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HIGH COURT OF AUSTRALIA APPELLANT AND THE STATE OF WESTERN AUSTRALIA RESPONDENT Mahmood v State of Western Australia [2008] HCA 1 30 January 2008 ORDER Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of Western Australia made on 14 May 2007. Remit the matter to the Court of Appeal of the Supreme Court of Western Australia for further hearing and disposition in accordance with the reasons of this Court. On appeal from the Supreme Court of Western Australia Representation J J Edelman with C H Withers for the appellant (instructed by Kott Gunning Lawyers) B Fiannaca SC with D A Lima for the respondent (instructed by Director of Public Prosecutions for Western Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Mahmood v State of Western Australia Evidence – Criminal law – Portions of "walk through" video tendered by defence at trial – Prosecution objected to tender of whole video – In closing prosecutor invited jury to draw adverse inferences from portions played – Trial judge refused to allow defence to re-open case to tender whole of video – Whether re- opening ought to have been allowed – Whether a direction to the jury was required to overcome prejudicial effects of the prosecutor's invitation. Criminal law – Practice and procedure – Directions to jury – Distinction between directions and comments – Whether trial judge's statements in summing up amounted to a direction. Evidence – Criminal law – Duty of prosecutor to tender all inculpatory statements – Whether prosecutor obliged to tender "walk through" video in whole or in part. Evidence – Criminal law – Evidence of blood stains in pocket – Whether accused had had opportunity to respond to blood-stain allegation – Whether judge's direction to the jury on this point was sufficient. Evidence – Criminal law – Evidence of blood stains in pocket not put to prosecution witnesses but mentioned by prosecutor in closing – Whether judge required to give a Jones v Dunkel direction. Criminal Appeal Act 2004 (WA), s 30. GLEESON CJ, GUMMOW, KIRBY AND KIEFEL JJ. Dlshad Hamad Mahmood (the appellant) was found guilty by a jury of the wilful murder of his wife following a trial in the Supreme Court of Western Australia. The murder took place on Sunday 4 July 2004 at premises at Mt Lawley where the appellant and his wife conducted a restaurant business called the Kebabistan Restaurant. In his evidence the appellant said that, after a visit from a friend he began cleaning the premises whilst his wife went to the toilet. When she did not return he went to find her. She was lying in a passageway bleeding. Her throat had been cut. He said that he picked her up but she was not breathing. He went outside to see if the person responsible was still there, but found no one. He returned to his wife and called the police, the ambulance and his son. During this time he said that he was very distressed. The video recording A lengthy record of interview was undertaken of the appellant on the day of the murder. About one week later he accompanied the police to the scene and "walked through" the events of the day as he had explained them. This narrative and his actions were recorded on video equipment. The case against the appellant was circumstantial. He had believed his wife had been unfaithful to him and had hired private investigators. He had not believed them when their report did not confirm his suspicions. There was evidence of an argument, or raised voices, at the restaurant premises on the morning of the murder, which the appellant denied. The prosecution called evidence of two expert witnesses in relation to the location of blood in the premises and on the appellant's clothes. The murder weapon was never discovered. During the case for the prosecution counsel for the defence cross- examined a police officer concerning the "walk through", or re-enactment, by the appellant of the events of 4 July 2004. In that re-enactment he indicated to the police officers the position of his wife's body when he discovered it, in the passageway connected to the restaurant, how he kneeled down to her and lifted her body so that part of it rested upon his knee. The police officer was asked about what had been recorded on the video of the re-enactment, but he was not present when it was filmed and was unable to recall in detail what he had seen of it. Defence counsel at that point sought to tender part of the video recording, some six minutes out of a total of more than two hours. The portion in question dealt only with the appellant's description of how he had held his wife's body. Its evident purpose was to explain the position of the blood on his clothes and his Kirby hands. Counsel for the defence did not seek to tender the whole of the video, but expressed a willingness to do so. The prosecution did not consent to that course. The trial judge (Jenkins J) indicated that only that part to which the defence required reference would form part of the evidence. Her Honour said that if the jury wished to view that part of the video tape they could be brought to the courtroom where arrangements could be made to view it. Her Honour explained to the jury that that situation arose because there was not consent between the parties that the whole of the tape should be tendered in evidence and there was no tape containing only that part relied upon. Shortly afterwards the portion of the tape was received into evidence. In his address to the jury the prosecutor said the following with respect to the evidence so admitted: "Some other things you can take into account: did you notice in the walk-through, the extract which was played to you, the accused man describing how he found his wife and how he held her and I'm suggesting to you that how he held her was a matter well within his knowledge, but did you notice his demeanour? This was on 11 July, a week after her death. Was there any emotion when he was asked about blood and so on? Did you see any sign of emotion in that recounting? Here is a man who is accused of killing his wife and the police ask him to even take part in this and asked those sort of questions. You saw his reaction, his demeanour. It was, I suggest to you, cold-blooded and clinical and this killing was cold-blooded and clinical." These submissions occurred just before the conclusion of the prosecutor's address. Counsel for the defence commenced his address shortly thereafter. He reminded the jury about how only a part of the video recording had been tendered, that the defence had offered to tender all of it, but that the prosecution had said there may be "issues" as to that. He went on: "… We put in a short section because they object and then they turn around and say, 'On the short section you've seen he's not crying.' Now what is that about?" The following morning counsel for the defence applied, in the absence of the jury, to re-open the case for the defence in order to tender evidence of other parts of the video recording where the appellant could be seen to be emotional. This was said to be warranted by the inference that the jury had been asked to draw about his lack of emotion, by reference to the short extract which had been admitted in evidence for another purpose. The trial judge refused the application. Kirby Her Honour was not convinced that the evidence taken of the re-enactment was sufficiently important to warrant that course and that the matter could properly be dealt with "by me indicating to the jury that it would be more relevant for them to consider the accused's demeanour on the day in question …". Her Honour appears to have taken the view that the events a week or so after the day of the killing would, or should, be less important to the jury. In the course of summing up her Honour said: "There's one final part of the evidence that I wish to give you directions on and that is in respect to some submissions that were made to you about drawing an adverse inference against the accused because of his demeanour during the walk-through video. [The prosecutor] made some submissions to you about this and then [defence counsel] replied, [and] said that you couldn't draw anything from the accused's demeanour during that video. Now, members of the jury, it would seem to me that it would be unwise for you to draw any adverse view against the accused because of his demeanour in the walk-through video. There are some reasons for that. The first is that you have only seen a portion of the video. You don't know what his demeanour was during the rest of the video. Secondly, the video was done some seven days after the death. It, in my view, would be more relevant if you were going to take demeanour into account to have regard to the accused's demeanour during the video record of interview taken on 4 July 2004, the very day that Ms Dbag died. It would also be relevant for you to take into account what some of the witnesses said who were walking past the shop. I think one in particular clearly heard what would have been the accused after Ms Dbag had died and he referred to the sound that he heard coming from the shop at that time as – I think it was Mr O'Hazy and he said that between about 8.50 and 9 am he saw what appears to be the accused distressed, unhappy, angry and upset, crying and moaning. Members of the jury, that's all I wish to say about the law relating to the evidence." Kirby The appeals The Court of Appeal (Roberts-Smith, McLure and Buss JJA)1 dismissed an appeal against conviction and by special leave the appellant appeals to this Court. The principal grounds of appeal in this Court concern, first the treatment of the video recording and secondly the significance of stains of the wife's blood upon the clothing worn by the appellant. If either ground succeeds there will arise the question of the application of "the proviso". The Court of Appeal In the Court of Appeal it was conceded by the prosecution that what had been put to the jury, about the appellant's apparent lack of distress or "cold- bloodedness" as being representative of what had occurred on that occasion as recorded on the video, was misleading. It was submitted that it was corrected by her Honour's direction. It was common ground that the appellant did display distress and seemed to be emotionally upset when talking about his wife at several points in the balance of the recording not seen by the jury. These concessions were noted by Roberts-Smith JA, who observed that the prosecution had signalled objection to the tender of the whole of the video on the basis that it was self-serving2. Roberts-Smith JA did not consider that there was any error in the exercise of the trial judge's discretion to refuse the application to re-open the case, concluding that an appropriate direction would be sufficient to correct the misstatement by the prosecution, which was described by his Honour as "unfair, insofar as it conveyed the implication the appellant's apparent lack of emotion and the extract the jury saw was representative of the whole of the recording"3. As his Honour observed, it should not have been said. There was however considerable evidence before the jury which indicated that the appellant had been emotionally upset and distressed about the death of his wife at a time closer to the event, commencing from his telephone calls to the ambulance and to the police and including the evidence of witnesses who saw and heard him at this time and the lengthy record of interview. Against that background, and combined with the trial judge's reminder to the jury that the exhibit was only part 1 Mahmood v The State of Western Australia [2007] WASCA 101. 2 Mahmood v The State of Western Australia [2007] WASCA 101 at [29]-[30]. [2007] WASCA 101 at [31]. Kirby of the recording, his Honour considered that the direction given was sufficient to rectify the statements made by the prosecutor. His Honour concluded that it did not result in a miscarriage of justice4. Buss JA agreed5. Roberts-Smith JA was referring to the ground of appeal provided by s 30(3)(c) of the Criminal Appeals Act 2004 (WA), which provides that the Court of Appeal must allow an appeal against conviction if, in its opinion, there was a miscarriage of justice. Sub-section (4) contains the proviso that, even if a ground of appeal is decided in favour of the offender, the Court of Appeal may dismiss the appeal if it considers that "no substantial miscarriage of justice has occurred". It followed from the conclusion reached by his Honour that it was not necessary to consider the proviso6. McLure JA agreed with the conclusion reached by Roberts-Smith JA. Her Honour did not agree with the trial judge's characterisation of the prosecution comment as being marginally relevant. In her Honour's view it linked the act of killing with the appellant's reaction. If this was part of the prosecution's case, it followed that the balance of the video recording was also relevant7. On the other hand her Honour was not satisfied that it was sufficiently material to warrant a re-opening of the defence case. In particular her Honour did not consider that it would have been to the appellant's forensic advantage to focus attention on his demeanour in that way, whereas the trial judge's statement to the jury was. It followed that there was no miscarriage of justice8. The view of McLure JA, as to the materiality of the inference the prosecutor invited the jury to draw, is plainly correct. It did not initially form part of the prosecution case. If it became relevant, it was incumbent upon the prosecution to admit the balance of the video in order that the jury could form a view about the appellant's state of emotion when the re-enactment of the events of the day of the murder was recorded. It was wrong to suggest that they should conclude that the appellant's reaction was unemotional from an excerpt, when there was at least some evidence to the contrary upon which the jury might [2007] WASCA 101 at [33]. [2007] WASCA 101 at [168]. [2007] WASCA 101 at [125]. [2007] WASCA 101 at [155]. [2007] WASCA 101 at [156]. Kirby conceivably have formed a different view. The question which then arises is what is necessary to be done to address such a situation. Direction and comment Courts are usually inclined to allow a re-opening to call evidence considered to be of sufficient importance, even after addresses9. That is not to say that it is the only course which may be taken in a given case. In the present case the members of the Court of Appeal were agreed that a direction by the judge would be sufficient, perhaps even preferable, to that course. What their Honours must have had in mind was a direction which would overcome the prejudicial effects of the prosecutor's remarks. To achieve that result it was necessary that the direction deny the implication, in the prosecutor's remarks, that that part of the video recording which they had seen was evidence of the appellant's emotional state as he recounted the events of the day of the murder. It was necessary for the directions, in effect, to distance that evidence from the purpose suggested by the prosecution in the address to the jury. A direction could be framed to achieve that outcome. The distinction between a direction and a comment by a trial judge is referred to in Azzopardi v The Queen10. It reflects the fundamental division of functions in a criminal trial between the judge and the jury. The distinction is important. Telling a jury that they may attach particular significance to a fact, or in this case suggesting that other evidence may be considered of greater weight, is comment. Because it is comment it may be ignored by the jury, a matter about which the jury should be told. A direction, on the other hand, may contain warnings about the care needed in assessing some evidence or the use to which it may be put. A direction is something which the law requires the trial judge to give to the jury and which they must heed11. It may be inferred from that part of the trial judge's summing up in question that her Honour appreciated that something in the nature of a direction was necessary, given the prosecutor's remarks. Her Honour's statements were more than comment. They went further than the identification of issues arising in connection with the evidence, leaving the matter of how they were to be dealt 9 Dyett v Jorgensen [1995] 2 Qd R 1 at 5 per Pincus JA. 10 (2001) 205 CLR 50 at 69-70 [49]-[52]. 11 (2001) 205 CLR 50 at 70 [50]. Kirby with for the jury12. Her Honour obviously considered it necessary to deflect attention from the appellant's demeanour, as seen in the video recording, by suggesting that the record of interview would be more relevant to the jury because it was closer in time to the murder of the deceased. Although her Honour made the suggestion in strong terms it nevertheless conveyed only an opinion about how the jury should view the matter. With respect to her Honour, what was not provided was a direction, in the nature of a warning, which the law required the jury to follow. The evidence available to the jury as an exhibit was only part of the video recording of the appellant giving his account of the events of the day of the murder. It was necessary for the jury to be directed, in unequivocal terms, that they knew so little of the context in which the segment of the video recording appeared that they could not safely draw the inference that the prosecutor had invited them to draw, that is to say, that they should ignore the prosecutor's invitation and remarks. However, the statements made by the trial judge in summing up would have conveyed to the jury, erroneously, that they were entitled to take the evidence into account as relevant to, and probative of, the question of the appellant's lack of emotion and inferentially, his guilt. The trial judge's remarks were directed to the reasons why they might give the evidence lesser weight than other, more contemporaneous, evidence. They failed to deny its evidentiary effect. The misdirection therefore amounts to an error of law13. The first ground of appeal succeeds. The second ground of appeal The second ground of appeal may be dealt with shortly. The prosecution's case, in opening, relied upon evidence of the presence of the appellant's wife's blood in a number of places on the appellant's body and clothing. The position of the blood stains was said to be inconsistent with his account of how he had come in contact with his wife's body and consistent with his having killed his wife. Although reference was made, in a scientific report, to the presence of the blood of his wife in his trouser pocket, the witnesses called by the prosecution were asked no questions about it. It is not immediately apparent what the prosecution 12 (2001) 205 CLR 50 at 69-70 [50]. 13 Gilbert v The Queen (2000) 201 CLR 414 at 416-417 [2] per Gleeson CJ and Gummow J, 423 [23] per McHugh J, 429 [45] per Hayne J; Darkan v The Queen (2006) 227 CLR 373 at 413 [136] per Kirby J. Kirby witnesses could have said about the presence of the appellant's wife's blood in his trouser pocket. The respondent however concedes that some evidence might have been adduced about the blood stains which might have shed some light upon their source and whether they could have come from an implement such as a knife, on the assumption that this was the nature of the murder weapon. The first reference to these blood stains came in a question put to the appellant, in cross-examination and without objection, that he had put the knife in his pocket before going outside to dispose of it. It may be observed that more than one inquiry was involved in what was put to the appellant for answer. The appellant's counsel took the matter up in re-examination. He said to the appellant: "They're saying that you had a knife in your pocket and ran out of the restaurant and threw it away?" The appellant denied that it was true and denied having anything to do with the killing of his wife. In his address to the jury, the prosecutor said of the evidence in this regard: "You will see an interesting DNA result in that blood was found in the inside of his right – this right-handed accused's pocket, jeans pocket, inside, actually inside his right pocket. What I'm suggesting is he has put the weapon, whatever it was, in there and he has been absent from the restaurant disposing of that before returning and then carrying out this pretence that someone, meaning someone else, killed his wife." In the address for the defence, counsel said: "Then they suggest to you, 'Oh, you know, he had the knife; had the knife in the pocket.' What, they want you to guess and speculate. The witness is called. Why not ask the blood-spatter man, 'Listen, the stain that you say is on the pocket, is that consistent with a bloodstained knife being put into the pocket?' Why not just ask him when he is in the witness box instead of not asking the witness and then three days later suggesting that you can guess and you can speculate." In her summing up to the jury the trial judge referred to the evidence relating to presence and position of blood. Having dealt with another aspect of it and the need to exclude "as a reasonable hypothesis" that something else explained the presence of blood on a door, her Honour went on: "… The second result the state relies upon is the blood found in the accused's pocket. The state says this is consistent with the accused putting the murder weapon in that pocket. Again, the significance of this Kirby evidence is a matter for you but before you could use that evidence against the accused you would have to exclude as a reasonable hypothesis other means by which the blood could have got in the pocket; for example, if the accused had put his bloodstained hand in the pocket to get something out or to search for something or even just out of habit." Shortly prior to dealing with these aspects of the evidence her Honour had said that she would direct the jury specifically as to some matters. Roberts-Smith JA rejected the appellant's contention that he had not had an opportunity to respond to the allegation14. His Honour also rejected the argument that her Honour was required to direct the jury that they could not draw the inference that the blood stain in the pocket came from a knife in the pocket because that had never been put to the prosecution witness Reynolds, who gave other evidence about blood stains15. The appellant's reliance upon the rule in Jones v Dunkel16 was misplaced17, in his Honour's view. It had been held, in Dyers v The Queen18 that, as a general rule, such a direction should not be given in a criminal trial. McLure and Buss JJA agreed19. It was neither necessary nor appropriate for the trial judge to direct the jury that an inference adverse to the case for the prosecution could be drawn because the presence of blood in the appellant's trouser pocket had not been the subject of evidence by the prosecution's witnesses. In the joint reasons in RPS v The Queen20 it was pointed out that where a witness, who might have been expected to be called and to give evidence on a matter, is not called by the prosecution, the question is not whether the jury may properly reach conclusions about issues of fact but whether, in the circumstances, they should entertain a 14 [2007] WASCA 101 at [100]. 15 [2007] WASCA 101 at [102]. 16 (1959) 101 CLR 298. 17 [2007] WASCA 101 at [109]. 18 (2002) 210 CLR 285. 19 [2007] WASCA 101 at [166]. 20 (2000) 199 CLR 620 at 632-633 [27]-[29] per Gaudron ACJ, Gummow, Kirby and Kirby reasonable doubt about the guilt of the accused. Similar views were expressed by Gaudron and Hayne JJ and by Callinan J in Dyers v The Queen21. Contrary to his contention, the appellant had the opportunity to explain the presence of the blood in his pocket. He did not offer an explanation. There was no evidence before the jury about the matter. They were not in a position to conclude that the blood stains were made by a knife, placed in the pocket by the appellant. There were other possibilities, consistent with innocence. These were addressed by her Honour the trial judge in her direction to the jury. The use of the word "hypothesis" may not always be advisable, and plainer terms preferable. But what her Honour said, particularly by way of example, was sufficiently clear to convey to the jury that they could not draw the inference suggested by the prosecution, given the standard of proof required. The second ground therefore fails. Conclusion and orders There was a failure to give a direction to the jury as to the use which they could not make of the excerpt of the video recording. The commentary which was provided as to its evidentiary value reflects a wrong decision on a question of law, a ground provided for by s 30(3)(b) of the Criminal Appeals Act. The appeal to this Court should be allowed on this ground only. There remains for consideration the application of the proviso, in sub- s (4). The matter should be remitted to the Court of Appeal to consider whether there has been no substantial miscarriage of justice22. To give effect to this conclusion, the appeal should be allowed. The order of the Court of Appeal of the Supreme Court of Western Australia should be set aside. In place of that order, the proceedings should be remitted to the Court of Appeal for the completion of the hearing of the appeal consistent with these reasons. 21 (2002) 210 CLR 285 at 293 [13], 327-328 [120]-[123]. 22 See Weiss v The Queen (2005) 224 CLR 300. Hayne HAYNE J. I agree with the other members of the Court that, for the reasons their Honours give, the appeal should be allowed and the matter remitted to the Court of Appeal of the Supreme Court of Western Australia. In the course of their investigations police asked the appellant to re-enact what had happened when, as the appellant had it, he found his wife bleeding to death in a passageway behind their restaurant. The appellant agreed to do this, and the re-enactment was video-recorded. If, in the course of the re-enactment, the appellant made assertions of fact that were inculpatory, the record of that re-enactment was both relevant and admissible evidence at the appellant's trial. By the very nature of the re-enactment in which the appellant participated he made assertions of fact that were inculpatory. Those out-of-court assertions against interest were admissible against him at his trial. The simplest and most obvious of those assertions against interest was that he was present at the restaurant when his wife was murdered. And much, if not all, of what the appellant said and did during the re-enactment acknowledged that he had had the opportunity to inflict on his wife the injuries from which she died. The appellant denied that he had killed his wife and during the re-enactment he sought to explain how it was that he had heard no assault upon his wife and had come to have so much of his wife's blood on his clothing. These explanations were proffered by him as exculpatory. And what the appellant said and did during the re-enactment was substantially in accordance with what he said to police when he was interviewed at a police station, and a video recording was made of that interview. In that record of interview, the appellant gave an account of events in which he asserted that he had not murdered his wife. The prosecution tendered the video recording of the interview with police but did not tender the record of the re-enactment. When trial counsel for the appellant sought to tender part of the record of the re-enactment and offered to tender it all, the prosecution consented to the tender of only part because, so it was submitted, the full record was "self-serving". The record of the re-enactment was no more self-serving than the videotaped record of interview. On both occasions the appellant asserted his innocence and sought to provide an explanation of events consistent with that assertion. But both the record of interview and the record of the re-enactment contained assertions of fact that were contrary to the interests of the appellant. If one record was admissible, so too was the other. In general, the prosecution should call "[a]ll available witnesses ... whose evidence is necessary to unfold the narrative and give a complete account of the Hayne events upon which the prosecution is based"23. If an accused has made inculpatory statements that are admissible in evidence, the prosecution should ordinarily lead evidence of all of those statements. It is necessary, of course, to take account of statutory provisions governing admissibility of out-of-court admissions that are not recorded24. But subject to that important consideration, it is not open to the prosecution to pick and choose between those statements, whether according to what is forensically convenient or on some other basis. And in leading evidence of out-of-court assertions which the prosecution alleges are inculpatory, the prosecution must take the out-of-court assertion as a whole; the prosecution "cannot select a fragment and say it bears out their case, and reject all the rest that makes against their case"25. Application of the last-mentioned principle to the record of a lengthy interview or re-enactment may not be easy26. But just as the prosecution in this case tendered the whole of the record of interview (apart from the undisputed excision of some irrelevant material) so too the prosecution could have, and should have, tendered the whole of the record of the re-enactment. In its supplementary submissions on this point the respondent relied on the decision of the Court of Appeal of the Supreme Court of Queensland in R v Callaghan27 and three Western Australian cases28 in which Callaghan has been considered. It was accepted in Callaghan29 that the interview, of which the accused had sought to tender evidence at his trial, "did not contain any 23 Whitehorn v The Queen (1983) 152 CLR 657 at 674 per Dawson J. See also Ziems v The Prothonotary of the Supreme Court of NSW (1957) 97 CLR 279 at 294; Richardson v The Queen (1974) 131 CLR 116; R v Apostilides (1984) 154 CLR 24 See, now, in Western Australia, Criminal Investigation Act 2006 (WA), Pt 11, 25 Jack v Smail (1905) 2 CLR 684 at 695. 26 cf Mule v The Queen (2005) 79 ALJR 1573 at 1574-1575 [5], 1579 [23]; 221 ALR 27 [1994] 2 Qd R 300. 28 Middleton v The Queen (1998) 19 WAR 179; Willis v The Queen (2001) 25 WAR 217; S (2002) 132 A Crim R 326. 29 [1994] 2 Qd R 300 at 302. Hayne inculpating statements". It was in this context that Pincus JA and Thomas J said in Callaghan30: "[I]f a prosecutor chooses to put into evidence a version which is in substance exculpatory, he makes it evidence in the case, and subject to matters of weight, it can be acted on as showing or tending to show the truth of its contents. There is no general obligation on the prosecution to call such evidence. The calling of such evidence is a benefit tendered by the prosecution and accepted by the defence." In Western Australia, Callaghan has been said31 to stand for the proposition that "[i]t is a matter for the prosecution to determine whether or not it wishes to lead the evidence as part of its case" of an out-of-court statement that contains both inculpating and exculpating material. The decision in Callaghan does not establish that proposition and it is a proposition that is not consistent with the proper presentation of the prosecution case. If there is admissible evidence available to the prosecution of out-of-court statements of the accused that contain both inculpating and exculpating material, fair presentation of the prosecution case will ordinarily require that the prosecution lead all that evidence. The difficulties which emerged so late in the appellant's trial stemmed from the failure of the prosecution to tender admissible evidence available to the prosecution which was evidence it asserted in its final address to the jury was relevant to, and demonstrative of, the appellant's guilt. Had the prosecution tendered in its case the complete record of the re-enactment in which the appellant had participated, trial counsel for the prosecution could not sensibly have made the submission he did and there would have been no occasion for the direction that should have been, but was not, given to the jury to ignore the argument advanced by the prosecution. 30 [1994] 2 Qd R 300 at 304. 31 Middleton (1998) 19 WAR 179 at 182. See also Willis (2001) 25 WAR 217; S (2002) 132 A Crim R 326.

HIGH COURT OF AUSTRALIA AND APPELLANT RESPONDENT Deal v Father Pius Kodakkathanath [2016] HCA 31 24 August 2016 ORDER Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of Victoria made on 24 July 2015. Remit the matter to the Court of Appeal for determination. The respondent pay the appellant's costs of the appeal to this Court and of the appeal to date in the Court of Appeal. On appeal from the Supreme Court of Victoria Representation A G Uren QC with A D B Ingram for the appellant (instructed by Melbourne Injury Lawyers) M F Wheelahan QC with S E Gladman for the respondent (instructed by Minter Ellison Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Deal v Father Pius Kodakkathanath Occupational health and safety – Statutory duty – Occupational Health and Safety Regulations 2007 (Vic), regs 3.1.1, 3.1.2, 3.1.3 – Duties of employers in relation to hazardous manual handling tasks – Where primary school teacher tasked to use step ladder to remove papier mâché displays from pin-board on classroom wall – Where displays unstable or unbalanced, or difficult to grasp and hold – Where task constituted hazardous manual handling task – Where in course of task teacher fell from step ladder and injured knee – Whether evidence capable of supporting cause of action for breach of statutory duty – Whether risk of injury amounted to risk of musculoskeletal disorder "associated with a hazardous manual handling task" – Whether sufficient evidence for jury to infer it was reasonably practicable for employer to identify task as involving hazardous manual handling. Statutes – Interpretation – Remedial legislation – Occupational Health and Safety Act 2004 (Vic) – Where Act and Regulations intended to protect employees against risk of injury in course of work – Where legislation imposes civil penalties on employers for breach of statutory duty – Whether fact of civil penalty requires narrow interpretation of provision. Words and phrases – "associated with", "close connection", "combined in terms of circumstances", "combined in terms of classification", "hazardous manual handling task", "musculoskeletal disorder", "real risk", "reasonably practicable", "Shirt calculus". Occupational Health and Safety Act 2004 (Vic), ss 2(1), 4, 20, 21, 158. Occupational Health and Safety Regulations 2007 (Vic), regs 1.1.1, 1.1.5, 1.1.7, FRENCH CJ, KIEFEL, BELL AND NETTLE JJ. This is an appeal from a judgment of the Court of Appeal of the Supreme Court of Victoria1, on appeal from the County Court of Victoria. The appellant's claim at first instance was for damages for a knee injury which she suffered in the course of her employment as a primary school teacher when she fell from a step ladder while removing papier mâché displays from a classroom pin-board. At trial, the appellant alleged that her injury was caused by the respondent's negligence or breach of statutory duty arising under regs 3.1.1, 3.1.2 and 3.1.3 of the Occupational Health and Safety Regulations 2007 (Vic) ("the Regulations"). Those provisions of the Regulations require an employer to identify tasks involving hazardous manual handling, control the risk of a musculoskeletal disorder associated with a hazardous manual handling task and review any risk control measures. The trial judge took the issue of breach of statutory duty away from the jury. His Honour ruled that the evidence was incapable of supporting a finding that the appellant was engaged in a hazardous manual handling task within the meaning of reg 3.1.2. On appeal, a majority of the Court of Appeal (Warren CJ and Ashley JA) held that there was evidence capable of supporting a finding that the appellant was engaged in a hazardous manual handling task but that the association between the generic nature of the task of removing the displays from the pin-board and the risk of the appellant's injury was not sufficiently close to come within reg 3.1.2. Digby AJA dissented. For the reasons which follow, the appeal should be allowed. Relevant legislative provisions Section 2(1) of the Occupational Health and Safety Act 2004 (Vic) ("the Act") provides that the objects of the Act are: to secure the health, safety and welfare of employees and other persons at work; and to eliminate, at the source, risks to the health, safety or welfare of employees and other persons at work; and to ensure that the health and safety of members of the public is not placed at risk by the conduct of undertakings by employers and self-employed persons; and 1 Deal v Kodakkathanath (2015) 45 VR 372. Bell Nettle to provide for the involvement of employees, employers, and organisations representing those persons, in the formulation and implementation of health, safety and welfare standards— having regard to the principles of health and safety protection set out in section 4." Section 4 of the Act identifies five principles of health and safety protection: "(1) The importance of health and safety requires that employees, other persons at work and members of the public be given the highest level of protection against risks to their health and safety that is reasonably practicable in the circumstances. (2) Persons who control or manage matters that give rise or may give rise to risks to health or safety are responsible for eliminating or reducing those risks so far as is reasonably practicable. (3) Employers and self-employed persons should be proactive, and take all reasonably practicable measures, to ensure health and safety at workplaces and in the conduct of undertakings. (4) Employers and employees should exchange information and ideas about risks to health and safety and measures that can be taken to eliminate or reduce those risks. (5) Employees are entitled, and should be encouraged, represented in relation to health and safety issues." to be Section 21 of the Act establishes a duty on employers, so far as is reasonably practicable, to provide and maintain for employees a working environment that is safe and without risks to health. The Regulations are promulgated pursuant to s 158 of the Act. Section 158 of the Act provides that the Governor in Council may make regulations for or with respect to, amongst other things, regulating or requiring the taking of any action to avoid an incident at a workplace and any other matter or thing required or permitted by the Act to be prescribed or that is necessary to be prescribed to give effect to the Act. Regulation 1.1.1 provides that one objective of the Regulations is to further the objects of the Act by, amongst other things, providing for health and safety in relation to workplaces and hazards, activities and things at workplaces. Bell Nettle Regulation 1.1.5 defines a number of terms for the purposes of the Regulations. "Manual handling" is defined as follows: "manual handling means any activity requiring the use of force exerted by a person to lift, lower, push, pull, carry or otherwise move, hold or restrain any object". The definition of "hazardous manual handling" provides: "hazardous manual handling means— (a) manual handling having any the following characteristics— repetitive or sustained application of force; repetitive or sustained awkward posture; (iii) repetitive or sustained movement; (iv) application of high force being an activity involving a single or repetitive use of force that it would be reasonable to expect that a person in the workforce may have difficulty undertaking; Example The force required to lift or otherwise handle heavy weights, to push or pull objects that are hard to move, to operate tools that require the use of 2 hands to exert sufficient force but that are designed for one hand or to operate tools that require squeezing of grips that are wide apart. exposure to sustained vibration; (b) manual handling of live persons or animals; (c) manual handling of unstable or unbalanced loads or loads that are difficult to grasp or hold". "Musculoskeletal disorder" is defined to mean: "musculoskeletal disorder means an injury, illness or disease that arises in whole or in part from manual handling in the workplace, whether Bell Nettle occurring suddenly or over a prolonged period of time, but does not include an injury, illness or disease that is caused by crushing, entrapment or cut resulting primarily from the mechanical operation of plant". Part 3.1 of Ch 3 of the Regulations is directed to manual handling. Regulation 3.1.1 imposes a duty on employers to identify tasks involving hazardous manual handling. It provides that: "(1) An employer must, so far as is reasonably practicable, identify any task undertaken, or to be undertaken, by an employee involving hazardous manual handling. (2) An employer may carry out a hazard identification under subregulation (1) for a class of tasks rather than for individual tasks all the tasks in the class are similar; and the identification carried out for the class of tasks does not result in any person being subject to any greater, additional or different risk to health and safety than if the identification were carried out for each individual task." Regulation 3.1.2 is directed to eliminating, reducing and controlling the risk of a musculoskeletal disorder associated with a hazardous manual handling task, so far as is reasonably practicable. Regulation 3.1.2(1) provides that: "An employer must ensure that the risk of a musculoskeletal disorder associated with a hazardous manual handling task affecting an employee is eliminated so far as is reasonably practicable." Regulation 3.1.2(2) provides that, if it is not reasonably practicable to eliminate the risk of a musculoskeletal disorder associated with a hazardous manual handling task affecting an employee, the employer must reduce that risk so far as is reasonably practicable by: "(a) altering— the workplace layout; or Bell Nettle the workplace environment, including heat, cold and vibration, where the task involving manual handling is undertaken; or (iii) the systems of work used to undertake the task; or changing the objects used in the task involving manual handling; or using mechanical aids; or any combination of paragraphs (a) to (c)." Regulation 3.1.3 provides that any measures implemented to control risks in relation to musculoskeletal disorders must be reviewed and, if necessary, revised. The facts The appellant was employed by the respondent as a primary school teacher. Her employment contract contained no reference to occupational health and safety issues. From the time of her engagement by the respondent in or about early 2002 until the time of the workplace injury the subject of this proceeding, the appellant taught classes from preparatory grade to grade 6. During 2007, she taught grade 3. On 19 September 2007, it was necessary for her as part of her job as the grade 3 teacher to remove a number of papier mâché displays mounted on large sheets of "stock card" from a pin-board on the classroom wall. The task of attaching such displays to the pin-board and later removing them was one which the appellant had to undertake periodically. There were two sizes of "stock card", each of which was larger than A3 size. The "stock card" was said to be somewhat thicker than "copy paper" but prone to buckle unless supported with at least one hand in the middle beneath. The appellant was only 156 cm tall and could not reach the pin-board from floor level. Accordingly, she used a two step ladder provided by the respondent. The step ladder was of "A" frame configuration of which the top step was 450 mm above the floor. There was a larger step ladder available elsewhere at the school but the appellant said that there was no need for her to use that ladder because she could reach the displays using the step ladder. In practice, the appellant had to set the step ladder at right angles to the pin-board, ascend the step ladder to the top step, reach up above her head and unpin one or more displays at a time, and then carry them as she descended backwards down the step ladder to the floor. Bell Nettle On the occasion in issue, the appellant was carrying more than one display at once, and holding them with both hands beneath to prevent them from bending as she descended backwards down the step ladder. At trial she stated that, "[b]ecause I held them underneath and not to the side they did move a little bit. They wouldn't move too much, but probably enough to concentrate on them as well as ... the step". She further deposed that, because the displays were in front of her, "I couldn't literally see down past them" and consequently that she "just went cautiously and tried to feel for the ladder, the step as I went. Each time, I didn't go fast, I was always going slow enough to feel for it, but this time I missed". As a result, she fell, and suffered a knee injury. There were some instructions on the step ladder, of which the appellant was aware and with which she complied. But the respondent had not given the appellant any written warning of the risks of falling from step ladders or that the appellant should not work alone when using the step ladder or of the danger of using the step ladder to perform the task of removing displays from the pin-board, or any other instructions as to how to perform the task. The appellant gave unchallenged evidence that she had no knowledge of the Regulations or of any assessment undertaken pursuant to the Regulations or of any occasion on which any manual handling risks associated with the placing or removing of such displays had been discussed in a safety context. The appellant called a forensic consulting engineer, Mr Contoyannis, to give expert opinion evidence. He described the accident, in part, as follows: "When stepping down, Ms Deal had both of her hands holding the displays which eliminated the possibility of her using her hands for stabilisation as well as obscuring her vision for ... locating the intermediate (lower) step. The combination of those two circumstances evidently led to her mishap as she stepped down, and the inevitable fall causing her injury." Mr Contoyannis stated that in order to avoid the risk of injury to which the appellant was exposed, the displays should have been handed to an assistant while the appellant was standing surely on the platform so that the appellant would have had both hands free to grasp the ladder as she descended. In answer to interrogatories delivered by the appellant, the respondent stated that, prior to 19 September 2007, a hazard identification had been undertaken, pursuant to reg 3.1.1 of the Regulations, with respect to the task which the appellant alleged resulted in her injury. The respondent identified a Manual Handling Risk Assessment (16), for the job/task of hanging large/heavy Bell Nettle artwork for displays, and a Manual Handling Risk Assessment (17), for the job/task of hanging paper and cardboard displays, as the documents which evidenced the performance of hazard identification. The respondent's Manual Handling Risk Assessment (17) included the following: School: Location: Classrooms & hallways Hazard Identification Identify hazardous manual handling by assessing task against the stressors listed below and place a tick (b) in the box only. (see the Manual Handling Code of Practice for guidance) Assessment date: Job/Task: Hanging paper & cardboard displays Repetitive or sustained application of force Repetitive or sustained awkward posture Repetitive or sustained movement Application of high force Stressors Exposure to sustained vibration Handling of live people & animals Handling loads that are unstable, unbalanced or difficult to move Task/ process steps light Climbing ladders hang displays Stretching up to hang displays Risk Assessment Does the task involve repetitive or sustained postures, movements or forces? Is the task done for more than 2 hours over a whole shift or continually for more than 30 minutes at a time? Does the task involve high force? Is there a risk? (yes if, yes to 1a & 1b or 2) Are environmental factors increasing the risk? Rate task as high, medium or low risk. Yes/No Yes Yes Yes Medium Briefly explain each finding Displaying posters For specific projects eg Art show Number of Stressors Risk Ranking High Medium Low Manual Handling Stressors Greater than 9 stressors 5-9 stressors 1-4 stressors Risk Control Recommendations List in order based on hierarchy of controls (see below) 1. Install a pulley system. 2. Mark maximum height that posters etc can be placed on walls. 3. Design mechanical aids to place art work – eg coat hanger on pole to reach hooks or wires. 4. Advise staff to use suitable ladder, not chairs/tables etc. 5. Provide documented SWP instructions on how to use pulley system. 6. Provide information, instruction and supervision to enforce above. Control hierarchy- 1. Alter workplace or environment. 2. Alter system of work. 3. Change the objects used. 4. Use mechanical aids. 5. Provide information, instruction & training (If 1-4 not practicable) Management Representative: Employee Health and Safety Representative Bell Nettle The respondent's Manual Handling Risk Assessment (17) did not include any recommendation that, if the manual handling task required both hands to stabilise the load, an assistant should be available to enable the person handling the load to pass the load to the assistant while the person handling the load was standing securely on the platform. Nor was there any evidence of a hazard identification process under the Regulations, or otherwise, identifying the need for, or recommending, the system of work involved in the task. Proceedings below By amended writ filed on 20 September 2013, the appellant sought damages for her injury, which she alleged was caused by the respondent's negligence or breach of statutory duty constituted by breach of the Regulations, in particular breach of regs 3.1.1, 3.1.2 and 3.1.3. The appellant's particulars of negligence included the alleged breaches of the Regulations. The matter came on for hearing before a judge and jury in the County Court at Melbourne on 25 August 2014. At the conclusion of the appellant's evidence, the judge proposed that he "determine the first issue, that is, whether the regulations themselves are applicable". After argument, the judge ruled that, although there had been manual handling, it had not been hazardous manual handling, and thus that the Regulations did not apply to the circumstances of the appellant's injury. Consequently, her case in reliance on them could not be put to the jury. The matter thus proceeded to verdict as a claim in negligence only, without the benefit of the alleged particular of negligence comprised of breach of regs 3.1.1, 3.1.2 and 3.1.3. On 2 September 2014, the jury returned a verdict for the respondent. The appellant appealed to the Court of Appeal but the appeal was dismissed. The majority accepted that the injury which the appellant suffered could, as a matter of fact, be characterised as a musculoskeletal disorder as defined, namely, an injury that arose in whole or in part from manual handling in the workplace. Their Honours were also persuaded, contrary to the trial judge's ruling, that "there was evidence fit to go to the jury that the load being carried by the appellant was unstable or unbalanced (or, possibly, difficult to grasp or hold)"2. It followed that the task in which the appellant was engaged when she was injured could be described as a hazardous manual handling task. But, their Honours said, the risk of injury was not "the risk of a musculoskeletal disorder associated with a hazardous manual handling task affecting an employee" within 2 Deal (2015) 45 VR 372 at 397 [133]. Bell Nettle the meaning of reg 3.1.2, because the association between the risk and the injury was not sufficiently close to come within the regulation. Their Honours stated that the words "associated with" in reg 3.1.2 required a "close connection"3 between the risk of harm and the generic nature of the manual handling task, in contrast to some form of connection between the risk and one of the several ways in which the generic task might conceivably be performed, and that it was the manner in which the appellant performed the task of removing the displays from the pin-board while standing on the step ladder, rather than the generic nature of the task, which caused her to fall. It followed, their Honours held, that the risk of injury was not "associated with" the task within the meaning of reg 3.1.2. Alternatively, the majority said, if the risk were one which nominally fell within par (c) of the definition of hazardous manual handling, it was not "reasonably practicable for an employer considering the generic task of removing light displays from pin boards using steps of the kind used by the appellant to conclude that the task would, or even might, involve hazardous manual handling"4. Digby AJA reasoned to the contrary that, because the Act and the Regulations were designed to protect workers from injury, they should not be given a narrow interpretation. The activity of demounting the displays was an activity that required the appellant to lift, lower, carry, move and hold the displays, and, therefore, it was arguable (in the sense of it being an issue fit to go to the jury) that it was a manual handling task within the meaning of reg 1.1.5. The whole activity comprised of unpinning the displays, demounting them from the pin-board and lowering them to the ground using the step ladder was arguably a related set of activities which together comprised a manual handling task that had the characteristics of manual handling of unstable or unbalanced loads, or loads that were difficult to grasp or hold, and thus was arguably a hazardous manual handling task within the meaning of reg 1.1.5. The risk of musculoskeletal disorder of the kind sustained by the appellant was arguably one which was "associated with" the hazardous manual handling task within the meaning of reg 3.1.2. There was evidence that the respondent had identified the task of putting up the displays on the pin-board with the use of the step ladder as a hazardous manual handling task but had not identified the task of taking them down with the use of the step ladder as a hazardous manual handling task. Consequently, it was arguable that the respondent was in breach of reg 3.1.1 in 3 Deal (2015) 45 VR 372 at 398 [143]. 4 Deal (2015) 45 VR 372 at 399 [145]. Bell Nettle failing so to identify the task. It was also arguable that the respondent was in breach of reg 3.1.2 in failing to reduce the risk of musculoskeletal disorder as far as was reasonably practicable by altering the systems of work used by the relevant staff to undertake the task and arguable that that breach of the Regulations caused the appellant's injury. Accordingly, the trial judge had erred by taking the matter away from the jury and, because one of the particulars of negligence had been breach of the Regulations, the verdict should be set aside and the matter should be remitted for retrial on all issues. For the reasons which follow, Digby AJA was right to hold that the issue of breach of statutory duty was fit to be left to the jury. The appellant's contentions Before this Court, the appellant contended that it was plain that the activity of removing the displays from the pin-board was a "manual handling" task as defined in reg 1.1.5 (scil, an activity requiring the use of force exerted by a person to lift, lower, push, pull, carry or otherwise move, hold or restrain any object). It was equally plain, it was submitted, that the task involved manual handling of unstable or unbalanced loads, or loads that were difficult to grasp or hold, and thus that it was a "hazardous manual handling" task as defined in reg 1.1.5. Nor should there be any doubt that the risk of the appellant suffering the injury was a risk "associated with" that task within the meaning of reg 3.1.2. Contrary to the majority's construction of reg 3.1.2, there is nothing in the text, context or purpose of reg 3.1.2 which limits "associated with" to "closely associated with". If the purpose of reg 3.1.2 were to require a close connection between the risk and the task, reg 3.1.2 would have been expressed in terms of a risk being "closely associated with" the task. "Associated with" is an ordinary English expression, which is used in reg 3.1.2 in its ordinary sense, and it necessarily follows that it was a question of fact5 fit to go to the jury whether the risk of the injury the appellant suffered was associated with the hazardous manual handling task of removing displays from the pin-board with the use of the step ladder. 5 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 395-397; [1996] HCA 36; cf Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2008) 232 CLR 314 at 334 [49] per Kirby J; [2008] HCA 9. Bell Nettle The respondent's contentions The respondent contended that the majority of the Court of Appeal were correct in holding that the phrase "associated with" in the context in which it appears in reg 3.1.2 requires a causal connection with the generic nature of a particular hazardous manual handling task, as opposed to a causal connection with the several ways in which a generic task might possibly be performed. In the respondent's submission, the majority were also right in concluding that the jury could not have found that it was reasonably practicable for the respondent to identify the generic nature of the task of removing the displays from the pin- board using a step ladder as one involving hazardous manual handling. It was only because of the manner in which the appellant chose to perform the task, by handling multiple displays at once, and so descending the ladder while using both hands to support the displays, that the risk of injury arose. In the respondent's submission, it followed that it would not have been open to the jury to conclude that it was a risk to which reg 3.1.2 was directed. Manual handling of an unstable load It is convenient to begin with what is not in dispute. It is not in dispute, and thus it may be accepted, that the injury suffered by the appellant was an injury that arose in whole or in part from manual handling in the workplace (other than an injury, illness or disease that was caused by crushing, entrapment or cut resulting primarily from the mechanical operation of plant), and was, therefore, a "musculoskeletal disorder" within the meaning of reg 1.1.5. It is also not in dispute, and equally may be accepted, that the task comprised of removing the displays from the pin-board with the use of the step ladder was an activity which required the use of force exerted by a person to lift, lower, push, pull, carry or otherwise move, hold or restrain any object, and was, therefore, a "manual handling" task within the meaning of reg 1.1.5. It is to be observed that the displays were light, or perhaps, as the majority of the Court of Appeal described them, "unquestionably light"6, and thus it may be said that the task did not require the use of a great deal of force. But there is nothing in the text or context of reg 1.1.5 which implies that "force" in the definition of "manual handling" is restricted to a large or substantial force. Although some paragraphs of the definition of "hazardous manual handling" (in particular, pars (a)(i) and (iv) and (b)) are directed to activities involving large or 6 Deal (2015) 45 VR 372 at 394 [116]. Bell Nettle substantial forces, others (in particular pars (a)(ii) and (iii) and (c)) are evidently designed to embrace situations where the force involved is minimal. It is not in dispute either, and therefore it may also be accepted, that the task of removing the displays from the pin-board with the use of the step ladder involved the manual handling of unstable or unbalanced loads, or loads that were difficult to grasp or hold, and that it was, therefore, a "hazardous manual handling" task7. The displays were unstable in the sense of being prone to bend unless supported, and to that extent were difficult to grasp or hold. And, although "load", like "force", is a protean conception, it appears to be used in the definition of "hazardous manual handling" in the natural and ordinary sense that includes anything to be carried8. Two issues remain to be determined. The first is whether the risk of a musculoskeletal disorder of the kind suffered by the appellant can properly be conceived of as a risk "associated with" the hazardous manual handling task comprised of removing the displays from the pin-board with the use of the step ladder. If so, the second issue is whether a jury could have inferred, as a matter of objective fact, that it was reasonably practicable to identify the risk and take steps to eliminate or reduce it as required by regs 3.1.1 and 3.1.2. Associated with a hazardous manual handling task Whether the risk of musculoskeletal disorder was "associated with" that manual handling task depends on the way in which reg 3.1.2 should be construed. Since reg 3.1.2 is remedial legislation passed for the protection of employees, it should be construed so as to afford to employees the protection which Parliament intended9. To that end, the width of the objects identified in s 2 of the Act, the breadth of the principles adumbrated in s 4 of the Act and the extent of the aims identified in reg 1.1.1 of the Regulations are indicative of a 7 Occupational Health and Safety Regulations, reg 1.1.5. 8 The Oxford English Dictionary, 2nd ed (1989), vol VIII at 1062, "load", sense 2. 9 Bull v Attorney-General for New South Wales (1913) 17 CLR 370 at 384 per Isaacs J; [1913] HCA 60; Waugh v Kippen (1986) 160 CLR 156 at 164-165 per Gibbs CJ, Mason, Wilson and Dawson JJ; [1986] HCA 12; Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32 at 44 per Mason CJ; [1991] HCA 7; R v Irvine (2009) 25 VR 75 at 91-92 [90]-[92] per Neave JA (Nettle JA agreeing at 77 [1], Lasry AJA agreeing at 106 [160]). Bell Nettle legislative purpose to afford relatively broad ranging protection to employees against the risks of hazardous manual handling tasks. By contrast, the majority's requirement of "close connection"10 appears to have been influenced more by what their Honours considered should be the appropriate scope of regs 3.1.1, 3.1.2 and 3.1.3 than by the legislative purpose as it is to be derived from the text, context and purpose of the legislation11. If so, it suggests the kind of error, against which this Court has warned on more than one occasion, of approaching the task of statutory construction by reference to what a judge might regard as desirable policy, imputing that to the legislation and then characterising that as the purpose of the legislation12. It is also apparent that the majority were considerably influenced in their construction of reg 3.1.2 by concerns about the penal and civil consequences if "associated with" were not limited to a "close connection"13. But, given the statutory purpose of the Act and the Regulations already referred to of affording broad ranging protection to employees against the risks of hazardous manual handling tasks, and the statutory purpose of occupational health and safety penalty provisions more generally14 of deterring employers from doing less than is reasonably practicable to guard against risks that are naturally and ordinarily occurring in the workplace, it would invert logic to read down "associated with" so that employers are relieved of liability for failure to guard against such risks. 10 Deal (2015) 45 VR 372 at 398 [143]. 11 Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378 at 388-390 [23]-[26] per French CJ and Hayne J; [2012] HCA 56. 12 Miller v Miller (2011) 242 CLR 446 at 459-460 [29] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [2011] HCA 9; Australian Education Union v Department of Education and Children's Services (2012) 248 CLR 1 at 14 [28] per French CJ, Hayne, Kiefel and Bell JJ; [2012] HCA 3; Certain Lloyd's Underwriters (2012) 248 CLR 378 at 390 [26] per French CJ and Hayne J. 13 Deal (2015) 45 VR 372 at 398 [143]. 14 Waugh v Kippen (1986) 160 CLR 156 at 164-165 per Gibbs CJ, Mason, Wilson and Dawson JJ; Capral Aluminium Ltd v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at 643 [73]; R v ACR Roofing Pty Ltd (2004) 11 VR 187 at 202-203 [43] per Nettle JA (Ormiston JA agreeing at 188 [1], Vincent JA agreeing at 189 [2]); Irvine (2009) 25 VR 75 at 91-92 [90]-[92] per Neave JA (Nettle JA agreeing at 77 [1], Lasry AJA agreeing at 106 [160]). Bell Nettle In its natural and ordinary sense, the phrase "associated with" may mean either combined terms of terms of circumstances or combined classification15. If it is used in reg 3.1.2 in the former sense of combined in terms of circumstances, it would imply that the risk of an employee suffering a musculoskeletal disorder while carrying out a hazardous manual handling task could fall within reg 3.1.2 whatever the cause of the musculoskeletal disorder. By contrast, if it is used in the more limited sense of combined in terms of classification, it would imply that a risk of musculoskeletal disorder cannot fall within reg 3.1.2 unless the risk is caused by one or more of the characteristics which define a manual handling task as a hazardous manual handling task, namely, repetitive or sustained application of force, repetitive or sustained awkward posture, repetitive or sustained movement, application of high force, exposure to sustained vibration, manual handling of live persons or animals, or manual handling of unstable or unbalanced loads or loads that are difficult to grasp or hold16. There is therefore a constructional choice to be made between those two possible meanings. In the course of their reasoning, the majority of the Court of Appeal referred with approval17 to the following observations of J Forrest J in Lindsay-Field v Three Chimneys Farm Pty Ltd18 concerning the scope of regs 3.1.1 and 3.1.2: "In any event, I do not accept that this activity is of the type intended to be covered by the Regulations. The objective of the Regulations, I think, is directed towards activities (and, particularly repetitive actions) which require the application of force in the course of the particular activity (be it lifting, pushing, pulling or holding) and thus result in a risk of injury. It is that type of injury which the Regulations are designed to prevent." To that extent, the majority were correct. A number of considerations point in favour of the conclusion that "associated with" in reg 3.1.2 is used in the sense of combined in terms of classification rather than combined in terms of circumstances, with the result that the risks of musculoskeletal disorder to which 15 The Oxford English Dictionary, 2nd ed (1989), vol I at 718, "associated", sense 3. 16 Occupational Health and Safety Regulations, reg 1.1.5, definition of "hazardous manual handling". 17 Deal (2015) 45 VR 372 at 400 [149]. 18 [2010] VSC 436 at [104]. Bell Nettle reg 3.1.2 is directed are confined to risks of musculoskeletal disorder that arise from, and thus are caused by19, something which is intrinsic to the hazardous manual handling task. First, it is apparent from the Regulatory Impact Statement accompanying the Regulations that the manual handling provisions of the Regulations were intended to limit the reach of the obligation to identify and guard against the risk of a musculoskeletal disorder arising from a manual handling task in the workplace to risks resulting from manual handling "[o]ccupational factors ... [which] can increase the risk of [musculoskeletal disorders] occurring"20. As was emphasised in the Regulatory Impact Statement to the Occupational Health and Safety (Manual Handling) Regulations 1999 (Vic) ("the 1999 Regulations") – from which the Regulations are derived – by so limiting the scope of the term "musculoskeletal disorder" to the specific context of manual handling, overlap and conflict with other hazard-specific regulations could be avoided21. Secondly, as originally promulgated, what is now reg 3.1.2 of the Regulations appeared as reg 15(1) in the 1999 Regulations, as follows: "An employer must ensure that any risk of a musculoskeletal disorder affecting an employee occurring— is eliminated; or if it is not practicable to eliminate the risk, is reduced so far as is practicable." 19 See and compare Pizzino v Finance Brokers (WA) Pty Ltd (1982) 56 ALJR 843 at 845 per Gibbs CJ, Murphy and Wilson JJ, 846-847 per Brennan and Deane JJ; 43 ALR 16 at 20, 22-24; Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 at 165-167 per Gleeson CJ (Meagher and Sheller JJA agreeing at 168); Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1 at 6 per Beaumont J. 20 Victoria, WorkSafe Victoria, Occupational Health and Safety Regulations 2007, Regulatory Impact Statement at 63; see Interpretation of Legislation Act 1984 (Vic), s 35. 21 Victoria, Victorian WorkCover Authority, Occupational Health and Safety (Manual Handling) Regulations 1999, Regulatory Impact Statement at 10-11, 17. Bell Nettle Later, however, in response to recommendations of the Maxwell Inquiry in 200422, the Act was amended to reduce the burden on employers to identify and guard against risks from what was practicable, and in 2007 reg 15 of the 1999 Regulations was recast consistently with the changes to the Act (as reg 3.1.2 of the Regulations) with the purpose of "includ[ing] greater specificity of the factors to be controlled"23. Consequently, whereas before that change, reg 15 of the 1999 Regulations might have been seen as extending to the risk of any musculoskeletal disorder arising in whole or in part from manual handling in the workplace, the addition of the requirement that a risk be "associated with a hazardous manual handling task" presents as calculated to restrict the reach of reg 3.1.2 to the risk of a musculoskeletal disorder arising in whole or in part from one or more of the hazardous manual handling task force factors of repetitive or sustained application of force, repetitive or sustained awkward posture, repetitive or sustained movement, application of high force, exposure to sustained vibration, manual handling of live persons or animals, or manual handling of unstable or unbalanced loads or loads that are difficult to grasp or hold. Thirdly, unless reg 3.1.2 is construed as confined to the risks of a musculoskeletal disorder that are caused by something that is intrinsic to the hazardous manual handling task, other hazard-specific parts of the Regulations – such as Pt 3.3, which deals with falls – would overlap and to some extent conflict with the manual handling provisions of the Regulations, and in particular reg 3.1.224. Fourthly, and more generally, if the reach of reg 3.1.2 were not so limited, it would have the relatively remarkable consequence that any musculoskeletal disorder suffered in the course of performing a hazardous manual handling task in the workplace might fall within reg 3.1.2, regardless of the cause of the musculoskeletal disorder. For example, it might include the risk of an office worker whose job it is many times a day (and thus repetitively) to replenish the paper supply in a photocopier, slipping or falling on a greasy floor while carrying a single ream of A4 copy paper to the photocopier, in circumstances where the 22 Maxwell, Occupational Health and Safety Act Review, (2004) at 100-105. 23 Victoria, WorkSafe Victoria, Occupational Health and Safety Regulations 2007, Regulatory Impact Statement at 65. 24 Victoria, Victorian WorkCover Authority, Occupational Health and Safety (Manual Handling) Regulations 1999, Regulatory Impact Statement at 10-11, 17; see also Victoria, WorkSafe Victoria, Occupational Health and Safety Regulations 2007, Regulatory Impact Statement at 11, 36. Bell Nettle carriage of the copy paper in no way contributes to the fall. Similarly, it might include the risk of an employee furniture removalist being struck by a passing motor car while removing a heavy load from the back of a parked furniture van, in circumstances where the fact that the load is heavy in no way contributes to the exposure of the employee to the oncoming path of the motor car. Although a risk of either kind is such that an employer may otherwise be required to foresee it and, to the extent that is reasonably practicable, take care to guard against it (for example, under the general duty to provide a working environment that is safe and without risks to health in accordance with s 21 of the Act), it forces language to describe a risk of either kind as one of musculoskeletal disorder arising in the workplace associated with that hazardous manual handling task. In each case, the cause of the accident is extraneous to the task25 and the fact that the worker was undertaking a hazardous manual handling task at the time of the accident was mere coincidence. According to ordinary acceptation, the risk of the fall in the first example would be said to be associated with the dangers of a dirty floor rather than carrying the copy paper and the risk of the impact in the second example would be said to be associated with the dangers of working in close proximity to passing motor cars rather than carrying a heavy load. Given that the evident object of reg 3.1.2 is to guard against the risks of hazardous manual handling tasks, and that hazardous manual handling tasks are defined in terms of the force necessary to lift, lower, push, pull, carry, or otherwise move, hold or restrain an object, needing to be applied repetitively or for sustained periods of time, being substantial, or needing to be applied to loads that for one reason or another are unpredictable, unstable, unbalanced or difficult to hold, the natural and ordinary implication of the text of reg 3.1.2 is that it is confined to risks which arise from or, in other words, are caused by26 one or more of those hazardous manual handling task force factors. As was earlier noticed, it is not in dispute that the task of taking down the displays with the use of the step ladder was a hazardous manual handling task. It involved manual handling of unstable or unbalanced loads or loads that were 25 Cf Kavanagh v The Commonwealth (1960) 103 CLR 547 at 581-587 per Windeyer J (in dissent); [1960] HCA 25. 26 See and compare Pizzino (1982) 56 ALJR 843 at 845 per Gibbs CJ, Murphy and Wilson JJ, 846-847 per Brennan and Deane JJ; 43 ALR 16 at 20, 22-24; Francis Travel (1996) 39 NSWLR 160 at 165-167 per Gleeson CJ (Meagher and Sheller JJA agreeing at 168); Hi-Fert Pty Ltd (1998) 90 FCR 1 at 6 per Bell Nettle difficult to grasp or hold. Nor did the respondent contend that the jury could not have found that the instability or imbalance or difficulty of grasping or holding the displays caused the appellant to miss her step on the step ladder and thereby caused the musculoskeletal disorder which she alleged. On that basis, it would have been open to the jury to find that the risk of the appellant falling from the step ladder as she did in the course of carrying out the hazardous manual handling task of removing displays from a pin-board with the use of a step ladder was a risk of musculoskeletal disorder "associated with" that hazardous manual handling task within the meaning of regs 3.1.1 and 3.1.2. Reasonable practicability of identifying the risk It will be recalled that the majority of the Court of Appeal reasoned that, if the risk of injury suffered by the appellant were "associated with" the generic nature of the hazardous manual handling task of removing the displays while standing on the step ladder, it was not "reasonably practicable for an employer considering the generic task of removing light displays from pin boards using steps of the kind used by the appellant to conclude that the task would, or even might, involve hazardous manual handling"27. It was the manner in which the appellant performed the task of removing the displays while standing on the step ladder, as opposed to the generic nature of the task, which caused her to fall, and it was not reasonably practicable for the respondent to identify that the appellant might perform the task in that manner. Counsel for the respondent embraced that aspect of the majority's reasoning and attempted to support it by reference to what he described as an overriding legislative limitation of employer obligations to that which is reasonably practicably capable of achievement. He identified in particular that each of the principles of health and safety protection identified in s 4 of the Act is expressed in terms of what is reasonably practicable and that the obligation to identify risks imposed by reg 3.1.1 and the obligation to guard against risk imposed by reg 3.1.2 are expressly limited to what is reasonably practicable. In counsel's submission, those limitations yield an implication that, in order for a risk of injury to be associated with a hazardous manual handling task within the meaning of reg 3.1.1 or reg 3.1.2, it must be a risk which is reasonably practicably capable of identification and therefore, in effect, that it must be a "real risk" as opposed to a risk which, in the terms of the Shirt calculus28, a 27 Deal (2015) 45 VR 372 at 399 [145]. 28 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48 per Mason J (Stephen J agreeing at 44, Aickin J agreeing at 50); [1980] HCA 12. Bell Nettle reasonable person would brush aside as far-fetched. In counsel's submission, the risk that the appellant would carry more than one display at a time as she descended the step ladder was not a real risk but one which a reasonable person would regard as far-fetched. Accordingly, it was submitted, it was not a risk of the kind which engaged regs 3.1.1 and 3.1.2. Those submissions, and the reasoning of the majority on which they were based, face difficulties at several levels. In the first place, as has been observed, it is not in dispute that the task of taking down the displays with the use of the step ladder was a hazardous manual handling task. It involved manual handling of unstable or unbalanced loads or loads that were difficult to grasp or hold. Equally, as has been observed, it is not in dispute that it would have been open to the jury to find that it was the fact of the instability or imbalance or difficulty of grasping the displays that caused the appellant to miss her step on the step ladder and so caused the musculoskeletal disorder which she alleged. It follows that it would have been open to the jury to find that the risk of the appellant falling from the step ladder in the course of carrying out the hazardous manual handling task of removing the displays from the pin-board with the use of the step ladder was a risk of musculoskeletal disorder that arose in whole or in part from one or more of the factors which defined the task of removing the displays as a hazardous manual handling task. In the second place, while reg 3.1.1 limits an employer's obligation to identifying the risks associated with a hazardous manual handling task to the identification of risks which are reasonably practicably capable of identification, it does not assist in the comprehension of that limitation to invoke common law conceptions of reasonable foreseeability of the kind essayed in Wyong Shire Council v Shirt29. Although there may be similarities in some contexts, in others there are likely to be significant differences. The test is whether it was reasonably practicable for the respondent to identify the task of removing displays from the pin-board with a step ladder as involving hazardous manual handling. That is an objective question of fact which, in this case, was for the jury to decide. In the third place, authority makes clear that, where a task is capable of being carried out in more than one way, as it was in this case, it is the employer's responsibility so far as is reasonably practicable to identify the risks potentially associated with each way and, so far as is reasonably practicable, to guard against those risks by implementing systems calculated to constrain the employee to 29 (1980) 146 CLR 40. Bell Nettle carrying out the task in the safest way30. Accordingly, it would be contrary to principle and illogical to suppose that, simply because there were a number of possible ways in which the appellant could have carried out the task of removing the displays with the use of the step ladder, it was not reasonably practicable for the respondent to identify the risks associated with the majority if not all of those possible ways. An employer cannot escape responsibility by identifying that there is one or even a number of ways of carrying out a task which do not attract such risks and assuming, without ensuring so far as is reasonably practicable, that the task will be carried out in those ways. Unless and until the employer has done what is reasonably practicable to prevent the employee performing the task other than in the safest way, the employer will be potentially liable for breach of regs 3.1.1 and 3.1.2. In the fourth place, although it might be thought that climbing backwards down a step ladder without a clear view of the steps and at least one free hand to steady oneself is to court a degree of personal danger, the fact that an employee acts without full regard for his or her personal safety in performing an otherwise authorised task does not of itself preclude a finding that the resultant risk is one which could reasonably practicably be identified and eliminated or reduced. Here, the appellant gave evidence that she was carrying out the task after school hours and so without means of assistance from her pupils, and that she was carrying more than one display at once in order to complete the task within a reasonable time. Since the respondent had not issued the appellant with any instructions as to how she should go about the task, still less warned her that she should not proceed without assistance or that, if proceeding alone, she should only carry one display at a time, why should it not be thought that the appellant might take the risk of carrying down more than one display at once and so need to use both hands to support the displays? Finally, in that connection, it may be observed that while the test of whether it was reasonably practicable to identify and guard against the risk of the appellant falling as she did is an objective test, it is not without significance that the respondent was able to and did identify the task of putting the displays on the 30 See, eg, Smith v The Broken Hill Pty Co Ltd (1957) 97 CLR 337 at 341-343 per Taylor J (Dixon CJ, Fullagar and Kitto JJ agreeing at 339); [1957] HCA 34; Da Costa v Cockburn Salvage & Trading Pty Ltd (1970) 124 CLR 192 at 198 per Barwick CJ, 218 per Gibbs J; [1970] HCA 43; Ferraloro v Preston Timber Pty Ltd (1982) 56 ALJR 872 at 873-874; 42 ALR 627 at 629-630; Czatyrko v Edith Cowan University (2005) 79 ALJR 839 at 842-843 [12]-[13]; 214 ALR 349 at 353; [2005] HCA 14. Bell Nettle pin-board with the use of a step ladder as a task which involved hazardous manual handling31. The jury would be entitled to take that evidence into account and to ask themselves why, if the respondent were able to identify the risks associated with putting up the displays on the pin-board, it was not reasonably practicable for the respondent to identify the attendant risks of later taking them down. Conclusion and orders In the result, it should be concluded that there was evidence fit to go to the jury from which the jury could have inferred as a matter of objective fact that it was reasonably practicable for the respondent to identify the task of taking down the displays with the use of the step ladder as a task involving hazardous manual handling and reasonably practicable for the respondent to take steps to eliminate this case eventuated, of a or substantially reduce musculoskeletal disorder associated with that task. the risk, which The appeal should be allowed. The orders of the Court of Appeal should be set aside and the matter should be remitted to the Court of Appeal to be dealt with according to law. The respondent should pay the appellant's costs of this appeal and the appellant's costs of the appeal to the Court of Appeal to date. 31 See above at [20]. Part 3 of the Act prescribes general duties relating to health and safety. Part 3 commences with s 20. Section 20(1) provides: "To avoid doubt, a duty imposed on a person by this Part or the regulations to ensure, so far as is reasonably practicable, health and safety requires the person— to eliminate risks to health and safety so far as is reasonably practicable; and if it is not reasonably practicable to eliminate risks to health and safety, to reduce those risks so far as is reasonably practicable." Section 20(2) provides: "To avoid doubt, for the purposes of this Part and the regulations, regard must be had to the following matters in determining what is (or was at a particular time) reasonably practicable in relation to ensuring health and safety— the likelihood of the hazard or risk concerned eventuating; the degree of harm that would result if the hazard or risk eventuated; (c) what the person concerned knows, or ought reasonably to know, about the hazard or risk and any ways of eliminating or reducing the hazard or risk; the availability and suitability of ways to eliminate or reduce the hazard or risk; the cost of eliminating or reducing the hazard or risk." Section 21 relevantly provides as what is described in Pt 3 as a "main duty" of an employer that "[a]n employer must, so far as is reasonably practicable, provide and maintain for employees of the employer a working environment that is safe and without risks to health". Non-compliance is an offence whether or not an employee is injured as a result. Read in light of s 20, that main duty of an employer is to provide and maintain a working environment in which all workplace risks to the health and safety of employees are eliminated, and if not eliminated then reduced, so far as is reasonably practicable having regard to considerations set out in s 20(2). The duty "is to ensure that employees are not exposed to risks, rather than to prevent a particular accident"32. The calculus of considerations set out in s 20(2) makes clear that the concept of risk with which s 21 is concerned is nothing more than a finite potential for the occurrence of harm to the health or safety of an employee. The concept of risk is inherently forward looking. But it is not tied to the knowledge or understanding of an employer. An objectively identified potential for the occurrence of harm to the health or safety of an employee constitutes a risk whether or not the employer knows or ought reasonably to know about that potential. The degree of likelihood that a risk will eventuate and what the employer knows or ought reasonably to know about the risk are factors that are taken into account at the stage of determining what action on the part of the employer is reasonably practicable to eliminate or reduce the risk. The regulations in question in this appeal, regs 3.1.1, 3.1.2 and 3.1.3, were made under s 158(1)(a) of the Act, which provides for the making of regulations for or with respect to the way in which duties imposed by the Act are to be carried out. That link to s 158(1)(a) is made clear by a note in each which states "Act compliance" followed by a reference to s 21. The significance of that note is spelt out in reg 1.1.7: the note indicates that each regulation sets out the "way" in which an employer's main duty under s 21 is to be performed in relation to the "matters" and to the "extent" set out in the regulation. The context of ss 20, 21 and 158(1)(a) and reg 1.1.7 explains the focus of regs 3.1.1, 3.1.2 and 3.1.3: on a particular category of workplace activity, and on exposure to a particular category of workplace risk. The activity and the risk together define the matters in relation to which those regulations prescribe the manner in which an employer's main duty under s 21 is to be performed. The particular category of workplace activity is a sub-category of "manual handling". Specifically, the activity is manual handling that meets the particular description of "hazardous" manual handling. The definitions in reg 1.1.5 make clear that hazardous manual handling is a subset of manual handling. Manual handling encompasses any workplace activity which requires use of force by an employee to lift, lower, push, pull, carry or otherwise move, hold or restrain an object. Hazardous manual handling is manual handling which falls within any one of three descriptions. The first is manual handling which has any of a number of specified characteristics: repetitive or sustained application of force, awkward posture or movement; application of high force being an activity that it would be reasonable to expect a person in the workforce might have difficulty 32 Director of Public Prosecutions v Coates Hire Operations Pty Ltd (2012) 36 VR undertaking; or exposure to sustained vibration. The second is manual handling of live persons or animals. The third is manual handling of unstable or unbalanced loads or loads that are difficult to grasp or hold. The particular category of workplace risk is the risk of musculoskeletal disorder. The definition in reg 1.1.5 importantly limits the statutory concept of musculoskeletal disorder to harm that is causally related to manual handling in the workplace. Subject to immaterial exceptions, a musculoskeletal disorder is "an injury, illness or disease that arises in whole or in part from manual handling in the workplace, whether occurring suddenly or over a prolonged period of time". The context therefore makes plain that the purpose of regs 3.1.1, 3.1.2 and 3.1.3 is to prescribe how an employer must perform the main duty imposed by s 21 in relation to the particular matter of the risk of a musculoskeletal disorder causally related to hazardous manual handling. A construction of each regulation which would promote that purpose is to be preferred to a construction which would not33. How the regulations set out to achieve that purpose is by obliging the employer to undertake a structured sequence of actions. Those actions are indicated by the headings which form part of the regulations34: "[h]azard identification", "[c]ontrol of risk" and "[r]eview of risk control measures". First, reg 3.1.1 addresses hazard identification. The employer must, so far as is reasonably practicable, "identify any task undertaken, or to be undertaken, by an employee involving hazardous manual handling". Performance of that obligation should not be unduly complicated. What the employer must do, so far as is reasonably practicable having regard to the calculus of considerations set out in s 20(2), is nothing more than to look to the real-world tasks actually to be undertaken by an employee and to identify any such task that has a component of manual handling meeting the description of hazardous manual handling. The reference in reg 3.1.1 to a task "involving" hazardous manual handling is simply to a real-world task to be undertaken by an employee that has hazardous manual handling as a component. Next, reg 3.1.2 addresses control of risk. It imposes a three-tiered obligation. The employer must eliminate "the risk of a musculoskeletal disorder associated with a hazardous manual handling task" so far as is reasonably practicable. If it is not reasonably practicable to eliminate that risk, the employer is obliged to reduce that risk so far as is reasonably practicable by means of one 33 Section 35(a) of the Interpretation of Legislation Act 1984 (Vic). 34 Section 36(2A)(a) of the Interpretation of Legislation Act 1984 (Vic). or a combination of different risk control measures. If it is not reasonably practicable to reduce that risk by those means, the employer is obliged to control that risk by providing information, instruction or training. Determination of what is or is not reasonably practicable at each tier of the obligation is again informed by the calculus of considerations set out in s 20(2). The reference in reg 3.1.2 to "the risk of a musculoskeletal disorder associated with a hazardous manual handling task" needs to be read bearing in mind that a musculoskeletal disorder is an injury, illness or disease that is caused by manual handling, albeit that manual handling need not be the sole cause. The words "associated with" do not introduce some further or different causal connection. What the words signify is that the particular risk of a musculoskeletal disorder concerned is the risk of an injury, illness or disease caused, in whole or in part, by manual handling meeting the description of hazardous manual handling. Lastly, reg 3.1.3 addresses review of risk control measures. The employer must ensure that any risk control measures that have been implemented are reviewed, and if necessary revised, in specified circumstances. The reference in the regulation to revision of risk control measures cannot be seen to impose a free-standing obligation. The reference serves rather to emphasise that the three- tiered obligation imposed by reg 3.1.2 is ongoing. A review conducted in accordance with reg 3.1.3 might well result in reconsideration of what is or is not reasonably practicable in the performance of the obligation imposed by reg 3.1.2 by reference to changes in circumstances that have affected the calculus of considerations set out in s 20(2) since earlier risk control measures were put in place. Turning to the facts of the present case, there is no dispute that the real- world task actually undertaken by the appellant in her capacity as an employee of the respondent was fairly described as removing a light display from a pin board using a step ladder. On the evidence fully set out in the joint reasons for judgment, the jury was entitled to conclude that one of the components of that overall task – carrying the light display – constituted manual handling of an unstable or unbalanced load or a load that was difficult to grasp or hold, and therefore that the task was objectively one involving hazardous manual handling within the meaning of reg 3.1.1. That another component of the task was using the step ladder could not affect that conclusion. The respondent's Manual Handling Risk Assessment identified hanging a light display on a pin board using a step ladder as a task involving hazardous manual handling. Against that background, the jury was obviously entitled to conclude that it was reasonably practicable for the respondent to identify the corresponding task of removing a light display from a pin board using a step ladder as a task involving hazardous manual handling. Turning to the application of reg 3.1.2, the jury was entitled to conclude from the appellant's evidence that the injury she sustained to her knee was caused, at least in part, by manual handling which answered the description of hazardous manual handling – being her handling of an unstable or unbalanced load or a load that was difficult to grasp or hold. That the injury might have been caused in part by her missing her step could not affect that conclusion. Nor could it matter that the injury might not have occurred if she had handled the load in a different way. In the result, the jury was entitled to find that the risk which came home to the appellant answered the description of the risk of a musculoskeletal disorder associated with a hazardous manual handling task, and the jury was entitled to conclude that the respondent failed to meet the obligation to act so far as was reasonably practicable to reduce or control that risk. the orders proposed the the consequences of that result for the rights of the parties determined at trial will be for the Court of Appeal to determine on remitter. I agree with those orders. joint reasons for judgment,

HIGH COURT OF AUSTRALIA PRIVATE R AND PLAINTIFF BRIGADIER MICHAEL COWEN & ANOR DEFENDANTS Private R v Cowen [2020] HCA 31 Date of Hearing: 30 June 2020 Date of Judgment: 9 September 2020 ORDER Application dismissed. The plaintiff pay the second defendant's costs of the application. Representation T A Game SC and B L Jones with J Nottle for the plaintiff (instructed by Wyatts Lawyers) Submitting appearance for the first defendant S P Donaghue QC, Solicitor-General of the Commonwealth, with J E Davidson and D J Ryan for the second defendant (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Private R v Cowen Constitutional law (Cth) – Defence – Military discipline – Where plaintiff charged with assault occasioning actual bodily harm – Where plaintiff and complainant members of Australian Defence Force at time of alleged conduct – Where neither plaintiff nor complainant on duty or in uniform – Where plaintiff charged under s 61(3) of Defence Force Discipline Act 1982 (Cth) – Where s 61(3) provided defence member guilty of offence if engaged in conduct outside Jervis Bay Territory and that conduct would constitute Territory offence if it took place in Jervis Bay Territory – Where plaintiff's conduct also constituted offence under ordinary criminal law and civil courts available – Where plaintiff challenged jurisdiction of Defence Force magistrate to hear charge – Whether s 51(vi) of Constitution supported conferral of jurisdiction by Defence Force Discipline Act upon service tribunal to hear charge. Words and phrases – "Ch III court", "Ch III protections", "concurrent jurisdiction", "conferral of jurisdiction", "courts martial", "defence force discipline", "defence force magistrate", "defence power", "judicial power of the Commonwealth", "maintaining or enforcing service discipline", "military discipline", "military jurisdiction", "naval and military defence", "pre-ordinate jurisdiction of the civil courts", "service connection test", "service offence", "service status test", "service tribunal", "sufficient connection". Constitution, ss 51(vi), 68, 71, 80, 106, Ch III. Crimes Act 1900 (ACT), s 24. Defence Force Discipline Act 1982 (Cth), ss 61(3), 63. KIEFEL CJ, BELL AND KEANE JJ. The plaintiff, a member of the Australian Defence Force ("the ADF"), has been charged by the Director of Military Prosecutions ("the DMP") with one count of assault occasioning actual bodily harm. The offence is alleged to have occurred in Brisbane. The charge against the plaintiff is brought pursuant to s 61(3) of the Defence Force Discipline Act 1982 (Cth) ("the Act"). Section 61(3) of the Act provides: "A person who is a defence member or a defence civilian[1] is guilty of an offence if: the person engages in conduct outside the Jervis Bay Territory (whether or not in a public place); and engaging in that conduct would be a Territory offence, if it took place in the Jervis Bay Territory (whether or not in a public place)." Assault occasioning actual bodily harm is an offence under s 61(3) of the Act because it would be a Territory offence2 if it took place in the Jervis Bay Territory by reason of s 24 of the Crimes Act 1900 (ACT), which applies in the Jervis Bay Territory by virtue of the Jervis Bay Territory Acceptance Act 1915 (Cth)3. An offence against the Act constitutes a "service offence" that may be tried before a service tribunal established under Pt VII of the Act4. A service tribunal includes, among other things, a Defence Force magistrate5. Under s 63(1) of the Act, the consent of the Director of Public Prosecutions ("the DPP") is required for 1 The expression "defence civilian" is defined in Defence Force Discipline Act 1982 (Cth), s 3(1). The plaintiff is a defence member. The position regarding defence civilians was not the subject of argument. See definition of "Territory offence" in Defence Force Discipline Act 1982 (Cth), Jervis Bay Territory Acceptance Act 1915 (Cth), s 4A. See also Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 311-312 [3]. See definitions of "charge" and "service offence" in Defence Force Discipline Act 1982 (Cth), s 3(1). See also ss 103, 115, 129. See definition of "service tribunal" in Defence Force Discipline Act 1982 (Cth), Bell the institution of proceedings for certain offences under s 61. The consent of the DPP is not required where the charge is of an offence against s 24 of the Crimes Act. The issue before this Court is whether the power conferred on the Commonwealth Parliament by s 51(vi) of the Constitution to make laws with respect to "naval and military defence" supports the conferral of jurisdiction by the Act upon a Defence Force magistrate to try the charge against the plaintiff, given that the offence charged is also an offence under s 339 of the Criminal Code (Qld) and was allegedly committed in Queensland in a time of peace when recourse to the civil courts is available. This case presents for further consideration the vexed question as to the extent to which the defence power authorises the proscription of conduct on the part of members of the ADF and the establishment of service tribunals to hear and determine charges relating to such conduct. The Commonwealth contends that s 61(3) is wholly valid in all its applications. It was said that there is a sufficient connection between s 51(vi) of the Constitution and s 61(3) of the Act in that s 61(3) conduces to the discipline and morale of the ADF as the force responsible for the defence of the nation by requiring members of the ADF to abide by the standards of behaviour prescribed by the criminal law applicable to all citizens, and so conduces to the defence of the nation. That connection is not denied by the availability of the civil courts to hear and determine a similar charge. In the alternative, the Commonwealth argues that s 61(3) can be read down so as to apply validly to the plaintiff. It was said that in the circumstances of this particular case there is a sufficient connection between s 51(vi) and the proceedings before the Defence Force magistrate to support the hearing and determination of the particular charge against the plaintiff as an aspect of the maintenance of the discipline of the ADF as the force responsible for the defence of the nation. The plaintiff argues that the connection propounded by the Commonwealth in its primary argument is insufficient. He argues that a law authorising a proceeding against a member of the ADF for an offence against the law of the land is not reasonably necessary for the defence of the nation because the civil justice system of the State of Queensland is available to hear and determine an equivalent charge under the criminal law. While the plaintiff did not contend that civil jurisdiction must always be given primacy over the exercise of military jurisdiction, it was submitted that, on the facts of this case, the availability of the civil courts to hear the charge was the "determinative" factor as to why s 51(vi) did not support the conferral of jurisdiction on the service tribunal to hear the charge against the plaintiff. The Commonwealth's primary contention should be accepted, and the plaintiff's contention rejected. A law is within the scope of s 51(vi) if the law is Bell reasonably necessary for the good order and discipline of the ADF. That is because such a law is reasonably necessary to the defence of the nation. It is impossible to say that a law that seeks to ensure that members of the ADF observe the standards of behaviour prescribed by the law of the land cannot reasonably be regarded as conducing to the maintenance of the discipline and morale of the ADF. That the law operates concurrently with the civil justice system is no reason to reach a contrary conclusion. Because the Commonwealth's primary submission should be accepted, it is not necessary to deal with its alternative submission. It is convenient to set out a brief summary of the factual and procedural background before turning to explain these conclusions by reference to the arguments of the parties. Background On 12 June 2019, the plaintiff was charged by the DMP that on 30 August 2015, in a hotel room in Fortitude Valley, Brisbane, he assaulted the complainant, a woman with whom he had previously been in an intimate relationship. The plaintiff was and is a member of the ADF in the Australian Regular Army; the complainant was, at the time of the alleged assault, a member of the ADF in the Royal Australian Air Force. Neither was on duty or in uniform at the time of the alleged offending. The DMP alleges that the offending occurred after a birthday party held for the complainant in Fortitude Valley. The plaintiff had booked a hotel room for himself and the complainant; the complainant agreed to use the room to get ready for the party. It is alleged that throughout the course of the evening, the plaintiff made unwanted advances towards the complainant, first at the hotel room and later at a nightclub in Fortitude Valley. It is alleged that at the end of the evening, the complainant returned to the hotel room to collect her belongings. The plaintiff arrived shortly thereafter. He was heavily intoxicated and angry. When the complainant sought to order an Uber, the plaintiff threw the complainant's phone across the room, grabbed the complainant by the throat and pushed her against the wall, shaking her and yelling at her. After the complainant broke free, the plaintiff tackled her to the ground, placed his knees on her chest and choked her with both his hands until two security guards entered the room and tackled the plaintiff. The complainant is said to have been treated for bruising to her throat on 1 September 2015. In October 2017, the complainant, in the course of being debriefed in relation to an unrelated traumatic event, disclosed to a superior officer within the chain of command to which she belonged details of the incident involving the plaintiff. Her superior officer then reported it to the Joint Military Police Unit ("the Bell JMPU") and the ADF Investigative Service ("ADFIS"). As a result of that report, the complainant was interviewed by an investigating officer with the JMPU and ADFIS in relation to the incident. At this time the complainant declined to make a formal complaint, but in March or April 2018 she decided that she wished to pursue a complaint against the plaintiff. As a result, the JMPU commenced an investigation which culminated in the plaintiff being charged by the DMP. On 26 August 2019, the plaintiff appeared before the first defendant, a Defence Force magistrate, to be heard on the charge. At that time, the plaintiff objected to the Defence Force magistrate's jurisdiction to hear the charge. The Defence Force magistrate dismissed the objection. On 13 September 2019, the plaintiff commenced proceedings in the original jurisdiction of this Court pursuant to s 75(v) of the Constitution seeking a writ of prohibition against the Defence Force magistrate to prevent his hearing the charge against the plaintiff. The Defence Force magistrate Before the Defence Force magistrate, the plaintiff argued that the magistrate lacked jurisdiction6 because what was described as the "service connection" test of jurisdiction was not satisfied on the facts of the case. The Defence Force magistrate observed with regard to the "service connection" test that the assault by a member of the ADF of another member "could be said to be conduct calculated to adversely impact on the good order, discipline, morale, welfare, reputation of a service, or in this case the ADF". The Defence Force magistrate did not, however, reach a concluded view as to whether the "service connection" test was satisfied. The Defence Force magistrate considered himself bound by the decision of the Defence Force Discipline Appeal Tribunal ("the Appeal Tribunal") in Williams v Chief of Army7, in which the Appeal Tribunal approved of what was described as the "service status" test, that is, that it is sufficient to confer jurisdiction on a service tribunal that the accused was a member of the armed forces when the charged offence was allegedly committed. Williams was concerned with alleged sexual misconduct by one member of the ADF against another at a private property while both members were off duty 6 Defence Force Discipline Act 1982 (Cth), s 141(1)(b)(v). [2016] ADFDAT 3. Bell and not in uniform. The accused argued that there was an insufficient connection between the charged conduct and the maintenance of military discipline to support the exercise of jurisdiction under the Act. The Appeal Tribunal (Tracey and Hiley JJ, with whom Brereton J relevantly agreed) held that a sufficient "service connection" was established8, but that, in any event, jurisdiction would be established under the Act on the basis of the "service status" test. In this regard, Tracey and Hiley JJ said9: "In the military context, the commission of crimes by defence members, even when off duty and extraneous to their service, can reflect on their fitness, and on the reputation of the ADF as a whole. Parliament may thus decide, as it has, that any crime committed by a defence member may be prosecuted as a service offence. Moreover ... the 'service status' test has the advantage of providing a much clearer and cleaner test than that of 'service connection'. The [Act] attaches amenability to service discipline to status as a 'defence member' (and, in certain cases, a 'defence civilian'). In other words, the legislation is framed in terms of the 'service status' test. As explained above, no decision of the High Court rejects the 'service status' test, and it has never been held that, insofar as the [Act] embraces the 'service status' test, it is beyond power. Accordingly, even if the 'service connection' test were not satisfied, in the absence of any decision of the High Court precluding its acceptance, we would find jurisdiction on the basis of the 'service status' test." In the present case, the Defence Force magistrate concluded that the plaintiff's objection to jurisdiction should be dismissed on the footing that the decision of the Appeal Tribunal in Williams favoured the application of the "service status" test. The parties' contentions In this Court, the plaintiff submitted that it is not reasonably necessary for the maintenance of military discipline to make all civil offences committed by defence members subject to military jurisdiction in peacetime when the civil courts are available to deal with those offences. The plaintiff, urging the application of what was described as the "service connection" test, whereby a service tribunal 8 Williams v Chief of Army [2016] ADFDAT 3 at [38]. 9 Williams v Chief of Army [2016] ADFDAT 3 at [49]-[51]. See also at [99]. Bell may exercise jurisdiction only where the circumstances of the particular case are sufficiently connected to the military service of the accused, argued that this test is not satisfied in the circumstances of the present case. The Commonwealth submitted that the approach urged by the plaintiff is ad hoc and impressionistic, and not capable of drawing a clear line between those circumstances which present a sufficient connection to the requirements of military discipline and those which do not. It was therefore said to be unsuitable as a test to determine the existence of the jurisdiction of a service tribunal to deal with a particular case. The Commonwealth submitted that it is central to the very existence and maintenance of the ADF as a disciplined and hierarchical force10 that its members be required to observe the standard of behaviour demanded of ordinary citizens, and that those standards be enforced by service tribunals11. It was said to be self-evident that soldiers whose conduct amounts to the commission of a criminal offence manifest qualities of attitude and character that may detract from the maintenance of a disciplined and hierarchical defence force12. The Commonwealth argued that the reasonable and convenient availability of the ordinary civil courts does not deny the clear justification for the conferral of jurisdiction upon service tribunals to deal with offences amounting to breaches of the law of the land as disciplinary matters. The military authorities must be able promptly and effectively to deal with conduct that tends to disrupt the maintenance of discipline and morale within the ADF, whether or not that conduct is also a breach of the civil law. In addition, in the prosecution of service offences that pick up the ordinary criminal law, service tribunals may take into account military-specific considerations, including implications of the alleged conduct for the morale of other ADF members and the need for general deterrence of criminal behaviour within the ADF13. 10 White v Director of Military Prosecutions (2007) 231 CLR 570 at 596 [52]. See also Haskins v The Commonwealth (2011) 244 CLR 22 at 47-48 [67]. 11 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 543. 12 O'Callahan v Parker (1969) 395 US 258 at 281-282, cited in Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 329-330 [67]. 13 Office of the Director of Military Prosecutions, Director of Military Prosecutions Prosecution Policy (2015) at 7-10 [1.3]. Bell The authorities It is as well to begin a consideration of the parties' contentions with a review of the decisions of this Court in which similar questions have been agitated. In Re Tracey; Ex parte Ryan14, the jurisdiction of a Defence Force magistrate was challenged after a member of the army was charged with, among other things, making a false entry in a service document. A majority of this Court rejected the challenge to the jurisdiction of the Defence Force magistrate to hear and determine that charge. In holding that the determination of that charge by a service tribunal conduces to the defence of the nation, Mason CJ, Wilson and "[B]oth as a matter of history and of contemporary practice, it has commonly been considered appropriate for the proper discipline of a defence force to subject its members to penalties under service law for the commission of offences punishable under civil law even where the only connexion between the offences and the defence force is the service membership of the offender. Such legislation is based upon the premise that, as a matter of discipline, the proper administration of a defence force requires the observance by its members of the standards of behaviour demanded of ordinary citizens and the enforcement of those standards by military tribunals. To act in contravention of those standards is not only to break the law, but also to act to the prejudice of good order and military discipline. It is appropriate that such conduct should be punished in the interests not only of the community but of the defence force as well. There can be little doubt that in war-time or upon overseas service such considerations warrant the treatment of civil offences as service offences and it is open to the legislature to regard the position in peace-time as warranting similar treatment. Good order and military discipline, upon which the proper functioning of any defence force must rest, are required no less at home in peace-time than upon overseas service or in war-time." Their Honours concluded on this point16: "The power to proscribe such conduct on the part of defence members is but an instance of Parliament's power to regulate the defence forces and the (1989) 166 CLR 518. 15 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 543-544. 16 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 545. Bell conduct of the members of those forces. In exercising that power it is for Parliament to decide what it considers necessary and appropriate for the maintenance of good order and discipline in those forces. And Parliament's decision will prevail so long at any rate as the rule which it prescribes is sufficiently connected with the regulation of the forces and the good order and discipline of defence members." Brennan and Toohey JJ, who also rejected the challenge, said that "proceedings may be brought against a defence member or a defence civilian for a service offence if, but only if, those proceedings can reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline"17. In so saying, Brennan and Toohey JJ were at odds with the approach of Mason CJ, Wilson and Dawson JJ to the extent that their use of the word "substantially" suggests a higher threshold of validity than the approach of the plurality, and also because Brennan and Toohey JJ insisted that a case by case approach be taken to ascertaining whether s 51(vi) supports the jurisdiction of a service tribunal to hear a particular charge. The approach of Brennan and Toohey JJ in Re Tracey resembles what has been referred to as the "service connection" test. Their Honours' approach sought to provide a flexible response attuned to the circumstances of the particular case. In this regard, their Honours said with respect to the history of naval and military "The scope of disciplinary authority necessarily extended to breaches of the ordinary criminal law, but the exercise of that authority was governed by the nature of the offence, the circumstances in which the offence was committed and the place and circumstances in which the disciplinary powers were invoked. If it was not practicable and convenient for the ordinary courts to exercise their jurisdiction – a situation which existed usually in relation to offences of a specific naval or military character or in relation to civil offences committed outside the territorial jurisdiction of the ordinary courts or in relation to naval or military personnel serving outside the Crown's dominions – the disciplinary powers were exercised." 17 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 570. 18 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 563. Bell In Re Tracey19, Deane J held that in times of peace, service tribunals have jurisdiction only to deal with "exclusively disciplinary offences". Gaudron J held that "the vesting of jurisdiction in service tribunals to hear and determine service offences which are substantially the same as civil court offences cannot reasonably be regarded as appropriate and adapted to the object of control of the forces"20. In Re Nolan; Ex parte Young21, a member of the army was charged before a service tribunal with a number of offences contrary to the Act for which there were comparable offences in the Crimes Act 1914 (Cth). The jurisdiction of the service tribunal was again challenged by the accused. Mason CJ and Dawson J, adhering to the view that their Honours, together with Wilson J, had expressed in Re Tracey22, said that23: "[I]t is open to Parliament to provide that any conduct which constitutes a civil offence shall constitute a service offence, if committed by a defence member24. The proscription of that conduct is relevant to the maintenance of good order and discipline in the defence forces; so long as the rule prescribed is sufficiently connected with the regulation of the defence forces and the good order and discipline of members, it will be valid. Indeed, we do not understand how it can be suggested that the prescription of a rule of conduct to be observed by defence members, when that rule of conduct is required to be observed by the general community for the good of society, is not sufficiently connected with the regulation of the defence forces and the good order and discipline of those forces. Plainly Parliament can take the view that what is good for society is good for the regulation of the defence forces and can give effect to that view by creating service offences which are cumulative upon, rather than in substitution for, civil offences: McWaters v Day25 ... For the reasons then given [in Re Tracey], (1989) 166 CLR 518 at 585-586, 591. 20 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 602. (1991) 172 CLR 460. (1989) 166 CLR 518 at 544-545. 23 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 474-475. 24 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 545. (1989) 168 CLR 289 at 297. Bell the exercise of jurisdiction in respect of service offences by service tribunals forming part of the defence forces necessarily stands outside the operation of Ch III26." In Re Nolan27, Brennan, Deane and Toohey JJ each adhered to the views that their Honours expressed in Re Tracey. McHugh J agreed with Deane J's view in Re Tracey and Re Nolan28. Gaudron J modified her view somewhat29, but adhered to the substance of the position taken by her Honour in Re Tracey. The challenge to jurisdiction again failed, with Deane, Gaudron and McHugh JJ in dissent. In Re Tyler; Ex parte Foley30, a member of the ADF was charged before a service tribunal with dishonestly appropriating a sum of money of the Commonwealth. His conduct constituted an offence against s 47(1) of the Act, which was substantially the same as offences under both the Crimes Act 1914 (Cth) and the Crimes Act 1900 (NSW). Once again, a challenge to the jurisdiction of the service tribunal failed. Mason CJ, Brennan, Deane, Dawson, Toohey and Gaudron JJ each adhered to their Honours' earlier views31. McHugh J, although remaining convinced that the reasoning of the majority in Re Nolan and Re Tracey was wrong, held that, in the interests of uniformity of judicial decision, those cases should be followed as there was no legally relevant distinction between either of those cases and Re Tyler32. In Re Aird; Ex parte Alpert33, a member of the ADF was charged under s 61 of the Act with rape, alleged to have been committed while he was on recreational leave while posted overseas. Yet again, a challenge to the jurisdiction of the service 26 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 539-541. (1991) 172 CLR 460 at 484, 490, 493. (1991) 172 CLR 460 at 499. 29 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 498. (1994) 181 CLR 18. 31 Re Tyler; Ex parte Foley (1994) 181 CLR 18 at 26, 28-29, 34-35. (1994) 181 CLR 18 at 39-40. (2004) 220 CLR 308. Bell tribunal failed. Kirby, Callinan and Heydon JJ held that the circumstances of that case did not give rise to a sufficient "service connection", and so only their Honours' reasons turned on disapproval of what has been called the "service status" test34. The majority of the Court (Gleeson CJ, McHugh, Gummow and Hayne JJ) held that a sufficient "service connection" existed, and thus the conclusion reached by their Honours did not depend on a rejection of the "service status" test35. The significant point is that, once again, the challenge to the jurisdiction of a service tribunal failed. As McHugh J explained in Re Aird, none of the cases in the trilogy of Re Tracey, Re Nolan and Re Tyler was decided on the basis of a single "ratio decidendi"36. The plaintiff in this case argued that a majority of this Court has not expressly accepted what has been described as the "service status" test. On the other hand, no decision of the Court is inconsistent with that test. Further, to the extent that the plaintiff argued that the concurrent availability of the civil justice system for the punishment of an offence against the ordinary law of the land itself denies the sufficiency of the connection between the defence power and the impugned law, to uphold that argument would require either overruling the decisions in Re Tracey, Re Nolan and Re Tyler or confining them as authority to their own peculiar facts. Neither course is attractive, given both that the challenge to jurisdiction failed in every one of those cases, and that none of the Justices in the majority in any of them held that the concurrent availability of the civil justice system was fatal to the valid conferral of jurisdiction on a service tribunal either as a matter of principle or on the facts of each respective case. In addition, in White v Director of Military Prosecutions37, Gummow, Hayne and Crennan JJ observed that the "identification of that which is reasonably necessary to the regularity and due discipline of the defence force cannot depend simply upon the absence of any counterpart for a particular norm of conduct in the general law". It is evident that the decisions to which reference has been made do not establish a controlling principle as to the approach to determining the extent to which the defence power authorises service tribunals to deal with charges in relation to misconduct by members of the ADF. The resolution of this 34 Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 337 [90], 355-356 [153], 356 [158], 35 Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 312-313 [5], 314 [9], 324 [45]-[46], (2004) 220 CLR 308 at 321 [35]. (2007) 231 CLR 570 at 601-602 [73]. Bell unsatisfactory state of affairs should be approached by reference to the text of the Constitution, illuminated by the assistance to be had from the discussion of constitutional principle in the decisions of this Court. The defence power Section 51 of the Constitution provides: "The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: the naval and military defence of the Commonwealth and of the several States, and the control of the forces to execute and maintain the laws of the Commonwealth". Section 68 of the Constitution provides: "The command in chief of the naval and military forces of the Commonwealth is vested in the Governor-General as the Queen's representative." A discussion of the scope of the legislative powers conferred on the Commonwealth Parliament by s 51 of the Constitution must proceed on the footing that the grant of legislative power is to be construed "with all the generality that the words used admit"38. In Re Tracey39, Mason CJ, Wilson and Dawson JJ rightly said of s 51(vi) of the Constitution: "Although the Australian Constitution does not expressly provide for disciplining the defence forces, so much is necessarily comprehended by the first part of s 51(vi) for the reason that the naval and military defence of the Commonwealth demands the provision of a disciplined force or forces." 38 The Commonwealth v Tasmania (1983) 158 CLR 1 at 127-128. (1989) 166 CLR 518 at 540. Bell That s 51(vi) encompasses the making of laws regulating military discipline in peacetime as well as in wartime and at home and abroad is now well settled40. The law-making power conferred on the Parliament by s 51(vi) of the Constitution is a purposive power: laws may be made for the defence of the nation. The subject matter of the power "is not a class of transaction or activity, or a class of public service, undertaking or operation, or a recognized category of legislation, but is a purpose"41. In the reasons of the Appeal Tribunal in Williams, and in the reasons of the Defence Force magistrate in this case, the issue was framed as a contest between the "service connection" test and the "service status" test. These expressions emerged in the jurisprudence of the Supreme Court of the United States42. The former test requires a sufficient connection between the particular proceedings under challenge and military service for the conferral of jurisdiction on a service tribunal, whereas the latter test upholds the conferral of jurisdiction on a service tribunal solely on the basis of the status of the accused as a member of the armed forces43. The expressions "service connection" and "service status", while perhaps convenient shorthand, tend to distract from the question which arises in relation to the scope of s 51(vi) of the Constitution. As Griffith CJ explained in Farey v Burvett44, the test of the validity of a law purporting to be made under s 51(vi) is 40 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 544, 563-564, 570, 585; Lane v Morrison (2009) 239 CLR 230 at 251 [63], citing White v Director of Military Prosecutions (2007) 231 CLR 570. 41 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 273; see also at 192-193, 253. See also Stenhouse v Coleman (1944) 69 CLR 457 at 471; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 89. 42 O'Callahan v Parker (1969) 395 US 258; Solorio v United States (1987) 483 US 43 Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 321 [36]. (1916) 21 CLR 433 at 441. See also South Australia v The Commonwealth (1942) 65 CLR 373 at 431-432, 437, 450; Adelaide Company of Jehovah's Witnesses Inc v The Commonwealth (1943) 67 CLR 116 at 155, 162; Stenhouse v Coleman (1944) 69 CLR 457 at 464, 466; Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 199, 207, 225, 278. Bell whether the measure can reasonably be seen to conduce to the efficiency of the defence forces of the Commonwealth, and that will not be so where "the connection of cause and effect between the measure and the desired efficiency [is] so remote that the one cannot reasonably be regarded as affecting the other". To similar effect, in Marcus Clark & Co Ltd v The Commonwealth, Dixon CJ expressed the test of validity as being whether "the measure does tend or might reasonably be considered to conduce to or to promote or to advance the defence of the Commonwealth"45. If that question is answered in the affirmative in relation to the impugned law in the present case, it is valid in all its applications, and there is no occasion to consider whether the "service connection" test is satisfied in the circumstances of any particular case. The defence power and its relationship to Ch III Within Ch III of the Constitution, which vests the judicial power of the Commonwealth exclusively in the courts created by it or brought under its aegis, s 71 provides relevantly: "The judicial power of the Commonwealth shall be vested in a Federal Supreme Court, to be called the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction." Also within Ch III of the Constitution, s 80 provides: "The trial on indictment of any offence against any law of the Commonwealth shall be by jury, and every such trial shall be held in the State where the offence was committed, and if the offence was not committed within any State the trial shall be held at such place or places as the Parliament prescribes." As to the relationship between s 51(vi) of the Constitution and the provisions of Ch III of the Constitution, in R v Cox; Ex parte Smith46, Dixon J rejected the argument that to allow a court martial to try a prisoner who, having been discharged from the ADF, allegedly joined a mutiny while serving military detention would be contrary to Ch III of the Constitution. Dixon J said47: (1952) 87 CLR 177 at 216. (1945) 71 CLR 1 at 23. See also R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 at 467-468. 47 R v Cox; Ex parte Smith (1945) 71 CLR 1 at 23. Bell "In the case of the armed forces, an apparent exception is admitted and the administration of military justice by courts-martial is considered constitutional ... The exception is not real. To ensure that discipline is just, tribunals acting judicially are essential to the organization of an army or navy or air force. But they do not form part of the judicial system administering the law of the land." It may be said that this statement by Dixon J is ambiguous. Was his Honour saying that service tribunals exercise a power judicial in nature but not the judicial power of the Commonwealth? Or was he saying that service tribunals exercise a power different from judicial power but which must be exercised judicially so as to ensure that justice is done? However that ambiguity may be resolved, on one point Dixon J was clear: the system of military justice established under s 51(vi) stands distinctly outside of Ch III of the Constitution. So much is now well settled48. In Re Tracey49, Mason CJ, Wilson and Dawson JJ were clearly correct in saying: "Of course, the powers bestowed by s 51 are subject to the Constitution and thus subject to Ch III. The presence of Ch III means that, unless, as with the defence power, a contrary intention may be discerned, jurisdiction of a judicial nature must be created under Ch III and that it must be given to one or other of the courts mentioned in s 71, namely, the High Court, such other courts as the Parliament creates or such other courts as it invests with federal jurisdiction: see Reg v Davison50. That is because any body exercising such jurisdiction would be exercising judicial power of the kind contemplated by Ch III and must, therefore, form part of the judicature for which that Chapter provides. However, the defence power is different because the proper organization of a defence force requires a system of discipline which is administered judicially, not as part of the judicature erected under Ch III, but as part of the organization of the force itself. Thus the power to make laws with respect to the defence of the Commonwealth contains within it 48 Hembury v Chief of General Staff (1998) 193 CLR 641 at 648 [13], 654 [32], 656 [40], 669 [72], 673 [80]; White v Director of Military Prosecutions (2007) 231 CLR 646-648 [234]-[238], 650 [246]; Lane v Morrison (2009) 239 CLR 230 at 237 [10], (1989) 166 CLR 518 at 540-541. (1954) 90 CLR 353 at 364-365. Bell the power to enact a disciplinary code standing outside Ch III and to impose upon those administering that code the duty to act judicially." In Re Tracey, Brennan and Toohey JJ did not expressly disagree with this view; rather their Honours avoided its logical implication, that the scope of s 51(vi) was unconstrained by Ch III, by treating jurisdiction conferred on service tribunals under s 51(vi) as subordinate to that conferred on civil courts pursuant to Ch III of the Constitution51. A "secondary" jurisdiction? The plaintiff sought support in the reasons of Brennan and Toohey JJ in Re Tracey for the proposition that, even though the service tribunal system was never "within the exclusive operation of Ch III"52, Ch III establishes the primacy of the jurisdiction of the civil courts of the Commonwealth and the States respectively as a limitation upon the power conferred by s 51(vi) of the Constitution. So far as the civil courts of the Commonwealth are concerned, this proposition might be said to draw support from the language of Brennan and Toohey JJ in Re Tracey53 and Re Nolan54, where their Honours spoke of the jurisdiction exercised by service tribunals established under ss 51(vi) and 68 as "secondary" and "subordinate" to that exercised by Ch III courts. Consideration of this Court's jurisprudence since those cases shows that the support is illusory. In this regard, in Re Tracey, Brennan and Toohey JJ framed the issue as a problem of reconciling two sets of constitutional objectives55: "The first set of objectives, dictated by s 51(vi), consist of the defence of the Commonwealth and of the several States and the control of the armed forces. To achieve these objectives, it is appropriate to repose in service authorities a broad authority, to be exercised according to the exigencies of time, place and circumstance, to impose discipline on defence members and defence civilians. The second set of objectives, dictated both by Ch III and s 106 of the Constitution and by the constitutional history we have traced, consist of recognition of the pre-ordinate jurisdiction of the civil courts and (1989) 166 CLR 518 at 571. 52 White v Director of Military Prosecutions (2007) 231 CLR 570 at 598 [58]. (1989) 166 CLR 518 at 563. (1991) 172 CLR 460 at 480-482. (1989) 166 CLR 518 at 569-570. Bell the protection of civil rights which those courts assure alike to civilians and to defence members and defence civilians who are charged with criminal offences. To achieve these objectives, civil jurisdiction should be exercised when it can conveniently and appropriately be invoked and the jurisdiction of service tribunals should not be invoked, except for the purpose of maintaining or enforcing service discipline. These two sets of constitutional imperatives point to the limits of the valid operation of the [Act]. It may not impair civil jurisdiction but it may empower service tribunals to maintain or enforce discipline. Therefore proceedings may be brought against a defence member or a defence civilian for a service offence if, but only if, those proceedings can reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline." Their Honours, in seeking to reconcile these objectives, were disposed to describe the jurisdiction of Ch III courts as "pre-ordinate"56 and the system of military justice for which Parliament might provide under s 51(vi) as "a secondary system for enforcing the ordinary criminal law against naval and military personnel where it was not practicable or convenient for the ordinary courts to exercise their jurisdiction to do so"57. In light of the exegesis of the constitutional text in subsequent decisions of this Court and a better understanding of the historical context, it can now be seen that the intrusion of the "second set of objectives" referred to by their Honours into the understanding of the scope of s 51(vi) of the Constitution cannot be supported. It cannot now be maintained that the jurisdiction of the civil courts is "pre-ordinate" with that of service tribunals established by the exercise of the power conferred by s 51(vi). While there may be an area of concurrent jurisdiction between civil courts and service tribunals, there is no warrant in the constitutional text for treating one as subordinate or secondary to the other. Rather, the two are equally authorised by the Constitution58. In White59, Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ concluded that service tribunals hearing charges of offences under the Act and imposing punishments for such offences do not exercise the judicial power of the Commonwealth. Rather, such tribunals 56 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 570. 57 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 563. 58 White v Director of Military Prosecutions (2007) 231 CLR 570 at 584 [10]. (2007) 231 CLR 570 at 585-586 [12]-[14], 589 [22], 595-596 [49]-[52], 597-598 Bell exercise a power concerned with maintaining and enforcing service discipline that is derived from ss 51(vi) and 68 of the Constitution. There is therefore no occasion to regard the courts created by or brought within Ch III of the Constitution as necessarily having a jurisdiction over service personnel that is superior to service tribunals. It may be noted that in Re Tracey60, Mason CJ, Wilson and Dawson JJ expressed the obiter view that the power exercised by service tribunals under the Act is judicial power. In this, their Honours differed from Brennan and Toohey JJ, who described the power exercised by service tribunals as "sui generis"61. In Lane v Morrison62, French CJ and Gummow J were emphatic that "the only judicial power which the Constitution recognises is that exercised by the branch of government identified in Ch III". Further, Hayne, Heydon, Crennan, Kiefel and Bell JJ observed that the decisions of courts martial, which were traditionally subject to review and took effect only upon confirmation within the chain of command, lacked the final authority that usually characterises the exercise of judicial power63, and went on to observe that to say that such tribunals exercised a form of judicial power "may go no further than asserting that courts-martial act judicially64"65. The power conferred by s 51(vi) enables the apparatus of the Executive Government of the Commonwealth established under s 68 of the Constitution to exercise the authority by which the armed forces of the nation may be maintained. In Haskins v The Commonwealth66, French CJ, Gummow, Hayne, Crennan, Kiefel "Because the decisions made by courts martial and other service tribunals are amenable to intervention from within the chain of command, the steps that are taken to punish service members are taken only for the purpose of, and constitute no more than, the imposition and maintenance of discipline (1989) 166 CLR 518 at 537, 539-540, 546-547. 61 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 574. (2009) 239 CLR 230 at 248 [48]. 63 Lane v Morrison (2009) 239 CLR 230 at 256-260 [81]-[93]. 64 cf R v Cox; Ex parte Smith (1945) 71 CLR 1 at 23. 65 Lane v Morrison (2009) 239 CLR 230 at 260 [96]. (2011) 244 CLR 22 at 36 [21]. Bell within the defence force; they are not steps taken in the exercise of the judicial power of the Commonwealth." The text of the Constitution, and the guidance afforded by the judicial exegesis to which reference has been made, show clearly that it is s 68, and not Ch III, which provides the institutional framework within which the disciplinary code enacted under s 51(vi) is to be enforced. Once it is accepted, as it must be in light of these developments in the understanding of the relationship between s 51(vi) and Ch III, that the system of military justice stands distinctly outside of s 71 of the Constitution, there is no warrant to speak of the system of military justice as an exception to the position established by Ch III but somehow subordinate to it. The jurisdiction of service tribunals is not secondary to the jurisdiction of the ordinary courts; rather it is complementary to that jurisdiction for the purposes of the nation's defence. In that regard, the system of military justice pursues the specific purpose of securing and maintaining discipline within the armed forces rather than the general purpose of punishing those guilty of criminal conduct. Given that "[a] function may take its character from that of the tribunal in which it is reposed"67, and given further the long history of the exercise of disciplinary jurisdiction by service tribunals within the chain of command established under s 68 of the Constitution, it may be more accurate to say that the power so exercised is executive or administrative in character68. And it is convenient to note here that the circumstance that the decisions of service tribunals are amenable to review under s 75(v) of the Constitution "points away" from the conclusion that such tribunals exercise judicial power69. Whether service tribunals exercise judicial or administrative power, the power is required to be exercised judicially, that is to say, in accordance with the requirements of reasonableness and procedural fairness to ensure that discipline is just. This Court is invested with jurisdiction by s 75(v) of the Constitution to supervise the exercise of power by officers of the Commonwealth to ensure that their powers are exercised judicially in that sense. 67 R v Hegarty; Ex parte City of Salisbury (1981) 147 CLR 617 at 628. See also R v Quinn; Ex parte Consolidated Foods Corporation (1977) 138 CLR 1 at 8, 10-12. 68 White v Director of Military Prosecutions (2007) 231 CLR 570 at 649 [240]; Lane v Morrison (2009) 239 CLR 230 at 247 [47]. 69 Attorney-General (Cth) v Alinta Ltd (2008) 233 CLR 542 at 579 [100]. See also at Bell The defence power and its relationship to s 106 of the Constitution The plaintiff argued that because s 51(vi) is expressed to be "subject to this Constitution", and because s 106 of the Constitution continues the constitutions of the States, acceptance of the Commonwealth's contention would be contrary to s 106 of the Constitution because a service tribunal hearing and determining a charge of an offence against the law of the land is exercising judicial power and thereby usurping the judicial power of the States. Section 106 of the Constitution provides: "The Constitution of each State of the Commonwealth shall, subject to this Constitution, continue as at the establishment of the Commonwealth, or as at the admission or establishment of the State, as the case may be, until altered in accordance with the Constitution of the State." It should be said that a concern as to the civil courts of the States and service tribunals being capable of hearing and determining charges arising out of the same conduct should not be exaggerated. Section 63 of the Act serves to minimise the extent of the potential for the concurrent exercise of jurisdiction. In any event, it is commonplace in modern life that professional disciplinary bodies entertain and determine charges of misconduct that would amount to offences against the ordinary law of the land on the basis that, if proved, the misconduct warrants the removal of the offender from the practice of his or her profession, whatever punishment might be imposed on the offender by the civil courts. As noted earlier, there can be no doubt that the power exercised by service tribunals is not the judicial power of the Commonwealth70. It may well be that the decision-making power conferred on service tribunals should not be characterised as judicial power at all. But it is not necessary to accept that service tribunals do not exercise judicial power at all in order to reject the suggestion that s 106 of the Constitution precludes the conferral under s 51(vi) of power on service tribunals to hear and determine charges relating to conduct that constitutes offences within the jurisdiction of the civil courts of the States. The unanimous decision of this Court in McWaters v Day71 established that the system of military justice established under ss 51(vi) and 68 of the Constitution 70 White v Director of Military Prosecutions (2007) 231 CLR 570 at 585-586 [12]- (1989) 168 CLR 289 at 299. Bell operates concurrently with the ordinary civil jurisdiction of the States and is complementary to it. No doubt service tribunals and State courts would take account of any orders made within the other system in dealing with an offender; but to say that is not to suggest that either system purports to control the other. To seek to limit the legislative power conferred on the Parliament of the Commonwealth by s 51(vi) by reference to the co-existence of a concurrent legislative power in the States is to seek to advance an argument inconsistent with this Court's decision in Amalgamated Society of Engineers v Adelaide Steamship Co Ltd72. As has been seen, the jurisdiction of service tribunals serves the special purpose of maintaining morale and discipline within the ADF. It is this purpose that validates the Act; and that purpose is served by holding members of the ADF to the observance of the law of the land. The validating purpose of the Act means that the jurisdiction of service tribunals does not trench upon the jurisdiction of State courts. In McWaters v Day73 the Court, in a unanimous judgment, said that the disciplinary code established by the Act was "cumulative upon and not exclusive of the ordinary criminal law". Their Honours went on to say of the Act that it did "not seek to do other than enact a system of military law in accordance with the traditional and constitutional view of the supplementary function of such law74"75. The concern of Brennan and Toohey JJ in Re Tracey, which drove their identification and reconciliation of the two sets of constitutional objectives they identified, was that should76: "service tribunals ... be authorized to trespass upon the proper jurisdiction of the civil courts over defence members and defence civilians ... their civil rights would be impaired. The protection of Magna Charta and the victory of Parliament over the Royal forces which resulted in the Bill of Rights would become the unintended casualties of the Australian Constitution." (1920) 28 CLR 129. (1989) 168 CLR 289 at 297. 74 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 549. 75 McWaters v Day (1989) 168 CLR 289 at 298. (1989) 166 CLR 518 at 569. Bell To argue that the advantages of the civil justice system, such as committal proceedings and trial by jury, should not be denied to an accused citizen-soldier is to fail to appreciate that a soldier accused of an offence against the law of the land did not, as a matter of history, have the choice of a trial within the civil system. It will be necessary to refer in due course to some matters of history in relation to this point. It is true that an individual who enlists in the defence force of the Commonwealth does not cease to be a citizen with rights as such; but it is idle to deny that such an individual incurs additional responsibilities under military law. As Windeyer J said in Marks v The Commonwealth77: "The relationship of members of the armed Services to the Crown differs essentially from that of civil servants whose service is governed by the regulations of the Public Service. The members of the Forces are under a discipline that the others are not: they have duties and obligations more stern than theirs: and rights and privileges that they cannot claim." It is now recognised that these special duties and obligations may be enforced by a system of military justice established for that purpose. In White78, Gummow, Hayne and Crennan JJ said: "The identification of that which is reasonably necessary to the regularity and due discipline of the defence force cannot depend simply upon the absence of any counterpart for a particular norm of conduct in the general law79. Additional responsibilities of defence members may give to general norms of conduct a distinct and emphatic operation. This may be apt for enforcement in a system of military justice such as that established by the Act." At the time of federation, a soldier accused of an offence against the civil law had no right to trial in the civil courts. Any wish on the part of a soldier accused of a criminal offence to be tried in the civil rather than military courts depended on the ability and willingness of the civil authorities to bring a prosecution. At this point, it is convenient to refer to some historical considerations. (1964) 111 CLR 549 at 573. (2007) 231 CLR 570 at 601-602 [73]. 79 cf Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 591, 603-604. Bell Historical context The plaintiff argued that prior to federation it was never considered necessary, in either the United Kingdom or the Australian colonies, for a service tribunal to try a defence member for any conduct amounting to an ordinary civil crime committed in peacetime. It was said, citing the historical analysis of Brennan and Toohey JJ in Re Tracey80, that the Mutiny Acts and Articles of War which applied to govern discipline of the army in the United Kingdom prior to 1879 subjected to military jurisdiction only those offences of a military character; there was no military jurisdiction to try soldiers for ordinary civil offences committed in the United Kingdom in times of peace. The plaintiff argued that the policy of the Army Discipline and Regulation Act 1879 (Imp) and subsequently the Army Act 1881 (Imp), which replaced the Mutiny Acts and Articles of War, was that courts martial should not exercise jurisdiction where the civil courts were reasonably available, "especially [for offences] which would ordinarily be tried by a jury"81. It should be kept in mind that, in point of principle, historical considerations cannot limit the scope of "defence" in s 51(vi) of the Constitution82: the exigencies of national defence can be expected to change over time. That said, the plaintiff's account of the history of the jurisdiction of service tribunals fails to recognise that since the beginning of the eighteenth century and the enactment of the Mutiny Act 1718 (Imp), there has been concurrent military and civil jurisdiction over members of the armed forces of the Crown. While the exercise of ordinary civil jurisdiction was accorded temporal priority over the exercise of military jurisdiction, that depended upon the decision of the civil authorities to bring proceedings in a timely way. The historical analysis of Brennan and Toohey JJ in Re Tracey83 seems to equate the temporal priority accorded to the exercise of civil jurisdiction under the applicable legislation with an exclusion of military jurisdiction in respect of many offences against the civil law. The Mutiny Acts contemplated the exercise of military jurisdiction to punish offences against the civil law if the civil authorities chose not to act against a miscreant soldier. In addition, the suggestion by Brennan (1989) 166 CLR 518 at 559. 81 War Office, Manual of Military Law, 4th ed (1899) at 108. 82 Marcus Clark & Co Ltd v The Commonwealth (1952) 87 CLR 177 at 226. (1989) 166 CLR 518 at 554-563. Bell and Toohey JJ in Re Tracey84 that reference to the Mutiny Acts showed that "when the ordinary courts were open, there was no occasion for the exercise of martial law (or military law as it is called in modern times)" is not accurate. As Clode explained85, the exclusion in the Mutiny Acts of "martial law" in "time of peace" referred to the use of military law against the civilian population, not the enforcement of military discipline against the soldiery. Immediately prior to federation, the Army Act and the Naval Discipline Act 1866 (Imp) expressly recognised that many ordinary criminal offences committed by members of the armed forces, regardless of whether they were committed abroad or at home, posed a risk to military discipline and were therefore subject to non-exclusive military jurisdiction86. Further, by the time of federation there were laws in force in New South Wales, Victoria, South Australia, Queensland, Western Australia and Tasmania which subjected all members of the armed forces to the Army Act and the Naval Discipline Act for the duration of their enlistment87. In White, Gummow, Hayne and Crennan JJ acknowledged that the history of military justice showed that the applicable legislation had long established the concurrent exercise of jurisdiction by service tribunals and the civil courts. For their Honours88, the "decisive consideration" was that at federation, under "the applicable statutes, the legislature controlled and regulated the administration by and within the [defence] forces of disciplinary measures intended to maintain discipline and morale within the forces. That regulation proceeded not only by general reference to acts 'to the prejudice of good order and military discipline'89 but also by reference to particular acts which would constitute offences under (1989) 166 CLR 518 at 557. 85 Clode, The Military Forces of the Crown; their Administration and Government (1869), vol 1 at 143. 86 Army Act 1881 (Imp), s 41(5); Naval Discipline Act 1866 (Imp), ss 43, 45, 46. 87 Military and Naval Forces Regulation Act 1871 (NSW), s 5; Defences and Discipline Act 1890 (Vic), ss 5, 19; Defences Act 1895 (SA), s 36; Defence Act 1884 (Qld), ss 26(3), 60, 61; Defence Forces Act 1894 (WA), s 40; Defence Act 1885 (Tas), ss 28(3), 62, 63. (2007) 231 CLR 570 at 596 [52]. 89 Army Act 1881 (Imp), s 41. Bell generally applicable laws." The suggestion that military tribunals were historically active in England only where ordinary civil courts were unavailable was also rejected in Solorio v United States90. The history of the relationship between the system of military justice and the civil courts was an aspect of the struggle for supremacy between the Parliament and the Crown: the history is not of a struggle between Parliament and constitutionally guaranteed individual rights of the soldiery to trial by jury in the civil courts. Within the broader struggle between Crown and Parliament, the novel presence within England of a standing army meant that offences by soldiers against the person and property of the civilian population and the failure of military command to curb these offences led to the demands pressed by the Parliament that miscreant soldiers should be delivered up to the civil authorities to ensure that their offences did not go unpunished91. The success of Parliament over the Crown meant that the military justice system was brought under the control of Parliament, not the Crown. Parliament required that the system of military justice operate concurrently with the civil courts even in peacetime and within the United Kingdom to ensure that members of the new standing army did not become a law unto themselves. The principal concern of the victorious Parliament was that the civil courts should be available to protect the citizenry should there be reason to doubt whether the Crown was sufficiently willing to discipline its troops. Importantly, the question whether a soldier accused of a crime against the law of the land was prosecuted in a civil court was not a matter for the choice of the accused soldier. The abiding concern was that the civil justice system should be available concurrently with the military justice system as a curb on the mischiefs that might result to the civilian population from incidents of lawlessness on the part of the members of the standing army. The considerations that informed the measures established by Parliament upon its victory over the Crown remain of abiding concern today. A modern standing army, like its precursors, consists of people who are empowered with "the skills, knowledge and weaponry to apply lethal force. If Army members engage in ill-disciplined use of violence at home or at work, then Army's confidence in them to execute their duties lawfully and discriminately in circumstances of immense stress on the battlefield is deeply undermined."92 This consideration may be (1987) 483 US 435 at 442-444. 91 Grant v Gould (1792) 2 H Bl 69 at 99-100 [126 ER 434 at 450]. 92 Australian Army, The Army Family and Domestic Violence Action Plan (2016) Bell thought to be even more compelling today than during the constitutional struggles of the seventeenth and eighteenth centuries. In the long period of peace that began after the end of the Napoleonic Wars, a failure by command to deal promptly, justly and effectively with an outbreak of acts of violence or dishonesty, perhaps motivated by sectarian differences, among personnel of the Royal Navy based at Sydney Cove would have been a matter of grave local concern to be dealt with urgently. But it was unlikely to have had any immediate effect upon discipline or morale in the armed forces located elsewhere in the British Empire. Distance and the difficulties of communication meant that local incidents were likely to remain local. Even in 1989, when Re Tracey was decided, it would have been unlikely that the occurrence of acts of violence or dishonesty at Fremantle would have had any immediate effect beyond that locale on the discipline or morale of the Royal Australian Navy more generally. Today, the speed and efficiency of communications, together with the better educated and more diverse membership of the ADF, have given rise to a different milieu in which the likely effect of such disturbances upon discipline and morale within the ADF is to be assessed, and in which the legislative power in s 51(vi) of the Constitution falls to be exercised. Such disturbances, and the ADF's response to them, could be expected to be known immediately throughout the ADF, and to be the subject of concern among servicemen and servicewomen until the controversy is resolved. And the strength and urgency of this concern would hardly be less in relation to acts of violence or dishonesty committed by members of the ADF against the civilian population. Conclusion: the defence power and s 61(3) of the Act It cannot be denied that s 61(3) of the Act conduces to the discipline and morale of the ADF by requiring members of the ADF to abide by the standards of behaviour required of all citizens. That being so, s 61(3) of the Act can reasonably be seen to conduce to the efficiency of the defence forces of the nation and so to conduce to the defence of the nation. It is a wholly valid exercise of the defence power. The plaintiff, in arguing that there is not a sufficient connection between all offences committed by members of the ADF and the discipline and morale of the ADF where the offence could be dealt with by the civil courts, provided the examples of a member of the ADF driving a motor vehicle at an excessive speed while on holiday or chopping down a protected tree in his or her own backyard. Once it is accepted that it is essential to the discipline and morale of the ADF that its members are required to abide by the law of the land, these examples are not compelling. In addition, whether the jurisdiction of a service tribunal should be exercised in cases of minor offences is a question of policy for the civil and military Bell authorities; but such questions of policy should not be confused with the question of the validity of the conferral of jurisdiction. It may also be said in relation to the examples given by the plaintiff that they invoke the dissenting view of Deane J in Re Tracey93 that in times of peace the Parliament may confer jurisdiction on service tribunals to deal only with "exclusively disciplinary offences". This view, which was never accepted by a plurality in any later decision, was subject to cogent criticism by Gleeson CJ in White94 on the basis that it cannot be said of any given offence that it is "exclusively disciplinary in its nature". It is not possible to chart the metes and bounds of what is an "exclusively disciplinary offence" or an "essentially military offence" or even a "characteristically military offence". Sedition and treason are offences that may be committed by soldiers and citizens alike, in times of peace as in wartime; but it cannot sensibly be supposed that service tribunals could not be vested pursuant to s 51(vi) with jurisdiction to deal with charges of such offences against service personnel. Further, the circumstance that some offences may be trivial does not mean that their commission can have no bearing on military discipline and morale. Trivial breaches of the law of the land, if they occur frequently, may obviously have a serious bearing on discipline and morale within the defence forces. The validity of a law as enacted does not depend upon proof of and the extent of the immediate need for its enactment in proceedings for the enforcement of the law. The relevant question is whether the rule prescribed by the law is "sufficiently connected with the regulation of the forces and the good order and discipline of defence members", not whether the circumstances of a particular case have that connection95. It is only if the relevant question is answered in the negative that any occasion arises to ask whether there is a sufficient ad hoc connection. A rule that requires defence force personnel always and everywhere to abide by the law of the land is sufficiently connected with s 51(vi) because observance of the law of the land is readily seen to be a basic requirement of a disciplined and hierarchical force organised for the defence of the nation. The "service connection" test The conclusion that s 61(3) of the Act is wholly valid in all its applications means that it is strictly unnecessary to consider whether the "service connection" test is satisfied here. To note the problems that attend the "service connection" test may, however, tend to confirm and reinforce the conclusion that s 51(vi) extends (1989) 166 CLR 518 at 585-586. (2007) 231 CLR 570 at 587-588 [18]-[20]. 95 Re Tracey (1989) 166 CLR 518 at 545. Bell to authorise the enactment of s 61(3) of the Act. It is, therefore, desirable to note some of the difficulties with the "service connection" test as a test of the validity of an impugned exercise of jurisdiction. In Re Tracey, Brennan and Toohey JJ recognised that because the test that they propounded is concerned with the circumstances of each particular case, the outcome may depend upon "matters of impression and degree, especially on the needs of service discipline"96. The subjectivity of and the uncertainty attending this approach is undesirable in a test of jurisdiction. In this regard, in Re Tracey, Mason CJ, Wilson and Dawson JJ rightly noted97: "[I]t is not possible to draw a clear and satisfactory line between offences committed by defence members which are of a military character and those which are not." The subjectivity and uncertainty of the "service connection" test weighed heavily with the United States Supreme Court in rejecting that test in Solorio98. There, the dissenting view of Harlan J in O'Callahan v Parker99 was ultimately vindicated. The majority of an earlier Supreme Court in O'Callahan v Parker applied the "service connection" approach to establishing the scope of offences to which service may be appropriate. Harlan J said that the decision of the majority100: "intimates that it is relevant to the jurisdictional issue in this case that petitioner was wearing civilian clothes rather than a uniform when he committed the crimes ... And it also implies that plundering, abusing, and stealing from, civilians may sometimes constitute a punishable abuse of military position ... But if these are illustrative cases, the Court suggests no general standard for determining when the exercise of court-martial jurisdiction is permissible. Whatever role an ad hoc judicial approach may have in some areas of the law, the Congress and the military are at least entitled to know with (1989) 166 CLR 518 at 570. (1989) 166 CLR 518 at 544. (1987) 483 US 435 at 449-450. (1969) 395 US 258 at 283-284. 100 (1969) 395 US 258 at 283-284. Bell some certainty the allowable scope of court-martial jurisdiction. Otherwise, the infinite permutations of possibly relevant factors are bound to create confusion and proliferate litigation over the jurisdictional issue in each instance. Absolutely nothing in the language, history, or logic of the Constitution justifies this uneasy state of affairs". The Supreme Court of Canada in R v Stillman101 rejected the impressionistic and ad hoc approach involved in a test similar to that favoured by Brennan and Toohey JJ on the basis that it tends to blur the distinction between the existence of jurisdiction and its exercise and gives rise to conceptual and practical uncertainty. The "service connection" test is not only uncertain in its application, it is also notably unfocused and unwieldy. The plaintiff, in urging the adoption and application of the "service connection" test, submitted that the Court should have regard to the 12 factors formulated by the Supreme Court of the United States in Relford v US Disciplinary Commandant102: The serviceman's proper absence from the base. The crime's commission away from the base. Its commission at a place not under military control. Its commission within our territorial limits and not in an occupied zone of a foreign country. Its commission in peacetime and its being unrelated to authority stemming from the war power. The absence of any connection between the defendant's military duties and the crime. The victim's not being engaged in the performance of any duty relating to the military. The presence and availability of a civilian court in which the case can be prosecuted. 101 (2019) 436 DLR (4th) 193 at 236-238 [103]-[109]. 102 (1971) 401 US 355 at 365, cited with approval in Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 571 and Re Aird; Ex parte Alpert (2004) 220 CLR 308 at Bell The absence of any flouting of military authority. The absence of any threat to a military post. The absence of any violation of military property. One might add still another factor implicit in the others: The offense's being among those traditionally prosecuted in civilian courts." The conscientious application of these factors cannot be relied upon to yield an acceptable result. In Re Aird, McHugh J (with whom Gleeson CJ, Gummow and Hayne JJ agreed) held that a sufficient connection to the defence power existed despite the Relford factors pointing "strongly against" that conclusion103. His Honour said104: "[T]he twelve factors listed in Relford cannot be regarded as an exhaustive indicia of what constitutes a 'service connection'. In any event, as Brennan and Toohey JJ pointed out in Re Tracey, a service connection is evidence of but not definitive of what is necessary to maintain discipline and morale in the armed forces." In the dissenting judgment of Marshall J in Solorio105, it was held that the "service connection" test was not satisfied in that case because the crimes of the petitioner "posed no challenge to the maintenance of order in the local command"106 even though the crimes in question involved the sexual abuse of two young daughters of fellow servicemen assigned to the same command as the petitioner. Stevens J suggested in Solorio107 that this conclusion was "most surpris[ing]". Some might think that is something of an understatement. As 103 (2004) 220 CLR 308 at 314 [9], 324 [45], 325 [49], 356 [156]. 104 Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 324 [45]. 105 (1987) 483 US 435 at 462-465. 106 (1987) 483 US 435 at 463. 107 (1987) 483 US 435 at 451. Bell McHugh J (with whom Gleeson CJ, Gummow and Hayne JJ agreed) said in Re Aird108: "A soldier who rapes another person undermines the discipline and morale of his army. He does so whether he is on active service or recreation leave." That a judge as eminent as Marshall J could reach such a surprising conclusion in the application of the "service connection" test (and also garner the concurrence of Brennan and Blackmun JJ in so doing) tends to confirm that the vagaries of the "service connection" test are too great a price to pay for its only apparent merit, which is the flexibility it brings to the resolution of the problem of concurrent jurisdiction. The majority of the Supreme Court in that case concluded as much109. Conclusion and orders Section 61(3) of the Act is valid in all its applications. The plaintiff's application should be dismissed. The plaintiff must pay the second defendant's costs of the application. 108 (2004) 220 CLR 308 at 314 [9], 324 [45], 325 [49], 356 [156]. 109 Solorio v United States (1987) 483 US 435 at 448-451. My opinion is that s 61(3) of the Defence Force Discipline Act 1982 (Cth) ("the Act") is supported by s 51(vi) of the Constitution in all its applications to conduct of defence members. These reasons explain how I form that opinion and why I choose to give effect to that opinion rather than to perpetuate constitutional uncertainty. Section 51(vi) of the Constitution confers power on the Commonwealth Parliament to make laws with respect to "the naval and military defence of the Commonwealth and of the several States, and the control of the forces to execute and maintain the laws of the Commonwealth". The power "is not limited to defence against aggression from a foreign nation", "is not limited to external threats", "is not confined to waging war in a conventional sense of combat between forces of nations" and "is not limited to protection of bodies politic as distinct from the public"110. The multifaceted nature of the power combined with the multifariousness of the circumstances of time and place in respect of which the power can be invoked, or might be sought to be invoked, have been experienced through the vicissitudes of two world wars, a "cold war", and most recently a "war on terror", to generate tension between maintenance of the federal system of government established by the Constitution and protection of that system of government through the exercise of the power. The tension has been shown in practice to be incapable of being resolved "by the application of any mechanical hard and fast rule"111. Mindful of the difficulties experienced in the outworking of the power, I decline the invitation of the Solicitor-General of the Commonwealth to formulate a "test" for the sufficiency of the connection of s 61(3) of the Act with s 51(vi) of the Constitution at the level of abstraction of asking whether the law is "'capable of being reasonably considered to be appropriate and adapted to achieving' its constitutional purpose"112. Equally, I decline the invitation on behalf of Private R to formulate a rival "test" for the sufficiency of that connection in the more 110 Thomas v Mowbray (2007) 233 CLR 307 at 324 [7]. 111 R v Foster (1949) 79 CLR 43 at 83; The Illawarra District County Council v Wickham (1959) 101 CLR 467 at 485. 112 Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 38 [57], quoting The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 259. stringent terms of "reasonable necessity"113. Nor do I look to derive concrete assistance from judicial pronouncements highlighting the breadth and flexibility of the practical application of the power to control civilian activity in a time of conventional war114 or in a time of apprehended external danger short of conventional war115. Not wishing to add to the multiplicity of views expressed over the past three decades on the topic of the capacity of the power conferred by s 51(vi) of the Constitution to support the system of defence force discipline established by the Act, I reach the conclusion that s 61(3) of the Act is supported by s 51(vi) in all its applications to defence members adopting the reasoning of Mason CJ, Wilson and Dawson JJ in Re Tracey; Ex parte Ryan116 as reiterated in Re Nolan; Ex parte Young117 in light of the unanimous decision in McWaters v Day118. In short, that reasoning is as follows: (a) within the reference in the first part of s 51(vi) to "the naval and military defence of the Commonwealth" is "necessarily comprehended" power to make provision for the good order and discipline of the defence force, because naval and military defence "demands the provision of a disciplined force or forces"119; in making provision for the good order and discipline of the defence force, it is open to Parliament in the exercise of the power to enact a "code of disciplinary conduct" binding on defence members and to provide for that 113 cf Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 226; White v Director of Military Prosecutions (2007) 231 CLR 570 at 601-602 [73]. 114 eg Farey v Burvett (1916) 21 CLR 433 at 441; Stenhouse v Coleman (1944) 69 CLR 457 at 471-472; Australian Communist Party v The Commonwealth (1951) 83 CLR 115 eg Marcus Clark & Co Ltd v The Commonwealth (1952) 87 CLR 177 at 215-219. 116 (1989) 166 CLR 518 at 540-541, 545, 547. 117 (1991) 172 CLR 460 at 474-475. 118 (1989) 168 CLR 289 at 297-298. 119 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 540. code to be "administered judicially, not as part of the judicature erected under Ch III, but as part of the organization of the force itself"120; subject to one significant limitation, in framing a code of disciplinary conduct "it is for Parliament to decide what it considers necessary and appropriate for the maintenance of good order and discipline" and "Parliament's decision will prevail so long at any rate as the rule [of conduct] which it prescribes is sufficiently connected with the regulation of the forces and the good order and discipline of defence members"121; the one significant limitation is that the power to enact a code of disciplinary conduct does not extend to permit Parliament to prescribe a rule of conduct for defence members that is in substitution for, as distinct from cumulative upon, ordinary criminal law122; subject to that limitation, prescription by Parliament of a rule of conduct that defence members act always and everywhere in conformity with the ordinary criminal law (defined in terms of the ordinary criminal law applicable within a designated geographical area of Australia) is sufficiently connected with regulation of the forces and the good order and discipline of defence members123; the prescription by s 61 of the Act of the rule that defence members act always and everywhere in conformity with the ordinary criminal law applicable within a specified Territory operates subject to that limitation so as to be supplementary to and not exclusive of ordinary criminal law, and the rule is for that reason supported in all its applications124. 120 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 541. 121 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 545. 122 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 547; McWaters v Day (1989) 168 CLR 289 at 297; Re Nolan; Ex parte Young (1991) 172 CLR 460 at 475. 123 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 545. See also Re Nolan; Ex parte Young (1991) 172 CLR 460 at 474-475. 124 McWaters v Day (1989) 168 CLR 289 at 297-299; Re Nolan; Ex parte Young (1991) 172 CLR 460 at 475. them are "established principles The Constitution is "an instrument framed in accordance with many traditional conceptions"125. Amongst concerning the position of the armed forces in the community"126. The limitation on the legislative power conferred by the first part of s 51(vi), recognised by Mason CJ, Wilson and Dawson JJ in step (d) and applied in steps (e) and (f) to uphold the validity of s 61 of the Act as a rule of conduct binding on defence members in addition to their obligations under the ordinary criminal law, reflects one of those established principles. The limitation is a translation into the Australian federal system of what Professor Albert Venn Dicey described as "[t]he fixed doctrine of English law ... that a soldier, though a member of a standing army, is ... subject to all the duties and liabilities of an ordinary citizen"127. Although of no present moment, I do not understand steps (c) to (f) in the reasoning of Mason CJ, Wilson and Dawson JJ concerning the scope of the power of Parliament to enact a code of disciplinary conduct binding on defence members to depend on the continuation of the method of enforcement of that code of disciplinary conduct identified in step (b). In particular, I see no reason why the conclusion that s 61 of the Act is within the scope of the power to enact a code of disciplinary conduct would not continue to be reached by the same steps whether the Act were to continue to provide under s 51(vi) of the Constitution for the hearing and determination of charges of service offences by service tribunals operating within the chain of defence force command and outside Ch III of the Constitution, as it did at the time of Re Tracey and as it does again now128, or whether the Act were to be amended, as one day well it might129, to provide under s 71 and s 77(i) of the Constitution for the hearing and determination of some or all charges of service offences by a court or courts operating outside the chain of defence force command and within Ch III of the Constitution. The argument for Private R is grounded in the markedly different approach expounded by Brennan and Toohey JJ in Re Tracey and Re Nolan. That approach focused less on the scope of the power conferred by s 51(vi) of the Constitution to 125 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193. 126 The Illawarra District County Council v Wickham (1959) 101 CLR 467 at 503. 127 Introduction to the Study of the Law of the Constitution, 10th ed (1959) at 300-301, quoted in Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 546. 128 cf Haskins v The Commonwealth (2011) 244 CLR 22 at 30 [1], 36 [22], explaining Lane v Morrison (2009) 239 CLR 230. 129 cf White v Director of Military Prosecutions (2007) 231 CLR 570 at 593 [40], 595 support a rule of conduct for defence members than on the scope of that power to support the conferral of jurisdiction to try and punish in contravention of that rule of conduct on a service tribunal operating outside Ch III of the Constitution. Their Honours explained the conclusion reached adopting that different approach in terms of the reconciliation of competing constitutional imperatives. On the one hand was the objective "dictated by s 51(vi)" to "repose in service authorities a broad authority, to be exercised according to the exigencies of time, place and circumstance, to impose discipline on defence members" within the chain of defence force command and outside Ch III of the Constitution. On the other hand was the objective "dictated both by Ch III and s 106 of the Constitution", as well as by "constitutional history", to recognise "the pre-ordinate jurisdiction of the civil courts and the protection of civil rights which those courts assure alike to civilians and to defence members ... who are charged with criminal offences"130. The reconciliation of those competing constitutional imperatives was seen by their Honours to lie in recognising that "the relevant power conferred by s 51(vi) does not extend to the making of a law to punish defence members ... unless the proceedings taken in order to punish them can reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline"131. The "distributive operation" of the Act was accordingly to be confined by s 15A of the Acts Interpretation Act 1901 (Cth) "so that the jurisdiction conferred on service tribunals is available for exercise only on occasions when there is constitutional support for its exercise"132. With great respect, I am unable to accept that the second of the constitutional imperatives identified by their Honours truly arises once full weight is given to the limitation that a rule of conduct for a defence member prescribed under s 51(vi) can only ever be cumulative upon ordinary criminal law. Subject to an exception I will mention, I cannot see how an exercise of jurisdiction by a service tribunal to try and punish a breach of a supplementary rule of conduct imposed on a defence member can impair the jurisdiction of any State court that is protected by s 106 of the Constitution or can impair any civil right that is assured by Ch III to that defence member or to anyone else who might be charged with an ordinary criminal offence. The exception is that trial or punishment of a service offence by a service tribunal must always have the potential to operate as a practical impediment to the conduct of a criminal proceeding or the imposition 130 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 569-570. 131 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 484. 132 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 485. of a criminal punishment, if for no other reason than that one person cannot be physically in two places at the same time. But their Honours did not formulate their constitutional limitation on the jurisdiction of service tribunals to address the potential for an actual exercise of jurisdiction by a service tribunal to impede an actual exercise of jurisdiction by a civil court. No suggestion appearing in their Honours' reasoning that an exercise of jurisdiction by a service tribunal cannot reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline merely because the defence member might be tried and punished for the same or other conduct as a criminal offence in a civil court133, the potential for practical impediment of an exercise of jurisdiction by a civil court must remain even if their formulated limitation is applied. Nor can I see in the pre-federation constitutional history recounted by their Honours a firm foundation for the emergence of a constitutional principle or constitutional practice of confining the jurisdiction of naval and military tribunals to try and punish disciplinary offences by members of the naval and military forces in order either to preserve the pre-eminence of the jurisdiction of civil courts or to safeguard the concomitant civil rights of persons charged with ordinary criminal offences. In the working out of the constitutional settlement of the seventeenth century by which the Imperial Parliament wrested control over the naval and military forces from the Crown, the "great constitutional dogma"134 came to be expressed in the recital in the preamble to the annual Mutiny Acts that "no man may be forejudged of life or limb, or subjected in time of peace to any kind of punishment by martial law, or in any other manner than by the judgment of his peers and according to the known and established laws of the realm"135. But annual Mutiny Acts early acknowledged a prerogative power in the Crown136, and were later taken to confer statutory power on the Crown137, both to establish Articles of War for the "better government" of the forces and to constitute courts-martial with power to try any offence against those Articles of War. Experience to the end of the eighteenth century had taught not only that "there is nothing so dangerous to the civil establishment of a state, as a licentious and undisciplined army" but also that "[a]n undisciplined soldiery are apt to be too many for the civil power" and 133 See Re Nolan; Ex parte Young (1991) 172 CLR 460 at 488-489; Re Tyler; Ex parte Foley (1994) 181 CLR 18 at 28-32. 134 R v Nelson and Brand (1867) Special Report at 68. 135 Preamble as quoted in Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 557. 136 Mutiny Act 1718 (Imp). 137 See War Office, Manual of Military Law, 4th ed (1899) at 17-18 [31]-[32]; Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 559. that it is "under the command of officers ... answerable to the civil power, that they are kept in good order and discipline"138. I can agree with Brennan and Toohey JJ that the scope of naval and military discipline by the time of federation "reflected the resolution of major constitutional controversies" and that, in accordance with the resolution that had been reached, members of the naval and military forces were subjected to "the processes of the ordinary courts" from which the exercise of disciplinary authority "did not derogate"139. But I cannot agree that the historical record justifies characterisation of subjection of naval and military personnel to the jurisdiction of civil courts as the "primary" mechanism by which naval and military discipline was achieved140. And I cannot agree that the systems of discipline administered within the naval and military chains of command were each properly characterised in terms of "a system for punishing breaches of the laws peculiarly applicable to those forces" combined with "a secondary system for enforcing the ordinary criminal law against naval and military personnel where it was not practicable or convenient for the ordinary courts to exercise their jurisdiction to do so"141. What I think is relevantly to be drawn from the pre-federation constitutional history beyond the "fixed doctrine of English law" described by Professor Dicey and recognised in the reasoning of Mason CJ, Wilson and Dawson JJ is the emergence by at least the second half of the nineteenth century of a firm perception that compliance by naval and military personnel with the ordinary criminal law was itself so important to the good order of the naval and military forces as to justify imposition and enforcement of that norm as a matter of naval and military discipline irrespective of whether civil court enforcement of the ordinary criminal law against non-compliant naval and military personnel was practicable or convenient. So much was evident in the terms of s 41(5) of the Army Act 1881 (Imp), as qualified by the proviso in s 41(b) but not by the proviso in s 41(a)142. To the duties and liabilities imposed on members of the naval and military forces in their capacities as ordinary citizens by the ordinary criminal law enforceable through the ordinary system of civil courts, had been added co-extensive and concurrent duties and liabilities imposed on them in their capacities as members 138 Grant v Gould (1792) 2 H Bl 69 at 99-100 [126 ER 434 at 450]. 139 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 562-563. 140 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 562. 141 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 563. 142 Set out in Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 560-561. See also ss 43, 45 and 46 of the Naval Discipline Act 1866 (Imp). of those forces enforceable through the systems of discipline administered within the naval and military chains of command. Unable to accept the second of the constitutional imperatives identified by Brennan and Toohey JJ in Re Tracey and Re Nolan, I am unable to accept either the need for the reconciliation in which their Honours engaged or the result of that reconciliation. The only relevant limitation on the legislative power conferred by s 51(vi) of the Constitution, in my opinion, is that identified by Mason CJ, Wilson Following the example of the majority in Re Aird; Ex parte Alpert143, this case might well be resolved without choosing between the approach of Mason CJ, Wilson and Dawson JJ and the approach of Brennan and Toohey JJ on the basis that trial and punishment by a service tribunal of the specific conduct with which Private R has been charged under s 61(3) of the Act (amounting to an assault by one defence member on another defence member) would satisfy the additional limitation on legislative power identified by Brennan and Toohey JJ in any event. To dispose of this case on that basis would comport with the practice of this Court of declining to answer a constitutional question absent a state of facts making answering that question necessary in order to determine a right or liability in issue144. The practice, however, is founded on prudential considerations145 which do not inevitably weigh in favour of a conclusion that leaving a constitutional issue unresolved is best. To adopt the practice here would add to a longstanding constitutional controversy which has repeatedly been thrown up as a practical problem in the administration of the Act and which would likely continue to be a practical problem unless and until resolved by definitive judicial pronouncement. After three decades of reflection and debate, everything that can be said has been said and nothing would be achieved by putting off its resolution to another case. Section 61(3) of the Act prescribes a rule of conduct for defence members − compliance with the ordinary criminal law − that is conducive to the good order and discipline of the defence force and that is supplementary to the ordinary criminal law. The time has come when it should be determined once and for all that trial and punishment of a contravention of that rule is within the jurisdiction validly conferred by the Act on a service tribunal operating within the chain of defence force command and outside Ch III of the Constitution, without any added requirement that the particular exercise of jurisdiction by the service tribunal be 143 (2004) 220 CLR 308 at 314 [9], 323-324 [42]-[43], 325 [49], 356 [156]. 144 Knight v Victoria (2017) 261 CLR 306 at 324 [32], quoting Lambert v Weichelt (1954) 28 ALJ 282 at 283. 145 Clubb v Edwards (2019) 93 ALJR 448 at 465-466 [34]-[36], 479-480 [135]-[138]; 366 ALR 1 at 15, 33-34. able to be reasonably regarded as substantially serving the purpose of maintaining or enforcing service discipline. Taking and choosing now to act on the view that s 61(3) of the Act is supported in all its applications to conduct of defence members, I agree with the orders proposed by Kiefel CJ, Bell and Keane JJ. Nettle 110 NETTLE J. I agree in the orders proposed by the plurality but not with their Honours' reasoning. Judicial power Previous decisions of this Court establish that the power exercised by service tribunals is judicial power, albeit of a kind that is placed outside the "law of the land" and thus outside the requirements of Ch III of the Constitution. In R v Bevan; Ex parte Elias and Gordon, in which this Court first upheld the constitutionality of military service tribunals, Starke J stated146 that, although courts martial under the Naval Discipline Act 1866 (Imp) exercised judicial power, being that "power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property", they were not exercising "the judicial power of the Commonwealth" within the meaning of s 71 of the Constitution. His Honour relied147 on decisions of the United States Supreme Court establishing that the power of courts martial was "entirely independent" of the judicial power of the United States established under its constitution. In R v Cox; Ex parte Smith, Dixon J observed148: "In the case of the armed forces, an apparent exception is admitted and the administration of military justice by courts-martial is considered constitutional149. The exception is not real. To ensure that discipline is just, tribunals acting judicially are essential to the organization of an army or navy or air force. But they do not form part of the judicial system administering the law of the land." 146 (1942) 66 CLR 452 at 466, 467-468, quoting Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 357 per Griffith CJ. 147 Bevan (1942) 66 CLR 452 at 467, referring to Dynes v Hoover (1858) 61 US 65, Kurtz v Moffitt (1885) 115 US 487, Willoughby, The Constitutional Law of the United States, 2nd ed (1929), vol 3 at 1542 and Willis, Constitutional Law of the United States (1936) at 447. 148 (1945) 71 CLR 1 at 23. 149 Bevan (1942) 66 CLR 452 at 467, 468 per Starke J, 481 per Williams J. Nettle It has been suggested150 that Dixon J's observation was ambiguous. But if so, it has not previously been taken to mean that service tribunals do not exercise judicial power. In Re Tracey; Ex parte Ryan, Mason CJ, Wilson and Dawson JJ considered151 it to be uncontroversial that service tribunals exercise judicial power, observing that "[t]here has never been any real dispute about that", and that, rather, the "real question" was whether such tribunals exercise the judicial power of the Commonwealth under Ch III of the Constitution. Their Honours went on to observe152 that, because "the proper organization of a defence force requires a system of discipline which is administered judicially, not as part of the judicature erected under Ch III, but as part of the organization of the force itself", "the power to make laws with respect to the defence of the Commonwealth contains within it the power to enact a disciplinary code standing outside Ch III and to impose upon those administering that code the duty to act judicially". Likewise, Brennan and Toohey JJ were unambiguously of the view153 that service tribunals exercise judicial power, but not "the judicial power of the Commonwealth". Their Honours reiterated154 that it was "not open to doubt" that the functions performed by a military tribunal are judicial in character. Deane J, too, was clear that Dixon J's statement in Cox should not be taken to mean that Commonwealth service tribunals do not exercise judicial power. As his Honour explained155: "A Commonwealth military tribunal is a Commonwealth instrumentality acting under the authority of Commonwealth law. When such an instrumentality so acting exercises powers of trial and punishment of a person charged with an offence against a law (albeit a military law) of the 150 Reasons of Kiefel CJ, Bell and Keane JJ at [46]. 151 (1989) 166 CLR 518 at 540. 152 Re Tracey (1989) 166 CLR 518 at 541. 153 Re Tracey (1989) 166 CLR 518 at 572. 154 Re Tracey (1989) 166 CLR 518 at 572, referring to R v Army Council; Ex parte Sandford [1940] 1 KB 719 at 725 per Goddard LJ and Attorney-General v British Broadcasting Corporation [1981] AC 303 at 342 per Lord Salmon, 360 per Lord Scarman. 155 Re Tracey (1989) 166 CLR 518 at 582-583. Nettle Commonwealth, it is exercising powers which are judicial in character156 and which appertain to the Commonwealth. That being so, the legal rationalization of any immunity of those powers from the net cast by Ch III of the Constitution does not lie in a denial of their intrinsic identity either as judicial power or as part of the judicial power of the Commonwealth. Nor does it lie in reversing the express words of the Constitution and making Ch III 'subject to' s 51(vi) with the consequence that the Parliament has legislative authority to confer upon military tribunals any judicial powers whose conferral might reasonably be seen as appropriate and adapted for the purposes of defence. The legal rationalization of such immunity can only lie in an essentially pragmatic construction of the reference to 'the judicial power of the Commonwealth' in Ch III to exclude those judicial powers of military tribunals which have traditionally been seen as lying outside what Dixon J described as 'the judicial system administering the law of the land'157." (emphasis added) In Re Nolan; Ex parte Young, this Court again confirmed158 that the jurisdiction of service tribunals is supported by s 51(vi) of the Constitution as an "apparent exception" to Ch III. Gaudron J, though dissenting in the result, observed159: "It may not yet be possible to define 'judicial power' in a way that is 'at once exclusive and exhaustive'160. But, it is beyond dispute that the power to determine whether a person has engaged in conduct which is forbidden by law and, if so, to make a binding and enforceable declaration as to the consequences which the law imposes by reason of that conduct lies at the heart of exclusive judicial power. The power which the Act confers on service tribunals to hear and determine service offences is a power of that kind. Indeed, I do not understand the judgments in Re Tracey or the arguments in this case to suggest otherwise. Rather, as I understand it, it is said that the power which the Act confers on service tribunals stands outside Ch III because it is a power exercised over persons subject to military 156 See, eg, R v "Daily Mail"; Ex parte Farnsworth [1921] 2 KB 733; Attorney-General v British Broadcasting Corporation [1981] AC 303 at 360 per Lord Scarman. 157 Cox (1945) 71 CLR 1 at 23. 158 (1991) 172 CLR 460 at 474-475 per Mason CJ and Dawson J, 479 per Brennan and 159 Re Nolan (1991) 172 CLR 460 at 497. 160 R v Davison (1954) 90 CLR 353 at 366 per Dixon CJ and McTiernan J. Nettle discipline, and, for historical and practical reasons, military authorities have long exercised a power, like judicial power, over those persons." In a similar vein, in Re Aird; Ex parte Alpert, Kirby J acknowledged161 that the authorities established acceptance of a "legitimate ambit for service justice, including in peacetime, comprising a form of 'judicial power' outside Ch III". Subsequently, in White v Director of Military Prosecutions, a majority of the Court re-endorsed162 the view that, although the power exercised by service tribunals is not "the judicial power of the Commonwealth", it is judicial power. Gleeson CJ characterised163 Dixon J's statement in Cox – that service tribunals "do not form part of the judicial system administering the law of the land" – as echoing Starke J's observation in Bevan that "the Supreme Court of the United States had held that courts martial form no part of the judicial system of the United States". His Honour embraced164 the language of Brennan and Toohey JJ in Re Tracey, reasoning that "history and necessity combine to compel the conclusion, as a matter of construction of the Constitution, that the defence power authorises Parliament to grant disciplinary powers to be exercised judicially by officers of the armed forces and, when that jurisdiction is exercised, 'the power which is exercised is not the judicial power of the Commonwealth; it is a power sui generis which is supported solely by s 51(vi) for the purpose of maintaining or enforcing service discipline'". Likewise, the plurality of Gummow, Hayne and Crennan JJ concluded165 that the power exercised by service tribunals is judicial power, albeit that it would be contrary to the decisions in Bevan and Cox to conclude that military tribunals necessarily exercise "the judicial power of the Commonwealth". Only Callinan J was of the opinion that the power of service tribunals is executive power, being "an aspect of the defence and executive powers outside Ch III of the 161 (2004) 220 CLR 308 at 343 [110]. 162 (2007) 231 CLR 570 at 585-586 [12]-[14] per Gleeson CJ, 595-596 [50]-[51] per Gummow, Hayne and Crennan JJ. 163 White (2007) 231 CLR 570 at 585 [13]. 164 White (2007) 231 CLR 570 at 586 [14]. 165 White (2007) 231 CLR 570 at 595-596 [50]-[51]. Nettle Constitution"166 that "should still be exercised, so far as is reasonably possible, in a proper and judicial way"167. Granted, in Lane v Morrison, French CJ and Gummow J conjectured168 that Starke J's statement in Bevan could be explained by an historical and misguided tendency to fail to distinguish between the obligation of an administrative body to "act judicially" and "the well-settled notion of exercising judicial power"169. Their Honours posited170 that such phraseology was apt to obscure the fact that "the only judicial power which the Constitution recognises is that exercised by the branch of government identified in Ch III". But that was not the view of the plurality comprised of Hayne, Heydon, Crennan, Kiefel and Bell JJ. The constitutional question presented for resolution was whether the Australian Military Court ("the AMC") established by s 114 of the Defence Force Discipline Act 1982 (Cth) exercised the judicial power of the Commonwealth. The Commonwealth had argued that the functions performed by service tribunals previously adjudicated upon involved an exercise of judicial power that was not the judicial power of the Commonwealth171. The plurality did not reject that proposition. Rather to the contrary, their Honours observed172 only that "reference to the exercise of a species of judicial power that is not the judicial power of the Commonwealth does not assist the resolution of the issue in this case", because, by purporting to situate the AMC outside the chain of command that had ensured that service tribunals the subject of the prior regime were subject to review and confirmation, the decisions of the AMC were ostensibly given "binding and authoritative" effect and, therefore, the AMC was impermissibly invested with the judicial power of the 166 White (2007) 231 CLR 570 at 650 [244]. 167 White (2007) 231 CLR 570 at 649 [240]. 168 (2009) 239 CLR 230 at 247-248 [47]-[48], referring to Kioa v West (1985) 159 CLR 550 at 583-584 per Mason J and Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 365-366 per Deane J. 169 Quoting Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 365-366 170 Lane (2009) 239 CLR 230 at 248 [48]. 171 Lane (2009) 239 CLR 230 at 255 [78] per Hayne, Heydon, Crennan, Kiefel and 172 Lane (2009) 239 CLR 230 at 255 [78], 260-261 [96]. Nettle Commonwealth173. The provisions creating the AMC thus fell outside s 51(vi), which, as French CJ and Gummow J observed174, does not support the existence of a system of "legislative courts" akin to the tribunals existing in the United States. To the same effect, in Haskins v The Commonwealth, six members of the High Court stated175: "Legislation permitting service tribunals to punish service members has been held to be valid on the footing that there is, in such a case, no exercise of the judicial power of the Commonwealth. Punishment of a member of the defence force for a service offence, even by deprivation of liberty, can be imposed without exercising the judicial power of the Commonwealth. Because the decisions made by courts martial and other service tribunals are amenable to intervention from within the chain of command, the steps that are taken to punish service members are taken only for the purpose of, and constitute no more than, the imposition and maintenance of discipline within the defence force; they are not steps taken in exercise of the judicial power of the Commonwealth." It follows that, apart from the obiter observations of French CJ and Gummow J, Lane and Haskins do not support the proposition that service tribunals do not exercise judicial power176. Nor should their Honours' observations in that respect be regarded as persuasive; for they fail to account for the reality that the Constitution does recognise other forms of judicial power the ultimate source of which is Commonwealth legislative power177. Lane and Haskins establish that, should Parliament wish to create a service body with the character of a Ch III court, the body must be constituted as a Ch III court. The exercise of judicial power by a service tribunal is distinguishable from that of "the judicial power of the 173 Lane (2009) 239 CLR 230 at 261 [97]-[98] per Hayne, Heydon, Crennan, Kiefel and 174 Lane (2009) 239 CLR 230 at 243 [30]. 175 (2011) 244 CLR 22 at 36 [21] per French CJ, Gummow, Hayne, Crennan, Kiefel 176 cf reasons of Kiefel CJ, Bell and Keane JJ at [52]-[53]. 177 See, eg, North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 613-617 [104]-[118] per Gageler J, 635-637 [174]-[181] per Keane J, citing Spratt v Hermes (1965) 114 CLR 226 at 242-243 per Barwick CJ, 251 per Kitto J, 260-261 per Taylor J, 266 per Menzies J, 278 per Windeyer J, 282 Nettle Commonwealth" only so long as the tribunal is of a military character, and, therefore, imbuing such a body with too many trappings of a Ch III court is apt to blur the distinction to an intolerable extent178. That reasoning is consistent with, and does not evince an intention to overturn, the longstanding recognition that the exercise of military discipline involves an exception to the exclusive exercise of judicial power by Ch III courts179. Moreover, with all respect to those who take a different view, I see little of substance to be gained, and the prospect of uncertainty being created, by now reclassifying the power of service tribunals as administrative power. The established position of this Court is that, in the interests of continuity and consistency in the law, previous decisions of the Court are not lightly to be overturned180 – and almost certainly not where they rest upon a principle worked out in a significant succession of cases; there is no relevant difference between the reasons of the Justices constituting the majority in the earlier decisions; the earlier decisions have achieved a useful result and not caused considerable inconvenience; and the earlier decisions have been independently acted upon in a way that militates against change181. Here, the recognition that the power exercised by service tribunals is judicial power is one which was worked out over a succession of cases culminating in Re Tracey, Re Nolan and White; there were no relevant differences between the Justices who so held; the holding has achieved a useful result of balancing the competing constitutional demands of s 51(vi) and Ch III of the Constitution; and it has been acted on by service tribunals without difficulty since at least Re Tracey182. Most pertinently for present purposes, as will be seen183, it is the recognition of the power exercised by service tribunals as a species of judicial power sitting outside the requirements of Ch III which explains why 178 See the discussion in Stellios, The Federal Judicature: Chapter III of the Constitution, 2nd ed (2020) at 290-291. 179 See [111]-[118] above. 180 See, eg, Queensland v The Commonwealth (1977) 139 CLR 585 at 599 per Gibbs J, 602 per Stephen J, 620, 630 per Aickin J; John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-439 per Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 352-353 181 See and compare John v Federal Commissioner of Taxation (1989) 166 CLR 417 at 438-439 per Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ. 182 Re Aird (2004) 220 CLR 308 at 336 [86] per Kirby J. 183 See [126] below. Nettle determination of whether the jurisdiction of a service tribunal in a given case can be viewed as reasonably appropriate and adapted to the defence of the Commonwealth necessarily depends on the nature and circumstances of the subject offending. The extent of service tribunals' jurisdiction In Re Tracey, Brennan and Toohey JJ propounded184 as the test of a service tribunal's jurisdiction that service proceedings may be brought against a member of the defence force "if, but only if, those proceedings can reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline". By contrast, Mason CJ, Wilson and Dawson JJ posited185 that it is within the legislative competence of the Parliament to provide that conduct on the part of a member of the defence force that would constitute a civil criminal offence shall, regardless of the nature of the offence and the circumstances of its commission, constitute a service offence. Subsequent decisions of the Court in Re Aird and White in effect accepted186 the Brennan and Toohey JJ test. Arguably, the position remains now, as it was at the time of Re Aird, that "[t]here is no legal principle that binds this Court to the application of a given rule in the present case" and that the test of service tribunals' jurisdiction propounded by Brennan and Toohey JJ in Re Tracey is simply "[t]he highest common denominator of agreement established by the earlier authority"187. But compared to the alternative proposed by Mason CJ, Wilson and Dawson JJ, it has more to commend it. As McHugh J observed188 in effect in Re Aird, the difference between the two tests is akin to the difference between the "service connection" test previously favoured by the United States Supreme Court, and the "service status" test which that Court adopted in Solorio v United States189. The essence of the Supreme 184 (1989) 166 CLR 518 at 570. 185 Re Tracey (1989) 166 CLR 518 at 543-545. 186 Re Aird (2004) 220 CLR 308 at 314 [8] per Gleeson CJ, 322 [37]-[38], 324 [43] per McHugh J, 330 [69] per Gummow J, 356 [156] per Hayne J; White (2007) 231 CLR 570 at 589 [24] per Gleeson CJ, 601-602 [73] per Gummow, Hayne and Crennan JJ. 187 Re Aird (2004) 220 CLR 308 at 336-337 [88] per Kirby J. 188 (2004) 220 CLR 308 at 321 [36]. Nettle Court's reasoning in Solorio was that the latter has the advantage of providing a bright line distinction190. But as Kirby J (albeit in dissent) demonstrated191 in Re Aird, despite that advantage, the service status test is "incompatible with Australia's constitutional history and text and with the highest measure of agreement to which past judicial concurrence in this Court has extended". The reasons why that is so were explained at length in the judgments of Brennan and Toohey JJ and Deane J in Re Tracey and it does not avail to repeat them. Suffice to say that in substance they conduce to the need to reconcile the two competing constitutional objectives of, on the one hand, s 51(vi) of the Constitution (for which it is appropriate to repose in service tribunals a broad authority to impose discipline on members of the defence force according to the exigencies of time, place and circumstances), and, on the other hand, Ch III, as informed by its history (which requires that the judicial power capable of being exercised by service tribunals be limited to what can reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline). In Re Tracey, Deane J compendiously summarised the need for, and dimensions of, that reconciliation as follows192: "Th[e] traditional confinement of the nature and range of the disciplinary powers of military tribunals has long been rightly recognized as fundamental to our system of government193. It avoids the creation of a military class removed from the reach of the ordinary law and courts of the land194. It protects the civilian from being subjected to military law and deprived of the benefits and safeguards of the administration of justice by independent courts. It limits the extent to which those subject to military authority are deprived of those benefits and safeguards to what is 'thought necessary' for the maintenance and enforcement of military discipline and 190 (1987) 483 US 435 at 449-451 per Rehnquist CJ. 191 (2004) 220 CLR 308 at 339 [96]. 192 (1989) 166 CLR 518 at 584-585. 193 See, eg, O'Callahan v Parker (1969) 395 US 258 at 268 per Douglas J. 194 See, eg, Burdett v Abbot (1812) 4 Taunt 401 at 449 per Mansfield CJ [128 ER 384 at 403]; Pitchers v Surrey County Council [1923] 2 KB 57 at 75 per Atkin LJ; Pirrie v McFarlane (1925) 36 CLR 170 at 227 per Starke J; The Illawarra District County Council v Wickham (1959) 101 CLR 467 at 503 per Windeyer J. Nettle duty195. It is that confinement of the nature and range of the traditional disciplinary powers of such tribunals which has alone enabled them to be rationally seen as not encroaching upon the ordinary administration of criminal justice by courts of law and as beyond the intended reach of Ch III of the Constitution. In that regard, it should be borne in mind that, in 1900, the unanimous judgment of a very strong Court of Exchequer Chamber (Kelly CB, Martin, Bramwell, Channell, Pigott, and Cleasby BB; Byles, Keating, Brett and Grove JJ) in Dawkins v Lord Rokeby196 stood as authority for the proposition that, when the whole question involved in a cause related to a matter of military discipline ('a military question'), the cause was 'not cognizable in a court of law'197 for the reason that cases 'involving questions of military discipline and military duty alone are cognizable only by a military tribunal'198. As a matter of legal principle, that perception of a dichotomy between the disciplinary functions of military tribunals and the jurisdiction of ordinary courts of law is open to serious question199. As a matter of historical fact, however, the perception itself remains of undiminished importance both in understanding why it has been held by the Court that the framers of the Constitution could not have intended to include military disciplinary powers in the judicial power which Ch III exclusively vested in courts which are independent of the Commonwealth Executive and in determining the nature and scope of the military disciplinary powers so excluded." (emphasis added) In White, Gleeson CJ affirmed the essential correctness of that approach. As his Honour observed200, the problem of determining the offences in respect of which Parliament can confer judicial power on service tribunals to try civil criminal offences committed by service personnel is one which necessitates reconciling the need for the armed forces to maintain and enforce service discipline with the protections contained in Ch III and the separation of powers inherent in 195 Groves v The Commonwealth (1982) 150 CLR 113. See also, eg, MacKay v The Queen [1980] 2 SCR 370 at 408 per McIntyre J. 196 (1873) LR 8 QB 255. 197 Dawkins v Lord Rokeby (1873) LR 8 QB 255 at 270 per Kelly CB. 198 Dawkins v Lord Rokeby (1873) LR 8 QB 255 at 271 per Kelly CB. 199 See Gibbons v Duffell (1932) 47 CLR 520 at 527 per Gavan Duffy CJ, Rich and Dixon JJ, 531 per Starke J; Groves v The Commonwealth (1982) 150 CLR 113 at 127-128 per Stephen, Mason, Aickin and Wilson JJ. 200 White (2007) 231 CLR 570 at 589 [24]. Nettle the structure of the Constitution. And as his Honour concluded201, the response which Brennan and Toohey JJ posited in Re Tracey recognises the impossibility of classifying an offence as either military or civil according only to the technical elements of the offence while ignoring the circumstances in which the offence is committed. By contrast, the idea that it is within the legislative competence of the Parliament to provide that conduct of a member of the defence force which constitutes a civil criminal offence shall constitute a service offence regardless of the nature and circumstances of the commission of the offence presents as oblivious to the effect of the offence on the maintenance and enforcement of service discipline202, and thus capable of subjecting service personnel to the abnegation of Ch III protections without consequent gain in the maintenance and enforcement of service discipline. True it is that the Parliament has broad power under s 51(vi) of the Constitution to determine what is necessary for the purpose of defence of the Commonwealth and thus for the maintenance or enforcement of service discipline. It is not for this Court to substitute for the will of Parliament what the Court may consider to be a preferable solution. But equally, as with any other purposive head of legislative power, so also with the defence power, Parliament cannot determine that something is for the purpose of the power when, on any reasonable view of the matter, it is not203. To adopt and adapt the language of Dixon J in Williams v Melbourne Corporation204: 201 White (2007) 231 CLR 570 at 589 [24]. 202 See reasons of Gordon J at [140]-[141]. 203 McCulloch v Maryland (1819) 17 US 316 at 421, 423 per Marshall CJ for the Court; Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 320-322 per Higgins J, 343-345 per Barton J, 357-358 per O'Connor J; The Commonwealth and the Postmaster-General v The Progress Advertising and Press Agency Co Pty Ltd (1910) 10 CLR 457 at 469 per Isaacs J; Farey v Burvett (1916) 21 CLR 433 at 440 per Griffith CJ, 460 per Higgins J; Stenhouse v Coleman (1944) 69 CLR 457 at 467 per Starke J, 471 per Dixon J; Wertheim v The Commonwealth (1945) 69 CLR 601 at 605 per Latham CJ; Marcus Clark & Co Ltd v The Commonwealth (1952) 87 CLR 177 at 226 per McTiernan J. 204 (1933) 49 CLR 142 at 155. See also South Australia v Tanner (1989) 166 CLR 161 at 165 per Wilson, Dawson, Toohey and Gaudron JJ; Minister for Resources v Dover Fisheries Pty Ltd (1993) 43 FCR 565 at 574-578 per Gummow J (Hill J agreeing). Nettle "The true nature and purpose of the [defence] power must be determined, and it must often be necessary to examine the operation of the [law] in the local circumstances to which it is intended to apply. Notwithstanding that ex facie there [may seem to be] a sufficient connection between the subject of the power and that of the [law], the true character of the [law] may then appear to be such that it could not reasonably have been adopted as a means of attaining the ends of the power. In such a case the [law] will be invalid, not because it is inexpedient or misguided, but because it is not a real exercise of the power." Ultimately, therefore, it is for this Court to say whether a propounded enactment is within power205 – which, in this context, means whether the Court is of the view that the law is "necessary" in the sense of reasonably appropriate and adapted206 or proportionate207 to the defence of the Commonwealth208. And for the reasons given, to the extent that s 61(3) of the Defence Force Discipline Act treats as a service offence a civil criminal offence committed by a member of the defence force regardless of the nature and circumstances of the commission of the offence, it cannot reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline, or, therefore, as reasonably appropriate and adapted or proportionate to the defence of the Commonwealth. Disposition of the matter That said, I accept that s 61(3) is valid in its application to offences which, because of their nature or circumstances of commission, are inimical to the maintenance or enforcement of service discipline, and, therefore, I accept that it is valid in its application to the offence here alleged. Despite the plaintiff and the complainant being on leave and away from their respective units at the time of the alleged offending, in light of this Court's decision in White it cannot seriously be doubted that it would be inimical to service discipline for a trained, serving infantryman violently to assault a female member of the defence force because she has spurned his sexual overtures. 205 See [129] fn 203 above. 206 Ronpibon Tin NL v Federal Commissioner of Taxation (1949) 78 CLR 47 at 56 per Latham CJ, Rich, Dixon, McTiernan and Webb JJ. 207 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 561-562 per Brennan CJ, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ. 208 Stenhouse (1944) 69 CLR 457 at 471 per Dixon J. Nettle Conclusion It follows that empowering a service tribunal to deal with the matter can reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline, and, on that basis, the application should be dismissed. Orders should be made as proposed by the plurality. 133 GORDON J. The Commonwealth Parliament's capacity to legislate under s 51(vi) of the Constitution for the provision of military discipline service tribunals stands outside of Ch III of the Constitution209. The justification for the Commonwealth Parliament to grant, outside of Ch III, disciplinary powers to be exercised judicially by members of the armed forces is the need to maintain or enforce service discipline. As Gleeson CJ said in White v Director of Military Prosecutions210, "the defence power authorises Parliament to grant disciplinary powers to be exercised judicially by officers of the armed forces and, when that jurisdiction is exercised, 'the power which is exercised is not the judicial power of the Commonwealth; it is a power sui generis which is supported solely by s 51(vi) for the purpose of maintaining or enforcing service discipline'" (emphasis added). And as Brennan and Toohey JJ said earlier in Re Tracey; Ex parte Ryan211, "the imposition of punishments by service authorities ... for the commission of criminal offences in order to maintain or enforce service discipline has never been regarded as an exercise of the judicial power of the Commonwealth" (emphasis added). Despite the fact that service tribunals exercise disciplinary powers which fall outside of Ch III, those tribunals act judicially212. Their function is not merely administrative or disciplinary213; they exercise judicial power214. That service tribunals exercise judicial power has been recognised for over 100 years in 209 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 540-541, 564-565, 572-573; White v Director of Military Prosecutions (2007) 231 CLR 570 at 586 [14], 597-598 210 (2007) 231 CLR 570 at 586 [14], quoting Re Tracey (1989) 166 CLR 518 at 574. 211 (1989) 166 CLR 518 at 572. See also Re Nolan; Ex parte Young (1991) 172 CLR 460 at 497; Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 314 [9], 319 [31], 325 [49], 356 [156]; White (2007) 231 CLR 570 at 586 [14], 589 [24]. 212 R v Cox; Ex parte Smith (1945) 71 CLR 1 at 23; Re Tracey (1989) 166 CLR 518 at 539; Lane v Morrison (2009) 239 CLR 230 at 237 [10], 255 [77]. 213 Re Tracey (1989) 166 CLR 518 at 537-538. 214 R v Army Council; Ex parte Sandford [1940] 1 KB 719 at 725; R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 at 466; Cox (1945) 71 CLR 1 at 23; Attorney-General v British Broadcasting Corporation [1981] AC 303 at 360; Re Tracey (1989) 166 CLR 518 at 537-540, 572-573; White (2007) 231 CLR 570 at 596-597 [52]-[55]; Lane (2009) 239 CLR 230 at 237 [10]. cf Lane (2009) 239 CLR Australia215. They do so under s 51(vi) of the Constitution and the Defence Force Discipline Act 1982 (Cth) ("the DFDA") (and outside of Ch III of the Constitution). As Mason CJ, Wilson and Dawson JJ observed in Re Tracey216, "it [is not] possible to admit the appearance of judicial power and yet deny its existence by regarding the function of a court-martial as merely administrative or disciplinary". But characterisation of power as judicial on the one hand, or as executive or administrative on the other, is not a step that need be taken in considering the question of validity raised in this case. It is sufficient to record that the exercise of the judicial power of the Commonwealth within Ch III and the operation of service tribunals acting judicially outside of Ch III are concurrent; they intersect. Consistent with the history of concurrent jurisdiction of civil courts and service tribunals prior to Federation217, the DFDA is "supplementary to, and not exclusive of, the ordinary criminal law"218. A defence force magistrate or court martial is an officer of the Commonwealth219 whose decisions are still subject to judicial review under s 75(v) of the Constitution even though the service tribunal would not be subject to Ch III requirements, whether or not the tribunal exercises a form of judicial power outside of Ch III. It is for those reasons that applying the descriptor "judicial" on one the hand, or "administrative" or "executive" on the other, to the power exercised by a service tribunal does not assist the inquiry about the validity of s 61(3) of the DFDA in its relevant operation. Validity is determined by asking whether s 61(3) of the DFDA in its application to the charge laid against the plaintiff is a law with respect to defence. 215 Re Tracey (1989) 166 CLR 518 at 573, citing Moore, The Constitution of The Commonwealth of Australia, 2nd ed (1910) at 308, 315-316, 321. 216 (1989) 166 CLR 518 at 537. 217 Bevan (1942) 66 CLR 452 at 466-467; Re Tracey (1989) 166 CLR 518 at 541-543, 562-563, 572-573; Re Nolan (1991) 172 CLR 460 at 481-482; White (2007) 231 CLR 570 at 596-597 [52]-[55]. 218 McWaters v Day (1989) 168 CLR 289 at 299. See also DFDA, ss 63, 188GA(1)(b). 219 See Re Tracey (1989) 166 CLR 518 at 572. There are two steps in answering that question. First, there was no dispute in this matter that220: "[i]t is open to Parliament to provide that any conduct which constitutes a civil offence shall constitute a service offence, if committed by a defence member ... [where] the proscription of that conduct is relevant to the maintenance of good order and discipline in the defence forces. The power to proscribe such conduct on the part of defence members is but an instance of Parliament's power to regulate the defence forces and the conduct of the members of those forces. In exercising that power it is for Parliament to decide what it considers necessary and appropriate for the maintenance of good order and discipline in those forces." This permits Parliament, subject to the next step, to prescribe a norm of conduct; that is, to enact a disciplinary code221. The next step is that "Parliament's decision will prevail so long ... as the rule which it prescribes is sufficiently connected with the regulation of the forces and the good order and discipline of defence members"222. But how is sufficient connection to be assessed? There are numerous cases about the validity of provisions concerning defence force discipline223. Those cases use various means of expressing the connection sufficient to bring a particular offence or charge within the defence power224. The great variety of expressions used demonstrates that the test of connection cannot be, and should not be, reduced to a single, all-embracing the shorthand expressions "service status" and formula. In particular, 220 Re Tracey (1989) 166 CLR 518 at 545. 221 Re Tracey (1989) 166 CLR 518 at 541; Re Aird (2004) 220 CLR 308 at 314 [8]. 222 Re Tracey (1989) 166 CLR 518 at 545. See also Re Aird (2004) 220 CLR 308 at 314 223 Bevan (1942) 66 CLR 452; Cox (1945) 71 CLR 1; Re Tracey (1989) 166 CLR 518; Re Nolan (1991) 172 CLR 460; Re Tyler; Ex parte Foley (1994) 181 CLR 18; Re Aird (2004) 220 CLR 308; White (2007) 231 CLR 570; Lane (2009) 239 CLR 224 See, eg, Re Tracey (1989) 166 CLR 518 at 545, 570; Re Nolan (1991) 172 CLR 460 at 474; Re Tyler (1994) 181 CLR 18 at 30; Re Aird (2004) 220 CLR 308 at 312-313 [5], 314 [8]-[9], 323 [40], 324 [43], 325 [49], 329-330 [67]-[69]. See also Leask v The Commonwealth (1996) 187 CLR 579 at 591. "service connection" obscure the nature of the inquiry that must be made225: namely, is the law in its relevant application to the offence and charge in issue a law with respect to defence? That demands attention to the connection between the charge that has been laid and defence force discipline. The two separate steps are both necessary and important. The steps recognise that service tribunals sit outside, but operate concurrently with, Ch III. They permit, as has occurred here with ss 61 and 63 of the DFDA, Parliament to establish a code of conduct for the maintenance of good order and discipline in the defence forces and to determine the extent to which that code intersects with Ch III. And no less importantly, they recognise that some forms of conduct proscribed by the ordinary criminal law fall outside of the power in s 51(vi) of the Constitution to regulate the defence forces and the conduct of the members of the forces. Thus, the justification for Parliament's capacity to legislate under s 51(vi) and outside of Ch III is taken into account. Conduct proscribed by the ordinary criminal law that would likely fall outside s 51(vi) is exemplified by the following. A member of the defence forces driving on a highway while off-duty, who was desperate to relieve themselves and so stopped and left their vehicle to do so behind a tree on the roadside (for example, because they had a medical condition requiring them to urinate frequently), would contravene the Crimes Act 1900 (ACT) and could be proceeded against in a service tribunal for a charge of urinating in a public place226. A member of the defence forces, similarly driving along a highway while off-duty, who opened the window of their vehicle with the result that food packaging sitting in the vehicle was accidentally blown out of the window, could be proceeded against in a service tribunal for a charge of littering227. In neither of these examples, however, could the conduct of the member of the defence forces have any bearing on military discipline, morale, efficiency or the ability of the military to carry out its 225 White (2007) 231 CLR 570 at 580 [3], 598-599 [60]-[61]. See also Re Nolan (1991) 172 CLR 460 at 489. 226 Crimes Act 1900 (ACT), s 393A. This is a strict liability offence: s 393A(2). See also DFDA, ss 3(1) definition of "Territory offence", 61(3); Jervis Bay Territory Acceptance Act 1915 (Cth), s 4A. 227 Litter Act 2004 (ACT), s 8. This is also a strict liability offence: s 8(8). See also DFDA, ss 3(1) definition of "Territory offence", 61(3); Jervis Bay Territory Acceptance Act, s 4A. functions228. The laws in those operations would not be laws with respect to defence. Adopting a "service status" test appears to entail the contrary conclusion. The "service status" test appears to treat all forms of alleged offending by service members as conduct that can be dealt with by service tribunals. So too does an approach that considers s 61(3) of the DFDA in all its applications to be supported by s 51(vi). Under both approaches, no inquiry would be undertaken in respect of the charge that was laid and its connection with defence force discipline. That inquiry must be made in order to demonstrate that the law in its relevant operation is supported by the defence power. Abandoning that inquiry would fail to recognise that military discipline is supplementary to, and not exclusive of, the ordinary criminal law and that military tribunals exercise powers which fall outside of, but operate concurrently with, Ch III. Not only is the intersection of Ch III with disciplinary tribunals created under s 51(vi) and the DFDA consistent with the separation of powers; the point at which they intersect ensures that a member of the defence force receives the benefit of that separation of powers in cases unconnected with military discipline. In this matter, in relation to the first step in assessing constitutional validity, s 61(3) of the DFDA is not challenged in its entirety and nor could it be. The Commonwealth Parliament has the capacity to legislate under s 51(vi) for the provision of service tribunals229. As the plaintiff accepted, this extends to the power to enact a disciplinary code230. It is at the second step that s 61(3) of the DFDA is challenged – that is, in its application to the plaintiff. That challenge is readily answered by reference to the authority of this Court231. The plaintiff is charged with assault occasioning actual 228 See Re Tracey (1989) 166 CLR 518 at 545; Re Aird (2004) 220 CLR 308 at 312-313 [5] (citing R v Généreux [1992] 1 SCR 259 at 293), 314 [8], 323-324 [42], 329 [66], 229 Re Tracey (1989) 166 CLR 518 at 540-541, 564-565, 572-573; Re Nolan (1991) 172 CLR 460 at 474, 479; Re Tyler (1994) 181 CLR 18 at 25-26, 29, 39-40; Re Aird (2004) 220 CLR 308 at 314 [8], 319 [31], 325 [49], 343 [109]; White (2007) 231 CLR 570 at 586 [14], 598 [60], 647 [236], 650 [246]. 230 Re Tracey (1989) 166 CLR 518 at 541; Re Aird (2004) 220 CLR 308 at 314 [8], 319 231 Re Tracey (1989) 166 CLR 518 at 545; Re Aird (2004) 220 CLR 308 at 312-313 [5] (citing Généreux [1992] 1 SCR 259 at 293), 314 [8]-[9], [11], 323-324 [42], 325 bodily harm (bruising to the complainant's throat) under s 61(3) of the DFDA, which picks up s 24(1) of the Crimes Act. The plaintiff is alleged to have attacked the complainant – grabbing her by the throat and holding her against the wall; shaking her by the throat backwards and forwards against the wall; tackling her to the ground and putting both of his knees on her chest; and choking her. The plaintiff was a member of the Australian Defence Force, though off-duty, at the time of the alleged offence. The alleged offence was one of violence. As McHugh J said in Re Aird; Ex parte Alpert, "[i]t is central to a disciplined defence force that its members are not persons who engage in uncontrolled violence"232. Conduct that "involves serious violence and disregard for the dignity of the victim ... clearly has the capacity to affect discipline, morale, and the capability of the Defence Force to carry out its assignments ... [I]t is a matter that pertains directly to the discipline, efficiency and morale of the military"233. On any view, there is a sufficient connection between the charge laid against the plaintiff and the regulation of the forces for the purpose of maintaining and enforcing good order and discipline of service members234. Such violence is inconsistent with a disciplined service; it is a matter that pertains directly to the discipline, efficiency and morale of service members. Orders For those reasons, the application should be dismissed with costs. [49], 329 [66], 330 [69], 356 [156]; White (2007) 231 CLR 570 at 581 [4] (quoting Généreux [1992] 1 SCR 259 at 294), 588-589 [21]. 232 (2004) 220 CLR 308 at 323 [42]; see also 314 [9], 325 [49], 356 [156]. 233 Re Aird (2004) 220 CLR 308 at 313 [5] (citing Généreux [1992] 1 SCR 259 at 293), 314 [9], [11], 323-324 [42], 325 [49], 356 [156]; White (2007) 231 CLR 570 at 581 [4], 588-589 [21]; Australian Army, The Army Family and Domestic Violence Action Plan (2016) at [2]. 234 See, eg, Re Tracey (1989) 166 CLR 518 at 545; Re Aird (2004) 220 CLR 308 at 314 Edelman Four approaches to the defence power and the judicial power of the Commonwealth The constitutional writ sought in this case concerns the defence power in s 51(vi) of the Constitution to make laws with respect to: "the naval and military defence of the Commonwealth and of the several States, and the control of the forces to execute and maintain the laws of the Commonwealth". There is no issue in this case concerning the essential meaning of these words of the defence power in s 51(vi). Instead, the issue concerns the extent to which the defence power can support Commonwealth laws that confer judicial power upon service tribunals. For at least three decades the jurisprudence of this Court has been divided upon this issue, with different approaches taken to the application of s 51(vi) to service tribunals. Four different approaches have been taken. None has commanded the acceptance of a majority of the Court as a matter of ratio decidendi. The first approach might be described as a purist approach. On that approach, most of the conferral of judicial power upon service tribunals is invalid because it contravenes the established constitutional implication that the judicial power of the Commonwealth can only be exercised in accordance with the provisions of Ch III of the Constitution. This approach is perhaps best illustrated by the reasons of Deane J in Re Tracey; Ex parte Ryan235. The second and third are historical approaches. On those approaches, for historical reasons the judicial power conferred upon service tribunals is an exception to, or not governed by, the implication that such judicial power can only be exercised by a court under Ch III of the Constitution. On the historical approaches, the validity of the conferral of such power generally requires the power conferred to conform with the pre-Federation history of its conferral. The two historical approaches are best illustrated by those taken in Re Tracey; Ex parte Ryan, by Mason CJ, Wilson and Dawson JJ on the one hand and Brennan and Toohey JJ on the other. On the historical approach of Mason CJ, Wilson and Dawson JJ, s 51(vi) empowers the Commonwealth Parliament to confer power upon service tribunals to discipline for any offence committed by a person with "service status". By contrast, the approach of Brennan and Toohey JJ empowers Commonwealth legislation to confer power upon service tribunals to discipline 235 (1989) 166 CLR 518 at 585-586. Edelman service personnel only for those offences which have a "service connection", that is, a connection between the offence and the defence power which is more than a mere allegation against a member of the armed services that they committed an offence. Examples of service connection factors were given in Relford v US Disciplinary Commandant236 including matters such as the commission of the offence at a military base or in a time of war. The application of the respective historical approaches has been described by the labels "service status" and "service connection"237. The fourth approach is one of constitutional synthesis. On this approach, the disciplinary power conferred upon service tribunals is treated as administrative power rather than judicial power. If the disciplinary power conferred on service tribunals is characterised as administrative rather than judicial then it is not governed by the restrictions upon conferral of judicial power in Ch III of the Constitution. The historical antecedents of the power of service tribunals would therefore have no bearing on whether that power is conferred consistently with Ch III of the Constitution. The issue would be solely whether the law is "with respect to" the head of power contained in s 51(vi) of the Constitution. This approach was taken by Callinan J in White v Director of Military Prosecutions238 and it obtained support from members of this Court in Lane v Morrison239. This case and the approach that should be adopted The particular issue in this case concerns the validity of s 61(3) of the Defence Force Discipline Act 1982 (Cth), which extends the judicial power to adjudicate upon, and punish, a member of the armed forces to offences provided in the Crimes Act 1900 (ACT). The plaintiff, Private R, asserted that s 61(3) could not validly apply to the offence with which he was charged, namely assault occasioning actual bodily harm, in the circumstances in which it occurred. He relied upon the historical approach of Brennan and Toohey JJ in Re Tracey; Ex parte Ryan and argued that the provision had departed from its historical antecedents and purported to apply to offences with which there was insufficient service connection. The Commonwealth also took the historical approach but 236 (1971) 401 US 355 at 365. See Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 237 Solorio v United States (1987) 483 US 435 at 439-441. See also Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 321 [36]; White v Director of Military Prosecutions (2007) 231 CLR 570 at 580 [3]. 238 (2007) 231 CLR 570 at 649 [240]. 239 (2009) 239 CLR 230 at 247-248 [48]. Edelman relied upon the approach of Mason CJ, Wilson and Dawson JJ in Re Tracey; Ex parte Ryan, to the effect that s 51(vi) empowers the Commonwealth Parliament to confer power upon service tribunals to discipline for any offence committed by a person with "service status". This case could be decided without resolving this issue. It would be enough to say that upon either of the historical approaches which were raised before the Court, s 61(3) of the Defence Force Discipline Act is valid in its application to Private R. I was initially attracted to deciding this case on this threshold basis. But, on reflection and in light of the submissions by the Commonwealth urging against the resolution of this dispute on this narrow basis, the better approach is to express a view on the broader issues. After at least three decades of uncertainty there is good reason for this Court to do so. For the reasons which follow, the proper approach to apply is the historical approach of Mason CJ, Wilson and Dawson JJ in Re Tracey; Ex parte Ryan. The alleged assault and Private R's case Private R is a member of the Australian Defence Force, specifically a soldier in the Regular Army, and is therefore a "defence member"240. He is alleged to have committed assault occasioning actual bodily harm upon the complainant, another member of the Australian Defence Force with whom he had previously had an intimate relationship. The alleged circumstances of the assault are serious. They are as follows. At an evening social function in Brisbane, Private R made unwanted sexual advances upon the complainant. After the social function, when the complainant went to collect her belongings from a private hotel room, Private R arrived and told her that she was not going home. He grabbed the complainant by the throat and pushed her against the wall. She kept repeating that she wanted to go home. While both of her feet were off the ground, he shook her backwards and forwards against the wall, yelling at her "What is wrong with you!". When she broke free from his grip, he tackled her to the ground and held her there with both of his knees on her chest. He then placed both his hands around her throat, choking her, preventing her from screaming or breathing. She banged her arms against the door and walls of the room to get help. After two security guards entered the room and tackled Private R, she fled the room. Bruises were left around her neck. Private R was charged by the Director of Military Prosecutions under s 61(3) of the Defence Force Discipline Act. One effect of s 61 is to apply the provisions of the Crimes Act to a defence member who is inside or, in the case of 240 Defence Force Discipline Act 1982 (Cth), s 3(1), definition of "defence member". Edelman s 61(3), outside the Jervis Bay Territory241. Assault occasioning actual bodily harm is an offence under s 24 of the Crimes Act punishable by imprisonment for five years. Private R challenged the jurisdiction of the Defence Force magistrate. That challenge was dismissed by the Defence Force magistrate, who applied the service status test. In this Court, Private R accepted that "unquestionably" the service tribunal exercised judicial power. The Commonwealth adopted the same position. However, Private R submitted that s 61(3) of the Defence Force Discipline Act went beyond the permissible limit of judicial power capable of being conferred under s 51(vi) of the Constitution because the provision did not have sufficient connection with s 51(vi) in all its applications. He submitted that there was insufficient connection with the defence power merely for a person with "service status" to commit any civil offence. He asserted that there must be an additional service connection between the offence and the purpose connected to s 51(vi) of maintaining or enforcing service discipline. Examples given in Private R's submissions of circumstances that were said to have insufficient "service connection" are speeding in a motor vehicle while a defence member is on holiday or a defence member chopping down a protected tree in their private backyard242. The threshold issue A question sometimes to be asked before crossing the threshold to consider the constitutional validity of a statutory provision is whether the provision, if it would otherwise be invalid, could be severed, read down, or partially disapplied243 so that it would remain valid in its application to the facts before the Court. If so, this Court, in a judgment to which I was a party, has said that it is unnecessary to consider the validity of the provision and that it would ordinarily be inappropriate to do so244. Much depends upon the qualifier "ordinarily". In hindsight, this qualification, although flexible, might have been too strict. 241 Read with Defence Force Discipline Act, s 3(1) (definition of "Territory offence") and Jervis Bay Territory Acceptance Act 1915 (Cth), s 4A. 242 Road Transport (Road Rules) Regulation 2017 (ACT), s 20; Tree Protection Act 2005 (ACT), s 15. 243 Clubb v Edwards (2019) 93 ALJR 448 at 534-537 [415]-[425]; 366 ALR 1 at 107- 244 Knight v Victoria (2017) 261 CLR 306 at 324 [33], citing British Medical Association v The Commonwealth (1949) 79 CLR 201 at 258 and Tajjour v New South Wales (2014) 254 CLR 508 at 585-589 [168]-[176]. Edelman A strict approach to this threshold issue might be seen in statements that a court should never "formulate a rule of constitutional law broader than is required by the precise facts to which it is to be applied"245. In many cases, all that the precise facts will require will be for the Court to say "This provision is valid at least in the circumstances before the Court". Therefore, on a strict view, the Court should always stop at such a conclusion because resolution of the constitutional issue is not necessary for the outcome of the case: "It suffices ... to hold that, as applied to cases like the present, the statute is valid."246 In my view, however, a less strict approach is more appropriate in light of the role of this Court. This Court would not adequately discharge its functions if it were always, or even ordinarily, to decide constitutional cases on the narrowest basis, which could have the effect of avoiding transparent elucidation of the intellectual principles that provide the foundation for application of the law to different fact scenarios and further development of the law by trial judges and intermediate appellate courts. In my opinion, an assessment of constitutional validity of a challenged provision should be undertaken whenever there is good reason to do so247. There may often be good reasons. This proceeding could be easily resolved on the threshold basis, in the same way that a majority of this Court resolved the applications in Re Aird; Ex parte Alpert248. A provision such as s 24 of the Crimes Act lies at the heart of the disciplinary concerns involved in the application of the defence power by s 61(3) of the Defence Force Discipline Act. That application recognises the need for members of the Australian Defence Force, who are trained to use force, to comply with proscriptions against force in civil society. Indeed, at the time of the alleged 245 Liverpool, New York and Philadelphia Steamship Co v Commissioners of Emigration (1885) 113 US 33 at 39. See also United States v Raines (1960) 362 US 17 at 21 and Washington State Grange v Washington State Republican Party (2008) 552 US 442 at 450. 246 Yazoo and Mississippi Valley Railroad Co v Jackson Vinegar Co (1912) 226 US 247 Clubb v Edwards (2019) 93 ALJR 448 at 534 [411]; 366 ALR 1 at 106. See also (2019) 93 ALJR 448 at 466 [36], 498 [231]-[232]; 366 ALR 1 at 15, 58-59. 248 (2004) 220 CLR 308 at 323-324 [42]-[46] (McHugh J). Gleeson CJ, Gummow and Hayne JJ agreeing at 314 [9], 325 [49], and 356 [156] respectively. Edelman events, the Chief of Army had issued the Army Family and Domestic Violence Action Plan, which provided, in part, that249: "Army exists for the lawful and disciplined use, or threat of use, of violence to protect Australia and its interests. The ill-disciplined use of violence on operations is a war crime and at home is a criminal offence. Australia empowers its Army members with the skills, knowledge and weaponry to apply lethal force. If Army members engage in ill-disciplined use of violence at home or at work, then Army's confidence in them to execute their duties lawfully and discriminately in circumstances of immense stress on the battlefield is deeply undermined." On the threshold basis, this Court could decide the case on the limited grounds that: (i) the offence of assault occasioning actual bodily harm is a valid application of s 61(3) on either a "service connection" or a "service status" approach; and (ii) it is unnecessary to consider whether the application of s 61(3) to any other offences, such as speeding or cutting down a tree, falls outside the scope of Commonwealth legislative power under s 51(vi) because, to the extent that it does, Parliament has manifested the intent that courts should use a "scalpel rather than a bulldozer" and apply the provision to some offences rather than none250. Hence, the possibility that s 61(3) could be disapplied from any circumstances to which it might not have valid application means that those circumstances could be left for another day. There are, however, good reasons not to resolve this case on the threshold basis. If this case were decided on this limited basis it would effectively perpetuate decades of uncertainty until a sufficiently extreme example arose, and was brought to this Court, requiring a choice between the service connection approach and the service status approach. It is unsatisfactory for this Court to perpetuate such a lack of clarity. The Solicitor-General of the Commonwealth was, therefore, correct to abjure any submission that this Court should resolve this case on the threshold basis. Service tribunals exercise judicial power There are some disciplinary measures under the Defence Force Discipline Act that, standing alone, might arguably not have involved the exercise of judicial power. For instance, outside the context of the rest of the Defence Force Discipline 249 Australian Army, The Army Family and Domestic Violence Action Plan (2016) at 250 Seila Law LLC v Consumer Financial Protection Bureau (2020) 140 S Ct 2183 at 2210-2211. See Acts Interpretation Act 1901 (Cth), s 15A. Edelman Act, sanctions involving a deduction from a defence member's pay for careless conduct, such as driving a vehicle without due care and attention251, could arguably be characterised as disciplinary administrative measures rather than as judicial responses to "offences punishable as crimes"252. But putting to one side such minor issues of discipline, for more than a century it has been recognised in this country that the power exercised by service tribunals to punish offences is an exercise of judicial power253. It is necessary to elaborate upon this point in some detail because of the challenge to this view by the fourth approach to s 51(vi), which I have described as the constitutional synthesis approach. When, in 1942, this Court upheld the death sentences imposed by a naval court martial upon Edward Elias and Albert Gordon254 there was no suggestion that the sentences were not judicial punishment and were merely an administrative exercise. Starke J accepted that service tribunals exercise judicial power although he asserted that it was not the judicial power "of the Commonwealth"255. The approach of Starke J, treating the power as judicial, has been consistently adopted or referred to with approval including by Brennan and Toohey JJ256, Deane J257, Gaudron J258, McHugh J259, and Gummow, Hayne and Crennan JJ260. 251 Defence Force Discipline Act, s 40D. 252 R v White; Ex parte Byrnes (1963) 109 CLR 665 at 670. 253 Moore, The Constitution of The Commonwealth of Australia, 2nd ed (1910) at 308, referring to Dawkins v Lord Rokeby (1873) LR 8 QB 255. See also Gageler, "Gnawing at a file: an analysis of Re Tracey; Ex parte Ryan" (1990) 20 Western Australian Law Review 47 at 49. 254 Their sentences were later commuted. See Australia, House Representatives, Parliamentary Debates (Hansard), 2 October 1942 at 1395. 255 R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 at 466-467. 256 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 564-565. 257 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 581. 258 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 598, 600. 259 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 499; Hembury v Chief of the General Staff (1998) 193 CLR 641 at 648 [13]. 260 White v Director of Military Prosecutions (2007) 231 CLR 570 at 595-596 [50]- Edelman It was the approach taken by Mason CJ, Wilson and Dawson JJ in Re Tracey; Ex parte Ryan261, who said "the real question ... is not whether a court-martial in performing its functions under the Act is exercising judicial power. There has never been any real dispute about that."262 The Australian treatment of service tribunals as exercising judicial power has long antecedents in English and United States law. When comparing a military tribunal with the courts of Westminster Hall, Lord Loughborough described the military tribunal as one that "must depend upon the same rules"263. English courts have held that service tribunals are courts giving decisions "in a criminal cause or matter"264 and that, as with any other court of justice, no action for libel or slander lay against the judges, counsel, witnesses or parties giving evidence before a military tribunal since it "has all the qualities and incidents of a court of justice"265. By 1872, Clode had written simply of service tribunals that the "State in its Civil aspect delegates Judicial functions to Military Officers"266. As with English law, courts of the United States have held for well over a century that a service tribunal exercises judicial power: "It is the organism provided by law and clothed with the duty of administering justice in this class of cases" and its judgments "rest on the same basis, and are surrounded by the same considerations which give conclusiveness to the judgments of other legal tribunals"267. Hence, as with English law, where a member of the armed services 261 (1989) 166 CLR 518 at 539-540. 262 (1989) 166 CLR 518 at 540. 263 Grant v Gould (1792) 2 H Bl 69 at 100 [126 ER 434 at 450]. See also Dawkins v Lord Paulet (1869) LR 5 QB 94 at 119. 264 R v Army Council; Ex parte Sandford [1940] 1 KB 719 at 725. See also Clifford and O'Sullivan [1921] 2 AC 570 at 581, contrasting a "so-called 'military court'". 265 Dawkins v Lord Rokeby (1873) LR 8 QB 255 at 266. See also Dawkins v Lord Rokeby (1875) LR 7 HL 744. 266 Clode, The Administration of Justice Under Military and Martial Law (1872) at 18. 267 Ex parte Reed (1879) 100 US 13 at 23. See also Grafton v United States (1907) 206 US 333 at 346; Ortiz v United States (2018) 138 S Ct 2165 at 2174. Edelman has been acquitted or convicted of an offence by a civil court268, in the United States the member cannot be exposed to double jeopardy269. These historical considerations, by themselves, might have been sufficient for the conclusive characterisation of the power of service tribunals to adjudicate and punish for offences as judicial: "the historical or traditional classification of a function is a significant factor to be taken into account in deciding whether there is an exercise of judicial power involved"270. But even apart from this historical treatment, a consideration of the nature of the power exercised and the manner in which it is exercised "would appear to satisfy every analytical test of what is strictly and exclusively judicial" so that service tribunals are "on any view exercising judicial power"271. As to the nature of the power exercised, a central attribute of judicial power is the imposition of punishment. In Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs272, Brennan, Deane and Dawson JJ said that the adjudication and punishment of criminal guilt under a law of the Commonwealth was established as "essentially and exclusively judicial in character". That approach has been taken for more than a century273 and the statement of their Honours has since been cited with approval in this Court on numerous occasions274. 268 Dicey, Introduction to the Study of the Law of the Constitution, 10th ed (1959) at 302, quoted in Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 546. 269 Schlesinger v Councilman (1975) 420 US 738 at 746; Ortiz v United States (2018) 138 S Ct 2165 at 2174, referring to the Double Jeopardy Clause as an independent basis for the conclusion. 270 R v Hegarty; Ex parte City of Salisbury (1981) 147 CLR 617 at 627, citing R v Davison (1954) 90 CLR 353 at 365, 369-370, 381-382 and Cominos v Cominos (1972) 127 CLR 588 at 600, 605, 608. 271 Stellios, Zines's The High Court and the Constitution, 6th ed (2015) at 299-300. 272 (1992) 176 CLR 1 at 27. 273 Waterside Workers' Federation of Australia v J W Alexander Ltd (1918) 25 CLR 274 Magaming v The Queen (2013) 252 CLR 381 at 399-400 [61]-[62]; Duncan v New South Wales (2015) 255 CLR 388 at 407 [41]; Falzon v Minister for Immigration and Border Protection (2018) 262 CLR 333 at 340 [14]-[15], 357 [88]; Minogue v Victoria (2019) 93 ALJR 1031 at 1042 [48]; 372 ALR 623 at 637; Vella v Edelman A service tribunal such as that created by the Defence Force Discipline Act is empowered to make orders upon conviction as punishment. Part IV of the Defence Force Discipline Act is entitled "Punishments and orders". It contains provisions concerned with authorised punishments, the scale of punishments, the scale of custodial punishments, concurrent or cumulative punishments, and convictions without punishment. It permits service impose punishments in a scale with the most extreme being imprisonment for life275 or imprisonment for a specific period276. In sentencing, the service tribunal must have regard to the principles of sentencing applied by the civil courts from time to time and not merely the need to maintain discipline in the Defence Force277. tribunals As to the manner in which the power is exercised, prior to a trial by a Defence Force magistrate the accused person enters a plea of guilty or not guilty and if the plea is not guilty then the magistrate proceeds to hear evidence278. The hearing is generally in public279, and in the presence of the accused280. Evidence may be taken on oath or by affirmation281. Court rules of evidence generally apply to the trial as applicable in courts exercising jurisdiction in or in relation to the Jervis Bay Territory282. Formal rules of procedure apply283. The accused can be represented by a legal practitioner284. A record of proceedings is Commissioner of Police (NSW) (2019) 93 ALJR 1236 at 1270-1271 [152]; 374 ALR 275 Defence Force Discipline Act, s 68(1)(a). Such punishment may only be imposed where the service tribunal is a general court martial: see Sch 2. 276 Defence Force Discipline Act, s 68(1)(b). Not exceeding six months where the service tribunal is a Defence Force magistrate: see Sch 2. 277 Defence Force Discipline Act, s 70(1). 278 Defence Force Discipline Act, s 135(1). 279 Defence Force Discipline Act, s 140. 280 Defence Force Discipline Act, s 139(1). 281 Defence Force Discipline Act, s 138(1)(a). 282 Defence Force Discipline Act, s 146. 283 See Court Martial and Defence Force Magistrate Rules 2020 (Cth), made pursuant to Defence Force Discipline Act, s 149A. 284 Defence Force Discipline Act, s 136. Edelman kept285. The royal prerogative of mercy is preserved286. The accused person is protected against exposure to double jeopardy287. A similar approach applies to trials by court martial, although one essential difference is that decisions of fact are made in a manner analogous to a jury by a panel of a President and other members288. Unsurprisingly, in Re Tracey; Ex parte Ryan289 Mason CJ, Wilson and Dawson JJ said, with regard to the Defence Force Discipline Act in relevantly the same form as present, that a service tribunal has "practically all the characteristics of a court exercising judicial power" and that "no relevant distinction can ... be drawn between the power exercised by a service tribunal and the judicial power exercised by a court". For these reasons, the weight of authority and principle supports the conclusion of Mason CJ, Wilson and Dawson JJ in Re Tracey; Ex parte Ryan that service tribunals exercise judicial power. However, from the first decade of this century there have been contrary suggestions that the power might not be judicial but might instead be a mere exercise of administrative power by the executive. One of the first such suggestions was made by Callinan J in White v Director of Military Prosecutions290. His Honour supported this conclusion by two reasons. The first reason for the suggestion that the power of service tribunals was administrative relied upon the reasons of Starke J in R v Bevan; Ex parte Elias and Gordon291 as precedent. Those reasons were interpreted as suggesting that the discipline and sanctions of military command were matters of executive power to be exercised "judicially" or in a judicial manner. Although, for decades now, it has been customary and convenient to speak of the manner of exercise of administrative power as often requiring procedural fairness rather than requiring exercise in a "judicial" manner or being a "quasi-judicial" power292, these 285 Defence Force Discipline Act, s 148. 286 Defence Force Discipline Act, s 189. 287 Defence Force Discipline Act, s 144. 288 Defence Force Discipline Act, ss 114, 133. See R v Stillman (2019) 436 DLR (4th) 289 (1989) 166 CLR 518 at 537. 290 (2007) 231 CLR 570 at 649 [240]. 291 (1942) 66 CLR 452. 292 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 365-366. See also Minister for Immigration and Multicultural Affairs v Rajamanikkam (2002) 210 Edelman confusing descriptions were not uncommon at the time Starke J wrote293. However, this was not what Starke J meant by his references to judicial power. His Honour was referring to judicial power in its proper and true sense. He said294: "This Court has held that the judicial power of the Commonwealth can only be vested in courts and that if any such court be created by Parliament the tenure of office of the justices of such court, by whatever name they may be called, must be for life, subject to the power of removal contained in sec 72 of the Constitution. Judicial power for this purpose may be described as 'the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action'. Naval courts-martial are set up and they exercise judicial power in the sense already mentioned. But do they exercise the judicial power of the Commonwealth?" The decision from which Starke J quoted his description of judicial power in this passage was that of Griffith CJ in Huddart, Parker & Co Pty Ltd v Moorehead295, whose description of judicial power is one which this Court has consistently referred to as "a classic statement of the characteristics of judicial authority"296, CLR 222 at 232 [25]; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 489-490 [25]; Lane v Morrison (2009) 239 CLR 230 at 247 [47]. 293 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 365, citing cases including Board of Education v Rice [1911] AC 179 at 182 and R v Electricity Commissioners; Ex parte London Electricity Joint Committee Co [1924] 1 KB 171 294 R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 at 466 (citations omitted). 295 (1909) 8 CLR 330 at 357. 296 R v Davison (1954) 90 CLR 353 at 387. See also R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 307; R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277 at 297; R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 394-395; R v Quinn; Ex parte Consolidated Foods Corporation (1977) 138 CLR 1 at 16. See also Consolidated Press Ltd v Australian Journalists' Association (1947) 73 CLR 549 at 561; Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 66; Nicholas v The Queen (1998) 193 CLR 173 Edelman "one of the best definitions of judicial power"297, or the "starting point"298 for considering whether power is judicial. including, ultimately, the chain of command, A second reason for the suggestion that the power of service tribunals might only be administrative power was that the punishments imposed are subject to confirmation by the Governor-General under s 68 of the Constitution299. This point attracted some support in Lane v Morrison300, where five members of this Court relied upon the review within a chain of command in support of their Honours' view that "on analysis the observation [that courts martial exercise judicial power] may go no further than asserting that courts-martial act judicially ... That observation may be made of many tribunals."301 However, the remarks in Lane v Morrison have no binding authority as precedent302. No party had made such a submission. Indeed, although such a submission would have been a complete answer to the case against the Commonwealth, when the then Solicitor-General of the Commonwealth was asked whether his reference to "judicial power" meant no more than a "duty to act judicially" he rightly referred to the characteristics of the power of service tribunals as judicial, replying that "It goes beyond [a duty to act judicially]. They are applying the facts to the law to determine whether an antecedent event gives rise to a liability under the Defence Force Discipline Code."303 297 Silk Bros Pty Ltd v State Electricity Commission of Victoria (1943) 67 CLR 1 at 9, Rola Co (Australia) Pty Ltd v The Commonwealth (1944) 69 CLR 185 at 215, and R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 395, all quoting Shell Co of Australia Ltd v Federal Commissioner of Taxation (1930) 44 CLR 530 at 542; [1931] AC 275 at 295. 298 Harris v Caladine (1991) 172 CLR 84 at 135; Thomas v Mowbray (2007) 233 CLR 307 at 413 [304]. See also Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 267-268. 299 White v Director of Military Prosecutions (2007) 231 CLR 570 at 649 [240]-[242]. 300 (2009) 239 CLR 230 at 257 [84]-[86], 261 [97]. 301 (2009) 239 CLR 230 at 260 [96]. See also at 247-248 [47]-[48] (French CJ and Gummow J). 302 CSR Ltd v Eddy (2005) 226 CLR 1 at 11 [13]; Spence v Queensland (2019) 93 ALJR 643 at 711 [294]; 367 ALR 587 at 667; Bell Lawyers Pty Ltd v Pentelow (2019) 93 ALJR 1007 at 1016 [28]; 372 ALR 555 at 562. 303 Lane v Morrison (2009) 239 CLR 230 at 233. Edelman The need for confirmation of a service tribunal's order from within the chain of command does not prevent the proper characterisation of the function of service tribunals as judicial. Trials by service tribunals have always included such confirmation by the Sovereign, the General, or Commander in Chief, yet have always been considered as judicial in nature. By 1717, when the Articles of War had statutory foundation304, Art 22 required an oath of members of any general court martial not to divulge the sentence of the court "until it shall be approved by his Majesty, the General, or Commander in Chief", nor was the sentence to be put in execution until his Majesty had received a report of the whole proceedings and his directions were signified thereupon. As Clode explained, a report of the Law Officers to George II authored in 1727 by Sir Philip Yorke and Charles Talbot305 showed that306: "The original intention of interposing the authority of the Crown, as Confirming Officer before a Court-martial Sentence was carried into execution, was assuredly one of mercy. Military tribunals were (then, at any rate, if not now) prone to severity, and hence the attribute of mercy was secured to the criminal." The interposition of an authority to grant mercy within the chain of command is just as consistent with the exercise of judicial power by the service tribunal as the traditional executive prerogative to grant mercy is with the exercise of judicial power by courts. Although by the time of the Army Act 1881307 the confirmation power was broader than merely a power of mercy, it was still a heavily constrained review power. In cases of a general court martial, it was a power to be exercised by the Sovereign, or some officer deriving authority from the Sovereign, in cases of conviction, but not acquittal308. And although it permitted findings or sentences to be sent back for revision, there was no further power of the confirming authority to recommend, or of the court martial to 304 Articles of War (4 Geo I), Art 22, recorded in the Journals of the House of Commons, vol 18 at 710. 305 Later, Lords Hardwicke and Talbot. See their report of 10 February 1727, extracted in Clode, The Military Forces of the Crown; Their Administration and Government (1869), vol 1 at 510. 306 Clode, The Administration of Justice Under Military and Martial Law (1872) at 145. 307 44 & 45 Vict c 58, s 54. 308 Army Act 1881, s 54(3). Edelman pronounce, an increase to the sentence upon the remitter309. Further, the power of review could not be exercised again after the new decision or sentence. Hence, the review power remained a limited power to review the justice of the conviction. It was not a power to remake the decision. As Clode explained, it was only a check: (i) to confirm that the court martial had jurisdiction; (ii) to ensure that the prisoner had a fair trial on the merits; and (iii) to confirm that the punishment was within the limits of the court martial's statutory power310. The legislative provision for service tribunals established shortly after Federation also reflected the narrowness of this historical power of confirmation within the chain of command by empowering the Governor-General, or a delegate311, to "[a]pprove, confirm, mitigate, or remit the sentence of any court- martial"312. The Defence Force Discipline Act follows a broadly similar approach to the reviewing of convictions. The review process sits alongside an appeal process, which has existed since 1955313, to a body now entitled the Defence Force Discipline Appeal Tribunal, which is "[f]or all practical purposes ... a court of criminal appeal"314. Punishments and orders of a service tribunal take effect forthwith subject to exceptions315. One exception is that a sentence of imprisonment by a service tribunal does not take effect unless approved by a reviewing authority316. The review operates as a check upon convictions, as it has done historically. It does so in a manner akin to an appeal by way of rehearing317. The reviewing authority – an officer or class of officers appointed by the Chief of 309 Army Act 1881, s 54(2). 310 Clode, The Administration of Justice Under Military and Martial Law (1872) at 144- 311 Defence Act 1903 (Cth), s 87(1) (as enacted). 312 Defence Act 1903, s 86(c) (as enacted). 313 Courts-Martial Appeals Act 1955 (Cth). 314 Hembury v Chief of the General Staff (1998) 193 CLR 641 at 649 [17]. 315 Defence Force Discipline Act, s 171(1). 316 Defence Force Discipline Act, s 172(1)(a) and (b). 317 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203 [13]. Edelman the Defence Force318 – has similar powers to a court of criminal appeal including very similarly drafted powers such as to quash a conviction, and enter an acquittal or order a new trial, where the conviction is unreasonable or cannot be supported having regard to the evidence or where there is a substantial miscarriage of justice319. Neither the power of a confirming authority to review the justice of a decision of a service tribunal, nor the power of judicial review described in s 75(v) of the Constitution – which applies to service tribunals just as it applies to federal courts – detracts from the conclusion of Mason CJ, Wilson and Dawson JJ in Re Tracey; Ex parte Ryan that a service tribunal determines authoritatively the liability of those charged before it320. Indeed, if the power of the reviewing authority were sufficient to alter the character of the service tribunal's decision from judicial to merely administrative then it is hard to see why the same expedient could not be applied in other circumstances to validate the exercise of what would otherwise be the judicial power of the Commonwealth outside the constraints of Ch III of the Constitution. Is the judicial power of service tribunals the judicial power "of the Commonwealth"? In Re Tracey; Ex parte Ryan, although this Court was unanimous that the power exercised by service tribunals to try and punish offences was a judicial power, there was a division of opinion as to whether the judicial power was "of the Commonwealth". As Mason CJ, Wilson and Dawson JJ said, although there has "never been any real dispute" that a court martial exercises judicial power, the question is whether it exercises "the judicial power of the Commonwealth under Ch III of the Constitution"321. They concluded that it does not322. Similarly, Brennan and Toohey JJ323, with whom Gaudron J agreed on this point324, said that although it was "not open to doubt" that courts martial in England performed 318 Defence Force Discipline Act, s 150. 319 Defence Force Discipline Act, ss 158-160. 320 (1989) 166 CLR 518 at 537. 321 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 540. 322 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 541. 323 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 572. See also at 573. 324 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 598. Edelman functions that were judicial in character, the imposition of punishment by service tribunals had never been regarded as an exercise of the judicial power of the Commonwealth. By contrast, Deane J325, and in later cases McHugh J326 and Kirby J327, thought that the conferral of judicial power on a service tribunal was a conferral of the judicial power "of the Commonwealth" although it is an exception to the exclusive vesting of such power in courts designated by Ch III. As Kirby J puzzled: whose judicial power does a service tribunal exercise if it is not that of the Commonwealth? It is not the independent judicial power of a State or Territory, nor is it the judicial power of a foreign nation328. Part of the explanation for the assertion that the judicial power of service tribunals is not "of the Commonwealth" originated in Australia with Starke J329. His Honour said, by reference to a decision of the Supreme Court of the United States concerning the operation of courts martial outside Art III of the United States Constitution330, that service tribunals are not part of the Ch III judicial system. This remark was echoed by Mason CJ, Wilson and Dawson JJ331 and by Brennan and Toohey JJ332 in Re Tracey; Ex parte Ryan. A curious aspect of this reasoning is that the conferral of judicial power on a subject matter of Commonwealth jurisdiction upon a tribunal outside the judicial system is usually a reason to conclude that the conferral is invalid rather than to conclude that the judicial power is not "of the Commonwealth". Ultimately, however, any debate about whether the judicial power is "of the Commonwealth" is no more than semantic because in Re Tracey; Ex parte Ryan, Mason CJ, Wilson and Dawson JJ ultimately justified the exercise of judicial 325 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 582-583. 326 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 499. 327 White v Director of Military Prosecutions (2007) 231 CLR 570 at 616-621 328 White v Director of Military Prosecutions (2007) 231 CLR 570 at 616 [124]. See also at 616-621 [123]-[140]. 329 R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 at 467. Then picked up by Dixon J in R v Cox; Ex parte Smith (1945) 71 CLR 1 at 23. 330 See Dynes v Hoover (1858) 61 US 65 at 79. 331 (1989) 166 CLR 518 at 540-541. 332 (1989) 166 CLR 518 at 573-574. Edelman power by service tribunals outside Ch III of the Constitution on the basis of historical considerations that would operate equally as an exceptional reason for the existence outside Ch III of the judicial power "of the Commonwealth". Historical reasons for preserving the exercise of judicial power by Commonwealth institutions outside the judicial system, and without being subject to Ch III considerations, may also have played a part in the express reservation to either House of the Commonwealth Parliament in s 47 of the Constitution of particular judicial power333. Section 47 reserves any question respecting the qualification of a senator or of a member of the House of Representatives, or respecting a vacancy in either House of the Parliament, and any question of a disputed election to the House in which the question arises334. The same can be said of the power under s 49 of the Constitution335. And so too, by implication from historical antecedents, for service tribunals exercising power under s 51(vi). Judicial power of service tribunals and Ch III of the Constitution A purist approach to s 51(vi) would preclude Parliament from conferring most judicial power upon service tribunals under s 51(vi) due to conflict with the principle that the judicial power of the Commonwealth can only be exercised by the courts designated by Ch III. The purist conception treats the pre-Federation history of service tribunals as a matter that carries no interpretative weight in the application of s 51(vi). The purist view is effectively that everything adjusted on Federation so that legislation is invalid, no matter how long established its historical antecedents, if it cannot be accommodated to implications derived, independently from that history, from the text and structure of the Constitution. No matter how strong the expressed expectations at Federation or how long established the jurisdiction of the service tribunals before Federation, they could not qualify the implication of the exclusivity of the vesting of the "judicial power of the Commonwealth" in courts designated by Ch III with regard to the application of s 51(vi), a provision that is expressly "subject to" the Constitution336. The purist approach inverts the proper process of reasoning by which the scope of a constitutional implication is shaped by historical considerations, not 333 Moore, The Constitution of The Commonwealth of Australia, 2nd ed (1910) at 316. 334 Subject to the provision otherwise by Parliament. Parliament otherwise provided for questions respecting disputed elections by the Commonwealth Electoral Act 1918 (Cth), Pt XVIII (as enacted). 335 R v Richards; Ex parte Fitzpatrick and Browne (1955) 92 CLR 157 at 166-167. See Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 574. 336 See, for instance, the approach of Deane J in Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 582-583. Edelman superimposed upon them. It denies the usual role of history and associated public expressions of expectations at Federation as a baseline from which the application of essential constitutional meaning develops. Instead, on the purist approach, constitutional implications, even those discovered decades after Federation, cannot be adjusted or tempered by history and expectations prior to Federation and beyond. No party to this application relied upon the purist approach. Rather than adopting the purist approach, the parties adopted the historical approach to the boundaries of s 51(vi). On that approach, Commonwealth legislation can validly confer judicial power upon service tribunals if the scope of that power can be seen to have been intended to continue from its accepted application prior to Federation. The parties all accepted the relevance of publicly expressed expectations at Federation, such as that expressed in Convention Debates by Mr O'Connor that "Parliament would have abundant power to decide how [courts martial] were to be conducted"337. However, the difficulty with the historical conception is that members of the Court have differed in their understanding of the historical record. Those differences have led to different scope being given to the service tribunal exception. That was the battleground of the argument in this Court. The view of the historical record taken by Brennan and Toohey JJ in Re Tracey; Ex parte Ryan, and subsequently338, was that prior to Federation there was no military jurisdiction for members of the British army to be tried for ordinary criminal offences committed in the United Kingdom during peacetime. After a lengthy consideration of the history of service tribunals, Brennan and Toohey JJ said339: "The power to punish conferred by naval and military law extended to the most serious crimes in the criminal calendar, but those crimes were not to be tried by court-martial unless they were committed on active service outside the jurisdiction of the ordinary courts or in circumstances and places where the jurisdiction of the ordinary courts could not be conveniently exercised." 337 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 10 March 1898 at 2259. See White v Director of Military Prosecutions (2007) 231 CLR 570 at 583 [7]. 338 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 481-482; Re Tyler; Ex parte Foley (1994) 181 CLR 18 at 29. 339 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 563. Edelman In contrast, Mason CJ, Wilson and Dawson JJ in Re Tracey; Ex parte Ryan, and subsequently340, considered that it was "open to Parliament to provide that any conduct which constitutes a civil offence shall constitute a service offence, if committed by a defence member"341. This was based in part upon their view of the historical record342: "[B]oth as a matter of history and of contemporary practice, it has commonly been considered appropriate for the proper discipline of a defence force to subject its members to penalties under service law for the commission of offences punishable under civil law even where the only connexion between the offences and the defence force is the service membership of the offender." The historical approach of Mason CJ, Wilson and Dawson JJ was strongly defended in this application by the Solicitor-General of the Commonwealth. The historical approach of their Honours is to be preferred over that of Brennan and Toohey JJ. As the Supreme Court of the United States observed in Solorio v United States343, even at the time of the American Revolution, British military tribunals had jurisdiction under the Articles of War to hear cases such as those concerning destruction of property despite the availability of ordinary civil courts. Indeed, not long after the prerogative basis for the Articles of War was placed on the legislative footing of annual Mutiny Acts, provision was made for courts martial to deal with any conduct that was an offence under the Articles of War. In the Mutiny Act 1718344, the Parliament provided that, subject to the "Party Injured" making an application to a commanding officer or proceeding for the prosecution before a civil court or magistrate, an officer, non-commissioned officer, or soldier could be tried by court martial for any "Offence against the Person, Estate, or Property of any of the Subjects of [the United Kingdom], which is Punishable by the known Laws of the Land". 340 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 474 (Mason CJ and Dawson J); Re Tyler; Ex parte Foley (1994) 181 CLR 18 at 26 (Mason CJ and Dawson J). 341 (1989) 166 CLR 518 at 545. 342 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 543. 343 (1987) 483 US 435 at 443. 344 5 Geo I c 5. Edelman With some limited qualifications such as offences committed outside active duty involving treason, murder, manslaughter, treason-felony, or rape345, that jurisdiction persisted in the Army Discipline and Regulation Act 1879346, which was substantially re-enacted as the Army Act 1881347. A broad jurisdiction also existed in the Naval Discipline Act 1866348 which, although more constrained by naval-related locations349, included trials of any offence, whether in England or abroad, which would be punishable by the law of England if committed in England. As Mason CJ, Wilson and Dawson JJ said in Re Tracey; Ex parte Ryan350, these United Kingdom statutes, and their counterparts in the Australian colonies351, were the forerunners of the provisions of the Defence Force Discipline Act conferring broad jurisdiction on service tribunals over civil offences. Provided that a service tribunal is constituted in a manner that is broadly consistent with its core historical antecedents it will not infringe the constitutional implication that the judicial power of the Commonwealth can only be exercised in accordance with Ch III of the Constitution. However, where the Commonwealth Parliament confers judicial power that extends beyond those historical roots, that can only be done consistently with the requirements of Ch III. Hence, the purported creation by the Commonwealth Parliament of an Australian Military Court could not be supported by s 51(vi), and independently of Ch III, because it was "established to make binding and authoritative decisions of guilt or innocence independently from the chain of command of the defence forces"352. The need for laws conferring judicial power upon service tribunals to conform to their historical roots can also be seen in the invalidation of ss 190(3) 345 Army Discipline and Regulation Act 1879 (42 & 43 Vict c 33), s 41; Army Act 1881, 346 Army Discipline and Regulation Act 1879, ss 41, 155. 347 Army Act 1881, ss 41, 162. 348 Naval Discipline Act 1866 (29 & 30 Vict c 109), ss 43, 45, 46. 349 Naval Discipline Act 1866, s 46. 350 (1989) 166 CLR 518 at 542. 351 Military and Naval Forces Regulation Act 1871 (NSW); Defences and Discipline Act 1890 (Vic); Defence Act 1884 (Qld); Defences Act 1895 (SA); Defence Forces Act 1894 (WA); Defence Act 1885 (Tas). 352 Lane v Morrison (2009) 239 CLR 230 at 266-267 [115]. Edelman and 190(5) of the Defence Force Discipline Act in Re Tracey; Ex parte Ryan. Those sub-sections sought to deny jurisdiction to State courts where a service tribunal had taken into consideration a service offence that was substantially the same as an offence for which the person was to be tried civilly or if a person had been tried for substantially the same offence as the civil court offence by a court martial. As Brennan and Toohey JJ held, the history of the special judicial power that is authorised by s 51(vi) did not "reveal any impairment of the criminal jurisdiction of the ordinary courts"353. Section 61(3) of the Defence Force Discipline Act operates consistently with its historical antecedents and does not exceed those historical boundaries. For the reasons given by Mason CJ, Wilson and Dawson JJ in Re Tracey; Ex parte Ryan, it does not contravene the implied prohibition upon exercise of the judicial power of the Commonwealth other than under Ch III of the Constitution. Sufficient connection between s 61(3) and the defence power There remains the submission by Private R that, independently of historical considerations, there is insufficient connection between s 61(3) of the Defence Force Discipline Act in all its applications and s 51(vi) of the Constitution. Private R submitted that there could not be sufficient connection between s 51(vi) of the Constitution and every offence contained in the legislation of the Australian Capital Territory that is picked up by s 61(3), "however trivial the conduct" and extending to "the most trivial kind of offences". For the reasons explained above, this submission departs from the historical understanding which preceded Federation, and from which there is no suggestion that s 51(vi) showed any intention to depart, concerning the intimate connection between the power of service tribunals to adjudicate upon all offences and the discipline necessary for the control of the armed forces. It can be accepted that the application of a constitutional power is not immutably set according to its historical application. The words "with respect to" require the challenged law to have a relevance to, or connection with, the head of power354 but, as society changes and develops, new or changed circumstances can alter the relevance to, or connection with, the head of power. Hence, the applications of the essential meaning of the "naval and military defence of the Commonwealth" and the "control of the forces to execute and maintain the laws 353 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 575. 354 Plaintiff S156/2013 v Minister for Immigration and Border Protection (2014) 254 CLR 28 at 42 [22], citing Grannall v Marrickville Margarine Pty Ltd (1955) 93 CLR Edelman of the Commonwealth" are not fixed. Nevertheless, no sufficient basis has been shown to depart from the consistent assumption of a connection between the control of the armed forces and the military discipline purpose for a law such as s 61(3) of the Defence Force Discipline Act authorising service tribunals to adjudicate upon and punish for all offences against the law of the land, however "trivial". In 1874, Clode wrote of the "habits of obedience" required by discipline355, saying that "'... nothing (even in Civil affairs) can be more dangerous than to allow the obligations to obey a law to depend on the opinion entertained by individuals of its propriety,' and in military affairs it would be intolerable". A hundred and thirty years later, in the Senate Foreign Affairs, Defence and Trade References Committee's report on the effectiveness of Australia's military justice system, which considered the Defence Force Discipline Act, the Committee quoted a public submission by General Cosgrove, then Chief of the Defence Force, who said that in times of both peace and conflict "the margin for error or omission without tragic consequences will often depend upon inculcated habits of discipline to instantly obey lawful directions and orders"356. That discipline "is as necessary in small matters such as punctuality and cleanliness as it is in more important ones like the protection of the human rights of non-combatants"357. And it is necessary whether the defence member is on leave or on duty. As Harlan J observed in O'Callahan v Parker358, "[t]he soldier who acts the part of Mr Hyde while on leave is, at best, a precarious Dr Jekyll when back on duty". It should, therefore, be accepted that, as Mason CJ, Wilson and Dawson JJ said in Re Tracey; Ex parte Ryan359, the purpose of a provision such as s 61(3), which brings the provision within power, is that: "as a matter of discipline, the proper administration of a defence force requires the observance by its members of the standards of behaviour demanded of ordinary citizens and the enforcement of those standards by military tribunals. To act in contravention of those standards is not only to 355 Clode, The Administration of Justice Under Military and Martial Law, 2nd ed (1874) at 73-76 (footnote omitted). 356 Australia, Senate, Foreign Affairs, Defence and Trade References Committee, The effectiveness of Australia's military justice system (June 2005) at 9-10 [2.11]. 357 Tracey, "The Constitution and Military Justice" (2005) 28 University of New South Wales Law Journal 426 at 426. 358 (1969) 395 US 258 at 281-282, a dissent ultimately accepted in Solorio v United States (1987) 483 US 435. 359 (1989) 166 CLR 518 at 543. Edelman break the law, but also to act to the prejudice of good order and military discipline." Conclusion After at least three decades of uncertainty, the reasoning of Mason CJ, Wilson and Dawson JJ in Re Tracey; Ex parte Ryan should be accepted in its entirety. I therefore agree with the conclusion in the joint judgment that s 61(3) of the Defence Force Discipline Act is valid in all its applications and with the proposed orders that the plaintiff's application should be dismissed with the plaintiff to pay the costs of the second defendant. This conclusion about the validity of the application of s 61(3) of the Defence Force Discipline Act is a matter of law, not policy. The provision in legislation such as the Defence Force Discipline Act for judicial power of service tribunals to extend to all the offences in the Crimes Act has been subjected to searching criticisms and expressions of dissatisfaction with the justice that it delivers360. The attempt by the Commonwealth Parliament to establish an Australian Military Court was an attempt to "improve upon ... that system with one more nearly approaching, but stopping short of, the Ch III paradigm"361. That attempt failed because although "[t]here is absolutely no reason why the functions assigned under the Act to service tribunals could not be performed by a Ch III court"362, there is no constitutional half-way house between a Ch III court and a service tribunal established consistently with the historical foundations that justify that application of the power in s 51(vi) of the Constitution. 360 See the discussion in Collins, The Military as a Separate Society: Consequences for Discipline in the United States and Australia (2019), ch 4. 361 Lane v Morrison (2009) 239 CLR 230 at 237 [11]. 362 White v Director of Military Prosecutions (2007) 231 CLR 570 at 619 [134].

HIGH COURT OF AUSTRALIA NERANJAN AGRAJITH KALUBUTH DE SILVA APPELLANT AND THE QUEEN RESPONDENT De Silva v The Queen [2019] HCA 48 Date of Hearing: 4 September 2019 Date of Judgment: 13 December 2019 ORDER Leave is granted to amend the Notice of Appeal. Special leave to appeal is granted in relation to ground 2 in the Amended Notice of Appeal. Appeal dismissed. On appeal from the Supreme Court of Queensland Representation P J Callaghan SC with P Morreau and B P Dighton for the appellant (instructed by Robertson O'Gorman Solicitors) M R Byrne QC with P J McCarthy for the respondent (instructed by Office of the Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS De Silva v The Queen Criminal practice – Trial – Directions to jury – Liberato v The Queen (1985) 159 CLR 507 ("Liberato") – Where appellant convicted by jury of rape – Where appellant did not give sworn evidence at trial – Where appellant made exculpatory statements in recorded police interview – Where record of interview admitted into evidence – Where appellant did not seek Liberato direction at trial – Where trial judge did not give Liberato direction – Whether Liberato direction required where accused does not give sworn evidence – Whether Liberato direction required where record of interview containing exculpatory statements admitted into evidence. Words and phrases – "beyond reasonable doubt", "choice between witnesses", "conflicting version of events", "criminal standard", "evidence on oath", "exculpatory answers", "interview with the police", "jury directions", "Liberato direction", "onus and standard of proof", "out-of-court statement", "recorded interview", "summing-up as a whole", "sworn evidence", "who do you believe", "word-on-word". KIEFEL CJ, BELL, GAGELER AND GORDON JJ. The appellant was arraigned in the District Court of Queensland (Judge Farr SC and a jury) on an indictment that charged him with two counts of rape1. Each offence was alleged to have been committed on the same occasion against the same complainant. In each case the allegation was of digital penetration of the complainant's vagina without her consent. The prosecution case on each count was dependent upon acceptance of the complainant's evidence. The appellant did not give, or call, evidence. A recorded interview between the appellant and the police was in evidence in the prosecution case ("the interview"). In the interview, the appellant denied any act of digital penetration. The trial judge gave conventional directions, which are not the subject of complaint, as to the onus and standard of proof. His Honour was not asked to give, and did not give, a direction along the lines of the direction proposed by Brennan J in Liberato v The Queen2 (a "Liberato direction"). The jury returned verdicts of not guilty on the first count and guilty on the second count. The appellant appealed against his conviction to the Court of Appeal of the Supreme Court of Queensland (Fraser, Gotterson and Morrison JJA), contending that a "miscarriage of justice occurred by reason of the directions given as to how the jury should approach the evidence contained in the appellant's interview with police". The principal deficiency in the directions was said to be the omission of a Liberato direction. Gotterson JA, giving the leading judgment, noted that the jury had not been presented with conflicting oral testimony from the appellant. His Honour said that there had been no need for a Liberato direction3. The appeal was dismissed. On 12 April 2019, Bell, Keane and Nettle JJ granted the appellant special leave to appeal on a single ground: "[t]he Court of Appeal erred in finding that a Liberato direction is not required if the defendant does not give evidence". On the hearing, the appellant acknowledged that a Liberato direction is not required as a matter of law4. He sought leave to amend his Notice of Appeal to add a 1 Criminal Code (Qld), s 349. (1985) 159 CLR 507 at 515. 3 R v De Silva [2018] QCA 274 at [40]-[42]. Salmon v The Queen [2001] WASCA 270 at [99]-[103]; Chen (2002) 130 A Crim R 300 at 328-329 [78]-[79]; R v Burt (2003) 140 A Crim R 555 at 564 [61]-[63]; R v Niass [2005] NSWCCA 120 at [28]; R v KDY (2008) 185 A Crim R Footnote continues Bell Gordon second ground: "[t]he Court of Appeal erred in failing to find that the directions given to the jury were inadequate and that as a result there was a miscarriage of justice". The Court heard full argument on the proposed second ground and reserved consideration of whether special leave to appeal would be granted to rely on it. For the reasons to be given, while it may, in some cases, be appropriate to give a Liberato direction notwithstanding that the accused's conflicting version of events is not before the jury on oath, this was not such a case. The Court of Appeal was correct to find that the summing-up as a whole conveyed that the jury could not convict if the appellant's exculpatory answers in the interview left them with a reasonable doubt as to his guilt5. In circumstances in which the proposed second ground of appeal is bound up with consideration of the first, it is appropriate to grant special leave to rely on the appellant's Amended Notice of Appeal but the appeal must be dismissed. Before turning to the terms of the Liberato direction, there should be some reference to the circumstances that gave rise to it. In Liberato, several accused were jointly tried for the rape of the complainant. Each accused admitted to having engaged in the act, or acts, of sexual intercourse with which he was charged, but claimed to have believed that the complainant was consenting6. The summing-up contained defects: the jury were directed that an accused was entitled to be acquitted if they were satisfied that he had an exculpatory belief as to consent, and if that "[gave] rise to a doubt" as to the accused's guilt7. In addition to this serious misdirection, on three occasions the trial judge identified the issue for the jury's determination as "who do you believe"8. After full argument, special leave to appeal was refused in Liberato. In the view of the majority, it had been open to the Court of Criminal Appeal to find 270 at 278 [26]; RMD v Western Australia (2017) 266 A Crim R 67 at 103 [165]; Ruthsalz v Western Australia [2018] WASCA 178 at [191]. 5 R v De Silva [2018] QCA 274 at [45]. (1985) 159 CLR 507 at 511. (1985) 159 CLR 507 at 514. (1985) 159 CLR 507 at 519. Bell Gordon that, notwithstanding the acknowledged defects in the summing-up, no substantial miscarriage of justice had actually occurred9. It is Brennan J's dissenting reasons which are the source of the Liberato direction10: "When a case turns on a conflict between the evidence of a prosecution witness and the evidence of a defence witness, it is commonplace for a judge to invite a jury to consider the question: who is to be believed? But it is essential to ensure, by suitable direction, that the answer to that question (which the jury would doubtless ask themselves in any event) if adverse to the defence, is not taken as concluding the issue whether the prosecution has proved beyond reasonable doubt the issues which it bears the onus of proving. The jury must be told that, even if they prefer the evidence for the prosecution, they should not convict unless they are satisfied beyond reasonable doubt of the truth of that evidence. The jury must be told that, even if they do not positively believe the evidence for the defence, they cannot find an issue against the accused contrary to that evidence if that evidence gives rise to a reasonable doubt as to that issue." Deane J agreed with Brennan J that the directions in Liberato were confusing because they left the impression that the jury's task was essentially one of making a choice between the differing prosecution and defence accounts11. His Honour also agreed that it was commonplace for judges to invite the jury to consider which of the conflicting accounts they believed. Indeed, his Honour said that express or implied references in a summing-up to a "choice" between witnesses were "sometimes unavoidable and commonly unobjectionable"12. His Honour did not consider that this posed difficulty, provided that the reference was accompanied by clear and unequivocal directions about the onus and standard of proof13. (1985) 159 CLR 507 at 508-509 per Mason A-CJ, Wilson and Dawson JJ. (1985) 159 CLR 507 at 515. (1985) 159 CLR 507 at 519-520. (1985) 159 CLR 507 at 519. (1985) 159 CLR 507 at 519. Bell Gordon Whatever may have been the practice when Liberato was decided, in Murray v The Queen this Court made clear that it is never appropriate for a trial judge to frame the issue for the jury's determination as involving a choice between conflicting prosecution and defence evidence: in a criminal trial the issue is always whether the prosecution has proved the elements of the offence beyond reasonable doubt14. In light of Murray, the occasions on which a jury will be invited to approach their task as involving a choice between prosecution and defence evidence should be few. This is not to say that the occasions calling for a Liberato direction should be few. The Liberato direction serves to clarify and reinforce directions on the onus and standard of proof in a case in which there is a risk that the jury may be left with the impression that the evidence on which the accused relies will only give rise to a reasonable doubt if they believe it to be truthful, or that a preference for the evidence of the complainant suffices to establish guilt. Subject to statute15, a Liberato direction should be given in a case in which the trial judge perceives that there is a real risk that the jury might view their role in this way. The Liberato direction is addressed, in terms, to a trial at which there is conflicting sworn evidence. Intermediate appellate courts have expressed differing views as to whether a Liberato direction is appropriate in a case in which the conflicting defence version of events is not given on oath, but is before the jury, typically in the accused's answers in a record of interview16. If the trial judge perceives that there is a real risk that the jury will reason that the accused's answers in his or her record of interview can only give rise to a reasonable doubt if they believe them, or that a preference for the evidence of the complainant over the accused's account in a record of interview suffices to establish guilt, a Liberato direction should be given. Where the risk of reasoning to guilt in either of these ways is present, whether the accused's version is on oath or in the form of answers given in a record of interview, the Liberato direction is necessary to (2002) 211 CLR 193 at 213 [57] per Gummow and Hayne JJ; see also at 201-202 [23] per Gaudron J. See also Douglass v The Queen (2012) 86 ALJR 1086 at 1089 [12] per French CJ, Hayne, Crennan, Kiefel and Bell JJ; 290 ALR 699 at 702-703. 15 See, eg, Jury Directions Act 2015 (Vic). 16 Whitsed v The Queen [2005] WASCA 208; R v Cordell [2009] VSCA 128; RMD v Western Australia (2017) 266 A Crim R 67; Monforte v The Queen [2018] VSCA Bell Gordon avoid a perceptible risk of miscarriage of justice17. When an accused gives, or calls, evidence there is a natural tendency for the focus to shift from the assessment of the capacity of the prosecution case to establish guilt to an assessment of the perceived strengths or weaknesses of the defence case. Recognition of this forensic reality suggests that the risk that the jury will reason in either of these ways is more likely to arise in a trial in which the conflicting defence account is on oath. In Johnson v Western Australia, Wheeler JA identified one possible shortcoming in using Brennan J's statement in Liberato as a template for the direction: a jury may completely reject the accused's evidence and thus find it confusing to be told that they cannot find an issue against the accused if his or her evidence gives rise to a "reasonable doubt" on that issue18. For that reason, it is preferable that a Liberato direction be framed along the following lines19: (i) if you believe the accused's evidence (if you believe the accused's account in his or her interview with the police) you must acquit; (ii) if you do not accept that evidence (account) but you consider that it might be true, you must acquit; and (iii) if you do not believe the accused's evidence (if you do not believe the accused's account in his or her interview with the police) you should put that evidence (account) to one side. The question will remain: has the prosecution, on the basis of evidence that you do accept, proved the guilt of the accused beyond reasonable doubt? Whether a Liberato direction is required will depend upon the issues and the conduct of the trial. At a trial where there has been no suggestion, whether express or implied, that the jury's determination turns on which of conflicting prosecution and defence versions is to be believed, there may be no need to expand on conventional directions as to the onus and standard of proof. As Wheeler JA also observed in Johnson, the expression "reasonable doubt" is apt to convey that a juror who is left in a state of uncertainty as to the evidence should not convict20. 17 Bromley v The Queen (1986) 161 CLR 315; Carr v The Queen (1988) 165 CLR 314; Longman v The Queen (1989) 168 CLR 79; Filippou v The Queen (2015) 256 CLR 47. (2008) 186 A Crim R 531 at 535 [14]-[15]. 19 Anderson (2001) 127 A Crim R 116 at 121 [26]. (2008) 186 A Crim R 531 at 535 [14]. Bell Gordon The facts On the evening of the subject events, the appellant and the complainant, who were acquaintances, made independent arrangements to stay overnight at a mutual friend's unit. Both had attended bars and nightclubs earlier in the evening. By the time they, and their mutual friend, Neil, returned to his unit, the complainant appeared to be intoxicated. The appellant had consumed some alcohol but he did not show signs of intoxication. Neil's girlfriend, Olivia, was present at the unit when the three arrived. It was arranged that the complainant would sleep on the couch in the lounge room and the appellant would sleep in the guest room. Olivia and Neil slept in his bedroom. The complainant got ready for bed, taking off her white t-shirt and putting on a black long-sleeved t-shirt. She removed her skirt but kept on her underwear. She was upset over the breakup of a relationship. The appellant sat on the couch with her and gave her a hug in a comforting manner. She then lay down to go to sleep. The complainant said that she woke to feel fingers being inserted into her vagina. She explained that she "wasn't completely coherent just yet". She had tried to "bring [herself] completely conscious to comprehend what was going on". It stopped and the complainant said she was "very still, trying to comprehend what I thought I had just felt". This was the incident charged in the first count, on which the jury returned a verdict of not guilty. Then the complainant said she felt fingers penetrating her vagina again. This was the incident charged in the second count, on which the jury returned a verdict of guilty. The complainant jumped off the couch and started yelling. Neil had died before the trial. A statement that he gave to the police was in evidence. In this he described the complainant bursting through the door of his bedroom saying "[g]et him out. Get him out". He said that he had walked out of the bedroom and seen the appellant mumbling, "[s]he's crazy. I'm leaving". The complainant was crying and she said "[h]e fingered me. What sort of person does that whilst someone is asleep". Olivia gave evidence of walking into the lounge room, where she saw the complainant yelling and shouting and telling the appellant to "get out". The complainant was wearing a loose shirt and black underwear. The appellant said "I've got to go" and left the unit. Olivia endeavoured to calm the complainant down. The complainant said that the appellant "tried to finger her". In the appellant's interview, he gave an account that the complainant had talked to him about breaking up with her boyfriend. She was naked and crying Bell Gordon and complaining that there was no one in her life. He cuddled her to comfort her. She had asked him if he found her attractive and whether he would date her. He replied that he had a girlfriend and at this point, the complainant "sort of freaked out". The summing-up The trial judge gave clear, correct directions on the onus and standard of proof. These included the instruction that: "It is for you to decide whether you are satisfied, beyond reasonable doubt, that the prosecution has proved the elements of the offence. If you are left with a reasonable doubt about guilt in respect of either charge, your duty is to acquit in respect of that charge. That is, to find the defendant not guilty. If you are not left with any such doubt, then your duty is to convict. That is, to find him guilty." His Honour observed that matters which would concern the jury no doubt would include the credibility and reliability of evidence, particularly that of the complainant. In directing the jury with respect to the fact that the appellant had not given or called evidence, his Honour twice reminded them that the onus was on the prosecution to establish guilt to the criminal standard. The instruction respecting the need for separate consideration of each count was accompanied by a direction of the kind discussed in R v Markuleski21, namely, that a reasonable doubt as to the truthfulness or reliability of the complainant's evidence in relation to one count may be taken into account in assessing the truthfulness and reliability of the complainant's evidence of another count. The focus of the appeal is on the directions concerning the interview. It is necessary to set them out at some length: "You have also before you the evidence of the defendant's interview with the police officers and the prosecution relies on some of the answers said to have been given by the defendant in that interview as supporting its case against him. … (2001) 52 NSWLR 82. Bell Gordon There are two issues, I suppose, that arise from that recording, insofar as those statements that the prosecution rely upon as suggesting it is in some way supportive of its case against him … The first thing, of course, is that you must accept that the defendant said such things. … Well, this is a recording. You can listen to that recording and that is a matter that you can work out for yourselves by simply listening to the tape. The second part of that is that you would have to, of course, conclude that what he said in those statements were accurate and true. So it is up to you to decide whether you are satisfied that those things said by the defendant, which the prosecution says – or submits to you are supportive of its case against him – were said by the defendant, and secondly, whether they were accurate and true. And, of course, it is a matter for you as to whether you – as to what weight you give to them. That is, whether they do support the prosecution case in any way, whether they do not, that is entirely a question of fact for yourselves. Now, in that interview he also gave answers which you might view as indicating his innocence. You should know, ladies and gentlemen, that you are entitled to have regard to those answers, if you accept them, and to give them whatever weight you think appropriate. Bearing in mind, of course, that they have not been tested by cross-examination. So in relation to both the answers which the prosecution relies upon as being supportive of its case against him, and those which point to innocence, it is entirely up to you what use you make of them and what weight you give to them." (emphasis added) The trial judge reminded the jury that defence counsel had suggested a possible motive for the complainant to lie in her account of the alleged offences. His Honour directed that if the jury rejected the suggested motive, it did not follow that the complainant was necessarily telling the truth. His Honour again reminded the jury that it was for the prosecution to satisfy them that the complainant was telling the truth because the prosecution bore the burden of establishing guilt beyond reasonable doubt. The Court of Appeal In the Court of Appeal, the appellant complained that the directions concerning the interview were misleading in two respects, each of which had the Bell Gordon tendency to undermine the directions on the onus and standard of proof. First, the instruction that the appellant's answers might be viewed as "indicating his innocence" was apt to suggest that the jury's inquiry was directed to innocence as distinct from proof of guilt. Secondly, the instruction respecting the answers in the interview on which the appellant relied that "you are entitled to have regard to those answers, if you accept them, and to give them whatever weight you think appropriate" was apt to reverse the onus. These deficiencies, it was submitted, underscored the necessity that the jury be given a Liberato direction. Gotterson JA noted that Brennan J's statement in Liberato was addressed to circumstances in which the trial judge had summed up the case "as one of choice between prosecution and defence evidence"22. Such a suggestion had not been made at the appellant's trial. While the appellant's exculpatory answers in the interview were evidence in the case, the appellant had not become a witness and the jury had not been presented with a conflict in oral testimony such as to characterise the case as a "word-on-word" case23. In the circumstances, his Honour said that there was no requirement for a Liberato direction24. Gotterson JA did not consider that the directions concerning the record of interview were misleading. The reference to answers as "indicating his innocence" was descriptive of the answers as exculpatory, and did not convey that the jury's task was to determine innocence25. The instruction "if you accept them" with respect to those exculpatory answers echoed the instruction at the commencement of the directions concerning the record of interview, which, consistently with Burns v The Queen26, directed the jury to consider first whether to accept that the answers were given and, secondly, to consider whether they were truthful27. 22 R v De Silva [2018] QCA 274 at [39]. 23 R v De Silva [2018] QCA 274 at [41]. 24 R v De Silva [2018] QCA 274 at [42]. 25 R v De Silva [2018] QCA 274 at [43]. (1975) 132 CLR 258. 27 R v De Silva [2018] QCA 274 at [44]. Bell Gordon Gotterson JA considered that the trial judge's concluding direction concerning the record of interview – that it was entirely up to the jury what use they made of the appellant's answers and what weight they gave to them – aligned with the general directions on the onus and standard of proof28. His Honour concluded that the summing-up as a whole conveyed that the jury could not convict if the appellant's exculpatory answers left them with a reasonable doubt about the appellant's guilt29. The submissions The appellant's case in this Court is that it is prudent to give a Liberato direction in most, if not all, cases in which there is evidence of the conflicting defence account of material events. He complains that the instructions given to the jury at his trial were generic and not adapted to the circumstances of the case. Specifically, they did not ensure that the jury understood that a preference for the evidence of the complainant did not preclude a verdict of not guilty. Nor did the directions make clear that disbelieving the appellant's version was no bar to a verdict of not guilty. The appellant maintains that the directions should not have invoked the concept of "innocence", or been expressed in terms that contemplated "acceptance" as a prerequisite to the use of the evidence of his answers given in the interview. The respondent did not take issue below or in this Court with the proposition that a Liberato direction could have been given in a case, such as this, in which the accused did not give evidence. The issue, however, in the respondent's submission, is whether the Court of Appeal erred in concluding that, on the whole of the summing-up, there was no miscarriage of justice in this case. The respondent points to the absence at the appellant's trial of the circumstances that Brennan and Deane JJ suggested called for a specific direction in Liberato: the trial did not involve starkly opposed sworn evidence, nor did the judge invite the jury to consider "who do you believe". Consideration This was a short trial in which the evidence, counsel's addresses and the summing-up were completed by lunchtime on the second day. The trial judge 28 R v De Silva [2018] QCA 274 at [45]. 29 R v De Silva [2018] QCA 274 at [45]. Bell Gordon addressed some preliminary remarks to the jury after they were empanelled. These included the instruction that: "A defendant in a criminal trial is presumed to be innocent. So before you may return a verdict of guilty on either charge, the prosecution must satisfy you that the defendant is guilty of the charge in question and must satisfy you of that beyond reasonable doubt." As detailed earlier, the jury were given repeated, correct directions as to the onus and standard of proof in the course of the summing-up. Nothing in the trial judge's summary of the way the respective cases were put, or in the way his Honour summed up, suggests that the jury might have been left with the impression that their verdicts turned on a choice between the complainant's evidence and the appellant's account in the interview. The focus of defence counsel's address was on the suggested incapacity of the prosecution case to support a finding of guilt beyond reasonable doubt in light of the complainant's intoxicated and emotional state. As noted, the directions concerning the use to be made of the appellant's answers in the interview commenced with a direction taken from Burns30 as to the necessity to be satisfied that the appellant gave the answers and, if so, to be satisfied that those answers were accurate and true. The statements in Burns were made in the context of a dispute as to the making of a confessional statement. The function of the summing-up is to meaningfully assist the jury to decide the real issues in the case. It should not contain formulaic directions unconnected to the determination of those issues. The instruction, that the jury first satisfy themselves that the answers on which the prosecution relied were given, was superfluous and apt only to distract: no party was suggesting that the appellant had not given the answers attributed to him in the electronically recorded interview. Whether, as the Court of Appeal reasoned, the words "if you accept them", when the trial judge came to the answers in the interview on which the appellant relied, would have been understood by the jury as meaning accepting that the answers were given, the direction was superfluous and potentially confusing. The requirement that jurors first satisfy themselves that the accused made an out-of-court statement is directed to disputed confessional statements and not exculpatory statements. It is, however, to read too much into the (1975) 132 CLR 258. Bell Gordon impugned passage to take from it, as the appellant submits, that the jury would have understood the direction as meaning "if you accept the truth of" the answers. The further instruction to give them "whatever weight you think appropriate" would make no sense were the jury to understand that a prerequisite to any use of the answers was satisfaction of their truth. Any risk of confusion was overcome by the further, correct, instruction: "So in relation to both the answers which the prosecution relies upon as being supportive of its case against him, and those which point to innocence, it is entirely up to you what use you make of them and what weight you give to them." In context, the trial judge's reference to answers in the interview "indicating [the appellant's] innocence" was, as the Court of Appeal held, descriptive of the answers as exculpatory31. The submission, that the reference to innocence and the inclusion of the words "if you accept them" in these two sentences of the summing-up undermined the clarity of the directions on the onus and standard of proof, is overly ambitious. Defence counsel appears not to have perceived any such risk. There was no request for any redirection on the use the jury might make of the answers in the interview. Nor did defence counsel seek a Liberato direction. The failure of counsel to seek a direction is not determinative against successful challenge in a case in which the direction was required to avoid a perceptible risk of the miscarriage of justice. The absence of an application for a direction may, however, tend against finding that that risk was present. The summing-up made clear the necessity that the jury be satisfied beyond reasonable doubt of the complainant's reliability and credibility. The Court of Appeal did not err in concluding that, when the summing-up is read as a whole, the trial did not miscarry by reason of the omission of a Liberato direction. Orders For these reasons, there should be the following orders: Leave is granted to amend the Notice of Appeal. Special leave to appeal is granted in relation to ground 2 in the Amended Notice of Appeal. 31 R v De Silva [2018] QCA 274 at [43]. Bell Gordon Appeal dismissed. Nettle NETTLE J. As the majority observe, a trial judge's summing up should be tailored to the issues and avoid the recitation of irrelevancies32. Presumably in pursuit of that objective, the trial judge gave the jury a Burns direction33 regarding the use that it was open to them to make of what were said to be incriminatory sections of the appellant's record of interview. That direction was as follows: "You have also before you the evidence of the defendant's interview with the police officers and the prosecution relies on some of the answers said to have been given by the defendant in that interview as supporting its case against him. The prosecution have referred you specifically to the statements that he made that you can hear on the recording, where he speaks about his close proximity to the complainant in the lead-up to the incident the subject of the charges. As I said, that recording will be with you when you retire to consider your verdicts and you can play it again as often as you wish. There are two issues, I suppose, that arise from that recording, insofar as those statements that the prosecution rely upon as suggesting it is in some way supportive of its case against him on the issue that I have just identified. The first thing, of course, is that you must accept that the defendant said such things. That is, gave answers about his proximity to the complainant in the lead-up to these two alleged events. Well, this is a recording. You can listen to that recording and that is a matter that you can work out for yourselves by simply listening to the tape. The second part of that is that you would have to, of course, conclude that what he said in those statements [was] accurate and true. So it is up to you to decide whether you are satisfied that those things said by the defendant, which the prosecution says – or submits to you are supportive of its case against him – were said by the defendant, and secondly, whether they 32 Alford v Magee (1952) 85 CLR 437 at 466 per Dixon, Williams, Webb, Fullagar and Kitto JJ. See also RPS v The Queen (2000) 199 CLR 620 at 637 [41] per Gaudron A-CJ, Gummow, Kirby and Hayne JJ; Azzopardi v The Queen (2001) 205 CLR 50 at 69 [49] per Gaudron, Gummow, Kirby and Hayne JJ; R v Getachew (2012) 248 CLR 22 at 34-35 [29] per French CJ, Hayne, Crennan, Kiefel and Bell JJ; Huynh v The Queen (2013) 87 ALJR 434 at 441 [31] per French CJ, Crennan, Kiefel, Bell and Gageler JJ; 295 ALR 624 at 631-632. 33 Burns v The Queen (1975) 132 CLR 258 at 261 per Barwick CJ, Gibbs and Nettle were accurate and true. And, of course, it is a matter for you as to whether you – as to what weight you give them. That is, whether they do support the prosecution case in any way, whether they do not, that is entirely a question of fact for yourselves." That direction was unexceptionable in itself. But there are some aspects of it that should be noted for reasons that will later appear. The first is the expression: "you must accept that the defendant said such things". That would have conveyed to the jury that, in order to have regard to the allegedly incriminatory answers, the jury had to be satisfied that the appellant in fact gave the allegedly incriminating answers. The second aspect is the use of the expression: "[t]he second part of that is that you would have to ... conclude that what he said in those statements [was] accurate and true" (emphasis added). That would have conveyed to the jury that the second matter of which they had to be satisfied before they could have regard to the incriminatory answers was that the incriminatory answers were "accurate and true". The third aspect of the direction is the trial judge's explication of the concept of weight, namely: "whether [the allegedly incriminating answers] do support the prosecution case in any way". As so expressed, that would have conveyed to the jury that the concept of weight stands separate and apart from the two conditions earlier explained of accepting that the appellant gave the allegedly inculpatory answers and that those answers were "accurate and true". Hence, as the concept of weight was so explained, the jury would have understood weight in this context to go to probative effect rather than credibility or reliability. Immediately after the Burns direction, the trial judge directed the jury in relation to the exculpatory aspects of the record of interview34. That direction was as follows: "Now, in that interview he also gave answers which you might view as indicating his innocence. You should know, ladies and gentlemen, that you are entitled to have regard to those answers, if you accept them, and to give them whatever weight you think appropriate. Bearing in mind, of course, that they have not been tested by cross-examination. So in relation to both the answers which the prosecution relies upon as being supportive of its case against him, and those which point to innocence, it is entirely up to you what use you make of them and what weight you give to them." 34 See Mule v The Queen (2005) 79 ALJR 1573 at 1577 [14] per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ; 221 ALR 85 at 90. Nettle There are several aspects of that direction that should also be noted. The first is that it would have conveyed to the jury that they were not entitled to make any use of any exculpatory answers given in the record of interview unless they "accept[ed] them". The second aspect is that, although the judge did not here spell out in terms that, in order to have regard to the exculpatory answers, the jury had to accept that the appellant in fact gave the exculpatory answers and, as a "second part of that", accept that those answers were "accurate and true", it is not unlikely that the jury would have understood the judge's use of the short-hand expression "accept them" as intended to convey exactly the same two conditions as had been outlined in the course of the immediately preceding Burns direction. The third aspect of the direction is that, here, as in the Burns direction, the judge referred to "weight" separately and apart from the notion of "accepting them" and, although his Honour did not here repeat in terms that weight means "whether they [the exculpatory answers] do support the [defence] case in any way", it is not unlikely that the jury would have taken that to be the judge's meaning, just as it was in the immediately preceding Burns direction. Seen, therefore, in the immediate context of the Burns direction, the net result of the direction on the exculpatory aspects of the record of interview may well have been to leave the jury with the impression that they were not permitted to have regard to the exculpatory answers unless they accepted both that those answers were given and that those answers were "accurate and true". The likelihood of that being so is fortified by the fact that, throughout the summing up, the judge repeatedly used the word "accept" to refer to a substantive acceptance, or non-acceptance, by the jury of particular evidence as being "accurate and true". Thus for example: "You are to determine the facts of the case based on the evidence that has been placed before you in this courtroom. That involves deciding what evidence you accept." (emphasis added) "you are not obliged to accept any comment I might make about the evidence". (emphasis added) "It is for you to decide whether you accept the whole of what a witness says or only part of it or none of it. You may accept or reject such parts of the evidence as you think fit. It is for you to judge whether a witness is telling the truth and correctly recalls the facts about which he or she has testified." (emphasis added) "Now, many factors may be considered in deciding what evidence you accept ... [Y]ou have seen how the witnesses presented in the witness box when answering questions ... [and] you should consider perhaps the likelihood of the particular witness's account or whether the evidence of a particular witness seemed reliable Nettle when compared with other evidence that you accept." (emphasis added) "the fact that we refer to [some] witnesses as expert does not mean that their evidence has automatically to be accepted, although you might think in this matter there is little reason to not accept their evidence". (emphasis added) "you are entitled to assess and accept and reject any such opinion evidence as you see fit". (emphasis added) "It is a matter for you, as the sole judges of the facts, whether you accept the evidence relating to the complainant's distressed condition". (emphasis added) As has been seen, there was very little in or about the direction on the exculpatory aspects of the record of interview that might have conveyed to the jury that the word "accept" was used in relation to the exculpatory aspects of the record of interview in any sense different from the repeated applications of "accept" throughout the summing up as referring to a substantive acceptance, or non-acceptance, of particular evidence as being "accurate and true". Further, as was earlier noticed, at the conclusion of the direction on the exculpatory aspects of the record of interview the judge directed the jury that, if they did "accept" the exculpatory answers, it was entirely up to them what use they made of them and what weight they gave them. In that context, that direction was misleading. The law is that, if the jury believed the appellant's account of what occurred, they were bound to acquit, and, even if they did not accept his account, but considered it was possible that it might be correct, they were bound to acquit35. It was only if they rejected his version of what occurred that they were entitled to ignore it. A properly structured Liberato direction delivered terms adumbrated in the majority's reasons would have safely conveyed that to the jury and, by doing so, gone far to overcome any misunderstanding, likely to have resulted from the direction on the exculpatory aspects of the record of interview, that the jury were not entitled to have regard to the exculpatory answers unless they accepted them as being "accurate and true". Instead, the admonition that it was entirely up to the jury what use they made of the exculpatory answers, in the context in which it was delivered, very likely compounded the problem. the 35 Liberato v The Queen (1985) 159 CLR 507 at 515 per Brennan J. Nettle Finally, it might not be without significance that the jury sought a re- direction as to the meaning of beyond reasonable doubt. It is, therefore, a little surprising that, although the judge was aware of this Court's decision in R v Dookheea36, his Honour chose not to adopt the response there recommended37 of contrasting the standard of proof beyond reasonable doubt with the lower civil standard of proof on the balance of probabilities in order to convey to the jury that being satisfied of guilt beyond reasonable doubt does not simply mean concluding that the accused may have committed the offence charged, or even that it is more likely than not that the accused committed the offence charged; that what is required is a much higher standard of satisfaction, the highest known to the law: proof beyond reasonable doubt. By itself, such a direction would not have saved the situation, but it would have assisted. In the result, I consider that there is a realistic possibility that the jury approached their task on the basis that they were to disregard the appellant's exculpatory answers unless they were persuaded that they were "accurate and true". So to approach their task would have been wrong in law and likely to have resulted in a conviction where, if properly directed, the jury may have acquitted. I consider that the appellant was thus deprived of a realistic chance of acquittal to which he was entitled and so subjected to a substantial miscarriage of justice. Conclusion It follows, in my view, that the appeal should be allowed. The order of the Court of Appeal should be set aside and in its place it should be ordered that the appeal to the Court of Appeal be allowed, the conviction be quashed and a new trial be had. (2017) 262 CLR 402. 37 R v Dookheea (2017) 262 CLR 402 at 426 [41] per Kiefel CJ, Bell, Gageler, Keane, Nettle and Edelman JJ.

HIGH COURT OF AUSTRALIA Matter No M97/2016 PLAINTIFF AND MINISTER FOR IMMIGRATION AND BORDER PROTECTION DEFENDANT Matter No P58/2016 APPLICANT AND MINISTER FOR IMMIGRATION AND BORDER PROTECTION RESPONDENT Graham v Minister for Immigration and Border Protection Te Puia v Minister for Immigration and Border Protection [2017] HCA 33 6 September 2017 M97/2016 & P58/2016 ORDER Matter No M97/2016 The questions stated by the parties in the special case and referred for consideration by the Full Court be answered as follows: Question 1 Are either or both of s 501(3) and s 503A(2) of the [Migration Act 1958 (Cth)] invalid, in whole or in part, on the ground that they: require a [federal court] to exercise judicial power in a manner which is inconsistent with the essential character of a court or with the nature of judicial power; or so limit the right or ability of affected persons to seek relief under s 75(v) of the Constitution as to be inconsistent with the place of that provision in the constitutional structure? Answer Section 501(3) is not invalid. Section 503A(2) is invalid to the extent only that s 503A(2)(c) would apply to prevent the Minister from being required to divulge or communicate information to this Court when exercising jurisdiction under s 75(v) of the Constitution, or to the Federal Court when exercising jurisdiction under s 476A(1)(c) and (2) of the [Migration Act], to review a purported exercise of power by the Minister under s 501, 501A, 501B or 501C to which the information is relevant. Question 2 In circumstances where the Minister found that the Plaintiff did not pass the character test by virtue of s 501(6)(b) of the [Migration Act 1958 (Cth)] because the Minister reasonably suspected that: the Plaintiff has been or is a member of "the Rebels Outlaw Motorcycle Gang"; and that organisation has been or is involved in criminal conduct; could the Minister, exercising power under s 501(3) of the [Migration Act], be satisfied that cancellation of the Plaintiff's visa was in the "national interest" without making findings as to: the Plaintiff's knowledge of, opinion of, support for or participation in the suspected criminal conduct of the Rebels Outlaw Motorcycle Gang; and/or how cancellation of the Plaintiff's visa would "disrupt, disable and dismantle the criminal activities of Outlaw Motorcycle Gangs"? Answer Unnecessary to answer. Question 3 Was the decision of the Minister of 9 June 2016 to cancel the Plaintiff's Special Category (Class TY) (Subclass 444) visa invalid by reason that: the answer to Question 1 is "Yes"; or the Minister acted on a wrong construction of s 503A(2); or the Minister failed to make the finding or findings referred to in [Question 2]? Answer The decision of the Minister to cancel the Plaintiff's visa was invalid by reason that the Minister acted on a wrong construction of s 503A(2). Question 4 What, if any, relief should be granted to the Plaintiff? Answer There should be directed to the Minister a writ of certiorari quashing the decision of the Minister and a writ of prohibition preventing action on that decision. Question 5 Who should pay the costs of this special case? Answer The Minister should pay the costs of the special case and of the proceeding. Matter No P58/2016 The questions stated by the parties in the special case and referred for consideration by the Full Court be answered as follows: Question 1 Are either or both of s 501(3) and s 503A(2) of the [Migration Act 1958 (Cth)] invalid, in whole or in part, on the ground that they: require a [federal court] to exercise judicial power in a manner which is inconsistent with the essential character of a court or with the nature of judicial power; or so limit the right or ability of affected persons to seek relief under s 75(v) of the Constitution as to be inconsistent with the place of that provision in the constitutional structure? Answer Section 501(3) is not invalid. Section 503A(2) is invalid to the extent only that s 503A(2)(c) would apply to prevent the Minister from being required to divulge or communicate information to this Court when exercising jurisdiction under s 75(v) of the Constitution, or to the Federal Court when exercising jurisdiction under s 476A(1)(c) and (2) of the [Migration Act], to review a purported exercise of power by the Minister under s 501, 501A, 501B or 501C to which the information is relevant. Question 2 In circumstances where the Minister found that the Plaintiff did not pass the character test by virtue of s 501(6)(b) of the [Migration Act 1958 (Cth)] because the Minister reasonably suspected that: the Plaintiff has been or is a member of a "group or organisation"; and that group or organisation has been or is involved in criminal conduct; could the Minister, exercising power under s 501(3) of the [Migration Act], be satisfied that cancellation of the person's visa was in the "national interest" without making findings as to: the Plaintiff's knowledge of, opinion of, support for or participation in the suspected criminal conduct of the group or organisation; and/or how cancellation of the Plaintiff's visa would "disrupt and disable such groups"? Answer Unnecessary to answer. Question 3 Was the decision of the Minister of 27 October 2015 to cancel the Plaintiff's Special Category (Class TY) (Subclass 444) visa invalid by reason that: the answer to Question 1 is "Yes"; or the Minister acted on a wrong construction of s 503A(2); or the Minister failed to make the finding or findings referred to in [Question 2]? Answer The decision of the Minister to cancel the Plaintiff's visa was invalid by reason that the Minister acted on a wrong construction of s 503A(2). Question 4 What, if any, relief should be granted to the Plaintiff? Answer There should be directed to the Minister a writ of certiorari quashing the decision of the Minister and a writ of prohibition preventing action on that decision. Question 5 Who should pay the costs of this special case? Answer The Minister should pay the costs of the special case and of the proceeding. Representation B W Walker SC with J M Forsaith for the plaintiff in M97/2016 and the applicant in P58/2016 (instructed by Malkoun & Co Lawyers) S P Donaghue QC, Solicitor-General of the Commonwealth with C L Lenehan and B K Lim for the defendant in M97/2016 and the respondent the for Commonwealth, intervening in both matters (instructed by Australian Government Solicitor) the Attorney-General of in P58/2016, and M G Sexton SC, Solicitor-General for the State of New South Wales with S J Free for the Attorney-General for the State of New South Wales, intervening in M97/2016 (instructed by Crown Solicitor (NSW)) P J Dunning QC, Solicitor-General of the State of Queensland with F J Nagorcka for the Attorney-General of the State of Queensland, intervening in both matters (instructed by Crown Solicitor (Qld)) M E O'Farrell SC, Solicitor-General of the State of Tasmania with S K Kay for the Attorney-General of the State of Tasmania, intervening in both matters (instructed by Office of the Solicitor-General of Tasmania) R M Niall QC, Solicitor-General for the State of Victoria with K E Foley for the Attorney-General for the State of Victoria, intervening in both matters (instructed by Victorian Government Solicitor) C D Bleby SC, Solicitor-General for the State of South Australia with A D Doecke for the Attorney-General for the State of South Australia, intervening in both matters (instructed by Crown Solicitor's Office (SA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Graham v Minister for Immigration and Border Protection Te Puia v Minister for Immigration and Border Protection Constitutional law (Cth) – Legislative power of Commonwealth – Constitution, s 75(v) – Where s 503A of Migration Act 1958 (Cth) prevents Minister for to divulge or Immigration and Border Protection from being required communicate certain information to courts – Whether s 503A requires courts to exercise judicial power in manner inconsistent with essential function of courts to find facts relevant to determination of rights in issue – Whether ss 501(3) and 503A(2) inconsistent with s 75(v) of Constitution – Whether s 503A(2)(c) denies High Court and Federal Court ability to enforce legislated limits of power – Whether s 503A(2)(c) curtails capacity of court to discern and declare whether legal limits of power conferred on Minister observed. Migration – Jurisdictional error – Power of Minister to cancel visa on character grounds under s 501(3) of Migration Act 1958 (Cth) – Where decisions to cancel visas took into account information purportedly protected from disclosure under s 503A – Where Minister's understanding of s 503A erroneous – Where error was as to whether Minister's decision would be shielded from review by court in so far as based on information protected from disclosure under s 503A – Whether decisions invalid as consequence of error. Words and phrases – "authorised migration officer", "character test", "fact-finding", "gazetted agency", "judicial power", "national interest", "protected from disclosure", "protected information", "public interest immunity", "purported exercise of a power", "substantial criminal record". Constitution, ss 75(v), 77(i), 77(iii). Migration Act 1958 (Cth), ss 476A, 501, 501A, 501B, 501C, 503A, 503B. KIEFEL CJ, BELL, GAGELER, KEANE, NETTLE AND GORDON JJ. Aaron Graham ("the plaintiff") is a citizen of New Zealand who has resided in Australia since December 1976. On 9 June 2016 he received a letter informing him that the Minister for Immigration and Border Protection ("the Minister") had decided to cancel the visa which had been granted to him (a Class TY Subclass 444 Special Category (Temporary) visa). The Minister gave as his reasons for doing so that he was satisfied as to the conditions for cancellation provided in s 501(3) of the Migration Act 1958 (Cth) ("the Act") and that he should not exercise his discretion in favour of the plaintiff to not cancel his visa. He said that in making his decision he had considered information which was protected from disclosure under s 503A of the Act. The plaintiff was not provided with a copy of that information or given any details of it. Mehaka Te Puia ("the applicant") is also a citizen of New Zealand and the holder of a visa of the same class as the plaintiff's. He has been resident in Australia since 2005. On 2 November 2015 he was given a letter informing him of the Minister's decision to cancel his visa. The Minister's decision was said to have been made under s 501(3) of the Act and to have been based on information which was protected from disclosure under s 503A of the Act. The applicant was not provided with a copy of that information or given any details of it. Section 503A(2) is set out later in these reasons. In summary, it relevantly provides that the Minister cannot be required to divulge information which was relevant to the exercise of his power under s 501 to any person or to a court if that information was communicated by a gazetted agency on condition that it be treated as confidential. The plaintiff brought proceedings in the original jurisdiction of this Court, seeking writs of prohibition directed to the Minister to prevent action on his decision to cancel the plaintiff's visa and a writ of certiorari to quash that decision. The applicant applied to the Federal Court of Australia under s 476A of the Act, seeking an order setting aside the decision of the Minister to cancel his visa. That matter was removed into this Court by order of Gordon J. Neither the plaintiff nor the applicant has sought orders for the production of the undisclosed information in the face of s 503A(2). The Minister has not provided the plaintiff, the applicant or their legal representatives with the information which he is said to have considered in making his decisions to revoke their visas ("the undisclosed information"). The undisclosed information Bell Nettle Gordon has not been provided to the Federal Court or this Court. The Minister has not sought orders preventing disclosure of the information to the plaintiff, the applicant and their legal representatives (s 503B), in order that he might make a written declaration that s 503A(2) does not prevent disclosure of the information to the Federal Court or this Court, as he may do under the Act (s 503A(3)). The Minister's position, clearly, is that any review of his decisions must be conducted by the Federal Court or by this Court without resort to the undisclosed information. The parties have agreed a special case in each proceeding and they have stated questions for the opinion of the Full Court. The questions are in practically the same terms. The questions as put in the plaintiff's special case are annexed to these reasons. The first question asks whether either or both of ss 501(3) and 503A(2) of the Act are invalid, in whole or in part, on the ground that they: require a Federal court to exercise judicial power in a manner which is inconsistent with the essential character of a court or with the nature of judicial power; or so limit the right or ability of affected persons to seek relief under s 75(v) of the Constitution as to be inconsistent with the place of that provision in the constitutional structure". The invalidity of s 501(3) was not addressed in submissions for the plaintiff. The questions may therefore be taken as directed only to s 503A(2). The same arguments were addressed by the plaintiff and the applicant to these questions. In these reasons a reference to the plaintiff's submissions or arguments is to be taken to refer to the submissions of both the plaintiff and the applicant. The statutory scheme Section 501(3) of the Act relevantly provides that the Minister may cancel a visa that has been granted to a person if: the Minister reasonably suspects that the person does not pass the character test; and the Minister is satisfied that the refusal or cancellation is in the national interest." Bell Nettle Gordon Section 501(6) relevantly provides that a person does not pass the character test if: the person has a substantial criminal record (as defined by subsection (7)); or the Minister reasonably suspects: that the person has been or is a member of a group or organisation, or has had or has an association with a group, organisation or person; and that the group, organisation or person has been or is involved in criminal conduct …" Section 501(7)(c) provides that a person has a substantial criminal record if the person has been sentenced to a term of imprisonment of 12 months or more. Sub-sections (4) and (5) of s 501 respectively provide that the power under sub-s (3) may only be exercised by the Minister personally and that the rules of natural justice do not apply to a decision under sub-s (3). Section 503A was inserted into the Act in 19981. In the Second Reading Speech Senator Kemp explained that law enforcement agencies are reluctant to provide sensitive information unless they are sure that both the information and its sources are protected2. Section 503A relevantly provides: If information is communicated to an authorised migration officer by a gazetted agency on condition that it be treated as confidential information and the information is relevant to the exercise of a power under section 501, 501A, 501B or 501C: 1 Migration Legislation Amendment (Strengthening of Provisions relating to Character and Conduct) Act 1998 (Cth). 2 Australia, Senate, Parliamentary Debates (Hansard), 11 November 1998 at 60. Bell Nettle Gordon the officer must not divulge or communicate the information to another person, except where: the other person is the Minister or an authorised migration officer; and the information is divulged or communicated for the purposes of the exercise of a power under section 501, 501A, 501B or 501C; … then: information authorised migration paragraph (1)(a) or (b); is communicated officer the Minister or an accordance with the Minister or officer must not be required to divulge or communicate the information to a court, a tribunal, a parliament or parliamentary committee or any other body or person; and if the information was communicated to an authorised migration officer—the officer must not give the information in evidence before a court, a tribunal, a parliament or parliamentary committee or any other body or person." The expression "gazetted agency" encompasses any "body, agency or organisation that is responsible for, or deals with, law enforcement, criminal intelligence, criminal investigation, fraud or security intelligence in, or in a part of, Australia" which is "specified in a notice published by the Minister in the Gazette"3. The expression "gazetted agency" also encompasses any "body, agency or organisation that is responsible for, or deals with, law enforcement, criminal intelligence, criminal investigation, fraud or security intelligence in a 3 Migration Act 1958 (Cth), s 503A(9), definitions of "Australian law enforcement or intelligence body" and "gazetted agency". Bell Nettle Gordon foreign country or a part of a foreign country" which is "a foreign country, or part of a foreign country, specified in a notice published by the Minister in the Gazette"4. It will be observed that s 503A(2) does not prohibit the Minister from disclosing the information. Section 503A(3) provides that the Minister may declare that sub-ss (1) and (2) do not prevent the disclosure of specified information in specified circumstances to a specified Minister, Commonwealth officer, court or tribunal, so long as the gazetted agency from which the information originated is first consulted. The Minister does not have a duty to consider the exercise of this power (s 503A(3A)). It remains to mention s 503B. Although the questions to be answered are not directed to it, it forms part of the statutory scheme relating to non-disclosure. Section 503B was inserted into the Act in 20035. Section 503B(1) relevantly provides that where information is communicated to the Minister by a gazetted agency on condition that it is to be treated as confidential; the information is relevant to proceedings in the Federal Court or the Federal Circuit Court that relate to, relevantly, s 501; and no declaration has been made by the Minister under s 503A(3) authorising the disclosure of the information for the purposes of the proceedings; then those courts may make orders which ensure that, if a declaration is made and the information disclosed, the information is not divulged or communicated to the applicant in the proceedings, the applicant's legal representative or any member of the public. That is to say, only the court would see the information. Orders under s 503B(1) may only be made on the application of the Minister. It has been mentioned that the Minister has made no such application in these cases. The criteria for the orders are contained in s 503B(5). However, s 503B(11) makes it clear that the Minister is not obliged to make a declaration under s 503A(3) even if orders are made under s 503B(1). 4 Migration Act 1958 (Cth), s 503A(9), definitions of "foreign law enforcement body" and "gazetted agency". 5 Migration Legislation Amendment (Protected Information) Act 2003 (Cth). Bell Nettle Gordon The Minister's reasons The plaintiff In his Statement of Reasons for cancelling the plaintiff's visa the Minister expressed himself to be satisfied of the two conditions necessary for cancellation under s 501(3), namely that he reasonably suspected that the plaintiff did not pass the character test and that it was in the national interest that his visa be cancelled. He was not satisfied that he should exercise his discretion to not cancel the plaintiff's visa. The plaintiff could not have passed the character test on account of his criminal record and the operation of s 501(6)(a) and (7)(c). The Minister himself said as much when he said that the plaintiff could not "objectively" pass the test. In 2009 the plaintiff had been convicted and sentenced to a term of imprisonment of 15 months for each of three counts of assault. The reason the Minister gave for his suspicion that the plaintiff did not pass the character test under s 501(6)(b) was that he was a member of the Rebels Outlaw Motorcycle Gang and that it had been involved in criminal conduct. So much had appeared from remarks made during sentencing and from statements made by the plaintiff's own representative, that he was a member of that organisation. Information about Operation Morpheus, established by the Serious and Organised Crime Coordination Committee, showed that that motorcycle gang was considered to be "one of Australia's highest criminal threats". The Minister took these facts into account together with the nature and extent of the plaintiff's criminal history in determining that it was in the national interest that the plaintiff's visa be cancelled. The Minister had regard to the plaintiff's family and personal circumstances in considering whether to exercise his discretion. Regardless of the availability of the substantial objective facts to found his suspicion, the Minister stated at a number of points in his reasons that he had considered the undisclosed information with respect to the conditions stated in s 501(3) and the exercise of his discretion. The undisclosed information was contained in an "Attachment ZZ" to the submission made by an authorised migration officer to the Minister to consider whether to cancel the plaintiff's visa. The parties agree that the provision of Attachment ZZ was a communication of that information to the Minister by an Bell Nettle Gordon authorised migration officer in accordance with s 503A(1) of the Act. It would follow that s 503A(2) applies. The applicant In his Statement of Reasons for cancelling the applicant's visa, the Minister said that he reasonably suspected that the applicant did not pass the character test by virtue of s 501(6)(b), because the Minister reasonably suspected that the applicant was a member of a group or organisation which has been or is involved in criminal conduct. It would appear that the organisation referred to is the Rebels Outlaw Motorcycle Gang. The Minister did not refer to the applicant's criminal record as relevant to the character test. In that part of the reasons which detail the applicant's personal circumstances, for the purpose of considering the exercise of his discretion, the Minister listed some relatively minor offences committed by the applicant which resulted in the imposition of fines, but not a sentence of imprisonment. In the case of the applicant, it would appear that the Minister's suspicion about the applicant, upon which his decision to cancel was based, was formed by reference only to the undisclosed information. In relation to both the character test and the national interest, the Minister had regard to the undisclosed information. That information was contained in "Attachment Z" to the submission to the Minister. The parties are agreed that the provision of that information was a communication to which s 503A(1) refers. Section 503A(2) applies. Revocation Neither the plaintiff nor the applicant has made representations to the Minister, pursuant to s 501C(3), to revoke his decision cancelling their visas. In the case of the plaintiff this is understandable. He could not satisfy the Minister that he passed the character test, given his substantial criminal record. That circumstance does not apply to the applicant, who has not sought to make any representations to the Minister. If the applicant had done so, unsuccessfully, the review undertaken by the Court would be of a different decision, namely the decision not to revoke the original decision to cancel his visa. The Minister does not, however, suggest that the applicant's failure to make representations to him is an impediment to the relief now sought by the applicant. Bell Nettle Gordon Inconsistency The general proposition put by the plaintiff with respect to invalidity is that there are limits to the power of the Commonwealth Parliament to legislate to withhold admissible documents from judicial proceedings. The starting point to the argument is the statement in Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs6 that the grants of legislative power in s 51 of the Constitution do not extend to making laws inconsistent with the essential character of a court exercising federal jurisdiction or with the nature of judicial power. The plaintiff's argument proceeds that it is an essential function of courts to find facts relevant to the determination of rights in issue. Section 503A(2) prevents the courts doing so and constitutes an interference with their function. The reference to fact-finding being an essential attribute of federal courts, or courts generally, requires qualification. Whilst the work of courts more often than not may involve finding the facts to which the law is to be applied, that is not always the case. The plaintiff accepts, as he must, that the Commonwealth Parliament can regulate aspects of judicial fact-finding. Nicholas v The Queen7 furnishes an example. The legislation there in question required courts, in certain circumstances, to ignore "the fact that a law enforcement officer committed an offence". It was held valid by a majority of the Court because its effect was not to determine criminal guilt, but to facilitate correct fact-finding by allowing relevant evidence to be admitted where the discretion referred to in Ridgeway v The Queen8 was applied. It has long been accepted that laws may regulate the method or burden of proving facts. In Nicholas, Brennan CJ explained9 that whilst a court, in the exercise of its implied powers, may provide for practice and procedure, it remains subject to overriding legislative provision. His Honour pointed out that the rules of evidence have traditionally been recognised as being an appropriate (1992) 176 CLR 1 at 26-27; [1992] HCA 64. (1998) 193 CLR 173; [1998] HCA 9. (1995) 184 CLR 19; [1995] HCA 66. (1998) 193 CLR 173 at 188-189 [23]. Bell Nettle Gordon subject of statutory prescription. The Parliament may, without offending Ch III of the Constitution, alter the onus of proof or standards of proof10. It may modify, or abrogate, common law principles such as those governing the discretionary exclusion of evidence11. It may legislate so as to affect the availability of privileges, such as legal professional privilege. Laws regulating the method or burden of proving facts may have a serious effect on the outcome of proceedings. In Gypsy Jokers Motorcycle Club Inc v Commissioner of Police12, it was said that the fact that a law handicaps a party does not mean that the court cannot exercise its jurisdiction, but rather that the court will arrive at its decision on less than the whole of the relevant materials. This may occur where there has been a successful claim for public interest immunity, resulting in documents not being produced. The plaintiff argues that the line between permissible regulation and impermissible interference is to be ascertained from the common law. Whether a law crosses the line depends upon the extent to which it requires a court to depart from "the methods and standards which have characterised judicial activities in the past"13. Those relevant methods and standards, the plaintiff submits, are those of the common law relating to confidentiality and public interest immunity. As to the latter, the fundamental principle recognised in Sankey v Whitlam14 is that admissible evidence can be withheld "only if, and to the extent, that the public interest renders it necessary"15. It is the duty of the court to balance the competing public interests, not the privilege of the executive16. That requires the 10 (1998) 193 CLR 173 at 189-190 [24], 225 [123], 234-236 [152]-[154]. 11 (1998) 193 CLR 173 at 188-191 [23]-[26], 201-203 [52]-[55], 272-274 [232]- 12 (2008) 234 CLR 532 at 556 [24]; [2008] HCA 4, quoting Church of Scientology v Woodward (1982) 154 CLR 25 at 61; [1982] HCA 78. 13 Thomas v Mowbray (2007) 233 CLR 307 at 355 [111]; [2007] HCA 33. 14 (1978) 142 CLR 1; [1978] HCA 43. 15 (1978) 142 CLR 1 at 41. 16 Sankey v Whitlam (1978) 142 CLR 1 at 38-39, 58-59, 95-96. Bell Nettle Gordon court to enquire into the facts, to ascertain the nature of the State secret17. The essential difference between relevant evidence being withheld by reason of public interest immunity and by reason of s 503A(2) is that in the case of the former, the courts determine whether that should occur. The Minister and the Attorney-General of the Commonwealth submit that, as a matter of policy, it may be accepted that admissible evidence should be withheld only if and to the extent the public interest requires it, but that there is no constitutional principle which requires the courts to be the arbiter of that question. This submission should be accepted to the extent that the question of where the balance may lie in the public interest has never been said to be the exclusive preserve of the courts, nor has it ever been said that legislation may not affect that balance. Whether the Constitution permits legislation to deny a court exercising jurisdiction under s 75(v) the ability to see the evidence upon which a decision was based is another matter. The plaintiff's argument derives no support from cases such as Gypsy Jokers18, K-Generation Pty Ltd v Liquor Licensing Court19 and Condon v Pompano Pty Ltd20. The plaintiff submits that those cases show that laws are less likely to be invalid if they have a close analogue with the common law or ensure the court's independence. This is an overly broad statement. Those cases involved legislative schemes of very different kinds from that presently under consideration. The plaintiff also seeks to rely upon the cases following upon Kable v Director of Public Prosecutions (NSW)21 on the basis that the principle to which Kable refers shares a similar foundation in constitutional principle, albeit the principle in that case is more limited. The plaintiff's argument, that a court's institutional integrity is substantially impaired by s 503A(2), is not compelling. 17 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 178 at 186; [1913] HCA 19. 18 (2008) 234 CLR 532. 19 (2009) 237 CLR 501; [2009] HCA 4. 20 (2013) 252 CLR 38; [2013] HCA 7. 21 (1996) 189 CLR 51; [1996] HCA 24. Bell Nettle Gordon The fact that a gazetted agency and the Minister may control the disclosure of information does not affect the appearance of the court's impartiality, as the plaintiff contends. Section 75(v) Resolution of the issue concerning s 75(v) of the Constitution requires a return to first principles. As the plaintiff's argument with respect to inconsistency correctly apprehended, all power of government is limited by law. Within the limits of its jurisdiction where regularly invoked, the function of the judicial branch of government is to declare and enforce the law that limits its own power and the power of other branches of government through the application of judicial process and through the grant, where appropriate, of judicial remedies. That constitutional precept has roots which go back to the foundation of the constitutional tradition of which the establishment of courts administering the common law formed part. By the time of the framing of the Australian Constitution, the precept had come to be associated in the context of a written constitution with the decision of the Supreme Court of the United States in Marbury v Madison22. The precept has since come to be associated in the particular context of the Australian Constitution with the decision of this Court in Australian Communist Party v The Commonwealth23. There Dixon J referred to the Australian Constitution as "an instrument framed in accordance with many traditional conceptions, to some of which it gives effect, as, for example, in separating the judicial power from other functions of government, others of which are simply assumed", adding that "[a]mong these I think that it may fairly be said that the rule of law forms an assumption"24. There also Fullagar J observed that "in our system the principle of Marbury v Madison is accepted as axiomatic, modified in varying degree in various cases (but never excluded) by 23 (1951) 83 CLR 1; [1951] HCA 5. 24 (1951) 83 CLR 1 at 193. Bell Nettle Gordon the respect which the judicial organ must accord to opinions of the legislative and executive organs"25. Acceptance by the framers of the Australian Constitution of the principle in Marbury v Madison was combined with a desire on their part to avoid replication of the actual outcome in that case. The outcome had been that the Supreme Court had held that Congress lacked legislative power to authorise the Supreme Court to grant mandamus to compel an officer of the United States to perform a statutory duty. The upshot was the inclusion within Ch III of the Constitution of s 75(v), which confers original jurisdiction on the High Court in all matters in which a writ of mandamus or prohibition or an injunction is sought against an officer of the Commonwealth, and of s 77(i) and (iii) in so far as those provisions empower the Commonwealth Parliament invest equivalent statutory jurisdiction on or in other courts. The power of a court exercising jurisdiction under, or derived from, s 75(v) to grant a writ of mandamus or prohibition or an injunction against an officer of the Commonwealth is a power to enforce the law that limits and governs the power of that officer. to confer or What follows from the inclusion of s 75(v) in the Constitution is that it is "impossible" for Parliament "to impose limits upon the quasi-judicial authority of a body which it sets up with the intention that any excess of that authority means invalidity, and yet, at the same time, to deprive this Court of authority to restrain the invalid action of the court or body by prohibition"26. The same is to be said of the impossibility of Parliament imposing a public duty with the intention that the duty must be performed and yet depriving this Court of authority by mandamus to compel performance of the duty imposed27 and of the impossibility of Parliament imposing a constraint on the manner or extent of exercise of a power with the intention that the constraint must be observed and yet depriving 25 (1951) 83 CLR 1 at 262-263 (footnote omitted). 26 R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 616; [1945] HCA 53. 27 R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 427; [1983] HCA 35. Bell Nettle Gordon this Court of authority by injunction to restrain an exercise of that power rendered unlawful by reason of being in breach of that constraint28. The presence of s 75(v) thus "secures a basic element of the rule of law"29. In Plaintiff S157/2002 v The Commonwealth30 it was said that: "Within the limits of its legislative capacity, which are themselves set by the Constitution, Parliament may enact the law to which officers of the Commonwealth must conform. If the law imposes a duty, mandamus may issue to compel performance of that duty. If the law confers power or jurisdiction, prohibition may issue to prevent excess of power or jurisdiction. An injunction may issue to restrain unlawful behaviour. Parliament may create, and define, the duty, or the power, or the jurisdiction, and determine the content of the law to be obeyed. But it cannot deprive this Court of its constitutional jurisdiction to enforce the law so enacted." Where Parliament enacts a law conferring a decision-making power on an officer and goes on to enact a privative clause, cast in terms that a decision of the officer cannot be called into question in a court, history shows that the privative clause has the potential to be read in different ways. The privative clause might be read as expanding the conferral of decision-making power on the officer31, or it might be read as speaking only to what an officer does within the limits of the decision-making power otherwise conferred32. On either of those non-literal readings, the privative clause would be valid. The privative clause would be invalid, however, were it to be read literally, so as to deny to a court exercising 28 Church of Scientology v Woodward (1982) 154 CLR 25 at 56-57. 29 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 482 [5]; [2003] HCA 2. 30 (2003) 211 CLR 476 at 482-483 [5]. See also at 513-514 [104]. 31 See, eg, Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 at 194; [1995] HCA 23. 32 See, eg, Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 509 Bell Nettle Gordon jurisdiction under or derived from s 75(v) the ability to enforce the legal limits of the decision-making power which Parliament has conferred on the officer. Where Parliament enacts a law which confers a decision-making power on an officer and goes on to enact some other provision, not cast as a privative clause, that other provision must likewise be invalid if and to the extent that it has the legal or practical operation of denying to a court exercising jurisdiction under, or derived from, s 75(v) the ability to enforce the limits which Parliament has expressly or impliedly set on the decision-making power which Parliament has conferred on the officer. Parliament can delimit the statutory jurisdiction which it chooses to confer under s 77(i) or invest under s 77(iii) to something less than the full scope of jurisdiction under s 75(v)33. Parliament can, under s 51(xxxix), regulate the procedure to be followed in the exercise of jurisdiction under s 75(v) or under s 77(i) or (iii), including by defining compulsory powers to compel disclosure of relevant information and by limiting admission of relevant evidence34. What Parliament cannot do under s 51(xxxix) or under any other source of legislative power is enact a law which denies to this Court when exercising jurisdiction under s 75(v), or to another court when exercising jurisdiction within the limits conferred on or invested in it under s 77(i) or (iii) by reference to s 75(v), the ability to enforce the legislated limits of an officer's power. The question whether or not a law transgresses that constitutional limitation is one of substance, and therefore of degree. To answer it requires an examination not only of the legal operation of the law but also of the practical impact of the law on the ability of a court, through the application of judicial process, to discern and declare whether or not the conditions of and constraints on the lawful exercise of the power conferred on an officer have been observed in a particular case. Bodruddaza v Minister for Immigration and Multicultural Affairs35 is an illustration of to have been transgressed. The provision there held invalid, s 486A of the Act, imposed a limitation being found that constitutional 33 Abebe v The Commonwealth (1999) 197 CLR 510; [1999] HCA 14. 34 Nicholas v The Queen (1998) 193 CLR 173. 35 (2007) 228 CLR 651 at 671-672 [53]-[60]; [2007] HCA 14. Bell Nettle Gordon blanket and inflexible time limit for making an application for relief under s 75(v) in relation to a migration decision. The basis of invalidity was explained to be that, in failing to "allow for the range of vitiating circumstances which may affect administrative decision-making", the section would have had the practical effect of depriving this Court of its jurisdiction to enforce those provisions of the Act which defined the decision-making power to make a migration decision36. Section 503A(2)(c) of the Act imposes a similarly blanket and inflexible limit on obtaining and receiving evidence relevant to the curial discernment of whether or not legislatively imposed conditions of and constraints on the lawful exercise of powers conferred by the Act on the Minister have been observed. The legal operation of s 503A(2)(c), so far as relevant, is to prevent the Minister from being required to divulge or communicate to any court any information which can be demonstrated objectively to meet the two conditions in s 503A(1). The first of those conditions is that the information has been "communicated to an authorised migration officer by a gazetted agency on condition that it be treated as confidential information". The second is that the information is "relevant to the exercise of a power under section 501, 501A, 501B or 501C". The expression "gazetted agency" has been referred to earlier in these reasons37. It is defined widely so as to encompass any body, organisation or agency in Australia that is responsible for, or deals with, law enforcement, criminal intelligence or investigation or security intelligence specified in a notice published by the Minister in the Gazette38. It also encompasses bodies responsible for, or dealing with, the same, in a foreign country or a part of a foreign country which is "a foreign country, or part of a foreign country, specified in a notice published by the Minister in the Gazette"39. The notice published by the Minister in the Gazette, as currently in force, specifies a total of 42 Commonwealth, State and Territory statutory authorities and government 36 (2007) 228 CLR 651 at 671-672 [55]. 39 Migration Act 1958 (Cth), s 503A(9), definitions of "Australian law enforcement or intelligence body", "foreign law enforcement body" and "gazetted agency". Bell Nettle Gordon departments in the first category and a total of 285 countries or parts of countries (the entire membership of the United Nations) in the second category40. The practical impact of that legal operation, so far as relevant, is in the application of s 503A(2)(c) to this Court when exercising jurisdiction under s 75(v) of the Constitution, and to the Federal Court when exercising under s 476A(1)(c) and (2) of the Act jurisdiction "the same as the jurisdiction of the High Court under [s] 75(v) of the Constitution", to review a purported exercise of power by the Minister under s 501, 501A, 501B or 501C. The impact is to prevent this Court and the Federal Court from obtaining access to a category of information which, by definition, is relevant to the purported exercise of the power of the Minister that is under review, and which must for that reason be relevant to the determination of whether or not the legal limits of that power and the conditions of the lawful exercise of that power have been observed. This Court and the Federal Court, by the operation of s 503A(2), are denied the ability to require the information to be produced or adduced in evidence by the Minister irrespective of the importance of the information to the determination to be made and irrespective of the importance or continuing importance of the interest sought to have been protected by the gazetted agency when that agency chose to attach to its communication of information to an authorised migration officer the condition that the information be treated as confidential information. To the extent s 503A(2)(c) operates in practice to deny to this Court and the Federal Court the ability to see the relevant information for the purpose of reviewing a purported exercise of power by the Minister under s 501, 501A, 501B or 501C, s 503A(2)(c) operates in practice to shield the purported exercise of power from judicial scrutiny. The Minister is entitled in practice to base a purported exercise of power in whole or in part on information which is unknown to and unknowable by the court, unless the Minister (after consulting with the gazetted agency from which the information originated) chooses to exercise the non-compellable power conferred on the Minister by s 503A(3) to declare that disclosure to the court can occur. Although this circumstance does not arise in this case because the applicant did not put a case to the Minister as to why the Minister should revoke his decision cancelling the applicant's visa, it is possible that a person may have a compelling case as to why he or she passes the character test. It may be such as 40 Commonwealth of Australia Gazette, GAZ16/001, 22 March 2016. Bell Nettle Gordon to show that, prima facie, the Minister could not have evidence to found his suspicion or that his decision is, in law, unreasonable. The practical effect of s 503A(2) is that the court will not be in a position to draw any inferences adverse to the Minister. No inference can be drawn whilst the Minister says that his decision is based upon information protected by s 503A(2), which the court cannot see. The resultant effect on the ability of this Court or the Federal Court to determine whether or not the conditions of and constraints on the lawful exercise of the power conferred on the Minister by s 501, 501A, 501B or 501C have been observed in a particular case is well-enough illustrated by the circumstances revealed by the reasons given by the Minister under s 501C(3) for the Minister's purported exercises of the power conferred by s 501(3) to cancel the visas of the plaintiff and the applicant. As explained earlier in these reasons, s 501(3) confers power on the Minister to cancel a visa that has been granted to a person if both of two conditions are satisfied. One condition is that the Minister reasonably suspects that the person does not pass "the character test"41, requiring relevantly that the Minister reasonably suspects both that the person has been or is a member of a group or organisation (or has had or has an association with a group, organisation or person) and that the group or organisation (or person) has been or is involved in criminal conduct42. The other condition is that the Minister is satisfied that the refusal or cancellation is in the national interest43. Section 501(3) is to be read with s 501C(4), which confers power on the Minister to revoke a decision under s 501(3). A condition of that power is that the person satisfies the Minister that the person passes the character test44. The suspicion of the Minister necessary to fulfil the first condition of s 501(3) and the satisfaction of the Minister necessary to fulfil the second condition of s 501(3) and the relevant condition of s 501C(4) must each be formed by the Minister reasonably and on a correct understanding of the law. 41 Migration Act 1958 (Cth), s 501(3)(c). 42 Migration Act 1958 (Cth), s 501(6)(b). 43 Migration Act 1958 (Cth), s 501(3)(d). 44 Migration Act 1958 (Cth), s 501C(4)(b). Bell Nettle Gordon The concept of the national interest, the Minister's satisfaction as to which is the subject of the second condition of s 501(3), although broad and evaluative, is not unbounded. And the statutory discretion enlivened on fulfilment of those statutory conditions must in each case be exercised by the Minister "according to the rules of reason and justice, not according to private opinion; according to law, and not humour, and within those limits within which an honest man, competent to discharge the duties of his office, ought to confine himself"45. The Minister's reasons in each case reveal that the Minister had regard to information within the scope of s 503A(1) both in forming the suspicion that the plaintiff and the applicant did not pass the character test and in coming to be satisfied that cancellation of each of their visas was in the national interest. Indeed, in the case of the applicant, the Minister's reasons reveal that the only information to which the Minister had regard in forming the suspicion that he did not pass the character test was information within the scope of s 503A(1). The structure of the Minister's reasons also reveals that the Minister treated his satisfaction that cancellation of the visa was in the national interest as the starting point for the consideration of the exercise of discretion, in each case going on to identify other considerations and to conclude that those other considerations were insufficient to outweigh the national interest in cancellation. Whether or not the Minister, in forming the suspicion and state of satisfaction and in exercising the discretion, did so reasonably on the material to which he had regard so as to have acted within the legal limits of the power conferred by s 501(3) cannot be known to this Court or to the Federal Court. The attempt by the Minister and the Attorney-General of the Commonwealth to analogise the operation of s 503A(2)(c) to the operation of the common law principle of public interest immunity is misplaced. In so far as the attempted analogy is to the supposed historical position of a court treating an executive certification that disclosure was not in the public interest as conclusive, the view of history on which it is based is too narrow. The better view is that, even outside the context of judicial review of executive action, a court "always had in reserve the power to inquire into the nature of the document for which 45 R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189; [1965] HCA 27, citing Sharp v Wakefield [1891] AC 173 at 179. See Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1; Minister for Immigration and Border Protection v Eden (2016) 240 FCR 158. Bell Nettle Gordon protection [was] sought, and to require some indication of the nature of the injury ... which would follow its production"46. The Minister and the Attorney-General do not point to any case in the original jurisdiction of this Court under s 75(v) in which executive certification of material taken into account by an officer in making a decision under review was found or even asserted to be conclusive of the public interest. In so far as the attempted analogy is to the circumstances of a court continuing judicially to review a purported exercise of power by an officer of the Commonwealth having upheld a claim for immunity from disclosure of material relevant to the decision under review, the analogy is incomplete. The fact that a successful claim for public interest immunity "handicaps one of the parties to litigation" is, of course, "not a reason for saying that the Court cannot or will not exercise its ordinary jurisdiction"47, as has been explained earlier in these reasons. A case in which a claim for public interest immunity is made and is successful, however, is a case in which "the veil of secrecy is not absolutely impenetrable, for the public interest in litigation to enforce the limitation of function ... is never entirely excluded from consideration"48. The court in such a case has not been deprived of access to the material in limine. The court has rather been able to weigh, and has weighed, the public interest in non-disclosure of the particular information against the interests of justice in the particular circumstances of the case before it and has made an assessment that the former outweighs the latter. The attempt of the Minister and the Commonwealth to uphold the validity of s 503A(2)(c) by analogy to statutory secrecy provisions held by this Court to withstand constitutional challenge in other contexts is also misplaced. The statutory scheme considered in Gypsy Jokers was described in that case as having "an outcome comparable with that of the common law respecting public interest immunity, but with the difference that the Attorney-General of 46 Robinson v State of South Australia [No 2] [1931] AC 704 at 716, approving Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 47 Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 556 [24], quoting Church of Scientology v Woodward (1982) 154 CLR 25 at 61. 48 Church of Scientology v Woodward (1982) 154 CLR 25 at 76. Bell Nettle Gordon the Court itself may make use of the information"49. In that case, as in K-Generation and South Australia v Totani50, the secrecy provisions in question did not prevent the reviewing court having access to the information on which the administrative decision under review was based. Commonwealth statutes, as the Minister and the Attorney-General point out, contain numerous secrecy provisions of general application which could not be suggested to be invalid merely because they might operate incidentally in particular circumstances to deny the availability of particular evidence to a court conducting judicial review51. But that is merely to emphasise that the question of validity must be one of substance and degree. The problem with s 503A(2)(c) is limited to its application to prevent the Minister from being required to divulge or communicate information to this Court when exercising jurisdiction under s 75(v) of the Constitution, and to the Federal Court when exercising jurisdiction under s 476A(1)(c) and (2) of the Act, to review a purported exercise of power by the Minister under s 501, 501A, 501B or 501C to which the information is relevant. The problem then lies in the inflexibility of its application to withhold the information from the reviewing court irrespective of the importance of the information to the review to be conducted. To the extent that it so operates, the provision amounts to a substantial curtailment of the capacity of a court exercising jurisdiction under or derived from s 75(v) of the Constitution to discern and declare whether or not the legal limits of powers conferred on the Minister by the Act have been observed. It is not necessary in this case to further analyse matters of substance and degree which may or may not result in the invalidity of a statutory provision affecting the exercise of a court's jurisdiction under s 75(v). It may be necessary to do so in the future. In this case the effect of s 503A(2) is effectively to deny the court evidence, in the case of the applicant the whole of the evidence, upon which the Minister's decision was based. It strikes at the very heart of the review for which s 75(v) provides. 49 (2008) 234 CLR 532 at 559 [36]. See also at 550-551 [5], 558 [29]. 50 (2010) 242 CLR 1; [2010] HCA 39. 51 See Kizon v Palmer (1997) 72 FCR 409 at 446. Bell Nettle Gordon The Minister and the Attorney-General do not suggest that s 503A(2) might be construed, which is to say read down, so as to save it from invalidity. Section 503A(2)(c) is invalid to the extent that it operates as described above, but its invalid application is severable52. Applying s 15A of the Acts Interpretation Act 1901 (Cth), the reference in s 503A(2)(c) to a "court" must be read to exclude this Court when exercising jurisdiction under s 75(v) of the Constitution, and the Federal Court when exercising jurisdiction under s 476A(1)(c) and (2) of the Act, to review a purported exercise of power by the Minister under s 501, 501A, 501B or 501C to which the information is relevant. Section 503A(2) is not otherwise invalid, nor is s 501(3). Remaining issues The remaining issues in the special cases can be dealt with quite shortly. The Minister's reasons for his decisions to cancel the visas of the plaintiff and the applicant refer repeatedly to the Minister having taken into account information described variously as "protected information under section 503A" and "information which is protected from disclosure under section 503A". The inference to be drawn is that the Minister made the decisions on the understanding that s 503A was valid in its entirety and operated to prevent the Minister from in any circumstances being required to divulge or communicate the information including to a court engaged in the judicial review of the decisions. That understanding was in error. The error was not as to the question to be asked by the Minister in making the decision but as to an important attribute of the decision to be made: whether or not the decision would be shielded from review by a court in so far as it was based on the relevant information. As in Re Patterson; Ex parte Taylor53, where the error of the Minister was a failure to appreciate that there would be no opportunity to seek revocation of the decision, "[t]he result of this misconception as to what the exercise of the statutory power entailed was that there was, in the meaning of the 52 See Victoria v The Commonwealth (1996) 187 CLR 416 at 502-503; [1996] HCA 56; Tajjour v New South Wales (2014) 254 CLR 508 at 586 [171]; [2014] HCA 35. 53 (2001) 207 CLR 391; [2001] HCA 51. Bell Nettle Gordon authorities, a purported but not a real exercise of the power conferred by That being so, writs of prohibition are appropriate to prevent action on the purported exercises of power by the Minister and, by way of ancillary relief, writs of certiorari are appropriate to quash them. A further issue raised by the plaintiff and the applicant as to whether an unconnected error of law should be attributed to the Minister by reference to the manner in which the Minister's reasons for his decisions explain his assessment of how cancellation of the visas was in the national interest need not be addressed. Answers to questions stated The questions formally reserved for the consideration of the Full Court in each special case should be answered to the following effect: Section 501(3) is not invalid. Section 503A(2) is invalid to the extent only that s 503A(2)(c) would apply to prevent the Minister from being required to divulge or communicate information to this the Court when exercising Constitution, or to the Federal Court when exercising jurisdiction under s 476A(1)(c) and (2) of the Act, to review a purported exercise of power by the Minister under s 501, 501A, 501B or 501C to which the information is relevant. jurisdiction under s 75(v) of (2) Unnecessary to answer. The decision of the Minister to cancel the plaintiff's visa was invalid by reason that the Minister acted on a wrong construction of s 503A(2). There should be directed to the Minister a writ of certiorari quashing the decision of the Minister and a writ of prohibition preventing action on that decision. The Minister should pay the costs of the special case and of the proceeding. 54 (2001) 207 CLR 391 at 455 [196]. See also at 420 [83]. Bell Nettle Gordon Questions stated for the Full Court Are either or both of s 501(3) and s 503A(2) of the Act invalid, in whole or in part, on the ground that they: require a Federal court to exercise judicial power in a manner which is inconsistent with the essential character of a court or with the nature of judicial power; or so limit the right or ability of affected persons to seek relief under s 75(v) of the Constitution as to be inconsistent with the place of that provision in the constitutional structure? In circumstances where the Minister found that the Plaintiff did not pass the character test by virtue of s 501(6)(b) of the Act because the Minister reasonably suspected that: the Plaintiff has been or is a member of "the Rebels Outlaw Motorcycle Gang"; and that organisation has been or is involved in criminal conduct; could the Minister, exercising power under s 501(3) of the Act, be satisfied that cancellation of the Plaintiff's visa was in the "national interest" without making findings as to: the Plaintiff's knowledge of, opinion of, support for or participation in the suspected criminal conduct of the Rebels Outlaw Motorcycle Gang; and/or how cancellation of the Plaintiff's visa would "disrupt, disable and dismantle the criminal activities of Outlaw Motorcycle Gangs"? 3. Was the decision of the Minister of 9 June 2016 to cancel the Plaintiff's Special Category (Class TY) (Subclass 444) visa invalid by reason that: the answer to Question 1 is "Yes"; or the Minister acted on a wrong construction of s 503A(2); or Bell Nettle Gordon the Minister failed to make the finding or findings referred to in question 2? 4. What, if any, relief should be granted to the Plaintiff? 5. Who should pay the costs of this special case? Edelman Introduction In a statement quoted by Windeyer J shortly after his retirement55, Dixon CJ once said that "[b]efore the reform of the law can be done, it is essential that its doctrines should be understood, and that may mean an investigation of the foundation of those that are to be reformed"56. The significant reform which this Court has been asked to make on these applications, and the novel content which it has been suggested should be given to a very recent constitutional implication, requires a focus upon the doctrinal and historical foundations for the implication. I have had the benefit of reading the joint reasons for decision of the other members of this Court. I agree, for the reasons they give, that the challenge by Mr Graham ("the plaintiff") and Mr Te Puia ("the applicant") to s 503A(2) of the Migration Act 1958 (Cth), on the basis that it substantially impairs a court's The significant remaining institutional constitutional issue concerns the content to be given to an implied constitutional constraint upon the Commonwealth Parliament's ability to restrict judicial review. On this point, with respect, I depart from the reasoning and the conclusions in the joint reasons. integrity, should be dismissed. The essence of the case for the plaintiff and the applicant relied upon the constitutional implication of a minimum provision of judicial review for constitutional writs. The existence of that implication was first suggested by this Court in obiter dicta in Plaintiff S157/2002 v The Commonwealth57. One member of the Court in that case had earlier described the Constitution as "silent about the circumstances in which the writs may issue", and as entrenching only "the jurisdiction of this Court when the writs are sought, rather than any particular ground for the issue of the writs"58. Nevertheless, in the present applications it was assumed by all counsel in this Court that the implication proposed in Plaintiff S157/2002 applied both to secure the existence of judicial review and to 55 Windeyer, "History in Law and Law in History", (1973) 11 Alberta Law Review 56 Quoted in Shatwell, "Some Reflections on the Problems of Law Reform", (1957) 31 Australian Law Journal 325 at 340. 57 (2003) 211 CLR 476; [2003] HCA 2. 58 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 142 [166]; [2000] HCA 57. Edelman ensure a minimum content of judicial review, at least in relation to the remedies prescribed in s 75(v) of the Commonwealth Constitution. This appears to be the first case in any court since Australian Federation in which it has been sought to apply this implication so as to ensure a minimum content to judicial review rather than merely to secure the existence of judicial review. Novelty is not a basis to reject a submission. But novelty invites grave caution where no submission having this effect has ever been made and accepted during a century of legislation, some of which imposed greater constraints on judicial review than the constraints involved in the legislation in this case. That caution is relevant both (i) to the existence of the implication and (ii) to its scope and content. As to the existence of the implication, in the absence of any submissions to the contrary, and not without doubt, I proceed on the basis that such an implication exists concerning the content of judicial review. All language requires necessary implications. The reasons for this include inadequate or infelicitous expression or, as asserted in this case, underlying assumptions. But, in general, the higher the level of abstraction at which an implication is expressed59 the less plausible it will be to characterise the implication as one that has direct effect. Possibly as a design to meet any objection about the existence of the implication, including the response that an implication expressed at a high level of generality invited an application of unrestrained policy in a manner that might cast doubt upon the legitimacy of the implication, the submissions of the plaintiff and the applicant generally applied established techniques of constitutional construction to determine the minimum content of judicial review to be implied rather than to rely upon the broad implication of a minimum standard of judicial review and to assert some content that should be given to it. To adapt the statement from the decision of this Court in Lange v Australian Broadcasting Corporation60, the focus of the plaintiff and the applicant was not generally to ask in the abstract "What should be required by a minimum content of judicial review?" It was to ask "What do the terms and structure of the Constitution require?" The latter question first requires interpretation and construction of the constitutional text, in its context, to determine the essential meaning of its expressions and implications. Like the interpretation and construction of any other text, the essential meaning is not necessarily literal and it proceeds by reference to the way that the essential meaning would be understood by a 59 Eg "The Constitution is a framework for a free society": Seamen's Union of Australia v Utah Development Co (1978) 144 CLR 120 at 157; [1978] HCA 46. 60 (1997) 189 CLR 520 at 567; [1997] HCA 25. Edelman reasonable, legally informed person at the time of utterance, which in this case is Federation. That process, as the submissions implicitly accepted, is avowedly historical. The submissions of the plaintiff and the applicant focused upon the constraints placed by the legislation upon judicial review on the ground of unreasonableness. These submissions, if accepted, go further than preventing Parliament from removing the unreasonableness ground for judicial review. Their submissions would require an implied constraint upon parliamentary power preventing Parliament from impairing judicial review on the ground of unreasonableness. The impairment upon which they relied was removing material from the record available for judicial review. There are two, or possibly three, reasons why the submissions of the plaintiff and the applicant should not be accepted. The first reason is that they are ahistorical. In a statement in a joint judgment in 199361, repeated in 199762, all members of this Court said, citing authority spanning more than a century, that it is "well settled that the interpretation of a constitution such as ours is necessarily influenced by the fact that its provisions are framed in the language of the English common law, and are to be read in the light of the common law's history". Legal history is relevant to understand the essential content of a constitutional implication in the same manner as it is used to establish the essential characteristics of an expression. As Gaudron and Gummow JJ said in relation to the latter, this involves "legal scholarship in preference to intuition or divination"63. One respect in which the submissions by the plaintiff and the applicant are ahistorical is that they require recognition of a constitutional constraint on judicial review which would have the effect that the Constitution would invalidate legislation which is considerably less extreme than legislation which had existed for more than 150 years before Federation, and which had become a standardised restriction in the mid-nineteenth century. Another respect in which the submissions by the plaintiff and the applicant are ahistorical is that they require recognition of a constraint upon legislative power to restrict production to a court of confidential State papers, despite four decades before Federation of unquestioned acceptance by courts of the conclusive nature of a certificate by a Minister that disclosure of a State paper 61 Cheatle v The Queen (1993) 177 CLR 541 at 552; [1993] HCA 44. 62 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 564. 63 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 93 [24]. Edelman would be prejudicial to the public service. There was a theoretical possibility, which never arose, of an "extreme case" where the condition that the document was a "State paper" might be challenged so that the rule did not apply. But, even then, when considering the condition for application of the conclusive certificate rule, the court would not examine the document. It is, of course, possible that the Constitution involved a break from these lengthy legal traditions. However, neither the plaintiff nor the applicant made any submission to this effect. This is unsurprising because it would be difficult to see how the Constitution broke from longstanding, clear, and established legal history by introducing contrary content to a generalised and broad implication which is ultimately founded on the concept of the rule of law, itself a concept the precise content of which is hotly disputed and which, on many accounts, includes notions of certainty and clarity. The essential content of the implication, which can only give "effect to what is inherent in the text and structure of the Constitution"64, could potentially apply over time to new facts or circumstances that did not exist at the time of Federation65. But the type of legislation to which the implication was sought to be applied in this case is not new. It has very old antecedents. On another, far more controversial, view it has been suggested that essential constitutional or legislative meaning can change with changing social attitudes or changing common law so that the same circumstances could have a different constitutional consequence at different times66. This approach, if legitimate, would permit a change in social attitudes or a change in the common law to have the effect that the Constitution can have "two contradictory meanings at different times, each of which is correct at one time but not another"67. Legislation which was valid in light of social attitudes or the common law in, say, 1929 would become invalid at some unknown later time due to a social or common law change altering the essential content of the implication without any relevant amendment to the 64 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567. 65 Ex parte Professional Engineers' Association (1959) 107 CLR 208 at 267; [1959] HCA 47. 66 Yemshaw v Hounslow London Borough Council [2011] 1 WLR 433 at 442-443 [26]-[27]; [2011] 1 All ER 912 at 922-923; Owens v Owens [2017] 4 WLR 74 at [39]. Cf Aubrey v The Queen (2017) 91 ALJR 601 at 610-611 [29]-[30]; 343 ALR 538 at 547-548; [2017] HCA 18; R v G [2004] 1 AC 1034 at 1054 [29]. 67 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 145 [423]; [2009] HCA 23. Edelman Constitution. Unless a truly ambulatory textual foundation68 existed for constitutional meaning to be updated in this way, a curious circumstance would arise where constitutional meaning would change yet, ex hypothesi, that change would not be sanctioned by the text itself69. Such judicial change, however well intentioned, would come at a great cost to representative self-government70. The plaintiff and the applicant made no submission to the effect that some social change or common law change subsequent to Federation altered the essential content of the implication at some unknown time. Without any relevant post- Federation facts, circumstances, or common law, this therefore leaves pre- Federation history as having a vital constructional role when determining the content of the implication. One historical constraint upon judicial review, which was imposed by a legislative technique standardised by the Summary Jurisdiction Act 1848 (11 & 12 Vict c 43), is far more extreme than the constraint which is imposed by the challenged s 503A(2) of the Migration Act. Another more extreme historical constraint was imposed by the conclusive certificate from a Minister that disclosure of a State paper would be prejudicial to the public service. It is not necessary in this case to consider whether laws in those terms would be valid today, assuming that they were expressed in clear language complying with the principle for such a law that "Parliament must squarely confront what it is doing and accept the political cost"71. The reason why it is not necessary to consider such hypothetical laws is that these more extreme constraints are relevant only as important matters of legal history against which the constitutional implication falls to be understood. The second reason why I do not accept the submissions of the plaintiff and the applicant concerns the lack of "fit" of those submissions with the existing jurisprudence of this Court, including legislation which this Court has upheld 68 Eg Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539 at 549 [23]; [2010] HCA 42. 69 Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 486; [1995] HCA 47. 70 Hively v Ivy Tech Community College of Indiana 853 F 3d 339 at 360 (7th Cir 2017) in the context of judicial updating of statutes generally. 71 R v Home Secretary; Ex parte Simms [2000] 2 AC 115 at 131 per Lord Hoffmann, described as "frequently cited" by this Court in Lee v New South Wales Crime Commission (2013) 251 CLR 196 at 309 [311]; [2013] HCA 39. Edelman despite imposing greater constraints upon judicial review than s 503A(2). This includes legislation upheld by this Court in 201072. There may be a third reason why the submissions of the plaintiff and the applicant should not be accepted. This is the difficulty of principle which faces a constitutional implication said to prevent Parliament from impairing the unreasonableness ground of judicial review when that ground of review itself arises only by implication from the statute. That issue can be considered briefly because it is not essential to my conclusion and neither the Minister nor any intervener to each Special Case made any submissions on this point. The result is that s 503A(2) of the Migration Act is not invalid. No separate submissions were made to suggest that s 501(3), which was also alleged to be invalid in the Special Cases, was invalid for any reason independent of s 503A(2). Consequently, that sub-section also should not be held to be invalid. The remainder of these reasons is divided as follows: Outline of the three difficulties with the submissions of the plaintiff and the applicant The entrenched minimum provision of judicial review Plaintiff S157/2002 v The Commonwealth Bodruddaza Multicultural Affairs v Minister for Immigration and The limited content of judicial review at Federation Three restrictions upon judicial review prior to, and after, Federation The first type of restriction: privative clauses The second type of restriction: broad administrative power The third type of restriction: reducing the content of the record A fourth restriction: prejudice to the public service 72 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319; [2010] HCA 41. Edelman The difficulty in obtaining production of records from the Crown or its officers The Minister's conclusive certificate in relation to State papers The decision after Federation in Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] The decline of the conclusive certificate Section 503A of the Migration Act and the minimum content of judicial review The first reason why s 503A(2) is not invalid The second reason why s 503A(2) is not invalid The third potential reason why s 503A(2) is not invalid Whether the Minister could have been satisfied that cancellation of the visas was in the national interest Conclusion A. Outline of the three difficulties with the submissions of the plaintiff and the applicant The central provision in question is s 503A of the Migration Act. In the Second Reading Speech of the Bill that introduced this provision, Senator Kemp explained that Australian and international law enforcement agencies were reluctant to provide the Department of Immigration and Multicultural Affairs with criminal intelligence and related, sensitive information unless they could be sure that both the information and its sources could be protected73. At its core, s 503A aims to provide those law enforcement agencies with that confidence. Section 503A is concerned to maintain almost absolute confidentiality over particular information communicated to an authorised migration officer by a gazetted agency on the condition that it be treated as confidential. The gazetted agencies include the Australian Secret Intelligence Service, the Australian Security Intelligence Organisation, the Department of Defence, various crime and corruption commissions, and State and Territory police forces. Also included are foreign law enforcement bodies, or parts of those bodies, from 73 Australia, Senate, Parliamentary Debates (Hansard), 11 November 1998 at 60. Edelman numerous other countries. Information falling within s 503A(2) can only be communicated to a court or tribunal if the Minister makes a declaration that the provision does not prevent disclosure after first consulting with the gazetted agency that provided the information on the condition of confidentiality. The plaintiff and the applicant submitted that s 503A(2) is invalid due to a constitutional constraint upon legislative power, which requires Parliament not to reduce judicial review in this Court below a minimum standard. That implied constitutional constraint was recognised in obiter dicta of this Court in 200374. Since then, it has only been applied once in this Court, in Bodruddaza v Minister for Immigration and Multicultural Affairs75. That was a case where the substance or practical effect of the provision entirely denied the plaintiff, and others in various different circumstances, any right to apply for the relief in this Court guaranteed by s 75(v) of the Constitution. The Court held that it was significant that the legislation in that case had no English comparator at any time before Federation76. The submission of the plaintiff and the applicant was that this Court "should be vigilant in giving real content to the notion of an 'entrenched minimum provision of judicial review'". The plaintiff and the applicant submitted that the "real content" must extend beyond provisions like those in Bodruddaza which entirely deny a person his or her constitutional rights. They submitted that the implied constitutional restraint should encompass a provision, such as s 503A(2), that "stymies" judicial review by removing part of the record which would otherwise be before the reviewing court. The plaintiff and the applicant submitted that s 503A(2) of the Migration Act was an unconstitutional constraint upon judicial review because the reliance by the Minister upon information that was protected from disclosure under s 503A would mean that it would not be possible for an applicant in a judicial review proceeding to establish that the decision was, "in the relevant administrative law sense, unreasonable". "Unreasonableness" was used to mean reasoning that contains a particular error, gives disproportionate weight to some factor, or is illogical or irrational77, including where there is no evidence upon which the Minister can rely. However, even in the case where the Minister 74 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476. 75 (2007) 228 CLR 651; [2007] HCA 14. 76 Bodruddaza v Minister for Immigration and Multicultural Affairs (2007) 228 CLR 77 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 366 [72]; [2013] HCA 18. Edelman asserts that he or she relied upon information that was protected from disclosure under s 503A, it is possible that the remainder of the Minister's reasons might disclose some matter that establishes that the conclusion was unreasonable or irrational. Indeed, the plaintiff and the applicant assumed that this was possible because it was one of the grounds for relief in these matters. The essence of the submission, therefore, was that an implied constitutional minimum provision of judicial review renders invalid legislation that might have the effect of precluding an applicant from knowing the extent of a ground of judicial review that he or she might rely on, namely unreasonableness. By what process could the "real content" proposed by the plaintiff and the applicant be found to be within the implication of a minimum provision of judicial review? At one point, the submissions of the plaintiff and the applicant appeared to invite a policy choice. For instance, they submitted that the Court should consider "what other courses were available to Parliament". But the submissions of the plaintiff and the applicant more generally conformed with a more legitimate answer, which is that the essential content of the implication is to be found by a consideration of the textual basis for the implication, its function, and its legal and contextual background and history. The conclusion reached should also be assessed in the context of its fit with the established constitutional doctrines developed since Federation. The parties and interveners were correct to take this historical approach to determine the essential content of the implication. However, it must be emphasised that where the historical approach involves a consideration of common law decisions prior to, and at the time of, Federation, the consideration of these decisions is not for the purpose of assessing whether they are correct or not. Rather, those decisions form part of the context from which the meaning of the Constitution, and the content of its implications, can be derived. As McHugh J said78, quoting from Judge Easterbrook, a written constitution "is designed to be an anchor in the past. It creates rules that bind until a supermajority of the living changes them"79. The identification of the constitutional meaning of the words used at Federation and, a fortiori, the essential nature and content of any implications to be derived from those words is therefore "an essential step in the task of construction"80. As explained in the introduction to these reasons, there are at least two obstacles in the path of infusing the implied constitutional restriction with a 78 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 549 [35]; [1999] HCA 27. 79 Easterbrook, "Abstraction and Authority", (1992) 59 University of Chicago Law Review 349 at 363. 80 Singh v The Commonwealth (2004) 222 CLR 322 at 385 [159]; [2004] HCA 43. Edelman meaning that precludes legislation which would constrain an unreasonableness ground of judicial review in the manner of s 503A(2). The first obstacle is that considerably more extreme, yet analogous, restrictions were commonplace before Federation and continued subsequently. The second obstacle is the lack of coherence between this implied constitutional restriction and other restrictions upon judicial review that have been held by this Court to be valid. As for the first obstacle, although there is no precise historical analogue of s 503A(2) of the Migration Act, it has strong historical antecedents. For at least a century and a half before Federation, English legislation had removed far more of the record before a decision maker, and had a considerably greater effect upon the subject matter of judicial review, than s 503A(2). Further, in a compelling analogy relied upon by the Attorney-General of the Commonwealth and the Minister, for nearly half a century before Federation, courts had recognised that a certificate provided to a court by a Minister or head of department was a conclusive basis to refuse production of evidence where the certificate said that disclosure would be prejudicial to the public service. If any document had been provided to a State officer on the condition that it remain confidential, a simple certificate from the Minister that disclosure would cause prejudice to the public service would, without a doubt, have precluded a court from examining that part of the record in any judicial review proceedings. Indeed, the certificate might not even have been needed in judicial review proceedings for various reasons, including an approach which had been taken by some courts that the Crown had a privilege to refuse production. The second obstacle to a conclusion that s 503A(2) infringes an implied constitutional minimum provision of judicial review is the tension between that conclusion and decisions of this Court that other, more onerous, restrictions upon judicial review are valid. At the time of Federation, there were numerous different techniques by which Parliament could attempt to restrict or constrain judicial review. One of those techniques was a privative clause. A second technique was conferring an extremely broad power upon the decision maker. A third was reducing the content of the material upon which the judicial review was conducted. The first two techniques have been held by this Court to have potentially significant effects in reducing the content of judicial review. As to the first technique, in R v Hickman; Ex parte Fox and Clinton81 this Court recognised, as had been the case for centuries, that a privative clause could substantially reduce the circumstances in which judicial review would be permissible, without this leading to invalidity. As to the second technique, in 2010 this Court upheld the validity of the conferral of very broad powers on the Minister, including without 81 (1945) 70 CLR 598; [1945] HCA 53. Edelman any obligation even to consider exercising the power82. To find that the third technique is unconstitutional, even though it does not operate as a complete legal or practical constraint upon judicial review, and in circumstances in which it has significant historical analogues at the time of Federation, would cause intolerable inconsistencies with the decisions of this Court, and would involve recognition of a vague and uncertain implication without any clear criterion of application. The third potential obstacle to accepting the submissions of the plaintiff and the applicant concerns the difficulty of expressing the essential content of the implied constitutional constraint in coherent terms where it involves a restriction upon judicial review on the ground of unreasonableness. The difficulty arises because the basis for judicial review on the ground of unreasonableness is an implication from the statute itself. The statutory implication is based upon limits set by the subject matter, scope and purposes of the legislation83. There is, at least, significant tension between (i) the notion that the basis for judicial review of whether a power has been exercised reasonably depends upon a statutory implication from the legislation which creates the power and (ii) the notion that a constitutional implication precludes legislation from unduly constraining judicial review of unreasonable decisions. B. The entrenched minimum provision of judicial review The submissions of the plaintiff and the applicant were premised upon a constitutional implication of a minimum provision of judicial review, deriving from s 75(v) of the Constitution and, perhaps more pertinently, its place in the Constitution. The constitutional implication requiring a minimum provision of judicial review has only been recognised relatively recently in this Court. Plaintiff S157/2002 v The Commonwealth The implication upon which the plaintiff and the applicant relied was first recognised in obiter dicta in Plaintiff S157/2002 v The Commonwealth84. That 82 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319. 83 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 350-352 [28]-[30], 363-364 [67]. See especially at 370-371 [90], citing Sharp v Wakefield [1891] AC 173 at 179, cited in R v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 431; [1944] HCA 42 and in Shrimpton v The Commonwealth (1945) 69 CLR 613 at 620; [1945] HCA 4. See generally R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189; [1965] HCA 27; Murphyores Incorporated Pty Ltd v The Commonwealth (1976) 136 CLR 1 at 17- 18; [1976] HCA 20; Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at 529 [62]; [2001] HCA 17. 84 (2003) 211 CLR 476. Edelman case concerned s 474 of the Migration Act. Section 474, on one reading, purported to preclude any court, including this Court, from granting relief in relation to the review of many decisions of an administrative character under the Act, including prohibition, mandamus, and injunctions. The Court held that the section did not have that effect. It was only concerned with non-jurisdictional errors. It precluded only remedies for non-jurisdictional error of law on the face of the record85. However, in obiter dicta in the joint judgment, the following was said86: "The Act must be read in the context of the operation of s 75 of the Constitution. That section, and specifically s 75(v), introduces into the Constitution of the Commonwealth an entrenched minimum provision of judicial review. There was no precise equivalent to s 75(v) in either of the Constitutions of the United States of America or Canada. The provision of the constitutional writs and the conferral upon this Court of an irremovable jurisdiction to issue them to an officer of the Commonwealth constitutes a textual reinforcement for what Dixon J said about the significance of the rule of law for the Constitution in Australian Communist Party v The Commonwealth87. In that case, his Honour stated that the Constitution: 'is an instrument framed in accordance with many traditional conceptions, to some of which it gives effect, as, for example, in separating the judicial power from other functions of government, others of which are simply assumed. Among these I think that it may fairly be said that the rule of law forms an assumption.'88 The reservation to this Court by the Constitution of the jurisdiction in all matters in which the named constitutional writs or an injunction are sought against an officer of the Commonwealth is a means of assuring to all people affected that officers of the Commonwealth obey the law and neither exceed nor neglect any jurisdiction which the law confers on them. The centrality, and protective purpose, of the jurisdiction of this Court in that regard places significant barriers in the way of legislative attempts (by privative clauses or otherwise) to impair judicial review of administrative 85 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 507 [81]. 86 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 513-514 [103]- 87 (1951) 83 CLR 1 at 193; [1951] HCA 5; cf Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 381 [89] per Gummow and Hayne JJ; [1998] HCA 22. 88 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193. Edelman action. Such jurisdiction exists to maintain the federal compact by ensuring that propounded laws are constitutionally valid and ministerial or other official action lawful and within jurisdiction. In any written constitution, where there are disputes over such matters, there must be an authoritative decision-maker. the Commonwealth the ultimate decision-maker in all matters where there is a contest, is this Court. The Court must be obedient to its constitutional function. In the end, pursuant to s 75 of the Constitution, this limits the powers of the Parliament or of the Executive to avoid, or confine, judicial review." the Constitution of Under On a restricted conception of these two paragraphs, the minimum provision of judicial review introduced by s 75 of the Constitution, and in particular s 75(v), is a requirement that a legislature cannot, in form or in substance, abolish any of the subjects of this Court's jurisdiction in that section, being writs of mandamus or prohibition, or injunctions against an officer of the Commonwealth. This restricted conception of a minimum provision of judicial review is consistent with the view expressed by one member of the joint judgment little more than two years earlier89. It is also consonant with a general understanding of the limited accountability function assigned to s 75(v), including in the Convention Debates. Putting aside other possible purposes for s 75(v)90, the limited accountability function was not understood as altering the content of judicial review or reducing the powers of Parliament, particularly below those that previously existed. Instead, the limited accountability function of the provision was understood to remove doubt about a source of power to make particular orders91. In other words, it was included "for more abundant caution"92 or as "a matter of safety"93. The caution was to avoid the conclusion in Marbury v Madison94, where it was held that Congress could not confer a power to order 89 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 139 [157]. 90 See Stellios, "Exploring the Purposes of Section 75(v) of the Constitution", (2011) 34 University of New South Wales Law Journal 70. 91 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 363; [1948] HCA 7. 92 Gummow, "The Scope of Section 75(v) of the Constitution: Why Injunction but No Certiorari?", (2014) 42 Federal Law Review 241 at 241. 93 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 4 March 1898 at 1876 per Mr Barton. See also the views of Dr Quick and Mr Isaacs at 1879-1881. Edelman mandamus upon the United States Supreme Court. During the Convention Debates, Messrs Barton and Symon both insisted that the proposed provision did not confer upon the High Court any right to interfere with "the political Executive of the Federation"95. Later, Mr Symon defended the proposed provision by explaining that96: "[t]he right to mandamus or prohibition is not conferred one whit more than at present. The provision merely throws within the ambit of the jurisdiction of the federal tribunal the right to determine the question. That question will be determined by the ordinary law of England – by the principles of constitutional government and the prerogatives of the Crown." However, read in their full context, the two paragraphs in Plaintiff S157/2002 might be thought to travel beyond this limited conception of an accountability function so that the "minimum provision of judicial review" is not merely a guarantee of jurisdiction in relation to mandamus, prohibition, or injunctions against an officer of the Commonwealth. The larger conception is that s 75, and particularly s 75(v), is also concerned with the content of the power of judicial review, although indirectly as a "textual reinforcement" of a broader implication deriving from the "rule of law" and reflected in the "centrality, and protective purpose, of the jurisdiction of this Court"97. That indirect implication means that, apart from the s 75(v) guarantee of jurisdiction, there is some other, undefined, implied limit to "the powers of the Parliament or of the Executive to avoid, or confine, judicial review"98. There are strong reasons for a cautious approach to the application of this broader conception of an implied limitation upon legislative power to constrain judicial review. As Dr Burton Crawford has observed, the reliance by the joint judgment in Plaintiff S157/2002 upon Dixon J's reference to the rule of law was "a strange reconfiguration of Dixon J's statement" that did "little to clarify the role played by the rule of law in the Australian constitutional framework"99. If 95 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 4 March 1898 at 1877. 96 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 4 March 1898 at 1878. 97 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 513-514 [103]- 98 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 514 [104]. 99 Burton Crawford, The Rule of Law and the Australian Constitution, (2017) at 110. Edelman the "rule of law" requires more than a guarantee of judicial review of executive action but instead restrains Parliament from "confining" the content of judicial review, then how great must that confinement be before the legislation will be invalid? Which of the different versions of the "contested concept"100 of the "rule of law", whether thick or thin, is the basis for the implied constraint? Is it necessary, or possible, to "mine the rule-of-law ideal for particular values which may then be translated into legal principles"101? How much weight should be put on the value said to be implicit in the rule of law that "the making of particular laws should be guided by open and relatively stable general rules"102? Would this same rule of law conception extend beyond the text of s 75(v), which focuses upon the High Court, and apply also to other federal courts? Would such principles extend to the removal of a ground for judicial review, such as procedural fairness, that parliaments have long assumed that they have power to remove? The difficulty, perhaps impossibility, of giving satisfactory answers to these questions may have been a reason why two of the members of the joint judgment in Plaintiff S157/2002, McHugh and Gummow JJ, only a week after the delivery of that decision, said in their reasons in another decision that it would be "going much further" than merely recognising the values underlying the rule of law "to give those values an immediate normative operation in applying the Constitution"103. Nevertheless, as the parties and interveners assumed, if essential content is to be given to the implied constitutional restriction on parliamentary power beyond legislation that has the effect of abolishing some or all of this Court's jurisdiction in s 75(v), then, at the very least, any analogous historical antecedents to the relevant legislation will be very significant. Shorn from history and the context in which the text and structure of the Constitution was enacted, the application of such an abstract conception to give essential content to a constitutional implication could require the Court simply to make unmediated policy decisions. Such unmediated policy decisions could only be made in two ways. One is by reference to the policy views of the individual 100 Waldron, "Is the Rule of Law an Essentially Contested Concept (in Florida)?", (2002) 21 Law and Philosophy 137. 101 McDonald, "The entrenched minimum provision of judicial review and the rule of law", (2010) 21 Public Law Review 14 at 33. 102 Raz, "The Rule of Law and its Virtue", (1977) 93 Law Quarterly Review 195 at 103 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 23 [72]; [2003] HCA 6. Edelman members of the Court. The other is by reference to the alleged perceptions of the public or some section of it. Both are illegitimate in this context. As to the former, speaking of the abstract wording in the express Due Process clause in the United States Constitution, the United States Supreme Court has described the caution to avoid "the liberty protected by the Due Process Clause [being] subtly transformed into the policy preferences of the Members of this Court"104. As to the latter, in Nicholas v The Queen105, Brennan CJ said of a criterion of "public perception" that this "would be to assert an uncontrolled and uncontrollable power of judicial veto over the exercise of legislative power". Bodruddaza v Minister for Immigration and Multicultural Affairs The decision of this Court in Bodruddaza v Minister for Immigration and Multicultural Affairs106 is not inconsistent with a narrow conception of the function of s 75(v) of the Constitution, namely a constraint upon the legislature, in form or in substance, abolishing the writs of mandamus or prohibition, or injunctions against an officer of the Commonwealth. In that case, the Court held that the entrenched minimum provision of judicial review had been transgressed by s 486A of the Migration Act, which purported to impose a fixed time limit upon an application to this Court for a writ of mandamus, prohibition or certiorari, or an injunction or declaration, in respect of "a privative clause decision". There was no judicial discretion to extend the time limit. Two points are critical to the understanding of that decision. First, in a number of circumstances, s 486A of the Migration Act operated to preclude entirely, as a matter of practical effect, any claim based upon s 75(v). The time limit was "of such short duration as to deny access to federal jurisdiction to applicants whose delay might not be the result of gross delay or culpable error"107. The joint judgment cited circumstances where access to the jurisdiction was effectively denied, including where the applicant could not have been aware of corrupt inducement, or actual or apprehended bias, until after expiry of the time limit. As a matter of substance, therefore, the section purported to deny that which the Constitution guaranteed. As Gageler and Keane JJ observed after s 486A was amended to allow a discretion to extend time, the amended provision regulated the exercise of the s 75(v) jurisdiction but 104 Washington v Glucksberg 521 US 702 at 720 (1997), citing Moore v City of East Cleveland 431 US 494 at 502 (1977). 105 (1998) 193 CLR 173 at 197 [37]; [1998] HCA 9. 106 (2007) 228 CLR 651 at 668-669 [45]-[46]. 107 MZXOT v Minister for Immigration and Citizenship (2008) 233 CLR 601 at 613 [1]; [2008] HCA 28. Edelman did not, and could not, "impose a condition precedent to the invocation of that jurisdiction"108. Secondly, although recognising that the "anterior situation in England has not generally been accepted as a comprehensive guide to the operation of s 75(v)", in the joint judgment in Bodruddaza their Honours described as a matter of "significance" the absence in England before Australian Federation of legislatively fixed time bars to judicial review109. Equally, for the reasons I have explained, the position concerning restrictions upon judicial review at the time of Federation is highly significant for the applications currently before this Court. C. The limited content of judicial review at Federation Two points should be noted about the nature of judicial review in England and the United States at the time of Federation in order to appreciate its limited content in cases of jurisdictional error. First, a dominant view of jurisdictional error in the nineteenth century, later rejected in Anisminic Ltd v Foreign Compensation Commission110, was that it was concerned only with the question of whether the decision maker had power to enter upon the inquiry. On that view, described by Lord Sumner in 1922 as "never since ... seriously disputed in England"111, jurisdictional error was not concerned with errors made in the course of the decision making process other than those on the face of the proceedings. The leading case that was associated with this view was R v Bolton112. In that case, Lord Denman CJ said that113: "the enquiry before us must be limited to this, whether the magistrates had jurisdiction to inquire and determine, supposing the facts alleged in the 108 Wei v Minister for Immigration and Border Protection (2015) 257 CLR 22 at 37 [41]; [2015] HCA 51. 109 Bodruddaza v Minister for Immigration and Multicultural Affairs (2007) 228 CLR 111 R v Nat Bell Liquors Ltd [1922] 2 AC 128 at 154, referring to R v Bolton (1841) 1 QB 66 [113 ER 1054]. 112 (1841) 1 QB 66 [113 ER 1054]. See also Ex parte Wake (1883) 11 QBD 291 at 113 R v Bolton (1841) 1 QB 66 at 75 [113 ER 1054 at 1058]. Edelman information to be true: for it has not been contended that there was any irregularity on the face of their proceedings." In other words, at Federation, courts had not generally embraced the approach to jurisdictional error which recognised, as Lord Reid did in Anisminic114, the "many cases" in which a tribunal's decision was a nullity because of something that it had done or failed to do during the course of the inquiry. Secondly, at the time of Federation, the writ of certiorari had limited recognition as a writ to quash a decision of an officer of the Executive. In England, certiorari to remove and quash a decision required that the decision was one in which the decision maker was under a duty to act judicially115. In 1894, Wright J maintained that the writ of certiorari was applicable to "judicial proceedings of courts" but that "the county council [was] not a court, and its proceedings [were] not judicial"116. Other cases construed the concept of a "judicial" act more liberally, "including many acts that would not ordinarily be termed 'judicial'"117. Although the English approach that drew a distinction between judicial and ministerial acts118 was not far from the United States "political question doctrine"119, the United States cases were even more restrictive in relation to certiorari120. In 1913, in Degge v Hitchcock121, the United States Supreme Court observed that the case was the first time a writ of certiorari had been sought against an officer of the Executive. The Supreme 114 [1969] 2 AC 147 at 171. 115 See the statement of the rule in R v Electricity Commissioners; Ex parte London Electricity Joint Committee Co (1920) [1924] 1 KB 171 at 205. 116 R v The London County Council; Re The Empire Theatre (1894) 71 LT 638 at 640. See also Royal Aquarium and Summer and Winter Garden Society v Parkinson 117 R v Woodhouse [1906] 2 KB 501 at 534-535. 118 See, further, Ellis v Earl Grey (1833) 6 Sim 214 [58 ER 574]. 119 Marbury v Madison 5 US 137 at 166 (1803). See also Baker v Carr 369 US 186 120 Gummow, "The Scope of Section 75(v) of the Constitution: Why Injunction but No Certiorari?", (2014) 42 Federal Law Review 241 at 245. Edelman Court held that the writ was unavailable for the purposes of reviewing an administrative order. D. Three restrictions upon judicial review prior to, and after, Federation It must have been very well known at the time of Federation that there were numerous techniques by which parliaments had restricted or constrained judicial review. In a later article, De Smith described three of them122. One of those techniques was a common privative clause. A second technique was "giving powers to Ministers and other statutory bodies in terms so broad that it becomes difficult for a court ever to hold that they have been exceeded"123. A third was "prescribing common forms for summary convictions, omitting a recital of the evidence and of the reasons for the decision"124. An appreciation of these restrictions is necessary to place in context the plaintiff and the applicant's submissions concerning the constraint upon parliamentary power to restrict judicial review. the essential content of The first type of restriction: privative clauses There is a fundamental difficulty involved with privative clauses. A court that upholds a privative clause could only do so for one of two reasons. First, the court might conclude that the effect of the clause was to make anything at all that the decision maker did legal. That is impossible. No tribunal or decision maker, outside an absolute dictatorship, has unlimited power. Secondly, but with the same effect, the court might conclude that any unlawful decision by the decision maker fell outside the authority of the courts. As Wade expressed the point, "[i]f a ministry or tribunal can be made a law unto itself, it is made a potential dictator; and for this there can be no place in a constitution founded on the rule of law"125. In Hickman, this Court adopted, as a matter of statutory construction, a pre-Federation technique of reconciliation of the literal terms of a privative 122 De Smith, "Statutory Restriction of Judicial Review", (1955) 18 Modern Law Review 575 at 588. The first and the third are clearly spelled out by Cave J in R v Bradley (1894) 70 LT 379 at 380-381. 123 De Smith, "Statutory Restriction of Judicial Review", (1955) 18 Modern Law Review 575 at 588. 124 De Smith, "Statutory Restriction of Judicial Review", (1955) 18 Modern Law Review 575 at 588. 125 Wade, "Constitutional and Administrative Aspects of the Anisminic Case", (1969) 85 Law Quarterly Review 198 at 200. Edelman clause and the impossibility, outside dictatorship, of a complete lack of review that the clause purported to require. The Court considered a regulation that provided that a decision of a Local Reference Board "shall not be challenged, appealed against, quashed or called into question, or be subject to prohibition, mandamus or injunction, in any court on any account whatever"126. A writ of prohibition was sought, and granted, in relation to an award made by the Board. In his well-known reasons for decision, Dixon J explained why the regulation did not exclude prohibition. Speaking of privative clauses, of which the regulation was an example, his Honour said127: "Such a clause is interpreted as meaning that no decision which is in fact given by the body concerned shall be invalidated on the ground that it has not conformed to the requirements governing its proceedings or the exercise of its authority or has not confined its acts within the limits laid down by the instrument giving it authority, provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body." Although the meaning of a privative clause will ultimately be a matter of construction128, it has been said on many occasions that such a clause might be upheld as within the power of Parliament, provided that (i) the decision of the body does not exceed the authority conferred by the legislation; (ii) the decision of the body constitutes a bona fide attempt to exercise the powers in issue; and (iii) the decision relates to the subject matter of the legislation. The third criterion was said to require that the decision must not, on its face, go beyond power129. It was said that a statute which confers on an administrator a 126 R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 606. 127 R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 615. 128 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 501 [60]. 129 Coal Miners' Industrial Union of Workers of Western Australia v Amalgamated Collieries of Western Australia Ltd (1960) 104 CLR 437 at 442-443; [1960] HCA 68; R v Commonwealth Conciliation and Arbitration Commission; Ex parte Amalgamated Engineering Union (Australian Section) (1967) 118 CLR 219 at 252- 253; [1967] HCA 47; R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 418, 422; [1983] HCA 35; O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 248-250, 286-287, 305; [1991] HCA 14; Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 at 179- 180, 194-195; [1995] HCA 23; Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 at 630-631; [1997] HCA 11; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 87 [102]; [2001] HCA 22. Edelman jurisdiction that complies with the Hickman principle "will be sufficient to satisfy any constitutional minimum that may exist"130. However, the Hickman principle was later said to have been placed "in perspective"131 by the decision of this Court in Plaintiff S157/2002, which explained that the three Hickman factors were necessary but not sufficient132. Nevertheless, this Court in Plaintiff S157/2002 did not deny that which had been assumed before the decision, namely that "there is considerable scope for the legislative conferral of jurisdiction on an administrator in terms which by-pass entirely the traditional grounds of judicial review"133. Indeed, this Court in Plaintiff S157/2002 recognised that the roots of the Hickman principle, which gave substantial but not absolute effect to a privative clause, were longstanding and predated Federation134. The second type of restriction: broad administrative power It was well settled at the time of Federation that, as the Lord Chancellor said in a well-known passage in Julius v Lord Bishop of Oxford135, mandamus would only lie if a power to act was coupled with a duty to act. By removing the duty to act, there was little utility in seeking judicial review of a decision of an official about whether to act. An extreme example of this restriction was considered by this Court in Plaintiff M61/2010E v The Commonwealth136. The provision of the Migration Act that was challenged in that case, s 46A, prohibited visa applications from "offshore entry persons" unless the Minister thought that an application was in the public interest. That power was exercisable by the Minister personally, but 130 Gageler, "The legitimate scope of judicial review", (2001) 21 Australian Bar Review 279 at 289. 131 Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 at 168 [70]; [2008] HCA 32. 132 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 502 [64]. 133 Gageler, "The legitimate scope of judicial review", (2001) 21 Australian Bar Review 279 at 290. 134 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 484-485 [12], citing Colonial Bank of Australasia v Willan (1874) LR 5 PC 417 at 442. 135 (1880) 5 App Cas 214 at 222-223. 136 (2010) 243 CLR 319. Edelman the Minister did not have a duty even to consider whether to exercise the power. This Court unanimously held that s 46A was valid. The Court rejected submissions that it was inconsistent with s 75(v) or its place or purpose in the Constitution, or contrary to the rule of law137. The third type of restriction: reducing the content of the record Notwithstanding the dominant historical approach, which (i) recognised only limited types of jurisdictional error, and (ii) was subject to legislative restrictions, it was not difficult for courts to quash decisions, usually convictions, for jurisdictional error or non-jurisdictional error of law appearing on the face of the record. Some of the errors that led to the quashing of convictions were purely formal. Formal errors in recording a conviction were easily made. In 1764, the justice of the peace and scholar Richard Burn wrote of the other justices that "there is not one of them in ten who knows how to draw up a conviction in form" and that even "the greatest lawyers have found it difficult enough, to guard a conviction, so that other lawyers could not break into it"138. Later, speaking in the House of Lords in 1803, Lord Sheffield said that "not one conviction in a thousand, if attacked, could stand"139. In the nineteenth century, some magistrates would refer convictions to "star barristers" for settlement. In 1824 a clerk of the peace deposed that he sent the particulars of the proceedings to Joseph Chitty with instructions to prepare a draft of the conviction140. Other errors were substantive, involving errors of law that would be evident when the conviction also set out the evidence upon which it had been obtained. For instance, in R v Little141, Lord Mansfield quashed a conviction that a person "traded as a hawker, pedlar or petty chapman" when the only evidence was a single act of selling a parcel of silk handkerchiefs. 137 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 347 [57]-[58]. 138 Burn, The History of the Poor Laws: With Observations, (1764) at 249-250. 139 Parliamentary Debates, 6 June 1803 at 535. See Costello, "The Writ of Certiorari and Review of Summary Criminal Convictions, 1660–1848", (2012) 128 Law Quarterly Review 443 at 447. 140 Costello, "The Writ of Certiorari and Review of Summary Criminal Convictions, 1660–1848", (2012) 128 Law Quarterly Review 443 at 457. 141 (1758) 1 Burr 609 [97 ER 472]. See also R v Younger (1793) 5 TR 449 [101 ER 253]; R v Neale (1799) 8 TR 241 [101 ER 1367]. Edelman The perceived extent to which, and ease by which, convictions could be overturned, particularly on formal grounds, was a matter of controversy. In R v The Inhabitants of the Parish of Ruyton of the Eleven Towns142, Crompton J spoke of a privative clause in 1848 legislation143 designed to address "a practice which had introduced lamentable and disgraceful technicalities"144. In the same case, Hill J described the statute as having a "plain and manifest intention" to "get rid of expensive and useless litigation upon points of mere form, and to facilitate the settlement of all disputes upon contested orders of removal"145. In 1848, the English Parliament passed three Acts. They were commonly described as "Jervis' Acts" after the Attorney-General, Sir John Jervis, who secured their passage146. One of those Acts, the Summary Jurisdiction Act 1848, provided in s 17 for a standard form conviction. The standard form substantially reduced the risk of formal errors. It also removed much of the record that could be reviewed for the purpose of certiorari, because the standard form did not contain any of the evidence. The standard form that was introduced by the Summary Jurisdiction Act was not new. It merely standardised a routine approach, possibly first created by Sir Joseph Jekyll MR's drafting in the Spirit Duties Act 1735147, that had been adopted in various different legislation for more than a century. In R v Nat Bell Liquors Ltd148, the Privy Council said that the Summary Jurisdiction Act "cut down the contents of the record, and so did away with a host of discussions as to error apparent on its face ... [T]he grounds for quashing 142 (1861) 1 B & S 534 [121 ER 813]. 143 Poor Law Procedure Act 1848 (11 & 12 Vict c 31), s 7. 144 R v The Inhabitants of the Parish of Ruyton of the Eleven Towns (1861) 1 B & S 534 at 545 [121 ER 813 at 817]. 145 R v The Inhabitants of the Parish of Ruyton of the Eleven Towns (1861) 1 B & S 534 at 547 [121 ER 813 at 818]. 146 Indictable Offences Act 1848 (11 & 12 Vict c 42); Summary Jurisdiction Act 1848 (11 & 12 Vict c 43); Justices Protection Act 1848 (11 & 12 Vict c 44). 147 Costello, "The Writ of Certiorari and Review of Summary Criminal Convictions, 1660–1848", (2012) 128 Law Quarterly Review 443 at 448, referring to the Spirit Duties Act 1735 (9 Geo II c 23). 148 [1922] 2 AC 128 at 160-161. Edelman on certiorari came in practice to be grounds relating to competence and disqualification." The Privy Council also said that the legislation149: "did not stint the jurisdiction of the Queen's Bench, or alter the actual law of certiorari. What it did was to disarm its exercise. The effect was not to make that which had been error, error no longer, but to remove nearly all opportunity for its detection. The face of the record 'spoke' no longer: it was the inscrutable face of a sphinx." As Costello has observed150, this was an exaggeration. It was not the Summary Jurisdiction Act which wrought the decline of certiorari. That Act merely adopted, and standardised, the same approach taken in various legislative provisions over the previous century. Further, the Summary Jurisdiction Act did not remove all opportunity for the detection of error. Although it substantially removed the prospect of establishing any jurisdictional or non-jurisdictional errors of law from the record, it remained possible, as older cases had recognised151, for jurisdictional error to be proved by affidavit alleging failure of a jurisdictional precondition, bias, apprehended bias, or a failure to afford procedural fairness. In summary, originally the writ of certiorari "to remove" only ordered the lower court to send up the indictment or presentment152. The Summary Jurisdiction Act standardised an approach that had developed over a century. That approach substantially confined the record before the reviewing court. The provisions of the Summary Jurisdiction Act were not read down. They were not disapplied. This was so even though, by 1848, there was a long-established judicial approach by which courts had refused to apply, or had read down, privative clauses. As Dr Murray said153: "the court could have exploited the ambiguity in their conceptualisation of jurisdiction, widening the conception so as to allow for the breadth of 149 R v Nat Bell Liquors Ltd [1922] 2 AC 128 at 159. 150 Costello, "The Writ of Certiorari and Review of Summary Criminal Convictions, 1660–1848", (2012) 128 Law Quarterly Review 443 at 464. 151 R v The Inhabitants of Great Marlow (1802) 2 East 244 at 248 [102 ER 362 at 152 Henderson, Foundations of English Administrative Law: Mandamus in the Seventeenth Century, (1963) at 92. 153 Murray, "Escaping the Wilderness: R v Bolton and Judicial Review for Error of Law", (2016) 75 Cambridge Law Journal 333 at 355. Edelman review that had been available on the face of the record before the introduction of statutory short-form convictions. To do so, however, would have been constitutionally difficult: Parliament had clearly intended a restriction of the inherent power of the Queen's Bench to review convictions, and an arrogation of reviewing powers in the face of this legislative intention would have had the effect of undermining this." Although the general provisions of the Summary Jurisdiction Act 1848 were substantially ameliorated by the "case stated" procedure that was introduced by the Summary Jurisdiction Act 1857 (20 & 21 Vict c 43), the scope of certiorari was still substantially narrowed by the confinement of the record. The form prescribed in the Summary Jurisdiction Act in 1848 was still in use in the Criminal Code of Canada in 1922154. That Canadian legislation was considered in R v Nat Bell Liquors Ltd155, where the Privy Council restored a conviction of a magistrate because the evidence before the magistrate formed no part of the record, and was not "available material on which the superior Court [could] enter on an examination of the proceedings below for the purpose of quashing the conviction"156. E. A fourth restriction: prejudice to the public service A fourth constraint existing at Federation, and for decades subsequently, was relied upon heavily in this case by the Attorney-General of the Commonwealth and the Minister. This constraint was the power of a Minister or head of department to object to the production of records on the basis of prejudice to the public service. The existence, at the time of Federation and for several further decades, of this common law and occasionally statutory bar to production of documents in court is relevant to appreciate the meaning and scope of the implied constitutional restriction imposing a minimum standard of judicial review. The difficulty in obtaining production of records from the Crown or its officers It appears that, at the time of Federation, this objection never needed to be raised in any judicial review proceedings. There are a number of possible reasons for this. One reason is that, although in the nineteenth century the Crown was entitled to discovery from a subject157, there was a view that a subject was 154 R v Nat Bell Liquors Ltd [1922] 2 AC 128 at 161. 155 [1922] 2 AC 128 at 161-163. 156 R v Nat Bell Liquors Ltd [1922] 2 AC 128 at 165. 157 Tomline v The Queen (1879) 4 Ex D 252. Edelman not entitled to discovery from the Crown158. So far as it applied, this constraint would extend to a range of Crown officers, including Ministers of State159. Even s 50 of the Common Law Procedure Act 1854 (17 & 18 Vict c 125) was held not to extend to conferring upon a subject a right to discovery against the Crown in a petition of right160. Whether or not it might ever have been needed in judicial review proceedings, the principle that permitted a conclusive certificate as to the public interest was pervasive and would have applied if it were needed by the Crown or its officers161. Even when, in 1947, English legislation abolished any Crown privilege not to give discovery, that legislation preserved the rule of law that authorised the withholding of any document on the ground that disclosure would be injurious to the public interest162. The Minister's conclusive certificate in relation to State papers At the time of Federation, it had been a universally held view for 40 years that public interest immunity could be invoked over State papers simply by evidence from a Minister or head of department that there would be prejudice to the public service from disclosure. The authorities held that such evidence could not be questioned by a judge. In an extreme case, where it was clear from the document's description that it was not a State paper, then the immunity did not apply, and the question of the conclusive nature of the evidence from the Executive did not arise. At the time of Federation, the leading case for 40 years was Beatson v Skene163. In that case, the plaintiff's claim of slander was dismissed by a jury. The plaintiff had sought production of various documents prior to trial. But the Secretary of State for War objected to production on the basis that it would be 158 Attorney-General v Newcastle-upon-Tyne Corporation [1897] 2 QB 384 at 395; Robertson, The Law and Practice of Civil Proceedings by and against the Crown and Departments of the Government, (1908) at 598. 159 In re La Société Les Affréteurs Réunis and The Shipping Controller [1921] 3 KB 1. See also Canada Deposit Insurance Corp v Code (1988) 49 DLR (4th) 57. 160 Thomas v The Queen (1874) LR 10 QB 44. 161 Robertson, The Law and Practice of Civil Proceedings by and against the Crown and Departments of the Government, (1908) at 598-600. 162 See Crown Proceedings Act 1947 (UK), s 28. 163 (1860) 5 H & N 838 [157 ER 1415]. Edelman injurious to the public service. Baron Bramwell upheld the objection. The plaintiff applied for a new trial. The application was heard by a powerful Court of Exchequer Chamber comprised of Pollock CB, Martin B, Wilde B, and Bramwell B (the trial judge). One ground was the refusal of the trial judge to compel production of various documents. The Court reiterated the general principle that if production would be injurious to the public service then the general public interest must prevail over the private interest of an individual suitor164. However, the Court went on to ask whether the public interest was to be determined by the presiding judge, who would need to ascertain in court what the document was and why its production would be injurious to the public service, or by the responsible servant of the Crown with the custody of the paper165. The Court concluded166: "It appears to us, therefore, that the question, whether the production of the documents would be injurious to the public service, must be determined, not by the Judge but by the head of the department having the custody of the paper; and if he is in attendance and states that in his opinion the production of the document would be injurious to the public service, we think the Judge ought not to compel the production of One reason that was given for this view was the danger of disclosure if such an inquiry took place in public, as was assumed would necessarily be the case167. The decision of the Court in Beatson was given by the Chief Baron, who explained that Martin B did not "entirely agree"168. He explained that the reason for disagreement was the view of Martin B that the judge should compel production, despite objection by the head of the department, if the judge were satisfied that the document could be made public without prejudice to the public service. This view was rejected. The Chief Baron said that169: 164 Beatson v Skene (1860) 5 H & N 838 at 853 [157 ER 1415 at 1421]. 165 Beatson v Skene (1860) 5 H & N 838 at 853 [157 ER 1415 at 1421]. 166 Beatson v Skene (1860) 5 H & N 838 at 853 [157 ER 1415 at 1421-1422]. 167 Beatson v Skene (1860) 5 H & N 838 at 853 [157 ER 1415 at 1421]. 168 Beatson v Skene (1860) 5 H & N 838 at 854 [157 ER 1415 at 1422]. 169 Beatson v Skene (1860) 5 H & N 838 at 854 [157 ER 1415 at 1422]. Edelman "perhaps cases might arise where the matter would be so clear that the Judge might well ask for it, in spite of some official scruples as to producing it; but this must be considered rather as an extreme case, and extreme cases throw very little light on the practical rules of life." Importantly, as a matter of logic, it could only be "so clear" in such an "extreme case" if the description of the document revealed that it was not a State paper. The rule in Beatson, that it was for the responsible servant of the Crown to determine whether production of a State paper was injurious to the public service, was applied many times before Federation. It does not appear to have ever been questioned before Federation. The rule was applied in HMS Bellerophon170. In that case, the Secretary of the Admiralty provided an affidavit that deposed that there would be prejudice to the public service if a report of a collision of one of her Majesty's ships were liable to be inspected in legal proceedings. Counsel for the plaintiffs argued that it was "for the Court and not for the Secretary of the Admiralty to judge whether the inspection would be prejudicial"171. Sir Robert Phillimore rejected that submission and followed the decision in Beatson. Another case in which the principle was applied was Latter v Goolden172. That decision was not reported other than a brief reference in The Times but it appears to have been printed as a precedent for use by the Home Office173. It involved an alleged libel contained in a letter written by the defendant firm of electrical engineers to the Civil Service Commissioners. The head of the department of the Civil Service was called, and refused to produce the document on the ground of public policy. A contemporary text described the head of department as saying only that the document was confidential, that the Civil Service received some 20,000 letters a year, and that the Government would be "much inconvenienced if the production of any of them could be enforced in a Court of Law"174. The claim of privilege was upheld solely upon this evidence of the head of department, without examining the document. Lord Esher MR is quoted as having said that the cases clearly show that when the head of a public 170 (1874) 44 LJ Adm 5. 171 HMS Bellerophon (1874) 44 LJ Adm 5 at 6. 172 (1894) The Times, July 17. 173 See Williams v Star Newspaper Co (Ltd) (1908) 24 TLR 297 at 297-298. 174 Pitt-Lewis (ed), A Treatise on the Law of Evidence as Administered in England and Ireland, 9th ed (1895), vol 1 at 619, §947 fn 1. Edelman department says that it would be contrary to the public interest to produce a document, "it is for him to say so"175. A further case was Hughes v Vargas176. That was a libel action heard at first instance by Hawkins J. The libel was alleged to be contained in an official report made to the Board of Inland Revenue. The Secretary to the Board of Inland Revenue gave evidence that the Board had instructed him to object to production on the ground that to do so would be prejudicial and injurious to the public service. The Chairman of the Board also objected on this ground. The plaintiff submitted that the court could "go behind the objection of the witnesses and see whether it was well-founded or not"177. Justice Hawkins refused production, holding that he "could not inquire into the grounds for the objection of those who had the custody of the document"178. This decision was upheld by the Court of Appeal. Lord Esher MR referred to the rule in Beatson, and reiterated that179: "It is not for the Judge to decide whether the production of a document would be detrimental to the public service, but if the document is a [S]tate document, that is belonging to a [S]tate office, and is in the hands of a public department of [S]tate, if the head of that department takes the objection that it would be contrary to the public welfare to produce the document in Court, the Judge must act upon that, and he is not to inquire closely as to what are the grounds of the objection, or whether he would take the same objection if he were in the place of the public officer." The same point was made in 1895 by the editor of Judge Pitt Taylor's A Treatise on the Law of Evidence as Administered in England and Ireland180, commonly referred to as Taylor on Evidence. One class of public interest immunity was described as the exclusion of evidence from "motives of public policy", which included matters that concern the administration of government 175 Quoted in Williams v Star Newspaper Co (Ltd) (1908) 24 TLR 297 at 297-298. 176 (1893) 9 TLR 471. 177 Hughes v Vargas (1893) 9 TLR 471 at 471. 178 Hughes v Vargas (1893) 9 TLR 471 at 471. 179 Hughes v Vargas (1893) 9 R 661 at 664-665. 180 Pitt-Lewis (ed), A Treatise on the Law of Evidence as Administered in England and Ireland, 9th ed (1895). Edelman and "the disclosure of which would be prejudicial to the public interest"181. The text continued182: "According to the Court of Appeal [in Hughes v Vargas], the minister to whose department a document belongs, or the head of a department in whose custody it is, is the exclusive judge as to whether such document is or is not protected from production on grounds of State policy, and if he claims such protection the court will not go behind the claim, or inquire whether the document be or be not one which can properly be the subject of such a claim." Although the court would not go behind such a claim by a Minister or head of department, the same might not be true if a subordinate officer attended court. Only then, as Taylor on Evidence explained, might the judge examine the documents to decide whether they should be withheld183. In 1898, Phipson also set out this rule, relying on cases including Beatson. He explained that one application of public interest immunity was that witnesses "may not be asked, and will not be allowed, to state facts or to produce documents the disclosure of which would be prejudicial to the public service"184. He continued, explaining that where "the head of the department objects, the judge will not compel the production, nor decide upon the validity of the objection, unless it is a palpably futile one"185. The suggestion by Phipson that a court might decide upon the validity of a "palpably futile" objection was plainly a reference to the "extreme case" to which Pollock CB referred in Beatson186. The supposition seems to have been that a court might decide contrary to the objection of the head of department if, without 181 Pitt-Lewis (ed), A Treatise on the Law of Evidence as Administered in England and Ireland, 9th ed (1895), vol 1 at 612-613, §939. 182 Pitt-Lewis (ed), A Treatise on the Law of Evidence as Administered in England and Ireland, 9th ed (1895), vol 1 at 619, §947. 183 Pitt-Lewis (ed), A Treatise on the Law of Evidence as Administered in England and Ireland, 9th ed (1895), vol 1 at 619, §947. 184 Phipson, The Law of Evidence, 2nd ed (1898) at 172. 185 Phipson, The Law of Evidence, 2nd ed (1898) at 173. 186 For this proposition, Phipson cited Beatson v Skene (1860) 5 H & N 838 [157 ER 1415]; Hughes v Vargas (1893) 9 R 661; and Latter v Goolden (1894) The Times, July 17. Edelman inspecting the document, it was clear from its description that it simply was not a State document. In other words, inspection was possible where it was palpably clear that a document possessed by the State was clearly not a State document in any sense, and therefore did not fall within the circumstances or category in which the head of department could give conclusive evidence. An example of such a case was given by Wright J in In re Joseph Hargreaves Ltd187. In that case the Board of Inland Revenue claimed that the production of a company's balance sheets on a misfeasance summons would be injurious to the public interest. The claim was upheld on the basis of the certificate of the Board. As Vaughan Williams LJ put the point on appeal, upholding the decision of Wright J, the communications were documents that came "within the rule which enables the heads of Government departments to object on their own responsibility to their production"188. The example given by Wright J was that it might be different if the documents were "documents belonging to the company which by some accident had got into the hands of the Inland Revenue officers"189. At the time of Federation, the principle was therefore clear. A certificate from a Minister or head of department that disclosure would be injurious to the public interest was conclusive. It was "not for the judge to say whether the production of any particular document [was] injurious to the public service or not"190. There was a theoretical possibility that the immunity would not apply in an "extreme case" where the description of the document was such that it clearly fell outside the class within which protection could attach. However, this was not because the evidence or certificate was inconclusive. It was because the document fell outside the class to which protection could be given. In other words, the conclusive nature of the certificate applied only to State papers. It did not apply in an extreme case where it was clear without examination of the document that the document possessed by the State could not, in any sense, contain a State communication. Various overlapping reasons were advanced in the cases for the conclusive nature of the certificate. One reason was that something that a judge might think to be innocuous would be thought to be noxious by "the better informed officials 187 [1900] 1 Ch 347 at 350. 188 In re Joseph Hargreaves Ltd [1900] 1 Ch 347 at 352-353. 189 In re Joseph Hargreaves Ltd [1900] 1 Ch 347 at 350. 190 Robertson, The Law and Practice of Civil Proceedings by and against the Crown and Departments of the Government, (1908) at 606. Edelman of the public department"191. The reason given in Beatson in 1860 was that the privilege would be defeated if there were argument about the content of the document in open court. Nearly a century later, the House of Lords maintained that a court could not be closed for the purpose of seeing the documents in the absence of the other party because192: "where the Crown is a party to the litigation, this would amount to communicating with one party to the exclusion of the other, and it is a first principle of justice that the judge should have no dealings on the matter in hand with one litigant save in the presence of and to the equal knowledge of the other." The decision after Federation in Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] The rule which recognised the conclusive nature of a Minister's certificate that production of a State paper was not in the public interest was considered more than a decade after Federation by this Court in Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2]193. In that case, an action was brought by Marconi's Wireless against the Commonwealth for infringement of a patent. The infringing item was said to be an apparatus for wireless telegraphy. The Postmaster-General opposed inspection of the apparatus, alleging that inspection would be prejudicial to the public interest and welfare of the Commonwealth. Marconi's Wireless submitted that it was the duty of the Court to inquire into whether the disclosure would prejudice the public interest, and that a government official could not "by his mere ipse dixit add to the class of State secrets recognized by law"194. A majority of the Court, Griffith CJ and Barton J (Isaacs J dissenting), rejected the claim for public interest privilege. An important point about Marconi's Wireless Telegraph is that the Court was unanimous about the conclusive nature of a certificate from a Minister or head of department. The Court only divided on the question of the scope of the extreme case where the communication about which disclosure was sought palpably did not fall within the class of "State papers" to which the privilege 191 Admiralty v Aberdeen Steam Trawling and Fishing Co Ltd 1909 SC 335 at 341. See also at 343-344. See also Griffin v South Australia (1925) 36 CLR 378 at 391- 392; [1925] HCA 39. 192 Duncan v Cammell, Laird & Co [1942] AC 624 at 640-641. 193 (1913) 16 CLR 178; [1913] HCA 19. 194 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR Edelman applied. If the communication fell outside that class then the view of the Minister or head of department would not be conclusive. In the majority, Griffith CJ referred to Beatson with approval but distinguished it on the basis that there was no question about the "general character" of the documents in Beatson195. The Chief Justice said that courts had "never abdicated the duty of considering whether the documents, in respect of which the claim is made, come within the reason of the rule"196 (emphasis added). The claim for privilege was dismissed by the Chief Justice because the disclosure fell outside the class, ie State papers, which came within the reason of the rule. He explained that no reason was given on a "preliminary inquiry into the nature of the alleged State secret"197 to justify a class that could include the apparatus. Also in the majority, Barton J endorsed the approach in Taylor on Evidence198 in relation to a class of case where "evidence is excluded from motives of policy"199. This class "comprise[d] secrets of State, or matters which concern the administration, either of penal justice, or of government, and the disclosure of which would be prejudicial to the public interest"200 (emphasis in original). Justice Barton continued201: "No doubt, if the Court sees that a document is of the character by reason of which the privilege arises, it will admit the claim to protection, and will allow the Minister or head of the department having the custody of the 195 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 196 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 197 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 198 Hume-Williams (ed), A Treatise on the Law of Evidence as Administered in England and Ireland, 10th ed (1906), vol 1 at 667-674, §§939-947. 199 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 200 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 201 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR Edelman paper to determine in each case whether production or inspection would be injurious to the public service; for that authority is the better judge of matters of public policy." (emphasis added) His Honour emphasised that in the "preliminary consideration" of whether a document belongs to a class where a government objection will be conclusive, "production is, of course, not necessary: it is sufficient that there be such a description as will enable the Court to see whether it comes within the class"202. Like Griffith CJ, his Honour also referred with approval to Beatson, reiterating the rule that it was for the responsible servant of the Crown to determine whether production of a State paper was injurious to the public service, but adding that "before that question arises for determination the Court must be able to see that it is a State Paper"203. Justice Barton reiterated that after the preliminary inquiry into whether the description of the document indicates that it falls within the protected class, the Court will "refuse production or inspection if the responsible officer who is the custodian determines that such publicity would be injurious to the public interest"204. Since the apparatus was not in the class, it was not possible for the Minister to say anything that would bring it within the class205. Justice Isaacs dissented. His Honour thought that the case was so clear that all that would have been needed was a short quotation from Beatson206. But he considered it necessary to write a lengthy decision to expose what he described as the "misapprehension" of the majority in the Court that would undermine "the rule in a most important branch of the law touching the relative functions of the Executive and the Judiciary"207. His Honour considered that the relevant category was simply that the documents were "in possession of a 202 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 203 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 204 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 205 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 206 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 207 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR Edelman government department"208. Apart from "extreme cases" that were "practically negligible", all documents in the possession of a government department would be State papers, and the assurance by the Minister of public prejudice was conclusive evidence upon which the Court must act209. His Honour then applied the same principles that had been developed in relation to documents to the apparatus. It was a State apparatus, and the Court was required to give effect to the view of the Minister. In summary, by the time of Marconi's Wireless Telegraph, it had been established for half a century that, in cases of State papers, the evidence of a Minister or head of department that disclosure of a document would be injurious to the public service was conclusive. A court was bound to follow it without inspecting the document. The decision in Marconi's Wireless Telegraph shows only that there was doubt, by 1913, about the scope of the category of State papers in which the evidence was conclusive. But there was no doubt that if a document fell within the category then the view of the Minister or head of department was conclusive. An application was brought in Marconi's Wireless Telegraph for special leave to appeal to the Privy Council. In the course of refusing special leave to appeal, the Lord Chancellor said "[o]f course the Minister's statement or certificate must be conclusive on a particular document. How can it be otherwise? ... If the Minister certifies quite specifically, his certificate is to be taken as conclusive"210. In 1914, immediately following Marconi's Wireless Telegraph, the matter arose again in the Supreme Court of Victoria in Spong v Spong211. In that case it was argued that the decision in Marconi's Wireless Telegraph meant that the Court was not bound to accept a statement that had been made by the Minister that production upon subpoena would be detrimental to the public interest212. The case was an extreme one. Both parties to the litigation wanted production of the documents. The trial judge explained that his view was that the documents alone, from their description, could be produced without injury because they 208 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 209 Marconi's Wireless Telegraph Co Ltd v The Commonwealth [No 2] (1913) 16 CLR 210 Quoted in Griffin v South Australia (1925) 36 CLR 378 at 386, 388. 211 [1914] VLR 77. 212 Spong v Spong [1914] VLR 77 at 78. Edelman were merely statements about the sale of land that contained information that could be discovered from the Titles Office213. Nevertheless, the trial judge refused production, quoting from the principle in Hughes v Vargas set out above214, and saying that this principle was applied by this Court in Marconi's Wireless Telegraph215. The same rule was applied by this Court in 1920, in O'Flaherty v McBride216, finding the Court receiving that statutory restrictions upon documents from the Crown preserved the power of a Minister to object to production of documents on the ground of prejudice to the public service. The background to O'Flaherty is that in 1918, the Commonwealth had introduced a tax provision to prevent the Government from being compelled to produce tax returns in ordinary civil litigation. In the Second Reading Speech which introduced that provision, the Treasurer said that the view of the Government was "that no taxpayer's return should be produced to a Court unless a taxpayer's assessment is before the Court on appeal or the Department is suing for recovery of tax"217. The provision introduced, s 9(4) of the Income Tax Assessment Act 1915 (Cth)218, was described by Dixon CJ as giving protection to the officer against compulsion219, and said by this Court to be "of great importance"220. It has been replicated numerous times since221. It provided that: 213 Spong v Spong [1914] VLR 77 at 80. 215 Spong v Spong [1914] VLR 77 at 80. 216 (1920) 28 CLR 283; [1920] HCA 60. 217 Australia, House of Representatives, Parliamentary Debates (Hansard), 1 May 218 Inserted by Income Tax Assessment Act 1918 (Cth), s 4(d). 219 Canadian Pacific Tobacco Co Ltd v Stapleton (1952) 86 CLR 1 at 7; [1952] HCA 220 O'Flaherty v McBride (1920) 28 CLR 283 at 288. 221 See Income Tax Assessment Act 1936 (Cth), s 16(3) (now repealed). See now Taxation Administration Act 1953 (Cth), Sched 1, s 355-75. See also Administrative Appeals Tribunal Act 1975 (Cth), s 66; Independent Commission Against Corruption Act 1988 (NSW), s 111; Superannuation (Government Co- contribution for Low Income Earners) Act 2003 (Cth), s 53 (now repealed); Anti- Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), s 134. Edelman "An officer shall not be required to produce in any Court any return, assessment, or notice of assessment, or to divulge or communicate to any court any matter or thing coming under his notice in the performance of his duties under this Act, except as may be necessary for the purpose of carrying into effect the provisions of this Act." In O'Flaherty, this Court considered an appeal against the dismissal of an information preferred by the appellant, an officer of the Income Tax Department, against the respondent. The information had been dismissed because the appellant failed to produce a report made by him and provided to the Department. It was held the information should not have been dismissed. The Court was unable to apply the exception which permitted production to the Court where it was "necessary for the purpose of carrying into effect the provisions of this Act", because the Court considered that it could not order production of the report for the purpose of determining that necessity. The Court said222: "the statutory provision quoted does not weaken, and is not intended to weaken, the rule of common law that evidence of affairs of State is excluded when its admission would be against public policy. That rule in the present case operates to exclude the admission of the report – and, of course, all secondary evidence of its contents – and consequently operates so as to leave the Court unable to say whether its production is or is not 'necessary' for the purposes mentioned in sub-sec 4 of sec 9 of the Act." The decline of the conclusive certificate It is unnecessary to trace in detail the decisions that marked the decline in the conclusive nature of a certificate by a Minister or head of department. It suffices to say that the principle was so well established at Federation that, even by 1925 in Griffin v South Australia223, the bold and creative counsel, Owen Dixon KC, did not even attempt to argue against the conclusive nature of the Minister's statement that the production of the documents was prejudicial to the public interest. Instead, on appeal from a decision that accepted as conclusive a statement by the Minister, Dixon KC argued that the Minister's statement that the class of document was State papers was not conclusive. He submitted that the Court could consider whether the documents were State papers if there was "positive evidence of mistake or misconception by the Minister of his duty"224. 222 O'Flaherty v McBride (1920) 28 CLR 283 at 288. 223 (1925) 36 CLR 378. 224 Griffin v South Australia (1925) 36 CLR 378 at 380. Edelman The claim for production in that case was dismissed. Chief Justice Knox said, in a statement that was echoed by Isaacs J225, Higgins J226, and Rich J227, that the rule in Beatson stood "unaffected by any of the later decisions to which we were referred"228. He explained that Marconi's Wireless Telegraph had recognised that the rule applied "in cases in which the Court is satisfied that the document in question is within that class [of State documents]"229. No extreme case had ever arisen in which the rule had been disregarded or modified230. Justice Isaacs also said of the extreme case where the document, on its face, did not fall within the relevant class231: "If (which is barely conceivable) there should ever be so transparent a claim by a Minister of the Crown for privilege that the Court without seeking evidence or weighing it can perceive ex facie the impossibility of public prejudice, the Court may well for such an extreme possibility reserve an extreme power." Only Starke J dissented in Griffin. His Honour considered that the commercial activities of Australian governments had become more and more extensive and the sphere of political and administrative action correspondingly wider. This was said to be a reason for submitting executive government "to the jurisdiction of the Courts" and imposing duties of "discovery and inspection of documents according to the ordinary rules of law and practice"232. Despite the existence of the extreme possibility that courts might, after preliminary inquiry without examining the documents, conclude that certain documents did not fall within the class that entitled protection based upon a conclusive certificate, as late as 1929 courts refused to countenance that possibility even in the most stark cases. The English equivalent of the extreme circumstances in Spong v Spong was the 1929 decision in Ankin v London and 225 Griffin v South Australia (1925) 36 CLR 378 at 388-389. 226 Griffin v South Australia (1925) 36 CLR 378 at 396. 227 Griffin v South Australia (1925) 36 CLR 378 at 397. 228 Griffin v South Australia (1925) 36 CLR 378 at 385. 229 Griffin v South Australia (1925) 36 CLR 378 at 386. 230 Griffin v South Australia (1925) 36 CLR 378 at 386. 231 Griffin v South Australia (1925) 36 CLR 378 at 394. 232 Griffin v South Australia (1925) 36 CLR 378 at 402. Edelman North Eastern Railway Co233. In that case, the English Court of Appeal upheld the refusal to disclose a mere notice of a rail accident sent by a railway company to the Minister. In doing so, Scrutton LJ reiterated that it was the practice of English courts to accept as conclusive a statement of a Minister even if "the Court may doubt whether any harm would be done by producing it"234. This case was later described by Lord Reid as "a good example of what happens if the courts abandon all control of this matter"235. In 1931, the Privy Council in Robinson v State of South Australia [No 2]236, purporting to restate the view of Griffith CJ in Marconi's Wireless Telegraph, said that the Court has "always had in reserve the power to inquire into the nature of the document for which protection is sought, and to require some indication of the nature of the injury to the State which would follow its production". This decision confused the existence of a power to consider whether the document was in a class for which the certificate was conclusive with a general power to inquire in any case. In either event, however, it appears that in the many cases litigated over half a century, such a general power had never been exercised. The decision in Robinson was not followed by the House of Lords in Duncan v Cammell, Laird & Co237. Viscount Simon LC, with whom the six other Lords of Appeal in Ordinary agreed, said that he could not agree with the view. He added that the Privy Council had been mistaken in regarding a rule permitting a court to inspect the document as having any application to the subject matter238. Five years after the decision in Duncan, when giving the Second Reading Speech of the English legislation that removed any Crown privilege to resist discovery, but preserved the common law rule concerning a conclusive certificate from a Minister, the Lord Chancellor said239: 234 Ankin v London and North Eastern Railway Co [1930] 1 KB 527 at 533. 235 Conway v Rimmer [1968] AC 910 at 947. 236 [1931] AC 704 at 716. 238 Duncan v Cammell, Laird & Co [1942] AC 624 at 641. 239 United Kingdom, Parliamentary Debates, House of Lords, 4 March 1947, vol 146, col 70. Edelman "I am quite satisfied in my own mind that the Crown must have the right to say that certain documents or sometimes certain classes of documents shall not be produced either in litigation to which the Crown are a party or litigation between two ordinary parties. ... I say further, having discussed this matter with the Judges, that I am quite satisfied that the Judges would think it most undesirable that they should have the task of deciding whether documents should or should not be protected from disclosure. Very often you cannot tell, merely by looking at a document, whether it should or should not be protected. You must know all the circumstances which led up to the document, and for a Judge to inform himself of all those matters might mean that he would have to be closeted, as it were, with one party to the litigation without the other side being there." However, in 1968, the decision in Duncan was overruled in Conway v Rimmer240. In that case, the House of Lords unanimously held that the decision concerning disclosure was always ultimately one for the court. Lord Reid said, quoting from Vinson CJ in United States v Reynolds241, that "[j]udicial control over the evidence in a case cannot be abdicated to the caprice of executive officers"242. In Sankey v Whitlam243, the "new light"244 from Conway v Rimmer was adopted by this Court. In the words of Gibbs ACJ in Sankey, it became "in all cases the duty of the court, and not the privilege of the executive government, to decide whether a document will be produced or may be withheld"245. From 1978, therefore, Australian courts no longer treated as conclusive a certificate from a Minister or head of department that production of a State paper would be prejudicial to the public service. Nevertheless, the unquestioned existence of this rule at the time of Federation, and for decades beyond, remains an extremely important matter of historical context. That historical context demonstrates the difficulty for the submissions of the plaintiff and the applicant that the Constitution contains an implication to which content should be given to preclude legislation that achieves a similar effect. 241 345 US 1 at 9-10 (1953). 242 Conway v Rimmer [1968] AC 910 at 951. 243 (1978) 142 CLR 1; [1978] HCA 43. 244 Sankey v Whitlam (1978) 142 CLR 1 at 38. 245 Sankey v Whitlam (1978) 142 CLR 1 at 38. Edelman F. Section 503A of the Migration Act and the minimum content of judicial review As I explained in the introduction to these reasons, s 503A of the Migration Act is a measure designed to ensure confidentiality over particular information communicated to an authorised migration officer by particular law enforcement agencies that insist that the information be treated as confidential. To do this, s 503A(2) regulates the material before a court or tribunal. The technique of regulating the material before a court or tribunal in order to achieve a desired policy outcome is not new. As the Attorney-General of the Commonwealth and the Minister pointed out, a majority of this Court upheld legislation to this effect in Nicholas v The Queen246. The regulation in that case involved legislation that required a court to disregard various facts concerning the involvement of a law enforcement officer in the commission of an offence. As Gummow J said, the legislative scheme was designed "to strike a balance between competing interests and to give effect with respect to these prosecutions to a perception of the public interest which differs from that expressed in the common law in Australia. That is a matter for the Parliament."247 The plaintiff and the applicant submitted that s 503A of the Migration Act contravened an entrenched minimum provision of judicial review because by "withholding" relevant information from a court the statutory scheme "can stymie judicial review". In other words, the alleged vice of s 503A was that, in some cases, a ground of judicial review that might have succeeded would not succeed. The plaintiff and the applicant pointed to the applicant's case, where, it was submitted, the Minister's conclusion that the applicant failed the "character test" was based entirely on protected information. Perhaps ironically, both the plaintiff and the applicant nevertheless also alleged that the Minister could not have been satisfied on the evidence before him, which included the protected information, that cancellation of their visas was in the national interest. Indeed, even in the most extreme case, where the only information relied upon by the Minister is the protected information, an application for judicial review would still potentially have significant content, including in relation to review of whether the conditions, including confidentiality, are satisfied for the operation of s 503A(2). Section 503A does not, therefore, generally prevent judicial review or oust the jurisdiction in s 75(v) of the Constitution. Its effect, instead, is to make a ground of judicial review, such as unreasonableness, more difficult to establish in some cases if there is protected information involved. As I explain below, on one view this might be less extreme than legislation which makes one ground of judicial review (eg procedural unfairness) impossible in every case. 246 (1998) 193 CLR 173. 247 Nicholas v The Queen (1998) 193 CLR 173 at 239 [164]. Edelman The first reason why s 503A(2) is not invalid As I have explained above, the first reason why s 503A(2) is not invalid is that the submission by the plaintiff and the applicant in relation to s 503A(2) is ahistorical in two senses. One sense in which the submission is ahistorical is that s 503A(2) of the Migration Act removes far less of the record than the form of legislation that existed for well over a century before Federation, which was standardised in 1848 by the Summary Jurisdiction Act. There is no suggestion that s 75(v) of the Constitution, or any other constitutional provision, involved a break from this longstanding legislative approach by the English Parliament so that English legislation enacted more than a century and a half earlier than Federation, and persisting since, would have become invalid in Australia. In any event, as I have explained, the Convention Debates would contradict such a suggestion. The second sense in which the submission is ahistorical is that s 503A(2) achieves by legislation a very similar effect to that which a certificate from the Minister would have achieved in any litigation in the nineteenth century. In the Second Reading Speech of the Bill that introduced s 503A, Senator Kemp said that the Bill increased the level of protection for criminal intelligence and related information that was "critical to assessing the criminal background or associations of non-citizen visa applicants and visa holders"248. He explained that it had been "difficult for the Department to use such information in making character decisions because its disclosure might be threatened"249. The difficulty arising from threatened disclosure was that "Australian and international law enforcement agencies are reluctant to provide sensitive information unless they are sure that both the information and its sources can be protected"250. A review of the nineteenth century decisions from Beatson onwards shows that any nineteenth century court, presented with a certificate from the Minister in relation to information such as that caught by s 503A(2), would have accepted the conclusive nature of the certificate. Even if it could have been alleged that s 503A(2) information fell within an "extreme case" of information that might not be a State paper, and therefore might not be entitled to the benefit of the conclusive certificate, a recital by the Minister of the matters described in the Second Reading Speech by Senator Kemp would have satisfied any court. No nineteenth century court would ever have considered that it had the power to examine the information if the Minister had deposed that it was provided by a domestic agency or foreign law enforcement agency on the condition that it be 248 Australia, Senate, Parliamentary Debates (Hansard), 11 November 1998 at 60. 249 Australia, Senate, Parliamentary Debates (Hansard), 11 November 1998 at 60. 250 Australia, Senate, Parliamentary Debates (Hansard), 11 November 1998 at 60. Edelman treated as confidential. As the Lord Chancellor said in Smith v The East India Company251, in relation to a mere commercial transaction but without examining the documents, in words that could easily be applied with even greater force to s 503A(2): "it is quite obvious that public policy requires, and, looking to the Act of Parliament, it is quite clear that the Legislature intended, that the most unreserved communication should take place ... [I]t is also quite obvious that if, at the suit of a particular individual, those communications should be subject to be produced in a Court of justice, the effect of that would be to restrain the freedom of the communications, and to render them more cautious, guarded, and reserved. these communications come within that class of official communications which are privileged, inasmuch as they cannot be subject to be communicated, without infringing the policy of the Act of Parliament and without injury to the public interests." therefore, think, that There are two relevant respects in which the operation of s 503A(2) is, in fact, more liberal than the operation of the nineteenth century conclusive certificates. The first of those is that in the nineteenth century, the prevailing view was that even if both parties supported production, the court was obliged to refuse the production of a document, or not to permit production of a document, where production would be injurious to the public service252. In contrast, s 503A(3) permits the Minister to disclose the information to a court or tribunal after consultation with the agency that provided the information on the condition of confidentiality. The second respect in which s 503A(2) is more liberal than the common law conclusive certificate is that a nineteenth century court would only consider whether a document was a "State paper" in a hypothetical "extreme case" that never arose in half a century before Federation. But the conditions under which s 503A(2) applies must be considered in every case. The preconditions to the application of s 503A(2) are that (i) information is communicated to an authorised migration officer; (ii) the information is communicated by a gazetted agency; (iii) the information is communicated on the condition that it be treated as confidential information; and (iv) the information is relevant to an exercise of a power under s 501, s 501A, s 501B, or s 501C of the Migration Act. If s 503A(2) were to be translated in nineteenth century terms, it would be as though the court would scrutinise every case in which the State alleged that a document was a State paper so that disclosure would be refused, rather than reserving this possibility only for hypothetical "extreme" cases that never occurred. 251 (1841) 1 Ph 50 at 55 [41 ER 550 at 552]. 252 Chatterton v Secretary of State for India in Council [1895] 2 QB 189 at 191, 195. Edelman The second reason why s 503A(2) is not invalid The second reason why s 503A(2) is not invalid is that such a conclusion would create inconsistencies with this Court's constitutional jurisprudence. Section 503A(2) can be contrasted with other privative clauses since Hickman that have constrained judicial review to a greater extent but which have been upheld as valid by this Court. An example contrasting with s 503A(2) is the restrictive legislation that was held to be valid by this Court in 2010 in Plaintiff M61/2010E253. As I explained above, that case considered provisions of the Migration Act that had the effect that an "offshore entry person" could not apply for a visa unless the Minister permitted an application. In some circumstances, the Minister could decide that it was in the public interest to grant a visa, whether or not an application had been made. The Minister's powers were expressly constrained only by the Minister's consideration of the public interest. And the Minister was not obliged even to consider the exercise of these powers. This meant, as the Court found, that mandamus would not issue to compel the Minister to consider exercising the power254. Since mandamus would not issue to compel any reconsideration, there was no utility in granting certiorari to quash recommendations made by the Minister after consideration255. As Dr Burton Crawford observed, the effect of the legislation in Plaintiff M61/2010E was to "knock out" the remedy of mandamus guaranteed by s 75(v) of the Constitution256. More precisely, the power to award mandamus was unaffected but there was no content upon which that power could operate. Nevertheless, in Plaintiff M61/2010E this Court accepted257 the submission of the Solicitor-General of the Commonwealth258 that the decision in Plaintiff S157/2002 did not require that the exercise of a statutory power in every case be accompanied by a duty to consider the exercise of the power so as to give content upon which the power to order mandamus could operate. As the Court explained, s 46A did not clash either with s 75(v) "or with its place or purpose in 253 (2010) 243 CLR 319. 254 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 358 [99]. 255 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 358 [100]. 256 Burton Crawford, The Rule of Law and the Australian Constitution, (2017) at 118. 257 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 347 [57]. 258 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 327. Edelman the Constitution"259. Nor did an abstract appeal to "the rule of law" lead to a different conclusion260. The third potential reason why s 503A(2) is not invalid The powers to which the s 503A(2) restriction on disclosure applies are powers under (i) s 501, (ii) s 501A, (iii) s 501B, or (iv) s 501C. In very broad terms, these powers are concerned, respectively, with (i) the Minister's refusal to grant a visa, or cancellation of a visa; (ii) the Minister setting aside a "non- adverse" decision by a delegate or by the Administrative Appeals Tribunal and substituting his adverse decision; (iii) the Minister setting aside an "adverse" decision by a delegate and substituting his adverse decision; and (iv) revocation of a decision under s 501(3) or s 501A(3) where, following submissions from the person, the Minister is satisfied that the person passes the character test. Suppose, to adapt a hypothetical example given by Dr Kirk261, that the Migration Act provided, clearly and unambiguously, that in some circumstances each of the four powers above need not be exercised by the Minister reasonably or rationally so that, in those circumstances, the Migration Act purported to exclude entirely judicial review based on unreasonableness, although leaving intact other grounds of jurisdictional error, including jurisdictional preconditions for the exercise of power. If such a scheme were to contravene an implied constitutional constraint on legislative power, the same constraint might also apply, indeed might apply with greater force, to a scheme which purported to remove the duty to observe procedural fairness. Yet many cases have assumed that there is no implied constitutional restraint upon legislation which provides that a person is not entitled to procedural fairness. The entitlement, and extent of the entitlement, to review for unreasonableness262, like review on the ground of 259 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 347 [57]. 260 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 347 [58]. 261 Kirk, "The entrenched minimum provision of judicial review", (2004) 12 Australian Journal of Administrative Law 64 at 71. 262 Kruger v The Commonwealth (1997) 190 CLR 1 at 36; [1997] HCA 27; Abebe v The Commonwealth (1999) 197 CLR 510 at 554 [116]; [1999] HCA 14; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 650 [126]; [1999] HCA 21; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 100-101 [40]; Minister for Immigration and Citizenship v SZIAI (2009) 83 ALJR 1123 at 1127 [15]; 259 ALR 429 at 433; [2009] HCA 39; Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 at 645 [123]; [2010] HCA 16; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 350-351 [28]-[29], and especially at 370-371 [88]-[90]. See also R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189, quoted in Murphyores (Footnote continues on next page) Edelman procedural fairness263, has been repeatedly held to arise as a matter of implication from the statute itself, rather than as an imposed ground of review by implication from the Constitution. It may not have been impossible, purely as a matter of logic, for a term to have been included in the Constitution which expressly constrained legislation from reducing judicial review. For instance, an express term could have been inserted in the Constitution which prohibited Parliament from legislating in such a manner as to reduce the minimum content of judicial review that would ordinarily exist on a ground such as unreasonableness based upon the usual subject matter, scope, and purposes of legislation. But an express term stated in this way would invite many questions concerning the manner and scope of its operation. That may have been a powerful reason not to imbue an implied term with such uncertain content. However, in the absence of any submissions on this point it is unnecessary to decide it. G. Whether the Minister could have been satisfied that cancellation of the visas was in the national interest The remaining issue in each Special Case raised by the plaintiff and the applicant is whether the power of the Minister to cancel a visa under s 501(3) of the Migration Act could reasonably have been exercised. The Minister's power arises if (i) the Minister reasonably suspects that the person does not pass the character test, and (ii) the Minister is satisfied that the cancellation is in the national interest. As to the first of these conditions, in cancelling the visa of each of the plaintiff and the applicant, the Minister relied upon the character test in s 501(6)(b). That paragraph provides that a person does not pass the character test if: Incorporated Pty Ltd v The Commonwealth (1976) 136 CLR 1 at 17-18 and Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 263 Salemi v MacKellar [No 2] (1977) 137 CLR 396 at 401, 419, 451; [1977] HCA 26; R v MacKellar; Ex parte Ratu (1977) 137 CLR 461 at 475; [1977] HCA 35; Kioa v West (1985) 159 CLR 550 at 609-610, 614; [1985] HCA 81; Haoucher v Minister for Immigration and Ethnic Affairs (1990) 169 CLR 648 at 652; [1990] HCA 22; Annetts v McCann (1990) 170 CLR 596 at 604; [1990] HCA 57; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 591; [1992] HCA 10; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 258-259 [12]- [13]; [2010] HCA 23; Minister for Immigration and Border Protection v SZSSJ (2016) 90 ALJR 901 at 914 [75]; 333 ALR 653 at 669; [2016] HCA 29. Edelman "the Minister reasonably suspects: that the person has been or is a member of a group or organisation, or has had or has an association with a group, organisation or person; and that the group, organisation or person has been or is involved in criminal conduct". A separate submission by each of the plaintiff and the applicant was that the Minister could not be satisfied that cancellation of either visa was in the national interest without making findings about either or both of (i) their knowledge of, opinion of, support for, or participation in the suspected criminal conduct of the Rebels Outlaw Motorcycle Gang, and (ii) how cancellation of their visas would disrupt, disable and dismantle the criminal activities of outlaw motorcycle gangs. In relation to the plaintiff, the Minister did not, as the plaintiff submitted, "leap uncritically from suspicion of membership to a conclusion that visa cancellation '[was] in the national interest, in that it [would] contribute to the national effort to disrupt, disable and dismantle the activities of Outlaw Motorcycle Gangs'". In particular, the Minister relied upon numerous matters for his conclusion that cancellation was in the national interest notwithstanding the plaintiff's period of residence in Australia and his ties to Australia. Those matters included: (i) information that is protected under s 503A of the Migration Act; (ii) the National Security Strategy and National Taskforce Operation Morpheus established by the Australian Crime Commission's Serious and Organised Crime Coordination Committee; (iii) the establishment of the Attero National Taskforce in 2012, the purpose of which was to disrupt, disable and dismantle the criminal activities of the Rebels Outlaw Motorcycle Gang, considered to be one of Australia's highest risk criminal threats; (iv) open source materials and submissions by the plaintiff's legal representative that identify the plaintiff as having been or being a member of the Rebels Outlaw Motorcycle Gang; and (v) a history of the plaintiff's criminal convictions dating back to 11 January 1982, including sentences for terms of imprisonment. The offences included convictions for stealing, breaking and entering, unlawfully damaging and destroying property, possession of various prohibited substances, and multiple convictions for firearm and weapons offences. The plaintiff reoffended even after he was sent a formal warning letter dated 4 July 2011 informing him that any further offending may result in his visa being cancelled. In relation to the applicant, the matters relied upon by the Minister in addition to the protected information included some of the same matters considered in relation to the plaintiff, namely (ii) and (iii) above. It is possible that much weight might have been placed by the Minister on the information that is protected from disclosure under s 503A of the Migration Act, and that the lack Edelman of production of this information makes it more difficult for the applicant to establish that the Minister could not have been satisfied that cancellation of the applicant's visa was in the national interest. Nevertheless, the submissions of the applicant essentially invited this Court to conduct a fresh assessment of the merits of whether the Minister could be satisfied that cancellation of the applicant's visa was in the national interest, which is "largely a political question"264. Those submissions could not have succeeded even if the information had been disclosed. This ground must also be dismissed. Conclusion The submissions of the plaintiff and the applicant on these applications were directed only to whether s 503A(2) invalidly failed to comply with an implied minimum provision of judicial review, which was said to be required to be provided by this Court. It was understandable that the plaintiff and the applicant confined their cases in this way because the primary textual source for the implication upon which they relied, s 75(v) of the Constitution, is a provision concerned only with the original jurisdiction of this Court. The plaintiff and the applicant made no submissions about the manner in which such an implication would extend also to constrain Parliament's power in relation to the exercise of jurisdiction defined under s 77(i) of the Constitution by reference to s 75, or whether the restriction was based upon a wider structural constitutional implication that operated identically in relation to other federal courts or to Supreme Courts265. The Commonwealth and the Minister reserved their position to respond to such submissions if, and when, s 503A(2) were to be applied in the Federal Court. The conclusion that I have reached in relation to these applications is a further reason why it is unnecessary to consider this issue. It is also unnecessary to consider whether, if s 503A(2) were invalid, it could be "read down" and, if so, the consequence of the existence of a number of possible ways in which it could be read down266. I would answer the questions of law in the Special Case which were reserved for consideration of the Full Court in relation to the plaintiff as follows, with identical answers in relation to the applicant: 264 Plaintiff S156/2013 v Minister for Immigration and Border Protection (2014) 254 CLR 28 at 46 [40]; [2014] HCA 22. 265 Cf Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 579-581 [95]-[100]; [2010] HCA 1. 266 Pidoto v Victoria (1943) 68 CLR 87 at 111; [1943] HCA 37. Edelman Neither s 501(3) nor s 503A(2) of the Migration Act is invalid. The Minister could be satisfied that the cancellation of the plaintiff's visa was in the national interest without making findings as to either or both of (i) the plaintiff's knowledge of, opinion of, support for or participation in the suspected criminal conduct of the Rebels Outlaw Motorcycle Gang, and (ii) how cancellation of the plaintiff's visa would disrupt, disable and dismantle the criminal activities of outlaw motorcycle gangs. The decision of the Minister to cancel the plaintiff's visa was not invalid. The plaintiff is not entitled to any relief. The plaintiff should pay the costs of the Special Case.

HIGH COURT OF AUSTRALIA ROBYN CHRISTINE FELLOWES APPELLANT AND MILITARY REHABILITATION AND COMPENSATION COMMISSION RESPONDENT Fellowes v Military Rehabilitation and Compensation Commission [2009] HCA 38 23 September 2009 Appeal allowed with costs. ORDER Set aside the orders of the Full Court of the Federal Court of Australia made on 4 August 2008 and, in their place, order that: the appeal to that Court be allowed with costs; the decision of the Administrative Appeals Tribunal made on 7 September 2007 be set aside and, in its place, there be a direction that the respondent determine the amount payable to the applicant for review by the Tribunal assessed under ss 24 and 27 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) in respect of an injury, being a right knee condition resulting in a degree of permanent impairment of the applicant of 10% as assessed under Table 9.5 of the applicable Guide to the Assessment of the Degree of Permanent Impairment; and the respondent pay the applicant's costs of the review by the Administrative Appeals Tribunal. On appeal from the Federal Court of Australia Representation P J Hanks QC with R F King-Scott for the appellant (instructed by Slater & T M Howe QC with L A Walker for the respondent (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Fellowes v Military Rehabilitation and Compensation Commission Workers' compensation – Injury resulting in permanent impairment – Under s 24 of Safety, Rehabilitation and Compensation Act 1988 (Cth), where "an injury to an employee results in a permanent impairment", respondent liable to pay compensation "in respect of the injury" – Amount of compensation fixed by degree of permanent impairment resulting from injury as assessed under Guide to the Assessment of the Degree of Permanent Impairment ("Guide") – Guide provides that "[w]here two or more injuries give rise to the same impairment a single rating only should be given" – Appellant previously compensated for injury to left knee resulting in permanent impairment – Whether appellant entitled to compensation for separate injury to right knee resulting in permanent impairment to same degree – Whether "degree of permanent impairment" refers to impairment of whole person or impairment to particular part of person's body. Words and phrases – "degree of permanent impairment", "impairment", "injury", "permanent impairment", "resulting from". Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 4(1), 24, 28, 142, Guide to the Assessment of the Degree of Permanent Impairment, 1st ed (1989). HAYNE, HEYDON, CRENNAN AND BELL JJ. The appellant enlisted in the Australian Army on 11 November 1986. In 1986, she suffered a left knee injury. As a result of work-related factors, the left knee injury left the appellant with no loss of range of movement of the left knee but with permanent difficulty with grades and steps, as distinct from distances. In 1987, the appellant suffered a right knee injury. As a result of work-related factors, the right knee injury left the appellant with no loss of range of movement of the right knee but with permanent difficulty with grades and steps, as distinct from distances. Is the appellant entitled to compensation for each injury? Or, because the second injury does not affect her ability to walk to any significantly greater extent than the first injury, is she not entitled to compensation for the second injury? These reasons will show that she is entitled to compensation for each injury. In December 2005, the appellant applied to the respondent, the Military Rehabilitation and Compensation Commission for compensation for each injury under the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the SRC Act"). The claims made by the appellant related to injuries sustained in connection with defence service before the commencement of the Military Rehabilitation and Compensation Act 2004 (Cth). That Act did not govern the appellant's claims. It was common ground that the appellant's claims are governed by the SRC Act. The Commission had to determine the claims under s 142 of the SRC Act. ("the Commission"), It is not disputed that, if the appellant suffered no permanent impairment other than that attributable to the injury to her left knee, she would be entitled to compensation in respect of a 10% level of impairment of the whole person assessed in accordance with the then applicable "Guide to the Assessment of the Degree of Permanent Impairment" prepared pursuant to s 28 of the SRC Act. It is likewise not disputed that, if the appellant suffered no permanent impairment other than that attributable to the injury to her right knee, she would have the same entitlement. In January 2007, after review and revocation of prior determinations to the contrary, the Commission determined that it was liable to pay the appellant compensation for the injury to her left knee on the basis that she had a 10% whole person impairment. In February 2007, the Commission accepted liability for the injury to the appellant's right knee but, in March 2007, determined that it was not liable to pay compensation for permanent impairment in relation to this injury because the appellant had already been compensated for a 10% whole person impairment. The Commission was asked to review this determination but affirmed it. The appellant applied to the Administrative Appeals Tribunal for review of the Commission's decision. The Tribunal affirmed1 the decision. The appellant appealed to the Federal Court of Australia against the Tribunal's decision. The Full Court of the Federal Court (French, Moore and Lindgren JJ) dismissed2 the appeal. By special leave, the appellant appeals to this Court. The SRC Act The appellant's entitlements to compensation depend upon the proper construction and application of the SRC Act. Section 24 of that Act, so far as now relevant, provided at the times relevant to this matter: "(1) Where an injury to an employee results in a permanent impairment, Comcare is liable to pay compensation to the employee in respect of the injury. For the purpose of determining whether an impairment is permanent, Comcare shall have regard to: the duration of the impairment; the likelihood of improvement in the employee's condition; (c) whether the employee has undertaken all reasonable rehabilitative treatment for the impairment; and any other relevant matters. Subject to this section, the amount of compensation payable to the employee is such amount, as is assessed by Comcare under subsection (4), being an amount not exceeding the maximum amount at the date of the assessment. 1 Re Fellowes and Military Rehabilitation and Compensation Commission (2007) 97 ALD 220. 2 Fellowes v Military Rehabilitation and Compensation Commission (2008) 170 FCR 531. The amount assessed by Comcare shall be an amount that is the same percentage of the maximum amount as the percentage determined by Comcare under subsection (5). Comcare shall determine the degree of permanent impairment of the employee resulting from an injury under the provisions of the approved Guide. The degree of permanent impairment shall be expressed as a percentage." Section 147 of the SRC Act provided, in effect, that for defence-related claims, references to "Comcare" are to be taken as references to the Commission but that it is the Commonwealth that is liable to pay amounts due under the Act. Some of the terms used in s 24 (notably "injury", "impairment" and "permanent") were defined in s 4(1) of the SRC Act. Those definitions provided: "impairment means the loss, the loss of the use, or the damage or malfunction, of any part of the body or of any bodily system or function or part of such system or function. injury means: a disease suffered by an employee; or an injury (other than a disease) suffered by an employee, being a physical or mental injury arising out of, or in the course of, the employee's employment; or an aggravation of a physical or mental injury (other than a disease) suffered by an employee (whether or not that injury arose out of, or in the course of, the employee's employment), being an aggravation that arose out of, or in the course of, that employment; but does not include any such disease, injury or aggravation suffered by an employee as a result of reasonable disciplinary action taken against the employee or failure by the employee to obtain a promotion, transfer or benefit in connection with his or her employment. permanent means likely to continue indefinitely." The Guide The "Guide" mentioned in s 24(5) was prepared under s 28 of the SRC Act. Among other things, the Guide set out criteria by reference to which the degree of the permanent impairment of an employee resulting from an injury was to be determined and the methods by which the degree of permanent impairment, as determined under those criteria, was to be expressed as a percentage. The Guide specified what it referred to as the "percentage whole person impairment" attributable to different levels of impairment of parts of the body. In particular, Table 9.5 of the Guide provided, in relation to "Limb Function – Lower Limb (Percentage Whole Person Impairment)": "% DESCRIPTION OF LEVEL OF IMPAIRMENT Can rise to standing position and walk BUT has difficulty with grades and steps Can rise to standing position and walk BUT has difficulty with grades, steps and distances Can rise to standing position and walk with difficulty BUT is limited to level surfaces Can rise to standing position and maintain it with difficulty BUT cannot walk Cannot stand or walk". The decisions below In the Administrative Appeals Tribunal, the Deputy President concluded3 that, although the appellant had sustained "two separate and distinct injuries that each give rise to a liability upon the Commission to pay compensation", s 24(5) of the SRC Act required that compensation be determined having regard to the degree of permanent impairment identified by reference to the Guide, and that the Guide "directs explicitly that two or more separate injuries that give rise to the same impairment result in a single rating of impairment". The reference to explicit direction in the Guide was a reference to an introductory section of the Guide entitled "Principles of Assessment", which said, under the heading "Combined Impairments": (2007) 97 ALD 220 at 228 [34]. "It is important to realise that impairment is system or function based and that a single injury or disease may give rise to multiple loss of function. When more than one table applies to a single injury separate scores should be allocated to each functional impairment. Where two or more injuries give rise to the same impairment a single rating only should be given." (emphasis added) In the Full Court of the Federal Court, French and Lindgren JJ concluded that the Tribunal made no error in its decision. Their Honours concluded4 that it would not have been open to the Tribunal to determine that the degree of permanent impairment resulting from the second injury (the injury to the appellant's right knee) was of the class "[c]an rise to standing position and walk BUT has difficulty with grades and steps". Moore J joined in the orders proposed by French and Lindgren JJ but did so on the footing5 that he was bound to follow the earlier decision of the Full Court of the Federal Court in Comcare v Van Grinsven6. As French and Lindgren JJ rightly observed7, it was not in issue in the present matter that the second injury suffered by the appellant "must have resulted in some further impairment, in the sense that [the appellant] must have been at least somewhat worse off after the second injury than she was immediately beforehand". Nonetheless, French and Lindgren JJ concluded that the effect of the legislation, in this case, was that an employee who suffered a work-related injury causing her deleterious consequences was not entitled to compensation. This conclusion was held8 by their Honours to follow from the necessity to make allowance for the appellant's existing permanent impairment when determining the degree of permanent impairment "resulting from" the second injury. Their Honours held that this outcome was required by the earlier (2008) 170 FCR 531 at 539 [35]. (2008) 170 FCR 531 at 543-544 [55]-[56]. (2002) 117 FCR 169. (2008) 170 FCR 531 at 539 [32]. (2008) 170 FCR 531 at 539 [33]. decision of the Full Court in Comcare v Van Grinsven9 and not denied by this Court's later decision in Canute v Comcare10. Injury and impairment As this Court pointed out in Canute11, "[t]he concept of 'an injury' is a term of pivotal importance in the structure of the [SRC] Act". Section 24(1) provided that where an injury to an employee results in a permanent impairment, Comcare (or in this case the Commonwealth) is "liable to pay compensation to the employee in respect of the injury". As the Court also pointed out12 in Canute, three observations may be made about the concept of injury: "First, the Act does not oblige Comcare to pay compensation in respect of an employee's impairment; it is liable to pay compensation in respect of 'the injury'. Secondly, the term 'injury' is not used in the Act in the sense of 'workplace accident'. The definition of 'injury' is expressed in terms of the resultant effect of an incident or ailment upon the employee's body. Thirdly, the term 'injury' is not used in a global sense to describe the general condition of the employee following an incident." It was not disputed that the appellant had suffered two injuries. Each injury resulted in a permanent impairment in the sense that each injury resulted in permanent damage to, or loss of the use of, a part of her body. Each injury caused damage to, or loss of the use of, a different part of the body: in one case the left knee; in the other, the right. The central question in the appeal is that presented by s 24(5) of the SRC Act: how was "the degree of permanent impairment of the employee resulting from" the second injury to be determined "under the provisions of the approved Guide"? The competing arguments The appellant submitted that, each injury having led to a separate impairment, the degree of permanent impairment of the employee that resulted from the injury was determined by looking to the consequences that followed (2002) 117 FCR 169. 10 (2006) 226 CLR 535; [2006] HCA 47. 11 (2006) 226 CLR 535 at 539 [8]. 12 (2006) 226 CLR 535 at 540 [10]. from that injury. The consequences to be identified, so the appellant submitted, were the consequences that followed from the particular impairment as that term is defined in the SRC Act. In this case, because there were two injuries and two impairments, two amounts of compensation should be awarded. By contrast, the respondent submitted that what was to be determined under s 24(5) was the degree of permanent impairment of the appellant, fixed by reference to Table 9.5 of the Guide. That table classified the impairment of the appellant's capacity to undertake the activities of daily living resulting from the second injury as the same as that which followed as a result of the first. Accordingly, so the respondent submitted, the degree of impairment resulting from the second injury, when assessed in accordance with the Guide, should be assessed as 0%, a result expressly contemplated by s 28(5) of the SRC Act13. Resolution of the competing arguments depends, in the end, upon how the word "impairment" should be read when used in the phrase found in s 24(5) ("the degree of permanent impairment of the employee resulting from an injury") recognising that the determination called for by s 24(5) is a determination of degree "under the provisions of the approved Guide". Is "impairment" to be understood in that phrase as referring back to s 24(1) and its provision that Comcare (here the Commonwealth) is liable to pay compensation to an employee in respect of an injury "[w]here an injury to an employee results in a permanent impairment"? In particular, is the reference to "permanent impairment of the employee" found in s 24(5) a reference in the circumstances of this case to permanent damage to, or loss of the use of, a part of the employee's body, as the definition of "impairment" would suggest? Or, as the respondent submitted, should s 24(5) be read as directing attention to impairment of the particular employee as a whole person rather than to damage to, or loss of the use of, a particular part of the body? Is that reading of s 24(5) required, as the respondent further submitted, by the Guide? In Canute, this Court pointed out14 that the definition of "impairment" in the SRC Act is not expressed in terms that require assessing impairment on a 13 Section 28(5) provided: "The percentage of permanent impairment or non-economic loss suffered by an employee as a result of an injury ascertained under the methods referred to in paragraph (1)(c) [the methods set out in the Guide] may be 0%." 14 (2006) 226 CLR 535 at 541 [11]. "whole person" basis. Rather, the definition is expressed in terms conveying a disaggregated sense. As the Court said15 in Canute, "[t]extually, the Act assumes that 'an injury' may result in more than one 'impairment'". Likewise, it must follow that more than one injury may result (and often will result) in more than one impairment. It may be accepted that, as the respondent submitted, s 24(5) requires determination of the degree of permanent impairment of an employee resulting from an injury "under the provisions of the approved Guide". It may also be accepted that, as the respondent submitted, s 28(1) of the SRC Act authorised Comcare to prepare a Guide setting out: criteria by reference to which the degree of the permanent impairment of an employee resulting from an injury shall be determined; [and] (c) methods by which the degree of permanent impairment ... as those criteria, shall be expressed as a determined under percentage". To that extent, the respondent's submission, that the Guide controls the assessment of the degree of permanent impairment, may be accepted. But, as pointed out in Canute16: "recourse to the criteria and methodologies set out in the Guide is only necessary once the key statutory criterion of the occurrence of 'an injury' (which resulted in at least one permanent impairment) has been fulfilled". Once it is accepted, as it was in Canute, that the SRC Act hinges about the concept of "injury" and that "impairment" is to be identified in terms of effect on bodily parts, systems or functions, it follows that the appellant's arguments are to be accepted and the respondent's rejected. The conclusion reached by the Tribunal could be supported only by reading s 24(5) as directing, or permitting, Comcare to provide in the Guide for determination of the degree of permanent impairment resulting from an injury by reference to the pre-existing capacities of the particular applicant for compensation. 15 (2006) 226 CLR 535 at 541 [11]. 16 (2006) 226 CLR 535 at 542 [14]. The argument that s 24(5) directs an approach of that kind (referred to in argument as a "whole person" approach) was expressly rejected by this Court in Canute17 and the respondent did not seek to reopen what was decided in that case. Rather, the respondent sought to emphasise that s 24(5) required application of the Guide and that s 28(1)(a) required Comcare to state, in the Guide, the criteria by reference to which the degree of permanent impairment resulting from an injury was to be determined. The respondent submitted that there were two reasons to conclude that the Guide required determination of the degree of impairment resulting from an injury by reference to the pre-existing capacities of the particular applicant for compensation. First, the respondent pointed to the repeated references in the Guide to "percentage whole person impairment". Secondly, the respondent pointed to the statement made in the introductory section of the Guide which is set out earlier in these reasons, that "[w]here two or more injuries give rise to the same impairment a single rating only should be given". The references in the Guide to "whole person impairment" identify the "methods by which the degree of permanent impairment [resulting from an injury is] expressed as a percentage"18. The percentages stated in the Guide describe "the extent of each impairment as a percentage value of the functional capacity of a normal healthy person"19. The references to "whole person impairment" that are found in the Guide do not direct attention to the effect of an injury or disease on a particular individual. On the contrary, the effect to be assessed is by reference to the functional capacities of a normal healthy person. The statement in the Guide, that "[w]here two or more injuries give rise to the same impairment a single rating only should be given", must be understood as directing attention to an impairment as that term is defined in the SRC Act. That is, the reference to the "same impairment" must be understood in terms of the particular identified effect on particular bodily parts, systems or functions. Contrary to the respondent's submission, this statement in the Guide is not to be understood as requiring a single rating to be given whenever each of two injuries 17 (2006) 226 CLR 535 at 542 [15]. 18 s 28(1)(c). 19 Guide to the Assessment of the Degree of Permanent Impairment, 1st ed (1989) at is assessed as yielding the same degree of impairment of two separate parts of the body. The text of the Guide is therefore to be construed as providing that the whole person impairment to which it directs attention requires comparison with the "functional [capacities] of a normal healthy person" rather than the capacities of the particular applicant as they existed immediately before the injury in question. The reference to two injuries causing the "same impairment" requires attention to the particular identified effect on bodily parts, systems or functions that is said to have resulted from the two injuries. It is, therefore, not necessary to consider, in this case, the application of the principle, stated20 in Canute, that if there were some conflict between what is required by the SRC Act and what is provided by the Guide, it is the Act that must be given priority. It is, nonetheless, important to make the further point that, on its proper construction, s 24(5) of the SRC Act directs attention to the degree of impairment that results from the injury resulting in the impairment identified in s 24(1). The two sub-sections of s 24 are not to be read as requiring or permitting a different identification of "impairment" in their respective applications. In the application of both sub-sections the focus must fall upon "the loss, the loss of the use, or the damage or malfunction"21 of a part of the body or a bodily system or function or part of a bodily system or function. And in the present case there were separate losses of use of, or damage to, two parts of the body. In this last connection, the respondent submitted that, despite there having been separate injuries to each knee, there was in fact only a single effect on (a loss of use of) a bodily function (the function of using the lower limbs). It may be doubted that the function of using the lower limbs is properly described as a bodily function. But even if the words could be understood as extending thus far, the respondent's argument, on examination, is no more than a restatement of the argument that the degree of impairment to be determined under s 24(5) is the degree of impairment as a whole person of the particular applicant for compensation. For the reasons already given, that construction should be rejected. 20 (2006) 226 CLR 535 at 548 [37]. 21 s 4(1), "impairment". It also follows that the decision of the Full Court of the Federal Court in Comcare v Van Grinsven22, upon which both the Tribunal and the Full Court relied in the present matter, was wrongly decided and should be overruled. Conclusion and orders For these reasons, the appeal to this Court should be allowed with costs. The orders of the Full Court of the Federal Court made on 4 August 2008 should be set aside. The appellant submitted, and the respondent did not submit to the contrary, that in these circumstances the appropriate consequential orders were to order that in place of those orders of the Full Court of the Federal Court there be orders that: the appeal to that Court be allowed with costs; the decision of the Administrative Appeals Tribunal dated 7 September 2007 be set aside and in its place there be a direction that the respondent determine the amount payable to the applicant for review by the Tribunal assessed under ss 24 and 27 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) in respect of an injury, being a right knee condition resulting in a degree of permanent impairment of the applicant of 10% as assessed under Table 9.5 of the Guide; the Commission pay the applicant's costs of the review by the Tribunal. 22 (2002) 117 FCR 169. KIEFEL J. The facts and the statutory provisions relevant to this appeal are set out in the reasons of the majority. I regret that I am unable to agree with those reasons. Section 24(5) is central to the provisions of the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the SRC Act") concerning the compensation of employees23. The sub-section requires Comcare to determine "the degree of permanent impairment of the employee resulting from an injury" (emphasis added). That determination is to be undertaken under the provisions of a Guide prepared pursuant to the SRC Act. No question arises on this appeal as to the validity of the Guide in question24. It is to be read with the SRC Act, as part of a The method employed by the Guide in assessing the degree, or level, of impairment is to determine the effect of the permanent impairment upon the employee's ability to function. The provisions of the Guide will be discussed later in these reasons. The particular type of impairment suffered by the appellant was assessed as producing a loss of 10 per cent of the function of her lower limbs. The appellant had previously been assessed as having that loss of function and that level of impairment after she had suffered an injury to the left knee, for which she was compensated, and before the injury in question, that to her right knee. The injury in question did not increase her loss of function as measured by the Guide. A conclusion that the degree of impairment found resulted from the second injury, as s 24(5) requires, is therefore not possible. As a result, no compensation is payable, as the Full Court of the Federal Court held26. Some observations concerning s 24(5), and s 24 as a whole, are necessary before further consideration is given to the Guide. It may be observed that s 24(5) involves three steps. The first two are the identification of an injury suffered by an employee and whether permanent impairment flows from that injury27. The third, that with which this appeal is concerned, is to determine the degree or extent of that impairment which results from the injury. 23 Canute v Comcare (2006) 226 CLR 535 at 539 [6]; [2006] HCA 47. 24 Guide to the Assessment of the Degree of Permanent Impairment, 1st ed (1989). 25 Deputy Federal Commissioner of Taxation (SA) v Ellis & Clark Ltd (1934) 52 CLR 85 at 89; [1934] HCA 54; Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101 at 110 [19]; [2008] HCA 38. 26 Fellowes v Military Rehabilitation and Compensation Commission (2008) 170 FCR 531 at 539 [33] and 540 [39] per French and Lindgren JJ. 27 Canute v Comcare (2005) 40 AAR 327 at 334 [30] per Hill J. The determination of the degree of impairment is critical to the payment of compensation. Section 24(5) requires the degree of impairment to be assessed in accordance with the Guide and that the degree of impairment so determined must result from the injury in question. Section 24(7) provides that, subject to some exceptions, where the degree of impairment is determined to be less than 10 per cent, no compensation is payable. The Impairment Tables in the Guide are said to be based on an evaluation of a "whole person impairment" drawn from the American Medical Association's Guides. That evaluation is "a medical appraisal of the nature and extent of the effect of an injury or disease on a person's functional capacity and activities of daily living."28 The "extent of each impairment" is expressed as a percentage value by reference to "the functional capacity of a normal healthy person."29 Part A of the Guide contains Tables which have, as their subject for assessment, various bodily systems and functions, to which a person's condition may be referable, and disorders, both physical and psychiatric. Each Table contains a heading, referable to a disorder, or a bodily system or function. The reference under each heading to "Percentage Whole Person Impairment" is the conclusion, expressed in a percentage as s 24(6) requires, of the effect of the impairment in question upon the employee's ability to function, as explained in the Guide. In some Tables the "description of level of impairment", which appears against the percentage value, refers to particular activities or aspects of daily life which are unable to be undertaken or are rendered more difficult because of the impairment. With respect to "Miscellaneous Ear, Nose and Throat Disorders", to take an example, a figure of 60 per cent is given for "[v]ertigo which interferes with all activities to the extent that only self care can be managed but all other activity is impossible"30. In other Tables the level of impairment is described by reference to the impairment itself, for example the extent of the loss of range of movement of an ankle, hip or knee in Table 9.2. The assessment, which is said 28 Guide to the Assessment of the Degree of Permanent Impairment, 1st ed (1989) at 29 Guide to the Assessment of the Degree of Permanent Impairment, 1st ed (1989) at 30 Guide to the Assessment of the Degree of Permanent Impairment, 1st ed (1989) at 24, Table 7.2. to be "in accordance with the range of joint movement"31, is nevertheless of the impairment of the person's ability to function. The appellant's impairment was assessed under Table 9.5, "Limb Function – Lower Limb (Percentage Whole Person Impairment)". The description of the level of impairment which the appellant was found to suffer is "[c]an rise to standing position and walk BUT has difficulty with grades and steps". That represents the appellant's loss of function, in daily life. The impairment so described has regard to the use of the lower limbs together. The level of impairment described above gave rise to a Percentage Whole Person Impairment of 10 per cent. That is the same level of impairment that the appellant previously suffered as a result of the injury to her left knee. The method of assessment of the degree of impairment under Table 9.5 may be contrasted with that under Table 9.2, referred to above. Table 9.2, which determines a person's loss of ability to function by reference to the limit to the range of movement of a joint of the lower limb, involves an assessment of a single limb. It was common ground that that Table was inapplicable to the appellant's condition. The comparator for the assessment, under the Guide, of loss of functional capacity and the effect upon daily activities is said to be the functional capacity of a normal healthy person. But this does not mean that the employee in question is assumed to be a normal healthy person at the date of the injury in question and that no regard is to be had to any pre-existing functional limitations. The determination under s 24(5) and the Guide is as to the extent of that person's permanent impairment, by reference to their capacity to function, which resulted from the injury. The "whole person impairment" referred to in the Guide is a conclusion, expressed as a percentage, of the extent to which a person's ability to function in daily life has been impaired. Whilst having that broader perspective, it is nevertheless an assessment of the particular condition suffered by the person which amounts to a permanent impairment under the SRC Act. In the appellant's case the assessment with respect to her right knee was of a degree of permanent impairment of 10 per cent of her functional capacity, which is to say of "the whole person". But that represented no change in her existing capacity, which was already impaired to the same degree by virtue of the injury to her left knee. The degree of impairment assessed with respect to the right knee cannot be said to have "resulted from" the injury. 31 Guide to the Assessment of the Degree of Permanent Impairment, 1st ed (1989) at In Canute v Comcare it was pointed out that the definition of "impairment" in the SRC Act is not given in terms of an impairment of a "whole person"; rather the word "impairment" was expressed in a disaggregated sense, in terms of effects on bodily parts, systems and functions32. However, the question as to the degree of impairment is one different from that as to whether the person has an impairment of a particular part of their body or of a particular bodily system or function. It involves a further enquiry, as to the effect of that particular impairment upon the person's ability to function, in accordance with the Guide. It was not necessary in Canute to consider what was comprehended by a determination of the degree of an employee's permanent impairment. It may be accepted that in the second step required by s 24(5), namely the identification of the impairment, regard is to be had to the definition of "impairment" contained in the SRC Act, as was done in Canute. But the assessment of the degree of that impairment involves the use of the Guide and the concept upon which it is based. The meaning of the term "whole person impairment" on its own may be unclear. However, the Guide explains that the "Percentage Whole Person Impairment" is a value given to the effect, or limitation, upon a person's functional capacity. That is the expression of the "degree" of the impairment for the purpose of In Canute it was said that, because the SRC Act assumes that more than one "injury" may occur, it is not correct to say that s 24(5) imports a "whole person" approach to the determination of the degree of permanent impairment33. That case concerned two different kinds of injury arising out of one incident. Statements as to a "whole person" approach should be understood in the context of the issues in that case and the argument put by Comcare as to what that approach involved. The employee in Canute had been awarded compensation for a back injury. It was assessed under the Guide at 12 per cent whole person impairment. He subsequently claimed compensation for an adjustment disorder arising from the back condition. Comcare relied upon s 25(4) to deny liability. That section provides that where there has been a final assessment of a degree of permanent impairment, no further amount of compensation is payable unless there is an increase in that degree of impairment of 10 per cent or more. Comcare's argument, it may be inferred, was that the earlier assessment of the degree of permanent impairment of the employee extended to include the impairment for 32 Canute v Comcare (2006) 226 CLR 535 at 541 [11]. 33 Canute v Comcare (2006) 226 CLR 535 at 541 [11]. which compensation was later claimed. That followed from the assessment being of the "whole person"34. The operation attributed to the Guide by Comcare in argument in Canute appears to have been that an assessment of a person's degree of impairment takes into account all injuries and consequent impairments they have suffered arising out of the one incident. That is clearly incorrect. The Guide assesses the effect of a particular impairment upon a person's functional capacity under the Table relevant to it. It was not necessary for the Court in Canute to consider the proper operation of the Guide. The effect contended for by Comcare was plainly inconsistent with the SRC Act's identification of an injury suffered by an employee as giving rise to a claim for compensation. The Court said that the word "injury" in s 24(1) was not used to describe a workplace accident; but rather was expressed in terms of the resultant effect of an incident upon the employee's body. It was not used "in a global sense to describe the general condition of the employee following an incident."35 The SRC Act assumes that a person might suffer more than one injury. The Court held that the psychiatric disorder was a separate injury giving rise to a claim for compensation36. In Canute the SRC Act was seen to comprehend two injuries arising from the same incident. The application of the Guide to the question posed by s 24(5) in this case shows that two injuries may give rise to the same degree of impairment. This possibility was recognised by the primary judge in Canute37. Nothing said by this Court in Canute affects that outcome, in my respectful view. A different question arises in this case from that considered in Canute. The focus is not upon the "injury" giving rise to a claim to compensation. It is not disputed that the appellant suffered an injury to her right knee which resulted in a condition which might be described as an impairment. The issue here focuses upon the assessment of the appellant's "degree of permanent impairment" and the requirement that that degree of impairment result from the injury. The degree, or extent, of the impairment is determined in accordance with the Guide. The Guide, by Table 9.5, determines the effect upon a person's functional capacity by reference to the operation of the person's lower limbs in conjunction with each other. In this case the first injury, to the left knee, was assessed as 34 See Canute v Comcare (2006) 226 CLR 535 at 541 [11]. 35 Canute v Comcare (2006) 226 CLR 535 at 540 [10]. 36 Canute v Comcare (2006) 226 CLR 535 at 547-548 [36]. 37 Canute v Comcare (2005) 40 AAR 327 at 335 [34] per Hill J. producing a degree of impairment of 10 per cent whole person impairment. The assessment of the degree of impairment following upon the second injury was the same. It could not therefore be said that the degree of impairment so assessed resulted from that injury. No amount of compensation is payable. I would dismiss the appeal.

HIGH COURT OF AUSTRALIA PALIFLEX PTY LIMITED APPELLANT AND CHIEF COMMISSIONER OF STATE REVENUE RESPONDENT Paliflex Pty Limited v Chief Commissioner of State Revenue [2003] HCA 65 12 November 2003 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation: N C Hutley SC with G A Moore, N Perram and K M Richardson for the appellant (instructed by Brock Partners) M G Sexton SC, Solicitor-General for the State of New South Wales with I Mescher for the respondent (instructed by Crown Solicitor for the State of New South Wales) Interveners: D M J Bennett QC, Solicitor-General of the Commonwealth of Australia with G Witynski and N L Sharp intervening on behalf of the Attorney-General of the Commonwealth of Australia (instructed by Australian Government Solicitor) M G Sexton SC, Solicitor-General for the State of New South Wales with I Mescher intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for the State of New South Wales) C J Kourakis QC, Solicitor-General for the State of South Australia with J C Pritchard intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor for the State of Western Australia) C J Kourakis QC, Solicitor-General for the State of South Australia with C Bleby intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for the State of South Australia) P J Hanks QC with S G E McLeish intervening on behalf of the Attorney- General for the State of Victoria (instructed by Victorian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Paliflex Pty Limited v Chief Commissioner of State Revenue Constitutional law (Cth) – Exclusive powers of Commonwealth Parliament – Place acquired by Commonwealth for public purposes – Subsequent State laws – Whether State laws applied to place on enactment – Whether State laws valid on enactment – Subsequent disposition of place by Commonwealth – Whether State laws applied to place after disposition – Whether State laws valid in application to place after disposition – Whether imposition of land tax under State laws in respect of place enforceable – Constitution, s 52(i) – Land Tax Act 1956 (NSW) – Land Tax Management Act 1956 (NSW). Taxation – Land tax – Place acquired by Commonwealth for public purposes – Subsequent State laws – Whether State laws applied to place on enactment – Whether State laws valid on enactment – Subsequent disposition of place by Commonwealth – Whether State laws applied to place after disposition – Whether State laws valid in application to place after disposition – Whether imposition of land tax under State laws in respect of place enforceable – Constitution, s 52(i) – Land Tax Act 1956 (NSW) – Land Tax Management Act 1956 (NSW). Constitution, s 52(i). Commonwealth Places (Administration of Laws) Act 1970 (NSW). Commonwealth Places (Mirror Taxes) Act 1998 (Cth). Commonwealth Places (Mirror Taxes Administration) Act 1998 (NSW). Land Tax Act 1956 (NSW). Land Tax Management Act 1956 (NSW). State Revenue Legislation Amendment Act 1997 (NSW). GLEESON CJ, McHUGH, GUMMOW, KIRBY AND HAYNE JJ. The transfer of the Land By written contract dated 5 September 1997 and completed 30 January the the appellant, Paliflex Pty Ltd ("Paliflex"), purchased from Commonwealth of Australia ("the Commonwealth") the property known as "Tresco" and located at 97 Elizabeth Bay Road, Elizabeth Bay ("the Land"). Elizabeth Bay is an inner suburb of Sydney bordering Sydney Harbour. The purchase price was $9 million. The transfer in favour of Paliflex was registered on 4 February 1998. It appears that, at all material times, the Land has been registered under the provisions of the Real Property Act 1900 (NSW). From a date in 1922 until the registration of the transfer to Paliflex, the Commonwealth was the registered proprietor of the Land. The transferee, Paliflex, remains the registered proprietor. The contract for sale had been assessed to stamp duty under the Stamp Duties Act 1920 (NSW) ("the Stamp Duties Act") in the sum of $480,490. The validity of the Stamp Duties Act to authorise that assessment and a fine for failure to pay the assessed duty was contested in proceedings in the Supreme Court of New South Wales1. In those proceedings, Austin J upheld the submission by Paliflex, which had been supported by the Attorney-General for the Commonwealth on an intervention, that no moneys were due and owing by Paliflex. This was because the Stamp Duties Act was outside the legislative competence of the New South Wales Parliament to the extent that its provisions purported to apply to a conveyance or agreement for the sale of a property which was, for the purposes of s 52(i) of the Constitution, a place acquired by the Commonwealth for public purposes. No appeal was taken from that decision and its correctness was not questioned in the present appeal. This appeal also concerns the operation of s 52(i) of the Constitution but with respect to the application of New South Wales land tax legislation to the Land. 1 Chief Commissioner of Stamp Duties v Paliflex Pty Ltd (1999) 47 NSWLR 382. McHugh Kirby Hayne The land tax litigation On 20 February 2000, the respondent, the Chief Commissioner of State Revenue ("the Commissioner"), issued to Paliflex a notice of assessment for land tax totalling $98,836 in respect of ownership of the Land by Paliflex on 31 December 1999. Thereafter, on 29 April 2000, the Commissioner issued to Paliflex an assessment in respect of the Land as owned by Paliflex on 31 December 1998. Objections against the two assessments were disallowed. An appeal to the Supreme Court against that disallowance and a cross-claim by the Commissioner to recover on the assessments were heard by Mason P2 on a statement of agreed facts. His Honour dismissed the appeal and entered judgment for the Commissioner on the cross-claim. An appeal by Paliflex was the Court of Appeal (Spigelman CJ, Stein and Heydon JJA)3. The appeal was dismissed but on grounds which went beyond, and differed from, those upon which Mason P had relied. taken The scheme of the New South Wales legislation was that the tax was imposed by the Land Tax Act 1956 (NSW) ("the Tax Act") in respect of the taxable value of land owned at midnight on a specified date and a detailed regime for assessment and collection was provided by the Land Tax Management Act 1956 (NSW) ("the Management Act"). The tax was both imposed and charged upon the land immediately on that date and did not wait upon the issue of an assessment4. The particular provisions which founded the assessments of Paliflex were enacted by the State Revenue Legislation Amendment Act 1997 (NSW) ("the 1997 Act"). The operative provisions of the 1997 Act5 amended the Tax Act and stated that, in respect of the taxable value owned by any person at midnight on 31 December 1997 and 1998, land tax at the scheduled rates was to be paid for the period of 12 months commencing on 1 January in the next succeeding year and in the manner prescribed under the Management Act. 2 Paliflex Pty Ltd v Chief Commissioner of State Revenue (NSW) 2002 ATC 4,124. 3 Paliflex Pty Ltd v Chief Commissioner of State Revenue (NSW) 2002 ATC 5,015. 4 Tooth & Co Ltd v Newcastle Developments Ltd (1966) 116 CLR 167 at 170. 5 Sched 2, Items 4, 5. McHugh Kirby Hayne The land tax system thus illustrates the dictum of Isaacs J with respect to the previous federal tax system, pursuant to the Land Tax Act 1910 (Cth) and the Land Tax Assessment Act 1910 (Cth), that6: "[t]he taxing Act is always speaking in the present. It does not affect to change or menace men's actions, but is a standing declaration of the law with respect to landed estates as they appear to exist at a given moment." Mason P rejected the submissions for Paliflex which he treated as7: "characterising [the Management Act and the Tax Act] as laws with respect to a Commonwealth place that were struck down at birth (1956) as regards the subject land; and were incapable of rising to touch it during a later era of private ownership unless reenacted generally or otherwise made to apply to the land by a specific enactment after [the registration of the transfer on] 4 February 1998", and as putting a case8: land because, "that the [Management Act] was and remains invalid in its application to the [Management Act] was the subject characterised as a the 'places acquired by law with respect Commonwealth for public purposes' and because no legislation enacted after 4 February 1998 reinstated the [Management Act] in its application to the subject land". His Honour concluded the that, upon Management Act and the Tax Act "failed to engage" with the Land in 1956, and s 52(i) did not operate to deny State legislative competence9. It is implicit in the reasoning of Mason P that the liability which later descended upon Paliflex by their proper construction, 6 Attorney-General for Queensland v Attorney-General for the Commonwealth (1915) 20 CLR 148 at 174. The relevant date under that legislation was the 30 June immediately preceding the year for which the land tax was levied and there was no provision for apportionment: Rabett v Forrest (1918) 18 SR (NSW) 131. 7 2002 ATC 4,124 at 4,127. 8 2002 ATC 4,124 at 4,128. 9 2002 ATC 4,124 at 4,128-4,129. McHugh Kirby Hayne reason of its ownership of the Land on 31 December 1998 and 31 December 1999 was not pursuant to any State law with respect to a place acquired by the Commonwealth for public purposes, within the meaning of s 52(i) of the Constitution. The conclusion that the relevant State legislation had no invalid operation with respect to the Land made it unnecessary for Mason P to determine any questions respecting s 14(2) of the Commonwealth Places (Administration of Laws) Act 1970 (NSW) ("the State Administration Act"). That legislation deals, among other topics, with the application of State laws when a place ceases to be a place to which s 52(i) of the Constitution applies. Subject to a qualification not presently relevant, s 14(2) states: "Subject to subsection (3), when a place ceases or has ceased to be a Commonwealth place at a particular time the laws of the State in force at that particular time apply or shall be deemed to have applied in or in relation to that place as if those laws had come into operation at that particular time and every Act, whether passed before or after the commencement of this Act, and every instrument made or having effect under any such Act, shall be read and construed as if it provided expressly that it was intended to so apply or to have so applied." Section 14(2) was enacted in apparent anticipation of certain statements by this Court in Attorney-General (NSW) v Stocks and Holdings (Constructors) Pty Ltd10. These may suggest that, upon the transfer of that land which is the relevant place acquired by the Commonwealth for public purposes, the land ceases to attract the continued exercise of the exclusive federal legislative power and that State law may validly apply by a reference point which is fixed by the loss of the character of the land as a Commonwealth place. The Court of Appeal disagreed with the reasoning of Mason P and went on to decide that Stocks and Holdings required a holding that s 14(2) of the State Administration Act was invalid. The Court of Appeal upheld the validity of the assessments of Paliflex to land tax, but only by reliance upon what was identified the the Mirror Taxes Legislation enacted in 199811 and including 10 (1970) 124 CLR 262 at 267 per Barwick CJ, 275-276 per Menzies J, 280-281 per Windeyer J; cf at 285, 289 per Walsh J. 11 Commonwealth Places (Mirror Taxes) Act 1998 (Cth), Commonwealth Places (Mirror Taxes Administration) Act 1998 (NSW). McHugh Kirby Hayne Commonwealth Places (Mirror Taxes) Regulations 2000 (Cth) and an Arrangement dated 14 February 2002 between the Governor-General and the Governor of New South Wales pursuant to that legislation. The Paliflex submissions Paliflex in this Court attacked the validity of the Mirror Taxes Legislation on various grounds. The appeal should be decided adversely to Paliflex without any reliance upon the Mirror Taxes Legislation to support the assessments and recovery of land tax. Thus, the Court should not enter upon those questions of alleged invalidity. Two necessary steps in the submissions by Paliflex in this Court are that (i) the land tax legislation never applied to the Land at any time after 1956 but, contrary to the holding of Mason P, this was by reason of the denial of State legislative competency by s 52(i) of the Constitution; (ii) s 14(2) of the State Administration Act is invalid. This is said to be on the ground that a federal law tracking the terms of s 14(2) would be supported by s 52(i) of the Constitution; it would have a sufficiently close connection with the Land as a place acquired by the Commonwealth for public purposes, despite its transfer to Paliflex, so that the existence of the exclusive federal power denies that of the State to enact s 14(2). The position which this Court should accept is that at no relevant time since 1956 have the Tax Act and the Management Act had any invalid application to the Land. More precisely, (i) the New South Wales land tax legislation was not invalid when enacted in 1956; there was no purported exercise by the State of what was the exclusive federal power conferred by s 52(i) of the Constitution; (ii) the Land ceased to have the character of a place acquired by the Commonwealth for public purposes on the registration of the transfer to Paliflex on 4 February 1998; and (iii) in its application to the Land on the critical dates of 31 December 1998 and 31 December 1999, the State legislation was not an exercise of power with respect to a place acquired by the Commonwealth for public purposes. These conclusions made it unnecessary formally to determine the validity of s 14(2) of the State Administration Act, but its validity is implicit in the reasoning leading to the above conclusions. The situation in 1956 We turn to consider proposition (i) listed in [16] above and thus to the situation in 1956 when the Tax Act and the Management Act were enacted. At that stage the Land was "property of any kind belonging to the Commonwealth" within the meaning of s 114 of the Constitution and so, without the consent of the McHugh Kirby Hayne Parliament of the Commonwealth, New South Wales could not impose any tax upon it. Further, the Land was one of the "places acquired by the Commonwealth for public purposes" within the meaning of s 52(i) of the Constitution. The Land had been acquired in 1922, but the phrase "acquired by the Commonwealth" carries within itself the notion of being the property of the Commonwealth as a consequence of that acquisition. In Essendon Corporation v Criterion Theatres Ltd12, decided in 1947, this Court had considered s 265(b) of the Local Government Act 1928 (Vic). This provided for the levying of municipal rates "[u]pon every person who occupies ... or if the occupier is the Crown ... then upon the owner" of the rateable property. The Commonwealth was the occupier of the relevant land for defence purposes. But it was held that it was not "the Crown" for the purposes of s 265(b). Nor was the Commonwealth a "person" who occupied the property. The upshot was that liability for rates was not imposed by s 265(b) upon the owner of the land, Criterion Theatres Ltd. One of the grounds of decision taken by Latham CJ was that to construe the phrase "every person" so as to include the Commonwealth would be to impose a tax upon it contrary to s 114 of the Constitution13. Further, both McTiernan J and Williams J14 had stressed that the phrase "every person" ordinarily is not construed as including a body politic. Dixon J had based his decision upon the ground that, independently of what might be the operation of s 114, it was a necessary consequence of the system of government established by the Constitution that the Constitution did not permit the taxing by a State law of the occupation of land for the carrying on by the Commonwealth of measures of defence15. His Honour also had emphasised that the presumption was that in a State statute references to the Crown did not cover the Commonwealth16. 12 (1947) 74 CLR 1. 13 (1947) 74 CLR 1 at 13; cf Bevelon Investments Pty Ltd v Melbourne City Council (1976) 135 CLR 530 at 536-537, 538-539, 544, 548-549, 551. 14 (1947) 74 CLR 1 at 28, 30. 15 (1947) 74 CLR 1 at 18, 22. See also Austin v Commonwealth (2003) 77 ALJR 491; 195 ALR 321. 16 (1947) 74 CLR 1 at 26. See also Commonwealth v Western Australia (1999) 196 CLR 392 at 432-433 [112]-[114]. McHugh Kirby Hayne The Management Act provided in s 7: "Subject to the provisions of this Act, land tax at such rates as may be fixed by any Act shall be levied and paid upon the unimproved value of all lands situated in New South Wales which are owned by taxpayers, and which are not exempt from taxation under this Act." That was to be read with s 9(1) which stated: "Land tax shall be payable by the owner of land upon the taxable value of all the land owned by him and not exempt from taxation under this Act." The term "taxpayer" was defined in s 3 as meaning "any person chargeable with land tax", and "owner" was so defined as to include "every person" deemed by provisions such as s 32 (dealing with occupation, control or use by non-owners) to be the owner. In respect of the Land, there was no third party who could have been classified as a deemed owner. Further, the Commonwealth was not, upon the proper construction of the Management Act by application of the principles referred to in Essendon Corporation, an "owner" or a "taxpayer". The Land was situated in New South Wales within the meaning of s 7 of the Management Act, but it was not "owned" by a "taxpayer" as that section also required. These conclusions are further supported by the opening words of s 2 of the Management Act, reflecting an awareness both of s 114 and of the doctrine of immunity explained by Dixon J in Essendon Corporation and developed very shortly thereafter in Melbourne Corporation v The Commonwealth17. Section 2 of the Management Act begins: "This Act shall be the Commonwealth of Australia Constitution Act, and so as not to exceed the legislative power of the State ...". read and construed subject The second limb of s 2 deals with severance to preserve partial validity. Provisions such as s 2 have appeared in a range of State laws18. Most of the 17 (1947) 74 CLR 31. 18 A general provision following the terms of s 2 was introduced as s 14A of the Interpretation Act 1897 (NSW) by the Interpretation (Amendment) Act 1969 (Footnote continues on next page) McHugh Kirby Hayne decided cases have dealt with the second limb19. However, the significance here of s 2 is in the confirmation by the first limb of a legislative intention, achieved by the subsequent sections to which reference has been made, to stay within the constraints imposed by the Constitution upon the exercise of the property taxing powers of the State legislature. It may be true that in 1956 the scope of s 52(i) of the Constitution was not appreciated20, but that of the other constraints was. The conclusion which follows is that the 1956 legislation was not a law with respect to the Land. The phrase "with respect to" appears in both s 51 and s 52 of the Constitution. It should be given no different meaning in s 52 to that in s 51. That this is so appears from Allders International Pty Ltd v Commissioner of State Revenue (Vict)21. Further, it is not to the point that the law in question may have several characterisations; the task is not to isolate one only of those characterisations as the sole determinant of the sufficiency of connection with the head of legislative power in question. Allders22 and earlier23 and subsequent24 authority confirm these propositions. In particular, Allders rejected the proposition which had been accepted in the Supreme Court of Victoria25 that the (NSW). The present provision in s 31 of the Interpretation Act 1987 (NSW) is expressed in different terms. 19 The cases include Carter v The Potato Marketing Board (1951) 84 CLR 460; Johnson v Commissioner of Stamp Duties [1956] AC 331. See also Harrington v Lowe (1996) 190 CLR 311 at 326-328. 20 See Rose, "The Commonwealth Places (Application of Laws) Act 1970", (1971) 4 Federal Law Review 263; Cowen, "Alsatias for Jack Sheppards?: The Law in Federal Enclaves in Australia", in Sir John Latham and Other Papers, (1965) 171 21 (1996) 186 CLR 630 at 641-642, 661-662, 673. 22 (1996) 186 CLR 630 at 640, 676. 23 See, eg, Northern Suburbs General Cemetery Reserve Trust v The Commonwealth (1993) 176 CLR 555 at 572. 24 See, eg, Grain Pool of Western Australia v Commonwealth (2000) 202 CLR 479 at 25 Allders International Pty Ltd v Commissioner of State Revenue of Victoria (1995) 129 ALR 678. McHugh Kirby Hayne stamp duty legislation could not be a law with respect to a Commonwealth place because it was a law with respect to instruments26. Allders also confirms27 that the boundaries of the power withdrawn by s 52(i) from the States are charted by the grant of exclusive power to the Commonwealth, so that a useful test is to ask whether a federal law similar to the 1956 State legislation would be supported in any of its operations as a law with respect to the Land. The answer must be that such a law would have no connection with the Land, accepting that something more than an insubstantial, tenuous or distant connection is required by the authorities just mentioned. The primary submission, put particularly clearly by the Attorney-General for Victoria as an intervener, should be accepted. The State legislation was not a law with respect to the Land whilst it had the character of a place acquired by the Commonwealth for public purposes; the legislation did not purport to regulate the conduct of persons there, or have any real and substantial impact upon that place. Stocks and Holdings The decision in Stocks and Holdings does not present any obstacle in the path of these conclusions. The land with which that case was concerned had been acquired by the Commonwealth in 1929 as a place for public purposes, namely a rifle range for the defence forces. On 27 June 1951, the County of Cumberland Planning Scheme ("the Scheme") came into force pursuant to the Local Government (Amendment) Act 1951 (NSW) which amended the Local Government Act 1919 (NSW) ("the LG Act"). At that time the land was in use by the Commonwealth for the Long Bay Rifle Range. Stocks and Holdings (Constructors) Pty Ltd later acquired the land at some point prior to 7 February 1968 from the Randwick Council, to which it had been transferred by the Commonwealth in 1965. The first question for the consideration of the Full Court of this Court asked whether, upon the Commonwealth of Australia as owner of the subject land". All five members of the Court answered "No", but, without further explanation to be derived from the the Scheme "bound its enactment 26 (1996) 186 CLR 630 at 641-642, 675-676. 27 (1996) 186 CLR 630 at 638, 676. McHugh Kirby Hayne reasons, the answer is equivocal. That is because the Scheme might not on its own terms have attempted to bind the Commonwealth, or it may have purported to do so but the attempt failed for the denial of State legislative power by s 52(i) of the Constitution. In submissions28 reliance had been placed upon the interpretation given to s 109 of the Constitution in Butler v Attorney-General (Vict)29. This was that the phrase in s 109, "to the extent of the inconsistency, be invalid", means not that the State law is beyond legislative power but that it has no legal operation for so long as the federal law is in force. The submission, as recorded by Barwick CJ30, had been that the Scheme: "should be construed as if it contained a provision that its terms should not apply to land being a place or forming part of a place acquired by the Commonwealth for public purposes so long as the Commonwealth should own or possess such place but that it should apply so soon as the Commonwealth ceased to own or to possess the place". "In my opinion, there are two answers to this submission. The first is that it would not be, in my opinion, an exercise of construction to import such a provision into the scheme. It would, in my opinion, amount to an attempt to legislate. But secondly and more importantly such a provision, in my opinion, would itself offend s 52(i) for the reasons expressed by my 28 (1970) 124 CLR 262 at 265. 29 (1961) 106 CLR 268. 30 (1970) 124 CLR 262 at 267. 31 (1970) 124 CLR 262 at 267. McHugh Kirby Hayne Walsh J32 concluded that, even if the Scheme were construed as suggested, it would still offend s 52(i). His Honour said33: "It is only if the provisions should be understood as having no application at all to lands which had been acquired by the Commonwealth for public purposes and were still held by it, that the Ordinance would avoid the consequences of s 52(i). But if so understood, those lands, although marked upon the map, would not be within the scheme. The scheme would not apply to them." "In my opinion the Ordinance in question, which purported on its face, by cll 26-29, to require the consent of the responsible authority before any building might be erected on the range or the land used for any purpose, was a law with respect to the rifle range. The range was delineated and coloured grey on the scheme map which showed the details of the planning scheme. This colour indicated a 'Special Uses Area'. It is stated in cl 3 that 'special uses' include the use of land or buildings for defence areas." Menzies J put the matter rather differently, saying35: "[T]he Long Bay Rifle Range was at all times within the scheme but ... the scheme imposed no limitation with respect to its use until the land had been acquired from the Commonwealth by the Council, ie until it ceased to be a place acquired by the Commonwealth." Windeyer J36 construed the Scheme as containing an implication that it did "not encroach upon matters the Commonwealth". the exclusive power of that are within 32 (1970) 124 CLR 262 at 288. 33 (1970) 124 CLR 262 at 288. 34 (1970) 124 CLR 262 at 269. 35 (1970) 124 CLR 262 at 278. 36 (1970) 124 CLR 262 at 280. McHugh Kirby Hayne The Tax Act and the Management Act are not concerned with the uses to which any land within a delineated geographic area may be put. They impose fiscal burdens only upon those "owners" who are "taxpayers". These are terms which did not include the Commonwealth. Thus, unlike the situation in Stocks and Holdings, there is no occasion to read down the 1956 legislation to preserve its validity. Nor, that being so, does one find an attempted reading down which would produce a text which itself would fall foul of s 52(i), as did the proposed reading down in Stocks and Holdings. The present case thus falls for decision without the initial complexities which attended the reading in Stocks and Holdings of the Scheme at the time of its commencement. If the premise for the decision in Stocks and Holdings was that the Scheme, in its terms, was a law with respect to a place acquired by the Commonwealth for public purposes, that premise is absent here. The case for Paliflex has to accept that, whilst the Land was owned by the Commonwealth, there was no State law which was a law with respect to it and so tainted by s 52(i) of the Constitution. The question presented in Stocks and Holdings – whether a law with respect to a place acquired by the Commonwealth for public purposes could be read down in such a way that it would no longer bear that characterisation – does not arise. That being so, there is no occasion to reconsider Stocks and Holdings. The situation after the transfer to Paliflex How then does the State legislation fail to support the assessments of Paliflex to tax imposed by reason of its ownership of the Land at dates subsequent to the registration of the transfer by the Commonwealth? The answer, particularly as developed by Paliflex in oral submissions, appeared to depend upon two related propositions. One is that the land tax legislation altered the "incidents of title" to the Land even while it was owned by the Commonwealth because it was apt to decrease the consideration Paliflex had been prepared to pay to acquire it, or any purchaser of the Spencer species37 would have been prepared to pay. Secondly, s 52(i), it was said, protected against State legislative interference with the interest of the Commonwealth in parting with places held by it for public purposes by turning them to maximum revenue account. 37 Spencer v The Commonwealth (1907) 5 CLR 418 at 431-432. McHugh Kirby Hayne Hence, the submission appears to be that it is within the exclusive legislative competence of the Commonwealth to insulate Paliflex (and, perhaps, subsequent owners of the Land) from the imposition of land tax by reason of ownership of the Land at times after registration of a transfer by the Commonwealth. In argument, Paliflex propounded a federal law supported by s 52(i), the text of which was: "A person who acquires a Commonwealth place from the Commonwealth shall not, at the time of acquisition by that person, be then exposed by any enactment of the State to any tax referable to that person's ownership of the place." There is an immediate difficulty with these submissions. It is of an evidentiary nature. The agreed facts do not reveal the manner of, nor considerations which affected, the computation of the purchase price and its acceptance by the Commonwealth as vendor. Further, there may be a real question about what significance is to be attached to economic consequences of the kind asserted in deciding whether an impugned law is a law with respect to a subject-matter identified in s 52(i). As Kitto J said in Fairfax v Federal Commissioner of Taxation38, the question of constitutional validity under s 51 of the Constitution: "is always one of subject matter, to be determined by reference solely to the operation which the enactment has if it be valid, that is to say by reference to the nature of the rights, duties, powers and privileges which it changes, regulates or abolishes; it is a question as to the true nature and character of the legislation: is it in its real substance a law upon, 'with respect to', one or more of the enumerated subjects, or is there no more in it in relation to any of those subjects than an interference so incidental as not in truth to affect its character?"39 38 (1965) 114 CLR 1 at 7. 39 Kitto J referred to Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 185-187 per Latham CJ, and Huddart Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 409-411 per Higgins J. See also Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 334 per Mason CJ, 336-337 per Brennan J, 351-352 per Toohey J; Leask v The Commonwealth (1996) 187 CLR 579 at (Footnote continues on next page) McHugh Kirby Hayne It is unnecessary to explore this question of the significance to be given to economic consequences further than to notice that Fairfax was a case in which the economic consequences of the impugned law were held not to deny its character as a law with respect to taxation. There are considerations flowing from the scope and purpose of s 52(i) of the Constitution which, in any event, indicate that the assumptions in Paliflex's submissions should not be accepted. The scope and purpose of s 52(i) Section 52 of the Constitution states: "The Parliament shall, subject to this Constitution, have exclusive power to make laws for the peace, order, and good government of the Commonwealth with respect to: the seat of government of the Commonwealth, and all places acquired by the Commonwealth for public purposes; (ii) matters relating to any department of the public service the control of which is by this Constitution transferred to the Executive Government of the Commonwealth; (iii) other matters declared by this Constitution to be within the exclusive power of the Parliament." In Svikart v Stewart40, Mason CJ, Deane, Dawson and McHugh JJ observed that the terminology of s 52(i) reflected that of cl 17 of s 8 of Art I of the United States Constitution, and that "the American experience was instructive" in the drafting of s 52. The United States provision is as follows: 590-591 per Brennan CJ, 634 per Kirby J; Kartinyeri v Commonwealth (1998) 195 CLR 337 at 372 [58] per Gummow and Hayne JJ; Re Pacific Coal Pty Ltd; Ex parte Construction, Forestry, Mining and Energy Union (2000) 203 CLR 346 at 411 [202] per Gummow and Hayne JJ; and the judgment of the Court in Re Maritime Union of Australia; Ex parte CSL Pacific Inc (2003) 200 ALR 39 at 48 40 (1994) 181 CLR 548 at 561. McHugh Kirby Hayne "The Congress shall have Power ... To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of Particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards and other needful Buildings". The phrase "other needful Buildings" extends to "whatever structures are found to be necessary the Federal Government"41, and includes court buildings, customs houses, and locks and dams for the improvement of navigation42. the performance of the functions of In the joint reasons in Svikart, their Honours said of the United States provision43: "The first part of cl 17, relating to the seat of government, is said to have been prompted by occurrences which took place near the close of the Revolutionary War when Congress in session in Philadelphia was surrounded and insulted by a body of mutineers of the Continental Army and the State did little to assist44. The second part, dealing with places purchased with the consent of the State, was thought necessary so that the consent of the State would carry with it political dominion and legislative authority. This was before the right of eminent domain was recognized45, and the view was that, in the case of land acquired without consent, the possession of the United States would be simply that of an ordinary proprietor subject to the legislative authority and control of the State46." 41 James v Dravo Contracting Co 302 US 134 at 143 (1937). 42 James v Dravo Contracting Co 302 US 134 at 142-143 (1937). 43 (1994) 181 CLR 548 at 559. 44 See Spratt v Hermes (1965) 114 CLR 226 at 273. 45 See Kohl v United States 91 US 367 (1875). 46 See Fort Leavenworth Railroad Co v Lowe 114 US 525 at 538, 542 (1885). McHugh Kirby Hayne Special considerations attend the first limb of s 52(i), that concerned with the seat of government of the Commonwealth. Section 125 required that seat to be within territory in New South Wales which was to be granted to or acquired by the Commonwealth. It was held in Svikart47, and affirmed in Re the Governor, Goulburn Correctional Centre; Ex parte Eastman48, that the seat of government and the Australian Capital Territory are not synonymous terms. The result is that s 122 has a large part to play and the power under the first limb of s 52(i) is concerned with political or constitutional aspects of the seat of government rather than with the government of the territory in which it is found. In Svikart, Mason CJ, Deane, Dawson and McHugh JJ concluded49 that the second limb of s 52(i) was intended to provide for exclusive Commonwealth the to places legislative power with respect Commonwealth and that: in a State acquired by "[t]o achieve this in an Australian context there was no need, as there was in the United States, to think in terms of territorial sovereignty. It was sufficient that acquisition of property should carry with it legislative authority without political dominion." To that, reference to s 8550 of the Constitution and to s 51(xxxi) might be added. the In particular, itself vested certain State property (a) s 85(i) 47 (1994) 181 CLR 548 at 561. 48 (1999) 200 CLR 322 at 333-334 [14], 335-336 [22], 353 [82], 369 [120]. 49 (1994) 181 CLR 548 at 560-561. 50 Section 85 states: "When any department of the public service of a State is transferred to the Commonwealth: all property of the State of any kind, used exclusively in connexion with the department, shall become vested in the Commonwealth; but, in the case of the departments controlling customs and excise and bounties, for such time only as the Governor-General in Council may declare to be necessary; the Commonwealth may acquire any property of the State, of any kind used, but not exclusively used in connexion with the (Footnote continues on next page) McHugh Kirby Hayne Commonwealth51, but with an obligation under s 85(iii) to provide compensation; (b) s 85(ii) conferred a specific power of acquisition of State property but for value; and (c) in so far as the acquisition of the place in question was the result of the exercise upon the State or any person of other compulsive powers, s 51(xxxi) required the acquisition to have been on just terms and for a purpose in respect of which the Parliament had power to make laws. Further, where the acquisition is the product, not of the exercise of powers of compulsion, but of agreement then, whilst s 51(xxxi) will have no application52, s 52(i) will. The United States position has developed rather differently in several respects. First, it was only in the second half of the nineteenth century that it was established by Kohl v United States53 and Fort Leavenworth Railroad Co v Lowe54 that the United States held a right of eminent domain "to take private property for public uses when needed to execute the powers conferred by the Constitution"55 and this right was not dependent upon purchase by consent of the department; the value thereof shall, if no agreement can be made, be ascertained in, as nearly as may be, the manner in which the value of land, or of an interest in land, taken by the State for public purposes is ascertained under the law of the State in force at the establishment of the Commonwealth; (iii) the Commonwealth shall compensate the State for the value of any property passing to the Commonwealth under this section; if no agreement can be made as to the mode of compensation, it shall be determined under laws to be made by the Parliament; the Commonwealth shall, at the date of the transfer, assume the current obligations of the State in respect of the department transferred." 51 See R v Bamford (1901) 1 SR (NSW) 337. 52 Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 416-417. 55 114 US 525 at 531 (1885). McHugh Kirby Hayne State legislature required by cl 17 of s 8 of Art I of the Constitution56. Secondly, it has been held that cl 17 is applicable to cases where the State conveys land for a purpose specified therein but reserves and the United States accepts "concurrent jurisdiction" which is "not inconsistent with the jurisdiction ceded to the United States"57. Finally, it was established in Collins v Yosemite Park Co58 that a State may convey, and the Congress may accept, either exclusive or qualified jurisdiction over property acquired, within the geographical limits of a State, for purposes other than those identified in cl 17. These purposes include forests, parks, ranges, wild life sanctuaries and flood control59. However, the United States jurisprudence does assist in indicating the values of federalism which underpin both cl 17 and s 52(i). Writing in The Federalist60, Madison explained the necessity of federal authority over forts, magazines and other "needful buildings" as being that61: "[t]he public money expended on such places, and the public property deposited in them, require that they should be exempt from the authority of the particular State". Thereafter, in Fort Leavenworth62, Field J adopted what had been said in this passage from The Federalist. A significant pointer in the same direction is provided by the phrase in s 52(i) "acquired by the Commonwealth for public purposes" (emphasis added). 56 Worthing v Rowell and Muston Pty Ltd (1970) 123 CLR 89 at 99. 57 James v Dravo Contracting Co 302 US 134 at 145 (1937). 58 304 US 518 at 528-530 (1938). 59 304 US 518 at 529-530 (1938). 60 Essay No 43, 23 January 1788. 61 Kurland and Lerner (eds), The Founders' Constitution, (1987), vol 3 at 219. See also Story, Commentaries on the Constitution of the United States, (1833), vol 3, 62 114 US 525 at 530 (1885). McHugh Kirby Hayne In Worthing v Rowell and Muston Pty Ltd63, Windeyer J said that these words "express a large and general idea". The terms "public use" and "public purpose" had had even before Federation a lengthy and significant history in Australia, particularly with respect to reservations from powers of disposition of the "waste lands" of the Crown64. In Worthing65, Windeyer J expressed the view that the method of acquisition might be by "any process known to the law", including by voluntary disposition inter vivos or testamentary disposition in favour of the Commonwealth. His Honour continued66: "And public purposes are not necessarily purposes for which the Parliament can make laws. I can see no reason why the Commonwealth, or a Commonwealth statutory body on behalf of the Commonwealth, should not be able to accept a gift from a landowner by his deed or will of land for the purpose, say, of a public park, just as I suppose it could become by gift possessed of pictures or books for public use and enjoyment." It is unnecessary for this appeal to determine whether these propositions as to the scope of the phrase "acquired ... for public purposes" in s 52(i) are to be accepted. What is significant is that (a) the "public purposes" spoken of in s 52(i) include at least those in respect of which the Parliament otherwise has power to make laws67 and (b) the word "for" is indicative of a continued or continuing end to be attained or object met by the retention by the Commonwealth of the property consequent upon that process of law by which it was acquired. That retention thus has "a purposive aspect"68. The pursuit of 63 (1970) 123 CLR 89 at 125. 64 Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 at 589-590 [58]-[59]; Western Australia v Ward (2002) 76 ALJR 1098 at 1147-1155 [197]- [244]; 191 ALR 1 at 69-81. 65 (1970) 123 CLR 89 at 127. 66 (1970) 123 CLR 89 at 127. 67 cf Victoria v The Commonwealth and Hayden ("the Australian Assistance Plan Case") (1975) 134 CLR 338. 68 cf Victoria v The Commonwealth (Industrial Relations Act Case) (1996) 187 CLR McHugh Kirby Hayne purpose is insulated against the intrusion of State legislative power by the reach of the phrase "with respect to" in the identification of the exclusivity of federal legislative power. The question will be whether the State law in question has a connection with the place concerned which is more than insubstantial, tenuous or distant. In Stocks and Holdings, both Menzies J69 and Windeyer J70 referred to the decision of the Supreme Court of the United States in SRA Inc v Minnesota71 in support of the construction of s 52(i). Windeyer J expressed his conclusion by relating it to the facts in Stocks and Holdings by saying72: "In 1965 the Commonwealth, no longer requiring the whole of its rifle range land, disposed of part by transfer to the Council of the Municipality of Randwick; and later the Council transferred a part of what it had thus acquired to the defendant, Stocks and Holdings (Constructors) Pty Ltd, which proposes to build an hotel there. As I read s 52 of the Constitution, the exclusive power of the Commonwealth with respect to a place it has acquired subsists only so long as it holds the place for that purpose. If the Commonwealth transfers land to the State, it becomes land of the Crown in right of the State. If the Commonwealth transfers it absolutely to a person, it becomes vested in the transferee as tenant in fee simple in right of the State. In either event the authority of the Commonwealth Parliament in respect of the place comes to an end: and so, in my view, do any laws that the Parliament made by virtue only of its exclusive power to make laws with respect to the place, unless the State Parliament legislates to keep them alive. This result flows from the nature of the Commonwealth power under s 52 with respect to places." (emphasis added) Menzies J described73 s 52(i) as an exclusive power to make laws for property so long as it fulfils the description of a place "acquired by the Commonwealth for 69 (1970) 124 CLR 262 at 276-277. 70 (1970) 124 CLR 262 at 280-281. 72 (1970) 124 CLR 262 at 280-281. 73 (1970) 124 CLR 262 at 277. McHugh Kirby Hayne public purposes" but not thereafter. The reasoning of Menzies J and Windeyer J reflected the statement in SRA Inc74: "As the purpose of Clause 17 was to give control over the sites of governmental operations to the United States, when such control was deemed essential for federal activities, it would seem that the sovereignty of the United States would end with the reason for its existence and the disposition of the property." Conclusions with respect to the post-transfer period The construction of the exclusive federal legislative power in s 52(i) and the terminal point fixed by Menzies J and Windeyer J should be accepted. That has fatal consequences for the submissions by Paliflex. The land tax legislation in its support of the liability of Paliflex to land tax by reason of its ownership of the Land on 31 December 1998 and 1999 was not a law with respect to a place acquired by the Commonwealth for public purposes. The land tax legislation did not create or impose any obligation or duty upon the owner of the Land until a date after the registration of the transfer to Paliflex. That may be contrasted with the operation of the stamp duty law upon the transfer of the Land to Paliflex. That duty was imposed upon the instrument by which the Land ceased to have the character of a place acquired by the Commonwealth for public purposes. The stamp duty law was a law with respect to the Land having that character and so trespassed upon the ground marked out by s 52(i). The interest or concern of the Commonwealth in aid of which s 52(i) gave to the Parliament exclusive legislative power subsisted for so long as the Commonwealth held the Land for public purposes and the grant of exclusive power was correspondingly circumscribed. That interest or concern did not extend to the exclusion of any exercise of State legislative power which might tax the ownership of the Land in the hand of a transferee from the Commonwealth. To the extent that it could be shown that the projected operation of a State tax regime might or could affect the price obtained on a transfer by the Commonwealth when land was no longer held for public purposes, the connection would be so insubstantial, tenuous and distant as to be beyond the preserve of federal exclusive legislative power. That is a 74 327 US 558 at 564 (1946). McHugh Kirby Hayne consequence of the construction of the second limb of s 52(i) which sees it as being concerned with the fulfilment of the public purpose, freed from any exercise of State legislative power with respect to the place. It was accepted in argument that there was contained within the exclusive grant in s 52(i) everything incidental to the main purpose of the power, within the sense of McCulloch v Maryland75. Without determining the point, it also may be accepted that, although found in s 51, the grant of law-making power with respect to matters incidental to the execution of legislative powers, conferred by par (xxxix), extends to the incidents in the exercise of the grant in s 52(i). The hypothetical federal law which would immunise Paliflex from liability to land tax would not be incidental to the main purpose of the grant in s 52(i), and would not concern the incidents of the exercise of that grant. It remains to indicate that nothing inconsistent with the above reasoning appears in the treatment by the majority of the third question in Stocks and Holdings. After the transfer of the land by the Commonwealth to Randwick Council in 1965, a new interim development order ("the IDO") was made after suspension by the Minister of the pre-existing Scheme. It was held (Menzies J and Windeyer J dissenting) that upon the true construction of s 342Y of the LG Act the exercise of the power to make the IDO was conditioned upon the continued and valid operation with respect to the land in question of the Scheme the IDO superseded. As explained earlier in these reasons, the Scheme did not have that valid operation. For this reason, dependent upon the construction of s 342Y, not s 52(i) of the Constitution, the majority76 answered "No" the question whether the notification of the IDO in 1965 bound the then owner and subsequent owners, including Stocks and Holdings. Orders For these reasons, which depart from those of the Court of Appeal, the appeal should be dismissed with costs. 75 17 US 159 at 206 (1819). See also Le Mesurier v Connor (1929) 42 CLR 481 at 76 (1970) 124 CLR 262 at 268 per Barwick CJ, 270 per McTiernan J, 289-292 per Callinan CALLINAN J. The facts, the relevant legislation and authorities, the submissions of the parties, and the course of the proceedings are fully stated in the judgment of Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ in whose proposed orders I would join. The propositions advanced by the appellant immediately strike one as improbable, if not extraordinary. A State law is enacted in respect of land owned at the time of its enactment by the Commonwealth. That law cannot (absent valid mirror or applicable other subsequent legislation) have any valid operation in relation to that land no matter that it may have passed into other hands. Just how improbable the proposition is was brought home during the appellant's submissions when it was unable to say, when challenged, for how long, and for how many successive ownerships the asserted immunity from the State law should or could endure. Were it not for the decision of this Court in Allders International Pty Ltd v Commissioner of State Revenue (Vict)77 and Attorney- General (NSW) v Stocks and Holdings (Constructors) Pty Ltd78 ("Stocks & Holdings"), it is doubtful whether the appellant's arguments could have been credibly advanced at all. The appeal fails on the basis that the two State enactments, the Land Tax Management Act 1956 (NSW) ("the LTMA") and the Land Tax Act 1956 (NSW), never had, or purported to have any application to the Commonwealth and any land owned by it within the State. Each of, and in combination, ss 3, 7 and 9 of the LTMA, the sections by which land tax is levied, refer or are intended to operate in relation to "land ... owned by taxpayers". As the Commonwealth is not a taxpayer it does not answer that description. Furthermore, the Commonwealth is, to put it at its lowest, constitutionally exempt from any obligation to pay land tax to the State. Statements made by some members of the Court in Stocks & Holdings need to be read in the light of the first in particular of the questions stated and answered in that case79: "(1) Whether upon its enactment on 27th June 1951, the County of the Scheme Ordinance Cumberland Commonwealth as owner of the subject land. Planning bound 77 (1996) 186 CLR 630. 78 (1970) 124 CLR 262. 79 (1970) 124 CLR 262 at 292. Callinan Walsh J (with whom Barwick CJ generally agreed80) said this of the State Act and Ordinance under consideration there81: "If upon their proper construction, the 1951 Act and the Ordinance applied to the rifle range land, I think that those enactments must be held to have been to that extent beyond power and invalid. Unless they should be construed as less extensive in meaning than their general terms would indicate, they cannot be held to be wholly valid. It was submitted that the provisions should be by construction confined so that they do not exceed what the Parliament of the State was competent to enact. The learned Solicitor-General for New South Wales submitted that the provisions were not intended to bind the Commonwealth or the land, whilst it remained in Commonwealth ownership, but were intended to bind the land and the owners of it for the time being (whether individuals, corporations or States) after the cessation of Commonwealth ownership. The submission is not simply that the provisions should be construed as not binding the Commonwealth. It is that they should be construed as not intended 'to bind the land' so long as it is owned by the Commonwealth ... To the extent that the 1951 Act and its Schedule should be read as having even the limited application to the land which the informant's arguments must postulate, it would be in my opinion invalid because of s 52(i). I do not mean that there would be any invalidity in showing the land on the map to which the Act refers in order to make it easier to understand the map or simply for the purpose of identifying land and stating facts as to its existing ownership and use. But if no more than that was done, I think that the land would not be brought within the scheme. It would not be land to which the scheme 'applies'. On the other hand, if the enactment is read as making the scheme apply to the land, and as issuing directions as to its use, whether in the present or in the future, I think that it is to that extent beyond legislative power." (emphasis added) McTiernan J reached the same conclusion for similar reasons82. Menzies J expressed, with respect, a persuasive different view83. Stocks & Holdings may however be distinguished. The presence and language of s 7 of the LTMA relevantly bring that Act within the qualification 80 (1970) 124 CLR 262 at 266. 81 (1970) 124 CLR 262 at 285-287. 82 (1970) 124 CLR 262 at 269. 83 (1970) 124 CLR 262 at 275. Callinan expressed by Walsh J in the first two sentences of the passages in his judgment that I have quoted. Section 7 is a provision which states in terms that the apparently general language "all land" is qualified, and is to be confined to "land owned by a taxpayer" or, to put it in the negative, to "land not owned by a non-taxpayer". Accordingly, it is not necessary, as the Court was invited to do, to re-open Stocks & Holdings, or to consider whether the view of Menzies J on this point should be preferred84: "Here, it seems to me, that the exclusion of the Commonwealth and of Commonwealth land from the restrictions and prohibitions of the scheme was so obviously necessary for validity that it is proper to conclude that such exclusion was intended, and, the mere fact that there are no express words of exclusion, does not warrant the invalidation of the scheme as a whole." Nor is it necessary to explore a further possible, at least apparently valid, point of distinction: that because what was in issue there was a planning scheme, applying not only to the rifle range, but also to other land surrounding and near to it, the scheme at the time of its enactment had to be viewed, unlike for example, a land tax enactment, as a composite whole, which for its practical utility had to be wholly valid in its application to all lands to which it purported to apply. In a planning scheme the use to which one parcel of land is to be put may well influence the permissible or desirable uses of other land covered by the scheme and vice versa85. The appellant contended that the two Acts burdened Commonwealth land. It was unable to identify any effect upon it however, except as to its value: in short that the Commonwealth could sell it for more if it were exempt from land tax. Attempts by the appellant to liken this circumstance to a defect in title were unconvincing. That the Commonwealth might get a better price if it could immunise land it owned from land tax for a period, or indefinitely, has nothing to say about the nature and completeness of the title that it can convey. Apart from the more obvious policy considerations arguing against the result sought by the appellant, that land no longer in Commonwealth ownership and therefore no longer used for any public purpose should nonetheless continue to have a tax free status, there is this. The Commonwealth owned no land at the time of Federation. Everything it has (apart from land transferred or ceded to it pursuant to ss 85 and 125 of the Constitution or given to it), must have been acquired either by purchase, overshadowed no doubt by its ultimate power of compulsory 84 (1970) 124 CLR 262 at 275. 85 cf Attorney-General (NSW) v Stocks and Holdings (Constructors) Pty Ltd (1970) 124 CLR 262 at 280 per Windeyer J. Callinan acquisition, or by compulsory acquisition. On acquisition it would have paid no additional sum for it because it was to be used for a Commonwealth public purpose, one relevant incident of which is freedom from State land tax. That follows from settled principle now enacted as s 60 of the Lands Acquisition Act 1989 (Cth) which relevantly provides: "In assessing compensation, there shall be disregarded: any special suitability or adaptability of the relevant land for a purpose for which it could only be used pursuant to a power conferred by or under law, or for which it could only be used by a government, public or local authority; any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the purpose for which the interest was acquired; and An enactment under the Constitution may not of course be used to construe the Constitution, but s 60 of the Lands Acquisition Act reflects the law in force in relation to compulsory acquisitions at the time of Federation and of which the drafters may be taken to have known. That law is described in Corrie v MacDermott86 on appeal from this Court to the Privy Council which explained the much earlier cases of Hilcoat v Archbishops of Canterbury and York87 and Stebbing v Metropolitan Board of Works88. The principle was shortly stated as89: "The value which has to be assessed is the value to the old owner who parts with his property, not the value to the new owner who takes it over." It would be odd, if having acquired land for a price which was unaffected by the incidents of public ownership, an acquiring authority should be entitled to sell it to an ordinary purchaser at a price enhanced by the continuation of a status entirely inappropriate to its new ownership and usage. 86 (1914) 18 CLR 511; [1914] AC 1056. 87 (1850) 10 CB 327 [138 ER 132]. 88 (1870) LR 6 QB 37. 89 Corrie v MacDermott (1914) 18 CLR 511 at 514; [1914] AC 1056 at 1062. Callinan What I have said is sufficient to dispose of the appeal. It is unnecessary to deal with the applicability or otherwise of the mirror legislation to which the Court of Appeal had regard in deciding the appeal to it. The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Filippou v The Queen [2015] HCA 29 12 August 2015 ORDER Appeal dismissed. On appeal from the Supreme Court of New South Wales Representation T A Game SC with G A Bashir SC and J L Roy for the appellant (instructed L A Babb SC with K McKay for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Filippou v The Queen Criminal law – Appeal – Appeal against conviction – Trial by judge alone – Application of Criminal Appeal Act 1912 (NSW), s 6(1) in appeal from trial by judge alone – Application of "proviso". Criminal law – Appeal – Appeal against sentence – Aggravating and mitigating circumstances – Onus and standard of proof – Where not proved beyond reasonable doubt that appellant brought murder weapon to scene and not proved on balance of probabilities that deceased brought murder weapon to scene – Whether sentencing judge bound to take view of facts most favourable to offender. Words and phrases – "miscarriage of justice", "substantial miscarriage of justice". Crimes Act 1900 (NSW), s 23. Criminal Appeal Act 1912 (NSW), ss 5, 6(1). Criminal Procedure Act 1986 (NSW), s 133. Crimes (Sentencing Procedure) Act 1999 (NSW), s 21A. FRENCH CJ, BELL, KEANE AND NETTLE JJ. In October 2011, the appellant stood trial before the Supreme Court of New South Wales by judge alone (Mathews AJ) on two counts of murder. To each count he pleaded not guilty of murder but guilty of manslaughter by reason of provocation. The sole issue at trial, therefore, was provocation. On 18 November 2011, the judge found the appellant guilty of murder on both counts1 and, on 22 December 2011, to an effective head sentence of her Honour sentenced imprisonment for 31 years with an effective non-parole period of 25 years2. the appellant The appellant appealed to the Court of Criminal Appeal against conviction and sentence but the appeals were dismissed3. McClellan CJ at CL, with whom Fullerton and S Campbell JJ agreed, held that, although the trial judge erred in fact as to the sequence of events leading up to the killings, and may perhaps also have erred in law in directing herself as to the elements of the "ordinary person" test of provocation4, there was no miscarriage of justice because the appellant had been proved guilty beyond reasonable doubt of the offences charged. The Court of Criminal Appeal also found no error in the sentence. On 13 March 2015, Hayne and Nettle JJ granted special leave to appeal on grounds concerning both conviction and sentence. The principal question in relation to conviction is the nature of an appeal to the New South Wales Court of Criminal Appeal from the judgment and verdict of a judge alone. The sole issue in relation to sentencing is whether in the particular circumstances of this case the judge was bound to take the view of the facts most favourable to the appellant although it had not been established on the balance of probabilities. As will appear, the Court of Criminal Appeal is required to deal with an appeal from judge alone in three stages. The first is to determine whether the judge has erred in fact or law. If there is such an error, the second stage is to decide whether the error, either alone or in conjunction with any other error or circumstance, is productive of a miscarriage of justice. If so, the third stage is to ascertain whether, notwithstanding that the error is productive of a miscarriage of justice, the Crown has established that the error was not productive of a substantial miscarriage of justice. [2011] NSWSC 1379. [2011] NSWSC 1607. [2013] NSWCCA 92. 4 Crimes Act 1900 (NSW), s 23(2)(b). Bell Nettle As will also appear, the trial judge was not bound to adopt the view of the facts most favourable to the appellant for the purposes of sentencing. The nature of a criminal appeal from a judge alone Section 133 of the Criminal Procedure Act 1986 (NSW) provides that a judge who tries a criminal proceeding without a jury may make any finding that could have been made by a jury on the question of guilt of the accused and that such a finding has the same effect as a verdict of a jury. In that sense, "finding" means an ultimate finding of guilt as opposed to a finding of fact leading to the finding of guilt. The section also provides that the judge must include in his or her reasons for judgment the principles of law applied and the findings of fact on which the judge relies; and that, if any Act or law requires a warning to be given to a jury in such a case, the judge is to take the warning into account in dealing with the matter. As was held in Fleming v The Queen5, the requirement to take a warning into account necessitates that the judge expressly refer to the warning in his or her reasons for judgment. Section 5 of the Criminal Appeal Act 1912 (NSW) provides that a person convicted on indictment may appeal to the Court of Criminal Appeal against conviction on any ground which involves a question of law alone and, with the leave of the Court or on the certificate of the judge, on any ground of appeal which involves a question of fact alone, or question of mixed law and fact, or any other ground which appears to the Court to be a sufficient ground of appeal. Section 6(1) of the Criminal Appeal Act provides in effect that the Court of Criminal Appeal shall allow an appeal against conviction if: the verdict of the jury is unreasonable or cannot be supported having regard to the evidence; or (2) where the judgment of the court of trial is wrong by reason of wrong decision of a question of law; or for any other ground there has been a miscarriage of justice, provided that the Court may dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred. (1998) 197 CLR 250 at 263 [32] per Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ; [1998] HCA 68. Bell Nettle As was also explained in Fleming, perforce of s 133 of the Criminal Procedure Act, each of the three limbs of s 6(1) of the Criminal Appeal Act is capable of application to the verdict of a judge alone6. For the purposes of the first limb, the question is whether, upon the evidence on which the judge acted, or upon which it was open to the judge to act, the judge's finding of guilt is "unreasonable" or "cannot be supported". For the purposes of the second limb, the question is whether the judge has erred in law in the sense of a departure from trial according to law7. Under the third limb, the question is whether for any other reason there has been a miscarriage of justice. In Fleming8, the Court left open the question of whether the Court of Criminal Appeal should intervene under the first or third limb of s 6(1) only if it appears that there is no evidence to support a finding of guilt or the evidence is all the one way or where there has been a misdirection leading to a miscarriage of justice9. For the purposes of this appeal, it is necessary to answer that question. Beginning with the first limb of s 6(1) of the Criminal Appeal Act, it is clear from the terms of s 133(1) of the Criminal Procedure Act that the effect of the latter provision is to equate a judge's finding of guilt to a jury's finding of guilt "for all purposes". It follows from the natural and ordinary meaning of the words of s 133(1) that, for the purposes of an appeal against conviction under s 5 of the Criminal Appeal Act, a judge's finding of guilt is to be treated as if it were the same as a jury's finding of guilt. Authority makes plain that a jury's finding of guilt is not to be disturbed unless it appears that there is no or insufficient evidence to support the finding, or the evidence is all the one way, or the finding is otherwise unreasonable, or unless there has been a misdirection leading to a miscarriage of justice10. It (1998) 197 CLR 250 at 261 [24] (referring to s 33 of the Criminal Procedure Act, which was then in identical terms to s 133 as presently in force). 7 Weiss v The Queen (2005) 224 CLR 300 at 308 [18]; [2005] HCA 81. (1998) 197 CLR 250 at 262 [26]. 9 See also O'Donoghue (1988) 34 A Crim R 397 at 401 per Hunt J. 10 Whitehorn v The Queen (1983) 152 CLR 657 at 686 per Dawson J; [1983] HCA 42; Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 532 per Gibbs CJ and Mason J, 621 per Deane J; [1984] HCA 7; Knight v The Queen (1992) 175 CLR 495 at 502-503 per Mason CJ, Dawson and Toohey JJ; [1992] (Footnote continues on next page) Bell Nettle follows perforce of s 133(1) of the Criminal Procedure Act that, in the case of an appeal against a judge's finding of guilt, the finding is not to be disturbed under the first limb of s 6(1) of the Criminal Appeal Act unless there is no or insufficient evidence to support the finding, or the finding is otherwise unreasonable, or the evidence was all the one way, or the judge has so misdirected himself or herself on a matter of law as to result in a miscarriage of justice. It is, however, to be borne steadily in mind that, as with a jury's verdict, so also with the judgment and verdict of a judge alone, in most cases a doubt experienced by an appellate court will be a doubt which the judge ought to have experienced. To adopt and adapt the language of M v The Queen11: "It is only where a [judge's] advantage in seeing and hearing the evidence is capable of resolving a doubt experienced by a court of criminal appeal that the court may conclude that no miscarriage of justice occurred. ... If the evidence, upon the record itself, contains discrepancies, displays inadequacies, is tainted or otherwise lacks probative force in such a way as to lead the court of criminal appeal to conclude that, even making full allowance for the advantages enjoyed by the [judge], there is a significant possibility that an innocent person has been convicted, then the court is bound to act and to set aside a verdict based upon that evidence." Turning to the second limb of s 6(1) of the Criminal Appeal Act, it will be seen that to some extent it overlaps the first. A "wrong decision of any question of law" includes misdirections on matters of substantive law as well as misdirections on matters of adjectival law. And, as with the first limb, the question under the second limb will be whether the error constitutes a miscarriage of justice in the sense of a departure from trial according to law12. The third limb covers cases where, by reason of irregularity or otherwise, an accused has not received a trial according to law or has not received a fair trial13. HCA 56; M v The Queen (1994) 181 CLR 487 at 493 per Mason CJ, Deane, Dawson and Toohey JJ; [1994] HCA 63. 11 (1994) 181 CLR 487 at 494 (footnote omitted). 12 Weiss v The Queen (2005) 224 CLR 300 at 308 [17]-[18] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan and Heydon JJ. 13 See, eg, Weiss v The Queen (2005) 224 CLR 300 at 317 [45]. Bell Nettle That leaves the proviso, which in terms is applicable to all three limbs of s 6(1). It directs that, even where error of the kind identified in any of the three limbs is established and amounts to a miscarriage of justice, the Court of Criminal Appeal may dismiss the appeal if it is satisfied that the error has not been productive of a substantial miscarriage of justice. By "substantial miscarriage of justice" what is meant is that the possibility cannot be excluded beyond reasonable doubt that the appellant has been denied a chance of acquittal which was fairly open to him or her14 or that there was some other departure from a trial according to law that warrants that description15. Consequently, if the Court of Criminal Appeal is persuaded that the first limb applies, it will follow that it has concluded that there has been a substantial miscarriage of justice. In contrast, where the second limb applies, the circumstances in some cases may be such that, despite the judge making "the wrong decision of [a] question of law", the Court of Criminal Appeal is persuaded that the error could not have deprived the appellant of a chance of acquittal that was fairly open to him or her. In that case the proviso will operate. Where the third limb is engaged, if the Court of Criminal Appeal has concluded that the appellant has not received a fair trial it will follow that it has concluded that there has been a substantial miscarriage of justice. But where, despite some other identified irregularity, the Court of Criminal Appeal is satisfied that the appellant has received a fair trial according to law and not otherwise been deprived of a chance of acquittal that was fairly open to him or her, once again the proviso will operate. It is also to be borne in mind, as was explained in Baiada Poultry Pty Ltd v The Queen16 and more recently noticed in Lindsay v The Queen, that, although the proviso is expressed in permissive terms, "if the condition (the conclusion that no substantial injustice has actually occurred) is satisfied"17 the proviso must be applied. 14 Pollock v The Queen (2010) 242 CLR 233 at 252 [70]; [2010] HCA 35. 15 Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 102-103 [22]-[23] per French CJ, Gummow, Hayne and Crennan JJ; [2012] HCA 14; see, eg, AK v Western Australia (2008) 232 CLR 438 at 456-457 [57]-[59] per Gummow and Hayne JJ, 482 [109]-[110] per Heydon J; [2008] HCA 8. 16 (2012) 246 CLR 92 at 103 [25]. 17 (2015) 89 ALJR 518 at 528 [43] per French CJ, Kiefel, Bell and Keane JJ; 319 ALR 207 at 219; [2015] HCA 16. Bell Nettle The facts In early 2009, the appellant purchased a home in Mayfield, New South Wales. The property shared a back fence with the home of William Willis ("the Willis home"). William Willis was away from the Willis home between 4 April and 20 June 2009. One Sunday night during his absence, his son Sam Willis held a party or "drinking session" at the Willis home. The party involved an open fire in the back yard and very loud music which continued well into the early hours of the morning. A neighbour (not the appellant) yelled out at the partygoers, called the police (who did not attend), hosed the partygoers with water and later commenced a verbal exchange of abuse. At some point during that exercise, the appellant entered his back yard and joined in the abuse of the partygoers, but the partygoers returned the abuse using offensive language. A few days later, a handwritten letter (which was found by a handwriting expert to have been written by the appellant) was left at the Willis home. The letter complained that noise was bothering the author's mother (although the appellant did not live with his mother) and threatened to call the police and report hidden "dope" at the Willis home and the home of Sam Willis's mother (who lived at a different location). Sam Willis canvassed the neighbourhood to ascertain if anyone knew anything of the letter. William Willis gave evidence that Sam Willis told him that the appellant denied writing it but said: "if you come around and threaten me again I'll shoot you". Sam Willis told his mother that the appellant had threatened to kill him. Some days after that, William Willis raised the issue with the appellant over the back fence. According to William Willis, the appellant told him that Sam Willis had come to his house without a shirt on, very upset, angry and threatening. William Willis also recalled that the appellant said: "I was upset Sam was upset we just let off a little bit of steam ... I just don't want to be threatened by Sam again". The appellant also said to William Willis that he had told Sam Willis: "If you come around again, I will shoot you". William Willis said he replied that he would "talk to Sam and sort it out". The judge accepted that evidence. Following their conversation, there were amicable exchanges between the two households, including a conversation about the erection of a common fence. In December 2009, Luke Willis moved into the Willis home to stay for a while with his father and brother. Early in January 2010, hypodermic syringes Bell Nettle were scattered on the pavement outside of the Willis home. William Willis gave evidence that he took that to be "just part of living in Mayfield". Late in January 2010, on the eve of Luke Willis moving out of the Willis home, Luke, Sam and William Willis had a barbeque and played music in the back yard until about 11pm. The next day, the front gate of the Willis home was found to be sprayed with shiny grey paint with paint splatters leading to an empty paint tin about four houses away. Some days after that, a second letter (also found to have been written by the appellant) was left on the front lawn of the Willis home. It complained about noise and rubbish, told the Willises to move out and threatened to make their stay unbearable if they remained. Sam Willis and his father canvassed the neighbours about that letter, too, but all the neighbours to whom they spoke, including the appellant's wife ("Mrs Filippou"), said they did not have any problems with the Willises. From 11 April 2010, William Willis was away overseas. He gave evidence that, while away, he was in contact with his sons up until a few days before the shooting and that they told him that there had not been any problems at the Willis home during his absence. On Saturday 26 June 2010, Sam Willis and Luke Willis, Luke Willis's girlfriend and one Alex Best had a barbeque and drank beer at the property where Luke Willis was then living. At around 9pm, Sam Willis and Best went to the Willis home, having purchased a bottle of bourbon on the way. There they found a plastic bag on the front lawn containing a mass of dried leaves and a piece of cardboard on which was written: "Cheers you Dope from Alex". The note may have been there for some weeks and the judge thought it possible that it had been written by Best. At the time, however, Sam Willis and Best decided that the appellant had put the bag on the lawn and they went to his home and poured the contents of the bag and the note onto the appellant's utility, which was parked in the driveway. Best also scratched the words "Suck me" onto the back of the utility. On Sunday 27 June 2010, at around 11am, Mrs Filippou found the leaves and the cardboard note and called the appellant. When he saw what had happened, he called out abusively over the back fence but there was no response. He then went out briefly at around midday and on his way home he pulled up outside the Willis home. He found there was no one there. At 5.50pm, Luke Willis and Sam Willis were seen standing outside the Willis home inspecting the lounge room window. It had been broken with a Bell Nettle plastic bag containing telephone books. The appellant's son later admitted to having broken the window and the judge accepted his evidence. But Luke Willis and Sam Willis concluded that it was the appellant who had broken the window and they went to confront him. At about 6pm, Mrs Filippou heard male voices calling the appellant and she assumed that it was the Willis brothers. When she told the appellant about the yelling, she said that he went straight down the hall and out the front door and (she thought) onto the footpath. Very shortly after that, she said, the appellant ran back into the house and told her to call their son, which she did. Mrs Filippou said that the appellant then went outside again, she heard all the men yelling and she thought that she heard the word "police". Then, the appellant ran back inside again and said: "I'm going", went out the back door and immediately got into his utility and reversed out of the driveway. Later, the police arrived and found that both Sam Willis and Luke Willis had been shot dead. Sam Willis had a gun in his hand with his finger in the trigger guard close to the trigger. A single eyewitness to the shooting, Brett Allen, gave evidence that he heard two popping noises and went to his window. At that point, he saw through the window the silhouette of a man bending over slightly with an outstretched arm. Then he saw a flash come from the end of the man's arm accompanied by another popping noise. Allen said that he realised that the noise had come from a gun and that a person had been shot, and he called police. Allen said that he also saw the man walk "fairly casually" into the house, then come out again, crouch over the silhouette of the man lying on the ground and move his arms in a pulling motion. Other neighbours gave evidence that they also heard two shots in close succession and then a third shot a few seconds later. Ballistics evidence established that the gun was a .38 special calibre Smith & Wesson Model 36 five-chamber revolver, from which three shots had been fired: one into the chest of each deceased from a distance of approximately 800mm to 1m; and a third into the neck of Sam Willis from a distance of approximately 300mm. It was also established that the chamber under the hammer was empty, indicating that there had been an attempt to fire the weapon again after the third shot had been fired. After leaving the scene, the appellant went to his place of work and called a previous acquaintance. He stayed with her that night, appearing to her to be on edge and restless, and he called his young daughters from her telephone the following morning. At 10.35am, he handed himself in to police and told them: "they pulled a gun on me and I took it off 'em and shot 'em. They're shit. If Bell Nettle you're going to pull a gun on me, be prepared to use it. That's all I'm going to say." Later, in his Electronically Recorded Interview of a Suspected Person ("ERlSP"), the appellant repeated the effect of that statement a number of times. He said that a man whom he had not seen before (Luke Willis) had taken a gun out of his pocket with his right hand and said: "I've got this". The appellant said that he immediately grabbed the gun and shot Sam Willis, because Sam Willis was still abusing the appellant. He then pointed the gun at Luke Willis and shot him too. He estimated that the Willises were no more than one metre away from him when he shot them and he said that he left the gun in the hand of one of the men (he could not remember who) "[b]ecause it['s] theirs, they may as well keep it". Then he went back inside, changed and left in his utility. He added that he might have shot someone on the ground but it all happened so fast that he could not remember. He had "just shot whatever bullets were there". During forensic procedures following the ERISP, the appellant said to a police officer, "I was always taught never bring a gun unless you are prepared to use it", and his demeanour changed and he clenched his fists and said, "I'm fucking proud of what I done. Fucking proud of it." After his arrest, the appellant was taken into custody and his telephone conversations were recorded. In a call recorded on 18 August 2010, the appellant said to Mrs Filippou: "They come around with a fucken gun we didn't" and "Who the fuck do they think they are coming around like fucken would be gangsters ... if they had of fucken brought a knife I would have cut their fucken heads off". The judge's reasons for judgment At the time of the Willis brothers' deaths, the partial defence of provocation in New South Wales was defined by s 23 of the Crimes Act 1900 (NSW) as follows: "Trial for murder—provocation (1) Where, on the trial of a person for murder, it appears that the act or omission causing death was an act done or omitted under provocation and, but for this subsection and the provocation, the jury would have found the accused guilty of murder, the jury shall acquit the accused of murder and find the accused guilty of manslaughter. Bell Nettle For the purposes of subsection (1), an act or omission causing death is an act done or omitted under provocation where: the act or omission is the result of a loss of self-control on the part of the accused that was induced by any conduct of the deceased (including grossly insulting words or gestures) towards or affecting the accused, and that conduct of the deceased was such as could have induced an ordinary person in the position of the accused to have so far lost self-control as to have formed an intent to kill, or to inflict grievous bodily harm upon, the deceased, whether that conduct of the deceased occurred immediately before the act or omission causing death or at any previous time. For the purpose of determining whether an act or omission causing death was an act done or omitted under provocation as provided by subsection (2), there is no rule of law that provocation is negatived there was not a reasonable proportion between the act or omission causing death and the conduct of the deceased that induced the act or omission, the act or omission causing death was not an act done or omitted suddenly, or the act or omission causing death was an act done or omitted with any intent to take life or inflict grievous bodily harm. (4) Where, on the trial of a person for murder, there is any evidence that the act causing death was an act done or omitted under provocation as provided by subsection (2), the onus is on the prosecution to prove beyond reasonable doubt that the act or omission causing death was not an act done or omitted under provocation. This section does not exclude or limit any defence to a charge of murder." Thus, after summarising the evidence, the judge turned first to the question posed by s 23(2)(a) and (4) of the Crimes Act of whether the Crown had established beyond reasonable doubt that the appellant's acts of shooting the Bell Nettle deceased were not the result of a loss of self-control on the part of the appellant induced by any conduct of the deceased. Defence counsel had argued in the course of his final address that the evidence left open a reasonable possibility that one or other of the deceased brought the gun to the scene and that that act, combined with the events which occurred leading up to their arrival at the appellant's house with the gun, caused the appellant to lose self-control and in that state of lost self-control shoot the deceased. The judge rejected that submission. The judge appreciated that the provenance of the gun was "a significant factual issue" because her finding on the matter would "inevitably influence [her] finding as to the state of mind of the accused when he shot the two deceased". Having considered the evidence, her Honour found she was not satisfied beyond reasonable doubt that the accused brought the gun. Even so, her Honour concluded that, assuming that one or other of the deceased had brought the gun to the scene, the appellant's conduct during the shooting and immediately and later after it demonstrated beyond reasonable doubt that the appellant had not lost self- control at the time of the killing. As for the appellant's conduct after the shooting, the judge acknowledged that "[a] significant factual question arises here, as to how Mr Allen's observations of these crucial events can be reconciled with the account Mrs Filippou gave to the police later that night". After assessing their evidence her Honour ultimately concluded: "I must assume that the sequence of events as described by Mr Allen is the correct one. He was very precise in his observations ... Mrs Filippou said that it all happened very quickly, and at one point she expressed uncertainty as to whether the verbal confrontation she heard might have taken place before her husband retuned and asked her to ring [the appellant's son]." As a result, her Honour found the "most likely picture" of the confrontation to accord with Allen's evidence, which supported a finding that the appellant had not lost self-control. The judge then referred to the statements made in the appellant's ERISP and during the recorded telephone conversation with Mrs Filippou and found as follows: "It is abundantly clear from the totality of the evidence that the accused was, at the relevant time, an inherently angry man. [Defence counsel] did not seek to argue otherwise. ... Bell Nettle I regard the statements made by the accused after the event as ultimately determinative of this issue, for the following reason. A loss of self-control under s 23 necessarily involves the accused committing the act causing death whilst his capacity to think rationally has been temporarily suspended by reason of the provocative conduct of the deceased. By definition it is an act which the person would not have done if he was in his normal state of mind. It follows that if the person continues, well after the effect of the provocative conduct has ceased, to justify his conduct and indicate that he would do the same thing again in the same situation, then this is inconsistent with the proposition that it was a temporary loss of self-control which caused him to act as he did. And this is precisely what the accused has continued to do. He did it several times the following day, when he was being interviewed by the Police. Amongst other things, he said that the deceased brothers 'probably deserved what they got', and that he was 'fucking proud' of what he had done. This is not the attitude of a man who has come back to rationality after a temporary loss of control. Even in his telephone conversation with his wife some six weeks later he was placing the blame on the deceased brothers, saying that they were 'just garbage people'." In the judge's view there was "no reasonable possibility that it was a loss of self-control" which caused the appellant to shoot the deceased. The first limb of provocation was therefore not made out. Although that was sufficient to dispose of the matter, the judge then went on to deal with the objective element of provocation, which is provided for in s 23(2)(b). Her Honour concluded that she was "quite unable to accept that an ordinary person, confronted with this situation, could have lost self-control so as to form an intention to kill or inflict grievous bodily harm on the brothers". She continued: "I am hesitant to use the word 'disproportionate', for there is no requirement of proportionality in relation to the defence of provocation as currently formulated. However, if the response is grossly disproportionate to the provocation, then it inevitably means that it will fail the 'ordinary person' test. And that, in my view, is clearly the situation here." For these reasons it followed that the defence of provocation failed. The appeal to the Court of Criminal Appeal There were three grounds of appeal to the Court of Criminal Appeal, each comprised of a number of parts but amounting in substance to: Bell Nettle The verdict was unreasonable within the meaning of the first limb of s 6(1) of the Criminal Appeal Act and could not be supported having regard to the evidence. This was because, in finding that the appellant had not lost self-control, the judge misdirected herself as to the inferences to be drawn from the statements made by the appellant while in custody; erred in the inferences drawn from the gap in time between the second and third shots; and misdirected herself as to the "ordinary person" test. The judge erred in law within the meaning of the second limb of s 6(1) of the Criminal Appeal Act by making each of the errors identified in the first ground. In all the circumstances, the conviction was a miscarriage of justice within the meaning of the third limb of s 6(1) of the Criminal Appeal Act. McClellan CJ at CL dealt first with the complaint that the judge erred in fact as to the sequence of events surrounding the shooting and thus the gap in time between the second and third shots. It is to be inferred from his Honour's reasons that the thrust of the appellant's argument on that point may have expanded in the course of hearing to a contention that the judge wrongly perceived Mrs Filippou's recollection of the sequence of events to be inconsistent with Allen's evidence; as a result wrongly doubted Mrs Filippou's reliability; and thus erred in rejecting Mrs Filippou's evidence concerning the appellant's apparent emotional state at the time of the shooting. McClellan CJ at CL appears to have accepted that contention: "I am satisfied that [the trial judge's] account is not correct. I am satisfied that the appellant went out to the street and then returned inside. He then went out again, the brothers were shot and the appellant then went inside or moved in that direction before returning to place the gun and then again leave the scene by returning to the house. Although after the shooting Mr Allen observed the appellant to walk back into the front yard of the house he did not see him go inside. Mrs Filippou said that the appellant came back inside on two occasions but on the second occasion rather than return to the scene of the shooting he took a motor vehicle and left altogether. Her Honour observed that Mr Allen described the appellant as the house. walking Mrs Filippou said that he was running, or was walking quickly and was angry. Her Honour concluded that the appellant's actions in returning 'quite calmly' when he went back towards Bell Nettle outside and placing the revolver into Sam Willis's hand is an action 'at least suggestive of rational thinking.' Again, I believe her Honour has not identified the correct sequence. On the first occasion the appellant went back inside, which was before the shooting he was agitated. However, after the brothers had been shot his demeanour changed and he in relative calm returned to place the gun." Somewhat perplexingly, however, having so identified those supposed errors, McClellan CJ at CL did not then say anything further about them. There is no mention in his Honour's reasons of whether he considered them to be productive of a miscarriage of justice or, if so, whether he was satisfied that the Crown had established that they were not productive of a substantial miscarriage of justice. There is no indication of how his Honour reconciled them with his conclusion that the appeal should be dismissed. McClellan CJ at CL next dealt with the appellant's complaint that the judge misdirected herself as to the inferences to be drawn from statements made by the appellant while in custody and, more generally, erred in basing her conclusion concerning the appellant's state of mind at the time of the shooting on evidence of the appellant's conduct and statements during and after the shooting. It is not clear but it appears from the following passage of McClellan CJ at CL's reasons that his Honour may have accepted that the judge also erred in those respects by treating the post-offence statements as "determinative" of the appellant's state of mind at the time of the killings: "It was open to her Honour to have regard to the appellant's subsequent statements to the extent they were capable of shedding light on his state of mind at the time of the shootings. However, her Honour could not reason that because those statements made at a time when the appellant was apparently calm and rational, sought to justify the killing without a suggestion that he lost control were determinative of his state of mind at the time of the shootings. Nor could the statements of themselves negative loss of self-control. There is an ambiguity in her Honour's reasons. Her Honour said that the appellant's later statements were 'ultimately determinative' of the issue. If her Honour meant that they alone determined the issue I could not agree. If she meant that they provided determinative weight I, with respect, could also not agree. To my mind the statement justifying his conduct together with the indication that he would do the same thing again (although no doubt engendering a sense of revulsion in ordinary people), does not provide any significant assistance in determining the state of Bell Nettle mind under which the appellant did the relevant acts and whether he lost his self-control. It is conceivable that a person who temporarily loses their self-control may later not regret their actions. Although they may have acted in a complete absence of control, later justification of their actions may not prove to be of any assistance to the prosecution case." Ultimately, however, McClellan CJ at CL dealt with the point on the basis that, despite his concerns about the judge's process of reasoning, he was not persuaded that her Honour's finding of guilt was erroneous: "Notwithstanding my reservations about her Honour's approach to the issue I am not persuaded that her Honour's conclusion was erroneous. Indeed, having considered the evidence I am satisfied that the Crown discharged the onus that it carried to the criminal standard. I have previously related the findings that her Honour made in relation to the actions of the appellant and the observations of his movements made by the witnesses. The appellant said in his ERISP that he removed the gun from one of the deceased and then fired it to kill both brothers. There was nothing to suggest that he acted as a result of losing his self-control. Indeed the only available conclusion was that in taking the gun and shooting the brothers he acted in a deliberate and calculated way not only in firing the first two shots but in firing the third shot, which the evidence established was responsible for the death of Sam Willis." Ex facie, that appears to mean that McClellan CJ at CL did not consider that the errors he identified in the judge's reasoning process were productive of an error in her Honour's conclusion because he was satisfied beyond reasonable doubt that the appellant was guilty. It is as if his Honour conceived himself to be deciding a civil appeal by way of rehearing under s 75A of the Supreme Court Act 1970 (NSW). But, if so, that was not a proper way of disposing of the appeal. As was earlier explained, an appeal from judge alone under s 5 of the Criminal Appeal Act is not an appeal by way of rehearing. Having identified error, the task for the Court of Criminal Appeal is to determine whether the error is productive of a miscarriage of justice. In this context that would have meant determining whether the judge had so erred in fact by preferring Allen's version of events over Mrs Filippou's recollections as to engage either the first or third limbs of s 6(1), or so erred in law by giving "determinative" weight to the appellant's post-offence statements as to engage the second limb of s 6(1); and, if so, then assessing whether it was established that the error was not productive of a substantial miscarriage of justice in the sense of depriving the appellant of a chance of acquittal (or, in this case, a chance of a manslaughter verdict) fairly open to him. To dispose of the matter on the basis simply that the Court of Criminal Appeal was not satisfied that the judge's conclusion was erroneous Bell Nettle because the Court of Criminal Appeal considered that the appellant had been proved guilty beyond reasonable doubt did not engage with the requirements of the statutory task. Thirdly, McClellan CJ at CL turned to consider the complaint that the judge erred in directing herself as to the ordinary person test of provocation for the purposes of s 23(2)(b) of the Crimes Act. His Honour concluded that, irrespective of whether the judge had done so, the error was not productive of a miscarriage of justice because he had no doubt that an ordinary person with the characteristics of the appellant would not have acted as the appellant did: "It was submitted that by expressing herself as she did her Honour has reversed the onus of proof. I am not persuaded that the submission should be accepted. The criticism is focused on the paragraph which commences with the words 'I am quite unable to accept ...' A reading of the entire paragraph suggests that her Honour may have merely been intending to convey that in the circumstances she was satisfied beyond any doubt that an ordinary person could not have been induced to lose their self-control and kill the brothers. Her Honour's finding is reflected in the last sentences of the paragraph where she identifies the response as being grossly disproportionate to the provocation with the consequence that the Crown has proved its case to the criminal standard. Irrespective of whether her Honour should be understood as framing her conclusion in an inappropriate manner I am nevertheless completely satisfied that there has been no miscarriage of justice. Even accepting the appellant's submission that he did not bring the gun to the scene and that he responded to the fact that the brothers brought it, he must have taken it from the brother carrying it and then without any apparent hesitation used it to kill both of them. There was no suggestion of a struggle or any attempt by the appellant to remove himself from the scene or deal with the situation without using the gun. I have no doubt that an ordinary person with the characteristics of the appellant, including his tendency to anger, would not have acted as the appellant did in the circumstances by taking the gun and forming the intention to kill." With respect, that was not correct either. The test was not whether an ordinary person would have acted as the appellant did but whether the conduct of the deceased could have induced an ordinary person in the position of the appellant to have so far lost self-control as to have formed the intent to kill or to inflict grievous bodily harm. Bell Nettle Finally, McClellan CJ at CL dealt with the complaint that the judge erred in failing to direct herself as to the care to be taken in drawing inferences adverse to the appellant. His Honour rejected that contention: "Complaint was made that her Honour failed to warn herself about the caution necessary in drawing inferences. There is no reason to doubt that her Honour, a very experienced trial judge, was mindful of the need to be careful in this respect and there is nothing in her Honour's judgment which would suggest that the proffered criticism could be sustained." The Court of Criminal Appeal was correct to reject that contention. Subject to statute18, judges are required to give juries particular warnings such as a Longman19 warning, a Domican20 warning, an accomplice warning21 or a Pollitt22 warning, for the purpose of alerting juries to particular difficulties with particular classes of evidence with which they are unlikely to be familiar. Perforce of s 133(3) of the Criminal Procedure Act, the same applies to trial by judge alone. As was explained in Fleming23, the obligation under s 133(3) "to take [a] warning into account" requires that the particular warning be included in the judge's reasons for judgment. But it is different in the case of directions other than warnings. Apart from warnings of the kind referred to in s 133(3), judges are required to give juries certain ineluctable directions as to matters such as the functions of the judge and jury, the burden and standard of proof, what constitutes evidence, the drawing of inferences from direct evidence, the care to be exercised in drawing inferences and, if an inference forms an essential step in the jury's process of reasoning to guilt, the need to be satisfied of that inference 18 Cf Jury Directions Act 2013 (Vic). 19 Longman v The Queen (1989) 168 CLR 79 at 90-91 per Brennan, Dawson and Toohey JJ; [1989] HCA 60. 20 Domican v The Queen (1992) 173 CLR 555; [1992] HCA 13; Evidence Act 1995 (NSW), s 116. 21 Peacock v The King (1911) 13 CLR 619; [1911] HCA 66; Evidence Act 1995 (NSW), s 165. 22 Pollitt v The Queen (1992) 174 CLR 558 at 599 per Dawson and Gaudron JJ; [1992] HCA 35. 23 (1998) 197 CLR 250 at 263 [32] per Gleeson CJ, McHugh, Gummow, Kirby and Bell Nettle beyond reasonable doubt24. Such directions are principles of law within the meaning of s 133(2) and therefore, in the case of trial by judge alone, must be applied. But it is sufficient if a judge's reasons show either expressly or by implication that they have been so applied25. As can be seen from the passages of the judge's reasons for judgment earlier referred to26, her Honour repeatedly referred to the need to be satisfied of guilt beyond reasonable doubt and twice specifically referred to the need for satisfaction beyond reasonable doubt in relation to the inferences which she drew concerning the appellant's state of mind at the time of the killings. Consequently, quite apart from such, if any, significance as might be attributed to the fact of the judge being "a very experienced trial judge", her Honour's reasons for judgment leave no room for doubt that she did take into account the care to be taken in drawing inferences and did take into account the need to be satisfied beyond reasonable doubt of the inferences which were critical to her conclusion of guilt. No miscarriage of justice Other things being equal, the Court of Criminal Appeal's failure to deal with the consequences of what it perceived to be the judge's error concerning the sequence of events surrounding the shooting; the irregularity of the fashion in which their Honours disposed of the question of whether the judge erred in giving the appellant's post-offence conduct determinative effect; and their Honours' apparent error in relation to the application of the ordinary person test prescribed by s 23(2)(b) of the Crimes Act, would dictate that the appeal be allowed and that the matter be remitted to the Court of Criminal Appeal for determination of the appeal against conviction according to law. For the reasons which follow, however, it can be seen that the judge did not err in either of the first two respects identified by the Court of Criminal Appeal and, accordingly, that the manner in which her Honour essayed the s 23(2)(b) test was of no consequence. 24 Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 535-536 per Gibbs CJ and Mason J, 626-627 per Deane J; Shepherd v The Queen (1990) 170 CLR 573 at 581 per Dawson J; [1990] HCA 56. 25 Fleming (1998) 197 CLR 250 at 263 [30]. 26 Above at [36]-[41]. Bell Nettle Starting with the first of the judge's supposed errors, the question for the Court of Criminal Appeal was not whether it was "satisfied that the judge's account was correct" but whether her Honour's findings as to the sequence of events were not reasonably open. And, plainly, they were open. Contrary to the Court of Criminal Appeal's reasoning, the judge's analysis of the pertinent evidence did not overlook that Allen did not look out of his window until after the first two shots had been fired. Allen's observation of the appellant going into the house after the third shot had been fired (which, on Mrs Filippou's version of events, would have been the second occasion that the appellant went back into the house) was of the appellant walking calmly inside, then coming out again, and then crouching over the deceased and using his arms in a pulling motion. As the judge rightly observed, that version of events was starkly inconsistent with Mrs Filippou's recollection that the appellant had run or walked back in quickly on the second occasion in an agitated state of mind and then driven away in his utility. Thus, for the reasons which her Honour gave, she was entitled to prefer Allen's version of events over Mrs Filippou's variously stated recollections. As to the second of the judge's supposed errors, of giving determinative force to the appellant's post-offence statements, McClellan CJ at CL did not say whether he perceived that to be an error of fact or of law. Logically, however, it could not have been either unless the trial judge meant that, regardless of other evidence, the post-offence statements were determinative of the appellant's state of mind at the time of the killings. Read in isolation, that is a possible interpretation of what the judge said at [103] of her reasons. But, read in the context of the whole of the analysis which began at [94] and continued to [103], it is plain that her Honour treated the post- offence statements as no more than the final, and in that sense determinative, piece of evidence which, when added to the other evidence of the appellant's actions (shooting the deceased, walking calmly into the house, and exiting and placing the gun in Sam Willis's hand), sustained the inference beyond reasonable doubt that the appellant had not lost self-control at the time of the shooting. Finally, with respect to the judge's observations concerning the effect of s 23(2)(b), it was conceded before this Court that, if it were open for the judge to conclude that the appellant had not lost self-control at the time of the shooting, any error which her Honour might have made in thereafter analysing the ordinary person test for the purposes of s 23(2)(b) could not have been of any consequence. That concession was rightly made. Once any possibility of the appellant losing self-control at the time of the shooting was excluded beyond reasonable doubt, the defence of provocation became untenable. Bell Nettle Conclusion on conviction Other than the alleged error in relation to s 23(2)(b), which was of no consequence given the judge's finding that the appellant had not lost self-control at the time of the killings, the judge did not make any errors contended for by the appellant. The appeal against conviction to the Court of Criminal Appeal should have been dismissed. For the same reason, the ground of appeal to this Court concerning conviction fails. Appeal against sentence Section 21A of the Crimes (Sentencing Procedure) Act 1999 (NSW) ("the Sentencing Act") provides that, in determining the appropriate sentence for an offender, the court must take into account any of the aggravating factors listed in s 21A(2) which are known to the court, any of the mitigating factors listed in s 21A(3) which are known to the court and any other objective or subjective factor that affects the relative seriousness of the offence. One of the aggravating factors, listed at s 21A(2)(c), is that the offence involved the actual or threatened use of a weapon and one of the mitigating factors, listed at s 21A(3)(c), is that the offender was provoked by the victim. Here, the fact that the appellant killed the deceased with a gun was known to the court and, therefore, was an aggravating factor which the sentencing judge was required to take into account in accordance with s 21A(2)(c). Equally, because the partial defence of provocation was excluded beyond reasonable doubt, it could not be said that the appellant had been so much provoked as to lose self-control. Nevertheless, the deceased's conduct could be prayed in aid as a mitigating factor under s 21(3)(c). Despite the exclusion of provocation as a partial defence, the question of whether the appellant or the deceased brought the weapon to the scene was a factor which bore on the relative seriousness of the offences. If it had been known to the court that the appellant brought the weapon to the scene, the judge would have been entitled to conclude that the appellant went to the scene at least contemplating the use of the weapon and, therefore, that his moral culpability was significantly greater than if the offences had been wholly spontaneous. In contrast, if it had been known to the court that the deceased brought the weapon to the scene, the judge would have been entitled to regard that as a factor which was favourable to the appellant, in the sense that it would have made it more likely that the first and possibly second shots were a spontaneous reaction to the situation with which the appellant was confronted. Bell Nettle But, as was established in R v Olbrich27, a sentencing judge may not take facts into account in a way that is adverse to an offender unless those facts have been established beyond reasonable doubt and, contrastingly, the offender bears the burden of proving on the balance of probabilities matters which are submitted in his or her favour. Where, therefore, the prosecution fails to prove a fact or circumstance which is adverse to the offender, but the judge is not satisfied on the balance of probabilities of an alternative version more favourable to the offender, the judge is not bound to sentence the offender on a basis which accepts the accuracy of the more favourable version. If the prosecution fails to prove beyond reasonable doubt a possible circumstance of the offending which, if proved, would be adverse to the offender but the offender fails to establish on the balance of probabilities a competing possibility which, if proved, would be favourable to the offender, the judge may proceed to sentence the offender on the basis that neither of the competing possibilities is known. As was stated by the majority in Olbrich28: "[W]e reject the contention that a judge who is not satisfied of some matter urged in a plea on behalf of an offender must, nevertheless, sentence the offender on a basis that accepts the accuracy of that contention unless the prosecution proves the contrary beyond reasonable doubt. The incongruities that would result if this submission were accepted are well illustrated by the present case. The respondent swore that he was a courier but the judge disbelieved him. To require the judge to sentence the respondent on the basis that he was a courier is incongruous." Despite these principles, the argument advanced on the appeal to this Court (which was not advanced before the Court of Criminal Appeal) was that, although the judge found it to be likely that the appellant had brought the gun to the scene of the killing, that fact was not proved beyond reasonable doubt and, therefore, her Honour was bound to sentence the appellant on the basis that it was one or other of the deceased who had brought the gun to the scene of the killing. Counsel for the appellant relied on the following example, cited in Cheung v The Queen, of circumstances in which, although a version of events favourable to an accused has not been established on the balance of probabilities, it is one of only 27 (1999) 199 CLR 270 at 281 [25]-[27] per Gleeson CJ, Gaudron, Hayne and Callinan JJ; [1999] HCA 54, adopting R v Storey [1998] 1 VR 359 at 369 per Winneke P, Brooking and Hayne JJA and Southwell AJA. 28 (1999) 199 CLR 270 at 280-281 [24] (emphasis in original). Bell Nettle two logical possibilities, of which the other is unfavourable to the accused and has not been proved beyond reasonable doubt, and therefore the judge may be bound to sentence on the basis of the version of events favourable to the accused29: "A simple example may be provided by a charge of murder against someone who has caused the death of an elderly, ill, person by administering a lethal injection. It may be the prosecution case that the accused was motivated by a desire to inherit the victim's estate. Another possible view of the facts may be that the accused was motivated by a desire to put an end to the victim's suffering. Both possibilities may be consistent with guilt. A jury would probably be instructed that, although the prosecution alleged a motive of greed, it was not essential that such motive be established. Some jurors may accept that there was such a motive. Others may not. The sentencing judge may need to address the question of motive. If the judge were unable to be satisfied beyond reasonable doubt as to the motive of personal gain, then the accused would be sentenced upon the more favourable basis. But that would be because the sentencing judge could not be satisfied of the prosecution's allegation. It would not be because the judge was obliged to sentence upon the view of the facts most favourable to the offender that was consistent with the jury's verdict." The argument should be rejected. As Olbrich made clear, where an offender asserts a fact favourable to the offender and the Crown contests it or the court is not otherwise disposed to accept it30, it is incumbent on the offender to establish the fact on the balance of probabilities. Properly understood, there is no inconsistency between those requirements and what was said in Cheung. The example in Cheung was directed to circumstances which might arise following trial by jury, where, because of the relative inscrutability of a jury verdict, it is impossible to say whether the jury has convicted the offender on the more or less favourable version of events, of which either would have sustained the conviction. In such circumstances, because of the necessity for a judge to sentence in accordance with the jury's findings of fact, the judge might take the view that he or she should assume that the jury has convicted the offender on the 29 (2001) 209 CLR 1 at 11 [9] per Gleeson CJ, Gummow and Hayne JJ; [2001] HCA 67. 30 (1999) 199 CLR 270 at 281 [25]. Bell Nettle basis of the more favourable version of events, and thus sentence the offender on that basis. So to say, however, does not mean that the judge would necessarily be bound to sentence on that basis. If, in the example cited in Cheung, it did not appear whether the jury decided the case on the basis that the homicide was a mercy killing as opposed to being motivated by greed, the offender failed to establish on the balance of probabilities that it was a mercy killing and the judge felt otherwise unable to accept that it was a mercy killing, the judge would be entitled to proceed on the basis that it was not known what motivated the killing. A fortiori in a case of trial before judge alone because, in such a case, the judge is the jury and knows the basis on which he or she has found the accused to be guilty. In such circumstances, even if the judge is not satisfied beyond reasonable doubt of the version of events which is unfavourable to the accused, the judge well knows whether the favourable version of events is or is not established on the balance of probabilities. If it is not, the judge is entitled to sentence accordingly. Counsel for the appellant contended that so to proceed would be in effect to sentence an accused on the basis of an aggravating circumstance which the Crown had not proved beyond reasonable doubt. But that contention wrongly equates the absence of proof beyond reasonable doubt of an aggravating circumstance with proof of a mitigating circumstance on the balance of probabilities. In a case like this, the choice is not between absence of proof beyond reasonable doubt of an aggravating circumstance and proof on the balance of probabilities of a mitigating circumstance, but rather between absence of proof beyond reasonable doubt of an aggravating circumstance and absence of proof on the balance of probabilities of a mitigating circumstance. Certainly, a sentencing judge must do his or her best to find the facts which determine the nature and gravity of the offending, including the facts which inform the offender's moral culpability. Even so, it is sometimes not possible for the judge to ascertain everything which is relevant, especially where an offender chooses not to offer any evidence on the plea. Where that occurs, the judge must proceed on the basis of what is proved and leave to one side what is not proved to the requisite standard. As was stated in Weininger v The Queen31: 31 (2003) 212 CLR 629 at 636-637 [20] per Gleeson CJ, McHugh, Gummow and Hayne JJ; [2003] HCA 14 (footnote omitted). Bell Nettle "The sentencing judge may not be able to make findings about all matters that may go to describe [the] circumstances. In particular, an offender may urge a particular view of the nature and circumstances of the offence, favourable to the offender. The sentencing judge may be unpersuaded that the view urged is, more probably than not, an accurate view of the circumstances. In such a case, it is not correct that the judge is bound to sentence the offender on that favourable basis, unless the prosecution proves the contrary beyond reasonable doubt. Accordingly, in the particular facts of Olbrich, where the offender asserted that he was no more than a courier of the drugs, but the sentencing judge disbelieved him, it was neither necessary nor appropriate to sentence him on the basis that he was a courier." That accords with the requirements in s 21A(1) of the Sentencing Act that facts be taken into account only in so far as they are "known to the court" according to the principles of proof laid down in Olbrich. It is different in some other common law jurisdictions. In England, the prosecution must, generally speaking, rebut mitigating facts asserted by an offender unless they are inconsistent with the jury's verdict, wholly implausible, manifestly false or extraneous in the sense of being unrelated to the facts of the offence or the offender's part in it or wholly outside the prosecution's knowledge and ability to refute32. In Canada, s 724(3) of the Criminal Code33 requires that a disputed fact be proved by the party asserting it on the balance of probabilities and that the prosecution must establish aggravating facts beyond reasonable doubt, but in the event of uncertainty as to the basis of the jury's verdict, the accused is entitled to the benefit of the doubt34. In New Zealand, where the position is modelled on ss 723 and 724 of the Canadian Criminal Code, the prosecution must negate beyond reasonable doubt any disputed mitigating fact raised by the defence that is not wholly implausible or manifestly false unless it is not related to the nature of the offence or the offender's part in the offence, in which case it falls to the offender to prove it on the balance of probabilities35. 32 Broderick (1993) 15 Cr App R (S) 476 at 479. 33 RSC 1985, c C-46. 34 R v Craig (2003) 177 CCC (3d) 321 at 327-328 [25]-[26] per Laskin JA for Laskin, MacPherson and Gillese JJA. 35 Sentencing Act 2002 (NZ), s 24. Bell Nettle Arguably, there is something to be said for those approaches. Obviously, it is undesirable that a judge should be required to sentence an offender without knowing all of the relevant facts and circumstances of the offending. Hence, at one level, the idea of making an assumption in favour of an offender in relation to facts and circumstances which are unknown to the court has a deal to commend it. But, as against that, the requirements of proof laid down in Olbrich are informed by principles of fairness which would not be served by making assumptions that could lead to an offender being sentenced on too favourable a basis. It is preferable to recognise that as a consequence of the rules of proof which those principles inform there will be some few cases, of which this is one, where an offender must be sentenced without the judge having a complete knowledge of what is relevant. For the reasons explained in Weininger, justice is likely to be better served if that approach is adhered to36. Conclusion It follows that the appeal should be dismissed. 36 (2003) 212 CLR 629 at 637-638 [23]-[24]. I agree with the joint reasons for judgment that the appeal to this Court from the Court of Criminal Appeal must be dismissed. I also agree with the reasoning set out in the joint reasons for judgment as to why the appeal must be dismissed in so far as it relates to sentence. What follows are my own reasons as to why the appeal must be dismissed in so far as it relates to conviction. In stating those reasons, I adopt without repetition the statement of facts and the explanation of the reasoning of the primary judge set out in the joint reasons for judgment. The sole ground of the appeal to this Court in so far as it relates to conviction is that the Court of Criminal Appeal erred in failing to apply s 6(1) of the Criminal Appeal Act 1912 (NSW) in its determination of an appeal against a conviction that was entered following a trial by judge alone, which was governed by s 133 of the Criminal Procedure Act 1986 (NSW). Section 133 of the Criminal Procedure Act provides: "(1) A Judge who tries criminal proceedings without a jury may make any finding that could have been made by a jury on the question of the guilt of the accused person. Any such finding has, for all purposes, the same effect as a verdict of a jury. (2) A judgment by a Judge in any such case must include the principles of law applied by the Judge and the findings of fact on which the Judge relied. If any Act or law requires a warning to be given to a jury in any such case, the Judge is to take the warning into account in dealing with the matter." Section 6(1) of the Criminal Appeal Act is a common form criminal appeal provision. I explained my understanding of each of the three limbs of a common form criminal appeal provision, and of its proviso, in Baini v The Queen37. My statement that "it has always been understood that it is for the respondent and not the appellant to establish to the satisfaction of the court of criminal appeal that the case is within the proviso"38 has since been overtaken by the holding in Lindsay v The Queen39. Otherwise, I see no reason to revise what I 37 (2012) 246 CLR 469 at 485-491 [46]-[56]; [2012] HCA 59. 38 (2012) 246 CLR 469 at 487 [49]. 39 (2015) 89 ALJR 518 at 529 [46]-[48], 532 [63]-[67]; 319 ALR 207 at 219-220, 223-224; [2015] HCA 16. said in Baini. It might be necessary to revisit the requirements of the proviso as stated in Weiss v The Queen40 in light of subsequent developments41, but this is not the occasion to do it. The Court of Criminal Appeal did not reach the proviso here. What is necessary is to relate each of the three limbs, which I explained in Baini in the context of an appeal against conviction following a jury trial, to an appeal against a conviction that has been entered following a trial by judge alone governed by s 133 of the Criminal Procedure Act. Section 133 of the Criminal Procedure Act draws a distinction between the ultimate finding which the trial judge makes on the question of guilt and intermediate findings of fact which the trial judge makes in the process of reasoning from the evidence to that ultimate finding. Section 133(2) relevantly requires the trial judge to include in his or her reasons for judgment all intermediate findings of fact on which he or she actually relied, together with the principles of law which he or she applied, in arriving at an ultimate finding of guilt. Section 133(1) relevantly requires the trial judge's ultimate finding of guilt to be treated as if it were a guilty verdict of a jury for the purpose of s 6(1) of the Criminal Appeal Act. The requirement of s 133(1) that the Court of Criminal Appeal treat the trial judge's ultimate finding of guilt as if it were a guilty verdict of a jury means that, subject to the proviso, the Court of Criminal Appeal must allow an appeal against conviction if it is of the opinion that the trial judge's ultimate finding of guilt should be set aside on a ground falling within any of the three limbs of s 6(1). If the trial judge has complied with s 133(2), the Court of Criminal Appeal considering those grounds will have the benefit of reasons for judgment of the trial judge which will explain the trial judge's intermediate findings of fact in a way which links those intermediate findings to the evidence and to the principles of law which the trial judge applied42. If the trial judge has not complied with s 133(2), that non-compliance will itself amount to a wrong decision on a question of law within the second limb in the same way as non- compliance by the judge with s 133(3) would amount to a wrong decision on a question of law43. 40 (2005) 224 CLR 300; [2005] HCA 81. 41 Cf Reeves v The Queen (2013) 88 ALJR 215 at 226 [64]-[66]; 304 ALR 251 at 264-265; [2013] HCA 57; Lindsay v The Queen (2015) 89 ALJR 518 at 535-536 [85]-[86]; 319 ALR 207 at 229. 42 Fleming v The Queen (1998) 197 CLR 250 at 262-263 [28]; [1998] HCA 68. 43 Fleming v The Queen (1998) 197 CLR 250 at 263-264 [31]-[33]. Under the first limb, which refers to the ground that a verdict "is unreasonable, or cannot be supported, having regard to the evidence", a trial judge's ultimate finding of guilt must be set aside on the same principle as a jury's verdict of guilt must be set aside. That is to occur if the Court of Criminal Appeal concludes on the whole of the evidence that it was not open to the relevant tribunal of fact, whether it be a jury or a trial judge, to be satisfied beyond reasonable doubt that the accused was guilty. The Court of Criminal Appeal will conclude that it was not open to the tribunal of fact to be satisfied beyond reasonable doubt that the accused was guilty if its own review of the evidence leads it to have a reasonable doubt that the accused was guilty, unless that tribunal's advantage in seeing and hearing the evidence is capable of resolving that doubt44. Irrespective of whether it is applied in an appeal against conviction following a jury trial or in an appeal against conviction following a trial by judge alone, the question under the first limb is always whether the ultimate finding of guilt was one which was open to the tribunal of fact on the whole of the evidence. In some cases of an appeal against a conviction following a trial by judge alone, consideration of the first limb will require the Court of Criminal Appeal to review for itself the totality of the evidence so as to form its own assessment of whether or not it was open to the trial judge to be satisfied beyond reasonable doubt that the accused was guilty without any regard to the reasons for judgment of the trial judge given in compliance with s 133(2). In a case where the argument in the appeal against conviction is that there are particular reasons why it was not open to the trial judge to be satisfied beyond reasonable doubt that the accused was guilty, it may be open to the Court of Criminal Appeal to discharge its appellate function under the first limb by reviewing the evidence and forming its own independent assessment of that evidence to the extent necessary to engage with that argument while adopting, without need for independent assessment, other intermediate findings of fact of the trial judge about which no complaint is made in the appeal. But having adopted the intermediate findings of fact of the trial judge about which no complaint is made, and having arrived at its own conclusion on the evidence to the extent necessary to engage with the particular argument, the question for the Court of Criminal Appeal in such a case will remain whether or not the Court of Criminal Appeal has a reasonable doubt about the ultimate finding of guilt which cannot be resolved by taking into account the trial judge's advantage in seeing and hearing the evidence. 44 M v The Queen (1994) 181 CLR 487 at 493-494; [1994] HCA 63; SKA v The Queen (2011) 243 CLR 400 at 405-406 [11]-[14]; [2011] HCA 13; Fitzgerald v The Queen (2014) 88 ALJR 779 at 781 [5]; 311 ALR 158 at 160; [2014] HCA 28. Under the second limb, which refers to the ground "that the judgment of the court of trial should be set aside on the ground of the wrong decision of any question of law", the trial judge's finding of guilt must be set aside (subject to the proviso) if (amongst other possibilities) the Court of Criminal Appeal concludes that the reasons for judgment of the trial judge disclose any error of law which was material to the way in which the trial judge arrived at the ultimate finding of guilt. Under the third limb, which is engaged where "on any other ground whatsoever there was a miscarriage of justice", the trial judge's finding of guilt must be set aside (subject again to the proviso) if the Court of Criminal Appeal concludes, for some reason not already covered by the first or the second limb, that there was a miscarriage of justice. There is no reason in principle why an error of fact in arriving at an intermediate finding of fact, which is disclosed by the reasons for judgment of the trial judge, should not be characterised as a miscarriage of justice if that error might reasonably have affected the ultimate finding of guilt. The observations in Simic v The Queen45, directed to review under the third limb of a "misstatement of an important matter of fact"46 which a trial judge made in a direction to a jury, can in my view be applied to review of an error of fact made by the trial judge in a trial by judge alone. Having made the point that the onus rests on an appellant to show that a misstatement of fact amounted to a miscarriage of justice, the unanimous judgment in Simic continued47: "Of course minor inaccuracies and omissions will not be likely to make it possible that the verdict was affected. Bare and remote possibilities may be disregarded, but if it is considered reasonably possible that the misstatement may have affected the verdict and if the jury might reasonably have acquitted the appellant if the misstatement had not been made, there will have been a miscarriage of justice, and a substantial one. In considering a question of this kind, the appellate court must have regard to the gravity of the misstatement as well as to the strength of the case against the appellant." Where, in an appeal against conviction following a trial by judge alone, it is argued that the reasons for judgment of the trial judge disclose an error of fact in the way in which the trial judge reasoned from the evidence to make an intermediate finding of fact on which the trial judge relied in arriving at the 45 (1980) 144 CLR 319; [1980] HCA 25. 46 (1980) 144 CLR 319 at 326. 47 (1980) 144 CLR 319 at 332. ultimate finding of guilt, I cannot see how the appellant can discharge the onus of establishing a miscarriage of justice under the third limb unless the appellant can persuade the Court of Criminal Appeal of two things. The first is that the trial judge did make that error of fact in arriving at an intermediate finding of fact. The second is that, having regard to the gravity of the error of fact and the strength of the case against the appellant, it was reasonably possible that the trial judge might not have arrived at the ultimate finding of guilt if the trial judge had not made that error. Applied to a mere error of fact on the part of the trial judge, as distinct from some error going to the trial process, it is therefore difficult to see how reliance by an appellant on the third limb can add anything to reliance on the first limb. Unless the Court of Criminal Appeal on its own review of the evidence can be persuaded that the error of fact gave rise to a reasonable doubt about the ultimate finding of guilt, which doubt cannot be resolved by the trial judge's advantage in seeing and hearing the evidence, neither limb will avail the appellant. This is, in my view, consistent with the explanation given by Hunt CJ at CL in Kurtic48 of the role of the Court of Criminal Appeal when considering the application of the first limb in an appeal against conviction following a trial by judge alone. The explanation was quoted without disapproval in Fleming v The Queen49. In Kurtic, Hunt CJ at CL said50: "In such a case, it is the duty of [the Court of Criminal Appeal] – whether the appeal is from a jury trial or a judge alone trial – to make its own independent assessment of both the sufficiency and the quality of the evidence, in order to see whether the jury (or judge trying the case alone) ought to have a reasonable doubt or whether [the] Court itself experiences such a doubt or is persuaded that there is a significant possibility that an innocent person has been convicted. ... As the finding of a judge in such a trial is to be given the same effect as a verdict of a jury for all purposes, error may be demonstrated if there is no evidence to support a particular finding, or if the evidence is all one way, or if the judge has misdirected himself or herself leading to a miscarriage of justice." If there were no evidence to support a particular finding, or if the evidence were all one way, the case would be one of a wrong decision on a question of law so as 48 (1996) 85 A Crim R 57. 49 (1998) 197 CLR 250 at 256-257 [14], see also at 262 [26]. 50 (1996) 85 A Crim R 57 at 60 (emphasis in original). to also fall within the second limb51. If the trial judge were shown merely to have got some intermediate fact wrong, the first limb would be engaged only if it were also shown that the wrong finding of fact deprived the appellant of a reasonable possibility of acquittal. For the reasons I have given, the third limb could then in my view equally be seen to be engaged. The grounds of appeal to the Court of Criminal Appeal in the present case were elaborately drawn. They were in the following terms: "1. Her Honour's verdict is unreasonable and cannot be supported having regard to the evidence, in particular, but not exclusively, upon the following bases: that, in finding that there was no reasonable possibility that the [appellant] had lost self-control, within the meaning of section 23 of the Crimes Act 1900, at the time that he fired the shots causing death, Her Honour misdirected herself as to the inferences to be drawn from statements made by the [appellant] while in custody; drew erroneous inferences from those statements; and (iii) to consider alternative failed available on the evidence. inferences fairly that, in finding as to the circumstances of the shooting and the explanation for the gap in time between the second and third shots, Her Honour failed to direct herself as to the need to consider other inferences; and failed to consider other evidence [sic] fairly available on the evidence. that, in dealing with the 'ordinary person' test within the meaning of section 23 of the Crimes Act 1900, Her Honour misdirected herself proportionality; the question of 51 M v The Queen (1994) 181 CLR 487 at 492. determined the reasonable person issue on the basis of that misdirection; and (iii) applied the wrong burden of proof. Her Honour made the following errors of law: (a) misdirected herself as to the inferences available to be drawn from statements made by the [appellant] while in custody; failed to direct herself, with respect to such statements, of the need to be satisfied that the inference proposed to be drawn is the only rational available inference; failed, in that regard, to consider available alternate inferences; (d) with respect to the movements of the [appellant] at the time of the shooting and the sequence of shots, failed to direct herself as to the need to be satisfied that the inference proposed to be drawn is the only rational available inference; (e) misdirected herself as to the role of 'proportionality' in the issue of provocation; in considering the issue of the 'reasonable person' within the meaning of section 23 of the Crimes Act 1900, Her Honour applied the wrong onus of proof. In all the circumstances the conviction of the [appellant] for murder amounts to a miscarriage of justice." The three enumerated grounds were plainly cast to invoke each of the three limbs of s 6(1) of the Criminal Appeal Act. Although the words "but not exclusively" in the introduction to the first enumerated ground might be seen to have introduced an element of equivocation, the factual basis for the ground was that the primary judge reached her ultimate finding of guilt through a process of reasoning which involved three particularised errors in the making of intermediate findings of fact. Cast as it was to invoke the first limb of s 6(1), the gravamen of the ground could only have been that, correcting for those errors, it was not open to the primary judge to be satisfied beyond reasonable doubt that the appellant was guilty of murder. Although somewhat obscured by the detail of its drafting, the burden of the second ground appears to have been to recast the same three particularised errors as wrong decisions by the primary judge on questions of law. The third ground then recast those same errors as having given rise to a miscarriage of justice. The third ground appears not to have been independently pressed in the course of the hearing before the Court of Criminal Appeal. For reasons I have already explained, I am unable to see how the third ground could materially add to the first. The first two of the particularised errors both related to the primary judge's conclusion in relation to s 23(2)(a) of the Crimes Act 1900 (NSW), which she expressed in terms that there was "no reasonable possibility" that a loss of self-control caused the appellant to fire the fatal shots52. The primary judge explained that it followed from that conclusion that the defence of provocation could not succeed and that the appellant was to be convicted of murder. The primary judge explained that she went on to deal with s 23(2)(b) only for the sake of completeness53. What the primary judge went on to say about s 23(2)(b) obviously played no part in the finding of guilt which she had already reached. Her further conclusion that the requirements of s 23(2)(b) were not satisfied was stated on the express assumption that, contrary to her earlier finding, the appellant had in fact lost self-control54. The contingent nature of that conclusion meant that any error of fact or of law which the primary judge might have made in arriving at it was at most conditionally relevant to her ultimate finding that the appellant was guilty of murder. The structure of the primary judge's reasons for judgment had the following implication for the third of the particularised errors on which the appellant sought to rely in the Court of Criminal Appeal, which related only to the way in which the primary judge interpreted and applied s 23(2)(b). Unless the appellant was able to persuade the Court of Criminal Appeal that the conviction for murder would have otherwise been required to be set aside by reference to either or both of the first two particularised errors, which related to the way in which the primary judge interpreted and applied s 23(2)(a), there was no reason for the Court of Criminal Appeal to consider the third particularised error at all. The consequence for the appeal to this Court is that, whatever criticism might be levelled at the way in which the Court of Criminal Appeal dealt with the third particularised error, that criticism is beside the point if there was nothing wrong with the way the Court of Criminal Appeal dismissed the 52 R v Filippou [2011] NSWSC 1379 at [104]. 53 R v Filippou [2011] NSWSC 1379 at [105]. 54 R v Filippou [2011] NSWSC 1379 at [105], [113]. grounds of appeal in so far as those grounds related to the first two particularised errors. In my opinion, there was no error of methodology in the way in which the Court of Criminal Appeal determined the appeal in relation to the first two particularised errors. Looking carefully to the reasons for judgment of the primary judge and evaluating the evidence for itself in so far as it related to the intermediate findings of fact criticised by the appellant, the Court of Criminal Appeal accepted the appellant's factual contention that both errors had occurred. It first found that the primary judge erred as to the inference to be drawn from the gap in time between the second and third shots55. It then went on to find that the primary judge erred as to the inference to be drawn from the statements made by the appellant while in custody56. Although not abundantly clear, I think that it is to be inferred from the reasoning of the Court of Criminal Appeal that it identified those two errors as being concerned with whether the inferences drawn by the primary judge should have been drawn on the totality of the relevant evidence, as distinct from being concerned with whether those inferences were capable of being drawn on that evidence. That is to say, the Court of Criminal Appeal appears to have seen both errors as errors of fact and not as errors of law. That was enough to dispose of the second ground of appeal, which relied on characterising the errors as wrong decisions by the primary judge on questions of law. What is quite explicit in the reasoning of the Court of Criminal Appeal is that, notwithstanding the errors it identified in the primary judge's intermediate fact-finding, the Court was satisfied on its own review of the evidence in so far as it was controversial in the appeal that the evidence supported the primary judge's ultimate finding of guilt. The conclusion, as expressed by McClellan CJ at CL, with whom Fullerton and S Campbell JJ agreed, was that "having considered the evidence" he was "satisfied that the Crown discharged the onus that it carried to the criminal standard"57. That conclusion was, in my view, expressed in terms which reflected the correct legal approach to the first limb of s 6(1). It was sufficient to dispose of the first ground of appeal, which relied on characterising the errors as having contributed to a finding of fact which was not open on the whole of the evidence. It was also sufficient to dispose of the third ground of appeal if and to the extent that ground might have remained in play. 55 Filippou v The Queen [2013] NSWCCA 92 at [51]-[52], [75]-[84]. 56 Filippou v The Queen [2013] NSWCCA 92 at [85]-[87], [102]-[104]. 57 Filippou v The Queen [2013] NSWCCA 92 at [105].

HIGH COURT OF AUSTRALIA PGA AND THE QUEEN APPELLANT RESPONDENT PGA v The Queen [2012] HCA 21 30 May 2012 ORDER Appeal dismissed. On appeal from the Supreme Court of South Australia Representation D M J Bennett QC with P F Muscat SC and A L Tokley for the appellant (instructed by Legal Services Commission (SA)) M G Hinton QC, Solicitor-General for the State of South Australia with K G Lesses for the respondent and intervening on behalf of the Attorney-General for the State of South Australia (instructed by Director of Public Prosecutions S J Gageler SC, Solicitor-General of the Commonwealth with G A Hill intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) J D McKenna SC with G J D del Villar intervening on behalf of the Attorney- General of the State of Queensland (instructed by Crown Law (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS PGA v The Queen Criminal law – Rape – Husband's immunity from prosecution for rape of wife – Presumption of consent to intercourse by wife in marriage – Appellant charged in 2010 with two counts of rape contrary to s 48 of Criminal Law Consolidation Act 1935 (SA) – Alleged rapes committed in 1963 against then spouse – Legislative amendments enabled institution of proceedings despite lapse of time – Elements of offence of rape in 1963 supplied by common law – Whether in 1963 common law of Australia presumed consent by wife in marriage. Precedent – Judicial method – Development of common law – Whether presumption of consent by wife in marriage was part of common law of Australia – Whether statement of common law in R v L (1991) 174 CLR 379 applied to events alleged to have occurred in 1963. Words and phrases – "common law", "marital exemption", "marital immunity", "presumption of consent", "rape", "retrospective application". Criminal Law Consolidation Act 1935 (SA), s 48. Matrimonial Causes Act 1857 (UK) (20 & 21 Vict c 85). FRENCH CJ, GUMMOW, HAYNE, CRENNAN AND KIEFEL JJ. The appellant and his wife, the complainant, were lawfully married in South Australia on 1 September 1962. At the relevant times in 1963 they remained lawfully married and were cohabiting in South Australia as husband and wife at the house of her parents; there were in force no legal orders or undertakings of any kind which affected their matrimonial relationship. The charges On 5 July 2010, by information of the Director of Public Prosecutions of South Australia, the appellant was charged for trial in the District Court of South Australia with two counts of carnal knowledge, with four counts of assault occasioning actual bodily harm and, what is immediately relevant for this appeal, with two counts of rape (counts 3 and 5) contrary to s 48 of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act"). The particulars of count 3 were that between 22 March 1963 and 25 March 1963, at Largs Bay in South Australia, the appellant had vaginal sexual intercourse with his wife without her consent. The particulars of count 5 were that on or about 14 April 1963, also at Largs Bay, the appellant had vaginal sexual intercourse with his wife without her consent. The issue before the Court is whether the appellant is correct in his contention that, as a matter of the common law, upon their marriage in 1962 his wife had given her consent to sexual intercourse and thereafter could not retract her consent, at least while they remained lawfully married, with the result that he could not be guilty of raping her as charged by counts 3 and 5. The proposition of law upon which the appellant relies has its source in a statement in extra-judicial writings of Sir Matthew Hale, Chief Justice of the Court of King's Bench (1671-1676), which were first published in 1736 as The History of the Pleas of the Crown. The statement by Hale is more fully set out later in these reasons1, but is encapsulated in the bald proposition that a husband cannot be guilty of a rape he commits upon his wife. It was repeated in East's work A Treatise of the Pleas of the Crown, published in 18032; by Chitty in his A Practical Treatise on the Criminal Law, published in 18163; and by Russell in A 2 Volume 1, Ch 10, §8. 3 Volume 3 at 811. Crennan Treatise on Crimes and Misdemeanors, the first edition of which was published in 18194. In each case the proposition was further repeated in later 19th century editions. What, however, was lacking in all these standard texts was any statement and analysis of reasoning which might have supported the statement by Hale and its continued acceptance. Given this state of affairs, it is perhaps not surprising that the Canadian Criminal Code of 1892 (s 266) and the Criminal Code of Queensland of 1899 (s 347), in defining the crime of rape, included the phrase "not his wife"5. The provisions in the Queensland Code, and those of Western Australia and Tasmania, were to be amended in 1989, 1985 and 1987 respectively6. The attempted abstraction and statement of doctrine in provisions of a code by means of propositions which do not represent generalised deductions from particular instances in the case law occasions difficulty when the common law later is shown to be to different effect7. Justice Holmes, in his essay "Codes, and the Arrangement of the Law"8, wrote: "New cases will arise which will elude the most carefully constructed formula. The common law, proceeding, as we have pointed out, by a series of successive approximations – by a continual reconciliation of cases – is prepared for this, and simply modifies the form of its rule. But what will the court do with a code? If the code is truly law, the court is confined to a verbal construction of the rule as expressed, and must decide the case wrong. If the court, on the other hand, is at liberty to decide ex 4 Volume 1, Bk 2, Ch 6, §1. 5 By 1984 over 40 of the United States retained statute laws conferring some form of marital exemption for rape: People v Liberta 474 NE 2d 567 at 572-573 (1984). However, in that case the New York provision was held invalid as denying the the United States equal protection required by Constitution. the 14th Amendment 6 See R v L (1991) 174 CLR 379 at 402; [1991] HCA 48. 7 See Murray v The Queen (2002) 211 CLR 193 at 206-207 [40]; [2002] HCA 26; Director of Public Prosecutions (NT) v WJI (2004) 219 CLR 43 at 53-54 [30]-[31]; [2004] HCA 47. (1870) 5 American Law Review 1, reprinted in Novick (ed), The Collected Works of Justice Holmes, (1995), vol 1, 212 at 213. Crennan ratione legis, – that is, if it may take into account that the code is only intended to declare the judicial rule, and has done so defectively, and may then go on and supply the defect, – the code is not law, but a mere text-book recommended by the government as containing all at present known on the subject." Indeed, in 1888, among the 13 judges sitting in the Court for Crown Cases Reserved, on the case stated in R v Clarence9 with respect to charges of "unlawfully and maliciously inflicting grievous bodily harm" and "assault occasioning actual bodily harm", contrary to s 20 and s 47 respectively of the Offences against the Person Act 1861 (UK)10 ("the 1861 UK Act"), differing views had been expressed as to whether the consent of the wife to intercourse with her husband had been vitiated by his failure to disclose to her that he was suffering from a contagious venereal disease. Thereafter, in the annotation to s 48 of the 1861 UK Act which appeared in Halsbury's Statutes of England, published in 192911, it was said: "It is said that a husband cannot be guilty of rape upon his wife as a principal in the first degree". (emphasis added) The 28th edition of Archbold's Pleading, Evidence & Practice in Criminal Cases, published in 1931, four years before the enactment of the CLC Act, cited Hale for the proposition expressed as: "It is a general proposition that a husband cannot be guilty of a rape upon his wife ... but it would seem that the proposition does not necessarily extend to every possible case"12. In the intervening period there appears to have been no reported case in England in which a husband had been prosecuted for the rape of his wife during their (1888) 22 QBD 23. 10 24 & 25 Vict c 100. 11 Volume 4 at 615. 13 See R v R [1992] 1 AC 599 at 614. Crennan As it stood in 1963, s 48 of the CLC Act stated: "Any person convicted of rape shall be guilty of felony, and liable to be imprisoned for life, and may be whipped." It is accepted that the elements of the offence of rape identified in s 48 were supplied by the common law. Section 4 of the CLC Act had wholly repealed The Criminal Law Consolidation Act 1876 (SA). As amended by s 13 and the Schedule to the Criminal Law Amendment Act 1925 (SA), s 60 of the 1876 statute had read: "Whosoever shall be convicted of the crime of rape shall be guilty of felony, and, being convicted thereof, shall be liable to be imprisoned for life, with hard labor, and may be whipped."14 The scheme of the legislation in South Australia, in its various forms, was to classify the offence of rape as a felony and to specify the range of punishments upon conviction. This followed the pattern in s 48 of the 1861 UK Act. The legislative emphasis upon the classification of the crime and the punishments which might be inflicted, leaving the elements of the crime itself to the common law, reflected past fluctuations in the statute law. Shortly after the enactment of the 1861 UK Act, there appeared in the 5th edition (1877) of Russell's work, A Treatise on Crimes and Misdemeanors15, the following: "This offence formerly was, for many years, justly visited with capital punishment; but it does not appear to have been regarded as equally heinous at all periods of our Constitution. Anciently, indeed, it appears to have been treated as a felony, and, consequently, punishable with death; but this was afterwards thought too hard; and, in its stead, another severe but not capital punishment was inflicted by William the Conqueror, namely, castration and loss of eyes, which continued till after Bracton wrote, in the reign of Henry III. The punishment for rape was still further mitigated, in the reign of Edward I, by the statute of Westm 1, c 13, which reduced the offence to a trespass, and subjected the party to 14 The Criminal Law Amendment Act 1925 (SA) omitted the words "or any term not less than four years". 15 Volume 1 at 858 (footnote omitted). Crennan two years' imprisonment, and a fine at the King's will. This lenity, however, is said to have been productive of terrible consequences; and it was, therefore, found necessary, in about ten years afterwards, and in the same reign, again to make the offence of forcible rape a felony, by the statute of Westm 2, c 34. The punishment was still further enhanced by the 18 Eliz c 7, s 1." The lapse of time Something should be said respecting the legal significance of the length of time between the alleged conduct in 1963 and the institution of proceedings in 2010. As the CLC Act stood in 1963, it included s 76a16. The effect of s 76a was that in respect of offences, including an offence against s 48, no information was to be laid more than three years after the commission of the offence. Section 76a was repealed by the Criminal Law Consolidation Act Amendment Act 1985 (SA). However, in R v Pinder17 it was held that the repeal of s 76a did not authorise the laying of an information which would deprive a person of immunity already acquired before the repeal of s 76a. The response of the legislature was to reverse the effect of this decision by the enactment of s 72A of the CLC Act by the Criminal Law Consolidation (Abolition of Time Limit for Prosecution of Certain Sexual Offences) Amendment Act 2003 (SA). The result was that a person, such as the appellant, who had acquired immunity by reason of the operation of the repealed s 76a had lost that immunity and could now be prosecuted. Changes have been made to the elements of the offence of rape, beginning with the Criminal Law Consolidation Act Amendment Act 1976 (SA), but it has not been submitted that these changes to the elements of the offence apply retrospectively. The permanent stay application On 6 July 2010 Herriman DCJ gave reasons for dismissing an application by the appellant for a permanent stay of proceedings. His Honour's reasons included the following passage: 16 This had been added by the Criminal Law Consolidation Act Amendment Act 1952 17 (1989) 155 LSJS 65. Crennan "The complainant's evidence is that in 1960 and 1961, when she was 15 or 16, the accused was in a relationship with her and she says that at that time they were living in her parents' house, albeit that he slept in a separate room. They were ultimately married in September 1962, when she was 17, but she says that before that age she had sexual intercourse with him on two occasions. Those two occasions represent counts 1 and 2 on the information. The parties then lived as husband and wife in her parents' house until mid-1963, when they went to their own premises. They separated in The complainant says that on two occasions, in March and April 1963, which she relates to times immediately before and soon after the birth of their first child, the accused had forcible sexual intercourse with her against her will. She says that she did not, at any time during the marriage, complain of carnal knowledge or, indeed, of that forced sexual intercourse. The time for laying of any such charges was then within three years of the act, so that the time for laying a complaint with respect to the carnal knowledge counts expired in about 1964 and, with respect to rape, in about 1966. Those time limits were not abolished until the year 2003. More importantly, there was, and, indeed, there remains, a real question as to whether in 1963 an offence of rape in marriage, as it is commonly called, was then part of the common law of this State." His Honour went on to stay the trial pending the statement for the Full Court of the Supreme Court of South Australia of a case under s 350(2)(b) of the CLC Act. This dealt with the argument of the appellant that at the time of the alleged offences in 1963, he could not, as a matter of law, have committed the crime of rape upon his wife. What was said in 1991 by four of the five members of this Court in R v L18 has been treated by the parties in the present litigation at least as having the result that by 1991 it was no longer the common law in Australia that by 18 (1991) 174 CLR 379 at 390 per Mason CJ, Deane and Toohey JJ, 405 per Crennan marriage a wife gave irrevocable consent to sexual intercourse with her husband. Herriman DCJ saw the outstanding issue for determination as being "was the offence of rape by one lawful spouse of another ... an offence known to the law of South Australia as at 1963?". A question to this effect was stated for consideration by the Full Court19. The Court (Doyle CJ and White J; Gray J dissenting) ordered that the question be answered as follows: "The defendant is liable at law to be found guilty of the offences of rape charged in count 3 and count 5 of the Information, notwithstanding that at the time of the alleged offence he was married to the alleged victim and was cohabiting with her, the marriage giving rise to no presumption of consent on her part to intercourse with her husband, and giving rise to no irrebuttable presumption to that effect." Gray J was of the contrary opinion and would have answered the question in the negative and applied the presumption of irrevocable consent. The appeal to this Court By special leave the appellant appeals to this Court seeking an order setting aside the answer given by Doyle CJ and White J. By Notice of Contention the respondent submits that, regardless of what follows from the decision in R v L20, the answer by Doyle CJ and White J, the majority in the Full Court, is to be supported on the basis that: (a) "the supposed marital exemption to the offence of rape ... was never part of the common law of Australia"; or (b) "if it ever was part of the common law of Australia, it ceased to be so as at the date of the commission of the offences in this matter". For the reasons which follow, if the "marital exemption" ever was part of the common law of Australia, it had ceased to be so by the time of the enactment in 1935 of s 48 of the CLC Act and thus before the date of the commission of the alleged offences charged as count 3 and count 5. It follows that the appeal must be dismissed. That conclusion does not involve any retrospective variation or modification by this Court of a settled rule of the common law. At the time of 19 (2010) 109 SASR 1. The Full Court sat as the Court of Criminal Appeal: see Lipohar v The Queen (1999) 200 CLR 485 at 504 [41]; [1999] HCA 65. 20 (1991) 174 CLR 379. Crennan the commission of the alleged offence the common law rule for which the appellant contends did not exist. The term "the common law" The references above to "the common law" and "the common law of Australia" require further analysis before consideration of the immediate issue concerning the crime of rape upon which this appeal turns. In his contribution under the heading "common law" in The New Oxford Companion to Law21, Professor A W B Simpson distinguishes five senses in which that term is used. The primary sense is that body of non-statutory law which was common throughout the realm and so applicable to all, rather than local or personal in its application. An example of such local or personal laws is the customary mining laws which had applied in various localities in England22. The second sense of the term is institutional, to identify the body of law administered in England by the three royal courts of justice, the King's Bench, Common Pleas and Exchequer, until the third quarter of the 19th century. The third sense is a corollary of the second, the expression "the common law" differentiating the law administered by those courts from the principles of equity administered in the Court of Chancery (and, one should add, from the law applied in the ecclesiastical courts until 1857 and the law applied in courts of admiralty). In that regard, Sir George Jessel MR emphasised in In re Hallett's Estate23 that, while the rules of the common law were "supposed to have been established from time immemorial", those of equity had been invented, altered, improved, and refined by the Chancellors from time to time, and he instanced "the separate use of [ie trust for] a married woman". With the development since the second half of the 19th century of appellate structures governing all species of primary decisions, judicial reasoning has tended not to invoke time immemorial and rather to follow the course which had been taken by the Chancellors in expounding legal principle. 21 Cane and Conaghan (eds), The New Oxford Companion to Law, (2008) at 164-166. 22 See TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 at 587 [30]-[31]; [2010] HCA 49. 23 (1879) 13 Ch D 696 at 710. Crennan The fourth and fifth senses of "common law" identified by Professor Simpson are as follows: "The term 'common law' came, in a fourth sense, to have the connotation of law based on cases, or law evolved through adjudication in particular cases, as opposed to law derived from the analysis and exposition of authoritative texts. Indeed sometimes 'common law' is more or less synonymous with the expression 'case law'. Since the common law was developed by the judges, interacting with barristers engaged in litigation, the expression 'common law' came, in a related fifth sense, to mean law made by judges." This draws attention to a difficulty in the appellant's reliance in this case upon a principle of the common law based upon a statement in a text published in 1736, many years after the death of the author, without citation of prior authority and lacking subsequent exposition in cases where it has been repeated. In that regard, observations by six members of the Court in the Native Title Act Case24 are significant. Their Honours noted that the term "common law" might be understood not only as a body of law created and defined by the courts in the past, but also as a body of law the content of which, having been declared by the courts at a particular time, might be developed thereafter and be declared to be different. Writing at the time of the establishment of this Court, and when he was Professor of Law at the University of Adelaide, Sir John Salmond said25: "The statement that a precedent gains in authority with age must be read subject to an important qualification. Up to a certain point a human being grows in strength as he grows in age; but this is true only within narrow limits. So with the authority of judicial decisions. A moderate 24 Western Australia v The Commonwealth (1995) 183 CLR 373 at 484-486; [1995] HCA 47. 25 Salmond, "The Theory of Judicial Precedents", (1900) 16 Law Quarterly Review 376 at 383. See also Holmes, "Codes, and the Arrangement of the Law", (1870) 5 American Law Review 1, reprinted in Novick (ed), The Collected Works of Justice Holmes, (1995), vol 1, 212 at 212-213. Crennan lapse of time will give added vigour to a precedent, but after a still longer time the opposite effect may be produced, not indeed directly, but indirectly through the accidental conflict of the ancient and perhaps partially forgotten principle with later decisions. Without having been expressly overruled or intentionally departed from, it may become in course of time no longer really consistent with the course of judicial decision. In this way the tooth of time will eat away an ancient precedent, and gradually deprive it of all authority and validity. The law becomes animated by a different spirit and assumes a different course, and the older decisions become obsolete and inoperative." The term "the common law of Australia" Finally, in his treatment of "common law", Professor Simpson refers to the expansion of British imperial power and the creation of "a common law world". The common law was received in the Province of South Australia with effect 19 February 1836, but despite the differing dates of the reception of the common law in the Australian colonies, the common law was not disintegrated into six separate bodies of law; further, what was received included the method of the common law, which in Australia involved judicial determination of particular parts of the English common law which were inapplicable to local conditions26. The "common law" which was received did not include the jurisdiction with respect to matrimonial causes (including suits for declarations of nullity of marriage, judicial separation (a mensa et thoro) and restitution of conjugal rights) which in England was exercised by the ecclesiastical courts. This exclusion appears to have been a deliberate decision by the Imperial authorities27. Further, unlike the situation in England, in the Australian colonies there was to be no 26 Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 at 466-467; [1995] HCA 44; Lipohar v The Queen (1999) 200 CLR 485 at 508-509 [54]-[55]; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 557-558 [99]-[101], 559-560 [104], 588-589 [193]-[196]; [2001] HCA 29; R v Gardener and Yeurs (1829) NSW Sel Cas (Dowling) 108; Ex parte The Rev George King (1861) 2 Legge 1307; Campbell v Kerr (1886) 12 VLR 384. 27 Castles, An Australian Legal History, (1982) at 140-142; Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 242. Crennan established religion28. The Anglican church was expressly enjoined from exercising any authority or jurisdiction in matrimonial causes29. The result was that the jurisdiction with respect to matrimonial causes, as well as divorce, which has been exercised by the colonial and State courts always has been derived from local statute law, not received "common law". Further, in Skelton v Collins30, Windeyer J said of the reception in the Australian colonies of the doctrines and principles of the common law: "To suppose that this was a body of rules waiting always to be declared and applied may be for some people satisfying as an abstract theory. But it is simply not true in fact. It overlooks the creative element in the work of courts. It would mean for example, that the principle of Donoghue v Stevenson31, decided in the House of Lords in 1932 by a majority of three to two, became law in Sydney Cove on 26th January 1788 or was in 1828 made part of the law of New South Wales by 9 Geo IV c 83, s 25. In a system based, as ours is, on case law and precedent there is both an inductive and a deductive element in judicial reasoning, especially in a court of final appeal for a particular realm or territory." Inductive and deductive reasoning This creative element of both inductive and deductive reasoning in the work of the courts in Australia includes the taking of such steps as those identified by Sir Owen Dixon in his address "Concerning Judicial Method"32. In his words, these are: (i) extending "the application of accepted principles to new 28 Wylde v Attorney-General (NSW) (at the Relation of Ashelford) (1948) 78 CLR 224 at 257, 275-276, 285-286, 298; [1948] HCA 39; Scandrett v Dowling (1992) 27 NSWLR 483 at 534-541; Shaw, The Story of Australia, (1955) at 98-100. 29 Wylde v Attorney-General (NSW) (at the Relation of Ashelford) (1948) 78 CLR 224 at 284-285; Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 242. 30 (1966) 115 CLR 94 at 134; [1966] HCA 14. 32 (1956) 29 Australian Law Journal 468 at 472. Crennan cases"; (ii) reasoning "from the more fundamental of settled legal principles to new conclusions"; and (iii) deciding "that a category is not closed against unforseen instances which in reason might be subsumed thereunder". To these steps may be added one which is determinative of the present appeal. It is that where the reason or "foundation"33 of a rule of the common law depends upon another rule which, by reason of statutory intervention or a shift in the case law, is no longer maintained, the first rule has become no more than a legal fiction and is not to be maintained. An example is provided by a division of opinion in Brown v Holloway34 and Edwards v Porter35 respectively between this Court and the House of Lords, as to the consequences of the Married Women's Property Act 1882 (UK) ("the 1882 UK Act") and its Queensland counterpart36. Of those cases, it was said in Thompson v Australian Capital Television Pty Ltd37: "The issue [in Edwards v Porter] concerned the effect of the provision in [the 1882 UK Act] that married women were to be capable of suing or being sued as if each were a feme sole, the immediate issue being whether a husband remained liable at common law with his wife for a tort committed by her during joint coverture. In this Court it had previously been decided by Griffith CJ, O'Connor and Isaacs JJ that the liability of the husband was gone38. At common law the wife had been liable for her own torts but there was no way in which that liability could be enforced save by an action against her in which her spouse was joined as a party. The joinder of the husband was necessary only because the liability of the wife could not be made effective without his joinder as a party. The 33 See the statement by Lord Penzance in Holmes v Simmons (1868) LR 1 P & D 523 34 (1909) 10 CLR 89; [1909] HCA 79. 36 Married Women's Property Act 1890 (Q). 37 (1996) 186 CLR 574 at 614-615; [1996] HCA 38. See also at 584-585, 591. 38 Brown v Holloway (1909) 10 CLR 89. Crennan legislation39 removed that procedural disability and therefore the reason which had rendered the husband a necessary party. In Edwards v Porter, without consideration of the reasoning of this Court in Brown v Holloway, their Lordships divided 3:2 in favour of a decision that, notwithstanding the legislation, the husband remained liable to suit with his wife for her torts40. One of the minority, Viscount Cave 'The whole reason and justification for joining a husband in an action against his wife for her post-nuptial tort has therefore disappeared; and it would seem to follow, upon the principle "cessante ratione cessat lex," that he is no longer a necessary or proper party to such an action.'" It is with this reasoning in mind that there is to be understood the earlier statement by Dawson J in R v L42 that: "whatever may have been the position in the past, the institution of marriage in its present form provides no foundation for a presumption which has the effect of denying that consent to intercourse in marriage can, expressly or impliedly, be withdrawn. There being no longer any foundation for the presumption, it becomes nothing more than a fiction which forms no part of the common law." 39 In Brown v Holloway, the Married Women's Property Act 1890 (Q). [See also Married Women's Property Act 1883 (Tas), Married Women's Property Act 1883-4 (SA), Married Women's Property Act 1884 (Vic), Married Women's Property Act 1892 (WA), Married Women's Property Act 1893 (NSW).] 40 Later, in Ford v Ford (1947) 73 CLR 524 at 528; [1947] HCA 7, Latham CJ expressed the opinion that, in accordance with the then prevailing doctrine in Piro v W Foster & Co Ltd (1943) 68 CLR 313; [1943] HCA 32, this Court would follow the House of Lords at the expense of its own earlier decision. In any event, legislation in all States and Territories ensured that married status has no effect on the rights and liabilities of a woman in tort: Balkin and Davis, Law of Torts, 2nd ed (1996) at 836. 41 Edwards v Porter [1925] AC 1 at 10. 42 (1991) 174 CLR 379 at 405. Crennan That statement points the way to the resolution of this appeal. The common law crime of rape The point should first be made that, the issue of irrevocable consent by a wife apart, the common law with respect to the crime of rape did not remain static. Sir Edward Coke in The First Part of the Institutes of the Laws of England early in the 17th century wrote43: "'Rape.' Raptus is, when a man hath carnall knowledge of a woman by force and against her will." In 1957 in their joint reasons in Papadimitropoulos v The Queen44, Dixon CJ, McTiernan, Webb, Kitto and Taylor JJ referred to Australian decisions given in 1915, 1919 and 1947 when stating: "The modern history of the crime of rape shows a tendency to extend the application of the constituent elements of the offence. The 'violenter et felonice rapuit' of the old Latin indictment is now satisfied although there be no use of force: R v Bourke45. The 'contra voluntatem suam' requires only a negative absence of consent; (as to the need of the man's being aware of the absence of consent, see R v Lambert 46). The 'violenter et felonice carnaliter cognovit' is established if there has been some degree of penetration although slight, and no more force has been used than is required to effect it: R v Bourke47; R v Burles48." 43 (1628), Section 190. 44 (1957) 98 CLR 249 at 255; [1957] HCA 74. 45 [1915] VLR 289. 46 [1919] VLR 205 at 213. 47 [1915] VLR 289. 48 [1947] VLR 392. Crennan Their Honours added49: "To return to the central point; rape is carnal knowledge of a woman without her consent: carnal knowledge is the physical fact of penetration; it is the consent to that which is in question; such a consent demands a perception as to what is about to take place, as to the identity of the man and the character of what he is doing. But once the consent is comprehending and actual the inducing causes cannot destroy its reality and leave the man guilty of rape." The reference in Papadimitropoulos to "[t]he modern history of the crime of rape" may be seen as foreshadowing two points with respect to the development of the common law made by Dixon CJ shortly thereafter. In Commissioner for Railways (NSW) v Scott50 Dixon CJ spoke of the gradual growth of the legal system by proceeding by reasoning from accepted notions about remedies and rights to the evolution of rules "to govern new or changed situations to which an ever developing social order gives rise"; he went on to observe that "[t]he resources of the law for superseding or avoiding the obsolescent have for the most part proved sufficient". It is upon that sufficiency that the respondent relies in this appeal. The statement by Hale What now follows in these reasons emphasises that some care is required when visiting what Professor Glanville Williams described as "the museum of the English criminal law"51. The relevant passage in The History of the Pleas of the Crown appears in Ch 58, headed "Concerning felonies by act of parliament, and first concerning rape". The importance of statutory intervention in this respect may be seen from the passage from Russell's treatise set out earlier in these reasons52. 49 (1957) 98 CLR 249 at 261. 50 (1959) 102 CLR 392 at 399-400; [1959] HCA 29. 51 Williams, "The Legal Unity of Husband and Wife", (1947) 10 Modern Law Review Crennan Hale referred to the statement by Bracton that it was a good exception to an appeal (ie formal accusation) of rape that the parties were living in amicable concubinage, adding "and the reason was, because that unlawful cohabitation carried a presumption in law, that it was not against her will". Hale went on to say: "But this is no exception at this day[. I]t may be an evidence of an assent, but it is not necessary that it should be so, for the woman may forsake that unlawful course of life." (emphasis added) This is followed by the critical statement: "But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." (emphasis added) Several points may be made immediately. First, it is apparent from Hale's treatment of Bracton's view in the 13th century of concubinage that he did not regard what had been said in past times as necessarily expressing the common law "at this day" four centuries later. Secondly, Hale gave, as the reason for the proposition that a husband cannot be guilty of a rape upon his wife, the nature in law of the matrimonial relationship. But, in that regard, it was well settled that marriage was constituted by the present consent of the parties expressed under such circumstances as the law required, but without the requirement for consummation to complete the marriage53. Further, as explained later in these reasons54, the ecclesiastical courts did not enforce any duty of sexual intercourse between husband and wife. Thirdly, Hale did not explain the character in law of the proposition respecting rape in marriage, whether it stated an element of the offence, a defence, or an immunity. Nor did Hale refer to any prior cases which might be 53 Dalrymple v Dalrymple (1811) 2 Hag Con 54 at 62-63 [161 ER 665 at 668-669]; R v Millis (1844) 10 Cl & F 534 at 719 [8 ER 844 at 913]. Crennan said to illustrate and support the proposition. From the immediately preceding treatment by Hale of Bracton it is apparent that the proposition is more than a bar to the reception of evidence by the wife or a statement of her absolute testimonial incompetence in this respect. This is further apparent from what immediately follows in Hale's text. This is a treatment of what had been decided at the trial of Lord Audley before the House of Lords in 163155 as follows: "A the husband of B intends to prostitute her to a rape by C against her will, and C accordingly doth ravish her, A being present, and assisting to this rape: in this case these points were resolved, 1. That this was a rape in C notwithstanding the husband assisted in it, for tho in marriage she hath given up her body to her husband, she is not to be by him prostituted to another. 2. That the husband being present, aiding and assisting, is also guilty as a principal in rape, and therefore, altho the wife cannot have an appeal of rape against her husband, yet he is indictable for it at the king's suit as a principal. 3. That in this case the wife may be a witness against her husband, and accordingly she was admitted, and A and C were both executed." It should be added that in the 19th century, it was held in the Supreme Judicial Court of Massachusetts56 that there should be no arrest of judgment on the ground that the indictment had not alleged that the complainant was not the wife of any of those charged with raping her. The relevant passage from Hale had been cited, but Bigelow J responded57: "Such an averment has never been deemed essential in indictments for rape, either in this country or in England. The precedents contain no such allegation. See authorities before cited. A husband may be guilty at common law as principal in the second degree of a rape on his wife by assisting another man to commit a rape upon her; Lord Audley's case, 3 Howell's State Trials, 401; and under our statutes he would be liable to be punished in the same manner as the principal felon. Rev Sts c 133, §1. An indictment charging him as principal would therefore be valid. 55 The Trial of Lord Audley (1631) 3 St Tr 401. 56 Commonwealth v Fogerty 74 Mass 489 (1857). 57 74 Mass 489 at 491 (1857). Crennan Of course, it would always be competent for a party indicted to show, in defence of a charge of rape alleged to be actually committed by himself, that the woman on whom it was charged to have been committed was his wife. But it is not necessary to negative the fact in the indictment." Thus it will be seen that whatever its character in law, Hale's proposition was not framed in absolute terms, given his treatment of Lord Audley's Case. But what is important for the present appeal is further consideration of the reason given by Hale, which was based in an understanding of the law of matrimonial status in the second half of the 17th century when he wrote. Matrimonial status and its incidents in England In the period in which Hale wrote, and until the significant legislative changes in the course of the 19th century, each of the three jurisdictions in England represented by the courts of common law, the courts of equity and the ecclesiastical courts, had distinct roles in matters affecting matrimonial status58. The law applied in the common law courts had absorbed much canon law learning and it defined basic concepts such as legitimacy, procedural rights at law between spouses, and the duties and responsibilities of husbands, including their rights and duties in respect of the contracts and torts of their wives. Marriage had important consequences in property law, for establishing and securing inheritance of legal estates in land. In such contexts a court of common law would determine whether there had been a marriage. The common law also provided forms of action such as breach of promise to marry, criminal conversation by adulterers and seduction of daughters. As already observed59 by reference to the statement of Sir George Jessel MR in In re Hallett's Estate60, equity intervened in a notable fashion by means of the trust to reserve separate property for a wife after her marriage. In his lecture entitled "Of Husband and Wife", Chancellor Kent, after referring to the incompetency at common law of a married woman to deal with her property 58 See the discussion by Professor Cornish in The Oxford History of the Laws of England, (2010), vol 13 at 724-726. 60 (1879) 13 Ch D 696 at 710. Crennan as a feme sole61, went on to contrast the position in equity and described the procedural consequences as follows62: "The wife being enabled in equity to act upon property in the hands of her trustees, she is treated in that court as having interests and obligations distinct from those of her husband. She may institute a suit, by her next friend, against him, and she may obtain an order to defend separately suits against her; and when compelled to sue her husband in equity, the court may order him to make her a reasonable allowance in money to carry on the suit." The provision in the 1882 UK Act and in the corresponding colonial married women's property legislation63 that a married woman was capable of acquiring, holding and disposing of any real or personal property as her separate property, as if she were a feme sole, "without the intervention of any trustee", represented a triumph in statutory form of the principles of equity64. However, it was not until 1862, with the decision of Lord Westbury LC in Hunt v Hunt65, that the Court of Chancery enforced a negative covenant in a deed of separation not to sue in the ecclesiastical courts (or after 1857 in the Divorce Court) for restitution of conjugal rights. Ecclesiastical courts in England had limited powers to order separation of spouses but could not order the dissolution of marriage. This required a statute. Hale wrote in a period in which Parliamentary intervention was beginning. In 1669 a private Act was granted to Lord de Roos, and in 1692 to the Duke of Norfolk; only five such divorces were granted before 1714, but between 1800 and 1850 there were 9066. (Divorce by private Act of the legislature was to be 61 Kent, Commentaries on American Law, (1827), vol 2, 109 at 136. 62 Kent, Commentaries on American Law, (1827), vol 2, 109 at 137. 63 See fn 39. 64 Yerkey v Jones (1939) 63 CLR 649 at 675-676; [1939] HCA 3. 65 (1862) 4 De G F & J 221 [45 ER 1168]; see also Fielding v Fielding [1921] NZLR 66 Sir Francis Jeune, "Divorce", Encyclopaedia Britannica, 10th ed (1902), vol 27, Crennan attempted in 1853 in New South Wales, but the Instructions issued to colonial governors required that any Bill dealing with divorce be reserved for the Queen's pleasure67 and the Royal Assent was only given to the Bill after some delay68.) However, it should be noted that in Scotland since the 16th century, provision had been made for judicial grant of divorce on grounds of adultery of either spouse or malicious desertion for at least four years69. Given the significant settlement of Scots immigrants in the Australian colonies, this element of their inheritance should not be overlooked in understanding the development of Australian institutions70. In 1891, the English Court of Appeal held that habeas corpus would issue to free a wife confined by her husband in his house in order to enforce restitution of conjugal rights71. In R v L72 Brennan J said: "The ecclesiastical courts made decrees for the restitution of conjugal rights but the decree commanded a general resumption of cohabitation and did not purport to compel a spouse to do or abstain from doing particular acts in performance of a connubial obligation73. The legal significance of connubial obligations was to be found in the making of decrees based on breaches of those obligations. Breaches were established only by proof of conduct that was a gross infringement of a connubial right or by proof of a 67 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 68 Bennett, A History of the Supreme Court of New South Wales, (1974) at 144-145. 69 Walker, A Legal History of Scotland, (2001), vol 6 at 658, 661. 70 See generally, McPherson, "Scots Law in the Colonies", [1995] Juridical Review 191. 71 R v Jackson [1891] 1 QB 671. 72 (1991) 174 CLR 379 at 393. 73 Hunt v Hunt (1943) 62 WN (NSW) 129. Crennan continuous failure to perform a connubial obligation in satisfaction of the corresponding connubial right of the other spouse. The courts exercising jurisdiction in matrimonial causes recognized the mutual rights of husband and wife relating to sexual intercourse and, in granting or withholding their decrees, ascertained whether either party had wilfully and persistently refused to accord the right of sexual intercourse to the other party. From the days of the ecclesiastical courts, however, it was accepted that no mandatory order to compel sexual intercourse would be made." In 1933, when describing the nature and incidents of a decree for restitution of conjugal rights under the jurisdiction conferred by Pt III (ss 6-11) of the Matrimonial Causes Act 1899 (NSW), Dixon J observed in Bartlett v Bartlett74 that, so long as this remedy was retained, it must be treated as a process imposing an obligation, the performance or non-performance of which is ascertainable, and he added75: "On the one hand, it is clear that the obligation requires cohabitation, a physical dwelling together. On the other hand, it is clear that it does not require the resumption of sexual intercourse. It cannot, in fact, and in principle ought not to be understood as attempting to, control motives, feelings, emotions, sentiment or states of mind. Its operation must be limited to overt acts and conduct. ... Perhaps, all that can be said is that the decree of restitution requires the spouse against whom it is directed again to dwell with the other spouse in outward acceptance of the relationship, to act as if they were husband and wife maintaining a matrimonial home and to commence no course of conduct intended to cause a separation." Evatt J set out76 a passage from the reasons of Salmond J in Fielding v Fielding77 in which, with reference to the jurisdiction conferred by s 7 of the Divorce and Matrimonial Causes Act 1908 (NZ) for the issue of decrees for restitution of conjugal rights, Salmond J had said: 74 (1933) 50 CLR 3 at 15-16; [1933] HCA 53. 75 (1933) 50 CLR 3 at 16. 76 (1933) 50 CLR 3 at 18. 77 [1921] NZLR 1069 at 1071. Crennan "The Ecclesiastical Courts [in England] never professed or attempted by means of decrees for restitution of conjugal rights, and imprisonment for disobedience to such decrees, to enforce any duty of sexual intercourse between husband and wife. The basis of such a decree was the wrongful refusal of matrimonial cohabitation. The duty enforced was merely the duty of husband and wife to live together under the same roof in the normal relationship of husband and wife, but without reference to the question of intercourse." The divorce legislation The passage of the Matrimonial Causes Act 1857 (UK)78 ("the 1857 UK Act") later was described by Dicey as "a triumph of individualistic liberalism and of common justice"79. But it was the culmination of many years of agitation. Of the delay, Professor Cornish writes80: "It is less easy to explain why, given the long availability of judicial divorce in Scotland and its spread to other Protestant countries, the step did not come earlier. Jeremy Bentham, for instance, had been an advocate of fully consensual divorce, but subject to time delays for reflection and a bar on the re-marriage of a guilty party." (footnote omitted) The 1857 UK Act terminated the jurisdiction of the ecclesiastical courts in matrimonial matters (s 2) and vested that jurisdiction in the new Court for Divorce and Matrimonial Causes (s 6), but the Court was to act on the principles and rules which had been applied by the ecclesiastical courts (s 22). A decree dissolving marriage might be pronounced on a petition by the husband alleging adultery by the wife, and on a wife's petition, alleging adultery coupled with desertion for at least two years and without reasonable excuse, or alleging adultery with aggravated circumstances including "such Cruelty as without Adultery would have entitled her to a Divorce à Mensâ et Thoro" (ss 27 and 31). 78 20 & 21 Vict c 85. 79 Lectures on the Relation between Law and Public Opinion in England during the Nineteenth Century, 2nd ed (1914) at 347. 80 The Oxford History of the Laws of England, (2010), vol 13 at 781. Crennan In 1858 the Secretary of State for the Colonies conveyed to all colonial governors and legislatures the wish of the Imperial Government that steps be taken to introduce, "as nearly as the circumstances of the Colony will admit", the provisions of the 1857 UK Act81. The colonies acted accordingly, but at different paces: Matrimonial Causes Act 1858 (SA), Matrimonial Causes Act 1860 (Tas), Matrimonial Causes Act 1861 (Vic), Matrimonial Causes Act 1863 (WA), Matrimonial Causes Act 1865 (Q), Matrimonial Causes Act 1873 (NSW). This legislation did not need to abolish in the colonies the non-existent jurisdiction of ecclesiastical courts. Rather, it conferred jurisdiction in matrimonial causes on the Supreme Courts. The differential treatment in the 1857 UK Act between the grounds of divorce available to husbands and wives was carried into the initial colonial legislation. But there followed attempts by New South Wales and Victoria to assimilate and expand the grounds for divorce; the Governor's Instructions required these Bills to be reserved for the Royal Assent on advice of the Imperial Government and, initially, in circumstances of considerable controversy in the colonies, the Royal Pressure for reform of legislation respecting divorce was, however, maintained, particularly in the more populous colonies of New South Wales and Victoria83, and eventually succeeded. In Victoria The Divorce Act 1889 provided extended grounds for divorce84. Advocates of the women's movement in New South Wales were able to press for further liberalisation of the laws, despite the opposition of the churches85. The Divorce Amendment and Extension Act 1892 81 The Despatch by Lord Stanley to the Governor of New South Wales for presentation to both Houses of the Parliament is reproduced in Votes and Proceedings of the Parliament of New South Wales 1859-1860, vol 4 at 1169. 82 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 83 See the account given by Finlay, To Have But Not to Hold, (2005), Ch 3. 84 Which included adultery, desertion for a period of three years and upwards, habitual drunkenness, habitual cruelty to a wife, conviction for attempt to murder a wife, conviction for having assaulted a wife with intent to cause grievous bodily harm, or repeated assaults on a wife: The Divorce Act 1889 (Vic), s 11. 85 Grimshaw et al, Creating a Nation, (1994) at 172. Crennan (NSW) was expressed in terms similar to those of the Victorian Act. The extended grounds gave colonial women greater access to divorce than their contemporaries in the United Kingdom. Conclusions What was the immediate significance of these 19th century legislative measures for the continued vitality of the reasoning upon which Hale in the 17th century had based his proposition respecting "rape in marriage"? In answering that question it is convenient first to repeat what was said by the Supreme Court of New Jersey in State v Smith86 as follows: "We believe that Hale's statements concerning the common law of spousal rape derived from the nature of marriage at a particular time in history. Hale stated the rule in terms of an implied matrimonial consent to intercourse which the wife could not retract. This reasoning may have been persuasive during Hale's time, when marriages were effectively permanent, ending only by death or an act of Parliament87. Since the matrimonial vow itself was not retractable, Hale may have believed that neither was the implied consent to conjugal rights. Consequently, he stated the rule in absolute terms, as if it were applicable without exception to all marriage relationships. In the years since Hale's formulation of the rule, attitudes towards the permanency of marriage have changed and divorce has become far easier to obtain. The rule, formulated under vastly different conditions, need not prevail when those conditions have changed." To that may be added the statement in that case88: "If a wife can exercise a legal right to separate from her husband and eventually terminate the marriage 'contract', may she not also revoke a 'term' of that contract, namely, consent to intercourse?" 86 426 A 2d 38 at 42 (1981). 87 Clark, The Law of Domestic Relations in the United States, (1968) at 280-282. 88 426 A 2d 38 at 44 (1981). Crennan In similar vein is the statement made from the New South Wales Supreme Court bench by Sir William Windeyer in 1886, in which he regretted that while the State regarded marriage as a civil contract and in this case the contract had been destroyed by the husband "having done his best to degrade you", by reason of the then limited grounds of divorce then available to her in New South Wales, she had no redress89. Insofar as Hale's proposition respecting the nature of the matrimonial contract was derived from an understanding of the principles applied by the ecclesiastical courts, the following may be said. First, as Lord Brougham observed in R v Millis90: "[Marriage] was always deemed to be a contract executed without any part performance; so that the maxim was undisputed, and it was peremptory, 'Consensus, non concubitus, facit nuptias vel matrimonium.'" Secondly, with respect to the exercise of their jurisdiction in suits for restitution of conjugal rights, the ecclesiastical courts did not accept that the exercise of the mutual rights of spouses was to be an occasion of abuse and degradation. The following further remarks of Brennan J in R v L91 are in point: "To acknowledge a connubial obligation not to refuse sexual intercourse wilfully and persistently is to acknowledge that the giving of consent to acts of sexual intercourse is necessary to perform the obligation. It would have been inconsistent with such an obligation to hold that, on marriage, a wife's general consent to acts of sexual intercourse has been given once and for all. If no further consent was required on the part of a wife, how could there be a wilful and persistent refusal of sexual intercourse by her? The ecclesiastical courts never embraced the notion of a general consent to sexual intercourse given once and for all on marriage by either spouse." Thirdly, and in any event, in the Australian colonies jurisdiction with respect to matrimonial causes was not part of the general inheritance of the Supreme 89 Bennett, "The Establishment of Divorce Laws in New South Wales", (1963) 4 Sydney Law Review 241 at 248. 90 (1844) 10 Cl & F 534 at 719 [8 ER 844 at 913]. 91 (1991) 174 CLR 379 at 396. Crennan Courts. They received such jurisdiction only by local statute in the second half of the 19th century. That legislation, as interpreted in the period before the enactment of the CLC Act in 1935, did not require, for compliance with a decree for restitution of conjugal rights, more than matrimonial cohabitation; in particular the duty of matrimonial intercourse was one of imperfect legal obligation because it could not be compelled by curial decree92. Finally, although Hale did not expressly rely upon it, his proposition respecting irrevocable consent could not have retained support from any common law concept that the wife had no legal personality distinct from that of her husband. This was never wholly accepted by the Court of Chancery, given the development there of the trust. The references earlier in these reasons to the significance of the married women's property legislation93 indicate that, by statute, the attitudes of the equity jurisdiction were given effect in the latter part of the 19th century to a significant degree throughout the legal system in England and the Australian colonies. To that may be added the significance of the conferral by the Commonwealth Franchise Act 1902 (Cth) of the universal adult franchise94. It has been said that the gaining of suffrage for women in South Australia in 1894 was critical to the national suffrage movement95. At the turn of the 20th century, suffragists in England were looking to what had been achieved in Australia96. An English suffragist, Dame Millicent Garrett Fawcett, writing in 1911 when women in England had not yet been granted suffrage, observed that97: 92 Bartlett v Bartlett (1933) 50 CLR 3 at 12, 15, 18. 94 See Roach v Electoral Commissioner (2007) 233 CLR 162 at 195-196 [70]-[71]; [2007] HCA 43. 95 Oldfield, Woman Suffrage in Australia, (1992) at 213 (Western Australia followed in 1899 through the passage of the Constitution Acts Amendment Act 1899 (WA)). 96 See for example Zimmern, Women's Suffrage in Many Lands, (1909) at 160; Fawcett, Women's Suffrage: A Short History of a Great Movement, (1911) at 59. 97 Fawcett, Women's Suffrage: A Short History of a Great Movement, (1911) at 59. Crennan "In the Commonwealth of Australia almost the first Act of the first Parliament was the enfranchisement of women. The national feeling of Australia had been stimulated and the sense of national responsibility deepened by the events which led to the Federation of the Independent States of the Australian Continent." By 1930 Isaacs J was able to say that98: "women are admitted to the capacity of commercial and professional life in most of its branches, that they are received on equal terms with men as voters and legislators, that they act judicially, can hold property, may sue and be sued alone". By the time of the enactment in 1935 of the CLC Act, if not earlier (a matter which it is unnecessary to decide here), in Australia local statute law had removed any basis for continued acceptance of Hale's proposition as part of the English common law received in the Australian colonies. Thus, at all times relevant to this appeal, and contrary to Hale's proposition, at common law a husband could be guilty of a rape committed by him upon his lawful wife. Lawful marriage to a complainant provided neither a defence to, nor an immunity from, a prosecution for rape. To reach that conclusion it is unnecessary to rely in general terms upon judicial perceptions today of changes in social circumstances and attitudes which had occurred in this country by 1935, even if it were an appropriate exercise of legal technique to do so. The conclusion follows from the changes made by the statute law, as then interpreted by the courts, including this Court, before the enactment of the CLC Act. Order The appeal should be dismissed. 98 Wright v Cedzich (1930) 43 CLR 493 at 505; [1930] HCA 4. HEYDON J. The events giving rise to this appeal allegedly took place in 1963. At that time it was universally thought in Australia that a husband could not be convicted of having sexual intercourse with his wife without her consent save where a court order operated or where there were other exceptional circumstances. This immunity from conviction was thought to exist because Sir Matthew Hale, who died in 1676, had asserted its existence in The History of the Pleas of the Crown, published in 1736. The reason he assigned was that on marriage wives irrevocably consented to sexual intercourse with their husbands99. Below the immunity will be called "the immunity" or "Hale's proposition". By what warrant did the State of South Australia seek in 2010 to prosecute the appellant for allegedly having sexual intercourse with his wife without her consent more than 47 years earlier? A sufficient answer to that question would be: "It had none, for the reasons that Bell J powerfully states." However, in deference to the arguments put by South Australia, a fuller answer should be given. One matter must be put aside, though the appellant may wish to rely on it at a later stage in these proceedings. This appeal is not directly concerned with any oppressiveness that results from the delay in prosecution. But that tardiness does support the appellant's submission that in 1963 there was no crime of rape for which he could be charged. One primary explanation which South Australia gave to the District Court for its delay was that the immunity created considerable doubt as to whether the appellant was liable for rape. Yet prosecutors have to demonstrate with clarity that the crimes they charge exist. South Australia tells the District Court that the appellant's liability was thought doubtful. It tells this Court that it is certain. South Australia's stance in the District Court is inconsistent with its dogmatic and absolute submissions in this Court. The first of its submissions in this Court was that the immunity never existed100. The second, alternative, submission was that even if the immunity had existed at one time, it had ceased to exist at some indeterminate time before South Australia put only those two submissions. It did not put a third submission – that even if the immunity existed and even if it had not ceased to exist up to now, it should be abolished now. That was a course which the 99 See below at [172]. 100 The first submission is discussed below at [71]-[113]. 101 The second submission is discussed below at [114]-[161]. English courts took in 1991102. It is a course which would raise issues different in some respects from those discussed below. South Australia's first submission: the detailed contentions South Australia's first submission was that it had never been the law, in England or in Australia, that a husband was immune from prosecution for having sexual intercourse with his wife without her consent. The Commonwealth supported that submission. It was based on a number of contentions. The first group of contentions centred on the following points. Hale's work was published 60 years after he died. The relevant part had not been revised before his death. Hale had not supported his statement with any reference to authority. Standing alone his proposition would not constitute the common law. At best it reflected "his view of a custom in 17th century England." As Blackstone asserted, "judicial decisions are the principal and most authoritative evidence, that can be given, of the existence of such a custom as shall form a part of the common law."103 A second group of contentions concerned ecclesiastical law. In the ecclesiastical courts there was no support for Hale's proposition. In ecclesiastical law each spouse had a right to sexual intercourse, but it was only to be exercised reasonably and by consent. This undermined the foundation of Hale's proposition. It revealed him to be mistaken in thinking that the wife's consent was irrevocable. It caused his proposition to be affected by "frailty". South Australia then turned to the history of Hale's proposition after he had enunciated it. It relied on Lord Lowry's very extreme statement that "Hale's doctrine had not been given the stamp of legislative, judicial, governmental and academic recognition."104 So far as "academic recognition" was concerned, South Australia submitted that the only statement of support for the immunity in absolute terms was that of Hale, and that there was no support for it in Blackstone. So far as "judicial … recognition" was concerned, South Australia submitted that Hale's proposition "was never authoritatively declared as part of the common law in Australia." It also submitted that no case had Hale's 102 R v R [1992] 1 AC 599. 103 Commentaries on the Laws of England, (1765), bk 1 at 69. 104 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. proposition as its ratio decidendi. There were only dicta and assumptions that the proposition existed. In some of the cases stating the dicta or resting on the assumptions Hale's proposition was cut down. There were also dicta to the contrary. Hale's proposition was further said to be inconsistent with some authorities. South Australia did not advance detailed submissions about any lack of "legislative" and "governmental" recognition. Perhaps it is hard to say much in support of negative propositions. However, there is a lot to be said against those two. Finally, South Australia submitted that the immunity was completely outdated and offensive to human dignity. It is convenient to deal with South Australia's first submission under the following headings. Defects in Hale's statement of the immunity It is immaterial that Hale's work was published 60 years after his death, that the reference to the immunity appears in a part of it which Hale had not revised, and that he stated no elaborate reasons justifying the immunity. Hale's work is capable of being an accurate account of the law of his day despite these things. There is no reason to suppose that, had he revised the relevant part of his work, he would have considered it desirable to change it. South Australia is not alone in complaining about Hale's failure to cite authorities105. But it is anachronistic to do so. The modern approach to precedent was only struggling to be born in Hale's day106. Hale himself said107: "the decision of courts of justice, though by virtue of the laws of this realm they do bind, as a law between the parties thereto, as to the particular case in question, till reversed by error or attaint; yet they do not 105 Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 878-883. The first maker of this criticism appears to have been Field J in R v Clarence (1888) 22 QBD 23 at 57. 106 Williams, "Early-modern judges and the practice of precedent", in Brand and Getzler (eds), Judges and Judging in the History of the Common Law and Civil Law: From Antiquity to Modern Times, (2012) 51. 107 The History of the Common Law of England, 6th ed (1820) at 89-90 (emphasis in original). make a law, properly so called; – for that only the king and parliament can do; yet they have a great weight and authority in expounding, declaring, and publishing what the law of this kingdom is; especially when such decisions hold a consonancy and congruity with resolutions and decisions of former times. And though such decisions are less than a law, yet they are a greater evidence thereof than the opinion of any private persons, AS SUCH, whatsoever". Hale's work often does not contain the dense citation of authorities characteristic of modern books. Indeed, many parts of it refer to only a few authorities. That is so of the passages in which he discusses the crime of rape. Hale did not cite direct authority for the immunity, or for his justification of the immunity. Whether there were in fact "authorities" of any kind to be cited on the present point is a matter which a 21st century court cannot easily deal with. It would need the assistance of close research into the question by modern legal historians with high expertise108. Subject to that matter, Hale did point out that there was authority for other propositions that he asserted. Those propositions were not inconsistent with the immunity. To some extent they supported it109. In view of Hale's high reputation for research into the criminal litigation of his day110, it seems likely that in practice husbands were not prosecuted for raping their wives, so that there were no authorities to cite. Even nowadays, a proposition can be correct though no precedent supports it. Ethical and tactical considerations prevent counsel from arguing what they perceive to be the unarguable. There are some propositions which seem too clear to the profession to be contradicted by argument. Propositions of that kind are widely accepted as good law. Subject to the research difficulties referred to in the previous paragraph, a lack of support from earlier authors such as Coke is, as Bell J explains, not significant and does not reveal Hale to be wrong111. Windeyer J once said: "an accepted rule of law is not to be overthrown by showing that history would not support it"112. None of the defects which 108 Australian Crime Commission v Stoddart (2011) 86 ALJR 66 at 81 [70]; 282 ALR 620 at 637; [2011] HCA 47. 109 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 153-156. See also below at [208]. 110 See below at [209]. 111 See below at [200]. 112 Commissioner for Railways (NSW) v Scott (1959) 102 CLR 392 at 447; [1959] HCA 29. supposedly existed in Hale's statement of the immunity prevented it from being an accepted rule of law. Hale and ecclesiastical law South Australia's appeal to ecclesiastical law encounters two difficulties. The first is that while the civil law of marriage was a matter for the ecclesiastical courts, the criminal law was a matter for the common law courts. Thinking in the ecclesiastical courts does not necessarily vitiate an account of the criminal law as administered in the common law courts. The second difficulty is that ecclesiastical law in the 17th century is another field not to be entered without expert assistance. In R v L113 Brennan J wrote at some length about ecclesiastical law. But the sources to which he referred were largely modern. None were contemporary with or earlier than Hale. Lord Lane CJ in R v R114 and Mason CJ, Deane and Toohey JJ in R v L115 pointed out that in Popkin v Popkin116 Sir William Scott (later Lord Stowell) stated: "The husband has a right to the person of his wife, but not if her health is endangered." Mason CJ, Deane and Toohey JJ commented that this showed that "even in the ecclesiastical courts, the obligation to consent to intercourse was not asserted in unqualified terms." If so, it also shows that Hale's proposition was not completely wrong. On the other hand, Brennan J did not think that Sir William Scott's statement showed that a husband had "a right to the person of his wife" without consent117. The submissions of the parties in this appeal did not take the matter further than Brennan J's researches took it. The parties did not cite any expert material throwing light on ecclesiastical law in or before Hale's time. For that reason, it is imprudent to examine it. 113 (1991) 174 CLR 379 at 391-402; [1991] HCA 48. 114 [1992] 1 AC 599 at 604. 115 (1991) 174 CLR 379 at 389. 116 (1794) 1 Hagg Ecc 765n [162 ER 745 at 747]. 117 R v L (1991) 174 CLR 379 at 398. Post-Hale writers South Australia submits that there is no statement of support for Hale's proposition except Hale himself, and that Hale's proposition has received no "academic recognition". That submission is extremely ambitious. It is also utterly incorrect. It is true that Hale's proposition is neither confirmed nor denied by Blackstone or Hawkins. Blackstone was writing at a considerable level of generality about much wider issues than those Hale wrote about. Whether or not it is right to describe Hawkins as "a somewhat second-rate institutional writer"118, it was not open to him to take up Hale's proposition in the first edition of his treatise. It appeared in 1716. Hale's work was not published until 1736. South Australia echoes the Crown's complaint to the House of Lords in R v R119 that the first writer to refer to the immunity after Hale was East in 1803. That is, however, less than 70 years after History of the Pleas of the Crown was published in 1736. In truth, Hale has enjoyed a great reputation. Lord Denning called him "the great Chief Justice Sir Matthew Hale"120. Hale's proposition garnered massive support from professional writers after 1803, and, as academic like too. lawyers emerged, Glanville Williams121, Smith and Hogan122 and Cross and Jones123 acknowledged the correctness of Hale's proposition. Like others who have attacked courts that relied on Hale's proposition124, South Australia failed to grapple with this uncomfortable point. Leading modern writers them from 118 Seaborne Davies, "The House of Lords and the Criminal Law", (1961) 6 Journal of the Society of Public Teachers of Law 104 at 110. 119 [1992] 1 AC 599 at 614. 120 Sykes v Director of Public Prosecutions [1962] AC 528 at 558. 121 Textbook of Criminal Law, 2nd ed (1983) at 236; "The problem of domestic rape", (1991) 141 New Law Journal 205 and 246. 122 Criminal Law, 6th ed (1988) at 430-432 (and all earlier editions). 123 Card (ed), Cross and Jones: Introduction to Criminal Law, 9th ed (1980) at 177 [9.2] (and all earlier editions). 124 For example, Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 One source of law is "informed professional opinion"125. Where there is little authority on a question of law, the opinions of specialist writers, particularly their concurrent opinions, are very important in revealing, and indeed in establishing, the law. That is particularly true of books written by practitioners. But it has force in relation to well-respected academic writers as well126. As Lord Reid said: "Communis error facit jus may seem a paradox but it is a fact."127 Owen J put the matter with trenchant simplicity in relation to the first edition of Archbold in 1822. It said128: "A husband … cannot be guilty of a rape upon his wife." Owen J said129: "It seems to me that the consequences of that statement is this: if he was right, then practitioners would follow what he said. Equally, however, if he was wrong, practitioners would follow what he said." Hale's proposition in the courts South Australia relied on Lord Lowry's statement that Hale's proposition had not been "given the stamp of … judicial … recognition."130 South Australia greatly exaggerated the extent to which the authorities cast doubt on the immunity before 1991, when the House of Lords decided it should be abolished131, and four members of this Court said that it had ceased to represent the law132. An illustration is provided by South Australia's submission in relation to R v Clarence: 125 Jones v Secretary of State for Social Services [1972] AC 944 at 1026 per Lord Simon of Glaisdale. 126 Australian Crime Commission v Stoddart (2011) 86 ALJR 66 at 84-98 [90]-[138]; 282 ALR 620 at 641-660. 127 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 25. 128 Archbold, A Summary of the Law Relative to Pleading and Evidence in Criminal Cases, (1822) at 259. 129 R v R – (rape: marital exemption) [1991] 1 All ER 747 at 748. 130 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 131 R v R [1992] 1 AC 599. 132 R v L (1991) 174 CLR 379 at 390 and 405. "The exemption was first the subject of judicial comment in R v Clarence.133 In R v Clarence, seven of the thirteen judges declined to comment on the issue;134 of the six judges who did, two of them reiterated and confirmed the marital rape proposition,135 three of them questioned or qualified it,136 and another briefly adverted to it without engaging in it.137 The comments of the judges in R v Clarence were obiter dicta, however, taken as a whole they indicate that even as at 1888 there existed no settled view." It is true that the few things said about Hale's proposition in R v Clarence were dicta. The submission is otherwise very misleading. It suggests that only A L Smith J and Pollock B favoured Hale's proposition. In fact the position is as follows. Stephen J supported Hale's proposition138. The following seven judges concurred: A L Smith J139, Mathew J140, Grantham J141, Manisty J142, Wills J146, Huddleston B143, Pollock B144 and Lord Coleridge CJ145. 133 (1888) 22 QBD 23. 134 Lord Coleridge CJ, Huddleston B, Grantham, Manisty and Mathew JJ (quashing the conviction); Charles and Day JJ (dissenting because upholding the conviction). 135 A L Smith J and Pollock B (quashing the conviction). 136 Wills J (quashing the conviction) and Hawkins and Field JJ (dissenting because upholding the conviction). 137 Stephen J (quashing the conviction). 138 R v Clarence (1888) 22 QBD 23 at 46. 139 R v Clarence (1888) 22 QBD 23 at 37. 140 R v Clarence (1888) 22 QBD 23 at 38. 141 R v Clarence (1888) 22 QBD 23 at 46. 142 R v Clarence (1888) 22 QBD 23 at 55. 143 R v Clarence (1888) 22 QBD 23 at 56. 144 R v Clarence (1888) 22 QBD 23 at 61-62 and 63-64. 145 R v Clarence (1888) 22 QBD 23 at 66. 146 R v Clarence (1888) 22 QBD 23 at 33. Hawkins J147 and Field J148 each stated or left open the possibility that in some circumstances a husband could be convicted of raping his wife. But at least the latter two judges plainly thought that Hale's proposition was correct in some circumstances. Day J concurred with Hawkins J149. Charles J concurred with Field J150. its operation South Australia correctly submitted that English trial judges assumed that Hale's proposition was correct, but qualified in special circumstances. Examples of special circumstances included where there was a court non-cohabitation order151, or a decree nisi of divorce had effectively terminated the marriage152, or the husband had given an undertaking to the court not to molest the wife153, or there was an injunction restraining the husband from molesting or having sexual intercourse with the wife154, or there was an injunction and a deed of separation (even though the injunction had expired)155. The outer limit of these exceptions was unilateral withdrawal from cohabitation coupled with a clear indication that the wife's consent to sexual intercourse was On one view, each of the courts that reached these decisions was attempting to achieve justice by tailoring the absolute nature of Hale's proposition to the circumstances before it. Even if the wife could be said to have 147 R v Clarence (1888) 22 QBD 23 at 51. 148 R v Clarence (1888) 22 QBD 23 at 57-58. 149 R v Clarence (1888) 22 QBD 23 at 55. 150 R v Clarence (1888) 22 QBD 23 at 61. 151 R v Clarke [1949] 2 All ER 448. The judge was Byrne J, of whom Owen J said in R v R – (rape: marital exemption) [1991] 1 All ER 747 at 749: "Those who appeared before him will know that he was a judge of the highest repute. As a criminal lawyer, there were not many to excel him in his day." In R v Miller [1954] 2 QB 282 at 289 Lynskey J concurred with R v Clarke. 152 R v O'Brien [1974] 3 All ER 663. 153 R v Steele (1976) 65 Cr App R 22. 154 R v Steele (1976) 65 Cr App R 22 at 25; R v McMinn [1982] VR 53. 155 R v Roberts [1986] Crim LR 188. 156 R v R – (rape: marital exemption) [1991] 1 All ER 747 at 754. given consent by marriage, in those cases it had been withdrawn as a matter of practical reality either because the wife had successfully invoked court process or because the spouses had reached a formal agreement negating consent. Another view is that these cases travel down a road "potholed with ever greater illogicalities"; produce "a gaggle of technical and anomalous distinctions" and "absurdity"; and lack any "relationship to the real world."157 But even if this latter view is correct, it is adverse to South Australia's position. The cases show the enduring toughness of Hale's proposition in legal thought. To destroy Hale's proposition might eliminate formal anomalies and technicalities. But it was a course which many judges found unattractive. Instead they turned their minds to devising narrow exceptions. In two of the cases just referred to, the correctness of Hale's proposition, in the absence of special circumstances, was specifically acknowledged by quotation158. In another, Hale's proposition was thought to be correct at common law though not necessarily satisfactory159. And in R v Miller160, where the prosecution failed to prove any special circumstance and could point to no more than the wife having petitioned for divorce, Hale's proposition was applied. R v Miller renders false South Australia's submission that "no binding precedent can be found where [Hale's] principle represented the ratio decidendi." Contrary to that submission, R v Miller was an "authoritative declaration of the common law on the matter." R v Miller also demonstrates that McGarvie J was wrong to say in R v McMinn161: "There does not seem to have been any recent case in which it was considered whether [Hale's proposition] remains part of the common law." R v Miller was a binding precedent in England until 1991. A second case which applied Hale's proposition is R v J – (rape: marital exemption)162. There are numerous cases, including Australian cases, in which courts have assumed Hale's proposition to be correct at common law163. One is R v 157 Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 880-882. 158 R v Clarke [1949] 2 All ER 448 at 448; R v Steele (1976) 65 Cr App R 22 at 24. 159 R v McMinn [1982] VR 53 at 55, 57-59 and 61. 160 [1954] 2 QB 282, criticised by Brooks, "Marital Consent in Rape", [1989] Criminal Law Review 877 at 882-883. 161 [1982] VR 53 at 61. 162 [1991] 1 All ER 759. 163 R v Brown (1975) 10 SASR 139 at 141 and 153; R v Cogan [1976] QB 217 at 223; R v Wozniak (1977) 16 SASR 67 at 71; R v Sherrin (No 2) (1979) 21 SASR 250 at 252; R v C (1981) 3 A Crim R 146 at 148-150; R v Caswell [1984] Crim LR 111; (Footnote continues on next page) Kowalski164, in which the English Court of Appeal described Hale's proposition as "clear, well-settled and ancient law". Another is R v Bellchambers165, in which Neasey and Everett JJ said that Hale's proposition "still expresses the common it as "archaic, unjust and they criticised discriminatory"166. A third is Brennan J's statement in R v L167: law", even though "Irrespective of the validity of Hale's reason for declaring that a husband could not be guilty as a principal in the first degree of rape of his wife, it appears that a substantive rule of the common law was established by his declaration." That statement followed more than 10 pages denouncing Hale's reasoning. Thus these last two cases, too, reveal the enduring toughness of Hale's proposition in legal thought. South Australia proffered three authorities that, in its submission, reveal that contrary to Hale's proposition, there was no irrebuttable presumption that on marriage the wife irrevocably consented to sexual intercourse with her husband. In R v Lister168, it was held that while it was lawful for a husband to restrain his wife's liberty where she was making "an undue use" of it, either by "squandering away the husband's estate, or going into lewd company", he could not do so where he had entered into a deed of separation with his wife. In R v Jackson169, the English Court of Appeal held that where a wife refused to live with her husband, he was not entitled to deprive her of liberty by kidnapping her and confining her to his house, even though he had obtained a decree for restitution R v Henry unreported, 14 March 1990 per Auld J: see R v J – (rape: marital exemption) [1991] 1 All ER 759 at 762-763 and Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 97-108; R v Shaw [1991] Crim LR 301; Question of Law Reserved on Acquittal (No 1 of 1993) (1993) 59 SASR 214 at 164 (1987) 86 Cr App R 339 at 341. 165 (1982) 7 A Crim R 463 at 465. 166 (1982) 7 A Crim R 463 at 466. 167 (1991) 174 CLR 379 at 402. 168 (1721) 1 Strange 478 [93 ER 645 at 646]. of conjugal rights. In R v Reid170, that Court held that matrimonial status conferred no immunity on a husband who kidnapped his wife. These cases do not support South Australia's submission. They do not proceed on the basis that on marriage there was a presumption that the wife consented to having her liberty restrained and that she could rebut that presumption by withdrawing her consent. Indeed, in R v Reid171 the Court said of the doctrine in R v Miller that it was "impossible to stretch that doctrine to the extent of saying that on marriage a wife impliedly consents to being taken away by her husband using force or threats of force from the place where she is living." Accordingly, these cases are not inconsistent with Hale's proposition. In 1991, the English Court of Appeal and the House of Lords overturned Hale's proposition172. But it is notable that they did not accept the Crown's submission that "Hale's statement was never the law"173. The rulings of those Courts had retrospective consequences. But they did not hold that Hale's proposition had never been the law. They did not hold that the judgments which had decided, said or assumed that it was correct were wrong at the time they were handed down. Lord Lane CJ said in the Court of Appeal that Hale's proposition had been "accepted as an enduring principle of the common law."174 And the House of Lords altered the law because social conditions had changed quite recently. Hale's proposition was seen as reflecting the society of his day, and its rejection was seen as reflecting the different form which modern society had recently taken175. On that reasoning, Hale's proposition was good law in South Australia in 1963 – a matter relevant to rejection of South Australia's second submission176. 171 [1973] QB 299 at 302. 172 R v R [1992] 1 AC 599. 173 R v R [1992] 1 AC 599 at 602. 174 R v R [1992] 1 AC 599 at 604. 175 R v R [1992] 1 AC 599 at 616. 176 See below at [121]-[161]. Governmental recognition South Australia also relied on Lord Lowry's statement that Hale's proposition "had not been given the stamp of … governmental … recognition."177 That submission too must be rejected. Hale's proposition has received indirect governmental recognition – by the Executive – in two ways. One form of governmental recognition took place in a report of the Criminal Law and Penal Methods Reform Committee of South Australia published in 1976. That report acknowledged that Hale's proposition represented the common law178. It recommended that the immunity be abolished where the event charged took place while the parties were living separately179. There are several other reports before and after the South Australian report also resting on the view that Hale's proposition represented the common law180. Another form of governmental recognition has taken place. Not only in South Australia but in many other places, the authorities did not prosecute charges against husbands accused of raping their wives. This Court was not told of any prosecutions having been brought in England between Hale's time and 1949. In the second half of the 20th century, as exceptions developed to Hale's proposition, there were attempts to prosecute husbands, not for non-consensual 177 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 178 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 13 [6.2]: see below at [174]. 179 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 15 [6.2.1]. 180 For example, Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 17-18 [2.56]-[2.57]; Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 9-12 [2.8]-[2.10]; American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 271-275, 341-346 and American Law Institute, Model Penal Code: Official Draft and Explanatory Notes, (1985), §213.1(1). The greatest example of this kind, which is not modern but does come from a time when, according to South Australia, legislative changes were being made which would mean that Hale's proposition "crumbled to dust", is the Royal Commission commenting on Stephen's Draft Code: see below at [219]. Sir Rupert Cross thought that Stephen had "one of the highest places" among the makers of English criminal law: "The Making of English Criminal Law: (6) Sir James Fitzjames Stephen", [1978] Criminal Law Review 652 at 661. sexual intercourse with their wives, but for crimes committed in connection with that conduct, such as assault or false imprisonment. So far as these crimes were distinct from sexual intercourse without consent, the prosecutions rested on sound legal thinking, though they were at peril of failing if there were difficulties in establishing that the husband's conduct had gone beyond sexual intercourse without consent181. What the prosecution assumes about the law is not decisive as to what the law is. But it is some guide to the thinking of experienced criminal lawyers. That thinking can be highly persuasive as to what the law is. Legislative recognition Finally, South Australia relied on Lord Lowry's statement that Hale's proposition "had not been given the stamp of legislative … recognition."182 That submission must also be rejected. Some forms of "legislative recognition" are of limited materiality. A statute expressly adopting Hale's proposition in South Australia would have superseded the common law. A statute expressly adopting it outside South Australia would have had slight relevance only to what the common law was in South Australia. Statutes rejecting it would have had little relevance to the position at common law unless they reflected a consistent legislative view of what the public interest demanded183. But there is South Australian legislation recognising Hale's proposition in the sense that it did not interfere with it when there was an occasion to do so. The South Australian Parliament did not adopt the recommendation of the Criminal Law and Penal Methods Reform Committee of South Australia to abolish the immunity when husband and wife were living separately. Instead two provisions relevant to the common law were enacted. First, s 73(3) of the Criminal Law Consolidation Act 1935 (SA) was introduced, removing any presumption that consent to sexual intercourse flowed from marriage. Secondly, s 73(5) was introduced: it prevented a spouse from being convicted not only of rape but also of indecent assault, attempted rape or indecent assault, and assault with intent to commit rape or indecent assault, unless the alleged offence was accompanied by various forms of aggravated conduct184. In substance it 181 See, for example, R v Henry unreported, 14 March 1990 per Auld J, set out in Law Commission, Rape within Marriage, Working Paper No 116, (1990) at 97-108. 182 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 183 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 61-63 [23]-[28]; [1999] HCA 67. 184 See below at [175]. overlapped with the common law position precluding convictions of husbands for the conduct of sexual intercourse with their wives without consent. Thus the South Australian Parliament assumed that the immunity existed at common law, and left it in existence. It appears to have gone further in creating an immunity without any common law counterpart for non-aggravated forms of the crimes other than rape to which s 73(5) referred. That state of affairs continued until "Legislative recognition" in places other than South Australia assuming that the immunity existed at common law is relevant to the content of South Australian law – particularly Australian legislation, since there is a single common law in Australia. There are three points to be made. First, in the Code States (Queensland, Tasmania and Western Australia), the definition of rape excluded sexual intercourse by a husband with his wife. The relevant statutes assumed the correctness of Hale's proposition186. Secondly, the numerous changes in State and Territory legislation in the 1970s and 1980s indicated an assumption by each legislature (and by each Executive, which had a large measure of control over what draft legislation was introduced) that Hale's proposition was sound at common law. If not, it would not have been necessary to abolish or qualify it187. Thirdly, Canadian188 and New Zealand189 legislation assumed the correctness of Hale's proposition. An anachronistic and offensive proposition? There are no doubt many criticisms to be made of Hale's proposition if it is to be applied in the circumstances of 2012. But these criticisms do not show that his proposition was necessarily anachronistic or offensive in 17th century circumstances. That would depend on historical analysis which the parties' submissions did not perform. The criticisms therefore do not demonstrate that Hale's proposition was wrong from the outset. They are, however, appropriate arguments to consider when deciding whether Hale's proposition ought to be abandoned. It is a question which legislatures answered affirmatively from the 1980s on. It is not a question which South Australia places before this Court. Whether they are appropriate arguments to consider when deciding whether 185 See below at [176]. 186 See below at [176] n 298. 187 See below at [176]. See also Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 at 35. 188 See below at [221]. 189 See below at [233]. Hale's proposition dropped out of the law at some point before 1963 is a question which relates to South Australia's second submission. South Australia's first submission rejected It was inherent in South Australia's first submission that all the writers, all the judges, all the government officials, all the law reformers, all the public servants advising Ministers, all the prosecution authorities and all the legislatures who wrote or acted on the assumption that Hale's proposition was the law were wrong. South Australia explicitly adopted a statement to this effect in the Full Court of the Supreme Court of South Australia190. I flatly disagree. South Australia's second submission On the assumption that Hale's proposition was correct for some time after he stated it, South Australia put various contentions denying its applicability in South Australia contended that before 1963 the law had changed so as to nullify Hale's proposition, even though no case had stated this before 1991. This is an unusual invocation of the judicial process. South Australia's contention is different from a contention that this Court should now declare Hale's proposition to be wrong, and do so with effect retrospective to 1963. This latter course presents in an overt form the considerable difficulties which cluster around the making of retrospective changes to the criminal law. South Australia did not choose to tackle these difficulties head on. It did not suggest that this Court should now change the law. Rather, it submitted that the dicta of four Justices in R v L191 recognised that Hale's proposition had ceased to be the law at some time before 1991. South Australia submitted that this time was a time before 1963. In fact, nothing in R v L suggests that the demise of Hale's proposition took place at any specific time before 1991, such as 1963. South Australia's thesis that R v L bound the Full Court of the Supreme Court of South Australia to reach this conclusion must be rejected. South Australia relied on the following arguments as indications that Hale's proposition had ceased to be the law before 1963. South Australia submitted that in R v Jackson192 the denial of the husband's right to use physical coercion on his wife suggested that the immunity 190 R v P, GA (2010) 109 SASR 1 at 9 [43]. 191 (1991) 174 CLR 379 at 390 and 405. 192 [1891] 1 QB 671: see above at [101]. had disappeared from the law. But it does not follow that a husband lost the immunity where he had not employed physical coercion against his wife. South Australia also submitted that Hale's proposition was based on the doctrine of coverture – that the legal status of a wife is assimilated with that of her husband. And it submitted that by the turn of the 20th century the law had come to acknowledge the rights of married women as independent of their husbands' rights. In effect, it submitted that so many inroads had been made on the doctrine of coverture that it could no longer support Hale's proposition. This submission has the drawback that Hale did not base his proposition on the doctrine of coverture. However, the developments on which South Australia relied could be used, and to a degree were used, to support an argument that by the mid-20th century the rights and privileges of married women in Australia were inconsistent with any theory that on marriage wives gave their husbands irrevocable consent to sexual intercourse. South Australia advanced detailed submissions on the capacity of wives, gained by statute, to own property, to sue and be sued, to vote, to have custody of children, and to compel payment of and be compelled to pay child maintenance. It also relied on the termination by statute of discrimination between husbands and wives in relation to the grounds of divorce. In that way South Australia advances an argument for permitting the appellant to be prosecuted now for conduct which allegedly occurred in 1963. Whether it should be accepted depends on four matters. One is whether in fact the changes in the rights and privileges of wives by 1963 were, to use the words of South Australia's written submissions, "entirely inconsistent with the principle that a wife gave irrevocable consent to sexual intercourse with her husband upon marriage." A second concerns the need for certainty in the criminal law. A third concerns whether South Australia's argument could, in a practical sense, work a retrospective change in criminal law. A fourth is whether the task being undertaken is appropriate for the courts as distinct from the legislature. It is convenient to deal with these points in order. Is there inconsistency between the modern rights and privileges of wives and the immunity of husbands for rape? Bell J gives convincing reasons for answering this question in the negative193. Some ideas which tend to render Hale's proposition anachronistic can be discerned in 19th and early 20th century legislation. But the crucial triggers that would push Hale's proposition into disfavour arose in the 1970s. Before that decade there had been some questioning by lawyers of the stated 193 See below at [224]-[248]. justification for Hale's proposition. In that decade questioning began to grow about whether the proposition should be abolished by the legislature. The questioning grew as public concern about the law of rape in general and marital rape in particular began to rise. Law reform agencies began to examine numerous problems in detail. Legislative changes of different kinds were introduced. One trigger was the controversial decision in R v Morgan194 that a mistaken but honest belief that the victim had consented to intercourse was a defence to a rape charge, whether or not that belief was reasonable. R v Morgan was decided on 30 April 1975, seven months before the then Attorney-General for the State of South Australia requested the Criminal Law and Penal Methods Reform Committee of South Australia to report on the law relating to rape and other sexual offences. It was the very first topic the Committee dealt with195. Another trigger concerned whether warnings about the desirability of finding corroboration for the evidence of those complaining that they had been raped rested on unsatisfactory stereotyping. Another trigger was discontent about the rules relating to the cross-examination of complainants about their sexual histories. There were many other issues about which debates began to widen and intensify in those years. The immunity was only one of them. Further, the reasons underlying the legislation which has altered the status of wives over the last 150 years are not necessarily inconsistent with the immunity. To describe Hale's proposition as creating a presumption which no longer has any foundation, and as a fiction not forming part of the common law196, overlooks the fact that a common law rule can rest on a fiction, particularly when the rule in question develops a new and non-fictitious basis. As Lord Sumner observed197: "an established rule does not become questionable merely because different conjectural justifications of it have been offered, or because none is forthcoming that is not fanciful." A fortiori, an established rule does not become questionable merely because a justification which appealed to the minds of lawyers more than 300 years ago has ceased to have appeal now. In Australia, the controversy has been resolved. The resolution lies in abolition of the immunity. Abolition came by degrees. It also came from legislatures. In England, on the other hand, the first decision to abolish the immunity was made by a judge – Simon Brown J, in 1990198. Rougier J, sitting alone, at once refused 195 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 2-8 [2]. 196 R v L (1991) 174 CLR 379 at 405. 197 Admiralty Commissioners v SS Amerika [1917] AC 38 at 56. 198 R v C – (rape: marital exemption) [1991] 1 All ER 755. This was a controversial decision. to follow it199. Then the immunity was abolished by the Court of Appeal and the House of Lords in R v R in 1991. The House of Lords decision has been supported on the ground that Hale's proposition was one which "nobody defended on the merits."200 That, however, is not true201. It is true to say, though, that R v R was based, as Lord Lowry later said, "on a very widely accepted modern view of marital rape"202. But the fact that an idea is very widely accepted does not mean that an inference from it automatically becomes a rule of law. The fact that a rule of law is disliked does not mean that it has ceased to be the law. The fact that a rule of law favourable to the accused is disliked does not mean that the courts rather than the legislature should abolish it. Indeed, after the English courts abolished the immunity, Parliament did as well203, once the matter had been considered by the Law Commission204. And the fact that very many people have disliked a rule of law favourable to the accused for a long time does not mean that it has ceased to be the law at some time in the past. The Permanent Court of International Justice said, in a somewhat different context, in Consistency of Certain Danzig 199 R v J – (rape: marital exemption) [1991] 1 All ER 759. 200 Spencer, "Criminal Law", in Blom-Cooper, Dickson and Drewry (eds), The Judicial House of Lords 1876-2009, (2009) 594 at 604. 201 See Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 258-259; Howard, Australian Criminal Law, (1965) at 146; Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 14 [6.2]; American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 345; Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 21 [2.69]. As late as 15 February 1991, just before the Court of Appeal decision of 14 March 1991 and the House of Lords decision of 23 October 1991 abolishing the immunity, Glanville Williams contended in "The problem of domestic rape", (1991) 141 New Law Journal 205 and 246, that husbands who had non-consensual intercourse with their wives should not be guilty of rape, but should be liable to prosecution for a new statutory crime. 202 C (A Minor) v Director of Public Prosecutions [1996] AC 1 at 38. 203 Criminal Justice and Public Order Act 1994 (UK), s 142, inserting a new s 1 of the Sexual Offences Act 1956 (UK). 204 Law Commission, Criminal Law: Rape within Marriage, Law Com No 205, Legislative Decrees with the Constitution of the Free City205, "[s]ound popular feeling is a very elusive standard." And mere popular feeling, however widespread, is a very unsafe standard to apply in relation to claims that common law rules have fallen into desuetude. Professor Robertson has contrasted R v R with C (A Minor) v Director of Public Prosecutions, in which the House of Lords declined to alter the common law rule that there is a rebuttable presumption that a child aged between 10 and 14 is doli incapax206. He correctly noted that the speeches in R v R contained "almost no argument", only "a bald statement"207. He argued that R v R rested on "the assumption, though it is an untested one, that there is wide consensus in the general public on the question of marital rape."208 He also argued that Lord Lowry's attempt to reconcile a change in the criminal law in R v R with a decision not to change it in C (A Minor) v Director of Public Prosecutions was "specious"209. He said210: "The abolition of the rule on rape, though occasioned by a rape where the man and wife were separated, would in fact apply inside an ongoing marriage. It is sociologically extremely unlikely that this view would command anything like as much support amongst the mass public as would a rule that allowed the conviction of thirteen-year-old auto-thieves. The fact that there had been several cases where judges had attempted to convict husbands for rape is on par with the attempt by the Divisional Court to change the doli incapax rule, where there was extensive quotation from judges who had wanted to but were dutiful to precedent. What is true is that liberal elite opinion was uniform in the rape context, and largely missing in the criminal capacity case. Asked how to square the two results, one Law Lord who had been a member of the bench in C but not in R v R threw his hands in the air and admitted he could not imagine how they squared it. Another though, who had heard C, indicated that his 205 Advisory Opinion, (1935) PCIJ (Ser A/B) No 65 at 53 per Sir Cecil Hurst (President), Judge Guerrero (Vice-President) and Judges Rolin-Jaequemyns, Fromageot, de Bustamante, Altamira, Urrutia, van Eysinga and Wang. 207 Judicial Discretion in the House of Lords, (1998) at 119. 208 Judicial Discretion in the House of Lords, (1998) at 120. 209 Judicial Discretion in the House of Lords, (1998) at 121. 210 Judicial Discretion in the House of Lords, (1998) at 121. decision was prompted by a desire to force the Government's hand and make it legislate." (emphasis in original) The task of assessing public opinion, or even the full range of legal opinion, whether now or in the past, is not an enterprise that is easy for courts to carry out. "The court does not, and cannot, carry out investigations or enquiries with a view to ascertaining whether particular common law rules … command popular assent."211 The question is not whether the view which the House of Lords stated in R v R about the general public's opinion is correct. The point is that if the general public's opinion is a relevant criterion, it is a criterion for the legislature to consider, not the courts212. Certainty in the criminal law Those who seek to foster the rule of law prize certainty. Ordinarily, certainty in the common law is assisted by the doctrine of precedent. Normally, a common law rule is supported by authorities. If an intermediate or ultimate appellate court decides to change the rule, it overrules the authorities and its decision creates a new binding authority. South Australia's submission is not that Hale's proposition be rejected, so that this Court's decision would be a new binding authority with retrospective effect. Instead South Australia submits that at some time which is not clearly specified, Hale's proposition ceased to be the law. At some time in the past that which had a solid existence is said to have dissolved into nothingness. In State Government Insurance Commission v Trigwell213, Gibbs J said: "Although the rules of the common law develop as conditions change, a settled rule is not abrogated because the conditions in which it was formulated no longer exist. It is now fashionable to criticize the rule in Searle v Wallbank[214] as anachronistic, inconsistent with principle and unsuitable to modern conditions, but it is by no means obvious that it would be a reasonable and just course simply to abolish the rule. The 211 State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 633 per Mason J; [1979] HCA 40. 212 See below at [128]-[129] and [146]-[150] for other arguments favouring legislative change in the criminal law over judicial change. 213 (1979) 142 CLR 617 at 627. See also Mason J at 633 (otherwise than in "a simple or clear case"). question whether the rule should be altered, and if so how, is clearly one for the legislatures concerned rather than for the courts." A fortiori, it does not follow from anachronism that a rule simply dissolves without any court ruling at the time it dissolved, leaving its dissolution to be detected by a court many years or decades later. To the extent that they may be changed retrospectively, uncertainty is inherent in common law rules. But the standard technique is to make the change in a particular case. It is announced as having happened at the time of that case. Even though it operates retrospectively, that retrospective operation tends to affect only quite recent conduct. That was so in R v R and other cases following it: the conduct charged took place only a short time before the law changed. At least in non-criminal fields, if the change is the result of altering "the law's direction of travel by a few degrees" as distinct from setting "it off in a different direction"215, no great harm may follow. Assuming it is permissible for the courts to change the substantive criminal law, R v R is an example of the standard technique. It relied on quite recent changes in the status of married women. It did not purport to announce that a change had taken place many years ago, by reason of changes in status even earlier. South Australia's urging of the latter course engenders much more uncertainty. It invites Bentham's reproach216: "Nebuchadnezzar put men to death for not finding a meaning for his dreams: but the dreams were at least dreamt first, and duly notified. English judges put men to death very coolly for not having been able to interpret their dreams, and that before they were so much as dreamt." Retrospective change in the criminal law and the appropriate institutions to effectuate it South Australia's arguments involve a retrospective change in the criminal law. Indeed, they willingly embrace it. They involve the proposition that conduct no-one saw as attracting criminal liability in 1963 in fact attracted that liability because an historical investigation in 2010-2012 is said to reveal that changes in legal and social conditions at some unspecified time before 1963 caused the conduct to become criminal. And this proposition involves a very serious crime. Rape in 1963 was punishable by life imprisonment and whipping217. 215 Bingham, "The Rule of Law", (2007) 66 Cambridge Law Journal 67 at 71. 216 Bowring (ed), The Works of Jeremy Bentham, (1843), vol IV at 315. 217 See below at [170]. The law's aversion to the judicial creation of crimes. In those circumstances, though it may be trite to do so, it is desirable to recall the law's aversion to the judicial creation or extension of crimes. In the early 17th century Bacon put the central difficulty in a retroactive criminal law thus in Aphorism 8 of his treatise De Augmentis218: "Certainty is so essential to law, that law cannot even be just without it. 'For if the trumpet give an uncertain sound, who shall prepare himself to the battle?'219 So if the law give an uncertain sound, who shall prepare to obey it? It ought therefore to warn before it strikes." And Aphorism 39 read in part220: "Let there be no authority to shed blood; nor let sentence be pronounced in any court upon capital cases, except according to a known and certain law. … Nor should a man be deprived of his life, who did not first know that he was risking it." Hobbes stated in 1651221: "harm inflicted for a fact done before there was a law that forbade it, is not punishment, but an act of hostility: for before the law, there is no transgression of the law". Hence, said Hobbes in 1681222: "A Law is the Command of him, or them that have the Soveraign Power, given to those that be his or their Subjects, declaring Publickly, and plainly what every of them may do, and what they must forbear to do." "The citizen must be able to ascertain beforehand how he stands with regard to the criminal law; otherwise to punish him for breach of that law is purposeless cruelty. Punishment in all its forms is a loss of rights or advantages consequent on a breach of law. When it loses this quality it 218 Spedding, Ellis and Heath (eds), The Works of Francis Bacon, (1877), vol V at 90. 219 1 Corinth. xiv. 8. 220 Spedding, Ellis and Heath (eds), The Works of Francis Bacon, (1877), vol V at 95. 221 Leviathan, reprinted by George Routledge and Sons, 2nd ed (1886) at 143. 222 A Dialogue Between a Philosopher and a Student of the Common Laws of England, Cropsey (ed) (1971) at 71. 223 Criminal Law: The General Part, 2nd ed (1961) at 575. degenerates into an arbitrary act of violence that can produce nothing but bad social effects." Stephen J stated in R v Price224: "the great leading rule of criminal law is that nothing is a crime unless it is plainly forbidden by law." Hence Hayek saw it as crucial to the rule of law that "the coercive power of the state … be used only in cases defined in advance by the law and in such a way that it can be foreseen how it will be used."225 Finally, as Harris said, retroactivity in criminal law is "pointless … because of the brutal absurdity of today commanding someone to do something yesterday."226 South Australia submitted, however, that the change it favoured "does not create a new offence, it merely removes a protection, arguably, formerly held by husbands." It submitted that there was no inhibition against judicial legislation which fell short of creating a new offence. South Australia relied on the following statement by the English Court of Appeal in R v R about the judicial abolition of the immunity227: "The remaining and no less difficult question is whether … this is an area where the court should step aside to leave the matter to the Parliamentary process. This is not the creation of a new offence, it is the removal of a common law fiction which has become anachronistic and offensive and we consider that it is our duty having reached that conclusion to act upon it." With respect to both South Australia and the English Court of Appeal, this is captious. The substantive effect of South Australia's argument is to expose persons to a risk of criminal prosecution for conduct which was not believed to be criminal at the time it was carried out. That is true even though South Australia sees this reasoning as doing nothing more pernicious than removing an anachronistic and offensive fiction. Sir John Smith said, correctly, "it is not clear that there is a difference in principle" between the judicial creation of a new 224 (1884) 12 QBD 247 at 256. 225 The Road to Serfdom, (1944) at 62. See generally Juratowitch, Retroactivity and the Common Law, (2008) at 43-65, 127-138 and 183-197. 226 Harris, Legal Philosophies, 2nd ed (1997) at 146. 227 R v R [1992] 1 AC 599 at 611 per Lord Lane CJ, Sir Stephen Brown P, Watkins, offence in Shaw v Director of Public Prosecutions228 and the judicial abolition of the immunity229. Zecevic v Director of Public Prosecutions (Vict). South Australia also relied on the following statement of Deane J (dissenting) in Zecevic v Director of Public Prosecutions (Vict)230: "There may be circumstances in which an ultimate appellate court is justified in overruling a previous decision of its own with the consequence that what had previously been accepted as a defence to a charge of murder is no longer, and never was, such a defence". This was a somewhat selective quotation. There are three reasons why it does not support South Australia's case. First, Deane J gave as an illustration the case of R v Shivpuri. In that case the House of Lords departed from earlier authority in order to state the true construction of a statute231. That is a very different matter from changing the common law. There are more difficulties in courts continuing to apply an erroneous construction of a statute than continuing to apply the received common law. The courts are masters of the common law, but servants of statutes. Further, the case in question was a special one. The change in construction did not cut down any "liberty" the accused had enjoyed. On the earlier and rejected construction, the accused was free to attempt to commit a crime if circumstances unknown to him made it impossible to do so. On the later and favoured construction, an attempt to commit the crime in those circumstances was criminal. The freedom arising under the earlier construction was a strange type of freedom. It was not a freedom which persons in the accused's position could be said to have been able to rely on: the relevant circumstances were unknown to them. Thus, as Juratowitch says232: "The absence of sensible reliance or liberty considerations in the case meant that the prohibition on criminal retroactivity was, without 228 [1962] AC 220: see below at [144]-[152]. 229 Commentary on R v C [1991] Crim LR 60 at 63. See also Sir John Smith's commentary on R v R [1991] Crim LR 475 at 478. 230 (1987) 162 CLR 645 at 677; [1987] HCA 26. 232 Retroactivity and the Common Law, (2008) at 195. diminishing the strength of that prohibition in general, eminently susceptible to being justifiably overcome in Shivpuri." Secondly, Deane J gave very detailed reasons for not applying his tentative observation to the case before him in Zecevic v Director of Public Prosecutions (Vict). They do not support South Australia's argument. Thirdly, Deane J made it plain that the undesirability of retroactive changes in criminal law adverse to the accused applies as much to abolishing defences as it does to creating new offences. Thus he said233: "It is simply wrong that an accused may be adjudged not guilty or guilty of murder according to the chance of whether his trial is completed before or after this Court has abolished a defence which, under the law which the Court itself had definitively settled at the time the offence was committed, reduced the offence from murder to manslaughter." He called this "a macabre lottery". The macabre character of the lottery is heightened in this case. Those who have caused the prosecution to be brought have allowed 47 years to pass before charging the appellant. Another problem with South Australia's argument is that it invites retrospective judicial legislation which collides with legal structures created by parliamentary legislation. Thus Brennan J, the only Justice in R v L not to state that Hale's proposition had ceased to exist, succinctly and correctly said234: "a mere judicial repeal of the [exception] would extend the liability for conviction of the crime of rape to cases which would be excluded from liability for conviction by s 73(5) of the Criminal Law Consolidation Act."235 Brennan J's point was that s 73(5) permitted convictions for rape in the aggravated circumstances stated in the sub-section, but otherwise preserved the common law "exception" from liability. To "repeal" the common law "exception" would expose husbands to a greater risk of prosecution for acts carried out before s 73(5) was enacted in 1976 than after it. Section 73(5) did not apply retrospectively. The greater exposure of husbands to risk of prosecution would depart significantly from the legislative scheme. It would mean that in 233 (1987) 162 CLR 645 at 677-678 (citation omitted). 234 R v L (1991) 174 CLR 379 at 402. The text has "section" instead of "exception", but this is an error. 235 See below at [175]. 1976 Parliament narrowed the scope of a husband's liability for sexual offences committed against his wife, rather than expanded it. And yet the seeming function of the legislation was to expand liability, not narrow it. Professional attitudes in 1963-1965. The retrospectivity involved in South Australia's arguments is highlighted by considering the following question. What would actually have happened if, instead of the appellant being charged with rape in 2010, he had been charged immediately after the second of the alleged offences had occurred in April 1963? the law "the is what judge says Lord Reid said: Mr Justice Holmes, as is well known, remarked that the bad man "does want to know what the Massachusetts or English courts are likely to do in fact. I am much of his mind. The prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by the law."237 No doubt it is often unrealistic to assume that people take account of the criminal law in deciding what conduct to engage in238. It is probably particularly unrealistic in relation to violent sexual crimes. However, people should be able to know, by recourse to a competent lawyer, what the legal consequences of a proposed course of action are before embarking on it239. What would a bad man in South Australia have learned if he had asked for a prophecy as to what the South Australian courts, and this Court, would be likely to say in the years 1963 to 1965, for example, if he had been charged in April 1963 with raping his wife in March and April and he had challenged the validity of the indictment or appealed against a conviction? There were at that time seven judges in the Supreme Court of South Australia. The Chief Justice was Sir Mellis Napier, in his 40th year of service on that Court. The senior puisne judge was Sir Herbert Mayo, in his 22nd year of service. Next in seniority came Sir Reginald Roderic St Clair Chamberlain: universally known as "Joe", he did not share the impulsiveness or the radicalism 236 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 22. 237 Holmes, "The Path of the Law", (1897) 10 Harvard Law Review 457 at 461. 238 Rodger, "A Time for Everything under the Law: Some Reflections on Retrospectivity", (2005) 121 Law Quarterly Review 57 at 68. Cf Williams, Criminal Law: The General Part, 2nd ed (1961) at 601-603. 239 See Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591 at 638; Fothergill v Monarch Airlines Ltd [1981] AC 251 at 279; and R v Rimmington [2006] 1 AC 459 at 480-482 [33]. of his namesake. The other judges were Justices Millhouse, Travers, Hogarth and Bright. This Court comprised Chief Justice Dixon and Justices McTiernan, Kitto, Taylor, Menzies, Windeyer and Owen. It is hard to see where a majority of two was to be found in the Supreme Court of South Australia in favour of the view that Hale's proposition never was, or had ceased to be, the law in South Australia. It is equally hard to see where a majority of three or four in favour of that view was to be found in this Court. Indeed, it is hard to find even one vote for that proposition. This is not simply a crass piece of legal "realism". It does not rest on the personal idiosyncrasies of the individual judges. The probabilities were strongly against either majority because of the particular ideas of the time. They were universal ideas among the Australian judiciary. To overturn Hale's proposition, or to deny that it ever had been the law, or to hold that it had earlier dissolved into nothingness, was to widen the criminal law. It was a legal commonplace in the middle of the 20th century that it was wrong for judges "to declare new offences": that "should be the business of the legislature." So spoke Lord Goddard CJ, Sellers and Havers JJ in 1953, in R v Newland240. They also stated that it was wrong for241: "the judges to declare new crimes and enable them to hold anything which they considered prejudicial to the community to be a misdemeanor. However beneficial that might have been in days when Parliament met seldom or at least only at long intervals it surely is now the province of the legislature and not of the judiciary to create new criminal offences." And in Director of Public Prosecutions v Withers, in 1974, Lord Simon of Glaisdale said242 that it was an "undoubted [principle] of law" that "it is not open to the courts nowadays either to create new offences or so to widen existing offences as to make punishable conduct of a type hitherto not subject to punishment". The same view would prevent any judicial widening of so extremely serious a crime as rape. That view was well-entrenched among judges, practising lawyers and academic lawyers. Contemporary reaction to two surprising decisions of the House of Lords in 1960 and 1961 demonstrates how well-entrenched it was. Director of Public Prosecutions v Smith. The first was a murder case, Director of Public Prosecutions v Smith. The trial judge (Donovan J) directed a 240 [1954] 1 QB 158 at 165. 241 [1954] 1 QB 158 at 167. 242 [1975] AC 842 at 863. jury that if the accused, in doing what he did, must as a reasonable man have contemplated that serious harm was likely to occur to the victim, he was guilty of murder – whether or not the accused actually had that contemplation. The Court of Criminal Appeal (Byrne, Sachs and Winn JJ) allowed Smith's appeal and substituted for the verdict of capital murder a verdict of manslaughter. On 28 July 1960, the House of Lords (Viscount Kilmuir LC, Lords Goddard, Tucker, Denning and Parker of Waddington) allowed a prosecution appeal and restored the conviction for capital murder. Viscount Kilmuir LC said that an accused person who was accountable for his actions and who carried out an unlawful and voluntary act was guilty of murder if the ordinary reasonable man would, in all the circumstances of the case, have contemplated grievous bodily harm as the natural and probable result of that act243. Shaw v Director of Public Prosecutions. The second case was decided on 4 May 1961. The House of Lords (Viscount Simonds, Lords Tucker, Morris of Borth-y-Gest and Hodson; Lord Reid dissenting) held in Shaw v Director of Public Prosecutions that the courts could create new crimes. Viscount Simonds said that the courts had: "a residual power, where no statute has yet intervened to supersede the common law, to superintend those offences which are prejudicial to the public welfare. Such occasions will be rare, for Parliament has not been slow to legislate when attention has been sufficiently aroused. But gaps remain and will always remain since no one can foresee every way in which the wickedness of man may disrupt the order of society."244 Lord Reid, whose reputation, still high, was extremely high in the early 1960s, dissented. He quoted with approval the second passage from R v Newland set out above245. He said246: "the courts cannot now create a new offence". Contemporary reactions to Shaw v Director of Public Prosecutions. Shaw v Director of Public Prosecutions attracted heavy criticism247. Probably for that 243 [1961] AC 290 at 327. 244 [1962] AC 220 at 268. 245 [1962] AC 220 at 274-275. 246 [1962] AC 220 at 276. 247 For example, Hall Williams, "The Ladies' Directory and Criminal Conspiracy: The Judge as Custos Morum", (1961) 24 Modern Law Review 626; Smith, "Commentary", [1961] Criminal Law Review 470; Seaborne Davies, "The House of Lords and the Criminal Law", (1961) 6 Journal of the Society of Public Teachers (Footnote continues on next page) reason, the principle it enunciated has since been narrowed 248. The modern English view corresponds with Lord Reid's. Thus Lord Bingham of Cornhill said249: "there now exists no power in the courts to create new criminal offences". An example of the contemporary reaction to Shaw v Director of Public Prosecutions is what P J Fitzgerald, a prominent Anglo-Irish criminal lawyer, wrote in 1962250: "Few cases in recent years have been quite so disturbing as this. The resuscitation of the judicial power to create crimes runs counter to two cardinal principles of free and democratic government." Fitzgerald put the first as follows251: "[T]he idea of the rule of law … is based on the demand that the citizen should be ruled by laws and not by the whims of men. In the sphere of criminal law this idea has become crystallized as … a principle according to which only breaches of existing criminal law should be punishable. The justification of this principle, which has been adopted as an actual rule in some legal systems, though not in the English legal system, is that the citizen should be able to know beforehand what conduct is permitted and what forbidden; for only in this way can he order his affairs with certainty and avoid coming into conflict with the law. It is this demand for certainty with regard to the provisions of the criminal law that militates against retrospective criminal legislation. When Parliament creates a new crime, it almost invariably legislates for the future only. This, however, is just what the courts cannot do. Our legal system is such that a court can of Law 104; Turpin, "Criminal Law – Conspiracy to Corrupt Public Morals", [1961] Cambridge Law Journal 144. 248 Director of Public Prosecutions v Bhagwan [1972] AC 60 at 80; Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions [1973] AC 435; Director of Public Prosecutions v Withers [1975] AC 842. 249 R v Jones (Margaret) [2007] 1 AC 136 at 161-162 [28]; see also at 171 [61] per Lord Hoffmann and 179-180 [102] per Lord Mance. 250 Criminal Law and Punishment, (1962) at 9. 251 Criminal Law and Punishment, (1962) at 9-10. The passage from Bentham to which Fitzgerald refers is from "Truth versus Ashhurst", in Bowring (ed), The Works of Jeremy Bentham, (1843), vol V at 235. It is conveniently set out in R v Rimmington [2006] 1 AC 459 at 480 [33]. only decide a point of law which arises in some actual case before the court, and consequently the court's decision always relates back to the facts of this case, facts which of course precede the decision. If, therefore, a court manufactures a new crime, it thereby determines after the event that the defendant's conduct, which at the time of commission was not prohibited by law, is a criminal offence. To countenance this type of retrospective criminal legislation means that certainty and consequently freedom are at an end. Bentham long ago pointed out that when the judges make law like this, they are treating the citizen as a man treats his dog, hitting him every time he does something to which the master takes exception. Animals and young children can only be trained in this way. Sane and adult members of a free society, however, are entitled to demand first to be told what conduct is forbidden so that they may choose whether or not to keep within the law." Fitzgerald put the second objection to "the creation of new offences by the courts" thus252: "Even suppose that a court could decide that the kind of act which the defendant had done would in future, though not in the instant case, constitute a crime, there is still the objection that this type of proceeding is not consonant with democratic government. If Parliament creates a new crime, the citizens whose liberty is thereby restricted have the consolation that this was done by their elected representatives whom they chose to perform this sort of activity, and whom in due course they may re-elect or reject. The judges, on the other hand, are appointed by the Crown, virtually irremovable and in practice accountable to no one. That such a body should have the power to decree that certain acts shall constitute crimes is totally incompatible with the notion of democracy." In similar vein, Lord Reid said that judicial legislation should be avoided when "public opinion is sharply divided on any question"253. The development of the criminal law raises questions which often sharply divide public opinion. Lord Reid employed arguments similar to those of Fitzgerald in Shaw v Director of Public Prosecutions254. And twice in R v Newland255, the Court of 252 Criminal Law and Punishment, (1962) at 10. 253 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 23. See also Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions [1973] AC 435 at 489. 254 [1962] AC 220 at 275. 255 [1954] 1 QB 158 at 165 and 167. Criminal Appeal referred to Sir James Fitzjames Stephen's statement of related arguments 70 years earlier256: "it is hardly probable that any attempt would be made to exercise [a power of declaring new offences] at the present day; and any such attempt would be received with great opposition, and would place the bench in an invidious position. … In times when legislation was scanty, [that power was] necessary. That the law in its earlier stages should be developed by judicial decisions from a few vague generalities was natural and inevitable. But a new state of things has come into existence. On the one hand, the courts have done their work; they have developed the law. On the other hand, parliament is regular in its sittings and active in its labours; and if the protection of society requires the enactment of additional penal laws, parliament will soon supply them. If parliament is not disposed to provide punishments for acts which are upon any ground objectionable or dangerous, the presumption is that they belong to that class of misconduct which it is not desirable to punish. Besides, there is every reason to believe that the criminal law is, and for a considerable time has been, sufficiently developed to provide all the protection for the public peace and for the property and persons of individuals which they are likely to require under almost any circumstances which can be imagined; and this is an additional reason why its further development ought to be left in the hands of parliament." Lord Diplock used similar reasoning in Knuller (Publishing, Printing and Promotions) Ltd v Director of Public Prosecutions257 to advocate a retreat from Shaw v Director of Public Prosecutions. The views of a scholar who received his legal education in Adelaide shortly before the appellant allegedly committed the conduct charged are representative of how lawyers thought at that time and in that place258: "the administration, or working-out, of the criminal law's prohibitions is permeated by rules and principles of procedural fairness ('due process of law') and substantive fairness (desert, proportionality), which very substantially modify the pursuit of the goal of eliminating or diminishing the undesired forms of conduct: such principles as nulla poena sine lege 256 A History of the Criminal Law of England, (1883), vol III at 359-360. 257 [1973] AC 435 at 473-474. See also Lord Simon of Glaisdale at 489. 258 Finnis, Natural Law and Natural Rights, (1980) at 261-262. (and rather precise leges, at that), and the principles which outlaw retroactive proscription of conduct (at the known cost of letting some dubious characters slip through the net), and restrain the process of investigation, interrogation, and trial (even at the expense of that terror which a Lenin knows is necessary for attaining definite social goals)." (emphasis in original) Ideas of this kind, though perhaps less congenial to the mentalities of recent decades, were very familiar to Australian judges in the early 1960s. They universally assented to those ideas. Contemporary reactions to Director of Public Prosecutions v Smith. Director of Public Prosecutions v Smith, too, attracted immediate criticism. In Australia it was rightly seen as an extension of the law of murder. Shortly before his death, Sir Wilfred Fullagar, then a Justice of this Court, entered Sir Owen Dixon's chambers and observed: "Well, Dixon, they're hanging men for manslaughter in England now."259 The doctrine stated in Director of Public Prosecutions v Smith was soon abolished by statute in England260. Glanville Williams called it "the most criticised judgment ever to be delivered by an English court."261 Lord Reid called it a "disaster"262. Dixon CJ, in his 35th year on the High Court and nearing the end of his eighth decade, levelled the most damaging criticism of all at it in Parker v The Queen. Judgment was delivered on 24 May 1963. That was at or shortly before the time the present appellant could have had the question of his immunity from prosecution for allegedly raping his wife in March and April 1963 considered by the courts, had the complainant, the police, the prosecuting authorities, and the courts moved expeditiously. Dixon CJ delivered a dissenting judgment. But it concluded with a passage263 with which all other members of the Court (Taylor, Menzies, Windeyer and Owen JJ) agreed264. In reading that passage, it must be remembered that up to 1963 it had been the High Court's 259 Ayres, Owen Dixon, (2003) at 276. 260 Criminal Justice Act 1967, s 8. 261 Textbook of Criminal Law, 2nd ed (1983) at 81. See also Williams, "Constructive Malice Revived", (1960) 23 Modern Law Review 605. 262 "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 29. 263 (1963) 111 CLR 610 at 632; [1963] HCA 14. 264 (1963) 111 CLR 610 at 633. practice to follow decisions of the House of Lords265. It had also been the Court's practice to pay great respect to the decisions of the English Court of Appeal266, and decisions of English High Court judges. That was so even though no appeal lay from any Australian court to those Courts. "In Stapleton v The Queen267 we said: 'The introduction of the maxim or statement that a man is presumed to intend the reasonable consequences of his act is seldom helpful and always dangerous'268. That was some years before the decision in Director of Public Prosecutions v Smith269, which seems only too unfortunately to confirm the observation. I say too unfortunately for I think it forces a critical situation in our (Dominion) relation to the judicial authority as precedents of decisions in England. Hitherto I have thought that we ought to follow decisions of the House of Lords, at the expense of our own opinions and cases decided here, but having carefully studied Smith's Case270 I think that we cannot adhere to that view or policy. There are propositions laid down in the judgment which I believe to be misconceived and wrong. They are fundamental and they are propositions which I could never bring myself to accept." Dixon CJ then said that Smith's case "should not be used as authority in Australia at all." Those were terrible words. They were brooding, sombre and unusually passionate. In them the aged Chief Justice revealed that at the end of his career he had plumbed the depths of an intolerable nightmare. His reaction shows the Court being provoked by a retrospective judicial expansion of criminal liability in England into a determination to preserve crucial common law principles in Australia, not applaud or foster their destruction. This Court had changed its own rules of stare decisis in order to preserve Australian law. Those rules are 265 Piro v W Foster & Co Ltd (1943) 68 CLR 313 at 320; [1943] HCA 32. See also Wright v Wright (1948) 77 CLR 191 at 210; [1948] HCA 33. There Dixon J said that diversity was "an evil", and that the "avoidance [of diversity] is more desirable than a preservation here of what we regard as sounder principle." 266 Waghorn v Waghorn (1942) 65 CLR 289 at 292; [1942] HCA 1. 267 (1952) 86 CLR 358; [1952] HCA 56. 268 (1952) 86 CLR 358 at 365. fundamental to the judicial method. The change was very substantial. Though the High Court continued to be bound by Privy Council decisions, on most points of law there was much more authority from the House of Lords and the English Court of Appeal than the Privy Council. For those reasons Parker v The Queen astonished the Australian legal profession. But its repudiation of the thinking underlying Director of Public Prosecutions v Smith accorded with the ideas of the Australian legal profession. What would the courts have done in 1963-1965? Had the appellant been charged with rape in April 1963, the immediate background to any claim by him of immunity from prosecution would have included the following elements. There was a continuing furore in which Lord Reid's dissent in Shaw v Director of Public Prosecutions was receiving overwhelming favour. There had been an explicit repudiation of English authority for the first time in Australian history271 in part because of its retrospective expansion of criminal liability. There was universal acceptance in the Australian judiciary of conceptions of the kind stated by Stephen, Lord Reid and Fitzgerald. They were conceptions ultimately rooted in the common understanding of the rule of law272. Recourse to the principal English works on criminal law which were available in 1963273 or soon to be published274 would have revealed that Hale's proposition as reflected in recent authorities was stated as the law. The same was true of Australian works 271 However, there had been a premonitory sign in Commissioner for Railways (NSW) v Cardy (1960) 104 CLR 274 at 285; [1960] HCA 45. 272 See Finnis, Natural Law and Natural Rights, (1980) at 270 (proposition (i)). 273 Fitzwalter Butler and Garsia (eds), Archbold: Pleading, Evidence & Practice in Criminal Cases, 35th ed (1962) at 1150 [2880]; Halsbury's Laws of England, 3rd ed (1955), vol 10 at 746 [1437]; Sturge (ed), Stephen's Digest of the Criminal Law (Indictable Offences), 9th ed (1950) at 263 (which includes the footnote Stephen had amended in the 4th ed (1887), the last he published in his lifetime): see below at [218]; Turner (ed), Russell on Crime, 11th ed (1958), vol 1 at 791; Turner (ed), Kenny's Outlines of Criminal Law, 18th ed (1962) at 192; Cross and Jones, An Introduction to Criminal Law, 4th ed (1959) at 76 and 160; Palmer and Palmer (eds), Harris's Criminal Law, 20th ed (1960) at 244. 274 Cross and Jones, An Introduction to Criminal Law, 5th ed (1964) at 79; Smith and Hogan, Criminal Law, (1965) at 290-292. available in 1963275 or shortly thereafter276. This Court was not taken to any works stating that Hale's proposition was not the law. The leading English and Australian academic lawyers specialising in criminal law – Professor Glanville Williams, Sir Rupert Cross, Sir John Smith, Professor Hogan, Professor Howard, Professor Brett, Professor Waller and Professor Morris – were agreed that the immunity existed. No Australian case denied Hale's proposition. A handful of English cases had qualified it, but only to a small degree277. Against that background, four questions arise. What prospect was there that the South Australian courts or the High Court would accede to an attempt by South Australia to effect a judicial extension, retrospectively, of criminal liability? What prospect was there that they would rule that the immunity had never existed? What prospect was there that they would accede to a submission that though the immunity had existed for a long time, it had disappeared some decades earlier? What prospect was there that they would accede to a submission that though the immunity had existed up to 1963, it should be abolished (necessarily with retrospective effect)? To each of those four questions the answer must be: "None". That answer is supported by the fact that once they came to consider the problem, neither the Australian nor the English courts wavered, until 1991, from the view asserted and assumed until then that Hale's proposition was substantially correct278. is necessary, with respect, emphatically to reject the statement that "in 1963, a respectable challenge to Sir Matthew Hale's opinion could have been mounted."279 To believe that is to believe that history can be rewritten in complete defiance of all contemporary evidence. It contradicts the reasoning of the House of Lords in R v R280. Foreseeability. South Australia did not rely on an argument which appealed to the European Court of Human Rights. But it is convenient to mention it. That Court held that the United Kingdom was not in contravention of 275 Weigall and McKay (eds), Hamilton and Addison: Criminal Law and Procedure, 6th ed (1956) at 88; Bourke, Sonenberg and Blomme, Criminal Law, (1959) at 43. See also Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247. 276 Brett and Waller, Cases and Materials in Criminal Law, 2nd ed (1965) at 300; Howard, Australian Criminal Law, (1965) at 145-147. 277 See above at [97]-[98]. 278 See above at [94]-[100]. 279 R v P, GA (2010) 109 SASR 1 at 13 [66] per Doyle CJ. 280 [1992] 1 AC 599: see above at [103]. Art 7 of the European Convention on Human Rights by reason of the decision in R v R because the abolition of the immunity was reasonably foreseeable281. This is a highly questionable justification for retrospective judicial change in the criminal law. But even if it is an arguable justification, it cannot apply here. It may be one thing to hold that it was reasonably foreseeable in 1990 that the immunity might be abolished in 1991. But in 1963 it was not reasonably foreseeable that if the matter came to court there would be an immediate abolition of the immunity by judicial means282. The significance of R v L. South Australia submitted that statements in R v L supported its second submission283. But it accepted that they were unnecessary to the decision in that case, and hence were dicta only. They were dicta about an aspect of the common law – a presumed incapacity to withdraw consent – which had been abolished by statute in every Australian jurisdiction. Further, they were dicta which said only that Hale's proposition was not in 1991 part of the common law of Australia. They said nothing in terms about what the position was in 1963. For the Court in this appeal the question is whether, as a matter of ratio decidendi, not obiter dicta, South Australia's second submission should be recognised as correct. An annihilatingly powerful reason for not recognising it is that it criminalises conduct which, if it took place, was lawful at the time it took place. Conclusion on South Australia's second submission. A decision by the legislature of South Australia after 1963 to enact a law retrospectively providing that the immunity was abolished with effect from a date before 1963 would have been subject to criticism from many quarters. That would have been significant, not because the critics would have been numerous, but because their criticisms would have been most trenchant284. South Australia's submission that the same result is to be achieved by a judicial decision to that effect is open to even greater criticism. The position of the judiciary in this respect is not superior to that of the legislature. For those reasons South Australia's second submission must be rejected. 281 SW v United Kingdom (1995) 21 EHRR 363 at 402 [43/41]. 282 Cf R v C [2004] 1 WLR 2098; [2004] 3 All ER 1, dealing with conduct in 1970 – a case exemplifying to a very marked degree the fallacy known to personal injury lawyers of finding foreseeability solely on the basis of hindsight. 283 (1991) 174 CLR 379 at 390 per Mason CJ, Deane and Toohey JJ and 405 per 284 See Walker, The Rule of Law, (1988) at 315-324. Issues which need not be resolved The appellant contended that a common law rule should be created by this Court to the effect that when there is a judicial change to the common law it only operates prospectively, not retrospectively. This would involve overruling prior authority285. That contention would only become a live issue if the common law as stated by Hale were held to have changed in the past (as South Australia submitted) or were to be changed now (as South Australia did not submit). It is not correct to arrive at either holding. Hence the need to consider the contention does not arise. Orders The appeal should be allowed. For the answer to the question of law given by the majority in the Full Court of the Supreme Court of South Australia there should be substituted the answer: "No". 285 Ha v New South Wales (1997) 189 CLR 465 at 503-504; [1997] HCA 34. Bell BELL J. In 2010, an Information was filed in the District Court of South Australia, charging the appellant with offences including two counts of rape. The complainant in each count was his then wife, GP, with whom he was living at the time. The offences of rape are alleged to have occurred in March and April 1963. It cannot be sensibly suggested that the appellant would have been prosecuted for those offences, had the allegations come to the attention of the authorities in 1963. This is because at that time it was understood that the crime of rape could not be committed by a husband against his wife with whom he was living ("the immunity"). A husband was amenable under the criminal law for any other offence of violence committed against his wife. The imposition of criminal liability on a person for an act or omission to which criminal liability did not attach at the date the act was done or omitted to be done is contrary to fundamental principle286. It is said that the prosecution of the appellant today for his conduct in 1963 does not offend that principle because the immunity has never formed part of the common law of Australia or, if it did, it had ceased to do so sometime before 1963. The first of these alternatives rests on demonstrating either the absence of an authoritative source for the immunity or that in R v L287 this Court declared the common law in terms that denied its existence. For the reasons that follow, neither of those propositions should be accepted. Nor should this Court now hold that, on some date before 1963, a settled rule of the common law affecting liability for a serious criminal offence ceased to exist. Procedural history The appellant was due to stand trial in the District Court of South Australia (Herriman DCJ) on 5 July 2010. On 29 June 2010, he applied to quash the counts in the Information charging him with rape contrary to s 48 of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act"). Herriman DCJ stated a case reserving a question of law for the determination of the Full Court of the Supreme Court of South Australia288. His Honour set out the following facts: each count charged an act of non-consensual penile-vaginal sexual intercourse with GP; GP and the appellant were married and cohabiting as husband and wife at the date of each alleged offence; and no legal orders or undertakings of any kind affected the marital relationship on those dates. The question of law that his Honour reserved is: 286 Nullum crimen sine lege; nulla poena sine lege (no crime or punishment without law). See Dicey, Introduction to the Study of the Law of the Constitution, 10th ed 287 (1991) 174 CLR 379; [1991] HCA 48. 288 CLC Act, s 350(2)(b). Bell "Was the offence of rape by one lawful spouse of another, in the circumstances as outlined above, an offence known to the law of South Australia as at 1963?" The Full Court, by majority (Doyle CJ and White J, Gray J dissenting), answered the question289 in this way290: "The defendant is liable at law to be found guilty of the offences of rape charged in count 3 and count 5 of the information, notwithstanding that at the time of the alleged offence he was married to the alleged victim and was cohabiting with her, the marriage giving rise to no presumption of consent on her part to intercourse with her husband, and giving rise to no irrebuttable presumption to that effect." By special leave, the appellant appeals to this Court against the answer given by the majority in the Full Court. The law of rape in South Australia Before turning to the Full Court's reasons, some reference should be made to the history of the law governing liability for rape in South Australia and to the decision in R v L. In 1963, the punishment for the offence of rape was provided by s 48 of the CLC Act: "Any person convicted of rape shall be guilty of felony, and liable to be imprisoned for life, and may be whipped." The elements of the offence of rape were supplied by the common law. The understanding that a husband could not be guilty as a principal in the first degree of the rape of his wife is traced to the statement of Sir Matthew Hale in The History of the Pleas of the Crown291: 289 Doyle CJ (White J concurring) restated the question as "whether Mr P can, as a matter of law, properly be convicted of count 3 and count 5 in the circumstances outlined": R v P, GA (2010) 109 SASR 1 at 4 [6]. 290 R v P, GA (2010) 109 SASR 1 at 19 [93] per Doyle CJ, 45 [174] per White J. 291 (1736), vol 1, c 58 at 629. Bell "But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." There does not appear to have been a single case in which a husband had been prosecuted for the rape of his wife with whom he was living in any common law jurisdiction at the date of the conduct with which the appellant is charged. By that date, as will appear, the justification for the immunity may have come to rest more upon the notion that the criminal law ought not to intrude into the marital bedroom, than upon the fiction of the wife's irrevocable consent. By the 1970s, the idea that there could be any justification for conferring immunity on a husband for the rape of his wife was the subject of critical academic attention and pressure for reform of the law292. South Australia was the first of the Australian jurisdictions to respond to the call for reform of the law of rape. In December 1975, the Attorney-General appointed a Committee of persons distinguished for their knowledge of the criminal law to report on the law relating to sexual offences293. The Committee was chaired by Justice Roma Mitchell of the Supreme Court of South Australia. The Committee submitted its Report to the Attorney-General in March 1976294. The Report contained a summary of the law stating that a husband could not be 292 The Women's Electoral Lobby was formed in 1972. See s 2 of its "Draft Bill and Other Recommendations on Sexual Offences (Superseding Draft Bill of August 1977; plus addenda of July 1978)", in Scutt (ed), Rape Law Reform, (1980) 265 at 268. See also Scutt, "Consent in Rape: The Problem of the Marriage Contract", (1977) 3 Monash University Law Review 255; Buddin, "Revision of Sexual Offences Legislation: A Code for New South Wales?", (1977) 2 University of New South Wales Law Journal 117 at 128-130; Sallmann and Chappell, Rape Law Reform in South Australia: A Study of the Background to the Reforms of 1975 and 1976 and of their Subsequent Impact, Adelaide Law Review Research Paper No 3, (1982) at v, 1-4, 10, 19-23. See, further, LeGrand, "Rape and Rape Laws: Sexism in Society and Law", (1973) 61 California Law Review 919; Brownmiller, Against Our Will: Men, Women and Rape, (1975); Geis, "Lord Hale, Witches, and Rape", (1978) 5 British Journal of Law and Society 26. 293 The other members of the Committee were Professor Howard, Hearn Professor of Law at Melbourne University and the author of the leading text on the criminal law in Australia, and Mr David Biles, the Assistant Director (Research) at the Australian Institute of Criminology. Mr Warren Brent Fisse, then Reader in Law at the University of Adelaide, was engaged as a consultant to the Committee. 294 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976). Bell guilty as a principal in the first degree of the rape of his wife. The Committee noted judicial development of the law in England allowing an exception to the immunity in the case of a wife who had obtained an order for separation relieving her from the obligation to cohabit with her husband295. It recommended that the immunity should be confined such that a husband should be liable to conviction for the rape of his wife whenever the act constituting the rape was committed while the two were living apart and not under the same roof296. Following receipt of the Committee's Report, the South Australian Parliament amended the CLC Act297 by introducing s 48(1), which stated the elements of the offence of rape, and s 73, which relevantly provided: "(3) No person shall, by reason only of the fact that he is married to some other person, be presumed to have consented to sexual intercourse with that other person. (5) Notwithstanding the foregoing provisions of this section, a person shall not be convicted of rape or indecent assault upon his spouse, or an attempt to commit, or assault with intent to commit, rape or indecent assault upon his spouse (except as an accessory) unless the alleged offence consisted of, was preceded or accompanied by, or was associated with – assault occasioning actual bodily harm, or threat of such an assault, upon the spouse; an act of gross indecency, or threat of such an act, against the spouse; 295 In R v Clarke [1949] 2 All ER 448, Byrne J held that, although as a general proposition of law a husband could not be guilty of rape of his wife, there was an exception where the wife was living separately and with the protection of a court order. The exception was recognised but did not apply in the circumstances in R v Miller [1954] 2 QB 282 (see fn 339 below) and it was extended in R v O'Brien [1974] 3 All ER 663. See Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 296 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 15 [6.2.1]. 297 Criminal Law Consolidation Act Amendment Act 1976 (SA). Bell an act calculated seriously and substantially to humiliate the spouse, or threat of such an act; or threat of the commission of a criminal act against any person." In the period following the South Australian reforms, the parliaments of each of the States and Territories enacted legislation with the evident intention of modifying or abolishing the immunity. This process of reform was completed by December 1991, when R v L was decided. In the Code States, this was achieved by removing the words "not his wife" from the definition of the offence298. In the Northern Territory, it was achieved by enacting the Criminal Code (NT) in terms that did not limit rape to an offence outside marriage299. In the Australian Capital Territory and New South Wales, it was done by enacting that the fact of marriage was no bar to conviction for the offence300. In Victoria and South Australia, any presumption of spousal consent to sexual intercourse on marriage was, in terms, abolished301. South Australia was alone in providing a limited immunity for 298 The Acts Amendment (Sexual Assaults) Act 1985 (WA) repealed s 325 of the Criminal Code (WA) and introduced s 324D, which provided that "[a]ny person who sexually penetrates another person without the consent of that person is guilty of a crime". The Criminal Code Amendment (Sexual Offences) Act 1987 (Tas) substituted a new s 185(1) of the Criminal Code (Tas), providing that "[a]ny person who has sexual intercourse with another person without that person's consent is guilty of a crime". The Criminal Code, Evidence Act and other Acts Amendment Act 1989 (Q) repealed s 347 of the Criminal Code (Q) and substituted a provision defining rape as "carnal knowledge of a female without her consent". 299 Criminal Code Act 1983 (NT), incorporating the Criminal Code (NT), s 192(1). 300 The Crimes (Sexual Assault) Amendment Act 1981 (NSW) inserted s 61A(4) into the Crimes Act 1900 (NSW), which provided that the fact that a person is married to a person on whom an offence of sexual assault is alleged to have been committed is no bar to conviction for that offence. The Crimes (Amendment) Ordinance (No 5) 1985 (ACT) inserted s 92R into the Crimes Act 1900 (NSW), as it applied to the ACT, which provided that the fact that a person is married to a person upon whom an offence of sexual intercourse without consent contrary to s 92D is alleged to have been committed shall be no bar to the conviction of the first-mentioned person for the offence. 301 In Victoria, the Crimes (Amendment) Act 1985 (Vic) substituted for s 62(2) of the Crimes Act 1958 (Vic) a new sub-section providing that the existence of a marriage does not constitute, or raise any presumption of, consent by a person to a sexual penetration or indecent assault by another person. Bell husbands in the case of non-aggravated offences. Further amendments introduced into the CLC Act in 1992 removed this partial immunity302. In R v L, the validity of s 73(3) of the CLC Act was challenged on the ground of inconsistency with Commonwealth law. The claimed inconsistency was with s 114(2) of the Family Law Act 1975 (Cth), which conferred power on the Family Court of Australia to make an order relieving a party to a marriage from any obligation to perform marital services or to render conjugal rights. The Court held that there was no direct or indirect inconsistency between the State and Commonwealth laws303. Resolution of the issue presented in R v L did not require consideration of proof of the offence of rape under the common law. Among the submissions advanced on L's behalf was that s 114(2) of the Commonwealth statute preserved the common law inability of a wife to withhold her consent to sexual intercourse with her husband. In their joint reasons, Mason CJ, Deane and Toohey JJ said that, "if it was ever the common law that by marriage a wife gave irrevocable consent to sexual intercourse by her husband, it is no longer the common law"304. This statement was prominent in the respondent's submissions before the Full Court and on this appeal. The Full Court Doyle CJ, writing for the majority in the Full Court, answered the reserved question on the footing that it was likely that Hale's statement of the immunity would have been accepted as a correct statement of the common law of Australia in 1963305. Nonetheless, his Honour said the Full Court should apply the considered statement of this Court that any presumption of irrevocable consent to sexual intercourse no longer formed part of the common law306. His Honour encapsulated the operation of the declaratory theory of the common law in the following statement307: 302 Criminal Law Consolidation (Rape) Amendment Act 1992 (SA). 303 R v L (1991) 174 CLR 379 at 385. 304 R v L (1991) 174 CLR 379 at 390. 305 R v P, GA (2010) 109 SASR 1 at 13 [66]. 306 R v P, GA (2010) 109 SASR 1 at 4 [8], 17 [82]. 307 R v P, GA (2010) 109 SASR 1 at 4 [9]. Bell "Mr P is charged with offences against the then s 48 of the [CLC Act]. In 1963 the elements of that offence were determined by the common law. Today, those elements are determined by the common law as stated by the majority in R v L." Gray J dissented. His Honour considered that the majority in R v L had not declared the common law with respect to liability for rape308. He reviewed the history and concluded that the appellant could not have been convicted of the rape of GP in 1963309. His Honour would have answered the reserved question in the negative310. Developments in Scotland and England Before returning to the decision in R v L, reference should be made to judicial development of the law relating to the immunity in Scotland and England. In S v HM Advocate311, an accused was indicted in the High Court of Justiciary in Scotland for the rape of his wife, with whom he was cohabiting. He challenged the count, contending that no crime known to the law of Scotland had been committed. The motion was dismissed and the dismissal upheld on appeal. Lord Justice-General Emslie, giving the judgment of the Court, noted that there was no authority holding that a cohabiting husband could be convicted of the rape of his wife312. His Lordship considered the state of English law to be sufficiently summarised in Glanville Williams' Textbook of Criminal Law313: 308 R v P, GA (2010) 109 SASR 1 at 36 [146], 37 [148]. The reference to the majority in the context is to the joint reasons of Mason CJ, Deane and Toohey JJ and the 309 R v P, GA (2010) 109 SASR 1 at 29 [132]. 310 R v P, GA (2010) 109 SASR 1 at 45 [173]. 311 1989 SLT 469. 312 S v HM Advocate 1989 SLT 469 at 471. There had been cases in Scotland following Clarke (see fn 295 above) that allowed the conviction of a man for the rape of his wife where they were separated: HM Advocate v Duffy 1983 SLT 7; HM Advocate v Paxton 1985 SLT 96. 313 S v HM Advocate 1989 SLT 469 at 472, citing Williams, Textbook of Criminal Law, 2nd ed (1983) at 236. Bell "A husband is legally incapable of perpetrating rape upon his wife unless the parties are judicially separated, or (probably) separated by consent, or unless the court has issued an injunction forbidding the husband to interfere with his wife, or the husband has given an undertaking to the court in order to avoid the issue of the injunction." Lord Emslie referred with approval to Glanville Williams' views on the justification for the immunity314: "The reason traditionally given for the general rule is the totally unconvincing one that the wife's consent is given on marriage, and she cannot revoke it. It would be an understatement to say that this authentic example of male chauvinism fails to accord with current opinion as to the rights of husbands." The immunity in the law of Scotland was traced to the unequivocal statement of it by Baron Hume315, which, in turn, drew on Hale. The Court accepted that Hume's statement of the law may have been correct in the 18th and early 19th centuries. However, the application of the rule in the late 20th century depended on the reasons justifying it and it was said that irrevocable consent, "if it ever was a good reason, no longer applies today"316. In 1985, in R v Roberts, the Criminal Division of the Court of Appeal of England and Wales said317: "In our judgment the law is now quite plain on this topic [marital rape]. The status of marriage involves that the woman has given her consent to her husband having intercourse with her during the subsistence of the marriage. She cannot unilaterally withdraw it." 314 S v HM Advocate 1989 SLT 469 at 473-474, citing Williams, Textbook of Criminal Law, 2nd ed (1983) at 237. 315 S v HM Advocate 1989 SLT 469 at 472, citing Hume, Commentaries on the Law of Scotland Respecting Crimes, (1797), vol 1, and subsequent editions published in 1819 and 1829, and the fourth edition edited by Bell in 1844. Also cited were Burnett, Criminal Law of Scotland, (1811) and Macdonald, A Practical Treatise on the Criminal Law of Scotland, 5th ed (1948) at 119. 316 S v HM Advocate 1989 SLT 469 at 473. 317 [1986] Crim LR 188, (Transcript: Marten Walsh Cherer). Bell The decision in Roberts followed Steele318 and allowed that a husband might be convicted of the rape of his wife in circumstances in which he and she had, by mutual agreement or court order, effectively put an end to the wife's fictional consent. The enactment of s 1(1)(a) of the Sexual Offences (Amendment) Act 1976 (UK), which defined rape in terms incorporating the expression "unlawful sexual intercourse", led to conflicting decisions at the trial court level319 as to the ability to judicially develop further exceptions to the immunity. The perceived difficulty was occasioned by the recognition that the word "unlawful" in this context had always been understood to refer to sexual intercourse outside marriage320. The Court of Appeal addressed this controversy in R v R321. The accused had been convicted of the attempted rape of his wife committed on an occasion in 1989 when the two were living separately. The wife had informed the accused of her intention to petition for divorce but had not commenced proceedings before the date of the offence. Lord Lane CJ, giving the judgment of the Court, said322: "It seems to us that where the common law rule no longer even remotely represents what is the true position of a wife in present day society, the duty of the court is to take steps to alter the rule if it can legitimately do so in the light of any relevant Parliamentary enactment." It was held that the word "unlawful" in the definition was surplusage. "We take the view that the time has now arrived when the law should declare that a rapist remains a rapist subject to the criminal law, irrespective of his relationship with his victim." 318 (1976) 65 Cr App R 22. 319 R v R [1991] 1 All ER 747; R v C [1991] 1 All ER 755; R v J [1991] 1 All ER 759. 320 R v Chapman [1959] 1 QB 100 at 105. 321 R v R [1992] 1 AC 599. 322 R v R [1992] 1 AC 599 at 610. 323 R v R [1992] 1 AC 599 at 611. Bell The House of Lords affirmed the decision. Lord Keith of Kinkel (with whom the other members of the House agreed) observed324: "It may be taken that [Hale's dictum] was generally regarded as an accurate statement of the common law of England. The common law is, however, capable of evolving in the light of changing social, economic and cultural developments. Hale's proposition reflected the state of affairs in these respects at the time it was enunciated. Since then the status of women, and particularly of married women, has changed out of all recognition in various ways which are very familiar and upon which it is unnecessary to go into detail." The European Court of Human Rights dismissed an application in respect of the decision in R v R325, holding that the accused's conviction did not violate Art 7(1) of the European Convention on Human Rights326. The decision had continued a perceptible line of authority dismantling the immunity327 and the development of the law "had reached a stage where judicial recognition of the absence of immunity had become a reasonably foreseeable development of the law"328. The courts in S v HM Advocate and R v R declared the common law of Scotland, England and Wales, taking into account changes in the conditions of 324 R v R [1992] 1 AC 599 at 616. 325 SW v United Kingdom (1995) 21 EHRR 363. 326 Article 7 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1950) provides: "1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed. 2. This article shall not prejudice the trial and punishment of any person for any act or omission which, at the time when it was committed, was criminal according to the general principles of law recognised by civilised nations." 327 SW v United Kingdom (1995) 21 EHRR 363 at 402. 328 SW v United Kingdom (1995) 21 EHRR 363 at 402. Bell society. In this respect, Lord Keith adopted the following statement from S v HM Advocate329: "By the second half of the 20th century, however, the status of women, and the status of a married woman, in our law have changed quite dramatically." The decisions in S v HM Advocate and R v R necessarily operated with retrospective effect. In each case, the conduct giving rise to the charge was alleged to have occurred not long before the date of the decision. That was important to the reasoning of the European Court of Human Rights in dismissing the application in R v R. One issue raised by this appeal that was not present in S v HM Advocate or R v R concerns the imposition of criminal liability in consequence of developing the law to take account of changed social conditions, for conduct that may have occurred before those changes took place. Prospective overruling and R v L the The Attorneys-General for South Australia, Queensland and Commonwealth intervened to address a constitutional issue raised by the appellant's third ground of appeal. This ground asserts that, if the common law was capable of further development following the 1976 amendments to the CLC Act, it should only be developed on a prospective basis. The submission was argued by reference to the decision of the House of Lords in In re Spectrum Plus Ltd (in liquidation)330. It was said in that case that the flexibility inherent in the English legal system permits the prospective overruling of a previous decision in a case in which it would otherwise produce gravely unfair and disruptive consequences for past transactions or events331. However, it has been held that a constitutional limitation on the exercise of judicial power does not permit this Court flexibility of that kind332. In their joint reasons in R v L, Mason CJ, Deane and Toohey JJ discussed the content of conjugal rights in the law of marriage, rejecting the submission that the doctrine imposes a continuing obligation on the part of a spouse to 329 R v R [1992] 1 AC 599 at 617, citing S v HM Advocate 1989 SLT 469 at 473. 331 In re Spectrum Plus Ltd (in liquidation) [2005] 2 AC 680 at 699 [40] per Lord Nicholls of Birkenhead. 332 Ha v New South Wales (1997) 189 CLR 465 at 504 per Brennan CJ, McHugh, Gummow and Kirby JJ; [1997] HCA 34. Bell to sexual intercourse as a legal consequence of marriage333. consent Their Honours noted Lord Lane CJ's statement in R v R that "there can be little doubt that what [Hale] wrote was an accurate expression of the common law as it then stood"334. They went on to say335: "Without endeavouring to resolve the development of the common law in this regard, it is appropriate for this Court to reject the existence of such a rule as now part of the common law of Australia. … The notion is out of keeping also with recent changes in the criminal law of this country made by statute, which draw no distinction between a wife and other women in defining the offence of rape. It is unnecessary for the Court to do more than to say that, if it was ever the common law that by marriage a wife gave irrevocable consent to sexual intercourse by her husband, it is no longer the common law." (emphasis added; citations omitted) It was unnecessary for the Court to "resolve the development of the common law" because, as their Honours observed, the law had been changed by statute. There was no jurisdiction in Australia in which a presumption of spousal consent to sexual intercourse had any bearing on a person's liability for rape336. The answer to the question of law reserved by Herriman DCJ requires consideration of an issue that was not addressed by the joint reasons or the reasons of Dawson J in R v L, which is the liability under the common law of a cohabiting husband for the rape of his wife. Did the immunity form part of the received common law? The laws and statutes of England applicable to the Province of South Australia were received on 19 February 1836. The relevant history and principles are explained by Mason J in State Government Insurance Commission v Trigwell337. It is not in question that, if Hale's statement of the immunity was a 333 R v L (1991) 174 CLR 379 at 387. 334 R v L (1991) 174 CLR 379 at 389, citing R v R [1992] 1 AC 599 at 603-604. 335 R v L (1991) 174 CLR 379 at 389-390. 336 See above at [176]. 337 (1979) 142 CLR 617 at 634-635; [1979] HCA 40. As explained, s 3 of Act No 9 of 1872 (SA) re-enacted s 1 of Ordinance No 2 of 1843 (SA). Section 3 of the 1872 Act declared that: "In all questions as to the applicability of any laws or statutes of England to the Province of South Australia, the said Province shall be deemed to (Footnote continues on next page) Bell rule of the common law in 1836, it was part of the laws of England received in South Australia338. In light of the history leading to the enactment of s 73(3) and (5) of the CLC Act, there can be little doubt that the common law of Australia was understood as embodying a rule that a husband was not amenable to conviction for the rape of his wife. It is also evident that, by 1976, the justification for that immunity was not perceived to depend upon the concept of irrevocable consent that presumption while maintaining the immunity save for offences committed in circumstances of aggravation. the Parliament of South Australia abolished intercourse, since As will appear, the Parliament of South Australia was not alone in acting upon acceptance that a husband was immune under the common law for the rape of his wife. Nonetheless, it is said that, correctly understood, the common law has never conferred the immunity. This is because Hale did not cite any authority for it and there is no binding judicial decision confirming its existence339. These criticisms will be addressed in turn. have been established on the twenty-eighth day of December, one thousand eight hundred and thirty-six." A modified version of this declaration was enacted in s 48 of the Acts Interpretation Act 1915 (SA). That section was repealed by s 26 of the Acts Interpretation Act Amendment Act 1983 (SA), with the effect that the date of settlement of the Province of South Australia is now taken to be 19 February 1836, on which date letters patent were issued defining its borders. See Lipohar v The Queen (1999) 200 CLR 485 at 508 [54]; [1999] HCA 65, citing South Australia v Victoria (1911) 12 CLR 667 at 676-677; [1911] HCA 17. 338 See R v Brown (1975) 10 SASR 139 at 153; R v Wozniak and Pendry (1977) 16 SASR 67 at 71; Question of Law (No 1 of 1993) (1993) 59 SASR 214 at 230; Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 13 [6.2]. 339 The only decision turning directly on the immunity appears to be R v Miller [1954] 2 QB 282. In that case, the accused was tried for the rape of his wife. The prosecution was brought after the decision in Clarke (see fn 295 above). The Crown relied on the evidence that the wife had been living separately at the time of the incident and had petitioned for divorce. Lynskey J held that the presentation of the petition for dissolution of the marriage did not have any effect in law upon the existing marriage and, accordingly, that the accused had no case to answer on the count charging rape: at 290. Bell An authoritative statement of the law of rape before Hale? It would be foolish to attempt to state the elements of liability for the offence of rape in the period before Hale. Holdsworth gives an account of the development of the offence in general terms, observing that Bracton would have confined the offence to violent intercourse with a virgin340. At the time of the writings attributed to Glanvill, rape was a plea of the Crown, which could be prosecuted by private appeal or on the presentation of the jury341. It appears that, in the early period, most prosecutions were by private appeal and that an appeal could be compromised by the marriage of the victim to her assailant342. There is evidence that, before the time of Hale, it was a good defence to an appeal of rape to say that the woman was one's concubine343. Holdsworth saw the essentials of the offence of rape as having been defined sometime after the Statute of Westminster II c 34, which made all rapes punishable as felonies344. The statute was passed in 1285 in the reign of Edward I. The only authority cited in Holdsworth for the statement of the essentials of the offence is Hale345. The explanation for this gap of some 400 340 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316, citing Bracton f 148. The most severe punishment, it seems, was reserved for the rape of a virgin, but elsewhere Bracton refers to punishment for the forcible ravishment of various categories of women: Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 414-415. 341 Hall (ed), The treatise on the laws and customs of the realm of England commonly called Glanvill, (1965) at 3, 175-176; Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. 342 Hall (ed), The treatise on the laws and customs of the realm of England commonly called Glanvill, (1965) at 176; Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 417-418; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212; Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. 343 Thorne (ed), Bracton on the Laws and Customs of England, (1968), vol 2 at 416; Dalton, The Country Justice, (1690), c 160 at 392; Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 41 at 108. 344 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. The Statute of Westminster II c 34 and its predecessor, the Statute of Westminster I c 13, also dealing with the punishment for rape, were both repealed by the Offences against the Person Act 1828 (UK) (9 Geo 4 c 31). 345 Holdsworth, A History of English Law, 3rd ed (1923), vol 3 at 316. Bell years may lie in Professor Baker's account of the development of the criminal law. In the period up to the mid-16th century, the common law comprised the "common learning" found, not only in the yearbooks, but in the oral tradition of the Inns of Court346. It was the latter that shaped the criminal law. Few criminal cases were decided in the courts at Westminster and only a small number of criminal cases "trickled into the year books"347. Much of the record of the criminal law is found in the notes made by readers348 and these, it would seem, contain little discussion of rape349. Professor Baker says that the most visible result of the body of experience of the courts disposing of criminal cases is to be found in the treatises of Crompton, Dalton and Hale, all of whom drew heavily on rulings made at gaol deliveries350. It was their selection, rather than the rulings at large, which he suggests influenced the future development of the law351. The authority of the Pleas of the Crown Hale's statement was of a negative condition of liability for rape. This circumstance tends to explain the absence of prosecutions of husbands for the offence. Consideration of whether Hale's statement of the immunity came to acquire the status of a rule of law (if it was not one in 1736) requires some account of the standing of the Pleas of the Crown among common lawyers. Sir Matthew Hale held office as Chief Baron of the Exchequer and Chief Justice of the King's Bench successively in the years 1660 to 1676. He died in 1676, leaving instructions in his will prohibiting the publication of any work 346 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 486. See also at 469: "[I]t was the settled learning of the inns of court, referred to in the 1490s as the 'old learning of the court', or the 'common learning in moots'. Common learning, by its nature, did not require chapter and verse to support it. It was what the whole system of exercises was implicitly calculated to transmit, to test, and to teach" (citations omitted). 347 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 471. 348 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 529. 349 Baker, The Oxford History of the Laws of England, (2003), vol 6 at 562. In fn 92, Baker notes that the Statute of Westminster II c 34 was glossed "very briefly". 350 Baker, "The Refinement of English Criminal Jurisprudence, 1500-1848", in The Legal Profession and the Common Law: Historical Essays, (1986) 303 at 313. 351 Baker, "The Refinement of English Criminal Jurisprudence, 1500-1848", in The Legal Profession and the Common Law: Historical Essays, (1986) 303 at 313. Bell other than that which he had permitted to be published in his lifetime. At the time of his death, he was writing the Pleas of the Crown, which he had planned as a work in three volumes352. Only the first volume was completed. Four years after his death, the House of Commons ordered that it be printed. However, it was not until 1736 that the first edition appeared under the editorship of Sollom Emlyn, barrister of Lincoln's Inn. Sir William Blackstone acknowledged his debt to Hale353 and drew on the Pleas of the Crown in his account of felonies in the Commentaries. Sir James Fitzjames Stephen accorded the composition of the Pleas of the Crown an important place in the evolution of the criminal law in the 17th century354. It was, in his estimate, a work "of the highest authority", demonstrating both "a depth of thought and a comprehensiveness of design" that put it in "quite a different category" from Coke's Institutes355. Important principles of criminal responsibility were hardly noticed before Hale356. Stephen saw the definition of many crimes as settled in the period that separates Coke from Blackstone, and Hale and Foster as having contributed more than any other writers to that development357. Maitland said of Hale that "none had a wider or deeper knowledge of the materials; he was perhaps the last great English lawyer who habitually studied records; he studied them pen in hand and to good purpose". He was, in Maitland's estimate, "the most eminent lawyer and judge of his time"358. Holdsworth accounted Hale "the greatest historian of English law before 352 Yale, Hale as a Legal Historian, (1976) at 8; Holdsworth, "Sir Matthew Hale", (1923) 39 Law Quarterly Review 402 at 419. The second volume was intended to deal with non-capital crimes and the third with franchises and liberties. 353 Blackstone, An Analysis of the Laws of England, 3rd ed (1758) at vii. 354 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 211. 355 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 211. Stephen was not uncritical in his treatment of the Pleas of the Crown. He described the weight of technical detail in the chapters dealing with procedure as almost unreadable except by a very determined student: at 212. 356 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 212. 357 Stephen, A History of the Criminal Law of England, (1883), vol 2 at 219. 358 Maitland, "The Materials for English Legal History", in Fisher (ed), The Collected Papers of Frederic William Maitland, (1911), vol 2, 1 at 5. Bell Maitland"359. He considered the Pleas of the Crown to have been left in the best state of any of Hale's works that had not been published at the date of his death360. Holdsworth, like Stephen, regarded the treatise highly361: "It was a branch of the law which could not then be adequately described without a very complete knowledge of the history of the law; and, partly because it contained very ancient ideas and rules, partly because it had been added to and in many details modified by a variety of statutes, it greatly needed systematic Coke and Crompton had summarized it, in a somewhat unsystematic form. Hale, because he was both a competent historian, a competent jurist, and a competent lawyer did the work which they endeavoured to do infinitely better. Ever since its first publication it has been a book of the highest authority." (citations omitted) treatment. Holdsworth saw Coke as standing midway between the medieval and the modern law, and Hale as "the first of our great modern common lawyers"362. The analysis of the offence in the Pleas of the Crown Hale described the offence of rape as "the carnal knowledge of any woman above the age of ten years against her will, and of a woman-child under the age of ten years with or against her will"363. Hale acknowledged Coke for this statement364, but proceeded to a much more detailed analysis of proof of the offence. He discussed additional elements (any degree of penetration was sufficient and it was not necessary to prove emission of semen); accessorial liability for the offence; liability in the case of infants under 14 years; liability in the case of consenting females under 12 years; and consent obtained by threat of 359 Holdsworth, "Sir Matthew Hale", (1923) 39 Law Quarterly Review 402 at 402. 360 (1923) 39 Law Quarterly Review 402 at 419-420. 361 (1923) 39 Law Quarterly Review 402 at 420. 362 (1923) 39 Law Quarterly Review 402 at 425. 363 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. 364 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. The fourth edition of the Third Part of Coke's Institutes, published in 1669, in fact described the offence of rape as "the unlawfull and carnal knowledge and abuse of any woman above the age of ten years against her will, or of a woman-child under the age of ten years with her will, or against her will" (emphasis added): The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 11 at 60. Bell violence, among other matters. He also gave a deal of attention to the older law concerning appeals of rape, including the concubinage exception365. The account of the husband's immunity follows discussion of the latter. The relevant passage is set out below366: "It appears by Bracton ubi supra, that in an appeal of rape it was a good exception, quod ante diem & annum contentas in appello habuit eam ut concubinam & amicam, & inde ponit se super patriam, and the reason was, because that unlawful cohabitation carried a presumption in law, that it was not against her will. But this is no exception at this day, it may be an evidence of an assent, but it is not necessary that it should be so, for the woman may forsake that unlawful course of life. But the husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given up herself in this kind unto her husband, which she cannot retract." Writing of the criticism that Hale had conjured up the immunity without authority, one commentator has observed that it might be thought incongruous that the law allowed an exception in the case of de facto relationships (for which there is clear evidence before Hale's time) but not de jure relationships367. The writer suggests that Hale lacked authority, not for the existence of the immunity, but for confining it to marriage368. It should be noticed that Hale said the concubinage exception was no longer good law because of the recognition that a 365 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628. 366 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 628-629. 367 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 154, citing Dalton, Countrey Justice, (1619) at 256; R v Lord Audley (1631) 3 St Tr 401 368 Lanham, "Hale, Misogyny and Rape", (1983) 7 Criminal Law Journal 148 at 155. Professor Lanham identifies two extra-judicial supports for the existence of the immunity in Hale's time. Hale referred to Isabel Butler v William Pull, introducing the case by explaining that if A forces B to marry him and then has carnal knowledge of her against her will, he cannot be found guilty of rape during the subsistence of the voidable marriage; and Statute 6 R 2 stat 1 c 6, giving a husband a right of appeal where his wife had consented to a rape by a third party after the fact. Bell woman may forsake her unlawful way of life. This was stated by way of contrast to sexual intercourse within marriage, which was seen as lawful369. Hale had a commanding knowledge of the work of the courts administering criminal justice370. It may safely be taken that husbands were not prosecuted for rape of their wives in the period before the publication of his treatise. Given the subordinate status of married women under the law, this may not surprise371. Among the few benefits that the law conferred on the married woman was to immunise her from prosecution for a crime committed by her in her husband's presence372. The presumption of the law was that she was bound to obey her husband's command. This is not an idea that readily accommodates the prosecution of the husband for an act of non-consensual sexual intercourse with his wife. Hale is the source for locating the immunity in contract. It is a rationale that is consistent with Blackstone's treatment of the relations between husband and wife at law. The latter's celebrated account of the nature and effect of 369 See extract from Coke at fn 364 above. Similarly, Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 41 at 108 described rape, relevantly, as an offence "in having unlawful and carnal Knowledge of a Woman" (emphasis added). 370 See Yale, Hale as a Legal Historian, (1976) for an account of Hale's record-searching and collecting from 1630, and his extensive knowledge of King's 371 Williams, "The Legal Unity of Husband and Wife", (1947) 10 Modern Law Review 16 at 29; Easteal, "Rape in marriage: Has the licence lapsed?", in Easteal (ed), Balancing the Scales: Rape, Law Reform and Australian Culture, (1998) 107 at 372 Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 1 at 2; Hale, The History of the Pleas of the Crown, (1736), vol 1, c 7 at 44-48; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 2 at 29; J W C Turner, Russell on Crime, 12th ed (1964), vol 1 at 94-95. The presumption did not extend to treason or murder: Hale, The History of the Pleas of the Crown, (1736), vol 1, c 7 at 45. It has been abolished in all Australian jurisdictions: Crimes Act 1900 (NSW), Sched 3, cl 4(1) (originally s 407A(1)); Criminal Code (Q), s 32 (omitted in 1997); CLC Act, s 328A; Criminal Code (Tas), s 20(2); Crimes Act 1958 (Vic), s 336(1); Criminal Code (WA), s 32 (omitted in 2003); Crimes Act 1900 (ACT), s 289. It is not included in the defence of duress in the Criminal Code (NT), s 40. However, an affirmative defence of marital coercion has been retained in South Australia and Victoria: CLC Act, s 328A; Crimes Act 1958 (Vic), s 336. Bell coverture373 was prefaced by the statement: "[o]ur law considers marriage in no other light than as a civil contract"374. While "[t]he holiness of the matrimonial state" (emphasis in original) was a matter for the ecclesiastical courts, Blackstone emphasised that the temporal courts treated marriage like all other contracts, asking whether the parties were willing and able to contract375. It is an analysis which has been seen as a civilised advance on the medieval concept of the husband's natural and God-given power over his wife376. Professor Stretton suggests that, for Blackstone, the fundamental point was that married women consented to their modified legal status by their agreement to marriage377: "It was therefore the logic of contract that justified married women's particular treatment at law. However, it was a narrow concept of consent that ended abruptly at the church door, with no room for renegotiation during marriage and virtually no effective ability to escape the legal effects of marriage through separation or divorce." Blackstone's treatment of rape was largely taken from Hale378. He did not refer to the immunity, but it is evident that Hale's statement of it was not controversial. Blackstone drew attention to those occasions on which Hale's account of the law departed from the views of other writers. In Blackstone's analysis of the offence of rape, there was one such occasion. He noted that Hale considered that carnal knowledge of a girl aged under 12 years was rape regardless of consent, but that the law had in general been held only to extend to the carnal knowledge of a girl aged under 10 years379. 373 "By marriage, the husband and wife are one person in law: that is, the very being or legal existence of the woman is suspended during the marriage, or at least is incorporated and consolidated into that of the husband: under whose wing, protection, and cover, she performs every thing": Commentaries on the Laws of England, (1765), bk 1, c 15 at 430 (emphasis in original). 374 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 375 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 376 Stretton, "Coverture and Unity of Person in Blackstone's Commentaries", in Prest (ed), Blackstone and his Commentaries, (2009) 111 at 120-121. 377 Stretton, "Coverture and Unity of Person in Blackstone's Commentaries", in Prest (ed), Blackstone and his Commentaries, (2009) 111 at 123, citing Commentaries on the Laws of England, (1765), bk 1, c 15 at 421. 378 Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 211-215. 379 Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212. Bell The operation of the immunity Hale's statement of the law may be analysed in either of two ways. First, that the offence comprises two elements: (i) carnal knowledge of a female (involving some degree of penetration); (ii) without her consent. On this analysis the immunity arises by the operation of an irrebuttable presumption of law. The alternative analysis is that the first element of the offence requires proof of the "unlawful" carnal knowledge of a female and that "unlawful" in this context means outside marriage380. The latter view accords with the treatment of the offence by text-writers, including Coke and Hawkins writing before the publication of Hale's treatise381. It is the analysis adopted by the Supreme Court of South Australia in those cases in which consideration has been given to the question. Bray CJ, discussing the elements of the offence in R v Brown382, considered that they were as stated in the 37th edition of Archbold: "Rape consists in having unlawful sexual intercourse with a woman without her consent by force, fear or fraud"383. The word "unlawful" was thought by Bray CJ to exclude intercourse between spouses384. Wells J appears to have been of the same view385. King CJ in R v Sherrin (No 2) also considered proof of the unlawfulness of the act of intercourse to have undoubtedly been an element of the offence at common law386. The resolution of the reserved question does not turn on whether the rule of law traced to Hale requires proof of the unlawfulness of the intercourse as an element, or is an irrebuttable presumption of consent. The latter, while "disguised in the language of adjective rules"387, is in truth a substantive rule of 380 R v Chapman [1959] 1 QB 100. 381 See fnn 364 and 369 above. 382 (1975) 10 SASR 139. 383 Butler and Garsia, Archbold: Pleading, Evidence & Practice in Criminal Cases, 37th ed (1969) at [2872], citing East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 434 and Hale, The History of the Pleas of the Crown, (1736), vol 1 at 627 et seq (emphasis added). 384 R v Brown (1975) 10 SASR 139 at 141. 385 R v Brown (1975) 10 SASR 139 at 153. 386 (1979) 21 SASR 250 at 252. 387 J W C Turner, Kenny's Outlines of Criminal Law, 19th ed (1966) at 455 [490]. Bell law. A husband could not be convicted as principal in the first degree for the rape of his wife on either analysis. At issue is the existence of the immunity, not whether the reason given for it is flawed or has, over time, ceased to provide a principled basis for it. A number of common law rules of liability for criminal offences have their origins in discredited ideas. The definition of the offence of murder stated by Coke388, and thereafter accepted as an authoritative statement of the elements of the offence389, required that the death of the deceased take place within a year and a day of the act causing death. The reason for the rule is suggested to be the limitations of medieval medical knowledge390. If that is the reason, it must be said that the rule survived long after its justification ceased. The rule has since been abolished by statute391. In the same category is the presumption that a boy under 14 years of age is physically incapable of sexual intercourse. This, too, is traced to the statement of the law in the Pleas of the Crown392. The presumption is patently absurd. Nonetheless, it was accepted as a rule of law precluding the 388 Coke, The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 7 at 389 Hawkins, A Treatise of the Pleas of the Crown, (1716), bk 1, c 31 at 79; Hale, The History of the Pleas of the Crown, (1736), vol 1, c 33 at 426; Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 14 at 197-198; East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 214, 343; Halsbury's Laws of England, 2nd ed, vol 9 at 428. See also R v Dyson [1908] 2 KB 454; R v Evans & Gardiner (No 2) [1976] VR 523. 390 Coke, The Third Part of the Institutes of the Laws of England, 4th ed (1669), c 7 at 53. See also Rogers v Tennessee 532 US 451 at 463 (2001); Fisse (ed), Howard's Criminal Law, 5th ed (1990) at 31; Waller and Williams, Criminal Law, 11th ed 391 Crimes Act 1900 (NSW), s 17A; CLC Act, s 18; Crimes Act 1958 (Vic), s 9AA; Crimes Act 1900 (ACT), s 11. The rule has been removed in the Code States: Penalties and Sentences Act 1992 (Q) (as enacted), s 207, Schedule, item 7 under the heading "Criminal Code"; Criminal Code Amendment (Year and a Day Rule Repeal) Act 1993 (Tas); Criminal Law Amendment Act 1991 (WA), s 6. It never formed part of the Criminal Code (NT). 392 Hale, The History of the Pleas of the Crown, (1736), vol 1, c 58 at 630 (mispaginated in the original as 730): "An infant under the age of fourteen years is presumed by law unable to commit a rape, and therefore it seems cannot be guilty of it, and tho in other felonies malitia supplet aetatem in some cases as hath been shewn, yet it seems as to this fact the law presumes him impotent, as well as wanting discretion." Bell conviction of boys for rape393 until it was abolished by statute394. It was sufficient for Lord Coleridge CJ in R v Waite to observe that the rule had been "clearly laid down by Lord Hale" and, on that authority, judges had "refused to receive evidence to shew that a particular prisoner was in fact capable of committing the offence"395. Hale's statement of the immunity was taken as an authoritative statement of the law by all the leading text-writers396. 393 See, eg, R v Eldershaw (1828) 3 Car & P 396 [172 ER 472]; R v Waite [1892] 2 QB 600; R v Williams [1893] 1 QB 320. See also Blackstone, Commentaries on the Laws of England, (1769), bk 4, c 15 at 212; Roscoe, A Digest of the Law of Evidence in Criminal Cases, 2nd ed (1840) at 797; Williams, Criminal Law: The General Part, 2nd ed (1961) at 821. 394 Crimes Act 1900 (NSW), s 61S (originally s 61A(2)); CLC Act, s 73(2); Crimes Act 1958 (Vic), s 62(1); Crimes Act 1900 (ACT), s 68; Sexual Offences Act 1993 (UK), s 1. The presumption has been removed in the Code States: Criminal Code, Evidence Act and other Acts Amendment Act 1989 (Q), s 9; Criminal Code Amendment (Sexual Offences) Act 1987 (Tas), s 5; Acts Amendment (Sexual Assaults) Act 1985 (WA), s 4. It never formed part of the Criminal Code (NT). 395 R v Waite [1892] 2 QB 600 at 601. See also R v Young [1923] SASR 35; R v Packer [1932] VLR 225. 396 East, A Treatise of the Pleas of the Crown, (1803), vol 1 at 446; Burnett, A Treatise on Various Branches of the Criminal Law of Scotland, (1811) at 102; Chitty, A Practical Treatise on the Criminal Law, (1816), vol 3 at 811; Russell, A Treatise on Crimes and Misdemeanors, (1819), vol 1, bk 3, c 6 at 802; Archbold, A Summary of the Law Relative to Pleading and Evidence in Criminal Cases, (1822) at 259; Alison, Principles of the Criminal Law of Scotland, (1832) at 215; Roscoe, A Digest of the Law of Evidence in Criminal Cases, (1835) at 708; Hume, Commentaries on the Law of Scotland, Respecting Crimes, (1844), vol 1, c 7 at 306; Macdonald, A Practical Treatise on the Criminal Law of Scotland, (1867) at 194; Stephen, A Digest of the Criminal Law (Crimes and Punishments), 4th ed (1887), c 29 at 194; Halsbury, The Laws of England, 1st ed, vol 9, par 1236; Sturge, Stephen's Digest of the Criminal Law (Indictable Offences), 9th ed (1950) at 263; Halsbury's Laws of England, 3rd ed, vol 10, par 1437; Butler and Garsia, Archbold: Pleading, Evidence & Practice in Criminal Cases, 35th ed (1962) at 1150; J W C Turner, Russell on Crime, 12th ed (1964), vol 1 at 708; Howard, Australian Criminal Law, (1965) at 135, 145-147. Bell R v Clarence The first judicial consideration of the immunity was in R v Clarence397. A bench of 13 judges was constituted to consider the question of whether the transmission of gonorrhoea by husband to wife in an act of consensual sexual intercourse could amount to the malicious infliction of grievous bodily harm. Wills, Field and Hawkins JJ each left open that circumstances may exist in which a husband could be liable for the rape of his wife. Wills J doubted that "between married persons rape is impossible"398. Field J thought that there may be cases in which a husband could be convicted of a crime arising out of forcibly imposing sexual intercourse on his wife; he did not say whether for rape or some other offence399. Hawkins J accepted that, by the marriage contract, a wife confers on her husband "an irrevocable privilege to have sexual intercourse with her during such time as the ordinary relations created by such contract subsist between them" and that a husband could not be convicted of a rape committed by him upon the person of his wife400. However, a husband was not at liberty to endanger his wife's health and cause her grievous bodily harm by the exercise of "the marital privilege" at a time when he was suffering from venereal disease and when the natural consequence of sexual intercourse would be the communication of that disease to her401. He explained the principles in this way402: "Rape consists in a man having sexual intercourse with a woman without her consent, and the marital privilege being equivalent to consent given once for all at the time of marriage, it follows that the mere act of sexual communion is lawful; but there is a wide difference between a simple act of communion which is lawful, and an act of communion combined with infectious contagion endangering health and causing harm, which is unlawful. … The wife submits to her husband's embraces because at the time of marriage she gave him an irrevocable right to her person. The intercourse which takes place between husband and wife after marriage is not by virtue of any special consent on her part, but is mere submission to an 397 (1888) 22 QBD 23. 398 R v Clarence (1888) 22 QBD 23 at 33. 399 R v Clarence (1888) 22 QBD 23 at 57. 400 R v Clarence (1888) 22 QBD 23 at 51. 401 R v Clarence (1888) 22 QBD 23 at 51. 402 R v Clarence (1888) 22 QBD 23 at 51, 54. Bell obligation imposed upon her by law. Consent is immaterial." (emphasis in original) Pollock B said403: "The husband's connection with his wife is not only lawful, but it is in accordance with the ordinary condition of married life. It is done in pursuance of the marital contract and of the status which was created by marriage, and the wife as to the connection itself is in a different position from any other woman, for she has no right or power to refuse her consent." Consideration of the immunity in Clarence appears to have been prompted by a submission based on a footnote in Stephen's Digest of the Criminal Law. The law in the first edition of the Digest was stated, relevantly, in this way404: "Rape is the act of having carnal knowledge of a woman without her conscious permission ... Provided that: – (1) A husband [it is said] cannot commit rape upon his wife by carnally knowing her himself, but he may do so if he aids another person to have carnal knowledge of her." The footnote relevantly said405: "Hale's reason is that the wife's consent at marriage is irrevocable. Surely, however, the consent is confined to the decent and proper use of marital rights. If a man used violence to his wife under circumstances in which decency or her own health or safety required or justified her in refusing her consent, I think he might be convicted of rape, notwithstanding Lord Hale's dictum. He gives no authority for it, but makes the remark only by way of introduction to the qualification contained in the latter part of clause (1), for which Lord Castlehaven's Case (3 St Tr 402) is an authority." 403 R v Clarence (1888) 22 QBD 23 at 63-64. 404 Stephen, A Digest of the Criminal Law (Crimes and Punishments), (1877), c 29 at 405 Stephen, A Digest of the Criminal Law (Crimes and Punishments), (1877), c 29 at Bell Stephen J gave the leading judgment in Clarence406. He used the occasion to draw attention to the alteration of the footnote, removing the suggestion that a man might in certain circumstances be indicted for the rape of his wife, in the most recent edition of his text407. Stephen was a great master of the criminal law408. An account of his draft criminal code and the subsequent Commission appointed to report upon it is contained in the joint reasons in Darkan v The Queen409. To the extent that the Draft Code appended to the Report of the Commissioners differed from Stephen's original draft, the differences were noted in the Report. The provisions dealing with offences against the person were said to correspond (as did the provisions in Stephen's original draft) with the Offences against the Person Act 1861 (UK)410, "supplemented by a reduction to writing of the common law doctrines and definitions"411. The Offences against the Person Act 1861 (UK) prescribed the punishment for rape but left the definition of the offence to the common law. It is apparent that the definition of rape in the Draft Code was understood by its authors412 to be a statement of the common law. Relevantly, the offence was defined as "the act of a man having carnal knowledge without her consent of a female who is not his wife"413. The Criminal Code Indictable Offences Bill 1878 (UK), on which the Commissioners' draft was based, and which defined rape in the same terms, had been circulated to the Judges, Chairmen and Deputy Chairmen of Quarter Sessions, Recorders and "many members of the bar and 406 A L Smith, Mathew and Grantham JJ, Huddleston B and Lord Coleridge CJ concurred. 407 R v Clarence (1888) 22 QBD 23 at 46. See Stephen, A Digest of the Criminal Law (Crimes and Punishments), 4th ed (1887), c 29 at 194 fn 4. 408 Radzinowicz, Sir James Fitzjames Stephen, 1829-1894, Selden Society Lecture, 409 (2006) 227 CLR 373 at 385-386 [33]-[36]; [2006] HCA 34. 410 24 & 25 Vict c 100, s 48. 411 Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 22. 412 Lord Blackburn, Mr Justice Barry, Lord-Justice Lush and Sir James Fitzjames Stephen. 413 Section 207 of the Draft Code, Appendix to the Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 107. Bell other gentlemen having practical experience in the administration of the criminal law"414 in England and Ireland with the invitation to comment on it. The absence of any suggestion in the Commissioners' Report that the offence of rape was to be modified under the Code is eloquent of the acceptance by those engaged in the administration of the criminal law in England and Ireland at the time that the offence could not be committed by a husband against his wife415. Sir Samuel Griffith drew on the English Draft Code in preparing his draft criminal code for Queensland416. In the latter, the offence of rape was defined, relevantly, as the "carnal knowledge of a woman, not his wife"417. The marginal notes reveal that Sir Samuel Griffith considered this definition to be a statement of the common law. In Canada, before the enactment of the Criminal Code in 1892, the offence of rape, while punishable as a felony under legislation modelled on the Offences against the Person Act 1861 (UK), depended upon the common law for its elements of proof. It is apparent that the understanding in that jurisdiction was that the offence could not be committed by a husband against his wife418. The Criminal Code defined rape as involving the "carnal knowledge of a woman who is not his wife"419. It does not appear that this was thought to involve any departure from the existing law. The absence of binding decision The absence of a binding decision does not mean that a rule stated in authoritative texts and accepted and acted upon by the legal profession over many years may not acquire status as law. The point is made by Sir John Smith 414 Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 5. 415 See Criminal Code Bill Commission, Report of the Royal Commission Appointed to Consider The Law Relating to Indictable Offences, (1879) [C 2345] at 25. 416 Griffith, Draft of a Code of Criminal Law, (1897) at iv. 417 Griffith, Draft of a Code of Criminal Law, (1897), s 353 at 135. 418 Taschereau, The Criminal Statute Law of the Dominion of Canada, 2nd ed (1888) 419 Criminal Code 1892 (Can), s 266. Bell in his commentary on R v C420, by reference to Foakes v Beer421. In the latter case, the House of Lords held itself bound to follow a rule stated by Coke to have been laid down in Pinnel's Case422 in 1602, although their Lordships disliked it and there was no decision in which it had been applied. As the Earl of Selborne LC put it423: "The doctrine itself, as laid down by Sir Edward Coke, may have been criticised, as questionable in principle, by some persons whose opinions are entitled to respect, but it has never been judicially overruled; on the contrary I think it has always, since the sixteenth century, been accepted as law. If so, I cannot think that your Lordships would do right, if you were now to reverse, as erroneous, a judgment of the Court of Appeal, proceeding upon a doctrine which has been accepted as part of the law of England for 280 years." Brennan J, the only Justice in R v L to consider proof of the offence of rape under the common law, considered the elements to have been fixed by Hale's statement of them424. The evidence in favour of that conclusion is compelling. Has the immunity ceased to exist? It was submitted that legal and social changes to the status of married women had produced the result that the immunity had ceased to be a rule of law on a date before the subject events. There were differing views about when that change to the law occurred, a circumstance which tends to highlight a difficulty with accepting the underlying premise. The respondent and the Attorney- General for South Australia contended that the foundation for the immunity had "crumbled to dust" as at the "early to mid twentieth century". The Attorney- General of circumstances had occurred "by the end of the 19th century". Reference was made to the enactment of the Married Women's Property Acts; the amendment of matrimonial causes statutes removing the "double-standard" relating to adultery as a ground for dissolution of marriage; and, more generally, the extension of the the Commonwealth contended the relevant change that 420 [1991] Crim LR 62. 421 (1884) 9 App Cas 605. 422 (1602) 5 Co Rep 117a [77 ER 237]. 423 Foakes v Beer (1884) 9 App Cas 605 at 612. See also at 622-623 per Lord Blackburn, 623-624 per Lord Watson, 629-630 per Lord FitzGerald. 424 R v L (1991) 174 CLR 379 at 399. Bell franchise to women, as combining to produce a state of affairs that was inconsistent with the continued existence of the immunity. These submissions were maintained in the face of a good deal of evidence to the contrary. The one case relied on to support the submissions was R v Jackson425. In that case, Lord Halsbury LC rejected the proposition that the relation of husband and wife gave the husband "complete dominion over the wife's person"426. The holding that an order for restitution of conjugal rights did not confer on the husband a right to imprison his wife is a tenuous basis for concluding that the husband was now amenable to prosecution for having sexual intercourse with his wife without her consent. In the first edition of Halsbury, published in 1909, almost 20 years after the decision in Jackson, the law was stated as being that "[a] man cannot be guilty as a principal in the first degree of a rape upon his wife, for the wife is unable to retract the consent to cohabitation which is a part of the contract of In Tasmania, the Married Women's Property Act was enacted in 1882. Women had been granted the franchise for both federal and State parliamentary elections by 1904428. The Matrimonial Causes Act 1860 (Tas) was amended in 1919 to remove the double-standard with respect to adultery429. Nonetheless, when the Parliament enacted the Criminal Code for Tasmania in 1924, a quarter of a century after the enactment of the Queensland Criminal Code, the crime of 426 [1891] 1 QB 671 at 679. 427 Halsbury, The Laws of England, 1st ed, vol 9, par 1236. The second edition, under the editorship of Viscount Hailsham, published in 1933, stated the law in the same terms: vol 9, par 815. It was not until after Clarke (see fn 295 above), which provided a limited exception to the immunity in the case of a wife living separately under the protection of a court order, that the third edition, under the editorship of Viscount Simons, published in 1955, stated the rule in qualified terms: "[a] man cannot, as a general rule, be guilty as a principal in the first degree of a rape upon his wife" (vol 10, par 1437). 428 Commonwealth Franchise Act 1902 (Cth); Constitution Amendment Act 1903 (Tas). 429 Matrimonial Causes Amendment Act 1919 (Tas) (Royal Assent proclaimed on 17 May 1920). Bell rape was defined in the same way as under the latter430. The significant changes in the legal status of married women which had occurred by 1924 do not appear to have been viewed at the time as inconsistent with the immunity. In the same year, the House of Lords delivered judgment in G v G431. That was an appeal from the dismissal of an application for a decree of nullity of marriage brought by a husband on the ground of his wife's impotency. The appellant and his wife were married in 1913 and the evidence of their relations spanned the period from that date to 1921. The wife had evinced an hysterical reluctance to engage in sexual intercourse. The question for the court was whether this psychological obstacle to consummation amounted to incapacity, as distinct from the mere wilful refusal of conjugal rights. The court below had doubted that the husband's repeated attempts at intercourse had exhibited "a sufficient virility"432. It was in this context that Lord Dunedin observed433: "It is indeed permissible to wish that some gentle violence had been employed; if there had been it would either have resulted in success or would have precipitated a crisis so decided as to have made our task a comparatively easy one." His Lordship considered the husband's account "as to why he did not use a little more force than he did" to have been an acceptable explanation434 and the appeal was allowed. The speeches in G v G speak to another age. The decision in that case is closer to the date of the acts charged against the appellant than was the hearing of this appeal. More than a decade after the events giving rise to this appeal, in 1975, Lawton LJ, giving the judgment of the English Court of Appeal in R v Cogan, proceeded upon acceptance that it was a legal impossibility for a man to rape his wife during cohabitation435. The accused bore accessorial liability for the rape of his wife by another. In the following year, Geoffrey Lane LJ extended the exception to the immunity to allow the conviction of a husband for the rape of his 430 Criminal Code (Tas), s 185 (as enacted). Relevantly, rape was defined as involving "carnal knowledge of a female not his wife". 432 G v G [1924] AC 349 at 357. 433 G v G [1924] AC 349 at 357. 434 G v G [1924] AC 349 at 358. 435 R v Cogan [1976] QB 217 at 223. Bell wife where he had given an undertaking not to molest her436. Of present significance is his Lordship's view that, "[a]s a general principle, there is no doubt that a husband cannot be guilty of rape upon his wife"437. The undertaking given in lieu of an injunction operated in that case to eliminate the wife's matrimonial consent to intercourse. A convenient account of the law in England as it was understood in December 1983 is contained in the Report of the Criminal Law Revision Committee, which had been asked to review the law relating to, and penalties for, sexual offences438: "In defining rape the Sexual Offences (Amendment) Act 1976 uses the term 'unlawful sexual intercourse'. What is 'unlawful' is left to the common law. The general rule is that sexual intercourse is 'unlawful' if it occurs outside marriage. Sexual intercourse between husband and wife is not 'unlawful' except in a fairly narrow class of cases, which can be broadly described as cases where the parties have separated and their separation has been acknowledged by a court." The existence of the immunity was also accepted in decisions of Australian courts delivered after 1963. Reference has been made earlier in these reasons to decisions of the South Australian Supreme Court439. In New South Wales, Victoria and Tasmania, the English line of authority allowing an exception to the immunity in the case of a wife living separately and under the protection of a court order was adopted440. In R v McMinn, Starke ACJ observed441: "There can be no doubt that for centuries the law in England (and in Australia) has been that a man cannot rape his wife. That this principle of law is out of tune with modern thinking has been recognized in Victoria 436 Steele (1976) 65 Cr App R 22. 437 Steele (1976) 65 Cr App R 22 at 24. 438 Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 17-18 [2.57]. 439 See above at [212]. 440 C (1981) 3 A Crim R 146; R v McMinn [1982] VR 53; Bellchambers (1982) 7 A Crim R 463. 441 [1982] VR 53 at 55. Bell by the Crimes (Sexual Offences) Act 1980 and there are similar Acts in other States." In New Zealand, a statute enacted in 1961 provided that no man could be convicted of rape of his wife unless, at the time of the intercourse, there was in force a decree nisi of divorce or nullity and the parties had not resumed cohabitation, or there was in force a decree of judicial separation or a separation order442. An amendment to the statute in 1981 maintained the immunity, save in cases where the husband and wife were living separately443. This restricted immunity was not removed until 1986444. The Model Penal Code, first published by the American Law Institute in 1962, relevantly provided that "[a] male who has sexual intercourse with a female not his wife is guilty of rape"445. In the revised commentary, published in 1980, this "traditional limitation" of the offence was maintained446. The proposition that by the mid-20th century or earlier the immunity had fallen into desuetude as the result of changes in the conditions of society is without support. In this country, as in other common law countries, the continued existence of the immunity does not appear to have been seen as inconsistent with the recognition of the equal status of married women. There is the curious spectacle in this appeal of the respondent and the Attorney-General for South Australia contending that the maintenance of the immunity by the mid- 20th century was inconsistent with the rights and privileges of married women, notwithstanding that as late as 1976 the Parliament of South Australia chose to preserve it447. 442 Crimes Act 1961 (NZ), s 128(3). 443 Family Proceedings Act 1980 (NZ), First Schedule. 444 Crimes Amendment Act (No 3) 1985 (NZ), s 2. 445 American Law Institute, Model Penal Code: Official Draft and Explanatory Notes, 446 American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 271-275, 341-346. The Comment notes that the rule existed at common law, prevailed at the time the Model Penal Code was drafted and "has been continued in most revised penal laws": at 341. 447 The original Bill introduced into Parliament, which purported to abolish the immunity completely, was rejected by the House of Assembly: Sallmann and Chappell, Rape Law Reform in South Australia: A Study of the Background to the Reforms of 1975 and 1976 and of their Subsequent Impact, Adelaide Law Review Research Paper No 3, (1982) at 20-21, 30-31. Bell By the mid-20th century, the notion that the immunity depended on the wife's irrevocable consent to intercourse may no longer have been seen as the justification for it. However, this is not to accept that the immunity had "crumbled to dust". The contemporary evidence suggests that the immunity was a recognised and accepted feature of the law of rape, albeit that the rationale supporting it may have changed. In 1954, Norval Morris and A L Turner, both then senior lecturers in law at the University of Melbourne, writing of the law respecting marital rape, were critical of irrevocable consent as the justification for the immunity448. They went on to discuss the "special position" of a married couple in law and in fact and to say449: "Intercourse then is a privilege at least and perhaps a right and a duty inherent in the matrimonial state, accepted as such by husband and wife. In the vast majority of cases the enjoyment of this privilege will simply represent the fulfilment of the natural desires of the parties and in these cases there will be no problem of refusal. There will however be some cases where, the adjustment of the parties not being so happy, the wife may consistently repel her husband's advances. If the wife is adamant in her refusal the husband must choose between letting his wife's will prevail, thus wrecking the marriage, and acting without her consent. It would be intolerable if he were to be conditioned in his course of action by the threat of criminal proceedings for rape." The leading Australian text on the criminal law published in 1965 praised the decision in R v Clarke450, which allowed an exception to the immunity; however, the author went on to observe451: "[A] husband should not walk in the shadow of the law of rape in trying to regulate his sexual relationships with his wife. If a marriage runs into difficulty, the criminal law should not give to either party to the marriage 448 Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 258. 449 Morris and Turner, "Two Problems in the Law of Rape", (1954) 2 University of Queensland Law Journal 247 at 259. 450 [1949] 2 All ER 448. See fn 295 above. 451 Howard, Australian Criminal Law, (1965) at 146. Bell the power to visit more misery upon the other than is unavoidable in the nature of things." The Mitchell Committee explained its reasons for proposing to confine the immunity in this way452: "The view that the consent to sexual intercourse given upon marriage cannot be revoked during the subsistence of the marriage is not in accord with modern thinking. In this community today it is anachronistic to suggest that a wife is bound to submit to intercourse with her husband whenever he wishes it irrespective of her own wishes. Nevertheless it is only in exceptional circumstances that the criminal law should invade the bedroom. To allow a prosecution for rape by a husband upon his wife with whom he is cohabiting might put a dangerous weapon into the hands of the vindictive wife and an additional strain upon the matrimonial relationship. The wife who is subjected to force in the husband's pursuit of sexual intercourse needs, in the first instance, the protection of the family law to enable her to leave her husband and live in peace apart from him, and not the protection of the criminal law. If she has already left him and is living apart from him and not under the same roof when he forces her to have sexual intercourse with him without her consent, then we can see no reason why he should not be liable to prosecution for rape." (emphasis added) The views expressed by the Mitchell Committee were in line with those expressed by the authors of the revised commentaries to the US Model Penal Code in 1980453 and by the English Criminal Law Revision Committee in 452 Criminal Law and Penal Methods Reform Committee of South Australia, Special Report: Rape and Other Sexual Offences, (1976) at 14 [6.2]. 453 American Law Institute, Model Penal Code and Commentaries (Official Draft and Revised Comments), (1980), Pt 2, Art 213 at 345: "The problem with abandoning the immunity ... is that the law of rape, if applied to spouses, would thrust the prospect of criminal sanctions into the ongoing process of adjustment in the marital relationship." 454 Criminal Law Revision Committee, Sexual Offences, Report No 15, (1984) Cmnd 9213 at 21 [2.69]. Explaining the majority view, which was not to remove the immunity, the Committee said: "Some of us consider that the criminal law should keep out of marital relationships between cohabiting partners – especially the marriage bed – except where injury arises, when there are other offences which can be charged." Bell In R v C, the English Court of Appeal set out the advice that an imagined solicitor might have given a husband who inquired as to the legality of marital rape in 1970455. This was in the context of a submission respecting the foreseeability of further development of the law in light of decisions which had allowed exceptions to the immunity. The Commonwealth Attorney-General submitted that the hypothesised advice applied with equal force in this case. The determination of the issue raised by this appeal does not depend upon consideration of foreseeability of change to the law. Nonetheless, the opinions of the academic lawyers and the members of law reform committees set out above may suggest that the solicitor in R v C was a man in advance of his times. There is a more fundamental difficulty with the submission that the Court should hold that a substantive rule of law affecting liability for a serious criminal offence has simply disappeared because of a perception that changed conditions of society no longer provided a justification for it. The powerful reasons against an ultimate court of appeal varying or modifying a settled rule or principle of the common law456 apply with particular force to a variation or modification which has the effect of extending criminal liability. It is for the parliament to determine that a rule of exemption from criminal liability is no longer suited to the needs of the community. The respondent and the Attorney-General for South Australia submitted that it is the responsibility of this Court to modify the law to avoid the "unjust" operation of a rule of immunity respecting criminal liability457. The submission is singular, given that there is no jurisdiction in Australia in which the common law governs a husband's liability for the rape of his wife. No occasion arises to modify the law to make it "an effective instrument of doing justice according to contemporary standards in contemporary conditions"458. The law of marital rape in each Australian jurisdiction has been brought into line with contemporary 455 R v C [2004] 1 WLR 2098 at 2103-2104 [19]; [2004] 3 All ER 1 at 6-7. 456 State Government Insurance Commission v Trigwell (1979) 142 CLR 617 at 633 per Mason J (Stephen and Aickin JJ agreeing); Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 664 per Wilson, Dawson and Toohey JJ, 677-678 per Deane J; [1987] HCA 26; Lamb v Cotogno (1987) 164 CLR 1 at 11 per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ; [1987] HCA 457 The respondent's Notice of Contention asserts that, "if [the immunity] ever was part of the common law of Australia, it ceased to be so as at the date of the commission of the offences in this matter". 458 O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 267 per Brennan J; [1991] HCA 14. Bell standards. Any statement of the common law respecting the liability of a husband for the rape of his wife with whom he was living could only apply to offences alleged to have been committed before the enactment of the statutory reforms. The declaration of the law for which the respondent contends carries with it that the parliaments of the States and Territories legislated over the course of the last century459 upon a wrong understanding of the law. That understanding was reflected in the Code States in the way in which the offence of rape was defined. In those States, the position remains that a husband is not liable to be convicted for the rape of his wife before the date on which the words "not his wife" were removed from the Criminal Code. In the jurisdictions which preserved the common law, the declaration would make it possible to reach back beyond the date on which statutory reforms were effected and attach liability to conduct occurring not less than a quarter of a century ago. In South Australia, it would be possible to successfully prosecute a man for the rape of his wife in the years up to 1976. In the more recent past, the same man would enjoy an immunity for the same conduct460. That is because the 1976 amendments enacted by the South Australian Parliament with the evident intention of limiting the immunity would now be seen to have conferred it. The fact that the parliaments of every Australian jurisdiction enacted legislation upon the understanding that the immunity was a rule of the common law provides some evidence that it was; and is a good reason for this Court not to now declare it to be otherwise. The rule of law holds that a person may be punished for a breach of the law and for nothing else461. It is abhorrent to impose criminal liability on a person for an act or omission which, at the time it was done or omitted to be done, did not subject the person to criminal punishment. Underlying the principle is the idea that the law should be known and accessible, so that those who are subject to it may conduct themselves with a view to avoiding criminal punishment if they choose462. However, its application does not turn on consideration of whether a person might be expected to have acted differently had he or she known that the proposed conduct was prohibited. Deane J's 459 In the case of Queensland, since 1899. 460 The immunity conferred by s 73(5) of the CLC Act was in force between 9 December 1976 and 16 April 1992. 461 See fn 286 above. See also Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 609-611 per Deane J, 687-688 per Toohey J; [1991] HCA 32; Williams, Criminal Law: The General Part, 2nd ed (1961) at 575-576. 462 Blackstone, Commentaries on the Laws of England, (1765), bk 1 at 45-46. Bell dissenting reasons in Zecevic v Director of Public Prosecutions (Vict) explain why that is so463: "The vice of such a retrospective abolition of a defence to a charge of murder lies not in the prospect of injustice to some imaginary killer who has killed on the basis that his crime will be reduced from murder to manslaughter in the event that he was found to have been acting excessively in self-defence. It lies in the fundamental injustice of inequality under the law which is unavoidable when the administration of the criminal law is reduced to a macabre lottery by what the late Professor Stone described as flagrant violation of the 'well-established judicial policies of the criminal law in favorem libertatis, and against ex post facto punishment'464." The departure from the statement of the elements of self-defence in Viro v The Queen465, sanctioned by the majority in Zecevic, was undertaken in circumstances in which it was considered unlikely to occasion injustice and in which it was acknowledged that the endeavour to state the "defence" by reference to the onus had proved unworkable466. Nothing in the judgments in Zecevic affords support for the acceptance of the respondent's contention that this Court should restate the common law with the effect of extending criminal liability to a class of persons previously exempt from that liability. The common law was demeaning to women in its provision of the immunity. It is no answer to that recognition to permit the conviction of the appellant for an act for which he was not liable to criminal punishment at the date of its commission. For these reasons I would allow the appeal, set aside the answer to the question of law given by the majority in the Full Court and, in lieu thereof, answer that question "no". 463 (1987) 162 CLR 645 at 677-678. 464 Precedent and Law, (1985) at 190. 465 (1978) 141 CLR 88 at 146-147; [1978] HCA 9. 466 Zecevic v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 664 per Wilson, Dawson and Toohey JJ. Bell

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT [2015] HCA 16 6 May 2015 ORDER Appeal allowed. Set aside the order of the Court of Criminal Appeal of the Supreme Court of South Australia made on 3 June 2014 and, in its place, order that: the appeal be allowed; the appellant's conviction be quashed; and a new trial be had. On appeal from the Supreme Court of South Australia Representation M E Shaw QC with B J Doyle for the appellant (instructed by North East Lawyers) M G Hinton QC, Solicitor-General for the State of South Australia with F J McDonald for the respondent (instructed by Director of Public Prosecutions (SA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Murder – Defences – Provocation – Where male Caucasian deceased made sexual advances towards male Aboriginal appellant at appellant's home in presence of appellant's de facto wife and family – Where open to jury to find that appellant killed deceased having lost self-control following advances – Where provocation left to jury at trial and appellant convicted of murder – Where Court of Criminal Appeal ("CCA") dismissed appeal against conviction because it concluded provocation should not have been left to jury as evidence, taken at highest, could not satisfy objective limb of provocation – Whether CCA erred in so concluding – Relevance of contemporary attitudes to sexual relations. Criminal law – Appeal – Appeal against conviction – Application of proviso – CCA dismissed appeal by applying proviso to s 353(1) of Criminal Law Consolidation Act 1935 (SA) – Where CCA not invited to apply proviso by prosecution – Whether CCA erred in invoking and applying proviso of its own motion. Words and phrases – "minimum powers of self-control", "ordinary person", "partial defence". Criminal Law Consolidation Act 1935 (SA), s 353(1). FRENCH CJ, KIEFEL, BELL AND KEANE JJ. Michael Joseph Lindsay was tried before the Supreme Court of South Australia (Sulan J) on an information that charged him with the murder on 1 April 2011 of Andrew Roger Negre. The jury were directed that it was incumbent on the prosecution to prove that the killing of the deceased was unprovoked. Lindsay was convicted of murder. Lindsay appealed against his conviction to the Court of Criminal Appeal of the Supreme Court of South Australia (Kourakis CJ, Gray and Peek JJ) on grounds which challenged the accuracy and sufficiency of the directions given to the jury on the issue of provocation. The majority (Peek J, with whom Kourakis CJ agreed) found that the directions were flawed in a number of respects and that the cumulative effect of these flaws constituted a miscarriage of justice1. However, their Honours were of the "firm view" that in 21st century Australia the evidence taken at its highest in favour of Lindsay was such that no reasonable jury could fail to find that an ordinary person could not have so far lost his self-control as to attack the deceased in the manner that Lindsay did2. It followed that the trial judge had been wrong to direct the jury on the alternative verdict of manslaughter based on provocation. The Court of Criminal Appeal majority concluded that, in the circumstances, the erroneous directions had not occasioned a substantial miscarriage of justice and the appeal was dismissed under the proviso to s 353(1) of the Criminal Law Consolidation Act 1935 (SA) ("the CLC Act")3. On 14 November 2014, French CJ and Gageler J granted Lindsay special leave to appeal from the order of the Court of Criminal Appeal. The appeal is brought on three grounds: first, that the trial judge was correct to leave provocation to the jury; secondly, that the Court of Criminal Appeal's reasons for concluding the contrary wrongly took into account unidentified academic literature; and thirdly, that in the absence of an application by the prosecution it was wrong to apply the proviso. For the reasons to be given, the trial judge did not err in leaving provocation for the jury's consideration. In this Court, the prosecution does not 1 R v Lindsay (2014) 119 SASR 320 at 378 [225] per Peek J (Kourakis CJ agreeing 2 R v Lindsay (2014) 119 SASR 320 at 380 [236] per Peek J (Kourakis CJ agreeing 3 R v Lindsay (2014) 119 SASR 320 at 382-383 [249]-[250] per Peek J (Kourakis CJ agreeing at 323 [1]). Bell maintain that the directions on provocation given to the jury were sufficient. It cannot be concluded that, if the jury had been correctly instructed on the issue of provocation, the appellant would inevitably have been convicted of murder. It follows that the appeal must be allowed4. Neither party submitted that, in this event, this Court should substitute a verdict of manslaughter. The appropriate consequential order is to direct that a new trial be had. The evidence at trial The appellant, an Aboriginal man, was aged 28 years or thereabouts at the date of the offence. On the evening of 31 March 2011, he, his de facto wife, Melissa, and a friend, Nicholas Hayes, visited the Hallett Cove Tavern. There they encountered the deceased, a Caucasian male who was previously unknown to them. The deceased had been drinking at the Tavern with his partner, Fiona Ninos. The two had quarrelled and she had gone home without him. The appellant and his party and the deceased all drank together and, in the early hours of 1 April 2011, they went to the appellant's Hallett Cove home to continue drinking. The appellant and Melissa had been living together since before the birth of their son, Ethan, who was then nine years old. They shared their home with two boarders: Luke Hutchings and Brigette Mildwaters. When the group arrived at the Hallett Cove home on the morning of 1 April 2011, Luke and Brigette were there, as were the appellant's two younger sisters, Ashleigh and Tahlia, and his cousin, Michael. The group, with the exception of Michael, who was asleep, commenced drinking together. At around 2:00am, Fiona Ninos rang the deceased's mobile telephone. The appellant spoke to her and invited her to join them. Fiona took up the invitation. After her arrival, the appellant showed her around the home. The deceased was seated at the kitchen bench where he was socialising with the group. Fiona stayed for around 45 minutes to an hour. During this time she did not see any aggressive behaviour. The mood of the group was good, they were drinking pre-mixed cans of bourbon and appeared happy and relaxed. Nonetheless, Fiona was annoyed with the deceased's decision to stay at the Tavern and to go out drinking with strangers and she told him so in heated terms. 4 Parker v The Queen (1963) 111 CLR 610 at 647 per Windeyer J; [1963] HCA 14; Green v The Queen (1997) 191 CLR 334 at 343-344 per Brennan CJ; [1997] HCA 50; Pollock v The Queen (2010) 242 CLR 233 at 252 [70]; [2010] HCA 35. Bell The appellant suggested that the deceased could stay the night and he offered to bring him home in the morning. Fiona caught a taxi home. Following Fiona's departure, there were two incidents, which together gave rise to the trial judge's decision to leave provocation for the jury's consideration. The first incident took place when the group was outside on the patio. The appellant was seated and the deceased straddled him, moving his hips backwards and forwards in a sexually suggestive manner. The appellant told the deceased that he was not gay and not to do "stuff like that" or he would hit him. Melissa also remonstrated with the deceased. The deceased apologised and the appellant told him "That's okay, just don't go doing stuff like that". Peek J summarised the evidence of the patio incident, observing that, whether the deceased had intended it or not, there was substantial evidence that the incident had caused upset not only to the appellant but, importantly, also to his de facto wife in his presence5. His Honour emphasised that the deceased had been told very firmly not to do it again6. The second incident occurred in the family room. The deceased was tired and the appellant told him that he could sleep in the spare room. The deceased said that he did not want to sleep up there by himself; he wanted the appellant in there with him. He said that he would pay the appellant for sex. The appellant replied "What did you say cunt?". The deceased repeated his proposition, offering to pay the appellant several hundred dollars7. The appellant punched the deceased, who fell to the floor. The appellant kicked and punched the deceased as he lay on the floor. At some stage, the appellant took hold of a knife with which he repeatedly stabbed the deceased. The deceased sustained multiple penetrating stab wounds. One group of wounds was in the right arm and chest. A second group of wounds was located over the abdomen. The stab wounds were associated with two significant injuries to the aorta. One completely severed the aorta; another caused a half 5 R v Lindsay (2014) 119 SASR 320 at 350 [107] per Peek J (Kourakis CJ agreeing 6 R v Lindsay (2014) 119 SASR 320 at 350 [107] per Peek J (Kourakis CJ agreeing 7 R v Lindsay (2014) 119 SASR 320 at 350 [110] and n 31 per Peek J (Kourakis CJ agreeing at 323 [1]). Bell thickness cut to it. These two wounds caused massive blood loss, leading to unconsciousness within 20 to 30 seconds and death within two to three minutes8. The appellant did not give evidence at the trial. It was his case that he had not been present at the time of the fatal assault. It is common ground that there was evidence upon which a reasonable jury might consider it possible that the appellant was provoked by the deceased's conduct and that he lost his self-control and carried out the fatal assault before regaining his composure. In light of the issues raised by the appeal, it is unnecessary to refer to other parts of the evidence that may have placed the events surrounding the killing in a different light. Before closing addresses, the trial judge invited counsel's submissions on whether provocation should be left for the jury's consideration. Trial counsel submitted that provocation was "fairly and squarely there and it really should be left to the jury". The prosecutor acknowledged that there was evidence of loss of self-control and, in light of the decision of this Court in Green v The Queen9, the prosecutor accepted that provocation was raised and that it was incumbent upon the prosecution to negative it. The addresses of each counsel were directed in substantial measure to the issue of provocation. Provocation Provocation at common law operates to reduce what would otherwise be murder to manslaughter. Although it is common to describe the doctrine as a "partial defence", the true position is that the unlawful intentional killing of another under provocation is not murder10. The malice that is implicit in the intention to kill or to do grievous bodily harm is denied in the case of a killing done under provocation11. There are two conditions for the operation of the doctrine: first, the provocation must be such that it is capable of causing an ordinary person to lose self-control and act in the way the accused did (the 8 R v Lindsay (2014) 119 SASR 320 at 327 [18] per Gray J. (1997) 191 CLR 334. 10 Woolmington v The Director of Public Prosecutions [1935] AC 462 at 482 per 11 Woolmington v The Director of Public Prosecutions [1935] AC 462 at 482 per Bell objective limb); and second, the provocation must actually cause the accused to lose self-control and the killing must take place while the accused is deprived of his or her self-control (the subjective limb)12. The focus of the objective limb is upon the capacity of the provocation to cause an ordinary person to lose self-control and form the intention to kill or to do grievous bodily harm13. Where the evidence raises the issue, the prosecution must prove that the killing was not done under provocation. The prosecution may do so by negativing beyond reasonable doubt either of the limbs of the doctrine. Where provocation is raised by the evidence, the determination of whether it has been negatived is for the jury. Whether the subjective limb is negatived is a question of fact. Whether the objective limb is satisfied is a question of opinion14 or, to adopt Glanville Williams' classification, it is a question of "evaluative fact"15. The threshold question of law is whether there is material in the evidence which sufficiently raises the issue to leave the partial defence for the jury's consideration. The determination of the threshold question requires the trial judge (and the appellate court) to consider the sufficiency of the evidence to allow that an ordinary person provoked to the degree the accused was provoked might form the intention to kill or to do grievous bodily harm and act upon that intention, as the accused did, so as to give effect to it16. The respective roles of judge and jury in the latter determination is the issue raised by the first ground of the appeal. In the Court of Criminal Appeal and in this Court, the appellant made a large submission: where there is evidence that is capable of supporting the subjective limb of the partial defence, no threshold question arises of the capacity of the evidence to support the objective limb. The appellant submitted that "the ordinary powers of self-control are to be determined by a jury, not by a court of 12 Masciantonio v The Queen (1995) 183 CLR 58 at 66 per Brennan, Deane, Dawson and Gaudron JJ; [1995] HCA 67. 13 Masciantonio v The Queen (1995) 183 CLR 58 at 69-70 per Brennan, Deane, 14 Phillips v The Queen [1969] 2 AC 130 at 137 per Lord Diplock for the Judicial Committee. 15 Williams, "Law and Fact", [1976] Criminal Law Review 472 at 472. 16 Masciantonio v The Queen (1995) 183 CLR 58 at 69 per Brennan, Deane, Dawson Bell appeal"17 and that only the jury may decide whether changes in the conditions and attitudes of society are such as to require the conclusion that the objective limb is negatived18. The submission is reminiscent of the unsuccessful submission urged on behalf of the appellant in Holmes v Director of Public Prosecutions that "[i]t is safer to trust to the good sense of ordinary reasonable men than to attempt to ... exclud[e] certain matters as matters of law"19. It will be recalled that the House of Lords in Holmes held that as a matter of law words alone, save in circumstances of a most extreme and exceptional character, are not capable of constituting provocation such as to reduce murder to manslaughter20. In so concluding, their Lordships discountenanced a dictum pronounced a little more than 70 years earlier by Blackburn J, who allowed that a sudden and unexpected confession of adultery might support the partial defence21. Viscount Simon, with whose reasons the other members of the House agreed, held that, in light of the changed conditions of society, Blackburn J's dictum was no longer good law22. His Lordship considered that as society advances the law "ought to call for a higher measure of self-control in all cases"23. It followed that the trial judge had been correct to direct the jury that it was not open to return a verdict of 17 [2015] HCATrans 052 at 406-415. 18 [2015] HCATrans 052 at 415. 19 [1946] AC 588 at 592. 20 [1946] AC 588 at 600 per Viscount Simon (Lords Porter, Simonds and du Parcq concurring at 601). 21 [1946] AC 588 at 599-600 per Viscount Simon (Lords Porter, Simonds and du Parcq concurring at 601), citing R v Rothwell (1871) 12 Cox C C 145 at 147. 22 [1946] AC 588 at 600 per Viscount Simon (Lords Porter, Simonds and du Parcq concurring at 601). 23 [1946] AC 588 at 601 per Viscount Simon (Lords Porter, Simonds and du Parcq concurring at 601). 24 Dissatisfaction with the rigidity of the common law stated in Holmes led to statutory reform in England by which the question of whether the provocation was enough to make a reasonable man do as the accused did was exclusively reserved (Footnote continues on next page) Bell This Court considered evidence of a sudden and unexpected confession of adultery together with the deceased's other conduct in Moffa v The Queen25. Each of the Justices, save Murphy J, proceeded upon acceptance of the common law of provocation stated in Holmes26. Barwick CJ concluded that the circumstances viewed in their entirety did not consist solely of words27. It followed that the court was not authorised to take the issue from the jury unless it was quite clear that no reasonable person could possibly conclude, in the situation viewed most favourably from the standpoint of the accused, that no ordinary man could have so far lost his self-control as to form an intent to at least do grievous bodily harm to his wife28. Whether it should be so concluded was a matter exclusively for the jury regardless of the court's view of the matter29. In this connection, his Honour observed that the jury is "credited with a knowledge of how the ordinary man would react in such a situation"30. His Honour noted, with respect to the role of the court in deciding the threshold question, that "there are limits to the control of such a factual situation which the court can for the jury: Homicide Act 1957 (UK), s 3. The position obtaining before the enactment of s 3 of the Homicide Act has since been restored under the new partial defence of "loss of control": Coroners and Justice Act 2009 (UK), ss 54, 55 and 56. This is in line with the Law Commission's recommendation that restoration of the power to the trial judge, coupled with the supervision of the appellate courts, "will enable the law to set boundaries in a reasoned, sensitive and nuanced way": The Law Commission, Partial Defences to Murder: Final Report, 6 August 2004 25 (1977) 138 CLR 601; [1977] HCA 14. 26 (1977) 138 CLR 601 at 605 per Barwick CJ, 613 per Gibbs J, 619 per Stephen J, 27 (1977) 138 CLR 601 at 605. 28 (1977) 138 CLR 601 at 607 per Barwick CJ. 29 (1977) 138 CLR 601 at 607 per Barwick CJ. 30 (1977) 138 CLR 601 at 606. Bell exercise"31. Stephen and Mason JJ in separate reasons approached the issue along much the same lines32. The analysis of the majority in Moffa was directed to findings open to a reasonable jury taking into account the entirety of the circumstances. It was not an analysis directed to whether in the latter part of the 20th century the law should or should not countenance that a wife's revelation of her adultery and taunts of her husband's sexual inadequacy might support the reduction of murder to manslaughter. Gibbs J, in dissent, considered that, in light of the decision in Holmes, the evidence in Moffa did not raise an issue fit for the jury's consideration33. His Honour said34: "The question has to be decided in the light of contemporary conditions and attitudes, for what might be provocative in one age might be regarded with comparative equanimity in another, and a greater measure of self-control is expected as society develops." Murphy J agreed with the other members of the majority that to have taken away the issue of provocation in Moffa would in the circumstances have been to usurp the function of the jury35. His Honour went further, proposing that the objective limb of the doctrine has no place in a rational system of jurisprudence and should be discarded36. His Honour's reasons contain a collection of the then current academic criticism of the objective limb of the doctrine37. These included the view that the court had proved too ready to exclude from the jury evidence of provocation which it regarded as insufficient to 31 (1977) 138 CLR 601 at 607. 32 (1977) 138 CLR 601 at 618-619 per Stephen J, 622 per Mason J. 33 (1977) 138 CLR 601 at 616. 34 (1977) 138 CLR 601 at 616-617. 35 (1977) 138 CLR 601 at 627. 36 (1977) 138 CLR 601 at 626. 37 (1977) 138 CLR 601 at 626-627. Bell reduce murder to manslaughter38. Sir Patrick Devlin writing extra-curially had earlier instanced Holmes as "an interesting modern example of the way in which the courts are still prepared to encroach on the province of the jury for practical reasons"39. The practical justification to which he referred was that a jury might too easily accept a suggestion of provocation out of mercy or sentiment40. A similar distrust of the jury informs some of the more recent criticism of the partial defence of provocation as lending itself to verdicts that reflect gender or The widespread criticism of the partial defence of provocation has led to its abolition or modification in all of the Australian jurisdictions, save South Australia42. This appeal is concerned with the common law of provocation, which remains the law in South Australia. 38 (1977) 138 CLR 601 at 627 per Murphy J, citing Brown, "The 'Ordinary Man' in Provocation: Anglo-Saxon Attitudes and 'Unreasonable Non-Englishmen'", (1964) 13 International and Comparative Law Quarterly 203 at 206. 39 Devlin, Trial by Jury, (1956) at 87. 40 Devlin, Trial by Jury, (1956) at 87. 41 Howe, "Green v The Queen – The Provocation Defence: Finally Provoking Its Own Demise?", (1998) 22 Melbourne University Law Review 466; Oliver, "Provocation and Non-violent Homosexual Advances", (1999) 63 Journal of Criminal Law 586; Bradfield, "Provocation and Non-violent Homosexual Advances: Lessons from Australia", (2001) 65 Journal of Criminal Law 76; The De Pasquale, "Provocation and Deployment of Culture as a Defence Strategy", (2002) 26 Melbourne University Law Review 110; Gray, "Provocation and the Homosexual Advance Defense in Australia and the United States: Law Out of Step with Community Values", (2010) 3(1) The Crit: A Critical Legal Studies Journal 53; Fitz-Gibbon, Homicide Law Reform, Gender and the Provocation Defence: A Comparative Perspective, the Homosexual Advance Defence: 42 Tasmania abolished the partial defence of provocation in 2003: Criminal Code Amendment (Abolition of Defence of Provocation) Act 2003 (Tas), s 4, repealing Criminal Code (Tas), s 160. In 2004, the Australian Capital Territory enacted provisions excluding non-violent sexual advances from alone forming the basis of a defence of provocation: Sexuality Discrimination Legislation Amendment Act 2004 (ACT), Sched 2, item 2.1, inserting Crimes Act 1900 (ACT), s 13(2A). In 2005, Victoria abolished the partial defence and introduced a new offence of defensive (Footnote continues on next page) Bell The rationale for the requirement that the court determine as a matter of law whether evidence is capable of constituting provocation was identified by Dixon J in Packett v The King as the need to apply an overriding or controlling standard for the mitigation allowed by law43. The statement, made with respect to provocation under the Criminal Code (Tas), which provided that "the question whether any matter alleged is, or is not, capable of constituting provocation is a matter of law"44, has been accepted as a statement of the common law of provocation in Australia45. In Stingel v The Queen, this Court affirmed that the function of the ordinary person test is to provide "an objective and uniform standard of the homicide: Crimes (Homicide) Act 2005 (Vic), ss 3, 4 and 6, inserting Crimes Act 1958 (Vic), ss 3B, 4 and 9AD. That offence was itself abolished in 2014: Crimes Amendment (Abolition of Defensive Homicide) Act 2014 (Vic), s 3. In 2006, the Northern Territory adopted the same approach as the Australian Capital Territory: Criminal Reform Amendment Act (No 2) 2006 (NT), s 17, inserting Criminal Code (NT), s 158(5). In 2008, Western Australia abolished provocation as a partial defence to murder, but retained it for other offences: Criminal Law Amendment (Homicide) Act 2008 (WA), s 12, repealing Criminal Code (WA), s 281. In 2011, Queensland restricted the scope of the partial defence in circumstances consisting of words alone or involving domestic relationships: Criminal Code and Other Legislation Amendment Act 2011 (Q), s 5, amending Criminal Code (Q), s 304. In 2014, New South Wales abolished the partial defence of provocation and introduced a partial defence of extreme provocation: Crimes Amendment (Provocation) Act 2014 (NSW), Sched 1, substituting Crimes Act 1900 (NSW), s 23. In 2013, the Criminal Law Consolidation (Provocation) Amendment Bill 2013 (SA), which provided that conduct of a sexual nature by a person did not constitute provocation merely because the person was the same sex as the defendant, was introduced in the Legislative Council of the Parliament of South Australia by the Hon Tammy Franks. It was subsequently withdrawn and referred to the Legislative Review Committee, the majority of whose members ultimately resolved not to support the Bill's passage, on a view that the decision in R v Lindsay (2014) 119 SASR 320 rendered the reform unnecessary: Report of the Legislative Review Committee into the Partial Defence of Provocation, (2014) at [8.1]. 43 (1937) 58 CLR 190 at 217; [1937] HCA 53. 44 Criminal Code (Tas), s 160(3), since repealed by Criminal Code Amendment (Abolition of Defence of Provocation) Act 2003 (Tas), s 4. 45 Parker v The Queen (1963) 111 CLR 610 at 660 per Windeyer J. Bell minimum powers of self-control" which must be observed before provocation may reduce what would otherwise be murder to manslaughter46. In this connection, the Court approved Gibbs J's statement respecting the relevance of contemporary conditions and attitudes to that determination47. Masciantonio v The Queen confirms that the statements in Stingel, while made with respect to the Criminal Code (Tas), are equally applicable to the common law of provocation in Australia48. Under the common law of provocation, the trial judge and the appellate court have the task of fixing the boundaries of the minimum powers of self-control that must be observed before it is open to the jury to find that murder is reduced to manslaughter by reason of provocation. The question for the trial judge and the appellate court is the same: whether "on the version of events most favourable to the accused which is suggested by material in the evidence, a jury acting reasonably might fail to be satisfied beyond reasonable doubt that the killing was unprovoked in the relevant sense"49. The determination of the question by the appellate court involves somewhat greater exactitude than the determination made by the trial judge. This reflects, as a matter of practicality, the reluctance of trial judges to withdraw the issue from the jury and the tendency to "tilt the balance" in favour of the accused50. In Stingel, the Court disavowed that the threshold test blurs the functions of judge and jury: within the area in which it is open to find that the prosecution has failed to negative provocation, the question is for the jury alone51. Importantly, the Court emphasised the "limited scope" of the threshold question 46 (1990) 171 CLR 312 at 327; [1990] HCA 61. 47 (1990) 171 CLR 312 at 327, citing Moffa v The Queen (1977) 138 CLR 601 at 48 (1995) 183 CLR 58 at 66 per Brennan, Deane, Dawson and Gaudron JJ. 49 Masciantonio v The Queen (1995) 183 CLR 58 at 67-68 per Brennan, Deane, Dawson and Gaudron JJ, citing Stingel v The Queen (1990) 171 CLR 312 at 334. 50 Masciantonio v The Queen (1995) 183 CLR 58 at 68 per Brennan, Deane, Dawson and Gaudron JJ, citing Lee Chun-Chuen v The Queen [1963] AC 220 at 230 per Lord Devlin for the Judicial Committee and Moffa v The Queen (1977) 138 CLR 601 at 617 per Gibbs J. 51 (1990) 171 CLR 312 at 334. Bell of law and the need to exercise caution before declining to leave provocation52. While the Court endorsed the relevance of contemporary attitudes and conditions to the threshold question53, no question of a shift in those attitudes or conditions was raised by the evidence in Stingel. There is an evident need for caution before a court determines as a matter of law that contemporary attitudes to sexual relations are such that conduct is incapable of constituting provocation. The partial defence recognises human frailty54 and requires that the gravity of the provocation be assessed from the standpoint of the accused, taking into account his or her history and attributes55. Assessment of the response of the ordinary person to the outrage which the provocative conduct might have engendered in the accused will usually depend upon a range of possible findings. It is this recognition that informed the majority's conclusion in Green that a reasonable jury could have entertained a reasonable doubt that the prosecution had negatived provocation56. The Court of Criminal Appeal With these observations in mind, it is convenient to turn to the reasons of the Court of Criminal Appeal majority. As earlier stated, the Court of Criminal Appeal majority concluded that the cumulative effect of the errors in the directions given to the jury on provocation was to "establish that [the appellant] has not had a trial according to law and that, in that sense, a miscarriage of justice has occurred"57. 52 (1990) 171 CLR 312 at 334. 53 (1990) 171 CLR 312 at 327. 54 Parker v The Queen (1963) 111 CLR 610 at 627 per Dixon CJ, 652 per Windeyer J; Johnson v The Queen (1976) 136 CLR 619 at 656 per Gibbs J; [1976] HCA 44. 55 Stingel v The Queen (1990) 171 CLR 312 at 326. 56 (1997) 191 CLR 334 at 346 per Brennan CJ, 356-357 per Toohey J, 373-374 per 57 R v Lindsay (2014) 119 SASR 320 at 378 [225] per Peek J (Kourakis CJ agreeing Bell Peek J, giving the leading majority reasons, moved from this conclusion to a consideration of whether the proviso should be applied. The starting point in that consideration was whether the trial judge was right to have left provocation to the jury58 and the focus of that consideration, in turn, was the objective limb of the partial defence. The Full Court of the Supreme Court of South Australia held in R v Dutton that under the common law words alone may constitute provocation59. The correctness of the analysis in Dutton was not in issue before the Court of Criminal Appeal or in this Court. Peek J identified the provocative conduct as consisting of the physical gestures on the patio and the deceased's statements in the second incident60. After reviewing the authorities, Peek J characterised the objective limb of the partial defence as "an instrument of policy employed to keep the partial defence of provocation within bounds acceptable to contemporary society"61. His Honour's analysis continued62: that "There in former is no doubt times, when acts of homosexuality constituted serious crime and men were accustomed to resort to weapons and violence to defend their honour, a killing under the provocation present here would have been seen as giving rise to a verdict of manslaughter rather than murder. However, times have very much changed. As Gibbs J emphasised in Moffa v The Queen: 'The question has to be decided in the light of contemporary conditions and attitudes, for what might be provocative in one age 58 R v Lindsay (2014) 119 SASR 320 at 378-381 [228]-[238] per Peek J (Kourakis CJ agreeing at 323 [1]). 59 (1979) 21 SASR 356 at 357 per King CJ, 364 per Sangster J, 376 per Cox J, citing Moffa v The Queen (1977) 138 CLR 601. 60 R v Lindsay (2014) 119 SASR 320 at 348 [97] and n 17 per Peek J (Kourakis CJ agreeing at 323 [1]). 61 R v Lindsay (2014) 119 SASR 320 at 380 [234] per Peek J (Kourakis CJ agreeing at 323 [1]) (emphasis in original). 62 R v Lindsay (2014) 119 SASR 320 at 380 [235]-[236] per Peek J (Kourakis CJ agreeing at 323 [1]) (footnote omitted). Bell might be regarded with comparative equanimity in another, and a greater measure of self-control is expected as society develops.' After careful consideration of the authorities, and of some of the extensive academic literature, I have come to the firm view that in 21st century Australia, the evidence taken at its highest in favour of the appellant in the present case was such that no reasonable jury could fail to find that an ordinary man could not have so far lost his self-control as to attack the deceased in the manner that the appellant did. Accordingly, the judge was incorrect in his decision to leave the partial defence of provocation to the jury in this case." His Honour went on to observe that his conclusion was based upon the facts of the case and did not support "some of the more extreme suggestions made in academic debate" since the decision in Green63. Whether the many critiques of the operation of the partial defence of provocation following Green64 are the "extensive academic literature" which his Honour took into account in his conclusion as to the capacity of the evidence to raise provocation in this case is not known. Should provocation have been left to the jury? There was no apparent motive for the killing and in the hours leading up to it the jury might consider that the appellant had been well disposed towards the deceased. As Peek J acknowledged65, there was ample evidence upon which the jury might consider that the prosecution had failed to negative that the deceased's conduct in fact provoked the appellant, causing him to lose his self-control, and that the sustained and vicious assault upon the deceased took place while the appellant was in that state. Peek J's conclusion – that no jury acting reasonably could fail to be satisfied beyond reasonable doubt that the appellant's reaction to the conduct of the deceased fell far below the minimum standard which must be attributed to the hypothetical ordinary man – would appear to be based upon a view about contemporary Australian attitudes to an uninvited non-violent homosexual advance. 63 R v Lindsay (2014) 119 SASR 320 at 380 [238] per Peek J (Kourakis CJ agreeing at 323 [1]), citing (1997) 191 CLR 334. 64 See n 41 above. 65 R v Lindsay (2014) 119 SASR 320 at 378 [228] per Peek J (Kourakis CJ agreeing Bell Although Peek J summarised findings which he considered it had been open to the jury to make in assessing the gravity of the provocation from the appellant's standpoint66, the analysis was in the context of addressing a ground of appeal. The appellant complains that when his Honour later came to consider whether there was material in the evidence capable of supporting the objective limb, his analysis was confined to the observation that in former times a man might defend his honour against a homosexual advance and that conditions and attitudes in 21st century Australia have moved on. The capacity of the evidence to support a conclusion that the prosecution might fail to negative the objective limb of the partial defence did not turn upon the appellate court's assessment of attitudes to homosexuality in 21st century Australia. It was open, as the appellant submits, for the jury to consider that the sting of the provocation lay in the suggestion that, despite his earlier firm rejection of the deceased's advance, the appellant was so lacking in integrity that he would have sex with the deceased in the presence of his family in his own home in return for money. And as the appellant submitted on the hearing of the appeal in this Court, it was open to a reasonable jury to consider that an offer of money for sex made by a Caucasian man to an Aboriginal man in the Aboriginal man's home and in the presence of his wife and family may have had a pungency that an uninvited invitation to have sex for money made by one man to another in other circumstances might not possess67. Dixon J pointed out in Packett that it may be open to entertain a reasonable doubt concerning provocation although it would be unreasonable to find affirmatively that provocation existed and was sufficient, a consideration which illustrates the need for caution before deciding to take the partial defence away from the jury68. The need for that caution has particular force in a case where, as here, there was evidence capable of supporting the subjective limb of the partial defence. The statement in Stingel of the limited scope of the threshold question recognises the need for restraint lest the court usurp the function of the jury. Peek J did not purport to decide that a non-violent sexual advance might never amount to provocation in law. Such a conclusion would be inconsistent with the 66 R v Lindsay (2014) 119 SASR 320 at 349-351 [99]-[112] per Peek J (Kourakis CJ agreeing at 323 [1]). 67 [2015] HCATrans 052 at 239-247. 68 (1937) 58 CLR 190 at 213-214. Bell holding in Green69. Peek J's conclusion reflected his assessment that there was more evidence to support the objective limb in Green than here70. This was essentially a factual conclusion which must be taken to encompass his Honour's estimate of the degree of outrage which the appellant might have experienced. It was for the jury to make that assessment. The trial judge did not err in leaving to the jury the alternative verdict of manslaughter based on provocation. This conclusion suffices to determine the appeal. However, there should be reference to the appellant's third ground, which, if it were good, would dispose of the appeal without more. The proviso The proviso in s 353(1) of the CLC Act is in the common form and provides that: "[T]he Full Court may, notwithstanding that it is of the opinion that the point raised in the appeal might be decided in favour of the appellant, dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred." The joint reasons in Baiada Poultry Pty Ltd v The Queen hold that if the condition (the conclusion that no substantial injustice has actually occurred) is satisfied, the power must be exercised71. The appellant submits that the anterior question is whether the court should embark on the inquiry without invitation. The appellant's submission is that under the adversarial system of criminal justice a court should not dismiss an appeal under the proviso of its own motion. In the Court of Criminal Appeal, the prosecution did not in terms submit that, in the event the Court determined otherwise, the appeal should nonetheless be dismissed because provocation should not have been left for the jury's consideration. The appellant complains that, in the result, the basis for the 69 (1997) 191 CLR 334 at 346 per Brennan CJ, 370 per McHugh J. 70 R v Lindsay (2014) 119 SASR 320 at 381 [238] per Peek J (Kourakis CJ agreeing 71 (2012) 246 CLR 92 at 103 [25] per French CJ, Gummow, Hayne and Crennan JJ; [2012] HCA 14. Bell application of the proviso was not laid out and he was not given the opportunity to make submissions on the issue which was determinative of the appeal. However, the foundation for the last-mentioned submission is not established. On the hearing of the appeal before the Court of Criminal Appeal, Kourakis CJ raised with senior counsel for the appellant the prospect of dismissal under the proviso were the Court to form the view that provocation should not have been left to the jury. In this connection, the Chief Justice made plain that the capacity of the evidence to raise the objective limb of the partial defence was the issue. Senior counsel responded submitting that "[i]f you get over the subjective test it's a matter for the jury", and directing the Court's attention to the decision of this Court in Green. Kourakis CJ later returned to the issue, raising with counsel the question of whether it mattered if the directions were wrong in a case in which provocation should not have been left in the first instance. Again, his Honour made clear that his focus was upon the objective limb of the doctrine. It cannot be said that the Court of Criminal Appeal failed to squarely put counsel on notice that consideration of the proviso was a live issue because the capacity of the evidence to satisfy the objective limb of provocation was a live issue. As noted earlier72, practical considerations incline trial judges towards leaving the alternative verdict where there is any suggestion of provocation. A prudent prosecutor will not urge a trial judge against such a course. The appellate court is not governed by the conduct of the prosecution at trial in its determination of whether in law the prosecution was required to negative provocation73. The focus of the prosecution's submissions in the Court of Criminal Appeal was on the contention that the trial judge's directions were correct and sufficient. The prosecution did not submit that the Court should apply the proviso upon the footing that provocation had been wrongly left. The prosecution did advert to the application of the proviso as one of the ways in which the Court might dispose of the appeal. However, even if the prosecution had made no reference to the proviso, in circumstances in which the Court of Criminal Appeal raised the proviso and invited counsel's submissions on whether it should be applied the appellant's challenge should be rejected. 72 At [26] above. 73 Lee Chun-Chuen v The Queen [1963] AC 220 at 230 per Lord Devlin for the Judicial Committee; Moffa v The Queen (1977) 138 CLR 601 at 613-614 per Gibbs J; Masciantonio v The Queen (1995) 183 CLR 58 at 68 per Brennan, Deane, Bell This is because the appellant's submission does not address the injunction in Baiada to give effect to the text and structure of the proviso74, neither of which supports the limitation that he proposes. Nor does his submission address the evident purpose of the proviso, which, as has been explained elsewhere, was to do away with the old Exchequer rule75. The circumstance that the prosecution did not rely on the proviso before the intermediate appellate court has been considered no bar to its engagement in this Court76, a conclusion which does not sit readily with acceptance of the appellant's submission invoking the adversarial nature of criminal justice. In this context, it should be remembered that the provision for appeal from the verdict of the jury is an exception to the principle of finality. As the joint reasons in Baiada point out, "[i]t is not to be supposed that, if an appellate court concluded that there had been no substantial miscarriage of justice, the appellate court could nevertheless allow the appeal and direct that a new trial be had"77. The force of that observation applies regardless of whether the prosecution has, in terms, invoked the proviso. The dismissal of the appeal under the proviso and its prominence in the appellant's submissions should not obscure that, if the Court of Criminal Appeal's conclusion that the evidence did not raise provocation were correct, the inadequacy of the directions on that topic did not occasion a miscarriage of justice78. The appeal does not provide the occasion to consider the separate issue, addressed by Peek J in connection with the proviso, of whether forensic decisions 74 (2012) 246 CLR 92 at 103 [24] per French CJ, Gummow, Hayne and Crennan JJ. 75 Weiss v The Queen (2005) 224 CLR 300 at 308 [18]; [2005] HCA 81. 76 Kelly v The Queen (2004) 218 CLR 216 at 238 [56] per Gleeson CJ, Hayne and Heydon JJ; [2004] HCA 12; Nicholls v The Queen (2005) 219 CLR 196 at 268 [192] per Gummow and Callinan JJ, 281 [233] per Kirby J; [2005] HCA 1; Darkan v The Queen (2006) 227 CLR 373 at 416 [145] per Kirby J; [2006] HCA 34. Cf Antoun v The Queen (2006) 80 ALJR 497 at 509 [58]-[60] per Hayne J; 224 ALR 51 at 65-66; [2006] HCA 2. See also Antoun v The Queen (2006) 80 ALJR 497 at 507 [49] per Kirby J; 224 ALR 51 at 63. 77 (2012) 246 CLR 92 at 103 [25] per French CJ, Gummow, Hayne and Crennan JJ. 78 Moffa v The Queen (1977) 138 CLR 601 at 617 per Gibbs J; Lee Chun-Chuen v The Queen [1963] AC 220 at 235 per Lord Devlin for the Judicial Committee; R v Tsigos [1964-5] NSWR 1607 at 1609 per Walsh J, 1635 per Moffitt J. Bell of trial counsel made in consequence of an erroneous decision to leave a partial defence may constitute a miscarriage of justice79. Orders The following orders should be made: 1. Appeal allowed. 2. Set aside the order of the Court of Criminal Appeal of the Supreme Court of South Australia made on 3 June 2014 and in lieu thereof order that the appeal to that Court be allowed, the appellant's conviction be quashed and a new trial be had. 79 R v Lindsay (2014) 119 SASR 320 at 381 [241]-[242]. Nettle NETTLE J. The appellant was convicted before the Supreme Court of South Australia of the murder by stabbing of Andrew Roger Negre. He appealed to the Court of Criminal Appeal on grounds which included that the trial judge's jury directions concerning the partial defence of provocation were inadequate and resulted in a miscarriage of justice. The appeal was dismissed. Peek J80, with whom Kourakis CJ agreed81, held that, although the judge's directions were inadequate and in some respects erroneous, they were not productive of a substantial miscarriage of justice. Their Honours considered that the partial defence of provocation should not have been left to the jury and, therefore, that the proviso should be applied82. Gray J was not persuaded that the judge's directions were inadequate or erroneous83. The appeal to this Court raises three issues for decision: (1) Given that the trial judge left provocation to the jury as a possible partial defence to murder, and the Crown did not contend at trial or on appeal to the Court of Criminal Appeal that the judge was in error to do so, was it open to the Court of Criminal Appeal to invoke the proviso? If it were open, did the Court of Criminal Appeal err in its application of the proviso: by having regard to academic literature not disclosed to the parties, and therefore which the parties did not have an opportunity to address before judgment was delivered; or by focusing on the homosexual nature of the suggested provocative conduct in circumstances where a jury might have taken the real "sting" and insult of the deceased's conduct to be something other than or in addition to the homosexual nature of the conduct? It is not now disputed that the trial judge's directions as to provocation were inadequate and erroneous. 80 R v Lindsay (2014) 119 SASR 320 at 378 [225]. 81 Lindsay (2014) 119 SASR 320 at 323 [1]. 82 Lindsay (2014) 119 SASR 320 at 381-383 [239]-[249]. 83 Lindsay (2014) 119 SASR 320 at 338 [59]-[63]. Nettle The evidence The appellant was a 28- or 29-year-old Aboriginal male who lived with his female partner, their child and another couple who paid a minimal rent for food and utilities. In the early hours of the morning of 1 April 2011, the appellant met the deceased, Mr Negre, at the Hallett Cove Tavern. Mr Negre had been drinking with his female partner until about 11:30pm. At that point he and she quarrelled and, after he declined her request to accompany her home, she departed. He remained at the tavern drinking at first alone and then with the appellant and his companions. At about 2:00am a group which included the appellant, the appellant's partner and Mr Negre left the tavern and travelled by taxi to the appellant's home with the intention of having further drinks. At around 1:30am to 2:00am, Mr Negre's partner woke and attempted to call him on his mobile telephone. The appellant answered and invited Mr Negre's partner to come over and join them. After she arrived, she was heard yelling and swearing at Mr Negre, asking why he had risked their relationship by going out with people he did not know. Subsequently, she appears to have calmed down. After the appellant showed her around the house, she departed in a taxi leaving Mr Negre behind. Following some more drinking and socialising, the first of two incidents occurred in the patio area immediately outside the house. According to some of the evidence given at the appellant's trial, Mr Negre made sexually suggestive gestures towards the appellant by sitting down with one leg on either side of him and making a thrusting motion towards him with his hips. Some of those present who gave evidence said that Mr Negre's conduct in behaving in that fashion considerably upset the appellant and also his partner. One witness recalled that the appellant said to Mr Negre: "Don't go doing stuff like that" and "Don't go doing stuff like that because I'm not gay" and "or I'll hit you". Another witness recalled it as being: "Lucky I don't hit you". The same witness recalled the appellant's partner "growling" and stating that the appellant was not gay and the appellant saying to Mr Negre: "Don't do that". A further witness recalled the appellant's partner saying: "Get him out of here". Mr Negre apologised and said it was only a joke. Later, the group moved inside to the family room. One witness said that Mr Negre appeared to be tired and that the appellant told him that he could sleep on the couch in the spare room. Mr Negre responded to the effect that he did not want to sleep up there by himself and that he wanted the appellant in there with him. Possibly there was then a period of time in which nothing material occurred. Some witnesses heard Mr Negre say to the appellant: "I'll pay you for sex" or "I'll pay you guys for sex". The appellant replied: "What did you say cunt?" to which Mr Negre responded by asking again for the appellant to join Nettle him and by offering the appellant several hundred dollars to do so. Immediately after that, the appellant punched Mr Negre and there was then a brief but violent frenzied attack on Mr Negre in which he was repeatedly stabbed with a kitchen knife. At the time of the attack, those present included the appellant, his partner, the appellant's sisters and the couple who lived with the appellant (one of whom was the appellant's co-accused). Expert forensic evidence established that Mr Negre had sustained multiple penetrating stab wounds, one group of which was in the region of the right upper arm and chest and a second group of which was located over the front of Mr Negre's abdomen. The wounds to the abdomen were associated with two significant injuries to the aorta. One of those wounds completely severed the aorta. The second caused a half-thickness cut to that vessel. The wounds to the aorta resulted in massive blood loss leading to unconsciousness within 20 to 30 seconds and death within two to three minutes. The conduct of the trial The Crown's case at trial was that the wounds were inflicted by the appellant with a knife. The appellant's only defence at trial was that it was not he who inflicted the knife wounds. The trial judge took the view, however, that there was evidence capable of sustaining a partial defence of provocation, and so left provocation to the jury. The Crown accepted at trial (and again before this Court) that there was evidence which, if accepted, was capable of satisfying the jury that it was reasonably possible that the appellant lost self-control. The jury nonetheless found the appellant guilty of murder and the appellant's co-accused guilty of the lesser offence of assisting the offender. The appeal to the Court of Criminal Appeal The appellant appealed to the Court of Criminal Appeal on grounds which included that the trial judge's directions on provocation were inadequate and resulted in a miscarriage of justice. As already noted, although the majority accepted that the directions were inadequate and productive of a miscarriage of justice, their Honours concluded that there had been no substantial miscarriage of justice and that the proviso84 should be applied. 84 Section 353(1) of the Criminal Law Consolidation Act 1935 (SA) provides: "The Full Court on any such appeal against conviction shall allow the appeal if it thinks that the verdict of the jury should be set aside on the ground that it is unreasonable or cannot be supported having regard to the evidence, or that the judgment of the court before which the appellant was convicted should be set aside on the ground of a wrong decision on any question of law, or that on any ground there was a miscarriage of justice, (Footnote continues on next page) Nettle The appeal to this Court The appellant was granted special leave to appeal to this Court on two grounds (in summary): (1) that the Court of Criminal Appeal erred in applying the proviso in circumstances in which the Crown did not contend for its application and did not identify the basis on which it could be applied; and (2) that the Court of Criminal Appeal erred in holding that there was no evidence capable of sustaining a partial defence of provocation and therefore that the trial judge's misdirections on provocation were not productive of a substantial miscarriage of justice. Invoking the proviso of the Court's own motion Counsel for the appellant contended with respect to the first ground that, because of the essentially adversarial nature of criminal proceedings, and the consequent importance of the way in which the parties define the issues to which submissions are directed85, it was not open to the Court of Criminal Appeal to invoke the proviso unless and until the Crown identified the proviso as a specific issue in the appeal and the manner in which it was contended to apply. In counsel's submission, so much was confirmed by the recent observation of Gageler J in Baini v The Queen86 that it has always been understood that it is for the respondent and not the appellant to establish to the satisfaction of the court of criminal appeal that the case is within the proviso. That argument cannot be accepted in the broad terms in which it was stated. Certainly, the Crown carries the onus of establishing that the proviso is applicable and so, unless the court is persuaded that there has been no substantial miscarriage of justice, an appeal must be allowed87. But, whether or not the Crown is first to take the point, where a court of criminal appeal makes it clear to an appellant that the court contemplates the proviso might be applicable, and in any other case shall dismiss the appeal; but the Full Court may, notwithstanding that it is of the opinion that the point raised in the appeal might be decided in favour of the appellant, dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred." 85 Ratten v The Queen (1974) 131 CLR 510 at 517 per Barwick CJ; [1974] HCA 35; James v The Queen (2014) 88 ALJR 427 at 435 [29]-[30] per French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ; 306 ALR 1 at 9-10; [2014] HCA 6. 86 (2012) 246 CLR 469 at 487 [49]; [2012] HCA 59. 87 Mraz v The Queen (1955) 93 CLR 493 at 514 per Fullagar J; [1955] HCA 59; TKWJ v The Queen (2002) 212 CLR 124 at 143 [63] per McHugh J; [2002] HCA 46. Nettle identifies with sufficient clarity the basis on which the court envisages the proviso could possibly so apply, and gives to the appellant an appropriate opportunity to advance submissions and other material in opposition to the identified basis of application of the proviso, there is nothing in principle or fairness to prevent the court deciding that there has not been a substantial miscarriage of justice and that the proviso should be applied. As this Court observed in Weiss v The Queen88, the common form proviso was calculated to do away with the Exchequer rule that any departure from trial according to law, regardless of the nature or importance of that departure, would result in an appeal being allowed. By using the words "substantial" and "actually occurred" the legislature gave a court of criminal appeal power to dismiss an appeal if it considers that no substantial miscarriage of justice has actually occurred. But to describe the proviso as a power is in some respects misleading. As was later explained in Baiada Poultry Pty Ltd v The Queen89, if a court of criminal appeal considers that no substantial miscarriage of justice has occurred, there is no discretion to allow the appeal and order that a new trial be had. The appeal must be dismissed. Of course, there are unlikely to be many cases where the Crown does not contend for the application of the proviso (either of its own motion or after being invited to do so by a court of criminal appeal) and yet a court of criminal appeal will be satisfied that there has not been a substantial miscarriage of justice. It might also be in some cases that, because of the way in which the Crown has conducted the appeal up to the point where the court first raises the issue, it would be unfair to require the appellant to meet that possibility. In the former class of case, the court would need to be satisfied that the Crown's reluctance to assert the proviso was not based on some underlying consideration which, if identified, would suggest that the proviso was inapplicable. In the latter class of case, the lack of fairness might mean that it would not be open to consider the application of the proviso in any event. Apart from cases of that kind, however, the fact that the Crown is not prepared to contend for the application of the proviso is not of itself a sufficient reason for a court of criminal appeal to decline to apply it. Counsel for the appellant argued that, be that as it may, in this case there was no identification of the basis which the Court of Criminal Appeal had in 88 (2005) 224 CLR 300 at 308 [18] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan and Heydon JJ; [2005] HCA 81. 89 (2012) 246 CLR 92 at 103 [25] per French CJ, Gummow, Hayne and Crennan JJ; [2012] HCA 14. Nettle mind for the possible application of the proviso, with the result that the appellant was not given the opportunity to meet and argue against the possibility. That submission must be rejected. The matter first arose in the course of argument in the Court of Criminal Appeal in the following exchange between the Chief Justice and counsel for the appellant: "Kourakis CJ: If provocation shouldn't have been left at all by the trial judge, then it might not matter that there were misdirections about it, and if the Court of Criminal Appeal held that provocation should not have been left, it could also then take the view that the misdirections didn't lead to any miscarriage of justice, and that was the difference on the facts between the majority and the minority in Green. ... Counsel: In our submission, the first point of principle that we put forward in response to that is this: that as the cases of Van Den Hoek and, indeed, Pollock and Masciantonio all confirmed, the courts must take a very open view; that is, if in doubt, lead provocation, is the effect of all of those judgments. In other words, the failure to leave it when a man has chased the deceased to the other side of the car and stabbed him while he is on the ground is a far cry from a case such as this where the Crown case is that there was a catalyst, he [the appellant] was angry, and it was a ferocious attack over in seconds, and similarly in Pollock. ... Kourakis CJ: I'm talking about whether it should have been left having regard to the second limb, which requires an objective test to be applied to the gravity of the insult as perceived by the appellant. Kourakis CJ: [Counsel], can you help me? How does the jury go about formulating the conception of the ordinary person here? Counsel: The ordinary person is simply a person with ordinary powers of self-control. Kourakis CJ: How do they go about working out what that is? Who do they look at if they can't look at themselves? Is there a model? Counsel: They don't look at anyone. The point is they have to look outside themselves. Kourakis CJ: To what then? Nettle Counsel: To what are ordinary or minimum powers of self-control. It's not the person, it's the powers of self-control of an ordinary person. Kourakis CJ: Isn't it really a social judgment on when a certain level of insult will excuse murder to manslaughter, don't they make a social judgment about that? Isn't that really what the test is about? Counsel: No, in my submission, what the test is about is applying the question of the gravity of the provocation from the point of view of the accused and answering whether or not he lost self-control in the way that it's been defined." Later in argument, Peek J took up the issue again: "Peek J: I just mention to you that matter of Green you handed up is not particularly helpful on this precise point we are now discussing because of course that turned on a statutory provision which is somewhat different to the common law in this particular regard. Counsel: Certainly on the ordinary man test the subsection (2)(a) I think it ... spells out I was really referring to the question of the proviso that was raised." Later still, in the course of the Crown's submissions, there was the following exchange between Gray J and counsel for the Crown: "Gray J: In determining the proviso, it's my understanding from recent High Court authorities it's not a criteria [sic] of this court to ask what might a reasonable jury do, is it possible the jury might reach a different verdict. The question is, what does this court, as judges, think the result should be. Counsel: The appeal court makes an independent assessment." As those exchanges demonstrate, the Court of Criminal Appeal did raise the possibility of applying the proviso on the basis that there had not been sufficient evidence of a reasonable possibility of objective provocation to leave to the jury. Counsel for the appellant was given an appropriate opportunity to respond and did in fact respond with a submission that, because there was sufficient evidence of subjective provocation to leave to the jury, the question of Nettle objective provocation should also have been left to the jury, in accordance with the decision of the majority of this Court in Green v The Queen90. Counsel for the appellant further contended that, whether or not the trial judge was correct to leave provocation to the jury, the fact was that his Honour had done so and, as was only to be expected, defence counsel's final address was structured accordingly. In counsel's submission, if provocation had not been left to the jury, defence counsel would have had no reason to submit to the jury that, if the appellant were the culprit, there was a reasonable possibility that the appellant was provoked. And, had that been the case, it cannot be gainsaid that the jury might then have been left with a reasonable doubt as to whether the appellant was the culprit. Accordingly, in counsel's submission, this was a case where, because of the way the trial was conducted, the appellant had been denied a chance of acquittal which was fairly open to him and, therefore, the Court of Criminal Appeal was in error in concluding that there had not been a substantial miscarriage of justice. There is force in that submission. Assuming that provocation should not have been left to the jury, it would be difficult to exclude as a reasonable possibility that by raising it as a partial defence, and defence counsel having to adapt her final address accordingly, the appellant was deprived of a chance of acquittal otherwise fairly open to him. Ultimately, however, the point is moot because, for the reasons which follow, the trial judge was right to leave provocation to the jury. Application of the proviso – the objective limb of provocation Peek J began his consideration of the proviso with reference to evidence of the effect of the deceased's sexual advances on the appellant and concluded that there was ample evidence to go to the jury on the issue of whether the appellant was in fact provoked91: "There was ample evidence for the jury's consideration of the subjective limb, namely that the appellant was in fact provoked by the conduct of the deceased and did thereby lose control. This was, in effect, conceded by the prosecutor in submissions in the absence of the jury." 90 (1997) 191 CLR 334; [1997] HCA 50. 91 Lindsay (2014) 119 SASR 320 at 378 [228]. Nettle To that point, his Honour's analysis was unexceptionable. Then, however, after referring to a number of authorities concerning the "ordinary person" test, his Honour continued92: "Thus, the objective test is an instrument of policy employed to keep the partial defence of provocation within bounds acceptable to contemporary society. There is no doubt that in former times, when acts of homosexuality constituted serious crime and men were accustomed to resort to weapons and violence to defend their honour, a killing under the provocation present here would have been seen as giving rise to a verdict of manslaughter rather than murder. However, times have very much changed. As Gibbs J emphasised in Moffa v The Queen: 'The question has to be decided in the light of contemporary conditions and attitudes, for what might be provocative in one age might be regarded with comparative equanimity in another, and a greater measure of self-control is expected as society develops.' After careful consideration of the authorities, and of some of the extensive academic literature, I have come to the firm view that in 21st century Australia, the evidence taken at its highest in favour of the appellant in the present case was such that no reasonable jury could fail to find that an ordinary man could not have so far lost his self-control as to attack the deceased in the manner that the appellant did. Accordingly, the judge was incorrect in his decision to leave the partial defence of provocation to the jury in this case." With respect, that was exceptionable. Peek J did not identify the "extensive academic literature" to which his Honour said he had given careful consideration or reveal how it may have assisted him in reaching his conclusion. The only pointer in that direction is that a little later in his reasons, his Honour said that "my conclusion in no way supports some of the more extreme suggestions made in academic debate since the decision of the High Court in Green v The Queen"93. One is left to wonder what suggestions his Honour had in mind and which, if any of them, he regarded as not so extreme as to be unacceptable. 92 Lindsay (2014) 119 SASR 320 at 380 [234]-[236] (emphasis in original; footnote omitted). 93 Lindsay (2014) 119 SASR 320 at 380 [238]. Nettle For that reason, there is force in the appellant's complaint that the majority appears to have had regard to academic literature not disclosed to the parties and, therefore, which the parties did not have an opportunity to address before judgment was delivered. Leastways, such ambiguity as there may be should be resolved in favour of the appellant94. Were that the only criticism of the majority's reasoning, it might be inconsequential. If it were otherwise clear that the proviso should have been applied, the fact that the appellant's counsel was deprived of an opportunity to dissuade the Court of Criminal Appeal from that view would likely be immaterial. But there are also several other aspects of the majority's reasoning which need to be considered. First, although, as Peek J quoted with approval, "[t]he success of a provocation defence rests on establishing the accused's act as one which any ordinary person might have done in the circumstances"95, it is also essential to keep in mind that the degree of provocation to which it must be assumed the ordinary person is subjected is the degree of provocation which was subjectively perceived by the accused. As this Court made plain in Stingel v The Queen96: "[T]he objective test was [not] intended to be applied in a vacuum or without regard to such of the accused's personal characteristics, attributes or history as serve to identify the implications and to affect the gravity of the particular wrongful act or insult." Secondly, in stating that he took the evidence "at its highest in favour of the appellant", Peek J did not elaborate upon what his Honour meant in the circumstances. The references in the preceding paragraph of his reasons to the historical criminalisation of homosexual acts and men killing "to defend their honour" suggest that he considered the gravamen of the evidence of provocation to be the homosexual nature of the deceased's advances. If that be so, his Honour erred by failing to take into account the full context of the events. 94 See, eg, Fleming v The Queen (1998) 197 CLR 250 at 262-263 [28]-[30] per Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ; [1998] HCA 68. 95 Lindsay (2014) 119 SASR 320 at 379-380 [233], quoting R v Hill [1986] 1 SCR 313 at 343-344 per Wilson J. 96 (1990) 171 CLR 312 at 324 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ; see also at 326-327; [1990] HCA 61; Masciantonio v The Queen (1995) 183 CLR 58 at 67 per Brennan, Deane, Dawson and Gaudron JJ, cf at 80 per McHugh J; [1995] HCA 67. Nettle Taking the circumstances disclosed by the evidence as a whole, the provocation as it might have been perceived by the appellant (and thus the force of the provocation to which it must be supposed an ordinary person in the position of the appellant would have been subjected) had a larger dimension than merely an unwanted homosexual advance on a heterosexual man. Other relevant considerations included that the appellant was hosting the deceased as a guest at the appellant's house; had reacted with anguish and loathing when the deceased made his first advance of the evening; had threatened violence if anything of the kind were repeated; and was then insulted in the presence of his partner, sisters and friends with an offer of several hundred dollars to prostitute himself to the deceased's desires. Further, as counsel for the appellant suggested in the course of argument (although no such submission was advanced below), it is not impossible that a jury could reasonably infer that, because the appellant is Aboriginal, he perceived the deceased's conduct towards him to be racially based and for that reason especially insulting97. Thirdly, although the objective test might aptly be described as "an instrument of policy"98, it is necessary to keep in mind that the policy is to limit the defence of provocation to what a reasonable jury might consider to be the standard of the minimum powers of self-control of an ordinary person. It is not what academics, the press, pressure groups or judges might hope or wish were the minimum powers of self-control of an ordinary person. Under our system of criminal law, it is the jury as representatives of the community who are entrusted to embody and apply community standards99. Thus, as Barwick CJ said in Moffa v The Queen100, subject to very limited exceptions, whether it should be concluded that an ordinary man would lose self-control "is a question exclusively for the jury, however much a court may be inclined to think that a jury should not do so". Fourthly, a reasonable jury is by no means a perfect jury. It is 12 ordinary men and women who between them are likely to embody most of the scruples, doubts, insecurities and predilections which are discoverable in one place or another across the broad range of an increasingly pluralist society. Subject to very limited exceptions, it is the immutable right of an accused to be accorded 97 Masciantonio (1995) 183 CLR 58 at 67 per Brennan, Deane, Dawson and 98 Lindsay (2014) 119 SASR 320 at 380 [234]. 99 Brown v The Queen (1986) 160 CLR 171 at 202 per Deane J; [1986] HCA 11; Cheatle v The Queen (1993) 177 CLR 541 at 560; [1993] HCA 44; Williams v Florida 399 US 78 at 100 (1970) per White J. 100 (1977) 138 CLR 601 at 606-607, see also at 622 per Mason J; [1977] HCA 14. Nettle the full benefit of any reasonable doubt which those influences might yield him or her. Fifthly, whatever may "have very much changed"101 since Green was decided in 1997, the law remains now as it was then, that the application of the objective test depends on the jury's evaluation of the degree of outrage which the accused might have experienced. As Brennan CJ said in Green, "[i]t [is] not for the Court to determine questions of that kind, especially when reaction to sexual advances are critical to the evaluation"102. There were some suggestions in the course of argument before the Court of Criminal Appeal, and there are also suggestions in Peek J's reasons for judgment103, that, as a result of this Court's decision in Weiss, the task of a court of criminal appeal in applying the proviso is for the court to make its own independent assessment of the evidence and on that basis determine whether, making due allowance for the natural limitations that exist in the case of an appellate court proceeding wholly or substantially on the record, the appellant was proved beyond reasonable doubt to be guilty of the offence on which the jury returned their verdict. What was said in Weiss must now be understood in light of what has since been observed in Baini104 (albeit in the context of the application of s 276 of the Criminal Procedure Act 2009 (Vic)) and in Pollock v The Queen105 (in relation to the common form proviso). That is to say, where there has been a miscarriage of justice the consequence of an error in the conduct of a criminal trial, a court of criminal appeal cannot fail to be satisfied that there has been a substantial miscarriage of justice unless it determines that, in the absence of the error, it would not have been open to the jury to entertain a reasonable doubt as to guilt. "Nothing short of satisfaction beyond reasonable doubt will do"106. A court of criminal appeal "can only be satisfied, on the record of the trial, that an error of the kind which occurred in this case did not amount to a 'substantial miscarriage 101 Lindsay (2014) 119 SASR 320 at 380 [235]. 102 (1997) 191 CLR 334 at 346. 103 Lindsay (2014) 119 SASR 320 at 381-383 [239]-[249]. 104 (2012) 246 CLR 469 at 480-481 [28]-[32] per French CJ, Hayne, Crennan, Kiefel and Bell JJ. See also Baini v The Queen (2013) 232 A Crim R 17. 105 (2010) 242 CLR 233 at 252 [70] per French CJ, Hayne, Crennan, Kiefel and Bell JJ; [2010] HCA 35. 106 Baini (2012) 246 CLR 469 at 481 [33]. Nettle of justice' if the … court concludes from its review of the record that conviction was inevitable"107. And by "inevitable" what is meant is that, assuming the error had not been made, the result was bound not to have been any different for the jury if acting reasonably on the evidence properly before them and applying the correct onus and standard of proof. Unless it is so possible to conclude that the accused has not been deprived "of a chance fairly open to him of being acquitted of murder"108, there is no room for the proviso. Finally, "[t]here was ample evidence for the jury's consideration of the subjective limb, namely, that the appellant was in fact provoked by the conduct of the deceased and did thereby lose control"109. The jury's assessment of that evidence – and so of the extent to which the appellant was in fact provoked by the conduct of the deceased – was critical to the evaluation of how an ordinary person might have reacted to that degree of provocation and, therefore, critical to satisfaction of the objective limb110. In those circumstances, it is surely not open to say that, on the view of the evidence most favourable to the appellant, the jury could not have been left with a reasonable doubt as to whether an ordinary person subjected to that degree of provocation could not have so much lost self-control as to form the intent to kill or inflict grievous bodily harm and before regaining self-control gone on and given effect to that intent in the manner in which the Conclusion For these reasons, the trial judge was right to leave provocation to the jury. It was not open to the majority of the Court of Criminal Appeal to be satisfied that the inadequacy of the judge's directions on provocation did not deprive the appellant of a chance which was fairly open to him of a verdict of guilty of manslaughter. The majority of the Court of Criminal Appeal was wrong to conclude that the inadequacy of the directions was not productive of a substantial miscarriage of justice. It follows that the appeal should be allowed. The orders of the Court of Criminal Appeal should be set aside, and in their place it should be ordered that 107 Baini (2012) 246 CLR 469 at 481 [33]. 108 Pollock (2010) 242 CLR 233 at 252 [70]. 109 Lindsay (2014) 119 SASR 320 at 378 [228] per Peek J. 110 Stingel (1990) 171 CLR 312 at 326-327 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. 111 Green (1997) 191 CLR 334 at 345-346 per Brennan CJ. Nettle the appeal to that Court be allowed, the conviction quashed and a new trial be had.

HIGH COURT OF AUSTRALIA AND APPELLANT THE QUEEN RESPONDENT [2018] HCA 32 8 August 2018 ORDER Appeal allowed. Set aside order 3 of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 13 April 2017 in the appeal against sentence. Remit the proceeding to the Court of Criminal Appeal of the Supreme Court of New South Wales for determination of the appeal against sentence. On appeal from the Supreme Court of New South Wales Representation G A Bashir SC with G E L Huxley for the appellant (instructed by Matouk Joyner Solicitors) K N Shead SC with T L Smith for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Appeal against sentence – Where appellant convicted of murder – Where primary judge found it probable that appellant acting under influence of some psychosis at time of offence – Where primary judge not satisfied appellant possessed intention to kill – Where primary judge's discretion miscarried by giving primary significance to standard non-parole period – Where Court of Criminal Appeal excised power to re-sentence – Where prosecutor conceded there was no issue with primary judge's factual findings – Where Court of Criminal Appeal found primary judge's findings open – Where Court of Criminal Appeal rejected primary judge's finding that appellant had suffered temporary psychosis which precluded forming intention to kill – Where Court of Criminal Appeal took into account evidence of appellant's progress since sentence on the "usual basis" as discussed in Betts v The Queen (2016) 258 CLR 420 – Where Court of Criminal Appeal failed to put appellant on notice of inclination not to act on concession made by prosecution – Whether denial of procedural fairness – Whether miscarriage of justice. Words and phrases – "circumstance of aggravation", "concession", "miscarriage of justice", "new evidence", "objective seriousness", "procedural fairness", "re-sentencing", "unchallenged factual findings", "usual basis". Criminal Appeal Act 1912 (NSW), s 6(3). BELL, KEANE, NETTLE, GORDON AND EDELMAN JJ. On 27 March 2008, following a trial in the Supreme Court of New South Wales (Hulme J and a jury), the appellant was convicted of the murder of a 15-year-old school girl, TB. The appellant was aged 16 years at the date of the offence. The offence occurred shortly before 4.00 pm on 19 July 2005. The appellant attacked TB on her way home from school. He stabbed her repeatedly to the upper back, upper chest, face and head. In all, there were 48 stab wounds. One wound penetrated the heart and the resulting blood loss led to death within a short interval. The appellant only broke off the assault when he was confronted by a passer-by. In the course of the attack, the appellant cut his hand. Later that afternoon, he gave three different accounts to witnesses of how he had sustained the cut: he had fallen over a rock, he had cut his hand on a rose bush, and he had cut his hand on barbed wire. He was arrested on the evening of the assault and has been in custody since. He declined to be interviewed by the police and did not give evidence at the trial or sentence hearing. In interviews with psychiatrists and the author of a pre-sentence report, the appellant either denied involvement in TB's death or claimed to have no memory of it. The appellant had no other convictions and was described by witnesses at the trial as a shy, quiet and family-oriented youth. It appears that before the trial, consideration was given by the appellant's legal advisers to the availability of psychiatric defences. Dr Nielssen, a forensic psychiatrist, interviewed the appellant in April 2007 and described him as having "an underlying schizophrenic illness" and determined that he was "probably concealing symptoms of mental illness". Dr Nielssen considered that there was doubt as to the appellant's fitness to plead. In a supplementary report prepared in October 2007, Dr Nielssen adhered to his opinion of the appellant's underlying mental condition but assessed that the appellant was fit to plead. The appellant did not raise the defence of mental illness or the partial "defence" of substantial impairment by abnormality of mind1 at the trial. At the sentence hearing, psychiatric opinion evidence as to the appellant's mental state was adduced by the prosecution and defence. It will be necessary to refer to this evidence in detail later in these reasons. For the present, it suffices to note that the primary judge found that it was probable that the appellant was acting "under the influence of some psychosis" at the time of the murder. His Honour was not satisfied beyond reasonable doubt that the offence was premeditated and, in light 1 Crimes Act 1900 (NSW), s 23A. Bell of the appellant's mental state, his Honour was not satisfied that the appellant possessed an intention to kill. At the time, a standard non-parole period of 25 years' imprisonment applied to the offence2. The primary judge applied the law as it was then understood3, giving primary significance to the standard non-parole period in the determination of the appropriate sentence. The standard non-parole period, as it stood, represented the non-parole period for an offence in the middle range of objective seriousness for such an offence4. The primary judge assessed that the offence was "a little below the mid-range" of objective seriousness. On 14 November 2008, the primary judge sentenced the appellant to a term of imprisonment for 22 years with a non-parole period of 17 years. The sentence was expressed to commence on 19 July 2005. The appellant will not be eligible for consideration of release on parole until 19 July 2022. The sentence will expire on 18 July 2027. By notice filed on 14 April 2016, the appellant sought leave to appeal against the sentence on the grounds that the primary judge erred in his application of the standard non-parole period legislation in light of this Court's decision in Muldrock v The Queen5, and that the sentence was manifestly excessive. The prosecution conceded what was described as a "Muldrock error". This was a concession that it was an error to give primary significance to the standard non-parole period in determining the appropriate sentence. The Court of Criminal Appeal (Leeming JA, Rothman and Wilson JJ) was unanimous in 2 Crimes (Sentencing Procedure) Act 1999 (NSW) ("the Sentencing Act"), Item 1B of the Table to Pt 4, Div 1A as at 27 March 2008. 3 R v Way (2004) 60 NSWLR 168. 4 Sentencing Act, s 54A(2). Section 54A(2), as amended by the Crimes (Sentencing Procedure) Amendment (Standard Non-parole Periods) Act 2013 (NSW), currently provides that: "[f]or the purposes of sentencing an offender, the standard non- parole period represents the non-parole period for an offence in the Table to this Division that, taking into account only the objective factors affecting the relative seriousness of that offence, is in the middle of the range of seriousness." (2011) 244 CLR 120; [2011] HCA 39. Bell upholding this ground, a conclusion which enlivened the Court of Criminal Appeal's power to re-sentence the appellant6. On the hearing of the appeal before the Court of Criminal Appeal, neither party challenged the primary judge's factual findings. The prosecution acknowledged that the sentence needed to be adjusted in light of Muldrock, but submitted that the adjustment should be minimal. The Court of Criminal Appeal majority, Leeming JA and Wilson J, rejected the primary judge's finding of the appellant's mental state at the time of the offence. That rejection took into account evidence that had been tendered to show the appellant's progress in custody in the period since the sentence hearing. Their Honours found that the appellant intended to kill TB. Wilson J also found that the offence involved "some degree of premeditation". Given these findings, Leeming JA and Wilson J concluded that no lesser sentence was warranted in law and the appellant's appeal was dismissed. Rothman J, in dissent, would not have departed from the primary judge's unchallenged findings. His Honour would have allowed the appeal and re-sentenced the appellant to a non-parole period of 12 years' imprisonment with a remainder of term of six years' imprisonment. On 15 December 2017, Kiefel CJ, Bell and Keane JJ granted the appellant special leave to appeal. The appeal is brought on two grounds. The first ground complains that the appellant was denied procedural fairness. The second ground complains that the Court of Criminal Appeal erred in substituting aggravated factual findings, in the absence of challenge to the findings of the primary judge and in circumstances in which their Honours accepted that the findings of the primary judge were open. For the reasons to be given, the appeal must be allowed on the first ground and the matter remitted to the Court of Criminal Appeal. The re-sentencing discretion In a case in which the Court of Criminal Appeal finds that the sentencing judge's discretion has miscarried, its power to re-sentence is enlivened unless, in the exercise of its discretion, the Court of Criminal Appeal is satisfied that no other (generally lesser) sentence is warranted in law. As explained in Kentwell v The Queen, the Court of Criminal Appeal exercises an independent sentencing discretion in that it is required to form its own view of the appropriate sentence, rather than confining itself to the determination of whether the identified error 6 Criminal Appeal Act 1912 (NSW), s 6(3). Bell infected the sentence imposed below7. Exceptional cases apart, the Court of Criminal Appeal's determination of the appropriate sentence is determined on the judge's material unchallenged factual findings, and any relevant evidence of the offender's post-sentence conduct8. that was before the sentencing the sentencing judge, The primary judge's reasons At the sentence hearing, it was the prosecution's case that the offence was "'at the very high end of objective seriousness', 'frenzied … full of hate and rage', involving a specific intention to kill and 'a very clear element of premeditation'". The primary judge accepted that the attack was frenzied but he considered the further findings sought by the prosecution were "much more doubtful". The submission that the offence was premeditated depended upon the inferences to be drawn from the timing and location of the attack, the appellant's possession of a knife, and the appellant's conduct in truanting from school that day. The attack took place shortly after TB got off the school bus, as she was taking a shortcut to her home through the car park of the Forresters Beach Resort. It was the first day at school following the school holidays. The appellant did not attend school that day. He returned home in the middle of the day, telling his mother, untruthfully, that he had left school early because he had a stomach ache. He left the house at about 3.30 pm, saying that he was going to Forresters Beach to "look at the trail bikes". The primary judge found that the appellant was aware of the timing of the buses and the stop at which TB alighted. A few months earlier, the appellant had got off the bus at the same spot on two occasions. His Honour was not prepared to infer that the offence was premeditated from the fact the appellant had taken the day off school or from his presence at the scene; the appellant had missed school on other occasions and there was nothing remarkable about his presence in the general area. His Honour noted that the appellant and TB were accustomed to travel on the same school bus. There was no evidence of any relationship between the two and no suggestion that the appellant had attempted to make contact with TB during the school holidays. The knife had not been (2014) 252 CLR 601 at 615 [35] per French CJ, Hayne, Bell and Keane JJ; [2014] HCA 37. 8 Carroll v The Queen (2009) 83 ALJR 579 at 584 [24]; 254 ALR 379 at 385; [2009] HCA 13; Betts v The Queen (2016) 258 CLR 420 at 427 [14]; [2016] HCA 25. Bell located; all that was known about it was that it was short. The evidence was neutral on whether the appellant regularly carried a knife. The primary judge considered that there was "much irrationality about what occurred". This observation took into account the absence of evidence that TB had slighted or rejected the appellant and the absence of any other conceivably rational explanation for the attack. His Honour considered that the irrationality of the attack was itself against a finding of premeditation. The psychiatric evidence adduced at the sentence hearing The prosecution adduced evidence from Dr Kasinathan and Dr Allnutt. Dr Kasinathan had been the consulting psychiatrist at the juvenile justice facility in which the appellant was housed. He had seen the appellant on some 20 to 30 occasions. Dr Allnutt is a consultant forensic psychiatrist and he interviewed the appellant shortly before the sentence hearing, some three years after the offence. The appellant called Dr Nielssen, who had interviewed the appellant again shortly before the psychiatrists was cross-examined and none departed from the opinions expressed in their reports. the sentence hearing. Each of Dr Allnutt diagnosed the appellant as suffering from "depressive and anxiety symptoms. Probably with obsessive compulsive symptoms, of obsessive compulsive disorder." Dr Allnutt acknowledged that there might be a connection or causative link between the appellant's anxiety disorder and his offence, but was unable to conclude that there was. Dr Allnutt considered that possible explanations for the frenzied nature of the attack (committed by a person who until then seemed to have led a normal life) were psychosis; an interaction with TB that went wrong; and a loss of control and temper. While Dr Allnutt could not rule out the possibility of psychosis, he considered the appellant had been highly disturbed at the time of the offence and that there might be another, non-psychotic but irrational, reason for it. Dr Kasinathan assessed the appellant the day after the offence and noted that his presentation was "strange" and thought form was not normal. This was these abnormalities. the only occasion when Dr Kasinathan noticed Dr Kasinathan agreed with Dr Allnutt's diagnosis of an anxiety disorder with depression. Dr Kasinathan was unable to see any connection between the appellant's anxiety symptoms and the offence. He agreed that the appellant's affect generally was somewhat restricted and, while this could be a sign of schizophrenia, he thought it was probably an autistic trait. Dr Kasinathan pointed out that the appellant had been under regular observation and that no psychosis had been detected. He was unable to find a psychiatric explanation for Bell the attack; he postulated that it might have been an overly explosive reaction to a slight, amplified by anxiety. Dr Nielssen considered that, at the time of the offence, the appellant had been, and at the date of the sentence hearing still was, in the prodromal phase of schizophrenia. This is the phase of the illness between the decline in social function and the emergence of frank psychiatric symptoms. It is usually only apparent in retrospect when acute symptoms have manifested. Dr Nielssen acknowledged that the illness had not developed as he would have expected in the period of three years since the offence. Dr Nielssen also acknowledged that a trial of medication for schizophrenia seemed to have no effect. Neither consideration led Dr Nielssen to depart from his opinion. That opinion took into account the appellant's mother's observations of the appellant's decline in scholastic performance and social function prior to the offence; a family history of mental illness; the appellant's striking abnormality of emotional expression in the course of each of Dr Nielssen's interviews with him; and a subtle impairment in the appellant's capacity for logical thinking. In summary, Dr Nielssen thought it likely that, at the time of the attack, the appellant was "in the early phase of psychotic illness". The primary judge's finding The primary judge did not find Dr Kasinathan's suggestion of an overly explosive reaction to a slight to be an adequate explanation for the offence, given that there was nothing in the appellant's past behaviour to suggest that he was prone to rage. His Honour favoured Dr Nielssen's opinion as more probably the correct explanation for the offending. As earlier stated, his Honour found that it was probable that the appellant was acting under the influence of some psychosis at the time of the offence. The statutory scheme The offence of murder is one for which a standard non-parole period applies under Pt 4, Div 1A of the Sentencing Act9. At the date of the offence, the the offence of murder was 20 years' standard non-parole period for imprisonment. The Sentencing Act was amended with effect from 1 January 2008, providing a standard non-parole period of 25 years' imprisonment for the murder of a person aged under 18 years. The increased standard non-parole 9 Sentencing Act, Items 1, 1A and 1B of the Table to Pt 4, Div 1A. Bell period applied to a conviction for such an offence on or after 1 January 200810. The appellant was convicted of the murder of TB on 27 March 2008 and, thus, at the date he was sentenced by the primary judge, the standard non-parole period for his offence was 25 years. The Court of Criminal Appeal's consideration of the re-sentencing of the appellant took place in a significantly altered statutory context. Section 54D(3), inserted into the Sentencing Act with effect from 1 January 200911, provides that standard non-parole periods do not apply to the sentencing of an offender if the offender was under the age of 18 years at the time the offence was committed. At the sentencing of the appellant in November 2008, it had been necessary to take into account that a standard non-parole period of 25 years' imprisonment applied to the offence. At the date the Court of Criminal Appeal considered re-sentencing, no standard non-parole period applied to the offence. The conduct of the appeal in the Court of Criminal Appeal tendered The appellant the affidavit of his instructing solicitor, Carla Velasquez, on the "usual basis". Ms Velasquez summarised entries contained in the appellant's case management file, records maintained by Juvenile Justice relating to the appellant's incarceration between 2005 and 2010, and records maintained by Justice Health relating to the appellant's medical treatment following his transfer to the adult correctional system in February 2010. Annexed to Ms Velasquez's affidavit were copies of reports prepared by a psychologist, Karen Clarke, dated 30 October 2009, and a psychiatric registrar, Dr Kheng Chan, dated 17 September 2014. At the date of Dr Chan's report, the appellant was being held in the Long Bay Hospital Mental Health Unit ("the Mental Health Unit") following his transfer from a correctional centre under Pt 5, Div 3 of the Mental Health (Forensic Provisions) Act 1990 (NSW). Dr Chan noted, by reference to Justice Health records, a concern that the concreteness of the appellant's thought processes and his restricted affect was "likely secondary to an underlying psychotic illness". The treating team considered that the appellant qualified as a "mentally ill" person. Dr Chan recorded that the appellant had a "strong family history of mental illness", including that his father was the product of an incestuous relationship between his grandmother and her own son, and that the 10 Crimes (Sentencing Procedure) Amendment Act 2007 (NSW). 11 Crimes Amendment (Sexual Offences) Act 2008 (NSW). Bell father suffered from schizophrenia and had committed suicide. The treating team's recommendation was that the appellant be managed as a correctional patient at the Mental Health Unit. On 13 October 2014, Dr Chan reported that the appellant had been observed over the preceding four weeks and there was no evidence to suggest that he had any psychotic feature. Dr Chan concluded that the appellant was not suffering from a serious mental illness and that his presentation was more consistent with autistic spectrum traits. The appellant was discharged from the Mental Health Unit. The prosecution tendered two affidavits on the "usual basis". One annexed records relating to the appellant's various disciplinary infractions, and the other extracted observations taken from the Justice Health file on several days in 2014 and 2015. It was not submitted by either party on the hearing in the Court of Criminal Appeal that any of the new evidence was relevant to the assessment of the appellant's culpability for his offence. The new evidence was relevant to the assessment of the prospects of the appellant's rehabilitation and to the conditions of his custody. The Court of Criminal Appeal Leeming JA approached the consideration of re-sentencing on the footing that the Court of Criminal Appeal must take into account factual circumstances as they existed at the date of the appeal and not as they were in 200812. This was correct insofar as the statutory sentencing regime and the appellant's conduct in, and experience of, custody were concerned. His Honour went on, however, to state that the Court of Criminal Appeal had the benefit of evidence that was not available to the primary judge, including expert psychiatric evidence of the appellant's current and former mental states, which bore directly on the objective seriousness of the offence. His Honour acknowledged that the primary judge's findings had been open, but said that the new evidence had led him to form "a very different view of the objective seriousness of the offence". Before turning to the new evidence, Leeming JA said that two matters were to be noted about the stances taken by the parties on the issue of 12 DL v The Queen (No 2) [2017] NSWCCA 58 at [5] citing MB v The Queen [2013] NSWCCA 254 at [18]. Bell re-sentencing. The first concerned the stance taken by the appellant. His Honour noted that senior counsel: "initially took the view that 'we don't ask the Court to re-find the facts', although at the same time it was said that the Court would put the finding of objective seriousness 'entirely to one side', because of the absence of a [standard] non-parole period". It is evident that his Honour considered that there was some inconsistency between senior counsel's initial view – not to ask the Court to re-find the facts – and her invitation to the Court to put the primary judge's finding of the objective seriousness of the offence entirely to one side. The second matter concerned the stance taken by the prosecution. Leeming JA noted that on the hearing of the appeal: "the Crown said that it did not take issue with [the primary judge's] assessment of criminality, 'except to say that in the circumstances, the [appellant] was well catered for in terms of those features that were taken into account to his considerable advantage'". Leeming JA observed that the prosecutor had characterised a number of the primary judge's findings as "unduly favourable" to the appellant and characterised the primary judge's failure to find that the appellant intended to kill as "a generous finding". His Honour said that the Court of Criminal Appeal was not bound by the primary judge's findings (especially given the "materially different evidence now before it"), nor was the Court bound by the prosecutor's statement that the Crown did not take issue with the primary judge's "assessment of criminality". Indeed, Leeming JA considered that, in light of "its inconsistency with the written and oral submissions", the concession may have been a slip. Leeming JA said that although senior counsel for the appellant had sought to acknowledge the prosecutor's "concession" – that there was no issue with the primary judge's assessment of criminality – the correct position was stated by senior counsel immediately thereafter: "[findings of objective seriousness] should be put to one side because the sentencing discretion is being exercised afresh by this Court, and it's for this Court to make their own findings completely unfettered by any findings of the original sentencing judge. That sentence [has] miscarried and this Court must simply come to its own conclusion." Bell His Honour concluded that "[i]t will be seen that [the appellant] has had ample opportunity to be heard on all aspects of his appeal against sentence". Turning to the question of re-sentence, Leeming JA observed that more than 11 years had passed since the killing and that the appellant had been under the consistent care of psychologists while in custody. Significantly in his Honour's analysis, there was no suggestion rising above speculation of incipient schizophrenia. His Honour considered that the number and location of the stab wounds pointed inexorably to the appellant having had the intention of killing TB. Leeming JA rejected the primary judge's finding that the appellant had suffered from "a temporary psychosis which precluded his forming an intention to kill" for two reasons. First, there was no evidence to sustain that finding. Secondly, given the necessity for any finding to be consistent with the jury's verdict, Leeming JA was unable to "conceive of a temporary psychosis which left [the appellant] with an intention to inflict grievous bodily harm while falling short of an intention to kill". The first reason took into account the new evidence and raises consideration of its availability to challenge the primary judge's factual findings. The second reason challenges the primary judge's finding without recourse to the new evidence. Wilson J also approached consideration of re-sentencing upon a view that no limitation applied to the use to be made of the new evidence. Her Honour found that the psychiatric opinion accepted by the primary judge "has not been borne out by time". Her Honour considered that the number, location and severity of the wounds led irresistibly to the conclusion that the appellant intended to kill TB. Wilson J also concluded, contrary to the primary judge's finding, that the offence was accompanied by some degree of premeditation. The conclusion, at least in part, rested on the absence of evidence that the appellant was carrying a knife for a purpose other than using it for a lethal attack, and to this extent wrongly imposed an onus on the appellant respecting a circumstance of aggravation13. Her Honour also rejected the primary judge's finding that the appellant was unlikely to re-offend, and would have departed from the primary judge's finding that special circumstances justified a departure from the statutory proportion between the head sentence and the non-parole period14. 13 R v Olbrich (1999) 199 CLR 270; [1999] HCA 54. 14 Sentencing Act, s 44(2). Bell The first ground – procedural fairness Leeming JA's view that the appellant had been given an ample opportunity to be heard on all aspects of his appeal appears to have been based on two misconceptions. The first misconception was that there was an inconsistency between the parties' stance that the primary judge's "assessment of criminality" was not in issue and the parties' invitation to put the primary judge's assessment of the objective seriousness of the offence entirely to one side. As earlier explained, the primary judge assessed the objective seriousness of the offence in circumstances in which it was an offence to which a standard non-parole period of 25 years' imprisonment applied. Consistently with the way the law was understood, the primary judge considered that he was required to first assess where in the continuum of seriousness this offence lay. And as also earlier explained, by the time the Court of Criminal Appeal came to consider re-sentencing, no standard non-parole period applied to the offence. The parties each made submissions about how the Court of Criminal Appeal might assess the objective seriousness of the offence in light of the current statutory regime and recognising that it was open to the Court of Criminal Appeal to form its own view of where the appellant's conduct stood on an objective scale of offending15. In making these submissions, neither party was inviting the Court of Criminal Appeal to depart from the factual findings below. The primary judge did not essay a discrete "assessment of criminality"; the prosecutor's concession that the Crown did not take issue with the "assessment of criminality" was a shorthand way of acknowledging that the Crown was not seeking to challenge the primary judge's findings that informed the appellant's criminality for his offence. Relevantly, these findings were that it was probable that the appellant was acting under the influence of some psychosis at the time of the murder, and that it had not been proved to the criminal standard that the appellant intended to kill TB or that the killing was premeditated. So much was made clear in an exchange between senior counsel for the prosecution and Rothman J on the hearing of the appeal. His Honour asked if the prosecution took issue with the "substantive findings of [the primary judge]" as to either the assessment of the criminality or the factual findings. Senior counsel for the prosecution responded "[n]o, your Honour, except the circumstances, the [appellant] was well catered for in terms of those features that were taken into account to his considerable advantage". to say that 15 Carroll v The Queen (2009) 83 ALJR 579 at 584 [24]; 254 ALR 379 at 385. Bell The prosecutor's submissions, that the primary judge's finding that it was not proved that the appellant intended to kill TB was "generous" and that the primary judge had taken into account "a number of matters" that were "unduly favourable", were in aid of the submission that any reduction in the appellant's sentence should be minimal. The submissions were not inconsistent with the prosecutor's decision not to challenge any of the primary judge's factual findings. The second misconception concerned the use to which the new evidence was to be put. In this Court the appellant submits, and the prosecution does not dispute, that all of the new evidence was tendered on the "usual basis". The "usual basis" refers to the practice discussed in Betts v The Queen16 of receiving evidence on the hearing of a sentence appeal of the offender's progress towards rehabilitation in the period since the sentencing. The evidence is routinely admitted on the limited basis that it may be taken into account in the event that the court comes to re-sentence17. On the hearing of the appeal in the Court of Criminal Appeal, immediately after thanking the prosecutor for the concession (that the Crown did not take issue with the primary judge's assessment of criminality), senior counsel for the appellant drew the Court's attention to Betts as the most "recent decision of the High Court indicating what the usual basis usually means", and submitted that "there is no issue between the parties as to the findings of [the primary judge]". Betts allows that in an exceptional case new evidence may be received for the purpose of revisiting the findings of primary fact. For the reasons there explained, the interests of justice will generally not be served by permitting either party to make a new or different case on the hearing of the appeal18. Here neither party invited the Court of Criminal Appeal to re-sentence the appellant upon a factual basis that differed from the primary judge's findings, much less to use the new evidence to impugn those findings. Leeming JA was right to say that the Court of Criminal Appeal was not bound by the prosecutor's concession. Notwithstanding the adversarial nature of criminal proceedings, the public interest in the sentencing of offenders is such 16 (2016) 258 CLR 420. 17 Betts v The Queen (2016) 258 CLR 420 at 426 [11]; Douar v The Queen (2005) 159 A Crim R 154 at 178 [124] per Johnson J; R v Deng (2007) 176 A Crim R 1 at 8 [28] per James J. 18 Betts v The Queen (2016) 258 CLR 420 at 428 [16]. Bell that the sentencing judge (or the appellate court in the case of re-sentencing) is not constrained by any agreement between the parties as to the appropriate range of sentence or by concessions made by the prosecutor19. Where, however, the judge (or the appellate court in the case of re-sentencing) is minded not to act on a concession made by the prosecution, the failure to put the offender on notice of that inclination and give him or her an opportunity to deal with the matter by evidence or submissions will ordinarily be a miscarriage of justice. In the absence of such an indication, it will be reasonable for the offender to conduct his or her case upon the understanding that the concession will be accepted and acted upon by the court20. It was an error to hold that the appellant had had ample opportunity to be heard on all aspects of his appeal. It cannot be said that the error could not have made any difference to the outcome of the appeal. It is, with respect, by no means evident that the new evidence provided a basis for departing from the primary judge's acceptance of Dr Nielssen's opinion. The new evidence did not contain any expression of expert opinion as to the appellant's mental state at the time of the offence. The majority drew the inference from the circumstance that the appellant has not developed schizophrenia that Dr Nielssen's opinion has been shown to be wrong. Whether to be uncontroversial. inference should not be is an available thought that the sentence hearing, Dr Nielssen maintained his opinion notwithstanding that the appellant had not gone on to develop schizophrenia in the three years following the offence. Dr Nielssen explained that there are varied courses of schizophrenia "ranging from sudden severe onset in early adolescence 19 GAS v The Queen (2004) 217 CLR 198 at 211 [31]; [2004] HCA 22; Elias v The Queen (2013) 248 CLR 483 at 494-495 [27]; [2013] HCA 31; Barbaro v The Queen (2014) 253 CLR 58 at 76 [47]-[49] per French CJ, Hayne, Kiefel and Bell JJ; [2014] HCA 2; Chow v Director of Public Prosecutions (1992) 28 NSWLR 593 at 606 per Kirby P. 20 Collins v The Queen (2018) 92 ALJR 517 at 525 [32]; 355 ALR 203 at 211; [2018] HCA 18; Chow v Director of Public Prosecutions (1992) 28 NSWLR 593 at 613 per Sheller JA; R v Tadrosse (2005) 65 NSWLR 740 at 745 [19] per Howie J; Stokes v The Queen (2008) 185 A Crim R 74 at 77 [13]-[15] per Barr J; Ng v The Queen (2011) 214 A Crim R 191 at 205-206 [43]-[50]; Govindaraju v The Queen [2011] NSWCCA 255 at [52]-[57], [62] per Hall J; R v Cunningham [2005] QCA 321 at 5 per Keane JA. Bell to subtle onset in mid or even late adult life". The appellant's restricted emotional expression, the strong family history of schizophrenia, and the appellant's psychosocial decline were matters on which Dr Nielssen placed weight. He rejected autism as an explanation for the appellant's restricted affect because autism is present from infancy, whereas the appellant's history was of apparently normal development until the 6 to 12 months before the offence, which were marked by psychosocial decline. If the primary judge's acceptance of Dr Nielssen's opinion were to be the subject of challenge, it might be expected that those acting for the appellant would seek to obtain a further report from Leeming JA's second reason for rejecting the primary judge's finding respecting intent did not depend on the new evidence. Leeming JA said that he could not "conceive of a temporary psychosis which left [the appellant] with an intention to inflict grievous bodily harm while falling short of an intention to kill". The observation fails to take account of the onus in the case of circumstances of aggravation. Murder was left to the jury on the basis that the appellant possessed the intention either to kill or to do grievous bodily harm. The primary judge was required to sentence upon the basis that, at the time the appellant stabbed TB, he possessed at least the intention to do grievous bodily harm. His Honour was not required to sentence the appellant on the basis that he intended to kill TB unless he was satisfied that that intention had been proved beyond reasonable doubt. In light of his acceptance of Dr Nielssen's opinion and the irrationality of the attack, the primary judge was not so satisfied. On one view, Leeming JA was raising a more fundamental issue, which is the capacity to reconcile the finding that the appellant was under the influence of "some psychosis" with the verdict. The primary judge did not elaborate on the effect of that influence on the appellant's conduct or understanding. In circumstances in which the prosecution did not object to the tender of Dr Nielssen's opinion at the sentence hearing, the primary judge is to be taken to have found that the appellant's mental condition did not substantially impair his capacity to understand events, judge whether his actions were right or wrong or control himself21. The appellant's first ground is made good. The majority's decision to depart from the primary judge's unchallenged factual findings, and to take the new evidence into account in substituting a finding of aggravation – the intention 21 Crimes Act 1900 (NSW), s 23A. Bell to kill (and in Wilson J's case the finding of premeditation and the rejection of the finding of unlikelihood of re-offending) – without notice to the appellant, was procedurally unfair and has occasioned a miscarriage of justice. This conclusion makes it unnecessary, and for that reason undesirable, to address the appellant's second ground, which invites the Court to state a principle respecting the power of an appellate court, determining an appeal against sentence under the common form appeal provision, to substitute aggravated factual findings for the unchallenged findings of the sentencing judge. The appeal must be remitted to the Court of Criminal Appeal for consideration of the re-sentencing of the appellant. In making this order, this Court is not to be taken to be expressing any view as to whether some other (lesser) sentence is warranted in law. Orders For these reasons there should be the following orders: Appeal allowed. Set aside order 3 of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 13 April 2017 in the appeal against sentence. Remit the proceeding to the Court of Criminal Appeal of the Supreme Court of New South Wales for determination of the appeal against sentence.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Milne v The Queen [2014] HCA 4 14 February 2014 S278/2013 & S279/2013 ORDER Appeal allowed. Set aside orders 1 and 3 of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 2 March 2012 with respect to count 1 on the indictment and, in their place, order that: the appeal against conviction with respect to count 1 to that Court be allowed; the appellant's conviction with respect to count 1 be quashed and the sentence imposed by the Supreme Court of New South Wales on 17 December 2010 with respect to count 1 be set aside; and a verdict of acquittal be entered with respect to count 1. The commencement of the sentence imposed on the appellant by the Supreme Court of New South Wales on 17 December 2010 with respect to count 2 on the indictment be amended to 17 December 2010 with the sentence to expire on 16 June 2014. On appeal from the Supreme Court of New South Wales Representation H K Dhanji SC with T F Edwards for the appellant (instructed by Michael Bowe) T A Game SC with D Jordan SC and A P C McGrath for the respondent (instructed by Commonwealth Director of Public Prosecutions) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Milne v The Queen Criminal law – Money laundering – Criminal offence under s 400.3(1) of Criminal Code (Cth) to deal with property intending it will become "instrument of crime" – Appellant dealt with shares intending not to declare resulting capital gain – Whether shares "instrument of crime". Words and phrases – "instrument of crime", "money laundering", "used in the commission", "used to facilitate". Criminal Code (Cth), ss 134.2, 400.1(1), 400.2(1), 400.3(1). FRENCH CJ, HAYNE, BELL, GAGELER AND KEANE JJ. Introduction This appeal concerns the construction and application of a provision of Pt 10.2 of the Criminal Code (Cth) ("the Code") which creates one of a number of offences under the general designation "money laundering". That provision, s 400.3(1), makes it an offence for a person to deal with money or other property of a value of or exceeding $1,000,000 if the person intends that the money or property will become an "instrument of crime". Property is an "instrument of crime" if it is used in the commission of, or used to facilitate the commission of, an indictable offence1. In February 2005 the appellant effected a disposition of shares the beneficial interest in which was held by a company under his control, Barat Advisory Pty Ltd ("Barat Advisory"). The shares were in a publicly listed company, Admerex Ltd ("Admerex"). They were swapped, at the appellant's direction, for shares in a Swiss software development company, Temenos Group AG ("Temenos"). The appellant intended that Barat Advisory would not declare, in its income tax return for 2005, the capital gain derived from that transaction. An intentional failure by Barat Advisory to declare the capital gain would be an offence against the Code2. The question in this appeal is whether, in those circumstances, the Admerex shares upon which the capital gain was made could have been intended to be or become "an instrument of crime" within the meaning of s 400.3(1). The answer to that question must be in the negative. Upon the disposal of the shares, which was the relevant dealing for the purposes of s 400.3(1), they were not intended to be "used" in the commission of, or to facilitate the commission of, an indictable offence. The proposition that they were intended to be so used involves giving to the term "use" a meaning which the text of the Code will not bear and which its purpose does not require. The appellant, who was convicted in the Supreme Court of New South Wales of the offence of money laundering and whose appeal against that conviction to the Court of Criminal Appeal of New South Wales was dismissed3, should not have been convicted of that offence. The appeal to this Court, by 1 Code, s 400.1(1). 2 Code, s 134.2. 3 Milne v The Queen (2012) 259 FLR 42. Hayne Bell special leave granted on 8 November 20134, should be allowed and orders made in terms appearing at the end of these reasons. The conviction and sentence The conviction, the subject of this appeal, was for the offence against s 400.3(1) of the Code set out in count 1 of the indictment, on which the appellant was tried before a judge and jury in the Supreme Court of New South Wales. That count read: "Between about 30 April 2004 and about 30 September 2005 at Sydney in the State of New South Wales and elsewhere [the appellant] dealt with property, intending that the property, namely a parcel of shares, would become an instrument of crime, in that it would be used to facilitate the commission of an offence by Barat Advisory Pty Ltd and at the time of the dealing, the value of the property was $1,000,000 or more." The second count, upon which the appellant was also convicted, alleged that on or about 13 November 2006 at Sydney, with the intention of dishonestly obtaining a gain from the Commonwealth, he caused to be lodged an income tax return in the name of Barat Advisory for the year ending 30 June 2005 containing false information, namely that the net capital gain from the sale of the shares in Admerex was $4,597, contrary to s 135.1(1) of the Code. On 17 December 2010 the appellant was sentenced by Johnson J on count 1 to a term of seven years imprisonment dating from 17 December 2010 and expiring on 16 December 2017. He was sentenced on the second count to three years and six months imprisonment dating from 17 December 2015 and expiring on 16 June 2019. The sentencing judge set a non-parole period of four years and nine months dating from 17 December 2010 and expiring on 16 September 2015. That non-parole period was later varied, pursuant to s 19AD(2)(e) of the Crimes Act 1914 (Cth), by Fullerton J as part of a sentence imposed in respect of another offence5. [2013] HCATrans 279. 5 R v Milne [2012] NSWSC 1538. Hayne Bell The statutory framework Part 10.2 of the Code is entitled "Money laundering" as is Div 400 of Pt 10.2, which contains s 400.3(1). Part 10.2 was introduced into the Code by Sched 1, item 1 of the Proceeds of Crime (Consequential Amendments and Transitional Provisions) Act 2002 (Cth). That Act replaced offences of money laundering created by ss 81 and 82 of the Proceeds of Crime Act 1987 (Cth) ("the POC Act") with those set out in Div 4006. The POC Act provisions were confined to dealings with money or property that was proceeds of crime or was reasonably suspected of being proceeds of crime. The enactment of Div 400 gave effect, inter alia, to a recommendation by the Australian Law Reform Commission ("the ALRC"), in a report on the POC Act published in 1999, that the scope of the offence of money laundering be broadened7. The respondent relied upon the ALRC report as supportive of a broad construction of the offence-creating provisions in Div 400. It may be accepted that the purpose of Div 400 was to create offences of broader application than existing money laundering offences. That purpose is reflected in the texts of the offence-creating provisions read according to their ordinary meanings. The questions whether the text of s 400.3(1) gives rise to constructional choices, whether a broad construction is to be preferred, and whether on a proper construction of the text the Admerex shares could be characterised as intended to "become an instrument of crime" are not answered simply by reference to the legislative purpose of broadening the scope of the offence of money laundering. This Court is concerned with the provisions of Div 400 as they stood between April 2004 and September 20058. Section 400.3(1) provided: 6 Australia, Senate, Proceeds of Crime (Consequential Amendments and Transitional Provisions) Bill 2002, Revised Explanatory Memorandum at 12. 7 Australian Law Reform Commission, Confiscation that Counts: A Review of the Proceeds of Crime Act 1987, Report No 87, (1999), Recommendation 22 at 139. 8 The provisions have been subject to amendment since that time – see especially the Anti-Money Laundering and Counter-Terrorism Financing (Transitional Provisions and Consequential Amendments) Act 2006 (Cth), Sched 1, Pt 1, items 21–38 and the Crimes Legislation Amendment (Serious and Organised Crime) Act (No 2) 2010 (Cth), Sched 5, Pt 1. Hayne Bell "A person is guilty of an offence if: the person deals with money or other property; and either: the money or property is, and the person believes it to be, proceeds of crime; or the person intends that the money or property will become an instrument of crime; and at the time of the dealing, the value of the money and other property is $1,000,000 or more. Penalty: Imprisonment for 25 years, or 1500 penalty units, or both."9 The two offences created by s 400.3(1), distinguished by the alternative elements in s 400.3(1)(b)(i) and s 400.3(1)(b)(ii), were temporally distinct. The first offence concerned a case in which a "crime" had already been committed. The second concerned a case in which a "crime" was in prospect10. Section 400.1(1) defined "instrument of crime": "money or other property is an instrument of crime if it is used in the commission of, or used to facilitate the commission of, an offence that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence)." 9 Lesser offences were created where a person dealt with money or property where there was a risk that it would become an instrument of crime and where the person was either reckless or negligent that there was that risk – Code, ss 400.3(2) and 400.3(3). Sets of similarly defined offences for money or property of lesser values were created by Code, ss 400.4 – 400.8 inclusive. 10 Chen v Director of Public Prosecutions (Cth) (2011) 83 NSWLR 224 at 230 [17] per Basten JA, 244 [87] per Garling J; R v Ansari (2007) 70 NSWLR 89 at 94 [15] Hayne Bell It also defined "property": "property means real or personal property of every description, whether situated in Australia or elsewhere and whether tangible or intangible, and includes an interest in any such real or personal property." The term "deals with money or other property" was defined in s 400.2(1): "For the purposes of this Division, a person deals with money or other property if: the person does any of the following: receives, possesses, conceals or disposes of money or other property; … and the money or other property is proceeds of crime, or could become an instrument of crime, in relation to an offence that is a Commonwealth indictable offence or a foreign indictable offence." The offence created by s 400.3(1) of the Code may be resolved into physical and fault elements within the meaning of Divs 4 and 5 of Pt 2.2 of the Code. Section 400.3(1)(a) defines a physical element of the offence, namely dealing with money or other property. As a physical element which is conduct, it attracts a fault element of intention pursuant to s 5.6(1). A second physical element, defined by s 400.3(1)(c), is that the value of the money or other property is $1,000,000 or more (an element of circumstance). As an element of circumstance it attracts, by operation of s 5.6(2), a fault element of recklessness. Section 400.3(1)(b)(ii) defines an element of intention. Whether it can or should be characterised as a fault element or otherwise need not be explored for the purposes of this appeal. It was not in dispute that the Admerex shares the subject of the indictment were "property" and that their transfer, effected by the appellant, was a disposal for the purposes of s 400.2(1)(a)(i). What was in contest, relevant to the physical element in s 400.3(1)(a) and the element of intention in s 400.3(1)(b)(ii), was whether, on the Crown case, the shares could be said to have been intended to become "an instrument of crime" within the meaning of s 400.2(1)(b). The relevant crime attributable to Barat Advisory was that created by s 134.2 of the Hayne Bell Code11, namely obtaining a financial advantage by deception. Section 134.2 relevantly provided: "(1) A person is guilty of an offence if: the person, by a deception, dishonestly obtains a financial advantage from another person; and the other person is a Commonwealth entity." That offence was said to arise out of the deliberate failure by Barat Advisory to declare the net capital gain for the sale of the Admerex shares in its income tax return for the year ending 30 June 2005. The obligations imposed upon Barat Advisory by the capital gains tax ("CGT") provisions of the Income Tax Assessment Act 1997 (Cth) ("the ITAA 1997") were not in question. The disposition of the Admerex shares was a CGT event A1 within the meaning of the ITAA 199712. Nor was it in dispute that by reason of the disposition Barat Advisory made a net capital gain for the year ended 30 June 200513, and incurred an obligation to declare that gain as part of its assessable income in its income tax return for that year14. A deliberate failure to make that declaration would result in Barat Advisory gaining a financial advantage from the Commonwealth. The factual case at trial The appellant, who did not give or call evidence at trial, made extensive formal written admissions pursuant to s 184 of the Evidence Act 1995 (Cth). The important facts of the case, although of some complexity, were largely undisputed. 11 It is not necessary to show an intention that a particular offence will be committed in relation to money or property – Code, s 400.13(2)(a). In this case no offence other than that said to have been committed by Barat Advisory under s 134.2 was in contemplation. 12 ITAA 1997, ss 100-20(2) and 104-5 to 104-10. 13 ITAA 1997, ss 100-45 to 100-50. 14 ITAA 1997, s 100-55. Hayne Bell On the factual case advanced by the Crown, the appellant was the sole director and shareholder of Barat Advisory. On 30 April 2004, 55,911,475 shares in Admerex, which was listed on the Australian Stock Exchange, were allotted to Barat Advisory by way of repayment of a debt owed to Clairmont Holdings and Finance Ltd ("Clairmont") by Admerex and assigned to Barat Advisory. Clairmont was also controlled by the appellant. The shares were allotted at a value of four cents each, representing a total value of $2,236,459. In May 2003, Clairmont had acquired, for the sum of $1, a debt of approximately $11,000,000 (later assessed to be closer to $8,000,000) owed by Admerex to its holding company, Global Technology Ltd15. Barat Advisory agreed to pay $1,500,000 to Clairmont for the assignment of the Admerex debt. That money was never paid. Barat Advisory thus acquired an asset with a value of at least $2,200,000 in circumstances in which Clairmont had acquired the original asset (the debt) at a cost of $1. As the Court of Criminal Appeal put it in its judgment16: "It was the Crown case that the appellant was, by this fortunate situation, now confronted with the problem of determining how to realise the profit from those transactions without having the proceeds substantially diminished by an obligation to pay tax, particularly CGT." The appellant sought legal advice ostensibly with a view to placing the Admerex shares in a structure which would facilitate their sale to off-shore investors and defer liability to tax. Five off-shore companies were incorporated on 3 June 200417 and five entities known under Dutch law as "Stichtings"18 were established on 11 June 2004. The appellant was identified in documentation as the beneficial owner of assets in accounts opened in a Swiss bank, known as EFG Private Bank SA ("EFG Bank"), on or around 15 June 2004 in the name of each 15 In May 2003 Admerex was known as Global Technology Australasia Ltd. It changed its name to Admerex Ltd on 10 July 2003. 16 Milne v The Queen (2012) 259 FLR 42 at 49 [26]. 17 Challinor Equities Ltd, Schlossman Partners Ltd, Thouvanel Investments (Asia Pacific) Ltd, Metevier Securities International Ltd and Vaillendourf Europe Ltd. 18 A Stichting is defined in Art 2:285 of the Burgerlijk Wetboek (Dutch Civil Code) as a legal person created by a legal act to realise a purpose by the use of capital or property brought in for that purpose. A Stichting must have at least one director. Hayne Bell of the off-shore companies. Urs Meisterhans, a partner in a Swiss financial services company, who was a director of each of the companies, opened the EFG Bank accounts. He was their sole signatory. On 11 June 2004 the appellant effected the transfer by Barat Advisory of 55,911,475 Admerex shares in five parcels at five cents per share, one parcel going to each of the five off-shore companies19. The total stated consideration for the transfer was $2,795,573.75. On the appellant's instructions each parcel was placed by the company secretary of Admerex with ANZ Nominees, to be held on behalf of each the off-shore companies, in an ANZ Nominees account operated by EFG Bank. It was not in dispute on this appeal that Barat Advisory retained beneficial ownership of the shares20. In January 2005, the appellant made an agreement with Mr Kim Goodall whereby Barat Advisory would acquire from him 1,000,000 shares in Temenos. Consideration for that acquisition was at least 48,000,000 of the Admerex shares. It was that transaction, as the Court of Criminal Appeal put it, that precipitated a CGT event21. On 3 February 2005 the Temenos shares were transferred to an account in the name of one of the off-shore companies, Challinor Equities Ltd. The value of the Temenos shares on the Swiss Stock Exchange was between A$8,400,000 and A$8,800,000 at that date. The value of the Admerex shares on the Australian Stock Exchange was then between A$8,400,000 and A$9,120,000. The appellant arranged for the 48,000,000 Admerex shares to be held on behalf of Mr Goodall in accounts in the names of the other four off-shore companies. The appellant accepted that the jury, by its verdict on count 1, was satisfied beyond reasonable doubt that on 3 February 2005 he intended that Barat Advisory would not declare the disposal of the Admerex shares as a CGT event. In September 2005, on 19 The parcels were 12,000,000 shares to Challinor Equities Ltd for $600,000, 11,900,000 shares to Schlossman Partners Ltd for $595,000, 11,500,000 shares to Thouvanel Investments (Asia Pacific) Ltd for $575,000, 9,411,475 shares to Metevier Securities International Ltd for $470,573.75 and 11,100,000 shares to Vaillendourf Europe Ltd for $555,000. 20 An argument that Barat Advisory had relinquished beneficial ownership was advanced in the Court of Criminal Appeal and rejected: Milne v The Queen (2012) 259 FLR 42 at 90 [225]. 21 Milne v The Queen (2012) 259 FLR 42 at 52 [51]. Hayne Bell Mr Goodall's instructions, the 48,000,000 Admerex shares were transferred and held on behalf of a third party. Between 3 February 2005 and mid June 2005, the 1,000,000 Temenos shares were disposed of and the proceeds deposited in an account, in the name of Challinor Equities Ltd, with a Swiss bank named Swissfirst Bank AG. A total of about $5,600,000 was transferred between March 2005 and January 2006 from that account to the Barat Advisory account with the Commonwealth Bank of Australia. Amounts from the transferred funds were expended for the personal benefit of the appellant over a period of time. The capital gain derived from the disposition of the Admerex shares was not declared by Barat Advisory in any of its income tax returns for the relevant years. They were prepared on the basis of information provided by the appellant. The Crown case at trial A written statement of the Crown case at trial, in relation to the first count on the indictment, included the following contentions: "[167] The Admerex shares remained under the beneficial ownership and effective control of Barat Advisory through the accused, after they were purportedly transferred into the Stichting Group companies on or around 11 June 2004. At the time of that purported transfer, and subsequently, [the appellant] intended to use the Stichting groups to conceal the disposal of the Admerex shares, and the proceeds of such disposal, in order to avoid the payment by Barat Advisory of Capital Gains Tax. [168] When the 48 million Admerex shares were disposed of on 3 February 2005, by exchanging them for 1 million Temenos shares, [the appellant] intended to avoid the payment by Barat Advisory of tax on the capital gain which was derived as a result of that disposal. For that purpose, [the appellant] used the Stichting groups to conceal the disposal of the 48 million Admerex shares and the proceeds of that disposal. [169] As such, [the appellant] intended that the 48 million Admerex shares would be used in the commission of, or used to facilitate the commission of, an offence that may be dealt with as a Commonwealth indictable offence, namely the obtaining by Barat Advisory of a financial advantage by deception, contrary to section 134.2 of the Criminal Code. [170] On this basis [the appellant] intended that the 48 million Admerex shares would become an instrument of crime." Hayne Bell In closing address to the jury, the prosecutor submitted that the exchange of the Admerex shares for the Temenos shares constituted a dealing with the Admerex shares which put the appellant in the position of being able to obtain a financial advantage for Barat Advisory: "So that the final act that the Crown points to was the swapping of the shares for the Temenos shares which meant that [the appellant] could then move ahead and cash in the Temenos shares, derive the benefit or proceeds from what had been the Admerex shares and bring them back into the country, again with a much reduced prospect of detection. It is in that way that the Crown says the accused was using the shares to facilitate the commission of the crime of obtaining the advantage by deception because he had this ongoing benefit of having converted the Admerex shares into Temenos shares and thus the capacity to sell those shares and obtain the benefits without the prospect of detection." The ruling and directions of the trial judge The trial judge rejected an application by senior counsel for the appellant for a directed verdict of acquittal on the first count. His Honour accepted that on the Crown case there was some evidence in support of each element of the offence created by s 400.3(1). The trial judge gave the jury written directions in addition to his oral summing up. His Honour directed the jury that in order to establish that the appellant had intended that the 48,000,000 Admerex shares would become an instrument of crime, the Crown must prove beyond reasonable doubt, inter alia, that at the time of their disposal by Barat Advisory on or around 3 February 2005, the appellant intended that they would facilitate the commission of an offence. He referred to the Crown allegation that the appellant intended that the shares would be used to facilitate the commission of an offence which involved the appellant at some time in the future dishonestly obtaining a financial gain by causing Barat Advisory to lodge an income tax return that contained false information because it did not include information about the capital gain that Barat Advisory was alleged to have made when it swapped the Admerex shares for the Temenos shares on 3 February 2005. His Honour continued: "The Crown must prove beyond reasonable doubt that, on or around 3 February 2005, the Accused intended that the 48 million Admerex shares would facilitate (that is, make easier) that type of offence to be committed." Hayne Bell The written directions did not differ materially in this respect from the oral directions to the jury. In the event, the outcome of this appeal turns on whether the relevant provisions of the Code apply to the conduct alleged in the Crown case. The critical physical element of the offence, the alleged dealing with the Admerex shares, was The element defined by to Mr Goodall. s 400.3(1)(b)(ii) required proof of an intention relating to the use of those shares after their disposal. their disposal The decision of the Court of Criminal Appeal The Court of Criminal Appeal gave a wide interpretation to the term "used to facilitate the commission of, an offence" in the definition of "instrument of crime". Their Honours adopted, as had the trial judge in his direction to the jury, the ordinary English meaning of "facilitate" as "make easier"22. The shares, which were "instrumental in the commission of an offence" as opposed to "incidental in its commission", could be said to have facilitated the commission of the offence23. They were "plainly capable of being used" and, on the Crown case, were intended to be used after their disposition to facilitate the commission of a s 134.2 offence24. The Court's reasoning appears to have rested in part upon a proposition that the continuing existence of the shares "hidden behind the additional curtain of the Temenos shares" after the disposal by the appellant meant that they "remained capable of use for the future commission of an offence."25 That proposition should be rejected as untenable given the factual case presented by the Crown. The Court rejected an argument that the Crown case involved an erroneous proposition that the share swap itself facilitated the commission of the subject offence. The Crown's contentions on the swap went to the appellant's intention. The swap created the CGT event which provided the basis for the commission of the future crime. It also provided "a further cloak or curtain behind which the act of ultimate deception (the lodgement of a [false] return) 22 Milne v The Queen (2012) 259 FLR 42 at 71 [145]. 23 Milne v The Queen (2012) 259 FLR 42 at 71 [145]. 24 Milne v The Queen (2012) 259 FLR 42 at 71 [146]. 25 Milne v The Queen (2012) 259 FLR 42 at 70 [140]. Hayne Bell would be more likely to succeed."26 The disposition of the shares also provided "a further facilitating measure for the offence itself."27 The Court held that the trial judge did not err in refusing to direct the jury to acquit the appellant on the first count28. Ground of appeal The single ground of appeal is that: "The Court of Criminal Appeal erred in its interpretation of the definition 'instrument of crime' in s 400.1 of the Criminal Code, Criminal Code Act 1995 (Cth) and as a result erred in finding that the property referred to in count 1 of the indictment was capable of falling within that definition in the circumstances alleged against the appellant at trial." Instrument of crime – the constructional question For property to become an instrument of crime within the meaning of s 400.3(1) it must be "used". An ordinary meaning of the verb "use" is "[t]o make use of (some immaterial thing) as a means or instrument; to employ for a certain end or purpose."29 That is the relevant ordinary meaning for the definition of "become an instrument of crime" which involves the "use" of property to serve a purpose, namely the "commission of an offence" or "to facilitate the commission of an offence". The relevant ordinary meaning of "facilitate" in this case is "[t]o render easier the performance of (an action), the attainment of (a result); to afford facilities for, promote, help forward (an action or process)."30 The appellant submitted that the word "use" in the definition of "instrument of crime" required an "actual dealing" or "actual deployment" by the 26 Milne v The Queen (2012) 259 FLR 42 at 72 [150]. 27 Milne v The Queen (2012) 259 FLR 42 at 72 [150]. 28 Milne v The Queen (2012) 259 FLR 42 at 72 [151]. 29 The Oxford English Dictionary, 2nd ed (1989), vol 19 at 353. 30 The Oxford English Dictionary, 2nd ed (1989), vol 5 at 649. Hayne Bell accused and that these things could not occur when the property in question had already been disposed of. The respondent contended for a broad construction involving an "extended meaning" of the term "use". It adopted what it described as the "purposive interpretation" adopted by the Court of Criminal Appeal. The respondent sought to draw an analogy from another statutory context. It referred to the decision of the Court of Appeal of Western Australia concerning provisions of the Criminal Property Confiscation Act 2000 (WA) in Director of Public Prosecutions (WA) v White31 and the decision of this Court on appeal from the Court of Appeal32. White was a case involving a different statute and very different facts. Beyond analogy and the call for a broad construction, the respondent's written submissions did not, with respect, spell out with any clarity how it would construe "instrument of crime" and the term "use", which is an essential integer of that definition. In oral submissions to this Court, senior counsel for the respondent accepted that the intended "use" of the Admerex shares for which he contended was the taking advantage by the appellant of circumstances created by their disposal, namely the substitution of the Temenos shares as a way of realising the capital gain derived from the Admerex shares in a way that would facilitate its concealment. To take advantage of the circumstances arising after and as a result of the disposal, that Barat Advisory had become the owner of Temenos shares in lieu of Admerex shares, does not involve a post-disposal use of the Admerex shares within the meaning of the definition of "instrument of crime". Senior counsel for the respondent also relied upon a post-disposal transfer of 4,088,525 Admerex shares from Challinor Equities Ltd to Metevier Securities International Ltd, the purpose of which was, according to the prosecutor in closing address, to ensure that the four off-shore companies had a total of 48,000,000 shares in order to give effect to the swap for the Temenos shares. Senior counsel for the respondent submitted to this Court that on the case thus put at trial there was a continuing use of the Admerex shares after their disposal on 3 February 2005. That submission should be rejected. The purpose of the transfer appears to have been to give effect to the disposal of the shares. 31 (2010) 41 WAR 249 at 259 [39]. 32 White v Director of Public Prosecutions (WA) (2011) 243 CLR 478 at 487– 488 [21]; [2011] HCA 20. Hayne Bell The definition of "instrument of crime" and the deployment of that term in s 400.3(1)(b)(ii) require a temporal separation between the requisite dealing and the intended use of the property. They also require an instrumental connection between the intended use of property and the commission or facilitation of the commission of an offence. Conduct involving property which is no more than a necessary condition of the commission of a subsequent offence does not on that account amount to the use of the property in or to facilitate the commission of that offence. Nor is the instrumental connection demonstrated merely by an intention to take advantage of circumstances arising after and as a result of the requisite dealing. A fortiori, that is the case where that property has been put beyond the reach of the accused by sale to a third party. Section 400.3(1) creates a serious offence. It is punishable by a term of imprisonment of up to 25 years. In the end the "broad construction" proffered by the respondent seemed to involve little more than the proposition that, however construed, it fits the facts of this case. As a matter of textual analysis, it does not. Purposive construction does not justify expanding the scope of a criminal offence beyond its textual limits33. In this case, those limits are not narrowly defined. The language of s 400.3(1)(b)(ii), and its associated definitions, is capable of application to a range of circumstances which fall within their ordinary meanings. Its construction according to the ordinary meaning of its words is sufficient to provide a broad coverage consistent with its purpose and without resort to "extended" meanings of those words. The preceding approach to construction is consistent with the Revised Explanatory Memorandum for the amending legislation which introduced Div 400 into the Code34. The term "instrument of crime" in s 400.1(1) was said in the Memorandum to introduce a new concept for the purposes of the money laundering offences, which were previously only concerned with proceeds of crime. The Memorandum stated35: 33 Krakouer v The Queen (1998) 194 CLR 202 at 223 [62]–[63] per McHugh J; [1998] HCA 43; Allan v Quinlan; Ex parte Allan [1987] 1 Qd R 213 at 215 per Connolly J, quoting Wallace v Major [1946] KB 473 at 477 per Lord Goddard CJ. 34 Australia, Senate, Proceeds of Crime (Consequential Amendments and Transitional Provisions) Bill 2002, Revised Explanatory Memorandum. 35 Australia, Senate, Proceeds of Crime (Consequential Amendments and Transitional Provisions) Bill 2002, Revised Explanatory Memorandum at 13. Hayne Bell "Consistent with recommendation 22 of the ALRC report, the definition extends the coverage to money or property used in the commission of, or to facilitate the commission of, an indictable offence." The Memorandum went on to point out that the concept was not new, being similar to that of "tainted property" in the POC Act36. "Tainted property", in relation to an offence, was defined in s 4(1) of the POC Act to include "property used in, or in connection with, the commission of the offence" and was liable to forfeiture by court order under s 19 of the POC Act. The ALRC had commented in its report that its proposed new formulation of money laundering would have the same effect as the Crimes (Confiscation) Act 1989 (Q) in that all tainted property, which could include property intended to be used in criminal activity, could be the subject of a money laundering charge37. Properly construed, s 400.3(1) of the Code could not apply to the conduct of the appellant said to constitute an offence against that provision according to the Crown case at trial. The disposal of the Admerex shares, which was the relevant dealing, did not involve their intended "use" within the meaning of that term in the definition of "instrument of crime". Conclusion The appeal should be allowed. The decision of the Court of Criminal Appeal of New South Wales dismissing the appellant's appeal with respect to count 1 on the indictment should be set aside and in lieu thereof the conviction quashed and a verdict of acquittal entered. The appellant submitted that if he were successful on the appeal, the Court should adjust the commencement date of the sentence imposed upon him in respect of count 2 on the indictment. In the ordinary case this Court would remit the matter to the Court of Criminal Appeal to deal with any consequences of the orders quashing the conviction and directing entry of a verdict of acquittal, for the sentence imposed upon the appellant in respect of the second count on the indictment. However, the parties were agreed that if the appeal were allowed the Court should adjust the commencement date for the sentence imposed on the 36 Australia, Senate, Proceeds of Crime (Consequential Amendments and Transitional Provisions) Bill 2002, Revised Explanatory Memorandum at 13. 37 Australian Law Reform Commission, Confiscation that Counts: A Review of the Proceeds of Crime Act 1987, Report No 87, (1999) at 128. Hayne Bell second count. The Court is satisfied that it has power to make the order sought 38. Any consequential adjustment to the non-parole period as varied by Fullerton J pursuant to s 19AD(2)(e) of the Crimes Act 1914 (Cth) will be a matter for the Supreme Court of New South Wales. The orders of the Court will be39: Appeal allowed. Set aside orders 1 and 3 of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 2 March 2012 with respect to count 1 on the indictment and, in their place, order that: the appeal against conviction with respect to count 1 to that Court be allowed; the appellant's conviction with respect to count 1 be quashed and the sentence imposed by the Supreme Court of New South Wales on 17 December 2010 with respect to count 1 be set aside; and a verdict of acquittal be entered with respect to count 1. The commencement of the sentence imposed on the appellant by the Supreme Court of New South Wales on 17 December 2010 with respect to count 2 on the indictment be amended to 17 December 2010 with the sentence to expire on 16 June 2014. 38 Pursuant to s 37 of the Judiciary Act 1903 (Cth) and s 59(1) of the Crimes (Sentencing Procedure) Act 1999 (NSW) as picked up by s 68(1) of the Judiciary Act, and s 16E(1) of the Crimes Act 1914 (Cth), the Court may vary the commencement of a sentence imposed on a person on the quashing of another sentence imposed on that person. See also Putland v The Queen (2004) 218 CLR 174 at 178-179 [4] and 179-180 [7] per Gleeson CJ, 189 [41] and 193-194 [54] per Gummow and Heydon JJ (Callinan J agreeing at 215 [121]); [2004] HCA 8. 39 Two file numbers were allocated to this matter at trial and in the Court of Criminal Appeal. Two notices of appeal were filed in this Court. The notices are identical and the orders made are as for a single appeal.

HIGH COURT OF AUSTRALIA APPELLANT AND DIRECTOR OF PUBLIC PROSECUTIONS (NSW) & ANOR RESPONDENTS Stanley v Director of Public Prosecutions (NSW) [2023] HCA 3 Date of Hearing: 15 November 2022 Date of Order: 15 November 2022 Date of Publication of Reasons: 15 February 2023 ORDER Appeal allowed. Set aside Order 1 of the Orders made by the Court of Appeal of the Supreme Court of New South Wales on 21 December 2021 and, in its place, order that: the orders of the District Court of New South Wales of 17 June 2021 dismissing the appellant's appeal under s 20(2)(c) of the Crimes (Appeal and Review) Act 2001 (NSW) are set aside; and the appellant's appeal to the District Court of New South Wales be heard and determined by the District Court of New South Wales according to law. On appeal from the Supreme Court of New South Wales Representation T A Game SC with T Quilter and C E O'Neill for the appellant (instructed by Legal Aid NSW) C O Gleeson with A Poukchanski for the first respondent (instructed by Solicitor for Public Prosecutions (NSW)) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Stanley v Director of Public Prosecutions (NSW) Administrative law – Judicial review – Jurisdictional error – Sentencing powers of inferior court – Where s 7 of Crimes (Sentencing Procedure) Act 1999 (NSW) ("Sentencing Procedure Act") empowered sentencing court to make intensive correction order ("ICO") directing that a sentence of imprisonment be served by way of intensive correction in community – Where power to make ICO was a discrete function arising after sentence of imprisonment imposed – Where s 66(1) of Sentencing Procedure Act provided community safety was paramount consideration in exercising discretion to make ICO – Where s 66(2) of Sentencing Procedure Act required sentencing court, when considering community safety, to assess whether making ICO or serving sentence by way of full-time detention more likely to address offender's risk of reoffending – Whether failure to comply with s 66(2) amounted to jurisdictional error – Consideration of categories of jurisdictional error in Craig v South Australia (1995) 184 CLR 163 and Kirk v Industrial Court (NSW) (2010) 239 CLR 531. Sentence – Sentence imposed by State court – Discretion to make ICO – Where community safety was paramount consideration in exercising discretion to order ICO – Where sentencing judge declined to make ICO and ordered sentence of imprisonment be served by way of full-time detention – Whether sentencing judge undertook assessment of community safety in accordance with s 66 of Sentencing Procedure Act. Words and phrases – "community safety", "error of law", "error of law by an inferior court", "full-time detention", "intensive correction order", "jurisdictional error", "misconception of function", "paramount consideration", "risk of reoffending", "sentencing process". Crimes (Appeal and Review) Act 2001 (NSW), ss 11, 17. Crimes (Sentencing Procedure) Act 1999 (NSW), ss 3A, 5, 7, 66, Pt 2 Div 2, Pt 5. Supreme Court Act 1970 (NSW), s 69B. KIEFEL CJ. The appellant pleaded guilty in the Local Court of New South Wales to multiple offences against the Firearms Act 1996 (NSW). In a statement of agreed facts, it was said that her cousin stored numerous firearms, firearm parts and ammunition at the appellant's house in Dubbo. When the appellant became aware of their presence, she allowed them to remain there until sold to a known person. She received a small sum for her participation. The appellant was sentenced in the Local Court to an aggregate term of imprisonment of three years with a non-parole period of two years. On her appeal to the District Court the appellant conceded that no penalty other than imprisonment was appropriate. However, she argued that the term of imprisonment should be served in the community by way of an intensive correction order ("ICO") rather than by way of full-time detention. The District Court Judge said that she had given "very close consideration" to the argument for an ICO but dismissed the appeal. The District Court Judge had a discretion to make an ICO under s 7(1) of the Crimes (Sentencing Procedure) Act 1999 (NSW) ("the Sentencing Procedure Act"), which relevantly provides that: "A court that has sentenced an offender to imprisonment in respect of 1 or more offences may make an intensive correction order directing that the sentence or sentences be served by way of intensive correction in the community." Section 66 of the Sentencing Procedure Act provides: "Community safety and other considerations Community safety must be the paramount consideration when the sentencing court is deciding whether to make an intensive correction order in relation to an offender. (2) When considering community safety, the sentencing court is to assess whether making the order or serving the sentence by way of full-time detention is more likely to address the offender's risk of reoffending. (3) When deciding whether to make an intensive correction order, the sentencing court must also consider the provisions of section 3A (Purposes of sentencing) and any relevant common law sentencing principles, and may consider any other matters that the court thinks relevant." Section 3A, which is referred to in s 66(3), provides that there are a number of purposes for which a court may impose a sentence on an offender. They include to ensure that an offender is adequately punished, to prevent crime by deterring the offender and others from committing similar offences, to promote the rehabilitation of the offender, and to protect the community from the offender. The appellant sought relief from the Supreme Court in the nature of certiorari to quash the sentence, and to remit the matter to the District Court to be dealt with according to law. A privative clause1 had the effect of limiting the supervisory jurisdiction of the Supreme Court to review for jurisdictional error. It was either found or assumed by members of the Court of Appeal that the District Court Judge had not undertaken the assessment required by s 66(2) of the Sentencing Procedure Act. The question for the Court was whether that failure amounted to jurisdictional error. The majority (Bell P, Basten, Leeming and Beech-Jones JJA, McCallum JA dissenting) held that it did not and dismissed the application for review2. At the conclusion of oral argument, this Court by a majority ordered that the appeal from the decision of the Court of Appeal be allowed and made consequential orders. I did not agree in the making of those orders. I considered that the majority of the Court of Appeal were correct to hold that there was no jurisdictional error. That was essentially because s 66(2), read with s 66(1), of the Sentencing Procedure Act does not condition the authority of the sentencing court to make or refuse to make an ICO under s 7(1)3. As the Court of Appeal recognised, whether a failure to conduct the assessment referred to in s 66(2) amounts to an error going to jurisdiction is to be determined by reference to the Sentencing Procedure Act. I gratefully adopt the analysis of Jagot J of that statute's provisions. Section 66 is not expressed in terms to condition the discretion under s 7(1). It does not by its terms effect a constraint upon the powers of a sentencing court. As Basten JA observed4, it is better described as a direction to the sentencing court that considerations which may promote the safety of the community are to be given special weight and that one factor to be included in the process of assessment is whether the risk of re-offending would be more likely under an ICO or by requiring full-time detention. It serves as a reminder to the court that giving paramount effect to community safety does not require incarceration. 1 District Court Act 1973 (NSW), s 176. Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1. See also Quinn v Commonwealth Director of Public Prosecutions (2021) 106 NSWLR 154. Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 34 [138]. On any view, the Sentencing Procedure Act does not make the outcome of the s 66(2) assessment or the consideration of community safety mandated by s 66(1) determinative of a sentencing judge's decision as to whether or not to make an ICO5. The decision to make or refuse to make an ICO is required to be informed by other considerations. Section 66(3) is equally emphatic6 in mandating that a sentencing court must also consider the sentencing purposes contained in s 3A and any relevant common law sentencing principles. It may also consider any other matters it considers relevant. One of the sentencing purposes to which s 3A refers is community safety, of which the assessment in s 66(2), undertaken by reference to the consideration in s 66(1), is but a factor. The clear legislative intention is that a sentencing court is to undertake an evaluative process in which the various considerations to which attention is directed are weighed. Some will be accorded greater weight. It is not possible to infer that Parliament intended the obligation under s 66(2) to condition the validity of the sentencing process. Section 66(2) cannot be read in isolation and thereby elevated to a condition upon the exercise of the power under s 7(1). The appeal should not have been allowed. It should have been dismissed. Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 47-48 [193] per Beech-Jones JA. Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 34 [138] per Basten JA; see also at 36-37 [145]-[147] per Leeming JA. Within a system of government in which power to affect a legal right or interest is limited to that authorised by law, there is utility in having a standardised means of expressing a conclusion that a purported exercise of power pursuant to an authority conferred by law exceeds the limits of that authority. Within our system, a conclusion to that effect has come to be expressed in the terminology of "jurisdictional error". When used to express a conclusion that a decision made in a purported exercise of judicial power exceeds the limits of decision-making authority legislatively conferred on a court, "jurisdictional error" has the same meaning as it has when used to express a conclusion that a decision made in a purported exercise of non-judicial power exceeds the limits of decision-making authority legislatively conferred on a person or body other than a court. Except in the case of an order of a superior court7, the import of the conclusion is the same8. The import of the conclusion is that the purported exercise of power lacks the authority of law: the decision made in fact "is properly to be regarded for the purposes of the law pursuant to which it was purported to be made as 'no decision at all'"9. Applied to a purported order of an inferior court of a State, such as the District Court of New South Wales10 or the Local Court of New South Wales11, "jurisdictional error" expresses the conclusion that the order is and was from the moment of its making lacking in legal authority: that it "is not an order at all"12. The purported order can be set aside in the constitutionally entrenched supervisory jurisdiction of a State Supreme Court such as that exercisable by the Supreme Court of New South Wales under s 69 of the Supreme Court Act 1970 (NSW)13. The purported order can also be impeached collaterally in any proceeding in any 7 New South Wales v Kable (2013) 252 CLR 118 at 133 [32], 140-141 [56]. 8 Citta Hobart Pty Ltd v Cawthorn (2022) 96 ALJR 476 at 485 [27]; 400 ALR 1 at 8. 9 Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123 at 133 [24], quoting Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 615 [51]. See also Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 374-375 [41]. 10 Section 8 of the District Court Act 1973 (NSW). 11 Section 7 of the Local Court Act 2007 (NSW). 12 Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 375. See also at 13 Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 578-581 [91]-[100]. court in which it might be sought to be relied upon to support or deny a claim for relief14. The manifest inconvenience which would arise from the uncertainty of never knowing whether an order made in fact by an inferior court was valid unless and until its validity had been raised in and determined by the same or another court in a subsequent proceeding, in combination with the potentially extreme consequences for those who might have acted in the interim on the faith of the order, has long been thought to provide reason to pause before reaching a conclusion that a perceived error on the part of the court in deciding to make the order is jurisdictional15. There is accordingly no novelty in the proposition that a mistake on the part of an inferior court, even as to the proper construction of a statute which invests that court with jurisdiction, will not necessarily or even ordinarily deprive a resultant order of the authority conferred on the court to make an order of that kind: there are mistakes, and then there are mistakes16. The decisions of this Court in Craig v South Australia17 and Kirk v Industrial Court (NSW)18 bear that out. Emphasised in Craig19 and reiterated in Kirk20 was that a defining characteristic of any court is that it is an institution the decision-making authority of which is to quell controversies about legal rights through the conclusive determination of questions of law as well as questions of fact. To that end, the decision-making authority of a court, whether superior or inferior, routinely encompasses "[t]he identification of relevant issues, the formulation of relevant questions and the determination of what is and what is not 14 Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 445-446 [27]-[28]; New South Wales v Kable (2013) 252 CLR 118 at 140-141 [56]. 15 Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 391. See also R v Federal Court of Australia; Ex parte Pilkington ACI (Operations) Pty Ltd (1978) 142 CLR 113 at 125-126; Berowra Holdings Pty Ltd v Gordon (2006) 225 CLR 364 16 Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416 at 420. See also Wang v Farkas (2014) 85 NSWLR 390 at 400 [42]. (1995) 184 CLR 163 at 176-180. (2010) 239 CLR 531 at 571-573 [66]-[68]. (1995) 184 CLR 163 at 179-180. (2010) 239 CLR 531 at 571-573 [66]-[68]. See also Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1 at 29 [73]. relevant evidence"21. So it was noted in Craig22 and repeated in Kirk23 that, whilst an inferior court would fall into jurisdictional error were it to misconceive the nature of the function it was required by statute to perform or to disregard some matter which statute required it to take into account as a condition of its jurisdiction, "a failure by an inferior court to take into account some matter which it was, as a matter of law, required to take into account in determining a question within jurisdiction ... will not ordinarily involve jurisdictional error". Whether non-compliance with a statutory provision expressed in terms that a court take a specified consideration into account in a decision-making process to be undertaken before making an order of a specified kind gives rise to jurisdictional error turns on the construction of the statute in question. The question of construction is not whether the statute requires the court to take the consideration into account. A mandatory consideration is not, without more, a jurisdictional consideration. The ultimate question of construction is whether the statute makes taking the consideration into account a condition of the authority which the statute confers on the court to make an order of that kind. Determining that question, like determining any question of whether non-compliance with a mandated step in a decision-making process transgresses the limits of decision-making authority conferred by statute, requires attention to "the language of the relevant provision and the scope and object of the whole statute"24. The opinion I formed during the hearing of this appeal and still hold is that the Crimes (Sentencing Procedure) Act 1999 (NSW) ("the Sentencing Procedure Act") does not condition the authority of a sentencing court to sentence an offender to a term of imprisonment on the sentencing court taking the consideration to which s 66(2) refers into account when deciding under s 7(1) to make or refuse to make an intensive correction order ("ICO") in respect of a term of imprisonment. That is for each of two sufficient and distinct reasons. One is that the authority of the sentencing court to sentence an offender to a term of imprisonment is not conditioned on the proper exercise of the power under s 7(1) to make an ICO. If an order sentencing an offender to a term of imprisonment is otherwise within jurisdiction, that order remains within jurisdiction even if the sentencing court exceeds its jurisdiction when making or refusing to make an ICO in the purported exercise of the authority conferred by s 7(1). The other is that s 66(2) does not in 21 Craig v South Australia (1995) 184 CLR 163 at 179-180. See also Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 572 [67]. (1995) 184 CLR 163 at 177-178, 179-180. (2010) 239 CLR 531 at 572 [67], 573-574 [72]. 24 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390-391 [91], quoting Tasker v Fullwood [1978] 1 NSWLR 20 at 24. any event condition the authority of the sentencing court to make or refuse to make an ICO under s 7(1). Non-compliance with s 66(2) does not result in the sentencing court exceeding the limits of the decision-making authority conferred on it by Having formed that opinion, I did not join in the orders made by majority at the conclusion of the hearing of this appeal. The orders then made allowed the appeal from a decision of the Court of Appeal of the Supreme Court of New South Wales25 and set aside an order of the Court of Appeal dismissing an application to it under ss 69 and 69B of the Supreme Court Act. In place of that order, they set aside orders made by the District Court on an appeal26 by way of hearing de novo27 from an order of the Local Court which had sentenced the appellant to an aggregate term of imprisonment of three years for offences against the Firearms Act 1996 (NSW). By those orders, the District Court had dismissed the appellant's appeal28 and had confirmed the appellant's sentence to the three-year term of imprisonment subject to variation of the commencement date of the sentence29. If within the authority of the District Court, the sentence of imprisonment so varied had the same effect and was enforceable in the same way as if it had been imposed by the Local Court30. My opinion as to the proper construction of the Sentencing Procedure Act aligns in material respects with the views expressed in separate reasons for judgment by each member of the majority of the Court of Appeal in the decision under appeal (Bell P, Basten, Leeming and Beech-Jones JJA) and with the reasoning of Leeming JA (with the concurrence of Johnson J) and Simpson JA in Quinn v Commonwealth Director of Public Prosecutions31. My opinion accords also with the analysis now undertaken by Jagot J, whose reasoning I gratefully adopt insofar as her Honour explains the scheme of the Sentencing Procedure Act and addresses issues of statutory construction. Unlike her Honour, but like most members of the majority of the Court of Appeal 25 Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1. 26 See s 11 of the Crimes (Appeal and Review) Act 2001 (NSW). 27 See s 17 of the Crimes (Appeal and Review) Act 2001 (NSW). See also Engelbrecht v Director of Public Prosecutions (NSW) [2016] NSWCA 290 at [92]. 28 See s 20(2)(c) of the Crimes (Appeal and Review) Act 2001 (NSW). 29 See s 20(2)(b) of the Crimes (Appeal and Review) Act 2001 (NSW). 30 See s 71(3) of the Crimes (Appeal and Review) Act 2001 (NSW). (2021) 106 NSWLR 154. in the decision under appeal (Bell P, Basten and Leeming JJA), I do not find it necessary to resolve the question of whether the District Court in fact took the consideration to which s 66(2) refers into account when deciding under s 7(1) to refuse to make an ICO. Being in dissent on a question of the construction of a statute peculiar to New South Wales and having the benefit of the reasons of Jagot J, I propose to confine these reasons to highlighting key points. Section 7(1) of the Sentencing Procedure Act does not condition the authority of a sentencing court to impose a sentence of imprisonment In the language of s 5(5) of the Sentencing Procedure Act, a sentence of imprisonment can become the "subject of" an ICO made under s 7(1). The sentence of imprisonment is not "subject to" an ICO. Section 7(1) of the Sentencing Procedure Act makes clear that the authority of a sentencing court to make an ICO arises only where that court has first sentenced an offender to a term of imprisonment. Section 7(1) also spells out that an ICO takes effect as a direction as to how that sentence to a term of imprisonment is to be served. An ICO is a direction that the term of imprisonment is to be served by way of intensive correction in the community. To that end, unless it is sooner revoked, an ICO automatically has the same term as the term of imprisonment in respect of which it is made32 and an ICO can only be made by the sentencing court subject to conditions imposed under Div 4 of Pt 5 of the Sentencing Procedure Act. Under the Crimes (Administration of Sentences) Act 1999 (NSW) ("the Administration of Sentences Act")33, compliance with the conditions of an ICO is monitored by a community corrections officer subject to the oversight of the Parole Authority. The Parole Authority is empowered to alter or supplement the conditions of an ICO and to revoke an ICO in the event of non-compliance or other specified circumstances34. The Parole Authority is also empowered to reinstate a revoked ICO on application by the offender or of its own initiative35. 32 Section 70 of the Sentencing Procedure Act; s 83 of the Crimes (Administration of Sentences) Act 1999 (NSW). 33 Part 3 and Div 1 of Pt 7 of the Administration of Sentences Act. 34 Sections 81A, 164 and 164AA of the Administration of Sentences Act. 35 Section 165 of the Administration of Sentences Act. That the sentence of imprisonment in respect of which an ICO is or might be made has a distinct and concurrent ongoing operation which is independent of the ICO is confirmed by the interlocking and complementary operation of s 62(4) of the Sentencing Procedure Act and s 181 of the Administration of Sentences Act. Section 62(4) of the Sentencing Procedure Act makes the standard requirement of s 62(1) – that a sentencing court issue a warrant for the committal of an offender to a correctional centre as soon as practicable after sentencing the offender to a term of imprisonment – inapplicable while action is being taken under Pt 5 in relation to the making of an ICO or where the sentence of imprisonment is the subject of an ICO. Section 181 of the Administration of Sentences Act provides for the Parole Authority to issue a warrant committing the offender to a correctional centre to serve the remainder of the sentence by way of full-time detention in the event of the ICO being revoked. The Court of Criminal Appeal of the Supreme Court of New South Wales has held, repeatedly and correctly, that whether an offender is to be sentenced to a term of imprisonment, and (if so) for what term, are questions to be asked and answered within the scheme of the Sentencing Procedure Act before any question can arise as to whether or not to make an ICO and (if so) on what conditions36. Consideration of the making of an ICO (where raised37) forms part of the sentencing procedure to be engaged in by a sentencing court, and an ICO (if made) forms part of the sentence (being the penalty38) that is imposed for an offence. The sentence of imprisonment and an ICO (if made) are commonly expressed in the form of a compendious order. Nevertheless, the decision of the sentencing court as to whether to sentence an offender to a term of imprisonment and the decision of that court as to whether to make an ICO directing the term of imprisonment to be served by way of intensive correction in the community involve distinct and consecutive exercises of decision-making authority separately conferred on the sentencing court. Imposition of a sentence of imprisonment is a precondition to the subsequent making of an ICO. Want or excess of authority in making or refusing to make an ICO cannot affect the validity of the prior sentence of imprisonment in respect of which the ICO is made or sought. 36 See Mandranis v The Queen (2021) 289 A Crim R 260 at 264-265 [22]-[26], referring to R v Zamagias [2002] NSWCCA 17. See also R v Fangaloka [2019] NSWCCA 173 at [44]-[45]. 37 See Blanch v The Queen [2019] NSWCCA 304 at [68]-[69]. 38 See s 3(1) of the Sentencing Procedure Act (definition of "sentence"). Assuming a sentence of imprisonment to be otherwise within jurisdiction, the sentence of imprisonment stands whether or not consideration is given by the sentencing court to the making of an ICO under s 7(1) of the Sentencing Procedure Act and whether or not any consideration that is given is brought to valid completion. Section 66(2) of the Sentencing Procedure Act does not condition the authority of the sentencing court to make or refuse to make an ICO under Section 7(3) of the Sentencing Procedure Act limits the authority conferred on a sentencing court to make an ICO under s 7(1) to an offender who is 18 years of age or over. Section 7(4) points to the authority conferred on the sentencing court to make an ICO being further limited by provisions within Pt 5. Division 2 of Pt 5 is headed "Restrictions on power to make intensive correction orders". A restriction on power does not necessarily condition, and thereby limit, the authority to exercise that power39. The protection that is given by a privative clause to sentencing decisions of the District Court on appeal from the Local Court40 provides reason to consider that not every restriction set out in Div 2 of Pt 5 conditions, and thereby limits, the decision-making authority of a sentencing court to make an ICO under s 7(1). The availability of appeals to correct errors within jurisdiction in any decision to make or refuse to make an ICO at first instance by both the Local Court41 and the District Court42 is another. Section 101A of the Sentencing Procedure Act specifically provides that a failure to comply with a provision of that Act may be considered by an appeal court in any appeal against sentence. Non-compliance with a restriction on power can therefore be corrected on an appeal against sentence whether or not the restriction is jurisdictional. Within Div 2 of Pt 5 are three provisions which undoubtedly limit the authority of a sentencing court to make an ICO. The first is s 67, the effect of which is that an ICO is not available for certain offences. The second is s 68, the effect of which is that an ICO is not available in respect of a term of imprisonment which 39 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 40 Section 176 of the District Court Act 1973 (NSW). 41 Sections 3(1) (definition of "sentence"), 11, 17 and 20(2) of the Crimes (Appeal and Review) Act 2001 (NSW). 42 Sections 2(1) (definition of "sentence"), 5(1)(c) and 6(3) of the Criminal Appeal Act 1912 (NSW). exceeds a two-year or three-year limit. The third is s 69(3), the effect of which is that an ICO is not available in respect of an offender who resides, or intends to reside, in another State or Territory. Like an ICO purportedly made in contravention of s 7(3), an ICO purportedly made in contravention of any of s 67, s 68 or s 69(3) would exceed the authority of a sentencing court to make an ICO under s 7(1). A purported order made in contravention of any one or more of them would be no order at all, although for reasons already stated its invalidity would not detract from the validity of the sentence of imprisonment. Within Div 2 of Pt 5 also are ss 66 and 69(1). The restrictions those provisions impose on the authority of a sentencing court to make an ICO are quite different in their substantive content and in their manner of expression. Unlike s 7(3), and ss 67, 68 and 69(3), the restrictions in ss 66 and 69(1) do not speak to whether the sentencing court has authority to make an ICO in respect of a class of offender or a class of offence or a particular term of imprisonment. They speak rather to how the authority of a sentencing court to make or refuse to make an ICO under s 7(1) is to be exercised. Section 66 speaks to the considerations to be taken into account and how those considerations are to be weighted. Section 69(1) speaks to the sources of information to which regard is to be had. Those are subject matters of a kind typically, indeed quintessentially, within the decision-making authority of a court. That the restrictions imposed by s 66 are legislatively intended to operate within the decision-making authority of the sentencing court is apparent from the language of the section. Importantly, s 66(1) and (3) are both expressly addressed to what the sentencing court must consider "when" the sentencing court is "deciding" whether to make an ICO. The language is suggestive of the drafters' advertence and adherence to "the clear distinction ... between want of jurisdiction and the manner of its exercise"43. The language signifies what the sentencing court is required to do in the course of exercising the decision-making authority conferred by s 7(1). Further support for the restrictions imposed by s 66 being construed to operate within the decision-making authority of the sentencing court is to be found in the structure of the section and in the nature of the considerations which the provision mandates be taken into account. The considerations which s 66(1) and (3) of the Sentencing Procedure Act combine to mandate that the sentencing court take into account in deciding whether to make or refuse to make an ICO comprise: 43 Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 389. "community safety", which s 66(1) says must be "the paramount consideration", meaning that the consideration must be treated as of the highest level of importance44; the purposes of sentencing set out in s 3A of the Act, being to ensure that the offender is adequately punished for the offence, prevent crime by deterring the offender and other persons from committing similar offences, protect the community from the offender, promote the rehabilitation of the offender, make the offender accountable for his or her actions, denounce the conduct of the offender and recognise the harm done to the victim of the crime and the community; and any relevant common law sentencing principles. In addition, s 66(3) permits the sentencing court to take into account any other matters that the court thinks relevant. Not unimportant within the structure of s 66 is that s 66(2) does not operate to impose a freestanding restriction. It does not even mandate the taking into account of an additional consideration. Rather, s 66(2) mandates an assessment which the sentencing court is required to undertake when considering community safety for the purposes of s 66(1). The outcome of the mandated assessment, of whether intensive correction in the community pursuant to an ICO or full-time detention is more likely to address the offender’s risk of re-offending, then feeds into the paramount consideration of community safety and through it into the mix of considerations which s 66(1) and (3) together require and permit to be taken into account in deciding whether to make or refuse to make an ICO. Implicit in the legislative prescription that the sentencing court must take account of all of the numerous, evaluative, amorphous, overlapping and potentially competing considerations referred to in s 66(1), as informed by s 66(2), and in s 66(3) is a legislative contemplation that the sentencing court is to synthesise them in making an overall evaluative decision whether to make or refuse to make an ICO. The weightings of the consideration referred to in s 66(1), as informed by s 66(2), and of the considerations referred to in s 66(3) are different. But all bear upon the making of the decision under s 7(1) in the same way. No one consideration can be construed to be a condition of the authority of the court to make or refuse to make an ICO unless all are construed as conditions of its authority to do so. To construe all as conditions of the authority of the sentencing court to make or refuse to make an ICO would be to treat every failure of the court to take account of a relevant consideration as amounting to jurisdictional error. 44 cf Storie v Storie (1945) 80 CLR 597 at 611-612. Moreover, for s 66 to condition the authority of a sentencing court to make or refuse to make an ICO under s 7(1) would be incongruous in light of the clear indication of legislative intention in s 5(4). The indication is that a failure on the part of the sentencing court to comply with s 5(1) – which requires that the court consider all possible alternatives so as to be satisfied that no penalty other than imprisonment is appropriate – is not to take a sentence of imprisonment beyond the authority of the sentencing court. Given the express statement of legislative intention that a sentence of an offender to a term of imprisonment is not to be invalidated by a failure on the part of a sentencing court to comply with the requirement of s 5(1), it is difficult to discern a rational basis in terms of legislative policy for inferring that the legislature impliedly intended that a failure on the part of the court to take account of one or more of the considerations specified in s 66 would invalidate the making of or refusal to make an ICO under s 7(1), which governs how the sentence is to be served. The absence from s 66 of a provision along the lines of s 5(4), explicitly preserving validity in the event of non-compliance, cannot be taken to indicate that such an odd result was contemplated in the legislative design. The presence of s 5(4) is explained by an evident legislative concern to avoid the potential for a court to infer that the satisfaction required of a sentencing court by s 5(1)45 was legislatively intended to be a "jurisdictional fact" absence of which would deprive the court of authority to impose the sentence46. Applying orthodox principles of construction, the language and structure of s 66, and the essentially evaluative nature of the decision for which it calls47, do not carry the same potential for an inference to be drawn that any element of the section was intended to be treated as a jurisdictional fact. Conclusion The appeal should not have been allowed. It should have been dismissed. 45 cf Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 651-654 [130]-[137]; Plaintiff S297/2013 v Minister for Immigration and Border Protection (2014) 255 CLR 179 at 188-189 [34]. 46 Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 574 [72], citing Craig v South Australia (1995) 184 CLR 163 at 177-178. 47 See Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144 at 179 [57], citing Australian Heritage Commission v Mount Isa Mines Ltd (1997) 187 CLR 297 at 303-304. Gordon Edelman Steward Gleeson GORDON, EDELMAN, STEWARD AND GLEESON JJ. The appellant is a woman from a background of disadvantage with five children and a significant employment history. In 2019, in contravention of the Firearms Act 1996 (NSW), she committed offences of knowingly taking part in the supply of a firearm and having in possession for supply a shortened firearm. The offences were committed after she became aware that her cousin had stored firearms under her house in regional New South Wales and in the back of a vehicle parked in her back yard. She said that she wanted the guns out of her house but did not want to get her cousin "into trouble". The appellant allowed the firearms to remain in her house for eight days and she accepted $50 of the sale price of the firearms. In October 2020, the appellant pleaded guilty in the Local Court of New South Wales at Dubbo to the contraventions of the Firearms Act, and was granted bail pending sentence. In December 2020, she was sentenced to an aggregate term of imprisonment of three years with a non-parole period of two years. She was again granted bail, pending an appeal to the District Court of New South Wales. The appellant appealed to the District Court against the severity of the sentence and asked the District Court, under s 7(1) in Div 2 of Pt 2 of the Crimes (Sentencing Procedure) Act 1999 (NSW) ("the Sentencing Procedure Act") (read with Pt 5 of that Act), to make an intensive correction order ("ICO") that would have directed that the appellant's sentence of imprisonment be served "by way of intensive correction in the community"48. Section 66(1), within Pt 5, of the Sentencing Procedure Act provides that community safety must be the paramount consideration when the court is deciding whether to make an ICO in relation to an offender. Section 66(2) provides that, when considering community safety, the court is to assess whether making the ICO or serving the sentence by way of full-time detention is more likely to address the offender's risk of reoffending. The appellant's appeal to the District Court was pursuant to s 11 of the Crimes (Appeal and Review) Act 2001 (NSW) ("the CAR Act"). By s 17 of that Act, the appeal was "to be by way of a rehearing of the evidence given in the original Local Court proceedings, although fresh evidence may be given in the appeal proceedings". Accordingly, the District Court Judge was required to engage in a fresh sentencing task and form her own view as to the appropriate sentence49. 48 Sentencing Procedure Act, s 7. 49 Engelbrecht v Director of Public Prosecutions (NSW) [2016] NSWCA 290 at [91]- [92]; Wany v Director of Public Prosecutions (NSW) (2020) 103 NSWLR 620 at Gordon Edelman Steward Gleeson The District Court Judge confirmed the sentence imposed in the Local Court and dismissed the appeal50. The District Court's reasons for dismissing the appeal failed to make any express reference to, or findings in relation to, the assessment in s 66(2) of the Sentencing Procedure Act. Having no appeal rights51, the appellant filed a summons in the New South Wales Court of Appeal seeking, pursuant to s 69B(1) of the Supreme Court Act 1970 (NSW), relief in the nature of certiorari quashing the decision of the District Court. The Court of Appeal52 concluded, by majority (Bell P, Basten, Leeming and Beech-Jones JJA, McCallum JA dissenting), that non-compliance with s 66(2) was not a jurisdictional error of law, but merely an error of law within the jurisdiction of the District Court. Consequently, the Court of Appeal concluded that its jurisdiction did not extend to the correction of such an error and dismissed the summons. The appellant was granted special leave to appeal to this Court. This appeal raises two issues: (1) whether failure by a judge of the District Court to make the assessment required by s 66(2) in declining to make an ICO is a jurisdictional error of law reviewable by the Supreme Court of New South Wales; and, if so, (2) whether the District Court Judge failed to make that assessment. At the completion of the hearing before this Court, at least a majority of Justices had concluded that the answer to both those questions was "Yes". As a result, orders were made allowing the appeal, setting aside the orders made by the Court of Appeal, and, in their place, ordering that the orders of the District Court dismissing the appellant's appeal be set aside and the appellant's appeal to the District Court be heard and determined by the District Court according to law. These are the reasons for those orders. In summary, the District Court Judge dismissed the appeal and imposed upon the appellant a sentence of imprisonment to be served by full-time detention without undertaking the assessment mandated by s 66(2) of the relative merits of full-time detention as against intensive correction in the community, for the purposes of considering the "paramount consideration" of community safety identified in s 66(1). In failing to undertake that assessment, the District Court 50 Under s 20(2)(c) of the CAR Act. 51 Gibson v Commissioner of Police (NSW Police Force) (2020) 102 NSWLR 900 at 52 To which the proceeding was assigned by Supreme Court Act 1970 (NSW), s 48. Gordon Edelman Steward Gleeson Judge misconstrued s 66 and thereby both misconceived the nature of her function under s 7 of that Act and disregarded a matter that the Sentencing Procedure Act required to be taken into account as a condition or limit of jurisdiction. Where the power to make an ICO is enlivened, a sentencing court does not have jurisdiction to decide that a sentence of imprisonment is to be served by full-time detention without assessing the comparative merits of full-time detention and intensive correction for reducing the offender's particular risk of reoffending. The District Court Judge's error of law can be understood as an instance of both the second and third examples of jurisdictional error on the part of an inferior court identified in Kirk v Industrial Court (NSW)53. It was properly conceded by counsel for the first respondent, in her clear and comprehensive written and oral submissions, that, s 66 aside, every other provision in Div 2 of Pt 5 of the Sentencing Procedure Act, headed "Restrictions on power to make intensive correction orders", contains one or more jurisdictional conditions. On a proper construction of s 66, that provision is no exception. Jurisdictional error by an inferior court The Supreme Court's jurisdiction to determine proceedings for judicial review of a sentence has been held to be limited to review for jurisdictional error of law, due to the constraint of the privative clause in s 176 of the District Court Act 1973 (NSW), which provides that "[n]o adjudication on appeal of the District Court is to be removed by any order into the Supreme Court"54. The District Court is a court of limited jurisdiction55, and an inferior court56. Whether an error of law (2010) 239 CLR 531 at 573-574 [72]. 54 Ex parte Blackwell; Re Hateley [1965] NSWR 1061 at 1062-1065; Attorney- General (NSW) v Dawes [1976] 1 NSWLR 242 at 247-248; Reischauer v Knoblanche (1987) 10 NSWLR 40 at 46-47; Anderson v Judges of the District Court of New South Wales (1992) 27 NSWLR 701 at 717; Spanos v Lazaris [2008] NSWCA 74 at [14]-[15]; Director of Public Prosecutions (NSW) v Emanuel (2009) 193 A Crim R 552 at 561 [45]. 55 District Court Act 1973 (NSW), s 9. 56 Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 456-457 [71], 474 [121]; Berowra Holdings Pty Ltd v Gordon (2006) 225 CLR 364 at 370 Gordon Edelman Steward Gleeson by an inferior court, such as the District Court, is jurisdictional will depend on the proper construction of the relevant statute57. In Craig v South Australia58, the Court described the scope of an inferior court's ordinary jurisdiction in the following passage: "[T]he ordinary jurisdiction of a court of law encompasses authority to decide questions of law, as well as questions of fact, involved in matters which it has jurisdiction to determine. The identification of relevant issues, the formulation of relevant questions and the determination of what is and what is not relevant evidence are all routine steps in the discharge of that ordinary jurisdiction. Demonstrable mistake in the identification of such issues or the formulation of such questions will commonly involve error of law which may, if an appeal is available and is pursued, be corrected by an appellate court and, depending on the circumstances, found an order setting aside the order or decision of the inferior court. Such a mistake on the part of an inferior court entrusted with authority to identify, formulate and determine such issues and questions will not, however, ordinarily constitute jurisdictional error. Similarly, a failure by an inferior court to take into account some matter which it was, as a matter of law, required to take into account in determining a question within jurisdiction or reliance by such a court upon some irrelevant matter upon which it was, as a matter of law, not entitled to rely in determining such a question will not ordinarily involve jurisdictional error." The circumstances in which an inferior court may fall into jurisdictional error are not closed. In Craig, the Court gave examples of the circumstances in which an inferior court will fall into jurisdictional error, including, as is presently relevant, "if it misconstrues [the statute conferring its jurisdiction] ... and thereby misconceives the nature of the function which it is performing or the extent of its 57 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 388-389 [91]; Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1 at 14-15 [34]; Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123 at 133-134 [27], 147-148 [72]; MZAPC v Minister for Immigration and Border Protection (2021) 95 ALJR 441 at 452 [30]; 390 ALR 590 at 597; Tu'uta Katoa v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2022) 96 ALJR 819 at 827 [31]; 403 ALR 604 at 612-613. (1995) 184 CLR 163 at 179-180. Gordon Edelman Steward Gleeson powers in the circumstances of the particular case"59, or "if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist"60, or if it "disregards ... some matter in circumstances where the statute ... conferring its jurisdiction requires that that particular matter be taken into account ... as a pre-condition of the existence of any authority to make an order"61. For instance, in Samad v District Court of New South Wales62, certiorari was granted to quash a decision based on the District Court Judge's misapprehension of the scope of his discretion to cancel a licence. In this case, it is not necessary to go beyond the instances of jurisdictional error by an inferior court that were identified in Craig and reinforced in Kirk63. Legislative framework The regime for sentencing criminal offenders in the Sentencing Procedure Act is complex and highly prescriptive. The core sentencing task of identifying the appropriate sentence to be imposed on the offender requires the sentencing court to identify the relevant limits of the court's jurisdiction and the available sentencing options. The Act prescribes the process required to be undertaken, and a multiplicity of relevant considerations, which may be competing and contradictory64. There is no dispute that many prescriptions in the Sentencing Procedure Act constitute limits upon the jurisdiction of the sentencing court. Examples include provisions that are stated not to apply to offenders under 18 years of age, such as the power to decline to set a non-parole period65. In many other cases, as noted later in these reasons, the legislature has also stated explicitly that non-compliance with a prescription in the Act does not operate to invalidate a sentence or other order made under the Act. 59 Craig (1995) 184 CLR 163 at 177-178. 60 Craig (1995) 184 CLR 163 at 177. 61 Craig (1995) 184 CLR 163 at 177. (2002) 209 CLR 140 at 151 [27]. (2010) 239 CLR 531 at 573-574 [72]. 64 Wong v The Queen (2001) 207 CLR 584 at 612 [77]. 65 Sentencing Procedure Act, s 54D. See also ss 7(3), 25A(1)(b) and 61(6). Gordon Edelman Steward Gleeson Three steps to the sentencing process There are three steps to be undertaken by a sentencing court prior to the final order by which a sentence of imprisonment is imposed under the Sentencing Procedure Act, or confirmed or varied on a sentencing appeal: first, a determination that the threshold in s 5(1), described below, is met; second, determination of the appropriate term of the sentence of imprisonment; and third, where the issue arises, consideration of whether or not to make an ICO66. The identification of these steps does not conflict with the principle, stated in Markarian v The Queen67, that sentencing does not involve a mathematical approach of increments to and decrements from a predetermined range of sentences. The sentencing court must engage in a process of instinctive synthesis of multiple factors at each stage of the sentencing process68. The first step requires the court to be satisfied, having considered all possible alternatives, that no penalty other than imprisonment is appropriate69. The possible alternative penalties include a community correction order70, a conditional release order71, conviction with no other penalty72 and a fine73. An ICO is not an alternative penalty. ICOs are of a different kind – an ICO is a sentence of imprisonment (for the purposes of s 5) that is directed, under s 7, to be served by way of intensive 66 R v Zamagias [2002] NSWCCA 17 at [24]-[30]; R v Fangaloka [2019] NSWCCA 173 at [44]; Wany (2020) 103 NSWLR 620 at 625 [17]. (2005) 228 CLR 357 at 373 [37], quoting Wong (2001) 207 CLR 584 at 611 [74]. 68 Blanch v The Queen [2019] NSWCCA 304 at [51]. 69 Sentencing Procedure Act, s 5(1). 70 Sentencing Procedure Act, s 8. 71 Sentencing Procedure Act, s 9. 72 Sentencing Procedure Act, s 10A. 73 Sentencing Procedure Act, s 15. Gordon Edelman Steward Gleeson correction in the community rather than full-time detention74. Section 7, headed "Intensive correction orders", provides: "(1) A court that has sentenced an offender to imprisonment in respect of 1 or more offences may make an intensive correction order directing that the sentence or sentences be served by way of intensive correction in the community. If the court makes an intensive correction order directing that a sentence of imprisonment be served by way of intensive correction in the community, the court is not to set a non-parole period for the sentence. (3) This section does not apply to an offender who is under the age of 18 years. (4) This section is subject to the provisions of Part 5." Power arises after sentence of imprisonment imposed There was no dispute that the power to order or decline to order an ICO under s 7(1) is a discrete function that arises after the sentencing court has imposed a sentence of imprisonment. That is clear from the words of s 7(1). The possibility of an ICO does not arise unless and until the sentencing court has first determined that no penalty other than imprisonment is appropriate and has sentenced an offender to imprisonment75. The discrete character of an ICO is reinforced by the consequences of failure to comply with an ICO. Where an offender fails to comply with obligations under an ICO, the consequences are prescribed by the Crimes (Administration of Sentences) Act 1999 (NSW) ("the CAS Act"). If a community corrections officer is satisfied that an offender has failed to comply with the offender's obligations under an ICO, the community corrections officer may take any of several actions ranging in seriousness from recording the breach and taking no further action (s 163(2)(a) of the CAS Act) to referring the breach to the State Parole Authority because of the serious nature of the breach (s 163(3) of the CAS Act). A failure to satisfy an obligation under an ICO may also come to be considered by the Parole Authority 74 Sentencing Procedure Act, ss 5(1), 5(5) and 7(1)-(2). 75 Wany (2020) 103 NSWLR 620 at 625 [18]. Gordon Edelman Steward Gleeson on that authority's own initiative, by exercise of its power of inquiry under s 162(1) of the CAS Act. If the Parole Authority is satisfied that an offender has failed to comply with their obligations under an ICO, s 164 will apply and will authorise the Parole Authority in taking any of a suite of actions including (at the most serious end of the range) the action of revoking the ICO (s 164(2)). If the Parole Authority does revoke the ICO, the Parole Authority is empowered by s 181(1) to issue a warrant committing the offender to a correctional centre to serve the remainder of their sentence by way of full-time detention. The Parole Authority may on its own initiative or on an application order the reinstatement of a previously revoked ICO Power to make or refuse to make an ICO Discretionary power, corresponding duty The power to make, or refuse to make, an ICO is discretionary. However, as the parties accepted, that conferral of power comes with a corresponding duty. The court will come under a duty to consider whether to make an ICO where that matter is properly raised in the circumstances of the case, and where the disentitling provisions identified below are not engaged76. This is consistent with the general principle that, where a jurisdiction is conferred and "created for the public benefit or for the purpose of conferring rights or benefits upon persons the court upon an application properly made is under a duty to exercise its jurisdiction and is not at liberty to refuse to deal with the matter"77. Provisions defining the jurisdiction to make an ICO Once the power to make an ICO is enlivened, the sentencing court must address the requirements in the Sentencing Procedure Act relevant to the imposition of such an order. Section 4B of the Sentencing Procedure Act restricts the making of an ICO in respect of a domestic violence offender, and s 7(3) provides that an ICO may 76 Blanch [2019] NSWCCA 304 at [68]-[69]. 77 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd (1949) 78 CLR 389 at 398-399. See also R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189; Murphyores Incorporated Pty Ltd v The Commonwealth (1976) 136 CLR 1 at 18. Gordon Edelman Steward Gleeson not be made in respect of an offender under 18 years old. Further, a sentencing court must not make an ICO in respect of an offender unless it has obtained a relevant assessment report in relation to the offender or it is satisfied that there is sufficient information before it to justify the making of such an order without an assessment report78. When considering the imposition of a home detention condition on an ICO, the court must not request an assessment report relating to the proposed condition unless it has imposed a sentence of imprisonment on the offender for a specified term79. Part 5 of the Sentencing Procedure Act applies when a sentencing court is considering, or has made, an ICO80. It includes provisions that define the jurisdiction to make an ICO. So, for example, an ICO commences on the date on which it is made81 and, unless revoked sooner, the term of an ICO is the same as the term or terms of imprisonment in respect of which the order is made82. Division 4 of Pt 5 makes provision for the conditions of an ICO, including that the sentencing court must impose certain standard conditions and at least one of the "additional conditions" of an ICO83. The court may also impose further conditions provided they are not inconsistent with the standard or additional conditions84. Division 2 of Pt 5, comprising ss 66 to 69, is entitled "Restrictions on power to make intensive correction orders". Division 2 contains prohibitions on the making of an ICO: in respect of certain offences (for example, an offence involving the discharge of a firearm)85; where the term of imprisonment exceeds certain limits including, relevantly, an aggregate sentence of imprisonment exceeding 78 Sentencing Procedure Act, s 17D(1)-(2); Crimes (Sentencing Procedure) Regulation 2017 (NSW), cl 12A. 79 Sentencing Procedure Act, s 17D(3). 80 Sentencing Procedure Act, ss 7(4) and 64. 81 Sentencing Procedure Act, s 71. 82 Sentencing Procedure Act, s 70. 83 Sentencing Procedure Act, s 73A(1)-(2). 84 Sentencing Procedure Act, s 73B. 85 Sentencing Procedure Act, s 67. Gordon Edelman Steward Gleeson three years86; and where an offender resides or intends to reside interstate87. The first respondent accepted that these prohibitions, as well as the prohibitions in ss 4B and 7(3) mentioned earlier, are conditions upon the sentencing court's jurisdiction to make an ICO so that non-compliance with those provisions is a jurisdictional error of law. Read with s 73A(3), s 69 contains yet another condition upon the court's jurisdiction. It provides that, while the sentencing court is not bound by an assessment report obtained in relation to the offender, the court must not impose a home detention condition or community service work condition on an ICO unless the assessment report states that the offender is suitable to be subject to such a condition88. There is no reason to doubt that this restriction is a condition upon the sentencing court's jurisdiction to make an ICO. Section 66 – Community safety and other considerations Section 66, headed "Community safety and other considerations", provides (emphasis added): "(1) Community safety must be the paramount consideration when the sentencing court is deciding whether to make an intensive correction order in relation to an offender. (2) When considering community safety, the sentencing court is to assess whether making the order or serving the sentence by way of full-time detention is more likely to address the offender's risk of reoffending. (3) When deciding whether to make an intensive correction order, the sentencing court must also consider the provisions of section 3A (Purposes of sentencing) and any relevant common law sentencing principles, and may consider any other matters that the court thinks relevant." There was no dispute before this Court that s 66 imposes specific mandatory considerations upon the decision maker to make, or refuse to make, an ICO. Section 66(1) requires the court to treat community safety as the "paramount 86 Sentencing Procedure Act, s 68. 87 Sentencing Procedure Act, s 69(3). 88 Sentencing Procedure Act, ss 69(2) and 73A(3). Compare s 69(1). Gordon Edelman Steward Gleeson consideration". In the context of s 66(2), community safety principally concerns the possible harms to the community that might occur in the future from the risk of reoffending by the offender. The issue is not merely the offender's risk of reoffending, but the narrower risk of reoffending in a manner that may adversely affect community safety. The identification of community safety in s 66(1) as the "paramount" consideration also indicates that s 66 is concerned with an aspect of the sentencing task that requires the sentencing court to have a particular and different focus at the third stage of the three-step process described earlier. When the court is deciding the discrete question whether or not to make an ICO, community safety is the consideration to which other considerations are to be subordinated, although other considerations must or may be taken into account as prescribed by s 66(3)89. Section 66(2) explains how the sentencing court must engage with the paramount consideration of community safety. For the purpose of addressing community safety, s 66(2) requires the sentencing court to undertake a task of assessing the possible impacts of an ICO or full-time detention on the offender's risk of reoffending. Section 66(2) gives effect to Parliament's recognition that, in some cases, community safety will be better promoted by a term of imprisonment served in the community than by full-time detention. Section 66(2) is premised upon the view that an offender's risk of reoffending may be different depending upon how their sentence of imprisonment is served, and implicitly rejects any assumption that full-time detention of the offender will most effectively promote community safety. Thus, s 66(2) requires the sentencing court to look forward to the future possible impacts of the sentence of imprisonment, depending upon whether the sentence is served by way of full-time detention or by way of intensive correction in the community. The assessment required by s 66(2) is not determinative of whether an ICO may or should be made. To the contrary, as is plain from s 66(3), the assessment is required for the purpose of addressing community safety as the paramount, but not the sole, consideration in deciding whether or not to make an ICO. Thus, the power to make an ICO requires an evaluative exercise that treats community safety as the paramount consideration, with the benefit of the assessment mandated by s 66(2). In that respect, the nature and content of the conditions that might be imposed by an ICO will be important in measuring the risk of reoffending. 89 R v Pullen (2018) 275 A Crim R 509 at 531 [86]; Mandranis v The Queen (2021) 289 A Crim R 260 at 270-271 [50]-[51]; cf Fangaloka [2019] NSWCCA 173 at Gordon Edelman Steward Gleeson That said, community safety will usually have a decisive effect on the decision to make, or refuse to make, an ICO, unless the relevant evidence is inconclusive. There may be cases where a court cannot be satisfied whether serving a sentence by way of intensive correction in the community or serving a sentence in full-time custody would be more likely to address reoffending. In those cases, other factors will assume significance and will be determinative. On the other hand, there will be cases where a court concludes that serving the sentence by way of intensive correction in the community is more likely to address reoffending. While aspects of community safety underpin some of the general purposes of sentencing90, such as specific and general deterrence and protection of the community from the offender, those aspects will have been considered in deciding whether to impose a sentence of imprisonment (ie, before considering an ICO). Community safety is required to be considered again and in a different manner under s 66 when considering whether to make an ICO. At this third step, community safety in s 66(1) is given its principal content by s 66(2), namely, the safety of the community from harms that might result if the offender reoffends, whether while serving the term of imprisonment that has been imposed or after serving that term of imprisonment. Failure to undertake assessment in s 66(2) is jurisdictional error Whether s 66(2) imposed a condition or limit upon the power of the District Court Judge or affected the nature of the function to be performed by her Honour in deciding whether or not to make an ICO is a matter of statutory construction. The appellant did not seek to contend that the s 66(2) assessment was required to establish any jurisdictional fact91. Nor did the appellant treat the s 66(1) "paramount consideration" as merely a relevant consideration. As appears from Craig, a failure by a sentencing court to take into account a relevant consideration in the course of arriving at a sentencing decision will not ordinarily be jurisdictional error without more. Rather, the following matters combine to illustrate the jurisdictional nature of the paramount consideration in s 66(1) as directed by the assessment in s 66(2). 90 Sentencing Procedure Act, s 3A. 91 cf Australian Heritage Commission v Mount Isa Mines Ltd (1997) 187 CLR 297 at 303-304; Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144 at 174 [44]. Gordon Edelman Steward Gleeson Assessment required by s 66 The inclusion of s 66 in Div 2 of Pt 5, which, as has been observed, is headed "Restrictions on power to make intensive correction orders", is an indication that the legislature intended s 66 to operate as an enforceable limit upon power. The Division heading is taken as part of the Act92. As identified above, Div 2 contains several restrictions on the power to make ICOs. As a general proposition, Div 2 reveals a clear legislative intention that sentencing courts are not "islands of power immune from supervision and restraint"93 in respect of compliance with Div 2. The requirement for the assessment under s 66 is a limit that operates at the third step in the sentencing process, that is, the limit affects the power to decide whether or not to make an ICO under s 7; it does not operate at the first and second steps of deciding whether to impose a sentence of imprisonment and, if so, the term of the sentence. A failure to undertake the assessment required by s 66(2) does not merely involve a mistake in the identification of relevant issues, the formulation of relevant questions or the determination of what was or was not relevant evidence94. Rather, it is a failure to undertake a task that is mandated for the purpose of deciding whether to make an ICO by reference to community safety as the paramount consideration. Such an error tends to defeat the evident statutory aim of improving community safety through provision of an alternative way to serve sentences of imprisonment by way of intensive correction in the community. The legislative importance of that aim is reinforced both by the characterisation of community safety as a "paramount" consideration and by the stipulation of the assessment task in s 66(2) to inform the consideration of community safety. The jurisdiction conferred by s 7 is thus to decide whether community safety as a paramount consideration together with the subordinate considerations in s 66(3) warrant full-time detention or intensive correction in the community. The s 66(2) assessment is integral to the function of choosing between full-time detention and intensive correction in the community in compliance with the requirement in s 66(1) to treat community safety as the paramount consideration. The question raised by this appeal is whether an error in undertaking this discrete task at the third step of the sentencing process can be characterised as one Interpretation Act 1987 (NSW), s 35(1). 93 Kirk (2010) 239 CLR 531 at 581 [99]. 94 cf Craig (1995) 184 CLR 163 at 179-180. Gordon Edelman Steward Gleeson going to the jurisdiction of the sentencing court. There is no basis to assume that an error at that step is "necessarily" an error within the sentencing court's jurisdiction simply because it follows the imposition of a sentence of imprisonment. As explained, the jurisdiction to grant an ICO calls for a subsequent and separate decision to be made after a sentence of imprisonment is imposed. The fact that the sentencing court may have acted within jurisdiction at the first and second steps in imposing the sentence of imprisonment does not mean that the sentencing court will necessarily remain within jurisdiction when making the separate decision whether to order an ICO. Section 7 is not an inconsequential subsequent power after the sentencing process is complete. Section 66 is "more than one evaluative step amongst many" that the Act requires to be carried out after a sentence of imprisonment is imposed. Section 7 is itself a sentencing function that is to be exercised by reference to the paramount consideration in s 66(1). It is a discretionary power – which, when enlivened, comes with a corresponding duty – that fundamentally changes the nature of the sentence of imprisonment imposed from full-time detention to one of intensive correction in the community. The sentencing court may bring itself outside of jurisdiction if it misconceives the nature of that function or fails to comply with a condition on the jurisdiction when exercising the power. And, as will be seen, that is what the District Court did in this case. Purpose of ICOs The power to make an ICO was introduced into the Sentencing Procedure Act by the Crimes (Sentencing Legislation) Amendment (Intensive Correction Orders) Act 2010 (NSW) ("the 2010 Act"). The second reading speech records that the ICO was designed "to reduce an offender's risk of re-offending through the provision of intensive rehabilitation and supervision in the community" and to address some of the documented shortcomings of periodic detention, which was abolished by the 2010 Act95. In 2017, the statutory scheme for ICOs was substantially amended by the Crimes (Sentencing Procedure) Amendment (Sentencing Options) Act 2017 (NSW) ("the 2017 Act"). In his second reading speech, the New South Wales Attorney-General, Mark Speakman SC, stated that the legislation "introduce[d] new, tough and smart community sentencing options that will promote community 95 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 22 June Gordon Edelman Steward Gleeson safety by holding offenders accountable and tackling the causes of offending"96. The Attorney-General stated that "[w]e know from Australian and international research that community supervision, combined with programs that target the causes of crime reduce offending ... We also know that community supervision is better at reducing reoffending than a short prison sentence ... With the new [ICO], offenders who would otherwise be unsuitable or unable to work will be able to access intensive supervision as an alternative to a short prison sentence"97. In his second reading speech for the 2017 Act, the Attorney-General also stated98: "New section 66 of the Crimes (Sentencing Procedure) Act will make community safety the paramount consideration when imposing an intensive correction order on offenders whose conduct would otherwise require them to serve a term of imprisonment. Community safety is not just about incarceration. Imprisonment under two years is commonly not effective at bringing about medium- to long-term behaviour change that reduces reoffending. Evidence shows that community supervision and programs are far more effective at this. That is why new section 66 requires the sentencing court to assess whether imposing an intensive correction order or serving the sentence by way of full-time detention is more likely to address the offender's risk of reoffending." These extrinsic materials reinforce what is evident from the terms of s 66: that the conduct of the assessment in s 66(2) is a prescribed and essential aspect of giving "paramount consideration" to community safety, as s 66(1) requires. Mandatory language of s 66(1) and (2) By itself, and particularly in the context of the privative clause, the mandatory language of s 66(1) ("Community safety must be the paramount consideration") and s 66(2) ("the sentencing court is to assess") is a relevant, but not conclusive, indication that the consideration of community safety is a condition 96 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 11 October 2017 at 273. 97 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 11 October 2017 at 273-274. 98 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 11 October 2017 at 274. Gordon Edelman Steward Gleeson or limit on jurisdiction. In the Sentencing Procedure Act, mandatory language is used in several instances in which it is unlikely that the legislative intention was that non-compliance would result in invalidity – for example, in ss 9(2), 10(3) and 21A, all of which require the court to take into account certain matters. Nevertheless, the mandatory language of s 66(1) and (2) is consistent with the mandatory language used for the jurisdictional condition or limit in every other provision in Div 2. Discretion and corresponding duty of the s 66 decision As noted earlier, the power to make or refuse to make an ICO at the third step is a discretionary decision separate from the decision to impose a sentence of imprisonment at the first step. That conferral of power comes with a corresponding duty99. But the discretionary nature of the decision under s 7 does not mean that an error cannot be jurisdictional. Every statutory discretion, whether conferred on a judicial or an administrative officer, is constrained by the statute under which it is conferred100. Similarly, the evaluative nature of the task under s 66 does not tell against a conclusion that its performance was intended by the legislature to be a condition of the jurisdiction to decide whether or not to make an ICO101. A person entrusted with a discretion or an evaluative judgment "must call [their] own attention to the matters which [they are] bound to consider"102. While a failure by an inferior court to consider a matter which it is required by law to take into account in determining a question within jurisdiction will not ordinarily involve jurisdictional error103, a failure to consider the paramount consideration in s 66(1) by reference to the assessment in s 66(2) goes beyond that ordinary case. It demonstrates a misconception of the function being performed under s 7 by failing to ask the right question within jurisdiction. 99 See [65] above. 100 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 348-349 [23]- [24]; see also 363 [65], 365 [71], 370-371 [90]. 101 cf Kioa v West (1985) 159 CLR 550 at 586; BVD17 v Minister for Immigration and Border Protection (2019) 268 CLR 29 at 37 [10]. 102 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39, quoting Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 229. 103 Craig (1995) 184 CLR 163 at 180. Gordon Edelman Steward Gleeson Absence of a "saving" provision Throughout the Sentencing Procedure Act, there are many provisions which state expressly that non-compliance with a provision does not lead to invalidity. There is no such provision in s 7 or s 66. As originally enacted, the Sentencing Procedure Act included such saving provisions in s 45(4) (concerning a requirement to make a record of reasons for declining to set a non-parole period for a sentence of imprisonment); s 48(3) (concerning a requirement to give information about the likely effect of a sentence of imprisonment); ss 71(2), 83(2), 92(2) and 96(2) (concerning requirements to take all reasonable steps to explain the offender's obligations under, and the consequences of failure to comply with, a periodic detention order; a home detention order; a community service order; and a good behaviour bond); and ss 72(3) and 93(3) (concerning requirements to give written notice to the offender and the Commissioner of Corrective Services of a periodic detention order and a community service order). The 2010 Act, which introduced the ICO, contained five saving provisions, all of which were directed to aspects of the scheme for making ICOs. Section 67, which was replaced by ss 7(3) and 66 in the 2017 Act, contained a saving provision in s 67(6), limited to a requirement on the court in s 67(5) to indicate to the offender and record reasons for declining to make an ICO in certain circumstances. The former s 67 reveals a deliberate choice by the legislature to include a saving provision only for a procedural aspect of the section that applied to an error made after the decision to decline to make an ICO. Also in the 2010 Act, new ss 71, 72 and 73 corresponded with the former ss 70, 71 and 72, concerning periodic detention orders. By s 71(3), an ICO was not invalidated merely because it specified a date of commencement of the sentence of imprisonment that did not comply with the requirements of s 71. Section 72(2) provided that non-compliance with requirements to take all reasonable steps to explain the offender's obligations under an ICO and the possible consequences of failure to comply with the relevant order did not invalidate the ICO. Section 73(3) provided that an ICO was not invalidated by a failure to comply with the notice requirements in s 73. The fifth saving provision was contained in an amendment to the Fines Act 1996 (NSW), and concerned the notice requirements following the making of an ICO in relation to a fine defaulter104. 104 Fines Act 1996 (NSW), s 89A(5). Gordon Edelman Steward Gleeson By the 2017 Act, similar provisions to the former s 67(5) and (6) were added to Div 4C of Pt 2 in the form of ss 17I and 17J. Section 71 was amended to remove the saving provision for an error in specifying the commencement date of an ICO. Additionally, in Div 4 of Pt 5, s 73A(1B) was inserted, providing that, where the sentencing court exercises the discretion in s 73A(1A) not to impose an additional condition on an ICO, the court must have a record of its reasons for not imposing an additional condition but the failure of the sentencing court to do so does not invalidate the sentence. Contemporaneously with the 2017 Act, the Justice Legislation Amendment (Committals and Guilty Pleas) Act 2017 (NSW) amended the Sentencing Procedure Act, including by introducing a saving provision in s 25F(8). Section 25F(8) provides that the failure by a court to comply with Div 1A of Pt 3 of the Sentencing Procedure Act does not invalidate any sentence imposed by the court. Division 1A comprises ss 25A to 25F and broadly concerns sentencing discounts for guilty pleas to indictable offences. This survey of the history of the Sentencing Procedure Act reveals a pattern of deliberate inclusion by the New South Wales legislature of saving provisions in the Sentencing Procedure Act purporting to identify when non-compliance with the Act does not invalidate a sentence imposed by a sentencing court, including an ICO105. Section 5(4) stands in contradistinction to the absence of an analogous provision in s 66 in the exercise of the discretion in s 5(1). Section 5(4) illustrates a choice by the legislature to save from invalidity a sentence affected by an error that otherwise might be regarded as a jurisdictional error. Section 5 supports a conclusion that s 66(2) operates as a limit upon the power of the sentencing court to make or refuse to make an ICO. Consequences of invalidity In the Court of Appeal, Basten JA (Bell P and Leeming JA agreeing106) considered that the adverse consequences of invalidity told against a conclusion 105 cf Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 106 Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 14-15 [56] and 38 [157]. Gordon Edelman Steward Gleeson that non-compliance with s 66(2) was a jurisdictional error of law107. Basten JA noted that the issue was not fully explored108. In this Court, the issue was again, wisely, not put at the forefront of the first respondent's argument. Ultimately, it tells against the first respondent's argument. The central adverse consequence was said to be that if the failure by a Local Court to comply with the condition in s 66(2) was a jurisdictional error, then a person who was refused an ICO would be unlawfully imprisoned. This consequence could not arise in a case such as the present appeal. Even if the jurisdictional error by the District Court Judge invalidated the entire sentence, the imprisonment orders of the Local Court would prevent any conclusion of unlawful imprisonment. Further, even in a case where the jurisdictional error is made by the Local Court judge, there is serious reason to doubt the correctness of the assumption underlying Basten JA's reasoning. It is strongly arguable that the failure to undertake the assessment did not invalidate the sentence of imprisonment, because at the point at which s 66 was engaged, the court had already made a separate decision to impose a sentence of imprisonment on the appellant109. Section 66 does not, therefore, restrain the power to impose a sentence of imprisonment; rather, it is engaged "when the sentencing court is deciding whether to make an [ICO] in relation to an offender"110. On this view, concerns that a finding of jurisdictional error would mean the sentence of imprisonment is a "nullity" that any person can disregard are unfounded. The jurisdictional error means that the discretion to consider whether or not to grant an ICO under s 7(1) was invalid, and therefore has not been exercised. This understanding – premised on the discrete function of determining whether to direct that a sentence of imprisonment be served by way of an ICO rather than full-time detention – also addresses concerns about apparent incongruity with provisions of the Sentencing Procedure Act providing that non- compliance with certain sections does not invalidate a sentence of imprisonment111. 107 Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 32-34 [127]-[137]; cf Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 375- 376, 391; Project Blue Sky (1998) 194 CLR 355 at 388-389 [91]. 108 Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 34 [134]. 109 Sentencing Procedure Act, s 7(1), see also, eg, s 68(1)-(2). 110 Sentencing Procedure Act, s 66(1). 111 See, eg, s 5(4). Gordon Edelman Steward Gleeson There are constructional and constitutional questions about the scope of those provisions (in particular, s 5(4))112; however, those questions do not need to be addressed in this case. If non-compliance with s 66 does not invalidate a sentence of imprisonment it cannot cut across and is otherwise consistent with s 5(4). The lack, or unlikelihood, of any serious consequences of invalidity from failure to comply with the condition in s 66(2), as Beech-Jones JA recognised113, must also be balanced against the potentially serious consequences of not treating non-compliance with s 66(2) as a jurisdictional error. It would mean that unlike the position in relation to every other provision in Div 2, a District Court judge undertaking a rehearing of a sentencing process would be wholly immune from review where a fundamental step in the mandated process for deciding whether to make an ICO is omitted and, consequently, the judge makes a fundamental error of ignoring entirely the paramount consideration for imposing an ICO, which motivated Parliament to introduce these orders and which was made explicit in the text of s 66. District Court appeal As explained, the appellant was sentenced by the Local Court to an aggregate term of three years' imprisonment, and appealed as of right to the District Court. Before the District Court, the appellant conceded that no penalty other than imprisonment was appropriate. The only issue was whether her term of imprisonment should be served by an ICO114. Facts and evidence The agreed facts presented to the District Court Judge included that the appellant's cousin had stored numerous firearms, firearm parts and ammunition at the appellant's home in suburban Dubbo without her knowledge. The appellant became aware of the items and allowed the items to remain at her home for eight days until they were sold to a known person. There were discussions between the appellant and another co-offender concerning the price for the items, during which the appellant was told that she would be given $500 if the items could be sold for 112 See Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476; Futuris Corporation (2008) 237 CLR 146; Kirk (2010) 239 CLR 531. 113 Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 50 [202]. 114 Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 44-45 Gordon Edelman Steward Gleeson $3,000. About a week after the appellant's discovery of the items, the co-offender and the known person met the appellant at her home and the known person gave the co-offender $6,000 in cash in exchange for the items. The police later seized the items. The appellant was arrested and made full admissions to the offences. She said she had been told that only $3,000 had been paid, of which she took $50. The appellant gave evidence and said that, as a parent, when she became aware of the guns, she just wanted them out of the house. She said that she did not call the police because "I didn't want to get my, my cousin into trouble and get him put in gaol". As Beech-Jones JA observed in the Court of Appeal115, the case required the District Court Judge to engage in the difficult task of reconciling the relative seriousness of the offences against the appellant's subjective circumstances. And as Bell P rightly said, the appellant presented "a strong subjective case"116. The appellant was a 38-year-old woman, who had five children. Two children lived with their father and saw the appellant every weekend; three children (a 15-year-old and four-year-old twins) lived with the appellant. The appellant was single. During her upbringing, her stepfather was in a motorcycle club and her mother had been a heroin addict and physically abusive. The appellant used "ice" from around 2013-2015, following her mother's death, but not subsequently. The appellant otherwise has a limited history of drug use. She had attended secondary school and had a significant employment history with long periods of continuous employment. She had some previous criminal convictions for offences that were of relatively minor seriousness. One of those convictions had resulted in an ICO. The appellant had complied with the terms of that order. The appellant had never previously served a term of full-time imprisonment. The evidence before the District Court included a sentencing assessment report prepared by Corrective Services NSW that had earlier been provided to the Local Court. The report included assessments that the appellant was a "T1/Medium risk of reoffending according to the Level of Service Inventory – Revised" and that the appellant was suitable to undertake community service work. The report stated that the information in the report may be used to make, relevantly, an ICO. 115 Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 46 [189]. 116 Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 5 [6]. Gordon Edelman Steward Gleeson Submissions before the District Court Judge The submissions made before the District Court Judge and the oral exchanges between the judge and counsel have very limited relevance to the construction of the reasons of the District Court Judge given that those reasons were delivered after being reserved for several weeks. But to the extent that they might be considered they further demonstrate a misunderstanding of the function of the District Court Judge. During the oral hearing, counsel for the appellant made submissions about the "detailed comprehensive plan" prepared by Community Corrections for the appellant, saying that the plan would have the effect that prospects of reoffending would be low. That was a submission about the paramount consideration of whether an ICO was more likely to address the risk of reoffending than full-time detention. But the District Court Judge responded by saying "[y]ou haven't addressed me on general deterrence" and, after emphasising the importance of general deterrence in relation to firearms, added that general deterrence "must be a very important and central platform of the sentencing exercise". Rather than treating community safety, in the sense of s 66(2), as the paramount consideration the District Court Judge infused that concept with notions of general deterrence. The District Court Judge's reasons After recording relevant facts, the District Court Judge referred to the general sentencing principles in s 3A of the Sentencing Procedure Act, including general and specific deterrence, denunciation, retribution, remorse and rehabilitation. The judge referred to the s 5(1) threshold and stated "[i]n all the circumstances there is no question that the s 5 threshold has been crossed". This finding was a reference to the appellant's concession that no penalty other than imprisonment was appropriate. Her Honour referred to comparable cases, set out the appellant's subjective case and her evidence, and summarised the submissions on behalf of the appellant, including noting the submission that an ICO was the most appropriate way of serving her sentence. Her Honour summarised the appellant's sentencing assessment report and the Crown's submissions including that the objective seriousness of the offending warranted a full-time custodial sentence. After making findings about the objective seriousness of the offences, and aggravating and mitigating circumstances, the District Court Judge said she had given "very close consideration" to the matters put to the court concerning the "appropriateness" of an ICO. There is no basis for drawing an inference about what was involved in her Honour's consideration. Her Honour then said: Gordon Edelman Steward Gleeson "I am very aware of the law which prescribes the availability of an ICO including such cases as Pullen, Fangaloka, Karout and Casella. I am aware of the three step process that must be followed by the Court in assessing whether or not an ICO is appropriate." The cases referred to by the District Court Judge were four decisions of the New South Wales Court of Criminal Appeal concerning the power to make an ICO. The decisions address a range of issues and do not state a uniform interpretation of s 66. There is nothing in the District Court Judge's reasons from which it might be inferred that the District Court Judge applied any aspect of any of the decisions in making her decision. In the absence of anything to indicate what the judge made of the four decisions, the assertion that she was "very aware" of them sheds no light on her decision-making process. The judge also made no reference to Wany v Director of Public Prosecutions (NSW)117, a then recent relevant intermediate appellate court authority that considered whether non-compliance with s 66(2) was a jurisdictional error of law. The District Court Judge's reference to the "three step process" concerns the established sequence of determinations to be made by a sentencing court in New South Wales before sentencing an offender to a term of imprisonment to be served by way of full-time detention as described earlier in these reasons118. The District Court Judge took the first two of the required three steps. First, the judge determined whether a sentence of imprisonment was appropriate. Second, the judge considered the length of the sentence of imprisonment. The judge referred to the need to take into account "all the matters that the Court must consider in the sentencing exercise particularly general deterrence which must loom large particularly specific deterrence and of course community safety and denunciation". The judge concluded that "a sentence ... of three years is an appropriate sentence". Her Honour purported to address the third step of the sentencing process, which required consideration of whether or not an ICO should be made, saying: "The third and final task that the Court must do in assessing whether or not an ICO is an appropriate term of imprisonment is to determine whether or not an ICO is an appropriate sentence taking into account all of the factors 117 (2020) 103 NSWLR 620. 118 Zamagias [2002] NSWCCA 17 at [24]-[30]; Fangaloka [2019] NSWCCA 173 at [44]; Wany (2020) 103 NSWLR 620 at 625 [17]. Gordon Edelman Steward Gleeson including community safety and rehabilitation. I have as I said given very close consideration to this. In my view community safety is of paramount consideration. There are a substantial number of firearms. The firearms in my view pose a significant risk to the people of Dubbo. Taking into account all of those matters I am not of the view that it is appropriate for the matter, for this sentence to be served by way of an Intensive Corrections Order." Jurisdictional error In addressing the appellant's application for an ICO, the District Court Judge did not refer to s 66 of the Sentencing Procedure Act specifically or in substance, although her reference to community safety as the paramount consideration indicated an awareness of the provision. Her Honour did not record any findings about whether an ICO or full-time detention was more likely to address the appellant's risk of reoffending. Nor did her Honour refer in any way to the conditions that might be suitably imposed in an ICO on the facts in this case. Without contemplating conditions of this kind, the risk of reoffending cannot have been measured. The District Court Judge's reasons reveal no assessment of community safety based on whether the risk of reoffending by the specific offender – the appellant – would be better reduced by full-time imprisonment or by an ICO, giving consideration to the appellant's personal circumstances. It cannot be inferred from the reasons that she undertook any such assessment119. Her Honour's statement that "[t]here are a substantial number of firearms. The firearms in my view pose a significant risk to the people of Dubbo" does not reveal a consideration of community safety in a forward-looking manner having regard to the appellant's risk of reoffending. In fact, the firearms posed no ongoing risk to community safety whether by future offending conduct on the part of the appellant or anyone else, as they had been seized. As is apparent, the District Court Judge purported to address community safety at the third step in the same manner that it might have been considered in step one or two by observing the safety risk posed by the offending conduct. The inescapable conclusion is that the District Court Judge failed to undertake the assessment in s 66(2). A further conclusion is that the District Court Judge failed to apprehend that her function at the third stage of the sentencing 119 cf Mourtada v The Queen (2021) 290 A Crim R 514 at 524 [37]; Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 47 [192]. Gordon Edelman Steward Gleeson process required her to assess the risks that the appellant would reoffend, in a manner that might affect community safety, depending upon whether she served her sentence of imprisonment by full-time detention or intensive correction in the community. A further matter that supports the conclusion that the District Court Judge failed to undertake the assessment in s 66(2), identified by Beech-Jones JA, is the lack of any reference to the circumstances of the offending as a matter bearing upon the appellant's risk of future reoffending. As his Honour put it120, the District Court Judge failed to address "whether the [appellant] was a dedicated gun runner or someone caring for five children who just wanted the guns out of her house". As earlier noted, the s 66(2) assessment required consideration, not merely of the appellant's risk of reoffending, but of her risk of reoffending in a manner that might affect community safety. That was a matter that almost certainly required consideration of the likelihood that the appellant would repeat offences of the kind for which she had been convicted. That assessment was not done. Given the invalidity, there has been no decision on the issue of an ICO at all. As there is a duty to consider whether to grant an ICO in cases where the power is engaged (as it clearly was in this case)121, this duty remains unperformed. Therefore, the District Court failed to perform its duty and did not determine the appellant's appeal according to law. It was therefore appropriate to set aside the order of the District Court dismissing the appellant's appeal, and order the Court to determine her appeal according to law. Relief Accordingly, the following orders were made: Appeal allowed. Set aside Order 1 of the Orders made by the Court of Appeal of the Supreme Court of New South Wales on 21 December 2021 and, in its place, order that: the orders of the District Court of New South Wales of 17 June 2021 dismissing the appellant's appeal under 120 Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 47 [191]. 121 Blanch [2019] NSWCCA 304 at [68]-[69]. Gordon Edelman Steward Gleeson s 20(2)(c) of the Crimes (Appeal and Review) Act 2001 (NSW) are set aside; and the appellant's appeal to the District Court of New South Wales be heard and determined by the District Court of New South Wales according to law. Jagot JAGOT J. I consider that the Court of Appeal of the Supreme Court of New South Wales was correct to decide that an alleged failure of a judge of the District Court of New South Wales to comply with s 66(2) of the Crimes (Sentencing Procedure) Act 1999 (NSW), which requires a sentencing court to assess an offender's risk of reoffending in considering whether to make an intensive correction order, did not involve jurisdictional error amenable to correction by the Supreme Court in its supervisory jurisdiction. I am also unable to conclude that, in this case, the District Court judge did not comply with s 66(2). Accordingly, I consider that this appeal should have been dismissed. The statutory schemes Offence triable summarily or on indictment The appellant pleaded guilty to offences against the Firearms Act 1996 (NSW). By s 5(1) of the Criminal Procedure Act 1986 (NSW), an "offence must be dealt with on indictment unless it is an offence that under this or any other Act is permitted or required to be dealt with summarily". Under s 84(1) of the Firearms Act, proceedings for an offence under that Act could be disposed of summarily before the Local Court of New South Wales. By s 7(1) of the Criminal Procedure Act, an "offence that is permitted or required to be dealt with summarily is to be dealt with by the Local Court". Chapter 5 of the Criminal Procedure Act regulates the summary disposal of indictable offences by the Local Court. By s 260(2) and Table 2 of Sch 1 to that Act, the offences to which the appellant pleaded guilty were required to be dealt with summarily unless "the prosecutor elects ... to have the offence dealt with on indictment". Section 261 of the Criminal Procedure Act requires an indictable offence to which s 260 applies to be dealt with summarily "as if it were a summary offence" (meaning, by s 3(1), an offence that is not an indictable offence). Section 268 then prescribes the maximum penalty that may be imposed for an indictable offence listed in Table 2 of Sch 1 dealt with summarily (in effect, by s 268(1A), the maximum term of imprisonment is "2 years or the maximum term of imprisonment provided by law for the offence, whichever is the shorter term"). If the offences committed by the appellant had not been dealt with summarily in accordance with these provisions, then s 8 of the Criminal Procedure Act would have operated to require prosecution on indictment in the Supreme Court or the District Court. In that event, the maximum sentences to which the Jagot appellant would have been exposed would have been much greater than two years for each offence122. Sentencing Sentencing in New South Wales is regulated by the Crimes (Sentencing Procedure) Act. Section 3(1) in Pt 1 (headed "Preliminary") of the Crimes (Sentencing Procedure) Act includes the following definitions: "aggregate sentence of imprisonment – see section 53A. community correction order means an order referred to in section 8. full-time detention means detention in a correctional centre. intensive correction has the same meaning as in the Crimes (Administration of Sentences) Act 1999[123]. intensive correction order means an order referred to in section 7. non-parole period means a non-parole period referred to in section 44(1). offender means a person whom a court has found guilty of an offence. 122 That is, a maximum of five years' imprisonment for each offence against ss 51(1)(a) and 51BA(1) of the Firearms Act and a maximum of 14 years' imprisonment for each offence against s 62(1)(c) of that Act. 123 "Intensive correction" is defined in s 3(1) of the Crimes (Administration of Sentences) Act 1999 (NSW) as "intensive correction in the community pursuant to an intensive correction order". Jagot sentence means – (a) when used as a noun, the penalty imposed for an offence, and (b) when used as a verb, to impose a penalty for an offence. sentencing court, in relation to an offender undergoing a penalty imposed by a court, means the court by which the penalty was imposed." Part 1 of the Crimes (Sentencing Procedure) Act also contains s 3A as follows: "The purposes for which a court may impose a sentence on an offender are as follows – to ensure that the offender is adequately punished for the offence, to prevent crime by deterring the offender and other persons from committing similar offences, to protect the community from the offender, to promote the rehabilitation of the offender, to make the offender accountable for his or her actions, to denounce the conduct of the offender, to recognise the harm done to the victim of the crime and the community." Part 2 of the Crimes (Sentencing Procedure) Act concerns "Penalties that may be imposed". The basic provision is s 4(1), that the "penalty to be imposed for an offence is to be the penalty provided by or under this or any other Act or law". Division 2 of Pt 2 concerns "Custodial sentences". It contains both ss 5 and 7 as follows: Penalties of imprisonment (1) A court must not sentence an offender to imprisonment unless it is satisfied, having considered all possible alternatives, that no penalty other than imprisonment is appropriate. Jagot (2) A court that sentences an offender to imprisonment for 6 months or less must indicate to the offender, and make a record of, its reasons for doing so, including – Subsection (2) does not limit any other requirement that a court has, apart from that subsection, to record the reasons for its decisions. (4) A sentence of imprisonment is not invalidated by a failure to comply with this section. Part 4 applies to all sentences of imprisonment, including any sentence the subject of an intensive correction order. Intensive correction orders (1) A court that has sentenced an offender to imprisonment in respect of 1 or more offences may make an intensive correction order directing that the sentence or sentences be served by way of intensive correction in the community. If the court makes an intensive correction order directing that a sentence of imprisonment be served by way of intensive correction in the community, the court is not to set a non- parole period for the sentence. This section does not apply to an offender who is under the age of 18 years. This section is subject to the provisions of Part 5." Division 3 of Pt 2 of the Crimes (Sentencing Procedure) Act concerns "Non-custodial alternatives". It deals with community correction orders (s 8), conditional release orders (s 9), and (amongst other things) other alternatives to a sentence of imprisonment (ss 10 and 11). Division 4B of Pt 2 of the Crimes (Sentencing Procedure) Act concerns "Assessment reports". By s 17B(1), an "assessment report means a report made by a community corrections officer or a juvenile justice officer under this Part". By s 17B(2), the "purpose of an assessment report is to assist a sentencing court to determine the appropriate sentence options and conditions to impose on the offender during sentencing proceedings". Section 17C(1) says that, "[e]xcept as provided by section 17D", the sentencing court may (but is not obliged to) request Jagot an assessment report only at certain times (eg, after a finding of guilt but before a sentence is imposed). Section 17D provides (in part) that: "(1) The sentencing court must not make an intensive correction order in respect of an offender unless it has obtained a relevant assessment report in relation to the offender. (1A) However, the sentencing court is not required to obtain an assessment report (except if required under subsection (2) or (4)) if it is satisfied that there is sufficient information before it to justify the making of an intensive correction order without obtaining an assessment report." Part 3 of the Crimes (Sentencing Procedure) Act concerns "Sentencing procedures generally". Division 1 ("General") contains a series of provisions including, for example: (a) s 21A, which specifies matters that the court is to take into account in determining the appropriate sentence for an offence, including certain general matters and aggravating and mitigating factors; (b) s 22, which provides that, in passing sentence for an offence on an offender who has pleaded guilty, a court must take into account the fact that the offender has pleaded guilty, when the offender pleaded guilty or indicated an intention to plead guilty, and the circumstances in which the offender indicated an intention to plead guilty; and (c) s 24, which identifies other matters that the court must take into account in sentencing an offender. Part 3 of the Crimes (Sentencing Procedure) Act also contains s 43, which provides (in part) that: "(1) This section applies to criminal proceedings (including proceedings on appeal) in which a court has – imposed a penalty that is contrary to law, or failed to impose a penalty that is required to be imposed by law, and so applies whether or not a person has been convicted of an offence in those proceedings. The court may reopen the proceedings (either on its own initiative or on the application of a party to the proceedings) and, after giving the parties an opportunity to be heard – (a) may impose a penalty that is in accordance with the law, and if necessary, may amend any relevant conviction or order." Jagot imprisonment, when sentencing an offender Part 4 of the Crimes (Sentencing Procedure) Act concerns "Sentencing procedures for imprisonment". Section 44(1) provides that "[u]nless imposing an aggregate sentence of imprisonment for an offence, the court is first required to set a non-parole period for the sentence (that is, the minimum period for which the offender must be kept in detention in relation to the offence)". But s 45(1) provides that a court may decline to set a non-parole period for an offence (or for offences, in the case of an aggregate sentence of imprisonment) for several reasons, including, in s 45(1)(c), "for any other reason that the court considers sufficient". Part 4 of the Crimes (Sentencing Procedure) Act also contains provisions concerning, amongst other matters, the commencement of sentence (s 47), the term of sentence (s 49), multiple sentences of imprisonment (s 53), aggregate sentences of imprisonment for more than one offence (s 53A), standard non-parole periods (s 54A), and concurrent and consecutive sentences (ss 55-60). Section 62 of the Crimes (Sentencing Procedure) Act provides that: "(1) As soon as practicable after sentencing an offender to imprisonment, a court must issue a warrant for the committal of the offender to a correctional centre. (3) A warrant under this section is sufficient authority – for any police officer to convey the offender to the correctional centre or police station identified in the warrant, and for the governor of the correctional centre, or the person in charge of the police station, to keep the offender in his or her custody for the term of the sentence. This section does not apply – (a) while action is being taken under Part 5 in relation to the making of an intensive correction order, or to a sentence of imprisonment that is the subject of an intensive correction order." Part 5 of the Crimes (Sentencing Procedure) Act concerns "Sentencing procedures for intensive correction orders". Section 64 of the Crimes (Sentencing Procedure) Act, in Div 1 of Pt 5, provides that Pt 5 "applies in circumstances in which a court is considering, or has made, an intensive correction order". This temporal operation reflects that Pt 5 Jagot contains provisions which operate before and after an intensive correction order is made. Division 2 of Pt 5 of the Crimes (Sentencing Procedure) Act concerns "Restrictions on power to make intensive correction orders". Section 66, containing the key provision, s 66(2), is in these terms: "(1) Community safety must be the paramount consideration when the sentencing court is deciding whether to make an intensive correction order in relation to an offender. (2) When considering community safety, the sentencing court is to assess whether making the order or serving the sentence by way of full-time detention is more likely to address the offender's risk of reoffending. (3) When deciding whether to make an intensive correction order, the sentencing court must also consider the provisions of section 3A (Purposes of sentencing) and any relevant common law sentencing principles, and may consider any other matters that the court thinks relevant." Section 67 provides that an intensive correction order is not available for certain offences. Section 68(1) provides that an intensive correction order is not to be made "in respect of a single offence if the duration of the term of imprisonment imposed for the offence exceeds 2 years". Section 68(2) provides that an "intensive correction order may be made in respect of an aggregate sentence of imprisonment. However, the order must not be made if the duration of the term of the aggregate sentence exceeds 3 years." By s 69(1) of the Crimes (Sentencing Procedure) Act, in deciding whether to make an intensive correction order, the sentencing court is to have regard to "(a) the contents of any assessment report obtained in relation to the offender, and (b) evidence from a community corrections officer and any other information before the court that the court considers necessary for the purpose of deciding whether to make such an order". Section 69(3) provides that the sentencing court "may not make an intensive correction order in respect of an offender who resides, or intends to reside, in another State or Territory, unless the State or Territory is declared by the regulations to be an approved jurisdiction". Section 70, in Div 3 of Pt 5, provides that, "[u]nless sooner revoked, the term of an intensive correction order is the same as the term or terms of imprisonment in respect of which the order is made". By s 71(1), "[a]n intensive correction order commences on the date on which it is made". Jagot Section 72, in Div 4 of Pt 5, specifies that an intensive correction order is subject to standard conditions under s 73, any additional conditions under s 73A, and any further conditions under s 73B. The standard conditions under s 73 are that the offender must not commit any offence and must submit to supervision by a community corrections officer. Subject to s 73A(1A), at least one additional condition must be imposed on an intensive correction order from several available under s 73A(2). Section 101A of the Crimes (Sentencing Procedure) Act provides that: "A failure to comply with a provision of this Act may be considered by an appeal court in any appeal against sentence even if this Act declares that the failure to comply does not invalidate the sentence." The Crimes (Sentencing Procedure) Act has numerous provisions to the effect that a failure to comply with a requirement of the Act does not invalidate the sentence. Leaving aside s 5(4), some of these provisions relate to substantive requirements relevant to the term of a sentence or a non-parole period (eg, ss 22(4), 25F(8), 53A(5), and 54B(7)). Others relate to requirements of a more procedural kind, such as providing reasons or explanations for certain matters or notices or information to an offender (eg, ss 17I(2), 17J(4), 23(6), 32(6), 44(3), 45(4), 48(3), 54C(2), 73A(1B), 100A(2C), 100B(2), and 100P(2)). Appeal rights Appeals from the Local Court are regulated by the Crimes (Appeal and Review) Act 2001 (NSW). Section 11(1) of that Act provides that "[a]ny person who has been convicted or sentenced by the Local Court may appeal to the District Court against the conviction or sentence (or both)". By s 17 of that Act, appeals against sentence by the person convicted are to "be by way of a rehearing of the evidence given in the original Local Court proceedings, although fresh evidence may be given in the appeal proceedings". While described as a "rehearing", this kind of appeal involves a hearing de novo, and is not dependent on establishing error by the Local Court124. By s 20(2) of that Act, the District Court can set aside the sentence, vary the sentence, or dismiss the appeal. Section 166(1) of the District Court Act 1973 (NSW) provides that the District Court has the criminal jurisdiction "conferred or imposed on it by or under this Act, the Criminal Procedure Act 1986 and any other Act". 124 Engelbrecht v Director of Public Prosecutions (NSW) [2016] NSWCA 290 at [92]- [95] ("Engelbrecht"); DK v Director of Public Prosecutions (NSW) (2021) 105 NSWLR 66. Jagot Section 176 of the District Court Act provides that: "No adjudication on appeal of the District Court is to be removed by any order into the Supreme Court." The appellant takes no issue with the orthodox position that s 176 excludes judicial review by the Supreme Court under s 69 of the Supreme Court Act 1970 (NSW) other than in respect of jurisdictional error125. In contrast to the position of an offender who has appealed from the Local Court to the District Court, by s 5(1) of the Criminal Appeal Act 1912 (NSW) a person convicted on indictment (which will necessarily be in the Supreme Court or the District Court) may appeal to the New South Wales Court of Criminal Appeal including, with leave, on any ground which appears to the court to be a sufficient ground of appeal. By s 5AA of that Act, a person convicted by the Supreme Court or the District Court in their summary jurisdictions may appeal to the Court of Criminal Appeal against conviction or sentence. The appellant's sentence and appeal to the District Court The Local Court convicted the appellant of the offences and sentenced her to an aggregate term of three years' imprisonment with a non-parole period of two years. The appellant was granted bail pending her appeal. The appellant appealed to the District Court against the severity of her sentence in accordance with s 11 of the Crimes (Appeal and Review) Act. The District Court heard the appeal on 28 May 2021. The District Court delivered oral reasons on 17 June 2021 in which the appeal was dismissed. The order made by the District Court was that the appellant "is sentenced to an aggregate term of imprisonment of 3 years to commence on 17 June 2021 and expiring on 16 June 2024 with a non-parole period of 2 years. The offender is to be released to parole on 16 June 2023." It is that order which the appellant seeks to quash. The commencement date of the sentence, 17 June 2021, is the date the District Court judge sentenced the appellant to imprisonment, reflecting that the District Court judge had to determine the appeal (and thus the sentence itself) de novo and that the appellant had been on bail pending the determination of her appeal. As it will become relevant later, it should also be noted that the sentences imposed by both the Local Court and the District Court said that the appellant was sentenced to a term of imprisonment. The orders did not say that the appellant was sentenced to a term of imprisonment "to be served by way of full-time detention". The form of the orders reflects an important feature of the structure of the Crimes 125 eg, Wang v Farkas (2014) 85 NSWLR 390 at 393 [8]; Engelbrecht [2016] NSWCA Jagot (Sentencing Procedure) Act, in place since its enactment, that an inherent aspect of a "sentence of imprisonment", as that term is used throughout the Act, is that such a sentence is served by way of "full-time detention" (as defined in s 3(1)) unless an order is made directing that the sentence of imprisonment is to be served in some other way. The summons in the Supreme Court The appellant filed a summons in the Supreme Court seeking relief in the nature of certiorari quashing the decision of the District Court under s 69B(1) of the Supreme Court Act and the return of the proceedings to the District Court to be dealt with according to law. Section 69 of the Supreme Court Act confirms the jurisdiction of the Supreme Court to "grant any relief or remedy or do any other thing by way of writ, whether of prohibition, mandamus, certiorari or of any other description". No argument was put that this matter involved an error of law that appears on the face of the record as referred to in s 69(3) and (4) of the Supreme Court Act. Section 69B of the Supreme Court Act provides that: In determining proceedings for judicial review in relation to a conviction or sentence for an offence, the Court may make an order quashing either the conviction of, or the sentence imposed on, the claimant, or quash both the conviction and the sentence. This section applies to judicial review of orders made by the Local Court or the District Court despite anything contained in the Crimes (Appeal and Review) Act 2001." The Court of Appeal dismissed the summons. The majority held that the assumed or found error of the District Court judge, a failure to carry out the assessment required by s 66(2) of the Crimes (Sentencing Procedure) Act, did not amount to jurisdictional error so that s 176 of the District Court Act operated to preclude judicial review by the Supreme Court126. 126 Stanley v Director of Public Prosecutions (NSW) (2021) 107 NSWLR 1 at 13 [50], 15-16 [59]-[61] per Bell P, 34-35 [138]-[139] per Basten JA, 37-38 [150]-[155], 38 [157] per Leeming JA, 47-48 [193]-[195] per Beech-Jones JA, McCallum JA dissenting at 45 [185] ("Stanley"). Jagot Jurisdictional error Some basic principles "It cannot be said that, whenever a court makes an erroneous decision, it acts without jurisdiction. An order made without jurisdiction – as if a court of petty sessions purported to make a decree of divorce – is not an order at all. It is completely void and has no force or effect. The persons who make the order will, for example, if any action by way of interference with person or property is taken under the authority of the order, be liable in an action of trespass. But an order is not rendered void ab initio when it is set aside on appeal as erroneous. The fact that it was erroneous does not show or even suggest that it was made without jurisdiction. Jurisdiction is not merely jurisdiction to decide a question rightly."127 This statement by Latham CJ in Parisienne Basket Shoes Pty Ltd v Whyte128 reflects three propositions. First, a court has jurisdiction to decide its jurisdiction. Second, an error by a court which would lead to its order being set aside on appeal (if there is a right of appeal) does not mean that the court had no jurisdiction to make the order. Third, an order made without jurisdiction, in contrast to an erroneous order within jurisdiction, is void from the outset, so that acts under the order, before the order is declared void, are not authorised by the order. In the context of orders of a court, this distinction – between erroneous orders within jurisdiction, liable to be set aside if there is a right of appeal, and orders made without jurisdiction, which are void from the outset – is fundamental. If it did not exist, then rights of appeal (which are "creature[s] of statute"129) would be meaningless, as would be statutory limits on such rights. Further, acts done in pursuit of an order made without jurisdiction (eg, imprisonment on an order of conviction and custodial sentence) would be done without authority, exposing those acting under the order to liability for their acts (eg, in the torts of false imprisonment or trespass to the person)130. 127 Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 375; see to the same effect at 384, 389 ("Parisienne Basket"). 128 (1938) 59 CLR 369. 129 Dwyer v Calco Timbers Pty Ltd (2008) 234 CLR 124 at 128 [2]; see also CDJ v VAJ (1998) 197 CLR 172 at 196-197 [95]. 130 eg, Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 445- 446 [27]-[28]; Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 645-646 [151]; New South Wales v Kable (2013) 252 CLR Jagot Latham CJ also made the point that if a court "has no jurisdiction to decide [a] question wrongly, then it has no jurisdiction to decide it at all – even rightly"131. As Latham CJ put it, the jurisdiction of inferior courts is not "jurisdiction only to decide rightly, with the consequence that, in deciding otherwise than rightly, they do not decide at all and any order made is coram non judice"132. Dixon J made the same point in Parisienne Basket in these terms133: "In courts possessing the power, by judicial writ, to restrain inferior tribunals from an excess of jurisdiction, there has ever been a tendency to draw within the scope of the remedy provided by the writ complaints that the inferior court has proceeded with some gross disregard of the forms of law or the principles of justice. But this tendency has been checked again and again, and the clear distinction must be maintained between want of jurisdiction and the manner of its exercise. Where there is a disregard of or failure to observe the conditions, whether procedural or otherwise, which attend the exercise of jurisdiction or govern the determination to be made, the judgment or order may be set aside and avoided by proceedings by way of error, certiorari, or appeal. But, if there be want of jurisdiction, then the matter is coram non judice. It is as if there were no judge and the proceedings are as nothing. They are void, not voidable." In Craig v South Australia, the distinctions between the jurisdiction of an inferior court and a statutory tribunal and between an error within and outside jurisdiction were confirmed134. Accordingly, an "inferior court falls into jurisdictional error if it mistakenly asserts or denies the existence of jurisdiction or if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist"135. The second kind of jurisdictional error (misapprehending or disregarding the nature or limits of functions or powers) was described as including: (a) disregarding or considering some matter if the statute conferring jurisdiction requires that particular matter to "be taken into account or ignored as a pre-condition of the existence of any 131 Parisienne Basket (1938) 59 CLR 369 at 375. 132 Parisienne Basket (1938) 59 CLR 369 at 377. Coram non judice means "not before a judge". 133 (1938) 59 CLR 369 at 389 (citation omitted). 134 (1995) 184 CLR 163 at 175-177, 179-180 ("Craig"). 135 Craig (1995) 184 CLR 163 at 177. Jagot authority to make an order"; and/or (b) misconstruing the statute conferring jurisdiction so as to misconceive the nature of the function being performed136. Further, "[t]he identification of relevant issues, the formulation of relevant questions and the determination of what is and what is not relevant evidence" in respect of issues which the court has jurisdiction to determine may involve error of law, but "will not ... ordinarily constitute jurisdictional error"137. In Kirk v Industrial Court (NSW)138, the misconceptions involved the core of the offence-creating provision, s 15 of the Occupational Health and Safety Act 1983 (NSW), and a departure from the applicable rules of evidence which was impermissible even with the defendant's consent (that is, calling the defendant to give evidence for the prosecution when s 17(2) of the Evidence Act 1995 (NSW) provided that the defendant was not competent to give evidence as a witness for the prosecution). It is readily understandable that, in Kirk, both classes of error were held to be jurisdictional. The first error in Kirk went to the heart of the commission of the offence. Construed in context, the offence-creating provision depended on the identification of a measure the employer should have taken to obviate an identifiable risk139 and thereby required the statement of offence to identify the act or omission said to constitute the contravention (that is, the measure not taken)140. Accordingly, convicting a defendant based on an alleged offence lacking any identification of the measure not taken to ensure the health, safety, and welfare at work of employees involved a fundamental misconception of the function of the court141. The second error in Kirk went to the heart of the modern common law criminal justice system. No matter how benign the reason (such as a request by a defendant to give evidence in the prosecution's case), a defendant is not competent 136 Craig (1995) 184 CLR 163 at 177-178. 137 Craig (1995) 184 CLR 163 at 179-180. 138 (2010) 239 CLR 531 ("Kirk"). 139 Kirk (2010) 239 CLR 531 at 553 [12]. 140 Kirk (2010) 239 CLR 531 at 553-554 [14]-[17]. 141 Kirk (2010) 239 CLR 531 at 556-558 [22]-[28], 560 [32]-[33], 561-562 [37]-[38]. Jagot to give evidence as a witness for the prosecution in New South Wales142. On the basis that a competent witness is generally a compellable witness, this principle accords with both the presumption of innocence and the accused's right to silence; "[u]nder our system society carries the burden of proving its charge against the accused not out of his own mouth"143. The appellant's case The appellant alleged jurisdictional error on the part of the District Court judge by proposing that s 66, specifically s 66(2), creates a condition precedent to the imposition of any sentence of imprisonment. The centrality of this proposition to the appellant's argument must be recognised. It was not the appellant's case that s 66(2) was a jurisdictional pre-condition to the making of an intensive correction order. This was not the appellant's case because this proposition itself tends to expose the non-jurisdictional character of s 66(2). This will be explained below. The appellant put her argument in several ways, but the essence of the argument is that it would be an error to construe s 66 as if it were concerned only with the question whether an intensive correction order should be made. Rather, according to the appellant, s 66 is concerned with whether an offender is subject to an order to serve their sentence of imprisonment by way of full-time detention (defined in s 3(1) as meaning "detention in a correctional centre") or in the community under an intensive correction order. That is, according to the appellant, serving a sentence of imprisonment by way of full-time detention is not the default position if the assessment under s 66(2) is not carried out. The assessment under s 66(2) is a condition precedent to the court imposing both a sentence of imprisonment to be served by way of full-time detention and a sentence to be served in the community under an intensive correction order. Unless and until the assessment under s 66(2) is made, there can be no order for a sentence of imprisonment. As such, the appellant argued, the assessment required by s 66(2) in Pt 5 of the Crimes (Sentencing Procedure) Act is an essential pre-condition to the operation of both Pt 4 ("Sentencing procedures for imprisonment") and Pt 5 of that Act ("Sentencing procedures for intensive correction orders"). 142 Evidence Act 1995 (NSW), s 17(2). See also Evidence Act 1995 (Cth), s 17(2); Evidence Act 1977 (Qld), s 8(1); Evidence Act 1929 (SA), s 18(1); Evidence Act 2001 (Tas), s 17(2); Evidence Act 2008 (Vic), s 17(2); Evidence Act 1906 (WA), s 8(1)(a); Evidence Act 2011 (ACT), s 17(2); Evidence (National Uniform Legislation) Act 2011 (NT), s 17(2). 143 Watts v Indiana (1949) 338 US 49 at 54. Jagot If not so characterised, it is apparent that a failure to undertake the assessment required by s 66(2) would be an error, but an error within jurisdiction. If the assessment required by s 66(2) is not a condition precedent to the imposition of a sentence of imprisonment, the assessment is nothing more than one evaluative step amongst many which the Crimes (Sentencing Procedure) Act requires to be carried out, not in making an order sentencing an offender to imprisonment, but in directing that the sentence of imprisonment be served other than by way of full-time detention. Putting it another way, in that event, there would be no failure to observe an essential condition to the exercise of the sentencing power and no want of jurisdiction; there would be a wrong manner of exercise of a subsequent power within jurisdiction (to make an order directing the sentence of imprisonment to be served other than by way of full-time detention), amenable to correction on appeal if a right of appeal exists. While it may be difficult to draw "a bright line between jurisdictional error and error in the exercise of jurisdiction"144, the distinction between deciding something which the decision-maker has no authority to decide (jurisdictional error) and wrongly deciding something the decision-maker has authority to decide (non-jurisdictional error) is necessary. This is particularly so in the context of a privative provision such as s 176 of the District Court Act, which reflects the intention of the New South Wales Parliament that there is to be a right to a hearing de novo in the District Court from a sentence imposed by the Local Court for an indictable offence dealt with summarily (for which the maximum sentence is generally constrained to two years for each offence) and no further right of Section 66 of the Crimes (Sentencing Procedure) Act The history, structure, context, and text of the Crimes (Sentencing Procedure) Act speak against the conclusion that s 66(2) functions as a jurisdictional pre-condition to a sentence of imprisonment or, indeed, to any sentencing function of a sentencing court. Division 2 of Pt 2 of the Crimes (Sentencing Procedure) Act deals with custodial sentences. The key provision, s 5(1), is that "[a] court must not sentence an offender to imprisonment unless it is satisfied, having considered all possible alternatives, that no penalty other than imprisonment is appropriate". Section 5(4) makes plain that the New South Wales Parliament did not intend a breach of s 5 to invalidate a sentence. 144 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 141 [163], citing Craig (1995) 184 CLR 163 at 177-178. 145 See Wang v Farkas (2014) 85 NSWLR 390 at 400 [42]. Jagot What is the effect of a sentencing court sentencing "an offender to imprisonment" as referred to in s 5(1)? As will be explained, the effect is that unless the court makes an order directing that the sentence is to be served by some other available option, such as an intensive correction order under s 7(1), the sentence of imprisonment is to be served by way of "full-time detention". The very concept of an intensive correction order being an order directing the way in which a sentence of imprisonment is to be served (if not by full-time detention) speaks against functions relating to such an order having the character of a jurisdictional pre-condition to a sentence of imprisonment or any sentencing function. Further, s 7(1), in terms, provides that the making of an intensive correction order involves a discretionary exercise. This too speaks against functions relating to an intensive correction order operating as a jurisdictional pre-condition to a sentence of imprisonment. That is, contrary to the appellant's argument, when a court sentences an offender to imprisonment under s 5(1), the Crimes (Sentencing Procedure) Act assumes that the sentence of imprisonment is to be served by way of full-time detention unless (relevantly) the discretionary power in s 7(1) is exercised. If that discretionary power is not exercised due to legal error, the sentence of imprisonment to be served by way of full-time detention remains within jurisdiction. This explains why it was unnecessary for the orders of the Local Court and District Court to say that the appellant's sentence of imprisonment was "to be served by way of full-time detention". As neither court made an order directing the sentence of imprisonment to be served by way of intensive correction in the community, the position pre-supposed by the Crimes (Sentencing Procedure) Act operated – the sentence of imprisonment was to be served by way of full-time detention. Now it is necessary to explain why a sentence of imprisonment is to be served by way of full-time detention unless the court, relevantly, makes an intensive correction order. As enacted, the Crimes (Sentencing Procedure) Act assumed that, if a court was satisfied that no penalty other than imprisonment was appropriate, the sentence would be served by way of full-time detention unless an order for either periodic or home detention (the then available alternatives) was made146. Under s 3(1), "full-time detention" was defined to mean "imprisonment that is required to be served otherwise than by way of periodic detention or home detention". That 146 See ss 5 to 7 of the Crimes (Sentencing Procedure) Act as enacted, commencing on 3 April 2000. Jagot is, but for the making of a home detention order or a periodic detention order, the sentence of imprisonment was to be served by way of full-time detention. The Crimes (Sentencing Procedure) Act was amended by the Crimes (Sentencing Legislation) Amendment (Intensive Correction Orders) Act 2010 (NSW) ("the 2010 Amending Act"). The 2010 Amending Act introduced intensive correction orders and abolished periodic detention, and therefore the definition of "full-time detention" in s 3(1) was also amended (to mean "imprisonment that is required to be served otherwise than under an intensive correction order or by way of home detention"). Accordingly, it is apparent that nothing about the introduction of intensive correction orders as an option for the way in which a sentence of imprisonment could be served changed the fact that a sentence of imprisonment was to be served by way of full-time detention unless an alternative order was made. The Second Reading Speech for the 2010 Amending Act confirmed that the underlying logic of the legislation remained as it was, it being said that the "bill requires a court to first determine that it will sentence a person to imprisonment and then to seek a suitability assessment to assist the sentencing court in determining whether or not the sentence of imprisonment is to be served by way of an ICO [intensive correction order]"147. The definition of "full-time detention" was amended again by the Crimes (Sentencing Procedure) Amendment (Sentencing Options) Act 2017 (NSW) ("the 2017 Amending Act")148. The amended definition was (and is) "full-time detention means detention in a correctional centre". This is to be understood in the context that this Act also abolished home detention orders, which were the last remaining kind of detention other than "full-time detention". What cannot be inferred is that, in so amending the definition of "full-time detention", the legislature intended that a sentence of imprisonment might be served other than by way of full-time detention if no order for an alternative way of serving the sentence of imprisonment was made. That is, the underlying logic of the statute remained that a sentence of imprisonment was to be served by way of full-time detention unless an order directing service of the sentence of imprisonment in some other way was made. 147 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 22 June 148 The amendments to the Crimes (Sentencing Procedure) Act as a result of the 2017 Amending Act came into force on 24 September 2018. Jagot The Second Reading Speech for the 2017 Amending Act confirmed that the underlying logic of the Crimes (Sentencing Procedure) Act remained unaltered. Accordingly, the Attorney-General said149: "[W]e are strengthening the intensive correction order. It will be available for offenders sentenced to up to two years imprisonment ... With the new intensive correction order, offenders who would otherwise be unsuitable or unable to work will be able to access intensive supervision as an alternative to a short prison sentence." Further, another important provision, s 5(5), has been part of the Crimes (Sentencing Procedure) Act since enactment (albeit in terms reflecting the alternative ways in which a sentence of imprisonment could be served other than by way of full-time detention from time to time). Section 5(5) currently provides that Pt 4 of the Crimes (Sentencing Procedure) Act applies to all sentences of imprisonment, including any sentence the subject of an intensive correction order. In the face of that provision, ss 7 and 66 of the Crimes (Sentencing Procedure) Act cannot be jurisdictional pre-conditions to Pt 4 and the imposition of a sentence of imprisonment. Another provision which has been part of the Crimes (Sentencing Procedure) Act since its enactment (albeit subject to amendments) is s 62. Section 62, like s 5(5), is a powerful indicator that ss 7 and 66 are not jurisdictional pre-conditions to a sentence of imprisonment or any sentencing function. Section 62 operates so that unless a sentencing court makes an order for an alternative method to serve a sentence of imprisonment (currently, an intensive correction order but, previously, a home detention or periodic detention order), it "must" issue a warrant for the committal of the offender to a correctional centre. That is, it is the fact that no intensive correction order is made which requires the warrant to be issued in respect of the sentence of imprisonment. This duty is inconsistent with the operation of ss 7 and 66 as jurisdictional pre-conditions to a sentence of imprisonment or any sentencing function. It should also be recognised that the Crimes (Sentencing Procedure) Act and the Crimes (Administration of Sentences) Act 1999 (NSW) were enacted as part of a legislative package150. The Crimes (Administration of Sentences) Act deals with imprisonment by way of full-time detention in Pt 2 and imprisonment by way 149 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 11 October 2017 at 274. 150 The legislative package was introduced in response to a report of the New South Wales Law Reform Commission, Sentencing, Report No 79 (1996); see New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 28 October 1999 Jagot of intensive correction in the community in Pt 3. Importantly, if an offender breaches an intensive correction order, the Parole Authority may revoke the order under s 164(2)(e) of the Crimes (Administration of Sentences) Act. Section 181 of that Act then provides (in part) that: If the Parole Authority revokes an intensive correction order, a re-integration home detention order or parole order, it may issue a warrant committing the offender to a correctional centre to serve the remainder of the sentence to which the order relates by way of full-time detention. Subject to any order under subsection (1B), a warrant under this section is sufficient authority – for any police officer to arrest, or to have custody of, the offender named in the warrant, to convey the offender to the correctional centre specified in the warrant and to deliver the offender into the custody of the governor of that correctional centre, and for the governor of the correctional centre specified in the warrant to have custody of the offender named in the warrant for the remainder of the sentence to which the warrant relates." The words in s 181(1), "to serve the remainder of the sentence to which the order relates by way of full-time detention", and in s 181(3)(b), "for the remainder of the sentence to which the warrant relates", confirm that the statutory scheme as a whole operates on two assumptions: (a) once a sentencing court has sentenced an offender to imprisonment, the sentence is not conditioned on any provisions relating to the making of an intensive correction order, and (b) the default position for a sentence of imprisonment is that it is to be served by way of full-time detention. If this were not the case, on revocation of an intensive correction order the offender would have to be sentenced again to a sentence of imprisonment to be served by way of full-time detention. Section 165 of the Crimes (Administration of Sentences) Act enables the Parole Authority to reinstate a revoked intensive correction order in respect of the "remaining balance of the offender's sentence". That balance is necessarily the sentence of imprisonment otherwise to be served by way of full-time detention. Like ss 5(5) and 62 of the Crimes (Sentencing Procedure) Act, ss 165 and 181 of the Crimes (Administration of Sentences) Act are strong indicators that ss 7 and 66 of the Crimes (Sentencing Procedure) Act are not jurisdictional pre-conditions to a sentence of imprisonment or any sentencing function. Jagot It also follows from this analysis that the absence of a provision equivalent to s 5(4) (that a sentence of imprisonment is not invalidated by a failure to comply with s 5) in s 7 of the Crimes (Sentencing Procedure) Act is irrelevant. Section 7 involves a way in which a sentence of imprisonment might be served other than by full-time detention. Accordingly, any exercise of power under s 7 is predicated on an exercise of power having already occurred under s 5(1). The exercise of power under s 5(1) (the sentencing of an offender to imprisonment) is protected by s 5(4). That protection, whatever its scope, operates on the exercise of power under s 5(1) whether or not an exercise of power is available under s 7. That is, if an intensive correction order can be and is made under s 7(1), to the extent that the order depends on an exercise of power under s 5(1) (the sentencing of an offender to imprisonment), s 5(4) will operate. This accords with the fact that s 7 (and the related provisions of Pt 5) is about the manner of service of a sentence of imprisonment and not the imposition of a sentence of imprisonment. While the way in which a sentence of imprisonment is to be served is of profound importance to an individual offender, the scheme of the Crimes (Sentencing Procedure) Act does not treat s 66, still less s 66(2), as an essential pre-condition to a sentence of imprisonment. The fact that s 66 is part of Div 2 of Pt 5 of the Crimes (Sentencing Procedure) Act, entitled "Restrictions on power to make intensive correction orders", does not indicate that every provision of Div 2 is a jurisdictional pre-condition to a sentence of imprisonment to be served by way of full-time detention. Division 2 of Pt 5 does contain some jurisdictional pre-conditions, but they are pre-conditions to the making of an intensive correction order, not a sentence of jurisdictional imprisonment. Sections 67, 68 and 69(3) are pre-conditions to the making of an intensive correction order. The same cannot be said of s 66 or s 69(1), however. They are evaluative obligations within jurisdiction. It is also apparent that mandatory language is not a safe guide to the question whether any provision of the Crimes (Sentencing Procedure) Act involves a jurisdictional limit. All obligations are expressed in mandatory terms. The issue is whether the consequence of non-compliance is invalidity by reason of lack of jurisdiction. In the present case, the matter said by the appellant to be outside of the jurisdiction of the District Court is the sentence of imprisonment itself. Characterising the case as one in which s 66(2) is a jurisdictional pre-condition to the making of an intensive correction order (contrary to the appellant's argument) does not assist. As discussed, the underlying scheme of the Crimes (Sentencing Procedure) Act is that a sentence of imprisonment is to be served by way of full-time detention unless another order is made directing the sentence be served in another way. Accordingly, an error in respect of an evaluative provision relevant to the decision whether or not to make that other order is necessarily one the sentencing court has jurisdiction to make. Jagot A related point is this. The proposition of McCallum JA in the Court below, that s 5(4) of the Crimes (Sentencing Procedure) Act applies only to a failure of a court to indicate its reasons as required by s 5(2)151, cannot be accepted. Section 5(4), in terms, applies to a "failure to comply with this section". In contrast, other provisions to similar effect in the Crimes (Sentencing Procedure) Act are expressly confined to a failure to give reasons or perform some other procedural function152. Effect must be given to the clear language of s 5(4) as applying to any failure to comply with s 5 (as a whole), not any failure to comply with s 5(2). The appellant did not suggest to the contrary. The proposition also assumes that s 5(4) operates to protect against all forms of jurisdictional error, which is constitutionally impossible153. In any event, s 5(4) is a statement of legislative intention and is to be construed in accordance with the principles of statutory construction, which will impose limits on the scope of the section. Those limits need not be addressed here. Accordingly, Bell P was right below to conclude that it would be most peculiar if s 5(4) protected a sentence of imprisonment affected by certain kinds of jurisdictional error (eg, a failure to fulfil the pre-condition to the required state of satisfaction of "having considered all possible alternatives"), but the same sentence of imprisonment could be invalidated by a mere failure to discharge a subsequent obligation (to consider making an order for an intensive correction order), relevant only to the way in which that sentence is to be served (not the fact of the custodial sentence). It would be more than peculiar if an assessment of one issue under s 66(2), amongst a raft of issues required to be considered under ss 66(3) and 69(1), could place the same sentence of imprisonment outside jurisdiction. Certain other considerations also reinforce these conclusions. First, there may be a duty to consider the making of an intensive correction order in a particular case, but that duty arises from the circumstances of the case and not from the terms of s 7 of the Crimes (Sentencing Procedure) Act, which is expressed in permissive, not mandatory, terms154. Second, s 64 of the Crimes (Sentencing Procedure) Act provides that Pt 5 applies "in circumstances in which a court is considering, or has made, an intensive 151 Stanley (2021) 107 NSWLR 1 at 41 [170]. 152 See, eg, ss 17I(2), 17J(4), 23(6), 32(6), 44(3), 45(4), 48(3), 54C(2), 73A(1B), 100A(2C), 100B(2), and 100P(2) of the Crimes (Sentencing Procedure) Act. 153 eg, Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 494 [37], 508 [83]; Kirk (2010) 239 CLR 531 at 581 [99]-[100]. 154 Blanch v The Queen [2019] NSWCCA 304 at [68]-[69]. Jagot correction order". Further, under s 66, the assessment required by s 66(2) is embedded in an overall evaluative process required by the whole of s 66, as well as s 69(1). A statutory function required to be performed as part of a subsequent evaluative process is unlikely to be capable of resulting in the sentencing court acting without jurisdiction in respect of the sentence of imprisonment. And, as discussed, unless some other order directing a different manner of service is made, the underlying logic of the legislation is that the sentence of imprisonment is to be served by way of full-time detention and, by s 62(1), as soon as practicable after sentencing an offender to imprisonment, the court "must" issue a warrant for the committal of the offender to a correctional centre. Third, the assessment in s 66(2) is to be the paramount consideration, as s 66(1) requires, but the concept of "community safety" is not exhausted by the assessment under s 66(2) and that assessment is not necessarily determinative of the outcome of the making of an intensive correction order. If the s 66(2) assessment were intended to be exhaustive of the concept of "community safety" or to be determinative of the outcome of the making of an intensive correction order, then there would be no need for sub-ss (1) and (2) of s 66 to be separately expressed – it would be sufficient if a single sub-section said words to the effect that "the paramount consideration in deciding whether to make an intensive correction order is whether making the order or serving the sentence by way of full-time detention is more likely to address the offender's risk of reoffending". Indeed, there would be no need to refer to the concept of "community safety" at all. Further, if the s 66(2) assessment were intended to be exhaustive of the concept of "community safety" or to be determinative of the outcome of the making of an intensive correction order, it would be impossible for a sentencing court to consider the provisions of s 3A and any relevant common law sentencing principles, and other matters the court thinks relevant, as required by s 66(3). And there would be no purpose in the court having regard to the contents of an assessment report or evidence from a community corrections officer as required by s 69. Fourth, if an intensive correction order is to be made, ss 73, 73A and 73B provide that "at the time of sentence" the court must or may impose certain conditions on that order. In context, this means at the time of sentencing an offender to a term of imprisonment which the sentencing court directs to be served by way of intensive correction in the community. It does not mean that if no intensive correction order is made, whether as a result of legal error or not, a sentence of imprisonment to be served by way of full-time detention is thereby imposed outside jurisdiction. Overall, I consider it impossible to extract from this statutory scheme support for the proposition that s 66(2) is a jurisdictional pre-condition to any Jagot sentencing function of a sentencing court. Section 66(2) does not impose any condition precedent to the imposition of a sentence of imprisonment to be served by way of full-time detention in accordance with Pt 4. It does not even dictate if an intensive correction order should be made. So understood, any failure to carry out the assessment required by s 66(2) involves a legal error, but not a jurisdictional error. On this basis, the difference between ss 66(2), 66(3) and 69(1) is not one of legal character (jurisdictional or non-jurisdictional); the difference is merely that in the hierarchy of relevant considerations, s 66(1) and (2) prescribe the consideration which is to be the paramount consideration. In the context of ss 66(3) and 69(1), the paramount consideration created by s 66(1) and (2) is necessarily the most important single, but not necessarily the determinative, consideration for the making of an intensive correction order. As Leeming JA said in Quinn v Commonwealth Director of Public Prosecutions, "[w]hatever force the word 'paramount' in s 66(1) carries, it does not turn community safety into a trump which defeats all the other purposes, some overlapping and some conflicting, regard to which is also mandated by s 66(3)"155. Characterising s 66(2) as a jurisdictional pre-condition to any sentencing function is also difficult to reconcile with long-established authority in New South Wales, not challenged by the appellant, about the process for making such an order. For example, it has been said that it "would be wrong to start with an intention to make an ICO and then to select the sentence in order to bring it within s 68 and activate s 7. A principled approach requires that the term of the sentence be first determined. If, and only if, that sentence (if an aggregate one) does not exceed 3 years (ie, is 3 years or less) or 2 years (for a single offence) consideration may be given to ordering that it be served by way of an ICO."156 This accords with the fact that an intensive correction order involves a subsequent and separate consideration within the jurisdiction of the sentencing court. Inconvenience of result is also relevant to the characterisation of error as jurisdictional or not157. This accords with the principle that characterising a class of error as jurisdictional involves a process of statutory construction directed to ascertaining a legislative intention to invalidate all decisions affected by that class 155 (2021) 106 NSWLR 154 at 178 [94] (emphasis in original). 156 Mandranis v The Queen (2021) 289 A Crim R 260 at 266 [35]; see also at 273 [65], 157 Parisienne Basket (1938) 59 CLR 369 at 391. Jagot of error158. The practical consequences of all orders of an inferior court imposing a sentence of imprisonment without discharging the task of assessment imposed by s 66(2), as part of the overall evaluative process required by the whole of s 66, being void are significant. They are the kinds of consequences entitled to legitimate weight in the process of statutory construction, albeit that Beech-Jones JA was right in the Court below to warn that the concept of practical inconvenience has its limits159. It may be accepted that, like other approaches to statutory construction, the concept of practical inconvenience in the context is potentially a "dangerous master"160. In the present case, however, the significance of the practical consequences needs to be recognised. As explained, if the obligation of assessment imposed by s 66(2) is a jurisdictional pre-condition to a sentence of imprisonment, as the appellant argued, then every failure to discharge that obligation will mean that an order of an inferior court imposing a sentence of imprisonment to be served by way of full-time detention will be void, not voidable. That failure might result from a failure to perform the required task of assessment in accordance with s 66(2) at all. It might result from some other misunderstanding of the nature of the task. Whatever the cause of the failure to comply with the requirements of s 66(2), a resulting order of an inferior court imposing a sentence of imprisonment would be a nullity. The appellant's attempts to narrow the effects of her argument by distinguishing between a total failure to perform the task required by s 66(2) and some other kind of failure to perform that task involves a misconception about the nature of jurisdictional error. If the statutory provision is a jurisdictional pre-condition, the exercise of power is either within or outside jurisdiction. This consequence, on the appellant's argument, of nullity of the sentence of imprisonment must be considered in a context where: given ss 67 and 68 of the Crimes (Sentencing Procedure) Act, an intensive correction order is primarily available for kinds of offences likely to be capable of being dealt with summarily by an inferior court; it may be inferred that, in New South Wales, the Local Court and District Court deal each year with a large number of offences capable of being the subject of an intensive correction order; 158 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 159 Stanley (2021) 107 NSWLR 1 at 48-50 [199]-[202]. 160 Colquhoun v Brooks (1888) 21 QBD 52 at 65. Jagot (3) while the manifest purpose of intensive correction orders is to give precedence to ameliorating the risk of reoffending for offenders who would otherwise be subject to relatively short-term sentences of imprisonment to be served by way of full-time detention161, that precedence does not dictate that an intensive correction order must be made. Accordingly, the Local Court and District Court must impose many sentences of imprisonment to be served by way of full-time detention despite the potential to make an intensive correction order; as Leeming JA observed in Quinn, it "is to be borne firmly in mind that the District Court will commonly give an ex tempore judgment, that the judicial officer who imposes sentence is apt to have done so many times before, and that the essential task is to bring to bear all sentencing considerations so as to reach the instinctive synthesis explained in Wong v The Queen (2001) 207 CLR 584; [2001] HCA 64 and Markarian v The Queen (2005) 228 CLR 357; [2005] HCA Even if the reasons are not given ex tempore, they will usually be given orally (as in the present case) and relatively soon after completion of oral submissions. In circumstances where the Crimes (Sentencing Procedure) Act imposes no express obligation to state reasons for a decision to impose or not to impose an intensive correction order163, the fact and nature of consideration of the requirements of s 66 may be left to inference (as in the present case), despite the serious consequences for the administration of justice in New South Wales resulting from such an error being jurisdictional and any resulting sentence of imprisonment to be served by way of full-time detention being a nullity; a person detained under purported authority of such an order affected by this class of error may well have a claim in tort (eg, false imprisonment or trespass to the person) against those who detained them and used any kind of physical compulsion which would 161 See, eg, the Second Reading Speech for the 2017 Amending Act: New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 11 October 2017 at 273- 162 (2021) 106 NSWLR 154 at 179 [98]. 163 In contrast to other provisions in the Crimes (Sentencing Procedure) Act requiring reasons, such as ss 5(2), 17I(1), 23(4), 45(2), 53A(2), 54B(4), 54C(1), 73A(1B), 100A(2B), 100B(1), and 100P(1). Jagot otherwise have been authorised by statute for dealing with a person so sentenced164; in any such case, it would always be open to a person so sentenced, at any time and without regard to the 28 day time limit for appeal imposed by s 11(2) of the Crimes (Appeal and Review) Act, to apply to the Supreme Court for relief under s 69 of the Supreme Court Act; and for errors within this class, the statutory scheme of a full de novo right of appeal to the District Court, but no further appeal from the District Court to the Supreme Court, would be circumvented. A construction "which brings about such a result almost provides its own refutation"165. Characterising s 66(2) as a jurisdictional pre-condition to the making of an intensive correction order also cannot be reconciled with the legislative scheme. The appeal to the District Court involved a hearing de novo requiring the District Court to sentence the appellant afresh. As noted above, this is why the District Court ordered the sentence of imprisonment to commence on 17 June 2021, the date of the District Court's order (as the appellant was on bail pending determination of her appeal). It is that order – the sentence of imprisonment – the appellant sought to quash. The appellant had to seek to quash the sentence of imprisonment. Otherwise, if a sentence of imprisonment remains and is not the subject of an intensive correction order, the scheme of the Crimes (Sentencing Procedure) Act means that the sentence is to be served by way of full-time detention and the duty on the court in s 62(1) operates to require the court to issue a warrant for the committal of the offender to a correctional centre. The irreconcilability of the duty in s 62(1) and the sentence of imprisonment remaining exposes that s 66(2) cannot be characterised as a jurisdictional pre-condition to the making of an intensive correction order. Accordingly, s 66, including s 66(2), does not "touch the jurisdiction or the capacity of the tribunal to adjudicate; ... [it] regulat[es] the proper course of procedure in matters incident to the jurisdiction of the justices and over which they have jurisdiction"166. Such an error is one within jurisdiction and the resulting order 164 eg, compulsory drug testing, confiscation of property, and control of inmates under ss 57, 75 and 79 of the Crimes (Administration of Sentences) Act. 165 Parisienne Basket (1938) 59 CLR 369 at 376. 166 Parisienne Basket (1938) 59 CLR 369 at 386 (citations omitted). Jagot of the District Court for the appellant to serve a sentence of imprisonment is not void. The District Court's order – affected by error? In the Court below, only Beech-Jones JA (McCallum JA agreeing)167 dealt with the question whether the District Court judge erred in the manner the appellant proposed, by failing to perform the function of assessment required by s 66(2) of the Crimes (Sentencing Procedure) Act. Beech-Jones and McCallum JJA accepted that the District Court judge did so err. The starting point, as noted, is that the assessment function required under s 66 is to be performed by the District Court as part of a hearing de novo requiring that Court to exercise the sentencing discretion afresh. While the reasons of the District Court are styled as a "judgment" in that they also dispose of the appeal from the Local Court, the reasons, insofar as they involve a fresh exercise of the sentencing evaluation task, are remarks on sentence. While there is some debate apparent in the authorities in respect of the status of remarks on sentence168, this descriptor accurately conveys that the remarks are intended to be delivered orally at the time of sentence, to explain to the offender, any victim, and the community, as clearly and as briefly as possible, why the sentence is being imposed. In this context, it has been said that remarks on sentence serve an important function169, but it is also "important to recognise ... that there is a practical tension between the principles requiring oral reasons, delivered in plain English and with brevity (usually in a busy list) and the need for reasons to satisfy the requirements of the law in the particular case"170. Spigelman CJ was right to observe that the "conditions under which District Court judges give such reasons are not such as to permit their remarks to be parsed and analysed"171. The desirability of remarks on sentence being given with despatch and as briefly as possible has prompted experienced sentencing judges to say that these circumstances may mean that the 167 Stanley (2021) 107 NSWLR 1 at 46-47 [189]-[192] per Beech-Jones JA, 39 [161], 45-46 [181]-[186] per McCallum JA. 168 eg, R v Hamieh [2010] NSWCCA 189 at [29]-[32]; R v Speechley (2012) 221 A Crim R 175 at 180-181 [34]; Maxwell v The Queen [2020] NSWCCA 94 at [139]- [147]; cf You v The Queen [2020] NSWCCA 71 at [21]. 169 R v Hamieh [2010] NSWCCA 189 at [29]. 170 R v Hamieh [2010] NSWCCA 189 at [32]. 171 R v McNaughton (2006) 66 NSWLR 566 at 577 [48], 578 [60], 580 [76], [80]. Jagot "remarks are not as robustly structured as they might otherwise have been"172. As Simpson J has put it, "[e]x tempore judgments not infrequently lack the order and precision of language that can be incorporated into a judgment after the luxury of time for consideration, refinement of expression, and polishing"173. This observation equally might apply to oral reasons given by a busy court such as the District Court, even if the oral reasons are delivered some weeks after the hearing. This said, the remarks on sentence must still be adequate174. A material argument specifically put must be addressed one way or another175. The course of the hearing, particularly the arguments put to the judge, may also be relevant. While propositions put by a judge in argument can never form part of the judge's reasons for the purpose of establishing error, I agree that submissions put to the judge may demonstrate the issues which had to be determined and may be used to supplement the judge's reasons if the reasons are brief and if "the adversely affected party is fully apprised of the judge's thinking from recent exchanges"176. The course of the hearing may also assist in understanding a judge's reasons, particularly if given orally and soon after the hearing. This must be so given the nature of the business of an inferior court dealing with numerous cases for which remarks on sentence must be given orally and as quickly and efficiently as possible. The District Court judge's reasons in the present case were not given ex tempore. However, they were delivered orally about three weeks after the hearing. While, in one sense, the oral reasons might be described as comprehensive, it is important to recognise that in giving the reasons, the judge repeatedly referred to submissions put during the hearing. Given this, it is legitimate to have regard to the hearing to determine, at the least, the issues which had to be determined. The transcript of the hearing in the District Court on 28 May 2021 records that the appellant's counsel said that the appeal was about "one issue", being the appropriateness of an intensive correction order. The appellant's counsel referred 172 Simkhada v The Queen [2010] NSWCCA 284 at [24]. 173 Rotner v The Queen [2011] NSWCCA 207 at [57]. 174 R v Thomson (2000) 49 NSWLR 383 at 394 [42]. 175 Blanch v The Queen [2019] NSWCCA 304 at [69]. 176 eg, Mohindra v The Queen [2020] NSWCCA 340 at [37]. See also Hay v Director of Public Prosecutions (NSW) [2020] NSWCA 75 at [29]; DK v Director of Public Prosecutions (NSW) (2021) 105 NSWLR 66 at 77 [46]-[47], 79 [56]; Mourtada v The Queen (2021) 290 A Crim R 514 at 520-521 [19], 521-522 [22], 525 [40]-[41]. Jagot to the three step process set out in R v Zamagias177. The submissions by the appellant's counsel otherwise focused on the appellant's remorse and good prospects of rehabilitation, as well as the supervision plan proposed as part of the assessment report if an intensive correction order was to be made. The District Court judge said in her oral reasons: "I turn now to the submissions that were made. Firstly in short form Mr Fren on behalf of the appellant submitted that this was an appeal really as to whether or not an ICO could effectively replace a full time custodial sentence. It was submitted that an ICO was the most appropriate sentence. Mr Fren respectfully submitted to the Court that taking all of the relevant factors into account on the sentencing exercise including recent appellant authorities on ICOs, community safety and what he submitted was a powerful subjective case that the purposes of sentencing were more appropriately met by the imposition of an ICO." Accordingly, it is beyond doubt that the District Court judge understood that the only issue was the making of an intensive correction order. No complaint was made about the sentence of imprisonment or its term. The only issue was the way in which that sentence should be served – by way of full-time detention or by way of intensive correction in the community. This issue called up for consideration a limited number of provisions of the Crimes (Sentencing Procedure) Act – ss 7, 66, 69, and 73 to 73B. No issue about any other provision, such as s 67 or s 68, arose. In the context of the objective seriousness of the offences and the relevance of general and specific deterrence, the District Court judge quoted Truong v The Queen as follows178: "Events in Australia and overseas demonstrate the ghastly consequences of illicit lethal weapons being at large in the community. Parliament has indicated by way of the maximum penalty and standard non-parole period that those who profit from trading in lethal weapons should receive condign punishment." 177 [2002] NSWCCA 17 ("Zamagias"). 178 [2013] NSWCCA 36 at [66]. Jagot The District Court judge also quoted from R v Howard, where "Where it appears that there are elements within the community who refuse to accept that firearms offences must be regarded as serious, the objectives of general and personal deterrence are entitled to substantial weight in sentencing for such offences. The availability of such weapons poses a major threat to the community particularly where, as here, an accused is completely indifferent to the persons who were to acquire them. The community has determined that trade in such weapons on any other than a strictly regulated basis is to be regarded as a serious offence. That must be reflected in the sentence imposed." The primary judge also recorded in her oral reasons that: "It was submitted [by the Crown] that given all of those factors that the objective seriousness of the offending warranted a full time custodial situation particularly to denounce the appellant's conduct and to deter the appellant and others from similar offending. ... With respect to objective seriousness I have had close regard to the submissions made by the Crown with respect to where I would find the objective seriousness of each of the offences." Accordingly, it is also beyond doubt that the District Court judge understood that the Crown's case was that the objective seriousness of the offences and considerations of general and specific deterrence were such that the sentence of imprisonment (which the appellant's counsel accepted had to be imposed) should be served by way of full-time detention despite the appellant's risk of reoffending being characterised in the assessment report as "medium" and the other subjective circumstances weighing in favour of the making of an intensive correction order. In the concluding part of her oral reasons, the District Court judge said: "I have given very close consideration to the matters that were put before the Court, particularly in respect to the appropriateness of an ICO. I am very aware of the law which prescribes the availability of an ICO including such cases as Pullen, Fangaloka, Karout and Casella. I am aware of the three step process that must be followed by the Court in assessing whether or not an ICO is appropriate. In all the circumstances I am of the view that a sentence of three years as imposed by the learned Local Court magistrate is completely appropriate and I would not cavil with that. The 179 [2004] NSWCCA 348 at [66]. Jagot second step is to determine – I beg your pardon the first step is to determine whether a sentence of imprisonment is appropriate. In all the circumstances there is no question that the s 5 threshold has been crossed. Accordingly I determine that a term of imprisonment is appropriate. The next step is to determine the length in all the circumstances taking into account all the matters that the Court must consider in the sentencing exercise particularly general deterrence which must loom large particularly specific deterrence and of course community safety and denunciation. I am of the view that a sentence imposed of three years is an appropriate sentence. The third and final task that the Court must do in assessing whether or not an ICO is an appropriate term of imprisonment is to determine whether or not an ICO is an appropriate sentence taking into account all of the factors including community safety and rehabilitation. I have as I said given very close consideration to this. In my view community safety is of paramount consideration. There are a substantial number of firearms. The firearms in my view pose a significant risk to the people of Dubbo. Taking into account all of those matters I am not of the view that it is appropriate for the matter, for this sentence to be served by way of an Intensive Corrections Order. Taking into account all of the factors that have been submitted to me by both the Crown and by Mr Fren I have formed the view that the appeal should be dismissed." The three step process to which the District Court judge referred in her oral reasons is explained in Zamagias180. In that case, Howie J explained that step one is whether "the court is satisfied, having considered all possible alternatives, that no other penalty other than imprisonment is appropriate"181. If the answer is yes, step two is to determine what the term of that sentence should be182. Step two is answered "without regard to whether the sentence will be immediately served or the manner in which it is to be served", as the alternatives "can only be considered once the sentence has been imposed"183. Step three is "whether any alternative to 180 [2002] NSWCCA 17. 181 Zamagias [2002] NSWCCA 17 at [25]. 182 Zamagias [2002] NSWCCA 17 at [26]. 183 Zamagias [2002] NSWCCA 17 at [26]. Jagot full-time imprisonment is available in respect of that term and whether any available alternative should be utilised"184. In R v Pullen185, referred to in the District Court judge's oral reasons as a case about "the law which prescribes the availability of an ICO" of which her Honour was "very aware", Harrison J quoted the relevant provisions, including s 66186, and said187: "In determining whether an ICO should be imposed, s 66(1) makes the paramount consideration. The concept of 'community safety' 'community safety' as it is used in the Act is broad. As s 66(2) makes plain, community safety is not achieved simply by incarcerating someone. It recognises that in many cases, incarceration may have the opposite effect. It requires the Court to consider whether an ICO or a full-time custodial sentence is more likely to address the offender's risk of re-offending. The concept of community safety as it is used in the Act is therefore inextricably linked with considerations of rehabilitation. It is of course best achieved by positive behavioural change and the amendments recognise and give effect to the fact that, in most cases, this is more likely to occur with supervision and access to treatment programs in the community." In R v Fangaloka188, referred to in the District Court judge's oral reasons as another case about "the law which prescribes the availability of an ICO" of which her Honour was "very aware", after quoting the relevant provisions, including s 66189, Basten JA said that190: "[T]he paramount consideration in considering whether to make an ICO is the assessment of whether such an order, or fulltime detention, is more likely to address the offender's risk of reoffending." 184 Zamagias [2002] NSWCCA 17 at [28]. 185 (2018) 275 A Crim R 509. 186 (2018) 275 A Crim R 509 at 528 [77]. 187 (2018) 275 A Crim R 509 at 530 [84] (emphasis added). 188 [2019] NSWCCA 173. 189 [2019] NSWCCA 173 at [47]. 190 [2019] NSWCCA 173 at [63] (emphasis added); see also at [65]. Jagot In Karout v The Queen191, referred to in the District Court judge's oral reasons as a further case about "the law which prescribes the availability of an ICO" of which her Honour was "very aware", Brereton JA quoted s 66192 and said193: "This has the effect that in making a decision whether to make an intensive correction order, community safety – including whether making the order or serving the sentence by way of full-time detention is more likely to address the offender's risk of reoffending – is the paramount, though not the only, consideration. An ICO may be appropriate where prospects of rehabilitation are good and the risk of re-offending may be better managed in the community." The final case which the District Court judge identified in her oral reasons as one about "the law which prescribes the availability of an ICO" of which her Honour was "very aware" was Casella v The Queen194. In that case, Beech-Jones J quoted s 66195 and said196: "On its face, s 66(2) only requires an assessment of whether making the order or serving the sentence by way of full‑time detention is more likely to address the offender's risk of reoffending." Lest it be assumed that the present case is one in which the result itself, the sentence of imprisonment for an aggregate term of three years with a non-parole period of two years, exposes the alleged error197 of a failure to comply with s 66(2) of the Crimes (Sentencing Procedure) Act, the statement of agreed facts should be considered. The appellant was one of four accused (the other co-accused being Gray, Harvey and Webb). Gray was under investigation by police for the unlawful supply of firearms. Harvey (accepted elsewhere to be the appellant's cousin) introduced 191 [2019] NSWCCA 253. 192 [2019] NSWCCA 253 at [54]. 193 [2019] NSWCCA 253 at cf Hoeben CJ at CL and Fullerton J at [2] and [80]-[95] respectively. (emphasis added, footnotes omitted), 194 [2019] NSWCCA 201 ("Casella"). 195 Casella [2019] NSWCCA 201 at [106]. 196 Casella [2019] NSWCCA 201 at [108] (emphasis added); see also at [110]-[111]. 197 eg, House v The King (1936) 55 CLR 499 at 505. Jagot and stored numerous firearms, firearm parts and ammunition at the appellant's home without her knowledge. The appellant subsequently became aware of the firearms stored at her home. She and Gray agreed that she would hold the firearms, firearm parts and ammunition for Harvey and Webb until Gray supplied them to a known male person. She also spoke with Harvey and indicated to Gray that Harvey would accept $2,500 for all the items. Gray agreed and told the appellant he would try to get $3,000 and would give her $500 for allowing the items to be stored at her home. The appellant liaised with Gray, Webb and the known male person to inspect the firearms stored at her home and Gray sold the firearms, firearm parts and ammunition to the known male person. Police seized the firearms, firearm parts and ammunition that were supplied to the known male person. The items amounted to eight firearms, 12 firearm parts and ammunition. The eight firearms (some of which were missing parts) included single shot and repeating rifles, including three shortened rifles, and shotguns. The appellant pleaded guilty to 10 offences involving possession and sale of firearms and firearm parts, including three offences relating to shortened firearms, each carrying a maximum sentence of imprisonment of two years if dealt with summarily by the Local Court. These circumstances provided a proper basis for the District Court judge to reach a rational and reasonable conclusion that the appellant's risk of reoffending was more likely to be addressed by not making an intensive correction order and the appellant instead serving her sentence of imprisonment in full-time detention. It must be accepted that in her reasons, the District Court judge did not refer to s 66 of the Crimes (Sentencing Procedure) Act. But the question of an alleged (complete) failure to perform the function in s 66(2) involves an inference. Whether that inference should be drawn requires consideration of all of the circumstances. As noted, the only issue in the appeal before the District Court judge was whether an intensive correction order should be made. The District Court judge could not have given "very close consideration" to the issue whether the sentence of imprisonment should be served by way of an intensive correction order and could not have been "very aware" of the cases about "the law which prescribes the availability of an ICO" to which she referred without recognising not only that community safety was the paramount consideration (as provided for in s 66(1)), but that in considering community safety the Court was required to assess whether making the order or serving the sentence by way of full-time detention would be more likely to address the appellant's risk of reoffending (as provided for in Jagot It is one thing to conclude that the District Court judge's reasons were inadequate. It is another to infer that in these circumstances the District Court judge did not assess at all whether making the intensive correction order or requiring the appellant to serve the sentence by way of full-time detention was more likely to address the appellant's risk of reoffending. The phrases "community safety" and "paramount consideration", which the District Court judge used in her reasons, are taken directly from s 66. It is difficult to accept that the District Court judge could have been "very aware" of "the law which prescribes the availability of an ICO" in the four cases identified and could have used these two phrases which appear in s 66(1), and yet infer that her Honour overlooked s 66(2), despite it being quoted in full and explained in all four cases. The better inference is that, in saying that "community safety is of paramount consideration", in the context in which she did, the District Court judge performed the task required by s 66(2). It should be inferred that the District Court judge assessed either that: (a) the appellant serving the sentence of imprisonment by way of full-time detention was more likely to address the appellant's risk of reoffending than making an intensive correction order; or (b) if making the intensive correction order was more likely to address the appellant's risk of reoffending, this paramount consideration and other subjective circumstances in the appellant's favour did not outweigh the objective seriousness of the offences and the factors of general and specific deterrence. I accept that it is not possible to infer from the District Court judge's reasons which of these two conclusions her Honour reached. I accept also that this means the District Court judge has not adequately discharged her obligation to give reasons for her decision. But inadequacy of reasons is not the complaint made, presumably because, in the statutory context of the Crimes (Sentencing Procedure) Act, such an error would not be jurisdictional. The argument that is put – that, despite what the District Court judge did say and the context in which the judge said it, she did not undertake the assessment required by s 66(2) at all – to my mind is untenable. For these reasons, I would have dismissed the appeal.

HIGH COURT OF AUSTRALIA DWN042 AND APPELLANT THE REPUBLIC OF NAURU RESPONDENT DWN042 v The Republic of Nauru [2017] HCA 56 13 December 2017 ORDER Appeal allowed. Set aside the order made by the Supreme Court of Nauru on 7 February 2017. Remit the matter to the Supreme Court of Nauru, to a judge other than Judge Khan, for reconsideration according to law. The respondent pay the appellant's costs of the appeal to this Court. On appeal from the Supreme Court of Nauru Representation P R D Gray QC with M L L Albert for the appellant (instructed by Maddocks) G R Kennett SC with A Aleksov for the respondent (instructed by Republic of Nauru) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS DWN042 v The Republic of Nauru Migration – Refugees – Appeal as of right from Supreme Court of Nauru – Where Supreme Court of Nauru failed to consider notice of motion – Whether failure to consider notice of motion involved denial of procedural fairness – Whether primary judge entitled to treat notice of motion as abandoned – Whether appeal could be dismissed because proper hearing could not have produced different result – Whether appeal incompetent because it would require consideration of interpretation and effect of Constitution of Nauru – Whether failure to consider complementary protection claim – Whether reliance on unsigned and unsworn transfer interview form constituted breach of requirements of procedural fairness. Words and phrases – "appeal", "arbitrary deprivation of life", "assurances to the court", "complementary protection", "denial of procedural fairness", "extortion by the Taliban", "interpretation or effect of the Constitution of Nauru", "notice of motion", "original jurisdiction", "transfer interview form", "unconstitutional nature of detention". Appeals Act 1972 (Nr), ss 44(a), 44(b), 45(a). Nauru (High Court Appeals) Act 1976 (Cth), ss 5, 8. Agreement between the Government of Australia and the Government of the Republic of Nauru Relating to Appeals to the High Court of Australia from the Supreme Court of Nauru (1976), Art 1(A)(b)(i), Art 1(A)(b)(ii), Art 2(a). Refugees Convention Act 2012 (Nr), ss 4(2), 5, 43(1). International Covenant on Civil and Political Rights (1966), Art 6. KEANE, NETTLE AND EDELMAN JJ. This is an appeal as of right from the Supreme Court of Nauru. The appellant is a Sunni Muslim of Pashtun ethnicity from a village in Pakistan. In August 2013, he arrived by boat at Christmas Island and in September 2013 was transferred to the Republic of Nauru ("the Republic") under a Memorandum of Understanding reached between Australia and the Republic. He applied for refugee status under s 5 of the Refugees Convention Act 2012 (Nr) ("the Refugees Act"). The Secretary of the Department of Justice and Border Control ("the Secretary") and the Refugee Status Review Tribunal ("the Tribunal") dismissed the appellant's application. The Supreme Court of Nauru, on an appeal in the nature of judicial review, struck out two of the appellant's grounds of appeal for reasons that, the respondent accepts, were incorrect. Very shortly before final judgment on the remaining grounds was delivered the appellant filed a notice of motion to reinstate those grounds. Final judgment was delivered without hearing that motion. The primary issue on this appeal is whether, in all the circumstances of the case, this involved a denial of procedural fairness to the appellant. For the reasons below, it did involve such a denial and the matter should be remitted to the Supreme Court of Nauru for determination according to law. Background The appellant's application for refugee status On 31 July 2014, after the Secretary determined that the appellant was not a refugee and was not owed complementary protection under the Refugees Act, the appellant applied to the Tribunal for a review of the Secretary's determination. The Tribunal invited the appellant to appear before it at a hearing on 25 September 2014. Prior to the Tribunal hearing, the appellant's solicitors provided the Tribunal with materials, including lengthy written submissions and a statement from the appellant. The appellant attended the Tribunal hearing on 25 September 2014. On 29 December 2014, the Tribunal affirmed the decision of the Secretary that the appellant was not a refugee and was not owed complementary protection under the Refugees Act. The Tribunal concluded that there were many flaws and inconsistencies in the appellant's narrative which, taken together, led the Tribunal to reject the appellant's evidence that he had been targeted for extortion by the Taliban. The Tribunal did not accept that there was any reasonable possibility that the appellant would be targeted in the future by the Taliban or opportunistic criminals who targeted wealthy businessmen. Nettle Edelman The circumstances of the appeal to the Supreme Court of Nauru On 24 April 2015, the appellant, then unrepresented, appealed from the decision of the Tribunal to the Supreme Court of Nauru. The appeal was listed for hearing on 5 May 2016. The appellant was unsuccessful in obtaining legal representation until the day before his hearing when a barrister in Nauru agreed to assist him pro bono publico. On the morning of the hearing, the appellant filed an amended notice of appeal raising four grounds as follows: The Tribunal acted in a way that was in breach of the principles of natural justice, contrary to s 22(b) of the [Refugees] Act, by conducting its hearing when and at the place where the [a]ppellant was unlawfully detained in breach of s 5 of the Constitution of Nauru. The Tribunal's hearing unconstitutional because he was unlawfully detained at that time. the [a]ppellant was in respect of The Tribunal erred in law in determining that the appellant is not owed complementary protection in that the Tribunal failed to respond to the appellant's claim that returning him to Pakistan would breach Nauru's international obligations due to the risk of arbitrary deprivation of life. The Tribunal erred by relying on the transfer interview form contrary to s 22(b) [of the Refugees Act] in circumstances where it was unsigned and unsworn, was not made available to his representative when he prepared his statement of claims and was expressly disowned as a record of his claims." At the appeal hearing, counsel for the respondent submitted that he did not have instructions to make submissions in relation to grounds 1 and 2 of the appellant's amended notice of appeal but he sought to be heard on a motion to strike out those grounds. The primary judge, Judge Khan, struck out grounds 1 and 2 of the amended notice of appeal with reasons to be given later. His Honour then refused the appellant's application for an adjournment. Arguments proceeded on the remaining grounds of the amended notice of appeal. Judgment was reserved on those grounds. On 20 May 2016, the primary judge gave his reasons for striking out grounds 1 and 2. His Honour held that the grounds should be struck out because the Supreme Court of Nauru had no jurisdiction to consider them, apparently because (i) the two grounds involved the interpretation and effect of the Nettle Edelman Constitution of Nauru so that under s 45(a) of the Appeals Act 1972 (Nr) there could be no appeal to the High Court of Australia from his decision on these grounds, and (ii) the Refugees Act was "crafted in a way to provide speedy resolution of ... refugee status"1. As the strike out decision was interlocutory, the appellant had no automatic right of appeal to this Court2. He sought leave to appeal to this Court from the strike out decision of the primary judge. At the leave hearing, on 16 December 2016, the respondent accepted that the primary judge's reasoning was "plainly wrong"3. Senior counsel for the respondent said that the respondent would not rely on Judge Khan's reasoning in opposition to any application by the appellant to reopen the present case on grounds 1 and 2. However, senior counsel for the respondent also said that any application to reopen in order to reintroduce the grounds that had been struck out would likely be resisted by the respondent, although for different reasons from those given by the primary judge. In light of the assurance given, and given the interlocutory nature of the application, this Court refused leave to appeal. While the primary judge's decision concerning grounds 3 and 4 remained reserved, correspondence was exchanged between the solicitors for the appellant and the solicitor for the respondent. On 22 December 2016, the solicitors for the appellant referred to the assurances given by the respondent at the leave hearing and sought consent from the respondent to orders permitting the appellant to reopen his appeal in respect of grounds 1 and 2 and to have leave to file any further amended notice of appeal. The appellant's solicitors did not provide the respondent with a proposed amended notice of appeal or a minute of the unspecified amendments to the notice of appeal. On 3 January 2017, the solicitor for the respondent replied, refusing to consent to the proposed orders, and setting out the assurances that had been given, including the comments that the respondent would likely resist any application to reopen. On 1 February 2017, the appellant's solicitors replied, persisting with the suggestion that the respondent should consent to orders to reopen grounds 1 and 2 of the appeal. On 6 February 2017, the respondent's solicitor replied, reiterating that the respondent's assurances at the leave hearing did not extend to consenting to an application to reopen grounds 1 and 2. 1 DWN042 v The Republic [2016] NRSC 6 at [25]. 2 Appeals Act 1972 (Nr), s 44(b); Nauru (High Court Appeals) Act 1976 (Cth), Schedule, Art 1(A)(b)(ii). 3 DWN042 v The Republic of Nauru [2016] HCATrans 310. Nettle Edelman On Friday, 3 February 2017, while this correspondence was ongoing, the solicitor for the respondent was advised that the primary judge would hand down his judgment on 7 February 2017. Late that afternoon, the solicitor for the respondent emailed the appellant's counsel advising him of this. Perhaps realising that counsel for the appellant was based in Melbourne and may not be able to travel to the Republic at short notice, the solicitor for the respondent helpfully suggested that counsel may wish to ask Ms Keane, a solicitor working in the Republic as a Claims Assistance Provider for asylum seekers, who was copied in to the email, "to mention an appearance on behalf of the appellant". On Monday, 6 February 2017, the solicitor for the respondent then informed the solicitors for the appellant that the primary judge would be handing down his judgment at 11am the next day. The solicitor for the respondent reiterated that the respondent would be represented at the hearing and that the respondent would not object if the appellant's solicitors contacted Ms Keane "with respect to an appearance on behalf of the appellant". On 6 February 2017, the same day that the appellant's solicitors were notified that judgment would be handed down the next day, they wrote to the Supreme Court of Nauru in two respects: (i) seeking leave to appear the next day by telephone, and (ii) filing a notice of motion to reinstate grounds 1 and 2, and to reopen the appeal to further amend those grounds. The appellant sought a substantive hearing of the notice of motion at a date to be fixed. The email and attachments were copied to the respondent's solicitor and the Associate to the primary judge. At 4.22pm on 6 February 2017, the Registrar replied as follows: "I have referred the matter to the Judge for his decision. It is rather late not only in time but also on the day to be making such a request but I had suggested that the matter be adjourned to another date." At 10.05am on 7 February 2017, less than an hour before the judgment was delivered, the Registrar emailed the parties, saying "I have discussed with the Judge and we are not in favour of phone-ins at all". Although the appellant's solicitors were precluded from appearing at the handing down of the primary judge's judgment, they would have expected, based upon the practical and reasonable approach of the Registrar, that the notice of motion would be adjourned to be heard on another date. The appellant was unable to attend the handing down of the judgment due to ill health. Nor was the appellant represented, except by the solicitor, Ms Keane, who had been instructed by the appellant's Melbourne solicitors to appear for the sole purpose of physically taking judgment. Judgment was handed Nettle Edelman down. Ms Keane made no mention of the motion to reopen grounds 1 and 2 or of the possibility of any adjournment. The judgment of the primary judge In his Honour's reasons for decision, after observing that he had struck out grounds 1 and 2, the primary judge considered the remaining two grounds. The third ground was dismissed by the primary judge because he concluded that the appellant had not made any claim before the Tribunal that returning him to Pakistan would breach Nauru's international obligations due to the risk of arbitrary deprivation of life. Hence, his Honour concluded that the Tribunal was not required to consider this issue4. The fourth ground was dismissed essentially because the Tribunal was not bound by the rules of evidence and was not precluded from relying upon an unsigned written statement5. At no stage in his reasons did the primary judge address the appellant's notice of motion to reinstate grounds 1 and 2, and to reopen the appeal to further amend those grounds. The appeal to this Court For the reasons explained in BRF038 v The Republic of Nauru6, the Supreme Court of Nauru was exercising original jurisdiction on "appeal" to it under s 43(1) of the Refugees Act, and an appeal to this Court under s 44(a) of the Appeals Act lies as of right in accordance with s 5 of the Nauru (High Court Appeals) Act 1976 (Cth), read with Art 1(A)(b)(i) of the Agreement forming the Schedule to that Act. However, Art 1(A)(b)(i) of the Agreement is subject to Art 2(a), which provides7: "An appeal is not to lie to the High Court of Australia from the Supreme Court of Nauru … where the appeal involves the interpretation or effect of the Constitution of Nauru". The appellant appealed to the High Court on five grounds. The first ground alleged error by the primary judge by failing to consider the appellant's notice of motion prior to giving judgment on the whole of the appeal. The second and third grounds reiterated the grounds that had been struck out. They 4 DWN042 v The Republic [2017] NRSC 4 at [26]. 5 DWN042 v The Republic [2017] NRSC 4 at [32]. [2017] HCA 44 at [35]-[41]. 7 See also Appeals Act 1972 (Nr), s 45(a). Nettle Edelman concerned the alleged unconstitutional nature of the appellant's detention at the time of the Tribunal hearing. The fourth ground alleged error by the primary judge in failing to conclude that the Tribunal erred in failing to consider part of the appellant's claim to complementary protection. The fifth ground alleged that the primary judge erred in failing to conclude that the Tribunal erred by relying upon the appellant's unsigned and unsworn transfer interview form. The failure to consider the notice of motion This appeal proceeded on the assumed basis that the notice of motion was no longer extant. The failure by the primary judge to consider the appellant's notice of motion involved a failure to deal with an important part of the appellant's case. The appellant only put his case on the basis of a failure to afford procedural fairness and did not submit that the failure to deal with the notice of motion involved a failure to exercise jurisdiction8. As the appellant submitted, the failure by the primary judge involved, at least, a failure to accord procedural The respondent sought to resist this conclusion on two grounds. First, it was submitted that the primary judge was entitled to treat the notice of motion as having been abandoned. That submission should not be accepted. The notice of motion had only been filed the previous day. The Registrar, who had joined with the primary judge in advising that they were not in favour of telephone attendances, had notified the appellant's solicitors that it would be recommended to the judge that the hearing of the notice of motion be adjourned. And, as the appellant's solicitors were aware, the primary judge had been notified that the appellant's solicitors and counsel were unavailable to appear. Ms Keane was present only to take judgment. Secondly, the respondent submitted that the first ground of appeal was incompetent because (i) the respondent would seek to meet any allegation of procedural unfairness by failing to consider the notice of motion by submitting that this Court should, in giving "such judgment ... as ought to have been given" in the Supreme Court10, dismiss the notice of motion, and (ii) the submissions 8 Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 612 [44], 649 [163]; [2002] HCA 11; Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088 at 1093 [32]; 197 ALR 389 at 395; [2003] HCA 26. 9 Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088 at 1092 [24]; 197 ALR 389 at 394. 10 Nauru (High Court Appeals) Act 1976 (Cth), s 8. Nettle Edelman that the respondent would make to this effect would involve matters concerning "the interpretation or effect of the Constitution of Nauru", which this Court is precluded from hearing under Art 2(a) of the Agreement forming the Schedule to the Nauru (High Court Appeals) Act and s 45(a) of the Appeals Act. This submission should not be accepted. The respondent accepted that the "stringency" of the test in Stead v State Government Insurance Commission11 did not apply to the circumstances of this appeal. That case involved a denial of procedural fairness at trial where a party was deprived of the chance to make submissions on an issue of fact. This Court held that12: "All that the appellant needed to show was that the denial of natural justice deprived him of the possibility of a successful outcome. In order to negate that possibility, it was, as we have said, necessary for the Full Court to find that a properly conducted trial could not possibly have produced a different result." The respondent was correct not to submit that this appeal could be dismissed on the basis that a properly conducted hearing could not possibly have produced a different result. That principle does not apply where, as was the case with the appellant's notice of motion, a party receives no hearing at all. The appellant was, and is, entitled to a hearing in the Supreme Court. It is not for this Court to attempt to provide the hearing that the appellant has not had, or to attempt to give any judgment such as might be thought to have been appropriate in the Supreme Court. There is, therefore, no basis upon which this ground of appeal requires consideration of the interpretation or effect of the Constitution of Nauru. This ground of appeal should be upheld. The alleged unconstitutional nature of the appellant's detention The second and third grounds of appeal to this Court can be disposed of shortly. Both grounds of appeal are incompetent. Both grounds plainly fall within the terms of Art 2(a) of the Agreement forming the Schedule to the Nauru (High Court Appeals) Act and s 45(a) of the Appeals Act as they involve "the interpretation or effect of the Constitution of Nauru". The appellant submitted that Art 2(a) could effectively be bypassed due to the concession by the respondent that the reasons of the primary judge on this point, relating to the 11 (1986) 161 CLR 141; [1986] HCA 54. 12 Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147. Nettle Edelman Constitution of Nauru, were plainly wrong. But in order to accept the concession of law this Court would be required to consider it. The appeal on these grounds would necessarily involve the interpretation or effect of the Constitution of Nauru. The alleged failure to consider an aspect of the appellant's case Section 4(2) of the Refugees Act requires that the Republic not return a person where doing so would be in breach of its international obligations. Article 6 of the International Covenant on Civil and Political Rights (1966), which the Republic ratified in 2001, requires that "[n]o one shall be arbitrarily deprived of his life". The Tribunal considered, in detail, the appellant's claim that he feared that he would be arbitrarily deprived of his life at the hands of the Taliban in connection with threats and extortion by the Taliban. The Tribunal accepted that the Taliban had been involved in human rights abuses and that opportunistic criminals had targeted businessmen. But the Tribunal rejected the appellant's evidence that he had been targeted by the Taliban or by opportunistic criminals in the past, including rejecting the appellant's evidence concerning an incident when the appellant said he had refused to pay extortion money demanded by the Taliban. The Tribunal concluded that there was a less than reasonable possibility of this happening in the reasonably foreseeable future. In the appellant's fourth ground of appeal he reiterated before this Court his submission before the primary judge that the Tribunal failed to consider that there was a reasonable possibility that he would be subject to an arbitrary deprivation of life on return to Pakistan as a result of "generalised violence" rather than being targeted for violence by the Taliban. It has been said in this Court that a decision maker's reasons should not be "scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed"13. For the same reasons, the record of a hearing should not be scrutinised in an attempt to elucidate grounds which were not, on a fair and reasonable construction of the record, raised for decision. On a fair and reasonable construction of the record, the submission concerning generalised violence that the appellant made in the Supreme Court of Nauru, and now makes in this Court, was not made before the Tribunal. The appellant's signed statement before the Tribunal contained headings "Who I think may harm/mistreat me in Pakistan" and "Why I will be harmed in Pakistan". The 13 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272; [1996] HCA 6. Nettle Edelman appellant's evidence under these headings was that the Taliban will kill him if he returns because he refused to pay money to the Taliban that they had demanded. At no point in the appellant's submissions, which were prepared by his lawyers, was it suggested that the appellant feared arbitrary deprivation of his life as a consequence of generalised violence, independent of his claims concerning the Taliban. Indeed, at one point in the appellant's written submissions to the Tribunal he said of the situation of violence that "[i]t is not local people and mere criminals who do these things. It is only the Taliban who are responsible." Nor at any stage during the oral hearing did the appellant make this allegation concerning generalised violence independent of the Taliban. This was despite being asked by the Tribunal on several occasions whether there was any other claim that he was making other than that he had been targeted by the Taliban. The appellant submitted in this Court that the submission about generalised violence was most clearly put to the Tribunal in a paragraph of his submissions where, under the heading "Extent of Nauru's International Non- Refoulement Obligations" and the sub-heading "Physical Violence", the appellant said: "It is our submission that Nauru's non-refoulement obligations prohibit the removal of [the appellant] to circumstances where he would face a reasonable possibility of arbitrary deprivation of life, torture, or cruel, inhuman or degrading treatment. It is our submission that [the appellant] would face harm of this kind if he were removed to Pakistan." This asserted conclusion about physical violence summarised the appellant's earlier written submissions in the same document where he said that he feared harm because of his imputed and actual political opinions. In each case the submission was concerned with directed violence by the Taliban rather than generalised violence. His submissions explained that: The Taliban believe that [the appellant] opposes their political views because he has refused to pay them the money they demanded; [The appellant] opposes the Taliban's ideals and objectives. As he states at paragraph [16] of his statement of claims dated 8 December 2014 'I did not want to give them money because they would only use it for bad things'; iii. [The appellant] will be further perceived to oppose the Taliban because he is a member of the Kokikhel tribe, whose elders in Nettle Edelman April 2014 refused the Taliban passage through their lands and refused to join or support the Taliban". This ground of appeal must be dismissed. The unsigned and unsworn transfer interview form On 28 November 2013, prior to his application for refugee status, the appellant attended a transfer interview. As part of the transfer interview, a form was completed. The appellant's fifth ground of appeal was that the Supreme Court should have found that the Tribunal erred by relying upon the transfer interview. The appellant submitted that it was not open to the Tribunal to rely upon the transfer interview form because it was unsigned and unsworn, was not made available to the appellant's representative when the representative prepared the appellant's statement of claims, and was expressly disowned as a record of the appellant's claims. Contrary to the appellant's submissions, there are three independent reasons why there was no procedural unfairness occasioned by the Tribunal's reliance upon the transfer interview form. First, the transfer interview form was not, and could not be, "disowned" by the appellant. The passage in a statement from the appellant upon which he relied asserted only that his information was "only a summary" and that he had not been told that the information that he provided would be used for the purposes of assessing his claims for protection. This statement by the appellant does not repudiate the transfer interview form. It is also inconsistent with the statement on the transfer interview form that the appellant understood the preliminary matters that were explained to him, including a statement that the information the appellant gave "will also be read and used by the people who will be assessing your claim for refugee status". The appellant consented to the interview and he consented to it being recorded. Secondly, although the appellant did not have a copy of the transfer interview form in December 2013, he or his representative had a copy of it at the time of the Tribunal hearing when reference was made to it by the appellant's representative. Neither the appellant nor his representative raised any objections with the Tribunal about it relying upon the content of the transfer interview form. Rather, the appellant's representative submitted that the Tribunal should "exercise caution" before relying upon the transfer interview "because of the pressurised situation that those interviews are conducted in". Thirdly, the matters in the transfer interview form upon which the Tribunal relied were consistent with evidence that the appellant gave before the Tribunal. The Tribunal relied upon statements by the appellant during his transfer interview concerning the first threat by the Taliban, which he said Nettle Edelman occurred in his home on 20 February 2013. This date was inconsistent with the earlier date when the appellant was issued with a passport as a consequence, he had said, of threats from the Taliban. Although the inconsistency was one of the reasons why the Tribunal formed adverse conclusions about the appellant's credibility, the appellant's oral evidence before the Tribunal was to the same inconsistent effect. In his oral evidence he variously gave dates of 25 February and late February. This ground of appeal must be dismissed. Conclusion The appeal should be allowed on the first ground. As the only order made by the primary judge was to affirm the decision of the Tribunal, the parties agreed that the appropriate orders in this Court if the appeal were allowed on the first ground would include quashing the orders made by the primary judge and remitting the matter to the Supreme Court of Nauru pursuant to s 8 of the Nauru (High Court Appeals) Act. The appellant submitted that the order for remitter should exclude the primary judge and Registrar who had been involved with this matter by concurring in the course of not permitting the appellant's solicitors to appear by telephone. However, as the respondent submitted, the Registrar, who is now Chief Justice, had not been involved with the matter in any substantive respect and need not be excluded from the remitter. The orders to be made should be: (1) Appeal allowed. Set aside the order made by the Supreme Court of Nauru on 7 February 2017. Remit the matter to the Supreme Court of Nauru, to a judge other than Judge Khan, for reconsideration according to law. The respondent pay the appellant's costs of the appeal to this Court.

HIGH COURT OF AUSTRALIA Matter No P47/2013 ELECTRICITY GENERATION CORPORATION T/AS VERVE ENERGY APPELLANT AND WOODSIDE ENERGY LTD & ORS RESPONDENTS Matter No P48/2013 WOODSIDE ENERGY LTD & ORS APPELLANTS AND ELECTRICITY GENERATION CORPORATION T/AS VERVE ENERGY RESPONDENT Electricity Generation Corporation v Woodside Energy Ltd Woodside Energy Ltd v Electricity Generation Corporation [2014] HCA 7 5 March 2014 P47/2013 & P48/2013 ORDER Matter No P47/2013 Appeal dismissed with costs. Matter No P48/2013 Appeal allowed with costs. Set aside paragraphs 1 to 4 of the orders of the Court of Appeal of the Supreme Court of Western Australia made on 20 February 2013 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of Western Australia Representation N C Hutley SC with J C Giles and D A Hughes for the appellant in P47/2013 and in P48/2013 (instructed by Jackson McDonald) the respondent D F Jackson QC with B Dharmananda SC, J K Taylor and E M Heenan for the appellants in P48/2013 and the respondents in P47/2013 (instructed by Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Electricity Generation Corporation v Woodside Energy Ltd Woodside Energy Ltd v Electricity Generation Corporation Contract − Construction – Long term gas supply agreement – Sellers obliged to use "reasonable endeavours" to supply supplemental gas – Agreement allowed sellers to take into account all "relevant commercial, economic and operational matters" in determining whether able to supply supplemental gas – Gas explosion at plant operated by third party temporarily reduced supply of gas to market – Sellers refused to supply supplemental gas at price stipulated in agreement during period of reduced supply – Sellers offered to supply equivalent quantities of gas at higher price under separate short term agreements – Whether sellers breached obligation to use "reasonable endeavours" to supply supplemental gas. Words and phrases – "able", "reasonable endeavours", "relevant commercial, economic and operational matters". FRENCH CJ, HAYNE, CRENNAN AND KIEFEL JJ. The first issue in these appeals is the construction and application of a long term gas supply agreement ("the GSA") between Electricity Generation Corporation trading as Verve Energy ("Verve") and various gas suppliers in Western Australia including Woodside Energy Ltd ("the Sellers"). The Sellers are the respondents to the first appeal and the appellants in the second. Verve, a statutory corporation, is the major generator and supplier of electricity to a large area in the southwest of Western Australia, including Perth. Verve purchases natural gas under the GSA for use in its power stations. Separate contracts between Verve and each of the Sellers are contained in the GSA1, which obliges each Seller to make available for delivery to Verve a proportionate share of a maximum daily quantity of gas ("MDQ"), delivered in a common and commingled stream2, and to use "reasonable endeavours"3 to make available to Verve a supplemental maximum daily quantity of gas ("SMDQ"). In these reasons, the acronyms MDQ and SMDQ are used in the same way as they are used in the GSA, to refer to specified quantities of gas. Both appeals concern the supply of gas to the Western Australian market, which was temporarily disrupted by an explosion at a gas plant operated by Apache Energy Limited ("Apache"). The first appeal, brought by Verve, challenges the conclusion that a contract induced by economic duress must be rescinded in order for restitution to be available. The Sellers' appeal concerns whether or not the Sellers breached the abovementioned "reasonable endeavours" obligation, which turns on the proper construction of cl 3.3 of the GSA. If the Sellers' construction of cl 3.3 is accepted, with the consequence that the Sellers did not breach the GSA, the second issue (arising on the Sellers' notice of contention), namely whether Verve has a right to restitution of moneys paid under short term gas supply agreements (for alleged economic duress), does not arise. Nor do other issues in Verve's appeal concerning whether rescission of those agreements is necessary before obtaining restitution, and the quantum of any restitution. 1 GSA, cl 31.3. 2 GSA, cl 1.3. 3 GSA, cl 3.3(a). Hayne Crennan Background facts The Sellers and Apache, the principal gas suppliers in Western Australia, operated gas plants located in the northwest of Western Australia. Gas was transported from both plants to the southwest of Western Australia by the Dampier to Bunbury Natural Gas Pipeline. On 3 June 2008, an explosion occurred at Apache's gas plant on Varanus Island. The explosion caused the cessation of gas production at the plant and effected a temporary reduction in the supply of natural gas to the Western Australian market by 30 to 35 per cent, which led to demand exceeding supply. On 6 June 2008, Apache entered into a written agreement with the Sellers and Japan Australia LNG (MIMI) Pty Ltd ("MIMI") under which the Sellers agreed to supply Apache with certain daily quantities of natural gas ("the Apache agreement"). Many other customers in Western Australia sought to purchase gas from the Sellers during this time, at prices far exceeding those contained in the GSA. On 4 June 2008, before the Apache agreement was executed, the Sellers informed Verve that they would not supply SMDQ under the GSA to Verve for an indefinite period. On the same day, the Sellers offered to supply Verve with an equivalent quantity of gas for the month of June 2008, at a price which exceeded the price in the GSA applicable to SMDQ. Under protest, and without prejudice to its rights under cl 3.3(b), Verve entered into a "fully interruptible" short term gas supply agreement with the Sellers and MIMI for the supply of daily quantities of gas between 8am on 4 June and 8am on 30 June 2008. It was common ground that the effect of the agreement was that the Sellers were under no obligation to supply any particular quantities of gas to Verve, and that the price for gas delivered under the agreement was the prevailing market price. On 20 June 2008, when it was clear that the shortage of supply referable to the Apache incident would continue until the end of September, the Sellers invited tenders for the purchase of gas from them under short term supply agreements for the period from 8am on 30 June to 8am on 30 September 2008. The Sellers' agent informed Verve that Verve would not receive the nominated SMDQ during that time, and would be required to enter the tender process to receive any additional gas from the Sellers. Again under protest, Verve submitted a successful tender and entered into another fully interruptible gas supply agreement with the Sellers and MIMI, until the end of September 2008. The price for gas delivered under the agreement was also the prevailing market price. From 30 September 2008, the Sellers supplied SMDQ to Verve Hayne Crennan pursuant to the GSA. It was common ground that the Sellers had the capacity to supply SMDQ nominated by Verve during the relevant period. These facts gave rise to a dispute over whether the Sellers breached their obligation under the GSA to use reasonable endeavours to supply SMDQ to Verve between 4 June and the end of September 2008. The GSA and the issues Clause 3 of the GSA provides for variously described quantities of gas which the Sellers are required to make available for delivery to Verve. At the heart of the dispute is the correct construction of cl 3.3 and, more particularly, the relationship between two parts of that clause, cl 3.3(a) and cl 3.3(b). The GSA replaces a prior contract between the Sellers and Verve and "reflects and facilitates a long-term"4 commercial relationship for the sale and purchase of natural gas5. This is part of the background and context in which cl 3.3 falls to be construed. Before going further, it is necessary to explain how the construction issue arises by reference to relevant provisions of the GSA. The GSA consists of Recitals, a Contract Overview (which does not qualify any substantive provisions), Part A − Key Commercial Provisions6, Part B − General Conditions7, Part C − Definitions and Interpretation8, and four Schedules. The GSA contains a number of provisions indicating that the Sellers supply gas to buyers other than Verve9, and it was not in contest that the demand for gas could fluctuate in the context of a large domestic and commercial electricity market. A number of provisions also indicate that Verve may 4 GSA, Recital C. The term of the GSA is indicated to be up to 20 years: GSA, Contract Overview and cll 2.1(a) and 30. 5 GSA, cl 1.1. 6 GSA, cll 1-8. 7 GSA, cll 9-29. 8 GSA, cll 30-31. 9 See particularly GSA, cl 12; see also cl 4.5(g). Hayne Crennan purchase its gas requirements, above the minimum quantities set out in the GSA, from suppliers other than the Sellers10. Under the "Key Commercial Provisions" of the GSA, governing "quantities" and "price"11, the Sellers agree to make available for delivery to "the Buyer" (ie Verve), and Verve agrees to receive and pay for − or pay for if not taken − gas, in quantities and at the price and in the manner specified in the GSA12. Clause 3 sets out the Sellers' delivery obligations by reference to maximum quantities and cl 4 provides for Verve's payment obligations by reference to minimum quantities. Clause 3.1 provides for a Total Contract Quantity of gas ("TCQ"), which the Sellers are required to make available for delivery under the GSA. This provides the context for the following provisions dealing with daily quantities of gas (maximum and supplemental). Clause 3.2 provides for MDQ and cl 3.3 provides for SMDQ. By cl 3.2(a), the Sellers are required to make available for delivery on any day gas up to MDQ13, subject to cl 9. It is convenient to turn briefly to cl 9 before considering cl 3.3. Clause 9 of the "General Conditions" in the GSA14 contains a complex scheme for "nominating" the quantities of gas required in the next seven day period15. By cl 9.1(a), Verve must nominate the quantity of gas which it requires for the next period. Within a few hours of that nomination, the Sellers are required to notify Verve of the quantity to be made available for that period16. 10 For example, Recital C of the GSA relevantly provides: "the Buyer intends to purchase most of its gas requirements from the Sellers (although up to 30% of those requirements above the Minimum Quantity may be purchased from other suppliers) within the terms of this Agreement to the extent feasible." See also cll 4.2(c) and 22.6. 11 See GSA, Part A. 12 GSA, cl 1.1. 13 Quantified in GSA, cl 3.2(b). 14 See GSA, Part B. 15 GSA, cl 9.1. 16 GSA, cl 9.1(b). Hayne Crennan By cl 9.2, each Seller must make available for delivery to Verve, on each day, a quantity of gas which is as close as reasonably practicable to the lesser of MDQ or the last daily nomination17. Under cl 9.3, if Verve's daily nomination exceeds MDQ, each Seller must use reasonable endeavours to make the excess available "[i]n accordance with Clause 3.3", but no more than its proportionate share of SMDQ18. Turning to cl 3.3, the construction issue is best understood by setting out the whole of the clause − the language which is contested is italicised: "3.3 Supplemental Maximum Daily Quantity If in accordance with Clause 9 ('Nominations') the Buyer's nomination for a Day exceeds the MDQ, the Sellers must use reasonable endeavours to make available for delivery up to an additional 30TJ/Day of Gas in excess of MDQ ('Supplemental Maximum Daily Quantity' or 'SMDQ'). In determining whether they are able to supply SMDQ on a Day, the Sellers may take into account all relevant commercial, economic and operational matters and, without limiting those matters, it is acknowledged and agreed by the Buyer that nothing in paragraph (a) requires the Sellers to make available for delivery any quantity by which a nomination for a Day exceeds MDQ where any of the following circumstances exist in relation to that quantity: the Sellers form the reasonable view that there is insufficient capacity available throughout the Sellers' Facilities (having regard to all existing and likely commitments of each Seller and each Seller's replacement, regarding maintenance, obligations safety and integrity of the Sellers' Facilities) to make that quantity available for delivery; 17 Clause 9.10 of the GSA provides for tolerances referable to operational matters. Clauses 9.11 and 9.14 deal respectively with "shortfall gas" and "excess gas" delivered as a result of operational circumstances. 18 GSA, cl 9.5(b). Hayne Crennan the Sellers form the reasonable view that there has been insufficient notice of the requirement for that quantity to undertake all necessary procedures to ensure that capacity is available throughout the Sellers' Facilities to make that quantity available for delivery; or (iii) where the Sellers have any obligation to make available for delivery quantities of Natural Gas to other customers, which obligations may conflict with the scheduling of delivery of that quantity to the Buyer. The Sellers have no obligation to supply and deliver Gas on a Day in excess of their obligations set out in Clauses 3.2 and 3.3 in respect of MDQ and SMDQ respectively." The crucial issue of construction is the relationship between the Sellers' obligation in cl 3.3(a) to "use reasonable endeavours" to make SMDQ available for delivery to Verve, and the Sellers' entitlement under cl 3.3(b), in determining whether they "are able to supply SMDQ" on any particular day, to "take into account all relevant commercial, economic and operational matters". Relevantly, cl 4.2 obliges Verve, in each contract year, to pay the Sellers for an Annual Minimum Quantity of gas ("AMQ"), whether or not Verve has taken that quantity19. Further, cl 4.3 contains calculations for a "minimum quantity" which is subject to offsets20. The prices for all gas delivered under the GSA are set out in cl 6. Subject to price reviews, cl 6 contains price tranches referable to quantities, tranche 3 being the price applicable to gas "delivered … in excess of MDQ"21, thus the price for SMDQ. 19 GSA, cl 4.2(c). 20 The "minimum quantity" can be reduced by an "offset" if the Sellers supply gas to a power producer (which Verve acknowledges is permitted under the GSA) with the effect of directly reducing Verve's market. Such a reduction will only be made where Verve has not disabled itself from taking the minimum quantity: see GSA, cl 4.5(a), (d)(iv) and (g). 21 GSA, cl 30. Hayne Crennan Other features of the GSA which bear on the construction issue must also be mentioned. As to supply, Verve is not obliged to nominate any SMDQ for supply from the Sellers, and the Sellers are not obliged to reserve daily capacity in their plants to supply SMDQ to Verve, nor to refrain from agreeing to sell gas to third parties. As to payment, Verve's "take or pay" obligation applies to MDQ22. That obligation does not apply to SMDQ which Verve nominates, but which the Sellers are unable to supply, to the extent that Verve acquires that gas from another supplier23. It was not part of Verve's case that the practical effect of the "take or pay" obligation is that Verve would be obliged to pay for SMDQ not taken. Clause 12 provides for "restricted capacity" and sets out priorities to be followed when capacity is constrained. In relation to defaults under the GSA, cl 22.6 limits the liability of Verve in respect of gas not taken to its liability in accordance with cl 4.2, which imposes the "take or pay" obligation in respect of AMQ. Clause 22.7 relevantly limits the Sellers' liability in respect of a failure to use reasonable endeavours to meet Verve's nominations of SMDQ. Pursuant to cl 22.7(c), each Seller's liability is limited to a proportionate share of the amount by which Verve's actual costs incurred in obtaining alternative gas exceed the amount equivalent to the price applicable to SMDQ in the GSA. The litigation In March 2009, Verve commenced proceedings in the Supreme Court of Western Australia, arguing, amongst other things, that the Sellers had breached their obligation under cl 3.3 of the GSA by failing to use "reasonable endeavours" to deliver nominated SMDQ to Verve between 4 June and 30 September 2008. Further, Verve contended that by refusing to supply nominated SMDQ, but offering an equivalent quantity of gas under the two short term supply contracts at a higher price than the price in the GSA applicable to SMDQ, the Sellers had exerted illegitimate pressure and placed Verve under economic duress. Before the primary judge (Le Miere J), Verve submitted that once it had nominated SMDQ under the GSA, the Sellers were obliged to use reasonable endeavours to make the nominated quantity of gas available for delivery. Verve contended that cl 3.3(b) gave further content to that obligation, by providing that "relevant commercial, economic and operational matters" could be taken into 22 GSA, cl 4.2(c). See also cll 4.1, 4.2(b) and 4.3(b)(ii). 23 GSA, cl 4.1(b)(v). Hayne Crennan account by the Sellers in determining whether they were "able" to supply SMDQ under the GSA; that is, whether they had the capacity to supply SMDQ, not whether they wished to do so. The Sellers submitted that the obligation under cl 3.3(a) to supply SMDQ could not be considered in isolation from the "logically anterior question" arising under cl 3.3(b) − whether the Sellers were able to supply SMDQ after taking into account all relevant commercial, economic and operational matters. Clause 3.3(b), it was submitted, entitled the Sellers to determine their ability to supply SMDQ to Verve on any given day after taking into account all commercial, economic and operational matters relevant to them. In preferring the Sellers' construction of cl 3.3 of the GSA24, the primary judge found that cl 3.3(b) "conditioned" the Sellers' obligation under cl 3.3(a), by prescribing the circumstances in which the Sellers were not obliged "to use reasonable endeavours" to make SMDQ available for delivery25. His Honour said26: "In the context of cl 3.3(b) commercial matters include the sale of gas to other customers or potential customers and the profitability of such sales compared with the profitability of supplying SMDQ under the GSA. The Sellers may take such matters into consideration in determining whether they are 'able to supply SMDQ on a Day'." That construction of cl 3.3 underpinned Le Miere J's conclusion that, in failing to supply nominated SMDQ to Verve pursuant to the GSA between 4 June and 30 September 2008, the Sellers did not breach cl 3.3 of the GSA27. Verve's further claim for damages for the tort of duress was rejected by the primary judge. Le Miere J found that Verve had not established that it entered into the short term gas supply agreements as a result of illegitimate 24 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 at [67]. 25 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 at [68]-[70]. 26 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 at [70]. 27 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 at [77], [79]. Hayne Crennan pressure exerted by the Sellers. The Sellers were at liberty to demand the price they did for the supply of gas to Verve, beyond the gas they were obliged to provide under the GSA. It made no difference, his Honour explained, that the Sellers knew that Verve required additional gas to meet its statutory or contractual obligations; nor did it make any difference that they knew that there was no alternative source from which Verve could obtain the gas28. In the event that the primary judge was wrong on the construction of cl 3.3, his Honour went on to consider cl 22.7 of the GSA. Le Miere J found that cl 22.7(c) effected a limitation on the Sellers' liability in respect of any breach of cl 3.3 of the GSA29. Verve appealed to the Court of Appeal of the Supreme Court of Western Australia, arguing that the primary judge had erred in dismissing Verve's claim for damages for the Sellers' alleged breach of cl 3.3 of the GSA. Verve again submitted that, on the proper construction of cl 3.3, the Sellers had breached their obligation to use reasonable endeavours to supply SMDQ during the period from 4 June to 30 September 2008. The Court of Appeal (McLure P, Newnes and Murphy JJA) resolved the issue of construction against the Sellers30. Murphy JA found that the obligation to use reasonable endeavours under cl 3.3(a) was conditioned by Verve making a nomination for SMDQ under cl 9. Clause 3.3(b) was not expressed to be such a conditioning event, but rather set out the factors which the Sellers could take into account to inform their obligation under cl 3.3(a). Murphy JA considered that there was nothing in the text or structure of cl 3.3 which gave the Sellers a right to decide whether or not to supply SMDQ, separate from their obligation to use reasonable endeavours once a nomination under cl 9 had been made31. His Honour went on to dismiss Verve's challenge to the primary judge's construction of cl 22.7(c). 28 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 at [87]. 29 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 at [98]. 30 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [21], [44], [122]. 31 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [133]. Hayne Crennan McLure P (Newnes JA concurring) agreed with Murphy JA in part, providing separate reasons in respect of the construction of cll 3.3 and 22.7(c) of the GSA. In her Honour's view, the Sellers' construction of cl 3.3 was inconsistent with the natural and ordinary meaning of that clause. McLure P found that the natural and ordinary meaning of cl 3.3 was that the Sellers must use reasonable endeavours to supply SMDQ to Verve which was the subject of a nomination under cl 9. The scope and content of that obligation was informed and delineated by the more specific matters and examples set out in cl 3.3(b)32. In that context, McLure P considered that the word "able" at the beginning of cl 3.3(b) meant the Sellers' "capacity to supply the nominated SMDQ"33, having regard to the matters and examples specified therein. This construction, in her Honour's view, was also consistent with the commercial objectives and operational challenges reflected in the terms of the GSA as a whole. All members of the Court of Appeal agreed that the Sellers applied illegitimate pressure to Verve, which caused Verve to enter into the short term gas supply agreements34. The Court of Appeal went on to find that Verve could have no cause of action in unjust enrichment for economic duress unless and until the short term gas supply agreements were rescinded35. Special leave was granted in each of the appeals. In this Court, the Sellers contended that the construction of cl 3.3 of the GSA accepted by Le Miere J was to be preferred. The parties were agreed that if that construction were correct, further issues in both appeals would fall away. For the reasons which follow, the construction advanced by the Sellers should be accepted, with the result that the first appeal must be dismissed and the second appeal should be allowed. 32 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [18]. 33 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [19]. 34 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [31], [44], [183]. 35 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [33], [44], [201]-[206]. Hayne Crennan The construction issue Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean36. That approach is not unfamiliar37. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract38. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context 36 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 589 [22] per Gleeson CJ; [2000] HCA 65; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 462 [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; [2004] HCA 35; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at 160 [8] per Gleeson CJ; [2008] HCA 3; see further Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at 188 [11] per Gleeson CJ, Gummow and Hayne JJ; [2001] HCA 70, citing Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912; [1998] 1 All ER 98 at 114. See also Homburg Houtimport BV v Agrosin Private Ltd [2004] 1 AC 715 at 737 [10] per Lord Bingham of Cornhill. 37 See, for example, Hydarnes Steamship Co v Indemnity Mutual Marine Assurance Co [1895] 1 QB 500 at 504 per Lord Esher MR; Bergl (Australia) Ltd v Moxon Lighterage Co Ltd (1920) 28 CLR 194 at 199 per Knox CJ, Isaacs and Gavan Duffy JJ; [1920] HCA 41; see generally Lord Bingham of Cornhill, "A New Thing Under the Sun? The Interpretation of Contract and the ICS Decision", (2008) 12 Edinburgh Law Review 374. 38 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; [2004] HCA 52; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at 160 [8] per Gleeson CJ, 174 [53] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ; Byrnes v Kendle (2011) 243 CLR 253 at 284 [98] per Heydon and Crennan JJ; [2011] HCA 26. See also Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 326, 350; Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 at 2906-2907 [14]; [2012] 1 All ER 1137 at 1144. Hayne Crennan [and] the market in which the parties are operating"39. As Arden LJ observed in Re Golden Key Ltd40, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience"41. Submissions in this Court In seeking to uphold the primary judge's construction of cl 3.3, the Sellers submitted that the GSA imposed different obligations on the Sellers in respect of MDQ and SMDQ, the latter being a lesser obligation than the strict or firm obligation (within a tolerance) to make MDQ available for delivery under cl 3.2(a). The Sellers submitted that there was no textual foundation for the Court of Appeal's construction of cl 3.3, by which cl 3.3(a) prevailed over the Sellers' ability to give effect to the considerations in cl 3.3(b). It was contended that the matters specified in cl 3.3(b), as exemplified in pars (i), (ii) and (iii), were solely concerned with the business interests of the Sellers. The Sellers urged that, read as a whole, cl 3.3 imposed an obligation to use reasonable endeavours to supply SMDQ, which was qualified or conditioned by the Sellers' entitlement to take into account their own commercial, economic and operational interests in relation to that supply of gas. Applying this construction, the consequential business conditions in the market, were matters which the Sellers were entitled to take into account under cl 3.3(b) in determining whether they were "able" − having regard to their capacity and business interests − to supply SMDQ nominated by Verve. Accordingly, the Sellers' actions in declining to the Sellers contended incident, and the Apache that 39 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 350 per Mason J; [1982] HCA 24, citing Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 995-996; [1976] 3 All ER 570 at 574. See also Zhu v Treasurer of New South Wales (2004) 218 CLR 530 at 559 [82] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ; [2004] HCA 56; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at 160 [8] per Gleeson CJ. 40 [2009] EWCA Civ 636 at [28]. 41 Zhu v Treasurer of New South Wales (2004) 218 CLR 530 at 559 [82] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ. See also Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455 at 464; [1983] HCA 38. Hayne Crennan supply Verve with nominated SMDQ in the relevant period, and in supplying gas that was available (ie above firm commitments, which included MDQ) on a fully interruptible basis and at prevailing market prices, did not constitute a breach of Verve agreed that cl 3.2 contained an unconditional obligation42 which could be contrasted with cl 3.3, the latter of which imposed a standard of endeavours that was reasonable in the circumstances. Verve's substantive answer to the Sellers' construction thereafter was largely defensive. Verve submitted that if the Sellers' construction of cl 3.3 were correct, the obligation to use reasonable endeavours to supply SMDQ was left without practical content, leading to the submission that the Sellers' construction was "uncommercial and objectively unlikely" and inconsistent with the whole of the GSA. The nomination procedure was relied on by Verve as a complex regime supporting the proposition that the obligation to use reasonable endeavours was engaged in some unqualified way on receipt of a nomination for SMDQ. The "take or pay" obligation was described as an incentive (although not an obligation) for Verve to obtain SMDQ from the Sellers. Verve urged, as it had in the courts below, that the word "able", as it occurs in cl 3.3(b), should be construed as a reference to the Sellers' capacity to deliver SMDQ and not as a reference to their willingness to do so. In essence, Verve contended that cl 3.3, correctly interpreted, obliged the Sellers to supply nominated SMDQ to Verve, notwithstanding the circumstance that the prevailing market price of gas was significantly higher than the tranche 3 price in the GSA. In applying that interpretation, Verve characterised the Sellers' actions in the relevant period as a breach of their obligation to use reasonable endeavours to supply SMDQ. Reasonable endeavours Contractual obligations framed in terms of "reasonable endeavours" or "best endeavours (or efforts)" are familiar. Argument proceeded on the basis that substantially similar obligations are imposed by either expression43. Such 42 Subject to force majeure (cl 18 of the GSA), which was of no relevance to the facts. 43 See, for example, Cypjayne Pty Ltd v Babcock & Brown International Pty Ltd (2011) 282 ALR 152 at 163 [67]; Jet2.com Ltd v Blackpool Airport Ltd [2012] 2 All ER (Comm) 1053 at 1061 [16], 1067 [41]. Cf CPC Group Ltd v Qatari Diar Real Estate Investment Company [2010] EWHC 1535 (Ch) at [252]-[253]. Hayne Crennan obligations are not uncommon in distribution agreements44, intellectual property licences45, mining and resources agreements46 and planning and construction contracts47. Such clauses are ordinarily inserted into commercial contracts between parties at arm's length who have their own independent business interests48. Three general observations can be made about obligations to use reasonable endeavours to achieve a contractual object. First, an obligation expressed thus is not an absolute or unconditional obligation49. Second, the nature and extent of an obligation imposed in such terms is necessarily conditioned by what is reasonable in the circumstances, which can include circumstances that may affect an obligor's business50. This was explained by Mason J in Hospital Products Ltd v United States Surgical Corporation51, which 44 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64. 45 See, for example, Terrell v Mabie Todd & Co Ltd (1952) 69 RPC 234; see also Melville, Forms and Agreements on Intellectual Property and International Licensing, revised 3rd ed (2008), vol 2, §9.10. 46 Centennial Coal Company Ltd v Xstrata Coal Pty Ltd (2009) 76 NSWLR 129. 47 Yewbelle Ltd v London Green Developments Ltd [2008] 1 P & CR 279; CPC Group Ltd v Qatari Diar Real Estate Investment Company [2010] EWHC 1535 48 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 91-92 per Mason J, 118 per Wilson J, 143-144 per Dawson J. 49 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 144 per Dawson J; Cypjayne Pty Ltd v Babcock & Brown International Pty Ltd (2011) 282 ALR 152 at 163 [67]. 50 Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83 at 101 per Mason J; [1980] HCA 15, citing Lord Roche in B Davis Ltd v Tooth & Co Ltd [1937] 4 All ER 118 at 128. 51 (1984) 156 CLR 41 at 91-92; see also at 118 per Wilson J, 144 per Dawson J. Hayne Crennan concerned a sole distributor's obligation to use "best efforts" to promote the sale of a manufacturer's products. His Honour said52: "The qualification [of reasonableness] itself is aimed at situations in which there would be a conflict between the obligation to use best efforts and the independent business interests of the distributor and has the object of resolving those conflicts by the standard of reasonableness … It therefore involves a recognition that the interests of [the manufacturer] could not be paramount in every case and that in some cases the interests of the distributor would prevail." As Sellers J observed of a corporate obligor in Terrell v Mabie Todd & Co Ltd53, an obligation to use reasonable endeavours would not oblige the achievement of a contractual object "to the certain ruin of the Company or to the utter disregard of the interests of the shareholders". An obligor's freedom to act in its own business interests, in matters to which the agreement relates, is not necessarily foreclosed, or to be sacrificed, by an obligation to use reasonable endeavours to achieve a contractual object54. Third, some contracts containing an obligation to use or make reasonable endeavours to achieve a contractual object contain their own internal standard of what is reasonable, by some express reference relevant to the business interests of an obligor55. 52 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 53 (1952) 69 RPC 234 at 236. 54 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 118 per Wilson J, 144 per Dawson J, both citing Van Valkenburgh, Nooger & Neville Inc v Hayden Publishing Co 30 NY 2d 34 (1972). See also Yewbelle Ltd v London Green Developments Ltd [2008] 1 P & CR 279 at 288 [29]. 55 See, for example, CPC Group Ltd v Qatari Diar Real Estate Investment Company [2010] EWHC 1535 (Ch) at [252]; Cypjayne Pty Ltd v Babcock & Brown International Pty Ltd (2011) 282 ALR 152 at 163 [68]. Hayne Crennan Clause 3.3 The GSA, pre-eminently a commercial contract between parties at arm's length with their own independent business interests56, should be given a businesslike interpretation in accordance with the authorities and the approach described above. Broadly described, the chief commercial purpose and objects of the GSA are twofold. First, Verve obtains a secure supply of gas which the Sellers are obliged to make available for delivery up to the specified MDQ, and secondly, the Sellers have an assured price in respect of the specified AMQ, which Verve is obliged to take and pay for, or pay for if not taken. The business interests of the parties coincide in each contract year, but also over the long term, in respect of the quantities of gas which must be delivered by the Sellers and which must be paid for by Verve, whether taken or not. Those provisions have the effect of insulating the parties from respective risks of fluctuations in demand and price in the context of a large domestic and commercial electricity market, at least to the extent of those quantities and the unconditional obligations imposed in respect of them. A supplementary commercial purpose or object of the GSA is the supply of SMDQ at the tranche 3 price, bearing in mind that, subject to the "take or pay" obligations for AMQ, Verve is not contractually bound to buy SMDQ from the Sellers and the Sellers are not contractually bound to reserve capacity in their plants for SMDQ. The obligation to use reasonable endeavours to supply SMDQ, provided for in cl 3.3, can be readily contrasted with the unconditional obligation to supply MDQ specified in cl 3.2. By way of contrast, the language of cl 3.3(a) is recognisably the language of qualified obligation, and cl 3.3(b) provides an internal standard of reasonableness by which the obligation to use reasonable endeavours to supply SMDQ can be measured. Taken as a whole, cl 3.3 provides for a balancing of interests if the business interests of the parties in respect of the supply of SMDQ do not entirely coincide, or if they conflict. What is a "reasonable" standard of endeavours obliged by cl 3.3(a) is conditioned both by the Sellers' responsibilities to Verve in respect of SMDQ and by the Sellers' express entitlement to take into account 56 Clause 31.4(l) of the GSA provides: "[T]his Agreement is not intended to, and does not, create any partnership, joint venture, agency relationship or other business entity between the Sellers and the Buyer nor does it impose any fiduciary obligations on any Party". Hayne Crennan "relevant commercial, economic and operational matters" when determining whether they are "able" to supply SMDQ. Compendiously, the expression "commercial, economic and operational matters" refers to matters affecting the Sellers' business interests. The relevant ability to supply is thus qualified, in part, by reference to the constraints imposed by commercial and economic considerations. The non-exhaustive examples of circumstances in which the Sellers will not breach the obligation to use reasonable endeavours to supply SMDQ, found in cl 3.3(b)(i), (ii) and (iii), are not confined to "capacity" (or capacity constraints). The effect of cl 3.3(b) is that the Sellers are not obliged to forgo or sacrifice their business interests when using reasonable endeavours to make SMDQ available for delivery. Verve's submission that "able" should be construed narrowly, so as to refer only to the Sellers' capacity to supply, fails to give full effect to the entire text of cl 3.3(b) and must be rejected. The word "able" in cl 3.3(b) relates to the Sellers' ability, having regard to their capacity and their business interests, to supply SMDQ. This is the interpretation which should be given to cl 3.3. The construction which has been accepted is consistent with surrounding circumstances known to both parties at the time of entering the GSA, which include the circumstances that the Sellers sell and supply gas to customers and buyers in the market other than Verve, some essential services depend on gas supply, and the prevailing market price of gas at any particular time may be greater (or less) than the tranche 3 price in the GSA. Understood as explained above, cl 3.3 did not oblige the Sellers to supply SMDQ to Verve notwithstanding conflict with their own business interests. Applied to the facts, cl 3.3 did not oblige the Sellers to supply SMDQ to Verve when the Apache incident occasioned business conditions leading to conflict between the Sellers' business interests and Verve's interest in obtaining nominated SMDQ at the tranche 3 price. These conclusions render it unnecessary to consider other issues raised by the appeals, including the construction issue in respect of cl 22.7, which imposes a cap on the Sellers' liability for default in respect of the supply of SMDQ. Orders For these reasons the first appeal should be dismissed and the second appeal should be allowed. Paragraphs 1 to 4 (inclusive) of the orders of the Court of Appeal made on 20 February 2013 should be set aside and, in their place, there should be an order that the appeal to that Court is dismissed. There should be an order that Verve pay the Sellers' costs in the Court of Appeal and in this Court. GAGELER J. The facts and procedural history are set out in the reasons for judgment of the majority. Save in their most salient aspects, the facts need not be repeated. It is convenient to refer to the parties to both appeals as "the Sellers" and "the Buyer", and to refer to their long term sale and purchase agreement as "the GSA". Commercial parties contracting at arm's length are free to agree on terms each considers to be to its own commercial advantage. The terms of their agreement, however, are construed by a court to mean what reasonable commercial parties in their position can be taken together to have meant. Clause 3.2 of the GSA imposes an obligation on the Sellers to make a maximum daily quantity of gas ("MDQ") available for delivery under the GSA. Clause 3.3 imposes an additional obligation on the Sellers which operates against the background of the Buyer having a continuing obligation under cl 9.1 to nominate to the Sellers, in advance of each day, the quantity of gas the Buyer requires under the GSA for the following seven days. While the precise mechanics of the Buyer's nomination for a particular day need not be examined, it is relevant to note that the Buyer is obliged by cl 9.6 to nominate the Buyer's requirements in good faith as the Buyer's best estimate as a reasonable and prudent operator at the time of the nomination. Clause 3.3(a) provides that, if the Buyer's nomination for a day exceeds MDQ, the Sellers "must use reasonable endeavours" to make gas available for delivery in excess of MDQ up to an additional daily quantity specified as the supplemental maximum daily quantity ("SMDQ"). There is now no dispute between the parties that the reference in cl 3.3(a) to "reasonable endeavours" is to endeavours which are objectively reasonable. There is also now no dispute between the parties that cl 3.3(b), in entitling the Sellers to "take into account all relevant commercial, economic and operational matters" in "determining whether they are able to supply SMDQ on a [d]ay", is concerned with the Sellers' use of endeavours which are objectively reasonable in accordance with cl 3.3(a). Clause 3.3(c) makes clear that the Sellers have no obligation to supply and deliver gas on a day in excess of their obligations in respect of MDQ and SMDQ. Clause 6.1(d) sets a price for gas delivered in excess of MDQ which is fixed for the twenty year period of the GSA subject to elaborate and prescriptive provisions governing price adjustment and price review set out in cll 6.2 and 7. Clause 6.1(d) thereby sets a fixed price for such gas as the Sellers are obliged to deliver on a day up to SMDQ in performance of their obligation under cl 3.3(a) of the GSA. It also applies that price for such gas as the Sellers choose to deliver under the GSA on a day in excess of SMDQ. The fundamental difficulty that I have with the construction of cl 3.3(b) of the GSA now advanced by the Sellers is that I am unable to see how reasonable commercial parties in the position of the Sellers and the Buyer, having agreed in cl 6.1(d) on a fixed price for such gas as may be delivered daily by the Sellers in excess of MDQ and having agreed in cl 3.3(a) that the Sellers must use reasonable endeavours to make gas nominated by the Buyer available for delivery up to SMDQ, can be taken to have meant by cl 3.3(b) to give the Sellers a discretion not to make gas available for delivery up to SMDQ merely because market circumstances present an opportunity for the Sellers to demand a substantially higher price for that gas than the price fixed by cl 6.1(d). The Sellers' construction is one which renders the obligation to use reasonable endeavours imposed on the Sellers by cl 3.3(a) of the GSA elusive, if not illusory, and which renders the price fixed by cl 6.1(d) of the GSA a price which is meaningful only if and when the Sellers consider it to their commercial advantage to accept it. The construction would, in commercial terms, eliminate the distinction carefully drawn in cl 3.3 between delivery of nominated gas in excess of MDQ up to SMDQ, in respect of which the Sellers are subjected to an obligation by cl 3.3(a), and the delivery of gas in excess of MDQ and SMDQ, in respect of which cl 3.3(c) makes clear that the Sellers are subjected to no obligation. Had reasonable commercial parties in the position of the Sellers and the Buyer meant the price fixed by cl 6.1(d) of the GSA to operate as a floor price at which the Sellers might choose to supply gas to the Buyer up to SMDQ only if and when the Sellers considered selling at that price to be to their commercial advantage, then it is difficult to see why, as reasonable commercial parties, they would have structured cl 3.3 as they did. The Buyer does not overstate the position in submitting that, if the Sellers' construction were correct, there is no apparent reason to have included cl 3.3 at all. The better construction of cl 3.3(b) is that advanced by the Buyer and unanimously accepted in the Court of Appeal of the Supreme Court of Western Australia. In allowing the Sellers to "take into account all relevant commercial, economic and operational matters" in "determining whether they are able to supply SMDQ on a [d]ay", cl 3.3(b) is directed to the ability or capacity of the Sellers to make gas nominated by the Buyer available for delivery in the performance of their obligation under cl 3.3(a) to use reasonable endeavours to make gas nominated by the Buyer available for delivery up to SMDQ. The reference in cl 3.3(b) to the Sellers being "able" to supply SMDQ on a day is to objective ability or capacity in the same way as the reference in cl 3.3(a) to "reasonable endeavours" is to objectively reasonable endeavours. Clause 3.3(b) operates on that construction to ensure that if the Sellers are objectively unable (as distinct from being subjectively unwilling) to supply SMDQ on a day by reason of "relevant commercial, economic and operational matters", they will not be required to make gas available to the Buyer under cl 3.3(a). The "relevant commercial, economic and operational matters" to which cl 3.3(b) refers encompass the totality of circumstances which might from time to time bear upon the ability or capacity of the Sellers to make gas nominated by the Buyer available for delivery up to SMDQ. Indeed, cl 3.3(b)(i) and (iii) makes clear that those circumstances include, without limitation, "all existing and likely commitments of each Seller" to the extent those commitments cause the Sellers to "form the reasonable view that there is insufficient capacity" to make a nominated quantity available for delivery, as well as conflicting obligations of the Sellers to make gas available for delivery to other customers. The Buyer conceded in argument that relevant "commercial" and "economic" matters to which cl 3.3(b) refers necessarily extend to circumstances which bear on the ability or capacity of each Seller to make gas nominated by the Buyer available for delivery up to SMDQ at the price fixed by cl 6.1(d) of the GSA. The Buyer therefore conceded that the Sellers, using reasonable endeavours, would not be obliged to make gas available for delivery at that price if the circumstances were such that the Sellers were thereby being forced to make that gas available for delivery at a loss. The Buyer gave the hypothetical example of a new tax on production leading to an increase in the Sellers' costs of production. Acceptance of that concession does not entail acceptance that the "commercial" and "economic" matters to which cl 3.3(b) refers also necessarily extend to the opportunity cost to the Sellers of making gas available for delivery to the Buyer under the GSA resulting from the Sellers, as a consequence of making that gas available for delivery under the GSA, no longer having that gas available to be put to a more profitable use. The wholly understandable desire of the Sellers to maximise their profits throughout the period of the GSA might well be described as a "commercial" or "economic" matter. But their desire to maximise their profits by withholding gas from delivery to the Buyer under the GSA so as to be able to sell that gas at a higher price would not be "relevant" to "whether they are able to supply SMDQ on a [d]ay" within the meaning of cl 3.3(b). Their desire would not be "relevant" because it would not bear objectively on their ability or capacity to make gas nominated by the Buyer available for delivery up to SMDQ. That the Sellers might be unable to put gas to a more profitable use as a consequence of making that gas available for delivery to the Buyer under the GSA would not mean that the Sellers would thereby be less able or have less capacity to make that gas available for delivery to the Buyer under the GSA. They would remain "able", just reluctant or unwilling. There is no dispute between the parties that, on the Buyer's construction of cl 3.3(b) of the GSA, the Sellers breached cl 3.3(a) by refusing to make gas available for delivery under the GSA and holding out for a higher price which the Buyer had no practical option but to pay in order to continue its operations. There is also no dispute as to the quantification of damages for that breach as assessed by the Court of Appeal. Accepting the Buyer's construction of cl 3.3(b) of the GSA, I would therefore dismiss the Sellers' appeal, leaving the award of damages by the Court of Appeal intact. The Buyer's appeal can be dealt with quite shortly. The claim by the Buyer to recover the higher price it paid to the Sellers in restitution is a valiant, but ultimately vain, attempt by the Buyer to overcome the cap in cl 22.7(c) of the GSA on "[t]he liability of each Seller in respect of a failure to use reasonable endeavours to meet a Buyer nomination above MDQ up to SMDQ". The Buyer does not argue that the "liability" to which cl 22.7(c) refers is confined to liability in contract. Nor does the Buyer argue that the Sellers' breach of cl 3.3(a) was not a "failure" by each Seller "to use reasonable endeavours to meet a Buyer nomination above MDQ up to SMDQ" within the meaning of cl 22.7(c). What the Buyer argues is that cl 22.7(c) does not extend to a threatened failure to use reasonable endeavours to meet a Buyer nomination above MDQ up to SMDQ and that the threat rather than the refusal of the Sellers to make gas available for delivery under the GSA forms the basis of each Seller's liability in restitution. The difficulty with that argument is that, even if it were assumed in the Buyer's favour that the distinction between threatened and actual failure is available on the construction of cl 22.7(c), the Buyer's claim in restitution necessarily relies on the Sellers' failure to use reasonable endeavours to meet the Buyer's daily nominations above MDQ up to SMDQ both to establish causation and to quantify the amount the Buyer claims that the Sellers have an obligation to disgorge. But for the Sellers' failure to use reasonable endeavours to meet the Buyer's daily nominations above MDQ up to SMDQ, the Buyer would have no claim for the higher price it paid. The liability of each Seller in restitution which the Buyer asserts is therefore necessarily a liability "in respect of a failure to use reasonable endeavours to meet a Buyer nomination above MDQ up to SMDQ". The award of damages for breach of cl 3.3(a) made by the Court of Appeal against each Seller is already in an amount which is capped by cl 22.7(c) of the GSA. The application of cl 22.7(c) to the Buyer's further claim in restitution means that the Buyer could not do better even if its asserted cause of action were established. The result of the application of cl 22.7(c) to the Buyer's claim in restitution is therefore that the Buyer's appeal must also be dismissed. Other issues potentially arising in that appeal need not be determined.

HIGH COURT OF AUSTRALIA APPELLANT AND SECRETARY, DEPARTMENT OF TREASURY RESPONDENT McKinnon v Secretary, Department of Treasury [2006] HCA 45 6 September 2006 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation J E Griffiths SC with J K Kirk and T J Brennan for the appellant (instructed by Corrs Chambers Westgarth) R R S Tracey QC with M F J Campbell for the respondent (instructed by Australian Government Solicitor) Australian Press Council intervening as amicus curiae on the basis of written submissions only Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS McKinnon v Secretary, Department of Treasury Administrative law – Freedom of information – Statute conferring right of access to documents other than exempt documents – Documents exempt if relating to deliberative processes of government and if disclosure contrary to the public interest – Decision by Minister to issue certificate that disclosure of certain documents contrary to the public interest – Whether reasonable grounds exist for claim that disclosure contrary to the public interest. Words and phrases – "exempt document", "internal working documents", "conclusive certificate", "public interest". Freedom of Information Act 1982 (Cth), ss 3, 11, 36, 58(5), 58B, 58C, 58E, 64. Administrative Appeals Tribunal Act 1975 (Cth), ss 43, 44. The characteristic function of GLEESON CJ AND KIRBY J. the Administrative Appeals Tribunal, established by the Administrative Appeals Tribunal Act 1975 (Cth), is to undertake what is sometimes called "merits review" of administrative decisions, determining whether the decision under review was, on the material before the Tribunal, the correct or (in the case of discretionary decisions) the preferable one1. When the Freedom of Information Act 1982 (Cth) ("the FOI Act") was enacted, the Tribunal, by s 58(1), was given that function in relation to what might be described as ordinary or routine decisions concerning requests for access to a document of an agency or an official document of a Minister. It is not, however, the function with which this appeal is concerned. We are concerned with a different function, identified by s 58(5), relating to a limited class of document, and a particular kind of decision. The central issue in the appeal turns upon an accurate understanding of the nature of the special function identified by s 58(5). The appellant contends that Downes J2, the President of the Tribunal, who followed a line of authority in the Tribunal and the Federal Court, and whose decision was upheld by a majority of the Full Court of the Federal Court3 (Tamberlin and Jacobson JJ, Conti J dissenting), erred in law in his understanding of the nature of the power given to the Tribunal by s 58(5). The facts, and the relevant statutory provisions, are set out in the reasons of Hayne J. For our purposes, and at the risk of some over-simplification, it is sufficient to summarise the legislative context as follows. The declared object of the FOI Act is to extend as far as possible the right of the Australian community to access to information in the possession of the Commonwealth Government by creating a general right of access to information in documentary form in the possession of Ministers, departments and public authorities, limited only by exceptions and exemptions necessary for the protection of essential public interests (s 3). We emphasise the repeated use of the word "right". Included in the exemptions and exceptions which qualify that right are those created by s 36 of the FOI Act, which deals with what are described as internal working documents. Such a document is exempt from disclosure if two conditions are satisfied. The first condition turns upon an objective description of the document itself. It must be a document the disclosure of which would disclose matter in the nature of, or relating to, opinion, 1 Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577. 2 Re McKinnon and Secretary, Department of the Treasury (2004) 86 ALD 138. 3 McKinnon v Secretary, Department of Treasury (2005) 145 FCR 70. Kirby advice or recommendation obtained, prepared or recorded, or consultation or deliberation that has taken place, in the course of, or for the purposes of, the deliberative processes involved in the functions of an agency or Minister. If a document answers that description then a second condition (which is that of present relevance) applies. The second condition for exemption is that disclosure of the document would be contrary to the public interest. A conclusion that disclosure of an internal working document would be contrary to the public interest may or may not turn upon contestable facts: either primary facts, or inferences to be drawn from those facts. It may or may not turn upon contestable matters of opinion. Inevitably, it will involve a judgment as to where the public interest lies. Such judgment, however, is not made in a normative vacuum. It is made in the context of, and for the purposes of, legislation which has the object described above, which begins from the premise of a public right of access to official documents, and which acknowledges a qualification of that right in the case of necessity for the protection of essential public interests (s 3(1)(b)). The legislative scheme with respect to internal working documents (s 36(3)) is that, where a document is one as to which the first condition mentioned above is fulfilled (which turns upon the nature and contents of the document and, perhaps, other circumstances), then a Minister may sign a certificate which, so long as it remains in force, establishes conclusively that the second condition for exemption is fulfilled. The Minister's power so to certify is conditioned as follows: "(3) Where a Minister is satisfied, in relation to a document [which fulfils the first condition], that the disclosure of the document would be contrary to the public interest, he or she may sign a certificate to that effect (specifying the ground of public interest in relation to which the certificate is given) ..." Such a decision of a Minister is subject to review by the Tribunal. However, the power of review conferred upon the Tribunal by s 58(5) does not involve the exercise of the characteristic function of full merits review described at the commencement of these reasons. It is not the function of the Tribunal to decide whether the Minister was correct to be satisfied that the disclosure of a document would be contrary to the public interest. The Tribunal does not ask itself whether, on the evidence before it, the Tribunal is satisfied that the disclosure of the document would be contrary to the public interest. The question that, by s 58(5), is raised for the Tribunal's decision is a related, but different, question. It is "whether there exist reasonable grounds for the claim that the disclosure of the document would be contrary to the public interest." Kirby Thus, in relation to internal working documents of the kind described in s 36(1)(a), it is for the Minister to decide the question of public interest raised by s 36(1)(b) and s 36(3), and it is the Minister's state of satisfaction on that issue that determines whether the document is exempt from disclosure. There is no provision for full merits review of that decision by the Tribunal. The Tribunal's review function, in such a case, is limited to determining whether there exist reasonable grounds for the claim that the disclosure of the document would be contrary to the public interest. Although it is the FOI Act that must be applied, and analogies may be imperfect and risky, it is worth pointing out that such a limited form of review of primary decision-making is not unfamiliar. For example (although the analogy is far from exact), when, in an ordinary tort case, an appellate court reviews a finding of negligence by a court of first instance (a finding that may turn upon questions of fact and a normative judgment as to reasonableness), the kind of review that is undertaken will depend upon whether the decision at first instance was that of a judge alone, or of a jury. In the former case, depending on the statute creating the right of appeal, the appeal may be by way of rehearing, and the duty of the appellate court may be to decide whether it regards the decision at first instance as wrong. In the latter case, the appellate court does not decide whether it agrees with the jury's conclusion; it decides whether it was reasonably open to the jury to reach that conclusion4. That is a familiar form of review which falls short of full merits review. Again, as Downes J pointed out in his reasons, statutes which confer a power conditioned upon the existence of reasonable grounds for a state of mind such as suspicion, or belief, are common. Powers of search and seizure, or arrest, are often conditioned in that way. Downes J referred to the decision of this Court in George v Rockett5 where it was said: "When a statute prescribes that there must be 'reasonable grounds' for a state of mind – including suspicion and belief – it requires the existence of facts which are sufficient to induce that state of mind in a reasonable person." This is an objective test. George v Rockett was concerned with Queensland legislation empowering the issue of a search warrant if there were reasonable grounds for suspecting that there was incriminating evidence in a house. The statutory formula, however, is widely used. The point of the objectivity of such a test, when it is necessary to consider whether a primary 4 Swain v Waverley Municipal Council (2005) 220 CLR 517. (1990) 170 CLR 104 at 112. Kirby decision-maker had reasonable grounds for a given state of mind, is that the question is not whether the primary decision-maker thinks he or she has To decide whether it was reasonably open to a decision-maker, on the evidence, to make a judgment such as a decision whether a person was (or was not) negligent, or whether the known facts are sufficient to induce in a reasonable person a suspicion or belief that someone is guilty of a crime, or whether there are reasonable grounds for a claim that a course of action (such as disclosure of a document) would be contrary to the public interest, involves an evaluation of the known facts, circumstances and considerations which may bear rationally upon the issue in question. A judgment as to whether information or argument bears rationally upon a question is also a familiar exercise. It is usually discussed by courts under the rubric of relevance7. If a piece of information, or an opinion, or an argument, can have no rational bearing upon a question for decision, it is irrelevant, and must be left out of further consideration. Otherwise, being relevant, just decision-making requires that it be taken into account. Where a claim, or an argument, or a conclusion or some other state of mind (such as suspicion, or belief, or satisfaction) involves an interplay of observation (of objective facts and circumstances), opinion, and judgment (which may involve an evaluation of matters such as reasonableness of conduct, or of the public interest), the question whether there are reasonable grounds for such a claim, or argument, or state of mind requires a consideration of all relevant matters and an assessment of the reasonableness of the claim, or argument, or state of mind having regard to all relevant considerations. Suppose the question is whether there are reasonable grounds for suspecting that A killed B. Suppose that A is a person of violent propensity, who had a motive to kill B, and had declared an intention to do so. Let it be assumed that those three facts are incontestable. In the absence of any other facts they may lead to a conclusion that there are reasonable grounds for suspecting that A killed B. Suppose, however, that A has an undisputed alibi. The first three facts then cease to constitute reasonable grounds for the suspicion. The question cannot be answered without considering all four facts. It is not a hypothetical question. It is a question to be answered in the light of all the known circumstances. This applies to all relevant considerations whether they be matters of objective fact (as 6 Bradley v The Commonwealth (1973) 128 CLR 557 at 574-575; Nakkuda Ali v M F de S Jayaratne [1951] AC 66; R v Inland Revenue Commissioners; Ex parte Rossminster Ltd [1980] AC 952. 7 Papakosmas v The Queen (1999) 196 CLR 297 at 307 [23]; Goldsmith v Sandilands (2002) 76 ALJR 1024 at 1025 [2]; 190 ALR 370 at 371. Kirby in the example given), or of opinion, or of argument. Until all relevant considerations, that is, all (known) considerations that could have a rational bearing upon the claim, or state of mind, or decision under review, are taken into account, it is impossible to form a just and fair judgment whether, objectively considered, there are reasonable grounds for the claim that the disclosure of the document would be contrary to the public interest. It is not enough for the Tribunal to ask whether there are facts, or opinions, or arguments that rationally bear upon that topic. All relevant matters must be taken into account; not for the purpose of deciding whether the Tribunal agrees with the Minister, but for the more limited purpose of deciding whether there are reasonable grounds for the claim which the Minister accepted. A problem may arise from an ambiguity in the word "grounds". A proposition (in the form of a statement of fact, or an opinion, or an argument) may be relevant to, and capable of supporting, a claim or a conclusion. There may be a number of such propositions. But that does not of itself mean that there are reasonable grounds for the claim or the conclusion. That is a question that can only be decided after considering all relevant propositions. The task of the Tribunal is not performed if, looking at a particular proposition, it says: "Other things being equal, that would be sufficient to induce in the mind of a reasonable Minister this state of mind." The Tribunal must look at, and take account of, any other relevant considerations as well. Section 36(3) requires the Minister, when giving a certificate, to specify "the ground of public interest" upon which he or she relies. There may be more than one such ground. But when s 58(5) refers to "reasonable grounds for the claim that the disclosure of the document would be contrary to the public interest" it raises the question whether, having regard to all the relevant considerations available to the Tribunal, there are matters that are sufficient to induce in a reasonable person a state of satisfaction that disclosure of a document would be contrary to the public interest. The expression "reasonable grounds for the claim" means reasonable grounds for contending that the Minister should be so satisfied. That is the nature of the claim. The ground or grounds specified by the Minister as the basis of his or her satisfaction must, of course, be relevant to the conclusion reached by the Minister. If they are not, then that is the end of the matter. The application will succeed. However, more than that is required. They must be reasonable grounds for a conclusion (or a claim that a conclusion should be reached). That can only be determined in the light of all relevant considerations. The point relied upon by the appellant emerges most clearly in the reasons of Tamberlin J, who was in the majority in the Full Court of the Federal Court. He said: "[O]ne example of a facet of the public interest that is relevant is the desirability of preserving intra-governmental communications prior to making a decision. Another, and obviously confidentiality of Kirby competing, facet of the public interest is the desirability of transparency in public administration. If there is a ground that is not irrational, absurd or ridiculous for a claim that the first-mentioned facet of the public interest would not be served by disclosure, then that alone is sufficient to satisfy the requirements of s 58(5). It is not necessary in order to decide that limited question that the decision-maker should consider and weigh all the other facets, and the grounds which may reasonably support each of those facets, in order for s 58(5) to be satisfied." The other member of the majority in the Full Court, Jacobson J, did not put the point quite so directly, but he also considered and rejected an argument that "the question of whether something is contrary to the public interest involves a consideration of factors on the other side of the ledger." the preservation of confidentiality of Logically, the view of the majority in the Full Court appears to mean that, so long as there is anything relevant to be said in support of the view that disclosure would be contrary to the public interest, an applicant for review under s 58(5) must fail. We cannot accept that. To take the example mentioned by intra-governmental communications prior to making a decision could always be advanced, in the case of internal working documents of the kind with which we are concerned, as a relevant consideration. How could that facet of the public interest ever be served by disclosure? How, then, could an applicant ever succeed? If it were enough for the Minister to point to one facet of the public interest that is served by non-disclosure, then it would be enough to say that non-disclosure preserves confidentiality. Of course it does. By definition, a facet is one side of something that has many sides. Looking only at a facet of an object is a necessarily incomplete way of looking at the object. Looking only at a facet of the public interest is a necessarily incomplete way of looking at the public interest. It is undoubtedly correct that the Tribunal's function under s 58(5) is not to decide whether the Tribunal is satisfied that disclosure would be contrary to the public interest; just as an appellate court's function on an appeal from a jury in a negligence case is not to decide whether it finds that the defendant was negligent. It does not follow, however, that the Tribunal is not required to take account of all relevant considerations, or that the circumstance that there is something relevant to be put against disclosure is the end of the matter. It is not the end; it is the beginning. Unaided by the reasons of the majority in the Full Court, and their explanation of the earlier decisions that were followed by Downes J, it would not have been obvious to us that Downes J in truth adopted the approach held by the Full Court to be necessary and correct. There are some passages in his reasons that are consistent with the approach that appears to us to be correct. The procedure by which a matter such as this comes before the Federal Court, or this Kirby Court, means that we do not have available to us all the material that was available to Downes J (including the disputed documents) and, as Hayne J suggests, the argument on both sides was conducted at a disconcerting level of abstraction. Nevertheless, the appellant is entitled to have the matter considered according to law, and we are prepared to accept that the view of the law expressed by the Full Court in upholding the decision of Downes J reflects what he decided. It is certainly the basis on which the Full Court decided the case. We have avoided reference to "balancing". This is a concept that assumes prominence in a different context, in which courts are required to deal with claims of public interest immunity advanced in opposition to the production of documents, for example under subpoena, in civil or criminal litigation. There, it is the public interest in the administration of justice, and considerations of fairness to litigants, that may need to be weighed against aspects of the public interest put at risk by disclosure of documents8. The image of the scales of justice is pervasive in legal thinking, and it is natural to talk of taking account of competing considerations in those terms. Under the FOI Act, however, the matter of disclosure or non-disclosure is not approached on the basis that there are empty scales in equilibrium, waiting for arguments to be put on one side or the other. There is a "general right of access to information ... limited only by exceptions and exemptions necessary for the protection of essential public interests [and other matters not presently material]" (s 3(1)(b)). That is the context in which a Minister makes a decision under s 36(3), and in which such a decision is reviewed under s 58(5). References to "balancing" create a danger of losing sight of that context. That is the context in which the question of reasonableness raised by s 58(5) is to be addressed. To lose sight of that would be to lose sight of the principal object of the FOI Act. We would allow the appeal with costs. The orders of the Full Court of the Federal Court should be set aside. In their place it should be ordered that the appeal to that Court be allowed with costs, that the decision of the Administrative Appeals Tribunal of 21 December 2004 be set aside, and that the proceedings be remitted to the Administrative Appeals Tribunal for reconsideration according to law. 8 See, for example, Conway v Rimmer [1968] AC 910; Sankey v Whitlam (1978) 142 CLR 1; Air Canada v Secretary of State for Trade [1983] 2 AC 394. Hayne HAYNE J. This appeal concerns the operation of Pt VI of the Freedom of Information Act 1982 (Cth) ("the Act"). That Part of the Act (ss 53-66) provides for the review of decisions made under the Act, first by an internal review (under s 54), and then on application to the Administrative Appeals Tribunal ("the Tribunal"). The particular issue that arises in the appeal concerns the operation of s 58(5) of the Act in relation to two certificates signed by the Treasurer of the Commonwealth, certifying that the disclosure of certain internal working documents (documents of a kind described in s 36(1)(a)9) would be contrary to the public interest. Section 58(5) provides that: "Where application is or has been made to the Tribunal for the review of a decision refusing to grant access to a document in accordance with a request, being a document that is claimed to be an exempt document under section 36 and in respect of which a certificate is in force under that section, the Tribunal shall, in a case where it is satisfied that the document is a document to which paragraph 36(1)(a) applies, if the applicant so requests, determine the question whether there exist reasonable grounds for the claim that the disclosure of the document would be contrary to the public interest." (emphasis added) How should the Tribunal determine that question? The determination of that issue will require close attention to the text of s 58(5). It is as well, however, to place that particular provision in its statutory context. 9 Section 36(1) provides: "Subject to this section, a document is an exempt document if it is a document the disclosure of which under this Act: (a) would disclose matter in the nature of, or relating to, opinion, advice or recommendation obtained, prepared or recorded, or consultation or deliberation that has taken place, in the course of, or for the purposes of, the deliberative processes involved in the functions of an agency or Minister or of the Government of the Commonwealth; and (b) would be contrary to the public interest." Hayne The Act The object of the Act is stated10 to be "to extend as far as possible the right of the Australian community to access to information in the possession of the Government of the Commonwealth" by methods identified in the Act. One of those methods is described11 as: "creating a general right of access to information in documentary form in the possession of Ministers, departments and public authorities, limited only by exceptions and exemptions necessary for the protection of essential public interests and the private and business affairs of persons in respect of whom information is collected and held by departments and public authorities". (emphasis added) The Act records12 that "[i]t is the intention of the Parliament that the provisions of this Act shall be interpreted so as to further" the Act's object. Subject to the Act, "every person has a legally enforceable right to obtain access in accordance with this Act to ... a document of an agency, other than an exempt document"13. An "agency" includes14 a "Department", which in turn includes "a Department of the Australian Public Service that corresponds to a Department of State of the Commonwealth". One class of exempt documents is the class of "internal working documents" defined in s 36(1) of the Act. That sub-section has two elements. First, the documents with which it deals are those the disclosure of which "would disclose matter to, opinion, advice or recommendation obtained, prepared or recorded, or consultation or deliberation that has taken place, in the course of, or for the purposes of, the deliberative processes involved in the functions of an agency or Minister or of the Government of the Commonwealth"15. Secondly, a document of that kind is an exempt document only if its disclosure would be contrary to the public interest16. the nature of, or relating 10 Freedom of Information Act 1982 (Cth), s 3(1). 11 s 3(1)(b). 13 s 11(1)(a). 15 s 36(1)(a). 16 s 36(1)(b). Hayne Section 36(3) provides that a Minister, if "satisfied, in relation to a document to which [s 36(1)(a)] applies," that its disclosure would be contrary to the public interest, may sign a certificate to that effect, "specifying the ground of public interest in relation to which the certificate is given". Subject to the operation of the provisions of Pt VI of the Act dealing with the review of decisions, "such a certificate, so long as it remains in force, establishes conclusively that the disclosure of that document would be contrary to the public interest". The applications for documents The appellant, Mr McKinnon, is the FOI Editor of The Australian newspaper. In October and in December 2002 he made two requests for material – the first, for material relating to "bracket creep" in the federal income taxation system, and the second, for material relating to the First Home Owners Scheme. The expression "bracket creep" has no single precise definition. In general it refers to inflation leading to an increase in the nominal incomes of taxpayers, moving them from one marginal tax bracket to another, and thus increasing the overall taxation receipts from personal taxpayers whose income has not increased in real terms. The First Home Owners Scheme provided a grant to those buying a home for the first time. The first request, as ultimately formulated, sought: "Reports, reviews or evaluations completed in the 12 months from 3 December 2001 to 3 December 2002 detailing the extent and impact of bracket creep and its impact on revenue collection of income tax, including information in relation to higher tax burdens faced by Australians and/or projections of revenue collection increases from bracket creep, but excluding documents that have already been released publicly or duplicate copies of documents." This request was originally directed to the Australian Taxation Office, but because it was seen to be more closely connected with the functions of the Department of the Treasury, it was transferred to that Department17. Nothing now turns on this aspect of the matter. The second request, directed to the Department of the Treasury, sought: "Documents relating to any review/report or evaluation completed on the First Home [Owners] Scheme in the last two years, including documents 17 s 16(1)(b). Hayne summarising the level of fraud associated with the program, its use by high wealth individuals and its impact on the housing sector's performance in the Australian economy." In answer to the requests, the Department provided Mr McKinnon with lists of the documents falling within the scope of the requests. Forty documents were listed as relevant to the first request (about "bracket creep"). All but one of those documents (a one page document described as being addressed to the Senate Economics Legislation Committee) were claimed to be exempt documents. In relation to the request for documents concerning the First Home Owners Scheme, 47 documents were identified as falling within the scope of the request. Most were claimed to be exempt documents in whole or in part. Being dissatisfied with the results of the internal review of these decisions made under s 54 of the Act, Mr McKinnon, pursuant to s 55 of the Act, made applications to the Tribunal for review of the decisions refusing to grant access to all the documents to which the requests related. Shortly before the applications for review were listed for hearing, the Treasurer signed two certificates under s 36(3). By one, he certified that the disclosure of parts of, or all of, 36 of the 40 documents originally identified as falling within the scope of the request about "bracket creep", would be contrary to the public interest on one or more grounds identified in the certificate. By the other, he certified that the disclosure of parts of, or all of, 13 of the 47 documents that had been identified as falling within the scope of the request about the First Home Owners Scheme would be contrary to the public interest on one or more of the grounds identified in the certificate. The schedule to each certificate set out a list of the documents concerned, identified what part or parts of the document were said to be exempt, and indicated, by reference to the statement of grounds set out in the body of the certificate, the particular ground or grounds on which the Treasurer relied in respect of each of the documents. Each certificate set out seven grounds: "(a) Officers of the Government should be able to communicate directly, freely and confidentially with a responsible Minister and members of the Minister's office on issues which are considered to have ongoing sensitivity and are controversial and which affect the Minister's portfolio. (b) Officers should be able freely to do in written form what they could in circumstances where any oral otherwise do orally, Such written remain confidential. communication would communications and policy formulation processes ensure that a proper record is maintained of the considerations taken into account. If they were to be released for public scrutiny, officers may in the future feel reluctant to make to decision-making relating Hayne a written record, to the detriment of these processes and the public record. The release of a document that discusses options that were not settled at the time the document was drafted and that recommends or outlines courses of action that were not ultimately taken has the potential to lead to confusion and to mislead the public. The release of such potentially misleading or confusing material would not make a valuable contribution to the public debate and has the potential to undermine the public integrity of the Government's decision making process by not fairly disclosing reasons for the final position are multi-layered and the documents reflect partially considered matters and tentative conclusions. Decision-making processes reached. The release of the material would tend to be misleading or confusing in view of its provisional nature, as it may be taken wrongly to represent a final position (which it was not intended to do) and ultimately may not have been used or have been overtaken by subsequent events or further drafts. The release of documents that contain a different version of estimates, projections, costings and other numerical analysis that cannot be put into context because of the absence of any explanation of the variables used or assumptions relied upon has the potential to lead to confusion and to mislead the public. The release of such potentially misleading or confusing material would not make a valuable contribution to the public debate and has the potential to undermine the public integrity of the Government's decision-making process by not fairly disclosing reasons for the final position reached. The preparation of possible responses to questions in Parliament is a very sensitive aspect of the work of departmental officers and it is appropriate that briefing and other material produced on a confidential basis in the preparation of those responses, remain undisclosed. The release of such documents would threaten the protection of the Westminster-based system of Government. The release of documents that are intended for a specific audience familiar with the technical terms and jargon used, has the potential for public misunderstanding in that the contents of the documents could be misinterpreted. These documents were not intended for publication and publication would be misleading as the documents do not contain sufficient information for an uninformed audience to interpret them correctly and reasonably." Hayne As the President of the Tribunal (Downes J) was later to observe18, the grounds fell into two broad categories: first, that disclosure would compromise necessary confidentiality (grounds (a), (b) and (f)), and second, that disclosure would be likely to mislead (grounds (c), (d), (e) and (g)). Pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"), the appellant sought, and obtained, from the Treasurer, statements of reasons for issuing the certificates under s 36(3) of the Act. It was open to the appellant to apply to the Federal Court for judicial review, on any of the grounds specified in the ADJR Act, of the Treasurer's decision to issue a certificate, but no such application was made. In particular, no application was made for judicial review of the decision on the grounds that the Treasurer's decision involved an error of law19, or was an improper exercise of the power20, whether because the Treasurer took irrelevant considerations into account or failed to take relevant considerations into account21 or for some other reason22. Rather, in the then pending applications to the Tribunal for review of the decisions to refuse the appellant access to the documents, the appellant required the Tribunal to determine the question whether there existed reasonable grounds for the claim that the disclosure of the documents would be contrary to the public interest. The Tribunal (Downes J) held23 that it must determine whether those grounds existed at the time of the review decision, not at the time the certificate was given. Neither party challenged that conclusion. The Tribunal determined24 that two documents were not within s 36(1)(a) but determined that there existed reasonable grounds for the claim that disclosure of any of the other documents covered by the Treasurer's certificates would be contrary to the public interest. Pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth), the appellant "appealed" to the Federal Court of Australia against the Tribunal's decisions that there existed reasonable grounds for the claim that disclosure of 18 Re McKinnon and Secretary, Department of the Treasury (2004) 86 ALD 138 at 19 Administrative Decisions (Judicial Review) Act 1977 (Cth), s 5(1)(f). 20 s 5(1)(e). 21 s 5(2)(a) and (b). 23 (2004) 86 ALD 138 at 142 [15]. 24 (2004) 86 ALD 138. Hayne the documents falling within s 36(1)(a) would be contrary to the public interest. Because the Tribunal had been constituted by the President of the Tribunal, the appeal was to the Full Court of the Federal Court25. That Court, by majority (Tamberlin and Jacobson JJ, Conti J dissenting), dismissed26 the appeal. By special leave, the appellant appealed to this Court. Both the proceedings in the Full Court of the Federal Court, and the appeal to this Court, were argued at a high level of abstraction. The appellant said that the central question in the appeal to this Court was whether s 58(5) of the Act "require[d] the Tribunal to consider competing facets of the public interest". The respondent identified the central question in substantially identical terms: whether s 58(5) of the Act required the Tribunal "to take into account and balance public interest considerations favouring disclosure of a document when determining whether reasonable grounds exist for a claim that disclosure would be contrary to the public interest". The appellant contended that it was necessary to identify the relevant question at a high level of abstraction, at least in part, because neither he nor his legal advisers had seen the documents in issue. Rather, pursuant to s 58C of the Act, Downes J had held parts of the hearing, during which evidence and information were given and submissions made about the content of the documents for which exemption was claimed, in the absence of the appellant and his advisers. And although Downes J had required the production of the disputed documents to him (in accordance with s 58E of the Act), he had, as the Act required, returned the documents to the persons by whom they were produced "without permitting any person who is not a member of the Tribunal as constituted for the purposes of the proceeding ... to have access to the document or disclosing the contents of the document to any such person"27. In this case, however, identifying the relevant question at the level of abstraction reflected in the parties' formulations of that question obscures two matters to which proper attention must be given. It obscures the need first, to identify the Tribunal's task in considering the question posed by s 58(5) of the Act, and second, to identify what the Tribunal did in the applications before it. The parties' formulations of the issue obscure those matters by leaving uncertain what is meant by saying that "competing facets of the public interest" should be "consider[ed]" or "take[n] into account and balance[d]". 25 Administrative Appeals Tribunal Act 1975 (Cth), s 44(3). 26 McKinnon v Secretary, Department of Treasury (2005) 145 FCR 70. 27 s 58E(3). Hayne Before identifying the Tribunal's task and relating that task, thus identified, to what the Tribunal did, it is desirable to say something more about the course of proceedings before, and the decision of, Downes J, and then to say something about the Full Court's reasons. The Tribunal proceedings In the Tribunal, the parties adduced a deal of evidence. The appellant called Mr Alan Rose, a former Secretary of the Attorney-General's Department of the Commonwealth who had also served as President of the Australian Law Reform Commission and as a member of the Administrative Review Council established under the Administrative Appeals Tribunal Act. The appellant also called evidence from the Editor of The Australian newspaper, Mr Michael Stutchbury, from Professor Peter Dixon, an applied economist particularly interested in questions relating to "bracket creep", and from Mr Anthony Harris, a senior financial writer and journalist who had been a senior Commonwealth public servant and State office holder. It is neither necessary nor profitable to record the details of the evidence adduced from these witnesses. Nor is it necessary or profitable to attempt to identify the precise forensic purposes which the appellant sought to achieve by the tendering of this evidence. Much of it appeared to be in the nature of argument and comment, rather than any proof of fact or relevant opinion. At the risk of undue abbreviation, the evidence from Mr Rose was generally to the effect that none of the grounds stated in the Treasurer's certificates was sound. So, for example, he said that, in his experience, "release of even very sensitive and controversial documents does not impede public servants' direct and free communication with Ministers" and he controverted each of the other grounds stated in the certificates. Mr Harris gave evidence to the same general effect. Mr Stutchbury and Professor Dixon gave evidence that release of the documents sought would advance public debate about matters of interest and importance not only for members of the public generally but also for academic investigation and study by economists. But inevitably, none of the evidence adduced by the appellant could engage directly with particular disputed documents – none of the appellant's witnesses had seen them. All of the appellant's evidence and argument was necessarily pitched at an abstract level. The respondent adduced evidence from a number of Treasury officers, including, in particular, Mr Philip Gallagher, Manager of the Retirement and Income Modelling Unit, and the officer of Treasury responsible for personal income tax costings since September 2001, Mr James Hagan, General Manager of the Domestic Economy Division, Macroeconomic Group, Ms Laurene Edsor, a senior adviser in the Integrated Tax Design Unit, Tax Design Division, and Mr Richard Murray, Executive Director, Fiscal and Corporate. Again, some of the material advanced in the affidavits of these witnesses appears to be more in Hayne the nature of argument and opinion, than proof of relevant facts, but all of their affidavits gave some information about some or other of the disputed documents. The respondent served all its affidavit evidence on the appellant and it followed that the appellant's legal advisers had access to this evidence, even though some of it was received in private hearings. The respondent's witnesses were made available for cross-examination on behalf of the appellant. In addition, however, Mr Murray and Mr Gallagher gave some further evidence in a private hearing from which the appellant and his advisers were excluded. As noted earlier, Downes J inspected the disputed documents, and his reasons are to be read in light of that fact, and in light of what had been said in evidence by the Treasury officers about the nature of the material they said was revealed by those documents. In his reasons, Downes J recorded28 the nature of the evidence that had been adduced by the parties. For present purposes it is important to observe that Downes J concluded29 that the grounds asserted in the certificates did not challenge the existence of a substantial public interest in knowing the subject matter dealt with in the disputed documents. He described30 the evidence given by the Treasury officers, particularly by Mr Murray, the most senior officer to give evidence, as supporting "the existence of an alternative reasonable opinion from the opinions expressed by the [appellant's] witnesses" but said31 that it was not for him to decide which of the opinions of the parties' witnesses was preferable. "Provided there is a reasonable basis for an opinion and there is evidence to support it the test in s 58(5) will be satisfied."32 Downes J then dealt in turn with each of the disputed documents. It is convenient to trace the outline of his Honour's reasons relating to one group of the "bracket creep" documents (described as documents B.001 to B.010) for those reasons are typical of the approach his Honour took to the matters. Each of the documents B.001 to B.010 had been written by an officer of the Australian Tax Office and each was addressed to a Treasury officer. Downes J concluded33 that each was "an advice or recommendation or both 28 (2004) 86 ALD 138 at 150-152 [53]-[67]. 29 (2004) 86 ALD 138 at 151 [59]. 30 (2004) 86 ALD 138 at 152 [66]. 31 (2004) 86 ALD 138 at 152 [66]. 32 (2004) 86 ALD 138 at 152 [66]. 33 (2004) 86 ALD 138 at 154 [75]. Hayne which was prepared for the purposes of the deliberative processes of government". The certificate asserted that grounds (c), (d), (e) and (g) (being the grounds asserting that disclosure would mislead) were engaged. Downes J said34: "Each of the documents certainly relates to options not settled, is provisional in nature and contains different versions of estimates, projections, costings and other numerical analysis which are not explained. The documents contain jargon and acronyms which would be meaningless to the average reader. The average reader would have difficulty in understanding the conclusions and even greater difficulty in understanding the reasoning and methodology." All of the documents were said35 to provide "a substantial factual basis for concluding" that they fell within the claimed grounds. Those grounds were described36 as "rational grounds", having "support in the authorities and in the evidence". Accordingly, Downes J concluded37 that reasonable grounds existed for the claim that disclosure of each of the documents would be contrary to the public interest. This kind of analysis was undertaken in respect of each of the disputed documents. For the most part all the grounds relied on were upheld, but in some cases38 greater weight or credence was given to some rather than all of the claimed grounds. The grounds that were upheld were described as being "rational" grounds, having support in the authorities (which is to say in past decisions of the Tribunal) and in the evidence. The Full Court In the Full Court, Jacobson J gave the principal reasons for the majority. Tamberlin J agreed in the reasons published by Jacobson J, but added some further observations. The parties' formulations of the relevant question to be considered in the appeal to this Court can be traced to what was said in the 34 (2004) 86 ALD 138 at 155 [76]. 35 (2004) 86 ALD 138 at 155 [77]. 36 (2004) 86 ALD 138 at 155 [77]. 37 (2004) 86 ALD 138 at 155 [77]. 38 See, for example, (2004) 86 ALD 138 at 155 [79]. Hayne reasons of Tamberlin J. His Honour's discussion of relevant principles began39 from the premise that: "The public interest is not one homogenous undivided concept. It will often be multi-faceted and the decision-maker will have to consider and evaluate the relative weight of these facets before reaching a final conclusion as to where 'the public interest' resides. This ultimate evaluation of the public interest will involve a determination of what are the relevant facets of the public interest that are competing and the comparative importance that ought to be given to them so that 'the public interest' can be ascertained and served. In some circumstances, one or more considerations will be of such overriding significance that they will prevail over all others. the competing considerations will be more finely balanced so that the outcome is not so clearly predictable." In other circumstances, Having identified what he saw to be the relevant principles, his Honour continued40: confidentiality of "[O]ne example of a facet of the public interest that is relevant is the intra-governmental desirability of preserving communications prior to making a decision. Another, and obviously competing, facet of the public interest is the desirability of transparency in public administration. If there is a ground that is not irrational, absurd or ridiculous for a claim that the first-mentioned facet of the public interest would not be served by disclosure, then that alone is sufficient to satisfy the requirements of s 58(5). It is not necessary in order to decide that limited question that the decision-maker should consider and weigh all the other facets, and the grounds which may reasonably support each of those facets, in order for s 58(5) to be satisfied." (emphasis added) The appellant placed particular weight upon the emphasised part of the reasons of Tamberlin J and contended that it encapsulated the approach adopted by the Tribunal. It was submitted that it was "implicit in the Tribunal's construction of the s 58(5) task that if any one facet of the public interest can be established as supported by a non-absurd opinion of one witness, and/or by past Tribunal decisions, then that is sufficient to satisfy the test". Hence, so the appellant submitted, it was necessary for this Court to hold that the Tribunal must balance competing facets of public interest. 39 (2005) 145 FCR 70 at 75-76 [12]. 40 (2005) 145 FCR 70 at 76-77 [16]. Hayne As earlier observed, the appellant require consideration of two elements: one concerning what the Act requires and the other concerning what the Tribunal did. It is convenient to deal first with what the Act requires. these submissions of The Tribunal's task There can be no doubt that s 58(5), like all other provisions of the Act, must be construed in a way that promotes the object of the Act. In particular, it is to be construed in a way that promotes access to documents in the possession of a Minister or Department. Exceptions and exemptions, including the exception or exemption for which s 36(1) provides, are to be limited to those necessary for the protection of essential public interests41. But the appellant made no submission that any particular question of construction of s 58(5) arises in the present matter which engages such principles. Rather, the attention of the parties was properly directed to identifying what s 58(5) requires. It was for that purpose that the appellant referred to "facets" of the public interest and what was said to be the need to balance competing facets of the public interest. It is necessary to begin the examination of the Tribunal's task by recognising that s 58(5) does not require, and does not permit, the Tribunal to substitute its opinion about whether the disclosure of particular documents of the kind identified in s 36(1)(a) would be contrary to the public interest, for the opinion expressed in a certificate given under s 36(3). Section 58(5) requires the Tribunal to answer a particular statutory question: are there reasonable grounds for the claim that disclosure would be contrary to the public interest? If the Tribunal answers that question in the negative, the Act requires42 the Minister who has given the certificate to decide whether to revoke the certificate. If the Minister decides not to revoke the certificate, the Minister must give notice43 of the decision to the applicant, must cause a copy of the notice44, including a statement of findings on any material question of fact, the material on which those findings were based, and the reasons for the decision45, to be laid before each House of the Parliament, and must read the notice46 to the House in which 41 s 3(1)(b). 42 s 58A(1). 43 s 58A(3)(a). 44 s 58A(3)(b). 45 s 58A(4). 46 s 58A(3)(c). Hayne the Minister sits. Thus if the Tribunal considers that there are not reasonable grounds for the claim, the Act provides for a series of steps to be taken whose ultimate sanction is evidently intended to lie in the political arena of the Parliament. It may readily be accepted that most questions about what is in "the public interest" will require consideration of a number of competing arguments about, or features or "facets" of, the public interest. As was pointed out in O'Sullivan v Farrer47: "[T]he expression 'in the public interest', when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only 'in so far as the subject matter and the scope and purpose of the statutory enactments may enable ... given reasons to be [pronounced] definitely extraneous to any objects the legislature could have had in view'48." That is why a question about "the public interest" will seldom be properly seen as having only one dimension. But s 58(5) can be engaged only where a Minister has decided that the disclosure of a document would be contrary to "the public interest" and has specified the ground or grounds of public interest in relation to which the certificate is given. The Minister's decision that disclosure would be contrary to the public interest is a judgment about which reasonable minds may very well differ. But the Tribunal is not charged with the task of deciding what assessment of the public interest is to be preferred. Its task is to answer the statutory question: are there reasonable grounds for the claim that disclosure would be contrary to the public interest? Again it may be accepted that there may be (and very often will be) competing considerations that are relevant to what I have called the statutory question posed by s 58(5). The Tribunal's task is not to be confined to examining those considerations separately. In particular, it is not to be confined to deciding whether one of the considerations advanced in support of a claim, that a document or documents should not be disclosed, can be seen to be based in reason. Rather, the Tribunal's task is to decide whether the conclusion expressed in the certificate (that disclosure of particular documents would be contrary to the public interest) can be supported by logical arguments which, taken together, are reasonably open to be adopted and which, if adopted, would support the 47 (1989) 168 CLR 210 at 216. 48 Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 per Dixon J. Hayne conclusion expressed in the certificate. The focus of the Tribunal must be upon the grounds for the conclusion. Are those grounds "reasonable grounds"? Of course that is a matter for judgment, not calculation or observation. Against what standard is that judgment to be made? Tamberlin J said49 that "[i]t is settled law that the words 'reasonable grounds', in [the present] context, denote grounds which are not irrational, absurd or ridiculous" and cited a number of previous Federal Court and Tribunal decisions as supporting that proposition50. It followed, so Tamberlin J held51, that the question presented by s 58(5) "is confined, by the terms of the section, to the issue whether there is any non-absurd basis for a claim that disclosure is contrary to the public interest". The appellant submitted that this approach is mistaken, and that it would be wrong to substitute a test of "not irrational, absurd or ridiculous" for the statutory language of "reasonable grounds" for the claim. Rather, so the appellant submitted, the statutory question asks whether there are sufficient grounds to induce the state of mind in a reasonable person that disclosure would be contrary to the public interest. This was a process that was said to require the resolution of disputed questions of fact (like whether release of the documents would inhibit free communication between public servants and Ministers) followed by an assessment of whether those factual grounds can, as a matter of reasoning, lead to the conclusion asserted. The appellant sought support for the first step in these submissions from what was said by this Court in George v Rockett52. But that case concerned a very different legislative provision which governed a Justice's issuing of a warrant where there were "reasonable grounds for suspecting" certain matters. In that context, the references to inducing a particular state of mind are apposite. But the question presented by s 58(5) makes no reference to the state of mind of any person. It asks whether there exist reasonable grounds for a claim that has been made. And it may seriously be doubted that the understanding of the Tribunal's task is assisted by injecting notions of persuasion or satisfaction of the kind with which George v Rockett was concerned. Such notions are unhelpful in 49 (2005) 145 FCR 70 at 74 [4]. 50 Attorney-General's Department v Cockcroft (1986) 10 FCR 180 at 190 per Bowen CJ and Beaumont J; Searle Australia Pty Ltd v Public Interest Advocacy Centre (1992) 36 FCR 111; Battalis v Secretary, Department of Health, Housing and Community Services (1994) 34 ALD 483 at 496-497 per Carr J; Centrelink v Dykstra [2002] FCA 1442 at [24] per Mansfield J. 51 (2005) 145 FCR 70 at 75 [7]. 52 (1990) 170 CLR 104. Hayne this context because they all too readily may be understood as requiring the Tribunal to make its own assessment of where the public interest lies. That is not what s 58(5) permits or requires. It requires an assessment of the grounds for the conclusion that disclosure is not in the public interest. Do reasonable grounds exist for that conclusion? The expression "not irrational, absurd or ridiculous" is not synonymous with "reasonable grounds". Of course, absurd, irrational or ridiculous grounds are not reasonable grounds. But the words "reasonable grounds" do not denote grounds which are "not irrational, absurd or ridiculous". The statutory words are to be given their ordinary meaning. It will seldom be helpful, and it will often be misleading, to adopt some paraphrase of them. In Attorney-General's Department v Cockcroft53 the Full Court of the Federal Court considered the operation of s 43(1)(c)(ii) of the Act – a provision which contained the words "could reasonably be expected to prejudice the future supply of information". In their joint reasons, Bowen CJ and Beaumont J rightly pointed out54 that it was undesirable to attempt any paraphrase of these words. Thus when their Honours said, as they did55, that the words required a "judgment to be made by the decision-maker as to whether it is reasonable, as distinct from to expect certain something consequences, they are not to be understood as having used the latter expression as a paraphrase of the former. Rather, they are to be understood, and have since been understood56, as doing no more than drawing an emphatic comparison. To do more would have been, as their Honours correctly said, "to place an unwarranted gloss upon the relatively plain words of the Act"57. And the same approach should be taken to the expression "reasonable grounds" when it is used in s 58(5) of the Act. irrational, absurd or ridiculous," that It follows that the appellant was right to say that the characterization of any one reason favouring non-disclosure of documents as "non-absurd" does not of itself require an affirmative answer to the statutory question posed in s 58(5). That is, it would be an error to treat the statutory question as requiring an 53 (1986) 10 FCR 180. 54 (1986) 10 FCR 180 at 190. 55 (1986) 10 FCR 180 at 190. 56 Searle Australia Pty Ltd v Public Interest Advocacy Centre (1992) 36 FCR 111 at 57 (1986) 10 FCR 180 at 190. Hayne affirmative answer wherever there is any "non-absurd" reason favouring non-disclosure of the documents in question. In deciding whether reasonable grounds exist for a claim, the Tribunal must take account of any relevant evidence that has been adduced and of any relevant arguments that have been advanced. It must consider the particular claim that has been made and that will require consideration (and commonly the examination) of the particular documents that are in question. The bare fact that the disputed documents are internal working documents of a kind described in s 36(1)(a) of the Act will not demonstrate that there are reasonable grounds for the claim that their production will be contrary to the public interest. The Act assumes that such documents may be, but are not necessarily, of a kind whose production would be contrary to the public interest. But it is well-nigh inevitable that some classification will be made of the documents in issue in a particular case, and the allocation of some or all of the disputed documents to one or more particular classes of document does not necessarily bespeak error by the Tribunal. In particular it does not necessarily reveal that the Tribunal has treated a particular class of document as necessarily protected from disclosure regardless of whether and what grounds there are for that conclusion. Of course the Tribunal must decide any relevant questions of fact that are tendered for decision in the matter before it. And, if opinion evidence is given, the Tribunal may find it necessary or desirable to decide what, if any, of that evidence it accepts. But it by no means follows that, by tendering evidence of opinion about what is or is not in the public interest, a party may require the Tribunal to decide what view of the public interest is to be preferred. That is not the question that the Act presents for the Tribunal. What the Tribunal did The appellant contended that the Full Court should have held that the Tribunal erred in a number of respects. In considering that argument it is necessary for this Court to decide for itself how the Tribunal set about its task. In this regard, the appellant placed chief weight upon the contention that, as Tamberlin J had suggested58 was the proper approach, the Tribunal had seen it as sufficient to identify a single ground that was not irrational, absurd or ridiculous intra-governmental for communications would not be served by disclosure of the disputed documents. But the appellant also submitted that the Tribunal had not decided all of the relevant questions of fact tendered by the competing evidence adduced at the confidentiality of that preserving claim the 58 (2005) 145 FCR 70 at 76-77 [16]. Hayne hearing, and had wrongly treated certain classes of documents as necessarily exempt from disclosure. None of these submissions should be accepted. In particular, the premise for the appellant's argument (that the Tribunal had in fact followed the path which Tamberlin J suggested was the proper approach to the case) was not established. First, Downes J did not treat "not irrational, absurd or ridiculous" as a paraphrase of "reasonable grounds". What his Honour said59 was that "'reasonable grounds' means grounds based on reason, as distinct from something 'irrational, absurd or ridiculous' on the one hand, or 'fanciful, imaginary or contrived' on the other" (emphasis added). Downes J continued60: "To say that reasonable grounds must be grounds based on reason does not resolve one critical issue relating to the test. The concept of reasonable grounds conveys more than the idea of reason. Were that not so, the only task for the [T]ribunal would be to test the logic of the claim and not to examine its basis. What is required is reasonable grounds for the claim. Finding the existence of grounds is an essential aspect of the test. Determining the reasonableness of grounds requires more than reason or logic. It requires the examination of the foundation for the claim." (emphasis added) That examination was to be conducted, Downes J held61, "by asking whether the facts established ... are sufficient to support the claim that disclosure would be contrary to the public interest in the mind of a person guided by reason". Secondly, as is implicit in the description Downes J gave of the task required by s 58(5), his Honour did not confine attention to individual grounds that might tend in favour of the claim that had been made and ask whether any one of those grounds was not irrational. Rather, he considered the particular documents that were in issue, and all of the grounds that were said to support the claim that had been made. The appellant did not contend that any of the grounds advanced in the Tribunal in support of the claim that disclosure of the disputed documents would be contrary to the public interest were irrelevant, or were not capable of constituting a ground for that claim. The appellant did not contend that it had not 59 (2004) 86 ALD 138 at 142 [15]. 60 (2004) 86 ALD 138 at 142 [16]. 61 (2004) 86 ALD 138 at 144 [23]. Hayne been open to Downes J to conclude (as he had62 in relation, for example, to the documents B.001 to B.010 referred to earlier in these reasons) that they contained "jargon and acronyms which would be meaningless to the average reader" and that "[t]he average reader would have difficulty in understanding the conclusions and even greater difficulty in understanding the reasoning and methodology" reflected in the documents. Thus, the appellant did not contend that it had not been open to Downes J to conclude, as he did63 in relation to those documents, that they provided "a substantial factual basis for concluding" that they fell within the grounds asserted in the relevant certificate for the claim that their disclosure would be contrary to the public interest. In the case of those particular documents, the relevant grounds for the claim were grounds asserting that release of the material shown in the documents had "the potential to lead to confusion and to mislead the public". The appellant did not assert that this could not constitute a reasonable ground for the claim that had been made. The appellant's complaint, in the Full Court, and repeated in this Court, was that Downes J had misdirected himself about the task required by s 58(5) by adopting a test of the kind described by Tamberlin J. That complaint was not made out. The appellant's submission, that Downes J had not resolved all necessary factual questions arising from the evidence that had been tendered, was a contention that centred upon the evidence given by the appellant's witnesses to the effect that the grounds stated in the certificates were not soundly based. The contention should be rejected. To the extent to which the argument amounted to a submission that the Tribunal was bound to assess for itself what the public interest required, as distinct from whether reasonable grounds existed for the claim that had been made, the argument should be rejected for the reasons stated earlier. That was not the Tribunal's task. And close attention was given by Downes J to the opinions that the appellant's witnesses expressed in their evidence. Thus, Downes J referred (at some length) to the evidence given by the appellant's witnesses, but said64 of it (by particular reference to the evidence of Mr Rose) that s 58(5) required him to consider "all the available reasonable opinions", and that "[t]o assess one expert opinion as definitive would not be to apply s 58(5)". There was no failure to resolve any relevant question of fact that was tendered by the parties. 62 (2004) 86 ALD 138 at 155 [76]. 63 (2004) 86 ALD 138 at 155 [77]. 64 (2004) 86 ALD 138 at 150 [56]. Hayne The appellant submitted that Downes J had treated the classification of some documents as conclusive of the issue before him and that this represented a return to the "class claims" for confidentiality of documents that the Act had been designed to eliminate. This classification approach was said to be revealed by the use Downes J made of earlier decisions of the Tribunal considering whether reasonable grounds existed for claims made, in other circumstances, that disclosure of other documents would be contrary to the public interest. In the course of his reasons, Downes J made several references to previous decisions of the Tribunal in which claims that disclosure of certain kinds of documents would not be in the public interest had been considered and upheld. He said65 of these earlier decisions that "[a] decision upholding a claim which has not been corrected on appeal must provide some basis for a positive finding that where a factual basis exists the grounds are reasonable". The reference to "where a factual basis exists" is important and shows that Downes J did not treat past decisions of the Tribunal as determinative of the issues that were to be decided in the matters before him. And that this was not the approach adopted is put beyond doubt in the very next sentence of the reasons where Downes J said66 that "it is ultimately for me to be satisfied with respect to each document before me". Downes J did not, as the appellant contended, treat the class into which documents fell as determinative of whether reasonable grounds existed for the claims that had been made. The appellant's contentions that the Tribunal erred in law were not made out. The appeal should be dismissed with costs. 65 (2004) 86 ALD 138 at 150 [52]. 66 (2004) 86 ALD 138 at 150 [52]. CALLINAN AND HEYDON JJ. The question that this appeal raises is as to the test to be applied to a review under the Freedom of Information Act 1982 (Cth) ("the Act") of a conclusive certificate of a Minister denying access to documents produced in or to the Minister's department. The facts The appellant works for The Australian, a broadsheet circulating throughout Australia. The appellant is its "Freedom of Information Editor". The appellant requested the respondent to provide the following: "Reports, reviews or evaluations completed in the 12 months from 3 December 2001 to 3 December 2002 detailing the extent and impact of bracket creep and its impact on revenue collection of income tax, including information in relation to higher tax burdens faced by Australians and/or projections of revenue collection increases from bracket creep, but excluding documents that have already been released publicly or duplicate copies of documents." A further request was made on 3 December 2002 for: "Documents relating to any review/report or evaluation completed on the First Home Buyers Scheme in the last two years, including documents summarising the level of fraud associated with the program, its use by high wealth individuals and its impact on the housing sector's performance in the Australian economy." Access to the documents sought was denied on the basis that they were exempt documents under the Act. Not all of the documents are in issue. This Court is concerned with some 47 of them only, 36 the subject of the first request, and 11 of the second. The decision of the Administrative Appeals Tribunal The appellant sought review by the Administrative Appeals Tribunal ("the Tribunal") of the exemption claimed by the respondent. Not long before the hearing was to begin, the Treasurer of the Commonwealth issued conclusive certificates under s 36(3) of the Act. The certificates identified seven grounds of conclusiveness. The grounds were the same in respect of each request. They were: "(a) Officers of the Government should be able to communicate directly, freely and confidentially with a responsible Minister and members of the Minister's office on issues which are considered to have ongoing sensitivity and are controversial and which affect the Minister's portfolio. (b) Officers should be able freely to do in written form what they could in circumstances where any oral otherwise do orally, Such written remain confidential. communication would communications and policy formulation processes ensure that a proper record is maintained of the considerations taken into account. If they were to be released for public scrutiny, officers may in the future feel reluctant to make a written record, to the detriment of these processes and the public record. to decision-making relating The release of a document that discusses options that were not settled at the time the document was drafted and that recommends or outlines courses of action that were not ultimately taken has the potential to lead to confusion and to mislead the public. The release of such potentially misleading or confusing material would not make a valuable contribution to the public debate and has the potential to undermine the public integrity of the Government's decision making process by not fairly disclosing reasons for the final position reached. Decision-making processes are multi- layered and the documents reflect partially considered matters and tentative conclusions. The release of the material would tend to be misleading or confusing in view of its provisional nature, as it may be taken wrongly to represent a final position (which it was not intended to do) and ultimately may not have been used or have been overtaken by subsequent events or further drafts. The release of documents that contain a different version of estimates, projections, costings and other numerical analysis that cannot be put into context because of the absence of any explanation of the variables used or assumptions relied upon has the potential to lead to confusion and to mislead the public. The release of such potentially misleading or confusing material would not make a valuable contribution to the public debate and has the potential to undermine the public integrity of the Government's decision-making process by not fairly disclosing reasons for the final position reached. The preparation of possible responses to questions in Parliament is a very sensitive aspect of the work of departmental officers and it is appropriate that briefing and other material produced on a confidential basis in the preparation of those responses, remain undisclosed. The release of such documents would threaten the protection of the Westminster-based system of Government. The release of documents that are intended for a specific audience familiar with the technical terms and jargon used, has the potential for public misunderstanding in that the contents of the documents could be misinterpreted. These documents were not intended for publication and publication would be misleading as the documents do not contain sufficient information for an uninformed audience to interpret them correctly and reasonably." The Tribunal, constituted by its President, Downes J, pursuant to s 58B(1) and (2) of the Act67, proceeded to hear the matter which now raises the question of the conclusiveness of the certificates. Both the appellant and the respondent called evidence. Part of the hearing was held in private pursuant to s 58C of the Act. One of the witnesses called on behalf of the appellant was Mr Rose, a very experienced retired senior official, who had been the Secretary of the Department of the Attorney-General for a period. The Tribunal said this of his evidence68: "This [Mr Rose's] evidence provides the [appellant] with a basis for challenging the certificates. It does not follow, however, that when such evidence is adduced the test in s 58(5) of the Act will be satisfied. There are a number of reasons for this. First, as the words of Mr Rose themselves show, he is giving evidence of his experience. Second, notwithstanding Mr Rose's distinction his evidence is stated largely in the form of conclusions which are drawn from primary evidence which is generally unstated. Third, the evidence does not exclude others from 67 Section 58B(1) and (2) provide: "(1) Where a request is made in accordance with subsection 58(4), (5) or (5A), the Tribunal shall be constituted in accordance with subsection (2) for the purposes of any proceeding for the determination of the question to which the request relates. the Tribunal For the purposes of a proceeding referred to in subsection (1), the Tribunal shall be constituted by: 3 presidential members; or a presidential member alone." 68 Re McKinnon and Secretary, Department of the Treasury (2004) 86 ALD 138 at holding different opinions. In this regard I also have evidence from relevant treasury officers. Their evidence, if accepted, much more closely addresses the claims made for the documents under consideration. Their experience is direct and contemporary. Fourth, Mr Rose is addressing the validity of the reasoning as much as the factual basis for the grounds and that is not a matter wholly determined by expert evidence. The views of others, including the views of members of tribunals considering claims under the Act, are relevant. Fifth, the test itself, as I have found it to be, requires a consideration of all the available reasonable opinions. To assess one expert opinion as definitive would not be to apply s 58(5). Finally, the ultimate question of whether reasonable grounds exist is a matter for me." The Tribunal derived little assistance from the evidence of the appellant's other witnesses, the editor of The Australian, Mr Stutchbury69; a former Auditor- General for New South Wales and now a writer and journalist, Mr Harris70; and an economist, Professor Dixon71. It was inhibited, the Tribunal said, in exposing publicly the most significant of the evidence given on behalf of the respondent by reason of s 58C(3) of the Act although that evidence had, in substance, been made available to the appellant72. The Tribunal was of the view that the evidence taken in private supported the claims made in the certificates, particularly that of Mr Murray73, and that his evidence established the existence of an alternative "reasonable opinion" to any of those of the appellant74. The Tribunal said75: The cross-examination did not "Mr Murray was cross-examined. demonstrate the evidence to be unreasonable. It is not for me to decide which of the opinions of the [appellant's] and respondent's witnesses are 69 (2004) 86 ALD 138 at 151 [58]-[60]. 70 (2004) 86 ALD 138 at 151 [61]. 71 (2004) 86 ALD 138 at 151 [62]. 72 (2004) 86 ALD 138 at 152 [65]. 73 An officer from the Department of the Treasury whose title was "Executive Director, Fiscal and Corporate". 74 (2004) 86 ALD 138 at 152 [66]. 75 (2004) 86 ALD 138 at 152 [66]. preferable. That is not the s 58(5) task. Provided there is a reasonable basis for an opinion and there is evidence to support it the test in s 58(5) will be satisfied. The evidence of Mr Murray as to the reasonableness of the claims in the conclusive certificates affirms the findings of previous tribunals that there is a reasonable basis for claims of the kind represented by each of the claims made in the conclusive certificates here." In deciding against the appellant, the Tribunal examined for itself each document in issue. It held that in order for the conclusiveness of the certificates to be sustained, the respondent must show, the onus being upon him, that there were reasonable grounds for the claim; and that therefore there had to be an "examination of the foundation for the claim."76 It said this of the grounds relied on by the respondent77: "To the extent to which the generality of the grounds renders them less persuasive I will need to look at how each individual claim might be supported. Because the test is ultimately based in findings of fact and not simply on the process of reasoning attached to a ground relied upon, it will usually be necessary to know something about each document to enable a judgment to be made. Sometimes characterising the document will be enough, particularly where the ground relied upon addresses the document individually. However, where the claim is not obviously good it will usually be helpful to examine the document to see how the document relates to the claim." The Tribunal was of the view that it sufficed for the Treasurer to show that the claim, meaning thereby, we think, the grounds for the claim, was not an irrational one78. As to the capacity of documents to mislead, the Tribunal said this79: "However, the s 36 ground may apply where the result of the disclosure will be to release misleading information about a topic of general interest when the purpose of the application is to gain access to general information or to government policy relating to such information." 76 (2004) 86 ALD 138 at 142 [16]. 77 (2004) 86 ALD 138 at 145 [29]. 78 (2004) 86 ALD 138 at 146 [35]. 79 (2004) 86 ALD 138 at 148 [43]. We will return to the Tribunal's reasons later but what we have referred to is enough, for present purposes, to provide the flavour and substance of the Tribunal's decision in favour of the respondent. The appeal to the Full Court of the Federal Court The appellant appealed to the Full Court of the Federal Court (Tamberlin and Jacobson JJ, Conti J dissenting)80. Such an appeal is on a question of law only (s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act")). Jacobson J wrote the principal judgment for the majority. His Honour defined the substantial issues before the Full Court, which were somewhat broader and more numerous there than in this Court, in this way81: "(a) whether the Tribunal misdirected itself as to the test stated in s 58(5) of [the Act], namely, 'the question whether there exist reasonable grounds for the claim', and in its application of that test[;] (b) whether the Tribunal misdirected itself as to what is involved in the concept of 'public interest' under s 36 of [the Act;] (c) whether the Tribunal erred in failing properly to consider the appellant's evidence as to why it was in the public interest that the documents be disclosed[;] (d) whether the Tribunal erred in the procedure it adopted pursuant to s 58C of [the Act] by excluding the appellant from attending a part of the proceeding during which oral evidence was given by two Treasury witnesses in relation to the question of whether the disclosure of documents would be contrary to the public interest[;] (e) whether the Tribunal erred in its construction of the question of whether some of the documents were reports of 'scientific or technical experts'; see s 36(6) of [the Act]. That subsection provides that the section does not apply to such reports so that a purported certificate could not have the effect of establishing conclusively that the disclosure of the documents would be contrary to the public interest; 80 McKinnon v Secretary, Department of Treasury (2005) 145 FCR 70. 81 (2005) 145 FCR 70 at 125 [138]. whether the Tribunal erred in finding that a communication with a member of the Minister's staff is effectively a communication with the Minister." After summarizing the relevant provisions of the Act and the reasons for decision of the Tribunal his Honour said82: "It is plain that the question of whether reasonable grounds exist must be a question of fact for the Tribunal. It is equally plain that it would be an incorrect construction of s 58(5) for the Tribunal to approach the question of reasonable grounds solely upon the basis of analogical support for a particular type of claim by reference to past authorities. This would be to permit class claims to be accepted, contrary to the warnings of the High Court in Sankey v Whitlam[83] and the Full Court in Northern Land Council[84]. Moreover, it would be to divert the Tribunal from the requirement that it address, as a question of fact, the issue of whether reasonable grounds exist. It seems to me that the Tribunal was alert to the need to decide, as a question of fact, whether reasonable grounds existed and to examine the documents in order to make that finding. It said at [29] that the test was ultimately based on findings of fact and not simply on the process of reasoning attached to a ground relied upon in the certificate. It also referred at [52] to the need for a 'factual basis'. It repeated the reference to a factual basis in [56] of its reasons." His Honour then turned his mind to the question whether the Tribunal is required to balance all aspects of the public interest, both for and against the "Although Dr Griffiths'[86] argument has some attraction, in my view it does not accord with the proper construction of s 58(5). The 82 (2005) 145 FCR 70 at 137-138 [215], [219]. 83 (1978) 142 CLR 1. 84 Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1. 85 (2005) 145 FCR 70 at 140 [233]. 86 Counsel for the appellant. correct approach to construction was stated by Beazley J in Australian Doctors'[87] and in the authorities which her Honour followed in that case. Those authorities make it clear that the approach urged upon the court by Dr Griffiths would negate the reasonable grounds concept and permit the Tribunal, through the back door, to come to its own opinion of what is in the public interest. That is not what s 58(5) requires. As Morling J said in Re Peters[88]: 'the question is not whether the Tribunal holds that opinion. Rather, the question is whether reasonable grounds exist for the claim that disclosure would be contrary to the public interest.'" Jacobson J referred to another question which he answered adversely to "The third subquestion raised under this heading is whether the opinions of one witness whose views are not demonstrated to be unreasonable can be sufficient to support a finding of reasonable grounds. In my view this is a question of fact which cannot be the subject of an appeal under s 44(1) of the Act: Vetter v Lake Macquarie City Council90. Even if this is not correct, there is nothing in the Tribunal's reasons to suggest that it did not take into account the views of the witnesses called for the appellant. It is true that the Tribunal made no express findings about the evidence of Mr Harris and Professor Dixon. But it is clear from what the Tribunal said at [56] about Mr Rose's evidence that it preferred the evidence of Mr Murray to that of the appellant's witnesses." Some other of his Honour's observations should be quoted91: "First, it seems to me that the entire question is predicated upon an assumption that the concept of the public interest can be defined within 87 Australian Doctors' Fund Ltd v Commonwealth of Australia (1994) 49 FCR 478. 88 Re Peters and Department of Prime Minister and Cabinet (No 2) (1983) 5 ALN N306 at N307. 89 (2005) 145 FCR 70 at 140-141 [238]-[239]. 90 (2001) 202 CLR 439 at 450-451 [24]-[25] per Gleeson CJ, Gummow and Callinan JJ, 467 [78] per Kirby J, 477-478 [108] per Hayne J. 91 (2005) 145 FCR 70 at 141-142 [243], [246]. precise boundaries. That proposition was rejected by Lockhart J in Right to Life Assn (NSW) Inc v Secretary, Department of Human Services and Health (1995) 56 FCR 50 at 59. His Honour there observed that opinions have differed and will always differ as to what is or is not in the public interest. It is plain that the categories of public interest are not closed and that different minds will differ as to what is, or what is not, in the public interest. Even if the question discloses a pure question of law in accordance with s 44(1) of the AAT Act, I do not consider that any error of law has been established. There is nothing in the subject matter or scope of [the Act] which confines the discretionary factors to be taken into account in the manner suggested by the appellant." It is unnecessary to enter upon the detail of the reasoning of Conti J in dissent as his Honour's reasoning was substantially adopted in the submissions of the appellant to which we will immediately go. The appeal to this Court The appellant's arguments The appellant first referred to the objects of the Act92, pointing out that there was a tension between them and the apparently limited nature of the review which the Tribunal was empowered to undertake under the Act: "(1) The object of this Act is to extend as far as possible the right of the Australian community to access to information in the possession of the Government of the Commonwealth by: 92 Section 3. form creating a general right of access to information in the possession of Ministers, documentary departments and public authorities, limited only by exceptions and exemptions necessary for the protection of essential public interests and the private and business affairs of persons in respect of whom information is collected and held by departments and public authorities". It was then submitted that the Tribunal did not address in any meaningful way the evidence adduced by the appellant: although the Tribunal said that it would "consider the opinions of Mr Rose in [its] assessment of the claims"93, its reasoning showed that this was not done. The uncontradicted evidence of Mr Rose, it was said, was put to one side on the basis that the statutory test94: "requires a consideration of all the available reasonable opinions. To assess one expert opinion as definitive would not be to apply s 58(5)." This should, it was submitted, be contrasted with the Tribunal's approach to the evidence of Mr Murray, as appears from this passage in its reasoning95: "The importance of this evidence is that it supports the existence of an alternative reasonable opinion from the opinions expressed by the [appellant's] witnesses. ... Provided there is a reasonable basis for an opinion and there is evidence to support it the test in s 58(5) will be satisfied." (emphasis added) Passing reference only was made, erroneously, the appellant argued, to the evidence of the appellant's other witnesses, Mr Harris and Professor Dixon. In his written submissions the appellant then put this: "It is implicit in the Tribunal's construction of the s 58(5) task that if any one facet of the public interest can be established as supported by a non-absurd opinion of one witness, and/or by past Tribunal decisions, then that is sufficient to satisfy the test. There is no requirement to assess all the evidence on any particular facet of the public interest, let alone to assess competing facets of the public interest. The net result of the approach of the Tribunal is encapsulated in the statement of Tamberlin J that:96 'If there is a ground that is not irrational, absurd or ridiculous for a claim that the first-mentioned facet of the public interest would not be served by disclosure, then that alone is sufficient to satisfy the requirements of s 58(5). It is not necessary in order to decide that 93 (2004) 86 ALD 138 at 151 [57]. 94 (2004) 86 ALD 138 at 150 [56]. 95 (2004) 86 ALD 138 at 152 [66]. 96 (2005) 145 FCR 70 at 76-77 [16]. limited question that the decision-maker should consider and weigh all the other facets, and the grounds which may reasonably support each of those facets, in order for s 58(5) to be satisfied.' The effect of the Tribunal's decision, as upheld by the majority of the Full Court, is substantially to undermine the Tribunal's proper review function where a conclusive certificate has been issued. The practical result is that, contrary to the intention manifest in the Act, s 36(3) certificates are effectively unchallengeable in Tribunal proceedings (and the same may be said for other FOI certificates). The correlative increase in the temptation to grant such certificates in relation to matters of political or governmental sensitivity is obvious, undermining the Act's operation. The approach of the Tribunal represents an abdication of the Tribunal's statutory review function and a misconstruction of ss 36 and Although broad, the scope of permissible considerations [of the public interest] is not unlimited. The ... Act itself manifests the Parliament's [view] of [the] public interest [in the] disclosure of official information, reflected in a general policy of disclosure and access 'limited only by exceptions and exemptions necessary for the protection of essential public interests and the private and business affairs of persons ...' (to quote s 3(1)(b)).97" The appellant submitted that if there is conflicting evidence as to the degree of likelihood that the revelation of material will in some way compromise the flow of information or advice within a department, or to a Minister, or confuse or mislead the public, the Tribunal must resolve the conflict: it must assess the evidence, and find that either of these consequences is more likely than not, and do so by assessing the significance of all of the evidence in all of the circumstances. The submission continued, that if the error of the Full Court is not corrected, in any future like dispute an official invariably will be capable of articulating a non-absurd rationalization for conclusiveness on the basis of contrariety to the public interest: to fail to resolve factual disputes in the light of a conclusion, stated by one witness, is to fail to undertake a true review, and is to defer to the view of one witness only. 97 See also General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84 at [147]; News Corporation Ltd v National Companies and Securities Commission (No 4) (1984) 1 FCR 64 at 66. The nub of the appellant's submissions was that the Tribunal and the majority of the Full Court effectively substituted a test of "not irrational, absurd or ridiculous" for the statutory language of "reasonable grounds". The expression "reasonable grounds" allows some room for difference based on an assessment of the evidence and the arguments. Outline of relevant provisions The objects of the Act should be set out in full because the appellant has submitted that the Tribunal and the Full Court failed to have due regard to them98: "Object The object of this Act is to extend as far as possible the right of the Australian community to access to information in the possession of the Government of the Commonwealth by: (a) making available to the public information about the operations of departments and public authorities and, in particular, ensuring that rules and practices affecting members of the public in their dealings with departments and public authorities are readily available to persons affected by those rules and practices; and form creating a general right of access to information in the possession of Ministers, documentary departments and public authorities, limited only by exceptions and exemptions necessary for the protection of essential public interests and the private and business affairs of persons in respect of whom information is collected and held by departments and public authorities; and creating a right to bring about the amendment of records containing personal incomplete, information incorrect, out of date or misleading. that It is the intention of the Parliament that the provisions of this Act shall be interpreted so as to further the object set out in subsection (1) and that any discretions conferred by this Act shall be exercised as far as possible so as to facilitate and promote, 98 Section 3. promptly and at the lowest reasonable cost, the disclosure of information." Section 4 of the Act is the definitions section. "Document" is broadly defined. Relevantly, an "exempt document" is a document which by virtue of Pt IV is an exempt document. Section 11, subject to the Act, confers a right of access to documents, other than exempt documents, which are the subject of Pt IV of the Act, upon every person, regardless, among other matters, of a Minister's belief as to the motives of the person seeking access. Exceptions, not relevant to this case, are stated in s 12. Part IV of the Act is concerned with categories of exempt documents. Section 33 is concerned with documents affecting national security, defence or international relations, s 33A with documents affecting relations with the States, s 35 with Executive Council documents, s 37 with documents affecting the enforcement of the law and public safety, s 39 with documents affecting financial or property interests of the Commonwealth, and s 41 with documents affecting personal privacy. Section 42 deals with privileged documents; s 43 with documents relating to business affairs; s 43A with documents relating to research; s 44 with documents affecting the national economy; s 45 with documents containing material obtained in confidence; and s 46 with documents which, if disclosed, would be in contempt of Parliament, or court. All of these sections make special provision for the treatment of each category. Sections 15 to 20 are largely concerned with the means by which access may be sought and provided. Under s 21, a Minister may defer access. Section 23 states by whom the request may be granted. If compliance with a request would substantially and unreasonably divert the resources of the department, or an agency as defined, or substantially and unreasonably interfere with the performance of a Minister's functions, access may be refused (s 24). If access is refused, the applicant must be given findings of material facts and reasons (s 26). A charge for the provision of the documents may be imposed Section 36, which is in Pt IV of the Act and is one of the two sections most relevant to this appeal, is as follows: "Internal working documents Subject to this section, a document is an exempt document if it is a document the disclosure of which under this Act: (a) would disclose matter in the nature of, or relating to, opinion, advice or recommendation obtained, prepared or recorded, or consultation or deliberation that has taken place, in the course of, or for the purposes of, the deliberative processes involved in the functions of an agency or Minister or of the Government of the Commonwealth; and (b) would be contrary to the public interest. (3) Where a Minister is satisfied, in relation to a document to which paragraph (1)(a) applies, that the disclosure of the document would be contrary to the public interest, he or she may sign a certificate to that effect (specifying the ground of public interest in relation to which the certificate is given) and, subject to the operation of Part VI, such a certificate, so long as it remains in force, establishes conclusively that the disclosure of that document would be contrary to the public interest. (7) Where a decision is made under Part III that an applicant is not entitled to access to a document by reason of the application of this section, the notice under section 26 shall state the ground of public interest on which the decision is based." Part VI provides for the review of decisions under the Act: under s 54 by way, first, of internal review. Section 55 confers a right of review by the Tribunal. Section 58, which is the other of the most relevant sections, should be set out because it defines the jurisdiction of the Tribunal in undertaking the review: "Powers of Tribunal Subject to this section, in proceedings under this Part, the Tribunal has power, in addition to any other power, to review any decision that has been made by an agency or Minister in respect of the request and to decide any matter in relation to the request that, under this Act, could have been or could be decided by an agency or Minister, and any decision of the Tribunal under this section has the same effect as a decision of the agency or Minister. (2) Where, in proceedings under this Act, it is established that a document is an exempt document, the Tribunal does not have power to decide that access to the document, so far as it contains exempt matter, is to be granted. (3) Where there is in force in respect of a document a certificate under section 33, 33A, 34, 35 or 36, the powers of the Tribunal do not extend to reviewing the decision to give the certificate, but the Tribunal, constituted in accordance with section 58B, may determine such question in relation to that certificate as is provided for in whichever of subsections (4), (5) and (5A) applies in relation to that certificate. (4) Where application is or has been made to the Tribunal for the review of a decision refusing to grant access to a document in accordance with a request, being a document that is claimed to be an exempt document under section 33, 33A, 34 or 35 and in respect of which a certificate (other than a certificate of a kind referred to in subsection (5A)) is in force under that section, the Tribunal shall, if the applicant so requests, determine the question whether there exist reasonable grounds for that claim. (5) Where application is or has been made to the Tribunal for the review of a decision refusing to grant access to a document in accordance with a request, being a document that is claimed to be an exempt document under section 36 and in respect of which a certificate is in force under that section, the Tribunal shall, in a case where it is satisfied that the document is a document to which paragraph 36(1)(a) applies, if the applicant so requests, determine the question whether there exist reasonable grounds for the claim that the disclosure of the document would be contrary to the public interest. The presence of s 58C(2), (3) and (4) in the Act explains why the hearing before the Tribunal proceeded in the way that it did, that is, partly in private: "(2) At the hearing of a proceeding referred to in subsection 58B(1), the Tribunal: shall hold in private the hearing of any part of the proceeding during which evidence or information is given, or a document is produced, to the Tribunal by: an agency or an officer of an agency; a Minister or a member of the staff of a Minister; or (iii) a member, an officer, or a member of the staff, of a body referred to in subsection 7(1) or the person referred to in that subsection; or during which a submission is made to the Tribunal by or on behalf of an agency or Minister, being a submission in relation to the claim: in the case of a document in respect of which there is in force a certificate under subsection 33(2) or 33A(2) or section 34 or 35 – that the document is an exempt document; in the case of a document in respect of which there is in force a certificate under section 36 – that the disclosure of the document would be contrary to the public interest; or in the case where a certificate is in force under subsection 33(4) or 33A(4) – that information as to the existence or non-existence of a document as described in a request would, if contained in a document of an agency: in a case where the certificate was given under subsection 33(4) – cause that document of an agency to be an exempt document for a reason referred to in subsection 33(1); or in a case where the certificate was given under subsection 33A(4) – cause subsection (2A) to apply to that document of an agency; and subject to subsection (4), shall hold the hearing of any other part of the proceeding in public. (3) Where the hearing of any part of a proceeding is held in private in accordance with subsection (2), the Tribunal: (a) may, by order, give directions as to the persons who may be present at that hearing; and shall give directions prohibiting the publication of: any evidence or information given to the Tribunal; the contents of any documents lodged with, or received in evidence by, the Tribunal; and (iii) any submission made to the Tribunal; at that hearing. (4) Where, in relation to a proceeding referred to in subsection 58B(1), the Tribunal is satisfied that it is desirable to do so by reason of the confidential nature of any evidence, information or matter or for any other reason, the Tribunal may, by order: direct that the hearing of a part of the proceeding that, but for this subsection, would be held in public shall take place in private and give directions as to the persons who may be present at that hearing; give directions prohibiting or restricting the publication of: the contents of any document lodged with the Tribunal in relation to the proceeding; or any evidence or information given to the Tribunal, the contents of any document received in evidence by the Tribunal, or any submission made to the Tribunal, in relation to the proceeding otherwise than at a hearing held in accordance with subsection (2); or in private give directions prohibiting or restricting the disclosure to some or all of the parties to the proceeding of evidence given before the Tribunal, or the contents of a document lodged with, or received in evidence by, the Tribunal, in relation to the proceeding." A Tribunal may, as it did here, personally examine exempt documents pursuant to s 64 of the Act. Section 93 requires that a report be provided annually to Parliament on the operation of the Act which must be laid before each House of it. Material to enable its preparation must be made available by Ministers. Disposition of the appeal It may be accepted, as the appellant submitted, that there is a tension between the objects of the Act and the restricted function of the Tribunal in undertaking a review. But that tension is resolved here by the explicit language of Pt IV of the Act which in language free of all ambiguity states what the function of the Tribunal is in reviewing the conclusiveness of a Minister's certificate. In short, the relevant sections clearly and designedly limit the broad and high-sounding objects. Furthermore the object set out in s 3(1)(b) is, itself, in terms, stated to be "limited ... by exceptions and exemptions necessary for the protection of essential public interests", a matter as to which a responsible Minister has the primary and, as will appear, almost the final judgment by reason of other relevant statutory language. The appellant's evidence The appellant's last submission is that the Tribunal failed to address, in any meaningful way, the evidence adduced by the appellant. So far as the evidence was substantially probative of any factual issue, the position simply was that the Tribunal preferred that of it which was given by the respondent's witness Mr Murray. Unfortunately, the Tribunal, the Full Court and this Court are precluded, by reason of the mandatory language of s 58C of the Act which we have set out, from revealing the nature and detail of Mr Murray's evidence which the Tribunal found so persuasive. But some of the evidence called on behalf of the appellant, which may be referred to and discussed, shows why it would have been easy for the Tribunal to regard other, more cogent evidence, as it saw Mr Murray's to be, as more helpful and ultimately more persuasive. Mr Stutchbury, as experienced as he was, both in his affidavit which tended to rehearse the appellant's arguments rather than state relevant facts, and in cross-examination, failed to make the important distinction between a topic of public interest and documents on or in relation to the topic. It could hardly be denied that the topics with which the documents in issue are concerned were matters of public interest. That does not mean that every document generated by, or everywhere in the deep recesses of, the Executive, concerning these topics is valuable, useful, or necessarily one in respect of which there existed no reasonable grounds or bases for non-disclosure in the public interest: or, although this is not the statutory test, to put the matter another way, that the public interest necessarily, or even on balance, required that they be disclosed. There was before the Court no evidence of the number of officials employed by the Commonwealth or within the Department of Treasury. But it is a matter of common knowledge that there are thousands of these, who, it may also safely be assumed, generate millions of documents annually, a large number of which would touch upon or concern the topics nominated by the appellant in his requests for documents. Not all of these documents could possibly be of equal importance. There are likely to be many documents written within a department of which a Minister could have no possible knowledge. Equally there are likely to be documents produced which reflect no opinion, proposal, idea, or even hope of a Minister, and which will have no influence upon any decision of a Minister or a government of which he is a member. So too, documents of which the Minister, or even a senior official, do become aware, may be produced to test assumptions, or for the purposes of comparison with other documents only. Some documents may be erroneous, or be based upon invalid assumptions, or may be of ephemeral interest only, or be overtaken by other events or otherwise swiftly superseded. Departments of public service are today so large, so dispersed throughout the nation, and so numerous in staff, as to make harsh any unqualified application in modern times of the convention that a Minister is responsible for everything that happens or should have happened, or that he administers99. every document produced, Mr Stutchbury's evidence did not take due account of the distinction between the topics, undoubtedly ones of public interest, and the direct relevance, currency, and varying significance and importance of the documents that might have been brought into existence about them. the department The matter to which Mr Rose's evidence was largely directed was the candour with which officials advised, or should advise, their Ministers and threats to it. Again, however, much of his evidence was argumentative rather than factually probative. For example, he quoted in his affidavit at some length from a document produced by the Australian Law Reform Commission in relation to freedom of information. The material comprised matters for submission, rather than inclusion in an affidavit, even though Mr Rose had been President for a time of the Australian Law Reform Commission. He also asserted this: "In my experience release of even very sensitive and controversial documents does not free communication with Ministers. An effective officer in the modern Public Service understands his or her role is to provide free and frank advice in a properly accountable manner." servants' direct and impede public 99 This is acknowledged in the Australian Department of Prime Minister and Cabinet publication, A Guide on Key Elements of Ministerial Responsibility, (1998) at 1. In any case, it seems debatable whether there has ever, in the United Kingdom or in Australia, been a strict convention that Ministers take individual responsibility for every departmental act, omission, or transgression: see Birch, Representative and Responsible Government, (1964) at 141; O Hood Phillips and Jackson, Constitutional and Administrative Law, 8th ed (2001) at 352-353 [17-017]- [17-019]; and Weller, "Parliamentary accountability for non-statutory executive power: Impossible dream or realistic aspiration?", (2005) 16 Public Law Review Deference should be accorded to Mr Rose's informed opinion. However, the opinion just quoted is a very far-reaching opinion relating to the states of mind of others. One must question his, indeed anyone's, ability to express an opinion of that kind. We would, for ourselves, have given it little weight, as we would his rejection of other grounds relied upon by the respondent based upon his own personal experience. Another paragraph of his affidavit failed to come to grips with the ground of conclusiveness relied upon by the respondent, that the documents were provisional in nature or superseded. Contrary to Mr Rose's opinion that the exposure of these would make "a very useful contribution to the public debate", in our opinion documents of that kind are more likely to mislead or confuse, or to make no contribution to any useful, or currently relevant debate. Some of Professor Dixon's evidence made the point, incontestable we think, that the topics were of public interest, as to the way in which, for example, "bracket creep" adversely affected many taxpayers. But a distinction that he too did not make in his evidence was the distinction between provisional or superseded documents, and current ones. The former could do little to advance the analyses which Professor Dixon and other economists would wish to do, of "the Treasury's apparent concern with the number of people who move from one tax bracket to another in any given year". The other witness called by the appellant was Mr Harris, an experienced financial journalist and a former senior official in the Commonwealth public service, working in Treasury, and Auditor-General for New South Wales. Much of what he said about "bracket creep" was self-evidently correct. So too, his knowledge of the processes followed in preparing budgets during his period of service could not be questioned. But his affidavit otherwise was also argumentative rather than factually probative. We would not have thought it helpful to describe as he did, the Treasurer's views of public administration as "old fashioned". Nor is it relevant to the controversy to point out that perhaps some of the documents could lawfully be revealed by the Auditor-General. Rather the contrary is the case. That they arguably could, merely demonstrates that the machinery of government is subject to another valuable check or balance100. Mr Harris also, unconvincingly, purported to speak as to the states of mind of other officials of other times. It is understandable therefore that the Tribunal was unimpressed by the evidence called on behalf of the appellant. To the extent that that evidence was truly probative about relevant current matters, or otherwise warranted consideration, the Tribunal dealt with it adequately. 100 See also s 93 of the Act, referred to earlier. The grounds of claim It is appropriate to make some observations at this point about the specific grounds taken of conclusiveness. The reference to "ongoing sensitivity" in the first is not entirely clear. We would be inclined ourselves to think that the fact that documents have continuing sensitivity, are controversial and affect a Minister's portfolio would not alone provide a reasonable ground for continuing confidentiality. The use of the word "ongoing" strongly suggests currency, and the use of the word "controversial" might well at least imply public interest. The second ground, which speaks of jeopardy to candour, and the desirability of written communications, obviously cannot readily be dismissed, and it seems to us that this is a matter upon which a Minister's opinion and experience are likely to be as well informed and valuable as those of anyone else, including senior officials. The third ground raises an issue of tentativeness, that is to say, that the documents were concerned with matters that were not settled and recommendations that were not adopted. This too, on its face, is a cogent ground. It is difficult to see how it would not be reasonable for a Minister to take the view that the release of material of that kind would not make a valuable contribution to public debate. The fourth ground has so much in common with the third that nothing further need be said about it. The fifth ground is far less persuasive. It claims that the difficulty of putting financial data into context provides reason for the non-disclosure of otherwise relevant documents. It is, we think, unrealistic for any Minister to believe that he or she can control, or dictate the context in which matters of public interest are debated. All that a Minister can do is seek to explain the data and to provide as accurate a context for it as possible. The sixth ground takes the point that such documents as are prepared for possible responses to questions in Parliament should remain confidential because their exposure would threaten the Westminster system of government, that is to say, responsible government, to which we have earlier referred. This cannot be said to be an unreasonable view. The Minister is the one who is responsible for an answer given in Parliament, within the practical modern limits to which we have referred. It is his or her answer itself which is a, or the, matter of public interest, and not the various documents which may have canvassed that answer, or other possible answers. It will be in respect of the answer that the Minister actually gives that any political price will have to be paid, just as there may well be a political price to be paid for any claim of conclusiveness, whether it is well- based or not. The seventh ground is at least arguably not reasonable, in effect, that the public may not be trusted to understand the technicalities of, and the jargon used in otherwise revealable documents. It is not as if the public is unaided by experts and others who can, including, for example, an informed journalist such as The grounds taken did not clearly articulate something that the oral evidence suggested, namely that the respondent was concerned that what might be disclosed could well be misrepresented, abbreviated or distorted, or at least not presented in a balanced way. Indeed, cross-examination of the appellant's witnesses certainly did go some way towards demonstrating lack of balance, indeed, lack of balance even in the reporting of the particular issue with which the Tribunal was concerned. That would not however be a ground that we would regard as reasonable, for the same reasons as we would reject a ground based upon an asserted lack of technical expertise, or inability to understand jargon on the part of each and every member of the public. There were, however, as appears from what we have said, a number of grounds of claim which the Tribunal was entitled to hold were reasonable and such as to justify conclusiveness. The application of the Act We come now to the submission of the appellant which we have earlier set out in some length: that the Tribunal erred in holding that if any one facet of the public interest can be established as supported by a non-absurd opinion of one witness, or on the basis of earlier decisions of the Tribunal, the test in favour of the Minister is satisfied. That submission makes the assumption that the decision here was supported by no more than one non-absurd opinion of one witness or earlier decisions of the Tribunal. The assumption is not correct. Implicit in it also, is the contention that Mr Murray's opinion and evidence were determinative from the outset. We do not read the Tribunal's decision in that way. The test applied by it did not involve a choice between absurdity and non-absurdity. To say that an opinion or a proposition is not absurd, is not to say that it is necessarily reasonable. In this area, in any event, the opinions of witnesses on either side purporting to reveal and express the states of mind and attitudes of others on other occasions will rarely be very helpful and practically never determinative. The role of the Tribunal will usually be best performed simply by examining the documents with a view to assessing whether the stated grounds of conclusiveness satisfy the statutory test. That is because, as here, it will usually be possible readily to characterize the topics in question as topics of public interest without the need for any, or any extensive expert evidence to that effect. The real issue will almost invariably then be whether the document in question, having regard to its date, its author, the position of its author, and its contents, is one in respect of which the Minister can hold the requisite opinion. The Act provides no mandate for any balancing exercise. To have regard to extraneous matters such as other competing reasons, if the requisite statutory reason for non- disclosure has been demonstrated, gives rise to a risk that a de facto balancing act will take place. Nor are we by any means certain that it is apt to describe the public interest as multifaceted. Neither the fact that different people will see it through different prisms, nor the fact that an all-encompassing definition of it for all occasions is not possible, means that the public interest is multifaceted. For years, juries in defamation cases have had to perform the task of deciding whether the publication of defamatory matter is in the public interest, a task which they have performed in our view generally well, upon the basis of their understanding of what the public interest was at the relevant time. Judges have usually not found it necessary to direct juries at length as to the meaning of the expression, except to warn them that it is not enough that the matter might be of some personal or prurient interest, or merely something about which they may be curious. We are unable to accept the language of the appellant's submission that the effect of the Tribunal's decision is substantially to undermine the Tribunal's proper function of review when a conclusive certificate has been issued. The function of the Tribunal is one which is mandatory and entirely statutory. And while a practical consequence may be that one or more of the stated objects of the Act are thereby defeated, the fact remains that this is a necessary consequence of the express, and as we have already said, unmistakably clear language of the sections with which the Tribunal and the courts are concerned here. The test upon which the Tribunal settled after summarizing a number of earlier cases decided by the Tribunal, and on appeal to the Full Court of the Federal Court, was whether the facts established before the Tribunal were sufficient to support the claim that disclosure would be contrary to the public interest in the mind of a person guided by reason. We would prefer to ask the question in terms of the language of the legislation itself, rather than any adaptation of it, because the former is perfectly clear in asking whether there exist reasonable grounds for the claim that the disclosure of the documents would be contrary to the public interest. The test actually posed by the Tribunal however was certainly, on no view, less advantageous to the appellant than the statutory language prescribes. It does follow, as the majority in the Full Court effectively held, that if one reasonable ground for the claim of contrariety to the public interest exists, even though there may be reasonable grounds the other way, the conclusiveness will be beyond review. It is important to notice that the statutory language does not give an entitlement to access if there are, as often there may very well be, reasonable grounds for the revelation of the document in the public interest. It further follows that the Tribunal is not obliged to undertake a balancing exercise of the kind the appellant submits it was bound to do. The role of the Tribunal in the circumstances of, and on the basis of the statutory language governing this case, is not to undertake a full merits review of the kind contemplated by s 43(1) of the AAT Act. Whether therefore, the only practical and real means of attacking a conclusive certificate will be by demonstrating that there are no reasonable grounds in fact, or that the grounds relied on are so unreasonable that no reasonable person could hold the opinions upon which they are based, does not arise for decision in this appeal. The Tribunal made no error of law in holding against the appellant in this case, and the Full Court of the Federal Court was accordingly correct in rejecting the appeal to it. The appeal to this Court must be dismissed with costs.

HIGH COURT OF AUSTRALIA WESTPAC SECURITIES ADMINISTRATION LTD & ANOR APPELLANTS AND AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION RESPONDENT Westpac Securities Administration Ltd v Australian Securities and Investments Commission [2021] HCA 3 Date of Hearing: 7 & 8 October 2020 Date of Judgment: 3 February 2021 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation R G McHugh SC with J R Williams SC and E R Doyle-Markwick for the appellants (instructed by Allens) A J L Bannon SC with J G Renwick SC, T J Kane and M S Kalyk for the respondent Investments (instructed by Australian Securities and Commission) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Westpac Securities Administration Ltd v Australian Securities and Investments Commission Corporations – Financial services – Where appellants had contacted members of superannuation funds of which they are trustees, advising each to accept offer to roll over their external superannuation accounts into their account with appellants – Where s 766B(3)(b) of Corporations Act 2001 (Cth) defines "personal advice" to include "financial product advice" given or directed to person in circumstances where a reasonable person might expect provider to have considered one or more of that person's objectives, financial situation and needs – Whether financial product advice given by appellants to members personal advice within meaning of s 766B(3)(b). Words and phrases – "consideration", "considered", "financial adviser", "financial product advice", "general advice", "one or more of the person's objectives, "social proofing", financial "superannuation", "superannuation fund". situation and needs", "personal advice", Corporations Act 2001 (Cth), ss 766B(3), 766B(4), 949A(2)(a). KIEFEL CJ, BELL, GAGELER AND KEANE JJ. We agree with Gordon J that the appeal should be dismissed with costs. Gratefully accepting her Honour's summary of the facts, issues and arguments in the case, we proceed to state our reasons for concluding that the appeal should be dismissed1. Section 766B(3)(b) of the Corporations Act 2001 (Cth) defines "personal advice" so as to include "financial product advice" given or directed to a person in circumstances where a reasonable person might expect the provider to have considered one or more of the person's objectives, financial situation and needs. Section 766B(4) defines "general advice" as financial product advice that is not personal advice. The division of the universe of financial product advice into "personal advice" and "general advice" serves to organise the obligations owed by a financial product adviser to a retail client, with more onerous obligations being imposed upon the adviser where the circumstances are apt to suggest to the client that the financial product, the subject of the advice, is appropriate to the particular circumstances of the individual client. The phone calls: what a reasonable person might have expected On the hearing of the appeal in this Court, it was common ground between the parties that the question posed by s 766B(3)(b) was whether a reasonable member might expect that Westpac had in fact considered one or more of the member's objectives, financial situation and needs and not whether the member might expect that Westpac should have considered those circumstances. Westpac submitted that the Full Court erred in importing a normative element into its understanding of the effect of s 766B(3)(b). ASIC urged that the Full Court's reasoning did not involve a normative judgment as to whether Westpac should have considered each member's particular financial circumstances before recommending acceptance of its roll-over service. It may be accepted that, at some points in the reasoning of members of the Full Court, there are suggestions that a normative approach was being applied by reference to an expectation as to how a service provider, such as Westpac, in an existing relationship with a member should properly conduct itself in making investment recommendations of 1 These reasons adopt the abbreviations used by Gordon J and will repeat matters stated in her Honour's reasons only to the extent necessary to understand our reasons. significance to the member2. That said, ASIC did not seek to support such an approach in argument in this Court. On the undisputed facts of the case, a reasonable person in the position of each of the members called by Westpac might expect Westpac, in recommending that the member accept Westpac's offer to procure the roll-over of the member's external superannuation accounts into the member's BT account, to have considered one or more of the member's objectives, financial situation and needs. Given that the appeal must fail on that basis, it is neither necessary nor appropriate to express a concluded opinion as to the correctness of the approach taken by the members of the Full Court. Westpac accepted the findings of both the primary judge and the Full Court that in the personal phone calls made by Westpac to the members, the Westpac callers impliedly recommended that each member roll over his or her external superannuation funds into a BT account3. The primary judge found that Westpac made this recommendation in the course of personal phone calls to each of the members, with whom Westpac had a pre-existing relationship. Westpac's representatives framed the calls as helpful "courtesy calls", advising each member of the availability of the roll-over service. This service was presented as an obvious and uncontroversial course of action for each particular member in respect of his or her BT account, having regard to the member's objectives discussed during the call4. The primary judge was dissuaded from reaching the conclusion that Westpac gave personal advice on the basis of three broad considerations. The first consideration was that the calls began with a disclaimer that "everything discussed today is general in nature, it won't take into account your personal financial 2 Australian Securities and Investments Commission v Westpac Securities Administration Ltd (2019) 272 FCR 170 ("ASIC v Westpac") at 197 [77], 198 [80], 3 Re Westpac Securities Administration Ltd (2018) 133 ACSR 1 ("Re Westpac") at 65-66 [272]-[274], 66 [277]-[278], 78 [366], 79 [369]-[372]; ASIC v Westpac (2019) 272 FCR 170 at 196-198 [76]-[80], 232-233 [268]-[274], 260-261 [392]. 4 Re Westpac (2018) 133 ACSR 1 at 84 [395]. needs"5. Secondly, the advice was offered free of charge6. Thirdly, the callers revealed a lack of knowledge about the member's financial situation that was inconsistent with a capacity to consider one or more of the member's objectives and financial situation7. The primary judge erred in being swayed by these considerations. Each may be dealt with briefly. As to the first consideration, each phone call was a personal communication to a member; it specifically related to the member's personal financial situation in relation to his or her superannuation. The disclaimer with which each phone call commenced was not apt to alter either the character of the recommendation in each case as advice specifically about the member's situation, or the expectation as to the quality of the advice that the phone call was apt to engender in the member. Immediately after the disclaimer, the Westpac callers set about, and succeeded in, eliciting from each member a statement of the member's objectives insofar as they were germane to the decision as to whether it was in each member's best interests to roll over external superannuation accounts into his or her BT account. Having elicited from each member an indication of his or her personal objectives of "saving on fees" and "improving the manageability" of superannuation by consolidating accounts8, the Westpac callers deployed the social proofing technique to confirm the validity of the expressed objectives. For example, Westpac's caller confirmed to member 1 that saving on fees and manageability are the "two main reasons our clients do like to bring their supers together" and that doing so "does make a lot more sense from a management point of view, for sure". The Westpac caller then proceeded to say to member 19: "Now, what we can do is we can go through your superannuation search results and we can actually help you bring them altogether over the phone now, the only thing we'll need from you today to do that is your tax file number." As to the second consideration, the circumstance that the superannuation roll-over service was offered "free of charge" was at best neutral in relation to the reasonable expectations of a member approached in this way by his or her financial 5 Re Westpac (2018) 133 ACSR 1 at 36-37 [148], 38 [158], 83 [394]. 6 Re Westpac (2018) 133 ACSR 1 at 83 [394]. 7 Re Westpac (2018) 133 ACSR 1 at 83 [394]. 8 Re Westpac (2018) 133 ACSR 1 at 80-81 [380]-[382]. 9 Re Westpac (2018) 133 ACSR 1 at 38 [158]. service provider, to whom he or she already paid fees for financial services related to superannuation. Westpac's interest in bringing more funds under its management to obtain fees was also both real and obvious: it was the raison d'être of Westpac's phone calls to the members. In these circumstances, a reasonable person in a member's position might well have seen the benefit to Westpac of provision of the roll-over service as attributable either to fees already paid by the member or to Westpac's business development. As to the third consideration, the circumstance that the Westpac callers at times revealed a lack of comprehensive knowledge of the members' financial affairs was not inconsistent with an expectation that the members' objectives were taken into account by Westpac in recommending acceptance of its roll-over service. Nothing in the text or context of s 766B(3) conveys any suggestion that advice is personal advice for the purposes of the regulatory scheme of the Act only if it is comprehensive of the totality of the objectives, financial situation and needs of the client. Indeed, to the contrary, s 766B(3) expressly provides that personal advice has been given where "the provider of the advice has considered one or more of the person's objectives, financial situation and needs"; it does not provide that the provider must have considered all of those matters (emphasis added). In addition, as a matter of fact, the social proofing technique used by the Westpac callers confirmed to each member that Westpac was familiar with objectives identified by each member as a matter of conventional wisdom. In this factual context, each member might reasonably think that Westpac considered that acceptance of the roll-over service was apt to realise the objectives the member had stated, and that this justified acceptance of the offer of the roll-over service regardless of what more comprehensive consideration of his or her financial situation might reveal. Westpac argued in this Court that the members' objectives identified and discussed in the phone calls were "highly generic and ... obviously correct" and that, for that reason, financial product advice that took those objectives into account was not apt to give rise to an expectation that the advice was based on one or more of the personal objectives, financial situation and needs of any of the members. But this argument seeks impermissibly to gloss the language of the statute. Objectives do not cease to be personal objectives merely because those objectives are such as to be generally applicable to all or most persons in the position of the client as well as to the particular client. It follows that advice which is personal advice within s 766B(3)(b) does not cease to be so because the content of that advice is such as to be generally applicable to all or most persons in the position of the client as well as to the particular client. The social proofing technique deployed by Westpac served to confirm, by reference to the common experience of like-placed others, that consolidation of each particular member's external superannuation accounts was appropriate to achieve that member's personal objectives of reducing fees and improving manageability. Those very objectives had been identified by the discussion which the Westpac caller elicited in the phone call itself as matters of concern pertaining to that particular member. By segueing into an offer to effect the roll-over, Westpac's callers implicitly recommended that each member accept the offer there and then on the evident footing that his or her interests were being served without any need for further consideration of his or her other objectives, financial situation or needs. It is well recognised that "many persons will only absorb the general thrust" of such marketing ploys10. Westpac knew its business and had reason to be confident that its marketing techniques were likely to be effective11. Each member might reasonably have expected that, given the nature of Westpac's business and its experience and expertise in relation to financial matters like superannuation, Westpac had taken the objectives it had elicited from the member into account in recommending the roll-over service. That is consistent with the recommendation of the service being presented to each member as a "no brainer" having regard to the manifest benefits to each member to be expected from rolling over into a single Westpac account. Given that Westpac's marketing was apt to create precisely that impression, it can hardly complain that it succeeded. Nor can it sensibly be suggested that the impression so created did not reasonably include an expectation on the part of the member that the recommendation was appropriate for him or her as an individual. "Considered" Westpac argued that "considered" in s 766B(3) refers to an active process of evaluation and reflection, and that the Full Court erred in adopting an "undemanding" understanding of "considered". That argument should be rejected. Westpac's argument once again glosses the statutory language, and does so in a way that renders its application less certain, while, at the same time, blurring its protective operation. 10 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 654-655 [47]-[48]. 11 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (1984) 157 CLR 215 (2013) 250 CLR 640 at 657 [55]-[56]; Gould v Vaggelas In the context of the consumer protection provisions of Ch 7 of the Act, "considered" in s 766B(3) should be understood as meaning "took account of"12. So much is confirmed by its broader statutory context. Section 949A, which appears in Div 4 of Pt 7.7 of the Act, is concerned with the regulation of the provision of general advice. Section 949A(2)(a) states: "The providing entity must, in accordance with subsection (3), warn the client that: the advice has been prepared without taking account of the client's objectives, financial situation or needs". It is significant that s 949A was introduced into the Act by the Financial Services Reform Act 2001 (Cth) at the same time as s 766B was enacted. The terms of s 949A(2)(a) can be seen as a deliberate counterpoint to what is described in s 766B(3), with the antonym of "considered" being "without taking account of". There is therefore no basis in the text of s 766B(3), or the context in which it appears, to read the word "considered" as importing a requirement of an active and comprehensive process of evaluation. Such a gloss upon "considered" would impermissibly narrow the scope of a provision intended to protect consumers while at the same time adding a layer of uncertainty to its operation. The recommendation by the Westpac caller to proceed to roll over each member's external accounts without further ado was put forward in a manner productive of an expectation that each member's objectives of saving fees and improving manageability were taken into account or, in the words of s 766B(3)(b), "considered". The social proofing technique deployed by Westpac was calculated to create that impression. That there was no mention of contraindicative factors such as fee penalties or loss of insurance is not inconsistent with the proposition that each member's personal objectives which were articulated were taken into account by Westpac. "One or more of the person's objectives, financial situation and needs" Westpac argued that the words "one or more of the person's objectives, financial situation and needs" refer to categories, so that s 766B(3)(b) is engaged only where a reasonable person might expect that the provider of advice has 12 See ASIC v Westpac (2019) 272 FCR 170 at 179-180 [25], 227 [247], considered so much of each category as is relevant to the subject matter of the advice. That contention should be rejected. Once again, Westpac seeks to gloss the language of the legislation so as to reduce its protective scope. The primary judge and the Full Court rightly held that s 766B(3)(b) contemplates consideration of at least one aspect of the client's objectives, financial situation or needs13. The ordinary and natural meaning of the terms of s 766B(3) is readily applicable to a situation in which the issue for decision by the client is focused upon one aspect of his or her financial affairs. The scope of advice reasonably germane to the resolution of that issue may be expected by both adviser and client to encompass only so much of the client's objectives, financial situation or needs as is relevant to its satisfactory resolution. The application of the ordinary and natural meaning of the text of s 766B(3)(b) is confirmed by the Supplementary Explanatory Memorandum to the Financial Services Reform Bill 2001 (Cth), which included the following statement in relation to the provision that became s 766B(3)14: "As subsection 766B(3) is currently drafted, a financial services provider could recommend a financial product or class of financial product as being appropriate to a retail client's individual needs and objectives, but avoid the requirements of proposed Divisions 3 or 5 of Part 7.7 because they had not considered the client's financial situation." Conclusion For these reasons, we agree with the orders proposed by Gordon J. 13 Re Westpac (2018) 133 ACSR 1 at 30-32 [111]-[119]; ASIC v Westpac (2019) 272 FCR 170 at 180-181 [27]-[29], 227-230 [249]-[257], 254-256 [365]-[372]. 14 Australia, Senate, Financial Services Reform Bill 2001, Supplementary Explanatory Memorandum at 5 [3.23]. GORDON J. Each of Westpac Securities Administration Ltd ("WSAL") and BT Funds Management Ltd ("BTFM") (collectively, "Westpac") held an Australian Financial Services Licence ("AFSL") granted under the Corporations Act 2001 (Cth)15 authorising them, as persons carrying on a financial services business in Australia16, to provide financial services including some financial product advice17. WSAL issued a superannuation product, the BT Business Super Account, part of the Westpac MasterTrust – Superannuation Division ("BT Business Account Fund"), of which WSAL is trustee. BTFM issued a superannuation product, the BT Lifetime Super – Employer Plan Account, part of the Retirement Wrap ("BT Lifetime Account Fund")18, of which BTFM is trustee. Membership in either Fund is a "financial product"19. Westpac contacted existing members20 of the Funds to encourage them to roll over external superannuation accounts into their pre-existing Westpac superannuation accounts (collectively, the "BT accounts"). There was no dispute, in this Court, that when Westpac made a telephone call or calls to each member, 15 Corporations Act, s 913B. 16 Corporations Act, s 911D. 17 Corporations Act, ss 766A and 766B. 18 Each Fund is a "superannuation entity" within the meaning of s 10(1) of the Superannuation ("the SIS Act"), (Supervision) Act 1993 namely, a "regulated superannuation fund" for the purposes of ss 10(1) and 19 of the SIS Act. Industry (Cth) 19 Within the meaning of Div 3 of Pt 7.1 of Ch 7 of the Corporations Act, by reason of s 764A(1)(g) (namely, a "superannuation interest" within the meaning of s 10(1) of the SIS Act). Section 10(1) of the SIS Act relevantly provides that "beneficiary, in relation to a fund, scheme or trust, means a person (whether described in the governing rules as a member, a depositor or otherwise) who has a beneficial interest in the fund, scheme or trust and includes, in relation to a superannuation fund, a member of the fund despite the express references in this Act to members of such funds". 20 The members were referred to in the decisions below variously as "clients", "customers" and "members". it provided financial product advice21 to that member in relation to a financial product (namely, membership in one of the Funds), that the advice was intended to influence that member in making a decision in relation to the Fund, and that the advice comprised an implied recommendation that that member "should roll over their external accounts into their BT account or, in other words, they should accept the rollover service". In relation to superannuation products, including membership in either Fund, neither WSAL nor BTFM was authorised, under its AFSL, to provide "financial product advice" which was personal advice22 within the meaning of s 766B of the Corporations Act. The term "personal advice", relevantly, is defined in s 766B(3) of the Corporations Act as: "financial product advice that is given or directed to a person (including by electronic means) in circumstances where: the provider of the advice has considered one or more of the person's objectives, financial situation and needs ...; or a reasonable person might expect the provider to have considered one or more of those matters." (emphasis added) The issue in this appeal is whether the financial product advice Westpac gave members was personal advice within the meaning of s 766B(3)(b). Was the advice given or directed to the member in circumstances where a reasonable person might expect that Westpac had considered one or more of the member's objectives, financial situation and needs? The resolution of that issue necessitates first construing s 766B(3) of the Corporations Act and then, as s 766B(3) directs, considering the circumstances in which the financial product advice was "given or directed" to the person, in this case, the member. As the Full Court of the Federal Court of Australia unanimously held, the answer to the issue is "yes". The appeal should be dismissed with costs. Statutory framework Chapter 7 of the Corporations Act, headed "Financial services and markets", was introduced in 200123. It was designed, in part, to introduce a single In the course of doing so, Westpac was providing a "financial service" within the meaning of s 766A(1)(a) of the Corporations Act. 22 Corporations Act, s 766B(3). 23 Financial Services Reform Act 2001 (Cth), Sch 1, item 1. licensing regime applicable to all persons providing financial services to ease the administrative burden on financial service providers, who previously were required to obtain multiple licences24. But it was also intended to benefit consumers, who previously could not "be certain that the conduct of the financial service provider [met] minimum standards"25. Thus, the object of Ch 7 includes to promote26: confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and fairness, honesty and professionalism by those who provide financial services ..." Part 7.1 (like much else in the Corporations Act) proceeds by defining key concepts – here "financial service", "financial product advice", "personal advice", "general advice" and "retail client". These defined terms are then used in ways that build one on the other and it is, therefore, necessary to set out several definitions. Division 4 of Pt 7.1, headed "When does a person provide a financial service?", contains s 766A(1), which relevantly provides: "For the purposes of this Chapter ... a person provides a financial service if they: provide financial product advice (see section 766B); or deal in a financial product (see section 766C); or (c) make a market for a financial product (see section 766D); or operate a registered scheme; or provide a custodial or depository service (see section 766E); or engage in conduct of a kind prescribed by regulations made for the purposes of this paragraph." 24 Australia, Senate, Financial Services Reform Bill 2001, Revised Explanatory Memorandum at 1 [1.4]-[1.5], 11 [2.39]. 25 Australia, Senate, Financial Services Reform Bill 2001, Revised Explanatory Memorandum at 11 [2.40]; see also 1 [1.5]. 26 Corporations Act, s 760A. This appeal is concerned with s 766A(1)(a) – "financial product advice" – defined in s 766B(1), for the purposes of Ch 7, to mean: "a recommendation or a statement of opinion, or a report of either of those things, that: is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or could reasonably be regarded as being intended to have such an influence." Section 766B(2) records that there are "2 types of financial product advice: personal advice and general advice". The term "personal advice" is defined in s 766B(3), which has been set out earlier27. General advice is defined as "financial product advice that is not personal advice"28. One aspect of the drafting history of s 766B(3) is to be observed. As initially drafted, s 766B(3) referred only to the "objectives, financial situation and needs" of a person29. The phrase "one or more of" was inserted prior to its enactment30: "to ensure that a financial services provider will be subject to the requirements of proposed Division[] 3 ... of Part 7.7 (including the requirement to provide a [Statement of Advice]) when advising a retail client that a particular financial product (o[r] class of financial products) is appropriate to them as an individual. As subsection 766B(3) is currently drafted, a financial services provider could recommend a financial product or class of financial product as being appropriate to a retail client's individual needs and objectives, but avoid the 27 See [26] above. 28 Corporations Act, s 766B(4). 29 Australia, Senate, Financial Services Reform Bill 2001, Supplementary Explanatory Memorandum at 5 [3.20]. 30 Australia, Senate, Financial Services Reform Bill 2001, Supplementary Explanatory Memorandum at 5 [3.22]-[3.23]. requirements of proposed Division[] 3 ... of Part 7.7 because they had not considered the client's financial situation." It is also to be observed that Ch 7 draws a distinction between retail and other clients31. The consumer protection provisions32 apply only to retail clients; this recognises that other clients "do not require the same level of protection, as they are better informed and better able to assess the risks involved in financial transactions"33. Where, however, the relevant financial product is a superannuation product (as it was here), Ch 7 provides that the person will always be a retail client34. The Revised Explanatory Memorandum explained that legislative decision in these terms35: "This will ensure that disclosure is given to all persons in relation to superannuation ... products. This is consistent with the long term nature and complexity of such products and will ensure the integrity of the regime in a choice of superannuation fund environment." Financial services licences Part 7.6 of Ch 7 governs the licensing of providers of financial services. Section 911A(1), within Div 2 of Pt 7.6, relevantly provides that "a person who carries on a financial services business ... must hold an [AFSL] covering the provision of the financial services". As stated earlier, each of WSAL and BTFM was a holder of an AFSL granted under s 913B of the Corporations Act authorising them, as persons carrying on a financial services business in Australia within the meaning of s 911D, to provide financial services. Under their respective AFSLs, they were authorised to provide financial product advice but they were not authorised to provide personal advice within the meaning of s 766B(3). The obligations of financial services licensees are addressed in Div 3. Section 912A(1) relevantly provides that a financial services licensee must: 31 Described in s 761G(4) as "wholesale clients" and in s 761GA as "sophisticated investors". See also Australia, Senate, Financial Services Reform Bill 2001, Revised Explanatory Memorandum at 8-9 [2.26]-[2.28]. 32 See, eg, Corporations Act, ss 941A, 941B, 946A, 949A, 961B, 961G, 961J. 33 Australia, Senate, Financial Services Reform Bill 2001, Revised Explanatory Memorandum at 8 [2.25]. 34 Corporations Act, ss 761G(1), 761G(6)(a), 761GA(b). 35 Australia, Senate, Financial Services Reform Bill 2001, Revised Explanatory Memorandum at 9 [2.27]. do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly; and (aa) have in place adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in relation to activities undertaken by the licensee or a representative of the licensee in the provision of financial services as part of the financial services business of the licensee or the representative; and comply with the conditions on the licence; and comply with the financial services laws ..." Westpac accepted that if the advice it provided was personal advice, Westpac not only breached the conditions of the AFSLs and the financial services laws, but also failed to do all things necessary to ensure that the financial services covered by the AFSLs were provided efficiently, honestly and fairly within the meaning of s 912A(1). Financial services obligations Part 7.7 of Ch 7 imposes on financial services licensees disclosure obligations which differ depending on whether general advice or personal advice is being provided. Divisions 3 and 4 of Pt 7.7, respectively, provide for different financial services obligations to apply when a licensee is providing personal advice and general advice. The main additional requirement applicable to the provision of personal advice is for a written Statement of Advice ("SOA") to be given36. The content of a SOA is prescribed37 and, subject to exceptions not presently relevant, must include, among other things: a statement setting out the advice; information about the basis on which the advice is or was given; and a statement setting out the name and contact details of the providing entity38. It was found by the Full Court, and was not contested in this Court, that if Westpac provided financial product advice that was personal advice, it breached s 946A because it failed to give the members a SOA. 36 Corporations Act, s 946A. 37 Corporations Act, Pt 7.7, Div 3, Subdiv D. 38 Corporations Act, s 947B(2). For general advice, the requirements are understandably less onerous. The main "[o]ther disclosure" requirement39, which applies any time general advice is provided to a retail client40, is that the client is provided with a general advice warning by the providing entity at the same time as the advice is provided and by the same means41. Under s 949A(2), that general advice warning must relevantly state that: the advice has been prepared without taking account of the client's objectives, financial situation or needs; and because of that, the client should, before acting on the advice, consider the appropriateness of the advice, having regard to the client's objectives, financial situation and needs ..." Pursuant to s 951B(1)(a) and (c), the Australian Securities and Investments Commission ("ASIC") published an exemption42 in relation to oral advice, which required the provider to orally warn any client provided with oral advice only that the advice is general and that the advice may not be appropriate for the client. ASIC did not contend that Westpac failed to comply with s 949A(2) or the exemption. In 2012, substantial changes were made to the regulation of personal financial advice by the Future of Financial Advice or "FoFA" reforms43. Their objective was to "improve the quality of financial advice while building trust and confidence in the financial advice industry through enhanced standards which align the interests of the adviser with the client and reduce conflicts of interest"44. 39 Corporations Act, Pt 7.7, Div 4. 40 Corporations Act, s 949A(1). It applies subject to regulations made for the purposes of the paragraph: Corporations Act, s 949A(1)(c). 41 Corporations Act, s 949A(2) and (3). 42 ASIC Class Order [CO 05/1195] at [4(b)]. 43 Corporations Amendment (Future of Financial Advice) Act 2012 (Cth); Corporations Amendment (Further Future of Financial Advice Measures) Act 2012 (Cth). 44 Australia, Senate, Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012, Revised Explanatory Memorandum at 3. See also Australia, Senate, Corporations Amendment (Future of Financial Advice) Bill 2012, Revised Explanatory Memorandum at 3. One reform was to insert Pt 7.7A into Ch 7 of the Corporations Act45. Part 7.7A requires providers of personal advice to retail clients46 to "act in the best interests of the client in relation to the advice"47 and to give priority to the interests of the client48. It was found below, and was not contested in this Court, that if Westpac provided personal advice to the members it breached s 961B(1) because it failed to act in the best interests of those members in providing that financial product advice, and thereby contravened s 961K(2), a civil penalty provision. Facts and background The circumstances in which Westpac provided the advice may be stated briefly. Westpac conducted a campaign to encourage existing members to roll over superannuation accounts held with other entities into their BT account. The objective of the campaign was to increase Westpac's funds under management. As a result of the campaign, Westpac increased its funds under management by almost $650 million between 1 January 2013 and 16 September The campaign was carried out by Westpac's Super Activation Team, comprised of employees of Westpac (or a company within the Westpac group of companies). At all relevant times, these employees were acting as agents of WSAL or BTFM for the purposes of s 769B of the Corporations Act within the scope of their actual or apparent authority, and were acting as representatives of WSAL or BTFM within the meaning of ss 910A and 960 of the Corporations Act. This appeal concerns the interactions between those employees and 14 existing members of the BT Business Account Fund or the BT Lifetime Account Fund. Each member was sent written communications by which Westpac offered to search for any external superannuation accounts they had, offered to roll over such accounts into their BT account, and sought to influence the member to take 45 Corporations Amendment (Future of Financial Advice) Act 2012 (Cth), Sch 1, item 10. 46 Corporations Act, s 961(1). 47 Corporations Act, s 961B(1). Section 961G requires that the advice provided be appropriate to the client. 48 Corporations Act, s 961J. For the purposes of Pt 7.7A, "advice" refers to personal advice, "client" refers to a retail client, and "provider" refers to the individual who is to provide the advice to the client: Corporations Act, s 961(1) and (2). See also Australia, Senate, Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012, Revised Explanatory Memorandum at 5 [1.1]. up those offers. For example, one type of letter, which was sent to each member, included: statements to the effect that "if you combine your super into one account, you could save on administration fees and enjoy the convenience of having all your super in one place"; a link to Westpac's website to enable the member to ask Westpac to undertake a search to locate amounts held in external accounts; a rollover form that the member could complete and return to take up Westpac's rollover service; and a statement that, if the member had a financial adviser, Westpac recommended that the member speak to that adviser for personal advice tailored to their specific objectives, financial situation and needs. In most, but not all, cases, the members accessed Westpac's website and requested that a search be conducted to locate amounts held in external accounts. In some cases, the members were then sent a further letter which set out the results of the requested superannuation search. Each member then received at least one telephone call from an adviser in the Super Activation Team. Although the calls varied, the appeal was conducted primarily by reference to the transcript of two calls conducted on one day with member 149. The primary features of the calls were as follows. The member was given a warning that everything discussed on the call would be general in nature and would not take into account their personal financial needs. The adviser then said that they were calling in order to help the member and this was reinforced by the adviser asking what the member saw as the main benefits of consolidating their superannuation funds, the adviser affirming the member's reasons to consolidate their superannuation through the use of "social proofing" language, by which the member was told that their objectives, beliefs or reasons were commonly held, and the adviser ultimately offering to help effect the consolidation of the member's external superannuation accounts into their BT account. it gave advice Westpac accepted, for the first time in this Court, that when it called the 14 members, the advice was "financial product advice" within the meaning of s 766B(1), the gateway to s 766B(3). The financial product advice, as found by the primary judge, was that each of the 14 members "received a 'recommendation' that they should roll over their external accounts into their BT account or, in other words, they should accept the rollover service" ("the recommendation"). those members and that The primary judge also found that "statements of opinion" were made during the calls which fell into the following categories: 49 A transcript of relevant parts of each call was annexed to the reasons of the Full Court: Australian Securities and Investments Commission v Westpac Securities Administration Ltd (2019) 272 FCR 170 at 269-289. "(1) Statements to the effect that, by rolling over external accounts into the [member's] BT account, the [member] could or may (but not would, except in the case of [one member]) save on fees. Statements to the effect that, by rolling over external accounts into the [member's] BT account, the [member] would improve the 'manageability' of their superannuation. Statements to the effect that a rollover into the [member's] the [member] because, BT account would be beneficial for example, it would be beneficial to pay only one set of fees or because there would be unspecified benefits. Statements to the effect that, by rolling over external accounts into the [member's] BT account, the [member] could get a better return on their superannuation or could improve the performance of their superannuation." Her Honour observed that "[s]ummarised in this way, it is obvious that the 'statements of opinion' each support the implied recommendation to accept the the rollover service and, recommendations and the statements of opinions were relevantly similar". After addressing the balance of s 766B(1), the primary judge concluded that "each of the 'recommendations' and 'statements of opinion' that ... were made constituted 'financial product advice' within the meaning of s 766B(1) of the Act". the [advisers'] in making intentions therefore, There may have been some division of opinion in the Full Court about whether what was said by the advisers included statements of opinion which could be regarded as personal advice. For the purposes of this appeal, however, it is sufficient to observe that financial product advice is a recommendation or a statement of opinion50. And in this Court, as explained, there was no dispute that when Westpac called each member, it provided financial product advice51 to that member in relation to a financial product (namely, membership in one of the Funds), that the advice was intended to influence that member in making a decision in relation to the Fund, and that the advice comprised an implied recommendation that that member "should roll over their external accounts into their BT account or, in other words, they should accept the rollover service". The issue is whether, contrary to the terms of the AFSLs, that financial product advice was personal advice within the meaning of s 766B(3)(b) because 50 Corporations Act, s 766B(1). In the course of doing so, Westpac was providing a "financial service" within the meaning of s 766A(1)(a) of the Corporations Act. the advice was given or directed to the member in circumstances where a reasonable person might expect Westpac to have considered one or more of the member's objectives, financial situation and needs. Westpac's submissions Westpac submitted that the Full Court erred in its construction of the reasonable person test in s 766B(3)(b) by asking whether a reasonable person might expect that the adviser should have considered one or more of the recipient's objectives, financial situation and needs, rather than asking whether a reasonable person might expect that the adviser had in fact considered such matters. Westpac contended that the Full Court introduced a "normative element" into the inquiry under s 766B(3)(b) by assuming what a reasonable person might expect the adviser should have considered if acting in the recipient's best interests, instead of asking what a reasonable person might expect the adviser actually to have considered. Put in different terms, Westpac argued that the Full Court erred by proceeding on a two-stage assumption: that an adviser in Westpac's position should act in its members' best interests, and that a member's best interests can only be served through the provision of personal advice. Westpac further submitted that the Full Court should have held that, properly construed, the reasonable person test in s 766B(3)(b) was not satisfied where a reasonable person would know that Westpac was not in a position to have considered the members' stated objectives of "saving on fees" and "manageability" because Westpac did not have knowledge of the members' personal circumstances that would be needed to give consideration to those objectives. Finally, Westpac submitted that the Full Court erred in finding that, on the proper construction of s 766B(3), the words "one or more of the person's objectives, financial situation and needs" refer to something less than what Westpac described as the minimum irreducible objectives, financial situation or needs of the recipient that would reasonably be considered relevant to the subject matter of the advice in question52. Construction of s 766B(3)(b) Section 766B(3) is to be read as a whole and given its ordinary meaning, in light of its context and purpose53. It is not to be dissected into separate words or 52 Corporations Act, s 961B(2)(b)(ii). 53 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69]; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 31 [4], 46-47 [47]; Federal Commissioner of Taxation v phrases, the meanings of which are then amalgamated into some composite meaning54. As has been observed, the gateway to s 766B(3) is "financial product advice", relevantly defined in s 766B(1) as a recommendation or statement of opinion that is intended to influence a person in making a decision in relation to a particular financial product or class of financial products, or could reasonably be regarded as being intended to have such an influence. Here, the particular financial product was membership in one of the Funds. The advice was given in telephone calls. The substance of the advice included a "recommendation" that each member "should roll over their external accounts into their BT account or, in other words, they should accept the rollover service". And, it is common ground that the provider, Westpac, gave that financial product advice – the recommendation – with the intention to influence the member to accept the rollover service offered by Westpac and to roll over their external accounts into their BT account. It is also common ground that the advisers, the callers, had not in fact considered one or more of the person's objectives, financial situation and needs within s 766B(3)(a). The question then is whether, for the purposes of s 766B(3)(b), the financial product advice (comprising the recommendation) was given or directed to the member in circumstances where a reasonable person might expect Westpac to have considered one or more of the person's objectives, financial situation and needs. In answering that question, several features of s 766B(3)(b) are significant. First, it poses an objective test, assessed at the time the financial product advice was given and having regard to the circumstances in which that advice was given. It refers to a reasonable person's expectation, being a reasonable person standing in the shoes of the person receiving the advice. It falls for consideration where financial product advice, intended (or reasonably regarded as being intended) to influence a person in making a decision about a particular financial product or class of financial products, has been given or directed to a person and it is to be assessed having regard to the circumstances in which that advice was given or directed. Consolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39]; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at 368 [14]. 54 See Project Blue Sky (1998) 194 CLR 355 at 381 [69], 382 [71]; Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378 at 391 [29]. Second, s 766B(3)(b) refers to things which a reasonable person might expect, which has a wider meaning than things which a reasonable person would expect. The standard is one of reasonable possibility, not reasonable probability55. Third, the phrase "to have considered" bears its ordinary meaning. Section 766B(3)(b) picks up the meaning of "the person's objectives, financial situation and needs" in s 766B(3)(a) by referring to "those matters". Section 766B(3)(b) therefore captures circumstances where a reasonable person might expect the provider to have taken into account, had regard to, or given attention to, one or more of the person's objectives, financial situation and needs. It follows that Westpac's submission that the word "considered" refers to the adviser actually taking the recipient's personal circumstances into account – by evaluating them for the purpose of providing the advice in question so that there is a nexus (in fact or by reasonable apprehension) between the adviser's consideration of the personal circumstances and the advice provided – must be rejected. Read in context, "considered" cannot be given the meaning Westpac submitted. Fourth, the words "one or more of", when used in s 766B(3)(a) and (b), convey that s 766B(3) applies where an adviser has considered (or might be expected to have considered) one or more (but not necessarily all) of a person's objectives, financial situation and needs. As has been explained, the words "one or more of" were added during the drafting process56. The inclusion of "one or more of" in s 766B(3) conveys that advisers cannot avoid the disclosure and conduct obligations57 which attach to the provision of personal advice simply by failing to consider one or more of the matters referred to in the provision. The contrary conclusion – that s 766B(3)(a) and (b) do not apply unless an adviser considers all or the whole of a person's objectives, financial situation and needs – would be unworkable legally and practically. A person may fail to provide complete information to an adviser, whether by way of oversight or otherwise. That is why s 961B(2)(c) recognises that an adviser will meet the duty to act in a client's best interests when providing personal advice58 where, among other things, the adviser makes reasonable inquiries to obtain complete and accurate information. Thus, Westpac's further submission that it was incapable of considering the personal objectives of each member in circumstances where, among others, 55 Westpac (2019) 272 FCR 170 at 232 [267]. 56 See [33] above. 57 See [37]-[40] above. 58 Corporations Act, s 961B(1). the member had not provided information about the fees charged on their external superannuation accounts, or any particular management issues with those external accounts, is also rejected. It is contrary to the text and purpose of s 766B(3)(b) and unworkable. Fifth, the phrase "objectives, financial situation and needs" bears its ordinary meaning. As the primary judge held, and as has not been disputed, an objective is an end towards which efforts are directed, a situation is a state of affairs or combination of circumstances and a need is a case or instance in which some necessity or want exists. And the relevant objectives, financial situation and needs referred to must be "the person's". They must be personal. That follows linguistically from the words of the provision, including the fact that this kind of advice is described as "personal advice", and it is also implicit from the obligations that arise in connection with the giving of personal advice59. Those obligations would be unnecessary and nonsensical if the only relevant matters to be considered were universal or generic, and not personal. As to purpose, the purpose of Ch 7 of the Corporations Act is, relevantly, to promote "confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services"60 and "fairness, honesty and professionalism by those who provide financial services"61. Consistent with, and reinforced by, that purpose and the wider statutory context, s 766B(3) is directed to the protection of the retail client, who is often without the skills, knowledge or information to make informed decisions. The specific purpose of para (b) is clear. Section 766B(3)(b) focuses on what a reasonable person would expect "the provider" – not the retail client – to have done. It is a consumer protection provision in which the notion of "considered" includes not only circumstances involving a certain type, level or duration of consideration (as where there is an opportunity for active, mature, intellectual reflection over time) but also where an adviser provides a prompt or immediate response. It thus ensures that advisers cannot avoid the disclosure and conduct obligations62 which attach to the provision of personal advice simply by failing to consider one or more of the person's objectives, financial situation and needs. 59 See [37]-[40] above. 60 Corporations Act, s 760A(a). 61 Corporations Act, s 760A(b). 62 See, eg, Corporations Act, ss 946A, 961B, 961G, 961J. These conclusions deny Westpac's contention that s 766B(3) does not apply unless an adviser (in fact or by reasonable apprehension) considers what it described as the minimum irreducible personal circumstances of the member relevant to the subject matter of the advice in question. It may be accepted that a member who has told a superannuation provider only that they want to save on fees and make their superannuation more manageable would not expect their tax position, the returns and investment profile of their other accounts, their insurance position and their retirement objectives to have been taken into account. However, advice can be personal advice within the meaning of s 766B(3) if, for example, a person's objectives of saving on fees and making superannuation more manageable are taken into account or might be expected to be taken into account. Whether or not other aspects of their financial situation and needs were considered would not alter that conclusion. Section 766B(3) is engaged if an adviser (in fact or by reasonable apprehension) considers at least an aspect of one of the three categories – namely, a person's objectives, financial situation or needs – and whether that has occurred will be a fact specific inquiry. Here, Westpac elicited aspects of the members' objectives as part of the effort to persuade them to transfer their external superannuation accounts into their BT account. It remains to deal with Westpac's further contentions that the Full Court disagreed on the touchstone for determining what aspects of, or to what degree, a person's objectives, financial situation or needs must be taken into account and that the Full Court erred in introducing what counsel described as a "normative element" into the inquiry under s 766B(3)(b). As to the first of those contentions, as Allsop CJ rightly said, "[t]he surrounding circumstances, including the nature, content and context of the communication or exchange, will provide the answer to the question whether the provider has considered, or whether a reasonable person might expect the provider to have considered, any one or more of those subjects". The reasons of the other judges are not to any different effect. In short, there was no disagreement. the into As to the second contention, Westpac submitted that the Full Court introduced a "normative element" inquiry under s 766B(3)(b) by proceeding on a two-stage assumption that an adviser in Westpac's position should act in its members' best interests, and that a member's best interests can only be served through the provision of personal advice. Westpac's submission is not correct. The submission elides two different ideas – what Westpac should have done, with what a reasonable person standing in the shoes of the member might expect Westpac to have done. What a reasonable person standing in the shoes of the member might expect must be found (as the section requires) by having regard to all the circumstances. But observing that regard must be had to all the circumstances does not add some additional normative element to the inquiry. And the Full Court did not proceed in that manner. To the contrary, each member of the Full Court focused on the calls in their context and applied the statutory test, being what a reasonable person standing in the shoes of the member might expect that Westpac considered; and the matters relied on by their Honours in applying the statutory test were all matters which could legitimately be considered. Certainly, the Full Court took into account factors such as the pre-existing relationship between Westpac and each member, that the calls were about superannuation, and that the purpose of the calls was to help the member. But the matters mentioned were not taken as "premises" or "assumptions". Nor were they added as some new elements ("normative" or otherwise) which were read into, or placed as a gloss on, the statute. Each was and remains simply a circumstance that arises from the application of s 766B to the facts of the case and informed the conclusion that the advice given was personal advice. That conclusion was correct. Westpac gave personal advice within the meaning of s 766B(3)(b) Westpac gave financial product advice to each member which was intended to influence them in making a decision in relation to a particular financial product, namely, membership in one of the Funds, in circumstances where a reasonable person might expect Westpac to have considered one or more of the member's objectives, financial situation and needs. The subject matter of the advice, the nature of the relationship between Westpac and its members, the purpose and tenor of the calls, and the members' objectives, together with the form, content and context of the financial product advice seen in light of a number of other considerations, compel the conclusion that the financial product advice was personal advice within the meaning of s 766B(3)(b). The subject matter of the financial product advice concerned the consolidation of multiple superannuation accounts, a significant financial decision. There was a pre-existing relationship between each member and Westpac. Westpac already held some of the member's superannuation and each member had entrusted those funds to Westpac. The pre-existing relationship was one of trustee and beneficiary63. A reasonable person might expect that the adviser would be acting in the member's best interests, including by considering one or more of their objectives, financial situation or needs before giving financial product advice. Contrary to the findings of the primary judge, the fact that the specific adviser from the Super Activation Team who made the call had no previous relationship with the member, or was not provided with information by the member prior to the call, does not detract from that conclusion. In circumstances where the advisers were representatives of Westpac, a reasonable person would expect the adviser to be 63 Westpac was required under s 52(2)(c) of the SIS Act to perform its duties and exercise its powers in the best interests of the beneficiaries. continuing the pre-existing relationship as a representative of Westpac, and to have access to all of the member's relevant information known to Westpac. The tone and tenor of the calls had a repeated emphasis on helping and assisting the member in relation to their superannuation. The expressed purpose of the calls was to assist the members with their superannuation. For example, member 1's adviser said: "it was just a quick courtesy call regarding your BT Superannuation account, we've just had some superannuation search results ... [W]e've got some results here we'd like to help you bring them over to your account to potentially save you on fees ... Now, before we get started can I ask you a few quick questions so I can help you." The members were then asked about their objectives. For example, member 1 was asked: "So what was the main reason you asked us to look for your superannuations ... and what did you see as the main benefits of bringing them altogether to the one place?". In response, the members conveyed their financial objectives, which included: to maximise the performance, in terms of financial return, of the member's overall superannuation; to minimise the fees payable in respect of the member's overall superannuation; and to assist with management of the member's superannuation. These were personal objectives within the meaning of s 766B(3). Given the members were asked about their personal objectives, a reasonable person might expect that the objectives articulated were relevant to, and would be considered by Westpac in, the provision of any subsequent financial product advice. This expectation would not likely be undermined by the fact that the members' objectives were elicited during the course of the calls. Westpac's prior correspondence to members offering to search for and roll over their external superannuation accounts into their BT account64 had set the scene for these calls. And the personal objectives that the advisers elicited from, and which were provided by, the members were said by the advisers to be ones which were common to most of Westpac's members. In other words, the members' objectives were familiar to the advisers. For example, after member 1 explained why they wanted Westpac to look for their superannuation accounts, the adviser responded that "manageability and also the saving on the fees ... are the two main reasons our clients do like to bring their supers together". In these circumstances, a reasonable person might expect that the adviser would be able to consider the member's objectives in a short time, and would have taken additional time, if necessary, before providing personal advice. The members were given a general advice warning. By that warning, the advisers expressly stated that they would not take into account the members' personal circumstances. So, for example, member 1's adviser said: "I do need to 64 See [44] above. let you know ... everything discussed today is general in nature, it won't take into account your personal financial needs". But the significance of the general advice warning must be assessed in light of all the circumstances. The general advice warning was given only once, at the beginning of the telephone conversation. Members were subsequently asked directly about their personal objectives. Members were not encouraged to seek personal advice before deciding whether to accept the rollover service. The financial product advice was provided without charge. Where financial product advice is provided without charge, a reasonable person may be less likely to think that the advice would be given taking into account the member's objectives, financial situation and needs. Here, however, the position was qualified by two features of the calls. First, there was a pre-existing relationship between the members and Westpac under which the members paid annual fees to Westpac. While those fees were not said to be for services including the provision of personal advice, it is nonetheless the case that the members would likely have made payments over time to Westpac for financial services related to superannuation. Second, it might have been apparent to a reasonable person that the recommended rollover was in Westpac's interests, because it would increase Westpac's total funds under management. A reasonable person might expect that where Westpac is acting, in part, in its own interests, a fee for the provision of personal advice is less likely to be required. In some cases, the adviser revealed a lack of knowledge about the member's financial situation. For example, questions asked by member 1's adviser revealed that the adviser did not know the amount of funds held in member 1's external accounts or the duration of member 1's employment with previous employers. This might suggest to a reasonable person that the adviser had not taken the whole or all aspects of the member's financial situation into account in providing the financial product advice. But that cannot detract from the fact that, on the calls, the adviser elicited the member's personal objectives, and, having been told what they were, the adviser then confirmed that the member's stated objectives were relevant and in common with other members. Personal advice only requires that the adviser has considered, or a reasonable person might expect them to have considered, "one or more of" a person's objectives, financial situation or needs and that is what occurred on these calls. Section 766B(3)(b) is concerned with the circumstances of the retail client. Here, those circumstances included the form, content and context of the financial product advice given to the members that they should roll over their external superannuation accounts into their BT account. As O'Bryan J observed, where a provider of advice urges the recipient to follow a particular course of action, there is a greater likelihood that a reasonable person might expect the adviser to have considered the recipient's personal circumstances. This observation applies with particular force in the present case, where: the course of action concerns a subject matter of significance to most members (being the consolidation of multiple superannuation accounts); there is a pre-existing relationship of dependence between the adviser and the member (that of trustee and beneficiary); the adviser elicited the member's objectives; and once having been told them, the adviser confirmed those personal objectives through the use of social proofing as being common and relevant objectives. As has been said, those circumstances would have conveyed to a reasonable person not only that those personal objectives were considered, but that no other matters needed to be taken into account and no other advice was required before the member made a decision to accept the recommendation and roll over their external superannuation accounts. In the course of argument, Westpac referred to the advice that might be given in respect of other kinds of financial products, such as securities traded on a licensed market. Those references are not to the point for at least two reasons. First, advice about those products is subject to the specific provisions in Subdiv C of Div 3 of Pt 7.7 of Ch 7 including, in particular, ss 946A and 946B. Second, as has been observed65, superannuation products are recognised as a distinct and different kind of product and treated separately. Conclusion and orders For these reasons, in all of the circumstances, the financial product advice Westpac gave to the members was personal advice within the meaning of s 766B(3)(b) of the Corporations Act. The appeal should be dismissed with costs. 65 See [34] above.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Pollock v The Queen [2010] HCA 35 20 October 2010 ORDER Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of Queensland made on 11 September 2009 and, in lieu thereof, order that: the appeal to that Court be allowed; the appellant's conviction be quashed; and a new trial be held. On appeal from the Supreme Court of Queensland Representation S J Keim SC with A E Cappellano for the appellant (instructed by Legal Aid Queensland) M J Copley SC with J A Wooldridge for the respondent (instructed by Director of Public Prosecutions (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Pollock v The Queen Criminal law – Defences – Provocation – Elements of provocation – Meaning of "sudden" – Whether accused's loss of self-control must immediately follow provocation – Scope of objective test – Whether there exists a discrete requirement that accused must commit fatal act before there has been time for loss of self-control to abate. Criminal procedure – Directions – Use of model directions – Duty to frame directions by reference to issues. Words and phrases – "loss of self-control", "sudden provocation", "time for passion to cool". Criminal Code (Q), s 304. FRENCH CJ, HAYNE, CRENNAN, KIEFEL AND BELL JJ. Introduction The appellant was convicted of the murder of his father following a trial before the Supreme Court of Queensland (Atkinson J and a jury). The sole question at the trial was whether the Crown had excluded the reasonable possibility that at the time the appellant did the act causing death he was acting under provocation. Provocation, as a partial defence to murder, is provided in s 304 of the Criminal Code (Q) ("the Code"), which states: "When a person who unlawfully kills another under circumstances which, but for the provisions of this section, would constitute murder, does the act which causes death in the heat of passion caused by sudden provocation, and before there is time for the person's passion to cool, the person is guilty of manslaughter only." This was a retrial. The appellant had been convicted of the murder of his father following an earlier trial and his conviction had later been set aside by the Court of Appeal1. The judgment of the Court of Appeal set out seven propositions, any one of which, it was said, if proved beyond reasonable doubt, would exclude that the appellant had been acting under provocation. Those seven propositions were stated as follows2: the potentially provocative conduct of the deceased did not occur; an ordinary person in the circumstances could not have lost control and acted like the appellant acted with intent to cause death or grievous bodily harm; or the appellant did not lose self-control; or the loss of self-control was not caused by the provocative conduct; 1 R v Pollock [2008] QCA 205. 2 R v Pollock [2008] QCA 205 at [7] per McMurdo P. Hayne Crennan Bell the loss of self-control was not sudden (for example, the killing was premeditated); or the appellant did not kill while his self-control was lost; or when the appellant killed there had been time for his loss of self- control to abate." Before the commencement of these seven propositions ("the sevenfold test") had been incorporated into the model directions on provocation contained in the Queensland Supreme and District Court Bench Book. The jury was directed in the terms of the sevenfold test at the retrial. the appellant's retrial Following his conviction, the appellant appealed unsuccessfully to the Court of Appeal (Keane, Muir and Fraser JJA)3. The appellant appeals by special leave against the order of the Court of Appeal on the ground that the directions incorporating the sevenfold test were wrong in law. He contends that the fifth and seventh propositions are not discrete requirements of the partial defence. More generally, he contends that the sevenfold test unfairly invited the jury to consider each proposition in isolation and not as interrelated parts of a composite concept. As these reasons will show, the sevenfold test was apt to invite the jury to wrongly conclude the issue of provocation against the appellant and for this reason the appeal must be allowed, the appellant's conviction set aside and a new trial ordered. The facts of the killing The deceased was killed shortly before 6.00am on Saturday 31 July 2004 at his home in Morayfield. His body was found lying face down in the garden. A large rock was nearby, which appeared to have been removed from a retaining wall about two and a half metres away. The vegetation surrounding the body was trampled and was suggestive of a struggle having taken place in that vicinity. The deceased died from head injuries. Severe force was required to have caused them. They could have been occasioned by between two and eight blows. It was likely that the deceased was standing upright at the time the first blow was delivered. 3 R v Pollock [2009] QCA 268. Hayne Crennan Bell There were signs that a struggle had taken place inside the house. In the appellant's bedroom there was a quantity of blood staining, and beads from a necklace that he had been wearing were scattered on the floor. The string of the necklace was found in the passageway near the front door. There were also blood stains in the bathroom and on a wall near the front door. At about 5.50am the deceased's neighbour, Gerry Hart, called the 000 emergency number. He had been awakened by the sound of a dog barking. After he opened his front door he heard groaning and a voice saying, "Gerry, ring the police". Shortly after 6.00am the appellant telephoned the 000 emergency service, saying that he had killed his dad. Ms Spottiswood, the appellant's companion on the night preceding these events, also made telephone contact with the 000 emergency service. When the police arrived at the home they found the appellant sitting in the shower crying. The police spoke with Ms Spottiswood, who gave an account that she had woken to hear "like arguing and fighting in the bedroom". She said that they were "pounding" on each other and that they dragged "each other" outside. At the time of the trial, Ms Spottiswood was suffering from a serious mental illness and she did not give evidence. However, the recording of her interview with the police was in evidence. Ms Spottiswood was the only person at the Morayfield home at the time of the killing, apart from the appellant and the deceased. In an interview with the police the appellant said that he did not remember what had occurred and that he suffered from blackouts when he drank too much. He said that the deceased had been a "fucking cunt to me my whole life. Oh, no, fucking snapped me last night – I don't know, he just fucking – I don't know what he did, but – I don't know what I did." The appellant did not give or call evidence at the trial. The evidence raising provocation The following is a summary of the evidence, much of it not in dispute, upon which, in addition to the facts set out above, the partial defence of provocation fell to be determined. The appellant had been living with his girlfriend, Lindsay Brownlie, for around two and a half years at the time of these events. Two weeks before the killing he had lost his job. He was depressed by this setback and he and Hayne Crennan Bell Ms Brownlie quarrelled. He packed some clothes and went to his father's Morayfield home on Wednesday 28 July 2004. He was distressed by the break- up and in a tearful telephone conversation with Ms Brownlie on Thursday 29 July he complained that she had not treated him fairly. She went to the Morayfield home and stayed the night with him. On Friday 30 July the appellant telephoned Ms Brownlie and suggested that they go out together. She said that she had quite a bit to do and declined the invitation. Later that evening Ms Brownlie and a friend, Megan Bray, accepted an invitation from the appellant's brother, Graham, to come over to the Morayfield home for a drink. The deceased was at home and he joined the group. He consumed a substantial amount of alcohol during the evening. The appellant came home in the early hours of the morning with Ms Spottiswood, a young woman whom he had met earlier in the evening. He was surprised to find Ms Brownlie in the house and the situation was awkward. After a time the group broke up. The appellant and Ms Spottiswood retired to the appellant's bedroom. Ms Bray and the deceased went for a walk and Ms Brownlie and Graham Pollock went outside and talked in the garden. Some time later the appellant came out of the bedroom and confronted Ms Brownlie in the garden demanding that she leave the premises. She went back inside the house leaving the appellant and Graham talking together in the garden. They discussed their childhood and the deceased's abusive behaviour towards them. They spoke of occasions when the deceased had flogged them. The appellant told Graham of an incident when he was a small boy when the deceased had sexually abused him. He complained of his physical resemblance to the deceased and that he had "the Pollock gene". He spoke of killing his daughter because she, too, looked like the deceased. He said that he should wait on a bridge and "throw a rock through [the deceased's] fucking window". In the early hours of the morning there was a hostile discussion between the appellant and the deceased in which the deceased told the appellant to "fuck off" and that the appellant was "the only one with the problem". The appellant replied to this jibe by referring to his lost job and to having come home to find his ex-girlfriend in the house. During the course of the morning Ms Bray went into the deceased's bedroom and lay down. She was on friendly terms with the appellant and had acted as his confidante. The appellant followed her into the bedroom and he warned that "if the bastard touches either you or Lindsay, I will kill him". Hayne Crennan Bell Later the deceased joined Ms Bray in the bedroom and they engaged in sexual intimacies. Meanwhile the appellant was demanding to know what Ms Bray was "doing up there with that dirty old cunt". In the course of the morning the appellant told Ms Brownlie that Ms Bray should not be involved with the deceased because he was a disgusting person. He said that his aunt, Andrea, did not want to bring her children to the Morayfield home because of what the deceased had done to her. He complained that the deceased had "anal probed" him when he was a child. Some time after this conversation Ms Brownlie saw the appellant in the alcove near the bathroom holding a 15 cm kitchen knife. He appeared to be very upset. She told him that he was being silly. He said that he was upset about the situation with Ms Bray and the deceased. After this, he returned the knife to its place in the kitchen and he fell asleep in the bar area of the kitchen. When he woke he started threatening that he would tell Ms Brownlie's and Ms Bray's employer that they had been using drugs. It was at this point that Graham Pollock said he had had enough. Graham suggested that Ms Brownlie tell Ms Bray that they were leaving. The appellant asked Ms Brownlie not to tell the deceased why they were leaving. Ms Brownlie knocked on the deceased's bedroom door. She said that they had to leave because the appellant was angry and wanted the two of them out of the house. This prompted the deceased to say that he was "going to kill that fucking little cunt". The deceased was in an angry mood. As Ms Bray left the bedroom he was getting dressed and making threats to kill the appellant. Graham Pollock also heard the deceased threatening to kill the appellant. He said that threats to kill were not unusual in the household; it was the sort of language that was used every time someone got a bit drunk, which happened two or three times a week. Graham Pollock, Ms Bray and Ms Brownlie left the house. There was an issue about the time of their departure. On the evidence it could have been between 5.00am and 5.45am, although it appears to have been more likely to have been after 5.30am. The admissions made to Ms Brownlie Ms Brownlie visited the appellant in prison a few days after the killing. At the trial she gave unchallenged evidence of admissions made by the appellant during the visit. He said that he wanted to explain what had happened. The deceased had been really "pissed off" with him and came into his, the appellant's, bedroom while the appellant was packing to leave. They wrestled and the appellant thought that he had "ripped" part of the deceased's face. The deceased Hayne Crennan Bell went into the bathroom. While he was in the bathroom the appellant banged on the bathroom door and called out that he knew what the deceased had done to Andrea. The deceased jumped out of the bathroom window. The two of them fought in the garden. The appellant picked up a rock and "tapped it or held it up to [the deceased] or something" at which point the deceased had said, "Go on, I bet you can't do it, you pathetic little fuck. Go on, I bet you can't do it". The issues and the way the parties put their cases There was no issue about the course of events leading to the departure of Ms Bray and the others from the Morayfield home. The deceased's sexual encounter with Ms Bray had been brought to a premature end by the appellant's petulant behaviour. The deceased was in an angry mood fuelled by alcohol. He had got out of bed and was putting on his clothes and threatening to kill the appellant as Ms Bray left the house. Physical evidence pointed to a fight having taken place in the appellant's bedroom. Ms Spottiswood, who had been asleep in the appellant's bed, woke to see the appellant and the deceased fighting in that room. One reasonable inference was that the deceased had come into the room and attacked the appellant. This was conduct which was capable of provoking the appellant. There were no witnesses to the killing and the circumstances of it are largely unknown. One inference from the use of the rock and the number and severity of the blows was that the appellant had lost his self-control at the time of the killing. The appellant's emotional state in the aftermath of the killing and his statement to the police that he had "snapped" were capable of providing support for that conclusion. There were two versions of how the fight had progressed. The first version, which obtained some support from Ms Spottiswood's account, was that the fight had started in the bedroom and had continued from there out into the garden, and, in the course of the fight, the appellant had picked up the rock and struck the deceased. The second version was the account given to Ms Brownlie. On this version, the fight had been interrupted and the deceased had sought refuge in the bathroom before escaping through the window and being attacked in the garden. The appellant's case was that the first version was reasonably possibly true. His counsel disavowed reliance on the version that he had given to Ms Brownlie. Counsel submitted that it did not stand with the objective evidence and suggested that it was a reconstruction made at a time when the appellant was trying to make sense of events of which he had no recollection. The claimed Hayne Crennan Bell inconsistencies included that it was a version that did not accord with Ms Spottiswood's description of the fight. Counsel also pointed to the absence of blood staining in the bathroom and, in particular, on the window surrounds, given that the bloodstains in the bedroom pointed to the deceased as having sustained some injury from which he had been bleeding profusely. The Crown Prosecutor's submissions were directed to eliminating provocation on each of the versions, although his principal focus was on persuading the jury to accept and act on the appellant's admissions made to Ms Brownlie. In the respondent's submission the appellant had not lost his self- control: he had been on a "slow boil" for several hours culminating in an intentional killing carried out for revenge. It was submitted that "[t]his was a crime of passion, just that it wasn't a passion that was caused by provocation". The interval while the deceased sheltered in the bathroom demonstrated that any loss of self-control was not sudden (proposition five) or, alternatively, that there had been time for any loss of self-control to abate (proposition seven). The trial was conducted throughout upon the understanding that the jury would be directed in the terms of the sevenfold test. The test provided the structure for counsel's submissions and the summing up. This tended to deflect the parties and the trial judge from identifying the real issues raised by the evidence. The prosecution bore the burden of excluding the reasonable possibility that the appellant was acting under provocation. In closing submissions, the Crown Prosecutor acknowledged that one inference that was open was that the deceased had provoked the appellant by attacking him in the bedroom. He also acknowledged that the circumstances of the killing (the number of blows) were capable of supporting an inference that the appellant had lost his self-control at the time he killed the deceased. Notwithstanding the recognition that the prosecution could not exclude on the criminal standard either that the deceased had provoked the appellant or that, at the time of the killing, the appellant had lost his self-control, the Crown Prosecutor addressed in sequence the propositions in the sevenfold test, inviting the jury to consider how as a matter of possibility each might be proved. For forensic reasons the appellant's counsel chose not to address the jury on how provocation might apply in the event that the jury accepted that the admissions made to Ms Brownlie were reliable. In the result, it may have appeared to the jury that acceptance of the appellant's admissions as true beyond reasonable doubt meant that provocation was excluded. Hayne Crennan Bell Provocation was raised on each of the versions. It was incumbent on the trial judge to explain how it arose on each version and how it might be excluded on each4. Central to the concept of provocation is the distinction that the law draws between intentional killing in an uncontrolled emotional state induced by the deceased's provocative conduct and an intentional killing (albeit, in this case, unplanned) induced by a desire for revenge. The "slow boil" submission based on the appellant's statements made in the hours before the killing raised nice questions as to this distinction. On either version of the facts the prosecution could not exclude that the deceased had provoked the appellant. If the jury were not able to exclude the first version as being reasonably possibly true, it would be difficult to establish that the matters upon which the appellant had earlier been brooding had led him to kill deliberately out of a desire for revenge, and not that he killed in an uncontrolled rage induced by the deceased's later provocative conduct. If the jury were satisfied beyond reasonable doubt of the truth of the appellant's admissions, it remained to consider whether it was reasonably possible that the appellant had lost his self-control as the result of the deceased's attack on him, and that he was still in that state when he killed the deceased. There was also the deceased's taunt, to the effect that the appellant was not man enough to hit him with the rock, to be addressed. Although the appellant did not rely on this evidence, the deceased's words (assuming that the prosecution had not excluded the reasonable possibility that he had said them) were themselves capable of amounting to provocation and it was incumbent on the trial judge to direct the jury accordingly. The summing up The trial judge directed the jury in general terms as to the meaning of provocation, the assessment of the gravity of the provocation, the attributes of the ordinary person and the objective ordinary person test consistently with the law as this Court has explained it in Stingel v The Queen5 and Masciantonio v The 4 Pemble v The Queen (1971) 124 CLR 107 at 117-118 per Barwick CJ, 133 per Menzies J; [1971] HCA 20; Van Den Hoek v The Queen (1986) 161 CLR 158 at 169 per Mason J; [1986] HCA 76. (1990) 171 CLR 312; [1990] HCA 61. Hayne Crennan Bell Queen6. Stingel was concerned with provocation under the Tasmanian Code7 and Masciantonio with the doctrine under the common law. In each case the Court observed that in this area of the criminal law the Codes and other statutory provisions and the common law have tended to reflect a degree of unity of underlying notions8. There is no complaint with her Honour's statement of the general principles. Her Honour identified the act relied upon by the appellant causing the loss of self-control as the fight in the bedroom which was alleged to have extended into the garden. She did not explain how provocation might apply were the jury to find the appellant's admissions were true. Her Honour explained that the prosecution would exclude provocation if it proved any one of the propositions in the sevenfold test. Written directions incorporating the sevenfold test were distributed to the jury in these terms: "It is for the prosecution to satisfy you beyond reasonable doubt that the defendant did not act under provocation before a verdict of guilty of murder is open. The prosecution will have succeeded in satisfying you that provocation is excluded as a defence, if it has satisfied you beyond reasonable doubt of any one of the following matters: the potentially provocative conduct of the deceased did not occur; or an ordinary person of the same age as Andrew Pollock in the circumstances could not have lost control and acted as he acted with intent to cause death or grievous bodily harm; or Andrew Pollock did not lose self-control; or the loss of self-control was not caused by the provocative conduct; or (1995) 183 CLR 58; [1995] HCA 67. 7 Criminal Code (Tas), s 160 (since repealed). 8 Stingel v The Queen (1990) 171 CLR 312 at 320 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ; Masciantonio v The Queen (1995) 183 CLR 58 at 66 per Brennan, Deane, Dawson and Gaudron JJ, 71 per McHugh J. Hayne Crennan Bell the loss of self-control was not sudden, or Andrew Pollock did not kill Murray Pollock while his self- control was lost; or when Andrew Pollock killed Murray Pollock there had been time for his loss of self-control to abate." The fifth proposition does not include the example (that the killing was premeditated) that formed part of the Court of Appeal's statement of the test. The example was omitted at the request of the Crown Prosecutor, with the consent of the appellant's counsel, because it was not the Crown case that the killing had been premeditated. The summing up contained no elaboration of the various propositions in the sevenfold test or how the evidence related to the determination of the questions posed by each. The only directions touching on the issues raised by the fifth and seventh propositions were: "What you have to consider here is whether Andrew Pollock acted in the heat of passion caused by sudden provocation and before there was time for his passion to cool. You must consider whether he was actually deprived of self-control and killed the deceased while so deprived. The prosecution says there was time for his passion to cool. The defence submits you could not be satisfied beyond reasonable doubt that he was not acting while provoked. The answer to that question is one for you to judge." The fifth proposition – the jury's question "Sudden" in ordinary English has a number of meanings. These include "immediate" and "without delay" as well as "unexpected" and "unpremeditated"9. The jury were troubled by the meanings of "sudden" and "loss of self-control". They asked for clarification of the definitions of each. With the agreement of both counsel, her Honour answered the question as to the definition of "sudden" in this way: 9 Oxford English Dictionary, 2nd ed (1989), vol 17 at 115-116, "sudden". Hayne Crennan Bell "Well, 'sudden' in that context I've taken from the Oxford English Dictionary, and it means – it says 'of actions and feelings, unpremeditated, done without forethought, acting without forethought or deliberation, performed or taking place without delay; speedy, prompt, immediate'. But 'sudden' is an ordinary, English word. It doesn't have any special legal meaning in this context. It's an ordinary, English word that means what you understand it to mean as ordinary members of the community. But the dictionary has these meanings: 'Unpremeditated, done without forethought, acting without forethought or deliberation, performed or taking place without delay, speedy, prompt, immediate'. But what it means in the Criminal Code, what it means in this part of the law is its own meaning. It means sudden. If there was another word that was better, another word would have been used, but that gives you some idea of the ordinary, English meaning of the word sudden in this context." The appellant's submissions – the fifth and seventh propositions The appellant complains that absent a direction that "sudden" in the fifth proposition connotes the absence of premeditation, it was left to the jury to exclude provocation in the event that there was any interval between the provocative conduct and the loss of self-control. In the Court of Appeal, and in the appellant's written submissions in this Court, a second criticism was made of the fifth proposition. "Sudden", it was said, qualifies the deceased's provocative conduct under s 304 and has been wrongly transposed in the fifth proposition to qualify the accused's loss of self-control. The complaint with the seventh proposition is that, read with the sixth proposition, it states an objective element of the defence that is additional to the threshold "ordinary person" test. Provocation in s 304 of the Code It will be recalled that s 304 provides: "When a person who unlawfully kills another under circumstances which, but for the provisions of this section, would constitute murder, does the act which causes death in the heat of passion caused by sudden provocation, and before there is time for the person's passion to cool, the person is guilty of manslaughter only." Hayne Crennan Bell On the hearing of the appeal each of the parties submitted that "sudden provocation" under s 304 is to be understood by reference to the common law. This acceptance is fatal to the appellant's second criticism of the fifth proposition. Keane JA in the Court of Appeal rejected the contention that "sudden" qualifies the deceased's provocative conduct. His Honour explained that the expression "sudden provocation" is "necessarily concerned with, and related to, the temporary loss of self-control excited by the provocation"10. This was a reference to the modern statements of the doctrine that speak of a "sudden and temporary loss of self-control"11. Section 304 of the Code is substantially in the form in which it was enacted12. Judges of the Supreme Court of Queensland have for many years interpreted the provision by reference to the common law13. This is because, as McTiernan ACJ and Menzies J explained in their joint reasons in Kaporonovski v The Queen, s 304 does not express the conditions upon which provocation is given legal effect: it is only by reference to the common law that one can determine the circumstances in which provocation operates to reduce a killing from murder to manslaughter under the provision14. 10 [2009] QCA 268 at [50]. 11 Parker v The Queen (1963) 111 CLR 610 at 652 per Windeyer J; [1963] HCA 14; Van Den Hoek v The Queen (1986) 161 CLR 158 at 168 per Mason J; R v Duffy [1949] 1 All ER 932; R v Ahluwalia [1992] 4 All ER 889 at 894-896 per Lord Taylor of Gosforth CJ. 12 Section 304 of the Code was amended by The Criminal Code and Offenders Probation and Parole Act Amendment Act 1971 (Q) to remove the reference to wilful murder. 13 R v Herlihy [1956] St R Qd 18; R v Young [1957] St R Qd 599; R v Johnson [1964] Qd R 1; R v Callope [1965] Qd R 456; Buttigieg (1993) 69 A Crim R 21; R v Pangilinan [2001] 1 Qd R 56. 14 (1973) 133 CLR 209 at 219 per McTiernan ACJ and Menzies J; [1973] HCA 35. Note: the definition of provocation in s 268 of the Criminal Code (Q) does not apply to provocation for the purposes of s 304. See Kaporonovski v The Queen (1973) 133 CLR 209 at 218-219. Hayne Crennan Bell The use of the expression "sudden provocation" was intended to import well-established principles of the common law concerning the partial defence in the law of homicide15. Thus, the provision is to be understood as requiring that the provocation both involve conduct of the deceased and have the capacity to provoke an ordinary person (to form the intention to kill or to do grievous bodily harm and to act in the way the accused acted), although neither requirement is stated in terms. In interpreting the language of s 304 it is permissible to have regard to decisions expounding the concept of "sudden provocation" subsequent to the Code's enactment16. 15 Section 304 of the Code was taken directly from cl 312 of Sir Samuel Griffith's draft code. See Griffith, Draft of a Code of Criminal Law, (1897) at 123. The marginal note to cl 312 refers to ss 58 and 172 of the Criminal Code Bill (Bill 2) in House of Commons Parliamentary Papers, (1880), Vol 2 at 1. Section 172 of the Bill provided: "Culpable homicide, which would otherwise be murder, may be reduced to manslaughter if the person who causes death does so in the heat of passion caused by sudden provocation. Any wrongful act or insult of such a nature as to be sufficient to deprive an ordinary person of the power of self-control may be provocation, if the offender acts upon it on the sudden and before there has been time for his passion to cool. Section 172 of the Bill was based on cl 176 of the draft code appended to: United Kingdom, Report of the Royal Commission Appointed to Consider the Law relating to Indictable Offences, (1879) [C 2345] ("Report of the Royal Commission") at 100-101. The Commissioners regarded s 176 as reflecting the common law save for the inclusion of insults as capable of amounting to provocation: Report of the Royal Commission at 22, 24-25. Sir Samuel Griffith considered cl 312 of his draft to embody the common law: Griffith, Draft of a Code of Criminal Law, (1897) at xii. 16 Boughey v The Queen (1986) 161 CLR 10 at 30 per Brennan J; [1986] HCA 29; R v LK (2010) 84 ALJR 395 at 422 per Gummow, Hayne, Kiefel, Crennan and Bell JJ; (2010) 266 ALR 399; [2010] HCA 17. Hayne Crennan Bell Suddenness and time for passion to cool The issues raised by the challenge to the fifth and seventh propositions make it necessary to say something about the related concepts of "suddenness" and of there being time "for passion to cool" in the development of the law of provocation. They can be traced to the emergence of the doctrine as the conceptual basis for reducing murder to voluntary manslaughter in the 17th century. Each has undergone development in the modern law. The history is detailed in Parker v The Queen, where it is noted that the doctrine was being worked out at a time when duelling was commonplace17. In the early cases and commentaries the quality of "suddenness" is used to describe both the incident and the accused's emotional response to it. Thus in 1666, when the judges of England met to consider aspects of the law of provocation (which were expected to arise in the trial of Lord Morley on a charge of homicide), they were agreed that if both parties "suddenly fight" and one kills the other the offence was manslaughter because "it is a combat betwixt two upon a sudden heat"18; whereas when two men argue and after such time as, "in reasonable intendment, their heat might be cooled" they fight (and one was killed) the offence was murder, because it was presumed "to be a deliberate act, and a premeditated revenge upon the first quarrel"19. The rationale for the development of the doctrine was the recognition that lesser moral responsibility attaches to an intentional killing done in a state of temporary loss of self-control caused by provocation than attaches to a deliberate killing "in cold blood"20. The related ideas of suddenness and the absence of cooling time were concerned with the absence of premeditation. At a time before the accused was competent to give evidence at trial the law presumed that a killing after a sufficient interval was not done under provocation. Blackstone said that if there were "sufficient cooling time for passion to subside and reason to interpose" and the accused thereafter kills, the offence is murder because it 17 Parker v The Queen (1963) 111 CLR 610 at 625-628 per Dixon CJ, 650-652 per 18 The Trial of Lord Morley (1666) 6 St Tr 770 at 771. 19 The Trial of Lord Morley (1666) 6 St Tr 770 at 771-772. 20 Parker v The Queen (1963) 111 CLR 610 at 651 per Windeyer J. Hayne Crennan Bell was "deliberate revenge and not heat of blood"21. East said of the interval between the provocation and the retaliation that it "aids very much the presumption of malice in law; for that is in some cases evidence in itself of deliberation"22. East's use of the expression "sudden provocation" was to connote the absence of premeditation23. The sixth edition of Russell on Crimes and Misdemeanours, current at the time Sir Samuel Griffith was writing his draft code, stated the law of provocation in terms that were drawn from East24. The language of s 304 reflects the way provocation was explained to the jury in R v Hayward25. Chief Justice Tindal directed them to consider "whether there had been time for the blood to cool, and for reason to resume its seat, before the mortal wound was given"26. In contemporary explanations of the doctrine it has been common to speak of the requirement that the provocative conduct induce in the accused a "sudden and temporary loss of self-control". The concepts of suddenness and temporariness are explained by McHugh J, dissenting in the result, in Masciantonio v The Queen27: "The concept of suddenness negatived any question of premeditation. The concept of temporariness ensured that an intentional killing would be excused as manslaughter only where it was committed while the killer's capacity for self-control had been overwhelmed by the desire for retribution that often arises when an interest or relationship that a person 21 Blackstone, Commentaries on the Laws of England, 15th ed (1809), bk 4, c 14 at 22 East, Pleas of the Crown, (1803), vol 1 at 252-253. 23 East, Pleas of the Crown, (1803), vol 1 at 241. 24 Russell, A Treatise on Crimes and Misdemeanours, 6th ed (1896), vol 3 at 54. 25 The point is made by Gleeson CJ in Chhay (1994) 72 A Crim R 1 at 8 citing R v Hayward (1833) 6 Car & P 157 [172 ER 1188]. 26 R v Hayward (1833) 6 Car & P 157 at 159 [172 ER 1188 at 1189]. 27 (1995) 183 CLR 58 at 80. Hayne Crennan Bell values is harmed or threatened by the conduct of another person [reference omitted]." Keane JA was correct to say that the expression "sudden provocation" in s 304 is concerned with the temporary loss of self-control excited by the provocation. The fifth proposition The difficulty with the fifth proposition is that it was susceptible of being understood as requiring that the loss of self-control immediately follow the provocation. The directions given in answer to the jury's question referred to meanings of the word "sudden" which included "unpremeditated". However, other meanings of "sudden" including "immediate" were given. It was left to the jury to decide what "sudden" meant when applied to the appellant's loss of self control. The law requires that the killing occur while the accused is in a state of loss of self-control that is caused by the provocative conduct, but this does not necessitate that provocation is excluded in the event that there is any interval between the provocative conduct and the accused's emotional response to it28. The fifth proposition was misleading in the absence of further explanation. The respondent submitted it had been necessary to direct the jury in terms of the fifth proposition in this case. This is because the appellant's statements and conduct in the earlier part of the morning had given rise "to a very real suspicion" that his intention to kill or to do grievous bodily harm was the product of brooding anger and not of provocation. For this reason, it had been necessary to guard against the jury wrongly concluding that an unprovoked intentional killing in anger might be reduced to manslaughter. It is sufficient to note that the fifth proposition hardly served to make the distinction clear. Reference has already been made to the care with which it was necessary to direct the jury as to the respondent's "slow boil" submission. 28 Parker v The Queen (1964) 111 CLR 665 at 679; [1964] AC 1369; Chhay (1994) 72 A Crim R 1 at 10 per Gleeson CJ; R v Ahluwalia [1992] 4 All ER 889 at 896 per Lord Taylor of Gosforth CJ. Hayne Crennan Bell The seventh proposition The seventh proposition assumes the loss of self-control and directs attention, objectively, to whether there had been time for the loss to abate. The respondent submits that it is an accurate statement of the law as it is explained in the joint reasons in Masciantonio v The Queen29: "Homicide, which would otherwise be murder, is reduced to manslaughter if the accused causes death whilst acting under provocation. The provocation must be such that it is capable of causing an ordinary person to lose self-control and to act in the way in which the accused did. The provocation must actually cause the accused to lose self-control and the accused must act whilst deprived of self-control before he has had the opportunity to regain his composure." (emphasis added) The alternative submission, which the respondent developed in oral argument, is that, regardless of whether the common law requires as a discrete, objective, element that there not have been time for the accused to regain his composure, this is a requirement of the partial defence under the Code. The respondent submits that the seventh proposition is a statement of the concluding words of s 304 without the metaphor. It cannot be an error, so it is said, to direct a jury in the terms of the statute. It is a submission which assumes that the concluding words of s 304 commencing "and before there is time" are the statement of a condition that is separate from the condition stated in the preceding phrase "in the heat of passion caused by sudden provocation". The language of s 304 reflects statements of the doctrine which pre-date the emergence of the "ordinary person" objective test. This threshold objective test was not part of the law at the time Tindal CJ formulated his classic direction in Hayward. Thirty-six years later the "reasonable man" had made his appearance in this area of the law. Keating J's directions in R v Welsh required the jury to consider whether the provocation was such that a reasonable man might be induced in the anger of the moment to commit the act30. By 1914 the 29 Masciantonio v The Queen (1995) 183 CLR 58 at 66 per Brennan, Deane, Dawson 30 (1869) 11 Cox CC 336 at 338. Hayne Crennan Bell "reasonable man" test was accepted as being an essential requirement for the operation of the partial defence31. In Mancini v Director of Public Prosecutions, Viscount Simon LC explained the "reasonable man" test as serving to ensure that "an unusually excitable or pugnacious individual" could not rely on provocation which would not have led an ordinary person to act as he did32. In applying the test, his Lordship said that it was important to consider whether a sufficient interval had elapsed since the provocation to allow a reasonable man time to cool33. "Cooling time", which in the early development of the doctrine operated presumptively to exclude provocation (and in this way to keep the doctrine within bounds), had come to be a factor bearing on the determination of the threshold objective "reasonable man" test. In Stingel v The Queen this Court approved Viscount Simon's statement in Holmes v Director of Public Prosecutions that the provocation must have the capacity to provoke an ordinary person "to the degree and method and continuance" of the violence causing death34. "Continuance" relates to the duration of the loss of self-control. It is the issue addressed by the seventh proposition. The significance of the inclusion of "method" and "continuance" in Viscount Simon's formulation of the ordinary person test was considered by this Court in Masciantonio v The Queen35. The question raised by that appeal was whether the trial judge had been right to withdraw provocation with respect to the "second stage" of the fatal event. The majority, referring to Johnson v The Queen, observed that it is now well established that the question of whether the retaliation is proportionate to the provocation has been absorbed into the application of the ordinary person test36. Their Honours said that the question of 31 R v Lesbini [1914] 3 KB 1116 at 1120. 32 [1942] AC 1 at 9. 33 Mancini v Director of Public Prosecutions [1942] AC 1 at 9. 34 Stingel v The Queen (1990) 171 CLR 312 at 325, citing Holmes v the Director of Public Prosecutions [1946] AC 588 at 597 per Viscount Simon. 35 (1995) 183 CLR 58 at 69-70 per Brennan, Deane, Dawson and Gaudron JJ. 36 Masciantonio v The Queen (1995) 183 CLR 58 at 67 per Brennan, Deane, Dawson and Gaudron JJ citing Johnson v The Queen (1976) 136 CLR 619 at 639, 640 per Barwick CJ, 659 per Gibbs J; [1976] HCA 44. Hayne Crennan Bell whether an accused had regained self-control was not answered by reference to the ordinary person. It was a question to be determined by reference to the conduct of the accused and to the common experience of human affairs37. The point being emphasised in the joint reasons in Masciantonio was that the objective test concerns the nature and extent of the reaction which might be caused in an ordinary person rather than its duration or precise physical form38. The question of whether an ordinary person could have formed the intention to kill or to do grievous bodily harm is of greater significance than the question of whether an ordinary person could adopt the means adopted by the accused to carry out the intention. So, too, the duration of the loss of self-control is of lesser significance than the capacity of the provocation to induce in the ordinary person the requisite intention. The determination of whether the prosecution has proved that an ordinary person, provoked to the degree that the accused was provoked, could not have formed the intention to kill or do grievous bodily harm and to have acted as the appellant acted does not require the jury to hypothesise the time that an ordinary person might have taken to regain composure. The circumstance that an accused had time to reflect before reacting to provocation may show that the later killing was an intentional killing carried out from motives of revenge or punishment39. The interval between the deceased's provocative conduct and the killing may tend to show that the accused had regained control at the time of the killing40. These are matters bearing on the determination of whether the killing was in fact caused by provocation and done at a time when the accused was in a state of temporary loss of self-control. In Parker v The Queen Windeyer J, speaking of the common law as well as the New South Wales statute under consideration, disavowed that the "first beginning of emotion [the loss of self-control] must not be earlier than just before 37 Masciantonio v The Queen (1995) 183 CLR 58 at 69 per Brennan, Deane, Dawson 38 Masciantonio v The Queen (1995) 183 CLR 58 at 69-70 per Brennan, Deane, 39 Moffa v The Queen (1977) 138 CLR 601 at 611 per Barwick CJ; [1977] HCA 14; R v Ahluwalia (1992) 4 All ER 889 at 895-896 per Lord Taylor of Gosforth CJ. 40 R v Ahluwalia (1992) 4 All ER 889 at 895 per Lord Taylor of Gosforth CJ. Hayne Crennan Bell the fatal act"41. His Honour cautioned against interpreting the words of the New South Wales statute as if it were stating several matters to be considered independently of one another42. He said that all of the circumstances were to be considered and that general statements about passion having time to cool had little place in the circumstances of that case43. His Honour's dissenting judgment (and that of Dixon CJ) was upheld in the Privy Council. Their Lordships agreed that it was an error to have construed the provision of the New South Wales statute as stating several matters to be considered separately and independently of one another44. Reference has been made to Johnson v The Queen, in which this Court rejected proportionality as constituting a discrete element of the partial defence45. In that case Barwick CJ explained a statement by Lord Devlin in Lee Chun- Chuen v The Queen, that there are three main elements of provocation, in this way46: "His Lordship did not set out separate elements to be considered disjointly in some temporal order. On the contrary, he emphasized the interaction of the several matters, which might be called considerations, to be in mind in 41 Parker v The Queen (1963) 111 CLR 610 at 662. 42 Parker v The Queen (1963) 111 CLR 610 at 658. The reference to statute was to s 23(2)(c) of the Crimes Act 1900 (NSW) which, at the time, required "[t]hat the act causing death was done suddenly, in the heat of passion caused by such provocation, without intent to take life". 43 Parker v The Queen (1963) 111 CLR 610 at 663. 44 Parker v The Queen (1964) 111 CLR 665 at 680. 45 Johnson v The Queen (1976) 136 CLR 619 at 636-637. At issue in Johnson was provocation as then provided by s 23(2) of the Crimes Act 1900 (NSW). The majority concluded that proportionality was not a discrete element of provocation either under the statute or under the common law: see at 636-637, 642 per Barwick CJ, 657-658 per Gibbs J, 660 per Mason J, 666 per Jacobs J; cf at 671 per 46 Johnson v The Queen (1976) 136 CLR 619 at 637, referring to Lee Chun-Chuen v The Queen [1963] AC 220 at 231-232. Hayne Crennan Bell deciding whether the provocation was, or could in law be permitted to be, operative in reducing the crime to manslaughter." The words of s 304 that require that the act causing death is done "in the heat of passion caused by sudden provocation, and before there is time for the person's passion to cool" are the expression of a composite concept incorporating that the provocation is such as could cause an ordinary person to lose self-control and to act in a manner which encompasses the accused's actions. It is the last- mentioned objective requirement that keeps provocation within bounds. The concluding words beginning "and before" are not the statement of a discrete element of the partial defence. The jury were required to determine whether the prosecution had proved beyond reasonable doubt that the appellant did not kill the deceased while in a state of loss of self-control induced by the deceased's provocative conduct, being conduct that had the capacity to cause an ordinary person to lose self-control and form the intention to kill or to do grievous bodily harm and to act as the appellant acted. If they were not so satisfied it was not open to proceed to proposition seven and to exclude provocation upon a view that, objectively, there had been time for the appellant's loss of self-control to abate. In every case in which provocation is raised it is necessary for the trial judge to explain the concept and the ways in which the prosecution may eliminate it. Model directions, when appropriately adapted to the case, may assist trial judges in this task, but model directions must not be used in a way that distracts attention from the central task of the judge in instructing the jury. That task is to identify the real issues in the case and to relate the directions of law to those issues47. The seven propositions identified by the Court of Appeal in the earlier appeal in this matter were not intended to be used as a template for jury directions. That they came to be included in the Bench Book may explain their use by the trial judge and trial counsel's acquiescence in that course. But, as these reasons explain, their use in this case misdirected the jury. The difficulty with the fifth proposition, stated as a discrete element, was highlighted by the jury's question. The appellant's counsel did not ask the trial judge to explain that "sudden" in this context signified the absence of premeditation. However, there is no reason to view his failure to do so as 47 Alford v Magee (1952) 85 CLR 437 at 466 per Dixon, Williams, Webb, Fullagar and Kitto JJ; [1952] HCA 3. Hayne Crennan Bell reflecting a decision thereby to obtain a perceived forensic advantage for the appellant. The respondent's submissions – miscarriage of justice The respondent submitted that whatever criticisms might be levelled at the sevenfold test, its use had not occasioned a miscarriage of justice in this case. There was no danger, so it was said, that the jury might have excluded provocation because they were satisfied that the appellant's loss of self-control had not been sudden or that objectively there had been time for the loss of self- control to abate. This was because on any view of the facts the interval between Ms Bray's departure and the killing was short. Whatever had occurred between the appellant and the deceased had happened rapidly and the appellant's response had been "immediate". These submissions do not come to grips with the way the prosecution's case was put at trial. The jury were invited to find that the appellant's loss of self-control was not "sudden" because there had been an interval during which the deceased was in the bathroom, because the appellant had the time to wipe his hand on the wall (leaving the blood-stained handprint) and because the appellant had time to prise the rock from the wall. The same factual matters appear to have been relied on in support of the submission that the prosecution had excluded provocation because there had been time for the appellant's loss of self-control to abate. The directions wrongly invited the jury to exclude that the appellant was acting under provocation if the jury found that there had been any interval between the deceased's provocative conduct and the act causing death. In the light of the way the parties had put their cases it cannot be said that the misdirection did not deprive the appellant of a chance fairly open to him of being acquitted of murder. It follows that the appeal must be allowed. The evidence was capable of eliminating that the killing was done under provocation. This includes that on either version of the events leading to the killing it was open to the jury to find that provocation had been negatived by the application of the threshold ordinary person test. For these reasons the consequential order should be that a new trial be held.

HIGH COURT OF AUSTRALIA Matter No A8/2018 AMACA PTY LIMITED (UNDER NSW ADMINISTERED WINDING UP) APPELLANT AND Matter No A7/2018 AND RESPONDENT APPELLANT AMACA PTY LIMITED (UNDER NSW ADMINISTERED WINDING UP) RESPONDENT Amaca Pty Limited v Latz Latz v Amaca Pty Limited [2018] HCA 22 Date of Order: 11 May 2018 Date of Publication of Reasons: 13 June 2018 A8/2018 & A7/2018 ORDER Matter No A8/2018 Appeal allowed in part, on the ground (Ground 3(a)) that the Full Court of the Supreme Court of South Australia erred in assessing damages by including an allowance for the loss of expectation of receiving an age pension during the "lost years". Set aside order 3 of the Full Court made on 30 October 2017 and 20 November 2017 and, in its place, order that judgment be entered in an amount to be determined in accordance with Order 1. Appeal otherwise dismissed. The appellant pay the respondent's costs of the appeal. Matter No A7/2018 Appeal dismissed. The respondent pay the appellant's costs of the appeal. On appeal from the Supreme Court of South Australia Representation J T Gleeson SC with D F Villa and C G Winnett for the appellant in A8/2018 and the respondent in A7/2018 (instructed by Holman Webb) D F Jackson QC with S Tzouganatos for the respondent in A8/2018 and the appellant in A7/2018 (instructed by Turner Freeman Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Amaca Pty Limited v Latz Latz v Amaca Pty Limited Negligence – Personal injury – Damages – Assessment of present value of future loss – Where claimant diagnosed with terminal malignant mesothelioma post-retirement – Where claimant's life expectancy reduced – Where claimant receiving superannuation pension under Superannuation Act 1988 (SA) and age pension under Social Security Act 1991 (Cth) – Whether superannuation pension entitlement which would have been received during remainder of pre-illness life expectancy compensable loss – Whether age pension entitlement which would have been received during remainder of pre-illness life expectancy compensable loss – Whether reversionary pension payable under s 38(1)(a) of Superannuation Act to partner on claimant's death should be deducted from damages award. Words and phrases – "age pension", "capital asset", "compensable loss", "compensatory principle", "loss of earning capacity", "lost years", "net present value", "offsetting or collateral benefit", "pension", "pre-illness life expectancy", "reversionary pension", "superannuation pension". Social Security Act 1991 (Cth), Pt 2.2. Superannuation Act 1988 (SA), Pt 5. KIEFEL CJ AND KEANE J. On 11 May 2018, the Court, by majority, made orders disposing of these appeals. We respectfully differ from the majority in that regard. We would have allowed Amaca's appeal and dismissed Mr Latz' appeal. We now set out our reasons. Mr Anthony Latz is a retiree who is dying from malignant mesothelioma, caused by the negligence of Amaca Pty Ltd, as a result of Mr Latz inhaling asbestos dust and fibre in 1976 or 1977 while cutting and installing asbestos fencing manufactured by Amaca1. The mesothelioma became symptomatic in 2016; and Mr Latz' condition was diagnosed as terminal in October of that year2. At that time, he had been retired from his employment in the public service of South Australia for over nine years3. One of the effects of the mesothelioma was that Mr Latz' pre-illness life expectancy was reduced by just over 16 years4. Mr Latz receives the age pension under Pt 2.2 of the Social Security Act 1991 (Cth). The age pension will cease to be payable on his death. also Mr Latz receives superannuation pension under the Superannuation Act 1988 (SA). Mr Latz made contributions to the South Australian Superannuation Fund during the period of his employment. Upon his retirement at age 60, he became entitled to receive a fortnightly payment from the State by way of superannuation. Section 40 of the Superannuation Act conferred on Mr Latz, as a person entitled to a pension, the right to commute his superannuation entitlement so as to take its value in a lump sum. Mr Latz did not exercise that right. Pursuant to s 38(1)(a) of the Superannuation Act, upon Mr Latz' death his "spouse" (a term defined so as to include his domestic partner, Ms Taplin) will become entitled (subject to presently irrelevant exceptions) to a lifetime pension equivalent to two-thirds of the notional pension to which Mr Latz would have been entitled. 1 Latz v Amaca Pty Ltd [2017] SADC 56 at [7], [16], [19]. 2 Latz v Amaca Pty Ltd [2017] SADC 56 at [30], [34]. 3 Latz v Amaca Pty Ltd [2017] SADC 56 at [27]. 4 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 69-70 [38]. In CSR Ltd v Eddy5, Gleeson CJ, Gummow and Heydon JJ, with whom Callinan J agreed, described the heads of loss that were "traditionally seen" as compensable for negligently inflicted personal injury as: non-pecuniary loss, being loss of the amenities of life; loss of earning capacity; and actual financial loss, being outgoings incurred by reason of the injury. the present case, the Full Court of the Supreme Court of South Australia held by majority (Blue and Hinton JJ, Stanley J dissenting)6 that the value of age pension and superannuation payments that could have been expected to be received by Mr Latz in the years between his retirement and death had his life expectancy not been reduced by his mesothelioma was a compensable loss even though it did not fall within the heads of loss described by the plurality in CSR Ltd v Eddy. The majority went on, however, to reduce the damages awarded to Mr Latz by the trial judge in order to take account of the benefits that Ms Taplin will receive under Mr Latz' superannuation entitlements upon his death7. Amaca submitted that the circumstance that Mr Latz will not receive age pension and superannuation payments by reason of his premature death is not the result of any diminution in Mr Latz' earning capacity, and is not otherwise a compensable financial loss as described in CSR Ltd v Eddy. This submission should be accepted. The liability imposed by the decision of the Full Court is novel. It is a liability for economic loss not previously recognised by judicial decision in Australia. The expansion of liability in negligence for personal injury so as to include, as compensable economic loss, the loss of the opportunity to enjoy the benefits of financial resources accumulated at the end of the plaintiff's working life is not supported by analogy with previous decisions. Mr Latz' imminent death means that he will not have the opportunity to receive the benefit of age pension and superannuation payments during the years that his retirement has been shortened by the effects of his mesothelioma. That (2005) 226 CLR 1 at 15-17 [28]-[31], 49 [122]; [2005] HCA 64. 6 Amaca Pty Ltd v Latz (2017) 129 SASR 61. 7 Stanley J would not have reduced the award by reference to Ms Taplin's entitlement: Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 103 [184]. means that his enjoyment of those rights will be less than would otherwise have been the case; but the loss of the opportunity to enjoy the financial resources accumulated over one's working life has not been regarded in Australia as compensable as economic or financial loss. No basis in principle whereby the enjoyment of Mr Latz' age pension and superannuation entitlements might be distinguished from the enjoyment of other financial resources available to him was identified by the Full Court or in argument in this Court. Accordingly, Amaca's appeal should have been allowed. Mr Latz brought his own appeal against the Full Court's reduction of the damages awarded to him by the trial judge in respect of his superannuation entitlements. Because, in our view, Amaca's appeal, insofar as it related to the superannuation payments, should have been allowed on the basis that the loss of the opportunity to receive those payments is not a compensable economic loss, we concluded that Mr Latz' appeal should have been dismissed. The trial At trial in the District Court of South Australia, Amaca conceded that if Mr Latz' evidence that he was exposed to asbestos that it had manufactured and sold was accepted, then it was liable in negligence8. The trial judge accepted Mr Latz' evidence9. Amaca does not contest this finding. The trial judge, rejecting Amaca's contention that Mr Latz' claim for damages to compensate him for the loss of the value of payments under either the age pension or the superannuation scheme was a novel one unsupported by precedent10, awarded Mr Latz damages in the sum of $1,062,000. Of that sum, $500,000 was in respect of the loss of the full net present value of age pension and superannuation payments for the years between Mr Latz' pre-illness life expectancy and his post-illness life expectancy, described compendiously as "future economic loss"11. The trial judge also concluded that there was no reason, "as a matter of fairness and policy"12, to reduce Mr Latz' damages by reason of the circumstance 8 Latz v Amaca Pty Ltd [2017] SADC 56 at [4]. 9 Latz v Amaca Pty Ltd [2017] SADC 56 at [16]. 10 Latz v Amaca Pty Ltd [2017] SADC 56 at [117]. 11 Latz v Amaca Pty Ltd [2017] SADC 56 at [118]-[119]. 12 Latz v Amaca Pty Ltd [2017] SADC 56 at [112]. that Ms Taplin will receive two-thirds of his superannuation pension upon his death. Rather, Mr Latz was entitled to be compensated fully for the loss of the superannuation pension in respect of the lost years13. The Full Court Amaca appealed to the Full Court in respect of the award of damages for economic loss14, contending that the trial judge had erred in: awarding damages for the lost years in respect of the age pension and superannuation payments; and not reducing the award of damages in respect of the lost years for the superannuation pension by reversionary reference entitlement. to Ms Taplin's The majority view By majority, the Full Court held that the trial judge had not erred in relation to issue (a) but had erred in relation to issue (b)15. Consequently, the Full Court reduced the damages awarded by the trial judge by reference to the value of Ms Taplin's reversionary entitlement, and substituted a judgment in Mr Latz' favour in the sum of $864,174. As to issue (a), Blue J concluded that there was no reason to distinguish between wages and income derived from the age pension or the superannuation scheme. Blue J treated as the governing consideration the compensatory principle stated by Lord Blackburn in Livingstone v Rawyards Coal Co16: "[W]here any injury is to be compensated by damages, in settling the sum of money to be given for … damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation". 13 Latz v Amaca Pty Ltd [2017] SADC 56 at [115]. 14 Mr Latz cross-appealed on grounds that are not presently relevant. 15 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 89 [125]-[126], 117 [253], 120 16 (1880) 5 App Cas 25 at 39. Blue J considered that awarding Mr Latz compensation for the age pension and superannuation pension was consistent with the compensatory principle17; and rejected the distinction suggested by Amaca between income actively earned and income passively received18. Hinton J also held that the compensatory principle required that Mr Latz be permitted to recover damages by way of compensation for the losses comprising the non-receipt during the lost years of superannuation payments and In relation to issue (b), Blue J held that Mr Latz' damages referable to the superannuation pension should be reduced by two-thirds by reference to the value of Ms Taplin's reversionary entitlement. Blue J concluded that, given that Ms Taplin's entitlement was premised on Mr Latz' entitlement to the pension, Mr Latz' pension and Ms Taplin's reversionary pension should be regarded as a "composite benefit"20, so that "as a matter of practical reality" the only loss that Mr Latz suffered was the remaining one-third of the pension that Ms Taplin was not entitled to receive under the Superannuation Act21. Hinton J considered that the effect of the superannuation scheme was that "[i]t is as if the pension to which the primary beneficiary was entitled switched to the secondary beneficiary, albeit in a reduced amount, upon the death of the primary beneficiary"22. Because Mr Latz would, through Ms Taplin, notionally continue to receive the superannuation pension after his death, Hinton J agreed with Blue J that Mr Latz' damages award should be reduced by reference to Ms Taplin's entitlement23. 17 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 85 [97]-[98]. 18 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 85-86 [100]-[104]. 19 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 116-117 [250]-[253]. 20 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 86 [107]. 21 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 88 [115]. 22 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 120 [261]. 23 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 120 [262]. The dissenting view Stanley J would have held that Mr Latz was not entitled to be compensated in respect of either the age pension or superannuation payments. His Honour regarded the plurality judgment in CSR Ltd v Eddy as an exhaustive statement of the heads of compensable damage for personal injury cases24, and concluded that there was no support for the view that damages could be awarded on some wider basis25. Stanley J held that the benefits under the age pension and the superannuation scheme did not fall within the identified categories of compensable economic or financial loss. Mr Latz' loss did not arise through the diminution of his earning capacity26; and the non-receipt of the benefits did not constitute actual financial loss, that head of loss being limited to "damages for the loss resulting from expenses incurred meeting the needs of the plaintiff by reason of his or her injuries."27 On the other hand, Stanley J concluded that, if the value of the age pension and superannuation payments that Mr Latz will not receive by reason of his early death were held to be a compensable economic or financial loss, the damages to be awarded to Mr Latz in respect of the loss of superannuation benefits should not be reduced by reference to Ms Taplin's reversionary entitlement. In his Honour's view, there was no reason to reduce the damages properly to be awarded to Mr Latz in order to avoid double compensation for the same loss. That Mr Latz would not be granted double compensation was demonstrated, his Honour said, by considering the hypothesis that Mr Latz had no spouse. On that hypothesis, on his death, no third party would enjoy a reversionary entitlement under the Superannuation Act; any compensable loss would be suffered exclusively by Mr Latz28. The appeals to this Court Amaca and Mr Latz both appealed, pursuant to grants of special leave, against the orders of the Full Court. 24 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 98 [165]. 25 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 98-100 [166]-[170]. 26 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 97 [162]. 27 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 98 [164]. 28 Amaca Pty Ltd v Latz (2017) 129 SASR 61 at 102-103 [180]-[182]. Damages for the non-receipt of the superannuation pension and the age pension Amaca submitted that Mr Latz may not recover damages in respect of either the superannuation pension or the age pension. Mr Latz submitted that he is entitled to recover the full net present value of the superannuation pension, and that the Full Court erred in reducing the award of damages by reference to Ms Taplin's reversionary entitlement under the Superannuation Act. Amaca argued that the loss of the value of age pension payments and superannuation benefits that will not be received by Mr Latz is not a loss of earning capacity. The age pension was said to be a "gratuitous statutory benefit", while the entitlement to superannuation benefits had been "earned" before Mr Latz' earning capacity was adversely affected by Amaca's negligence. Nor was the loss of either benefit a financial loss in the sense of an actual outgoing incurred by reason of the injury. Amaca argued that this Court should not extend the heads of compensable damage beyond those described in CSR Ltd v Eddy. Amaca argued that there is no distinction in principle between the losses for which Mr Latz sought compensation and the non-receipt of other passive income streams. Amaca argued that the decisions of this Court in Skelton v Collins29, Todorovic v Waller30 and Fitch v Hyde-Cates31 do not support the extension of liability for economic loss. Skelton and Todorovic were, it was said, concerned with the compensability of loss of earning capacity rather than non-receipt of income. Fitch did not support the view that the non-receipt of a pension was compensable loss in that it too was concerned with the effects of the loss of earning capacity, whereas in the present case Mr Latz' earning capacity – that is, his "ability to accumulate wages through the deployment of his labour and skill" – had not been diminished by his injury. Mr Latz submitted that his claims to recover the net present value of the age pension and the superannuation payments as items of economic loss fit squarely within the compensatory principle, as articulated by Lord Blackburn in Livingstone v Rawyards Coal Co. 29 (1966) 115 CLR 94; [1966] HCA 14. 30 (1981) 150 CLR 402; [1981] HCA 72. 31 (1982) 150 CLR 482; [1982] HCA 11. Mr Latz argued that Amaca's reading of the plurality judgment in CSR Ltd v Eddy was too narrow, in that their Honours were not purporting to provide an exhaustive list of the compensable heads of damage, as was evident in the statement that the three types of loss mentioned were those "traditionally seen"32 as recoverable. Mr Latz' argument referred to the view of Windeyer J in Teubner v Humble that the so-called heads of loss are not to be treated "as if they were distinct items in a balance sheet"33. Mr Latz argued that the circumstance that the age pension was an income stream that was conferred pursuant to statute did not affect the question whether he ought to be compensated for the loss of the benefit: the age pension had a monetary value that, because of Amaca's negligence, he would not receive; and he was therefore entitled to be compensated in respect of that loss. Mr Latz argued superannuation benefits would require the Court to overrule its earlier decisions in Skelton, Todorovic and Fitch; and that there was no reason in principle to do to accept Amaca's argument in relation that In addition, Mr Latz contended that in Fitch Mason J suggested34 that damages could be recovered for the loss of the benefit of an annuity. It was argued that there is no material distinction between an annuity and Mr Latz' entitlement to superannuation payments. Mr Latz argued that English case law supported the view that both pension entitlements were recoverable. In particular, in Pickett v British Rail Engineering Ltd, Lord Scarman said in obiter that a plaintiff could recover damages for lost financial expectations during the lost years35. Mr Latz also submitted that several English decisions since Pickett have awarded damages for lost pension benefits and that Canadian law also allows for recovery of superannuation pension entitlements. It was submitted that even if the categories outlined by the plurality in CSR Ltd v Eddy were properly regarded as an exhaustive statement of the categories of compensable loss, the loss of Mr Latz' superannuation entitlement represented a loss of earning capacity and therefore fell within the second 32 (2005) 226 CLR 1 at 15 [28]. 33 (1963) 108 CLR 491 at 505; [1963] HCA 11. 34 (1982) 150 CLR 482 at 491. 35 [1980] AC 136 at 170. category. This was said to be because the entitlement arose from his provision of labour in return for money, which money was reflected in the value of his entitlement. He also argued that the loss of the superannuation pension and the age pension could each be characterised as a pecuniary consequence of the loss of capacity that was occasioned by the injury, thereby coming within the third CSR Ltd v Eddy category. The reduction of Mr Latz' damages by reference to Ms Taplin's reversionary pension Although, as noted above, the issue raised by Mr Latz' appeal falls away with the resolution of Amaca's appeal in its favour, the arguments advanced in relation to Mr Latz' appeal are not without interest in that the absence of a solution in precedent to the difficulties raised by the parties serves to highlight the novelty of the decision of the majority of the Full Court on the issue in Amaca's appeal. Mr Latz submitted that the majority of the Full Court erred in treating as relevant the concern that pecuniary benefits available to a third party may be relevant to the quantification of damages available to a plaintiff36. Mr Latz argued that the Superannuation Act created two distinct statutory entitlements that were receivable by different persons; and that, by conflating the entitlements of Mr Latz and Ms Taplin, the majority of the Full Court failed to compensate Mr Latz for the loss that he had suffered by reason of Amaca's negligence. Mr Latz argued that Stanley J was correct in his appreciation of the anomalies that resulted from the majority's approach because, on the majority's approach, plaintiffs who had dependants would be treated differently from those who did not. Amaca characterised Mr Latz' superannuation entitlement as an inchoate right that might, as events played out, be payable to one of several different people. The benefit conferred under the Superannuation Act was thus a composite benefit, but one conferred on Mr Latz alone until his death. This characterisation was said to be supported by the circumstance that the Superannuation Act treats Mr Latz' superannuation entitlement and Ms Taplin's entitlement as sequential, in the sense that the latter becomes available only upon the termination of the former. The circumstance that Ms Taplin will receive payments upon Mr Latz' death does not mean that the payments she will receive are not an aspect of Mr Latz', rather than Ms Taplin's, statutory entitlement. 36 Cf The National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569; [1961] HCA 15. It is not necessary to resolve these competing arguments. It is sufficient to observe that the difficulties raised by them cry out for a legislative solution. It is surely a matter for the legislature to determine whether, and the extent to which, it would be an unacceptable windfall to the beneficiaries of the estate of a deceased person to enjoy a measure of damages unaffected by associated benefits received by those beneficiaries upon the death of the deceased, especially when the damages so recovered would, in some cases, be paid for from compulsory insurance schemes funded by members of the general public. That the need for a legislative solution to these difficulties would arise if the decision of the majority of the Full Court in Mr Latz' favour were upheld is a reason for circumspection in that regard. The compensatory principle and compensable loss The compensatory principle that "a plaintiff who has been injured by the negligence of the defendant should be awarded such a sum of money as will, as nearly as possible, put him in the same position as if he had not sustained the injuries"37 is well-established38. But the compensatory principle is concerned with the measure of damages required to remedy compensable damage39. In applying the principle, it is necessary first to establish whether the loss claimed is compensable as an aspect of the injury suffered by the plaintiff40. It is important to bear in mind the distinction between damage, in the sense of a loss to the interests of a plaintiff by the act of negligence, and damages, which are assessed and awarded on the basis that, so far as possible, they will reflect that loss. The two concepts should not be confused. The compensatory principle informs the latter but not the former. One cannot invoke the compensatory principle to identify whether a particular head of damage is compensable. Further, it is of particular importance in the present case to recognise that the compensatory principle affords no assistance in determining whether a given loss is compensable as economic loss or as a loss of the amenities of life. The majority 37 Todorovic v Waller (1981) 150 CLR 402 at 412. See also at 427-428, 442, 463. 38 Haines v Bendall (1991) 172 CLR 60 at 63; [1991] HCA 15. 39 For a discussion of the distinction between "damage" and "damages", see Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 132 CLR 323 at 327-328, 328-329, 330; [1975] HCA 23; Mahony v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 527; [1985] HCA 37. 40 Harriton v Stephens (2006) 226 CLR 52 at 132 [270]; [2006] HCA 15. See also Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191 at 210-211; Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 424 [14]-[15]; [1999] HCA 25. of the Full Court erred in treating the compensatory principle as obviating the need to first determine whether a particular head of damage is compensable and on what basis. The categories of compensable loss Amaca was correct to contend that the heads of loss compensable for personal injury are as stated by the plurality in CSR Ltd v Eddy, and Mr Latz was not correct to argue that the reference by the plurality in CSR Ltd v Eddy to loss of earning capacity is but an illustration of a broader range of compensable economic loss. CSR Ltd v Eddy As noted above, Mr Latz' argument emphasised that the plurality in CSR Ltd v Eddy41 introduced their summary of the "three types of loss" that are compensable by damages by referring to the three categories as those "traditionally seen" as recoverable. But this reference by their Honours was not concerned to limit the generality of their statement; rather, their Honours were concerned to contrast the orthodox nature of these three heads of loss with the anomalous character of the earlier decision in Griffiths v Kerkemeyer42, and to make the point that it was a departure "from the usual rule that damages other than damages payable for loss not measurable in money are not recoverable for an injury unless the injury produces actual financial loss"43. As McHugh J said in CSR Ltd v Eddy44, "[a]s a matter of principle, Griffiths v Kerkemeyer damages are an anomaly." In CSR Ltd v Eddy, this Court overruled the decision of the New South Wales Court of Appeal in Sullivan v Gordon45, which had upheld a claim that a plaintiff's loss of capacity to care for a disabled relative was compensable as a form of financial loss in terms of the cost of obtaining care for the disabled relative from professional carers. The point being made in CSR Ltd v Eddy was that, just as recovery of Griffiths v Kerkemeyer damages could not be justified as 41 (2005) 226 CLR 1 at 15 [28]. 42 (1977) 139 CLR 161; [1977] HCA 45. 43 (2005) 226 CLR 1 at 15 [27]. 44 (2005) 226 CLR 1 at 39 [91]. 45 (1999) 47 NSWLR 319. an orthodox development of principle, so recovery of Sullivan v Gordon damages could not be justified as an analogical extension of Griffiths v Kerkemeyer. The express identification in CSR Ltd v Eddy of loss of earning capacity as the relevant head of compensable economic loss resulting from personal injury accords with the settled course of authority in Australia. In Teubner v Humble46, Windeyer J, with whom McTiernan J agreed, said: "Broadly speaking there are, it seems to me, three ways in which a personal injury can give rise to damage: First, it may destroy or diminish, permanently or for a time, an existing capacity, mental or physical: Secondly, it may create needs that would not otherwise exist: Thirdly, it may produce physical pain and suffering." Windeyer J went on to discuss the economic loss that the destruction or diminution of earning capacity causes. His Honour said that47: "the damage arises really from the destruction of a faculty or skill, and that this is the best way in which to consider its assessment. The sum that might have been earned by the exercise of a faculty or skill then becomes the measure of the economic value to the individual of the faculty or skill in respect of which he has been damaged." In Arthur Robinson (Grafton) Pty Ltd v Carter48, in a passage cited with approval by the plurality in CSR Ltd v Eddy49, Barwick CJ explained that loss of earning capacity is not merely a shorthand for a broader range of economic loss. In a passage that deserves to be quoted at length, Barwick CJ explained50 that an injured plaintiff: "is not to be compensated for loss of earnings but for loss of earning capacity. However much the valuation of the loss of earning capacity involves the consideration of what moneys could have been produced by the exercise of the respondent's former earning capacity, it is the loss of 46 (1963) 108 CLR 491 at 505. 47 (1963) 108 CLR 491 at 506. 48 (1968) 122 CLR 649; [1968] HCA 9. 49 (2005) 226 CLR 1 at 16 [30]. 50 (1968) 122 CLR 649 at 658. that capacity, and not the failure to receive wages for the future, which is to be the subject of fair compensation. In so saying, I realize that many statements may be found in the reported cases where loss of earnings has been the description of this element in special damages. But I do not find that in these it was necessary to consider or draw the distinction between the loss of earnings and the loss of earning capacity. But where in Australia attention has been drawn to the distinction, authoritative expressions with which I respectfully agree have indicated that it is loss of earning capacity and not loss of earnings that is to be the subject of compensation." The focus upon loss of earning capacity, rather than lost earnings or income, as the head of compensable economic loss was not a casual slip of the pen: it is maintained throughout the Australian cases51. The distinction made by this focus aligns with the distinction observed in the authorities between loss of amenities of life and economic loss resulting from the personal injury. It serves to maintain the distinction between economic loss which is compensable as such and that which is not. The distinction is between the effect of the injury upon an individual's ability to provide for himself or herself and his or her dependants, and the loss of the capacity to enjoy that which has been provided. To put this point another way, the adverse effect of personal injury upon a plaintiff's earning capacity has been accepted as being sufficiently related to the personal injury caused by the defendant's negligence to be compensable; whereas other economic effects having a less direct or immediate connection with the personal injury suffered by the plaintiff have not. The importance of the direct connection between a personal injury and its effect upon the earning capacity of the victim as the compensable head of damage is fundamental52. 51 Skelton v Collins (1966) 115 CLR 94 at 129; O'Brien v McKean (1968) 118 CLR 540 at 546-548; [1968] HCA 58; Sharman v Evans (1977) 138 CLR 563 at 579; [1977] HCA 8; Fitch v Hyde-Cates (1982) 150 CLR 482 at 498; Nguyen v Nguyen (1990) 169 CLR 245 at 248; [1990] HCA 9. 52 In The Wealth of Nations, Adam Smith wrote: "The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of a poor man lies in the strength and dexterity of his hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbour, is a plain violation of this most sacred property." (Footnote continues on next page) As will be seen in the discussion of Skelton later in these reasons, more remote economic effects of personal injury have been compensated as an aspect of the loss of amenities of life. For the present, it is sufficient to say that to abandon the focus upon loss of earning capacity would open the way, in principle, for the recovery of loss of the enjoyment of economic benefits by reason of the accident as compensable economic loss. In this regard, the recovery of damages for the loss of the opportunity to receive payments of income derived from accumulated wealth has not been accepted in Australia as a form of compensable economic loss. In Government Insurance Office v Johnson53, Hutley JA observed, correctly, that in Gammell v Wilson54 the House of Lords had, incorrectly, described the damages for the lost years as for lost earnings rather than for lost earning capacity. Hutley JA recognised, correctly, that the House of Lords in Gammell v Wilson55 had departed from a focus upon loss of earning capacity as opposed to lost earnings as the basis for holding the defendant liable for the loss of earnings in the lost years. Hutley JA went on to say56: "Loss of earning capacity is the capital asset consisting of the personal capacity to earn money from the use of personal skills. This is not the same as earnings where the person concerned has capital. If a millionaire rentier is killed, under circumstances giving rise to an action for damages, his loss of earning capacity is not the value of the interest he collects. Examples can be indefinitely multiplied. Where a person has capital employed in a business, it is necessary to split his earning capacity from his income. In this case, the basis of the assessment of the earning capacity of the deceased is that the whole of the income of a saw mill which [he] was to acquire without cost to himself from his father was the measure of his earning capacity. The good fortune of a young man to have a generous father with the capacity to make valuable gifts is not part of his earning capacity." In giving their reasons for revoking a grant of special leave to appeal to the High Court in GIO v Johnson, Mason ACJ, Wilson and Deane JJ expressed See Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 2nd ed (1778), vol 1 at 151. 53 [1981] 2 NSWLR 617 at 627. 54 [1982] AC 27 at 78. 55 [1982] AC 27 at 65, 71, 72, 78. 56 [1981] 2 NSWLR 617 at 627. their agreement with the views of Hutley JA57. To accept the contrary view would be to accept that differences in wealth make the opportunity to enjoy what life has to offer more valuable to the rich than to the poor, a proposition which the common law of Australia has not accepted58. Indeed, in GIO v Johnson59 Murphy J, agreeing with the view of the plurality, went on to describe a claim to the effect of that rejected by Hutley JA as "socially indefensible." It may be noted that in the English case of Adsett v West60 damages were allowed for loss of income arising from the loss of the prospect of an inheritance by reason of premature death. McCullough J saw no material difference between the loss of the opportunity to earn income by working and the loss of the opportunity to receive income from interest on an inheritance61. The approach of McCullough J is distinctly at odds with the views expressed by Hutley JA and the plurality in the High Court in GIO v Johnson. A consideration of this Court's decisions in Skelton, Todorovic and Fitch tends to confirm, rather than to deny, the conclusion that the loss of the opportunity to receive age pension and superannuation payments is not compensable as economic loss. Skelton Contrary to the argument for Mr Latz, it is not necessary to overrule Skelton in order to accept Amaca's submissions. Rather, in order to accept Mr Latz' submissions it would be necessary to disregard a central aspect of the Court's reasoning in that case. Skelton upheld the right of an injured plaintiff "to recover damages for economic loss resulting from his diminished earning capacity"62. Consistently with the focus upon loss of earning capacity as compensable economic loss, this Court held that in assessing damages for loss of earning capacity where a plaintiff's expectation of life has been shortened by his or her injuries, the court 57 Unreported, 22 October 1982 at 3-4. 58 Skelton v Collins (1966) 115 CLR 94 at 97-99, 117. 59 Unreported, 22 October 1982. 61 [1983] QB 826 at 848. See also West v Versil Ltd [1996] TLR 526. 62 (1966) 115 CLR 94 at 121. See also at 95-96, 127, 129. must have regard to the probable length of his or her working life had he or she not been injured, and not merely to the probable period left to him or her to live as a result of the injury63. Insofar as the members of the Court in Skelton spoke of lost earnings, it is clear that they were speaking of the consequences of a diminution of earning capacity during the lost years rather than the non-receipt of income from income-producing assets owned by the plaintiff64. One may note, in particular, that Windeyer J65, after referring to "[t]he general principle that damages are compensatory", went on to refer to the particular rule flowing from "the principle of compensation ... that anything having a money value which the plaintiff has lost should be made good in money" and to observe that this rule: "applies to that element in damages for personal injuries which is commonly called 'loss of earnings'. The destruction or diminution of a man's capacity to earn money can be made good in money. ... [W]hat is to be compensated for is the destruction or diminution of something having a monetary equivalent." It may be said to be not entirely satisfactory that under the reasoning in Skelton an injured plaintiff whose injuries cause his or her death while he or she is still at work may recover damages for the loss of his or her earning capacity calculated by reference to the present value of his or her prospective earnings over the balance of his or her working life, while an injured plaintiff whose injuries do not affect his or her earning capacity until after it is exhausted and who dies thereafter may recover nothing by way of economic loss. But this result follows from observance of the boundary drawn between loss of earning capacity and loss of the amenities of life. The decision in Skelton cannot be regarded as a signpost pointing the way towards recognition of a more extensive liability for economic loss than that which it upheld. In the discussion in Skelton of the unsatisfactory state of the authorities in the United Kingdom, Taylor J (with whom Kitto, Menzies, Windeyer and Owen JJ relevantly agreed) fixed upon the extent to which economic loss results from "destroyed earning capacity" to draw the line between compensable economic loss and the loss of "a measure of prospective happiness", including the loss of the enjoyment of one's assets, which was compensable by the award of 63 (1966) 115 CLR 94 at 95-96, 121, 127, 129. 64 (1966) 115 CLR 94 at 96, 113-114, 126-127, 129, 137. 65 (1966) 115 CLR 94 at 129. a conventional sum only as an aspect of the loss of the amenities of life66. A plaintiff denied the opportunity to enjoy an income derived from sources other than his or her capacity to earn is entitled to recover for the loss of that enjoyment by his or her untimely death, not as compensable economic loss, but, if at all, as an aspect of the loss of the amenities of life. For that loss only a modest conventional allowance has ever been made67. It is convenient to note here that in Pickett68, Lord Scarman agreed with the view of the Law Commission of England and Wales69 that: "There seems to be no justification in principle for discrimination between deprivation of earning capacity and deprivation of the capacity otherwise to receive economic benefits. … [I]t is a loss caused by the tort even though it relates to moneys which the injured person will not receive because of his premature death. No question of the remoteness of damage arises other than the application of the ordinary foreseeability test." On that basis, Lord Scarman went on to say that, although the point did not arise for decision and had not been argued, he "would allow a plaintiff to recover damages for the loss of his financial expectations during the lost years provided always the loss was not too remote."70 It is to be noted that the other members of the majority of the House of Lords in Pickett decided the case expressly on the footing that damages were available for loss of earning capacity of a man in employment at the time he was disabled from working for the balance of his pre-morbid working life up to 66 (1966) 115 CLR 94 at 115-117, 120-121. See also Sharman v Evans (1977) 138 CLR 563 at 584, 586, 590. 67 Rose v Ford [1937] AC 826 at 838, 842, 852, 861; Benham v Gambling [1941] AC 157; H West & Son Ltd v Shephard [1964] AC 326; Skelton v Collins (1966) 115 CLR 94 at 97-99, 116-117, 119-120; Gannon v Gray [1973] Qd R 411 at 427-428. 68 [1980] AC 136 at 170. 69 Law Commission, Report on Personal Injury Litigation – Assessment of Damages, Law Com No 56, (1973) at 24 [90]. 70 [1980] AC 136 at 170. retiring age71. In this respect, the decision in Pickett went no further than Skelton. It may also be noted that the Law Commission report to which Lord Scarman referred concluded that "other kinds of economic loss referable to the lost period" should be compensable "in line with the reasoning of the Australian High Court in Skelton v Collins"72. With all respect, that understanding of the reasoning in Skelton fails to recognise the significance of its explicit focus upon loss of earning capacity, as distinct from lost earnings, as the compensable species of economic loss. Todorovic In Todorovic, the plaintiff had been rendered "virtually unemployable"73 by the personal injuries suffered as a result of the defendants' negligence. His damages included a component representing the loss of superannuation benefits74 that he would have enjoyed had his capacity to earn those benefits not been diminished by his injuries. The decision in Todorovic does not support the decision of the Full Court in this case. The diminution of the plaintiff's earning capacity was taken into account as showing that the value of his superannuation rights after retirement from work was less than it would have been but for the personal injury the plaintiff had suffered, the amount of the difference being compensable as a reflection of the diminution of his earning capacity75. Fitch In Fitch76, the administratrix of the estate of Mr Hyde-Cates brought proceedings pursuant to s 2(1) of the Law Reform (Miscellaneous Provisions) Act 71 [1980] AC 136 at 145-146, 151-152, 159, 163. See also Gammell v Wilson [1982] AC 27 at 65. 72 Law Commission, Report on Personal Injury Litigation – Assessment of Damages, Law Com No 56, (1973) at 24 [90], 89. 73 (1981) 150 CLR 402 at 403. 74 (1981) 150 CLR 402 at 403. 75 (1981) 150 CLR 402 at 426-427. See also at 451, 460, 481. 76 (1982) 150 CLR 482. 1944 (NSW) for damages in respect of his death as a result of injuries suffered in a motor vehicle accident. Section 2(1) provided that all causes of action vested in a person shall survive on his death for the benefit of his estate. The trial judge awarded $20,000 for future lost earnings. The Court of Appeal increased that award. On appeal to the High Court, one issue concerned the proper construction of s 2(2)(c), which provided relevantly that the damages recoverable by the estate "shall be calculated without reference to any loss or gain to his estate consequent on his death". Mason J, with whom Gibbs CJ, Stephen, Aickin and Brennan JJ agreed, held that the language of s 2(2)(c) was "hardly apposite to exclude the deceased's loss of earning capacity in the years of life of which he has been deprived."77 In addition, Mason J observed that78: "At no time does the estate of a deceased person have an entitlement either to his earning capacity or to the future wages he might have earned but for his death. The loss of them is a loss of the deceased, not of his estate." This reasoning does not deviate from the focus upon loss of earning capacity as the compensable loss of the injured plaintiff. A further issue in Fitch arose because s 2(2)(d) provided relevantly that the damages recoverable by the estate "shall not include any damages … for the curtailment of his expectation of life." In this regard, Mason J observed that this language was "scarcely apposite to cover damages for lost earning capacity in the years of life of which the deceased has been deprived."79 The point to be made here is that, as Mr Latz has suffered no loss of earning capacity in the years of life of which he will have been deprived, Fitch does not assist his claim. The case was not concerned with whether the earning capacity of the deceased had ceased to be exercisable prior to and quite apart from the tortious injury that resulted in his death. And so the decision is distinguishable in that it was concerned with loss resulting from the loss of earning capacity during the lost years80. 77 (1982) 150 CLR 482 at 491. 78 (1982) 150 CLR 482 at 491. 79 (1982) 150 CLR 482 at 492. 80 (1982) 150 CLR 482 at 494-495. That having been said, the argument advanced for Mr Latz drew particular attention to the circumstance that Mason J, in the course of his discussion of s 2(2)(c), approved81 Lord Scarman's observation in Gammell v Wilson82 that "annuities ceasing on death" were "not a good example" as that loss was "part of the cause of action which vested in the deceased before his death." This remark by Mason J was made in the course of the discussion by his Honour as to whether the loss of future receipts was compensable at the suit of the estate of the deceased rather than exclusively at the suit of the deceased; and so Mason J was not directly addressing the issue whether the loss of an annuity should properly be characterised as a loss of earning capacity. More significantly for present purposes, it is difficult to regard Mason J as expressing a view in support of a claim of the kind made by Mr Latz, given his Honour's concurrence, a little over six months later, in reasons approving the view of Hutley JA in GIO v Johnson. Nothing in the case law in the United Kingdom – apart from the decision in Adsett v West83, which is unsatisfactory in light of GIO v Johnson – provides a basis in principle for expanding liability for economic loss for personal injury beyond that established by Skelton. Neither side was able to point to a decision from the United Kingdom or Canada which offered a reasoned solution to the actual problem at hand84. Suggestions in the English cases cited by the parties, to the effect that lost pension benefits are recoverable, can readily be understood on the basis that they involved a diminution of pension benefits that reflected the loss of earning capacity. And to observe that the Ontario Law Reform Commission has acknowledged that the law in Canada appears to allow for the recovery of the loss of superannuation pension entitlements or "pension earning capacity"85 is to take the issue no further than this Court's decision in Todorovic. Expanding the notion of loss of earning capacity? The principal argument for Mr Latz was presented on the basis that the decision of the majority of the Full Court was no more than an orthodox 81 (1982) 150 CLR 482 at 491. 82 [1982] AC 27 at 77. The same point was made by Lord Wright in Rose v Ford [1937] AC 826 at 842. 84 Cf Auty v National Coal Board [1985] 1 WLR 784 at 787, 792-793, 803; Phipps v Brooks Dry Cleaning Service Ltd [1996] PIQR Q100. 85 Ontario Law Reform Commission, Report on Compensation for Personal Injuries and Death, (1987) at 43. application of the position settled by Skelton, Todorovic and Fitch. An attempt was made to present an alternative argument to the effect that Mr Latz' superannuation entitlement could be regarded as "delayed remuneration for ... current work"86. In this regard, Mr Latz' argument did not explain how it can be said that the loss of the opportunity to enjoy payments under the age pension or superannuation entitlement is a result of the diminution or destruction of earning capacity. As to the age pension, that entitlement accrues without any payment on behalf of the pensioner; the accrual of the entitlement has nothing to do with the exercise of or inability to exercise earning capacity. And to characterise superannuation payments as deferred earnings for labour and services previously performed is merely to recognise that the entitlement to the payments has accrued by the actual exercise, in the past, of the individual's earning capacity; it is not to explain the basis on which the accrued entitlement to superannuation is itself a species of earning capacity which has been compromised by personal injury. In addition, the argument put for Mr Latz did not explain whether, or how, defined benefit schemes like Mr Latz' superannuation scheme should be differentiated from simple accumulation schemes. Nor did the argument explain how superannuation schemes in general should be distinguished from other forms of accumulated wealth from which retired persons may expect to derive post-retirement income. If an entitlement to superannuation is regarded as an extension or prolongation of the "capital asset" that is earning capacity, then how is it said that this asset has been destroyed or diminished by the negligence of the defendant? One may ask whether the position would be different if Mr Latz had exercised his right under s 40 of the Superannuation Act to take his superannuation entitlement in a lump sum. If so, on what basis in principle should the defendant's liability differ because of that choice? And no attempt was made to explain how the failure to receive age pension or superannuation entitlements might be conceptualised as a form of economic loss distinct from the non-receipt of other forms of benefit such as legacies under a will or distributions under a discretionary trust that would have been received had the proposed recipient lived to a certain age. The failure to come to grips with these issues highlights the difficulty which confronts the invitation to expand the liability for economic loss for personal injury beyond the consequences of the loss of earning capacity as that concept is currently understood. In the absence of satisfactory answers to these issues, this Court has no sufficient ground to accept that invitation because it is 86 Parry v Cleaver [1970] AC 1 at 16. left unable to resolve the uncertainty in the law that would be engendered as a result. Conclusion As Mr Latz' counsel put it on his behalf, Mr Latz will lose the capacity to receive the payments during those years lost to him because of the consequences of his injury. Such a claim might be seen as a claim for the loss of the amenities of life, for which only a modest conventional amount may be awarded under the first head of compensable loss identified in CSR Ltd v Eddy, but Mr Latz' claim was not advanced on that basis. One may sympathise deeply with Mr Latz' plight, but it cannot be denied that the liability which the decision of the majority of the Full Court upheld is novel. That decision cannot be supported as an incremental extension of previous decisions in this country. True it is that cases of mesothelioma present an unusual challenge because of the potentially long intervals between infection and the onset of serious disability. But the possibility, or even the reality, of such long intervals does not alter the nature of the loss when it has been sustained and when a court is required to determine whether, and on what basis, that loss is compensable. The common law of this country has not accepted that the loss of the opportunity to enjoy one's financial resources by reason of premature death is a form of economic loss compensable as such. To accept that proposition now would be to accept that the loss of the capacity to enjoy one's financial resources may be given a different value depending upon the value of the resources available to the plaintiff from whatever sources those resources may have been derived. That would be a departure from a position grounded in notions of equality before the law. A satisfactory basis for that departure has not been demonstrated. Bell BELL, GAGELER, NETTLE, GORDON AND EDELMAN JJ. Mr Latz is 71 years old. In October 2016, Mr Latz was diagnosed with terminal malignant mesothelioma. At that time, Mr Latz had retired from the public service and was receiving a superannuation pension entitlement of $51,162 per annum under Pt 5 of the Superannuation Act 1988 (SA) ("the superannuation pension") and an age pension entitlement of $5,106 per annum under Pt 2.2 of the Social Security Act 1991 (Cth) ("the age pension"). In October 2016, Mr Latz commenced proceedings against Amaca Pty Limited (under NSW administered winding up) ("Amaca"), the manufacturer of asbestos fencing he had cut and installed some 40 years earlier. Amaca did not dispute liability on appeal to the Full Court of the Supreme Court of South Australia, or before this Court. Mr Latz contended that, but for the negligence of Amaca, he would have continued to receive both the superannuation pension and the age pension for the remainder of his pre-illness life expectancy – around a further 16 years beyond his post-illness life expectancy87. The Full Court of the Supreme Court of South Australia held, by majority (Blue J and Hinton J, Stanley J dissenting)88, that the value of the superannuation pension and that of the age pension were compensable loss. The majority then reduced the damages awarded to Mr Latz to take into account the reversionary pension that Mr Latz's partner will receive on his death under s 38(1)(a) of the Superannuation Act. Amaca appeals the findings of compensable loss in relation to both the superannuation pension and the age pension. Mr Latz appeals the finding that the reversionary pension is to be deducted from any award of damages. These two appeals required the Court to consider whether Mr Latz is entitled to damages from Amaca for the loss of his superannuation pension and of his age pension for those 16 years beyond his post-illness life expectancy and, 87 The Full Court observed that the average life expectancy of a 70 year old male was around 16.71 years, whereas after developing mesothelioma Mr Latz's life expectancy was unlikely to extend beyond 31 October 2017. Accordingly, the Full Court calculated the period of lost superannuation to be 16.21 years (the period of his pre-illness life expectancy less the period of his post-illness life expectancy). The approximation adopted by the Full Court will be used in these reasons. 88 Amaca Pty Ltd v Latz (2017) 129 SASR 61. Bell if so, whether any reversionary pension that might be payable to his partner under s 38(1)(a) of the Superannuation Act should be taken into account in the assessment of his damages. Those questions are to be resolved by the application of fundamental principles governing the assessment of damages for negligently caused personal injuries. First, it is necessary to identify Mr Latz's loss. If a loss is identified then, as Lord Wilberforce stated in Pickett v British Rail Engineering Ltd89, the law has to answer a question: is that loss the loss of "something for which the claimant should and reasonably can be compensated?"90 At the outset, it is important to recognise the obvious point that the claimant claims compensation for negligently caused personal injury91. That claim focuses attention upon the interests of the victim92. Those interests are addressed by awarding damages as compensation for actual loss (either loss already suffered or loss that will probably be suffered)93 – an award guided by the compensatory principle. There are inherent difficulties in the assessment of damages94 and, as Windeyer J wrote more than once95: 90 [1980] AC 136 at 149. 91 Skelton v Collins (1966) 115 CLR 94 at 129; [1966] HCA 14. 92 Pickett [1980] AC 136 at 149. 93 Skelton (1966) 115 CLR 94 at 108, 128; Todorovic v Waller (1981) 150 CLR 402 at 427; [1981] HCA 72. See also Harriton v Stephens (2006) 226 CLR 52 at 126 [251]; [2006] HCA 15. 94 Todorovic (1981) 150 CLR 402 at 412-413 citing Paul v Rendell (1981) 55 ALJR 371 at 372; 34 ALR 569 at 571. See also Lim Poh Choo v Camden and Islington Area Health Authority [1980] AC 174 at 182-183. See generally the observations on damages in the Ipp Report: Commonwealth of Australia, Review of the Law of Negligence: Final Report, (2002), Ch 13. 95 Teubner v Humble (1963) 108 CLR 491 at 505; [1963] HCA 11; Skelton (1966) 115 CLR 94 at 128. Bell "So-called principles of assessment of damages for personal injuries can be made the subject of almost endless discussion. The consequences of such injuries are not all susceptible of evaluation in money, and seeming logic can be pushed too far". As a result, the compensatory principle has yielded, or resulted in, the development of a number of principles96, some of which should be restated. A claimant who has suffered negligently caused personal injury has traditionally97 been seen to recover damages calculated under three heads or types of loss: (1) certain non-pecuniary losses (even if no actual financial loss is caused and the damage caused by the defendant cannot be measured in money); (2) loss of earning capacity; and (3) actual financial loss. It is necessary to say something further about the second type of loss – the element described as a "loss of earning capacity". The loss of earning capacity has been described as a capital asset – the capacity to earn money from the use of personal skills98. A claimant is to be compensated in respect of lost earning capacity "during those years by which [their] life expectancy has been shortened, at least to the extent that they are years when [they] would otherwise have been earning income"99. "[D]amages … are not recoverable for an injury unless the injury produces actual financial loss"100 (emphasis added). In CSR Ltd v Eddy, Gleeson CJ, Gummow and Heydon JJ stated that damages recoverable in relation to reduced future income are damages for loss of earning capacity and not damages for loss of earnings simpliciter, and that those damages are awardable "only to the extent that the loss has been or may be 96 Skelton (1966) 115 CLR 94 at 129; Todorovic (1981) 150 CLR 402 at 412. 97 CSR Ltd v Eddy (2005) 226 CLR 1 at 15-17 [28]-[31]; [2005] HCA 64. 98 Government Insurance Office v Johnson [1981] 2 NSWLR 617 at 627. See also Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649 at 658; [1968] HCA 9; Cullen v Trappell (1980) 146 CLR 1 at 7; [1980] HCA 10; Redding v Lee (1983) 151 CLR 117 at 131; [1983] HCA 16. 99 Sharman v Evans (1977) 138 CLR 563 at 579; [1977] HCA 8 citing Skelton (1966) 115 CLR 94 at 121. 100 CSR Ltd v Eddy (2005) 226 CLR 1 at 15 [27]. Bell productive of financial loss"101. That is, a claimant is compensated not merely because the capacity to earn has been diminished but because the diminution is or may be productive of financial loss102. If the diminution is productive of financial loss, it is compensable. Most of the authorities are concerned with the methodology or methodologies adopted to value that capital asset. For the purposes of these appeals, it is unnecessary to address, or resolve, the different methodologies. It is, however, instructive to step through various matters of principle which underpin or underscore the methodologies. If a claimant suffers a negligently caused personal injury during their working life and, as a result of that injury, suffers a reduction in one or more of their income and their life expectancy, then, as explained by this Court in Todorovic v Waller, there is one objective – to award a sum of money that will, as nearly as possible, put the claimant in the same position as if they had not sustained the injury103. Although the aim of the court in awarding damages is to make good to the claimant, so far as money can do, the loss suffered, it is impossible to assess damages by "a mere matter of mathematics"104. The process 101 (2005) 226 CLR 1 at 16 [30] citing Graham v Baker (1961) 106 CLR 340 at 347; [1961] HCA 48 and Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 5, 18; [1995] HCA 5. See also Arthur Robinson (Grafton) (1968) 122 CLR 649 at 658. 102 Graham (1961) 106 CLR 340 at 347. See also Skelton (1966) 115 CLR 94 at 129. 103 (1981) 150 CLR 402 at 412. See also Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39; Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625 at 646; [1981] HCA 3 citing Lim Poh Choo [1980] AC 174 at 187; Nominal Defendant v Gardikiotis (1996) 186 CLR 49 at 54; [1996] HCA 53. See generally Registrar of Titles v Spencer (1909) 9 CLR 641 at 645; [1909] HCA 69; Johnson v Perez (1988) 166 CLR 351 at 367, 371; [1988] HCA 64; Harriton (2006) 226 CLR 52 at 130 [264]. 104 Todorovic (1981) 150 CLR 402 at 412. See also Skelton (1966) 115 CLR 94 at 129; Arthur Robinson (Grafton) (1968) 122 CLR 649 at 657. Bell must always be one of judgment, rather than calculation105. And the burden lies on the claimant to prove the injury or loss for which they seek damages106. Where a claimant suffers a negligently caused personal injury during their working life, the objective of putting the claimant in the same position as if they had not sustained the injury is met by an award of damages which may include compensation for loss of superannuation benefits107. The assessment of any such loss is specific to the claimant. Superannuation benefits, like wages, are the product of the exploitation of the claimant's capital asset. As illustrated by the decision in Todorovic, not only does the loss of superannuation benefits form a part – sometimes a critical part – of the assessment of the value of loss of earning capacity but that loss is valued separately as a subset of this type of loss. There are a number of reasons why that is the approach adopted. First, superannuation benefits are part of remuneration108. Second, those benefits are a capital asset constituted by the body of rights which a claimant has as a result of both national statutory superannuation requirements109 and the 105 Todorovic (1981) 150 CLR 402 at 413. See, eg, Lee Transport Co Ltd v Watson (1940) 64 CLR 1 at 13-14; [1940] HCA 27; Pamment v Pawelski (1949) 79 CLR 406 at 410-411; [1949] HCA 43; O'Brien v McKean (1968) 118 CLR 540 at 548-549; [1968] HCA 58; Cattanach v Melchior (2003) 215 CLR 1 at 42 [101]; [2003] HCA 38. 106 Todorovic (1981) 150 CLR 402 at 412. 107 Todorovic (1981) 150 CLR 402 at 425-427; Jongen v CSR Ltd (1992) Aust Torts Reports ¶81-192; NSW Insurance Ministerial Corporation v Wynn (1994) Aust Torts Reports ¶81-304 at 61,740; Roads and Traffic Authority v Cremona (2001) 35 MVR 190; Ghunaim v Bart (2004) Aust Torts Reports ¶81-731 at 65,449 [125]; Zorom Enterprises Pty Ltd v Zabow (2007) 71 NSWLR 354 at 368-369 108 See, eg, Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of Manufactures (1986) 160 CLR 341 at 355; [1986] HCA 23; Austin v The Commonwealth (2003) 215 CLR 185 at 265 [167]; [2003] HCA 3. 109 See Superannuation Guarantee (Administration) Act 1992 (Cth). Bell superannuation arrangements specific to that claimant. The way in which those rights are valued will have to take account of the content of those rights. Third, in calculating damages for a claimant's lost earning capacity, the court has regard to the probable period of the claimant's working life immediately before the injury and not merely to the period of life which remained after the injury110. The objective, already identified, is apparent: to put the claimant in the same position as if they had not sustained the injury. In general terms, where a claimant is injured during their working life, what is awarded in relation to superannuation benefits is the net present value of the court's best estimate of the fund that the claimant would have had at the date of retirement but for the injury111; namely, a fund which would have generated the "lost" superannuation benefits. The capital asset that is being valued (because it is lost) is the present value of the future rights112. The label attached to those future rights – be it an accumulation fund, a defined benefit scheme, a pension scheme or some other descriptor – is not determinative. The particular rights – the future superannuation benefits – are assessed as if they had been converted into or replaced by a new asset – a fund reflecting the best estimate of what those rights would have generated at retirement, because that is the basis for assessing what has been lost. The loss is not the loss of some opportunity to enjoy the asset. The loss is the diminution in value of the asset. The awarding of damages for this aspect of earning capacity has, and achieves, other distinct and important objectives. Not only does the award seek to provide to the claimant an amount – a fund – that might have been sufficient to generate the expected superannuation benefits for a pre-illness life expectancy, the fund has other values and benefits to the claimant. As Lord Wilberforce explained in Pickett113: 110 Skelton (1966) 115 CLR 94 at 121. 111 See, eg, Villasevil v Pickering (2001) 24 WAR 167 at 179-182 [51]-[68] citing Jongen (1992) Aust Torts Reports ¶81-192. 112 Zorom (2007) 71 NSWLR 354 at 368 [54], 369 [59], 370-371 [66]-[67]. See also Wynn (1994) Aust Torts Reports ¶81-304 at 61,740. 113 [1980] AC 136 at 149. Bell "To the argument that 'they are of no value because you will not be there to enjoy them' can he not reply, 'yes they are: what is of value to me is not only my opportunity to spend them enjoyably, but to use such part of them as I do not need for my dependants, or for other persons or causes which I wish to support. If I cannot do this, I have been deprived of something on which a value – a present value – can be placed'?" Put in different terms, at the date of judgment, the claimant receives, as an element of an award of damages, the net present value of a fund that the claimant prior to the injury would have expected to receive on retirement, subject to appropriate discounts. It is a loss that is measured and awarded – a loss of something for which the claimant should be, and reasonably can be, compensated114. And what the claimant then does with that fund is a matter for them. However, Amaca contended that Mr Latz is in a different position and should not be compensated because not only is he retired but he is in receipt of a pension from a statutory superannuation scheme. Amaca's argument that Mr Latz has not suffered a loss, because the loss is only a loss that can be suffered by his family after his death, and is therefore not his loss, must fail. Contrary to Amaca's argument, Mr Latz has personally suffered a loss, which has a present value, and which can be quantified. That last statement needs unpacking. On his retirement, what Mr Latz had, as a result of the exploitation of his capital asset, was a superannuation pension under Pt 5 of the Superannuation Act – a fund with certain conditions. On retirement, Mr Latz had access to that fund and, but for his injury, would have continued to receive the superannuation pension from that fund for the whole of his pre-illness life expectancy115. Mr Latz will now not receive the superannuation pension for the full duration of his pre-illness life expectancy because of the negligence of Amaca. The value of the capital asset constituted by his rights under the Superannuation Act has been diminished by the injury caused by Amaca. But for the conduct of Amaca, Mr Latz's rights under the Superannuation Act would have been more valuable than they now will be. 114 Pickett [1980] AC 136 at 149. 115 See s 34 of the Superannuation Act. Bell What he has lost is the net present value of the benefit of the converted capital asset for the remainder of his pre-illness life expectancy – a further 16 years. The point is amplified when the nature of that converted capital asset is understood. Mr Latz's rights under Pt 5 of the Superannuation Act can be conceptualised, as Mr Latz submitted, as delayed remuneration for work that Mr Latz has carried out116. This asset is intrinsically connected to earning capacity, representing, as it does, a species of remuneration – financial rewards from work117. Had Mr Latz's illness presented itself before he retired, he would have been awarded the net present value of that capital asset. There is no principled basis for denying Mr Latz compensation for his lost superannuation benefit just because the injury or illness which occasioned that loss became apparent only after he commenced retirement. That does not appeal to a sense of justice. It does not accord with principle. Further, the approach to assessment must take account of change to the quality of the medium of compensation. As Stephen J said in Todorovic118: "since the sole function of the process of assessment is to attain what the law has fixed as the proper measure of compensation, there can be no place in the process for fixed rules of law; instead the process must be capable of adjustment in the face of changes in the quality of the medium of compensation. The current acceptability at any time of a process of assessment will depend, and depend only, upon whether or not its outcome fairly corresponds to what the law has set as the proper measure of compensation." 116 Parry v Cleaver [1970] AC 1 at 16. See also Smoker v London Fire and Civil Defence Authority [1991] 2 AC 502 at 523. 117 See Husher v Husher (1999) 197 CLR 138 at 147 [18]; [1999] HCA 47. 118 (1981) 150 CLR 402 at 428. Bell Over the last 30 years, significant changes have directly impacted the process of assessment: namely, the significance of superannuation in the context of an ageing population119 and, as these appeals demonstrate, the late onset of diseases like mesothelioma120. And, as Lord Wilberforce said in Pickett121: "if there is a choice between taking a view of the law which mitigates a clear and recognised injustice in cases of normal occurrence, at the cost of the possibility in fewer cases of excess payments being made, or leaving the law as it is, I think that our duty is clear. We should carry the judicial process of seeking a just principle as far as we can, confident that a wise legislator will correct resultant anomalies." In these appeals, there is a clear and recognised injustice. As a result of Mr Latz's injury, caused by Amaca, he will suffer an economic loss in respect of his superannuation pension. That loss is both certain and able to be measured by reference to the terms of the Superannuation Act – the net present value of the superannuation pension for the remainder of his pre-illness life expectancy, a further 16 years. He should be entitled to recover that loss. Moreover, this loss (which can and should be measured) is distinct in nature and source from the non-receipt of other forms of benefit, including legacies under a will or distributions under discretionary trusts. The superannuation pension, unlike the other forms of benefit, is a capital asset and intrinsically connected to earning capacity. 119 Finch v Telstra Super Pty Ltd (2010) 242 CLR 254 at 271 [33]; [2010] HCA 36. See, eg, Australian Law Reform Commission, Elder Abuse – A National Legal Response: Final Report, Report No 131, (2017) at 231 [7.1]. 120 See, eg, Amaca Pty Ltd v Booth (2011) 246 CLR 36 at 69-70 [93]; [2011] HCA 53; Alcan Gove Pty Ltd v Zabic (2015) 257 CLR 1 at 6 [5]-[6]; [2015] HCA 33. 121 [1980] AC 136 at 150. Bell But what should be the amount of damages awarded for that damage or loss? On the death of the contributor, the statutory superannuation scheme provides a number of identified outcomes for the contributor's superannuation pension122. If the contributor's employment is terminated by the contributor's death and the contributor is not survived by a spouse or eligible child, the contributor's estate is entitled to a lump sum123. If the contributor is survived by a spouse, then the spouse will be entitled to a pension equal to two-thirds of the contributor's pension124. In both of those situations, a contributor's identified loss would be calculated to include a component sufficient to generate the future expected income stream from the pension that will be lost. The first calculation would take into account the lump sum125, the second calculation would take into account the value of the spouse's pension126. Despite each of those amounts, in both situations there will be a loss which is compensable. But what, then, is the position if the contributor under the statutory superannuation scheme has retired? If the contributor is not survived by a spouse or eligible child, then the estate is not entitled to a lump sum and the contributor's loss will be the net present value of the pension for the remainder of his pre-illness life expectancy127, a further 16 years. As Lord Wilberforce asked rhetorically in Pickett128, why should the claimant be deprived of something on which a value – a present value – can be placed and which he can enjoy now? However, where the contributor to the statutory superannuation scheme does have a spouse129, then valuing the loss just identified must give credit for the value of the right which the contributor acquired when they became a contributor 122 s 38 of the Superannuation Act. 123 s 38(1)(d) of the Superannuation Act. 124 s 38(1)(a) of the Superannuation Act. 125 s 38(1)(d) of the Superannuation Act. 126 s 38(1)(a) of the Superannuation Act. 127 s 38(1)(d) of the Superannuation Act. 128 [1980] AC 136 at 149. 129 s 38(1)(a) of the Superannuation Act. Bell to that scheme and which remains after their death – a two-thirds pension to the spouse130. It is an offsetting or collateral benefit131. The position then is this: if you are of working age, a lump sum attributable to the superannuation pension is awarded which includes a component sufficient to generate the future expected income stream that has been lost, subject of course to the necessary deductions and discounts. If you are retired, then a similar calculation should be made. It would be incongruous and wrong not to do so. The nature of the damage suffered in each case is identical: the loss of superannuation benefits that, but for the negligently caused injury, would have been received during the lost years. To reason that the results should be different because one victim suffers a reduction in working life while the other does not would be to decide the matter according to a distinction that is unproductive of relevant difference. Why should a tortfeasor whose negligence inflicts a loss of life expectancy on a victim and thereby deprives the victim of superannuation benefits that, but for the injury, would have been received during the lost years be permitted to shelter from liability behind the casuistry that the victim's income earning capacity is not thereby affected? A sum is to be allowed on account of the superannuation pension in the calculation of damages for Mr Latz's personal injuries. The age pension stands in stark contrast. It is not part of remuneration. It is not a capital asset. It is not a result of, or intrinsically connected to, a person's capacity to earn. Nor, contrary to Mr Latz's submission, is it a future income stream to which he has any present or future right or entitlement. It is not a form of property even within the extended meaning given to that concept in the application of s 51(xxxi) of the Constitution132. No sum is to be allowed on 130 cf Dionisatos v Acrow Formwork & Scaffolding Pty Ltd (2015) 91 NSWLR 34 at 74 [207]; see also at 38 [1], 44 [33]. 131 The National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569 at 599-600; [1961] HCA 15. See also Redding (1983) 151 CLR 117; Manser v Spry (1994) 181 CLR 428; [1994] HCA 50. 132 See, eg, Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 349; [1948] HCA 7; Cunningham v The Commonwealth (2016) 259 CLR 536 at 555-556 [43]-[46]; [2016] HCA 39. Bell account of the age pension in the calculation of damages for Mr Latz's personal injuries. For those reasons, the following orders were made on 11 May 2018: Matter No A8/2018 Appeal allowed in part, on the ground (Ground 3(a)) that the Full Court of the Supreme Court of South Australia erred in assessing damages by including an allowance for the loss of expectation of receiving an age pension during the "lost years". Set aside order 3 of the Full Court made on 30 October 2017 and 20 November 2017 and, in its place, order that judgment be entered in an amount to be determined in accordance with Order 1. Appeal otherwise dismissed. The appellant pay the respondent's costs of the appeal. Matter No A7/2018 Appeal dismissed. The respondent pay the appellant's costs of the appeal.

HIGH COURT OF AUSTRALIA JULIAN KINGSFORD GERNER & ANOR PLAINTIFFS AND THE STATE OF VICTORIA DEFENDANT Gerner v Victoria [2020] HCA 48 Date of Hearing: 6 November 2020 Date of Order: 6 November 2020 Date of Publication of Reasons: 10 December 2020 ORDER Demurrer allowed with costs. Representation B W Walker SC with M D Wyles QC, R F R Pintos-Lopez and S C B Brenker for the plaintiffs (instructed by Hamilton Locke) K L Walker QC, Solicitor-General for the State of Victoria, with C L Lenehan SC, K A O'Gorman and T M Wood for the defendant (instructed by Victorian Government Solicitor's Office) J A Thomson SC, Solicitor-General for the State of Western Australia, with J J E Perera for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor's Office (WA)) G A Thompson QC, Solicitor-General of the State of Queensland, with F J Nagorcka for the Attorney-General of the State of Queensland, intervening (instructed by Crown Law (Qld)) M J Wait SC, Solicitor-General for the State of South Australia, with K E Dennis for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor's Office (SA)) L S Peattie for the Attorney-General for the Northern Territory, intervening (instructed by Solicitor for the Northern Territory) S K Kay with D R Osz for the Attorney-General for the State of Tasmania, intervening (instructed by Office of the Solicitor-General (Tas)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Gerner v Victoria Constitutional law (Cth) – Implications from Constitution – Where directions made under s 200(1)(b) and (d) of Public Health and Wellbeing Act 2008 (Vic) restricted movement of persons within Victoria – Where plaintiffs sought declarations that directions and s 200(1)(b) and (d) of Public Health and Wellbeing Act were invalid as an infringement of a freedom to move wherever one wishes for whatever reason ("freedom of movement") said to be implicit in Constitution – Where defendant demurred on ground that Constitution did not imply freedom of movement – Whether freedom of movement implicit in federal structure of Constitution – Whether freedom of movement protected by implied freedom of political communication – Whether freedom of movement implicit in s 92 of Constitution. Words and phrases – "constitutional implication", "constitutional interpretation", "COVID-19", "federal structure", "federation", "freedom of movement", "implied freedom of movement", "implied freedom of political communication", "interstate intercourse", "intrastate intercourse", "political communication", "quarantine", "terms and structure", "text and structure". Constitution, ss 51(ix), 92. Public Health and Wellbeing Act 2008 (Vic), ss 200(1)(b), 200(1)(d). KIEFEL CJ, GAGELER, KEANE, GORDON AND EDELMAN JJ. The Public Health and Wellbeing Act 2008 (Vic) ("the Act") empowers authorised officers, appointed by the Chief Health Officer, to exercise "emergency powers" when a "state of emergency" has been declared by the Minister for Health ("the Minister")1. On 16 March 2020, the Minister declared that a state of emergency existed in the whole of Victoria by reason of the serious risk to public health posed by the COVID-19 pandemic ("the State of Emergency Declaration"). The State of Emergency Declaration was repeatedly extended so that it remained in force when the present proceedings were heard and determined by the Court on 6 November By virtue of s 200(1)(b) and (d) of the Act, the emergency powers exercisable by the Chief Health Officer include the ability to "restrict the movement of any person or group of persons within the emergency area" and to "give any other direction that the authorised officer considers is reasonably necessary to protect public health". Since 16 March 2020, directions restricting the movement of people within Victoria ("the Lockdown Directions") have been made from time to time. The Lockdown Directions remained in force when the present proceedings were heard and determined. The first plaintiff, Mr Gerner, lives in Melbourne. He is the owner of the second plaintiff, which conducts a restaurant business in Melbourne. Prior to the making of the State of Emergency Declaration and the Lockdown Directions, the second plaintiff generated annual sales of approximately $2 million per annum. It was alleged by the plaintiffs that the second plaintiff has suffered a significant loss of revenue by reason of the restrictions on movement imposed by the Lockdown Directions. The plaintiffs commenced proceedings in the original jurisdiction of this Court seeking declarations that s 200(1)(b) and (d) of the Act and the Lockdown Directions made thereunder are invalid as an infringement of a guarantee of freedom of movement said to be implicit in the Constitution. The defendant demurred to the plaintiffs' claim on the ground that the Constitution does not imply the freedom of movement for which the plaintiffs contend. With a view to determining the demurrer, the parties agreed to present the following question to the Full Court: 1 Public Health and Wellbeing Act 2008 (Vic), ss 3(1), 198, 199, 200, 201. "Does the Constitution provide for an implied freedom for the people in and of Australia, members of the Australian body politic, to move within the State where they reside from time to time, for the purpose of pursuing personal, recreational, commercial, and political endeavour or for any reason, free from arbitrary restriction of movement?" On 6 November 2020, the Full Court answered this question against the plaintiffs; and ordered that the demurrer be allowed with costs. The reasons for making those orders may be stated by reference to the arguments advanced by the plaintiffs. The plaintiffs' contention The plaintiffs' contention was that a freedom of movement of the kind contemplated by the demurrer question is: implied from the text and structure of the Constitution and is logically and practically necessary for the preservation of the constitutional structure; alternatively, to be implied from the system of representative and responsible government enshrined in the Constitution and as part of the implied freedom of political communication; alternatively, implied as an aspect of s 92 of the Constitution." Insofar as the plaintiffs' contention asserted a conflict between the challenged provisions of the Act and the Lockdown Directions on the one hand, and the implied freedom of political communication on the other, it is to be noted that the plaintiffs' amended statement of claim did not allege or particularise any facts to support a case that such a conflict has occurred. There was, for example, no allegation in the plaintiffs' pleading that the Act or the Lockdown Directions burdened political communication. Similarly, insofar as the plaintiffs asserted a conflict between the Act and the Lockdown Directions and s 92 of the Constitution, there was no allegation in the plaintiffs' pleading that the Act or the Lockdown Directions burdened any aspect of interstate trade, commerce or intercourse. The absence of any pleaded basis for these aspects of the plaintiffs' contention was sufficient reason to reject the plaintiffs' claim for declarations of invalidity by reference to them. For the Court to have determined the question posed on either of these bases would have amounted to the provision of a hypothetical opinion2. The position was different in relation to the plaintiffs' contention that the provisions of the Act and the Lockdown Directions conflicted with an implied freedom of movement that stands independently of political communication and independently of interstate trade, commerce and intercourse. This contention was at least supported by the allegations of fact in the plaintiffs' pleaded case. The plaintiffs' contention in this respect failed, however, on the ground that there is no basis in the text and structure of the Constitution for the implication which the An implication from federation? At common law individuals may move about as they see fit. But that freedom is subject to the laws of the land. In Blackstone's Commentaries on the Laws of England it is said that the personal liberties of the subjects of the common law, including "locomotion", may only be abrogated or regulated by "due course of law"3. Because freedom of movement may be limited by statute, to speak of a constitutionally guaranteed freedom of movement is to assert the invalidity of a statute by reason of a conflict between the Constitution and the statute. It must be understood that to speak of an implied freedom is to speak of a limitation on legislative or executive power rather than a personal right4. Accordingly, to assert that a freedom of movement is implicit in the Constitution is to assert that the Constitution impliedly denies to the Commonwealth and the States power to make laws the object of which is to restrict freedom of movement. The plaintiffs argued that the restriction on the legislative power of the Commonwealth and the States for which they contend springs from the fact that federation produced "one people, one nation, where there had been several peoples and several colonies". Freedom to move wherever one wishes for whatever reason was said to follow, it being the essence of being a community or society or nation that the people can know each other. The Commonwealth v Queensland (1987) 62 ALJR 1 at 1-2. 3 Blackstone, Commentaries on the Laws of England (1765), bk 1, ch 1 at 130-131. Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 566. It must be said at the outset of a discussion of this contention that the notion that a freedom of communication or movement is a freestanding implication of the Constitution, cognate with but standing separately from the implied freedom of political communication in Lange v Australian Broadcasting Corporation5, is contrary to the settled course of authority in this Court. The orthodox view, the basis for which will be discussed under the next heading, is that freedom of movement or communication enjoys constitutional protection as an aspect or corollary of the protection of freedom of political communication6. recognised The plaintiffs relied on the suggestion by Murphy J in McGraw-Hinds (Aust) Pty Ltd v Smith that a constitutional implication of freedom of communication, including physical movement, may be drawn from "the nature of Australian society"7. It may be said immediately that this suggestion was not supported by the other members of the Court in McGraw-Hinds, all of whom decided the case in accordance with the requirements of s 92 of the Constitution8. Further, the suggestion that the Constitution implies a broad freedom of communication was expressly rejected by a majority of this Court in Miller v TCN Channel Nine Pty Ltd9. The suggestion of Murphy J in McGraw-Hinds is distinctly inconsistent with the settled approach to the drawing of constitutional implications. Contrary to the plaintiffs' submission, the question is not, "what is required by federation". It is now well settled that what the Constitution implies depends on "what ... the terms and structure of the Constitution prohibit, authorise or (1997) 189 CLR 520. 6 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 234 [148], 297 [334]-[335], 306 [364]; Wainohu v New South Wales (2011) 243 CLR 181 at 230 [112]; Tajjour v New South Wales (2014) 254 CLR 508 at 566-567 [95], (1979) 144 CLR 633 at 670. See also Buck v Bavone (1976) 135 CLR 110 at 137; Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54 at 87-88. 8 McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 144 CLR 633 at 644-646, 650-652, (1986) 161 CLR 556 at 569, 579, 615, 636-637. require"10. That is because federation is not a "one size fits all" proposition; the kind of federation that is created depends on the text and structure of its constitutive instrument. So, just as the Constitution "gives effect to the institution of 'representative government' only to the extent that the text and structure of the Constitution establish it"11, the legal nature and effect of the federation established by the Constitution can be known only from the terms and structure of the Constitution itself. The legislative powers of the States as members of the federation established by the Constitution are expressly preserved by s 106 of the Constitution. The proposition that those powers are necessarily limited by the freedom of movement for which the plaintiffs contend draws no support in the text or structure of the Constitution. It is surprising, to say the least, that it is suggested by the plaintiffs that State laws for the licensing of users of the States' roads have to conform to this limitation on State legislative power. That suggestion was rejected when made in Higgins v The Commonwealth12. In that case, Finn J rejected a challenge to the validity of a law13 that suspended the payment of unemployment benefits on the recipient's moving to an area considered to have lesser employment prospects. Finn J said14: "It is inconceivable ... that the Constitution implicitly puts at risk (subject to considerations of proportionality, etc) a significant range of routine Commonwealth and State laws merely because in particular ways, they limit either freedom of movement or else the making of choices within that freedom. I instance criminal laws authorising or requiring incarceration, curfew provisions, some forms of town planning and road traffic legislation, 10 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567. 11 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 566-567 (footnote omitted). See also McGinty v Western Australia (1996) 186 CLR 140 at 168, 182, 183, 231, 284-285; MZXOT v Minister for Immigration and Citizenship (2008) 233 CLR 601 at 618 [20], 627 [54], 635 [83], 656 [72]; Re Gallagher (2018) 263 CLR 460 at 472 [24]. (1998) 79 FCR 528. 13 Social Security Act 1991 (Cth), s 634. (1998) 79 FCR 528 at 534-535. and statutes which exclude or regulate entry on real property, public transport etc." Finn J might equally have instanced laws providing for quarantine as a routine response to outbreaks of contagious or infectious diseases. The essence of quarantine is, as Latham CJ put it in McCarter v Brodie15, that "the actual movement of persons ... is restricted or altogether prohibited". Section 51(ix) of the Constitution confers on the Commonwealth Parliament an express power to make laws with respect to "quarantine". By virtue of s 106 of the Constitution the concurrent legislative power of the States with respect to the same subject matter was expressly preserved. In the Engineers' Case16, Knox CJ, Isaacs, Rich and "The doctrine of 'implied prohibition' finds no place where the ordinary principles of construction are applied so as to discover in the actual terms of the instrument their expressed or necessarily implied meaning. The principle we apply to the Commonwealth we apply also to the States, leaving their respective acts of legislation full operation within their respective areas and subject matters, but, in case of conflict, giving to valid Commonwealth legislation the supremacy expressly declared by the Constitution, measuring that supremacy according to the very words of sec 109." The plaintiffs argued that the restriction on legislative power for which they contend may be discerned by a process of reasoning akin to that adopted in Leeth v The Commonwealth18 by Deane and Toohey JJ. In that case, their Honours suggested that "specific provisions of the Constitution which reflect or implement some underlying doctrine or principle are properly to be seen as a manifestation of it and not as a basis for denying its existence by invoking the inappropriate rule of (1950) 80 CLR 432 at 454-455. 16 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd ("the Engineers' Case") (1920) 28 CLR 129. 17 Engineers' Case (1920) 28 CLR 129 at 155. (1992) 174 CLR 455. expressio unius"19. This approach to the interpretation of the Constitution did not find favour with the majority of the Court in that case20. Nor, for that matter, did it command the support of a majority in any subsequent decision of this Court21. It is not difficult to understand why. To seek to discern, by a process of induction from the presence in the Constitution of specific express restrictions upon legislative power, the existence of a broader limitation upon legislative power is distinctly inconsistent with the orthodox approach to constitutional interpretation established On behalf of the plaintiffs, heavy emphasis was put upon the unappealing prospect that State Parliaments, unconstrained by a limit upon legislative power of the kind urged by the plaintiffs, might divide the people of the Commonwealth by creating "enclaves" that prevent people knowing each other23. Again, the Engineers' Case stands in the way of the plaintiffs' argument. To point to the possibility that legislative power may be misused is distinctly not to demonstrate a sufficient reason to deny its existence24. The interpretation of the Constitution is not to be approached with a jaundiced view of the integrity or wisdom or practical competence of the representatives chosen by the people25. In any event, as has been noted, the plaintiffs did not plead any factual basis for a contention that the Act or the Lockdown Directions are apt to effect a division of the people of the Commonwealth into "enclaves" so as to impede the exercise of political sovereignty by the people of the Commonwealth. 19 Leeth v The Commonwealth (1992) 174 CLR 455 at 484-485 (footnote omitted). 20 Leeth v The Commonwealth (1992) 174 CLR 455 at 467-468, 475-476, 480. 21 See, eg, Kruger v The Commonwealth (1997) 190 CLR 1. (1920) 28 CLR 129 at 146-151. 23 Compare Kruger v The Commonwealth (1997) 190 CLR 1 at 115. 24 Engineers' Case (1920) 28 CLR 129 at 151-152; Kruger v The Commonwealth (1997) 190 CLR 1 at 36; New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 117-118 [188]. 25 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 136. See also Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 43-44. The closest that the plaintiffs were able to come to finding support in the decided cases for the notion of a freedom of movement implicit in the federal structure was in observations of Griffith CJ and Barton J in R v Smithers; Ex parte Benson26. In Smithers, the impugned law27 made it an offence for a resident of another State to enter New South Wales if he or she had been convicted in his or her home State of an offence carrying a penalty of either death or imprisonment for a year or more, and less than three years had passed since his or her release from any imprisonment. Griffith CJ held the law to be invalid on the basis that the States' power to exclude residents of other States had been "cut down ... by the mere fact of federation" and the "elementary notion of a Commonwealth". His Honour reached that conclusion irrespective of ss 92 and 11728. He drew support for this implication from the holding of Miller J in Crandall v State of Nevada29 that citizens of the United States have an implicit right to come to the seat of the federal government and to access federal executive and judicial facilities30. Barton J reasoned similarly, holding that s 92 did not carry the freedom of interstate intercourse much further than the constitutional implication arising from the fact of federation31. Barton J also drew support from the holding in Crandall32. It is apparent that the observations of Griffith CJ and Barton J were concerned with movement between the States, as well as the movement between the States and (what is now) the Australian Capital Territory in order to participate in the affairs of the federation. Their Honours were not concerned to deny or confine the legislative power of the States over intrastate movement. And, in any event, the other members of the Court did not follow the approach of Griffith CJ and Barton J. In that regard, Isaacs and Higgins JJ held that the law was invalid (1912) 16 CLR 99. 27 The Influx of Criminals Prevention Act 1903 (NSW). 28 R v Smithers; Ex parte Benson (1912) 16 CLR 99 at 108-109. (1867) 73 US 35 at 44. 30 R v Smithers; Ex parte Benson (1912) 16 CLR 99 at 108. 31 R v Smithers; Ex parte Benson (1912) 16 CLR 99 at 110. 32 R v Smithers; Ex parte Benson (1912) 16 CLR 99 at 109-110. because it interfered with the freedom of interstate intercourse expressly guaranteed by s 92. Isaacs J held that s 92 effects an "absolute prohibition on the Commonwealth and States alike to regard State borders as in themselves possible barriers to intercourse between Australians"33. Higgins J observed that the impugned legislation was impermissibly "pointed directly at the act of coming into New South Wales" in that it "ma[de] the coming into New South Wales an offence" (emphasis in original)34. The plaintiffs also argued that the implied freedom of movement for which they contend was accepted as implicit in the federal structure of the Constitution in Pioneer Express Pty Ltd v Hotchkiss35. That case concerned a law said to interfere with intercourse between New South Wales and the Australian Capital Territory36. The appellant had been convicted under the impugned law of carrying passengers in an unlicensed public motor vehicle between points involving no interstate journey37. The appellant's coach had, relevantly, carried passengers from Sydney to Canberra. The plaintiffs relied on the statement of Dixon CJ that, in addition to the freedom of interstate intercourse guaranteed by s 92, there is implicit in the Constitution an "immunity from State interference with all that is involved in [the] existence [of the Australian Capital Territory] as the centre of the national government", which "means an absence of State legislative power to forbid restrain or impede access to it"38. But what was said by Dixon CJ does not support the plaintiffs' contention in relation to intrastate movement. Importantly, "to press that kind of implication so far as to disable a State from making such a law as [the impugned law, which did not interfere with intercourse between New South Wales and the Australian Capital Territory but rather 33 R v Smithers; Ex parte Benson (1912) 16 CLR 99 at 117. 34 R v Smithers; Ex parte Benson (1912) 16 CLR 99 at 118. (1958) 101 CLR 536. 36 The State Transport (Co-ordination) Act 1931 (NSW), s 12. 37 Pioneer Express Pty Ltd v Hotchkiss (1958) 101 CLR 536 at 548. 38 Pioneer Express Pty Ltd v Hotchkiss (1958) 101 CLR 536 at 549-550. 39 Pioneer Express Pty Ltd v Hotchkiss (1958) 101 CLR 536 at 550. related to intrastate movement] would be to go beyond and outside the constitutional doctrines by which implications are authorized." It is thus apparent that nothing in either Smithers or Pioneer Express recognises a constitutional impediment to the regulation of intrastate movement. In any event, the kind of implication spoken of in Smithers and Pioneer Express is better understood today under some other rubric such as the implied freedom of political communication so far as access to the seat of government is concerned, or the implications of Ch III of the Constitution so far as access to the courts of the Commonwealth is concerned. Freedom of political communication and representative and responsible government Under this heading, the plaintiffs sought to argue that movement for any purpose amounts to political communication and as such is protected by the implied freedom of political communication. The plaintiffs submitted that freedom of movement is necessary for the maintenance of the constitutional system of representative and responsible government as an aspect of the implied freedom of The implied limitation on legislative power recognised in Lange protects "political communication, not communication in general"41. This implied limitation on legislative power of the Commonwealth and the States has been recognised as a necessary implication from the express provisions of ss 7, 24 and 128 and related provisions of the Constitution, which establish the political sovereignty of the people of the Commonwealth, because it is indispensable to enabling the people to "exercise a free and informed choice as electors"42. The 40 First recognised in Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 and later explained in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 and Unions NSW v New South Wales (2019) 264 CLR 595. 41 McCloy v New South Wales (2015) 257 CLR 178 at 228 [119]. 42 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560. See also Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 136; McCloy v New South Wales (2015) 257 CLR 178 at 207 [45]; Unions NSW v New South Wales (2019) 264 CLR 595 at 607 [14]. implied freedom of political communication is seen as necessary to preserve the system of representative and responsible government. While legislated limits on movement that burden political communication may fall foul of this constitutional protection, as the measures limiting movement for the purpose of political protest were held to do in Levy v Victoria43 and Brown v Tasmania44, limits on communication or movement which do not have a political character do not. Accordingly, the short answer to the plaintiffs' argument under this heading is that a statute said to limit freedom of movement so as to burden political communication may be invalid; but that is because it is an impermissible burden on political communication. As has already been noted, the plaintiffs did not plead that the Act or the Lockdown Directions restricted political communication. Section 92 The plaintiffs submitted that freedom of movement is implicit in s 92 on the basis that intrastate movement is a necessary incident of the freedom of interstate intercourse it guarantees. The plaintiffs' argument is distinctly contrary to Miller v TCN Channel Nine Pty Ltd45. There, a majority of the Court held that a guarantee of freedom of communication (which can be taken to include movement of persons) cannot be implied from s 92. The plaintiffs' argument is logically deficient in that it does not explain why the validity of a law burdening interstate intercourse via restriction of intrastate movement should be assessed against a freestanding freedom of movement rather than directly against the requirements of s 92. Indeed, the implied freedom for which the plaintiffs contend would swallow the freedom expressly guaranteed by s 92. The implication asserted by the plaintiffs would render otiose the delineation clearly drawn by the text of s 92 between protected interstate intercourse, that is to say, "movement ... across State (1997) 189 CLR 579. (2017) 261 CLR 328. (1986) 161 CLR 556 at 569, 579, 615, 636-637. borders"46, and intrastate intercourse, which it does not purport to protect. To accept the plaintiffs' argument would be to accept an implied restriction on legislative power that is wider in its operation than the express terms of s 92 of the Constitution. It would be also contrary to the approach in the Engineers' Case47, where the plurality applied the statement of Lord Loreburn LC, in reference to the British North America Act 1867 (Imp), that "if the text is explicit the text is conclusive, alike in what it directs and what it forbids"48. To conclude that the express limitation on legislative power in respect of the specific subject matter, being interstate trade, commerce and intercourse, does not cover other subject matter as well, being intrastate trade, commerce and intercourse, is not mere slavish adherence to the maxims "expressio unius est exclusio alterius" (the express mention of one thing is the exclusion of another thing) or "expressum facit cessare tacitum" (there is no room for an implication in the face of an express provision). Rather, it is to recognise that the legislative powers granted or preserved by the Constitution are not to be confined by implications which are not necessary and which would undermine the application of the freedom of interstate intercourse in s 92. As Mason J said in Miller v TCN Channel Nine Pty Ltd49 in response to the argument that s 92 implicitly protects freedom of communication, there is no "basis for implying a new s 92A into the Constitution". If the issue is looked at more broadly, there can be not the slightest doubt that the mischief at which s 92 was directed was the possibility of legislative interference with interstate trade, commerce or intercourse between the States of the new federation to be established50. The possibility that State laws might restrict intrastate trade, commerce or intercourse was not identified as an impediment to a successful federation. At the 1897 Adelaide Convention, the Hon Isaac Isaacs 46 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 (1920) 28 CLR 129 at 150. 48 Attorney-General for Ontario v Attorney-General for Canada [1912] AC 571 (1986) 161 CLR 556 at 579. 50 See Cole v Whitfield (1988) 165 CLR 360 at 385. (later Isaacs CJ) noted that the mischief at which the provision that was to become s 92 was directed was the restriction of the free flow of goods across State borders. The provision was, Isaacs said, "really pointed at the border duties", rather than "interfer[ing] with the internal management of the State so long as the effect of that management does not extend to intercourse with another State"51. At the 1897 Sydney Convention, the Hon Richard O'Connor (later O'Connor J) said, in a discussion regarding what became ss 51(i) and 92, that the Constitution would not remove the States' "police powers" to "interfere with ... freedom of commerce and of human intercourse" for the purpose of "prohibiting both persons and animals, when labouring under contagious diseases ... entering their territory"52. Finally, it may be noted that it was argued on behalf of the plaintiffs that the implied limitation on legislative power for which they contend means that in s 92 of the Constitution, "trade, commerce and intercourse among the States" must be understood "pragmatically" to refer to trade, commerce and intercourse "throughout the Commonwealth". This latter form of words was expressly adverted to and rejected in the course of the Convention Debates. In this regard, Isaacs said53: "What we intend to do is to prevent any State from charging importation duty on goods coming into its territory. If we use the words: Throughout the Commonwealth, I feel no shadow of doubt that these words will be construed as much larger than the well-known phrase expression: Among the States. 51 Official Report of the National Australasian Convention Debates (Adelaide), 22 April 1897 at 1142-1143. 52 Official Record of the Debates of the Australasian Federal Convention (Sydney), 22 September 1897 at 1062. See also at 1049. 53 Official Report of the National Australasian Convention Debates (Adelaide), 22 April 1897 at 1142. We know what we intend, but these provisions are to be subject to judicial interpretation hereafter." At the 1898 Melbourne Convention, the Hon Edmund Barton (later Barton J) was also of the view that the phrase "throughout the Commonwealth" ought to be rejected because it could be "so read as to interfere with a state's own right of regulating that kind of internal trade which is quite unconnected with inter- state commerce"54. It would be a distinctly unsound approach to the interpretation of the constitutional text actually adopted by the framers to attribute to that text a meaning that they were evidently "united in rejecting"55. Conclusion For these reasons, the plaintiffs' contention was rejected and the defendant's demurrer allowed. 54 Official Record of the Debates of the Australasian Federal Convention (Melbourne), 16 February 1898 at 1020. 55 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 353. See also Kruger v The Commonwealth (1997) 190 CLR 1 at 21.

HIGH COURT OF AUSTRALIA STEPHEN ALFRED CATTANACH & ANOR APPELLANTS AND KERRY ANNE MELCHIOR & ANOR RESPONDENTS Cattanach v Melchior [2003] HCA 38 16 July 2003 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Queensland Representation: D F Jackson QC with C Newton for the appellants (instructed by Deacons) B W Walker SC with M E Eliadis for the respondents (instructed by Shine Roche McGowan) Interveners: R J Meadows QC, Solicitor-General for the State of Western Australia with J C Pritchard intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor for the State of Western Australia) C J Kourakis QC, Solicitor-General for the State of South Australia with C Jacobi intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for the State of South Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Cattanach v Melchior Negligence – Medical negligence – Negligent advice following sterilisation procedure – Birth of child – Damages – Whether damages recoverable for past and future costs of raising and maintaining child until the age of 18 years – Whether award of damages should be reduced through reference to benefits and pleasures derived, or to be derived, from child. Public policy – Family relationships – Negligent advice following sterilisation procedure – Birth of child – Damages – Whether birth of child is a legal harm for which damages may be recovered – Whether departure is required from ordinary tortious rules as to causation and economic loss. Damages – Negligence – Medical negligence – Negligent advice following sterilisation procedure – Birth of child – Whether recovery limited to damages for pain, suffering, inconvenience and costs of pregnancy and childbirth – Whether additional damages recoverable for past and future costs of raising and maintaining child until the age of 18 years – Whether absence of physical injury to father of child indicates that damage amounts to pure economic loss – Whether unplanned pregnancy constitutes injury to mother – Applicable rules governing recovery in such a case – Whether award of damages should be reduced through reference to benefits and pleasures derived, or to be derived, from child – Whether recovery limited to cases involving extra costs caused by disability of parent or child. The issue If, in consequence of medical negligence, a couple become the parents of an unintended child, can a court, in an award of damages, require the doctor to bear the cost of raising and maintaining the child? Such a question has divided judicial opinion in many countries. Recently, the House of Lords held that, according to the laws of England and Scotland, the answer is no1. At least to the present time, that is also the preponderant view in North America. The reasons for judgment of other members of the Court refer to the case law in other jurisdictions. The question cannot be answered by intuition. The intuitive response of many people would probably vary according to the circumstances of particular cases; including some circumstances that the law would regard as irrelevant. Courts seek to answer the question by reference to general principles, based upon legal values. Those principles may allow for exceptions or qualifications, but such exceptions or qualifications themselves must be founded upon principle. The differing responses given by courts throughout the world show that the relevant principles are not easy to identify, or apply. The way in which the question is framed is closely related to the facts of the present case; and those facts are uncomplicated. A claim for damages was brought jointly by the respondents, as a couple, and an award of damages was made to them jointly. The claim was not based upon the existence of any disability on the part of either mother or child, or any special or unusual needs which will take the cost of raising the child out of the ordinary. The first appellant is an obstetrician and gynaecologist who provides sterilisation services in the course of his practice. It is lawful for him to do so; just as it was lawful for the first respondent, Mrs Melchior, to seek those services. Mrs Melchior did not have to justify her decision to become sterilised, and the reasons she gave in evidence were not unusual. They were not based on considerations of financial hardship, or medical necessity. She decided she wanted no more children. The claim with which this Court is concerned was based on tort, rather than contract. That is because Mrs Melchior undertook her sterilisation procedure in a public hospital. The second appellant, the State of Queensland, is the authority responsible for the hospital at which Dr Cattanach attended Mrs Melchior. The legal uncertainty surrounding the issue as it is presented in this case is not only the result of the fact that widespread availability and use of sterilisation services, associated with the possibility that medical negligence may result in 1 McFarlane v Tayside Health Board [2000] 2 AC 59. unintended conception, is a comparatively recent social phenomenon. In truth, what is involved is a new manifestation of an old problem: the way in which the law of tort deals with the consequences of negligent conduct of one person that affects the financial interests of others, as distinct from conduct that injures another's person or property. The distinction between what is often called pure economic loss, and loss, including financial loss, flowing from injury to person or property, is not always clear, or satisfactory. Even so, it is embedded in the law of tort, and forms the basis of established rules governing liability for damages2. The common law shows more caution in imposing tortious liability for conduct that has an adverse effect upon purely financial interests than it shows in relation to conduct that causes damage to person or property3. There are sound reasons of legal policy for that. In identifying the nature of the alleged loss for which Mr and Mrs Melchior seek damages, it is to be noted that its immediate cause was the process of human reproduction (conception, pregnancy and birth), resulting in a parent-child relationship. That relationship is the source of legal and moral responsibilities which are the basis of their claim for damages. The common law has always attached fundamental value to human life; a value originally based upon religious ideas which, in a secular society, no longer command universal assent. Blackstone, in his Commentaries4, referred to human life as "the immediate gift of God, a right inherent by nature in every individual". Many people who now respect the same value, do so upon different grounds. However, in this context, the concept of value is ethical, not economic. It does not depend upon the benefits, tangible or intangible, that some children bestow upon their parents. It may be assumed that most children enrich the lives of their parents. But, in the eyes of the law, the life of a troublesome child is as valuable as that of any other; and a sick child is of no less worth than one who is healthy and strong. The value of human life, which is universal and beyond measurement, is not to be confused with the joys of parenthood, which are distributed unevenly. The fact that the present problem involves human reproduction, and the parent-child relationship, is significant; but not because it introduces an ethical dimension that forecloses debate. The problem to be addressed is legal. In any event, it may be doubted that theology provides the answer to a financial dispute, between a provider of sterilisation services and aggrieved patients, concerning the extent of the damages to be awarded on account of the birth of a child. 2 Tame v New South Wales (2002) 76 ALJR 1348 at 1351 [6]; 191 ALR 449 at 452. Feldthusen, Economic Negligence, 4th ed (2000) at 1, 10-11. 4 Commentaries on the Laws of England (1765), Bk I at 125. There is another consideration which might influence the intuitive response of some people, but which also is legally irrelevant. Whatever the principle that determines the answer to the question posed above, it applies regardless of the financial circumstances of the parents. The common law does not permit courts to impose a means test upon plaintiffs. Wealthy parents, who might reasonably be expected to spend more on bringing up their children, may have a larger claim than poor parents, to whom the birth of an unintended child might cause comparatively greater financial hardship. This would be so simply because a tortfeasor takes a victim as he or she is found. In the present case, McMurdo P, in the Court of Appeal, made the pertinent observation that neither side invited the court to take account of the social security benefits, which may or may not be means tested, to which parents are entitled in various circumstances. It is accepted as relevant that the social context in which this issue is to be resolved is that of a secular society, in which attitudes towards control over human reproduction have changed. It is also to be noted that modern governments accept a responsibility to make welfare arrangements for the benefit of supporting parents. The argument for the appellants, and some of the reasoning in McFarlane v Tayside Health Board5, points to an apparent incongruity. To say that, as a result of the birth of an unintended child, the parents have an extra mouth to feed, is true. But it is a small part of the truth. Except for people who live at the most basic level of subsistence, it is an obviously incomplete description of the consequences of parenthood. It is incomplete even as a description of the financial consequences. It is not difficult to think of cases in which the birth of a child, and the formation of a parent-child relationship, could have serious effects upon the future earning capacity of a mother, or a father. There are parents for whom the cost of feeding and maintaining an unintended child would be of minor importance compared to other financial consequences. Furthermore, the financial consequences of the birth of a child may extend beyond those which directly affect the parents. The child's siblings, for example, might be affected; in some cases, substantially. Their prospects of inheritance may be diminished. Or their parents may have less money available to provide them with financial assistance. The incongruity is said to lie in selecting, out of the lifelong, and manifold, consequences of the birth of a child, a few particular financial incidents of the parent-child relationship. As the point was expressed in argument in McFarlane6, the claim focuses only on one aspect of the existence of a child, namely, the child's financial needs until adulthood, and involves a partial and [2000] 2 AC 59 at 62. selective approach to the results of the child's birth and existence. Whether the law permits, and how it deals with, such selectivity is an issue to be addressed. Whatever be the correct response to that issue, it cannot be disposed of as though the dispute in the present case concerns an item of consequential pecuniary loss incurred, or to be incurred, by a plaintiff suing for damages for personal injury7. If that were not otherwise clear, it is made so by the role of Mr Melchior. Only by overlooking the form of the claim and of the order that was made, by disregarding Mr Melchior altogether, and by treating reproduction as a form of personal injury to Mrs Melchior, could the issue be so regarded. That is not the way the case was dealt with by the trial judge, or any member of the Court of Appeal of Queensland. This Court must deal with the claim that was made, and the judgment that is under appeal. Mr Melchior cannot be ignored as a faintly embarrassing irrelevancy. His role is one of the defining features of the claim as it was presented. It was a joint claim, and joint damages were awarded. The facts and the proceedings The issue in this Court is narrower than the issues that arose for determination by the trial judge or the Court of Appeal. Mr and Mrs Melchior married in 1984, when Mrs Melchior was aged 32. They had a child in 1985, and another in 1988. In 1991, they agreed to have no more children. Mrs Melchior explained in her evidence that they had two healthy children, and were quite happy with the size of their family. She did not wish to continue taking oral contraceptives. Her health was good. The couple had planned their finances around bringing up two children. Mr Melchior had a medical condition that caused him some concern about its possible transmission to a male child, but that concern turned out to be misplaced. It was a factor in his agreeing to some form of sterilisation, but, when it came to the point, according to Mrs Melchior, he "kept on procrastinating". She decided to do something about it herself. She consulted a general practitioner, who referred her to In 1992, Dr Cattanach recommended, and subsequently performed, a tubal ligation. Although it was claimed at trial that he did so negligently, that claim was rejected. The finding of negligence made by the trial judge, and upheld by the Court of Appeal, rested on a different basis. The trial judge found that, when Mrs Melchior first consulted Dr Cattanach, she told him that, when she was 15 years old, her right ovary and her right fallopian tube had been removed. When Dr Cattanach performed the tubal ligation, what he saw appeared consistent with that history. Accordingly, he attached a clip only to the left cf Luntz, Assessment of Damages for Personal Injury and Death, 4th ed (2002), fallopian tube. In 1996, at the age of 44, Mrs Melchior discovered that she was pregnant. In 1997, she gave birth to a son, Jordan. It turned out that, contrary to her belief, her right fallopian tube had not been removed. The trial judge found that, by reason of certain aspects of her condition, it was not negligent of the doctor to have failed to observe that at the time of the sterilisation procedure. The finding of negligence was based upon a conclusion that Dr Cattanach had too readily and uncritically accepted his patient's assertion that her right fallopian tube had been removed, that he should have advised her to have that specifically investigated, and that he should have warned her that, if she was wrong about that, there was a risk that she might conceive. The case was decided as one of negligent advice and failure to warn. There was evidence as to the financial circumstances of the couple. Mr Melchior is a freight operations agent. At the time of the hearing, his weekly pay, after tax, was about $800. Mrs Melchior had engaged in various forms of part-time employment at periods during her marriage but, as from December 1997, she worked full-time, without salary, in the family home. The trial judge, Holmes J, had before her three distinct claims for damages. This appeal is concerned only with the third. The first was a claim by Mrs Melchior for damages relating to the pregnancy and birth. Those damages were assessed and allowed at $103,672.39. They included compensation for pain and suffering, and loss of the amenities of life, associated with pregnancy and childbirth, the loss of some part-time earnings, the loss of capacity to undertake future employment resulting from a thrombosis associated with the pregnancy, and various expenses, including the cost of household care, and medical and pharmaceutical costs. The second claim was by Mr Melchior for loss of consortium as a result of his wife's pregnancy and childbirth. This claim was allowed, and, like the first claim, it is not the subject of the present appeal. However, because of one aspect of the way in which the trial judge assessed the claim, it is worth noting what she said about it: "While recognising the toll which the events must have taken on the marriage, it has not in this State been the practice to make substantial awards for loss of consortium. In any event, Mr Melchior retains the benefit of his wife's company and she is not significantly disabled. Although the first three years of a child's life can impose considerable strain on any household, and in the circumstances of this case must have made matters very difficult, there is every probability that life will improve as Jordan grows older. Indeed, this is an area in which some deference may be paid to the 'blessing' argument; it is clear from Mr Melchior's evidence that Jordan is now the source of considerable gratification to him, and it is possible that he will prove to be a source of mutual joy and a strength to the Melchiors' relationship in years to come. In the circumstances of this case I do not consider a large award is warranted. I allow $3,000.00 in this regard." The "'blessing' argument", to which her Honour referred, was an argument, given weight by some members of the House of Lords in McFarlane, that, in the sight of the law, a child is a blessing as well as a burden, and that it "is morally offensive to regard a normal, healthy baby as more trouble and expense than it is worth"8. Holmes J's response to that consideration was to make some reduction in Mr Melchior's claim for loss of consortium. It was treated as irrelevant to the third claim, which is the subject of the present appeal. Dr Cattanach and the State of Queensland appealed to the Court of Appeal of the Supreme Court of Queensland. By majority, (McMurdo P and Davies JA, Thomas JA dissenting) the appeal was dismissed9. An application for special leave to appeal to this Court was made. Gaudron and Kirby JJ, upon terms as to costs, made a grant of special leave "limited to the question of damages for raising and maintaining the child". The claim for the costs of raising and maintaining the child Before coming to a consideration of the legal issues involved, it is necessary to refer to the nature, and some of the incidents, of the third claim. It was a joint claim by Mr and Mrs Melchior, and resulted in an award of damages to them jointly in the sum of $105,249.33. The claim was particularised in the Statement of Claim by a contention that the "plaintiffs will jointly incur expenses [associated] with rearing Jordan". Details of the claim were provided through the evidence of Mr Melchior, who gave the following answer to a question asked by his counsel: "Kerry hasn't been working for a number of years, so is it the case that the family has to be housed, clothed, fed, educated and entertained out of [your] income? -- Everything comes out of that income. There is no other." The costs with which this Court is concerned, and which were recovered from the appellants by way of an award of damages, are costs that were, or will be, met out of Mr Melchior's income. In the Court of Appeal, McMurdo P and Thomas JA described the third claim as a claim for pure economic loss and Davies JA said it should be decided according to the principles applied by this Court in Perre v Apand Pty Ltd10, a case concerned with pure economic loss. In this respect, having regard to the role of Mr Melchior, the Court of Appeal was 8 McFarlane v Tayside Health Board [2000] 2 AC 59 at 114. [2001] QCA 246. 10 (1999) 198 CLR 180. plainly correct. From his point of view, how could the claim be anything other than a claim for pure economic loss? And if it were merely a claim for loss consequential upon personal injury to Mrs Melchior, what was the court doing making an award of damages in favour of Mr Melchior? Other cases may arise, concerning the consequences of negligent provision of sterilisation or like services, in which the claims may be framed differently, and different legal considerations may arise. We are not called upon to answer all the questions that may arise in those cases; and it is not in keeping with the method by which the common law has developed to seek to do so. Mr Melchior, for the purposes of his evidence, prepared a detailed schedule setting out the anticipated costs of raising Jordan until the age of 18. Holmes J accepted the schedule as "a reasonable representation of the costs of raising a child". For the early years, about half of the estimated expenditure was on food. In later years, that proportion dropped to about one-third. Other items included clothing, medical and pharmaceutical expenses, child care, travelling to and from school, birthday and Christmas presents each year, and entertainment. If, in principle, it is possible to recover such costs by way of damages for negligence in the provision of sterilisation services, then it is not easy to see why the claim should be limited to the first 18 years of the life of the unintended child. It is a feature of affluent societies that children remain financially dependent upon their parents for longer periods. Many children are supported by their parents well beyond the age of 18. The claim in the present case did not cut out at the age when attendance at school was no longer compulsory (in Queensland, 15). Why it did not continue into a period of tertiary education is not clear. It was not restricted to items which Mr and Mrs Melchior were legally obliged to provide. It included items of reasonable discretionary expenditure. By the standards of many parents, the expected expenditure on the cost of education was strikingly low. This Court is not asked to decide whether the amounts which Mr and Mrs Melchior plan to spend on food, or education, or presents, for their son are reasonable. However, there is a dispute as to whether the law allows them to pass the cost on to Dr Cattanach, and the State of Queensland. The issue to be determined is whether the costs of feeding, clothing, educating, maintaining and entertaining the child are damages for which the appellants are liable at the suit of the respondents. The modesty of a claim as presented in a particular case might lead a court to overlook the implications, for other cases, of the acceptance of a claim of that character. However, this is a financial claim, and an understanding of its details is necessary for a decision upon the question of principle which it raises. Actionable damage In order to succeed in their claim, the respondents must show that they have jointly suffered damage (which is the gist of an action in negligence), and that the appellants owed them a duty of care to avoid causing damage of that kind. In Fleming, The Law of Torts11, it is said: "What qualifies as actionable damage is a question of policy largely defined by the 'duty' rules considered in the preceding chapter. The reason is that the concept is relative, dependent on the circumstances of the occasion. For example, while physical injury from external trauma is categorically included, liability for mental distress is more hedged ... Property damage is widely conceived, embracing any interference which diminishes the value of the object, like contamination, without necessarily amounting to structural damage. Purely economic loss, however, is actionable only under controlled conditions." In an action for the tort of negligence, there is a distinction between the "damage" said to have been suffered by a plaintiff, and the "damages" awarded as compensation for each item or aspect of that damage, usually as a single sum12. Damage is "loss or harm occurring in fact"13. Such loss or harm will involve an interference with a right or interest recognised as capable of protection by law. Description of a right or interest said to have been interfered with may sometimes be tendentious. It might be said, for example, that Mr and Mrs Melchior have a "right to choose" the size of their family. It is more accurate to say that they have the freedom to make such a choice. If a right of choice exists in relation to some matter, then presumably anyone who causes the person with such a right to do anything he or she does not choose to do inflicts a form of legal harm. That is a loose concept. Similarly, assertions of interference with financial interests may require closer analysis. Not every form of unexpected or unintended expenditure results in financial loss or harm. The lack of precision in the concept of financial or economic loss was discussed in Perre v Apand Pty Ltd14. There, the example was given of a child whose parents are killed as a result of the negligent conduct of another. Claims for compensation in such cases are governed and controlled by statute15. However, the need for such statutory provisions, as was recited in the preamble 11 9th ed (1998) at 216. 12 Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 132 CLR 323; Mahony v J Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 526-527. 13 Crofter Hand Woven Harris Tweed Co v Veitch [1942] AC 435 at 442 per Viscount 14 (1999) 198 CLR 180 at 193 [6]. 15 eg Compensation to Relatives Act 1897 (NSW). to Lord Campbell's Act16, stemmed from the rule in Baker v Bolton17 that, in a civil court, the death of a human being could not be complained of as an injury. The historical explanation of that rule is controversial18. Even so, a moment's reflection upon the forms of disadvantage that might result to one person from the death of another reveals the difficulty of identifying and measuring all the economic consequences of death. In the present case, we are concerned with the obverse case. Medical negligence resulted in human reproduction and a parent- child relationship, from which flowed the obligations reflected in the damages that were awarded at trial. Attention is then concentrated upon some of the financial consequences of that relationship. In the Inner House of the Court of Session in McFarlane, the Lord Justice Clerk, Lord Cullen, distinguished between the damage and the consequences flowing from it19, and described the costs of raising and maintaining the unintended child as falling into the second category20. With respect, such a distinction is sound, and necessary. His Lordship identified the damage as occurring at conception21. For my part, I would regard as an integral aspect of the damage, said to be actionable damage, the parent-child relationship. The parent-child relationship is the immediate cause of the anticipated expenditure which the respondents seek to recover by way of damages. If they have suffered actionable damage, it is because of the creation of that relationship and the responsibilities it entails. Mr and Mrs Melchior have the legal status of guardians and custodians of their son, subject to any order of a court, until he attains the age of 18 years22. Their responsibilities extend to the physical, mental, moral, educational and general welfare of the child23. The Family Law 16 9 & 10 Vict c 93. 17 (1808) 1 Camp 493 [170 ER 1033]. 18 Malone, "The Genesis of Wrongful Death", (1965) 17 Stanford Law Review 1043; Admiralty Commissioners v SS Amerika [1917] AC 38; Woolworths Ltd v Crotty (1942) 66 CLR 603. 19 1998 SLT 307 at 310. 20 1998 SLT 307 at 310. 21 1998 SLT 307 at 310. 22 Family Law Act 1975 (Cth), s 61C(1). 23 Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 278 per Brennan J. Act 1975 (Cth) recognises (s 60B) that children have the right to be cared for by both their parents, regardless of whether the parents are married, and (s 66C) that the parents of a child have the primary duty to maintain the child. Similar provision is made in the Child Support (Assessment) Act 1989 (Cth) (s 3). This, it appears to me, is the significance of the topic of adoption. It was not contended in this case, on behalf of the appellants, that the fact that Mr and Mrs Melchior did not have their child adopted by another couple breaks the causal relationship between the medical negligence and the costs of raising and maintaining the child. However, the possibility of adoption, even if it is purely theoretical, serves to indicate the significance of the parent-child relationship as an element of the damage of which the respondents complain. It was the existence, and continuation, of that relationship that formed the vital link between the potential interference with their financial interests resulting from conception and the actuality of such interference following birth. That relationship is the key to an accurate understanding of the damage they claim to have suffered. However, as an examination of the details reveals, the claim for damages is not limited to expenses that will be incurred as a result of legal obligation. It extends to expenses that will be incurred as a matter of moral obligation, and to others that will be incurred as a matter of parental discretion. The relationship will last for the joint lives of the parties to it, although the legal (as distinct from the natural and moral) incidents of the relationship will probably come to an end sooner. No attempt has been made in argument, or in the approach taken by the Supreme Court of Queensland, to confine the respondents' claim, as a matter of principle, to one that reflects bare legal obligations. At the same time, no attempt has been made to pursue to its logical conclusion the question of the full extent of the claims which people in the position of the respondents are entitled to make. If the appellants are said to be subject to an indeterminate liability, that is important to the question of the existence of their duty of care. The coming into existence of the parent-child relationship is critical to the actionable damage of which the respondents complain. That relationship has multiple aspects and consequences; some economic, and some non-economic; some beneficial to the parents, and some detrimental. The case for the respondents treats that relationship as a source of economic loss or harm for which the law of negligence will make the appellants liable in damages. That the incurring of the financial costs the subject of the respondents' claim was a foreseeable consequence of the medical negligence found to have occurred is not in question. However, one thing is clear. There is no general rule that one person owes to another a duty to take care not to cause reasonably foreseeable financial harm, even assuming that what is here involved is properly so described24. The reasons for that were discussed in Perre v Apand Pty Ltd25. The burden that would be imposed upon citizens by such a rule would be intolerable. In Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad", "The common law has exhibited a marked reluctance to allow recovery of pure economic damage sustained as a result of negligence. Before Hedley Byrne & Co Ltd v Heller & Partners Ltd in the long line of cases that commenced with Cattle v Stockton Waterworks Co no plaintiff succeeded in recovering economic damage which was not consequential upon physical damage ... It was otherwise if the plaintiff had a proprietary or possessory interest in property: in that event he could recover consequential financial loss". Cattle v Stockton Waterworks27 was treated by learned commentators as an early example of the law's reluctance to recognise a duty to take care to avoid causing purely pecuniary loss. For example, Professor Fleming, in 1977, treated the case as falling within the category of "relational interests" in respect of which, he said, opposition to recovery for pecuniary loss was most ingrained28. Negligent interference with profitable contractual expectations was given as an example29. The term "relational loss" has been used in respect of cases where "[t]he plaintiff suffers economic loss because of some relationship which exists between the plaintiff and the injured third party"30. Here we are not concerned with an injured third party, but with plaintiffs claiming to be injured jointly, their economic loss flowing from the coming into existence of a relationship by reason of which they incurred financial and other responsibilities. It is the very existence of the third party which, by reason of the relationship to him of the plaintiffs, is said to give rise to loss or harm. It might be added that, although 24 Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529 at 25 (1999) 198 CLR 180 at 192-193 [5]-[7]. 26 (1976) 136 CLR 529 at 584-585. 27 (1875) LR 10 QB 453. 28 Fleming, The Law of Torts, 5th ed (1977) at 169-171. 29 See also Candlewood Navigation Corporation Ltd v Mitsui OSK Lines Ltd [1986] 30 Feldthusen, Economic Negligence, 4th ed (2000) at 193-194. See also Cane, Tort Law and Economic Interests (1996) at 454. Mr Melchior's claim for loss of consortium was relational in nature, such claims are now anomalous, and bear a proprietorial character inconsistent with current ideas as to the relationship between husband and wife31. Holmes J, when assessing compensation for injury to the marital relationship, allowed some set- off by reference to the parental relationship. This passed unremarked in the Court of Appeal, presumably because no point was made about it in argument. Since, as all the members of the Court of Appeal recognised, we are not here dealing with a claim for financial loss consequential upon personal injury to a plaintiff, or damage to a plaintiff's property, but with a claim for recovery of pure economic loss arising out of a relationship, then it can scarcely be asserted with any degree of plausibility that legal principle or authority leads inexorably to the result for which the respondents contend. On the contrary, as Lord Steyn observed in McFarlane32, we are concerned with a proposal for a new head of liability for economic loss which must be justified by cogent reasons. The respondents, in addition to establishing that they have incurred what the law recognises as loss or harm, must show that the duty of care which Dr Cattanach owed them extended to a duty of care to protect them from that kind of loss or harm. In Sutherland Shire Council v Heyman33 Brennan J pointed out that "a postulated duty of care must be stated in reference to the kind of damage that a plaintiff has suffered". He went on to say: "The question is always whether the defendant was under a duty to avoid or prevent that damage, but the actual nature of the damage suffered is relevant to the existence and extent of any duty to avoid or prevent it." In deciding the related questions whether the creation of a parent-child relationship involves actionable damage in the form of economic loss, and whether the law imposed a duty of care on Dr Cattanach to avoid or prevent that damage, it is appropriate to measure the present case against the reasons of policy for the law's reluctance to impose liability of this kind. These were discussed in Perre v Apand Pty Ltd34. A specific example of that caution, in which the policy reasons are examined, is the decision of the House of Lords in Caparo Industries Plc v Dickman35, where it was held that the liability of auditors for negligent mis- statements in certifying corporate accounts did not extend to the economic loss 31 See Brett, "Consortium and Servitium: A History and Some Proposals", (1955) 29 Australian Law Journal 321, 389 and 428. 32 [2000] 2 AC 59 at 79. 33 (1985) 157 CLR 424 at 487. 34 (1999) 198 CLR 180 at 192-193 [5]-[6]. suffered by investors who bought shares in the company whose accounts were certified. The House of Lords drew a line at the company and its members, and denied a duty of care to protect the financial interests of members of the public who might contemplate investing in the company. In the same way, in McFarlane, when addressing the present problem, the House of Lords drew a line at the birth of the child, allowing damages which included matters associated with the birth, but denying damages thereafter. The first reason for caution is the potential indeterminacy of the financial consequences of a person's acts or omissions, and the need for "some intelligible limits to keep the law of negligence within the bounds of common sense and practicality"36. In this context, indeterminacy does not mean magnitude. By focusing on the parent-child relationship, it is possible to draw a line short of adverse effects upon siblings and others. But even if account is taken only of foreseeable adverse financial consequences to the parents, there is no reason to suppose they will cease when the child turns 18, or to restrict them to those that form the subject of the present claim. If the cost of birthday and Christmas presents is to be included, why not, in an appropriate case, the expense associated with a wedding? If the cost of schooling is included, why not, in an appropriate case, the cost of tertiary education? Furthermore, as was noted earlier, the adverse financial implications of the assumption of parental responsibility might extend beyond the incurring of additional items of expenditure. What basis in principle is there for distinguishing between child-rearing costs and adverse effects on career prospects, which, in the case of some parents, might far exceed the costs of raising and maintaining a child? Reference has already been made to another reason for caution in this area, which is the lack of precision in the concept of economic loss, as distinct from injury to person or property, which is usually readily identifiable. What kinds of detriment or disadvantage flowing from the parent-child relationship would be regarded as financial loss or harm? Parents might go through their lives making financial and other arrangements, and adjusting their circumstances, to accommodate the needs or reasonable requirements of their children. To what extent, and in what circumstances, would this count as economic harm? So far, attention has been confined to financially negative aspects of the parent-child relationship. But why should that be so, especially if we are dealing with a claim that comprehends moral and natural obligations, as well as legal obligations? There was a time when the law imposed obligations on children to care for their parents. Blackstone wrote37: 36 Caparo Industries Plc v Dickman [1990] 2 AC 605 at 633 per Lord Oliver of Aylmerton. 37 Blackstone, Commentaries on the Laws of England (1765), Bk I at 441. "The duties of children to their parents arise from a principle of natural justice and retribution. For to those, who gave us existence, we naturally owe subjection and obedience during our minority, and honour and reverance ever after; they, who protected the weakness of our infancy, are entitled to our protection in the infirmity of their age; they who by sustenance and education have enabled their offspring to prosper, ought in return to be supported by that offspring, in case they stand in need of assistance. Upon this principle proceed all the duties of children to their parents, which are enjoined by positive laws." In modern society, legal obligations of children to support their parents have largely disappeared38. But with an ageing population, and increasing pressure on welfare resources, the financial aspects of caring for parents are likely to become of more practical concern. Unless attention is confined to strict legal obligations, (and, if it were, the respondents' claim would need substantial revision), then what justification is there for ignoring the natural and moral obligations owed by children to parents, and the financial consequences that may entail? Why should we focus exclusively on child care and ignore care of the aged? It is difficult to justify treating a relationship as damage, and then measuring the consequential harm by reference only to those aspects of the relationship that are easy to count, and that arise sooner rather than later. Although our society does not regard children as economic assets, it does not follow that they should be treated as unmitigated financial burdens. Another reason for the law's hesitancy in this area is a problem of legal coherence. An example of such a problem, in a different context, resulting in the denial of a duty of care, is to be found in the recent decision of this Court in Sullivan v Moody39. The matter was referred to by Lord Steyn in McFarlane40. The common law does not allow a person to treat his or her own birth as actionable damage41, just as it does not allow the death of a human being to be complained of as an injury. Where it is the parent-child relationship that is in question, the law imposes obligations, in support and protection of the child, which are difficult to reconcile with a recognition of the relationship as damage. The Queensland Criminal Code contains provisions relating to abortion (ss 224, 38 In the times of the Poor Laws, entitlement to relief was related to satisfaction by children of their obligations to their parents. See Holdsworth, A History of English Law, vol 4, 2nd ed (1937) at 156-157, 387-402. 39 (2001) 207 CLR 562 at 581-582 [55]-[60]. 40 [2000] 2 AC 59 at 83. 41 McKay v Essex Area Health Authority [1982] QB 1166. 225, 226), infanticide (ss 291, 294, 313), concealing the birth of a child (s 314), failing to supply the necessaries of life (s 324), endangering the life of a child by abandonment or exposure (s 326), and cruelty to children (s 364). A child is not a commodity that can be sold, or otherwise disposed of, in order to mitigate hardship to a parent. The legal incidents of the parent-child relationship can only lawfully be avoided by adoption. The various ways in which common law and statute protect the child, by imposing and reinforcing parental obligations, reflect international norms. Article 23 of the International Covenant on Civil and Political Rights 1966 declares that "[t]he family is the natural and fundamental group unit of society", and Art 24 provides that every child shall have the right to such measures of protection as are required by the child's status as a minor, on the part of the child's family, society and the State. Article 10 of the International Covenant on Economic, Social and Cultural Rights 1966 requires that "[t]he widest possible protection and assistance should be accorded to the family, which is the natural and fundamental group unit of society, particularly for its establishment and while it is responsible for the care and education of dependent children". Article 18 of the Convention on the Rights of the Child 1989 refers to "the principle that both parents have common responsibilities for the upbringing and development of the child". The recognition of the family as the natural and fundamental group unit of society, which is repeatedly expressed in international instruments42, in conjunction with declarations of the need to provide for the care and protection of children, is not easy to reconcile with the idea of the parent- child relationship as something the law will regard as an element of actionable damage. The next matter to be considered is what was earlier described as the selectivity of the respondents' approach to the incidents of the parent-child relationship created in consequence of the negligence of which they complain. The object of an award of damages in a case such as the present is not to punish a wrongdoer; it is to restore the plaintiffs, as nearly as possible as can be done by an award of financial compensation, to the position in which they would have been but for the wrongdoing43. It is to effect "reasonable restitution for the wrong done"44. Is that object achieved by the award of damages made in favour 42 eg American Declaration of the Rights and Duties of Man 1948, Art VI; American Convention on Human Rights 1969, Art 17; Additional Protocol to the American Convention on Human Rights in the Area of Economic, Social and Cultural Rights 1988, Art 15; Cairo Declaration on Human Rights in Islam 1990, Art 5(a); Arab Charter on Human Rights 1994, Art 38(a). 43 Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39 per Lord Blackburn, cited by Lord Clyde in McFarlane v Tayside Health Board [2000] 2 AC 59 at 104- 44 McFarlane v Tayside Health Board [2000] 2 AC 59 at 105 per Lord Clyde. of the respondents at trial? They have a loving relationship with a healthy child. It does not involve any special financial or other responsibilities that might exist if, for example, the child had an unusual and financially burdensome need for care. The financial obligations which the respondents have incurred, legal and moral, are of the same order as those involved in any ordinary parent-child relationship. They must feed the child. Of course, he remains their child. Does reasonable restitution involve obliging Dr Cattanach to pay for the food? The Christmas and birthday presents, for which they claimed and were awarded damages, will presumably be received with gratitude, and perhaps, at some future time, reciprocated. Does reasonable restitution require Dr Cattanach to pay for them? The entertainment they will provide the child will, no doubt, be enjoyed. Should Dr Cattanach have to pay for it? Some of those items would be unremarkable in a claim, in the Family Court, by one parent against another, for child maintenance. But when they appear in a schedule of damages in tort, they prompt questions as to the nature of the entire claim. When Mr and Mrs Melchior have spent the money itemised in their claim on food, clothing, education, maintenance and entertainment, what will they have to show for it? An adult son. No allowance has been, or can be, made for that. This is a question that has consistently vexed courts considering this problem. An answer that has been given is that, in awarding damages in tort, it may be appropriate to set off like against like, but if a financial loss is suffered, it is neither necessary nor appropriate to set off a non-financial benefit. In this connection, the exemplar, referred to in argument in the Scottish courts in McFarlane, and in the judgments in that case45, is the coal miner who, having been injured, and having suffered the loss of his future earning capacity, does not have his damages reduced to allow for the benefit of a future life of unemployed leisure in the open air. With respect to those who think otherwise, that example seems to me to re-state, rather than to answer, the present problem. As with many suggested analogies, the real question is whether it is analogous. The injured miner's claim for loss of earning capacity is for financial loss consequent upon physical harm, a well recognised form of actionable damage. He will be compensated for the consequences of that harm, including financial loss in the form of loss of earning capacity. His loss of earning capacity, a recognised head of damages, is not mitigated by his enforced leisure. Here, however, the question is whether human reproduction and the creation of a parent-child relationship is actionable damage. It is disputed that, in answering that question, some of the detrimental financial consequences of that relationship can be selected, and all the other consequences, financial and non-financial, ignored. One of the grounds upon which "wrongful life" claims by children have been rejected is the impossibility of making a rational or fair assessment of 45 1998 SLT 307 at 316. damages46. A similar difficulty is encountered in awarding damages for loss of expectation of life47. The indeterminate nature of the financial consequences, beneficial and detrimental, of the parent-child relationship has already been noted. In deciding whether, in the contemplation of the law, the creation of that relationship is actionable damage, it is material to note that it is unlikely that the parties to the relationship, or the community, would regard it as being primarily financial in nature. It is a human relationship, regarded by domestic law and by international standards as fundamental to society. To seek to assign an economic value to the relationship, either positive or negative, in the ordinary case, is neither reasonable nor possible. Conclusion The claim under consideration displays all the features that have contributed to the law's reluctance to impose a duty of care to avoid causing economic loss. The liability sought to be imposed is indeterminate. It is difficult to relate coherently to other rules of common law and statute. It is based upon a concept of financial harm that is imprecise; an imprecision that cannot be concealed by an arbitrary limitation of a particular claim in subject matter or time. It is incapable of rational or fair assessment. Furthermore, it involves treating, as actionable damage, and as a matter to be regarded in exclusively financial terms, the creation of a human relationship that is socially fundamental. The accepted approach in this country is that "the law should develop novel categories of negligence incrementally and by analogy with established categories"48. The recognition of the present claim goes beyond that, and is unwarranted. The appeal should be allowed. The orders made by the Court of Appeal (except as to costs) should be set aside. The appellants' appeal to that Court should be allowed in part. The judgment of Holmes J should be varied by setting aside that part which orders the appellants to pay the respondents the sum of 46 McKay v Essex Area Health Authority [1982] QB 1166. 47 See eg Skelton v Collins (1966) 115 CLR 94 at 130 per Windeyer J. 48 Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 481 per Brennan J. McHugh 41 McHUGH AND GUMMOW JJ. By majority (McMurdo P and Davies JA; Thomas JA dissenting), the Queensland Court of Appeal49 dismissed an appeal against a judgment in the Supreme Court of Queensland (Holmes J)50 awarding damages against the first and second defendants, Dr Cattanach and the State of Queensland. Dr Cattanach is a specialist obstetrician and gynaecologist. The plaintiffs, Mr and Mrs Melchior, are husband and wife. In this Court, they are the respondents and Dr Cattanach and the State are the appellants. It was admitted on the pleadings that the State was the statutory successor to the Brisbane South Regional Health Authority, which had operated the Redland Hospital. Dr Cattanach was a consultant obstetrician and gynaecologist the Redland Hospital where, on 13 March 1992, he performed on Mrs Melchior a sterilisation procedure. Thereafter, in 1997, Mrs Melchior gave birth to the couple's third child, a son. At the time of the trial, the child was a healthy, active three year old. Mr and Mrs Melchior had married in 1984 and, prior to the sterilisation procedure, there were two children of the marriage, daughters each born by Caesarean section in 1985 and 1988 respectively. The primary judge described as follows the personal circumstances of Mr and Mrs Melchior before Mrs Melchior was referred to Dr Cattanach by her general practitioner: "They were satisfied with a family of two, and in 1991 discussed together the prospect of taking steps to ensure that they would have no more children. They had planned their finances around bringing up two children, and Mrs Melchior did not wish to continue using oral contraceptives. Mr Melchior said that he was also influenced by the fact that he suffered from Charcot-Marie-Tooth syndrome, a disease causing muscular atrophy in his feet and legs. It was his understanding that while his daughters were unlikely to inherit the condition, a male child would be at risk. (He was in fact wrong on the latter aspect.) He was content, therefore to limit his family to the two daughters he had." In 1967, when Mrs Melchior was aged 15, she underwent an appendectomy. The surgical notes indicated that, in the course of the operation, her right ovary was found to be filled with a blood clot and was removed; there was no abnormality in the left ovary or either fallopian tube and those organs were left intact. Mrs Melchior had been told by her mother that an ovary had been removed. 49 [2001] QCA 246. 50 (2001) Aust Torts Rep ¶81-597. McHugh Mrs Melchior and her husband brought their action in both tort and contract. There appears to have been no basis for any action in contract by Mr Melchior. The trial judge found that, whilst Mrs Melchior's initial consultation with Dr Cattanach had been as a private patient, she had been admitted to hospital for the sterilisation surgery as a public patient. It was not suggested that at that latter stage there had existed any contractual relationship between Dr Cattanach and either plaintiff. Accordingly, the trial judge determined the plaintiffs' claims as issues in tort. The State admitted its vicarious liability for any negligence established against Dr Cattanach. Holmes J found that Dr Cattanach was negligent after the sterilisation procedure in failing to inform Mrs Melchior of various matters. The first was that the oral history she gave of the removal of the right fallopian tube in 1967 had not been positively confirmed during the sterilisation procedure. The second was that, if the fallopian tube were present, there was a ten-fold increase in the risk of her falling pregnant than was usual after the performance of the sterilisation procedure. The third was that an available procedure, an hysterosalpingogram, was likely to disclose the existence of a functioning fallopian tube. The Court of Appeal upheld the finding of negligence against Dr Cattanach and the conclusion that his negligence was the probable cause of The award of damages had three components. The first was an award in favour of Mrs Melchior of $103,672.39 consisting of damages for her pain and suffering in respect of the pregnancy and birth, the effect on her health (including a supervening depression), lost earning capacity (past and future), various hospital, medical, pharmaceutical and travel expenses (both past and future), the cost of maternity clothes and damages described as Griffiths v Kerkemeyer51 damages for care that she might need. The second was an award to Mr Melchior of $3,000 for loss of consortium in accordance with the remedy allowed in Toohey v Hollier52 for all practical, domestic disadvantages suffered by a husband in consequence of the impaired health or bodily condition of his wife. The third was an award in favour of Mr and Mrs Melchior for $105,249.33 for the past and future costs associated with raising and maintaining their child until he reaches the age of 18. 51 (1977) 139 CLR 161. 52 (1955) 92 CLR 618. McHugh No appeal was taken to the Court of Appeal respecting the first and second categories of damages. However, with respect to the third category, Dr Cattanach and the State contended that Holmes J had erred in law in allowing any costs for the rearing of the child and that her Honour had erred in failing to apply the decision of the House of Lords in McFarlane v Tayside Health Board53. Davies JA, who, with McMurdo P, constituted the majority, stated the issue thus arising as follows: "Should the parents of a healthy child, born in consequence either of a negligently performed sterilization operation or of negligent advice or of a negligent omission to advise as to the consequences of that operation be entitled to recover from the negligent doctor the costs of reasonable maintenance of the child during his or her minority?" The majority of the Court of Appeal answered that question in the affirmative and dismissed the appeal with costs. Upon an undertaking by Dr Cattanach and the State that they would not seek to disturb any costs orders made in the courts below and would pay Mr and Mrs Melchior's costs of an appeal to this Court, this Court granted special leave limited to one ground. This is whether the Court of Appeal erred in holding that damages were recoverable by Mr and Mrs Melchior for the reasonable costs of raising and maintaining their child. Thus, if it be held in this Court that the Court of Appeal was not in error, the appeal fails, and no question arises respecting quantum or the manner in which it was determined. The appellants would be liable under ordinary principles for the foreseeable consequences of Dr Cattanach's negligence. There was no finding of contributory negligence. Questions of remoteness or insufficient causal connection between the breach of duty by Dr Cattanach and the claimed loss did not arise. Nor was reliance placed upon any supposed illegality or limitation or objection in the policy of the law respecting the performance of sterilisation procedures. Further, in the course of argument in this Court, the appellants expressly disavowed any ground of appeal that, rather than an award in favour of both respondents, there should have been an award only in favour of Mrs Melchior, to the exclusion of Mr Melchior. In Rees v Darlington Memorial Hospital NHS Trust54, Robert Walker LJ said of McFarlane that, while their Lordships "disavowed any intention of 54 [2003] QB 20 at 30. McHugh deciding the case on the grounds of public (or social) policy, there is a strong moral element in the basis of the decision". In McFarlane55, Lord Slynn of Hadley said that a doctor undertaking a duty of care in regard to the prevention of pregnancy does not assume responsibility for economic losses imposed on or accepted by parents in bringing up a child. To that, Hale LJ responded in Parkinson v St James and Seacroft University Hospital NHS Trust56: "Given that the doctor clearly does assume some responsibility for preventing conception, it is difficult to understand why he assumes responsibility for some but not all of the clearly foreseeable, indeed highly probable, losses resulting." Against that background of current authority in the United Kingdom, the appellants took another tack in their submissions. The appellants' primary submission to this Court is that there can be no award in damages for the cost of rearing and maintaining a healthy child who would not have been born but for the negligent failure of a gynaecologist to give certain advice. Further, and in the alternative, it is submitted that any such award of damages should be limited in some way, in particular by treating the arrival of the healthy child as a benefit to be set off against the damages. The appellants based these submissions upon the propositions that, as a matter of the policy of the law, the birth of a healthy child is not a legal harm for which damages may be recovered, and that this result would follow whether action was brought in tort or contract. This policy of the law, the appellants submitted, reflects "an underlying value of society in relation to the value of human life". In several of the State jurisdictions in the United States, in decisions upon which the appellants rely, the denial of awards of damages for the expense of raising an unwanted, healthy child has been based upon a public policy against "meddling" with "the concept of life and the stability of the family unit" including apprehended harm to a child upon later learning that the money for its nurture has been provided by damages recovered in a "wrongful birth" action57. 55 [2000] 2 AC 59 at 76. 56 [2002] QB 266 at 289. 57 Wilbur v Kerr 628 SW 2d 568 at 570-571 (1982); Boone v Mullendore 416 So 2d 718 at 721-723 (1982); MA v United States 951 P 2d 851 at 855 (1998). McHugh It can hardly be disputed that, in myriad ways, the law reflects a concern with the value of life and the welfare of infant children. But, against that general background, even in the exercise of the parens patriae jurisdiction, hard choices are to be made rather than broad statements repeated. The matters considered by the Court in Marion's Case58 provide a recent example. It was there held by majority that the Family Court of Australia had jurisdiction to authorise the carrying out of a sterilisation procedure upon the intellectually disabled child in question, but that the joint guardians of the child had no power to act in the matter without a court order59. On the other hand, Brennan J (one of the minority) was of the opinion that neither parents, guardians nor the court had power to authorise the non-therapeutic sterilisation of intellectually disabled children60. Merely to repeat those propositions upon which the appellants rely does not explain why the law should shield or immunise the appellants from what otherwise is a head of damages recoverable in negligence under general and unchallenged principles in respect of the breach of duty by Dr Cattanach. There may be a temptation, yielded to in some of the many cases in other countries to which we were referred in argument, to treat the arrival of the third child of Mr and Mrs Melchior as a "wrongful birth" and thus as the wrong inflicted upon Mr and Mrs Melchior; but this means attention is directed away from the remedies available to the parents in respect of the breach of duty by Dr Cattanach. In Brodie v Singleton Shire Council61, Gaudron, McHugh and Gummow JJ referred to the use of the term "immunity" in various areas of tort law to indicate a protection against action in respect of rights and duties which otherwise exist in the law. In various instances referred to in that passage, including the position of barristers and liability for straying animals, the protection is expressed as the negation of the existence of a duty of care and is founded upon particular views of public policy. Similarly, public policy negates the existence of a duty of care in respect of the negligent acts of a member of the 58 Secretary, Department of Health and Community Services v JWB and SMB (1992) 175 CLR 218. 59 (1992) 175 CLR 218 at 325-326. 60 (1992) 175 CLR 218 at 285. 61 (2001) 206 CLR 512 at 555-556 [94]. McHugh Australian armed forces if "the matters complained of formed part of, or an incident in, active naval or military operations against the enemy"62. The protection contended for in the present case would not operate in that way. The subject of the protection is recovery of a particular head of damages for an admitted breach of duty. But, that limitation notwithstanding, there is, as Callinan J indicates in his reasons at [295], a judicial aversion to the enjoyment of special privilege or advantage in litigation unless strong reason for its retention (as was the issue in Brodie) or creation (the present case) can be demonstrated. In Smith v Jenkins63, Windeyer J observed that "public policy" in relation to the common law of torts is not to be thought of as like that public policy which invalidates contracts and, one might add, certain trusts and conditions attached to voluntary dispositions by will or settlement. In those areas, the starting point has been the favour with which the law has looked upon the right of private contract and the performance of contracts, and upon the freedom of disposition of property, by dispositions inter vivos and testamentary64. Countervailing policies matured by the long course of judicial decision into detailed doctrines. Some (such as the restraint of trade doctrine, the rules against perpetuities, and the rules against contractual restraints upon alienation considered in Hall v Busst65) are based upon economic notions. Other policies protect and maintain the proper relationship between the citizen and the branches of government66. The authorities here include the great case of Egerton v Earl Brownlow67 concerning the importuning of the advisers of the Crown to secure the bestowal of honours by the Crown and the decisions of this Court respecting the "lobbying" of legislators, Ministers and public officers 62 Shaw Savill and Albion Co Ltd v The Commonwealth (1940) 66 CLR 344 at 362 per Dixon J. See also Groves v The Commonwealth (1982) 150 CLR 113 at 117, 122; Mulcahy v Ministry of Defence [1996] QB 732 at 744-746, 750-751. 63 (1970) 119 CLR 397 at 418. 64 See Hill v Van Erp (1997) 188 CLR 159 at 223-224; Corbin on Contracts, Interim Edition, vol 15, §§1375-1376. 65 (1960) 104 CLR 206 at 217-218, 224-225, 245-246. 66 See Farnsworth on Contracts, 2nd ed (1998), vol 2 at 9-10. 67 (1853) 4 HLC 1 [10 ER 359]. McHugh in Wilkinson v Osborne68, Horne v Barber69 and Wood v Little70. Other cases are protective of the authority of the courts. They include the treatment in Brooks v Burns Philp Trustee Co Ltd71 of covenants to oust the jurisdiction of the courts, the reservation identified in Regie National des Usines Renault SA v Zhang72 respecting the maintenance in Australian courts of actions for certain foreign wrongs, and the rule, applied in Hunter v Chief Constable of the West Midlands Police73, that it is against the policy of the law to permit a civil action for damages to be used for a collateral attack on a final decision of a criminal court of competent jurisdiction. Further, the division of opinion between Dixon CJ and Windeyer J on the one hand, and Kitto J on the other, in Church Property Trustees, Diocese of Newcastle v Ebbeck74 as to the tendency of a condition in a will, respecting religious faith, to promote domestic discord between spouses, at bottom concerns the policy of the law respecting family relationships. So does the common law rule that there is no publication for the purposes of the law of defamation when one spouse transmits defamatory matter to the other spouse75. The appellants' submissions would bring this case within that general area respecting family relationships. But several points should be made immediately. First, the general considerations advanced by the appellants have not, as in the contract and disposition of property cases, matured into a coherent body of legal doctrine. No doubt that is not a fatal obstacle. The policy of the law cannot be static. Yet the novelty of the outcome for the present case of the appellants' 68 (1915) 21 CLR 89. 69 (1920) 27 CLR 494. 70 (1921) 29 CLR 564. 71 (1969) 121 CLR 432. 72 (2002) 76 ALJR 551 at 563 [60]; 187 ALR 1 at 17. 74 (1960) 104 CLR 394. See also the remarks of Lord Wilberforce in Blathwayt v Baron Cawley [1976] AC 397 at 425-426. 75 Wennhak v Morgan (1888) 20 QBD 635 at 639 per Manisty J: "[W]ould it be well for us to lay down now that any defamation communicated by a husband to a wife was actionable? To do so might lead to results disastrous to social life". McHugh submissions calls for a more careful scrutiny than would be required where there was a developed body of legal principle directly relevant. Secondly, this is a case in tort. Further consideration of the remarks of Windeyer J in Smith v Jenkins76 is appropriate. His Honour, after speaking of contract, turned to tort, observed that public policy "after all is the bedrock foundation on which the common law of torts stands" and continued77: "Here the question is different. It seems to me a mistake to approach the case by asking whether the plaintiff is precluded by considerations of public policy from asserting a right of action for negligence. The proper inquiry seems to me to be simply: is there for him a right of action? That depends upon whether in the circumstances the law imposed a duty of care; for a right of action and a duty of care are inseparable. The one predicates the other. Duty here does not mean an abstract and general rule of conduct. It is not the duty to God and neighbour of the catechist's question. It is a concept of the law, a duty to a person, which he can enforce by remedy at law. Lord Atkin's famous generalizations need some qualifications and require some exceptions. For instance, negligent misstatements are now actionable, but the duty of care in that field depends, it has been held, not simply on foreseeability of harm but on a special relationship between the parties. If a special relationship be in some cases a prerequisite of a duty of care, it seems to me that in other cases a special relationship can exclude a duty of care." Barwick CJ and Owen J spoke to similar effect78. It is here that the case for the appellants encounters difficulty. Duty, breach and damage are all conceded. The interest of the respondents which the law of negligence protected79 in respect of the negligent misstatement or 76 (1970) 119 CLR 397 at 418. See further Gollan v Nugent (1988) 166 CLR 18 at 46-48, where it was held in respect of an action for trespass to goods and conversion that the law does not deny an owner's right to possess property merely because of an intention to carry on criminal conduct. 77 (1970) 119 CLR 397 at 418. See also Gala v Preston (1991) 172 CLR 243 at 78 (1970) 119 CLR 397 at 400, 425 respectively. 79 Tame v New South Wales (2002) 76 ALJR 1348 at 1377-1378 [168]-[175]; 191 ALR 449 at 489-490; Grubb (ed), The Law of Tort, (2002), §§1.11-1.13; Prosser and Keeton on Torts, 5th ed (1984) at 5-6. McHugh omission by Dr Cattanach was that of each of the respondents in the planning of their family or, as it has been put in the United States, in their reproductive future. The injury to that interest had varied elements. There were those matters reflected in the first award of some $103,000 to Mrs Melchior, but there were also those touching the responsibility the spouses incurred to rear their third child. That responsibility was both moral and legal. The Child Support (Assessment) Act 1989 (Cth) imposed obligations upon the parents of an "eligible child" who was under the age of 18 years80. It does not advance understanding greatly, one way or the other, to describe the expenditure required to discharge that obligation as "economic loss"81. Nor is it correct to say that the damage that the respondents suffered was the parent-child relationship or the coming into existence of the parent-child relationship. To do so is to examine the case from the wrong perspective. In the law of negligence, damage is either physical injury to person or property or the suffering of a loss measurable in money terms or the incurring of expenditure as the result of the invasion of an interest recognised by the law. The parent-child relationship or its creation no more constitutes damage in this area of law than the employer-employee relationship constitutes damage in an action per quod servitium amisit. In the latter case, the employer suffers damage, for example, only when it is forced to pay salary or wages to its injured employee although deprived of the employee's services82. It does not suffer damage merely because its employee has been injured. Similarly, for the purpose of this appeal, the relevant damage suffered by the Melchiors is the expenditure that they have incurred or will incur in the future, not the creation or existence of the parent- child relationship. If, for example, their child had been voluntarily cared for up to the date of trial, they could have recovered no damages for that part of the child's upbringing. And, if it appeared that that situation would continue in the future, then the damages they would be able to recover in the future would be reduced accordingly. 80 See ss 3, 4, 24; Luton v Lessels (2002) 76 ALJR 635 at 636 [4]-[7], 640-642 [32]- [41], 650 [90], 659-661 [152]-[175]; 187 ALR 529 at 530-531, 537-539, 550, 81 cf Perre v Apand Pty Ltd (1999) 198 CLR 180 at 204 [50], 218-220 [100]-[105], 82 Commissioner for Railways (NSW) v Scott (1959) 102 CLR 392. McHugh The unplanned child is not the harm for which recompense is sought in this action83; it is the burden of the legal and moral responsibilities which arise by reason of the birth of the child that is in contention. The expression "wrongful birth" used in various authorities to which the Court was referred is misleading and directs attention away from the appropriate frame of legal discourse. What was wrongful in this case was not the birth of a third child to Mr and Mrs Melchior but the negligence of Dr Cattanach. The submissions by the appellants introduce notions of public policy not in formulating the relevant duty of care nor, in so far as they would have the reasoning apply also in contract, to strike at the bargain itself. Rather, as remarked above, the appellants seek the proscription of a particular head of recovery of damages. The ground advanced is that the policy of the law does not allow of any treatment as compensable harm of the third category of damages In McFarlane84, Lord Millett treated what was involved as the "admission of a novel head of damages"; this raised a matter "not solely a question of principle" because "[l]imitations on the scope of legal liability arise from legal policy". His Lordship continued85: "Legal policy in this sense is not the same as public policy, even though moral considerations may play a part in both. The court is engaged in a search for justice, and this demands that the dispute be resolved in a way which is fair and reasonable and accords with ordinary notions of what is fit and proper. It is also concerned to maintain the coherence of the law and the avoidance of inappropriate distinctions if injustice is to be avoided in other cases." In this Court, the respondents dispute the first proposition that what was involved in the third category of the award made by Holmes J was a novel head of damages. They refer to the statement of general principle by McHugh J in 83 cf Weir, "The Unwanted Child", (2000) Cambridge Law Journal 238; "Judicial Limitations on Damages Recoverable for the Wrongful Birth of a Healthy Infant", (1982) 68 Virginia Law Review 1311 at 1317. 84 [2000] 2 AC 59 at 108. 85 [2000] 2 AC 59 at 108. 86 (1996) 186 CLR 49 at 54. McHugh "When a defendant has negligently injured a plaintiff, the common law requires the defendant to pay a money sum to the plaintiff to compensate that person for any damage that is causally connected to the defendant's negligence and that ought to have been reasonably foreseen by the defendant when the negligence occurred87. The sum of money to be paid to the plaintiff is that sum which will put the plaintiff, so far as is possible, 'in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation'88. Consequently, when a plaintiff asserts that, but for the defendant's negligence, he or she would not have incurred a particular expense, questions of causation and reasonable foreseeability arise. Is the particular expense causally connected to the defendant's negligence? If so, ought the defendant to have reasonably foreseen that an expense of that kind might be incurred?" Both questions, posed with respect to the third category of the award at trial in the present case, should be answered in the affirmative. Indeed, later in his speech in McFarlane, Lord Millett had discounted any distinctions between pure and consequential economic loss, saying89: "The distinction is technical and artificial if not actually suspect in the circumstances of the present case, and is to my mind made irrelevant by the fact that Catherine's conception and birth are the very things that the defenders' professional services were called upon to prevent. In principle any losses occasioned thereby are recoverable however they may be characterised." In addition, notwithstanding what had been said by Lord Millett in McFarlane (in the first passage set out above), the appellants in the present case displayed no enthusiasm for a distinction between "legal policy" and "public policy"; they rightly preferred the term "policy of the law". In the course of giving his answers to the questions put by the House of Lords in Egerton, 87 Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound) [1961] AC 388 at 423, 425; Chapman v Hearse (1961) 106 CLR 112 at 88 Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39. 89 [2000] 2 AC 59 at 109. 90 (1853) 4 HLC 1 at 87 [10 ER 359 at 394-395]. McHugh "I have already observed that I presume we are not asked our opinions as to public policy, but as to the law; and I apprehend that when in our law-books of reports we find the expression, it is used somewhat inaccurately instead of 'the policy of the law.' Thus, contracts in restraint of trade have been said to be illegal as against public policy, but in truth, it is part of the common law that trade shall not be restricted, as was held in the Year Book91; and unreasonable contracts in restraint of trade violate the policy of that part of the common law, and are therefore illegal. So, in bankruptcy, the object and policy of the bankrupt-laws is to make a rateable distribution of the bankrupt's property amongst all his creditors, and preferences given to particular creditors by a trader in contemplation of bankruptcy are in violation of the policy of the bankrupt-laws, and are therefore held to be fraudulent and void." More recently, Lord Radcliffe began a lecture on the subject, perhaps inevitably titled "Riding an Unruly Horse"92, with the statement93: "Every system of jurisprudence tends to produce in the course of its own development a conception of a 'public policy' or 'public interest' which on occasions overrides its normal recognition and enforcement of legal rights and interests." Much of the maturation of the policy of the law to which reference has been made above took place in England in cases decided at a period in which the body of statute law was comparatively small, representative and responsible government as now understood was in its infancy, and there was no universal franchise. Lord Diplock made the point, with particular reference to the development of the criminal law, in R v Knuller (Publishing, Printing and Promotions) Ltd94. Much has changed. Thus, whether by asserting a general superintendence of morality or otherwise, the courts today are no longer able to create common law criminal offences95. 91 2 H 5, pl 26. 92 See Richardson v Mellish (1824) 2 Bing 229 at 252 [130 ER 294 at 303] and the other equine metaphors collected by Kirby J in Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 232. 93 Radcliffe, The Law & Its Compass, (1960) at 37. 94 [1973] AC 435 at 473-474. 95 R v Rogerson (1992) 174 CLR 268 at 304; R v Knuller (Publishing, Printing and Promotions) Ltd [1973] AC 435 at 457-458, 464-465, 490, 496. McHugh Hence the force of Lord Radcliffe's further remarks96: "Public policy suggests something inherently fluid, adjusted to the expediency of the day, the proper subject of the minister or the member of the legislature. The considerations which we accept as likely to weigh with them are just not those which we expect to see governing the decisions of a court of law. On the contrary, we expect to find the law indifferent to them, speaking for a system of values at any rate less mutable than this." Lord Atkin spoke to similar effect in Fender v St John-Mildmay97, as earlier had Isaacs J in Wilkinson v Osborne98 and Winfield in his influential essay, "Public Policy in the English Common Law"99. What was put by Isaacs J in Wilkinson100 may be adapted to the present case by posing two questions. First, are the underlying values respecting the importance of human life, the stability of the family unit and the nurture of infant children until their legal majority an essential aspect of the corporate welfare of the community? Secondly, if they are, can it be said there is a general recognition in the community that those values demand that there must be no award of damages for the cost to the parents of rearing and maintaining a child who would not have been born were it not for the negligent failure of a gynaecologist in giving advice after performing a sterilisation procedure? Allowing an affirmative answer to the first question, nevertheless the answer to the second must be that the courts can perceive no such general recognition that those in the position of Mr and Mrs Melchior should be denied the full remedies the common law of Australia otherwise affords them. It is a beguiling but misleading simplicity to invoke the broad values which few would deny and then glide to the conclusion that they operate to shield the appellants from the full consequences in law of Dr Cattanach's negligence. The present is one of that class of case identified by Viscount Haldane in Rodriguez v Speyer 96 Radcliffe, The Law & Its Compass, (1960) at 43-44. 97 [1938] AC 1 at 10-11. 98 (1915) 21 CLR 89 at 97. 99 (1928) 42 Harvard Law Review 76 at 95-99. 100 (1915) 21 CLR 89. McHugh Brothers101; the question is whether the underlying values which the appellants invoke are "so definite that [they] must be applied without reference to whether a particular case involves the real mischief to guard against which [they were] originally introduced"102. The reliance upon values respecting the importance of life is made implausible by the reference to the postulated child as "healthy". The differential treatment of the worth of the lives of those with ill health or disabilities has been a mark of the societies and political regimes we least admire103. To prevent recovery in respect of one class of child but not the other, by reference to a criterion of health, would be to discriminate by reference to a distinction irrelevant to the object sought to be achieved, the award of compensatory damages to the parents104. To suggest that the birth of a child is always a blessing, and that the benefits to be derived therefrom always outweigh the burdens, denies the first category of damages awarded in this case; it also denies the widespread use of contraception by persons such as the Melchiors to avoid just such an event. The perceived disruption to familial relationships by, for example, the Melchiors' third child later becoming aware of this litigation, is at best speculative. In the absence of any clear and accepted understanding of such matters, the common law should not justify preclusion of recovery on speculation as to possible psychological harm to children. The point was emphasised as follows in Custodio v Bauer105: "One cannot categorically say whether the tenth arrival in the Custodio family will be more emotionally upset if he arrives in an environment where each of the other members of the family must contribute to his support, or whether he will have a happier and more well-adjusted life if he brings with him the wherewithal to make it possible." 101 [1919] AC 59 at 77. 102 [1919] AC 59 at 77. 103 Hoyano, "Misconceptions About Wrongful Conception", (2002) 65 Modern Law Review 883 at 900-901. 104 Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 478. 105 59 Cal Rptr 463 at 477 (1967). McHugh In McFarlane106, Lord Steyn concluded: "Instinctively, the traveller on the Underground would consider that the law of tort has no business to provide legal remedies consequent upon the birth of a healthy child, which all of us regard as a valuable and good thing." Another, and to us the preferable, view was later put by Hale LJ in Parkinson107: "The traveller on the Underground is not here being invoked as a hypothetical reasonable man but as a moral arbiter. We all know that London commuters are not a representative sample of public opinion. We also know that the answer will crucially depend upon the question asked and the amount of relevant information and argument given to help answer it. The fact that so many eminent judges all over the world have wrestled with this problem and reached different conclusions might suggest that the considered response would be less emphatic and less unanimous." Her Ladyship's remarks return one to the identification by Isaacs J in Wilkinson108 of that which has general recognition in the community. It may well be said that changes in the composition and attitudes of society in Australia in the century since Isaacs J wrote that judgment have made it very difficult to make broad assumptions as to what, apart from expression in legislation, the courts in the exercise of the judicial power to develop and apply the common law should accept as the paradigm of social behaviour. However, that realisation serves but to emphasise the point made by Lord Radcliffe some 40 years ago that the policy of the law should be slow to fix upon something "inherently fluid"109. There remains the subsidiary submission by the appellants respecting the "setting-off" of the emotional satisfaction and other benefits enjoyed by Mr and Mrs Melchior from the birth of their third child. The assumption here is that there is no bar to recovery of damages under the third category recovered at trial; the contention is that those damages should have been limited in some way. 106 [2000] 2 AC 59 at 82. 107 [2002] QB 266 at 290. 108 (1915) 21 CLR 89 at 97-98. 109 Radcliffe, The Law & Its Compass, (1960) at 43. McHugh Section 920 of the Restatement (Second) of Torts, issued in 1977, sets out what in the United States is described as the "benefit rule": "When the defendant's tortious conduct has caused harm to the plaintiff or to his property and in so doing has conferred a special benefit to the interest of the plaintiff that was harmed, the value of the benefit conferred is considered in mitigation of damages, to the extent that this is equitable." Comment b to the Restatement notes: "Damages resulting from an invasion of one interest are not diminished by showing that another interest has been benefited." Speaking of §920, it has been said110: "In the wrongful birth context, application of the rule requires an identification of the interest a plaintiff sought to protect in attempting to avoid the conception of a child, and a determination of whether a special benefit to that interest was conferred upon the plaintiff as a result of the defendant's tortious conduct. This 'same interest' limitation prevents damages resulting from the injury to one particular interest from being diminished by a showing that some other interest has been benefitted." In some cases in the United States111, a broad interpretation has been given to the notion of "same interest" with the effect of allowing an offsetting of what was said to be postnatal non-pecuniary benefits of parenthood, thereby resulting in a significant reduction in the damages recovered. Thus, in Troppi v Scarf112, a Michigan court said: "Since pregnancy and its attendant anxiety, incapacity, pain and suffering are inextricably related to child bearing ... it would be [unsound] to attempt to separate those segments of damage from the economic costs of an unplanned child in applying the 'same interest' rule." 110 Milsteen, "Recovery of Childrearing Expenses in Wrongful Birth Cases: A Motivational Analysis", (1983) 32 Emory Law Journal 1167 at 1180. 111 For example, Troppi v Scarf 187 NW 2d 511 (1971); Sherlock v Stillwater Clinic 260 NW 2d 169 (1977); Boone v Mullendore 416 So 2d 718 (1982). 112 187 NW 2d 511 at 518 (1971). McHugh In other decisions, for example Custodio v Bauer113, the contrary result has been reached, it being emphasised that the offsetting benefit must be to the interest protected. A similar point was made in this Court, with reference to §920 as it appeared in the first Restatement issued in 1939, by Dixon J in Public Trustee v Zoanetti114. His Honour stated as a general proposition115: "[W]hen there are two interests adversely affected you cannot treat recompense for one as a gain arising from the occurrence and operating in relief of the loss of or injury to the other interest." His Honour continued, with reference to Comment b to §920116: "Indeed, even when one of two separate interests is benefited in consequence of a wrongful act, the benefit cannot be set off against an injury to the other. ... It is not immaterial to notice that in describing some of the various applications given to this principle the Restatement includes the proposition that damages to a husband for loss of consortium are not diminished by the fact that the husband is no longer under the expense of supporting the wife." Earlier in his reasons in Zoanetti, Dixon J identified the different interests of a wife in the life of her husband, founded upon the economic or pecuniary advantages of the marriage, and her interests founded upon affections and feelings117. So in this case the interests of Mr and Mrs Melchior in controlling the size of their family, for the economic and apprehended eugenic reasons referred to above, have a different character or quality to the affection they would give and hope to receive from a child of their marriage, whatever the circumstances in which Mrs Melchior conceived and was brought to term. In argument, reference was made to the case of a parent bringing a "nervous shock" action for the death of a child and of a widow bringing an action under the compensation to relatives statutes. Could it be said that in the first case there was to be an offset for the expenditure saved for future support of a child 113 59 Cal Rptr 463 (1967). 114 (1945) 70 CLR 266. 115 (1945) 70 CLR 266 at 278. 116 (1945) 70 CLR 266 at 278. The example referred to in the first Restatement appears unchanged in Comment b to §920 in the second Restatement. 117 (1945) 70 CLR 266 at 277. McHugh and, in the second, for the removal of the inconveniences involved in the wife looking after her husband? In each case, there would be no set-off because of the principles indicated by Dixon J in Zoanetti. The same is true of the present case. The statement of relevant legal principle by Dixon J also shows why it is an error to think that awarding damages for the cost of raising a child inevitably requires the courts to balance the "monetary value of the child"118 against the cost of maintaining the child. In assessing damages, it is impermissible in principle to balance the benefits to one legal interest against the loss occasioned to a separate legal interest. The benefits received from the birth of a child are not legally relevant to the head of damage that compensates for the cost of maintaining the child. A different case would be presented if the mother claimed damages for "loss of enjoyment of life" as the result of raising the child. If such a head of damage were allowable, it would be correct to set off against the claim all the benefits derived from having the child. But the head of damages that is relevant in the present case is the financial damage that the parents will suffer as the result of their legal responsibility to raise the child. The benefits to be enjoyed as a result of having the child are not related to that head of damage. The coal miner, forced to retire because of injury, does not get less damages for loss of earning capacity because he is now free to sit in the sun each day reading his favourite newspaper. Likewise, the award of damages to the parents for their future financial expenditure is not to be reduced by the enjoyment that they will or may obtain from the birth of the child. Logically, those persons like Lord Millett who would deny the cost of maintaining the child because of what they see as the immeasurable benefits gained from the birth of the child must deny the right of action itself. If the immeasurability of those benefits denies damages for the cost of maintaining the child, there must also be denied recovery for the hospital and medical costs of the birth and for the attendant pain and suffering associated with the birth. Yet, illogically as it seems to us, those persons permit the action and allow damages to be recovered in respect of these two heads of damage. The appeal should be dismissed with costs. 118 McFarlane v Tayside Health Board [2000] 2 AC 59 at 111 per Lord Millett. Kirby KIRBY J. This appeal119 concerns an aspect of the law of negligence. It requires the determination of whether damages may be recovered following negligent advice after a sterilisation procedure which resulted in an unexpected pregnancy and consequent birth. The issues of negligence and causation are not now in dispute. However, part of the damages is contested. The facts and history of the proceedings The proceedings are an outcome of the failure of a sterilisation operation and the omission of the surgeon to give his patient adequate warning of the risks of further conception. Such a risk existed because, during the surgery, the surgeon detected and clipped only one fallopian tube120. In fact, there was another intact fallopian tube obscured by adhesions that were the consequence of a childhood operation upon the patient about which the surgeon had been informed. The patient, being uninformed about the risk of further conception and believing that the sterilisation had succeeded, resumed unprotected sexual relations with her husband. She failed to explore the option of an available further investigation (hysterosalpingogram) to establish the risk of residual fertility. These events resulted in the birth of a child who was healthy. He was the third child and first son of the couple. The parents have acknowledged their love for him although his birth was unplanned121. The parents sued the surgeon and the State of Queensland, the latter as responsible for the hospital where the surgery was performed. A count in contract was pleaded but not pursued. This left as the sole claim one framed in negligence. The primary judge found negligence against the surgeon for which he and the State were liable, in respect of his failure to inform his patient after the operation of the possibility that the sterilisation might have been ineffective. She found that such failure was a material cause of the pregnancy that followed122. The primary judge awarded the mother damages for her pain and suffering in respect of the pregnancy and birth, the effects of the pregnancy on her health, 119 From a decision of the Supreme Court of Queensland (Court of Appeal): Melchior v Cattanach [2001] QCA 246. 120 Melchior v Cattanach (2001) Aust Torts Reports ¶81-597 at 66,620-66,621 [8]. Relevant additional facts are set out in the reasons of Callinan J at [266]-[273]. 121 (2001) Aust Torts Reports ¶81-597 at 66,629 [51], 66,635 [80]. 122 (2001) Aust Torts Reports ¶81-597 at 66,626 [33]. Kirby her lost earning capacity and the cost of maternity wear, along with damages123 for future care that she might need124. She also awarded the father a small sum for loss of consortium. These awards are not in contest in this Court. However, the primary judge went on to award damages to the parents in the sum of $105,249.33 for past and future costs associated with raising and maintaining the child125. The surgeon and the State ("the appellants") appealed to the Queensland Court of Appeal challenging the primary judge's findings on liability, causation and that aspect of damages that concerned the costs of child-rearing. The Court of Appeal unanimously rejected the challenges to the findings on liability in negligence and causation126. However, on the issue of damages for the costs of child-rearing, that Court divided. By majority, the appeal was dismissed127. Special leave to appeal to this Court was granted, limited to the recoverability of the costs of raising and maintaining the child. The sole question before this Court, therefore, concerns the principle governing the recovery of the costs of child-rearing rather than the precise manner in which (or duration for which)128 any costs of child-rearing should be provided. The appellants submitted that it was wrong in legal principle to include such a component in the parents' damages and, if it was not, that the courts below had erred in their approach to the calculation of the amount recoverable. It is in this way that this Court is obliged to answer the question whether, in proceedings brought by parents having the legal and moral responsibility to raise a child, born in consequence of a failed sterilisation procedure (or as a result 123 Claimed to be based on Griffiths v Kerkemeyer (1977) 139 CLR 161. See reasons of Callinan J at [276]. 124 (2001) Aust Torts Reports ¶81-597 at 66,635 [81]-[82]. 125 (2001) Aust Torts Reports ¶81-597 at 66,635 [81]-[82]. 126 [2001] QCA 246 at [2]-[4] per McMurdo P; [72]-[76] per Davies JA; [132]-[133], [137] per Thomas JA dissenting. 127 [2001] QCA 246. Extracts from the dissenting opinion of Thomas JA appear in the reasons of Callinan J at [279]. 128 The primary judge allowed $17,698.80 for past costs of rearing the respondents' son together with interest on that amount of 5% for three years and $84,895.53 for the costs of raising the child to age 18, making the total awarded. See (2001) Aust Torts Reports ¶81-597 at 66,634 [79], 66,635 [81]. In contemporary circumstances, at least in some cases, where tertiary education would be a reasonable possibility, provision until legal majority might be insufficient. However, that question was not an issue in the appeal. Kirby of an omission to warn properly of a risk of such failure), the costs of child- rearing may be included in the parents' damages. If it may, a subsidiary question arises as to whether the sum allowed for that item should be reduced to allow for the joys and benefits derived, and any prospects of support in the future, from the birth of a child. No statute law provides the answer to these questions. It is therefore necessary to apply the common law. There is no authority of this Court establishing a clear rule with sufficient particularity to yield immediately a solution to the issues in the appeal. In Registrar of Titles v Spencer129, this Court, in its early days, adopted the general principle governing damages in tort expressed by Lord Blackburn in Livingstone v Rawyards Coal Company130. His Lordship there said that basic principle provided for the recovery of131: "that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation." This principle of compensation (or restoration) is, however, of limited value as a guide to the answers that should be given to the problem now before us. Courts have repeatedly acknowledged that the calculation of damages in tort is an inexact activity "accomplished to a large extent by the exercise of a sound imagination and the practice of the broad axe"132. There being no binding authority and the general principle being of limited guidance, it is necessary to have resort to the usual sources of the common law invoked by the courts in such circumstances. Those sources are: (1) the state of any legal authority that may be developed and applied by analogy 129 (1909) 9 CLR 641 at 645. See also Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 at 191; Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625 at 646-647; Todorovic v Waller (1981) 150 CLR 402 at 412; Johnson v Perez (1988) 166 CLR 351 at 367, 371; Haines v Bendall (1991) 172 CLR 60 at 63; The Laws of Australia – Torts (2003) at 595 130 (1880) 5 App Cas 25. 131 (1880) 5 App Cas 25 at 39; cf Nominal Defendant v Gardikiotis (1996) 186 CLR 49 at 54 cited in the reasons of McHugh and Gummow JJ at [71]. 132 Watson, Laidlaw and Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104 at 118 (HL) per Lord Shaw. Kirby to new circumstances; (2) any applicable considerations of relevant legal principle; and (3) any considerations of legal policy133. Past legal authority on failed sterilisation Early English authority: Sterilisation operations, and their consequences, have, for as long as they have existed, caused sharp differences of opinion amongst judges of the common law. An early example can be found in the English Court of Appeal in Bravery v Bravery134. There, a husband had undergone a sterilisation operation in 1938, despite protests of his wife who wanted more children. Eventually, the wife petitioned for divorce on the ground of his cruelty. Her claim was dismissed. However, Denning LJ dissented. He acknowledged that the operation could be lawful where done for "just cause", such as to prevent the transmission of an hereditary disease. However, his Lordship went on135: "But when it is done without just cause or excuse, it is unlawful, even though the man consents to it. Take a case where a sterilisation operation is done so as to enable a man to have the pleasure of sexual intercourse, without shouldering the responsibilities attaching to it. The operation then is plainly injurious to the public interest. It is degrading to the man himself. It is injurious to his wife and to any woman whom he may marry, to say nothing of the way it opens to licentiousness; and, unlike contraceptives, it allows no room for a change of mind on either side." In unusually sharp language, the majority in Bravery (Sir Raymond Evershed MR and Hodson LJ) felt "bound to dissociate ourselves from the general observations of the Lord Justice at the end of his judgment"136. This rebuke arose from the deeply felt differences that informed judicial opinions on the subject of sterilisation in 1954. The intervening half-century has not removed these strong feelings. But it has taught the need to keep them in check and to adhere, so far as possible, to the neutral application of basic legal principles, more important than ever where passions are aroused by a legal controversy. 133 Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 252; Northern Territory v Mengel (1995) 185 CLR 307 at 347; cf Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 at 43-44 [8] ("Principle"), 46-47 [14] ("Authority"), 66-67 [33] ("Policy"); see also at 71 [48], 75 [64]. 134 [1954] 1 WLR 1169; [1954] 3 All ER 59. 135 [1954] 1 WLR 1169 at 1180; [1954] 3 All ER 59 at 67-68. 136 [1954] 1 WLR 1169 at 1175; [1954] 3 All ER 59 at 63. Kirby In the 1960s, and thereafter, social attitudes to various forms of contraception, including sterilisation, began to change in Australia as in other like countries. The changes make the attitudes of Denning LJ expressed in Bravery seem increasingly anachronistic. In part, the changes have come about as a result of greater knowledge of, and discussion about, human sexuality137; in part, they have followed advances in the technology of contraception and sterilisation procedures; and in part, they have reflected social changes affecting the role of women and of marriage, the economic expectations of individuals and the altered place of religion in society. These and other considerations present the background against which judicial decisions in various countries concerning failed sterilisation procedures must be viewed. The common law does not exist in a vacuum. It is expressed by judges to respond to their perceptions of the requirement of justice, fairness and reasonableness in their society. By the 1970s, the concurrent happening of the social and technological changes that I have mentioned began to produce claims by disappointed patients who had undergone sterilisation operations for the purpose of removing the risk of conception and the need to use other forms of contraception, only to discover that the operations had failed, that conception had occurred, that a baby was born and that they were, as a consequence, burdened both with short-term and long-term losses138. What commenced as a relatively small number of cases is now a substantial and growing body of decisional law, not only in common law countries but also in countries with civil law systems. An early decision in England in Udale v Bloomsbury Area Health Authority139 attempted to stem the tide of such claims. In that case, involving the birth of a child following the failure of a sterilisation operation, Jupp J awarded the patient damages for pain and suffering and loss of earnings during pregnancy. His Lordship allowed a small amount for the disturbance of family finances caused by the unexpected conception. However, he rejected the patient's claim for the costs of raising the child (sought in that case to the age of sixteen). He found that to allow damages of such a kind was contrary to public policy, being disruptive of family life and inconsistent with the sanctity of human life140. 137 Following such developments as the publication of the Kinsey Reports: Kinsey et al, Sexual Behavior in the Human Male (1948); Sexual Behavior in the Human Female (1953). 138 An early United States case was Coleman v Garrison 349 A 2d 8 (1975), modified in part by Garrison v Medical Center of Delaware 581 A 2d 288 (1990). 139 [1983] 1 WLR 1098; [1983] 2 All ER 522. 140 [1983] 1 WLR 1098 at 1107, 1109; [1983] 2 All ER 522 at 529, 531. He drew some support from McKay v Essex Area Health Authority [1982] QB 1166. Kirby As more such cases came before the courts differing views soon emerged. The approach of Jupp J was not followed in a number of the English cases that ensued, including Emeh v Kensington and Chelsea and Westminster Area Health Authority141, Thake v Maurice142 and Benarr v Kettering Health Authority143. In those cases, the judges rejected the argument that public policy prevented the recovery of damages for the cost of child-rearing. As far as the later judges were concerned, the normal legal principle of recovery of damages would apply. A person injured through the negligence of another could recover damages on the compensatory principle for all losses that were reasonably foreseeable to the tortfeasor at the time of the wrong. Such losses included, in a case of such a kind, the basic costs of child-rearing. Limited Australian authority: This was the state of the understanding of the English common law when cases of this kind first arose before Australian courts. An early instance was Dahl v Purnell144, decided by Pratt DCJ in the District Court of Queensland. That case involved a failed vasectomy. As in the present appeal, the claimant proved a want of proper warning about the risks of post-operative conception. The claim that public policy prevented an award of damages because the child was born healthy, was rejected by Pratt DCJ, with reference to the later English decisions145. An amount of nearly $37,000 was allowed for the cost of future upbringing of the child to the age of eighteen years. A not dissimilar approach was taken by de Jersey J in the Supreme Court of Queensland in Veivers v Connolly146. Such was the position of Australian law when CES v Superclinics (Australia) Pty Ltd147 was decided by the New South Wales Court of Appeal. CES was an instance of repeated negligent misdiagnosis of a patient's pregnancy which the patient claimed had deprived her of the chance to procure a lawful abortion that she would have undergone148. Several points not presently 141 [1985] QB 1012 at 1020-1021. 143 [1988] NLJ 179. 144 (1992) 15 Qld Lawyer Reps 33. 145 (1992) 15 Qld Lawyer Reps 33 at 36 referring to Thake and Emeh. 146 [1995] 2 Qd R 326. 147 (1995) 38 NSWLR 47. 148 (1995) 38 NSWLR 47 at 69, 84. Kirby material were argued in the case. Relevantly to the issues in this appeal, the Court of Appeal divided on the extent of the damages that the unmarried parents of the unplanned child could recover. In dissent, Meagher JA concluded that no damages for rearing the child could be recovered149. In part, his Honour, following Jupp J in Udale, reasoned that this was so on the basis of the legal principle that such a claim was "utterly offensive". He said that "there should be rejoicing that the hospital's mistake bestowed the gift of life upon the child". In part, his Honour reasoned (with reliance upon St John's Gospel in the Christian Bible150) that the child was a "joy" for which the parents were obliged to give credit; that the calculation of the allowance for such "joy" was impossible; and that this fact demonstrated the impermissibility of recovering damages on that basis. Various other arguments of policy were called in aid151. CES was a decision in which I participated in the Court of Appeal. By reference to the state of authority in England and to United States cases at that time, I rejected the argument that, as a matter of policy, the "sanctity of human life" prevented the law from allowing damages for the "economic consequences" of the unplanned and unwanted pregnancy consequential upon medical negligence152. Whilst acknowledging that a court in such a case was required to assess damages for the net injury incurred by the victim of negligence, and that each case would depend on its own facts, I saw no reason "grounded in public policy" to deny full recovery by the parents of the damages claimed by them to compensate for the damage they had suffered, "physical, psychological and economic"153. The third judge in CES, Priestley JA, concluded, contrary to the reasoning of Meagher JA, that the parents were entitled to recover "any damage flowing from the negligent advice" to the effect that the mother was not pregnant, subject to considerations of foreseeability and remoteness154. However, Priestley JA 149 (1995) 38 NSWLR 47 at 86 citing McKay v Essex Area Health Authority [1982] QB 1166 at 1193 per Griffiths LJ. 150 (1995) 38 NSWLR 47 at 87 citing John 16:21. 151 (1995) 38 NSWLR 47 at 87. Such as the policy against encouraging "unnatural" parental rejection of a child in the hope of enhancing damages. 152 (1995) 38 NSWLR 47 at 74-77. 153 (1995) 38 NSWLR 47 at 77. 154 (1995) 38 NSWLR 47 at 84. Kirby concluded that, after a very short interval, the parents could have surrendered the child to adoption. The mother's decision to keep the child was her own choice. After that decision was made, the defendant was not legally responsible for the parents' financial costs of rearing the child155. In the exigencies, in order to provide guidance for the consequent retrial and to trial courts generally, I agreed in Priestley JA's approach as expressing the highest common denominator of the majority, whilst stating my dissent from it156. The resulting approach attracted numerous highly critical reviews157. Neither in this appeal nor in most other recent decisions on the issue158 has the argument been accepted that a plaintiff is disentitled to damages because she failed to procure a termination of her pregnancy or, upon birth of the child, failed to arrange for its adoption. This Court granted special leave to appeal in CES159. Had that appeal been decided, it is likely that the issues now before the Court, or many of them, would have been resolved. But the claim in CES was settled before the hearing of the appeal was completed. The result has been continued uncertainty in Australian law as to the principles to be applied160. The unloved holding established by the Court of Appeal majority in CES hardly represents a clear foundation for the resolution of the present appeal. This appeal cannot, therefore, be decided by reference to the state of Australian judicial authority particular to the issue in controversy. Since CES, there have been many judicial decisions in other countries that have addressed the approach to be taken, in default of legislation, to problems of the present kind. Unfortunately, these decisions too have not spoken with a single voice. 155 (1995) 38 NSWLR 47 at 84. 156 (1995) 38 NSWLR 47 at 78-79. 157 Swanton, "Damages for 'Wrongful Birth' – CES v Superclinics (Aust) Pty Ltd", (1996) 4 Torts Law Journal 1 at 6-7; Graycar and Morgan, "'Unnatural Rejection of Womanhood and Motherhood': Pregnancy, Damages and the Law", (1996) 18 Sydney Law Review 323 at 340-341. 158 eg McFarlane v Tayside Health Board [2000] 2 AC 59 at 74. 159 Nafte v CES (1996) 7 Leg Rep SL3. 160 See eg Edwards v Blomeley [2002] NSWSC 460 at [96]. Kirby United States authority: In the United States of America, full recovery for the ordinary costs of raising a child born after sterilisation procedures have failed in consequence of medical negligence or negligent advice is allowed in a small number of States. In some States, judicial decisions allow recovery limited to the economic expenses but offset by an allowance for the emotional and other benefits derived by the parents as a consequence of the unexpected birth. Most States, however, deny the recovery of the costs of child-rearing, at least where the child in question is born without disabilities161. They usually do so on public policy grounds. A summary of the United States cases, indicating the diversity of the principles applied in that country to 1997, may be found in Emerson v Magendantz162. The differences of opinion, and the often sharply divided views within individual State courts, illustrate the difficulty of procuring a consensus about what the principles of the common law require. However, it is fair to say that in the majority of jurisdictions in the United States courts have adopted a remedy of limited recovery that excludes the cost of child-rearing as an element of damages in medical malpractice suits following a failed sterilisation163. Recent United Kingdom cases: In the United Kingdom, the law has taken a different turning in the last three years following the decision of the House of Lords in McFarlane v Tayside Health Board164. In that case, for reasons stated in differing ways by the five participating Law Lords, it was held that the parents of a healthy child, born following a negligently performed sterilisation procedure, could not recover damages for the cost of bringing up that child from a local health authority legally responsible for the operation. In effect, their Lordships reversed fifteen years of English appellate authority which, after Udale, had, with substantial consistency, held that maintenance costs were recoverable in such circumstances because they flowed directly from the failed sterilisation, were reasonably foreseeable, were contemplated both by the parents and the surgeon concerned and were not too remote165. 161 Baugher, "Fundamental Protection of a Fundamental Right: Full Recovery of Child-Rearing Damages for Wrongful Pregnancy", (2000) 75 Washington Law Review 1205. 162 689 A 2d 409 (1997). 163 Emerson 689 A 2d 409 at 411-412 (1997). Thirty United States jurisdictions have adopted this approach. Two have adopted a full recovery rule without offsetting allowance for emotional and economic benefits. 165 Hoyano, "Misconceptions About Wrongful Conception", (2002) 65 Modern Law Review 883 at 884. Kirby Possibly because of the lack of agreement in the several reasons in McFarlane about the justification for the reversal of the previous authority of courts in England166 and Scotland167, courts in later cases and commentators in the United Kingdom have searched for a common principle to guide decision- makers on the application of the law. In my reading, the closest that anyone has come to identifying a common principle in McFarlane seems to be Buxton LJ in Greenfield v Irwin168. His Lordship there suggested that the true foundation of that decision was that it represented a particular application of the three-fold test propounded by the House of Lords in Caparo Industries Plc v Dickman169. That test is commonly followed in England (and other countries) when judges are asked to resolve novel claims for damage framed in reliance on the tort of negligence. As Buxton LJ points out in Greenfield, Lord Slynn of Hadley170 and Lord Hope of Craighead171 in McFarlane referred to the Caparo test in their reasons. According to Buxton LJ, Lord Steyn172, by using the language of what was "fair, just and reasonable", did so implicitly, those considerations being the third (policy) criterion mandated by the Caparo test. Whilst I find Buxton LJ's analysis compelling in this regard173, it presents two significant difficulties for me in this appeal. The first is that Lord Steyn expressly repudiated as the foundation for his conclusion in McFarlane174, an Of more immediate explanation explicitly grounded in public policy. 166 Especially Thake [1986] QB 644 (CA). Leave to appeal to the House of Lords was refused. See also Gold v Haringey Health Authority [1988] QB 481 at 484; Allen v Bloomsbury Health Authority [1993] 1 All ER 651 at 662. 167 McFarlane v Tayside Health Board 1997 SLT 211; Allan v Greater Glasgow Health Board 1998 SLT 580; Anderson v Forth Valley Health Board 1998 SLT 168 [2001] 1 WLR 1279 at 1285 [19]-[20]. 169 [1990] 2 AC 605 at 617-618. 170 [2000] 2 AC 59 at 75-76. 171 [2000] 2 AC 59 at 95-97. 172 [2000] 2 AC 59 at 82-83. 173 Set out in Greenfield [2001] 1 WLR 1279 at 1285 [19]-[20]. 174 [2000] 2 AC 59 at 82-83. Kirby importance, this Court has rejected the Caparo analysis175. After repeated efforts on my part to persuade this Court of the merits of the Caparo approach176, I have been forced to admit defeat177. To the extent that McFarlane in the House of Lords, explicitly or implicitly, rests on a Caparo analysis, it provides no foundation of legal principle for guidance to this Court concerning the content of the requirements of the common law of Australia. I cannot forbear to mention the extent to which all members of this Court have referred in this appeal (correctly in my view) to considerations of principle and policy178. Yet it was the explicit reference to policy in the Caparo analysis that was considered enough to make the three-stage approach adopted there unsuitable for Australian courts in resolving novel questions of negligence liability179. The conclusion that the present appeal cannot be decided by the application of the Caparo three-fold test is an important one. If I were approaching this appeal in the manner that Caparo mandates, I would be forced to confront directly, and even more explicitly, the competing issues of policy necessary to the resolution of the third step in the Caparo analysis. However, obedient to the authority of this Court, I must put the Caparo analysis aside. Although I regard it as self-evident that courts take such policy considerations into account in deciding novel problems of this kind, the majority of this Court does not accept that such a transparent evaluation of issues of policy is appropriate to the courts in Australia180. I am therefore obliged to approach the 175 Sullivan v Moody (2001) 207 CLR 562. 176 eg in Pyrenees Shire Council v Day (1998) 192 CLR 330 at 420-427 [246]-[253]; Romeo v Conservation Commission (NT) (1998) 192 CLR 431 at 476-477 [117]- [121], 484-485 [138]-[140]; Perre v Apand Pty Ltd (1999) 198 CLR 180 at 286- 291 [289]-[302]; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 80-86 [223]-[235]; and Brodie v Singleton Shire Council (2001) 206 CLR 177 Graham Barclay Oysters Pty Ltd v Ryan (2002) 77 ALJR 183 at 228-229 [236]- [238]; 194 ALR 337 at 398-400. 178 cf reasons of McHugh and Gummow JJ at [76]-[77]; reasons of Callinan J at [292], 179 cf Perre v Apand Pty Ltd (1999) 198 CLR 180 at 211-212 [80], 302 [333]-[334]; Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 288- 289 [101]; Sullivan v Moody (2001) 207 CLR 562 at 579 [49] and authorities there cited. 180 cf reasons of Hayne J, especially at [194], [258]; reasons of Heydon J, especially at Kirby issues of legal principle and legal policy, relevant to this appeal, in a somewhat different way. In the United Kingdom, despite Lord Steyn's denials, the proposition that the rejection in McFarlane of an entitlement to compensation for raising a healthy child rested, to some extent, on considerations of legal policy appears to be borne out by the course that decisional authority has followed since McFarlane was decided. In several cases, at trial and in the English Court of Appeal, questions have been raised about the scope of McFarlane and of the principle to be derived for its application to different fact situations. Such was the case in Rand v East Dorset Health Authority181. There, as a result of negligence, an antenatal screening failed to detect that a foetus had Down's Syndrome. But for this negligence, the mother said she would have opted for a termination of her pregnancy which was certainly available in such circumstances. Notwithstanding McFarlane, the parents recovered an award for the financial consequences flowing from the child's disability which the judge held to be different in principle from awarding damages in consequence of the child's existence as such. The health authority did not appeal182. In Parkinson v St James and Seacroft University Hospital NHS Trust183 a mother was awarded damages, upheld by the Court of Appeal, in a case where sterilisation had been carelessly performed and the child, who was born as a consequence, had a disability that involved the mother in extraordinary costs over and above those of normal upbringing. In Rees v Darlington Memorial Hospital NHS Trust184, the English courts had to consider the claim of a single mother who had given birth to a healthy child but who was herself severely visually impaired. Because of the mother's impairment the failure of her tubal ligation, resulting in conception, had imposed on her extra childcare costs, the avoidance of which had constituted the main reason that had led her to seek sterilisation. The trial judge refused the claim whilst acknowledging that the general rule in McFarlane was "fast dissipating" 181 [2000] Lloyds Rep Med 181. 182 See also Lee v Taunton and Somerset NHS Trust [2001] 1 FLR 419. Kirby in England185. However a majority of the Court of Appeal in Rees186 reversed that decision. The House of Lords has heard an appeal which stands for judgment. Since Rees, in AD v East Kent Community NHS Trust187 a totally disabled mother in an institution, who gave birth to a healthy child in circumstances of alleged inadequate supervision, sued the Trust for negligence. The trial judge declined to adopt a further exception to McFarlane. He voiced criticisms of the state that the common law of England had reached188. He granted the plaintiff leave to appeal. The law in the United Kingdom following these cases can be described, fairly, as exhibiting a mixture of "exhausted principle and obscure pragmatism"189. Although the appellants in this Court urged that any consideration of the issues of disability be postponed until a case arose presenting such facts, this would not, in my view, be a correct course to adopt. The decisions in England and Scotland since McFarlane illustrate "how far negligence law has come adrift of principle"190. They provide a preview, and a warning, against following the same course in Australian law. At least, we should not follow the English authority without a serious reflection on the consequences that will ensue if we do. Other common law countries: In Canada, the trend of decisional law has generally reflected a disinclination of judges to provide damages for child-rearing 185 Unreported, Queen's Bench, 9 March 2001 quoted in Hoyano, "Misconceptions About Wrongful Conception", (2002) 65 Modern Law Review 883 at 899. 186 [2003] QB 20 per Robert Walker and Hale LJJ; Waller LJ dissenting. 187 Unreported, Queen's Bench, 23 May 2002, Cooke J noted Hoyano, "Misconceptions About Wrongful Conception", (2002) 65 Modern Law Review 188 Noted Hoyano, "Misconceptions About Wrongful Conception", (2002) 65 Modern Law Review 883 at 903. 189 Hoyano, "Misconceptions About Wrongful Conception", (2002) 65 Modern Law Review 883 at 905 citing Steele, "Scepticism and the Law of Negligence", (1993) Cambridge Law Journal 437 at 466-467. 190 Hoyano, "Misconceptions About Wrongful Conception", (2002) 65 Modern Law Review 883 at 892. Kirby in cases of the present kind191. Even then, exceptional circumstances have been acknowledged as possibly requiring the exceptional provision of compensation for the costs of child-rearing192. In New Zealand, the position is complicated by the existence of the accident compensation scheme193. the administrative determinations and judicial decisions on review have also reflected a general unwillingness to burden the Accident Compensation Corporation with the costs of the upkeep of a healthy child born as a result of compensable "medical misadventure"194. However, within that context, In South Africa, on the other hand, the arguments of public policy that have elsewhere been successful in drawing a line against recovery in such cases, have not found favour in the courts. Both in early decisions195 and in a more recent case196 the South African Supreme Court of Appeal has rejected the defendants' arguments of public policy. Whilst accepting that unexpected and unwanted births from failed sterilisation procedures cannot, as such, constitute a "legal loss" within South African delictual law, the economic burden of the parents' obligation to maintain the child has been recognised as a loss for which damages may be recovered. Civil law approaches: In the civil law systems in Europe, judicial opinions are as divided as they are in the common law. The law is still developing. However, where, following failed sterilisation, a healthy child is born, the law in France, like that of the United Kingdom following McFarlane, denies damages for the costs of the child's upbringing197. Yet in Germany, a 191 Doiron v Orr (1978) 86 DLR (3d) 719; Cataford v Moreau (1978) 114 DLR (3d) 585; Fredette v Wiebe (1986) 29 DLR (4th) 534. 192 Kealey v Berezowski (1996) 136 DLR (4th) 708 at 741. 193 The legislative scheme governed by the Injury Prevention, Rehabilitation, and Compensation Act 2001 (NZ). 194 Re Z: Decision No 764 (1982) 3 NZAR 161; XY v Accident Compensation Corporation (1984) 2 NZFLR 376; cf SGB v WDHB [2002] NZAR 413. 195 Edouard v Administrator, Natal 1989 (2) SA 368 affd Administrator, Natal v Edouard 1990 (3) SA 581. 196 Mukheiber v Raath 1999 (3) SA 1065. 197 See McFarlane [2000] 2 AC 59 at 73, 80. See also Greenfield [2001] 1 WLR 1279 at 1288-1290 [31]-[36] per Buxton LJ. Kirby limited measure of support may be recovered for such costs. In the Netherlands, the Hoge Raad held in 1997, contrary to the submission of the Advocate-General, that full damages for child-rearing may be recovered in such cases198. Where a disabled child is born, German law permits full recovery; the law in Britain seems for the moment to allow recovery of additional costs. In France, following legislation, no costs of upbringing may be recovered although the parents have certain other personal rights which they may pursue199. Emerging common themes: This short review of the current state of judicial authority in a number of developed countries, necessarily brief and incomplete, reveals the difficulties of the problems presented to courts asked to provide a component of damages for the costs of upbringing of a child born after negligently performed sterilisation procedures. There are common themes in the solutions offered by the several courts cited. But there is little consensus in the present state of authority as to the basic approach that should be taken. The majority of courts have adopted control mechanisms of one kind or another to limit the liability of a surgeon, hospital or health service so as to exclude the potentially large amounts incurred in the upbringing of a child born in such circumstances. However, the definition of the "cut-off" point and the explanation of why and how it is to be found, varies significantly. Lying deep in many of the judicial opinions are perceptions of moral or ethical factors, illustrated by the recourse to Biblical citations200. Sometimes, to avoid the appearance of unreliable personal opinions, judges have attempted to objectify the foundation for their judgments. Lord Steyn did this in McFarlane by his appeal to the supposed opinion of the passenger in the London Underground201. This fictional character, a successor to the man on the Clapham omnibus202, is elevated to a modern Delphic oracle so as to amount to something more than "the subjective view of the judge [as to] what he reasonably believes 198 See McFarlane [2000] 2 AC 59 at 73; Weir, "The Unwanted Child", (2002) 6 Edinburgh Law Review 244 at 250. 199 Weir, "The Unwanted Child", (2002) 6 Edinburgh Law Review 244 at 250. 200 eg CES (1995) 38 NSWLR 47 at 87 per Meagher JA; XY v Accident Compensation Corporation (1984) 2 NZFLR 376 at 381 per Jeffries J. 201 [2000] 2 AC 59 at 82: "Instinctively, the traveller on the Underground would consider that the law of tort has no business to provide legal remedies consequent upon the birth of a healthy child, which all of us regard as a valuable and good thing." 202 cf Jones, "Bringing up Baby", (2001) Tort Law Review 14 at 18. Kirby that the ordinary citizen would regard as right"203. However, the fiction has proved unconvincing to many of the judges to whom it was addressed by the House of Lords204 and to academic commentators who have analysed the reasoning in McFarlane since that decision was delivered205. Instead of pretending to such fictions, judges should, in my view, be willing to take responsibility for applying the established judicial controls over the expansion of tort liability. Even if, in Australia, they reject the explicit controls stated in Caparo, they should accept that206: "Every system of law must set some bounds to the consequences for which a wrongdoer must make reparation … In any state of society it is ultimately a question of policy to decide the limits of liability." The setting of such bounds by a legislature can be arbitrary and dogmatic. Subject to any constitutional restrictions, Parliaments, motivated by political considerations and sometimes responding to the "echo-chamber inhabited by journalists and public moralists"207, may impose exclusions, abolish common law rules, adopt "caps" on recovery and otherwise act in a decisive and semi-arbitrary way208. Judges, on the other hand, have the responsibility of expressing, refining and applying the common law in new circumstances in ways that are logically reasoned and shown to be a consistent development of past decisional law. Of course, in a general way, judges should take the economic outcomes of their 203 McFarlane [2000] 2 AC 59 at 82 per Lord Steyn. 204 eg Hale LJ in Parkinson [2002] QB 266 at 290 [82] cited by McHugh and Gummow JJ at [82]; cf Robert Walker LJ in Rees [2003] QB 20 at 32 [41]. 205 eg Hoyano, "Misconceptions About Wrongful Conception", (2002) 65 Modern Law Review 883 at 898. 206 McLoughlin v O'Brian [1981] QB 599 at 623. 207 Vellino v Chief Constable of the Greater Manchester Police [2002] 1 WLR 218 at 233 [60]; [2002] 3 All ER 78 at 91-92. 208 In a number of Australian jurisdictions legislation has recently been introduced to impose restrictions on the recovery of damages for injury: see eg Motor Accidents Compensation Act 1999 (NSW); Civil Liability Act 2002 (NSW). The Personal Injuries Proceedings Act 2002 (Q) was introduced in accordance with s 4(1) "to assist the ongoing affordability of insurance through appropriate and sustainable awards of damages for personal injury". See The Laws of Australia – Torts (2003) at 596 [33.10:7]; Review of the Law of Negligence (Justice David Ipp, Chairman) Kirby decisions into account209. But they have no authority to adopt arbitrary departures from basic doctrine210. Least of all may they do so, in our secular society, on the footing of their personal religious beliefs or "moral" assessments concealed in an inarticulate premise dressed up, and described, as legal principle or legal policy211. The competing choices An analysis of the foregoing, and other, legal authority indicates that several possibilities compete for the solution of the quandary before this Court in this appeal. Confining myself to the chief of these, the possible responses to a claim in negligence by parents seeking to recover damages in respect of the costs of rearing an unplanned child born in the given circumstances are: That no damages may be recovered where the child is born healthy and without disability or impairment; That damages may be recovered but confined to the immediate damage to the mother (and loss of consortium for the father) together with any expenses and loss of earnings immediately consequential on the pregnancy and delivery but excluding the costs of upkeep until self- reliance of a healthy child; That damages may be recovered but confined to the foregoing together with any additional costs of rearing a child born with a disability or born to a parent or parents with a disability; That damages may be recovered in full for the reasonable costs of rearing an unplanned child to the age when that child might be expected to be economically self-reliant, whether the child is "healthy" or "disabled" or "impaired" but with a deduction from the amount of such damages for the joy and benefits received, and the potential economic support derived, from the child; and 209 Kinzett v McCourt (1999) 46 NSWLR 32 at 51 [97] per Spigelman CJ. 210 cf McFarlane [2000] 2 AC 59 at 76 per Lord Slynn; Hoyano, "Misconceptions About Wrongful Conception", (2002) 65 Modern Law Review 883 at 905. 211 Swanton, "Damages for 'Wrongful Birth' – CES v Superclinics (Aust) Pty Ltd", (1996) 4 Torts Law Journal 1 at 7. See also reasons of Gleeson CJ at [6]; cf Meagher JA in CES (1995) 38 NSWLR 47 at 86-87. Kirby That full damages against the tortfeasor for the cost of rearing the child may be allowed, subject to the ordinary limitations of reasonable foreseeability and remoteness, with no discount for joys, benefits and support, leaving restrictions upon such recovery to such limitations as may be enacted by a Parliament with authority to do so. It is convenient to collect the foregoing main solutions to the problem under these headings. In substance, the issue for this Court is which of them represents the solution that seems most harmonious with the applicable considerations of contemporary Australia. legal authority, principle and policy, as viewed Option 1: No damages In substance, the foundation for the first option can normally be traced to religious, political or social views resting upon specific attitudes to the dignity of the human person, for example as that person is believed to be created in the image of God. Some of a secular persuasion might rely on concepts of fundamental human rights, resting on notions of inherent human dignity212. There are resonances of this latter discourse in Hale LJ's reasoning in Parkinson, objecting to an approach to damages that would treat a disabled child as having less worth than a healthy child or that would "commodify" the status of childhood213. For similar reasons, Hayne J in this Court rejects an approach that he considers would involve treating "life" as an "article of commerce" with "market value"214. Apart from some hints of a human rights explanation for denying recovery altogether, most of the judicial expositions of this viewpoint have been expressed in terms reflecting an opinion that the birth of a "normal, healthy baby [is] a blessing, not a detriment"215. Although it is acknowledged that it may sometimes, in the result, represent a "mixed blessing", it is regarded as offensive to the natural gratitude that should exist for healthy progeny to countenance demands for money so that persons other than the parents will assume 212 See reasons of Heydon J at [353]. 213 Parkinson [2002] QB 266 at 293 [89]-[90]. Her Ladyship concluded that any such risks could be answered by recognising that the disabled child simply costs more to keep. 214 Reasons of Hayne J at [248]. See also reasons of Gleeson CJ at [35]. 215 McFarlane [2000] 2 AC 59 at 114 per Lord Millett. Kirby responsibility for the upkeep of a child, which law216 and morality pronounce is the responsibility of the parents217. In the face of such natural obligations, it has been held that the law should refuse to countenance a legal proceeding that contravenes such deeply felt ethical and legal values218. The law, it is said, should not permit "conduct inconsistent with the duty to nurture children"219. The judge's task of assessing the damages for such a claim has been described as "distasteful"220. It is for that reason, so it is argued, that the law rejects, as "morally offensive", even grotesque, a parental claim that the birth of a healthy baby is "more trouble and expense than it is worth"221. Put another way, an irrefutable presumption is established that may be explained in terms of the fact that, although initially unwanted, the child, once born, will virtually always be loved so that the joys and benefits of its birth and the prospect of reciprocal love and support will be taken, as a matter of law, to outweigh the costs and burdens involved in its upbringing222. For the law to be otherwise would threaten the most fundamental of social institutions, the family unit, which is to be treated as natural and sacred in law and life223. Various subsidiary arguments of principle and policy have been advanced to support this option. They include the contention that compensation for the 216 Family Law Act 1975 (Cth), s 66C; Child Support (Assessment) Act 1989 (Cth), s 3; A New Tax System (Family Assistance) Act 1999 (Cth), s 21. See also Criminal Code (Q), ss 286, 324; Crimes Act 1900 (NSW), s 44; Criminal Code (WA), s 344; Criminal Law Consolidation Act 1935 (SA), s 30; Criminal Code (NT), ss 183, 184; Children's Services Act 1986 (ACT), ss 109, 110; Children and Young People Act 1999 (ACT), ss 17-21; Children and Young Persons Act 1989 (Vic), s 4. 217 See reasons of Heydon J at [323]-[337]. See also reasons of Gleeson CJ at [35]. 218 CES (1995) 38 NSWLR 47 at 85-86 per Meagher JA. 219 Reasons of Heydon J at [404]. 220 Reasons of Callinan J at [296]. 221 McFarlane [2000] 2 AC 59 at 114. 222 McFarlane [2000] 2 AC 59 at 97 per Lord Hope; cf Parkinson [2002] QB 266 at 223 See reasons of Gleeson CJ at [35], [39], reasons of Hayne J at [258], reasons of Heydon J at [323], [354], [371]. Kirby costs of upbringing is too difficult to calculate224 and should therefore not be attempted; that it is offensive to present a child, however many years later, with knowledge that it was originally unwanted and the law should not lend itself to such an affront; and that providing for recovery would encourage parents to assert, and perhaps even feel, a lack of love for the child225 which the law should not countenance. None of these arguments bears close analysis. The calculation of the value of countervailing considerations such as joy and love may indeed be difficult. On the other hand, for a very long time judges and juries have been obliged to put money values on equally nebulous items such as pain and suffering and loss of reputation. Calculation of the cost of rearing a child is, by comparison, relatively straightforward. Such calculations are regularly performed for insurance and other purposes226. The mechanics of calculation may be solved although the question of principle remains. The notion that a child might be hurt emotionally following the later discovery that parents had sought sterilisation and had gone to court to recover damages for its failure to prevent the child's birth is unconvincing227. It is difficult to accept that children in today's age learning such facts would not realise, if explained to them, that the claim was brought simply for the economic consequences of medical negligence and to burden the tortfeasor with (and spare the family of) such financial consequences. The experience of post-birth parental love would usually allay the hypothetical hurts attributed to hypersensitive children later learning that their births were originally unexpected. The notion that parents would be encouraged, in court or out, to treat such a child as an unwanted "brute"228 is sheer judicial fantasy. The reality, acknowledged in this case as in all others that I have read, is that, once born and known to them, the child is accepted and loved by the parents. In the real world, cases of this kind are about who must bear the economic costs of the upkeep of the child. Money, not love or the preservation of the family unit, is what is in issue. 224 CES (1995) 38 NSWLR 47 at 87 per Meagher JA. See also reasons of Gleeson CJ at [39]; cf reasons of Callinan J at [297]. 225 CES (1995) 38 NSWLR 47 at 86. See reasons of Heydon J at [391]. 226 eg AMP-NATSEM, Income and Wealth Report, Issue 3, October 2002, setting out costs in current dollars for the average family to raise children. 227 cf Thake [1986] QB 644 at 667. 228 The word used by Meagher JA in CES (1995) 38 NSWLR 47 at 87. Kirby The principle that a child is always to be treated by the common law as a "blessing" can probably be traced to Christensen v Thornby, a decision in the United States229. Although the supposed principle has been rejected as a universal rule in that country230, the notion persists in the case law231. To some degree it was reflected in the appellants' submissions before this Court. The "blessing" idea has a double aspect. First, it is said that the birth of a healthy child is a blessed event and cannot possibly constitute "harm", "injury" or "damage" for which a person will be heard to claim in a court of law. To say otherwise, it is suggested, would require a court to postulate that it would have been better that the child concerned had not been born. That would be repugnant to the basic idea of the sanctity and value of each human life which every legal system, including the common law, upholds232. Secondly, if, contrary to this proposition, there is harm, injury or damage of some kind, it cannot sound in money damages because the blessing of such a child will always overwhelm the burdens so as to expel any right of financial recovery233. On this theory, "after the birth of a normal healthy child the injury is entirely healed"234. To hold to the contrary, it is suggested, would open up a vast array of potential claims by parents, grandparents and other carers, including for the opportunity costs involved in having to spend thousands of hours on the upbringing of a child that might otherwise have been devoted to money-making activities235. These arguments are equally unconvincing. The notion that in every case, and for all purposes, the birth of a child is a "blessing" represents a fiction which the law should not apply to a particular case without objective evidence that bears it out236. In any event, it is not the birth of the child that constitutes the 229 255 NW 620 at 622 (1934). 230 eg in Custodio v Bauer 59 Cal Rptr 463 (1967). 231 See eg Kealey (1996) 136 DLR (4th) 708. 232 eg Trindade and Cane, The Law of Torts in Australia, 3rd ed (1999) at 434 cited by Lord Steyn in McFarlane [2000] 2 AC 59 at 83. 233 cf MY v Boutros [2002] 6 WWR 463 at 488 [158]. 234 XY v Accident Compensation Corporation (1984) 2 NZFLR 376 at 380. 235 LaCroix and Martin, "Damages in Wrongful Pregnancy Tort Actions", in Ireland and Ward, Assessing Damages in Injuries and Deaths of Minor Children (2002) 93 236 CES (1995) 38 NSWLR 47 at 73-74. Kirby harm, injury or damage for which the parents sue. Instead, it is for the economic harm inflicted upon them by the injury they have suffered as a consequence of the negligence that they have proved. Contrary to the assumptions that appear to have been accepted by the courts below, the present was not a case of pure economic loss. It was, rather, an instance of direct injury to the parents, certainly to the mother who suffered profound and unwanted physical events (pregnancy and child-birth) involving her person, after receiving negligent advice about the risks of conception following sterilisation. Any economic loss was not pure, but consequential237. The applicable distinction was explained by Gleeson CJ in Tame v New South Wales238: "Unscientific as may be the distinction between 'pure' economic loss, 'parasitic' economic loss, and damage to property, the care which the law requires people to show for the person or property of others is not matched by a corresponding requirement to have regard to their financial interests. The distinction is not based on science or logic; it is pragmatic, and none the worse for that." In his reasons in this appeal, Gleeson CJ suggests239 that the distinction is inapplicable to this case which involves a form of pure economic loss. With respect, that reasoning is flawed. It gains no support from the fact (thought critical to the point) that the father himself suffered no physical injury. The mother certainly did and, whatever the position of the father, she would be entitled to recover on normal principles without disqualification. On no view could her claim for the costs of child-rearing be viewed as involving "pure" economic loss. The claim of the parents (including the father) is made in common for that item of loss. To that extent the father's claim is made concrete by the physical injury suffered by the mother. It is artificial to sever the parents' claim which is made jointly for the same sum. It is a concern about indeterminate liability that has led the common law to impose upon claims for economic loss various conditions, including that the plaintiff should have suffered physical injury. It is a "pragmatic" condition and it is satisfied in this case by the physical injury to the mother. The precondition being fulfilled, the parents should recover the consequent loss. To deny such recovery is to provide a zone of legal immunity to medical practitioners engaged in sterilisation procedures that is unprincipled and inconsistent with established legal doctrine240. 237 See reasons of McHugh and Gummow JJ at [67]-[68]; cf reasons of Gleeson CJ at [9], [19], [30], reasons of Callinan J at [299]. 238 (2002) 76 ALJR 1348 at 1351 [6]; 191 ALR 449 at 452. See also Caparo [1990] 2 AC 605 at 622. 239 Reasons of Gleeson CJ at [9], [19]-[20], [30]. 240 cf reasons of McHugh and Gummow JJ at [57]-[64]; reasons of Callinan J at [295]. Kirby This being the case, the parents were entitled to recover damages for the economic consequences of the established physical events caused by the negligence without having to satisfy the special tests adopted by the common law for so-called "pure" economic loss, applicable to cases where such physical events are absent241. The spectre of supplementary claims by grandparents and other carers evaporates on analysis. Such claims would face difficulties that are simply not present in a claim of the present kind, brought by the parents, particularly by a mother. The language of "blessings" too is a distraction from the real subject matter of parental claims. Neither the invocation of Scripture nor the invention of a fictitious oracle on the Underground (not even its Australian equivalent242) authorises a court of law to depart from the ordinary principles governing the recovery of damages for the tort of negligence. If such recovery is to be denied, its rejection must find some other and different reasons or another and different law-maker. If there is any area where the law has no business in intruding243, it is in the enforcement of judicial interpretations of Scripture and in giving legal effect to judicial assertions about "blessings", litigious "time bomb[s]"244, "desirable paradigm[s] of family relationships"245, the pertinence of "natural love and mutual confidence between parent and child"246, "key values in family life"247 and the belief that "ill-behaved" children cause "more trouble and very little joy"248. Such considerations risk diverting their exponents from the evidence in the particular case, especially the economic evidence: overwhelming legal 241 Hedley Byrne and Co Ltd v Heller and Partners Ltd [1964] AC 465 at 517; Perre (1999) 198 CLR 180 at 267-270 [242]-[247]. 242 The person "on the Emu Plains omnibus": S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 at 376. 243 CES (1995) 38 NSWLR 47 at 87 per Meagher JA. 244 Thomas JA in the Court of Appeal [2001] QCA 246 at [159] quoted by Heydon J at 245 Reasons of Hayne J at [258]. 246 Reasons of Heydon J at [328], [404]. 247 Reasons of Heydon J at [322]. 248 Reasons of Heydon J at [350]. Kirby analysis with emotion249. I agree that there is a need to rein in judicial declamations250. In this area of discourse most of them have been on the side of those who most vehemently denounce their making. In short, if the application of ordinary legal principles is to be denied on the basis of public policy, it is essential that such policy be spelt out so as to be susceptible of analysis and criticism. Desirably, it should be founded on empirical evidence, not mere judicial assertion251. Yet this was not attempted in the present case, whether at trial or on appeal. Before this Court, the Attorneys-General for South Australia and Western Australia intervened, by leave, to advance arguments supportive of the appellants. They tendered affidavit materials concerning the number of sterilisation cases in those States, the potential numbers of procedures that might, on average, fail and the possible costs that could be incurred by the public healthcare systems if the common law were as it was found to be in the courts below. Such affidavit evidence, although admissible for the purpose of considering the States' application to intervene in private litigation, is not admissible to supplement the record in the appeal involving the parties. By the authority of this Court, the parties and the Court are strictly confined to the evidentiary record252. The most that can be said of the material provided by the States is that it shows what commonsense would suggest in any event. Cases of this kind have potentially large economic consequences. In default of enforceable contractual immunities from liability or statutory exemptions from, or "caps" upon, liability, the application of ordinary principles of tort liability will result, potentially, in substantial judgments precisely because the foreseeable consequences of the negligence are large. The issue is, therefore, who should bear those consequences: the victim of the legal wrong or the person responsible for it, the tortfeasor? To complain about the potential increase in amounts recoverable in some such cases253 is also irrelevant to legal principle. According to that logic, the 249 CES (1995) 38 NSWLR 47 at 71-72; cf Markesinis and Unberath, The German Law of Torts, 4th ed (2002) at 179. 250 Reasons of Heydon J at [316]. 251 Hoyano, "Misconceptions About Wrongful Conception", (2002) 65 Modern Law Review 883 at 905-906. See reasons of McHugh and Gummow JJ at [77]. 252 Mickelberg v The Queen (1989) 167 CLR 259; Eastman v The Queen (2000) 203 CLR 1 at 12-13 [17]-[19], 25 [73], 51 [158], 63 [190], 97 [290], cf at 79 [240]- 253 cf reasons of Heydon J at [306]-[310]. Kirby courts should terminate tortious recovery altogether for it undoubtedly imposes substantial burdens and inconvenience on tortfeasors. Such a conclusion would be absurd. Where large economic losses have resulted from a person's negligence involving physical harm, the ultimate issue is who should bear the burdens of the economic losses. In our legal system that burden normally falls on the person whose negligence is found to have caused the losses. Option 2: Limiting compensation to immediate damage A variation of the first option is the one which, so far, has gained most support in the common law in the United Kingdom, the United States and Canada. This is to allow the parents to whom a child is born following the negligent failure of sterilisation procedures or the provision of inadequate or inappropriate advice in the given circumstances to recover certain compensation for the immediate consequences of the pregnancy to the mother (and possibly the family) but to draw a line soon after delivery of the child so as to exclude any recovery of the costs of child-rearing. In the United Kingdom, this is what the House of Lords held in McFarlane254. However, there was no unanimity in the speeches of their Lordships to mark out clearly the limits of what might be recovered. According to Lord Slynn255, damages could be recovered by the mother for the pain and inconvenience of the pregnancy and delivery, for the extra costs of healthcare, of baby clothes and the mother's loss of earnings. According to Lord Steyn256, recovery is limited to the injury to the mother and loss of earnings during the last stages of her pregnancy. For Lord Hope257, the damages for negligence would extend to compensation for the injury to the mother, including for the physical and emotional problems proved and any loss of earnings. But they would not include provision for the costs of the baby's layette because this was to be regarded as part of the normal costs of child-rearing. Lord Clyde258, on the other hand, would provide a general solatium for the injury to the mother including for the costs of the baby's layette and for the mother's loss of earnings during the pregnancy. Moreover, Lord Millett259 would provide no damages for 255 McFarlane [2000] 2 AC 59 at 74, 76. 256 McFarlane [2000] 2 AC 59 at 84. 257 McFarlane [2000] 2 AC 59 at 97. 258 McFarlane [2000] 2 AC 59 at 105-106. 259 McFarlane [2000] 2 AC 59 at 114. Kirby the mother's pain and suffering nor for her distress at the pregnancy for this was part of parenthood for which the law, on public policy grounds, denies an entitlement to claim. Lord Millett would limit recovery to an amount proper for the defendant's breach of the right of the parents to decide for themselves upon the size of their family. For this his Lordship considered that a conventional sum of £5,000 would be appropriate. How precisely that sum was made up or justified is not clear. The variety of the opinions of their Lordships suggests that different principles were at work in the differentiation between the damages that were held to be recoverable in cases of this kind and the damages that were not. It might be true that, generally in actions of tort, the calculation of damages is partly arbitrary, that exactitude is an illusion and that line-drawing is always a necessity. But the diverse opinions of their Lordships in McFarlane illustrate what can happen when judges embark upon the "quicksands" of public policy260, at least when doing so leads them away from basic legal principle. In the United States, in virtually all jurisdictions in which some damages are allowed for births following negligent failure of a sterilisation procedure (or consequential advice), provision is made for the mother's recovery of her loss of wages during the confinement, the father's loss of consortium, medical and hospital expenses involved in the confinement and some provision for parental pain and suffering and emotional distress261. Most courts have denied the full costs of raising a healthy child, only those of Wisconsin and New Mexico providing for the recovery of such costs262. In general, such judicial decisions are founded on assertions of public policy or the policy of the law. Sometimes, however, reference is made to the supposed impossibility of calculating the net costs of raising the child263. Sometimes the line drawn is explained by reference to the parental decision to "forego the option of adoption" and instead "to retain the child as their own with all the joys and benefits that are derived from parenthood"264. But commonly the division between the recoverable costs of the 260 Jones, "Bringing up Baby", (2001) Tort Law Review 14 at 16-17. 261 Baugher, "Fundamental Protection of a Fundamental Right: Full Recovery of Child-Rearing Damages for Wrongful Pregnancy", (2000) 75 Washington Law Review 1205 at 1214-1215. 262 LaCroix and Martin, "Damages in Wrongful Pregnancy Tort Actions", in Ireland and Ward, Assessing Damages in Injuries and Deaths of Minor Children (2002) 93 263 Emerson 689 A 2d 409 at 412-413 (1997). 264 Emerson 689 A 2d 409 at 413 (1997). Kirby immediate aftermath of irrecoverable consequences of child-rearing is simply attributed to public policy with a passing nod towards the law's respect for the sanctity of life, the blessings of children and the importance of the family unit, and occasional invocations of Scripture. the unwanted pregnancy and the In my view, the best attempt to justify the otherwise arbitrary differentiation between the immediate consequences of the medical negligence (loss of wages, hospital costs, mother's pain and layette) and longer-term consequences (child-rearing costs to self-reliance) is that made by Laws LJ in Greenfield265. His Lordship appeals to dual notions of causation and justice: "In principle no damages are awarded for a benefit, or I would say for any condition that is other than a detriment or taken to be a detriment. Here is the value in the present context of the distinction between damage attributable to the effects of pregnancy and confinement and alleged damage attributable to the existence of the healthy child that is born. The first may be said to be a detriment; the second cannot possibly be so categorised … It is to be noted that if this lady were to obtain the damages she seeks, she would happily be in a position whereby she would look after her much loved child at home, yet at the same time in effect would receive the income she would have earned had she stayed at work. In my judgment that is not just compensation; it is the conferment of a financial privilege, which has nothing to do with just compensation." The difficulty with this reasoning is that severing the causal link between various outcomes of the pregnancy is incontestably arbitrary. Both kinds of damage are equally foreseeable as a consequence of negligence. Each is directly caused. Neither is too remote. So far as the appeal to justice is concerned, it is unrealistic to expect that, once the child is born, the mother will hate or neglect it because initially it was unexpected and undesired. That truly would be an hypothesis contrary to public policy and ordinary human experience. Parents in the given situation must make the most of their circumstances. However, responsibility for the financial costs of such circumstances remains to be attributed. So long as child-rearing costs are imposed on the parents alone, the dual purposes of the law of torts are, to that extent, unfulfilled. There is neither proper compensation for the victims of the legal wrong nor the provision of a civil sanction that promotes care and discourages carelessness in the future, in the knowledge that the burden of it will fall on others. 265 [2001] 1 WLR 1279 at 1292 [51]-[54]. Kirby The propounded distinction between immediate and long-term costs of medical error is not drawn in other cases of medical negligence. It is arbitrary and unjust in this context. Such a distinction could even be said to be discriminatory, given that it involves a denial of the application of ordinary compensatory principles in the particular circumstances of child-birth and child- rearing, circumstances that biologically and socially pertain to the female experience and traditionally fall within the domain of women. If such a distinction is to be drawn, it is the responsibility of the legislature to provide it, not of the courts, obliged as they are to adhere to established legal principle266. Option 3: Extra costs of disabled births A number of the earlier cases, both in England267 and Australia268, concerned claims brought by parents of children born with disabilities after failed sterilisation. Sometimes the sterilisation procedures were sought for the precise reason of avoiding such risks. Further, as the cited cases in England since McFarlane demonstrate, the supposed public policy that forbids compensation for the costs of upkeep of a healthy child is severely challenged when the unexpected child is born with significant disabilities269 or where the child is healthy but the unexpecting parent is relevantly disabled270. In such cases, it has been suggested, the provision of compensation for the extra costs of rearing the child whom the parent(s) sought to avoid by sterilisation, would not "stick in the gullet" of Lord Steyn's hypothetical Underground traveller271. This differentiation is also arbitrary and therefore unacceptable as a statement of the common law. In Australia, even the use of the description of such parents as "afflicted with a handicapped child"272 would be offensive to most such parents and contrary to their attitudes about themselves, their child and others. Essentially, such differentiation rests on outmoded reasoning similar to 266 cf reasons of Heydon J at [311]: "The common law does not permit capping." However, in Australia, legislatures commonly so provide. 267 Emeh [1985] QB 1012. 268 Veivers [1995] 2 Qd R 326. 269 Rand [2000] Lloyds Rep Med 181; Parkinson [2002] QB 266. 270 Rees [2003] QB 20. 271 Parkinson [2002] QB 266 at 295 [95]. 272 Jones v Berkshire Area Health Authority unreported, 2 July 1986 cited by Kirby that of Denning LJ in Bravery273. According to such reasoning, because married (or other permanent) sexual relationships between a fertile man and woman commonly give rise to the procreation of children, departure from that purpose is to be treated as exceptional unless there is some good reason to justify it, such as the avoidance of a disabled child or an unwanted child of a disabled parent. Such thinking (like the earlier notion of enforced adoption) bears little relationship to reality in contemporary Australia. That reality includes non-married, serial and older sexual relationships, widespread use of contraception, same-sex relationships with and without children, procedures for "artificial" conception and widespread parental election to postpone or avoid children. The "stick in the gullet" test for the recovery of damages is simply the latest illustration of judges applying to the legal rights of individuals in contemporary society values formed in the far-off days of judicial youth, thirty or more years earlier, when social facts were significantly different. The rule limiting recovery to the extra costs incurred for, or by, children or parents with disabilities is no more than an attempt to carve a tolerable exception from the supposed "stick in the gullet" prohibition on any recovery for an unexpected birth following a failed sterilisation or negligently omitted advice. That prohibition is revealed in such cases as manifestly unjust and therefore offensive to notions of fairness and reasonableness that inform the content of the common law274. It ignores the fact that, in Australia and in like countries, millions of people use contraceptives daily to avoid the very result which the appellants would have the Court say is always to be viewed by the law as a benefit (except perhaps where the parent or child is disabled275). Apart from the arbitrariness of this exception it has a further flaw. It reinforces views about disability and attitudes towards parents and children with physical or mental impairments that are contrary to contemporary Australian values reinforced by the law276. English judges have been forced into this unhappy differentiation because of the authority of McFarlane. Some of them show obvious discomfort with it and some even rebellion. I am unconvinced that Australian law should go down the same path for it leads away from established legal principle. 273 [1954] 1 WLR 1169 at 1180; [1954] 3 All ER 59 at 67-68; cf Gillick v West Norfolk and Wisbech Area Health Authority [1986] AC 112 at 182-188 per Lord Scarman. 274 cf Fassoulas v Ramey 450 So 2d 822 at 830 (1984) per Ehrlich J (diss). 275 cf Emerson 689 A 2d 409 (1997). 276 cf Parkinson [2002] QB 266 at 293-294 [91]-[92]. See Disability Discrimination Act 1992 (Cth); X v Commonwealth (1999) 200 CLR 177 at 223-224 [147]. Kirby Option 4: Compensation with discount for joys and benefits An alternative approach that would permit adherence to ordinary recovery principles but provide for the "moderation" of damages, at least in cases like this where a child is born healthy, is to require a discount from the compensation for the costs of child-rearing of an allowance for "the 'satisfaction, the fun, the joy, the companionship, and the like' derived from bringing up a child"277. The theory behind this approach is that the plaintiff is only entitled in law to damages for the net loss that has been suffered and must bring to account any benefits, to offset the burdens, that flow from the wrong. Thus a child may have been undesired but the child, once born assumes a different complexion because of the consequential joys and benefits that it brings to the parents for which they should make allowance. This was the approach favoured in early cases both in England278 and Australia279, although in the latter it was suggested that, whilst each case depended on its own facts, only a "small amount" should be deducted on this ground. More recently, the need to make such a deduction has been invoked in England, in responding to the Caparo formula280, to justify the conclusion that no damages for child-rearing should be allowed in the case of a healthy child on the footing that the joys and benefits necessarily and invariably outweigh the costs and burdens of child-rearing281. Several judges have declared that it is impossible to set off benefits of such a character against costs of such a kind282. However, in a number of jurisdictions of the United States juries, which 277 Seymour, Childbirth and the Law (2001) at 126. 278 Thake [1986] QB 644; cf Swanton, "Damages for 'Wrongful Birth' – CES v Superclinics (Aust) Pty Ltd", (1996) 4 Torts Law Journal 1 at 11. 279 Dahl (1992) 15 Qld Lawyer Reps 33 at 36-37; cf Graycar and Morgan, "'Unnatural Rejection of Womanhood and Motherhood': Pregnancy, Damages and the Law", (1996) 18 Sydney Law Review 323 at 337-339. 280 [1990] 2 AC 605 at 618. 281 McFarlane [2000] 2 AC 59 at 76 per Lord Slynn, 95 per Lord Hope; cf Parkinson [2002] QB 266 at 290-291 [83]. 282 eg Lord Slynn in McFarlane [2000] 2 AC 59 at 75; cf CES (1995) 38 NSWLR 47 at 87 per Meagher JA. Kirby commonly decide such cases, are instructed to discount from the costs of child- rearing the benefits conferred by having and raising the child. Such juries do The approach of such United States decisions has been influenced by an interpretation of the American Law Institute's Restatement of Torts 2d. As Donaldson284 writes, it recognises: "[E]ven while causing tortious harm, one may also provide an incidental benefit to another, and … when the tortious conduct causing the harm sued upon has at the same time conferred a special benefit to the interest of the plaintiff in the action, the value of the benefit conferred should be considered in mitigation of damages, to the extent that such consideration would be equitable." The application of the Restatement to permit offsetting the joys and benefits of the child's birth has been criticised as inconsistent with the true scope of §920285. According to this criticism, it is erroneous to offset dissimilar costs or burdens. The process has been described as equivalent to "comparing apples to oranges"286. Although I was initially attracted to this fourth option, I have concluded with the critics that it is inconsistent with the approach hitherto taken by Australian law and cannot be justified as a matter of legal principle287. For example, no-one until now has suggested that the damages of a negligently injured worker or pedestrian, totally incapacitated for work, should be reduced to allow for the fact that the injuries have resulted in a kind of benefit – having relieved the injured person from the obligation to answer the morning alarm or the necessity to travel to work on a cold day. Any such "benefits" and "joys" as 283 Ochs v Borrelli 445 A 2d 883 (1982); University of Arizona Health Sciences Center v Superior Court of the State of Arizona 667 P 2d 1294 (1983). 284 "Wrongful Pregnancy Damages", 89 ALR4th 632 at 638 cited in CES (1995) 38 NSWLR 47 at 76. 285 Baugher, "Fundamental Protection of a Fundamental Right: Full Recovery of Child-Rearing Damages for Wrongful Pregnancy", (2000) 75 Washington Law Review 1205 at 1226. 286 Johnson v University Hospitals of Cleveland 540 NE 2d 1370 at 1374 (1989). 287 eg Sharman v Evans (1977) 138 CLR 563 at 578; cf Public Trustee v Zoanetti (1945) 70 CLR 266 at 286; Kahn-Freund, "Expectation of Happiness", (1941) 5 Modern Law Review 81 at 85-86. Kirby result from unplanned and undesired idleness are treated by the law as too remote or of a different character so that they are not offset but ignored. In one United States case288, explained in the language of the Restatement, it was said, correctly in my view: "[I]t hardly seems equitable to not only force this benefit upon [the parents] but to tell them they must pay for it as well by offsetting it against their proven emotional damages. With respect to economic benefits, the same argument prevails." It might be appropriate to deduct from the costs of child-rearing any proved economic benefits received, or likely to be received, by the parents as a result of the birth of the child. However, the emotional and other benefits and burdens resulting from such a birth cannot be assessed comprehensively at the beginning of life. They are different in quality from the costs incurred in child- raising. They have nothing to do with the legal wrong for whose foreseeable consequences the tortfeasor must restore the parents. Legal principle requires that such joys and any like benefits of the unexpected birth be ignored in calculating the recoverable damages. Option 5: Compensation to include foreseeable costs of child-rearing The application of the general rule, requiring the tortfeasor to pay the victims of the wrong for the reasonably foreseeable consequences of any proved negligence, obliges the inclusion in the recoverable damages of a sum for the costs of child-rearing. Clearly such costs are within the ambit of the compensable principle required by "corrective justice". Lord Steyn conceded as much in McFarlane289. It is true that, if the action is brought by the mother or the parents, it is she or they, and not the child, who recovers the verdict290. Perhaps this is a defect in our legal procedures that should, and could, be repaired by legislation or protective court orders. But it is not a defect peculiar to this type of litigation. Furthermore, as has been correctly conceded, even without protective orders parents will normally feel a duty to devote the damages recovered towards the benefit of their child291. 288 Marciniak v Lundborg 450 NW 2d 243 at 249 (1990). 289 [2000] 2 AC 59 at 82. 290 cf reasons of Heydon J at [312]. 291 cf reasons of Heydon J at [312], [341]-[342]. Kirby The supposed reasons for departing from the general rule of the common law have been variously explained. In so far as they relate to a suggested disproportion between the original wrong and the cost burden imposed as a consequence, this is unconvincing and unprincipled, at least so far as legal analysis is concerned. In many cases, especially those involving vulnerable people, the damages recoverable may bear little relationship to the degree of the tortfeasor's initial culpability292. If the suggested reason for denying recovery is the natural joy derived by the parents from the smile of their child, I would answer, as Peter Pain J did in Thake293: "[E]very baby has a belly to be filled and a body to be clothed." As to the contention that the burden on the medical profession, particularly obstetricians, and their medical indemnity insurance would be prohibitive, the answer that a court must give is that such considerations cannot succeed at common law. Particularly, they cannot succeed in this case because no evidence was tendered addressed to the issue. Any such considerations must therefore be addressed to the other branches of government, principally the legislature. So far as "public policy" is invoked to justify an arbitrary departure from the principle of "corrective justice" it is necessary to repeat the caution that judges must observe in appealing to, or applying, such contestable considerations294. One writer has argued that the House of Lords decision in McFarlane reflects a particular factual context in the United Kingdom whereby most patients in this class of case bring their claim, in effect, against the local authority representing the National Health Service295, not, as in Australia, against an individual physician or surgeon or healthcare facility legally responsible for the legal wrong. Concern to protect the viability of the National Health Service at a time of multiple demands upon it might indeed help to explain the invocation in the House of Lords in McFarlane of the notion of "distributive justice"296. But such a consideration has no part to play in the identification of an applicable Australian public policy. In other recent cases, this Court has insisted upon following the star of legal principle. It has not diverted from that course because of concerns that legislatures, for their own purposes and within their own much 292 cf Joslyn v Berryman [2003] HCA 34. 293 [1986] QB 644 at 666; cf Graycar and Morgan, "'Unnatural Rejection of Womanhood and Motherhood': Pregnancy, Damages and the Law", (1996) 18 Sydney Law Review 323 at 337. 294 McLoughlin v O'Brian [1983] 1 AC 410 at 430 per Lord Scarman; Emeh [1985] QB 1012 at 1021, 1028. 295 Jones, "Bringing up Baby", (2001) Tort Law Review 14 at 19. 296 [2000] 2 AC 59 at 83 per Lord Steyn. Kirby larger powers of law-making, might later modify or reverse the exposition of the common law as offered by this Court297. In the present case the negligence of the appellants was established. It was found that such negligence caused direct loss to the parents, including the physical and emotional impact on the mother298. Those findings are not in issue in this appeal. They constitute the starting point for analysis of the scope and limits of the parents' recovery. Ordinary principles of tort liability would entitle the victims of the appellants' wrong to recover from the appellants all aspects of their harm that are reasonably foreseeable and not too remote. By the application of that test the inclusion in the parents' damages of a component for the costs of child-rearing involved no legal or factual error. Neither did the omission to deduct from that sum an allowance for estimates of the joys and like benefits derived, or proved likely to be derived, from the birth of the child. On the contrary, the provision of a zone of immunity to the appellants would have involved legal error. The Court of Appeal and the primary judge were correct to resist it. The comparatively modest amount allowed in this case evidences no exaggeration or excess. Such amounts have been allowed in the past in Australia, England, South Africa and elsewhere without prompting legislative intervention. Keeping in mind the financial costs of the care of the child, the allowance for the costs of child-rearing is hardly exceptional in terms of common law principle. To deny it would be. Any such denial would be arbitrary. As such, denial is the business, if of anyone, of Parliament not the courts299. Orders The majority in the Court of Appeal were correct to conclude that no error had been shown in the allowance provided by the primary judge for the cost of rearing the respondents' additional child. The appeal from the Court of Appeal's order should be dismissed with costs. 297 See eg Brodie (2001) 206 CLR 512; Tame (2002) 76 ALJR 1348; 191 ALR 449; Gifford v Strang Patrick Stevedoring Pty Ltd [2003] HCA 33. 298 See Parkinson [2002] QB 266 at 285-287 [63]-[69]. 299 McFarlane [2000] 2 AC 59 at 95 per Lord Hope. Hayne 182 HAYNE J. By 1992 the respondents had two children of their marriage. In that year the first respondent, the wife, underwent a tubal ligation which was performed by the first appellant ("the doctor") at a public hospital in Queensland. The operation did not have the desired effect of sterilising the first respondent. In 1996 she became pregnant and, on 29 May 1997, was safely delivered of a third child. The respondents sued the doctor and the State of Queensland in both tort and contract. The claim in contract was not pressed at trial and has not been pressed on appeal. At first instance, the trial judge (Holmes J)300 found that the doctor had failed adequately to inform the first respondent of the possibility that the procedure undertaken would not be effective and to give her the option of considering further investigation. The trial judge rejected contentions that the doctor had conducted the procedure carelessly. The finding that the doctor had failed to exercise reasonable care in giving advice to the patient was not challenged in this Court. The critical question for decision is whether damages to be awarded to the respondents should include any amount for the costs that will be incurred in maintaining the child. I answer that question, no. The trial judge awarded both respondents damages which included amounts for costs already incurred in maintaining the child and the present value of amounts that would be incurred on that account. The doctor and the State appealed to the Court of Appeal of Queensland. That Court (McMurdo P, Davies JA, Thomas JA dissenting) dismissed the appeal301. In this Court, the appellants challenged the assessment of the damages awarded only in so far as those damages included past or future costs of maintaining the child. They made no point about the trial judge's decision to award the damages to the respondents jointly and made no point about the awarding of damages to the first respondent for pain and suffering and loss of amenities occasioned by the pregnancy and childbirth, for her past and future economic loss, or for past and future costs of providing care for the family. Nor did the appellants challenge the award to the second respondent of $3,000 for loss of consortium consequent upon his wife's pregnancy and the birth of a third child. Questions of the kind which must be examined in this matter have been considered in many different jurisdictions around the world. Those questions have arisen against different factual backgrounds. In some cases, like the present, both mother and child have been healthy. In some, either mother or child has had (or in some cases both mother and child have had) some medical problem. (For the moment, it is convenient to adopt the dichotomy between 300 Melchior v Cattanach (2001) Aust Torts Reports ¶81-597 at 66,626 [33]. 301 Melchior v Cattanach [2001] QCA 246. Hayne "healthy" and "disabled" children used in other jurisdictions without pausing to examine the difficulties that the terminology and even the dichotomy itself may entail.) In some cases, like the present, the complaint made against the doctor concerns the advice that the doctor did, or did not, give to the patient. In some, the complaint has been about the way in which the sterilisation procedure has been carried out. In some cases, like the present, it is the woman who has sought sterilisation; in some, it is the man. In some cases there have been genetic reasons for seeking to prevent conception; in some, the reasons have been financial, social or a combination of such factors. Overseas decisions In America the dominant view is that no damages are to be awarded for the costs of rearing a healthy child302. In the United Kingdom the House of Lords has recently held303 that parents could not recover damages for the costs of rearing a healthy child, but the Court of Appeal has since held that such costs may be recovered as damages by the healthy parent of a disabled child304 and the partially disabled parent of a healthy child305. In Canada it has been held that the damages to be awarded against a doctor who performs a sterilisation negligently should not include child rearing costs306. By contrast, courts in South Africa307 have allowed damages of this kind. (In New Zealand the question that arises concerns the operation of the national accident compensation scheme308 not the law of negligence.) Courts that have considered the problem have taken different paths in reasoning to their conclusion. Much more often than not, the conclusion reached by appellate courts has not been reached unanimously. In the United States the 302 See, for example, Emerson v Magendantz 689 A 2d 409 at 411-412 (1997) and the cases there cited. 303 McFarlane v Tayside Health Board [2000] 2 AC 59. 304 Parkinson v St James and Seacroft University Hospital NHS Trust [2002] QB 266. 305 Rees v Darlington Memorial Hospital NHS Trust [2003] QB 20. 306 Kealey v Berezowski (1996) 136 DLR (4th) 708. 307 Mukheiber v Raath 1999 (3) SA 1065. 308 See, for example, Re Z: Decision No 764 (1982) 3 NZAR 161; XY v Accident Compensation Corporation (1984) 2 NZFLR 376; SGB v WDHB [2002] NZAR Hayne reasons given have often reflected the influence of §920 of the Restatement of Torts 2d: "When the defendant's tortious conduct has caused harm to the plaintiff ... and in so doing has conferred a special benefit to the interest of the plaintiff that was harmed, the value of the benefit conferred is considered in mitigation of damages, to the extent that this is equitable." Further, the reasons given have often assumed that emotional and spiritual advantages flow from the birth of a healthy child which will necessarily outweigh any financial costs that will be incurred. Sometimes public policy is invoked. Sometimes, most notably in McFarlane v Tayside Health Board309, consideration of its application is rejected as unhelpful. The legal problem It is important to begin by accurately identifying the legal problem that arises. In doing that, it is convenient to begin by putting on one side the difficulties that may arise from the husband's joining in his wife's claim. The wife sued her doctor for negligence. The doctor was held to have failed to exercise reasonable care (here, as it happens, by not giving proper advice, not by performing the procedure carelessly). The existence of a duty of care was not disputed. That a treating doctor owed his or her patient a duty to take reasonable care in treating that patient, and to take reasonable care in tendering to the patient suitable advice about the treatment, was undisputed and is indisputable. What duty of care the doctor owed to his patient's husband or why he owed that duty, were questions that were not explored in argument. Beyond saying that it is not self-evident how the doctor owed Mr Melchior a duty to offer him any advice it is neither necessary nor appropriate to examine that question further. It is as well, however, to consider why a doctor owes a patient the duties that were conceded to be owed here. The physical integrity of an individual's person and property has always been treated as of central importance in the law of negligence. Likewise the autonomy of the individual called on to make decisions affecting that physical integrity has been given great weight310. It is, then, not surprising that a doctor should owe his or her patient a duty to take reasonable care in carrying out procedures on the body of the patient, and a duty to take reasonable care in 310 Rogers v Whitaker (1992) 175 CLR 479. Hayne proffering advice about that treatment and its consequences. That a particular procedure is conducted at the patient's choice, rather than for an immediately identified therapeutic reason, leads to no different answer. The interest of the patient which is at stake in the events described is the patient's interest in physical integrity. The patient permits an invasion of that integrity only upon being sufficiently informed of what is to be done, why it is to be done and what are the consequences that will, or may, follow from it. Where the procedure contemplated concerns the patient's reproductive capacity it may be accurate to describe the interest at stake as being the patient's reproductive autonomy. I take leave to doubt, however, the utility of identifying the interest in this way, if only because it may reflect echoes of the wholly different debate in the United States about issues discussed in the decision of the Supreme Court of the United States in Roe v Wade311. But, whether or not the interest at stake is identified as reproductive autonomy, the interest is one which, if infringed, may affect the holder of that interest in a way which leads to the birth of another. In such a case the effect of the infringement of that interest is not confined to effects on the plaintiff. If the wife suffered loss or damage of which the doctor's negligence was a cause, she is, prima facie, entitled to recover damages for that loss or damage. In the present matter the wife alleged that the negligence of the doctor was a cause of several different consequences for her. They were: her falling pregnant with the associated pain and discomfort of pregnancy and childbirth, further deleterious physical together with some consequences for her which followed from her pregnancy; the financial consequences for her of pregnancy and childbirth; and the financial consequences for her of having another child to maintain and nurture. Each was a reasonably foreseeable consequence of the negligence of the doctor. It follows that the relevant question is why the wife was not entitled to recover damages for all these consequences; it is not why she should be held to be entitled to recover for them. It is important to approach the question without assuming its answer by classifying the claim and arguing from that classification to a conclusion. In particular, to describe the wife's claim as one of economic loss caused by negligent advice would ignore the first consequences identified or it would treat Hayne her claim as if it were two distinct claims when, in truth, it was but a single claim for damages. There being no dispute about the existence or ambit of the duty of care owed by the doctor to his patient, the dispute was confined to what damages were to be allowed for what in this Court must be accepted to have been a negligent failure by the doctor to tender proper advice. To describe the claim as for "wrongful birth" or "wrongful conception" would divert attention from the relevant wrong: the negligent failure to give proper advice. Several different heads of argument can be identified in the reasons of those courts outside Australia which have considered questions of the kind raised in this matter. They can be described as (a) the "blessing" argument, (b) the "set off" argument, (c) the "impossible prediction" argument, (d) the "damage the child" argument, (e) the "motives and damages" argument, and (f) the "public policy" arguments. As will become apparent, each is an argument that at some point or other begins to blend with one or more of the other arguments. It is the last set of arguments, about public policy, which I consider to be determinative here. "Blessing" In Kealey v Berezowski312, in the Ontario Court (General Division), Lax J said: "In our hierarchy of societal values, the benefits which a child brings are regarded as so essentially worthwhile that we tend to regard those who are childless by choice as unusual and we extend our comfort to those who long for a child but are unable to have one. In short, the love, companionship, affection and joy which a child brings is thought to so outweigh the burdens that we bridle at the thought that the law could be so foolish as to regard this as a compensable loss." (original emphasis) This argument, that the birth of a child, or at least the birth of a healthy child, is always a blessing for the parents, has played a prominent role in the United States cases313. Sometimes it has been sought to buttress the conclusion that the child is a blessing, by saying that parents who persist with the pregnancy, forego releasing the child for adoption, and choose to retain the child as their own, are to be taken as concluding that, for them, the benefits of retaining the child outweigh 312 (1996) 136 DLR (4th) 708 at 732. 313 Public Health Trust v Brown 388 So 2d 1084 at 1085-1086 (1980); Beardsley v Wierdsma 650 P 2d 288 (1982); Terrell v Garcia 496 SW 2d 124 (1973). Hayne the economic costs of child rearing314. Yet as has been rightly pointed out in other cases in the United States315, the blessing argument not only finds its expression in sentimental terms, it is an argument which is usually traced to assertions of "universally-shared emotion and sentiment"316. The chief criticism of the blessing argument can be put in different ways. First, it may be said that it imposes upon parties a paradigm of family life which may or may not be apt to their circumstances. Secondly (and this is no more than a restatement of the first argument in other words), there will be cases in which the birth of an unwanted child does put one or both of the parents of that child in circumstances which, whatever measure is applied, are worse than the circumstances in which that parent, or those parents, would have been but for the negligence of which complaint is made. The parent or parents are worse off economically, emotionally, socially and spiritually. That is not to say that the child is nothing but a burden or that there is no benefit in the relationship between parent and child. But the relevant inquiry which is to be made in a claim for damages for negligence is: what is the position of the plaintiff as a result of the defendant's tortious conduct compared with the position that would have obtained if the tort had not been committed? That is not answered by saying that parenthood brings both benefits and burdens. It is important, however, to notice the limits of the criticism that is levelled at the blessing argument. The criticism denies the universal validity of a factual proposition which can be expressed as: all children are a blessing to all parents. The criticism does not deny that parenthood does bring both benefits and burdens. It will be necessary to examine later what follows from that fact. This leads to consideration of the "set off" argument and the "impossible prediction" argument. It is convenient to look at them together. "Set off" and "impossible prediction" The former of these two arguments suggests that the financial costs of bringing up a child are to be reduced by an allowance for the benefits that the parent will obtain from parenthood both during and after the period of a child's financial dependence on the parent. The latter suggests that so uncertain are the predictions that would have to be made about the future for a young child, and 314 Public Health Trust v Brown 388 So 2d 1084 at 1085-1086 (1980); Emerson v Magendantz 689 A 2d 409 at 419 (1997). 315 Cockrum v Baumgartner 447 NE 2d 385 at 388 (1983). 316 Public Health Trust v Brown 388 So 2d 1084 at 1085 (1980). Hayne the consequences for the parent of that child, that it would be wrong to allow anything for the economic costs of bringing up the child. Both are arguments which require or assume that a monetary sum could be identified as the "worth" of a child's love or emotional support for a parent. At first sight, that may seem a startling proposition. But the law has long since sought to measure pain and suffering in amounts of money. Measuring the converse experience in money is no more or less absurd, or difficult, than expressing the pain of a broken limb as a dollar amount. Hitherto the courts have not sought to value the future benefits to be derived from what, ideally, would be a relationship of mutual love and support between parent and child but there has not been any occasion to do so. The set off argument assumes that it is possible to make useful predictions about what the future will hold for parent and child. At the least that is difficult. It may even be that, as McCardie J said317, in the context of a claim for the wrongful death of an infant child, the claim "is pressed to extinction by the weight of multiplied contingencies". Again, however, the criticisms of the set off argument must not obscure the fact that it rightly acknowledges that parenthood does bring benefits and burdens. Again it will be necessary to return to consider the consequences that should be held to follow from this fact. The criticisms that are made of the proposition, that benefits and burdens are to be set off one against the other, go no further than making the point that to do so would be hard. It would be hard because it is hard to predict the future, and it would be hard because some of the burdens are economic, and many of the benefits are not. "Damage the child" The "damage the child" argument approaches the problem from what may seem to be an altogether different point of view from arguments about the advantages which parenthood brings to the parents. It asks what will the child think when, in years to come, he or she discovers not only that the birth was unwanted, but also that one or both of the parents sought to put a monetary value on the cost of maintaining the child, and recover that from another, rather than bear that cost. Why, so the argument runs, should whatever risk this discovery may present to the welfare of the child be inflicted upon the child for the financial benefit of the parent? To this there are said to be several answers. First, it is not self-evident that the feared consequences of harm to the child are likely, let alone inevitable. Much would turn on what was said on the subject, when and how, and on the nature of the relationship that had been established between parent and child both 317 Barnett v Cohen [1921] 2 KB 461 at 472. Hayne before and after these revelations were made. Secondly, recovery of damages which include the costs of maintaining the child may, in at least some cases, make a considerable difference to the material well-being of the child. But for their recovery the child may have faced the consequences of the parents' financial hardship. Thirdly, the parent or parents bring the action to recover loss which will be suffered by the parents, not loss suffered by the child. In no other circumstances does the possibility of detriment to a person not party to the action prevent recovery of damages otherwise proved to have been sustained by the plaintiff as a result of the defendant's negligence. What those answers do not address is the more deep-seated problem that lies in the fact that the parent seeks to advance his or her economic interests by contending that the child to whom the parent owes obligations is to be regarded as nothing more than an economic burden on the parent. It will be necessary to return to the significance of this matter at the end of these reasons. For the moment, it is enough to say that the answers made to the damage the child argument are answers which attack the universal validity of a particular factual proposition about harming the child. The answers do not deal with what might be described as the consequent commodification of the child. "Motives and damages" Does it matter why the plaintiff sought sterilisation, or advice about that subject? Some of the cases suggest that different answers to the central question in this case might be given depending upon whether the person seeking sterilisation did so for financial, medical, or other reasons. That is, there are indications in some of the cases that a person who seeks sterilisation for financial reasons should be treated differently from a person who decides, for some other reason, not to have any further children. Or, if no distinction should be drawn according to whether there is some financial reason to seek sterilisation, should a person who seeks sterilisation to avoid the risk of passing on some inherited characteristic or condition be precluded from recovery of the costs of bringing up the child from a doctor who performs the sterilisation without reasonable care, if that child does not have the feared characteristic or condition? Would it matter if the doctor was not told everything that moved a patient to seek sterilisation? How would the not uncommon case of mixed motives be resolved? What if the motives of the patient and the patient's partner differed? As Lord Millett pointed out in McFarlane318, not only may those who perform a sterilisation not know why the procedure is sought, "they have no need to know [the] reasons and it would be impertinent of them to enquire". 318 [2000] 2 AC 59 at 110. Hayne What legal principle would be engaged to make motive a relevant consideration? Is it a principle about duty of care or about remoteness of damage? A parent's liability for the costs of maintaining the child is the inevitable consequence of having a child. It is, therefore, by no means evident that the motive for avoiding future pregnancy bears upon what damages should be allowed if, as a result of a doctor's negligence, a patient becomes a parent. The consequences which it is sought to avoid are plainly a reasonably foreseeable consequence of the doctor's breach if, as a result of failing to take reasonable care, the patient or the patient's partner falls pregnant. Again, as Lord Millett pointed out319, "[i]t is difficult to justify a rule which would make [the doctors'] liability depend on facts which were unknown to them and which are, to put it crudely, none of their business". There is a further set of questions which raise similar issues to those which arise under the heading of motive. How are the damages allowed for bringing up a child to be assessed? Unless the motives of the parent are taken into account, does it mean that if wealthy parents want, and are able, to spend large sums in the care and education of a child, the negligent doctor should bear all of those costs regardless of the capacity of the parents to bear them? Should recovery be limited to the costs of some hypothetical average amount outlaid in bringing up a child? Again, it would be difficult to justify a rule under which the extent of the liability of a careless doctor did not depend upon the particular damages shown to have been suffered by the plaintiff. Why should the damages to be allowed to a plaintiff be limited to some standardised amount? The debate about the significance of a patient's motives and the damages to be allowed assumes that the costs of bringing up a child are recoverable. It diverts attention from the fundamental question of whether they are recoverable at all. Obviously, nothing in the debate about these subjects bears directly upon the validity of that assumption. Not only does the debate offer no direct assistance in testing the validity of the assumption, I do not consider that it affords any real insight into the nature of the problems thrown up when the assumption is tested. Pointing to wealthy parents educating a child at the expense of a careless doctor may be thought by some to be a useful polemical device, but it does not shed light on the underlying problem. Nor does identifying the motive for the parent seeking treatment assist the debate. Once it is recognised that seeking sterilisation is legal, and it is accepted that there may be many reasons why sterilisation is sought, the motive of the patient should not affect the relief to be granted if the doctor is careless. The central question 319 [2000] 2 AC 59 at 110. Hayne remains, whether damages for the costs of bringing up the child should be allowed at all. It is convenient to deal more fully at this point with the decision of the House of Lords in McFarlane. To do so will invite attention to some further questions that might be grouped under the several headings already mentioned and, at the same time, it will serve to introduce some of the questions presented by reference to public policy and values. McFarlane v Tayside Health Board The decision in McFarlane departed from what had been said in two earlier decisions of the English Court of Appeal320, which had accepted that damages for the negligent performance of, or advice about, sterilisation might include the costs of bringing up the child. McFarlane was a case in which the complaint made was about the advice that a doctor gave, not about the care with which a procedure had been conducted. Four members of the House (Lord Slynn of Hadley, Lord Steyn, Lord Hope of Craighead and Lord Clyde) held that the mother was entitled to general damages for the pain, suffering and inconvenience of pregnancy and childbirth. The fifth member of the House, Lord Millett, would have allowed no damages on this account. All members of the House held that damages were not to be allowed for the costs of maintaining and rearing the child. Their Lordships divided on whether special damages and damages for loss of earnings occasioned by pregnancy and childbirth were recoverable. Three of their Lordships (Lords Slynn, Steyn and Hope) characterised the costs of bringing up the child as pure economic loss321. Each may be understood as identifying the relevant question as being whether the doctor had owed the patient a duty to take reasonable care in giving advice which was a duty that protected the patient's economic interests. Lord Slynn concluded322 that there was no duty of that kind because the doctor had not assumed responsibility for the expense of rearing the child. Lord Steyn invoked notions of "corrective" and "distributive" justice323 and concluded324 that "commuters on the Underground" would not accept that to impose such a liability would be a "just distribution of 320 Emeh v Kensington and Chelsea and Westminster Area Health Authority [1985] QB 1012; Thake v Maurice [1986] QB 644. 321 [2000] 2 AC 59 at 76 per Lord Slynn, 83-84 per Lord Steyn, 89 per Lord Hope. 322 [2000] 2 AC 59 at 76. 323 [2000] 2 AC 59 at 82. 324 [2000] 2 AC 59 at 82. Hayne burdens and losses among members of a society". Although not expressed in terms of duty of care, his Lordship's reference325, "[i]f it were necessary to do so", to the claim not satisfying the requirement of being fair just and reasonable may be thought to locate the references to distributive and corrective justice in the field of ascertaining or limiting a duty of care. Lord Hope expressly invoked326 the tripartite test of fair just and reasonable327, commonly used in the United Kingdom328 in connection with ascertaining the existence of a duty of care, to conclude that the costs of bringing up the child should not be recoverable while, at the same time, denying329 that the costs of maintenance had been shown to exceed the value of the benefits of parenthood. The fourth member of the majority in the House of Lords (Lord Clyde) was of the view330 that maintenance costs went "far beyond any liability which ... they were undertaking". the defenders could reasonably have Characterising the claim as a claim for economic loss following upon allegedly negligent advice331, Lord Clyde concluded332 that it was not "reasonable" for the parents, having accepted the addition to their family, to be "relieved of the financial obligations of caring for their child". thought The fifth member of the House (Lord Millett) took a different path to his conclusions that no damages should be allowed for either the pain, suffering and inconvenience of pregnancy or childbirth or for the costs of rearing the child. His Lordship said333 that "the law must take the birth of a normal, healthy baby to be a blessing, not a detriment". Lord Millett concluded334 that, although it is a mixed blessing, "society itself must regard the balance as beneficial" and that it 325 [2000] 2 AC 59 at 83. 326 [2000] 2 AC 59 at 94-97. 327 Caparo Industries Plc v Dickman [1990] 2 AC 605 at 617-618. 328 cf Sullivan v Moody (2001) 207 CLR 562. 329 [2000] 2 AC 59 at 97. 330 [2000] 2 AC 59 at 105. 331 [2000] 2 AC 59 at 105. 332 [2000] 2 AC 59 at 105. 333 [2000] 2 AC 59 at 113-114. 334 [2000] 2 AC 59 at 114. Hayne would be "subversive of the mores of society for parents to enjoy the advantages of parenthood while transferring to others the responsibilities which it entails". The pain and distress of pregnancy and delivery were, in his Lordship's view335, "as much an inescapable precondition of [the child's] birth as the expense of maintaining her afterwards was its inevitable consequence". If the latter was not allowable, nor should the former. On these bases, Lord Millett concluded that no damages should be allowed for the pain and distress of pregnancy and delivery but rather336 a conventional, albeit small, sum should be allowed as damages to reflect that the parents had "lost the freedom to limit the size of their family" and thus had been "denied an important aspect of their personal autonomy". In addition, in a conclusion that seems sharply at odds with the reasoning which denied all except this small conventional sum of damages, Lord Millett would have allowed as special damages the costs of replacing equipment for the care of a baby which parents had disposed of in the belief that they would have no further children. All five members of the House expressly disclaimed any reliance on considerations of public policy337. Yet, as Lord Steyn rightly pointed out338, denying liability for the cost of bringing up the child "by saying that there is no loss, no foreseeable loss, no causative link or no ground for reasonable restitution is to resort to unrealistic and formalistic propositions which mask the real reasons" for the decision. Further, to attempt to identify separate duties of care according to the nature of the loss suffered is to ignore the fact that the negligent conduct had a number of different consequences, some physical, some economic, but all of which were reasonably foreseeable. Moreover, to fasten upon the fact that the negligence in question was the negligent provision of advice appears to entail that a different outcome may, even necessarily will, be reached in cases where the procedure or patient's examination is conducted carelessly from the outcome of cases of negligent advice like the present. If broad concepts like fairness and justice, distributive or corrective justice, or the views of commuters on the Underground are relevant, it is not to be supposed that distinctions between economic and physical consequences or between negligent procedures and negligent advice are maintainable. 335 [2000] 2 AC 59 at 114. 336 [2000] 2 AC 59 at 114. 337 [2000] 2 AC 59 at 76 per Lord Slynn, 83 per Lord Steyn, 95 per Lord Hope, 100 per Lord Clyde, 108 per Lord Millett. 338 [2000] 2 AC 59 at 82. Hayne Despite the express disavowal of reliance on public policy, invocation of the concepts I have mentioned reveals not only that the courts must decide how the common law is to develop but also that the decision was thought, in McFarlane, to be affected by consideration of what would best reflect society's needs and society's wishes. Before turning to consider the place which "public policy" or "values" should have in the resolution of the question presented in this case, it is convenient to notice one further aspect of the matter dealt with by Lord Millett – the significance of choice. Choice At various points in the debate about whether damages should be allowed for the cost of bringing up a child, reference is made to the parents having made a choice to keep the child rather than offer it for adoption, or to their having made a choice not to terminate the pregnancy by abortion. As mentioned earlier, this "choice" has been said to reveal that for the parent the benefits of having the child outweigh the burdens339. Sometimes, it has been advanced (as it was in McFarlane) as an argument about causation – the parents' choice is said to break the causal nexus between negligent conduct and expenditure on bringing up the child. Inevitably, references to "choice" invite attention to the fact that for the individual the decision the parent makes, or refrains from making, is necessarily determined by the application of a combination of reason, emotion and beliefs that is unique to that individual. Whatever the decision, so long as the decision is to pursue a lawful course, it would be wrong for the law to characterise that course as unreasonable. To do so would deny the individual's autonomy to choose the lawful course of action which, to that individual, seems best. That a parent has decided to keep the child (or did not decide not to continue with the pregnancy or to offer the child for adoption) is the premise for debate. To adopt and adapt what was said in one American case (in a dissenting opinion)340, "[a] person who has decided that the economic or other realities of life far outweigh the benefits of parenthood" is confronted by the result which, but for the want of care by the defendant, would have been avoided. To say that a child is born and not given for adoption as a result of the plaintiff's choice to keep the child tells only part of the story. Not only does it ignore the fact of the defendant's negligence, "choice" is an expression apt to mislead in this field. For some, confronted with an unplanned pregnancy, there is no choice which they 339 Public Health Trust v Brown 388 So 2d 1084 at 1085-1086 (1980). 340 Public Health Trust v Brown 388 So 2d 1084 at 1087 (1980). See also CES v Superclinics (Australia) Pty Ltd (1995) 38 NSWLR 47 at 74 per Kirby ACJ. Hayne would regard as open to them except to continue with the pregnancy and support the child that is born. For others there may be a choice to be made. But in no case is the "choice" one that can be assumed to be made on solely economic grounds. Human behaviour is more complex than a balance sheet of assets and liabilities. To invoke notions of "choice" as bespeaking economic decisions ignores that complexity. "Public policy" Public policy has long played a key role in the development of the common law. For Oliver Wendell Holmes it was "the secret root from which the law draws all the juices of life"341. Its influence in the common law can be traced at least to Coke342 and perhaps well before343. Over the centuries the prominence given to that influence has ebbed and flowed but its influence has been constant. It was invoked by Lord Mansfield in Jones v Randall344 in relation to a wagering contract. It was deployed in connection with contracts of restraint of trade even before the landmark decision in Mitchel v Reynolds345. As Winfield pointed out "Public policy, like misery, made some very incongruous bedfellows. The man who bet on Napoleon's life347, the worker who fettered his own freedom of trade, the parent who wished to tie up his estate indefinitely or to get his daughter too well married, the parish officers who compounded for a lump sum with the father of a bastard child348, the person who made a simoniacal contract349, the testator who made a gift dependent on the 341 Holmes, Common Law, (1882) at 35. 342 Egerton v Brownlow (1853) 4 HL Cas 1 at 144-145 [10 ER 359 at 417]. 343 Winfield, "Public Policy in the English Common Law", (1928) 42 Harvard Law Review 76 at 79-82. 344 (1774) 1 Cowp 37 at 39 [98 ER 954 at 955-956]. 345 (1711) 1 P Wms 181 at 192 [24 ER 347 at 351]. 346 Winfield, "Public Policy in the English Common Law", (1928) 42 Harvard Law Review 76 at 86. 347 Gilbert v Sykes (1812) 16 East 150 [104 ER 1045]. 348 Cole v Gower (1805) 6 East 110 at 110 [102 ER 1229 at 1229]. 349 Kircudbright v Kircudbright (1802) 8 Ves 51 [32 ER 269]. Hayne acquisition of a dukedom350 – are all here cheek by jowl. Perhaps matters were edging on the absurd when it was held that a colliery fire engine must be reckoned as personal property on the ground of 'public benefit and convenience'351." In the middle of the 19th century, the role to be played by public policy in judicial decision making came under close scrutiny in England. In Egerton v Brownlow352, the judges were asked to express their opinion about the validity of a proviso to a testamentary gift that, if the donee died without having acquired the title of Duke or Marquis of Bridgewater, the gift should be void. Widely differing views were expressed about the role of public policy. Platt B353 treated public policy as an abstract standard, independent of time and circumstances. At the other end of the spectrum, Alderson B354, and Parke B355 with whom Wightman and Erle JJ agreed356, regarded public policy as no more than a guide for ascertaining the object of a particular law and considered that to give it any wider role would trespass upon the legislature's role. In the opinion of Parke B357, public policy: "is a vague and unsatisfactory term, and calculated to lead to uncertainty and error, when applied to the decision of legal rights; it is capable of being understood in different senses; it may, and does, in its ordinary sense, mean 'political expedience', or that which is best for the common good of the community; and in that sense there may be every variety of opinion, according to education, habits, talents, and dispositions of each person, who is to decide whether an act is against public policy or not. To allow this to be a ground of judicial decision, would lead to the greatest uncertainty and confusion. It is the province of the statesman, and not the lawyer, to discuss, and of the legislature to determine, what is the best for the public good, and to provide for it by proper enactments. It is the 350 Kingston v Pierepont (1681) 1 Vern 5 [23 ER 264]. 351 Lawton v Lawton (1743) 3 Atk 13 at 13-16 [26 ER 811 at 811-812]. 352 (1853) 4 HL Cas 1 [10 ER 359]. 353 (1853) 4 HL Cas 1 at 99 [10 ER 359 at 399]. 354 (1853) 4 HL Cas 1 at 106-107 [10 ER 359 at 402]. 355 (1853) 4 HL Cas 1 at 122-124 [10 ER 359 at 408-409]. 356 (1853) 4 HL Cas 1 at 100 [10 ER 359 at 399-400]. 357 (1853) 4 HL Cas 1 at 123 [10 ER 359 at 408-409]. Hayne province of the judge to expound the law only; the written from the statutes: the unwritten or common law from the decisions of our text-writers of predecessors and of our existing courts, acknowledged authority, and upon the principles to be clearly deduced from them by sound reason and just inference; not to speculate upon what is the best, in his opinion, for the advantage of the community." from These views did not prevail in Egerton v Brownlow. Rather, it was the views expressed by Pollock LCB that were adopted by the House of Lords. As Pollock LCB rightly pointed out358: "This doctrine of the public good or the public safety, or what is sometimes called 'public policy', being the foundation of law, is supported by decisions in every branch of the law; and an unlimited number of cases may be cited as directly and distinctly deciding upon contracts and covenants as the avowed broad ground of the public good and on that alone; and the name and authority of nearly all the great lawyers (whose decisions and opinions have been extensively reported) will be found associated with this doctrine in some shape or other." His Lordship concluded359 that to "discard the public welfare from consideration" would "abdicate the functions of [judicial] office" and that, accordingly, he was bound to look for the principles that informed earlier decisions and not shrink from applying them "to any new and extraordinary case that may arise". As Winfield suggested360, the views of Alderson B, repudiating any role for public policy in judicial decision making, came altogether too late in the development of the common law. What those views amounted to was the denial of any but the most limited role to the courts in the development of the common law: a role which assumed that the judges do no more than discover and declare the common law. It is a view which denies that there are occasions when judges in a common law system must make choices about the way in which the common law is to develop. What techniques may be used in making those choices may be a matter for debate. Sir Owen Dixon, in his address "Concerning Judicial Method"361, 358 (1853) 4 HL Cas 1 at 144-145 [10 ER 359 at 417]. 359 (1853) 4 HL Cas 1 at 149 [10 ER 359 at 419]. 360 (1928) 42 Harvard Law Review 76 at 90. 361 Dixon, "Concerning Judicial Method", in Jesting Pilate and other Papers and Addresses, (1965) 152 at 157. Hayne advocated what he called "the high technique and strict logic of the common law". Yet he considered362 that the technique of the common law could "meet the demands which changing conceptions of justice and convenience make", and thus recognised that these conceptions could legitimately bear upon the development of the common law. Others have given greater emphasis to the need, on occasions, for judges to make law. Lord Reid said that to deny that judges make law was to believe a fairytale363. And it has been said364 that now "the law-making function of [the High Court] is accepted by the overwhelming majority of lawyers". It is unnecessary to do more in this case than recognise that judges in a common law system can and must make choices about the development of that law. What is the role of public policy in the development of the common law? In 1921, Benjamin Cardozo said365 that, confronted by an entirely new point, an American judge was influenced by four forces not always separated one from the other. They were the force of logic or analogy, the force of history, the force of custom and "the force of justice, morals and social welfare, the mores of the day"366. But the role to be accorded to this fourth force cannot be seen as having been settled in England by the decision in Egerton v Brownlow. After Egerton v Brownlow, there was what one author367 described as a period of scepticism and hesitation368. Increasingly frequent reference was thereafter 362 "Concerning Judicial Method", in Jesting Pilate and other Papers and Addresses, 363 Reid, "The Judge as Law Maker", (1972) 12 Journal of the Society of Public Teachers of Law 22 at 22. 364 McHugh, "The Judicial Method", (1999) 73 Australian Law Journal 37 at 39-40. 365 Cardozo, The Nature of the Judicial Process, (1921) at 51; Cardozo, The Growth of the Law, (1924) at 61-62. 366 Cardozo, The Growth of the Law, (1924) at 62. 367 Knight, "Public Policy in English Law", (1922) 38 Law Quarterly Review 207 at 368 See, for example, Evanturel v Evanturel (1874) LR 6 PC 1; Janson v Driefontein Consolidated Mines Ltd [1902] AC 484. Hayne made369 to the "unruly horse" metaphor given to the law by Burrough J in Yet there are two features of the development of English common law after Egerton v Brownlow which it is important to recognise. First, as was said in "[T]he determination of what is contrary to the so-called 'policy of the law' necessarily varies from time to time. Many transactions are upheld now by our own Courts which a former generation would have avoided as contrary to the supposed policy of the law. The rule remains, but its application varies with the principles which for the time being guide public opinion." Thus, Paine's Age of Reason was considered as a blasphemous libel in the late 18th century372 because any attack on Christianity was illegal, but in 1917 a denial of Christianity was held not blasphemous373. Toleration of different religious views had increased. By contrast, political practices once common (such as sale of titles) were later condemned as contrary to public policy374. The standards of acceptable political behaviour had changed. Secondly, although contrary views were expressed375, the better view of English common law in the first decades of the 20th century appears to have been that the circumstances which would attract condemnation on public policy grounds were neither a closed class nor of fixed and immutable content. In Rodriguez v Speyer Brothers376, Viscount Haldane said: 369 For example, In re Beard; Reversionary and General Securities Co Ltd v Hall [1908] 1 Ch 383 at 386-387; In re Bowman; Secular Society Ltd v Bowman [1915] 2 Ch 447 at 471; In re Wallace; Champion v Wallace [1920] 2 Ch 274 at 288-289. 370 (1824) 2 Bing 229 at 252 [130 ER 294 at 303]. 371 (1874) LR 6 PC 1 at 29. 372 R v Williams (1797) 26 How St Tr 653. 373 Bowman v Secular Society Ltd [1917] AC 406. 374 Parkinson v College of Ambulance Ltd [1925] 2 KB 1. 375 For example, Janson v Driefontein Consolidated Mines Ltd [1902] AC 484 at 491 per Lord Halsbury LC. 376 [1919] AC 59 at 81. Hayne "I think that the change in the view taken of the law as to covenants in restraint of trade, and the illustration it affords of the fashion in which decisions which were right in their time may cease to be of valid application, are highly instructive. For they show that between the class of cases in which, as in the instance of the rule against perpetuities, the law, although originally based on public policy, has become so crystallised that only a statute can alter it, and the different class, such as that of the cases relating to wagers, in which the principle of public policy has never crystallised into a definite or exhaustive set of propositions, there lies an intermediate class. Under this third category fall the instances in which public policy has partially precipitated itself into recognised rules which belong to law properly so called, but where these rules have remained subject to the moulding influence of the real reasons of public policy from which they proceeded." Until appeals from Australian courts to the Privy Council were abolished, the common law applied in Australia walked in step with the courts at Westminster. Inevitably, then, this Court sought to give effect to what was understood to be the view prevailing in English decisions about the role to be accorded to public policy. Early decisions of this Court on that subject must be understood in that light. In this Court, in 1915, Isaacs J noted377 that Lord Halsbury had said in Janson v Driefontein Consolidated Mines Ltd378 that a court could not invent a new head of public policy. Accordingly, so Isaacs J concluded379, the public policy which a court could apply as a test of validity of a contract was limited to "some definite and governing principle which the community as a whole has already adopted either formally by law or tacitly by its general course of corporate life, and which the Courts of the country can therefore recognize and enforce. The Court is not a legislator: it cannot initiate the principle; it can only state or formulate it if it already exists." 377 Wilkinson v Osborne (1915) 21 CLR 89 at 96. 378 [1902] AC 484 at 491. 379 (1915) 21 CLR 89 at 97. Hayne Even so, Isaacs J recognised the possibility of changes in the application of public policy, citing380 in that connection the passage from the advice of the Judicial Committee in Evanturel v Evanturel381 set out above. As Windeyer J was later to point out382, "the distinction between creating a new head of public policy and defining the scope of heads already formulated by judicial decision is perhaps verbal rather than real". Nonetheless, there is evident reason for the greatest hesitation in resorting to public policy considerations in areas in which they have not previously been seen as engaged. Public policy in contract and succession Public policy considerations have most often been considered in connection with contract and succession to property. In those areas public policy plays a wholly negative role, denoting (as was said in a different context) "a justification or excuse for not applying, or recognising the application of, an otherwise applicable rule of law"383. A contract will not be enforced if it is unlawful (as, for example, a contract to commit a crime), if it is injurious to foreign relations or to the prejudice of public safety, if it is injurious to the proper working of justice, if it is an unreasonable restraint of trade, if it is injurious to good government, if it is an attempt to oust the jurisdiction of the courts or if it is injurious to the status of marriage or promotes sexual immorality. In the field of succession the rule against perpetuities is rooted in public policy. In addition, some forms of conditional gift have been held bad for reasons of public policy. Egerton v Brownlow itself was such a case384. In both contract and succession the operation of public policy considerations is now well developed. In particular, there is a clear articulation of the need to resolve the tension between competing policies of the law. In the case of contract, it is well accepted that the law will seek to give effect to bargains that are struck between those of full age and capacity. To refuse to enforce a particular bargain on the grounds of public policy trenches upon the general policy favouring the enforceability of bargains. In succession, effect is 380 (1915) 21 CLR 89 at 97. 381 (1874) LR 6 PC 1 at 29. 382 Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432 at 452. 383 Carter, "The Role of Public Policy in English Private International Law", (1993) 42 International and Comparative Law Quarterly 1 at 1. 384 See also, for example, Church Property Trustees, Diocese of Newcastle v Ebbeck (1960) 104 CLR 394; Blathwayt v Baron Cawley [1976] AC 397 at 425-427. Hayne generally given to the decision a person of full age and capacity makes about the disposition of his or her property on death. That is qualified in some respects – by the rule against perpetuities and by considerations of public policy which are held to strike down some forms of disposition. In addition, the legislation providing for testators' family maintenance further qualifies that general freedom of disposition. But in both contract and succession there is a discernible policy of the law which resort to public policy considerations would confine or modify. Public policy and tort Compared with the degree to which the operation of public policy considerations has been developed in the law of contract and succession, the role of public policy in the development of the law of tort has been given less prominence. Considerations of public policy have found some reflection in connection with developments in defences to defamation385. Those developments grew out of the common law of qualified privilege in which "the common convenience and welfare of society" was long established as the criterion of protection386. They offer no guidance to the resolution of the problems presented in this matter. They may, therefore, be put to one side. Public policy has also been invoked to deny recovery in negligence between those engaged in a joint criminal enterprise387. Its deployment in that context has not been without controversy. Four members of the Court in Gala v Preston preferred to express their decision in the language of proximity and duty of care388 rather than in the form of a general exclusionary rule389. In 1967, Kitto J said390 that to discuss the application of the law of negligence to a sport or game "in terms of 'judicial policy' and 'social expediency' is to introduce deleterious foreign matter into the waters of the common law – in 385 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 565. 386 Toogood v Spyring (1834) 1 Cromp M & R 181 at 193 [149 ER 1044 at 1050]. 387 Gala v Preston (1991) 172 CLR 243 at 270-271 per Brennan J, 277-278 per Dawson J, 291 per Toohey J; cf Henwood v Municipal Tramways Trust (SA) (1938) 60 CLR 438; Smith v Jenkins (1970) 119 CLR 397; Progress and Properties Ltd v Craft (1976) 135 CLR 651; Jackson v Harrison (1978) 138 CLR 388 (1991) 172 CLR 243 at 254. 389 (1991) 172 CLR 243 at 249-250 per Mason CJ, Deane, Gaudron and McHugh JJ. 390 Rootes v Shelton (1967) 116 CLR 383 at 387. Hayne which, after all, we have no more than riparian rights". This notwithstanding, in the last decades of the 20th century, increasing attention was given to the role of public policy in the development of the law of tort391. That has largely been confined to one aspect of the law of negligence – duty of care – which is consistent with duty of care being one of the principal analytical devices for controlling the apparent breadth of recovery that would follow were all careless conduct causing loss held to be actionable. Even here, however, the courts have not infrequently failed to articulate the "policy" reasons which have underpinned a particular conclusion. Either the effect of a determination of liability the (deterrence or determination, or the reasons have been obscured behind a conclusory expression like "fair just and reasonable"392. loss-spreading) has been elevated to a reason for Further, it is always necessary to recall the considerations identified by Stephen J in Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad"393. Policy considerations have a significant part to play in any judicial definition of liability and entitlement in new areas of the law. But as Stephen J went on to say394: "That process should however result in some definition of rights and duties, which can then be applied to the case in hand, and to subsequent cases, with relative certainty. To apply generalized policy considerations directly, in each case, instead of formulating principles from policy and applying those principles, derived from policy, to the case in hand, is ... to invite uncertainty and judicial diversity." Although sterilisation procedures have been available and used for much of the 20th century395 this is the first time in which this Court has had to consider what damages should be allowed where the procedure was effected negligently or negligent advice was given about the subject. 391 Stapleton, "Duty of Care Factors: a Selection from the Judicial Menus", in Cane and Stapleton (eds), The Law of Obligations: Essays in Celebration of John Fleming, (1998) 59. 392 Stapleton, "Duty of Care Factors: a Selection from the Judicial Menus", in Cane and Stapleton (eds), The Law of Obligations: Essays in Celebration of John Fleming, (1998) 59. 393 (1976) 136 CLR 529 at 567. 394 (1976) 136 CLR 529 at 567. 395 Christensen v Thornby 255 NW 620 (1934). See also the description of the use of such procedures in California in Miller and Dean, "Liability of Physicians for Sterilization Operations", (1930) 16 American Bar Association Journal 158. Hayne Duty of care is not the only analytical tool that can be, or has been, used to control the reach of the tort of negligence. Rules about remoteness of damage can serve that purpose. Whether, since Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound)396, remoteness of damage does curtail recovery in negligence to any significant extent may be open to debate. What is not contestable, however, is that remoteness rules are a means of confining recovery and that the particular rule adopted in requiring that damage not be too remote is based in public policy choices made by the courts. The basis stated in The Wagon Mound397 was that the former rule of causation398 had led "to nowhere but the never-ending and insoluble problems of causation". And as has more recently been recognised those problems of causation are themselves problems which invite attention to policy questions399. In the end, the former rule based on causation was rejected as unduly lax. A characterisation of that kind can be founded only in some conception of what is or is not a desirable outcome. What is important for present purposes is that the rules about remoteness of damage reveal that duty of care is not the only analytical tool deployed to control the reach of the tort of negligence, and that considerations of public policy have an important part to play in the development and application of other analytical tools. Of course it must be recognised, as it was 150 years ago400, that "it may be that Judges are no better able to discern what is for the public good than other experienced and enlightened members of the community". But as Pollock LCB went on to say, "that is no reason for their refusing to entertain the question, and declining to decide upon it". Public policy in this case All of the arguments against allowing damages for the costs of bringing up a child born as a result of careless advice or treatment by a doctor are arguments that have two characteristics. First, they seek to expand the field for 397 [1961] AC 388 at 423. 398 In re Polemis and Furness, Withy & Co [1921] 3 KB 560. 399 March v Stramare (E & M H) Pty Ltd (1991) 171 CLR 506 at 516; Chappel v Hart (1998) 195 CLR 232 at 256 [63]; Environment Agency v Empress Car Co (Abertillery) Ltd [1999] 2 AC 22 at 29-31. 400 Egerton v Brownlow (1853) 4 HL Cas 1 at 151 per Pollock LCB [10 ER 359 at Hayne debate beyond the economic consequences of pregnancy and childbirth. Secondly, they explicitly or implicitly invoke values which it is said are society's values. Although variously described, the values invoked all relate to the worth that is to be ascribed to the life of an individual, and the worth that can be found in establishing and maintaining a good and healthy relationship between parent and child. The contrary arguments point to the undeniable fact that a parent is legally bound to maintain his or her child until the child is aged 18 years401. Incurring that liability is an inevitable consequence of the birth of the child. But for the negligence there would not be that liability. To restore the plaintiff to the position in which the plaintiff would have been but for the negligence, it is necessary to recompense the plaintiff for the value of that liability. Two further steps then are taken in the argument in support of that conclusion. First, it is said that the valuation of that liability is a task not different in any relevant respect from that undertaken by a court dealing with a wrongful death claim. Secondly, it is said that to hold that damages for maintaining the child are not recoverable would give the tortfeasor an immunity from the ordinary operation of principles of negligence. These last two points may be dealt with briefly. First, wrongful death claims are creatures of statute. The courts are required to value the pecuniary loss sustained by a dependant by reason of the death402. It has long been established that attention must be confined in such actions to economic consequences alone. What is done in those cases, created and regulated as they are by legislation, sheds no light on the present problem. Secondly, to speak of "immunity" or "exemption" of a tortfeasor from the consequences of the tort may or may not be an accurate description of the result of the conclusion that damages for the cost of bringing up the child are not recoverable. But beyond sounding a warning note that care is required before reaching the conclusion, it says nothing about the strength or weakness of the arguments that support or detract from the conclusion. The balance of these reasons seeks to make an argument that can be expressed in two steps. First, the consequences for a parent of negligent advice or treatment by a doctor in connection with sterilisation will usually include non-financial benefits; they will not be confined to economic detriment. 401 Family Law Act 1975 (Cth), s 61C(1); Child Support (Assessment) Act 1989 (Cth), 402 Blake v Midland Railway Co (1852) 18 QB 93 at 109-111 [118 ER 35 at 41-42]; De Sales v Ingrilli (2002) 77 ALJR 99 at 109-110 [55]; 193 ALR 130 at 143. Hayne Secondly, the net value or worth of the consequences probably cannot be assessed in monetary terms, but even if it could be, the parent should not be permitted to attempt to demonstrate that the net worth of the consequences of being obliged to rear a healthy child is a financial detriment to him or her. Consequences The matters discussed earlier in these reasons reveal that to look at the consequences of negligence of the kind now in question as confined to economic consequences narrows the focus of attention unduly. First, to confine attention to economic consequences would require a refusal to award anything for pain and suffering associated with pregnancy and childbirth on the ground that pain and suffering has no economic value: it cannot be bought and sold in a market. Secondly, if attention is to be paid to all of the consequences of the defendant's negligence, one of those consequences is that there is a new life in being: a life with all the value, and all of the potential for good and evil, of any other human being. That life is not an article of commerce and to it no market value can be given. The fact of its existence brings to the plaintiff the economic burdens identified. It may, it may not, bring to the plaintiff some future economic benefits. It may, it may not, bring to the plaintiff some non-economic rewards or benefits which the plaintiff may, or may not, consider outweigh the financial burdens. Valuation To value the life of the new child would at least be unrealistic if not impossible. In any event, to attempt to do so is not to the point in an action brought by a plaintiff for the vindication of his or her interests. But are the benefits which may, but need not, flow to a parent from having a child to be wholly ignored in seeking to mould relief that will vindicate the parent's interests? Is it enough to say that the benefits, to the extent that they are economic, cannot be measured because there are too many contingencies which will affect the measurement and, to the extent that they are not economic, must be left out of account because there is no market place in which they are traded? To my mind these last questions must be answered no. The possibility of benefits, economic and non-economic, cannot be ignored. Saying that the benefits cannot be measured, or cannot be measured in money, is not reason enough to ignore them and to confine inquiry to the adverse economic consequences of parenthood. If assigning value to the benefits of having a new child is impossible, it means that no value can sensibly be determined for the balance between benefits and burdens. If, contrary to that conclusion, some assessment of the net value of benefits and burdens can be made, the choice which must then be made is Hayne whether the law is to permit parents, or their opponents, to embark upon a calculation of the net worth of a new child to the parent. It is important to emphasise that recognising that there are benefits and burdens makes no assumption about what that net worth will be. It does not assume that the benefits will outweigh the burdens or vice versa. It does no more While than recognise that acknowledging the validity of the criticisms that are made of the set off argument, it replies to those criticisms by saying that to show that solving the problem is hard does not deny the existence of the problem presented by there being countervailing benefits. there may be both benefits and burdens. The particular question which must ultimately be answered in this case is, are the ordinary costs of rearing the child to be an admissible head of damage? That particular question is, however, rooted in the more general question I have identified earlier – what relief will vindicate the parent's interest injuriously affected by the doctor's negligence? Because the interests at stake are those of the parent, not the child, the question is what damages are to be allowed to the parent for the consequences for the parent of the defendant's negligent conduct? The consequences for the parent are known only in part when the trial takes place. It is known that the parent has incurred some expenditure. It is known whether the parent has begun to establish a good relationship with the child. (It may be doubted that a parent would readily assert that the relationship was an unmitigated and unrelieved burden.) What is not known is what will happen in the future. Will the relationship flower, or will it wither and die? Will the child, in any sense, truly be a blessing? Will the child provide financial support for the parent when the parent faces hard times? None of this is known. Confining attention to the financial outgoings incurred during the child's minority is to have the courts ignore some consequences of parenthood, such as the emotional and spiritual rewards it may bring. Although it may be thought that those rewards, in greater or lesser measure, are the more probable outcome of events, focusing on economic consequences ignores them. I would answer no, to what I have described as the particular question: are the ordinary costs of rearing a child to be an admissible head of damage? I would give that answer regardless of whether the claim is framed in contract or tort. The common law should not permit recovery of damages for the ordinary costs of rearing a child. I speak of "ordinary" costs not to distinguish between the wealthy parent, who wishes nothing but the most expensive upbringing for a child, and other parents. Rather, I refer to the ordinary costs of bringing up a child to distinguish between cases where the child has no abnormal or special needs for expenditure in care or maintenance, and the child whose upbringing is more costly than normal because of special needs. The extra costs, over and above ordinary Hayne expenditures, may, in some cases, be recoverable. The law should not, however, permit recovery of damages for the ordinary costs of rearing a child even if the child has special needs. As Lord Millett said in McFarlane403, "[t]he admissibility of any head of damage is a question of law". The law should not admit this head because it would be necessary to put a price on the value to the parent of the new life. Again, I adopt Lord Millett's statement of the point404: "If the monetary value of the child is assessed at a sum in excess of the costs of maintaining him [or her], the exercise merely serves to confirm what most courts have been willing to assume without it. On the other hand, if the court assesses the monetary value of the child at a sum less than the costs of maintaining him [or her], it will have accepted the unedifying proposition that the child is not worth the cost of looking after him [or her]." Public policy forecloses that inquiry. To do so affirms, or at least does not detract from, what is seen to be the desirable paradigm of family relationships in which child and parent are of mutual support one to the other. In that sense, and only in that sense, the law might be seen as concluding that every child is a blessing. But the point is more deep seated than a factual generalisation of very doubtful validity. It is a point which draws attention to the process of valuation that would have to be undertaken in order to arrive at a true measure of the infringement of the parent's interest. Once it is accepted that there are benefits and burdens in parenthood, it will be in the economic interests of the parent to assert that the burdens outweigh the benefits. Foreclosing the inquiry prevents the parent (in pursuit of the parent's own economic interests) inflicting harm on the child to whom the parent owes obligations by the parent denying the benefits of that relationship. To put the matter another way, the parent should not be permitted to embark upon proving that the economic costs of the child will, in the long run, outweigh whatever advantages or benefits the parent may derive from the child's existence and the relationship between parent and child. As Gummow and Kirby JJ rightly point out in Gifford v Strang Patrick Stevedoring Pty Ltd405: "the law has long placed particular value on the protection of the young from serious harm. The parens patriae jurisdiction referred to in Marion's 403 [2000] 2 AC 59 at 112. 404 [2000] 2 AC 59 at 111. 405 [2003] HCA 33 at [89]. Hayne Case406 provides one illustration. The entitlement of parents of a child to be heard in child welfare proceedings concerning a child provides another illustration407. Further, through the imposition of obligations and the conferral of rights, both the general law and contemporary statute law have treated the relationship of parent and child as a primary means by which to secure the public interest in the nurturing of the young408." To hold, as I do, that the parent should be prevented from embarking upon this inquiry resolves the conflict which otherwise would exist between the duty of the parent to preserve and protect the interests of the child by advancing the mutual worth of the bond between them, and the interest of the parent in seeking recompense for a wrongful invasion of the parent's interests. In putting the proposition that way there are obvious allusions to the equitable rules about conflict of duty and interest409. The allusion is deliberate, but it is not intended to suggest that there has been, or should be, the direct importation and application of such rules in this case. Rather, it is sought to derive support from these equitable rules for the development of a similarly "inflexible rule"410 in the common law of damages for negligence and breach of contract: a rule which would preclude the parent from recovering damages for the ordinary consequences which flow to the parent from being obliged to raise and maintain a child born as a result of the infringement of the parent's interests. The parent would be denied treating the child as a commodity to be given a market value. The parent would be denied this, not because revelation of the claim may damage the child, but because the law should not permit the commodification of the child. The recompense obtainable by the parent would be confined to those matters which affect the parent alone: the pain and suffering of pregnancy and childbirth, and those costs of the failed procedure that have been thrown away. By adopting this rule, the law would refuse, as Lord Millett said411, "to regard a 406 Secretary, Department of Health and Community Services v JWB and SMB (1992) 175 CLR 218 at 258-259. 407 J v Lieschke (1987) 162 CLR 447 at 462, 463-464; cf In re Gault 387 US 1 (1967). 408 cf Russell v Russell (1976) 134 CLR 495 at 549. 409 Bray v Ford [1896] AC 44 at 51 per Lord Herschell; Chan v Zacharia (1984) 154 CLR 178 at 198-199 per Deane J; Breen v Williams (1996) 186 CLR 71 at 132-138 410 Bray v Ford [1896] AC 44 at 51 per Lord Herschell. 411 McFarlane v Tayside Health Board [2000] 2 AC 59 at 114. Hayne normal, healthy baby as more trouble and expense than it is worth". No less importantly, the law would refuse to allow a parent to seek to demonstrate the contrary. Other considerations would arise if the child had special needs which would require the expenditure of money to meet those needs. In such a case the parent could seek to demonstrate the costs incurred in meeting those needs without in any way denying or diminishing the benefits of being parent to the child. The appeal should be allowed. Callinan CALLINAN J. The question that this appeal raises is whether a doctor and a health authority are liable in damages for the costs of rearing to age 18 a child whom his parents conceived as a result of a negligent failure on the part of the doctor to advise that the mother might still, despite an attempted sterilization performed upon her, give birth to a child. The facts In December 1967, when she was 15 years old, the first respondent underwent an appendectomy at the Balmain Hospital in Sydney. Because her right ovary was found to be filled with a blood clot the surgeon removed it. The other reproductive organs, including the left and right fallopian tubes were unaffected and left intact. The respondents married in 1984. Two daughters, delivered by Caesarean section, were born to them. For various reasons, including a fear, later established to be unfounded, of an hereditary disease of the second respondent, and the first respondent's age, they wished to limit their family to these two children. The first respondent contacted the first appellant, who is a gynaecologist, in November 1991 with respect to the possibility of performance by him of a procedure for her sterilization. The first appellant formed the view that the first respondent's right fallopian tube as well as her right ovary had been removed in 1967. He arranged for her to undergo an ultrasound scan. By January 1992 he had concluded, and told the first respondent, that there were no impediments to the successful completion of the procedure. After undergoing pre-operative admission to the Redland Hospital for various purposes, including HIV testing, on 4 March 1992, the first respondent was admitted as an in-patient on 12 March 1992 for the sterilization procedure. The procedure, a tubal ligation, was performed laparoscopically by the first appellant at the Redland Hospital on 13 March 1992. It entailed the insertion of two instruments into the body, one just below the navel and the other just above the pubic bone. The purpose of the first was to introduce a laparoscope to enable the organs to be viewed. The second was a cannula, through which a clip applicator was passed to enable a clip to be placed across the fallopian tube. The surgery was performed under general anaesthetic. The first appellant described what he found and did as follows: "Good view small bowel associated with right adnexal area – extensive adhesions. No right tube or ovary visible. Consistent with patient's history of right salpingo-oophorectomy. Left tube and ovary normal. One Filshie clip applied to tube and application checked." Callinan ("Salpingo-oophorectomy" means the removal of both the ovary and its associated fallopian tube.) The first appellant did not see any right ovary or fallopian tube. He thought this to be consistent with the history he believed he had been given that both had been removed. The right fallopian tube had however, been obscured by bowel adhesions resulting from the surgery in 1967. As the first appellant was unaware of its existence, he applied a clip to the left fallopian tube only. He did not see the first respondent again, but was the author of a letter (which came to be signed by the medical superintendent of the second appellant) to the first respondent's general practitioner. In it he described the procedure and its apparent outcome, although he did make one obvious mistake by a reference to the application of a clip to the right tube. The letter was not brought to the attention of the respondents. In November 1996, at the age of 44, the first respondent fell pregnant. She bore a healthy son, again following a Caesarean section, on 29 May 1997. Expert representatives of the parties were present at the birth. After the delivery the uterus was moved outside the abdominal cavity. At first, all that could be seen were the adhesions of the bowel to the uterus. After dissection however, it became apparent that the right fallopian tube was present. It was convoluted and compressed, and turned almost 180 degrees back upon itself. It was attached by adhesions to its own supporting structures and to the uterus itself, and was displaced towards the uterus from its normal position. By a similar procedure the left fallopian tube was viewed. It could be seen to be effectively ligated by an appropriately placed Filshie clip. In September 1997, four months after the birth, the first respondent underwent a hysterosalpingogram, a procedure in which dye is inserted into the uterus under pressure and the results are observed on x-ray. It showed that the right fallopian tube was patent. The consensus of medical opinion was that the first respondent had conceived by transmigration of an ovum from the left ovary to the right fallopian tube. At the time of the trial the child was healthy, active, normal in all respects, and a valued member of the family. The trial The respondents sued the appellants in contract and negligence. The action in contract was not pursued at the trial, presumably because the attempted sterilization was undertaken free of charge at a public hospital. The respondents alleged negligence both in the performance of the operation, and in the giving of professional advice by the first appellant. This Court is not concerned with the former of the allegations. The particulars of the latter relevantly were: Callinan "(a) Failing to inform or alternatively adequately inform the first plaintiff of the risk or possibility that the procedure would fail and that she may not be rendered sterile; Failing to enquire of the first plaintiff that she adequately understood that she may not be rendered sterile by the operation; Failing to adequately check to determine the presence of a functional right fallopian tube." The primary judge, Holmes J, made findings of negligence, effectively of negligent professional advice, against the first appellant in these terms412: "In the circumstances I conclude that Dr Cattanach was negligent in terms of particular (a); that is, in failing adequately to inform [the first respondent] of the possibility that the procedure would fail to be effective because of the possibility of the continuing existence of the right fallopian tube so as to give her the option of considering further investigation in the form of a hysterosalpingogram. That negligence was a material cause of her pregnancy and the birth of Jordan." Her Honour then turned to the issue of damages. She summarized the appellants' submissions on the issue as follows413: "The [appellants], by an amended entry of appearance and defence, pleaded that all damages other than those for pain and suffering ought to be curtailed by reference to the time at which Jordan could, in theory, have been adopted. In his submissions, Mr Griffin QC did not seek to direct me down any specific path to that conclusion – for example, public policy considerations, application of a 'fair just and reasonable' test, or the failure to adopt as raising remoteness or causation issues – relying more generally on the effect of the decision of the House of Lords in McFarlane v Tayside Health Board414 in limiting the scope of damages. Although Mr Griffin's submissions went so far as to propose that no damages at all should be awarded in respect of the birth of a healthy child, he acknowledged that the weight of authority was to the effect that damages for pain and suffering from the pregnancy at least were recoverable. In 412 (2001) Aust Torts Rep ¶81-597 at 66,626 [33]. 413 (2001) Aust Torts Rep ¶81-597 at 66,626 [36]. Callinan adverting to McFarlane v Tayside Health Board, he drew a distinction between economic loss occasioned by the pregnancy and birth, and economic loss occasioned by the child's existence in the family, suggesting that if damages were recoverable at all for economic loss, they were limited to the former." After reviewing the authorities in this country and the United Kingdom her Honour turned to the most recent decision of this Court concerning claims for economic loss, Perre v Apand Pty Ltd415. There were, in her Honour’s opinion, factors present here which were indistinguishable from several which were influential with most members of this Court in Perre. In consequence, she held that the respondents should recover damages, including as one component, the costs of rearing the child. Her Honour accordingly assessed damages as follows416: "The first [respondent's] damages Pain and suffering and loss of amenities Interest on $20,000 for 3.75 years @ 2% Past economic loss Interest for 3.5 years @ 5% Future economic loss Past Griffiths v Kerkemeyer damages Interest for 3 years @ 2% Future Griffiths v Kerkemeyer damages 415 (1999) 198 CLR 180. 416 (2001) Aust Torts Rep ¶81-597 at 66,635 [81]. Special damages Interest on special damages Second [respondent's] damages Loss of consortium First and second [respondents'] damages Past costs of raising Jordan Interest @ 5% for 3 years Future costs of raising Jordan Callinan The appeal to the Queensland Court of Appeal The appellants appealed to the Court of Appeal on both issues, liability and damages. Because special leave to appeal to this Court was confined to the latter, the former requires no further consideration. The Court of Appeal was unanimous as to the respondents' entitlement to damages, except as to the expense of rearing the child. McMurdo P thought that the case was governed by Perre and that the trial judge's assessment of damage by analogy with it was correct, and should be affirmed. Her Honour did not think that there was any compelling public policy which obliged her to reject or reduce the respondents' assessment. Davies JA reached the same conclusion as the President. There were, in his opinion also, no "policy factors which ought to preclude recovery of a loss which, policy factors aside, ought to be reasonable."417 417 [2001] QCA 246 at [99]. Callinan The basis for the dissenting opinion of Thomas JA is to be found in the following paragraphs418: "Principles concerning the allowance and assessment of damages have evolved in a pragmatic way, and their development has often been influenced by policy considerations. Thus, for a long time the common law refused to allow damages resulting from the death of a human being. The evolution of the law of damages progressed through a period of lump sum jury assessments, in which summings-up more commonly urged caution than sanguinity. In the 20th century jury assessments tended to be supplanted by lump sum assessments by trial judges. Recognition of the desirability of lump sum assessments survived until the 1970s, finally to be supplanted by recognition that, in general, assessment ought to be through the identification of separate heads of damage and the allocation of identifiable damages to each. Damages for the cost of rearing an initially unwanted child are not at this point of time a recognised head of damage, and of course the ultimate issue is whether it ought to be. The fundamental question arising in this case is how to determine what the plaintiff has lost, and whether and how the plaintiff's undoubted benefit is to be brought into account. The gaining of a healthy child may in one sense be regarded as the receipt of a collateral benefit, a subject which the courts have not solved in any comprehensive or logically satisfactory way. But once again in this area recourse has been had to 'justice, reasonableness and public policy'. The benefit of parenthood of a healthy child who becomes a welcome member of a family is substantial. Families are important units in a community. It is in the interest of the community that parental responsibility, love and trust between parent and child and strong family units be maintained. There is also a widely perceived sense of continuity (which some see as potential immortality) in the procreation of one's own children. In this case [the first and second respondents] are both the natural parents and the custodians of their child. I do not consider it fair or desirable that someone else be required to maintain the child in addition to compensating [the first respondent] for the injury that has been done to her and compensating [the second respondent] for the injury done to his rights. It is accepted in our society that natural parents are liable to contribute to the succour and maintenance of their children. Under the Family Law Act parents have a duty to maintain their children even when 418 [2001] QCA 246 at [195]-[200]. Callinan the child is in the care of others, and children have the right to be cared for by both their parents regardless of whether their parents are married, separated or have never lived together. The criminal law also imposes a legal duty upon persons having the care of a child under 16 to provide the 'necessaries of life'. These obligations are cornerstones of our society and apply to all parents whether they become parents with enthusiasm, surprise or reluctance. This is not to say that someone else could not be ordered to indemnify parents against the financial burden of parenthood. But in my view to do so under circumstances such as the present would create an unfair and inappropriate obligation upon a defendant." It followed that his Honour would have adopted a "limited damages rule" and reduced the damages by $105,249.33. The appeal to this Court In this Court it was accepted that the claim in contract had been abandoned. There were other matters that were not in dispute: that no distinction should be made between the respective liabilities of each of the appellants, or the entitlements of each of the respondents; and that, despite any inconsistencies between an absence of challenge to the respondents' other heads of damages, and the challenge to the damages awarded for the costs of rearing the child, the former should stand. Something should however be said about the heads and quantum of damages. The respondents' claims were modest ones. The fact that this is so does not provide any basis for a denial to them of their cause of action. Logically, if they had been able to establish them, claims might have been maintainable for the cost of tertiary education and expenses voluntarily, but conventionally incurred by parents whilst children remain dependent on them. The allowance by Windeyer J in Parker v The Commonwealth419 of a sum that a father might have set aside for a daughter's wedding had he survived, despite the the relevant analogue of absence of express provision for Lord Campbell's Act there, has not been regarded as inappropriate, and indeed has subsequently frequently been allowed in other cases. That the damages may be substantial, or that they may vary very much from case to case does not mean that they are indeterminate. Indeed the contrary is the case. Variation results from the requirement that careful regard be had to the particular facts of each case. The law has long taken the view that a tortfeasor who has injured, for example, a budding business genius or a potential world champion golfer, must it under 419 (1965) 112 CLR 295 at 314. Callinan compensate that victim to the extent of the loss likely to be sustained, notwithstanding that the damages would be only a small fraction of those if the victim's prospects were modest. The authorities As in the intermediate court of appeal, the appellants urged the Court to adopt approaches of the kind which were preferred by the majority in the House of Lords in McFarlane v Tayside Health Board420 which resulted in a decision denying the costs of rearing a child to a parent after a preventative procedure has been carelessly and incompetently performed. It should be pointed out that before the appeal was determined in the House of Lords, the preponderance of judicial opinion in the United Kingdom was to a somewhat different effect. That opinion is fully summarized in their Lordships' speeches and needs no repetition here. The balance of opinion in the House was that it was not fair, just and reasonable that a doctor or a hospital should bear the cost of rearing a child by reason of negligence on the part of either in failing to prevent an unwanted pregnancy. Other matters considered relevant were the so-called principles of distributive justice421, disproportion between the damages claimed and what would, and should constitute "reasonable restitution" for the consequences of the negligent conduct by the doctor422, and the offsetting joy that the advent and rearing of a child bring to a parent's life. Lord Millett took a quite different view. He would not have awarded the parents any damages beyond a "conventional sum which [it] should be left to the trial judge to assess, but which [he] would not expect to exceed £5,000 in a straightforward case like the present."423 His Lordship said424: "This does not answer the question whether the benefits should be taken into account and the claim dismissed or left out of account and full recovery allowed. But the answer is to be found in the fact that the advantages and disadvantages of parenthood are inextricably bound together. This is part of the human condition. Nature herself does not permit parents the disadvantages. In other contexts the law adopts the same principle. It the advantages and dispense with to enjoy 421 [2000] 2 AC 59 at 76 per Lord Slynn of Hadley, 82-83 per Lord Steyn, 96 per Lord Hope of Craighead. 422 [2000] 2 AC 59 at 83 per Lord Steyn, 106 per Lord Clyde. 423 [2000] 2 AC 59 at 114. 424 [2000] 2 AC 59 at 114. Callinan insists that he who takes the benefit must take the burden. In the mundane transactions of commercial life, the common law does not allow a man to keep goods delivered to him and refuse to pay for them on the ground that he did not order them. It would be far more subversive of the mores of society for parents to enjoy the advantages of parenthood while transferring to others the responsibilities which it entails. Unlike your Lordships, I consider that the same reasoning leads to the rejection of Mrs McFarlane's claim in respect of the pain and distress of pregnancy and delivery. The only difference between the two heads of damage claimed is temporal. Normal pregnancy and delivery were as much an inescapable precondition of Catherine's birth as the expense of maintaining her afterwards was its inevitable consequence. They are the price of parenthood. The fact that it is paid by the mother alone does not alter this." As with McFarlane, courts in other jurisdictions in cases of this kind have discussed and weighed the advantages and disadvantages of bearing and rearing children, and have attempted to identify universal, moral, family values. Some examples suffice to show the themes that are threaded through many of the judgments. Lax J in Kealey v Berezowski425 comprehensively makes the sort of case that the appellants seek to make here. First her Honour points out that a definitional framework426 is required to distinguish between a "wrongful birth", a term adopted in respect of a child damaged at birth, "wrongful life", the birth of an abnormal child born as a result of a planned pregnancy, and "wrongful pregnancy", a term descriptive of a birth of a healthy child following a medical failure to prevent or terminate an unwanted pregnancy. Both the events in Kealey and this case would fall into the last category of cases. Her Honour said this427: "No one would disagree that the responsibilities of rearing a child entail burdens, financial and otherwise. But, successfully meeting those responsibilities also brings innumerable benefits in the form of personal satisfaction and happiness. The responsibilities and the rewards are inextricably bound together and do not neatly balance one against the other, at least not in the case of children. Who can say whether the time, 425 (1996) 136 DLR (4th) 708. See also Mummery v Olsson (2001) Ont Sup CJ LEXIS 96 and MY v Boutros [2002] 6 WWR 463. 426 (1996) 136 DLR (4th) 708 at 723. 427 (1996) 136 DLR (4th) 708 at 738-739. Callinan toil and trouble, or the love, guidance and money which parents devote to a child's care and upbringing, will bring rewards, tangible or intangible, today, tomorrow or ever. No court can possibly determine this in any sensible way. Nor should it attempt to do so. If damages are awarded for child-rearing costs, it is my view that the correct approach is as suggested in Thake v Maurice. The responsibilities and the rewards cancel each other out." Later Lax J said this428: "Life is about choices and not everything in life is predictable or planned. To transform a mistake, measured in millimeters, into a monetary award in this case, cannot be right. Nor, in my view, can every mistake be evaluated by rules designed for different reasons. The Kealeys are willing and able to assume and have assumed their responsibilities as parents to their third daughter as they should. Ashley is ensured a happy and successful childhood in a family which has welcomed her, loves her and can afford to raise her. The responsibilities should remain where they are." The approach in the United States of America which is summarized by LaCroix and Martin429 is generally, but not invariably in accord with the majority of the House of Lords in McFarlane: "The 1967 decision of the California Court of Appeals in Custodio v Bauer was the first to recognize that a physician could be held liable for the birth of an unplanned, healthy child. … Custodio was the first case in which damages for wrongful pregnancy were awarded, and the court allowed full recovery of childrearing costs. Since the Custodio decision, courts have diverged in their award of childrearing damages. Most courts have awarded damages for losses incurred during and immediately after the pregnancy. They include the cost of the failed procedure; the medical expenses of pregnancy and delivery; the mother's lost income during and immediately after the pregnancy; and the husband's loss of consortium. A minority of states has allowed damages for the mother's pain and suffering during pregnancy 428 (1996) 136 DLR (4th) 708 at 741. 429 LaCroix and Martin, "Damages in Wrongful Pregnancy Tort Actions", in Ireland and Ward, Assessing Damages in Injuries and Deaths of Minor Children (2002) 93 Callinan and delivery or for emotional distress after delivery. However, as in wrongful birth actions, state courts have split over the issue of damage recovery for childrearing costs. Only in Wisconsin and New Mexico have state courts allowed recovery for the full cost of raising a healthy child. Other state courts in Arizona, California, Connecticut, Massachusetts, Maryland, and Minnesota have allowed recovery for childrearing costs offset by the value of the child's aid, comfort, society and assistance, ie, the child's benefits to the parents. The application of the partial recovery rules is intended 'to prevent a windfall to the parents and an undue financial burden to the physicians'. The majority of state courts (Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Michigan, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington, West Virginia and Wyoming) ruling on the issue denies any recovery of childrearing costs. Only one state, Massachusetts, allows recovery for pain and suffering associated with the burdens of raising another child. At present there does not appear to be any trend bringing the divergent approaches to damages in wrongful pregnancy suits closer together." In South Africa in Mukheiber v Raath430 damages for the costs of rearing the child were allowed. Similarly, under the Civil Law damages have been awarded by German courts for the full maintenance costs of bringing up a child431. In New Zealand the position is affected by the expressions used in the relevant national compensation statute but the language of one Justice at least resonates with that of judges in other jurisdictions. In XY v Accident Compensation Corporation432 Jeffries J said this433: "This Court thinks the answer lies in an analysis of ordinary meaning of the words applying the accepted, even conventional views of 431 Markesinis and Unberath, The German Law of Torts, 4th ed (2002) at 179: "The position in private law thus seems to have settled in the following way. (i) Both parents have a contractual claim for wrongful birth and pregnancy cases; (ii) this entitles them to full maintenance costs (whether the child is healthy or not; if it is not the measure of damages may be greater to cover the extraordinary medical expenses); (iii) the mother may additionally claim pain and suffering in cases of wrongful birth that result from a complicated birth." 432 (1984) 2 NZFLR 376. 433 (1984) 2 NZFLR 376 at 380. Callinan human affairs. It has been decided, and it is not challenged in any way, that conception by a woman of a child in the circumstances was a medical misadventure and an injury. That itself could be described as a highly artificial result but it is the base from which we must proceed. It is also accepted that pregnancy and birth are still part of the injury. To name regeneration of the species, perhaps its most fundamental urge, an injury, in whatever circumstances, is to introduce novel and very fundamental changes to accepted human thinking. In the light of the foregoing for a Court to hold that once the birth had taken place there was no longer an injury and therefore by definition no loss could result from it seems an almost welcome return to normalcy. This Court does not find that our supreme legislative body intended to stigmatise possibly the highest expression of love between human beings, that of a mother for her child, as a continuing injury to her by making compensation payable during dependency. To put it simply after the birth of a normal healthy child the injury is entirely healed. The theory of this solution is that the artificiality which calls conception, pregnancy and the event of birth an injury ends with the event and normalcy reimposes itself. The Court takes care not to go further, as some decisions in other countries have done, by proclaiming the birth as a positive benefit. It is not necessary to this reasoning. The foregoing might be called the epitome of the answer but it can be expounded by looking at the words of the section." Before this case the only relevant decision of an appellate court in Australia was CES v Superclinics (Australia) Pty Ltd434. There Kirby ACJ concluded that it was a matter for the trial judge on all of the facts to decide whether a set-off (for the joys and satisfaction of parenthood) should occur, and if it should, against what component of damages it should be, making the point, however, that it should not be assumed that the birth of a child was in all circumstances a blessing. Nonetheless, for the sake of achieving a majority judgment, his Honour concurred with the orders proposed by Priestley JA who took the view that damages for the period beyond the time at which the mother could have given up her child for adoption, did not flow from the negligence of the defendant, but were a consequence of her own personal choice435. Meagher JA (in dissent) expressed an entirely different opinion. He was very much influenced by his earlier conclusion that an abortion in the circumstances would have been illegal. He also expressed his abhorrence of any 434 (1995) 38 NSWLR 47. 435 (1995) 38 NSWLR 47 at 78-79. Callinan assertion that the birth of a healthy child could provide the basis for an award of damages436. The arguments against damages I cannot help observing that the repeated disavowal in the cases of recourse to public policy is not always convincing. Davies JA in the Court of Appeal in this case was, with respect, right to imply that it would be more helpful for the resolution of the controversy if judges frankly acknowledged their debt to their own social values, and the way in which these have in fact moulded or influenced their judgments rather than the application of strict legal principle. In substance, almost all of the arguments that can be made against the awarding of damages for the costs of rearing a child consequent upon what Lax J would categorise as a wrongful pregnancy, do involve emotional and moral values and perceptions of what public policy is, or should be. Some of the arguments against an award overlap. The conventional expression, "natural love and affection", used by lawyers in the past as the moral consideration for the making of a gift, sums up the nature of the overwhelming benefit suggested in the cases as fully offsetting any financial burden attached to the raising of a child. It is repugnant to our society, perhaps even universally so, one argument goes, to treat the birth of a child as an occasion for an award of damages. The illegality (in some circumstances in some jurisdictions) of abortion argues against an award of damages. The next matter relied upon, and one which cannot sit happily with the first that I have mentioned, is the mother's freedom to give the child up for adoption or, in some jurisdictions in some circumstances (legally) to abort the child. That the tortfeasor (a surgeon) made an error in relation to a few millimetres only of tissue is, I think, perhaps the least persuasive of all. It is not possible to imply (as would be necessary to ground the claim) another argument goes, an undertaking by the defendant to provide restitution equivalent to the costs of rearing a child. An award of damages for the cost of rearing a child gives rise to a disproportionality between what a doctor undertakes to do and the damages which the patient seeks to recover. Common or overwhelming public opinion is against the recognition of the relevant claim. That opinion is readily identifiable by, and apparent to, all judges. Alternatively it should at least be regarded as a question of fact in every case whether, or the extent to which, the joys of parenthood offset the monetary costs. A rule against recovery is desirable in order to discourage medical practitioners from performing abortions of healthy foetuses. The damages are a windfall to the parents. It is impossible, if damages are awarded, to shield a child from the unwelcome and unhappy knowledge that he or she was an unwanted and unplanned child. It is simply impossible to assess in monetary terms the advantages and disadvantages of parenthood: no damages 436 (1995) 38 NSWLR 47 at 85-87. Callinan at all should therefore be awarded for the costs of rearing the child. To give damages as sought is to give long-term damages and therefore necessarily excessive damages. Logically, a notional age of 18 represents an arbitrary cut off point: the loss may in fact be indeterminate, and the law leans strongly against indeterminacy of loss. To award damages of the kind sought is not to do what is fair, just and reasonable or, to use the words of Thomas JA in the Court of Appeal in this case, it would not be "fair or desirable that someone else be required to maintain the child in addition to compensating [the first respondent] for the injury that has been done to her and compensating [the second respondent] for the injury done to his rights."437 Further arguments against a relevant award were noted and accepted by "It is accepted in our society that natural parents are liable to contribute to the succour and maintenance of their children. Under the Family Law Act parents have a duty to maintain their children even when the child is in the care of others, and children have the right to be cared for by both their parents regardless of whether their parents are married, separated or have never lived together439. The criminal law also imposes a legal duty upon persons having the care of a child under 16 to provide the 'necessaries of life'440." All but one of these arguments were either explicitly or implicitly called in aid by the appellants in this appeal. It was not argued that a decision not to offer the child for adoption, or not to abort the foetus was more or less morally, or otherwise praiseworthy, or repugnant, than to undergo sterilization. It may be that because of the possibility of changed views in society about reproductivity, the Court may be forced to confront an argument that a decision not to abort, or not to offer for adoption, should be regarded as a failure on the part of the parents to act reasonably (as apparently Priestley JA did as to the latter in CES) but it is unnecessary for the Court to decide here whether that is so. One strong contrary argument against the appellants which I accept, is that a holding for them here would be tantamount to the conferral of a new form of immunity upon doctors and hospital authorities. Hitherto, the classes of defendants enjoying immunities have done so essentially for public purposes, and 437 [2001] QCA 246 at [196]. 438 [2001] QCA 246 at [199]. 439 Family Law Act 1975 (Cth), Pt VII, ss 60B, 66C. 440 Criminal Code (Q), ss 286, 324. Callinan in at least a well-understood, if not always unquestioned public interest. For example, the immunity of advocates, of judges441, of parliamentarians442 for various purposes, of the instrumentalities entitled to the shield of the Crown443 and, until very recently, of highway authorities, fall into this category. The loss of the last, consequent upon the decision of this Court in Brodie v Singleton Shire Council444 is indicative perhaps of an increasing judicial aversion to the enjoyment of special privilege or advantage in litigation unless strong reason for its creation or retention can be demonstrated445. 441 See Rajski v Powell (1987) 11 NSWLR 522; Mann v O’Neill (1997) 191 CLR 204; Re East; Ex parte Nguyen (1998) 196 CLR 354. 442 See for example the Defamation Act 1889 (Q), s 10(1) which provides that: "A member of the Legislative Assembly does not incur any liability as for defamation by the publication of any defamatory matter in the course of a speech made by the member in Parliament." 443 See Seddon, Government Contracts: Federal, State and Local, 2nd ed (1999) at 111-125. Seddon notes at 112 that: "Broadly, a body set up for 'governmental' purposes will be treated as a manifestation of the Crown and thus able to claim relevant privileges or immunities." However, see also Townsville Hospitals Board v Townsville City Council (1982) 149 CLR 282 at 288-289 where Gibbs CJ said: "[M]any functions formerly regarded as matters of private concern are now carried out by instrumentalities of government and the question whether the functions in question are traditionally or peculiarly governmental is likely to be increasingly unhelpful in deciding whether the body formed to carry out those functions enjoys the privileges and immunities of the Crown … The answer to the question must in the end depend upon the intention to be derived from the statute under which the body in question is constituted." 444 (2001) 206 CLR 512. 445 See in relation to the immunity of advocates, Giannarelli v Wraith (1988) 165 CLR 543. In Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 at 281 [362]-[363]; 167 ALR 575 at 670 I pointed out that Giannarelli is a recent decision of this Court based on sound policy and legal grounds and adopted Mason CJ's comments (at 557) in Giannarelli that "the exception which the law creates is not to benefit counsel but to protect the administration of justice." Callinan It may well be seen by some to be distasteful for others to claim, and indeed for judges to assess, damages in a situation of this kind. The fact that I might as a judge find it personally distasteful to be required to assess damages of the kind claimed, can however provide no reason to refuse to award them if the application of legal principle requires me to do so446. That so many judges in superior courts in different jurisdictions on various occasions have been essentially of the same mind in rejecting the relevant claim, albeit that they have not always expressed themselves in precisely the same way in doing so, is a matter not lightly to be disregarded. But in the event I find myself obliged to confirm the assessment. There is nothing novel in the contention that courts may be called upon to assess what is in reality unassessable with precision, or has no true monetary equivalent. Here, in truth the damages can be assessed with a reasonably high degree of precision unlike damages for pain and suffering or damages for defamation which this Court has held should be assessed with an eye to the damages conventionally awarded in cases of personal injuries447. Nor is it novel for a court to look solely to, and give compensation for financial consequences, and to ignore emotional ones. Lord Campbell's Act enacted in various but generally consistent forms in the States requires no less of judges than this. No one would seriously suggest that an offset (assuming it were legally permissible) should be made against the value of the support lost by a surviving spouse on the death of a good provider who was also incidentally a tyrannical, unpleasant and generally disagreeable companion whose company the survivor would thereafter be spared. The respondents are entitled to be compensated for the costs they are likely to incur in rearing the child until he is 18 years old which is all that they claim. In this case, the claim as formulated was a reasonably simple one. Whether social security or other state benefits may or should be taken into account was not in issue. The reciprocal joy and affection of parenthood can have no financial equivalence to the costs of rearing him. One is no substitute for the other. There is no reason to suppose in any event that the reciprocal bonds of obligation and affection will be any the less if the parents are compensated for the cost of bringing up the child. The appellants were negligent. The respondents as a result have incurred and will continue to incur significant expense. That expense would not have been incurred had the first appellant not given negligent professional advice. All of the various touchstones for, and none of the relevant disqualifying conditions 446 See De Sales v Ingrilli (2002) 77 ALJR 99 at 136 [189]; 193 ALR 130 at 180: "That a judge might find a task distasteful is not a reason for the judge not to do it." 447 Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44. Callinan against, an award of damages for economic loss are present here. Holmes J at first instance, as with McMurdo P and Davies JA on appeal, were right to identify those touchstones and apply Perre to the case as they did. No identifiable, universal principle of public policy dictates any different result. The damages are not indeterminate. That they should be awarded is also consistent with the underlying notion that their availability in tort serves as a measure of deterrence of tortious conduct. It is important to revert to the precise question to be answered in this case. It is whether damages for professional advice negligently given, or negligently omitted to be given, can be awarded to cover the cost of the healthy product of an unwanted pregnancy. It also is equally important to note some questions which do not fall to be answered in this case. There is no relevant ground of appeal raising any questions as to any of the other heads of damages awarded by the trial judge. It is not a case in contract. There is no issue of contributory negligence. It is not a case of negligent misstatement. It is not a case in which any party has sought to distinguish between the respective entitlements of the parents even though the father here was apparently not the recipient of the negligent advice, and was, at one point at least, procrastinating and ambivalent about whether his wife should undergo sterilization. It is not a case in which any entitlement to damages for loss of consortium or the costs associated with an evaluation of the pain and suffering of the confinement is contested. Nor was any challenge made to the damages awarded to the mother for her economic loss. Accordingly, incongruities, if any, between what might have been claimed, awarded, or offset in fact, do not need to be considered. Despite the large measure of agreement by those judges whose conclusions the appellants would invoke, the matters relied on by them do not, with respect, commend themselves in law to me. The "windfall" argument is one of these. The denial of damages to the parents could equally be described as a windfall to the tortfeasor. To many, the abortion of a child or the offering of him for adoption, particularly within wedlock, would be more morally repugnant than the claiming of damages in respect of the rearing of the child. And there are many harsher truths which children have to confront in growing up than the knowledge that they were not, at the moment of their conception, wanted. This Court has rejected448 the approach of the House of Lords in Caparo Industries Plc v Dickman449, one essential element of which is a test of fairness, justice and reasonableness. One of its difficulties lies in the inevitable differences in points 448 See Perre v Apand Pty Ltd (1999) 198 CLR 180 at 193-194 [9]-[12] per Gleeson CJ, 210-212 [77]-[82] per McHugh J, 302-303 [332]-[335] per Hayne J, 325 [403] per Callinan J. Callinan of view as to what is fair, just and reasonable. Some would, in any event, readily hold that a tort having been committed, a victim having suffered quantifiable monetary loss, the victim should in fairness, justice and reasonableness be compensated: that the tortfeasor should pay. Arguments of distributive justice are in my opinion unimpressive. Judges are obliged both in principle and in terms of their judicial oath450 to do equal justice between rich and poor. On one application of such a principle (of distributive justice), the doctor, or the public health authority (or perhaps their insurer) on the basis of having the longer pocket, should pay. I would certainly not decide the case on such a basis. That a negligent person should pay furthers the ends of corrective justice. It is easy to think of much more difficult cases of the assessment of damages, for example, damages for loss of opportunity, or for pain and suffering. I accept the relevance in the debate of the existence of obligations imposed by the law relating to families, paternity and maternity, and like enactments, as well as the sanctions of the criminal law, for a failure to maintain and support children451. But the imposition of these legal obligations can no more absolve the negligent professional from his liability for damages than it can the negligent motorist from his obligation in tort to pay the increased cost of the care of a child he has negligently run over even though the parents may remain obliged to support the child by providing that care. The only matter in this appeal that was in issue was what both parties characterized as an entitlement or otherwise to damages for economic loss. therefore that characterization, although necessarily general and I think imprecise, is reasonable in the circumstances, the parties having put aside, for the purposes of this appeal, any controversy with respect to damages for any physical assault, operation, intrusion or physical contact, of any kind. That being so, the case necessarily becomes, as McHugh J suggested early in the argument, a relatively simple one452. The arguments of the appellants should be rejected. I would dismiss the appeal with costs. 450 eg Oaths Act 1867 (Q), s 3: "I AB do sincerely promise and swear that as a judge of the Supreme Court of Queensland I will at all times and in all things do equal justice to the poor and rich and discharge the duties of my office according to the laws and statutes of the realm and of this State to the best of my knowledge and ability without fear favour or affection." (emphasis added) 451 [2001] QCA 246 at [199] per Thomas JA. 452 Transcript of proceedings, 11 February 2003 at 13-14. Background issues The circumstances of the appeal are fully set out in the reasons for The procedural structure of this litigation has meant that many issues which might have arisen did not arise. Some of those issues, however, trigger reflection on the nature of future litigation if the law permits recovery of the costs of raising a healthy but unplanned child from a negligent medical practitioner. Expensive upbringing. The claim which succeeded in this case was not greedy. It was entirely moderate. It does, however, suggest disquieting possibilities in relation to other much more ambitious claims. The plaintiffs appear to have had only a modest combined income before the birth of their son, Jordan. The second plaintiff at the time of the trial was grossing $55,000-60,000 per annum (with a large overtime component in those figures). Even before the birth the first plaintiff's earnings were no more than a few thousand dollars per year. The plaintiffs' claim for the costs of Jordan's upkeep corresponded with that which persons on modest incomes of the type they received could provide. One element that perhaps went a little beyond that was an item for the cost of a "moderately priced private school" at $800 per semester or term. Fees of that order are not only "moderate" but relatively very low. Private secondary education had been contemplated for Jordan's two older sisters, but those plans had to be abandoned because of the expense. The defendants make no complaint of the trial judge's inclusion of that particular item, but it poses the question: what can parents recover in relation to a child who is unplanned and enters a family accustomed to the most expensive primary, secondary and indeed tertiary education? If a Princeton education was contemplated and was feasible for the planned children, can its cost be denied in relation to the unplanned child? And if the parents and the planned children took expensive overseas holidays, can their cost be denied in relation to the unplanned child? If it had been the practice of the family for expensive presents to be given to the planned children, why cannot the cost of expensive presents to the unplanned child be recovered from the defendant? Jordan's parents recovered a sum referable to numerous items which in scope, quantity and cost were very modest – inexpensively priced clothes and toys and pastimes and presents and parties. But even they claimed $200 as the cost of Jordan's share of a holiday in the United States when he was in his first year, and it was allowed by the trial judge. Rich parents might legitimately seek to contend that they should recover from a negligent defendant the cost of expensive clothes, toys, pastimes, presents and parties of the type which the planned siblings of the unplanned child had enjoyed or were going to enjoy. In Allen v Bloomsbury Health Authority453 Brooke J held that the defendants were liable to pay for all such expenses as might reasonably be incurred for the education and upkeep of the unplanned child, having regard to the condition in life of the child and the reasonable requirements of the child. That would include expensive schools if that was how the child's siblings had been educated, even though this might result in "a very substantial claim"454. In Benarr v Kettering Health Authority455, the costs of private education were held recoverable because the parents were "upper middle-class", were "deeply interested in obtaining the best possible education that they can for their children" and "had decided that their children would be privately educated". And in McFarlane v Tayside Health Board456 Lord Hope of Craighead said that "a very substantial award of damages might have to be made for the" upbringing of the child of "the expatriate banker or businessman whose work required him to reside with his wife in countries where suitable facilities for education were not available or to adopt an itinerant lifestyle." Potential problems in relation to house extensions and larger family cars have also been identified457. On the other hand, it has been said that the amounts recoverable should be set "at a reasonable and not an extravagant level, albeit that the well to do may well have exceeded that level because they have the means to enable them to express their love and care for the child in a more expensive fashion"458. Duration of upbringing. An overlapping issue also arises. If parents are entitled to recover for the costs of rearing an unplanned child until the age of 18 on the ground that they are legally obliged to maintain the child until that age, why are they not entitled to recover for the costs of maintaining the child after that age if it was the practice of that family to do so? Does the ambit of the damages extend to cover "everything that can reasonably be described as 453 [1993] 1 All ER 651 at 662. 454 [1993] 1 All ER 651 at 662. 455 (1988) 138 New LJ 179. 456 [2000] 2 AC 59 at 91; see also Lord Clyde at 106. 457 eg McFarlane v Tayside Health Board 1997 SLT 211 at 217 per Lord Gill. See also Udale v Bloomsbury Area Health Authority [1983] 1 WLR 1098 at 1109-1110; [1983] 2 All ER 522 at 531-532, where the problem was solved illogically. 458 Allan v Greater Glasgow Health Board 1998 SLT 580 at 585 per Lord Cameron of Lochbroom. necessary for the upbringing of the child until the end of school, university, independence, maturity?"459 Parents often do maintain their children well after the age of 18 − occasionally until death. In South Africa "liability ... lapses when the child is reasonably able to support itself"460. That test leaves open room for considerable differences of opinion. Diminished enjoyment of life. Further, if parents are entitled to recover for the costs of rearing a child, why are they not entitled to recover for the costs of diminished enjoyment of life, since the greater the number of children and the wider their age range, the more domestic work the parents must do and the less leisure time the parents have? Particular (h) of damage in this case was: "The first and second plaintiffs have both sustained the loss of enjoyment and amenity of their married life by reason of the added responsibility and burden of raising Jordan." The trial judge did not award damages of this kind, and did not deal with this part of the claim; perhaps it was not pressed. But this particular claim is not surprising. Among the respects in which the capacity of parents of a given number of children to enjoy life can be diminished by the birth of further children is the reduced enjoyment to be derived by the parents from those whose births were intended. While celibacy may have no pleasures and marriage may have many pains, one of the pleasures which can be derived from marriage is the company of children: that pleasure may be reduced, nullified or more than nullified by the arrival of additional children. Claims in respect of the "services of parents" and "emotional burdens" have been made in America461. If parents can recover for diminished leisure or diminished enjoyment of parent-child relationships, can siblings recover in respect of diminished opportunities to spend time with their parents and diminished opportunities to enjoy the benefits which they might have enjoyed had their parents' financial reserves not been used on the unplanned child462? Moderating the damages. McMurdo P understandably showed unease about some of these problems in noting that the costs claimed in this case were "moderate reasonable costs"463 while in general favouring a "modest" approach 459 McFarlane v Tayside Health Board [2000] 2 AC 59 at 74 per Lord Slynn of Hadley. 460 Mukheiber v Raath 1999 (3) SA 1065 at 1081 [51] (Supreme Court of Appeal). 461 McKernan v Aasheim 687 P 2d 850 at 851 (Wash, 1984). 462 See Custodio v Bauer 59 Cal Rptr 463 at 476-477 (1967); Cox v Stretton 352 NYS 2d 834 at 839-840 (1974); White v United States 510 F Supp 146 (1981). 463 [2001] QCA 246 at [58]. leading to "moderation of damages"464. The trouble is that the common law of tort compensates for loss. Loss remains loss even if it is suffered by a rich family, and even if a rich family loses more than a poor one. The common law does not permit capping. Dismissal of the appeal carries the certain consequence, for better or for worse, that the skills and ingenuity of the lawyers who advise plaintiffs as a class, whether rich or poor, will be devoted at once to extending recovery far beyond the limited level which the present plaintiffs sought. That is not in itself necessarily an argument against recovery. But it does indicate the nature of the litigation which will ensue if recovery is permitted. Child's non-entitlement. Where, as here, damages are awarded in a lump sum in part to cover expenditures which are to take place in the future, the award carries no guarantee that they will actually be so spent in the future. The recipients are at liberty to spend the damages on themselves or on any other purpose whatsoever. Neither side suggested, and no Anglo-Australian or American case drawn to the Court's attention suggests, that there is any applicable exception to the general rule that the damages recovered may be spent as the plaintiff wishes465. However, in Canada a trust has been imposed in favour of the child466. The authorities in outline While there is authority at intermediate appellate level in this country favouring the proposition that the first defendant owed the plaintiffs a duty of care467, there was no superior court authority before this case favouring the recovery of the head of damages in controversy in this appeal. There was no authority of the Supreme Court of Queensland favouring recovery of that head of 464 [2001] QCA 246 at [64]. 465 Todorovic v Waller (1981) 150 CLR 402 at 412. Similarly, where damages are recovered by a plaintiff for services rendered by third parties, there is no obligation to pay the damages to the third parties: Griffiths v Kerkemeyer (1977) 139 CLR 161 at 177, 193-194; Kars v Kars (1996) 187 CLR 354 at 372. 466 Krangle (Guardian ad litem of) v Brisco (2000) 184 DLR (4th) 251 (BCCA). A similar development has occurred in England in relation to services rendered by third parties: Hunt v Severs [1994] 2 AC 350. 467 Kirby ACJ and Priestley JA agreed on this point, though Meagher JA dissented, in CES v Superclinics (Australia) Pty Ltd (1995) 38 NSWLR 47. damage468. The only decision of an appellate court in this country opposed it469. The House of Lords held, after close consideration, that the relief sought is not available in English or Scots law470. That approach has been followed in Canada471. In New Zealand, where the common law of negligence in relation to personal injuries is severely confined by statute, the position is not clear472. The relief sought is denied in the majority of United States jurisdictions (though in most instances there are dissenting opinions). It seems that full recovery is permitted only in Wisconsin473 and New Mexico474. In a minority of jurisdictions 468 Dahl v Purnell (1992) 15 QLR 33 was a decision of the District Court. Veivers v Connolly [1995] 2 Qd R 326 did not concern a healthy child, and no argument of the kinds debated in this appeal that rearing costs should not be recovered was presented. 469 CES v Superclinics (Australia) Pty Ltd (1995) 38 NSWLR 47: the opinion of Priestley JA was adverse to the recovery of child-rearing costs and Meagher JA agreed on this point, though going further in opposing all recovery. There is no contrary Australian authority, since in F v R (1982) 29 SASR 437 nothing was awarded in relation to the head of damages in controversy in this appeal. 470 McFarlane v Tayside Health Board [2000] 2 AC 59. While that case has been criticised, the prior "authorities" to the contrary are far from satisfactory. They were two Court of Appeal decisions. Emeh v Kensington and Chelsea and Westminster Area Health Authority [1985] QB 1012 concerned a child with congenital abnormalities, but recovery evidently included, in addition to the costs referable to abnormality, the costs which would have been incurred had the child been normal. Judgment was not reserved; the Court did not discuss the arguments debated in American or earlier English authority in detail; and what the Court said about healthy children was obiter. Thake v Maurice [1986] QB 644, which concerned a healthy child, followed what was said in Emeh's case, but the contrary view was not argued in view of Emeh's case. There was a line of single judge authority and opinion disagreeing with the Court of Appeal both before (Udale v Bloomsbury Area Health Authority [1983] 1 WLR 1098; [1983] 2 All ER 522) and after (Gold v Haringey Health Authority [1988] QB 481 at 484 per Lloyd LJ, agreeing with an unreported opinion of Ognall J: Jones v Berkshire Area Health Authority (2 July 1986)). 471 eg MY v Boutros [2002] 6 WWR 463 (Alberta QB); cf Kealey v Berezowski (1996) 136 DLR (4th) 708 (Ont Ct (General Division)). 472 SGB v WDHB [2002] NZAR 413. 473 Marciniak v Lundborg 450 NW 2d 243 (Wis, 1990). 474 Lovelace Medical Center v Mendez 805 P 2d 603 (NM, 1991). recovery is permitted subject to an offset for the benefits gained by the parents (subject again to dissenting opinions)475. South Africa permits recovery476. The position of the defendants The defendants accepted that since a duty of care, a breach of duty, causation in fact and damage of various kinds had been found against them; since special leave had been granted only in relation to the third head of damages; and since all the calculations needed to produce the third head of damages were feasible and had been done, the question was whether the duty of care extended to that third head of damages and if it did, why it did. They submitted that it did not follow from their concessions about duty, breach, causation and damage that the plaintiffs could recover the damages in controversy. The plaintiffs said that those concessions meant that as a matter of general principle child-rearing costs were recoverable, but contended that the issue was whether some special exception existed to prevent recovery. A trial or intermediate appellate court which was faced with authorities in the condition described above would normally be regarded as taking a new step in the law − as extending the common law − if it allowed the head of recovery under consideration. That is how Thomas JA, at least, viewed the matter in the Court of Appeal477. The defendants accordingly submitted that this Court was being asked to take a new step, or to confirm that the Supreme Court of Queensland was correct in taking a new step. The defendants in effect submitted that the plaintiffs bore a burden of persuasion as to why that step should be or should have been taken. Counsel for the defendants rightly described the leading South African case478 as "declamatory". The same expression can be applied to many of the other authorities, both those favouring recovery and those opposing it. The difficulty of the subject has led more to the emphatic statement of conclusions than to the detailed exposition of the reasoning underlying them. The sum awarded for child-rearing expenses which is in controversy in this appeal is approximately equivalent to that which might be recovered for a moderately severe personal injury having long term detriments, like a badly 475 The position as at 1997 is summarised in Emerson v Magendantz 689 A 2d 409 476 Mukheiber v Raath 1999 (3) SA 1065 (Supreme Court of Appeal). 477 [2001] QCA 246 at [195]. 478 Mukheiber v Raath 1999 (3) SA 1065 (Supreme Court of Appeal). broken leg, or for the destruction of a very expensive uninsured car in a motor accident, or for serious damage to a dwelling caused by a negligently driven runaway truck, or for some substantial interruption to the profitability of a business. Each of these events is in some way, if not a catastrophe, at least a calamity for the victim. Many judges and other lawyers across the common law world have opposed recovery of a sum for child-rearing expenses because they have an instinctive revulsion against seeing the birth of a healthy child as comparable in any way with a badly broken leg, the destruction of a very expensive car, serious damage to a building, or some substantial injury to a business479. Others, like Ognall J, point out that "those who are afflicted with a handicapped child or who long desperately to have a child at all and are denied that good fortune would regard an award for this sort of contingency with a measure of astonishment"480. Yet others, like Weir, see it as "a grotesque waste of public funds" that "hospitals, strapped for funds for curing the sick", should be "paying out loads of money in respect of perfectly healthy children and adolescents … to parents who were in no way obliged to spend it on them"481. But it has been one thing to reach a conclusion after experiencing revulsion or feeling astonishment or observing a grotesque result. It has been another thing to formulate legal reasoning to support the conclusion reached. Despite the difficulties in identifying decisive legal reasoning in the authorities, counsel for the defendants relied on the main arguments, such as they are, advanced in those decisions in other jurisdictions which have denied recovery for child-raising costs. The defendants relied on the fact that though there was not universal agreement in the common law world that there should be no recovery for child- rearing costs, there was widespread opposition to recovery. Not all opponents relied on the same reasons, but the condition of the authorities suggested that the result arrived at was just. While the defendants conceded a duty of care, they said that the law limited "the type of injury to which it extends" by what Deane J in Jaensch v Coffey called "overriding requirements or limitations"482: 479 "To name regeneration of the species, perhaps its most fundamental urge, an injury, in whatever circumstances, is to introduce novel and very fundamental changes to accepted human thinking": XY v Accident Compensation Corporation (1984) 2 NZFLR 376 at 380 per Jeffries J. 480 Jones v Berkshire Area Health Authority (unreported, 2 July 1986), quoted by Lloyd LJ, who said many would no doubt agree, in Gold v Haringey Health Authority [1988] QB 481 at 484. 481 Weir, "The Unwanted Child", (2002) 6 Edinburgh Law Review 244 at 247. 482 (1984) 155 CLR 549 at 583, applied by Callinan J in Tame v New South Wales (2002) 76 ALJR 1348 at 1408-1409 [330]; 191 ALR 449 at 533. "It is not and never has been the common law that the reasonable foreseeability of risk of injury to another automatically means that there is a duty to take reasonable care with regard to that risk of injury ... Reasonable foreseeability on its own indicates no more than that such a duty of care will exist if, and to the extent that, it is not precluded or modified by some applicable overriding requirement or limitation. It is to do little more than to state a truism to say that the essential function of such requirements or limitations is to confine the existence of a duty to take reasonable care to avoid reasonably foreseeable injury to the circumstances or classes of case in which it is the policy of the law to admit it. Such overriding requirements or limitations shape the frontiers of the common law of negligence. They may apply to preclude altogether the existence of a duty of care in particular circumstances ... or to limit the content of any duty of care or the class of persons to whom it is owed ... or the type of injury to which it extends ...". Deane J supported the proposition enunciated in the last nine words by a reference to Best v Samuel Fox & Co Ltd483. There the House of Lords held that a wife had no claim for loss of consortium against a tortfeasor who had injured her husband. Lord Goddard pointed out that an employee whose employer was negligently killed or permanently injured by a tortfeasor and who therefore lost the employment had no claim against the tortfeasor. Nor, statute apart, did the employer's wife or children, even though their standard of living had in consequence fallen484. Deane J's point was that even if a tortfeasor physically injured both husband and wife, so that she could claim in respect of her physical injuries, she could not claim for that kind of injury described as "loss of consortium". The defendants also relied on Sutherland Shire Council v Heyman485, "[A] postulated duty of care must be stated in reference to the kind of damage that a plaintiff has suffered and in reference to the plaintiff or a class of which the plaintiff is a member." That sentence was applied by Hayne J in Modbury Triangle Shopping Centre Pty Ltd v Anzil486. Brennan J continued: 484 [1952] AC 716 at 731. 485 (1985) 157 CLR 424 at 487. 486 (2000) 205 CLR 254 at 290 [104]. "It is impermissible to postulate a duty of care to avoid one kind of damage – say, personal injury – and, finding the defendant guilty of failing to discharge that duty, to hold him liable for the damage actually suffered that is of another and independent kind – say, economic loss. Not only may the respective duties differ in what is required to discharge them; the duties may be owed to different persons or classes of persons. That is not to say that a plaintiff who suffers damage of some kind will succeed or fail in an action to recover damages according to his classification of the damage he suffered. The question is always whether the defendant was under a duty to avoid or prevent that damage, but the actual nature of the damage suffered is relevant to the existence and extent of any duty to avoid or prevent it." The defendants said there was nothing novel in seeing instances where, though a duty of care existed, breach of it permitted recovery only in relation to some forms of loss but not others. The instances given were nervous shock as it was understood before recent clarification487; actions in defamation by a plaintiff who had to rely on illegality or any reputation arising out of illegality488; other actions, including personal injury actions, resting on the conduct of illegal enterprises489; damages for the costs of care before Griffiths v Kerkemeyer490; and actions to recover financial loss attributable to the plaintiffs' impecuniosity491. The defendants attributed the fact that if this case were to be numbered among these few instances it would be exceptional to the simple circumstance that the present case was unusual in nature, arising out of the birth of a human child. The defendants' primary position was: "The birth of a normal, healthy child should not be regarded as a legal harm or wrong for which damages may be awarded." It is convenient to go directly to the reasons why the arguments advanced by the majority of the Court of Appeal are unsound, rather than setting out in detail each of the defendants' contentions or going to every part of the four thoughtful but divergent judgments in the Supreme Court. Those arguments are 487 Tame v New South Wales (2002) 76 ALJR 1348; 191 ALR 449. 488 Wilkinson v Sporting Life Publications Ltd (1933) 49 CLR 365. 489 Meadows v Ferguson [1961] VR 594. 490 (1977) 139 CLR 161 – a decision cut back by statute in some jurisdictions, and increasingly less esteemed in others. 491 Owners of Dredger Liesbosch v Owners of Steamship Edison [1933] AC 449. unsound because they take insufficient account of the law's assumptions about some key values in family life as reflected in the unenacted and enacted law. They also take insufficient account of the type of litigation that is likely to take place if recovery of rearing costs is permitted. That in turn meant that they failed to deal with three objections to the outcome which the Court of Appeal majority approved. Fundamental assumptions of the law relating to parents and children It is a fundamental assumption underlying many rules of the common law and many statutory provisions that, in general, where the interests of children collide with other interests, the interests of the children prevail; that parents have duties of a high order to advance the interests of their children; that those interests are best advanced by nurture in stable marriages; and that one of the interests of children which the law recognises is the need to avoid the harm which may flow from publicity connected with litigation in which their interests are at stake. The raising of children to a point at which they achieve sufficient maturity to render themselves capable of independent social existence is a lengthy process. It is a commonplace that children have a "special vulnerability"492. This special vulnerability is not only a vulnerability to hunger if they are not fed, to disease if they are not sheltered, and to physical harm if they are not cared for. It includes psychological vulnerability. Children can lack confidence. They can be fragile and sensitive. They depend on love, and on the perception that they are loved, in order to build up confidence and stability. For centuries the courts have intervened in the relationship between parents or guardians and children in order to protect children who were abused or neglected or in peril either as to property or person. In In re X (A Minor) (Wardship: Jurisdiction)493 Latey J said: "All subjects owe allegiance to the Crown. The Crown has a duty to protect its subjects. This is and always has been especially so towards minors … And it is so because children are especially vulnerable. They have not formed the defences inside themselves which older people have, 492 Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 304 per 493 [1975] Fam 47 at 52, approved in In re C (A Minor) (Wardship: Medical Treatment) (No 2) [1990] Fam 39 at 46 per Lord Donaldson of Lymington MR. See also In re R (A Minor) (Wardship: Consent to Treatment) [1992] Fam 11 at and, therefore, need especial protection. They are also a country's most valuable asset for the future." It was part of the Crown's prerogative as pater patriae or parens patriae to exercise jurisdiction over charities, idiots, lunatics and children494, "infants and lunatics … being unable to take care of themselves"495. The jurisdiction "rests upon this ground, that it is the interest of the State and of the Sovereign that children should be properly brought up and educated; and according to the principle of our law, the Sovereign, as parens patriae, is bound to look to the maintenance and education (as far as it has the means of judging) of all his subjects"496. This jurisdiction devolved upon the courts. The importance of the jurisdiction and the rights enforced in it is revealed by the fact that it is not a jurisdiction to be taken away by statute except in the clearest language497. In wardship proceedings the applicant seeks to commit the child to the protection of the court and asks the court to make whatever order it thinks fit for the child's benefit498. Hence the jurisdiction must be exercised "for the best interests of the child"499. The "main consideration was the welfare of the 494 Falkland v Bertie (1696) 2 Vern 333 at 342 [23 ER 814 at 818] per Lord Somers LC; In re Spence (1847) 2 Ph 247 at 252 [41 ER 937 at 938] per Lord Cottenham LC; Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 259 per Mason CJ, Dawson, Toohey and Gaudron JJ, 280 per Brennan J. 495 Eyre v Shaftsbury (Countess of) (1722) 2 P Wms 103 at 111 [24 ER 659 at 662] per Sir Joseph Jekyll MR, Gilbert B and Raymond J. 496 Hope v Hope (1854) 4 De G M & G 328 at 345 [43 ER 534 at 541] per Lord Cranworth LC. 497 Johnson v Director-General of Social Welfare (Vict) (1976) 135 CLR 92 at 97 per Barwick CJ, Stephen and Mason JJ concurring. 498 In re B (J A) (An Infant) [1965] Ch 1112 at 1117 per Cross J; Fountain v Alexander (1982) 150 CLR 615 at 635 per Mason J. 499 R v Gyngall [1893] 2 QB 232 at 252 per Kay LJ. child"500 − "welfare in its widest sense"501. That is the "dominant"502 or "paramount"503 or "primary"504 or "first and paramount"505, though not the "sole" consideration506. The welfare of children is seen as normally being advanced by permitting them to live with and to be under the guardianship of their parents. The law presumes it to be in the interests of children to be "under the nurture and care" of a parent − a "natural protector, both for maintenance and education"507. That perception rests on the natural love and mutual confidence between parent and child − the duty of parents to advance the welfare of the children, the urge parents normally have to do this, and the trust children have that their parents will do this. "The responsibilities and powers of parents extend to the physical, mental, moral, educational and general welfare of the child. They extend to every aspect of the child's life."508 "The acknowledged rights of a father with respect to the custody and guardianship of his infant children are conferred by the law, it may be with a view to the performance by him of duties towards the 500 In re O'Hara [1900] 2 IR 232 at 239 per FitzGibbon LJ. 501 In re O'Hara [1900] 2 IR 232 at 254 per Holmes LJ. 502 Goldsmith v Sands (1907) 4 CLR 1648 at 1653 per Griffith CJ; Moule v Moule (1911) 13 CLR 267 at 269 per Griffith CJ; J v C [1970] AC 668 at 697 per Lord Guest; Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 293 per Deane J. 503 Ward v Laverty [1925] AC 101 at 108 per Viscount Cave; J v C [1970] AC 668 at 697 per Lord Guest. 504 Thomasset v Thomasset [1894] P 295 at 300 per Lindley LJ. 505 In re B (A Minor) (Wardship: Sterilisation) [1988] AC 199 at 202 per Lord Hailsham of St Marylebone LC; Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 293 506 In re Thain [1926] Ch 676 at 684 per Eve J. 507 United States v Green 26 Fed Cas 30 at 31 (1824) per Story J; J v Lieschke (1987) 162 CLR 447 at 463 per Deane J. 508 Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 278 per Brennan J. children, and, in a sense, on condition of performing those duties"509. Parents have a "duty to nurture, control and protect" their children510. While the welfare of the child is the paramount consideration in resolving wardship and guardianship controversies, there are others. One is that the "child should have an opportunity of winning the affection of its parent, and be brought for that purpose into intimate relation with the parent"511. By the same token the parent should have an opportunity of winning the affection of the child. The value which the law places on this is evidenced by the continuation of access by a father to his child even though he has separated from the mother and that child. "Even when they live apart, we attach a great deal of importance to trying to preserve as good and as close a relationship as possible between the child and the parent with whom he is not living."512 "The law recognises … the natural duties of the father. Now the natural duties of a father are to treat his child with the utmost affection and with infinite tenderness, to forgive his child without stint and under all circumstances."513 These duties are "sacred duties"514. These propositions were stated at a time when, and in a case in which, fathers were assumed to have greater rights than is now the case515 but what they say about paternal duties remains correct, and must now also be true of maternal duties. In this Court, emphasis has been laid on the fact that the duty to nurture children lies at the heart of marriage. In Russell v Russell516 Jacobs J said: 509 In re Fynn (1848) 2 De G & Sm 457 at 474 [64 ER 205 at 212] per Sir James Knight Bruce VC. 510 J v Lieschke (1987) 162 CLR 447 at 462 per Brennan J. 511 In re Thain [1926] Ch 676 at 690 per Warrington LJ. 512 Parkinson v St James and Seacroft University Hospital NHS Trust [2002] QB 266 at 294 [93] per Hale LJ. 513 In re Agar-Ellis (1883) 24 Ch D 317 at 327 per Brett MR. 514 In re Agar-Ellis (1883) 24 Ch D 317 at 329 per Brett MR. 515 J v C [1970] AC 668 at 694 per Lord Guest, 721 per Lord Upjohn; Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 291, 293 per Deane J. 516 (1976) 134 CLR 495 at 548-550. "[M]arriage as a social institution which the law clothes with rights and duties attaching to the parties thereto is primarily an institution of the family. It is true that marriage can be regarded as a social relationship for the mutual society help and comfort of the spouses but it cannot be simply so regarded. The primary reason for its evolution as a social institution, at least in Western society, is in order that children begotten of the husband and born of the wife will be recognized by society as the family of that husband and wife … The nurture of children by, and in recognized and ordered relationship with, their parents is … integral to the concept of marriage as it has developed as an institution in our society ... [B]y marriage and the procreation of children in the marriage relationship each parent has social rights and duties of nurture in respect of those children which arise from and are part of the marriage relationship which exists or which previously existed." Jacobs J was in dissent in the result in that case, but that does not affect the force of those observations. They are consistent with the proposition, accepted by Deane J, that the law presumes that it is in the interests of children to be under the nurture and care of their parents517. And they support the following view of Thomas JA, dissenting in the Court of Appeal518: "Families are important units in a community. It is in the interest of the community that parental responsibility, love and trust between parent and child and strong family units be maintained." The family "remains the central and cherished structure in our lives"519. It follows that "planting seeds of discontent and discord between spouses is contrary to the policy of the law … [S]tability of marriage is the general policy of the law. And that stability must depend upon marriages being in general supported by harmony and sustained by happiness … [T]he consortium of matrimony … should not be interfered with, hampered or embarrassed"520. The parens patriae jurisdiction has stimulated a long history of legislation intended to promote the welfare of children who are neglected or otherwise in 517 J v Lieschke (1987) 162 CLR 447 at 463. 518 [2001] QCA 246 at [196]. 519 Kealey v Berezowski (1996) 136 DLR (4th) 708 at 731-732 per Lax J. 520 Church Property Trustees, Diocese of Newcastle v Ebbeck (1960) 104 CLR 394 at 415 per Windeyer J. See also Dixon CJ at 404. peril521. It is common for this legislation to stipulate that in resolving controversies, whether they relate to the welfare of children, to guardianship, to custody, or to adoption, the welfare of the child is the first and paramount consideration522. There is also other modern legislation which seeks to promote the welfare of children. The Family Law Act 1975 (Cth), s 60B(1), provides that the object of Pt VII of the Act is "to ensure that children receive adequate and proper parenting to help them achieve their full potential, and to ensure that parents fulfil their duties, and meet their responsibilities, concerning the care, welfare and development of their children." Section 66C(1), which is in similar terms to the Child Support (Assessment) Act 1989 (Cth), s 3(1), provides that the parents of a child have the primary duty to maintain the child. The specific duties of parents are enforced by maintenance orders under other provisions of the Act523. The Criminal Code (Q), s 286, provides: "(1) It is the duty of every person who has care of a child under 16 years to – provide the necessaries of life for the child; and the precautions take the circumstances to avoid danger to the child's life, health or safety; and that are reasonable in all take the action that is reasonable in all the circumstances to remove the child from any such danger; and he or she is held to have caused any consequences that result to the life and health of the child because of any omission to perform that duty, whether the child is helpless or not. In this section – 521 eg the New South Wales legislation analysed by Kirby P in Shales v Lieschke (1985) 3 NSWLR 65 at 72-80. 522 eg Guardianship of Infants Act 1925 (UK), s 1 (which Lord Upjohn said "enshrined the view of the Chancery Courts" in J v C [1970] AC 668 at 724). 523 Luton v Lessels (2002) 76 ALJR 635 at 646 [65] per Gaudron and Hayne JJ; 187 ALR 529 at 544. 'person who has care of a child' includes a parent, foster parent, step parent, guardian or other adult in charge of the child, whether or not the person has lawful custody of the child." And s 324 provides: "Any person who, being charged with the duty of providing for another the necessaries of life, without lawful excuse fails to do so, whereby the life of that other person is or is likely to be endangered or the other person's health is or is likely to be permanently injured, is guilty of a misdemeanour, and is liable to imprisonment for 3 years." There are similar but not identical provisions in jurisdictions other than In In re C (A Minor) (Wardship: Medical Treatment) (No 2) Lord Donaldson of Lymington MR said that in wardship proceedings courts could make525: "orders forbidding the publication of information about the ward or the ward's family circumstances. Consistently with this, applications to the court in wardship proceedings are made within the privacy of the court sitting in chambers and the decision of the court and its reasons for that decision are not normally given in open court." This is one of the few exceptions to the strict rule that justice is administered in open court. In Scott v Scott526 Viscount Haldane LC said of wards of court: "[T]he judge who is administering their affairs, in the exercise of what has been called a paternal jurisdiction delegated to him from the Crown through the Lord Chancellor, is not sitting merely to decide a contested question. His position as an administrator as well as judge may require the application of another and overriding principle to regulate his procedure in the interest of those whose affairs are in his charge." 524 eg Crimes Act 1900 (NSW), ss 43 and 44; Criminal Law Consolidation Act 1935 (SA), s 30; Criminal Code (WA), ss 262, 263 and 344; Crimes Act 1900 (ACT), s 39; and Criminal Code (NT), ss 149, 183 and 184. 525 [1990] Fam 39 at 46. 526 [1913] AC 417 at 437. This language is reminiscent of that of Cardozo J, giving the opinion of the New York Court of Appeals in Finlay v Finlay527: "The chancellor in exercising his jurisdiction upon petition does not proceed upon the theory that the petitioner, whether father or mother, has a cause of action against the other or indeed against any one. He acts as parens patriae to do what is best for the interest of the child … He is not adjudicating a controversy between adversary parties, to compose their private differences. He is not determining rights 'as between a parent and a child', or as between one parent and another." In Scott v Scott Lord Atkinson said528 that in wardship cases the judges "act as the representatives of the Sovereign as parens patriae, and exercise on his behalf a paternal and quasi-domestic jurisdiction over the person and property of the wards for the benefit of the latter". In the same case Lord Shaw of Dunfermline said529: "The affairs are truly private affairs; the transactions are transactions truly intra familiam; and it has long been recognized that an appeal for the protection of the Court in the case of such persons does not involve the consequence of placing in the light of publicity their truly domestic affairs." Underlying these explanations is a perception that the public disclosure of evidence and argument in wardship proceedings, whose primary purpose is the welfare of the ward, can be damaging to the welfare of the ward. Similarly, there can be noted in legislative provisions governing adoption two clear themes. One is that the welfare and interests of the child are paramount. The other is that the fact of adoption is to be kept in very large measure confidential. Thus by the Adoption of Children Act 1964 (Q), s 10, "the welfare and interests of the child concerned shall be regarded as the paramount consideration". It is not necessary to obtain the consent of a child under the age of 12 to adoption: s 26(1). There is a prohibition on public statements that a parent or guardian of a child wishes to have it adopted, or that a person wishes to adopt a child, or that a person is willing to make arrangements with a view to the adoption of a child: s 44(1). There are restrictions on the publication of the names of applicants for adoption, the child being adopted, the father or mother or a guardian of the child, or the adopter of the child: s 45(1). Applications to 527 148 NE 624 at 626 (NY, 1925). 528 [1913] AC 417 at 462. 529 Scott v Scott [1913] AC 417 at 483. courts or tribunals are to be heard in camera in the absence of the public: s 58. There are strict duties of confidentiality on public officers in relation to information about adoptions: s 59. Sections 44, 45, 58 and 59 create criminal offences, punishable by a penalty or imprisonment for six months: s 53. Adopted persons are entitled to information about their birth parents, and their relatives and birth parents are entitled to certain other information, but only after the adopted person has attained the age of 18: see s 39B and the definition of "adopted person" in s 39A. It follows that persons under the age of 12 need not know that they have been or are to be adopted, and that no material is to be published which might enable anyone else to learn that persons of any age have been adopted. These provisions reflect a legislative assumption that it may be harmful for persons under the age of 12 to know that the people who bring them up are not their natural parents; and extreme measures are taken to prevent persons under the age of 12 from learning the truth530. The nature of litigation to recover rearing costs Personal injury litigation at common law, like much other litigation, is not fought in an altruistic way. Plaintiffs injured by reason of a tort are, understandably enough, interested in stressing the resulting damage to various of their pre-injury capacities in order to achieve the maximum possible damages recovery. Further, since there can be no return to the court if the injuries turn out to be worse than they were apprehended to be, there is every reason to assemble evidence which points to the worst possible outcomes. Hence in ordinary personal injury litigation some plaintiffs will feel a strong temptation to exaggerate their symptoms, or at least depict them – to treating doctors, to other doctors, to their lawyers and to the court – in the most forceful way of which they are capable. There are restraints of conscience against this. And there are tactical restraints: excess is likely to breed a counter-reaction from the trier of fact. A further restraint comes from the objective assessments of medical science. However, a new order of litigation would arise if the law permitted plaintiffs to sue in respect of the apprehended cost of future events relating to the ordinary needs and weaknesses of their children. The restraints on plaintiffs exaggerating the needs and weaknesses of their children are likely to be much more attenuated than the restraints against plaintiffs exaggerating their own needs and weaknesses. 530 For similar legislation in other jurisdictions protecting confidentiality, see Adoption Act 2000 (NSW), ss 134-143 and 180; Adoption Act 1984 (Vic), ss 83, 88 and 121; Adoption Act 1988 (Tas), ss 71 and 109; Adoption Act 1988 (SA), ss 24, 31, 32 and 36; Adoption Act 1994 (WA), ss 124 and 127; Adoption Act 1993 (ACT), s 97; and Adoption of Children Act (NT), ss 60-61. It is no answer to contend that the courts are well equipped to reject perjured claims and deflate exaggerated ones. Nor is it an answer to say that the fear of perjured evidence ought not to operate to prevent otherwise desirable developments in the law. For one thing, the subject-matter of the testimony is peculiarly within the consciousness of the parents − family ambitions, family hopes, family habits, children's weaknesses. It is thus difficult to counter false testimony by objective evidence known to the defendant. While in conventional personal injury litigation there are intervening checks on exaggeration, because of the objective assessments of medical science, in personal injury litigation directed to recovering the costs of rearing normal children these checks would have only a limited role to play. For another thing, the parents may well feel not only self-interest in recovering a lump sum in their own right, but may also feel a duty to increase the funds available for the support of their children. These are factors combining with unusual power to generate exaggerated claims. To exaggerate one's own hopes, habits and weaknesses with a view to increasing an award of damages involves no breach of duty to any third party. But a conflict between parental duty and parental self-interest can be created when a parent exaggerates the hopes open to a child, the habits of the child's family, or the weakness of the child in order to generate higher damages to be paid to the parent, even if the motive for these exaggerations is a sincere desire to improve the financial basis of the child's future. The conflict can be created in at least three ways. First, there are dangers in parents holding out unrealisable hopes for their children or in representing to others that they hold out these hopes. Some parents will not successfully resist the temptation to seek to recover greater damages calculated by reference to educational training for the unplanned child of the highest quality and price by suggesting that the family ambition was to ensure the best education for the planned children with a view to the highest professional and personal goals being attained − even if they are in truth quite unattainable for any of the children. Secondly, if the permitted quantum of recovery rose to particular levels, it would be hard for parents to resist the temptation to give evidence of family habits and customs in relation to the planned children − and indeed of family "traditions" which were created after the arrival of the unplanned child − calculated to increase recovery against the defendants responsible for the unplanned birth. That evidence would speak of very lavish presents, very luxurious holidays, very expensive parties. Thirdly, parents should maintain the self-esteem and self-confidence of children, and not emphasise the proneness to diseases and illnesses, the weaknesses, the incapacities, the disabilities, the mental slowness, the character difficulties or the misbehaviour of children. They should not denigrate the physical or mental or moral capacities of their children. This duty would be breached if parents were to stress or exaggerate characteristics which may call for medical or psychiatric or other professional attention in the years after the trial with a view to increasing damages recovery at the trial. Some argue strongly against maintaining any distinction between children who are "normal and healthy" and those who are not531. But once that distinction is abandoned, the temptation to expand the areas of claimed weakness is likely to increase. If there is no recovery of rearing costs for normal healthy children but there is for others, parents will have a strong incentive to identify and accentuate matters which might move a child into the category of being other than normal and healthy. But even if there is no distinction, so that rearing costs are recoverable however healthy or otherwise a child is, parents will have a strong incentive to accentuate matters which might arguably call for expenditures in future and which might increase the potential for higher damages recovery. The weakness of the majority approach Against that background, the reasoning of the majority of the Court of Appeal can be seen to be invalid for three reasons. First, it leads to the award of damages for a supposed loss in circumstances where what has happened is incapable of characterisation as a loss. That is because, since the law assumes that human life has unique value and brings into existence corresponding duties of a unique kind, the impact of a new life in a family is incapable of estimation in money terms. Secondly, the award of damages to which the majority reasoning leads would have the result, entirely alien to the assumptions and goals of the legal system, of encouraging parents to exaggerate the abilities of their children, the customs of their families or the troubles of their children. It would encourage parental misrepresentation of the parent-child relationship, and create an odious spectacle. Thirdly, the majority reasoning tends to generate litigation about children capable of causing the children distress and injury if they hear about it. Before turning to these three reasons, it is desirable to deal with one criticism commonly employed against those who oppose recovery. 531 eg McMurdo P: [2001] QCA 246 at [29], [50]. See also the trial judge: (2001) Aust Torts Rep ¶81-597 at 66,629 [52]. The difficulty of assessing actual loss It has often been argued that the birth of children brings advantages, and the difficulty of offsetting these advantages against the costs of bringing up the children points against recovery. It is said that since the benefits and the costs are difficult to reduce to money terms, it is desirable to assume that the former outweighs the latter or that they balance each other532. Arguments of this type have been put in a variety of ways, but they tend to depend on the proposition that the birth of every child brings joy. They are correspondingly weakened by the circumstance that as a matter of fact not every child brings joy. The plaintiffs tended to treat the proposition that all children bring to their parents joy outweighing the burdens of parenthood as being crucial to the defendants' contentions. The plaintiffs made much of the falsity of that proposition as a universal rule, and of the extent to which potential parents strove to avoid producing children. In fact, the proposition so strongly assailed by the plaintiffs was not crucial to the defendants' contentions. The various criticisms which can be made of the defendants' proposition do not affect the force of other contentions they advanced against the majority reasoning in the Court of Appeal. Those other contentions can coexist with the fact that many children, even well- behaved ones, cause their parents immense trouble, and ill-behaved ones cause even more trouble and very little joy. There is one other weakness in the arguments just referred to. They tend to concentrate on the practical difficulties and disadvantages of seeking to compare the money sums which can be calculated as having been spent on rearing a child and as likely to be spent on rearing it in future with the value of that child as a life capable of bringing happiness to its parents. In contending that in practice comparisons cannot be made, the arguments referred to assume that in principle it is legitimate to try to do so. That is to be doubted. The non-comparability of human life and money The first matter which the reasoning of the majority of the Court of Appeal does not sufficiently take into account is that it is not possible to treat the costs of bringing up children as loss or damage to the parents because of the 532 See CES v Superclinics (Australia) Pty Ltd (1995) 38 NSWLR 47 at 87 per Meagher JA; Kealey v Berezowski (1996) 136 DLR (4th) 708 at 732 per Lax J; McFarlane v Tayside Health Board 1997 SLT 211 at 216-217; McFarlane v Tayside Health Board [2000] 2 AC 59 at 97 per Lord Hope of Craighead, 114 per Lord Millett. For American versions of the arguments, see Coleman v Garrison 349 A 2d 8 at 12 (Del, 1975); Miller v Johnson 343 SE 2d 301 at 308 (Va, 1986) nature of the human child, the nature of the parent-child relationship and the duties which human birth causes to spring up. A duty lies on parents to preserve and nurture their children whether or not they actually experience joy from the existence of those children. To link that duty with the extent of pleasure which a particular child's life gives its parents would smack "of the commodification of the child, regarding the child as an asset to the parents"533. A child is not an object for the gratification of its parents, like a pet or an antique car or a new dress. Nor is it a proprietary advantage which has accompanying burdens needing to be met if the advantage is to be fully secured − such as a partly paid up share or mortgaged land. The child has a "value" which must be fostered whether it pleases its parents or repels them. It is contrary to human dignity to reduce the existence of a particular human being to the status of an animal or an inanimate chattel or a chose in action or an interest in land. It is wrong to attempt to place a value on human life or a value on the expense of human life because human life is invaluable − incapable of effective or useful valuation. It is thus the policy of the law that the birth of a child is not to be discounted or devalued, even if many actual children are not blessings. The child is itself valuable, not because it confers blessings or economic advantages or other advantages, but because it is life. The Court below reasoned that the interest of the plaintiffs affected by the defendants' conduct is their "free choice … to limit the number of their children, to not be blessed with a child", and thus that compensation is not sought for the "wrongful birth or new life of the child" itself but for relief from "the additional financial burden that will be placed on the family" − the financial burden flowing from the legal and moral responsibilities which the arrival of the child imposes on the parents534. If a seller delivers too many cattle to a farmer, and the farmer later seeks to recover the costs of feeding the excess cattle from the seller, no doubt it can be said that compensation is not sought for the excess cattle themselves, but for relief from the financial consequences of the legal and moral responsibilities which their arrival imposed on the farmer. If a veterinary surgeon conducts the sterilisation of a dog negligently, and the dog's owner later seeks to recover the costs of feeding the puppies, no doubt it can be said that compensation is not sought for the puppies, but for relief from the financial consequences of the legal and moral responsibilities which their arrival imposed on the owner. If under a contract incapable of termination, machinery is sold 533 Parkinson v St James and Seacroft University Hospital NHS Trust [2002] QB 266 at 293 [89] per Hale LJ. 534 [2001] QCA 246 at [53] per McMurdo P. which calls for excessive maintenance and repair, no doubt it can be said that compensation is sought by the buyer not for the machinery itself, but for relief from the financial consequences of the responsibilities which its acquisition has generated. However, the new child is not to be compared to an excessive supply of animals or unwanted puppies or a piece of machinery needing constant maintenance and repair. "[A] child should not be viewed as a piece of property, with fact finders … assessing the expense and damage incurred because of a child's life"535. "It is morally offensive to regard a normal, healthy baby as more trouble and expense than it is worth."536 Its worth is as a child, not as a commodity. Hence its life has "worth" in a sense quite distinct from the way commodities have "worth". Thus in CES v Superclinics (Australia) Pty Ltd537 Meagher JA said: "[O]ur law has always proceeded on the premise that human life is sacred. That is so despite an occasional acknowledgment that existence is a 'vale of tears'. Hence, in criminal law, except within closely defined limits, to take another's life is murder; to threaten to do so is a criminal offence. To abort a child in utero is a common law misdemeanour. In the law of torts, negligently to shorten someone's life sounds in damages. Negligently to render someone sterile is tortious. Blackstone's Laws of England, vol 1, Chapter 1, Section 1 [states]: 'Life is ... a right inherent by nature in every individual and it begins in contemplation of law as soon as an infant is able to stir in the mother's womb.'" Further, it is a serious offence to incite, counsel or aid someone to commit suicide or attempt to commit suicide538. "Respect for life and the rights proceeding from it are at the heart of our legal system and, broader still, our civilization."539 Hence the expenses of nurturing life can never outweigh life itself, and a parent cannot be heard to contend in court that that parent has suffered compensable loss from the birth of the child. Human life is invaluable in the sense that it is incapable of valuation. It has no financial worth which is capable of estimation. It cannot be sold for 535 Beardsley v Wierdsma 650 P 2d 288 at 293 (Wyo, 1982). 536 McFarlane v Tayside Health Board [2000] 2 AC 59 at 114 per Lord Millett. 537 (1995) 38 NSWLR 47 at 86. 538 eg Criminal Code (Q), s 311 (the penalty is life imprisonment). 539 Cockrum v Baumgartner 447 NE 2d 385 at 389 (Ill, 1983). money, at least not lawfully. The duty cast on parents which flows from the arrival of new human life is also incapable of valuation or estimation or discharge by payment. The financial costs of child-rearing can be calculated, but they represent only part − and in some ways an insignificant part − of the onerous aspects of the duty. To calculate them in money terms and then permit their recovery in relation to the performance of the duty is to engage in an activity lacking any meaningful correspondence with the duty, just as much as seeking to calculate the economic and other advantages of the new life is to engage in an activity lacking any meaningful correspondence with the phenomenon under consideration. Assume that an action is started within, but near the end of, the limitation period, and that its hearing is delayed until the child is nearly eighteen. Assume that if child-rearing expenses were recoverable, the total award, with interest, would be $200,000. Assume that the parents had a very low income, were near retirement age at the time of the trial, and had accumulated no assets. Assume that the child had demonstrated great intellectual ability, likely to result in the capacity to earn a large income; that it was extremely precocious, having already finished a university degree; and that it had entered into employment carrying a salary of $100,000 per annum. Assume also that it had entered a contract to pay its parents an annuity of $30,000 per annum from the time of the father's retirement until the death of the longer living of the two parents. Assume that the net present value of that annuity greatly exceeded $200,000. Should the parents be able to recover $200,000 or any part of it? If they can, is it open to the defendant to contend that in fact the birth of the child turned them a profit? The answer is that the law contemplates neither parental recovery nor an offset in relation to the annuity. This is not because there is any impracticability in permitting both the recovery and the offset. In limited circumstances of the kind postulated, there is no impracticability. Rather, the law rejects the regime contemplated because it is alien to basic legal assumptions about human life in families. The idea that human life has a value not commensurable with the costs of nurturing it was attacked by McMurdo P540 and by Davies JA as resting on the erroneous view that the birth of a child is always a blessing. Davies JA said that that view had rested on "a religious basis" and was "underpinned" by a "religious belief" that had declined541. That scarcely demonstrates the absurdity of the proposition under attack. As Thomas JA said, "not all religious or cultural influences are necessarily wrong"542. The opinion that human life is of unique 540 [2001] QCA 246 at [51]. 541 [2001] QCA 246 at [80]-[81]. 542 [2001] QCA 246 at [164]. value, while it is shared by many religions, is not limited to them. Nor is it limited to particular moralities. It underpins much of the common law. And if a sedulous attempt were to be made to weed out of the common law every principle that rested on religious or moral values, it would be radically changed. The idea that human life has a value not commensurable with the costs of nurturing it so far as it rested on the idea that the birth of a child is a blessing was also attacked by McMurdo P and Davies JA on the ground that "community views" had changed543. The evidence of change was that the arrival of unplanned children can be perceived as a financial and personal disaster. The evidence of change was also found in what was said to be community acceptance and encouragement of contraception and sterilisation, and the wider availability in some jurisdictions of abortion. This case is not about the desirability of contraception, sterilisation or abortion. On occasion the plaintiffs seemed to attribute to the defendants a disapprobation of these practices which did not in fact exist. But whatever the degree of popularity of, or state encouragement for, or virtue in these kinds of birth control, it does not follow that it is wrong to treat a human birth as the creation of something uniquely worthwhile. Nor does it follow that damages should be recoverable for the rearing of children whose unplanned births occurred when an attempt at birth control failed. In McFarlane v Tayside Health Board, Lord Gill, the trial judge, said544: "It is true that the law no longer upholds the sanctity of life as an absolute value: but I do not interpret the social and legislative changes … as indicating that the law no longer favours and promotes family relationships. In my opinion, the law has not reached the stage where family relationships and the worth of a child's existence are values to which it is indifferent. If I am right, a principle of law that affirms that the existence of a child can be an actionable loss to his parents would seem to conflict with those values." The plaintiffs suggested that the defendants' reliance on the value of human life was flawed, because the damages awarded for loss of expectation of life for wrongful death are low. In Benham v Gambling545 the House of Lords limited the damages to £200. Viscount Simon LC said546: 543 [2001] QCA 246 at [51], [80]-[82]. 544 1997 SLT 211 at 216-217. 546 [1941] AC 157 at 166. "It would be fallacious to assume, for this purpose, that all human life is continuously an enjoyable thing ...". He also said547: "The truth, of course, is that in putting a money value on the prospective balance of happiness in years that the deceased might otherwise have lived, the jury or judge of fact is attempting to equate incommensurables. Damages which would be proper for a disabling injury may well be much greater than for deprivation of life. These considerations lead me to the conclusion that in assessing damages under this head, whether in the case of a child or an adult, very moderate figures should be chosen ... I trust that the views of this House, expressed in dealing with the present appeal, may help to set a lower standard of measurement than has hitherto prevailed for what is in fact incapable of being measured in coin of the realm with any approach to real accuracy." The House of Lords has since adjusted the figure more than once to allow for inflation548, but awards in England remained low until this head of damages was abolished there, and they remain low here549. The answer to this objection propounded as a matter of Scots law, which has equal validity in Australian law, was put thus by Lord Gill550: "[T]he sum of money awarded in Scotland for the death of a child has always been relatively nominal and it has never been suggested, so far as I am aware, that such a sum represents even an attempt to express any meaningful value of a child's existence in monetary terms. Moreover, I do not consider that the assessment of a sum of damages for the loss of a son or daughter in childhood is the same process as the assessment of the value to the parents of a living child's existence throughout an assumed normal lifespan." 547 [1941] AC 157 at 168. 548 Naylor v Yorkshire Electricity Board [1968] AC 529 (£500); Gammell v Wilson 549 Luntz, Assessment of Damages for Personal Injury and Death, 4th ed (2002) at 550 McFarlane v Tayside Health Board 1997 SLT 211 at 215. Trindade and Cane say551: "[T]he fact that the sum is small and conventional shows the law's dislike for the task of valuing life." That is because life is invaluable in the sense that it is beyond monetary value or monetary valuation. It is "incapable of being measured in coin of the realm"552. And the sum is small partly because there is widespread consciousness of the power of Windeyer J's observations in Skelton v Collins553: "Still less can I grasp the idea that a man's life is a possession of his that can be valued in money. This must be for many people repugnant to opinions, sometimes half felt sometimes deeply held, about the meaning of life and death, duty and destiny. And for others, less attached or persuaded in their opinions, it must be unacceptable simply because life and money are essentially incommensurable. And the idea does not become more easily acceptable when the measure of the worth of life is said to be a balance of happiness over unhappiness. In some of the judgments and articles that I have read the postulated inquiry seems to depend upon some doctrine of Epicurean hedonism, in others upon a conviction that tribulation endured does not deprive life of value. The differing views have been eloquently expressed. But for myself I doubt the relevance to the present question of any particular philosophy. For the question is not, I think, Is life a boon? – but, Are the years of life that a man expects something that belongs to him, the loss of which can be measured in money?" It is not the case that the value of a child's life is only the present equivalent of £200 in 1941. Nor is it the case that the value of a child's life can be assessed at a figure exceeding the costs of raising it554. The child's life, like all human life, has a value which is beyond comparison with money. It is not the case that the lives of some individuals are great and valuable boons to them and the lives of others are worth little. The limited, conventional and controversial allowance in wrongful death cases does not demonstrate that human life has little value. It says nothing about whether the costs of rearing children so exceed the benefits to their parents as to be recoverable in tort. In any event, the wrongful 551 Trindade and Cane, The Law of Torts in Australia, 3rd ed (1999) at 526. 552 Benham v Gambling [1941] AC 157 at 168 per Viscount Simon LC. 553 (1966) 115 CLR 94 at 130. 554 As suggested in McFarlane v Tayside Health Board 1997 SLT 211 at 216 per Lord Gill. death cases relate to the value of the life of one human being to that human being, while one approach to the present problem concerns not the value of a child's life to itself but to its parents. The undesirable temptations to parents The law recognises that the essential unit of society, at least so far as the rearing of children is concerned, is the family. Tort rules ought not to be modified so as to blur or obscure that recognition. Hence it is undesirable to adopt "a rule of damages that would require parents, if their litigation is to succeed, to persuade a judge or jury that their child is not worth to them the cost of rearing that child"555. This line is commonly taken in American cases which oppose the provision of an offset to the recovery of child-rearing costs. The recovery of child-rearing expenses would lead to an "intolerable … inquiry concerning the probable value of a child to his or her parents". "The inquiry would be intolerable because it would require a determination of whether the child represents a loss to his or her parents. Would they be better off if the child had never been born? Is the child worth less than it would cost to raise him or her and, if so, how much less? Even if such an inquiry could lead to a reasoned, and not merely speculative, conclusion, a doubtful proposition, the balancing of costs and benefits treats the child as though he or she were personal property. The very inquiry is inconsistent with the dignity that the Commonwealth, including its courts, must accord to every human life, and it should not be permitted. The court suggests that such an inquiry would be no different in principle from other inquiries in which we now engage, such as inquiry into parental loss of consortium due to a child's serious impairment from injury, or inquiry into parental loss due to a child's death. I disagree. The policy assumption underlying the assessment of damages for loss of a child's consortium or for a child's death is that a child's life has value and its impairment or termination results in loss to the parents. That assumption is consistent with the respect for human life that ought to be embodied in the public policy of this Commonwealth. The assumption underlying the availability of damages due to a child's birth, however, is that the child's net value to his or her parents, in light of associated costs, is less than nothing. How much less determines the amount of the plaintiff's damages. Surely, sound public policy requires a recognition 555 Burke v Rivo 551 NE 2d 1 at 7 (Mass, 1990) per O'Connor J dissenting (Nolan and that injury or death of a child, but not a child's life, represents loss to others."556 In these circumstances, "permitting recovery … requires that the parents demonstrate not only that they did not want the child but that the child has been of minimal value or benefit to them. They will have to show that the child remains an uncherished, unwanted burden so as to minimize the offset to which the defendant is entitled."557 Recovery of rearing costs "would thus engender the unseemly spectacle of parents disparaging the 'value' of their children or the degree of their affection for them in open court"558. Davies JA said, in the course of propounding several convincing arguments why, if recovery of rearing costs is permitted, there should be no set- off for emotional benefits559: "[I]t is, from a policy point of view, undesirable that courts should have to make an assessment of damages which includes weighing the likely prospective good and bad qualities of a child. That would be morally offensive. It would, as Thomas JA has noted, tend to encourage parents to disparage their children, it would be likely to harm the relationship between the parents and the child and it would be likely to harm the psychological well-being of the child." This is true. Yet calculating the costs of rearing a child can involve assessing its likely bad qualities − physically and emotionally − to see whether particular financial provision is called for. Davies JA's reasoning thus points against this head of recovery. McMurdo P, in opposing any limitation of recovery to children with disabilities, said560: "To draw a distinction between the benefit of a healthy normal child and those with disabilities invites the distasteful spectacle of litigating this question in public." It is true that the spectacle would be distasteful, and worse than distasteful. But the same type of spectacle would arise whatever the extent of recovery, because the scale of the extent of recovery 556 Burke v Rivo 551 NE 2d 1 at 7 (Mass, 1990) per O'Connor J dissenting (Nolan and 557 Cockrum v Baumgartner 447 NE 2d 385 at 390 (Ill, 1983). 558 Public Health Trust v Brown 388 So 2d 1084 at 1086 n 4 (Fla, 1980). 559 [2001] QCA 246 at [88]. 560 [2001] QCA 246 at [50]. would increase the more it could be demonstrated that the child had any type of difficulty. In Lovelace Medical Center v Mendez561 the Supreme Court of New Mexico declined to permit recovery of damages for detriments in the form of the emotional distress caused by the arrival of an unplanned child, because if that were permitted, proof of emotional and psychological benefits to the parents, being of the same kind as the detriments, would be allowed562. The Court said: to prove how slight or nonexistent was "A trial over such issues … could result in the unseemly spectacle of the parents' attempting the psychological benefit they derived from their additional child in order to minimize the offset to their nonpecuniary interests. We hold that permitting such a dispute to be litigated would be contrary to public policy." The same unseemly spectacle would follow from the attempt by parents to prove deficiencies in their child, including deficiencies in its psyche, in order to enhance a claim to damages for child-rearing costs. Similarly, Thomas JA in the Court of Appeal563, speaking of Kirby ACJ's preference for an offset solution in CES v Superclinics (Australia) Pty Ltd564, said that it: "presents difficulties. The problems associated with a legal system in which plaintiff parents have a strong economic incentive to denigrate the value of their child tends to make litigation a time bomb and truth a casualty." However, the problem would exist even if there were no offset solution. A rule of law which created a temptation in parents to exaggerate the educational goals their children might achieve would be alien to the parental duty to be realistic about their children's future and not to point children down paths which it is beyond their powers to walk along. A rule of law which created a temptation in parents to exaggerate the standard of living of the family in terms of presents, parties, holidays and general lifestyle would be alien to the health of family life. A rule of law which created a temptation in parents to exaggerate the physical or 561 805 P 2d 603 at 613 (NM, 1991). 562 Pursuant to Restatement (Second) of Torts (1979), §920. 563 [2001] QCA 246 at [159]. 564 (1995) 38 NSWLR 47 at 77. mental or character weaknesses of their children with a view to suggesting expensive remedies for those weaknesses would be alien to the parental duty to maintain the self-esteem and self-confidence of children, and, even if the children did not learn of what was said, it would be alien to a duty not to denigrate children to others. Thomas JA rightly deplored "the prospect that little or no damages would be awarded for loving mothers and fathers while generous compensation would be obtained by those who disparage and reject their child"565. Since there is a question whether a rule of law exists which permits parents to recover from negligent defendants the costs of rearing their children, it is relevant to consider the consequences of the rule. The rule under consideration would encourage parents both to exaggerate and to denigrate their children's aptitudes. The rule would encourage parents to search for characteristics of the children which might call for future expenditures with a view to recovering monetary compensation to meet those possible expenditures. The rule would encourage parents to describe personal ambitions for their children and family hopes of a kind which could sound in money but may not be advantageous to the children because the testimony postulates career paths which the children may be incapable of pursuing. The rule would mandate parents to assert their own economic interests to the maximum by exaggerating their duties to the child in the light of possible features of the child's future life. Thus the rule would tend to tempt parents to breach their duties to build up the esteem of their children, to direct them into career paths they are capable of following, and to abstain from denigration of their qualities and capacities. And it would hold out these temptations in litigation conducted in public, and often designed to advance the self-interest of the parents. The rule would tend to reduce the ties between parents and children to matters of coins and notes, to treat the personal duty of parents as something dischargeable by cash payments, to resolve personal worth into exchange value, and to substitute the mores of the counting house for the ethics of family life. That the supposed rule has these consequences points strongly to the conclusion that it does not exist. It would tend to generate a form of litigation focusing, not on the general expenses of child-rearing, but on the particular position of one particular child. The impact of the litigation on the unplanned child In this case the trial judge, McMurdo P and Davies JA each thought that knowledge gained by a child of litigation in which attempts were being or had been made by its parents to recover the costs of its upkeep from a defendant who 565 [2001] QCA 246 at [169]. negligently failed to prevent it from coming into existence was not damaging to that child. On the other hand, Thomas JA thought that it was. Thomas JA said that among the reasons which, considered as a whole, he saw as providing "a strongly persuasive and rational basis" for denying a recovery of rearing costs were the "protection of the mental and emotional health of the child" and "the undesirability of a child learning that the court has declared its birth to be a mistake"566. Many other lawyers have shared Thomas JA's opinion. United States. In Sherlock v Stillwater Clinic567, a case permitting recovery of rearing costs subject to an offset for the benefits which the child brought, the majority of the Supreme Court of Minnesota was troubled by "the psychological consequences which could result from litigating such claim". They concluded568: "It is ... our hope that future parents and attorneys would give serious reflection to the silent interests of the child and, in particular, the parent- child relationships that must be sustained long after legal controversies have been laid to rest." These passages reflect an assumption, on the part of judges favouring recovery of rearing costs, that litigation by parents to recover rearing costs can be damaging to the unplanned children involved. In Wilbur v Kerr569 the Supreme Court of Arkansas said: "the child's welfare has troubled all who have examined the problem." The Court refused recovery of rearing costs from a doctor who negligently performed a vasectomy for the following reasons570: 566 [2001] QCA 246 at [169]. 567 260 NW 2d 169 at 176 (Minn, 1977). 568 260 NW 2d 169 at 177 (Minn, 1977). As Thomas JA said, this "appears to be something of a pious hope … [I]t would be unrealistic to rely on litigants to hold back": [2001] QCA 246 at [176]. 569 628 SW 2d 568 at 571 (Ark, 1982). 570 The relevant passage has been frequently quoted or referred to since: eg Boone v Mullendore 416 So 2d 718 at 721-722 (Ala, 1982); McKernan v Aasheim 687 P 2d 850 at 855-856 (Wash, 1984). "It is a question which meddles with the concept of life and the stability of the family unit. Litigation cannot answer every question; every question cannot be answered in terms of dollars and cents. We are also convinced that the damage to the child will be significant; that being an unwanted or 'emotional bastard', who will some day learn that its parents did not want it and, in fact, went to court to force someone else to pay for its raising, will be harmful to that child. It will undermine society's need for a strong and healthy family relationship. We have not become so sophisticated a society [as] to dismiss that emotional trauma as nonsense." In Boone v Mullendore571 the Supreme Court of Alabama said that to award as damages the cost of raising a child born after a negligent failure to remove a mother's fallopian tubes "could have a significant impact on the stability of the family unit and the subject child". The Court referred to: "the possible harm that can be caused to the unwanted child who will one day learn that he not only was not wanted by his or her parents, but was reared by funds supplied by another person. Some authors have referred to such a child as an 'emotional bastard' in a realistic, but harsh, attempt to describe the stigma that will attach to him once he learns the true circumstances of his upbringing." In McKernan v Aasheim572 the Supreme Court of Washington en banc said: "[T]he simple fact that the parents saw fit to allege their child as a 'damage' to them would carry with it the possibility of emotional harm to the child. We are not willing to sweep this ugly possibility under the rug by stating that the parents must be the ones to decide whether to risk the emotional well being of their unplanned child." In University of Arizona Health Sciences Center v Superior Court of the State of Arizona573 Gordon VCJ said: "Although later discovery of their parents' feelings toward them may harm only a few children, I think a few are too many." In Burke v Rivo574 O'Connor J, in whose dissent Nolan and Lynch JJ concurred, said that the recovery of rearing costs "would encourage litigation 571 416 So 2d 718 at 721-722 (Ala, 1982). 572 687 P 2d 850 at 855-856 (Wash, 1984). 573 667 P 2d 1294 at 1302 (Ariz, 1983). 574 551 NE 2d 1 at 8 (Mass, 1990). harmful to families − litigation designed to produce the result, ultimately to be discovered by the child, that he or she was supported not by the parents, because they did not want him or her, but by an unwilling stranger". Some American courts have endeavoured to reduce the perceived risk of harm in various ways. One is to address a message to the child in the judgment stating that its parents' complaint does not imply "any present rejection or future strain upon the parent-child relationship" or amount to rejection of the child as a person, but simply represents an endeavour to test the limits of the doctor's liability575. Another technique is to abstain from naming the parents as parties576. These techniques may or may not be successful, but they do disclose an assumption that there is a real risk of harm if they are not employed. England. In Udale v Bloomsbury Area Health Authority577 Jupp J refused damages for the cost of rearing a child born after a failed sterilisation operation. He referred with favour to numerous arguments against recovery, one of which was578: "It would be intolerable ... if a child ever learned that a court had publicly declared him so unwanted that medical men were paying for his upbringing because their negligence brought him into the world." He said579: "It is highly undesirable that any child should learn that a court has publicly declared his life or birth to be a mistake − a disaster even − and that he or she is unwanted or rejected. Such pronouncements would disrupt families and weaken the structure of society." Scotland. In McFarlane v Tayside Health Board Lord Gill said580: "[M]ost people would find it unseemly that … the child concerned might later learn not only that his birth was a consequence of negligence, but that his parents raised an action that implied that they would have preferred that he had not been born." 575 See Rieck v Medical Protective Co of Fort Wayne, Ind 219 NW 2d 242 at 245-246 (Wis, 1974); Coleman v Garrison 349 A 2d 8 at 14 (Del, 1975). 576 Anonymous v Hospital 366 A 2d 204 (Conn, 1976). 577 [1983] 1 WLR 1098; [1983] 2 All ER 522. 578 [1983] 1 WLR 1098 at 1106; [1983] 2 All ER 522 at 529. 579 [1983] 1 WLR 1098 at 1109; [1983] 2 All ER 522 at 531. 580 1997 SLT 211 at 217. New South Wales. In CES v Superclinics (Australia) Pty Ltd581, a case in which a mother sued medical practitioners who had negligently failed to diagnose her pregnancy and deprived her of the opportunity to have an abortion, Meagher JA said, in a judgment denying claims by the mother in relation to pain and suffering and lost income (as to which he was in dissent), and by both parents in relation to the expense of rearing the child (as to which he was not in dissent): "Having given birth to a healthy child in August 1987, the plaintiff claimed at a court hearing in December 1993 that the child, then over six years old, was unwelcome, a misfortune, perhaps a disaster, certainly a head of damages. For all I know the child was in court to witness her mother's rejection of her. Perhaps, on the other hand, the plaintiff had the taste to keep her child out of court. Even if that be so, it does not mean the unfortunate infant will never know that her mother has publicly declared her to be unwanted. When she is at school some [âme] charitable – perhaps the mother of one of her 'friends' – can be trusted to direct her attention to the point. That a court of law should sanction such an action seems to me improper to the point of obscenity." Adoption regime. The confidentiality which surrounds adoption suggests a perception by the legislature of the damage which can flow to children from learning that their parents regard them as a burden. "Inasmuch as both the natural and adoptive parents are aware of the adoption, this confidential air surrounding the proceedings appears to be primarily designed to protect the child from either public or, in the case of a young child, his own knowledge of the adoption. There are several reasons why it is desirable that a young child should not know of his adoption. Among these are that he will feel natural, that he will not know he was unwanted by his natural parents, and that he will not feel discriminated against in his adoptive home because he is not a natural child. Knowledge of the adoption, however, would not seem nearly as likely to cause emotional harm as knowledge of the sterilization claim, since the adopted child would have no reason to suspect that his parents did not want him although they may be adoptive parents. But knowledge of the adoption would give the child knowledge that his natural parents did not want him and considered him a burden which is the precise thing that the parents in the instant case are claiming, and in this respect, 581 (1995) 38 NSWLR 47 at 86. knowledge of both may be considered equally likely to cause emotional injury to the child and, therefore, objectionable."582 The Court of Appeal's reasoning. In the Court of Appeal McMurdo P said that there were two sound answers to arguments of that kind583: "First, an unwanted or unplanned pregnancy does not mean that the child when born is not cherished by the family. Such births are a common enough occurrence, although most are not caused by established medical negligence. It is only the financial and social burden arising from the negligence that was unwanted, not the child that is consequently born ... The fact that a child born in such circumstances is regarded by parents and family as a blessing is no reason to exclude [scil recovery of] the moderate and reasonable economic loss caused to the family. Second, in Australian society, we have become accustomed to claimants pursuing tortious claims against insured friends and relatives; we are no longer shocked when a husband sues his wife in a motor vehicle accident case for damages for personal injuries, children sue parents for whom they work when injured in the work place or students sue their school for damages arising from negligence. What then is wrong with a parent or parents claiming damages for raising a child conceived because of medical negligence; this is no criticism of the blameless child but is a recognition of the parents' entitlement to economic loss suffered through the appellants' negligence." Davies JA's answer to this argument was584: "[I]t is said that the bringing of such a claim may detrimentally affect the relationship between the parents and the child and may detrimentally affect the psychological well-being of the child. On the assumption that the bringing of such a claim does not involve any assessment of the non- financial benefits and burdens of bringing up the child, I do not see how it can have any such effect. The bringing of any claim for damages by the parents, here the claims for pain, suffering and loss of amenities by the first respondent and the second respondent's claim for loss of consortium, disclose the fact that the conception was unwanted. In any event an unwanted conception is not uncommon and I think it unlikely that the 582 RJL, "The Birth of a Child Following an Ineffective Sterilization Operation As Legal Damage", (1965) 9 Utah Law Review 808 at 812 n 23. 583 [2001] QCA 246 at [59]-[60]. 584 [2001] QCA 246 at [97]. disclosure of that fact would be likely to harm the relationship or the well- being of the child. Moreover the addition of a financial claim for the support of the child with its attendant financial benefit to the family and the child is, if successful, more likely to be something for which the child will be grateful than a matter which he or she will regret." The trial judge in this case took the same approach, and added585: "To suppose that parents, because they cannot recover damages, will never mention to their child the misfortune which brought about his or her conception is unrealistic; and the greater the economic burden placed on the family the more probable such an outcome." This reasoning has been employed in earlier cases586. The majority reasoning does not give sufficient weight to the argument turning on the risk of harm to the child. It is convenient to examine successively various relevant strands in that reasoning. No risk of harm? The proposition that there is no risk of harm at all is extremely questionable. That proposition has been disputed by many judges. And the proposition is inconsistent with the assumptions underlying adoption legislation. Unplanned pregnancies generating litigation. Even if McMurdo P and Davies JA are correct in saying that unwanted or unplanned pregnancies are common, their commonness does not negate the potentiality of harm for particular children on learning the facts. It is one thing to learn of an unplanned pregnancy which took place because the child was born too soon or because of casual contraceptive failure. It is another thing to learn that not only did an unplanned pregnancy take place after the parents had resolved never to have children again, and had resorted to medical procedures causing considerable pain or discomfort and expense to ensure that outcome, but also that the parents were 585 (2001) Aust Torts Rep ¶81-597 at 66,629 [53]. 586 Custodio v Bauer 59 Cal Rptr 463 at 477 (1967); Boone v Mullendore 416 So 2d 718 at 725 (Ala, 1982); Flowers v District of Columbia 478 A 2d 1073 at 1079 (DC, 1984); Thake v Maurice [1986] QB 644 at 667; Emeh v Kensington and Chelsea and Westminster Area Health Authority [1985] QB 1012 at 1021, 1025; Burke v Rivo 551 NE 2d 1 at 4-5 (Mass, 1990); Marciniak v Lundborg 450 NW 2d 243 (Wis, 1990); Administrator, Natal v Edouard 1990 (3) SA 581 at 592 (AD); CES v Superclinics (Australia) Pty Ltd (1995) 38 NSWLR 47 at 75; and McFarlane v Tayside Health Board [2000] 2 AC 59 at 75. prepared to engage in litigation. That litigation will have much at stake and is bound to be bitterly fought. It is usually fought against a professional who is defending his or her reputation and possibly his or her continuing right to practise. An uninsured professional will be seeking to protect his or her assets. An insured professional will be attempting to prevent the levying of higher professional indemnity insurance premiums or the refusal of cover in future. Further, if the professional is insured, the medical insurer is likely in modern conditions to be in a condition of some desperation. If a hospital is joined, it will have every reason to resist the claim. But even if the litigation is not fought with any particular bitterness, it will inevitably involve for the plaintiffs stress, expense, publicity and grave risks as to costs. The litigation will reveal intimate details of the parents' matrimonial history and motivations. It will reveal that the parents were attempting to shift to another set of shoulders the burden of fulfilling the parents' duty of paying for the child's rearing and the burden of funding the numerous expenditures flowing from motives other than bare duty. Thus there is no close analogy between the position of a child which guesses or discovers that its birth has been unplanned and took place by reason of some contraceptive error or misfortune and the position of a child which learns that its parents were not only prepared to submit to some form of surgery in an endeavour to prevent birth forever, but also prepared to undertake the stresses, pains and risks of litigation to recover the costs of its upbringing and prepared publicly to ventilate in open court and in devastating detail the lengths to which they were prepared to go to prevent the birth. In this very case, should Jordan ever read the judgments of the courts, or be told about their contents in detail, he will learn of his parents' decision that his mother should undergo a sterilisation operation to ensure that he would never be born, he will learn that his mother gave evidence that his birth was "a major disruption to the family", he will learn that it caused her to become "depressed and angry" and he will learn that she found his care "exhausting"587. In short, he will learn that, as McMurdo P said, "his conception was not regarded as a family blessing"588. He will also learn of the effects on her body which caused her to recover substantial sums independently of the head of damage under consideration. He will learn that his birth was unusual in being preceded by the institution of proceedings in relation to his conception. He will learn that his birth was unusual in being attended by experts summoned by both sides who were eager, by examining his mother's uterus outside the abdominal cavity, and by examining other organs, to ascertain how his mother's undesired pregnancy had come about589. The harm which may be suffered by children who learn that their birth was unplanned and took place for reasons other than third party negligence is not relevantly comparable with 587 (2001) Aust Torts Rep ¶81-597 at 66,629 [51]. 588 [2001] QCA 246 at [58] n 91. 589 [2001] QCA 246 at [113]. that which may be suffered by those who learn that their birth was allegedly the result of third party negligence resulting in litigation. The cherished child/financial burden distinction. McMurdo P drew a distinction between the "cherished" child whose arrival is a "blessing" and the "financial and social burden arising from the negligence" which caused the child to be born. The distinction drawn by McMurdo P is less likely to be drawn by some children. The determination of the parents, in pursuit of monetary compensation for the "financial and social burden", to reveal in public their private motivations and decisions and the pain and inconvenience which medical procedures caused, and to itemise to the last cent each piece of expenditure for the first eighteen years of the child's life or whatever longer period is relied on, is likely to impress the children with the "burden" rather than the "blessing" aspect of their existence. Is only moderate and reasonable loss recoverable? McMurdo P's characterisation of recoverable loss as being only "moderate" and "reasonable" corresponds, of course, with her preferred position on quantum generally. That preference is based on worries which attract sympathy, but it is wholly unsound in law. It is likely, however, that if the law permits recovery at all, damages will be sought in immoderate amounts which may become large to the point of being unreasonable. If sought on a satisfactory evidentiary basis, those damages will have to be awarded. Analogy with suing schools? While there is a sense in which schools are in loco parentis, there is no relevant analogy between the present problem and the phenomenon of pupils suing schools of the kind to which McMurdo P appealed. The range of emotions ex-pupils have towards their schools is likely to be quite different from the range of emotions they have towards their parents. Analogy with suing friends or relatives for transport or work injuries? There is no valid comparison between an injured spouse suing the other spouse whose negligent driving caused an accident or an injured child suing its parent for injuries sustained while working for the parent, on the one hand, and parents recovering the cost of rearing their child. It is regrettably difficult for modern society to operate without some risk of injury on the roads or at work. That is why there is statutory compulsion to insure against those risks and why there are statutory creatures to meet the claims if the obligation is not fulfilled. The degree of fault entitling recovery in motor car accidents is very slight, and in the case of workers' compensation claims it is non-existent. No bitterness or pain within families is likely to be caused by that type of litigation. Children employed by their parents are likely to be of a sufficient age to avoid the kind of harm to younger children which is under discussion. Litigation to recover the rearing costs of unplanned children is of a quite different kind from litigation against insured relatives or friends. Wider implications of the argument. Davies JA noted, importantly, that it is not only the bringing of a claim for rearing costs which may disclose to a child that its conception was unwanted: disclosure of that fact can flow from litigation similar to the first plaintiff's claim for the first head of damages (pain, suffering and loss of amenities) and from litigation similar to the second plaintiff's claim for the second head of damages (loss of consortium). He concluded that the claim for rearing costs could not be denied on the basis of disclosing unwanted conceptions, since they would be disclosed anyway by forms of litigation whose availability is not in question in this appeal. The difficulty can, of course, be resolved by denying the availability of those forms of litigation in a case in which that is a live issue. It could also simply be accepted as arising from a not unreasonable compromise under which those forms of litigation are permitted for particular reasons, but not litigation for child-rearing costs. Will the child perceive the damages as assisting its upbringing? Davies JA's allusion to the fact that the damages awarded may help the parents to bring up the child does not in terms meet the difficulty raised in relation to possible damage to the child. For one thing, there is no obligation on the parents to spend the damages recovered to compensate for child-rearing costs in actually paying those costs. There are considerable risks that in some cases the capital sum received as damages will be speedily dissipated rather than being spent steadily over time on the child's maintenance. Even if in some cases the potential injury to the child can be nullified or palliated by the reflection that the money recovered was spent sensibly in advancing family interests, the fact is that in others it will not because the money will not be so spent. For another thing, the contention that the child is more likely to welcome than to regret the making of a successful financial claim, with its benefit to the child and the family as a whole, and that the "suit … is in no reasonable sense a signal to the child that the parents consider the child an unwanted burden"590, is rational if the matter is approached entirely materialistically, but does not necessarily negate the risk of an irrational reaction from children who are not proceeding materialistically. The reactions of children are often not rational, they often do not proceed materialistically, and they often understand conduct as sending adverse signals even if there is "no reasonable sense" in which it does. Parental judgments of benefit. The argument based on the risk of harm has been countered on occasions in the United States by saying, as the Supreme Judicial Court of Massachusetts said in Burke v Rivo591: "it is for the parents, not 590 Marciniak v Lundborg 450 NW 2d 243 at 246 (Wis, 1990). 591 551 NE 2d 1 at 5 (Mass, 1990). the courts, to decide whether a lawsuit would adversely affect the child and should not be maintained". The problem is that the parents are torn between conflicting forces. Even if they perceive a risk that the litigation will harm the child, they have the strongest motives of self-interest to prosecute it, and also strong motives of duty to the child and its siblings to do so, and to seek to recover as much as they can from the defendant. They are thus in a position of conflict between duty and interest, and to some degree in a position of conflict between duty and duty. Those conflicts would be removed if the head of damages under discussion were not recoverable. Actual expenditure of damages. It follows almost inevitably from the straitened economic position of most citizens that expenditure at the best of times tends to exceed income, and that any windfalls that come along are not saved, but are very soon deployed to meet some pressing need. Parents who received a capital sum by way of damages partly calculated by reference to the future costs of child-rearing would, if they behaved prudently, invest that sum so as to meet recurrent expenditures over the balance of the period for which the compensation was awarded. But it is nearly inevitable that many will be tempted not to do that, but to spend it on urgent needs well before the time for particular expenditures has come. Intra-family concord will not be advanced when children learn that the course described to the court for their education, maintenance and advancement in life was not in fact followed because the money awarded to finance that course had to be devoted to other claims thought at the time, no doubt rightly, to be more pressing. If the parents' claim depended on a theory of expensive education being needed to fulfil high ambitions, the gap between the education offered and the standard achieved, the target being held out and the extent to which it was missed, may depress the unplanned child. If the parents' claim depended on a luxurious style of life, the child may not be happy to learn of this after experiencing something less. True and false claims about the child's weaknesses. If the parents' claim depended on the need to spend money in order to overcome some physical or mental or emotional or character deficiency in the child, it is not likely to help the child to hear about this if the claim is not soundly based, and even less likely to help the child if it is soundly based. Conflicting views of parents on initiating proceedings. Since the Court of Appeal upheld an award in favour of both parents, in that Court's contemplation it is apparently open to one to sue but not the other. If one parent wishes to commence proceedings for substantial damages and another, fearing proceedings will harm the child, opposes that wish, the possibility of litigation plants seeds of discontent and discord between spouses. Conclusion The various assumptions underlying the law relating to children and the duties on parents created by the law would be negated if parents could sue to recover the costs of rearing unplanned children. That possibility would tend to damage the natural love and mutual confidence which the law seeks to foster between parent and child. It would permit conduct inconsistent with a parental duty to treat the child with the utmost affection, with infinite tenderness, and with unstinting forgiveness in all circumstances, because these goals are contradicted by legal proceedings based on the premise that the child's birth was a painful and highly inconvenient mistake. It would permit conduct inconsistent with the duty to nurture children. For those reasons, if there was a duty of care, it did not extend to the head of damage under consideration, and that head is not recoverable. Wrongful life cases There is a fourth possible reason why the conclusion of the majority of the Court of Appeal is invalid. It rests on an arguable inconsistency between permitting parents the right to recovery of damages, particularly rearing costs, in relation to the birth of an unplanned child and denying unplanned children the right to recovery of damages in relation to their own birth. Children may sue defendants, including professionals who have negligently caused them to suffer disabilities, whether by conduct before conception592 or by conduct after conception but before birth593. But the law in 592 Kosky v The Trustees of the Sisters of Charity [1982] VR 961. 593 Watt v Rama [1972] VR 353; X and Y (by her Tutor X) v Pal (1991) 23 NSWLR England594, Scotland595, Canada596, most American States597 and Australia598 prevents children suffering disabilities from suing negligent professionals responsible for their birth but not otherwise responsible for causing any harm which led to those disabilities. In McFarlane v Tayside Health Board599 Lord Steyn referred to the following passage from Trindade and Cane, The Law of Torts in Australia600: "[I]t might seem somewhat inconsistent to allow a claim by the parents while that of the child, whether healthy or disabled, is rejected. Surely the parents' claim is equally repugnant to ideas of the sanctity and value of human life and rests, like that of the child, on a comparison between a situation where a human being exists and one where it does not." Lord Steyn said: "In my view this reasoning is sound. Coherence and rationality demand that the claim by the parents should also be rejected." However, it is undesirable to deal with this issue in this case. Lord Steyn's point was not developed by the defendants in this Court, and the plaintiffs did not deal with it. 594 McKay v Essex Area Health Authority [1982] QB 1166. 595 P's Curator Bonis v Criminal Injuries Compensation Board 1997 SLT 1180 at 1199 per Lord Osborne. 596 Arndt v Smith [1994] 8 WWR 568 at 573-575 [17]-[28] (BCSC); Mickle v Salvation Army Grace Hospital (1998) 166 DLR (4th) 743 at 748 (Ont Ct (General Division)); Jones (Guardian ad litem of) v Rostvig (1999) 44 CCLT (2d) 313 (BCSC); Lacroix (Litigation Guardian of) v Dominique (2001) 202 DLR (4th) 121 (Man CA). 597 See the analysis of the authorities made by Studdert J in Edwards v Blomeley [2002] NSWSC 460 at [33]-[43]. 598 eg Bannerman v Mills (1991) Aust Torts Rep ¶81-079; Edwards v Blomeley [2002] NSWSC 460; Harriton v Stephens [2002] NSWSC 461; Waller v James [2002] NSWSC 462. 599 [2000] 2 AC 59 at 83. 600 3rd ed (1999) at 434. Anomalies and implications As was noted above, Davies JA in the Court of Appeal pointed out that if the mother can recover for pain and suffering and lost wages, and the father can recover for loss of consortium, but neither can recover for rearing costs, the outcome, particularly so far as it rests on the desire to avoid damage to the child, is not wholly rational. If the child on hearing of any litigation in which its parents contended in the court that its birth was unwanted, is at risk of damage, that risk will equally exist whether the litigation is directed to the recovery merely in respect of the mother's pain and suffering and wage loss or whether it is directed also to the recovery of rearing costs. Similarly, in Flowers v District of Columbia601, Ferren J said: "It is not necessarily true that a child would be less likely to learn about litigation to recover the costs of the pregnancy … than about litigation to recover the costs of child-rearing. Thus, the … concern that a child not learn he or she was unplanned must be premised on a belief that parents would keep secret a limited damage award, but not a complete damage award. That is a dubious proposition." And as Faulkner J, sitting in the Supreme Court of Alabama, said in Boone v Mullendore602: "Will a child feel any less an 'emotional bastard' if its parents recover the damages permitted by the majority rather than full and complete damages?"603 This criticism has some force. One partial answer is that the law may represent a justifiable compromise pursuant to which the mother recovers for losses closely connected with her bodily interests, but not otherwise, and in particular does not recover for economic losses in the form of rearing costs; this outcome could be aided by the fact that the child, its proposed activities and its capacities will play a much less central role in proceedings limited to that head of recovery. Another answer is that if there is an irrationality, it points as much against any recovery by the parents at all as it does against a denial of recovery for rearing costs. In logic, it may be that the entire claim should be dismissed. That is, if the policy of protecting the child from knowledge that it was unwanted 601 478 A 2d 1073 at 1079 n 1 (DC, 1984). 602 416 So 2d 718 at 724-725 (Ala, 1982). 603 This criticism was also made in Burke v Rivo 551 NE 2d 1 at 4 (Mass, 1990); CES v Superclinics (Australia) Pty Ltd (1995) 38 NSWLR 47 at 75 per Kirby ACJ; and Thake v Maurice [1986] QB 644 at 667-668 per Peter Pain J. is crucial, that points against the mother recovering for her pain and suffering, lost income and expenses of birth; and against the father recovering for loss of consortium. This latter approach would deny the existence of any duty of care at all. The findings below and the narrowness of the grant of special leave to appeal necessarily compelled the defendants to concentrate analysis on the relatively narrow question whether the controversial head of damages is recoverable, and to abstain from any contention that there was no duty of care. If attention is widened beyond the confines established by the procedural history of this case to the question whether there is a duty of care, there is much to be said for the answer: "There is not"604. Arguably the case is one where, despite the reasonable foreseeability of the expenditure for which the plaintiffs claimed, "to find a duty of care would so cut across other legal principles as to impair their proper application and thus lead to the conclusion that there is no duty of care of the kind asserted"605. Arguably the case is one where to find a duty would cause the tort of negligence to "subvert many other principles of law, and statutory provisions, which strike a balance of rights and obligations, duties and freedoms"606. The legal principles and statutory provisions so impaired would be those which require parents to act in the best interests of their children. The compromise solution has considerable attraction in that it impairs those principles and provisions much less than the total recovery solution, while meeting an unquestioned hurt of the mother's. But these questions, and for that matter other fundamental questions, namely, what damages (if any) are recoverable in contract, and what rules apply to children said not to be "normal" or "healthy", must be left for a case in which a decision is necessary and in which specific argument is offered. Orders The appeal should be allowed. In accordance with undertakings given by the defendants when special leave was granted, none of the costs orders made 604 However, there is little authority for that view, apart from the opinion of Meagher JA in CES v Superclinics (Australia) Pty Ltd (1995) 38 NSWLR 47; but see Szekeres, By and Through Szekeres v Robinson 715 P 2d 1076 at 1078 (Nev, 1986) and McFarlane v Tayside Health Board 1997 SLT 211 at 214 per Lord Gill (damages not recoverable for distress of normal pregnancy and labour). 605 Sullivan v Moody (2001) 207 CLR 562 at 580 [53] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ. 606 Sullivan v Moody (2001) 207 CLR 562 at 576 [42] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ. below should be disturbed, and the defendants should pay the plaintiffs' costs of the appeal. The following orders should be made. The appeal is allowed. The judgment of the Court of Appeal is set aside. In lieu thereof the appeal to the Court of Appeal is allowed to the following extent: the judgment of Holmes J dated 23 August 2000 is varied by deleting paragraph 3 thereof ("The First and Second Defendant pay the First and Second Plaintiff the amount of The appellants are to pay the respondents' costs of the appeal (including their costs of the special leave application).

HIGH COURT OF AUSTRALIA Matter No A5/2022 APPELLANT AND THE QUEEN Matter No A6/2022 RESPONDENT APPELLANT AND THE QUEEN RESPONDENT Hore v The Queen Wichen v The Queen [2022] HCA 22 Date of Hearing: 11 May 2022 Date of Judgment: 15 June 2022 A5/2022 & A6/2022 ORDER In each matter: Appeal allowed. Set aside the order of the Court of Appeal of the Supreme Court of South Australia made on 7 May 2021 and, in its place, order that: the appeal to that Court be allowed; the decision of the primary judge be set aside; and the appellant's application for release on licence be remitted to the primary judge to be determined according to law. On appeal from the Supreme Court of South Australia Representation S A McDonald SC with G P G Mead SC for the appellant in each matter (instructed by Legal Services Commission (SA)) M J Wait SC, Solicitor-General for the State of South Australia, with L M Boord SC for the respondent in each matter (instructed by Office of the Director of Public Prosecutions (SA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Hore v The Queen Wichen v The Queen Criminal law – Sentencing – Indefinite detention – Release on licence – Where s 57 of Sentencing Act 2017 (SA) ("Act") conferred upon Supreme Court of South Australia discretion to order that persons convicted of certain sexual offences be detained in custody until further order – Where s 59(1a)(a) of Act provided that person detained in custody could not be released on licence unless person satisfied Supreme Court that person capable of controlling and willing to control sexual instincts – Where "willing" not defined in Act – Where s 57(1) of Act provided that, in that section, person regarded as "unwilling" to control sexual instincts if a significant risk that person would, given opportunity to commit relevant offence, fail to exercise appropriate control of person's sexual instincts – Whether "willing" in s 59(1a)(a) meant converse of "unwilling" in s 57(1) of Act – Whether Supreme Court obliged to reach state of satisfaction required by s 59(1a)(a) by excluding from consideration likely effect of conditions of release on licence upon person's willingness to exercise appropriate control of sexual instincts. Words and phrases – "capable", "conditions of release on licence", "exercise appropriate control of the person's sexual instincts", "ongoing capability and willingness", "release on licence", "reliable commitment to control", "significant risk", "state of mind", "unwilling", "willing". Sentencing Act 2017 (SA), ss 57, 58, 59. KEANE, GORDON, EDELMAN, STEWARD AND GLEESON JJ. Under Div 5 of Pt 3 of the Sentencing Act 2017 (SA) ("the Act"), the Supreme Court of South Australia may order that a person who has been convicted of certain sexual offences be detained in custody until further order. Within that Division, s 59(1) provides that the Supreme Court may authorise a person who has been detained in custody to be released into the community "on licence" – that is, with conditions attached to the person's release. In this regard, s 59(1a)(a) provides that a person applying for release from custody on licence cannot be released unless the person satisfies the Supreme Court that the person is, relevantly, "both capable of controlling and willing to control the person's sexual instincts". Each of the appellants, Mr Wichen and Mr Hore, is subject to an order for detention in custody under s 23 of the Criminal Law (Sentencing) Act 1988 (SA) ("the Repealed Act"), the predecessor to s 57 of the Act1. Each of them applied for, and was refused, release on licence into the community pursuant to s 59 in the current regime. In each case, the primary judge (Kourakis CJ in respect of Mr Wichen2 and Hughes J in respect of Mr Hore3) held that, on the proper construction of s 59(1a)(a), "willing" means the converse of "unwilling" as defined in s 57(1). On that basis, in each case, the primary judge was not satisfied that the relevant appellant was "willing" to control his sexual instincts. "Willing" is not defined in the Act, but s 57(1) of the Act provides that, in that section, a person to whom s 57 applies will be regarded as "unwilling to control [his or her] sexual instincts if there is a significant risk that the person would, given an opportunity to commit a relevant offence, fail to exercise appropriate control of the person's sexual instincts". The primary judge in each case also held that, under s 59, the Supreme Court may only consider the imposition of conditions on the person's release on licence after the person applying for release succeeds in establishing to the satisfaction of the Court that the person is both capable of controlling and willing to control his or her sexual instincts, without regard to the likely effect of any such conditions on the person's willingness to exercise appropriate self-control. 1 Wichen v The Queen [2020] SASC 157 at [2]; Hore v The Queen (2020) 285 A Crim R 94 at 96 [1]. 2 Wichen v The Queen [2020] SASC 157. 3 Hore v The Queen (2020) 285 A Crim R 94. Gordon Edelman Steward Gleeson The Court of Appeal of the Supreme Court of South Australia (Kelly P, Lovell and Bleby JJA) dismissed an appeal by each appellant4. In this Court, the appellants contend that "willing" in s 59(1a)(a) of the Act should be given its ordinary meaning and, on that understanding, each appellant satisfies that prerequisite for release on licence. Alternatively, the appellants contend that the Supreme Court, in considering whether to release a person on licence, may properly have regard to the conditions which may be imposed upon the release of the person as affecting the willingness of the person to control his or her sexual instincts. For the reasons that follow, the appellants' first contention should be rejected, but their alternative contention should be upheld. In consequence, each appeal must be allowed. Before turning to address the arguments agitated by the parties, it is convenient to summarise the circumstances in which each appellant came to be detained, the terms of the legislative scheme in Div 5 of Pt 3 of the Act, and the course of proceedings in the courts below in relation to each appellant's application for release on licence. The detention of the appellants Mr Wichen On 5 February 2003, Mr Wichen pleaded guilty to one count of serious criminal trespass in a place of residence and one count of assault with intent to rape5. By that time, he had a significant history of criminal offending, which commenced when he was 12 years old and included convictions for two attempted rapes and indecent assault6. On 26 July 2005, he was sentenced to ten years' imprisonment, which was backdated to commence on 29 April 2002, the date he was first taken into custody7. 4 Wichen v The Queen (2021) 138 SASR 134; Hore v The Queen (2021) 289 A Crim R 216. 5 Contrary to, respectively, ss 170(2) and 270B of the Criminal Law Consolidation Act 1935 (SA). See Wichen v The Queen [2020] SASC 157 at [2]. 6 R v Wichen (2005) 92 SASR 528 at 532-533 [18]-[22]. 7 R v Wichen (2005) 92 SASR 528 at 555 [128]-[129]. Gordon Edelman Steward Gleeson At the time of sentencing, the Director of Public Prosecutions ("the DPP") applied, pursuant to s 23 of the Repealed Act, for a declaration that Mr Wichen was incapable of controlling his sexual instincts, and for an order for his indefinite The sentencing judge, Gray J, adjourned that application until the Court could receive further information about the steps taken to address the mental condition of Mr Wichen while in custody9. The adjourned application was heard on 30 August 2011. Having received further evidence, including from two psychiatrists and one psychologist, the sentencing judge declared that Mr Wichen was incapable of controlling his sexual instincts and directed that he be detained in custody until further order from the expiry of his sentence on 29 April 201210. Mr Hore Mr Hore's criminal history includes offences against children, namely indecent assault and aggravated indecent assault. As a consequence of that offending, he became a "registrable offender" under the Child Sex Offenders Registration Act 2006 (SA)11. On 24 February 2015, Mr Hore pleaded guilty in the Magistrates Court of South Australia to three counts of failing, as a registrable offender, to comply with reporting conditions without reasonable excuse12 and one count of possessing child pornography knowing of its pornographic nature13. Mr Hore was sentenced in the Supreme Court, following a prosecution appeal against his original sentence, to 16 months' imprisonment with a non-parole period of ten months14. On 9 February 2016, shortly before the expiry of Mr Hore's non-parole period, the sentencing judge, Nicholson J, made an order pursuant to s 23(4) of the 8 R v Wichen (2005) 92 SASR 528 at 530 [2], 531 [4]. 9 R v Wichen (2005) 92 SASR 528 at 554 [123]. 10 R v Wichen [No 2] [2011] SASC 194 at [14], [30]. 11 R v Hore [2016] SASC 21 at [5]-[6], [8]. 12 Contrary to s 44(1) of the Child Sex Offenders Registration Act 2006 (SA). 13 Contrary to s 63A of the Criminal Law Consolidation Act 1935 (SA). 14 Police v Hore [2015] SASC 150 at [28]. Gordon Edelman Steward Gleeson Repealed Act that Mr Hore be detained in custody until further order, with such detention commencing upon the expiry of his term of imprisonment. In his Honour's reasons, delivered at a later date, Nicholson J held that the risk of Mr Hore committing further sexual offences against children if he were released was very high and would remain so unless he engaged with, and responded to, further counselling and rehabilitative programs. His Honour declared that Mr Hore was incapable of controlling his sexual instincts15. The legislative scheme The "primary purpose" for sentencing a defendant for an offence pursuant to the Act is to "protect the safety of the community (whether as individuals or in general)"16. Part 3 of the Act provides for the imposition of custodial sentences. Within that Part, Div 5 is headed: "Offenders incapable of controlling, or unwilling to control, sexual instincts". The legislative scheme within Div 5 is comprised of three main sections: s 57 empowers the Supreme Court to detain such persons in custody until further order; s 58 empowers the Court to discharge the detention order and allow a person to be released from custody; and s 59 empowers the Court to release such persons on licence. Section 57(7) confers upon the Supreme Court a discretion to order that "a person to whom this section applies be detained in custody until further order if satisfied that the order is appropriate". A "person to whom this section applies" means: a person convicted by the Supreme Court of a relevant offence; a person remanded by the District Court of South Australia or the Magistrates Court under s 57(2) to be dealt with by the Supreme Court under s 57; or a person who is the subject of an application by the Attorney-General for the State of South Australia under s 57(3)17. Before the Supreme Court may determine whether to make an order under s 57, in accordance with s 57(6) the Court must direct that at least two legally qualified medical practitioners "inquire into the mental condition of [the] person 15 R v Hore [2016] SASC 21 at [3], [39]. 16 s 3 of the Act. 17 s 57(1) of the Act, definition of "person to whom this section applies". Gordon Edelman Steward Gleeson ... and report to the Court on whether the person is incapable of controlling, or unwilling to control, the person's sexual instincts". As to the expression "unwilling", s 57(1) provides: "In this section – unwilling – a person to whom this section applies will be regarded as unwilling to control sexual instincts if there is a significant risk that the person would, given an opportunity to commit a relevant offence, fail to exercise appropriate control of the person's sexual instincts." Consistently with the primary purpose of the Act, s 57(8) provides that, in determining whether to make an order under s 57, the "paramount consideration" of the Supreme Court "must be to protect the safety of the community (whether as individuals or in general)". Section 57(9) lists matters which the Supreme Court "must" take into consideration in determining whether to make an order under that section, including the reports of the medical practitioners provided to the Court18, any relevant evidence or representations that the person may desire to put to the Court19, and any other matter that the Court thinks relevant20. As noted above, there are two possible avenues for the release of a person subject to an order under s 57. Pursuant to s 58, the order for detention may be discharged, in which event the person is released unconditionally. Pursuant to s 59, the person may be released on licence. As the appeals are concerned with release on licence, it is convenient to consider s 59 before noting the terms of s 58. By s 59(1), the Supreme Court "may, on application by the DPP or the person, authorise the release on licence of a person detained in custody" under Div 5. By s 59(1a), the person detained in custody cannot be released on licence unless the person satisfies the Court that: 18 s 57(9)(a) of the Act. 19 s 57(9)(b) of the Act. 20 s 57(9)(d) of the Act. Gordon Edelman Steward Gleeson the person is both capable of controlling and willing to control the person's sexual instincts; or the person no longer presents an appreciable risk to the safety of the community (whether as individuals or in general) due to the person's advanced age or permanent infirmity." Section 59(2) imposes a requirement, relevantly identical to s 57(6), that, before determining an application under s 59, the Court obtain medical reports on "whether the person is incapable of controlling, or unwilling to control, the person's sexual instincts". The "paramount consideration" in determining an application under s 59 is also identical to s 57(8), namely to protect the safety of the community21. Section 59(4) states the matters the Supreme Court "must" take into consideration when determining an application under s 59. Those matters include, relevantly: the reports of the medical practitioners provided to the Court under s 59(2)22; any relevant evidence or representations that the person may desire to put to the Court23; a report provided to the Court by the "appropriate board" (relevantly, the Parole Board24), including any opinion of the Parole Board on the effect that the release on licence of the person would have on the safety of the community, a report as to the probable circumstances of the person if the person were to be released on licence, and the recommendation of the Parole Board as to whether the person should be released on licence25; evidence tendered to the Court of the estimated costs directly related to the release of the person on licence26; and any other matter the Court thinks relevant27. 21 s 59(3) of the Act. 22 s 59(4)(a) of the Act. 23 s 59(4)(b) of the Act. 24 s 59(20) of the Act, definition of "appropriate board". 25 s 59(4)(c) of the Act. 26 s 59(4)(d) of the Act. 27 s 59(4)(g) of the Act. Gordon Edelman Steward Gleeson Sections 59(7) and 59(8) address the conditions to be imposed on a person upon release on licence. Section 59(7) provides that "[s]ubject to this Act, every release of a person on licence under this section" is subject to two conditions, which are to the effect that a person is prohibited from possessing a firearm, any part of a firearm, or ammunition, and is required to submit to tests for gunshot residue. Section 59(8) then provides: "Without limiting subsection (7), the release of a person on licence under this section will be subject to such conditions as the [Parole Board] thinks fit and specifies in the licence (including a condition that the person be monitored by use of an electronic device approved under section 4 of the Correctional Services Act 1982)." Section 59(4a) provides that, when determining an application under s 59, the Supreme Court must not have regard to the length of time that the person has spent in custody or may spend in custody if the person is not released on licence. Section 58 empowers the Supreme Court, on application by the DPP or the person in detention, to discharge an order under s 57. The order cannot be discharged unless, relevantly, the person subject to the order satisfies the Court of the matters in s 58(1a), which are identical to the matters in s 59(1a). There is also, in s 58(2), a requirement that the Court obtain medical reports in respect of the same matters identified in ss 57(6) and 59(2). Legislative history The Sentencing (Release on Licence) Amendment Act 2018 (SA) ("the Amending Act") inserted ss 58(1a), 59(1a) and 59(4a) into the Act. The Attorney-General's Second Reading Speech explained the background to the Amending Act28: "In the past, the court has expressed the view that, despite the risks an offender might pose to the safety of the community, it was appropriate to release the offender into the community on licence as the community could be adequately protected through a number of steps to be taken by the 28 South Australia, House of Assembly, Parliamentary Debates (Hansard), 29 May Gordon Edelman Steward Gleeson Department for Correctional Services and other agencies to manage those risks. This bill amends [the Act] to address concerns that have been raised about this approach. The reforms create a two-step process. Firstly, a detained person will need to satisfy the court that they are both capable of and willing to control their sexual instincts. It is a reversal of onus. If the court is so satisfied, the court can then consider whether they should be released on licence or have their indefinite detention order discharged, with the paramount consideration being the safety of the community in making that decision. This means that if the person cannot satisfy the court that they are both capable [of] and willing to control their sexual instincts, then the court is unable to make an order to release the person on licence or to discharge their order of detention subject to one exception." The "exception" referred to in the final sentence was the alternative prerequisite in s 59(1a)(b), being if the person no longer presents an appreciable risk to the safety of the community due to his or her advanced age or infirmity. The applications for release on licence Each appellant applied to the Supreme Court for release on licence pursuant to s 24(1) of the Repealed Act29. By reason of the transitional provisions in Pt 3 of Sch 1 to the Act, each application fell to be determined pursuant to s 59 of the Act30. Mr Wichen Kourakis CJ held that "willing" in s 59(1a)(a) means the converse of the special meaning of "unwilling" in s 57(1)31 – that is, "a person is willing to control their sexual instincts where there is not a significant risk that the person would, 29 Wichen v The Queen [2020] SASC 157 at [1], [5]; Hore v The Queen (2020) 285 A Crim R 94 at 100 [29]. 30 Wichen v The Queen [2020] SASC 157 at [98]; Hore v The Queen (2020) 285 A Crim R 94 at 100 [31]. 31 Wichen v The Queen [2020] SASC 157 at [110]. Gordon Edelman Steward Gleeson given an opportunity to commit a relevant offence, fail to exercise appropriate control of their sexual instincts"32. His Honour said that if the relevant condition for release on licence were whether Mr Wichen was willing to control his sexual instincts, in the ordinary meaning of that word, his Honour would have found that Mr Wichen was so willing. But his Honour considered that, due to the serious abuse to which Mr Wichen was exposed as a child and his innate disposition manifested by his previous offending, there was a significant risk that Mr Wichen would fail to exercise appropriate control if an opportunity to commit an offence were to arise. Accordingly, his Honour was not satisfied that the requirement in s 59(1a)(a) had been met33. To arrive at this construction of "willing", Kourakis CJ considered the scheme of ss 57 and 59 and made three preliminary observations. First, the opening words of s 57(1) apply definitions set out therein only to s 57. Secondly, the power to make an indefinite detention order under s 57 is not expressly conditioned on a finding that the person is incapable of controlling, or unwilling to control, his or her sexual instincts. His Honour considered, however, that if that power was not implicitly subject to such a condition, an order was nonetheless unlikely to be made in the absence of such a finding. The third observation was that the power to make an order for release on licence is expressly conditioned upon a finding by the Supreme Court that the person is both capable of controlling and willing to control the person's sexual instincts34. It followed that reading "willing" as the converse of "unwilling" was the only way in which ss 57 and 59, read together, could provide a "coherent regime" for detention and release on licence35. Kourakis CJ then turned to consider whether s 59 allows the Supreme Court to consider the conditions which a person will face after being released from custody in deciding whether to make an order for release on licence. Having already noted that the power to release on licence is expressly conditioned on a finding that the person is both capable of controlling and willing to control his or 32 Wichen v The Queen [2020] SASC 157 at [112]-[113], quoting R v Iwanczenko [2019] SASC 140 at [112]. 33 Wichen v The Queen [2020] SASC 157 at [122]-[123]. 34 Wichen v The Queen [2020] SASC 157 at [107]-[108]. 35 Wichen v The Queen [2020] SASC 157 at [110]. Gordon Edelman Steward Gleeson her sexual instincts, his Honour considered that it had to be demonstrated "from within the artificial constraints of prison ... that there is no significant risk that [the person] will fail to exercise the appropriate control"36. His Honour referred in particular to the evidence of a psychiatrist, Dr Nambiar, who said that it would be "best to take a stepped down approach", where Mr Wichen is moved from an environment of "total control, within reason" to the community but monitored at all times, such as by electronic monitoring and home detention37. Even though his Honour was confident that if Mr Wichen were released on licence with conditions properly safeguarding against reoffending there was no significant risk of reoffending, as the "stepped down" approach to which Dr Nambiar testified "might show", his Honour concluded that s 59 did not permit that course38. Kourakis CJ was troubled by the conclusion at which he arrived. His Honour observed that Mr Wichen was "trapped in a paradox" by this construction of s 59(1a)(a), since Mr Wichen was not able to demonstrate his ability to control his sexual instincts in ordinary social circumstances outside prison without being released from prison. As a result, Kourakis CJ said that there was little prospect that Mr Wichen would be released until he meets the criteria for infirmity pursuant to s 59(1a)(b), an outcome which his Honour described as "harsh, and some may say cruel"39. Mr Hore Hughes J came to the same conclusions as Kourakis CJ on both issues which form the grounds of the present appeals40. 36 Wichen v The Queen [2020] SASC 157 at [124]. 37 Wichen v The Queen [2020] SASC 157 at [24]. 38 Wichen v The Queen [2020] SASC 157 at [124]. 39 Wichen v The Queen [2020] SASC 157 at [124]. 40 Hore v The Queen (2020) 285 A Crim R 94 at 112-113 [91]-[93], 114-115 Gordon Edelman Steward Gleeson As to the relevance of conditions of release on licence, her Honour held41 that it is only once it is established that there is not a significant risk that the person would fail to exercise appropriate control of his or her sexual instincts that the imposition of conditions is considered, in order to consider whether any remaining risk could be reduced or obviated42: "It is sufficiently clear by the language and form of s 59 that the first step in [Mr Hore's] case is that he must establish that he is both capable of and willing to control his sexual instincts when an opportunity to fail to do so arises. The Court cannot release the person without that having been established. However, it does not follow from such a conclusion that the risk is wholly removed, and the balance of s 59 is directed at other factors to be incorporated into the decision as to what is an appropriate order to make." (emphasis in original) Similarly to Kourakis CJ, her Honour acknowledged that the effect of this construction was to place a significant – and in some cases impossible – burden on the person43. The Court of Appeal The Court of Appeal dismissed both appellants' appeals, in separate judgments delivered on the same day44. The decision in Hore v The Queen45 substantially adopted the reasoning in Wichen v The Queen46. It is sufficient for present purposes to examine the Court of Appeal's reasoning in Wichen. The Court of Appeal addressed Mr Wichen's submission, repeated in this Court for both appellants, that "unwilling" is defined in s 57 and that definition is preceded by the words "[i]n this section" so that, absent express words expanding 41 Hore v The Queen (2020) 285 A Crim R 94 at 114 [99], 115 [101]. 42 Hore v The Queen (2020) 285 A Crim R 94 at 115 [101]. 43 Hore v The Queen (2020) 285 A Crim R 94 at 114 [99]. 44 Wichen v The Queen (2021) 138 SASR 134; Hore v The Queen (2021) 289 A Crim R 216. (2021) 289 A Crim R 216 at 217 [1], 221 [24], 222 [26]. (2021) 138 SASR 134. Gordon Edelman Steward Gleeson the application of this definition across the Division, the principle of legality47 required the Court to presume against reading "willing" in s 59(1a)(a) as the opposite of "unwilling". The Court of Appeal accepted that the principle of legality favoured a construction of "willing" that would not have a more deleterious effect on the liberty of the individual than the ordinary meaning of the word; but their Honours held that any presumption to that effect was displaced by the terms of the statute48. To that point, the Court of Appeal held that it was a "necessary conclusion" from the text, structure and purpose of the Act that the word "willing" in s 59(1a)(a) meant the opposite of "unwilling"49. In the view of the Court of Appeal, the "fundamental difficulty" with the construction proposed by Mr Wichen was the incoherency described by Kourakis CJ50: that, if "willing" was not the converse of "unwilling", a person would be detained under one test (under s 57), but would potentially be amenable to discharge (under s 58) or immediate release on licence (under s 59) under another. Such an outcome would be, it was said, "capricious" and "nonsensical" and would frustrate the purpose of the legislative scheme51. The Court of Appeal also referred to the circumstance that each of ss 58(2) and 59(2) requires the Supreme Court to obtain medical reports in the same terms as s 57(6). The Court of Appeal observed that unless "willing" meant the opposite of "unwilling", those inquiries would, inexplicably, be directed at different outcomes52. As to the relevance of conditions of release on licence, the Court of Appeal agreed with Hughes J that it is only after the Supreme Court determines that the criteria in s 59(1a)(a) (or the infirmity criterion under s 59(1a)(b)) are satisfied in 47 See Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 259 [15]; North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 581 [11]. 48 Wichen v The Queen (2021) 138 SASR 134 at 140-141 [24], 142 [28]. 49 Wichen v The Queen (2021) 138 SASR 134 at 142 [28]. 50 Wichen v The Queen [2020] SASC 157 at [110]. 51 Wichen v The Queen (2021) 138 SASR 134 at 143 [31]. 52 Wichen v The Queen (2021) 138 SASR 134 at 142-143 [29]-[30]. Gordon Edelman Steward Gleeson relation to the person that the power to release on licence is enlivened, and only then can the question of conditions arise53. The meaning of "willing" in s 59(1a)(a) In this Court, the appellants submit that in s 59(1a)(a), "capable" is directed at whether the psychological condition of the person is such that he or she is effectively able to make a free choice to control his or her sexual instincts; by contrast, "willing" signifies a subjective state of mind on the part of the detained person, of being open or prepared to make that choice, and "willing" in s 59(1a)(a) should be given its ordinary meaning. The appellants submit that the construction of "willing" adopted by the Court of Appeal relies, erroneously, on the definition of a different word, "unwilling", that definition being expressed to be limited in its operation to s 57. The appellants argue, again invoking the principle of legality54, that the defined meaning of "unwilling" in s 57(1) should be confined to its use in that section. The appellants submit that the purpose of the definition in s 57(1) is to identify the practical content of the reports of medical practitioners required by s 57(6), and that the Court of Appeal's construction gives the meaning of "unwilling" an operation beyond that limited purpose. These submissions are not persuasive. It may be said immediately that it is not correct to say that "unwilling" is defined in s 57(1). It is more accurate to say that s 57(1) deems a person to whom s 57 applies to be "unwilling" to exercise appropriate control of the person's sexual instincts in circumstances where the risk of a failure to exercise appropriate control is "significant". A person seeking discharge under s 58 or release on licence under s 59 is, and can only be, a person to whom s 57 applies. Moreover, the appellants' argument cannot be reconciled with ss 58(2), 58(4)(a), 59(2) and 59(4)(a) of the Act. There would be no point in requiring the Supreme Court to obtain and act upon the reports of medical practitioners if those reports were not directed to the task required of the Court by ss 58(1a) and 59(1a). 53 Wichen v The Queen (2021) 138 SASR 134 at 144-145 [41]-[42]. 54 See Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 259 [15]; North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 581 [11]. Gordon Edelman Steward Gleeson The focus of the medical reports required by each of ss 57(6), 58(2) and 59(2) is upon whether the person is either incapable of controlling the person's sexual instincts, or (to interpolate the deemed meaning of "unwilling") at significant risk of failing to control those instincts if given the opportunity to commit a relevant offence. In s 57(1), the particular use of the expression "unwilling" recognises that a person's willingness to control his or her sexual instincts may fall somewhere on a spectrum of states of volition, at some point on which the community is at "significant risk" of harm for reasons other than a want of capability on behalf of the person to control his or her sexual instincts. It requires no leap of imagination to appreciate that, in this context, when s 59(1a)(a) speaks of positive satisfaction that the person is willing to control his or her sexual instincts, it is speaking of an affirmative conclusion that the person falls within that part of the spectrum of states of volition which would not pose a significant risk of harm to the community should the person's commitment to appropriate self-control be tested after release from detention. In this context, the term "significant risk" serves to establish the level of risk by reference to which the regime is engaged in s 57 or relaxed under s 58 or s 59. The Court of Appeal rightly rejected the appellants' invocation of the principle of legality in this context. The construction of "willing" adopted by the Court of Appeal also rightly rejected the appellants' contention that willingness is established exclusively by reference to the subjective views expressed by the person seeking release, rather than by reference to an evaluation of the person's actual willingness when presented with an opportunity to exercise control of the person's sexual instincts. The unmistakeable intention of the Act is that the question of a person's willingness in s 59(1a)(a) is not to be resolved by uncritical acceptance of the person's expressed inclination to control the person's sexual instincts. Whether a person is "willing" in the relevant sense cannot depend on assertions by the person that may reflect subjective wishful thinking, if not feigned commitment, on the part of the person. The Supreme Court's assessment of the person's state of mind is concerned with whether the person is likely to have a reliable commitment to control the person's sexual instincts at the time when any occasion for the exercise of control arises. In summary, in relation to the first ground of appeal, the courts below were correct to hold that, for the purposes of s 59(1a)(a), a person is "willing" to control his or her sexual instincts where there is not a significant risk that the person would, given an opportunity to commit a relevant offence, fail to exercise appropriate control of his or her sexual instincts. It remains now to consider the relevance of conditions of release on licence. Gordon Edelman Steward Gleeson The relevance of conditions of release on licence The appellants submit that whether there is a risk that a person would, given an opportunity to commit an offence, fail to exercise appropriate control over the person's sexual instincts must depend on the circumstances in which such opportunity may arise. Those circumstances may include the effect on the person's commitment to appropriate self-control of the conditions of the licence upon which the person's release was authorised under s 59(1) of the Act. There is force in this submission. The respondent submits that s 59 invites a two-step analysis: first, a determination whether the threshold test established by s 59(1a) is met; and then, and only then, a determination to exercise the discretion to make an order for release on licence with conditions. It is also argued that the imposition of conditions upon release on licence is relevant only to address any residual risk posed by the release of the person. The respondent points to the excerpt from the Second Reading Speech for the Amending Act set out above as supporting this approach. These submissions should not be accepted. The courts below adopted the approach urged by the respondent in construing s 59(1a)(a) as if it required a determination of "willingness" as a condition precedent to final consideration of the application for release on licence. One cannot reconcile that approach with the text of s 59(1), which is clear that there is but one determination to be made by the Supreme Court, that determination being whether the person should be granted release on licence. Section 59(1a)(a) simply does not call for a determination as to willingness as an exercise separate from, and anterior to, the determination whether or not to grant release on licence. True it is that s 59(1a) commands that a determination under s 59(1) may not be made in favour of release on licence unless the person satisfies the Court of the matters in either s 59(1a)(a) or (b); but the satisfaction required by s 59(1a) is not required to be established by an exercise separate from, and carried out without regard to, the likely behaviour of the person in the circumstances in which the extent of the risk of a failure to exercise appropriate self-control is to be assessed by the Court. The likely effect of the conditions of release on licence upon the strength of the person's commitment to exercising appropriate self-control may have a bearing on the assessment required by the Court. The power conferred by s 59(1) is concerned with whether the Supreme Court should "authorise the release on licence of a person detained in custody under [Div 5]". Integral to the exercise of that power is consideration of the conditions referred to in s 59(7) and (8). Gordon Edelman Steward Gleeson The evaluation of the person's capability and willingness for the purposes of s 59(1a)(a) is not concerned, or more precisely not solely concerned, with the person's capability and willingness at the point in time at which the application for release on licence is determined. Rather, s 59(1a)(a) is vitally concerned with the person's ongoing capability and willingness to exercise appropriate self-control, on the assumption that the person is released, when any occasion for the exercise of self-control arises. Since the person cannot be released on licence without the conditions required by s 59(7) and (8), the evaluation of the person's likely response to an occasion calling for the exercise of the person's ability to control his or her sexual instincts must also proceed on the assumption that the conditions of the licence are in place on the hypothetical occasion for the exercise of appropriate control. If this assumption is not made, the evaluation of the person's likely behaviour would proceed by reference to a state of affairs that can never arise under s 59, that is, release on licence without conditions. An intention to enlist the Supreme Court in such an arid exercise cannot be discerned in the legislation. Section 59, unlike s 58, is concerned with release on licence. There is no suggestion in the text of s 59 that the Court is required or permitted to disregard the likely effect of the conditions of release on licence on the person's willingness to control the person's sexual instincts when the Court is assessing whether there is a "significant risk" that the person would, if given an opportunity to commit a relevant offence, fail to exercise appropriate self-control. To say that the conditions of release on licence may have some bearing upon the Court's assessment of the person's willingness to control his or her sexual instincts is not to say that the Court must assume that the person will comply with the conditions, or that the Court must ignore the possibility that the conditions will not be effective in bolstering the person's willingness to exercise self-control. It is simply to acknowledge that consideration of the effect of the conditions on the person's willingness is integral to the determination whether there is not a "significant risk" that the person will fail to exercise appropriate control upon the person's release on licence. To interpret s 59 as if it did require a determination whether to exercise the power to order release on licence without taking into account the effect of conditions on the person's willingness to exercise self-control would substantially reduce the utility of s 59. That is because, on the approach urged by the respondent, the only practical avenue for the release of a person detained under s 57 would be that provided by s 58. On that approach, s 58 would provide a sufficient basis for the discharge of a detention order if the person's willingness were established to the satisfaction of the Supreme Court. That being so, there would be no good reason not to discharge the order made under s 57 and it is difficult to see how there could be any occasion for release on licence under s 59. For all practical purposes, s 59 would be rendered a dead letter. Gordon Edelman Steward Gleeson The immediate context in which s 59(1a)(a) is found confirms that the Supreme Court is not obliged to reach the state of satisfaction required by s 59(1a)(a) by excluding from consideration the likely effect of the conditions of the release on licence upon the person's willingness to exercise appropriate self-control. In that regard, s 59(4) provides: "The Supreme Court must also take the following matters into consideration when determining an application under this section for the release on licence of a person detained in custody under this Division: a report provided to the Court by the [Parole Board] in accordance with the direction of the Court for the purposes of assisting the Court to determine the application, including – any opinion of the [Parole Board] on the effect that the release on licence of the person would have on the safety of the community; and a report as to the probable circumstances of the person if the person is released on licence; and (iii) the recommendation of the [Parole Board] as to whether the person should be released on licence". That s 59(4)(c)(ii) requires the Supreme Court to consider a report from the Parole Board that identifies the "probable circumstances of the person if the person is released on licence" confirms the relevance of such matters to the determination contemplated by s 59(1a)(a) of the Act. As to the respondent's contention that the imposition of conditions upon release on licence is relevant only to address any residual risk posed by the release of the person, nothing in s 59 suggests that the relevance of the report or reports referred to in s 59(4)(c) is limited in this way. It is of some significance in this regard that s 59(1) does not suggest that the determination required of the Supreme Court includes the prescription of conditions by the Court as a bespoke regime for the release of the person on licence. The terms of the conditions governing release on licence are determined by the Act under s 59(7) or by the appropriate board under s 59(8). It is not inconsistent with the purpose of the Amending Act stated in the Second Reading Speech for the Supreme Court to take into account, under Gordon Edelman Steward Gleeson s 59(1a)(a), the effect of conditions of release on licence insofar as those conditions may have a positive effect upon the person's willingness to exercise appropriate control of his or her sexual instincts. The respondent's submission to the contrary misapprehends the thrust of the Second Reading Speech. The purpose of s 59(1a)(a), as explained in the Second Reading Speech, is to ensure that the Court not order the release of a person on licence where the safety of the community is dependent upon the efficacy of external controls such as monitoring, supervision and pro-social support. It is to be noted that the excerpt from the Second Reading Speech set out above commences with a reference to the Supreme Court "in the past" having "expressed the view that, despite the risks an offender might pose to the safety of the community, it was appropriate to release the offender into the community on licence as the community could be adequately protected through a number of steps to be taken by the Department for Correctional Services and other agencies to manage those risks". The case referred to was the decision in R v Humphrys55 at first instance. In R v Humphrys, the primary judge held that release on conditions was appropriate given that the risk posed to the safety of the community by Mr Humphrys could be sufficiently addressed by the "regime proposed to be put in place immediately upon his release"56. The conclusion of the primary judge was that the external controls imposed on Mr Humphrys' behaviour under that regime could be relied upon to keep the community safe. No finding was made that the conditions of release on licence could be expected to bolster Mr Humphrys' willingness to exercise appropriate self-control sufficiently to warrant an affirmative finding of willingness on his part. Indeed, to the contrary, from the reasons of the Court of Criminal Appeal of South Australia (which were delivered on the same day as the enactment of s 59(1a)), it is apparent that Mr Humphrys was viewed as an intelligent and manipulative individual who, by "deceitful manipulation", might thwart the regime to be put in place upon release57. The amendments that introduced s 59(1a) into the Act were not directed to precluding release on licence of a person who is a different kind of individual, one who can be found to have a firm commitment to the exercise of appropriate self-control of his or her sexual instincts. [2018] SASC 39. 56 R v Humphrys [2018] SASC 39 at [57]. See also at [37]-[44]. 57 R v Humphrys (2018) 131 SASR 344 at 355-360 [29]-[44]. Gordon Edelman Steward Gleeson The amendments introducing s 59(1a) were directed to ensuring that the external constraints upon behaviour provided by the licence conditions should not be relied upon to protect the community where, even with those external constraints, the Court is unable to be satisfied of the person's willingness to exercise appropriate self-control. The amendments were not concerned to deny the possibility that a positive finding can be made as to the person's willingness to exercise appropriate self-control on the basis that the support afforded by the conditions to be imposed may help to bolster the person's willingness to exercise that self-control so that the Court is able to be satisfied there is not a "significant risk" of a failure in that regard. The appellants' alternative contention must be accepted. In determining whether to order release of a person on licence under s 59(1a)(a), the Supreme Court is not obliged to reach the state of satisfaction required by the word "willing" in s 59(1a)(a) by excluding from consideration the likely effect of the conditions of the release on licence upon the person's willingness to exercise appropriate self-control of his or her sexual instincts. Orders In each case, the appeal must be allowed. The order of the Court of Appeal must be set aside, the appeal to that Court be allowed, the decision of the primary judge in each matter be set aside, and each appellant's application for release on licence be remitted to the primary judge to be determined according to law.

HIGH COURT OF AUSTRALIA PETER MANN & ANOR APPELLANTS AND PATERSON CONSTRUCTIONS PTY LTD RESPONDENT Mann v Paterson Constructions Pty Ltd [2019] HCA 32 9 October 2019 ORDER Appeal allowed with costs. Set aside orders 1 to 3 of the Court of Appeal of the Supreme Court of Victoria made on 12 September 2018 and, in their place, order that: the application for leave to appeal be granted; the appeal to the Court of Appeal of the Supreme Court of Victoria be allowed with costs; and orders 2 to 5 of the order made by Justice Cavanough of the Supreme Court of Victoria on 21 March 2018 be set aside and, in their place, it be ordered that: the appeal to the Supreme Court of Victoria be allowed with costs; the orders of the Victorian Civil and Administrative Tribunal made on 12 December 2016 be set aside; and (iii) the matter be remitted to the Victorian Civil and Administrative Tribunal further determination for according to law. On appeal from the Supreme Court of Victoria Representation T J Margetts QC with G F Hellyer and A C Roe for the appellants (instructed by Telford Story & Associates) J P Moore QC with A J Laird and J A G McComish for the respondent (instructed by Kalus Kenny Intelex) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Mann v Paterson Constructions Pty Ltd Restitution – Unjust enrichment – Work and labour done – Where land owners and builder entered into contract to which Domestic Building Contracts Act 1995 (Vic) applied – Where contract provided for progress payments at completion of stages – Where owners requested, and builder carried out, variations to plans and specifications in contract without giving written notice as required by s 38 of Act – Where owners repudiated contract after builder raised invoice claiming for variations – Where contract terminated by builder's acceptance of owners' repudiation – Whether s 38 of Act applied to limit amount recoverable by builder for variations – Whether builder entitled to recover in restitution as alternative to claim in damages for breach of contract – Whether contract price operated as ceiling on amount recoverable by way of restitution. Words and phrases – "accrued rights", "alternative restitutionary remedy", "common counts", "completed stage", "contract price ceiling", "contractual incentives", "domestic building contract", "failure of basis", "failure of consideration", "limit on recovery", "measure of restitution", "notice", "primary and secondary obligations", "principle of legality", "protective provisions", "qualifying or vitiating factor", "quantum meruit", "quasi-contractual obligation", "repudiation", "restitution", "subjective devaluation", "unjust enrichment", "variations", "work and labour done". Domestic Building Contracts Act 1995 (Vic), ss 1, 3, 4, 16, 27, 38, 39, 53, 132. KIEFEL CJ, BELL AND KEANE JJ. The appellants entered into a contract with the respondent for the construction by the respondent of two townhouses on land owned by the appellants. The parties fell into dispute in relation to the works. The respondent claimed that the appellants had repudiated the contract, and purported to terminate the contract by accepting that repudiation. The respondent then claimed that it was entitled to recover payment for its work, including variations, upon a quantum meruit. The respondent's claim was upheld by the Court of Appeal of the Supreme Court of Victoria1. Pursuant to a grant of special leave to appeal, the appellants now challenge the decision of the Court of Appeal on the following grounds: "[1] The Court of Appeal erred in holding that the respondent builder, having terminated a major domestic building contract upon the repudiation of the contract by the [appellants], was entitled to sue on a quantum meruit for the works carried out by it. [2] Alternatively, if the respondent was entitled to sue on a quantum meruit, the Court of Appeal erred in finding that the price of the contract did not operate as a ceiling on the amount claimable under such a quantum meruit claim. The Court of Appeal erred in allowing the respondent to recover on a quantum meruit basis for variations to the works carried out by the respondent, because it incorrectly found that s 38 of the Domestic Building Contracts Act 1995 (Vic) did not apply to a quantum meruit claim for variations to works under a domestic building contract." The relevant terms of the contract between the parties, the relevant legislative provisions bearing upon the third ground of appeal, the course of proceedings in the courts below, and the circumstances giving rise to the appeal to this Court, are comprehensively summarised in the reasons of Nettle, Gordon and Edelman JJ. We gratefully adopt their Honours' summary. In our respectful opinion, the issue posed by the first ground of appeal should be resolved in the affirmative, in favour of the appellants. As a result, it is unnecessary to address the second ground of appeal. In relation to the issue raised by the third ground of appeal, we agree with the conclusion and reasons of Nettle, Gordon and Edelman JJ and have nothing useful to add. 1 Mann v Paterson Constructions Pty Ltd [2018] VSCA 231. Bell The rescission fallacy The appellants' first ground of appeal raises for consideration the correctness of the proposition that a claim for quantum meruit – that is, for the reasonable value of work performed – may be made at the election of the innocent party to a contract as an alternative to a claim for damages in the wake of the termination of the contract for repudiation or breach. That proposition was accepted by the Judicial Committee of the Privy Council in Lodder v Slowey2. It has since been applied by the intermediate appellate courts of Victoria3, New South Wales4, Queensland5, and South Australia6. In Lodder v Slowey, the Board upheld the decision of the Court of Appeal of New Zealand in Slowey v Lodder7. On the basis of the theory that the relevant contract had been rescinded ab initio, the plaintiff was held entitled to recover a sum assessed as the reasonable value of the services rendered, even though the amount so assessed might substantially exceed the agreed price. In the Court of "As the defendant has abandoned the special contract, and as the plaintiff has accepted that abandonment, what would have happened if the special contract had continued in existence is entirely irrelevant. As by the consent of both parties the special contract has been set aside, neither 3 Brooks Robinson Pty Ltd v Rothfield [1951] VLR 405; Sopov v Kane Constructions Pty Ltd [No 2] (2009) 24 VR 510. 4 Segur v Franklin (1934) 34 SR (NSW) 67; Horton v Jones [No 2] (1939) 39 SR (NSW) 305; Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234. Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350; McGowan v Commissioner of Stamp Duties [2002] 2 Qd R 499; Speakman v Evans [2002] QCA 293; Legal Services Commissioner v Baker [No 2] [2006] 2 Qd R 249. Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525; Maxcon Constructions Pty Ltd v Vadasz [2016] SASCFC 119. (1901) 20 NZLR 321. 8 Slowey v Lodder (1901) 20 NZLR 321 at 358. Bell can the plaintiff claim for any profit he might have made under it nor can the defendant set up that if the plaintiff had been allowed to complete his performance of the contract he would have made no profit or would have suffered a loss." In the present case, the Court of Appeal followed9 its previous decision in Sopov v Kane Constructions Pty Ltd [No 2]10. In Sopov, Maxwell P, Kellam JA and Whelan A-JA held that a builder was entitled to advance a claim for quantum meruit in lieu of a claim for damages following its acceptance of the owner's repudiation and the consequent termination of the contract11. Their Honours reached that conclusion in deference to the course of judicial authority beginning with Lodder v Slowey despite weighty academic criticism12 and even though their Honours considered that Lodder v Slowey and the decisions that followed it "can be seen to have been founded" on what their Honours termed the "rescission fallacy"13. The reference in Sopov to the "rescission fallacy" was apposite. The theory that the contract between the parties becomes "entirely irrelevant"14 upon discharge for repudiation or breach is indeed fallacious. As Mason CJ said in Baltic Shipping Co v Dillon15: "It is now clear that ... the discharge operates only prospectively, that is, it is not equivalent to rescission ab initio." 9 Mann v Paterson Constructions Pty Ltd [2018] VSCA 231 at [92]-[97]. 11 Sopov v Kane Constructions Pty Ltd [No 2] (2009) 24 VR 510 at 514-515 [9]-[12]. 12 See Sopov v Kane Constructions Pty Ltd [No 2] (2009) 24 VR 510 at 514 [9] fn 13. See also Kull, "Restitution as a Remedy for Breach of Contract" (1994) 67 Southern California Law Review 1465; Havelock, "A Taxonomic Approach to Quantum Meruit" (2016) 132 Law Quarterly Review 470. 13 Sopov v Kane Constructions Pty Ltd [No 2] (2009) 24 VR 510 at 514 [10]. 14 Slowey v Lodder (1901) 20 NZLR 321 at 358. 15 (1993) 176 CLR 344 at 356; [1993] HCA 4. See also Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 379; [1936] HCA 6; Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 390; Federal Commissioner of Taxation v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342 at 345-346 [2]; [2008] HCA 22; Construction Forestry Mining and Energy Union v Mammoet Australia Pty Ltd (2013) 248 CLR 619 at 639 [69]; [2013] HCA 36; (Footnote continues on next page) Bell The notion that the termination of a contract for repudiation or breach has the effect of rescinding the contract ab initio was unequivocally rejected by this Court in McDonald v Dennys Lascelles Ltd16. In that case, Dixon J, with whom Rich and McTiernan JJ agreed, said17: "When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract is rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made. But when a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach." In this classic statement of principle, Dixon J made two points. The first was that upon the innocent party electing to treat the contract as no longer binding upon it, both parties are discharged from the further performance of the contract, while those rights that have accrued in accordance with the terms of the contract remain enforceable. To say that the contract has come to an end "may in individual cases convey the truth with sufficient accuracy", but "the fuller expression that the injured party is thereby absolved from future performance of his obligations under the contract is a more exact description of the position"18. Accordingly, in the case of a building contract, an innocent builder is entitled to recover as a debt any amount that has become due under the terms of the contract, unless the contract provides to the contrary. The contract in the present case did not provide to the contrary. Southern Han Breakfast Point Pty Ltd (In liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340 at 365 [79]; [2016] HCA 52. 16 (1933) 48 CLR 457; [1933] HCA 25. 17 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476-477. 18 Heyman v Darwins Ltd [1942] AC 356 at 399. Bell The second point made by Dixon J was that when the contract is discharged at the election of the innocent party, the contract is "determined so far as it is executory only and the party in default is liable for damages for its breach". His Honour's reference to "damages for its breach" was a reference to what are commonly referred to as "damages for loss of bargain"19. Such damages, which are to be distinguished from damages for prior breaches of contract20, are a "substitute for performance"21 of the executory obligations under the contract that the defaulting party is no longer required to perform in specie. "[T]he liability in damages is substituted for the executory obligations to which acceptance of repudiation puts an end."22 The right to damages for loss of bargain that arises in such a case is, in this respect, no less a creature of the contract than the right to recover sums that become due before its termination. In Lep Air Services Ltd v Rolloswin 19 See, eg, Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444; [1976] HCA 21; Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; [1985] HCA 14; Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245; [1988] HCA 11; Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237; [2008] HCA 10. 20 See Dominion Coal Co Ltd v Dominion Iron and Steel Co Ltd [1909] AC 293 at 311; Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 849-850; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 48; Lombard North Central Plc v Butterworth [1987] QB 527 at 535; Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 273; Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 356. 21 One Step (Support) Ltd v Morris-Garner [2019] AC 649 at 673 [35]. 22 Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 48. Bell Investments Ltd23, Progressive Mailing House Pty Ltd v Tabali Pty Ltd24, Lord Diplock said: in a passage subsequently approved by Brennan J in "Generally speaking, the rescission of the contract puts an end to the primary obligations of the party not in default to perform any of his contractual promises which he has not already performed by the time of rescission ... The primary obligations of the party in default to perform any of the promises made by him and remaining unperformed likewise come to an end as does his right to continue to perform them. But for his primary obligations there is substituted by operation of law a secondary obligation to pay to the other party a sum of money to compensate him for the loss he has sustained as a result of the failure to perform the primary obligations. This secondary obligation is just as much an obligation arising from the contract as are the primary obligations that it replaces". Lord Diplock's analysis serves to focus attention upon the point that the terms of the contract govern the amount of compensation payable by way of damages for loss of bargain25. Even though the innocent party is no longer entitled to performance of the executory terms of the contract, the terms of the terminated contract inform the quantum of damages recoverable26: "The damages are assessed by reference to the old obligations but the old obligations no longer exist as obligations."27 As will become clear, in such a case a 23 [1973] AC 331 at 350. See also Raja's Commercial College v Gian Singh & Co Ltd [1977] AC 312 at 319; Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 848-849; Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd ("The New York Star") (1980) 144 CLR 300 at 306; [1981] 1 WLR 138 at 145; [1980] 3 All ER 257 at 262; Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana ("The Scaptrade") [1983] 2 AC 694 at 702; Litster v Forth Dry Dock & Engineering Co Ltd [1990] 1 AC 546 at 568; One Step (Support) Ltd v Morris-Garner [2019] AC 649 at 672 [34]. 24 (1985) 157 CLR 17 at 48. See also Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 254, 273; Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 341; [1995] HCA 16. 25 cf Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 at 1446; [1966] 3 All ER 26 Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 341. 27 Lep Air Services Ltd v Rolloswin Investments Ltd [1973] AC 331 at 345. Bell restitutionary claim unconstrained by the bargain made by the parties would impermissibly cut across the parties' contract. Contract and the subsidiarity of restitutionary claims Restitutionary claims must respect contractual regimes and the allocations of risk made under those regimes28. In Pavey & Matthews Pty Ltd v Paul29, in a passage cited with approval by French CJ, Crennan and Kiefel JJ in Equuscorp Pty Ltd v Haxton30, Deane J said: "The quasi-contractual obligation to pay fair and just compensation for a benefit which has been accepted will only arise in a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable. In such a case, it is the very fact that there is no genuine agreement or that the genuine agreement is frustrated, avoided or the unenforceable circumstances giving rise to) the imposition by the law of the obligation to make restitution." the occasion for (and part of that provides In Pan Ocean Shipping Co Ltd v Creditcorp Ltd ("The Trident Beauty")31, Lord Goff of Chieveley spoke to similar effect: "[A]s a general rule, the law of restitution has no part to play in the matter; the existence of the agreed regime renders the imposition by the law of a remedy in restitution both unnecessary and inappropriate." In Lumbers v W Cook Builders Pty Ltd (In liq)32, Gleeson CJ noted that the contractual arrangements in that case "effected a certain allocation of risk" 28 See Steele v Tardiani (1946) 72 CLR 386 at 402; [1946] HCA 21; Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 654-655 [45]-[48], 662-663 [77]-[79], 671 [111], 673 [122], 674 [126]; [2008] HCA 27; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 514 [26]; [2012] HCA 7. See also Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161 at 164-166; [1994] 1 All ER 470 at 473-475. 29 (1987) 162 CLR 221 at 256; [1987] HCA 5. 30 (2012) 246 CLR 498 at 529 [64]. 31 [1994] 1 WLR 161 at 164; [1994] 1 All ER 470 at 473-474. 32 (2008) 232 CLR 635. Bell and that there was "no occasion to disturb or interfere with that allocation" and "every reason to respect it"33. Gummow, Hayne, Crennan and Kiefel JJ spoke of taking "proper account" of the contractual rights and obligations that existed34, and said35: "[A]s is well apparent from this Court's decision in Steele v Tardiani36, an essential step in considering a claim in quantum meruit (or money paid) is to ask whether and how that claim fits with any particular contract the parties have made." Their Honours noted that it is essential to consider how the claim fits with contracts the parties have made because, as Lord Goff "rightly warned" in The Trident Beauty37, "serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract"38. In MacDonald Dickens & Macklin (a firm) v Costello39 in the Court of Appeal of England and Wales, Etherton LJ, with whom Pill and Patten LJJ agreed, in rejecting a restitutionary claim, said: "The general rule should be to uphold contractual arrangements by which parties have defined and allocated and, to that extent, restricted their mutual obligations, and, in so doing, have similarly allocated and circumscribed the consequences of non-performance. That general rule reflects a sound legal policy which acknowledges the parties' autonomy to configure the legal relations between them and provides certainty, and so limits disputes and litigation." 33 Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 654 [46]. 34 Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 662 [77]. 35 Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 663 [79]. 36 (1946) 72 CLR 386. 37 [1994] 1 WLR 161 at 166; [1994] 1 All ER 470 at 475. 38 Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 663 [79]. Gleeson CJ also quoted the relevant passage of Lord Goff's speech in The Trident Beauty with approval: see at 655 [47]. 39 [2012] QB 244 at 251 [23]. Bell Accrued contractual rights In circumstances where the respondent has enforceable contractual rights to money that has become due under the contract, there is no room for a right in the respondent to elect to claim a reasonable remuneration unconstrained by the contract between the parties. As Deane J explained in Pavey & Matthews, in such a case there is a "valid and enforceable agreement governing the [respondent's] right to compensation", and there is therefore "neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to pay a reasonable remuneration"40. To allow a restitutionary claim in these circumstances would be to subvert the contractual allocation of risk. As "[W]here P confers a benefit on D pursuant to a contract, the valuation of that work is a matter of contract, which ... respects the parties' valuation. Valuation is in a sense part of risk allocation: P is taking the risk of market rises and D of falls in the market. To allow P to recover anything other than the contract value – such as the objective value, the market value, or a reasonable value – would be to reallocate that risk." Damages for loss of bargain The same may be said where, as in the present case, the innocent party has an enforceable contractual right to damages for loss of bargain. The extent of the obligation to pay damages for loss of bargain, governed as it is by the terms of the terminated contract, reflects the parties' allocation of risk and rights as between each other under the contract. To allow a restitutionary remedy by way of a claim for the reasonable value of work performed unconstrained by the terms of the applicable contract would undermine the parties' bargain as to the allocation of risks and quantification of liabilities, and so undermine the abiding values of individual autonomy and freedom of contract. As Jaffey has said42: "The remedial contractual regime is continuous with the contract, giving effect to the contractual allocation of risk, but the unjust enrichment 40 (1987) 162 CLR 221 at 256. 41 Beatson, "The Temptation of Elegance: Concurrence of Restitutionary and Contractual Claims", in Swadling and Jones (eds), The Search for Principle: Essays in Honour of Lord Goff of Chieveley (1999) 143 at 151-152. 42 Jaffey, "Restitutionary Remedies in the Contractual Context" (2013) 76 Modern Law Review 429 at 438-439 (footnote omitted). Bell regime creates a striking discontinuity. It gives effect to a different allocation of risk altogether ... It seems that the contract, which was drafted to allocate risk, fails to do so. On this analysis, the availability of the restitutionary remedies undermines the freedom of the parties to determine the terms of their exchange". To put it another way, where "[a] contract is not performed as agreed, this allocation of risk is enforced only if the remedial regime properly reflects the primary relation"43. Allowing recovery of remuneration for services rendered in the amount ordered by the courts below in this case would be to allow a windfall to the respondent that is distinctly inconsistent with the respect due to the contract made by the parties as the charter whereby their commercial risks were allocated between them and their liabilities limited44. To allow a restitutionary claim would be to "subvert the default remedial regime of contract law, to which the parties, by contracting, have submitted"45, and accordingly to subvert the contractual allocation of risk. To allow a restitutionary claim for quantum meruit to displace the operation of the compensatory principle where the measure of compensation reflects contractual expectations would be inconsistent with what Gummow J described as the "gap-filling and auxiliary role of restitutionary remedies"46. Similarly, from an American perspective, that "the noncontractual remedy was originally allowed as a way to fill important gaps in contract remedies, providing compensation in damages that contract law now affords directly"47. Further, the restitutionary claim for quantum meruit cannot be supported on the basis that it is needed to prevent the defaulting party from it has been said 43 Jaffey, "Restitutionary Remedies in the Contractual Context" (2013) 76 Modern Law Review 429 at 437. 44 Compare Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 45 Havelock, "A Taxonomic Approach to Quantum Meruit" (2016) 132 Law Quarterly Review 470 at 481. 46 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 545 [75]; [2001] HCA 68. 47 Kull, "Restitution as a Remedy for Breach of Contract" (1994) 67 Southern California Law Review 1465 at 1468. Bell being unjustly enriched because "a party who is liable in damages is not unjustly enriched by a breach of contract and indeed is not enriched at all"48. Roxborough Cases like the present one, concerned with the enforcement of a claim for remuneration for work performed under a contract upon the termination of the contract for repudiation or breach, stand in marked contrast with cases of restitution such as Roxborough v Rothmans of Pall Mall Australia Ltd49. In that case, payments of money were held to be recoverable because of the failure of the basis on which the payments had been made by the payers. Roxborough was not concerned with a claim for remuneration under a contract for work and labour. More importantly, it was not a case of breach of contract on the part of the defendant where the compensatory principle of the law of contract was engaged. The restitutionary claim did not cut across the contractual charter of the parties' rights and obligations. In Roxborough, consistently with the view later taken in Lumbers, Gummow J explained that restitutionary claims, such as an action to recover moneys paid on the basis of a failure of consideration, "do not let matters lie where they would fall if the carriage of risk between the parties were left entirely within the limits of their contract"50. His Honour was at pains to explain that where a plaintiff already has "a remedy in damages ... governed by principles of compensation under which the plaintiff may recover no more than the loss sustained", allowing the plaintiff to claim "restitution in respect of any breach ... would cut across the compensatory principle" of the law of contract51. Total failure of consideration? The respondent argued that the appellants' repudiation prevented it from performing its obligations under the contract and from being remunerated accordingly. On that basis it was argued that there was a total failure of 48 Kull, "Restitution as a Remedy for Breach of Contract" (1994) 67 Southern California Law Review 1465 at 1467 (emphasis omitted). 49 (2001) 208 CLR 516. 50 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 51 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at Bell consideration which entitled the respondent to advance a restitutionary claim for quantum meruit. The respondent submitted that whether its obligation under the contract was entire or severable is immaterial, but argued that, if it mattered, the contract in question imposed an entire obligation on the respondent, so that its entitlement to progress payments was conditional upon the performance of the entire obligation. The respondent's argument, in the terms in which it was put, fails because its obligation under the contract was not an entire obligation. The contract between the parties did not impose one entire obligation on the respondent to complete the whole of the contract works in order to become entitled to the payment of an indivisible contract price. The contract provided for the making of staged payments as the work was performed. Nothing in the contract was apt to suggest that these payments were only provisional, and subject to a final taking of accounts. The respondent's obligations are properly construed as severable rather than entire. It is eloquent of the artificiality of the respondent's argument that it strains unreasonably to characterise the contract as one which would deny to the respondent any entitlement to unconditional payment unless and until the whole of the contract works were completed. The appellants' repudiation did not prevent the respondent from performing the totality of its obligations under the contract. The respondent's rights to be paid some instalments of the contract price had accrued before the contract was terminated. The respondent was entitled to be paid those instalments for that work; it was not entitled to claim greater payments by way of a restitutionary claim for quantum meruit. The respondent's rights to the bulk of progress payments had accrued at the date of the repudiation, and there could be no failure of consideration in respect of the work the subject of those accrued rights. It was suggested in the course of argument that some work was done by the respondent before the contract was terminated but for which a right to payment had not yet accrued under the contract, and that there was a total failure of consideration in respect of such work which could support a restitutionary claim for quantum meruit. Some support for this may be found in Horton v Jones [No 2]52, where Jordan CJ said: "If one party to an express contract renders to the other some but not all the services which have to be performed in order that he may be entitled to receive the remuneration stipulated for by the contract, and the other by 52 (1939) 39 SR (NSW) 305 at 319. Bell his wrongful repudiation of the contract prevents him from earning the stipulated remuneration, the former may treat the contract as at an end and then sue for a quantum meruit for the services actually rendered: Segur v Franklin53." It is evident that Jordan CJ did not advert to the tension between the rescission fallacy which informed Lodder v Slowey and the approach in McDonald. Much less was Jordan CJ offering a reconciliation of these competing approaches. It is not at all apparent that Jordan CJ accepted that the entitlement to sue for a quantum meruit "for the services actually rendered" did not apply to work for which an entitlement to payment under the contract had accrued before the contract was brought to an end. Indeed, in Segur v Franklin54, Jordan CJ expressly recognised the entitlement to sue for the services "rendered under the contract before it came to an end", evidently referring to all such services. That approach is inconsistent with the basal understanding in McDonald that accrued rights to payment under the contract are neither displaced nor enhanced by termination in future. And in any event, for present purposes, it is to be noted that Jordan CJ did not distinguish between an entitlement to a quantum meruit for all the work performed and an entitlement to payment for work performed before termination, but in respect of which a right to payment had not yet accrued under the contract. To allow a restitutionary claim for quantum meruit in respect of work done before termination, but in respect of which a right to payment has not yet accrued, on the basis of a total failure of consideration is to apply the rescission fallacy under another guise because it treats the contract as if it were unenforceable as having been avoided ab initio. If it be accepted that the better course is now to acknowledge that to allow an unconditional entitlement to payments for stages of work completed by a builder to be divested at its election in order to clear the way for the recovery of a reasonable sum for that work is so clearly inconsistent with the principle stated in McDonald that it should no longer be maintained, then the law should not allow a right of election on the part of the builder to claim a reasonable payment for work done under the contract in respect of which an unconditional entitlement to payment has not yet accrued. To recognise such rights would necessarily introduce a degree of novelty for no reason other than to preserve the vestigial operation of what is, ex hypothesi, now recognised as a fallacy. In addition, to recognise such rights would give rise to complex questions of proof and evaluation necessitated by the multi-partite 53 (1934) 34 SR (NSW) 67 at 72. 54 (1934) 34 SR (NSW) 67 at 72. Bell analysis required as a result. It is no part of the duty of the courts to complicate litigation in this way for the parties. The present case affords an example of what experience shows, that proof of an entitlement to a quantum meruit may often involve more complex questions of evidence and evaluation than an assessment of damages for loss of profit upon termination for breach. To require an evaluation of an entitlement to a quantum meruit in respect of that portion of the work performed before termination, but for which a contractual right to payment has not accrued, subject to a qualification that this entitlement should not exceed a fair value calculated in accordance with the contract price or the appropriate part of the contract price, is to commit the parties, and the tribunal obliged to make the necessary assessment, to an exercise involving an unprecedented level of uncertainty and complexity. Given the clear contemporary understanding of the effect of termination, considerations of coherence, certainty and commercial convenience provide ample reason to move on from adherence to the vestiges of what is now seen to be an unprincipled right to remuneration for work done, unconstrained by the terms of the contract. The question which must now be addressed is whether Lodder v Slowey should continue to be applied notwithstanding its reliance on the rescission fallacy. Should Lodder v Slowey continue to be applied? Considerations of principle The respondent sought to sustain the judgment in its favour on the basis that repudiation is a distinctive kind of breach of contract, which has distinctive remedial consequences. It was said that the appellants did not merely depart from the terms of the contract but manifested an intention no longer to be bound by the contract, and that they could not now approbate and reprobate by insisting on adherence to the very contract they repudiated. It was said that where a builder accepts a repudiation by the owners and terminates the contract, it is by definition no longer possible for the builder to complete the promised contractual performance, nor to receive from the owners the contractual performance promised by them. It was said that the law has rightly recognised the availability of a restitutionary claim for quantum meruit in such circumstances. Bell These submissions echo the observations of Meagher JA in Renard Constructions (ME) Pty Ltd v Minister for Public Works55 that it would be anomalous: "that a figure arrived at on a quantum meruit might exceed, or even far exceed, the profit which would have been made if the contract had been fully performed ... only ... if there were some rule of law that the the greatest possible remuneration arrived at contractually was remuneration available, or that it was a reasonable remuneration for all work requiring to be performed". Meagher JA, after observing that there is no such rule, went on to say that56: "it would be extremely anomalous if the defaulting party when sued on a quantum meruit could invoke the contract which he has repudiated in order to impose a ceiling on amounts otherwise recoverable". With respect, the observations of Meagher JA, while avowedly of a piece with the rescission fallacy itself57, do not afford a satisfactory justification in point of principle for continuing to adhere to it. These observations, and the view urged by the respondent, fail to acknowledge that it is precisely because the parties have agreed upon the contract price for the performance of work that it is to be regarded as "the greatest possible remuneration" for the work agreed to be performed. Absent adherence to the rescission fallacy, there is nothing "anomalous" in a defaulting party enjoying the protection of the contract's ceiling on the amounts recoverable by way of damages. That each party is freed from further performance of its primary obligations is no reason why the innocent party should be entitled to enforce a remedy which has no relationship to the expectations embodied in those primary obligations. It is a matter of public policy that under the law of contract a defaulting party is not to be punished for 55 (1992) 26 NSWLR 234 at 277-278. 56 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 278. 57 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 277. Bell its breach58. As Lord Hoffmann said in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd59: "[T]he purpose of the law of contract is not to punish wrongdoing but to satisfy the expectations of the party entitled to performance." And that is so even if the breach was deliberate or self-interested. In Butler v Fairclough60, in a passage later adopted by Gleeson CJ, McHugh, Gummow and Hayne JJ in Gray v Motor Accident Commission61, Griffith CJ said: "The motive or state of mind of a person who is guilty of a breach of contract is not relevant to the question of damages for the breach, although if the contract itself were fraudulent the question of fraud might be material. A breach of contract may be innocent, even accidental or unconscious. Or it may arise from a wrong view of the obligations created by the contract. Or it may be wilful, and even malicious and committed with the express intention of injuring the other party. But the measure of damages is not affected by any such considerations." In One Step (Support) Ltd v Morris-Garner62, Lord Reed, with whom Baroness Hale of Richmond, Lord Wilson and Lord Carnwath agreed, said: "The courts will not prevent self-interested breaches of contract where the interests of the innocent party can be adequately protected by an award of damages. Nor will the courts award damages designed to deprive the contract breaker of any profit he may have made as a consequence of his failure in performance. Their function is confined to enforcing either the primary obligation to perform, or the contract breaker's secondary obligation to pay damages as a substitute for performance ... The damages awarded cannot therefore be affected by whether the breach was deliberate or self-interested." 58 See, eg, Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 at 544-545 [21]-[22], 577-578 [155]-[156], 605-607 [253]-[256]; [2016] HCA 28. See also Addis v Gramophone Co Ltd [1909] AC 488 at 494; Johnson v Unisys Ltd [2003] 1 AC 518 at 530 [15]; Priebe & Sons Inc v United States (1947) 332 US 407 at 417-418. 59 [1998] AC 1 at 15. 60 (1917) 23 CLR 78 at 89; [1917] HCA 9 (citation omitted). 61 (1998) 196 CLR 1 at 6-7 [13]; [1998] HCA 70. 62 [2019] AC 649 at 673 [35]. Bell Finally, it is a rhetorical distraction to argue that the defaulting party may not "approbate and reprobate" the contract. The principle in McDonald does not permit a defaulting party to approbate as well as reprobate the contract. Rather, the principle states the consequences for the parties where the innocent party elects to terminate the contract in response to the conduct of the defaulting party. That those consequences do not include an enhancement of the innocent party's rights or punishment of the defaulting party does not mean that the defaulting party may repudiate the contract while also claiming its benefit. Rather, it means that termination for repudiation or breach is not an occasion for obtaining a windfall or inflicting a punishment. The older authorities The respondent submitted that the historical roots of its claim are very deep. It called in aid Planché v Colburn63, De Bernardy v Harding64 and Prickett v Badger65 as support for the decision in Lodder v Slowey. The older cases referred to by the respondent do not afford strong support for Lodder v Slowey. In Planché, the Court upheld an award of damages by the jury. The reasoning upon which the Court proceeded is not pellucidly clear and may depend upon a "nineteenth century distinction between 'discharged' and 'rescinded' contracts [that] no longer forms part of the law governing breach of contract"66. What is clear is that nothing in the decision in Planché offers support for the notion that a plaintiff may elect between damages for loss of bargain under the contract and a restitutionary claim for quantum meruit67. In De Bernardy, in the judgment of Alderson B, one finds what may be an early statement of the rescission fallacy. His Lordship said68: 63 (1831) 8 Bing 14 [131 ER 305]. 64 (1853) 8 Exch 822 [155 ER 1586]. 65 (1856) 1 CB (NS) 296 [140 ER 123]. 66 Mitchell and Mitchell, "Planché v Colburn (1831)", in Mitchell and Mitchell (eds), Landmark Cases in the Law of Restitution (2006) 65 at 91. 67 See Havelock, "A Taxonomic Approach to Quantum Meruit" (2016) 132 Law Quarterly Review 470 at 480. 68 De Bernardy v Harding (1853) 8 Exch 822 at 824 [155 ER 1586 at 1587]. Bell "Where one party has absolutely refused to perform, or has rendered himself incapable of performing, his part of the contract, he puts it in the power of the other party either to sue for a breach of it, or to rescind the contract and sue on a quantum meruit for the work actually done." Pollock CB took the somewhat different view that69: "It was a question for the jury, whether, under the circumstances, the original contract was not abandoned, and whether there was not an implied understanding between the parties that the plaintiff should be paid for the work actually done as upon a quantum meruit." It may be that Pollock CB is to be understood on the basis that the original contract was "closed" by abandonment and the making of a new contract entirely to replace the old. Unhelpfully, Platt B "concurred", apparently with both Pollock CB and Alderson B70. In Prickett, Williams and Crowder JJ each purported to follow Planché and De Bernardy. Willes J said71: "The plaintiff would have been entitled to receive the commission agreed on, if the defendant's conduct had not prevented his earning it. I must confess I do not see why the jury should not have given him the full amount." It would appear that Willes J concluded that the plaintiff had done all that was required under the contract to earn the commission provided by the contract. These older authorities are not so clear or consistent as to afford compelling support for the original adoption of the rescission fallacy. Much less do they support its continued application in the light of the contemporary appreciation of its inconsistency with basal principle. An "open" contract The respondent also argued that the critical point in cases of termination for repudiation is that a claim for quantum meruit is available because there is no 69 De Bernardy v Harding (1853) 8 Exch 822 at 824 [155 ER 1586 at 1587]. 70 De Bernardy v Harding (1853) 8 Exch 822 at 824 [155 ER 1586 at 1587]. 71 Prickett v Badger (1856) 1 CB (NS) 296 at 308 [140 ER 123 at 128]. Bell longer an "open" contract between the parties. This argument proceeds on a misunderstanding of what is meant by an "open" contract. The reference in the authorities to an "open contract" is a reference to a contract that has not been rescinded ab initio and so remains enforceable. In this regard, the reference to an "open" contract in argument in Prickett72 was to a contract that was "unperformed", as distinct from what was described by Deane J in Pavey & Matthews73 as "a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable". When, in Steele v Tardiani74, Dixon J, with whom McTiernan J agreed, said that the fact of a contract being "open and, to that extent, unperformed, excludes any implied obligation ... to pay a fair and reasonable remuneration for the work done", his Honour was referring to a contract which, though unperformed, remains enforceable. The author of the classic passage in McDonald, when speaking of an "open" contract in Steele v Tardiani, could only have been referring to a contract that was enforceable, whether by an action for damages or otherwise75. Summary Lodder v Slowey should no longer be applied. When this Court in McDonald rejected the notion that termination of a contract upon acceptance of a repudiation has the effect of rescinding the contract ab initio, it removed the "reason" or "foundation"76 of the holding in Lodder v Slowey. Subsequent decisions have "disclosed weakness in the reasoning"77 of 72 (1856) 1 CB (NS) 296 at 302 [140 ER 123 at 125]. 73 (1987) 162 CLR 221 at 256. 74 (1946) 72 CLR 386 at 402. 75 See, eg, Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 at 364-365, part of which was cited by Dixon J in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 477. 76 PGA v The Queen (2012) 245 CLR 355 at 373 [30]; [2012] HCA 21. See also Lissenden v C A V Bosch Ltd [1940] AC 412 at 426. 77 West Ham Union v Edmonton Union [1908] AC 1 at 5, adopted in Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626 at 677-678; [1986] HCA 34. Bell Lodder v Slowey, and that decision is "no longer really consistent with the course of judicial decision"78 in this country. It having become evident "that an error of principle has occurred by judicial decision", and in circumstances where it is not necessary to overrule any past decision of this Court to do so, "the error should be corrected judicially"79. Lodder v Slowey has come to be recognised as "no more than a legal fiction"; as such it is "not to be maintained"80. Especially in a context such as the present, "it is of great importance that these principles should be correctly defined, for, if not, there is a danger that the error may spread in other directions, and a portion of our law be erected on a false foundation"81. In any given case, there may be considerations that militate against exercising the power to overrule a longstanding decision. It is "impossible to lay down precise rules according to which this power will be exercised"82. In Ross Smith v Ross Smith83, Lord Reid acknowledged that it would have been a compelling consideration that it "could reasonably be supposed that anyone has regulated his affairs in reliance on its validity, but it would be fantastic to suppose that anyone has ... entered into any kind of transaction, on the faith of" the longstanding decision. The same may be said in relation to Lodder v Slowey, the fallacious reasoning of which may give rise to serious mischief. It may be that some builders actually set the prices at which they bid for work on the expectation that they will be astute to take advantage of an opportunity to elect for a more generous level of remuneration in due course. If that is the case, any such expectation is distinctly not to be encouraged. Honesty and efficiency in trade and commerce are not promoted by a rule that allows the recovery of a windfall by a party who has extracted itself from a losing contract, from which, 78 PGA v The Queen (2012) 245 CLR 355 at 371 [24]. 79 Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 132 CLR 323 at 334; [1975] HCA 23. See also West Ham Union v Edmonton Union [1908] AC 1 at 5; Bourne v Keane [1919] AC 815 at 830. 80 PGA v The Queen (2012) 245 CLR 355 at 373 [30]. 81 Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 82 Admiralty Commissioners v Valverda (Owners) [1938] AC 173 at 194. 83 [1963] AC 280 at 303. See also Bourne v Keane [1919] AC 815 at 874. Bell acting rationally, it would pay to be released. In GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd84, Finn J observed that: "It ... has long been recognised that 'it is difficult to see why breach, which saves the plaintiff further loss, should be grounds for recovery of a greater sum [than the contract price]': Dobbs, Law of Remedies, vol 3, §12.7(5) ... As is said in Mason and Carter, Restitution Law in Australia at [1430]: 'There is ... little to be said in principle or policy for a rule which provides a clear incentive to manufacture or snatch at repudiation as a means of escaping a bad bargain.'" Conclusion and orders It may be that in some cases justice will not be done without a restitutionary claim. Different considerations may apply in cases where advance payments are sought to be recovered by restitutionary claims for money paid, although it may be that the law of contract adequately provides for such cases85. "There will generally be no need to have recourse to a remedy in restitution" where a claim in contract is available86. In the present case, there is no good reason to consider that damages for breach of contract would fail to meet the justice of the case such that a restitutionary claim for quantum meruit should be available. It is not necessary to consider the position in other contexts or with respect to other restitutionary claims as the present case is concerned only with a claim for remuneration for work and labour done under a contract terminated for repudiation or breach. The appeal should be allowed. Orders 1, 2 and 3 of the Court of Appeal should be set aside. In their place, it should be ordered that the application for leave to appeal be granted; the appeal to the Court of Appeal be allowed with costs; orders 2 to 5 of the primary judge be set aside and, in their place, it be ordered that the appeal to the primary judge be allowed with costs; the decision of the Victorian Civil and Administrative Tribunal be set aside; and the matter be remitted to the Tribunal for further determination according to law. The respondent should pay the appellants' costs of and incidental to the appeal to this Court. 84 (2003) 128 FCR 1 at 157-158 [662]. 85 See McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 477-478. 86 Goss v Chilcott [1996] AC 788 at 797. Nettle, Gordon and Edelman JJ describe the nature and history of this long-running dispute between the appellant Owners and the respondent Builder. I adopt their abbreviations. As their Honours explain, the Builder's claim to recover by way of restitution a sum of money representing the value of work done by the Builder for the benefit of the Owners before the Contract was terminated upon the Builder's acceptance of the Owners' repudiation covered work within three distinct categories: (1) work done by the Builder in respect of variations to the plans and specifications set out in the Contract which were asked for by the Owners; (2) work done by the Builder in respect of the plans and specifications set out in the Contract for which the Builder had accrued a contractual right to payment under the Contract at the time of its termination; and (3) work done by the Builder in respect of the plans and specifications set out in the Contract for which the Builder had not yet accrued any contractual right to payment under the Contract at the time of its termination. Section 38 of the DBC Act governs recovery by the Builder for work done within category (1). I agree with the construction of s 38 arrived at by Nettle, Gordon and Edelman JJ and I agree with the substance of their Honours' reasons for arriving at that construction. Construed within the context of the DBC Act as a whole, the limited statutory entitlement conferred by that section exhibits a sufficient legislative intention to exclude recovery at common law87. The intention is manifest in the express terms of s 38(6), if the conditions in s 38(6) are not met, and appears by necessary implication from the measure of the entitlement set out in s 38(7), if the conditions in s 38(6) are met. The combined effect is that recovery at common law is in all circumstances excluded and that the Builder is limited to recovery under s 38(7) if, but only if, the conditions in s 38(6) are met. The common law governs recovery by the Builder for work done within categories (2) and (3). Recovery for work done within each of these categories is limited by the common law principles that govern imposition of an obligation to 87 cf Comptroller-General of Customs v Kawasaki Motors Pty Ltd [No 2] (1991) 32 FCR 243 at 258; Chippendale Printing Co Pty Ltd v Commissioner of Taxation (1996) 62 FCR 347 at 366-369. pay by way of restitution a sum of money representing the value of work, enforceable by an action that can be described following Pavey & Matthews Pty Ltd v Paul88 as a non-contractual quantum meruit. The correct outcome in relation to work done within category (2) is that a non-contractual quantum meruit is not available to the Builder. In my opinion, the preferable outcome in relation to work done within category (3) is that a non-contractual quantum meruit is available to the Builder. Although those conclusions accord with the conclusions reached by Nettle, Gordon and Edelman JJ, I reach them by a narrower path of reasoning. Category (2): work for which the Builder has accrued a contractual right to payment There can be no doubt about the outcome in relation to work done within category (2). The result of the Builder's acceptance of the Owners' repudiation is that the Builder still has in respect of that work the same accrued contractual right to payment under the Contract as the Builder had up until the time of termination of the Contract89. The Builder can enforce that accrued contractual right in a common law action in debt90. The continuing existence of a contractual right to payment, enforceable by an action in debt, leaves no room to recover payment by another action in debt on a non-contractual quantum meruit. Times past, any such action would need to have proceeded on the fiction of an implied contractual promise on the part of the Owners to pay for an executed consideration by the Builder. Then, it would have been enough to say that a contract would not be implied to the extent that the rights of the parties were governed by an express or "special" contract91. Now, it is sufficient to point out that, through the contractual creation of the debt, the Builder has received from the Owners exactly what the Builder agreed with the Owners that the Builder would receive for having done the work. The continuing existence of the enforceable contractual obligation to pay for the work means that there is "neither occasion nor legal justification for the law to 88 (1987) 162 CLR 221 at 256-257; [1987] HCA 5. 89 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476-477; [1933] HCA 25; Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 379-380; [1936] HCA 6; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 at 155 [651]. 90 Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 567, 569; [1956] HCA 51. 91 Summers v The Commonwealth (1918) 25 CLR 144 at 153; [1918] HCA 33. superimpose or impute" a different, non-contractual obligation on the part of the Owners to pay for the work92. The more general point is that "[n]o action can be brought for restitution while an inconsistent contractual promise subsists between the parties in relation to the subject matter of the claim"93. The continuing application of the regime of rights and obligations set out in the Contract to govern the mutual rights and obligations of the parties in respect of payment for the work has the result that the law of restitution simply "has no part to play in the matter"94. Category (3): work for which the Builder has not accrued a contractual right to payment More difficulty attends the outcome in relation to work done within category (3). Determining the outcome requires this Court to make a choice. Should the Builder be restricted in respect of that work to enforcing the Builder's undoubted entitlement to recover damages for loss occasioned to the Builder in consequence of the termination of the Contract? Or should the Builder be able to elect to recover instead an amount representing the value of the work by way of restitution on a non-contractual quantum meruit? No decision of this Court is directly in point. Statements made by three members of the Court in Automatic Fire Sprinklers Pty Ltd v Watson95, concerning whether a wrongfully dismissed employee is entitled to recover the value of services rendered or is confined to unliquidated damages for breach of the contract of employment, might be thought to point in both directions. The statements were unnecessary to the decision in that case. Restricting the Builder to recovering damages for breach of contract has the support of some statements made in the House of Lords in Ranger v Great Western Railway Co96 and of a formidable body of recent academic and professional writing97. Allowing the Builder to elect to recover an amount 92 Pavey (1987) 162 CLR 221 at 256. 93 Trimis v Mina (1999) 16 BCL 288 at 296 [54], quoted in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 at 156 [655]. 94 Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161 at 164; [1994] 1 All ER 470 at 474. 95 (1946) 72 CLR 435 at 450, 462, 465; [1946] HCA 25. 96 (1854) 5 HLC 72 at 96, 118 [10 ER 824 at 834, 843]. 97 eg, Dennys and Clay, Hudson's Building and Engineering Contracts, 13th ed (2015) at 926-927 [8-019]; Mason, Carter and Tolhurst, Mason & Carter's (Footnote continues on next page) representing the value of the work by way of restitution on a non-contractual quantum meruit accords with the received understanding of the common law in Australia as repeatedly accepted in intermediate courts of appeal over the last three decades98. It also accords with the predominant approach of courts in the United States99. The source of the received understanding in Australia can be traced on one line of descent back through the Privy Council's endorsement in Lodder v Slowey100 of the decision of the New Zealand Court of Appeal under appeal in that case101 to a series of scantily reported English cases towards the middle of the nineteenth century which began with Planché v Colburn102. Examination of Planché v Colburn does not readily reveal a principled explanation for the doctrine it spawned103. The Privy Council's decision in Lodder v Slowey is devoid of reasoning. The decision of the New Zealand Court of Appeal under appeal in that case appears to have proceeded on the notion that Restitution Law in Australia, 3rd ed (2016) at 484-487 [1168], 592-593 [1408], 609-611 [1430]; Furst and Ramsey, Keating on Construction Contracts, 10th ed (2016) at 282-284 [9-058]-[9-063]; Havelock, "A Taxonomic Approach to Quantum Meruit" (2016) 132 Law Quarterly Review 470 at 480-482; Jackman, The Varieties of Restitution, 2nd ed (2017) at 89-90, 116-121; Carter, Contract Law in Australia, 7th ed (2018) at 920-921 [38-39]. 98 eg, Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350; Legal Services Commissioner v Baker [No 2] [2006] 2 Qd R 249; Sopov v Kane Constructions Pty Ltd [No 2] (2009) 24 VR 510. 99 eg, Boomer v Muir (1933) 24 P 2d 570; United States v Zara Contracting Co Inc (1944) 146 F 2d 606; Loomis v Imperial Motors Inc (1964) 396 P 2d 467; Paul Hardeman Inc v Arkansas Power & Light Co (1974) 380 F Supp 298; Murdock- Bryant Construction Inc v Pearson (1984) 703 P 2d 1206. 101 Slowey v Lodder (1901) 20 NZLR 321 at 358. 102 (1831) 8 Bing 14 [131 ER 305]. See De Bernardy v Harding (1853) 8 Exch 822 [155 ER 1586]; Prickett v Badger (1856) 1 CB (NS) 296 [140 ER 123]; Inchbald v The Western Neilgherry Coffee, Tea, and Cinchona Plantation Co (Ltd) (1864) 17 CB (NS) 733 [144 ER 293]; Appleby v Myers (1867) LR 2 CP 651. 103 See Mitchell and Mitchell, "Planché v Colburn (1831)", in Mitchell and Mitchell (eds), Landmark Cases in the Law of Restitution (2006) 65. termination of a contract by acceptance of a repudiation operated to "rescind" the contract in the sense of avoiding the legal operation of the contract for the past as well as for the future104. Adherence to that notion accords with the explanation of Planché v Colburn and its progeny in the notes to the same 1868 edition of Bullen and Leake's Precedents of Pleadings105 as was referred to in Roxborough v Rothmans of Pall Mall Australia Ltd106. The notion was subsequently authoritatively rejected in McDonald v Dennys Lascelles Ltd107. There are, however, two characteristically scholarly and concise judgments of Jordan CJ, delivered shortly after McDonald v Dennys Lascelles Ltd and without reference to Lodder v Slowey, which provide a different and more satisfying justification for the received understanding. In Segur v Franklin108, Jordan CJ noted with reference to McDonald v Dennys Lascelles Ltd that it was then "clearly settled that if one party to a contract repudiates his liabilities under it, the other party may treat such repudiation as an invitation to him to regard himself as discharged from the further performance of the contract". The consequence, he noted, was that the other party "may accept this invitation and treat the contract as at an end, except for the purposes of an action for damages for breach of contract ... or", he added, "in a proper case, an action for a quantum meruit"109. Jordan CJ went on to explain110: "Where a wrongful repudiation has the effect of preventing the other party from becoming entitled to receive remuneration for services already rendered, which remuneration, according to the terms of the contract, he is entitled to receive only if the contract is wholly carried into effect, the innocent party, who has elected to treat the contract as at an end may, instead of suing for damages, maintain an action to recover a quantum meruit for the services which he has rendered under the contract before it came to an end. Such an action is not regarded as an action for an unliquidated claim, but an action for a debt or liquidated demand". 104 Slowey v Lodder (1901) 20 NZLR 321 at 356-358. 105 Bullen and Leake, Precedents of Pleadings in Personal Actions in The Superior Courts of Common Law, 3rd ed (1868) at 37. 106 (2001) 208 CLR 516 at 524-525 [14]; [2001] HCA 68. 107 (1933) 48 CLR 457 at 476-477. 108 (1934) 34 SR (NSW) 67 at 72. 109 (1934) 34 SR (NSW) 67 at 72. 110 (1934) 34 SR (NSW) 67 at 72. Returning to the topic in Horton v Jones [No 2]111, Jordan CJ re-emphasised that "[a] claim to a quantum meruit is in the theory of the law a liquidated claim; and the claimant, if he is successful, is entitled to recover the amount at which he has assessed his claim, unless the jury reduces it". That is an important statement about the nature of the common law action, to which I will return. Jordan CJ added that there were circumstances in which an action for a quantum meruit would lie "[w]here there is or has been an express contract between the parties". He instanced112, with reference to Segur v Franklin: "If one party to an express contract renders to the other some but not all the services which have to be performed in order that he may be entitled to receive the remuneration stipulated for by the contract, and the other by his wrongful repudiation of the contract prevents him from earning the stipulated remuneration, the former may treat the contract as at an end and then sue for a quantum meruit for the services actually rendered". Jordan CJ's explanation of the basis for a claim on a quantum meruit for the value of services rendered by the innocent party proceeded expressly on the modern understanding, settled in McDonald v Dennys Lascelles Ltd, that termination of a contract on acceptance of repudiation operates only for the future. Unlike the reasoning of the New Zealand Court of Appeal in the decision upheld in Lodder v Slowey, the reasoning of Jordan CJ did not proceed on the notion that acceptance of repudiation operates to render a contract void from the beginning. The notion had been discarded then, as it remains discarded now. The explanation given by Jordan CJ in Segur v Franklin and in Horton v Jones [No 2] proceeded on the same conception of the nature of a non- contractual quantum meruit as was implicit in his Honour's reasons for judgment in Horton v Jones113. In an exposition of the common law pivotal to the reasoning of Deane J in Pavey114, Jordan CJ in Horton v Jones characterised a non-contractual quantum meruit for services rendered as "an action of debt" to enforce an obligation, imposed by law independently of any genuine agreement between the parties, to pay "reasonable remuneration for the executed consideration"115. 111 (1939) 39 SR (NSW) 305 at 317. 112 (1939) 39 SR (NSW) 305 at 319. 113 (1934) 34 SR (NSW) 359. 114 (1987) 162 CLR 221 at 250-251. 115 (1934) 34 SR (NSW) 359 at 367. Within the explanation in Segur v Franklin and Horton v Jones [No 2], in my opinion, are reasons consistent with Pavey's recognition of "unjust enrichment" as a "unifying" (as distinct from "universal" or "all-embracing"116) legal concept as to why the common law should recognise a right to restitution in the particular category of case117. Within the same explanation, in my opinion, is also guidance as to what the proper measure of restitution in that category of case should be118. For reasons that will become apparent, I am unable to answer the ultimate question, of whether the common law of Australia should continue to recognise a right to restitution in this category of case, without also determining the proper measure of restitution. The starting point is to appreciate that the category of case is one in which it is the "very fact" that a contract becomes unenforceable that "provides the occasion for (and part of the circumstances giving rise to) the imposition by the law of the obligation to make restitution"119. The innocent party has rendered services in part performance of the totality of the services necessary to be performed in order for the innocent party to accrue a contractual entitlement to payment in the future. Termination of the contract, consequent upon acceptance by the innocent party of its repudiation by the defaulting party, supervenes. The result is that "as on the one side no further acts of performance can be required, so, on the other side, no liability can be brought into existence [since] it depends upon a further act of performance"120. Through acceptance of the wrongful repudiation of the defaulting party, the innocent party is thereby in the present position of having rendered services in part performance of the contract for which that party has not accrued and cannot accrue a contractual entitlement to be paid. The defaulting party is correspondingly in the present position of having had the benefit of the services rendered in part performance of the contract for which that party has not incurred and will not incur any contractual obligation to pay. To recognise the "unjustness" of the defaulting party having had the benefit of the services rendered by the innocent party in part performance of the 116 See Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560 at 595 [74], 615 [130], 617 [136], 618-619 [139]-[141]; [2014] HCA 14. 117 Pavey (1987) 162 CLR 221 at 256-257. 118 Pavey (1987) 162 CLR 221 at 256-257. 119 Pavey (1987) 162 CLR 221 at 256. 120 Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 380. contract in a case of a default amounting to a wrongful repudiation, I do not think it necessary to analogise to any other category of case. Nor do I think it appropriate to attempt to discern and apply some other all-embracing criterion of liability in the common law of restitution. By preferring to maintain a narrow focus, I am adhering to the standard common law judicial technique of deciding no more than what needs to be decided. A submission of the Builder causes me to divert from that narrow focus if only to explain why I choose to maintain it. The submission is to the effect that the justification for the common law to continue to recognise a right to restitution in the particular category of case is now sufficiently to be found in the application of the concept of "failure of basis". The concept of "total failure of consideration", renamed as "failure of basis", was invoked in novel circumstances to explain the imposition of an obligation to repay money that had been paid in Roxborough121 and to explain the imposition of an obligation to pay for services that had been rendered in Barnes v Eastenders Cash & Carry Plc122. Undoubtedly, the concept can help to explain the imposition of obligations to make restitution across a range of established categories of case. The present category is one in which the concept has some explanatory power123. One party has rendered services, from which the other has benefited, on a "basis" that "has failed to sustain itself" in the events that have occurred. That is to isolate an important part of the story. But it is not to tell the whole story. The other important parts that need to be told are that the services were rendered pursuant to a valid contract which the defaulting party has wrongfully repudiated and which the innocent party has terminated so as to result in the innocent party failing to accrue a right to payment for the services under the contract yet having an entitlement to claim damages from the defaulting party for non-completion of the contract. Useful as the concept of total failure of consideration or failure of basis can be, it is important not to surrender to that one concept the hegemonic status steadfastly denied to the concept of unjust enrichment124. The common law method, as Sir Frederick Jordan himself observed extra-judicially, has never 121 (2001) 208 CLR 516 at 524-529 [14]-[24], 555-558 [101]-[109], 589 [199]. 122 [2015] AC 1 at 41-44 [103]-[115]. 123 cf Beatson, "The Temptation of Elegance: Concurrence of Restitutionary and Contractual Claims", in Swadling and Jones (eds), The Search for Principle: Essays in Honour of Lord Goff of Chieveley (1999) 143 at 148-149. 124 cf Roxborough (2001) 208 CLR 516 at 543-544 [71]-[73]; Barnes v Eastenders Cash & Carry Plc [2015] AC 1 at 41 [102], 43 [113]. purported to be one in which the determination of a particular case has been deduced from supposed "fundamental principles of justice". The general principles of the common law are, in his language, "built up" from the "collation of decided cases"125. They are monitored by reference to how well they fit within the wider body of the law and how well they work in practice; where problems are revealed, they can be revised or even abandoned at the appropriate level within the judicial hierarchy. Bearing constantly in mind the adage that the life of the common law has been not logic but experience126, there is a need to resist the temptation to intellectual gratification that accompanies any quest to portray cases in which the common law recognises an obligation of restitution as the conscious or unconscious application of one Very Big Idea. The need is to avoid the pitfalls of overgeneralisation127, just as it is to ensure that considerations that are practically important but theoretically inconvenient are not overlooked or underappreciated. In the common law of restitution, as in the common law of tort, particular categories of case give rise to their own particular sorts of problem. Once properly identified, the problems that arise in any particular category "will then become the focus of attention in a judicial evaluation of the factors which tend for or against a conclusion, to be arrived at as a matter of principle"128. That is what needs to happen here. The various categories of case in which money paid under a contract might or might not be recovered on the ground of a total failure of consideration or failure of basis having resulted from the termination of the contract, upon acceptance of a repudiation129 or upon the happening of a frustrating event130, raise their own problems. So too does the more difficult category of case where it is the defaulting party who seeks to recover the value of 125 Jordan, Appreciations (1950) at 58-59. 126 Holmes, The Common Law (1881) at 1. 127 See Smith, "Restitution: A New Start?", in Devonshire and Havelock (eds), The Impact of Equity and Restitution in Commerce (2019) 91 at 95-96. 128 Sullivan v Moody (2001) 207 CLR 562 at 580 [50]; [2001] HCA 59. 129 eg, Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 350-354; [1993] HCA 4, discussing, amongst other cases, McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 477 and Dies v British and International Mining and Finance Corporation 130 eg, Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC services rendered to the innocent party131. For present purposes, all of them can be put to one side. The critical question in the present category of case is why the common law should not treat the innocent party as adequately remunerated for the services rendered to the defaulting party by having an entitlement to maintain an action for damages for breach of the contract in part performance of which the innocent party rendered those services. Accentuating that question is the common law's belated recognition of the availability to the innocent party of damages measured by reference to the loss attributable to the innocent party's reliance on the contract132. Indeed, a plausible explanation of Planché v Colburn and its nineteenth century progeny is that most if not all were cases in which the party who had rendered services before the other's repudiation was in substance compensated in damages measured by reference to his or her reliance loss133. My view is that the answer to that critical question cannot lie in the notion of the contracting parties having arrived at a contractual "allocation of risk", which the common law of restitution will not disturb134. Contracting parties are, of course, at liberty to determine by contract the "secondary" obligations, which are to arise in the event of breach or termination of the "primary" obligations they have chosen to bind them135. Even where the parties have not so determined, it may for some purposes be appropriate to describe obligations that the common law imposes to pay damages for breach of contract as "secondary" obligations which, in the event of termination by acceptance of a repudiation, are "substituted" for the primary obligations136. However, it would be artificial as a matter of commercial practice and wrong as a matter of legal theory to conceive 131 eg, Sumpter v Hedges [1898] 1 QB 673, discussed in Steele v Tardiani (1946) 72 CLR 386 at 403; [1946] HCA 21; Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 656 [51]-[52]; [2008] HCA 27. See also McFarlane and Stevens, "In Defence of Sumpter v Hedges" (2002) 118 Law Quarterly Review 569. 132 The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 133 Kull, "Restitution as a Remedy for Breach of Contract" (1994) 67 Southern California Law Review 1465 at 1489, referring to Fuller and Perdue, "The Reliance Interest in Contract Damages: 2" (1937) 46 Yale Law Journal 373 at 394. See also Tridant Engineering Co Ltd v Mansion Holdings Ltd [2000] HKCFI 1 at 107. 134 cf Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 663 [79]. 135 Moschi v Lep Air Services Ltd [1973] AC 331 at 350. 136 Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 849. of contracting parties who have not addressed the consequences of termination in the express or implied terms of their contract as having contracted to limit themselves to the contractual remedy of damages in that event. Parties contract against the background of the gamut of remedies that the legal system makes available to them. The common law gives to them the benefit, and saddles them with the detriment, of what they expressly or impliedly agree in their contract. Outside the scope of what they agree in their contract, the common law gives to them what the common law itself allows them to get. Nor can I see that the answer is to be found in the notion that overlapping remedies in contract and in restitution are in some way anomalous. Tidiness has never been a feature of a common law system. Overlapping remedies available at the option of an innocent party against another party who is in contractual default are commonplace. Remedies at common law can overlap with those in equity. At common law, causes of action in contract can overlap with causes of action in tort, and the potential for a cause of action in restitution to overlap with a cause of action in damages for breach of contract was recognised in Baltic Shipping Co v Dillon137. Rather, I consider that answering the critical question needs to be informed by a weighing of the practical consequences of continuing to allow an innocent party to maintain a non-contractual quantum meruit as an alternative to an action for unliquidated damages for breach of contract. To those consequences I now turn. One practical consequence which flows from a non-contractual quantum meruit being "in the theory of the law" an action for a debt is that the action can have significant procedural advantages to an innocent party over an action for damages for breach of contract under procedural rules in Australian courts138. Typically, those advantages include a capacity to obtain default judgment139. More importantly, a non-contractual quantum meruit has the advantage that proof of the value of services rendered is almost invariably more straightforward than proof of contractual loss. Questions of causation and remoteness play no part. The availability of the action allows the innocent party 137 (1993) 176 CLR 344 at 355. 138 See generally Mason, Carter and Tolhurst, Mason & Carter's Restitution Law in Australia, 3rd ed (2016) at 1025 [2922]. 139 eg, Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 21.03(1)(a); City Mutual Life Assurance Society Ltd v Giannarelli [1977] VR 463 at 468. See also Alexander v Ajax Insurance Co Ltd [1956] VLR 436 at 445; Edwards v Australian Securities and Investments Commission (2009) 264 ALR 723 at 739-740 [81]-[87]. to choose to adopt the course of quickly and cheaply obtaining judgment for an easily quantifiable liquidated amount instead of embarking on a long and more expensive and more uncertain pursuit of a potentially larger judgment for unliquidated damages. Choice by the innocent party to adopt that course has the flow-on systemic advantage of shortening trial and pre-trial processes. The practical considerations are not all one way. Against permitting recovery on an action for a non-contractual quantum meruit for the value of services rendered under the contract is the prospect of a party recovering more as a result of termination of the contract than would have been due to that party had the contract been performed. If the value of the services rendered is to be determined independently of the contract, as the common law of Australia as declared by intermediate courts of appeal currently stands, recovery in excess of the contract price has the real potential to occur in two main scenarios. One is where the contract has turned out to be under-priced, with the result that the party faces the prospect of making a loss by going on to complete performance. The other is where the contract has been structured to allocate a higher proportion of the overall contract price to work performed at earlier stages for which the party has already accrued a contractual right to payment140. With the potential to recover more from termination than from completion comes the incentive to terminate: to search out and seize upon conduct able to be characterised as a repudiation with a view to making more out of engaging in the ensuing litigation than is available to be made out of completing the contract. Compounding the incentive for one contracting party to find conduct amounting to repudiation is a corresponding incentive for the counter-party to do whatever can be done to avoid it. The result "is to invert the normal interest of such a party regarding the other's contractual performance"141: "While the performing party's objective is to provoke a default, the recipient's goal is to safeguard a favorable bargain – avoiding the risk of default by excessive precautions and 'overperformance.' It is difficult to think of a clearer incentive to inefficiency in the contractual relation." The function of a common law remedy is to remediate an innocent party, not to penalise a defaulting party, and not to distort the incentive of either party to perform the contract. The policy of the common law demands that the problem of distorted contractual incentives be addressed. 140 Dennys and Clay, Hudson's Building and Engineering Contracts, 13th ed (2015) at 141 Kull, "Restitution as a Remedy for Breach of Contract" (1994) 67 Southern California Law Review 1465 at 1472. In my opinion, the problem is more appropriately addressed by limiting the measure of restitution than by denying the availability of the common law action for restitution. If the measure of the value of the services rendered by the innocent party is capped by reference to the contractually agreed remuneration for those services – the contract price – the distortion is substantially eliminated. "Upon a quantum meruit, usually the value of services is assessed by reference to charges commonly made by others for like services"142. That is to say, the amount recovered is usually measured at the market value of the services rendered. Inherent in the nature of the obligation enforced on a quantum meruit being to pay only "reasonable remuneration", however, is that the usual basis of assessment may not yield the appropriate measure of restitution in every case. The approach of the Court of Appeals of New York in Buccini v Paterno Const Co143 is instructive144, albeit that it concerned a non-contractual quantum meruit for services rendered which was brought after termination of a contract in circumstances more akin to frustration than to repudiation. There an individual had been engaged by a building owner under a contract for services which provided for disputes to be determined by arbitration. The individual died before the services were completed. Under New York law, the effect of his death was to terminate the contractual obligation to complete the services, leaving the owner liable for the benefit of such services as had been rendered. Cardozo CJ explained how the common law of restitution could be the source of that liability145: "The parties may say by their contract what compensation shall be made in the event of [death]. The award will then conform to the expression of their will. They may leave the subject open, to be governed by the law itself. The award will then conform to the principles of liability in quasi contract and to the considerations of equity and justice by which that liability is governed." 142 South Australian Harbors Board v South Australian Gas Co (1934) 51 CLR 485 at 501; [1934] HCA 45. 144 cf Beatson, "The Temptation of Elegance: Concurrence of Restitutionary and Contractual Claims", in Swadling and Jones (eds), The Search for Principle: Essays in Honour of Lord Goff of Chieveley (1999) 143 at 164. 145 (1930) 253 NY 256 at 258. Going on to deal with the measure of the value of the services rendered by the deceased able to be claimed by the executrix of the deceased in an arbitration, "Death of the contractor has not nullified the contract in the sense of emancipating the claimant from the restraint of its conditions. They limit her at every turn. She cannot stir a step without reference to the contract, nor profit by a dollar without adherence to its covenants. ... The interrupted work may have been better than any called for by the plans. Even so, there can be no recovery if the contractor willfully and without excuse has substituted something else. ... The value proportionately distributed may be greater than the contract price. Even so, the price, and not the value, will be the maximum beyond which the judgment may not go. ... 'The recovery in such a case cannot exceed the contract price, or the rate of it for the part of the service performed.' ... The question to be determined is not the value of the work considered by itself and unrelated to the contract. The question to be determined is the benefit to the owner in advancement of the ends to be promoted by the contract." The statement quoted by Cardozo CJ to the effect that recovery "cannot exceed the contract price, or the rate of it for the part of the service performed" drew on language, frequently repeated in nineteenth century American cases, which derived from that of the Supreme Court of Indiana in Coe v Smith147. There recovery on a quantum meruit claim was explained, in terms that remain apposite today, as "compensation for benefit received and enjoyed"148. With express reference to the potential for the quantum of recovery to distort contractual incentives, it was said of the position of the party whose benefit was the result of contractual performance149: "He is to pay no more than the amount in which he has been benefited, and this will be determined by the jury, all things being considered ... and the amount recovered must, in no case, exceed the contract price, or the rate of it for the part of the contract performed. This, policy would not permit, lest a temptation should be held out to break contracts in an advanced stage of performance, in hopes of higher compensation than might be stipulated for in the contract." 146 (1930) 253 NY 256 at 258. 147 (1853) 4 Ind 79. 148 (1853) 4 Ind 79 at 82. 149 (1853) 4 Ind 79 at 82-83. That was a rare and lucid articulation of sound common law policy at a time when, for the most part, in the determination of issues of quantum the jury was left to be the conscience of the common law. The historical role of the jury in determining the measure to be recovered on a quantum meruit was acknowledged in Jordan CJ's already quoted reference in Horton v Jones [No 2] to the entitlement of the successful claimant "to recover the amount at which he has assessed his claim, unless the jury reduces it"150. Neither in Planché v Colburn nor in any of its nineteenth century English progeny does it appear that the amount in fact awarded by a jury exceeded the contract price. In none of them, however, does the question appear to have arisen for determination as to whether the contract price placed a ceiling on the amount a jury could determine. An argument that the policy of the common law in some way limited the measure recoverable on a quantum meruit by an innocent party for services rendered in performance of a contract later terminated on acceptance of a repudiation was put to and rejected by the New Zealand Court of Appeal in Slowey v Lodder151, the decision upheld by the Privy Council on appeal in Lodder v Slowey. Just what that argument was is not entirely clear. The consequence of that lack of clarity is that I am not convinced that the actual decision in Lodder v Slowey was necessarily wrong. One of the two members of the New Zealand Court of Appeal who gave judgment in Slowey v Lodder was Williams J. He seems to have understood the argument of the respondents to the appeal to that Court as being to the effect that the measure of recovery on the quantum meruit should have been the same as the measure of damages for breach of contract152. He rejected it. As the argument was so understood, I think he was correct to reject it. To my mind, there is no satisfactory answer to his rhetorical question: "If the result must be the same, how can it profit a plaintiff to have – what he certainly has – an alternative remedy?" To require the innocent party to prove the measure of damages for breach of contract in order to sustain an action for quantum meruit, or to permit the defaulting party to prove that measure of damages in order to meet it, would rob the action of its principal practical advantage over an action for damages. The other member of the New Zealand Court of Appeal who gave judgment in Slowey v Lodder was Conolly J. He seems to have understood the same argument as being to the effect that the measure should not have exceeded 150 (1939) 39 SR (NSW) 305 at 317 (emphasis added). 151 (1901) 20 NZLR 321 at 353. 152 (1901) 20 NZLR 321 at 358. the contract price for the services rendered153. He accepted it in principle. As the argument was to be so understood, I think he was correct to accept it in principle. On a non-contractual quantum meruit to recover remuneration for services rendered in performance of an unenforceable contract, the general approach has been to treat the contract price as no more than evidence of the value to the owner of the services rendered154. The reason is not difficult to discern: were the contractual price automatically to be treated as the measure of the value of the services "it might be persuasively contended that the action on a quantum meruit was an indirect means of enforcing the [unenforceable] contract"155. Deane J nevertheless suggested in Pavey156 that "[t]he defendant will also be entitled to rely on the unenforceable contract, if it has been executed but not rescinded, to limit the amount recoverable by the plaintiff to the contractual amount in a case where that amount is less than what would constitute fair and reasonable remuneration". How far that suggestion can be taken need not now be considered. Whatever the position in relation to an unenforceable contract, my view is that the contract price should limit a non-contractual quantum meruit to recover remuneration for services rendered in part performance of an enforceable contract that is later terminated so as to preclude future recovery of the contractual amount by an action to enforce the contract. To impose that limit on recovery is consistent with the general approach articulated by Cardozo CJ in Buccini and with the specific approach accepted in principle by Conolly J in The common law rule should accordingly be that the amount recoverable on a non-contractual quantum meruit as remuneration for services rendered in performance of a contract prior to its termination by acceptance of a repudiation cannot exceed that portion of the contract price as is attributable to those services. Issues concerning the identification and appropriate method of apportionment of the contract price are best left to be addressed on a case by case basis if and when they arise. To the extent that they allowed recovery in excess of the contract price for the services rendered, Renard Constructions (ME) Pty Ltd v Minister for Public 153 (1901) 20 NZLR 321 at 366. 154 Horton v Jones (1934) 34 SR (NSW) 359 at 367. 155 Pavey (1987) 162 CLR 221 at 228. 156 (1987) 162 CLR 221 at 257. Works157, Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd158 and Sopov v Kane Constructions Pty Ltd [No 2]159 were, in my opinion, wrongly decided. Qualified to ensure that the amount recovered cannot exceed the portion of the contract price that is attributable to the services rendered, there is no reason to depart from the common law principle of recovery expounded by Jordan CJ in Segur v Franklin and Horton v Jones [No 2]. The principle is sound in theory and, so qualified, is beneficial in practice. The preferable outcome, in my opinion, is accordingly that the Builder can recover from the Owners by way of restitution on a non-contractual quantum meruit an amount in respect of the work done by the Builder for which the Builder had accrued no contractual right to payment under the Contract at the time of its termination. The amount recoverable is a liquidated amount representing reasonable remuneration for the work. That amount cannot exceed the portion of the overall price set by the Contract that is attributable to the work. Having drawn on the approach of the Court of Appeals of New York in Buccini in reaching that conclusion, I need to add that I have not ignored the law in the United States on the precise topic of the ability of an innocent party to recover the value of work done in the performance of a repudiated contract. Doctrinal assistance from the American case law is limited by the relative infrequency with which the topic has arisen for appellate decision and by adherence in at least some of the leading cases to the theory of repudiation rejected in McDonald v Dennys Lascelles Ltd160. Noteworthy, however, is that my preferred outcome accords in practical effect with the position adopted by the American Law Institute in 2010 in the Restatement (Third) of Restitution and Unjust Enrichment, notwithstanding that it is couched in different terminology and arrived at by a different conceptual route161. The common law rule there adopted is that, as an alternative to damages 157 (1992) 26 NSWLR 234. 158 [1995] 2 Qd R 350. 160 eg, Boomer v Muir (1933) 24 P 2d 570 at 577; Loomis v Imperial Motors Inc (1964) 396 P 2d 467 at 468-469. See also Mason, Carter and Tolhurst, Mason & Carter's Restitution Law in Australia, 3rd ed (2016) at 608 [1429]. 161 As to which see Gergen, "Restitution as a Bridge over Troubled Contractual Waters" (2002) 71 Fordham Law Review 709, esp at 736-741. for expectation loss, a plaintiff who is entitled to a remedy for repudiation may recover "[p]erformance-based damages" measured by "the market value of the plaintiff's uncompensated contractual performance, not exceeding the price of such performance as determined by reference to the parties' agreement"162. Of some consolation, given the close division in this Court, is the reporter's note that the subject-matter of the rule is "one of the most controversial topics under the name 'restitution'"163. Conclusion For these reasons, I agree with the orders proposed by Nettle, Gordon and 162 Restatement (Third) of Restitution and Unjust Enrichment §38(2)(b). 163 Restatement (Third) of Restitution and Unjust Enrichment §38 at 644. 109 NETTLE, GORDON AND EDELMAN JJ. This is an appeal from a decision of the Court of Appeal of the Supreme Court of Victoria (Kyrou, McLeish and Hargrave JJA)164. The essential questions are whether remuneration for work and labour done by the respondent for the appellants under a domestic building contract, before the contract was terminated by the respondent's acceptance of the appellants' repudiation, is recoverable by the respondent under the contract or, alternatively, as restitution for unjust enrichment and, if the latter, whether the contract limits the amount of restitution that may be awarded. For the reasons which follow, insofar as the work and labour done was work and labour done in response to a requested variation within the meaning of s 38 of the Domestic Building Contracts Act 1995 (Vic) ("the DBC Act"), any amount of remuneration must be determined in accordance with ss 38 and 39 of the DBC Act. Insofar as the work and labour done, not being variations, comprised completed stages of the contract as defined in the contract, the amount of remuneration payable is essentially that which is prescribed by the contract for those stages, and any damages for breach of contract are to be calculated accordingly. Insofar, however, as any of the work and labour done, not being variations, comprised part of a stage of the contract that had not been completed at the time of termination, the respondent is entitled, at its option, to damages for breach of contract or restitution, but the amount of restitution should be limited in accordance with the rates prescribed by the contract. The facts On 4 March 2014, the appellants entered into a Master Builders Association Form HC-6 (Edition 1 - 2007) "major domestic building contract"165 with the respondent for the construction by the respondent of two double-storey townhouses ("the Units") on the appellants' land in Blackburn, Victoria ("the Works"), at a fixed price of $971,000 (including GST) ("the Contract"). The Contract was "[p]repared in accordance with" the DBC Act, and cl 25.7 stated that the Contract would "in all respects be governed by and construed in accordance with the laws that apply in the State of Victoria". 164 Mann v Paterson Constructions Pty Ltd [2018] VSCA 231. 165 As defined in s 3(1) of the DBC Act. Clause 11.8 of the Contract provided that: "The Owner will make Progress Payments to the Builder in accordance with the agreed and completed Progress Payments Table as set out in Item 23 of the Appendix." Item 23 of the Appendix was as follows: Contract to build through to all stages Deposit Base Stage Frame Stage Lock up Stage Fixing Stage Final Payment Upon Completion Total Clause 12.1 of the Contract provided that: "If the Owner wishes to vary the Plans, or Specifications then the Owner will give to the Builder a written notice describing the variation requested." Clause 12.2 of the Contract provided in substance that the Builder was not required to carry out any requested variation but that, if the Builder reasonably believed that the requested variation would not require an amendment to any permit, cause any delay in reaching Completion (as defined), and add any more than 2% to the Original Contract Price (as defined), the Builder might at its discretion carry out the variation. Clause 12.3 of the Contract provided in substance that, if the Builder reasonably believed that the requested variation would require an amendment to any permit, cause any delay in reaching Completion, or add any more than 2% to the Original Contract Price, the Builder would give a written notice to the Owner stating that the Builder refused or was unable to carry out the requested variation or, alternatively, stating the effect the variation would have on the Works, whether or not an amendment to any permit would be required, a reasonable estimate of any delay in reaching Completion, the cost of the variation, and the effect of that cost on the Contract Price. Clause 12.4 of the Contract provided in substance that the Builder would not commence any variation requested by the Owner unless either the Owner had given the Builder a written request for the variation, which was to be attached to the notice required to be given by the Builder under cl 12.3, or the following condition was satisfied: "the Builder reasonably believes that the variation requested by the Owner: will not require any amendment to any permit; AND (ii) will not cause any delay in reaching Completion; AND (iii) will not add more than 2% to the Original Contract Price." Clause 12.8 of the Contract provided, so far as is relevant, that: "Whenever the Builder has, under Clause 12.4 ..., accepted an obligation to carry out a variation then the Owner hereby agrees to PAY to the Builder: LESS the agreed variation price if the variation falls within clause 12.2 and no price had been agreed for the variation, the documented cost of carrying out the variation plus 15% of that cost for the Builder's margin any deposit that the Owner may have already paid in respect of that variation under Clause 12.6. The Builder may include in its payment claims amounts of money in respect of all additional work completed [and related materials and services provided] to the date of the claim." During the course of the Contract, the appellants orally requested 42 variations – 11 in relation to the front Unit ("Unit one") and 31 in relation to the back Unit ("Unit two") – without giving any written notice in accordance with cl 12.1. None of those variations added more than 2% to the Original Contract Price. The respondent carried them out without giving written notice under A certificate of occupancy for Unit one issued on 3 March 2015, and on 18 or 19 March 2015 the appellants made what was described as the "final payment" in respect of that Unit. As has been seen, the Contract made no provision for a final progress payment in respect of Unit one as such, but rather only in respect of both Units – the Works – as an aggregate whole. It is not apparent from the proceedings below whether what was described as the "final payment" in respect of Unit one was sought and paid pursuant to a variation of the Contract or explicitly or implicitly on account of one or more of the progress payments provided for in the Contract. At or about the time of handover of Unit one, the respondent informed the appellants that there was an amount in excess of $48,000 due to be paid for the extensive variations which they had requested to Unit one. The appellants replied: "We'll see about that". On or about 17 March 2015, the respondent raised an undated invoice claiming variations and/or extras in the sum of $48,844.92 in respect of Unit one. There were no attached invoices, accounts or other documents in support of the claim. On 16 April 2015, the appellants' solicitors wrote to the respondent's solicitors alleging that on or about 16 February 2015 the respondent had advised the appellants that it would not continue carrying out the Works until its claim for variations in respect of Unit one was paid; that the respondent had purported to raise the invoice of 17 March 2015 "in breach of clauses 12 and 13 of the [Contract] and contrary to the requirements of sections 37 and/or 38 of the [DBC invoices and other supporting relevant Act]" documentation in support of the claim); and that the respondent had committed further identified breaches of the Contract, which, in combination, were said to amount to a repudiation of the Contract, which the appellants accepted. (and without providing On 22 April 2015, the respondent's solicitors replied denying that the respondent had repudiated the Contract; alleging in the alternative that any repudiation had been waived; and observing that it was not apparent why the respondent's request to be paid for variations was in any way repudiatory. On 28 April 2015, the appellants' solicitors wrote again, presumably maintaining their position that the respondent had repudiated the Contract, which repudiation the appellants had accepted. On the same day, the respondent's solicitors replied that the appellants' purported determination of the Contract was itself repudiatory; that the respondent accepted their repudiation of the Contract; and that the respondent might institute "proceedings seeking damages against your clients for breach of the contract or for restitution on a quantum meruit basis". Relevant statutory provisions Section 1 of the DBC Act provides in substance that the "main purposes" of the DBC Act are to regulate contracts for carrying out domestic building work, provide for the resolution of domestic building disputes by the Victorian Civil and Administrative Tribunal ("VCAT"), and require builders carrying out domestic building work to be insured. Section 3(1) defines a "domestic building contract" as "a contract to carry out, or to arrange or manage the carrying out of, domestic building work other than a contract between a builder and a sub-contractor", and defines a "major domestic building contract" as "a domestic building contract in which the contract price for the carrying out of domestic building work is more than $5000 (or any higher amount fixed by the regulations)". Perforce of ss 3(1) and 5, "domestic building work" includes, and the DBC Act applies, inter alia, to, the construction of a home. Section 4 provides, inter alia, that one of the "objects" of the DBC Act is to enable domestic building work disputes to be resolved as quickly, efficiently and cheaply as possible having regard to the needs of fairness. Section 16(1) provides that a "builder who enters into a domestic building contract must not demand, recover or retain from the building owner an amount of money under the contract in excess of the contract price unless authorised to do so by this Act", under pain of 100 penalty units. Section 16(2) stipulates, however, that s 16(1): "does not apply to any amount that is demanded, recovered or retained in respect of the contract as a result of a cause of action the builder may have that does not involve a claim made under the contract." Section 27(1) provides in substance that a domestic building dispute exists between a builder and the building owner if the latter fails to pay the builder any amount due to the builder under a domestic building contract by the date it is due. Section 27(2) provides, however, that a building owner may still dispute any matter relating to work carried out under a domestic building contract notwithstanding having paid for the work. So far as is relevant, s 38 provides that: "Variation of plans or specifications – by building owner (1) A building owner who wishes to vary the plans or specifications set out in a major domestic building contract must give the builder a notice outlining the variation the building owner wishes to make. If the builder reasonably believes the variation will not require a variation to any permit and will not cause any delay and will not add more than 2% to the original contract price stated in the contract, the builder may carry out the variation. In any other case, the builder must give the building owner either – a notice that – states what effect the variation will have on the work as a whole being carried out under the contract and whether a variation to any permit will be required; and if the variation will result in any delays, states the builder's reasonable estimate as to how long those delays will be; and (iii) states the cost of the variation and the effect it will have on the contract price; or a notice that states that the builder refuses, or is unable, to carry out the variation and that states the reason for the refusal or inability. (5) A builder must not give effect to any variation asked for by a building owner unless – the building owner gives the builder a signed request for the variation attached to a copy of the notice required by subsection (3)(a); or subsection (2) applies. (6) A builder is not entitled to recover any money in respect of a variation asked for by a building owner unless – the builder has complied with this section; or [VCAT] is satisfied – that there are exceptional circumstances or that the builder would suffer a significant or exceptional hardship by the operation of paragraph (a); and that it would not be unfair to the building owner for the builder to recover the money. If subsection (6) applies, the builder is entitled to recover the cost of carrying out the variation plus a reasonable profit. This section does not apply to contractual terms dealing with prime cost items or provisional sums." Section 53 provides, so far as is relevant, that VCAT "may make any order it considers fair to resolve a domestic building dispute" and, without limiting that power, that VCAT may: "order the payment of a sum of money – found to be owing by one party to another party; by way of damages (including exemplary damages and damages in the nature of interest); (iii) by way of restitution". Section 132(1), in effect, prohibits parties to a domestic building contract from contracting out of the DBC Act. However, under s 132(2), parties may include terms in the contract that impose greater or more onerous obligations on a builder than are imposed by the DBC Act. Proceedings at first instance On 25 June 2015, the respondent instituted a proceeding in VCAT seeking the following relief: damages in the sum of $446,770.18, including claims for variations in the amount of $231,515.16 for both Units and prime cost adjustments in the amount of $176,877.54; or alternatively, a balance of moneys for work and labour done and materials provided up to the date of termination in the amount of By updated particulars of damage filed on 1 August 2016, the respondent amended its claim for the balance of moneys for work and labour done from $518,597.97 to $944,898 (the latter being based on the interim report of a quantity surveyor and registered builder retained by the respondent, who assessed the total value of work and labour done under the contract to be $1,898,673, which, after deduction of payments already made under the contract, yielded the balance of $944,898). After a hearing extending over some 20 sitting days and including an on- site inspection and evidence by 11 expert witnesses and 11 lay witnesses, VCAT (Senior Member Walker) found166 that the appellants had wrongfully repudiated the contract and that the repudiation was accepted by the respondent on 28 April 2015 as bringing the contract to an end. VCAT extracted167 the following paragraph from the decision of the Court of Appeal of the Supreme Court of Victoria in Sopov v Kane Constructions Pty Ltd [No 2]168: "The right of a builder to sue on a quantum meruit following a repudiation of the contract has been part of the common law of Australia for more than a century. It is supported by decisions of intermediate courts of appeal in three States, all of which postdate McDonald[169] and two of which postdate Pavey & Matthews[170]. If that remedy is now to be 166 Paterson Constructions Pty Ltd v Mann (Building and Property) [2016] VCAT 167 Paterson Constructions Pty Ltd v Mann (Building and Property) [2016] VCAT 168 (2009) 24 VR 510 at 515 [12] per Maxwell P, Kellam JA and Whelan A-JA. 169 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; [1933] HCA 25. 170 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5. declared to be unavailable as a matter of law, that is a step which the High Court alone can take." Evidently on that basis, VCAT reasoned171 as follows: "Because of the conclusion that I have reached on the termination issue the Builder's claim for recovery on a quantum meruit basis is established and it is entitled to an amount that reflects the value of the benefit that it has conferred upon the Owners, which I think is the fair and reasonable value of its work. The assessment that I have to make is not the builder's entitlement according to the Contract but rather, the reasonable value of the work and materials the Owners have requested and the value of the benefit they have received from the Builder. Accordingly, it is unnecessary for me to determine whether section 38 or the equivalent provision in the Contract document applies. If I find that the work that was done was requested by the Owners, the Builder is entitled to its fair and reasonable value which might be quite different from the claim that it has made or what it might have been entitled to under the terms of the Contract. Consequently, in regard to each variation I only need to determine whether or not the work was requested and whether or not it has been included in the valuation that Mr Pitney has made." In the result, VCAT held172 that: "The amount to be paid by the Owners of [sic] the Builder with respect to the benefit that it has conferred upon them is calculated as follows: Value of the work assessed without defects less rectification of defects as above Value of the benefit conferred upon the Owners less net amount paid Amount due to the Builder 171 Paterson Constructions Pty Ltd v Mann (Building and Property) [2016] VCAT 172 Paterson Constructions Pty Ltd v Mann (Building and Property) [2016] VCAT VCAT added173, as if it were not otherwise apparent, that: "by succeeding in a claim for a quantum meruit, the Builder has recovered considerably more than it might have recovered had the claim been confined to the Contract". The appeal to the Supreme Court of Victoria The appellants sought leave to appeal to the Supreme Court of Victoria pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic). By their proposed notice of appeal, the appellants advanced 13 questions of law and 17 grounds of appeal. At the outset of the hearing of the appeal, however, senior counsel for the appellants informed the primary judge (Cavanough J) that there were only "two underlying issues" involving alleged error of law on the part of VCAT: first, whether VCAT wrongly treated Sopov v Kane as establishing that a construction contract terminated by a party's acceptance of the other party's repudiation is "void ab initio" or, alternatively, erred because Sopov v Kane was wrongly decided; and, secondly and consequently, whether VCAT had further erred in holding that, because the contract was avoided ab initio, s 38 of the DBC Act did not apply. The primary judge determined174 the first issue in favour of the respondent, on the basis that VCAT made no error in its interpretation of Sopov v Kane and that Sopov v Kane "is, according to the High Court, the 'prevailing authority' for working out the amount which the builder is able to claim in restitution (as an alternative to a claim for breach of contract)". His Honour's reference to the High Court was to the observation in Southern Han Breakfast Point Pty Ltd (In liq) v Lewence Construction Pty Ltd175 that the Building and Construction Industry Security of Payment Act 1999 (NSW) is not "concerned to provide security for payment of an amount which, according to prevailing authority, might be claimed as an alternative to damages by way of restitution for work carried out (or goods and services supplied) in the event of the construction contract terminating on acceptance of repudiation". His Honour also referred176 173 Paterson Constructions Pty Ltd v Mann (Building and Property) [2016] VCAT 174 Mann v Paterson Constructions Pty Ltd [2018] VSC 119 at [19] (footnote omitted). 175 (2016) 260 CLR 340 at 362 [66] per Kiefel, Bell, Gageler, Keane and Gordon JJ (footnote omitted); [2016] HCA 52. 176 Mann v Paterson Constructions Pty Ltd [2018] VSC 119 at [19] fn 17. to the refusal of special leave to appeal from the Court of Appeal's decision in The primary judge determined178 the second issue in favour of the respondent, on four bases: that the DBC Act does not define "variation" but, as it appeared to his Honour, the "relevant context of the word in the [DBC Act] tends to favour the meaning of a change in the terms of the contract rather than a change in the work"; that, although "[i]t is plainly open to a Parliament to regulate what may or may not be recovered by way of a claim in restitution in relation to building work", upon its proper construction s 38 does not do so, for several reasons, principally that it relates to the recovery of "any money in respect of a variation", rather than for "the cost of any work performed or materials supplied under the variation" (as the previous Act had done179); that, as it appeared to his Honour, s 16(2) of the DBC Act contemplates a builder being awarded a sum of money in excess of the contract price pursuant to an extra-contractual cause of action, such as a restitutionary claim; and that "it was confirmed in Sopov v Kane ... that, in Australia, the entitlement of a builder to sue on a quantum meruit rather than for contractual damages was 'too well settled by authority to be shaken'". In the result, the primary judge granted leave to appeal, and allowed the appeal for the limited purpose of correcting a minor mathematical error in VCAT's orders, but otherwise dismissed the appeal. 177 Sopov v Kane Constructions Pty Ltd [2009] HCATrans 338. 178 Mann v Paterson Constructions Pty Ltd [2018] VSC 119 at [61], [72], [77]-[80], [82] (emphasis omitted). 179 House Contracts Guarantee Act 1987 (Vic), s 19(1). The appeal to the Court of Appeal The appellants sought leave to appeal to the Court of Appeal on four grounds, in substance as follows: that the primary judge erred in holding that VCAT applied correct legal principle in proceeding on the basis that, where a building contract is terminated by a builder by acceptance of the owner's repudiation of the contract, the contract is avoided ab initio, without having regard to the cost actually incurred by the respondent in carrying out the building contract or the discrepancy between the amount awarded and the contract price (Ground 1); that the primary judge erred in holding that VCAT was legally permitted to conclude that, where a building contract is terminated by a builder by acceptance of the owner's repudiation of the contract, the builder is entitled at law to sue for restitution as upon a quantum meruit for work and labour done, rather than being confined to a remedy in damages for breach of contract (Ground 2); and that the primary judge erred in holding that s 38 of the DBC Act did not bar the respondent's claim for restitution as upon a quantum meruit for variations (Grounds 3 and 4). The Court of Appeal refused leave to appeal on Ground 2, granted leave to appeal on Grounds 1, 3 and 4, and dismissed the appeal. As to Grounds 1 and 2, their Honours found180 no error in VCAT's method of assessment of reasonable remuneration, observing in effect that only this Court could determine that Sopov v Kane was wrongly decided, given that the Court of Appeal in that decision had followed the decision of the Privy Council in Lodder v Slowey181 and the Court of Appeal of the Supreme Court of New South Wales in Renard Constructions (ME) Pty Ltd v Minister for Public Works182; that this Court had refused special leave to appeal in both Renard Constructions and Sopov v Kane; that Sopov v Kane had been followed by the Court of Appeal of the Supreme Court of Queensland in Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd183; and 180 Mann v Paterson Constructions Pty Ltd [2018] VSCA 231 at [90]-[94], [96]. 182 (1992) 26 NSWLR 234. 183 [1995] 2 Qd R 350. that this Court in Southern Han had footnoted Sopov v Kane as "prevailing authority". Further, their Honours held184 that, as VCAT found that the scope of work performed by the respondent substantially differed from the scope of work in the Contract, VCAT was justified in not relying on the Contract Price in assessing the quantum meruit amount. In rejecting Grounds 3 and 4, their Honours accepted185 that: "where a builder carries out a variation to the building work at the request of an owner, s 38 has the following effect: If the builder has complied with the notice requirements of s 38, the builder is entitled to recover the agreed contractual price for a variation. If the builder has not complied with the notice requirements of s 38 but s 38(2) or s 38(6)(b) applies, s 38(6) does not 'apply' within the meaning of s 38(7) and: if the parties have agreed to a contractual price for a variation, the builder is entitled to recover the agreed price; but if the parties have not agreed to a contractual price for a variation, the builder is not entitled to recover on the 'cost plus profit' basis in s 38(7). If the builder has not complied with the notice requirements of s 38 and neither s 38(2) nor s 38(6)(b) applies, s 38(6) 'applies' within the meaning of s 38(7), and so the builder is entitled to recover on the 'cost plus profit' basis in s 38(7), and not under the contract, irrespective of whether the parties have agreed to a contractual price for a variation." Their Honours reasoned186, however, that, because the right of a builder to sue for restitution as upon a quantum meruit as an alternative to an action for damages "seeks to achieve an equitable outcome by ensuring that the builder 184 Mann v Paterson Constructions Pty Ltd [2018] VSCA 231 at [84]. 185 Mann v Paterson Constructions Pty Ltd [2018] VSCA 231 at [129] (footnote omitted). 186 Mann v Paterson Constructions Pty Ltd [2018] VSCA 231 at [142], [144]. receives a fair and reasonable amount for the benefit the builder has conferred", and because, in their Honours' view, there is nothing in the text, purpose or legislative history of s 38 which requires that it be construed as extending to claims in quantum meruit, the principle of legality strongly favours a construction which does not exclude the restitutionary remedy. They added187 that: "Moreover, if claims in quantum meruit were excluded by the section, an anomalous result would follow. In the situation where the prohibition in s 38(6) applies but no contractual price has been agreed for the variation, s 38(7) is not attracted, for the reasons explained above. No part of s 38 would fill the gap by giving the builder an entitlement to payment. Accordingly, if claims in quantum meruit are within the scope of s 38(6), a builder in that situation could recover nothing at all. There is no apparent reason why the provision would pursue that objective, and no language suggesting such an outcome. The construction of s 38 that we have adopted would enable a builder to recover payment for a variation on a quantum meruit basis in the situation postulated above." The appeal to this Court By grant of special leave, the appellants appeal to this Court on three grounds, being in substance: the Court of Appeal erred in holding that the respondent was entitled, after accepting the appellants' repudiation of the contract, to recover in restitution as upon a quantum meruit rather than being confined to a claim in damages for breach of contract (Ground 1); alternatively, if the respondent were entitled to claim in restitution as upon a quantum meruit, the Court of Appeal erred in failing to hold that the contract price operated as a ceiling on the sum recoverable as such (Ground 2); the Court of Appeal erred in holding that s 38 of the DBC Act does not apply to a claim for restitution as upon a quantum meruit in respect of variations (Ground 3). 187 Mann v Paterson Constructions Pty Ltd [2018] VSCA 231 at [145]. A matter of nomenclature As Professor John Chipman Gray once said, although people "are very ready to accept new ideas, provided they bear old names", a "loose vocabulary is a fruitful mother of evils"188. The issues on this appeal, as at first instance and before the Court of Appeal, were described in terms of "quantum meruit", sometimes on the assumption that the phrase identifies a species of restitution for unjust enrichment. But the Latin may mislead. It means only "as much as he deserved", and as such refers to a sum certain which represents the benefit of services. As is explained in what follows, it was a label given to a form of action which fell into desuetude, superseded by counts in indebitatus assumpsit, even before the abolition of the forms of action. In its historical use, the form of action was truly contractual, describing an implied price of a reasonable sum for work done. To plead a claim today merely by reference to that language of the form of action tells a lawyer very little, and a layperson nothing at all, as to (i) whether the cause of action is one to enforce the contract, seeking payment of a reasonable price implied into the contract189, (ii) whether it is an asserted claim for a restitutionary remedy for breach of contract190, or (iii) whether it is a remedy arising by operation of law in that category of actions concerned with restitution in the category of unjust enrichment. This litigation has only ever been concerned with the final category. Application of s 38 of the DBC Act to variations It is convenient, however, to begin with Ground 3, the application of s 38 of the DBC Act to the respondent's claim for restitution as upon a quantum meruit in respect of variations. As was earlier noticed, s 38(1) requires a building owner who wishes to vary the plans or specifications set out in a major domestic building contract to give the builder a notice outlining the variation proposed. Unlike some other 188 Gray, "Some Definitions and Questions in Jurisprudence" (1892) 6 Harvard Law Review 21 at 21. 189 See, eg, Horton v Jones [No 2] (1939) 39 SR (NSW) 305 at 319, point (1) per 190 Kull, "Restitution as a Remedy for Breach of Contract" (1994) 67 Southern California Law Review 1465. See also the remarks of Professor Kull as Reporter in American Law Institute, Restatement of the Law Third, Restitution and Unjust Enrichment (2011) §1 at 10, referring to "part of contract law" and "a parallel source of liability". provisions of the DBC Act, such as s 34(2), s 38(1) does not expressly stipulate that the notice must be in writing. But it is apparent from the text, context and purpose of s 38 that "a notice" means a notice in writing. Textually, s 38(1) refers to "a notice" – as opposed simply to "notice" – the former being more naturally and ordinarily suggestive of a notice in tangible form, and the latter more appropriate for a notice that may be given orally191. Contextually, s 37(1) stipulates that a builder who wishes to vary the plans or specifications set out in a major domestic building contract "must give the building owner a notice" describing the proposed variations; and, when read in conjunction with s 37(2)(a) – which refers to the building owner giving the builder "a signed consent to the variation attached to a copy of the notice required by subsection (1)" – it is apparent that "a notice" in s 37(1) means a notice in writing. Section 38 then provides for owner-initiated variations in substantially identical form to the manner in which s 37 provides for builder- initiated variations; and, since the pattern of s 38 is, by design, functionally identical to the pattern of s 37, it is apparent that "a notice" in s 38 is intended to have the same meaning it has in s 37, namely a notice in writing192. That conclusion is fortified by the consideration that one of the principal objects of the DBC Act, as set out in s 4, is to enable domestic building disputes to be resolved as quickly, efficiently and cheaply as possible193. And it is also consistent with the legislative intention as stated194 in the Explanatory Memorandum to the Bill which introduced the DBC Act: "Clause 38 requires a building owner who seeks a variation to the plans or specifications set out in a major domestic building contract to give the builder written notice of the proposed variation. The builder must then give the building owner a written notice indicating the overall effect of the proposed variation ... The builder is not required to give this 191 Oxford English Dictionary, online, "notice", sense 9a, cf sense 1a, available at <https://www.oed.com/view/Entry/128591>. 192 See Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 10 per Gibbs CJ; [1981] HCA 40. 193 See and compare Pavey & Matthews (1987) 162 CLR 221 at 228-229 per Mason 194 Victoria, Domestic Building Contracts and Tribunal Bill 1995, Explanatory Memorandum at 7 (second emphasis added). The name of the Act was changed from Domestic Building Contracts and Tribunal Act 1995 by s 36 of the Tribunals and Licensing Authorities (Miscellaneous Amendments) Act 1998 (Vic). notification if he reasonably believes the variation will not cause delay and will not add more than 2% to the contract price ... A builder cannot recover any money in relation to the building owner-requested variations unless this provision is complied with or the Tribunal orders as for clause 37. The provision does not apply to prime cost items or provisional sums." As will be recalled, s 38(5) prohibits a builder from giving effect to any owner-initiated variation unless the building owner has given a signed request attached to a copy of the notice required by s 38(3)(a). And s 38(6) of the DBC Act provides that a builder is not entitled to recover "any money" in respect of a variation asked for by a building owner (other than for prime cost items and by way of provisional sums195), unless either the builder has complied with "this section" or VCAT is satisfied of the matters prescribed by s 38(6)(b). Given the terms of s 38(5), the requirement in s 38(6) for the builder to have complied with "this section" is met only if: the owner has given the builder a notice in writing in accordance with s 38(1) and the builder has complied with s 38(3) by giving the owner a notice in writing in accordance with s 38(3)(a) within the reasonable time prescribed by s 38(4); or the owner has given the builder a notice in writing in accordance with s 38(1) and the builder satisfies the requirements of s 38(2) in that the builder reasonably believes the variation will not require variation to a permit, cause any delay or add more than 2% to the original contract price stated in the contract. If one or other of those conditions is satisfied, and the plans or specifications are so varied, s 39(b) provides that the contract price is taken to be the price as adjusted to take account of the variation. By contrast, if neither condition is satisfied, then, perforce of s 38(6)(b), the builder is not entitled to recover any money in respect of an owner-initiated variation (other than for prime cost items and by way of provisional sums) unless VCAT is satisfied: that there are exceptional circumstances or that the builder would suffer a significant or exceptional hardship by reason of the 195 DBC Act, s 38(8). builder's failure to comply with s 38 in either of the two respects mentioned above; and that it would not be unfair to the building owner for the builder to recover the money. If VCAT is so satisfied, then s 38(7) has the effect that the builder is entitled to recover the cost of carrying out the variation plus a reasonable profit. The apparent purpose and legislative effect of these provisions is that a builder shall not be permitted to recover any money in respect of owner-initiated variations (other than for prime cost items and by way of provisional sums) except in accordance with these provisions. As such, they function as protective provisions196, designed to prevent the kinds of problems likely to arise where domestic building contract variations are dealt with informally, as by oral request by an owner for a variation and compliance by the builder without first agreeing with the owner on the price and other consequences of giving effect to the variation; in particular, to avoid the surprises and consequent disputation likely to arise where plans and specifications under a major domestic building contract are varied without the degree of formality mandated by s 38(1) and (2) or (3). Hence, subject to only one exception, they prohibit a builder recovering any money in respect of owner-initiated variations unless the required degree of formality has been observed. The one exception reflects a legislative recognition that there can sometimes be instances of non-compliance which are in themselves exceptional or would result in the builder suffering exceptional hardship and in which it is not unfair to require the owner to pay a reasonable recompense for the variation, namely, the cost of the variation and a reasonable profit margin in accordance with s 38(7). The respondent submitted, in effect, that the DBC Act draws a distinction between building contracts and building works and expressly preserves remedies in respect of the latter "by way of restitution". Counsel for the respondent referred to ss 16 and 53 of the DBC Act and invoked the principle of legality in support of that submission. The submission must be rejected. Neither s 16 nor s 53 of the DBC Act supports an argument of that generality. Whether or not s 16(2) envisages claims in restitution for work performed under a major domestic building contract – and, for present purposes, that is not a question that needs to be decided – relevantly its only effect is as an exception to the 196 See and compare Deposit & Investment Co Ltd v Kaye (1963) 63 SR (NSW) 453 at 460-461 per Walsh J; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 518 [34] per French CJ, Crennan and Kiefel JJ; [2012] HCA 7. prohibition in s 16(1) against a builder recovering more under a domestic building contract than is allowed by the contract or otherwise by the Act. It does not in terms or effect in any way suggest a qualification of the explicit operation of s 38(5)197. Similarly, the power which s 53 of the DBC Act confers on VCAT to make such order as VCAT considers fair to resolve a domestic building dispute, including an order for restitution, is a general power which of necessity operates subject to more specific express and implied limitations, and s 38 is a specific provision that specifically limits the amounts which may be recovered for variations198. By their text, context and purpose, ss 37 and 38 reflect a legislative intent to cover the field of the remuneration payable to builders for work and labour done in response to requested variations under major domestic building contracts. To permit any alternative form of recovery for work under such a variation – whether contractual or restitutionary and including pursuant to s 16 or s 53 – would have the effect of frustrating or defeating, or at least operating inconsistently with, that intent199. Nor does the principle of legality gainsay that. Although, as the respondent contended, it requires a clear indication of intent to conclude that legislation abrogates common law rights200, with the required clarity increasing the more that the rights are "fundamental"201 or "important"202, the indications 197 See Perpetual Executors and Trustees Association of Australia Ltd v Federal Commissioner of Taxation (1948) 77 CLR 1 at 29 per Dixon J; [1948] HCA 24; Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at 585-586 [50]-[51] per Gummow and Hayne JJ; [2006] HCA 50. 198 See Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7 per Gavan Duffy CJ and Dixon J; [1932] HCA 9; Bruton Holdings Pty Ltd (In liq) v Federal Commissioner of Taxation (2009) 239 CLR 346 at 353 [17] per French CJ, Gummow, Hayne, Heydon and Bell JJ; [2009] HCA 32. 199 See Equuscorp (2012) 246 CLR 498 at 514 [25] per French CJ, Crennan and 200 See and compare Sargood Bros v The Commonwealth (1910) 11 CLR 258 at 279 per O'Connor J; [1910] HCA 45; Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 341 per Mason A-CJ, Wilson and Dawson JJ; [1983] HCA 9; Berowra Holdings Pty Ltd v Gordon (2006) 225 CLR 364 at 373 [23] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; [2006] HCA 32. 201 See, eg, Bropho v Western Australia (1990) 171 CLR 1 at 18 per Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ; [1990] HCA 24; Coco v The Queen (Footnote continues on next page) here are sufficient to abrogate any contractual or restitutionary rights. The prohibition applies in terms to recovery of any money "in respect of" a variation. That is an expression of wide connotation203, which, in the context in which it appears, should be taken to mean what it says. It prohibits the recovery of any money, and that means the recovery of any money whether under contract or in restitution. It may be, as the primary judge observed and the respondent contended, that other expressions could have been used to convey the same sense still more pellucidly. But the fact that such other expressions were not selected does not suggest an absence of legislative intent to achieve the result of prohibiting the recovery of any money204. Upon the proper construction of these provisions, they exclude the availability of restitutionary relief for variations implemented otherwise than in accordance with s 38. In the event of failure to comply with the requirements of either s 38(1) and (3) or s 38(1) and (2), a builder's only right of recovery for variations under a domestic building contract is under s 38(6)(b) (if VCAT is satisfied of the matters for which it provides) for the amounts prescribed by Here, there was no compliance with s 38(1) or (3), and, because there was no compliance with s 38(1), there could not be compliance with s 38(2)205. For (1994) 179 CLR 427 at 437 per Mason CJ, Brennan, Gaudron and McHugh JJ, 446 per Deane and Dawson JJ; [1994] HCA 15; Oates v Attorney-General (Cth) (2003) 214 CLR 496 at 513 [45] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne and Heydon JJ; [2003] HCA 21. 202 Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11] per Gleeson CJ, Gaudron, Gummow and Hayne JJ; [2002] HCA 49; Lee v New South Wales Crime Commission (2013) 251 CLR 196 at 217-218 [29] per French CJ, 310 [313] per Gageler and Keane JJ; [2013] HCA 39. 203 Trustees Executors & Agency Co Ltd v Reilly [1941] VLR 110 at 111 per Mann CJ, quoted in Powers v Maher (1959) 103 CLR 478 at 484-485 per Kitto J; [1959] HCA 52. See also R v Khazaal (2012) 246 CLR 601 at 613 [31] per French CJ; [2012] HCA 26. 204 See and compare Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305 at 342 [117] per Heydon J; [2009] HCA 19. 205 See [155] above. the same reason, cl 12.2 of the Contract was not engaged. Possibly, the respondent could have satisfied VCAT of the matters referred to in s 38(6)(b). But VCAT did not undertake the exercise required by s 38(6)(b). It proceeded on the erroneous basis that the respondent was entitled to restitution for the variations despite the respondent's failure to comply with s 38. It follows that Ground 3 should be upheld and that the matter should be remitted to VCAT for further determination of the amounts, if any, payable in respect of variations. Recovery of restitution as an alternative to contractual remedies As s 38 has no application to that part of the respondent's claim that was not in respect of variations, it is next necessary to determine whether the respondent was entitled to recover restitution for a cause of action in the category of unjust enrichment (rather than for amounts due under the contract or damages for breach of contract) in relation to those aspects of its claim which were for work and labour done otherwise than in response to requested variations within the meaning of s 38. As was earlier mentioned206, s 53 of the DBC Act conferred power on VCAT to make any order it considered fair and reasonable to resolve the domestic building dispute between the respondent and the appellants, including an order for payment of a sum of money by way of restitution. VCAT ordered that the appellants pay the respondent restitution as upon a quantum meruit. Presumably, VCAT did so in reliance on s 53. But it was not open to VCAT to regard it as fair and reasonable to make a restitutionary order in the circumstances unless restitution would have been available at law207. The question is whether it would have been. (i) Restitution upon termination for breach Where a contract remains "open" – that is, "not discharged"208 – there is generally "neither occasion nor legal justification for the law to superimpose or 206 See [158] above. 207 See and compare Sue v Hill (1999) 199 CLR 462 at 485 [42] per Gleeson CJ, Gummow and Hayne JJ; [1999] HCA 30; Leeming, "Overlapping Claims at Common Law and in Equity – An Embarrassment of Riches?" (2017) 11 Journal of Equity 229 at 241-243. 208 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 541 [67] per Gummow J; [2001] HCA 68. impute an obligation or promise to pay a reasonable remuneration"209. Such an obligation or promise "would be either inconsistent with the contract or ... would duplicate the contractual obligation"210. But the position at law for contracts that are "closed", including, relevantly, those terminated for repudiation, is different. At least since the decision of Dixon J in McDonald v Dennys Lascelles Ltd, it has been accepted that, where a party to a contract elects to accept the other party's repudiation of the contract, both parties are released from contractual obligations which are not yet due for performance, but existing rights and causes of action continue unaffected211. Dixon J explained212 the position thus: 209 Pavey & Matthews (1987) 162 CLR 221 at 256 per Deane J. See also Horton v Jones [No 2] (1939) 39 SR (NSW) 305 at 319 per Jordan CJ; Steele v Tardiani (1946) 72 CLR 386 at 402 per Dixon J; [1946] HCA 21; Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 450 per Latham CJ; [1946] HCA 25; Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 663 [79] per Gummow, Hayne, Crennan and Kiefel JJ; [2008] HCA 27; cf Roxborough (2001) 208 CLR 516 at 527-528 [21] per Gleeson CJ, Gaudron and Hayne JJ, 577-578 210 Pavey & Matthews (1987) 162 CLR 221 at 238 per Brennan J. 211 Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 356 per Mason CJ (Brennan and Toohey JJ agreeing at 367, 383), 390 per McHugh J; [1993] HCA 4; Federal Commissioner of Taxation v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342 at 345-346 [2] per Gleeson CJ, Gummow, Heydon, Crennan and Kiefel JJ; [2008] HCA 22; Construction Forestry Mining and Energy Union v Mammoet Australia Pty Ltd (2013) 248 CLR 619 at 639 [69] per Crennan, Kiefel, Bell, Gageler and Keane JJ; [2013] HCA 36; Southern Han (2016) 260 CLR 340 at 365 [79] per Kiefel, Bell, Gageler, Keane and Gordon JJ. See also Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 341 per Brennan J; [1995] HCA 16; Bailey v New South Wales Medical Defence Union Ltd (1995) 184 CLR 399 at 430 per McHugh and Gummow JJ; [1995] HCA 28; Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 at 261 fn 84 per Gleeson CJ, Kirby, Heydon, Crennan and Kiefel JJ; [2008] HCA 10; Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers Appointed) (In liq) (2013) 251 CLR 592 at 637-638 [156] per Keane J; [2013] HCA 51; Heyman v Darwins Ltd [1942] AC 356 at 399 per Lord Porter; Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 844 per Lord Wilberforce (Lord Diplock, Lord Keith of Kinkel and Lord Scarman agreeing at 851, 853), 850 per Lord Diplock. "When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract is rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made. But when a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach213." (emphasis added) As the law stands in Australia, as it does in England, New Zealand, Canada and the United States, upon termination for repudiation of an uncompleted contract containing an entire obligation (or, as will be seen, divisible stages) for work and labour done, the innocent party may sue either for damages for breach of contract or, at the innocent party's option, for restitution in respect of the value of services rendered under the contract214. 212 McDonald (1933) 48 CLR 457 at 476-477. 213 See Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 at 365 per Bowen LJ; Hirji Mulji v Cheong Yue Steamship Co [1926] AC 497 at 503 per Lord Sumner; Cornwall v Henson [1899] 2 Ch 710 at 715, revd [1900] 2 Ch 298; Salmond and Winfield, Principles of the Law of Contracts (1927) at 284-289; Morison, Rescission of Contracts (1916) at 179-180. 214 Planché v Colburn (1831) 1 Moo & S 51, a fuller report than (1831) 8 Bing 14 [131 ER 305]; Lodder v Slowey [1904] AC 442; Brooks Robinson Pty Ltd v Rothfield [1951] VLR 405; Renard Constructions (1992) 26 NSWLR 234; Iezzi Constructions [1995] 2 Qd R 350; Sopov v Kane (2009) 24 VR 510. See Mason, Carter and Tolhurst, Mason & Carter's Restitution Law in Australia, 3rd ed (2016) at 482-487 [1166]-[1168]; Mitchell, Mitchell and Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 9th ed (2016) at 64 [3-36]; Grantham and Rickett, Enrichment and Restitution in New Zealand (2000) at 165-170; Maddaugh and McCamus, The Law of Restitution, 2nd ed (2004) at 586-600 [19:200]; American (Footnote continues on next page) The availability of restitution, and the form of restitutionary remedy awarded, will depend on the type of enrichment alleged215. Generally speaking, a personal restitutionary remedy will be assessed as money had and received where the alleged enrichment is the receipt of money; it will be assessed as upon a quantum meruit where the alleged enrichment is the receipt of services; and it will be assessed as upon a quantum valebant where the alleged enrichment is the receipt of goods. Where the alleged enrichment takes more than one form, such as the provision of money and services to a party, the other party is entitled to the money paid together with a reasonable sum for the services, subject, of course, to prohibitions against double recovery216. The "qualifying or vitiating"217 factor giving rise to a prima facie obligation on the part of the enriched party to make restitution is a total failure of consideration, or a total failure of a severable part of the consideration218. In this context, consideration means the matter considered in forming the decision to do the act: "the state of affairs contemplated as the basis or reason for the payment"219. In many cases the relevant basis will be the benefit that is Law Institute, Restatement of the Law Third, Restitution and Unjust Enrichment 215 See generally Mason, Carter and Tolhurst, Mason & Carter's Restitution Law in Australia, 3rd ed (2016) at 15-16 [115], 1018-1023 [2908]-[2916]; Mitchell, Mitchell and Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 9th ed (2016) at 9-10 [1-13], 19-20 [1-36]; Birks, Unjust Enrichment, 2nd ed (2005) at 287; Burrows, The Law of Restitution, 3rd ed (2011) at 15-16. 216 See Cobbe v Yeoman's Row Management Ltd [2008] 1 WLR 1752 at 1774 [42]-[44]; [2008] 4 All ER 713 at 736-737. See also Baltic Shipping (1993) 176 CLR 344 at 354-355. 217 Equuscorp (2012) 246 CLR 498 at 516 [30] per French CJ, Crennan and Kiefel JJ, citing David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ; [1992] HCA 48. 218 Steele (1946) 72 CLR 386 at 401 per Dixon J; David Securities (1992) 175 CLR 353 at 383 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ; Roxborough (2001) 208 CLR 516 at 524-526 [14]-[17] per Gleeson CJ, Gaudron and Hayne JJ. 219 David Securities (1992) 175 CLR 353 at 382 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ, quoting Birks, An Introduction to the Law of Restitution bargained for. In those cases, "[t]he test is whether or not the party claiming total failure of consideration has in fact received any part of the benefit bargained for under the contract or purported contract"220. More specifically, a total failure of consideration for work done exists by reason of the termination of a contract for breach where the basis on which the work was done has failed to materialise or sustain itself221, and the total failure of consideration is seen as the occasion and part of the circumstances giving rise to the other party's obligation to make restitution to the extent of the fair value of that work222. It is for that reason that no such obligation can arise while the obligation under which the benefit was conferred and accepted remains enforceable, open and capable of performance223. Where a contractor is only entitled to receive remuneration if the contract is wholly carried into effect, and the other party's wrongful repudiation of the contract has the effect of preventing the contractor from becoming entitled to receive remuneration for services already rendered, the contractor may, after electing to treat the contract as at an end, maintain an action to recover restitution as upon a quantum meruit for those services, instead of suing for damages224. 220 David Securities (1992) 175 CLR 353 at 382 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ, quoting Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 923 per Kerr LJ (Nicholls LJ agreeing at 938); [1989] 3 All ER 423 at 433, 444. 221 See Roxborough (2001) 208 CLR 516 at 525 [16] per Gleeson CJ, Gaudron and Hayne JJ, 556-557 [103]-[104] per Gummow J; Equuscorp (2012) 246 CLR 498 at 517-518 [31]-[33] per French CJ, Crennan and Kiefel JJ; Barnes v Eastenders Cash & Carry Plc [2015] AC 1 at 42-43 [104]-[114] per Lord Toulson JSC (Baroness Hale of Richmond DPSC, Lord Kerr of Tonaghmore, Lord Wilson and Lord Hughes JJSC agreeing). 222 See and compare Pavey & Matthews (1987) 162 CLR 221 at 256 per Deane J. 223 Steele (1946) 72 CLR 386 at 402 per Dixon J. See Trimis v Mina (1999) 16 BCL 288 at 296 [54] per Mason P (Priestley and Handley JJA agreeing at 299 [78], [79]); Lumbers (2008) 232 CLR 635 at 663 [79] per Gummow, Hayne, Crennan 224 Segur v Franklin (1934) 34 SR (NSW) 67 at 72 per Jordan CJ (Street J and Maxwell A-J agreeing at 72); Horton v Jones [No 2] (1939) 39 SR (NSW) 305 at 319 per Jordan CJ. See also McFarlane and Stevens, "In Defence of Sumpter v Hedges" (2002) 118 Law Quarterly Review 569 at 578. An illustration is provided by Automatic Fire Sprinklers Pty Ltd v Watson, in the context of employment contracts. Latham CJ and Starke J each held225 that, where an employee is bound by contract, the terms of which are such that the employee is not entitled to claim any remuneration unless he or she serves for a specified period, and the employer wrongfully dismisses the employee before the latter becomes entitled to be paid wages, the employee is not entitled to any remuneration under the employment contract because he or she has not earned it in accordance with the contract terms. If the employment contract is no longer open, however – that is, if the employee has exercised his or her right to accept the employer's repudiation as discharging the contract – the employee may elect between two remedies: the employee may claim damages for the loss sustained as a result of the wrongful dismissal or the employee may claim for restitution as upon a quantum meruit for the value of the work done226. (ii) Entire obligations and divisible obligations It follows from what has been said that, where, under a contract for work and labour, a party is entitled to payment upon completion of any part of the work (which is to say that the obligation to complete that work is "infinitely divisible"227), where the contract expressly fixes a price for services, and where the contract is terminated by that party's acceptance of the other party's repudiation of it, the party so terminating the contract will have an accrued right to payment under the contract for that part of the work that has been done. There will have been no failure of consideration. Accordingly, that party's remedy in respect of that part of the work that has been done will generally be restricted to a 225 The majority held that the purported dismissal of an employee was ineffectual in law to terminate the employment. As Latham CJ and Starke J each would have held that the purported dismissal was effective to terminate the employment, their Honours considered this point: see Automatic Fire Sprinklers (1946) 72 CLR 435 at 448, 459 per Latham CJ, 463 per Starke J. 226 Automatic Fire Sprinklers (1946) 72 CLR 435 at 450 per Latham CJ, 461-462 per 227 Steele (1946) 72 CLR 386 at 401 per Dixon J. claim for what has accrued due or damages for breach of contract228 assessed by reference to the contract price less the cost of completing the work229. By contrast, if the obligation to perform work and labour is "entire", so that nothing is due until all of the work has been completed by the contractor, then, upon termination of the contract by the contractor's acceptance of the other party's repudiation of it, there will be a total failure of consideration230. Upon acceptance that the contract is repudiated, either by a renunciation or a manifested unwillingness or inability to perform the contract substantially according to the contract terms231, the contractor's right to complete the performance and earn the price will have failed, and thus nothing will be due under the contract for such part of the work as has been completed. In that event, the "consideration" – in the sense of the condition or the "basis"232 for the performance by the contractor – will have failed, and restitution will lie as upon a quantum meruit in respect of work and labour done up to the point of termination. In those circumstances, there is a "qualifying or vitiating" factor, namely, a total failure of consideration, giving rise to a restitutionary remedy in the alternative. By further contrast, if the obligation to perform work is divisible into several entire stages, then, upon termination of the contract for repudiation: (i) the contractor so terminating the contract will have accrued rights under the 228 Steele (1946) 72 CLR 386 at 402 per Dixon J; Baltic Shipping (1993) 176 CLR 344 at 350 per Mason CJ (Brennan and Toohey JJ agreeing at 367, 383), 377 per Deane and Dawson JJ. See also Roxborough (2001) 208 CLR 516 at 557-558 [106] per 229 See Edelman, McGregor on Damages, 20th ed (2018) at 979 [31-022]. 230 See [168] above. 231 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at 135-136 [44] per Gleeson CJ, Gummow, Heydon and Crennan JJ; [2007] HCA 61. 232 Roxborough (2001) 208 CLR 516 at 525 [16] per Gleeson CJ, Gaudron and Hayne JJ, 557 [104] per Gummow J; Equuscorp (2012) 246 CLR 498 at 517 [31] per French CJ, Crennan and Kiefel JJ; Barnes [2015] AC 1 at 42 [105]-[107] per Lord Toulson JSC (Baroness Hale of Richmond DPSC, Lord Kerr of Tonaghmore, Lord Wilson and Lord Hughes JJSC agreeing). contract for those stages that have been completed233; (ii) there will be a total failure of consideration in respect of the stages that have not been completed, because the contractor's right to complete the performance and earn the price will have failed and nothing will be due under the contract in respect of those uncompleted stages; and (iii) restitution will lie as upon a quantum meruit in respect of the work and labour done towards completion of the uncompleted stages as an alternative to damages for breach of contract234. The underlying principle concerning restitution of the value of work and labour where the basis for performance has failed is the same as that concerning restitution of money paid where the basis for the payment has failed. Hence, where a contract for the sale and delivery of a dozen bags of cement provides for the price in full to be paid in advance, and, at the point of termination of the contract by the purchaser's acceptance of the supplier's repudiation of it, only four bags have been delivered, the contract may be treated as severable as to the remaining eight bags and eight-twelfths of the price paid in advance recovered by way of restitution as money had and received as upon a total failure of consideration in relation to those eight bags235. Generally speaking, a construction contract which is divided into stages, and under which the total contract price is apportioned between the stages by means of specified progress payments payable at the completion of each stage, is viewed as containing divisible obligations of performance236. In that event, where at the point of termination of the contract by the builder's acceptance of the principal's repudiation some stages of the contract have been completed, such that progress payments have accrued due in respect of those stages, there will be no total failure of consideration in respect of those stages. The builder will have 233 See generally Steele (1946) 72 CLR 386 at 401 per Dixon J; David Securities (1992) 175 CLR 353 at 383 per Mason CJ, Deane, Toohey, Gaudron and 234 See David Securities (1992) 175 CLR 353 at 383 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ; Goss v Chilcott [1996] AC 788 at 797-798 per Lord Goff of Chieveley for the Privy Council; Roxborough (2001) 208 CLR 516 at 526-527 [18]-[19] per Gleeson CJ, Gaudron and Hayne JJ, 558 [109] per Gummow J. 235 See Whincup v Hughes (1871) LR 6 CP 78 at 81 per Bovill CJ. 236 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 at 164-165 [704], [705] per Finn J, noting that in each case the question is one of construction. See also Furst and Ramsey, Keating on Construction Contracts, 10th ed (2016) at 85-86 [4-007]. no right of recovery in restitution in respect of those stages, and the builder's rights in respect of those completed stages will generally be limited to debt for recovery of the amounts accrued due or damages for breach of contract. But if there are any uncompleted stages, there will be a total failure of consideration in respect of those stages due to the failure of the builder's right to complete the performance and earn the price. In that event, there will be nothing due under the contract in relation to those stages, and restitution as upon a quantum meruit will lie in respect of work and labour done towards completion of those uncompleted stages. In this matter, it is apparent from the manner in which the Contract expressly provided for stages, and specified that progress payments were payable upon completion of each stage, that the obligation of performance under the Contract was divisible. Accordingly, for the reasons stated, the respondent's right to recovery in respect of the completed stages (other than for variations) was limited to the amount due under the Contract on completion of those stages or damages for breach of contract, and the respondent's right to recovery in respect of the uncompleted stages (other than for variations) was restricted to restitution for work and labour done in respect of those stages or damages for breach of contract. As the matter stands, it is not entirely clear which stages had been completed. Given the terms of VCAT's decision, it appears not unlikely that all stages up to and including the Lock up Stage had been completed in relation to both Units, and it may be inferred from the fact that a final payment claim in relation to Unit one was made and paid before termination that Unit one had been completed. But according to the terms of the Contract, the stages as described in the Contract relate to the total development comprised of the two Units, and it is not suggested that there are means within the Contract for apportioning the progress payments as between the two Units. For that reason, although a final progress payment for Unit one was claimed and paid prior to termination, it is not apparent whether what was described as the final payment in respect of Unit one was sought and paid pursuant to a variation of the Contract or explicitly or implicitly on account of one or more of the progress payments for which the Contract provided. It is another question which will need to be investigated upon remitter of the matter to VCAT. What can be said for present purposes, however, is that, as matters stand, it appears that there was at least one stage as specified in the Contract which was not complete as at the time of termination. If so, the respondent may have a claim for restitution of the value of work and labour done towards completion of that stage. But, to repeat, to the extent that there were stages which had been completed at the time of termination, so that the right to progress payments payable in respect of those stages had accrued, the respondent had no right to restitution in respect of work comprised in those stages. The respondent's rights of recovery in respect of those stages are limited to the respondent's rights under the Contract for the progress payments payable in respect of those stages or damages for breach of contract. (iii) History of restitutionary relief The appellants contended that the body of authority which stands in support of the current state of the law derives from an historical misconception that acceptance of a repudiation operated to rescind the contract ab initio and thereby divest rights earlier accrued under the contract237. In the appellants' submission, now that it is understood that such a contract is terminated only de futuro, cases such as Sopov v Kane should be seen as wrongly decided or at least as no longer to be followed. In the appellants' submission, logic and a proper appreciation of principle require that, in such a case, the innocent party should be limited to its rights to amounts due under the contract, and damages for breach of contract. The modern claim for restitution of the value of work and labour done derives from the common count of quantum meruit. In order to appreciate the significance of the appellants' contention, it is necessary, therefore, to understand a little of the history of the remedy238. From the late sixteenth century, implied contractual obligations to pay reasonable remuneration for goods (quantum valebat) or for services (quantum meruit) were enforceable under the general form of action for breach of a simple contract (assumpsit)239. But, apparently upon the fiction that such remuneration 237 For academic support for this view, see, eg, Hunter and Carter, "Quantum Meruit and Building Contracts" (1989) 2 Journal of Contract Law 95 at 111-112; Jackman, The Varieties of Restitution, 2nd ed (2017) at 116-121. 238 See Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560 at 605 [107] per Gageler J; [2014] HCA 14. 239 See, eg, Floyd v Irish (1588) in Glisson and Gulston, A Survey of the Law (1659) at 96; Dellaby v Hassel (1588) 1 Leon 123 [74 ER 114]; Royle v Bagshaw (1590) Cro Eliz 149 [78 ER 407]. See also Greening (ed), Chitty's Treatise on Pleading and Parties to Actions, 7th ed (1844), vol 1 at 351; Bullen and Leake, Precedents of Pleadings in Personal Actions in The Superior Courts of Common Law, 3rd ed (1868) at 35; Simpson, A History of the Common Law of Contract: The Rise of the Action of Assumpsit (1975) at 65, 497-498. was "a sum certain, quantified by reason or desert"240, such obligations came to be enforced by the writ of debt241 and, accordingly, by the more convenient form of action for recovery of a debt: the action for breach of a fictional promise to pay it (indebitatus assumpsit)242. So convenient was this new form of recovery that the common counts of indebitatus assumpsit for goods sold and delivered and for work and labour done supplanted, and absorbed the terminology of, the earlier contractual remedy upon a quantum valebat and quantum meruit243. Over time, these counts, like other indebitatus assumpsit counts, began to be deployed where an obligation arose from the equity of the case, as if upon a genuinely implied contract (quasi ex contractu)244. But this development was hindered by the decision in Cutter v Powell, which in effect proceeded from the "axiom" that "where the parties have come to an express contract none can be implied" to the contestable conclusion that a contract for payment of a specific sum only upon completion of works precluded any obligation to pay reasonable remuneration – whether contractual or quasi-contractual – even where the 240 Simpson, A History of the Common Law of Contract: The Rise of the Action of Assumpsit (1975) at 65-66, 498-499. 241 See, eg, The Six Carpenters' Case (1610) 8 Co Rep 146a at 147a per Brian CJ [77 ER 695 at 697]; Waring v Perkins (1621) Cro Jac 626 [79 ER 539]. The point was not without controversy: see Mason v Welland (1685) Skin 238 [90 ER 109]. 242 See, eg, King v Locke (1662) 1 Keb 422 [83 ER 1030]; Tate v Lewen (1671) 2 Wms Saund 371 [85 ER 1159]. See also Ames, "The History of Assumpsit: II – Implied Assumpsit" (1888) 2 Harvard Law Review 53 at 58-60; Denning, "Quantum Meruit and the Statute of Frauds" (1925) 41 Law Quarterly Review 79 at 83-84; Pavey & Matthews (1987) 162 CLR 221 at 230-232 per Brennan J; Stoljar, The Law of Quasi-Contract, 2nd ed (1989) at 187-192; Ibbetson, A Historical Introduction to the Law of Obligations (1999) at 149. 243 See Pavey & Matthews (1987) 162 CLR 221 at 251 per Deane J. 244 See, eg, Hays v Warren (1733) W Kel 117 [25 ER 522]; Keck's Case (1744) in Bridgman (ed), Buller's Introduction to the Law Relative to Trials at Nisi Prius, 7th ed (1817) at 139a. See also Pavey & Matthews (1987) 162 CLR 221 at 232 per Brennan J; Barton, "Contract and Quantum Meruit: The Antecedents of Cutter v Powell" (1987) 8 Journal of Legal History 48 at 58-60; Ibbetson, A Historical Introduction to the Law of Obligations (1999) at 269-272. recipient of work had repudiated the contract before the other party had had the opportunity to complete the work and qualify for payment245. In mitigation of the harshness to which that gave rise, shortly after Cutter v Powell was decided, Lord Kenyon CJ held246 in Giles v Edwards that plaintiffs prevented from performance "by the defendant's default" had "a right to put an end to the whole contract and recover back the money that the plaintiffs had paid under it". Later, that reasoning was extended to goods supplied under a contract, Best CJ remarking247 in Mavor v Pyne that "[i]f a man agrees to deliver me one hundred quarters of corn, and after I have received ten quarters, I decline taking any more, he is at all events entitled to recover against me the value of the ten that I have received". Then, in Planché v Colburn248, the Court of Common Pleas held that an author who had been engaged to write a treatise for a proposed publication for children to be called "The Juvenile Library" was entitled to sue for quantum meruit after the contract was "finally abandoned". Gaselee and Bosanquet JJ emphasised249 the plaintiff's entitlement to remuneration for work done albeit never received by the publisher. Tindal CJ identified250 "the question here" – "whether the contract remained in existence or not" – as having been decided by the jury's finding of abandonment. 245 (1795) 6 TR 320 at 324 per Lord Kenyon CJ (emphasis added), see also at 325 per Ashhurst J, 325 per Grose J, 326 per Lawrence J [101 ER 573 at 575-577]. See and compare Stoljar, "The Great Case of Cutter v Powell" (1956) 34 Canadian Bar Review 288; Pavey & Matthews (1987) 162 CLR 221 at 237 per Brennan J; Barton, "Contract and Quantum Meruit: The Antecedents of Cutter v Powell" (1987) 8 Journal of Legal History 48 at 48-49, 61-62; Ibbetson, "Implied Contracts and Restitution: History in the High Court of Australia" (1988) 8 Oxford Journal of Legal Studies 312 at 317-318; Baltic Shipping (1993) 176 CLR 344 at 385 per 246 (1797) 7 TR 181 at 182 [101 ER 920 at 921]. 247 (1825) 3 Bing 285 at 288 [130 ER 522 at 524]. 248 (1831) 1 Moo & S 51. See also Planché v Colburn (1831) 5 Car & P 58 at 61-62 per Tindal CJ [172 ER 876 at 877-878] for the summing up at nisi prius. 249 (1831) 1 Moo & S 51 at 53-54. 250 (1831) 1 Moo & S 51 at 52-53. As will be apparent, the ratio of Planché v Colburn was less than clear. Nonetheless, it was cited251 in the second edition of Smith's Leading Cases as authority for a seemingly sole and general right of an innocent party in response to any repudiation of a contract "to elect to rescind" and, "on doing so, immediately sue on a quantum meruit for anything ... done ... previously to the rescision [sic]". That was something of an overstatement. But in the years which followed, it was uncritically cited and applied252, usually by reference to Planché v Colburn and Smith's Leading Cases. Three later developments in the law of contract initiated by Hochster v De La Tour253 then further undermined the theoretical basis of the rule. They were the recognition of the implied obligation of cooperation254 (now commonly described as the rule in Mackay v Dick255), the doctrine of anticipatory breach256, and the development over time of the distinctions as now understood between the concepts of abandonment by consent, termination and rescission257. Seeking to 251 Smith, A Selection of Leading Cases on Various Branches of the Law, 2nd ed (1842), vol 2 at 11-12 (emphasis in original). 252 See, eg, De Bernardy v Harding (1853) 8 Ex 822 at 823 per Hoggins and Malcolm (arguendo), 824 per Alderson B [155 ER 1586 at 1587]; Bartholomew v Markwick (1864) 15 CB (NS) 711 at 716 per Erle CJ [143 ER 964 at 966]; Slowey v Lodder (1901) 20 NZLR 321 at 351 per Morison and Skerrett (arguendo), 356-357 per Williams J, 362 per Conolly J, affd [1904] AC 442 at 451 per Lord Davey for the Privy Council. 253 (1853) 2 El & Bl 678 [118 ER 922]. 254 (1853) 2 El & Bl 678 at 688-689 per Lord Campbell CJ [118 ER 922 at 926]. See J F Burrows, "Contractual Co-operation and the Implied Term" (1968) 31 Modern Law Review 390. 255 (1881) 6 App Cas 251 at 263 per Lord Blackburn. See also Butt v M'Donald (1896) 7 QLJ 68 at 71 per Griffith CJ (Cooper and Power JJ agreeing at 71); Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 448-449 per McHugh and Gummow JJ; [1995] HCA 24. 256 Hochster (1853) 2 El & Bl 678 at 689-690 per Lord Campbell CJ [118 ER 922 at 926]. See also Walsh v Alexander (1913) 16 CLR 293 at 305 per Isaacs J; [1913] HCA 24. 257 Hochster (1853) 2 El & Bl 678 at 685 per Crompton J (arguendo) [118 ER 922 at 924-925]. See also Summers v The Commonwealth (1918) 25 CLR 144 at 151-153 per Isaacs J; [1918] HCA 33, affd (1919) 26 CLR 180; [1919] HCA 20. accommodate those developments, the editors of the last edition of Smith's Leading Cases asseverated258 that the innocent party to a repudiation was entitled alternatively to affirm the contract and demand performance, to terminate and sue for damages, or to rescind the contract ab initio and sue on a quantum meruit. But, less than a decade later, that third option was debased by the recognition in McDonald that termination for breach does not avoid a contract ab initio. Contrary to the appellants' submissions, however, so to recognise does not mean that the availability of restitutionary relief for work performed under an entire obligation up to the point of termination (as an alternative to damages for breach of contract) should now be regarded as unprincipled. For although at the time of Planché v Colburn it was considered necessary that an express contract be avoided ab initio in order to imply the quasi-contractual obligation which grounded a claim in indebitatus assumpsit for work and labour done259, it is now recognised that restitutionary obligations are imposed by operation of law in response to circumstances including the retention of a benefit received on a basis which has totally failed to materialise260. Of course, as has been observed261, it is still the case that no such obligation can arise while the reciprocal obligation for which the benefit was conferred and accepted remains enforceable, open and capable of performance. But circumstances other than the unenforceability or avoidance of a contract ab initio, including frustration and termination, may provide the occasion for, and form part of the circumstances giving rise to, an obligation to pay what is reasonable. The position which arises upon frustration of a contract is therefore instructive. Under the rule in Taylor v Caldwell262 it was once the law that, where an entire obligation to perform work and labour became impossible of performance before completion of the work, both parties were excused from further performance of the contract and neither party had any right of recovery in respect of that part of the work which had been completed or moneys paid in 258 Chitty, Denning and Harvey, A Selection of Leading Cases on Various Branches of the Law, 13th ed (1929), vol 2 at 35, 46-47. See also Denning, "Quantum Meruit and the Statute of Frauds" (1925) 41 Law Quarterly Review 79 at 79-80. 259 See Mitchell and Mitchell, "Planché v Colburn (1831)", in Mitchell and Mitchell (eds), Landmark Cases in the Law of Restitution (2006) 65 at 89-91. 260 See [169] fn 221 above. 261 See [169] above. 262 (1863) 3 B & S 826 [122 ER 309]. anticipation of its completion263. That changed with the decision of the House of Lords in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd, which recognised264 that it is not necessary that the contract be "wiped out altogether" in order to attract restitutionary relief. As Viscount Simon LC stated, where moneys are paid to secure performance of a result, and performance becomes impossible, there is a total failure of consideration in respect of moneys paid because the inducement which brought about the payment is not fulfilled. The same applies to the frustration of a contract for the provision of services. There is a total failure of consideration for the provision of the services where "the state of affairs contemplated as the basis or reason for the [services] has failed to materialise or, if it did exist, has failed to sustain itself"265. Principle, coherence and authority dictate that the position in relation to a contract terminated for repudiation be the same. Although it was once thought that the innocent party's right to recover reasonable remuneration for the work done up to the point of termination depended on the notion that termination avoided the contract ab initio – thereby leaving the way clear to imply a quasi- contractual obligation on the part of the other party to pay reasonable remuneration for that work – now it is recognised that there may be a total failure of consideration for the work so done because, by reason of the termination, the basis on which the work was done has failed to materialise or sustain itself, and that total failure of consideration is seen as the occasion and part of the circumstances giving rise to the other party's obligation to make restitution to the extent of the fair value of that work. 263 See Appleby v Myers (1867) LR 2 CP 651 at 660 per Blackburn J for the Court; Civil Service Co-operative Society v General Steam Navigation Company [1903] 2 KB 756 at 764 per Earl of Halsbury LC (Lord Alverstone CJ and Cozens-Hardy LJ agreeing at 765, 766); Chandler v Webster [1904] 1 KB 493 at 499 per Collins MR, 501 per Romer LJ, 502 per Mathew LJ; In re Continental C and G Rubber Co Pty Ltd (1919) 27 CLR 194 at 201 per Knox CJ and Barton J; [1919] HCA 62. 264 [1943] AC 32 at 47-48 per Viscount Simon LC, 52-53 per Lord Atkin, 57 per Lord Russell of Killowen, 60 per Lord Macmillan, 69-70 per Lord Wright, 73 per Lord Roche, 81, 83 per Lord Porter. See Baltic Shipping (1993) 176 CLR 344 at 356 per Mason CJ (Brennan and Toohey JJ agreeing at 367, 383). 265 Barnes [2015] AC 1 at 42 [107]-[108] per Lord Toulson JSC (Baroness Hale of Richmond DPSC, Lord Kerr of Tonaghmore, Lord Wilson and Lord Hughes JJSC agreeing), quoting Birks, An Introduction to the Law of Restitution (1989) at 223. See [188] above. Admittedly, there is a difference between frustration and termination for breach, in that, in the case of frustration, the party who has undertaken work under the contract has no right to damages for breach of contract – there being no breach of contract involved in frustration – and is, therefore, without a remedy other than restitution; whereas, in the case of termination for breach, the innocent party has a right to sue for damages for breach of contract in theory sufficient to put him or her in the position in which he or she would have been if the contract had been performed266. On that basis, it has been contended that what applies to frustration cannot or should not be transposed to termination for breach267. There is also a great deal of academic writing which is similarly critical of the existence of a non-contractual remedy upon termination. Essentially, retention of the arguments against the alternative restitutionary remedy conduce to two principal propositions. The first is that, where a contract is terminated for breach after the innocent party has partially completed the work for which the contract provides, the proper characterisation of the basis or condition on which the work was performed can only ever be the other party's promise to perform the contract (as opposed to the objective basis of the other party's performance of it), and, because the promise is enforceable by an action for damages, there is no failure of consideration268. The second is that, if it is correct to characterise the basis or condition on which the work has been undertaken as being the other party's performance of that party's contractual obligations (as opposed to being limited to that party's promise to perform them), the other party's failure to perform them yields a contractual remedy which is appropriate and adequate to put the innocent party in the position in which he or 266 See Robinson v Harman (1848) 1 Ex 850 at 855 per Parke B [154 ER 363 at 365]; Livingstone v Rawyards Coal Company (1880) 5 App Cas 25 at 39 per Lord Blackburn; Wenham v Ella (1972) 127 CLR 454 at 471 per Gibbs J; [1972] HCA 43; The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80-82 per Mason CJ and Dawson J, 98 per Brennan J, 116-117 per Deane J, 134 per Toohey J, 148 per Gaudron J, 161 per McHugh J; [1991] HCA 54. 267 See Hunter and Carter, "Quantum Meruit and Building Contracts" (1989) 2 Journal of Contract Law 95 at 113; Stewart and Carter, "Frustrated Contracts and Statutory Adjustment: The Case for a Reappraisal" (1992) 51 Cambridge Law Journal 66. 268 See, eg, McLure, "Failure of Consideration and the Boundaries of Restitution and Contract", in Degeling and Edelman (eds), Unjust Enrichment in Commercial Law (2008) 209 at 211-215; Raghavan, "Failure of Consideration as a Basis for Quantum Meruit following a Repudiatory Breach of Contract" (2016) 42 Monash University Law Review 179 at 186-187, 197. she would have been if the contract had been performed; and, therefore, there is no need or justification for the imposition of an alternative restitutionary remedy269. The first proposition is at odds with long-accepted learning in England and in this country270 and should be rejected. As Viscount Simon LC stated in Fibrosa271: "In English law, an enforceable contract may be formed by an exchange of a promise for a promise, or by the exchange of a promise for an act – I am excluding contracts under seal – and thus, in the law relating to the formation of contract, the promise to do a thing may often be the consideration, but when one is considering the law of failure of consideration and of the quasi-contractual right to recover money on that ground, it is, generally speaking, not the promise which is referred to as the consideration, but the performance of the promise. The money was paid to secure performance and, if performance fails the inducement which brought about the payment is not fulfilled. If this were not so, there could never be any recovery of money, for failure of consideration, by the payer of the money in return for a promise of future performance, yet there are endless examples which show that money can be recovered, as for a complete failure of consideration, in cases where the promise was given but could not be fulfilled". 269 See, eg, Beatson, "The Temptation of Elegance: Concurrence of Restitutionary and Contractual Claims", in Swadling and Jones (eds), The Search for Principle: Essays in Honour of Lord Goff of Chieveley (1999) 143 at 151-152; Jaffey, "Restitutionary Remedies in the Contractual Context" (2013) 76 Modern Law Review 429 at 440-441; Havelock, "A Taxonomic Approach to Quantum Meruit" (2016) 132 Law Quarterly Review 470 at 481. 270 See Fibrosa [1943] AC 32 at 48-49 per Viscount Simon LC, 72 per Lord Wright, cf at 53 per Lord Atkin, 56 per Lord Russell of Killowen, 82 per Lord Porter; David Securities (1992) 175 CLR 353 at 382 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ; Baltic Shipping (1993) 176 CLR 344 at 350-351 per Mason CJ (Brennan and Toohey JJ agreeing at 367, 383), 376 per Deane and Dawson JJ, 389 per McHugh J. See also Havelock, "A Taxonomic Approach to Quantum Meruit" (2016) 132 Law Quarterly Review 470 at 490-492. 271 [1943] AC 32 at 48. The first proposition should also be rejected for the reason that it is premised on a misconception that an obligation to pay damages for breach of contract is an obligation imposed by the contract as such, which reflects the bargain struck between the parties and which survives termination like a debt due under the contract. Traditionally, the remedial obligation to pay damages for breach of contract has been understood as an obligation "arising by operation of law"272. Whether or not there is any role for the objective or manifested intention of the parties in ascertaining boundaries of liability in an award of damages273, the proposition that the award of damages is somehow a product of the agreement of the parties as an alternative to performance is not easily reconciled with several established notions at law and in equity, including the normative principles which govern the quantification of damages274 and the grant of specific performance and injunctions on the basis that damages are an "inadequate" remedy275. The parties contract for performance, not damages. In short, as Windeyer J said, "[i]t is ... a faulty analysis of legal obligations to say that the law treats a promisor as having a right to elect either to perform his promise or to 272 Concut Pty Ltd v Worrell (2000) 75 ALJR 312 at 317 [23] per Gleeson CJ, Gaudron and Gummow JJ; 176 ALR 693 at 699; [2000] HCA 64, quoting Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 585 per Lord Goff of Chieveley; [1998] 1 All ER 883 at 893. See also Grein v Imperial Airways Ltd [1937] 1 KB 50 at 69 per Greer LJ. 273 See and compare Transfield Shipping Inc v Mercator Shipping Inc [2009] AC 61 at 68 [12] per Lord Hoffmann. See also Robertson, "The Basis of the Remoteness Rule in Contract" (2008) 28 Legal Studies 172; Lawson, "The Remoteness Rules in Contract: Holmes, Hoffmann, and Ships that Pass in the Night" (2012) 23 King's Law Journal 1; Edelman and Bourke, "F W Guest Memorial Lecture 2017: Hadley v Baxendale" (2018) 15(2) Otago Law Review 1; Edelman, McGregor on Damages, 20th ed (2018) at 196-197 [8-172]-[8-173]. 274 See Wenham v Ella (1972) 127 CLR 454 at 466-467 per Walsh J; Johnson v Perez (1988) 166 CLR 351 at 356 per Mason CJ; [1988] HCA 64. 275 See J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 at 298 per Dixon J; [1931] HCA 15; Dougan v Ley (1946) 71 CLR 142 at 150 per Dixon J; [1946] HCA 3. pay damages. Rather ... the promisee has 'a legal right to the performance of the contract'."276 The position is clearer still with respect to damages for anticipatory breach of contract. By itself, the repudiation of a contract does not entitle the innocent party to loss of bargain damages for anticipatory breach: the entitlement arises only, if at all, upon the innocent party's election to terminate the contract277, and the power of termination itself arises by operation of law, with the result that clear words are necessary to exclude it278. It follows, a fortiori, that the law, not the agreement of the parties, furnishes the obligation to pay damages consequent upon termination for breach. And that conclusion is only reinforced by authority to the effect that such damages are "available under the general law" upon termination for breach of a term fundamental in character, but "require very clear words" where the term is expressly deemed to be fundamental279. 276 Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460 at 504; [1967] HCA 3. See also Zhu v Treasurer of New South Wales (2004) 218 CLR 530 at 574-575 [128] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ; [2004] HCA 56. 277 Barrick v Buba (1857) 2 CB (NS) 563 at 579-580 per Cockburn CJ [140 ER 536 at 543-544]; Wilkinson v Verity (1871) LR 6 CP 206 at 209-210 per Willes J for the Court; Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235 at 250 per Kitto J; [1954] HCA 25; Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 458 per Gibbs, Mason and Jacobs JJ; [1976] HCA 21; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 31 per Mason J (Wilson, Deane and Dawson JJ agreeing at 38, 51, 56); [1985] HCA 14; Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 260-261 per Mason CJ (Deane, Dawson and Toohey JJ agreeing at 265); [1988] HCA 11. But see Vold, "Anticipatory Repudiation of Contracts and Necessity of Election" (1928) 26 Michigan Law Review 502 at 519, attributing this rule to dubious headnotes of Avery v Bowden (1855) 5 El & Bl 714 [119 ER 647] and Reid v Hoskins (1855) 5 El & Bl 729 [119 ER 653]. See also Liu, Anticipatory Breach 278 Concut (2000) 75 ALJR 312 at 317 [23] per Gleeson CJ, Gaudron and Gummow JJ; 176 ALR 693 at 699-700. See and compare Koompahtoo (2007) 233 CLR 115 at 136 [46] per Gleeson CJ, Gummow, Heydon and Crennan JJ. 279 Shevill v Builders Licensing Board (1982) 149 CLR 620 at 627-628 per Gibbs CJ; [1982] HCA 47. Much that has been written to the contrary proceeds from the Austinian philosophical distinction which Lord Diplock first drew between primary and secondary rights or obligations arising under a contract in Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association280, and to which his Lordship thereafter returned on 17 further occasions before his death in 1985281. It is true that, while sitting on the Court of Appeal, his Lordship described282 the secondary obligation to pay damages for breach of contract as "consensual" and related it to an assumption of responsibility. But, in the House of Lords, he repeatedly affirmed that it is the law, not the agreement of the parties, which furnishes that obligation283. Notably, in Moschi v Lep Air Services Ltd, his Lordship posited284 that an obligation to compensate in monetary terms "is substituted by operation of law" for the primary obligations. By then describing it as "just as much an obligation arising from the contract as are the primary obligations it replaces", his Lordship merely acknowledged that the contract remained the "source"285 of that liability in damages, which liability for that reason was covered by a guarantee of obligations under a contract. Such reasoning in no way denies the concurrent existence of other obligations having a different source in law, including restitution for unjust enrichment. Later, in Photo Production Ltd v Securicor Transport Ltd, his Lordship observed286 that "judicial consensus over the years", and occasionally "Parliament in passing a statute", had recognised obligations by reference to the perceived expectations of "reasonable businessmen". With respect, that is no doubt so, but the fact that courts have historically calculated damages on the basis of some such assumption is in no sense opposed to the conclusion that it is the law as opposed to the 280 [1966] 1 WLR 287; [1966] 1 All ER 309. 281 See Foxton, "How Useful is Lord Diplock's Distinction between Primary and Secondary Obligations in Contract?" (2019) 135 Law Quarterly Review 249. 282 C Czarnikow Ltd v Koufos [1966] 2 QB 695 at 730. 283 See also One Step (Support) Ltd v Morris-Garner [2019] AC 649 at 672 [34] per Lord Reed JSC (Baroness Hale of Richmond PSC, Lord Wilson and Lord Carnwath JJSC agreeing). 284 [1973] AC 331 at 350. 285 See Moschi [1973] AC 331 at 347-348, referring to "bailment", "tort" and "unsatisfied judgments" as other sources of legal obligation. See also Photo Production [1980] AC 827 at 850. 286 [1980] AC 827 at 850. contract as such that imposes the obligation to pay damages for anticipatory breach of contract. Rather, it tends to confirm it. The rights to which Dixon J referred in McDonald as having "already been unconditionally acquired" before termination for breach are not to be conceived of as including an entitlement to damages for loss of bargain which arises only upon termination; and, once that is understood, it will be seen that it denies the possibility of any inconsistency "with the obligations relevant parties undertook by their contractual arrangements"287. In the end, the parties' consensual allocation of rights and obligations says nothing about the existence of concurrent remedies following termination for repudiation; "in the absence of ... agreement, the law must decide"288. Theoretically, the second proposition has more to commend it. Arguably, the latter-day developments of the implied contractual obligation of cooperation and the doctrine of anticipatory breach have so much ameliorated the injustice289 which spawned the quasi-contractual remedy of quantum meruit for work and labour done that a restitutionary remedy is no longer necessary to alleviate the unjust enrichment of the recipient of the benefit of it. But the remedy is one of considerable practical value. A claim for restitution is a liquidated demand which, by contrast to an unliquidated claim for damages, may provide easier and quicker recovery including by way of summary judgment. And as Leeming JA observed in Fistar v Riverwood Legion and Community Club Ltd290, "there is nothing foreign to the Australian legal system in a plaintiff having alternative claims arising out of the same facts"291. Further, as United Australia Ltd v Barclays Bank Ltd shows292, the law has mechanisms for deciding when a plaintiff becomes committed to one rather than the other remedy. The doctrine of election between remedies sits in the wider framework of election and inconsistency which Stephen J considered293 in Sargent v ASL Developments Ltd. 287 Lumbers (2008) 232 CLR 635 at 663 [78] per Gummow, Hayne, Crennan and 288 Fibrosa [1943] AC 32 at 43 per Viscount Simon LC. 289 See [187] above. 290 (2016) 91 NSWLR 732 at 743 [48] (Bathurst CJ and Sackville A-JA agreeing at 291 See also Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 at 581 per Lord Wilberforce. 293 (1974) 131 CLR 634 at 641-642; [1974] HCA 40. Coherence does not depend on singularity. Coherence can be, and often is, achieved through other mechanisms294. Moreover, as Gummow J was at pains to point out in Roxborough v Rothmans of Pall Mall Australia Ltd295, ours is not a system in which the theory of unjust enrichment comes first and decisions must then be made to comply with it. It is a common law system of stare decisis that develops over time and through which general principle is derived from judicial decisions296. Unjust enrichment may be conceived of as a "unifying legal concept"297 which serves a "taxonomical function"298 that assists in understanding why the law recognises an obligation to make restitution in particular circumstances. But it is in no sense an all-embracing theory of restitutionary rights and remedies pursuant to which existing decisions are to be accepted or rejected by reference to the extent of their compliance with its proportions299. Consequently, where a doctrine of the common law has grown up over several centuries – as has the availability of restitutionary relief for work and labour done under a partially completed entire obligation following termination of a contract for breach – and the doctrine remains principled and coherent, widely accepted and applied in kindred jurisdictions, it can hardly be regarded as a sufficient basis to discard it that some of the conceptions which historically informed its gestation have since changed 294 See also O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 257-259 per 295 (2001) 208 CLR 516 at 544 [72]-[73]. See also Windeyer, Lectures on Legal History, 2nd ed (rev) (1957) at 5. 296 See also Breen v Williams (1996) 186 CLR 71 at 115 per Gaudron and McHugh JJ; [1996] HCA 57; D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 350 [26] per French CJ, Kiefel, Bell and Keane JJ; [2015] HCA 35. 297 Pavey & Matthews (1987) 162 CLR 221 at 256-257 per Deane J; David Securities (1992) 175 CLR 353 at 375 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ; Lumbers (2008) 232 CLR 635 at 665 [85] per Gummow, Hayne, 298 Equuscorp (2012) 246 CLR 498 at 516 [30] per French CJ, Crennan and Kiefel JJ; AFSL (2014) 253 CLR 560 at 579 [20] per French CJ, 618 [138] per 299 Roxborough (2001) 208 CLR 516 at 543 [70] per Gummow J, quoting Finn, "Equitable Doctrine and Discretion in Remedies", in Cornish et al (eds), Restitution: Past, Present and Future (1998) 251 at 251-252. or developed over time300. Whatever doubts might remain about the theoretical underpinnings of the doctrine by reason of the problematic nature of its origins or subsequent developments in the law of contract, it is too late now for this Court unilaterally to abrogate the coherent rule simply in order to bring about what is said to be a greater sense of theoretical order to the range of common law remedies. Admittedly, there is cause for concern about the potential for disparity between the amounts recoverable by way of restitution for work done under a contract which is terminated for breach and the amounts recoverable by way of damages for breach of contract. That phenomenon – alarmingly widespread in domestic building disputes of the kind in issue, as it appears – implies a need for development of the law in a manner which better accords to the distribution of risks for which provision has been made by contract. But, as will be explained, that is a problem which may be addressed with less far-reaching measures than abrogation of the rule of recovery and more consistently with the accepted techniques of common law development301. Ground 1 must be rejected. The contract price as a limitation on the sum recoverable Until about the turn of the twentieth century, the measure of restitutionary relief for work and labour done by an innocent party under an entire obligation in a contract terminated for repudiation was truly quantum meruit – the amount earned – and thus generally a pro rata proportion of the contract price302. By 1900, however, a practice seems to have emerged in some American jurisdictions of putting the question of assessment to the jury in the form of what the work and 300 See and compare Holmes, The Common Law (1881) at 5; Windeyer, Lectures on Legal History, 2nd ed (rev) (1957) at 109. 301 See and compare Wenham v Ella (1972) 127 CLR 454 at 466 per Walsh J. 302 Lilley v Elwin (1848) 11 QB 742 at 755 per Coleridge J for the Court [116 ER 652 at 657]; Goodman v Pocock (1850) 15 QB 576 at 580 per Lord Campbell CJ [117 ER 577 at 579]; Macnamara v Martin (1908) 7 CLR 699 at 706 per Griffith CJ (Barton J agreeing at 707); [1908] HCA 86. See also Hulle v Heightman (1802) 2 East 145 at 147-148 [102 ER 324 at 325]; Thomas v Williams (1834) 1 Ad & E 685 at 689 per Lord Denman CJ for the Court [110 ER 1369 at 1371]; Melville v De Wolf (1855) 4 El & Bl 844 at 849 per Lord Campbell CJ for the Court [119 ER 313 at 315]; Smith (ed), Addison on Contracts, 8th ed (1883) at 451-452; Skelton, Restitution and Contract (1998) at 53. labour done was worth, which directed attention only to its reasonable value rather than the contract price303. That practice was followed at the trial in Slowey v Lodder304, and, on appeal, the New Zealand Court of Appeal (whose decision was upheld by the Privy Council305) rejected an argument306 that the jury's verdict was excessive because it was "not made up on the basis of the contract". The reasoning of the Court of Appeal is doubtful. Williams J approached307 the matter on the basis that, because the contract was "rescinded", it was to be regarded as "abandoned" and thus as having no application to acts done and rights accrued up to the point of rescission. Conolly J exposed308 some difficulties with the early authorities, principally Planché v Colburn, but, like Williams J, did not fully address the leading authorities supporting the pro rata or contract measure. Nevertheless, Lodder gave rise to the notion, which has held sway since at least the last half of the twentieth century, that the amount recoverable upon a quantum meruit is the objective value of the work and labour done, usually measured by reference to the reasonable cost of performing it309. Such a method of quantification in effect equates the value of "the benefit or 'enrichment' actually or constructively accepted" by the defendant310 with the benefit to the hypothetical willing but not 303 See, eg, Merrill v Ithaca and Owego Rail Road Co (1837) 16 Wend 586 at 594 per Cowen J for the Court and Lincoln v Schwartz (1873) 70 Ill 134 at 137 per Sheldon J for the Court, cited in Sedgwick, A Treatise on the Measure of Damages, 8th ed (1891), vol 2 at 318. 304 (1901) 20 NZLR 321 at 325. 305 Lodder v Slowey [1904] AC 442. 306 (1901) 20 NZLR 321 at 353 per Chapman and Findlay (arguendo). 307 (1901) 20 NZLR 321 at 358. 308 (1901) 20 NZLR 321 at 362. 309 See, eg, Brooks Robinson [1951] VLR 405 at 409 per Dean J (Martin and Sholl JJ agreeing at 407, 409); Renard Constructions (1992) 26 NSWLR 234 at 277 per Meagher JA (Priestley and Handley JJA agreeing at 271-272, 283); Iezzi Constructions [1995] 2 Qd R 350 at 362 per McPherson JA; Sopov v Kane (2009) 24 VR 510 at 518 [24]-[25], 519 [30] per Maxwell P, Kellam JA and Whelan A-JA. 310 Pavey & Matthews (1987) 162 CLR 221 at 263 per Deane J. anxious purchaser of like services311, and that, in turn, with the expenditure by the plaintiff in reliance on the contract312. Not infrequently it has resulted in awards of restitution substantially in excess of the contract price. Sopov v Kane is one example of the phenomenon, and the amount of restitution awarded by VCAT in this case is another. In some circumstances, it is necessary or appropriate that the benefit of work to the defendant be determined without reference to a contract price. As Dixon J observed in South Australian Harbors Board v South Australian Gas Co313, identification of "a fair and reasonable rate of remuneration, in other words a quantum meruit", raises a "question of fact", the answer to which "depends very much upon the methods of reasoning which are pursued". Where the claim to quantum meruit is founded upon a contract which does not expressly fix a price for services, "usually" the value of those services will be "assessed by reference to charges commonly made by others for like services", unless no such standard is available314. In such cases, practical necessity justifies the default application of an objective price derived from outside the contract which ordinarily depends on evidence of supply costs and market conditions315. Equally, where the claim is founded on an obligation to pay for services rendered under a contract which is unenforceable, it has been held that "[o]rdinarily" the measure of restitution "will correspond to the fair value of the benefit provided (eg remuneration calculated at a reasonable rate for work 311 See and compare Spencer v The Commonwealth (1907) 5 CLR 418 at 441 per Isaacs J; [1907] HCA 82; Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 436 [49]-[50] per McHugh J; [1999] HCA 25; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259 at 275-277 [48]- [51] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; [2008] HCA 5. 312 See and compare Fuller and Perdue, "The Reliance Interest in Contract Damages: 1" (1936) 46 Yale Law Journal 52 at 54-55; The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64. 313 (1934) 51 CLR 485 at 499 (Evatt and McTiernan JJ agreeing at 508); [1934] HCA 314 South Australian Harbors Board v South Australian Gas Co (1934) 51 CLR 485 at 501 per Dixon J, see also at 490 per Starke J. 315 See Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 at 616 per Brennan J; [1982] HCA 53. actually done or the fair market value of materials supplied)"316. Prices stated in the contract are regarded as relevant, but they remain "evidence only, on the question of amount"317. That approach is informed by a legal concern that direct application of the contract price would risk incoherence with the policy of the law rendering the contract unenforceable, although this will always require consideration of that policy. As Mason and Wilson JJ noted in Pavey & Matthews Pty Ltd v Paul318: "If the effect of bringing an action on a quantum meruit was simply to enforce the oral contract in some circumstances only, though not in all the circumstances in which an action on the contract would succeed, it might be persuasively contended that the action on a quantum meruit was an indirect means of enforcing the oral contract." By contrast, where a contract is enforceable, but terminated for repudiation, there are no reasons of practicality and few in principle to eschew the contract price. It has been said that "[t]he defendant cannot refuse to abide by the contract and at the same time claim its protection" against the innocent plaintiff319. But, as has been seen320, where a contract is terminated for breach, it continues to apply to acts done up to the point of termination, and it remains the basis on which the work was done. There is, therefore, nothing about the termination of the contract as such that is inconsistent with the assessment of restitution by reference to the contract price for acts done prior to termination. The contract price reflects the parties' agreed allocation of risk321. Termination of the contract provides no reason to disrespect that allocation. Granted, there may be difficult questions of apportionment of the contract price, such as where 316 Pavey & Matthews (1987) 162 CLR 221 at 263 per Deane J. 317 See Scarisbrick v Parkinson (1869) 20 LT 175 at 177 per Kelly CB; Ward v Griffiths Bros Ltd (1928) 28 SR (NSW) 425 at 427 per Street CJ; Horton v Jones (1934) 34 SR (NSW) 359 at 367-368 per Jordan CJ; Pavey & Matthews (1987) 162 CLR 221 at 236-238 per Brennan J, 250, 252, 257 per Deane J, 267-268 per 318 (1987) 162 CLR 221 at 228. 319 Lord, Williston on Contracts, 4th ed (2003), vol 26, §68:41 at 475. 320 See [165] above. 321 See Mason, Carter and Tolhurst, Mason & Carter's Restitution Law in Australia, 3rd ed (2016) at 610 [1430]. performance of a small part of the entire obligation is the most valuable part of the contractor's work322. There may also be difficult questions in identifying the contract price, such as where the expected benefits to the contractor include not only payments of money but also the value of promises or releases. But such difficulties of valuation and apportionment have long been encountered in other areas323. The incongruity of restitutionary awards in excess of contract price, and related anomalies, have been acknowledged in other jurisdictions. In England, it has been held at first instance that there can be no justification for restitutionary recovery in excess of the contract price324. That accords with the position in some jurisdictions in the United States, which have either in effect returned to the pro rata contract price as the prima facie measure of the innocent party's recovery of quantum meruit or adopted the total contract price as a limit on the recovery otherwise assessed325. According to the Restatement of the Law Third, Restitution and Unjust Enrichment326, "modern academic commentary is almost uniformly critical of a rule that permits money 'restitution' free of the contract price". More recently, in England, the courts have adopted a more nuanced approach. In Cressman v Coys of Kensington (Sales) Ltd, Mance LJ observed327 that the "general concern" of the law on restitution "is with benefit to the particular defendant, or so-called 'subjective devaluation'"328. 322 See, eg, Whincup v Hughes (1871) LR 6 CP 78 at 81 per Bovill CJ. 323 See, eg, Attwood v Maude (1868) LR 3 Ch App 369. 324 Taylor v Motability Finance Ltd [2004] EWHC 2619 (Comm) at [26] per Cooke J. 325 See Palmer, The Law of Restitution (1978), vol 1, §4.4(c) at 398-401; Skelton, Restitution and Contract (1998) at 57-60. 326 American Law Institute, Restatement of the Law Third, Restitution and Unjust Enrichment (2011) §38 at 645. 327 [2004] 1 WLR 2775 at 2787 [28] (Thorpe LJ and Wilson J agreeing at 2795 [52], 328 See Birks, An Introduction to the Law of Restitution (1989) at 109-132; Burrows, The Law of Restitution, 3rd ed (2011) at 47-60; Virgo, The Principles of the Law of Restitution, 3rd ed (2015) at 69-72. In Benedetti v Sawiris, the Supreme Court of the United Kingdom accepted that concepts responding to subjective devaluation may be applied in appropriate cases. Lord Clarke of Stone-cum-Ebony JSC observed329 that "the starting point in valuing the enrichment is the objective market value, or market price, of the services performed", the relevant price being that "which a reasonable person in the defendant's position would have had to pay for the services". His Lordship went on to hold330, however, that, because of "the fundamental need to protect a defendant's autonomy", a defendant would be "entitled to prove that he valued the relevant services (or goods) provided by the claimant at less than the market value"; albeit, and importantly, not by reference to subjective intentions or expectations of the value of the services to the defendant at the relevant time. Lord Reed JSC, although doubting the aptness of the expression "subjective devaluation", accepted331 that a court is free to depart from market value either where receipt of a benefit is involuntary or where the recipient assumed responsibility for payment on a particular basis – for example, that the cost of the service would be a specific sum. And importantly, as his Lordship observed332, while in practice most such cases are likely to fall within the scope of the law of contract, "some could fall within the scope of unjust enrichment (eg if a contract were void or unenforceable)". Lord Neuberger of Abbotsbury PSC, although not expressing a concluded view on the subject, stated333 as follows: "In my view, it may well be that, in some cases of unjust enrichment, subjective devaluation could be invoked by a defendant to justify the award of a smaller sum than that which would be prima facie payable ... 329 [2014] AC 938 at 956 [15], 957 [17] (Lord Kerr of Tonaghmore and Lord Wilson JJSC agreeing), quoting Benedetti v Sawiris [2010] EWCA Civ 1427 at [140] per Etherton LJ (emphasis added). 330 [2014] AC 938 at 957 [18]. 331 [2014] AC 938 at 986-987 [113]-[117]. 332 [2014] AC 938 at 987 [115]. 333 [2014] AC 938 at 1006 [187], 1007-1008 [191]-[192]. [I]t may often be unreasonable for a claimant to claim a market-based payment ... where there have been prior discussions and the defendant has indicated that he would not be prepared to pay as much as the market price for the benefit. It would seem wrong ... for the claimant to be better off as a result of the law coming to his rescue, as it were, by permitting him to invoke unjust enrichment, than he would have been if he had had the benefit of a legally enforceable contractual claim for a quantified sum." Their Lordships' observations in Benedetti accord with the contention in Goff & Jones334, and the contentions of other leading academic writers to similar effect335, that the law of restitution should respect the contracting parties' allocation of risk. In that regard, the learned editors of Goff & Jones state336 that: "this is not indirectly to enforce the terms of a contract that has been terminated; rather, it is a reflection of the fact that the ground of recovery is failure of basis, and the parties have agreed what the basis of the transfer is to be. The contract price implicitly allocates certain risks to the supplier of the goods or services, such as the risk that the market value of the goods or services will increase before performance, and the risk that the goods or services prove to be more costly to supply than the supplier had anticipated. Allowing a supplier bringing an action in unjust enrichment to recover more than the contract price for any goods or services supplied under the contract would clearly reallocate those risks to the purchaser." Until recently, one view of English restitutionary jurisprudence was to treat the concept of unjust enrichment as if it were a definitive legal principle that supplies a sufficient premise for direct application by rigid, uniform application of questions concerning whether there is (1) an enrichment, (2) at the plaintiff's 334 Mitchell, Mitchell and Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 9th ed (2016) at 51 [3-10], 53-54 [3-16]-[3-17], 71-72 [3-52]-[3-54]. 335 Virgo, The Principles of the Law of Restitution, 3rd ed (2015) at 99-102; Edelman and Bant, Unjust Enrichment, 2nd ed (2016) at 84, 141-151; Mason, Carter and Tolhurst, Mason & Carter's Restitution Law in Australia, 3rd ed (2016) at 95-96 [215], 609-610 [1430]; Furst and Ramsey, Keating on Construction Contracts, 10th ed (2016) at 283-284 [9-062]. 336 Mitchell, Mitchell and Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 9th ed (2016) at 71-72 [3-54]. expense, (3) in circumstances of an unjust factor, and (4) subject to defences337. Within that rigid approach, there was something of a tendency to treat tests for and measures of "enrichment" as governed by a single principle; thus encouraging a view of the benefit abstracted from the contract price338. More recently, some members of the Supreme Court of the United Kingdom have cautioned against mechanical application of the "four questions" of enrichment, expense, injustice and defences339. In Swynson Ltd v Lowick Rose Llp, Lord Sumption JSC denied340 that English law had a universal theory which explains all of the cases in which restitution is available. In view of those developments, it may be that the law of restitution in the United Kingdom and the law of restitution in Australia are no longer quite as far apart as was previously imagined. Whether or not that is so, however, in this country restitution arises in recognised categories of case and is not necessarily available whenever, and to the extent that, a defendant is enriched at the plaintiff's expense in circumstances that render the enrichment unjust341. Although, over time, novel categories of 337 See, eg, Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221 at 227 per Lord Steyn, 234 per Lord Hoffmann; Benedetti [2014] AC 938 at 955 [10] per Lord Clarke of Stone-cum-Ebony JSC (Lord Kerr of Tonaghmore and Lord Wilson JJSC agreeing); Menelaou v Bank of Cyprus Plc [2016] AC 176 at 187 [18] per Lord Clarke of Stone-cum-Ebony JSC, 197 [61] per Lord Neuberger of Abbotsbury PSC. See Mitchell, Mitchell and Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 9th ed (2016) at 8 [1-09]. 338 See, eg, Birks, An Introduction to the Law of Restitution (1989) at 116-117. 339 See, eg, Investment Trust Companies v Revenue and Customs Commissioners [2018] AC 275 at 295 [40]-[42] per Lord Reed JSC (Lord Neuberger of Abbotsbury PSC, Lord Mance, Lord Carnwath and Lord Hodge JJSC agreeing); Swynson Ltd v Lowick Rose Llp [2018] AC 313 at 326 [22] per Lord Sumption JSC (Lord Neuberger of Abbotsbury PSC, Lord Clarke of Stone-cum-Ebony and Lord Hodge JJSC agreeing), 351-352 [110]-[112] per Lord Neuberger PSC. See also Skandinaviska Enskilda Banken AB (Publ) v Conway [2019] 3 WLR 493 at 520-521 [79]-[80] per Lord Reed, Lord Wilson, Lord Lloyd-Jones, Lord Briggs and Sir Donnell Deeny. 340 [2018] AC 313 at 326 [22] (Lord Neuberger of Abbotsbury PSC, Lord Clarke of Stone-cum-Ebony and Lord Hodge JJSC agreeing). 341 David Securities (1992) 175 CLR 353 at 378-379 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ; AFSL (2014) 253 CLR 560 at 595 [73]-[74] per Hayne, Crennan, Kiefel, Bell and Keane JJ, 618 [139] per case may come to be recognised, or existing categories refined, that must occur in accordance with the common law's ordinary process of incremental development: by analogy with decided cases, albeit that, within that process of development and refinement, the four questions may serve to focus attention on the nature, availability and measure of restitutionary relief, and so assist in structuring understanding as to avoid the development of the law of unjust enrichment degenerating into an exercise in idiosyncratic discretion. Accordingly, in this country, it has not been found necessary to resort to a generalised approach of so-called subjective devaluation and, at least to that extent, what was held in Benedetti is incapable of direct application. But the concerns which inform the analysis in Benedetti are just as relevant here as they are in England. For just as a contract may inform the scope of fiduciary and other equitable duties342, the price at which a defendant has agreed to accept the work comprising an entire obligation is logically significant to the amount of restitution necessary to ensure that the defendant's retention of the benefit of that work is not unjust and unconscionable. In point of principle, deference to contract as a reflection of parties' agreed allocation of risk is at least as appropriate in Australia as it is in England343. As has been seen, the decision of the Supreme Court of the United Kingdom in Benedetti did not go so far as to make the contract price the limit of restitutionary recovery. Although supportive of the conclusion that the amount to be allowed by way of restitution should not ordinarily exceed the contract price, it leaves open the possibility of exception. It is appropriate that this Court adopt a similar approach. It is consistent with the Australian understanding of restitutionary remedies that a contract, although discharged, should inform the content of the defendant's obligation in conscience to make restitution where the failed basis upon which the work and labour was performed was the contractor's right to complete the performance and earn the price according to the terms of the contract. It is, therefore, appropriate to recognise that, where an entire obligation 342 See, eg, Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 97 per Mason J; [1984] HCA 64; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 291 [52] per Gummow, Hayne, Heydon, Kiefel and Bell JJ; [2009] HCA 44, quoting The Equity Trustees Executors & Agency Co Ltd v New Zealand Loan & Mercantile Agency Co Ltd [1940] VLR 201 at 205 per Lowe J; Friend v Brooker (2009) 239 CLR 129 at 150-151 [47] per French CJ, Gummow, Hayne and Bell JJ; [2009] HCA 21. 343 See and compare Lumbers (2008) 232 CLR 635 at 662-663 [78]-[79] per Gummow, Hayne, Crennan and Kiefel JJ. (or entire divisible stage of a contract) for work and labour (such as, for example, an entire obligation under or an obligation under a divisible stage of a domestic building contract) is terminated by the plaintiff upon the plaintiff's acceptance of the defendant's repudiation of the contract, the amount of restitution recoverable as upon a quantum meruit by the plaintiff for work performed as part of the entire obligation (or as part of the entire divisible stage of the contract) should prima facie not exceed a fair value calculated in accordance with the contract price or appropriate part of the contract price. So to recognise does not exclude the possibility of cases where, in accordance with principle, the circumstances will dictate that it would be unconscionable to confine the plaintiff to the contractual measure. One such possibility is arguably afforded by the infamous case of Boomer v Muir344, which has been explained345 on the basis of the defendant's continuing breaches being responsible for a cost overrun that rendered the contract unprofitable. As Dooling J observed in that case346, the question whether the plaintiff could recover in excess of the contract price "depends upon whether it is equitable to permit" the plaintiff to depart from the pricing structure agreed with the defendant. Nonetheless, as Lord Neuberger of Abbotsbury PSC observed in Benedetti347, in many such cases it would appear wrong that a claimant should be entitled to a better result in restitution than would have been available to him or her under contract. In this matter, it was not suggested that there are circumstances sufficient to warrant departure from the prima facie position that a claimant should not achieve a better result by way of restitution than under the contract. It follows that VCAT was in error in assessing the amount of restitution otherwise than in accordance with the contract rates. Ground 2 should be upheld. 344 (1933) 24 P 2d 570. 345 See Cohen, "The Fault Lines in Contract Damages" (1994) 80 Virginia Law Review 1225 at 1304-1305; Gergen, "Restitution as a Bridge Over Troubled Contractual Waters" (2002) 71 Fordham Law Review 709 at 711-712. See and compare Andersen, "The Restoration Interest and Damages for Breach of Contract" (1994) 53 Maryland Law Review 1 at 22-26. 346 (1933) 24 P 2d 570 at 576 (Spence A-PJ and Sturtevant J agreeing at 580). 347 [2014] AC 938 at 1007-1008 [192]. Remitter to VCAT and costs The appellants contended that, if the matter were remitted to VCAT for further determination, it should be remitted to VCAT constituted otherwise than by Senior Member Walker. The basis for that contention was submitted to be that the Senior Member made adverse findings as to the credibility of the appellants, in particular of the first appellant, that the Senior Member had already expressed a view upon the facts and found in favour of the respondent's restitutionary claims, and that, if remitted, there would need to be a further hearing with evidence led as to the question of valuation of the construction costs in accordance with this Court's ruling. Thus it was submitted that it would be fairer to the parties that the matter be heard and decided by a differently constituted Tribunal348. The contention is not persuasive. Ultimately, it will be a matter for VCAT to decide how it is to be composed for the purposes of the further determination. But it is to be observed that, subject to the overriding discretion of VCAT, there should be no need or justification for any of the parties to have an opportunity of adducing further evidence. The further determination should involve no more than the application of the law, as explained in these reasons, to the facts as already found, and the recalculation of amounts in accordance with contractual rates and, if determined by VCAT to be applicable by reference to the criteria prescribed by s 38(6)(b), by reference to the rate prescribed in relation to variations by s 38(7) of the DBC Act. The evidence already adduced and the findings already made are complex and extensive, and it is evident that the Senior Member, with the benefit of having dealt with the matter until now, would be much better placed to apply the evidence and findings than would another member coming freshly to the task. Given the nature of the task involved in the redetermination, it is difficult to accept, or even suppose, that the hypothetical observer could reasonably perceive a realistic possibility of any degree of bias. The respondent contended that, if the appeal were allowed, the costs of the appeal from VCAT to the primary judge should be reserved to his Honour for redetermination. The basis of that contention was said to be that, because the appellants had originally advanced 13 questions of law and 17 grounds of appeal, but proceeded with only two issues, there were likely to be costs thrown away 348 See Northern NSW FM Pty Ltd v Australian Broadcasting Tribunal (1990) 26 FCR 39 at 40. See also Johnson v Johnson (2000) 201 CLR 488 at 492 [11] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; [2000] HCA 48; Isbester v Knox City Council (2015) 255 CLR 135 at 146 [20]-[23] per Kiefel, Bell, Keane and Nettle JJ; [2015] HCA 20. which the appellants should bear and which his Honour would be best placed to determine. That contention is also unpersuasive. As already noticed, senior counsel for the appellants informed the primary judge at the outset of his opening that there were only two issues, and thereafter the application for leave to appeal and the appeal to his Honour proceeded accordingly. Consequently, although it is not inconceivable that there were some costs thrown away by reason of the inclusion in the appellants' notice of appeal of the other grounds and questions of law, it is not apparent that they were substantial enough to justify departure from the ordinary course that costs should follow the event. The ordinary course should be adhered to. Conclusion and orders It follows that the appeal should be allowed with costs. Orders 1, 2 and 3 of the Court of Appeal should be set aside. In their place, it should be ordered that the application for leave to appeal be granted; the appeal to the Court of Appeal be allowed with costs; orders 2 to 5 of the primary judge be set aside and, in their place, it be ordered that the appeal to the primary judge be allowed with costs; the orders of VCAT be set aside; and the matter be remitted to VCAT for further determination according to law.

HIGH COURT OF AUSTRALIA LEGAL SERVICES BOARD APPELLANT AND RESPONDENT Legal Services Board v Gillespie-Jones [2013] HCA 35 14 August 2013 ORDER Appeal allowed. Order 1 of the orders made by the Court of Appeal of the Supreme Court of Victoria on 19 April 2012 be set aside, and, in its place, order that: the appeal from the order made by the County Court of Victoria on 1 April 2011 be allowed; and paragraphs 1–4 of the order made by the County Court on 1 April 2011 be set aside, and, in their place, order that the appeal from the decision of the Legal Services Board made on 20 October 2009 be dismissed. On appeal from the Supreme Court of Victoria Representation N J Young QC with S R Senathirajah for the appellant (instructed by Legal Services Board) M F Wheelahan SC with M F Fleming SC and B J McCullagh for the respondent (instructed by Billings Cloak) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Legal Services Board v Gillespie-Jones Legal practitioners – Legal Practitioners Fidelity Fund ("Fidelity Fund") – Barrister briefed by solicitor to appear for client – Money paid into general trust account by client on account of legal costs – Money misappropriated by solicitor – No finding that client instructed solicitor to pay third parties – Whether barrister entitled to claim against Fidelity Fund for unpaid fees. Words and phrases – "default", "failure to pay or deliver trust money", "pecuniary loss", "persons for or on whose behalf money is held", "transit money", "trust money". Legal Profession Act 2004 (Vic), Pts 3.3, 3.6. FRENCH CJ, HAYNE, CRENNAN AND KIEFEL JJ. In 2006, a person charged with criminal offences ("the client") retained Mr Michael Grey ("the solicitor"), who was the principal of the firm Poulton Elliott & Grey, to act for him in connection with forthcoming criminal proceedings. The respondent, Mr Gillespie-Jones ("the barrister"), was briefed by the solicitor to appear for the client in those proceedings. The client made a series of payments to the solicitor on account of his legal costs. Most of the monies supplied were misappropriated by the solicitor. The amount remaining was insufficient to meet the barrister's unpaid fees. The barrister made a claim against the Legal Practitioners Fidelity Fund ("the Fund"). The Fund is maintained by the Legal Services Board ("the Board") under the Legal Profession Act 2004 (Vic) ("the LPA")1. Compensation is payable out of the Fund2 where a claim is allowed under Pt 3.6 of the LPA. A claim may be allowed under that Part where a person establishes that there has been a default which has caused that person pecuniary loss3. One circumstance of default is when a law practice fails to pay or deliver trust money received by it, where the failure arises from an act of dishonesty4. The barrister's claim was rejected by Her Honour Judge Kennedy of the County Court of Victoria allowed the barrister's appeal and his claim5. The Court of Appeal of the Supreme Court of Victoria (Nettle, Redlich and Hansen JJA) dismissed an appeal from her Honour's decision6. the Board. 1 Legal Profession Act 2004 (Vic), s 6.7.15(1). Amendments were made to the Legal Profession Act 2004 with effect from May 2007. These reasons refer to the Act as it stood as at the time of the relevant events, prior to the date that these amendments took effect. 2 Legal Profession Act 2004, s 6.7.16. 3 Legal Profession Act 2004, s 3.6.7. 4 Legal Profession Act 2004, s 3.6.2. 5 Gillespie-Jones v Legal Services Board [2011] VCC 223. 6 Legal Services Board v Gillespie-Jones [2012] VSCA 68. Hayne Crennan The client's payments Prior to the barrister being briefed, the solicitor and a senior counsel had acted for the client in committal proceedings. During this period, the client paid the sum of $21,700, by way of cheques and cash, to the solicitor on account of his legal costs. Not all of these monies were paid by the solicitor into his law practice's general trust account. The client also paid directly to the senior counsel an amount greater than the fees ultimately rendered by the senior counsel; the senior counsel's clerk transferred the balance of $8,400 to the solicitor. This amount was never refunded to the client. The barrister was briefed to appear for the client between December 2006 and April 2007. Between 19 December 2006 and 9 May 2007, the client paid a further $55,000 to the solicitor. Of the total sum of $85,100 received by the solicitor, the solicitor dishonestly appropriated $63,030 to himself. The $55,000 which was paid to the solicitor in the latter period was effected by 11 electronic transfers of $5,000 each from the client's account to the solicitor's law practice's general trust account. Seven of the transfers were denoted with the name of the solicitor together with the name of the barrister such as in "Grey & SG Jones" or "Grey & Simon". The other four transfers referred to the barrister as "Sgj via M Grey" or similar. In his evidence before the primary judge, the client explained that he used initials and words such as "Sgj via M Grey" on the transfers because the solicitor had told him that he, the solicitor, had to pay the barrister. The client understood that he could not himself engage a barrister. When the solicitor asked him for money, he assumed that it related to "whatever expenses" including the engagement of whoever was to appear for him. When asked to whose engagement he referred, he replied: "[e]verybody that come and help me". Asked whether there was a person specified, he answered: "[y]es, is [the barrister] and I think the doctor was included, I think [the solicitor] say that, you know, I need to pay him for more legal expenses." The client's instruction was "to pay [the solicitor], to pay whoever that has been engaged." He assumed that the money the solicitor had asked him to pay "was to pay whoever, that [the solicitor] said he was going to pay." It may at the least be inferred that the payments were made by the client at the request of the solicitor and that they were made in order to enable the solicitor to pay the client's legal costs. The primary judge considered whether the instruction, so far as it related to the barrister's fees, was more specific and made Hayne Crennan findings in that regard7. It is also to be inferred that the monies were not to be used for any purpose other than the payment of legal costs and that any balance was to be repaid to the client. The barrister periodically submitted memoranda of his fees to the solicitor, but the client did not see them. There was no costs agreement between the barrister and the solicitor or between the client and either the solicitor or the barrister. The client was not told what the solicitor's or the barrister's fees might be. The total of the barrister's fees was $53,610, of which $31,540 was unpaid. There is no dispute that the barrister's fees for the services that he had rendered were fair and reasonable. There does not appear to be any dispute that, had the monies not been misappropriated, there would have been sufficient money in the solicitor's law practice's general trust account to meet the client's legal costs, including the barrister's fees. The LPA – Pt 3.6 The general purposes of the LPA8 are to improve the regulation of the legal profession and facilitate the regulation of legal practice on a national basis. It was enacted as part of national reforms which aimed to regulate the legal profession in a uniform manner throughout Australia9. The LPA was based largely on10 the first edition of the Model Provisions11, which had been provided to the Standing Committee of Attorneys-General in July 2004. Provision is made for the Fund in Pt 6.7 of the LPA. The Board is required to maintain it12 and to pay into it contributions and levies from legal 7 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [84]-[94]. 8 Legal Profession Act 2004, s 1.1.1. 9 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 16 November 10 Victoria, Legislative Assembly, Legal Profession Bill 2004, Explanatory Memorandum at 1. 11 Parliamentary Counsel's Committee, Legal profession—model laws project: Model Provisions, (2004). 12 Legal Profession Act 2004, s 6.7.15(1). Hayne Crennan practitioners, together with certain other monies13. The stated purpose of the Fund is that it "is to be applied by the Board for the purpose of compensating claimants in respect of claims allowed under Part 3.6 in respect of defaults to which that Part applies."14 Part 3.6 appears in Ch 3, which deals with a number of subjects. On this appeal, attention is directed to Pts 3.3 and 3.6, which are respectively entitled "Trust Money and Trust Accounts" and "Fidelity Cover". Other subjects dealt with in Ch 3 include "Manner of Legal Practice" and "Professional Indemnity Insurance". The purpose of Pt 3.6 is stated in s 3.6.1. It is to compensate persons15 "for loss arising out of defaults by law practices arising from acts or omissions of associates"16. The LPA defines17 an associate to include a partner in the law practice. Section 3.6.7(1) identifies a person entitled to claim and the essential elements of the claim. It provides: "A person who suffers pecuniary loss because of a default to which this Part applies may make a claim against the Fidelity Fund to the Board about the default." It may be observed at this point that s 3.6.7(1) is cast in terms of causation. The event which causes pecuniary loss, and upon which a claim may be based, is "a default". The centrality of a default to the scheme for compensation in Pt 3.6 is confirmed by the provision dealing with the Board's powers in respect of a claim. The Board may disallow a claim "to the extent that the claim does not relate to a default for which the Fidelity Fund is liable."18 13 Legal Profession Act 2004, s 6.7.17. See also Legal Profession Act 2004, s 6.7.24. 14 Legal Profession Act 2004, s 6.7.16. 15 See below at [24]-[26]. 16 The section also refers to defaults by approved clerks, but it will not be necessary in these reasons to mention this class of person. 17 Legal Profession Act 2004, s 1.2.4(1)(a)(ii). 18 Legal Profession Act 2004, s 3.6.14(2). Hayne Crennan The definition of "default" assumes importance on this appeal as does the definition of "pecuniary loss". In the case of a law practice, "default" means19: a failure of the practice to pay or deliver trust money or trust property that was received by the practice or an associate of the practice in the course of legal practice by the practice or an associate, if the failure is constituted by or arises from an act or omission of an associate that involves dishonesty; or a fraudulent dealing with trust money or trust property that was received by the practice or an associate of the practice in the course of legal practice by the practice or an associate, if the fraudulent dealing is constituted by or arises from an act or omission of an associate that involves dishonesty". A "pecuniary loss" is defined to mean20: the amount of trust money, or the value of trust property, that is not paid or delivered; or the amount of money that a person loses or is deprived of, or the loss of value of trust property". It may be observed that par (a)(i) of the definition of "default" corresponds with par (a) of the definition of "pecuniary loss" as does par (a)(ii) with par (b). Here, the barrister's pecuniary loss is said to have resulted from the trust money which was not paid or delivered. That loss is neither more nor less than the amount of the money not paid or delivered. What constitutes a "failure to pay or deliver trust money" is not specified. In the context of a practice in receipt of trust money, it must be taken to convey non-compliance with an instruction to pay or deliver trust money to another person, that instruction having been given by the client or other person entitled to give such an instruction. It must be understood, in the context of a default, as an instruction to pay to a third person because it is contemplated that the failure to pay or deliver it may result in loss to that person. 19 Legal Profession Act 2004, s 3.6.2. 20 Legal Profession Act 2004, s 3.6.2. Hayne Crennan "Trust money" is not a term defined in Pt 3.6. A definition can be found in s 3.3.2(1), in Pt 3.3. "Trust money" in relation to a law practice is there generally defined as: "money received in the course of or in connection with the provision of legal services by the law practice for or on behalf of another person". More specifically, it includes "money received on account of legal costs in advance of providing the services". "Legal costs" is defined21 to mean "amounts that a person has been or may be charged by, or is or may become liable to pay, a law practice for the provision of legal services including disbursements". There can be no doubt that the sums paid by the client in this case were trust money in this sense. "Trust money" also includes "transit money", which is defined22 to mean "money received by a law practice subject to instructions to pay or deliver it to a third party, other than an associate of the practice"23. It will be recalled that the failure of a practice to pay or deliver trust money, in the definition of default, comprehends such an instruction. The LPA – Pt 3.3 The issues raised by the Board's submissions and by the reasons of the Court of Appeal direct attention to the relationship, if any, between Pts 3.6 and 3.3. It is therefore necessary to identify those aspects of Pt 3.3 which are said to be relevant to the construction of Pt 3.6 and to an entitlement to claim or recover compensation. One issue concerns the protective purpose of Pt 3.3 and the persons to whom that Part is directed. Section 3.3.1(a) states that one purpose of Pt 3.3 is "to ensure that trust money is held by law practices … in a way that protects the interests of persons for or on whose behalf money is held" (emphasis added). 21 Legal Profession Act 2004, s 1.2.1. 22 Legal Profession Act 2004, s 3.3.2(1). 23 The definition of "trust money" in s 3.3.2(1) of the Legal Profession Act 2004 also includes "controlled money", which is defined as money received by a law practice subject to a written direction to deposit it in an account over which the practice has exclusive control, and money the subject of a "power to deal" with it for or on behalf of another person. Neither is relevant to the issues on the appeal. Hayne Crennan Another issue raised by the Board concerns compliance with certain procedures of Pt 3.3 and whether this was a precondition to making any payment to the barrister. The starting point is the requirement that a general trust account be maintained by a law practice24. Trust money, with certain exceptions, must be deposited in such an account25. The law practice must hold trust money deposited in its general trust account "exclusively for the person on whose behalf it is received" and "disburse [it] only in accordance with a direction given by the person."26 An exception to the rule that trust money must be deposited in a general trust account is transit money27. This is no doubt because it is subject to a specific instruction to pay a third party. Two particular provisions concerning dealings with, and more particularly withdrawals from, a general trust account are relied upon by the Board. Section 3.3.18(1) provides that money standing to the credit of a general trust account "is not available for the payment of debts of the practice". The Board says that the relevant contract was between the solicitor and the barrister and therefore that the barrister's fees were a debt owed by the solicitor. lien does not provide an authorisation Section 3.3.20(1)(a) provides for a law practice to exercise a lien for legal costs (a term, it will be recalled, which is defined to include disbursements). But trust money. Section 3.3.20(1)(b) requires that trust money may only be withdrawn "for payment to the practice's account for legal costs owing to the practice" if the procedures prescribed in the regulations are complied with. Regulation 3.3.3428 prescribes such procedures. Unless there is a costs agreement (and, it will be recalled, there was no costs agreement in this case) or the money is owed to the practice by way of a reimbursement of money already paid on behalf of a person, an instruction is required from the client authorising the withdrawal29. The regulations also require, for a withdrawal, that the law practice requests payment to withdraw 24 Legal Profession Act 2004, s 3.3.11. 25 Legal Profession Act 2004, s 3.3.13. 26 Legal Profession Act 2004, s 3.3.14(1). 27 Legal Profession Act 2004, s 3.3.13(1)(c). 28 Of the Legal Profession Regulations 2005 (Vic). 29 Legal Profession Regulations 2005, reg 3.3.34(3)(a). Hayne Crennan to be made and sends a bill to the client, and that the client does not make an objection to the bill within a specified period30. The decisions below and issues on the appeal It is convenient to refer first to a matter which is no longer in issue. Section 3.6.1 states the purpose of Pt 3.6 to be to compensate "clients"31. The Board, by reference to this section, held that compensation could be paid only to a client of a law practice. Neither the primary judge32 nor the Court of Appeal33 accepted that this view was supported by Pt 3.6, read as a whole. They both held that the word "person" in s 3.6.7, which sets out who may make a claim against the Fund, ought to be given its ordinary meaning. That construction is plainly correct. The reference to "clients" must be taken to refer to part only of the class of persons who may seek compensation, given that s 3.6.7, the operative provision, contains a different and wider term. That "persons", and not just clients, are to be compensated, if they can establish the matters required by s 3.6.7, is confirmed by: the reference to "persons" as claimants in the Model Provisions34, upon which Pt 3.6 is based; the wording of s 6.7.16, referred to above35; and s 3.6.28. Section 3.6.28 provides that an associate of a law practice may make a claim under s 3.6.7 if the associate suffers pecuniary loss because of a default of the law practice arising from the act or omission of another associate of the practice. As the Court of Appeal observed36, it would be difficult to discern a legislative intention to allow innocent associates of a defaulting solicitor to have access to the Fund but not innocent third parties. 30 Legal Profession Regulations 2005, regs 3.3.34(3)(b), 3.3.34(4). 31 Section 3.1.1(2) of the Legal Profession Act 2004 is in similar terms. 32 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [57]-[58]. 33 Legal Services Board v Gillespie-Jones [2012] VSCA 68 at [41]. 34 Parliamentary Counsel's Committee, Legal profession—model laws project: Model Provisions, (2004), s 802. 36 Legal Services Board v Gillespie-Jones [2012] VSCA 68 at [39]. Hayne Crennan The first issue – compliance with Pt 3.3 procedures Her Honour the primary judge found that a "default", for the purposes of Pt 3.6, was established37 and that the barrister had suffered a pecuniary loss as a result38. Her Honour found that there had been a failure to pay or deliver trust money. In characterising the relevant money, her Honour did not accept the barrister's submission that the money was "transit money"39. Her Honour found that each of the payments made by the client to the solicitor was provided for paying "everybody that was to come and help him" in his defence. Her Honour rejected the submission that "composite money" could be stamped with the character of transit money. It is to be inferred that her Honour was referring to money intended to be paid to more than one person. Her Honour said that, because different consequences follow if money is transit money, such as it not having to be paid into a law practice's general trust account, it is necessary for it to be clearly identified as such. It had not been clearly identified in the present case because the money was "potentially designated for [the solicitor] himself"40. Her Honour appears to have considered that the money could satisfy that part of the definition of "trust money" which refers to money that is the subject of a power to deal with it for or on behalf of another person41, although her Honour took the "other person" to be the client. This finding does not assume importance on the appeal. The finding to which attention is now directed is that the money was trust money because it was "received by the practice on account of legal costs in advance of providing the services"42. The solicitor's failure to pay or deliver trust money was constituted by the solicitor's failure to pay in accordance with a direction given by the client43. The 37 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [107]-[108]. 38 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [110]-[111]. 39 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [84]-[90]. 40 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [89]. 41 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [92]. 42 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [90]-[91]. 43 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [97], [99]. Hayne Crennan obligation cast by s 3.3.14(1)(b), to disburse trust money "only in accordance with a direction given by the person", had been breached. It was breached because the solicitor disbursed the trust money, her Honour found, "contrary to the direction given by [the client] to pay for his legal costs and instead [the solicitor] … used that money for himself." 44 It has earlier been observed45 that a "failure to pay or deliver trust money" in the context of the definitions of "default" and "pecuniary loss" necessarily involves an instruction to pay or deliver trust money to a third person which is not complied with. It is a feature of her Honour's findings, one which is important to the outcome of this appeal, that her Honour did not find that such an instruction was given to pay the barrister's fees. The effect of the findings is in fact contrary to the existence of such an instruction. In relation to whether there had been a default, her Honour found46 that the money was received by the practice on account of legal costs and could be disbursed only in accordance with the client's directions under s 3.3.14. This suggests that the initial instruction did not involve a direction to pay a third party. Her Honour's conclusion that there had been a default did not involve a finding of a failure to comply with an instruction to pay a third party but, more generally, that s 3.3.14 had been breached because the solicitor used the money for himself and not for its designated purpose, the payment of legal costs47. These findings are consistent with those concerning whether the trust money was transit money. Significantly, the finding that the money was designated by the client to the solicitor on account of costs, generally, would appear to involve a rejection of any finding that there was at the same time an instruction to pay the barrister. Her Honour rejected the Board's argument that a "failure" to pay trust money was dependent upon a solicitor's compliance with the procedural requirements of Pt 3.3 and in particular s 3.3.2048. Her Honour held that, if a solicitor has disbursed trust money contrary to the client's directions, then that 44 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [97]. 45 At [16] above. 46 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [99]. 47 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [97], [99]. 48 Gillespie-Jones v Legal Services Board [2011] VCC 223 at [101]-[102]. Hayne Crennan solicitor has "failed" to pay trust money, regardless of whether he or she has complied with procedures. The Board now repeats the submission that it made to the Court of Appeal on this issue. It submits that because a claim under Pt 3.6 involves a failure to pay trust money, the barrister must establish that he had an immediate right to receive payment for his fees at the time of default. Until the procedural requirements of Pt 3.3 have been met, there can be no failure to pay trust money held in a law practice's trust account. In the Board's submission, the requirements of Pt 3.3 present an insurmountable barrier to the barrister's claim. The second issue – who is entitled to claim compensation? In the Court of Appeal, the Board argued that it was necessary to interpret Pt 3.6 in light of Pt 3.3, and in particular the protective purpose of the latter, which is stated in s 3.3.1(a). The Board contended that an entitlement to claim under Pt 3.6 is limited, by implication derived from s 3.3.1, to the interests of persons "for or on whose behalf" trust money was held by the defaulting solicitor. Such a person must have a legal or equitable interest in the money. The question which the Court of Appeal posed for itself was "whether [the barrister] was a person 'for or on whose behalf' the money the subject of default was held"49. The Court accepted50 that, insofar as Pt 3.6 is concerned with providing compensation to those who suffer pecuniary loss regarding trust money, Pt 3.6 is "logically to be seen as limited to the interests of persons for or on whose behalf the trust money the subject of the default was held." This followed because Pt 3.6 is concerned with trust money, amongst other things, and Pt 3.3 regulates how such money is to be dealt with. The Court of Appeal considered that the word "interests" in s 3.3.1 is co- ordinate with the expression "for or on whose behalf" the money or property is held; but it did not follow that "interests" were limited to legal or equitable interests51. It was sufficient that the barrister had a contingent interest in the fund, constituted by the monies paid by the client, which was held on trust for payment to him when his fees became due52. The Court of Appeal characterised 49 Legal Services Board v Gillespie-Jones [2012] VSCA 68 at [51]. 50 Legal Services Board v Gillespie-Jones [2012] VSCA 68 at [49]-[50]. 51 Legal Services Board v Gillespie-Jones [2012] VSCA 68 at [53]. 52 Legal Services Board v Gillespie-Jones [2012] VSCA 68 at [59]. Hayne Crennan the trust as one in the nature of a Quistclose trust53, which was to be implied from the fact that the client paid the monies to the solicitor to be applied to a particular The Board submits that the facts do not permit this finding. It further submits that a trust of the kind identified by the Court of Appeal is inconsistent with the requirements of Pt 3.3, which prescribe how trust money is to be applied. In particular, s 3.3.14 requires that trust money be held exclusively for the persons "on whose behalf it is received" and that it be disbursed only in accordance with a direction given by that person. By Notice of Contention, the barrister challenges the underlying premise for the Court of Appeal's finding. He contends that the Court of Appeal erred in holding that the benefit afforded by Pt 3.6 may only be given to a person "for or on whose behalf money is held". In the barrister's submission, none of the provisions of Pt 3.6 requires that a claimant have an interest of this kind. On this view, the Court of Appeal's construction imports a limitation upon the class of persons entitled to claim compensation, one which is not consistent with the language of Pt 3.6. Is compliance with Pt 3.3 procedures a condition of compensation under Pt 3.6? Clearly the monies paid by the client fall within that part of the definition of "trust money" which refers to "money received on account of legal costs in advance of providing the services", as the primary judge found. As such, they were required to be paid into the solicitor's law practice's general trust account, from which point they would have become subject to the provisions of Pt 3.3 concerning dealings with trust money. Section 3.3.20(1)(b) and its associated regulation55 apply when a law practice withdraws monies to pay its legal costs including disbursements. However, in this case, the law practice had not paid the barrister the fees in question. No question of reimbursement arose. Section 3.3.18(1) denies the availability of monies standing to the credit of the general trust account to meet the debts of the practice. That section is directed to the unilateral action of withdrawal from the account, on the part of a law practice, for that purpose. 53 After Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567. 54 Legal Services Board v Gillespie-Jones [2012] VSCA 68 at [55]. 55 Legal Profession Regulations 2005, reg 3.3.34. Hayne Crennan These provisions do not, in their terms, appear to be referable to the circumstance where a client gives an instruction to disburse monies. The primary judge did not, however, find that such an instruction was given. In any event, the relevant instruction was given by the client before monies were paid into the general trust account. If the instruction had been found to be directed to payment of the barrister's fees, the monies would have qualified as transit money, in which case they would not have been subject to these provisions. But her Honour rejected that contention. In these circumstances, it cannot be said that a specific instruction to pay the barrister's fees was given such that the provisions of Pt 3.3 to which the Board refers do not apply. Nevertheless, the Board's submission that, because the procedures required by Pt 3.3 were not complied with, there could not have been a "failure to pay or deliver trust money" within the meaning of Pt 3.6 cannot be accepted. It cannot be accepted because the legislature could not reasonably be taken to have intended them to apply in the circumstance of a default. Part 3.6 is predicated upon acts of dishonesty giving rise to a default. The Board's submission is that, regardless of this circumstance, the legislature intended to condition recovery of compensation for the default to the defaulting solicitor's compliance with procedural requirements regarding payments that he or she did not intend to make. This is curious logic. Had the solicitor in this case not been acting dishonestly, he would surely have sought the necessary approvals to pay the barrister's fees and it seems likely that they would have been given. Part 3.6 is concerned with compensating persons who suffer pecuniary loss as a result of a default. It contains no statement that compensation is to be conditional upon compliance with the procedural requirements of Pt 3.3, nor can such a condition be implied on ordinary rules of construction. To the contrary, Pt 3.6 may reasonably be taken to be founded upon the assumption that, where there has been a dishonest dealing with trust money, procedures are unlikely to have been complied with. The matters dealt with in s 3.6.14(3) are relevant to the question of legislative intention. That provision gives the Board power to disallow or reduce a claim in certain circumstances, which, in general terms, involve the conduct or knowledge of a claimant in connection with the act of default or the claim. One particular circumstance, referred to in par (d) of the sub-section, is when proper records are not created or kept, and the claimant knew or ought reasonably to have known that they would not be kept or would be destroyed. Two observations may be made regarding this provision. First, the circumstance identified in par (d) confirms, if it be necessary, a legislative Hayne Crennan understanding that, in dishonest actions or dealings with trust money or property, proper records are not likely to be kept. The same may be said of compliance with procedures. Secondly, it is evident that the legislature has turned its mind to the circumstances where compensation might be denied or reduced, having regard to the conduct or knowledge of a claimant. It is difficult then to infer that the legislature also intended to deny compensation because of a defaulting solicitor's omissions in respect of which a claimant had no knowledge or control. Fundamentally, the Board seeks to impute to the legislature an intention which is neither reasonable nor rational. In Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation56, it was said that when a judge assigns labels such as "absurd" or "irrational", he or she is assigning a ground for concluding that the legislature could not have intended a statute to operate in a particular way, and that an alternative interpretation is to be preferred. This is such a case. It is preferable to adopt a construction that will avoid a consequence which appears irrational or unjust57. Part 3.6 cannot sensibly be read as conditioning recovery to compliance with procedures in Pt 3.3. Who is entitled to claim compensation? The starting point for a consideration of whether the barrister is within the class of persons entitled to claim compensation must be the provisions of Pt 3.6. It is necessary to give close consideration to its provisions, as those most clearly relevant to a determination of this question58. In particular, attention should be directed to the definitions of "default" and of "pecuniary loss". This is not to deny the importance of purpose to the construction of Pt 3.6. The relevant purpose is that of Pt 3.6 itself, which is to provide compensation where a person suffers pecuniary loss as a result of a default, as those terms are defined. That purpose is remedial and beneficial, and the provisions of Pt 3.6 which bear upon the question should therefore receive as generous a construction as the actual language of those provisions permits59. It is to the actual language 56 (1981) 147 CLR 297 at 321; [1981] HCA 26. 57 Public Transport Commission (NSW) v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 at 350; [1975] HCA 28. 58 See Fleming v The Queen (1998) 197 CLR 250 at 256 [12]; [1998] HCA 68; Baini v The Queen (2012) 246 CLR 469 at 476 [14]; [2012] HCA 59. 59 Antico v Heath Fielding Australia Pty Ltd (1997) 188 CLR 652 at 675; [1997] HCA 35; IW v City of Perth (1997) 191 CLR 1 at 27; [1997] HCA 30. Hayne Crennan of the Part that resort should be had60 to determine the limits, if any, on the class of persons who may benefit from the provision it makes for compensation. The purpose of Pt 3.3 is to regulate dealings with trust money and deter persons from dealing with that money contrary to, or without, instructions and contrary to the interests of persons on whose behalf the money is held. The extent to which dishonest dealings may be deterred by such provisions is another matter. What Pt 3.3 and Pt 3.6 have in common, it will be seen, is that they identify a person who has an interest in the money in the sense that the person may suffer loss if it is dealt with other than according to instructions. However, the class of persons identified is not limited to persons beneficially entitled to trust money and s 3.3.1 should not be read as limited in that way. So understood, the question whether the barrister had some interest in the trust money, such as that of a beneficiary of a Quistclose trust for payment of his fees, is not to the point. The question Pt 3.6 poses, which will determine the barrister's entitlement to claim compensation, is whether he suffered a pecuniary loss as a result of a default. Reference has been made above61 to the two circumstances of default provided for in Pt 3.6 and the pecuniary loss which corresponds with them. It is the person who suffers such loss in the circumstance of a default who is entitled to claim compensation. The question is whether the barrister is such a person. The second circumstance of default is a fraudulent dealing with trust money or property which results in the loss or deprivation of money or the loss of value of trust property. It identifies a person who has a proprietorial interest in trust money or property. That person's loss is the diminution of that interest as a result of the fraudulent dealing. It is not suggested that the barrister has suffered such a loss. It is the first circumstance of default and its corresponding loss which is relevant to the barrister. A person may suffer pecuniary loss where there has been a failure to pay or deliver trust money or property. The pecuniary loss suffered is that which is not paid or delivered. Neither a proprietorial interest nor any entitlement to the trust money or property is required, beyond the fact that, 60 Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 at 638; [1984] HCA 55. Hayne Crennan but for the default, the trust money or property would have been paid or delivered to the person. A qualification is necessary with respect to the last statement. A person will not have suffered pecuniary loss as a result of a default merely because, had monies not been misappropriated, there would have been sufficient trust money to meet the person's claim. This seems to us to be the approach taken by her Honour the primary judge. There can be no "failure to pay or deliver" trust money or property unless there is an extant instruction to the practice to pay or deliver the money or property, and it is not complied with. The instruction must necessarily be to pay or deliver the trust money or property to an identifiable person. It is that person who will suffer loss if the instruction is not complied with. The person so identified in Pt 3.6 is also identified in Pt 3.3, in the definition of "trust money". Such a person is the third party who is the intended recipient of trust money which is the subject of an instruction for payment or delivery to that person. That money is "transit money". Both Pts 3.6 and 3.3 therefore comprehend that trust money may be held not only for and on behalf of a person beneficially entitled to it, but also on behalf of a person who is the subject of an instruction that trust money be paid or delivered to that person. To the limited extent to which it is necessary to do so, s 3.3.1(a) should be taken also to refer to a third party recipient of transit money as a person "for or on whose behalf money is held". That person's interests depend upon the instruction given being complied with. The barrister might have been such a person, had there been a finding that the client gave the relevant instruction62. It is unnecessary to consider the Board's further submission that a "failure to pay or deliver" trust money is to be equated with a "failure to account". The conclusion sought to be drawn from this premise is that the only person to whom a law practice could pay or deliver trust money is the person beneficially entitled to it. The submission relied on cases involving statutes in terms which differ from the LPA and brings to mind the cautionary statement in Baini v The Queen63 that such an approach is likely to mislead. Attention should be directed to the text of the statute in question. 62 See [31], [61]. 63 (2012) 246 CLR 469 at 476 [14]. Hayne Crennan Was the barrister entitled to claim compensation? For the barrister to succeed, it is necessary that there has been a failure to pay or deliver trust money to him. In the event of such a default, he will have suffered the necessary pecuniary loss. A failure to pay or deliver trust money requires that the solicitor was instructed to pay the barrister's fees upon receipt of his memoranda of fees. The barrister's claim founders on the findings of the primary judge respecting the instruction given by the client. Her Honour's findings in connection with default do not contain the necessary finding that there was a relevant instruction and those relating to whether the money was transit money are inconsistent with such an instruction having been given. The effect of her Honour's findings is that the money was intended to be held by the solicitor and disbursed according to the client's further directions. Her Honour's opinion that transit money cannot be composite money was no doubt influential to the finding of default. It raises the question whether transit money is sufficiently identified by an instruction to pay more than one person and to pay them an as yet unascertained sum of money. But this is not a question that is raised on this appeal. In his submissions, the barrister sought to show that the payments made by electronic transfer could only have been intended for him, because the solicitor's costs were to come out of the earlier payments. But reliance could only be placed upon the circumstance of the manner of those payments, by a combination of cash and cheques payable to the solicitor's law practice. There was no relevant finding by the primary judge in this regard. The submissions point up the essential difficulty for the barrister on this appeal. It is not disputed that the findings made by the primary judge concerning the instructions given by the client were not challenged in the Court of Appeal. They are not now the subject of the appeal to this Court and cannot be revisited. On those findings, the retainer was not made on behalf of the client. The solicitor was personally responsible for the barrister's fees. The instructions the client gave the solicitor did not amount to an instruction to pay the barrister's fees without further reference to the client. It is neither necessary nor appropriate to decide whether a barrister retained by a solicitor on behalf of a client would have a claim against the Fund if the client had paid the solicitor an amount on account of counsel's fees (or disbursements generally) and the solicitor misapplied those monies. It is Hayne Crennan important, however, to emphasise that the actual disposition of this case, as distinct from the more general discussion of the operation of the LPA, turns upon the facts of the particular case. Variation of either or both of the aspects of the facts of this case that have been noted may, we do not say must, yield a different application of the LPA. Orders The appeal should be allowed and order 1 of the Court of Appeal of the Supreme Court of Victoria of 19 April 2012 set aside. In lieu thereof it should be ordered that the appeal from the decision of the County Court of Victoria be allowed and pars 1 to 4 of the order of that Court of 1 April 2011 set aside. In lieu thereof it should be ordered that the appeal from the decision of the Legal Services Board of 20 October 2009 be dismissed. There is no need for an order for costs, the Board having undertaken to pay the barrister's costs of the appeal regardless of the outcome and to not seek to disturb orders for costs made in the courts below. Bell BELL, GAGELER AND KEANE JJ. Introduction A client pays money to a law practice on account of legal costs, including barristers' fees and other disbursements, to be incurred in the course of the law practice providing legal services. The law practice misappropriates the money. Can a barrister retained by the law practice recover unpaid fees from the Legal Practitioners Fidelity Fund maintained under the Legal Profession Act 2004 (Vic) ("the Act")? That is the ultimate question that arises in respect of a claim made against the Fidelity Fund by Mr Simon Gillespie-Jones, a member of the Victorian Bar. The claim was disallowed by the Legal Services Board ("the Board") but upheld the County Court of Victoria on appeal by Mr Gillespie-Jones (Judge Kennedy)64 and on further appeal by the Board to the Court of Appeal of the Supreme Court of Victoria (Nettle, Redlich and Hansen JJA)65. The Board now appeals, by special leave, to this Court from the decision of the Court of Appeal. The result is that the ultimate question should be answered in the negative, the appeal should be allowed, and orders should be made having the effect of restoring the Board's disallowance of the claim. Facts Mr Gillespie-Jones was retained by Mr Michael Grey, an Australian legal practitioner engaged in legal practice on his own account in Victoria. The retainer, between December 2006 and April 2007, was to defend a client of Mr Grey. The client was an individual charged with criminal offences. There was no written agreement between Mr Gillespie-Jones and Mr Grey or between the client and either Mr Gillespie-Jones or Mr Grey. Judge Kennedy found that the retainer constituted a contract between Mr Gillespie-Jones and Mr Grey66. that Implicit Mr Gillespie-Jones agreed to provide legal services to the client in consideration of Mr Grey paying Mr Gillespie-Jones the fair and reasonable value of those legal services when billed to Mr Grey. that finding was 64 Gillespie-Jones v Legal Services Board [2011] VCC 223. 65 Legal Services Board v Gillespie-Jones [2012] VSCA 68. 66 [2011] VCC 223 at [136]. Bell Mr Gillespie-Jones billed Mr Grey $53,610 between December 2006 and April 2007. There is now no dispute between the parties that the amount so billed was the fair and reasonable value of the legal services Mr Gillespie-Jones provided to the client with the result that Mr Grey became indebted to Mr Gillespie-Jones in that amount. Mr Grey received from the client $85,100, paid directly or indirectly between August 2006 and May 2007. The payment was in two main tranches. Before Mr Gillespie-Jones was retained by Mr Grey, the client paid $21,700 to Mr Grey partly in cash and partly by cheque and a barrister's clerk, to whom the client had made a direct payment, refunded $8,400 to Mr Grey. After Mr Gillespie-Jones was retained by Mr Grey, the client paid $55,000 into Mr Grey's general trust account by electronic transfer in discrete amounts of $5,000, each accompanied by the client's contemporaneous written explanation that the transfer was for "Grey & Jones" or "Sjg [that is, Mr Gillespie-Jones] via Grey" or some variant of those two alternatives. Notwithstanding those variations in the method and timing of payment, Judge Kennedy found, in respect of the total amount of $85,100 the client paid to Mr Grey, that the client "was paying on account of any legal costs in relation to his defence, including 'everybody that was to come and help him' in his defence", a category of persons which "might include Mr Grey himself" as well as medical experts to be engaged by Mr Grey67. Her Honour specifically found that Mr Grey did not receive any part of the amount paid to him by the client subject to instructions to pay or deliver it to Mr Gillespie-Jones68. Those findings accord with the written explanation Mr Gillespie-Jones gave when making his claim against the Fidelity Fund that the client "paid the money to Mr Grey for legal services including disbursements (barristers fees and other out of pocket expenses)". The evidence before Judge Kennedy established that, when paying to Mr Grey, the client did not know what amounts had been sought to be charged by Mr Grey, by Mr Gillespie-Jones, or by any medical expert and that, as at April 2007, the client expected to be repaid some of the money he had paid to Mr Grey because he believed that he had paid Mr Grey more than his actual costs. 67 [2011] VCC 223 at [40]-[42], [84], [92], [138]. 68 [2011] VCC 223 at [89]-[90], [138]. Bell Of the total amount of $53,610 Mr Gillespie-Jones billed to Mr Grey, Mr Grey paid to Mr Gillespie-Jones $4,070 in January 2007 and $18,000 in May 2007, leaving $31,540 unpaid. There is no dispute between the parties that Mr Grey dishonestly disbursed the remaining $63,030 of the $85,100 paid to him by the client for purposes of his own. The evidence before Judge Kennedy established that Mr Grey did so by keeping for himself some of the cash the client paid him and otherwise by making unauthorised withdrawals from his general trust account. Mr Gillespie-Jones made his claim against the Fidelity Fund on 14 January 2008. As later refined, his claim was for an amount corresponding to the $31,540 in unpaid fees in respect of which Mr Grey had become indebted to Mr Gillespie-Jones. The basis of the claim was that, but for the dishonesty of Mr Grey, the amount would have been paid to him by Mr Grey from the remaining $63,030 paid to Mr Grey by the client. Mr Grey had not billed the client for any work he may have done. The only other disbursement Mr Grey incurred in the course of providing legal services to the client was in respect of a medical expert he had retained. That medical expert too made a claim against the Fidelity Fund, in an amount of $16,880. County Court Judge Kennedy implicitly accepted that Mr Grey had held the money paid to him by the client on trust for the client and that Mr Gillespie-Jones had no equitable interest in any part of the amount misappropriated by Mr Grey69. compensation from the Fidelity Fund on the basis that he was a person who suffered pecuniary loss because of the default constituted by Mr Grey's disbursal of money entrusted to him by the client contrary to the instructions of the client70. that Mr Gillespie-Jones was entitled According to her Honour, the amount of the unpaid fees claimed by Mr Gillespie-Jones was a pecuniary loss Mr Gillespie-Jones was entitled to claim from the Fidelity Fund because of that default in that: using a "common sense approach", Mr Gillespie-Jones had not been paid those fees "because Mr Grey disbursed money designated for to [the client's] instructions"71; and "but for" the default there would have been sufficient funds legal costs contrary 69 [2011] VCC 223 at [98], [120]. 70 [2011] VCC 223 at [102]-[103], [108], [132]. 71 [2011] VCC 223 at [110]. Bell available to meet all of the client's legal costs including the outstanding fees of Mr Gillespie-Jones72. Her Honour found that the amount of the unpaid fees was not reasonably available to Mr Gillespie-Jones from any source other than the Fidelity Fund, in circumstances where Mr Gillespie-Jones had already pursued Mr Grey to bankruptcy73. Court of Appeal The Court of Appeal held that Judge Kennedy was wrong to consider that Mr Gillespie-Jones did not need to be a person "for or on whose behalf" the client paid money to Mr Grey to be entitled to claim from the Fidelity Fund74. The Court of Appeal went on to find that the money paid to Mr Grey by the client had been held by Mr Grey on trust for persons, including Mr Gillespie- Jones, to whom Mr Grey was to become indebted in the course of providing legal services to the client. According to the Court of Appeal75: "In the reality of the circumstances which obtained, the logical and most probable inference is that the client impliedly put the funds beyond his power of immediate recall and thus subjected them to a trust for payment to counsel and other persons retained to assist in the defence." "[T]he relationship thereby established", held the Court of Appeal, "was a Quistclose trust creating an interest by [Mr Gillespie-Jones] in the trust money"76 (footnote omitted). Having observed that it appeared to have been implicit in the arrangement between the client and Mr Grey that the "rights" of Mr Gillespie-Jones and other persons to receive payments out of the fund held by Mr Grey "were conditional 72 [2011] VCC 223 at [111]. 73 [2011] VCC 223 at [137]. 74 [2012] VSCA 68 at [42]-[50]. 75 [2012] VSCA 68 at [58]. 76 [2012] VSCA 68 at [55], citing Barclays Bank Ltd v Quistclose Investments Ltd Bell upon [Mr Gillespie-Jones] and those other persons having a present right to payment"77, the Court of Appeal continued78: "Under the terms of the trust so constituted, the solicitor [that is, Mr Grey] had an obligation to pay the respondent [that is, Mr Gillespie- Jones] out of the fund when and if the respondent rendered a memorandum of fees in enforceable form. But the respondent's 'interest' did not depend upon the existence of a present unfulfilled obligation to pay and deliver the money. Even before his fees fell due, the respondent had a contingent interest in the fund, in that it was held on trust for payment to him when his fees became due. The respondent, therefore, had an enforceable right to due administration of the fund and, ultimately, to have the solicitor account to the respondent out of the fund for the amount found to be due upon a memorandum of fees being rendered in enforceable form." (footnote omitted) The conclusion of the Court of Appeal was that Judge Kennedy was correct, in the result, to hold Mr Gillespie-Jones entitled to compensation from the Fidelity Fund. The result was justified, it said, on the basis that there had been a failure by Mr Grey to pay or deliver to Mr Gillespie-Jones "trust money that was received by [Mr Grey] in the course of legal practice and held for or on behalf of [Mr Gillespie-Jones]"79. Issues in the appeal The Board challenges the finding of the Court of Appeal that Mr Grey held the money paid to him by the client on trust for persons who included Mr Gillespie-Jones. Mr Gillespie-Jones challenges by notice of contention the holding of the Court of Appeal that he needed to be a person "for or on whose behalf" the client paid money to Mr Grey in order to claim from the Fidelity Fund. Mr Gillespie- Jones thereby relies on the approach adopted by Judge Kennedy. Accordingly, the issues in the appeal are: 77 [2012] VSCA 68 at [57]. 78 [2012] VSCA 68 at [59]. 79 [2012] VSCA 68 at [61]. Bell (1) Was the whole or any part of the money paid to Mr Grey by the client held by Mr Grey on trust for the benefit of Mr Gillespie- If not, was Mr Gillespie-Jones nevertheless compensation from the Fidelity Fund? entitled The resolution of those issues turns in substantial measure on the construction and operation of provisions of the Act and of the Legal Profession Regulations 2005 (Vic) ("the Regulations") made under the Act. The Act The purposes of the Act include to improve the regulation of the legal profession, in part by implementing national model provisions for the regulation of the legal profession, and to facilitate the regulation of legal practice on a national basis80. The Act was enacted in 2004 following adoption that year by the Standing Committee of Commonwealth, State and Territory Attorneys- General of a national model law for the regulation of the legal profession. The Act was amended to reflect changes in that model law with effect relevantly from May 200781. In the absence of any contention of material differences before and after the amendment, it is sufficient to refer to the Act as amended in May 2007. Within the lexicon of the Act: an "Australian legal practitioner" includes a person admitted to the legal profession under the Act who holds a current local practising certificate82; a "law practice" includes an "Australian legal practitioner who is a sole practitioner" as well as a partnership consisting of Australian legal practitioners83; an "associate" of a law practice includes a sole practitioner (in the case of a law practice constituted by the practitioner) as well as a partner in the law practice (in the case of a law practice constituted by a partnership of legal practitioners) and an agent or employee of a law practice84; "legal services" means work done, or business transacted, in the ordinary course of legal 80 Section 1.1.1. 81 Legal Profession Amendment Act 2007 (Vic). 82 Sections 1.2.1(1) and 1.2.3. 83 Section 1.2.1(1) ("law practice" and "law firm"). 84 Sections 1.2.1(1) and 1.2.4. Bell practice85; a "client" includes a person to whom legal services are provided86; and "legal costs" means amounts, including disbursements, that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services87. Chapter 3 of the Act contains provisions explained in outline as "regulating various aspects of the legal profession with the aim of ensuring that law practices and legal practitioners operate effectively in the interests of justice, their clients and the public interest"88. Those parts of Ch 3 of immediate relevance to the issues in the appeal are Pts 3.3 and 3.6. Part 3.3: "trust money" Part 3.3 bears centrally on the first issue in the appeal. In outline, the Part "regulates the receipt, handling of and accounting for clients' money by law practices"89. The first of its expressed purposes is "to ensure that trust money is held by law practices … in a way that protects the interests of persons for or on whose behalf money is held"90. Within Pt 3.391: "trust money, in relation to a law practice, means money entrusted to the law practice in the course of or in connection with the provision of legal services by the practice, and includes – (a) money received by the practice on account of legal costs in advance of providing the services; and controlled money received by the practice; and 85 Section 1.2.1(1) ("legal services"). 86 Section 1.2.1(1) ("client"). 87 Section 1.2.1(1) ("legal costs"). 88 Section 3.1.1(1). 89 Section 3.1.1(2). 90 Section 3.3.1. 91 Section 3.3.2(1) ("trust money"). Bell transit money received by the practice; and (d) money received by the practice, that is the subject of a power, exercisable by the practice or an associate of the practice, to deal with the money for or on behalf of another person". "Controlled money" means "money received or held by a law practice in respect of which the practice has a written direction to deposit the money in an account (other than a general trust account) over which the practice has or will have exclusive control"92. "Transit money" means "money received by a law practice subject to instructions to pay or deliver it to a third party, other than an associate of the practice"93. A "power" includes an "authority"94. That definition of "trust money" within Pt 3.3 is structured in a way that "indicates an exhaustive explanation of the content of the term" and that "also … make[s] it plain that otherwise doubtful cases do fall within its scope"95. The general explanation that the term "means" money "entrusted" to a law practice in the course of or in connection with the provision of legal services by the practice cannot be read narrowly or technically so as to cover only circumstances which would give rise to a relationship of trust independently of the operation of the Act. The word "entrusted" is rather to be read according to its ordinary meaning in such a context. The general explanation is therefore to be read as covering any money confided to the care or disposal of the law practice in circumstances which indicate that the money has been earmarked for purposes not being purposes of the practice itself96. The further explanation that the term "includes" money received by the law practice within four specified categories indicates that money within those categories is always trust money, whether or not it would otherwise fall within the general conception of money entrusted to the law practice. 92 Section 3.3.2(1) ("controlled money"). 93 Section 3.3.2(1) ("transit money"). 94 Section 3.3.2(1) ("power"). 95 BHP Billiton Iron Ore Pty Ltd v National Competition Council (2008) 236 CLR 145 at 159 [32]; [2008] HCA 45. 96 Stephens v The Queen (1978) 139 CLR 315 at 333; [1978] HCA 35; Francis v Law Society of New South Wales [1982] 2 NSWLR 191 at 200. Bell The Part applies to a law practice having an office in Victoria, in respect of trust money received by the law practice in Victoria97. The law practice is obliged to maintain a general trust account with an approved authorised deposit- taking institution in Victoria98. As soon as practicable after receiving trust money, the law practice is obliged to deposit the money in that general trust account99. That obligation of the law practice to deposit trust money it receives in its general trust account applies except where the money is: the subject of a written direction to deal with the money otherwise than by depositing it in the account (in which case the law practice must deal with the money in accordance with the direction)100; controlled money (in which case the law practice must deposit the money in the account specified in the written direction relating to the money)101; transit money (in which case the law practice must pay or deliver the money as required by the instructions relating to the money)102; or money that is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person (in which case the law practice must ensure that the money is dealt with by the practice or associate only in accordance with the power relating to the money)103. Failure of the law practice to comply with the obligation applicable to the category of trust money received by the law practice is in each case a criminal offence. The distinct obligations of the law practice in respect of how the law practice must deal with money within each of the specified categories of trust money indicate that those categories are to be read as mutually exclusive. Money received by the practice on account of legal costs in advance of providing the services, unless accompanied by an appropriate written direction, is not amongst those categories excluded from the general obligation to deposit trust money received in the general trust account of the practice. Money of that kind must therefore always be deposited by the law practice in its general trust account. 97 Section 3.3.5. 98 Sections 3.3.11 and 3.3.2(1) ("general trust account"). 99 Section 3.3.13. 100 Section 3.3.13(1) and (2). 101 Sections 3.3.13 and 3.3.15. 102 Sections 3.3.13 and 3.3.16. 103 Sections 3.3.13 and 3.3.17. Bell Two restrictions imposed by the Part on the holding of trust money deposited in a general trust account of a law practice are of particular importance. First, the law practice is obliged by s 3.3.14 to hold the trust money so deposited "exclusively for the person on whose behalf it is received" and must "disburse the trust money only in accordance with a direction given by the person". Failure of the law practice to comply is, again, a criminal offence. While the word "for", like the expression "on behalf of", "may be used in conjunction with a wide range of relationships", the word is undoubtedly used in that context to "describe a relationship of trustee and cestui que trust"104. The statutory obligation of the law practice, in other words, is to hold trust money deposited in its general trust account exclusively for the benefit of the person (or persons) on whose behalf the money was received by the law practice and to disburse that money only at the direction of that person (or those persons). Secondly, by s 3.3.18 the money "is not available for the payment of debts of the practice or any of its associates" save in respect of money to which the law practice or an associate of the law practice "is entitled". By s 3.3.20(1)(b), a law practice is empowered to withdraw money held in its general trust account "for payment to the practice's account for legal costs owing to the practice if the relevant procedures or requirements prescribed by [the Act and the Regulations] are complied with". It accords with ordinary principles of construction105, and furthers the protective purpose of Pt 3.3, to read that specific power as limiting the general power of a law practice to disburse money from its general trust account in accordance with a direction given by the person on whose behalf the money was received by the law practice. Whether or not that person has directed that the money be withdrawn for payment of legal costs (including disbursements) owing to the practice, the effect of s 3.3.20(1)(b) is that the money cannot be withdrawn by the legal practice from its general trust account for that purpose save on two conditions. One is that the withdrawal is for payment to the practice's own account. The other is that the withdrawal is in compliance with the relevant requirements of the Act and the procedures prescribed by the Regulations. The relevant requirements of the Act are principally those that arise under Pt 3.4, the purposes of which include to regulate the billing of costs for legal 104 R v Toohey; Ex parte Attorney-General (NT) (1980) 145 CLR 374 at 386; [1980] HCA 2. 105 Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7; [1932] HCA 9. Bell services and to provide a mechanism for review of those costs106. The requirements of Pt 3.4 ordinarily have the effect that (if not the subject of disclosure made by the practice and a written agreement about the payment of costs entered into between the law practice and the client) legal costs owing to a law practice need not be paid by the client unless they are reviewed by a taxing master and are not recoverable by the law practice unless they accord with the fair and reasonable value of the services provided107. The procedures prescribed by the Regulations allow a law practice to withdraw trust money for payment of legal costs owing to the practice by the person for whom the trust money was paid into the general trust account in two relevant circumstances. One is where the money is withdrawn in accordance with a costs agreement or instructions authorising the withdrawal, or is owed to the practice by way of reimbursement of money already paid by the practice on behalf of the person, provided that, before effecting the withdrawal, the practice gives or sends to the person a request for payment, referring to the withdrawal, or a written notice of withdrawal108. The other is where the law practice has given the person a bill relating to the money and the person has not within a specified time objected to the withdrawal of the money or the person has objected but has not within a further specified time applied for review of the legal costs or the money otherwise becomes legally payable109. In relation to trust money held in its general trust account, a law practice is authorised by s 3.3.20(1)(a) of the Act to "exercise a lien, including a general retaining lien, for the amount of legal costs reasonably due and owing by the person to the practice". The incidents of a general retaining lien of a law practice over money held on trust for a client are well understood. The lien is a common law right, implied by law, to retain the money until the costs of the law practice are paid. It is wholly passive and possessory in nature110. It "does not mean that the money is not beneficially the money of the client" and it does not mean that the law practice can pay any part of the money to itself111. 106 Section 3.4.1. 107 Sections 3.4.17 and 3.4.19. 108 Regulation 3.3.34(3). 109 Regulation 3.3.34(4). 110 Barratt v Gough-Thomas [1951] Ch 242 at 250. 111 Johns v Law Society of New South Wales [1982] 2 NSWLR 1 at 20. Bell Part 3.6: the Fidelity Fund Part 3.6 bears centrally on the second issue in the appeal. In outline, the Part "establishes a system for compensating clients who suffer loss because of a default of a law practice"112. It has as its expressed purpose, relevantly, "to compensate clients for loss arising out of defaults by law practices arising from acts or omissions of associates"113. The system it establishes is for claims to be made against the Fidelity Fund, which the Board is obliged to maintain114, into which the Board is obliged to pay annual contributions and levies from legal practitioners115, and from which the Board is obliged to pay any claim allowed or established against the Fidelity Fund116. The Part applies to a "default" of a law practice arising from or constituted by an act or omission of one or more associates of the practice117. "Default" relevantly means118: "a failure of the practice to pay or deliver trust money … that was received by the practice in the course of legal practice by the practice, where the failure arises from or is constituted by an act or omission of an associate that involves dishonesty". Entitlement to claim against the Fidelity Fund to the Board "about the default" is conferred by s 3.6.7 on "[a] person who suffers pecuniary loss because of a default to which [the] Part applies". "Pecuniary loss" relevantly means, in relation to a default, "the amount of trust money … that is not paid or delivered" or "the amount of money that a person loses or is deprived of"119. 112 Section 3.1.1(2). 113 Section 3.6.1. 114 Section 6.7.15. 115 Section 6.7.17. 116 Section 6.7.18. 117 Section 3.6.5. 118 Section 3.6.2 ("default"). 119 Section 3.6.2 ("pecuniary loss"). Bell There is specific provision for such a claim to be made against the Fidelity Fund by a non-defaulting associate of a defaulting law practice "if the associate suffers pecuniary loss because of the default"120. That specific provision does not operate to give extended meaning to the expression "suffers pecuniary loss because of the default" but rather to make it clear that a person who suffers pecuniary loss because of a default by a law practice is not disqualified from making a claim by reason only of being an associate of that law practice. The Board may determine a claim by allowing or disallowing it in whole or in part and may disallow or reduce a claim to the extent that, among other things, the negligence of the claimant contributed to the loss or the claimant knowingly assisted in or contributed towards, or was a party or accessory to, the act or omission giving rise to the claim121. By force of s 3.6.15 (costs and interest aside) "[t]he amount payable to a person in respect of a default must not exceed the amount of the person's actual pecuniary loss resulting from the default". An appeal against a decision of the Board disallowing or reducing a claim lies to a court that would have jurisdiction to determine the claim if the claim were for a debt owing to the claimant122. The appeal is by way of a new hearing: the court has jurisdiction to review the merits of the Board's decision and to affirm, vary or set aside the decision of the Board and to make a new decision in substitution123. Unless the Board waives the requirement, the appellant is required to establish on the appeal that the whole or part of the amount sought to be recovered from the Fidelity Fund is not reasonably available from other sources124. Issue (1): Was Mr Gillespie-Jones a beneficiary? The terminology of a "Quistclose trust" is helpful as a reminder that legal and equitable remedies may co-exist. The terminology is not helpful if taken to suggest the possibility apart from statute of a non-express trust for non-charitable 120 Section 3.6.28. 121 Section 3.6.14. 122 Section 3.6.23(1) and (8). 123 Section 3.6.23(4) and (5). 124 Section 3.6.23(3). Bell purposes125. There is no reason to think that the Court of Appeal departed from orthodox trust analysis so as to contemplate such a possibility in the present case. "[U]nless there is something in the circumstances of the case to indicate otherwise, a person who has 'the custody and administration of property on behalf of others' or who 'has received, as and for the beneficial property of another, something which he is to hold, apply or account for specifically for his benefit' is a trustee in the ordinary sense"126 (footnotes omitted). A legal practitioner who receives money from a client to be held for and on behalf of the client or another person archetypally answers that description. Unsurprisingly, therefore, there was before the Court of Appeal and remains no dispute between the parties that Mr Grey held the money paid to him by the client as a trustee in the ordinary sense. The first issue is rather about the proper identification of the person or persons for whose benefit Mr Grey held that money on trust. Was the trust solely for the benefit of the client, as Judge Kennedy implicitly accepted, or was the trust for the benefit of Mr Gillespie-Jones and other persons retained by Mr Grey to assist in the client's defence, as the Court of Appeal found? The finding of the Court of Appeal that Mr Grey held the money on a "Quistclose trust" for the benefit of Mr Gillespie-Jones and other persons retained by Mr Grey to assist in the client's defence is best seen as a finding, based on the Court of Appeal's determination of the inferred mutual intention of the client and Mr Grey, that Mr Grey held the money on an express trust having two limbs. The first limb, on which the Court of Appeal focused because, on the view it took, that limb was operative to give Mr Gillespie-Jones an interest at the time of default, was for the benefit of persons retained by Mr Grey to assist in the client's defence, the money being payable to those persons at the time Mr Grey became indebted to those persons by reason of their retainers. The second limb was for the benefit of the client if, and to the extent that, the money held by Mr Grey was not exhausted by payment in accordance with the first limb. The Court of Appeal's reference to Mr Gillespie-Jones having a "contingent interest" in the money held on trust is best understood as a reference to Mr Gillespie-Jones 125 Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 502; Twinsectra Ltd v Yardley [2002] 2 AC 164 at 187 [80]-[81], 192-193 [100]. 126 Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 165-166; [1993] HCA 1, quoting Taylor v Davies [1920] AC 636 at 651 and Cohen v Cohen (1929) 42 CLR 91 at 100; [1929] HCA 15. See also Mann v Hulme (1961) 106 CLR 136 at 141; [1961] HCA 45. Bell having an immediate interest sufficient to enforce the trust in advance of any money becoming payable to him. It is, of course, "the established rule that in order to constitute a trust the intention to do so must be clear and that it must also be clear what property is subject to the trust and reasonably certain who are the beneficiaries" 127. An express trust in the terms found by the Court of Appeal would not fail for want of reasonable certainty as to who are the beneficiaries. "A trust is not uncertain merely because the actual persons to whom the distribution will be made cannot be known in advance of the date of distribution; it is sufficient that … upon that date the beneficiaries can be ascertained with certainty"128. It does not matter for this purpose that the date of distribution may vary between classes of beneficiaries or within a class of beneficiaries. Nor would an express trust in the terms found by the Court of Appeal fail for want of sufficient clarity of intention on the part of the client and Mr Grey that such a trust be constituted by reason of the absence of language specifically expressing an intention to create a trust for the benefit of persons retained by Mr Grey to assist in the client's defence. "If the inference to be drawn is that the parties intended to create or protect an interest in a third party and the trust relationship is the appropriate means of creating or protecting that interest or of giving effect to the intention, then there is no reason why in a given case an intention to create a trust should not be inferred"129. Whether or not parties intend to create in a third party an interest that is appropriate to be created by a trust relationship falls in each case to be determined by reference to the outward manifestation of the intentions of the parties within the totality of the circumstances130. Those circumstances centrally include the nature of the relationship between the parties together with such rights or obligations pertaining to that relationship as might arise under statute or at common law. "The contractual relationship provides one of the most common 127 Kauter v Hilton (1953) 90 CLR 86 at 97; [1953] HCA 95. 128 Kinsela v Caldwell (1975) 132 CLR 458 at 461; [1975] HCA 10. 129 Bahr v Nicolay [No 2] (1988) 164 CLR 604 at 618-619; [1988] HCA 16. 130 Byrnes v Kendle (2011) 243 CLR 253 at 275 [59]; [2011] HCA 26; Walker v Corboy (1990) 19 NSWLR 382 at 386; Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 503. Bell bases for the establishment or implication and for the definition of a trust"131; a relationship established or regulated by statute can provide another basis132. Such trust relationship as may arise to give effect to the inferred intention of the parties must mould to statutory rights and obligations of the parties. A trust relationship is not to be recognised or enforced, and is therefore not to be inferred, if and to the extent the trust relationship would give rise to rights or obligations inconsistent with those conferred or imposed by statute133. The real problem with the trust relationship found by the Court of Appeal lies in the difficulty of reconciling the rights and obligations to which that trust relationship would give rise with the rights conferred on the client and obligations imposed on Mr Grey by Pt 3.3 of the Act. The client is not to be inferred to have waived his statutory rights and Mr Grey is not to be inferred to have assumed trust obligations he could not perform consistently with his statutory obligations. For the purposes of Pt 3.3 of the Act, the category of trust money comprising money received by a law practice on account of legal costs in advance of providing services comprises all money received by a law practice on account of any amount, including any disbursement, that a person may be charged by, or may become liable to pay to, the law practice for any work done or business transacted in the ordinary course of legal practice. The category therefore covers any fees for which the law practice, as distinct from the client, may become liable to pay a barrister and in respect of which, as a disbursement, the law practice may then be entitled to seek reimbursement from the client. The critical finding of Judge Kennedy that the client "was paying on account of any legal costs in relation to his defence, including 'everybody that was to come and help him' in his defence", meant that the totality of the money paid to Mr Grey by the client fell within that category. In respect of money within that category, the statutory obligations of Mr Grey were clear. He was to deposit the money in his general trust account 131 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In Liq) (2000) 202 CLR 588 at 603 [27]; [2000] HCA 25, quoting Gosper v Sawyer (1985) 160 CLR 548 at 568- 569; [1985] HCA 19. 132 Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 161-168. 133 Nelson v Nelson (1995) 184 CLR 538 at 551-552; [1995] HCA 25; Miller v Miller (2011) 242 CLR 446 at 457-459 [24]-[27]; [2011] HCA 9. Bell and was thereafter to hold the trust money so deposited "exclusively for the person on whose behalf it [was] received" (that is to say, the client) and was to "disburse the trust money only in accordance with a direction given by [that] person". Those statutory obligations were inconsistent with Mr Grey holding the whole or any part of the money on trust for Mr Gillespie-Jones or other persons retained by Mr Grey to assist in the client's defence. They were consistent only with Mr Grey holding the money on trust exclusively for the benefit of the client and subject to the instructions of the client. Because equity regards as done that which ought to have been done, those statutory obligations resulted in Mr Grey having held all of the money exclusively on trust for the benefit of the client immediately from the time of its receipt, whether or not he deposited the money in his general trust account. By further operation of the Act, unless and until Mr Grey became entitled to the whole or any part of it, the money so held on trust for the benefit of the client was not available for the payment of any debt of Mr Grey, including any debt Mr Grey might owe to persons he retained to assist in the client's defence. Mr Grey would become entitled to withdraw the money for the purpose of being paid legal costs owed to him by the client, including by way of reimbursement for any debts he may have incurred to persons retained to assist in the client's defence, only for payment to his own account and only upon compliance with the procedures and requirements prescribed by the Act. In the meantime, Mr Grey had the security of his lien: his common law right to retain the money in the trust account until those legal costs were paid. Persons retained by Mr Grey to assist in the client's defence benefited indirectly from the existence of that lien without need of having any beneficial interest in the money. To the extent that the client impliedly put the money he paid to Mr Grey beyond his power of immediate recall, he did so by subjecting that money which Mr Grey was to hold on trust exclusively for him to the operation of that lien, not by subjecting that money to the operation of any trust for the benefit of any other person. The reasoning of the Court of Appeal, treating the client's entitlement to trust money deposited or required to be deposited by a law practice in its general trust account as non-exclusive, is for the reasons stated contrary to the express terms of the Act. Further, it is apt to give rise to theoretical and practical problems that the legislature could not have intended. For example, a purchaser might entrust to a law practice funds to defray the price of a parcel of land purchased under a contract of which the vendor asserts an entitlement to specific performance, and hence an interest as beneficiary of the funds entrusted to the Bell law practice for that purpose134. Application of a "Quistclose trust" analysis would mean that the vendor in this scenario could claim a beneficial entitlement to the funds entrusted by the purchaser to the law practice, even though the purchaser, having purported to rescind the contract, demanded the return of the funds from the law practice of which the purchaser is the client. The legislature is not to be taken to have intended to facilitate the creation of the kind of conflict of interest and duty abhorred by the law 135, and thereby to expose clients to the expense and uncertainty of disputing with their lawyers over the beneficial ownership of trust money. Mr Gillespie-Jones had no interest, present or contingent, in the whole or any part of the money paid by the client to Mr Grey. Issue (2): Was Mr Gillespie-Jones entitled to claim against the Fidelity Fund? In circumstances where Mr Grey held the money paid to him by the client on trust solely for the benefit of the client, the issue that next arises is whether Mr Gillespie-Jones was nevertheless entitled to compensation from the Fidelity Fund. Under Pt 3.6 of the Act, the relevant provisions of which have already been set out, the entitlement of a person to claim against the Fidelity Fund requires: first, a "default" by a law practice; secondly, the suffering of "pecuniary loss" by the person; and thirdly, the existence of a relevant causal connection between the suffering of that pecuniary loss and that default, connoted by the words "because of". The amount payable is then limited to "the amount of the person's actual pecuniary loss resulting from the default". Exposition of those requirements and that limitation is assisted by reference to legislative history. At the time of the adoption of the model law in 2004, different provisions for claiming compensation from fidelity funds existed in legislation regulating the legal profession in each State and Territory136. Most relevant for present purposes is the legislation then existing in Victoria and New South Wales. 134 cf Lysaght v Edwards (1876) 2 Ch D 499 at 506; Haque v Haque [No 2] (1965) 114 CLR 98 at 124; [1965] HCA 38; KLDE Pty Ltd v Commissioner of Stamp Duties (Q) (1984) 155 CLR 288 at 300-301; [1984] HCA 63. 135 Bolkiah v KPMG [1999] 2 AC 222 at 236-237. 136 Section 80 of the Legal Profession Act 1987 (NSW); ss 208 and 214 of the Legal Practice Act 1996 (Vic); s 60 of the Legal Practitioners Act 1981 (SA); ss 24 and (Footnote continues on next page) Bell Legislation then existing in Victoria provided for the fidelity fund in that State to be applied "for the purpose of compensating persons who suffer pecuniary loss from a defalcation of, or in relation to", money received by a legal practitioner for or on behalf of a person, other than the practitioner, in the course of or in connection with the practitioner's legal practice137. That language had been held not to require a claimant to be either a client who paid the money or a person on whose behalf the money was received138. A claim was limited to "the amount of the actual pecuniary loss suffered by the person"139. That language had been held to refer to the loss represented by the monetary value of the money the subject of the defalcation and not to include other consequential loss resulting from the defalcation140. Legislation then existing in New South Wales provided for the fidelity fund in that State to be applied "for the purpose of compensating persons who suffer pecuniary loss because of a failure to account"141. It defined "failure to account" as "a failure by a solicitor to account for, pay or deliver money … received by, or entrusted to, the solicitor … in the course of the solicitor's practice"142. That statutory definition reflected judicial explanation of the expression "failure to account" in the Legal Practitioners Act 1898 (NSW) as a "failure to pay or deliver moneys … to or on behalf of a person entitled thereto at the time when such payment or delivery should reasonably have been made"143. Accordingly, there was a "failure to account" if and when, "contrary to the 25(2) of the Queensland Law Society Act 1952 (Q); ss 18 and 20(3) of the Legal Contribution Trust Act 1967 (WA); s 112 of the Legal Profession Act 1993 (Tas); s 91 of the Legal Practitioners Act 1974 (NT); s 137 of the Legal Practitioners Act 1970 (ACT). 137 Sections 3(1) ("trust money") and 208 of the Legal Practice Act 1996 (Vic). 138 Baker v Law Institute of Victoria [1974] VR 388 at 396; Law Institute of Victoria v Baker (1974) 48 ALJR 160 at 161. 139 Section 214 of the Legal Practice Act 1996 (Vic). 140 Dobcol Pty Ltd v Law Institute of Victoria [1979] VR 393 at 396-398; Ristevski v Kyriacou unreported, Supreme Court of Victoria, 5 August 1997. 141 Section 80(1) of the Legal Profession Act 1987 (NSW). 142 Section 79A of the Legal Profession Act 1987 (NSW). 143 Francis v Law Society of New South Wales [1982] 2 NSWLR 191 at 204. Bell mandate on which he had received the moneys", a solicitor misappropriated them144. The legislation in an earlier form had provided for the fidelity fund to be applied "for the purpose of reimbursing persons who may suffer pecuniary loss by reason of the theft, or fraudulent misapplication by a solicitor … of any moneys ... entrusted to the solicitor … in the course of his practice as a solicitor"145. It had been held in that form to confine application of the fund to the reimbursement of persons "having a legal or equitable interest in the moneys entrusted to the solicitor"146. Turning first to the requirement of the model law enacted in Pt 3.6 that there be a "default" by a law practice, it is apparent that the definition of "default" in Pt 3.6 builds on the definition of "failure to account" in the previous New South Wales legislation, qualifying it to apply only to a case where the failure arises from or is constituted by an act or omission of an associate that involves dishonesty. There is a default within the meaning of the Part where a law practice, by reason of the dishonesty of an associate, fails to pay or deliver trust money according to the mandate on which the trust money was received and is held by the law practice. The default lies specifically in that failure to pay or deliver trust money, not in any broader pattern of dishonest conduct of which that failure might form part. Turning next to the requirement of the model law enacted in Pt 3.6 that a person suffers "pecuniary loss", the definition of "pecuniary loss" in Pt 3.6 did not appear in the previous New South Wales or Victorian legislation or in the previous legislation of any other State or Territory. The first limb of the definition (referring to "the amount of trust money … that is not paid or delivered") is plainly limited to the amount of trust money that the law practice fails to pay or deliver by reason of the dishonesty of an associate. However, the second limb (referring to "the amount of money that a person loses or is deprived of") plainly extends beyond the amount of trust money that the law practice fails to pay or deliver so as to encompass a loss or deprivation of other money that results from such a failure to pay or deliver trust money. 144 Law Society of New South Wales v Glenorcy Pty Ltd (2006) 67 NSWLR 169 at 174 145 Section 56(1) of the Legal Practitioners Act 1898 (NSW) prior to its amendment by the Legal Practitioners and Other Acts (Amendment) Act 1974 (NSW). 146 Anderson v Law Society of New South Wales unreported, Supreme Court of New South Wales, 21 December 1979 at 5, applying Australia and New Zealand Banking Group Ltd v Law Society of New South Wales [1976] 1 NSWLR 686 at Bell While the model law enacted in Pt 3.6 adopts the language of the previous Victorian legislation in limiting the amount payable to "the amount of the person's actual pecuniary loss resulting from the default", that limitation must be read with the two limbs of the definition of pecuniary loss. The word "actual" no doubt serves to exclude possible or contingent pecuniary loss. However, unlike the position under the previous Victorian legislation, actual pecuniary loss is not limited to the amount of trust money that is not paid or delivered. It extends by virtue of the second limb of the definition of pecuniary loss to a consequential loss or deprivation of money. Turning finally to the requirement of the model law enacted in Pt 3.6 that a person suffers pecuniary loss "because of" a default, it is apparent that the statutory expression is drawn from the previous New South Wales legislation. That factor is insufficient to conclude that the causal connection the statutory expression connotes can be established (as had been held in respect of the earlier form of the previous New South Wales legislation) only in the case of a person having a legal or equitable interest in the trust money that the law practice failed to pay or deliver by reason of the dishonesty of an associate. Because causation in a legal context is always purposive147, however, the class of persons capable of answering the description of those suffering pecuniary loss because of a default cannot be divorced from the purpose of The class of persons capable of answering the description cannot be confined by reference to the expressed purpose of Pt 3.6 being "to compensate clients". That expression of purpose does not appear in the model law and is best read, as the Court of Appeal suggested, "as providing that the main or dominant purpose of Part 3.6 is to facilitate claims for compensation by clients"148. The entitlement to claim compensation in the operative provision in Pt 3.6 is conferred, conformably with the model law, using the undefined term "person" rather than the defined term "client". The purpose of Pt 3.6, encompassing but not limited to the expressed purpose of compensating clients, is rather to be discerned in the relationship between Pt 3.6 and Pt 3.3. The statutory expression of the purpose of Pt 3.3 – to ensure that trust money is held by law practices "in a way that protects the 147 Travel Compensation Fund v Tambree (2005) 224 CLR 627 at 639 [28]-[30], 642- 643 [45]-[46]; [2005] HCA 69; Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd [1999] 2 AC 22 at 29-32. 148 [2012] VSCA 68 at [40]. Bell interests of persons for or on whose behalf money is held" – conforms to the expression of purpose in the corresponding provision of the model law and is reflected in the substance of the rights and obligations set out in Pt 3.3. Trust money is money entrusted to a law practice to be held by the law practice for or on behalf of other persons, who may but need not be clients. In the case of trust money paid or required to be paid into the general trust account of a law practice, the persons "for or on whose behalf" the trust money is held are exclusively persons who have a beneficial interest in that trust money. Part 3.6 provides a safety net for those whose interests are sought to be protected by Pt 3.3, conferring an entitlement to compensation if and to the extent that the protection afforded by Pt 3.3 breaks down due to the dishonesty of an associate of a law practice. The compensatory purpose of Pt 3.6 is encompassed within the protective purpose of Pt 3.3. It is within that protective purpose to compensate persons "for or on whose behalf" trust money is held by a law practice for the adverse pecuniary consequences of the practice departing, by reason of the dishonesty of an associate, from the mandate subject to which that trust money was received and is held. The compensatory purpose of Pt 3.6 is advanced by construing the requisite causal connection between a default and the suffering of pecuniary loss as conferring an entitlement on persons "for or on whose behalf" trust money is held to claim against the Fidelity Fund for the amount of trust money that the law practice fails to pay or deliver together with any further amount of money that the person loses, or of which the person is deprived, as a consequence of that dishonest failure to pay or deliver trust money. The compensatory effect of Pt 3.6 would be extended beyond the protective purpose of Pt 3.3 were the requisite causal connection to be construed as extending to permit claims for the consequential losses of other persons. The Court of Appeal was therefore correct to construe the entitlement to compensation conferred by Pt 3.6 as extending only to persons "for or on whose behalf" trust money is held by a law practice. In respect of trust money paid or required to be paid into the general trust account of a law practice, the Court of Appeal was also correct to equate persons "for or on whose behalf" trust money is held by the law practice with persons having a beneficial interest in that trust money. Mr Gillespie-Jones suffered the non-payment of a debt owed by Mr Grey. He did not suffer the loss of any trust money held for him or on his behalf. The money which Mr Grey failed to pay to Mr Gillespie-Jones was not his to lose, but money to which the client was exclusively beneficially entitled. Bell With due respect to Judge Kennedy, who adopted the contrary view, it is in any event difficult to characterise Mr Gillespie-Jones as a person who suffered loss "because of" the failure of Mr Grey to pay trust money. Mr Gillespie-Jones was always, and could never have been other than, a creditor of Mr Grey. As between Mr Grey and Mr Gillespie-Jones it was immaterial whether Mr Grey used trust money to pay his debt to Mr Gillespie-Jones. Moreover, any payment to Mr Gillespie-Jones by Mr Grey would not have been a payment of trust money. Had he complied with s 3.3.20(1)(b) of the Act, Mr Grey would have paid trust money into the law practice's own account and drawn upon that account to pay Mr Gillespie-Jones. Mr Gillespie-Jones could not have insisted on payment of money from the trust account and Mr Grey could not have drawn money from the trust account to discharge his debt to Mr Gillespie-Jones other than by paying it into his own account. Mr Gillespie-Jones never had any entitlement to, or expectation of, payment of trust money. He did not suffer any loss because of the failure by Mr Grey to pay trust money; he suffered a loss because of Mr Grey's failure to pay his debts.

HIGH COURT OF AUSTRALIA APPLICANT AND VICTORIA LEGAL AID & ANOR RESPONDENTS D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 10 March 2005 ORDER Special leave to appeal granted. Appeal treated as instituted and heard instanter and dismissed with costs. On appeal from the Supreme Court of Victoria Representation: N A Moshinsky QC with V Ruta for the applicant (instructed by BTE Flynn Murone & Co) D F Jackson QC with D Masel for the first respondent (instructed by Monahan + Rowell) N J Young QC with D F Hore-Lacy SC, B G Walmsley SC, G A Devries and G M Hughan for the second respondent (instructed by Beckwith Cleverdon Rees) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS D'Orta-Ekenaike v Victoria Legal Aid Legal practitioners – Negligence – Immunity from suit – Applicant sought legal assistance from first respondent, a statutory corporation deemed to be a firm of solicitors, in defence of criminal prosecution – First respondent retained second respondent, a barrister, to appear for applicant at committal proceedings – Applicant pleaded guilty at committal proceedings but subsequently pleaded not guilty and stood trial – Evidence of guilty plea led at first trial – Applicant convicted but verdict quashed on appeal and new trial ordered – Applicant acquitted on retrial – Respondents alleged to have been negligent in advising applicant to plead guilty at committal – Advice allegedly tendered at a conference two days prior to committal proceeding and at a further conference on day of committal proceeding – Whether advocate's immunity available to respondents – Whether advocate's immunity applied in respect of advice allegedly given in conference. Legal practitioners – Immunity from suit – Legal Profession Practice Act 1958 (Vic) – Barristers liable for negligence to same extent as solicitor as at 1891 – Extent of solicitor's liability for negligence in 1891. Courts – Judicial process – Judicial process as an aspect of government – Nature of the judicial process – The need for finality of judicial determination – Whether advocate's immunity necessary to ensure finality of judicial process. Courts – Abuse of process – Whether rules about abuse of process provide sufficient satisfaction of the finality principle – Nature of client's complaint – Whether distinction exists between civil and criminal proceedings – Whether distinction to be drawn between challenging the final outcome of litigation and challenging an intermediate outcome. High Court – Whether Giannarelli v Wraith (1988) 165 CLR 543 should be reconsidered – Relevance of statutory changes since Giannarelli v Wraith – Relevance of developments in common law in England and Wales – Relevance of experience in other jurisdictions. Courts – Practice and procedure – Summary determination of action without trial – Whether claim revealed an arguable cause of action. Legal Profession Practice Act 1958 (Vic), s 10. Legal Practice Act 1996 (Vic), s 442. GLEESON CJ, GUMMOW, HAYNE AND HEYDON JJ. There are two principal issues in this matter. First, should the Court reconsider its decisions in at common law an advocate cannot be sued by his or her client for negligence in the conduct of a case in court, or in work out of court which leads to a decision affecting the conduct of a case in court; and in 1891 (the date at which the extent of the liability of a barrister was fixed by the Legal Profession Practice Act 1958 (Vic) ("the LPPA")) an advocate was immune from suit for allegedly negligent acts or omissions committed in court in the conduct of civil or criminal litigation, or committed out of court but leading to a decision affecting the conduct of a case in court? Secondly, does the immunity apply to the acts or omissions of a solicitor which, if committed by an advocate, would be immune from suit? The issues arise in an application for special leave referred for argument, as on appeal, before the whole Court. The application for special leave is brought by a client (the applicant) whose action for negligence against the respondents was summarily terminated on the basis that his statement of claim disclosed no arguable cause of action. Special leave should be granted but the appeal dismissed with costs. Giannarelli should not be reopened. The immunity applies to the particular acts or omissions alleged to have been committed by the second respondent and by an employee of the first respondent. The facts alleged by the applicant In February 1996, the applicant was charged with rape. He sought legal assistance from Victoria Legal Aid ("VLA"), a body corporate established by s 3 of the Legal Aid Act 1978 (Vic). VLA retained the second respondent (Mr McIvor) as the applicant's barrister to appear for the applicant in the Magistrates' Court at the committal proceeding to be held under the Magistrates' Court Act 1989 (Vic)2. (1988) 165 CLR 543. At the committal proceeding, the applicant, although not bound to enter a plea, entered a plea of guilty. He was committed for trial in the County Court of Victoria. In February 1997, the applicant was presented for trial. On arraignment he entered a plea of not guilty and stood trial. His guilty plea at the committal proceeding was led in evidence. He was convicted and sentenced to three years' imprisonment. The applicant appealed against his conviction to the Court of Appeal of Victoria. That Court (Winneke P, Brooking JA, Vincent AJA) set aside the verdict, quashed the conviction and directed a new trial3 on the ground that, although evidence of the applicant's guilty plea at committal had been properly admitted in evidence4, the trial judge had failed to give sufficient directions about the use that might be made of the plea5. On the applicant's retrial, evidence of his guilty plea at committal was not admitted. He was acquitted. In 2001, the applicant commenced an action against VLA and the barrister, Mr McIvor, in the County Court. The applicant alleged that he had retained VLA as his solicitor to act on his behalf in defending the charge of rape. (The statement of claim does not allege any consideration for this retainer but that may be ignored. It will be assumed that the applicant alleged that there was a contract of retainer.) He alleged that VLA and the barrister each owed him duties to exercise reasonable skill, care and diligence in acting for him. The pleading is at least consistent with the applicant alleging that the duties were either contractual or duties of care imposed by law, or both. The applicant alleged that the person having the carriage of the matter at VLA (Ms Robyn Greensill) and the barrister, separately or together, advised him that: he "did not have any defence to the charge"; 3 R v D'Orta-Ekenaike [1998] 2 VR 140. [1998] 2 VR 140 at 146. [1998] 2 VR 140 at 147. if he entered a guilty plea at committal "he would receive a suspended sentence"; and if he did not plead guilty at committal but contested the charge at trial and was found guilty, "he would receive a custodial penalty". This advice was said to have been tendered at a conference in the barrister's chambers held two days before the date appointed for the committal proceeding and again at a further conference at the Magistrates' Court on the day of, but before the commencement of, the committal proceeding. The applicant alleged that "undue pressure and influence" was exerted upon him at this second conference, by both Ms Greensill "on behalf of the VLA" and by Mr McIvor and that, as a result, he entered a guilty plea. He alleges that, by reason of the breaches of duty by VLA and the barrister, he suffered, and continues to suffer, loss and damage. The particulars given of that loss and damage are loss of liberty during the period of his imprisonment between conviction at his first trial and subsequent quashing of that conviction, loss of income during that period and beyond (because of his psychological condition), psychotic illness, and the costs and expenses of the appeal, the retrial and the civil proceeding. The steps in the action against the respondents Both respondents filed defences to the applicant's statement of claim in which each put in issue many of the allegations made. It is, however, not necessary to examine those issues. Both respondents applied for orders terminating the proceedings summarily. The primary judge (Judge Wodak) ordered that the proceeding be forever stayed. His Honour held that the advice allegedly given at each conference, both by Ms Greensill and Mr McIvor, "was so intimately connected with the conduct of the trial as to come within the immunity defence principle". He further held that this defence was available both to VLA and to the barrister and that the applicant's proceeding was, therefore, doomed to fail. The applicant sought leave to appeal to the Court of Appeal of Victoria. That Court (Winneke P and Buchanan JA) concluded that it was not shown that the decision of Judge Wodak was wrong, or attended by sufficient doubt to warrant a grant of leave, and accordingly refused leave to appeal. It is from that order that the applicant seeks special leave to appeal. Statutory regulation of the Victorian legal profession At the time Giannarelli was decided, and at the time of the events giving rise to the applicant's proceeding against VLA and Mr McIvor, the Victorian legal profession was regulated by the LPPA. The LPPA, although amended from time to time, was, in important respects, a consolidating statute enacted at the time of the 1958 consolidation of Victorian legislation. Indeed, in one critical respect, the LPPA was the re-enactment of legislation first passed in 1891 and subsequently re-enacted in the successive consolidations of 1915, 1928 and 1958. Section 10 of the LPPA provided that: "(1) Every barrister shall be entitled to maintain an action for and recover from the solicitor or client respectively by whom he has been employed his fees costs and charges for any professional work done by him. Every barrister shall be liable for negligence as a barrister to the client on whose behalf he has been employed to the same extent as a solicitor was on the twenty-third day of November One thousand eight hundred and ninety-one liable to his client for negligence as a solicitor." That section had its origin in s 5 of the Legal Profession Practice Act 1891 (Vic) ("the 1891 Act"). Section 5 of the 1891 Act provided: "Every barrister shall in future be entitled to maintain an action for and recover from the solicitor or client respectively by whom he has been employed his fees costs and charges for any professional work done by him. And every barrister shall in future be liable for negligence as a barrister to the client on whose behalf he has been employed to the same extent as a solicitor is now liable to his client for negligence as a solicitor." The 1891 Act was assented to on 23 November 1891 but came into operation on 1 January 18926. It provided that those previously admitted as barristers were, by the 1891 Act, admitted as solicitors and were to be entitled to practise as solicitors7 and, conversely, that those previously admitted as solicitors were admitted as barristers and were to be entitled to practise as such8. After the passing of the 1891 Act, no person was to be admitted to practise as a barrister or a solicitor solely but should be admitted by the Supreme Court both as a barrister and a solicitor9. When the 1891 Act was consolidated and re-enacted in 1915, as the Legal Profession Practice Act 1915, reference to the date of assent of the 1891 Act was substituted for the words "is now liable". Thus, as consolidated, s 10 of the Legal Profession Practice Act 1915 provided: "Every barrister shall be entitled to maintain an action for and recover from the solicitor or client respectively by whom he has been employed his fees costs and charges for any professional work done by him. And every barrister shall in future be liable for negligence as a barrister to the client on whose behalf he has been employed to the same extent as a solicitor was on the twenty-third day of November One thousand eight hundred and ninety-one liable to his client for negligence as a solicitor." Although subsequently divided into two sub-sections, the section was re-enacted substantially in its 1915 form in 1928 and again in 1958. Despite the evident legislative intention in the 1891 Act that the legal profession in Victoria should be fused, the amalgamation of the two branches has never been complete. Since the Victorian Bar was first established in 1884, there have always been practitioners in Victoria who, in accordance with voluntary arrangements undertaken on their signing the Roll of Counsel maintained by the Victorian Bar, have chosen to practise solely as barristers. Subject to some exceptions, those practitioners have agreed to act in litigious matters only on the instructions of a solicitor, and have agreed that each is duty bound to accept a brief in the courts in which he or she professes to practise, if offered a proper professional fee to do so, unless there are special circumstances to justify refusing to accept the particular brief10. That latter rule (usually referred to as the 10 Gowans, The Victorian Bar: Professional Conduct, Practice and Etiquette, (1979) at 66, referring to the minutes of the meeting of the Bar Council of 3 November "cabrank rule") is now set out in the Australian Bar Association Model Rules11 and Rules of Conduct of The Victorian Bar Inc12. In addition, however, at all times since the 1891 Act, there have been practitioners in Victoria who, although not members of the Victorian Bar, have had extensive practices as advocates on the direct instructions of lay clients, both in courts of summary jurisdiction and in the superior courts. Thus while the profession in Victoria has for the most part been divided between those practising solely as barristers and those practising solely as solicitors, the division has not been absolute and it is a division that has come about as a result of voluntary arrangements undertaken by those who, together, have constituted the Victorian Bar. These matters are of more than historical importance. First, their appreciation is necessary to a proper understanding of the 1891 Act and its legislative progeny which, at the relevant times, was s 10(2) of the LPPA. Secondly, they direct attention away from any consideration of special privileges or disabilities thought to attach to the profession of barrister, as that profession has been, or may now be, understood and organised in England and Wales, or in States where the legal profession is divided along lines similar to those in England and Wales. This second point is emphasised when it is recognised that the legal professions in States other than Victoria have been organised and regulated differently. It is not necessary to describe, in any detail, either the present or the past organisation or regulation of the legal professions in those other States. In some, at various times, there has been only a small group of advocates who have practised solely or principally as barristers. In those States there have been many cases where a barrister, whose principal place of practice has been based in another State, but who has been admitted to practise in the first State, has advised about, or appeared in, litigation in the courts of that first State. Often enough, interstate counsel have appeared with one or more local practitioners as junior counsel. In such cases, the junior was often a partner or employee solicitor of the firm of instructing solicitors and a practitioner who often appeared in the superior courts of the State. 11 Rules 85-92. 12 Rules 86-90, 92 and 113. What these considerations, and the other historical matters described above, reveal is that attention must be directed to the nature of the role which an advocate (whether barrister, solicitor or both barrister and solicitor) plays in the judicial system. The decision in Giannarelli As indicated earlier, there are two aspects of the Court's decision in Giannarelli which are important in the present matter. First, there was a question about the proper construction of s 10(2) of the LPPA; secondly, there was a question about the common law immunity from suit of participants in the judicial process. A majority of the Court concluded13 that s 10(2) of the LPPA did not subject a barrister to a common law duty of care in negligence. As Wilson J, with whose reasons in this respect Mason CJ agreed, pointed out14, s 10(2) of the LPPA was a "fixed-time" provision15; it required consideration of the extent to which, in 1891, a solicitor would have been liable to a client for negligence. The Court in Giannarelli divided over whether the relevant liability to be considered was confined to the liability of a solicitor as advocate or extended to the liability of a solicitor "in the exercise of his functions as a solicitor"16. The majority preferred the view that the comparison required by s 10(2), when considering whether an advocate was liable for negligence committed in court or in work intimately associated with work in court, was with the liability that a solicitor-advocate would have had to a client in 1891 in such circumstances. For our own part, we prefer the construction, adopted by the majority in Giannarelli, that neither s 5 of the 1891 Act nor s 10(2) of the LPPA led to the result that, although in 1891 a solicitor-advocate would have been immune from suit for in-court negligence, either the 1891 Act or its subsequent re-enactments made a barrister liable to suit for such negligence. So to read the relevant provisions of either the 1891 Act or the LPPA would give little or no effect to the words "liable ... to the same extent". But in the end, chief significance must be 13 (1988) 165 CLR 543 at 561 per Mason CJ, 570 per Wilson J, 587 per Brennan J, 14 (1988) 165 CLR 543 at 567. 15 Bennion, Statutory Interpretation, 4th ed (2002) at 762. 16 (1988) 165 CLR 543 at 604 per Toohey J. attached to the fact that a disputed question of construction was finally resolved in Giannarelli. This Court should not depart from that decision without powerful reasons to do so. A mere preference for one construction over the other would not suffice. The second aspect of the decision in Giannarelli which is now important is the conclusion reached about the common law. The conclusion that, at common law, an advocate cannot be sued by his or her client for negligence in the conduct of a case, or in work out of court which is intimately connected with the conduct of a case in court, was consistent with the earlier decisions of the House of Lords in Rondel v Worsley17 and Saif Ali v Sydney Mitchell & Co18. No doubt because the arguments advanced in Giannarelli were framed against the background of those two English decisions, a number of matters were considered in the reasons in Giannarelli that have application, or at least greater application, in a divided legal profession where only barristers have a right of audience in superior courts. And because the particular claims made in Giannarelli against the barristers who were sued were framed or treated as claims in negligence, not claims for breach of contract, much of the discussion in the reasons in Giannarelli is directed at the tort of negligence. But, as these reasons will seek to demonstrate, the decision in Giannarelli must be understood having principal regard to two matters: the place of the judicial system as a part of the governmental structure; and the place that an immunity from suit has in a series of rules all of which are designed to achieve finality in the quelling of disputes by the exercise of judicial power. Although reference is made in Giannarelli to matters such as: the supposed connection between a barrister's immunity and an inability to sue the client for professional fees19; 19 (1988) 165 CLR 543 at 555 per Mason CJ; In re Le Brasseur and Oakley [1896] 2 Ch 487 at 494; Robertson v Macdonogh (1880) 6 LR Ir 433 at 438; cf Rondel v Worsley [1969] 1 AC 191 at 260-264. the potential competition between the duties which an advocate owes to the court and a duty of care to the client20; and the desirability of maintaining the cabrank rule21; each was, and should be, put aside as being, at most, of marginal relevance to whether an immunity should be held to exist. The first of these matters, even if it were well founded (and it is not), would be irrelevant to the liability of a solicitor-advocate and there is no sound basis for distinguishing between advocates according to whether the advocate does or does not have a contract with the client. The second matter assumes, wrongly, that the duties might conflict. They do not; the duty to the court is paramount. But, more than that, the question of conflicting duties assumes that the only kind of case to be considered is one framed as a claim in negligence. That is not so. The question is whether there is an immunity from suit, not whether an advocate owes the client a duty of care. The third consideration, the cabrank principle, is also irrelevant to the solicitor-advocate. Highly desirable as the maintenance of the cabrank rule is in ensuring that the unpopular client or cause is represented in court, it does not provide a sufficient basis to justify the existence of the common law immunity. Likewise, it is as well to mention at this point a further consideration that must be put aside as irrelevant. It may readily be accepted that advocates must make some decisions in court very quickly and without pausing to articulate the reasons which warrant the choice made. But so too do many others have to make equally difficult decisions. Reference to the difficulty of the advocate's task is distracting and irrelevant. Further, although not irrelevant, we would consider the "chilling" effect of the threat of civil suit22, with a consequent tendency to the prolongation of 20 (1988) 165 CLR 543 at 556 per Mason CJ, 572-573 per Wilson J; cf Rondel v Worsley [1969] 1 AC 191 at 231, 251, 272-273, 282. 21 (1988) 165 CLR 543 at 572-573 per Wilson J; Saif Ali v Sydney Mitchell & Co [1980] AC 198 at 221. 22 (1988) 165 CLR 543 at 579 per Brennan J. trials23, as not of determinative significance in deciding whether there is an immunity from suit. That is not to say, however, that the significance, or magnitude, of such effects should be underestimated. But while they are considerations that do not detract from the importance of the immunity, we do not consider that they provide support in principle for its existence. Chief attention must be given to the nature of the judicial process and the role that the advocate plays in it. The judicial process as an aspect of government In Giannarelli, Mason CJ said24 that "the barrister's immunity, if it is to be sustained, must rest on considerations of public policy". His Honour explained25 that the term "immunity" was used in a sense which assumed that rights and duties might otherwise exist at common law, but the immunity is sustained on considerations of public policy and "the injury to the public interest that would arise in the absence of immunity"26. Of the various factors advanced to justify the immunity, "the adverse consequences for the administration of justice which would flow from the re-litigation in collateral proceedings for negligence of issues determined in the principal proceedings" (emphasis added)27 was held to be determinative28. The significance of the reference to the administration of justice is of fundamental importance to the proper understanding of the immunity and its foundation. To adopt the language found in the cases considering Ch III of the Constitution, the central concern of the exercise of judicial power is the quelling of controversies. Judicial power is exercised as an element of the government of society and its aims are wider than, and more important than, the concerns of the particular parties to the controversy in question, be they private persons, 23 (1988) 165 CLR 543 at 557 per Mason CJ, 594 per Dawson J. 24 (1988) 165 CLR 543 at 555. 25 (1988) 165 CLR 543 at 554-555. 26 Gibbons v Duffell (1932) 47 CLR 520 at 529 per Starke J. 27 (1988) 165 CLR 543 at 555. 28 See also (1988) 165 CLR 543 at 574 per Wilson J, 579 per Brennan J, 595-596 per corporations, polities, or the community as personified in the Crown or represented by a Director of Public Prosecutions. No doubt the immediate parties to a controversy are very interested in the way in which it is resolved. But the community at large has a vital interest in the final quelling of that controversy. And that is why reference to the "judicial branch of government" is more than a mere collocation of words designed to instil respect for the judiciary. It reflects a fundamental observation about the way in which this society is governed. As s 71 of the Constitution says, what is "vested in a Federal Supreme Court, to be called the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction" is the judicial power of the Commonwealth, that is, the judicial power of the national polity. No matter whether the judicial branch of government is separated from the other branches of government (as it is and must be at the federal level29 but, at least generally, is not at the State level30) it is, in Quick and Garran's words31, "the third great department of government". Finality A central and pervading tenet of the judicial system is that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances. That tenet finds reflection in the restriction upon the reopening of final orders after entry32 and in the rules concerning the bringing of an action to set aside a final judgment on the ground that it was procured by fraud33. The tenet also finds reflection in the doctrines of res judicata and issue estoppel. Those doctrines prevent a party to a proceeding raising, in a new proceeding against a party to the original proceeding, a cause of action or issue that was 29 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 267-268 per Dixon CJ, McTiernan, Fullagar and Kitto JJ. 30 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. 31 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 32 DJL v Central Authority (2000) 201 CLR 226. 33 DJL v Central Authority (2000) 201 CLR 226 at 244-245 [35]-[38]. finally decided in the original proceeding34. It is a tenet that underpins the extension of principles of preclusion to some circumstances where the issues raised in the later proceeding could have been raised in an earlier proceeding35. The principal qualification to the general principle that controversies, once quelled, may not be reopened is provided by the appellate system. But even there, the importance of finality pervades the law. Restraints on the nature36 and availability of appeals, rules about what points may be taken on appeal37 and rules about when further evidence may be called in an appeal (in particular, the so-called "fresh evidence rule"38) are all rules based on the need for finality. As was said in the joint reasons in Coulton v Holcombe39: "[i]t is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial". The rules based on the need for finality of judicial determination are not confined to rules like those mentioned above. Those are rules which operate between the parties to a proceeding that has been determined. Other rules of law, which affect persons other than the parties to the original proceeding, also find their justification in considerations of the need for finality in judicial decisions. And some of those rules are rules of immunity from suit. 34 See, for example, Hoysted v Federal Commissioner of Taxation (1925) 37 CLR 290; [1926] AC 155; Blair v Curran (1939) 62 CLR 464; Jackson v Goldsmith (1950) 81 CLR 446; Administration of Papua and New Guinea v Daera Guba (1973) 130 CLR 353. 35 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. 36 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73. 37 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; O'Brien v Komesaroff (1982) 150 CLR 310; Coulton v Holcombe (1986) 162 CLR 1. 38 Orr v Holmes (1948) 76 CLR 632; Ratten v The Queen (1974) 131 CLR 510 at 516-517 per Barwick CJ; Gallagher v The Queen (1986) 160 CLR 392; Mickelberg v The Queen (1989) 167 CLR 259. 39 (1986) 162 CLR 1 at 7. Other immunities from suit Parties who fail in litigation, whatever its subject, may well consider the result of that litigation to be wrong, even unjust. Seldom will a party have contested litigation without believing, or at least hoping, that it will be resolved in that party's favour. If that party does not succeed, an explanation for failure may be sought in what are perceived to be the failures of others – the judge, the witnesses, advocates – anyone other than the party whose case has been rejected. This is no new phenomenon. It is a problem with which the common law has had to grapple for centuries. Its response has been the development of immunities from suit for witnesses, judges and advocates. The origin of these rules can be traced to decisions of the 16th and 17th centuries40. From as early as the 16th century, a disappointed litigant could not sue those who had given evidence in the case. That is, the disappointed litigant could not seek to demonstrate that witnesses had given, or parties had suborned, perjured evidence41 or that witnesses or parties had conspired together42 to injure that litigant. Nor could the disappointed litigant seek to demonstrate that what was said by the witnesses had defamed that litigant43. All such actions were precluded or answered by an absolute privilege. It mattered not how the action was framed. And it mattered not whether the disappointed litigant alleged that the witness had acted deliberately or maliciously. No action lay, or now lies, against a witness for what is said or done in court44. It does not matter whether 40 As to witnesses, see, for example, Jerom and Knight's Case (1588) 1 Leo 107 [74 ER 99]; Damport v Sympson (1596) Cro Eliz 520 [78 ER 769]; Harding v Bodman (1617) Hut 11 [123 ER 1064]; Eyres v Sedgewicke (1620) Cro Jac 601 [79 ER 513]. As to judges, see, for example, Windham v Clere (1589) Cro Eliz 130 [78 ER 387]; Floyd v Barker (1607) 12 Co Rep 23 [77 ER 1305]; Metcalfe v Hodgson (1633) Hut 120 [123 ER 1143]; Nichols v Walker (1635) Cro Car 394 41 See, for example, Revis v Smith (1856) 18 CB 126 at 140, 141, 144 [139 ER 1314 at 1319-1321]; Collins v Cave (1859) 4 H & N 225 at 229, 230, 235 [157 ER 824 at 826-828]; Henderson v Broomhead (1859) 4 H & N 569 [157 ER 964]. 42 Cabassi v Vila (1940) 64 CLR 130. 43 Munster v Lamb (1883) 11 QBD 588; Gibbons v Duffell (1932) 47 CLR 520 at 44 Cabassi v Vila (1940) 64 CLR 130. what is done is alleged to have been done negligently or even done deliberately and maliciously with the intention that it harm the person who would complain of it. The witness is immune from suit and the immunity extends to preparatory steps45. That the immunity must be pleaded as a defence makes it nonetheless an immunity from suit. As the whole Court said in Lange v Australian Broadcasting Corporation46: "The result [of the defence] is to confer upon defendants, who choose to plead and establish an appropriate defence, an immunity to action brought against them." (footnote omitted) The development of judicial immunity was more complex. It was bound up with the development of the law relating to excess of jurisdiction, and thus with the development of the principles governing when a judicial decision was open to collateral attack. Its history has been traced by Holdsworth47. It is not necessary to examine that history in any detail, beyond noticing that the decisions of courts of record were conclusive, but those of inferior courts were open to collateral attack alleging excess of jurisdiction. Hence, while action might lie at common law for acts done in an inferior court in excess of jurisdiction, the decisions of supreme courts were final. And there was an immunity from suit for any judicial act done within jurisdiction48. What is important to notice for present purposes is not the history of development of this immunity, but that both judicial immunity and the immunity of witnesses were, and are, ultimately, although not solely, founded in considerations of the finality of judgments. Statements can be found in the cases that the immunity of witnesses serves to encourage "freedom of expression" or "freedom of speech" so that the court will have full information about the issues in the case49. Statements also can be found50 that place the immunity of those who participate in court proceedings on 45 Watson v M'Ewan [1905] AC 480; Gibbons v Duffell (1932) 47 CLR 520 at 525. 46 (1997) 189 CLR 520 at 565. 47 Holdsworth, "Immunity for Judicial Acts", (1924) Journal of the Society of Public Teachers of Law 17. 48 Sirros v Moore [1975] QB 118; Rajski v Powell (1987) 11 NSWLR 522. 49 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 679 per Lord Steyn, 697 per Lord Hoffmann. 50 For example, Munster v Lamb (1883) 11 QBD 588 at 607 per Fry LJ. the desirability of avoiding baseless actions being brought against those who were merely discharging their duty, but these considerations are advanced in answer to another kind of argument. As Fry LJ said in Munster v Lamb51: "Why is it that a judge who disgraces his office, and speaks from the bench words of defamation, falsely and maliciously, and without reasonable or probable cause, is not liable to an action? Is not such conduct of the worst description, and does it not produce great injury to the person affected by it? Why should a witness be able to avail himself of his position in the box and to make without fear of civil consequences a false statement, which in many cases is perjured, and which is malicious and affects the character of another?" The answer proffered (that it is more necessary to prevent the baseless action than provide for the kind of case described) may well suffice to meet the point. But the deeper consideration that lies beneath the principle is that determining whether the complaint made is baseless or not requires relitigation of the matter out of which the complaint arises. In R v Skinner52, Lord Mansfield said that "neither party, witness, counsel, jury, or Judge, can be put to answer, civilly or criminally, for words spoken in office". Of that immunity it has been said in Mann v O'Neill53 that it responds to two related considerations, "to assist full and free access to independent courts for the impartial quelling of controversies, without fear of the consequences" and "the avoidance of the re-agitation by discontented parties of decided cases after the entry of final judgment" other than by appellate processes. That view of the matter reflects the consideration that what is at stake is the public interest in "the effective performance" of its function by the judicial branch of government54. 51 (1883) 11 QBD 588 at 607. 52 (1772) Lofft 54 at 56 [98 ER 529 at 530]. 53 (1997) 191 CLR 204 at 239 per Gummow J. 54 cf Gibbons v Duffell (1932) 47 CLR 520 at 528 per Gavan Duffy CJ, Rich and The judicial process as an aspect of government – conclusions The "unique and essential function" of the judicial branch is the quelling of controversies by the ascertainment of the facts and the application of the law55. Once a controversy has been quelled, it is not to be relitigated. Yet relitigation of the controversy would be an inevitable and essential step in demonstrating that an advocate's negligence in the conduct of litigation had caused damage to the client. The question is not, as may be supposed56, whether some special status should be accorded to advocates above that presently occupied by members of other professions. Comparisons made with other professions appear sometimes to proceed from an unstated premise that the law of negligence has been applied, or misapplied, too harshly against members of other professions, particularly in relation to factual findings about breach of duty, but that was not a matter argued in this Court and should, in any event, be put to one side. Nor does the question depend upon characterising the role which the advocate (a private practitioner) plays in the administration of justice as the performance of a public or governmental function. Rather, the central justification for the advocate's immunity is the principle that controversies, once resolved, are not to be reopened except in a few narrowly defined circumstances. This is a fundamental and pervading tenet of the judicial system, reflecting the role played by the judicial process in the government of society. If an exception to that tenet were to be created by abolishing that immunity, a peculiar type of relitigation would arise. There would be relitigation of a controversy (already determined) as a result of what had happened during, or in preparation for, the hearing that had been designed to quell that controversy. Moreover, it would be relitigation of a skewed and limited kind. No argument was advanced to this Court urging the abolition of judicial or witness immunity. If those immunities remain, it follows that the relitigation could not and would not examine the contribution of judge or witness to the events complained of, only the contribution of the advocate. An exception to the rule against the reopening of controversies would exist, but one of an inefficient and anomalous kind. 55 Fencott v Muller (1983) 152 CLR 570 at 608 per Mason, Murphy, Brennan and 56 cf Arthur J S Hall v Simons [2002] 1 AC 615 at 680 per Lord Steyn. A justification based on finality has as much force today as it did when Giannarelli was decided. Given this, what changes have occurred since the decision in Giannarelli which would necessitate a reconsideration of that decision? Three matters will be considered. First, there have been some changes to statutes that must be noticed. Secondly, there has been the decision of the House of Lords in Arthur J S Hall & Co v Simons57 that the public interest in the administration of justice in England and Wales no longer required that advocates enjoy immunity from suit for alleged negligence in the conduct of civil or criminal proceedings. Thirdly, it will be necessary to say something shortly about the experience in other jurisdictions. Statutory changes since Giannarelli The LPPA was repealed by the Legal Practice Act 1996 (Vic) ("the Practice Act"). The relevant provisions of the Practice Act came into operation on 1 January 1997. Section 442 of the Practice Act provided that "[n]othing in this Act abrogates any immunity from liability for negligence enjoyed by legal practitioners before the commencement of this section". That section had its origins in a report of the Law Reform Commission of Victoria58 in which the Commission devoted a chapter to discussing the advocate's immunity. That discussion proceeded from the premise59 that "neither barristers nor solicitors are liable for losses arising from negligent 'in-court' advocacy work". The Commission recommended60 that this immunity be removed by legislation. It was said61 that: "The legislation should provide that actions arising out of alleged negligence in the course of criminal proceedings cannot be commenced 58 Report No 48, Access to the Law: Accountability of the Legal Profession, July 59 Report No 48, par 50 at 23. 60 Report No 48 at 40. 61 Report No 48 at 40. until the conviction or sentence in the criminal proceeding has been set aside or varied on an appeal or on a petition for mercy." As s 442 of the Practice Act shows, the Commission's recommendation was not adopted. Instead, the Explanatory Memorandum for the Practice Bill said that what was to become s 442 of the Practice Act "preserves the common law immunity for advocates in respect of work in a court or tribunal or work intimately connected with it" (emphasis added). Thus, although s 442 speaks of "any" immunity not being abrogated, it is clear from the course of events described that it was enacted on the assumption that it would preserve an existing immunity. It is necessary to notice some other provisions of the Practice Act. Section 64 sets out what are called the "general principles of professional conduct". They include that a legal practitioner should, in the service of a client, act honestly and fairly in the client's best interests and with all due skill and diligence. They also include the principle that a legal practitioner should, in the service of a client, act so as not to engage in, or assist, conduct that is calculated to defeat the ends of justice or is otherwise in breach of the law. There is, therefore, statutory recognition of obligations which all legal practitioners, including advocates, owe to their clients and to the court. These general principles are reflected in "Practice rules"62 made by recognised professional associations ("RPAs") to regulate the professional conduct of legal practitioners to whose disciplinary supervision the practitioners are assigned. Part 5 of the Practice Act63 provides for the resolution of disputes between clients and legal practitioners and for the disciplinary arrangements governing practitioners. One form of dispute with which these provisions deal64 is a claim that a person has suffered pecuniary losses as a result of an act or omission by a legal practitioner in the provision of legal services to the person (other than loss in respect of which a claim lies against the Fidelity Fund established under the Practice Act). One form of disposition of such a complaint is an order65 by the Legal Profession Tribunal established under the Practice Act that the legal practitioner pay to the client a specified sum as compensation not 62 Legal Practice Act 1996 (Vic), s 72. 64 s 122(1)(b). 65 s 133(1)(a). exceeding $15,000. Section 133(2) of the Practice Act provides that the making of a compensation order does not affect the right of a client to recover damages for pecuniary loss but the order must be taken into account by a court making an award of damages. Thus the Practice Act provides for the making of some, limited, orders against a practitioner to compensate a client for loss occasioned by an act or omission of the practitioner. Some other legislative events must be noticed. Since 1999, State legislatures have given close attention to what has been called "tort law reform". In particular, close attention has been paid to the law of negligence, and a number of statutes have been passed since 2000 which have dealt with that general subject66. In none of that legislation has there been any reference to the immunities from suit of advocates, witnesses or judges. Nothing in any of the legislative steps taken since Giannarelli suggests that the Court should now reconsider the decision reached in that case. On the contrary, the enactment of s 442 of the Practice Act suggests that the Court legislature, directly confronted with a should not do so. recommendation that the law should be changed to the form for which the applicant now contends, chose not to do so. That legislature expressly preserved the state of the law as it was determined in Giannarelli, supplementing that with a limited right to compensation in cases (among others) where a practitioner had failed to act with due skill and care. One State This notwithstanding, the applicant contends that the House of Lords' decision in Arthur J S Hall v Simons shows why the common law in Australia should be restated. Arthur J S Hall v Simons The House of Lords has restated the common law about advocates' immunity, at least for England and Wales. (Perhaps there may remain some question67 whether the law in Scotland still accords with what was decided in Rondel v Worsley and Saif Ali v Sydney Mitchell & Co but that question need not 66 See, for example, Civil Liability Act 2002 (NSW), Wrongs and Other Acts (Public Liability Insurance Reform) Act 2002 (Vic), Wrongs and Limitation of Actions Acts (Insurance Reform) Act 2003 (Vic), Wrongs and Other Acts (Law of Negligence) Act 2003 (Vic). 67 Anderson v HM Advocate 1996 JC 29; Wright v Paton Farrell 2002 SCLR 1039. be examined.) The House was divided in opinion in some aspects of the decision. All of their Lordships concluded68 that reconsideration of advocates' immunity was appropriate in the light of changes in the law of negligence, the functioning of the legal profession, the administration of justice, and public perceptions. But, as Lord Millett pointed out69, much also turned on the then imminent coming into operation of the Human Rights Act 1998 (UK) and the consequent application of Art 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. Three members of the House70 would have retained the immunity in relation to criminal proceedings. A majority of the House, however, concluded71 that since a collateral challenge in civil proceedings to a criminal conviction was prima facie an abuse of process, and ordinarily such an action would be struck out, an immunity from suit was not required to prevent collateral attacks on criminal decisions. The conclusion about collateral challenges and abuse of process was critical to the outcome in Arthur J S Hall v Simons. It will be necessary to consider that topic. Before doing so, however, it is as well to make two other points of basic importance. First, this Court decided, as long ago as 196372, that it would no longer "follow decisions of the House of Lords, at the expense of our own opinions and cases decided here". The separate development of the common law in Australia over the last 40 years, coupled with the considerable, and now profound, changes in the constitutional and other arrangements to which the United Kingdom is party, such as the various European and other international instruments to which it is, but Australia is not, a party, can only reinforce that view. 68 [2002] 1 AC 615 at 678 per Lord Steyn, 684 per Lord Browne-Wilkinson, 688 per Lord Hoffmann, 709-710 per Lord Hope of Craighead, 728 per Lord Hutton, 736-737 per Lord Hobhouse of Woodborough, 752-753 per Lord Millett. 69 [2002] 1 AC 615 at 753. See also at 734-735 per Lord Hutton. 70 [2002] 1 AC 615 at 723-724 per Lord Hope of Craighead, 735 per Lord Hutton, 752 per Lord Hobhouse of Woodborough. 71 [2002] 1 AC 615 at 679-680 per Lord Steyn, 684-685 per Lord Browne-Wilkinson, 706 per Lord Hoffmann, 727, 730 per Lord Hutton, 753 per Lord Millett. 72 Parker v The Queen (1963) 111 CLR 610 at 632. Secondly, and no less fundamentally, where a decision of the House of Lords is based, as is its decision in Arthur J S Hall v Simons, upon the judicial perception of social and other changes said to affect the administration of justice in England and Wales (or the United Kingdom more generally) there can be no automatic transposition of the arguments found persuasive there to the Australian judicial system. Especially is that so when the decision may well be thought to have been significantly affected by the European considerations to which Lord Millett referred. In addition, of course, account must be taken not only of the fact that the legal profession is organised differently in the several States and Territories of Australia, but also of the fact that in none of those States or Territories is the profession organised in precisely the same way as it is in England and Wales. Further, although in the end we do not think this determinative, the rules to which reference is made in Arthur J S Hall v Simons about abuse of process and summary termination of civil proceedings may differ in some respects from those that apply in some Australian jurisdictions. Experience in other jurisdictions Care must also be exercised in dealing with the applicant's contention that advocates' immunity has not been thought to be a necessary part of the law of other jurisdictions – in particular, Canada, New Zealand or the several jurisdictions in the United States of America. In Canada, a single judge of the Ontario High Court of Justice, Krever J, held73 in 1979 that an advocate was not immune from suit. It appears that this decision has not since been challenged in Canada. In New Zealand, the High Court held74 that it was bound by earlier authority to hold that there is an advocates' immunity. On appeal, the Court of Appeal of New Zealand reversed that decision75. Whether there will be an appeal to the Supreme Court of New Zealand is not yet known. In the United States of America, it is said that there is no advocates' immunity. But in each of these jurisdictions it is necessary to look beyond the bare statement that there is, or is not, an advocates' immunity. For example, in both 73 Demarco v Ungaro (1979) 95 DLR (3d) 385. 74 Lai v Chamberlains [2003] 2 NZLR 374. 75 Lai v Chamberlains unreported, Court of Appeal of New Zealand, 8 March 2005. Canada76 and the United States77 a prosecutor is immune from suit78. And in the United States absolute immunity for judges is the rule79 despite the criticism that sometimes is directed at the rule80. Whether a public defender is immune81 may remain a matter of controversy. A description of the position in the United States would be incomplete, however, if no account was taken of the operation of the doctrine of collateral estoppel82. In particular, it would be necessary to take account of principles like that described in the Restatement Third of The Law Governing Lawyers83 as being that a judgment, in a post-conviction proceeding in a criminal matter (as, for example, an appeal) about whether the lawyer was negligent, may be binding in a subsequent malpractice action against the lawyer even though the lawyer sued was not a party to that litigation84. And the application of such principles is not confined to criminal matters85. Principles of finality find different expression in different jurisdictions. The particular step taken by the House of Lords in Arthur J S Hall v Simons can be understood as influenced, if not required, by Art 6 of the European Convention to which Lord Millett referred. Article 6 was then understood (in the 76 Nelles v Ontario [1989] 2 SCR 170. 77 Gregoire v Biddle 177 F 2d 579 (2nd Cir 1949) cert den 339 US 949 (1950); Imbler v Pachtman 424 US 409 (1976). 78 cf in the United Kingdom Elguzouli-Daf v Commissioner of Police [1995] QB 335. 79 Stump v Sparkman 435 US 349 (1978). 80 See Shaman, "Judicial Immunity from Civil and Criminal Liability", (1990) 27 San Diego Law Review 1. 81 Black v Bayer 672 F 2d 309 (3rd Cir 1982); cf Ferri v Ackerman 444 US 193 82 Ashe v Swenson 397 US 436 (1970); Allen v McCurry 449 US 90 (1980). 83 §53 Comment d at 392. 84 See, for example, McCord v Bailey 636 F 2d 606 (DC Cir 1980). 85 Mallen and Smith, Legal Malpractice, 3rd ed (1989), vol 2, §17.13, at 50-55. light of Osman v United Kingdom86) as securing the right to have any claim relating to civil rights and obligations brought before a court or tribunal. The immediate question in this case, however, is how, in Australia, the principle for which the applicant now contends is to be accommodated with the general principle that controversies, once quelled, should not be reopened. No competition with a general right of the kind considered in Osman v United Kingdom need be resolved. Rules about abuse of process and finality As foreshadowed in what is written above, particular attention must be directed to whether rules about abuse of process provide a sufficient satisfaction of the principle that controversies, quelled by the application of judicial power, are generally not to be reopened. That requires identification of the nature of the complaint made by a disappointed client who seeks to sue an advocate; next, identification of the premise from which the applicant's argument proceeds; and then, consideration of whether a distinction can or should be drawn between "civil" and "criminal" proceedings, or between challenges to "final" or "intermediate" results. First, what is the nature of the complaint that is made? The nature of the client's complaint In every case the complaint must be that a consequence has befallen the client which has not been, and cannot be, sufficiently corrected within the litigation in which the client was engaged. That consequence may take a number of forms. For the moment, it will suffice to identify what may appear to be the three chief consequences: (a) a wrong final result; (b) a wrong intermediate result; and (c) wasted costs. A client may wish to say that the conduct of the advocate was a cause of the client losing the case because, for example, a point was not taken, or a witness was not called, or evidence was not led. The client may have no appeal, or no remedy on appeal, as, for example, would generally be the case if the evidence not called was available at trial. A client may wish to say, as the applicant does in this case, that the conduct of the advocate (or here, the advocate and VLA) was a cause of the client suffering an intermediate consequence (conviction at the first trial and imprisonment) which was not wholly remedied on appeal. (The conviction was 86 (1998) 29 EHRR 245. set aside but the client was incarcerated for a time and complains of that and what is said to have been caused by it.) A client may wish to say that the conduct of the advocate was a cause of the client incurring unnecessary expense. That may be because a costs order was made against the client or because unnecessary costs were incurred in taking a step in the litigation. What unites these different kinds of consequence is that none of them has been, or could be, wholly remedied within the original litigation. The final order has not been, and cannot be, overturned on appeal. The intermediate consequence cannot be repaired or expunged on appeal. The costs order cannot be set aside; the costs incurred cannot be recovered from an opposite party. And in every one of these cases, the client would say that, but for the advocate's conduct, there would have been a different result. In particular, leaving cases of wasted costs aside, the client wishes to assert that, if the case had been prepared and presented properly, a different final, or intermediate, result would have been reached. And yet the judicial system has arrived at the result it did. The consequences that have befallen the client are consequences flowing from what, by hypothesis, is a lawful result. So, to take the present case, the imprisonment of which the applicant seeks to complain is lawful imprisonment. In a case where the client would say the wrong final result is reached, the result in fact reached is, by hypothesis, one that was lawfully reached. Whether the lawful infliction of adverse consequences (such, for example, as imprisonment) can constitute a form of damage is a question that may be noted but need not be answered. The premise for the applicant's argument The premise for the contention that a client should have an action against a negligent advocate whose negligence caused loss to the client is that there should be no wrong without remedy. If full effect is given to that premise, the client who is defamed in proceedings should have a remedy, at least if the defamation was published otherwise than without malice and in the intended performance of an advocate's or a judge's duty. But the absolute privilege accorded to all participants in the court process and the privilege given to those who publish fair and accurate reports of what is said in court are not challenged. Nor is there any challenge to the immunity of witnesses from suit whether for negligence or intentional torts. Yet it is said that there should be a remedy for the advocate's negligence. If that is right, the paradigm case in which there should be a remedy is where the advocate's negligence is a cause of the client losing the litigation. That is, there should be a remedy for cases in which the client seeks to challenge the final result. There are two consequences that follow from recognising that this is the paradigm case. First, the tension between the principle of finality and allowing litigation seeking damages in cases where, in order to succeed, it will be necessary to impugn the final result of earlier litigation, is evident. Secondly, recognising that to permit a challenge to the final result is inconsistent with the need for finality shifts attention to whether there are to be exceptional cases in which that may be permitted. In Arthur J S Hall v Simons, all members of the House accepted that there are circumstances in which the result reached in earlier litigation should not be reopened. Those circumstances were to be identified by using rules about abuse of process. And in the present case, the applicant submitted that it was enough to show that he would not seek to impugn the final result of the litigation in which he had been engaged. Abuse of process Questions of abuse of process can be relevant to the present issue only if it is accepted that there are, or may be, circumstances in which the result reached in earlier litigation should not be impugned. The circumstances in which proceedings might be classified as an abuse of process have been described in various ways. In Hunter v Chief Constable of the West Midlands Police87, to which extensive reference was made in the speeches in Arthur J S Hall v Simons, Lord Diplock spoke88 of abuse of process as a misuse of a court's procedure which would "be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people". In Rogers v The Queen89, Mason CJ observed of Lord Diplock's speech that, with what had been said in this Court90, it indicated: "that there are two aspects to abuse of process: first, the aspect of vexation, oppression and unfairness to the other party to the litigation and, secondly, the fact that the matter complained of will bring the administration of justice into disrepute". 88 [1982] AC 529 at 536. 89 (1994) 181 CLR 251 at 256. 90 Williams v Spautz (1992) 174 CLR 509; Walton v Gardiner (1993) 177 CLR 378. But in the present case it is necessary to focus attention more closely upon what it is about the circumstances that might make prosecution of the case "manifestly unfair" or might "bring the administration of justice into disrepute among right-thinking people". When it is recognised that the particular circumstance which is said to engage consideration of questions of abuse of process is that the proceeding against the advocate requires challenging the result arrived at in earlier proceedings, the question then becomes how can a distinction be drawn between results that can be attacked, and those that cannot. Two different bases of distinction must be examined. First, can a distinction be drawn, as it was in Arthur J S Hall v Simons, between civil and criminal proceedings? Secondly, can a distinction be drawn between challenging the final outcome of litigation and challenging some intermediate outcome? An exception for criminal cases? The difficulties of dividing the litigious world into two classes, one marked "civil" and the other marked "criminal", were identified in Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd91. Those difficulties are reason enough to reject a principle founded in drawing such a distinction. In addition, however, there is no sufficient reason to distinguish between a conviction and a verdict of acquittal. As Deane and Gaudron JJ pointed out in Rogers92, principles of finality find reflection not only in doctrines of preclusion intended to protect the position of an individual (the doctrines of res judicata, issue estoppel, and so-called "Anshun estoppel") but also in the public need "for decisions of the courts, unless set aside or quashed, to be accepted as incontrovertibly correct"93. It is this public need which must underpin the proposition that a conviction cannot be challenged in subsequent proceedings. But if that is right (and it is) neither should an acquittal be open to challenge. Then the question comes down to whether some useful distinction can be drawn between civil and criminal cases. For the reasons given in Labrador Liquor, none can. 91 (2003) 216 CLR 161. 92 (1994) 181 CLR 251 at 273-274. 93 (1994) 181 CLR 251 at 273. See also Pearce v The Queen (1998) 194 CLR 610 at 625-626 [53]-[55] per Gummow J. Nor is it right to see the administration of the civil law as giving rise to judgments worthy of less respect than those reached on the trial of indictable or other offences. No doubt account must be taken of the different standards of proof. Account must also be taken of the fact that there are cases in which issues tried in civil litigation include issues that have been, or could be, the subject of criminal prosecution. The civil action for assault, the personal representative's proceedings to determine whether the beneficiary named in a will is barred from taking because the beneficiary feloniously killed the deceased, are but two obvious examples of such suits. But in none of those actions was the person who would seek to challenge the outcome reached in some earlier (criminal) proceeding a party to that earlier proceeding. In cases where a client sues an advocate, the client will always have been a party to the proceeding the result in which is challenged. If effect is to be given to the principle that decisions of the courts, unless set aside or quashed, are to be accepted as incontrovertibly correct, it must be applied at least to the parties to the proceeding in which the decision is given. The final outcome of the proceeding, whether "civil" or "criminal" or a hybrid proceeding, must be incontrovertible by the parties to it. If that is right, it follows that no remedy is to be provided if its provision depends upon demonstrating that a different final result should have been reached in the earlier litigation. Cases such as the present, in which the challenge made is to an intermediate result, can then be seen to be exceptional. The contention would be that, even if a client cannot say that a different final outcome should have been reached, the client may nonetheless complain about an intermediate result. An exception for challenges to intermediate outcomes? The existence of cases in which there would be an intermediate result of which complaint could be made would depend upon that intermediate result having been set aside on appeal. Here it is important to recognise that, just as was the case in the present matter, the grounds on which an intermediate result is set aside may be unrelated to what is now alleged to have been the advocate's negligent conduct. In this case, the conviction at the first trial was quashed for want of proper direction about how the plea of guilty at committal might be used, not because the guilty plea was improvidently entered. Incompetence of counsel is not a separate ground of appeal. As was pointed out in TKWJ v The Queen94, the relevant question on appeal in a criminal matter will be whether there was a miscarriage of justice. In general, then, if an intermediate result is set aside, it will be for reasons unconnected or, at best, only indirectly connected, with the client's contention that the advocate was negligent. It follows, therefore, that the class of cases in which an intermediate result would be open to challenge not only would be exceptional, in the sense of standing apart from challenges to final decisions, but also would be a class of case whose membership would depend upon the application of criteria unconnected with what, for present purposes, is the central focus of debate, namely the alleged negligence of the advocate. By this stage of the argument, in which attention is directed solely to exceptional cases, the proposition that for every wrong there should be a remedy has become too attenuated to be of any relevant application. Especially is that so when the very existence of the relevant exceptional case depends for the most part upon considerations that are irrelevant to the wrong that is to be remedied. If final results cannot be challenged, intermediate results should not be treated differently. There remains for separate consideration the last of the three kinds of consequence identified earlier as consequences of which a client may wish to complain: wasted costs. Again, at first sight it might be thought that seeking to recover wasted costs would not cut across any principle of finality. But it is necessary to recall that the general rule is that costs follow the event. To challenge the costs order, therefore, will often (even, usually) involve a direct or indirect challenge to the outcome on which the disposition of costs depended. For the reasons given earlier, that should not be permitted lest a dispute about wasted costs become the vehicle for a dispute about the outcome of the litigation in which it is said that the costs were wasted. No relitigation To remove the advocate's immunity would make a significant inroad upon what we have earlier described as a fundamental and pervading tenet of the judicial system. That inroad should not be created. There may be those who will seek to characterise the result at which the Court arrives in this matter as a case of lawyers looking after their own, whether because of personal inclination and sympathy, or for other base motives. But the legal principle which underpins the Court's conclusion is fundamental. Of course, there is always a risk that the 94 (2002) 212 CLR 124 at 132-133 [23]-[25] per Gaudron J, 157 [102]-[103] per determination of a legal controversy is imperfect. And it may be imperfect because of what a party's advocate does or does not do. The law aims at providing the best and safest system of determination that is compatible with human fallibility95. But underpinning the system is the need for certainty and finality of decision. The immunity of advocates is a necessary consequence of that need. Redrawing the line No sufficient reason is proffered for reconsidering the Court's decision, in Giannarelli, that an advocate is immune from suit whether for negligence or otherwise in the conduct of a case in court. Should the boundary of the operation of the immunity be redrawn? Again, we consider that no sufficient reason is proffered for doing so. In particular, there is no reason to depart from the test described in Giannarelli as work done in court or "work done out of court which leads to a decision affecting the conduct of the case in court"96 or, as the latter class of case was described in the Explanatory Memorandum for the Bill that became the Practice Act, "work intimately connected with" work in a court. (We do not consider the two statements of the test differ in any significant way.) As Mason CJ demonstrated in Giannarelli97, "it would be artificial in the extreme to draw the line at the courtroom door". And no other geographical line can be drawn that would not encounter the same difficulties. The criterion adopted in Giannarelli accords with the purpose of the immunity. It describes the acts or omissions to which immunity attaches by reference to the conduct of the case. And it is the conduct of the case that generates the result which should not be impugned. 95 R v Carroll (2002) 213 CLR 635 at 643 [22] per Gleeson CJ and Hayne J; The Ampthill Peerage [1977] AC 547 at 569 per Lord Wilberforce; Erinford Properties Ltd v Cheshire County Council [1974] Ch 261 at 268 per Megarry J. 96 (1988) 165 CLR 543 at 560 per Mason CJ. 97 (1988) 165 CLR 543 at 559. Applying Giannarelli to this case The advice which it is alleged that Mr McIvor, the barrister, and Ms Greensill, the employee of VLA, gave the applicant was advice about whether to enter a plea at committal. A committal proceeding is an administrative function conducted by a judicial officer98. The relationship between committal proceedings and trial is such that they are part of the controversy which the trial ultimately determines99. Entry of a plea was not required, but if entered, it could be used in evidence at a subsequent trial. Mr McIvor's tendering this advice to the applicant was work which an advocate did out of court but it was work which led to a decision which affected the conduct of the case at the subsequent trial. For these reasons, apart from the operation of s 10(2) of the LPPA, the advocate would have had an immunity from suit at common law. VLA VLA cannot be said to stand in any different position from the advocate. At the time of the events giving rise to this matter, the Legal Aid Act 1978 provided100 that "VLA or an officer of VLA when ... performing any of the functions of ... a solicitor" was bound to observe the same rules and standards of professional conduct and ethics as those that a private practitioner was required to observe. For the purposes of the application of that provision in respect of a member of staff of VLA, VLA was deemed101 to be a firm of solicitors and the members of staff of VLA were deemed102 to be employed by that firm. That is, at least to the extent of identifying the professional obligations imposed upon VLA and its officers, VLA was equated by the Legal Aid Act with a private firm of solicitors. The advice which Ms Greensill is alleged to have given (either separately from or in conjunction with Mr McIvor) is alleged to have been given at the same 98 Ammann v Wegener (1972) 129 CLR 415 at 435-436 per Gibbs J; Grassby v The Queen (1989) 168 CLR 1. 99 R v Murphy (1985) 158 CLR 596 at 614 per Gibbs CJ, Mason, Wilson, Brennan, 101 s 16(2)(a). 102 s 16(2)(b). time and for the same purpose as the advice Mr McIvor gave. No relevant distinction could be drawn between the junior of two counsel retained to appear for an accused tendering advice of the kind of which the applicant complains and the instructing solicitor tendering that advice. Neither junior counsel nor the instructing solicitor may have addressed the court in any subsequent court appearance. The duties which each owes the client are identical. The content of the advice is identical. It cannot be said that the advice of one is more closely related to the court proceedings than the other, let alone one being intrinsically superior to or more effective than the other (if such a distinction were possible or relevant). What this example reveals is that the considerations of finality which require maintenance of the advocate's immunity require that the immunity extend to the advice allegedly given by Ms Greensill on behalf of VLA. Because the immunity now in question is rooted in the considerations described earlier, where a legal practitioner (whether acting as advocate, or as solicitor instructing an advocate) gives advice which leads to a decision (here the client's decision to enter a guilty plea at committal) which affects the conduct of a case in court, the practitioner cannot be sued for negligence on that account. Conclusion and orders For these reasons, special leave to appeal should be granted, the appeal treated as instituted and heard instanter, but dismissed with costs. McHugh 93 McHUGH J. The issue in this special leave application is whether a barrister and a solicitor practising in Victoria may be sued for damages in a civil action for conduct that induced the applicant to enter a plea of guilty to a charge of rape at a committal hearing. The applicant asks this Court to reconsider its decision in Giannarelli v Wraith103 where the Court held that what has been called the advocates' immunity from suit prevents the bringing of a civil action for conduct occurring during, or intimately connected with, the trial of a civil or criminal cause. The applicant contends that this Court should now declare that the immunity is no longer part of the common law of Australia and that an advocate can be sued for negligent conduct in respect of the trial of a civil or criminal action. Alternatively, the applicant contends that the immunity upheld in Giannarelli does not extend to the conduct of the respondents of which he complains. He says that the immunity is anomalous and protects legal practitioners from action for damages for negligent conduct that in other professions and occupations would be actionable. In my opinion, this Court should not overturn its decision in Giannarelli. The present action is based on the same statutory provision as was in issue in Giannarelli. That statute has now been repealed. If leave to appeal was granted, a decision in this case could only affect a small number of – maybe no other – actions. For that reason, the case is not one that should be the subject of the grant of special leave to appeal. Ordinarily, the proper course would be to dismiss the application. But other members of the Court have dealt extensively with the liability of advocates for conduct intimately connected with the hearing of litigation. Moreover, since Giannarelli was decided the House of Lords in Arthur J S Hall & Co v Simons104 has declared that under English common law advocates are no longer immune from actions for negligence. In those circumstances, I do not dissent from the grant of special leave in this case. However, in my opinion the appeal must be dismissed because, under the common law of Australia, advocates are not liable to be sued in damages for negligent conduct that is intimately connected with the hearing of a civil or criminal cause. Nor were they liable for such conduct in 1891105. Although the inability to sue advocates for their in-court conduct is traditionally described as an immunity, that description is just another name for the conclusion that, as a matter of legal policy, advocates do not owe an actionable duty of care in respect of their conduct in court. Similarly, they owe no actionable duty of care in respect of out-of-court conduct that is intimately 103 (1988) 165 CLR 543. 105 Legal Profession Practice Act 1891 (Vic). McHugh connected with in-court conduct. They do, however, owe actionable duties of care in respect of conduct that is not intimately connected with in-court advocacy. But in respect of their in-court conduct, they are in the same position as many other persons who owe no actionable duty of care in respect of their activities or the exercise of their professions even though the negligent performance of those activities or professions will cause damage to others. So far as the law of negligence is concerned, it does not matter whether the lack of remedy against the advocate arises because the advocate does not owe a duty of care enforceable by an action for damages or has what is described as an immunity from suit. In Brodie v Singleton Shire Council Justices Gaudron and Gummow and I said of the concept of an immunity106: "The term 'immunity' may be used in a related sense to identify a liability or remedy which, in England, did not arise or was not available against the Executive Government, identified as 'the Crown'; hence the common law principle of immunity of the Crown from actions in tort and what is now known as the 'public interest immunity' against discovery of documents. … The term 'immunity' also is used in various areas of the law to indicate an immunity to action in respect of rights and duties which otherwise exist in the law. One example is the common law immunity of the Crown to actions for breaches of its contracts; the common law accepted that a contract had been made and a legal wrong committed. The immunity of the barrister, upheld in Giannarelli v Wraith, assumes, as Mason CJ explained, an obligation to exercise reasonable care and skill but sustains the immunity on considerations of public policy. Again, the common law rule which confers a 'qualified immunity' from liability in respect of straying animals is an 'exception to the ordinary principles of negligence' and, where it operates, 'negates the existence of a duty of care'. In recent decisions of the House of Lords respecting the liability in negligence of public authorities, the terms 'immunity' and 'non-justiciable' have been used, apparently interchangeably, and in the sense of negation of the existence of a duty of care." (footnotes omitted) This discussion indicates that the immunity afforded advocates in Australia involves a recognition of the existence of obligations of due care and skill owed to clients, but for policy reasons denies a duty of care that gives rise to a cause of action in damages. That analysis accords with judicial statements that the immunity exists not to protect advocates from the consequences of their 106 (2001) 206 CLR 512 at 555-556 [93]-[94]. McHugh misconduct but solely for the enhancement of the administration of justice and public confidence in it107. That analysis also explains the dividing line between the well-recognised exposure to liability for work not connected with the conduct of a matter in court and work covered by the immunity. It is the interjection of policy arising from the difficulties of proving that a different result would have ensued but for the carelessness of the advocate and the legal principle of finality that prevents an actionable duty of care arising. However, although advocates have an immunity from action, in reality their position is no different from many other persons who owe no actionable duty of care in respect of their activities or the exercise of their professions. Thus, absent a contract, auditors owe no general duty of care to investors even though they can reasonably foresee that negligent auditing or reporting may cause damage to those investors108. Journalists and authors do not owe a legally enforceable duty to take reasonable care not to injure a person's reputation or financial position by publishing careless statements. Journalistic codes impose duties of care and ethics on journalists in respect of their writings but a journalist owes no generally enforceable duty of care even in cases where his or her carelessness causes immense harm to an individual. Unless a statement is defamatory as well as careless, the journalist or author incurs no liability. Even if the statement is defamatory and careless, it may not be actionable. The common law and statute provide many defences for statements that are defamatory and careless. But it is not merely auditors, accountants, journalists and authors who are immune from liability for negligent statements causing damage to individuals. Absent a contractual or fiduciary relationship, any person who makes a negligent statement causing damage owes no actionable duty of care to other persons unless the statement was made in circumstances meeting the conditions formulated by this Court in San Sebastian Pty Ltd v The Minister109 and other cases. Thus, a planning authority owes no duty of care to a developer who suffers loss by relying on representations contained in a scheme to redevelop a suburban area unless the authority assumed responsibility for, or intended to induce the developer to rely on, the representations110. A developer owes no duty of care to the subsequent purchaser of a commercial building even though the 107 Giannarelli v Wraith (1988) 165 CLR 543 at 576 per Wilson J; Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 750 per Lord Hobhouse of Woodborough. 108 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 109 (1986) 162 CLR 340. 110 San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340. McHugh developer knows or ought reasonably to foresee that negligent construction of the building will cause loss or damage to the subsequent purchaser111. Similarly, a municipal council owes no duty to a subsequent purchaser of a house to take reasonable care to ensure that the foundations of a dwelling-house are not defective before approving the construction of the house112. Nor does a housing authority owe a duty to a subsequent purchaser of a house to see that an extension to the house was not defective even if the authority granted the money that enabled the extension to be carried out under a statutory power113. No duty is owed even though the purchaser has bought the house with the aid of mortgage moneys provided by the authority. Similarly, a Commissioner for Companies who registers deposit-taking companies owes no duty to depositors to take care that the financial affairs of the registered companies are conducted properly114. Medical practitioners and social workers employed by the State to examine children for evidence of sexual abuse owe no duty of care to persons suspected of being guilty of the sexual abuse115. Persons who institute prosecutions owe no actionable duty to the defendant to take reasonable care in launching the prosecution. A prosecutor can be sued for the damage to the liberty and reputation of the defendant only when the prosecutor acted maliciously and without reasonable and probable cause116. Moreover, the action is not in negligence but for the tort of malicious prosecution. Judges and witnesses owe no actionable duty of care not to make careless statements that may cause loss of liberty, reputation or money. Neither a judge117 nor a witness118 nor counsel119 can be sued even for false and defamatory statements made maliciously in the course of judicial proceedings. A witness's immunity from suit extends even to 111 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 78 ALJR 628; 205 ALR 522. 112 Sutherland Shire Council v Heyman (1985) 157 CLR 424. 113 Curran v Northern Ireland Co-Ownership Housing Association Ltd [1987] AC 114 Yuen Kun Yeu v Attorney-General of Hong Kong [1988] AC 175. 115 Sullivan v Moody (2001) 207 CLR 562. 116 Davis v Gell (1924) 35 CLR 275; Sharp v Biggs (1932) 48 CLR 81; Commonwealth Life Assurance Society Ltd v Smith (1938) 59 CLR 527. 117 Sirros v Moore [1975] QB 118; Rajski v Powell (1987) 11 NSWLR 522. 118 Cabassi v Vila (1940) 64 CLR 130. 119 Munster v Lamb (1883) 11 QBD 588. McHugh out-of-court conduct that is intimately connected with the giving of evidence in court120. In all these cases, the policy of the law is that no action should lie for the negligent or careless conduct of the defendant even though the defendant knew or ought to have known that his or her conduct might cause damage to the plaintiff. Except for the purpose of classification, it does not matter whether the lack of legal liability stems from characterising it as an immunity or as an absence of a duty of care. Whichever classification is used, the result is the same: the negligent person is not liable to the injured person. What is significant about the above cases is that the damage suffered by the plaintiff is not physical damage but economic damage or damage to liberty or reputation. Ordinarily, people owe a duty of care to other persons when they know or ought reasonably to foresee that their conduct may cause physical damage to those persons or their property. Reasonable foreseeability of physical harm is generally enough to impose a duty of care on a person who knows or ought reasonably foresee that physical harm is a likely result of his or her conduct. Liability will arise when the duty is breached and where there is a causal relationship between the breach and the harm. But even reasonable foresight of harm is not always sufficient to give rise to a duty of care. Thus, police officers owe no duty to a member of the public to take reasonable care in investigating a crime so as to be able to apprehend a criminal before he commits a further crime by injuring that member of the public121. It is not sufficient to found a duty of care that the police officer ought to know that, if his or her careless investigation fails to apprehend the criminal, a member of a particular class of persons may suffer physical harm122. Nor do service personnel engaged in active operations owe a duty of care to avoid loss or damage to private citizens123. Their immunity is not confined "to the presence of the enemy or to occasions when contact with the enemy has been established"124. It covers "attack and retreat, pursuit and avoidance, reconnaissance and engagement"125. Nor does the duty that the landlord of a shopping centre owes as an occupier of land extend to conducting its operations resistance, advance and 120 Watson v M'Ewan [1905] AC 480. 121 Hill v Chief Constable of West Yorkshire [1989] AC 53. 122 Hill v Chief Constable of West Yorkshire [1989] AC 53 at 62. 123 Shaw Savill and Albion Co Ltd v The Commonwealth (1940) 66 CLR 344. 124 Shaw Savill and Albion Co Ltd v The Commonwealth (1940) 66 CLR 344 at 361. 125 Shaw Savill and Albion Co Ltd v The Commonwealth (1940) 66 CLR 344 at 362. McHugh so that persons leaving the centre are protected from physical attacks by third parties126. In these exceptions to the general rule that reasonable foresight of physical harm will give rise to a duty of care, the law negates liability for reasons of policy. In the case of police officers, one reason for excluding the duty is that a "great deal of police time, trouble and expense might be expected to have to be put into the preparation of the defence to the action"127. This would result in "a significant diversion of police manpower and attention from their most important function, that of the suppression of crime"128. Consequently, a police officer is not liable for the harm suffered by a victim of crime unless, at the very least, that person was subject to a "special risk" of harm different from other members of the public129. In the case of service personnel, the policy of the common law is "to concede to the armed forces complete legal freedom of action in the field, that is to say in the course of active operations against the enemy, so that the application of private law by the ordinary courts may end where the active use of arms begins"130. In the case of the supermarket landlord, the common law refuses to impose a duty because, "[i]f people were under a legal duty to prevent foreseeable harm to others, the burden imposed would be intolerable"131. Similarly, public policy is the reason that the common law does not give a cause of action to a person who suffers harm as the result of an advocate's negligent in- court conduct or conduct intimately connected with the hearing of a case. The common law takes the view that the harm that is likely to be done to the administration of justice by permitting such actions is greater than the harm done to individuals by refusing them such causes of action. Where the harm suffered by a person is economic loss or injury to reputation or liberty, the common law is always reluctant to impose a duty of care on the harm-causing person even where it was reasonably foreseeable that harm of that kind might ensue. Because that is so, a trader is under no duty to take reasonable care to avoid loss or injury to its commercial rivals while lawfully pursuing its trade even though its object is to take away the custom or 126 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254. 127 Hill v Chief Constable of West Yorkshire [1989] AC 53 at 63. 128 Hill v Chief Constable of West Yorkshire [1989] AC 53 at 63. 129 Hill v Chief Constable of West Yorkshire [1989] AC 53 at 62. 130 Shaw Savill and Albion Co Ltd v The Commonwealth (1940) 66 CLR 344 at 362. 131 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 266 per McHugh market share of its rivals. Reasonable foresight of harm is never decisive in determining whether a person owes a duty to take care to avoid economic loss or injury to reputation or liberty. Indeed, until 1964 it could fairly be said that, in the absence of a contract or fiduciary duty, no action for such losses would arise in any case132. Before the law will impose a duty of care in respect of these kinds of harm, it considers other factors and will not impose a duty of care unless public policy requires it. Those factors include the nature of the defendant's activities and the object that the defendant is seeking to achieve. The common law evaluates all the competing interests in the case before determining, as a matter of policy, that the defendant should be restrained in carrying out its activities by the obligation to take reasonable care for the plaintiff's economic, liberty or reputation interests. In the case of in-court advocacy, the common law of Australia has long held that, although it is reasonably foreseeable that an advocate's carelessness will cause harm to the advocate's client, other factors negate the existence of an enforceable duty of care. The common law regards them as so important that advocates cannot be sued for damages for carelessness in conducting litigation. Advocacy in the courts is a unique profession. Advocates play an indispensable part in the administration of justice. No valid analogy can be drawn between the exercise of the calling of advocacy in the common law context and the exercise of other professions. The lack of validity in analogies with other professions and callings is reinforced by the significant differences in the proof of issues in negligence claims against other professions and callings and the proof of those issues if advocates could be sued for their courtroom conduct. In Australia, advocacy in the courts is principally carried out by those admitted as, or practising exclusively as, barristers. In Australia, the barrister133, like the solicitor, is an officer of the court134, as indispensable to the administration of justice as the judge. Without an independent Bar, investigating and arguing the legal rights and duties of members of the public in the courts and assisting in the administration of justice, the cost of administering justice would increase dramatically. Government functionaries, or perhaps the judges themselves, would have to take on the role of the advocates. They would have to engage in many out-of-court activities that are now carried out by members of 132 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. 133 For the purpose of this judgment, I will refer to legal practitioners in their role as advocates as barristers whether they are admitted as solicitors, barristers and solicitors or barristers. 134 This is not the case in England where the Inns of Court control and regulate the admission and conduct of barristers. McHugh the Bar. That would include investigating, researching and presenting claims and defences in the great majority of cases. As experience has shown, few persons, untrained in law, have the ability to adequately present or defend a legal cause of action. The independence of the Bar in large part therefore secures the independence of the judiciary. It seems highly unlikely that public confidence in the administration of justice could be maintained at its present level if the administration of justice in all its aspects was a government monopoly. Hence, there is an undeniable public interest in the maintenance of an independent Bar that, within the limits imposed by the adversarial system of justice, assists in achieving an efficient and economical system of justice. For close on two centuries, eminent judges have acknowledged the indispensable part that the Bar plays in the administration of justice. More than 160 years ago, Mr Baron Alderson pointed out that "[t]he institution of barristers is principally to assist the Court in the dispensing of justice"135. In Ziems v The Prothonotary of the Supreme Court of NSW136, Dixon CJ pointed out that "the Bar is a body exercising a unique but indispensable function in the administration of justice". In the same case, Kitto J said137: "It has been said before, and in this case the Chief Justice of the Supreme Court has said again, that the Bar is no ordinary profession or occupation. These are not empty words, nor is it their purpose to express or encourage professional pretensions. They should be understood as a reminder that a barrister is more than his client's confidant, adviser and advocate, and must therefore possess more than honesty, learning and forensic ability. He is, by virtue of a long tradition, in a relationship of intimate collaboration with the judges, as well as with his fellow-members of the Bar, in the high task of endeavouring to make successful the service of the law to the community. That is a delicate relationship, and it carries exceptional privileges and exceptional obligations. If a barrister is found to be, for any reason, an unsuitable person to share in the enjoyment of those privileges and in the effective discharge of those responsibilities, he is not a fit and proper person to remain at the Bar." This special relationship with the judges is the reason, for example, why advocates who neglect to file income tax returns or pay taxes may be struck off the role of practitioners. Such failures may indicate that a person is not a fit and proper person to discharge the duties owed by an advocate to the court and to lay 135 Moscatti v Lawson (1835) 1 M & Rob 454 at 455 [174 ER 156 at 156]. 136 (1957) 97 CLR 279 at 286. 137 (1957) 97 CLR 279 at 298. McHugh clients. There can be few other professions, if any, where such failures bring a professional career to an end. The practices and the professional conduct of barristers have changed in many respects since Mr Baron Alderson's observation. When he was a member of the Court of Exchequer Chamber, the Inns of Court would have held that a barrister who advertised legal services, sued for fees or entered into contractual relationships with lay clients concerning representation in court was guilty of unacceptable and unprofessional conduct. Not now. In most common law jurisdictions today, advocates can do each of these things. But despite these changes in the professional practices of barristers, the role of the barrister is as singular today as it has been at any time in the last 200 years. The barrister's role remains indispensable to the common law system of justice. No doubt care needs to be taken when using expressions such as "exercising a unique but indispensable function in the administration of justice"138. That expression is not synonymous with assisting the court in every possible way to arrive at the best legal decision possible on the facts of the case. This is a consequence of the adversarial system of justice, a consequence that is reinforced by the doctrine of legal professional privilege which exists for the benefit of the client and not for the benefit of his or her legal adviser and prevents the barrister from disclosing legally privileged information. Under the adversarial system of justice, a barrister has no obligation to the court to assist an opponent to prove a cause of action or defence. A barrister is under no obligation to tell an opponent or a witness anything that may assist the opponent's cause139. Nor does a barrister owe a duty to the court to assist the opponent to plead the facts in a way best calculated to obtain a just result according to law. As long as the barrister does not mislead the court, he or she is entitled to make the opponent prove that person's case even though the barrister knows that the facts alleged by the opponent are true. Indeed, as four Justices of this Court pointed out in Tuckiar v The King140, in a criminal trial counsel is entitled to put rational arguments, based on the evidence, against a verdict of guilty even when counsel is aware of facts that point to the client's guilt. Their Honours said141: 138 (1957) 97 CLR 279 at 286. 139 In re G Mayor Cooke (1889) 5 TLR 407. 140 (1934) 52 CLR 335. 141 Tuckiar v The King (1934) 52 CLR 335 at 346. McHugh "Whether he be in fact guilty or not, a prisoner is, in point of law, entitled to acquittal from any charge which the evidence fails to establish that he committed, and it is not incumbent on his counsel by abandoning his defence to deprive him of the benefit of such rational arguments as fairly arise on the proofs submitted." The adversarial system of justice has its critics, many of whom claim that it hampers rather than helps the achievement of justice. But when all the consequences of the adversarial system are taken into account, the fact remains that the administration of justice, as now known, would be greatly impaired without the assistance of an independent Bar. Despite being in a relationship of confidence with a lay client, the first duty of the barrister is not to the client but to the court in which the barrister appears. The duty to the instructing solicitor or the lay client is secondary. Where the respective duties conflict, the duty to the court is paramount. That duty to the court imposes obligations on the barrister with which the barrister must comply even though to do so is contrary to the interests or wishes of the client. Thus, the barrister can do nothing that would obstruct the administration of justice by: deceiving the court; withholding information or documents that are required to be disclosed or produced under the rules concerned with discovery, interrogatories and subpoenas; abusing the process of the court by preparing or arguing unmeritorious applications; wasting the court's time by prolix or irrelevant arguments; coaching clients or their witnesses as to the evidence they should give; using dishonest or unfair means or tactics to hinder an opponent in the conduct of his or her case. Moreover, the advocate owes a duty to the court to inform it of legal authorities that "bear one way or the other upon matters under debate"142. The duty applies "quite irrespective of whether or not the particular authority assists the party which is so aware of it"143. 142 Glebe Sugar Refining Co Ltd v Greenock Harbour Trustees [1921] SC (HL) 72 at 143 Glebe Sugar Refining Co Ltd v Greenock Harbour Trustees [1921] SC (HL) 72 at McHugh Thus, in many situations arising in the conduct of litigation, the common law requires an advocate to act contrary to the interests of his or her client. I doubt if there is any other profession where the common law requires a member of another profession to act contrary to the interests of that person's client. In some professions and callings, statutes now impose specific obligations on members to disclose information against the interests of the client. But advocacy is probably unique in imposing common law obligations on a professional person to act contrary to the interests of a lay client. This factor alone is probably sufficient to preclude reasoning by analogy from the liability of other professions and occupations for negligent conduct. But however that may be, two other factors show conclusively that it is in the public interest to give advocates an immunity from liability for in-court conduct and conduct intimately connected with in-court conduct. They are the difficulties of proof concerned with showing that, but for the advocate's carelessness, a different result would have ensued and the undermining of public confidence that would flow from inconsistent verdicts. It will be necessary at a later stage of this judgment to return to those matters. Statement of the case In 1996, the applicant was charged with raping a female. In February 1997, he was convicted of that charge by a jury. He was sentenced to three years imprisonment. At his trial, the Crown tendered as evidence against him the guilty plea that the applicant had made at the committal hearing. Later, the Court of Appeal of the Supreme Court of Victoria quashed the applicant's conviction and ordered a retrial on the ground that the trial judge's directions in respect of the plea of guilty were inadequate144. In 1998 at the retrial a jury acquitted the applicant of rape. At the retrial, the presiding judge rejected the tender of the applicant's plea of guilty at the committal hearing. In 2001, the applicant commenced an action for damages in the County Court of Victoria against Victoria Legal Aid, his solicitor, and Ian McIvor, a barrister. He alleges that, by reason of Victoria Legal Aid's breach of its retainer and McIvor's breach of the duty that as a barrister he owed to the applicant, the applicant has suffered and continues to suffer injury, loss and damage. The particulars included loss of liberty, a psychotic illness, loss of income and the costs and expenses of the appeal and retrial. After defences were filed, Victoria Legal Aid and McIvor applied for an order permanently staying the proceedings. Rule 23.01 of the County Court Rules of Procedure in Civil Proceedings (Vic) provides for the making of a permanent stay order where a proceeding does not disclose a cause of action, is 144 R v D'Orta-Ekenaike [1998] 2 VR 140. McHugh scandalous, frivolous or vexatious or is an abuse of process. Judge Wodak, who heard the application, made an order permanently staying the proceedings. He granted the stay because the decision of this Court in Giannarelli v Wraith145 showed that the applicant's claim did not disclose a cause of action. That was because Giannarelli held that advocates were immune from action for damages for negligently conducting cases in court or making decisions out of court that were intimately connected with conducting cases in court. The Court of Appeal of the Supreme Court of Victoria confirmed Judge Wodak's order. The applicant now seeks special leave to appeal against the order of the Court of Appeal dismissing his appeal against his Honour's order. Statement of facts As a result of the procedure in the County Court, the application for special leave to appeal has to be dealt with on the facts alleged in the Statement of Claim. The respondent solicitor has contested the construction of some allegations of fact in the Statement of Claim. The respondent barrister has submitted that the approach to be taken to an application for stay under the County Court Rules involves construing ambiguities in the Statement of Claim against the applicant. The County Court and Court of Appeal did not identify any ambiguities in the pleadings requiring resolution for the purpose of determining the stay application. Judge Wodak assumed for those purposes that the applicant could establish negligence in the manner claimed. The parties accepted that the facts alleged in the Statement of Claim were the basis for this Court's consideration. The material facts alleged in the Statement of Claim are as follows. In February 1996, the applicant retained Victoria Legal Aid as his solicitor to defend the charge of rape. It briefed McIvor to appear for him at the committal proceedings. The applicant had two meetings with McIvor and an employee of Victoria Legal Aid at which he told them that he was not guilty of the charge. He also told them of the circumstances of the alleged offence, circumstances that disclosed a possible defence of consent. Nevertheless, they advised him to plead guilty to the charge on the ground that he had no defence and that an early plea of guilty would most likely result in a suspended sentence. They advised him that, if he defended the charge, he ran the risk that a gaol term would be imposed. They exerted undue pressure and influence on him to plead guilty at committal. As a result, at the committal he pleaded guilty. Upon these facts, the applicant claims that the respondents breached the duty of care that they owed him. He claims damages for the costs of the appeal 145 (1988) 165 CLR 543. McHugh and the second trial, for his incarceration, lost income and illnesses following the events described, all of which he says were caused by the negligence of the respondents but for which he would not have entered a guilty plea at committal. The applicant's particulars of negligence allege a failure to exercise due care in considering the possible defence available to him, a failure to warn him that a plea of guilty at committal may be admitted as evidence if a trial was held and the exertion of pressure to plead guilty. The statutory regime The liability of the second respondent, the barrister, is potentially affected by the provisions of the Legal Profession Practice Act 1958 (Vic) ("the 1958 Act"). The relevant provision for this application is s 10(2) which, at the time of the events, provided: "Every barrister shall be liable for negligence as a barrister to the client on whose behalf he has been employed to the same extent as a solicitor was on the twenty-third day of November One thousand eight hundred and ninety-one liable to his client for negligence as a solicitor." The history of the provision was traced in Giannarelli v Wraith where there was no disagreement about its past, only what implications flowed from its history. Section 10(2) first appeared as s 5 of the Legal Profession Practice Act 1891 (Vic). In that context the provision read: "… every barrister shall in future be liable for negligence as a barrister to the client on whose behalf he has been employed to the same extent as a solicitor is now liable to his client for negligence as a solicitor." (emphasis added) When the provision was re-enacted in 1915, 1928 and then 1958, the italicised words were removed and the date of coming into force of the 1891 Act was inserted. The 1958 Act was repealed effective from 1 January 1997 by s 452 of the Legal Practice Act 1996 (Vic) ("the 1996 Act"). In s 442 of the 1996 Act, any effect of that Act on legal practitioners' liability pre-1997 is expressly excluded. The 1996 Act clearly operates prospectively146. The 1958 Act continues to apply to the conduct of the respondents and governs any liability they may have incurred. 146 See also Interpretation of Legislation Act 1984 (Vic), s 14(2). McHugh The same provision governed the conduct of the practitioners in Giannarelli. It is convenient to consider what understanding of the provision, and of the immunity, prevailed on that occasion. What did Giannarelli v Wraith decide? Giannarelli involved a claim in negligence by two brothers who had been convicted of perjury on the basis of testimony they gave to a Royal Commission. This Court quashed their convictions after failed appeals in the Court of Criminal Appeal. They sued the barristers who appeared for them at the committal, trial and appeal to the Court of Criminal Appeal and the instructing solicitor from the committal and trial. Their convictions were quashed on a ground raised for the first time in the High Court proceedings – that s 6DD of the Royal Commissions Act 1902 (Cth) rendered the testimony from the Royal Commission inadmissible in the perjury trial. The brothers claimed that their barristers were negligent in failing to raise that objection earlier. By majority, this Court held that the barristers were immune from the claim of negligence. Statutory interpretation In Giannarelli, no one interpretation of s 10(2) commanded majority acceptance. All Justices agreed on two matters. Before the 1891 Act, a barrister could not sue for his fees because he had no contract with his client and because of the public policy understanding of the basis on which a barrister offered his services. And, before 1891, a barrister could not be sued for the negligent performance of his professional services. One effect of the 1891 Act was to provide for a single admission as both solicitor and barrister and to make all persons who were barristers at that date, solicitors also, and vice versa. Mason CJ, Wilson and Dawson JJ held that s 10(2) in the form it appeared in the 1891 Act had the purpose of placing barristers and solicitors on the same footing in terms of liability for negligence. Accordingly, the issue for those Justices in Giannarelli was: as at 23 November 1891, would a solicitor have been immune from a suit of negligence for the conduct alleged against the defendant barristers? The fourth member of the majority in the result was Brennan J who held that s 10(2) did not apply to the appeal in Giannarelli. His Honour construed the provision in its original context and concluded that it was intended to apply only to those barristers who, by operation of the 1891 Act, became entitled to practise as solicitors. Those admitted after the commencement of the 1891 Act would be entitled to sue for their fees and would be liable in negligence by virtue of their admission as both barrister and solicitor. For Brennan J, the only issue was McHugh whether the respondent barristers had an immunity at common law at the time of the appeal. Toohey J, with whom Deane and Gaudron JJ agreed, held that, in s 10(2), the words "to the same extent as" had the effect of "imposing a statutory liability upon a barrister for negligence in relation to his activities as a barrister"147. A barrister's liability was measured by that of a solicitor in negligence as a solicitor. Both owed a duty of care to their clients for work undertaken in their respective professional capacities from 23 November 1891 which, if breached, could result in liability in negligence. The effect of the Act was thus to remove the immunity of barristers from liability for negligent conduct as barristers. His Honour noted148: "It does not follow from this construction that the duty is not capable of development or that the categories of negligence for which a barrister is liable are forever fixed as at 23 November 1891." Toohey J held that subsequent common law authority on the advocates' immunity did not affect the respondents' position. The first difficulty facing this Court is the absence of an authoritative construction of the provision which governs the second respondent in this case. Three Justices held that the provision applied to direct attention to the immunity at common law in 1891, three that it applied to abrogate the immunity and one that it did not apply to any barrister admitted after 1891. The minority construction of Deane, Toohey and Gaudron JJ should be excluded from consideration on the basis that it does not accord with the result in Giannarelli. The applicant's submission that there is no meaningful difference in the approach to the statutory provision between the majority and minority in Giannarelli cannot be supported. The difference in reasoning among the majority Justices means that Giannarelli has no ratio decidendi. But this does not mean that it has no precedential authority or does not have binding force in this case. I discussed this kind of situation in Re Tyler; Ex parte Foley149: 147 (1988) 165 CLR 543 at 603. 148 (1988) 165 CLR 543 at 609. 149 (1994) 181 CLR 18 at 37-38. McHugh "The divergent reasoning of the majority judges in Re Tracey; Ex parte Ryan150 and Re Nolan; Ex parte Young151 means that neither of those cases has a ratio decidendi. But that does not mean that the doctrine of stare decisis has no relevance or that the decisions in those cases have no authority as precedents. Because it is impossible to extract a ratio decidendi from either of the two cases, each decision is authority only for what it decided152. But what is meant by saying that a case, whose ratio decidendi cannot be discerned, is authority for what it decided? It cannot mean that a court bound by that decision is bound only by the precise facts of the case. Stare decisis and res judicata are different concepts. In my opinion, the true rule is that a court, bound by a previous decision whose ratio decidendi is not discernible, is bound to apply that decision when the circumstances of the instant case 'are not reasonably distinguishable from those which gave rise to the decision'153. In Great Western Railway Co v Owners of SS Mostyn ('The Mostyn')154, Viscount Dunedin, after concluding that no binding ratio decidendi could be extracted from the House's decision in River Wear Commissioners v Adamson155 said156: 'Now, the judgment is binding. What, therefore, I think is our duty on this occasion is to consider the statute for ourselves in the light of the opinions, diverging as they are, and to give an interpretation; but that interpretation must necessarily be one which would not, if it applied to the facts of Wear v Adamson, lead to a different result.'" Applying that reasoning to the present case, this Court cannot determine the liability of the respondents in a way that is inconsistent with the decision in Giannarelli. The facts of this application arise under the same statutory 150 (1989) 166 CLR 518. 151 (1991) 172 CLR 460. 152 Dickinson's Arcade Pty Ltd v Tasmania (1974) 130 CLR 177 at 188; Philip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR 399 at 496. 153 Scruttons Ltd v Midland Silicones Ltd [1962] AC 446 at 479 per Lord Reid. 155 (1877) 2 App Cas 743. 156 The Mostyn [1928] AC 57 at 74. McHugh provision as applied in Giannarelli. On an application arising under the 1958 Act, and relevantly indistinguishable from Giannarelli, that is, falling within the scope of the immunity described in that case, the Court cannot deliver a result inconsistent with Giannarelli unless the Court overrules that case. As I have indicated, the liability of a solicitor in respect of in-court negligence at common law in 1891 was relevant to the reasoning of Mason CJ and Wilson and Dawson JJ and the liability of both solicitors and barristers in 1988 was relevant to the reasoning of Brennan J. However, Brennan J also considered the state of the law in 1891, in the alternative to his construction of the 1958 Act, and held that it was the same as in 1988. Even the Justices who relied on a fixed time interpretation of the provision took account of subsequent articulations of the immunity and did not rely exclusively on the state of the authorities in 1891. Wilson J explained this approach on one aspect of the "… I find the reasoning [in later cases] persuasive, and see no difficulty in accepting [them] as strong evidence of the law of England as it was in 1891 with respect to the immunity of solicitors from liability for in-court negligence as advocates."158 Dawson J positively concluded that the later authorities "did not alter the extent of the liability" but merely re-expressed its basis as lying in public policy and not in the absence of contract between the barrister and client, developments in negligence having removed that possibility159. Toohey J considered, in the alternative to his construction, the question of solicitors' liability for in-court negligence in 1891 and dissented on the authorities160. Deane J, as well as agreeing with Toohey J, indicated his dissent, as a matter of policy, from the majority view that the common law immunity extended to the conduct of the respondents161. 157 Giannarelli v Wraith (1988) 165 CLR 543 at 570. Mason CJ agreed with Wilson J's approach to the provision at 561. 158 See also the concluding words of his Honour's judgment: (1988) 165 CLR 543 at 159 (1988) 165 CLR 543 at 593. 160 (1988) 165 CLR 543 at 604-606. 161 (1988) 165 CLR 543 at 588. McHugh In concluding that the common law affords advocates an immunity for in- court negligence, the majority held that the basis for the immunity lay in public policy considerations162. Their Honours identified three matters as relevant. The role of the advocate The majority relied on the primacy of the obligation of an advocate to the Court, taking on particular significance in the conduct of litigation, which had the potential to conflict with the interests of the client163. The advocate must make decisions about the extent of cross-examination, the witnesses to be called, points to be taken, submissions and objections to be made. An advocate, concerned about the exposure to liability for negligence to the client, might, in making such decisions, relegate the interests of efficient conduct of litigation to second place in favour of the exclusion of any possible avenue of success for the client, however hopeless. Prolixity in litigation is contrary to the public interest in the resolution of disputes without delay. An advocate must also, on occasion, act contrary to her or his client's interests, even instructions, and refuse to allege fraud or other disgraceful conduct without good cause, to mislead the court or to fail to disclose authority contrary to the client's position. The burden of meeting allegations of negligence, even assuming that courts would not visit liability on a practitioner for upholding their obligation to the court, would influence the discharge of that obligation. One difficulty is that unsuccessful litigants whose principal action was without much substance are those most likely to bring a later, equally unsubstantiated, claim against their representative. (ii) Other immunities Connected with the issue of an advocate's duty to the court, in the majority's view, was the consistency of the immunity for an advocate with immunities afforded to other participants in litigation164. The rationale for the immunity of judges, jurors and witnesses from suit for what they say in court is the protection of free speaking in court proceedings, the better to achieve the 162 (1988) 165 CLR 543 at 555 per Mason CJ, 569 per Wilson J, 579 per Brennan J, 163 (1988) 165 CLR 543 at 555 per Mason CJ, 572-573 per Wilson J, 579 per Brennan J, 594 per Dawson J. 164 (1988) 165 CLR 543 at 557 per Mason CJ, 569-570 per Wilson J, 579 per Brennan J, 595 per Dawson J. McHugh disclosure of truth in the administration of justice. The majority Justices relied on what Brett MR had said in Munster v Lamb165: "If upon the grounds of public policy and free administration of the law the privilege be extended to judges and witnesses, although they speak maliciously and without reasonable or probable cause, is it not for the benefit of the administration of the law that counsel also should have an entirely free mind? Of the three classes – judge, witness, and counsel – it seems to me that a counsel has a special need to have his mind clear from all anxiety." Also related to the role of an advocate in the administration of justice is the preservation of the cab rank principle. Legal practitioners are, according to this principle, required to accept work presented to them in a field in which they hold themselves out as practising as long as a reasonable fee is offered. The removal of the immunity is said to threaten the principle because it will make practitioners reluctant to accept a brief from a difficult or unmeritorious client for fear that a vexatious claim in negligence will ensue. Brennan J commented on the importance of the continued observance of the cab rank rule to the administration of justice166 but none of the Justices gave it particular weight in considering the immunity at common law167. (iii) Public confidence in the administration of justice Their Honours placed importance on the damage to the administration of justice that would be caused by the collateral challenge to proceedings where a suit of negligence concerns conduct in the course of litigation. That damage is two-fold. In order to establish causation, a plaintiff must show at least that, but for the advocate's conduct, a different result would have obtained in the proceedings. Causation could rarely be demonstrated without a full reconsideration of the issues litigated in the primary proceedings, including a rehearsal of the evidence. In this parallel proceeding, the opponent from the principal proceeding would not be a party. Collateral proceedings are thus not the same as a retrial. The advocate is left in a peculiarly vulnerable position. The conduct amounting to negligence must be established in the context of the actual trial, in which matters of impression, demeanour of witnesses, judge and the jury, take on importance and are hard to assess objectively at a later stage. 165 (1883) 11 QBD 588 at 603. 166 (1988) 165 CLR 543 at 580. 167 (1988) 165 CLR 543 at 573 per Wilson J, 594 per Dawson J (Mason CJ did not refer to it). McHugh Their Honours also saw retention of public confidence in the finality of curial resolution of disputes168 as important for the administration of justice. A successful claim of negligence against a practitioner depends on demonstrating that at least one outcome of the principal litigation was wrong. In circumstances where that result has not been first obtained by successful appeal, the possibility of inconsistent outcomes arises. A successful party in collateral proceedings might use that outcome as a ground for seeking leave to appeal the principal proceedings out of time. Inconsistent outcomes in criminal matters are an even greater concern for confidence in the administration of justice. The opportunity for a quasi-rehearing through collateral proceedings would be an incentive to a disappointed litigant to sue his or her advocate. Dawson J said on this issue169: "Nothing could be more calculated to destroy confidence in the processes of the courts or be more inimical to the policy that there be an end to litigation. If the decision of a court is wrong, the appeal process is the means by which it should be corrected. To allow the courts to be used to undermine its authority in other proceedings is clearly not in the public interest." Dealing with issues of timing The relevant date for determining whether there is an immunity at common law precluding a suit against the respondents takes on importance in this case because it is an application for special leave to appeal and the statutory provision governing the matter has been repealed. Since the decision in Giannarelli, the House of Lords has abolished the immunity of advocates in both civil and criminal proceedings, preferring to rely on the broad power in English courts to strike out claims on abuse of process grounds170. A significant factor in that decision was the changing nature of advocacy and legal practice. If the immunity applied to the present case is one falling to be determined according to the current state of the common law, this Court might wish to re- express the immunity of advocates in a modern context and grant special leave to appeal. That path would involve no criticism of the decision in Giannarelli. However, if the matter is determined on the state of the law in 1891, this Court must be satisfied of manifest error in the decision of the Court in Giannarelli before it could grant leave. A grant of leave cannot be influenced by subsequent developments of fact or law, except insofar as those developments may be said to 168 (1988) 165 CLR 543 at 558 per Mason CJ (with whom Brennan J agreed at 579), 573-574 per Wilson J, 594-595 per Dawson J. 169 (1988) 165 CLR 543 at 595. 170 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 691-692 per Lord Hoffmann. McHugh throw light on the law of 1891 (in the manner described by Wilson J). The applicant has not sought to demonstrate patent error in Giannarelli, however; rather he submits that the retention of the immunity can "no longer" be justified. A major difficulty in granting leave to re-open this authority is that there is no majority holding in Giannarelli as to the relevant date for determining the second respondent's liability – 1891 or the common law applicable in 1996? The 1958 Act has been repealed, so that the present basis of advocates' immunity in Victoria now lies in common law alone. It is not the most efficient way for this Court to conduct its business by granting leave in a case that might turn on a repealed statute that might affect few, if any, cases apart from this one. The two intervening events – the House of Lords decision and the repeal of the time-based statutory provision – when considered with the unsatisfactory state of Giannarelli on the issue of whether the common law should be considered according to the statutory date or the present time, therefore, tell against granting special leave to appeal in this case. Neither party has suggested that any equivalent statutory provision applies in any other jurisdiction. Nor can I find a jurisdiction in which this issue is presently regulated by statute. This case can only raise a matter of national significance insofar as it deals with the present common law position. Because of its statutory basis, this application is not a good vehicle for considering the modern state of the common law in respect of advocates' immunity. However, in an application for special leave, this Court will consider whether a miscarriage of justice is demonstrated on the facts of the particular case. Again, difficulties arise because the permanent stay order on the applicant's claim leaves this Court to assess the matter as if negligence were established. Ordinarily the Court would not grant leave where crucial facts remain contested. In this case, it is quite possible that, whatever the law, the claim will fail on the facts. However, other members of the Court would grant special leave to appeal and they have examined the substance of the law. In those circumstances, it would not be satisfactory to reject the application on no other basis than that it is an unsatisfactory vehicle to deal with the issue of the advocate's immunity. Does the immunity extend to the present conduct? The first issue for the Court is whether the immunity recognised in Giannarelli extends to the conduct the subject of this Statement of Claim. If not, then it would be unnecessary for this Court to reconsider the immunity. The applicant submits, in the alternative to reconsidering Giannarelli, that the immunity for advocates does not cover the negligent application of pressure in relation to a committal plea. McHugh The extent of the immunity In Giannarelli, the majority adopted the extent of the immunity described by McCarthy P in the New Zealand Court of Appeal171. In Rees v Sinclair his Honour said172: "… the protection exists only where the particular work is so intimately connected with the conduct of the cause in Court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing." The passage had also been adopted by the House of Lords in Saif Ali v Sydney Mitchell & Co173 as the appropriate test. Giving meaning to "intimately connected" A decision about a plea of guilty cannot be described other than as intimately connected with the conduct of a criminal cause. It is a decision made preliminary to the hearing of a charge which affects the conduct of the accused's matter before the court. In adopting the "intimately connected" test, Lord Wilberforce said174: "... I think that the formulation takes proper account, as it should, of the fact that many trials, civil and criminal, take place only after interlocutory or pre-trial proceedings. At these proceedings decisions may often fall to be made of the same nature as decisions at the trial itself: it would be illogical and unfair if they were protected in the one case but not in the other." The connection of a plea of guilty at committal with the conduct of a criminal matter is intimately connected with the hearing of that matter because the timing of the plea affects the sentence imposed, in particular, whether the plea was entered at the first reasonable opportunity175. The applicant's attempt to 171 (1988) 165 CLR 543 at 560 per Mason CJ, 571 per Wilson J, 579 per Brennan J, 172 [1974] 1 NZLR 180 at 187. 173 [1980] AC 198 at 215 per Lord Wilberforce, 224 per Lord Diplock, 232 per Lord Salmon. 174 Saif Ali v Sydney Mitchell & Co [1980] AC 198 at 215. 175 Cameron v The Queen (2002) 209 CLR 339 at 345-346 [19]-[25] per Gaudron, McHugh distinguish his case from Giannarelli on the basis that a committal is an administrative and not judicial proceeding cannot be accepted. Further, Giannarelli itself concerned the liability of, among others, the barristers from the committal proceedings. Work that courts have held was intimately connected with the conduct of a cause includes: Failing to raise a matter pertinent to the opposition of a maintenance application176; Failing to plead or claim interest in an action for damages177; Issuing a notice to admit and making admissions178; Failing to plead a statutory prohibition on the admissibility of crucial evidence179; Negligently advising a settlement180. In Keefe v Marks, Gleeson CJ referred to other examples of out-of-court work that would be intimately connected with the conduct of the cause181: "interviewing the plaintiff and any other potential witnesses, giving advice and making decisions about what witnesses to call and not to call, working up any necessary legal arguments, giving consideration to the adequacy of the pleadings and, if appropriate, causing any necessary steps to be undertaken to have the pleadings amended." By contrast, a failure to advise the availability of possible actions against third parties182, failure to advise commencing proceedings in a particular 176 Rees v Sinclair [1974] 1 NZLR 180 at 187. 177 Keefe v Marks (1989) 16 NSWLR 713 at 718. 178 Munnings v Australian Government Solicitor (1994) 68 ALJR 169 at 172 per Dawson J; 118 ALR 385 at 390. 179 Giannarelli v Wraith (1988) 165 CLR 543. 180 Biggar v McLeod [1978] 2 NZLR 9. 181 (1989) 16 NSWLR 713 at 718. 182 Saif Ali v Sydney Mitchell & Co [1980] AC 198 at 216, 224, 232. McHugh jurisdiction183 and the negligent compromise of appeal proceedings leading to the loss of benefits gained at first instance184 have been held not to fall within the immunity. Of course many other categories of conduct are well recognised as falling outside the immunity, especially the giving of advice not for the purpose of litigation185. The applicant sought to distinguish this case from Giannarelli on the basis that it involves a failure to warn in the Rogers v Whitaker186 sense. That submission must be rejected. The issue is whether the relevant connection with the conduct of the litigation exists, not the form of the negligence. An integral part of the advocate's role is the giving of advice on the basis of which the client will give instructions that direct the course of proceedings. The advice is critical to and often determinative of the client's decision. There is no relevant distinction between instructions given on negligent advice and the negligent carrying out of instructions if both are intimately connected with the conduct of litigation. The Court of Appeal for England and Wales has had occasion to decide a very similar case to the present one. In Somasundaram v Melchior & Co187, the plaintiff had been convicted of unlawful and malicious wounding after pleading guilty. His conviction was confirmed on appeal. He had instructed his solicitor that he could not remember picking up the knife with which his wife was stabbed and he intended to plead not guilty. Subsequently he changed his story and recalled picking up the knife and striking her on the head with it. At a meeting with counsel and the solicitor, counsel advised the plaintiff that he had no defence to the charge if he persisted with the second account and the plaintiff decided to plead guilty. As in the present case, the plaintiff in Somasundaram claimed that the solicitors had pressured him into pleading guilty. The defendant firm of solicitors was also acting for the plaintiff in matrimonial proceedings. The plaintiff claimed the solicitors had influenced his decision with threats of the potential consequences for those proceedings if there was a trial in the criminal matter. The Court of Appeal upheld the striking out of the proceedings against the firm on the basis that the claim had no chance of success and was frivolous 183 Macrae v Stevens [1996] Aust Tort Reports ¶81-405. 184 Donellan v Watson (1990) 21 NSWLR 335. 185 For example Heydon v NRMA Ltd (2000) 51 NSWLR 1. 186 (1992) 175 CLR 479. 187 [1988] 1 WLR 1394; [1989] 1 All ER 129. McHugh and vexatious. The Court went on, however, to address the defendant's alternative defences – first, that it was an abuse of process to impugn a decision of a competent court and second, the immunity of advocates. The Court held that it was an abuse of process to attempt to impugn a conviction by a competent court188. As for the character of work such as advice on a plea in criminal proceedings, the Court said189: "Both counsel submit, rightly in our judgment, that advice as to a plea is something which is so intimately connected with the conduct of the cause in court that it can fairly be said to be a preliminary decision affecting the way that the cause is to be conducted when it comes to a hearing … Indeed it is difficult to think of any decision more closely so connected." (footnotes omitted) Their Lordships thought that the advocates' immunity would have protected the barrister but not the solicitor (who was not acting as an advocate) from a claim in negligence190. Not every aspect of legal practice that is intimately connected with the conduct of litigation, and so covered by the immunity, is supported by all of the public policy bases for the immunity. Some aspects, particularly those germinating out of court, are based more on the public policy of preventing re- litigation or collateral proceedings than in the duty of an advocate to the court or the peculiarities of the adversarial profession. It is difficult to see what constraints a barrister or solicitor is under when advising a client whether to plead guilty. An accused is entitled to put the prosecution to proof. Benefits that may attend an early plea of guilty are for the client to weigh up in his or her Immunising advocates from actions based on their negligent interests. exaggeration of the sentencing benefits of a guilty plea, exertion of pressure to plead guilty or failure to advise on the risks attending a plea of guilty serves no public interest connected with the advocate's obligations to the court. However, there may be a public policy purpose in protecting an advocate from vexatious claims arising from mere errors of judgment inherent in predicting a sentencing outcome. If liability were to attach to underestimation of a sentence, practitioners might give higher estimates in their advice and depress the number of guilty pleas entered. 188 [1988] 1 WLR 1394 at 1403; [1989] 1 All ER 129 at 136; relying on Hunter v Chief Constable of the West Midlands Police [1982] AC 529, discussed below. 189 [1988] 1 WLR 1394 at 1403; [1989] 1 All ER 129 at 136. 190 [1988] 1 WLR 1394 at 1403-1404; [1989] 1 All ER 129 at 136-137. McHugh Immunity for advice concerning pleas of guilty does, however, serve the important public interests of avoiding re-litigation of issues and maintaining confidence in the administration of criminal justice insofar as that confidence rests on finality of outcome. In criminal cases, the prospect of re-litigation is especially invidious. Whether or not the conviction has been overturned, the plaintiff must prove that, but for the advocate's negligence, an acquittal would have followed. But, except where an acquittal was required as a matter of law, that issue in most cases is simply impossible of proof. Take the present case as an example. Juries give no reasons, and it is against public policy for jurors to be called to give evidence as to their reasoning process. For all a civil court, trying an action for negligence, would know, the plea of guilty may have been entirely discounted by the jury at the first trial of the applicant. The advocates' alleged negligence may have had no material bearing on the result. Why should a plaintiff get damages for negligence that cannot be proved to have affected the result? Those who claim that, if an advocate's negligence can be a ground for overturning a criminal conviction, it should be a ground for a civil action for damages fail to note the differences between a criminal appeal and a civil action for damages concerning an advocate's negligence. In a criminal appeal, once the court finds that the advocate's negligence constituted an irregularity that might have affected the result, the onus is on the Crown to prove that the irregularity could not possibly have affected the result. Unless the Crown has discharged that onus – which is always difficult – the conviction will be quashed. In the civil proceeding, the accused bears the onus of proving that the advocate's negligence resulted in his or her conviction, a burden that can only be discharged by guesswork. Whether a claim for damages for an advocate's negligence arises out of criminal or civil litigation, the issue of causation distinguishes the claim from every other action for negligence. That is because the opinion of a third party – a judge or a jury – is interposed between the negligence and the injury. Where physical injury is involved, the tribunal of fact, assisted by expert opinion where necessary, can determine – usually with confidence – whether the negligence caused the injury to the plaintiff. It is a matter of objective probability. Where economic loss is involved, the tribunal of fact can also usually find with some confidence that the defendant's negligence caused the plaintiff's loss. In each case, except where a warning or advice is involved, the opinion of a third party is not interposed between the negligence and the injury, as it is in the case of an advocate's negligence. And in the warning or advice cases, the issue of causation is usually a simple one. It depends upon whether the plaintiff is believed as to what he or she would have done if proper advice or a warning had been given. But where loss is claimed to be the result of an advocate's in-court negligence, the decisive factor in the causation issue is the opinion of the tribunal of fact at the original trial. It can only be guesswork as to whether the negligence made any difference to that result. No doubt there may be cases where the negligence McHugh is so gross that, in an action for damages, the tribunal of fact can find that it must have affected the result of the earlier proceedings. Such cases are likely to be rare. Even where a judge has tried the original case and given reasons, it will often be difficult to know whether the failure to ask a question or put an argument or the putting of a question or argument affected the judge's conclusion. In their joint judgment, Gleeson CJ, Gummow, Hayne and Heydon JJ set out in detail the reasons why adverse consequences for the administration of justice would also be likely to result from the re-litigation in negligence proceedings of issues already decided in a civil or criminal cause. I agree with what their Honours have written on this fundamental issue. There is, of course, a greater public interest in maintaining confidence in the administration of criminal rather than civil justice. So, it is possible to sue a practitioner for the negligent settlement of proceedings or for the negligent loss or abandonment of a cause of action. Such claims lead to the litigation of a primary claim even if that claim can no longer be pursued. These results flow even though there is a public interest in the finality achieved through the statutes of limitations and the promotion of out-of-court dispute settlement. But where a trial has taken place, as the judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ demonstrates, public confidence in the administration of justice is likely to be impaired by the re-litigation in a negligence action of issues already judicially determined. The preservation of finality is a compelling reason why it is not appropriate to construct "allegations of damage in a manner which attempts to relate the harm suffered as a consequence of a barrister's alleged negligence to that aspect of his conduct furthest removed from physically standing up and speaking in Court"191. If a decision affects the conduct of a case in court, it can be viewed both as a course of conduct lasting from the decision until and including the last opportunity to change that course during the hearing, and as a potential, although unprovable, causative factor in a result. The context in which the decision is made, either physical or temporal, is thus of no relevance. The notion of the "calm of chambers" serves only to identify one factor supporting the restriction of the immunity, in respect of conduct not taking place during court proceedings. It does not follow that a decision, made out of court, and maintained in court, is outside the rationales for the immunity. 191 Keefe v Marks (1989) 16 NSWLR 713 at 719 per Gleeson CJ. His Honour reiterated those remarks in the decision of this Court in Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 at 228-229 [97]; 167 ALR 575 at 601; and they were endorsed by Callinan J (1999) 74 ALJR 209 at 280 [361]; 167 ALR 575 at 670; Kirby J contra (1999) 74 ALJR 209 at 236 [128]; 167 ALR 575 at 610. McHugh Accordingly, the immunity should extend to any work, which, if the subject of a claim of negligence, would require the impugning of a final decision of a court or the re-litigation of matters already finally determined by a court. On that basis, no distinction should be drawn between the role of a solicitor and a barrister in the context of advising a client regarding the entering of a plea in criminal proceedings. If the immunity were applicable to the barrister and not the solicitor in the present case, it would not serve the public policy purpose of preventing the rehearing of the applicant's charge. In his judgment192 in this case, Kirby J relies on a number of cases for the proposition that solicitors were "not immune from proceedings in negligence in respect of conduct out of court (or indeed in court, a matter not here in issue)". But, with great respect to his Honour, at its highest one of the cases cited appears to assume that under Scots law a procurator could be sued for damages for failing to examine witnesses properly. But none of the other cases supports the proposition for which his Honour cites them. Kirby J cites193 Hill v Finney194 to support his proposition. But nothing said by the Queen's Bench in that case supports the proposition. The notes attached to the Report, which were made by the reporter of the case, purport to discuss the law; whether accurately or not is another matter. In any event, the notes make it clear that there was no distinction between the liability of the solicitor and the liability of counsel. The notes state195: "It seems clear that an attorney is no more liable than a counsel for honestly advising his client that, on the facts, his suit or defence cannot be sustained." A more unsatisfactory case than Hill could hardly be found. It is simply a report of a nisi prius trial before Cockburn CJ. The jury brought in findings that would have entitled the defendant to a verdict as a matter of law. The foreman then said "he believed his brethren had agreed to their findings on the supposition that they would be enabled to award damages"196. The jury then asked to retire. On their return, they said "we return a simple verdict for the plaintiff – Damages, 192 Reasons of Kirby J at [283], [284], [295], [300]. 193 Reasons of Kirby J at [283], [284]. 194 (1865) 4 F & F 616 [176 ER 716]. 195 (1865) 4 F & F 616 at 625 n(a) [176 ER 716 at 720]. 196 (1865) 4 F & F 616 at 653 [176 ER 716 at 734]. McHugh one farthing"197. In answer to a question from the Lord Chief Justice, the jury said that they now found that the defendant had given the alleged advice, to "Why, that is inconsistent with your former finding! You think that the plaintiff is entitled to a verdict, but not to damages; that he has lost his defence through the defendant's fault, but that he has suffered no loss! However, that is your verdict." The reporter comments that it was clear that the Lord Chief Justice would have favoured a motion for a new trial or a verdict for the defendant but the defendant was satisfied, and did not move199. Nor do the cases cited by Kirby J "confirm the foregoing historical analysis"200. Stokes v Trumper201 simply decided that where a "solicitor has by his crassa negligentia in the conduct of [a] suit caused the suit to be lost, he cannot recover any portion of his bill" including disbursements202. The case says nothing about whether the client could have recovered damages from the solicitor for loss suffered. Re Spencer203 decided that a solicitor who put an erroneous allegation into a petition that resulted in a wrongful payment of funds held in court was "primarily liable for the costs and expenses" of the matter. Ritchie v Macrosty204 was, according to the headnote, an action for damages "brought by a client against an agent (a country procurator), [alleging] gross negligence and want of skill, or mismanagement from improper motives", whereby a cause entrusted to him had been lost. The procurator denied the allegations that they showed a cause of action. The parties could not agree as to the terms of the issue to be tried. Consequently, the Lord Justice-Clerk commented205: 197 (1865) 4 F & F 616 at 655 [176 ER 716 at 734]. 198 (1865) 4 F & F 616 at 655 [176 ER 716 at 734]. 199 (1865) 4 F & F 616 at 655 [176 ER 716 at 734]. 200 Reasons of Kirby J at [297] fn 412. 201 (1855) 2 K & J 232 [69 ER 766]. 202 (1855) 2 K & J 232 at 247 [69 ER 766 at 772]. 203 (1870) 39 LJ Ch 841 at 843. 204 (1854) 16 Dunlop 554. 205 (1854) 16 Dunlop 554 at 558. McHugh "I think it would be going too far to hold at present that there is no relevancy; and it strikes me that the best way of disposing of this case is, to remit to the Sheriff of the county to report as to the conduct of his own procurator." Assuming that the procurator was an attorney, the case is hardly authority for the proposition that under the common law of England in 1891 a solicitor did not have the same immunity as a barrister in respect of in-court conduct. Since I wrote the above, Kirby J has added further references in support of the contention that a solicitor could have been sued for negligence under the common law as it existed in 1891. With great respect, however, none of the references to which his Honour refers establish the proposition that a solicitor in the same position as the first respondent in this case could have been sued for negligence at common law. They do no more than establish that in many situations a solicitor could be sued at common law for negligence in respect of out-of-court conduct. But, as I have already pointed out, so can barristers. The strongest reference in support of his Honour's contention is the statement contained in the work by Archer M White206. In that statement White says, "[w]hen acting as advocate for his client, he is liable for breach of contract." White cites two cases for this proposition. However, neither of them support the proposition that in 1894 a solicitor could be sued for negligence for in-court conduct or conduct intimately connected with the conduct of a case in court. The cases to which White refers are reported only as summary notes in issues of The Law Journal in 1879 and 1885. The first of them is Fergusson v Lewis207 where the plaintiff had retained the defendant, a solicitor, to defend him on a charge of "permitting a horse belonging to the company to be taken out in an unfit condition". The defendant was found to breach his retainer because he "did not attend the Court, though at his request the case was put off for an hour and a half, and the plaintiff was convicted and fined". It is hardly surprising that the jury found for the plaintiff. Any barrister today who failed to turn up to court would equally be liable. The second case is Clarke v Couchman208 where the plaintiff sued the defendant, a solicitor, for "costs alleged to have been incurred by the defendants' negligence in getting up a case heard at the same Court". The note of the case states: 206 White, A Treatise on the Constitution and Government of Solicitors: Their Rights and Duties, (1894) at 175. 207 (1879) 14 The Law Journal 700. 208 (1885) 20 The Law Journal 318. McHugh "The allegation of negligence was that whereas Mr Charles Couchman undertook the case, he, at the last moment, and without any intimation to the plaintiff, handed it over to Mr Thursfield, another member of the firm, through whose want of familiarity with the facts the plaintiff was non-suited." The plaintiff recovered judgment. Again it is hardly surprising that the solicitor was held guilty of negligence. Any barrister who was guilty of such conduct would also be liable in damages for the loss caused to the plaintiff. What is perhaps significant is that the plaintiff sued Couchman and not Thursfield who had acted as the advocate for the firm and who obviously did not conduct the case in accordance with the appropriate standard of competence. It is hardly surprising that there is no recorded case as at 1891 holding that a solicitor could be sued for negligence in respect of the conduct of a case in court or conduct intimately connected with his or her conduct of the case in court. In 1891, the right of solicitors to appear as advocates was subject to significant limitations. In England solicitors had no right of audience before the High Court of Justice until the enactment of the Courts and Legal Services Act (1990) UK. They had however been given the right to appear as advocates in the County Courts in 1845 and in Courts of Petty Sessions in 1848. In 1857 they were given the right to act in Probate and Divorce Courts and in 1859 the right to act in the Court of Admiralty209. Similarly in New South Wales, solicitors did not obtain the right of appearance before the Supreme Court of New South Wales until the enactment of the Legal Practitioners Act 1892 (NSW) which stated in s 2: "From and after the passing of this Act every Attorney shall be competent to appear, and shall have the right of audience, in all Courts in New South Wales in all matters and proceedings in which he acts as Attorney, Solicitor, or Proctor." Prior to the enactment of that legislation a Rule of Court "made in 1834 or 1835 [gave] an exclusive right of audience in the Supreme Court to barristers."210 In Victoria, the position was similar. Until the enactment of the Legal Profession Practice Act 1891 (Vic) only a barrister could appear in the Supreme 209 Holdsworth, A History of English Law, (1965), vol 15 at 228. 210 Teece, The Law and Conduct of the Legal Profession in New South Wales, (1963) at 12. See also R v Stephen (1880) 1 NSWLR 244. McHugh Court211. However, solicitors had the right to appear in a County Court under the County Court Act 1852 (Vic). If in 1891 the English courts had had to determine whether a solicitor could be guilty of negligence in respect of the in-court conduct of a case or because of a matter intimately connected with such conduct, I think it is highly likely that, notwithstanding the existence of a contract between the solicitor and the client, the English courts would have held that the solicitor-advocate was not liable. In Mackay v Ford212, the Court of Exchequer Chamber held that an attorney acting as advocate could not be sued for defamation for words uttered by him in defence of his client in criminal proceedings before magistrates. During argument, Chief Baron Pollock interjected213: "[a]n attorney when acting as an advocate has the same privilege as counsel." That comment suggests that, if the point had arisen, the English courts would have held that solicitors acting as advocates had the same privileges and immunities as barristers. And if the English courts had so held, so would the courts of Victoria. In my opinion, the applicant's claim cannot succeed unless the immunity of advocates is reconsidered by this Court, either as to its extent or as to its existence. Changes in legal practice The House of Lords, in Arthur J S Hall214, identified a number of developments in legal practice said to justify a reconsideration and, ultimately, abolition of the immunity for advocates. The applicant does not suggest that this Court should merely follow the decision of the House of Lords, but presses the factors considered by their Lordships as grounds for this Court to reconsider the immunity in Australia after taking into account those and other factors. The House rejected each of the bases previously relied on to support the advocates' immunity. The cab rank rule was considered of minimal effect in preserving access to justice and the immunity too high a price to pay in the administration of justice for the benefits it offered215. 211 Dean, A Multitude of Counsellors, (1968) at 86. 212 (1860) 5 H&N 792 [157 ER 1397]. 213 (1860) 5 H&N 792 at 794 [157 ER 1397 at 1397]. 214 Arthur J S Hall & Co v Simons [2002] 1 AC 615. 215 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 678-679 per Lord Steyn, 696-697 per Lord Hoffmann, 714 per Lord Hope of Craighead, 739-740 per Lord Hobhouse of Woodborough. McHugh rejected because the position of The need for consistency with immunity of other participants in court advocates was proceedings was distinguishable216. The House held that, because they owed a duty of care as professionals to their paying clients, advocates were not comparable to judges or witnesses except, possibly, expert witnesses who ought also to be deprived of their immunity. The immunity from suit for defamation did not require an immunity from suit for negligence as well. By contrast, the House held that the advocate's duty to the court was not distinguishable from potentially conflicting duties arising in other professions, for example ethical obligations of doctors217. Those professions were also subject to numerous, even vexatious, claims. The threat of vexatious claims was not likely to affect the performance of an advocate's obligations to the court more than the countervailing possibilities of damage to reputation, wasted costs orders and measures by disciplinary bodies or the court218. The House also rejected the possibility of re-litigation or collateral proceedings219. It did so on the basis that attempts to impugn final decisions of competent courts could be struck out as an abuse of process under the rules of court or employing the authority of Hunter v Chief Constable of the West Midlands Police220. The decision of their Lordships expressly relied on change221 and the experience of comparable jurisdictions, including other European Community nations, Canada and the United States, all of whom had abolished or never had 216 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 679 per Lord Steyn, 697-698 per Lord Hoffmann, 714-715 per Lord Hope of Craighead. 217 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 680 per Lord Steyn, 690 per Lord Hoffmann, 728 per Lord Hutton. 218 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 692-693 per Lord Hoffmann. 219 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 679 per Lord Steyn, 685 per Lord Browne-Wilkinson, 691, 705-707 per Lord Hoffmann, 715 per Lord Hope of Craighead. 221 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 682 per Lord Steyn, 684 per Lord Browne-Wilkinson, 688, 691, 704 per Lord Hoffmann, 728 per Lord Hutton, 737 per Lord Hobhouse of Woodborough. McHugh the immunity222. The House took into account the commercialisation of legal practice including advertising, the use of contract and insurance. Their Lordships also considered a rise in the public expectation of professional liability. These matters rendered the immunity of advocates anomalous and unable to be supported by the public policy considerations previously embraced223. Their Lordships rejected fears of over-litigation in light of the difficulty of establishing breach and causation in such negligence actions224. The House valued instead the role of tort as a promoter of standards of performance in the legal profession and the maintenance of public confidence in the legal system by the removal of a self-serving immunity. Lord Steyn concluded225: "[O]n the information now available and developments since Rondel v Worsley226 I am satisfied that in today's world that decision no longer correctly reflects public policy." The public policy basis for the immunity endures Their Lordships' reasons show that some factors formerly relied on to support the immunity can no longer be accepted. For example, a number of the features of legal practice said to distinguish advocates from other professions are no longer persuasive. The potentially conflicting duties of doctors to their patients' wishes, ethical obligations including confidentiality and the preservation of life, have not protected them from suit. Recently, the New South Wales Court of Appeal held that a doctor was negligent in failing to obtain the consent of two patients, a couple, who came to him to be tested for sexually transmittable diseases, to the mutual disclosure of the results, and was liable for the later infection of one of them by the other with HIV227. The doctor was obliged, in the exercise of reasonable care, to request permission for what would otherwise be both a criminal offence and a breach of statutory duty. Many other examples, especially those involving the absence of consent to treatment in life-threatening situations, may be enumerated. 222 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 680-681 per Lord Steyn, 695 per Lord Hoffmann. 223 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 684 per Lord Browne Wilkinson. 224 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 753 per Lord Millett. 225 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 683. 227 Harvey v PD (2004) 59 NSWLR 639. McHugh The idea of pressure, haste and quick judgment involving unknown quantities in a courtroom is also not distinguishable from the kind of strain under which a surgeon might operate. Mr Jackson QC, for the first respondent, referred to the special position of advocates because they face an opponent, whereas in medical practice, all involved seek the health of the patient. I do not think that distinction is persuasive. The disease or condition to be treated might well be viewed as having a similar role in medical practice. Indeed in some cases, a patient may be the doctor's worst enemy in improving the patient's health. The invidious dissection of a professional's conduct by lawyers and judges with the benefit of hindsight and time for reflection is also not a burden that would attach only to advocates in the absence of immunity. Competing demands, matters of fine judgment with heavy potential consequences, unexpected outcomes and new information at a crucial moment, for example, are all features of defences to claims of negligence in medical practice. The Bolam test228 of professional liability, which has now been adopted in most Australian jurisdictions by statute229, is intended to preclude judges and legal practitioners imposing their own views as to what is negligent practice in many professions. This is particularly so in the case of medical practice where lawyers cannot be expected to appreciate the true reality of participation in that profession. If lawyers and judges had such insight, arguably the common law might have adopted immunities, or higher thresholds of negligence in other professions. In my view, however, the factors considered in Arthur J S Hall do not require this Court to abolish the immunity of advocates. The unreality of determining the causation issue in most cases and the undermining of public confidence by collateral attacks on final decisions of courts are the persuasive public policy bases that justify the immunity of advocates from suit. The truly distinguishing feature of legal practice is that it results in enforceable judgments. Those judgments may be called into question on appeal, including by attacks on the quality of legal representation provided. However, it is inimical to the legal process and the administration of justice, that matters be re-litigated for a collateral purpose or that judgments be fundamentally called into question in ways which cannot result in their amendment. And without abandoning the rule 228 Bolam v Friern Barnet Hospital Management Committee [1957] 1 WLR 582; [1957] 2 All ER 118. 229 Civil Liability Act 2002 (NSW), Pt 1A, Div 6; Wrongs Act 1958 (Vic), s 59; Civil Liability Act 2003 (Q), Ch 2, Pt 1, Div 5; Civil Liability Act 1936 (SA), s 41; Civil Liability Act 2002 (Tas), s 22. See the discussion of this reform in Spigelman, "Negligence and insurance premiums: Recent changes in Australian law", (2003) 11 Torts Law Journal 291 at 300-303. McHugh that judges and jurors cannot be called to give evidence to explain their decisions, it can only be guesswork in many – probably most – cases whether the advocate's negligence affected the result. In Arthur J S Hall, the Law Lords who did not favour the abolition of the immunity in criminal cases emphasised the problem of collateral attacks on final judgments in criminal cases230. They recognised that existing authority was insufficient to strike out all actions calling into question a conviction. In my view, however, their Lordships underestimated the importance of maintaining confidence in the administration of justice even in the civil sphere, and overestimated the court's capacity to limit the re-litigation or rehearing aspects of a negligence trial. Collateral attack and re-litigation are not the only bases for maintaining the advocates' immunity. The immunity of other participants in legal proceedings – the judge, jurors and witnesses – rests on the necessity that those who participate in the administration of justice should not be hampered in the discharge of their duties by fear of litigation concerning what they say and do. The administration of justice demands fearless and independent advocates who are not hampered in the discharge of their role by the need to consider whether their conduct might be actionable. The advocates' immunity from a suit for defamation in part rests on this basis. Another factor supporting the immunity of advocates is, as I have indicated, that neither the judicial officer nor members of the jury can testify. Moreover, other legal practitioners cannot divulge matters covered by professional privilege. So, the immunity arises not only from the extent to which an advocate is analogous to other participants in a court proceeding but also because the courts wish to retain the immunity of those participants and cannot equitably do so while exposing the advocate to suit. Although many aspects of legal practice are not distinguishable from other professions in terms of justifying an immunity from negligence, the causation issue is. The task of the advocate is to persuade another person in a system underpinned by the principle that the vigorous presentation of opposing views is the best method for obtaining the correct result. Although this is a matter that could be considered in the assessment of breach, decisions made about the conduct of a case based on what it will be possible to persuade a judge or jury to think are open to reasonable differences of professional opinion and influenced by factors not demonstrable by evidence because of their particularity to each case and because those to be persuaded are non-compellable witnesses. Claims 230 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 722-725 per Lord Hope of Craighead, 751-752 per Lord Hobhouse of Woodborough. McHugh of negligence in respect of advocacy are generally either unanswerable or unwinnable because of the obstacles of proof. Those in favour of the abolition of the immunity tend to emphasise the unwinnable character of such claims as a brake on the floodgates of litigation. But a case like the present demonstrates that where there has been a successful retrial, the defence of the claim may be difficult, even though the onus of proof remains on the plaintiff. Moreover, there is evidence that, in the Australian context, even the difficulty of proving an allegation of deficient representation has not dissuaded many persons from making such claims the basis for an appeal. The leading authority on the issue of allowing an appeal on the ground of incompetent counsel is R v Birks231, a decision of the New South Wales Court of Criminal Appeal. Gleeson CJ described the law as "well settled" that neither counsel's incompetence nor acting contrary to instructions "will, of itself, attract appellate intervention"232. His Honour sought to identify a single rationale for the occasions when a court would intervene, that intervention being always "extremely cautious"233. His Honour held that there would be no appellate intervention unless a miscarriage of justice was shown, a matter that would be assessed in the context of the operation of the criminal justice system. A person would ordinarily be bound by the way his or her case was conducted by counsel so that decisions made without, or contrary to instructions, errors of judgment or However, where "flagrant even negligence would not usually suffice. incompetence" of counsel or some other cause resulted in a miscarriage of justice, an appellate court would intervene234. The decision in Birks makes clear that there may be a combination of events, including the incompetence of counsel, which together amount to a miscarriage of justice. Appellate courts in Australian jurisdictions regularly hear appeals alleging the incompetence of counsel. The matters are overwhelmingly of a criminal character and almost always dismissed. The particulars of incompetence generally involve issues concerning admissions or failure to adduce or failure to object to certain evidence235. Wrongly advising the accused not to give evidence 231 (1990) 19 NSWLR 677. 232 (1990) 19 NSWLR 677 at 684 per Gleeson CJ. 233 (1990) 19 NSWLR 677 at 684 per Gleeson CJ. 234 (1990) 19 NSWLR 677 at 685 per Gleeson CJ. 235 For example, Hart v The Queen (2003) 27 WAR 441; R v Cerullo [2003] NSWCCA 201; R v TJF (2001) 120 A Crim R 209; R v Gust [1999] NSWCCA 265; Arrowsmith v The Queen (1994) 55 FCR 130. McHugh is a common complaint236. Cross-examination is the other main area of challenge – the failure to pursue inconsistencies, the failure to put certain questions237. More unusual examples include intoxication, advising the client to plead not guilty and raising character during examination-in-chief without properly checking the accused's antecedents238. On many occasions appellate courts have reiterated the caution with which such allegations are approached. The Victorian Court of Appeal said239: "No doubt there will be many decisions made by counsel which, in retrospect, might appear to have been ill advised. However the mere fact that such decisions have been made and appear in retrospect to have been unwise will not, of itself, lead a court of criminal appeal to quash a conviction, for the simple reason that the making of those decisions is part and parcel of the process of a fair trial … A court of criminal appeal is poorly equipped to review decisions made by counsel during the course of a criminal trial, many of which have to be made on the spur of the moment or in circumstances with which an appellate court cannot hope to be familiar. Usually there must be something akin to flagrant incompetence of counsel before it will be moved to intervene …". However, notwithstanding the rarity of success, claims of this kind continue to be made. The Queensland Court of Appeal has made these observations240: "It is becoming more common, particularly when an appellant is not legally represented, for counsel who represented the appellant at trial to be criticised for the way the trial was conducted, with allegations of bad advice, disregard of instructions, and failure to ask necessary questions or call necessary witnesses … 236 For example, R v Nudd [2004] QCA 154; compare R v McConnell [2000] QCA 463; R v Szabo [2001] 2 Qd R 214. 237 For example, R v Shalala [2003] NSWCCA 330; R v Martin [2000] NSWCCA 332; R v Lawson [2000] NSWCCA 214. 238 Including R v Falzon (2000) 33 MVR 128; Olivero v The Queen (1993) 61 SASR 239 R v Miletic [1997] 1 VR 593 at 598-599. 240 R v Green [1997] 1 Qd R 584 at 586 per Fitzgerald P and Thomas J. McHugh While these complaints are easy to make, considerable time and effort is often necessary to determine whether they have any substance, even when they are baseless. This presents a major problem in an overloaded court system in which the number of cases to be heard, especially criminal cases, is increasing and trials are growing longer, with a corresponding increase in the appellate workload and, because of the cost of legal representation and perhaps other reasons, more appellants are representing themselves. Almost invariably, the absence of competent legal representation adds to the burden on the Court, which is anxious to ensure that the unrepresented party receives appropriate assistance … The mere fact that valid criticisms can be made of counsel's conduct of the trial does not mean that there has been a miscarriage of justice or that an appeal against conviction should be allowed." (footnotes omitted) In appropriate cases, an appellate court will intervene. So in R v Falzon241, the New South Wales Court of Criminal Appeal allowed an appeal against sentence where counsel had advised the accused to plead not guilty, in circumstances where there was clearly no basis for defending the charge. The Court recognised that an earlier plea would have entitled the accused to a discount on sentence and made an allowance for that in re-sentencing. And in R v Kyriacou242 the South Australian Court of Criminal Appeal allowed an appeal against conviction where the incompetence of counsel had led to a failure to put key aspects of the defence to the main Crown witness and counsel's misleading advice had led to the accused not testifying. The Court held that the accused had lost a very real prospect of a verdict of not guilty. The problem of collateral attack on final decisions and re-litigation is unable to be cured by the exercise of the courts' powers to strike out proceedings. There is no issue estoppel in the negligence action between the advocate and the client, because the advocate was not a party to the principal proceedings243. Each Supreme Court in Australia has an inherent jurisdiction to protect its own processes from abuse and a provision in the rules of court to the same effect244. 241 (2000) 33 MVR 128. 242 (2000) 210 LSJS 296. 243 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 743 per Lord Hobhouse of Woodborough. 244 Supreme Court Rules (NSW), Pt 13 r 5, Pt 15 r 26; Supreme Court (General Civil Procedure) Rules (Vic), r 23.01; Supreme Court Rules (SA), rr 3.01, 46.18; Uniform Civil Procedure Rules (Q), r 293; Rules of the Supreme Court (WA), (Footnote continues on next page) McHugh Lower courts have equivalent rules245. Although a claim involving negligence in prior proceedings may be recognised as contrary to the public interest, it does not amount to an abuse of process. Unless the damages claimed are not for a cognisable loss, the claim will have a proper purpose of compensation246. And if the matter has been finally concluded by a competent court, there can be no suggestion that the proceedings seek to influence that outcome. Without investigating the merits of the matter, it will be difficult to demonstrate, on a strike-out application, that the proceeding is inherently vexatious. An improper purpose or a vexatious claim will be even harder to demonstrate if the result of the principal proceedings has been in the plaintiff's favour on appeal. And yet the public interest in avoiding re-litigation and protecting finality will remain. It is important to remember that the proceedings may be commenced at any time within the limitation period, while an appeal must, except where leave is obtained, be filed within a few weeks of the judgment. In Arthur J S Hall, the House of Lords247 relied on new flexible Civil Procedure Rules248 which permitted an action to be dismissed where "the claimant has no real prospect of succeeding on the claim". These new rules contrasted with the previous position where a defendant "had a very heavy burden to satisfy the court that it was 'frivolous and vexatious' and ought to be struck out"249. Their Lordships also relied on the authority of Hunter v Chief Constable of the West Midlands Police250. That decision appears to be at odds with the state of Australian authority and does not operate in cases where a result has been overturned on appeal251. The Lords who would have retained the O 67 r 5; Supreme Court Rules 2000 (Tas), r 259; Supreme Court Rules (NT), r 23.01; Supreme Court Rules (ACT), O 17 r 1. 245 For example the provision under which this strike-out application was brought, the County Court Rules of Procedure in Civil Proceedings (Vic), r 23.01. 246 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 742 per Lord Hobhouse of Woodborough. 247 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 682 per Lord Steyn, 691, 707 per Lord Hoffmann, 733 per Lord Hutton. 248 Civil Procedure Rules 1999 (UK), r 24.2. 249 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 691 per Lord Hoffmann. 251 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 685 per Lord Browne-Wilkinson, 702-703 per Lord Hoffmann. McHugh immunity in criminal cases did not think even the broad rules of court and Hunter were enough to protect criminal advocates from the likelihood of vexatious claims252. Australian courts operate under what is now described as the "old rules" in the United Kingdom. This Court has said253: "The power to order summary judgment must be exercised with 'exceptional caution' and 'should never be exercised unless it is clear that there is no real question to be tried' ... Nowhere is that need for exceptional caution more important than in a case where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact. In such a case, it is essential that 'great care … be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal'254." (some footnotes omitted) An alternative might be to seek a permanent stay of proceedings on the basis that, having regard to the immunities of crucial witnesses and, for example, any delay between the principal proceedings and the claim of negligence, it would be impossible for the defendant advocate to receive a fair trial. However, this power too should be invoked only in very extreme circumstances, because it involves a refusal to exercise the court's jurisdiction255. The immunity should not be reconsidered Despite the House of Lords' decision in Arthur J S Hall and the recent decision of the Court of Appeal of New Zealand in Lai v Chamberlains256, I am not persuaded, for the reasons that I have given, that the common law of 252 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 722-724 per Lord Hope of Craighead, 733-734 per Lord Hutton, 742-743 per Lord Hobhouse of Woodborough. 253 Webster v Lampard (1993) 177 CLR 598 at 602-603 per Mason CJ, Deane and 254 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130. See also Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 per Dixon J. 255 Jago v District Court (NSW) (1989) 168 CLR 23; Walton v Gardiner (1993) 177 CLR 378. 256 Unreported, Court of Appeal of New Zealand, 8 March 2005. McHugh Australia should abandon the immunity of advocates or hold that it does not apply to out-of-court advice concerning a plea of guilty. It covers the present case including the allegation that the advice to plead guilty constituted undue pressure and influence and the claim that the applicant has suffered mental illness as the result of his conviction and imprisonment. Ordinarily, the proper order would be that the application for special leave to appeal should be dismissed. However, the decision of the House of Lords in Arthur J S Hall departing from the previous course of authority and coming after Giannarelli raised a question of great public interest. It raised the question as to whether the common law of Australia should also abolish the advocates' immunity in respect of in-court conduct or conduct intimately connected with in- court conduct. That question is sufficiently important to warrant the grant of special leave so that this Court can decide whether the immunity should or should not be retained. Accordingly, there should be a grant of special leave but the appeal must be dismissed with costs. Kirby 208 KIRBY J. This case concerns the civil liability of a barrister, and of his instructing solicitor, for the performance of their respective professional duties outside court in a manner alleged to have been negligent. The client claims that, as a result of their negligence, he suffered, and continues to suffer, damage. To recover compensation for such damage, he commenced legal proceedings. However, those proceedings were permanently stayed on the basis that each of the lawyer defendants was entitled to the benefit of an absolute immunity from suit. It was held that no proceedings could be maintained at law, even assuming that the client could prove all of the allegations of negligence that he had pleaded against the defendants. Having failed to obtain from the intermediate court leave to appeal, the client seeks special leave to appeal to this Court, the lifting of the stay order and the remittal of the proceedings for trial. The application was referred to a Full Court to be heard as on the return of an appeal. In my opinion, the client is entitled to succeed. The appeal should be allowed. The judgment below should be set aside. The case should go to trial. Professional negligence, lawyers' immunity and change Liability of the professions: Over the course of a century, this Court has heard countless cases in which negligence has been alleged against professional and other skilled persons. Thus, it has held to legal account architects257, civil engineers258, dental surgeons259 and specialist physicians and surgeons260, anaesthetists261, electrical contractors262, persons providing financial advice263, 257 Voli v Inglewood Shire Council (1963) 110 CLR 74 at 79-80, 84. 258 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 78 ALJR 628; 205 ALR 522. See also Brickhill v Cooke [1984] 3 NSWLR 396 at 398; Investors in Industry Commercial Properties Ltd v South Bedfordshire District Council [1986] 259 Rosenberg v Percival (2001) 205 CLR 434 at 453 [60], 465 [101], 499 [208]. 260 Rogers v Whitaker (1992) 175 CLR 479; Chappel v Hart (1998) 195 CLR 232; Naxakis v Western General Hospital (1999) 197 CLR 269; Cattanach v Melchior (2003) 215 CLR 1. 261 Paton v Parker (1941) 65 CLR 187 at 195, 198. 262 Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313. 263 Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556 at 566-573. See also, on appeal to the Privy Council: (1970) 122 CLR 628; [1971] AC 793. Kirby police officers264, builders265, pilots266, solicitors267 (in respect of out-of-court advice) and teachers268. In individual cases, the professional person concerned has won or lost. But liability has been decided by the application of the general principles of the law of negligence as elaborated at the time of the decision. None of the defendants in any of the foregoing cases claimed, still less received, the benefit of an absolute immunity from liability269. So why are the lawyers in this case entitled to be treated in such a special, protective and unequal way? Is this truly the law of Australia, applicable to the case? If so, what is the justification? "The cards are now stacked": In earlier times, the law in Australia (as even earlier in England) recognised an immunity for barristers from liability for negligence. However, there is no such general immunity for advocates in, for example, the United States of America270, Canada271, the European Union272, Singapore273, India274 or Malaysia275. An attempt in England to have the barristers' immunity at common law re-expressed was partly successful in 264 Howard v Jarvis (1958) 98 CLR 177 at 183. 265 Bryan v Maloney (1995) 182 CLR 609. 266 Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 267 Hawkins v Clayton (1988) 164 CLR 539; Hill v Van Erp (1997) 188 CLR 159. 268 Ramsay v Larsen (1964) 111 CLR 16; Geyer v Downs (1977) 138 CLR 91; The Commonwealth v Introvigne (1982) 150 CLR 258. 269 See, however, the liability arising out of military operations: Shaw Savill and Albion Co Ltd v The Commonwealth (1940) 66 CLR 344. 270 See eg Ferri v Ackerman 444 US 193 at 205 (1979). 271 See eg Demarco v Ungaro (1979) 95 DLR (3d) 385. 272 See Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 680-681 per Lord Steyn. 273 Chong Yeo & Partners v Guan Ming Hardware & Engineering Pte Ltd [1997] 2 SLR 729 at 744 per Yong Pung How CJ. 274 Kaur v Deol Bus Service Ltd AIR 1989 P&H 183 at 185 per Sodhi J. 275 Miranda v Khoo Yew Boon [1968] 1 MLJ 161. Kirby Rondel v Worsley276 and Saif Ali v Sydney Mitchell & Co277. It was at that point in the evolution of common law doctrine that this Court delivered its decision in In Giannarelli, this Court was closely divided. It affirmed the survival of a defined immunity for the barrister respondents. The immunity was such that, at common law, a barrister could not be sued by a client for negligence for conduct in court, or for conduct out of court that leads to a decision affecting the in-court conduct. Some members of the Court suggested that there was a similar immunity for a solicitor acting as an advocate in court. Some expressed even wider views concerning the scope of the immunity. An attempt to reopen the existence, and ambit, of that immunity in Australia failed in Boland v Yates Property Corporation Pty Ltd279. This was because it was ultimately unnecessary for the decision in that case to determine the availability of the immunity claimed. Then came the House of Lords' decision in Arthur J S Hall & Co v Simons280. Their Lordships unanimously concluded that the public interest, which had previously been held to sustain the advocates' immunity, could no longer do so in respect of a suit for alleged negligence in the conduct of civil proceedings. With three dissentients281, a majority282 went on to conclude that the immunity in relation to the conduct of criminal proceedings could likewise no longer be supported. In the result, in England and Wales, whose law was the original source for the Australian law providing immunity for barristers, such immunity has now been abolished. In New Zealand, too, shortly before these reasons were published, the Court of Appeal abolished advocates' immunity as no longer 278 (1988) 165 CLR 543. 279 (1999) 74 ALJR 209; 167 ALR 575. 281 Lord Hope of Craighead, Lord Hutton and Lord Hobhouse of Woodborough. 282 Lord Steyn, Lord Browne-Wilkinson, Lord Hoffmann and Lord Millett. Kirby representing the law of that country283. As Lord Steyn observed in Arthur J S Hall284, "the cards are now heavily stacked against maintaining the immunity of advocates". If this Court not only upholds the immunity for barristers in respect of in- court decisions but expands it to protect out-of-court advice by barristers, and by an instructing solicitor with respect to that person's separate obligations to the client, it will, once again285, be approaching basic legal doctrine in a way rejected virtually everywhere else. Such disparity in a matter of legal principle does not necessarily mean that this Court is wrong. But it certainly suggests the need for justification by reference to identified errors of so many other courts and legal systems or proof of such local divergencies as warrant Australian law taking its own peculiar direction. An inadmissible empathy: Is an outcome, upholding a broad immunity from suit for Australian lawyers for in-court work (or out-of-court work intimately connected with in-court work), required by distinctions in the organisation or duties of the legal profession in this country? Or by some special vulnerability to suit of Australian lawyers? Or by some particular feature of local legislation or law286? Perhaps it is necessary because of a settled holding of this Court that should not be changed except by Parliament? 283 Lai v Chamberlains unreported, Court of Appeal of New Zealand, 8 March 2005 per McGrath, Glazebrook, Hammond and O'Regan JJ, Anderson P diss. The Court did not decide the issue of a retention of immunity for criminal trials. In New Zealand, the question was not complicated by the statutory prescription applicable in Victoria. See also Harley v McDonald [2001] 2 AC 678. 284 [2002] 1 AC 615 at 683. 285 For example, in proposals to adopt the test in Caparo Industries Plc v Dickman [1990] 2 AC 605 at 617-618 per Lord Bridge of Harwich. See Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 623-627 [231]-[238]; Kirby, "Harold Luntz: Doyen of the Australian Law of Torts", (2003) 27 Melbourne University Law Review 635 at 638. Or, in using international law to interpret the Constitution: Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1134 [184]-[186]; 208 ALR 124 at 170-171. See also the test for disqualification for apparent bias for pecuniary interest: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 384 [150], noted in "Reviews and Notices", (2002) 28 Commonwealth Law Bulletin 286 Such as the Legal Profession Practice Act 1958 (Vic) ("the 1958 Act"), considered in Giannarelli (1988) 165 CLR 543. Kirby It will be necessary to consider these questions. But this much is clear. The point that divides this Court, upon the issue argued in the present application, should not rest merely on the personal inclinations and sympathies of particular judges287. Nor should it depend on a transient lack of sympathy for plaintiffs' claims288. Nor can it draw legitimate support from what Professor Cane has called an "empathy heuristic"289. In the words of Lord Hoffmann, intuition and sympathetic understanding confined to lawyers, from whom ordinarily Australian judges are drawn, "will not do"290. Such a large, even, it is suggested, an expanded immunity from the legal liability that is imposed by judges on virtually everyone else in society in like relationships, requires the incontestable authority of a statutory exemption, the unarguable power of binding legal doctrine or the overwhelming force of arguments of principle and policy expressed in new ways because the old ones now persuade almost no other judiciary in the world. There is no such statutory exemption applicable to this case. This Court's existing legal doctrine does not control the outcome of these proceedings. Even if it did, such doctrine would need to be reconsidered by this Court in the light of public policy perceived "in today's world"291. Authority, principle and policy require that this Court declare that the absolute immunity from suit, as invoked by the lawyers in this case, is not part of Australian law. The client is entitled to have his action tried on the merits. The facts and applicable legislation The facts and legislation: The facts in this case have not yet been found at trial. From the pleadings, it appears that Mr Ryan D'Orta-Ekenaike (the applicant) sued Victoria Legal Aid ("VLA"), a body corporate established by the Legal Aid Act 1978 (Vic). VLA is the first respondent to the applicant's 287 See Shaw v Minister for Immigration and Multicultural Affairs (2003) 78 ALJR 203 at 226 [127]; 203 ALR 143 at 175. 288 Woolcock (2004) 78 ALJR 628 at 656 [150]; 205 ALR 522 at 561; Luntz, "Torts Turnaround Downunder", (2001) 1 Oxford University Commonwealth Law Journal 95; Stapleton, "The golden thread at the heart of tort law: Protection of the vulnerable", (2003) 24 Australian Bar Review 135 at 142. 289 Cane, "Consequences in Judicial Reasoning", in Horder (ed), Oxford Essays in Jurisprudence: Fourth Series, (2000) 41 at 56, fn 35, referred to by Lord Hoffmann in Arthur J S Hall [2002] 1 AC 615 at 689. 290 Arthur J S Hall [2002] 1 AC 615 at 689. 291 Arthur J S Hall [2002] 1 AC 615 at 683 per Lord Steyn. Kirby proceedings. It is the employer of Ms Robyn Greensill ("the solicitor"). She is a solicitor who, at the relevant time, advised the applicant in respect of criminal proceedings brought against him, charging him with rape. By the Legal Aid Act, VLA and officers of VLA (such as the solicitor) are "subject to the same professional duties as those to which a private practitioner is subject by law or the custom of the legal profession in the practice of his profession"292. For the purposes of the application of this provision in respect of a member of the staff of VLA "who is practising as, or performing any of the functions of, a legal practitioner … in a court on behalf of any person"293, VLA is deemed to be "a firm of solicitors lawfully practising in the State and retained by the person to act on his behalf"294 and "the members of the staff of VLA shall be deemed to be employed by that firm"295. VLA is obliged to indemnify any officer against any liability incurred by him or her "in respect of any negligent act or omission by the officer in the course of the performance of his or duties [sic] or in good faith in the purported performance of his or her duties"296. The Act therefore contemplates, and provides for, VLA's liability in negligence for the acts or omissions of its employees. Mr Ian McIvor is a barrister practising at the Melbourne Bar ("the barrister"). He is the second respondent to the applicant's proceedings. It is important to state that neither the barrister nor VLA has, at this stage, been found to have been negligent. Each has filed a defence contesting the applicant's claims. However, in advance of a hearing of the action, VLA and the barrister successfully invoked the asserted immunity from suit. They succeeded in obtaining summary relief from the County Court of Victoria (Judge Wodak). It is the consequent order, permanently staying the applicant's proceeding for negligence, that the applicant contests in this Court. The general factual background to the case is stated in the reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ ("the joint reasons")297 and in the reasons of McHugh J298. There set out are the applicant's pleaded allegations 292 Legal Aid Act 1978 (Vic), s 16(1)(b). 293 Legal Aid Act 1978 (Vic), s 16(2). 294 Legal Aid Act 1978 (Vic), s 16(2)(a). 295 Legal Aid Act 1978 (Vic), s 16(2)(b). 296 Legal Aid Act 1978 (Vic), s 16(4). 297 Joint reasons at [4]-[11]. 298 Reasons of McHugh J at [114]-[120]. Kirby against VLA and the barrister, the fate of the proceedings in the Victorian courts, and the relevant provisions successively enacted by the Victorian Parliament since 1891 for the liability of members of the legal profession in that State. The constitutional setting: Mention is made in the joint reasons of the constitutional arrangements governing the courts of Australia299. There is no specific provision in the Constitution for the entitlements and liabilities of the legal profession. Still less is there any mention there of an immunity to be enjoyed by members of the legal profession against client claims of negligence. No implication of immunity could be derived from the Constitution as necessarily inherent in the provisions for this country's courts as set out there. None was alleged. Nor was any argument advanced that it was implicit in the constitutional design that persons, such as the applicant, are entitled to approach the courts, provided for in the Constitution, on a basis of full equality with other parties in a like position, claiming redress for negligence300. In light of the substantial arguments pressed in this application, I will disregard any such constitutional implications. Nevertheless, immunities from suit are rightly regarded in Australia as exceptional. Normally, the law of Australia, which the Constitution upholds, demands that all persons should be equal before the courts in rights and liabilities. Derogations from that rule need clear and convincing authority. Quelling controversies is indeed an important purpose of the Judicature established by the Constitution301. However, normally, "controversies" are "quelled" justly and by the application of law. If negligence can be proved, the controversy presented by such a claim is quelled by holding those negligent, who owed a duty of care and caused damage, liable for the result. It is not "quelled" by shutting the door of the courts to those who are damaged in that way. Approach to the application: During argument, a question arose concerning the approach that it was proper to take to the claim by VLA and the barrister for peremptory relief against the applicant's proceedings. For the barrister, it was said that this Court's authority supported the proposition that the court, before which such relief was sought, looked with strictness at the pleadings propounded. It judged the motion for summary dismissal, or a 299 Joint reasons at [32]-[33]. 300 See Leeth v The Commonwealth (1992) 174 CLR 455 at 486 per Deane and Toohey JJ (diss), 502 per Gaudron J (diss); Kruger v The Commonwealth (1997) 190 CLR 1 at 112-113 per Gaudron J (diss); cf Muir v The Queen (2004) 78 ALJR 780 at 784-785 [23]-[28]; 206 ALR 189 at 194-195. 301 Joint reasons at [43]. Kirby permanent stay, by measuring the pleadings strictly according to their terms against the applicable legal standard. Such an approach may be correct where the law in question is clear and settled302. However, the function of a court, asked to give peremptory relief that stops proceedings in their tracks, is not a mechanical one303. To prevent a party with an apparently serious claim from having a trial of that claim on its merits must not become an occasion to inflict injustice or prematurely to close the court's doors in that party's face. Summary relief terminating an action, or ordering that it be permanently stayed, is only available where there is "no risk of injustice to the plaintiffs". Such orders are provided "only in plain and obvious cases". Otherwise, as Sir Thomas Bingham MR said in E (A Minor) v Dorset County Council304, "where the legal viability of a cause of action is unclear (perhaps because the law is in a state of transition), or in any way sensitive to the facts, an order to strike out should not be made". In Woolcock Street Investments Pty Ltd v CDG Pty Ltd305, I explained why the approach to such cases is one of restraint: "Only in a clear case will answers be given, and orders made, that have the effect of denying a party its ordinary civil right to a trial. This is especially so where, as in many actions for negligence, the factual details may help to throw light on the existence of a legal cause of action – specifically a duty of care owed by the defendant to the plaintiff." Unfortunately, it has been a feature of many of the cases concerned with the existence, and scope, of the duty of care owed by lawyers to their clients (and of the immunity from suit claimed by such lawyers) that courts, determining the matter, have had to do so in proceedings such as the present. The issue has been disjoined from the evidence. Questions of law have been isolated306. Or the matter has been determined on pleadings without the benefit of a full consideration of the facts and findings based on a thorough appreciation of the evidence. 302 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 303 See Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 155, 167-172. 304 [1995] 2 AC 633 at 694. 305 (2004) 78 ALJR 628 at 654 [138]; 205 ALR 522 at 558. 306 As in Giannarelli (1988) 165 CLR 543 at 597-598. Kirby Where parties seek peremptory relief, as VLA and the barrister did in these proceedings, they cannot complain if an appellate court tests the provision of such relief against the plaintiff's case, viewed at its highest. Doing so is only fair. If a party is to be denied a trial on the merits, which is ordinarily any person's right, this should only happen where the facts and law combine to make the case a clear one, demanding that result and none other. The applicant's case at its highest: As it happens, in the present case a public record of earlier proceedings involving the applicant is available. Without objection, parts of the record of the earlier criminal proceedings were received by this Court. In the way the proceedings unfolded, involving the applicant in two trials for rape, it became necessary, in the second trial, for the applicant to establish the basis upon which it would be unjust to permit the prosecution to prove that he had pleaded guilty to rape at his committal. Obviously, proof of that fact before the jury in the second trial would harm the applicant's defence. That is why he sought to exclude the evidence of his original plea. The issue was decided in the second trial in the County Court of Victoria on a voir dire conducted by Judge Duckett. In the course of his ruling, explaining the reasons why evidence of the plea should be excluded, the judge recounted evidence that had been adduced before him, which he accepted307. The applicant gave evidence before Judge Duckett. He deposed to the circumstances of the plea. He said that, on six occasions, he had given a private solicitor, whom he initially retained, consistent instructions that he proposed to plead not guilty. The judge accepted that he had given the same instructions to the VLA solicitor when she took over responsibility for his defence. Her instructions to counsel at the time stated that "the accused is adamant"308 that he is not guilty. However, the barrister expressed "a firm view" that the applicant had "no defence to this charge"309. The applicant was not comfortable with that advice. At first, it appeared that the applicant's defence would be reserved to the trial, as was his right. However, on the day of the committal hearing, in an interview room at the Melbourne Magistrates' Court, a conference took place between the barrister, the VLA solicitor and the applicant. Judge Duckett explained310: 307 Ruling of Judge Duckett, County Court of Victoria, 22 June 1998 ("Ruling") at 56. 308 Ruling at 56. 309 Ruling at 56. 310 Ruling at 57. Kirby "I was told that counsel said strongly that there was no defence to the charge and the accused said a number of times that he was not guilty. His Legal Aid solicitor said in evidence that she pressured him to plead guilty because, as she saw it, he would then get the reward of a shorter term of imprisonment or a benefit in terms of sentence as a result of such an early plea. She said that she was instrumental in the accused's failure to reserve his plea at committal. I also note that, whilst this conference was being held at the court, the prosecuting authorities interrupted twice … to try to get an early decision from the defence. It does appear that this was a highly charged situation in which the accused was asked to give his instructions." The judge proceeded to describe the factual conflict concerning the existence or absence of consent on the part of the complainant, and the existence or absence of a belief on the part of the applicant that the complainant was consenting to sexual intercourse with him. The applicant believed that there had been consent to sexual intercourse with him, and that that was a reasonable belief "because of a measure of foreplay that took place between them before penetration"311. Judge Duckett went on312: "For counsel to say in these circumstances that there is no defence to this charge is patently not correct, and I assume that what counsel intended to say was that the defence that was open to the accused was a defence that will be difficult to establish." telephoned his former private solicitor During the discussions with the barrister and the VLA solicitor, the applicant to seek her advice. Understandably, according to the judge, as she was no longer involved in the matter, she was unable to help him. Also understandably, the applicant was affected by what the VLA solicitor and the barrister told him before his plea was "I am satisfied that the plea that was entered was as a result of considerable pressure applied by the accused's previous legal advisers and that it could well have been given in the mistaken belief that the accused 311 Ruling at 57. 312 Ruling at 58. 313 Ruling at 58-59. Kirby had no defence in law to the charge of rape. In those circumstances … I rule that the evidence is not admissible." Following the exclusion of the evidence of the plea of guilty to rape, the applicant was acquitted of the charge at his second trial. He then brought the present proceedings asserting negligence on the part of the solicitor and the barrister in telling him that he had no defence to the charge; in suggesting that he would receive a suspended sentence on a guilty plea entered at the committal; in telling him that he would receive a custodial penalty if he pleaded not guilty and was found guilty; and in failing to explain, adequately or at all, the risks involved in entering a guilty plea at committal, in the event that he later sought to change that plea and to restore the plea of not guilty that he had earlier asserted. Again, in fairness to the barrister and the solicitor, it is important to point out that the abbreviated proceedings on the voir dire would not necessarily reflect what would emerge in a full trial of a negligence claim. However, two of the three parties (the applicant and the solicitor, but not the barrister) gave evidence before Judge Duckett. The issues sufficiently overlap to make the observations of the judge on the voir dire of relevance, certainly to understanding the applicant's claim against VLA in respect of the solicitor's alleged conduct. Attaching evidentiary flesh to the bare bones of the pleadings (foreclosed, so far, by the summary relief granted below) presents starkly the issue that now falls for decision. That issue is stated by Deane J, in general terms, in his dissenting reasons in Giannarelli314. Is a legal practitioner immune from all redress for negligence "however gross and callous in its nature or devastating in its consequences"315 simply because the practitioner is a professional person admitted as a barrister or solicitor who has performed functions in, or closely connected with, court proceedings? Is that person, as such, absolutely immune from suit although negligence can clearly be proved, wrong or inadequate professional advice established, and although it is shown (as was alleged in this case) that considerable pressure was applied to have the client accept that negligent advice? Presented in this way, the issues in the present application transcend any negligent acts and omissions of the barrister and the solicitor in this case, assuming that they could be proved. What is involved is a wholly exceptional exemption from the ordinary liability that other professional and non- professional persons face before the courts of Australia for conduct arguably much less blameworthy, in circumstances of equivalent care and attention, 314 (1988) 165 CLR 543 at 587-588. 315 Giannarelli (1988) 165 CLR 543 at 588. Kirby involving errors seemingly less culpable and perilous, if the complaints are believed316. The issues Upon my analysis, the following issues arise for decision: Identifying the rule in Giannarelli: Does any binding rule of law, established by this Court's decision in Giannarelli317, govern the outcome of the present application? Reconsideration of Giannarelli: If so, or in any event, should the rule in Giannarelli be reconsidered and re-expressed in the light of the arguments presented in the present application? The scope of lawyers' immunity: If there is no binding rule of law to govern the outcome of the present application, or if any previous rule should now be re-expressed, is it reasonably arguable that the barrister or VLA (for the solicitor) is liable in negligence so that the applicant's action should be restored to the list and proceed to trial? Is there an immunity for lawyers at all, and if so, what is the scope and nature of that immunity? (4) Deference to Parliament: To the extent that there is no binding rule applicable to the present application, or that any such rule should be reconsidered and re-expressed, should this Court leave any such reconsideration and re-expression to Parliament? Or should it proceed, as the House of Lords has recently done, to declare that the lawyers' in particular longer applies either generally or immunity no circumstances? (5) Outcome of the application: In the light of the answers to the foregoing issues what orders should be made in respect of the application and the continuance of the applicant's proceedings against his former lawyers? Identifying the rule in Giannarelli It is critical first to identify the precise binding rule for which the decision in Giannarelli stands. It is especially important to ascertain that rule in this case because Giannarelli concerned the liability of barristers in the State of Victoria. 316 eg the default found against Dr Rogers in Rogers v Whitaker (1992) 175 CLR 479 and against Dr Chappel in Chappel v Hart (1998) 195 CLR 232. 317 (1988) 165 CLR 543. Kirby Although the Court was divided in Giannarelli, the decision is relatively recent. If the ratio decidendi of that decision is applicable to the present case, it is the duty of courts to give effect to it whilst it stands. So far as stare decisis is concerned, constitutional cases in this Court stand in a different position318. But in other matters of law, where the Court has ruled, unless an existing rule is altered, it is the duty of judges to apply it. The reluctance to change an existing rule is sometimes treated as enlarged where (as the barrister submitted was the position in this case) the principle stated in past authority concerns a disputed question of statutory construction in respect of which the applicable legislation was relevantly the same but has been amended since the events giving rise to the proceedings319. When a court is asked to reconsider a past decision320, with a view to altering the legal rule which that decision establishes, this does not mean rewriting all of the reasons of the judges who participated. The nature of discursive reasoning in common law jurisdictions would make such a task inappropriate and needlessly burdensome. The binding rule of a decision is ascertained with a strictness of approach in some ways similar to that adopted in deriving the res judicata or an issue finally determined in a trial that cannot be reopened between the parties. What is involved is a process at once precise and careful. In the last mentioned cases, it requires identification of the "matter which it was necessary to decide and which was actually decided"321. Were it otherwise, a mass of obiter dicta, deployed rhetorically and argumentatively by judges in the course of explaining how a legal rule is arrived at, would take on the force of binding law. Such an approach would expand enormously the ambit of decisional authority. Fortunately, that is not the way the common law doctrine of precedent operates. 318 Queensland v The Commonwealth (1977) 139 CLR 585 at 593-594; Stevens v Head (1993) 176 CLR 433 at 461-462; Shaw (2003) 78 ALJR 203 at 217 [76]; 203 ALR 143 at 161-162; Coleman v Power (2004) 78 ALJR 1166 at 1219 [289]; 209 ALR 182 at 255. 319 The facts of the present case are governed by the 1958 Act, s 10(2), considered in Giannarelli (1988) 165 CLR 543. Since the events giving rise to the applicant's action, that sub-section has been repealed and replaced by the Legal Practice Act 1996 (Vic), s 442. See joint reasons at [48]. 320 See joint reasons at [1]. 321 Blair v Curran (1939) 62 CLR 464 at 532 per Dixon J. Kirby In Garcia v National Australia Bank Ltd322, I explained the process that is involved. It is rudimentary323. However, it needs to be restated in this case: "It is fundamental to the ascertainment of the binding rule of a judicial decision that it should be derived from (1) the reasons of the judges agreeing in the order disposing of the proceedings; (2) upon a matter in issue in the proceedings; (3) upon which a decision is necessary to arrive at that order". It follows that the opinions of judges who dissent from a court's orders are disregarded for this purpose, however valuable their reasons may otherwise be. Judicial remarks on subsidiary issues, not strictly necessary to the decision, are likewise discarded, however persuasive they appear. The governing rule is "at once majoritarian and precise"324. That rule and none other applies to the ascertainment of the ratio decidendi of Giannarelli. In considering the barrister's submission that this Court should adhere to the rule established by Giannarelli, it is thus elementary that the content of that rule should be found with legal accuracy. In new circumstances, in a case with new and different facts, this Court may choose to expand a previously stated rule. In doing so, it may choose to use, for that purpose, obiter dicta appearing in the reasons of the judges in the majority (or those in the minority) in Giannarelli. But only the ratio, ascertained by the foregoing process, binds others affected until it is changed by Parliament or this Court. Judicial remarks falling outside the foregoing requirements might be persuasive. Obviously, they are entitled to attention and respect, especially if they appear in the reasons of judges who supported the order in the previous case and if they are consistent with such reasoning. But, as a matter of law, they are not binding. As McHugh J said recently in Coleman v Power325, cases are "only authorities for what they decide". A case can have "no wider ratio decidendi than what was in issue in the case"326. 322 (1998) 194 CLR 395 at 417 [56]. 323 Dickenson's Arcade Pty Ltd v Tasmania (1974) 130 CLR 177 at 188; Federation Insurance Ltd v Wasson (1987) 163 CLR 303 at 313-314; Great Western Railway Co v Owners of SS Mostyn [1928] AC 57 at 73-74. See MacAdam and Pyke, Judicial Reasoning and the Doctrine of Precedent in Australia, (1998), Ch 10. 324 Garcia (1998) 194 CLR 395 at 417 [56]; see Johnson v The Queen (2004) 78 ALJR 616 at 626 [40]; 205 ALR 346 at 359. 325 (2004) 78 ALJR 1166 at 1182 [79]; 209 ALR 182 at 203. 326 Coleman (2004) 78 ALJR 1166 at 1182 [79]; 209 ALR 182 at 203. Kirby The rule in Giannarelli: the ratio on the statute The statutory argument: In Giannarelli, the plaintiffs in the negligence action (the Giannarellis) initially invoked s 10(2) of the 1958 Act. That sub- section was adapted from the original enactment in the Legal Profession Practice Act 1891 (Vic) ("the 1891 Act"). The Giannarellis submitted that the sub-section imposed liability for negligence "upon legal practitioners in relation to their professional activities as barristers" and overcame "the assumed immunity of barristers from any such liability that existed as at the date of its original enactment"327. It was later to be remarked that one "might be forgiven for imagining that the purpose of the provision was to do away with the barrister's immunity from suit in negligence"328. However, the Giannarellis' arguments divided this Court. Three judges upheld the submission. Toohey J did so by reference to the language of the section and its statutory history329. He also drew upon the purpose of the section in the context of the effort of the Parliament of Victoria in 1891 to abolish the division of the legal profession into barristers and solicitors and to assimilate the functions (and the liabilities) of each330. Toohey J's analysis is compelling. It represents an instance of the purposive construction of legislation that, since Giannarelli was decided, has gained increasing ascendancy in this Court331. Deane J332 and Gaudron J333 agreed with it. However, these were the three judges who dissented from the Court's orders in Giannarelli. In conformity with the rule for the ascertainment of the ratio of that decision, their reasoning must be disregarded. 327 Giannarelli (1988) 165 CLR 543 at 544-545. 328 Law Reform Commission of Victoria, Access to the law: accountability of the legal profession, Report No 48, (1992) at 44 [3]. 329 Giannarelli (1988) 165 CLR 543 at 597-603. 330 Giannarelli (1988) 165 CLR 543 at 599-601. 331 Bropho v Western Australia (1990) 171 CLR 1 at 20, approving Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 421-424 per McHugh JA. See also CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 112-113. 332 Giannarelli (1988) 165 CLR 543 at 587. 333 Giannarelli (1988) 165 CLR 543 at 610. Kirby Reasoning of the majority: The judges in the majority in Giannarelli, whose concurrence in this Court's orders was decisive, were Mason CJ, Wilson, Brennan and Dawson JJ. But there were significant differences in the ways each of them reasoned. As appears from the structure of his reasons, Mason CJ approached the case, basically, as one concerned with the common law immunity of the defendant barristers in the action brought by the plaintiffs334. A solicitor, Mr Shulkes, had originally been a defendant in the Giannarellis' claim. Subsequently, the claim against the solicitor was withdrawn335. In point of legal principle, therefore, the case was concerned, and only concerned, with the liability of barristers. It does not stand for any binding legal rule relating to the liability of solicitors. Anything said in Giannarelli with respect to the liability of solicitors was unnecessary to the decision formalised in this Court's orders. It represents obiter dicta that do not bind as a matter of precedential law. Although the plaintiffs had put their claim based on the statute at the forefront of their argument, Mason CJ's treatment of the statutory issue appears in less than a page, at the end of his Honour's reasoning336. There, Mason CJ expresses agreement with the interpretation of the statutory provisions contained in the reasons of Wilson J337. The presentation of the Chief Justice's reasons suggests that this was a subsidiary, or supplementary, foundation for the opinion that he had reached on the basis of the applicable rule of the common law. In his reasons, Wilson J, like Toohey J, placed the statutory argument at the forefront of his analysis338. He concluded that the statutory provision was a "fixed-time" provision339. Accordingly, to "determine whether it exposes a barrister to liability for in-court negligence it is necessary to ask whether, on 23 November 1891, a solicitor was liable to his client for in-court negligence in respect of his handling of a case as an advocate"340. 334 Giannarelli (1988) 165 CLR 543 at 554. 335 Giannarelli (1988) 165 CLR 543 at 544. 336 Giannarelli (1988) 165 CLR 543 at 560-561. 337 Giannarelli (1988) 165 CLR 543 at 561. 338 Giannarelli (1988) 165 CLR 543 at 563-571. 339 Giannarelli (1988) 165 CLR 543 at 567. 340 Giannarelli (1988) 165 CLR 543 at 567-568 per Wilson J. Kirby Like Wilson J, Dawson J (also part of the majority) gave primacy to the statutory argument. Although Dawson J recognised that, at the time of its enactment, the 1891 Act was endeavouring to ensure that both solicitors and barristers "should in the future be treated equally"341, he ultimately concluded (as Wilson J had done) that "whether barristers are immune in Victoria from liability for negligence in the conduct of their clients' cases in court" depends, under the Act, "upon the liability of solicitors in 1891"342. The result is that three judges in Giannarelli (Mason CJ, Wilson and Dawson JJ) rejected the interpretation of the 1958 Act preferred by the three judges in the minority (Toohey, Deane and Gaudron JJ). They rejected the approach of Toohey J that the statute simply identified the relevant duty of care owed by a barrister to his or her client in a way designed to equalise the liability of barristers with solicitors. This equal division of the Court in Giannarelli left the deciding vote to Brennan J. The decisive opinion of Brennan J: Brennan J took a different approach again to the meaning of the 1958 Act. By reference to his analysis of the history and language of the 1891 Act, his Honour concluded that s 5 of that Act (which had introduced the right of barristers to sue for their fees and equalised the liability in negligence of barristers and solicitors) was in the nature of a transitional provision343. He concluded in this way by reference to the express imposition of liability on the barristers and solicitors mentioned in the 1891 Act, but only with respect to those "heretofore … admitted"344. To the submission that this view was difficult to reconcile with the later repeated re-enactment of the provision of the 1891 Act – eventually in the 1958 Act – Brennan J said that it was "perhaps … a tribute to the longevity of Victorian practitioners and the caution of the draftsman"345. His Honour's conclusion could not have been clearer346: "In my opinion, s 10(2) is not expressed to have any application to practitioners admitted as barristers and solicitors after 23 November 1891 and has never applied to such practitioners." 341 Giannarelli (1988) 165 CLR 543 at 590. 342 Giannarelli (1988) 165 CLR 543 at 590. 343 Giannarelli (1988) 165 CLR 543 at 582-583. 344 Giannarelli (1988) 165 CLR 543 at 582. 345 Giannarelli (1988) 165 CLR 543 at 582. 346 Giannarelli (1988) 165 CLR 543 at 583. Kirby It is true that Brennan J then considered what would follow if, contrary to his real opinion, s 10(2) of the 1958 Act were taken as applying generally to a barrister and solicitor of modern times. He observed that this had been an agreed construction before the Full Court of the Supreme Court of Victoria. He pointed to the great difficulty of ascertaining, with today's eyes, the liability of solicitors in 1891 and then applying that liability to today's legal practitioners347. He finally repeated his rejection of the Giannarellis' case, so far as it was based on s 10(2) of the 1958 Act. For Brennan J, that sub-section was "a vestigial provision applying only to barristers admitted prior to 23 November 1891 and probably only with respect to their practices as solicitors pursuant to s 3 of the 1891 Act or its later equivalents"348. Conclusion: no clear ratio: The reasoning of Brennan J in Giannarelli involves a view of the 1958 Act adopted by none of the other judges in the majority in that case. It deprives any resulting ratio of the case, concerning s 10(2) of the 1958 Act, of force as a binding principle of law governing later judges. There were three theories as to the meaning and purpose of the statutory amendment in 1891, carried forward to the 1958 Act. None of them secured the endorsement of a majority of this Court. It follows that the purpose and effect of s 10(2) of the 1958 Act are open to fresh determination in this case. Unhesitatingly, I would adopt the interpretation accepted by Toohey, Deane and Gaudron JJ in Giannarelli. I would do so for the reasons given by Toohey J. In his reasons, McHugh J acknowledges the foregoing divergencies in the opinions of the judges who joined in the Court's orders in Giannarelli349. His Honour accepts that there is no ratio decidendi in Giannarelli350, but holds that Giannarelli has precedential value in cases where the facts are not reasonably distinguishable351. I contest that the facts of this case are indistinguishable for precedential purposes. This case includes a solicitor (in Giannarelli, the solicitor dropped out). It concerns out-of-court advice by the barrister, whereas Giannarelli concerned a failure by the barristers to raise an objection in court. 347 Giannarelli (1988) 165 CLR 543 at 584-585. 348 Giannarelli (1988) 165 CLR 543 at 587. 349 Reasons of McHugh J at [128]-[132]. 350 cf Shaw (2003) 78 ALJR 203 at 212 [49]-[50] per McHugh J; 203 ALR 143 at 154- 351 Reasons of McHugh J at [133]. Kirby The rule in Giannarelli: solicitors' liability in 1891 Giannarelli: what was decided: Assuming, however, that the foregoing analysis is incorrect and that the closing, reluctant words of Brennan J's reasons in Giannarelli352 amount to an ultimate endorsement of the construction of the 1891 Act favoured by Wilson J, obviously it is open to comment that the emerging legal principle is an extremely unstable one. It rests, in effect, not on what the fourth member of the majority in Giannarelli believed was the true construction of the 1958 Act but on a construction that was agreed by the parties before the Full Court353, which that judge had earlier rejected by his analysis. It follows that if, contrary to my opinion, this hypothetical and contingent endorsement of the "fixed-time" theory of s 10(2) of the 1958 Act should be accepted as providing a binding rule, decided by the majority in Giannarelli, its unsatisfactory foundation makes it necessary to define precisely what the Court decided and to examine whether that decision carries sufficient conviction and authority to apply to the different factual circumstances of the applicant's case. When that task is undertaken, additional weaknesses in the reasoning of the majority in Giannarelli become immediately apparent. Separated points of law: In the reasons in Giannarelli, only Toohey J clearly identifies the legal points that were before this Court for decision in that case. He alone sets out354 the three questions of law that arose for determination in the Full Court, and were separated for decision355. The appeal to this Court in Giannarelli (and the constitutional "matter" that had to be decided) was confined to a consideration of whether the Supreme Court had erred in the determination of those separated questions. By setting them out explicitly, Toohey J directed attention, correctly, to the limited points that were presented for decision. In ascertaining the legal questions decided in Giannarelli, for the purpose of defining the binding rule for which that decision stands, the proper starting point is the statement of the separated questions of law tendered for answer. As appears from the reasons of Toohey J, those questions of law concerned the liability of the several barristers in respect of their successive conduct of the Giannarellis' defence at the committal proceeding, in their trial and in the Court of Criminal Appeal356. No reference whatever is made in the 352 Giannarelli (1988) 165 CLR 543 at 587. 353 Giannarelli (1988) 165 CLR 543 at 583 per Brennan J. 354 Giannarelli (1988) 165 CLR 543 at 597-598. 355 See Wraith v Giannarelli [1988] VR 713 at 716-717. 356 Giannarelli (1988) 165 CLR 543 at 597-598. Kirby separated questions to the liability in law of the solicitor, Mr Shulkes. By the time the questions were separated in the Full Court, he had dropped out of the proceedings357. This analysis confirms that there can be no rule of law in Giannarelli, governing the liability of a solicitor (whether under the 1958 Act or otherwise), that is binding on this Court or any other Australian court as a matter of ratio decidendi. The point did not fall for decision. As a matter of legal authority, it remains open. On the other hand, the liability of the barristers who appeared for the Giannarellis when the legal point later revealed in this Court358 was not noticed or taken, was certainly presented for decision in Giannarelli. Yet it was presented solely in terms of the three reserved questions of law. Those questions were expressed in identical language. Only the references to the successive barristers and hearings were changed. It is enough, therefore, to restate one of the questions, taken from the reasons of Toohey J359: "(a) As a matter of law is the first Appellant immune from all liability to the first, second and third respondents on the facts alleged against him in the Statement of Claim on the grounds that as a matter of public policy he is immune from all and any liability for negligence or breach of retainer arising out of any act or omission on his part during his conduct of the said Respondents' defence at the committal hearing?" On the face of things, the separated questions of law, so expressed, confined the issue for decision in Giannarelli to the barristers' conduct "during" specified "hearings". They did not extend to conduct outside such "hearings". They did not do so whether that conduct was intimately connected, remotely connected or unconnected with the "hearing". Simply put, issues of barristerial liability out of court were not before this Court in Giannarelli upon the questions that defined the issues for decision. The causative defaults alleged: Given the nature of the facts alleged against the barristers in the statement of claim, this explanation of the issues addressed in Giannarelli is unsurprising. Those facts asserted that the barristers had successively failed to advise the Giannarellis "that they had a good defence to the proceedings" and had failed "to object to certain inadmissible evidence tendered by the Crown"360. Examined closely, only the failure to object to the 357 Giannarelli (1988) 165 CLR 543 at 554 per Mason CJ. 358 In Giannarelli v The Queen (1983) 154 CLR 212. 359 Giannarelli (1988) 165 CLR 543 at 597 (emphasis added). 360 (1988) 165 CLR 543 at 553 per Mason CJ. Kirby admission of the evidence given by the Giannarellis before the Royal Commission was causative of their subsequent conviction of perjury, the imposition of criminal punishment and the incurring of costs in bringing the matter to this Court where the barristers' omission was eventually repaired361. The provision of "advice" to the Giannarellis by their barristers earlier might theoretically have led to successful no bill applications. But the real damage suffered by them, of which they complained in their negligence actions, was a result of the failure of their lawyers to detect and raise in the hearing the legal defence available under the Royal Commissions Act 1902 (Cth)362. That defence bites when evidence given before a Royal Commission is tendered against the witness in later civil or criminal proceedings. By that Act, such evidence is inadmissible. Reading the separated questions of law in this light, it is clear that the legal issues for decision in Giannarelli were limited by an adverbial phrase of place, namely conduct by the barrister in question "during" the "hearing". The questions did not extend more broadly. They did not need to, having regard to the issue that was presented for decision by the evidence and the reserved questions. It follows that anything said by this Court in Giannarelli, concerning the liability of a solicitor or the liability of barristers otherwise than during the hearing, represented obiter dicta. Such observations are not binding in the present case. They are entitled to careful attention. But they do not represent a binding rule of the common law of Australia. The reasons of the judges in the majority in Giannarelli travelled far beyond the issue so defined. However, those reasons correctly and repeatedly returned to the liability/immunity of barristers for work "in court"363. Thus, at the opening of his reasons, Dawson J defined the issue for decision by the Court to be whether a barrister "is immune from liability for negligence in the conduct of his client's case in court"364. That was a correct statement of the issue raised by the separated questions of law and by the evidence in the case. 361 (1988) 165 CLR 543 at 553 per Mason CJ. 362 s 6DD. 363 See eg Giannarelli (1988) 165 CLR 543 at 558-559 per Mason CJ, 572-573 per Wilson J, 579 per Brennan J. 364 Giannarelli (1988) 165 CLR 543 at 588 (emphasis added). Kirby I have expressed the foregoing opinions before365. I have not changed my mind. In the present case, the applicant's pleader was careful to limit his claim for negligence to conduct outside the courtroom. This delineation was unconvincing to Mason CJ in Giannarelli366. Whilst his Honour's opinion in this respect is entitled to consideration, it is not binding. As a matter of law, Giannarelli is confined to holding that a Victorian barrister is immune from liability for negligence in the conduct of his or her client's case in court during a hearing. Conclusion: no legal obstacle: Negligence in such conduct is not what the present applicant alleges, or has ever alleged, against the barrister, still less against the solicitor employed by VLA. It follows that there is no legal obstacle to this Court's deciding the extent of the out-of-court liability of those lawyers. Obviously, the decision on that liability will take into account the holding in Giannarelli. However, there are strong reasons of principle and policy why, at the least, that holding should not be extended beyond the courtroom door367. Legal professional liability by statute in 1891 and today How the question arises: It is obvious that, if the 1958 Act makes relevant provision for the liability in negligence of legal practitioners in Victoria, its terms must (to that extent) be obeyed, whatever may be the common law of Australia on the subject. The starting point in resolving the present application is therefore the statute. No issue was raised as to its constitutional validity. I have explained that, in Giannarelli368, three theories were expressed as to the purpose and effect of the 1891 Act and its progeny. They could be described as the "equalising" theory369, the "fixed-time" theory370 and the "transitional provision" theory371. For the moment I will accept that ultimately Brennan J 365 Boland (1999) 74 ALJR 209 at 240-241 [146]; 167 ALR 575 at 617. 366 Giannarelli (1988) 165 CLR 543 at 559-560. 367 Boland (1999) 74 ALJR 209 at 241-242 [150]; 167 ALR 575 at 618. See also Lai [2003] 2 NZLR 374 at 387 [62]. 368 (1988) 165 CLR 543. 369 Held by Toohey J (with whom Deane and Gaudron JJ agreed). See above at [248]. 370 Held by Wilson J (with whom Mason CJ agreed) and with Dawson J to like effect. See above at [252]. 371 Held by Brennan J. See above at [255]. Kirby adopted the "fixed-time" theory on the basis of the parties' agreement372. As Toohey J for the dissentients also explored the consequences of the "fixed-time" approach373, this Court should examine the liability of a solicitor in Victoria on 23 November 1891 for conduct of the kind alleged against VLA and the barrister in this case, in order to ascertain the extent of that liability (or immunity) upon the postulate that the "fixed-time" theory represents the binding ratio of Merely to state such a method of determining the contemporary liability of legal practitioners in Victoria more than a hundred years later casts a spell of unreality over the entire exercise. This suggests that it is unlikely that it is what the Parliament of Victoria intended when it enacted, consolidated and re-enacted the 1891 provisions. However, against the chance that Giannarelli establishes a rule that obliges this approach, I will indicate where it leads for out-of-court advice of the kind that the applicant pleads in this case both against the barrister and the solicitor. By reference to the liability of a solicitor in Victoria in 1891, is it reasonably arguable that, under the 1958 Act, contemporary Victorian lawyers are liable in negligence for the acts and defaults of which the applicant complains? Or may they successfully plead immunity from suit carried into the modern age by reference to a solicitor's liability in negligence in 1891? 1891 liability: legal texts: The law of negligence in Victoria in 1891 was significantly different from that in 1996, when the relevant acts and omissions pleaded by the applicant are alleged to have occurred. In 1891 the House of Lords had decided neither Donoghue v Stevenson374 nor Hedley Byrne & Co Ltd v Heller & Partners Ltd375. As Brennan J observed in Giannarelli, it is difficult enough for judges to find and express the present law of negligence. It is next to impossible for them to state precisely and with accuracy how an earlier generation would have viewed the law, perceiving its commands through the eyes of those living a century ago376. "The judges of today are aliens to the society of a hundred years ago and, unless the relevant earlier period has produced an applicable precedent of binding authority, a judge could hardly be translated back to the earlier time and, ignoring the experience of the intervening years, declare 372 See Giannarelli (1988) 165 CLR 543 at 587. 373 Giannarelli (1988) 165 CLR 543 at 599-609. 376 Giannarelli (1988) 165 CLR 543 at 585 per Brennan J. Kirby common law principles different from what the judge now considers the common law to be." Yet this is the theory of the "fixed-time provision" that the 1891 Act was said to impose. To assume that, by that Act, a solicitor's liability in 1891 is in some respects frozen in time by statute (as distinct from merely equalised with that of a barrister) is the course that we were invited to accept. I do so with great reluctance. Nevertheless, I will take this step in case it is what the ratio of Giannarelli obliges so far as the application of the statutory provisions is concerned. What, then, was the negligence liability/immunity of a Victorian solicitor in 1891? In his text, Principles of the Law of Negligence377, Thomas Beven, writing in 1889, said that in the "preliminary investigations required before instituting proceedings the solicitor's duty is specially to consider [inter alia] [w]hether there is any, and what, right of action". He went on to say that "[p]alpable negligence in any of these particulars, whether arising from want of acquaintance with law or from defective apprehension of the facts would constitute a cause of action against the solicitor". This was because it was "deemed essential that the client should have the benefit of his solicitor's advice and judgment in the conduct of the suit in the management of which the solicitor is also required to be reasonably competent". In a text more particularly addressed to solicitors' liability, Arthur Poley in 1897378 wrote that it was "the solicitor's duty to ascertain the facts for the purpose of advising his client as to his rights before he launches the litigation". By inference, the same would apply to advising a client as to a defence in criminal proceedings. The separate liability of a solicitor in connection with litigation was explained by Archer White. He stated that, when a solicitor "act[s] as advocate for his client, he is liable for breach of contract" and that "[a] solicitor before advising an action should satisfy himself that there is a proper cause"379. White also said that, in litigation, a solicitor "must in all cases warn his client of possible consequences" of adopting a particular course380. 378 Poley, A Treatise Upon the Law Affecting Solicitors of the Supreme Court, (1897) 379 White, A Treatise on the Constitution and Government of Solicitors: Their Rights and Duties, (1894) at 175. 380 White, A Treatise on the Constitution and Government of Solicitors: Their Rights and Duties, (1894) at 177. Kirby Whatever immunity was enjoyed by barristers in Victoria in the last decade of the nineteenth century, alike with England, and whether barristerial immunity rested on the notion that the function of a barrister involved an office381, or was not the proper subject of contractual liability382, or was protected by public policy383, the situation of solicitors was clearly different. As White explained384: "[w]herever the relation of solicitor and client exists, whether the solicitor is paid for his services or not, he is liable for negligence to his client". And "negligence includes any act or omission which he may reasonably be expected to have been able to avoid"385. The standard of care owed by a solicitor in 1891 was expressed at that time in terms of liability for "crassa negligentia" or "gross negligence"386. However, such expressions meant "nothing more than the absence of the skill, diligence, and care which would be ordinarily expected in the case of a solicitor"387. It is plain that, in 1891, the texts on negligence and solicitors' liability were of the opinion that a solicitor could be expected to inform himself of all relevant facts and law so as to be in a position to offer advice as to the suitable course of litigation and the consequences of the choices open to the client. Because solicitors had contracts of retainer with their clients they could sue for fees. However, they could also be sued for negligent failure to conform to the foregoing standards. 381 See eg Swinfen v Lord Chelmsford (1860) 5 H & N 890 at 921 [157 ER 1436 at 382 Thornhill v Evans (1742) 2 Atk 330 at 332 [26 ER 601 at 602]; Turner v Philipps (1792) Peake 166 [170 ER 116]. Physicians were treated as being in the same class: Veitch v Russell (1842) 3 QB 928 [114 ER 764]; Rondel [1969] 1 AC 191 at 383 Ex parte Lloyd (5 November 1822), reported as a note in Ex parte Elsee (1830) Mont 69 at 72, cited in Giannarelli (1988) 165 CLR 543 at 578-579 per Brennan J. 384 White, A Treatise on the Constitution and Government of Solicitors: Their Rights and Duties, (1894) at 170 (footnote omitted). 385 White, A Treatise on the Constitution and Government of Solicitors: Their Rights and Duties, (1894) at 170. 386 Saunders, A Treatise Upon the Law Applicable to Negligence, (1871) at 156; Poley, A Treatise Upon the Law Affecting Solicitors of the Supreme Court, (1897) at 188; Beven, Principles of the Law of Negligence, (1889) at 788. 387 Poley, A Treatise Upon the Law Affecting Solicitors of the Supreme Court, (1897) Kirby It follows that, if the 1891 Act (and its successors, including the 1958 Act) assimilated the liability of a Victorian barrister with the liability of a solicitor in 1891, there is little doubt that a solicitor at that time was liable in law for negligent acts and omissions in the provision of advice to a client out of court, such as the applicant alleges here. 1891 liability: case law: The foregoing statements in legal texts are sustained by reference to the case law of the late nineteenth century. It was not disputed in these proceedings (any more than it had been in Giannarelli) that the law in Victoria in 1891 was the same as that expressed in England at that time. In Hill v Finney388 (a decision not referred to in Giannarelli) the Queen's Bench in England observed that an attorney could be liable for negligently advising a client not to defend an action. In that case, the plaintiff had retained the attorney to represent him in an action commenced by the plaintiff's wife for judicial separation on the ground of cruelty. Counsel was not retained. The plaintiff (like the present applicant) considered that he had a good defence to his wife's action. However, he accepted his attorney's advice not to defend the action nor to adduce evidence in opposition. The plaintiff understood the attorney's advice to be that, if he consented to his wife's action, the separation would be pronounced without the wife's giving evidence of his alleged cruelty. That proved not to be the case. The trial judge insisted upon the provision of evidence of cruelty. The plaintiff was unprepared to answer such evidence. In consequence of the resulting order, based on the proved cruelty, the plaintiff was dismissed from the Army. He suffered loss. He brought proceedings to recover damages from the attorney for the consequences of the allegedly negligent out- of-court advice. There was not the slightest suggestion by the Queen's Bench that, in 1865, the attorney was entitled to an immunity from the plaintiff's suit on the basis that the advice he had tendered to his client was "work done out of court which leads to a decision affecting the conduct of the case in court"389 and thus immune from suit. On the contrary, the proceedings were consistent with the earlier statement of the law in England that "[a]ttorneys are responsible to their clients for negligence or unskilfulness; but no action lies against the counsel for his acts, if done bona fide for his client"390. 388 (1865) 4 F & F 616 [176 ER 716]. 389 Giannarelli (1988) 165 CLR 543 at 560 per Mason CJ. 390 Swinfen v Swinfen (1857) 1 CB (NS) 364 at 403 [140 ER 150 at 166]. Kirby Numerous authorities may be found in the casebooks of the nineteenth century in which a solicitor was deprived of costs or held liable for negligent misapprehension of the law in advising a client as to the course that the client should take in court proceedings391. In an early decision of this Court, in Charlick v Foley Brothers Ltd392, Isaacs J made it clear that the duty of a solicitor extended to explaining fully to a client the ramifications of pleading a defence based on the statute of frauds. Isaacs J said that no such defence should be filed "without [the solicitor] fully explaining it, and pointing out its full meaning and effect, and the probable consequences of the defence in case the event turns on a question of credibility"393. A failure to explain such consequences fully would have rendered a solicitor in 1891 liable to the client for any losses that ensued394. It is true that by the nineteenth century solicitors, like barristers, were accorded immunity from suit for any alleged defamation occurring during in- court conduct as an advocate395. However, such an immunity rested on a legal principle different from, and narrower than, the absolute professional immunity claimed in the present proceedings396. Apart from everything else, the immunity was concerned with in-court conduct. It is not relevant to the present case, where all of the alleged conversations took place, and the professional advice was given, out of court. In 1891, forty years before Donoghue v Stevenson397 was decided, negligence was not perceived as an independent, comprehensive tort. It was an element in the duty inherent in particular relationships that gave rise to a cause of action at common law. In the case of a solicitor, the relationship in question arose from the contractual obligation between the solicitor and client398. It was the perceived absence of such a contract between a lay client and a barrister that 391 eg Ibbotson v Shippey (1879) 23 Sol Jo 388. 392 (1916) 21 CLR 249. 393 Charlick (1916) 21 CLR 249 at 251. 394 Lee v Dixon (1863) 3 F & F 744 [176 ER 341]. 395 Munster v Lamb (1883) 11 QBD 588. 396 See Giannarelli (1988) 165 CLR 543 at 607, citing Demarco (1979) 95 DLR (3d) 385 at 407-408 per Krever J. 398 See D'Orta-Ekenaike v Victoria Legal Aid [2004] HCATrans 119 at 4821-4824 per Kirby was one of the oft-propounded reasons for the inability of the client to sue the barrister and hence for the barrister's immunity from suit for negligence. However, the position of a solicitor in 1891 was quite different399. This view of a solicitor's liability as at 1891 is confirmed by the contemporary texts400. By providing as it did in the 1891 Act, that a barrister could recover fees from a "client"401, the Victorian Parliament recognised a relationship then necessary to facilitate a general duty arising in tort between the barrister and client thereafter. In a sense, the 1891 Act anticipated by decades the steps that were later to occur in the common law in Donoghue v Stevenson402 and Hedley Byrne403. Under the common law principles expressed in those cases, absent any immunity, breach of a duty of care on the part of legal practitioners, certainly in respect of out-of-court advice to a client, was available to ground liability in negligence. If the "fixed-time" theory of the 1891 Act is accepted, that step was taken in Victoria much earlier. Because in 1891 a solicitor was liable for negligence on his contract of retainer, so, thereafter, was a barrister. All that remained was the ascertainment of whether the alleged conduct by barristers amounted to out-of-court negligence. If it did, liability arose and the immunity did not apply. The "intimately connected" test: There is no hint in the contemporary texts on the negligence liability of solicitors in the late nineteenth century, nor in the cases of that time, that the immunity earlier accorded to barristers was available to solicitors with respect to out-of-court work. On the contrary, there is very great doubt that, at that time, the general immunity belonging to barristers in respect of in-court activities as an advocate extended to solicitors. The sole immunity that was recognised in a solicitor's case related to immunity from suits for in-court defamation. I could find no decision that goes further. 399 Swinfen v Swinfen (1857) 1 CB (NS) 364 at 403 [140 ER 150 at 166]; see these reasons at [307]. 400 In 1889, it was explained that "an action for negligence against a solicitor" lay not in "contract but in tort; since its essence is not the non-performance of a contractual duty but the performance of a negligent act; and therefore damage has to be shewn. Further, damage must be shewn to have resulted from the negligent act": Beven, Principles of the Law of Negligence, (1889) at 790. 401 1891 Act, s 5. Kirby It follows that the historical analysis of Toohey J in Giannarelli is to be preferred404. Because the present case concerns only out-of-court conduct, not in-court advocacy, it is unnecessary to reopen what I regard as an historical error on the part of the majority in Giannarelli in holding that a solicitor advocate in Victoria in 1891 was entitled, at that time, to all the immunities of a barrister in respect of in-court activities. But when it comes to out-of-court advising, there was in 1891 no general immunity for solicitors405. It should not now be invented by this Court. To do so would be contrary to historical facts proved by the contemporary records. The passage that gave rise to the expansion of the immunity for out-of- court advice appears in the reasons of McCarthy P in Rees v Sinclair406. Not until that decision in 1973 was a separate rule propounded in respect of a barristers' immunity from action extending it to "pre-trial work … so intimately connected with the conduct of the cause in Court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing". It was that passage that was approved in England in Saif Ali407. The task before the New Zealand and English courts, in those decisions, was different from that which, in Giannarelli, the "fixed-time" hypothesis was held to impose on Australian courts in respect of a claim for immunity by legal practitioners in Victoria. There, the inquiry was not what the evolving standards of the common law permitted or obliged. Upon that subject, different views could be stated408. In the case of Victoria, however, upon the "fixed-time" hypothesis, the question was a statutory one. It involved an historical search for the liability of solicitors in 1891. Except by invoking a fiction that defies established historical fact (namely that the common law is always unchanged and unchanging409), it is impossible to pretend that any immunity from liability in negligence extended in November 1891 to solicitors for out-of-court advising 404 Giannarelli (1988) 165 CLR 543 at 604-607. 405 See reasons of McHugh J at [174]. 406 [1974] 1 NZLR 180 at 187. 407 [1980] AC 198 at 215 per Lord Wilberforce, 224 per Lord Diplock, 232 per Lord Salmon. 408 See eg Keefe v Marks (1989) 16 NSWLR 713 at 719 per Gleeson CJ, 729 per Meagher JA; cf 723 per Priestley JA (diss). 409 See Giannarelli (1988) 165 CLR 543 at 585 per Brennan J, citing Atlas Tiles Ltd v Briers (1978) 144 CLR 202 at 208. Kirby whether connected or unconnected to an in-court appearance. That assertion defies the clear state of the common law in 1891. If this Court is to adopt the "fixed-time" hypothesis, it must do so rigorously and accurately. It must ascertain and apply what the law said at the chosen time. It cannot pick and choose amongst the favourable and unfavourable developments happening thereafter, attributing only those that it likes to the law The rule in Giannarelli: resulting ratio and reconsideration The resulting rule in Giannarelli: It follows from the foregoing analysis that any ratio decidendi of Giannarelli is confined to the immunity of barristers during the hearing of proceedings in court. No binding rule is established applicable to barristers for out-of-court advice. No binding rule at all is established for the liability of solicitors. All remarks on those subjects are obiter dicta. Moreover, they are dicta that rest on the flimsiest of foundations in a sharply divided decision, where the deciding opinion of Brennan J differed from all others and supported the Court's orders on a hypothesis which that judge himself had earlier rejected. Assuming that a majority can be constructed in Giannarelli to fix the liability of barristers and solicitors in Victoria in 1996 by reference to the liability of solicitors in Victoria in November 1891, the contemporary cases and texts clearly show that, at that time, a solicitor was not immune from proceedings in negligence in respect of conduct out of court (or indeed in court, a matter not here in issue). The later holdings concerning the ambit of barristers' immunities in England410 and New Zealand411 have no immediate relevance to this case. This is because, on the postulate adopted, the only inquiry is about the liability of solicitors in Victoria in November 1891. From this it follows that there is nothing in the ratio decidendi in Giannarelli that obliges the termination of the applicant's proceedings against VLA and the barrister. In the face of contrary developments in the law elsewhere, this Court should not expand the scope of the immunity for which Giannarelli stands. Confined to its essential reasoning, Giannarelli does not support the decisions of the Victorian courts in this case. To the extent that those courts thought otherwise, they erred. This Court should correct their orders. 410 Saif Ali [1980] AC 198 at 215. 411 Rees [1974] 1 NZLR 180 at 187 (the holdings of which were recently held by the Court of Appeal "no longer [to] justify the retention of the immunity": Lai unreported, Court of Appeal of New Zealand, 8 March 2005 at [125]). Kirby This answer to the first issue in these proceedings obviates any necessity to reopen the ratio decidendi of Giannarelli. If, however, contrary to my analysis, Giannarelli stands for a wider legal rule that would support the immunities severally claimed by VLA for the solicitor and by the barrister, I would certainly favour reconsideration of that rule. I would do so in the light of the arguments presented in this application. I would also favour reconsideration because, respectfully, I consider the analysis in Giannarelli of Deane, Toohey and Gaudron JJ to be correct. Their Honours' reasoning is to be preferred as a matter of statutory construction, purposive interpretation, historical analysis412 and legal principle. Response to historical criticism: In his reasons413, McHugh J criticises my analysis of some of the nineteenth century cases that I have cited in the foregoing part of these reasons. I do not accept his criticism. It is distasteful, in resolving what is ultimately a significant contemporary legal question, to become embroiled in a dispute concerning the liability of solicitors, separately from barristers, in nineteenth century England and Victoria. To say the least, there is an air of unreality in such an endeavour. I have engaged in the task only because of the argument that the applicable Victorian legislation, and a legal rule established by this Court in Giannarelli, oblige a search for the content of solicitors' liability for negligence in 1891. I venture upon a response to McHugh J's criticism, protesting once again that neither premise for undertaking this task is good law. It is true414 that Hill v Finney415 is in some ways an unsatisfactory case. The report of the directions of Cockburn CJ to the jury is spiced with comments of the reporter. However, the case is cited in nineteenth century texts as support for the proposition that "the solicitor may also be sued for any tort which he has committed independently of the contract of retainer against his client"416. In what is ultimately an inquiry about the understanding of the legal profession in 1891 as 412 There are many other cases that confirm the foregoing historical analysis: eg Stokes v Trumper (1855) 2 K & J 232 [69 ER 766]; Ritchie v Macrosty (1854) 16 Dunlop 554; Re Spencer (1870) 39 LJ Ch 841. 413 Reasons of McHugh J at [169]-[175]. 414 Reasons of McHugh J at [170]-[171]. 415 (1865) 4 F & F 616 [176 ER 716]. 416 See eg White, A Treatise on the Constitution and Government of Solicitors: Their Rights and Duties, (1894) at 179. Kirby to the liability of barristers for negligent out-of-court conduct (and given Brennan J's observations in Giannarelli417 as to the difficulty, one hundred years later, of stating with any precision the common law principles of 1891 as they then stood and were interpreted) such citation by the authors of contemporaneous legal texts is far from irrelevant. It is a sounder source of the law in 1891 than our contaminated examinations of the cases are likely to produce. The report in Hill details a number of cases where actions for negligence were brought against attorneys. The reporter's notes appear to contradict, or at least to require modification of, the reporter's statement extracted by McHugh J in his reasons418. The reporter goes on to say that actions for negligence could be brought against attorneys for errors in practice419: "Now, no doubt an attorney is liable for an error of practice, if it is plain and obvious (as this, it was admitted, would have been) and led to an injurious result". More to the point, the summing up of Cockburn CJ notes that the attorney's defence, as argued in the case, was not that there was immunity in law. Instead, it was that the defendant had denied giving the alleged advice in fact and said that the advice that he gave was honestly given and not accompanied by the alleged misrepresentation. The absence of a plea of immunity, or reference to such a legal defence, by so experienced a judge as Cockburn CJ, suggests that the immunity now asserted for the attorney, one hundred and forty years later, was not in the minds of the contemporary lawyers. It is true that, closely analysed and confined to the matters essential for decision, the cases referred to in one of my footnotes420, taken to task by McHugh J421, do not resolve the point in issue here. But they were certainly 417 (1988) 165 CLR 543 at 585; see these reasons at [275]. 418 Reasons of McHugh J at [170]. 419 Hill (1865) 4 F & F 616 at 634 fn (b) [176 ER 716 at 726]; see also earlier in the same footnote at 634 fn (b) [176 ER 716 at 725]: "[I]n an action against an attorney, not for direct breach of a positive contract to do a specific act, but for breach of a general duty arising out of the retainer to bring sufficient care and skill to the performance of the contract, the action is not on contract but in tort, and its essence is negligence, and the damage must be shown to have arisen thereupon." 420 In my reasons above, fn 412. 421 Reasons of McHugh J at [172]-[173]. Kirby understood by contemporary practitioners and text-writers to indicate that an attorney could be held liable for negligence for out-of-court acts and defaults, whereas a barrister (having no contract with the lay client) could not. Thus in Stokes v Trumper422, Sir William Page Wood VC423 cited from Purves v Landell424 to sustain his proposition that "where an attorney has shewn a 'want of reasonable skill', he is liable in an action for negligence"425. In Purves, Lord Campbell had said that "[a]gainst the barrister in England, … luckily, no action can be maintained. But against the attorney, the professional adviser, or the procurator, an action may be maintained." The stated juxtaposition could not be clearer. As to the criticism of my citation of Re Spencer426, it is correct to say that it concerned an attorney's liability for costs and expenses. But it was in that case that Giffard LJ wrote427: "If persons either make or adopt a statement, the contrary of which they ought to have known, by the exercise of reasonable care, to be the truth; and if they obtain from the Court, on the footing of that statement, an order which afterwards is found to be wrong, they are bound to indemnify the persons injured by that order from all consequences occasioned by it." Finding renewed, but momentary, enthusiasm for this historical inquiry, I should mention some additional authorities that support my proposition concerning the liability of attorneys to clients for out-of-court negligence, according to the common law of England in the nineteenth century. Thus, in Godefroy v Jay428, it was held that negligence was proved against the defendant, an attorney, who allowed judgment to go by default in an action in which the plaintiff had retained him for his defence. Although the case certainly contemplated court proceedings, and the negligent conduct that occurred was out 422 (1855) 2 K & J 232 [69 ER 766]. 423 Later Lord Hatherley. 424 (1845) 12 Cl & F 91 at 103 [8 ER 1332 at 1337]. 425 (1855) 2 K & J 232 at 247 [69 ER 766 at 772]. 426 (1870) 39 LJ Ch 841. See reasons of McHugh J at [172]-[173]. 427 (1870) 39 LJ Ch 841 at 843. 428 (1831) 7 Bing 413 [131 ER 159]. See also Filmer v Delber (1811) 3 Taunt 486 [128 ER 192 at 193]; Reece v Righy (1821) 4 B & Ald 202 [106 ER 912]. Kirby of court, no plea of immunity was raised. Indeed, Alderson J considered the matter "a very plain case"429 of liability. In Hart v Frame430, an attorney was employed to take proceedings for employers against apprentices for misconduct. He proceeded on a section of the applicable statute specifically relating to servants and not apprentices. He was held liable to repay the clients the damages and costs occasioned by his error. No legal immunity was suggested or found. In Purves431 came the decision differentiating the "lucky" immunity of the barrister from the less fortunate liability of the attorney. In Swinfen v Swinfen432 the respective liabilities of an attorney and a barrister were contrasted. A compromise was entered into by the barrister on behalf of the client which was later formalised in an order of the court. The client refused to comply with the order, contending that the compromise had been made without her authority. When a motion was brought for contempt of court, the court refused and discharged the original order, holding that it had been made without the client's authority. Crowder J, like those who had gone before, distinguished clearly the respective liabilities of barristers and solicitors, as they then stood433: "Attorneys are responsible to their clients for negligence or unskilfulness; but no action lies against the counsel for his acts, if done bona fide for his client. In this respect, therefore, the counsel stands in a different position from the attorney". In Stanford v Roberts434, Kay J also drew a distinction between the immunity that he was prepared to attribute to counsel and the liability of solicitors for omitting from a deed of settlement a provision which counsel had recommended should be inserted in it. To similar effect was the decision of Stirling J in In re Dangar's Trusts435. In that case it was held that a solicitor was 429 (1831) 7 Bing 413 at 422 [131 ER 159 at 163]. 430 (1839) 6 Cl & F 193 at 210 [7 ER 670 at 676]. 431 (1845) 12 Cl & F 91 at 103 [8 ER 1332 at 1337]. 432 (1857) 1 CB (NS) 364 [140 ER 150]. 433 (1857) 1 CB (NS) 364 at 403 [140 ER 150 at 166]. 434 (1884) 26 Ch D 155 at 160. 435 (1889) 41 Ch D 178. Kirby liable for his negligence in not seeing that all of the facts relating to a matter were brought before the court. Where the solicitor took "an active part"436 in the court proceedings, Stirling J considered that "the current of authority is clear and decisive as to the liability of solicitors in cases of misfeasance … He is liable for the consequences of his neglect in not having informed the Court of the true state of the title of the fund". These and other cases were plainly understood in contemporaneous legal texts to support the conclusion that I have expressed concerning the liability of solicitors for out-of-court negligence in 1891. The fact that several of the cases concerned professional conduct intimately associated with in-court activity merely reinforces my stated conclusion about the application of the Victorian legislation upon the identified assumptions. Scope of any new forensic immunity Assumptions of the analysis: In this area of discourse, it is not unusual for judges to express their views on the more fundamental question of whether, apart from the statutory provisions, the immunity exists today. The judges in the majority in Giannarelli did so437. In Boland438, so did Gaudron J439 and I440. So also did Callinan J to the opposite effect441. The state of the common law concerning any alleged immunity of legal practitioners, in respect of out-of-court advice to their clients, only arises in these proceedings if it is accepted that the 1958 Act does not yield a conclusive answer to the ascertainment of the liability in negligence of VLA and the barrister. In a sense, this would involve viewing the 1891 Act as imposing equality on the rights and liabilities of barristers and solicitors after that time and leaving it to the common law to develop in the normal way in respect of each of them442. That would be the way in which the existence, or absence, of a common law immunity 436 (1889) 41 Ch D 178 at 196. 437 (1988) 165 CLR 543 at 554-560 per Mason CJ, 572-575 per Wilson J, 586-587 per Brennan J, 591-596 per Dawson J. 438 (1999) 74 ALJR 209; 167 ALR 575. 439 Boland (1999) 74 ALJR 209 at 230 [107]; 167 ALR 575 at 602-603. 440 Boland (1999) 74 ALJR 209 at 236-242 [128]-[151]; 167 ALR 575 at 610-619. 441 Boland (1999) 74 ALJR 209 at 280-281 [360]-[363]; 167 ALR 575 at 670-671. 442 Giannarelli (1988) 165 CLR 543 at 602-609 per Toohey J. Kirby for lawyers would be decided in other Australian jurisdictions that have no provision similar to s 10(2) of the 1958 Act. In Victoria, at least until the most recent statutory changes, the position has been affected by the special statutory prescription derived ultimately from the 1891 Act. The immunity cannot be supported: If, contrary to the above reasoning, the scope of a Victorian legal practitioner's immunity from suit is open to consideration as a matter of common law principle (as distinct from historical discovery) there is an overwhelming case against maintaining it. In this conclusion I agree with the unanimous opinion of the House of Lords in Arthur J S Hall. As in England, this Court should declare that the supposed foundations for the immunity, when subjected to contemporary scrutiny, are found wanting. Neither the assertion of a special "office" nor the absence of a contract of retainer now suffices to sustain the immunity443. The supposed arguments of public policy, examined with today's eyes, are also insufficient444. Comparable legal systems within, and outside, the common law world operate perfectly well without the immunity. The English Bar, from which the Australian rule first derived, now does so. Because I agree in the reasoning of Lord Steyn and Lord Hoffmann in Arthur J S Hall445, and because I have earlier foreshadowed my views446, I can now state them briefly. The anomalous exception of immunity: On the face of things, an immunity from liability at law is a derogation from the rule of law and fundamental rights447. The special solicitude of the law for its own practitioners has been noted by judges448. It has been contrasted with the high measure of accountability demanded of other professions449. Such an immunity diminishes 443 Swinfen v Lord Chelmsford (1860) 5 H & N 890 at 920 [157 ER 1436 at 1448]; Batchelor v Pattison and Mackersy (1876) 3 R 914 at 918; In re Le Brasseur and Oakley [1896] 2 Ch 487 at 494 (CA). 444 Arthur J S Hall [2002] 1 AC 615. 445 [2002] 1 AC 615 at 675 per Lord Steyn, 685 per Lord Hoffmann. 446 Boland (1999) 74 ALJR 209 at 236-240 [128]-[142]; 167 ALR 575 at 610-616. 447 Osman v United Kingdom (1998) 29 EHRR 245 at 285 [110]-[111], 316-317 [150]- 448 Saif Ali [1980] AC 198 at 218-220 per Lord Diplock, 228-229 per Lord Salmon. 449 See Masel, Professional Negligence of Lawyers, Accountants, Bankers and Brokers, 2nd ed (1989) at 192; Heerey, "Looking over The Advocate's Shoulder: An Australian View of Rondel v Worsley", (1968) 42 Australian Law Journal 3 at (Footnote continues on next page) Kirby justifiable loss distribution in a generally inelastic market450. Effectively, it reduces equality before the courts. It is a mistake to portray the decision of the House of Lords in Arthur J S Hall as resting on the human rights provisions of local law or on the European Convention for the Protection of Human Rights and Fundamental Freedoms ("the European Convention")451. Although that Convention was mentioned by some of their Lordships452, most made no mention of it at all. Doubtless this was because the Human Rights Act 1998 (UK) was not in force as part of the domestic law of England at the time relevant to any of the proceedings before the House. The principles in the case fell to be examined outside the Convention paradigm453. In any case, the same principles that inform the European Convention are recognised in the International Covenant on Civil and Political Rights ("the ICCPR")454. Australia is a party to the latter. It is also a signatory to the First Optional Protocol to the ICCPR, designed to ensure compliance with the ICCPR's requirements455. Inevitably, those requirements (of equality before, and accountability to, the law) influence the contemporary expression of the common law of Australia456. 7; Brookes, "Time to abolish lawyers' immunity from suit", (1999) 24 Alternative Law Journal 175 at 175. See also Williams, "Immunity in retreat?", (1999) 15 Professional Negligence 75; Yeo, "Dismantling Barristerial Immunity", (1998) 14 Queensland University of Technology Law Journal 12. 450 Law Reform Commission of Victoria, Access to the law: accountability of the legal profession, Report No 48, (1992) at 23 [51]. The Commission records (at 25- 26 [56]) that abolition of the immunity was supported by the Law Institute of Victoria (representing solicitors) but opposed by the Bar Council and members of the judiciary. 451 Done at Rome on 4 November 1950. See Art 6 ("Right to a fair trial"). 452 Arthur J S Hall [2002] 1 AC 615 at 734 per Lord Hutton, 753 per Lord Millett. 453 Arthur J S Hall [2002] 1 AC 615 at 707 per Lord Hoffmann. 454 Done at New York on 19 December 1966, [1980] Australian Treaty Series No 23, Art 14. 455 Done at New York on 19 December 1966, [1991] Australian Treaty Series No 39. 456 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42 per Brennan J. Kirby Restrictions on rights to legal recovery in the nature of immunities have been held contrary to such universal provisions457. True, some immunities have been sustained458. However, the examination of each such claim is scrupulous. So must it be in the contemporary common law. The common law of Australia is no less suspicious of legal immunities than are the laws of other countries and the foregoing international conventions459. The changing state of authority: Successive justifications of the source of the barristers' immunity have collapsed under the force of changes in the law and social perceptions. The justification by reference to the inability of a barrister to sue for fees460 is now completely unpersuasive. Those in other professions who perform work as advisers, including in an honorary capacity, are not exempt from legal liability461. In any event, in many places (including Victoria) statute has reversed the traditional rule about the recovery of fees462. And it never applied to solicitors. The suggestion that the immunity attaches to the barrister as a "gentleman", a holder of an office who owes a duty to the court, his or her profession and the public463, is unpersuasive in contemporary Australia464, if it was ever so. Fundamentally, such views derive from a class-based notion of 457 eg Holy Monasteries v Greece (1994) 20 EHRR 1; Devlin v United Kingdom (2001) 34 EHRR 1029. 458 A v United Kingdom (2002) 36 EHRR 917 (Parliamentary privilege). See Lester and Pannick (eds), Human Rights Law and Practice, 2nd ed (2004) at 214-219 459 Brodie v Singleton Shire Council (2001) 206 CLR 512 at 556-557 [97] per Gaudron, McHugh and Gummow JJ, 602-603 [234]-[235] of my own reasons, referring to Roy v Prior [1971] AC 470 at 480 per Lord Wilberforce. 460 Le Brasseur [1896] 2 Ch 487 at 494; Robertson v Macdonogh (1880) 6 LR Ir 433 at 438; Rondel [1967] 1 QB 443 at 513 per Danckwerts LJ; Rondel [1969] 1 AC 191 at 292-293 per Lord Pearson. 461 Rondel [1969] 1 AC 191 at 226-227, 244-245, 277-280, 288-289; Giannarelli (1988) 165 CLR 543 at 555. 462 1958 Act, s 10(1). 463 Batchelor (1876) 3 R 914 at 918 per Lord Inglis LP. 464 See Arthur J S Hall [2002] 1 AC 615 at 725-726 per Lord Hope of Craighead; Rondel [1969] 1 AC 191 at 241-246. Kirby society that has no place in contemporary Australian law465. As Wilson J noted in Giannarelli466, "[f]avouritism and inequality of treatment under the law are capable of breeding contempt for the law, particularly when it is perceived that those who are favoured are themselves lawyers". That leaves only the supposed public policy arguments to uphold the claimed immunity. That basis was supported in England in Rondel467 in 1967. It was maintained in Saif Ali468 in 1978. However, by 2000469, "public policy" was unanimously held insufficient in England to support the barristers' immunity in respect of civil litigation. By majority, it was also held insufficient in criminal cases. Giannarelli was delivered in an interval between the foregoing decisions. The postulate of barristerial immunity, based squarely on public policy grounds, is relatively recent. It was derived, in effect, from Rondel. The clear exclusion from the immunity of non-contentious chamber work is also relatively recent. In Rondel470, Lord Reid foreshadowed the time that I believe has now arrived. His Lordship pointed to the fact that public policy is not immutable. What may have seemed justifiable on that ground in earlier times is unjustifiable today. Professional and global considerations: The existence of an immunity for barristers first arose when the legal profession was significantly different from its current comportment in Australia. The Bar, like the judiciary, was much smaller. The organisation of contemporary legal practice in Australia has greatly altered. Increasingly, advocacy is performed by lawyers who do not practise exclusively as barristers. Often they practise in national, indeed international, firms. Australian lawyers increasingly deal with lawyers in other lands, virtually none of whom enjoy the immunity that lingers in Australia as an historical vestige. The welfare and liberty of clients depend upon the accuracy and sufficiency of legal advice. Whatever special problems arise, calling for instantaneous judgment inside the courtroom doors, they seem no more demanding than the 465 See In re May (1858) 4 Jur NS 1169, where Sir Richard Kindersley VC observed that he would "never willingly derogate from the high position in which a barrister stands, and by which he is distinguished from an ordinary tradesman". 466 (1988) 165 CLR 543 at 575. 469 Arthur J S Hall [2002] 1 AC 615. 470 [1969] 1 AC 191 at 227. See also Arthur J S Hall [2002] 1 AC 615 at 704 per Lord Hoffmann, 709 per Lord Hope of Craighead. Kirby instantaneous decisions expected of a surgeon or of a pilot of a large passenger aircraft. Neither of the latter may claim an immunity from suit for negligence. The features of the modern provision of legal services (illustrated in this case by the involvement of VLA) suggest a need to rethink the justifiability of an absolute immunity for advocates. Yet, far from being reconsidered, confined or abolished (as has occurred in England following Arthur J S Hall), the demand in this case was effectively to expand the immunity. It was to increase the rule in Giannarelli beyond in-court decisions during a hearing and to extend the immunity to a solicitor employed by a legal aid body, who would certainly not have enjoyed the traditional immunity formerly confined to barristers as a class. Others may not find this direction of Australian law, running against the global tide, anomalous and unjustifiable. I do. Special features and public policy: The arguments in support of the immunity, based on the suggested role of the legal practitioner in private (or equivalent to private) practice in the governmental functions of administering justice, are as unconvincing to me as they were to all of their Lordships in the House of Lords. The supposed analogy to the immunity afforded to judges, jurors and prosecutors breaks down under a moment's examination. None of these persons owes any duty of care to a litigant. Lawyers, such as the barrister and the solicitor in this case, owe such a duty. Furthermore, the barrister's "divided loyalty" to client and court does not support the existence of the immunity, as it is difficult to see how negligence could be found where a barrister has simply complied with a duty to the court471. Similarly, the witness analogy is unconvincing. A witness and a lawyer must have immunity from defamation for what they say in court. However, I am far from convinced that a witness should enjoy an absolute immunity from suit in respect, say, of a report, prepared for a fee out of court on behalf of a party where that report contains negligent mistakes or omissions that cause reasonably foreseeable damage to that party472. It is unnecessary to decide that point here. But any immunity that exists must be defined as an exception to the general principle that a party who is wronged by the negligence of another owing that party a duty of care, should normally have a remedy for any foreseeable damage thereby occasioned. 471 See Arthur J S Hall [2002] 1 AC 615 at 686, 692-693, 738-739; Cane, Tort Law and Economic Interests, 2nd ed (1996) at 235. 472 See Cane, Tort Law and Economic Interests, 2nd ed (1996) at 237, cited in Arthur J S Hall [2002] 1 AC 615 at 679 per Lord Steyn. Kirby Subsuming the private legal practitioner into the category of public officials and extending an absolute immunity whatever the negligence or wrong- doing revealed, cannot be sustained by a functional analysis. Once the legal liability of barristers for some of the advice they give is upheld473, the class exemption (which never extended to solicitors) is demolished. From that point, the law limps along with an unjustifiable exception to legal accountability based on empathy and tradition, not coherent legal principle. Its boundary is ultimately indefinable. This fact also suggests the instability of the immunity principle that is being asserted. For those who take a broad view of work that is "intimately connected" with in-court decisions, there is virtually nothing in the practice of advocates that is not shielded by the immunity. Indeed, it allegedly extends to the instructing solicitor, although that person has his or her separate and independent duties to provide out-of-court advice to the client. The practice of retaining a second lawyer can only be justified if such distinct duties are accurately and separately discharged. Against the unhistorical and unprincipled extension of the immunity in the way now proposed in this case, I dissent. Fear of floods of litigation: The usual alarms were sounded concerning the dangers of re-expressing the lawyers' immunity in this case. In response to them, I would answer as the House of Lords has done. None of the propounded fears is sufficient to sustain the anomalous immunity on public policy grounds. I agree with what the House of Lords said concerning the supposed danger to the "cab rank" rule474; the suggested dangers of collateral challenges to a previous decision of another court475; the propounded fear of vexation by disgruntled litigants476; and the danger postulated to the advocate's duty to the court477 and of an unjustifiable increase in litigation. I would conclude, as their Lordships did, that none of these arguments, ultimately, supports an absolute immunity from suit, said to belong to lawyers, alone of all professional groups, for simply doing their job. 473 Arthur J S Hall [2002] 1 AC 615 at 729 per Lord Hutton, 745 per Lord Hobhouse of Woodborough. 474 Arthur J S Hall [2002] 1 AC 615 at 678-679 per Lord Steyn, 696-697 per Lord Hoffmann. 475 Arthur J S Hall [2002] 1 AC 615 at 679-680 per Lord Steyn. 476 Arthur J S Hall [2002] 1 AC 615 at 690-692 per Lord Hoffmann. 477 Arthur J S Hall [2002] 1 AC 615 at 692-693 per Lord Hoffmann. Kirby The fear of floods of litigation, brought by discontented litigants against barristers and their instructing solicitors, which cannot be properly repelled where unwarranted is likewise unsustained by experience. It does not happen in the United States, a most litigious country, where there has never been an immunity from suit for ordinary attorney advocates478. It does not happen in Canada, where the courts have rejected such a general immunity479. Instead, in that country, the courts have concentrated on developing special rules to recognise the practical problems that lawyers often face in conducting trials and giving legal advice. The general unavailability of legal aid in Australia to support negligence claims against lawyers; the availability of summary relief against vexatious claims480; and the rules against abuse of process by relitigation481 (not to mention the empathy and understanding of judges for co- professionals in unmeritorious cases) make it completely unnecessary to retain an absolute immunity of the broad, even growing, ambit propounded in this case. I agree with the comment of Lord Hoffmann in Arthur J S Hall482: "[The immunity] is burning down the house to roast the pig; using a broad-spectrum remedy when a more specific remedy without side effects can handle the problem equally well." Confirmation of this empirical assessment also comes from two specific sources. Between the time, in the Giannarelli litigation, that Marks J found the immunity unavailable to barristers in Victoria and the reversal of that decision by the Victorian Full Court, there was no objective evidence of any increase in the length of criminal trials in that State or evidence of a sudden rise in negligence claims against lawyers483. Moreover, in England, where the immunity has now been abolished, a flood of litigation has not occurred and has been declared 478 Ferri 444 US 193 (1979). See Arthur J S Hall [2002] 1 AC 615 at 721 per Lord Hope of Craighead. 479 Garrant v Moskal [1985] 2 WWR 80 at 82, applying Demarco (1979) 95 DLR (3d) 385; cf Linden, Canadian Tort Law, 7th ed (2001) at 151. 480 General Steel Industries (1964) 112 CLR 125 at 129-130. See also Arthur J S Hall [2002] 1 AC 615 at 691-692. 481 Arthur J S Hall [2002] 1 AC 615 at 703-704 per Lord Hoffmann. 482 [2002] 1 AC 615 at 703. 483 Law Reform Commission of Victoria, Access to the law: accountability of the legal profession, Report No 48, (1992) at 35-36 [78]. Kirby "unlikely"484. Only a handful of cases involving alleged negligence on the part of barristers has reportedly reached court and "in only two of them was the barrister found liable"485. A commentator has concluded486: "The decision [in Arthur J S Hall] does not appear to have caused any great problems for the legal profession. Indeed, the reaction of some in the profession is that it is to be welcomed, if it helps to restore public confidence in the openness and accountability of the profession." Even before Arthur J S Hall was decided, the English courts had no hesitation in providing relief against futile, frivolous, vexatious and abusive claims. So much is illustrated by the decision of the English Court of Appeal in Somasundaram v M Julius Melchior & Co487, described in the reasons of McHugh J488. Where the law affords such measured relief from unwarranted claims, the maintenance of a general legal immunity represents an over-wide protection. It is one incapable of adjusting to the occasional claim which is warranted as a case of professional negligence, accountable to the courts as every other such case is. A criminal proceedings exception?: In Boland489, I acknowledged that a stronger argument existed for an exception from liability in respect of the conduct of criminal, when compared to civil, proceedings. This was noticed in the House of Lords by two of their Lordships who ultimately favoured such an exception490. A third member of the House of Lords also supported such an exception491. The question did not have to be decided in Boland, which in any event was a case involving civil proceedings. However, it has to be decided here. 484 Seneviratne, "The rise and fall of advocates' immunity", (2001) Legal Studies 644 485 Seneviratne, "The rise and fall of advocates' immunity", (2001) Legal Studies 644 at 662, fn 130. 486 Seneviratne, "The rise and fall of advocates' immunity", (2001) Legal Studies 644 at 662 (footnotes omitted). 487 [1988] 1 WLR 1394 (CA); [1989] 1 All ER 129. 488 Reasons of McHugh J at [158]-[160]. 489 (1999) 74 ALJR 209 at 241 [148]; 167 ALR 575 at 617-618. 490 Arthur J S Hall [2002] 1 AC 615 at 716 per Lord Hope of Craighead, 730 per Lord Hutton. 491 Arthur J S Hall [2002] 1 AC 615 at 746-749 per Lord Hobhouse of Woodborough. Kirby With respect, I now find preferable the views of the majority in the House of Lords. Lord Millett explained492: "[T]o make the existence of the immunity depend on whether the proceedings in question are civil or criminal would be to draw the line in the wrong place … [E]ven if the immunity were retained only in criminal cases tried on indictment, in which the liberty of the subject is at stake … it is difficult to believe that the distinction would commend itself to the public. It would mean that a party would have a remedy if the incompetence of his counsel deprived him of compensation for (say) breach of contract or unfair dismissal, but not if it led to his imprisonment for a crime he did not commit and the consequent and uncompensated loss of his job. I think that the public would at best regard such a result as incomprehensible and at worst greet it with derision." There is no attempt in the present applicant's case to use his civil proceeding for an illegitimate collateral attack on a criminal conviction that has been sustained by legal process. His criminal conviction has been set aside. He has been acquitted. The applicant brings his action for compensation for advice that he alleges was inaccurate and inadequate which caused him to be imprisoned unnecessarily and otherwise to suffer damage. Moreover, the action is brought in respect of professional conduct that happened out of court. The issues of collateral attack do not therefore present themselves. If they did, it would not be beyond the capacity of Australian law to define proportionate protections as has been done in other jurisdictions. Removal of false issues: Before leaving these points, I would add a number of comments on the reasons of the majority in this Court. First, as to the suggestion that the immunity of advocates is an essential consequence of the need for certainty and finality of court determinations of legal controversies493, it is enough to say that virtually all legal systems of the world, including many that are at least as worthy of respect as our own, flourish without the supposed indispensable immunity. They either have never had it or have now abolished it. And in any case, the issue raised in a claim of legal professional negligence is necessarily different, in fact and in law, from the issue that has been earlier litigated and determined. Secondly, the respondents' case is not improved by substituting an analysis expressed in terms of an absence of legal duty for that in terms of the 492 Arthur J S Hall [2002] 1 AC 615 at 752. 493 See joint reasons at [34]-[36], [43]-[45]. Kirby existence of a legal immunity. So far, the applicable English and Australian law has usually been expressed in terms of an advocates' "immunity". Its operation the supposed new does not become any more palatable by adopting nomenclature494. In particular, this verbal device cannot avoid the traditional, and recently restated495, distaste of our law for legal immunities. They are highly exceptional; and rightly so. Thirdly, there is no analogy between the liability of legal advisers and that of journalists, property developers and other persons instanced by McHugh J496. There are few relationships that are closer, involving at once neighbourhood, proximity, reliance and vulnerability of the client, than that with legal advisers in connection with litigation. The supposed analogies mentioned by McHugh J are remote. In any event, the holdings of no liability in some such cases have been criticised497 or were the subject of dissenting opinions498. Fourthly, the test of liability cannot be whether its "burden" is, in the opinion of some judges, "intolerable"499. Were that the test for liability in negligence, it would probably exempt neurosurgeons, air pilots and many others carrying heavy responsibilities for fleeting acts and omissions of carelessness. What is "intolerable" depends, in any event, on the eye of the beholder. Critics of the advocates' immunity have repeatedly suggested that its survival can be traced to considerations of professional and judicial empathy rather than to neutral legal principles and to reasoning by comparison with analogous advisory occupational groups. Fifthly, there is no occasion in these proceedings for a dissertation on the merits and importance of independent advocates500. Who contests it? The independent Bar has not only been a vital contributor to the just and efficient 494 Reasons of McHugh J at [95]. 495 eg Brodie (2001) 206 CLR 512. 496 Reasons of McHugh J at [98]-[99]. 497 Thus the denial of recovery in Osman v Ferguson [1993] 4 All ER 344 (CA) was criticised in the European Court of Human Rights in Osman (1998) 29 EHRR 245. 498 See eg Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 276-285 [65]-[87]; Woolcock (2004) 78 ALJR 628 at 656-661 [150]-[175]; 205 ALR 522 at 561-568. 499 Modbury (2000) 205 CLR 254 at 266 [28], cited in reasons of McHugh J at [102]. 500 Reasons of McHugh J at [105]-[108]. Kirby operation of the trial process. It has contributed uniquely to the independence and high standing of the judiciary of our tradition501. But this is not the issue in the case. All that is involved is whether, by the application of statute or the development of the common law, Australian barristers and solicitors are entitled to an exceptional immunity which other socially useful, sometimes intensely demanding, advisory professions do not enjoy and which advocates have not enjoyed, or do not enjoy, in virtually every other country on earth. With all respect, the appeal to the "undeniable public interest in the maintenance of the independent Bar"502 introduces a false trail. Independent lawyers, including an independent and separate Bar, exist, and in some cases have long existed, in many other countries and, in particular, in most other countries of the common law. To suggest that the removal of the anomalous out- of-court immunity for lawyers in Australia would, uniquely, destroy that professional independence is to display a lack of confidence in the local legal profession that I simply cannot share. Australian barristers, and their instructing solicitors, are made of sterner stuff. A residual in-court immunity?: The foregoing is sufficient to persuade me to the merits of the applicant's challenge to the immunity invoked by VLA and the barrister. However, a question remains whether Giannarelli should continue to state the law in respect of in-court negligence by advocates. The logic of my reasoning suggests that, as the applicant submitted, Giannarelli should now be overruled. On the other hand, to arrive at orders in this case it is unnecessary to do this. Giannarelli indisputably concerned allegations of in-court negligence. The applicant's case here, as pleaded, involves allegations of out-of-court negligence. Because mine is a minority view, it is unnecessary for me to resolve this point. My inclination would be to leave Giannarelli standing until a case is presented where a challenge to its supposed ratio is necessary, as it is not here. Because the advice and "pressure" of which the applicant complains occurred otherwise than in the heat of an actual hearing of his committal, trial or appeal, the question of the legal rule for in-court negligence does not need to be redetermined. There are different arguments available on the point503. I would leave its resolution to the future. 501 Kirby, Judicial Activism: Authority, Principle and Policy in the Judicial Method, (Hamlyn Lectures, 2003) (2004) at 17-20. 502 Reasons of McHugh J at [106]. 503 See Boland (1999) 74 ALJR 209 at 241-242 [150]; 167 ALR 575 at 618. Kirby Should any change be left to Parliament? The argument of the lawyers: The fourth issue in this application assumes that the earlier issues have been decided in favour of the applicant. A question must then be answered whether, in such circumstances, the immunity being wholly or to some degree shown as anomalous, unjustifiable and unsustained by public policy, this Court should now abolish it to the necessary extent – or leave any change to be made by the legislatures of the nation, which have the ordinary responsibility for the regulation of the legal profession. VLA and the barrister argued strongly that the latter was the proper course. I was reminded of my reasons in Brodie v Singleton Shire Council504. I there collected some of the arguments for and against judicial re-expression of the common law. Several of those arguments are applicable to this case. An important consideration that supports leaving the issue to Parliament is the necessarily prospective operation of any new rule that would expose to liability persons who may previously have assumed that they were immune from suit505. There is some suggestion in Arthur J S Hall that the re-expression of liability adopted in that case "should take effect only from the date [of] the judgment in this case"506. To the extent that that was a consideration for their Lordships (a matter that is uncertain from their reasons) it is a course that is unavailable in Australia where prospective overruling has been held to be inconsistent with the Rejection of the arguments in England: The argument that a re-expression of the law should be left to Parliament was strongly pressed upon the House of Lords in Arthur J S Hall508. Clearly, their Lordships were unimpressed with it. By their orders, they unanimously rejected the contention. Lord Hoffmann acknowledged the need for restraint by judges in entering areas of the law "which are properly matters for democratic decision"509. This was most relevant where a significant allocation of resources was involved, a matter which should be left to 504 (2001) 206 CLR 512 at 591-604 [203]-[237]. 505 Brodie (2001) 206 CLR 512 at 595-596 [215], referring to Ha v New South Wales (1997) 189 CLR 465 at 503-504. 506 [2002] 1 AC 615 at 726 per Lord Hope of Craighead. 507 Ha (1997) 189 CLR 465 at 503-504. 508 [2002] 1 AC 615 at 683 per Lord Steyn, 704-705 per Lord Hoffmann. 509 Arthur J S Hall [2002] 1 AC 615 at 704, referring to Southwark London Borough Council v Mills [2001] 1 AC 1 at 9-10. Kirby Parliament. Lord Hoffmann expressed the view that the course of legislation followed in England indicated that Parliament had accepted that judges had re- expressed the law in Rondel and might do so again. His Lordship went on510: "I do not think that your Lordships would be intervening in matters which should be left to Parliament. The judges created the immunity and the judges should say that the grounds for maintaining it no longer exist. Cessante ratione legis, cessat lex ipsa." Lord Steyn511 accepted that the question was "finely balanced" and that it would be "the easy route" for their Lordships to abdicate their responsibilities, although doing so would occasion a state of continuing uncertainty over a prolonged period512. He said that to do so would be "a disservice to the public interest". I agree with those reasons. The judicial function and immunities: To the above I would add a final consideration to which I gave weight in Brodie513. That was another case involving an anomalous, unjust and unclear immunity from legal liability: "There are undoubtedly some activities which, of their very nature, justify the provision of a legal immunity from suit. However, they are, and should be, closely confined. When challenged, they should be capable of being fully justified by more than an appeal to legal history and past legal authority. When examined, some immunities have been rejected as unsustainable514. Others have been questioned and elsewhere overruled515 ... The survival of the immunity must be tested, not simply by the facts of the present cases but by any circumstance, however extreme and culpable, where [the protected party] claims an immunity from liability … 510 Arthur J S Hall [2002] 1 AC 615 at 704-705. The Latin maxim means: "the rationale of a legal rule no longer being applicable, that rule itself no longer applies". 511 Arthur J S Hall [2002] 1 AC 615 at 683. 512 Arthur J S Hall [2002] 1 AC 615 at 683. 513 (2001) 206 CLR 512 at 603-604 [235]-[237]. 514 eg the immunity of landlords: Jones v Bartlett (2000) 205 CLR 166 at 238-240 515 eg of advocates: Boland (1999) 74 ALJR 209 at 236 [129]; 167 ALR 575 at 611; Arthur J S Hall [2002] 1 AC 615. Kirby [I]n the present case, the offence to fundamental notions of equality of parties before the law, which the anomalous immunity invoked by the respondents occasions, reinforces my conclusion that such immunity can no longer rest on a rule made by the judges." Conclusion: out-of-court immunity abolished: I reach the same conclusion in the present case. I question why an anomalous immunity is not only preserved in Australia but now actually enlarged by a binding legal rule that will include out-of-court advisings and extend to protect solicitors as well as barristers. With all respect to those of the contrary view, I regard such a decision as legally erroneous, unwarranted and unworthy. In taking this step, this Court adopts a posture that has never represented the law in most of the world. It extends an approach that has increasingly been rejected or closely confined by the judges of other common law countries. I reject the notion that the accomplished advocates of Australia, and their instructing solicitors, are in greater need of a legal immunity than their counterparts elsewhere. Or that the administration of justice in Australia, almost uniquely, requires such an immunity in order to function. Or that the law extends to Australian legal practitioners an absolute immunity from suit as claimed. Once again, this Court is out of step with the rest of the legal world. It shores up privileges and immunities that others have never allowed, or have now abandoned, as unjustifiable and legally unnecessary. Orders Special leave to appeal should be granted. The appeal should be allowed. The decision of the Court of Appeal of the Supreme Court of Victoria should be set aside. In lieu thereof, it should be ordered that leave to appeal to that Court be granted and the appeal allowed. The orders of the County Court of Victoria should be set aside. The matter should be remitted to that Court for trial consistently with these reasons. The respondents should pay the applicant's costs in this Court, in the Court of Appeal and in the County Court. Callinan Issue This application for special leave, which was argued as if it were an appeal, raises the question whether the Court should overrule its decision in Giannarelli v Wraith516 by abolishing the immunity of advocates, and, in some cases, solicitors, from suit in relation to the conduct of legal proceedings. Facts There has as yet been no trial in this matter. The facts before this Court are confined therefore to the untested allegations in the statement of claim and what is recorded as having occurred in open court during the criminal trial and the appeal to the Court of Appeal of Victoria. The applicant was charged with rape on 11 February 1996. He retained the first respondent as his solicitor. The second respondent was retained by the first respondent as the applicant's barrister. On the basis of emphatic advice given by the respondents, the applicant pleaded guilty to the charge at a committal hearing on 11 July 1996. At trial, the applicant changed his plea to not guilty. The prosecution then sought to lead evidence of his plea of guilty at the committal hearing. Objection was taken to the tender. The trial judge, Judge Lewis, in dismissing the objection said this517: "And further, as part of its case the Crown relies on the accused's plea of guilty at the Magistrates' Court as being an admission by him to every element of the offence, including that element relating to his state of mind." In his summing up the trial judge said this of the plea of guilty at the committal518: "[The applicant has submitted] further, that you should disregard his plea of guilty at the Magistrates' Court. He pleaded guilty for the wrong reasons, if you like, for convenience, on advice from his legal advisers and the police. And, as the evidence in this trial demonstrates, says the accused's counsel, he has a perfectly good defence to the charge. 516 (1988) 165 CLR 543. 517 See R v D'orta-Ekenaike [1998] 2 VR 140 at 147. 518 See R v D'orta-Ekenaike [1998] 2 VR 140 at 147. Callinan The Crown has not been able to prove beyond reasonable doubt that the accused man had the necessary guilty mind." No exception was taken to this part of the summing up by the second respondent. The applicant was convicted and sentenced to a term of imprisonment of three years on 3 March 1997. On 24 July 1997, the Court of Appeal of Victoria (Winneke P, Brooking JA and Vincent AJA) quashed the applicant's conviction and sentence by reason of error in the trial judge's direction and ordered a re-trial. In so holding, Winneke P (with whom Brooking JA and Vincent AJA agreed) said519: "Those directions were, in my view, less than sufficient. In a case where the Crown was contending that the applicant's plea of guilty at the lower court was conclusive evidence of his guilt, including the challenged issue of his state of mind, it was the judge's obligation to give the jury directions, carrying with them the full authority of his office, as to how they should approach such a significant issue. Like in every other case where an alleged confession of guilt has been challenged, his Honour, in my view, was bound to instruct the jury in the circumstances that, before they could use the evidence of the guilty plea as conclusive evidence of the applicant's guilt, they had to be satisfied beyond reasonable doubt that such plea was, and was intended to be, a true acknowledgment of the applicant's guilt of the crime charged; and that if, having regard to the evidence, they concluded that it was possible that he had entered the plea not because of a belief in his guilt but because he believed he would receive a suspended or more lenient sentence, then they should discard the plea of guilty from their consideration. Because the evidence of the plea of guilty was such a potent piece of evidence operating adversely to the applicant, the failure to give such a direction, in my view, has exposed the applicant to a risk of a substantial miscarriage of justice, a risk which cannot be saved by the operation of the proviso to s 568(1) of the Crimes Act." At the re-trial, the applicant pleaded not guilty. The prosecution again sought to lead evidence of the plea of guilty at the committal. The trial judge (Judge Duckett) rejected the tender. In doing so his Honour said: "I am satisfied that the plea that was entered was as a result of considerable pressure applied by the accused's previous legal advisers and that it could well have been given in the mistaken belief that the accused had no defence in law to the charge of rape. In those circumstances and in 519 R v D'orta-Ekenaike [1998] 2 VR 140 at 147. Callinan the exercise of the discretion in the court, I rule that the evidence is not admissible." On this occasion, the applicant was acquitted. On 4 September 2001, the applicant sued the respondents in negligence in the County Court of Victoria. He claimed that the advice to plead guilty given by the respondents before the committal hearing was given negligently, and that the respondents imposed undue influence on him to plead guilty. The applicant claimed, and it can readily be accepted, that he suffered loss and damage as a result of his imprisonment. The first and second respondents applied for a stay of the applicant's proceedings by summons. On 13 December 2002, Judge Wodak of the County Court of Victoria granted the application with costs and stayed the proceedings pursuant to r 23.01 of the County Court Rules of Procedure in Civil Proceedings 1999 (Vic), which provides that a proceeding may be stayed if it does not disclose a cause of action, is scandalous, frivolous or vexatious, or is an abuse of the process of the Court. The applicant applied to the Victorian Court of Appeal for leave to appeal520. That Court (Winneke P and Buchanan JA) refused the application and ordered that the applicant pay the respondents' costs for the reason that the action was governed by the decision of this Court in Giannarelli v Wraith and was therefore bound to fail. The application to this Court It is necessary first to say something, but fortunately very little in view of the careful review of it and its history by Gleeson CJ, Gummow, Hayne and Heydon JJ, of the legislation bearing on this case, the Legal Profession Practice Act 1958 (Vic) ("the LPPA"). Section 10(2) of the LPPA is, as a fixed time provision, one of those rather rare enactments that denies the legal fiction that decisions restating the common law are merely declaratory of it both prospectively and retrospectively. As are Gleeson CJ, Gummow, Hayne and Heydon JJ, I am of the view that the construction of both s 5 of the Legal Profession Practice Act 1891 (Vic) and s 10(2) of the LPPA adopted by the majority in Giannarelli v Wraith521 was correct, but in any event that there would 520 D'orta-Ekenaike v Victoria Legal Aid unreported, Victorian Court of Appeal, 14 March 2003. 521 (1988) 165 CLR 543 at 561 per Mason CJ, 570 per Wilson J, 587 per Brennan J, Callinan be insufficient reason for this Court currently to depart from it even if its correctness were in doubt. I now turn to the common law regarding barristers' and solicitors' liability in negligence which was also considered by this Court in Giannarelli v Wraith. The applicant submits in this Court that the House of Lords correctly identified in Arthur J S Hall & Co v Simons522, reasons, as valid for Australia as for the United Kingdom, why advocates should no longer enjoy immunity of any kind from suit. Before dealing with those submissions, I should restate the common law principle for which Giannarelli v Wraith relevantly stands. It is that neither a barrister nor a solicitor will be liable for work done in court, or work done out of court that is connected with work done in court. In Arthur J S Hall & Co v Simons, the House of Lords discussed and effectively rejected the reasons which hitherto had long been regarded as necessitating the existence of the immunity. Their Lordships took the view that benefits would flow from the lifting of the immunity: it would bring an end to an anomalous exception to the basic principle that there should be a remedy for a wrong523. This assertion implies that advocates alone escape liability for negligent error. But this is not so. Journalists and publishers regularly negligently inflict harm upon persons about whom they write or speak. The law's tenderness for free speech however affords them a practical immunity, by way of a defence of qualified privilege, from suit in many cases. Auditors may not be successfully sued by financiers in respect of negligent auditing524. Many statutory bodies, including the Australian Crime Commission525, the Australian Securities and the Australian Competition Tribunal527, the Crime and Misconduct Commission528 in Queensland and the Independent Commission Against Corruption529 in New South Wales enjoy a Investments Commission526, 523 [2002] 1 AC 615 at 682 per Lord Steyn. 524 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 525 Australian Crime Commission Act 2002 (Cth), s 59B. 526 Australian Securities and Investments Commission Act 2001 (Cth), s 246. 527 Trade Practices Act 1974 (Cth), s 158. 528 Crime and Misconduct Act 2001 (Q), s 335 (although the protection from liability is not absolute and does not cover negligent acts and omissions). 529 Independent Commission Against Corruption Act 1988 (NSW), s 109. Callinan statutory immunity despite their capacity to cause great harm to people and corporations by their negligence. In this country, military officers may not be sued for damages for negligently causing harm to servicepeople during active service530. Jurors and witnesses may not be sued in respect of any negligence by them in court. Judges and judicial officers may not be sued in negligence despite that negligent error by them is capable of causing very great harm indeed. Immunity of advocates is not therefore anomalous. For the advancement and preservation of a free and democratic society, numerous immunities exist and are justifiable. They exist for, and in, a broader public interest, even though the result may be the denial of a remedy for a wrong. This is so even though modern judicial tendency inclines against any extension of those categories of immunity531. Lord Steyn referred to, and thought as arguing against immunity, vast changes in legal practice. It has become more commercialised: barristers may now advertise. They may enter into contracts for legal services. They must carry insurance. Modern society is consumerist. People have a greater awareness of their rights. A barrister is not obliged to inform a client in advance of the existence of any immunity532. Let it be accepted for the sake of the argument, that the changes to which his Lordship referred may be occurring in varying degrees in this country although so far advertising by barristers is either proscribed or heavily restricted. In my respectful opinion, those sorts of changes do not however justify the dismantling of the immunity that is available to advocates. To treat an entitlement of barristers to advertise (if it were available to them) as giving rise to and justifying the removal of immunity would be, in my opinion, to compound the sort of harm which New South Wales has recently sought to cure533. A profession which undertakes its work in public, adversarially and competitively, in the presence of judges who supervise the whole proceedings, and may 530 Shaw Savill and Albion Co Ltd v The Commonwealth (1940) 66 CLR 344 at 361 per Dixon J (with whom Rich ACJ and McTiernan J agreed); Groves v The Commonwealth (1982) 150 CLR 113 at 117 per Gibbs CJ, 126 per Stephen, Mason, Aickin and Wilson JJ. 531 Cattanach v Melchior (2003) 215 CLR 1 at 106 [295] per Callinan J; see also at 29 [59] per McHugh and Gummow JJ. 532 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 682. 533 See reg 139 of the Legal Profession Regulation 2002 (NSW) inserted by Sched 1 to the Legal Profession Amendment (Personal Injury Advertising) Regulation 2003 (NSW) restricting advertising by barristers and solicitors of their willingness to or capacity to undertake claims for personal injury. Callinan its members, and whose engagement discipline is generally by other professionals, has no need to, and should not, in my opinion, be obliged or encouraged to advertise. That it happens cannot displace the powerful reasons for the retention of the immunity to which I will refer. Even if it could, it would provide no basis for lifting the immunity of those barristers who choose not to advertise. Whether barristers are compelled to, or would prudently, in any event, carry insurance is not in my view relevant. Insurance policies are written no doubt upon the basis of the current law, and that is that the immunity exists. Neither the House of Lords nor this Court had any evidence before it of the implications of increases in premiums that would follow from the abolition of the immunity. The law has traditionally, and in my opinion correctly, generally taken the view that the existence or otherwise of insurance should not affect the outcome of a case. And likewise its availability or otherwise should not influence the formulation of common law principle in respect of which many other factors have a more relevant and important role to play. Let it also presently be accepted that people may have a greater awareness of their rights, and, because they form part of a consumerist society, are more ready now to pursue them than in the past. If that be so, people also no doubt are in a position to, and do exercise a greater degree of discernment and control over the conduct of their cases by their advocates in court. That many people may have embraced consumerism provides no more reason to enable them to pursue their advocates in negligence than that an increasingly large number of people may sell and purchase shares, would provide a reason for shareholders to sue the Australian Securities and Investments Commission in negligence. It follows that I do not think that any societal and related changes, actual or assumed, of themselves justify the dismantling of an advocates' immunity. But the applicant also submits that the basis for the existence of the immunity in the first place is, and always has been, unsound. Among other things, the applicant again relies for this submission upon the analysis and rejection by Lord Hoffmann in Arthur J S Hall & Co v Simons of the arguments in favour of the immunity. Before considering those arguments I would make these observations. Litigation in our common law system is adversarial. It involves the presentation of the facts and law in the best possible light for the party on whose behalf the presentation is made. Cross-examination requires of counsel careful preparation but it is still both a technical skill and an art. Decisions with respect to it have often to be made instantaneously, and, accordingly, in part at least, intuitively. It is frequently impossible to know whether a question in chief or cross- examination should have been asked, until after it has been answered. The material with which advocates have to deal in every case is human material, not the tangible human material of tissue, bone and blood, but of mind and memory. Callinan Counsel can rarely be completely certain at the beginning, of the actual way in which the facts are going to fall out by the end of the trial. Every case requires the making of strategic and tactical decisions. A major aspect of the successful advocate's craft is persuasiveness. Persuasiveness is difficult to define and therefore difficult to teach. Its form may vary according to the nature of the case to which it is to be brought. Indeed, frankness requires that it be acknowledged that it may vary according not only to the court or tribunal in which it is to be practised, but also to the personal composition of that tribunal or court on the day. Despite what other professionals may claim, the practice of advocacy is unique in this and other respects. True it is that surgeons for example, have to make instantaneous judgments, and that the materials upon which they are working do not always respond predictably, but there are only a certain number of procedures or courses which may be taken, and provided a surgeon adopt a reasonable one or other of them, the surgeon will not be regarded as having been negligent. The days have long passed (some 2400 years or so) since medicine could be described as simply an art and not largely or entirely a science534. There is a further relevant consideration. Although the common law in general changes only incrementally, there have in recent times been changes of a radical and even sudden kind. Very recent examples are the decisions of this Court in Brodie v Singleton Shire Council535 and Lange v Australian Broadcasting Corporation536. In the common law, precedential system in which Australian advocates work, the legal fiction to which I earlier referred, that what this Court decides has in effect always been the law, prevails. In consequence, there is a more than merely theoretical risk, that if an advocate may be sued, he or she could be sued for not having pursued in court, a new claim, for example, for non-feasance against a local authority, even before Brodie was decided by this Court. Take also the consequences of this case if the applicant's arguments were to succeed and Giannarelli v Wraith were accordingly to be overruled. Any advocate who had failed to pursue in court for a person in the same circumstances as this applicant, a claim for damages against the advocate acting for him at his committal, would arguably be liable in negligence for not anticipating the decision for which the applicant here contends. Even a failure to anticipate a small incremental change could be hazardous. All common lawyers are supposed to understand that the common law changes at least, incrementally. Potential liability for not making adventurous claims in pre-emption of possible 534 Hippocrates said, "Life is short, and the Art long; the occasion fleeting; experience fallacious, and judgment difficult": quoted in The Theory and Practice of Medicine, (1964) at 292. 535 (2001) 206 CLR 512. See also the discussion in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 329-330 [336]. 536 (1997) 189 CLR 520. Callinan change could well produce an undesirable and expensive deluge of extravagant claims, with a corresponding impact upon the work of the courts. It is not uncommon for this Court to speak with more than one voice. Of the 14 decisions reported in vol 211 of the Commonwealth Law Reports, there were two cases in which the Court divided 5 to 2, one case in which the decision was by a majority of 4 to 3, and no cases in which the Court delivered a joint unanimous judgment. The law and the outcome in any particular case are therefore frequently other than pellucid and predictable537. The this Court. Furthermore, in-court error, so called, is not always exclusively the error of the advocate. Sometimes, the error is exclusively the error of the court. Boland v Yates Property Corporation Pty Ltd538 is a case in point. It was exclusively judicial error there which gave rise to a whole train of expensive proceedings in negligence against a barrister and solicitors who were ultimately exonerated by those proceedings was a misapprehension on the part of the Court of Appeal of New South Wales as to the true nature of "special value" in a valuation case539, a misapprehension which was repeated by the Full Court of the Federal Court. This case itself took a quite different turn on the second trial, the judge there rejecting the tender of the plea which had been received in the first trial. Who was right; the first or the second trial judge? That opinions on these questions can reasonably differ highlights the problem. There are few absolute truths in the law and litigation. Why, it may be asked, should the advocate be singled out as liable when witnesses, jurors and judges are not? trigger for The factors to which I have referred justify the existence of the immunity. The realities of them cannot however be divorced from other, even more compelling reasons for the existence and the continuation of the immunity. Three of these were stated very fully by Mason CJ in Giannarelli v Wraith540 and need no repetition, other than by reference, by me: the advocate's overriding duty to an independent authority, the court; the risk, expense and vexation of collateral proceedings; and, the special and unique difficulty, dealing as 537 Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 at 272-273 [310]; 167 ALR 575 at 659. 538 (1999) 74 ALJR 209; 167 ALR 575. 539 Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 at 254 [224]- [331]-[334], 276 [338], 279-280 [355]-[359]; 167 ALR 575 at 634-635, 644-646, 540 (1988) 165 CLR 543 at 555-559. Callinan advocates do, with matters not subject to scientific laws and measurement, in drawing a line between non-negligent errors of judgment and negligent errors of judgment in particular situations. To the last I would only add this. Any advocate who is experienced in trial work before both judges and jurors knows only too well that many decisions have to be made, often on a second by second basis, as to what should be said or asked, and how it should be said or asked. And that which has been said or asked may look quite different, either much better or worse than it seemed at the time, after all the evidence has been led, the submissions made, and the judgment or verdict given. Few other professions, teaching, psychology and psychiatry are perhaps some, require their practitioners to attempt to see into the minds, and anticipate the thinking, reactions, and opinions of other human beings, as does the profession of advocacy. The truths to which I have referred are regrettably not fully understood, and, it must also be observed, are often not accurately represented. This in part at least, explains the suspicion that abounds in some sections of the public but which Lord Hoffmann in Arthur J S Hall & Co v Simons thought a further factor justifying the withdrawal of the immunity541. Because Giannarelli v Wraith is a recent decision of this Court, and in my opinion is, with respect, plainly right in its treatment of the common law as well as the relevant legislation, it is unnecessary for me to do more than touch upon some of the other reasons which compel the continuation of the immunity. By contrast with the work of other professionals, the cause and effect of something done in the course of advocacy are difficult to explore fully and satisfactorily. This is so because of the overwhelming public importance in the isolation and consequential inscrutability of juries, the independence of judges, and the inability therefore of either a plaintiff client or a defendant advocate to call the judge, or the jurors to prove or disprove causation. Risk of action does no doubt conduce to the defensive practice of a profession, in turn leading to delay and unnecessary expense. That this has not been thought sufficient reason to confer immunity upon other professionals does raise the question whether it should do so in relation to lawyers. Standing alone, it might not. But there are other, related considerations in the case of advocate lawyers. Principally they are the cost and the desirability of finality of litigation to which I give separate attention. The fact that decisions holding professionals liable in negligence may have produced unnecessarily defensive practices is to be regretted, but provides no sufficient basis to treat advocates in the same way as other professionals. The remedy, if one is warranted, for unnecessarily defensive 541 [2002] 1 AC 615 at 689. Callinan professional practice elsewhere, does not lie in the imposition of liability upon lawyers in respect of their conduct of litigation. It has been suggested that the invention of case management and a gradual departure from conduct of litigation by the oral word exclusively have greatly relieved the burden upon the advocate: that much that had to be done previously, intuitively and initially instantaneously, can be, and is now to a substantial extent done in the calm and reflective atmosphere of chambers542. Case management is not however novel. In no fewer than three Australian jurisdictions, New South Wales, Queensland and Victoria, legislation enabling the adoption of special and expeditious procedures in commercial cases has been in force for many years543. Available judicial decree there even extended to dispensation with the rules of evidence544 and compulsion of a party to make admissions with respect to any question of fact relevant to the action545. This Australian legislation generally had as its model the rules and practice of the Commercial Court established in the United Kingdom in 1895 as part of the Queen's Bench Division to expedite the resolution of commercial and mercantile disputes546. Not only therefore is case management a process which has been available and used for many years, but it is also hardly a process which has significantly reduced the burden upon advocates547. In some ways it has increased it. Case management is designed among other things to expedite litigation. Decisions still have to be made quickly and under pressure. The oral tradition has not been abandoned. The provision in advance, of long, written proofs or affidavits of evidence-in-chief which in all probability have been settled by the lawyers for the parties, can make cross-examination more difficult, and indeed its effectiveness, critical to the 542 Arthur J S Hall & Co v Simons [2002] 1 AC 615 at 724 per Lord Hope of Craighead. 543 Supreme Court Act 1970 (NSW), s 53 and Supreme Court Rules 1970 (NSW), Pt 14 r 1; Supreme Court (Miscellaneous Civil Proceedings) Rules 1998 (Vic), O 2; Commercial Causes Act 1910 (Q), s 3. 544 See for example, Supreme Court Act 1970 (NSW), s 82(1)(a) and Supreme Court Rules 1970 (NSW), Pt 14 r 2; Supreme Court (General Civil Procedure) Rules 1996 (Vic), r 40.05; Commercial Causes Act 1910 (Q), s 4(5)(b). 545 See for example, Supreme Court Act 1970 (NSW), s 82(1)(b); Commercial Causes Act 1910 (Q), s 4(5)(e). 546 Halsbury's Laws of England, 4th ed reissue, vol 37, par 1370. See also Scrutton, "The Work of the Commercial Courts", (1921) 1 Cambridge Law Journal 6. 547 No case was referred to which suggested that an advocate's immunity was less in a commercial cause. Callinan outcome of the case548. Too vigorous a form of case management may be productive of a higher risk of judicial error and the need therefore for even finer judgment on the part of advocates549. In Arthur J S Hall & Co v Simons, Lord Steyn acknowledged that the "cab rank" rule requiring barristers to undertake cases in fields in which they practise for the fees they customarily charge was a "valuable professional rule"550. His Lordship however added this: "But its impact on the administration of justice in England is not great. In real life a barrister has a clerk whose enthusiasm for the unwanted brief may not be great, and he is free to raise the fee within limits. It is not likely that the rule often obliges barristers to undertake work which they would not otherwise accept." It would be wrong for a barrister, or a barrister's clerk in Australia, and it is not the practice therefore in this country, to raise a barrister's fee as a device to avoid an unwanted brief. Furthermore, in only two of the States in which there is a functionally divided legal profession, do barristers employ clerks. And even in those latter, the role of the clerk is increasingly administrative, and removed from the fixation of fees. In this country, I do not doubt that the removal of the immunity would intrude upon and diminish the utility of the valuable cab rank rule. Related to the utility, and therefore the desirability of the retention of the cab rank rule, is the practice in Australia, particularly in this Court, of the undertaking of work on a pro bono basis on behalf of indigent parties. Legal aid funds are likely to continue to be scarce. In consequence, the Court's reliance upon the altruism of advocates in offering their services on a pro bono basis is unlikely to decrease. The removal of the immunity has a real capacity to deny the courts access to these services. The immunity in varying forms has existed for more than 200 years. Its existence and justification have been much debated over the years. Legislatures 548 The enthusiasm for case management is not universal. Among its critics is Professor Michael Zander QC who has written persuasively about a number of its defects (see "The Woolf Report: Forwards or Backwards for the New Lord Chancellor?", (1997) 16 Civil Justice Quarterly 208; "Does Case Management Work?", (1997) New Zealand Law Journal 151). It may be proper to regard it in its most radical or intrusive forms as still experimental. 549 Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 is an example of the correction by this Court of too rigid an approach to case management at first instance and in the Full Court of the Federal Court. 550 [2002] 1 AC 615 at 678. Callinan have not moved to abolish it. In particular, the Victorian Parliament chose not to abolish or regulate the immunity. This is so notwithstanding that, after Giannarelli v Wraith was decided, itself a decision in a Victorian case, the Law Reform Commission of Victoria had recommended legislative removal of the immunity551. Instead, by s 442(1) of the Legal Practice Act 1996 (Vic), the legislature expressly legislated that nothing in that Act abrogates any immunity the from commencement of the section. Far ranging changes reducing common law liability for negligence have recently been enacted552, but this immunity has not been abrogated. Practices and legal principles which have evolved over long periods and under scrutiny from time to time are not lightly to be discarded: it would be presumptuous for current law makers to think or act differently. liability for negligence enjoyed by legal practitioners before There are other matters which require separate discussion. One is the duty that advocates owe to the court. It is a primary duty and transcends the duty owed to the client. That it transcends the latter does not mean that it is always easy for the advocate to distinguish between, and give preference to the primary duty in cases of doubt. The need for observance of the duty to the court as a primary duty requires that there be no ambiguity about what may flow from it, in particular, a claim, however misconceived, by the client against the advocate. What I have said justifies the retention of the immunity. That I have not referred in detail to other justifications for it does not mean that they are not relevant and important. The risk of conflicting judgments, the need for freedom of expression and candour in court, the invidiousness of making comparisons between actual and notional reactions by judges and juries to arguments and counsel's conduct of a case, and the discouragement of relitigation all lead to the conclusion that in the public interest the immunity of advocates is necessary for the orderly functioning of the system of justice in this country. As to the last, I also agree with what Gleeson CJ, Gummow, Hayne and Heydon JJ have said at [34]-[36] of their Honours' reasons and would add only this. The law has always frowned upon prolonged litigation pursued to produce a different result from what has already been decided. What was said in relation to the doctrine of res judicata is relevant here553: 551 Access to the Law: Accountability of the Legal Profession, Report No 48, (1992) at 552 See for example, Wrongs (Amendment) Act 2000 (Vic), Wrongs and Other Acts (Public Liability Insurance Reform) Act 2002 (Vic), Wrongs and Limitation of Actions Acts (Insurance Reform) Act 2003 (Vic), Wrongs and Other Acts (Law of Negligence) Act 2003 (Vic). 553 Jeter v Hewitt 63 US 352 at 364 (1859) per Campbell J. Callinan "[T]he maintenance of public order, the repose of society, and the quiet of families, require that what has been definitely determined by competent tribunals shall be accepted as irrefragable legal truth." The reasons which I have given for the retention of the immunity are reasons also for its operation upon work done out of court which leads to a decision affecting the conduct of a case in court. It will be apparent from my rejection of the reasons asserted for dismantling the immunity that I disagree with the very recent decision of the New Zealand Court of Appeal554. So far as the second respondent is concerned, the position is clear. For the reasons stated by Judge Wodak and by the Court of Appeal, the relevant work had a connexion, indeed an intimate connexion, with the conduct of the case in court. Advice as to a plea of guilty given shortly prior to a committal could not fairly be characterized otherwise. It went to the heart of the proceedings in court: it was fundamental to the conduct of them. Should a distinction be drawn however between the first respondent as the instructing solicitor who joined in the advice alleged to have been given, and the second respondent as the advocate? Are the respective positions of the respondents different by reason of their different roles as barrister and solicitor? In my opinion, the first respondent's submissions that the immunity of a solicitor who advises jointly with counsel cannot be considered in isolation from the immunity of counsel, should be accepted. A decision of the kind taken here, as with many decisions as to the conduct of the case, is taken after discussion and is usually taken jointly. What may have started as a tentative suggestion by one of the lawyers may well emerge as a firm joint decision, a separate author of which cannot reasonably be identified. A solicitor, instructing in litigation owes the same duties as the advocate to court and client. The reasons favouring immunity of advocates in work connected with the conduct of litigation accordingly require that the same immunity obtain for solicitors. The existence of the immunity does not depend upon whether the proceedings are civil or criminal. Nor does anything turn on the fact that the advice here was given in relation to committal proceedings. As this Court said in R v Murphy555: 554 Lai v Chamberlains unreported, Court of Appeal of New Zealand, 8 March 2005. 555 (1985) 158 CLR 596 at 616. Callinan "Even though they are properly to be regarded as non-judicial in character, committal proceedings themselves traditionally constitute the first step in the curial process, possibly culminating in the presentation of the indictment and trial by jury. They have the closest, if not an essential, connexion with an actual exercise of judicial power: see Ammann v Wegener556; Barton v The Queen557." Only two other matters require mention. The first is that in his pleadings, the applicant asserts that "undue pressure" was imposed by the respondents. The Court of Appeal was correct in holding that this could not give rise to a cause of action. In any event, the particulars indicate that the allegation is effectively of emphatic, perhaps even very emphatic, advice. As to that, it may simply be said that advice that is not clear, is advice that may not be worth having. The applicant sought to rely upon Rogers v Whitaker558. He contended that he was not, but should have been, warned that a plea of guilty at the committal could have adverse effects at trial if he sought to withdraw or change his plea. It must have been unmistakably clear to the applicant that the entering of a plea of guilty was ultimately his personal decision and that it would have for him the most serious of consequences. Anyone pleading guilty must have known that. In any event, an allegation of a "failure to advise", not materially different from the allegation made here, was rejected in Giannarelli v Wraith. I would grant the application for special leave to appeal, treat the appeal as having been instituted and heard but dismiss it with costs. 556 (1972) 129 CLR 415 at 437. 557 (1980) 147 CLR 75 at 99. 558 (1992) 175 CLR 479.

HIGH COURT OF AUSTRALIA PLAINTIFF AND STATE OF VICTORIA DEFENDANT Minogue v Victoria [2018] HCA 27 20 June 2018 ORDER The questions stated by the parties in the special case filed 21 December 2017 be amended and the questions stated (as so amended) be answered as follows: Question (a) Is s 74AAA of the Corrections Act 1986 (Vic) ("the Corrections Act") capable of applying to the Plaintiff in circumstances where: before the commencement of that section: the Plaintiff's non-parole period had ended or parole eligibility date had occurred; or the Plaintiff had made an application for parole; or the Board had made a decision to proceed with parole planning in respect of the Plaintiff; or before the commencement of s 127A of the Corrections Act, the Plaintiff had commenced this proceeding? Answer Yes. Question (b) Is s 74AAA of the Corrections Act capable of applying to the Plaintiff in circumstances where it was not an element of the offence of which the Plaintiff was convicted that the Plaintiff knew, or was reckless as to whether, the deceased was a police officer as defined by s 74AAA(6)? Answer Yes. Question (ba) If the answer to question (b) is "yes", is s 74AAA capable of applying to the Plaintiff in circumstances where the sentencing court, in determining the Plaintiff's sentence, did not make a finding for the purposes of s 3(2)(a) of the Crimes Act 1958 (Vic)? Answer Yes. Question (bb) If the answer to question (b) and question (ba) is "yes", is s 74AAA capable of applying to the Plaintiff only if he was sentenced on the basis that he knew that, or was reckless as to whether, the murdered person was a police officer as defined by s 74AAA(6)? Answer Yes. Question (bc) If the answer to question (bb) is "yes", does s 74AAA apply to the Plaintiff? Answer Question (c) If the answer to question (a) and question (b) is "yes", is s 74AAA and/or s 127A of the Corrections Act invalid in their application to the Plaintiff in that they do not operate consistently with the Commonwealth Constitution and the constitutional assumptions of the rule of law? Answer Unnecessary to answer. Question (d) Who should pay the costs of the special case? Answer The defendant. Representation C J Horan QC with A F Solomon-Bridge for the plaintiff (instructed by Darebin Community Legal Centre) K L Walker QC, Solicitor-General for the State of Victoria with G A Hill for the defendant (instructed by Victorian Government Solicitor) Interveners M G Sexton SC, Solicitor-General for the State of New South Wales with A M Mitchelmore for the Attorney-General for the State of New South Wales, intervening (instructed by Crown Solicitor's Office (NSW)) P J Dunning QC, Solicitor-General of the State of Queensland with A D Keyes for the State of Queensland, the Attorney-General of intervening (instructed by Crown Law (Qld)) P D Quinlan SC, Solicitor-General for the State of Western Australia with J L Winton for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) M J Wait SC with F J McDonald for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minogue v Victoria Criminal law – Parole – Where s 74AAA of Corrections Act 1986 (Vic) imposes conditions for making parole order for prisoner convicted and sentenced to imprisonment for murder of person who prisoner knew was, or was reckless as to whether person was, police officer – Where s 127A inserted into Corrections Act 1986 (Vic) stating s 74AAA applies regardless of whether prior commencement of s 74AAA prisoner became eligible for parole, prisoner took steps to ask Adult Parole Board of Victoria ("Board") to grant parole, or Board began consideration of whether prisoner should be granted parole – Where prior to commencement of s 74AAA and s 127A plaintiff became eligible for parole and applied for parole and Board began consideration of whether plaintiff should be granted parole – Whether s 74AAA and s 127A apply to plaintiff. Words and phrases – "non-parole period", "parole", "recklessness", "sentencing", "statutory construction". Charter of Human Rights and Responsibilities Act 2006 (Vic), ss 10, 22, 28, 31, Corrections Act 1986 (Vic), ss 74AAA, 127A. Crimes Act 1958 (Vic), s 3. KIEFEL CJ, BELL, KEANE, NETTLE AND EDELMAN JJ. On 27 March 1986 a stolen car containing an explosive device was parked in the vicinity of a number of public buildings in Melbourne, including the Russell Street Police Complex and the Melbourne Magistrates' Court building. A little after 1:00pm the explosive device was detonated. It caused serious injuries to a number of persons and the subsequent death of Angela Rose Taylor, who was a constable in the Victorian police force. Constable Taylor had been on duty in the court and was crossing the roadway in her lunch hour when the bomb exploded. The plaintiff and three co-accused were charged with the murder of Constable Taylor. The Crown case relied upon the doctrine of concert or joint enterprise. The case was that the plaintiff and the other accused were parties to a common plan to explode the bomb. The Crown conceded that it could not prove the part played by any particular accused, but invited the jury to infer that each accused was a guilty participant. After a trial before a jury in the Supreme Court of Victoria, the plaintiff and one co-accused were convicted of the murder. The plaintiff was sentenced by Vincent J on 24 August 1988 to a term of imprisonment for life with a non-parole period of 28 years. The plaintiff's non-parole period ended on 30 September 2016 for the purposes of the Corrections Act 1986 (Vic) ("the Corrections Act"). It marked his "parole eligibility date" within the meaning of reg 82 of the Corrections Regulations 2009 (Vic). It is not disputed that at this time the Adult Parole Board of Victoria ("the Board"), which is established under the Corrections Act1, had power under s 74(1) of that Act to order that the plaintiff be released on parole. In determining whether to make a parole order, s 73A requires that the Board give paramount consideration to the safety and protection of the community. The practice of the Board is that it will only consider whether to make a parole order with respect to a prisoner if the prisoner makes an application for parole. The plaintiff made such an application on 3 October 2016. The procedure undertaken by the Board when an application for parole is made to it is first to make a decision as to whether to proceed to parole planning. It does so after receipt of a report from the Case Management Review Committee ("the CMRC") of the prison in which the person is detained. The CMRC's report supported the plaintiff's parole application. Such a recommendation does not bind the Board. 1 Corrections Act 1986 (Vic), s 61. Bell Nettle Edelman On 20 October 2016 the Board decided to "proceed with parole planning" and to consider the plaintiff's suitability for release on parole on receipt of a from Community Correctional Services Parole Suitability Assessment ("the CCS"). An officer of the CCS was subsequently appointed to the plaintiff's case. On 25 October 2016 the plaintiff provided extensive written submissions in support of his application. On 14 December 2016 s 74AAA ("the 2016 Amendment") was inserted into the Corrections Act2. Sub-sections (1) to (3) provide: "(1) The Board must not make a parole order under section 74 or 78 in respect of a prisoner convicted and sentenced (whether before, on or after term of imprisonment with a non-parole period for the murder of a person who the prisoner knew was, or was reckless as to whether the person was, a police officer, unless an application for the parole order is made to the Board by or on behalf of the prisoner. this section comes into operation) to a The application must be lodged with the secretary of the Board. In considering the application, the Board must have regard to the record of the court in relation to the offending, including the judgment and the reasons for sentence." "Police officer" is defined by sub-s (6) to mean a police officer: "(a) who, at the time the murder of that police officer occurred, was performing any duty or exercising any power of a police officer; or the murder of whom arose from or was connected with the police officer's role as a police officer, whether or not the police officer was performing any duty or exercising any power of a police officer at the time of the murder." The evident purpose of the 2016 Amendment, where the conditions referred to in the sub-sections set out above are present, is to limit the circumstance in which parole may be granted to a prisoner to whom it applies effectively to the end of his or her life. Section 74AAA(4) provides: Justice Legislation Amendment (Parole Reform and Other Matters) Act 2016 (Vic), Bell Nettle Edelman "After considering the application, the Board must not make a parole order under section 74 or 78 (as the case may be) in respect of the prisoner unless the Board— is satisfied (on the basis of a report prepared by the Secretary to the Department) that the prisoner— is in imminent danger of dying, or is seriously incapacitated and, as a result, the prisoner no longer has the physical ability to do harm to any person; and has demonstrated that the prisoner does not pose a risk to the community; and is further satisfied that, because of those circumstances, the making of the parole order is justified." Sub-section (5) provides that, "[f]or the avoidance of doubt", s 73A also applies to the determination of the Board under the section. When it was enacted, the 2016 Amendment did not contain any transitional provisions. On 20 December 2017 s 127A was inserted into the Corrections Act3. It provides: "To avoid doubt, and without limiting the application of the amendments made by Part 2 of the Justice Legislation Amendment (Parole Reform and Other Matters) Act 2016 in respect of applications for parole made on or after the commencement of those amendments— the amendments made by that Part also apply to a prisoner convicted and sentenced as mentioned in section 74AAA(1), those regardless of whether, before amendments— the commencement of the prisoner had become eligible for parole; or the prisoner had taken any steps to ask the Board to grant the prisoner parole; or 3 Corrections Legislation Further Amendment Act 2017 (Vic), s 24. Bell Nettle Edelman (iii) the Board had begun any consideration of whether the prisoner should be should be [sic] granted parole; and the Board may, in its discretion, treat any steps taken by a prisoner to ask the Board to grant the prisoner parole, being steps taken before the commencement of those amendments, as being an application the Board under section 74AAA(2)." the secretary of lodged with In January 2017, before s 127A was enacted, the plaintiff commenced proceedings in this Court. In his Amended Writ of Summons filed on 16 June 2017 he sought declarations that s 74AAA does not apply to him or to his application for a grant of parole and that it is invalid in so far as it purports to apply to him. The questions now before this Court are limited to whether s 74AAA applies to the plaintiff. After commencing his proceedings, the plaintiff asked the Board not to take any further action in relation to his application for parole until the determination of these proceedings. The Board acceded to that request. At the time the parties agreed to state questions of law for the opinion of this Court arising out of the special case, the plaintiff's application for parole had not progressed beyond the steps outlined above. The initial questions The following questions were initially stated for the opinion of the Court: Is s 74AAA of the [Corrections] Act capable of applying to the Plaintiff in circumstances where: (i) before the commencement of that section: (A) the Plaintiff's non-parole period had ended or parole eligibility date had occurred; (B) the Plaintiff had made an application for parole; or (C) the Board had made a decision to proceed with parole planning in respect of the Plaintiff; or (ii) before the commencement of s 127A of the [Corrections] Act, the Plaintiff had commenced this proceeding? Bell Nettle Edelman Is s 74AAA of the [Corrections] Act capable of applying to the Plaintiff in circumstances where it was not an element of the offence of which the Plaintiff was convicted that the Plaintiff knew, or was reckless as to whether, the deceased was a police officer as defined by s 74AAA(6)? If the answer to (a) and (b) is 'yes', is s 74AAA and/or s 127A of the [Corrections] Act invalid in their application to the Plaintiff in that they do not operate consistently with the Commonwealth Constitution and the constitutional assumptions of the rule of law? (d) Who should pay the costs of the special case?" The further questions During the course of the hearing the parties stated two further questions. They are as follows (with some minor grammatical amendments question (bb)): "(ba) If the answer to question (b) is 'yes', is s 74AAA capable of applying to the Plaintiff in circumstances where the sentencing court, in determining the Plaintiff's sentence, did not make a finding for the purposes of s 3(2)(a) of the Crimes Act 1958 (Vic)? If the answer to question (b) and question (ba) is 'yes', is s 74AAA capable of applying to the Plaintiff only if he was sentenced on the basis that he knew that, or was reckless as to whether, the murdered person was a police officer as defined by s 74AAA(6)?" The remaining question If question (bb) is answered in the affirmative, there would remain only one question the answer to which may finally resolve this matter. Whether it is appropriate to do so will be discussed later in these reasons. It may be formulated as: "(bc) If the answer to question (bb) is 'yes', does s 74AAA apply to the Plaintiff?" Bell Nettle Edelman Question (a) There is no right or entitlement to release on parole at the expiration of a minimum term determined at sentencing4. It always remains a possibility that a prisoner may be required to serve the whole head sentence imposed5. The expiration of a minimum term has been said merely to provide an opportunity for the prisoner to be released6 and to constitute a factum by reference to which a statutory parole system operates7. The plaintiff does not now submit that he has a right to parole. He accepts that it is a privilege which is in the grant of the Executive. The right of which he speaks is a right to have the process that he had initiated by his application for parole completed. He submits that the Board's power is engaged once it begins consideration of his application. Once it has commenced it is required to complete its task. Its task is to be completed by reference to the law that was in force prior to the 2016 Amendment, he contends. A similar argument was put in Attorney-General (Q) v Australian Industrial Relations Commission8. A newly enacted section in the Workplace Relations Act 1996 (Cth) required the Commission to cease arbitrating if it was satisfied that the industrial dispute was covered by a State award or employment agreement. The question was whether it applied to a proceeding commenced before it was enacted. The unions submitted that they had acquired the right to have their disputes arbitrated under the pre-existing law. In the joint judgment it was explained9 that the right asserted is more accurately described as a public 4 Crump v New South Wales (2012) 247 CLR 1 at 26-27 [60]; [2012] HCA 20; Knight v Victoria (2017) 91 ALJR 824 at 830 [27]; 345 ALR 560 at 566; [2017] HCA 29. 5 PNJ v The Queen (2009) 83 ALJR 384 at 387 [11]; 252 ALR 612 at 615; [2009] HCA 6. 6 Bugmy v The Queen (1990) 169 CLR 525 at 538; [1990] HCA 18. 7 Crump v New South Wales (2012) 247 CLR 1 at 26-27 [60]. (2002) 213 CLR 485; [2002] HCA 42. 9 Attorney-General (Q) v Australian Industrial Relations Commission (2002) 213 CLR 485 at 502 [40]. Bell Nettle Edelman law right to require the Commission to observe its duty to comply with the laws that exist from time to time. A right of that nature is a right to have a claim or its application considered determination. Their Honours went on to say10 that if the law is changed before an award is made, by placing additional restraints or conditions on the exercise of the power, then the obligation to make a determination according to law is correspondingly modified. in accordance with that governs the statute In the context of the executive release of prisoners on parole it has been observed in a number of cases, most recently in Crump v New South Wales11, that statutes providing for parole may be expected to change from time to time, to reflect changes in government policy and practice. In rejecting the argument put by the plaintiff in Crump that the Parole Board was obliged to determine his application for parole by reference to the law in existence at the time that he was sentenced, Heydon J pointed out12 that the plaintiff had no right or entitlement that the previous statutory regime should continue to apply to him. The question of what a successful parole application may require is one to be answered in the light of whatever the legislation requires at the relevant time13. The relevant time would be when the application for parole comes to be determined. No question of an accrued right to have the plaintiff's application for parole determined by reference to the law prior to the 2016 Amendment arises. His reliance on provisions such as s 14(2) of the Interpretation of Legislation Act 1984 (Vic) and cases such as Esber v The Commonwealth14 is misplaced. In the latter respect, s 74AAA cannot be said impermissibly to interfere with the judicial power to be exercised in these proceedings15. 10 Attorney-General (Q) v Australian Industrial Relations Commission (2002) 213 CLR 485 at 504 [46]. 11 (2012) 247 CLR 1 at 16-17 [28], 19 [36], 20 [37], 26 [60]. 12 Crump v New South Wales (2012) 247 CLR 1 at 28-29 [71]. 13 Crump v New South Wales (2012) 247 CLR 1 at 28 [70]. 14 (1992) 174 CLR 430; [1992] HCA 20. 15 H A Bachrach Pty Ltd v Queensland (1998) 195 CLR 547 at 563-564 [19]-[20]; [1998] HCA 54; Duncan v Independent Commission Against Corruption (2015) 256 CLR 83 at 98 [26], 101-102 [42]; [2015] HCA 32. Bell Nettle Edelman In any event, the plaintiff's argument fails to take account of s 127A. Regardless of the nature of the right to have his application determined, s 127A(a) expressly provides that s 74AAA applies to a prisoner in his position. It says that s 74AAA will apply regardless of three circumstances: whether a prisoner had become eligible for parole; whether the prisoner had taken steps to ask the Board to grant parole; and whether the Board had begun consideration of whether parole should be granted. These were the three reasons identified by the plaintiff in his Second Further Amended Statement of Claim as to why s 74AAA did not apply to him. The plaintiff contends that s 127A does not apply to him because it was not enacted until after he had commenced proceedings and should not be construed as operating retrospectively. He calls in aid the observation of Viscount Dilhorne in delivering the advice of the Privy Council in Zainal bin Hashim v Government of Malaysia16 that for pending actions to be affected by retrospective legislation, the language of the enactment must be such that no other conclusion is possible than that it was the intention of the legislature. Counsel for the plaintiff submits that that principle of construction is of particular importance in the interpretation of legislation affecting the criminal justice system or otherwise impinging on the liberty of the subject17. That contention cannot be accepted. Read in context, the opening words of s 127A, "[t]o avoid doubt", signify that the provision is declaratory of the intended operation of s 74AAA and, therefore, that s 127A operates from the date of commencement of s 74AAA18. As this Court has observed19, it is open to 16 [1980] AC 734 at 742. See also State of Victoria v Robertson (2000) 1 VR 465 at 472 [21] per Batt JA. 17 See R v JS (2007) 230 FLR 276 at 289-290 [45]-[46] per Spigelman CJ (Mason P, McClellan CJ at CL, Hidden and Howie JJ agreeing at 305 [162], 310 [194], [195], [196]); cf Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 520 per Mason CJ, Wilson and Dawson JJ, 523 per Brennan J, 532 per Deane J; [1987] HCA 12. 18 See and compare Australian Railways Union v Victorian Railways Commissioners (1930) 44 CLR 319 at 373-375 per Isaacs CJ; [1930] HCA 52; Seafarers' Retirement Fund Pty Ltd v Oppenhuis (1999) 94 FCR 594 at 598 [16]. 19 H A Bachrach Pty Ltd v Queensland (1998) 195 CLR 547 at 563-564 [19]-[20]. See also Australian Education Union v General Manager of Fair Work Australia (2012) 246 CLR 117 at 143 [53] per French CJ, Crennan and Kiefel JJ; [2012] HCA 19. Bell Nettle Edelman Parliament to enact such a law notwithstanding that it may affect or even render nugatory pending proceedings. The answer to question (a) is "yes". Question (b) It may be accepted, as the plaintiff points out, that s 74AAA is different from the provisions dealt with by this Court in Crump and Knight v Victoria20. Although the provisions in those cases and s 74AAA have in common a purpose to limit the availability of parole and although each may, to an extent, have been modelled on its predecessor, they refer to different classes of prisoner. Crump concerned a parole application made by "a serious offender the subject of a non-release recommendation" and the legislation in Knight was directed expressly to "the prisoner Julian Knight". The prisoner to whom s 74AAA applies is one who has been "convicted and sentenced … to a term of imprisonment with a non-parole period for the murder of a person who the prisoner knew was, or was reckless as to whether the person was, a police officer" (as defined in sub-s (6)). The construction which the plaintiff first advances is that for s 74AAA to apply, a prisoner must have been convicted and sentenced for an offence which has as an element knowledge of or recklessness about the identity of the person murdered as a police officer. This is said to follow from the reference to the prisoner being convicted and sentenced "for" those matters in conjunction with the murder. The plaintiff points out that he was not convicted "'for' the murder of a police officer"; and he was not convicted and sentenced "'for' the murder of a person who he knew was, or was reckless as to whether the person was, a police officer". The defendant does not suggest to the contrary. The defendant points out that there never has been and there is not now an offence having these elements. There is no offence which contains as an element that the murder victim was a police officer. The plaintiff's argument would mean that s 74AAA had no operation at the time that it was enacted or now. Yet it expressly directs attention to offences committed before the section came into force. There is obvious force in these contentions. The plaintiff's answer to the claim that his argument gives the section almost no operative effect is that it might apply in the future if an offence was 20 (2017) 91 ALJR 824; 345 ALR 560. Bell Nettle Edelman created having those elements. Another possibility is that those questions could in the future be specifically raised at trial and a special verdict sought. A third is where a person is sentenced on the basis of specific findings to these effects. These submissions cannot be accepted. The text of s 74AAA(1) does not suggest some possible future operation for the section. It is, as the defendant points out, directed to the past events of conviction and sentence. It is not a proper approach to construction to deny a provision any realistic operation. The plaintiff's third possible sphere of operation for the provisions may be taken as directed to the questions which follow, but it is not addressed to the present question. The answer to question (b) is "yes". Questions (ba) and (bb) It is convenient to deal with these questions together. Both have as their basal proposition that a prisoner's knowledge or recklessness is to be understood as a circumstance connected with the sentencing of the prisoner for murder. On this approach s 74AAA(1) is taken to operate distributively. It is to be read as requiring as a fact that the prisoner has been convicted for the murder of a person who was a police officer; and as a further fact that the prisoner knew or was reckless as to whether the person was a police officer. Construction generally The first limb of the plaintiff's argument respecting question (ba) is that the reference to sentencing in s 74AAA(1) is to sentencing pursuant to s 3(2)(a) of the Crimes Act 1958 (Vic) ("the Crimes Act"). Section 3(2)(a) provides for a standard sentence of 30 years if the prosecution proves beyond reasonable doubt, relevantly, that the person murdered was an emergency worker and the accused knew or was reckless as to that fact. An emergency worker is defined to include Section 3(2)(a) could not have applied to the plaintiff when he was sentenced. It was enacted afterwards22. But the answer to question (ba) must in any event be "yes". True it is that the same mental conditions are referred to in 21 Crimes Act 1958 (Vic), s 3(3); Sentencing Act 1991 (Vic), s 10AA(8). 22 Sentencing Amendment (Emergency Workers) Act 2014 (Vic), s 11. Bell Nettle Edelman s 74AAA(1), but it is apparent from a close textual comparison of the two provisions that their respective areas of operation are very different. A "police officer" as defined in s 3(1) of the Corrections Act means a police officer within the meaning of the Victoria Police Act 2013 (Vic) ("the Victoria Police Act"). Consequently, a "police officer" within the meaning of s 74AAA(1) of the Corrections Act (as defined in s 74AAA(6)) means a police officer within the meaning of the Victoria Police Act who, at the time of the murder of that police officer, was performing any duty or exercising any power of a police officer or whose murder arose from or was connected with the police officer's role as a police officer whether or not he or she was performing any duty or exercising any power of a police officer at the time of the murder. By contrast, s 3(2) of the Crimes Act applies to the sentence to be imposed for the murder of a "custodial officer" on duty or an "emergency worker" on duty. A "custodial officer" for that purpose means a custodial officer within the meaning of s 10AA of the Sentencing Act 1991 (Vic)23, which, although it includes "a police custody officer" within the meaning of the Victoria Police Act, does not include a "police officer" within the meaning of the Victoria Police Act24. A "police custody officer" as defined is a person employed in Victoria Police under Pt 3 of the Public Administration Act 2004 (Vic) who is authorised to act as a police custody officer under s 200D of the Victoria Police Act25. A "custodial officer" as so defined also includes: a Governor, prison officer or escort officer within the meaning of the Corrections Act; a person authorised under the Corrections Act to exercise the functions or powers of a Governor, prison officer or escort officer; and a person authorised under s 9A(1A) or (1B) of the Corrections Act to exercise functions or powers referred to in those sub-sections. An "emergency worker" means26 a police officer or protective services officer within the meaning of the Victoria Police Act and also includes ambulance officers, fire fighters of various kinds and State Emergency Service operators of several kinds. Thus it is apparent that the range of victims to which s 74AAA applies is at once both broader and more circumscribed than the range of victims to which s 3(2)(a) of the Crimes Act applies. It is broader in as much as it applies to police officers whether or not they are on duty. It is more 23 Crimes Act 1958 (Vic), s 3(3). 24 Sentencing Act 1991 (Vic), s 10AA(8). 25 Victoria Police Act 2013 (Vic), s 3(1). 26 Sentencing Act 1991 (Vic), s 10AA(8). Bell Nettle Edelman circumscribed to the extent that it only applies to police officers, whereas s 3(2)(a) of the Crimes Act applies not only to police officers but also to protective services officers, police custody officers, prison officers, escort officers and other emergency service workers. Viewed in contrast to s 3(2)(a), there is nothing in the text or purpose of s 74AAA(1) to suggest as narrow an operation as that for which the plaintiff contends. Its natural reading is that whenever the circumstances provided for in s 74AAA(1) are present, s 74AAA applies. Question (ba) should be answered "yes". The essential issue with respect to question (bb) is how the factum that "the prisoner knew was, or was reckless as to whether the [murdered] person was, a police officer" is to be established. Clearly enough both facts – that of conviction for the murder of a police officer and that of the prisoner's knowledge or recklessness as to the person being a police officer – are required to be present before s 74AAA(4) applies. The question is by what means are they to be established. Whether the deceased officer was a police officer who at the time of the murder was performing duties or exercising powers of a police officer or whose murder was connected with his or her role are all matters critical to the assessment of the nature and gravity of the crime and at least in some cases also the prisoner's moral culpability. Thus they should be readily apparent from the sentencing remarks. The critical issue is how it is to be established whether at the time of the murder the prisoner knew or was reckless as to whether the victim was a police officer performing duties or exercising powers of a police officer or whose murder was connected with his or her role as a police officer ("a police officer within the meaning of s 74AAA(1)"). It is the plaintiff's contention that s 74AAA(1) is satisfied and s 74AAA(4) applies only if a prisoner was sentenced on the basis that he or she knew or was reckless as to whether the person murdered was a police officer within the meaning of s 74AAA(1) at the time the act causing death was committed. On this approach the Board would apply the findings made by the sentencing judge. Those findings would be the only evidence upon which the Board acts. The defendant argues that the question is entirely one for the Board. It may satisfy itself about a prisoner's state of mind at the relevant time by Bell Nettle Edelman making such enquiries as it considers necessary. It would not be limited to the court record and sentencing remarks. It could even disagree with a finding made by the court. The principal difficulty in the way of the construction for which the defendant contends is that it would seem to require the addition of words to s 74AAA(1) to make it clear that the Board is intended to satisfy itself as to the question of the prisoner's state of mind. Those drafting the sub-section could reasonably have supplied words to this effect had it been intended that the Board was to conduct an enquiry into facts other than those which formed the basis for the prisoner's sentencing. It is no function of the courts to fill in gaps in legislation27. There is no clear necessity for such an implication28 in order to give sense and meaning to s 74AAA(1) construed in its context29. The text of s 74AAA(1) points to the sentencing process. Section 74AAA(3) requires the Board to have regard to the court record and sentencing remarks. It cannot be said to be necessary to advance the purpose of s 74AAA for the Board to undertake its own enquiry. True it is that the Corrections Act gives the Board a power to "inform itself on any matter as it sees fit"30. But this general power is subject to particular provisions which identify the task which the Board is to undertake. There are a number of provisions in the Corrections Act from which it may be inferred that the Board is to make enquiries in order to satisfy itself about matters pertaining to a prisoner. By way of example, s 74AABA(1) provides that the Board must not make a parole order in respect of a prisoner serving a sentence of imprisonment for an offence of murder, conspiracy to murder, accessory to murder or manslaughter "unless the Board is satisfied" that the prisoner has co- operated satisfactorily in the investigation to identify the body or remains of the 27 Marshall v Watson (1972) 124 CLR 640 at 649; [1972] HCA 27; Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1 at 12; [1972] HCA 21; Taylor v The Owners – Strata Plan No 11564 (2014) 253 CLR 531 at 548 [38]; [2014] HCA 9. 28 Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd (2008) 232 CLR 314 at 332 [44]; [2008] HCA 9, quoting from Thompson v Goold & Co [1910] AC 29 Director-General of Education v Suttling (1987) 162 CLR 427 at 433; [1987] HCA 30 Corrections Act 1986 (Vic), s 71. Bell Nettle Edelman victim or the place where they may be found. For that purpose, sub-s (3) of that section requires the Board to have regard to certain reports and to the question of the capacity of the prisoner to co-operate in the investigation of the offence. There are other provisions which expressly require the Board to consider circumstances or to make enquiries as to a prisoner's condition. Section 77(3) and (5) provide that the Board must cancel the parole of a prisoner in certain circumstances "unless the Board is satisfied that circumstances exist that justify the continuation of the parole". Section 77A(2) provides that it may revoke the cancellation of a prisoner's parole "if it is satisfied that exceptional circumstances exist". Section 78(4) contains a similar provision with respect to making a parole order where parole has been cancelled on a previous occasion. Section 77D provides that the Board may arrange for a medical, psychiatric or psychological examination of a prisoner and require a report in determining whether to make, vary, cancel or revoke the cancellation of a parole order. Provisions such as these may be contrasted with s 74AAA(1), which contains no mention that the Board inform itself. It describes the prisoner to whom it is to apply by reference to ascertainable facts and s 74AAA(3) enjoins the Board to have regard to the record of the court in relation to the offending, including the judgment and reasons for sentence. The natural reading of s 74AAA(1) is that the mental element necessary is to be gleaned from what has been said by the court on sentencing. It is not necessary to resort to principles which might require a strict approach to the construction of s 74AAA(1), for which the plaintiff contends. A construction which limits the role of the Board in the way explained follows from its terms. Reference to a stricter approach, however, serves to illuminate aspects of the operation of the sub-section, properly construed. The consequence of s 74AAA(4) applying is effectively to deny a prisoner an opportunity for parole. In Smith v Corrective Services Commission (NSW)31 reference was made to the established principle of statutory construction that a penal statute, or one affecting a person's liberty, should be construed strictly. The Court was there dealing with a provision concerning the remission of a period of imprisonment with respect to a prisoner where parole had been revoked. It is unnecessary to decide whether this principle should be viewed as a general rule of construction, as a subsidiary rule of construction, or merely as a matter of context because, however this strict approach to construction is viewed, 31 (1980) 147 CLR 134 at 139; [1980] HCA 49. Bell Nettle Edelman it reinforces the limited role for the Board with respect to s 74AAA(1). That is so regardless of the fact that the plaintiff has no right, as such, to parole, as Consistently with a strict approach to construction, regard may be had to the consequences of a prisoner's state of mind being left as a matter for the Board. It is to be recalled that when sentencing a court will not take into account facts which are adverse to the interests of the accused unless they are established beyond reasonable doubt33. This may be contrasted with the position of the Board, which is not required to make findings to any particular standard. It is not bound by the rules of evidence or any practice or procedure applying to courts in the performance of its powers, functions or duties34. It is not obliged to accord natural justice35. It may also be borne in mind that on the defendant's construction, the Board will be making an enquiry into the state of mind of a prisoner with respect to events which occurred many years, probably decades, ago. The defendant submits that to limit the Board to findings made on sentencing would prevent it taking into account any new or compelling evidence bearing upon the prisoner's state of mind at the relevant time. Admissions made whilst in prison might fall into this category. But even if s 74AAA did not apply in a particular case, it would not prevent the Board taking a matter such as this into account in determining whether to grant parole. Construction by reference to the Charter The plaintiff seeks to support his construction of s 74AAA by reference to s 32(1) of the Charter of Human Rights and Responsibilities Act 2006 (Vic) ("the Charter"), which requires that: "So far as it is possible to do so consistently with their purpose, all statutory provisions must be interpreted in a way that is compatible with human rights." 32 See [17]. 33 R v Olbrich (1999) 199 CLR 270 at 281 [27]; [1999] HCA 54. 34 Corrections Act 1986 (Vic), s 71. 35 Corrections Act 1986 (Vic), s 69(2). Bell Nettle Edelman The Charter may be overridden by legislation36, but the 2016 Amendment contains no such provision. The Charter applies. The human rights to which the plaintiff refers are those listed in s 10(b) of the Charter, which prohibits a person being "treated or punished in a cruel, inhuman or degrading way". Section 10 is in substantially the same terms as Art 3 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1950) ("the Convention"). Section 32(2) of the Charter provides that in interpreting a statutory provision regard may be had to international law and the judgments of domestic, foreign and international courts and tribunals relevant to a human right to which the Charter applies. In Vinter v United Kingdom37, the European Court of Human Rights (Grand Chamber) ("the ECHR") said38 that there is now clear support in European and international law for the principle that all prisoners, including those serving life sentences, be offered the possibility of rehabilitation and the prospect of release if that rehabilitation is possible. The discretion of the Secretary of State to grant parole to prisoners serving a whole life minimum term was confined by a Prison Service Order, which stated that release would only be ordered in circumstances similar to those found in s 74AAA(4) in the present case. The ECHR held that it violated Art 3 because it amounted to ill-treatment. It approved observations that in such a circumstance a prisoner can never atone for his offence and his punishment continues until death39. In the course of argument it was pointed out that the construction of s 74AAA(1) for which the plaintiff contends would not render it compatible with the human right upon which he relies. It would still apply to prisoners who fulfilled the description there provided. At best, his construction might narrow the class of persons to whom it applies. 36 Charter of Human Rights and Responsibilities Act 2006 (Vic), s 31. 37 (2013) 63 EHRR 1. 38 Vinter v United Kingdom (2013) 63 EHRR 1 at 38 [114]. 39 Vinter v United Kingdom (2013) 63 EHRR 1 at 17-18 [54], 38 [112], referring to R (on the application of Wellington) v Secretary of State for the Home Department [2008] 3 All ER 248. See also cases which followed: R v McLoughlin [2014] 1 WLR 3964; [2014] 3 All ER 73; Hutchinson v United Kingdom (2015) 61 EHRR Bell Nettle Edelman In further submissions provided subsequent to the hearing the plaintiff submits that s 74AAA(1) would accord with s 32(1) if a construction minimised the extent of the incompatibility with or encroachment on human rights. His construction would infringe the human rights of fewer people and would remove the Board's power to grant parole only with respect to persons who had been found by a sentencing court, or a jury on special verdict, to have had the requisite state of mind. By way of analogy, the plaintiff draws upon what has been said about the approach to construction required by the principle of legality, namely that a construction which avoids, minimises or mitigates an encroachment on rights and freedoms is to be preferred40. But despite the apparent logic of that submission, no jurisprudence of the ECHR or other foreign or international court was identified as supporting it. It is not necessary, however, to determine whether s 32(1) can be applied in this way. The ordinary processes of construction clearly favour a narrower approach and if the Charter applied in the way contended it would lead to no different conclusion. Question (bb) should be answered "yes". Question (bc) The affirmative answer to question (bb) means that there is only one further question remaining upon which the resolution of this matter depends, namely, whether s 74AAA in fact applies to the plaintiff, having regard to s 74AAA(1). The defendant submits that a preferable question might be whether it would be open to the Board to conclude that s 74AAA(1) applies to the plaintiff. The submission overlooks that the defendant has itself raised the question in its pleading in this matter. It alleges that "the Plaintiff was sentenced on the basis that he knew that, or was reckless as to whether, the murdered person was a 'police officer' as defined in s 74AAA(6)". The issue is therefore before this Court. Further, all relevant evidence as to this issue is contained in the special case and the parties have addressed it in their submissions. It was for these reasons that the Court advised the parties that in the event that the answer to 40 Momcilovic v The Queen (2011) 245 CLR 1 at 46-47 [43]-[44], 200 [512]; [2011] HCA 34. Bell Nettle Edelman question (bb) is in the affirmative, it was inclined to answer the remaining question. Section 74AAA(1) refers to knowledge or recklessness on the part of the person convicted of murder as to the fact that the person murdered was a police officer. For the offence of murder, recklessness requires that the accused be aware of the probability that his or her act would cause death or grievous bodily harm41. It requires a subjective appreciation or actual foresight on the part of the accused of the probability of the consequence of the act to which he or she was a party42. The defendant accepts what is required for recklessness in connection with the offence of murder, but submits that for the purposes of s 74AAA(1) it might be necessary for the plaintiff only to have been aware of the possibility that the murder victim was a police officer. This approach is said to be available because the sub-section is concerned with the question of parole. It does not, however, accord with the proper construction of s 74AAA(1), which puts the approach to questions of knowledge in the context of the sentencing of the prisoner for the offence of murder. For the plaintiff to have been sentenced on the basis of his recklessness as to whether the deceased was a police officer, a finding by the sentencing judge would have been required, beyond reasonable doubt, as to the plaintiff's subjective appreciation or actual foresight of that fact and his determination to proceed regardless of it43. The defendant submits that regard should also be had to the reasons of the Court of Criminal Appeal in this matter, but that would not accord with the terms of s 74AAA, which speaks only of a person being sentenced on a particular basis. Consistently with its terms, regard could only be had to the reasons of an appellate court if it itself engaged in sentencing, that is to say, by allowing an appeal and re-sentencing. The remarks of the sentencing judge contain no reference to the plaintiff's state of mind concerning the identity of the police constable who was killed. 41 R v Crabbe (1985) 156 CLR 464 at 470; [1985] HCA 22. 42 Pemble v The Queen (1971) 124 CLR 107 at 119, 127, 135; [1971] HCA 20; La Fontaine v The Queen (1976) 136 CLR 62 at 68, 78, 86, 90, 94; [1976] HCA 43 Pemble v The Queen (1971) 124 CLR 107 at 119, 127, 135. Bell Nettle Edelman That is understandable, given that the offence committed was indiscriminate in its possible effect with respect to victims. Whilst it was possible that police officers could be affected, so could persons working in the court and other public buildings, or people making their way along the street. No particular person or class of person was targeted by the common enterprise and this would seem to be required by s 74AAA(1) and (6). The reasons of the sentencing judge reveal that the plaintiff and those with whom he acted sought to achieve a maximum effect by placing the vehicle not only in front of the Police Complex and opposite the Magistrates' Court building but also, as his Honour said, "in a major thoroughfare, close to the centre of the city of Melbourne and only a short distance from the intersection of that thoroughfare with La Trobe Street which also carries a great deal of traffic. The explosion occurred at lunchtime, on a working day, when by reason of the proximity of the Easter holiday period one might reasonably have expected the roadways and footpaths in the vicinity to be even busier than might normally be the situation." His Honour found that the location selected for the bombing and the time chosen for its detonation were powerful indicators of the underlying motivation for it, namely the plaintiff and his co-accused's "hatred and contempt for this society and its institutions". There was evidence of the plaintiff's hatred of police, but there was no finding to this effect made by the sentencing judge. His Honour did make reference to "violent actions" directed against members of the police force, but this was in connection with the application of the principle of deterrence as relevant to sentencing. It was not directed to the state of mind of the plaintiff at the relevant time. The plaintiff was not sentenced on the basis that he knew that the person murdered was a police officer within the meaning of s 74AAA(1) or that he was reckless as to that fact. Section 74AAA does not apply to him. Question (c) The question whether s 74AAA and s 127A are invalid as contrary to constitutional assumptions concerning the rule of law was one which drew submissions from the interveners. Given the answers to questions (bb) and (bc), it is not necessary to answer it. Question (d) The defendant should pay the plaintiff's costs. Bell Nettle Edelman Orders The questions set out above should be answered as follows: Question (a) – Yes. Question (b) – Yes. Question (ba) – Yes. Question (bb) – Yes. Question (bc) – No. Question (c) – Unnecessary to answer. Question (d) – The defendant. The Victorian Charter of Human Rights and Responsibilities, as the Charter of Human Rights and Responsibilities Act 2006 (Vic) is known44, has as its main purpose the protection and promotion of human rights by means which include setting out the human rights which the Victorian Parliament specifically seeks to protect and promote45, ensuring that all statutory provisions are interpreted so far as is possible in a way that is compatible with those human rights46, imposing an obligation on all public authorities to act in a way that is compatible with human rights47, and requiring a "statement of compatibility" with human rights to be prepared in respect of every Bill introduced into the Victorian Parliament48. The human rights which the Victorian Parliament specifically seeks to protect and promote are the civil and political rights set out in Pt 2 of the Charter. Section 6(1) of the Charter refers to them as human rights that "[a]ll persons have". One of the human rights set out in Pt 2 of the Charter that all persons have is the right, set out in s 10(b), not to be "treated or punished in a cruel, inhuman or degrading way". On the widely accepted international understanding that incarcerating a person without hope of release is an affront to the inherent dignity of that person, it is not in dispute that the right set out in s 10(b) encompasses the right of a prisoner serving a life sentence to be "offered the possibility of rehabilitation and the prospect of release if that rehabilitation is achieved"49. Another of the human rights set out in Pt 2 of the Charter is that set out in s 22(1), which provides that "[a]ll persons deprived of liberty must be treated with humanity and with respect for the inherent dignity of the human person". The Charter has an additional purpose of enabling the Victorian Parliament, in "exceptional circumstances", to make an "override declaration" that a statutory provision has effect despite being expressly declaring 44 Section 1(1) of the Charter. 45 Section 1(2)(a) and Pt 2 of the Charter. 46 Sections 1(2)(b) and 32(1) of the Charter. 47 Sections 1(2)(c) and 38 of the Charter. 48 Sections 1(2)(d) and 28 of the Charter. 49 Vinter v United Kingdom (2013) 63 EHRR 1 at 17-18 [54] (quoting R (on the application of Wellington) v Secretary of State for the Home Department [2008] 3 All ER 248 at 268-269 [39(iv)]), 37-38 [110]-[114]. incompatible with one or more of the human rights in the Charter50. To the extent that an override declaration is made in respect of a statutory provision, the requirement to interpret that provision in a way that is compatible with human rights does not apply51. Consistently with the founding principles of the Charter that "human rights are essential in a democratic and inclusive society" and that "human rights belong to all people without discrimination"52, the legislative process for making an override declaration is constrained in two ways. First, the exceptional circumstances that justify the override declaration are to be explained in a statement made to the House of the Victorian Parliament in which the Bill for the legislation containing the override declaration is introduced53. Second, an override declaration expires after five years, but may at any time be re-enacted54. The first of those constraints on the legislative process for making an override declaration ensures that, before the Victorian Parliament chooses to enact a provision that is to have effect despite being incompatible with a human right of any person, it is required to confront that choice squarely and is placed in a position to evaluate the justification for that choice. The second ensures that a person's human rights once overridden cannot be permanently forgotten. The justification for that person's human rights being overridden must be periodically re-evaluated. When in 2014 the Victorian Parliament enacted s 74AA of the Corrections Act55, prohibiting the Board from making a parole order in respect of the prisoner Julian Knight unless, amongst other things, the Board is satisfied that he "is in imminent danger of dying, or is seriously incapacitated"56, the Victorian 50 Sections 1(3)(a) and 31 of the Charter. 51 Section 31(6) of the Charter. 52 Preamble to the Charter. 53 Section 31(3) and (5) of the Charter. 54 Section 31(7) and (8) of the Charter. 55 Section 3 of the Corrections Amendment (Parole) Act 2014 (Vic). 56 Considered in Knight v Victoria (2017) 91 ALJR 824; 345 ALR 560; [2017] HCA Parliament made an override declaration. It specifically declared that the Charter "has no application to this section"57. When in 2016 the Victorian Parliament came to enact s 74AAA of the Corrections Act58, prohibiting the Board from making a parole order in respect of a prisoner within the class of prisoners described in s 74AAA(1) unless substantially similar conditions are satisfied, the Victorian Parliament chose not to make an override declaration. That was in spite of the Minister who introduced the Bill for s 74AAA opining, in the statement of compatibility which she laid before the Legislative Assembly, that the constraint on granting parole imposed by the section "may induce a sense of hopelessness in an offender" incompatibly with the human rights in both s 10(b) and s 22(1) of the Charter59. Against the background of that expression of opinion in the statement of compatibility, the State in this proceeding did not attempt to argue that the limitations imposed by s 74AAA(4) of the Corrections Act on the making of a parole order subjected the human rights of a prisoner within the class of prisoners described in s 74AAA(1) only to what s 7(2) of the Charter describes as "such reasonable limits as can be demonstrably justified in a free and democratic society based on human dignity, equality and freedom". Because it condemns each of them to a life without hope, the operation of s 74AAA(4) is incompatible with the human rights set out in ss 10(b) and 22(1) of the Charter of every prisoner within the class of prisoners identified in s 74AAA(1). Because s 32(1) of the Charter was relegated to the periphery of the argument, however, this case is not an appropriate occasion for this Court to revisit the important question of the content of the requirement of that provision that "[s]o far as it is possible to do so consistently with their purpose, all statutory provisions must be interpreted in a way that is compatible with human rights" if all questions concerning the construction of s 74AAA(1) can be resolved in a manner which excludes Mr Minogue from the class of prisoners identified in s 74AAA(1) without reference to s 32(1). Not without hesitation, I am persuaded that they can. None of the four competing interpretations of the class of prisoners described in the text of s 74AAA(1) advanced by the parties in argument can be ruled out by reference to s 35(a) of the Interpretation of Legislation Act 1984 57 Section 74AA(4) of the Corrections Act. 58 Section 3 of the Justice Legislation Amendment (Parole Reform and Other Matters) Act 2016 (Vic). 59 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 6 December (Vic)60 ("the Interpretation of Legislation Act") as failing to promote the statutory purpose of the insertion of s 74AAA into the Corrections Act. That purpose was identified in the Justice Legislation Amendment (Parole Reform and Other Matters) Act 2016 (Vic) ("the 2016 Amendment Act") in terms no more specific than "to amend [the Corrections Act] ... in relation to conditions for the making of a parole order in relation to a prisoner convicted and sentenced to a term of imprisonment with a non-parole period for the murder of a police officer"61. The parties pointed in the course of argument to no statutory reference or extrinsic material which would serve to define that statutory purpose with more precision or which would indicate a parliamentary intention to confine that statutory purpose more narrowly. The first two of the competing interpretations were advanced by Mr Minogue alone. The first was that the prisoner needed to be convicted of the non-existent offence of murder of a police officer of which knowledge that, or recklessness as to whether, the victim was a police officer is an element. The second was that the prisoner needed to be convicted only of the offence of murder but needed to be sentenced under s 3(2)(a) of the Crimes Act. The interpretations are to be rejected because neither interpretation is textually open for reasons elaborated by the plurality: the first gives no work to the bracketed reference in s 74AAA(1) to a prisoner convicted and sentenced before s 74AAA came into operation, and the second can explain part but not all of the definition of "police officer" in s 74AAA(6). The remaining interpretations of the class of prisoners described in the text of s 74AAA(1) were advanced by the State. The third, which the State advanced only in the alternative and which Mr Minogue also took up in the alternative, was that the prisoner needed to be convicted of the offence of murder and needed to be sentenced on the basis that the prisoner knew that, or was reckless as to whether, the victim was a police officer. The fourth, which the State advanced alone, had two variations. On the first variation, the prisoner needed to be a person of whom the Board was satisfied that he or she was convicted and sentenced for murder and of whom the Board was satisfied that he or she knew that, or was reckless as to whether, the victim was a police officer. On the second variation, the prisoner needed to be a person who as an objective fact was convicted and sentenced for murder and who as an objective fact knew that, or was reckless as to whether, the victim was a police officer. The first variation of the fourth interpretation of s 74AAA(1) can be excluded on the basis that it too is not textually open for reasons again elaborated 60 See Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249 at 262; [1990] HCA 41. 61 Section 1(a)(i) of the 2016 Amendment Act. by the plurality: it involves reading into s 74AAA(1) a requirement for satisfaction on the part of the Board in the face of requirements for satisfaction on the part of the Board appearing expressly both in s 74AAA(4)(a) and (b) and in s 74AABA(1), which were also introduced by the 2016 Amendment Act. The remaining interpretations, being the third interpretation and the second variation of the fourth interpretation, are, in my opinion, open on the text of s 74AAA(1). There is, to that limited extent, a "constructional choice" to be made62. The question of whether a prisoner is within the class of prisoners defined by the third interpretation of s 74AAA(1) or within the class defined by the second variation of the fourth interpretation of s 74AAA(1) is on either of those competing interpretations a question of the prisoner's state of mind at the time of committing the offence of murder which must be answered objectively. If in dispute, it must be answered by a court in civil proceedings for pre-emptory declaratory relief or for judicial review of action or inaction of the Board purporting to apply s 74AAA. The difference between the two interpretations lies in the scope of the factual inquiry informing that determination. On the third interpretation of s 74AAA(1), the factual inquiry into the prisoner's state of mind is limited to the facts found by the sentencing judge which formed the basis of the sentence imposed on the prisoner. On established principle, those are facts which the sentencing judge would have needed to have found proved beyond reasonable doubt on the evidence led at trial63. On the second variation of the fourth interpretation, in contrast, the court in the later civil proceedings would be permitted and required to re-examine the record of the criminal trial (as it might perhaps be supplemented in the civil proceedings by other evidence) so as to make its own finding on the balance of probabilities as to the prisoner's state of mind. The third interpretation is, in my opinion, to be preferred because it involves no supplementation of the established system of criminal justice by which questions of fact as to a prisoner's state of mind at the time of committing an offence are ordinarily determined once and for all at the criminal trial for that offence and because it avoids entirely the spectre of inconsistent findings in criminal and civil proceedings. Against the background that "a convicted 62 Cf Momcilovic v The Queen (2011) 245 CLR 1 at 50 [50]; [2011] HCA 34. See generally Brysland and Rizalar, "Constructional Choice", (2018) 92 Australian Law Journal 81. 63 R v Olbrich (1999) 199 CLR 270 at 281 [25]-[27]; [1999] HCA 54; Filippou v The Queen (2015) 256 CLR 47 at 69-70 [64]; [2015] HCA 29. See also ss 4 and 141 of the Evidence Act 2008 (Vic). prisoner, in spite of his imprisonment, retains all civil rights which are not taken away expressly or by necessary implication"64, my opinion is that the third interpretation is also to be preferred because, by producing the narrower class of prisoners to which s 74AAA(4) has the potential to apply in comparison with the only textually available alternative interpretation of s 74AAA(1), it affords the greater prospect of a prisoner in the position of Mr Minogue, through demonstrated rehabilitation and subject to appropriate safeguards, experiencing some measure of the common law right to liberty65. The third interpretation is accordingly to be preferred without needing to form any view as to whether it is also required by s 32(1) of the Charter. On that interpretation, the reference in s 74AAA(1) to "a prisoner convicted and sentenced (whether before, on or after this section comes into operation) to a term of imprisonment with a non-parole period for the murder of a person who the prisoner knew was, or was reckless as to whether the person was, a police officer" is to a prisoner convicted of the offence of murder and sentenced on the basis that the prisoner knew that, or was reckless as to whether, the victim was a police officer. For these reasons, I agree with the answers proposed by the plurality to questions (b), (ba) and (bb) concerning the construction of s 74AAA(1). Although the answer to question (bb) strictly renders an answer to question (a) unnecessary, question (a) is proposed to be answered in the affirmative by the plurality. It is appropriate that I express my agreement with that answer. My agreement with the answer to question (a) is sufficiently based on a straightforward reading of s 127A of the Corrections Act. Whether Mr Minogue would have had an accrued right, within the meaning of s 14(2)(e) of the Interpretation of Legislation Act, to have his eligibility for parole considered in accordance with the Corrections Act as it stood before the commencement of the 2016 Amendment Act is a topic on which I prefer to express no view. If he did, s 127A of the Corrections Act manifests a contrary intention within the meaning of s 4(1)(a) of the Interpretation of Legislation Act sufficient to displace the application of s 14(2)(e) of the Interpretation of Legislation Act on and from the commencement of the 2016 Amendment Act. By declaring the applicability of s 74AAA to a prisoner who had become eligible for parole before the commencement of the 2016 Amendment Act in intention unqualified terms, s 127A sufficiently manifests that contrary 64 Raymond v Honey [1983] 1 AC 1 at 10, 14. 65 Williams v The Queen (1986) 161 CLR 278 at 292; [1986] HCA 88. notwithstanding that Mr Minogue commenced this proceeding before s 127A itself was enacted. For the reasons given by Spigelman CJ in Attorney-General (NSW) v World Best Holdings Ltd66, I consider that the Privy Council in Zainal bin Hashim v Government of Malaysia67 overstated the strength of the common law presumption that retrospective legislation will not be interpreted to interfere with rights in issue in pending proceedings unless the statutory language is such that "no other conclusion is possible than that that was the intention of the legislature". As Mason JA had earlier stated in Bawn Pty Ltd v Metropolitan Meat Industry Board68: "Once it is accepted that the general principle of construction recognizes that a statute may operate retrospectively so as to disturb and alter substantive rights which accrued before the commencement of the statute, provided that the statutory intention in that behalf is manifested with sufficient clarity, it is not easy to see why any different rule should be applied to the possible operation of the statute on rights which have already accrued, but are the subject of pending proceedings, at the time when the statute commences to operate. True it is that in the latter case an added element of injustice may arise in the form of a liability to costs in circumstances in which the award of costs lies not in the discretion of the court, but follows automatically the result of the litigation. Nevertheless, it does not seem that the injustice which will or may result from an interference with substantive rights in pending suits is in general so much greater that a stronger presumptive rule should be applied in such a case, in particular a rule which, according to its formulation, insists on a specific or explicit reference to rights in pending actions as an essential preliminary to the application of the new statute to those rights." Finally, for the reasons given by the plurality, I agree with the proposed answer to question (bc) to the effect that Mr Minogue is outside the class of prisoners to which s 74AAA(1) refers with the result that s 74AAA(4) does not apply to him. I also agree with the proposed answers to questions (c) and (d). 66 (2005) 63 NSWLR 557 at 570-574 [48]-[66]. 67 [1980] AC 734 at 742. 68 (1970) 72 SR (NSW) 466 at 487. GORDON J. The plaintiff is serving a life sentence for murder with a non-parole period of 28 years. The deceased was an on-duty police officer crossing the road during her lunch hour. The earliest date on which the plaintiff could be released on parole under s 74 of the Corrections Act 1986 (Vic) ("the Act") was 30 September 2016, which was the end of the plaintiff's "non-parole period"69 – the plaintiff's "parole eligibility date"70. On 3 October 2016, the plaintiff submitted a parole application form to the On 13 October 2016, a case management review committee decided that the plaintiff's application met the requirements for a parole application. On 20 October 2016, the Board decided to "proceed with parole planning" and to consider the plaintiff's suitability for release on parole on receipt of a Parole Suitability Assessment from Community Correctional Services ("CCS") within Corrections Victoria. A CCS officer was appointed and the plaintiff made a written submission in support of his application for parole. Then, on 14 December 201672, s 3 in Pt 2 of the Justice Legislation Amendment (Parole Reform and Other Matters) Act 2016 (Vic) commenced operation, inserting s 74AAA into the Act. Section 74AAA applies to "a prisoner convicted and sentenced … to a term of imprisonment with a non-parole period for the murder of a person who the prisoner knew was, or was reckless as to whether the person was, a police officer"73. The section provides that parole may not be granted to such a prisoner unless the Board is satisfied that the prisoner is in imminent danger of dying, or is so seriously incapacitated that, as a result, the prisoner no longer has the physical ability to do harm to any person, and the prisoner has demonstrated that they do not pose a risk to the community74. In its terms, it limits the possible grant of parole to a narrow window at the end of the prisoner's life. 69 For the purposes of s 74 of the Act. 70 reg 82(1) of the Corrections Regulations 2009 (Vic). 71 Established under s 61 of the Act. 72 s 2(1) of the Justice Legislation Amendment (Parole Reform and Other Matters) Act 2016 (Vic). 73 s 74AAA(1) of the Act. 74 s 74AAA(4) of the Act. On 1 January 2017, the plaintiff brought these proceedings in this Court and, by an amended statement of claim filed in June 2017, sought declarations that s 74AAA did not apply to him or his application for a grant of parole and that s 74AAA was invalid insofar as it purports to apply to the plaintiff or to the consideration of the grant of parole to the plaintiff. Then, on 20 December 201775, s 24 of the Corrections Legislation Further Amendment Act 2017 (Vic) commenced operation, inserting s 127A into the Act. Section 127A relevantly provides that, "[t]o avoid doubt", the amendments made by Pt 2 of the Justice Legislation Amendment (Parole Reform and Other Matters) Act 2016 (Vic) (inserting s 74AAA) apply to a prisoner regardless of whether before the commencement of those amendments the prisoner had become eligible for parole, the prisoner had taken any steps to ask the Board to grant the prisoner parole, or the Board had begun any consideration of whether the prisoner should be granted parole76. By his second further amended statement of claim, the plaintiff also challenges the validity of s 127A. The seven questions stated for the opinion of the Court are set out in the reasons of other members of the Court. For the following reasons, in addition to those set out in the reasons for judgment of Kiefel CJ, Bell, Keane, Nettle and Edelman JJ, I agree with the answers there proposed. I agree that, on the proper construction of the Act, s 74AAA applies only if the prisoner was convicted and sentenced for the murder of a police officer and the prisoner knew, or was reckless as to whether, the person murdered was a police officer. Those facts may be, but do not need to be, an element of the offence for which the prisoner was convicted and sentenced. (In this case they were not.) The Board must have regard to the record of the court77 in relation to the offending, including the judgment and reasons for sentence78, in satisfying itself of the existence of those ascertainable facts. The task of the Board is confined. If the court did not find those facts, the section does not apply to a prisoner. I wish, however, to say something more about two aspects of the plaintiff's argument: that s 74AAA takes away or infringes a right or entitlement 75 s 2(1) of the Corrections Legislation Further Amendment Act 2017 (Vic). 76 s 127A(a) of the Act. 77 As to the content of the record of the court, see Chitty, A Practical Treatise on the Criminal Law, (1847), vol 1 at 720 cited in Turner, Kenny's Outlines of Criminal Law, 19th ed (1966) at 553 [650] n 1. 78 s 74AAA(3) of the Act. of the plaintiff and, further, that s 74AAA (either alone or in conjunction with s 127A) operates retrospectively. The points are closely related. Both of these points should be rejected. Both fail at the first hurdle – the proper construction of the Act. Infringe or take away right? At the expiration of a minimum term fixed by a sentencing judge, the Act does not provide for or grant any right or entitlement to release on parole and the plaintiff did not contend otherwise79. A minimum term does no more than set a period during which a person is not eligible to be released on parole80. That was the position prior to the introduction of s 74AAA. The Act provided, and still provides, that the Board may make a parole order81. Prior to the enactment of s 74AAA, the only express criterion governing the Board's decision under s 74(1) was the requirement in s 73A for the Board to give paramount consideration to the safety and protection of the community. And, under the Act or otherwise, a prisoner has no right, entitlement or expectation that the Board's jurisdiction concerning an application for parole would be governed by the statutory regime in force at their "parole eligibility date" or when an application for parole is submitted. In October 2016, the Board, having considered the plaintiff's application, decided to "proceed with parole planning" in order to consider the plaintiff's suitability for release on parole. That "decision" of the Board does not have any statutory effect. That "decision" does not enliven any statutory entitlement, or accrued right or expectation, to a grant of parole or to have a parole application determined by reference to any particular criteria under the Act. In fact, prior to the enactment of s 74AAA(1), which includes the words "unless an application … is made to the Board by or on behalf of the prisoner", there was no statutory requirement for a prisoner to make an application for parole. Rather, it was a "practice" (not a statutory requirement) to require a prisoner to make an application for parole to the Board. There was nothing that the Act required the plaintiff to do and, therefore, nothing for him to "enliven". The Act reflects that it is the executive that has the power or retains the privilege to order a prisoner's release on parole and, further, that the system to determine the exercise of that power or privilege may be amended from time to 79 See Knight v Victoria (2017) 91 ALJR 824 at 830 [27]; 345 ALR 560 at 566; [2017] HCA 29. 80 Knight (2017) 91 ALJR 824 at 830 [27]; 345 ALR 560 at 566. 81 s 74(1) of the Act. time, both legislatively and administratively, to reflect changes in policy and practice82. In short, s 74AAA did not take away or infringe any right or entitlement to parole because, prior to the enactment of that section, the Act did not give or grant any such right or entitlement to parole. Retrospective? Those provisions of the Act also provide a complete answer to the plaintiff's contention that s 74AAA – either alone or in conjunction with s 127A – operates retrospectively. That contention proceeds from the premise that before the enactment of one or both of those provisions the plaintiff had some right or entitlement. As just explained, the plaintiff did not have a right or entitlement under the Act capable of being withdrawn by s 74AAA. The plaintiff's position, legally and factually, both prior to and after the enactment of s 74AAA, never rose higher than a possibility that the Board may make a parole order by reference to the applicable criteria at the time when his application for parole was determined. The fact that the Board's assessment of whether or not a parole order should be made is subject to different conditions following the enactment of s 74AAA does not alter that conclusion. Section 74AAA operates prospectively83. It did not seek to, and does not, "readjust rights and burdens ... and upset otherwise settled expectations"84 that have existed for any period, let alone any significant period. On its proper construction, s 74AAA takes the prisoner as it finds them85 – convicted and sentenced for an offence of a particular kind. It is then necessary to consider s 127A. It did not operate retrospectively86. As the opening words of s 127A 82 Crump v New South Wales (2012) 247 CLR 1 at 19-20 [36]-[37], 26 [60]; [2012] HCA 20. 83 See generally Maxwell v Murphy (1957) 96 CLR 261 at 267; [1957] HCA 7; The Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 309 [57]-[58]; [1998] HCA 20. 84 United States v Carlton 512 US 26 at 37 (1994) citing Connolly v Pension Benefit Guaranty Corporation 475 US 211 at 229 (1986) and Usery v Turner Elkhorn Mining Co 428 US 1 at 16 (1976). 85 See R v Roussety (2008) 24 VR 253 at 264 [18]. 86 cf Zainal bin Hashim v Government of Malaysia [1980] AC 734 at 742 cited in NSW Food Authority v Nutricia Australia Pty Ltd (2008) 72 NSWLR 456 at 487 [132] and State of Victoria v Robertson (2000) 1 VR 465 at 471-472 [21]. expressly state, s 127A is "[t]o avoid doubt" about the intended operation of s 74AAA. It is declaratory of the operation of s 74AAA and operates from the date of commencement of s 74AAA. And, as has just been explained, it was not capable of affecting or infringing any right or entitlement because the plaintiff had no right or entitlement to parole or to any particular system adopted to determine whether the executive would exercise the power, or privilege, to grant parole. Retrospective legislation is somewhat "distasteful" – even more so when retrospective legislation takes away accrued rights87. But this is not a matter where society in general, or this plaintiff in particular, has ordered their affairs on a basis that is withdrawn, infringed or negatived retrospectively by legislation. In the future, if legislation or some particular provision in an Act was enacted which had that effect, those issues would need to be addressed. But that question, and therefore where the line might be drawn, does not arise here and does not need to be addressed. 87 Boral Windows v Industry Research and Development Board (1998) 83 FCR 215 at

HIGH COURT OF AUSTRALIA G CHARISTEAS AND APPELLANT Z V CHARISTEAS & ORS RESPONDENTS Charisteas v Charisteas [2021] HCA 29 Date of Hearing: 3 September 2021 Date of Judgment: 6 October 2021 ORDER The first respondent's application for an extension of time to file a notice of contention be refused. The appeal be allowed with the first respondent to pay the costs of the appeal. The orders of the Full Court of the Family Court of Australia made on 10 July 2020 be set aside and, in their place, there be orders that: the husband's appeal be allowed with the wife to pay the costs of the appeal, including any costs of the wife's cross-appeal; the orders made by Walters J on 10 February 2015 and 12 February 2018 be set aside; and the application for orders pursuant to s 79 of the Family Law Act 1975 (Cth) further or in addition to paragraphs 1, 5-13 and 15 of the orders made by Crisford J on 9 December 2011 be remitted to the Family Court of Western Australia for rehearing. On appeal from the Family Court of Australia Representation S Penglis SC and F A Robertson for the appellant (instructed by DS Family Law) P J Ward with A L Spencer for the first respondent (instructed by Williams + Hughes) Fourth respondent (limited to written submissions) No appearance for the second, third and fifth to eighth respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Charisteas v Charisteas Family law – Property settlements – Apprehended bias – Where husband and wife separated – Where husband commenced proceedings in Family Court of Western Australia seeking orders for settlement of property – Where Family Court made orders for settlement of property – Where orders provided for early vesting of trust and distribution of trust fund and income – Where early vesting orders set aside on appeal but not remitted for redetermination – Where different judge of Family Court ("trial judge") made new and inconsistent orders for settlement of property – Where wife's barrister engaged in private communication with trial judge, including while case underway and while judgment reserved, without previous knowledge and consent of other parties – Where wife's barrister said communications did not concern substance of case – Whether fair-minded lay observer might reasonably apprehend that trial judge might not bring impartial mind to decision – Whether Family Court retained power to make orders for settlement of property subject of early vesting orders. "final orders", Words and phrases – "apprehended bias", "bias", "disclosure", "fair-minded lay "independence and observer", impartiality", "informed consent", "judicial practice", "private communications", "professional conduct", "property settlement", "public confidence in the judicial system", "reasonable apprehension of bias". "hypothetical observer", Family Law Act 1975 (Cth), ss 79, 79A. KIEFEL CJ, GAGELER, KEANE, GORDON AND GLEESON JJ. The appellant ("the husband") and the first respondent ("the wife") married in 1979 and separated in 2005. In 2006, the husband commenced proceedings under s 79 of the Family Law Act 1975 (Cth) ("the Act") for orders settling the property of the parties to the marriage. The ensuing and still unfinished litigation was aptly described by the trial judge as "long-running" and "staggeringly expensive". There has been a litany of applications, hearings, orders and appeals. For present purposes, it is necessary to refer to only some of this unfortunately long and tortured history. In 2011, Crisford J of the Family Court of Western Australia made property settlement orders under s 79 of the Act ("the 2011 Property Orders"). The orders divided the net assets of the parties (excluding superannuation) between the wife (as to 38%) and the husband (as to 62%) and specifically addressed, among other things, the sale of the former matrimonial home and disbursement of the sale proceeds, the transfer of shares and the splitting of superannuation. Paragraphs 2 to 4 of the 2011 Property Orders provided for the early vesting of an identified trust ("the Trust"); upon vesting, for the distribution of the trust fund and income in accordance with the trust deed between the husband, the wife and their three adult children; and, before such distribution, for a payment of $338,000 to the husband's mother, who was a general beneficiary of the Trust ("the Early Vesting Orders"). In April 2013, the Full Court of the Family Court of Australia set aside the Early Vesting Orders on the basis that the husband's mother had been denied procedural fairness. The Full Court did not make any consequential orders whether remitting that issue for rehearing or otherwise. The parties could not agree on what was then to happen. In February 2015, Walters J of the Family Court of Western Australia ("the trial judge") published a lengthy interlocutory judgment in which his Honour held that the 2011 Property Orders were not final orders and that the Court retained power to make property settlement orders under s 79 of the Act. Over a year later, in March 2016, the trial judge listed the trial of what property settlement orders should in fact be made to be heard before his Honour starting on 3 August 2016. The trial commenced on that date. Evidence was led from 3 August to 17 August. The trial was then adjourned to 13 September 2016 for the parties to make oral submissions and "to be heard in relation to the making of interim or interlocutory orders pending the delivery of [final] judgment" as "[a]ll parties accepted that it would be likely to take up to 12 months for the judgment to be delivered". Written submissions were filed by the adult children of Gordon Gleeson the husband and wife, as well as "the Additional Parties"1, on 24 August, by the husband on 31 August and by the wife on 7 September. On 9 September 2016, the Additional Parties applied for the trial judge to recuse himself on the ground of apprehended bias, relying on ten statements and rulings made by the judge during the trial ("the First Recusal Application"). The application was supported by the husband. The wife and adult children opposed the application. The First Recusal Application was heard and dismissed by the trial judge on 13 September. His Honour delivered ex tempore reasons. Approximately two months later, the trial judge published written reasons for dismissing the First Recusal Application. An appeal by the corporate trustee and the husband's mother against the dismissal of the First Recusal Application, supported by the husband, was dismissed by the Full Court of the Family Court of Australia. On 12 February 2018, the trial judge delivered judgment and, among other things, purported to make orders under s 79 of the Act ("the 2018 Property Orders"). Those orders did not set aside or vary the 2011 Property Orders but were inconsistent with them. Three days later, the trial judge retired. On 12 March 2018, the husband appealed to the Full Court of the Family Court of Australia against the 2018 Property Orders. On 8 May 2018, the husband's solicitor wrote to the barrister who had appeared for the wife before the trial judge raising with her "gossip" that while the trial judge was seised of the Charisteas matter, the barrister and the judge had engaged outside of court in a manner inconsistent with her obligations and those of the judge. The letter asked the barrister to provide written assurance that "during the time the former Judge was seised of the [Charisteas] matter, [she] had no contact with him outside of court"; and if she could not provide that assurance, she was asked to "outline the circumstances of [her] dealings with him". Two weeks later, the barrister responded stating that she had met with the judge for a drink or coffee on approximately four occasions between 22 March 2016 and 12 February 2018; had spoken with the judge by telephone on five occasions between January 2017 and August 2017; had exchanged "numerous" text messages with the judge between 20 June 2016 and 15 September 2017 (except for a brief hiatus during the evidence stage of the trial); and had exchanged "occasional" text messages with the judge from 15 September 2017 until 1 Namely, the corporate trustee of the Trust, a director of the corporate trustee, the executors of the estate of the husband's father, and the husband's mother. Gordon Gleeson 12 February 2018. The barrister concluded by stating that the "communications" with the trial judge did not concern "the substance of the ... case". The husband filed an amended notice of appeal adding grounds alleging apprehension of bias. On appeal to the Full Court there were two relevant issues. The first was whether the 2018 Property Orders should be set aside on the ground of a reasonable apprehension of bias arising from the trial judge's private communications with the wife's barrister. There was no suggestion of actual bias. The second was whether the power under s 79 of the Act was capable of being exercised by the trial judge when Crisford J had already made the 2011 Property Orders. By majority (Strickland and Ryan JJ, Alstergren CJ dissenting), the Full Court dismissed the appeal. Strickland and Ryan JJ rejected the allegations of apprehended bias and dismissed the appeal against the 2018 Property Orders. Alstergren CJ would have allowed the appeal on the ground of apprehended bias and remitted the matter for rehearing. His Honour did not address s 79 of the Act. The husband's appeal to this Court raised the same issues. It is appropriate to deal first with the appeal ground raising apprehended bias, as it "strike[s] at the validity and acceptability of the trial and its outcome"2. As will be explained, the Full Court should have allowed the appeal on that basis and remitted the matter for retrial. It remains necessary, however, to address the appeal grounds concerning ss 79 and 79A of the Act, as those sections affect what issues arise in the retrial. Apprehended bias Where, as here, a question arises as to the independence or impartiality of a judge, the applicable principles are well established3, and they were not in dispute. 2 Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at 611 [117]; see also 581-582 [3]. See also Webb v The Queen (1994) 181 CLR 41 at 86; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 345 [7]; CNY17 v Minister for Immigration and Border Protection (2019) 268 CLR 76 3 Ebner (2000) 205 CLR 337 at 344-345 [6]-[8]; Concrete (2006) 229 CLR 577 at 581-582 [3], 609 [110]; Smits v Roach (2006) 227 CLR 423 at 443-444 [53]; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at 437 [31]; Isbester Gordon Gleeson The apprehension of bias principle is that "a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide"4. The principle gives effect to the requirement that justice should both be done and be seen to be done, reflecting a requirement fundamental to the common law system of adversarial trial – that it is conducted by an independent and impartial tribunal5. Its application requires two steps: first, "it requires the identification of what it is said might lead a judge ... to decide a case other than on its legal and factual merits"; and, second, there must be articulated a "logical connection" between that matter and the feared departure from the judge deciding the case on its merits6. Once those two steps are taken, the reasonableness of the asserted apprehension of bias can then ultimately be assessed7. As five judges of this Court said in Johnson v Johnson8, while the fair-minded lay observer "is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice". Ordinary judicial practice, or what might be described in this context as the most basic of judicial practice, was relevantly and clearly stated by Gibbs CJ and v Knox City Council (2015) 255 CLR 135 at 146 [21]; CNY17 (2019) 268 CLR 76 4 Ebner (2000) 205 CLR 337 at 344 [6]; Concrete (2006) 229 CLR 577 at 609 [110]. 5 Ebner (2000) 205 CLR 337 at 343 [3], 344-345 [6]-[7], 348 [22]-[23], 362 [79]; Concrete (2006) 229 CLR 577 at 609-610 [110]-[111]. 6 Ebner (2000) 205 CLR 337 at 345 [8]; see also 350 [30]. 7 Ebner (2000) 205 CLR 337 at 345 [8], 350 [30]; Concrete (2006) 229 CLR 577 at 609-610 [110]-[111]; CNY17 (2019) 268 CLR 76 at 88 [21], 98-99 [57]. (2000) 201 CLR 488 at 493 [13] (footnote omitted), quoted in Concrete (2006) 229 CLR 577 at 609-610 [111]. See also S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 at 378-381. Gordon Gleeson Mason J in Re JRL; Ex parte CJL9 in 1986 by adopting what was said by McInerney J in R v Magistrates' Court at Lilydale; Ex parte Ciccone10 in 1972: "The sound instinct of the legal profession – judges and practitioners alike – has always been that, save in the most exceptional cases, there should be no communication or association between the judge and one of the parties (or the legal advisers or witnesses of such a party), otherwise than in the presence of or with the previous knowledge and consent of the other party. Once the case is under way, or about to get under way, the judicial officer keeps aloof from the parties (and from their legal advisers and witnesses) and neither he nor they should so act as to expose the judicial officer to a suspicion of having had communications with one party behind the back of or without the previous knowledge and consent of the other party. For if something is done which affords a reasonable basis for such suspicion, confidence in the impartiality of the judicial officer is undermined." In this matter, what is said might have led the trial judge to decide the case other than on its legal and factual merits was identified. It comprised the various communications between the trial judge and the wife's barrister "otherwise than in the presence of or with the previous knowledge and consent of"11 the other parties to the litigation. Indeed, given the timing and frequency of the communications between the trial judge and the wife's barrister, it cannot be imagined that the other parties to the litigation would have given informed consent to the communications even if consent had been sought, and it was not. The communications should not have taken place. There were no exceptional circumstances. A fair-minded lay observer, understanding that ordinary and most basic of judicial practice, would reasonably apprehend that the trial judge might not bring an impartial mind to the resolution of the questions his Honour was required to decide. The trial judge's impartiality might have been compromised by something said in the course of the communications with the wife's barrister, or by some aspect of the personal relationship exemplified by the communications. (1986) 161 CLR 342 at 346, 350-351. [1973] VR 122 at 127. Now reflected in Australasian Institute of Judicial Administration Inc, Guide to Judicial Conduct, 3rd ed (2017) at 19-20 [4.3]. 11 cf Magistrates' Court at Lilydale [1973] VR 122 at 127. Gordon Gleeson Accordingly, there is a logical and direct connection between the communications and the feared departure from the trial judge deciding the case on its merits. In their reasons the majority in the Full Court recognised the principle of judicial practice. Their Honours accepted that once a trial has commenced, private communication between a judge and counsel for one of the parties, without the knowledge and consent of the other parties, is so obvious a departure from the norms of judicial and professional conduct that it will usually be sufficient to establish the first limb in Ebner v Official Trustee in Bankruptcy12. Nothing that was said in the passage in Magistrates' Court at Lilydale13 extracted above, in guidelines14 or in a leading text on judicial ethics15 limits the period necessary to avoid communication to after the commencement of the trial. In any event, whilst communication here was halted while evidence was taken, it was resumed before final submissions and continued over the lengthy period of 17 months when the written reasons for the judgment on the question of recusal and the judgment on the settlement of property were reserved. Focusing on this latter period, the majority in the Full Court reasoned that the trial judge and the wife's barrister were aware of some of their obligations, by not communicating during the course of the trial, and the trial judge may be taken to have failed to appreciate that the same strictness applied at other times. According to the majority, the hypothetical observer would understand that the trial judge mistakenly held such a view but would not consider his lack of disclosure to be sinister. This reasoning is erroneous. The apprehension of bias principle is so important to perceptions of independence and impartiality "that even the appearance of departure from it is prohibited lest the integrity of the judicial system be undermined" (emphasis added)16. No prediction by the court is involved (2000) 205 CLR 337. [1973] VR 122 at 127. 14 Australasian Institute of Judicial Administration Inc, Guide to Judicial Conduct, 3rd ed (2017) at 34 [6.11.1]. 15 Thomas, Judicial Ethics in Australia, 3rd ed (2009) at 65 [4.65]. 16 Ebner (2000) 205 CLR 337 at 345 [7]. Gordon Gleeson in deciding whether a judge might not bring an impartial mind to bear17. No question as to the understanding or motivation of the particular judge arises. The lack of disclosure in this case is particularly troubling. It is difficult to comprehend how the trial judge could have failed to appreciate the need to disclose the communications, particularly when he was dealing with the application to recuse himself on other grounds. It may give the hypothetical observer reason to doubt the correctness of the claim by the wife's barrister that their communications did not concern "the substance" of the case, if the ambiguity inherent in that statement is not itself of sufficient concern. The majority also reasoned that the second limb in Ebner was not made out by reference to what the fair-minded lay observer, properly informed as to the judiciary and the Bar, would think. The information included that barristers are professional members of an independent Bar who do not identify with the client; that judges are usually appointed from the senior ranks of the Bar; and that it may be expected they will have personal or professional associations with many counsel appearing before them18. Informed by such matters, the majority reasoned, the hypothetical observer would be "able to tolerate" some degree of private communication between a judge and the legal representative of only one party, even if undisclosed. The majority considered that the hypothetical observer would accept in this case that the judge and the wife's barrister would adhere to professional restraint in what was discussed and would accept that a professional judge who has taken an oath of office would not discuss the case at hand. Once again, this reasoning is erroneous. The alignment of the fair-minded lay observer with the judiciary and the legal profession is inconsistent with the apprehension of bias principle and its operation and purpose. The hypothetical observer is a standard by which the courts address what may appear to the public served by the courts to be a departure from standards of impartiality and independence which are essential to the maintenance of public confidence in the judicial system19. The hypothetical observer is not conceived of as a lawyer but a member of the public served by the courts. It would defy logic and render nugatory 17 Ebner (2000) 205 CLR 337 at 345 [7]-[8]. 18 Citing Aussie Airlines Pty Ltd v Australian Airlines Pty Ltd (1996) 65 FCR 215 at 230. See also Taylor v Lawrence [2003] QB 528 at 554-555 [73]. 19 Johnson (2000) 201 CLR 488 at 492-493 [12]; Ebner (2000) 205 CLR 337 Gordon Gleeson the principle self-appreciation of this kind. imbue the hypothetical observer with professional It may be accepted that many judges and lawyers, barristers in particular, may have continuing professional and personal connections. The means by which their contact may be resumed is by a judge making orders and publishing reasons, thereby bringing the litigation to an end. It is obviously in everyone's interests, the litigants in particular, that this is done in a timely way. The wife sought an extension of time to file a notice of contention contending that the husband had waived his right of complaint of apprehended bias. The communications between the trial judge and the wife's barrister should not have occurred and, in the absence of informed consent to all of the communications, there was no waiver. The application for an extension of time to file the notice of contention should be refused. The appeal should be allowed and the matter remitted for rehearing before a single judge of the Family Court of Western Australia. What issues are to be determined on that rehearing depends upon the proper understanding and application of ss 79 and 79A of the Act. Section 79 Section 79 of the Act confers power on a court exercising jurisdiction in proceedings by virtue of the Act20 to make an order for the settlement of property. When an order is made under s 79, subject to the limited jurisdiction to vary it or set it aside given by s 79A of the Act, "the power of the ... Court to make an order under s 79 is treated as having been exercised and as exhausted"21. Crisford J set out her Honour's findings of the assets and liabilities of the parties to the marriage and the 2011 Property Orders dealt with all of that property. The s 79 power had been exercised and was exhausted. A Full Court of the Family Court set aside the Early Vesting Orders, which, as noted, were paras 2 to 4 of the 2011 Property Orders. It is important to understand what that Full Court did and did not do. When it set aside the Early Vesting Orders, the Full Court did not deal with the re-exercise of the s 79 power in relation to the Early Vesting Orders or 20 Act, s 4(1) definition of "court". 21 Mullane v Mullane (1983) 158 CLR 436 at 440. See also Clayton v Bant (2020) 95 ALJR 34 at 41 [26]; 385 ALR 41 at 47. Gordon Gleeson remit that aspect for further hearing. But nor did the Full Court alter any other aspect of the 2011 Property Orders. Given that there is to be a retrial, that remains the position. The 2011 Property Orders, without the Early Vesting Orders, have not been set aside. Contrary to the view reached by the Full Court that set aside the Early Vesting Orders, the power under s 79 of the Act to deal with the property the subject of the Early Vesting Orders is not spent. The Family Court of Western Australia retains the power under s 79 to make orders that, in all the circumstances, it is satisfied are just and equitable, in relation to the property the subject of the Early Vesting Orders. If orders were to be made in the same form as the Early Vesting Orders, the 2011 Property Orders would stand unaffected. By contrast, if some different order were to be made with respect to the early vesting and distribution of the Trust, there may be a question about whether a party can show that powers can and should be exercised under s 79A. The Family Court of Western Australia should list the matter for rehearing to address the Early Vesting Orders. The parties to the litigation, as well as that Court, must take steps to ensure that this litigation is brought to an end without further delay. Conclusion and orders For those reasons, the following orders should be made: The first respondent's application for an extension of time to file a notice of contention be refused. The appeal be allowed with the first respondent to pay the costs of the appeal. The orders of the Full Court of the Family Court of Australia made on 10 July 2020 be set aside and, in their place, there be orders that: the husband's appeal be allowed with the wife to pay the costs of the appeal, including any costs of the wife's cross-appeal; the orders made by Walters J on 10 February 2015 and 12 February 2018 be set aside; and the application for orders pursuant to s 79 of the Family Law Act 1975 (Cth) further or in addition to paragraphs 1, 5-13 and 15 of the Gordon Gleeson orders made by Crisford J on 9 December 2011 be remitted to the Family Court of Western Australia for rehearing.

HIGH COURT OF AUSTRALIA & ANOR APPELLANTS AND ALEKSANDRA GACIC & ORS RESPONDENTS John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28 14 June 2007 ORDER Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 30 June 2006 and in their place make the following orders: Appeal allowed with costs. Set aside the orders of Bell J made on 2 June 2005 and in their place order that: verdicts be entered that the matter complained of by the appellants carries each of the imputations identified as imputations (a) and (c) and that imputations (a) and (c) are defamatory; a verdict be entered for the respondents in relation to imputation (b); and the issues of whether the matter complained of carries the imputation identified as imputation (d) and whether that imputation is defamatory be remitted for determination by a jury in accordance with s 7A of the Defamation Act 1974 (NSW). The appellants to have a certificate under the Suitors Fund Act 1951 (NSW) if so entitled. Order that the appellants pay 25 per cent of the respondents' costs of the trial before Bell J and a jury, the respondents pay 50 per cent of the costs of the appellants of that trial, and that the balance of the costs of that trial abide the outcome of the further trial pursuant to s 7A of the Defamation Act 1974 (NSW)." Otherwise, appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation T D Blackburn SC with D R Sibtain for the appellants (instructed by Freehills) G O'L Reynolds SC with C A Evatt and P Kulevski for the respondents (instructed by Beazley Singleton Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS John Fairfax Publications Pty Ltd v Gacic Defamation – Statutes – Interpretation of Supreme Court Act 1970 (NSW) ("Supreme Court Act") – Section 108(3) – Defamation action – Appeal challenging findings of a jury made under s 7A(3) of the Defamation Act 1974 (NSW) ("Defamation Act") on specific issues put to the jury – Powers of an appeal court to direct a verdict for the plaintiff on such issues in the event of a successful appeal. Statutes – Interpretation – "May" – Appeal challenging findings of a jury on specific issues in defamation proceedings – Whether Supreme Court Act, s 108(3) confers a power, with a duty to exercise that power once the relevant entitlement to a verdict on any issue in the proceedings is established as a matter of law. Statutes – Interpretation – Supreme Court Act, s 108(3) – Defamation Act, s 7A – Defamation action – Jury found that there were imputations conveyed but that those imputations were not defamatory – Role of the jury in defamation proceedings – Whether the Court of Appeal must order a new trial where it holds that a jury's answers to issues put to the jury in defamation proceedings are unreasonable. Defamation – Business defamation – Nature of the test for defamation where a plaintiff alleges damage to business reputation – Procedure in jury trials in New South Wales – Application of Defamation Act, s 108(3). Words and phrases – "any cause of action, issue or claim for relief", "may", "direct a verdict and give judgment accordingly", "as a matter of law", "entitled to a verdict", "business defamation". Supreme Court Act 1970 (NSW), ss 75A, 85, 86, 90, 102, 107, 108. Defamation Act 1974 (NSW), ss 7A, 9, 46, 46A. GLEESON CJ AND CRENNAN J. The issue in this appeal concerns the power given to the New South Wales Court of Appeal by s 108(3) of the Supreme Court Act 1970 (NSW) ("the Supreme Court Act"), and the exercise of that power at a certain stage of an action being heard pursuant to the Defamation Act 1974 (NSW) ("the Defamation Act")1. The facts are set out in the reasons for judgment of Callinan and Heydon JJ. The case concerns that form of defamation which involves injury to business reputation, that is, the publication of imputations that have a tendency to injure a person in his or her business, trade, or profession. That the law of defamation affords such protection is not surprising. Suppose someone says: "X is a thoroughly decent person, but he is showing signs of age; his eyesight is poor, and his hands tremble". That would not be a reflection on X's character. It would be likely to evoke sympathy rather than hatred, ridicule or contempt. If, however, X were a surgeon, the statement could be damaging. To say that someone is a good person, but a dangerously incompetent surgeon, is clearly likely to injure the person's professional reputation. That is an established form of defamation, and it was not called in question by the parties to the present appeal. Pursuant to s 7A of the Defamation Act, proceedings were held before Bell J and a jury, at which the jury was required to decide whether certain matter published by the first appellant about a business carried on by the respondents carried all or any of four specified imputations and, if so, whether the imputation or imputations was or were defamatory (s 7A(3)). The alleged imputations were said to have been contained in a critical review of a restaurant Coco Roco, which was owned by the respondents. Those with which the appeal to this Court is concerned were as follows : The respondent sells unpalatable food at Coco Roco The respondent provides some bad service at Coco Roco. Each respondent sued on those imputations, and on two others which are not the subject of this appeal. One of the other imputations, identified as (d), was the subject of consideration by the Court of Appeal, but we are not asked to decide the issue in respect of that imputation that was before the Court of Appeal, and we have not heard argument on the point. 1 The Defamation Act was repealed by the Defamation Act 2005 (NSW) but continues to apply because of the date when the causes of action accrued. Crennan In relation to each of (a) and (c), the jury found that the imputation was conveyed by the article published by the first appellant, but that the imputation was not defamatory. The respondents appealed to the Court of Appeal on two presently relevant grounds, both of which were upheld. One ground was that the jury had been misled by the way in which counsel had addressed on the subject of defamatory meaning, and that the trial judge's directions were inadequate to correct what had been put in address. The other ground was that the jury's answers to the second of the questions posed in respect of (a) and (c) were unreasonable. It is not necessary to go into the detail of the first ground. In brief, the Court of Appeal held that the combined effect of counsel's address and the trial judge's directions was to mis-state the nature of business defamation, and to leave the jury with the impression that, if the matter published would not lower the respondents in the estimation of right thinking members of the community, then the respondents were not defamed. To relate the point to the example given above, it was not made clear to the jury that it could be defamatory to say that X, a surgeon, although a good man, had deteriorated physically, even though that would not reflect badly on his character or his personal conduct. To say that a restaurant sells unpalatable food or provides bad service does not necessarily reflect badly on the owners personally. They might be worthy people who are themselves victims of circumstances, or incompetent staff. However, it has a tendency to damage their business reputation. That point, the Court of Appeal held, was not conveyed, or not conveyed with sufficient clarity, to the jury. The Court of Appeal went further, and upheld the second ground as well. Beazley JA, with whom Handley and Ipp JJA agreed, held that, having found that imputations (a) and (c) were conveyed, no reasonable jury, properly directed, could have given any answer other than that the imputations were defamatory. In that respect, it was noted that the case for the respondents was confined to a case of business defamation. The s 7A proceedings were being conducted in advance of any consideration of whatever defences the appellants would raise. No defence has yet been filed. In this Court, the appellants challenged the Court of Appeal's conclusion that no reasonable jury, properly instructed, could find that imputations (a) and (c) were not defamatory. As to that, Beazley JA said: "The appellants had recently opened their restaurant at King Street Wharf. The appellants had promoted the restaurant in terms: 'A new level of dining comes to Sydney's King Street Wharf'. The restaurant had been fitted out expensively and had extensive views of Darling Harbour. The style and price of the food was, as it appears from the article, intended to indicate that this was a high class restaurant. As I have indicated, the Crennan location at Darling Harbour was itself prestigious in a city which is sophisticated and cosmopolitan. The food served in any restaurant is its essential business. If the food is 'unpalatable' the restaurant fails on the very matter that is the essence of its existence. This is especially so of a purportedly high class restaurant. To say of a restaurateur of such an establishment that they sold 'unpalatable' food injures that person in their business or calling and because of that, is defamatory. In my opinion, no reasonable jury properly directed could reach any other verdict. Service is also an integral part of the experience of dining. Good service is expected at a high class restaurant. It is part of what the patron pays for. It is almost trite to say that poor service, even occasional poor service within the one dining experience, will not be tolerated by patrons of an expensive 'swank' restaurant. To say, therefore, that the appellants provided 'some bad service' at Coco Roco, even though the damnation was not total, would injure a person in their business or calling as a restaurateur and was likewise defamatory. No reasonable jury properly directed could reach any other verdict." This reasoning appears to us to be correct. It was argued for the appellants that an ordinary reasonable reader might take the article in question as a criticism of the chef, not the owners of the restaurant, and, further, that a condemnation of some food or some service would not necessarily reflect on the reputation of the restaurateurs as traders. These arguments are unpersuasive, and to some extent reflect the approach that led the Court of Appeal to uphold the first of the grounds of appeal to it. The principal complaint of the appellant was directed to the course taken by the Court of Appeal after it had arrived at the conclusions stated above. The Court of Appeal gave effect to its conclusion that no reasonable jury, having found that imputations (a) and (c) were conveyed, could reasonably fail to conclude that they were defamatory, by exercising the power under s 108(3) of the Supreme Court Act to enter what were in effect special verdicts in favour of the respondents on the s 7A issues in relation to (a) and (c). As Gummow and Hayne JJ have pointed out, it was accepted in argument by counsel for the respondents that the precise orders made by the Court of Appeal in that respect require some amendment, but the substance of what was intended is clear. According to the appellants, the Court of Appeal did not have the power to do that, or, alternatively, if the power existed, it should not have been exercised. The Court of Appeal was right to hold that the power existed. The issue is not whether a trial judge in a defamation case has the power to direct a verdict for the plaintiff. The issue concerns the power conferred on the Court of Appeal by Crennan s 108(3); a provision that should be construed amply so as to permit the Court of Appeal to respond to the requirements of justice in the variety of circumstances to which it might apply. In the circumstances of a s 7A proceeding, the concept of a plaintiff, as a matter of law, being entitled to a verdict on any issue in the proceedings is sufficiently flexible to cover a case where it appears to the Court of Appeal that, upon the evidence, no reasonable jury could fail to answer a question favourably to the plaintiff. Section 108 is concerned with appellate power, and s 108(3) is to be understood in the context of the full range of issues that might come before an appellate court. The issues determined by the jury in the present case were such that, according to the appellants, a Court of Appeal could never say that a plaintiff was, as a matter of law, entitled to a verdict. On the appellants' argument, an unreasonable jury verdict, or even a succession of unreasonable jury verdicts, could never be corrected by a Court of Appeal, but could only be set aside or, perhaps, ultimately accepted in the interests of finality. (We use "unreasonable" in the sense earlier explained). So to construe s 108 would be to import an unnecessary limitation upon the Court of Appeal's capacity to do justice between the parties. It was assumed in argument, at least on the appellants' side, that the Court of Appeal, having concluded that the respondents were, as a matter of law, entitled to a verdict on the issues determined by the jury, nevertheless had a discretion as to whether to enter a verdict itself or simply order a new trial by a jury. It seems paradoxical that a Court of Appeal, having decided that a plaintiff is entitled as a matter of law to a verdict, might then choose not to give effect to that legal entitlement. Again, the statutory provision must be understood in the light of the wide range of possible circumstances in which it might apply. As is illustrated by the case of Charlwood Industries Pty Ltd v Brent2, and as was pointed out by Hunt AJA in Harvey v John Fairfax Publications Pty Ltd3, there may be cases where, in s 7A proceedings, the question whether matter conveys a certain imputation and the question whether that imputation is defamatory are so bound up that an unreasonable answer to the second casts doubt on the answer to the first. There may be other circumstances in which the legally correct response to an appellate finding that a jury's verdict was unreasonable is to order a new trial. The statutory power given by s 108(3) involves a compound concept. The proposition that a party is entitled as a matter of law to a verdict on an issue, and the proposition that the Court of Appeal should direct such a verdict, are not, in a case such as the present, separate and distinct. The one is the reflex of the other. Section 108(3) confers power to direct a verdict, which is an alternative to ordering a new trial. The hypothesis is that error justifying appellate intervention [2002] NSWCA 201. [2005] NSWCA 255 at [104]. Crennan has been shown. The Court of Appeal, in deciding whether, upon the evidence, a party is, as a matter of law, entitled to a verdict on a s 7A issue, will have considered the competing possibility, which is that, in the circumstances of the case, there are questions that must be resolved by a jury. If, for example, the answer given by the jury to one question throws doubt on the answer given to another, and both answers are for that reason set aside, then it may not appear that upon the evidence one party is, as a matter of law, entitled to a verdict, and a new trial may be necessary. Here, there was no reason to suppose that the jury's answers reflected a compromise. There was every reason to suppose that the jury, having found that the imputations were conveyed, decided they were not defamatory because of a misunderstanding of what was meant by defamatory. It was, after all, what was found to be an inadequate direction on that topic that was the ground for appellate intervention in the first place. The s 7A procedure seems apt to give rise to that kind of jury error. It may be difficult for jurors to appreciate that, in defamation practice, a decision that a publication is defamatory is not the end of the debate about liability; that often it is just the beginning. The word defamation, like negligence, is ambiguous. It may refer to a tort, or to an element of a tort. Notwithstanding the directions they are given, there may well be jurors who think that a decision that a publication conveys a defamatory imputation is tantamount to a decision that the defendant has committed an actionable wrong. There was nothing in the circumstances of the case that required a jury to revisit the first question, that is, the question that was answered favourably to the respondents. The Court of Appeal was itself in a position to answer the second question without doing any injustice to either party. The evidence was bare and undisputed. There were not, as was argued, "community standards", bearing upon the question whether to say that a restaurant has unpalatable food and bad service has a tendency to injure the proprietors in their business, of such a kind as to require the evaluation of a jury. The decision of the Court of Appeal was correct. Subject to the alteration of the form of the orders made by the Court of Appeal referred to in the reasons of Gummow and Hayne JJ, the appeal should be dismissed with costs. GUMMOW AND HAYNE JJ. In the issue dated 30 September 2003 of the Good Living supplement or "lift out" to the Sydney Morning Herald, published by the first appellant, there appeared an article under the name of the second appellant on a page headed "Good Eating". The article was a review of the experiences of the writer at the restaurant "Coco Roco" which he introduced as "the swank new eatery at King Street Wharf". The three respondents are the persons who apparently were proprietors of the business conducting the restaurant. They sued in the Supreme Court of New South Wales not only for defamation, but also for malicious falsehood. An amended statement of claim was filed on 8 November 2004 pursuant to an order of Nicholas J made on 26 October 2004. No defence has been filed. The litigation giving rise to the appeal to this Court concerns only the claim in defamation and the four imputations that were pleaded, each as a cause of action in accordance with s 9 of the Defamation Act 1974 (NSW) ("the 1974 Act"). The imputations were that at "Coco Roco" unpalatable food was sold (imputation (a)), excessive prices charged (imputation (b)), some bad service provided (imputation (c)), and a chef was employed who made poor quality food (imputation (d)). The outcome of the litigation to date, in particular after the order of the New South Wales Court of Appeal (Handley, Beazley and Ipp JJA)4, is that each of imputations (a) and (c) is conveyed and is defamatory of the respondents, that this is not so as regards imputation (b), and that a jury must reconsider imputation (d). The appellants challenge in this Court the decision respecting imputations (a) and (c). That outcome should not be disturbed by this Court. The sequel will be further litigation to determine not only the defamatory nature of imputation (d), but also, as to imputations (a) and (c) (and possibly (d)), any defences and questions of damages. The issues before this Court turn upon the respective roles in New South Wales at the relevant time (before the commencement of the Defamation Act 2005 (NSW) ("the 2005 Act") of judge and jury in defamation actions and the scope for intervention by the Court of Appeal. The division of functions between judge and jury in trials of defamation actions was settled by the common law so as to classify as a question of law the question of whether the matter complained of was or was not capable of bearing 4 Gacic v John Fairfax Publications Pty Ltd [2006] NSWCA 175. a defamatory meaning and, if it was so capable, the determination as a question of fact whether the matter was or was not defamatory5. At the time when the common law was settled in this way, the available appellate procedures in respect of trials at common law in New South Wales had the characteristics explained by Griffith CJ in the following passage from "[I]f a case was set down for trial by a jury, and either party was dissatisfied with the result, the dissatisfied party, if there had been a verdict, might move for a new trial. Later a form of procedure had been adopted by which a verdict was taken, leave being reserved to either party to move to have it set aside or a different verdict or a nonsuit entered. Then the Court in Banco on motion could make the appropriate order. But if no leave was reserved all that the Court could do was to grant a new trial, and if there was no verdict there was nothing to be done but to set the case down again for trial, because nothing could be done except after a verdict, which was the foundation of the procedure. You could not depart from that rule, however plain the right might be, except by having leave reserved. Then the [New South Wales] legislature, being no doubt aware of the change that had been effected in the law and practice in nearly all other parts of the British dominions, passed, amongst other enactments, s 7 [of the Supreme Court Procedure Act 1900 (NSW) ('the 1900 Act')]." There were various grounds upon which, under the common law procedure applying to civil trials in New South Wales, a new trial might be ordered. They included7 cases where the plaintiff should have been non-suited, and of misdirections by the trial judge, and of wrongful admission or rejection of evidence. In the latter category, the Exchequer Rule associated with Crease v Barrett8 was applied in New South Wales, as Isaacs J stressed in Harris v Minister for Public Works (NSW)9. If admissible evidence were rejected, then a 5 Capital and Counties Bank v Henty (1882) 7 App Cas 741 at 775-776; Australian Broadcasting Corporation v O'Neill (2006) 80 ALJR 1672 at 1687 [45]; 229 ALR (1907) 4 CLR (Pt 2) 1223 at 1227-1228. 7 See Walker, The Practice of the Supreme Court of New South Wales at Common Law, 4th ed (1958) at 109-123. (1835) 1 C M & R 919 [149 ER 1353]. See Weiss v The Queen (2005) 224 CLR (1912) 14 CLR 721 at 728-729. new trial was to be ordered unless the Court in banc was satisfied that, if admitted, the evidence could not have affected the result10. The consequences of improper admission of evidence, generally speaking, were similar11. A distinction of present importance is that a new trial might be ordered on an available ground which might or might not be sufficiently strong to warrant a conclusion that the applicant for the new trial was, as a matter of law, entitled to a verdict. To that situation, s 7 of the 1900 Act was addressed. Section 7 of the 1900 Act stated: In any action, if the Court in Banco is of opinion that the plaintiff should have been nonsuited, or that upon the evidence the plaintiff or the defendant is as a matter of law entitled to a verdict in the action or upon any issue therein, the Court may order a nonsuit or such verdict to be entered. If the Court in Banco orders a new trial of any action, issue, or question which has been tried before a Judge without a jury, it may direct such new trial to be heard before a Judge either with or without a jury." Of s 7 in this form, Griffith CJ said in Heydon v Lillis12: Primâ facie, the words are to be construed literally, as they stand. They begin 'In any action,' and the succeeding words show that the provision is exactly applicable to every case where there has been an attempt to try a case with a Judge or a jury, where there has been a trial; they apply to all cases in which the plaintiff should have been nonsuited, or, on the evidence, the plaintiff or the defendant was entitled to a verdict as a matter of law. These words cover every case." The 1900 Act was wholly repealed by the Supreme Court Act 1970 (NSW) ("the 1970 Act")13. Section 86(1) of the 1970 Act stated14: 10 Dairy Farmers Co-operative Milk Co Ltd v Acquilina (1963) 109 CLR 458 at 11 See the discussion by Windeyer J in Balenzuela v De Gail (1959) 101 CLR 226 at 12 (1907) 4 CLR (Pt 2) 1223 at 1228. 13 s 5, First Schedule. "Proceedings on a common law claim in which there are issues of fact on a claim in respect of defamation are to be tried with a jury." Section 102 is a general provision dealing with appeals after jury trials and provides: "Where, in any proceedings in the Court, there is a trial of the proceedings or of any issue in the proceedings with a jury, an application for: the setting aside of a verdict or judgment, a new trial, or the alteration of a verdict by increasing or reducing any amount of debt, damages or other money, shall be by appeal to the Court of Appeal." Section 108 was included as a special provision to continue15: "the power of the Court of Appeal to dispose of an appeal by final order where it is practicable to do so, rather than remit the case to the Court of first instance". Section 108 of the 1970 Act states: "(1) This section applies to an appeal to the Court of Appeal in proceedings in the Court in which there has been a trial with a jury. (2) Where it appears to the Court of Appeal that on the evidence given at the trial a verdict for the plaintiff could not be supported and that, pursuant to any provision of the rules, an order ought to have been made for the dismissal of the proceedings either wholly or so far as concerns any cause of action in the proceedings, the Court of Appeal may make an order of dismissal accordingly. (3) Where it appears to the Court of Appeal that upon the evidence the plaintiff or the defendant is, as a matter of law, entitled to a verdict in the proceedings or on any cause of action, issue or claim for 14 Section 86 was repealed by the 2005 Act, Sched 6.17. 15 New South Wales, Law Reform Commission, Report on Supreme Court Procedure, Report No 7, (1969) at 15. relief in the proceedings, the Court of Appeal may direct a verdict and give judgment accordingly." (emphasis added) It is with s 108(3) that this appeal is concerned. The affinity between s 108(3) and s 7 of the 1900 Act will be apparent. Both are predicated upon an "entitlement" to an outcome "as a matter of law". Where such an entitlement is made out, then the appellate court "may", in the case of s 108(3), "direct a verdict and give judgment accordingly". What is the import of the term "may" in s 108(3)? Its use in s 108(3) is to confer a power with a duty to exercise it if the entitlement spoken of is established. This answer may be seen from a line of authority beginning with the decision of the Court of Common Pleas in Macdougall v Paterson16. There, in delivering the judgment of the Court, Jervis CJ said of a power conferred by statute upon the new County Courts in England17: "[W]hen a statute confers an authority to do a judicial act in a certain case, it is imperative on those so authorized, to exercise the authority when the case arises, and its exercise is duly applied for by a party interested, and having the right to make the application. For these reasons, we are of opinion, that the word 'may' is not used to give a discretion, but to confer a power upon the court and judges; and that the exercise of such power depends, not upon the discretion of the court or judge, but upon the proof of the particular case out of which such power arises." This Court in terms has applied this reasoning in decisions including Finance Facilities Pty Ltd v Federal Commissioner of Taxation18 and most recently in Leach v The Queen19. In R v Commonwealth Industrial Court; Ex parte The Amalgamated Engineering Union, Australian Section20, Fullagar J indicated that "[t]o overcome this very important rule of construction" a strong and direct provision is required. None is found in s 108(3) of the 1970 Act. The reference to entitlement to a verdict points in the other direction and to the operation of the rule of construction. 16 (1851) 11 CB 755 [138 ER 672]. 17 (1851) 11 CB 755 at 773 [138 ER 672 at 679]. 18 (1971) 127 CLR 106 at 134-135. 19 (2007) 81 ALJR 598 at 608 [38]; 232 ALR 325 at 337. 20 (1960) 103 CLR 368 at 378. However, in Charlwood Industries Pty Ltd v Brent21, the New South Wales Court of Appeal proceeded without reference to this line of authority and on the footing that s 108(3) conferred a discretion to deny a remedy to a party with the entitlement at law spoken of in that sub-section. The Court of Appeal in the present case appears to have proceeded in the same fashion but decided that the present respondents should have an order in their favour. In this Court, there was some debate as to the relevance to what was said to be that allegedly discretionary outcome of questions of "community standards", these being peculiarly jury questions. The appellants also submitted that, as a matter of discretion, the Court of Appeal should have declined to enter a verdict in relation to imputations (a) and (c), because it had decided to send back for retrial the issues respecting imputation (d). The debate on these topics was beside the point. If the respondents made out their entitlement, as a matter of law, to relief under s 108(3) with respect to imputations (a) and (c), then the Court of Appeal was obliged to provide the appropriate remedy. Further issues in this appeal concern the application of s 108(3) in respect of the trial of defamation actions where the common law procedures described earlier in these reasons have been displaced by the statutory regime provided by s 7A of the 1974 Act. Section 7A was inserted in the 1974 Act by the Defamation (Amendment) Act 1994 (NSW)22. The general provision made for jury trial by s 86 of the 1970 Act was subjected to the provisions of s 7A (s 7A(5)). In the Second Reading Speech in the Legislative Assembly on the Bill which provided for the introduction of s 7A, the responsible Minister said23: "What is proposed is that at an early stage in a defamation action a jury will be required to answer two questions. The first is whether the imputations alleged are conveyed by the published material. The second is whether, if the answer to that question is yes, the imputations are defamatory. If the jury answers either of those questions no, the judge will enter judgment for the defendant. 21 [2002] NSWCA 201 at [70]. See also Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 at [102]. 22 Sched 1(2). 23 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 29 November 1994 at 5901. the That is what occurs now in defamation cases where a jury is empanelled. It is where the jury answers the threshold questions in the affirmative that the change will take place. In proceedings at present the jury is retained to determine some questions of fact inherent in certain defences. Under this bill that will not occur. Having dealt with the jury will be discharged from further preliminary questions participation in the trial, which will then proceed before the judge alone, he or she determining all defences and, in due course, assessing any damages. By allocating to the jury what is a vital decision in the trial the arrangement maintains an appropriate degree of community involvement. At the same time, by providing that the trial shall thereafter proceed before the judge alone, a substantial amount of time and money will be saved and the complexities which now arise in the course of a trial because of the current division of functions of judge and jury will be overcome." The history of the present litigation is an illustration of the false expectations that, by the introduction of s 7A into the 1974 Act, a substantial amount of time and money would be saved and that procedural complexities would be overcome. The 2005 Act contains in s 22 its own regime for division of functions between judge and jury, including determination of damages by judge not jury, but does not replicate the procedures required by s 7A. Section 7A provided for three distinct curial proceedings, as the history of the present litigation shows. First, a judge (Nicholas J) determined in respect of each of the imputations pleaded that, in the terms of pars (a) and (b) of s 7A(3)24, the matter was reasonably capable of carrying the imputation pleaded and was reasonably capable of bearing a defamatory meaning. Secondly, there was a proceeding conducted on a subsequent occasion and before another judge (Bell J) and a jury of four. The only evidence before the Court was the article itself and no oral evidence was called. The task of the jury 24 Section 7A(3) stated: "If the court determines that: the matter is reasonably capable of carrying the imputation pleaded by the plaintiff, and the imputation is reasonably capable of bearing a defamatory meaning, the jury is to determine whether the matter complained of carries the imputation and, if it does, whether the imputation is defamatory." under this branch of s 7A was to determine whether the matters complained of carried each of the imputations and, if so, whether the imputation was defamatory (s 7A(3)). In respect of each plaintiff, the jury found that the article conveyed to the ordinary reasonable reader the imputations that unpalatable food was sold at the restaurant (imputation (a)), and that some bad service was provided there (imputation (c)), but that the plaintiff had not established that these imputations were defamatory. The jury also found that the article did not convey to the ordinary reasonable reader the imputation that excessive prices were charged at the restaurant (imputation (b)) or that the plaintiff was incompetent as a restaurant owner by reason of the employment of a chef who made poor quality food (imputation (d)). Observations by McHugh J in John Fairfax Publications Pty Ltd v Rivkin25 are in point here. His Honour said: "Falsity and hurt to feelings are, of course, irrelevant to the issues of meaning and defamation in the trial – whether it be a s 7A trial or the conventional defamation trial. But the plaintiff's evidence on those matters usually tends to create sympathy for the plaintiff and sometimes prejudice against the defendant. The s 7A procedure eliminates these advantages for the plaintiff who must conduct the case in the detached – and some would say unreal – atmosphere of a jury trial on documentary evidence." In the present case the order of the Court was that judgment be entered for the defendants in respect of each of the four causes of action pleaded, that is to say the four imputations. Had the jury made findings favourable to the respondents, the third stage would have been reached. This would involve determination by the Court and not the jury of any defences and of the amount of damages (s 7A(4)). The Court of Appeal made orders, the first four of which read: "1. Appeal allowed. Set aside the verdicts for the [appellants]. There be verdicts for the [respondents] in respect of imputations (a) and (c). 25 (2003) 77 ALJR 1657 at 1670 [76]; 201 ALR 77 at 94. The [respondents'] claim in relation to imputation (d) be remitted for determination by a jury in accordance with s 7A of the [1974 Act]." It will be apparent from the terms of order 3 that with respect to imputation (d) relief was not given under s 108(3), as it was with respect to imputations (a) and (c). Rather, in remitting that matter for redetermination by a jury, the Court of Appeal was exercising its powers under the general provision made by s 102 of the 1970 Act to deal with new trials of any issue determined by a jury. There had been no appeal to the Court of Appeal against the jury's rejection of imputation (b), respecting excessive prices, and this plays no part in the appeal to this Court. The third of the three stages for which provision is made in s 7A thus has not been reached in the present litigation. What is involved in that third stage appears from s 7A(4): "If the jury determines that the matter complained of was published by the defendant and carries an imputation that is defamatory of the plaintiff, the court and not the jury is: to determine whether any defence raised by the defendant (including all issues of fact and law relating to that defence) has been established, and to determine the amount of damages (if any) that should be awarded to the plaintiff and all unresolved issues of fact and law relating to the determination of that amount." It will be apparent that, as in this case, the determination by the jury at the second stage of whether the matter complained of carries the imputation and, if so, whether it is defamatory, falls for determination in the absence of consideration of any defence that would be litigated only at the third and final stage. Before turning to consider the remaining issues which arise on the appeal to this Court, there is a preliminary matter which should be noted. It concerns the form of the order made by the Court of Appeal. The respondents accept that this was defective and that, if the appeal to this Court otherwise failed, nevertheless it would be meet for this Court to reformulate the orders of the Court of Appeal. Upon that basis, the order proposed by the respondents includes the following: "1. Appeal allowed with costs. Set aside the orders of Bell J made on 2 June 2005 and in their place order that: verdicts be entered that the matter complained of by the [respondents] carries each of the imputations identified as imputations (a) and (c) and that imputations (a) and (c) are defamatory; a verdict be entered for the [appellants] in relation to imputation (b); and the issues of whether the matter complained of carries the imputation identified as imputation (d) and whether that imputation is defamatory be remitted for determination by a jury in accordance with s 7A of the [1974 Act]. The [respondents] to have a certificate under the Suitors Fund Act 1951 (NSW) if so entitled." There is also a dispute as to the appropriate provision for costs, consideration of which can be deferred until later in these reasons. There are several issues of construction concerning s 108(3). One has been dealt with earlier in these reasons. This concerned the correct reading of the phrase "the Court of Appeal may direct" in the light of authorities beginning with The second construction issue concerns the phrase "on any cause of action, issue or claim for relief in the proceedings". These words, to adapt what was said by Griffith CJ in Heydon v Lillis27, are apt "to cover every case". The jury, acting pursuant to s 7A(3) of the 1974 Act, had determined whether the matter complained of carried the imputations pleaded and, if so, whether the four imputations were defamatory. This was, at least, the determination "on any ... issue ... in the proceedings", and subject-matter for the exercise by the Court of Appeal of its power conferred by s 108(3). The second issue is related to the first. The appellants fixed upon the concluding words of s 108(3), "direct a verdict and give judgment accordingly". Entry of the verdicts with respect to imputations (a) and (c) would not entitle the respondents to judgment on those causes of action in advance of the determination of any defences and of any damages to be awarded under the procedures of s 7A(4). Therefore, the appellants submitted, there was no power even to enter the special verdicts. But the terms of s 108(3) specify a particular 26 (1851) 11 CB 755 [138 ER 672]. 27 (1907) 4 CLR (Pt 2) 1223 at 1228. treatment of "any cause of action, issue or claim for relief", and the concluding words "direct a verdict and give judgment accordingly" mandate relief of the appropriate description, which may not include the giving of judgment in the proceedings. The word "and" is used in the concluding phrase in s 108(3) to encompass either or both forms of relief, according to the circumstances of the case. The remaining issue of construction concerns the phrase "is, as a matter of law, entitled to a verdict". In that regard, the submissions for the appellants indicated some conflation of ideas respecting the phrase "matter of law". No doubt the terms of s 7A(3), "the jury is to determine", rendered it a matter of law for the jury to determine whether the matter complained of carried the imputation and, if so, whether the imputations were defamatory. But, upon the completion by the jury of its task under s 7A(3) of the 1974 Act, another legal norm was engaged. This concerned the scope for appellate intervention under s 108(3) of the 1970 Act. What confers, as a matter of law, an entitlement to appellate relief under s 108(3)? The meaning of that provision is elucidated by reference to various authorities upon s 7 of the 1900 Act. These include the reasons of Starke J and of Dixon J in Shepherd v Felt and Textiles of Australia Ltd28, and of Latham CJ and of Dixon J in Hocking v Bell29. In the latter case, Dixon J observed of the use of the phrase "perverse verdict" in this context that30: "[s]ometimes it is used to describe a disregard of a direction from the judge. Sometimes it refers to a finding contrary to that which the facts of the case legally demand. But I think it always means something more than a verdict against the weight of the evidence". In Hocking v Bell, Latham CJ and Dixon J (whose dissenting judgments were supported by the outcome in the Privy Council31) decided that s 7 was inapplicable in favour of the defendant because there had been evidence upon which a jury could reasonably find for the plaintiff. In the present case, the only evidence before the jury was the article complained of. There was no dispute as to its publication. The area of contention was the imputations alleged to be 28 (1931) 45 CLR 359 at 373, 379-380 respectively. 29 (1945) 71 CLR 430 at 441-442, 497-498 respectively. 30 (1945) 71 CLR 430 at 498. 31 Hocking v Bell (1947) 75 CLR 125 at 130-132. carried by it and their defamatory nature. This distinction, for the purposes of s 108(3), between a case such as the present under s 7A and the evidentiary dispute in cases such as Hocking v Bell, was emphasised by Hunt AJA in Harvey v John Fairfax Publications Pty Ltd32. The present case is closer to the situation in Shepherd. There the question of wrongful termination of an agency agreement turned upon the interpretation and effect of documents. Dixon J said33: "In Morgan v Savin34 Willes J decided that when the circumstances of the engagement and the dismissal are all proved by written documents in evidence, the question whether the dismissal was justified is one of law for the decision of the Court and not for the jury. In the present case the contract is in writing and the justification for its termination is found in the telegrams and the letter of the appellant the despatch of which is undisputed. In my opinion the jury could not adopt any explanation or modification of these documents which is compatible with a due observance on the part of the appellant of the condition of his contract of agency. I therefore agree with the Supreme Court in thinking the respondent was, as a matter of law, entitled to a verdict." It is true that s 7A(3) specifically entrusted to the jury the determination of the question whether the imputations (a) and (c) were carried by the matter complained of and, if so, whether they were defamatory. Thus, it could not be said, as Willes J had said of the issues in Morgan, that the present case concerned questions of law for the court to decide. Nevertheless, to adapt what Dixon J said in the above passage from Hocking v Bell, the jury could not adopt any explanation of the matter complained of which was incompatible with its due consideration of the questions whether the imputations were carried by that matter and, that being so, whether they tended to injure the respondents in their trade or business. Put another way, could a reasonable jury, properly instructed, have given the answer that while the article conveyed the imputations (a) and (c), respecting unpalatable food and some bad service, that it did not have that tendency to injure?35 32 [2005] NSWCA 255 at [101]. 33 (1931) 45 CLR 359 at 380. 34 (1867) 16 LT 333 at 334. 35 See John Fairfax Publications Pty Ltd v Rivkin (2003) 77 ALJR 1657 at 1658 [2], 1698-1699 [185]; 201 ALR 77 at 78, 130. In the Court of Appeal, Beazley JA answered that last question as "The food served in any restaurant is its essential business. If the food is 'unpalatable' the restaurant fails on the very matter that is the essence of its existence. This is especially so of a purportedly high class restaurant. To say of a restaurateur of such an establishment that they sold 'unpalatable' food injures that person in their business or calling and because of that, is defamatory. In my opinion, no reasonable jury properly directed could reach any other verdict. Service is also an integral part of the experience of dining. Good service is expected at a high class restaurant. It is part of what the patron pays for. It is almost trite to say that poor service, even occasional poor service, within the one dining experience, will not be tolerated by patrons of an expensive 'swank' restaurant. To say, therefore, that the appellants provided 'some bad service' at Coco Roco, even though the damnation was not total, would injure a person in their business or calling as a restaurateur and was likewise defamatory. No reasonable jury properly directed could reach any other verdict." (original emphasis) In this Court, the appellants have not demonstrated any error in those critical passages. The respondents properly emphasise that the fundamental difficulty here in the path of the appellants lies in the concept of "tendency" which pitches the common law test at a fairly low threshold. It is sufficient that the imputation "be such as is likely to cause ordinary decent folk in the community, taken in general, to think the less of [the plaintiff]"37. The result is that, subject to the allowance of the appeal to this Court to enable substitution of the reframed Court of Appeal orders 1-3 set out earlier in these reasons, in substance the appeal to this Court has failed. There remains the question of costs. The conduct at the trial before Bell J and the jury of the then senior counsel for the present respondents, even if, as is by no means apparent from the record, it had the shortcomings now asserted by the appellants in this Court, is no reason for denying the respondents their costs in this Court. Nor is there any good ground to disturb the substance of the cross- order made in the Court of Appeal. As reformulated, this states: 36 [2006] NSWCA 175 at [56]-[57]. 37 Boyd v Mirror Newspapers Ltd [1980] 2 NSWLR 449 at 452. "4. Order that the [respondents] pay 25 per cent of the [appellants'] costs of the trial before Bell J and a jury, the [appellants] pay 50 per cent of the costs of the [respondents] of that trial, and [that] the balance of the costs of that trial abide the outcome of the further trial pursuant to s 7A of the [1974 Act]." Kirby KIRBY J. This appeal, from orders of the Court of Appeal of the Supreme Court of New South Wales38, involves the meaning and operation of s 108(3) of the Supreme Court Act 1970 (NSW) ("the Supreme Court Act") in the context of a jury trial in a defamation case39. Ultimately, the appeal concerns the maintenance of the limited role of the jury in defamation trials. Citizens do not always share the faith of appellate judges in the judicial resolution of the central issues arising in defamation actions. Typically (and here) those issues require the determination of a clash between a claim to protection of reputation and honour and a claim to exercise the right of "free speech" and a "free press". In New South Wales, the Defamation Act 1974 (NSW) ("the Defamation Act"), whilst furthering the general curtailment of jury trials in the State, even in defamation proceedings, exceptionally preserved its availability for the limited functions assigned by s 7A of that Act. In this appeal, this Court is asked to uphold the appellants' right to that mode of trial. In my view, the Court should so order, correcting the error of the Court of Appeal which decided to make the critical determination for itself. By the Defamation Act 2005 (NSW) ("the 2005 Act") and companion legislation, a new regime, designed to secure uniform State and Territory laws on defamation in Australia, has been enacted40. However, it was common ground that the uniform law did not apply to the present case41. The appeal must therefore be decided in accordance with the pre-existing law. As has been noted42, that law (and the associated practice) involves distinct peculiarities. 38 Gacic v John Fairfax Publications Pty Ltd [2006] NSWCA 175. 39 That trial was conducted pursuant to the Supreme Court Act, s 86 and the Defamation Act 1974 (NSW), s 7A(3). Section 86 of the Supreme Court Act was repealed with the enactment of the Defamation Act 2005 (NSW), Sched 6.17. Section 21 of that Act provides for (limited) jury trials in defamation proceedings. Note also Supreme Court Act, s 85(6). 40 See also Defamation Act 2005 (Vic); Defamation Act 2005 (SA); Defamation Act 2005 (Q); Defamation Act 2005 (WA); Defamation Act 2005 (Tas); Defamation Act 2006 (NT); Civil Law (Wrongs) Act 2002 (ACT). 41 It was not suggested that transitional arrangements in the 2005 Act affected the future trial of the respondents' claims against the appellants, which remain to be determined in accordance with the law and procedures stated in the Defamation Act. See 2005 Act, Sched 4 Pt 2. 42 See Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519 at 578-581 [139]; John Fairfax Publications Pty Ltd v Rivkin (2003) 77 ALJR 1657 at 1677 [119]; 201 ALR 77 at 104-105. Kirby The appeal concerns, specifically, the correctness of the disposition by the Court of Appeal in respect of four jury determinations, equivalent to "special verdicts"43. It was agreed between the parties that one of them44 should stand. One of them45, the Court of Appeal decided, should be remitted for redetermination by a second jury in accordance with s 7A of the Defamation Act46. Neither party challenged the foregoing outcomes. However, in relation to the two remaining determinations47, the Court of Appeal concluded, purportedly under s 108(3) of the Supreme Court Act, that it had the power to, and should, substitute its own answers in favour of the respondents, rather than remitting the issues for redetermination by the second jury. Some of the questions in this appeal overlap those considered by this Court in John Fairfax Publications Pty Ltd v Rivkin48. There, the jury were asked whether the published articles conveyed certain imputations, and, if so, whether the imputations were defamatory. In each case, the jury had found that the imputation alleged was not conveyed. Accordingly, they did not need to consider whether the imputations were defamatory. In Rivkin, as here, the Court of Appeal found that some of the jury's answers were unreasonable49. But there, the Court of Appeal ordered that a new trial should be had before a new jury on all of the alleged imputations. This Court substituted an order limiting the new trial to those imputations in relation to which it found that the first jury's determinations had been unreasonable50. In Rivkin, the Court of Appeal did not assert, still less did it exercise, a power to determine the outstanding issues for itself. No party in Rivkin submitted that this Court, exercising the powers of the Court of Appeal51, should 43 The appellants agreed that they could be so described. See [2007] HCATrans 079 44 In respect of imputation (b). 45 In respect of imputation (d). 46 Court of Appeal Order 4. See [2006] NSWCA 175 at [105]. 47 In respect of imputations (a) and (c). 48 (2003) 77 ALJR 1657; 201 ALR 77. 49 Rivkin v John Fairfax Publications Pty Ltd [2002] NSWCA 87. 50 See Rivkin (2003) 77 ALJR 1657 at 1685 [170], 1702-1703 [213], [217], 1704- 1705 [223], [225]; 201 ALR 77 at 116, 135-136, 138. 51 Judiciary Act 1903 (Cth), s 37. Kirby substitute determinations, or "verdicts", favourable to Mr Rivkin. In this case, the course adopted by the Court of Appeal, of substituting its own determinations of the contested issues, followed a recent line of authority in that Court, upholding the power52 and identifying considerations to be taken into account in deciding whether such power should be exercised in the particular case53. In effect, special leave was granted in these proceedings to permit this Court to consider the correctness of the foregoing line of authority54; whether it conforms to the applicable legislation; whether it is consistent with longstanding authority of this Court about appellate review of orders following jury verdicts; and whether, in the deployment of any power that is found, the disposition was insufficiently respectful of the parties' right to jury trial which was exceptionally reserved in defamation cases for determinations of this kind. The facts and legislation The facts: The facts are described in the reasons of Callinan and Heydon JJ55. Those reasons set out the entirety of the matter complained of by Aleksandra Gacic, Ljiljana Gacic and Branislav Ciric (the respondents). Their proceedings in the Supreme Court of New South Wales against John Fairfax Publications Pty Ltd and Mr Matthew Evans (the appellants), claimed damages for defamation and injurious falsehood. By their statement of claim, the respondents alleged the collapse of their restaurant business and a loss of profits in consequence of the subject publication. They pleaded the cause of action in defamation as follows: "[T]he plaintiffs have been greatly injured in their character, credit, reputation, trade and profession and have been brought into public hatred, ridicule and contempt." The legislation: In their reasons, Callinan and Heydon JJ have set out relevant provisions of the Defamation Act56 and also of the Supreme Court Act57. 52 Charlwood Industries Pty Ltd v Brent [2002] NSWCA 201. See also cases referred to in [2006] NSWCA 175 at [59]-[74]. 53 Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 225. 54 See reasons of Gleeson CJ and Crennan J at [1]. 55 Reasons of Callinan and Heydon JJ at [153]-[155], [161]. 56 ss 7A, 9, 46. Reasons of Callinan and Heydon JJ at [156]-[159]. Kirby As Callinan and Heydon JJ observe, no separate provision is made in the Defamation Act for appeals to the Supreme Court in defamation matters. Accordingly, the general provisions of the Supreme Court Act, specifically s 108(3), must be adapted, so far as their language and the circumstances permit, to extend to the exercise of that power by the Court of Appeal in cases where a discontented party appeals against a jury determination made pursuant to s 7A(3) of the Defamation Act. In addition to the provisions of s 108 mentioned by Callinan and Heydon JJ, further provisions of the Supreme Court Act should be noted. First, ss 85 and 86 concern the applicable mode of trial within the Supreme Court. Relevantly, they provided: "85 Trial without jury unless jury required in interests of justice Proceedings in any Division are to be tried without a jury, unless the Court orders otherwise. Common law claim – defamation Proceedings on a common law claim in which there are issues of fact on a claim in respect of defamation are to be tried with a jury. (2) Despite subsection (1), the Court may order that all or any issue of fact be tried without a jury if: any prolonged examination of documents or scientific required and cannot investigation conveniently be made with a jury, or local all parties consent to the order." Three further provisions of the Supreme Court Act should be mentioned: "90 Special verdict It shall be the duty of a jury to answer any question of fact that may be left to the jury by the presiding Judge at the trial. 57 s 108. Reasons of Callinan and Heydon JJ at [179]. Also set out are the provisions of the Supreme Court Procedure Act 1900 (NSW), s 7. See reasons of Callinan and Heydon JJ at [167] fn 167. Kirby 102 Appeal after jury trial Where, in any proceedings in the Court, there is a trial of the proceedings or of any issue in the proceedings with a jury, an application for: the setting aside of a verdict or judgment, a new trial, or shall be by appeal to the Court of Appeal. 107 Substituted verdict Where, in an appeal to which this section applies: the Court of Appeal would, but for this section set aside the verdict, finding, assessment or judgment and order a new trial on an issue of the amount of debt or damages or of the value of goods, the Court of Appeal is satisfied that: it is fully able to assess the amount of debt or damages or the value of the goods on perusal of the evidence … and the parties consent to the exercise of the powers given by this section, (iii) it appears to the Court of Appeal to be desirable to exercise the powers for the purpose of avoiding a multiplicity of trials, or it appears to the Court of Appeal that, as a result of an error of law on the part of the trial judge or (where there has been a trial with a jury) a manifest error on the part of the jury, some item of debt or damages or valuation has been wrongly included in or excluded from the assessment, Kirby the Court of Appeal may draw inferences and make findings of fact, assess the amount of debt or damages or the value of goods in such sum as in the opinion of the Court of Appeal the debt or damages or value ought to be assessed if a new trial were had forthwith and substitute that sum for the sum awarded in the Court below and give such judgment and make such order as the nature of the case requires." Meaning of the legislation: The meaning and application of s 108(3), which is critical to the power of the Court of Appeal in the instant case, is, by the approach now conventionally taken, to be discovered not solely from the words of that sub-section but also from those words as understood in their context58. That context includes s 107, which is a most detailed provision. It controls the power of the Court of Appeal to substitute its order or judgment in a case concerned with claims about "the amount of debt or damages or the value of goods". Clearly, the present case does not attract s 107. Apart from anything else, the parties did not consent as s 107(c)(i) would require. However, a question is presented as to whether that section was intended to exhaust the Court of Appeal's power to enter a "substituted verdict" in a trial with a jury. Obviously, the limited power provided by s 108(3) is also to be contrasted with the general powers afforded to the Court of Appeal by s 75A of the Supreme Court Act59. Those powers do not apply to an appeal arising out of "a trial with a jury in the Court"60. The wide powers afforded to the Court of Appeal by s 75A61 are thus to be contrasted with the narrower powers afforded by s 108(3), applicable in this instance. Nevertheless, the ambit of the powers of the Court of Appeal, where there has been a trial with a jury, is clearly intended to be wide. Thus, s 102 providing for an "appeal to the Court of Appeal" applies where there has been "a trial … of any issue in the proceedings with a jury". When that provision is read with s 7A of the Defamation Act, it cannot be doubted that an appeal, such as the present, lay to the Court of Appeal from the jury's determination of the "issue" presented 58 See New South Wales v Commonwealth (2006) 81 ALJR 34 at 140-141 [470]; 231 ALR 1 at 127; Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 80 ALJR 1509 at 1529 [91]; 229 ALR 1 at 25; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 396-397. 59 Fox v Percy (2003) 214 CLR 118 at 125-127 [22]-[26]. 60 Supreme Court Act, s 75A(2)(c). 61 Supreme Court Act, s 75A(10). Kirby by s 7A and the determinations concerning the imputations upon which the respondents had sued the appellants. That conclusion is relevant to the power of the Court of Appeal under s 108(3), given that the sub-section, like s 102, addresses the disposition of an "issue ... in the proceedings". In a s 7A proceeding, the questions answered by the jury constitute the "trial … of any issue in the proceedings with a jury" pursuant to s 102. The answers present an "issue … in the proceedings", as that phrase is used in s 108(3). This apparent symmetry in Pt 762 of the Supreme Court Act is important. In New South Wales, under s 9 of the Defamation Act63, the cause of action for publication of defamatory matter arose not from the matter complained of, as such, but from each defamatory imputation contained in that matter. Once a judge has determined, pursuant to s 7A(3) of the Defamation Act, that the matter complained of is reasonably capable of carrying the imputation pleaded and that the imputation is reasonably capable of bearing a suggested defamatory meaning, it is the jury that must determine whether (that is, as a matter of fact) "the matter complained of carries the imputation and, if it does, whether the imputation is defamatory"64. Section 7A thus envisages that, if the imputation pleaded passes the test of capability and is then resolved by the jury in favour of the plaintiff, the jury's function in the defamation trial is concluded. The determination of any defence relied on by the publisher and of the damages (if any) to which the plaintiff is entitled, are issues left entirely to the judge65. The procedure in s 7A, as interpreted, has been subject to much judicial66 and academic criticism67. However, it is pointless to examine the criticism as the procedure is not copied in the new uniform legislation68. This appeal represents, it may be hoped, the last 62 Headed "Appeal to the Court of Appeal" and including ss 102, 107 and 108. 63 Reasons of Callinan and Heydon JJ at [157]. 64 Defamation Act, s 7A(3). See reasons of Callinan and Heydon JJ at [156]. 65 Defamation Act, s 7A(4). 66 Drummoyne Municipal Council v Australian Broadcasting Commission (1990) 21 NSWLR 135 at 148-151; Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 at 162. 67 Kenyon, Defamation: Comparative Law and Practice, (2006) at 159-161. 68 Relevantly, the 2005 Act, s 6(3). Section 22(2) of that Act provides: "The jury is to determine whether the defendant has published defamatory matter about the plaintiff and, if so, whether any defence raised by the defendant has been established." Kirby time that this Court will have to consider s 7A. But it is important that we give the answer required by law. Common ground General issues: A high measure of common ground between the parties narrowed the issues before this Court: The respondents' claim for injurious falsehood has not been heard. Nor, pending the outcome of these proceedings, have any issues of the defences to defamation or of damages (if any) been decided69; The appellants have not yet filed a defence in the proceedings. During argument, it was said that the action in defamation will be defended, if needed, "on the basis of comment"70. Even in respect of the s 7A issues, no formal defence was filed71; and . Given that this appeal concerns only imputations (a) and (c), this Court is unconcerned with those parts of the Court of Appeal's reasons that address the suggested prohibition on supporting a defamatory imputation such as (d) by drawing an inference based on an inference72. It follows that this Court's attention is concerned only with the Court of Appeal's disposition in respect of imputation (a) (the respondents sell unpalatable food at Coco Roco) and (c) (the respondents provide some bad service at Coco Roco). Upon each of those imputations the first jury concluded that the matter complained of conveyed the imputation pleaded but that in neither case was it defamatory. Business defamation: It was also common ground that a class of defamation exists (described as "business defamation"73) where published material conveys defamatory imputations that injure a plaintiff in the plaintiff's business, trade or profession. 69 Including in respect of imputations (a) and (c). See reasons of Gummow and 70 [2007] HCATrans 079 at 2734-2735. See also at 3423-3424. 71 [2007] HCATrans 079 at 559-564, 630-639. 72 [2006] NSWCA 175 at [11]-[25] per Handley JA, [77]-[92] per Beasley JA, [107]- [133] per Ipp JA. See reasons of Gleeson CJ and Crennan J at [4]. 73 [2005] NSWCA 175 at [32]. Kirby Upon one view, an injury to a business (being to a plaintiff in respect of its business or occupation) amounts to nothing more than a particular form of damage suffered in consequence of the general wrong of defamation. The tort itself is constituted by the lowering of the subject of the publication in the estimation of ordinary persons with whom the subject has dealings, whether such dealings are personal, societal, occupational or otherwise74. The notion that there is a special sub-variety of the tort of defamation concerned with a particular aspect of the damage suffered by an individual in consequence of a "business defamation" is arguably an illustration of an error quite common in the law of torts, as traditionally expressed in the casebooks. It elevates a particular category, based on past decisions and specific relationships and damage, into a species of the wrong as distinct from simply an instance of the wrong's operation. In the recent past, this Court has endeavoured to reduce such categories by encouraging more conceptual thinking in this area of the law75. In the Defamation Act 1958 (NSW) ("the 1958 Act"), which preceded the Defamation Act applicable to these proceedings, an attempt was made to define with some precision the kinds of actionable defamation for which proceedings might be brought in New South Wales. Thus, s 5 of the 1958 Act provided that: "Any imputation concerning any person, or any member of his family, whether living or dead, by which the reputation of that person is likely to be injured, or by which he is likely to be injured in his profession or trade, or by which other persons are likely to be induced to shun or avoid or ridicule or despise him, is called defamatory, and the matter of the imputation is called defamatory matter. The imputation may be expressed either directly or by insinuation or irony." (emphasis added) 74 As for example in a sporting, religious, associational or different relationships; cf Sim v Stretch [1936] 2 All ER 1237. See reasons of Gleeson CJ and Crennan J at 75 See, for example, Papatonakis v Australian Telecommunications Commission (1985) 156 CLR 7 at 20, 32; Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479 at 484-488; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 544-550; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 549-551 [79]-[83], 591-594 [203]-[211]; Leichhardt Municipal Council v Montgomery (2007) 81 ALJR 686; 233 ALR 200. Kirby Such was the provision considered by this Court in Sungravure Pty Ltd v Middle East Airlines Airliban SAL76. However, the 1958 Act was repealed in its entirety when the Defamation Act was enacted in 197477 so that "[t]he law relating to defamation, in respect of matter published after the commencement of [the Defamation Act] shall be as if [the 1958 Act] had not been passed and the common law and the enacted law … shall have effect accordingly."78 The 1958 Act definition did not, therefore, apply to the present proceedings. In the Court of Appeal, the substantial reason for concluding that the trial before the primary judge (Bell J) had miscarried was that Court's decision that her Honour had misdirected the jury concerning the content of the "business defamation" complained of by the respondents79. The repeal of the 1958 Act, with its express reference to "business defamation", restored the common law in New South Wales. The text books on defamation, both in England80 and in Australia appear to accept that, at common law81: "[D]efamation is concerned to protect the plaintiff's business reputation just as much as his or her personal or social attributes, so that statements which disparage a person in his or her calling will also be branded as defamatory." In its review of the law of defamation, the Australian Law Reform Commission also concluded that defamation included publication of "matter concerning a person which tends … to injure that person in his occupation, trade, 76 (1975) 134 CLR 1 at 3. Section 5 of the 1958 Act, which was also s 5 of the Defamation Act 1957 (Tas), was repeated almost verbatim from the Criminal Code (Q), s 366, in turn a re-enactment of the Defamation Law of Queensland 1889. 77 Defamation Act, s 4(1). 78 Defamation Act, s 4(2). 79 [2006] NSWCA 175 at [50] per Beasley JA (Handley and Ipp JJA concurring at [1] and [106]). 80 Milmo and Rogers (eds), Gatley on Libel and Slander, 10th ed (2004) at 36-37 [2.7], cited by Beasley JA: [2006] NSWCA 175 at [32]. 81 Balkin and Davis, Law of Torts, 3rd ed (2004) at 557 [18.2]. See also Fleming, The Law of Torts, 9th ed (1998) ("Fleming") at 582. Kirby office or financial credit."82 Given the agreement of the parties on this issue, I will not attempt to re-express the law of defamation at common law upon which the respondents relied. Any such re-expression or re-conceptualisation must await a case in which the grounds of appeal require this Court to address the relevance to the cause of action (as distinct from the damage) of the particular capacity or relationship in which the harm to reputation is said to have been done. The appellants did not contest the conclusion of the Court of Appeal that the primary judge had misdirected the jury (by elaborating before them the test for general defamation); and had erred in the way in which she redirected the jury on that subject. Nor did they argue that such deficiencies had been waived by the conduct of the respondents' trial counsel83. The manner in which counsel for the appellants at trial addressed the jury, and the primary judge instructed them, on the test for concluding that the imputations, specifically (a) and (c), bore a "defamatory meaning", were arguably consistent with the way the respondents had pleaded their cause of action in defamation, as set out above84. Be that as it may, because of the way the parties have defined the issues, this Court can disregard such questions. One particular problem presented by accepting a particular category of "business defamation" is identifying the relevant audience in whose eyes the complaining party's reputation has then been diminished. Does it remain all ordinary people in the community, "taken in general"85? Or, in the case of business defamation, is it confined to those who have, or might have had, business dealings with the plaintiff? This question is unanswered by those who propound the special category. In a sense, the address to the jury by the appellants' counsel, and the directions of the trial judge complained of before the Court of Appeal, left it to the jury to determine whether the imputations which they found were conveyed by the article damaged the appellants' business reputation and were therefore 82 Australian Law Reform Commission, Unfair Publication: Defamation and privacy, Report No 11, (1979) at 47-48 [84]. See s 9(1)(c) of the Draft Commonwealth Bill for an Unfair Publication Act, Appendix C at 210-211; cf Trindade, Cane and Lunney (eds), The Law of Torts in Australia, 4th ed (2007) at 83 See [2006] NSWCA 175 at [40]-[51], [75]-[76]. 84 Above these reasons at [63]. 85 Gardiner v John Fairfax & Sons Pty Ltd (1942) 42 SR (NSW), 171 at 172. See also Fleming at 582-583. Kirby defamatory. They were to do so having regard to the effect of the publication on ordinary decent people86 in general who might have become aware of the matter complained, which appeared in both the print and online versions of the first appellant's newspaper, The Sydney Morning Herald. On the premise that has been adopted, I accept, as the appellants do, that a misdirection occurred. It was not made sufficiently clear to the jury that some statements will be defamatory not by virtue of their impact on people generally, but, rather, based on the damage caused to their business reputation. It was therefore incorrect to speak generally of the effect of the publication on ordinary people at large and not also of (or alternatively of) the effect on the business reputation of the respondents or their business87. The foregoing analysis confines the attention of this Court to the correctness of the Court of Appeal's dispositions concerning imputations (a) and (c). The issues It follows that the issues in the appeal are: The appellate power issue: Did the Court of Appeal err in concluding that it had the power, pursuant to s 108(3) of the Supreme Court Act, to substitute its own answers for those of the first jury in respect of imputations (a) and (c)? The exercise of power issue: If the Court of Appeal had such power, did it err in exercising that power in the circumstances of this case by failing to order a retrial before the second jury of all of the issues that were held to have miscarried before the first jury? Arguments for the absence of the appellate power Appellants' textual submissions: The primary submission of the appellants was that the Court of Appeal lacked the power under the Supreme Court Act to make the orders that it did in respect of imputations (a) and (c). This argument was advanced not only on the technical (or verbal) footing that the Supreme Court Act did not authorise "verdicts" for the respondents in respect of those imputations. More fundamentally, it rested on the fact that the only basis upon which the Court of Appeal could act under the propounded 86 See Fleming at 583. 87 See reasons of Gleeson CJ and Crennan J at [6]. Kirby power in s 108(3) was where the party concerned was "as a matter of law, entitled to a verdict … on any … issue … in the proceedings". The appellants' arguments need to be addressed by appropriate textual and contextual analysis. It is not enough to say that, if correct, they would lead to inconvenient, surprising, paradoxical or unreasonable outcomes. Unfortunately, that is sometimes the case with legislation. The rule of law does not readily bend to necessity, paradox or convenience but only to the requirements of the law as properly elucidated. The appellants submitted that, for two reasons, the power granted to the Court of Appeal was not engaged so as to permit it to substitute its own determinations for those of a jury. First, the foundation for the Court of Appeal's intervention was not "a matter of law". If anything, it was purely a matter of fact. Secondly, the entitlement to "a verdict", in the context, did not correspond with the determination actually made by a jury within s 7A(3) of the Defamation Act. The jury did not produce a "verdict" strictly so called. Even if, loosely, the jury's determination of the limited questions arising under s 7A(3) might be described as a kind of "special verdict", it was not a "verdict" of which s 108(3) of the Supreme Court Act was speaking. This was so because the closing words of the sub-section indicated that the type of "verdict", with which s 108(3) was concerned, was one by which the Court of Appeal could "give judgment accordingly", that is, judgment disposing of the entire action. As this was not possible in the present case, where defences and damages (if any) remain outstanding under s 7A(4) of the Defamation Act88, the powers expressed in s 108(3) were not engaged. The Court of Appeal had therefore erred in concluding that it had the power to substitute "verdicts" as it did. It may be accepted that these arguments, advanced for the appellants in favour of their interpretation of s 108(3), derive some support from the language of the legislation, from past authority and from considerations of legal principle and policy. The provisions of s 107 of the Supreme Court Act, by which the Court of Appeal is empowered in very limited circumstances (and subject to strict conditions) to enter a "substituted verdict", including where there has been a trial with a jury, give support to the argument that s 108(3) should be read narrowly. Unless the phrase "as a matter of law" is given a substantive operation, the differentiation of the powers stated in s 107, in the limited circumstances to which that section applies, could not so easily be understood. True, s 107 has no application to a case such as the present. But the appellants pointed to the section, by way of contrast, to demonstrate that s 108(3) was not intended to provide a broad power to the Court of Appeal to enter a "substituted verdict", 88 Reasons of Gummow and Hayne JJ at [18], [41]. Kirby save in terms of the sub-section, limited to where "as a matter of law" that course was warranted. The limited character of the powers conferred by s 108(3) also appears in sharp contrast to the broad powers conferred by s 75A of the Supreme Court Act. The specific exclusion of the operation of those broad powers in relation to an appeal arising out of a "trial with a jury in the [Supreme] Court", made it plain that, in this respect, Parliament was maintaining the traditional control over the powers of the appellate court where the trial had been by jury. According to the appellants, the maintenance of such control was understandable. A jury gives no reasons89. An appellate court is in a much better position to make findings or assessments and to give judgments or make orders which ought to have been given at trial, where it has the advantage of judicial reasons disposing of the trial. After a jury trial, an appellate court can ordinarily only speculate on the reasons for a jury's verdict, including if the determination of an issue under s 7A(3) is a "special verdict" of sorts. The appellate court does not actually know the jury's reasoning in such cases. The appellants also relied on the special provision made in s 86 of the Supreme Court Act for "issues of fact on a claim in respect of defamation". According to their argument, this provision, and the particular and limited function assigned to the jury by s 7A of the Defamation Act, indicated a general purpose on the part of Parliament that, save in limited circumstances inapplicable in these proceedings, it was for a jury to determine whether the matter complained of carried the imputation alleged by the plaintiff and, if it did, whether that imputation was defamatory. Express provisions for such a trial should be given proper effect. Reading s 108(3) of the Supreme Court Act against the background of the role contemplated for the jury in defamation proceedings, lent support, in that context, to adhering to a traditional approach to the meaning of s 108(3), rather than adopting one that would expand that meaning beyond its orthodox ambit90. Appellants' submissions of principle: The determination by a jury as to whether the matter complained of carries an imputation alleged and, if it does, whether the imputation is defamatory, involves the jury in the interpretation of the matter in question. This function presents a question of fact and not one of law91. It is an evaluative function which engages the jury precisely because they 89 Swain v Waverley Municipal Council (2005) 220 CLR 517 at 579 [199]. 90 Hanrahan v Ainsworth (1990) 22 NSWLR 73 at 88. 91 Lewis v Daily Telegraph Ltd [1964] AC 234 at 277, 281; reasons of Gummow and Kirby are taken to represent a cross-section of the community in a way that judges may not do92. Past experience shows that juries sometimes "baffle" appellate judges by repeatedly coming to conclusions which judges regarded as "unreasonable" or, in the old language, "perverse"93. In matters of evaluation and judgment concerning words and conduct, and particularly where issues of free expression are at stake, the determination of the meaning of a publication and whether it is defamatory of a person complaining about it, does not (on the face of things) involve "a matter of law". Were it otherwise, that determination would not be assigned by s 7A(3) to a jury, whose only province is to reach conclusions on the facts. Unless it can be said that in some circumstances a factual conclusion is so manifestly wrong and unreasonable that, without more, it evidences an error of law, the precondition for the operation of s 108(3) is not attracted. Because the jury are not bound to accept any particular interpretation or meaning ascribed to a publication, or any evaluation of the publication as defamatory or otherwise, it has not conventionally been considered that a plaintiff in such issues is entitled, as a matter of law, to a verdict in its favour94. The respondents contested this conventional view by reference to some early decisions of this Court95 and to some authority overseas96. However, the respondents could not point to a single reported case in a defamation trial in Australia, where a trial judge has directed the jury, over the opposition of a defendant, that they must return a verdict in favour of the plaintiff. Or that they must determine that the matter complained of carried the imputation alleged and 92 Rivkin (2003) 77 ALJR 1657 at 1661-1662 [23]-[26] per McHugh J; 201 ALR 77 93 Hocking v Bell (1945) 71 CLR 430 at 486, 488, 497-498. See also (1947) 75 CLR 94 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 151. 95 Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 at 373; Hocking v Bell (1945) 71 CLR 430 at 441-442. See reasons of Callinan and Heydon JJ at 96 The respondents quoted Wigmore, A Treatise on the Anglo-American System of Evidence in Trials at Common Law, 3rd ed (1940), vol 9 at 305-306 (§2495) and authorities cited therein, including Leach v Burr 188 US 510 at 513 (1903); Jerke v Delmont State Bank 223 NW 585 at 590 (1929). See also City of Chanute v Higgins 70 P 638 at 640 (1902); McCaskill v Ford Motor Co of Canada (1955) 17 WWR 239 at 245. Kirby that such imputation was, as a matter of law, defamatory of the plaintiff. Such a verdict on factual questions, in favour of the party bearing the onus of establishing the facts, on the face of things, denies the residual function of the jury to believe or disbelieve the asserted facts, or to derive a meaning, purpose and effect from the facts, contrary to the plaintiff's submissions. The appellants invoked the many cases in this Court which, they said, supported their view as to the ambit of the power conferred on the Court of Appeal by provisions such as s 108(3). As these cases are collected by Callinan and Heydon JJ97, I will not repeat them. For the most part, the authorities derive from a time when jury trial of factual issues in civil litigation was much more common in Australia than it is today98. At this late stage in the elucidation of such provisions, and their application to an appeal following "a trial of ... any issue ... with a jury", the appellants urged this Court to adhere to the old law. They submitted that the Court should avoid imposing a strained interpretation of the phrase "as a matter of law", inapt to any error that was felt to exist in a jury determination of the issues presented by s 7A(3) of the Defamation Act. The appellants also emphasised the fact that, when the s 7A procedure was introduced into the Defamation Act, the Attorney-General, supporting its introduction, acknowledged the continuing importance of the role assigned to the jury by this section. He described that role as involving "a vital decision in the trial" and as maintaining "an appropriate degree of community involvement"99. Why was such a role retained, especially when, at the same time, jury trials were effectively abolished for virtually all other civil causes in New South Wales? The appellants argued that this was because the decision assigned to the jury by s 7A(3) required the jury to give meaning to the matter complained of; to evaluate it against the pleaded imputations; and then to form a judgment on behalf of the community on whether the imputations were conveyed by the matter complained of and, if so, whether they were capable of bearing the defamatory meaning(s) alleged by the plaintiff. The first step in this process (deriving meaning) might be one that a judge could perform as well as a jury. After all, under s 7A(3), a precondition for the matter coming before a jury at all is a determination by a judge of the reasonable 97 Reasons of Callinan and Heydon JJ at [186] fn 166. 98 Naxakis v Western General Hospital (1999) 197 CLR 269; Swain (2005) 220 CLR 99 Reasons of Callinan and Heydon JJ at [195] fn 179, quoting the speech of the Hon J P Hannaford: New South Wales, Legislative Council, Parliamentary Debates (Hansard), 22 November 1994 at 5472. Kirby capability of the matter to carry the imputation pleaded and to bear a defamatory meaning of the plaintiff. However, in judging the second question, community values will often be important. To the extent that a defamatory meaning is accepted, free speech is diminished. This, according to the appellants, was why jury trial had been preserved in the present context. They submitted that this Court should read the powers of the Court of Appeal in the light of that consideration. If, for reasons of economy, finality, convenience or otherwise, it was thought appropriate that the Court of Appeal should have the power to substitute its judgment for that of a jury, Parliament could so provide expressly. It had not done so in the Defamation Act. Nor did such a particular power exist in the predecessor or successor to that Act. In such circumstances, the language of s 108(3) should not be interpreted to afford the power. The appellants asked this Court to overrule the recent line of authority in the Court of Appeal holding to the contrary. It will be apparent from the foregoing statement of the appellants' arguments that their construction of s 108(3) is far from meritless. Nevertheless, I have ultimately come to the conclusion that the better view of s 108(3) is that a power does exist in the Court of Appeal to substitute its determination of an issue arising under s 7A(3) of the Defamation Act for that reached by a jury where the jury's determination is unreasonable. I must explain why. Appellate power exists to direct a verdict for the plaintiff Wide reading of courts' powers: In interpreting the powers of the Court of Appeal, it is conventional to give a broad ambit to statutory provisions affording jurisdiction and power to such a court100. This is done out of recognition of the wide range of circumstances to which such powers must respond and because of the confidence that such a court will not misuse its jurisdiction or powers. Of course, it remains to construe the powers by reference to the language in which they are expressed, read in the light of their history, and in the context in which they are stated and having regard to any relevant considerations of principle and policy. The language of, and history behind, s 108(3) sufficiently indicate a different and more limited grant of power to the Court of Appeal in respect of an issue decided by a jury than an issue determined in the reasoned decision of a 100 Knight v F P Special Assets Ltd (1992) 174 CLR 178 at 205; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 422-423 [108]; Hillpalm Pty Ltd v Heaven's Door Pty Ltd (2004) 220 CLR 472 at 499-500 [84]. See also reasons of Gleeson CJ and Crennan J at [11]. Kirby judge. Nevertheless, given the grant of power to the Court of Appeal, in an appeal after a "trial of … any issue in the proceedings with a jury"101, it would be inappropriate to adopt a narrow construction of the power so conferred. Nor, in the operation of s 7A of the Defamation Act and ss 102 and 108 of the Supreme Court Act, should it be assumed that all of the old authorities concerned with appeals following jury verdicts are necessarily imported into the determination of what may be done in such a case. Trial of "issues" is included: It is significant that both the grant of jurisdiction and power in s 102, and the provision in s 108(3) for the disposition by the Court of Appeal of an appeal to it in proceedings in which there has been "a trial with a jury", contemplate a trial of an "issue" in the proceedings. In other words, by the language of these two sections, Parliament has provided a role for the Court of Appeal following a jury trial of an "issue in the proceedings". The provisions of s 108(3) are therefore well adapted to respond to the very limited functions assigned to a jury by s 7A(3) of the Defamation Act102. When, therefore, ss 102 and 108 of the Supreme Court Act are read alongside s 7A of the Defamation Act, it is not difficult to conclude that s 108(3) applies to such a case. If it applies, on the face of things, it would not be surprising if it applied in a useful way, responsive to the limited kind of "issue" which this form of "trial with a jury" typically presents. That "issue", as the present trial instances, usually involves a determination by a jury on the basis of little or nothing more than the evidence of the matter complained of, the identification of the alleged imputations, argument from both sides and directions from the trial judge103. Absence of appellate constraints: Such an attenuated "trial with a jury", inherent in the kind of involvement of the jury contemplated by s 7A(3), typically (as in this case) involves no contested evidence; no questions of credibility; and no room for the kinds of determinations of an evidentiary or factual kind that might otherwise make a principled appellate review of the jury determination difficult or impossible to perform. Here, equally with the jury in the trial, the appellate judges would have the entirety of the evidence and be able to read and assess the matter complained of, just as the jury might do. Whilst the jurors come from different backgrounds and might have a wider range of experience in the community, such substitution 101 Supreme Court Act, s 102 (emphasis added). 102 Reasons of Gummow and Hayne JJ at [44]-[45]. 103 Rivkin (2003) 77 ALJR 1657 at 1677 [119]; 201 ALR 77 at 104-105. Kirby would not be impossible. It would not even be particularly difficult. Most of the reasons that ordinarily restrain disturbance of jury verdicts are absent in this particular class of case. The residual restraints involve considerations relevant to the exercise of the power. They do not suggest an absence of the power. Contextual meaning to "verdict": So far as concerns the argument of the appellants based on the closing words of s 108(3), there are several answers. The sub-section does not purport to state exhaustively all of the powers of the Court of Appeal in disposing of an appeal after a "trial … of any issue in the proceedings with a jury"104. Necessarily, the Court must have other general powers as required for it to discharge its appellate functions. Such powers are available to supplement those expressed in s 108(3). In any case, the power given to the Court of Appeal in s 108(3) to "direct a verdict and give judgment accordingly" must be read in a way apt to the disposition of an "issue … in the proceedings". This is because, by its terms, s 108(3) contemplates that that is all that the proceedings in the Court in which there has been a trial by jury might involve. In disposing of an "issue" alone, self-evidently a "verdict" and "judgment" will not necessarily be a "verdict" or "judgment" of the entire proceedings105. From the context, therefore, the "verdict" and "judgment" mentioned in s 108(3) must be such as is appropriate to an appellate determination of an "issue". It must therefore allow the possibility of application to the kind of "special verdict" for which s 7A provides. Reading s 7A with s 108(3) makes it sensible to treat a s 7A(3) determination as a kind of special verdict. Likewise, the giving of a "judgment" must be read as including a "judgment" of the Court of Appeal disposing of the appeal before it, including following a determination in a trial by jury of a limited "issue". In fact, the formal disposition of the Court of Appeal's decision in the present case was described as a "judgment or order". That description was correct. Indeed, these are the descriptions of curial dispositions used in the Constitution itself106. No difficulty is therefore presented for the respondents' construction of the powers of the Court of Appeal by the closing words of Meaning of "as a matter of law": But what of the phrase "as a matter of law" in s 108(3)? It is true that many decisions of this Court suggest that a jury verdict in a trial of an action at common law will not present "a matter of law", 104 Supreme Court Act, s 102. 105 Reasons of Gummow and Hayne JJ at [18], [41], [45]. 106 Constitution, s 73. Kirby unless there is no evidence at all to sustain that verdict. How does that interpretation operate in a circumstance, as here, that expressly hypothesises that the jury trial in question may be confined to the determination of an "issue" and where that "issue" is one involving the factual determination reserved to the jury by s 7A(3)? The appellants' argument was that this analysis simply demonstrated that s 108(3) had no work to do in an appeal against a jury determination of an "issue" under s 7A(3). However, that would not be a conclusion that one would readily reach, given the inferred purpose of providing an effective remedy of appeal, including against a jury determination under s 7A of the Defamation Act. So far as s 108(3) is concerned, this is now effectively the only decision "in proceedings … in which there has been a trial with a jury" in which a plaintiff may be entitled to a "[special] verdict ... on [an] … issue … in the proceedings". It would not therefore be reasonable to interpret s 108(3) as having no application to such a case. Such an interpretation would reduce s 108(3) in this regard to a fatuity. This is not an interpretation of the sub-section that should be adopted. When this conclusion is reached, it is necessary to reconsider, in this context, some of the old authorities addressed to the phrase "as a matter of law". Without exception, those authorities date from the time of jury verdicts of a general kind, which determined the totality of a civil dispute between the parties. In their reasons, Callinan and Heydon JJ have pointed out that, even when that was the case, a number of judges of this Court accepted that, in given circumstances, when the evidence was all one way, it was open to an appellate court to conclude "as a matter of law [that] the verdict must be for the party entitled to succeed"107. Jury determinations evidencing legal error: I would not wish to rest my conclusion on scattered judicial expressions of such a kind. Instead, as it seems to me, a different and broader foundation exists. It is one apt to the kind of "appeal" enlivened in the present case by the challenge to the determination of the jury under s 7A(3). Since many of the cases upon which the appellants relied were decided, there has been a great expansion of the facility of appeal. This has accompanied, and stimulated, an appreciation that the facility of appeal is as important where "there has been a trial with a jury" as where there has been a trial before a judge sitting alone. In each case, the legal system is committed to the principles of 107 Reasons of Callinan and Heydon JJ at [185]-[186], quoting Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373 and also citing Hocking v Bell (1945) 71 CLR 430 at 441-442. Kirby lawfulness, fairness and rationality. This is why, in Rivkin108, I suggested that it was "erroneous to elevate a jury verdict in favour of a defendant in a defamation case to a status comparable to that of a verdict of acquittal of a defendant in a criminal case." To similar effect is the reasoning of the House of Lords in Grobbelaar v News Group Newspapers Ltd109. In that case, Lord Scott of Foscote wrote110: "Each side is equally entitled to justice. The appellate court must, of course, pay proper respect to the jury verdict. The jury are the fact finders. In a civil case, the jury, as fact finders, are entitled to the same respect, no more and no less, than that which is due to a trial judge sitting without a jury. The difference is that the trial judge's reasoning will be, or should be, on the face of the judgment whereas the jury's reasons, being undisclosed, will need to be re-constructed by the appellate court. Subject to that important difference, however, the factual conclusions of juries in civil cases should, in my opinion, be treated by an appellate court no differently, with no greater and no less respect, than the factual conclusions of judges." In the same case, Lord Bingham of Cornhill observed111: "The oracular utterance of the jury contains no reasoning, no elaboration. But it is not immune from review. The jury is a judicial decision-maker of a very special kind, but it is a judicial decision-maker none the less. While speculation about the jury's reasoning and train of thought is impermissible, the drawing of inevitable or proper inferences from the jury's decision is not, and is indeed inherent in the process of review." When, therefore, in performing their functions of determining the limited issues reserved to them by s 7A(3), a jury reaches a conclusion that appears to an appellate court to be unreasonable112, such an error is not now to be categorised as purely or only a factual one. In some cases, such a verdict may indicate "as a 108 (2003) 77 ALJR 1657 at 1676 [116]; 201 ALR 77 at 103-104. 109 [2002] 1 WLR 3024; [2002] 4 All ER 732. 110 [2002] 1 WLR 3024 at 3053 [75]; [2002] 4 All ER 732 at 759. See also Rivkin (2003) 77 ALJR 1657 at 1676 [116]; 201 ALR 77 at 103-104. 111 [2002] 1 WLR 3024 at 3029-3030 [7]; [2002] 4 All ER 732 at 737-738. 112 In the now discarded language, "perverse": Rivkin (2003) 77 ALJR 1657 at 1675 [111]; 201 ALR 77 at 102. Kirby matter of law" that the jury must have applied the wrong legal standard or must have reasoned in a way contrary to that envisaged by the applicable law. More than 20 years ago, in Azzopardi v Tasman UEB Industries Ltd113, I questioned the correctness of some of the very wide language deployed in the cases which the appellants invoked in this appeal. Azzopardi involved the question of whether, in defined circumstances, factual determinations by a judge might appear to an appellate court so manifestly erroneous as to indicate that the judge had made an error of law. I did not accept that errors of fact-finding could never give rise to an "error of law", grounding an appeal so limited. However, the majority of the New South Wales Court of Appeal decided otherwise. As I pointed out in Azzopardi, many of the old cases arose in the circumstances of jury trial where different considerations were presented because of the absence of reasons and the heightened difficulty of appellate analysis of the decision under review114. The intervening years have not shaken the opinions that I expressed in Azzopardi. On the contrary, the intervening case law confirms me in the view that I stated there. Reasoning such as that of Lord Bingham in Grobbelaar suggests that the view I favoured in Azzopardi may be as true of jury determinations as of the reasoned decisions of judges. It is simply more difficult to establish the error where there has been "a trial with a jury" than where judicial reasons are available to the appellate court to assist in that task and to help demonstrate the relevant error. In either case, if it can be shown that the outcome is unreasonable, a decision on the facts may betoken a misunderstanding or misapplication of the law. Then, "as a matter of law", the Court of Appeal may "upon the evidence" conclude that "the plaintiff … is … entitled to a verdict … on … [the] issue"115. It may do so where that "issue" is the jury's determination under s 7A(3) of the Defamation Act. This conclusion is not inconsistent with my belief that a trial judge may not direct a verdict in favour of the onus-bearing plaintiff in proceedings before a jury under s 7A(3). The powers of a trial judge remain the same. In such trials they are, in my view, limited. However, s 108(3) of the Supreme Court Act says nothing at all about the powers of the trial judge. It addresses only the jurisdiction and powers of the Court of Appeal. Those powers are larger than the powers of a trial judge. There will still be reasons for restraint. But, given the 113 (1985) 4 NSWLR 139 at 141-145. 114 (1985) 4 NSWLR 139 at 151. 115 cf reasons of Gummow and Hayne JJ at [24]-[27]. Kirby attenuated nature of the proceeding involving the jury under s 7A(3); the limited evidence typically (as here) adduced; and the limited issues reserved for the jury's determination, there is no reason why the Court of Appeal, having all the evidence, could not conclude that the jury had erred. In such a case the Court of Appeal might decide that a party, as a matter of law, is entitled to a (special) verdict on the "issue" presented by s 7A(3). Many of the considerations suggesting restraint on the part of the Court of Appeal remain to be considered in relation to the second issue in this appeal, namely the exercise of the power in disposing of an appeal in such a matter. Thus, the Court of Appeal might conclude (as in my view would often be appropriate) that a second jury should consider "the evidence" on a retrial and reach their own conclusions. Or the Court of Appeal, which has the power or discretion ("may"), could decide to "direct a [special] verdict". In each case, it is for the Court of Appeal to dispose of the appeal as its powers permit and the circumstances require. In support of this conclusion is a consideration repeatedly mentioned by the Court of Appeal itself in justifying its conclusion as to its powers under s 108(3). In Charlwood Industries Pty Ltd v Brent116, Ipp AJA put the matter in this way117: "[I]f the imputation is plainly defamatory and, on the relevant material, any other decision would be perverse, it would follow, as a matter of law, that the Court of Appeal may direct a verdict on the issue whether a defamatory meaning arises and give judgment accordingly. Any other result would be quite incongruous. For example, in a case where the Court of Appeal holds that a verdict was perverse by failing to hold that an imputation was defamatory, it would be incongruous to hold a new trial in accordance with law, with all the expense and solemn paraphernalia … In such circumstances the practicalities of the situation and common sense cry out for the Court to proceed under s 108(3)." Conclusion: appellate power exists: In the result I would reject the submission of the appellants that the Court of Appeal had no power to answer the questions presented for the determination of the jury, in a way different from the answers given by the first jury. Under the Supreme Court Act, such a power exists. However, as has been recognised in a number of the cases, there are countervailing considerations that need to be given weight. This brings me to the 116 [2002] NSWCA 201. 117 [2002] NSWCA 201 at [67]-[68]. Kirby appellants' alternative challenge. This is to the exercise by the Court of Appeal of the power not to order a retrial of all of the outstanding imputations before a jury. It is here that I part company with the other members of this Court. I will explain why. The Court of Appeal's decision miscarried Basis of the decision: The Court of Appeal exercised the power to substitute its own determination of the issues reserved for jury determination under s 7A(3) on the basis that the determinations of the first jury had been unreasonable118; that any result other than that which it favoured would be incongruous; and that no relevant reason stood in the way of adopting that course given that the only possible verdict was that the imputations were defamatory. I agree with what Gummow and Hayne JJ have written119 concerning the legal character of the "power" conferred on the Court of Appeal by s 108(3) of the Supreme Court Act. It is not a discretionary faculty in the usual sense of that expression. This classification affects the standard to be applied to appellate review of the subject order. That order involves the exercise of a power that is to be given effect, once the entitlement to it is made out. This follows from the identity of the repository of the power and much legal authority. However, the decision on whether the entitlement has been made out itself involves evaluation and judgment. It is not beyond contest and reasonable differences. In resolving such contest and differences, it is necessary to return to fundamental considerations. Specifically, the Court of Appeal rejected the appellants' submissions that a jury decision was appropriate in the case because "any decision by a jury as to whether a particular meaning found by them is defamatory raises community standards"120. the circumstances where general community standards with respect to sexual morality or immorality were raised by a publication121 and a case such as the present. Her Honour concluded that: 118 [2006] NSWCA 175 at [63]. 119 Reasons of Gummow and Hayne JJ at [27]-[28]. See also reasons of Gleeson CJ and Crennan J at [12]. 120 [2006] NSWCA 175 at [71]. 121 [2006] NSWCA 175 at [72]. Kirby "The question whether a restaurant serves unpalatable food or provides some bad service does not raise questions of community standards of the type discussed in Cairns v John Fairfax."122 Because, in her Honour's view, "the only verdict that could have been returned by the jury was that the imputations were defamatory", it followed that "there is no reason why [the Court of Appeal] ought not to enter verdicts in respect of imputations (a) and (c)"123. With respect, it is my opinion that this approach indicates error on the part of the Court of Appeal124. Indeed, there were several reasons why the Court of Appeal's exercise of its power miscarried in this respect. The reasons of Gleeson CJ and Crennan J state that the power given to the Court of Appeal by s 108(3) involves a compound concept. They conclude that the proposition inherent in the sub-section, that as a matter of law a party becomes entitled to a verdict, ensures that any notion of discretion would be "paradoxical"125. Yet their Honours accept that, in determining whether, as a matter of law, the respondents were entitled to a verdict on imputations (a) and (c), the Court of Appeal "will have considered the competing possibility ... that, in the circumstances of the case, there are questions that must be determined by a jury"126. In my respectful view, the other reasons in this Court fail to give weight to this consideration. Section 108(3) applies generally to all matters where there has been a trial with a jury. The role entrusted to juries in defamation proceedings is, unlike that role in criminal matters, particular and limited. Where Parliament has specifically entrusted a jury with the role of making "determinations" under the Defamation Act, the power granted by s 108(3) must adapt accordingly. This is because it will not always be possible in defamation proceedings, conducted in accordance with s 7A(3), to determine that, upon all the evidence "as a matter of law" a party is entitled to a particular determination. 122 Cairns v John Fairfax & Sons Ltd [1983] 2 NSWLR 708 at 720. 123 [2006] NSWCA 175 at [74]. See also at [56]-[57]. 124 cf reasons of Gummow and Hayne JJ at [51]-[54]. 125 See reasons of Gleeson CJ and Crennan J at [12]. See also reasons of Gummow and Hayne JJ at [27]-[28]. 126 Reasons of Gleeson CJ and Crennan J at [12]. Kirby Simply because a misdirection of the applicable test of defamation has occurred, I do not accept that imputations found to have been conveyed by a jury are necessarily defamatory. If they were, Parliament would not have provided for jury determinations of separate and distinct questions in s 7A(3). Although one might "suppose that the jury, having found that the imputations were conveyed, decided they were not defamatory because of a misunderstanding of what was meant by defamatory"127, this should not be assumed128. It is not necessarily so. For my own part, I do not agree that the "Court of Appeal was itself in a position to answer the second question without doing any injustice to either party"129. That is the very role which the Defamation Act entrusts to a jury. I cannot accept that there are no questions in this case that remain to be determined by a jury, certainly in a matter in respect of which the first (jury) trial has been held to have miscarried through no fault of the appellants. The postulated approach of juries: It cannot be the position that a conclusion by judges in the Court of Appeal that imputations are conveyed and are clearly defamatory always deprives a publisher of the right to have a second jury reconsider the matter. If that were so, it would render the procedure for limited jury trial provided for in s 7A(3) incongruous. Effectively, it would make it a pointless exercise to have the jury reach a determination at all. Yet, by definition, Parliament has concluded that a jury should decide such matters. It has provided for that mode of trial and in current circumstances this is notable because it is so exceptional. It is not for the Court of Appeal, by a universal approach to all cases in which it concludes that a publication "is reasonably capable of carrying the imputation" and "of bearing a defamatory meaning", contrary to the first jury's verdict, to proceed to substitute determinations by its judges for those of juries. Doing that ignores the distinctive legislative scheme. Moreover, it evidences insufficient respect for the continuing role and function of juries in cases of this kind130. Where, therefore, a determination has miscarried for misdirections, prima facie it remains a party's right to have a determination of the stated questions, relevant to liability in defamation, decided by a jury. History teaches that jury determinations in such cases are not infrequently different from those of judges – 127 Reasons of Gleeson CJ and Crennan J at [13]. 128 cf reasons of Gummow and Hayne JJ at [48], [51]-[53]. 129 Reasons of Gleeson CJ and Crennan J at [13]. 130 Swain (2005) 220 CLR 517 at 568-569 [160]. Kirby a fact that McHugh J noticed in Rivkin131. His Honour cited Lord Devlin's well-known remarks in Lewis v Daily Telegraph132: "[T]he layman's capacity for implication is much greater than the lawyer's. The lawyer's rule is that the implication must be necessary as well as reasonable. The layman reads in an implication much more freely; and unfortunately, as the law of defamation has to take into account, is especially prone to do so when it is derogatory." Lord Reid, in Morgan v Odhams Press Ltd133, pointed out that the "ordinary reader does not formulate reasons" but "gets a general impression". Moreover, there are uncounted cases where jurors have been more protective of liberties and freedom than judges have been. One such liberty is the freedom of the press to publish criticisms of people and institutions that are ironical, sarcastic, satirical, witty or designed to mock perceived pretension. It is true that such issues attract defences under the Defamation Act that are then available to publishers, such as the appellants. However, even before the defences are reached, the scheme of the legislation envisages that a decision will be taken from a jury, affirming or denying the complaint of defamation. Proper respect has to be paid to that legislative scheme. The approach of the Court of Appeal, and now of the majority of this Court, evidences insufficient attention to this consideration. Absence of a true verdict on imputations (a) and (c): The conclusion that the Court of Appeal should substitute its own determinations on imputations (a) and (c) also departed from its own recognition, in an earlier case, correctly in my view, that134: "This Court should rarely, if ever, proceed to decide the issue of whether an imputation is defamatory of the plaintiff before a jury has first determined that issue. That is because the jury has an especially significant constitutional role … in evaluating the impact of the matter complained of on the community." In the present matter, the Court of Appeal had concluded that the primary judge had misdirected the jury concerning the law applicable to their decision on 131 (2003) 77 ALJR 1657 at 1661-1662 [23]-[28]; 201 ALR 77 at 82-84. 132 [1964] AC 234 at 277. 133 [1971] 1 WLR 1239 at 1245; [1971] 2 All ER 1156 at 1163. 134 Harvey [2005] NSWCA 255 at [105] per Hunt AJA. Kirby imputations (a) and (c). In this sense, on the Court of Appeal's holding, the determinations by the first jury were not true determinations, as s 7A(3) contemplated. On the approach of the Court of Appeal, there has therefore never been a jury determination of those imputations in accordance with law. The Court of Appeal recognised this consideration135. However, their Honours gave insufficient, if any, weight to it. Yet it was a very important factor confirming the entitlement of the appellants (and also the respondents) to have a second jury consider the imputations afresh, absent any misdirection that caused the first jury determination to miscarry. Juries and community standards: I cannot agree that the function of the jury in reflecting "community standards" was somehow immaterial, or of little relevance, to a decision in a case of "business defamation", such as the present136. Some judges may feel themselves better able to decide imputations damaging to a business than, for example, imputations concerned with sexual morality. However, it is not the case that "community standards" are irrelevant in such matters. To say that would be to deny the legislative scheme that preserves the touchstone of community standards provided by a civil jury. It is far from inconceivable to me that a contemporary jury of Australian citizens might reasonably conclude that the review of the respondents' restaurant was not defamatory of the respondents. They might take the view that it was basically an example of media entertainment in which any publicity is good publicity. Or that high price restaurateurs have to exhibit a thicker skin. Or that defamation should be reserved to more serious complaints because "free speech" and the "free press" really matter. Or that any defamation was of the respondents' chef and waiting staff and not of them. Moreover, on subjects such as a criticism of a restaurant's food and service, lay jurors are much more likely to reflect community standards than judges, many of whom, like myself, have no special interest in culinary matters, expensive restaurants or cuisine generally. Astonishing as it may seem, judges may occasionally lack a sense of irony or humour. Some may undervalue "free speech" or sometimes even feel hostility to a "free press". In such matters, therefore, there is safety in the numbers of a jury. It was an error of the Court of Appeal to consider that community standards were insignificant in judging the suggested defamatory character of the review of the respondents' restaurant. With all respect, such an attitude contradicts the legislative preservation by s 7A(3) of the function of a jury. That function is not unreviewable. It does not exclude a proper role for the Court of Appeal. But the jury's function is still very 135 [2006] NSWCA 175 at [73]. 136 cf reasons of Gleeson CJ and Crennan J at [13]. Kirby important. Because Parliament exceptionally provided for it, it is to be respected in defamation actions. Successive jury verdicts prevail: Experience at the time when civil jury trials were much more common than today, demonstrates that sometimes juries continued to reach conclusions about defamatory imputations that were different from those reached by judges. In these circumstances, it is not the case, as Ipp AJA put it in Charlwood137, that: "[S]hould the jury again bring in a verdict that the imputation was not defamatory, that verdict would once more be overturned on the same ground." An appellate court, in such a case, might take that course. However, in several well-known instances, appellate judges have ultimately accepted that jurors were entitled to reach a conclusion different from that of the judges. The best known of such cases in Australia is Hocking v Bell138. In that case, which involved the prospect of successive "unreasonable" jury verdicts being set aside, this Court pointed out139 that each order for a further new trial was discretionary. Latham CJ, whose reasons140 were upheld by the Privy Council, concluded that because the appeal involved a second jury verdict in favour of the plaintiff, that verdict should be allowed to stand. That should happen although the appellate court might itself have come to a conclusion different from the jury's verdict. To the same effect, Dixon J141 quoted from Forsyth's History of Trial by Jury142: "But to this ['a general verdict can only be set right by a new trial'] there is a limit. Juries may baffle the court by persisting in the same opinion, and in such cases it has been the practice for the latter ultimately to give way." 137 [2002] NSWCA 201 at [68]. 138 (1945) 71 CLR 430; (1947) 75 CLR 125 (PC). 139 (1945) 71 CLR 430 at 445, 463, 468, 499-500. 140 (1945) 71 CLR 430 at 444-445. 141 (1945) 71 CLR 430 at 488. Kirby In Hocking v Bell, Dixon J, like Latham CJ, concluded that such was the course that this Court should adopt. It was that conclusion that ultimately prevailed in the Privy Council. The same approach was followed recently by the Court of Appeal itself in Harvey v John Fairfax Publications Pty Ltd143. That was a case involving a second trial in a defamation action where the jury returned the same determinations of the s 7A issues adverse to the plaintiff. In such a case, Hunt AJA sensibly asked "whether the time [had] come to call a halt to the succession of 'unreasonable' verdicts"144. In the end, in that case, that was the course which the Court of Appeal took. The jury's verdict was allowed to stand145. Callinan and Heydon JJ ask, in effect, whether the appellate court would require two, or three, or more trials before surrendering its opinion that a jury determination under s 7A was "unreasonable"146. In practice, it rarely comes to more than two. Normally the problem does not arise. But where it does, the approach adopted by Latham CJ and Dixon J in Hocking v Bell, affirmed by the Privy Council, is by no means irrational. It is sensible. It is practical. It is another instance of the great truth that the life of the common law is not logic alone but includes experience147. And in any case, in the present appeal, on the hypothesis upheld by the Court of Appeal, there has never been a proper trial of the imputation issues before a jury, accurately instructed on the law. The appellants ordinarily have a right by statute to such a trial. The Court of Appeal should not have deprived them of that right in the circumstances of this case in respect of imputations (a) and (c). Retrial of the whole matter: There is one final consideration. It was mentioned in passing by Ipp JA in the present case148. This Court has endorsed the general proposition that "if there is to be a new trial it ought to be of the case 143 [2005] NSWCA 255. 144 [2005] NSWCA 255 at [108]. 145 [2005] NSWCA 255 at [117]. 146 Reasons of Callinan and Heydon JJ at [188]. 147 Holmes, The Common Law, (1882) at 1. 148 [2006] NSWCA 175 at [134]-[139]. Kirby as a whole unless the Court thinks that 'they shall do more injustice by setting the matter at large again'"149. The Court of Appeal unanimously concluded that imputation (d) should be remitted to a jury for redetermination. Having so ordered, the position has been reached that there must be a second jury trial in these proceedings. A jury will be empanelled and will have the matter complained of before them, with argument from the present parties and with correct directions on the law, so as to determine the issues presented by imputation (d). Because the Court of Appeal affirmatively addressed this consideration before making the differential orders that it did, it would not, standing alone, have warranted disturbance, given the discretionary elements inherent in such a disposition. However, once other errors are demonstrated in the determination by the Court of Appeal, it falls to this Court to make its own orders, freed of those errors. In that circumstance, it is appropriate to take into account the necessity for a new trial before a second jury under s 7A. When that consideration is added to the others that I have identified, there are compelling reasons why, in this case, all of the remaining imputations, (a), (c) and (d), should be returned for trial before the second jury. That course alone will fulfil the procedures that Parliament has laid down. That is therefore the course that I would favour. In case it should become important, in respect of the retrial of imputation (d) and the issue of an inference on an inference, I agree with what Callinan and Heydon JJ have written on that subject150. Orders The appeal should be allowed. Orders 3 and 4 of the orders of the Court of Appeal should be set aside. In place of those orders, this Court should order that the claims by the present respondents against the appellants in relation to imputations (a), (c) and (d) be remitted for determination by a jury in accordance with s 7A of the Defamation Act 1974 (NSW). The respondents should pay the appellants' costs of the appeal to this Court. 149 Pateman v Higgin (1957) 97 CLR 521 at 527. See also Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816 at 1820-1821 [20], [22], 1836 [133]; 221 ALR 402 at 408, 429; CSR Ltd v Della Maddalena (2006) 80 ALJR 458 at 475 [81]; 224 ALR 1 at 21. 150 Reasons of Callinan and Heydon JJ at [191]-[194]. Facts and Previous Proceedings The respondents were the owners of Coco Roco, a restaurant in Sydney. The first appellant is a publisher of newspapers, and the second appellant is a restaurant reviewer for the first appellant. The respondents sued the appellants for damages for defamation in the Supreme Court of New South Wales on the review of their restaurant published in the first appellant's newspaper, the Sydney Morning Herald. Before the trial of any issue by a jury in this case, a judge of the Supreme Court of New South Wales (Nicholas J) ruled that four imputations were reasonably capable of being carried by the review, and were reasonably capable of bearing a defamatory meaning. Those four imputations were as follows: (a) The respondents sell unpalatable food at Coco Roco. (b) The respondents charge excessive prices at Coco Roco. (c) The respondents provide some bad service at Coco Roco. (d) The respondents are incompetent as restaurant owners because she/he employs a chef at Coco Roco who makes poor quality food. The Section 7A Trial A trial of some of the issues was then conducted pursuant to s 7A(3)(b) of the Defamation Act 1974 (NSW) ("the Defamation Act")151 before a judge (Bell J) and a jury. It was a trial colloquially known as a "s 7A trial". That section provides as follows: "7A Functions of judge and jury If proceedings for defamation are tried before a jury, the court and not the jury is to determine whether the matter complained of is reasonably capable of carrying the imputation pleaded by the 151 Since repealed by the Defamation Act 2005 (NSW), s 46, however it was common ground that the 1974 Act continues to apply in this case. plaintiff and, if it is, whether the imputation is reasonably capable of bearing a defamatory meaning. If the court determines that: the matter is not reasonably capable of carrying the imputation pleaded by the plaintiff, or the imputation is not reasonably capable of bearing a defamatory meaning, the court is to enter a verdict for the defendant in relation to the imputation pleaded. If the court determines that: the matter is reasonably capable of carrying the imputation pleaded by the plaintiff, and the imputation is reasonably capable of bearing a defamatory meaning, the jury is to determine whether the matter complained of carries the imputation and, if it does, whether the imputation is defamatory. If the jury determines that the matter complained of was published by the defendant and carries an imputation that is defamatory of the plaintiff, the court and not the jury is: to determine whether any defence raised by the defendant (including all issues of fact and law relating to that defence) has been established, and to determine the amount of damages (if any) that should be awarded to the plaintiff and all unresolved issues of fact and law relating to the determination of that amount. (5) Section 86 of the Supreme Court Act 1970 and section 76B of the District Court Act 1973 apply subject to the provisions of this section." Section 9 of the Defamation Act relevantly draws a distinction between published matter and any imputations conveyed by it: "9 Causes of action (1) Where a person publishes any report, article, letter, note, picture, oral utterance or other thing, by means of which or by means of any part of which, and its publication, the publisher makes an imputation defamatory of another person, whether by innuendo or otherwise, then for the purposes of this section: that report, article, letter, note, picture, oral utterance or thing is a matter, and the imputation is made by means of the publication of that matter. (2) Where a person publishes any matter to any recipient and by means of that publication makes an imputation defamatory of another person, the person defamed has, in respect of that imputation, a cause of action against the publisher for the publication of that matter to that recipient: in addition to any cause of action which the person defamed may have against the publisher for the publication of that matter to that recipient in respect of any other defamatory imputation made by means of that publication, and in addition to any cause of action which the person defamed may have against that publisher for any publication of that matter to any other recipient. (5) Notwithstanding subsection (2), where proceedings for defamation in respect of the publication of any matter are tried before a jury, the jury shall, unless the court otherwise directs: give a single verdict in respect of all the causes of action on which the plaintiff relies. (5A) Notwithstanding subsection (2), if the court or the jury (if any) finds for the plaintiff as to more than one cause of action in the same proceedings for defamation, the court may assess damages in a single sum. This section does not affect: any law or practice relating to special verdicts, or the powers of any court in case of vexatious proceedings or abuse of process." It is sufficient to note that the Defamation Act provides for all of the analogous defences to defamation at common law: truth152; absolute privilege153; qualified privilege154; protected reports155 and comment156. Under the procedure mandated by the Defamation Act the issues raised by the defences, as well as damages, are the province of the trial judge to be decided after the s 7A trial. To complete the context in which s 7A appears, reference is required to Pt 4 of the Defamation Act which is concerned with damages and costs. Section 46 defines "harm": "46 General In this Part relevant harm means, in relation to damages for defamation: harm suffered by the person defamed, or (b) where the person defamed dies before damages are assessed, harm suffered by the person defamed by way of injury to property or financial loss. (2) Damages for defamation shall be the damages recoverable in accordance with the common law, but limited to damages for relevant harm. In particular, damages for defamation: shall not include exemplary damages, and shall not be affected by the malice or other state of mind of the publisher at the time of the publication complained of or 152 Sections 14, 15 & 16; including contextual truthful imputations. 153 Sections 17 to 19. 154 Sections 20 to 23. 155 Sections 24 to 28. 156 Sections 29 to 35. at any other time, except so far as that malice or other state of mind affects the relevant harm." Section 46A gives guidance as to the "factors relevant in damages assessment": that they be "appropriate and rational" having regard to the relevant harm, and to the general range of damages for non-economic loss awarded to personally injured plaintiffs. Clearly, "harm" consisting of financial harm or loss will sound in damages. The better to understand imputation (d) in particular and its relevance to the case, the review should be set out: "Crash and Burn When dining on the view is the only recommendation If a restaurant serves good as well as bad food, do you give it the benefit of the doubt? I wouldn't do that with a three chef's hat restaurant, so why should I do it here? Especially when more than half the dishes I've tried at Coco Roco are simply unpalatable. Coco Roco is the swank new eatery at King Street Wharf. The opening was touted as 'Sydney's most glamorous restaurant'. If glamour peaked at about 1985, then perhaps they're right. Something about the polished stainless steel around the open kitchen and the black reflector tiles in the bathroom make me feel I should be wearing a pink shirt and a thin leather tie. Maybe it's just me. What isn't disputable is that this place has had a $3 million fitout, has views westwards over the water and scored Sarah O'Hare as its official guest at the opening. It has set itself up as a flash restaurant with big-end-of-town prices. Its business card even boasts that 'A new level of dining comes to Sydney's King Street Wharf.' I couldn't agree more. Coco Roco is actually two restaurants: Coco, the posh place upstairs off Lime Street, and sibling Roco, also smartly fitted out on the foreshore. Forever in pursuit of excellence, we chose the more expensive option. Expensive is right. Mains skid dizzily from a vegetarian dish at just under $30 and crash over the $50 mark. It's a brave restaurateur who tries that without the goods to back it up. A degustation of oysters ($28 for six/$40 for 12) arrives as different flavoured bivalves, rather than as oysters from various regions. There's a saffron infused gin one. There's a seafood foam which looks like it's been piped on top. The texture is scary and, let's be polite, not to my tastes. The limoncello, however, is worse – flavours jangle like a car crash; all at once it's sickly sweet, overtly alcoholic, slippery, salty and bitter. Only the lone natural oyster is gloriously free from interference and there's an exquisite verjuice jelly on another. Next up, the carpaccio of beef ($22) comes with a dreary roast almond paste underneath and far too many yellowing rocket leaves on top. The meat itself is fine, although the parmesan cheese strips taste tired. Small Queensland scallops ($24) on jagged shells with cauliflower and vanilla nearly work but are uninteresting. Why anyone would put apricots in a sherry-scented white sauce with a prime rib steak is beyond me. A generous chock of meat comes perfectly rested, medium as ordered. But the halves of apricot are rubbery and tasteless (which is probably a good thing). I scrape the whole wretched garnish to one side. The meat has a good length of flavour and is a damned fine steak, even if it is $52. I can't help but think at this price I could be dining at Rockpool. On a side dish, three house-made mustards – milk, Guinness and lavender – prove that some things are better left alone. The other main, roast chicken ($35) is outstandingly dull, which is odd considering it's a Glenloth bird that I usually love. A few days later, in the interests of impartiality, I'm back. This time it's salad to start ($8), sweetly dressed with honey and balsamic vinegar and topped with fine cress. It's not great but passable, except for a few wilting leaves. A poached beef fillet ($46) shows, like last visit, that they can cook steak. This time it's medium rare, although the meat is curiously dry on the edges. But the accompanying broth is well below average. It is sticky sweet with port and overcooked potatoes floating in it do it no favours. Oxtail and sweetbread dumplings are a delight, however. I've never had pork belly that could almost be described as dry. Until tonight. A generous square of pig's paunch ($33) is snuggled into a mass of starchy lentils. The meat is unevenly spiced with Moorish flavours and the lentils are poor. Texturally, it brings to mind the porcine equal of a parched weetbix. For dessert, honeycomb cheesecake ($17) has little to recommend it, with its soggy pastry base. Compared with the raspberry and shiraz A dismal pyramid of sorbet ($15) jangles the mouth like a gamelan concert. Poached berries underneath are OK, except for what I guessed might have been soggy blackberries. It could be argued that Coco is still settling in. But apricots in sherry-scented white sauce aren't meant to garnish a rib eye of beef. The menu isn't held back by minor glitches; it's flawed in concept and execution. In a city where harbourside dining has improved out of sight in recent years, Coco Roco is a bleak spot on the culinary landscape. The address: 17 Lime Street, King Street Wharf, City. The Hours: Coco lunch Tue-Fri noon-3pm, dinner Tue-Sat from 6pm. (Roco lunch and dinner daily.) The Food: Contemporary Mediterranean. The Wine List: Good, solid list with plenty of interest. The Owners: Aleksandra and Liliana Gacic, Branislav Ciric. The Chef: Adam Birtles. The Service: Good and bad. The Noise: Could get loud. The Vegetarians: Three dishes, plus plenty of sides. The Wheelchair access: Yes to Roco, stairs to Coco. The Cards: Major except Diners Club. The Bill: Entrees $17-$24, mains $28-$52, desserts $15-17. Less at Roco. The Value: A shocker. The Summary: Unpalatable flavours on one hand and pricey but good steak with flawed garnishes on the other add up to a restaurant where the view is the best bit. And you can't eat that. The s 7A trial consisted of the tender of the review, addresses by counsel for the parties, directions by the trial judge, and the return of answers by the jury to the questions put to them, that is, to use the language of s 7A(3)(b) of the Defamation Act, the "determin[ation]" of the questions whether the imputations were carried by the review and whether they were defamatory. Beazley JA in the Court of Appeal relevantly summarised the stances of the parties and the trial judge's responses to them at the s 7A trial157: "Addresses to the jury: [Respondents'] case The [respondents] had specifically pleaded a case of business defamation in paragraph 6 of the Statement of Claim and this was the basis upon which their counsel addressed the jury. No case of general defamation was pleaded or pursued before the jury. When addressing the jury the [respondents'] counsel explained the way that the [respondents] brought their claim in these terms: '... that imputation if you found it to be conveyed [was] likely to injure the [respondents'] reputation in their business, trade or profession as restaurant owners. Any imputation which suggests some unfitness or incompetence for a trade, business or profession is defamatory and we say that these imputations are defamatory because they injure the [respondents'] reputation in their trade or profession.' [Appellants'] case However, senior counsel for the [appellants] took a different approach altogether and made the following comments to the jury in respect of imputation (a): 157 Gacic v John Fairfax Publications Pty Ltd [2006] NSWCA 175 at [33]-[42]. Note that text in bold is the emphasis of the trial judge (Bell J), and the text in italics is the emphasis of Beazley JA in the New South Wales Court of Appeal. 'Now, members of the jury, you haven't heard much about the test of what is defamatory. Her Honour will explain it to you, the legal test; because that is her Honour's job. Incidentally, if her Honour says anything to you about the law that conflicts with what Mr Evatt or I have said, then you follow her Honour ... The test of whether something is defamatory is whether the thing would tend to make ordinary decent people in the community think the less of the [respondents]. It is a very simple test. It is the usual way it is put ... [s]ometimes it is put slightly differently but that is the usual test and her Honour, I apprehend, will tell you something like that or very similar to that.' Senior counsel continued, in relation to imputation (a): 'How is it defamatory? How would it tend to make decent people think less of another person, even if they are the owner of a restaurant, to say that they sell unpalatable food? I mean, isn't it just it is one of those things. If you sell unpalatable food, then maybe you are a restaurant owner who owns a restaurant which isn't very good, but how does it make an ordinary decent person think less of somebody else to say that they sell unpalatable food? ... Isn't it a bit neutral? You think, "Oh, well, yep, he says that this person sells unpalatable food. Yeah, okay, fine", but you are not going to march around are you, going to make some sort of judgment of that person or think any the less of them. It is a matter for you, members of the jury, but if you think that ordinary decent people, which is the test, in the community would tend to think the less of somebody because it is said about them that they sell unpalatable food, well, it is a matter for you. You are the community arbiters on that question.' Senior counsel for the [appellants] then dealt with imputation (b). The jury found that imputation (b) was not conveyed by the article. There is no appeal from that finding. However, it remains relevant to refer to senior counsel's comments to the jury as to the meaning of defamation in relation to this alleged imputation so as to provide an overview of the approach taken at trial by the [appellants] to defamatory meaning. Thus, having referred to the terms of imputation (b), senior counsel said: 'Again you have got this problem, you might think – and I don't want to labour the point – but you might think that you have got this problem that even if the reader thought that the prices were excessive, the reader who reads this article on the bus or at the table or whatever, is not going to get a meaning that these individual people who are just named in the side-bar are charging – it is just not a meaning that is going to occur to the reader, is it?' Senior counsel concluded his address in relation to imputation (b) by saying: 'It wouldn’t make the reader, you might think, think less of someone if that were said ...' The same approach was taken when senior counsel for the [appellants] addressed the jury in relation to imputation (c). He again asked the jury to consider how it was defamatory of the [respondents] to say that they provided some bad service in the sense that 'nobody [was] going to think the less of them' because of what was said in that part of the article. Senior counsel for the [appellants] then dealt with imputation (d). He indicated to them that no defamatory imputation could arise where there was an inference upon an inference. This latter goes to the second ground of appeal. In relation to this ground of appeal, senior counsel for the [appellants] also suggested to the jury that the imputation was not defamatory. In that respect, he said: 'Is the ordinary reader going to think, or decent people, going to think the less of somebody? I should tell you that it is only fair to say that it can also be defamatory of somebody if you impugn their professional competence in their job. It is what the law says. But at the end of the day it is your decision.' That was the only reference in senior counsel's address to a business defamation. Directions sought Before her Honour commenced her summing [up] and in the absence of the jury, counsel for the [respondents] indicated to her Honour that he needed some directions. The exchange between her Honour, Mr Evatt, counsel for the [respondents] and Mr Blackburn SC, senior counsel for the [appellants], was as follows: 'EVATT: On defamatory meaning, my friend put that the test, which is pretty standard test -- (sic) HER HONOUR: He did, at the very end. EVATT: But not applicable to this case. HER HONOUR: He did, at the very end. EVATT: I know that, but that was -- BLACKBURN: I am happy for any correction. EVATT: I have the relevant passages from Gatley. BLACKBURN: I am happy for any corrections. HER HONOUR: I intend telling the jury that whilst, ordinarily, the notion of something being defamatory carries with it that it would lower a person in the estimate of ordinary, right thinking members of the community, the case here depends upon another aspect of the notion of being defamatory, acknowledged by Mr Blackburn towards the conclusion of his address, and that is that the meaning conveyed would be likely to injure a person in his or her trade or profession by reason of suggesting unfitness or incompetence or something of that nature. Does that address your problem? EVATT: Yes. That's what I put. My friend just, in the last minutes of his address, did make a number of correct statements but four times he said about the ordinary reasonable reader, even if they read the side bar, and he said that at long intervals of time. But he did end up saying that they would have to read the whole of the article. BLACKBURN: I accept that. I am happy for any reinforcement.' Trial judge's directions to the jury In her summing up to the jury, her Honour dealt with the question of defamatory meaning in the following terms: 'Let me now turn to the question of whether or not the imputations that are pleaded are defamatory ... Generally, defamatory means having the tendency to lower a person in the estimate of ordinary, right-thinking members of the community. But there is another way in which an article or publication may be defamatory and it is the way that the [respondents] put their case here. It is important you understand that the question of whether or not the imputations were defamatory of the [respondents] takes up the concept of whether they may have the tendency to injure a person in his or her profession or trade by the suggestion of unfitness or incompetence or the like. Just to make that clear. Generally, defamatory means having the tendency to lower a person in the estimate of ordinary right-thinking members of the community but equally, and importantly for this case, defamatory has the meaning of having a tendency to injure the [respondents] in his or her profession or trade by the suggestion of unfitness or incompetence.' After further summing-up to the jury on matters not relevant to this ground of appeal, her Honour concluded by asking counsel for the parties whether there were any matters they wished to raise. Mr Evatt, counsel for the [respondents], replied in the negative." There had been submissions by the respondents before the trial judge concluded her summing up that imputation (d) was an inference from another inference. Following argument about that, her Honour said that she would direct the jury in this way: "HER HONOUR: What I propose saying to the jury, subject to anything further that either of you want to put to me, is this, or words to this effect, because I have not made a note of it: Mr Blackburn told you something about the law relating to inferences. You will recall he addressed submissions that the law of defamation does not admit of an imputation being drawn by a process of inferential reasoning involving one inference being drawn upon another inference. BLACKBURN: That's correct. HER HONOUR: There is provision, if an imputation is not, as a matter of law, capable of arising, for that matter to be tested before a judge. The question for you is, as a matter of fact, whether an ordinary reasonable reader, reading this article, would have understood that article to be conveying the meaning set out in paragraph (d). That is a question of fact. It is not necessary or desirable for you to analyse the matter by reference to what you were told concerning legal principles, about whether it involves a process of inferential reasoning, or something to that effect. Now, Mr Evatt, would that address your concerns? EVATT: I think it would." Despite the fact that the present appellants' counsel appeared to agree with her Honour's proposed direction, albeit without enthusiasm, subsequently, he chose to seek a redirection with respect to the jury's role in deciding whether imputation (d) consisted of an inference from an inference. Her Honour was accordingly induced to redirect in these terms: "Members of the jury, there is a matter that is necessary for me to give you further directions in relation to. It arises out of the question … of the imputation pleaded in questions 1, 3 and 5(d) and to the submissions that Mr Blackburn made to you concerning the law. I did not wish to convey to you, and I do not direct you, that anything Mr Blackburn said to you was wrong as a matter of law. It is the law that a defamatory imputation cannot be drawn or conveyed by a process of reasoning that involves drawing one inference upon another inference. That correctly states the law. The matter that I wanted to make clear to you was that if, as a matter of law, the imputation pleaded in questions 1, 3 and 5(d) was not capable of arising, you would not be concerned with it. That does not mean that if you, in your role as the trier of fact, conclude that the imputation does not arise because it involves the ordinary reasonable reader drawing one inference upon another inference, if that is the process of reasoning that you are attracted to, then you would find that the imputation does not arise. This leads me necessarily to tell you something briefly about the process of inferential reasoning. An inference is a conclusion drawn from a number of established facts. If (a), (b) and (c) are proved as facts, then one might conclude or infer that (d) is also a fact. An inference relevantly means a conclusion that you draw from the established material. I do not propose to go back to the factual submissions advanced with respect to the imputation pleaded in (d) of those questions. You understand that, as a matter of law, imputation (d) is capable of arising; whether you find that it does or not is a matter for you, and in answering that question you are concerned with whether the ordinary reasonable reader would have taken, from the article, the meaning that each of the [respondents], that he or she is incompetent as a restaurant owner because he or she employs a chef at Coco Roco who makes poor quality food." The debate about the impermissibility or otherwise of the drawing by juries of inference from inferences was stimulated by the observations on that topic made by Hunt CJ at CL (Mason P and Handley JA agreeing) as a member of the Court of Appeal in Amalgamated Television Services v Marsden158 in which his Honour treated Lewis v Daily Telegraph Limited159 as authority for the 158 (1998) 43 NSWLR 158 at 167. proposition that an imputation was bad if it could be discerned to contain an inference upon an inference. The jury found that imputations (a) and (c) were conveyed but were not defamatory, and that imputations (b) and (d) were not conveyed. Judgment was in consequence entered for the appellants. The Proceedings in the Court of Appeal The respondents appealed to the Court of Appeal (Handley, Beazley and Ipp JJA). Their appeal sought no disturbance of the jury's finding that imputation (b) was not conveyed. Reasonableness of the jury's answers and the relevance of community standards imputations (a) and (c), remitting The Court of Appeal upheld the appeal, finding for the present respondents on imputation (d) for determination by a jury, and making various orders for costs. The Court of Appeal held that the only verdicts on imputations (a) and (c) which a reasonable jury, properly directed, could have reached were those that their Honours held should have been reached. The Court of Appeal was, if so empowered, effectively obliged, in the circumstances of this case, to decide the issues raised by these imputations in favour of the present respondents, without any further jury trial. As to a submission that counsel for the respondents should have sought a further redirection by the trial judge, the Court of Appeal was of the view that counsel's failure in that regard did not oblige the Court to permit the miscarriage of justice which would otherwise result. The trial judge's directions, the Court of Appeal said, failed to draw the necessary distinction between business defamation and personal defamation: directions appropriate to the latter were not to the point in a case of damage to business people claiming injury of a business kind. Interpretation of s 108(3) of the Supreme Court Act 1970 (NSW) Handley JA gave separate consideration to the Court's jurisdiction under s 108(3) of the Supreme Court Act 1970 (NSW) (the "Supreme Court Act"). His Honour's view was that, in general, an appellate court should not enter a verdict in favour of a party bearing a legal onus on a question of fact. The proper course for an appellate court in the case of an erroneous direction would usually, but not in an exceptional case, be to order a new trial. Section 108(3) of the Supreme Court Act does not dictate any different an approach. In cases of business defamation in particular, in which community standards are of less significance than in others, an appellate court may not be as reluctant to enter a verdict without remitting the issues to another jury. This was such a case. (c) An inference upon an inference Beazley JA (Handley JA agreeing) was of the opinion that the question whether an imputation involves an inference upon an inference is part of the question of the capacity of a matter to convey the imputation in question, and, accordingly, a matter for determination by a judge and not a jury. Their Honours held that imputation (d) did not, however, involve an inference upon an inference. Beazley JA said this in her reasons160: "The question of whether an imputation involves an inference upon an inference is a question of capacity, which, under the provisions of s 7A(1) of the Defamation Act must be determined by the court and not by the jury. In this case, if the [appellants] wished to contend that the imputation contained an inference upon an inference, it was necessary for them to do so before the judge. It was not a jury question." Her Honour concluded that as there was no inference upon an inference involved in imputation (d), it was proper, in her opinion for a jury, properly directed, to make a determination whether imputation (d) was actually conveyed or not, and whether it was defamatory. Handley JA said161: "As oral argument in the appeal on this question developed the clearer it became that this analysis was not appropriate for the consideration of a jury, who were likely to be distracted and confused by its complexities." Handley JA (Beazley JA agreeing) was of the opinion that in determining whether a matter is capable of conveying an imputation, a judge should rule against it if it is derived from an inference, because, in that event, the matter does not of itself convey the imputation pleaded: although his Honour had agreed with Hunt CJ at CL in Marsden that this was a jury question, on reconsideration, he had come to the view that this was not so. Ipp JA was of a different mind on this last topic. In his opinion, there could well be cases in which further inferential conclusions may be available and reasonably open to be regarded, suitably cautiously as defamatory. In so holding, his Honour said, and in our view correctly162: 160 Gacic v John Fairfax Publications Pty Ltd [2006] NSWCA 175 at [90]. 161 [2006] NSWCA 175 at [23]. 162 [2006] NSWCA 175 at [113], [119]. "while reasoning based on an inference drawn from an inference should be looked at with caution, there is no absolute rule of law that precludes such reasoning in an appropriate case … The question as to the meaning that the words convey to the ordinary person should be a simple and straightforward one, as befits a law that governs the everyday life and actions of all levels of persons in the community. The question should not be obscured by overly complex and subtle metaphysical distinctions that stand as a formidably esoteric barrier to what should be an easily comprehensible reasoning process akin to common sense." Ipp JA too did not doubt that in this case an order for a new trial in relation to imputations (a) and (c) would be unjust to the respondents and that the Court should reverse the jury's answers to the questions concerning them. Accordingly the Court of Appeal ordered that imputation (d) be remitted for re-determination by a jury, by reason of the trial judge's further directions which left a question to the jury whether the imputation did involve an inference upon an inference. The Appeal to this Court The appellants appealed to this Court on several grounds including that the orders of the Court of Appeal were in excess of the powers conferred upon it by s 108(3) of the Supreme Court Act. Because the respondents carried the onus on the relevant matters, which were all factual ones, they were uniquely and exclusively for the jury. They argued that even if error by the jury did enliven a discretionary power to enable the Court of Appeal to set aside the jury's answers, and to enter verdicts for the respondents, the Court erred in exercising its discretion by not ordering new trials of the issues here. They further submitted that it was erroneous for the Court of Appeal to hold that "community standards" were of little or no relevance to cases of injury to plaintiffs in respect of their trades or businesses. The notice of appeal also raised a question whether the jury was correctly instructed by the trial judge on the drawing of an inference from an inference as it related to their decision on imputation (d). That ground was not, however, the subject of any specific written or oral submissions by the appellants, and ultimately, in argument, the appellants said that they did not cavil with the decision of the Court of Appeal to remit imputation (d) for another s 7A trial163. It is necessary to refer further to the relevant legislation. 163 [2007] HCATrans 079 at 26, lines 1086-1087. The first matter to notice is that the Defamation Act makes no provision, separate or otherwise, for appeals from decisions made under it. It follows that appeals in such cases are, as are other appeals from the Supreme Court generally, governed by the Supreme Court Act. The latter, by s 108, makes special provision for appeals from decisions of juries: "108 Nonsuit or verdict after jury trial (1) This section applies to an appeal to the Court of Appeal in proceedings in the Court in which there has been a trial with a jury. (2) Where it appears to the Court of Appeal that on the evidence given at the trial a verdict for the plaintiff could not be supported and that, pursuant to any provision of the rules, an order ought to have been made for the dismissal of the proceedings either wholly or so far as concerns any cause of action in the proceedings, the Court of Appeal may make an order of dismissal accordingly. (3) Where it appears to the Court of Appeal that upon the evidence the plaintiff or the defendant is, as a matter of law, entitled to a verdict in the proceedings or on any cause of action, issue or claim for relief in the proceedings, the Court of Appeal may direct a verdict and give judgment accordingly." There are, as the appellants point out, substantial differences between that section and s 75A of that Act. It would be surprising if it were otherwise. Decisions of juries have always, and rightly, been accorded especial respect. Why this is so is obvious, and needs no repetition here164. That does not mean of course that decisions of juries are immunized against appellate review and reversal. In any event it is upon the statutory language that provides for appeals that the Court must focus. The Appellants' Submissions A s 7A trial is within the language of s 108(1) of the Supreme Court Act. This case is not within s 108(2) because there was no verdict at first instance for the respondent plaintiff. Nor is it, so the appellants argue, within the language of s 108(3). They submit that upon the evidence, the respondents were not, as a matter of law, entitled to a verdict in the proceedings: there was always a live factual controversy as to the defamatory nature or otherwise of imputations (a) 164 John Fairfax Publications Pty Ltd v Rivkin (2003) 77 ALJR 1657 at 1660 [17] per McHugh J, 1676 [115] per Kirby J, 1698 [184] per Callinan J; 201 ALR 77 at 80, and (c). In defamation, as opposed to other areas of the law, the meaning of words is always a question of fact, and therefore a matter for the jury and not a judge. The appellants submit that the Court of Appeal does not have power to set aside a jury verdict and enter a contrary verdict except to the extent that statute so provides. They cite several statements to that effect165. Section 108(3), is, they argue, quite explicit in limiting appellate intervention and substitution of an appellate verdict, if, and only if, as a matter of law a plaintiff is so entitled. Several cases166 decided under s 7 of the Supreme Court Procedure Act 1900 (NSW) ("Supreme Court Procedure Act") which was in similar terms to s 108(3) of the Supreme Court Act167, so hold. The appellants also argue that as a matter of ordinary construction, s 108(3) of the Supreme Court Act can have no application here, because on no view are the respondents "entitled to a verdict in the proceedings or on any cause of action, issue or claim for relief in the proceedings". It is inapt, they submit, to refer to a jury's answers to questions which do not conclude a case and could not result, without more, in a judgment for the plaintiffs, as a verdict, that is to say, even a verdict on an issue. They accept however that the jury's answers to the questions "could be described as special verdicts"168. 165 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 379 per Dixon J; Hocking v Bell (1945) 71 CLR 430 at 441 per Latham CJ; Williams v Smith (1960) 103 CLR 539 at 542 per Dixon CJ, McTiernan, Fullagar, Kitto and Menzies JJ. 166 Hocking v Bell (1945) 71 CLR 430 at 441 per Latham CJ and at 488 per Dixon J (their Honours' reasons for judgment were approved by the Privy Council in Hocking v Bell (1947) 75 CLR 125 at 130-132); De Gioia v Darling Island Stevedoring & Lighterage Co Ltd (1941) 42 SR (NSW) 1 at 4 per Jordan CJ. 167 Section 7 of the Supreme Court Procedure Act 1900 (NSW) stated: "In any action, if the Court in Banco is of opinion that the plaintiff should have been nonsuited, or that upon the evidence the plaintiff or the defendant is as a matter of law entitled to a verdict in the action or upon any issue therein, the Court may order a nonsuit or such verdict to be entered." 168 [2007] HCATrans 079 at 18, lines 706-707. Disposition of the Appeal Reasonableness of a jury's decision and the power of a Court of Appeal to substitute a different decision It is true that in defamation the meaning of words is a question of fact169. But it does not follow that a jury may give them a wholly unreasonable, unavailable or perverse meaning. They may no more do that than they may decide that words which are inescapably or unmistakably defamatory, are not defamatory. And whether they have done any of these things is a question of law, reviewable as such and, if the jury has reached an unreasonable or perverse view, reversible by a Court of Appeal. If, as here, the issues presented were issues which, as a matter of law, no other conclusion was reasonably open on them to a properly instructed jury, the case is within s 108(3) of the Supreme Court Act, and the Court of Appeal was entitled to determine them accordingly itself. This case is within the language of Starke J in Shepherd v Felt & Textiles of Australia Ltd170: "Where on the uncontroverted facts the action or an issue must be determined in favour of one party, then, as a matter of law, that party is entitled to the verdict in the action or upon the issue. And it is necessarily wrong to leave any conclusion or inference in such circumstances as a question of fact to the jury. In such a case a direction should be given to the jury that as a matter of law the verdict must be for the party entitled to succeed …" (emphasis added) Before citing the passage which we have just quoted, Latham CJ in Hocking v Bell171 said this of s 7 of the Supreme Court Procedure Act: "If there is evidence upon which a jury could reasonably find for the plaintiff, unless that evidence is so negligible in character as to amount only to a scintilla, the judge should not direct the jury to find a verdict for the defendant, nor should the Full Court direct the entry of such a verdict. The principle upon which the section is based is that it is for the jury to decide all questions of fact, and therefore to determine which witnesses should be believed in case of a conflict of testimony. But there must be a 169 Lewis v Daily Telegraph Ltd [1964] AC 234 at 281 per Lord Devlin. 170 (1931) 45 CLR 359 at 373. 171 Hocking v Bell (1945) 71 CLR 430 at 441-442. real issue of fact to be decided, and if the evidence is all one way, so that only one conclusion can be said to be reasonable, there is no function left for the jury to perform, so that the court may properly take the matter into its own hands as being a matter of law, and direct a verdict to be entered in accordance with the only evidence which is really presented in the case …" The evidence here, the review only, was all one way. The fact that the respondents did not ask for a directed "verdict" or answers, as perhaps they might have, does not mean that the Court of Appeal was disqualified from reversing the jury's decision. They were, having regard to the clear meaning of the words of imputation (a) and (c), and the jury's unreasonable determinations in respect of them, bound to do so. An important purpose of the Supreme Court Procedure Act, the predecessor of the Supreme Court Act, was to reduce costs and delays and, to that end to confer rights of appeal upon litigants and powers upon courts of appeal to give the judgments or decisions that the courts of first instance should have given, including verdicts and determinations by juries. The appellants' submission that a court of appeal could only do this after a second or third unreasonable or perverse determination must be rejected. The relevance of community standards The appellants submitted that a community standard or standards could properly bear upon the question, indeed effectively determine, whether the imputation that the respondents, as restaurateurs, sell unpalatable food and provided some bad service at their restaurant was conveyed, not conveyed, or conveyed and defamatory. We would reject that submission. Business capacity and reputation are different from personal reputation. Harm to the former can be, as here, inflicted more directly and narrowly than harm to a person's reputation. A person who does not have an admirable character may be a very good restaurateur. It might be possible to say things about him or her personally that are not defamatory, but not about that person as a restaurateur in relation to the conduct of the restaurant. Restaurant standards rather than community ones are the relevant standards in that situation. No community standard or value could obliterate or alter the defamatory meaning of the imputations in this case. It is unimaginable, in any event, that the estimation of the respondents in the mind of any adult person, let alone a reasonable reader, would not be lowered by a statement that they sold unpalatable food and provided bad service at their restaurant, and did so for considerable sums of money. The reinforcement, by the trial judge in her redirections, of the present appellants' submission to the jury that they should have regard to community values and standards in assessing the defamatory nature or otherwise of the imputations, was, as the Court of Appeal held, erroneous. (c) Drawing inferences Because, as the appellants accept, imputation (d) must be remitted for another s 7A trial it is necessary to say something about the content of directions appropriate to it. The Defamation Act, unlike in many other jurisdictions which allow and generally encourage general verdicts on the matter complained of, requires of a plaintiff in New South Wales, perhaps not as explicitly as has been assumed, the pleading and giving of answers in respect of specific imputations even when the imputations do no more than restate verbatim the defamatory matter or part of it (Defamation Act ss 7A and 9)172. Once, as happened here, the antecedent legal questions that the relevant matter was capable of carrying the imputations complained of, and that they were capable of bearing a defamatory meaning were decided, the only questions remaining, and for the jury at the s 7A trial, were whether the imputations were defamatory and were carried by the published matter. These are relatively simple questions, focused as they are on particular imputations. They admit of clear answers, and ones which can more readily perhaps be seen to be unreasonable or otherwise, than a general verdict in relation to defamatory matter at large. Properly understood, Lewis v Daily Telegraph Ltd173 does not however provide a foundation for a principle, either that all defamatory matter must, for the purposes of pleading and delineating issues, be translated into express imputations, regardless of its clearly defamatory meaning according to its ordinary and natural meaning, or that an imputation when pleaded must be rejected unless it can be seen to have the character of exclusively one inference. In Lewis one of the plaintiffs was obliged to plead an imputation because he wished to allege a meaning that went beyond the ordinary and natural meaning of the published matter; that a report that the police were making an inquiry or "probe" into the affairs of a company, conveyed that the chairman of the company was guilty of fraud, or suspected by the police of being guilty of fraud. As Lord Devlin pointed out174, it is only if the words do not speak for themselves, that such innuendos and insinuations, going beyond the literal meaning, as could reasonably be read into them, must be pleaded. The words 172 Section 9(6) preserves special verdicts. 174 [1964] AC 234 at 279. published in Lewis neither insinuated nor implied the meaning alleged by the plaintiff. It is the language of the Defamation Act and the way in which it has been construed in New South Wales, and not the common law, that has given rise to insistence upon strictures of pleading of imputations in New South Wales in defamation cases175. It is too categorical to say that imputations must be scrutinized for a duality of inferences, and, if a duality is found, rejected. We certainly do not think that their Lordships went nearly so far in Lewis. We take Lord Hodson176, 175 See the criticism of the New South Wales requirements in this regard in the second reading speech for the Defamation Bill 2005 (NSW) to replace the Defamation Act. New South Wales Legislative Council, Parliamentary Debates (Hansard), 18 October 2005 at 18683: "Clause 8 will bring a significant but very welcome change to NSW law. Under the current NSW law, each defamatory imputation (or meaning) gives rise to a separate cause of action. In all other jurisdictions, it is the publication of defamatory matter that gives rise to the cause of action. In a speech to university students some years ago, the former Supreme Court Defamation List Judge, the Honourable Justice David Levine RFD, lamented the 'excruciating and sterile technicalities' that resulted from making the imputation the cause of action. 'Fortnight after fortnight I have to deal with arguments concerning whether a pleaded imputation is proper in form and is capable of arising from the relevant publication … The amount of the Court's time, let alone litigants' resources, expended profligately in the determination of what words, sentences and phrases mean is positively scandalous: and this is at the initiation of proceedings … Matters of principle have been elevated to an obsessive preoccupation, the playthings of forensic ingenuity, fantasy and imagination, at the expense of the early, quick and cheap litigation of real issues that affect the people involved in libel actions … The question is not simply what does a publication mean and whether what it means is defamatory. The jury has to determine, in the no doubt novel environment for the jurors of the courtroom and the jury room, whether the words that constitute the imputation carefully crafted by lawyers are in fact carried by the publication complained of to ordinary reasonable people'. Clause 8 will finally put an end to this needless complexity. Clause 8 reflects the position at common law by making it clear that it is the publication of defamatory matter that is the basis for a civil action for defamation. Both the NSW Law Society and the NSW Bar Association strongly support this long-awaited change." 176 [1964] AC 234 at 274. in referring to the drawing of an inference from an inference, to be saying no more than that in the circumstances of the case, to allege that suspicion implied or meant actual guilt was unreasonable. Lord Devlin177 stated that "two fences have to be taken instead of one," and that to impute guilt would be to "take the second in the same stride". In this case both the trial judge initially and Ipp JA in the Court of Appeal were sceptical about such a far-reaching proposition, and, in our opinion, rightly so. The real question is as to the impression that the words are likely to make upon the reasonable reader178. The way in which the trial judge put that issue to the jury in this case initially, was substantially correct. To say that because the words of an imputation may reasonably convey more than one defamatory meaning or impression, or that because implications, inferences and imputations suggest more than one meaning or successive meanings, they must be rejected, would be to introduce unnatural and excessive refinement to the basic factual question whether the words (or the imputation) have defamed the plaintiff. Published matter may well convey a duality of meanings and impressions, not necessarily exclusive of one another, and sometimes with one leading to another, successive, inevitable or almost inevitable one. Interpretation of s 108(3) of the Supreme Court Act It remains to deal with other aspects of the argument of the appellants as to the effect and operation of s 108(3) of the Supreme Court Act. Section 7A of the Defamation Act was enacted after the Supreme Court Act, but neither expressly nor impliedly repealed any part of s 108. They must, as far as possible, be read consonantly with each other. The whole purpose of s 7A and the amendments enacted to the Defamation Act was to save costs and simplify defamation proceedings.179 It was thought that the segmentation of issues, and 177 [1964] AC 234 at 286. 178 Lewis v Daily Telegraph Ltd [1964] AC 234 at 285 per Lord Devlin. 179 Presenting the second reading speech, the Attorney-General, the Hon J P Hannaford said: "At present the jury is retained to determine some questions of fact inherent in certain defences. Under this bill that will not occur. Having dealt with the preliminary questions the jury will be discharged from further participation in the trial, which will proceed before the judge alone, he or she determining all defences and, in due course, assessing any damages. By allocating to the jury what is a vital decision in the trial the arrangement maintains an appropriate degree of community involvement. At the same time, by providing that the trial shall thereafter proceed before the judge alone, a substantial amount of time and money will be saved and the complexities which now arise in the course of a trial because of the current (Footnote continues on next page) the assignment of different roles to the trial judge and the jury would assist in achieving these ends. The issues decided by the jury here were to be decided finally for the purposes of the trial. The appellants in their submissions treated the jury's answers as at least in the nature of a special verdict. According to traditional notions a decision or determination by the jury in a s 7A trial might not be a "verdict" in a conventional sense, but it is indisputable that it is a final decision on an "issue" in the trial on the way to a "verdict". In that sense it should be regarded as susceptible to appeal, reversible when, as here, the facts are all one way, and therefore a matter of law, within the language of s 108(3) of the Supreme Court Act. We would dismiss the appeal with costs. division of functions of judge and jury will be overcome." New South Wales Legislative Council, Parliamentary Debates (Hansard), 22 November 1994 at

HIGH COURT OF AUSTRALIA ALDI FOODS PTY LIMITED AS GENERAL PARTNER OF ALDI STORES (A LIMITED PARTNERSHIP) APPELLANT AND SHOP, DISTRIBUTIVE & ALLIED EMPLOYEES ASSOCIATION & ANOR RESPONDENTS ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association [2017] HCA 53 6 December 2017 ORDER Appeal allowed in part. Set aside orders 1, 2(b) and 3 of the Full Court of the Federal Court of Australia dated 29 November 2016 and, in their place, order that: the applicant's originating application for relief under s 39B of the Judiciary Act 1903 (Cth) be allowed in part; and a writ of mandamus issue directed to the second respondent, requiring it to determine the first respondent's appeal from the decision and orders of Deputy President Bull made on in matter number AG2015/3510 22 September 2015 according to law. On appeal from the Federal Court of Australia Representation G J Hatcher SC with A L Perigo for the appellant (instructed by Enterprise Law) W L Friend QC with A M Duffy and C J Tran for the first respondent (instructed by AJ Macken & Co) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association Industrial law (Cth) – Fair Work Act 2009 (Cth) – Enterprise agreements – Approval of enterprise agreements by Fair Work Commission – Where employer in process of establishing new undertaking – Where existing employees in other undertakings of employer accepted offer of employment in new undertaking – Where enterprise agreement made with those employees before new undertaking commenced operations – Whether agreement required to be made as "greenfields agreement" pursuant to s 172(2) and (4) of Fair Work Act – Where Commission may approve non-greenfields agreement under s 186 of Fair Work Act only where satisfied agreement genuinely agreed to by employees covered by agreement – Whether employees "covered by" agreement from time agreement made or from time employees commence working under agreement. Industrial law (Cth) – Fair Work Act 2009 (Cth) – Enterprise agreements – Approval of enterprise agreements by Commission under s 186 of Fair Work Act – Where Commission, before approving agreement, required to be satisfied that each award-covered employee would be "better off overall" under agreement than under relevant modern award – Where Commission considered agreement passed better off overall test because clause in agreement entitled employees to payment of any shortfall in entitlement under agreement as compared with entitlement under modern award – Whether Commission failed to engage in comparison between agreement and modern award. Words and phrases – "applies", "better off overall test", "covers", "employees covered by the agreement", "greenfields agreement", "will be covered by the agreement". Fair Work Act 2009 (Cth), ss 51, 52, 53, 54(1), 58(1), 172, 173(1), 176, KIEFEL CJ, BELL, KEANE, NETTLE, GORDON AND EDELMAN JJ. This appeal concerns the operation of provisions of the Fair Work Act 2009 (Cth) ("the Act") relating to enterprise agreements. The parties agitated four issues. The first issue concerns the power of the Fair Work Commission ("the Commission") under s 186(2)(a) of the Act to approve an enterprise agreement for a new enterprise made with existing employees of the employer who have agreed to work, but are not at that time actually working, as employees in the new enterprise ("the coverage issue"). The second issue was whether error by the Commission in relation to the coverage issue amounts to jurisdictional error amenable to judicial review. The third issue concerns whether the Commission fell into jurisdictional error in being satisfied that the enterprise agreement in this case passed the "better off overall test" ("the BOOT") for the purposes of s 186(2)(d) of the Act ("the BOOT issue"). The fourth issue, raised by notice of contention, was whether the decision of the Commission on the BOOT issue was amenable to correction by certiorari on the ground of error of law on the face of the record, in the event that such an error were held to fall short of jurisdictional error. The Full Court of the Federal Court of Australia determined the coverage and BOOT issues against the appellant. As to the coverage issue, the Full Court held that approval of the agreement was beyond the jurisdiction of the Commission under the Act because the agreement had not been agreed to by the employees "covered by the agreement", in that the employees who voted in favour of the agreement were not at that time actually working under its terms1. The Full Court determined the BOOT issue on the basis that the Full Bench of the Commission misapplied the statutory test as to whether the BOOT was satisfied, and so misconceived the jurisdiction conferred on it by the Act. For the reasons that follow, it should be held that the Full Court erred in its determination of the coverage issue, but decided the BOOT issue correctly. In those circumstances, it was not necessary for the Full Court, and it is not necessary for this Court, to determine the second and fourth issues. It is necessary to begin with an understanding of the industrial and procedural background relevant to both the coverage and BOOT issues. 1 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 184 [143], 190 [177]. Bell Nettle Gordon Edelman Background ALDI Foods Pty Ltd as General Partner of ALDI Stores (A Limited Partnership) ("ALDI") operates retail stores organised as distinct undertakings in various regions of New South Wales, Queensland and Victoria2. ALDI's undertaking in each geographical region is treated as a separate enterprise3. In early 2015, ALDI was in the process of establishing a new undertaking in Regency Park in South Australia ("the Regency Park region"). In April 2015, it sought, from its existing employees in its stores in other regions, expressions of interest to work in the Regency Park region. In late May 2015, ALDI made written offers of employment to some of those employees who had provided an expression of interest4. Each offer commenced with the words: "I am pleased to advise that Aldi Stores ... wishes to offer you ongoing employment as [position] in our new Regency Park region in South Australia, commencing when the new region opens. … [W]e anticipate this will occur around October 2015 … You will continue to be employed until that date in your current region and will be covered by that region's enterprise agreement." Seventeen employees accepted the offer5. ALDI then commenced a process of bargaining with these 17 employees under the provisions of Pt 2-4 of the Act for an enterprise agreement to cover the Regency Park region6. Neither the Transport Workers' Union of Australia ("the TWU") nor the Shop, 2 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 172 [76]-[77]; Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 252-253 [12]. 3 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 4 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 172 [77]-[78]. 5 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 172 [78]. 6 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 173 [83]. Bell Nettle Gordon Edelman Distributive and Allied Employees Association ("the SDA") were involved as bargaining representatives for the new agreement7. At ALDI's request, pursuant to s 181(1) of the Act, these employees voted on the ALDI Regency Park Agreement 2015 ("the Agreement")8. Clause 5 of the Agreement stated, among other things, that it would "apply to the following classifications of Employees of ALDI employed in the Regency Park Region", with various job descriptions then being set out. Sixteen of the employees cast a valid vote, with 15 in favour9. At the time the vote was conducted, the Distribution Centre at Regency Park was still under construction, and trading in the region had not commenced10. On 4 August 2015, ALDI applied to the Commission for approval of the Agreement11. The application for approval stated that the Agreement covered 17 employees based on an agreement by a postal ballot of the employees at which 16 employees cast a valid vote, 15 of which were in favour of the Agreement12. The application was listed for determination by Bull DP13. The 7 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 8 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 158 [5]. 9 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 158 [5]. 10 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 173 [87]. 11 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 173 [84]. 12 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 13 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at Bell Nettle Gordon Edelman Deputy President approved the Agreement as operative from 29 September Both the SDA and the TWU ("the unions") filed notices of appeal against the decision of Bull DP to the Full Bench of the Commission. Because the unions had not participated in the proceedings before Bull DP, the issues agitated before the Full Bench, the Full Court, and now in this Court, had not been raised at that earlier stage15. Relevantly, for present purposes, it was contended that the Agreement should have been made as a "greenfields agreement" under the Act because ALDI was establishing a new enterprise and had not employed in that new enterprise any of the persons who would be necessary for the normal conduct of the enterprise. In addition, it was argued that the Agreement did not pass the BOOT16. The Full Bench (Watson VP, Kovacic DP and Wilson C) rejected these contentions, and dismissed the appeal17. The SDA then applied to the Full Court of the Federal Court for judicial review of the decisions of both Bull DP and the Full Bench18. The Full Court, by majority, upheld the SDA's contentions and issued the writs of certiorari and prohibition sought by the SDA19. 14 ALDI Regency Park Agreement 2015 [2015] FWCA 6373 at [13]. 15 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 173 [86]. 16 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 17 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 18 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 157 [1]. 19 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 190 [179]. Bell Nettle Gordon Edelman ALDI was granted special leave to appeal to this Court against the decision of the Full Court20. The Commission, the second respondent to the current appeal, filed submitting appearances both in this Court and in the Full Court21. The reasons of the Full Bench and the Full Court reveal different approaches to the construction of material provisions of the Act in relation to the coverage issue. The difference in approach reflects a difference in focus in relation to the provisions of the Act. In the reasons of the Full Bench, the focus was principally upon s 172 of the Act, whereas in the Full Court the focus was upon the perceived difficulty posed by the requirement of s 186(2)(a) for the Agreement to have been "genuinely agreed to by the employees covered by the agreement" when no employees were, at that time, actually working under the Agreement. The material provisions of the Act must be understood, if possible, as parts of a coherent whole22. Such an understanding is not only possible but compelling. In the interests of clarity of analysis and coherence in exposition, it is desirable to set out that understanding before turning to discuss further the competing views of the Full Bench and the Full Court. The Act The Act contains several mechanisms for regulating employees' entitlements to wages, leave and other benefits. Two such mechanisms are modern awards and enterprise agreements. Where there is an enterprise agreement in place which applies to an employee, a modern award does not apply23. 20 [2017] HCATrans 048. 21 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 158 [1]. 22 See Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[71]; [1998] HCA 28. 23 Fair Work Act 2009 (Cth), s 57. Bell Nettle Gordon Edelman Part 2-4 of the Act deals with enterprise agreements. One stated object of Pt 2-4 is to "provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits"24. The term "enterprise" is defined in s 12 of the Act to mean "a business, activity, project or undertaking". The provisions of Pt 2-4 that are material for present purposes deal with the following topics: the availability of a greenfields agreement; the rights of employees to be represented by a bargaining representative for a proposed enterprise agreement; the making of an enterprise agreement; the approval of an enterprise agreement by the Commission; and the requirements for approval by the Commission, such as the need for genuine agreement by employees and for the agreement to pass the BOOT. The provisions of the Act in relation to each of these topics may now be noted. The availability of a greenfields agreement An enterprise agreement may be either a single-enterprise agreement or a multi-enterprise agreement25. Section 172 stands at the forefront of Pt 2-4: it is the only section in Div 2 of Pt 2-4, which is the first substantive Division of that Part. Section 172 provides for the circumstances in which an enterprise agreement may be made. It deals with both single-enterprise agreements and multi-enterprise agreements. We are here concerned only with single-enterprise agreements. In particular, we are concerned with whether the Agreement is a "greenfields agreement". Whether an enterprise agreement is a greenfields agreement or not affects the operation of many provisions of Pt 2-4 of the Act. In particular, as will be seen, s 186(2)(a) operates only in respect of an agreement that is not a greenfields agreement. Whether or not an enterprise agreement is a greenfields agreement depends upon the terms of s 172, which fix upon the circumstances of its making. Section 172 provides relevantly as follows: "(2) An employer, or 2 or more employers that are single interest employers, may make an enterprise agreement (a single-enterprise agreement): 24 Fair Work Act 2009 (Cth), s 171(a). 25 Fair Work Act 2009 (Cth), s 12. Bell Nettle Gordon Edelman (a) with the employees who are employed at the time the agreement is made and who will be covered by the agreement; or (b) with one or more relevant employee organisations if: the agreement relates to a genuine new enterprise that the employer or employers are establishing or propose to establish; and the employer or employers have not employed any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement. Note: The expression genuine new enterprise includes a genuine new business, activity, project or undertaking (see the definition of enterprise in section 12). Greenfields agreements single-enterprise agreement made as paragraph (2)(b) … is a greenfields agreement. referred (6) An enterprise agreement cannot be made with a single employee." It can readily be seen that s 172 does not contemplate that an enterprise agreement is a greenfields agreement simply because it relates to a new enterprise. Moreover, s 172 does not require that an enterprise agreement related to a new enterprise be made as a greenfields agreement. Section 172 divides the universe of single-enterprise agreements into two categories. Of these two categories, only the second, which comprises those agreements made as referred to in sub-s (2)(b) of s 172, encompasses greenfields agreements, as sub-s (4) makes plain. The remaining category of enterprise agreements consists of those that are not greenfields agreements: they are made as referred to in s 172(2)(a). Such agreements are those made in circumstances where the employer already Bell Nettle Gordon Edelman employs employees who are not then, but will be, covered by the enterprise agreement then in contemplation. Section 172(2)(a) and (b)(ii) expressly contemplate that employees "will be covered" by the proposed agreement, even though the employees are also currently employed under another enterprise conducted by the employer under another agreement. It is necessarily implicit in s 172(2)(b)(ii) that an employer engaged in establishing a new enterprise may have in its employ at that time persons who will be necessary for the conduct of the new enterprise. Because such an enterprise is one that, as s 172(2)(b)(i) provides, is to be established at some future time, the word "employed" in s 172(2)(b)(ii) should not be taken to mean "employed in that new enterprise", as the SDA argued: the new enterprise, ex hypothesi, does not yet exist. Rather, "employed" simply means "employed" by that employer. An enterprise agreement cannot be made as a greenfields agreement with persons who are already employees of the employer because s 172(2)(b)(ii) allows such an agreement to be made only where none of the persons who will be necessary for the normal conduct of the new enterprise have been employed. Such an agreement, with persons currently employed, must necessarily be made under s 172(2)(a) of the Act. At this point, reference should be made to provisions of Pt 2-1 of the Act, which make general provision for the coverage and application of an enterprise agreement. It is evident from these provisions of the Act that an enterprise agreement may "cover" an employee even though it does not yet "apply" to that employee in the sense of imposing obligations on the employee and the employer. An enterprise agreement imposes obligations on employees and employers covered by it only when it applies to such persons. Section 51 of the Act provides that an enterprise agreement does not give a person an entitlement, nor does it impose obligations on a person, unless the agreement "applies" to the person. Section 52 of the Act deals with when an agreement "applies" to an employee. Importantly, ss 52 and 53 expressly indicate that an enterprise agreement may cover an employee when it is not in operation, but it can only apply to an employee when it is in operation. Section 52(1) sets out when an enterprise agreement applies to an employee, employer or employee organisation. It provides: "An enterprise agreement applies to an employee, employer or employee organisation if: Bell Nettle Gordon Edelman the agreement is in operation; and the agreement covers the employee, employer or organisation; and no other provision of this Act provides, or has the effect, that the agreement does not apply the employee, employer or organisation." Section 53(1) provides that "[a]n enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer." Section 53(6) provides: "A reference in this Act to an enterprise agreement covering an employee is a reference to the agreement covering the employee in relation to particular employment." Because an employee may be covered by more than one agreement at one time, s 58(1) of the Act provides that only one enterprise agreement can apply to an employee at a particular time. That is because only one set of rights and obligations can be in operation in relation to the work actually performed by the employee at that time in relation to particular employment. Given the terms of ss 52 and 53, it is apparent that an employee may be covered by an agreement that applies to him or her, and by an agreement that does not, at that time, apply to him or her. Furthermore, an employee may be covered by more than one agreement at any one time. To speak of an employee being covered by an agreement is to speak of the agreement providing terms and conditions for the job performed by, or to be performed by, the employee. In this context, the natural meaning of the reference in s 53(6) to "particular employment" of an employee is to the description of the employee's job in the agreement. In this regard, the terms of cl 5 of the Agreement refer to the job descriptions of employees whose employment the Agreement will regulate when it comes into operation. It is a natural and ordinary use of language to speak of the Agreement as covering these employees. That an employee may be covered by the terms of more than one agreement at any one time was recognised in Construction, Forestry, Mining and Bell Nettle Gordon Edelman Energy Union v John Holland Pty Ltd26 ("John Holland"). That the Act allows that to occur is hardly surprising: that very possibility was expressly contemplated in the Explanatory Memorandum which accompanied the Bill for the Act27. Section 54(1) provides: "An enterprise agreement approved by the [Commission] operates from: 7 days after the agreement is approved; or if a later day is specified in the agreement – that later day." An enterprise agreement comes into operation in the sense of creating rights and obligations between an employer and employees in relation to the work performed under it only after it has been approved by the Commission. After that time the agreement applies to the employers and employees who are covered by it. But before that time, as will be seen, by virtue of s 182(1) of the Act, a non-greenfields enterprise agreement is "made" when a majority of those employees who will be covered by the agreement cast a valid vote to approve the agreement. As will be seen, once the agreement is made in accordance with s 182(1), the agreement is treated by the Act as covering the employers and employees to whom it refers. Rights to be represented Where an agreement is not made under s 172(2)(b) of the Act, the employees, being the employees referred to in sub-s (2)(a), are entitled to representation under s 173. Section 173(1) of the Act requires an employer that will be covered by a proposed enterprise agreement that is not a greenfields agreement to take all reasonable steps to give notice of the right to be represented by a bargaining representative to each employee who: 26 (2015) 228 FCR 297 at 303 [22]. 27 Australia, House of Representatives, Fair Work Bill 2008, Explanatory Memorandum at 34 [205]. Bell Nettle Gordon Edelman "(a) will be covered by the agreement; and is employed at the notification time for the agreement." Section 176 sets out the persons who are the bargaining representatives for a proposed enterprise agreement that is not a greenfields agreement. Employee organisations, such as the SDA, are the default bargaining representatives for These provisions serve to ensure that the employees referred to in s 172(2)(a) are able to call upon the negotiating skills and bargaining strength of employee organisations should they so choose in order to minimise the inequalities of bargaining power that might otherwise adversely affect the outcome of their negotiations with their employer. Making an enterprise agreement Under s 180(2)(a) of the Act, the employer must take all reasonable steps to ensure that "the employees … employed at the time who will be covered by the agreement" are given a copy of the agreement and certain other material. By s 181(1) of the Act: "An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it." As to when a single-enterprise agreement is made, s 182 of the Act provides relevantly: If the employees of the employer … that will be covered by a proposed single-enterprise agreement that is not a greenfields agreement have been asked to approve the agreement under subsection 181(1), the agreement is made when a majority of those employees who cast a valid vote approve the agreement. 28 Fair Work Act 2009 (Cth), s 176(1)(b). Bell Nettle Gordon Edelman (3) A greenfields agreement is made when it has been signed by each employer and each relevant employee organisation that the agreement is expressed to cover … a proposed single-enterprise agreement is a greenfields agreement that has not been made under subsection (3); and relevant employer or employers apply the [Commission] for approval of the agreement; the the agreement is taken to have been made: by the relevant employer or employers with each of the employee organisations that were bargaining representatives for the agreement; and (g) when the application is made to the [Commission] for approval of the agreement." It can be seen that an agreement that is not a greenfields agreement, ie one that has not been made under s 172(2)(b), is made upon approval by the employees who will be covered by the agreement. When it is made, those employees are accurately described as being covered by it, even though it does not yet apply to them in the sense of being in operation so as to create rights and liabilities in relation to work actually performed under it. It covers them in the sense contemplated by s 53 of the Act because it is expressed to cover the jobs described as being within its scope; it is the charter of rights and duties for those who actually enter into employment under its terms. Under s 185(1), if an enterprise agreement is made, a bargaining representative for the agreement, whether for the employer or employees, must apply to the Commission for approval of the agreement. Approval by the Commission At the time that approval is sought from the Commission, the agreement will have already been made, in the case of a non-greenfields agreement, by the employees who made it under s 182(1) of the Act. Bell Nettle Gordon Edelman Section 186(1) of the Act requires the Commission, on an application for approval of an enterprise agreement under s 182(4) or s 185, to approve the agreement "if the requirements set out in this section and section 187 are met." Under s 186(2), the Commission must be satisfied relevantly that: if the agreement is not a greenfields agreement – the agreement has been genuinely agreed to by the employees covered by the agreement; and the agreement passes the better off overall test." One may note that s 186(2)(a) is necessarily speaking of an enterprise agreement that is made, not as referred to in sub-s (2)(b) of s 172, but as referred to in sub-s (2)(a) of s 172. Section 186(2)(a) requires, in respect of a non-greenfields enterprise agreement, that the Commission be satisfied that the agreement has been genuinely agreed to by the employees "covered by" the agreement. Such an agreement is, as has been seen from s 182(1), an agreement that has been made. The Full Bench in this case was correct when it said29: "In our view the concepts of 'coverage' and 'application' in ss 52 and 53 of the Act provide the key to the interpretation of the phrase 'who will be covered by the agreement' in s 172(2)(a) and s 182(1). An enterprise agreement covers an employee if it is expressed to cover the employee. An enterprise agreement applies to an employee in relation to particular employment if the agreement covers them and the agreement is in operation." The Full Bench was also correct when it went on to say that, in determining whether, for the purposes of s 186(2), the employees "will be 29 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at Bell Nettle Gordon Edelman covered by the agreement after it is made", "[a]pplication of the agreement is not relevant."30 Section 186(3) provides, in relation to both greenfields agreements and non-greenfields agreements, that the Commission must be satisfied that the group of employees "covered by" the agreement was fairly chosen. In this regard, s 186(3A) relevantly provides: "If the agreement does not cover all of the employees of the employer … covered by the agreement, the [Commission] must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct." Section 188 of the Act states the circumstances in which the Commission may be satisfied that an enterprise agreement "has been genuinely agreed to by the employees covered by the agreement". Section 187(5) contains an additional requirement in respect of a greenfields agreement. It is the only provision of Pt 2-4 which does not neatly accommodate the view that an agreement covers employees when it is made, so that they are then employees who are covered rather than employees who will be covered. It provides: "If the agreement is a greenfields agreement, the [Commission] must be satisfied that: the relevant employee organisations that will be covered by the agreement are (taken as a group) entitled to represent the industrial interests of a majority of the employees who will be covered by the agreement, in relation to work to be performed under the agreement; and it is in the public interest to approve the agreement." Section 187(5) is not a sufficient warrant to disregard the scheme otherwise followed in Pt 2-4. It is evident that Parliament did not draw a 30 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at Bell Nettle Gordon Edelman significant distinction by the change of tense from "covered" to "will be covered" in s 187(5). It may be noted here that s 187 is expressed to set out "additional requirements" for the approval of agreements to the "general requirements" contained in s 186. In this regard, s 186, which also applies to greenfields agreements, uses the present tense in sub-ss (2)(a), (2)(b)(i), (3), (3A) and (6)(a) notwithstanding that the agreement is yet to be approved by the Commission. Parties to a greenfields agreement, too, are covered by an agreement when it is made and before it is approved, as is apparent from sub-ss (3) and (4)(g) of s 182. The BOOT Section 193(1) of the Act explains when a non-greenfields agreement passes the BOOT for the purposes of s 186(2)(d). It provides: "An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the [Commission] is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee." Section 193(6) provides that the "test time" is the time "the application for [Commission] was made under the agreement by the approval of subsection 182(4) or section 185." The Full Bench Coverage The Full Bench concluded that: "employees who accepted on-going employment in the Regency Park Region were employed by ALDI at the time the agreement was made. Further, as their employment comprehended work within the scope of the Regency Park Agreement they were covered by the Agreement. … The resultant agreement was made under s 182(1). It was a single enterprise Bell Nettle Gordon Edelman agreement available to be made under s 172(2)(a). The Agreement has been genuinely agreed to by the employees covered by the Agreement."31 The Full Bench noted that, in Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union ("Cimeco")32, a Full Bench of the Commission had proceeded on the basis that the expression "will be covered" in s 182(1) of the Act referred to those employees: "actually falling within the coverage clause [in the agreement being put to the vote] as opposed to those it was anticipated would be covered by the agreement on the basis that they had been 'mobilised' to perform work in the region covered by the agreement. … [T]he expression 'will be covered by the agreement' in s 182(1) does not indicate future likelihood but rather expresses a determinate or necessary consequence." In the present case, the Full Bench declined to follow Cimeco in relation to s 172(2)(a)33. Rather, in order to give a consistent meaning to common phrases in the Act, it followed the suggestion of the Full Court of the Federal Court in John Holland34 that the phrase "the group of employees covered by the agreement" in s 186(3) meant "the whole class of employees to whom the agreement might in the future apply"35. The Full Bench held that the question before it entailed two elements: first, a determination whether the persons are employees; and secondly, a determination whether the employees will be covered 31 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 32 (2012) 219 IR 139 at 151-152 [50]-[51]. 33 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 34 (2015) 228 FCR 297. 35 See John Holland (2015) 228 FCR 297 at 299 [1]-[2], 306-307 [34]-[41]. Bell Nettle Gordon Edelman by the agreement after it is made. It was held that whether or not the agreement applied was not relevant to the resolution of the question before it36. The BOOT The Full Bench received new evidence from the SDA in relation to whether the BOOT was passed. This new evidence included reference to the work rosters of employees who voted to approve the Agreement, and a comparison of their wages under the award and the Agreement37. The comparisons were between the entitlements of 10 of the 17 relevant employees who had signed the Agreement and those employees' entitlements under the General Retail Industry Award 2010 ("the GRIA"), the relevant modern award for the purposes of s 193(1) of the Act. The SDA's contention based on the new evidence was that 40 per cent of employees would receive less by way of remuneration under the Agreement than they would receive under the GRIA38. In response, ALDI argued that the BOOT was satisfied because the Agreement contained the following provision as part of cl 13 ("the comparison clause")39: "The remuneration paid for each classification has been set to ensure employees are better off overall under this Agreement than under the relevant Modern Award which would otherwise apply. Where an Employee considers they are not better off overall under this Agreement than under the relevant Modern Award, they may request a comparison of the benefits received for a nominated period of time under this Agreement and the benefits which would otherwise be provided under the relevant 36 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 37 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 266-267 [56]; Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 186 [155]. 38 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 186 [155]. 39 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at Bell Nettle Gordon Edelman Modern Award. Any shortfall in total remuneration which would otherwise be payable under the Modern Award will be paid to the Employee in the next pay period after the review is completed. If the Employee and ALDI cannot reach agreement on the remuneration which should be paid, the Resolution of Disputes provision of this Agreement will be followed and the parties will agree to the Fair Work Commission arbitrating and making a binding determination to resolve the matter." The Full Bench concluded40: "This clause creates an enforceable right to payments to employees equal to or higher than those contained in the award. There is no limitation on its availability. … In our view the Deputy President properly considered the BOOT and reached a decision based on a sound analysis. It has not been demonstrated that there is any appealable error in the decision under appeal. We dismiss this ground of appeal." The Full Bench said no more in relation to its decision upon the BOOT issue. The Full Court of the Federal Court On the SDA's application for judicial review, the Full Court, by majority (Katzmann and White JJ, Jessup J dissenting), held that the Full Bench's decision was vitiated by jurisdictional error, and issued the writs of certiorari and prohibition sought by the SDA41. The majority upheld the SDA's argument that the Agreement could not be approved by the Commission under s 186(2)(a) because it had not been agreed to by the employees "covered by the agreement" as the Agreement was not then in operation42. 40 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 41 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 190 [179]. 42 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 182-185 [132]-[147]. Bell Nettle Gordon Edelman The majority of the Court also upheld the SDA's argument that the Full Bench misapplied the provisions of the Act in being satisfied that the Agreement passed the BOOT for the purposes of s 186(2)(d), without resolving the issue raised by the new evidence, by relying on the comparison clause43. Coverage White J, with whom Katzmann J relevantly agreed, accepted the SDA's submission that it was necessary to focus upon the "change in terminology" used in ss 186 and 188 compared with that used in ss 172 to 18144. It was said that the use of the present tense "covered by" in s 186 and the fact that the Commission is obliged to consider whether employees have genuinely agreed to the enterprise agreement, in contrast to the use of the prospective terminology "employees who will be covered by" in ss 172 to 181, indicates "a requirement that there be at least some employees actually (and not prospectively) covered by the enterprise agreement at the time it is made."45 White J held that s 186(2)(a) of the Act requires that there be persons covered by the agreement whose genuineness in agreeing to it can be assessed by the Commission and that "[p]ersons who will become covered by the agreement only at some time in the future do not answer that description, even if they did, by some means, vote to approve it."46 His Honour concluded that "there were no employees actually 'covered by' the Regency Park Agreement at the time it was made, at the time of the application to the [Commission], or at the time the agreement was approved"47. White J reached these conclusions because: 43 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 187-189 [163]-[174]. 44 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 182 [135]-[136]. 45 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 182 [131]. 46 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 182 [134]. 47 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 184 [143]. Bell Nettle Gordon Edelman "at the relevant times, there were no employees actually in [the positions referred to in cl 5 of the Agreement]. The 17 employees were then occupying other positions in other enterprises which were within the coverage of other enterprise agreements."48 White J considered that the Full Bench erred in applying the reasoning in John Holland in construing s 186(2)(a)49. His Honour held that "neither Bull DP nor the Full Bench undertook the task required by s 186(2)(a) in the way it required." On that basis, it was held that the Full Bench had exceeded its jurisdiction in proceeding on an erroneous view to the contrary50. White J was influenced in reaching his conclusion by the consideration that it would be "very difficult, if not impossible", for the Commission to be satisfied that: "the employees 'covered by the agreement' have genuinely agreed to it … if the employees in question are the whole class of employees to whom the agreement might apply in the future. It is not readily to be expected that the Parliament intended that the [Commission] had to be satisfied that all employees who might during the life of an enterprise agreement become covered by it had genuinely agreed to it."51 The BOOT The majority of the Full Court noted that s 193(1) requires the Commission to be satisfied that each award employee would be "better off 48 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 184 [142]. 49 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 181 [129]. 50 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 184 [144]. 51 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 181 [128]. Bell Nettle Gordon Edelman overall" under the Agreement, and not just "no worse off"52. The majority held that the Full Bench was required to assess the detriments alleged by the SDA53. White J observed that the Full Bench characterised the comparison clause as creating an enforceable right to payments equal to or higher than those contained in the award, without explaining how that could be so. White J pointed out that the comparison clause, at best, created an enforceable entitlement to the shortfall between the employee's entitlement under the Agreement and the employee's corresponding entitlement under the GRIA – it did not create an entitlement to payment under the Agreement which was superior54. An entitlement to a payment which was no more than equal to the award entitlement could not, by definition, satisfy the statutory condition contained in s 193(1)55. White J also held that the Full Bench misunderstood its function in concluding that the SDA had not demonstrated any "appealable error" in Bull DP's decision56. His Honour held that once it had received the further evidence, the exercise of its appellate function was not constrained by the need to identify error by Bull DP – instead, it was required to reach its own decision on 52 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 186 [153]. 53 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 188-189 [167]-[168]. 54 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 188 [166]. 55 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 188 [167]. 56 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 189 [169]-[170]. Bell Nettle Gordon Edelman the evidence before it57. It was held that by misunderstanding its task in this way, the Full Bench did not exercise its jurisdiction as required by law58. The coverage issue In this Court, the SDA argued that the proposed enterprise agreement was, in truth, a greenfields agreement because the employees who were already working for ALDI in other regions were not relevantly "employed" for the purposes of s 172(2)(a) as they were not actually doing the work under the proposed agreement. In its insistence that it is impossible to be "covered" by an agreement under which work has not yet actually begun, this argument amounts to a contention that "coverage" and "application" are synonymous, and that one can disregard the distinction deliberately drawn by ss 52 and 53 between the two terms. The SDA's argument, and the reasoning of the majority of the Full Court, cannot accommodate the distinction expressly drawn by ss 52 and 53 of the Act between coverage and application. In the course of argument in this Court it was suggested on behalf of the SDA that s 53(6) of the Act, in speaking of "the agreement covering the employee in relation to particular employment", is speaking exclusively of a case where the employee is actually performing work under the agreement at that time. That understanding of s 53(6) requires one to read into the provision words that are not there. Read without the SDA's proposed gloss, it is apparent that the provision is simply referring to the employee's job as described in the agreement rather than to the actual performance by the employee of the tasks involved in that job. This understanding accords with the Explanatory Memorandum for the Bill, which treats "particular employment" as synonymous with a "job"59. 57 See Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203-204 [14]-[15]; [2000] HCA 47. 58 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 189 [170], [174]. 59 Australia, House of Representatives, Fair Work Bill 2008, Explanatory Memorandum at 34 [205]. Bell Nettle Gordon Edelman The SDA's argument, and the reasoning of the majority of the Full Court, cannot stand with the plain and ordinary meaning of s 172(2) and (4) of the Act. Those provisions, as mentioned, contemplate the making of non-greenfields agreements with persons already employed. In addition, while s 186 operates on the assumption that there are employees covered by the agreement at the time the application for approval is made, it does not follow that the agreement must apply to them in the sense of operating to fix their rights and obligations in the work actually being performed by them at that time. The question of coverage that arises when the Commission asks whether the agreement has been genuinely agreed to for the purposes of s 186(2)(a) is not whether the employees voting for the agreement are actually employed under its terms, but rather whether the agreement covers all employees who may in future have the terms and conditions of their jobs regulated by it. At the stage of considering whether an enterprise agreement is available to be made under s 172 of the Act, ie when no agreement has as yet been made, it is a natural and ordinary use of language to speak of the employees whose jobs are within the scope of the proposed agreement as employees who "will be covered" by the agreement. At the stage of considering whether an enterprise agreement, which has been made (by virtue of s 182(1)), should be approved pursuant to s 186(2)(a), it is a natural and ordinary use of language to speak of the employees, whose jobs are described by the terms of the agreement which has been made, as employees who "are covered" by the agreement. The Full Court erred in acceding to the SDA's invitation to give the change in tense between ss 172 to 181 and ss 186 and 188 an effect which overrides the distinctions drawn by s 172 and ss 52 and 53 of the Act. The change in tense is of no greater significance than to recognise that an agreement is not capable of covering an employee in any meaningful sense until it has been made. A coverage clause in an enterprise agreement may expressly provide that it covers every job description that may, at some time, be necessary to the work regulated by it, but the agreement is not available as a charter of the terms and obligations apt to effect that regulation until it has been made60. That this is so should hardly be surprising. An enterprise agreement when made has the same effect, so far as coverage is concerned, as a modern award, which, when made, 60 Cf National Tertiary Education Industry Union v Swinburne University of Technology (2015) 232 FCR 246. Bell Nettle Gordon Edelman affords those who thereafter accept employment under its terms a charter of their rights and duties in that employment61. It is noteworthy that s 207(1)(a) of the Act provides for the variation of an enterprise agreement by the employer and: the employees employed at the time who are covered by the agreement; and the employees employed at the time who will be covered by the agreement if the variation is approved by the [Commission]". Section 207(4) provides: "Subsection (1) applies to a greenfields agreement only if one or more of the persons who will be necessary for the normal conduct of the enterprise concerned and are covered by the agreement have been employed." The provision made by s 207(4) utilises the present perfect tense "have been" to reflect the circumstance that greenfields agreements may only be made where no employees were employed at the time the agreement was made. Further, the collocation of the future tense "will be necessary" with the present tense "are covered" makes it clear that the idea of coverage does not require an employee to be actually working under the terms of the agreement at the time he or she is said to be covered. In addition, the need to condition the expression "are covered" with the qualifying words "have been employed" confirms that the coverage of an agreement is wider than existing employees. That a greenfields agreement could have been made covering the Regency Park operations with persons who were not then employed by ALDI is beside the point, as noted by the Full Bench62. That is because the Agreement was made, as the Act allows, as a non-greenfields agreement. In light of the ordinary and natural meaning of the terms of Pt 2-4 of the Act, a non-greenfields enterprise agreement can be made with two or more employees, so long as they are the only employees employed at the time of the 61 Cf Fair Work Act 2009 (Cth), s 143. 62 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at Bell Nettle Gordon Edelman vote who are to be covered by the agreement. It does not matter that the agreement may, in due course, come to apply to many more employees. That understanding is consistent with the approach of the Full Court in John Holland63. In John Holland, the expression "the group of employees covered by the agreement" in s 186(3) was held to relate to the "whole class of employees to whom the agreement might in the future apply"64. As was said in John Holland, the expression "covered by" in s 186(3) extends to any person who will, in the future, be engaged as an employee to whom the agreement will apply. To the extent that a different view was taken in Cimeco, it should not be followed. Consistently with the view of s 186(3) taken in John Holland, the references in sub-s (2) to "covered by" may be read as "those persons currently employed who fall within the whole class of employees to whom the agreement might in future apply". That was the approach which found favour with the Full Bench65. That approach is correct. It recognises that s 186(2), unlike s 186(3), is concerned exclusively with agreements that are not greenfields agreements. The employees covered by agreements that are not greenfields agreements presented to the Commission for approval are necessarily those employees with whom the agreements have been made under s 182(1). The conclusion indicated by the ordinary and natural meaning of these provisions of the Act is not brought into question by the concern, identified by White J, that there is something implausible in the legislature accepting that a small group of employees may be able to fix the terms and conditions of employment for all the employees who may be employed in the enterprise in the future. That concern was adverted to and rejected in John Holland66. It is a concern that does not warrant the adoption of an understanding of the Act that is contrary to the ordinary and natural meaning of its text. Indeed, the concern is addressed, and largely allayed, by the protective provisions of the Act relating to 63 (2015) 228 FCR 297 at 299 [1]-[2], 306-307 [34]-[41]. 64 (2015) 228 FCR 297 at 299 [2]. 65 See Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 66 (2015) 228 FCR 297 at 306-307 [34]-[41]. Bell Nettle Gordon Edelman the right to representation, the "fairly chosen" provisions of sub-ss (3) and (3A) of s 186, and, most importantly, the need to pass the BOOT. On the approach of the majority of the Full Court, the concern that a decision affecting only a few in the present may bind many in the future is one that is only to be remedied in the case of new enterprises, notwithstanding that it may equally arise in relation to already existing ones. On any construction, s 172(2)(a) may be used to make an enterprise agreement with two or more employees for an already existing enterprise. In the case of a small but already existing enterprise, it is uncontroversial that the votes of a few original employees may eventually bind a much larger group as the enterprise grows. The construction of the majority of the Full Court does nothing to remove that possibility, nor could it. Yet, in relation to new enterprises, the approach of the majority of the Full Court treats that possibility as unacceptable. Rather than countenance the possibility, expressly contemplated by s 172(2)(a), that a few original employees may make an agreement in relation to a proposed new enterprise that will later bind a larger group, the majority of the Full Court ignored the language of s 172 and adopted a strained construction of s 186(2)(a). That strained construction had the effect of denying those employees the capacity to make an agreement capable of receiving approval. Presumably it was because of the involvement of employee organisations in the making of greenfields agreements that the majority of the Full Court saw its concern as remedied by that construction. However, given that employees involved in making a non-greenfields agreement might, if they wished, appoint an employee organisation as a bargaining representative, and given the additional protections of sub-ss (3) and (3A) of s 186, and the need to pass the BOOT, no good reason, in terms of the purpose of the Act, justifies that strained construction. Should special leave be revoked? In the course of argument, it was submitted on behalf of the SDA that ALDI's grant of special leave should be revoked because ALDI's argument in relation to the coverage issue had altered in a material respect. In this regard, the SDA argued that before the Full Court, ALDI conceded that there were no Bell Nettle Gordon Edelman employees "covered by" the Agreement at the time it was made67 even though the Full Bench had concluded that the employees who voted in favour of the Agreement were "covered by" it because "their employment comprehended work within the scope of the ... Agreement"68. It may well be that ALDI's concession should fairly be understood as having been predicated upon the SDA's contention as to the construction of "coverage" being correct. If it was, then the concession was no more than that, since the employees in question had not yet commenced work at the Regency Park undertaking, they were not yet covered by the Agreement69. Whatever the effect of the concession, however, it is clear that ALDI at no stage abandoned its reliance upon s 172 of the Act. The error in the Full Court stemmed principally from a failure to come to grips with the terms of s 172. In addition, the coverage issue is a matter of public importance which should not be allowed to stand wrongly decided merely because of an ill-advised and plainly erroneous concession upon a matter of law by a party to the proceeding70. Accordingly, the SDA's application for the revocation of the grant of special leave should be refused. The BOOT ALDI submitted that the new evidence adduced by the SDA before the Full Bench could not be accorded much, if any, weight, as that evidence did not reflect the hours to be worked by employees under the Agreement, important components of the payments of employees were omitted, and employees were 67 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 184 [143]. 68 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 69 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 184 [142]. 70 Cf Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd (1978) 139 CLR 231 at 241; [1978] HCA 8; Minister Administering the Crown Lands Act v NSW Aboriginal Land Council (2008) 237 CLR 285 at 304-305 [66]; [2008] HCA 48. Bell Nettle Gordon Edelman the purposes of classified for the comparison at substantially higher classifications than employees doing the same work under a substantially similar agreement that had recently been approved with the support of the SDA. ALDI submitted that it is apparent from the reasons of the Full Bench that it did not find the new evidence persuasive and acted upon that view. The SDA submitted that the BOOT "requires an overall assessment to be made", which in turn "requires the identification of terms which are more beneficial for an employee, terms which are less beneficial and an overall assessment of whether an employee would be better off under the agreement"71. What is involved is a comparison between terms and conditions under the agreement and the terms and conditions under the modern award72. That submission must be accepted. The majority of the Full Court was correct to identify jurisdictional error in the conclusion of the Full Bench that the Agreement passed the BOOT because the comparison clause "creates an enforceable right to payments to employees equal to or higher than those contained in the award"73. The BOOT expressly requires that the employees be "better off" under the Agreement compared to the award; it may be contrasted with the "no disadvantage" test which was the legislative predecessor of the BOOT74. The comparison clause was apt only to ensure that an employee could make a request for payments to be equalised as between the Agreement and an award. The right to equalisation, after a process initiated by the employee, does not of itself leave the employee better off under the Agreement at the test time. The paragraphs excerpted above from the reasons of the Full Bench in relation to the BOOT issue are all that was said upon this issue by the Full Bench. There is nothing in the reasons of the Full Bench to suggest that, irrespective of the comparison clause, the employees were found to be better off 71 Re Armacell Australia Pty Ltd (2010) 202 IR 38 at 49 [41]. 72 Top End Consulting Pty Ltd re Top End Consulting Enterprise Agreement 2010 [2010] FWA 6442 at [26]-[29]. 73 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 74 See Workplace Relations Act 1996 (Cth), ss 170LT, 170VPB, 170XE. Bell Nettle Gordon Edelman under the Agreement, such that it could possibly be said that the Agreement as a whole secures employees payments "equal to or higher than those contained in the award"75. Before the Full Court, there was a difference between the parties as to whether the Full Bench had actually exercised its power under s 607(2)(a) of the Act to receive the new evidence adduced by the SDA. As to this, White J noted76 that the Full Bench at par [3] of its reasons seemed to suggest that it had granted leave to adduce the new evidence; and White J went on to conclude that the "Full Bench reached its decision on the basis that all the further evidence had been received." In this Court, there was no challenge to this conclusion of White J. It may be taken to be the case that the new evidence was received by the Full Bench. And so it may be said that, although the new evidence was received by the Full Bench, the factual issues which it raised were not expressly resolved by the Full Bench. The majority of the Full Court was correct to conclude that the Full Bench's reasons justify "the conclusion that the Full Bench did not address the correct question"77. On a fair reading of the reasons of the Full Bench, it did not engage in any comparison between the Agreement and the modern award. Rather, it summarised ALDI's submission upon the comparison clause, and accepted that submission as showing that the Agreement passed the BOOT. It may be, of course, that the new evidence adduced by the SDA before the Full Bench can be shown to be deserving of little weight in the evaluative assessment required by s 193, but the Full Bench fell into jurisdictional error in failing to determine whether or not that was so. It was also argued on behalf of ALDI that the majority of the Full Court failed to appreciate that the comparison clause serves to ensure that employees covered by the Agreement will become entitled to the benefit of favourable movements in the award after the BOOT has been satisfied. That argument does 75 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 76 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 189 [171]-[172]. 77 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 189 [168]. Bell Nettle Gordon Edelman not meet ALDI's difficulty. No doubt, the benefit to employees of this updating provision is something that might properly be taken into account in assessing whether the BOOT is satisfied at the test time. But to say this does not answer the point that the Full Bench's reasons do not show how the BOOT is satisfied at the test time given that the comparison clause assures employees of no more than that they may take steps in the future with a view to ensuring that they are not worse off than under the award. In any event, by failing to carry out the evaluative assessment required to resolve the issue raised by the new evidence received by it, the Full Bench misconceived its role and so fell into jurisdictional error78. Whether the Full Bench was satisfied that an employee was better off overall under the Agreement than under the award required an evaluative assessment after consideration of the provisions of the award and the Agreement that may have been more beneficial to employees and those that may have been less beneficial79. This assessment is a matter of the kind which has been described in other contexts as: "a question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds."80 The appeal to the Full Bench for which the Act provides is an appeal by way of rehearing81. Section 607(2) allows the Full Bench to admit further evidence on an appeal to it in order to determine the matter upon that rehearing. 78 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 208-209 [31]. 79 Re Armacell Australia Pty Ltd (2010) 202 IR 38 at 49 [41]. 80 British Fame (Owners) v Macgregor (Owners) [1943] AC 197 at 201, cited with approval in Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALJR 492 at 493-494; 59 ALR 529 at 532; [1985] HCA 34. 81 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203-204 [13]-[14]; Allesch v Maunz (2000) 203 CLR 172 at 180 [23]; [2000] HCA 40. Bell Nettle Gordon Edelman Using that further evidence, the Full Bench may find that the decision the subject of appeal was an incorrect decision even though, on the evidence before the Commission, its decision was not demonstrably erroneous. The Full Bench was wrong to approach its task as if it were enough to conclude that Bull DP had "properly considered the BOOT and reached a decision based on a sound The Full Bench did not deal with the appeal to it as an appeal by way of rehearing. On any view of what a rehearing entails83, once the Full Bench admitted the new evidence which challenged the satisfaction of the BOOT, it was incumbent on it to decide the appeal "upon the facts and in accordance with the law as it exists at the time of hearing the appeal."84 That is because "the further evidence may demonstrate error in the outcome" even though the primary decision was correct at the time it was made85. By concluding that "[i]t has not been demonstrated that there is any appealable error in the decision under appeal", because "the Deputy President properly considered the BOOT and reached a decision based on a sound analysis", the Full Bench did not "hav[e] regard to all the evidence now before the appellate court"86. Conclusions and orders In the result, ALDI's appeal to this Court succeeds in relation to the coverage issue and fails in relation to the BOOT issue. It was common ground between the parties that in the event that the appeal to this Court should succeed in relation to the coverage issue but fail in 82 Transport Workers' Union of Australia v ALDI Foods Pty Ltd (2016) 255 IR 248 at 83 Cf Warren v Coombes (1979) 142 CLR 531 at 551; [1979] HCA 9. 84 CDJ v VAJ (1998) 197 CLR 172 at 202 [111]; [1998] HCA 67. See also Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 107; [1931] HCA 34. 85 See Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy (2008) 166 FCR 64 at 75 [41]. 86 Allesch v Maunz (2000) 203 CLR 172 at 180 [23]. Bell Nettle Gordon Edelman relation to the BOOT issue, the latter issue should be remitted to the Commission to be determined according to law. While the parties were at one in speaking in terms of an order to remit to the Commission the question whether the BOOT has been satisfied, the better course, given that the decision of the Full Bench was affected by jurisdictional error which must be formally corrected, is to order that it be quashed by a writ of certiorari and that a writ of mandamus issue requiring that the Full Bench proceed to determine the appeal to it according to law. The appeal to this Court should be allowed in part. That part of the orders of the Full Court of the Federal Court of Australia dated 29 November 2016 relating to the decision of Bull DP under s 186 of the Fair Work Act 2009 (Cth) should be set aside. A writ of certiorari should be issued to quash the decision of the Full Bench of the Fair Work Commission, and a writ of mandamus should issue requiring the Full Bench of the Fair Work Commission to determine according to law whether the ALDI Regency Park Agreement 2015 passes the better off overall test set out in s 193 of the Fair Work Act 2009 (Cth). That part of the first respondent's originating application to the Full Court of the Federal Court of Australia for relief under s 39B of the Judiciary Act 1903 (Cth) concerned with the decision of Bull DP under s 186 of the Fair Work Act 2009 (Cth) should be dismissed. 105 I agree with the orders proposed by the plurality and I agree with the reasons given by the plurality for making those orders. By way of amplification, I add one observation concerning the "coverage issue". The Full Court of the Federal Court correctly concluded in Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd87 that the "group" of "employees covered by the agreement" to which s 186(3) and (3A) refer is the whole class of employees to whom the agreement might in the future apply. That conclusion is compelled by the consideration that the requirements of s 186(3) and (3A) must be met in order to approve a greenfields agreement in the same way as those requirements must be met in order to approve an agreement that is not a greenfields agreement. Given that a greenfields agreement, as defined in s 172(4) by reference to s 172(2)(b) and (3)(b), is an agreement made by an "employer" or "employers" who "have not employed any of the persons who … will be covered by the agreement", the reference in s 186(3) and (3A) to "employees covered by the agreement" cannot be read as limited to employees to whom the agreement will apply immediately on coming into operation. The word "employees" in s 186(3) and (3A), like the words "employer" and "employers" in s 172(2)(b) and (3)(b), is without temporal significance. The "group" to which s 186(3) and (3A) refer is the totality of persons who might at any time during the operation of the agreement meet the description of employees covered by the agreement. The word "employees" in s 186(2)(a) is similarly without temporal significance. The reference to "employees covered by the agreement" in s 186(2)(a) is similarly not limited to employees to whom the agreement will apply immediately on coming into operation. But the employees to whom s 186(2)(a) refers cannot extend, as does the "group" in s 186(3) and (3A), to the totality of persons who might at some time in the future meet the description of employees covered by the agreement. To read s 186(2)(a) as extending to the totality of those persons would give rise to a difficulty of the kind which evidently troubled the majority of the Full Court of the Federal Court in the decision under appeal88. To the extent that some persons within the totality of persons who might at some time in the future meet the description of employees covered by the agreement might not yet have been employed and might not yet even be known, it would be impossible to be satisfied at the time of approval that the agreement "has been genuinely agreed to". The result would be that, except in the case of an agreement confined to 87 (2015) 228 FCR 297. 88 Shop, Distributive and Allied Employees Association v ALDI Foods Pty Ltd (2016) 245 FCR 155 at 181 [128]. covering a closed class of persons who were already employed at the time the agreement was made, the requirement could not be met. The difficulty is overcome when it is recognised that s 186(2)(a), in contrast to s 186(3) and (3A), sets out a requirement that needs to be met only in the case of an agreement that is not a greenfields agreement. Read in light of the descriptions in s 172(2)(a) and (3)(a) of an agreement that is not a greenfields agreement, and against the background of the procedure established by ss 180(1) and 181(1) for the making of an agreement that is not a greenfields agreement, the reference in s 186(2)(a) to "employees covered by the agreement" needs to be understood as confined in its operation to a particular subclass of employees covered by the agreement. The subclass comprises those who were employed at the time the agreement was made and became covered by the agreement as a result of it having been made. What s 186(2)(a) therefore requires, in the case of an agreement that is not a greenfields agreement, is satisfaction that the agreement has been genuinely agreed to by those employees who were employed at the time the agreement was made and who became covered by the agreement as a result of the agreement being made. That the agreement might not apply to those employees until a time in the future is not to the point. Accordingly, in the case of the ALDI Regency Park Agreement 2015, the employees within the scope of s 186(2)(a) were limited to the 17 existing employees of ALDI who at the time of making that Agreement had already contracted to work in the Regency Park region in the future.

HIGH COURT OF AUSTRALIA COMMISSIONER OF STATE TAXATION APPELLANT AND CYRIL HENSCHKE PTY LTD & ORS RESPONDENTS Commissioner of State Taxation v Cyril Henschke Pty Ltd [2010] HCA 43 1 December 2010 ORDER Appeal allowed with costs. Set aside the order of the Full Court of the Supreme Court of South Australia made on 29 May 2009, and in its place order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of South Australia Representation M G Hinton QC, Solicitor-General for the State of South Australia with M J Wait for the appellant (instructed by Crown Solicitor (SA)) M T Flynn with M St J R Butler for the respondents (instructed by Finlaysons Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of State Taxation v Cyril Henschke Pty Ltd Stamp duties – Conveyance – Partnership – Dissolution of partnership – Retirement Deed effected retirement of one partner and reconstitution of partnership and continuation of business by remaining partners – Nature of partner's interest in partnership assets – Whether Retirement Deed a conveyance of interest in personal property – Whether satisfaction of retiring partner's interest and creation of new partnership assured or vested interest in personal property. Words and phrases – "conveyance on sale", "dissolution of partnership", "equitable interest of partner". Stamp Duties Act 1923 (SA), s 60. Partnership Act 1891 (SA), ss 20, 39. FRENCH CJ, GUMMOW, HAYNE, HEYDON AND KIEFEL JJ. For some 50 years a partnership as constituted from time to time has been carrying on a winemaking business under the name CA Henschke & Co. The trade marks under which the wine has been sold have included "Hill of Grace" and "Mount Edelstone". The partnership has produced the wine from grapes purchased from independent growers or grown by the partnership at vineyards owned by entities and persons associated with the Henschke family under unwritten licences or similar arrangements. These vineyards include the Eden Valley vineyard and the Hill of Grace vineyard. At no relevant time has the partnership itself owned real property. Immediately prior to 23 December 2004 the partnership was conducted under a written agreement dated 17 January 1986 ("the 1986 Partnership Agreement"). This provided that the interests in the partnership were held as to one-third by Cyril Henschke Pty Ltd ("Cyril Henschke"), the first respondent; as to one-third by Henschke Cellars Pty Ltd ("Henschke Cellars"), the second respondent; as to one-sixth by Stephen Carl Henschke ("Mr Stephen Henschke"), the third respondent; and as to the remaining one-sixth by Mrs Doris Henschke, the mother of Mr Stephen Henschke. Subject to the terms of the 1986 Partnership Agreement, the provisions of the Partnership Act 1891 (SA) ("the Partnership Act") applied to the conduct of the partnership. Clauses 22 and 23 of the 1986 Partnership Agreement provided for retirement of partners upon the giving of particular notice, with an option for the continuing partners to purchase the share of the retiring partner, and, in default of such purchase, for dissolution and winding up of the partnership. The issue on this appeal by the Commissioner of State Taxation for South Australia ("the Commissioner") is whether an instrument identified as a Deed of Retirement dated 23 December 2004 ("the Retirement Deed") was a "conveyance on sale" within the meaning of s 60 of the Stamp Duties Act 1923 (SA) ("the Act") and thereby was charged with stamp duty pursuant to s 4 of the Act. Section 4 of the Act is a provision which attracts the general principle that stamp duty is levied on instruments, not on the underlying transactions to which they give effect, so that it is a matter, in the present case, of ascertaining the subject matter with which the Retirement Deed deals according to its terms1. Section 3 of the Act requires that the statute be read in conjunction with the Taxation Administration Act 1996 (SA), with the result that in the present case an "appeal" lay to the Supreme Court of South Australia from the determination by the Treasurer of South Australia upholding the assessment to stamp duty in the sum of $316,669 upon the Retirement Deed which had been made on 16 March 2006 by the Commissioner. The dispute came before the Supreme Court (Gray J) upon a Statement of Agreed Facts. The primary judge dismissed the appeal2. However, an appeal to the Full Court (Doyle CJ, Bleby and Layton JJ)3 was successful and the assessment to duty was set aside. For the reasons which follow, the appeal by the Commissioner to this Court should succeed and the decision of the primary judge should be restored. Clause 4 of an instrument dated 8 December 2004 ("the Sale and Purchase Agreement"), the parties to which included, but were not limited to, the parties to the Retirement Deed (set out below), had required the execution of the Retirement Deed in the form of a schedule to the Sale and Purchase Agreement. The Sale and Purchase Agreement dealt also with the sale of certain shares in Cyril Henschke and Henschke Cellars, the sale and lease of the "Home Gardens Vineyard" and the "Eden Valley Vineyard" respectively, and other matters. Stamp duty has been assessed and paid on the Sale and Purchase Agreement. Its execution followed lengthy negotiations between members of the Henschke family which had commenced in December 1997. The Sale and Purchase Agreement did not deal with the assets of the partnership. The principal asset shown in the accounts of the partnership as at 22 December 2004 was "goodwill" valued at $35,218,559. In previous accounts no value had been shown for "goodwill" in the balance sheet of the partnership. The "goodwill" represented that associated with the "Henschke" brand name and the trade marks to which reference already has been made. 1 Commissioner of Stamp Duties (Q) v Hopkins (1945) 71 CLR 351 at 360; [1945] HCA 14; DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 at 449; [1982] HCA 14. 2 Cyril Henschke Pty Ltd v Commissioner of State Taxation (2008) 104 SASR 1. 3 Cyril Henschke Pty Ltd v Commissioner of State Taxation (2009) 104 SASR 22. The parties to the Retirement Deed were Cyril Henschke, Henschke Cellars, Mr Stephen Henschke and Mrs Doris Henschke. The Retirement Deed recited that those parties were partners in the partnership constituted by the 1986 Partnership Agreement trading under the name "CA Henschke & Co". It recited the respective interests of the partners in the partnership, that Mrs Doris Henschke "wishes to retire from the Partnership" and that the instrument set out "the terms upon which [Mrs Doris Henschke] shall retire from the Partnership". It is fundamental to an appreciation of the issues which arise on this appeal that the partnership conducted before the date of the Retirement Deed and under the 1986 Partnership Agreement had no legal personality distinct from that of the individual partners4. It follows that the partnership carried on with Mrs Doris Henschke as a partner before the Retirement Deed was not the partnership conducted thereafter without her. The general principles with respect to retirement of partners were explained as follows by Eichelbaum CJ in Hadlee v Commissioner of Inland Revenue5: "In law the retirement of a partner, or the admission of a new partner, constitutes the dissolution of the old partnership and the formation of a new one. Here, upon the happening of such events there were no overt signs of dissolution; the partnership's financial structure and arrangements were such that none was required but that does not alter the underlying legal significance of any retirement or new admission6. Nor, in my Income Tax Commissioners for City of London v Gibbs [1942] AC 402 at 413, 419, 430, 432; SJ Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd [1989] 2 Qd R 87 [1989] 2 NZLR 447 at 455. That litigation culminated in an appeal to the Privy Council but upon other grounds: [1993] AC 524. See also the observations of Aickin J in Watson v Ralph (1982) 148 CLR 646 at 654-655; [1982] HCA 35 and the statements by McPherson JA in McGowan v Commissioner of Stamp Duties [2002] 2 Qd R 499 at 507 [15] and in SJ Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd [1989] 2 Qd R 87 at 90-91. Income Tax Commissioners for City of London v Gibbs [1942] AC 402, particularly at 414 per Viscount Simon LC, 429, 430 per Lord Wright, 432 per Lord Porter; (Footnote continues on next page) opinion, is it possible to avoid those legal propositions by the terms of the partnership agreement: no doubt it is competent for partners to agree in advance that in the event of a retirement the remaining partners will continue to practise in partnership but that does not overcome the consequence that the partnership practising the day after the retirement is a different one from that in business the previous day." These propositions reflect the distinction between what may be called a "technical" dissolution usually brought about by agreement, such as that in the Retirement Deed, and a "general" dissolution with a winding up of the partnership7. Clauses 1 and 2 of the Retirement Deed are as follows: "1. Notwithstanding anything contained in the Partnership Agreement (including, without limitation, clauses 22 and 23): [Mrs Doris Henschke] hereby retires from the Partnership, with effect at the end of 30 June 2003, (without giving 6 calendar months' notice and despite the date of this Deed not being 30 June); and Cyril Henschke, Henschke Cellars and [Mr Stephen Henschke] (the Continuing Partners) shall continue the Partnership under the Partnership Agreement (without purchasing the Partnership and without the Partnership being dissolved). interest The Partnership shall distribute to [Mrs Doris Henschke] her share of the partners' funds of the Partnership (capital and income), amounting to $5,885,298, in full satisfaction of all claims she has against the Partnership." (emphasis added) Reference has been made to the provisions in cll 22 and 23 of the 1986 Partnership Agreement with respect to the option to purchase and winding up in default of the exercise by the continuing partners of that option. The closing Brace v Calder [1895] 2 QB 253 at 258 per Lord Esher MR, 261 per Lopes LJ, 263 per Rigby LJ; Lindley on the Law of Partnership, 15th ed (1984) at 543, 983. 7 Lindley and Banks on Partnership, 18th ed (2002) at 675-676 [24-02]-[24-03]. words of cl 1 of the Retirement Deed serve to emphasise that there is to be no such winding up and that what is achieved by the Retirement Deed is a "technical" rather than a "general" dissolution, and, in consideration of the payment to be made to her, Mrs Doris Henschke relinquished any right to a winding up of the partnership and to her consequential share in any surplus which was identified on the taking of an account. The remaining provisions of the Retirement Deed are as follows: The Continuing Partners: release [Mrs Doris Henschke] from all obligations under the Partnership Agreement; and shall indemnify and keep indemnified [Mrs Doris Henschke] against all or any claims against the Partnership after the date of this deed. Subject to clauses 2 and 3(b), [Mrs Doris Henschke] releases the Partnership from all or any claims she may have against the Partnership at any time. The Continuing Partners acknowledge that their interests in the Partnership (capital and income) are now as follows: Cyril Henschke – two fifths; (b) Henschke Cellars – two fifths; and [Mr Stephen Henschke] – one fifth." Stamp duty is charged in respect of the instruments specified in Sched 2 to the Act (s 4). The litigation has been conducted on the footing that duty is chargeable on the Retirement Deed as a "[c]onveyance or transfer on sale of any property" under cl 3(1) of Sched 2. Section 60 of the Act contains definitions of "conveyance" and "conveyance on sale". The respondents, having regard to the provenance of the Retirement Deed as a schedule to the Sale and Purchase Agreement, presented their case on the basis that if the Commissioner were correct that the Retirement Deed was a "conveyance", there was no further point that this instrument nevertheless was not a "conveyance on sale"8. The term "conveyance" is defined in s 60 as including every instrument "by which or by virtue of which or by the operation of which ... any ... personal property or any estate or interest in any such property is assured to, or vested in, any person". The term "interest" is defined in s 2(1) as including any inchoate equitable interest. The reasoning of the Full Court9 turned upon the proposition that the Retirement Deed did not effect any transfer of the one-sixth interest of Mrs Doris Henschke in the assets of the partnership; rather, that interest had ceased, because it was "satisfied" by the payment made under cl 2 of $5,885,298, "in full satisfaction of all claims she has against the Partnership". However, the Commissioner submits, perhaps more emphatically than before the Full Court, that this characterisation of the Retirement Deed gives insufficient weight to its effect upon the legal relationship between the parties. Section 20(1) of the Partnership Act had required that all interests in property brought into the partnership conducted under the 1986 Partnership Agreement be held and applied by the partners exclusively for the purposes of that partnership. Upon the retirement of Mrs Doris Henschke as provided in cl 1 of the Retirement Deed, this partnership was dissolved, albeit without a "general" dissolution in the sense described above. The legal effect of the succeeding clauses of the Retirement Deed was to constitute a new partnership between Cyril Henschke, Henschke Cellars and Mr Stephen Henschke in the shares specified in cl 5 and otherwise on the same terms as those of the 1986 Partnership Agreement. The contract which had been expressed in the 1986 Partnership Agreement was discharged by accord and satisfaction, as described by Dixon J in McDermott v Black10. The assets previously committed to the dissolved partnership were, by reason of the operation of the Retirement Deed, to be held and applied, in accordance with s 20(1) of the Partnership Act, for the purposes of the second partnership. 8 Cf McCaughey v Commissioner of Stamp Duties (NSW) (1914) 18 CLR 475 at 487, 492; [1914] HCA 45. (2009) 104 SASR 22 at 33 [53]. 10 (1940) 63 CLR 161 at 183-184; [1940] HCA 4. The Commissioner submits that it follows that the Retirement Deed was an instrument, in the terms of the definition of "conveyance" in s 60 of the Act, by which, or by virtue of which, or by the operation of which, personal property vested in the members of the second partnership. That submission should be accepted. The submissions to the contrary made by the respondents to a significant degree relied upon a particular view of the role of equitable doctrines and remedies in the conduct of partnerships. Much of what was submitted, and accepted by the Full Court, is uncontroversial. While the business conducted under the name CA Henschke & Co in the period before 23 December 2004 was the activity provided for by the 1986 Partnership Agreement, the relationships between the partners were not regulated purely by their contract. There was a fiduciary relationship between them, a critical feature of which was that each had agreed to act for or on behalf of or in the interests of all of them in the exercise of any power or discretion affecting their interests in a legal or practical sense11. The significance of the interplay between the law of contract and the doctrines and remedies of equity was further explained by Lord Millett in Hurst v Bryk12. His Lordship observed that disputes between partners and the dissolution and winding up of partnerships have always fallen within the jurisdiction of the Court of Chancery, and continued13: "This is because, while partnership is a consensual arrangement based on agreement, it is more than a simple contract (to use the expression of Dixon J in McDonald v Dennys Lascelles Ltd14); it is a continuing personal as well as commercial relationship. Neither during the continuance of the relationship nor after its determination has any partner any cause of action at law to recover moneys due to him from his fellow partners. The amount owing to a partner by his fellow partners is recoverable only by the taking of an account in equity after the partnership 11 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64. 13 [2002] 1 AC 185 at 194. 14 (1933) 48 CLR 457 at 476; [1933] HCA 25. has been dissolved15. Only the Court of Chancery was equipped with the machinery necessary to enable such an account to be taken, and the basis upon which the account was taken reflected equitable principles. These could be modified by agreement, but they did not find their source in contract." This foundation for the engagement of equitable doctrines and concomitant remedies has given rise to judicial consideration of the nature of the interest conferred by equity upon each partner with respect to partnership assets as they exist from time to time and in advance of a "general" dissolution under the control of a court of equity. Neuberger LJ16 recently described as "conceptually somewhat opaque" the concept of a partner's share in the partnership assets as understood in the earlier English authorities. However, the matter has received attention in a series of decisions in this Court. Any such interest with respect to partnership assets was described by "a right in respect of assets but ... a right, or a congeries of rights, growing out of the partnership articles". As Windeyer J indicated in Bolton v Federal Commissioner of Taxation18, the right is generally regarded as equitable and is "a fractional interest in a surplus of assets over liabilities on a winding up and in the future profits of the partnership business". In Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd19, McTiernan, Menzies and Mason JJ said that the interest of the partner is sui generis. 15 See Richardson v Bank of England (1838) 4 My & Cr 165 [41 ER 65]; Green v Hertzog [1954] 1 WLR 1309. 16 Sandhu v Gill [2006] Ch 456 at 462 [18]. 17 Perpetual Executors & Trustees Association of Australia Ltd v Federal Commissioner of Taxation (Thomas' Case) [No 2] (1955) 94 CLR 1 at 15; [1955] HCA 66. 18 [1965] ALR 481 at 485, 491; (1964) 9 AITR 385 at 389, 395. 19 (1974) 131 CLR 321 at 328; [1974] HCA 22. Cf Hendry v The Perpetual Executors and Trustees Association of Australia Ltd (1961) 106 CLR 256 at 265-266; [1961] HCA 44; Watson v Ralph (1982) 148 CLR 646 at 650. The position here is not sufficiently or accurately expressed merely by use of the term "beneficial interest" any more than when considering the operation of discretionary trusts and unit trusts20. The critical point, putting to one side the prospect of future profits, was explained by Kitto J in Livingston v Commissioner of Stamp Duties (Q)21. It is that the interest of each partner can be ascertained finally only upon completion of the liquidation and the identification of any surplus share. That reasoning is reflected in the terms of s 39 of the Partnership Act22, and exemplifies a proposition expressed by Viscount Radcliffe upon the further appeal in Livingston. His Lordship said23: "Equity in fact calls into existence and protects equitable rights and interests in property only where their recognition has been found to be required in order to give effect to its doctrines." The controversy in Canny Gabriel turned on the proposition that, if the equities otherwise are equal, the first of two competing equitable interests prevails, but that, if the first be but a "mere equity" of the kind considered in Latec Investments Ltd v Hotel Terrigal Pty Ltd (In Liquidation)24, it may not retain priority over the subsequent equitable interest. The decision in Canny Gabriel was that the equitable interest of a partner in the assets before winding up was more than a "mere equity" and thus retained priority over a subsequent 20 MSP Nominees Pty Ltd v Commissioner of Stamps (SA) (1999) 198 CLR 494 at 509 [34]; [1999] HCA 51; CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) (2005) 224 CLR 98 at 112 [25]; [2005] HCA 53. 21 (1960) 107 CLR 411 at 453; [1960] HCA 94. See also Thomas' Case [No 2] (1955) 94 CLR 1 at 27-28; Chan v Zacharia (1984) 154 CLR 178 at 192-193; [1984] HCA 36. 22 Section 39 provides that, on dissolution, each partner is entitled as against the others to the application of partnership property to pay the debts and liabilities of the firm and to have any surplus applied in payment of any balance due to the partners. 23 Commissioner of Stamp Duties (Q) v Livingston (1964) 112 CLR 12 at 22; [1965] AC 694 at 712. See also Barns v Barns (2003) 214 CLR 169 at 197-198 [78]; [2003] HCA 9. 24 (1965) 113 CLR 265; [1965] HCA 17. equitable charge. That may be accepted but is not decisive of the present appeal, which does not concern the principles of priorities in equity. United Builders Pty Ltd v Mutual Acceptance Ltd25 decided that, as Mason J put it, with the agreement of Barwick CJ, Gibbs and Wilson JJ26: "according to long established principle, a mortgage or charge over a partner's share or interest in the partnership does not vest any interest in the assets of the partnership against the other partners. What the mortgage or charge does is to confer an entitlement on the holder on dissolution of the partnership in relation to the partner's share of the partnership assets. ... The vital consideration is that the partner's interest is in truth a chose in action, which, as [Federal Commissioner of Taxation v Everett] acknowledged, 'consists of a right to a proportion of the surplus after the realization of the assets and payment of the debts and liabilities of the partnership'27. A mortgage or charge is considered to vest rights over that chose in action but it is not considered to carry any title to the specific assets until dissolution. ... A fixed charge is appropriate to create a security over a partner's share. It gives rise to a present security over the chose in action which is the partner's share. Although it creates no specific interest in the partnership assets until dissolution, this is not because the charge is dormant; it is because the rights conferred by the charge relate to the existing chose in action and that the security over the chose in action confers no entitlement to the assets of the partnership until dissolution." This reasoning, which is the established doctrine of the Court, does not determine in favour of the respondents the issue of the imposition of stamp duty upon the Retirement Deed. Rather, it points to the contrary result. The Retirement Deed operated with respect to the interest of Mrs Doris Henschke, which was a presently existing equitable chose in action against the other partners to effect an accord and satisfaction, by her acceptance of the payment 25 (1980) 144 CLR 673; [1980] HCA 43. 26 (1980) 144 CLR 673 at 687-688. 27 (1980) 143 CLR 440 at 446; [1980] HCA 6. the business previously conducted under under cl 2 in place of that chose in action against the other partners. The Retirement Deed further provided for the creation of a second partnership to the 1986 Partnership conduct Agreement and to do so upon the terms indicated earlier in these reasons. Pursuant to and by virtue of the provisions of the Retirement Deed, there were vested in the members of the second partnership the equitable choses in action representing their present partnership interests as described by Mason J in United Builders. As already stated, the Retirement Deed thus was a conveyance within the meaning of s 60 of the Act. The respondents sought to avoid that outcome by reliance upon MSP Nominees Pty Ltd v Commissioner of Stamps (SA)28. This was in support of the submission that the assets of the first partnership remained under the control of the "continuing partners" comprising the second partnership, and "once they had the release from Mrs [Doris] Henschke there was no need for a conveyance". But the present significance of MSP Nominees is found in the proposition in the reasons of the Court29 to the effect that an essential characteristic of the "release" of an equitable interest, such as that of Mrs Doris Henschke, is the enlargement of the interests of the "continuing partners" in the assets to be applied by them in the conduct of the business of the second partnership. Nor do the respondents derive support from the treatment by this Court in McCaughey v Commissioner of Stamp Duties (NSW)30 of a particular clause providing for mutual releases between former partners. The case turned upon the construction of the deed containing that clause and the limited definition of "conveyance" in the Stamp Duties Act 1898 (NSW). The appeal should be allowed with costs, the orders of the Full Court set aside and in place thereof the appeal to the Full Court should be dismissed with costs. 28 (1999) 198 CLR 494. 29 (1999) 198 CLR 494 at 509 [33]. 30 (1914) 18 CLR 475 at 486, 491.

HIGH COURT OF AUSTRALIA GOOGLE INC AND APPELLANT AUSTRALIAN COMPETITION AND CONSUMER COMMISSION RESPONDENT Google Inc v Australian Competition and Consumer Commission [2013] HCA 1 6 February 2013 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court of Australia made on 3 April 2012 and the orders of the Federal Court of Australia made on 4 May 2012 and, in their place, order that the appeal to the Full Court be dismissed with costs. On appeal from the Federal Court of Australia Representation A J L Bannon SC with C Dimitriadis for the appellant (instructed by S T White SC with K C Morgan for the respondent (instructed by Corrs Chambers Westgarth) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Google Inc v Australian Competition and Consumer Commission Trade practices – Misleading or deceptive conduct – Search engine operator displayed "sponsored links" on search results page – Sponsored links created by or at direction of advertisers – Sponsored links comprised advertising text which directed users to web sites of advertisers' choosing – Whether search engine operator engaged in misleading or deceptive conduct by publishing or displaying sponsored links which contained misleading representations made by advertisers search engine operator adopted or endorsed misleading – Whether representations. Words and phrases – "adoption", "endorsement", "intermediary", "misleading or deceptive conduct", "misleading representation". Trade Practices Act 1974 (Cth), ss 52, 85(3). FRENCH CJ, CRENNAN AND KIEFEL JJ. The appellant, Google Inc ("Google"), operates the well-known internet search engine "Google" ("the Google search engine")1. The respondent, the Australian Competition and Consumer Commission ("the ACCC"), claims that particular search results displayed by the Google search engine between 2005 and 2008 conveyed misleading and deceptive representations, and that, by publishing or displaying those search results, Google engaged in conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the Act")2. In July 2007, the ACCC initiated proceedings under Pt VI of the Act, seeking declarations and injunctive relief against Google and another party. At first instance in the Federal Court of Australia, the primary judge (Nicholas J) dismissed the ACCC's application to the extent that it related to Google on the basis that Google had not made the misleading and deceptive representations relied upon by the ACCC3. The Full Court of the Federal Court (Keane CJ, Jacobson and Lander JJ) allowed the ACCC's appeal, and made declarations to the effect that Google had contravened s 52 of the Act by publishing the search results4. By special leave, Google now appeals to this Court. The ACCC has filed a notice of contention concerning an aspect of the evidence it contends is relevant to conclusions about Google's conduct. As explained below, the search results which are the subject of these proceedings are "sponsored links" – a form of advertisement created by, or at the direction of, advertisers willing to pay Google for advertising text which directs users to a web site of the advertiser's choosing. It is not now in contention that the sponsored links which are the subject of this appeal – referred to in these reasons as "the STA Travel advertisements", "the Carsales advertisements", "the Ausdog advertisement" and "the Trading Post advertisement" – conveyed misleading and deceptive representations. What the present appeal concerns is whether, in all the circumstances, Google (as distinct from the advertisers to whom the sponsored links belonged) engaged in misleading and deceptive conduct by publishing or displaying the sponsored links. In the reasons which 1 The Google search engine is accessible to users in Australia through the web sites google.com and google.com.au. 2 Section 52 of the Act was replaced on 1 January 2011 by s 18 of the Australian Consumer Law, a schedule to the Competition and Consumer Act 2010 (Cth). 3 Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd ("ACCC v Trading Post") (2011) 197 FCR 498. 4 Australian Competition and Consumer Commission v Google Inc ("ACCC v Google") (2012) 201 FCR 503. Crennan follow, it will be explained that Google did not contravene s 52 of the Act. Google did not author the sponsored links; it merely published or displayed, without adoption or endorsement, misleading representations made by advertisers. Relevant principles At all times relevant to these proceedings, s 52(1) of the Act, found in Div 1 of Pt V5, provided that "[a] corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". The ACCC sought to establish that Google had contravened s 52 directly, and did not seek to rely on s 75B of the Act, which relevantly provided that a person who had "aided, abetted, counselled or procured the contravention" of a provision of Pt V would be a person "involved in [the] contravention" for the purpose of the enforcement and remedies provisions in Pt VI. Google sought to rely on s 85(3) of the Act. Section 856, in Pt VI, was headed "Defences", and sub-s (3) provided: "In a proceeding in relation to a contravention of a provision of Part V or VC committed by the publication of an advertisement, it is a defence if the defendant establishes that he or she is a person whose business it is to publish or arrange for the publication of advertisements and that he or she received the advertisement for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to a contravention of a provision of that Part." More will be said about s 85(3) later in these reasons. A number of well-established propositions about s 52 may be stated briefly. First, the words "likely to mislead or deceive" in s 52 make it clear that it is not necessary to demonstrate actual deception to establish a contravention of s 527. The ACCC did not call evidence to show that any user of the Google search engine was misled or deceived in any relevant respect8. 5 Part V was entitled "Consumer protection". Division 1 covered "Unfair practices". 6 See now Australian Consumer Law, s 251. 7 Taco Company of Australia Inc v Taco Bell Pty Ltd ("Taco Bell") (1982) 42 ALR 177 at 202 per Deane and Fitzgerald JJ. 8 ACCC v Trading Post (2011) 197 FCR 498 at 533 [152]. Crennan Second, where an issue in s 52 proceedings is the effect of conduct on a class of persons such as consumers who may range from the gullible to the astute, the court must consider whether "the 'ordinary' or 'reasonable' members of that class" would be misled or deceived9. The primary judge applied that test. Third, conduct causing confusion and wonderment is not necessarily co-extensive with misleading or deceptive conduct10. Fourth, s 52 is not confined to conduct which is intended to mislead or deceive. A corporation could contravene s 52 even though it acted reasonably and honestly11. However, as Mason ACJ, Wilson, Deane and Dawson JJ observed in Yorke v Lucas12: "That does not ... mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive." 9 Campomar Sociedad Limitada v Nike International Ltd ("Campomar") (2000) 202 CLR 45 at 85 [102]; [2000] HCA 12. See also Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd ("Puxu") (1982) 149 CLR 191 at 199 per Gibbs CJ; [1982] HCA 44; Campomar (2000) 202 CLR 45 at 85 [103], 86-87 [105]. 10 Campomar (2000) 202 CLR 45 at 87 [106], approving Taco Bell (1982) 42 ALR 177 at 201 per Deane and Fitzgerald JJ. See also Puxu (1982) 149 CLR 191 at 198 11 Puxu (1982) 149 CLR 191 at 197 per Gibbs CJ. See also Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 per Stephen J; [1978] HCA 11; Yorke v Lucas (1985) 158 CLR 661 at 666 per Mason ACJ, Wilson, Deane and Dawson JJ; [1985] HCA 65. 12 (1985) 158 CLR 661 at 666. See also Butcher v Lachlan Elder Realty Pty Ltd ("Butcher") (2004) 218 CLR 592 at 605 [38] per Gleeson CJ, Hayne and Heydon JJ; [2004] HCA 60; Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Ltd ("ACCC v Channel Seven") (2009) 239 CLR 305 at 321 [43] per French CJ and Kiefel JJ, 323-324 [57] per Gummow J; [2009] HCA Crennan In the courts below, there was some discussion of an early case, Universal Telecasters (Qld) Ltd v Guthrie13. Guthrie concerned the corporate proprietor of a television station which had been convicted on a charge under s 53(e) of the Act in connection with the broadcast of an advertisement, sourced from one of its customers, which contained a misleading statement concerning the price of certain motor vehicles. A majority of the Full Court of the Federal Court (Bowen CJ and Franki J; Nimmo J dissenting) found that the corporation had successfully established a defence under s 85(3) of the Act, and quashed the conviction. However, all members of the Full Court found that, by broadcasting the advertisement, the corporation had itself made the misleading statement – although, given the result, the opinions of Bowen CJ and Franki J on this issue were obiter dicta. On the question of whether an intermediary broadcasting a statement on behalf of another can be said to "make" the statement for the purposes of s 53(e), Bowen CJ said14: "where there are express words of adoption or exclusion, this may, perhaps, be a proper line to draw. If so, then logically it would seem difficult to distinguish the case where, by necessary implication the statement was made for or on behalf of another. These will be matters for decision when an appropriate case arises ... The fact that a statement is clearly an advertisement for a particular advertiser would not seem to constitute a sufficient basis in the circumstances to justify a holding that the statement was not made by the television station. ... Even if it be proper to distinguish statements, on the basis they are expressly or by necessary implication statements of the advertiser and not of the television station, the statement in this case is not seen to be such a statement." In Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd15, the Full Court of the Federal Court (Bowen CJ, Lockhart and Fitzgerald JJ) considered Guthrie in the context of an alleged contravention of s 52 of the Act arising from the publication of several newspaper articles. The members of the Full Court recognised that a newspaper's publication of material encompasses both the 13 ("Guthrie") (1978) 18 ALR 531. 14 (1978) 18 ALR 531 at 533. 15 ("Global Sportsman") (1984) 2 FCR 82. Crennan making of representations and the passing on of the representations of others16. Their Honours found that the publication of an inaccurate statement of another conveys an essentially different meaning from that conveyed by the original statement (unless the original statement is adopted by the publisher), and that mere publication of the statement will not necessarily amount to adoption by the publisher17. This approach presaged the formulation of the principle established by this Court in Yorke v Lucas18. It also implicitly qualified the Full Court's apparent support in Guthrie for the proposition that the mere fact that a broadcaster is obviously not the source of a misleading advertisement may not be sufficient for the broadcaster to avoid a contravention of s 52. In any event, the Full Court in Global Sportsman noted that Bowen CJ had made it clear in Guthrie that it was necessary to refer to all the facts of a particular case, including the content of an advertisement, before deciding whether an intermediary broadcaster had made any misleading statements contained in the advertisement of another19. In a subsequent case, Gardam v George Wills & Co Ltd20, which concerned a defendant who supplied goods with an anonymous label containing product information, French J said21: "The innocent carriage of a false representation from one person to another in circumstances where the carrier is and is seen to be a mere conduit, does not involve him in making that representation ... When, however, a representation is conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as adopting it, then he makes that representation. It will be a question of fact in each case". 16 (1984) 2 FCR 82 at 91-92. 17 (1984) 2 FCR 82 at 89-90. See also Butcher (2004) 218 CLR 592 at 605 [38]-[40] per Gleeson CJ, Hayne and Heydon JJ; ACCC v Channel Seven (2009) 239 CLR 305 at 321 [43] per French CJ and Kiefel J, 323-324 [57] per Gummow J. 18 (1985) 158 CLR 661 at 666 per Mason ACJ, Wilson, Deane and Dawson JJ. 19 (1984) 2 FCR 82 at 89. 20 (1988) 82 ALR 415. 21 (1988) 82 ALR 415 at 427. Crennan Gleeson CJ, Hayne and Heydon JJ further explained the correct approach to intermediaries in Butcher22. Butcher concerned an alleged contravention of s 52 by a real estate agent who had incorporated an inaccurate survey diagram supplied by the vendor of a property into an advertising brochure, and provided that brochure to potential purchasers of the property. Gleeson CJ, Hayne and Heydon JJ found that the agent had not contravened s 52 because he had done no more than communicate the vendor's representation to purchasers without adopting or endorsing it23. Their Honours adopted the principles stated by Mason ACJ, Wilson, Deane and Dawson JJ in Yorke v Lucas24, and said25: "In applying those principles, it is important that the agent's conduct be viewed as a whole. It is not right to characterise the problem as one of analysing the effect of its 'conduct' divorced from 'disclaimers' about that 'conduct' and divorced from other circumstances which might qualify its character." Their Honours went on to say that the conclusion in Butcher flowed from the nature of the parties, the character of the transaction and the content of the It has been established in relation to intermediaries or agents that the question whether a corporation which publishes, communicates or passes on the misleading representation of another has itself engaged in misleading or deceptive conduct will depend on whether it would appear to ordinary and reasonable members of the relevant class that the corporation has adopted or endorsed that representation27. It has also been established that, if that question 22 (2004) 218 CLR 592. 23 (2004) 218 CLR 592 at 605 [40]. 24 (1985) 158 CLR 661 at 666. See Butcher (2004) 218 CLR 592 at 605 [38]. 25 (2004) 218 CLR 592 at 605 [39]. 26 (2004) 218 CLR 592 at 605 [40]. 27 Yorke v Lucas (1985) 158 CLR 661 at 666 per Mason ACJ, Wilson, Deane and Dawson JJ; Butcher (2004) 218 CLR 592 at 605 [39]-[40] per Gleeson CJ, Hayne and Heydon JJ; ACCC v Channel Seven (2009) 239 CLR 305 at 321 [43] per French CJ and Kiefel J, 323-324 [57] per Gummow J. See generally Heydon, Trade Practices Law – Competition and Consumer Law, (looseleaf service), vol 3 Crennan arises, it will be a question of fact to be decided by reference to all the circumstances of a particular case28. As will be explained below, the ACCC contends that Google and the Google search engine do not operate analogously to other intermediaries or agents, and that the principles established in relation to intermediaries or agents do not apply to the facts of this case. Factual background In order to explain the conduct by Google which the ACCC says contravenes s 52 of the Act, it is necessary to say something about the operation of the Google search engine, its interaction with Google's AdWords program, and how each of the STA Travel advertisements, the Carsales advertisements, the Ausdog advertisement and the Trading Post advertisement came to be created using the AdWords program and displayed using the Google search engine. The internet and the Google search engine The internet is a global network of networks of computers. Computers connected to the internet communicate with each other – requesting and receiving data – by means of a common language, the Internet Protocol29. The World Wide Web is a vast system of interlinked documents ("web pages") which can be accessed by computers connected to the internet. Each web page has a unique address, or URL30. An internet user who wishes to access a web page at a known address can access that web page by entering the address into the web browser on his or her computer. An internet user who wishes to access a web page but does not know its address, or wishes to locate a selection of web pages relevant to a particular topic, is likely to use an internet search engine, like the Google search engine, in much the same way that a person who does not know the telephone number of a 28 Yorke v Lucas (1985) 158 CLR 661 at 666 per Mason ACJ, Wilson, Deane and Dawson JJ; Butcher (2004) 218 CLR 592 at 605 [39]-[40] per Gleeson CJ, Hayne and Heydon JJ. See also Global Sportsman (1984) 2 FCR 82 at 89. 29 See Roadshow Films Pty Ltd v iiNet Ltd (2012) 86 ALJR 494 at 498-499 [15] per French CJ, Crennan and Kiefel JJ; 286 ALR 466 at 470; [2012] HCA 16. 30 The acronym "URL", for uniform resource locator, is used to refer to the address of a web page. Crennan particular business, or wishes to contact a local provider of a particular product or service, might once have been likely to use a telephone directory. The Google search engine allows internet users to search for web pages by entering search terms into a search field and clicking on a button marked "Google Search" ("the search button"). Google keeps and constantly updates an index of billions of web pages which enables it to respond to users' search requests. Google does not control the search terms entered by users of the Google search engine, or the material available on the internet. During the period relevant to these proceedings, if a user of the Google search engine entered search terms into the search field and clicked on the search button, the Google search engine would display two types of search results: "organic search results" and "sponsored links". Organic search results are links to web pages, which are ranked in order of relevance to the search terms entered by the user. The Google search engine always displays organic search results, and organic search results are always displayed free of charge. Google does not sell placement in its organic search results. Instead, the order of relevance of organic search results is determined by a complex proprietary algorithm developed by Google which is a function of many factors, including the content of each web page which Google has indexed, and the number and type of links between each of those web pages. As mentioned above, a sponsored link is a form of advertisement. Each sponsored link is created by, or at the direction of, an advertiser who typically pays Google each time a user of the Google search engine clicks on the sponsored link. Not all search terms entered into the Google search engine result in the display of sponsored links. When the Google search engine does display sponsored links, they are listed separately from organic search results. They appear either above the organic search results in a shaded box marked "Sponsored Links" ("top left sponsored links"), or to the far right of the organic search results in a box marked "Sponsored Links" ("right side sponsored links"). Whether the Google search engine displays sponsored links, and the order and position in which such links appear if they are displayed, is not determined by the algorithm which determines the order of relevance of organic search results, but by the AdWords program, described below. Crennan An example of a search results page which includes organic search results, top left sponsored links and right side sponsored links was included in the Sponsored links and the AdWords program The AdWords program is a program which allows advertisers to create, change and monitor the performance of sponsored links. Google provides advertisers with access to the AdWords program through AdWords accounts. Worldwide, hundreds of thousands of advertisers use the AdWords program. Google derives most of its revenue from its online advertising business, which involves publishing or displaying advertisements as sponsored links on its search results pages. A sponsored link consists of three elements: a headline which incorporates a link to a web page (in blue text); the address of the web page to which the headline links (in green text); and some brief advertising text (in black text). An advertiser using the AdWords program to create a sponsored link will specify the headline, the address of the web page to which the headline links, and the advertising text, within certain limits (such as word limits) set by Google. The advertiser will also specify "keywords" which trigger the appearance of the sponsored link when entered as search terms by a user of the Google search engine. In some cases, the advertiser may specify that the headline to the sponsored link will consist of the search terms entered by the user of the Google search engine that correspond with the keywords selected by the advertiser – a facility referred to as "keyword insertion". Participation in the AdWords program is subject to Google's Terms of Service, the AdWords Program Terms, and applicable Google policies. Google's Terms of Service relevantly provide as follows: "8.5 You agree that you are solely responsible for (and that Google has no responsibility to you or to any third party for) any Content that you create, transmit or display while using the Services and for the consequences of your actions (including any loss or damage which Google may suffer) by doing so. 9.6 Unless you have been expressly authorized to do so in writing by Google, you agree that in using the Services, you will not use any 31 ACCC v Trading Post (2011) 197 FCR 498 at 503 [6]. Crennan trade mark, service mark, trade name, logo of any company or organization in a way that is likely or intended to cause confusion about the owner or authorized user of such marks, names or logos." The AdWords Program Terms relevantly provide: The Program. Customer is solely responsible for all: (a) ad targeting options and keywords (collectively 'Targets') and all ad content, ad information, and ad URLs ('Creative'), whether generated by or for Customer; and (b) web sites, services and landing pages which Creative links or directs viewers to, and advertised services and products (collectively 'Services'). ('Use'). Customer represents and warrants that (y) all Customer information is complete, correct and current; and (z) any Use hereunder and Customer's Creative, Targets and Customer's Services will not violate or encourage violation of any applicable laws, regulations, code of conduct, or third party rights (including, without limitation, intellectual property rights)." Google's Advertising Policies include a statement that an advertiser's "ads and keywords must directly relate to the content on the landing page for [the advertiser's] ad", and that "[p]roducts or services promoted in [the advertiser's] ad must be reflected on [the advertiser's] landing page". Google's Advertising Policies also include a policy entitled "Deceptive use of business names", which advises advertisers that they "may not imply an affiliation, partnership or any special relationship with any unrelated third party". Provision is made for owners of business names to notify Google of any complaint of misuse. Google has a similar policy and complaints procedure in relation to trade marks. When a user enters search terms into the Google search engine, an "auction" is triggered that determines which sponsored links to show, in which order to show them, and how much Google will charge the advertisers whose sponsored links are displayed when the user clicks on them. An advertiser using the AdWords program may elect to trigger a sponsored link (or participate in an "auction" that will determine whether to display a sponsored link) by choosing three different types of keyword: exact match, phrase match or broad match. Exact match will trigger a sponsored link only if the search term entered by the user is the exact keyword chosen by the advertiser. Phrase match will trigger a sponsored link if the user enters any word in the phrase chosen by the advertiser. Broad match triggers sponsored links Crennan The based on known associations determined by Google's algorithms. advertisers whose sponsored links are relevant to this appeal each selected exact match. The term "auction" has a particular meaning in this context. The "auction" which determines whether a particular sponsored link will be displayed takes into account: the relevant advertiser's advertising budget for the day; how much the advertiser is willing to pay each time a user clicks on the sponsored link; whether the advertiser has selected exact match, phrase match or broad match for the keywords it has specified in relation to the sponsored link; and the "quality score" of the sponsored link, which depends in part on the content of the sponsored link, as determined by the advertiser. A keyword which has been disapproved will not trigger a sponsored link until any problem with its use has been corrected. Disapproved keywords can include business names or trade marks which have been the subject of a complaint by their respective owners to Google. The STA Travel advertisements The first group of sponsored links relevant to this appeal belonged to STA Travel, a business operating in the travel industry. These sponsored links appeared on 29 May 2007, 18 July 2007, 24 October 2007 and 17 April 2008. The sponsored link which appeared on 18 July 2007 was generated in response to a search conducted on the Google search engine using the search terms "harvey world travel". This search generated a search results page consisting of organic search results, a single top left sponsored link and three right side sponsored links. The top left sponsored link and the first two organic search results linked to the web site of Harvey World Travel, a significant competitor of STA Travel. The sponsored link relevant to these proceedings was a right side sponsored link which linked to the web site of STA Travel, and was in the following terms: "Harvey Travel Unbeatable deals on flights, Hotel & Pkg's Search, Book & Pack Now! www.statravel.com.au" The relevant sponsored links which appeared on other dates also featured the headlines "Harvey Travel" or "Harvey World Travel", and linked to the web site of STA Travel. Crennan The primary judge found that, by the publication of the STA Travel advertisements, STA Travel represented to ordinary and reasonable members of the relevant class that it had a commercial association with Harvey World Travel, and that information regarding Harvey World Travel and its products or services could be found at the web site of STA Travel32. His Honour found that these representations were misleading and deceptive33. Both Harvey World Travel and STA Travel had AdWords accounts which enabled them to create sponsored links using the AdWords program, and to specify keywords for those sponsored links. Ms Alice Wood, an account manager at Google, was involved with STA Travel's AdWords account between about March 2006 and March 2007. The evidence before the primary judge showed that the keyword "Harvey World Travel" had been added to STA Travel's AdWords account before Ms Wood became involved with the account. On 7 June 2006, Mr Arjan Goudsblom of STA Travel emailed Ms Wood a document containing keywords including "Harvey World Travel" and "Harvey Travel". On 3 July 2006, Mr Goudsblom emailed Ms Wood another document containing keywords including those terms, and requested that Ms Wood "adjust our categories to contain all these phrases". On 10 August 2006, following a further exchange of emails between Ms Wood and Mr Goudsblom, Ms Wood applied those keywords to certain sponsored links in STA Travel's AdWords account. The Carsales advertisements The second group of sponsored links relevant to this appeal belonged to a classified advertising business called Carsales, which operates the web site carsales.com.au. The relevant sponsored links appeared on 28 May 2007, and at various other times between March 2006 and July 2007. The sponsored link which appeared on 28 May 2007 was generated in response to a search conducted on the Google search engine using the search terms "honda .com.au". This search generated a search results page consisting of organic search results, a single top left sponsored link and a single right side sponsored link. The first two organic search results linked to the web site of Honda Australia Pty Ltd, a subsidiary of the well-known car manufacturer. The relevant sponsored link was the top left sponsored link, which linked to the web site of Carsales, and was in the following terms: 32 ACCC v Trading Post (2011) 197 FCR 498 at 550-551 [236]-[237]. 33 ACCC v Trading Post (2011) 197 FCR 498 at 551 [238]. Crennan "Honda .com.au www.Carsales.com.au/Honda-Cars Buy/Sell Your Civic The Fast Way on Australia's No.1 Auto Website" The primary judge found that, by the publication of the Carsales advertisements, Carsales represented that users who clicked on the headlines to the sponsored links would be taken to the web site of Honda Australia. His Honour went on to find that this representation was likely to mislead or deceive ordinary and reasonable members of the relevant class34. Like STA Travel, Carsales had an AdWords account. At various times, both Mr Chris Bayley, a customer service representative at Google, and Ms Wood were involved with Carsales' AdWords account. The evidence before the primary judge indicated that Mr Bayley was also involved with a separate AdWords account belonging to a classified advertising business called Carpoint, which operates the web site carpoint.com.au, and is ultimately part of the same organisation as Carsales. the keyword "Honda .com.au" had been added to Carpoint's AdWords account prior to March 2006, although it is not clear by whom. The evidence indicated that On 7 March 2006, Mr Bayley sent an email to Mr Daniel Johnson of Carsales recommending that keywords used in Carpoint's AdWords account be added to Carsales' AdWords account, and that Carsales use keyword insertion in all of its sponsored links. On 15 March 2006, Mr Bayley sent an email to list of keywords for Mr Johnson attaching a spreadsheet containing a Mr Johnson's approval, including the keyword "Honda .com.au". On 17 March 2006, Mr Bayley added a number of keywords to Carsales' AdWords account, including "honda" and "Honda .com.au". On 6 December 2006, Ms Wood sent an email to Mr Johnson which included her suggestions for "maximising" Carsales' AdWords account. Attached to that email was a spreadsheet in which Ms Wood highlighted certain existing keywords which she described as "the best converting terms for [Carsales]". These keywords included the keyword "Honda .com.au". The Ausdog advertisement Alpha Dog Training is a dog training business owned by Mr Gregory Fontana. It operates the web site alphadogtraining.com.au. The Dog Trainer Pty Ltd ("Ausdog") is a competitor of Alpha Dog Training. It operates the web site DogTrainingAustralia.com.au. 34 ACCC v Trading Post (2011) 197 FCR 498 at 554 [251]. Crennan The next sponsored link relevant to this appeal belonged to Ausdog. It appeared on 12 March 2008, and was generated in response to a search conducted on the Google search engine using the search terms "Alpha Dog Training". The first of the organic search results linked to the web site of Alpha Dog Training. One of the top left sponsored links linked to the web site of Ausdog, and was in the following terms: "Alpha Dog Training DogTrainingAustralia.com.au All Breeds. We come to you. No dog that can't be trained." The primary judge found that, by the publication of the Ausdog advertisement, Ausdog represented that it had a commercial association with Alpha Dog Training, and that information regarding Alpha Dog Training and its products or services could be found at the web site of Ausdog35. His Honour found that these representations were misleading and deceptive or likely to mislead or deceive ordinary members of the relevant class36. Both Ausdog and Alpha Dog Training had AdWords accounts. Ausdog's AdWords account was operated on its behalf by an advertising agency, Agency XYZ. On 16 December 2007, Agency XYZ added 239 keywords to Ausdog's AdWords account, including 15 keywords containing the phrase "alpha dog" or "alphadog". On 13 March 2008, Mr Fontana sent an email to Google making a complaint about the "[f]raudulent use of our business name". The following day, Ms Casey-Lee Atherton of Google responded, recommending that Mr Fontana take up the matter with Ausdog. On 1 April 2008, Mr Fontana complained to Ausdog. On 12 April 2008, Agency XYZ removed all of the "alpha dog" or "alphadog" keywords from Ausdog's AdWords account. The Trading Post advertisement The final sponsored link relevant to this appeal belonged to Trading Post Australia Pty Ltd ("Trading Post"), a classified advertising business which operates the web site tradingpost.com.au. It appeared on 29 May 2007, and was generated in response to a search conducted on the Google search engine using the search terms "just 4x4s magazine". This search generated a search results 35 ACCC v Trading Post (2011) 197 FCR 498 at 567 [317]. 36 ACCC v Trading Post (2011) 197 FCR 498 at 567 [317]-[318]. Crennan page consisting of organic search results, two top left sponsored links and a number of right side sponsored links. The sponsored link relevant to this appeal was a top left sponsored link which linked to the web site of Trading Post, and was in the following terms: "Just 4x4s Magazine www.tradingpost.com.au New & Used 4WD Cars – See 90,000+ Auto Ads Online. Great Finds Daily!" Just Magazines Pty Ltd is a competitor of Trading Post. It publishes a number of magazines throughout Australia, including one titled "Just 4x4s". Among other things, the Just 4x4s magazine contains classified advertisements for four-wheel drive vehicles. The primary judge found that, by the publication of the Trading Post advertisement, Trading Post represented that it had a commercial association with the Just 4x4s magazine, and that information regarding the Just 4x4s magazine could be found at the web site of Trading Post37. His Honour found that these representations were misleading and deceptive or likely to mislead or deceive38. Trading Post had an AdWords account which was operated on its behalf by an advertising agency, Sensis. On 26 December 2006, Mr Eric Wan of Sensis uploaded the keyword "just 4x4s magazine" to Trading Post's AdWords account, as part of a batch of 246 keywords. Proceedings below Primary judge The ACCC made two claims against Google before the primary judge. First, the ACCC alleged that Google had engaged in conduct contrary to s 52 of the Act by failing sufficiently to distinguish between organic search results and sponsored links. The primary judge rejected this claim39. Second, the ACCC alleged that Google engaged in conduct contrary to s 52 of the Act by publishing the STA Travel or displaying particular sponsored including links, 37 ACCC v Trading Post (2011) 197 FCR 498 at 572 [341]. 38 ACCC v Trading Post (2011) 197 FCR 498 at 572-573 [342], [345]. 39 ACCC v Trading Post (2011) 197 FCR 498 at 515-520 [76]-[84]. Crennan advertisements, the Carsales advertisements, the Ausdog advertisement and the Trading Post advertisement. The primary judge made three significant findings in relation to this claim. First, as described above, the primary judge found that each of the STA Travel advertisements, the Carsales advertisements, the Ausdog advertisement and the Trading Post advertisement contained representations which were misleading or deceptive or likely to mislead or deceive40. Second, the primary judge found that Google had not made the representations conveyed by the advertisements41. Relying on and applying the decisions of the High Court in Butcher42 and ACCC v Channel Seven43, which his Honour treated as developments in the law clarifying the reasoning of the Full Court of the Federal Court in Guthrie44, the primary judge found that Google had acted merely as a conduit, passing on the advertisements of others without endorsing or approving them45. The primary judge described the ordinary and reasonable members of the relevant class of consumers who might be affected by the alleged conduct as "The relevant class will consist of people who have access to a computer connected to the internet. They will also have some basic knowledge and understanding of computers, the web and search engines including the Google search engine. They will not necessarily have a detailed familiarity with the Google search engine but they should be taken to have at least some elementary understanding of how it works. It 40 ACCC v Trading Post (2011) 197 FCR 498 at 551 [238], 554 [251], 567 [317]- 41 ACCC v Trading Post (2011) 197 FCR 498 at 540-542 [186]-[195], 551-552 [239]- 42 (2004) 218 CLR 592. 43 (2009) 239 CLR 305. 44 (1978) 18 ALR 531. 45 ACCC v Trading Post (2011) 197 FCR 498 at 536-540 [176]-[185]. 46 ACCC v Trading Post (2011) 197 FCR 498 at 528 [122]. Crennan is not possible to use a search engine in any meaningful way without knowing something about how it operates." His Honour found that ordinary and reasonable members of this class would have understood that sponsored links were advertisements, and were different from organic search results47. His Honour also found that ordinary and reasonable members of the relevant class would not have understood Google to have endorsed or to have been responsible in any meaningful way for the content of the advertisements; rather, they would have understood that the advertisements were messages from the advertisers which Google was passing on for what they were worth48. Drawing an analogy with other publishers or broadcasters of advertisements who provide technical facilities which permit advertisements to be seen or heard, the primary judge specifically rejected the ACCC's argument based on the keyword insertion facility49, about which more will be said below. Third, the primary judge found the representations conveyed by the advertisements, then the defence afforded by s 85(3) of the Act would not have been available to Google in respect of any of the STA Travel advertisements, the Carsales advertisements, the Ausdog advertisement or the Trading Post advertisement50. if Google had made that, Full Court The ACCC's appeal to the Full Court focused on the primary judge's finding that Google had not made the representations relied upon by the ACCC, but had acted as a mere conduit. The Full Court unanimously found that Google had itself engaged in misleading and deceptive conduct, and therefore allowed the appeal51. The members of the Full Court differed from the primary judge in their treatment of Guthrie and Butcher. The Full Court relied on the reasoning in Guthrie, and held that Butcher did not stipulate that an intermediary must 47 ACCC v Trading Post (2011) 197 FCR 498 at 533-536 [155]-[169]. 48 ACCC v Trading Post (2011) 197 FCR 498 at 540-542 [186]-[194]. 49 ACCC v Trading Post (2011) 197 FCR 498 at 541-542 [192]-[193]. 50 ACCC v Trading Post (2011) 197 FCR 498 at 552 [242], 554-555 [252]-[257], 567 51 ACCC v Google (2012) 201 FCR 503 at 521-522 [92]-[95], 524 [104]. Crennan expressly adopt or endorse a statement for the intermediary to be liable under s 5252. Further, and critically, the Full Court construed the sponsored links as being "Google's response to a user's insertion of a search term into Google's search engine"53 and "Google's conduct in response to the user's interaction with Google's search engine"54. Relying in part on the fact that Google's technology was involved in applying the "broad match" feature of the AdWords program, the Full Court found that what was in issue was "Google's conduct as a principal, not merely as a conduit"55, and went on to say56: "The circumstance that the sponsored link is displayed as Google's response to a user's insertion of a search term into Google's search engine prevents any analogy between this case and the case of the bill-board owner or the owner of a telephone network or the publisher of a newspaper or a telecaster who simply displays an advertisement of another. In those cases the medium is not concerned with the content of the advertiser's message: in the four instances in question here Google created the message which it presents. Google's search engine calls up and displays the response to the user's enquiry. It is Google's technology which creates that which is displayed. Google did not merely repeat or pass on a statement by the advertiser: what is displayed in response to the user's search query is not the equivalent of Google saying here is a statement by an advertiser which is passed on for what it is worth." Their Honours found that, even if ordinary and reasonable members of the relevant class perceived Google as a mere conduit, "[t]he reaction of the ordinary and reasonable member of the class is not solely determinative of the issue" because the circumstances showed that in fact Google was more than a mere conduit57. 52 ACCC v Google (2012) 201 FCR 503 at 520 [85]-[86]. 53 ACCC v Google (2012) 201 FCR 503 at 522 [95]. 54 ACCC v Google (2012) 201 FCR 503 at 522 [96]. 55 ACCC v Google (2012) 201 FCR 503 at 522 [94]. 56 ACCC v Google (2012) 201 FCR 503 at 522 [95]. 57 ACCC v Google (2012) 201 FCR 503 at 521 [89]. Crennan The Full Court rejected Google's argument that it was entitled to the defence afforded by s 85(3) of the Act in relation to the STA Travel advertisements and the Trading Post advertisement58. Submissions in this appeal The ACCC contended that, by publishing or displaying the STA Travel advertisements, the Carsales advertisements, the Ausdog advertisement and the Trading Post advertisement, Google had engaged in misleading and deceptive conduct as a principal. In terms of the relevant law discussed above, the central proposition advanced by the ACCC was that Google was the maker or creator of the sponsored links. The ACCC relied on the fact that Google used its technology to display the sponsored links in response to search requests made by users of the Google search engine. This, it was said, established Google's liability under s 52, notwithstanding that the advertisers were the source of the sponsored links, and notwithstanding the fact that Google did not endorse or adopt the contents of any of the sponsored links. Employing the language of Yorke v Lucas59, the ACCC contended that, in the light of the relevant facts and circumstances, Google had done more than merely pass on the sponsored links for what they were worth. The starting point for the ACCC's arguments was that the clickable headline in each of the sponsored links contained the name of a trader (and, in one case, the URL of a trader) different from that of the relevant advertiser. Referring to the keyword insertion facility, the ACCC argued that Google had inserted search terms chosen by users of the Google search engine as headlines in the sponsored links, and was therefore responsible for the collocation of the clickable headline containing the name (and, in one case, the URL) of another trader and the advertiser's URL. The ACCC also emphasised that Google had provided the functionality of the clickable headline (that is, the ability for users of the Google search engine to click on the headline of a sponsored link and be taken to the advertiser's web site). In addition, the ACCC submitted that, by displaying the sponsored links, Google had informed users of the Google search engine that the sponsored links were responsive to the users' search requests. 58 ACCC v Google (2012) 201 FCR 503 at 525-526 [111]-[115]. 59 (1985) 158 CLR 661. Crennan Google Google always admitted that it published or displayed the STA Travel advertisements, the Carsales advertisements, the Ausdog advertisement and the Trading Post advertisement. However, Google contended that the fact that it displayed the sponsored links in response to users' search requests was not sufficient to justify a finding that Google had itself made the misleading representations conveyed by the sponsored links, or otherwise engaged in misleading and deceptive conduct. Google emphasised that each relevant aspect of a sponsored link – the headline, the advertising text, the advertiser's URL, the keywords and the use of keyword insertion – was specified by the advertiser, and that Google merely implemented the advertiser's instructions. Google submitted that the technical facilities it provided through the AdWords program were different in kind, but not in principle, from facilities provided to advertisers by other intermediaries such as publishers and broadcasters. Google further contended that any commercial association or affiliation between an advertiser and another trader was something peculiarly within the knowledge of the advertiser, and was not a matter within Google's expertise. Google also relied on the primary judge's findings that ordinary and reasonable users of the Google search engine would have understood that the sponsored links were advertisements paid for by advertisers to promote their products and businesses, and that Google was merely passing them on for what they were worth. Did Google contravene s 52? It is axiomatic that the Google search engine operates by the mechanism that users' search requests are framed as search terms chosen by the user for the purpose of generating organic search results. What every advertiser seeks to achieve by use of the AdWords program is that its sponsored links will be triggered by search terms entered by a user (corresponding to keywords chosen by the advertiser) which indicate that the user may have an interest in the advertiser's products or services. Google has no control over a user's choice of search terms or an advertiser's choice of keywords60. The ACCC contended that Google, rather than the advertisers, "produced" (in the sense of making or creating) the sponsored links which are the subject of 60 However, where a keyword chosen by an advertiser has been disallowed following a complaint by the owner of a business name or trade mark, that keyword will not trigger a sponsored link. Crennan this appeal. That submission must be rejected. It is critical to appreciate that, even with the facility of keyword insertion, the advertiser is the author of the sponsored link. As Google correctly submitted, each relevant aspect of a sponsored link is determined by the advertiser. The automated response which the Google search engine makes to a user's search request by displaying a sponsored link is wholly determined by the keywords and other content of the sponsored link which the advertiser has chosen. Google does not create, in any authorial sense, the sponsored links that it publishes or displays. That the display of sponsored links (together with organic search results) can be described as Google's response to a user's request for information does not render Google the maker, author, creator or originator of the information in a sponsored link. The technology which lies behind the display of a sponsored link merely assembles information provided by others for the purpose of displaying advertisements directed to users of the Google search engine in their capacity as consumers of products and services. In this sense, Google is not relevantly different from other intermediaries, such as newspaper publishers (whether in print or online) or broadcasters (whether radio, television or online), who publish, display or broadcast the advertisements of others. The fact that the provision of information via the internet will – because of the nature of the internet – necessarily involve a response to a request made by an internet user does not, without more, disturb the analogy between Google and other intermediaries. To the extent that it displays sponsored links, the Google search engine is only a means of communication between advertisers and consumers. The primary judge's findings about the way in which ordinary and reasonable users of the Google search engine would understand the sponsored links were not disturbed in the Full Court. These findings – that ordinary and reasonable users would have understood the sponsored links to be statements made by advertisers which Google had not endorsed, and was merely passing on for what they were worth – were plainly correct. They also support the conclusion reached above. On its face, each sponsored link indicates that its source is not Google, but an advertiser. The heading "Sponsored Links" appears above both top left sponsored links and right side sponsored links, and the URL of the advertiser, appearing within each sponsored link, clearly indicates its source. Ordinary and reasonable users of the Google search engine would have understood that the sponsored links were created by advertisers. Such users would also have understood that representations made by the sponsored links were those of the advertisers, and were not adopted or endorsed by Google. In its notice of contention, the ACCC asserted that the role of Google personnel advising or assisting advertisers in the selection of keywords (described above in relation to both the STA Travel advertisements and the Carsales advertisements) was relevant in determining whether Google had Crennan engaged in misleading or deceptive conduct. The evidence of the role of Google's personnel in relation to the STA Travel advertisements and the Carsales advertisements was not irrelevant. However, while it showed correspondence between Google personnel and the advertisers concerned, it never rose so high as to prove that Google personnel, as distinct from the advertisers, had chosen the relevant keywords, or otherwise created, endorsed or adopted the sponsored links. It is true that Google has a system in place which will preclude use of certain keywords as triggers for advertisements when Google is on notice of a possible misrepresentation to which an advertiser's choice of keywords may give rise. However, the facts in respect of the Ausdog advertisement show the difficulty that Google might have, in the absence of notification, in determining whether a trader whose name (or name and URL) appears in the headline of an advertiser's sponsored link is a competitor or associate of the advertiser. Taken together, the facts and circumstances considered above show that Google did not itself engage in misleading or deceptive conduct, or endorse or adopt the representations which it displayed on behalf of advertisers. Section 85(3) While the conclusions reached above make it unnecessary to determine the issues raised under s 85(3), a possible question about the scope of s 85(3) may arise given the line of authority in this Court commencing with Yorke v Lucas61. That line of authority identifies a process of enquiry to be followed when determining, as a question of fact, whether an intermediary can be said to have itself made the misleading representation of another which it has communicated to a third party. Section 85(3) provided a defence in proceedings in relation to a contravention of Pt V or VC of the Act which was limited to publishers of advertisements. If an intermediary publisher has not endorsed or adopted a published representation of an advertiser, that circumstance may be sufficient, in the context of a particular case, to justify a finding that the intermediary has not contravened s 52. By way of contrast, an intermediary publisher who has endorsed or adopted a published representation of an advertiser without appreciating the capacity of that representation to mislead or deceive may have resort to the statutory defence. In those circumstances, recognising that its business carried a risk of unwitting contravention, an intermediary publisher may 61 (1985) 158 CLR 661. Crennan need to show that it had some appropriate system in place to succeed in the defence that it did not know and had no reason to suspect that the publication of that representation would amount to a contravention. It is sufficient for present purposes to state that the recognisable distinctions between these different scenarios illustrate the different spheres of operation of the line of authority in this Court commencing with Yorke v Lucas and the statutory defence in s 85(3). Orders Orders should be made as follows: Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court of Australia made on 3 April 2012 and the orders of the Federal Court of Australia made on 4 May 2012 and, in their place, order that the appeal to the Full Court be dismissed with costs. Hayne The critical facts and allegations At the relevant times, the appellant ("Google") provided a well-known internet search engine. In response to searches entered into that search engine by users, Google displayed search results and "sponsored links": advertisements created by advertisers for display on a Google search results page when the user of the search engine entered in the search request words chosen by the advertiser. This appeal concerns four advertisements. The respondent ("the ACCC") alleged that, by publishing those advertisements, Google made a number of false representations and thereby engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, contrary to what was, at the relevant times, s 52 of the Trade Practices Act 1974 (Cth) ("the Act")62. The ACCC had made other allegations of contravention by Google but these were not in issue in the appeal to this Court. By its statement of claim, the ACCC alleged contravention in relation to each of the four advertisements by the following sequence of allegations: (a) Google published the advertisement; (b) by publishing the advertisement, Google made certain representations; (c) each of those representations was made in trade or commerce; and (d) "[b]y making each or any" of those representations, Google engaged in conduct that was misleading or deceptive or likely to mislead or deceive "in that" each representation was false. In relation to each of the four advertisements, the determinative issue at trial was whether, as the ACCC had alleged, Google made the alleged representations. That issue lay at the heart of the arguments in the ACCC's appeal to the Full Court of the Federal Court and in Google's appeal to this Court. Determination of this appeal The trial judge concluded63 that Google had not made any of the alleged representations. The trial judge found64 that the advertisements conveyed one or both of two false representations: first, that there was a commercial association between the advertiser and a particular business for which the user of the search 62 See now Competition and Consumer Act 2010 (Cth), Sched 2, s 18; cf Australian Securities and Investments Commission Act 2001 (Cth), s 12DA; Corporations Act 2001 (Cth), s 1041H. 63 Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd (2011) 197 FCR 498 at 551-552 [241], 554 [251], 567 [318], 572-573 [342]. 64 (2011) 197 FCR 498 at 550-551 [237], 554 [251], 567 [317], 572 [341]. Hayne engine had searched (when there was none); and second, that, by clicking on the sponsored link, the user would be taken to a website of the business for which the user had searched (when, in fact, the user would be taken to the advertiser's website). The trial judge further found65 that ordinary and reasonable members of the class of persons using Google's search engine would have understood the sponsored links to be advertisements made and paid for by the advertisers, and that Google had not adopted or endorsed the representations made in them. In the Full Court of the Federal Court and in this Court, no party sought to challenge the findings the trial judge made about what the advertisements represented or what ordinary and reasonable users of Google's search engine would have understood. Instead, in both the Full Court of the Federal Court and in this Court, the ACCC sought to make good the proposition that, given all of Google's conduct, Google made the representations which the trial judge found to be misleading or deceptive or likely to mislead or deceive. The ACCC advanced arguments which fastened upon Google's provision of the means for advertisers to prepare advertisements that may be displayed when certain search terms were entered by a user of the search engine and the fact that Google's search engine determined what advertisements would be displayed in response to the user's search terms. These facts about the preparation and display of the advertisements do not, and were not said to, challenge the trial judge's findings that the ordinary and reasonable user would have understood links were advertisements made and paid for by the advertisers and that the representations made in them were not endorsed or adopted by Google. Because the user would not understand Google to be making the representations which the trial judge found to be misleading or deceptive, the ACCC failed to make good the central allegation upon which its case in relation to the four advertisements depended: that Google made the representations conveyed by the advertisements. For this reason alone, Google's appeal to this Court must be allowed. the sponsored that This conclusion depends wholly upon the particular way in which the ACCC framed its case against Google and the unchallenged findings of fact that the trial judge made. These reasons do not depend upon the application of any general rule about the liability of publishers for publishing misleading or deceptive advertisements made and paid for by another. Neither the text of the Act nor the decisions that have been reached about the application of s 52 permit the statement of a general rule to the effect that a corporation can contravene s 52 by publishing an advertisement, made and paid for by another and containing statements that would (or would be likely to) mislead or deceive, only 65 (2011) 197 FCR 498 at 536 [169]-[173], 540-542 [187]-[195], 551-552 [241]. Hayne if that corporation endorsed or adopted (or would be understood to have endorsed or adopted) the content of the advertisement. A general rule expressed in those terms would pay insufficient regard to the text of s 52. Notions of endorsement and adoption may be relevant to the application of s 52 if, and only if, the contravening conduct is identified as making a representation. Even in cases where the contravening conduct is identified as making a representation, notions of endorsement and adoption are not always relevant to, let alone determinative of, the application of s 52. But they are notions that have no role to play if it is alleged that publishing a misleading or deceptive advertisement contravened s 52. To explain why that is so, it is necessary to consider the Act. Every allegation of contravention of s 52 turns ultimately upon the proper construction of the Act. Relevant provisions of the Act The text of s 52 is well-known but it is important to set it out. Section 52 provided: "(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1)." It is also necessary to notice s 85(3)66 when considering whether publication of a paid advertisement contravened s 52. The provisions of the proper understanding and application of s 85(3) bear directly upon s 52 because s 52 must be read in the context of the whole Act. At the times relevant to this appeal, s 85(3) provided: "In a proceeding in relation to a contravention of a provision of Part V or VC committed by the publication of an advertisement, it is a defence if the defendant establishes that he or she is a person whose business it is to publish or arrange for the publication of advertisements and that he or she received the advertisement for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to a contravention of a provision of that Part." Three features of s 85(3) must be noted. First, the relevant premise for engaging s 85(3) was identified as "a contravention of a provision of Part V ... committed by the publication of an advertisement". Second, s 85(3) provided a defence to a proceeding for contravention. It did not provide that publication of 66 See now Competition and Consumer Act 2010, Sched 2, s 251. Hayne an advertisement was to be taken not to be a contravention of Pt V or Pt VC or that it was to be taken not to be a contravention unless the alleged contravener was shown to have endorsed or adopted the content of the advertisement. And third, the defence for which s 85(3) provided was available only if certain conditions were met. It will be necessary to say more about s 85(3) but, before doing so, there are some features of s 52 to which attention must be drawn. Section 52 and the identification of impugned conduct The generality with which s 52 was expressed should not obscure one fundamental point. The section prohibited engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. It is, therefore, always necessary to begin consideration of the application of the section by identifying the conduct that is said to meet the statutory description "misleading or deceptive or ... likely to mislead or deceive". The first question for consideration is always: "What did the alleged contravener do (or not do)?" It is only after identifying the conduct that is impugned that one can go on to consider separately whether that conduct is misleading or deceptive or likely to be so. In some s 52 cases, in identifying conduct that is said to be misleading or deceptive or likely to be so, it may be necessary to recognise that the Act amplified67 the way in which a reference to "engaging in conduct" should be read. No question of that kind arose in this appeal and the extended definition may be put aside. In some s 52 cases, it may be necessary to recognise that a publisher of an advertisement made and paid for by another may be a secondary party to some other person's contravention of s 52. Whether that issue arises depends, of course, on the way in which the case is framed. In this matter, the ACCC did not allege that Google was a secondary party to a contravention of the Act, whether by the advertiser or any other person, and so questions of secondary liability may be put aside. Much more often than not, the simpler the description of the conduct that is said to be misleading or deceptive or likely to be so, the easier it will be to focus upon whether that conduct has the requisite character. It will often be possible to identify the relevant conduct as the making of one or more representations, but it is necessary to bear in mind that s 52 was not confined68 to 67 s 4(2)(a). 68 See, for example, Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 623 [103]; [2004] HCA 60; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 341 [102]; [2009] HCA 25; Miller & Associates Insurance Broking Pty (Footnote continues on next page) Hayne the prohibition of misrepresentations. It follows that a claim of contravention of s 52 need not be pleaded or argued by reference to the making of some representation. "It suffices that [the conduct] leads or is likely to lead into error."69 Melding the two issues of conduct and characterisation is apt to distract and confuse. Especially is that so if the melding is achieved by using the language of misrepresentation to give a single composite description of both the conduct and its character. Describing the alleged misleading or deceptive conduct as "making a misrepresentation" is distracting and confusing for at least three reasons. First, it paraphrases the statutory words in language redolent of a body of legal principle which is not engaged. The dangers of doing that are self-evident70. Second, in cases like the present, the description assumes that there has been misleading or deceptive conduct and then seeks to identify who should be held responsible for it. An inquiry of that kind, at least in a case like the present, would tend to present a binary choice: did A or did B make the misrepresentation? But again, this is not a question that is presented by the text of the Act. The question presented by the Act is not: "Who misled or deceived a third party?" The question is not: "Did A mislead or deceive B?" The statutory question is whether the defendant's conduct was misleading or deceptive or likely to be so. Third, the description is one that inevitably directs attention to whether the alleged contravener "made" any misrepresentation, and in turn whether the alleged contravener "endorsed" or "adopted" the accuracy of some representation. Those are notions that have no footing in the text of the Act. They may be apt descriptions of the facts of a particular case but they must not be allowed to take on a life of their own as substitutes for the statutory text. Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 368 [15]; [2010] HCA 31; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 at 555. 69 Miller & Associates (2010) 241 CLR 357 at 368 [15] per French CJ and Kiefel J, citing Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 at 589 [63]. See also Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198 per Gibbs CJ; [1982] HCA 44. 70 See Campbell (2009) 238 CLR 304 at 341 [102]. Hayne This last point about endorsement and adoption is important and should be amplified. On their face, these expressions might be taken to suggest that the corporation which is found to have endorsed or adopted what was published either had some knowledge of or opinion about the truth of what was said, or was at least reckless as to its truth. Yet, from the earliest days of the Act, it was established71 that a corporation could contravene s 52 even if it had acted honestly and reasonably. Neither knowledge of contravention nor intention to contravene was an element of s 52. As McHugh J correctly observed72, in his dissenting reasons in Butcher v Lachlan Elder Realty Pty Ltd, s 52 "looks at the conduct of a corporation and is concerned only with whether that conduct misled or was likely to mislead a consumer. It is not concerned with the mental state of the corporation." (emphasis added) In so far as notions of endorsement and adoption direct attention to whether the alleged contravener had some specific intention or knowledge, or was reckless as to some matter, they are notions that collide with this fundamental proposition. It is ultimately not profitable to pursue what content might be given to either "endorsement" or "adoption". They are terms that may (but not always) have some role to play in cases where the impugned conduct is alleged to be the making of some representation. For present purposes, the crucial observation to make is that the absence of "endorsement" or "adoption" does not provide a criterion of determinative significance for the application of s 52. Extrapolating from decided cases The text of s 52 does not require a corporation to have "endorsed" or "adopted" the content of an advertisement made and paid for by another before that corporation can be found to have engaged in misleading or deceptive conduct. Much of the argument in the present appeal proceeded not by reference to the statutory text but by reference to decided cases and the rule or rules said to underpin them. In particular, and reflecting the way in which the case against Google was framed and pursued, it was said that previous decisions of this Court and other courts establish a principle that a defendant which passes on a representation made by another engages in misleading or deceptive conduct only if the defendant endorsed or adopted the representation. Before considering the particular cases relied on, some observations must be made about the use of decided cases in considering and applying s 52 of the Act. 71 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216; [1978] HCA 11; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191. 72 (2004) 218 CLR 592 at 634 [139]. Hayne In Butcher, McHugh J was right to observe73 that that case was "concerned with the application of a statutory text, expressed in general terms, to particular facts". The observation applies equally to this case and to all s 52 cases. Because it is the statutory text which controls, there is no little danger in attempting to extrapolate from the decided cases to a rule of general application. No such rule can stand in the place of the statutory text. This is not to say that the decided cases are unimportant or that they do not contribute to the proper understanding of how the Act operates. But each case must be understood by reference to the statutory text and the particular facts that were identified as relevant to the application of that text. When considering what was said in the reasons for decision in a s 52 case, the description of the relevant conduct is as important as are the facts and circumstances identified as bearing upon whether that conduct was misleading or deceptive. Analysis of the decided cases is not to be glossed over and obscured by attempting to identify particular species of misleading or deceptive conduct, attaching some general description to each (such as a "misrepresentation" case, an "advertisement" case or a "mere conduit" case) and then applying s 52 by fitting the case into one of those constructed categories. Analogical reasoning is important but analogies can be drawn only after understanding the full factual context in which it was held that s 52 did or did not apply. Against this background, it is convenient to turn now to the particular authorities relied on in this appeal. It is necessary to consider three decisions of this Court – Yorke v Lucas74, Butcher75 and Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Ltd76 – and, more briefly, two earlier decisions of the Full Court of the Federal Court – Universal Telecasters (Qld) Ltd v Guthrie77 and Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd78. 73 (2004) 218 CLR 592 at 616 [80]. 74 (1985) 158 CLR 661; [1985] HCA 65. 75 (2004) 218 CLR 592. 76 (2009) 239 CLR 305; [2009] HCA 19. 77 (1978) 18 ALR 531. 78 (1984) 2 FCR 82. Hayne The decided cases In Yorke v Lucas, the alleged contraventions arose out of the sale of a business. It was alleged that the vendor company had misrepresented the turnover and profit of the business, that the vendor's agent (another company) had contravened s 52 by passing on to the purchaser the vendor's instructions about the turnover and profit of the business, and that the directors of each of those companies were involved in the contraventions alleged against their respective companies. The trial judge found79 that the turnover and profit had been misrepresented and that both companies (the vendor and the vendor's agent) had contravened the Act. As to the agent company, the trial judge concluded80 that it had "unwittingly contravened s 52 by engaging in conduct which was at least likely to mislead". And as to the director of the agent, the trial judge found81 that he had acted conscientiously and carefully by checking (more than once) the vendor's instructions about these matters and that he was therefore not involved in his company's contravention. Neither the Full Court of the Federal Court nor this Court had to decide whether the agent company had contravened s 52. Both appeals concerned only the liability of the director of the agent company. Nonetheless, the plurality in this Court said82 that: "even though a corporation acts honestly and reasonably, it may nonetheless engage in conduct that is misleading or deceptive or is likely to mislead or deceive ... That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive." (emphasis added) What was said by the plurality cannot be understood without an appreciation of what the conduct of the agent company was said to have been. 79 Yorke v Ross Lucas Pty Ltd (1982) 45 ALR 299 at 313-314. 80 (1982) 45 ALR 299 at 314. 81 (1982) 45 ALR 299 at 307-308; Yorke v Ross Lucas Pty Ltd (No 2) (1983) 46 ALR 82 (1985) 158 CLR 661 at 666 per Mason ACJ, Wilson, Deane and Dawson JJ. Hayne The evidence83 of the agent company's director, whose conduct founded the contravention by the agent company, was that he had told the purchaser that he (the director) "had no figure work to confirm" the profit and turnover amounts and had no statement prepared by an accountant. He told the purchaser that he "only had answers to questions [he had] asked" the vendor company's director and that he (the director of the agent company) had not verified the profit and turnover amounts. This evidence was accepted84 at trial and not disturbed on appeal to the Full Court85 or to this Court. In these circumstances, it is evident why the plurality in this Court said what has been set out above. The agent company did not represent that the profit and turnover of the business was any particular amount. The director of the agent company told the purchaser that the figures he provided were what he had been told by the vendor. That is, all that the director of the agent company did (or said) was to represent to the purchaser that the vendor had told him certain profit and turnover figures. In Butcher, the real estate agent gave a prospective purchaser a brochure which reproduced a survey diagram of waterfront land that was to be auctioned. The diagram was wrong. The brochure said that the information within it had been gathered from sources which the agent believed to be reliable but that its accuracy could not be guaranteed and that interested persons should rely on their own enquiries. The majority referred86 to Yorke v Lucas and said87 that, in applying those principles, "it is important that the agent's conduct be viewed as a whole". The majority engaged in a detailed review of all of the circumstances "The agent did not purport to do anything more than pass on information supplied by another or others. It both expressly and implicitly disclaimed any belief in the truth or falsity of that information. It did no more than state a belief in the reliability of the sources." 83 (1982) 45 ALR 299 at 308. 84 (1982) 45 ALR 299 at 303, 308. 85 Yorke v Lucas (1983) 49 ALR 672 at 674. 86 (2004) 218 CLR 592 at 605 [38]. 87 (2004) 218 CLR 592 at 605 [39]. 88 (2004) 218 CLR 592 at 609 [51]. Hayne While the majority in Butcher said89 that "[t]he agent did no more than communicate what the vendor was representing, without adopting it or endorsing it" (emphasis added), that statement should not be divorced from its context. It was, of course, an accurate description of the agent's conduct, but absence of adoption or endorsement was not taken as concluding in every case the question of contravention of s 52. Channel Seven concerned, and concerned only, the application of s 65A of the Act. Section 65A(1) provided that s 52 (and some other provisions of the Act) did not apply to "a prescribed publication of matter by a prescribed information provider". The trial judge had found that certain television stations had made representations that were misleading or deceptive and those findings were not in issue in this Court. In their joint reasons, French CJ and Kiefel J referred90 briefly to the "conditions that must be satisfied before an information provider is liable in respect of misleading or deceptive representations made by a third party and published by the information provider". Their Honours said91 that "[t]he publication, by an information provider, of third party statements about goods or services, does not, without more, amount to the adoption or making of those statements by the information provider" and referred, in support of the proposition, to the majority reasons in Butcher92. Likewise, Gummow J said93 that "it has become well established that, for the broadcasts ... to give rise to contraventions of s 52 by [the television stations], it was necessary at least for some 'endorsement' or 'adoption' of what was represented on the programs by the relevant third parties". These passages cannot be divorced from their context and treated as an exhaustive statement of the applicable principles. As the reference to Butcher in the joint reasons of French CJ and Kiefel J made plain, they intended no variation of or qualification to what was said in Butcher (or, it may be added, in Yorke v Lucas). And, because there was no occasion to do so, Gummow J left unexplained what would constitute "some 'endorsement' or 'adoption' of what was represented". Gummow J did go on to observe94 that "[t]he evidence 89 (2004) 218 CLR 592 at 605 [40]. 90 (2009) 239 CLR 305 at 321 [43]. 91 (2009) 239 CLR 305 at 321 [43]. 92 (2004) 218 CLR 592 at 605 [38]-[40]. 93 (2009) 239 CLR 305 at 324 [57]. 94 (2009) 239 CLR 305 at 324 [58]. Hayne demonstrated that ... there was at least the necessary endorsement or adoption" in relation to certain of the representations in that case. But these references to endorsement and adoption followed from the way the case had been argued at trial and from the findings of fact which the trial judge had made in response to those arguments. Those findings were not in dispute in the appeal to this Court and no consideration was given in this Court to what "endorsement" or "adoption" might mean in this context. Argument of the present appeal also directed attention to the decisions of the Full Court of the Federal Court in Universal Telecasters95 and Global Sportsman96, in both of which a media corporation published the statement of another. The references made97 in those cases to what then were perceived to be difficulties in deciding whether a corporation's conduct in publishing a misleading statement made by another was conduct that was misleading or deceptive or likely to be so must be read in the light of the later statements made in this Court in Yorke v Lucas and Butcher. One point emerges from both Yorke v Lucas and Butcher. Both point to the importance of identifying the relevant "conduct", having regard to all of the circumstances of the case. In both, the relevant inquiry did not stop short at asking whether it was apparent that the defendant was passing on information supplied by another. In neither was the relevant question posed as whether it was the original supplier of the information or the alleged contravener who made a misrepresentation or whether the defendant "endorsed" or "adopted" any misrepresentation. In both, attention was given to whether, in all of the circumstances of the case, it was clear that the defendant expressly or impliedly disclaimed belief in the truth or falsity of the information. And in both, the defendant's express or implied disclaimer of belief in the truth or falsity of the information communicated was an important element of the facts. It by no means follows from there being in both a disclaimer of belief in the truth of what was represented that the presence or absence of a disclaimer is determinative of the application of s 52. And it is not possible to extrapolate from either or both of Yorke v Lucas and Butcher to some general rule to the effect that, when a corporation was known to be passing on information supplied by another, the corporation could contravene s 52 only if that corporation would have appeared to ordinary or reasonable members of the relevant class to have endorsed or adopted the information. Nor is it possible to extrapolate from either 95 (1978) 18 ALR 531. 96 (1984) 2 FCR 82. 97 Universal Telecasters (1978) 18 ALR 531 at 533-534 per Bowen CJ; Global Sportsman (1984) 2 FCR 82 at 89-90 per Bowen CJ, Lockhart and Fitzgerald JJ. Hayne or both of them to some general rule that would hold publishers of paid advertising that is misleading or deceptive not liable for contravention of s 52 unless the publisher endorsed or adopted the content of the advertisement. That the defendant publishes electronically does not require different principles to be applied in a s 52 case from those explained in Yorke v Lucas and Butcher. But it is necessary to say something more about paid advertising and s 85(3) of the Act. Paid advertising As has been explained, the ACCC alleged that the relevant conduct in this matter was Google making certain representations. That way of putting the case should not be permitted to obscure the fact that displaying search results with sponsored links was itself a form of conduct. (The ACCC alleged that in respect of each of the four advertisements in issue in this case, Google had published the relevant sponsored link but it did not allege that this conduct itself contravened the Act, instead identifying the contravening conduct as making representations.) The act of displaying an advertisement to people who otherwise would not see or hear it is clearly "conduct" capable of misleading or deceiving those who see or hear it. Displaying the advertisement to those people may lead them into error. Whether it is likely to mislead or deceive depends upon how the ordinary or reasonable member of the class of persons to whom the publication was directed would understand what was published. When a print or electronic media corporation publishes a paid advertisement, the reader or viewer of the advertisement will very often recognise readily that what is seen or heard was devised and paid for by the advertiser. The reader or viewer will usually be given no reason not to take the advertisement at its face value. If the advertisement is misleading or deceptive, the reader or viewer will likely be misled or deceived. The conduct of publishing the advertisement has made it available to the reader or viewer. If no more is shown, there seems much to be said for the view that publishing the advertisement is conduct of the kind prohibited by s 52. When ss 52 and 85(3) are read together, it is evident that the Act assumed that the conduct of publishing an advertisement made and paid for by a third party may contravene s 52. Provision of the defence suggests strongly that, but for the defence, the publisher of the advertisement would be liable for a contravention. The defence was only in issue if contravention was first established. The relevant premise for engaging s 85(3) was "a contravention of a provision of Part V ... committed by the publication of an advertisement". Identifying the premise for engagement of s 85(3) in this way might be consistent with including the provision in the Act out of an abundance of caution: Hayne against the possibility that the publication of an advertisement might be held to be a contravention of Pt V. But if the purpose of providing a defence was to deny the possibility that bare publication of an advertisement might be held to contravene Pt V, it is difficult to see why contravention was taken as the premise for its operation. And more tellingly, the defence would have been made available without limitation. The prescription of conditions for engaging the s 85(3) defence is inconsistent with its being treated as no more than a piece of legislative caution. Rather, the prescription of conditions demonstrates that the Act assumed that publication of an advertisement could be conduct that is misleading or deceptive or likely to be so. And more than that, the prescription of conditions for engaging the defence identified the only relevant circumstances in which liability for contravention of the norm of conduct provided by s 52 was to be answered or excused. The statutory assumption that publication of an advertisement could be conduct that contravened s 52 is consistent with an understanding of s 52 that focuses only upon whether conduct is likely to lead another or others into error. To hold that publishing an advertisement may mislead or deceive requires no extreme or strained reading of that section. Describing the result that follows from applying the section to such circumstances as harsh or unintended necessarily assumes, wrongly, that s 52 applied only if the contravener knew that the conduct would (or was likely to) mislead or deceive. Of course, as already noted, s 85(3) could be engaged only where a contravention of s 52 was alleged and would otherwise have been established. But to read s 52 as contravened by the publisher of a third party's advertisement only when the publisher has endorsed or adopted the content of the advertisement would strip s 85(3) of its content. Requiring positive demonstration of endorsement or adoption would strip s 85(3) of its content because, whatever meaning is given to those expressions, they necessarily direct attention to questions different from the issues about knowledge of and reason to suspect a contravention that are posed by s 85(3). Such a construction of the Act should not be adopted. Conclusion For these reasons, I agree with the orders proposed by French CJ, Crennan and Kiefel JJ but do so on the footing that has been described. 125 HEYDON J. This appeal raises questions about two important provisions of the Trade Practices Act 1974 (Cth) ("the TPA"). Section 52(1) provided: "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."98 Section 52(1) appeared in Pt V Div 1 of the TPA. Section 85(3) of the TPA provided: "In a proceeding in relation to a contravention of a provision of Part V … committed by the publication of an advertisement, it is a defence if the defendant establishes that he or she is a person whose business it is to publish or arrange for the publication of advertisements and that he or she received the advertisement for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to a contravention of a provision of that Part."99 Factual background This appeal concerns the business of the appellant, Google Inc ("Google"). That business depends on the World Wide Web ("the web"). The web is a vast system of linked documents to which access may be gained via the internet. Google may be described as a "website operator". Access to the web is obtained by using a "browser". That expression refers to the software used to navigate the web. A person wishing to make documents available on the web specifies an address known as a "Uniform Resource Locator" ("URL"). The URL appears in the address bar at the top of the screen which conveys the information contained on the web. The browser processes the URL to locate the information made available by a website operator. It then translates an underlying code into a webpage visible to an end user. Google operates a free internet search engine. It is accessible on the internet at, among other places, www.google.com.au. Google's business reflects a relationship between Google, end users who conduct searches, and advertisers. Members of the public may conduct a search by entering a word-based query. In response, the search engine displays a results page. Two features of the results page are relevant to this appeal. The first relevant feature of the results page is that it provides a list of links to webpages that may be of interest to the user. The list often runs into several pages. It may run into hundreds of pages. These links are called "organic search results". Each day many millions of search queries are conducted at www.google.com.au, each search taking a fraction of a second. 98 See now s 18(1) of the Australian Consumer Law – Sched 2 to the Competition and Consumer Act 2010 (Cth) ("the Australian Consumer Law"). 99 See now s 251 of the Australian Consumer Law. The other relevant feature of the results page is that Google displays advertisements on it. From that display Google derives revenue. That revenue is the primary source of Google's income. The advertisements were described by the trial judge as "sponsored links". A program called "AdWords" generates the sponsored links. "AdWords" is a "self-serve" system for advertisers. It is owned by Google. It is accessible online. It allows advertisers to create their own advertisements. And it allows advertisers to bid to display the advertisements on Google's results pages. Advertisers use the system subject to Google's terms and conditions. Those terms and conditions provide that advertisers are responsible for the content of their advertisements. The terms and conditions require advertisers to abide by policies designed to ensure that their advertisements are clear and accurate. The "AdWords" system thus provides a low cost advertising platform which is readily accessible to businesses of all sizes. It is used by hundreds of thousands of advertisers. Via trigger select keywords "AdWords", advertisers their advertisements. These keywords are based on the search queries of Google users. An advertisement will only be displayed on the results page for a Google search containing the selected keywords if the advertiser wins an online auction. Bids in that auction are assessed by price and other factors. Where an advertisement is displayed, it consists of three elements. The first is a headline chosen by the advertiser, "the ad headline". It is accompanied by a link to the advertiser's website. The second is an additional message chosen by the advertiser, which was referred to in the evidence as "the ad text". The third is the web address of a website chosen by the advertiser, the URL. When a user clicks on the link and is taken to the advertiser's chosen website, the advertiser pays a fee to Google determined by the advertiser's bid. Google has policies through which persons aggrieved by an advertiser's use of a trademark or business name can request that Google block the offending advertisements. The issue the Australian Competition The controversy in this appeal is narrower than the controversy at the trial. The controversy in this appeal springs from a particular allegation of the and Consumer Commission respondent, ("the ACCC"). The allegation is that certain advertisements which appeared on Google's results pages were misleading and deceptive. Those advertisements were devised by the advertisers, not Google. Google does not now dispute the ACCC's allegation. A representative example of the advertisements that the ACCC complains of was composed thus. The ad headline and the ad text referred to "Just 4x4s Magazine". That magazine contains advertisements for the sale of certain motor vehicles. The web address, however, directed users to www.tradingpost.com.au. The Trading Post also contains advertisements for certain motor vehicles. The advertisement falsely suggested an affiliation between the two publications. After a trial in the Federal Court of Australia, Nicholas J found that Google had not breached s 52(1) of the TPA. The Full Court of the Federal Court of Australia (Keane CJ, Jacobson and Lander JJ) reversed that decision. The Full Court made the following declaration, inter alia: "[T]hat Google … by publishing, or causing to be published, on results pages on the Google Australia website on 29 May 2007, results which were advertisements for The Trading Post's business and website with the headline being 'Just 4x4s Magazine', in trade or commerce represented, contrary to the fact, that: there was a commercial association between Trading Post and Just 4x4s Magazine; and thereby engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the TPA." That is, the Full Court found that Google had made an implied representation as to the existence of a commercial association between the Trading Post and Just 4x4s Magazine. The case before the trial judge So far as relevant to this appeal, the ACCC's case at trial, as perceived by the trial judge, was that Google had made the pleaded misrepresentations by publishing the advertisements. The trial judge saw the ACCC's case as being that each of the advertisements conveyed a misrepresentation because of its content considered in isolation. That is, his Honour did not perceive the ACCC's case as relying on the content of the advertisements in combination with any other material on the results page. The ACCC specifically abjured any contention that Google intended to mislead or deceive. Hence the ACCC did not contend that Google was "knowingly concerned" in a contravention by any advertiser within the meaning of s 75B(1)(c) of the TPA. The liability which the ACCC alleged was entirely strict. The ACCC did not allege that Google intended to make any of the implied representations found by the Full Court. The trial judge's reasoning The trial judge's reasoning was as follows. First, the trial judge found that the class of people to which the impugned advertisements were directed comprised people with three characteristics. They had access to a computer connected to the internet. They had a basic understanding of computers, the web and search engines. And they had an elementary understanding of how the Google search engine worked. Secondly, the trial judge found that the impugned advertisements were all described on the Google results page as "Sponsored Links" in a clear way which was not likely to go unnoticed. Thirdly, the trial judge found that ordinary reasonable members of the class in question would appreciate that a "sponsored link" is a type of advertisement. Those persons knew that Google was a commercial enterprise. They knew that Google did not charge users to use its search engine. Hence they would have understood that Google had to generate revenue by other methods. One method was causing advertisements to appear on its results pages. The trial judge said that there was no evidence to suggest that any ordinary or reasonable person within the relevant class believed Google to be free of advertisements. And his Honour inferred that there were not likely to be any such persons in future. The trial judge found that ordinary and reasonable users in the relevant class would infer that "sponsored links" were links for which businesses seeking to promote their goods and services made payments to Google – that is, that they were advertisements. The trial judge said that there was no evidence that any person had been misled into thinking that the impugned advertisements were not advertisements. Nor did any survey or other evidence based on observation or experiment support the view that this was likely. Fourthly, the trial judge found100: "ordinary and reasonable members of the class would have understood that: a sponsored link is an advertisement that includes a headline incorporating a link to a website address displayed beneath the headline; if a person clicks on the headline they [sic] will be taken to the website address displayed beneath the headline; the website address displayed beneath the headline will usually be the website address of the advertiser; the identity of the advertiser will usually be apparent from the website address displayed beneath the headline." Fifthly, the trial judge found that ordinary and reasonable members of the relevant class would have understood that it is the advertiser who usually determines the content of an advertisement. Thus they would have understood 100 Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd (2011) 197 FCR 498 at 540 [187]. that the message which an advertisement conveyed was a message from the advertiser rather than from the publisher. The trial judge found that ordinary and reasonable members of the relevant class would be most unlikely to have understood any information that the impugned advertisements conveyed as being endorsed or adopted by Google. Rather, those members would have understood that the message conveyed was a message from the advertiser which Google was passing on for what it was worth. Google did no more than represent that the advertisements were advertisements. In short, the trial judge found that although Google did not expressly disclaim making the misrepresentations, the way the advertisements were presented excluded that possibility. The Full Court's reasoning The trial judge analysed the question "Did Google make the misrepresentations?" from the point of view of ordinary and reasonable members of the relevant class. The ACCC did not contend, and the Full Court did not conclude, that his Honour was wrong to do so. And the ACCC did not contend, and the Full Court did not conclude, that any of the findings of fact summarised above were wrong. Why, then, did the Full Court disagree with the trial judge's conclusion that the representations had not been made by Google? It disagreed because it considered that the trial judge had posed the wrong question. It said101: "The question is not whether the advertisement was an advertisement for Google or for a third party, but whether Google's conduct in response to the user's interaction with Google's search engine was misleading. As an issue of fact, that question reasonably admits of only one answer." The ACCC defended that reasoning in this Court. It submitted that the case was about whether Google itself had made the misleading or deceptive representations, not about whether Google had adopted representations made by the advertisers. The ACCC argued that it was Google that decided whether the advertisements would be published, and in what form. The ACCC pointed out that Google displayed the blue clickable headline containing the relevant search term in collocation with the advertiser's URL as part of its response to a given inquiry. ACCC accepted that the advertiser provided the keywords. It accepted that the advertiser selected the keywords for the purposes of having the advertiser's advertisement published when those keywords were searched on the Google search engine. But the ACCC submitted that it was only Google that 101 Australian Competition and Consumer Commission v Google Inc (2012) 201 FCR "[made] available the functionality, being the clickable blue headline, which [was] the basis for the making of the representation." The Full Court's reasoning rested on three propositions. First, that Google displayed the advertisements "in response to the entry of the user's search term"102. Secondly, that the advertisements were generated by Google's AdWords system. Thirdly, that the reasoning in Universal Telecasters (Qld) Ltd v Guthrie103 had not been affected by later decisions. That case held that when a television station broadcast an advertisement containing spoken words it made a statement. Google's "response" The Full Court's reasoning depends heavily on the idea that Google "respond[ed] to the entry of the user's search term". But that is implicit in the fact that Google operates a search engine business. Everything on the results page appears there because a user has entered a search query. If the Full Court's reasoning leads to the conclusion that a trader in Google's position always "makes" the representations in the third party advertisements, it is a very extreme conclusion. It would put traders in Google's position at risk of committing numerous contraventions of the TPA unless the s 85(3) defences were available. That conclusion is not lightly to be accepted. If it is not accepted, in each case there will be a factual choice available. In some circumstances a trader in Google's position might "make" third party advertisement. In others it might not. Whether the trader "makes" the representations must turn on considerations different from and additional to whether the trader responded to the entry of the user's search term. Save in one aspect, the ACCC's submissions which the Full Court accepted did not isolate what those considerations are. The submissions did not face up to three facts. The first is that the misleading conduct lay entirely within the text of the advertisements. The second is that each advertisement consisted of three elements dictated by the advertiser – the ad headline, the ad text, and the advertiser's URL. The third is that the impugned material was what users understood to be an advertisement paid for by a third party, what Google intended to be an advertisement paid for by a third party, and what was in fact an advertisement paid for by a third party. the representations the 102 Australian Competition and Consumer Commission v Google Inc (2012) 201 FCR 503 at 521 [88] per Keane CJ, Jacobson and Lander JJ. 103 (1978) 18 ALR 531 at 533 and 547. The aspect of the Full Court's reasoning which does isolate a crucial consideration was put thus104: "What the user is … told is that the advertiser's message and the advertiser's URL are an answer to the user's query about the subject matter of the keyword which includes the identification of a competitor of the advertiser. … The conduct is Google's because Google is responding to the query and providing the URL. It is not merely passing on the URL as a statement made by the advertiser for what the statement is worth. Rather, Google informs the user, by its response to the query, that the content of the sponsored link is responsive to the user's query about the subject matter of the keyword." The Full Court then gave an example105: "The most obvious example of the falsity of the response and of the fact that it is Google's conduct, is the Harvey World Travel sponsored link. The user enters that keyword because the user is seeking information about Harvey World Travel. Instead, the user is given the URL of one of Harvey World Travel's competitors. In this example, the user is not told merely that the advertiser has provided Google with this URL. Rather, Google tells the user that the URL provided below is the contact address for information about Harvey World Travel. The whole purpose of the user's inquiry, to which Google responds by providing organic links and sponsored links, is to answer the user's query. The enquiry is made of Google and it is Google's response which is misleading." This reasoning locates the misleading conduct outside the advertisement itself. It treats the misleading conduct as resting on a misrepresentation that the impugned advertisements, even if not in themselves misleading, would be responsive to the search queries made by users. This reasoning was impermissible for the following reasons. First, the ACCC did not successfully demonstrate that the allegation on which its arguments rested was pleaded. Secondly, the trial judge found that, though material on the results page which did not consist of advertisements – ie the organic search results – was positioned according to relevance, Google had not 104 Australian Competition and Consumer Commission v Google Inc (2012) 201 FCR 503 at 521 [91]-[92] per Keane CJ, Jacobson and Lander JJ. 105 Australian Competition and Consumer Commission v Google Inc (2012) 201 FCR 503 at 521-522 [93] per Keane CJ, Jacobson and Lander JJ. represented that the material which did consist of advertisements were organic search results or positioned according to relevance. In other words, the advertisements might be for goods or services quite different from the material in organic search results. The ACCC did not challenge that finding of the trial judge. Indeed, it had admitted it was accurate at trial. Thirdly, there was no evidentiary inquiry at the trial as to whether ordinary and reasonable users of the Google search engine expected or were motivated by a desire that third party advertisements would be relevant to their search queries, and, if so, how they would be relevant and how that expectation or motivation arose. The Full Court's reasoning assumes what it is that users want to find out when they make a query of Google's search engine. There was no evidence to support that assumption and no finding about it at trial. Even if Google had represented to users that use of its search engine might reveal advertisements relevant to them, it does not follow that Google was adopting or endorsing what the advertisements said. In Butcher v Lachlan Elder Realty Pty Ltd106, an estate agent represented to a potential purchaser of property that a brochure about that property contained "all the details for the property" and "everything you need to know". That representation was held to make an additional representation: that the brochure "was a very helpful document which conveniently put together in a single place the answer to some questions that purchasers typically asked"107. But it did not follow from the fact that the estate agent made that additional representation that he had personally made a misleading statement which appeared in the brochure itself. AdWords The Full Court relied on Google's AdWords system to support its conclusions in the following way108: "Google's search engine is the information retrieval system which the user employs to navigate his or her way through the web using keywords that deliver links to other locations on the web. Google supplies its advertising customers with the ability to select keywords which are expected to be used by persons making enquiries through Google's search engine. The ability of advertisers to select 'broad match' keywords enables them to trigger sponsored links through Google's search engine based on known associations which are determined by Google's proprietary algorithms. 106 (2004) 218 CLR 592; [2004] HCA 60. 107 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 596 [6]. 108 Australian Competition and Consumer Commission v Google Inc (2012) 201 FCR Although the keywords are selected by the advertiser, perhaps with input from Google, what is critical to the process is the triggering of the link by Google using its algorithms. That is a further reason to conclude that it is Google's conduct as a principal, not merely as a conduit, which is involved in each of the four instances that form the subject matter of this appeal. The circumstance that the sponsored link is displayed as Google's response to a user's insertion of a search term into Google's search engine prevents any analogy between this case and the case of the bill-board owner or the owner of a telephone network or the publisher of a newspaper or a telecaster who simply displays an advertisement of another. In those cases the medium is not concerned with the content of the advertiser's message: in the four instances in question here Google created the message which it presents. Google's search engine calls up and displays the response to the user's enquiry. It is Google's technology which creates that which is displayed. Google did not merely repeat or pass on a statement by the advertiser: what is displayed in response to the user's search query is not the equivalent of Google saying here is a statement by an advertiser which is passed on for what it is worth." (emphasis added) This reasoning contains an error of law and an error of fact. Is it the case that traders in Google's position will necessarily have contravened s 52(1) of the TPA if they do anything more than "repeat or pass on" material? No. That limited view is an error of law. For example, the brochure which the estate agent passed on in Butcher v Lachlan Elder Realty Pty Ltd had not been prepared by the vendor and given to the estate agent. The estate agent had prepared it from information given by the vendor109. A related difficulty is the Full Court's treatment of what French J said in Gardam v George Wills & Co "The innocent carriage of a false representation from one person to another in circumstances where the carrier is and is seen to be a mere conduit, does not involve him in making that representation. … When, however, a representation is conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as 109 (2004) 218 CLR 592 at 593 and 596-598 [7]-[11]. 110 (1988) 82 ALR 415 at 427, quoted with approval by Gummow J in Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305 at 324 [57]; [2009] HCA 19. adopting it, then he makes that representation. It will be a question of fact in each case." (emphasis added) The Full Court quoted the first and third sentences, but not the italicised sentence. The Full Court said that the "reaction of the ordinary and reasonable member of the class is not solely determinative of" whether Google was a mere conduit. Yet the italicised sentence suggests that the liability depends on whether the relevant section of the class regards the "carrier" as having adopted the representation. Concentration on how a representation would be perceived by ordinary and reasonable members of the relevant section of the class is supported by other authority. Thus in Butcher v Lachlan Elder Realty Pty Ltd111 the test for assessing the "conduct" of the agent was "what a reasonable person in the position of the purchasers, taking into account what they knew, would make of the agent's behaviour". Here, there is no basis on which it could be concluded that ordinary and reasonable members of the relevant class would have regarded Google as adopting the advertisements. Neither the trial judge nor the Full Court reached that conclusion. This leads to the error of fact in the passage from the Full Court's reasons quoted above. It is true that Google created the picture which the user saw on the screen. It put in place the technology which enabled the advertisements to be displayed. But it did not create "the message" sent by means of that technology. The trial judge found that the advertisements were "created by advertisers"112. His Honour found that Google "received" them for publication113. His Honour said that while "Google made available to … advertisers the technical facility that enabled keywords to be uploaded which, if made the subject of a search by a user of the Google search engine, might then generate … sponsored links [and] … the technical facility which allowed for keyword insertion to occur …, it was [the advertisers], not Google, that chose to use these facilities to produce headlines … in response to search queries"114. And the trial judge found that advertisers created sponsored links by selecting keywords which, if entered by users, triggered advertisements (whether by exact match, phrase match or broad 111 (2004) 218 CLR 592 at 608 [50] per Gleeson CJ, Hayne and Heydon JJ. 112 Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd (2011) 197 FCR 498 at 511 [53]. 113 Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd (2011) 197 FCR 498 at 543 [200] (a finding made in relation to s 85(3) of the TPA, but relevant on this issue as well). 114 Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd (2011) 197 FCR 498 at 527 [117]. match) in particular geographic locations selected by the advertisers. None of these findings were overturned by the Full Court. In this Court, the ACCC advanced the following submission: "it is Google's AdWords system that takes a user's keyword, entered as a search query, and dynamically inserts it into the advertisement. And it is Google's Ad[W]ords system which determines 'whether, how and in what order' an advertisement is published in response to a user's query." "What was misleading or deceptive about the … advertisements was the particular collocation of the advertiser's URL with a headline consisting of keywords the advertisements against the background of the special functionality of the headline enabling a user to click on it and be taken to the advertiser's website." that Google's AdWords system had inserted into The ACCC repeatedly stressed the word "dynamic" in what Google called its "dynamic keyword insertion feature". But these submissions do not invalidate the trial judge's conclusions. If Google's provision of its technological facilities to display the advertisements caused it to be the maker of the advertisements, one of two conclusions would follow. Either there would be an exceptionally wide form of absolute liability for those who publish information in the media, or there would be a distinction between advertising in online media and advertising in traditional media. Neither conclusion should be reached. The ACCC repeatedly said that Google "inserted keywords" into the advertisements. It is more accurate to say, as the ACCC did at another point, that the "dynamic keyword insertion feature allows an advertiser to nominate keywords which, when they 'match' the user's search query, are automatically inserted into the headline of the advertisement … so that 'the headline replicates the whole or a part of the relevant search query'." That quotation is from the trial judge's reasons115. The trial judge correctly said116: "Keyword insertion is a technical facility the availability of which enables the publication of an advertisement in a particular form. While 115 Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd (2011) 197 FCR 498 at 525 [102]. 116 Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd (2011) 197 FCR 498 at 541-542 [193]. the technology employed in online advertising may be quite different to [sic] that associated with the publication of advertisements in newspapers or magazines or the broadcasting of television or radio advertisements, it is nevertheless clear the publisher or broadcaster of such advertisements always provides at least some of the technical facilities that permit the relevant advertisement to be seen or heard. It does not follow that these publishers or broadcasters have thereby endorsed or adopted any information conveyed by the advertisement or that they have done anything more than pass it on for what it is worth." that The keyword insertion facility does not insert a user's search query into an advertisement. Rather, it inserts a keyword chosen by the advertiser for inclusion in or as the ad headline if that keyword triggers the advertisement. The keyword may or may not be the same as the search query. The use of the facility does not achieve any special result. The same advertisement with the same ad headline can be displayed following the same search query using a "fixed" ad headline. All that keyword insertion does is save the advertiser from entering multiple fixed ad headlines to reflect different keywords. Every advertisement, whether called up by the keyword insertion facility or by the fixed ad headline mechanism, is predetermined by the advertiser. The ACCC submitted that "Google employees assisted … advertisers to 'maximise' the effectiveness of their sponsored link campaigns". This submission was raised by notice of contention. It criticised the Full Court's view that the assistance which Google employees provided to advertisers was irrelevant. One problem with that submission is that Google employees were not involved in some of the impugned advertisements at all. A further problem is that no analysis of the evidence showed that Google personnel had made the remaining advertisements. An additional problem is that the ACCC did not explain how the conclusion that an ordinary and reasonable member of the relevant class would not understand Google to be making the misleading statements could be undercut by a finding that Google employees assisted advertisers in composing their advertisements. As the Full Court correctly said, that finding might be relevant to an allegation that Google was liable as a secondary participant under s 75B of the TPA, but no such allegation was made. Universal Telecasters (Qld) Ltd v Guthrie Google strongly attacked the correctness of dicta by Bowen CJ, Nimmo and Franki JJ in Universal Telecasters (Qld) Ltd v Guthrie117. That is a decision which the ACCC did not cite in either its written or its oral submissions to this Court. In contrast, the ACCC relied on the case in the Full Court. The first 117 (1978) 18 ALR 531. ground of its notice of appeal complained that the trial judge had erred in holding that it did not apply. The Full Court held that later case law "has not altered the legal operation of s 52 of the [TPA] as it was explained by Bowen CJ"118. In Guthrie's case, a television broadcaster broadcast an advertisement for cars. The advertisement made false or misleading statements concerning the existence or amount of future price rises of the advertised cars once sales tax relief ceased. The television broadcaster was charged under s 53(e) of the TPA with making those statements. The prosecution failed because Bowen CJ and Franki J decided, over Nimmo J's dissent, that s 85(3) of the TPA applied. For that reason, the propositions enunciated by the majority on the issue whether the defendant had itself made the statements were obiter dicta. On that issue, all three members of the Court considered that the defendant had made a statement under s 53(e) of the TPA even though the advertisement had been prepared by an advertising agency on the instructions of the advertiser. The reasons for judgment of Nimmo and Franki JJ can be dealt with briefly. Nimmo J stated the defendant's argument119: "it was the advertising agency that made the statements and all that the [defendant] did was provide the means by which they were published." His Honour rejected the argument because of an inference from s 85(3)120: "[T]he text of the advertisement was disseminated to potential consumers by the [defendant] in its telecast which made no reference to the advertising agency. In my view the making and publishing of the statements in this case were contemporaneous and mutually inclusive. Such a state of affairs appears to me to have been contemplated by the legislature for s 85(3) provides a defence to a person whose business is to publish or arrange for the publication of advertisements and who received an advertisement for publication in the ordinary course of business but did not know and had no reason to suspect that its publication would amount to a contravention of Pt V of the [TPA]." Franki J too relied solely on an inference from s 85(3). His Honour said121: 118 Australian Competition and Consumer Commission v Google Inc (2012) 201 FCR 503 at 519 [80] per Keane CJ, Jacobson and Lander JJ. 119 Universal Telecasters (Qld) Ltd v Guthrie (1978) 18 ALR 531 at 538. 120 Universal Telecasters (Qld) Ltd v Guthrie (1978) 18 ALR 531 at 539. 121 Universal Telecasters (Qld) Ltd v Guthrie (1978) 18 ALR 531 at 547. "in general, where a television station telecasts an advertisement that contains certain spoken words, it is proper to hold that the television station has made a statement. Section 85(3) of the Act also points in the same direction. I consider that by telecasting the advertisement the [defendant] made the statement as alleged. Similar legislation elsewhere often contains some provision either excluding a television station or newspaper from its operation or providing a defence in one way or another, often somewhat comparable with the defence provided by s 85(3) of the [TPA]." It will be necessary to return to the significance of s 85(3). Bowen CJ's reasons are significant because the Full Court saw them as stating the law. His Honour said of the defendant's argument122: "The argument was illustrated by supposing a case where the television station broadcast a statement by an individual along the following lines: 'Today the Federal Treasurer said — "Sales tax on all motor vehicles will be reduced by 25 per cent as from 1 July next".' It was argued that the television station in this instance should be held to make the statement about the Treasurer and his announcement but should not be held to make the statement regarding sales tax. Where there are express words such as those in the illustration or where there are express words of adoption or exclusion, this may, perhaps, be a proper line to draw. If so, then logically it would seem difficult to distinguish the case where, by necessary implication the statement was made for or on behalf of another. These will be matters for decision when an appropriate case arises. In the fields of consumer protection legislation and television broadcasting, it appears to me that any doctrine of necessary implication, if it is proper to import it at all, will have to be closely confined. No evidence was tendered as to what would be the reaction of particular viewers. Obviously one difficulty would be to lay down a rule for determining when such an implication should be made. Would the mere fact that it was an advertisement which, in the nature of things, featured the name of the advertiser be sufficient? The television medium is such that the impact is immediate and ephemeral. A viewer cannot go back over the broadcast. For him it is necessarily a matter of impression. If one sought to find a test by which one might determine whether the implication should or should not be made, should one test it by asking whether the judge would make that implication if he were the viewer or, leaving the judge on one side, whether an ordinary reasonable person 122 Universal Telecasters (Qld) Ltd v Guthrie (1978) 18 ALR 531 at 533. viewing it would make that implication or whether some less sophisticated or less perceptive viewer would do so. None of these tests would appear to me to be satisfactory. The relevant provisions of the Trade Practices Act are directed to protecting all viewers including those who are particularly susceptible to the influence of persuasion by advertisement. The fact that a statement is clearly an advertisement for a particular advertiser would not seem to constitute a sufficient basis in the circumstances to justify a holding that the statement was not made by the television station. While the terms of the advertisement in the present case may fairly raise the inference that the statement in it is the statement of Metro Ford, there is insufficient material in it to raise the inference that it is not also the statement of Universal Telecasters. Even if it be proper to distinguish statements, on the basis they are expressly or by necessary implication statements of the advertiser and not of the television station, the statement in this case is not seen to be such a statement. It may be suggested that this interpretation places a heavy burden upon television stations. However, it is no doubt because of this burden that the defences in s 85 are provided." (emphasis added) These passages, apart from the emphasised words, were quoted by the Full Court123. It is possible to distinguish what Bowen CJ said from the present problem. He was discussing television viewers, who cannot go back over the broadcast. This case concerns users of search engines, who can study the relevant results page in a close and leisurely fashion. But it is undesirable to rest the outcome of the present appeal merely on that point of distinction. The common factor in the Full Court's reasoning in Guthrie's case is s 85(3). There is an available argument, though it is a very extreme one, that unless the defence under s 85(3) is made out, any publication by one person of a misleading message created by another contravenes the misleading and deceptive conduct provisions. The ACCC did not put that argument in terms. One weakness in the argument is that while it might have force in relation to the relatively narrow field with which s 85(3) deals – the publication of advertisements by persons whose business it is to publish or arrange for the publication of advertisements – the problems that very wide absolute liability for 123 Australian Competition and Consumer Commission v Google Inc (2012) 201 FCR misleading and deceptive conduct create can arise in fields outside advertising124. For example, in Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd, Bowen CJ, Lockhart and Fitzgerald JJ pointed out the problems that arise in relation to national newspapers125: "the contents of a [national] newspaper … cover an extremely broad range, with wide variations both in form and subject matter. Law lists, weather forecasts, stock exchange reports, reviews, articles on special subjects by identified experts, photographs, cartoons, etc. all accompany what might be more narrowly considered 'news', which commonly relates both to local and foreign events. Some articles would more readily be taken as statements by the newspaper than others. For example, an item of local news, such as a statement that a local company had failed, particularly if unaccompanied by a by-line, might often fit readily into that category. On the other hand, foreign news such as the report of the commencement of a war in another part of the world might, of its very nature, often suggest that the newspaper was doing no more than retailing information which had been supplied to it." The ameliorative effect of s 85(3) – its role in lightening the "heavy burden" to which Bowen CJ referred in Guthrie's case – exists in relation to advertisements, but not in relation to other fields. That leaves open the possibility of universal absolute liability in those other fields. That is a factor pointing against the correctness of reasoning that leads to that result. By the expression "heavy burden", Bowen CJ was referring to the "absolute" nature of liability under s 52. It is absolute rather than strict, because no defence of honest and reasonable mistake has been expressly granted by the TPA or identified as a 124 Among the leading cases not involving advertising are Yorke v Lucas (1985) 158 CLR 661 at 666; [1985] HCA 65; Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1985) 58 ALR 549 at 586-587; The Saints Gallery Pty Ltd v Plummer (1988) 80 ALR 525 at 530-531; Amadio Pty Ltd v Henderson (1998) 81 FCR 149 at 257. See also Gardam v George Wills & Co Ltd (1988) 82 ALR 415 at 427 per French J ("Nobody would expect that the postman who bears a misleading message in a postal article has any concern about its content or is in any sense adopting it. The same is true of the messenger boy or courier service"); Lake Koala Pty Ltd v Walker [1991] 2 Qd R 49 at 58; Gurr & Gurr v Forbes (1996) ATPR ¶41-491 at 42,144-42,145; Harkins v Butcher (2002) 55 NSWLR 558 at 568 [45] (in its approval of Dean v Allin & Watts [2001] 2 Lloyd's Rep 249 at 257-258); Charben Haulage Pty Ltd v Environmental & Earth Sciences Pty Ltd (2004) ATPR (Digest) ¶46-252; Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (No 2) (2009) 74 ACSR 373 at 380-381 [28]-[33]. 125 (1984) 2 FCR 82 at 91-92. matter of implication126. All that the TPA offered in addition to s 85(3) was the defence that s 65A provided127. But this defence has limited application only. It is probably unavailable to Google in this case. In addition, s 85(6) provided a defence for persons who acted honestly and reasonably and ought fairly to be excused, but only if they were natural persons128. In Guthrie's case, Bowen CJ and Franki J did not go so far as to infer absolute and universal liability wherever the s 85(3) defence could not be made out. Franki J qualified his remarks with the words "in general", an expression permitting exceptions to any supposed rule of absolute and universal liability. Bowen CJ accepted that express words of adoption could result in liability and express words of exclusion could result in immunity from liability. He also accepted, though with caution, the idea that if express words of exclusion suffice for immunity, a necessary implication that the defendant only made the statement for or on behalf of someone else could also lead to immunity. The proposition that express words of adoption or exclusion, or necessary implications to that effect, are relevant is not inconsistent with later authority. The Full Court in the present appeal was probably correct to say that the only difference between what Bowen CJ said and what later cases have held is that the latter gave what Bowen CJ called "necessary implication[s]" a wider role in conferring immunity. On the other hand, the trial judge was also probably correct to say that the law has developed since Guthrie's case to the point that it is hard to see how Guthrie's case can provide assistance129. There is certainly a significant line of authority in this Court130, in the Full Court of the Federal Court of Australia131, 126 Gillies, "Misleading and deceptive conduct: Immunising the intermediary – the conduit defence", (2006) 14 Trade Practices Law Journal 209 at 210, 219 (referring to Proudman v Dayman (1941) 67 CLR 536; [1941] HCA 28). 127 See now s 19 of the Australian Consumer Law. 128 See now s 85 of the Competition and Consumer Act 2010 (Cth). 129 Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd (2011) 197 FCR 498 at 540 [185]. 130 Yorke v Lucas (1985) 158 CLR 661 at 666; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 605 [38]-[40]; Australian Competition and Consumer Commission v Channel Seven Brisbane Pty Ltd (2009) 239 CLR 305 at 319-320 [38]-[40], 321 [43] and 323-324 [57]. 131 Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 89 (stressing the factual nature of the inquiry); Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd (1985) 58 ALR 549 at 586-587; The Saints Gallery Pty Ltd v Plummer (1988) 80 ALR 525 at 530-531; Gardam v George Wills & Co Ltd (1988) 82 ALR 415 at 427; Dalton v Lawson Hill Estate Pty Ltd (2005) 66 IPR 525 (Footnote continues on next page) and in the Court of Appeal of the Supreme Court of New South Wales132, for the proposition that it is possible for the defendant to pass on or report a misleading statement by another person without being liable. The appellant cited this line of authority for that proposition. The respondent did not deny that the authorities stood for that proposition and did not attack either the authorities or the proposition. At no stage in oral argument was any attack suggested. The respondent's position was simply that the facts in this appeal extended beyond the proposition. In consequence the outcome of this appeal turns almost entirely on the facts. The reasoning underpinning those authorities rests on the fundamental idea that if a person repeats what someone else has said accurately, and does not adopt it, there is nothing misleading in that person's conduct. What, then, is the role of s 85(3)? It operates as a backstop in cases where the defendant did make the misleading statement, but the fairly rigorous criteria for immunity stated in s 85(3) are made out. The ACCC correctly submitted that this case turns on its facts. So did Guthrie's case. The correctness of Guthrie's case on its own facts may or may not be doubted. But the result does not influence this Court to any particular outcome in the present appeal. The ACCC's submission boiled down to the proposition that Google had made misrepresentations in the impugned sponsored links because the content of those sponsored links was responsive to the user's query through Google's AdWords program. If that proposition were sound, that submission would mean that Google would be liable unless it could discharge the burden of proving that it had no reason to suspect that an advertisement was in contravention of the TPA within the meaning of s 85(3). That is an unacceptably extreme submission. The ACCC did not attack the proposition that if Google had expressly indicated that it was not making any representation inherent in the advertisements it would not have been liable under s 52. If that is so, then an exclusion by what Bowen CJ called a necessary implication must have the same result. at 543 [82], 544 [88] and 545 [94]; Eric Preston Pty Ltd v Euroz Securities Ltd (2011) 274 ALR 705 at 727-728 [198]-[212]; Dib Group Pty Ltd v Coolabah Tree Aust-Wide Pty Ltd [2011] FCAFC 57 at [190]-[197]. 132 Abigroup Contractors Pty Ltd v Sydney Catchment Authority (2004) 208 ALR 630 at 648-649 [89]-[95]; Orix Australia Corp Ltd v Moody Kiddell & Partners Pty Ltd [2006] NSWCA 257 at [70] and [79]; Borzi Smythe Pty Ltd v Campbell Holdings (NSW) Pty Ltd [2008] NSWCA 233 at [51] and [82]-[87]. Orders The appeal should be allowed with costs. Orders 1-5 made by the Full Court of the Federal Court of Australia on 3 April 2012 and orders 1-3 made by the Federal Court on 4 May 2012 should be set aside. In lieu thereof, the appeal to the Full Court of the Federal Court of Australia should be dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT [2012] HCA 50 14 November 2012 ORDER Appeal allowed. Set aside the order of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 5 December 2011 and, in its place, order that: the appeal to that Court be allowed; the appellant's conviction be quashed; and a new trial be had. On appeal from the Supreme Court of New South Wales Representation T A Game SC with S J Buchen for the appellant (instructed by Legal Aid (NSW)) L A Babb SC with J H Pickering for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Appeal – Misdirection – Application of "proviso" – Appellant convicted of murder – Prosecution alleged at trial that either appellant hit and killed deceased or alternatively another person hit and killed deceased pursuant to joint criminal enterprise with appellant – Jury instructed to consider case of joint criminal enterprise as alternative to primary case that appellant hit and killed deceased – Court of Criminal Appeal held no evidence of joint criminal enterprise – Whether "no substantial miscarriage of justice" occurred. Words and phrases – "proviso", "substantial miscarriage of justice". Criminal Appeal Act 1912 (NSW), s 6(1). FRENCH CJ, HAYNE, CRENNAN AND KIEFEL JJ. At the appellant's trial in the Supreme Court of New South Wales for the murder of Dale Kevin Muldoon, Julie Anne Quinn gave evidence that she saw the appellant beat the deceased to death by hitting him with his fists, a child's baseball bat and a small axe. The appellant's niece, known in the trial as "C", gave evidence that Ms Quinn had told her that it was she (Ms Quinn) who had struck the deceased with an axe and that she had done so because the deceased was hitting the appellant. At the appellant's trial, the prosecution's primary case was that the appellant alone had hit and killed the deceased. But, as an alternative case, the prosecution submitted that even if Ms Quinn had struck the fatal blow or blows, the appellant was guilty of murder because Ms Quinn had been part of a joint criminal enterprise with the appellant. The trial judge instructed the jury that, if they considered that the prosecution did not establish that the appellant was solely responsible for the fatal injuries inflicted on the deceased, they should then consider whether the appellant had used the baseball bat, and Ms Quinn the axe, "pursuant to an agreement to cause the death of the deceased with the intention of killing him or inflicting grievous bodily harm upon him". The appellant was convicted. His appeal against conviction was dismissed1 by the Court of Criminal Appeal of New South Wales (Beazley JA, Hidden and R A Hulme JJ). The Court of Criminal Appeal held2 (and it is not now disputed) that there was no evidence at trial which would have permitted the jury to conclude that Ms Quinn and the appellant had engaged in any joint criminal enterprise to kill or inflict grievous bodily harm on the deceased. It followed, so the Court of Criminal Appeal held3, that the trial judge (Buddin J) was wrong to direct the jury that, if not persuaded beyond reasonable doubt that the appellant had struck the fatal blow or blows, the jury might nonetheless convict the appellant of murder if satisfied that the appellant and Ms Quinn had been engaged in a joint criminal enterprise to kill or do grievous bodily harm to the deceased. Although there had thus been a wrong decision of a question of law, the Court of Criminal Appeal concluded4 that no substantial miscarriage of justice 1 Cooper v The Queen [2011] NSWCCA 258. [2011] NSWCCA 258 at [72]. [2011] NSWCCA 258 at [73]. [2011] NSWCCA 258 at [256]. Hayne Crennan had actually occurred and that the proviso to s 6(1) of the Criminal Appeal Act 1912 (NSW) applied. By special leave the appellant appeals to this Court. He submits that the Court of Criminal Appeal was wrong to apply the proviso. That submission should be accepted. The appeal must be allowed, the appellant's conviction quashed and a new trial had. In these circumstances, it is neither necessary nor appropriate to consider the appellant's other submissions about the adequacy of certain aspects of the trial judge's directions or about whether trial counsel's not having adduced evidence about the deceased's mental condition occasioned a miscarriage of justice. It is necessary to say something further about the facts of the matter and the course of proceedings against the appellant. The facts and proceedings below On 5 May 2003, the mother of the deceased told police that her son was missing. She said that she had not seen or heard from him since 22 March 2003. A New South Wales State election was held on that day and the deceased's mother told police that the deceased had gone to vote but had not returned. On 18 June 2003, police arrested the appellant, Ms Quinn and Mr Kevin Denne. Mr Denne told police that he had been present when the appellant took the body of the deceased to the Ben Bullen State Forest and buried it. Mr Denne took police to the State Forest and pointed out where the deceased's body had been buried. In September 2004, the appellant and Ms Quinn were jointly indicted on one count of murder and one count of disposing of the deceased's body with intent to pervert the course of justice. The appellant pleaded not guilty to murder but guilty to the count about disposing of the body; Ms Quinn pleaded not guilty to both counts. An order was made that the two accused be tried separately. Ms Quinn's trial proceeded first. She was acquitted of murder but the jury could not agree with respect to the second count. A "no bill" was subsequently entered in respect of the second count. In May and June 2005 the appellant was tried on the charge of murder. At his trial, expert evidence was led that post mortem examination of the deceased showed that he had four wounds to the head. At least two of those wounds were associated with skull fractures that the forensic pathologist described as requiring "a lot of force" to inflict. Some but not all of the wounds Hayne Crennan could have been caused by a blunt object like a baseball bat or the flat side of an axe; one of the wounds could have been caused by the back of an axe. In this Court, both the appellant and the respondent accepted that the evidence did not permit the jury to conclude beyond reasonable doubt that only one weapon was used. The respondent submitted that the evidence showed that two weapons were used. The prosecution alleged that these wounds were inflicted on the deceased on 22 March 2003 at the house in Lithgow occupied by the appellant and one of his children with Ms Quinn and one of her children. The appellant did not dispute these matters at trial. He denied that he had inflicted the wounds. As has already been noted, Ms Quinn gave evidence at the trial. She said that the appellant had struck the deceased several times first with his fists, then with a child's baseball bat and finally with a small axe. Unsworn evidence was also adduced from Ms Quinn's then eleven year old son who described the appellant punching the deceased. Ms Quinn said that she took her son into a bedroom after the appellant punched the deceased. Mr Denne and C each gave evidence describing his or her part in the appellant's burying the body in the State Forest on the day after the deceased was killed. Mr Denne also gave evidence that after the body had been buried the appellant had dropped a hessian bag into a fire at a rubbish tip. (This bag was said to have contained the murder weapons.) When cross-examined by trial counsel for the appellant, C accepted that after she had driven the appellant and Mr Denne to the State Forest with the body of the deceased in the boot, she had returned to the house of the appellant and Ms Quinn. At the house she had a conversation with Ms Quinn about whose body had been taken to the State Forest and about what had happened. C accepted that Ms Quinn had told her in that conversation that she had struck the deceased in the face with an axe because he was hitting the appellant. Because Ms Quinn was available to give evidence at the trial and the asserted facts were fresh in her memory when she made the representation, C's evidence of the out of court statement by Ms Quinn was admissible5 as evidence of the truth of the assertions made in the statement. Ms Quinn denied that she had made the statement that C attributed to her. Ms Quinn denied that she had struck the deceased and her evidence was that the 5 Evidence Act 1995 (NSW), s 66. Hayne Crennan appellant (and only the appellant) had struck the deceased. The appellant did not give evidence. The Court of Criminal Appeal held6 that the trial judge was wrong to direct the jury that joint criminal enterprise was a possible path to the appellant's conviction. That is, the Court decided that there had been a "wrong decision of [a] question of law"7. But the Court concluded8 that there was "no substantial miscarriage of justice within the meaning of the proviso". The proviso It is now well established9, and it must again be emphasised, that, as this Court held in Weiss v The Queen10, there are three propositions which are fundamental to the application of the proviso to the common form criminal appeal statute. First, the appellate court must itself decide whether a substantial miscarriage of justice has actually occurred. Second, the task is objective, and is to be performed with whatever are the advantages and disadvantages of deciding an appeal on the record of the trial. Third, the standard of proof of criminal guilt is proof beyond reasonable doubt. Performance of the appellate court's task requires11 the court to undertake its own independent assessment of the evidence and it further requires12 the court to determine: [2011] NSWCCA 258 at [73]. 7 Criminal Appeal Act 1912 (NSW), s 6(1). [2011] NSWCCA 258 at [256] per Beazley JA (Hidden and R A Hulme JJ agreeing). 9 See, for example, AK v Western Australia (2008) 232 CLR 438 at 455 [52]; [2008] HCA 8; Cesan v The Queen (2008) 236 CLR 358 at 393-394 [123]; [2008] HCA 52; Baiada Poultry Pty Ltd v The Queen (2012) 86 ALJR 459 at 465-466 [21]-[29]; 286 ALR 421 at 428-430; [2012] HCA 14. 10 (2005) 224 CLR 300 at 315 [39]; [2005] HCA 81. 11 Weiss (2005) 224 CLR 300 at 316 [41]. 12 Weiss (2005) 224 CLR 300 at 316 [41]. Hayne Crennan "whether, making due allowance for the 'natural limitations' that exist in the case of an appellate court proceeding wholly or substantially on the record13, the accused was proved beyond reasonable doubt to be guilty of the offence on which the jury returned its verdict of guilty". And although "[n]o single universally applicable description of what constitutes 'no substantial miscarriage of justice' can be given"14, it is necessary to bear at the forefront of consideration in this case that, as was pointed out15 in Weiss: "It cannot be said that no substantial miscarriage of justice has actually occurred unless the appellate court is persuaded that the evidence properly admitted at trial proved, beyond reasonable doubt, the accused's guilt of the offence on which the jury returned its verdict of guilty." (emphasis added) The Court of Criminal Appeal In this case, Beazley JA (who gave the principal reasons of the Court of Criminal Appeal) correctly identified16 the applicable principles. The reasons examined17 the evidence that had been given at trial. Beazley JA referred18 to the "unlikelihood of C's evidence being correct" but nowhere expressly identified what it was about that evidence that was "unlikely" to be correct. It may be that it can be inferred from the comparison undertaken in the reasons19 between an account of events which had the deceased hit in the face with an axe and the post mortem findings of the forensic pathologist that the unlikelihood or improbability that was being identified concerned the content of what C testified Ms Quinn had 13 Fox v Percy (2003) 214 CLR 118 at 125-126 [23] per Gleeson CJ, Gummow and Kirby JJ; [2003] HCA 22. 14 Weiss (2005) 224 CLR 300 at 317 [44]. 15 (2005) 224 CLR 300 at 317 [44]. See also Baiada Poultry (2012) 86 ALJR 459 at 466 [29]; 286 ALR 421 at 430. 16 [2011] NSWCCA 258 at [250]. 17 [2011] NSWCCA 258 at [251]-[255]. 18 [2011] NSWCCA 258 at [251]. 19 [2011] NSWCCA 258 at [42]-[46], [56]-[57], [251]. Hayne Crennan told her, rather than whether a conversation to the effect described had occurred. But whether or not this is so need not be examined. What is presently important is that the Court of Criminal Appeal did not conclude that it was satisfied beyond reasonable doubt that either Ms Quinn did not say the words attributed to her or the description of events she gave to C was false. Rather, the point seen as determinative of the proviso appears to have been20 that "when the whole of the evidence is considered, the case that the appellant at least struck the blow that caused [one of the most serious injuries to the deceased] is such, that ... there has been no substantial miscarriage of justice within the meaning of the proviso to s 6(1)". This reasoning does not apply the principles set out in Weiss. Applying the proviso in this case As the reasons of Beazley JA recorded21, the prosecution had submitted in the Court of Criminal Appeal that the evidence "suggested" that the injury in question had been caused by a baseball bat (emphasis added). Beazley JA said22 that "[t]he probability was ... that a baseball bat was used" (emphasis added). But neither the submission nor the conclusion asserted satisfaction beyond reasonable doubt. The appellant could not be found guilty of murder unless it was proved beyond reasonable doubt that he had struck the fatal blow or blows. In this Court, the respondent accepted that the jury could not have concluded on the evidence at trial that only one implement had been used to cause the deceased's injuries. And the respondent did not dispute in argument in this Court that the record of the evidence at trial did not permit an appellate court to conclude which blow or blows inflicted on the deceased had caused his fatal injuries. Ms Quinn's evidence, if believed, could found a conclusion to the requisite standard that the appellant had struck all the blows. If that were so, it would not matter which implement caused death. If, however, there was a reasonable possibility that Ms Quinn had struck the deceased with an axe (as C's evidence suggested) the appellant was not guilty of murder unless blows he struck were 20 [2011] NSWCCA 258 at [256]. 21 [2011] NSWCCA 258 at [255]. 22 [2011] NSWCCA 258 at [255]. Hayne Crennan the cause of death. Confined as the Court of Criminal Appeal necessarily was to the record of proceedings at the trial, it was not open to it to decide beyond reasonable doubt that either Ms Quinn did not say what C had reported or that what Ms Quinn was reported to have said was false. Without taking at least one of those steps, the Court of Criminal Appeal could not be persuaded beyond reasonable doubt that the appellant alone had struck all the blows inflicted on the deceased. Unless satisfied beyond reasonable doubt that the appellant alone had hit the deceased, the Court of Criminal Appeal could not decide that he was guilty of murder. Unless satisfied beyond reasonable doubt that the appellant was guilty of murder, the Court of Criminal Appeal could not be satisfied that no substantial miscarriage of justice had actually occurred. In this Court, the respondent sought to support the conclusion reached by the Court of Criminal Appeal by submitting that, if the jury applied the directions given at trial about what amounted to a joint criminal enterprise, the jury would necessarily have rejected that aspect of the prosecution's argument at trial. It followed, so the respondent submitted, that the jury must have decided the case by deciding that only the appellant had hit the deceased and that no substantial miscarriage of justice had actually occurred. This submission should not be accepted. It depended upon relegating the prosecution's alternative case at trial to what the respondent described in this Court as a "faint suggestion ... cancelled out in the summing up by the trial judge's direction" about joint criminal enterprise. But the trial judge did not treat the prosecution's alternative case as some "faint suggestion". Indeed, the trial judge expressly rejected the submission by trial counsel for the appellant that joint criminal enterprise should not be left to the jury. In his charge to the jury the trial judge described the prosecution's alternative case as inviting the jury to accept that Ms Quinn had said what C described, to accept that Ms Quinn was right to say that she had hit the deceased with an axe, but to reject that Ms Quinn did so in defence of the appellant. The trial judge instructed the jury that if it was a reasonable possibility that Ms Quinn made the admission attributed to her by C and that the admission was a truthful and reliable account of events, joint criminal enterprise was not established because, on those hypotheses, there was a reasonable possibility that Ms Quinn had been acting in defence of another. But the jury were not told that the prosecution's alternative case (dependent on accepting only part of what Ms Quinn was alleged to have said) was not open. And it cannot now be demonstrated this alternative case. Demonstration of that conclusion depends upon the jury having rejected what the judge's instructions had identified as an available view of the facts. jury must have rejected that the Hayne Crennan Orders The appeal must be allowed. The orders of the Court of Criminal Appeal should be set aside and in their place there be orders that: (a) the appeal to that Court is allowed; (b) the appellant's conviction is quashed; and (c) a new trial be had. HEYDON J. Dale Kevin Muldoon died on the evening of Saturday 22 March 2003. He died at the house of the appellant, Bradley Douglas Cooper. The other persons in the house at that time were the appellant's de facto wife, Julie Anne Quinn, then aged about 29, and her son, known as J, then aged nine. Mr Muldoon's death was caused by one or other of two head injuries. The death was not an unfortunate accident. He had not tripped over the carpet. Someone killed him. Who? There were two possibilities. The only form of the prosecution case now pressed is that the appellant, then aged 39, attacked Mr Muldoon with blows from his fists, a child's baseball bat, and a small axe. Ms Quinn's testimony supported that case. It was also supported by the appellant's behaviour after Mr Muldoon's death. He made admissions to three witnesses on 23 March 2003 that he had killed Mr Muldoon. He also procured C, his niece, then aged 18, and Kevin James Denne to help him remove Mr Muldoon's body from his house, bury it in the Ben Bullen State Forest and dispose of a hessian bag containing a baseball bat and an axe on which the appellant said there was DNA. The appellant also changed his clothing at Ben Bullen State Forest. He persuaded others to tell untruths on his behalf. And he urged others to keep what they knew from the police. The appellant threatened to murder three people if they did not comply with his wishes. The defence was not obliged to have a "case". But it did have one, even though it bore no burden of proof in relation to it. That "case" rested on the testimony of C. C said that Ms Quinn had confessed to her that she had hit Mr Muldoon in the face with an axe – a proposition which Ms Quinn denied. The defence "case" was also adumbrated in suggestions put in cross-examination to Ms Quinn. One was that, because she was pregnant, she had not wished to be interrogated by the police. Another was that the appellant decided, after discussing the matter with her, to get rid of Mr Muldoon's body in order to protect her. Another was that Mr Muldoon attacked the appellant with a baseball bat and with a knife. Ms Quinn denied these suggestions. Thus the defence "case", only partly supported by evidence, was that though the appellant may have inflicted injuries in the course of a fight started by Mr Muldoon, he was provoked or acting in self-defence, and the fatal blow was struck by Ms Quinn. After a trial by jury, the appellant was convicted of murder in the Supreme Court of New South Wales. The Court of Criminal Appeal dismissed his appeal. The appellant raises two points in this Court. Counsel's failure to introduce evidence Ground 2.3 of the Notice of Appeal in this Court was: "The Court of Criminal Appeal erred in holding that defence counsel's failure to adduce relevant evidence in relation to the deceased's mental condition and the related failure to cross-examine the deceased's grandmother did not occasion a miscarriage of justice." In the Court of Criminal Appeal the appellant contended that there were various deficiencies in how defence counsel presented his case at trial. The Court of Criminal Appeal rejected some of these contentions, but accepted two. The first was that counsel had omitted to adduce certain evidence about Mr Muldoon's mental state in her cross-examination of Mr Muldoon's grandmother, Mrs Muldoon. The second was that counsel had omitted to tender some documents held by the Mid Western Area Health Service. Those documents related to visits by Mr Muldoon to Lithgow District Hospital. They supposedly recorded that Mr Muldoon appeared to be affected by drug induced psychosis, and he claimed to suffer from mental health problems, including possibly mild schizophrenia. Finally, the documents also revealed contacts between Mrs Muldoon and Lithgow District Hospital in which Mrs Muldoon stated that she had at times felt a little afraid of Mr Muldoon because of his violent and erratic behaviour. In this Court the appellant submitted that the uncalled evidence would have provided "a compelling basis for an inference that the deceased suffered from a psychotic illness substantially aggravated by the consumption of alcohol and drugs, making him prone to paranoid, erratic and dangerous behaviour." Both in this Court and in the Court of Criminal Appeal, the appellant submitted that there had been "a miscarriage of justice" within the meaning of s 6(1) of the Criminal Appeal Act 1912 (NSW) ("the Criminal Appeal Act"). In considering that submission the Court of Criminal Appeal posed the question: "would a jury have been likely to entertain a reasonable doubt about guilt if all the evidence had been before it?" It answered that question in the negative. Thus in its view the ground of appeal before it was not made out. That made it unnecessary to consider whether the proviso to s 6(1) of the Criminal Appeal Act applied in relation to this ground. The proviso is to the effect that notwithstanding the fact that the Court of Criminal Appeal is of opinion that the point raised by the appeal might be decided in favour of the appellant, it may dismiss the appeal "if it considers that no substantial miscarriage of justice has actually occurred." It was not necessary to consider the application of the proviso because the particular point raised by the appeal was not decided in favour of the appellant. However, the Court of Criminal Appeal later applied the proviso to this ground of appeal as well as to a joint criminal enterprise ground of appeal which is discussed below23. 23 See below at [47]-[101]. The appellant submitted that the Court of Criminal Appeal posed the wrong test. He questioned whether instead of requiring only a "likelihood" that the jury would entertain a reasonable doubt, the correct test required an examination of whether there was a "significant possibility" that it would do so24. He also contended that the correct analysis of that likelihood or possibility turned on the fairness of the trial25. The resolution of this appeal does not require either point to be decided. There are difficulties in the Court of Criminal Appeal's criticisms of the appellant's trial counsel. One difficulty is that counsel for the appellant in the Court of Criminal Appeal submitted that the evidence given by trial counsel for the appellant to the Court of Criminal Appeal should be rejected as unsatisfactory. In some respects, in a simple contest of credibility, the Court of Criminal Appeal preferred the evidence of the appellant to that of the appellant's trial counsel. That preference is very surprising. The appellant bore the burden of proving the facts necessary to establish before the Court of Criminal Appeal that on the new evidence there had been a miscarriage of justice at the trial. The appellant, who was serving a 22 year gaol sentence, had much to lose if he failed to discharge it. In a criminal trial there are limits to the extent to which the accused's interest in acquittal can be taken into account. But the factual dispute before the Court of Criminal Appeal was not part of a criminal trial. Further, the appellant had had a very bad criminal record from the age of 16, extending over 23 years. In seriousness, his convictions ranged from driving offences, stealing and crimes of dishonesty, to assault and aggravated robbery. He had served two terms of imprisonment. He was on parole at the time of Mr Muldoon's death. The most recent item in his criminal record was a plea of guilty, in the presence of the jury, to perverting the course of justice in the aftermath of Mr Muldoon's death. At least that part of the record was before the Court of Criminal Appeal. It was not clear whether or not any other part of that criminal record was before the Court of Criminal Appeal. It is not suggested that the evidence of barristers in good standing is always to be preferred to the evidence of witnesses with bad criminal records, but the existence of the appellant's record renders the Court of Criminal Appeal's preference for the appellant's testimony remarkable. A further difficulty sprang from Mrs Muldoon's testimonial position. She said that her grandson was not dangerous, and that on one relevant occasion he to Lithgow District Hospital for a stomach problem only. had gone 24 See Nudd v The Queen (2006) 80 ALJR 614 at 622 [24]; 225 ALR 161 at 170; [2006] HCA 9. 25 TKWJ v The Queen (2002) 212 CLR 124 at 148 [76]; [2002] HCA 46. Mrs Muldoon had taken the same position in an interview with the appellant's trial counsel. In that interview, Mrs Muldoon had also said that she was not afraid of Mr Muldoon, but for him, lest he be a danger to himself. The Crown prosecutor had told the appellant's trial counsel that the Crown had access to other evidence to that effect. It followed that Mrs Muldoon would probably have strongly cross-examination to the effect that her grandson was a psychotic prone to erratic and violent behaviour when under the influence of drugs and alcohol. To break that resistance down might have required the employment of robust forensic methods. That robustness might have alienated sympathy from the appellant. There was thus much to be said for avoiding this risk by not seeking to shake Mrs Muldoon from her preferred position. resisted any attempt to obtain evidence from her And there is another difficulty. It is that the conduct by the appellant's trial counsel of his case as a whole, in circumstances where the appellant chose not to testify, or call evidence, with a view to denying or explaining the many damaging items of evidence against him, suggests considerable professional competence. This makes it harder to support the criticisms which the appellant now makes of his trial counsel through his new counsel. The appellant greatly exaggerated the extent to which the hospital documents supported the view that Mr Muldoon was prone to acts of irrational violence (as distinct from experiencing possible mental health problems). In fact only two documents are material. One document stated: "Brought to [Lithgow District Hospital] by concerned family members. Drug induced psychosis. Bizarre/dangerous [behaviour]. Settled in hospital, [follow up] requested." It is not clear whether the source of the second and third sentences was a family member not qualified to state any expert conclusion, or a medically qualified member of the hospital staff who did not witness the primary evidence on which the conclusion was based. In the second document, a Probation and Parole officer recorded that Mrs Muldoon had stated "that she felt a little afraid of [Mr Muldoon] due to his violence and erratic behaviour at times". Despite this second-hand hearsay, the primary evidence of Mrs Muldoon was likely to have been quite different – that she felt afraid for Mr Muldoon. The decision of the appellant's trial counsel not to challenge Mrs Muldoon or tender the documents was a sound exercise of professional judgment. The unelicited evidence would not have advanced the appellant's case materially. The appellant's "case" had to be that he had not struck any blow which caused Mr Muldoon's death and that Ms Quinn had struck at least one. Quite apart from what Mrs Muldoon might have been induced to say against her will, and quite apart from the records, there was evidence that Mr Muldoon had a psychotic disorder and was prone to dangerous behaviour when under the influence of drugs or alcohol. There was also evidence that Mr Muldoon was under the influence of drugs or alcohol or both on the evening of 22 March 2003. But how did that evidence, or further evidence to the same effect, establish that, or even raise a reasonable doubt about whether, Ms Quinn struck a blow causing his death and the appellant did not? The appellant never answered that question. There is no doubt that violence took place. Mr Muldoon's state might suggest that he insulted the appellant in such a way as to provoke violence, or that he attacked the appellant. But whoever started the quarrel, it did not immediately escalate into mortal violence. The vital question is what happened when it began to escalate in that way. On that question, Mr Muldoon's state when the quarrel began casts no light. The appellant submitted that if Mr Muldoon was in a psychotic state, it would support a suggestion put to Ms Quinn that after the appellant struck Mr Muldoon, Mr Muldoon picked up the baseball bat and struck the appellant. He also submitted that it would call in question J's evidence that the violence began with the appellant repeatedly punching Mr Muldoon. However, J was not cross-examined to suggest that his account was wrong. Indeed, parts of the cross-examination of Ms Quinn conducted by the appellant's trial counsel assumed that J's account was correct. The evidence of Mr Muldoon's medical state does not negate the prosecution theory of the case. It does not even raise a significant possibility of a reasonable doubt about it. It casts no light on what happened during the encounter between Mr Muldoon and an assailant, whoever that assailant was. The proviso: background The second point is raised in other grounds of appeal. They relate to the proviso. One version of the prosecution case against the appellant was that he was guilty of murder on the ground that he was solely responsible for the death of Mr Muldoon. Another version was that the appellant was guilty of murder because of his participation in a "joint criminal enterprise" with Ms Quinn. The Court of Criminal Appeal found, and the respondent now accepts, that the alternative case should not have been left to the jury. However, the Court of Criminal Appeal considered that this did not occasion any substantial miscarriage of justice, and that the appeal should be dismissed. It thus applied the "proviso" to s 6(1) of the Criminal Appeal Act26. The appellant's submissions to this Court on the proviso fell into two categories. 26 See above at [39]. The first category comprised submissions to the effect that the trial judge's error was of a kind which "by its very nature" meant that an appellate court was inevitably and always prevented from applying the proviso. The second category comprised submissions to the effect that even if the first category of submissions failed, in the particular circumstances of this appeal the proviso ought not to be applied. Did the trial judge's error "by its very nature" prevent application of the proviso? The appellant submitted that it was not possible to apply the proviso because of the seriousness of the error the Court of Criminal Appeal found. He cited an authority referring to "the possibility that the proviso may not be engaged if a trial was so irregular that no proper trial had taken place."27 He also referred to discussions of whether the proviso cannot be applied where there is a "fundamental" error or an error going "to the root of the proceedings"28. There are problems in the appellant's reliance on these authorities. The first problem is that some of the authorities referred to suggest that it is preferable, indeed mandatory, to concentrate on the actual words of s 6(1) of the Criminal Appeal Act rather than attempting to apply a gloss on them. Thus, for example, it is not correct to distinguish between fundamental and non-fundamental errors and then to seek to characterise a particular error as fundamental. The second problem is that one of the authorities the appellant relied on is Handlen v The Queen29. The appellant submitted that Handlen v The Queen "is a recent example of a case involving an analogous error" to that which, on the appellant's case, the Court of Criminal Appeal made in these proceedings. The appellant submitted that in that case "the majority … concluded that the nature of the error meant that it was not open to apply the proviso." However, the analogy the appellant seeks to draw breaks down for two reasons. One reason is that in Handlen v The Queen there was a single prosecution case: that two drug importations were the result of a joint criminal enterprise to import drugs into Australia. In contrast to the present proceedings, there was no alternative case to the effect that the drug importations were the result of one of the appellants 27 Evans v The Queen (2007) 235 CLR 521 at 533 [39] per Gummow and Hayne JJ; [2007] HCA 59. 28 Gassy v The Queen (2008) 236 CLR 293 at 307 [34] per Gummow and Hayne JJ; [2008] HCA 18, discussing Wilde v The Queen (1988) 164 CLR 365 at 373; [1988] HCA 6. 29 (2011) 86 ALJR 145; 283 ALR 427; [2011] HCA 51. acting alone. The other reason is that the appellants in that case had been convicted on the joint criminal enterprise case under s 11.2 of the Criminal Code (Cth). The difficulty in the joint criminal enterprise case in Handlen v The Queen was that no such crime existed under s 11.2. That difficulty does not arise here, because a joint enterprise crime exists. The difficulty which does arise here is that there was no evidence that the joint enterprise crime had been committed. It is one thing to decide that the proviso cannot be applied when the single form in which a prosecution case was advanced assumed the existence of a crime which did not exist. It is another thing to decide that the proviso cannot be applied where, although one of the two forms in which a prosecution case was advanced existed in law but there was no evidence to support it, there was another which existed in law and which was supported by evidence. The authorities the appellant cited do not support his contention that the kind of error the trial judge made by its nature precludes the application of the proviso. That contention must fail. Are there reasons for not applying the proviso in the particular circumstances? The second category of the appellant's submissions about the proviso included the complaint discussed above about counsel's conduct of the trial. Since counsel's conduct has not been shown to have caused a miscarriage of justice, it may be left out of account30. The balance of the second category included the following. First, the appellant said that the misdirections about joint criminal enterprise, and related considerations, meant that reduced weight should be given to the jury verdict of guilty against the appellant. However, the Court of Criminal Appeal's conclusion is supported without giving any weight to the jury verdict. Secondly, the appellant submitted that the Court of Criminal Appeal erred in its approach to the proviso. He submitted that all it did was examine what Ms Quinn said and what C said only on the balance of probabilities. It did not analyse the conflicts in their evidence in light of the criminal standard of proof. In the following passages in the reasons for judgment of the Court of Criminal Appeal, the appellant relied on the words appearing in bold type: "The unlikelihood of C's evidence being correct is underscored by Dr Little's evidence. On Dr Little's uncontradicted evidence, there were no fractures and no lacerations to the deceased's face, which was the part of the body that C alleged Ms Quinn had said she had hit. Dr Little also gave evidence that there were no blood vessels in that part of the body 30 See above at [41]-[46]. from which blood would spurt and therefore spray onto the walls and ceiling. It will be recalled that C not only said Ms Quinn said that blood had sprayed onto the wall and ceiling, but also that she had seen a stain on the wall and ceiling. It will also be recalled that Ms Quinn gave evidence that the appellant Ms Quinn's evidence was punched the deceased several times. corroborated in this regard by the evidence of her son, J, who said that he saw the appellant punch the deceased, and also by C and Mr Denne, each of whom said that the following day they noticed the appellant's knuckles were swollen. J's evidence differed in some respects from other evidence given by Ms Quinn, C and Mr Denne, particularly in relation to the time and sequence in which people came and went from the house on the night of 22 March and the following morning. However, those matters were incidental to the events of that night. J's recollection that he saw the deceased being punched was not challenged in cross-examination. Dr Little gave evidence that there was no bruising to the deceased's face … It is not clear from the cross-examination whether the questions were intended to relate to the deceased being hit on the face with an axe or other implement, or whether it related to the deceased being punched. However, the question was cast in terms of the deceased having received 'significant blows' to the face, which would seem to indicate that the question was directed to him being hit with an implement. Dr Little's reply would also seem to indicate that that was her understanding. The Crown also relied upon the fact that there was no evidence of any defensive injuries on the deceased's body, indicating that the attack upon him occurred suddenly, as Ms Quinn had stated. Finally, the Crown relied upon the fact that the evidence suggested that injuries 2-4 and 4 in particular, had been caused by a baseball bat. There was no suggestion in the evidence or in the case advanced by the appellant in cross-examination of Ms Quinn that anyone else had used the baseball bat. The probability was also that a baseball bat was used, given that … C gave evidence that the handle of a baseball bat was sticking out from the hessian bag the appellant removed from the house and threw onto the fire at the tip." (italicised words in original; words in bold do not appear in bold in original) There is a question whether the facts referred to need to be established beyond reasonable doubt, as distinct from being facts which if found on the balance of probabilities might, taken together with other facts, support a conclusion that the elements of the offence were proved beyond a reasonable doubt31. Even assuming that they do, the appellant's submission should be rejected. It depends on taking the references to "unlikelihood" and "probability" that appear in bold type in isolation. They should not be taken in isolation, but in context. When taken in context, those words are not to be read as references to satisfaction on the balance of probabilities. They are to be read as references to satisfaction on the criminal standard of proof. The relevant context is afforded by the paragraph preceding those paragraphs just quoted. In that preceding paragraph the Court of Criminal Appeal set out three passages from Weiss v The Queen32. Each passage referred to the need for an appellate court considering the proviso to be satisfied that guilt was proved beyond reasonable doubt. There are numerous other passages in that case to the same effect33. The Court of Criminal Appeal would have been familiar with those passages. A less direct context is afforded by the Court of Criminal Appeal's quotation of passages from the trial judge's summing up. Those passages referred to the need for the prosecution to prove guilt beyond reasonable doubt. The Court of Criminal Appeal also quoted from the summing up delivered by the judge who presided over Ms Quinn's trial. The Court of Criminal Appeal emphasised a passage in that summing up stating that the central issue for the jury was proof by the prosecution of its case beyond reasonable doubt. Beazley JA has presided over many cases in the Court of Criminal Appeal which have involved application of the proviso. Hidden and R A Hulme JJ have been immersed in criminal litigation for the whole of their long professional careers. No doubt occasionally Homer can nod. But the proposition that the Court of Criminal Appeal thought that the civil standard of satisfaction sufficed in relation to the proviso and that the criminal standard need not be applied is, to me, completely incredible. Thirdly, the appellant said that the Court of Criminal Appeal was subject to "natural limitations" in assessing the credit of Ms Quinn in her evidence against the appellant and the credit of C in reporting Ms Quinn's confession that she attacked Mr Muldoon with an axe. However, the Court of Criminal Appeal's conclusion is supported quite independently of reasoning affected by the "natural limitations" an appellate court is subject to in assessing a witness's credibility when compared to the jury. The fact that the Court of Criminal Appeal did not 31 See Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 535-539, 570 and 599; [1984] HCA 7; Shepherd v The Queen (1990) 170 CLR 573; [1990] HCA 56; Glass, "The Insufficiency of Evidence to Raise a Case to Answer", (1981) 55 Australian Law Journal 842 at 850-851. 32 (2005) 224 CLR 300 at 316-317 [41], [44] and [45]; [2005] HCA 81. 33 (2005) 224 CLR 300 at 312 [29], 315 [38]-[40], 316 [42] and 317 [43]. see Ms Quinn or C give oral testimony was not a disadvantage preventing it from applying the proviso. That is so for the following reasons. The duty of an appellate court considering the proviso was stated thus in "The appellate court must make its own independent assessment of the evidence and determine whether, making due allowance for the 'natural limitations' that exist in the case of an appellate court proceeding wholly or substantially on the record, the accused was proved beyond reasonable doubt to be guilty of the offence on which the jury returned its verdict of guilty." (footnotes omitted) The assessment demands a survey of the whole of the trial record35. The task is to be carried out by each member of the appellate court personally. The relevant question to be asked is not whether the jury which returned the guilty verdict would have done so if there had been no error. Nor is it whether a reasonable jury would convict36. Instead, the question for each member of the appellate court personally is whether that member thinks that the evidence properly received established the accused's guilt beyond reasonable doubt. The appellant submitted: "So long as an impermissible path to conviction was left open for the jury, particularly in circumstances in which it could not be said that the defence case was adequately placed before the jury, assertions about the strength of the prosecution case do not provide a basis for the application of the proviso." That is not so. It flatly contradicts what was said in Weiss v The Queen. Questions about applying the proviso do not arise unless there has been an appellable error in the conduct of the trial – whether the error lies in leaving open an impermissible path to conviction, or in a failure to put the defence case, or in any other of many possible ways. But once there is an appellable error, it is necessary to examine the strength of the prosecution case as part of an inquiry into whether the appellate court is convinced of guilt beyond a reasonable doubt. 34 (2005) 224 CLR 300 at 316 [41] per Gleeson CJ, Gummow, Kirby, Hayne, 35 Weiss v The Queen (2005) 224 CLR 300 at 317 [43]. 36 Weiss v The Queen (2005) 224 CLR 300 at 314-316 [35]-[40]. Before stating the conclusions which the assessment leads to in this case, it is desirable to describe the evidence of the three primary non-expert witnesses. C's testimony. C gave evidence by closed circuit television and under indemnity. She broke down in the witness box more than once. She said that on the morning of 23 March 2003, the appellant called her and asked her to give him a hand. She picked him and Ms Quinn up at his house. She said that, after dropping J at school, they went to Mr Denne's house and spent some minutes there. She then went back to her car with the appellant and Mr Denne. Ms Quinn stayed at Mr Denne's house. The appellant asked C to drive to a bottle shop. C said: "he then explained to me that somebody – he didn't mention names – had come around to the house, threatened the kids [sic] lives and he'd put a stop to it." In cross-examination, C was asked: "Q. What I'm putting to you is that what your uncle said to you around that time were words to this effect, okay, and I'm not suggesting these are the exact words either, but it was more to this style; that a person had come around and been threatening his children and Mr Denne's children – are you nodding, it – do you – – [A]. I – I'm nodding in listening to what you're saying sorry. Q. Okay, do you agree that that was part of what he said? A. To the best of my recollection is what is in my statement. It's possible that that's what could have been said but – – Q. And that he indicated to you that he had had a fight with a person? A. That – I really can't remember exactly the conversation. Q. But it was certainly to that effect wasn't there, that there'd been a fight? A. Yes. Q. And so far as the precise words that were used, you really can't be sure what they were? A. Not a hundred per cent no." C did not retract her evidence that the appellant admitted that he had put a stop to the person making the threats. That person could only have been Mr Muldoon. On C's evidence, the appellant said that he had "put a stop to it" by killing Mr Muldoon. cross-examination, she said that it was Mr Denne who had purchased the beer. then purchased some beer. the appellant testified that The party returned to the appellant's house. The appellant and Mr Denne took Mr Muldoon's body out of the house and placed it in the boot of C's car. A hessian bag was placed in the boot as well. Two handles were protruding from it. They looked like the handles of a baseball bat and an axe. C then drove the appellant and Mr Denne away. The appellant told C not to exceed 80 kilometres per hour in order to avoid attracting attention. C noticed that the vehicle was being followed by a motorbike, the driver of which was an acquaintance of hers. She told the appellant this. The appellant told C to pull over and tell the acquaintance that she was taking the appellant and Mr Denne camping. C complied with this instruction. The appellant then instructed C to stop at a small clearing in the Ben Bullen State Forest. The appellant and Mr Denne got Mr Muldoon's body and the hessian bag with the protruding handles out of the boot. C asked the appellant what the bag was for. She testified that he said: "we have to get rid of it because it had DNA on it". C was not cross-examined with a view to suggesting that the appellant did not say this. The appellant then told C to go back to Lithgow, and said that he and Mr Denne would find their own way home. The appellant also told C to tell Ms Quinn that he and Mr Denne would find their own way home. On her return to the appellant's house, C met Ms Quinn. The transcript records the following evidence: "Q. Did you speak to her? A. Yes. Q. What did you say to her? A. I asked her, I, I told her what my uncle had told me to tell her and asked her what went on. Q. What'd she say? A. That, that was when she told me that it was Dale, she said they were having a fight. Q. Who was having a fight? A. My uncle and Dale and it got out of hand. I'm not sure whether it was, she said that she hit him or whether it was my uncle that hit him. Q. When you say 'hit him', who do you mean by 'him'? A. Hit Dale. Q. Did she say what Dale was hit with? A. With an axe." (emphasis added) C then testified that she saw blood on the wall and the ceiling. The transcript continued: "Q. Was there any conversation between you and [Ms Quinn] about the blood on the wall and the ceiling? A. I asked her what the stain was and she said – – Q. The stain, I beg [your] pardon, yes. A. – – that was, that it was blood. Q. Did she say anything about how it got there? A. Just that it sprayed. Q. Did she say where it sprayed from? A. It was from Dale. Q. Did she say anything about where Dale was hit with the axe? A. On the face. Q. Did she say who it was that hit him on the face? A. I was sure she said that she hit him." (emphasis added) C testified that at some time after 23 March 2003, but before she spoke to the police in June 2003, the appellant told her that "the police had been to [the appellant's] house and spoke to [Ms Quinn]. [Ms Quinn] said that she didn't know who I was. [The appellant] told me just to pretend that [Mr Muldoon] was still here and don't tell the police anything." The transcript continued: "Q. Did you say anything to him when he said that to you? A. I told him that I can't lie. Q. What did he say to that, if anything? A. He just told me that, you know, I'd be able to do it. Q. Did he say anything else apart from that? A. He thought that Kevin [Denne] was [the one] who told the police and he said that if – whoever tells the police is going to end up in the same place that Dale did." In cross-examination, C made it plain that she did not know the identity of the deceased person she had driven to the Ben Bullen State Forest. The cross-examination elicited one part of what C had said to the police in June 2003. That part concerned what Ms Quinn had said to her when she returned alone from Ben Bullen State Forest: "I asked her who [the body] was because [the appellant] wouldn't tell me, and she told me it was Dale Muldoon … and the officer said 'yeah' and then you continued 'and she told me about the fight that her – that [the appellant] and Dale had had' and the police officer said 'okay what did she [say] happened in the fight'. 'She said that Dale came around and they were all chummy, talking as friends as they do and then Dale, they got alcohol delivered by taxi, right, and then they were drinking and then Dale said something, I got told Dale said something about the kids and he was going to kill Chantelle and all this sort of stuff which is [the appellant's] daughter' and then the police officer said 'all right', then you said 'and [the appellant] just – she said [the appellant] just went ballistic and started hitting him and – and Dale started hitting [the appellant] and [Ms Quinn] didn't know what to do so she grabbed the axe and hit him in the head with it and she said it cut him straight down the face'. The police officer said '[Ms Quinn] said that?' and you said 'yes' and the police officer said 'all right' and then you said 'and that's what he's told me so that was, she said, I didn't know what she said, I didn't know what to do because I thought he was going to kill [the appellant] and so that's where it ended …'." (emphasis added) C had also made statements to the police about the axe which Ms Quinn had allegedly used to hit Mr Muldoon. C said: "I'm not sure which way that it had hit his head but he was still alive and blood was spurting on the roof and all around the house and stuff like that" (emphasis added). By "roof" she meant "ceiling". Then, speaking of a blood stain on the ceiling, C told the police: "I noticed the one on the roof when I came back to speak to [Ms Quinn] and when I came back and it was still on the roof that was when she told me that was where she'd hit [Mr Muldoon] with the axe and it had sprayed the roof" (emphasis added). C also said to the police that Ms Quinn had told her that the "blood was spurting from [Mr Muldoon's] head onto the roof" (emphasis added). C used the word "spurting" several times during this part of the interview. C described to the police Ms Quinn's manner in saying that she had hit Mr Muldoon in the face with an axe thus: "Just at [sic] like it was she'd gone to the shop and bought and [sic] ice cream, basically she didn't seem, she didn't seem upset or worried or anything like that". Two points of detail in C's evidence may be noted. First, most of her evidence related to the day after the murder – Sunday 23 March 2003. C testified that before the time she went to the appellant's house, which she said was just before primary school started, she drove her brothers to school. C testified that while at the appellant's house she saw J getting ready for school. And she testified that after going to the appellant's house she dropped J at school. Non- private schools do not operate on Sundays, unless they are Sunday Schools. No elaborate statement of reasons is necessary to exclude a Sunday School or a private school as an available possibility in this case. J's mother, Ms Quinn, thought that J in fact went out that morning to play tennis with a friend. That understanding corresponds with what J told the police. Secondly, telephone records reveal that C received a call on her mobile telephone at 10.51am on Sunday 23 March 2003. The call – the appellant's call – was made from a public telephone adjacent to a BP service station near the appellant's house. An unsuccessful attempt had been made to contact C's mobile telephone from the same public telephone at 8.38pm the previous evening. Children do not go to school after 10.51am. Mr Denne's testimony. Mr Denne testified that he had received a telephone call from the appellant at about 1am on Sunday 23 March 2003. Telephone records indicated that a call was made to him at 1.24am from the public telephone adjacent to the BP service station. The appellant said that there was something he wanted to talk to Mr Denne about. He said the matter was "more important than Sally". Sally was Mr Denne's eldest daughter. Mr Denne obeyed the appellant's instruction and went to the appellant's house. At the front door, the appellant said that he had something to show Mr Denne. He told Mr Denne "not to freak out". Mr Denne entered the house and observed a body wrapped in a blanket. He recognised it as Mr Muldoon, and the appellant confirmed this. Mr Denne asked the appellant what he had done. The appellant said that Mr Muldoon had "threatened his family and my family" – that is, the appellant's family and Mr Denne's family. The families were in fact closely linked: Mr Denne was bringing up as part of his family a daughter of whom the appellant was the biological father. The appellant asked Mr Denne to help him get rid of the body. Mr Denne said he did not want anything to do with it. The appellant said again that Mr Muldoon "threatened his [ie, Mr Denne's] family and my family". The appellant also said that he had helped Mr Denne many times and that Mr Denne had to help him. He asked Mr Denne to return at 8am. Speaking of Mr Denne's partner Tracey, the appellant said: "Don't tell Tracey, don't tell no one." Mr Denne did not return to the appellant's house in the morning, but the appellant came to Mr Denne's house in C's motor vehicle with Ms Quinn. Mr Denne testified that he and the appellant went into the backyard. He testified that the appellant "said I had to come and help him get rid of Dale and I said I didn't want anything to do with it and he said I think something to the words of 'If you don't come and help me I'll put you with him'." Mr Denne's evidence continued: "Q. What did you understand when he used the word – well the word 'him' who did you understand him to be talking about? Q. How would you describe his tone of voice when he used those words to you? A. Angry." Mr Denne recollected travelling back to the appellant's house. He did not recollect stopping to buy beer on the way, and in cross-examination he denied it. He agreed with C's evidence that the body and the hessian bag were placed in C's car by the appellant. Mr Denne's evidence described the drive to Ben Bullen State Forest and the meeting with the motorcyclist with whom C was acquainted. He said that he had dug a hole for the body with a stick. He described the burial. Mr Denne also said that he was crying at the time, and that the appellant told him "to stop my blubbering or he'll put me in there with Dale." He described the appellant's manner in saying this as "[v]ery serious". He described the burning of the hessian bag, and said that the appellant then changed his clothing. The two later returned to the appellant's house and Mr Denne went home. At some time after that day, the appellant told Mr Denne not to tell the police or anyone what had happened. Mr Denne testified that he had seen television reports of the police investigation. He said that after he had seen them, the appellant "came around" to find out if Mr Denne had said anything to anyone, including the police. Mr Denne was not cross-examined in relation to his evidence in chief about any of the express admissions made, threats given or warnings issued by the appellant. Ms Quinn's testimony. Ms Quinn gave evidence to the effect that the appellant injured Mr Muldoon by punching him, then by hitting him with a baseball bat, and then by hitting him with an axe. She testified that after the appellant had punched Mr Muldoon but before the appellant had hit him with the baseball bat, the appellant became "quite upset, he was yelling, he said 'You're not leaving here alive'." She also said that after the appellant had hit Mr Muldoon with the axe, the appellant said to her: "I've known this fuckwick [sic] all my life and I killed him like that, I've only known you five years, imagine what I'll do to you." Her version of Mr Denne's visit in the early hours of Sunday 23 March 2003 corresponded with Mr Denne's account. She testified that Mr Denne told the appellant: "I've helped you out at other times but this time you're on your own", to which the appellant replied: "no, you will help me, you will help me, I don't want to have to dig two holes". Ms Quinn said that on the morning of Sunday 23 March 2003 she was driven to Mr Denne's house. She said that the appellant told her not to return home to the appellant's house until midday. She obeyed. She said that C, on returning to the appellant's house after midday, told her that "the boys" would find their own way back that evening. She denied saying anything to C about having attacked Mr Muldoon with an axe. Ms Quinn was cross-examined extensively, particularly in relation to the admission which C had attributed to her. She adhered to her denial. Some other aspects of the cross-examination may be noted. It was suggested to her that when Mr Denne came to the appellant's house some time after 1am on 23 March 2003 he was informed that she had hit Mr Muldoon on the head with an axe. She denied this. This was not an allegation which Mr Denne supported; nor was he asked in cross-examination to support it. He was asked whether he had told a Christine McKinnon that Ms Quinn had told him that she had killed Mr Muldoon. He denied this. The defence did not call Christine McKinnon or anyone else who claimed that Other specific matters were put to Ms Quinn which she denied – that Mr Muldoon said he was going to shoot the children, that he was going to shoot Crystal and Chantelle, and that J was "a – – of a kid". She said she would have recalled that expression because if it had been used she "would've been very, very upset". It was also put to her that on the morning of 23 March 2003, Mr Denne came to the appellant's house. She denied that proposition and her denial was supported by Mr Denne. The appellant submitted that Ms Quinn's evidence – particularly her evidence about completing preparations for her son's dinner and not discussing the death of Mr Muldoon – was circumstantially incredible. That submission must be rejected. Even if C's evidence were accepted, the position is that the appellant had brutally inflicted injuries on Mr Muldoon, that Mr Muldoon had died, that Ms Quinn was pregnant and that she was responsible for the wellbeing of both that child and her young son, J. In the presence of a man who had just committed acts of terrible violence and threatened others, to say as little as possible and carry on as normally as possible was not incredible, but credible. The appellant also submitted that Ms Quinn's denial of C's evidence about her admission was incredible. In fact, it was much more credible than C's assertion of the fact asserted in the alleged admission, for that fact was contradicted by the medical evidence. So far as C's account was favourable to the appellant, it contained three elements: that Ms Quinn had struck Mr Muldoon because he had overpowered the appellant; that Ms Quinn had struck Mr Muldoon's face with the axe; and that blood spurted from Mr Muldoon's wounds to the ceiling. In a passage quoted above37, the Court of Criminal Appeal explained the difficulties in reconciling C's testimony with the medical evidence. Contrary to C's claim that Ms Quinn spoke of an axe cut straight down Mr Muldoon's face, there were no fractures or lacerations to his face. Indeed, Dr Little testified that none of the injuries to Mr Muldoon's head could have been caused by the sharp part of an axe. Nor were there blood vessels in that area which would spurt and spray onto the walls and ceiling. The appellant submitted in this Court that this reasoning of the Court of Criminal Appeal was defective, because Dr Little had given evidence that blood could have got onto the wall and ceiling if it were "cast-off blood". She said that that phenomenon occurs "when an implement that for example hits someone over the head gets blood on it. Then when it's lifted up again the blood that's on it gets flung off and that's called 'cast-off blood' so that can be propelled quite a distance." Contrary to the appellant's submission, that evidence is in fact inconsistent with the words of Ms Quinn as reported to the jury by C. Those words were that blood "sprayed" or "was spurting" from the head of Mr Muldoon. Those words purportedly described a primary event actually observed by Ms Quinn. They did not merely state an inference from the existence of blood on a ceiling. There is a further difficulty with C's assertion. Neither the appellant nor Mr Muldoon had any injuries indicative of a fight in which Mr Muldoon overpowered the appellant at a time before the baseball bat and the axe were used to injure Mr Muldoon. J's evidence was that it was the appellant who first punched Mr Muldoon, and that Mr Muldoon did not retaliate but asked the appellant, a bigger man, to stop. J's evidence on this point was not challenged. It was consistent with the evidence of Ms Quinn. A further reason for rejecting C's evidence regarding Ms Quinn's admission is that in chief C testified initially that she was "not sure" whether Ms Quinn had said that she had hit Mr Muldoon with an axe or that the appellant had hit Mr Muldoon with an axe. This was a strange answer. It was strange because she must have appreciated that her evidence about what Ms Quinn said about the identity of the person using the axe was, if true, a most important part of her evidence. Her uncertainty cuts away any credibility in her later claim that Ms Quinn had made the admission. Procedurally, C's evidence created difficulties for the prosecution. She was called by the prosecution, either because the prosecution saw it as its duty to do so38 or because some aspects of her evidence favoured the prosecution case. From the defence point of view, initially C did not give the "right" answer in chief on the admission. She gave the "right" answer a little later, and repeated it in cross-examination. But she only did so in 37 See above at [58]. 38 R v Apostilides (1984) 154 CLR 563; [1984] HCA 38. cross-examination after a great deal of her interview with police officers had been read out to her – that is, after questions of an extremely leading kind had been put to her. But the prosecution had no opportunity to challenge her on those answers, nor to test to what extent they were the product of coaching, or worse, by her uncle. It could not invoke s 38 of the Evidence Act 1995 (NSW), because C's initial evidence in chief was not "unfavourable" to the prosecution. It is inherently improbable that Ms Quinn would have attacked Mr Muldoon. She had nothing against Mr Muldoon. The appellant was bigger than Mr Muldoon, who was in turn bigger than Ms Quinn. Ms Quinn only weighed 54 kilograms. On the evidence which was admitted, there was no reason to suppose that the appellant acting alone was incapable of "stopping" Mr Muldoon. It would have been against nature for her to commit murder while her young son was present in the house. The greater the doubt that Ms Quinn attacked Mr Muldoon, the greater the likelihood that the appellant attacked and killed him. There is no other possible killer. In the circumstances, taken as a whole, C's evidence about Ms Quinn's alleged admission is valueless. The significance of the appellant's failure to cross-examine. Trial counsel representing the appellant cross-examined the prosecution witnesses on some points but not others. She is not to be criticised for this. It is not suggested that counsel's tactics in cross-examination were anything other than soundly judged. For example, leaving aside ethical questions, it would have been totally counterproductive for counsel to have cross-examined Ms Quinn to suggest that she had inflicted all the blows on Mr Muldoon. The contrary evidence of J, the state of the appellant's knuckles, and Ms Quinn's size, convincingly negate that version of events. It would have been pointless to have cross-examined the prosecution witnesses about the appellant's conduct after Mr Muldoon's death. The appellant had already pleaded guilty to the offence of perverting the course of justice which was based on that conduct. However, the failure of counsel for one party to cross-examine a witness called by the other side on evidence which the witness has given on a particular matter can support an inference that the cross-examining party accepts the evidence. That inference could be negated if the party calling the witness is on notice that the point is disputed or if there exists some other special factor, for example that the evidence is inherently incredible39. Failure to cross-examine on a particular point can also make it easier for the trier of fact to accept the witness's evidence on that point, especially if it is uncontradicted by other evidence. In the absence of a formal admission, a plea of not guilty puts in 39 Seymour v Australian Broadcasting Commission (1997) 19 NSWLR 219 at 236. controversy all main facts in issue, like, here, whether Ms Quinn struck a blow. There was full cross-examination on the main facts in issue in this case. But a plea of not guilty does not necessarily put in controversy subordinate or collateral facts in issue, like the details of the witnesses' behaviour after the death, from which inferences might be drawn in relation to the main facts in issue40. These propositions are, of course, subject to the overriding caveat that, in the absence of a formal admission, it is not possible in criminal cases to remove an issue from the jury's consideration41. However, when the proviso is under consideration, the appellate court performs the role of the trier of fact. Trial counsel for the appellant put many aspects of the defence "case" to C, Mr Denne and Ms Quinn. It is significant that she did not put other aspects of that "case" to them. That renders it easy to make findings adverse to the defence "case" in areas where the prosecution witnesses gave evidence in chief undermining that "case" but were not cross-examined. Evidence suggesting a consciousness of guilt. Evidence suggesting a consciousness of guilt is receivable as an admission. A great deal of evidence of this kind was received at the trial without objection. It is open to the party against whom the evidence is tendered to offer some innocent explanation of it which may nullify its force42. No innocent explanation was offered here, for the appellant did not testify and the defence called no other evidence. And no innocent explanation was elicited in cross-examination. Various standard categories of evidence revealing a consciousness of guilt are relevant to this appeal. One category comprises the appellant's attempts to preserve secrecy in relation to the circumstances of Mr Muldoon's death and the removal of his body from the appellant's house. This category included the appellant's express admissions and his attempts to keep them secret. "If an accused engages in conduct calculated to prevent the disclosure of something capable of implicating him or her in the commission of an offence, it is conceivable that the conduct may properly be interpreted as evincing consciousness of guilt … [W]here an offender has a conversation with a friend, of which the contents are capable of incriminating the offender, and thereafter engages in conduct calculated to prevent disclosure of the incriminating sections of the conversation, it is 40 See HML v The Queen (2008) 235 CLR 334 at 425 [274]; [2008] HCA 16; BBH v The Queen (2012) 86 ALJR 357 at 393-394 [194]; 286 ALR 89 at 135; [2012] HCA 9. 41 R v Rajakaruna (No 2) (2000) 15 VR 592 at 608 [53]. 42 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 391-392; [1975] HCA 8. open to a jury to infer that the offender's conduct is motivated by consciousness of guilt of the offence and fear that disclosure of the contents of the conversation will reveal his or her involvement in the offence."43 Another category comprises the burial of Mr Muldoon's body, the burning of the hessian bag containing the baseball bat and axe, and the appellant's decision to change out of the clothes he had worn at and after the time of the killing. "[I]f an accused attempts to hide a weapon known to have been used in a homicide, or to hide a motor car involved in a hit and run accident, or to destroy clothes seen to have been worn by a burglar, a jury may infer that the accused is motivated by consciousness of guilt of the offence charged and fear that disclosure of the item will reveal his or her involvement in the offence."44 The "clandestine disposal of a body" is "of itself discreditable"45. Another well-known category is lies46. The procuration of others to lie can reveal consciousness of guilt. One example of procuration to lie is the subornation of false testimony47. A related example is the appellant's subornation of false statements to police officers. There is a question whether the reception of admissions by conduct other than lies is regulated by rules which are similar to those employed in relation to lies48. It is not necessary to decide that question. The admissibility of the appellant's conduct after Mr Muldoon's death was not in issue either at trial or on appeal. If it had been, those rules would have been satisfied. The conduct relied on was identifiable and identified. The conduct related to a knowledge of some 43 R v Farquharson (2009) 26 VR 410 at 454 [174] per Warren CJ, Nettle and Redlich JJA. 44 R v Farquharson (2009) 26 VR 410 at 454 [174] per Warren CJ, Nettle and Redlich JJA. See also R v Panozzo (2007) 178 A Crim R 323 at 335 [28]. 45 R v Wildy (2011) 111 SASR 189 at 197 [34] per Vanstone J. 46 Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 564; Edwards v The Queen (1993) 178 CLR 193; [1993] HCA 63. 47 Moriarty v The London, Chatham, and Dover Railway Co (1870) LR 5 QB 314 at 319. See also R v Watt (1905) 20 Cox CC 852 at 853; R v Flanigan (1997) 190 LSJS 499 at 504. 48 For the rules, see Edwards v The Queen (1993) 178 CLR 193 at 210-211. aspect of the offence. The conduct was carried out because the appellant knew that if it had not been carried out he would have been implicated in the commission of the offence. There was no reasonable possibility that the conduct was carried out for some innocent reason. The evidence reviewed. In summary, there are several reasons for concluding beyond reasonable doubt that the appellant was responsible for the murder of Mr Muldoon. The appellant obviously had the means to murder Mr Muldoon. He also had the opportunity. And he had a motive for murder, quite apart from whatever insulting, provocative or dangerous remarks Mr Muldoon made just before violence broke out. There was animosity between the two men. This animosity related to a Ms Burley. Ms Burley commenced a relationship with Mr Muldoon at the age of 14. After separating from Mr Muldoon, she commenced a relationship with the appellant. It lasted six to eight months. Thereafter she returned to Mr Muldoon for two years. And after that she went back to the appellant for two years. Ms Burley testified that after she had left the appellant for the first time and resumed her relationship with Mr Muldoon, the appellant said to Ms Burley that if he found out that she was running around with Mr Muldoon again he would "get" Mr Muldoon. Ms Burley's mother repeatedly testified to a similar threat made by the appellant against Mr Muldoon. The appellant made numerous express admissions of killing Mr Muldoon – one to Ms Quinn, two to Mr Denne, and one to C. Immediately after the killing he said to Ms Quinn that he had killed Mr Muldoon49. In contrast to the extremely detailed and searching cross-examination of her on other subjects, Ms Quinn's evidence on that point was only challenged in relation to when the appellant said that, not whether he said it. The appellant twice admitted killing Mr Muldoon when Mr Denne, on seeing the body in the early hours of 23 March 2003, asked the appellant what he had done50. Mr Denne's evidence in chief on these points was not challenged in cross-examination, though other aspects of his testimony were strongly challenged. The appellant admitted to C on the morning of 23 March 2003 that somebody, who can only have been Mr Muldoon, "threatened the kids' lives" and "he'd put a stop to it". C's evidence on this point was not directly challenged in cross-examination. The appellant also made an express admission to C that the hessian bag containing the baseball bat and axe had DNA on them. When that statement is taken in context, it is plain that the appellant was referring to his own DNA. That evidence was not challenged in cross-examination. 49 See above at [75]. 50 See above at [70]. Further, the appellant made numerous admissions by conduct. One admission by conduct was the appellant's role in arranging for the destruction of evidence by burying the body and burning the hessian bag containing the baseball bat and the axe. Another was the appellant's procurement of others to tell lies. He asked C to lie to her friend on the motorbike about the purpose of their journey to the forest. He procured C to tell a lie by pretending that "Dale was still here". The appellant also made admissions by conduct in his endeavours to maintain secrecy. He told C not to tell the police about Mr Muldoon's death. In the early hours of 23 March 2003 he told Mr Denne not to tell Tracey or anyone. After he and Mr Denne buried Mr Muldoon he told Mr Denne not to tell the police or anyone else. There were other most important admissions by conduct. They were in the form of threats. The appellant threatened others in relation to his need for their assistance in disposing of the body and the bag. He also threatened others to secure their silence. In substance, the appellant threatened Ms Quinn with death immediately after the killing of Mr Muldoon when he said that he had known Mr Muldoon all his life "and I killed him like that, I've only known you five years, imagine what I'll do to you." This was a threat to kill his de facto wife, carrying an unborn child of which he was the father. He threatened Mr Denne with death after Mr Denne refused to help dispose of the body. This was a threat to kill an old friend. That threat is established by the evidence of Ms Quinn, who testified that the appellant said: "no, you will help me, you will help me, I don't want to have to dig two holes". That threat is also established by the evidence of Mr Denne, who testified that the appellant said: "If you don't come and help me I'll put you with him". Neither item of testimony was challenged in cross-examination. The appellant also threatened Mr Denne with death while Mr Denne was weeping after Mr Muldoon's burial. There was no challenge to this evidence in cross-examination. The appellant threatened C with death after she said that she would not lie to the police. He said "whoever tells the police is going to end up in the same place that Dale did." This was a threat to his 18 year old niece. This evidence was not challenged in cross-examination. The man who made these chilling threats to murder his de facto wife (pregnant with his child), his old friend and his young niece would not have had any scruples about murdering Mr Muldoon. There was no time limit to the threats. They stand to this day, ready to be carried out whenever suitable opportunities present themselves. They have an even deeper significance. A man who tells his 18 year old niece, for example, that if she tells the police anything she will "end up in the same place [Mr Muldoon] did" is conveying the message that it was he who caused Mr Muldoon to end up in that place. In that callous message lies the terrifying aspect of the threat. It is the terrifying aspect which makes it efficient. It must have been even more callous and terrifying when the threat was made – as all of them were – in the presence of Mr Muldoon's body or shortly after its burial. The appellant was a well-built man in the prime of life. He was luridly indicating that he had both the disposition and the capacity to kill if necessary. The extent of the duress he applied to Ms Quinn, Mr Denne and C is measured by its success in achieving its goals for some months. These threats and the other admissions by conduct indicate that the appellant viewed himself as being entirely responsible for Mr Muldoon's death, not as a man merely seeking to help his de facto wife out of the consequences of a killing by her for which he was not responsible. There is one further group of relevant considerations. It comprises inferences which can be drawn from the instructions evidently given to the appellant's trial counsel for the purposes of conducting cross-examination. The following propositions were stated in leading questions put to Ms Quinn in cross-examination: that Mr Muldoon had put a knife to the appellant's throat; that Ms Quinn had hit Mr Muldoon with an axe four times; and that Mr Muldoon had struck the appellant with a baseball bat. However, no questions were put to C, Mr Denne or Ms Quinn suggesting that the appellant had ever denied guilt, or that the appellant said that Ms Quinn had struck any blows, or that the appellant said that Mr Muldoon had attempted to knife him, or that the appellant said that Mr Muldoon had hit him with a baseball bat, or that the appellant remonstrated with Ms Quinn for murdering Mr Muldoon. There was no evidence to this effect. The defence "case" was that Ms Quinn struck the fatal blow and that Mr Muldoon had employed a knife and baseball bat on the appellant. No attempt was made to elicit any evidence that the appellant had propounded that "case" to anyone on 22-23 March 2003, or at any time before the trial. Yet if the events supposedly underpinning that "case" had happened, it would have been strange that he had not mentioned them very close to the time when they allegedly took place. It would have been strange, for example, if the appellant had not attempted to improve his position in the eyes of the shocked Mr Denne by saying that Ms Quinn had killed Mr Muldoon and that Mr Muldoon had menaced him with a knife and a baseball bat. This reasoning does not contravene the appellant's right to out-of-court silence. That right applies in relation to questions from police officers51. Circumstantial inferences may be drawn from silence, coupled with what was said, in the presence of persons who are not police officers, but members of an accused person's own circle. Some of the admissions which Ms Quinn said the appellant had made to her were challenged in cross-examination. However, they were not dissimilar to those to which C and Mr Denne testified, and the admissions to which C and Mr Denne testified in chief were not challenged in cross-examination. The challenges to Ms Quinn's evidence were often only of the most formal kind. 51 Petty v The Queen (1991) 173 CLR 95 at 99; [1991] HCA 34. Thus it was put to Ms Quinn that the appellant "never threatened you", to which she said: "Yes he did." In these circumstances, the evidence of C and Mr Denne was powerfully corroborative of Ms Quinn's. In this Court, counsel for the appellant correctly submitted that "all this post-event conduct … may look bad, and it does look bad". But he went on: "in the context of what one is actually considering here, it does not point determinately in the direction of one version against the other. It is adverse evidence, but it does not actually strongly assist in the resolution of the narrow issue that is involved in this case." One view of the narrow issue is whether Ms Quinn is to be believed in relation to what she said she observed the appellant do and in relation to her denial of C's evidence that she admitted hitting Mr Muldoon with the axe. That issue is capable of being investigated by analysing the totality of the post-killing conduct of the appellant, Mr Denne, Ms Quinn and C. That conduct reveals that the only person who instigated the removal and burial of Mr Muldoon's body and the burning of the hessian bag with the baseball bat and axe, which the appellant said contained DNA evidence, was the appellant. It reveals that the appellant made a series of brutal threats to commit murder if his orders were not obeyed. The recipients submitted to those threats without demur and without fail, at least for a time. The appellant through his counsel – in the form of questions which were asked, and in the questions which were not asked – accepted the correctness of the evidence about the express admissions, the arrangements for removal and burial, the burning of vital evidence and the making of the threats. The appellant's conduct in relation to Ms Burley suggests that making threats of this kind was for him a standard modus operandi. The "united force of all the circumstances put together"52 is very powerful even if attention is limited to the appellant's behaviour. But it is not right to limit attention in that way. It is necessary to take into account and weigh together all the circumstances53. One key circumstance is that on the appellant's theory of the case, Ms Quinn had at least as much reason to dispose of the body and the murder weapons as the appellant. But she took no initiative whatever in that regard. Only the appellant did. 52 Belhaven and Stenton Peerage (1875) 1 App Cas 278 at 279 per Lord Cairns LC, quoted with approval by Gibbs CJ and Mason J in Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 535. 53 R v Hillier (2007) 228 CLR 618 at 637-638 [46]-[48]; [2007] HCA 13. Those considerations show beyond reasonable doubt that the appellant's behaviour was the sole cause of Mr Muldoon's death and that the killing was murder. Order The appeal should be dismissed.

HIGH COURT OF AUSTRALIA STATE OF NEW SOUTH WALES APPELLANT AND GEMMA FAHY RESPONDENT New South Wales v Fahy [2007] HCA 20 22 May 2007 ORDER 1. Appeal allowed. Set aside orders 2 and 3 of the Court of Appeal of the Supreme Court of New South Wales made on 4 April 2006 and in their place order that the order of the District Court of New South Wales made on 28 February 2005 that there be a verdict for the plaintiff be set aside, and in its place order that there be judgment for the defendant. The appellant pay the costs of the respondent of the appeal in this Court. On appeal from the Supreme Court of New South Wales Representation P Menzies QC with P R Sternberg and B McDonald for the appellant (instructed by Crown Solicitor for New South Wales) I M Barker QC with S Norton SC and E E J Welsh for the respondent (instructed by L J Sharpe & Co) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS New South Wales v Fahy Negligence – Relationship between the Police Service Act 1990 (NSW) and the nature and extent of the duty of care owed by the "Crown" or Commissioner of Police to the respondent police officer. Negligence – Respondent police officer assisted a stabbing victim without support from nearby police officers – As a result the respondent suffered post- traumatic stress disorder – Whether the "Crown" or Commissioner of Police breached duty of care owed to the respondent by failing to establish a system of work whereby, when possible, the respondent was supported by another police officer – Whether failure of nearby police officers to provide support to respondent was a breach of duty. Negligence – Breach of duty – Foreseeability of risk of injury – Whether Wyong Shire Council v Shirt (1980) 146 CLR 40 should be overruled. Words and phrases – "breach of duty" – "calculus of negligence". Police Service Act 1990 (NSW), s 201. GLEESON CJ. The issue in this appeal is whether a finding of negligence made in favour of the respondent by a District Court judge, and the Court of Appeal of New South Wales (Spigelman CJ, Basten JA and M W Campbell AJA)1, should be overruled. The facts are set out in the reasons for judgment of the other members of the Court. The respondent was a constable in the Police Service of New South Wales ("the Service"). As the other members of the Court have noted, the case was conducted by the parties, at some risk of over-simplification, upon the basis that the relationship between the respondent and "the Crown" was analogous to that of employee and employer, and that either "the Crown" or the Commissioner of Police owed the respondent a duty of care of the kind that exists in an ordinary employment setting, subject to any relevant statutory modification of the incidents of that relationship. The Statement of Claim alleged that the respondent was employed by the Service. The Grounds of Defence admitted that allegation, and also admitted that "an employer owes a duty to its employee to take reasonable care for the employee's safety". The main issue at trial, and on appeal, was breach of that duty. There were also some presently irrelevant questions about quantification of damages. The damage said to have been suffered by the respondent, in consequence of the breach of duty by her employer to take reasonable care for her safety, was psychiatric injury diagnosed as post-traumatic stress disorder. The circumstances in which the injury occurred are explained in the reasons of the other members of the Court. To observe that it was common ground that the Service, or the Commissioner, owed the respondent a duty to take reasonable care for her safety, and that this embraced a duty to institute and maintain a safe system of work, helps to set the context for the debate in this Court, but it raises questions as to the kind of act or omission that would constitute a breach of such duty. The relevant form of safety is protection from the risk of psychiatric injury and, in particular, post-traumatic stress disorder. Having regard to the nature of the duties of a police officer, and to the nature of post-traumatic stress disorder, concepts of risk, and safety, may require closer analysis. The duties of police officers commonly expose them to danger, sometimes from people who deliberately seek to cause them harm. Individual responses to stressful situations vary greatly, and police officers are sometimes called upon to deal with situations that many ordinary citizens would find unbearably stressful. Police service is not unique in this respect. Many callings expose people to forms of stress with which outsiders would be unable to cope. Furthermore, an individual's capacity to cope with stress may be affected by unpredictable personal circumstances. 1 New South Wales v Fahy (2006) 155 IR 54. In Barber v Somerset County Council2, the House of Lords dealt with the case of a schoolteacher who suffered psychiatric injury caused by work-related stress. Applying as a standard of negligence "the conduct of the reasonable and prudent employer, taking positive thought for the safety of his workers in the light of what he knows or ought to know"3, the House of Lords disagreed with the Court of Appeal's decision that negligence had not been shown. However, Hale LJ in the Court of Appeal had formulated some practical propositions applicable to cases where complaint is made of psychiatric illness brought about by stress at work, and these were accepted in the House of Lords4. On the question whether psychiatric harm to the particular employee was reasonably foreseeable, they included the proposition that "there are no occupations which should be regarded as intrinsically dangerous to mental health"5. Another way of expressing a similar idea may be to say that the factors that may cause stress, and the circumstances in which an individual might suffer stress-related injury, are so various that to single out any occupation and treat it as intrinsically dangerous in this respect is unwarranted. There are circumstances, for example, in which caring for children might be at least as stressful as law enforcement. This being a case about breach of duty, there was reference in argument to the well-known statement of principle of Mason J in Wyong Shire Council v Shirt6. As his reasons make clear7, Mason J was applying the law as stated by Lord Reid on behalf of the Privy Council in Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty ("The Wagon Mound [No 2]")8. Dealing with the two factors of reasonable foreseeability of a risk of harm, and avoidance of the risk, Mason J explained how a tribunal of fact should set about deciding whether there has been a breach of a duty of care. The tribunal asks first whether a reasonable person in the defendant's position would have foreseen that his or her conduct involved a risk of injury to the plaintiff or to a class of persons including the [2004] 1 WLR 1089; [2004] 2 All ER 385. [2004] 1 WLR 1089 at 1110 [65]; [2004] 2 All ER 385 at 406, applying Stokes v Guest, Keen and Nettlefold (Bolts and Nuts) Ltd [1968] 1 WLR 1776 at 1783. [2004] 1 WLR 1089 at 1092-1093 [7], [10], 1109 [63]; [2004] 2 All ER 385 at 389- [2004] 1 WLR 1089 at 1092 [7]; [2004] 2 All ER 385 at 389. (1980) 146 CLR 40 at 46-48. (1980) 146 CLR 40 at 47. plaintiff. If the answer is yes, then the task is to consider what a reasonable person would do by way of response to the risk. He then set out factors which are likely to enter into such a consideration; factors which may need to be "balanced out"9. This has since been referred to, somewhat unfortunately, as a "calculus". What is involved is a judgment about reasonableness, and reasonableness is not amenable to exact calculation10. The metaphor of balancing, or weighing competing considerations, is commonly and appropriately used to describe a process of judgment, but the things that are being weighed are not always commensurate. As was pointed out in Mulligan v Coffs Harbour City Council11, there are cases in which an unduly mathematical approach to the exercise can lead to an unreasonable result. In 1856, Alderson B said: "Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do."12 Reasonableness is the touchstone, and considerations of foreseeability and risk avoidance are evaluated in that context. In Shirt, Wilson J, in dissent, expressed some concern that some forms of judicial exposition of the concept of reasonable foreseeability might deprive the requirement of foreseeability of practical substance13. Later judges have expressed similar concerns. There may be cases where courts have lost sight of the ultimate criterion of reasonableness, or have adopted a mechanistic approach to questions of reasonable foreseeability, risk management or risk avoidance. Complaints about failure to warn seem to give rise to problems of that kind. There have been occasions when judges appear to have forgotten that the response of prudent and reasonable people to many of life's hazards is to do nothing14. If it were otherwise, we would live in a forest of warning signs. That, however, does not warrant reconsideration in this case of what was said by Mason J. In cases where the principles have been misapplied, that may have been the result of a failure to read the most frequently quoted passage in the context of the whole of Mason J's judgment. (1980) 146 CLR 40 at 47-48. 10 See Ridge v Baldwin [1964] AC 40 at 65. 11 (2005) 223 CLR 486 at 490 [2]. 12 Blyth v Birmingham Waterworks Co (1856) 11 Ex 781 at 784 [156 ER 1047 at 13 (1980) 146 CLR 40 at 53. 14 cf Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460; Neindorf v Junkovic (2005) 80 ALJR 341; 222 ALR 631; Vairy v Wyong Shire Council (2005) 223 CLR 422 at 425-427 [2]-[8]. There being no dispute that the respondent was owed a duty of care by her employer, and there being no dispute about the general nature of that duty (a duty to take reasonable care for the safety of the respondent by instituting and maintaining a safe system of work), the respondent has the benefit of concurrent findings that there was a breach of that duty. I expressed my views on the significance of this consideration in Graham Barclay Oysters Pty Ltd v Ryan15, and do not intend to repeat them. The essence of the challenge to those findings is that the reasoning on which they were based was manifestly implausible. The case for the respondent was somewhat more diffuse than the case that finally succeeded and, as Basten JA pointed out in the Court of Appeal, the findings of the primary judge were expressed in a manner that tended to confuse issues of breach of duty and causation. The respondent attributed her condition to a number of alleged shortcomings in the conduct of individual police officers, and of the Service, both during and after the traumatic events in the immediate aftermath of the armed robbery of 25 August 1999. She had various complaints about the way she was treated on the night in question, and later. Ultimately, however, it was the conduct of Senior Constable Evans in failing to assist and support the respondent as she rendered assistance to the victim of the armed robbery that was held to involve a breach of the duty of care owed to the respondent. There was plenty of evidence to justify a conclusion that psychiatric injury of the kind suffered by the respondent was a reasonably foreseeable consequence of failing to provide support and assistance in the circumstances in which she was placed. I do not understand that to be in contest. One of the respondent's primary complaints was that she was left alone by Senior Constable Evans to cope with a situation in circumstances where the system under which they were both working required that he ought not to have left her alone without reason; and the primary judge found that he had no good reason. This idea of a system that was in place, but was departed from by Senior Constable Evans, was contentious. The primary judge referred to "the buddy system" and "the recognised risks of stress-related disorders" in the context of a conclusion that police officers assigned to work together, such as Senior Constable Evans and the respondent on the night in question, were duty-bound to give one another support unless there were reasons why that was not practical. The appellant argued that this so-called "buddy system" owed more to assumptions made by the respondent's medical witnesses than to any cogent evidence of police practice. There is some force in that criticism. However, as the trial was conducted, there was a dearth of evidence from senior police officers. The respondent gave unchallenged evidence that, when police officers were working in pairs, "you had 15 (2002) 211 CLR 540 at 567-569 [48]-[54]. to look after who you were working with", and she gave examples of how this mutual support worked in practice. Nobody suggested that it would be possible to prescribe with any precision the circumstances in which two police officers, working as a pair, should or should not separate. The decision in the present case was that there was a recognised risk of stress-related injury, that the Service had responded to the risk by requiring police officers working in pairs to give one another support and assistance unless there was some reason for separating, that Senior Constable Evans had shown no reason for leaving the respondent alone, and that the respondent's exposure to the trauma of the victim in the doctor's surgery without any help from her partner was a cause of her psychiatric injury. "The critical issue in the present case was whether or not the failure on the part of the officers of the Appellant to provide support in the course of the traumatic incident was a breach of duty. It can readily be accepted, as the Appellant submitted, that the Court should be slow to require the police to generally have a second officer supporting another in the course of exposure to the trauma of victims of crime. Pressure and stress are part of the system of work which police officers must be prepared to carry out. There are numerous occasions on which one of two officers operating under the buddy system would reasonably leave the other to perform functions on his or her own. Indeed, it must often be the case that it is necessary to do so. In the usual case it would not take much in the way of evidence to satisfy a court that the performance by a police officer of his or her primary duties was such that any failure to offer support for another police officer did not constitute a breach of duty. However, in the present case the plaintiff established a proper basis for an inference that there was no such call of other duties which made it reasonable not to take steps to support the [plaintiff]. In particular the presence of other police officers on the scene was such as to support a conclusion that the attendance of Constable Evans to other tasks was not such as to render reasonable, in all of the circumstances, his failure to support the [plaintiff]." The other members of the Court of Appeal agreed in substance with that finding. I see no sufficient reason for this Court to reject the finding. The appeal should be dismissed with costs. GUMMOW AND HAYNE JJ. In August 1999, the respondent, Gemma Fahy, was a constable16 in what was then called the Police Service of New South Wales17. Ms Fahy had joined the Service in February 1996 and in the course of her duties had attended many traumatic incidents. On 25 August 1999, she was one of two officers stationed at Green Valley Police Station assigned to patrol in a police truck. The other officer, Senior Constable Evans, was senior to her. Ms Fahy considered Senior Constable Evans to be a friend but they had been assigned to work together only three or four times previously. At about 9.00 pm on 25 August 1999, Ms Fahy and Mr Evans were directed to investigate a hold-up alarm at a pharmacy at Edensor Park Shopping Centre. Ms Fahy was later to allege that she suffered psychiatric injury in consequence of what happened thereafter. In 2001, Ms Fahy brought an action in the District Court of New South Wales against the State of New South Wales claiming damages for negligence. She succeeded at trial. An appeal by the State to the Court of Appeal failed on the issue of liability but succeeded on a question about mitigation of damages18. By special leave, the State now appeals to this Court to agitate questions about liability, and in particular questions about breach of duty, including whether this Court should reconsider Wyong Shire Council v Shirt19. This abbreviated description of the facts that lie behind the appeal and of the course of litigation in the courts below masks a number of particular features of both the facts and the course of proceedings which it will be necessary to examine in some detail. It is as well to begin, however, by identifying some fundamental considerations that must inform examination of this matter. 16 Police Service Act 1990 (NSW), s 73. 17 Police Service Act, s 4. The Police Service Amendment (NSW Police) Act 2002 (NSW) amended the short title of the Police Service Act to the "Police Act 1990" and deleted references to the Police Service of New South Wales, instead referring to "NSW Police". It will be necessary in these reasons to refer to the provisions of the Police Service Act as they stood at the time of the events giving rise to this matter, and convenient to refer to the "Police Service" rather than to "NSW Police". 18 New South Wales v Fahy (2006) 155 IR 54. 19 (1980) 146 CLR 40. The essential statutory framework Because Ms Fahy claimed damages from the State on account of events occurring during her service as a police officer, any inquiry about the liability of the State must begin by considering the statutes that governed Ms Fahy's service as a police officer, the statutes that regulated claims against the State, and the statutes that regulated claims brought by an employee against his or her employer. It is convenient to begin by examining relevant provisions of the Police Service Act 1990 (NSW). The Police Service established by the Police Service Act comprised the members referred to in s 5, which included the Commissioner and police officers employed under the Act. The Police Service was not a body corporate. The functions of the Police Service included20 providing "police services" for New South Wales. "[P]olice services" included21 "the protection of persons from injury or death, and property from damage, whether arising from criminal acts or in any other way". Subject to the direction of the relevant Minister, the Commissioner was "responsible for the management and control of the Police Service"22. Section 8(2) provided that: "The responsibility of the Commissioner includes the effective, efficient and economical management of the functions and activities of the Police Service." The Police Service Act prescribed23 the ranks of police officers within the Police Service. Read as a whole, the Police Service Act demonstrated that the evident purpose of the legislation was, as may be expected, to create an hierarchical and disciplined force. Chief among the statutory provisions giving effect to that purpose was s 201 which made it a criminal offence for a police officer to neglect or refuse either to obey any lawful order or to carry out any lawful duty as a police officer. The ordinary statement of claim by which the proceedings in the District Court were commenced alleged that the State of New South Wales was sued "pursuant to the Crown Proceedings Act, in respect of New South Wales Police". 20 s 6(2)(a). 21 s 6(3)(b). Presumably, this allegation was intended to engage s 5 of the Crown Proceedings Act 1988 (NSW), and its provisions that: "(1) Any person, having or deeming himself, herself or itself to have any just claim or demand whatever against the Crown (not being a claim or demand against a statutory corporation representing the Crown) may bring civil proceedings against the Crown under the title 'State of New South Wales' in any competent court. Civil proceedings against the Crown shall be commenced in the same way, and the proceedings and rights of the parties in the case shall as nearly as possible be the same, and judgment and costs shall follow or may be awarded on either side, and shall bear interest, as in an ordinary case between subject and subject." How s 5 applied was not stated in the statement of claim and was not examined at trial. In the Court of Appeal24 reference was made to the Law Reform (Vicarious Liability) Act 1983 (NSW). Section 8 of that Act, as in force when the proceedings in the District Court were commenced and tried, provided that: "(1) Notwithstanding any law to the contrary, the Crown is vicariously liable in respect of the tort committed by a person in the service of the Crown in the performance or purported performance by the person of a function (including an independent function) where the performance or purported performance of the function: is in the course of the person's service with the Crown or is an incident of the person's service (whether or not it was a term of the person's appointment to the service of the Crown that the person perform the function); or is directed to or is incidental to the carrying on of any business, enterprise, undertaking or activity of the Crown." For the purposes of that Act, a police officer was deemed, by s 6, "to be a person in the service of the Crown and not a servant of the Crown". Some questions about the application of the Crown Proceedings Act and the Law Reform (Vicarious Liability) Act were considered recently in New South 24 (2006) 155 IR 54 at 60 [30]. Wales v Ibbett25. The issues that arise in this matter differ from those considered in Ibbett but are issues whose resolution depends upon premises that have their origin in those two statutes. Much of the argument of the appeal in this Court proceeded from the unstated premise that either "the Crown", or a person or persons for whom "the Crown" was made vicariously liable by the Law Reform (Vicarious Liability) Act, was to be treated as owing to Ms Fahy the duty of care owed by an employer to an employee. In particular, much of the argument in this Court proceeded from the assumption that "the Crown", or a person for whom "the Crown" was vicariously liable, was under a non-delegable duty to provide a safe system of work26 for police officers. This assumption depended upon a number of important intermediate steps, not all of which must now be examined. In particular, it is not necessary to decide whether the relevant duty of care was owed by "the Crown" or was to be understood as a duty of the Commissioner of Police (for whom "the Crown" was vicariously liable) qualifying, or giving content to, the statutory obligation imposed on the Commissioner by s 8(1) of the Police Service Act to manage and control the Police Service. No matter whether the asserted duty of care is that of "the Crown" or the Commissioner, it is necessary and important to recognise that it must be framed in a way that takes proper account of the statutory framework provided by the Police Service Act for the performance of police duties. Police officers are required to undertake tasks of a kind that few, if any, commercial employers could ask of their employees. Police officers must confront death, injury and destruction. It is they who must waken the sleeping household to tell them of the sudden death or serious injury of another. Ms Fahy herself spoke of incidents she had attended in three years of police service: a fatal plane crash, a fatal industrial accident, numerous fatal car accidents, overdoses and hangings. And as well as confronting the consequences of folly and accident, police officers must confront the wrongdoer bent upon harm to both the police and members of the public. It is tasks of these kinds that are encapsulated27 by the anodyne description of a function of the Police Service as being "the protection of persons from injury or death, and property from damage, whether arising from criminal acts or in any other way". And it is tasks of these kinds that constitute the duties of a police officer and may be the subject of 25 (2006) 81 ALJR 427 at 430 [4]-[6]; 231 ALR 485 at 487-488. 26 cf Kondis v State Transport Authority (1984) 154 CLR 672. 27 s 6(2)(a) and (3)(b). lawful orders to a police officer. To neglect or refuse either to obey those orders or to carry out those duties was a criminal offence. That is the work for which "the Crown" or the Commissioner was, so the parties' arguments assumed, duty bound to provide a safe system to perform. But the system that was devised had to be one which did not detract from the effectuation of the statutory purposes and functions of the Police Service. Examination of the facts and arguments in this case will reveal that too little attention has hitherto been given to these considerations. The third kind of statutory provisions to which it was necessary to give attention at the trial of this matter were the provisions, regulating common law claims by employees against employers, of Div 3 of Pt 5 of the Workers Compensation Act 1987 (NSW) as in force at the time of the events giving rise to Ms Fahy's claim28. Reference was made to those provisions at trial and no point in the appeal to this Court was said to turn upon the application or operation of those provisions. It is, therefore, not necessary to examine what was said about these matters at trial or to make further reference to the provisions. The facts Something further must be said about what happened to Ms Fahy after she and Senior Constable Evans were directed to investigate the hold-up alarm. When they arrived at the shopping centre, they were told that there had been a hold-up and that someone had been injured. (The hold-up had been at a video store, not the pharmacy to which they were originally directed.) Ms Fahy and Mr Evans were told that the victim had walked to a medical centre about 50 metres away. There was a trail of blood on the footpath. At the medical centre the receptionist directed the officers to a treatment room where a doctor was attending to the injured victim. Ms Fahy went into the room; Mr Evans did not. The doctor was dealing with a stab wound to the victim's chest. Ms Fahy asked the doctor what she could do to help. He told Ms Fahy the victim was complaining of pain in his left side, and he asked her to look at that. Ms Fahy discovered that the victim had suffered another, very deep, laceration which extended from his left armpit to his waist. He was bleeding profusely. She tried to stop the bleeding by first applying dressings and then holding the wound together. Mr Evans may or may not have told Ms Fahy that he was going outside. Be this as it may, he did not stay with Ms Fahy. 28 Workers Compensation Act 1987 (NSW), s 151U. The victim, still conscious, but bleeding profusely and evidently fearing death, spoke of his wife, his children, and his love for them. Ms Fahy tried to comfort him while, at the same time, using her radio, she asked, several times, where was the ambulance that had been summoned. The victim told her what the offenders were wearing and this, too, she relayed by radio. Throughout it all she attempted to keep the victim's wound closed. Other police officers arrived at the scene but none came into the treatment room at the medical centre. One, the duty officer, Inspector Whitten, came to the door of the treatment room, "took one look ... turned around and ... walked away". When the ambulance officers arrived (about nine minutes after Ms Fahy and Mr Evans had arrived at the scene) Ms Fahy helped them move the victim into the ambulance. As the ambulance was leaving, the duty officer, Mr Whitten, told Ms Fahy to "put [her] hat on", "the media is here". There then followed a series of other events Ms Fahy was later to allege contributed to the psychiatric injury she suffered. They included events on the night of the incident, and subsequent events said by Ms Fahy to constitute a failure to observe or to respond adequately to the trauma she had suffered. These matters loomed large at the trial of the action but they need not be described in any detail here. Central to Ms Fahy's complaint, at trial and subsequently, was the fact that she had been left alone in the treatment room with the doctor and the wounded victim when, as the trial judge found, her immediate superior, Senior Constable Evans, had no operational or other sufficient reason which required him to leave her alone. In her pleading in the District Court, Ms Fahy had referred to Senior Constable Evans as her "partner" and she had alleged that "[r]ather than assist her, the partner decamped". A psychiatrist called to give evidence at the trial spoke of Ms Fahy as perceiving herself "to be abandoned by her partner or buddy" and said that the "absence of her buddy" was "the decisive factor" in her development of a post-traumatic stress disorder. The trial judge referred to "the lack of support from her senior officers, including Senior Constable Evans and Inspector Whitten", and described Ms Fahy's case as being that she had been treated "with extraordinary insensitivity, or by a deliberate course of conduct which had the effect of breaking down [her] resilience". In the Court of Appeal, Spigelman CJ identified29 "[t]he critical issue" as being "whether or not the failure on the part of the officers ... to provide support in the course of the traumatic incident was a breach of duty" (emphasis added). But none of these descriptions identified 29 (2006) 155 IR 54 at 58 [17]. precisely the relevant content of the duty that this "insensitive treatment", "failure to provide support", or "abandonment" breached. The pleaded case In her ordinary statement of claim Ms Fahy had alleged that the Police Service, "for which the [State] is liable", was under a duty of care to her, was in breach of that duty and was negligent. Seven particulars of negligence were given. None of them made any reference, in terms, to an alleged failure to provide a safe system of work. Apart from particulars alleging, generally, a failure to take adequate precautions for the plaintiff's safety, and putting her in a position of peril, only two particulars referred to what had occurred at the shopping centre. First, it was alleged that there had been a failure to provide Ms Fahy "with proper and adequate assistance at the scene of the ... armed robbery". Secondly, it was alleged that the Police Service was negligent "[b]y its servant or agent, leaving the scene of the armed robbery and exposing [Ms Fahy] to the victim by herself". The remaining particulars of negligence concerned alleged failures to provide adequate counselling and adequate debriefing in respect of the incident. The specificity of these particulars obscured the logically anterior question whether "the Crown" or the Commissioner was duty bound to establish a system of work for police that would not have left Ms Fahy as the only police officer in the treatment room when the doctor and Ms Fahy worked (desperately, and ultimately successfully) to save the life of the victim. The trial Evidence led at the trial focused upon two distinct subjects: what Senior Constable Evans and other officers did at the scene during and after the time Ms Fahy was assisting the treatment of the victim in the treatment room, and what counselling or debriefing was provided to Ms Fahy over subsequent days and weeks. As noted earlier, Senior Constable Evans was found not to have had any operational, or other sufficient reason that required him to leave Ms Fahy alone when she was in the treatment room with the doctor and the victim. Evidence was given about police officers, who had been assigned to work in pairs, working as "partners". Consistent with the hierarchical and disciplined character of the Police Service, Ms Fahy pointed out that the senior of two officers assigned to work with each other was "in charge of decision-making", but that "whether you were the junior or the senior, you had to look after who you were working with". Ms Fahy accepted that if two officers attended an incident, the first priority was to look after any injured person. In that regard she described earlier incidents she had attended, and made plain that during those incidents, she and the other officer with whom she was then working, whether that other officer was senior or junior to her, had worked closely together. But there were, she acknowledged, no "protocols" which controlled the senior officer's judgment about what each of two attending officers would do at any particular incident. The evidence given by Ms Fahy about the way in which police officers who had been assigned to work in pairs did their work was generally to the same effect as evidence given by a former police officer (Terrence O'Connell) called to give expert evidence on behalf of the plaintiff. In particular, that witness did not suggest that any relevant rules had been made about how two officers should go about their work. And the general effect of his evidence was that no rules could be made about that subject. As he said, at a crime scene where a person has been injured, the arrangements between a pair of police officers attending the scene "tend to work themselves out, because when you're dealing with an emergent situation, the delineation between roles often isn't quite as clear as we imagine. In fact you do what you can do." Further, the evidence given by Ms Fahy was consistent with the only documentary record of police operating procedures tendered at the trial – part of a pocket guide issued to police. Under the heading "Armed Robbery (Standard Operating Procedures)" the guide spoke of the need to "[e]nsure the well being of victims/witnesses", to "[c]irculate description of vehicle/offenders – as soon as possible", and to "[p]reserve crime scene". But it said nothing about how these tasks were to be divided if two officers attended the scene. No other evidence was led to demonstrate that the system of work which did govern, or should govern, the performance of duties by two police officers attending a scene such as confronted Ms Fahy and Senior Constable Evans did, or should, regulate the performance of their duties in such a way that Mr Evans would not have left Ms Fahy alone with the doctor and victim in the medical centre treatment room. The appeal to the Court of Appeal The State's notice of appeal to the Court of Appeal gave 13 grounds of appeal. Three (grounds 11 to 13) concerned questions of quantum and may be put aside from consideration in the appeal to this Court. The remaining 10 grounds were, for the most part, cast in terms attacking particular factual findings made by the trial judge. Only the first ground (that the trial judge "erred in finding that the cause of [Ms Fahy's] post-traumatic stress disorder ... was as a result of the negligent acts and/or omissions of a number of officers of NSW Police") might be understood as inviting attention to the questions of breach of duty which the State agitated in this Court. And even that ground was cast in terms which might suggest the need to give closer attention to questions of causation than questions about breach of duty. It appears, however, that argument in the Court of Appeal was directed to these questions of breach of duty. And it was not submitted in this Court that the issues which the State agitated in this Court had not been before the Court of Appeal. No submission was made that those issues did not constitute a part of the matter over which this Court has jurisdiction. All members of the Court of Appeal agreed that the State's appeal in relation to questions of liability should be dismissed. Spigelman CJ, with whose reasons M W Campbell AJA agreed, understood30 the State's grounds of appeal as "address[ing] issues of scope of duty, breach and causation". But Spigelman CJ recorded31 that there was no issue that the State owed a duty to Ms Fahy to provide a safe system of work and that there was no issue that, if either Senior Constable Evans or Inspector Whitten were in breach of a duty of care, the State was vicariously liable for that breach. In the particular facts of the case his Honour found it unnecessary32 to consider questions of vicarious responsibility for breaches of duty by Senior Constable Evans or Inspector Whitten and focused only on what he described as "the employer's direct obligation". He identified33 the employer's duty as "a duty to take reasonable steps to avoid unnecessary risk of personal injury, relevantly psychiatric injury" and the risks to be avoided as those risks which are reasonably foreseeable. Having identified34 the critical issue as being whether leaving Ms Fahy alone in the treatment room "satisfied the various elements of the tort including duty, breach and causation", Spigelman CJ concluded35 "that the attendance of [Senior] Constable Evans to other tasks was not such as to render reasonable, in all of the circumstances, his failure to support" Ms Fahy. Basten JA analysed the case differently. His Honour noted36 some of the difficulties that lay behind the allegation that the State was sued pursuant to the Crown Proceedings Act "in respect of New South Wales Police" and the separate 30 (2006) 155 IR 54 at 56 [3]. 31 (2006) 155 IR 54 at 56 [2]. 32 (2006) 155 IR 54 at 56 [4]. 33 (2006) 155 IR 54 at 56 [5]. 34 (2006) 155 IR 54 at 57 [10]. 35 (2006) 155 IR 54 at 58 [18]. 36 (2006) 155 IR 54 at 60-61 [30]-[33]. difficulties that might arise in determining whether "the Crown" was Ms Fahy's employer for purposes of determining the safety of conditions of employment. In that regard, Basten JA noted37 that s 6 of the Law Reform (Vicarious Liability) Act expressly provided that a police officer was to be deemed to be a person "in the service of the Crown and not a servant of the Crown" (emphasis added). Having observed38 that despite the way in which the matter had been pleaded, the focus of the evidence was on the conduct of individual officers, Basten JA examined first39 what it would have been necessary to establish to show that Senior Constable Evans had acted in breach of a duty of care which he had owed Ms Fahy. In particular, Basten JA concluded40 that it would have been necessary to demonstrate that Mr Evans was, or should reasonably have been, aware of the risk of psychiatric injury to Ms Fahy. But because the case had not been pleaded or presented at trial in a way that depended upon showing that Mr Evans owed Ms Fahy a duty of care, there were no findings of fact that would support the conclusion that he had acted in breach of such a duty. Basten JA then went on to consider the complaints made by Ms Fahy on the basis that they were complaints, first, that the failure of Senior Constable Evans to provide reasonably necessary support was a failure by the employer either to provide or to maintain a safe system of work41, and second, that the treatment of Ms Fahy by Inspector Whitten, coupled with what had happened after the incident, was to be understood as a breach of duty "to provide appropriate support to an officer in the circumstances of the plaintiff, and monitor the effects of a potentially traumatic episode"42. The conclusion reached by Basten JA was expressed very briefly. His Honour said43: "The findings of the trial judge were that Senior Constable Evans was aware of the circumstances in which the plaintiff had been assisting 37 (2006) 155 IR 54 at 61 [33]. 38 (2006) 155 IR 54 at 61 [34]. 39 (2006) 155 IR 54 at 71-74 [81]-[90]. 40 (2006) 155 IR 54 at 73-74 [90], citing Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44. 41 (2006) 155 IR 54 at 73-74 [90]. 42 (2006) 155 IR 54 at 74 [93]. 43 (2006) 155 IR 54 at 75 [98]. the doctor to stem the victim's bleeding; Inspector Whitten knew that there was a real risk that the victim would die; he further knew that the plaintiff had had contact with the victim's wife and was in the process of taking her to the hospital when she was called back to the crime scene, and if he did not know from his own observation, should have known from Senior Constable Evans, of the circumstances inside the surgery. Those findings support the conclusion that there was a breach of the duty to provide reasonably safe conditions of employment." (emphasis added) It is to be noted that this conclusion did not state expressly what it was that the reasonable employer should have done. In particular, the safe system of work was not identified. All that was said was that the particular events described constituted a departure from the provision of a safe system of work. Moreover, the statement of the conclusion must be understood in the light of what Basten JA had earlier said44 about the role of the "partner" or "the buddy system". The examination Basten JA undertook of the "partner" or "the buddy system" was made against an understanding45 of "the real complaint being made" by Ms Fahy as being "that her employer had failed to provide an adequate system of work, so as to give her sufficient support both during and in the immediate aftermath of a potentially highly distressing event". His Honour continued46: "On that approach, it was not sufficient simply to put two officers on duty together and tell them to work together in a manner vaguely described as 'the buddy system'. In the absence of any evidence as to relevant instructions, one would be inclined to infer that 'the buddy system' was intended to provide physical protection and backup, which would not have been available if officers patrolled alone. Further, to the extent that the officers witnessed matters which needed to be recorded for the purposes of an investigation and possible criminal proceedings, a second officer would obviously provide a source of corroboration and a check on the accuracy of the observations of the other. On the other hand, if the colleague was expected to provide psychological support in a distressing situation, then each officer would need to have understood that that was part of the particular role envisaged under 'the buddy system'. There was no evidence to suggest whether or not that was so understood, but the gist of the plaintiff's case in relation to Senior Constable Evans appears to 44 (2006) 155 IR 54 at 73-74 [90]. 45 (2006) 155 IR 54 at 73 [90]. 46 (2006) 155 IR 54 at 73-74 [90]. have been that such support was reasonably necessary and was not provided." The conclusion reached by Basten JA, that there was a breach of duty to provide reasonably safe conditions of employment, is consistent only with a conclusion that safe working conditions required that police officers working in pairs were to be required "to provide psychological support in a distressing situation" to each other. But what was meant by the reference to "provid[ing] psychological support" was not stated expressly by either Spigelman CJ or Basten JA. The only conclusion stated by the Court of Appeal was that the trial judge's findings of fact supported the conclusion that what had happened to Ms Fahy was not consistent with the implementation of a safe system of work. The appeal to this Court The State attacked the reasoning of the Court of Appeal in a number of ways. The attacks, though variously expressed, took two principal forms. First, it was said that the Court of Appeal erred in not identifying, other than negatively, what was the safe system of work that should have been prescribed. This, so the State submitted, constituted a failure to identify properly the scope and content of the relevant duty of care or served to mask the error in determining the significance to be attributed to the "partner" or "the buddy system". This latter characterisation of the error was related by the State to the separate question whether the Court of Appeal erred in concluding that there was a reasonably foreseeable risk of injury for the purposes of determining breach of duty. The second principal strand of the State's arguments was that this Court should reconsider Wyong Shire Council v Shirt and, in particular, should abandon the equation of a "foreseeable risk" with "[a] risk which is not far-fetched or fanciful"47. As this summary of the State's submissions reveals, separate submissions were made about duty and breach of duty. But the accepted premise for argument of this litigation at all stages has been that either "the Crown", or a person for whom "the Crown" is vicariously liable, owed Ms Fahy a non-delegable duty of care to provide and maintain a safe system of work. As noted earlier, this conventional assumption for the litigation depends upon the validity of a number of unstated premises, but neither the State nor Ms Fahy suggested that the premises should be challenged. It is not necessary to go behind the conventional assumption of the parties and, given the way in which the case proceeded in this Court and in the courts below, it would be inappropriate to do so. It is not necessary to go behind the assumption because, 47 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 48. properly understood, the State's chief complaint about the conclusions reached in the Court of Appeal is better analysed as a complaint about breach of duty, not about the scope or content of the duty owed. In that regard, this case may be contrasted with Koehler v Cerebos (Australia) Ltd48 where attention focused upon the content of the employer's duty to an employee to take reasonable care to avoid psychiatric injury. That case concerned an allegation that the work expected of the employee was too great and that nothing had been done to modify her duties. As was pointed out in the joint reasons in Koehler49, the content of the duty owed by an employer to an employee must take account of the obligations which the parties owe one another under the contract of employment, the obligations arising from that relationship which equity would enforce and any applicable statutory provisions. Considering those obligations reveals questions that bear upon whether the employer must modify the work an employee is to do. In the present case, however, Ms Fahy's complaint was directed to what she alleged the Police Service should have required of other officers. That was a complaint about the system of work prescribed by the Police Service. In order to consider that complaint, it is necessary to recall what was decided in Shirt. Wyong Shire Council v Shirt The Court's decision rightly been understood as in Shirt has authoritatively stating how a tribunal of fact must set about deciding whether there has been a breach of duty of care. The description of that task, in the reasons of Mason J50, though well known, should be set out: "[T]he tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man's response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the 48 (2005) 222 CLR 44. 49 (2005) 222 CLR 44 at 53 [21]. 50 (1980) 146 CLR 40 at 47-48. defendant may have. It is only when these matters are balanced out that the tribunal of fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant's position. The considerations to which I have referred indicate that a risk of injury which is remote in the sense that it is extremely unlikely to occur may nevertheless constitute a foreseeable risk. A risk which is not far-fetched or fanciful is real and therefore foreseeable. But, as we have seen, the existence of a foreseeable risk of injury does not in itself dispose of the question of breach of duty. The magnitude of the risk and its degree of probability remain to be considered with other relevant factors." This approach to questions of breach of duty has come to be known as the "Shirt calculus". The description may be convenient but it may mislead. Reference to "calculus", "a certain way of performing mathematical investigations and resolutions"51, may wrongly be understood as requiring no more than a comparison between what it would have cost to avoid the particular injury that happened and the consequences of that injury. Shirt requires a more elaborate inquiry that does not focus only upon how the particular injury happened. It requires looking forward to identify what a reasonable person would have done, not backward to identify what would have avoided the injury. In Vairy v Wyong Shire Council52, it was explained why it is wrong to focus exclusively upon the way in which the particular injury of which a plaintiff complains came about. In Vairy, it was said53 that: "[T]he apparent precision of investigations into what happened to the particular plaintiff must not be permitted to obscure the nature of the questions that are presented in connection with the inquiry into breach of duty. In particular, the examination of the causes of an accident that has happened cannot be equated with the examination that is to be undertaken when asking whether there was a breach of a duty of care which was a cause of the plaintiff's injuries. The inquiry into the causes of an accident is wholly retrospective. It seeks to identify what happened and why. The inquiry into breach, although made after the accident, must attempt to answer what response a reasonable person, confronted with a foreseeable 51 The Oxford English Dictionary, 2nd ed (1989), vol 2 at 778, citing Hutton, A Mathematical and Philosophical Dictionary, (1796), vol 1 at 234. 52 (2005) 223 CLR 422. 53 (2005) 223 CLR 422 at 461 [124] per Hayne J; see also at 443 [60]-[61] per risk of injury, would have made to that risk. And one of the possible answers to that inquiry must be 'nothing'." It is only if the examination of breach focuses upon "what a reasonable man would do by way of response to the risk"54 (emphasis added) that it is sensible to consider "the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have"55. Breach of duty in this case? How were the questions presented by Shirt to be answered in this case? There can be no doubt that performing the duties of a police officer can often be very psychologically stressful. That is the inevitable consequence of the kinds of work police officers are required to perform. That a police officer may suffer psychiatric injury as a result of performing that work is, therefore, readily foreseeable. The risk of such injury is not far-fetched or fanciful; the risk of injury may not even be remote (if "remote" is understood as meaning extremely unlikely to occur). The evidence led in this case revealed that the Police Service of New South Wales had long since recognised these risks. At least by 1991, the Police Service had established a psychology unit to provide "confidential services to members of the Police Service and to their immediate families". A psychologist was on call 24 hours a day to provide trauma crisis counselling for members of the Service "involved in a major incident or community crisis". Debriefings were compulsory following certain kinds of incidents and counselling was provided, as requested, "after other work related traumas ... eg assaults, attending particularly distressing fatal incidents, etc". In addition, counselling was available from the psychology unit to "staff suffering from a cumulative stress reaction". In June 1999, a special report was made to the New South Wales Parliament under s 31 of the Ombudsman Act 1974 (NSW) entitled Officers Under Stress. That report concerned "the need for the NSW Police Service to identify and support police officers whose psychological well-being has been affected by stress". In the same month a set of guidelines was published in the journal Police News (which it may be assumed was circulated to police officers) that was said to be "intended to protect the welfare and legal rights" of police 54 Shirt (1980) 146 CLR 40 at 47. 55 Shirt (1980) 146 CLR 40 at 47-48. officers in certain critical incidents. All of these matters demonstrate not only that the risk of a police officer suffering psychiatric injury was foreseeable, but also that the Police Service had foreseen the risk and had taken steps to avoid, or at least ameliorate, the consequences of the stresses of police work. The State submitted that the relevant risk to consider in determining whether Ms Fahy had established that there had been a breach of duty to provide a safe system of work was whether "a police officer might suffer a psychiatric injury if that officer's partner did not remain to provide support whilst the officer was exposed to trauma whilst assisting a doctor". For the reasons given earlier, that formulates the relevant risk from the wrong perspective. It seeks to ask, in effect, whether the particular mechanism which led to the injury of which the plaintiff complained was a foreseeable risk. But breach of duty requires consideration of whether the defendant's conduct (which it is to be assumed is identified in this case as the formulation of systems of work for police officers) involved a risk of injury to the plaintiff. And here, there could be no doubt that police work involved a risk of psychiatric injury to police officers. The inquiry that was then to be undertaken was "what a reasonable man would do by way of response to the risk". The focus must fall upon how police officers should have been instructed to perform their work, not upon what steps the Police Service should have taken to provide support for officers who had been exposed to traumatic incidents. It is necessary, therefore, to identify the system of work that should have been prescribed in response to the risk of psychiatric injury. The implicit premise for the conclusions reached in the Court of Appeal, and by the trial judge, appears to have been that the Police Service, if acting reasonably, would have issued a general instruction to police officers assigned to work in pairs that, whenever possible, or perhaps unless operational requirements dictated otherwise, the officers should remain together, and each should provide psychological support to the other during any traumatic incident. An instruction of that kind poses a number of questions that must be examined. First, if the instruction is intended as a reasonable response to the foreseeable risk of psychiatric injury, why would it be reasonable to confine the response to officers assigned to work in pairs? Why is it only those officers who warrant this protection? Yet it was not submitted that reasonable care required that police officers not be assigned to work alone. And it is a notorious fact that police officers do work alone. Secondly, even when officers are assigned to work together, there are many circumstances in which their duties will require them to separate. So, to vary the facts of the present case only slightly, what if there had been two persons stabbed in the attempted robbery? What if one had collapsed at the video store, but the other had managed to walk 50 metres to the medical centre? Inevitably, the first two police officers arriving at the scene would have had to separate. Of course the second point is one that the exception or qualification, permitting separation when necessary, is intended to meet. And it is the content of the postulated exception that gives particular significance to the finding that Senior Constable Evans had no operational or other sufficient reason not to remain with Ms Fahy. But the fact that an exception or qualification must be made to the general rule is highly significant. The making of the exception or qualification, like the observation that officers can be and are assigned to work alone, reveals that there are cases where a police officer must face traumatic incidents alone. And it may reasonably be supposed that the worse an incident is, the more likely it is that officers will not be able to spend any time supporting each other because they will be fully occupied in controlling the situation and dealing with its consequences. Thirdly, what is meant by one officer "providing psychological support" to another? The notion is replete with difficulty and ambiguity. Particular emphasis was given, in this case, to Ms Fahy's sense of abandonment and to the fact that, while trying to prevent a badly injured man bleeding to death, she had to do so many other things. She had to recall what the victim said. Not only was he giving what he thought were his last messages to those whom he loved, he gave some description of what the offenders were wearing. And at the same time Ms Fahy was using her police radio, more than once, to ask where was the ambulance, and to pass on what she had learned from the victim. These facts were critical to understanding the medical evidence that attributed such importance to what had happened during this period of nine or so minutes, compared with the litany of traumatic incidents Ms Fahy had confronted in the past, apparently without any ill-effect. But these particular facts give no useful content to the notion of "providing psychological support". There was no evidence led at trial that suggested what content should be given to this expression. If, as seems very likely, what one person should do to give psychological support to another, varies with the individuals concerned and the circumstances that give rise to the need for support, it is evident that the expression has, and can have, no fixed or certain content. There are individuals for whom and circumstances in which support is best given by the individuals remaining close by each other. Yet in the workplace, support may sometimes best be given by withdrawing to a respectful distance. Allowing a distressed colleague to recover composure without feeling under immediate scrutiny may be the better course. And there may be cases in which support is best expressed by silence rather than the persistently intrusive inquiry about well-being. Assuming, however, that the difficulties of giving content to the notion of providing psychological support could be surmounted, the first two kinds of difficulty identified above would remain. Why should there be an instruction confined to officers directed to work in pairs? Does not the exception to the rule (for operational necessity) falsify the conclusion that a reasonable employer would respond to the risk of psychiatric injury by issuing and enforcing such an instruction? Or are both difficulties sufficiently met by understanding the instruction as a response that recognises that the risk of psychiatric injury cannot be eliminated, but may be reduced? Both difficulties that have been identified find their roots in the very nature of police work. It is the nature of that work that entails that the risk of psychiatric injury, occasioned by traumatic incidents, cannot be eliminated. It cannot be eliminated because police officers must confront traumatic incidents in the course of their duties. (Those observations may be thought to suggest the need to consider questions of voluntary assumption of risk but at no stage of the litigation has the State sought to raise such questions.) To perform the tasks that society expects of police, as those tasks were expressed in the Police Service Act, police officers must obey the lawful orders given by their superiors and must carry out their lawful duties. That is why to neglect or refuse either to obey a lawful order or to carry out any lawful duty is a criminal offence56. Once the content of the postulated general instruction is identified and set against the requirements of the Police Service Act it is evident that not to give and enforce compliance with such an instruction was not a breach of duty. That is not because the risks of psychiatric injury to police officers were and are not reasonably foreseeable. They are. The response that Shirt requires a court to identify when considering breach of duty is a response which must have regard, in this case, to the responsibilities cast on the Police Service and on individual police officers. They are the "other conflicting responsibilities" of which Mason J spoke57 in Shirt and which were to be taken into account in identifying the reasonable response to the risk. In particular, obedience to lawful orders, and the carrying out of lawful duties, is of primary and determinative significance. Why that is so is illustrated by the facts of this case. Senior Constable Evans said, in his evidence at trial, that he did not stay in the treatment room with Ms Fahy because he had other police duties to perform. In particular he referred to a need to secure what was a crime scene where a serious crime had been committed, to search for a weapon and to look at a 57 (1980) 146 CLR 40 at 47. surveillance video record in the video store. The trial judge rejected Mr Evans' evidence as an "unconvincing" explanation for his absence. In the Court of Appeal the rejection of Mr Evans' account was treated58 as consistent with a finding that other officers who had come to the scene could have done what Mr Evans said he was doing. Whether this understanding of the evidence is consistent with the trial judge's findings is a question that need not be examined. What is important is that Mr Evans' explanation of what he was doing reflected what could have happened at the scene and, if it did, it would have been a course of conduct consistent with the requirements of the Police Service Act. The senior of two officers assigned to work together must take responsibility for the way in which duties are divided. The junior officer must comply with the senior officer's orders. Each must perform their duties and must protect "persons from injury or death, and property from damage, whether arising from criminal acts or in any other way"59. The postulated instruction would require police officers assigned to work in pairs to remain together unless operational requirements dictated otherwise. That creates tension between the performance of the officer's duties and the need to protect a fellow officer. On its face, the instruction resolves that tension, but it seeks to do that on the assumption that a choice can be made between performance of one duty and performance of the other. That is, it assumes that the dictates of operational necessity or other sufficient cause (which must be given precedence over the duty to protect a fellow officer) will be apparent at the time. It may greatly be doubted, however, that this is so. Indeed, the more difficult and pressing the circumstances confronting police officers, the more difficult it will often be to decide what should be done, and who should do it. And it is the most difficult and pressing circumstances that are most likely to carry the risk of psychiatric injury to the officers involved. This necessary imprecision in the practical application of the instruction is a strong reason to doubt that a reasonable "employer" would have concluded that it should be issued. There is, however, a further, and more deep-seated, difficulty about the postulated instruction. Because it would require the making of a choice between the performance of duties owed generally and a duty owed to fellow officers, one duty would have to be given primacy. The hypothesis for the postulated instruction is that it is the first set of duties that is given that status. And as noted earlier, that strips the instruction to do what can be done to help and support 58 (2006) 155 IR 54 at 59 [20]. 59 s 6(3)(b). fellow officers confronting traumatic incidents of much of its content. But because the qualification or exception to the instruction has that effect, a very likely, even inevitable, consequence of giving the instruction would be that the protection of fellow officers would be treated by those to whom it was given as being of no less importance than the performance of the duties imposed on police officers by the Police Service Act. This possible misunderstanding of the postulated instruction is a powerful reason for concluding that a reasonable "employer" would not have issued it. But more than that, no instruction could lawfully be given that would qualify the statutory responsibilities imposed upon police officers by the Police Service Act and enforced by s 201 of that Act. And by requiring officers to choose between whether their attendance to those duties is necessary and staying to support a colleague, the "employer" would seek to qualify those responsibilities. The qualification or exception to the postulated instruction, whether it is expressed by reference to "operational necessity", "other sufficient cause" or both, qualifies the duties whose performance is enforced by s 201. Because those duties were statutory responsibilities, they trumped the other considerations which would ordinarily be put into the balancing exercise spoken of in Shirt. Neither the Court of Appeal nor the trial judge recognised this to be so, and in that respect failed to apply Shirt. No reconsideration of Shirt It follows from what has been said that there is no occasion, in this case, to reconsider the correctness of Shirt. It is as well to say, however, that no persuasive argument was mounted in this case for the view that Shirt should now be reconsidered60. It is a decision that has stood for more than 25 years and has been applied frequently both in courts of trial and appeal and in this Court. There may be cases when the principles stated in Shirt have not been applied accurately. In particular, arguments of the kind made, and rejected, in Vairy and in Mulligan v Coffs Harbour City Council61 may suggest a misunderstanding of the so-called "calculus" that would seek to determine questions of breach in some cases by balancing the cost of a single warning sign against the catastrophic consequences of a particular accident. But the fact, if it be so, that Shirt has not always been applied properly does not provide any persuasive reason to reconsider its correctness. 60 John v Federal Commissioner of Taxation (1989) 166 CLR 417; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 71 [55], 101-106 [152]-[167]; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 45 [38]. 61 (2005) 223 CLR 486. Further, contrary to an argument advanced on behalf of the State, the fact that States and Territories have chosen to enact legislation which, in some cases, may alter the way in which questions of breach of duty of care are to be approached in actions for damages for negligence provides no reason to re-express this aspect of the common law. If anything, the diversity of legislative approaches manifest in legislation enacted on this subject62 points away from the desirability of restating the common law. Conclusion and orders The appeal to this Court was conducted on the basis that disposition of the arguments about the provision of support to Ms Fahy at the scene was determinative. The respondent did not seek to uphold the judgment she had obtained at trial by reference to other considerations, whether concerning the Police Service's response to her participation in this traumatic incident or otherwise. It follows that, for the reasons given earlier, the appeal to this Court should be allowed, paragraphs 2 and 3 of the orders of the Court of Appeal made on 4 April 2006 be set aside and in their place there be an order that in place of the order of the District Court of New South Wales that there be a verdict for the plaintiff there be judgment for the defendant. Consistent with the terms on which special leave to appeal to this Court was granted, the orders for costs made at trial and in the Court of Appeal are not to be disturbed and the appellant in this Court should pay the respondent's costs of the appeal. 62 Civil Liability Act 2002 (NSW); Wrongs Act 1958 (Vic); Civil Liability Act 1936 (SA); Civil Liability Act 2003 (Q); Civil Liability Act 2002 (WA); Civil Liability Act 2002 (Tas). Kirby KIRBY J. This appeal, from the Court of Appeal of the Supreme Court of New South Wales63, concerns the law of negligence. Specifically, it concerns the question whether the State of New South Wales ("the appellant"), as the admitted employer of Ms Gemma Fahy ("the respondent"), then a constable in the Police Service of the State64, was liable to pay damages to the respondent. The damages were claimed for a severe condition of post-traumatic stress disorder ("PTSD") from which it was accepted the respondent suffered following circumstances arising in the course of her employment. The respondent succeeded at trial in the District Court of New South Wales (Graham DCJ)65. By its appeal to the Court of Appeal, the appellant challenged that outcome. So far as the challenge related to the liability of the appellant, it was unanimously dismissed by the Court of Appeal, although the reasons for judgment were somewhat different as between Spigelman CJ (with whom M W Campbell AJA substantially agreed66) and Basten JA. Upon a particular aspect of the damages awarded to the respondent by the primary judge (in total $469,893), the Court of Appeal unanimously upheld the appellant's appeal67. On this footing, the Court of Appeal ordered that the matter be remitted to the District Court for determination of the allowance to be made68 for a reduction of the respondent's damages on the basis of a failure on her part to mitigate her damage by taking anti-depressant medication after this was prescribed for her69. No cross-appeal to this Court was brought on that issue. Accordingly, if the appellant's challenge to its liability fails, that would be the result, unless the parties earlier settled that "one outstanding matter"70. 63 New South Wales v Fahy (2006) 155 IR 54. 64 Police Service Act 1990 (NSW), s 73. 65 Fahy v State of New South Wales unreported, 28 February 2005 ("reasons of the primary judge"). 66 (2006) 155 IR 54 at 59 [27], 87 [154]; but see at 87 [158]. 67 (2006) 155 IR 54 at 59 [23], 84 [142], 87 [154]. 68 Under the Workers Compensation Act 1987 (NSW), s 151L(3). 69 (2006) 155 IR 54 at 81-82 [129], 83-84 [137]. 70 As Spigelman CJ urged them to do: (2006) 155 IR 54 at 59 [23]. Kirby The general background to the case is described in other reasons71. However, to explain the conclusion to which I come, it will be necessary to add certain relevant facts disclosed in the evidence taken at the trial. Specifically, it will be necessary to refer in greater detail to the conclusions of the judges below, all of whom were of the view that the respondent was entitled in law to succeed in her claim framed in negligence. When the further facts are understood, concerning the system of work instituted for police constables faced (as the respondent undoubtedly was) with fraught circumstances, the conclusion of the primary judge, and of the Court of Appeal, can be better appreciated. This is a case of an employer that correctly recognised special risks and dangers for its employees. It devised a system which was carried out defectively on the occasion when the respondent suffered her damage. On this basis, the case is a relatively straight-forward one involving the failure of the employer to maintain and carry out its own system of work, protective of the respondent. So explained, it was open to the primary judge to find negligence against the appellant. There is no occasion for this Court to find error in the substantive conclusion reached below. The judgment of the Court of Appeal to that effect should be affirmed. The issues Matters not in issue: In this Court, a number of topics, canvassed earlier, or in argument, can be put to one side as ultimately not in issue. Thus, in defining the scope and content of the duty of care owed by the appellant to the respondent, this Court does not need to have regard to the Occupational Health and Safety Act 1983 (NSW). At trial, the respondent neither pleaded, nor relied upon, the provisions of that Act as affording evidence of negligence on the part of the appellant, as a body subject to the duties prescribed by that Act. Whilst some of the provisions of the Act were referred to in documents tendered in evidence in the respondent's case72, the failure of the respondent to run such a case at trial would render it unfair, now, in this Court, to permit the issue to be raised substantively for the first time. This is so, although it would appear that the Court of Appeal, in a series of decisions, has treated the obligations imposed by the Act as relevant to the ascertainment of the duty owed at common law to persons engaged in 71 Reasons of Gummow and Hayne JJ at [14]-[16], [29]-[44]. 72 Thus the expert report of Mr Terrence O'Connell referred to s 15(1) of the Act and to the New South Wales Police Service Occupational Rehabilitation Policy published in June 1996. Kirby relationships of employment and quasi-employment73. Indeed, the Act has been specifically considered in that Court as relevant to the obligations of care arising in the employment of police officers74. Nothing significant would appear to turn on this issue, given that the Court of Appeal did not find that the Act, or its application to the peculiarities of police employment, obliged any different approach to the content of the duty of care from that expressed by this Court (in Wyong Shire Council v Shirt75, to which reference will shortly be made). Various other issues, or potential issues, can likewise be ignored. Thus, no one until the proceedings reached this Court ever suggested the possibility that a police constable might be excluded from recovery on the basis of negligence by reference to the notion of voluntary assumption of risk (volenti)76. If we have reached a stage in the law of employment and quasi-employment in Australia that this nineteenth century concept is to be revived for this purpose, notwithstanding all the legal reasoning that argues to the contrary77, specifically in the case of police78 and like employment79, a specific argument to that effect would be necessary. Unsurprisingly, in my view, no such argument was advanced in this appeal. Various other issues can also be taken as settled. They include the primary judge's general quantification of the respondent's damages, save for the point of mitigation80; his conclusion that the negligent acts or omissions of the appellant (if proved) "materially contributed to the onset of [PTSD] and 73 eg TNT Australia Pty Ltd v Christie (2003) 65 NSWLR 1 at 15-16 [68]-[70]. 74 New South Wales v Williamson [2005] NSWCA 352. 75 (1980) 146 CLR 40 at 47-48. 76 cf reasons of Gummow and Hayne JJ at [71]; Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44 at 58-59 [40], 65 [57]. 77 See eg Bowater v Rowley Regis Corp [1944] KB 476 at 481; Burnett v British Waterways Board [1972] 1 WLR 1329; [1972] 2 All ER 1353; Blackburn, "'Volenti Non Fit Injuria' and the Duty of Care", (1951) 24 Australian Law Journal 78 Attorney-General for Ontario v Keller (1978) 86 DLR (3d) 426. 79 Ogwo v Taylor [1988] AC 431 (fire service). 80 (2006) 155 IR 54 at 80 [119], 81 [128]. Kirby depression or anxiety conditions in the [respondent]"81; and his rejection of the defence of contributory negligence82. Contrary to what was suggested during argument in this Court, the pleadings in the record show that the respondent did plead a case based on the appellant's vicarious liability for the acts and omissions of its "servant or agent". Thus, it was specifically pleaded that the respondent at the critical time "was accompanied by her partner who was also a member of the New South Wales Police Service. Rather than assist her, the partner decamped."83 Moreover, the particulars of negligence pleaded against the appellant included84: "By its servant or agent, leaving the scene of the armed robbery and exposing the [respondent] to the victim by herself." Ultimately, it is of no consequence whether the appellant's liability arose directly, or through the acts and omissions of police officers (such as Senior Constable Steven Evans and Inspector Whitten) for whom it was made vicariously liable by the operation of the Law Reform (Vicarious Liability) Act 1983 (NSW)85. As was rightly noted by the Court of Appeal86, on the facts of the case, "[n]othing turns … on the two different ways of approaching the duty". Nevertheless, the great part of the respondent's case, as described in the reasons of the primary judge and of the Court of Appeal, concerned the appellant's system of work and its provision of counselling and follow-up after injury. On the evidence, it was the suggested failure of the system, at the point where the respondent suffered the trauma that triggered her PTSD and depression, that became the focus of most of the argument in this Court. Correctly, the primary judge did not treat PTSD as somehow excluded by law from the kind of damage that would render the appellant liable in negligence if the other ingredients of the tort were proved87. Nor did he treat the fact that the 81 Reasons of the primary judge at 63, 66. 82 Reasons of the primary judge at 73-74. 83 Ordinary statement of claim, par 5. 84 Ordinary statement of claim, par 6(d). 86 (2006) 155 IR 54 at 56 [2] per Spigelman CJ (with whom M W Campbell AJA agreed at 87 [154]). 87 Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383 at 394, 407; Tame v New South Wales (2002) 211 CLR 317 at 390 [213]; cf Campbelltown City Council v Mackay (Footnote continues on next page) Kirby respondent had been a police officer with three years' operational experience before her exposure to the traumatic events that triggered her psychological illness, and had apparently adequately coped with earlier stressful incidents, as somehow placing her outside the duty of care owed to her by the appellant, to take positive steps to protect her from such well-known and recognised employment risks as face police constables in the State and throughout the Commonwealth88. The "employment" of police: As Gummow and Hayne JJ point out in their joint reasons89, this is another case where, to define with legal accuracy the ambit of the duty of care owed to the respondent in the circumstances complained of, it was necessary to start with the statutory provisions governing the relationship in question90. No statement of the common law applicable to a case in respect of which a statute has relevant application, may ignore the material provisions of statute law. The peculiarity of the office of a constable of police, viewed from the standpoint of common law principles, was explained by this Court in its early decision of Enever v The King91. As Griffith CJ pointed out in that case, the fundamental problem, from the point of view of rendering the government or the Crown liable vicariously for wrongs done by a constable, statute apart, was that the constable's exercise of powers was viewed by the law as conduct personal and incidental to that office92. This holding left police constables exposed to personal liability at common law at the suit of third persons and potentially outside the protections ordinarily applicable by that time to those engaged in the employment relationship93. It eventually led to legislative reform. At the (1989) 15 NSWLR 501 at 503-504; Tennant, "Liability for Psychiatric Injury: an Evidence-based Appraisal", (2002) 76 Australian Law Journal 73 at 75, 79. 88 Reasons of the primary judge at 75. 89 Reasons of Gummow and Hayne JJ at [18]. 90 cf Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 91 (1906) 3 CLR 969. Enever was approved by the Privy Council in Attorney- General for New South Wales v Perpetual Trustee Co Ltd (1955) 92 CLR 113 at 120; [1955] AC 457 at 479-480. 92 (1906) 3 CLR 969 at 975. 93 See Australian Law Reform Commission, Complaints Against Police, Report No 1, Kirby relevant time, the applicable legislation in New South Wales was the Police Service Act 1990 (NSW)94. In the Court of Appeal, Basten JA commenced his analysis by reference to the collection of State legislation relevant to ascertaining the ambit and extent of the duty of care owed by the appellant to the respondent in the "employment" relationship95. To use the word chosen by Basten JA96, there are various reasons why the way in which the respondent sued the appellant, as if it were liable to her in law as an ordinary employer, was "inapt". As Basten JA observed, for specified statutory purposes the Commissioner of Police is expressly deemed to be the employer of a constable97. But there was no equivalent general provision in the Police Service Act98. In the trial of the present proceedings, these fine points of law were glossed over for a simple reason. In par 2 of her ordinary statement of claim, the respondent pleaded her cause of action asserting that she was "employed by the [New South Wales Police] Service as a Police Officer" and in par 1 she sued to recover from the appellant pursuant to the Crown Proceedings Act 1988 (NSW). In par 1 of its defence, the appellant admitted pars 1 and 2 of the statement of claim. Unsurprisingly, therefore, the respondent's claim went to trial, and was decided, upon the footing that the appellant was content to have its obligations decided as representative of the respondent's employer on the dual footing that the State or "the Crown in right of New South Wales"99 was the proper party to be sued in the circumstances100 and that the legal relationship existing at all relevant times was that of "employment". 94 The Police Service Act is now known as the Police Act 1990 (NSW). 95 (2006) 155 IR 54 at 60-61 [30]-[33] noting the Law Reform (Vicarious Liability) Act 1983 (NSW), s 9B(2) and Crown Proceedings Act 1988 (NSW). See also New South Wales v Ibbett (2006) 81 ALJR 427; 231 ALR 485. 96 (2006) 155 IR 54 at 60-61 [32]. 97 See eg Anti-Discrimination Act 1977 (NSW), s 4B; Commissioner of Police v Estate of Russell (2002) 55 NSWLR 232 at 250 [90]-[94]. 98 (2006) 155 IR 54 at 61 [33] where Basten JA called attention to s 41 of that Act. 99 Crown Proceedings Act, s 3. 100 cf British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30 at 84-86 [145]-[153] referring to Byrne v Ireland [1972] IR 241 at 272 per Walsh J. Kirby Once a legal problem of this kind is identified, no court can be required to accept concessions or assumptions agreed between the parties that would lead the court to knowingly ignore or misapply the law101. Yet no party to this appeal, either in the Court of Appeal or in this Court, asked the court to clarify the precise relationship that existed between the appellant and New South Wales police officers such as the respondent, if it was not that of employment. No party suggested that this Court should revoke special leave on that basis102. Both parties appeared to be content to allow the appeal to be decided on the basis stated in the pleadings, upon which footing the trial had been conducted and the arguments of the parties decided. Judicial dicta exist which suggest that, in contemporary circumstances, at least for the application of industrial relations legislation, members of a State police force are indeed "employees" of the State103. Self-evidently, the appellant is not without access to the advice of experienced lawyers, and particularly when it comes to clarifying its own legal status and amenability to be sued in respect of a specified relationship having well-known legal consequences. In such circumstances, although the appellant's admissions on the pleadings gloss over potential problems that were correctly identified by Basten JA in the Court of Appeal, and although such problems are not theoretically immaterial to the resolution of the issues remaining in the appeal, I am content to deal with the dispute between the parties on the basis that they have chosen104. This means that the appeal to this Court must be decided on the footing that the respondent was an employee of the appellant, or of a body represented by the appellant, and was owed the duties that ordinarily attach in law to the employment relationship, without any relevant diminution or variation deriving from the peculiarities of the position held by the respondent, namely that of police constable, or the like positions held by the other relevant police officers whose conduct was put in issue, namely Senior Constable Evans (the respondent's "partner" or "buddy" at the relevant time) and Inspector Whitten (the duty officer in charge of the relevant operation during which the respondent suffered the damage for which she sued). 101 Roberts v Bass (2002) 212 CLR 1 at 54 [143]. 102 cf Klein v Minister for Education (2007) 81 ALJR 582 at 590 [38], 593-594 [57]; 232 ALR 306 at 315, 319-320. 103 Konrad v Victoria (1999) 91 FCR 95; but cf Griffiths v Haines [1984] 3 NSWLR 104 cf Klein (2007) 81 ALJR 582 at 590 [38], 593-594 [57]; 232 ALR 306 at 315, Kirby Issues in contest: By the foregoing analysis, the actual issues in contest in this appeal are narrowed. Effectively, they are two: The reopening of Shirt issue: Whether this Court, as the appellant in an amended ground of appeal urged, should reconsider, and re-express, the authority stated in its decision in Shirt105 as to the test for establishing a breach of the duty of care on the part of a party alleged to be liable to another in the tort of negligence; and The standard/breach issue: Whether, in the circumstances of this appeal, and according to the legal principles so expressed, the appellant has demonstrated error on the part of the Court of Appeal and the primary judge in expressing the ambit of the duty of care owed to the respondent and in upholding the suggested breach of that duty giving rise to liability in the appellant for negligence. Having regard to this Court's authority, the duty of the respective courts, both at trial and in the Court of Appeal, was to apply the approach expressed in Shirt106. The only court in which that approach might be re-examined, and re- expressed, was this Court. Picking up some suggestions put to it in the course of argument of the special leave application107, the appellant formally asked this Court to allow it to add a ground of appeal challenging the holding in Shirt. Even if, upon one view, the alternative approach available to the appellant (namely that the event was "not unlikely to occur")108 would produce no different result in the present case, the correct starting point for this Court is the identification of the governing legal rule. Where, as here, the issue has been fully argued, it is desirable that it be squarely determined by the Court and laid to rest. For this reason, I shall deal first with the issue of the status of the "Shirt calculus" and whether it should be abolished, or re-expressed, as the appellant argued it should at the threshold of its submissions. The maintenance of the approach in Shirt Context of the issue: The appellant's concession that the relationship of the respondent to the Police Service was that of employment effectively concluded, in the circumstances of this appeal, any issue as to whether a duty of 105 (1980) 146 CLR 40 at 47-48. 106 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 403 [17]. 107 [2006] HCATrans 472 at 140. 108 Caterson v Commissioner of Railways (1973) 128 CLR 99 at 101-102 per Kirby care existed for which the appellant was liable in law. This was because the employment relationship is clearly one that falls within the concept of "neighbourhood" which Lord Atkin declared to be the first step in determining the existence of a legal duty of care for the purpose of the tort of negligence109. Indeed, the employment relationship is one of comparatively few that impose specific obligations on the duty bearer to take affirmative action to prevent injury to others, namely those who are employed by, and thus subject to the general direction and control of, the other110. At common law the general rule is that a person "is not bound to do acts for others' benefit; he may sit still and let things take their course"111. However, by long authority, the very nature of the employment obligation creates a duty of care between those party to it. Indeed, it is a relationship that obliges the employer affirmatively to establish and enforce a safe system of work112. In the employment relationship, the employer is responsible for keeping abreast of technological and scientific knowledge113 and for taking positive action to consider, and respond to, the needs of accident prevention in accordance with "changing the community"114. Some of the most important contributions to the perception of the last-mentioned necessity, according to our law, were written by McHugh J115. increasing concern with safety justice and ideas of Merely prescribing a safe system is not enough to discharge the obligation that is owed to employees. The system must be enforced. This must be done even against employee resistance116. Although an employer may not always have to take active steps to acquaint itself with special or unique weaknesses or 109 Donoghue v Stevenson [1932] AC 562 at 580. 110 cf Crimmins (1999) 200 CLR 1 at 98 [276] per Hayne J (diss). 111 Terry, "Negligence", (1915) 29 Harvard Law Review 40 at 52. 112 See eg Katsilis v Broken Hill Pty Co Ltd (1977) 52 ALJR 189; 18 ALR 181. 113 Stokes v Guest, Keen and Nettlefold (Bolts and Nuts) Ltd [1968] 1 WLR 1776 at 114 Bankstown Foundry Pty Ltd v Braistina (1986) 160 CLR 301 at 309. 115 See eg Mihaljevic v Longyear (Australia) Pty Ltd (1985) 3 NSWLR 1 at 9, 18; Bankstown Foundry Pty Ltd v Braistina (1985) Aust Torts Reports ¶80-713 at 69,127, see also at 69,125-69,126 per Priestley JA. 116 McLean v Tedman (1984) 155 CLR 306 at 313. Kirby predispositions to injury and damage on the part of particular employees117, where the employer becomes aware that there is such a susceptibility, or should be so aware in the ordinary course of reasonable conduct, special precautions need to be taken by it, to fulfil the duty of care that is inherent in the employment relationship118. Against the background of this established body of doctrine in the common law, which was not challenged in this appeal, the issue presented was not whether a duty of care existed on the part of the Police Service to an employee such as the respondent. The express acknowledgment of the employment relationship foreclosed that issue. So much was correctly recognised in the Court of Appeal by Spigelman CJ119: "There is no issue that the Appellant owed a duty to the Respondent to provide a safe system of work. Nor was there any issue that, if either Constable Evans or Inspector Whitten were in breach of a duty of care, then the Appellant was vicariously liable for that breach. Nothing turns, on the facts of the case, on the two different ways of approaching the duty." Instead, the argument advanced for the appellant, in this Court as in the Court of Appeal, concerned what that given duty of care reasonably entailed in the circumstances of this case and whether, as so defined, it had been breached by the acts and omissions of the Police Service. These were the questions that took the Court of Appeal to the approach required in Shirt. The decision in Shirt is so well known, and frequently applied, that it was not cited by name in the Court of Appeal's reasons. But in the statements of the ambit of the duty of care, both of Spigelman CJ120 and of Basten JA121, the resonances of Shirt can clearly be observed. Moreover, in each of those reasons, care was taken to distinguish the then recent authority of this Court in Koehler v Cerebos (Australia) Ltd122. That was a case in which this Court unanimously 117 Blackman v Commonwealth (1978) 20 ACTR 33 at 43. 118 cf Paris v Stepney Borough Council [1951] AC 367; Qualcast (Wolverhampton) Ltd v Haynes [1959] AC 743 at 753; Silvestro v Verbon Pty Ltd [1973] 2 NSWLR 119 (2006) 155 IR 54 at 56 [2]. 120 (2006) 155 IR 54 at 56 [5] (M W Campbell AJA agreeing at 87 [154]). 121 (2006) 155 IR 54 at 74 [92]-[94]. 122 (2005) 222 CLR 44. Kirby rejected an appeal by an employee who claimed to have been exposed to the risk of psychiatric injury as a consequence of her employment duties. Koehler was plainly distinguishable on the facts. But it was common, both to the joint reasons in Koehler123 and, more reluctantly, the concurring reasons of Callinan J in that case124, that the proper approach to the ascertainment of the duty of care owed by the employer to the employee (and whether it was breached) was that stated in Shirt. With Koehler fresh in mind, the Court of Appeal therefore approached the task before it by asking the questions mandated in the familiar passage in the reasons of Mason J in Shirt, which Callinan J in Koehler had ruefully observed had "been constantly applied throughout this country and in this Court since it was decided"125. The Shirt calculus: Because it is central to the resolution of the issues argued in this appeal, it is necessary to remember that the critical passage in the reasons of Mason J in Shirt126 directs the decision-maker to ask two questions, viz (1) would a reasonable person in the defendant's position have foreseen that the conduct postulated involved a risk of injury to the plaintiff or a class of persons including the plaintiff; and (2) if so, what would a reasonable person do by way of response to such risk. However, there then immediately follows a passage which, as McHugh J remarked in Tame v New South Wales127, has sometimes been overlooked, namely128: "The perception of [that] response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have. It is only when these matters are balanced out that the tribunal of fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant's position." 123 (2005) 222 CLR 44 at 53 [19]. 124 (2005) 222 CLR 44 at 64 [54]. 125 (2005) 222 CLR 44 at 64 [54]. 126 Cited in full in the reasons of Gummow and Hayne JJ at [56]. 127 (2002) 211 CLR 317 at 353 [99]. 128 Shirt (1980) 146 CLR 40 at 47-48. In his reasons in Tame, McHugh J added emphasis to the words in the last sentence. Kirby This passage in the reasons of Mason J in Shirt followed a decision of the Judicial Committee of the Privy Council in The Wagon Mound [No 2]129. In that decision, Lord Reid, giving the reasons of the Board, in an appeal from a decision of Walsh J in the Supreme Court of New South Wales130, remarked131: "If a real risk is one which would occur to the mind of a reasonable man in the position of the defendant's servant and which he would not brush aside as far-fetched, and if the criterion is to be what that reasonable man would have done in the circumstances, then surely he would not neglect such a risk if action to eliminate it presented no difficulty, involved no disadvantage, and required no expense." It was this approach which had led Glass JA, in the New South Wales Court of Appeal decision from which the appeal in Shirt came to this Court132, to describe the test of foreseeability, in the context of breach of duty, as "undemanding"133. When Shirt was heard in this Court, Mason J observed that134: "Despite the force of Mr McHugh's argument I am not persuaded that a finding of breach of duty was beyond the jury's competence." In stating the principles, later described as the "Shirt calculus", Mason J took considerable pains to emphasise that, in the context of breach of duty, "in many cases the greater the degree of probability of the occurrence of the risk the more readily it will be perceived to be a risk", although "it certainly does not follow that a risk which is unlikely to occur is not foreseeable"135. He also emphasised that the touchstone which alone opened up a finding of civil liability in negligence at common law was "what a reasonable man would do by way of response to the risk". 129 Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty [1967] 1 AC 617. 130 Miller Steamship Co Pty Ltd v Overseas Tankship (UK) Ltd [1963] SR (NSW) 948. 131 [1967] 1 AC 617 at 643-644. See also Koufos v C Czarnikow Ltd [1969] 1 AC 132 Shirt v Wyong Shire Council [1978] 1 NSWLR 631. 133 Shirt v Wyong Shire Council [1978] 1 NSWLR 631 at 641. The adjective was noted by Mason J in Shirt (1980) 146 CLR 40 at 44. 134 (1980) 146 CLR 40 at 48. 135 (1980) 146 CLR 40 at 47. Kirby The decision in Shirt was given by this Court at a time when appeals still lay in Australia from State courts to the Privy Council, a point noted by Mason J136. Although this was a factor in persuading Mason J to accept and adopt the formulation of Lord Reid, his Honour made it clear that he also did so because "there are sound reasons for accepting it as a correct statement of the law"137. The issue now presented by the appellant's threshold attack on the principles so stated, is whether the formulation in Shirt should be revised and re- expressed. Suggestions for revision of Shirt: One of the foremost proponents of a revision of the approach expressed in Shirt was McHugh J, expressing in his judicial reasons arguments which he had advanced as counsel, but which had not found favour in Shirt with Mason J (or with Stephen J, Murphy J and Aickin J, who expressly or impliedly agreed with Mason J in his conclusions and reasoning138). In McHugh J's repeated opinions in this Court139, the endorsement by Mason J in Shirt140 of the principle that "a risk which is not far-fetched or fanciful is real and therefore foreseeable" was the beginning of "the problems that now beset negligence law"141. Although the Shirt formulation is one which encourages, and promotes, consideration of the necessities of accident prevention (a principle which McHugh J elsewhere repeatedly favoured142), his Honour several times suggested that this Court should return to the test proposed by Barwick CJ in Caterson v Commissioner of Railways143. That test would confine the risk to be guarded against to one that is "not unlikely to occur". This, or some other formula designed to exclude remote and insubstantial risks from the 136 (1980) 146 CLR 40 at 47. 137 (1980) 146 CLR 40 at 47. 138 (1980) 146 CLR 40 at 44, 49, 50 (Wilson J dissented at 50ff, see esp at 53). 139 See Tame (2002) 211 CLR 317 at 352-354 [98]-[101]. 140 (1980) 146 CLR 40 at 48. 141 Tame (2002) 211 CLR 317 at 352 [98], 353 [100]. See also Swain v Waverley Municipal Council (2005) 220 CLR 517 at 548-549 [79]-[81]. 142 See below these reasons at [132]. 143 (1973) 128 CLR 99 at 101-102. Kirby need for positive response, was the course propounded by McHugh J in order to return the Australian law of negligence, in this respect, to what he saw as the path of reasonableness from which it had strayed following The Wagon Mound [No 2] and Shirt. Equally, or more, insistent about the need to revisit the Shirt formulation have been successive opinions of Callinan J in Tame144 and Koehler145, and Callinan and Heydon JJ in Vairy v Wyong Shire Council146. That view is repeated in this case in the reasons of Callinan and Heydon JJ (although their Honours say that it is not necessary for the decision of this case that Shirt be overruled)147. The appellant agreed that the test in Caterson could not now be adopted, as least in New South Wales, as it would be inconsistent with the Civil Liability Act 2002 (NSW) which requires that the risk be "not insignificant". The appellant therefore urged this Court to substitute the requirement that the risk be regarded as reasonably foreseeable only where it is so significant that it is reasonable to require a defendant to examine the need for precautions to eliminate it. This is the "significance" test. In effect, the appellant urged the Court to adopt the test stated in s 5B of the Civil Liability Act 2002 (NSW) which provides: "(1) A person is not negligent in failing to take precautions against a risk of harm unless: the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and the risk was not insignificant, and in the circumstances, a reasonable person in the person's position would have taken those precautions." Whilst I respect the repeated expressions of opinions of my colleagues who hold to the contrary view, I cannot agree that it is timely, appropriate or desirable to re-express the common law of Australia in this respect. I will state my reasons for this conclusion. 144 (2002) 211 CLR 317 at 429 [331]. 145 (2005) 222 CLR 44 at 64 [54]. 146 (2005) 223 CLR 422 at 480-481 [213]. 147 Reasons of Callinan and Heydon JJ at [213]. Kirby The re-expression of Shirt should be rejected The Shirt rule is nuanced: First, the decision in Shirt was stated by this Court with a high degree of unanimity in what was effectively a test case propounded to permit a re-expression by the Court of an applicable legal principle of broad application. Even Wilson J, who dissented as to the outcome and would have pulled back from the "undemanding test of foreseeability", stated that he had "some misgiving as to the use of the term 'not unlikely to occur' which in my opinion is patently obscure"148. Moreover, Wilson J remarked that he did not "understand [Barwick CJ in Caterson] to be adopting a standard significantly different to that enunciated in The 'Wagon Mound' [No 2]"149. This last remark was perceptive, although it doubtless arose out of the then prevailing deference to the Privy Council in those areas of the law still subject to its appellate review of Australian judicial decisions. When the actual words of Lord Reid, later blamed as occasioning a wrong turning, are examined it is clear (as Mason J pointed out in Shirt150) that their Lordships in The Wagon Mound [No 2] positively rejected the view that "risk of injury which is remote is of necessity not a real risk and that it falls outside the concept of foreseeability". However, what Mason J went on to emphasise in Shirt was that the foreseeability of the risk was only the first question that the decision-maker had to ask. It might be answered in the affirmative. But a second question remained. It was what a reasonable person would do by way of response to the then identified risk. It was in that connection that Mason J listed the factors relevant to what was later called the "calculus" that had to be performed. Those factors introduced, in a much less obscure and more nuanced way, the practical considerations that Barwick CJ in Caterson had sought to express in his "patently obscure" ambit phrase "not unlikely to occur". It follows that it is quite wrong for critics to portray Shirt as providing an "open sesame" to liability by removing the requirement of reasonableness inherent in Lord Atkin's approach in Donoghue v Stevenson151. The law has not lost the moorings of that fundamental requirement. On the contrary, the Shirt formulation, in a highly practical way, directs specific attention to a series of considerations that are typically such as to moderate the imposition of legal liability where that would not be reasonable. 148 (1980) 146 CLR 40 at 53. 149 (1980) 146 CLR 40 at 53. 150 (1980) 146 CLR 40 at 46. 151 [1932] AC 562 at 580. Kirby Shirt has been misapplied: If there has been an incorrect application by trial courts of the full force of the formulation expressed by Mason J in Shirt, that is not a weakness in this Court's formulation. It simply shows that the "calculus" has not been given its full operation and perhaps, as McHugh J observed in Tame152, those courts have been overly transfixed by reference to the "undemanding" test of foreseeability and insufficiently mindful of the second question to be asked and of the specific criteria which give that question a practical operation. In a number of cases, this Court has pointed to the failure of trial counsel and judges to have regard, and to give proper weight, to the "magnitude of risks, the likelihood of the occurrence of risks, the expense and difficulty of responding to every possible risk in an effective way and the potentially conflicting considerations to be given weight"153. It is not a rational response to this problem to re-express a formulation that expressly calls attention to considerations which, in a proper case, may persuade the decision-maker that what a reasonable person would do by way of response to a foreseeable risk in the particular circumstances of a case might be: nothing154. "Calculus" is not mathematical: The fact that the Shirt formulation has sometimes been ignored or misapplied is not a reason for abandoning it. In countless cases, courts of trial and of appeal have applied the formulation accurately, according to its terms. In the nature of things, this Court rarely sees such instances. Any excuse for overlooking the repeated reminders about the criteria of practical reasonableness contained in the latter part of the Shirt formulation, that might have existed before such decisions as Tame, Swain v Waverley Municipal Council155 and Koehler, has now well and truly been dealt with by the judicial observations made in those decisions. Moreover, self-evidently, the reference to the Shirt formulation as a "calculus" is not intended to suggest a mathematical or scientific precision in the endeavour. The very components of the "calculus" deny any such expectation, most (if not all) of them being insusceptible to exact computation156. 152 (2002) 211 CLR 317 at 353 [99]. 153 Swain (2005) 220 CLR 517 at 577 [191]. 154 Reasons of Gummow and Hayne JJ at [58]. See also Romeo v Conservation Commission (NT) (1998) 192 CLR 431 at 480 [128]; Vairy (2005) 223 CLR 422 at 155 (2005) 220 CLR 517. 156 cf reasons of Gummow and Hayne JJ at [57]. Kirby Furthermore, although the Shirt formulation must be applied retrospectively by a court which knows that a misfortune of some kind is alleged to have happened to the plaintiff, of its nature it is designed to be applied prospectively (what the reasonable person "would have foreseen" and "would do by way of response to the risk"157). In this, there is nothing inconsistent with the approach stated in Shirt or indeed that earlier expressed by Barwick CJ in Maloney v Commissioner for Railways (NSW)158 to which Wilson J called attention in his reasons in Shirt159. In Maloney, Barwick CJ had said160: "Perfection or the use of increased knowledge or experience embraced in hindsight after the event should form no part of the components of what is reasonable in all the circumstances. That matter must be judged in prospect and not in retrospect. The likelihood of the incapacitating occurrence, the likely extent of the injuries which the occurrence may cause, the nature and extent of the burden of providing a safeguard against the occurrence and the practicability of the specific safeguard which would do so are all indispensable considerations in determining what ought reasonably to be done."161 Whatever may once have been the danger of oversight of the latter parts of the Shirt formulation, recent decisions, and recent trends in the law, have ensured that those risks need not now unduly trouble this Court. Relevance of new legislation: It is also relevant here to consider the enactment of legislation designed to re-express legal liability in negligence in ways intended to reduce such liability, such as the Civil Liability Act 2002 (NSW). This is because the common law operates in the crevices left after statutory provisions have addressed subjects on which the common law once spoke with uninterrupted authority. As this Court has said so many times in 157 (1980) 146 CLR 40 at 47 (emphasis added). 158 (1978) 52 ALJR 292; 18 ALR 147. 159 (1980) 146 CLR 40 at 55. 160 (1978) 52 ALJR 292 at 292-293; 18 ALR 147 at 148. 161 See eg Ardern v Ritchies Stores Pty Ltd [2001] VSCA 5; Campbelltown City Council v Frew [2003] NSWCA 154; O'Leary v Oolong Aboriginal Corporation Inc (2004) Aust Torts Reports ¶81-747; Tomisevic v Menzies Wagga Southern Pty Ltd [2005] NSWCA 178. Kirby recent years, where statute speaks, it is the parliamentary command that takes primacy and constitutes the starting point for legal analysis162. Nevertheless, the significance of legislation of this kind is not as the appellant urged. On the contrary, the disparity and specificity of the various legislative approaches in different States of Australia suggest that it would not be timely or appropriate for this Court, on this ground, to attempt a re-expression of the general principles of the Australian common law. In this, I agree with the reasons of Gummow and Hayne JJ163. This is not an area where the legislature has been neglectful or is unlikely to repair a demonstrated defect in the law164. Nor is it one where this Court's intervention is required to correct demonstrated injustice, departure from basic principle or disproportional consequences that cannot safely be left to particular parliamentary repair165. Shirt correctly states the law: Ultimately, I would not favour a re- expression of the law expressed in Shirt because I share the view expressed by Mason J in that case that there are sound reasons for accepting the formulation there expressed as a "correct statement of the law"166. Not only is it a statement that emerged from a long series of decisions dating back, at least, to Donoghue v Stevenson167. By expressing the approach to "foreseeability" in the first question stated in Shirt, in the undemanding way that appears there, for the purpose of deciding whether a breach of a duty of care has been established, this Court has encouraged all those in a relationship of "neighbourhood" (and certainly employers) to keep in mind and act upon the affirmative obligations of accident prevention that can sometimes arise out of the particularities of the relationship in question. A similar thought was expressed in the United States of America by Professor (later Chief Judge) Richard Posner in his influential essay "A Theory 162 Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 80 ALJR 1509 at 1528 [84] and cases there cited; 229 ALR 1 at 163 Reasons of Gummow and Hayne JJ at [79] by reference to the legislation noted in 164 Brodie v Singleton Shire Council (2001) 206 CLR 512 at 601-602 [229]-[233]. 165 cf Clayton v The Queen (2006) 81 ALJR 439 at 462-463 [119]; 231 ALR 500 at 166 (1980) 146 CLR 40 at 47. Kirby of Negligence", published in 1972168. Writing about the issue of foreseeability, Professor Posner pointed out that "[c]ourts invoke the doctrine of 'proximate cause' to excuse defendants from liability for unforeseeable consequences of negligence"169. He instanced the case of a train stopping at a crossing to allow a group of rowdy passengers to disembark. If this event were to cause fright to a car driver waiting at the crossing for the train to move on and to occasion erratic driving of the car because of such fright and anxiety resulting in a mishap and injury, the law would deny recovery. It might do so on the basis of causation. But Professor Posner indicated that the same result "follows from the economic standard of negligence". He explained170: "If negligence is a failure to take precautions against a type of accident whose cost, discounted by the frequency of its occurrence, exceeds the cost of the precautions, it makes sense to require no precautions against accidents that occur so rarely that the benefit of accident prevention approaches zero. The truly freak accident isn't worth spending money to prevent. Moreover, estimation of the benefits of accident prevention implies foreseeability." That is why, in judging the existence or otherwise of a breach of a duty of care, the door is left open by the "undemanding" test posed by the first question stated by Mason J in Shirt. Generally speaking, it is highly desirable that the law should encourage those with the power to do so (and one might say especially employers) to turn their attention to issues of accident prevention. Yet because such prevention is not to be purchased at excessive cost nor required for the "truly freak accident", or otherwise unreasonably, the Shirt "calculus" proceeds to require attention to what the reasonable person would do in all the circumstances. And it gives guidance about the types of considerations that such a person would take into account in acting reasonably. Because, with McHugh J, I regard the communitarian notion of accident prevention as an important and desirable operative consequence of the law of negligence171, I would not myself favour any re-expression of the law that would endorse a reduced vigilance in respect of accident prevention. Parliament can, if 168 (1972) 1 Journal of Legal Studies 29. 169 (1972) 1 Journal of Legal Studies 29 at 42. 170 (1972) 1 Journal of Legal Studies 29 at 42. 171 Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 at 477-478 [62]-[63] per McHugh J (diss), 492-493 [107] of my own reasons; Cole v South Tweed Heads Rugby League Football Club Ltd (2004) 217 CLR 469 at 483-484 [38]-[41] Kirby it chooses, endorse "notions of selfishness that are the antithesis of the Atkinian concept of the legal duty that we all owe, in some circumstances, to each other as 'neighbours'"172. However, it is not a direction that, in my view, the common law of Australia has taken or should take. Importantly, in my respectful view, it is the approach which, without re-expressing the test, majorities of this Court have repeatedly taken in recent times; and now, once again, is taken in this appeal. It is the antithesis of the neighbourhood concept that lay behind the modern law of negligence. It places the decisions of this Court outside the legal mainstream on this topic. Conclusion: Shirt stands: I would therefore reject the appellant's application to have this Court re-express the formulation stated in Shirt for the decision about the content of the duty owed by the Police Service, for which the appellant has accepted liability, to the respondent as employee and for the standard to be applied in deciding whether the Police Service breached its duty of care to the respondent. The liability of the appellant therefore falls to be decided in accordance with the principles explained by Mason J in Shirt. Both as a matter of binding authority and for reasons of basic legal principle applicable in Australia, the courts below were correct to so decide. The standard and breach of the duty of care Awareness of police stress: The occurrence of stress (and specifically the risk of PTSD) in the employment of police officers, specifically police constables such as the respondent, was well established by the evidence adduced in the trial of the present proceedings. It is a reality that might to some degree also be the proper subject of judicial notice173. The duties of police officers sometimes present them with circumstances of violence, horror, death, anger and destruction. In such circumstances, the risk of PTSD as a consequence of employment duties is far from far-fetched or fanciful. It is actual and real. A reasonably careful employer would not simply occasionally praise and exhort its employees and wash its hands of the responsibility to minimise the risks and dangers of such stress. It would do what is reasonable to prevent and minimise the dangers. What is reasonable will not, and could not, involve elimination of all such risks. But preventative and supporting strategies are known and available. Conformably with the discharge of the duty of care imposed by the common law of Australia on employers, 172 Neindorf v Junkovic (2005) 80 ALJR 341 at 359-360 [85]; 222 ALR 631 at 653 referring to Lord Atkin's speech in Donoghue v Stevenson [1932] AC 562 at 580 citing, in turn, St Matthew's Gospel. 173 Reasons of Gummow and Hayne JJ at [60]-[61]. Kirby appropriate protective strategies have to be devised, adopted, maintained and enforced. There was ample evidence at trial that, prior to the events that caused PTSD to the respondent, the Police Service was aware of the particular risks faced by police constables on the job and of the need to respond to them in every reasonable way. In June 1999, the State Ombudsman had published a special report to Parliament, Officers Under Stress174. The opening words of the summary to the report describe it as one concerning "the need for the NSW Police Service to identify and support police officers whose psychological well- being has been affected by stress". The Ombudsman cited the Police Service's own research which in 1998 had found that: For every five police officers involved in incidents, only three were offered professional support. Of those who were offered support, 72 per cent were not offered further assistance after the initial intervention. 18 per cent of those interviewed indicated a clinically significant reaction to the incident; only half of this 18 per cent had received assistance. More experienced officers were significantly more likely to be affected. A third of those surveyed were unaware of the Police Service's psychology and welfare services." The report concluded that the managers within the Police Service had a responsibility to "identify and respond to the needs of staff experiencing difficulties". According to the evidence, by the late 1990s, the Police Service in New South Wales was responding to external pressures to recognise the need to improve and maintain a safe and healthy working environment for police personnel, to the fullest extent practicable. This was the declared occupational rehabilitation policy of the Service, released in June 1996175. In addition to acknowledging a need for compliance with "statutory obligations under Sections 15, 16 and 19 of the Occupational Health and Safety Act 1983", the Service, in recognising and the Supervisors", stated that they: specific obligations of "Commanders/Managers 174 Tabled June 1999 pursuant to the Ombudsman Act 1974 (NSW), s 31. 175 New South Wales Police Service, Occupational Rehabilitation Policy, (June 1996). Kirby "[a]re required to exercise a duty of care over all systems of work and the work environment in all workplaces under their control, and support the process of joint consultation with all employees, employee representatives and committees on all issues associated with occupational health and safety in the workplace." According to Mr Terrence O'Connell OAM, a long-time serving member of the Police Service and an expert witness on police systems, "at the time of Ms Fahy's incident, it was well known within the Police Service that inappropriate police management was likely to negatively impact on police exposed to traumatic events. An important study undertaken by Jeannie Higgins [Clinical Psychologist] into traumatic stress reactions amongst New South Wales Police between 1993 and 1995, found that 'rookie' recruits within the first 18 months of police service, were likely to exhibit disproportionate symptoms of PTSD". Mr O'Connell referred to a study of traumatic incidents in Scotland and Northern Ireland176 which found that insensitive management practices following an incident can exacerbate, or even produce, post-traumatic symptoms. In the case of policing, "it is the organisational or operational culture that largely shapes and influences management practice". Various ways of dealing with the problem of police stress were recorded by Mr O'Connell. One was denial and stigmatisation of psychological injury with "inappropriate coping strategies (such as excessive or 'binge' drinking) … widespread among police". Mr O'Connell suggested that this culture provided "an insight into why Ms Fahy may have been reluctant to share her experience earlier with other police". The other strategy was operational modification, officer support and systems adaptation, accompanied by candid acknowledgment of the existence of a potential problem and the need to address it systematically, scientifically and empathetically177. The report of Ms Higgins of March 1995, referred to by Mr O'Connell, was in evidence178. It was prepared for the Police Association of New South Wales. Inferentially it (or equivalent data) was given or available to the Police Service. Senior police officers cooperated in the production of this report. The 176 Mitchell, Boyle and Smith, "The Nature of Traumatic Incidents: New Data from Scotland and Northern Ireland", paper delivered at the International Society for Traumatic Stress Studies Conference, Melbourne, 2000. 177 There has been a similar cultural resistance to acknowledging stress in the legal profession and judiciary: see Thomas, "Get Up Off the Ground", (1997) 71 Australian Law Journal 785. 178 Higgins, Traumatic Stress Reactions in Police, (1995). Kirby report emphasised the importance of basing employment strategies for reducing avoidable stress to police officers upon empirical data. But it recognised that PTSD commonly arose from exposure to a traumatic event in which both of the following were present: "1) actual or threatened death or serious injury to self or others; and 2) the person's response involved intense fear, helplessness, or horror"179. The cultural inhibitions on police constables seeking professional psychological assistance and expressing feelings, especially if they were female, was recorded and illustrated. Ms Higgins' report concluded180: "We cannot prevent police being exposed to traumatic events but some current intervention programmes may simply further numb police to their feelings, perpetuate existing difficulties, and cost a lot. … Since we cannot easily prevent operational police being exposed to potentially traumatising events, policing organisations have a legal responsibility to make occupational environments as favourable as possible to optimal functioning and recovery. There is currently almost a complete lack of focus on organisational issues which perpetuate the negative effects of traumatisation." This, then, was the employment environment known to the appellant as the respondent's employer. The risk of serious injury (PTSD), found to have occurred to the respondent, was not only foreseeable. It was actually foreseen. It was impossible to remove entirely exposure to traumatic initiators of PTSD. However, two initiatives were knowable and known. They were (1) compliance with a strategy of mutual support and reinforcement to police officers at the scenes of such trauma; and (2) subsequent follow-up, reinforcement and support after exposure to serious risks, to ensure that the police officers principally involved were coping adequately or knew of support services available to help them to deal with feelings of stress. Initiatives of the second kind were devised because it was known that police officers might feel reluctant to discuss their feelings of stress with superiors or immediate work colleagues, for fear of revealing evidence of personal vulnerability. This Court, like the courts below, does not have to invent these systems for the New South Wales Police Service. They already existed at the time of the respondent's exposure to serious trauma and consequent triggers for PTSD. The primary judge found (and the Court of Appeal agreed) that neither of the applicable systems was properly implemented in the respondent's case. This was 179 Higgins, Traumatic Stress Reactions in Police, (1995) at 8. 180 Higgins, Traumatic Stress Reactions in Police, (1995) at 11. Kirby the foundation for the conclusion that the respondent had established negligence on the part of the police employer and was entitled to damages for the injury suffered as a consequence. Out of fairness to the respondent and the judges who found in her favour on this issue, it is therefore necessary to record in these reasons the evidence and analysis that supported the conclusion reached, applying the orthodox reasoning of the Shirt analysis. The partner system: The respondent, in her evidence, described the way that, shortly before the incident of 25 August 1999, she was "paired" with Senior Constable Evans. She had worked with him as a "partner" on fewer than ten occasions dealing with "domestic violence incidents; break and enters; assaults". She described the system that was in place, according to the training that she had received at the Police Academy: "There's always the senior person on the truck, and they are in charge of decision-making, et cetera; and besides whether you were the junior or the senior, you had to look after who you were working with. So if I was a senior on the car and went to a fatal car accident, for example, I would say … 'You do this duty or that duty', and they would report back to me … But I'd have to constantly keep an eye on them because I'm the senior person, I'm responsible for them." The respondent described the way she had been exposed to trauma in events that happened before 25 August 1999 and the way she had worked with her partner in typical circumstances and was able to look to the partner to "just counsel each other". The respondent was not cross-examined to suggest that the partner (or "buddy") system was a fabrication. It was clearly open to the primary judge to accept that it was a system introduced by the employer both for operational purposes and for the provision of mutual support so as to combat the weaknesses exposed by internal and external reports. It was not absolutely universal, inflexible or rigid in its implementation. Occasions would inevitably arise when the police constables had to work separately to cope with particular duties and multiple needs. However, as described by the respondent, the procedure accepted and implemented the principles of mutual assistance and professional support. Unless there was some other conflicting obligation or legal duty that made an inconsistent demand on the police partner, it was expected that he or she would be there to help the other with their essential duties. That was the employment system of work that was in place. Once this system of work is properly appreciated, concerns as to its practicality and feasibility fall away. It is not to the point to say, as do Gummow and Hayne JJ181, that the duty to maintain a safe system of work could not 181 Reasons of Gummow and Hayne JJ at [75]. Kirby reasonably require one police officer to "protect" another, as such a requirement would be in conflict with the other duties imposed on police officers by the Police Service Act and by the instructions of their superiors. Nor is it to the point to say, as do Callinan and Heydon JJ, that the duty could not require that a police officer not be left alone in a stressful situation, because such a requirement would be inconsistent with the exigencies of police work, and police officers are sometimes required to work alone182. With respect, each of those formulations of the standard of care seriously misstates the standard that was presented by the evidence, and which was found by both the primary judge and the Court of Appeal to be owed by the appellant. The relevant standard of care was not one of protection or of accompaniment at all times. Rather, it was that a police officer was to "provide support" to their designated partner183. The nature of the support which a partner can provide will depend upon the circumstances. But the requirement to provide support, to act, as it were, as a "buddy" to a designated partner, is not an instruction which "trumps"184 the other duties of a police officer, at the cost of the performance of those duties. Rather, the giving of assistance and support by one police officer to another officer who is his or her designated partner, where it is possible and reasonable to do so, furthers the performance of their duties by both police officers. The respondent's own description of the partner system was confirmed by the evidence of Senior Constable Deanne Abbott. It was not contested by the evidence of expert witnesses Mr O'Connell or Inspector Stephen Egginton. Naturally, they laid emphasis on the need for flexibility and the primary duty of police partners attending a scene of trauma to isolate the crime scene; to pursue suspects; to assist the injured; and to protect property. Yet none of these duties was disputed by the respondent or her witnesses. Her complaint (upheld by the primary that her partner, Senior Constable Evans, had none of these excuses. Instead, he simply "decamped", unjustifiably leaving the respondent, who was the junior officer in the pair, attending to grossly unreasonable and overwhelming duties, without the proper backup that was reasonable in the circumstances. judge and sustained on appeal) was 182 Reasons of Callinan and Heydon JJ at [207]-[209]. 183 (2006) 155 IR 54 at 58 [17]-[18] per Spigelman CJ, 87 [155]-[158] per M W Campbell AJA; cf reasons of Gleeson CJ at [11]-[13] and reasons of 184 Reasons of Gummow and Hayne JJ at [75]-[77]. Kirby The particular significance of mutual support at the scene of gross trauma was best explained in the evidence of Dr Andrew Robertson, a psychiatrist in practice for thirty years. He gave evidence for the respondent. He explained why the system of police partnership, and mutual support at the scene of serious trauma, was important both from an operational point of view and also to help the officers cope with trauma at the time and to avoid PTSD subsequently: "I think that the absence of any sort of physical or emotional support from a buddy did not allow her to maintain a sense of professional detachment, which is what protects one when dealing with people like this. It became very much a personal concern of hers, and the whole purpose of a buddy system, as it's sometimes called, is to share the trauma and to allow those who are working to maintain a sense of professional detachment; because of the absence of her buddy, she wasn't able to do that, and I think that this was the decisive factor, I think this was reinforced by what happened in the immediate aftermath" (emphasis added). Unjustified abandonment: If Senior Constable Evans had gone off to isolate the crime scene, to pursue witnesses, to tend the injured or to protect property, the failure of the system of partner work to provide the respondent with the presence and support of her partner, and sharing of duties, would have been unfortunate. But it would not have been unreasonable. Within the language of Mason J in Shirt, it would then have been open to the tribunal of fact to conclude that the employer had done what was reasonable by way of response to the risk. Senior Constable Evans would have been fulfilling "other conflicting responsibilities which the defendant may have"185. On such evidence, a finding of negligence would then have been wrong. However, this was not the way the primary judge concluded. To the contrary, he accepted that the worst thing that the respondent felt at the crime scene was "her feeling of abandonment"186. And he concluded187: "I am satisfied, on the balance of probabilities, that senior constable Evans left the [doctor's] room without giving any reason to the plaintiff". Moreover, he said188: 185 Shirt (1980) 146 CLR 40 at 47-48. 186 Reasons of the primary judge at 26. 187 Reasons of the primary judge at 60. 188 Reasons of the primary judge at 33-35. Kirby "[Senior Constable Evans] was not a particularly impressive witness and the explanation as to why it was that he needed to go outside, and why it was that he was unable to leave those outside duties to any of the other police who were there, was, in my view, quite unconvincing. In the circumstances, that issue of credit, in so far as it is a real issue of credit, ought to be resolved in favour of the plaintiff. It follows then, that … the plaintiff was, during this episode, albeit for only a few minutes, left without her buddy, her senior partner, whose responsibility was essentially to look after her welfare. That had operated in previous incidents to provide her with a measure of comfort and enabled her then to perform her work with professional detachment." This was a very important finding in the respondent's favour. It was based substantially on the primary judge's assessment of the truthfulness of the respective testimony of the respondent and of Senior Constable Evans. As such, it would have required compelling reasons or strong objective evidence to authorise an appellate court to substitute a different conclusion189. There were no such compelling reasons or objective testimony. The finding was not disturbed by the Court of Appeal. These then are concurrent findings of fact. A final court is ordinarily most reluctant to disturb such findings and will only do so in compelling circumstances. As the primary judge pointed out, the appellant refrained from calling other relevant police witnesses who had been at the crime scene. Even the duty officer, Inspector Whitten, was not called in the appellant's case. He too, according to the respondent, had simply looked into the surgery while the respondent was in there and left without comment190. He too failed to give appropriate support to the respondent, to check how she was coping and to provide her with the detachment necessary to depersonalise the trauma and stress to which she was subjected and so to externalise it from herself. Inspector Whitten's omissions were unexplained by him. That failure was available to reinforce the primary judge's conclusions. These were that the first element in the system of work which the Police Service had put in place to respond to the risk of PTSD had not been properly fulfilled in the circumstances. In fact, on the findings made, the partner system had broken down. Neither the senior duty officer nor the respondent's designated police partner had fulfilled the 189 Fox v Percy (2003) 214 CLR 118 at 125-126 [23], 127-128 [27]-[29]. 190 A fact remarked upon by the Court of Appeal: (2006) 155 IR 54 at 57 [10], 63 Kirby essential purpose of the partnership arrangement. Specifically, the absence from the medical practitioner's surgery of Senior Constable Evans, leaving the respondent to cope there with overwhelming and multiple duties, was not explained or justified by "any other conflicting responsibilities" that Senior Constable Evans or the Police Service had at that time. Subjection to gross stress: Allowing that police officers, in the course of their duties, are subjected to stress and pressure of a kind that few other vocations are submitted to, that to which the respondent was subjected in the medical surgery on 25 August 1999 was truly exceptional, even by abnormal police standards: She was in the presence of an injured man who appeared to her to have been stabbed through the heart and who had a massive cut to his back which exposed his ribs to full view and was bleeding profusely; She was obliged to attempt to stem the victim's blood loss and effectively to hold his body together whilst the medical practitioner attended to the wound at the front of his chest; She had to attend closely to the victim's conversation and to what he wished her to tell his family, should he not survive, as seemed a high possibility at that time; She was also required, at the same time, to seek, remember and transmit by police radio his descriptions of the assailants and the circumstances of the attack; She was concurrently obliged to radio descriptions and to enquire about the urgent arrival of the ambulance to transport the victim to hospital; It was at that time that Inspector Whitten entered the surgery as the respondent was speaking on the police radio. He could see that she was attending to multiple tasks. However, he did nothing to assist and support her either physically or by just staying with her or attempting momentarily to share her efforts at the centre of the drama; When the ambulance arrived, and the respondent emerged from the surgery, she noted that there were five police officers standing outside, including Inspector Whitten and Senior Constable Evans. When asked what they were doing, she said: "Nothing. They were standing there" and "all I remember, is … them standing there looking at me"; It was at that stage that Inspector Whitten peremptorily instructed the respondent to put her police cap on, as the media were present; and Kirby Then, as the respondent went with another police partner to transport the victim's wife to the hospital, Inspector Whitten summarily ordered her to return to the crime scene, stating that he was unwilling to authorise overtime that might be involved, were she to proceed to the hospital. The circumstances in the medical surgery were, as the primary judge said, "gruesome and traumatic". It was clearly open to the primary judge to conclude on the evidence that Inspector Whitten and Senior Constable Evans had unnecessarily abandoned the respondent to the multiple tasks she was obliged to perform. That was her subsequent complaint and a trigger for the PTSD that the primary judge found. When the cross-examiner pointed out to the respondent that "You had the doctor", the respondent answered: "But he never talked to me. He wasn't a policeman." Unfortunately, neither Inspector Whitten, nor Senior Constable Evans nor others of the police at the scene came in to assist the respondent, to talk to her, or to encourage or support her. This was therefore the very antithesis of the police partnership system, with its dual operational and personal purposes. Because of the strong and repeated medical evidence that PTSD can be initiated by abandonment and perceived lack of support, the conclusion of the primary judge that the breakdown of the employer's system of work was a major contributor to the respondent's distress and causative of her condition191 is unremarkable. It was fully sustained by the findings of fact that he made192. Not only did Inspector Whitten, as the duty officer, fail to ensure that the partnership system was fulfilled, by directing Senior Constable Evans or one of the other police officers to go immediately to assist the respondent or at least to take over the communication on the police radio. He left her where she was, unaided. He simply joined the other officers waiting outside doing "[n]othing". If this conclusion was in any way unfair to Inspector Whitten, it was certainly one that was open to the primary judge on the evidence. It was reinforced by Inspector Whitten's unexplained failure to give evidence in support of the appellant's case193. It was not disturbed by the Court of Appeal. Default in proper follow-up: When the traumatic events thus described occurred, the respondent had only a few weeks of service left before she was entitled to commence her annual leave. According to the evidence, she attended for duty until then. She found that she was not coping. Although a system of 191 Reasons of the primary judge at 61. 192 Reasons of the primary judge at 45. 193 cf Jones v Dunkel (1959) 101 CLR 298 at 321 per Windeyer J. Kirby psychological support had allegedly been put in place, the respondent said that she was unaware of it. Two weeks after the trauma, she made her own enquiries about contact with a police chaplain to help her cope. The evidence did not disclose any immediate follow-up or positive initiative on the part of the Police Service itself to check how the respondent was coping after events that would be unimaginable for most citizens in whose service they are performed. The coldness, indifference and lack of support for the respondent was evidence of the culture of the police employment described in the reports tendered at trial. Whilst the evidence did not suggest that this neglect was deliberate or personal to the respondent, it was open to the primary judge to conclude that the absence of support allowed the condition of PTSD to accumulate and to become, for a time, debilitating in the respondent's case. It was, on an institutional level, akin to the reaction of Inspector Whitten when he saw the respondent in the midst of the trauma, performing, unaided, multiple and horrendous tasks. Her predicament was noted. Then the police authority simply withdrew. This was not a case, as Koehler was, of an individual employee with an alleged special or personal vulnerability. This was, as the primary judge and the Court of Appeal concluded, a case of institutional failure to respond in a reasonable manner to a well-known, and repeatedly manifested, service-wide problem inherent in the nature of this particular employment. Conclusion: negligence established It was therefore well open to the primary judge, on the basis of his findings, to conclude that the Police Service had failed to maintain and enforce a reasonably safe system of work for its employees such as the respondent. The Police Service was well aware, from a number of prior reports, of the need to address systematically the special problems of exposure to trauma faced by those whom it accepts to be its employees and to provide them with safe systems of work designed to prevent or reduce the risks of PTSD and work-induced depression. The Police Service responded by instituting the partnership (or "buddy") system. However, in the circumstances of this case, it failed to ensure that that system was properly and reasonably carried into effect. Furthermore, after she had been exposed to intense trauma and pressure, the respondent was dealt with in a seriously neglectful, seemingly indifferent and insensitive manner. Police personnel are expected, on behalf of society, to perform extremely important, dangerous and sometimes horrifying and life- threatening duties. But they are human beings and they are citizens. They are also employees of the Service, accepted as such in this case. They are entitled to the protection of the ordinary principles of the common law. Kirby The reasonable, and therefore the lawful, obligations of the Police Service towards the respondent on the contested issue of the content and breach of the duty of care owed by the Service are to be found in the decision of this Court in Shirt194. For the reasons stated earlier, the appellant's attempt to have that approach overruled as a matter of law, and re-expressed, should be rejected. Applying the approach laid down by this Court in Shirt to the present circumstances, it was open to the primary judge and the Court of Appeal to conclude that a reasonable employer in the Police Service's position would have foreseen that its conduct and omissions involved the risk of injury to the respondent or a class of persons including the respondent. The risk was well known. Indeed, some steps had been taken to respond to it. To the question of what a reasonable employer would do by way of response to the risk, the considerations mentioned in Shirt support the conclusion reached in this case by the primary judge and by the Court of Appeal. The magnitude of the risk was significant. That risk demanded affirmative and institutional responses in the context of an employee exposed to such risk. The degree of probability of the occurrence of the risk was great given the near certainty that, in the course of their duties, police constables and other police officers would be repeatedly exposed to conditions of trauma in an employment culture traditionally unsympathetic to revelations of perceived stress or weakness. The expense, difficulty and inconvenience of taking alleviating action are real. But insufficient appears to have been done to publicise the availability of confidential trauma counselling. This eventually forced the respondent to look to her religion rather than to her employer for assistance. There are "conflicting responsibilities" that modify what a police employer can be expected to do for police employees to whom it owes a duty of care. Those conflicting responsibilities include the legal and professional duties imposed on police to secure a crime scene, to assist victims of crime, to investigate crime and bring those responsible to justice and to protect property195. In some circumstances, such duties would indeed "trump" the Police Service's common law duties to those accepted as its employees. However, in the present case, such considerations can be put aside because of the finding of the primary judge, undisturbed by the Court of Appeal and indeed confirmed by it196, that the respondent's police partner was not 194 (1980) 146 CLR 40 at 47-48. 195 cf Police Service Act 1990 (NSW), ss 6(2)(a) and (b) and 201. See reasons of Gummow and Hayne JJ at [27], [71]-[72]. 196 (2006) 155 IR 54 at 57 [10], 58-59 [18]-[20], 87 [154]. Kirby otherwise engaged on police duties but, like Inspector Whitten, was simply standing around doing "[n]othing". Unless that collateral finding of fact is now overturned by this Court, it supports, and confirms, the conclusions of negligence reached below. According to ordinary principles of appellate review, this Court has no authority to displace the finding. On that basis, this was a relatively simple case where the employer's system of work was not properly and safely implemented. This occurred with the knowing involvement of the duty officer who failed to give evidence to deny or qualify what the respondent said about him and his conduct. All such conclusions were fully open to the courts below. There is one final consideration that reinforces the foregoing conclusions. As has often been said, the law of torts serves a dual purpose. It exists to provide means of redress and compensation for those who suffer actionable civil wrongs caused by others. But it also states the community's standards197, including standards of accident prevention that have their clearest application in the employment context198. What follows from the fact that this Court concludes that there was no breach of the duty of care owed by the Police Service to the respondent? The ambit of employer responsibilities to address a well-known vulnerability and special risk of police employment is narrowed. The stimulus of the law to the provision and maintenance of a safe system for police employment is diminished. The previous police culture of denial is once again reinforced. This entails both personal and institutional costs. An encouragement, where reasonable, to provide operational assistance and reinforcement is overridden. Effective measures to promote professional detachment and mutual support fail to receive the law's backing. These results were not necessary. They are certainly not desirable. In its 1997 report, received in evidence, the Royal Commission into the New South Wales Police Service emphasised that the Police Service needed to change its approach to staff, from its traditional approach which was "inward- looking … characterised by command and control, autocracy and suspicion of new ideas"199. It is a significant misfortune that, by its decision in the present 197 cf Woods (2002) 208 CLR 460 at 498 [121]. 198 Braistina (1986) 160 CLR 301 at 308-309; Neindorf (2005) 80 ALJR 341 at 359-360 [84]-[85]; 222 ALR 631 at 653. 199 Royal Commission into the New South Wales Police Service, Final Report, Volume II: Reform, (May 1997) at 207 [1.1] (conducted by Justice J R T Wood). Kirby matter, reversing the judgments below, this Court now encourages a restoration and re-entrenchment of the old approach to police employment in contemporary Australia. The approach of the majority in this appeal is yet another instance of the Court's recent disfavour towards plaintiffs' claims in personal injury cases200. It is the more surprising because it is expressed in a context of employment, where the law has traditionally been at its most protective. It is specially unfortunate because the facts disclose the devoted, but unsupported, work of Ms Fahy whose conduct as a police constable helped save a crime victim's life but at the same time needlessly subjected her to unrelieved stress. There was no one with whom to "share the trauma", a technique that tends to reduce the long-term impact of such stress201. I regard this decision as a reaffirmation of this Court's retreat from its former communitarian approach to negligence liability. The Court turns its back on accident prevention in employment which, not so long ago, was a major theme of our negligence doctrine. Indifference on the part of employers is restored and rewarded. Most remarkably, all this is done in the present case where there were concurrent findings of fact in favour of the respondent at both levels of the courts below, a result that, conventionally, this Court would be most reluctant to override. Respectfully, I dissent. Subject to the resolution of the issue of mitigation left open by the Court of Appeal's orders, which orders should stand, the respondent was entitled to damages for the established negligence of the Police Service for which the appellant is liable. Order The appeal should be dismissed with costs. 200 See Luntz, "Torts Turnaround Downunder", (2001) 1 Oxford University Commonwealth Law Journal 95 at 96. 201 Evidence of Dr Robertson, quoted above in these reasons at [149]; see also the reasons of Callinan and Heydon JJ at [209]-[210] and the reasons of Crennan J at CALLINAN AND HEYDON JJ. Several questions were argued in this appeal: the scope of the duty of care owed to police officers by the State; whether there has been a breach of that duty; and whether Wyong Shire Council v Shirt202 should be overruled. The facts The respondent joined the Police Service of New South Wales in February 1996. By 1999 she seems, in the course of her work, to have encountered more situations of stress than many of her colleagues, who, in consequence, referred to her as "Dr Death". Her account of her experiences included this: "[E]veryone died on my shift, in any weird wonderful way, it always happened on my shift. I have a friend who's been in the job 10 years and she's never been to a fatal, and I've been in the job three and a bit, and I've been to over 10." Her claim was, in effect, that her resilience was more than matched by the insensitivity with which her superiors treated her after the events which gave rise to this litigation and which, she claims, triggered the illness which she now suffers. In the past, she had been able to manage stress, because, she said, "my partner had always been there". A robbery was attempted on 25 August 1999 at a video store at Edensor Park, a suburb of Sydney, by two men, one of whom stabbed and slashed the proprietor before fleeing. The proprietor was able to make his way to a nearby medical centre. The respondent and Senior Constable Steven Evans were called to the store from which they followed a trail of blood to the medical centre. An "extremely pale" and shocked receptionist took them into a surgery at the medical centre, where a doctor was attending to the victim's wounds. The respondent described what she saw: "My initial thought is – excuse the French – 'well, he's f***ed; he's dead'. Like, he's just covered with blood everywhere, and it's just running off him, like someone had got his shirt and dunked it in a bucket of water, and that's how much blood there was – just soaked – and he's just gasping all the time." 202 (1980) 146 CLR 40. When the respondent turned to speak to Senior Constable Evans, she saw that he had left the room. She described her reaction to this as follows: "It was like a, 'Sh**' – you know – 'what am I going to do?' Then I could hear [the victim] again, so I just went straight into work mode. Like, I took an oath to protect life and property, so I asked the doctor, 'What can I do to help?'" At the doctor's request she examined the victim's left side and saw that he had suffered a knife wound of about 60 centimetres in length, from the left armpit to the waist. She ripped the shirt off so that access could be gained to the wound. The respondent then performed a number of tasks simultaneously. She tended to the wound by holding the opening together with one hand, and applying medical pads to stem the bleeding with the other. She kept talking to the victim, both to keep him conscious, and to try to obtain a description of his assailants. She spoke to other police officers by radio, relaying the information provided, and called for an ambulance. She did not ask for help, and competently managed the tasks she had set for herself. The respondent was alone with the doctor and the victim for perhaps ten minutes, certainly no longer, before an ambulance arrived. The trial judge said that these minutes "were hectic and emotionally fraught". The respondent "was confronted with an awful sight". Just before the ambulance arrived, a senior police officer, the duty officer, looked into the surgery and saw the respondent, the victim and the doctor there. According to the respondent, the duty officer "just took one look and ... turned around and ... walked away". She impliedly criticized him in this evidence: "Q. When that occurred, how did you feel? Helpless. I mean, I was there; I was tired from holding on, and I've looked at him, you know – – Did you catch his eye? Yes; more in disbelief of what I was seeing. And he's just looked and just turned and walked away. Take a moment. Would you prefer a few minutes? No, please, no. Apart from that moment where [the duty officer] came in, had any other police come in to give you any assistance while you were in there? Had you heard anything from them? After that, the respondent assisted the ambulance officers with their equipment. Six or so other police officers were "just standing there" while she did. As the ambulance left, the duty officer approached the respondent. He told her to put her hat on because the media had arrived. The respondent accompanied another police officer to the proprietor's house to tell his wife about the assault. The woman "collapsed" when she was told what had happened. The respondent and the other officer were on their way to the hospital with the woman when the respondent was instructed on the radio to return to the scene, where she remained until about 11.30pm. When, in response to a question by the duty officer, she informed him she had started work at midday, he told her to go home because he was not going to pay her overtime. The respondent reminded the duty officer that the scene could be a murder scene if the victim died. He said that he did not care: he was not paying the respondent overtime and she was to go home. The respondent left, feeling ill, and even the next day the image of the victim's injuries "kept playing over and over and over in [her] head". She said this in her evidence: "Q. What can you remember of the journey home? Nothing. I remember suddenly being at my front gate and my dog waiting for me to walk in. How did you spend the balance of the night? I sat and cried. I'd pat my dog. It was outside and I thought I'd better go inside and I walked inside, hands in my jacket, and I'd just got blood all over. So I went inside to soak my clothes, to get the blood out. How much did you sleep, if at all, that night? I didn't." At work the next day, the respondent kept a "stiff upper lip". She neither sought nor was offered counselling. She did however obtain the telephone number of the police chaplain. It was not disputed that the respondent suffered a post-traumatic stress disorder as a result of the events of 25 August 1999, although there was disagreement as to its severity and the relevance of other contributing factors. The proceedings at first instance The respondent sued the appellant in the District Court of New South Wales, for damages under the Workers Compensation Act 1987 (NSW), alleging negligence in these respects: "(a) Failing to take any or any adequate precautions for the Plaintiff's safety; Putting the Plaintiff in a position of peril in the circumstances; Failing to provide the Plaintiff with proper and adequate assistance at the scene of the said armed robbery; (d) By its servant or agent, leaving the scene of the armed robbery and exposing the Plaintiff to the victim by herself; Failing to counsel or adequately counsel the Plaintiff following the incident; Failing to provide the Plaintiff with proper and adequate debriefing in respect of the incident; Further and alternatively, following the incident and the months thereafter it was necessary for the Plaintiff to undergo counselling and debriefing which did not occur. The plaintiff relies on the failure of the said service to provide these measures to the Plaintiff as being negligent and a breach of the duty of care which the Service owed her." There is no express allegation, it may be observed, of any deficiency in the system of work. The trial judge was obliged to resolve conflicts in the medical evidence before him. As to one of the principal issues argued, of the necessity for, and the sufficiency of, a proper system of work for police officers, a high point for the respondent was some evidence given by a psychiatrist, Dr Robertson: ... I think that the absence of any sort of physical or emotional support from a buddy did not allow [the respondent] to maintain a sense of professional detachment, which is what protects one when dealing with people like this. It became very much a personal concern of hers, and the whole purpose of a buddy system, as it's sometimes called, is to share the trauma and to allow those who are working to maintain a sense of professional detachment; because of the absence of her buddy, she wasn't able to do that, and I think that this was the decisive factor, I think this was reinforced by what happened in the immediate aftermath with – but that's really all I was going to say. Now assume that the incident had been the same but that she had received that support, commendation, of which you have told us – her partner did his job and the support and commendation you speak about were there – what's the likely outcome, do you feel, in this patient's case would have happened? Q. What would be the outcome probably? I think – it's very difficult to be dogmatic on this – but I think that it would be significantly less likely that she would have developed a post-traumatic stress disorder, or had she done so, it would have been a disorder of considerably lesser severity." There was evidence – it is unnecessary to elaborate upon it – that the appellant was aware that the work of police officers could be so stressful that special measures should be adopted to deal with it, including counselling and psychological therapy. The availability of these and other aids was notified to police officers by, among other means, a journal. An experienced police officer, over objection, gave this evidence for the appellant which it is not suggested in this Court was inadmissible: Is it appropriate for the more senior partner to leave the other officer at a crime scene or should the senior partner stay with the other officer? The location the victim was in would not technically be regarded as the crime scene. The crime scene would have been the location where the robbery and stabbing occurred. As the senior officer has further responsibilities they must make a decision as to how to deploy staff at the scene. This may involve tasking some staff to assist victims and others with crime scene preservation. Given that this situation, at the time of the officer's arrival, involved a possible homicide and a large crime scene it would take some resources and time to set up appropriate measures to preserve it. It is evident that some officers, at least in the early parts of the police involvement, would be required to carry out duties by themselves, as limited resources would be available. Given this, it would be appropriate for Constable Evans to leave to ensure Crime Scene [the respondent] with Preservation was commenced immediately. the doctor Is it inappropriate for the more senior partner to leave another officer with 3 years experience with a doctor to treat a seriously injured victim? involve leaving some staff The senior officer must decide on how best to deploy staff given the responsibilities of managing a crime scene. This would, naturally, to perform duty by themselves. An officer of three years experience would be expected to know what to do in such a situation given their exposure to policing incidents over that time and training provided to them. The senior officer needs to take into account the capabilities of the officers available to them and deploy them accordingly. Given that at the time [the respondent] was left with the doctor and patient and there were [sic] only one other car crew at the scene it would be appropriate to leave her to assist the doctor and go about attempting to manage the scene as a priority." The trial judge, Graham DCJ, summarized the respondent's case: "The plaintiff's case is that the fact that she contracted a posttraumatic stress disorder arising from this incident was due, at least in part, to what might be termed a differential. The experience with the victim was a serious one, and one which was, no doubt, unpleasant and, in a general sense, very traumatic. But the plaintiff's case is that the difference in this case was that, during her involvement with the victim, and in the immediate aftermath, she was treated in a way which was calculated to bring about an exacerbation of her situation, so as to render it more likely that she would contract that disorder or make that disorder, if it were to be contracted, much more serious, due to the lack of support from her senior officers, including senior constable Evans and inspector Whitten [the duty officer], and the insensitivity with which she was treated by them and, in particular, by inspector Whitten. The plaintiff's case is, also, that a material contribution to the contracting of posttraumatic stress disorder, or of making it a more severe form of that disorder, was attributable to the failure of the plaintiff's superiors in the police service, over the next month or so in particular, to monitor her reactions and to make her aware of the availability of various forms of assistance within the police service, such as the welfare branch, the psychology unit, peer support officers and various other measures of that type. The plaintiff's case is that, by being left to her own devices, as it were, without being observed or advised, in circumstances where she was clearly displaying symptoms consistent with a seriously adverse reaction to the incident, the defendant was negligent and failed in its duty of care to the plaintiff. There is no dispute that senior constable Evans left the room." His Honour accepted that police officers will inevitably be exposed to extraordinary and stressful events and that they must be, and are, subject to strict discipline. As to some of the issues in the case, the trial judge took the view that, by reason of the absence of the duty officer Inspector Whitten from the witness box, he should infer that his evidence, had it been adduced, would not have been favourable to the appellant. He was prepared to draw a similar inference from the absence of other potential witnesses for the appellant. The findings, relevant for present purposes, of negligence made by the trial judge are these: "Thus, the plaintiff was left without support, both during and after what was, on any view of it, a very traumatic event. It is, in my view, clearly foreseeable that such a course of treatment could materially contribute to the onset of, or the severity of, post traumatic stress disorder, a psychiatric injury which was, in any event, foreseeable in the circumstances, and was neither a farfetched nor fanciful risk in those circumstances. Given the buddy system, and the existence of programs recognising the risk of the development of posttraumatic stress disorder for police officers engaged in traumatic events or incidents, it amounted to a lack of reasonable care on the part of the defendant, both at the scene of the incident, on 25 August 1999 and, secondly, in the aftermath, especially in the period between 25 August and early September when the plaintiff went on leave. The steps taken, for example, by inspector Whitten, as I have indicated, are conceivably explicable for proper operational reasons, but his absence from the witness box leads more firmly to the conclusion that his manner was simply grossly insensitive and verging on a deliberate degrading of the situation of the plaintiff who, to his knowledge, had been engaged in what can be described, without hyperbole, as a life and death situation. No operational or economic factors stand in the way of the conclusion that to have dealt properly with the plaintiff, in accordance with the buddy system and in accordance with the recognised risks of stress-related disorders, would have required no more effort, no more resources, on the part of the police, than were available to them on that evening." In the result, the trial judge held for the respondent and assessed damages The appeal to the Court of Appeal of New South Wales The appellant appealed to the Court of Appeal (Spigelman CJ, Basten JA and M W Campbell AJA)203. That Court was not unanimous as to all of the matters in issue. Spigelman CJ (M W Campbell AJA agreeing with the Chief Justice) and Basten JA all accepted that the relationship of employer and employee is a special relationship giving rise to a duty of affirmative action, and that, in a context in which exposure to risk is an integral part of the work, as here, the law requires affirmative action on the part of each employee to the others. M W Campbell AJA differed from the other members of the Court in finding that the conduct of Inspector Whitten, in directing the respondent to put on her hat, to return to the scene of the crime, and later to return to the police station because he would not approve overtime, was not in breach of any duty of care, and did not make a material contribution to the respondent's illness. The three judges did agree that the fact that a person may not have reacted adversely to exposure to trauma on an earlier occasion, or occasions, did not mean that further exposure, particularly of the intense character of the present instance, would not reasonably foreseeably lead to psychiatric injury. They further agreed that while courts should be slow to insist upon the presence of a second officer in every case of exposure to victims of crime, in the present circumstances, another officer, whether Senior Constable Evans or someone else, should have been present. Basten JA gave separate consideration to the relationship between the respondent and Senior Constable Evans, as well as between Inspector Whitten and the respondent, and the respondent and the Crown as her employer. Having regard to the way in which the parties had conducted their cases at the trial, his 203 New South Wales v Fahy (2006) 155 IR 54. Honour did not find it necessary to reach any conclusion about the significance of the provisions of s 6 of the Law Reform (Vicarious Liability) Act 1983 (NSW) which deems a person such as the respondent to be "in the service of the Crown", and not a servant of the Crown. The vicarious liability of the appellant, his Honour held, consisted in Inspector Whitten's failure to give, or provide support to the respondent in the knowledge that Senior Constable Evans was not there to give it. As to causation, Spigelman CJ (M W Campbell AJA agreeing) said that the primary causal factor was the respondent's exposure to the trauma of the victim in the doctor's surgery. The fact, however, that the respondent was isolated was part of the incident itself. The onus therefore shifted to the State to establish that the injury would have occurred in any event, even if there had been no breach of duty on the part of the State: it failed to discharge that burden. Specifically as to system of work, Spigelman CJ said204: "The critical issue in the present case was whether or not the failure on the part of the officers of the Appellant to provide support in the course of the traumatic incident was a breach of duty. It can readily be accepted, as the Appellant submitted, that the Court should be slow to require the police to generally have a second officer supporting another in the course of exposure to the trauma of victims of crime. Pressure and stress are part of the system of work which police officers must be prepared to carry out. There are numerous occasions on which one of two officers operating under the buddy system would reasonably leave the other to perform functions on his or her own. Indeed, it must often be the case that it is necessary to do so. In the usual case it would not take much in the way of evidence to satisfy a court that the performance by a police officer of his or her primary duties was such that any failure to offer support for another police officer did not constitute a breach of duty. However, in the present case the plaintiff established a proper basis for an inference that there was no such call of other duties which made it reasonable not to take steps to support the Respondent. In particular the presence of other police officers on the scene was such as to support a conclusion that the attendance of Constable Evans to other tasks was not such as to render reasonable, in all of the circumstances, his failure to support the Respondent. The Appellant acquired an evidentiary burden to prove that performance of the other tasks by Constable Evans was 204 (2006) 155 IR 54 at 58 [17]-[18]. consistent with his duty of care to Constable Fahy. It did not discharge that onus." The appellant enjoyed a minor success in its appeal, but not in respect of the issue of causative negligence. The only ground upon which the appellant's appeal did succeed was as to mitigation of damages, a matter with which this Court is not concerned. The appeal to this Court There was reference in argument to the Police Service Act 1990 (NSW), and in particular to s 201 of it, which makes it a criminal offence for an officer to refuse, or neglect, to obey a lawful order, or to perform a lawful duty. Of a member of a disciplined armed force, hardly less could be expected. That such an expectation is given statutory expression, and the common knowledge of what the work of law enforcement may require, provide the context for a consideration of the respective rights and obligations of the parties. In this Court the appellant's arguments were essentially twofold: that the trial judge and the Court of Appeal erred in holding that the appellant failed to adopt a safe system of work – effectively, that in either all, or any, stressful situation in which another officer could be present, he or she should be present; and, that the test of foreseeability propounded in Wyong Shire Council v Shirt205 raises too low a threshold for negligence, and ought no longer be followed. As appears however from the passages from the reasons in the Court of Appeal that we have quoted, that Court did not formulate a requirement of a duty of care quite as expansive, or impose quite as heavy an evidentiary onus on the appellant of proving necessity of absence of a supporting officer in all, or practically all stressful situations, as the appellant's submissions assume. Nonetheless the Court's holding certainly suggests that, save for cases of demonstrated necessity, the appellant should not allow an officer to be alone in stressful situations. It may be accepted that there will be occasions upon which the mere presence of another officer might be of value to a police officer in the course of police work. The same might be equally true of other occupations in which there is, from time to time, an element of danger or stress. But the fact that the possibility of danger or stress is a regular incident of a particular occupation, is also an indication that emergencies and events calling for a division of labour, 205 (1980) 146 CLR 40. and a need and capacity for improvisation or adaptation on the part of an officer coping alone, will inevitably occur. In our opinion, the appellant is not under an obligation to provide and maintain a system of work requiring the presence of a minimum of two officers, except when as a matter of real necessity that is not possible. Nor is it obliged to discharge an evidentiary onus in cases in which an officer is acting alone to establish any such necessity. Certainly, the respondent's earlier resilience is not to be held against her. But that she had performed her work well in stressful circumstances in the past, without any apparent qualms and ill-effects would at least suggest: first, that her training had helped her to do so; secondly, that police officers could be expected to, and did, not infrequently, encounter and need to deal alone with events of the kind that occurred here; and, thirdly, that such events might obviously call for the carrying out of several tasks simultaneously by an officer in attendance. It is not difficult to think of situations in which the availability of more even than two officers would still not enable each of them to stand side by side: for example, if three or more criminals fled in different directions and were to be pursued and apprehended separately by a police officer; or a picket or demonstration during which the participants were so numerous that from time to time an officer would inevitably be isolated. Exposure to danger and stress are almost as necessary concomitants of civil law enforcement as they are of military service. Of course, as Dr Robertson said, maintenance of professional detachment by people in occupations of these kinds is desirable. But it is in the nature of human affairs that complete professional detachment on all occasions is an ideal, rather than a universal practicality. Another difficulty for the respondent is that the medical evidence generally, and for example, Dr Robertson's also, left unexplained how the mere presence of another officer, presumably any other officer, either someone else, or Senior Constable Evans with whom the respondent had worked for a few other shifts only, could have arrested the onset, or made a substantial contribution to the arrest of the onset, of a psychiatric illness. That this is so highlights the substantial difficulties about a categorical requirement of the presence of two or more officers together in stressful situations as a necessary element of a safe system of work for police officers. What, it may be asked, if the two officers assigned to a shift dislike each other, or one has a temperament, mannerisms or a personality which would make his or her presence unhelpful? These are matters with which the appellant has to deal on a day by day basis, which go beyond, and are outside, medical expertise alone. As the evidence of the senior police officer called by the appellant explained, police resources are finite, and deployment at or about a place of criminal activity, and elsewhere as a consequence of it, is a matter for decision and adaptability at the time and in the circumstances prevailing. The respondent had been a police officer for three or so years. Her experience and training could reasonably be expected to have enabled her to perform alone the tasks that she did, in the presence of, and for the medical practitioner, for the ten minutes required, without suffering a psychiatric illness. The system of work was not deficient. Even if the risk of a psychiatric illness as a result of exposure for a period alone to a wounded victim could be, in circumstances of the kind existing here, as we do not think it may be, regarded as a not fanciful possibility, that it might develop in ten minutes clearly is so remote that the appellant was not obliged to abate it by rostering, and insisting upon another police officer's presence throughout. It was of no significance therefore that other witnesses for the appellant were not called by it. No inferences adverse to the appellant should be drawn from their absence. In the circumstances there was no evidence that they could have given that was relevant to any of the issues, of duty of care, the system of work, or breach of duty. There was no obligation upon the appellant to provide such a system of work as would almost always, and in this case have, required the presence of another officer. The other measures adopted by the appellant, of training, and to reduce and relieve stress, and the inevitable exigencies of police work generally, together negate such a requirement. For those reasons, the appellant's appeal must be allowed. It is not strictly necessary therefore to decide whether Shirt should be reopened and overruled. In deference however, to the full argument about that, we propose to express our view of it. In Shirt, Mason J, with whom Stephen and Aickin JJ agreed, stated the test of foreseeability and the requirements of the response to the risk in this way206: "[T]he tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man's response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have. It is only when these matters are balanced out that 206 (1980) 146 CLR 40 at 47-48. the tribunal of fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant's position. The considerations to which I have referred indicate that a risk of injury which is remote in the sense that it is extremely unlikely to occur may nevertheless constitute a foreseeable risk. A risk which is not far- fetched or fanciful is real and therefore foreseeable. But, as we have seen, the existence of a foreseeable risk of injury does not in itself dispose of the question of breach of duty. The magnitude of the risk and its degree of probability remain to be considered with other relevant factors." His Honour's statement reflects, and enlarges somewhat upon, the advice of Lord Reid speaking for the Privy Council in The Wagon Mound [No 2]207 in which his Lordship coupled the foreseeability of an injury, with the expense of guarding against it as relevant, indeed decisive, matters in establishing negligence. The test posited in Shirt has, we think, given rise to problems in practice. It is unrealistic to expect or require people to imagine in advance, and then grade as likely, very likely, extremely likely, remote, or far-fetched or fanciful, all of the various possible consequences of their intended conduct. That a result falling just short of the far-fetched or fanciful might happen is something that is unlikely to occur to even a farsighted person. We do not doubt that the degree of likelihood or otherwise of a particular result, or an injury, has a real bearing on the foreseeability of it. That is not to say that people should not carefully consider the courses of conduct upon which they are to embark, and the possibility that injury might flow from them. The development of the law of negligence has done much to improve standards of conduct generally. But it is, in our opinion, not reasonable to say, acting as courts do, in hindsight, that everything falling short of the far-fetched or fanciful should have been foreseen. We adhere, in this regard, to what Callinan J said in another case of psychiatric injury208, that is of an injury of a peculiarly unpredictable kind by reason of the vast range of personal susceptibilities to it, and the frequent absence to the lay observer of readily ascertainable and objectively verifiable symptoms and manifestations of it209: 207 Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty [1967] 1 AC 617 at 208 Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44. 209 Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44 at 64 [54]. "Three Justices of this Court in Wyong Shire Council v Shirt held that any risk, however remote or even extremely unlikely its [realization] may be, that is not far-fetched or fanciful, is foreseeable. I suppose that it is true that there is nothing new under the sun. With enough imagination and pessimism it is possible to foresee that practically any misadventure, from mishap to catastrophe is just around the corner. After all, Malthus in 1798 famously predicted that the population of the world would inevitably outstrip the capacity of the Earth to sustain it. The line between a risk that is remote or extremely unlikely to be [realized], and one that is far-fetched or fanciful is a very difficult one to draw. The propounding of the rule relating to foreseeability in the terms that their Honours did in Wyong requires everyone to be a Jeremiah, and has produced the result that undue emphasis has come to be placed upon the next element for the establishment of tortious liability, the sorts of measures that a reasonable person should be expected or required to take to guard against the risk." (footnotes omitted) The observations of McHugh J in Tame v New South Wales are in point210: "I think that the time has come when this Court should retrace its steps so that the law of negligence accords with what people really do, or can be expected to do, in real life situations. Negligence law will fall – perhaps it already has fallen – into public disrepute if it produces results that ordinary members of the public regard as unreasonable." The unsatisfactory nature of the test has also resulted, on occasions, in the application of double standards by the courts, stemming perhaps from a reluctance to require of an injured plaintiff the same high degree of foresight as has been required of defendants. Otherwise, apart from cases in which duties are owed by reason of the particular respective positions of the parties, some, perhaps many plaintiffs would either fail in their claims, or be saddled with contributory negligence equal to, or greater than that of the defendants, or even be held voluntarily to have assumed risks. The test posed has caused undue emphasis to be placed upon an inquiry as to the expense of guarding against injury. If anything of any conceivable utility could have been done easily or inexpensively, there has been an unfortunate tendency to make these assumptions when it has not been done: that regardless of the likelihood of injury in fact, had it been done it would have prevented, or at least reduced, the chance of injury – that it should therefore have been done – and that the failure to do it constitutes negligence. In fact, the reality is often that it 210 (2002) 211 CLR 317 at 354 [101]. was not done, because it would not have occurred to a reasonably careful person either that injury would result, or that the "neglected measure" would have made a difference. The failure to erect a warning sign, usually something that can be done inexpensively, is a classic instance of this. In Commissioner of Main Roads v Jones211 a motorist who was seriously injured when his car struck a horse on a stretch of unfenced road alleged that a highway authority was negligent in failing to erect a sign warning of the possible presence of wild horses on the highway. The Full Court of Western Australia found for the motorist, holding that the absence of such a sign caused his injuries even though, as Callinan J pointed out212 on appeal to this Court, there was irrefutable evidence that on the journey in question, before the collision, the motorist had for long distances repeatedly and flagrantly ignored a multiplicity of signs notifying speed limits. Vairy v Wyong Shire Council213 and Mulligan v Coffs Harbour City Council214 are two other recent cases in which it had been held in the courts below that warning signs were the panacea for all injuries215. Too many cases have turned on the understandable, but often unconvincing, assertion by a plaintiff that he or she would have seen and heeded a warning sign had one been in place216. These and very many other cases in which the test in Shirt has been sought to be applied are not simply ones of misapplication. They demonstrate how unrealistic and difficult in practice the test is. In the result, plaintiffs' hopes of large awards of damages have been raised by unduly sympathetic trial and intermediate courts only and inevitably to be dashed on final appeal, and too onerous a burden has been placed upon defendants and insurers. Legislatures too have reacted against the test by enacting legislation to make the recovery of substantial damages for personal injuries for negligence more difficult217. So 211 (2005) 79 ALJR 1104; 215 ALR 418. 212 (2005) 79 ALJR 1104 at 1119 [81]; 215 ALR 418 at 438. 213 (2005) 223 CLR 422. 214 (2005) 223 CLR 486. 215 See also Nagle v Rottnest Island Authority (1993) 177 CLR 423 in which this Court made such a finding. 216 cf Rosenberg v Percival (2001) 205 CLR 434 at 504-505 [221]. 217 Civil Law (Wrongs) Act 2002 (ACT); Civil Liability Act 2002 (NSW); Personal Injuries (Liabilities and Damages) Act 2003 (NT); Civil Liability Act 2003 (Q); (Footnote continues on next page) unrealistic on occasions have been the decisions, that the courts themselves have jeopardized their standing and reputation. There is a further problem. In Donoghue v Stevenson, Lord Atkin said218: "The liability for negligence … is no doubt based upon a general public sentiment of moral wrongdoing for which the offender must pay." It is no doubt true that in many respects defendants have been found liable in negligence even though their acts or omissions are not morally wrong. Shirt has, however, often had the effect of making morally innocuous defendants liable in a very striking way. Its reversal would bring the law of negligence more into line with the underlying principles on which Lord Atkin sought to base it in Donoghue v Stevenson. The case for a reconsideration of Shirt is very strong. It has stated the relevant common law for fewer than 27 years. Buckle v Bayswater Road Board219 had stated the law of negligence of highway authorities for 65 years yet this Court in Brodie v Singleton Shire Council220 reopened and swept it away, upon the basis that the majority thought that its difficulties of application requiring the drawing of a distinction between misfeasance and nonfeasance justified it in doing so. In our opinion the justification for overruling Shirt is greater. Just as it is not necessary for the decision of this case to overrule Shirt, so it is not necessary to consider what test should replace it. However, it is appropriate to say something brief on that subject. In the law of tort, of negligence particularly, absolute rigidity of principle in practice turns out to be impracticable. When it is sought to be imposed it so often proves incapable of sensible application. Accordingly, a flexible and realistic test should be substituted for a test of foreseeability of fancifulness or otherwise. The test that Wrongs Act 1936 (SA), as amended by the Wrongs (Liability and Damages for Personal Injury) Amendment Act 2002 (SA), subsequently renamed Civil Liability Act 1936 (SA); Civil Liability Act 2002 (Tas); Wrongs Act 1958 (Vic), as amended by the Wrongs and Other Acts (Public Liability Insurance Reform) Act 2002 (Vic); Civil Liability Act 2002 (WA). 218 [1932] AC 562 at 580. 219 (1936) 57 CLR 259. 220 (2001) 206 CLR 512. commends itself to us is the one stated by Walsh J at first instance in The Wagon Mound [No 2], that what should be foreseen is a risk that is "significant enough in a practical sense"221. Such a test would usually produce, we think, a similar result to that favoured by Barwick CJ in Caterson v Commissioner for Railways222, that an event should only be regarded as a foreseeable one for the purposes of the law of negligence if it is "not unlikely to occur". On balance however Walsh J's test has the advantage of greater practicality and flexibility. We would allow the appeal and join in the orders proposed in the judgment of Gummow and Hayne JJ. 221 Miller Steamship Co Pty Ltd v Overseas Tankship (UK) Ltd [1963] SR (NSW) 948 222 (1973) 128 CLR 99 at 101-102. Crennan CRENNAN J. The facts, the issues to which they give rise and the course of the litigation have been set out in the reasons for judgment of others rendering it unnecessary for me to repeat those matters except for the purposes of explaining these reasons. As a result of performing her duties as a police constable, the respondent suffered particular harm, a "recognisable psychiatric illness"223, capable of "objective determination"224. It was not disputed that she suffered acute and extreme post-traumatic stress disorder. The respondent's psychiatric illness arose after she assisted a doctor attending a victim of violent criminal acts. During the course of an armed robbery, injuries inflicted on the victim included a cut of approximately 60cm in length under his left armpit to his waist, and a stab wound in the centre of his chest causing arterial blood loss. The victim thought he was dying. The respondent worked at the victim's left side, holding his slashed body together, staunching blood loss, receiving the victim's messages for his wife and children and his information about the assailants, and operating her radio to the extent that she could. The doctor worked from the victim's right side, attending to the stabbing injury near the victim's heart. The respondent was taxed by the situation and throughout the incident she kept looking for assistance. There was no dispute that the incident was a serious emergency or that the victim had incurred life-threatening injuries. There was no doubt that what the respondent did was within the normal scope of her employment. As explained in more detail in the joint reasons of Gummow and Hayne JJ, police officers' duties can be generally construed by reference to the services described in the Police Service Act 1990 (NSW)225. Police officers' duties include "the protection of persons from injury or death ... arising from criminal acts"226. All constables in the New South Wales Police Service take an oath to uphold this duty. 223 Hinz v Berry [1970] 2 QB 40 at 42 per Lord Denning MR, approved by Windeyer J in Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383 at 394-395. 224 Tame v New South Wales (2002) 211 CLR 317 at 382-383 [194] per Gummow and 225 Reasons of Gummow and Hayne JJ at [18]-[22]. 226 Section 6(3)(b). Crennan The respondent brought a modified claim in the District Court of New South Wales for common law damages pursuant to the Workers Compensation Act 1987 (NSW) as it stood prior to amendments made in November 2001. The question arising was whether the State of New South Wales ("the State") (whether as the "Crown" or the Commissioner of Police), through its "employee", Senior Constable Evans, was in breach of an admitted duty to take reasonable care for the respondent's safety while at work. The respondent relied on an established system of work in which senior and junior police officers were paired as partners and were required to give mutual support and assistance, to the extent that such support and assistance could reasonably be provided in any particular situation. The State denied that such a system existed. By the time of the appeal to this Court, the respondent concentrated on her complaint that Senior Constable Evans, her senior and partner on this occasion, did not give her proper and adequate support and assistance while she was attending to the victim. She was accompanied by Senior Constable Evans to the crime scene and to the medical centre to which the victim had gone. Her pleading recited that "[r]ather than assist her, [he] decamped". Another pair of police oficers, a senior constable and a probationary constable, had arrived at the medical centre at approximately the same time, and within minutes some five police officers were present, including Inspector Whitten, then the commanding officer on the scene. Whilst there was a contest about what Senior Constable Evans said to the respondent when he left her with the victim and the doctor, there was no dispute that he did not return, or contact her by radio, while she attended to the victim. Argument was not aimed at the question of the foreseeability of risk in terms of determining whether there was a real and not far-fetched or fanciful risk to the respondent of psychiatric injury, particularly post-traumatic stress disorder, as a result of attending to a victim of violent criminal acts. There was a considerable uncontradicted body of evidence which showed that police work involved a risk of psychiatric injury, including post-traumatic stress disorder, to police officers as a class, as a result of the nature of many of the tasks which police officers are obliged to perform. Plainly, criminal acts can involve violence and the consequences of protecting victims of criminal acts from death can be distressing. The New South Wales Police Service recognised that police officers were exposed to high levels of stress when dealing with crime scenes or motor accidents, and the victims involved. It was also known that significant numbers of police officers suffered psychiatric injury, including post-traumatic stress disorder, after attending gruesome crime and accident scenes. In a relevant report of a 1995 study in evidence, it was stated that "[t]here is an extraordinarily Crennan high rate of police retired as medically unfit with a psychiatric diagnosis." That statement was not contradicted. Since the existence of the risk was incontestable, this case does not provide an opportunity to consider whether the test in Wyong Shire Council v Shirt227, that a reasonable risk is one which is not "far-fetched or fanciful"228, is too "undemanding"229. Because the risk was foreseeable, the argument before this Court was principally aimed at the question of what a reasonable person in the position of the State should do "by way of response to the risk"230. The answer to that question determines the question of whether, on this occasion, there had been a breach of the State's duty to provide a safe system of work. In the Court of Appeal of New South Wales, Spigelman CJ proceeded on the basis that there was no issue that the State was under a duty as employer to set up a safe system of work to avoid the risk of personal injury, including psychiatric injury231. In the common law of Australia liability for psychiatric injury has been recognised where the plaintiff and defendant were in an employer and employee relationship232. 227 (1980) 146 CLR 40. 228 (1980) 146 CLR 40 at 48 per Mason J. 229 Tame v New South Wales (2002) 211 CLR 317 at 352-353 [97]-[99] per McHugh J. 230 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47 per Mason J. 231 New South Wales v Fahy (2006) 155 IR 54 at 56 [2] and [5]. 232 Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383; New South Wales v Seedsman (2000) 217 ALR 583; cf White v Chief Constable of South Yorkshire Police [1999] 2 AC 455 ("White"), in which a majority in the House of Lords decided that a duty, analogous to an employer's duty to protect an employee from physical harm, did not extend to protecting "employees" from psychiatric injury when there was no breach of the "employer's" duty to protect "employees" from physical injury. Alcock v Chief Constable of South Yorkshire Police [1992] 1 AC 310 concerned the tragic Hillsborough stadium collapse. Spectators had not been compensated for psychiatric injury. One of the complications in White was a perceived injustice if police were compensated for psychiatric injury but spectators were not. Lord Goff of Chieveley (in dissent) at 486 noted that the majority decision was contrary to Chadwick v British Railways Board [1967] 1 WLR 912; [1967] 2 All ER 945 and Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383. Crennan In Mount Isa Mines Ltd v Pusey233 ("Mount Isa Mines") Windeyer J upheld the plaintiff employee's claim for psychiatric injury. The duty of care was based on the foreseeability of psychiatric injury by shock and on the employer's legal duty to provide safe working conditions for employees. In relying on two English authorities234 and "known medical fact"235 in support of this finding, his Honour deprecated arbitrary and illogical restrictions on claims for psychiatric injury236. Until medical science enabled courts to better distinguish immediate emotional responses to distressing experiences237 from psychiatric injury, courts were cautious about allowing claims because of a fear of "imaginary claims"238. A second factor which militated against allowing claims for "nervous shock" was the fear that "an unduly onerous burden would be placed on human activity"239, especially where a claimant was not shocked by apprehending injury to him- or herself, but injury to another. To discourage claims which were spurious, or claims which would unduly burden human activity, courts developed and applied a number of "control mechanisms"240, "more or less arbitrary conditions"241 which plaintiffs needed to satisfy in addition to the requirement of reasonable foreseeability of psychiatric injury. It is unnecessary to say more here because these developments are traced in the joint judgment of Gummow and Kirby JJ in Tame v New South Wales ("Tame"), which was heard together with Annetts v Australian Stations Pty Ltd242. The same developments, and the fact that English courts came within a "hair's 233 (1970) 125 CLR 383. 234 Dooley v Cammell Laird & Co Ltd [1951] 1 Lloyd's Rep 271; Chadwick v British Railways Board [1967] 1 WLR 912; [1967] 2 All ER 945. 235 Mount Isa Mines (1970) 125 CLR 383 at 394 per Windeyer J. 236 Mount Isa Mines (1970) 125 CLR 383 at 403-408 per Windeyer J. 237 Mount Isa Mines (1970) 125 CLR 383 at 394 per Windeyer J. 238 Victorian Railways Commissioners v Coultas (1888) 13 App Cas 222 at 226. 239 Fleming, The Law of Torts, 9th ed (1998) at 174. 240 Page v Smith [1996] AC 155 at 189 per Lord Lloyd of Berwick. 241 White v Chief Constable of South Yorkshire Police [1999] 2 AC 455 at 502 per Lord Hoffmann. 242 (2002) 211 CLR 317 at 374-378 [170]-[183]. Crennan breadth" of some retreat from established control mechanisms, are considered by Lord Hoffmann in White v Chief Constable of South Yorkshire Police243. Advances in medicine and psychiatry which enable more reliable classification of psychiatric illness, greater understanding of aetiology and better diagnosis have been recognised in the courts244. Those advances in medicine and psychiatry have been taken into account when novel problems emerged, which highlighted the limitations of established control mechanisms and impelled their review245. In Tame a majority in this Court rejected established control mechanisms as definitive tests of liability, although the factors which gave rise to them may still be relevant to questions of reasonableness246. The majority stated that the criterion of reasonableness imposed at all levels of inquiry (to determine the existence and scope of a duty of care, breach of duty and damage247) is an intrinsic control mechanism. The criterion of reasonableness sets boundaries in respect of liability for psychiatric injury, and anchors the boundaries in principle, rather than allowing them to depend on arbitrary and indefensible distinctions248. A claim in respect of a psychiatric injury which is reasonably foreseeable is limited only by reference to general considerations: the compatibility of a duty of care with any conflicting professional responsibilities249, whether imposed by 243 [1999] 2 AC 455 at 502. See also Handford, Mullany and Handford's Tort Liability for Psychiatric Damage, 2nd ed (2006) at 124-128 [5.270]-[5.330] and 244 See, for example, Morris v KLM Royal Dutch Airlines [2002] 2 AC 628 at 679-680 [152]-[153] per Lord Hobhouse of Woodborough. 245 Tame (2002) 211 CLR 317 at 378 [183] per Gummow and Kirby JJ. 246 (2002) 211 CLR 317 at 333 [17] per Gleeson CJ, 340 [51] per Gaudron J, 380-381 [190]-[191] and 383 [196] per Gummow and Kirby JJ. 247 Donoghue v Stevenson [1932] AC 562. 248 Tame (2002) 211 CLR 317 at 333 [18] and 337 [35]-[36] per Gleeson CJ, 339 [45] and 340 [51] per Gaudron J, 380-381 [189]-[191] per Gummow and Kirby JJ. In Gifford v Strang Patrick Stevedoring Pty Ltd (2003) 214 CLR 269 at 304 [99], Hayne J raised the possibility of the need to develop new control devices in substitution for rejected control mechanisms. 249 Tame (2002) 211 CLR 317 at 335 [26] per Gleeson CJ, 342 [57] per Gaudron J. Crennan statute250 or contract251, and considerations of legal coherence252. Likewise, the question of what a reasonable employer should do as a response to a foreseeable risk of psychiatric injury to employees as a class or individually is subject to those general considerations. It was submitted on behalf of the State that the admitted duty of care to employ a safe system of work could not reasonably extend to pairing police officers as partners and requiring them to provide mutual support and assistance. It was submitted that such a system would be impracticable and would lack common sense given the operational duties of any pair of police officers. An employer's duty to take care of an employee's safety has to be performed in the light of the obligations on the employees to undertake stressful work. By reference to established principle, a proven risk of physical injury to an employee which can be averted by requiring employees to work in pairs can give rise to a duty on the employer in those terms253. Determining the reasonableness and practicality of a duty to have such a system of work in the circumstances here requires an examination of the duties of the employees and a consideration of the accommodation of possible conflicts between different duties. In the proceedings before the primary judge, the respondent, Senior Constable Deanne Abbott, and Mr Terrence O'Connell (who was a member of the police force between 1971 and 2000) gave evidence for the respondent. Inspector Stephen Egginton gave evidence for the State. Senior Constable Evans also gave evidence. They were all familiar with an established system of work, of pairing a senior and junior police officer as partners and requiring each to provide mutual support and assistance, subject to the exigencies of the situation, when attending crime scenes or motor vehicle accidents. This case was not concerned with, and the evidence did not cover, systems of work which might apply in the context of other police duties, some of which might be expected to be undertaken by a police officer working alone. 250 Sullivan v Moody (2001) 207 CLR 562 at 582 [60]. 251 Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44. 252 Tame (2002) 211 CLR 317 at 335 [28] per Gleeson CJ, 342 [58] per Gaudron J, 361 [123] per McHugh J, 381 [191] per Gummow and Kirby JJ, 417-418 [296] per Hayne J, 425 [323] per Callinan J. See Sullivan v Moody (2001) 207 CLR 562 at 253 Collins v First Quench Retailing Ltd 2003 SLT 1220. Crennan Consistent with the statutory duties mentioned above and a police officer's oath, the primary objective of the system of working in pairs on such occasions was the preservation of a victim's life, a task known to create a risk of psychiatric injury, particularly post-traumatic stress disorder, to the police officers involved. The system of working in pairs was the subject of police officer training. The senior partner of a pair was expected to control a crime scene and organise resources, including personnel. Such a responsibility could entail leaving an officer to perform duties alone. Duties such as securing a crime scene, recording details of witnesses and calling for assistance were all important but they were ranked as a lower priority than saving the lives of victims. The senior partner in a pair was required to be very clear about his or her intentions, the responsibilities of the junior partner and the senior partner's expectations. The specific tasks which individual officers would undertake in a given situation would vary, but communication between officers paired as partners was important. Decisions calling for fine judgment in the allocation of priorities were made by the senior officer in a pair. Common sense governed such decisions. Senior Constable Evans agreed in oral evidence before the primary judge that on the occasion in question he was responsible for the respondent's welfare. Further, a commanding officer at a scene had a responsibility to support the other officers. The respondent had been a police officer since 1996 and had been involved in at least 10 prior emergencies involving trauma without suffering psychiatric injury. On each of those occasions her partner gave her support and assistance and she gave several examples of the ways in which this was done, especially by reference to the division of operational tasks between partners on a rational and efficient basis. As to the effect of a system of working in pairs for mutual support, Dr Robertson, a qualified psychiatrist, gave evidence that the purpose of such a system "is to share the trauma". He explained that a system of having two people working together in a traumatic situation helped both of them to maintain professional detachment. Medical experts called by both parties agreed that there was a risk of police officers developing post-traumatic stress disorder as a result of attending traumatic events. However, none of them was able to state with certainty what were the critical predictors of the illness or whether repeated exposure to traumatic events increased the risk of developing the illness. No evidentiary Crennan basis was established for limiting the duty of care by reference to prior episodes of illness254. While the severity of exposure to grotesque aspects of trauma was considered by all of the medical experts to be important, they all also agreed that support during and after such an experience could decrease the risk of developing the illness and mitigate its severity or, putting it another way, assist in "adaptation following traumatic experience". Be that as it may, in the context of a partner's exposure to traumatic events, all serving or former police officers who gave evidence about the system of working in pairs had a common understanding, and shared sensibilities, relating to support and assistance. Whilst it was agreed that crime scenes were dynamic, the demands on police officers were fluid, and the tasks were various, their common understanding of support and assistance was not confined by a "Cartesian distinction" bearing on "the interrelation of mind and body"255. Their common understanding encompassed support and assistance to avert the risk, to the partner, of psychiatric injury. The system of work did not require Senior Constable Evans to stay with the respondent every minute when she was attending the victim. As the system was explained in the evidence, it required Senior Constable Evans to communicate with the respondent (something he could have done by radio, in person or through another police officer); it required him to check on how the respondent was coping with the primary duty to the victim. What was appropriate had to be determined by common sense and the exigencies of the situation. Senior Constable Evans was trained in the system of work and experienced in its operation. In giving an explanation for his conduct, namely that he was guarding or securing the crime scene and had other duties associated with that task, Senior Constable Evans did not demonstrate that giving support and assistance to the respondent was incompatible with those other duties. The system of work had been set up as a reasonable, obvious and practical mechanism by which the State addressed the known risks to which police officers were exposed when attending victims of criminal acts or motor accidents. In the absence of direct and persuasive evidence to the contrary, the system of work as described did not impose any unduly onerous burden on police 254 cf Walker v Northumberland County Council [1995] 1 All ER 737 at 739 per Colman J; Keen v Tayside Contracts 2003 SLT 500 at 511 [69] per Lady Paton. 255 Mount Isa Mines (1970) 125 CLR 383 at 405 per Windeyer J. Crennan work. It was not incompatible or inconsistent with the proper and effective discharge of police officers' statutory duties, or multiple operational duties as they arose. The system of work cannot be said to lack common sense, or to be impractical, when it is designed to protect victims' lives, and to avoid known risks to the police officers, which included the risk of psychiatric injury, particularly post-traumatic stress disorder. The institution of the system of work was a step which a reasonable person in the position of the State would take in order to deal with the known risks associated with exposure to traumatic events. It was a step which the State did take. The evidence permitted the inference drawn by the trial judge, and upheld on appeal, that on this occasion the State (through Senior Constable Evans) breached its duty. The decision of the Court of Appeal should stand. I agree with the orders proposed by Gleeson CJ and Kirby J.

HIGH COURT OF AUSTRALIA CITTA HOBART PTY LTD & ANOR APPELLANTS AND RESPONDENT Citta Hobart Pty Ltd v Cawthorn [2022] HCA 16 Date of Hearing: 8 & 9 February 2022 Date of Judgment: 4 May 2022 ORDER Appeal allowed. Set aside orders 1 to 3 of the Full Court of the Supreme Court of Tasmania made on 23 December 2020 and, in their place, order that the appeal to that Court be dismissed. There be no order as to costs. On appeal from the Supreme Court of Tasmania Representation D J Batt QC with J D Watson for the appellants (instructed by Page Seager Lawyers) R Merkel QC with S A Beckett, C J Tran and L E Hilly for the respondent (instructed by Hobart Community Legal Service) S P Donaghue QC, Solicitor-General of the Commonwealth, and F I Gordon with R S Amamoo for the Attorney-General of the Commonwealth, intervening (instructed by Australian Government Solicitor) M G Sexton SC, Solicitor-General for the State of New South Wales, with M O Pulsford for the Attorney-General for the State of New South Wales, intervening (instructed by NSW Crown Solicitor's Office) J A Thomson SC, Solicitor-General for the State of Western Australia, with S R Pack for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor's Office (WA)) G A Thompson QC, Solicitor-General of the State of Queensland, with F J Nagorcka for the Attorney-General of the State of Queensland, intervening (instructed by Crown Law (Qld)) M J Wait SC, Solicitor-General for the State of South Australia, with K M Scott for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor's Office (SA)) R J Orr QC, Solicitor-General for the State of Victoria, with M A Hosking for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor's Office) S K Kay SC, Solicitor-General for the State of Tasmania, with D R Osz for the Attorney-General for the State of Tasmania, intervening (instructed by Office of the Solicitor-General (Tas)) C L Lenehan SC with D P Hume for the Australian Human Rights Commission, appearing as amicus curiae (instructed by Australian Human Rights Commission) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Citta Hobart Pty Ltd v Cawthorn Constitutional law (Cth) – Chapter III – Where respondent's complaint made under Anti-Discrimination Act 1998 (Tas) ("State Act") was referred to Anti- Discrimination Tribunal ("Tribunal") – Where appellants in defence asserted provisions in State Act inconsistent with Disability Discrimination Act 1992 (Cth) and Disability (Access to Premises – Buildings) Standards 2010 (Cth) – Where Tribunal dismissed complaint for want of jurisdiction without addressing merits of defence – Where Full Court of Supreme Court of Tasmania on appeal considered merits of, and rejected, defence – Where Tribunal not "court of a State" within meaning of ss 77(ii) and 77(iii) of Constitution – Where Chapter III implication recognised in Burns v Corbett (2018) 265 CLR 304 prevents State Parliament conferring on State tribunal that is not "court of a State" judicial power with respect to any matter of kind described in ss 75 and 76 of Constitution – Whether Tribunal exercised judicial power when determining complaint under State Act – Whether Tribunal had jurisdiction to hear and determine complaint – Whether defence needed to meet some threshold of arguability to give rise to matter of kind described in ss 76(i) and 76(ii) of Constitution. Words and phrases – "abuse of process", "claim or defence that amounts to 'constitutional nonsense'", "colourable", "genuinely in controversy", "involving no 'real question'", "issue capable of judicial determination", "judicial power", "justiciable controversy", "limits of jurisdiction", "manifestly hopeless", "matter", "no reasonable prospects of success", "not incapable on its face of legal argument", "single justiciable controversy", "State jurisdiction", "State tribunal", "summarily dismissed", "threshold of arguability". Constitution, Ch III, ss 75, 76, 77, 109. Anti-Discrimination Act 1998 (Tas), ss 89, 90. KIEFEL CJ, GAGELER, KEANE, GORDON, STEWARD AND GLEESON JJ. Burns v Corbett1 held that a State Parliament lacks legislative capacity to confer on a State tribunal that is not a court of the State within the meaning of s 77(ii) and s 77(iii) of the Constitution judicial power with respect to any matter of a description in s 75 or s 76 of the Constitution. To ensure validity, a State law conferring State jurisdiction on a State tribunal must therefore be construed in accordance with applicable State interpretation legislation2 to exclude jurisdiction with respect to all such matters. In Burns, State jurisdiction was found to have been denied to a State tribunal in a matter, referred to in s 75(iv) of the Constitution, between residents of different States. A matter meets the description of a matter between residents of different States if the parties to the justiciable controversy which comprises the matter are natural persons who are in fact resident in different States3. Following Burns, this appeal concerns the exclusion from State jurisdiction conferred on a State tribunal of matters, referred to in s 76(i) or s 76(ii) of the Constitution, arising under the Constitution or arising under laws made by the Commonwealth Parliament. How is a justiciable controversy to be identified as a matter answering one or other of those descriptions? The question arises in the context of a referral to the Anti-Discrimination Tribunal ("the Tribunal") under the Anti-Discrimination Act 1998 (Tas) ("the State Act") of a complaint by the respondent4 that the appellants discriminated on the ground of disability in the provision of a facility by failing to provide adequate wheelchair access in the construction of Parliament Square in Hobart. In their formal defence to the complaint, the appellants asserted to the Tribunal that the (2018) 265 CLR 304. In Burns s 31 of the Interpretation Act 1987 (NSW), here s 3 of the Acts Interpretation Act 1931 (Tas). 3 Dahms v Brandsch (1911) 13 CLR 336; Watson v Marshall and Cade (1971) 124 CLR 621 at 623-625; Foxe v Brown (1984) 59 ALJR 186 at 188; 58 ALR 542 at Prior to the commencement of the Tasmanian Civil and Administrative Tribunal (Consequential Amendments) Act 2021 (Tas). State Act is in relevant part inoperative by force of s 109 of the Constitution because it is inconsistent with the Disability Discrimination Act 1992 (Cth) ("the Commonwealth Act") and the Disability (Access to Premises – Buildings) Standards 2010 (Cth) made under it ("the Commonwealth Standards"). Finding that constitutional defence to be "not colourable", the Tribunal ordered that the complaint be dismissed for want of jurisdiction5. On appeal from the order of the Tribunal to the Supreme Court of Tasmania6, the Full Court (Blow CJ, Wood and Estcourt JJ) addressed the merits of the constitutional defence and unanimously rejected it. The Full Court set aside the order of the Tribunal and remitted the complaint to the Tribunal for hearing and determination7. Blow CJ, with whom Wood J agreed, described the argument that the State Act is inconsistent with the Commonwealth Act and the Commonwealth Standards as "misconceived"8. Despite the use of that epithet, the Full Court did not clearly identify what it saw as the appealable error9 on the part of the Tribunal. One possible interpretation of the several reasons for judgment is that the Full Court found the Tribunal to have erred by failing itself to address and reject the merits of the constitutional defence in the exercise of the State jurisdiction to hear and determine the complaint conferred on it by the State Act. Another possible interpretation is that the Full Court held that the Tribunal erred by failing to conclude that raising the constitutional defence did not exclude State jurisdiction to hear and determine the complaint because the constitutional defence was not 5 David Cawthorn and Paraquad Association of Tasmania Incorporated v Citta Hobart Pty Ltd and Parliament Square Hobart Landowner Pty Ltd [2019] TASADT See s 100 of the State Act. 7 Cawthorn v Citta Hobart Pty Ltd (2020) 387 ALR 356. 8 Cawthorn v Citta Hobart Pty Ltd (2020) 387 ALR 356 at 358 [5]. See Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541 "reasonably arguable" in the sense that the constitutional defence would have amounted to an abuse of process if raised in a court. The reasons for judgment of the Full Court need not be subjected to further examination. That is because the Full Court would have been wrong to discern appealable error on the part of the Tribunal on either of those bases. Nor is it necessary or appropriate for this Court, exercising appellate jurisdiction under s 73(ii) of the Constitution to give the judgment which ought to have been given by the Full Court10, itself to examine and determine the merits of the argument that the State Act is in relevant part inoperative because it is inconsistent with the Commonwealth Act and the Commonwealth Standards. The constitutional defence was genuinely raised in answer to the complaint in the Tribunal and was not incapable on its face of legal argument. That being so, the complaint and the defence together formed parts of a single justiciable controversy comprising a matter within the description in each of s 76(i) and s 76(ii) of the Constitution. The Tribunal was on that basis correct to order that the complaint be dismissed for want of jurisdiction. Before turning to explain that outcome, it is appropriate to address a threshold issue, raised by the Australian Human Rights Commission ("the AHRC") with the support of the Attorney-General of Queensland intervening on the appeal to this Court, and taken up by the respondent by way of notice of contention. The issue is as to whether the jurisdiction conferred on the Tribunal by the State Act to hear and determine a complaint of discrimination referred to it in truth involves the exercise of judicial power. The Tribunal exercises judicial power in hearing and determining a complaint That the hearing and determination of a complaint referred to the Tribunal under the State Act involves the exercise of judicial power was decided in The Commonwealth v Anti-Discrimination Tribunal (Tas)11. The argument of the 10 See s 37 of the Judiciary Act 1903 (Cth). (2008) 169 FCR 85. AHRC challenges just one aspect of the reasoning adopted in that case to reach that conclusion. Proceeding on the indisputable premise that the jurisdiction conferred on the Tribunal to hear and determine a complaint cannot involve the exercise of judicial power unless such order as the Tribunal may make if it finds the complaint to be established is binding on the parties12, the AHRC argues that the State Act on its proper construction makes the binding effect of the Tribunal's order contingent on registration of that order in the Supreme Court. Unless and until registration occurs, so the argument goes, the Tribunal's order and the inquiry leading up to the making of that order are entirely administrative. Construing the State Act in accordance with the applicable State interpretation legislation, so the argument concludes, compliance with the constitutional limitation on State legislative capacity recognised in Burns is not to be achieved by construing the provisions of the State Act which confer jurisdiction on the Tribunal to hear and determine a complaint to exclude a matter of the same description as a matter referred to in s 75 or s 76 of the Constitution. Compliance with the constitutional limitation is instead to be achieved by construing the provision permitting registration of the Tribunal's order to exclude an order that, if registered, would result in an exercise of judicial power with respect to a matter of a description in s 75 or s 76 of the Constitution. Precisely the same argument was put and rejected in The Commonwealth v Anti-Discrimination Tribunal (Tas)13. The principal authority of this Court from which the AHRC seeks to derive analogical support for the argument – Brandy v Human Rights and Equal Opportunity Commission14 – was there distinguished by reference to a provision of the legislation in issue which specifically provided that an unregistered determination was "not binding or conclusive between any of the 12 Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 357; Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (2001) 203 CLR 645 at 658 [31]. (2008) 169 FCR 85 at 132-133 [205]-[207], 146-147 [249]-[254]. See also Meringnage v Interstate Enterprises Pty Ltd (2020) 60 VR 361 at 394-395 (1995) 183 CLR 245. parties to the determination"15. The operation of that provision was later highlighted in the explanation of Brandy in Attorney-General (Cth) v Breckler16 as a case in which the "administrative act" of registration "converted a non-binding administrative determination into ... a binding, authoritative and curially enforceable determination". The State Act, it was pointed out in The Commonwealth v Anti-Discrimination Tribunal (Tas), contained and continues to contain no equivalent provision. The distinction drawn was, and remains, sound. The essential flaw in the AHRC's argument is that it confuses the order of the Tribunal with the mechanism for enforcement of that order. As Dixon CJ and McTiernan J observed in R v Davison17, in a passage to which attention was drawn in Brandy18, "[t]he power to award execution might not belong to a tribunal, and yet its determinations might clearly amount to an exercise of the judicial power". The State Act on its proper construction makes clear that an order made by the Tribunal on finding a complaint established takes immediate effect as an order with which the person to whom it is directed is bound to comply19. Registration of the order made by the Tribunal in the Supreme Court, so as then to become "enforceable as if it were an order of the Supreme Court"20, is not a precondition to the order being required to be complied with. To the contrary, it is a step available to a person to enforce the order if the order "has not been complied with"21. 15 See s 25Z(2) of the Racial Discrimination Act 1975 (Cth), as discussed in Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 257, (1999) 197 CLR 83 at 110 [42]. (1954) 90 CLR 353 at 368. (1995) 183 CLR 245 at 257. See also at 269. 19 Section 89(1) of the State Act. 20 Section 90(2) of the State Act. 21 Section 90(1)(c) of the State Act. The Tribunal has State judicial power to determine the limits of its State jurisdiction No party or intervenor disputes that the Tribunal has a duty and concomitant authority to ensure that a complaint referred to it is and remains within its jurisdiction to hear and determine. The disparate arguments advanced on the appeal concerning the nature of that duty nevertheless indicate that some explication of underlying principle is warranted. The starting point is the constitutional precept that "all power of government is limited by law" and that "[w]ithin the limits of its jurisdiction where regularly invoked, the function of the judicial branch of government is to declare and enforce the law that limits its own power and the power of other branches of government through the application of judicial process and through the grant, where appropriate, of judicial remedies"22. The limits of a power conferred by statute are those expressed in or implied into the statute construed in light of the Constitution. That is so whether the repository of the power is a court or a non-court tribunal and whether the power conferred is judicial or non-judicial. Failure to exercise, or to observe the legislated limits of, a jurisdiction conferred on a court or a non-court tribunal established by Commonwealth legislation is amenable to compulsion or restraint by mandamus or prohibition granted in the entrenched original jurisdiction of this Court under s 75(v) of the Constitution23. Failure to exercise, or to observe the legislated limits of, a jurisdiction conferred on a court or a non-court tribunal established by State legislation is correspondingly amenable to compulsion or restraint by an appropriate judicial remedy granted in the entrenched supervisory jurisdiction of the Supreme Court of that State24. 22 Graham v Minister for Immigration and Border Protection (2017) 263 CLR 1 at 24 23 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 482-483 [5]. 24 Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 580-581 [98]. Having a judicially enforceable duty to comply with the limits of its own jurisdiction, a court or a non-court tribunal must have power to take steps needed to ensure its own compliance with that duty. If not expressed in the legislation establishing the court or non-court tribunal or in the legislation conferring jurisdiction on it, that power is necessarily implied on the basis that "everything which is incidental to the main purpose of a power is contained within the power itself"25. The power which a court or a non-court tribunal necessarily has to ensure that it remains within the limits of its jurisdiction is not of a nature that is inherently judicial. The reason is that the exercise of the power is incapable of quelling a controversy between parties about existing legal rights26. Nor is it inherently non-judicial. Rather, the power takes its nature from the nature of the power to which it is incidental: "[t]he nature of the final act determines the nature of the previous inquiry"27. A court in which judicial power is invested therefore "has jurisdiction to determine – and to determine judicially – whether it has the jurisdiction to entertain a particular application or to make a particular order"28. The court, in other words, has "jurisdiction to decide its own jurisdiction"29 in the performance of which it exercises judicial power. A tribunal that is not a court and that is invested with non-judicial power correspondingly has authority – in the exercise of non-judicial power – to "make up its mind" or "'decide' in the sense of forming an opinion" about the limits of its 25 Burton v Honan (1952) 86 CLR 169 at 177. 26 Petrotimor Companhia de Petroleos SARL v The Commonwealth (2003) 128 FCR 27 R v Davison (1954) 90 CLR 353 at 370, quoting Prentis v Atlantic Coast Line Co (1908) 211 US 210 at 227. See also Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 189-190, quoting Re Ranger Uranium Mines Pty Ltd; Ex parte Federated Miscellaneous Workers' Union of Australia (1987) 163 CLR 656 at 666. 28 R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 215. 29 New South Wales v Kable (2013) 252 CLR 118 at 133 [31]. own jurisdiction "for the purpose of determining its own action"30. The authority is not to "reach a conclusion having legal effect" but to form an opinion for the purpose of "moulding its conduct to accord with the law"31. The jurisdiction of a State tribunal that is not a court of the State within the meaning of s 77(ii) and s 77(iii) of the Constitution on which State judicial power is conferred by State legislation is to be understood in conformity with the same principles. The State tribunal must be taken to have incidental jurisdiction to determine whether the hearing and determination of a particular claim or complaint would be within the legislated limits of its State jurisdiction. The Federal Court32 and the Court of Appeal of the Supreme Court of New South Wales33 have correctly so held. Taking its nature from the nature of the power to which it is incidental, that jurisdiction of a State tribunal that is not a court of the State within the meaning of s 77(ii) and s 77(iii) of the Constitution is itself a conferral of State judicial power. Accordingly, the State tribunal exercises judicial power when it decides that a claim or complaint in respect of which its jurisdiction is sought to be invoked is or is not a matter of a description referred to in s 75 or s 76 of the Constitution. The Federal Court34 has correctly so held. To the extent that the Court of Appeal of the Supreme Court of New South Wales might be understood to have held to the contrary in Sunol v Collier35, that decision should not be followed. The legal effect of the judicial exercise by a State tribunal that is not a court of the State within the meaning of s 77(ii) and s 77(iii) of the Constitution of its 30 R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 618. 31 Re Adams and the Tax Agents' Board (1976) 12 ALR 239 at 245. 32 Qantas Airways Ltd v Lustig (2015) 228 FCR 148 at 170 [91]. 33 Wilson v Chan & Naylor Parramatta Pty Ltd (2020) 103 NSWLR 140 at 156 34 Qantas Airways Ltd v Lustig (2015) 228 FCR 148 at 170 [91]. (2012) 81 NSWLR 619 at 624 [20]. See also Gaynor v Attorney General for New South Wales (2020) 102 NSWLR 123 at 156-157 [137]. jurisdiction to decide its own jurisdiction is no different from the legal effect of the judicial exercise of jurisdiction to decide its own jurisdiction by an inferior court of the State that is a court within the meaning of s 77(ii) and s 77(iii) of the Constitution. The limits of jurisdiction are in each case the limits that are set by the legislated conferral of jurisdiction construed in light of the Constitution. The judicial determination of jurisdiction is in neither case conclusive36. In either case, if jurisdiction is wrongly determined to exist, such order as is ultimately made in the purported exercise of jurisdiction is wholly lacking in legal force37. Here, the opinion formed by the Tribunal that the complaint referred to it was beyond its jurisdiction to hear and determine was accordingly a judicial opinion and the order made by the Tribunal dismissing the complaint for want of jurisdiction was an order made in the exercise of State judicial power. The question for the Full Court on appeal from the order of the Tribunal was, and the question for this Court on appeal from the judgment of the Full Court is, whether that order was correct. Determining the relevant limit of the Tribunal's State jurisdiction The relevant limit on the jurisdiction of the Tribunal to hear and determine the complaint made by the respondent arises, it will be recalled, because the provisions of the State Act which confer that jurisdiction are to be construed in accordance with the applicable State interpretation legislation to exclude jurisdiction with respect to any matter meeting a description in s 75 or s 76 of the Constitution. The existence and scope of a matter meeting a description in s 75 or s 76 of the Constitution must be determined by "objective assessment"38. The assessment to be undertaken to determine the existence and scope of a matter excluded from the State jurisdiction conferred on a non-court State tribunal by a State law is no different from the assessment to be undertaken to determine the existence and scope of a matter of the same description within the jurisdiction of this Court by s 75 or under s 76, conferred on a court created by the Commonwealth Parliament 36 Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 375; New South Wales v Kable (2013) 252 CLR 118 at 140 [56]. 37 Cameron v Cole (1944) 68 CLR 571 at 590-591. 38 Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251 at 262 [32]. under s 77(i), or invested in a court of a State under s 77(iii) of the Constitution. Moreover, the objective assessment can be no different when undertaken by a non-court State tribunal for the purpose of determining whether a particular claim or complaint is within the legislated limits of its State jurisdiction from when the assessment is undertaken by the Supreme Court of the State on appeal or in the exercise of its entrenched supervisory jurisdiction. A "matter" referred to in s 75 or s 76 of the Constitution encompasses a justiciable controversy about a legal right or legal duty having an existence that is not dependent on the commencement of a proceeding in the forum in which that controversy might come to be adjudicated39. Amongst the circumstances in which a justiciable controversy answers the description in s 76(ii) of a matter "arising under" a law made by the Commonwealth Parliament is where a Commonwealth law is relied on as the source of a claim or a defence that is asserted in the course of the controversy40. And amongst the circumstances in which a justiciable controversy answers the description in s 76(i) of a matter "arising under" the Constitution is where the invalidity or inoperability of a Commonwealth or State law is asserted in the course of the controversy in reliance on the Constitution. In each case, the assertion operates to characterise the totality of the justiciable controversy41 and continues to characterise the totality of the justiciable controversy even where the assertion is later resolved in the exercise of judicial power or even withdrawn42. Those characteristics of a matter described in s 76(i) or s 76(ii) of the Constitution provide an answer to another argument of the respondent raised by notice of contention. The argument is to the effect that the judgment of the Full Court can be supported on the basis that the proper course for the Tribunal to have taken once the constitutional defence was raised before it was to have adjourned 39 Fencott v Muller (1983) 152 CLR 570 at 603 (citing In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265), 608. 40 LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581, citing R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154 and Felton v Mulligan (1971) 124 CLR 367 at 408. 41 Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 571 [7]. 42 Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 477. the hearing of the complaint to allow the question of whether the State Act is in relevant part inoperative by reason of inconsistency with the Commonwealth Act or the Commonwealth Standards to be determined by the Supreme Court in the exercise of the federal jurisdiction invested in it pursuant to s 77(iii) of the Constitution by s 39(2) of the Judiciary Act 1903 (Cth). The answer is that the subject-matter of the complaint referred to the Tribunal was a justiciable controversy about the entitlement of the respondent to an order under the State Act on the basis that the appellants discriminated on the ground of disability in the provision of a facility by failing to provide adequate wheelchair access in the construction of Parliament Square in Hobart. The assertion by the appellants by way of defence to the complaint that the State Act is in relevant part inoperative by force of s 109 of the Constitution by reason of inconsistency with the Commonwealth Act and the Commonwealth Standards formed part of the one justiciable controversy for the reason that the determination of the constitutional defence was essential to the determination of the claim43. That was so notwithstanding the incapacity of the Tribunal judicially to determine the constitutional defence in the exercise of the limited jurisdiction conferred by the State Act44. The totality of that single justiciable controversy was therefore one matter meeting the descriptions in both s 76(i) and s 76(ii) of the Constitution. Having attracted that character by the raising of the constitutional defence, the single justiciable controversy encompassing both the statutory claim and the constitutional defence would retain that character even if the constitutional defence were later to be considered and rejected by the Supreme Court. The irrelevance of the merits of the constitutional defence There remains to consider whether, in order to have given rise to a matter of a description in s 76(i) or s 76(ii) of the Constitution, the constitutional defence asserted by the appellants needed to meet some threshold degree of arguability 43 Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585-586 [138]-[140]. 44 cf Abebe v The Commonwealth (1999) 197 CLR 510 at 529-530 [36]. and, if so, what that threshold was. The question is said in informed contemporary commentary to be not yet finally resolved45. The resolution in principle is that for a claim or defence in reliance on a Commonwealth law or in reliance on the Constitution to give rise to a matter of a description in s 76(i) or s 76(ii) of the Constitution, it is enough that the claim or defence be genuinely in controversy and that it give rise to an issue capable of judicial determination. That is to say, it is enough that the claim or defence be genuinely raised and not incapable on its face of legal argument. That is what should be taken to have been meant by repeated acknowledgements that the assertion of a claim or defence will not give rise to a matter within the description in s 76(i) or s 76(ii) of the Constitution if the claim or defence is "unarguable" or if the claim or defence is "colourable" in that it is made for the purpose of "fabricating" jurisdiction46. Thus, the State jurisdiction of a State tribunal that is not a court of the State within the meaning of s 77(ii) and s 77(iii) of the Constitution is not denied, just as the federal jurisdiction of this Court under s 76(i) or s 76 (ii) or of another court under s 77(i) or s 77(iii) of the Constitution is not engaged, by the assertion of a claim or defence that amounts to "constitutional nonsense"47 or any other form of legal nonsense. But examination of what the prospects of success of a legally 45 See Lindell, Cowen and Zines's Federal Jurisdiction in Australia, 4th ed (2016) at 197-199, referring to Aitken, "The Meaning of 'Matter': A Matter of Meaning – Some Problems of Accrued Jurisdiction" (1988) 14(3) Monash University Law Review 158 and Leeming, Authority to Decide: The Law of Jurisdiction in Australia (2012) at 40. See now the discussion in Leeming, Authority to Decide: The Law of Jurisdiction in Australia, 2nd ed (2020) at 42-44. 46 See the cases cited in Lane, Lane's Commentary on the Australian Constitution (1986) at 367-368, referred to in Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 219. 47 Contrary to the opinion expressed by Owen Dixon KC in his evidence to Royal Commission on the Constitution of the Commonwealth: Australia, Royal Commission on the Constitution of the Commonwealth, Report of Proceedings and Minutes of Evidence (Melbourne), 13 December 1927 at 788. coherent claim or defence might be, were that claim or defence to be judicially determined on its merits, forms no part of the requisite assessment. The Full Court of the Federal Court in Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation48 captured that principle well in pointing out that jurisdiction with respect to a matter is jurisdiction "to entertain, and determine, all claims constituting [the matter], whatever their ultimate fate". It went on to point out that "[a]ny other approach would involve the extremely inconvenient result that the existence or absence of jurisdiction to deal with a particular claim would depend upon the substantive result of that claim"49. The longevity of the principle as expounded in Burgundy Royale can be illustrated by reference to Hopper v Egg and Egg Pulp Marketing Board (Vict)50. There a constitutional claim made in a proceeding in the original jurisdiction conferred on this Court under s 76(i) of the Constitution by s 30(a) of the Judiciary Act was referred to the Full Court of this Court for argument under s 18 of the Judiciary Act, where it was emphatically rejected. The claim was to the effect that certain provisions of a Victorian Act imposed a duty of excise contrary to s 90 of the Constitution. This Court in an earlier case had considered a New South Wales Act in substantially similar terms and had held that it did not impose a tax and therefore did not impose a duty of excise contrary to s 90 of the Constitution51. Determining the merits of the claim consistently with that earlier authority, the Full Court of this Court unanimously concluded that the Victorian Act also plainly did not impose a tax52, a conclusion fatal to the constitutional claim. A majority went on to hold that, despite that outcome, the matter still attracted the Court's original jurisdiction. Drawing on language in Troy v Wrigglesworth53, Latham CJ remarked that "[t]he fact that the constitutional objection has failed does not deprive the court (1987) 18 FCR 212. (1987) 18 FCR 212 at 219. (1939) 61 CLR 665. 51 Crothers v Sheil (1933) 49 CLR 399 at 408. (1939) 61 CLR 665 at 671, 676-677, 687. (1919) 26 CLR 305 at 311 (emphasis added). of jurisdiction if 'the facts relied on were bona fide raised, and were such as to raise' the question", adding that although the constitutional claim had failed he was unable to "discern a satisfactory reason for saying that it was not a bona-fide claim so based"54. Entirely consistent with the approach taken in this Court are decisions of the Full Court of the Federal Court in cases in which a claim or defence based on a Commonwealth law has been struck out or summarily dismissed – by reason of the claim or defence having been found on analysis and after argument to be "foredoomed to fail"55 or "so clearly untenable that it cannot possibly succeed"56 – and in which the Federal Court has yet been held to retain jurisdiction simply by reason of the claim or defence having been genuinely asserted57. The respondent, with the support of the Attorney-General of the Commonwealth and some other intervenors, invites this Court to depart from that principled and longstanding approach. The invitation is to put in its place a requirement that, to operate to characterise a justiciable controversy as a matter described in s 76(i) or s 76(ii) of the Constitution, a claim or defence asserted in reliance on a Commonwealth law or in reliance on the Constitution must meet a threshold of arguability consistent with the raising of the claim or defence in a court not amounting to an abuse of the process of that court. The invitation is rejected. To adopt the suggested approach would blur the distinction between the existence of jurisdiction and the exercise of jurisdiction. It would confuse the jurisdiction that any court or non-court tribunal must have to decide the limits of its own jurisdiction with the power that a court alone must have in the exercise of its jurisdiction to safeguard the integrity of its processes. Applied to this Court, to a court created by the Commonwealth Parliament or a court of a State on which (1939) 61 CLR 665 at 673-674. 55 Walton v Gardiner (1993) 177 CLR 378 at 393. 56 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130; Spencer v The Commonwealth (2010) 241 CLR 118 at 140 [55]. 57 See Unilan Holdings Pty Ltd v Kerin (1993) 44 FCR 481 at 481-482; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 at 598-599 [88]; Rana v Google Inc (2017) 254 FCR 1 at 7 [21]. federal jurisdiction is conferred by a Commonwealth law, such an approach would result in a perverse fragmentation of jurisdiction by splintering off from jurisdiction those aspects of a genuine controversy most readily resolvable in the exercise of judicial power. Applied by a State tribunal that is not a court of the State within the meaning of s 77(ii) and s 77(iii), it would inevitably involve that tribunal being drawn down the forbidden path of judicially determining the merits of a matter within a description in s 76(i) or s 76(ii) of the Constitution. None of that is to suggest that an incomprehensible or nonsensical claim or defence that is thereby incapable of giving rise to a matter within a description in s 76(i) or s 76(ii) of the Constitution would not equally be a claim or defence that would be struck out or summarily dismissed by a court were it asserted in a proceeding in respect of which federal jurisdiction was otherwise attracted under s 75 or s 76 of the Constitution. But the questions which arise and the tests which are applied on applications of the kind mentioned are different from those which arise and are applied when determining the existence of jurisdiction. Finally, in response to a submission put by the Attorney-General of the Commonwealth, it should be added that the suggested approach derives no analogical support from the approach that has been adopted to determining when a cause pending in a court "involves" a matter arising under the Constitution or involving its interpretation within the meaning of s 78B of the Judiciary Act58. The characterisation of a cause pending in a court required by that section is not directed to the existence of jurisdiction. The characterisation is directed rather to whether an exercise of jurisdiction is to be delayed pending the giving of notices to the Attorneys-General of the Commonwealth and of the States and Territories. Here, as has already been noted, the Tribunal specifically found that the constitutional defence of the appellants was "not colourable". That finding has not been challenged. Whatever the merits of the constitutional defence, there is and could be no suggestion that the constitutional defence was not genuinely raised or is so incoherent as to be insusceptible of judicial determination on those merits. Together with the claim of the respondent to a remedy under the State Act, the constitutional defence therefore formed part of and gave character to a single justiciable controversy comprising a matter within the description in each of s 76(i) 58 See Glennan v Commissioner of Taxation (2003) 77 ALJR 1195 at 1197-1198 [14]; 198 ALR 250 at 253; Re Culleton (2017) 91 ALJR 302 at 307-308 [29]; 340 ALR and s 76(ii) of the Constitution. For that reason, the hearing and determination of the claim, no less than the hearing and determination of the defence, was beyond the jurisdiction conferred on the Tribunal by the State Act. The Tribunal was correct so to decide. Disposition The appeal is to be allowed. The substantive orders of the Full Court are to be set aside. In their place, it is to be ordered that the appeal from the Tribunal be dismissed. In accordance with a condition of the grant of special leave to appeal, there is to be no order as to costs. Edelman The central question and the structure of these reasons The central question on this appeal concerns when a State tribunal will be denied jurisdiction to exercise judicial power in a matter before it because one party has raised in the dispute an issue that falls within a subject of federal jurisdiction. The particular issue raised concerns an allegation by the appellants that there is a "matter ... arising under [the] Constitution". The circumstances of the appeal involve a complaint of discrimination by Mr Cawthorn, the respondent, which was made in the Anti-Discrimination Tribunal ("the Tribunal")59, a body which was constituted under the Anti-Discrimination Act 1998 (Tas) ("the State Act") and which, it is common ground, was not a court. Mr Cawthorn has paraplegia. He relies on a wheelchair for mobility. Together with the Paraquad Association of Tasmania Incorporated, he brought a complaint against the appellants, namely the developer and the owner of land for the "Parliament Square" development in Tasmania. He complained that one of the proposed entrances to the development would provide access only by stairs. Mr Cawthorn alleged that this constitutes direct and indirect disability discrimination under ss 14, 15 and 16(k) of the State Act. One of the appellants' defences was effectively that: (i) the appellants had complied with the Disability Discrimination Act 1992 (Cth) ("the Commonwealth Act") and subordinate legislation under the Commonwealth Act, and (ii) the Commonwealth Act had covered the field in relation to disability discrimination standards so that s 109 of the Constitution rendered the State Act inoperative to the extent that it imposed any additional duties upon the appellants ("the s 109 issue"). The Tribunal dismissed Mr Cawthorn's complaint on the basis that the existence of the s 109 issue meant that the dispute arose in federal jurisdiction because there was a matter arising under the Constitution, and it did not have authority to decide matters in federal jurisdiction. The Full Court of the Supreme Court of Tasmania assessed the s 109 issue, concluded that it was "misconceived", and set aside the orders of the Tribunal, remitting the matter to be heard and determined by the Tribunal according to law60. The central question on this appeal is therefore whether the Tribunal was denied jurisdiction to exercise judicial power due to the allegation by the appellants 59 The Anti-Discrimination Tribunal was abolished on 5 November 2021: Tasmanian Civil and Administrative Tribunal Act 2020 (Tas) ss 3, 148. 60 Cawthorn v Citta Hobart Pty Ltd (2020) 387 ALR 356. Edelman which raised a matter under the Constitution. That question can be answered by reference to eight expository steps by which these reasons are structured: (1) The Tribunal would have exercised judicial power if it had resolved the dispute. (2) The Tribunal had no authority to exercise judicial power over a subject matter of federal jurisdiction. (3) The scope of a subject matter of federal jurisdiction is the same in a court or in a tribunal. (4) Tribunals, like courts, have authority to decide whether they have jurisdiction and therefore to decide whether a subject matter of federal jurisdiction arises. In a dispute concerning a "matter ... arising under this Constitution", being a subject matter of federal jurisdiction, there must be a "real question" as to that subject matter. (6) An issue will involve no "real question" for the same reasons that it would be an abuse of process. (7) The s 109 issue in this case involved a "real question" about a matter arising under the Constitution and thus it was a subject matter of federal jurisdiction. (8) The s 109 issue in this case was not a separate matter. The general propositions, discussed below, involved in each of these eight steps have been established in Australian law for many decades. In the application of those general propositions, and in the absence of any suggestion of improper purpose in the appellants raising the s 109 issue, Mr Cawthorn could only establish that the Tribunal had authority to decide the single, indivisible issue before it by establishing either that the Tribunal would not have been exercising judicial power, so that there was no matter, or that the s 109 issue raised by the appellants was manifestly hopeless. Neither submission can be accepted. (1) The Tribunal would have exercised judicial power in resolving the dispute A preliminary question, raised by the Australian Human Rights Commission in its intervention in this case and adopted in a further notice of contention by Mr Cawthorn, is whether the Tribunal would have been exercising judicial power in resolving the dispute between the appellants and Mr Cawthorn. If the Tribunal would not have been exercising judicial power, then it would not have been exercising judicial power on any of the subjects of federal jurisdiction within ss 75 and 76 of the Constitution. Edelman Numerous statements in this Court, following the classic formulation by Kitto J61, have established that, as a general rule, judicial power involves five elements: (i) a decision following a process of inquiry including finding of facts and application of law; (ii) that settles for the future; (iii) a dispute between defined persons or classes of persons; (iv) as to the existence of a legal relation between them; (v) creating a binding norm by reference to which that legal relation will be applied in the future. The submission of the Australian Human Rights Commission was essentially in two stages. First, an exercise of power under the State Act could be administrative power if it were characterised without regard to s 90 of the State Act, which provides for a process to enforce an order of the Tribunal in the Supreme Court of Tasmania as if it were an order of that Court. Secondly, s 90 can be disapplied under s 3 of the Acts Interpretation Act 1931 (Tas) to the extent that it would apply to the subject matter of federal jurisdiction. Even if it were appropriate to approach the interpretation of the State Act in this segmented fashion, which it is not62, the submission would fail at the first stage. The remedial provision in s 89 of the State Act is the "final act" that "determines the nature of the previous inquiry"63. Contrary to the submission of the Australian Human Rights Commission, the orders of the Tribunal sought by Mr Cawthorn under s 89 are not merely "recommendations". Although a power for a tribunal to enforce its own orders has sometimes been described as an essential element of judicial power64, that is because enforcement is a powerful indicator that a binding norm has been created. But, even without enforcement, s 89 is a remedial provision that is the epitome of judicial power. 61 R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 374. See also R v Ludeke; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 655; Babaniaris v Lutony Fashions Pty Ltd (1987) 163 CLR 1 at 12; Love v Attorney-General (NSW) (1990) 169 CLR 307 at 320; Polyukhovich v The Commonwealth (War Crimes Act Case) (1991) 172 CLR 501 at 532, 685; Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 109-110 [41]; Attorney-General (Cth) v Alinta Ltd (2008) 233 CLR 542 at 577 [94]. 62 The Commonwealth v Anti-Discrimination Tribunal (Tasmania) (2008) 169 FCR 85 63 R v Davison (1954) 90 CLR 353 at 370. 64 Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 Edelman Section 89 of the State Act operates in the following way. After a decision that can include the finding of facts and application of law, s 89 empowers the Tribunal to impose remedies to settle a dispute about a legal relation between persons for the future, creating a binding norm. The section assumes, correctly, that binding legal norms can exist independently of their enforceability65. It provides for the Tribunal to make orders such as: the mandatory re-employment of the complainant66; the payment of money to the complainant as compensation for any loss or injury caused by discrimination or prohibited conduct67; the payment of a fine68; or the declaration that a contract or agreement is void ab initio69. Orders under s 89 do not merely "recommend" re-employment, the payment of compensation or fines, or that a contract or agreement is void. Such orders impose a binding norm, requiring these things to be done. This is put beyond doubt by s 90(1)(c), in its reference to the filing of an affidavit describing the extent to which any order of the Tribunal has not been complied with as part of the separate process for enforcement. (2) The Tribunal had no authority to exercise judicial power over a subject matter of federal jurisdiction Immediately prior to Federation there was no State judicial power concerning matters arising under the Constitution, or involving its interpretation. In Burns v Corbett70, four members of this Court concluded, in effect, that the power in s 77(ii) of the Constitution, for the Commonwealth Parliament to make laws defining the extent to which the jurisdiction of any federal court shall be exclusive of that which belongs to or is invested in the courts of the States, carried an implication with the effect that s 77(ii) would read as though it provided as follows: "all of the subjects of federal jurisdiction can only belong to or be invested in courts and not tribunals of the States even if State tribunals had previously exercised jurisdiction over those subjects". Regardless of whether the large implication in Burns was correct, or whether (i) a "court" in s 77(ii) should be read in a general way as "some organ as 65 Hart, The Concept of Law, 3rd ed (2012) at 18-25, 51-61, 100-123. 66 Anti-Discrimination Act 1998 (Tas), s 89(1)(c). 67 Anti-Discrimination Act 1998 (Tas), s 89(1)(d). 68 Anti-Discrimination Act 1998 (Tas), s 89(1)(e). 69 Anti-Discrimination Act 1998 (Tas), s 89(1)(f). (2018) 265 CLR 304. Edelman constituted by the State to exercise judicially some portion of the King's judicial power"71, or (ii) s 77(ii) contains an implication of Commonwealth legislative power to exclude federal jurisdiction from tribunals of the States as well as courts of the States, there was no dispute on this appeal that a tribunal could not exercise federal jurisdiction in respect of a matter arising under the Constitution. Either the Constitution precludes a tribunal from exercising federal jurisdiction, or the Commonwealth Parliament has exercised legislative power to preclude a tribunal (3) The scope of a subject matter of federal jurisdiction is the same in a court or a tribunal Jurisdiction has dimensions of person, locality, and subject matter73. The topics in ss 75 and 76 of the Constitution cross each of these dimensions. They include the dimension of jurisdiction concerning persons holding particular offices in the references to "consuls"74 or "an officer of the Commonwealth"75. They include the dimension of jurisdiction concerning locality in the reference to "matters ... between residents of different States"76. And they include the dimension of jurisdiction concerning subject matter, relevantly to this appeal, in the reference to "any matter ... arising under this Constitution, or involving its interpretation"77. In every instance, the correct answer to whether that dimension of jurisdiction exists does not vary depending upon whether the question is asked by a court or by a tribunal. Federal jurisdiction, in the dimensions covered in the topics in ss 75 and 76 of the Constitution, cannot have one meaning when it is exercised by a court and another meaning when it is exercised by a tribunal. Put another way, the conclusion that a person is a consul, an officer of the Commonwealth, or a 71 Le Mesurier v Connor (1929) 42 CLR 481 at 510. 72 See also Judiciary Act 1903 (Cth), ss 38, 39. 73 Rizeq v Western Australia (2017) 262 CLR 1 at 48 [129]; Du Ponceau, A Dissertation on the Nature and Extent of the Jurisdiction of the Courts of the United States (1824) at 21-22. 74 Constitution, s 75(ii). 75 Constitution, s 75(v). 76 Constitution, s 75(iv). 77 Constitution, s 76(i). Edelman resident of a different State does not change simply because the forum in which the conclusion is reached is a tribunal rather than a court. Likewise, a matter does not cease to arise under the Constitution because it is raised before a tribunal rather than a court. (4) Both courts and tribunals have authority to decide whether they have jurisdiction If doubt arises, the "first duty of any Court, in approaching a cause before it, is to consider its jurisdiction"78. That consideration of whether jurisdiction exists is not, by definition, an exercise of jurisdiction. It is "part of the court being 'clothed with full authority essential for the complete adjudication of the matter'"79. In deciding whether federal jurisdiction exists, the court is not exercising federal jurisdiction. It is merely taking the necessary step anterior to the exercise of any judicial power by reaching an opinion as to its own jurisdiction. As Leeming JA said in Gaynor v Attorney General for New South Wales80, "[t]here is a difference between an authoritative, binding determination of a dispute between the parties by the exercise of judicial power, and the expression of an opinion". The same is true for a tribunal. A tribunal has a duty not to exceed its authority which necessarily requires the ability "to consider the legal limits of that authority"81. Like a court, if there is doubt a tribunal must "satisfy itself whether a claim made to it is within its limited authority"82. In short, a tribunal must "make up its mind" about its authority to decide83. Also like a court, in determining whether it has jurisdiction to exercise judicial power, a tribunal is not resolving 78 Hazeldell Ltd v The Commonwealth (1924) 34 CLR 442 at 446. See also Federated Engine-Drivers and Firemen's Association of Australasia v Broken Hill Proprietary Co Ltd (1911) 12 CLR 398 at 415; Old UGC Inc v Industrial Relations Commission (NSW) (2006) 225 CLR 274 at 290 [51]; Federal Commissioner of Taxation v Tomaras (2018) 265 CLR 434 at 477 [132]. 79 Leeming, Authority to Decide: The Law of Jurisdiction in Australia, 2nd ed (2020) at 44, quoting R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 at 465. (2020) 102 NSWLR 123 at 156 [137]. 81 Re Adams and the Tax Agents' Board (1976) 12 ALR 239 at 242. 82 Gaynor v Attorney General for New South Wales (2020) 102 NSWLR 123 at 155-156 [130]-[132]; Wilson v Chan & Naylor Parramatta Pty Ltd (2020) 103 NSWLR 140 at 144 [14]. 83 R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 618. Edelman any matter between the parties84. Its determination is anterior to, but is not an exercise of, judicial power. The determination by a tribunal of whether it has jurisdiction to exercise judicial power can lead to a consequential decision that will affect the parties. If the court decides that it has jurisdiction, then it will exercise judicial power. If it decides that it does not have jurisdiction, then it will refuse to exercise judicial power. In either case, the consequential act of exercising, or not exercising, judicial power is judicially reviewable. But neither courts nor tribunals can be prohibited from performing their anterior duty to decide whether they have jurisdiction85. In summary, both courts and tribunals have the duty and the authority to decide, "in the sense of forming an opinion" about86, the existence of their jurisdiction. Hence, for the purposes of ascertaining whether federal jurisdiction exists, courts and tribunals can decide whether a person is a consul or an officer of the Commonwealth. They can decide whether a person is a resident of a different State. And they can decide whether the dispute before them is a "matter ... arising under this Constitution, or involving its interpretation". (5) A dispute concerning a "matter ... arising under this Constitution" requires a "real question" as to that subject matter More than a century ago, Griffith CJ said that "[t]he word 'matters' was in 1900 in common use as the widest term to denote controversies which might come before a Court of Justice"87. A "matter" in s 76 of the Constitution means "the subject matter for determination in a legal proceeding"88, which is "capable of judicial determination"89. A matter requires "some immediate right, duty or 84 See Sunol v Collier (2012) 81 NSWLR 619 at 624 [20]. 85 See R v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190 at 203, 215-216, 225; R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 216. 86 R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 618. 87 South Australia v Victoria (1911) 12 CLR 667 at 675. In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265. 89 South Australia v Victoria (1911) 12 CLR 667 at 708. See also Palmer v Ayres (2017) 259 CLR 478 at 490 [26]. Edelman liability to be established by the determination of the Court"90, where the reference to a "right" encompasses all species of legal relations. Contrary to the submissions of the State of Western Australia, intervening, it is not necessary in order to identify the existence of a matter "arising under this Constitution" for a court or tribunal to resolve the issue arising under the Constitution. It is sufficient that the court or tribunal considers that the dispute arises. Nevertheless, a matter will not arise simply because one party asserts that it does. For example, just as there will be a "want of [federal] jurisdiction" in the United States where "the alleged claim under the Constitution" is "made solely for the purpose of obtaining jurisdiction or ... is ... frivolous"91, a matter in Australian law will not arise where one party raises the issue merely for jurisdictional reasons without any genuine dispute or where the issue is preposterous or manifestly hopeless. This is what is meant when it is sometimes said that a question calling for the exercise of federal jurisdiction must be "properly raised"92 or that there must be a "real question"93 rather than one that is "essentially fictitious"94. As will be explained below, an issue in a court that is not properly raised – or, in other words, does not involve a "real question" – has been described for a century as an abuse of process. The next section addresses the circumstances in which an issue would be described in a court as an abuse of process or, without the label of abuse of process, described in a tribunal as not raising a "real question". (6) An issue will involve no "real question" for the same reasons that it would be an abuse of process As explained in (3) above, the scope of the subject matter of federal jurisdiction must be the same whether it arises in a court or in a tribunal. So, whether a putative matter is brought in a court or in a tribunal, the same answer In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265. See also CGU Insurance Ltd v Blakeley (2016) 259 CLR 339 at 368 [85]. 91 Bell v Hood (1946) 327 US 678 at 682-683. See also Shapiro v McManus (2015) 136 S Ct 450 at 455-456. 92 Troy v Wrigglesworth (1919) 26 CLR 305 at 311. 93 Hopper v Egg and Egg Pulp Marketing Board (Vict) (1939) 61 CLR 665 at 677; Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130. See also Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 303 [159]; Re Green (2011) 85 ALJR 423 at 432 [36]; 275 ALR 437 at 448. 94 Bailey v Patterson (1962) 369 US 31 at 33. Edelman must be given in both fora as to whether there is a "real question" sufficient to give rise to jurisdiction. Where a putative matter arises in a court, the court's conclusion that there is no "real question" raised by a party may be reached in the exercise of its inherent jurisdiction by considering whether it would be an abuse of the court's processes to address the question. There are at least three established categories of abuse of process: (i) the use of the court's processes for an illegitimate purpose; (ii) the use of the court's processes in a manner that is unjustifiably oppressive to one of the parties; and (iii) the use of the court's processes in a manner that impairs the integrity of the court95. In each category, issues that are abuses of process are sometimes also described as involving no "real question"96. The first category of abuse of process, where the court's processes are used for an illegitimate purpose, is sometimes described as involving an issue that is "'colourable' in the sense that [it was] made for the improper purpose of 'fabricating' jurisdiction"97. The second category, sometimes unfortunately also described as involving a "colourable" issue98, concerns oppression in the sense that a ground of the dispute is oppressive or "vexing" to one of the parties or, in more antique language, it is "frivolous and vexatious" or "frivolous, vexatious or oppressive99. In relation to the second category of abuse of process, it is important to distinguish between, on the one hand, a frivolous or vexatious issue and, on the 95 Walton v ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) (2022) 96 ALJR 166 at 192 [130]; 399 ALR 1 at 33. 96 Hopper v Egg and Egg Pulp Marketing Board (Vict) (1939) 61 CLR 665 at 677; Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130. See also Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 303 [159]; Re Green (2011) 85 ALJR 423 at 432 [36]; 275 ALR 437 at 448. 97 Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 219. 98 See Hopper v Egg and Egg Pulp Marketing Board (Vict) (1939) 61 CLR 665 at 677; Arbaugh v Y & H Corporation (2006) 546 US 500 at 513. 99 Tampion v Anderson (1973) 48 ALJR 11 at 12; 3 ALR 414 at 416-417; Mickelberg v The Queen (1989) 167 CLR 259 at 312; Ridgeway v The Queen (1995) 184 CLR 19 at 74-75; Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 Edelman other hand, one that discloses "no reasonable cause of action"100. The former is a higher threshold. As Barwick CJ observed in General Steel Industries Inc v Commissioner for Railways (NSW)101, many different expressions have been used to attempt to describe the high threshold for a frivolous or vexatious issue: "'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'. At times the test has been put as high as ... so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or 'so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument'; 'so to speak apparent at a glance'." Some of these verbal formulae do not capture the height of the threshold. For instance, the penultimate expression that reads in part, "does not admit of reasonable argument", distracts from the higher threshold required for an issue to be "manifestly groundless"102 or "unarguable"103 by the introduction of notions of reasonableness. On the other hand, a test of "unarguable" is either a contradiction in terms (ie, the very reason that the issue arises is because it will be argued), or it is the expression of the very conclusion sought to be justified (ie, the reason why a party will not be permitted to argue the issue). The Solicitor-General of the Commonwealth suggested the adoption of the expression "so clearly untenable that it cannot possibly succeed". That is an expression which Barwick CJ104 borrowed from an early decision of this Court where it was used to describe a claim that was "so utterly hopeless that it ought to be got rid of under the inherent jurisdiction of the Court" and so should be 100 In the matter of an appeal by Luck (2003) 78 ALJR 177 at 178 [6]; 203 ALR 1 at 3, quoting Hunt v Allied Bakeries Ltd [1956] 1 WLR 1326 at 1328; [1956] 3 All ER 101 (1964) 112 CLR 125 at 129. 102 See also Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91. 103 Compare R v Cook; Ex parte Twigg (1980) 147 CLR 15 at 26. 104 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR Edelman permanently stayed as an abuse of process and not heard in the exercise of the Court's jurisdiction105. But without knowledge of the history of this expression, references to "untenable" or even "obviously untenable" might be associated with notions of reasonableness involved in summary dismissal. For want of any better expression, the best description might be "manifestly hopeless". The important distinction in the second category of abuse of process is between the higher threshold of issues that are manifestly hopeless and the lower thresholds, including claims or defences that do not enjoy reasonable prospects of success. As four members of this Court said in Spencer v The Commonwealth106, many cases of unreasonable prospects of success might also meet the higher threshold107, but the higher threshold to establish that there is no "real question" requires a "certain demonstration of the outcome of the litigation, not an assessment of the prospect of its success"108. Hence, decisions of the Full Court of the Federal Court of Australia that have upheld "[t]he striking out of the relevant portions of [a] pleading"109 properly did not suggest that the struck out pleading was necessarily an abuse of process unless the claim was manifestly hopeless such as "the proposition that the Commonwealth Constitution is invalid"110. In order to show that the s 109 issue raised by the appellants was not a "real question", and in the absence of any improper purpose, it was necessary for Mr Cawthorn to show that the issue was manifestly hopeless. That is a higher threshold than summary dismissal on the grounds that the claim has no reasonable prospects of success. A similar lower threshold to no reasonable prospects is also arguably embodied in the summary dismissal test for whether a claim is "misconceived" under s 99(2)(a) of the State Act. The same reasoning, denying the existence of a "real question", can also, unsurprisingly, be seen in the application of s 78B of the Judiciary Act 1903 (Cth), 105 Burton v Shire of Bairnsdale (1908) 7 CLR 76 at 88, 92. 106 (2010) 241 CLR 118. 107 (2010) 241 CLR 118 at 141 [59] 108 (2010) 241 CLR 118 at 140 [54]. 109 Unilan Holdings Pty Ltd v Kerin (1993) 44 FCR 481 at 481. See also Rana v Google Inc (2017) 254 FCR 1 at 7 [21]. 110 Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 at 598-599 [88]. Edelman which copies the language of s 76(i) of the Constitution111, such that a notice that a cause "involves a matter arising under the Constitution or involving its interpretation" is not required to be issued merely because one party asserts that there is a matter arising under the Constitution112. Although the question raised by the similar language of s 78B operates to suspend rather than to extinguish jurisdiction, the principles are the same. Again, there must be a "real question"113. As French J said in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd114, "[i]f the asserted constitutional point is frivolous or vexatious or [otherwise] raised as an abuse of process, it will not attach to the matter in which it is raised the character of a matter arising under the Constitution". (7) The s 109 issue involved a "real question" about a matter arising under the Constitution and thus it was a subject matter of federal jurisdiction The only basis upon which Mr Cawthorn submitted that the s 109 issue did not involve a "real question" was that, in his submission, it was so clearly untenable that it could not succeed. In other words, Mr Cawthorn relied upon the formulation of the appropriate test for a lack of a "real question" due to an issue being oppressive or, in more antique language, "frivolous, vexatious or oppressive". For the reasons explained above, I prefer to express that test as requiring the issue raised to be manifestly hopeless. In such cases, it is both unnecessary and inappropriate to delve into any detail of the question raised by the appellants. Nevertheless, and contrary to the submissions of a number of the counsel on this appeal, an assessment of whether a question is manifestly hopeless can never be entirely independent of an assessment of the "merits" of that issue. But the extreme conclusion that there is no "real question", such that if raised as a question of the inherent jurisdiction of a court it would be dismissed as an abuse of the court's processes, requires the lack of merit to be so obvious, and so apparent, that it can be easily seen to be manifestly hopeless. Some cases might require substantial thought and reasoning for an 111 State Bank of New South Wales v Commonwealth Savings Bank of Australia (1986) 4 NSWLR 549 at 563. 112 Glennan v Commissioner of Taxation (2003) 77 ALJR 1195 at 1197 [14]; 198 ALR 250 at 253, quoting Re Finlayson; Ex parte Finlayson (1997) 72 ALJR 73 at 74. 113 Re Culleton (2017) 91 ALJR 302 at 308 [29]; 340 ALR 550 at 556. The addition of "substantial" merely describes the outcome and adds nothing: Leeming, Authority to Decide: The Law of Jurisdiction in Australia, 2nd ed (2020) at 115-117. 114 (1999) 95 FCR 292 at 297 [14]. See also Daniels v Deputy Commissioner of Taxation [2007] SASC 431 at [17]. Edelman adjudicator to satisfy themselves that an apparently absurd claim or defence is hopeless115 or that it is not hopeless and may indeed be correct116. But it should only be in a rare case that a court or tribunal should accede to the tentatively expressed suggestion of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW)117 that argument "of an extensive kind" may be necessary to demonstrate the extreme lack of merit required to establish that there is no "real question", so that the claim or defence is manifestly hopeless. The s 109 issue raised by the appellants is not manifestly hopeless. It suffices to say that, whatever may be the strength of the argument concerning what is sometimes, awkwardly, described as "direct inconsistency"118, it was not manifestly hopeless to allege that the State Act was "indirectly" inconsistent with the Commonwealth Act on the argued basis that the Commonwealth Act was intended to be "exhaustive"119 in its coverage of the relevant subject matter of disability standards. The argument is not manifestly hopeless in circumstances in which the Commonwealth Act contemplates a comprehensive regime of disability standards to be formulated by the Minister120. Mr Cawthorn submitted that the Commonwealth Act provides for a "model of election" between bringing a discrimination claim under a State regime or under the Commonwealth regime121. At first glance, this might appear to make any claim that the Commonwealth Act is exhaustive manifestly hopeless. But, as the 115 eg Joosse v Australian Securities and Investment Commission (1998) 73 ALJR 232; 159 ALR 260. 116 eg Re Manitoba Language Rights [1985] 1 SCR 721. 117 (1964) 112 CLR 125 at 130. 118 See the discussion in Work Health Authority v Outback Ballooning Pty Ltd (2019) 266 CLR 428 at 472-473 [105]. 119 See, eg, Ex parte McLean (1930) 43 CLR 472 at 483; Wenn v Attorney-General (Vict) (1948) 77 CLR 84 at 120; R v Credit Tribunal; Ex parte General Motors Acceptance Corporation (1977) 137 CLR 545 at 563; Viskauskas v Niland (1983) 153 CLR 280 at 291-292; Dickson v The Queen (2010) 241 CLR 491 at 507-508 [33]-[35]; Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2011) 244 CLR 508 at 525 [44]; Work Health Authority v Outback Ballooning Pty Ltd (2019) 266 CLR 428 at 447-448 [33]-[35], 472-473 [105]-[106]. 120 Disability Discrimination Act 1992 (Cth), s 31. But cf s 31(2)(b). 121 Disability Discrimination Act 1992 (Cth), ss 13(4), 13(5). Edelman appellants submitted, it is arguable that (i) the election regime is concerned only with areas of concurrency of the Commonwealth Act and any State Act, and (ii) those areas of concurrency do not extend to disability standards. This argument derives some support from ss 13(3) and 13(3A) of the Commonwealth Act which, respectively, recognise that the Commonwealth Act "is not intended to exclude or limit the operation of a law of a State or Territory that is capable of operating concurrently with [the Commonwealth Act]" but that lack of intention "does not apply in relation to Division 2A of Part 2 (Disability standards)". Whatever may be the strength of the appellants' argument122, the brief discussion above suffices to demonstrate that the s 109 issue raised is not manifestly hopeless. (8) The s 109 issue was not a separate matter The second ground of Mr Cawthorn's notice of contention was essentially that, if the s 109 issue was not manifestly hopeless, then the Tribunal could, and should, have excised the s 109 issue as a separate matter to be dealt with by a court possessing federal jurisdiction. A matter encompasses all claims made within the scope of a controversy123 and it will only be where an issue is a "completely disparate claim constituting in substance a separate proceeding" that it will constitute a separate matter124. It was not, and could not have been, suggested that the subject matter of the s 109 issue was, in substance, a separate proceeding. Mr Cawthorn instead submitted that the s 109 issue was a separate matter for reasons concerning the forum in which it could be adjudicated. In other words, if the Tribunal had jurisdiction over all of the dispute other than the s 109 issue, then the s 109 issue must form part of a separate matter. That submission cannot be accepted. The s 109 issue could have been separately raised in a court possessing federal jurisdiction and, if that had occurred, the Tribunal would have had a 122 See Disability Discrimination Act 1992 (Cth), ss 13(4)(a), 13(5)(a), "including a matter dealt with by a disability standard" and Australia, House of Representatives, Disability Discrimination and Other Human Rights Legislation Amendment Bill 2008, Explanatory Memorandum at 12 [63]. 123 Fencott v Muller (1983) 152 CLR 570 at 603. 124 Fencott v Muller (1983) 152 CLR 570 at 607, quoting Felton v Mulligan (1971) 124 CLR 367 at 373. Edelman separate matter before it125. The Tribunal could then have resolved the dispute before it since no subject matter of federal jurisdiction would have been involved in that separate matter. But, since the s 109 issue was raised as part of the same proceeding before the Tribunal, there was only one matter. The content of that matter fell to be characterised independently of the forum in which it was to be adjudicated126 and, hence, independently of any restrictions upon the jurisdiction of that forum. Conclusion The appeal must be allowed on the first ground and the notices of contention dismissed. This conclusion means that it is unnecessary, in order to resolve the appeal to this Court, to decide the appellants' second ground of appeal concerning the merits of the s 109 issue. Orders should be made allowing the appeal, setting aside orders 1 to 3 of the Full Court made on 23 December 2020 and, in their place, ordering that the appeal to that Court be dismissed. 125 Abebe v The Commonwealth (1999) 197 CLR 510 at 529-530 [36]. 126 Meringnage v Interstate Enterprises Pty Ltd (2020) 60 VR 361 at 406 [139].

HIGH COURT OF AUSTRALIA DRAGAN VASILJKOVIC PLAINTIFF AND COMMONWEALTH OF AUSTRALIA & ORS DEFENDANTS Vasiljkovic v Commonwealth of Australia [2006] HCA 40 Date of Order: 15 June 2006 Date of Publication of Reasons: 3 August 2006 ORDER The questions stated by the parties in the Special Case for the opinion of the Full Court are answered as follows: (a) Q. Is Part II of the Extradition Act 1988 (Cth) invalid to the extent, if any, to which it purports to confer a power to deprive an Australian citizen of liberty otherwise than in the exercise of the judicial power of the Commonwealth? (b) Q. Is Part II of the Extradition Act 1988 (Cth) read together with the Extradition (Croatia) Regulations 2004 (Cth) invalid to the extent to which it purports to confer a power to deprive an Australian citizen of liberty otherwise than upon a finding that there exists a prima facie case against that person of the commission of the offences alleged by the State requesting extradition? (c) Q. Is regulation 4 of the Extradition (Croatia) Regulations 2004 (Cth) invalid because it was not made pursuant to the power conferred by s 51(xxix) of the Constitution or any other legislative power of the Commonwealth? The costs of the Special Case be costs in the action. Representation T E F Hughes QC with K P Smark for the plaintiff (instructed by Albert A Macri Partners) H C Burmester QC with J G Renwick for the first and second defendants (instructed by Australian Government Solicitor) Submitting appearance for the third defendant Submitting appearance for the fourth defendant Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Vasiljkovic v Commonwealth of Australia Extradition – Plaintiff remanded in custody pending determination of eligibility for surrender – Arrest warrant for plaintiff in force in Croatia on charge of certain war crimes – Arrest warrant constitutes relevant "supporting documentation" for purposes of s 19 of the Extradition Act 1988 (Cth) – Statement made by Croatian investigating authorities of a well-founded suspicion that plaintiff committed the offences alleged, including recitation of evidence provided by witnesses – Croatia declared to be an "extradition country" by Extradition (Croatia) Regulations 2004 (Cth), regs 3, 4 – Whether Pt II of the Extradition Act is a valid law of the Commonwealth. Constitutional law (Cth) – Judicial power of the Commonwealth – Plaintiff detained pending determination of eligibility for surrender – Extradition Act, s 19(1) provided power of an administrative nature to conduct proceedings to determine eligibility for surrender – Extradition Act, s 19(5) provided that the person to whom the proceedings relate is not entitled to adduce evidence to contradict allegations that the person has engaged in the conduct constituting an extradition offence – No prima facie evidence requirement applicable – Whether Pt II of the Extradition Act is invalid to the extent that it purports to confer a power to deprive an Australian citizen of liberty otherwise than in exercise of the judicial power of the Commonwealth – Whether Pt II of the Extradition Act when read together with the Extradition (Croatia) Regulations is invalid to the extent that it purports to confer a power to deprive an Australian citizen of liberty otherwise than upon a finding that there exists a prima facie case against that person of the commission of the offences alleged by the state requesting extradition – Whether law authorising such involuntary detention requires machinery for testing the validity of the charges made – Whether surrender proceedings are an integer of a "matter" for the purposes of Ch III of the Constitution. Constitutional law (Cth) – External affairs – Extradition (Croatia) Regulations not made pursuant to any treaty between Australia and Croatia – Whether, in the absence of a treaty, the declaration by the Extradition (Croatia) Regulations of Croatia as an extradition country is invalid for want of support by s 51(xxix) of the Constitution or any other legislative power of the Commonwealth – Whether Pt II of the Extradition Act and the Extradition (Croatia) Regulations operate by reference to the conduct of the plaintiff external to Australia or by reference to an untested and untestable allegation of such conduct – Whether the mere fact of a request by a foreign state makes the subject-matter of the request amenable to the exercise of the legislative power conferred by s 51(xxix). Constitution, s 51(xxix), Ch III. Extradition Act 1988 (Cth), ss 3(a), 5, 11, Pt II. Extradition (Croatia) Regulations 2004 (Cth). GLEESON CJ. The plaintiff is, by naturalisation, a citizen of Australia. At the time of the hearing of this matter he was also a citizen of Serbia and Montenegro. He is accused of having committed, in 1991 and 1993, criminal offences against the Basic Criminal Code of the Republic of Croatia. Those offences are alleged to have been committed in the course of conflict between the armed forces of the Republic of Croatia and "armed Serbian paramilitary troops" of which the plaintiff was said to have been a commander. The alleged offences include torture and the murder of civilians and prisoners of war. On 12 December 2005, a County Court of the Republic of Croatia decided that there was a well-founded suspicion that the plaintiff had committed the alleged offences and that a motion requesting his interrogation should be granted. The decision, after reciting details of the alleged conduct of the plaintiff, recorded that "the suspect" had not been interrogated because he lived abroad and was "not available at the moment". The decision also upheld a "motion concerning custody". On 17 January 2006, the Government of Croatia requested Australia to deliver the plaintiff to the Croatian authorities by way of extradition. The request enclosed a copy of the County Court Decision, and particulars of the alleged offences. The plaintiff, who was born in 1954 in what was then the Federal People's Republic of Yugoslavia, migrated to Australia in 1969 with his family, and took up Australian citizenship in 1975. If the allegations against him are true, he must have returned to his former homeland temporarily in 1991 and 1993, but he resides in Australia. The events that occurred following the extradition request are set out in the reasons of Gummow and Hayne JJ, and it is unnecessary to repeat them. The extradition request was made pursuant to the Extradition (Croatia) Regulations 2004 (Cth) ("the Regulations"), which provided for the Republic of Croatia to be declared an extradition country for the purposes of the Extradition Act 1988 (Cth) ("the Act"). The scheme of the relevant provisions of the Act and the Regulations follows what is sometimes called the "no evidence" model of extradition. It will be necessary to examine the scheme in detail. It is convenient, however, at the outset to identify a question of public policy which bears upon the legislative scheme. The central problem in the case is to relate that question to the issues of law by reference to which the matter is to be decided. Legislative policy Although the extradition of fugitive offenders is an executive act, it requires statutory authority. It cannot be exercised "except in accordance with the laws which prescribe in detail the precautions to be taken to prevent unwarrantable interference with individual liberty"1. As Barwick CJ pointed out in Barton v The Commonwealth2, legislative authority is necessary for the surrender of a person to another country and to provide for custody and conveyance which are the common incidents of such surrender. Although international co-operation in the surrender of fugitives, typically based upon reciprocity, is commonly the subject of treaties, in Australia a treaty does not have the effect of law, and the interference with liberty necessarily involved in the apprehension and surrender of a person for extradition can lawfully occur only if undertaken in accordance with statute. Treaties, or other international arrangements, providing for extradition are made, and acts in fulfilment of obligations undertaken in those treaties or arrangements are implemented, by the Executive Government, but it is for the Parliament, by legislation, to confer the necessary authority required to make executive action lawful. The power to enact legislation upon the subject of extradition is conferred by s 51(xxix) of the Constitution, extradition being a matter of external affairs. Treaties, and other international arrangements, on extradition have reflected certain concerns. Reciprocity is one. Another is the identification of the kinds of offence for which extradition may be sought. Political offences are commonly excluded. Extradition offences are usually limited to serious crimes. According to the principle of double criminality, the conduct constituting such an offence must also constitute a criminal offence according to the law of the surrendering State. Questions of possible penalty (particularly the death penalty) may call for attention. Assurances limiting the offences for which a surrendered person may be prosecuted are common3. Whatever is agreed about such matters will be reflected in the necessary legislation. Typically, however, because of the nature of the concerns addressed by extradition arrangements, and the relationship between such concerns and a nation's foreign relations, the legislation will give the executive authority an ultimate discretion to refuse a request for surrender even if all necessary conditions are fulfilled4. An issue of policy addressed by treaties or other arrangements, and legislation, is whether a State's obligation to surrender a fugitive may extend to a 1 Brown v Lizars (1905) 2 CLR 837 at 852 per Griffith CJ. (1974) 131 CLR 477 at 483. 3 Barton v The Commonwealth (1974) 131 CLR 477 at 483. eg Extradition (Foreign States) Act 1966 (Cth), s 18; Extradition Act 1988 (Cth), s 22. For an example of judicial review of such a discretion see Foster v Minister for Customs and Justice (2000) 200 CLR 442. fugitive who is one of its nationals5. Practice has varied. Professor Shearer has observed that Great Britain never officially favoured exclusion of a State's own nationals from extradition obligations, and that its first extradition treaty, which was with the United States in 1794, applied to all persons irrespective of their nationality6. There would be a tension between the adoption of a territorial theory of criminal jurisdiction and a State's refusal in principle to surrender its own nationals. Unless a State that refuses to surrender its own nationals in respect of criminal conduct committed abroad intends to bring them to justice itself, (an obligation that could not be fulfilled if its own criminal jurisdiction were territorially based), then a fugitive can obtain sanctuary by returning from the place of a crime to his or her own country. Great Britain and many Commonwealth countries, including Australia, "do not reject in principle the extradition of their own citizens to foreign countries"7. There is nothing in the Act or the Regulations that seeks to attach any legal significance to the fact that the plaintiff was at the relevant time a citizen of Australia as well as of Serbia and Montenegro. This represents a legislative choice in keeping with past Australian practice, and with the practice of many, but not all, other nations. Another issue for international treaties and arrangements on extradition is whether a State requesting extradition should be required to furnish to the State in which the fugitive is located some, and if so what, evidence, not only about the nature of the accusations against the fugitive, but also tending to establish his or her guilt. Writing in 1971, Professor Shearer said8: "A deep and so far unreconciled conflict exists between the Anglo- American attitude to this question and that of most of the rest of the world. Broadly speaking, British Commonwealth and American courts require that a requesting State make out a prima facie case of guilt against an alleged fugitive criminal before they will grant extradition. The weight of the evidence required is the same as would be required by those courts before sending a person accused of the commission of an offence within their own jurisdiction for trial before a judge and jury. Courts in other countries, by contrast, do not in general concern themselves at all with the strength of the case which the accused will be later called upon to answer; it is enough that the warrant has been regularly issued, identity established, and the procedural and substantive stipulations of the treaty fulfilled." 5 Generally, see Rafuse, The Extradition of Nationals, (1939). 6 Shearer, Extradition in International Law, (1971) at 97. 7 Shearer, Extradition in International Law, (1971) at 102. 8 Shearer, Extradition in International Law, (1971) at 150. As will appear, there has since been a change in British and Australian practice. The foundation of the American practice may be the Fourth Amendment to the United States Constitution (taken up by the Fifth Amendment) which protects the rights of the people to be secure in their persons, houses, papers and effects against unreasonable searches and seizures and provides that "no Warrants shall issue, but upon probable cause"9. The practice of the United States has been, and remains, to include in extradition treaties to which it is a party a requirement that before any fugitive in the United States is surrendered it must be shown that there is probable cause to surrender that person to the criminal process of the foreign State and, because of the reciprocity inherent in extradition arrangements, a similar requirement applies when the United States seeks extradition of a fugitive from, say, Australia. Similar requirements applied between Australia and other countries under the Extradition (Foreign States) Act 1966 (Cth) and the Extradition (Commonwealth Countries) Act 1966 (Cth). On the other hand, the United Nations Model Treaty on Extradition, adopted in 1990, contains no such requirement. A request for extradition is to be accompanied by a description of the person sought together with any other information to help establish identity, the text of the law creating the offence, a warrant issued by a court or other competent judicial authority for the arrest of the person or a certified copy of that warrant, a statement of the offence for which extradition is requested and a description of the acts or omissions constituting the alleged offence, including an indication of the time and place of its commission. A footnote to the Model Treaty states: "Countries requiring evidence in support of a request for extradition may wish to define the evidentiary requirements necessary to satisfy the test for extradition and in doing so should take into account the need to facilitate effective international cooperation." The European Convention on Extradition of 1957, in Art 12 dealing with the request and supporting documents, says that the request shall be supported by the warrant of arrest or other order having the same effect and issued in accordance with the procedure laid down in the law of the requesting State and a statement of, and particulars of, the offences for which extradition is requested. In 1991, the United Kingdom ratified the 1957 European Convention. Its extradition arrangements with other parties to the European Convention contain no prima facie evidence requirement. Australia's current extradition arrangements vary. Some include the (reciprocal) requirement of showing probable cause, or a prima facie case. Others do not. This topic was the subject of a 2001 Report by the Parliament's 9 Bassiouni, International Extradition: United States Law and Practice, 4th ed (2002) at 830; Caltagirone v Grant 629 F 2d 739 (2nd Cir 1980); Parretti v United States 122 F 3d 758 (9th Cir 1997). Joint Standing Committee on Treaties ("the Report")10, which reviewed and criticised aspects of policy changes made by the 1988 legislation. According to "In the 1980s, following the recommendations of the Stewart Royal Commission into drug trafficking and the failed attempt to extradite Robert Trimbole from Ireland, a government task force examined extradition law. Major changes to Australia's laws resulted in 1985, including the introduction of a 'no evidence' alternative to the prima facie case requirement. Under this option, the requesting country must provide a statement of the conduct constituting the offence, but need not provide evidence in support. When the various Acts were consolidated into the Extradition Act 1988, the 'no evidence' option became the default scheme. That option has been the preferred policy ever since, having been included in Australia's model treaty ... and is now embodied in 31 signed treaties." When the Extradition (Foreign States) Act 1966 (Cth) was amended in 1985 the Attorney-General, Mr Bowen, told Parliament that the new approach would enable Australia more easily to conclude extradition arrangements with civil law countries "whose systems have difficulty in adapting to the provision of pre-trial evidence"12. The "no evidence" scheme is reflected in the 2004 Regulations relating to Croatia. It is the scheme that is now commonly adopted in relation to countries which have civil law systems of justice. To speak of a prima facie case requirement is perhaps an over-simplification, as there are differing approaches to the standard of evidence that may be required, but those differences are not of present relevance. The Report noted that, with the exception of the criminal justice agencies, most of the witnesses who gave evidence or made submissions to the Joint Standing Committee, who included legal experts, "supported the prima facie case requirement as a necessary and not particularly onerous 10 The Commonwealth Parliament Joint Standing Committee on Treaties, Extradition – A Review of Australia's Law and Policy, Report No 40, (August 11 The Commonwealth Parliament Joint Standing Committee on Treaties, Extradition – A Review of Australia's Law and Policy, Report No 40, (August 2001), par 2.21. 12 Australia, House of Representatives, Parliamentary Debates (Hansard), 20 March safeguard of the rights of those whose extradition from Australia is sought"13. The Committee found it "incongruous that quite different standards of proof apply to extradition requests from Commonwealth countries and civil law countries, and that far more supporting evidence is required from countries whose systems of justice closely resemble Australia's"14. It did not favour the continuation of the "no evidence" model and recommended reconsideration of the current legislative policy. Those recommendations have not, or have not yet, been accepted. Many lawyers would find it surprising that, in responding to a request from Croatia for the surrender to its criminal justice system of an Australian citizen, Australia's requirements for supporting information are less than its requirements in responding to a similar request from the United States of America. The question of supporting information is a matter that affects human rights, and involves an important issue of public policy. This Court's concern, however, is with legislative power, and that has been the focus of the argument. The Act and the Regulations The Act deals, in Pt II, with extradition from Australia to extradition countries which includes a country that is declared by the regulations to be an extradition country, such as Croatia (s 5). A principal object of the Act is to codify the law relating to the extradition of persons from Australia to extradition countries and, in particular, to provide for proceedings by which courts may determine whether a person is to be, or is eligible to be, extradited, without determining the guilt or innocence of the person of an offence (s 3). Relevant to Pt II are the definitions of extradition offence (offences for which the penalty reflects a certain level of seriousness, or conduct which under a relevant extradition treaty is required to be treated as an offence: s 5) and extraditable person (a person who is accused or who has been convicted in a country of an extradition offence, for whose arrest a warrant is in force, and who is believed to be outside the country: s 6). Such a person is an extraditable person in relation to the country. Although we are presently concerned with a case of an accused, rather than a convicted, person, the provisions of the Act relating to convicted persons should not be overlooked. 13 The Commonwealth Parliament Joint Standing Committee on Treaties, Extradition – A Review of Australia's Law and Policy, Report No 40, (August 2001), par 3.39. 14 The Commonwealth Parliament Joint Standing Committee on Treaties, Extradition – A Review of Australia's Law and Policy, Report No 40, (August 2001), par 3.1. Section 11 of the Act, which is in Pt I, provides that regulations may state that the Act applies in relation to a specified extradition country subject to such limitations, conditions, exceptions or qualifications as are necessary to give effect to a treaty. Sub-sections (4) and (5) of s 11 deal with a case where the Act applies subject to a limitation, condition, qualification or exception which stipulates that a person is not eligible for surrender to an extradition country in relation to an extradition offence for the purposes of s 19(2) unless the sufficient evidence test is satisfied. Broadly stated, the standard of evidence required to satisfy such a test corresponds with the provision of such evidence as would be required, in relation to an offence committed in Australia, to satisfy a committing magistrate that a person should be committed for trial. For present purposes, it is unnecessary to go into the detail. It covers extradition under those treaties and arrangements which have the prima facie evidence requirement. Part II establishes the procedures to be followed where a request for extradition of a person is made to Australia by an extradition country. An application may be made, on behalf of the extradition country, to a magistrate for the issue of a warrant for the person's arrest (s 12). If the magistrate is satisfied, on the basis of information given by affidavit, that the person is an extraditable person in relation to an extradition country the magistrate shall issue a warrant for the person's arrest, and send a report to the Attorney-General. By reason of the definition of extraditable person, the facts of which the magistrate must be satisfied are (relevantly), first, that a warrant is in force for the arrest of the person in relation to an offence against the law of an extradition country, secondly, that the offence is an extradition offence in relation to the country, and thirdly, that the person is believed to be outside the extradition country. A person who is arrested under a provisional arrest warrant shall be brought as soon as possible before a magistrate and shall be remanded either in custody or on bail for the time necessary to allow proceedings under s 19 to be conducted (s 15). Section 16 provides for the Attorney-General, after receiving an extradition request from an extradition country in relation to a person, to notify a magistrate. The notice shall not be given unless the Attorney-General is of the opinion that the person is an extraditable person in relation to the extradition country and that if the alleged conduct had taken place in Australia it would have constituted an extradition offence in relation to Australia. Further, the notice shall not be given if the Attorney-General is of the opinion that there is an extradition objection in relation to the alleged offence. (An extradition objection is defined in s 7. It covers, for example, political offences, or cases of persecution.) If the Attorney-General decides not to issue a notice under s 16, then the Attorney-General must direct the magistrate to release the person if the person is in custody or, if the person is on bail, to discharge the recognizances on which bail was granted (s 12). Section 19 deals with a case such as the present. Where a person is on remand under s 15, and a notice has been given under s 16, and an application is made for proceedings to be conducted under s 19, and the magistrate considers that the person and the extradition country have had reasonable time to prepare, the magistrate shall conduct proceedings to determine whether the person is eligible for surrender in relation to the extradition offence. The section continues: "(2) For the purposes of subsection (1), the person is only eligible for surrender in relation to an extradition offence for which surrender of the person is sought by the extradition country if: the supporting documents in relation to the offence have been produced to the magistrate; (b) where this Act applies in relation to the extradition country subject limitations, conditions, exceptions or qualifications that require the production to the magistrate of any other documents—those documents have been produced to the magistrate; to any the magistrate is satisfied that, if the conduct of the person constituting the offence in relation to the extradition country, or equivalent conduct, had taken place in the part of Australia where the proceedings are being conducted and at the time at which the extradition request in relation to the person was received, that conduct or that equivalent conduct would have constituted an extradition offence in relation to that part of Australia; and the person does not satisfy the magistrate that there are substantial grounds for believing that there is an extradition objection in relation to the offence. In paragraph (2)(a), supporting documents, in relation to an extradition offence, means: if the offence is an offence of which the person is accused— a duly authenticated warrant issued by the extradition country for the arrest of the person for the offence, or a duly authenticated copy of such a warrant; if the offence is an offence of which the person has been convicted—such duly authenticated documents as provide evidence of: the conviction; (iii) the sentence imposed or the intention to impose a sentence; and the extent to which a sentence imposed has not been carried out; and in any case: a duly authenticated statement in writing setting out a description of, and the penalty applicable in respect of, the offence; and a duly authenticated statement in writing setting out the conduct constituting the offence. (4) Where, in the proceedings: a document or documents containing a deficiency or deficiencies of relevance to the proceedings is or are produced; and the magistrate considers the deficiency or deficiencies to be of a minor nature; the magistrate shall adjourn the proceedings for such period as the magistrate considers reasonable the deficiency or deficiencies to be remedied. to allow In the proceedings, the person to whom the proceedings relate is not entitled to adduce, and the magistrate is not entitled to receive, evidence to contradict an allegation that the person has engaged in conduct constituting an extradition offence for which the surrender of the person is sought. Subject to subsection (5), any document that is duly authenticated is admissible in the proceedings. (7) A document that is sought by or on behalf of an extradition country to be admitted in the proceedings is duly authenticated for the purposes of this section if: it purports to be signed or certified by a judge, magistrate or officer in or of the extradition country; and it purports to be authenticated by the oath or affirmation of a witness or to be sealed with an official or public seal: in any case—of the extradition country or of a Minister, Department of State or Department or officer of the Government, of the extradition country; (ii) where the extradition country is a colony, territory or protectorate—of the Government of that country or of any person administering a Department of the Government of that country. the person administering (7A) Subsection (7) has effect in spite of any limitation, condition, exception or qualification under subsection 11(1), (1A) or (3). (8) Nothing in subsection (6) prevents the proof of any matter or the admission of any document in the proceedings in accordance with any other law of the Commonwealth or any law of a State or Territory. (9) Where, in the proceedings, the magistrate determines that the person is eligible for surrender to the extradition country in relation to the extradition offence or one or more of the extradition offences, the magistrate shall: by warrant in the statutory form, order that the person be committed to prison to await surrender under a surrender warrant or temporary surrender warrant or release pursuant to an order under subsection 22(5); inform the person that he or she may, within 15 days after the day on which the order in the warrant is made, seek a review of the order under subsection 21(1); and record in writing the extradition offence or extradition offences in relation to which the magistrate has determined that the person is eligible for surrender and make a copy of the record available to the person and the Attorney-General. (10) Where, in the proceedings, the magistrate determines that the person is not, in relation to any extradition offence, eligible for surrender magistrate shall: the extradition country seeking surrender, the order that the person be released; and advise the Attorney-General in writing of the order and of the magistrate's reasons for determining that the person is not eligible for surrender." As was noted above, in some cases Australia's arrangements with an extradition country include a prima facie evidence (or similar) requirement. Where there is such a requirement it will be taken up by s 19(2)(b). Where, as in the case of Croatia, there is no such requirement, then s 19(3) identifies the supporting material that is required. If a question arises as to whether there is an extradition objection, that is dealt with under s 19(2)(d). Sub-section (5) applies whether or not there is a prima facie evidence requirement. It reflects the fact that, even where there is such a requirement, an extradition hearing does not involve a trial on the merits, and the enquiry is as to whether there is, in effect, a case to be answered. The alleged offender is not given an opportunity to adduce evidence which contradicts the allegations made on behalf of the country seeking surrender15. Section 21 provides that an order of a magistrate under s 19(9) or s 19(10) may be the subject of a review by the Federal Court or the Supreme Court of a State or Territory. The reviewing court may either confirm or quash the magistrate's order. If an order under s 19(9) is quashed, the reviewing court may direct the magistrate to order the release of the person. There is a right of appeal to the Full Court of the Federal Court. A time limit is imposed on a subsequent application for special leave to appeal to this Court. In Pasini v United Mexican States16 this Court rejected an argument that s 21 of the Act was invalid on the ground that it conferred on the Federal Court an administrative rather than a judicial function. After referring to Director of Public Prosecutions (Cth) v Kainhofer17, the joint judgment said18: 15 Shearer, Extradition in International Law, (1971) at 154-156; Bassiouni, International Extradition: United States Law and Practice, 4th ed (2002) at 832- 16 (2002) 209 CLR 246. 17 (1995) 185 CLR 528. 18 (2002) 209 CLR 246 at 255 [18]. "Although there may be little difference in practical effect, the function of the Federal Court under s 21 of the Act is different in nature from that of a magistrate under s 19 of the Act. The magistrate is required to determine administratively whether a person is eligible for surrender to an extradition country. The Federal Court is required to determine whether that decision was right or wrong and, if wrong, what decision should have been made by the magistrate, thereby determining the rights and liabilities of the parties to the review proceedings and, thus, exercising judicial power." As soon as reasonably practicable after a person has been determined to be an eligible person, the Attorney-General shall determine whether the person is to be surrendered (s 22(2)). The person is only to be surrendered if the Attorney- General is satisfied that there is no extradition objection, and if the Attorney- General is satisfied that the person will not be subjected to torture, and that the death penalty will not apply, and if there is a speciality assurance (against trial for other offences) and if any limitation, condition, qualification or exception is satisfied. In addition, the person is only to be surrendered if the Attorney- General, in his or her discretion, considers that the person should be surrendered in relation to the offence (s 22(3)). Where the Attorney-General determines that a person is to be surrendered then a warrant issues for the surrender of the person to the extradition country (s 23). The ultimate discretion reposed in the Attorney-General by s 22 of the Act is consistent with the earlier Australian legislation19. One aspect of its significance relates to a matter referred to in s 22, that is, political offences. Professor Shearer wrote20: "The exercise of executive discretion in this matter can be supported by several arguments. In the first place, the executive may have confidential avenues of information closed to the courts which may significantly alter the appreciation of the nature or circumstances of an offence to the fugitive's advantage. Second, even where the executive has no further information of its own, it may be persuaded to act upon information supplied by the fugitive which could not be received as admissible evidence by the courts because of evidentiary rules or procedures. is not persuaded by representations made to it by the fugitive to refuse extradition, it may nevertheless attach certain conditions to his surrender in order to satisfy any qualms it may have as to the consequences of his return." Third, where the executive 19 Extradition (Foreign States) Act 1966 (Cth), s 18. 20 Shearer, Extradition in International Law, (1971) at 192. Part II of the Act thus provides for the exercise of judicial power by a court, administrative functions by a judicial officer acting as persona designata, and executive power by the Attorney-General. Eligibility for surrender is determined by the first two of those three methods. If a person is found to be eligible, then the decision whether the person should be surrendered is committed to the executive authority. That decision-making power is subject to the provisions of s 22, which include requirements concerning the Attorney- General's satisfaction about certain matters, and a general discretion. The legislation provides for what have been described as "four stages in extradition proceedings", that is, commencement, remand, determination by a magistrate of eligibility for surrender and executive determination (subject to legislative constraints) that a person is to be surrendered21. There is no extradition treaty with Croatia. The Regulations declare Croatia to be an extradition country, and, as authorised by s 11 of the Act, amend the terms of the Act to substitute "60 days" for "45 days". Extradition does not depend upon the existence of a treaty22. The Regulations do not stipulate any presently relevant limitations or conditions. In that respect they may be contrasted with the Extradition (United States of America) Regulations (Cth) which provide (in reg 4) that the Act applies subject to the Treaty on Extradition between Australia and the United States of America. That treaty is annexed to those regulations. Article V of the treaty provides that neither of the Contracting Parties shall be bound to deliver up its own nationals but the executive authority of each Contracting Party shall have the power to deliver them up if, in its discretion, it considers that it is proper to do so. That, incidentally, is an example of the role of executive discretion in this area. Article VI provided that extradition shall be granted only if the evidence is found sufficient, according to the laws in the territory where the person whose extradition is requested is found, to justify his trial or committal for trial23. There are no corresponding provisions in the Regulations which apply to Croatia. Validity Three questions have been reserved by a Justice for the consideration of a Full Court. They are: 21 Harris v Attorney-General (Cth) (1994) 52 FCR 386 at 389. 22 Brown v Lizars (1905) 2 CLR 837; Barton v The Commonwealth (1974) 131 CLR 23 Note, however, the protocol done at Seoul on 4 September 1990. Is Part II of the Extradition Act invalid to the extent, if any, to which it purports to confer a power to deprive an Australian citizen of liberty otherwise than in the exercise of the judicial power of the Commonwealth? Is Part II of the Extradition Act read together with the Extradition (Croatia) Regulations 2004 (Cth) invalid to the extent to which it purports to confer a power to deprive an Australian citizen of liberty otherwise than upon a finding that there exists a prima facie case against that person of the commission of the offences alleged by the State requesting extradition? Is Regulation 4 of the Extradition (Croatia) Regulations 2004 (Cth) invalid because it was not made pursuant to the power conferred by s 51(xxix) of the Constitution or any other legislative power of the Commonwealth? The Act is framed upon the assumption, which is consistent with international law and practice, and with constitutional theory, that it is the executive branch of government that conducts Australia's foreign relations, enters into treaties and other international arrangements concerning extradition, communicates with foreign governments, and responds to a request by another State to surrender a person who is found in Australia to be dealt with by that other State's criminal justice system, either by granting or refusing the request, or by complying with it subject to conditions. The interference with personal liberty inevitably involved in the process of extradition of an unwilling person requires legislative authority. It is the legislature that gives domestic legal effect to treaties and other arrangements made by the executive branch, and that decides the terms and conditions upon which the process of extradition may take place. In accordance with international practice, the Parliament has given the executive authority, subject to the requirements of the Act, the ultimate discretion, even if all other conditions are satisfied, to decide whether, and upon what conditions, a person will be surrendered to a requesting State. The judiciary has the role assigned to it by the Act, which is primarily the determination of eligibility for surrender, and dealing with questions of bail. The judiciary also has the power to enforce compliance by the executive authority with the Constitution, with the Act and with any other applicable laws24. Extradition is not part of the Australian criminal justice system. It involves no determination of guilt or innocence. By hypothesis (leaving to one side convicted fugitives), it concerns a person who is accused of an offence against a law other than an Australian law, and whom Australia does not intend 24 For a description of the comparable United States position see Bassiouni, International Extradition: United States Law and Practice, 4th ed (2002) at 68-69. to bring to trial for that offence. If, after the conditions stipulated by legislation have been satisfied, the person is surrendered, such surrender is the result of an executive decision. Plainly, extradition has serious implications for the human rights, and in particular for the personal liberty, of the person who is the subject of a request for surrender. Those implications are not limited to the case of a person who is an Australian citizen. The interference with personal liberty involved in detention during the extradition process (if that occurs), and in involuntary delivery to another country and its justice system is not undertaken as a form of punishment. No doubt, to the person involved, some of its practical consequences may be no different from punishment, but the purpose is not punitive. To repeat, the process involves no adjudication of guilt or innocence. It is undertaken for the purpose of enabling such an adjudication to be made in a foreign place, according to foreign law, in circumstances where Australia has no intention itself of bringing the person to trial for the conduct of which the person is accused. The legislative provisions concerning remand, and bail, were considered by this Court in United Mexican States v Cabal25. The practical implications of arrangements concerning an alleged offender's custody during the process of determining whether compliance with Australia's international obligations requires that the person be surrendered to the criminal justice system of a foreign State were discussed. In Barton v The Commonwealth26, Mason J pointed out that "[d]etention inevitably is an incident in the process of extradition". Any form of involuntary detention, under any conditions, involves an interference with liberty. There was reference in argument to the plaintiff being kept in an ordinary prison. His liberty would be interfered with wherever he was kept against his will. Sending him, against his will, to Croatia for further custody and interrogation, even if he were on bail in the meantime, plainly interferes with his liberty. In DJL v Central Authority27, Kirby J referred to extradition pursuant to international treaty obligations relating to criminal offenders as a paradigm of lawful removal of a citizen notwithstanding a citizen's basic right to live in Australia. So it is. What is more, it is removal by an executive act undertaken with legislative authority; not removal by judicial decision. The Regulations, and Pt II of the Act, are supported by s 51(xxix) of the Constitution: the external affairs power. As French J said in Hempel v Attorney- 25 (2001) 209 CLR 165. 26 (1974) 131 CLR 477 at 503. 27 (2000) 201 CLR 226 at 278-279 [136]. General (Cth)28: "[T]he subject-matter of extradition is directly concerned with international relations. ... The nature of extradition is such that a law with respect to it is likely to be a law with respect to external affairs whether or not there is in existence any supporting treaty."29 The external affairs power is not confined to the implementation of treaties. Making arrangements, by treaty or otherwise30, for the extradition of alleged fugitive offenders, and giving effect to those arrangements, are matters that directly concern Australia's relations with other countries and are part of that aspect of its external affairs. The conferral of power in s 51(xxix) is subject to the Constitution. Is the deprivation of liberty necessarily involved in the extradition process, or the particular scheme of Pt II of the Act, contrary to the Constitution? It may be accepted that, subject to qualifications, "the power to order that a citizen be involuntarily confined in custody is, under the doctrine of the separation of judicial from executive and legislative powers enshrined in our Constitution, part of the judicial power of the Commonwealth entrusted exclusively to Ch III courts"31. However, as Gaudron J pointed out in Kruger v The Commonwealth32, there are well-known exceptions to that general proposition and, further, those exceptions do not fall within precise and confined categories. They include, for example, arrest and custody pending trial, and detention by reason of mental illness or infectious disease. They also include the process of extradition. Although there is judicial involvement at various stages of the extradition process, in Australia extradition is, and always has been, ultimately an executive act undertaken with legislative authority. It is the executive branch of government that conducts Australia's relations with other nations and, for the reasons earlier explained, the making of a final decision to surrender a person to a requesting State may involve a variety of discretionary considerations concerning and affecting such relations. The separation of powers inherent in the structure of the Constitution does not mandate that the decision to surrender a person be regarded as an exercise of judicial power and given to the judicial branch of government. It does not mandate that the process of extradition be 28 (1987) 77 ALR 641 at 671. 29 See also R v Burgess; Ex parte Henry (1936) 55 CLR 608; R v Sharkey (1949) 79 CLR 121 at 136; Kirmani v Captain Cook Cruises Pty Ltd [No 1] (1985) 159 CLR 30 Barton v The Commonwealth (1974) 131 CLR 477. 31 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 28 per Brennan, 32 (1997) 190 CLR 1 at 109-110. treated (if that were otherwise possible) as part of the system of administration of criminal justice. If it did, Australia's extradition laws have never conformed to the Constitution, and they would not conform to the Constitution even if there were a prima facie evidence requirement in all cases. Is there, nevertheless, some minimum level of judicial involvement in the process of extradition which Pt II of the Act does not satisfy? In particular, does the Constitution mandate that decisions about eligibility for surrender must involve an assessment by a judicial officer of the sufficiency of the evidence against the alleged offender? To put the matter differently, is the "no evidence" model of extradition an option that is constitutionally unavailable to Australia? That is the issue raised by the second question. There is nothing in the express terms of the Constitution, corresponding to the Fourth Amendment to the United States Constitution, that says so. There is no problem of interpretation of the text of the Constitution, or of the Act, that arises. If a prohibition exists, it must be found in the structure of the Constitution, as a matter of implication. What, exactly, is the implication? It cannot be enough to say that the Constitution implies that the legislature cannot adopt the "no evidence" model of extradition. That would simply be to assert that the plaintiff should succeed, without assigning any reasons. Nor is it enough to say that such a conclusion would better protect the plaintiff's liberty. So it would. The process of reasoning must contain a major as well as a minor premise. If it is accepted that Parliament, consistently with the constitutional separation of powers, may confer on the executive authority the power finally to decide for or against surrender, and may confine judicial involvement in the extradition process to determining eligibility for surrender (and, even then, subject to judicial review, as an administrative function), then Parliament may determine the criteria of eligibility. Parliament has not done so in a manner that is inconsistent with international practice, or that provides some other ground for arguing that there is not sufficient connexion with the subject of external affairs to warrant a conclusion that the law is to be regarded as an exercise of the external affairs power. The policy reflected in the Act may be controversial, but it is not idiosyncratic. It is an available legislative choice, reflecting a not uncommon response to the problems of international relations raised by questions of extradition. The submissions of the plaintiff invoked the concept of proportionality. In Mulholland v Australian Electoral Commission33 I referred to the danger that use of that concept might bring with it considerations relevant only to a different constitutional context. In considering whether Pt II of the Act is a valid exercise of the power to make laws with respect to external affairs, because that conferral 33 (2004) 220 CLR 181 at 200 [39]. of power is subject to the Constitution there is a question whether the legislation offends the principle of separation of powers enshrined in the Constitution. It is not easy to see what proportionality has to do with that. Once that question is decided against the plaintiff (as, for the reasons already given, it should be) then what remains is essentially an issue of characterisation. In an appropriate constitutional context, as explained in Mulholland, proportionality may require a judgment as to whether a law which limits a fundamental right does so by means which are no more than is necessary to accomplish a legislative objective which is sufficiently important to justify limiting the constitutional right. The most familiar context in which such a judgment is required is that of human rights protections which permit restrictions of fundamental rights and freedoms provided they are demonstrably justified in a free and democratic society. That is a long way removed from the task that confronts this Court in deciding whether Pt II of the Act is a law with respect to external affairs. It cannot be denied that the law is a rational method of pursuing Australia's international relations. In a context such as the present, inappropriate use of the concept of proportionality may amount to an invitation to the judicial branch of government to impose its own ideas of policy upon the legislature. The separation of powers works in more than one direction. It prevents the legislature and the executive from exercising judicial power. It also prevents the judiciary from exercising legislative power. Where, as here, the legislation is so obviously with respect to external affairs, and where it offends no express or implied provision of the Constitution, a conclusion that the legislation is not the method of dealing with extradition that has the least impact on human rights does not result in invalidity. It is possible to design alternative systems of extradition that are more protective of human rights. The existing prima facie evidence requirement, in those cases where it applies, may itself be deficient in that regard. That, however, is not the test of legislative validity. If proportionality does not have the meaning referred to above, but is no more than another way of asking whether the law is capable of being regarded as appropriate and adapted to the end of pursuing Australia's international relations, then it does not assist the plaintiff. Conclusion For these reasons I joined in the order made on 15 June 2006. The Special Case asks nothing about costs, which will be for the Justice dealing with the action to decide. GUMMOW AND HAYNE JJ. One of the stated principal objects of the Extradition Act 1988 (Cth) ("the Act") is to codify the law respecting extradition from Australia "without determining the guilt or innocence of the person of an offence" (s 3(a)). The plaintiff, an Australian citizen by naturalisation, challenges the valid operation of the Act to authorise his detention pending determination of his eligibility for surrender to the Republic of Croatia ("Croatia"). Writing at the time of the adoption of the Constitution, Quick and Garran "Extradition is the surrender or delivery of fugitives from justice by one sovereign State to another. It is justified by the principle that all civilized communities have a common interest in the administration of the criminal law and in the punishment of wrongdoers." It has long been the case that pursuit of that common interest cannot effectively be confined within national boundaries35. However, any comprehensive extradition law must allow for national differences both in constitutional imperatives and in the administration of the criminal law under, for example, what are often contrasted as the common law and civilian systems. The challenge by the plaintiff concerns alleged limitations upon the power conferred by s 51(xxix) of the Constitution to legislate with respect to "external affairs" and hence extradition, and requirements said to be imposed by Ch III of the Constitution upon the processes under the Act for extradition from Australia. Before turning to consider the particular grounds upon which the plaintiff claims his detention is illegal, it is appropriate to refer to some general considerations respecting the relationship between the executive and legislative branches of government and the consequent necessity for extradition legislation such as the Act. Constitutional immunity from removal In DJL v Central Authority, the Court rejected a submission that Australian citizens enjoyed a constitutional immunity from removal from Australia and, in particular, that Regulations made to give effect to The Hague 34 The Annotated Constitution of the Australian Commonwealth, (1901) at 635. 35 Attorney-General (Cth) v Tse Chu-Fai (1998) 193 CLR 128 at 134 [8], referring to remarks by the Supreme Court of Canada in United States v Cotroni [1989] 1 SCR Convention36 were for that reason invalid in their application to Australian citizens37. In the course of so holding, Kirby J, with whose reasons on this issue Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ agreed38, noted the concession in argument that the only power to remove a citizen would stem from international treaty obligations relating to criminal offenders, such as extradition, "Once removal of a citizen to a foreign country pursuant to extradition law and an extradition treaty is accepted, it is impossible to differentiate such a case (for constitutional purposes) from removal of a child pursuant to the Regulations." There is, however, a qualification to any general proposition respecting the absence of a constitutional immunity of Australian citizens from removal from Australia. The qualification is well settled and applies not only to citizens but to individuals generally. It reflects a division under the Constitution between the competence of the executive and legislative branches of government. The joint judgment of six members of the Court in Oates v Attorney-General (Cth)40 stated, with reference to remarks of Mason J in Barton v The Commonwealth41, that "it was, and is, settled law in the United Kingdom and Australia that a fugitive offender cannot be arrested for extradition overseas in the absence of a warrant issued under the authority of statute. Wrongful arrest could give rise to tortious liability, and could be an occasion for the remedy of habeas corpus." In his judgment in Re Bolton; Ex parte Beane42, Brennan J explained that by 1815 it 36 The Convention on the Civil Aspects of International Child Abduction concluded at The Hague on 25 October 1980. 37 (2000) 201 CLR 226 at 240 [21], 279 [137]. 38 (2000) 201 CLR 226 at 240 [21]. 39 (2000) 201 CLR 226 at 279 [137]. 40 (2003) 214 CLR 496 at 503-504 [13]. See also Attorney-General (Cth) v Tse Chu-Fai (1998) 193 CLR 128 at 134 [7]. 41 (1974) 131 CLR 477 at 497. 42 (1987) 162 CLR 514 at 521-522. was established in England that statutory authority was required for the surrender not only of British subjects but also of aliens43. Similarly, in the United States, Hughes CJ, delivering the opinion of the Supreme Court in Valentine v United States; ex rel Neidecker44, spoke of the "fundamental consideration that the Constitution creates no executive prerogative to dispose of the liberty of the individual", and continued: "Proceedings against him must be authorized by law. There is no executive discretion to surrender him to a foreign government, unless that discretion is granted by law." To understand the grounds of the challenge presented by the plaintiff, something more first should be said respecting the scheme of the Act. The scheme of the Act Part I (ss 1-11) contains a number of detailed definitional and structural provisions. The term "extraditable person" is explained in s 6 in terms which apply both to those already convicted of an extraditable offence and to those for whose arrest a warrant is in force. The plaintiff is in the latter category. The term "extradition country" is so defined in s 5 of the Act as relevantly to include any country that is declared to be an extradition country by regulations made under the power conferred by s 55. The Extradition (Croatia) Regulations45 ("the Croatia Regulations") came into force on 8 December 2004. Croatia is declared to be an extradition country (regs 3, 4). Although there are instruments which may give rise to a treaty relationship concerning extradition between Croatia and Australia, the Croatia Regulations were not made in order to give effect to any treaty. The Commonwealth and the Minister for Justice and Customs, the first and second defendants and active parties on that side of the record, place no reliance upon any treaty for the steps that have been taken under the Act with respect to the plaintiff. Section 11 of the Act provides that regulations may apply the Act subject to limitations, conditions, exceptions or qualifications necessary to give effect to 43 The opinion to that effect of the Law Officers to the Home Office, delivered on 30 September 1815, is reprinted in McNair, International Law Opinions, (1956), vol 2 at 44. 44 299 US 5 at 9 (1936). 45 SR No 339/2004. a bilateral extradition treaty (s 11(1)(a)). The regulations also may apply the Act in such a fashion to a specified extradition country (s 11(1)(b)). The Croatia Regulations make no presently pertinent adjustment under s 11(1)(b). Part II of the Act (ss 12-27) is headed "EXTRADITION FROM AUSTRALIA TO EXTRADITION COUNTRIES". The plan of Pt II was described as follows by the Full Court of the Federal Court in Harris v Attorney- General (Cth)46: "The Act contemplates four stages in extradition proceedings as follows: (1) Commencement; (2) Remand; (3) Determination by a magistrate of eligibility for surrender; (4) Executive determination that the person is to be surrendered. In summary form, the scheme is as follows: The commencement of proceedings is by the issue of a provisional warrant under s 12(1) or by the giving of a notice under s 16(1). Once arrested, the person is required by s 15 to be taken before a magistrate and remanded in custody or on bail for such period as may be necessary for eligibility proceedings to be taken under s 19. Where a person is on remand under s 15 and the Attorney-General has given a notice under s 16(1), provision is made under s 19 for a magistrate to conduct proceedings to determine whether the person is eligible for surrender. If eligibility is so determined by the magistrate, provision is made by s 22 for the Attorney-General to decide whether the person is to be surrendered." The statutory responsibilities of the Attorney-General with respect to the issue of surrender warrants were considered in Foster v Minister for Customs and Justice47. That stage has not been reached in the present case. Rather, steps with respect to the plaintiff have been taken at what in Harris were identified as the first and second stages in extradition proceedings, namely, commencement and remand. The plaintiff remains remanded in custody, pursuant to the power conferred by s 15(2), pending embarkation by the magistrate upon the third stage of the procedures under Pt II of the Act, determination of eligibility to surrender. 46 (1994) 52 FCR 386 at 389. Any claim by the arrested person that he or she in fact was not the person whose surrender was sought might be raised when the arrested person is brought before the magistrate under s 15(1): Federal Republic of Germany v Parker (1998) 84 FCR 323 at 336. 47 (2000) 200 CLR 442. It is settled by authorities preceding and including Pasini v United Mexican States48 that, in determining eligibility to surrender and in making consequential orders, the magistrate exercises administrative functions, not the judicial power of the Commonwealth49. That will be significant for the consideration later in these reasons of the submission by the plaintiff as to what is required of that administrative process by Ch III of the Constitution. It should be noted that s 46 of the Act provides for the making of arrangements between the Governor-General and State Governors for the performance by State magistrates of the functions of a magistrate under the Act50. The fourth defendant is such a magistrate. The making of these arrangements between respective executive branches of government is consistent with the administrative nature of the functions of the magistrates. There is a related matter which should be remarked upon at this point. Section 15 confers a power to remand on bail, but the magistrate is not to remand on bail "unless there are special circumstances justifying such remand" (s 15(6))51. The phrase "special circumstances" has its source in the United States decisions, beginning in 1903 with Wright v Henkel52, which were considered by Gleeson CJ, McHugh and Gummow JJ in United Mexican States v Cabal53. From those authorities it emerges that in this field of discourse "historical ideas about bail"54 are not controlling, given among other things the engagement in extradition cases of Australia's international relations and standing, the importance of effective reciprocity, and the consequences for those relations of supervening flight by those whose extradition is sought and who have been apprehended in Australia. 48 (2002) 209 CLR 246 at 254-255 [16]-[18], 264-265 [48]-[50]. 49 A conclusion to corresponding effect has been reached in the United States: Lo Duca v United States 93 F 3d 1100 at 1105-1108 (1996); Semmelman, "Federal Courts, the Constitution, and the Rule of Non-Inquiry in International Extradition Proceedings", (1991) 76 Cornell Law Review 1198 at 1209. 50 cf Austin v Commonwealth (2003) 215 CLR 185 at 268-269 [178]-[181]; Aston v Irvine (1955) 92 CLR 353 at 364-365. 51 The phrase "special circumstances" appears also in s 21(6)(f)(iv) dealing with the grant of bail in review proceedings under that section. 52 190 US 40 at 62 (1903). 53 (2001) 209 CLR 165 at 183-187 [47]-[54]. 54 United States ex rel McNamara v Henkel 46 F 2d 84 at 84 (1912). The extradition request The plaintiff was born in 1954 in the country then known as the Federal People's Republic of Yugoslavia. He came to Australia in 1969 with his family when he was 15 years of age and, in 1975, was granted Australian citizenship pursuant to the Australian Citizenship Act 1948 (Cth). The plaintiff has retained that status ever since. On 19 January 2006, a successful application was made for a warrant of arrest under s 12(1) of the Act. On the same date, the warrant was executed upon the plaintiff and he was taken into custody by officers of the Australian Federal Police. The plaintiff was remanded in custody in reliance upon s 15 of the Act and an application for bail was refused by the fourth defendant on 27 January 2006. The plaintiff remains in detention at the Parklea Correctional Centre in New South Wales55. The third defendant is Governor of that institution. The third and fourth defendants have taken no active part in the proceeding in this Court. The supporting documents upon which the magistrate conducts proceedings under s 19 to determine eligibility to surrender vary by reference to the status of the person concerned as one already convicted in the extradition country (s 19(3)(b)) or as one accused there (s 19(3)(a)). In the latter case, which applies to the plaintiff, the critical document is the arrest warrant issued by the extradition country. The affidavit sworn by a member of the Australian Federal Police and provided in support for the issue of the warrant of arrest in Australia stated that the deponent had been informed of and believed matters, including the following: "(a) On 12 December 2005 at Croatia, warrant number KIO-86/05 was issued by the County Court of Šibenik for the arrest of Dragan VASILJKOVIC (also known as Daniel Snedden). The warrant remains in force as at the date of my swearing this affidavit. A copy of the warrant is annexed and marked 'DJB1'. The offences which [are] the subject of the warrant, and in relation to [] Dragan VASILJKOVIC (also known as Daniel Snedden) are: 55 Section 53 of the Act operates to apply to the plaintiff, so far as they are applicable, the laws of New South Wales respecting conditions of imprisonment of those awaiting trial for offences against State law. two war crimes against prisoners of war under Article 122 of the Basic Criminal Code of Croatia; and one war crime against civil population under Article 120, Paragraphs 1 and 2 of the Basic Criminal Code of Croatia. The offences are punishable under the laws of Croatia by a maximum penalty of 20 years imprisonment. Croatia is, by virtue of section 5 of [the Act] and regulation 4 of [the Croatia Regulations], an extradition country. Dragan VASILJKOVIC (also known as Daniel Snedden) was born on 12 December 1954 at Beograd, Serbia and Monte Negro and is a citizen of Australia, Serbia and Monte Negro." The annexed warrant, marked "DJB1", is the relevant "supporting document" for the s 19 surrender determination. It was addressed to the Extradition Unit of the Attorney-General's Department and signed under the Seal of the Ministry of Justice of Croatia. The alleged war crimes offences against the Basic Criminal Code of Croatia are stated to have been committed during June and July 1991 in the town of Knin, in July 1991 in Glina, and in February 1993 in a place near Benkovac. All three places are stated to be the location at the relevant time of an armed conflict between forces of Croatia and armed Serbian paramilitary troops; in addition, in the case of Glina, the Yugoslav People's Army is stated also to have been involved. Attached to the warrant was a copy of the Decision of an investigating magistrate that the investigation requested on 28 November 2005 by the Šibenik County Office of the Public Prosecutors shall be conducted against the plaintiff on the grounds of a well-founded suspicion that he committed the criminal offences in question. The form taken by the Decision is illustrated by the reference made in it to reports by police authorities which were: the interviews with information gathered, especially "made from witnesses, captured members of the Croatian Army and police who were imprisoned at Knin fortress, or at Bruška near Benkovac, as well as with eyewitnesses of and participants in the attack on Glina". With respect to events at the Knin fortress, the Decision recites "a well-founded suspicion" that the plaintiff was commander of a Serbian Special Unit and: "[o]n the occasion in question, a group of captured Croatian soldiers and policemen, consisting of Velibor Bračić, Nikica Plivelić, Zvonko Magdić, Ivan Krizmanić, Mile Luketić, Nikola Luketić, Tomislav Ceronja, Marko Mijić and Osman Vikić, were brought in a dugout with poor sanitary conditions serving as prison, where they were maltreated by [the plaintiff's] subordinates on a daily basis by being punched and kicked, hit with truncheons and rifle butts all over their bodies, by having rifle barrels pushed into their mouth[s], by having been sent to [fictitious] execution by firing squad, by being maltreated mentally and by being tortured by thirst, which [the plaintiff] saw and knew. The prisoners, too, warned [the plaintiff] of it as they complained to him as the commander and he convinced himself by seeing their injuries. Moreover, as Velibor Bračić was being interrogated and the members of the unit of [the plaintiff] were hitting him with truncheons and rifle butts all over his body, [the plaintiff], with his army boots on, took a powerful swing with his leg at Bračić and hit him in the head while saying: 'Now you'll see how this should be done!' The prisoner was covered with blood due to the inflicted injuries." The plaintiff's case in this Court At its basic level and as formulated in oral submissions, the substance of the plaintiff's complaint respecting the materials before the magistrate is that the treatment in the Decision of the allegations in such terms as those shown above is inadequate. The plaintiff contends that before the magistrate determining the eligibility of the plaintiff for surrender there should be, conformably with requirements of Ch III of the Constitution, sworn statements by the named witnesses. This would not require the availability of those persons for cross- examination, but would enable a submission to be made that the statements "would not suffice to put the requested person on trial for the offence charged". Before the Full Court is a special case which poses three questions arising in a proceeding instituted by the plaintiff in the original jurisdiction of this Court. The principal relief sought is habeas corpus to secure his release from custody. The custody is said to be illegitimate by reason of the constitutional infirmity of the legislation supporting his detention. The questions for the Full Court ask whether Pt II of the Act is invalid to the extent to which it purports to confer a power to deprive an Australian citizen of liberty otherwise than in the exercise of the judicial power of the Commonwealth (question (a)). Question (b) asks whether Pt II is invalid to the extent to which it purports to confer a power to deprive an Australian citizen of liberty otherwise than upon a finding that there exists a prima facie case against that person of the commission of the offences alleged by the state requesting extradition. The effect of the third question is whether, in the absence of a treaty, the declaration by the Croatia Regulations of Croatia as an extradition country is invalid for want of support by the power conferred by the external affairs power in s 51(xxix) of the Constitution or any other legislative power of the Commonwealth (question (c)). With respect to questions (a) and (b), the plaintiff contends in his written submissions that the involuntary detention of an Australian citizen in aid of possible extradition to face pending criminal charges in a foreign country is penal in character if the law authorising the detention and extradition "lacks any machinery for testing the validity of the charges". It is said that Pt II of the Act is such a law and therefore is invalid because it attempts to usurp the judicial power of the Commonwealth established by Ch III of the Constitution. The submission continues that an Australian citizen consistently with Ch III cannot be subjected by a law of the Commonwealth to involuntary detention in the absence of judicial determination of guilt of an offence against a law of the Commonwealth. Here, the plaintiff has been detained with a view to determining his surrender without recourse to the judicial power to test any issue of a prima facie case of his guilt of the offence under the law of Croatia in respect of which the extradition is sought. Before turning further to consider these submissions, something should be said respecting the emphasis placed in them, first upon the character of the plaintiff as an Australian citizen and, secondly, upon the absence of reliance upon a treaty with Croatia. Absence of a treaty First, as to the absence of a treaty, the following may be noted. The Extradition Act 1870 (Imp) ("the 1870 Imperial Act") and the Fugitive Offenders Act 1881 (Imp) ("the Fugitive Offenders Act") dealt respectively with foreign state extradition, and return of fugitives within what was then the Empire. The Imperial legislation applied in Australia together with ancillary Australian federal legislation56 until the passage of comprehensive legislation in 1966. This was the Extradition (Foreign States) Act 1966 (Cth) ("the 1966 Act") and the Extradition (Commonwealth Countries) Act 1966 (Cth). This in turn was replaced in 1988 by the present legislation. The 1870 Imperial Act, in dealing with surrender, operated by reference in s 2 to the existence of treaty arrangements with foreign states for the surrender of fugitive criminals and the making of the appropriate Order in Council57. After 56 The Extradition Act 1903 (Cth). 57 Oates v Attorney-General (Cth) (2003) 214 CLR 496 at 503 [12]. the enactment of the 1870 Imperial Act, a Royal Commission58 recommended legislation giving power for the delivery of fugitive criminals whether or not a treaty existed between the United Kingdom and the requesting state. That recommendation was not acted upon at the time in the United Kingdom but, in Australia, extradition in such circumstances was provided for by s 3 of the Extradition (Foreign States) Act 1974 (Cth) ("the 1974 Act"). This amended the 1966 Act by empowering the Governor-General to apply the 1966 Act to foreign The advantages of such legislation were identified by Professor Shearer as follows60: "[T]he treaty method will remain the principal basis of regulating extradition relations with other countries as the only one which secures full reciprocity of obligation. Resort to [the new legislation], however, will be a useful adjunct in establishing an extradition facility in respect of countries with which, for the present, it is not possible to conclude a treaty, or as a stop-gap measure while negotiations for a treaty are in progress. It might also be used as a species of ad hoc extradition, since the Act applies to offences committed before or after the Act commenced to apply in relation to the State concerned." The scheme of the 1974 legislation has been carried forward into the Act by the definition adopted of "extradition country" in s 5. Reference to this has been made earlier in these reasons. The role of citizenship The second matter to which reference now should be made concerns the role of citizenship in the identification of those subject to extradition procedures. Sections 2 and 6 of the 1870 Imperial Act in identifying fugitive criminals who were liable to surrender did not distinguish between them by reference to their nationality. In In re Galwey61, the surrender of a British subject had been demanded by the Government of Belgium pursuant to a treaty with the United 58 Parry (ed), A British Digest of International Law, (1965), vol 6 at 805-806. 59 See Shearer, "Extradition and Asylum", in Ryan (ed), International Law in Australia, 2nd ed (1984) 179 at 182-184. 60 "Extradition and Asylum", in Ryan (ed), International Law in Australia, 2nd ed (1984) 179 at 184 (footnote omitted). Kingdom. It was held in the Queen's Bench Divisional Court that, although a British subject, the accused was a person "liable to be ... surrendered" within the meaning of s 6 of the 1870 Imperial Act and that an order of committal into custody with a view to his surrender had been rightly made. That decision then was followed by the Full Court of the Supreme Court of Queensland, presided over by Griffith CJ, in R v Macdonald; Ex parte Strutt62. To that it may be added that in Charlton v Kelly63, the Supreme Court of the United States held that a treaty providing for the extradition of "persons" included United States citizens as well as aliens and upheld the extradition of a United States citizen to Italy. The definition of the term "extraditable person" in s 6 of the Act, to which reference has been made earlier in these reasons, like the 1870 Imperial Act, does not distinguish those liable to surrender by reference to their nationality. In oral submissions, the plaintiff submitted that the Australian citizenship of the plaintiff was significant as accentuating the application of constitutional principle to him and was "relevant colour". There is no such relevant colour. This is so as to the arguments concerning both the limits of the external affairs power and Ch III of the Constitution. As to the first, the history of that aspect of foreign relations concerned with extradition sought by foreign states, even as it had developed at the time of the adoption of the Constitution, denied any special position to British subjects. A statutory basis for rendition to a foreign state was required for subject and alien alike. The power of the Parliament to enact the Act and to create the regulation-making authority which has been exercised by the Croatia Regulations has no inhibition or restriction to reflect any privileged position of Australian citizens. As indicated earlier in these reasons, citizens enjoy no constitutionally conferred general immunity against removal by the processes of federal law from Australia. As to Ch III of the Constitution, the following may be said. Those persons who may invoke the exercise in their favour of the judicial power of the Commonwealth or rely upon principles derived from Ch III as an answer to legislative or executive action respecting them are not limited by any particular 62 (1901) 11 QLJ 85 at 90. 63 229 US 447 (1913). See also Restatement of the Foreign Relations Law of the United States, 3d, vol 1, §475, Reporters' Note 4 (1986); Rafuse, The Extradition of Nationals, (1939). constitutional status. The frequent recourse to the judicial power by those with the status of "aliens" within the meaning of s 51(xix) of the Constitution illustrates the point. The impact of Ch III upon the exercise of the legislative power of the Commonwealth with respect to extradition and its preparatory processes, whatever that impact may be in a given situation, is neither diminished nor accentuated by the national status of the person the object of that exercise of power. Counsel for the plaintiff properly invited attention to the statement by Brennan, Deane and Dawson JJ in Chu Kheng Lim v Minister for Immigration that64: "the involuntary detention of a citizen in custody by the State is penal or punitive in character and, under our system of government, exists only as an incident of the exclusively judicial function of adjudging and punishing criminal guilt". (emphasis added) But subsequent consideration indicates that the beneficiaries of this principle derived from Lim are not necessarily limited to citizens65. The external affairs power The stage now has been reached in these reasons where answers may be given to the questions posed for the Full Court by the special case. It is convenient to begin with question (c) and the denial by the plaintiff of support for the Croatia Regulations by the external affairs power. The plaintiff emphasises the absence of reliance upon any treaty with Croatia. Irrespective of any operation of Ch III, the question is said by the plaintiff then to become whether the regulation-making power in s 55 of the Act can support the Croatia Regulations by reliance upon the power with respect to external affairs conferred by s 51(xxix) of the Constitution. It is said that, unlike the situation considered in Polyukhovich v The Commonwealth66, Pt II of the Act and the Croatia Regulations do not operate by reference to the conduct of the plaintiff external to Australia. Rather, they operate by reference to an untested and untestable allegation of such conduct. Further, the mere fact of a request by 64 (1992) 176 CLR 1 at 27. 65 Fardon v Attorney-General (Qld) (2004) 78 ALJR 1519 at 1536 [78]; 210 ALR 50 66 (1991) 172 CLR 501. a foreign state such as Croatia does not make the subject-matter of the request amenable to the exercise of the legislative power conferred by s 51(xxix). As indicated by Dawson J in The Tasmanian Dam Case67 and French J in Hempel v Attorney-General (Cth)68, the treatment of fugitive offenders provides subject-matter for a law supported by s 51(xxix) without the necessity for a treaty obligation in that behalf. The width of the present definition in the Act of "extradition country" has its provenance in recommendations made in the United Kingdom over 130 years ago, as explained earlier in these reasons. Likewise, the employment of extradition in aid of determination of guilt or innocence, not in the country yielding up the fugitive but in the country to which there is the rendition, has a long history. Indeed, that outcome is of the essence of the concept of rendition as indicated by Quick and Garran in the passage set out in the second paragraph of these reasons. The answer to question (c) should be "No". Section 51(xxix) provides sufficient support for the legislation in question. No reliance was placed in submissions upon s 51(xxviii) ("the influx of criminals") and we say nothing here on that subject. There remain questions (a) and (b), where the plaintiff seeks to engage in his favour consequences said to flow from Ch III of the Constitution. They also each should be answered "No" and thus adversely to the plaintiff. Section 19(5) of the Act Question (b) fixes upon the detention of the plaintiff, pending the magistrate's determination under s 19 of the Act of his eligibility to surrender, without any requirement of a finding by the magistrate of the existence of a prima facie case of his commission of the offences alleged by Croatia. The plaintiff complains both of what Pt II of the Act does not require for consideration of eligibility to surrender and of what the Act does stipulate in s 19(5) by way of limitation upon the conduct of the determination proceedings. Section 19(5) states: "In the proceedings, the person to whom the proceedings relate is not entitled to adduce, and the magistrate is not entitled to receive, evidence to contradict an allegation that the person has engaged in 67 The Commonwealth v Tasmania (1983) 158 CLR 1 at 300-301. 68 (1987) 77 ALR 641 at 671. conduct constituting an extradition offence for which the surrender of the person is sought." Something first should be said respecting that provision. Its forerunner was in the amendment made to s 17 of the 1966 Act by s 9 of the Extradition (Foreign States) Amendment Act 1985 (Cth). In the Second Reading Speech on the Bill for that measure, the Attorney-General said69: "The first amendment will enable Australia to conclude extradition arrangements with countries which do not require the requesting country to furnish evidence of guilt but rather information as to the allegations against the fugitive. This amendment is of particular significance to civil law countries whose systems have difficulty in adapting to the provision of pre-trial evidence. The extradition arrangements of most European countries which are reflected in the European Convention on Extradition do not require the production of prima facie evidence." Reference to the text of the European Convention on Extradition70 (which was opened for signature in Paris on 13 December 1957), particularly Art 12, dealing with the request and supporting documents, bears out the remarks by the Attorney-General. The European Convention falls within the third of the categories described under the heading "Required showing of extraditability" in Comment b to §476 of the Restatement of the Foreign Relations Law of the United States71. The Comment reads in part: "Extradition laws and treaties use various formulations to describe the proof required to support extradition. Under United States law and treaties, the standard is generally such evidence of criminality as would justify the requested state in holding the accused for trial if the act had been committed within its jurisdiction[72]. In Great Britain and states 69 Australia, House of Representatives, Parliamentary Debates (Hansard), 20 March 70 Between 17 Member States of the Council of Europe, with signature or accession by four non-member states. 71 3d, vol 1 (1986). 72 See the judgments of Hughes J in McNamara v Henkel 226 US 520 at 523-524 (1913), of Brandeis J in Collins v Loisel 259 US 309 at 314-315 (1922) and, more recently, the judgment of the Second Circuit of the Court of Appeals in Lo Duca v United States 93 F 3d 1100 at 1104 (1996). following the British model, the standard is stricter, equivalent to a prima facie case, ie, such showing as, in the absence of a defense, would be required for committal of the accused. Among some states, including the parties to the European Convention on Extradition inter se, no review of the evidence is conducted in the requested state." The 1870 Imperial Act (s 10) was construed as requiring prima facie proof of guilt, and importance was attached to the observance by the magistrate of the demeanour of the witnesses73. Particular treaties may require more of the supporting documents supplied with an extradition request than the arrest warrant supplied in the case of the plaintiff. Thus, Art VI of the Treaty on Extradition between Australia and the United States of America, as it stood when considered in Riley v The Commonwealth74, required evidence which, according to the law of the requested state, would justify trial or committal for trial if the offence had been committed there75. Variations in what supporting documents are required, exemplified by the above examples, are accommodated by modifications to the Act which are permitted under s 11 to be made by regulation. These modifications encompass the application of a "prima facie evidence test". That term is explained as follows in s 11(5)(b): "a reference to the prima facie evidence test being satisfied is a reference to the provision of evidence that, if the conduct of the person constituting the extradition offence referred to in that subsection had taken place in [a] part of Australia ... would, if uncontroverted, provide sufficient grounds to put the person on trial, or sufficient grounds for inquiry by a court, in relation to the offence". But the presence of such a provision does not deny the validity of s 19(5). The operation of that sub-section has not been displaced or qualified with respect to requests by Croatia. The validity of s 19(5) was unsuccessfully called into 73 Re Guerin (1888) 60 LT (NS) 538 at 540-541. 74 (1985) 159 CLR 1 at 10, 13. 75 Article VI was deleted from the Treaty by Art 4 of the Protocol done at Seoul on 4 September 1990 and not replaced. The Treaty and the Protocol are, respectively, Sched 1 and Sched 2 to the Extradition (United States of America) Regulations. question in Todhunter v Attorney-General (Cth)76; a submission that the Commonwealth lacked power to legislate for the surrender of residents to other states without them being heard in their defence was not accepted. The validity of s 19(5) was called into question again in Cabal77 in aid of a bail application, but the Court was not persuaded by the arguments in support of invalidity78. The submission was that s 19(5) invalidly denied the exercise of judicial power to stay surrender proceedings as an abuse of process. In some respects the attack on s 19(5) in the present case is presented on a narrower front. As mentioned earlier in these reasons, the plaintiff grounded his argument upon the apparent denial to him of the opportunity before the magistrate to contradict by submission "sworn statements" by the witnesses relied upon by the requesting state; it was contended that the "allegation" spoken of in s 19(5) must be more than the warrant issued by the extradition country and must include such "sworn statements". The plaintiff sought to strengthen his arguments by referring to what was said to be the limited opportunity of judicial review of the procedures under Pt II, at least in cases where, unlike this case, constitutional invalidity was not raised. It is true that decisions under the Act are a class which are not decisions to which the Administrative Decisions (Judicial Review) Act 1977 (Cth) applies79. However, if the fourth defendant were to determine under s 19 of the Act that the plaintiff was eligible for surrender to Croatia, s 21 would provide a distinct system for judicial review, as Pasini80 affirms. Further, s 39B(1A)(c) of the Judiciary Act 1903 (Cth), which confers original jurisdiction on the Federal Court with respect to certain matters arising under any laws made by the Parliament, may also render amenable to judicial review decisions at the earlier stages of warrant (s 12) and remand (s 15). In their written submissions, the first and second defendants expressly accepted the decision in Bertran v Vanstone81 that the Federal Court has such jurisdiction. 76 (1994) 52 FCR 228 at 249-251. The point was not reagitated on appeal: Todhunter v United States of America (1995) 57 FCR 70 at 81-82. 77 (2001) 209 CLR 165 at 173 [11]. 78 (2001) 209 CLR 165 at 199 [84]. 79 Sched 1, par (r). 80 (2002) 209 CLR 246. 81 (1999) 94 FCR 404 at 409-410. These conferrals of federal jurisdiction meet the plaintiff's objection. They also make it unnecessary for present purposes to consider any further federal jurisdiction with respect to the decisions of magistrates under Pt II of the Act which may be provided by s 75(v) of the Constitution. In particular, it is unnecessary to enter upon the question whether State magistrates performing administrative functions under the Act in accordance with inter-government arrangements pursuant the Commonwealth" within the meaning of s 75(v)82. It is sufficient to note that what Barwick CJ called "a large and most important jurisdiction"83 is one whose scope the Court "should itself be jealous to preserve and maintain"84. that extent, "officer[s] of to s 46 are, It is convenient to return to the main outline of the argument respecting Ch III. On this branch of the case, it is assumed that s 19(5) otherwise is within legislative power, the point being the subjection of the powers in s 51 of the Constitution to what flows from Ch III. But what relevantly could flow from Ch III? Nothing could do so. The magistrate by whom the plaintiff was remanded in custody was not exercising the judicial power of the Commonwealth. The plaintiff sought to draw an analogy between the procedures in Pt II of the Act and committal processes as an integer in the common law system of criminal trial. R v Murphy85 establishes that, whilst committal proceedings for trial of an indictable offence against a law of the Commonwealth are administrative not judicial in nature, so that the exercise of the judicial power of the Commonwealth is not engaged at that stage, they are part of the one "matter" which a trial ultimately determines. But the scheme of Pt II of the Act stamps the procedures with which it deals with a different character. The ultimate determination is not a trial by 82 cf R v Murray and Cormie; Ex parte The Commonwealth (1916) 22 CLR 437; In re Anderson; Ex parte Bateman (1978) 53 ALJR 165; 21 ALR 56; Trimbole v Dugan (1984) 3 FCR 324 at 327-328; Re Cram; Ex parte NSW Colliery Proprietors' Association Ltd (1987) 163 CLR 117. 83 R v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190 at 200-201. 84 R v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190 at 201. See also Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 85 (1985) 158 CLR 596. Australian judicial process. The procedures provided by Pt II are employed with a view to the rendition of the person in question to a foreign state, to suffer the consequences of an existing conviction there or to undergo trial there but, in either case, with no determination in Australia of guilt or innocence. Where then is the Ch III "matter" of which the administrative proceedings under Pt II of the Act are an integer? What is the controversy between parties as to their respective rights and obligations which is to be resolved by the exercise of the judicial power of the Commonwealth in a court of federal jurisdiction?86 The necessary matter and controversy are not manifested. For that reason alone, the answer to question (b) must be adverse to the interests of the plaintiff. Involuntary detention There remains question (a). This is framed more generally than question (b). It should receive a response which places involuntary detention pending determination of eligibility to surrender to a foreign state and without determination of guilt or innocence, in the manner provided in Pt II of the Act, outside any general proscription by Ch III of involuntary detention under federal law other than as a consequential step in the adjudication of guilt for past acts. Reference has been made earlier in these reasons to the statement by Brennan, Deane and Dawson JJ in Lim87 of a principle derived from Ch III enjoining as penal or punitive in character involuntary detention in custody by the state other than as an incident of the adjudging and punishing of criminal guilt. In Fardon v Attorney-General (Qld)88, Gummow J explained a preference for a somewhat differently expressed formulation of the principle. But, in each instance, the formulation has been subject to "exceptional cases". In our view, those cases are not necessarily confined to such examples given in Lim89 as involuntary detention in cases of mental illness, quarantine and infectious disease, punishment by military tribunals and by Parliament for contempt, and committal to custody to await trial. The outcome in Lim itself was to uphold the detention of aliens for the purposes of deportation90. 86 cf Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 87 (1992) 176 CLR 1 at 27. 88 (2004) 78 ALJR 1519 at 1536 [80]; 210 ALR 50 at 74. 89 (1992) 176 CLR 1 at 28, 55, 71. 90 cf the subsequent division of opinion in Al-Kateb v Godwin (2004) 219 CLR 562 as to the effect to be given to Lim. All of the above examples, in particular that concerned with committal to custody to await trial, were well established at the time of the adoption of the Constitution. So also detention as a step to extradition. The law and practice of extradition had a long history in the United Kingdom. In the United States, the first reported extradition case occurred in 179991, pursuant to Jay's Treaty with the United Kingdom of 179492. The well-founded fear of flight which has influenced the United States authorities dealing with bail and the decision of this Court in Cabal93 has also informed the proposition of Mason J that94: "[d]etention inevitably is an incident in the process of extradition". A similar recognition founds the reservation in par (f) of Art 5 of the European Convention on Human Rights95 in respect of lawful arrest or detention of persons against whom action is being taken with a view to deportation or extradition. The question in the present case is not in such broad terms as to ask whether involuntary detention pending determination under any extradition system of eligibility to surrender to the requesting state is necessarily an exceptional case. Question (a) properly is focused upon the particular legislative structure supplied by Pt II of the Act and the Croatia Regulations. In that regard, the provisions made for bail in special circumstances and for judicial review at various stages of the extradition procedures under Pt II are significant. The importance of such matters in treating committal to custody pending trial in a 91 United States v Robins 27 F Cas 825 (No 16,175) (1799). The United States District Court rejected (at 832) a submission that rendition of Robins, a United States citizen, to the United Kingdom would deny him his rights under the Constitution to trial by jury. 92 Semmelman, "Federal Courts, the Constitution, and the Rule of Non-Inquiry in International Extradition Proceedings", (1991) 76 Cornell Law Review 1198 at 93 (2001) 209 CLR 165 at 183-187 [47]-[54]. 94 Barton v The Commonwealth (1974) 131 CLR 477 at 503. 95 The Convention is Sched 1 to the Human Rights Act 1998 (UK). domestic forum as not appertaining exclusively to judicial power was stressed in the joint judgment in Lim96. The detention here is in aid of determination of guilt or innocence not in a domestic forum, but in the requesting state. This circumstance does not deny the exceptional nature, in the relevant sense, of that detention. The long history of extradition before the adoption of the separation of judicial power by Ch III of the Constitution is a weighty consideration. The legislatively based surrender, even of citizens, to foreign states for determination there of criminal guilt or innocence, or for suffering of punishment there upon earlier conviction, is an instance where the general subjection to Ch III of the legislative powers of the Parliament does not necessarily constrain law-making. In R v Cox; Ex parte Smith97, when speaking of military justice and the reposing by Ch III of the judicial power of the Commonwealth exclusively to courts of justice, Dixon J said that any "exception" here was not "real". The necessity and occasions for the imposition of military discipline stood that system outside Ch III. The same is true of extradition processes but to a more limited degree. Extradition processes, to be effective and reciprocal, must provide, as a general proposition, for determination in the requesting state of issues of criminal guilt or innocence, and for detention by the requested state pending its determination of surrender. The reasons why this is so are recounted earlier in these reasons and were developed in Cabal98. To the extent that there is no prior adjudication of guilt by a domestic court, and the detention is not with a view to the conduct of such a trial by a domestic court, it may be said that the necessity and occasions for detention pending determination of surrender of the person requested to the requesting state and its judicial processes stand outside Ch III, rather than as an exception to its application. But to confine consideration of the relationship between Ch III and detention pending determination of surrender in this way would be to examine the question too narrowly. While the scope of Ch III may be seen to be restricted, in so far as there is no prior adjudication of guilt by a domestic court 96 (1992) 176 CLR 1 at 28. 97 (1945) 71 CLR 1 at 23. 98 (2001) 209 CLR 165 at 189-190 [58]. The extent to which the military justice system stands outside Ch III remains an unsettled question: Re Tyler; Ex parte Foley (1994) 181 CLR 18. and the detention is not with a view to seeking a trial in a domestic court, nevertheless that apparent restriction must be accompanied by a scheme for judicial review of the relevant administrative action, at least to the degree of that applicable to Pt II of the Act. The scheme for judicial review of the relevant administrative action is not to be dismissed as providing no real right of access to the courts for which Ch III provides. It is that scheme which is the means by which the law determining the limits, and governing the exercise, of the relevant statutory powers is declared and enforced99. Detention, in accordance with the Act, pending surrender of a requested person to the requesting country, thus does not bypass the independent courts envisaged by Ch III. Finally, the proposition that federal legislation providing for detention of a requested person pending determination of surrender, without a decision of an Australian court about that person's guilt or innocence, must, in order to be valid, provide for an Australian court to assess the quality of the evidence against that requested person depends upon a much more particular prescription of the limits on legislative detention derived from Ch III than the principle expressed either in Lim or in Fardon. It is more particular because it seeks to limit what, by hypothesis, is identified as an exception to the proscription by Ch III of involuntary detention under federal law other than as a consequential step in the adjudication of guilt for past acts. The content of that more particular principle (which would yield the asserted limitation to the exception) is not identified. Orders For these reasons we joined in the order made on 15 June 2006. The answers given by that order determined adversely to the plaintiff the grounds upon which relief is claimed in the action. It will now be for a single Justice to make orders disposing of the action and providing for costs. 99 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-36; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 347-348 Kirby 119 KIRBY J. These proceedings were brought by Mr Dragan Vasiljkovic ("the plaintiff") in the original jurisdiction of this Court100. On 15 March 2006, Gummow J ordered that a special case, agreed between the parties, be set down for hearing before the Full Court. The case formulated three questions. The Court made its orders on 15 June 2006, answering each of the questions stated in the negative. It now remains for the Court to provide its reasons. As will appear, I did not join in the orders of the Court disposing of the proceedings. In my view, the plaintiff was entitled to succeed. I will now state my reasons for my minority opinion. The nature of the special case The three questions formulated by the case arise out of arguments which the plaintiff raised to contest the constitutional validity of steps taken to extradite him to the Republic of Croatia ("Croatia"). The law pursuant to which extradition was sought is found, relevantly, in Pt II of the Extradition Act 1988 (Cth) ("the Extradition Act") and the Extradition (Croatia) Regulations 2004 (Cth) ("the Regulations"). The plaintiff submitted that Pt II of the Extradition Act was invalid in so far as it purported to deprive him of liberty, otherwise than in the exercise of the judicial power of the Commonwealth. He also submitted that the Regulations were invalid in so far as they declared Croatia to be an "extradition country" for the purposes of the Extradition Act101. The plaintiff is a national ("citizen") of Australia. He claimed that that fact was relevant to the answers to be given to each of the three questions in the special case102. His complaint was that he could not be extradited from Australia to Croatia on the basis of nothing more than an assertion by Croatia that he had committed offences there. Nor, he argued, could extradition be effected by agreement between governments without affording him the opportunity (formerly provided by Australian law in all cases of extradition103) to have a magistrate or judge consider the evidence said to justify his apprehension and involuntary extradition. 100 Constitution, s 75(iii) and (v); Judiciary Act 1903 (Cth), ss 30, 33. 101 The Regulations, reg 4. 102 cf Singh v The Commonwealth (2004) 78 ALJR 1383 at 1429-1430 [219]-[220]; 209 ALR 355 at 419. 103 See Extradition (Foreign States) Act 1966 (Cth), s 17(6) and Extradition (Commonwealth Countries) Act 1966 (Cth), s 15(6). Kirby To the extent that the Extradition Act and the Regulations failed to uphold these requirements, the plaintiff submitted that they were invalid under the Australian Constitution. This was so because they failed to demonstrate the engagement of, or were disproportionate to, the postulated head of constitutional power relied on by the Commonwealth. Alternatively, the plaintiff argued that, if the laws relied upon fell within that head of power, they failed to observe the proper place envisaged for the Judicature by the Constitution, in respect of governmental action that deprived a person of liberty. In my view, the plaintiff made good the last of these complaints. Part II of the Extradition Act is invalid in so far as it provides for the deprivation of the plaintiff's liberty otherwise than in the exercise of the judicial power of the Commonwealth. The first question reserved should therefore have been answered in the affirmative. That answer was sufficient, without more, to uphold the plaintiff's challenge to his extradition. Extradition should have been denied. Orders to restrain the extradition should have been made until, lawfully, a judge had considered the evidence propounded against the plaintiff and determined that a case was established to warrant such a serious imposition upon his liberty. The facts The plaintiff's background: The plaintiff was born in 1954 in what was then the Republic of Yugoslavia. In 1969, at the age of fifteen years, he migrated to Australia with his family. In 1975, the plaintiff was naturalised and became an Australian citizen104. He retains that nationality status. An affidavit of an Australian federal agent, annexed to the special case, stated that the plaintiff is also a citizen of Serbia and Montenegro, originally part of the six republics that made up Yugoslavia. Croatia declared itself an independent republic in 1991 when it withdrew from Yugoslavia. In January 2006, the plaintiff was living in Perth, Western Australia. He had permanent employment there. In the middle of that month, he travelled to Sydney and stayed in the suburb of Liverpool. It was there that he was arrested for the express purpose of extradition to Croatia. That action precipitated these proceedings. Croatia's decision and request: In December 2005, the County Court in Šibenik in Croatia decided that a person bearing the plaintiff's name, "known as Captain Dragan", described as "a national of Serbia and Montenegro and Australia", should be submitted to investigation by public prosecutors, pursuant to the Basic Criminal Code of Croatia. 104 Under the Australian Citizenship Act 1948 (Cth). See special case at [2]. Kirby According to a translated copy of this decision, annexed to the special case, the investigation was authorised "on the grounds of a well-founded suspicion" that the plaintiff had taken part in "the armed conflict between the armed forces of the Republic of Croatia and armed Serbian paramilitary troops of 'the Republic of Krajina'". The court decision contains accusations against the plaintiff concerning alleged acts and omissions on his part whilst acting with "paramilitary troops" and whilst serving as their "superior officer". The conduct alleged is asserted to have occurred in Knin in June and July 1991, in Glina in July 1991 and in Bruška in February 1993, and is alleged to have involved attacks on, and maltreatment of, soldiers and policemen; torture of prisoners of war; and wrongs to civilians and their property, including the looting of civilian property and protected facilities; and attacks against churches and schools. The court decision states that there is a "well-founded suspicion" that the plaintiff committed offences against the Croatian Basic Criminal Code. It also says that the conduct amounted to crimes against humanity, and therefore violated international law105. Self-evidently, the accusations, if they could be proved, are of a grave kind. Yet no evidence, attributed to identified witnesses, sworn, affirmed or otherwise formally taken, was provided to support the accusations. On the face of the decision, nothing more is shown than that the public prosecutors, in accordance with Croatian criminal procedure, had sought consent from the Croatian court to conduct an investigation and had provided that court with unspecified materials that ultimately convinced the court that the investigation request was well founded. The request appears to have relied on undisclosed interviews with eye-witnesses, participants and victims, as well as military documentation and other materials from "the meetings of the paramilitary troops officers … under the direct command of the suspect himself". Following the foregoing developments, an assistant to the Minister in the Croatian Ministry of Justice wrote on 17 January 2006 to the Extradition Unit of the federal Attorney-General's Department in Canberra. The assistant to the Croatian Minister requested the delivery of the plaintiff to the Croatian 105 Within Arts 13 and 14 of the Geneva Convention relative to the Treatment of Prisoners of War, opened for signature 12 August 1949, 75 UNTS 135 (entered into force 21 October 1950); Arts 27 and 53 of the Geneva Convention relative to the Protection of Civilian Persons in Times of War, opened for signature 12 August 1949, 75 UNTS 287 (entered into force 21 October 1950); and Arts 13 and 16 of the amending Protocol Additional to the Geneva Conventions of 12 August 1949, and Relating to the Protection of Victims of Non-International Armed Conflicts (Protocol II), opened for signature 8 June 1977, 1125 UNTS 609 (entered into force 7 December 1978). Kirby authorities by way of extradition. For that purpose, she sought the plaintiff's temporary arrest in order to facilitate investigation by the Croatian public prosecutors' office. Contained within this document was a description of the plaintiff's allegedly "punishable conduct". That description generally followed the details of the Šibenik court decision. On receipt of this request, and following the initiative of the federal Attorney-General, a member of the Australian Federal Police ("AFP") in Perth quickly set in train the procedures provided for by the Extradition Act (applied to the request from Croatia by the Regulations106). Australian proceedings: On 19 January 2006, the federal agent applied to a magistrate of the State of Western Australia for a warrant under the Extradition Act to arrest the plaintiff107. In support of that request, she annexed the Šibenik court decision (which she described as a "warrant") and deposed that the offences, subject to the "warrant", involved two war crimes against prisoners of war under Art 122 of the Basic Criminal Code of Croatia, and one crime against the civilian population under Art 120 of that Code. She stated that such offences were punishable under Croatian law by a maximum penalty of twenty years imprisonment. By reference to the Regulations, she said that Croatia was "an extradition country". On this basis, she sought a warrant for the provisional arrest of the plaintiff, pursuant to s 12 of the Extradition Act. On the same day, Magistrate R H Burton issued the provisional arrest warrant addressed to federal, State and Territory police officers throughout Australia108. The warrant was executed in Sydney on the same day. The plaintiff was taken into custody by AFP officers. The following day he was brought before a magistrate sitting in the Local Court of New South Wales. In reliance on s 15 of the Extradition Act, the plaintiff was remanded in custody to appear at the Central Local Court in Sydney. On 27 January 2006, the plaintiff appeared in custody before Magistrate A D Moore. The magistrate refused bail, remanding the plaintiff in custody to the Parklea Correctional Centre, where he was detained at the time of the hearing before this Court, pending its orders. Detention and imprisonment: The special case describes the conditions of the plaintiff's detention following his arrest. They were severe: 106 The Regulations, reg 4. 107 Pursuant to the Extradition Act, s 12(1). 108 See the definition of "police officer" in the Extradition Act, s 5. See also ss 12(1) and 13(1)(a). Kirby "The plaintiff has been imprisoned in circumstances where he has been required to share a prison cell with persons convicted of criminal offences and where he has been subject to the full rigours of prison discipline. He has had limits placed on his telephone communications with persons outside the prison (and at times has been unable to contact his solicitors). Attendance upon him by his legal advisers at the prison has been hampered by the unavailability of separate interview facilities, with the result that he has had to provide instructions to his legal advisers in open areas of the prison to which other inmates had ready access." There is no contest that Croatia was recognised by Australia as an independent State in 1992 and that the Regulations were duly made thereafter. It appears that negotiations for an extradition treaty between Croatia and Australia were then commenced. However, the contesting defendants placed no reliance on the existence of a treaty to sustain the designation of Croatia as an "extradition country". By s 5 of the Extradition Act, "extradition country" means, relevantly, "(a) any country … that is declared by the regulations to be an extradition country". By the Regulations, Croatia was so declared. A list of the presently declared "extradition countries" was supplied by the Commonwealth. Of the extradition regulations that do not relate to extradition for particular offences109 or to groups of countries110, most are made with individual countries pursuant to particular extradition treaties. Fourteen, however, involve non-treaty extradition countries111. Some of these involve common law countries with legal systems similar to Australia's. Others involve legal systems that are quite different. Some in the latter category might be accepted, on the basis of permissible judicial knowledge, to be comprised of uncorrupted, competent, independent and impartial courts. The features of others 109 See, for example, Extradition (Traffic in Narcotic Drugs and Psychotropic Substances) Regulations; Extradition (Bribery of Foreign Public Officials) Regulations 1999; Extradition (Safety of United Nations and Associated Personnel) Regulations 2000; Extradition (Suppression of Terrorist Bombings) Regulations 2002; Extradition (Transnational Organised Crime) Regulations 2004; Extradition (Convention against Corruption) Regulations 2005; Extradition (Suppression of the Financing of Terrorism) Regulations 2006. 110 See, for example, the Extradition (Commonwealth Countries) Regulations 1998. 111 Including Extradition (United Kingdom) Regulations 2004; Extradition (Canada) Regulations 2004. In respect of non common law countries, they include Extradition (Thailand) Regulations; Extradition (Hashemite Kingdom of Jordan) Regulations 2002; Extradition (Lebanon) Regulations 2003; Extradition (Kingdom of Cambodia) Regulations 2003; Extradition (Croatia) Regulations 2004; Extradition (Slovenia) Regulations 2004; Extradition (Lithuania) Regulations 2005. Kirby might not be known. A number, to certain knowledge, involve courts with well- reported defects that fall short of international human rights standards. Despite this, non-treaty extradition arrangements have been made with them by executive regulations that have not been disallowed by the Federal Parliament112. Some of the regulations reflect treaty obligations demanded by the requesting country. They superimpose on the Extradition Act a more stringent standard of proof than those envisaged by the Extradition Act itself. For instance, the Extradition (Commonwealth Countries) Regulations 1998 impose upon a requesting State an obligation to satisfy the prima facie evidence test in order to secure the extradition of a person under the Extradition Act113. Treaty provisions vary, but generally adopt the standards set out in the Extradition Act114. However, unless specific provision is made by treaty and accepted by the regulations, the Extradition Act applies to the process of extradition from Australia. At least, the Act does so if Pt II of the Act is a valid law of the Commonwealth. In January 2006, Commencement of proceedings: the plaintiff commenced his proceedings in this Court for a writ of habeas corpus and other relief. In pursuit of that relief, the plaintiff joined as defendants in the proceedings both Magistrate Moore (under whose order he was remanded without bail) and the Governor of the Parklea Correctional Centre (in whose custody he was detained). Those proceedings resulted in the special case. Magistrate Moore and the Governor submitted to this Court's orders. The Commonwealth and the Minister (together "the Commonwealth") defended the validity of the challenged provisions of the Extradition Act and Regulations. The three attacks on the validity of the Act and Regulations are identified in the questions reserved for the opinion of this Court. 112 The Regulations are made under the regulation-making power contained in Extradition Act, s 55. 113 Extradition Act, s 11(5)(b); Extradition (Commonwealth Countries) Regulations, 114 Extradition Act, s 19. For example, there are some treaties that impose a "prima facie evidence" test. Others require a "sufficient evidence test". Still others, like the Extradition Act, involve a "no evidence" test. See Appendix D to the Australian Parliament, Joint Standing Committee on Treaties, Extradition – A Review of Australia's Law and Policy, Report No 40, (August 2001). Kirby The questions reserved The three questions reserved were as follows: Is Pt II of the Extradition Act invalid in so far as it purports to deprive an Australian citizen of liberty otherwise than in the exercise of the judicial power of the Commonwealth? Is Pt II of the Extradition Act, read together with the Regulations, invalid in so far as it purports to deprive an Australian citizen of liberty otherwise than on a finding that there exists a prima facie case against that person that he or she committed the offences alleged by the State requesting extradition? Is reg 4 invalid because it was not made pursuant to the power conferred by s 51(xxix) of the Constitution, or any other legislative power of the Commonwealth? The legislation History and background to the Act: The history of extradition law in Australia has been described in several recent decisions of this Court115. That history has passed through distinct phases, beginning with the Extradition Act 1870 (Imp)116, followed by the Fugitive Offenders Act 1881 (Imp)117, the Extradition Act 1903 (Cth), the Extradition (Commonwealth Countries) Act 1966 (Cth) and the Extradition (Foreign States) Act 1966 (Cth). Both of the latter Acts were repealed when the Extradition Act came into effect. By the Extradition Act, a new regime was adopted, creating common provisions for extradition from Australia to "extradition countries" and to Australia from other countries (with the exception of New Zealand, for which separate provisions were enacted118). Certain features have survived this series of amendments to Australian extradition law. Under such law, the consequences that flow from extradition, including a serious interference with the rights of the person sought to be extradited, cannot follow from extradition treaties entered into by the Executive 115 See, eg, Director of Public Prosecutions (Cth) v Kainhofer (1995) 185 CLR 528 at 556-557; AB v The Queen (1999) 198 CLR 111 at 141-143 [81]-[84]. 116 33 and 34 Vict c 52; cf AB v The Queen (1999) 198 CLR 111 at 142 [83]. 117 44 and 45 Vict c 69. 118 Extradition Act, Pt III. Kirby Government alone. They require the authority of legislation119. The provisions of the legislation, if valid, govern each case in accordance with their terms. Accordingly, close attention must be paid to the language and scheme of the governing law, as well as to any regulations validly made under it. The scheme of the Act: Part II of the Extradition Act envisages an "extradition request"120 in respect of an "extradition offence"121 by an "extradition country"122 in relation to an "extraditable person"123. The overall scheme for which the Extradition Act provides was described by the Full Federal Court in Harris v Attorney-General (Cth)124 in terms that were accepted by this Court125: "The Act contemplates four stages in extradition proceedings as follows: (1) Commencement; (2) Remand; (3) Determination by a magistrate of eligibility for surrender; (4) Executive determination that the person is to be surrendered. In summary form, the scheme is as follows: The commencement of proceedings is by the issue of a provisional warrant under s 12(1) or by the giving of a notice under s 16(1). Once arrested, the person is required by s 15 to be taken before a magistrate and remanded in custody or on bail for such period as may be necessary for eligibility proceedings to be taken under s 19. Where a person is on remand under s 15 and the Attorney-General has given a notice under s 16(1), provision is made under s 19 for a magistrate to conduct proceedings to determine whether the person is eligible for surrender. If eligibility is so determined by the magistrate, provision is made by s 22 for the Attorney-General to decide whether the person is to be surrendered." A superficial consideration of this scheme might suggest that a magistrate (and thus, a court exercising the judicial power of the Commonwealth) is 119 See reasons of Gleeson CJ at [6]. 120 Defined in Extradition Act, s 5. 121 Defined in Extradition Act, s 5. 122 Defined in Extradition Act, s 5. 123 Defined in Extradition Act, s 6. 124 (1994) 52 FCR 386 at 389. 125 Kainhofer (1995) 185 CLR 528 at 547. Kirby engaged in the extradition process in an effective way from its commencement. It might be thought that the magistrate affords an independent and impartial scrutiny on the part of the judiciary of the executive acts performed by various agents of the Commonwealth. When, however, the language of the Extradition Act is examined closely, it becomes clear that the general rule for which the Act provides (including in respect of a request made by Croatia) is one that effectively confines the magistrate to administrative functions alone. So much was decided by this Court in Pasini v United Mexican States126. However, in that case no objection was taken (as it was in this case) that the legislation was constitutionally invalid because it omitted to interpose the judicial power before decisions were made by the magistrate depriving the person subject to an extradition request of liberty127. The magistrate, before whom the person subject to the extradition request must be brought "as soon as practicable" for remand128, is not then engaged in an examination of the merits, substance or adequacy of the evidence or other material propounded to deprive that person of liberty and to secure that person's removal from Australia. Instead, as occurred in this case, the initial request for a provisional arrest warrant is performed by the magistrate without the person who is subject to the request being represented or heard. Moreover, at the later stage of the magistrate's determination of eligibility for surrender, it is specifically provided in s 19(5) of the Extradition Act that: "In the proceedings, the person to whom the proceedings relate is not entitled to adduce, and the magistrate is not entitled to receive, evidence to contradict an allegation that the person has engaged in conduct constituting an extradition offence for which the surrender of the person is sought." In short, the magistrate, participating in the process created by the Extradition Act, is effectively reduced to checking documents. His or her function, at the provisional arrest warrant stage, is to ensure that the application is made in the statutory form on behalf of a country that is shown to be an "extradition country". He or she is to be satisfied that the person to whom the offence relates is an "extraditable person"129. These matters involve no more than formal scrutiny of the existence of warrants or convictions; or an allegation of an 126 (2002) 209 CLR 246 at 253 [11]. 127 The issues in Pasini are explained at (2002) 209 CLR 246 at 253 [11], 261 [37]- 128 Extradition Act, s 15(1). 129 As defined by the Extradition Act, s 6. Kirby offence defined as an "extradition offence". The Act clearly envisages that there will be no "hearing" at first instance. This might not be entirely surprising given the circumstances of many alleged offenders, residing outside the country requesting extradition, for whom the risk of flight will often be substantial130. Yet once the subject is arrested under a provisional arrest warrant and brought before a magistrate, the functions of the magistrate remain no more substantive. It is, as the Commonwealth correctly explained, a "no evidence" regime. The Act places no general obligation on the requesting State to demonstrate a basis of merit (however thin) in support of the request. That function is reserved to the next stage in the process131. It is performed by the Attorney-General and is called a "surrender determination". It is true that the Attorney-General is obliged to make the surrender determination "as soon as … reasonably practicable, having regard to the circumstances, after [the] person becomes an eligible person"132. But the relevant decision is effectively placed beyond the reach of the Judicature. It does not involve a public, transparent hearing by someone independent of the Executive Government, deciding the request on the basis of an assessment of the weight and sufficiency of the material presented to justify the extradition and consequent detention. The role of the magistrate is not judicial in character. The Extradition Act provides for review of a magistrate's decision by application in the first instance to the Federal Court of Australia or to the Supreme Court of a State or Territory; and thereafter, by appeal to the Full Court of the Federal Court133. In their reasons, Gummow and Hayne JJ place reliance on that facility134. Heydon J bases his finding of validity on the existence of this "system of judicial review"135. However, I am unconvinced. Owing to the nature of the magistrate's primary decision, this involvement of the courts is also extremely limited. What is being reviewed is an order confined to the scrutiny of formal matters. There is little, if any, ambit for judicial consideration of wider questions, such as the sufficiency of the extradition request. Apart from the 130 The risk of flight is discussed in United Mexican States v Cabal (2001) 209 CLR 131 Extradition Act, s 22(2). 132 Extradition Act, s 22(2). 133 Extradition Act, s 21(3). 134 Reasons of Gummow and Hayne JJ at [100]-[101]. 135 Reasons of Heydon J at [222]. Kirby normal limitations inherent in procedures for judicial review, and the usual injunctions placed on appellate courts to avoid intruding into the merits136, the powers of the reviewing courts are confined to affirming the order of the magistrate or quashing that order and directing the magistrate to137: in the case of an order under subsection 19(9) – order the release of the person; or in the case of an order under subsection 19(10) – order, by warrant in the statutory form, that the person be committed to prison to await surrender under a surrender warrant or temporary surrender warrant or release pursuant to an order under subsection 22(5)." Thus, s 19 clearly excludes judicial scrutiny of the eligibility for surrender of the person the subject of the request. Amongst other things, the magistrate is required to consider whether the person has had reasonable time in which to prepare for the conduct of the proceedings138. Given the limited function of the proceedings (being "to determine whether the person is eligible for surrender in relation to the extradition offence or extradition offences for which surrender of the person is sought by the extradition country"139) this would not normally present any difficulty. Qualifying for this and other confined requirements will ordinarily be purely a matter of form (as it was in the plaintiff's case). That this is so is made even clearer by s 19(2) of the Extradition Act, which is central to the plaintiff's charge of constitutional invalidity. That sub- section describes the nature of the magistrate's determination of eligibility for surrender and the issues to which the magistrate must turn his or her mind: 136 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40-41; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 271-272; Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 137 Extradition Act, s 21(2)(b). The order under s 19(9) is made where the magistrate determines that the person is eligible for surrender. The order under s 19(10) is made where the magistrate determines that the person is not, in relation to any extradition offence, eligible for surrender. The order under s 22(5) is made where the Attorney-General determines that the person should not be surrendered. 138 Extradition Act, s 19(1)(d). 139 Extradition Act, s 19(1). Kirby "… [T]he person is only eligible for surrender in relation to an extradition offence for which surrender of the person is sought by the extradition country if: the supporting documents in relation to the offence have been produced to the magistrate; (b) where this Act applies in relation to the extradition country subject to any limitations, conditions, exceptions or qualifications that require the production to the magistrate of any other documents— those documents have been produced to the magistrate; the magistrate is satisfied that, if the conduct of the person constituting the offence in relation to the extradition country, or equivalent conduct, had taken place in the part of Australia where the proceedings are being conducted and at the time at which the extradition request in relation to the person was received, that conduct or that equivalent conduct would have constituted an extradition offence in relation to that part of Australia; and the person does not satisfy the magistrate that there are substantial grounds for believing that there is an extradition objection in relation to the offence." Lest it be thought that an "extradition objection", referred to in s 19(2)(d), would include an objection to the failure of the requesting country to produce viable evidence to substantiate the request, it is necessary to note the definition of an "extradition objection" contained in s 7 of the Extradition Act. By s 7, an "extradition objection" is limited to cases where the extradition offence is a political offence; where the surrender is sought for ulterior racial, religious, national or political reasons; where the person surrendered would suffer prejudice by reason of race, religion, nationality or political opinion; where the conduct for which extradition was sought would have constituted an offence under military but not ordinary criminal law; or where the person has already been acquitted or pardoned by a competent tribunal or authority in the extradition country or Australia140. These are narrow and highly particular grounds of objection. It is true that this definition affords substantive grounds to object to extradition. But it does not permit the magistrate (even if confined to the material provided by the requesting country) to scrutinise that material and to ask whether, if the allegations contained in that material were proved before the 140 Extradition Act, s 7(a), (b), (c), (d) and (e). Kirby courts, tribunals or authorities of the requesting country, they would justify imposing such a heavy burden on the liberty of the person the subject of the request. Plaintiff's submissions: The plaintiff submitted that, in converting the scheme of Australian extradition law from that contained in the 1966 Acts141 to the "no evidence" scheme of the present Act, the Parliament took a wrong turning. He argued that to arrest him; deprive him of his liberty for an extended period of time; remand him without bail; confine him during the entire process to a general prison; house him with convicted offenders; and contemplate sending him to a foreign country without ever affording him substantive access to the independent courts of Australia, was contrary to the requirements of the Australian Constitution. Chapter III of the Constitution does not provide an explicit guarantee of access to the courts. However, the plaintiff submitted that access to an Australian court in a case such as the present was implicit in the subjection of the applicable legislative powers of the Parliament to the other provisions of the Constitution, including Ch III. The plaintiff also argued that, in his own case, such an entitlement was inherent in his status as an Australian national, enjoying the status of a citizen. This country's Constitution grants both citizens and aliens the protection of Ch III courts142. However, the plaintiff argued that it was his status as a constitutional national and statutory citizen of Australia that rendered invalid his removal in custody to a foreign country in circumstances where he was denied anything other than a formal judicial scrutiny of the foreign request. Relevant fundamental rights Australian constitutional context: The Australian Constitution does not contain an express list of relevant fundamental rights, equivalent to the "due process" provisions of the United States Constitution143 that have informed American extradition law and its requirements144. Nor does the Constitution 141 Extradition (Foreign States) Act 1966 (Cth), ss 16(1), 17(6); Extradition (Commonwealth Countries) Act 1966 (Cth), s 15(6). 142 The same was true in Australia's colonial times. See Ex parte Lo Pak (1888) 9 NSWLR (L) 221 at 235-236, 244, 248; Ex parte Leong Kum (1888) 9 NSWLR (L) 250, noted in Bennett, Colonial Law Lords, (2006) at 31-32. 143 United States Constitution, Amendments V and VI. See Kainhofer (1995) 185 CLR 528 at 559, in which Amendment VI is discussed. 144 See Bassiouni, International Extradition: United States Law and Practice, 4th ed Kirby contain an explicit provision akin to s 11 of the Canadian Charter of Rights and Freedoms145. Nor are there statutory rights of an equivalent kind to which a person such as the plaintiff may appeal, other than the rights contained in the Extradition Act itself. This does not mean that Australian law is silent on questions of fundamental human rights. Certainly when the common law or statutory provisions are unclear (and perhaps more generally), it is permissible for Australian courts to inform themselves about any suggested infractions of fundamental rights. This is particularly so since Australia, by ratifying the First Optional Protocol to the International Covenant on Civil and Political Rights ("the ICCPR"146), has subjected its laws to the scrutiny of the United Nations Human Rights Committee147. The Constitution is also subject today to the influences emanating from the international context in which it now operates148. Unsurprisingly, in the present age, this view has been accepted by many national final courts, including the Supreme Court of the United States149, traditionally less open to the influence of comparative law than Australian courts have been. In deriving implications from the language and structure of the Constitution, Australian judges, like their foreign counterparts, are entitled to inform themselves of the developing content of the international law of human rights150. Such law does not bind them to particular outcomes. But it is often informative and helpful to the performance of the judicial task, including in constitutional adjudication. 145 Constitution Act 1982 (Can), Pt I, discussed in Kainhofer (1995) 185 CLR 528 at 146 International Covenant on Civil and Political Rights, opened for signature 16 December 1966, 999 UNTS 171 (entered into force 23 March 1976). 147 cf Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42. 148 eg Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 658; Al-Kateb v Godwin (2004) 219 CLR 562 at 624 [175]-[176]. 149 See cases cited in Al-Kateb (2004) 219 CLR 562 at 627 [185]-[186]: Atkins v Virginia 536 US 304 at 316 n 21 (2002); Lawrence v Texas 539 US 558 at 576-577 (2003); Grutter v Bollinger 539 US 306 at 344 (2003) per Ginsburg J. 150 Al-Kateb (2004) 219 CLR 562 at 625-630 [179]-[193]; cf at 589 [63]. Kirby Provisions of the ICCPR: The ICCPR contains, in Art 9, an express prohibition against arbitrary detention. That Article provides: "(1) Everyone has the right to liberty and security of person. No one shall be subjected to arbitrary arrest or detention. No one shall be deprived of his liberty except on such grounds and in accordance with such procedure as are established by law. (3) Anyone arrested or detained on a criminal charge shall be brought promptly before a judge or other officer authorized by law to exercise judicial power and shall be entitled to trial within a reasonable time or to release. … (4) Anyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings before a court, in order that court may decide without delay on the lawfulness of his detention and order his release if the detention is not lawful. The right to liberty, stated in this way, reflects the emphasis of the common law, consideration of which informs the interpretation of the Constitution by Australian courts151. In a number of cases, the United Nations Human Rights Committee has upheld complaints against Australia in respect of Art 9 violations152. In one of those decisions153, the Human Rights Committee reaffirmed its conclusion that a State party to the ICCPR places itself in breach of the requirements of Art 9 where: "there was no discretion for a court … to review the [complainant's] detention in substantive terms for its continued justification. The Committee considers that an inability judicially to challenge a detention 151 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 192. 152 A v Australia (HRC No 560/93); C v Australia (HRC No 900/99): see Joseph, Schultz and Castan, The International Covenant on Civil and Political Rights: Cases, Materials, and Commentary, 2nd ed (2004) at 312-315 [11.16], 315-317 153 C v Australia (HRC No 900/99): see Joseph, Schultz and Castan, The International Covenant on Civil and Political Rights: Cases, Materials, and Commentary, 2nd ed (2004) at 342-343 [11.61]. Kirby that was, or had become, contrary to article 9, paragraph 1, constitutes a violation of article 9, paragraph 4." This reasoning would appear to apply with equal force where, as here, the complainant is an Australian national; is detained in severe prison conditions although on remand; is imprisoned in a fashion undifferentiated from convicted offenders; is denied bail except in "special circumstances" that are extremely difficult to prove154; is restricted substantially to formal objections to his extradition; and is denied any consideration by an Australian court of the veracity of the hearsay assertions that alone constitute the propounded basis for his detention and removal in custody to a foreign country. Recent changes to extradition law After a lengthy period of near universal rules (such as the rules of speciality155 and double criminality156) changes have recently been made to extradition law in a number of countries. These changes are designed to address what are described as new problems. For example, in 1999, the Canadian Parliament enacted the Extradition Act 1999 (Can) to deal with a perceived increase in transnational organised crime. In the same year, the New Zealand Parliament enacted the Extradition Act 1999 (NZ), designed to simplify extradition procedures. By the Extradition Act 2003 (UK), a new British statute on extradition was introduced to implement European Union arrangements, both between European Union countries, and between European Union and non- European Union countries157. Concerns about delay and expense have occasioned numerous international inquiries and proposals addressed to the supposed inefficiencies of the pre-existing law158. Similar thinking lay behind the explanations offered to 154 See eg Cabal (2001) 209 CLR 165 at 187-189 [55]-[56]. 155 See eg AB v The Queen (1999) 198 CLR 111 at 141-145 [80]-[91]; Truong v The Queen (2004) 78 ALJR 473 at 478 [18], 488 [75], 495-497 [120]-[129]; 205 ALR 72 at 78, 92, 101-104. See also reasons of Gleeson CJ at [7]. 156 Riley v The Commonwealth (1985) 159 CLR 1 at 15-20; Oates v Attorney-General (Cth) (2003) 214 CLR 496 at 504-505 [17]. See also reasons of Gleeson CJ at [7]. 157 Described in Australian Government, Attorney-General's Department, A New Extradition System: A Review of Australia's Extradition Law and Practice, (December 2005) at 61 ("the 2005 Paper"). 158 See for example, United Nations Office on Drugs and Crime, Informal Expert Working Group on Effective Extradition Casework Practice, Report, (2004). Kirby the Federal Parliament when the Extradition Acts of 1966 were amended by the Extradition (Commonwealth Countries) Amendment Act 1985 (Cth) and the Extradition (Foreign States) Amendment Act 1985 (Cth). Those Acts followed the report of a taskforce established by the federal Attorney-General in February 1985. The following month, amendments were introduced into the Federal Parliament. The Attorney-General explained159: "The first amendment will enable Australia to conclude extradition arrangements with countries which do not require the requesting country to furnish evidence of guilt but rather information as to the allegations against the fugitive. This amendment is of particular significance to civil law countries whose systems have difficulty in adapting to the provision of pre-trial evidence. The extradition arrangements of most European countries which are reflected in the European Convention on Extradition do not require the production of prima facie evidence." Current proposals argue for still further amendments, designed to remove or modify remaining (and sometimes longstanding) provisions of Australian extradition law. The justifications refer to the rapid expansion of international travel; developments in information technology; the increase in transnational crime; and the threat of terrorism160. Obviously, these developments are subjects worthy of attention, as are the advances in national and international efforts to bring to justice those who are alleged to have committed international crimes. However, in Australia any action taken in this regard must conform to the requirements of the Constitution. The multilateral extradition treaty which Australia has signed with other Commonwealth countries ensures that, in respect of extradition proceedings with those countries, the prima facie evidence test is satisfied. In this respect, the extradition scheme conforms to Australian constitutional requirements. If Australian constitutional norms necessitate a similar adjustment in respect of extradition arrangements with other countries, this must follow from the obligation of all branches of government in Australia to conform to the requirements of the Constitution. So much was uncontested by the Commonwealth. It does not appear from anything placed before this Court that proof of a prima facie case, required by the Extradition (Commonwealth Countries) Regulations, has rendered that procedure unworkable. In effect, the plaintiff asked why any lesser standard should be 159 Australia, House of Representatives, Parliamentary Debates (Hansard), 20 March 1985 at 596 (Attorney-General L F Bowen). 160 2005 Paper at 3. Kirby applied to him as an Australian national, protected by a Constitution that establishes an independent judiciary. The issues Three issues arise for decision by this Court: The judicial power issue: Whether the Extradition Act is invalid in so far as it fails to interpose judicial consideration of the sufficiency of evidence warranting surrender prior to depriving a requested person of his or her liberty; The legislative power issue: Whether, in the case of an Australian national, the absence of a requirement that a prima facie case be proved against the requested person renders the detention and extradition invalid, notwithstanding the other provisions of the Extradition Act and the Regulations; and The validity of the Regulations issue: Whether, notwithstanding the absence of a treaty with Croatia, constitutional power exists to support the provisions of the Act and the Regulations in the plaintiff's case. These issues are inter-related. If the plaintiff were to succeed in relation to one of them, that would have been sufficient to invalidate his detention. It would then be unnecessary to address the remaining issues. Common ground Some aspects of the parties' arguments on the first issue, described above, represented common ground. Subjection to judicial scrutiny: As explained above, it is clear from the text and structure of the Constitution, and from past authority161, that any constitutional grant of legislative power to enact a law with respect to extradition (and the surrender of persons lawfully within Australia) is subject to the other provisions of the Constitution, including the provisions of Ch III to the extent that it is engaged. The design of the Constitution makes it plain that, even where the Parliament can lawfully enact provisions for the handing over of a person to another country, that person must ordinarily have a real right of access to the courts for which Ch III provides. In this way, the legislature and the Executive 161 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 270. Kirby are subjected, when requested, to the requirements of judicial scrutiny. Because of the opening words of s 51, "subject to this Constitution", this scrutiny cannot be excluded. Inalienable rights of nationals: There is no absolute right under the Constitution for an Australian national to remain in this country. So much was held in DJL v Central Authority162. Yet a national has an inalienable right to enter Australia163, and cannot be refused entry at the "barrier". Once admitted, he or she will be subject to Australian law, including any law requiring, or authorising, the loss of liberty. Legal demands that other countries and international organisations may make, in accordance with law, can authorise the surrender of a person to enable the removal of that person from Australia, in custody where necessary. Nonetheless, surrender is a serious step. This is so given the normal entitlement of a person, lawfully present in Australia (whether a national or otherwise), to be undisturbed in liberty and life by the demands of foreign countries and external organisations without the clear authority of a valid law. No such country or organisation has a right to have an Australian national or lawful resident surrendered to it by Australia except under Australian law164. Even an alien present in Australia is entitled to the protection of Australian law. Such protection is itself an attribute of Australia's sovereignty. Extradition implies loss of liberty: Because compliance with an extradition request within the terms of the Extradition Act obliges arrest, detention and removal from Australia (and ordinarily, lengthy detention in the country to which the person is surrendered), an extradition decision places an obvious and immediate burden on the liberty of the surrendered person. Accordingly, Australian extradition those constitutional provisions which control the imposition of a loss of liberty on persons subject to it. This is especially so where the loss of liberty has the character of punishment, and more so where it occurs in a criminal context. typically enlivens legislation 162 (2000) 201 CLR 226 at 278-279 [136]-[137] of my reasons; Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ agreeing at 240 [21]. Regarding my comments in DJL, I would note, consistently with these reasons, that my concern was with the absence of judicial authority. Extradition pursuant to treaty will not be lawful unless the requested person has substantive access to a court. 163 Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 469: "The right of the Australian citizen to enter the country is not qualified by any law imposing a need to obtain a licence or 'clearance' from the Executive." 164 Riley (1985) 159 CLR 1 at 15. Kirby Judicial determination of loss of liberty: There is no reason why extradition should be frozen in the procedures of the nineteenth century, a time when, typically, individual treaties were negotiated between nations to provide the terms for such exceptional acts, and did so with considerable particularity165. In this context, as in others, the Constitution is susceptible to adaptation to contemporary circumstances166. Those circumstances include a large increase in international travel and the numbers engaging in it; the growth of transnational crime; and the necessity for extradition procedures to adapt to these phenomena. The plaintiff accepted that a full-scale trial in Australia before extradition, involving witnesses and other evidentiary material, where the proper venue for such a trial was in the country requesting extradition, was neither necessary under the Australian Constitution nor feasible167. The issue in contest was therefore reduced to whether, as a precondition to detention and with a view to removal and surrender, a minimum requirement was an assessment by an Australian court, designed to assure the person subject to the extradition request, and the community at large, that the surrender and consequent loss of liberty was effected on the basis of sufficient evidence, rather than upon a mere assertion. Punishment as a judicial function: It is beyond doubt that, in Australia, there is a portion of involuntary detention that can only occur under federal law "as an incident of the exclusively judicial function of adjudging and punishing criminal guilt"168. This is so notwithstanding differences in this Court as to the precise constitutional restrictions on the power of officials in the Executive Government to impose detention without judicial authority. Different views have been stated about what that portion is and how it might be defined169. Yet it cannot be doubted that it exists. Its definition cannot 165 cf Kainhofer (1995) 185 CLR 528 at 560-561, citing Muller's Case 17 Fed Cas 975 166 Singh (2004) 78 ALJR 1383 at 1436 [258]; 209 ALR 355 at 429. 167 cf Aughterson, Extradition: Australian Law and Procedure, (1995) at 210, citing In the matter of Jack Mandel [1958] VR 494 at 498. 168 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27 per Brennan, Deane and Dawson JJ; cf Al-Kateb (2004) 219 CLR 562 at 573 [4], 581-583 [36]- 169 See, for example, Al-Kateb (2004) 219 CLR 562 at 586-589 [49]-[61], 615-616 [145]-[149]; Fardon v Attorney-General (Qld) (2004) 78 ALJR 1519 at 1530 [43]- [44], 1544 [135]; 210 ALR 50 at 65-66, 86. Kirby belong solely to the subjective intentions of parliamentarians or officials in the laws they make or implement. Nor can the incidents, duration and circumstances of the detention be regarded as irrelevant to enlivening the constitutional requirements. Here, according to the facts in the special case, the detention of the plaintiff was in support of proposed criminal proceedings in another country. The detention was to be (and, at the hearing, had already been) significant in duration and arduous in execution. The exceptions of executive detention: The authorities clearly accept that some orders depriving persons of their liberty are treated as "exceptions" to the requirement of judicial involvement in governmental deprivations of liberty. In such exceptional cases, detention by the Executive will not contravene the requirements of Ch III. Nor will it involve an impermissible investment of the judicial power of the Commonwealth in bodies other than Ch III courts170. In the present case it was common ground that the Executive might, consistently with the Constitution, detain aliens (for a time at least) if present in the Commonwealth without lawful authority; persons arrested and detained "pending trial"; persons who are mentally ill or infectiously diseased; and those who have to be deprived of liberty for the welfare and protection of others whom they endanger171. The list of such exceptions is not closed172. However, in Australia, it has not previously been held that involuntary detention, including arrest, surrender and removal at the request of a foreign country, is exempt from the requirement of judicial authority under the Constitution. The arguments of the parties In support of the validity of the Extradition Act and the Regulations, the Commonwealth advanced a number of arguments which the plaintiff sought to answer. Inherent features of extradition: The Commonwealth pointed to the fact that detention, usually involuntary, was inevitable in the case of extradition as an inherent incident in the process itself, because of the danger of flight173. For this reason, in Europe (including now in the United Kingdom) such detention has 170 cf Lim (1992) 176 CLR 1 at 10. 171 Lim (1992) 176 CLR 1 at 28; Re Woolley; Ex parte Applicants M276/2003 (2004) 79 ALJR 43 at 56 [58]; 210 ALR 369 at 384. 172 cf Kruger v The Commonwealth (1997) 190 CLR 1 at 162. 173 Barton v The Commonwealth (1974) 131 CLR 477 at 503. Kirby been accepted as a permissible derogation from the right to liberty as long as it is effected "in accordance with [the] procedure prescribed by law"174. So much may be accepted. But it does not answer the question of what any such law must contain in the Australian constitutional context, which is different in this respect from that of the United Kingdom and Europe. Exceptional executive detention: The Commonwealth relied on the established exceptions to judicially authorised detentions, many of which are of long standing and pre-date the Australian Constitution. This too may be accepted. But the present case is not an established exception under Australian law175. Detention and criminal punishment: The Commonwealth argued that the broad statements in Chu Kheng Lim v Minister for Immigration176, about the exclusive judicial role in imposing involuntary detention in the context of criminal punishment, were not endorsed by a majority of the Court in that case. They were not, therefore, part of the ratio decidendi of that case. So much may also be accepted. There are other features in the passage in the joint reasons in Lim, including the reference to the "immunity" from executive detention, which the citizens of this country enjoy177. The constitutional protections are not confined to citizens. Nonetheless, the acceptance of a general immunity from executive detention runs through the case law. Established exceptions apart, it is normally the case in our society that individuals cannot lose their liberty upon the final decision of an official. Normally, until now, such a loss of liberty has required an order of a court. The Extradition Act partially reflects this rule by requiring that, after arrest on a preliminary warrant, the person subject to the request for extradition 174 European Convention for the Protection of Human Rights and Fundamental Freedoms, opened for signature 4 November 1950, 213 UNTS 222 (entered into force 3 September 1953), Art 5. See Jones and Doobay, Extradition and Mutual Assistance, 3rd ed (2005) at 235. See also Lester and Pannick, Human Rights Law and Practice, 2nd ed (2004) at 161. 175 It is true that extradition is a procedure that has traditionally been carried out by the Executive Government. See Pasini (2002) 209 CLR 246 at 265 [50]. However, in the Australian context, this tradition must adapt to the requirements of the Constitution. 176 (1992) 176 CLR 1 177 Lim (1992) 176 CLR 1 at 28. Kirby be brought "as soon as practicable before a magistrate"178. However, after the introduction of the "no evidence" procedures and removal of the need to show a prima facie case, the utility of this speedy submission to the judicial branch was almost entirely lost. It became, in effect, a mere formality – a statutory leftover from the former requirement that involved judicial scrutiny of the justification for continued custody, removal and surrender. Upon the Commonwealth's submission, a law of the Parliament could provide for unlimited detention on an executive order, and courts could do nothing about it. This is an offensive proposition. Rightly, our Constitution is vigilant against detention by the Executive alone. It has favoured the interposition of judicial authority for extensive deprivations of liberty, outside strictly exceptional cases. This Court should continue to insist on that principle. This is not a time to retreat from it and to allow exceptions to become the rule. The growth of executive detention, especially in criminal proceedings, on executive warrants is offensive to the Australian Constitution. Such detention is not limited purely for the benefit of a person such as the plaintiff. It is done for all persons, nationals and otherwise, who look to the Constitution to protect them from the erosion of liberty by ill-judged laws, and by official conduct alien to our legal tradition179. In Fardon v Attorney-General (Qld)180, Gummow J suggested that the relevant discrimen was not whether the impugned law was "penal or punitive in character" (as proposed by the joint reasons in Lim181). His Honour said that he would "prefer a formulation of the principle derived from Ch III in terms that, the 'exceptional cases' aside … involuntary detention … in custody by the State is permissible only as a consequential step in the adjudication of criminal guilt … for past acts". Subject to what is said below about the relevance of detention conditions, I would accept that formulation. I would apply it to this case. Relevance of detention conditions: The Commonwealth rejected the relevance of the agreed facts concerning the punitive conditions in which the plaintiff was detained at the time of hearing. It argued that such conditions could not determine whether the plaintiff was undergoing detention in custody by the State for past acts, otherwise than by judicial order. It argued that irksome 178 Extradition Act, s 15(1). 179 cf Fardon (2004) 78 ALJR 1519 at 1555 [187]; 210 ALR 50 at 101; Baker v The Queen (2004) 78 ALJR 1483 at 1501-1502 [94]; 210 ALR 1 at 27. 180 (2004) 78 ALJR 1519 at 1536 [80]; 210 ALR 50 at 74. 181 (1992) 176 CLR 1 at 27. Kirby burdens could not transform administrative detention into impermissible punishment. The reasons of other members of this Court indicate that punishment must be consequential upon a finding of guilt, and that the conditions of the detention are irrelevant to this consideration182. However, if a person, under the process set in train by the Extradition Act, must be arrested; remanded in custody without bail (in all but the rarest case); detained for a lengthy period in order to be expelled in custody for detention in a foreign country; and submitted to the legal processes of that country, whilst in custody and facing criminal charges, the conditions of such custody are not irrelevant to determining whether the custody should be characterised as "punishment". With respect to those who have expressed a contrary view183, it is not irrelevant to examine the incidents of the detention, its circumstances and duration when deciding its actual character for constitutional purposes. Analogy to criminal remand: The Commonwealth urged the acceptance of detention in aid of extradition as an exception similar in quality to detention without bail pending a criminal trial. Whilst there are some analogies between these two forms of coercive custody, there are essential differences that render this argument unpersuasive. Detention pending trial within Australia is, in most cases, subject to a substantive judicial order. Such detention is therefore supervised by the independent judiciary. It is subject to consideration of the supporting evidence at trial before one of the independent courts established by or under the Constitution. On the other hand, detention, in accordance with the Extradition Act, with a view to removal and surrender to another country and submission to its legal system, now relevantly bypasses the independent courts envisaged by Ch III of the Constitution. Under the present law, such detention deprives the person concerned of even the slightest consideration by an Australian judicial officer of the sufficiency of evidence to justify such steps being taken, drastic as they are for that person's liberty. Remand, in the extradition context, denies any substantive consideration of the accused person's case. The reception of evidence to support substantive consideration is forbidden. In this case, the plaintiff, although a national of this country, is to be sent to Croatia from Australia, and detained for a considerable time in both countries, without an independent court ever considering the 182 Reasons of Gleeson CJ at [33]-[34]; reasons of Gummow and Hayne JJ at [107]. 183 Al-Kateb (2004) 219 CLR 562 at 595 [74] per McHugh J, 650-651 [264]-[268] per Hayne J; Woolley (2004) 79 ALJR 43 at 87 [227] per Hayne J, 93 [261] per Callinan J; 210 ALR 369 at 428, 434-435. Kirby sufficiency of evidence said to justify that course. Why should that course be treated as constitutionally acceptable? The need to adapt extradition procedures: The Commonwealth relied on the need for adaptation of extradition procedures to accommodate a number of emerging considerations, including: the growing number of persons subject to extradition requests; the growth, change and significance of transnational crime; and the desirability of Australia's entering into efficient extradition arrangements with other countries so that Australia might reap benefits in return, and avoid isolation as a haven for international fugitives. In light of these considerations, one can accept the need to adopt some new procedures for international extradition. However, any such procedures must conform to the national Constitution, as much in Australia as elsewhere. In matters of international cooperation, efficiency does not trump constitutionality. I can envisage steps that do not involve risks of undue delay, substantial cost or inconvenience but which guarantee judicial consideration of the evidence said to support lengthy detention in custody prior to extradition. This is what Australian law provides for in respect of extradition proceedings with other Commonwealth countries. I do not exaggerate the utility and effectiveness of the form of judicial scrutiny which the plaintiff insists upon184. However, in some cases, it could have utility and would provide a check against excessive executive decisions that have the effect of curtailing liberty. To deny this is to deny this nation's constitutional tradition and experience. Procedures of civil law jurisdictions: The Commonwealth urged that, if this Court insisted upon such requirements, it would effectively frustrate the conduct of extradition proceedings between Australia and civil law countries. I find this argument the least persuasive of all. Even before the Extradition Act 1870 (Imp), the United Kingdom had negotiated extradition treaties with France and Denmark, two civil law systems185. It is true that the role of the investigating magistrate and courts in 184 The functions of judicial (as opposed to non-judicial) officers are discussed in Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 44-45. 185 In re Rees [1986] AC 937 at 953 per Lord Mackay of Clashfern. Kirby civil law jurisdictions is different from that of prosecutors and the courts in the accusatorial criminal trial conducted in Australia and other common law jurisdictions186. However, for a very long time extradition arrangements have existed, under legislation and treaties, between countries of the two systems. They have existed for a century between the United States and France187. Dating back to Biblical times, nations have negotiated arrangements for the extradition of persons wanted for trial for alleged crimes by other nations having very different legal systems. Professor Bassiouni attributes the first recorded extradition arrangement to a peace treaty agreed in 1280 BC between Ramses II, Pharaoh of Egypt, and the Hittites after the latter were defeated in an attempt to invade Egypt188. The notion that evidentiary material could not be produced, sufficient for the kind of scrutiny by a court propounded by the plaintiff, is totally unconvincing. The very documents from the Croatian Ministry and the Šibenik County Court, annexed to the special case, contradict that suggestion. Those documents, especially the latter, are replete with references to unseen and unsupplied statements by eye-witnesses including some attributing words to the plaintiff as direct quotes. In addition, the County Court decision refers to documentary evidence and to the interrogation of witnesses, presumably recorded by police or other officials in preparation for a prosecution under Croatian law. There is no serious practical impediment to discharging the minimal requirements of judicial scrutiny inherent in the terms and structure of the Australian Constitution. When the Parliament introduced the "no evidence" form of extradition in 1985, it followed immediately a report of a departmental taskforce. There appears to have been little, if any, consideration of the available alternatives. There was no apparent consideration by the Parliament of any constitutional impediments in this regard189. It may be hoped that, in the current 186 cf RPS v The Queen (2000) 199 CLR 620 at 630 [22]. 187 Bassiouni, International Extradition: United States Law and Practice, 4th ed (2002) at 926. The author states that the original treaty was signed between the United States and France in 1909 and came into force in 1911 (37 Stat 1526). A second treaty was signed in February 1970 and came into force in April 1971 (22 UST 407). 188 Bassiouni, International Extradition: United States Law and Practice, 4th ed (2002) at 32. The Roman Republic entered into such treaties as far back as 266 BC: see Brown v Lizars (1905) 2 CLR 837 at 850. 189 Australia, House of Representatives, Parliamentary Debates (Hansard), 20 March Kirby review of the Act, closer attention will be given to libertarian constitutional imperatives normal to Australia190. Conclusion: invalidity is established The result is that the plaintiff established the invalidity of so much of Pt II of the Extradition Act as failed to afford him consideration by an Australian court of whether the evidence upon which Croatia requested his surrender was sufficient in law to justify his apprehension and detention, and a subsequent surrender determination by the Attorney-General. It follows that the first question reserved in the special case should have been answered "Yes". I can understand that this outcome would cause concern, particularly in light of the seriousness of the allegations made against the plaintiff. However, the outcome in my view, because Croatia provided only unsubstantiated allegations to justify the arrest, detention, removal and surrender of the plaintiff. It supplied documents that referred to potential evidence that, by inference, existed. But it provided no such evidence whatever, sworn, affirmed or formalised in any way according to Croatian legal procedures. followed, No doubt, Croatia took this course because, under the Australian Extradition Act, accusations were all that were required to support an extradition request from Croatia. However, under the Australian Constitution, more, in my opinion, was required. Before a national (or any other person living under the protection of Australian laws) might lose liberty in such a way, and be subjected to a lengthy imposition upon that person's basic freedoms, a sufficient case for imposing such deprivations had to be demonstrated, in the form of evidence, provided to a judge or magistrate in one of the independent courts of Australia. This conclusion would not mean subjecting each extradition request to a full trial on the merits in this country. However, it would mean permitting a court to examine evidence and to consider whether, if proved, such evidence would be sufficient to warrant the continued detention of the individual and the making of a surrender decision with its large consequences for that person's liberty. Self-evidently, such a decision is a serious one, particularly, one might say, where the person in question is an Australian national. It constitutes an exception to the protection that each nation State owes to people living under its laws. To comply with Australian constitutional requirements, in my view, it would be sufficient for the Parliament to revert to the scheme of legislation which existed prior to the precipitate adoption of the "no evidence" amendments 190 2005 Paper at 7. In the "guiding principles", no reference is made to the need to minimise infractions of personal liberty, but see at 20. Kirby The stated purpose of Croatia was to institute criminal proceedings in Croatia for the prosecution of the plaintiff on serious charges which, if proved, would be offences against the criminal law of Croatia and also offences against international humanitarian law. Every nation is duty-bound to cooperate in upholding the universal principles of international law. However, Australia does not contribute towards global efforts to enhance the rule of law by failing to uphold its own laws, particularly the law of the Constitution. No submission was made in this case that, apart from the Extradition Act, there existed any other basis for surrender of the plaintiff. Thus, it was not argued, for example, that the surrender of the plaintiff was required by any international law principle of universal jurisdiction recognised by the law of Australia191. However, it should be noted that even if such a principle were to apply, it would be subject to Australian constitutional norms192. National constitutional law is not really tested when it is invoked by popular persons or their supporters. It is tested, and the judges' fidelity to law is examined, when that law is invoked by an unpopular person such as one accused of grave crimes. In this respect, in such cases in the past, this Court has shown fidelity to the Constitution193. Recently, the Constitutional Court of Indonesia was subject to a similar test when it upheld a constitutional objection to the conviction of persons for involvement in an attack on tourists in Bali, prosecuted under retrospective anti-terrorism legislation. Such legislation was held incompatible with the new Constitution's prohibition on retrospective criminal laws194. This Court should be no less committed to the requirements of the Australian Constitution. 191 Macedo (ed), Universal Jurisdiction: National Courts and the Prosecution of Serious Crimes Under International Law, (2004). 192 See Lord Browne-Wilkinson, quoted by Macedo, "Introduction", in Macedo (ed), Universal Jurisdiction: National Courts and the Prosecution of Serious Crimes Under International Law, (2004) 1 at 6. See also Kirby, "Universal Jurisdiction and Judicial Reluctance: A New 'Fourteen Points'", in Macedo (ed), Universal Jurisdiction: National Courts and the Prosecution of Serious Crimes Under International Law, (2004) 240 at 243. 193 See eg Adelaide Company of Jehovah's Witnesses Inc v The Commonwealth (1943) 67 CLR 116 at 124; Australian Communist Party Case (1951) 83 CLR 1. 194 Butt and Hansell, "The Masykur Abdul Kadir Case: Indonesian Constitutional Court Decision No 013/PUU-I/2003", (2004) 6 Australian Journal of Asian Law 176 at 185ff; Clarke, "Retrospectivity and the Constitutional Validity of the Bali Bombing and East Timor Trials", (2003) 5 Australian Journal of Asian Law 1; (Footnote continues on next page) Kirby There may be other lawful bases, under Australian law, pursuant to which, absent his consent, the plaintiff might be held in custody, pending any restoration of the pre-1985 legislative scheme and renewal of Croatia's request under the restored provisions. This would be a decision for the Commonwealth, to be considered by the Justice of this Court to whom the proceeding should be returned. But if no lawful basis could be demonstrated for detaining the plaintiff further, an order that he be restored to his liberty would necessarily have followed. The remaining issues The legislative power issue: From the outcome to the first question reserved, it follows that the second question, although unnecessary to answer, would also have been answered in the affirmative. Except to the extent that the reference to the status of the plaintiff as an Australian citizen (or national) might be relevant to the proportionality of the legislation, such status would not appear to be determinative of any question of constitutional invalidity in issue in this case. Save in particular cases195, the Constitution does not distinguish between citizens and non-citizens in the entitlements that it confers. Citizens and non-citizens are entitled to invoke the Constitution without discrimination based on their nationality. Whilst the substance of the second question might therefore be answered "Yes", in the light of the answer given to the first question reserved, the second should be formally answered: "Unnecessary to answer". The validity of the Regulations issue: The third question reserved concerns the validity of reg 4 of the Regulations. This question also would not have needed to be answered in light of the answer that I would have given to the first. The attack on the Regulations was based on the making of extradition arrangements between the Executive Governments of Australia and Croatia, without the ratification of a treaty. The plaintiff argued that, absent a treaty, the external affairs power contained in s 51(xxix) of the Constitution was not engaged to support extradition to Croatia under the Act and Regulations. Those arguments were unconvincing. Kirby, "Terrorism and the Democratic Response 2004", (2005) 28 University of New South Wales Law Journal 221 at 239. 195 See, for example, Constitution, ss 30, 41, 44(i), 117. Kirby Extradition without legislation is forbidden in Australia196, but extradition without a bilateral treaty is permitted197. Professor Bassiouni, in his authoritative text, explains198: "Extradition is regarded by states as a sovereign act. Most states' view is that the duty to extradite arises by virtue of a treaty. In the absence of an international duty, states can and do rely on reciprocity and comity, which are part of international principles of friendly cooperation among nations. Reciprocity could become binding under international law if it manifests the custom of a state as evidenced by its consistent practice. … A state's non-treaty basis concerns the granting or requesting of extraditions carried out on the basis of national legislation which authorises it199 and provides the framework, substantive conditions, exceptions, and procedures inherent in it200. … Ad hoc arrangements are occasionally entered into by states to suit their particular needs at certain times … There is also a growing practice based on multilateral treaties. Furthermore, the emerging custom or duty to extradite for international crimes is gaining ground201." In Australia, treaty obligations do not represent the only way to engage the legislative powers of the Parliament under the external affairs power. In XYZ v The Commonwealth202, I referred to the argument that a federal law, with respect 196 Brown v Lizars (1905) 2 CLR 837 at 850-851; Barton (1974) 131 CLR 477 at 494- 495; cf Shearer, "Extradition Without Treaty", (1975) 49 Australian Law Journal 197 cf De L v Director-General, NSW Department of Community Services (1996) 187 CLR 640, concerning the Family Law (Child Abduction Convention) Regulations 1986 (Cth). See also Oates (2003) 214 CLR 496 at 502-503 [9]. 198 Bassiouni, International Extradition: United States Law and Practice, 4th ed 199 For example, the French practice started with the Decret-Loi of 19 February 1791, followed by the Ministry of Justice Circulaire of 30 July 1872, and the law of 10 March 1927. For a more recent practice which permits reciprocity by a common law based system, see the Extradition (Foreign States) Act 1974 (Cth). 200 National legislation serves the same purpose for States that rely on treaties. 201 This is dealt with by Bassiouni, International Extradition: United States Law and Practice, 4th ed (2002) at 35ff. 202 [2006] HCA 25. Kirby to conduct geographically external to Australia, was necessarily a law with respect to external affairs203. Whatever problems and difficulties such an it provides no approach presents for Australian constitutional doctrine, impediment to the validity of the Regulations in this case. Here, the making of the Regulations, designating Croatia as an "extradition country", was directly relevant to Australia's relations with Croatia and thus to Australia's "external affairs"204, as that phrase is incontestably used in the Constitution. It follows that the attack on the validity of reg 4 would fail. However, the formal answer to the third question, in my view, was: "Unnecessary to answer". Orders The orders that I favoured in these proceedings were as follows: (1) Answer the questions reserved as follows: (a) Yes. (b) Unnecessary to answer; and (c) Unnecessary to answer. Return the proceedings to a single Justice with these answers to dispose of the matter, including in respect of costs. 203 New South Wales v The Commonwealth ("the Seas and Submerged Lands Case") (1975) 135 CLR 337; Polyukhovich v The Commonwealth (1991) 172 CLR 501 at 530-531, 602, 638, 695-696: see XYZ v The Commonwealth [2006] HCA 25 at 204 cf R v Burgess; Ex parte Henry (1936) 55 CLR 608 at 643; R v Sharkey (1949) 79 CLR 121 at 136. 222 HEYDON J. I agree with Gummow and Hayne JJ, save in one respect. I would reserve to a case in which it is necessary for decision the question whether, if the system of judicial review described by their reasons for judgment205 had not existed, detention of the plaintiff pending deportation would have been valid.

HIGH COURT OF AUSTRALIA AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPELLANT AND TPG INTERNET PTY LTD RESPONDENT Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 12 December 2013 ORDER Appeal allowed with costs. Set aside order 1 of the Full Court of the Federal Court of Australia made on 20 December 2012 and the orders of the Full Court made on 4 April 2013 and, in their place, order that: orders 4, 9 and 10 of the Federal Court made on 15 June 2012 be set aside; the appeal to the Full Court be otherwise dismissed; and the respondent pay the appellant's costs of the appeal to the Full Court. On appeal from the Federal Court of Australia Representation J T Gleeson SC, Solicitor-General of the Commonwealth and C D Golvan SC with E J C Heerey for the appellant (instructed by Australian Government Solicitor) N J O'Bryan SC with M J Hoyne for the respondent (instructed by Truman Hoyle Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Australian Competition and Consumer Commission v TPG Internet Pty Ltd Consumer law – Misleading or deceptive conduct – Whether respondent's advertisements breached Trade Practices Act 1974 (Cth) ("TPA") and Australian Consumer Law – Whether "dominant message" approach correct – Whether ordinary and reasonable consumer would have starting assumption that advertised internet service was bundled with telephony service – Whether consumers must consider whole of advertisement (including small print or quickly spoken detail) to correct otherwise misleading headline representations. Consumer law – Pecuniary penalties – Whether Full Court of Federal Court failed to adequately consider specific and general deterrence in reducing pecuniary penalty – Whether reduced pecuniary penalty manifestly inadequate – Whether primary judge correctly assessed number and classes of contraventions. Words and phrases – "dominant message". Trade Practices Act 1974 (Cth), ss 52, 53, 53C(1)(c), 76E(3). Competition and Consumer Act 2010 (Cth), Sched 2, ss 18, 29, 224(3). FRENCH CJ, CRENNAN, BELL AND KEANE JJ. From late September 2010 until early November 2011, TPG Internet Pty Ltd ("TPG") engaged in a multi- media advertising campaign, the centrepiece of which was the offer to consumers of an attractive price for the ADSL2+ service which it supplies. That service utilises a consumer's home telephone line to provide a broadband internet connection that has no data download limit1. The advertisements deployed in TPG's campaign prominently displayed the offer to supply broadband internet ADSL2+ service for $29.99 per month. Much less prominently, the advertisements qualified this offer, stating that it was made on the basis that the ADSL2+ service was available only when bundled with a home telephone service, provided by TPG through landline technology, for an additional $30.00 per month (with a minimum commitment of six months). In addition, TPG required the consumer to pay a setup fee of $129.95 plus a deposit of $20.00 for telephone charges. The Australian Competition and Consumer Commission ("the ACCC") brought proceedings in the Federal Court of Australia against TPG. It alleged that the advertisements were misleading and deceptive by reason of the disparity between the prominent headline offering TPG's ADSL2+ service at an attractive price and the less prominent terms qualifying that offer. The ACCC also alleged that some of the advertisements contravened s 53C(1)(c) of the Trade Practices Act 1974 (Cth) ("the TPA") by failing to specify "in a prominent way and as a single figure, the single price" for the package of services offered by TPG. The primary judge upheld the ACCC's claim, and made a number of orders against TPG, including the imposition of a pecuniary penalty of $2 million. TPG was largely successful in an appeal to the Full Court of the Federal Court of Australia. All but three of the primary judge's findings that TPG had engaged in misleading conduct were set aside; and the pecuniary penalty was reduced to a total of $50,000 in respect of the findings of infringement which were upheld. The ACCC appeals to this Court pursuant to special leave granted on 16 August 2013. 1 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,683 [2]. Crennan Bell The ACCC submitted, among other things, that it was not open to the Full Court, in the proper exercise of its appellate function, to hold that the advertisements were not misleading. Further, the ACCC contended that the penalty imposed by the primary judge should be restored in accordance with his Honour's findings as to the extent of TPG's contraventions and, given the circumstances of TPG's offending, that the penalty reflect the importance of personal and general deterrence considerations. For the reasons which follow, it should be accepted that the Full Court erred in setting aside the findings of the primary judge as to the extent of TPG's contraventions of the TPA; and his Honour's assessment of the appropriate pecuniary penalty of $2 million should be restored. Statutory framework Section 52 of the TPA provided that "[a] corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." Section 53 of the TPA relevantly provided that: "A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services: (e) make a false or misleading representation with respect to the price of goods or services; [or] (g) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy." The TPA was amended by the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) with the consequence that the TPA applied in relation to advertisements published before 1 January 2011 and the Australian Consumer Law2 ("the ACL") applied with respect to advertisements 2 Sched 2 to the Competition and Consumer Act 2010 (Cth). Crennan Bell published on or after that date. Sections 52 and 53(e) and (g) of the TPA are in the same terms as ss 18 and 29(1)(i) and (m) of the ACL except that the phrase "[a] person must not" is used in the ACL rather than the phrase "[a] corporation shall not" in the TPA. It was common ground that this difference was of no relevant consequence3. Under s 76E of the TPA and s 224 of the ACL, the maximum pecuniary penalty for each act or omission in contravention of s 53(e) and (g) of the TPA or s 29(1)(i) and (m) of the ACL was $1.1 million4. Section 53C(1) of the TPA relevantly provided: "A corporation must not, in trade or commerce, in connection with: the … possible supply of … services to a person …; or the promotion by any means of the supply of … services to a person …; make a representation with respect to an amount that, if paid, would constitute a part of the consideration for the supply of the … services unless the corporation also: specifies, in a prominent way and as a single figure, the single price for the … services". The advertisements Between 25 September 2010 and 7 October 2010, in the first phase of the campaign, TPG deployed advertisements on three national television stations and seven capital city radio stations, in a number of national and capital city newspapers, and on the websites of TPG and two third parties ("the initial advertisements"). On 4 October 2010, the ACCC was prompted by the initial advertisements to write to TPG to convey its concerns regarding the advertisements. Although 3 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,685 [18]. 4 Trade Practices Act 1974 (Cth), s 76E(3); Australian Consumer Law, s 224(3). Crennan Bell TPG did not accept that the ACCC's concerns were warranted, it amended the advertisements with effect from about 7 October 2010. The advertisements in the second phase of the campaign were deployed from 7 October 2010 until 4 November 2011 ("the revised advertisements"). The revised advertisements were published on or in four national television stations, the same seven radio stations as the initial advertisements, a wider range of national and capital city newspapers, the TPG website and third party websites, national cinema screens, national magazines, coupon booklets left in letter boxes, brochures, public transport, billboards and noticeboards5. Representative samples of the advertisements may be found annexed to the reasons of the primary judge and the Full Court. The primary judge and the Full Court viewed replays of the television advertisements and listened to replays of the radio advertisements. The parties did not invite this Court to do likewise. The findings and conclusions of the primary judge The primary judge proceeded to his conclusions on the basis that TPG's target audience consisted of "the broad class of Australian consumers around mainland capital cities who were users or potential users of broadband internet services."6 His Honour found that the target audience did not include people who knew little or nothing about broadband internet services7. While users of ADSL2+ were more knowledgeable about such services than the general class of users or potential users of internet services, the primary judge found that "this does not impute a high level of knowledge about broadband internet to the ordinary or reasonable consumer."8 5 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,683 [5]. 6 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,685 [23]. 7 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,686 [27]. 8 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,686 [28]. Crennan Bell The bundling condition His Honour found that the target audience included first time users of ADSL2+ services9. The primary judge also found that, by virtue of the array of available internet options, the ordinary or reasonable consumer would not have any starting assumption as to whether TPG's offering was of a separate or bundled service, and would rely on the advertisement for information as to the service offered10. The primary judge found that each advertisement had the same dominant message, namely: "Unlimited ADSL2+ for $29.99 per month"11. His Honour found that the "ordinary or reasonable consumer taking in only the dominant message would have the impression that the entire cost of the service is $29.99 per month, with no other charges and no obligation to acquire another service"12; and the balance of the advertisement which contained that information was not given sufficient prominence to counter the effect of the headline claim13. The primary judge held that the dominant message was false "because – as TPG conced[ed] – to acquire Unlimited ADSL2+ for $29.99 per month a consumer is also obliged to rent a home telephone line from TPG and to pay an additional $30 per month for it."14 9 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,686 [29]. 10 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,686 [31]. 11 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,689 [54]. 12 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,689 [55]. 13 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,692 [78], 44,693 [82], 44,693 [84], 44,693 [87], 44,694 [90], 14 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,689 [56]. Crennan Bell His Honour observed that the bundling condition operated to15: "double the headline advertised monthly charge which is likely to make it much less attractive for some consumers. For many consumers it will involve the acquisition of a service extra to the broadband service that they are interested in acquiring. For many young people that no longer use landline telephones and rely instead on mobile telephones, the additional landline telephone rental is likely to be a service that they do not want." In these circumstances, the primary judge concluded that the information about TPG's bundling condition needed to be "quite clear and prominent if it [was] to correct the misleading impression of the message."16 His Honour found that the initial and revised television advertisements did not meet this requirement, and made findings to similar effect in relation to the initial and radio advertisements, newspaper and other print advertisements and internet advertisements, as well as in relation to the revised public transport, billboard and noticeboard advertisements17. revised As to the revised brochure advertisements, the primary judge accepted that consumers would read the brochure more carefully than a newspaper so that any misleading impression created by the headline offer in relation to the price of the ADSL2+ service was likely to be corrected by the balance of the information18. The setup condition The primary judge accepted that setup fees are always charged for broadband contracts for less than 24 months, and that the consumers targeted by 15 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,690 [62]. 16 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,690 [62]. 17 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,691 [73], 44,693 [82], 44,693 [84], 44,693 [87], 44,694 [90], 18 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,695 [99]. Crennan Bell the campaign would be aware of this fact. Nevertheless, his Honour held that because the dominant message gave the impression that there would be no further charges, it was necessary for the advertisements to qualify clearly that message with an indication of the requirement of a further fee19. In relation to the initial television, radio, newspaper and internet advertisements, the primary judge found that none of them was sufficiently clear as to the requirement of the setup fee20. Consequently, his Honour held, in relation to these advertisements, that a consumer would likely conclude that no further fee was required by TPG21. With respect to the revised campaign, the the revised radio primary advertisement, provided information regarding the setup fee that was sufficiently clear to correct what would otherwise have been a misleading message22. As to the revised radio advertisement, his Honour held that many consumers hearing it were likely to have seen or heard one or other of TPG's advertisements and to be aware of the existence of the setup fee as a result23. that all advertisements, except judge found Section 53C(1)(c) The primary judge also concluded that the single price of $509.89 was not displayed in a prominent way, within the meaning of s 53C(1)(c) of the TPA, in the initial television, newspaper and internet advertisements24. The ACCC had made no complaint in this regard in relation to any of the revised advertisements. 19 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,695 [100]. 20 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,695 [102], 44,696 [105], 44,696 [106], 44,696 [109]. 21 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,696 [104], 44,696 [105], 44,696 [108], 44,696 [109]. 22 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,696-44,697 [110]-[111]. 23 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,696 [110]. 24 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,700 [138]. Crennan Bell Penalty In a separate judgment, the primary judge made orders for injunctions, pecuniary penalties, corrective advertising, the implementation by TPG of a compliance program and costs25. The only one of these orders presently in controversy relates to the quantum of the pecuniary penalties imposed on TPG. His Honour ordered that TPG pay a total penalty of $2 million made up as follows26: "Conduct Penalty First phase advertisements Television Radio Internet Print Subtotal Second phase advertisements Television and cinema Radio Internet Print Outdoor Subtotal 25 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) (2012) ATPR ¶42-402. 26 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) (2012) ATPR ¶42-402 at 45,604-45,605 [141]. Crennan Bell Total: The conclusions of the Full Court The Full Court (Jacobson, Bennett and Gilmour JJ) was not persuaded that the primary judge was wrong in his conclusion that the initial television advertisement was misleading27. Further, the Full Court held that the primary judge's conclusions in relation to s 53C(1)(c) revealed no appealable error28. On the other hand, the Full Court held that the revised television advertisement, initial and revised radio advertisements, initial and revised newspaper advertisements, initial and revised online advertisements and public transport advertisements were not misleading29. Their Honours proceeded to that determination on the footing that they were in as good a position as the primary judge to determine the proper factual findings to be made in relation to each of the advertisements, and were required to give effect to their conclusion in that regard30. The Full Court did not reject the primary judge's conclusions in relation to the misleading character of the advertisements simply on the basis of a different impression of the facts of the case or the inferences properly to be drawn from those facts31. Close examination of the Full Court's reasons shows that their Honours' conclusion reflected differences in point of principle with the approach taken by the primary judge. It is necessary to identify those points of divergence and to note their influence on the conclusions of the Full Court before proceeding to a discussion of the reasons for upholding the approach of the primary judge. 27 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 290 [112]. 28 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 291-292 [125]-[133]. 29 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 290 [113], 290 [115], 290 [117]-[118], 291 [119], 291 [122], 291 30 Fox v Percy (2003) 214 CLR 118 at 126-127 [25]; [2003] HCA 22; Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at 435-436 [24]-[27]. 31 Warren v Coombes (1979) 142 CLR 531 at 553; [1979] HCA 9. Crennan Bell Differences in approach The Full Court acknowledged that it was not in dispute that "a percentage of the target audience is likely to have a lower level of interest in broadband internet bundled with a home telephone line", and that it was agreed that "the percentage of consumers with a fixed home telephone line has been falling since 2005, particularly amongst 18-24 year olds living away from home."32 The Full Court differed from the primary judge in relation to his Honour's view that the "dominant message" of the advertisements was of critical importance in determining whether they were to be characterised as misleading. In that regard, the Full Court treated as decisive33 the statement of principle of Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd34 that: "where the conduct complained of consists of words it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words." Their Honours observed that35: "consumers to whom the advertisements were directed must … be taken to have some familiarity with the market for the provision of broadband services. In particular, they would know that services such as ADSL2+ are offered for sale as either 'bundled' or 'stand alone'." The Full Court brought this statement of principle and their Honours' 32 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 289 [99]. 33 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 286 [79]. 34 (1982) 149 CLR 191 at 199; [1982] HCA 44. 35 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 288 [98]. 36 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 289 [105]. Crennan Bell "to approach the question as one based solely upon the 'dominant message' does not take into account the need to have regard to the attributes of the hypothetical reader or viewer. As we have said, these attributes include knowledge of the 'bundling' method of sale commonly employed with this type of service, as well as knowledge that set-up charges are often applied." The Full Court's approach was also informed by the statement of Gibbs CJ in Puxu37 that "[t]he heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests." Paraphrasing this statement, the Full Court said "[t]he legislation does not operate for the benefit of those who fail to take care of their own interests"38. What was said in Puxu and adopted by the Full Court reflects a similar observation in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd39 that s 52 of the TPA (and now s 18 of the ACL): "does not impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence." Whether speaking of representations to the public at large or in negotiations between parties of equal bargaining power and competence, the quoted observations in Puxu and Miller go to the characterisation of conduct as misleading or deceptive. Conduct is misleading or deceptive, or likely to mislead or deceive, if it has a tendency to lead into error. That is to say there must be a sufficient causal link between the conduct and error on the part of persons exposed to it40. It is in that sense that it can be said that the prohibitions in s 52 and s 18 were not enacted for the benefit of people who failed to take reasonable care of their own interests. 37 (1982) 149 CLR 191 at 199. 38 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 290 [110]. 39 (2010) 241 CLR 357 at 371 [22] per French CJ and Kiefel J; [2010] HCA 31. 40 Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193 at Crennan Bell The effect of these differences of approach upon the conclusion of the Full Court can be seen in the following passage in the reasons of the Full Court41: "The primary judge answered the critical question by finding that the dominant message in each of the relevant advertisements was that the reader or viewer could acquire ADSL2+ for $29.99 per month without incurring an obligation to acquire any additional service or to pay any further charges. On that approach, the ordinary or reasonable reader would be misled unless the misleading dominant message was corrected by a sufficiently clear and prominent statement which prevented the inaccurate dominant message from being misleading, or likely to mislead or deceive. In our respectful view, that was not the correct approach to adopt when considering the advertisements. It is true … that many persons will only absorb the general thrust. But this is not a mandate for ignoring the rule that the whole of the advertisement must be considered in its full context." It is to be noted that, in this passage, their Honours accepted that "many persons will only absorb the general thrust" of the advertisements. That view of the tendency and effect of the advertisements was in accord with the conclusion of the primary judge. The Full Court reached the conclusion that TPG's advertisements were not misleading via a view of principle which differed from that of the primary judge, and which should not have been of decisive application, given their Honours' view as to the tendency and effect of the advertisements. The divergence in point of principle between the primary judge and the Full Court can also be seen in the following passage42: "It seems to us that the primary judge's emphasis on the 'dominant message' led him into error. The authorities which have considered advertisements containing a misleading 'primary' or 'dominant' statement do not depart from the overarching rule that it is necessary to look at the 41 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 289 [101]-[103]. 42 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 289 [104]-[105]. Crennan Bell whole of the advertisement. Also, in those cases, the primary statement was flagrantly misleading when read in light of the inconspicuous fine print. Moreover, to approach the question as one based solely upon the 'dominant message' does not take into account the need to have regard to the attributes of the hypothetical reader or viewer. As we have said, these attributes include knowledge of the 'bundling' method of sale commonly employed with this type of service, as well as knowledge that set-up charges are often applied." As it happens, their Honours had not previously, in the course of their reasons, said that the attributes of the hypothetical reader or viewer included "knowledge that set-up charges are often applied." More importantly, however, their Honours went on to explain that they reached a different conclusion from the primary judge as to the character of the advertisements by reference to their view that the primary judge had erred in point of principle. The Full Court said43: "This is the prism through which the critical question of the overall impact of the commercials on the ordinary and reasonable consumer must be considered. It produces a different answer to that reached by the primary judge in almost all of the advertisements because the consumer must be taken to have read or viewed the advertisements with knowledge of the commercial practices of bundling and set-up charges." The Full Court, viewing the case through its different "prism", concluded in relation to the particular advertisements that each of the revised television advertisement, the initial and revised radio advertisements, the initial and revised print advertisements, the initial and revised online advertisements and the public transport advertisements was not misleading. In this regard, their Honours concluded that the advertisements were not misleading because the bundling condition could not be missed except by "perfunctory" viewing or listening; and, alternatively, because an ordinary and reasonable viewer or listener would know 43 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 289 [106]. Crennan Bell that "services may be offered as a 'bundle'" and, in the case of the revised television advertisement, that setup charges are often required44. The approach of the primary judge was correct First, the Full Court erred in holding that the primary judge was wrong to regard the "dominant message" of the advertisements as of crucial importance: neither of the statements of Gibbs CJ in Puxu which the Full Court applied was decisive in the circumstances of this case. Secondly, the Full Court erred in failing to appreciate that the tendency of TPG's advertisements to mislead was not neutralised by the Full Court's attribution of knowledge to members of the target audience that ADSL2+ services may be offered as a "bundle". Puxu Puxu was a case in which the claim of misleading conduct rested "solely on the fact that the appellant sold goods which were virtually identical in appearance to those sold by the respondent."45 The case was determined on the basis that potential purchasers of furniture costing substantial sums of money were able to inspect the furniture which was on display in the retailer's showroom46. The majority of the Court took the view that purchasers would, acting reasonably, pay attention to the label, brand or mark of the suite they were minded to buy and, as a result, would not be misled by similarities in the getup of rival products47. It was in this context that the observations of Gibbs CJ cited above should be understood. This case is in stark contrast to Puxu in three respects. First, TPG's target audience did not consist of potential purchasers focused on the subject matter of their purchase in the calm of the showroom to which they had come with a substantial purchase in mind. Here, the advertisements were an unbidden 44 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 290-291 [113]-[124]. 45 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 46 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 47 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at Crennan Bell intrusion on the consciousness of the target audience. The intrusion will not always be welcome. The very function of the advertisements was to arrest the attention of the target audience. But while the attention of the audience might have been arrested, it cannot have been expected to pay close attention to the advertisement; certainly not the attention focused on viewing and listening to the advertisements by the judges obliged to scrutinise them for the purposes of these proceedings. In such circumstances, the Full Court rightly recognised that "many persons will only absorb the general thrust."48 That being so, the attention given to the advertisement by an ordinary and reasonable person may well be "perfunctory", without being equated with a failure on the part of the members of the target audience to take reasonable care of their own interests. Secondly, the Full Court did not recognise that the tendency of the advertisements to mislead was to be determined, not by asking whether they were apt to induce consumers to enter into contracts with TPG, but by asking whether they were apt to bring them into negotiation with TPG rather than with one of its competitors on the basis of an erroneous belief engendered by the general thrust of TPG's message. It might be said, as TPG did, that consumers, acting reasonably in their own interest, could be expected to obtain a clear understanding of their rights and obligations before signing up with TPG; but to say that is to confuse the question whether the consumer has suffered loss with the anterior question as to whether the advertisement, viewed as a whole, has a tendency to lead a consumer into error. Thus, in Campbell v Backoffice Investments Pty Ltd49 French CJ noted that the question of characterisation as to whether conduct is misleading is "logically anterior to the question whether a person has suffered loss or damage thereby". that characterisation of conduct "generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error"50. As observed earlier in these reasons, questions of carelessness by consumers in viewing advertisements may be relevant to that question of characterisation. It has long been recognised that a contravention of s 52 of the TPA may occur, not only when a contract has been concluded under the influence of a 48 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 289 [103]. 49 (2009) 238 CLR 304 at 318 [24]; [2009] HCA 25. 50 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 319 [25]. Crennan Bell misleading advertisement, but also at the point where members of the target audience have been enticed into "the marketing web" by an erroneous belief engendered by an advertiser, even if the consumer may come to appreciate the true position before a transaction is concluded51. That those consumers who signed up for TPG's package of services could be expected to understand fully the nature of their obligations to TPG by the time they actually became its customers is no answer to the question whether the advertisements were misleading. Thirdly, this is not a case where the tendency of TPG's advertisements to lead consumers into error arose because the target audience might be disposed, independently of TPG's conduct, to attend closely to some words of the advertisement and ignore the balance. The tendency of TPG's advertisements to lead consumers into error arose because the advertisements themselves selected some words for emphasis and relegated the balance to relative obscurity. To acknowledge, as the Full Court did52, that "many persons will only absorb the general thrust" is to recognise the effectiveness of the selective presentation of information by TPG. The Full Court erred in failing to appreciate the implication of that finding. It was common ground that when a court is concerned to ascertain the mental impression created by a number of representations conveyed by one communication, it is wrong to attempt to analyse the separate effect of each representation53. But in this case, the advertisements were presented to accentuate the attractive aspect of TPG's invitation relative to the conditions which were less attractive to potential customers. That consumers might absorb only the general thrust or dominant message was not a consequence of selective attention or an unexpected want of sceptical vigilance on their part; rather, it was In these an unremarkable consequence of TPG's advertising strategy. 51 Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326 at 338-339; SAP Australia Pty Ltd v Sapient Australia Pty Ltd (1999) 169 ALR 1 at 14 [51]; Australian Competition and Consumer Commission v Commonwealth Bank of Australia (2003) 133 FCR 149 at 171-172 [47]. See also Bridge Stockbrokers Ltd v Bridges (1984) 4 FCR 460 at 475. 52 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 289 [103]. 53 Arnison v Smith (1889) 41 Ch D 348 at 369; Gould v Vaggelas (1985) 157 CLR 215 at 252; [1985] HCA 68; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199, 210-211. Crennan Bell circumstances, the primary judge was correct to attribute significance to the "dominant message" presented by TPG's advertisements. The knowledge base of the target audience It may be accepted that if the hypothetical reasonable consumer is taken to know that ADSL2+ services may be sold as part of a bundle with telephony services, then, if he or she brings that knowledge to bear in a conscious scrutiny of the terms of TPG's offer, he or she might be less likely to form the impression that the offer was of an ADSL2+ service available without a requirement to take and pay for an additional service from TPG. But the circumstance that many consumers might know that ADSL2+ services are commonly offered as a "bundle" was not apt to defuse the tendency of the advertisements to mislead, especially where the target audience is left only with the general thrust or dominant message after the evanescence of the advertisement. As the primary judge said, the vice of TPG's advertisements was that they required "consumers to find their way through to the truth past advertising stratagems which have the effect of misleading or being likely to mislead them."54 Given TPG's strategy, the primary judge was entitled to draw the inference that consumers might be enticed to enter into negotiation with TPG without appreciating that TPG's services were, in fact, being offered only as a "bundle". It is pertinent to note again that "many persons will only absorb the general thrust" and that the question is not whether consumers suffered loss by signing up to a contract to accept and pay for TPG's service55. It has long been recognised that, where a representation is made in terms apt to create a particular mental impression in the representee, and is intended to do so, it may properly be inferred that it has had that effect56. Such an inference may be drawn more readily where the business of the representor is to make such 54 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,697 [116]. 55 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 351-352 [142]- 56 Gould v Vaggelas (1985) 157 CLR 215 at 219, 237-238, 250-252, 262; Australian Guarantee Corporation Ltd v Sydney Guarantee Corporation Ltd (1951) 51 SR (NSW) 166 at 170-171; Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1988) 84 ALR 437 at 445; Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (1996) 66 FCR 451 at 466. Crennan Bell representations and where the representor's business benefits from creating such an impression. To say this is not to say that TPG acted with an intention to mislead or deceive: such an intention is not an element of the contravention charged against TPG, and there was no suggestion of such an intention in the ACCC's case. There can be no dispute, however, that TPG did intend to create an impression favourable to its offer in the mind of potential consumers; and that it did intend to emphasise the most attractive component of its offer in order to do so. It cannot be denied that the terms of the message and the manner in which it was conveyed were such that the impression TPG intended to create was distinctly not that which would have been produced by an advertisement which gave equal prominence to all the elements of the package it was offering to the public. In this regard, it is significant that, as the primary judge noted, TPG considered deploying just such an advertisement and chose not to adopt it, evidently opting to continue with its headline strategy57. It was not open to the Full Court, in the proper exercise of its appellate function, to hold that TPG's advertisements were not misleading. Penalty As the findings of the primary judge in relation to TPG's contraventions of the TPA and the ACL are to be reinstated, the primary judge's assessment of penalty should also be restored. The Full Court expressed the view that, even if the primary judge's findings in relation to TPG's contraventions were sustained, the penalty imposed by his Honour was "outside the appropriate range of penalties"58. We disagree. In this regard, three broad observations may be made to indicate that the penalty fixed by the primary judge was within the appropriate range. Number of contraventions The primary judge assessed the pecuniary penalty on the basis that there were nine classes of contraventions based upon the four different types of the 57 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR ¶42-383 at 44,691 [69]. 58 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 292 [136]. Crennan Bell initial advertisements and the five different types of the revised advertisements. The Full Court held that this approach was in error on the basis that there were "three different messages … (i) the 'no bundling condition', (ii) the no set-up fee in the initial advertisements, and (iii) the failure to prominently display the single price in the initial advertisements."59 that, given The Full Court considered the advertisements across the range of media was broadly the same, there were only three categories of contravention60. This led the Full Court to begin at a starting point where the total maximum penalty was not $9.9 million but $3.3 million61. The Full Court erred in this regard in failing to recognise that the primary judge was entitled to have regard to the circumstance that TPG pursued its "three different messages" by the deployment of different media. the content of that The s 87B undertaking In 2009 TPG gave the ACCC an undertaking under s 87B of the TPA. In that undertaking TPG acknowledged that it might have contravened the TPA by its conduct and undertook not to engage in misleading and deceptive conduct generally. The primary judge took this undertaking into account in assessing the pecuniary penalty to be imposed on TPG in respect of the contraventions which he had found. The Full Court held that his Honour erred in this regard on the basis that "[t]he existence of the undertaking, where the facts underlying the undertaking were never proved and no breach was ever alleged, was not a relevant circumstance."62 The Full Court erred in failing to appreciate the relevance of the undertaking in relation to the claims of personal deterrence upon the sentencing 59 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 294-295 [148]-[152]. 60 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 295 [150]-[151]. 61 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 295 [155]. 62 TPG Internet Pty Ltd v Australian Competition and Consumer Commission (2012) 210 FCR 277 at 296 [159]. Crennan Bell discretion. The fact that the undertaking had not been sufficient to secure TPG's adherence to the requirements of the TPA indicated that a more severe penalty was necessary to accomplish the task of securing that adherence. In Singtel Optus Pty Ltd v Australian Competition and Consumer Commission63, it was rightly said by the Full Court of the Federal Court that the court, in fixing a penalty, must "make[] it clear to [the contravener], and to the market, that the cost of courting a risk of contravention … cannot be regarded as [an] acceptable cost of doing business." Deterrence General and specific deterrence must play a primary role in assessing the appropriate penalty in cases of calculated contravention of legislation where commercial profit is the driver of the contravening conduct. TPG's campaign was conducted over approximately 13 months at a cost to TPG of $8.9 million64. It generated revenue of approximately $59 million, and an estimated profit of $8 million65. TPG's customer base grew from 9,000 to 107,000 during this period, although it cannot be said that this was at the expense of TPG's competitors. The pecuniary penalty fixed by the primary judge did not exceed that which might reasonably be thought appropriate to serve as a real deterrent both to TPG and to its competitors. As was said in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission, the penalty for contravention of the TPA66: "must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business. … [T]hose engaged in trade and commerce must be deterred from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention." 63 (2012) 287 ALR 249 at 266 [68]. 64 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) (2012) ATPR ¶42-402 at 45,596 [79]-[80]. 65 Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2) (2012) ATPR ¶42-402 at 45,601 [117]-[119]. 66 (2012) 287 ALR 249 at 265 [62]-[63]. Crennan Bell It was submitted on TPG's behalf that the matter should now be referred back to the Full Court because it had not dealt with aspects of TPG's appeal to it. That submission is without foundation. There is nothing in the reasons of the Full Court to suggest that it had not finally disposed of the matter before it, and TPG has not sought to maintain the orders of the Full Court on any basis other than that determined by the Full Court. Orders The appeal should be allowed. Ordinarily, it would follow that the orders made by the Full Court of 4 April 2013 should be set aside and in their place the appeal to the Full Court should be dismissed, with the consequence that the orders of the primary judge would be reinstated. But the ACCC accepted that, with the passage of time and TPG's refraining from engaging in further contraventions, it is not necessary to reinstate the injunctions, corrective advertising and compliance programs ordered by the primary judge. Accordingly, pars 1, 2, 3, 4, 5 and 6 of the orders made by the Full Court on 4 April 2013 should be set aside along with par 1 of its orders of 20 December 2012, TPG's appeal to the Full Court dismissed, and the orders of the primary judge of 15 June 2012 reinstated, save that those orders be varied by deleting paragraphs 4, 9 and 10. TPG should pay the ACCC's costs of and incidental to the appeal to the Full Court and of the application for special leave and of the appeal to this Court. I regret that I am unable to concur in the reasons for judgment of the majority. My inability to concur is not because I disagree with the statements of legal principle set out in those reasons. It is because I cannot read the reasons for judgment of the Full Court of the Federal Court as having ignored them. The question whether TPG's advertisements were likely to lead the ordinary and reasonable consumer or potential consumer of broadband internet services into error is ultimately a question of fact. The Full Court correctly recognised that it was in as good a position as the primary judge to reach its own conclusion on that question. The Full Court correctly recognised that it was therefore obliged in the appeal to do just that. The question the Full Court was obliged to determine for itself fell to be addressed against the following background. DSL broadband internet services, which have been supplied widely in Australia since 2003, are delivered over copper wires of the kind used to deliver home telephone services. By the time TPG launched its advertising campaign in 2010, DSL broadband internet services had for some years been marketed widely, had often been marketed bundled with home telephone line rental, and commonly had a setup fee. Until recently, it had not been possible to acquire DSL broadband internet services without actually having a home telephone service. Against that background, the essential difference between the Full Court and the primary judge concerned the level of sophistication each attributed to the ordinary and reasonable consumer or potential consumer of broadband internet services during the period of TPG's advertising campaign in 2010 and 2011. The Full Court considered that an ordinary consumer of broadband internet services who was sufficiently aware of DSL broadband internet services potentially to be misled by those advertisements would also be aware that DSL broadband internet services were often bundled with home telephone line rental and commonly had a setup fee. The consumer would not form an impression, merely from a headline reference to "Unlimited ADSL2+ $29.99 per month", that what was being advertised was a stand-alone DSL service for a stand-alone price of $29.99 per month. The consumer would look to the whole of the advertisement in the first place. Looking to the whole of the advertisement, the consumer would form an impression as to whether the headlined DSL service was or was not being bundled with home telephone line rental and did or did not have a setup fee. The question, as the Full Court saw it, was therefore not whether the fine print of an advertisement was sufficient to dispel a "dominant message" conveyed by its headline. The question was whether the ordinary and reasonable consumer or potential consumer of broadband internet services, looking with an open mind to the whole of the advertisement, would be likely in fact to have formed an impression that what was being advertised was a stand-alone DSL broadband internet service for a stand-alone price of $29.99 per month. In my opinion, the Full Court made no error of principle in framing the ultimate question of fact that way and it was open to the Full Court to answer that question in the way it did: yes for the initial television advertisements; but no for the other advertisements. The Full Court did not, as the ACCC sought to advance, err in the exercise of its appellate function. What TPG was offering in each advertisement was a bundle of services for six months comprising: unlimited DSL broadband internet services for $29.99 per month; home telephone line rental for $30.00 per month and a once- off setup fee of $129.95. The Full Court concluded that the ordinary and reasonable consumer, aware that the headlined DSL service might or might not be bundled with home telephone line rental and might or might not have a setup fee, and looking to the whole of the advertisement, would not be likely to have been led by the headline reference to unlimited DSL broadband internet services into thinking that what was being advertised was less than the bundle comprising all three components. In so concluding, the Full Court brought to its analysis of the home telephone line rental component essentially the same form of analysis as the primary judge brought to the setup component. The advertisements the Full Court found to be non-contravening all expressly referred to the home telephone line rental component in the words "when bundled with TPG Line Rental $30 pm" which followed (with less prominence) the words "Unlimited ADSL2+ $29.99 per month". The only reference to the setup component, where reference was made at all in those advertisements, was buried in the words "includes deposit and setup fees" which followed (with much less prominence) the words "min charge $509.89". Telling also in favour of the Full Court's conclusion that the hypothetical ordinary and reasonable consumer would not be likely to have been misled (although obviously not determinative of that conclusion) was the dearth of evidence of any actual consumer being misled by any advertisement, even to the point of doing no more than contacting TPG to make an inquiry, despite TPG's advertisements having run nationally for a period of some 13 months. Nothing for present purposes can, in my opinion, be made of TPG's choice to adopt a headline strategy in the advertisements, and to maintain that strategy in the face of ACCC opposition. Some other background facts are here important. TPG's pricing of two components of the bundle was unremarkable: TPG's competitors routinely charged $29.95 per month as the basic monthly access fee for a standard telephone service and between $80 and $200 for setup. The range of charges for basic telephone services had by 2010 been static for several years. The supply of DSL services, on the other hand, was hotly contested, with suppliers differentiating their services based on speed, usage quotas, period and price. The TPG offering was significant as being one of the first to have unlimited downloads. Within that market context, TPG understandably focussed its advertisements on the component of its bundle which differentiated its services from those of its competitors and which TPG considered would be most attractive to consumers: unlimited downloads for $29.99 per month. It does not follow that TPG thereby intended to, was likely to, or did, lead consumers into error as to the existence of the other components. Given my view on contravention, my conclusions on penalty can be stated quite briefly. In circumstances where the Full Court overturned findings of fact by the primary judge which impacted on the extent of TPG's contravening conduct, the Full Court was obliged to go on to determine the appropriate penalty for itself. That is what the Full Court did in its separate and subsequent judgment on penalty, delivered nearly ten months after the primary judge had ordered, amongst other things, injunctions and corrective advertising. The Full Court did not ignore the importance of deterrence. The Full Court treated the remaining contraventions as serious. The Full Court nevertheless took into account the impact on TPG of the decision of the primary judge, including being required to write to customers telling them it had engaged in misleading and deceptive conduct and being forced immediately to terminate its advertising campaign, which the Full Court itself found not to breach the Act. I can see no error of principle in the Full Court's reasoning and cannot regard the size of the penalty it imposed as manifestly inadequate. I would dismiss the appeal.

HIGH COURT OF AUSTRALIA THE QUEEN AND APPELLANT RESPONDENT The Queen v Baden-Clay [2016] HCA 35 31 August 2016 ORDER Appeal allowed. Set aside orders 1 and 2 of the Court of Appeal of the Supreme Court of Queensland made on 8 December 2015, and in their place order that the appeal to that Court be dismissed. On appeal from the Supreme Court of Queensland Representation W Sofronoff QC with D C Boyle and S J Hedge for the appellant (instructed by Director of Public Prosecutions (Qld)) M J Byrne QC with M J Copley QC for the respondent (instructed by Peter Shields Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Queen v Baden-Clay Criminal law – Criminal liability – Where respondent's wife disappeared and body later found – Where respondent involved in sexual affair with another woman – Where some injuries to respondent's cheek likely caused by fingernails – Where respondent gave evidence at trial denying involvement in killing wife and disposing of body – Where jury convicted respondent of murder – Where Court of Appeal held hypothesis of unintentional killing not excluded by prosecution and substituted verdict of manslaughter – Where common ground on appeal that respondent killed his wife – Whether hypothesis consistent with jury's verdict innocence of murder open – Whether unreasonable – Whether jury entitled to be satisfied beyond reasonable doubt that respondent acted with intent to kill or cause grievous bodily harm when he killed his wife. Words and phrases – "circumstantial evidence", "hypothesis consistent with innocence", "intention", "intractably neutral", "lies", "motive", "post-offence conduct", "role of the jury", "unreasonable verdict", "whole of the evidence". Criminal Code (Q), s 668E(1). FRENCH CJ, KIEFEL, BELL, KEANE AND GORDON JJ. On 15 July 2014, following a trial in the Supreme Court of Queensland before Byrne SJA and a the murder of his wife, found guilty of jury, respondent was the The respondent appealed against his conviction to the Court of Appeal of the Supreme Court of Queensland on the ground that the jury's verdict was unreasonable. The Court of Appeal (Holmes CJ, Fraser and Gotterson JJA) allowed the appeal on that ground, set aside the respondent's conviction on the charge of murder, and substituted a verdict of manslaughter. The Court of Appeal held that, although it was open to the jury to find that the respondent had killed his wife, the evidence did not allow the jury to be satisfied beyond reasonable doubt that the respondent intended either to kill her, or to cause her grievous bodily harm. In particular, the Court of Appeal accepted the respondent's submission, made for the first time on appeal, that the prosecution had not excluded the hypothesis that the respondent had struck his wife in the course of a struggle and that she had died as the result of a fall, or in some other manner, that did not involve an intent on his part either to kill her or to cause her grievous bodily harm. On the appeal to this Court, the Crown contended that it was open to the jury, having regard to all the evidence, to be satisfied beyond reasonable doubt that the respondent killed his wife with intent to kill her or to cause her grievous bodily harm. That contention should be accepted. The respondent gave evidence at his trial. He denied that he had fought with his wife, killed her and disposed of her body. The respondent's evidence did not support the hypothesis held by the Court of Appeal to be consistent with the respondent's innocence on the charge of murder. The hypothesis on which the Court of Appeal acted was not available on the evidence; and so the Court of Appeal was wrong to conclude that it was unreasonable for the jury to find on the whole of the evidence that the deceased's death at the respondent's hands was intentional1. The appeal should be allowed and the verdict of guilty of murder restored. 1 M v The Queen (1994) 181 CLR 487 at 493-494; [1994] HCA 63; MFA v The Queen (2002) 213 CLR 606 at 614-615 [25], 623 [55]-[56]; [2002] HCA 53. Bell Gordon The evidence at trial The respondent gave evidence that he, his wife and their three daughters were at home on the night of 19 April 2012. He said that he went to bed at about 10 pm, leaving his wife, who was watching television, in the living room. He awoke just after 6 am on 20 April 2012. His wife was not at home, but she often went for an early morning walk. That morning, he was responsible for getting the children ready for school and taking them there. He was "under the pump a little bit" and was "rushing that morning". He said he cut himself shaving. The respondent phoned and sent text messages to his wife, but there was no response. He also called his parents to tell them that he did not know where his wife was. He went driving around the suburb looking for her. At 7.15 am he called 000 to report her missing. The police arrived at the respondent's home at 8 am. The respondent was asked whether he and his wife were estranged; he denied it. He was asked whether there was an "indication that the marriage is going to break up" and he answered "Um I hope not." He went on to say that he "had an affair … that ended last year." The deceased's body was found on 30 April 2012 under a bridge on a bank of Kholo Creek, some 13 kilometres from her home. The forensic evidence Dr Nathan Milne, the forensic pathologist who conducted the post-mortem examination of the deceased's body, was unable to determine the cause of death because of the significant level of decomposition of the body, but in his opinion, the deceased did not die of natural causes. There were no definite injuries found which might have suggested the use of a weapon. It may be noted that there was no evidence of a skull fracture. Dr Milne estimated that the time of death was consistent with the last time she was seen alive 11 days earlier. There were no signs suggestive of drowning. Dr Milne said that if the deceased had fallen from the bridge onto the ground, significant injuries would have been expected, but acknowledged that if she fell into the water, there may not be detectable injuries. Although the deceased did at various times suffer from depression, for which she was prescribed medication, Professor Olaf Drummer, a forensic Bell Gordon pharmacologist and toxicologist, concluded that consumption of drugs did not contribute to her death. In addition, none of the medical practitioners or psychologists who had treated her held any concerns that she was suicidal. Leaves found on the body were from trees of six species that grew at the respondent and his wife's home; four of these did not grow at the site at which the body was found. The respondent and his wife's eldest child thought that her mother was wearing a "sloppy jacket" and pyjama pants at the time the deceased was watching television. The deceased's body was found clothed in three-quarter length pants, socks, sneakers and a singlet top which had a bra built into it. Blood matching the deceased's DNA profile was found in the rear section of her car, which had only been acquired in February 2012. Tests on the respondent's mobile phone showed that it had been placed on a charger, adjacent to the side of the bed on which he slept, at 1.48 am, at a time when he claimed he was asleep. The respondent's injuries Three experts gave evidence that there were two categories of injuries to the respondent's right cheek. Their evidence was that it was most likely that fingernails caused one set of scratches and it was implausible that those scratches had been caused by a shaving razor. The second set of marks appeared to be different. They were fresher, and were consistent with having been caused by a razor "particularly if moved from side to side as it was drawn from front to back or back to front across the face." There were also injuries to the respondent's torso which were examined by doctors in connection with the proceedings, but these injuries were not relied upon by the prosecution. The respondent's relationship with Ms McHugh The respondent had been involved in a sexual affair with another woman, Ms Toni McHugh, since August 2008. The affair with Ms McHugh began when she commenced working for the respondent's real estate agency and continued until a friend informed the respondent's wife in September 2011. The respondent then ceased the affair and Ms McHugh left his employ. The affair recommenced at the respondent's instigation in December 2011. Bell Gordon Ms McHugh gave evidence that, during the course of the affair, the respondent told her that he had no relationship with his wife, that he did not love his wife, that he loved Ms McHugh, and that one day he wanted to come to her "unconditionally". On the last occasion Ms McHugh and the respondent met before the deceased's disappearance, she said that she needed to know what was going to happen with respect to their relationship. The respondent told her that he would be out of his marriage by 1 July. He confirmed this promise in writing less than three weeks before the deceased's disappearance. Ms McHugh gave evidence that she and the respondent had discussed their living arrangements between December 2011 and April 2012, and that although the respondent was willing to "entertain" such discussions, "[h]e never really got practical about anything." Ms McHugh, referring to the 1 July deadline the respondent had set, said: "I thought he's just pulling a number out of thin air. In actual fact, I just didn't believe it. I didn't believe it at all." On 20 April 2012, Ms McHugh was to attend a real estate conference. In the late afternoon of 19 April 2012, she phoned the respondent to talk about the conference. The respondent told her that two of his staff members were going to attend. Ms McHugh inferred that one of the attendees would be the respondent's wife. Ms McHugh became upset, and told the respondent that he needed to tell his wife about their relationship and that it was unfair to both her and his wife for them to be in the same room together. His response was that he was thinking of selling the business and that he would do that after he had left his wife. Ms McHugh said that she believed that the respondent was "taking more of a stand" and that "something was going to be different this time". As noted above, on the morning of 20 April, the respondent admitted to police that he had had an affair, but told the police that it had ended. The respondent told police that he and his wife had seen a counsellor the previous Monday, who had suggested that 15 minutes be set aside each night for his wife to "vent and grill" the respondent about his affair (which she thought had ended). The respondent said that he and his wife had had a 15 minute session the previous night and that there were "some difficult things that we talked about". The respondent also said that their financial situation was "pretty tight". Ms McHugh gave evidence that she attended the conference on 20 April. She called the respondent at lunchtime to ask him where his wife was. He told her that his wife was missing. On that day, he told her that they "need to not ... communicate and lay low." Bell Gordon On 21 April, the respondent called Ms McHugh and told her that police would want to speak to her and that she should tell the truth. While she was with police, he called her again and told her just to answer "yes" or "no". He asked her whether she had told the police that they were together again, and she replied "yes". The call ended. Ms McHugh and the respondent met one further time, when the respondent told her that she "would have to fall in love with someone else" and that "things weren't going to be looking good for him." In his evidence, the respondent admitted that he had told Ms McHugh that he loved her and that he had undertaken to leave his wife by 1 July. However, he said that he had never loved her and merely did that to "placate" her. He admitted that he told her that he did not love his wife, but insisted that he actually did. For the sake of completeness, it may be noted that the respondent was experiencing financial difficulties at the time of his wife's death; but the prosecution disavowed any suggestion that the respondent was motivated to kill his wife in order to obtain the proceeds of a policy of insurance on her life. It is unnecessary to say any more about this aspect of the matter. The issue of intent at trial The Crown case At trial, the Crown did not seek to suggest that the respondent had premeditated, that is to say planned, the killing of his wife. The Crown case was put on the basis that on the night of 19 April 2012, the respondent was confronted by the consequences of his conduct, which included the long-term tension in his relationship with his wife, the tension in his relationship with Ms McHugh, his discussions with Ms McHugh on the late afternoon of 19 April, and the prospect of his ongoing relationship with Ms McHugh being exposed to his wife at the conference which was to be held on the following day, and of his wife being unwilling to forgive him a second time. In these circumstances, he became involved in an altercation in which he killed his wife with the intention of doing so or of causing her grievous bodily harm. The respondent's case The defence case at trial included a suggestion that the respondent's wife may have taken her own life in a fall from the bridge over Kholo Creek or by drowning. The forensic evidence noted above provided a compelling answer to this suggestion. The jury were entitled to reject as fanciful the suggestion that Bell Gordon the deceased had somehow made her way over the 13 kilometres from her home in order to do away with herself by throwing herself off the bridge into Kholo Creek. Other possible causes of death suggested on behalf of the respondent such as alcohol or drug toxicity could similarly be rejected by the jury in light of the expert evidence adduced at trial. The respondent's evidence was that he had nothing to do with his wife's death. In particular, he denied that he fought with her on the evening of 19 April or the morning of 20 April. He denied that he left his children alone in the house to go to the Kholo Creek bridge. He denied that he took any steps to dispose of his wife's body. There was some discussion at trial as to the basis on which a verdict of manslaughter should be left to the jury as an alternative to murder. In answer to the trial judge's question: "What is the reasonable hypothesis consistent with an absence of an intention to kill?", counsel for the respondent replied: "That, on the prosecution case, death was occasioned unintentionally." His Honour responded: "But there are no fractures of the head." Counsel agreed with that observation, and in response to the trial judge's further remark: "So there's no suggestion that she's fallen and hit her head on bricks or cement", counsel answered: "No." Later, prior to the trial judge's summing up, his Honour canvassed with counsel for the respondent the possibility of a direction that the defence contended in the alternative that the conduct in question did not tend to prove an intentional killing. Counsel for the respondent said the problem with that was "it's not our contention". On this footing and without objection from the respondent, the hypothesis which the Court of Appeal held to be available to the respondent was not put before the jury. The alternative verdict of manslaughter was left to the jury because the Crown bore the onus of proving that the respondent acted with intent to kill or to cause grievous bodily harm. The Court of Appeal The respondent appealed against his conviction pursuant to s 668E(1) of the Criminal Code (Q) on the ground that the verdict was unreasonable2. 2 The respondent also appealed on two grounds concerning the adequacy of the trial judge's summing up to the jury. The Court of Appeal rejected those grounds. They were not in issue in this Court. Bell Gordon The Court of Appeal, in allowing the respondent's appeal on the ground that the verdict was unreasonable, identified the "critical question" as whether it was open to the jury to conclude that the respondent intended to cause the deceased's death, or at least cause her grievous bodily harm3, and held that "there was no evidence of motive in the sense of a reason to kill"4. Their Honours said5: "To explain why somebody might be in a volatile emotional state is not to provide a motive for his conduct … The evidence of financial stress and the extra-marital affair suggested a context of strain between the couple which might well have culminated in a confrontation; but it did not provide a motive or point to murder rather than manslaughter." Their Honours also said6: "There is nothing about the facial scratches to indicate the circumstances in which they were inflicted; whether they occurred in the course of a heated and perhaps physical argument or in resisting a murderous attack." In relation to the disposition of the case by the Court of Appeal, it is as well not to attempt to paraphrase their Honours' reasons. As to the respondent's evidence that he had no involvement at all in the death of his wife, their Honours "The jury could properly have rejected every word [the respondent] said as a lie. But that would, with the exception of his explanation of the scratches on his face, have done nothing to advance the Crown case. Conclusions that he had lied in that regard and that he had taken steps to dispose of his wife's body were properly to be taken into account, as evidence of a consciousness of guilt, in the context of all the evidence in the case. But the lies, or the lies taken in combination with the disposal of the body, would not enable the jury to draw an inference of intent to kill or 3 R v Baden-Clay [2015] QCA 265 at [41]. 4 R v Baden-Clay [2015] QCA 265 at [46]. 5 R v Baden-Clay [2015] QCA 265 at [42]. 6 R v Baden-Clay [2015] QCA 265 at [43]. 7 R v Baden-Clay [2015] QCA 265 at [45] (footnote omitted). Bell Gordon do grievous bodily harm if there were, after consideration of all the evidence, equally open a possibility that all of that conduct was engaged in through a consciousness of a lesser offence; in this case, manslaughter." The Court of Appeal went on to hold that the evidence of the respondent's post-offence conduct, including his lies, was indeed "intractably neutral" as to whether his wife's homicide was intended or not and that there was a reasonable hypothesis consistent with innocence of murder which the jury could not, acting reasonably, reject8. Their Honours explained9: "[W]hile findings that [the respondent] lied about the cause of his facial injuries and had endeavoured to conceal his wife's body should not be separated out from the other evidence in considering their effect, the difficulty is that, viewed in that way, the post-offence conduct evidence nonetheless remained neutral on the issue of intent. To put it another way, there remained in this case a reasonable hypothesis consistent with innocence of murder: that there was a physical confrontation between [the respondent] and his wife in which he delivered a blow which killed her (for example, by the effects of a fall hitting her head against a hard surface) without intending to cause serious harm; and, in a state of panic and knowing that he had unlawfully killed her, he took her body to Kholo Creek in the hope that it would be washed away, while lying about the causes of the marks on his face which suggested conflict." The Crown's submissions The Crown submitted that the trial was conducted by both prosecution and defence as a case of murder or nothing. The Crown submitted that, although manslaughter was left to the jury because the prosecution bore the onus of proving intent to kill or cause grievous bodily harm, no factual hypotheses relating to a possible verdict of manslaughter by the respondent rather than murder by him were raised by the defence. In particular, there was no evidence to support the hypothesis of "a blow" or "a fall hitting her head against a hard surface" in the course of an altercation between the respondent and the deceased; indeed, the respondent's evidence excluded that possibility. It was said that the absence of an evidentiary foundation for the factual hypothesis posed by the Court of Appeal meant that it was incapable of constituting a reasonable 8 R v Baden-Clay [2015] QCA 265 at [47]. 9 R v Baden-Clay [2015] QCA 265 at [48]. Bell Gordon hypothesis which might have caused the jury to entertain a doubt as to whether the killing had been accompanied by an intent to kill or cause grievous bodily harm. The Crown also argued that the evidence of the relationship between the respondent, Ms McHugh and his wife, and the possible imminent meeting between Ms McHugh and his wife at the real estate conference, together with Ms McHugh's demands to decide whether to leave his wife, and his wife's recriminations in the course of her "venting and grilling" on the evening of 19 April, was evidence from which a jury might reasonably infer the formation of an intention to kill or to cause grievous bodily harm at the time on the night of 19 April 2012 when the respondent killed his wife. The Crown argued further that the respondent's post-offence conduct, including his lies, was capable of giving rise to an inference of guilt of murder. On the evidence, the jury could reasonably conclude that, having killed his wife, the respondent immediately engaged in a deliberate and calculated series of actions to shroud his involvement in her death and to deny to police any knowledge of his motive to kill her, and that these post-offence actions were those of a person who had intentionally killed his wife10 rather than a panicked reaction by a man who had unintentionally caused her death. The respondent's submissions The respondent submitted that, as the case for murder depended entirely upon circumstantial evidence and the onus of proof of murderous intent was always upon the Crown, the jury could not return a verdict of guilty. The respondent submitted that a hypothesis consistent with innocence of murder was open on the evidence. That was the hypothesis identified by the Court of Appeal11: a physical confrontation between the respondent and his wife during which he delivered a blow to the wife which killed her without intending to cause serious harm, after which he took the body to Kholo Creek in a state of panic and knowledge that he had unlawfully killed her, in the hope that the body would be washed away. 10 See R v Heyes (2006) 12 VR 401 at 405 [9]; cf R v McClutchie [2015] QCA 120 at 11 R v Baden-Clay [2015] QCA 265 at [48]. Bell Gordon The respondent submitted that the Court of Appeal was right to proceed on the basis that motive to kill, in the sense of a settled desire to kill the deceased, was not relied upon by the prosecution at trial. In this regard, the respondent cited Glanville Williams in relation to the concept of "motive"12: "The word 'motive' has two related meanings. (1) It sometimes refers to the emotion prompting an act, eg, 'D killed P, his wife's lover, from a motive of jealousy.' (2) It sometimes means a kind of intention, eg, 'D killed P with the motive (intention, desire) of stopping him from paying attentions to D's wife.' In the second sense, which is the one in which the term is used in criminal law, motive is ulterior intention – the intention with which an intentional act is done (or, more clearly, the intention with which an intentional consequence is brought about). Intention, when distinguished from motive, relates to the means, motive to the end; yet the end may be the means to another end, and the word 'intention' is appropriate to such medial end." The respondent argued that, to the extent that "motive" was relied upon by the prosecution, it was used in the first sense rather than the second, so that the Court of Appeal did not err in putting aside evidence of the respondent's volatile emotional state as evidence of murder rather than manslaughter13. The respondent submitted that, while the Court of Appeal held that the respondent's lies concerning his affair with Ms McHugh, the scratches to his face, and the steps taken by him to dispose of the body were "properly to be taken into account as evidence of a consciousness of guilt, in the context of all the evidence in the case"14, that evidence was neutral on the question of whether the respondent was guilty of murder or manslaughter. It was said that the Court of Appeal properly concluded from the totality of the evidence that the hypothesis of guilt of an unintentional unlawful killing was open. 12 Glanville Williams, Criminal Law: The General Part, 2nd ed (1961) at 48 (footnote omitted). See also R v Hyam [1975] AC 55 at 73. 13 R v Baden-Clay [2015] QCA 265 at [44]. 14 R v Baden-Clay [2015] QCA 265 at [45]. Bell Gordon Hypothesis consistent with innocence The prosecution case against the respondent was circumstantial. The principles concerning cases that turn upon circumstantial evidence are well settled15. In Barca v The Queen16, Gibbs, Stephen and Mason JJ said: "When the case against an accused person rests substantially upon circumstantial evidence the jury cannot return a verdict of guilty unless the circumstances are 'such as to be inconsistent with any reasonable hypothesis other than the guilt of the accused': Peacock v The King17. To enable a jury to be satisfied beyond reasonable doubt of the guilt of the accused it is necessary not only that his guilt should be a rational inference but that it should be 'the only rational inference that the circumstances would enable them to draw': Plomp v The Queen18; see also Thomas v The Queen19." For an inference to be reasonable, it "must rest upon something more than mere conjecture. The bare possibility of innocence should not prevent a jury from finding the prisoner guilty, if the inference of guilt is the only inference open to reasonable men upon a consideration of all the facts in evidence"20 (emphasis added). Further, "in considering a circumstantial case, all of the circumstances established by the evidence are to be considered and weighed in deciding whether there is an inference consistent with innocence reasonably open 15 Barca v The Queen (1975) 133 CLR 82 at 104; [1975] HCA 42. 16 (1975) 133 CLR 82 at 104; [1975] HCA 42. 17 (1911) 13 CLR 619 at 634; [1911] HCA 66. 18 (1963) 110 CLR 234 at 252; [1963] HCA 44. 19 (1960) 102 CLR 584 at 605-606; [1960] HCA 2. 20 Peacock v The King (1911) 13 CLR 619 at 661, quoted in Barca v The Queen (1975) 133 CLR 82 at 104. Bell Gordon on the evidence"21 (emphasis added). The evidence is not to be looked at in a piecemeal fashion, at trial or on appeal22. Further, a criminal trial is accusatorial but also adversarial. Subject to well-defined exceptions, "parties are bound by the conduct of their counsel, who exercise a wide discretion in deciding what issues to contest, what witnesses to call, what evidence to lead or to seek to have excluded, and what lines of argument to pursue."23 Approach of the Court of Appeal The onus of proof of murder, including proof of the respondent's intention to kill or cause grievous bodily harm, was always upon the prosecution. It is common ground that the jury rejected (and were entitled to reject) beyond reasonable doubt the respondent's hypotheses that his wife had taken her own life or had died of alcohol or drug toxicity. The Court of Appeal's reasoning proceeded on the assumption that there could be no reasonable doubt that the respondent killed his wife. Given the unchallenged conclusion that the respondent was the agent of his wife's death, the compelling inference is that he was the last person to see his wife alive and was the only person who knew the circumstances of her death. That inference did not, of course, diminish the overall burden on the prosecution of proving beyond reasonable doubt all elements of the offence of murder with which the respondent was charged. In the case of circumstantial evidence, the prosecution's burden requires it to exclude all reasonable hypotheses consistent with innocence. However, where an accused person with knowledge of the facts is silent, then as was said in Weissensteiner v The Queen24: 21 R v Hillier (2007) 228 CLR 618 at 637 [46]; [2007] HCA 13 (footnote omitted). 22 R v Hillier (2007) 228 CLR 618 at 638 [48]. See also Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 535; [1984] HCA 7. 23 Nudd v The Queen (2006) 80 ALJR 614 at 618 [9]; 225 ALR 161 at 164; [2006] HCA 9. See also Ratten v The Queen (1974) 131 CLR 510 at 517; [1974] HCA 35; Doggett v The Queen (2001) 208 CLR 343 at 346 [1]; [2001] HCA 46. 24 (1993) 178 CLR 217 at 227-228 per Mason CJ, Deane and Dawson JJ; [1993] HCA 65. Bell Gordon "in a criminal trial, hypotheses consistent with innocence may cease to be rational or reasonable in the absence of evidence to support them when that evidence, if it exists at all, must be within the knowledge of the accused." its context, as explained That passage was quoted with approval in RPS v The Queen25. The significance to be attached to what was said in Weissensteiner must be in Azzopardi v The Queen26. understood Weissensteiner was not simply a case in which the accused failed to contradict direct evidence of other witnesses. It was a case in which, if there were facts which explained or contradicted the evidence against the accused, they were facts which were within the knowledge only of the accused and thus could not be the subject of evidence from any other person or source. In any event, this is not a case where the accused remained silent. It is a case where the accused gave evidence. The present case is stronger for the prosecution than the Crown case in Weissensteiner because here the respondent gave evidence, which not only did not support the scenario hypothesised by the Court of Appeal, but was inconsistent with that scenario. The respondent's evidence was that he had nothing to do with the circumstances in which his wife was killed. On his evidence he simply was not present when her death occurred; and he could not have been the unintentional cause of her death. The Court of Appeal considered that there was a reasonable hypothesis that the respondent was guilty of manslaughter, but was not guilty of murder, because he did not have the requisite intention to kill his wife or cause her grievous bodily harm. That hypothesis was27: "that there was a physical confrontation between the appellant and his wife in which he delivered a blow which killed her (for example, by the effects of a fall hitting her head against a hard surface) without intending to cause serious harm; and, in a state of panic and knowing that he had unlawfully killed her, he took her body to Kholo Creek in the hope that it 25 (2000) 199 CLR 620 at 633 [27], 641 [54], see also at 654-655 [104]; [2000] HCA 26 (2001) 205 CLR 50 at 73 [61]; [2001] HCA 25. 27 R v Baden-Clay [2015] QCA 265 at [48]. Bell Gordon would be washed away, while lying about the causes of the marks on his face which suggested conflict." The evidence given in the present case by the respondent narrowed the range of hypotheses reasonably available upon the evidence as to the circumstances of the death of the respondent's wife. Not only did the respondent not give evidence which might have raised the hypothesis on which the Court of Appeal acted, the evidence he gave was capable of excluding that hypothesis. The Court of Appeal's conclusion to the contrary was not based on evidence. It was mere speculation or conjecture rather than acknowledgment of a hypothesis available on the evidence. In this case, there was no evidence led at trial that suggested that the respondent killed his wife in a physical confrontation without intending to kill her. There were "no positive proved facts from which the inference" drawn by the Court of Appeal could be made28. There was no evidence at trial of any injury to the wife's body that might have killed her. Due to the decomposition of the body, the precise cause of her death remains unknown. There was a probable bruise on the internal lining of the left front of the chest wall, but it was unclear whether it occurred pre- or post-mortem. If it was a bruise, the evidence was that it was the result of a "mild force injury" because there were no underlying rib fractures. There was a chipped tooth but no signs of trauma to the teeth or the hard tissues of the jaw. Not only were there no fractures to the head, which might have suggested the wife had fallen and hit her head on a hard surface (as in the example given by the Court of Appeal), there were no other fractures on the body. Counsel for the respondent sought to rely upon Knight v The Queen29 to support the approach of the Court of Appeal. In that case, Mason CJ, Dawson and Toohey JJ held that the hypothesis that an accused charged with murder did not fire a shot which hit the complainant with intent to kill so as to sustain a charge of attempted murder was open on all the evidence in the case, notwithstanding that the jury were entitled to disbelieve the accused's evidence that he was not aware of cocking and discharging the rifle which fired the shot that wounded the complainant. But that was not a case where the only evidence which raised the hypothesis consistent with an absence of intention to kill came from the accused. In Knight, the prosecution had conceded that another shot 28 See Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152 at 169-170. 29 (1992) 175 CLR 495; [1992] HCA 56. Bell Gordon fired shortly before the shot which wounded the complainant had not been fired with intent to kill the person wounded by it; the second shot was fired in a continuation of the same struggle in the course of which the first shot was fired. In addition, the absence of a trigger guard meant that the rifle could easily have been fired as a consequence of the struggle rather than as the result of a conscious application of pressure to the trigger30. In the present case, by contrast, the only evidence which actually related to the hypothesis on which the respondent sought to rely was evidence which was inconsistent with that hypothesis. The Court of Appeal appears31 to have reasoned that the respondent's evidence could be disbelieved by the jury, as it plainly was, so that there was no evidence at all in relation to the hypothesis. If it were truly the case that there was no evidence from the respondent as to the circumstances of his wife's death, the application of the principles explained in Weissensteiner would have required consideration; and they were not adverted to by the Court of Appeal. But the respondent chose to give evidence. To say that the respondent's evidence was disbelieved does not mean that his evidence could reasonably be disregarded altogether as having no bearing on the availability of hypotheses consistent with the respondent's innocence of murder. His evidence was important, even if it was disbelieved, because it was open to the jury to consider that the hypothesis identified by the Court of Appeal was not a reasonable inference from the evidence when the only witness who could have given evidence to support the hypothesis gave evidence which necessarily excluded it as a possibility. The Court of Appeal should not have treated the case as one in which it was open to it to identify a hypothesis as to the circumstances of the death of the deceased on the basis that the respondent's evidence could be disregarded as if it had not been given at all. There remains another difficulty with the Court of Appeal's approach. The Court of Appeal's hypothesis was never put to the jury by the respondent's counsel, either directly or indirectly. The hypothesis was contrary to, and excluded by, the case that the respondent put to the jury. That statement requires explanation. 30 (1992) 175 CLR 495 at 504. 31 R v Baden-Clay [2015] QCA 265 at [45]. Bell Gordon Aware that the prosecution case was circumstantial, the trial judge invited the respondent's counsel to state the reasonable hypotheses consistent with the respondent's innocence that he wished to be put as part of the summing up. The respondent's counsel provided a document listing four hypotheses to account for the death – drowning; falling from a height to her death or to cause drowning; alcohol and/or sertraline toxicity; or the effects of serotonin syndrome, which led to her drowning or falling from a height to her death. None of these hypotheses raised manslaughter – none of them involved the respondent playing any part in the death of his wife. In his closing address, the respondent's counsel told the jury there were two possibilities – the respondent murdered his wife or, as the respondent had told the jury in evidence, he expected his wife to walk back in the door or be found, having slipped over or hurt herself. The respondent's counsel agreed with the trial judge that that approach was a "considered tactical position". Further, in an exchange with the trial judge, the respondent's counsel accepted there was "no suggestion that [the wife had] fallen and hit her head on bricks or cement" because there were "no fractures of the head". It may readily be accepted that "it is not incumbent on the defence either to establish that some inference other than that of guilt should reasonably be drawn from the evidence or to prove particular facts that would tend to support such an inference."32 That proposition merely reflects that it remains for the prosecution to prove the accused's guilt of an offence beyond reasonable doubt33. And it does not detract from, and is consistent with, the further proposition that a "trial judge must be astute to secure for the accused a fair trial according to law."34 A trial judge must adequately direct the jury "both as to the law and the possible use of the relevant facts upon any matter upon which the jury could in the circumstances of the case upon the material before them find or base a verdict in whole or in part"35; the trial judge is under a "duty to put to the jury with adequate assistance any matters on which the jury, upon the evidence, could find 32 Barca v The Queen (1975) 133 CLR 82 at 105. 33 Knight v The Queen (1992) 175 CLR 495 at 502. 34 Pemble v The Queen (1971) 124 CLR 107 at 117; [1971] HCA 20. 35 Pemble v The Queen (1971) 124 CLR 107 at 117-118. Bell Gordon for the accused"36 (emphasis added). No complaint is made in this Court that the directions given to the jury were inadequate. The directions "put fairly before the jury the case which the accused" made37. The trial judge left manslaughter to the jury and put to them the four hypotheses identified by defence counsel. But it is quite another matter, as occurred on appeal to the Court of Appeal and again to this Court, to contend for a hypothesis which was not put to the jury for tactical reasons, which is directly contrary to evidence of the respondent at trial, which is directly contrary to the way in which the respondent's counsel conducted the defence and which, in response to direct questions from the trial judge, was expressly rejected by the respondent's counsel. The issues and available lines of argument to be pursued were narrowed by the way the case was conducted at trial. That is commonplace. But it cannot be ignored. The hypothesis identified by the Court of Appeal was not open. Once that hypothesis is rejected, no other hypothesis consistent with guilt of manslaughter, but innocence of murder, has ever been identified at trial, before the Court of Appeal or in this Court. This conclusion is sufficient to require that the appeal be allowed and the respondent's conviction for murder restored. It is necessary, however, to explain why the jury were entitled reasonably to regard the whole of the evidence as satisfying them beyond reasonable doubt that the respondent acted with intent to kill or cause grievous bodily harm when he killed his wife and so reject the alternative verdict of manslaughter in favour of murder. The whole of the evidence The role of the jury It is fundamental to our system of criminal justice in relation to allegations of serious crimes tried by jury that the jury is "the constitutional tribunal for deciding issues of fact."38 Given the central place of the jury trial in the 36 Pemble v The Queen (1971) 124 CLR 107 at 118. See also James v The Queen (2014) 253 CLR 475 at 481 [10]; [2014] HCA 6. 37 RPS v The Queen (2000) 199 CLR 620 at 637 [41]. 38 Hocking v Bell (1945) 71 CLR 430 at 440; [1945] HCA 16. See also Brennan v The King (1936) 55 CLR 253 at 266; [1936] HCA 24; Sparre v The King (1942) 66 CLR 149 at 154; [1942] HCA 19; Keeley v Mr Justice Brooking (1979) 143 CLR 162 at 188; [1979] HCA 28; Chamberlain v The Queen [No 2] (1984) 153 CLR (Footnote continues on next page) Bell Gordon administration of criminal justice over the centuries, and the abiding importance of the role of the jury as representative of the community in that respect39, the setting aside of a jury's verdict on the ground that it is "unreasonable" within the meaning of s 668E(1) of the Criminal Code is a serious step, not to be taken without particular regard to the advantage enjoyed by the jury over a court of appeal which has not seen or heard the witnesses called at trial40. Further, the boundaries of reasonableness within which the jury's function is to be performed should not be narrowed in a hard and fast way by the considerations expressed in the passages from the reasons of the Court of Appeal explaining its disposition of the appeal. With those considerations in mind, a court of criminal appeal is not to substitute trial by an appeal court for trial by jury. Where there is an appeal against conviction on the ground that the verdict was unreasonable, the ultimate question for the appeal court "must always be whether the [appeal] court thinks that upon the whole of the evidence it was open to the jury to be satisfied beyond reasonable doubt that the accused was guilty."41 Motive As to the respondent's reliance upon Glanville Williams' discussion of the concept of motive, it should be noted that Glanville Williams himself considered that the difference between the two senses in which he described the concept was "merely terminological"42. This terminological difference should not be allowed 521 at 601; MacKenzie v The Queen (1996) 190 CLR 348 at 365; [1996] HCA 35; MFA v The Queen (2002) 213 CLR 606 at 621 [48]. 39 Kingswell v The Queen (1985) 159 CLR 264 at 301; [1985] HCA 72; Brown v The Queen (1986) 160 CLR 171 at 201; [1986] HCA 11; Katsuno v The Queen (1999) 199 CLR 40 at 63-64 [49]; [1999] HCA 50; Cheng v The Queen (2000) 203 CLR 248 at 277-278 [80]; [2000] HCA 53; Alqudsi v The Queen (2016) 90 ALJR 711 at 715 [2], 718 [16], 753 [195]; 332 ALR 20 at 22, 26, 73; [2016] HCA 24. 40 M v The Queen (1994) 181 CLR 487 at 494; MFA v The Queen (2002) 213 CLR 41 M v The Queen (1994) 181 CLR 487 at 494-495. See also R v Hillier (2007) 228 CLR 618 at 630 [20] and the authorities cited. 42 Glanville Williams, Criminal Law: The General Part, 2nd ed (1961) at 48 fn 1. Bell Gordon to obscure the undeniable relevance to the task of the jury of evidence of "[t]he relations of the murdered ... [person] to his [or her] assailant, so far as they may reasonably be treated as explanatory of the conduct of the accused as charged in the indictment"43. In the present case, it was for the jury to determine whether, in a physical confrontation on the night of 19 April 2012, the respondent formed the intention to kill his wife because he suddenly found intolerable the consequences of his years of deception, including his wife's recriminations in the course of her "venting and grilling", and the prospects of her discovery of his ongoing infidelity and deception. The respondent had told Ms McHugh that he would be free from his wife by 1 July; and he was aware that both women were planning to attend the same real estate conference on 20 April. It was for the jury to determine the likely effect upon his mind of the difficulties in which he found himself when he took her life. It was not unreasonable for the jury to conclude, on the whole of the evidence, that it tested credulity too far to suggest that his evident desire to be rid of his wife was fortuitously fulfilled by her unintended death. So, in Plomp v The Queen44, this Court rejected the contention that the jury had unreasonably convicted a man of murdering his wife by contriving to drown her in the surf in some unknown manner. The death occurred in circumstances in which the accused had expressed a wish to be free of his wife. Dixon CJ, with whom Kitto, Taylor and "[I]t appears to me that if the jury weighed all the circumstances they might reasonably conclude that it would put an incredible strain on human experience if Plomp's evident desire to get rid of his wife at that particular 43 R v Bond [1906] 2 KB 389 at 401, cited with approval in Wilson v The Queen (1970) 123 CLR 334 at 343-344 by Menzies J, with whom McTiernan and Walsh JJ agreed; [1970] HCA 17. See also Mutual Life Insurance Co of New York v Moss (1906) 4 CLR 311 at 317, 323; [1906] HCA 70; R v Plomp [1962] Qd R 161 at 175, 185-186; Lewis v The Queen [1979] 2 SCR 821 at 831; R v Heath [1991] 2 Qd R 182 at 202-203; Richardson v The Queen [2013] NSWCCA 218 at 44 (1963) 110 CLR 234. 45 (1963) 110 CLR 234 at 243. Bell Gordon juncture, presaged as it was by his talk and actions, were fulfilled by her completely fortuitous death". "Motive, if proven, is a matter from which a jury might properly infer intention"46. The Court of Appeal found that "there was no evidence of motive in the sense of a reason to kill"47. The Court of Appeal accepted that "[t]he evidence of financial stress and the extra-marital affair suggested a context of strain between the couple which might well have culminated in a confrontation" but concluded that "it did not provide a motive or point to murder rather than manslaughter."48 That was an error. The Court of Appeal appears not to have considered and weighed all of the circumstances established by the evidence at trial. For example, the Court of Appeal's conclusion does not account for the evidence that the respondent had made promises to Ms McHugh about leaving his marriage by 1 July; that the respondent could not afford to divorce his wife; and that there was a possibility that his wife and Ms McHugh would run into each other the next day and that Ms McHugh might reveal the respondent's lies about their ongoing affair. There was also evidence before the jury of post-offence concealment and lies by the respondent which was not referred to by the Court of Appeal. Post-offence concealment and lies The respondent's false denials to police about his ongoing affair, his suggestion to Ms McHugh that she should "lie low", and his enquiry of her as to whether she had revealed the affair to the police were all capable of being regarded by the jury as evidencing a strong anxiety to conceal from police the existence and true nature of his affair with Ms McHugh. This anxiety could reasonably be seen as indicative that, in his mind, the affair and the killing were inter-related, and that the killing was not an unintended, tragic death of his wife, but an intentional killing. 46 De Gruchy v The Queen (2002) 211 CLR 85 at 92 [28]; [2002] HCA 33. 47 R v Baden-Clay [2015] QCA 265 at [46]. 48 R v Baden-Clay [2015] QCA 265 at [42]. Bell Gordon In R v White49, in the Supreme Court of Canada, Major J said: "As a general rule, it will be for the jury to decide, on the basis of the evidence as a whole, whether the post-offence conduct of the accused is related to the crime before them rather than to some other culpable act. It is also within the province of the jury to consider how much weight, if any, such evidence should be accorded in the final determination of guilt or innocence. For the trial judge to interfere in that process will in most cases constitute a usurpation of the jury's exclusive fact-finding role." In R v White, Major J went on to say that there may be cases where post-offence conduct, such as the accused's flight or concealment, is so out of proportion to the level of culpability involved in a lesser offence that it might be found by the jury to be more consistent with the more serious offence charged50. There may be cases where an accused goes to such lengths to conceal the death or to distance himself or herself from it as to provide a basis on which the jury might conclude that the accused had committed an extremely serious crime and so warrant a conclusion beyond reasonable doubt as to the responsibility of the accused for the death and the concurrent existence in the accused of the intent necessary for murder51. There is no hard and fast rule that evidence of post-offence concealment and lies is always intractably neutral as between murder and manslaughter. As Major J said52: "The result will always turn on the nature of the evidence in question and its relevance to the real issue in dispute." In Lane v The Queen53, the Court of Criminal Appeal of the Supreme Court of New South Wales rejected the contention that a count of manslaughter of the accused's child should have been left to the jury as an alternative to murder. The Court held that the jury were entitled to take the post-offence conduct of the accused as evidencing consciousness of guilt of murder. In particular, the Court held that the lies told by the accused "alone were sufficient 49 [1998] 2 SCR 72 at 89 [27]. 50 [1998] 2 SCR 72 at 91 [32]. 51 R v Ciantar (2006) 16 VR 26 at 39 [38]-[40], 47 [65]-[67]; R v DAN [2007] QCA 52 [1998] 2 SCR 72 at 91 [32]. 53 (2013) 241 A Crim R 321. Bell Gordon to provide the evidentiary foundation for an inference that … she acted with the intention of killing."54 Their Honours went on to say that the false accounts given by the accused "provide no factual foundation for an inference that the manner in which she killed [her child]" would establish manslaughter by criminal negligence55. It was open to the jury, in this case, to regard the lengths to which the respondent went to conceal his wife's body and to conceal his part in her demise as beyond what was likely, as a matter of human experience, to have been engendered by a consciousness of having unintentionally killed his wife. However, even if the evidence of post-offence conduct were neutral on the issue of intent, that alone would provide no basis to conclude that the reasonable hypothesis relied upon by the Court of Appeal was open on the evidence led at trial. To so conclude is to adopt an impermissible "piecemeal" approach to that evidence. All of the circumstances established by the evidence were to be considered and weighed, not just some of them. Finally, the jury could take into account the absence of any signs that a weapon was used to cause the death of the deceased, and make their own judgment about the respondent's intention at the time, bearing in mind the difficulty involved in killing a human being without the use of a weapon unless the act of killing is driven by a real determination to cause death or grievous bodily harm. In all the circumstances of this case, other than speculating about how things might have happened, it was open to the jury rationally to conclude that the respondent killed his wife and did so with intent, at least, to cause her grievous bodily harm. Upon the whole of the evidence led at trial, it was open to the jury to be satisfied beyond reasonable doubt that the respondent was guilty of murder. Conclusion The appeal should be allowed. Orders 1 and 2 of the Court of Appeal made on 8 December 2015 should be set aside and in their place the appeal to that Court should be dismissed. 54 (2013) 241 A Crim R 321 at 349 [111]. 55 (2013) 241 A Crim R 321 at 349 [111].

HIGH COURT OF AUSTRALIA POLYAIRE PTY LTD APPELLANT AND K-AIRE PTY LTD & ORS RESPONDENTS Polyaire Pty Ltd v K-Aire Pty Ltd [2005] HCA 32 16 June 2005 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court of Australia made on 23 January 2004 and in their place order that the appeal to the Full Court is dismissed with costs. On appeal from the Federal Court of Australia Representation: D M Yates SC with B J Jenner for the appellant (instructed by Lynch Myer) D K Catterns QC with S J Goddard for the respondents (instructed by Thomson Playford) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Polyaire Pty Ltd v K-Aire Pty Ltd Intellectual property – Designs – Infringement of a registered design – Fraudulent imitation of a registered design – Where alleged infringing design sufficiently different not to be an obvious imitation – Whether fraudulent imitation requires that differences between alleged infringing design and registered design be attributable to dishonest disguise of the latter – Whether the application of a fraudulent imitation requires that alleged infringer applied design with knowledge of the existence of the registration and of absence of consent to its use, or with reason to suspect those matters. Words and phrases: "fraudulent". Designs Act 1906 (Cth), s 30(1)(a). McHUGH, GUMMOW, HAYNE, CALLINAN AND HEYDON JJ. Nearly 70 years ago, Dixon J, in his judgment in Macrae Knitting Mills Ltd v Lowes Ltd1, observed of the Designs Act 1906 (Cth) ("the Act") that it: "shows a marked economy in the statement of its principles. It does not explain what it means by the very general expressions employed. The case law, as might be expected, cannot reduce to certainty the vagueness which the legislation exhibits, but the cases do contain statements which I think afford some guidance in the application of this rather peculiar Act." The issues which arise on the present appeal bear out what Dixon J said in Macrae. The Design The appellant ("Polyaire")2 carries on from premises in South Australia business as a manufacturer and seller of air-conditioning components. Polyaire was the registered proprietor under the Act of Design No 110628 ("the Design"). The Design was registered for a period of one year commencing 21 March 1991 and the period of registration was extended thereafter3. The article in respect of which the Design was registered was stated in the Certificate of Registration as "an air conditioning outlet director part". This expression is a circumlocution for a "grille", being that part of an air-conditioning unit which directs the flow of air from the unit to the room or other area to be air-conditioned. The Certificate of Registration contains a statement of novelty. The novelty is said to result in "the arrangement of the end parts of the blades and a coupling bar interconnecting said ends at each side of a surrounding frame as illustrated in the representations". Five pages of representations are attached. (1936) 55 CLR 725 at 729. 2 Formerly named "A C Components Pty Ltd". 3 Polyaire also was registered proprietor of Design No 84267, which was registered in 1981 in respect of an "Airconditioning Air Outlet Director". There is no issue concerning this design which arises on this appeal. The litigation This appeal is brought from the judgment of the Full Court of the Federal Court (Mansfield, Emmett and Bennett JJ)4 which reversed the decision of the primary judge. In an action in the Supreme Court of South Australia, Besanko J5 found against K-Aire Pty Ltd ("K-Aire") and the other eight respondents in respect of the application of a fraudulent imitation of the Design to the articles identified in the action as exhibits P3 and P4 and as "KA1" and "KA2". Each was a grille or outlet director. After KA1 had appeared on the market and Polyaire had complained of infringement of the Design, changes were made which produced KA2. Besanko J granted declaratory and injunctive relief in respect of both KA1 and KA2. He also made orders directed to enabling Polyaire to make an election between its claim for damages and its claim for an account of profits. Counter-claims challenging the validity of the registration of the Design were dismissed. The respondents appealed (by leave) to the Full Court. The injunctive relief granted by Besanko J had been stayed pending the outcome of the appeal. The appeal succeeded on the issue of infringement and the orders of the trial judge in that respect were set aside and orders substituted dismissing the claim for infringement. The Full Court delivered its reasons in December 2003 and its orders were entered on 29 January 2004. The application for special leave to appeal to this Court was filed but, before the grant of special leave on 12 August 2004, the Act was repealed with effect from 17 June 2004 upon the commencement of certain provisions in the Designs Act 2003 (Cth) ("the New Act"). However, s 155(1) of the New Act states that, if proceedings arising from an application to a court under the repealed Act were pending immediately before the commencement of the New Act, the matter is to be decided as if the Act had not been repealed. Section 40I of the Act provided that an appeal lay to the Federal Court from a "prescribed court" (an expression including the Supreme Court of South Australia). An appeal then lay to this Court by special leave under s 33 of the Federal Court of Australia Act 1976 (Cth). The special leave application which was pending on 17 June 2004 has been accepted by the parties 4 K-Aire Pty Ltd v Polyaire Pty Ltd (2003) 60 IPR 512. 5 Polyaire Pty Ltd v K-Aire Pty Ltd (2003) 226 LSJS 109. as a proceeding "arising from" an application to a court within the meaning of s 155(1) of the New Act. There is no objection to the competency of the appeal to this Court. Nor is there any disagreement with the proposition that the issues that arise on the appeal are to be determined as if the old Act had not been repealed. The provenance of s 30 of the Act The appeal turns principally upon the construction of a phrase in par (a) of s 30(1) of the Act. That sub-section deems a person to infringe the monopoly in a registered design if, without the licence or authority of the owner, that person engages in one or more of the activities in par (a), (b) or (c). Paragraph (a) states: "applies the design or any fraudulent or obvious imitation of it to any article in respect of which the design is registered". Paragraphs (b) and (c) were introduced when s 30 was recast6 after the determination in Hella-Australia Pty Ltd v Quinton Hazell (Aust) Pty Ltd7 that, as s 30 had stood, the only infringing application of a design was one within Australia. In that case, the design had been applied to goods manufactured in Japan and then imported into Australia. Nothing turns upon the changes made in response to Hella by the addition of pars (b) and (c)8. 6 By s 3 of the Designs Act 1967 (Cth). Section 30 was subsequently amended by s 19 of the Designs Amendment Act 1981 (Cth), but no change was made to par (a) of s 30(1). [1968] 1 NSWR 235. 8 Paragraphs (b) and (c) include as infringements the following acts: imports into Australia for sale, or for use for the purposes of any trade or business, any article in respect of which the design is registered and to which the design or any fraudulent or obvious imitation of it has been applied outside Australia without the licence or authority of the person who was the owner of the registered design at the time when the design or imitation was so applied; or sells, or offers or keeps for sale, or hires, or offers or keeps for hire, any article: (Footnote continues on next page) What is significant for present purposes is that par (a) remained unchanged from the text of s 30 as enacted in 1906. Paragraph (a) in turn reflected the provisions of par (a) of s 58 of the Patents, Designs, and Trade Marks Act 1883 (UK) ("the 1883 Act")9. The 1883 Act had consolidated the untidy statute law relating to registered designs. Section 58 of the 1883 Act stated that it was not lawful "for any person without the license or written consent of the registered proprietor to apply such design or any fraudulent or obvious imitation thereof, in the class or classes of goods in which such design is registered". Section 58 was repealed by the Patents and Designs Act 1907 (UK) ("the 1907 Act")10, but was replaced by s 60 which was in terms not materially different. The 1907 Act was repealed in part by the Patents and Designs Act 1949 (UK). Section 43 of this statute departed from the 1883 Act and the 1907 Act; it conferred exclusive rights in respect of "an article to which the registered design or a design not substantially different from the registered design has been applied" (emphasis added). A registration system had been set up first by a statute of 1839 ("the 1839 Act")11. Section 3 of the 1839 Act had forbidden the doing or causing to be done of certain acts in relation to a registered design "without the Licence or Consent in Writing of the registered Proprietor thereof". Those acts were: to which the design or any fraudulent or obvious imitation of it has been applied in infringement of the monopoly in the design; or in respect of which the design is registered and to which the design or any fraudulent or obvious imitation of it has been applied outside Australia without the licence or authority of the person who was the owner of the registered design at the time when the design or imitation was so applied." 9 46 & 47 Vict c 57. 10 7 Edw VII c 29. 11 2 & 3 Vict c 17. "No Person shall use for the Purposes aforesaid, or any of them, or print or work or copy, such registered Design, or any original Part thereof, on any Article of Manufacture, for Sale: No Person shall publish, or sell or expose to Sale or Barter, or in any other Manner dispose of for Profit, any Article whereon such registered Design or any original Part thereof has been used, knowing that the Proprietor of such Design has not given his Consent to the Use thereof upon such Article: No Person shall adopt any such registered Design on any Article of Manufacture for Sale, either wholly or partially, by making any Addition to any original Part thereof, or by making any Subtraction from any original Part thereof". (emphasis added) The 1839 Act had been succeeded in 1842 by a statute ("the 1842 Act")12 which, in ss 7 and 8, dealt with remedies for piracy but which now in express terms forbad fraudulent imitation of designs13. In particular, s 7 stated: "No Person shall apply any such Design, or any fraudulent Imitation thereof for the Purpose of Sale, to the ornamenting of any Article of Manufacture, or any Substance, artificial or natural, or partly artificial and partly natural: No Person shall publish, sell, or expose for Sale any Article of Manufacture, or any Substance, to which such Design, or any fraudulent Imitation thereof, shall have been so applied, after having received, either verbally or in Writing, or otherwise from any Source other than the Proprietor of such Design, Knowledge that his Consent has not been given to such Application, or after having been served with or had left at his Premises a written Notice signed by such Proprietor or his Agent to the same Effect." (emphasis added) 12 5 & 6 Vict c 100. See Edmunds and Bentwich, The Law of Copyright in Designs, 2nd ed (1908) at 8. 13 The 1842 Act was repealed by the 1883 Act. The 1842 Act introduced (by s 9), in addition to the penal provisions for piracy, a civil remedy for damages sustained "either by the Application of any such Design or of a fraudulent Imitation thereof". It is from the texts of the 1839 Act and the 1842 Act, and then the 1883 Act and the 1907 Act with the attendant case law, that Polyaire derives the basis for its submission respecting the meaning of "fraudulent" later found in par (a) of s 30(1) of the Act. The submission, which should be accepted, is that the application of a "fraudulent imitation" requires that the application of the design be with knowledge of the existence of the registration and of the absence of consent to its use, or with reason to suspect those matters, and that the use of the design produces what is an "imitation" within the meaning of par (a). This, to apply the general principle recently exemplified in Macleod v The Queen14, is the knowledge, belief or intent which renders the conduct fraudulent15. This construction of par (a) of s 30(1) is consistent with the approach to the term "fraudulent" taken by the Full Court of the Federal Court in Turbo Tek Enterprises Inc v Sperling Enterprises Pty Ltd16. Their Honours rejected a submission that it was necessary to show that the alleged infringer had actual knowledge of the fact of registration, saying17: "Fraud is a general concept with which the law is familiar and which it well understands. It has many aspects. There is no reason to think that the legislature, when it used the words, 'fraudulent imitation', in s 30(1)(b) of the Act, intended them to have any narrow or restricted operation. There is no apparent reason why the legislature should have intended the Act to apply in a restrictive way and, even then, only when the alleged infringer had actual knowledge of the fact of registration. To take any other view would give to would-be infringers the opportunity to 14 (2003) 214 CLR 230 at 242 [37], 256 [99]-[100], 264-265 [130]. 15 See as to the permissible inference by a jury of fraud against a party who "wilfully shuts his eyes" the judgment of Lord Esher MR in English and Scottish Mercantile Investment Company Ltd v Brunton [1892] 2 QB 700 at 707-708. 16 (1989) 23 FCR 331. 17 (1989) 23 FCR 331 at 347-348. avoid the consequences of the Act by a multiplicity of expedients. Deviousness would be encouraged. Opportunism and expediency would be rewarded. What is required is a realistic and practical approach which will allow for the fact that there will be an infinite variety of circumstances and that each case will depend on its own facts." The Full Court held that it was sufficient that the alleged infringer had reason to believe or strongly suspected that an article which it had imported and marketed embodied a design that was registered, or in respect of which an application was pending18. It is unnecessary in the present appeal to decide whether the proposition respecting applications pending but not granted is correct. The authorities Polyaire relies for a statement of basic principle upon what was said by Farwell J in Dunlop Rubber Co Ltd v Golf Ball Developments Ltd19. Polyaire correctly submits that Dunlop Rubber was a case under the 1907 Act which also encapsulates much of the case law under the 1883 Act as it stood in England when the Act was enacted in Australia in 190620. Farwell J was concerned to distinguish between an obvious and a fraudulent imitation. His Lordship said21: "I think an obvious imitation is something which is very close to the original design, the resemblance to the original design being immediately apparent to the eye looking at the two. With regard to the word 'fraudulent', fraudulent I think does pre-suppose a knowledge of the registered design. I think it would be difficult for a Court to come to the conclusion that an imitation was fraudulent unless the Court was satisfied 18 (1989) 23 FCR 331 at 348. 19 (1931) 48 RPC 268. 20 Barran v Lomas (1880) 28 WR 973 at 975; Grafton v Watson (1884) 51 LT (NS) 141 at 144; Sherwood and Cotton v Decorative Art Tile Co (1887) 4 RPC 207 at 210-211. See also the judgment of Luxmoore J in Wells v Attache Case Manufacturing Co Ltd (1931) 49 RPC 113 at 120, and the collection and discussion of the authorities by Romer J in Rose v J W Pickavant and Company Ltd (1923) 40 RPC 320 at 332-333. Romer J held (at 333-334) that the defendant had applied an imitation of the plaintiff's design which, while not obvious, was fraudulent. 21 (1931) 48 RPC 268 at 279. that the registered design had been known to the author of the alleged infringing design, and further, it seems to me that 'fraudulent' imports something in the nature of making use of the registered design." Farwell J went on to say of the term "fraudulent" in this context22: "It does not necessarily import deliberate intention to steal the property of the owner of the registered design. ... [A] person may be the author of a fraudulent imitation believing perfectly honestly that he has so altered the registered design as to make them two different designs, and so far as his own mind and his own intention are concerned, he may be honest in that sense." (emphasis added) "But fraudulent imitation seems to me to be an imitation which is based upon, and deliberately based upon, the registered design, and is an imitation which may be less apparent than an obvious imitation; that is to say, you may have a more subtle distinction between the registered design and a fraudulent imitation, and yet the fraudulent imitation, although it is different in some respects from the original, and in respects which render it not obviously an imitation may yet be an imitation perceptible when the two designs are closely scanned and accordingly an infringement." Besanko J expressly adopted what had been said by Farwell J in Dunlop Rubber. Dunlop Rubber had been followed by Morton J in Lewis Falk Ltd v Henry Jacobwitz24 and by Jenkins J in W H Dean & Son Ltd v G L Howarth & Coy Ltd25. It should be added that the English cases on the 1883 Act and the 1907 Act proceeded on the basis that a defendant might be liable for applying "the design" or an "obvious imitation" without knowing of or having reason to suspect the existence of the registered design, so that any copying was, as Cotton LJ put 22 (1931) 48 RPC 268 at 279-280. 23 (1931) 48 RPC 268 at 280. 24 (1944) 61 RPC 116 at 122. 25 (1948) 66 RPC 1 at 2. it, "unconscious"26. Further, a designer who was supplied with the registered design and instructed "to make an original design for a similar article", as was the fact in J Harper and Co Ltd v The Wright and Butler Lamp Manufacturing Company Ltd27, might succeed in producing what was but an obvious imitation. That being so, there would be no reason to investigate whether, despite differences going beyond those of an obvious imitation, the defendant had procured the application of a fraudulent imitation. In Fisher & Paykel Healthcare Pty Ltd v Avion Engineering Pty Ltd28, the Full Court of the Federal Court remarked that it was a misconception to say that an issue of fraudulent imitation can arise only after it has been held that there was no obvious imitation; rather, as a practical matter, it was often preferable for a plaintiff to seek to establish a case on obvious imitation by visual comparison and without having to enter upon the question of what the defendant knew or had reason to suspect. The Court continued29: "The authorities demonstrate (in particular Malleys [Ltd v J W Tomlin Pty Ltd30]) that to support a finding of fraudulent imitation there may be greater differences between the registered design and the offending design than between the registered design and what could be held to be an obvious imitation. This is because the person who has deliberately set out to copy the registered design is presumed more readily to have achieved his object than the person who did so innocently. In this respect designs law, though having no common law base, is analogous to passing off. Nevertheless, whether the imitation is obvious or fraudulent, in the final analysis, as the decision in Malleys illustrates, the offending article must have the same fundamental or basic design as the article embodied in the registered design." 26 Grafton v Watson (1884) 51 LT (NS) 141 at 144. See also Rose v J W Pickavant & Co Ltd (1923) 40 RPC 320 at 332; Dunlop Rubber Co Ltd v Golf Ball Developments Ltd (1931) 48 RPC 268 at 279. 27 (1895) 12 RPC 483 at 489. 28 (1991) 103 ALR 239 at 248. 29 (1991) 103 ALR 239 at 248 (footnotes omitted). 30 (1961) 180 CLR 120. In the present litigation, having found no obvious imitation, it was necessary for Besanko J to decide whether there nevertheless was a fraudulent imitation. The respondents' case The respondents do not in terms seek to block the stream of authority on the 1883 Act and the 1907 Act by asserting a necessity for Polyaire to establish that the respondents had an intention to steal its property as owner of the Design. However, the respondents do contend that more was required than that which Besanko J, having adopted Dunlop Rubber, found against them. They rely upon a statement by Burchett J on the appeal in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd31, repeating what he had said in Elconnex Pty Ltd v Gerard Industries Pty Ltd32. This is to the effect that, while the copier must know or suspect that the copying will infringe the rights of another, what makes the conduct fraudulent for the operation of s 30(1)(a) of the Act is dishonest concealment of the copying in order to evade being held legally responsible for it. In the present case, the Full Court agreed with that proposition33. It held that Besanko J had fallen into error. His Honour had not found that differences between the Design and KA1 and KA2 had been omitted "in order to disguise the copying", with the result that "the finding of fraudulent imitation therefore cannot stand"34. Polyaire submits that the Full Court fell into error by limiting the meaning of "fraudulent imitation" in s 30(1)(a) to a "sub-species of case", where, in addition to meeting the criteria in Dunlop Rubber and other cases, there has been a dishonest purpose of concealment of the use of the registered design. 31 (2000) 100 FCR 90 at 112. 32 (1991) 32 FCR 491 at 503. 33 (2003) 60 IPR 512 at 524. 34 (2003) 60 IPR 512 at 524. Malleys The proposition respecting the necessity for disguise largely has been founded upon what has been perceived as the ground of the decision of this Court in Malleys Ltd v J W Tomlin Pty Ltd35. The respondents fix upon the following passage in the joint judgment of the Court, given by Taylor, Menzies and Owen JJ36: "Turning to s 30 it is apparent that there is infringement in any one of three cases – that is, where the design which has been applied is: – (i) the registered design (ii) an obvious imitation of the registered design (ie, not the same but a copy apparent to the eye notwithstanding slight differences) and (iii) a fraudulent imitation (ie, a copy with differences which are both apparent and not so slight as to be insubstantial but which have been made merely to disguise the copying). Visual comparison will establish (i) or (ii) but a finding of fraudulent imitation must require something more because in such a case visual comparison is not of itself sufficient to establish imitation; otherwise it would be an obvious imitation." (emphasis added) Point (ii) is consistent with Dunlop Rubber37 and is uncontroversial. However, a further examination of the whole of the reasons in Malleys shows that point (iii) would be accurate if the material in brackets were introduced, not by "ie", but by "eg". While a copy with differences which are apparent and not so slight as to be insubstantial but which have been made merely to disguise the copying may answer the description in s 30 of a fraudulent imitation, this state of affairs does not exhaust the scope of that description. The primary judge in Malleys, McLelland CJ in Eq, referred38 in detail to Dunlop Rubber, no doubt because both sides had accepted its authority. His Honour had been pressed by the defendant with the significance of the addition 35 (1961) 180 CLR 120. 36 (1961) 180 CLR 120 at 127. 37 (1931) 48 RPC 268 at 279-280. 38 J W Tomlin Pty Ltd v Malleys Ltd (1960) 77 WN (NSW) 723 at 728-729. to its product of a large embossed cross, after notice of the plaintiff's design. McLelland CJ in Eq said of this39: "The person responsible for the production of the defendant's design for the bottom of its pan was not called as a witness. In the above circumstances I draw the inference that the defendant based its design on the plaintiff's design and that the embossed cross was added with deliberation to make the appearance of the defendant's article different from the plaintiff's design. No explanation of why the embossed cross was added was given by any witness called on behalf of the defendant." This passage is the apparent source for the statement by this Court in Malleys40 that "in effect" the primary judge had found that the design had been "deliberately based" on the registered design, and that "such differences as there were had been adopted for the purpose of disguising this". That was not to say that, absent such "disguise", there could have been no infringement by fraudulent imitation. The primary judge had relied upon the defendant's deliberation in attempting to differentiate its design as a ground for discounting its argument that there were significant differences, sufficient to take it out of the requirement that there be an "imitation". However, this Court in Malleys went on to emphasise that the primary judge had made the finding respecting fraudulent imitation whilst not treating the J rim as an integral part of the design for the base of the toilet pans. The primary judge then had found, as this Court read his decision41, that, disregarding the J rim, the defendant had deliberately based its design upon that of the plaintiff with such differences as there were having been adopted for the purpose of disguising this deliberate taking of the design. Taylor, Menzies and Owen JJ held42 that there was a substantial difference of a material kind given the absence of the J rim, with the result that the design applied by the defendant "was not an imitation of the registered design but a different design which embodied some of the 39 (1960) 77 WN (NSW) 723 at 728. 40 (1961) 180 CLR 120 at 127. 41 J W Tomlin Pty Ltd v Malleys Ltd (1960) 77 WN (NSW) 723. 42 (1961) 180 CLR 120 at 128. features of the registered design". Their Honours added that what had been taken was not the plaintiff's design but its idea43. That approach to the issue of infringement was entirely consistent with earlier authority. A well-known example is the insistence in Dunlop Rubber that, at the end of the case, it always must be possible to say that there has been an "imitation"44. In the second edition of Edmunds and Bentwich, The Law of Copyright in Designs, which appeared in 1908, it had been said45: "A 'fraudulent imitation' is imitation with knowledge that the pattern is a registered design, and without any sufficient invention on the part of the imitator." (emphasis added) The position was correctly put by Besanko J as follows: "[E]ven if the defendant set out to copy the plaintiff's design and even if the defendant's intention in adopting the differences between the plaintiff's registered design and the accused article was to disguise the copying, there will be no fraudulent imitation unless the accused article is in fact an imitation or copy." After the decision in Malleys, consideration was given to the Act by the Designs Law Review Committee which reported in 1973 ("the Franki Committee"). The Franki Committee referred to the above passage in Malleys "We are satisfied that the broad protection afforded by section 30 is appropriate and should remove any idea that if a design is copied infringement can be avoided by attempting to disguise copying by making apparent and not insubstantial differences. We do not recommend that there should be any major amendment of it." (emphasis added) 43 (1961) 180 CLR 120 at 128. 44 (1931) 48 RPC 268 at 281-282. 46 Australia, Designs Law Review Committee, Report on the Law Relating to Designs, February 1973 at 29. This supports the reading of the passage in Malleys for which Polyaire contends. Thereafter, in Firmagroup Australia Pty Ltd v Byrne & Davidson Doors (Vic) Pty Ltd47, special leave was granted chiefly to consider the distinction between "obvious" and "fraudulent" imitations, but on further analysis at the appeal the question did not arise. It is important to keep in mind in applying par (a) of s 30(1) of the Act that the Court is concerned with a type of statutory fraud somewhat removed from fraud at common law, and the degree of moral turpitude or recklessness generally required for its establishment. The kind of fraud that the Act seeks to remedy is closer in kind to, but is still not entirely analogous with, equitable fraud, which, for its establishment, does not require that an actual intention to cheat must always be proved; proof of misconception of the extent of a person's obligation, to act or to refrain from acting in a particular way, may suffice48. The significance of "disguise" It should now be accepted that the position respecting infringement by fraudulent imitation and the significance of any "disguise" was correctly summed up as follows by Lehane J at first instance in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd49: "[T]he essential questions are, first, whether the allegedly infringing design is based on or derived from the registered design and, then, whether the differences are so substantial that the result is not to be described as an imitation. Frequently, of course, probably usually, changes will have been introduced for the purpose of disguising copying or, perhaps, because of a conscious desire to come as close as possible to the registered design while avoiding infringement. But, as this case illustrates, particular changes may be introduced for other compelling reasons; and there is no obvious reason why that should defeat a claim of fraudulent infringement." His Honour also observed in Philips50: 47 (1987) 180 CLR 483 at 489. 48 See Nocton v Lord Ashburton [1914] AC 932 at 954 per Viscount Haldane LC. 49 (1999) 91 FCR 167 at 200. 50 (1999) 91 FCR 167 at 200. "If, literally, it was a requirement of fraudulent imitation that any changes to the design be introduced merely to disguise copying, it would follow that, where there is a design based on a registered design, where the designer earnestly wishes to get as close to the registered design as possible but is, in some respect, prevented by some mechanical imperative and is forced to introduce a change on that account, the design is not a fraudulent imitation however clearly it may fall within the established tests of 'imitation'. I am not convinced that that conclusion, which does not strike me as particularly sensible, is required by authority." We turn further to consider why, consistently with what was said by Lehane J, the appeal should be allowed and the orders of Besanko J restored. It is convenient to refer first to the findings of fact by Besanko J. These have not been challenged. The findings of fact Something more should be said respecting the respondents. The third respondent, Mr R K Colebatch, was the sole director of K-Aire. He also was managing director of the second respondent ("Kemalex"). Mr Colebatch and the fourth respondent, Mr B V Benfield, were directors of the fifth and sixth respondents. Mr Benfield was a director of the seventh and eighth respondents and Mr Colebatch was sole director of the ninth respondent. At trial, Mr Colebatch, K-Aire, Kemalex and the fifth, sixth and ninth respondents were jointly represented. Mr Benfield and the seventh and eighth respondents together had other representation. In this Court, all respondents had the same representation. Mr Andrew Rogers was an industrial designer. In March 1996, Mr Colebatch asked him whether he would be interested in designing an air-conditioning outlet for Kemalex. After consulting Mr Benfield, for whom Mr Rogers had produced a design for a one-piece outlet director (known as "the china outlet"), and who did not object, Mr Rogers proceeded with discussions By 10 April 1996, a design had been agreed to with Mr Colebatch. Mr Colebatch's requirements and Kemalex placed with Mr Rogers an order for technical drawings. These were completed shortly thereafter and at about this time Mr Rogers produced a model. Besanko J found Mr Rogers an unsatisfactory witness who at times was evasive in cross-examination. His Honour found that in 1996 Mr Rogers "had reason to suspect that any outlet director produced by [Polyaire] was the subject of a registered design" and rejected his evidence to the contrary. Besanko J also found that in March 1996 Mr Rogers had in his possession one of Polyaire's outlet director parts manufactured in accordance with the Design. Further, Mr Colebatch had instructed Mr Rogers that he wanted a design which would produce a look similar to that of other products in the market, and Mr Colebatch had insisted upon two requirements which were features of the Design. An appreciation of the critical findings by Besanko J for the issue of fraudulent infringement is assisted by regard to the description of the features of the Design given by his Honour earlier in his reasons. He noted that the Design related to a "blade pack" which rests upon a cruciform section and may be rotated in different directions. Besanko J also said of the drawings attached to the Certificate of Registration: "The frame which houses the blade boxes is not shown. There are six curvilinear blades in the blade box. The curvature of the blades is such that between the leading edge and the trailing edge the blade turns almost ninety degrees (90º). The blades move in unison. They are attached to the frame of the blade box by means of a spigot or axle which protrudes from the end of the blade and which has a cap or top at the end of it. The spigot or axle is inserted into a horse-shoe shaped aperture which snaps tight after insertion. There are two slots on either side of each aperture which allow the aperture to 'deform' and then snap fit. There are two control bars on either side of the frame which are there to ensure the blades move in unison. The blades are connected to the control bar by means of an axle which is at the end of each blade and which is above the main axle." Besanko J's findings respecting fraudulent infringement were as follows: "I find that Mr Rogers in designing KA1 knowingly, consciously and deliberately based his design on [Polyaire's] outlet director part which embodied [the Design]. I make that finding having regard to a number of matters. First, Mr Rogers had an outlet director part which embodied [the Design]. [Polyaire] was a larger seller in the market and its products, including outlet director parts, were popular. I mention at this point that I am unable to accept Mr Rogers' denial that he knew that [Polyaire] was 'a large player in the market'. By 1996 he had been involved in design work for outlet directors for a number of years. He kept himself informed of the products of competitors of his client. He would have had a reasonable Secondly, appreciation of [Polyaire's] position the market. Mr Colebatch's instructions to Mr Rogers were to design a product which looked like other products in the market. Some of Mr Colebatch's specific requirements are features of [the Design]. Thirdly, there are substantial similarities between Mr Rogers' design and [the Design]. The similarities between KA1 and [the Design], particularly in relation to the snap fit mechanism, the control bars and the blade ends including the spigots, are obvious. No other outlet director part similar in respect of those features to KA1 or [the Design] was identified. The publication Mr Rogers identified is, to my mind, an unlikely source of the similarities to which I have referred. It follows that I do not accept Mr Rogers' denial that he modelled the snap fit for the main blade spigot on [Polyaire's] outlet director part. I have already identified other areas in which his evidence was unsatisfactory. His denial on this point is a further example." His Honour reminded himself of the principle (of which Malleys itself is a leading example) that a distinctly different shape or configuration might produce not an imitation but a different design51. He went on: "In my opinion, the shape and configuration of KA1 is not distinctly different from [the Design]. There are differences, the most significant of which are the absence from KA1 of the chamfered lip and the vertical ribs on the outside of the frame. However, the features of shape and configuration which give [the Design] its distinctive appearance, namely, the snap fit mechanism, the control bars and the blade ends including the spigots (despite small differences) have been copied. I find that KA1 is a fraudulent imitation of [the Design]." The respondents' criticisms of factual findings At the end of his judment in Hecla Foundry Co v Walker, Hunter and Co52, deciding that there had been an obvious imitation of the plaintiff's registered design in respect of a stove, Lord Herschell apparently rejoiced in saying53: 51 Malleys Ltd v J W Tomlin Pty Ltd (1961) 180 CLR 120 at 128. 52 (1889) 6 RPC 554. 53 (1889) 6 RPC 554 at 559. Later, in In re Wolanski's Registered Design (1953) 88 CLR 278 at 281, Kitto J, after reference to Hecla, remarked: "And I cannot say (Footnote continues on next page) "It is impossible in such a case as the present to give reasons for the opinion formed. I can only say that to me it appears, without doubt, that the door complained of is an obvious imitation of the registered design." Lord Herschell notwithstanding, the respondents subjected to extensive criticism the detailed reasons given by Besanko J in support of his finding of fraudulent imitation. Those criticisms are unjustified. Before dealing with fraudulent imitation, his Honour earlier in his reasons had dismissed the contention that there was an obvious imitation. He referred to what he considered to be a number of slight differences. His Honour then continued: "That leaves as differences between [the Design] and KA1 the steeply chamfered inner lip on the top of the frame of [the Design] and the vertical ribs on the outside of the frame of [the Design]. These features are not present in KA1." Besanko J then asked the question whether those differences were merely slight so that KA1 was an obvious imitation. He concluded that the two differences mentioned, particularly the absence of the steeply chamfered inner lip on the top of the frame were more than slight differences. The result was that there was not an obvious imitation. In dealing then with the question of fraudulent imitation, his Honour, in the passage set out above, adverted to the two features the absence of which had been determinative of his conclusion respecting obvious imitation. However, he went on to indicate that there had been copying of features giving the Design its distinctive appearance, namely the snap fit mechanism, the control bars and the blade ends including the spigots. That approach to the matter was an orthodox application of principle whereby what is not an obvious imitation may yet be a fraudulent imitation. However, the respondents then fixed upon what appeared in an earlier portion of the judgment in which Besanko J rejected the contention that the Design was invalid because it was not a new and original design. Here, his that the present case is any exception to the rule that the eye, like the heart according to Pascal, has its reasons that reason does not know." Honour included the chamfered inner lip and the vertical ribs as two of the three features which gave the Design a distinctive shape and configuration compared with the relevant prior art. That was said to cut the ground from the subsequent finding respecting fraudulent imitation where Besanko J had emphasised the copying of the snap fit mechanism, the control bars and blade ends, whilst the chamfered lip and vertical ribs were absent from KA1. However, these matters, which were so significant for the determination of fraudulent copying, had been adverted to in the first category of distinctive features compared with the prior art and, indeed, his Honour had said that it was "particularly" these which gave to the Design its distinctive shape and configuration. When the reasons are read as a whole and an appreciation is given to the different issues to which they were directed at various stages, there is no substance in the complaints made by the respondents. Conclusions For the respondents to succeed, it therefore is necessary for them to withstand the attack by Polyaire upon insistence by the Full Court upon the necessity for "disguised copying". For the reasons already given, that insistence is misplaced in law. The appeal should be allowed with costs. The orders of the Full Court should be set aside and in place thereof the appeal to that Court should be dismissed with costs.

HIGH COURT OF AUSTRALIA Matter No S22/2021 APPELLANTS AND SANDOZ PTY LTD Matter No S23/2021 RESPONDENT CNS PHARMA PTY LTD APPELLANT AND SANDOZ PTY LTD RESPONDENT H. Lundbeck A/S v Sandoz Pty Ltd CNS Pharma Pty Ltd v Sandoz Pty Ltd [2022] HCA 4 Date of Hearing: 8 October 2021 Date of Judgment: 9 March 2022 S22/2021 & S23/2021 ORDER In Matter No S22/2021: Appeal allowed with costs. Set aside orders 1, 2 and 3 made on 4 August 2020 and orders 1 and 2 made on 30 March 2021 of the Full Court of the Federal Court of Australia and, in their place, order that: the appeal and cross-appeal from the orders of the primary judge made on 19 February 2019 each be allowed in part; declare that the second respondent did not have rights to bring proceedings under s 79 of the Patents Act 1990 (Cth); orders 2 and 3 made by the primary judge on 19 February 2019 be set aside; declare that the first respondent is entitled to damages and pre- judgment interest calculated thereon; the matter be remitted to the primary judge for the recalculation of damages and pre-judgment interest payable to the first respondent; the parties be given liberty to apply to the primary judge for a stay of the remitted proceedings pending the determination of the proceedings relating to the licence granted to the appellant by the Commissioner of Patents on 11 April 2019 under s 223(9) of the Patents Act 1990 (Cth); the appellant pay the respondents' costs to date in the proceedings before the primary judge, and costs of the appeal and cross-appeal to the Full Court of the Federal Court of Australia; and the appeal and cross-appeal be otherwise dismissed. In Matter No S23/2021: Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation A J L Bannon SC with L Merrick and C I Cunliffe for the appellants in each matter (instructed by Corrs Chambers Westgarth) C Dimitriadis SC and A R Lang SC for the respondent in each matter (instructed by Clayton Utz) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS H. Lundbeck A/S v Sandoz Pty Ltd CNS Pharma Pty Ltd v Sandoz Pty Ltd Contract – Construction – Where clause in settlement agreement entered into between appellants and respondent prior to expiry of original term of patent granted respondent non-exclusive licence to exploit patent – Where clause in settlement agreement did not specify end date of non-exclusive licence – Whether non-exclusive licence applied to acts during extended term of patent. Patents – Infringement – Where term of patent extended under Patents Act 1990 (Cth) ("Act") – Where patentee and exclusive licensee brought infringement proceedings for acts done during extended term of patent – Whether exclusive licensee had rights to bring infringement proceedings under s 79 of Act for acts done during extended term of patent – Whether respondent engaged in misleading or deceptive conduct by not disclosing to customers possibility that term of patent might be extended – Construction and effect of s 79 of Act – When patentee's cause of action accrued under s 79 of Act for the purposes of s 51A(1)(a) of Federal Court of Australia Act 1976 (Cth). Words and phrases – "acts of infringement", "cause of action accrued", "commercial benefit", "exclusive licensee", "extension", "extension of the term of the patent", "grant of an extension", "infringement proceedings", "irrevocable non- exclusive licence", "misleading or deceptive conduct", "patent", "patentee's rights", "pharmaceutical substance", "term of the patent". Federal Court of Australia Act 1976 (Cth), s 51A(1)(a). Patents Act 1990 (Cth), s 79. KIEFEL CJ, GAGELER, STEWARD AND GLEESON JJ. These two appeals from decisions of the Full Court of the Federal Court (Nicholas, Yates and Beach JJ)1, each on appeal from a judgment of a single judge of that Court litigation concerning the extension under the Patents Act 1990 (Cth) ("the Act") of the term of a standard patent relating to a pharmaceutical substance known as escitalopram ("the Patent"). long-running serial instalment Escitalopram is used as a treatment for depression. Two pharmaceutical products containing escitalopram are included in the Australian Register of Therapeutic Goods ("ARTG"). One is known as "Cipramil", the other as "Lexapro". The appellants in one appeal ("the Lundbeck Appeal") are H Lundbeck A/S ("Lundbeck Denmark") and Lundbeck Australia Pty Ltd ("Lundbeck Australia"). Lundbeck Denmark, a Danish pharmaceutical company, is the owner of the Patent. Lundbeck Australia, its Australian subsidiary, holds an exclusive licence of the Patent from Lundbeck Denmark. The appellant in the other appeal ("the Pharma Appeal"), CNS Pharma Pty Ltd ("Pharma"), is a subsidiary of Lundbeck Australia which sells a generic version of Lexapro in Australia which is also manufactured by and purchased from Lundbeck Denmark. The Patent as granted to Lundbeck Denmark was dated 13 June 1989. Having a standard term of 20 years, it expired on Saturday 13 June 2009. However, on 25 June 2014 Lundbeck Denmark was granted an extension of the term to 9 December 2012. The respondent in both appeals, Sandoz Pty Ltd ("Sandoz"), is a supplier of generic pharmaceutical products. During the extended term, from Monday 15 June 2009 to 9 December 2012, Sandoz sold generic escitalopram products. On 26 June 2014, the day after the grant of the extension of the term, Lundbeck Denmark and Lundbeck Australia commenced proceedings against Sandoz in the Federal Court. Lundbeck Denmark and Lundbeck Australia claimed declaratory relief, damages and pre-judgment interest on the basis that, by selling generic escitalopram products between 15 June 2009 and 9 December 2012, Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35; Sandoz Pty Ltd v H Lundbeck A/S [No 2] [2021] FCAFC 47. 2 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408; H Lundbeck A/S v Sandoz Pty Ltd [No 2] [2019] FCA 46. Steward Gleeson Sandoz infringed the Patent. Pharma also commenced proceedings against Sandoz in the Federal Court. Being neither the patentee nor an exclusive licensee, Pharma could not commence proceedings for patent infringement. Rather, Pharma put its separate claim to declaratory relief, damages and pre-judgment interest on the basis that Sandoz also engaged in misleading or deceptive conduct within the meaning of s 52 of the Trade Practices Act 1974 (Cth) and s 18 of the Australian Consumer Law in Sch 2 to the Competition and Consumer Act 2010 (Cth), by failing to warn customers and potential customers to whom it sold its generic escitalopram products that their supply of those products might infringe the Patent if and when an extension of the term was granted. The primary judge found against Sandoz in both proceedings. Her Honour accordingly made declarations and awarded damages and pre-judgment interest to Lundbeck Denmark and Lundbeck Australia (for loss found to have been occasioned to each of them by Sandoz's infringement of the Patent) and to Pharma (for loss found to have been occasioned to it by the conduct on the part of Sandoz that her Honour found to be misleading or deceptive). The Full Court allowed Sandoz's appeals, setting aside the declarations and awards of damages and pre-judgment interest made by the primary judge, and in their place ordering the dismissal of both proceedings. The principal ground on which the Full Court allowed the appeals was that the Full Court found3, contrary to a finding of the primary judge4, that Sandoz held a non-exclusive licence from Lundbeck Australia from 31 May 2009 to 9 December 2012 through the operation of a clause ("the settlement clause") in a "Settlement Agreement" which Sandoz had entered into with Lundbeck Denmark and Lundbeck Australia in February 2007. The holding of that non-exclusive licence meant that none of Sandoz's sales between 15 June 2009 and 9 December 2012 amounted to acts of infringement. The principal ground of each appeal to this Court is that the Full Court was wrong, and the primary judge was right, in their competing constructions of the settlement clause. If that ground is upheld, as we think it should be, two further grounds arise in the Lundbeck Appeal and a further issue is raised by notice of contention in the Pharma Appeal. Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 48-51 [55]-[69]. 4 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 480-485 [275]-[303]. Steward Gleeson The first of the further grounds in the Lundbeck Appeal concerns whether Lundbeck Australia (as distinct from Lundbeck Denmark) had rights to bring proceedings in respect of acts of infringement during the extended term: the primary judge held that it did5; the Full Court considered that it did not6. The second concerns when a cause of action for damages for infringement during the extended term arose against Sandoz for the purpose of calculating pre-judgment interest: the primary judge held that the cause of action for Lundbeck Denmark arose annually from 15 June 2009 and for Lundbeck Australia arose at the time of each infringing sale7; the Full Court considered that no cause of action arose until the later grant of the extension of the term of the Patent8. In respect of both grounds, we think that the Full Court was correct. The further issue which arises by notice of contention in the Pharma Appeal is whether Sandoz's failure to warn the pharmacists to whom it sold that supply of its generic escitalopram products might infringe the Patent if and when an extension of the term was granted constituted misleading or deceptive conduct. The primary judge, as already noted, found that it did9. The Full Court did not need to address that finding given that, on its construction of the settlement clause, none of Sandoz's sales between 15 June 2009 and 9 December 2012 infringed the Patent10. Disagreeing with the primary judge, we do not consider that Sandoz's failure to warn amounted to misleading or deceptive conduct. Though the issue raised by the notice of contention in the Pharma Appeal is discrete, resolution of each of the other issues in the appeals, including the construction of the settlement clause, turns substantially on the construction and operation of provisions of the Act governing the extension of the terms of standard patents relating to pharmaceutical substances. Those provisions are best expounded, and the facts relating to the Settlement Agreement recorded, before 5 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 453-458 [173]-[195]. Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 56-63 [83]-[110]. 7 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 523 [467]-[468], 524 [472], Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 69-73 [135]-[147]. 9 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 540-544 [534]-[548]. 10 Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 73 [151]. Steward Gleeson explaining in turn: the proper construction of the settlement clause; why Lundbeck Australia had no right to bring proceedings for infringement during the extended term; why Lundbeck Denmark had no cause of action against Sandoz until the grant of the extension of the term; and why Sandoz's failure to warn did not constitute misleading or deceptive conduct. The term and extension of the term of a standard patent The Commissioner of Patents grants a standard patent for an invention by registering prescribed particulars of the patent in the Register of Patents11. The patent once granted gives to the patentee exclusive rights, during the term of the patent, both to exploit the invention (including by sale12) and to authorise another person to exploit the invention13. The term of a standard patent is 20 years from the date of the patent14. The date of the patent is the date of filing of the complete specification, which must contain a clear disclosure of the invention15, or such other date as might be provided for in regulations made under the Act16. The Act makes no provision for the extension of the term of a standard patent other than provision for the extension of the term of a standard patent relating to a pharmaceutical substance that is contained in goods included in the ARTG. Provision in that respect is made in Pt 3 of Ch 6, which was inserted by amendment in 1998 ("the 1998 Act")17, but which was relevantly modelled in part on provisions inserted into the Patents Act 1952 (Cth) ("the 1952 Act") in 1989 11 Section 61 of the Act. 12 Section 3 of the Act and Sch 1 (definition of "exploit") to the Act. 13 Section 13 of the Act. 14 Section 67 of the Act. 15 Section 40(2), (3) and (4) of the Act. 16 Section 65 of the Act. Intellectual Property Laws Amendment Act 1998 (Cth). Steward Gleeson ("the 1989 Act")18 which were carried over into the Act as enacted19 but repealed The second reading speech for the Bill for the 1998 Act described the objective of Pt 3 of Ch 6 as being "to provide an 'effective patent life' more in line with that available to inventions in other fields of technology"21. In Alphapharm Pty Ltd v H Lundbeck A/S22, Crennan, Bell and Gageler JJ noted: "The purposes of the extension of term scheme are to balance the competing interests of a patentee of a pharmaceutical substance whose exploitation of monopoly has been delayed (because of regulatory delay) and the public interest in the unrestricted use of the pharmaceutical invention (including by a competitor) after the expiration of the monopoly (that is, the term)." Section 70 allows the patentee of a standard patent relating to a pharmaceutical substance contained in goods included in the ARTG to apply to the Commissioner for a one-off extension of the term of the patent if the period between the date of the patent and the date of commencement of the first inclusion of goods containing the substance in the ARTG is five years or more23. Section 71 provides that the patentee must apply for the extension during the term of the patent and within six months after the latest of three specified dates, here within six months after the first inclusion of goods containing the substance 18 Patents Amendment Act 1989 (Cth). 19 See Div 2 of Pt 3 of Ch 6 of the Act as enacted. 20 Patents (World Trade Organization Amendments) Act 1994 (Cth). 21 Australia, House of Representatives, Parliamentary Debates (Hansard), 26 November 1997 at 11275. (2014) 254 CLR 247 at 271 [60]. 23 Section 70(1), (2)(a), (3), (4) and (5)(a) of the Act. Steward Gleeson in the ARTG24. However, in specified circumstances25, the Commissioner has discretion to extend the time for the patentee to apply for the extension26. The application must be advertised27, must be accepted by the Commissioner if satisfied that the requirements of ss 70 and 71 are met28, and may be opposed by any person on the ground that one or more of the requirements of ss 70 and 71 are not met29. Section 76 provides that the Commissioner must grant an extension of the term if there is no opposition to the grant or if, in spite of opposition, the Commissioner's decision or the decision on any appeal is that the extension should be granted30. The term of the extension so granted is spelt out in s 77 by reference to a formula (equating to how much longer than five years the first inclusion of goods containing the substance in the ARTG was after the date of the patent)31 but is capped at five years32. During the term of the extension, the exclusive rights given by the patent are limited by operation of s 78. In particular, the exclusive rights of the patentee are not infringed by a person exploiting the pharmaceutical substance for a purpose other than a therapeutic use33. The explanatory memorandum for the Bill for the 1998 Act referred to these amendments as "spring-boarding" provisions designed 24 Section 71(2)(b) of the Act. 25 Section 223(2) of the Act. 26 See Alphapharm Pty Ltd v H Lundbeck A/S (2014) 254 CLR 247. 27 Section 72 of the Act. 28 Section 74 of the Act. 29 Section 75 of the Act. 30 Section 76(1) of the Act. 31 Section 77(1) of the Act. 32 Section 77(2) of the Act. 33 Section 78(a)(i) of the Act. Steward Gleeson to allow suppliers of generic pharmaceutical products to take steps necessary to Section 79, the construction and operation of which lies at the heart of the appeals, provides: a patentee applies for an extension of the term of a standard patent; and the term of the patent expires before the application is determined; and the extension is granted; the patentee has, after the extension is granted, the same rights to start proceedings in respect of the doing of an act during the period: commencing on the expiration of the term of the patent; and ending on the day on which the extension was granted; as if the extension had been granted at the time when the act was done." The reference in s 79 to "rights to start proceedings in respect of the doing of an act" needs to be understood against the background of s 120 of the Act. Section 120 provides that "infringement proceedings" may be started in a prescribed court, or in another court having jurisdiction to hear and determine the matter, by the patentee or an exclusive licensee35. The section goes on to require the patentee to be a party in the proceedings36, to shield the patentee against costs 34 Australia, House of Representatives, Intellectual Property Laws Amendment Bill 1997, Explanatory Memorandum at 2. 35 Section 120(1) of the Act. 36 Section 120(2) of the Act. Steward Gleeson unless the patentee chooses to participate37, and to prescribe the period within which "[i]nfringement proceedings must be started"38. "Infringement proceedings" are defined in the Act to mean "proceedings for infringement of a patent"39. Yet, as noted by Kiefel CJ, Bell and Keane JJ in Calidad Pty Ltd v Seiko Epson Corporation40 and by Gummow A-CJ and Kirby J in Northern Territory v Collins41, "infringement" is left undefined, the scheme of the Act being instead to fix attention on the exclusive rights given by the patent. That is because proceedings for infringement of a patent – though regulated, augmented and explicated by Ch 11 of the Act, including through the provision of statutory remedies42 – are proceedings in tort for the doing of an act in violation of one or more legal rights in rem43 the contours of which are defined by the exclusive rights given by the patent. Section 120 assumes tortious liability on the part of a person who does an act that infringes an exclusive right to exploit the invention during the term of a patent and addresses itself to proceedings to enforce that liability. The stipulations set out in the section, including as to the court in which infringement proceedings 37 Section 120(3) of the Act. 38 Section 120(4) of the Act. 39 Section 3 of the Act and Sch 1 (definition of "infringement proceedings") to the Act. (2020) 94 ALJR 1044 at 1054 [26]; 384 ALR 577 at 584. (2008) 235 CLR 619 at 624 [20]. 42 Sections 122 and 123 of the Act. 43 Ricketson, The Law of Intellectual Property (1984) at 992 [50.37]; Independent Oil Industries Ltd v The Shell Co of Australia Ltd (1937) 37 SR (NSW) 394 at 414; General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd [1976] RPC 197 at 211-212; Collins v Northern Territory (2007) 161 FCR 549 at 559-562 [24]-[28] (a decision overturned on appeal on different grounds in Northern Territory v Collins (2008) 235 CLR 619). See also Clarke v Adie (1877) 2 App Cas 315 at 333- Steward Gleeson can be started44 and as to the period within which infringement proceedings can be started45, are procedural. Section 79, in contrast, assumes absence of tortious liability on the part of a person who has done an act of the same nature during the period between the expiration of the term of a standard patent and the grant of an extension of the term of the patent. On that assumption, the section confers on the patentee rights to start proceedings against the person in respect of the doing of the act by creating the statutory fiction – connoted by the words "as if"46 – that the extension had been granted at the time when the act was done. The rights to proceed conferred by s 79 through the operation of that statutory fiction are inherently substantive. That is because, to be equivalent to the rights to proceed that the patentee would have had in tort had the extension been granted when the act was done, the rights to proceed conferred by the section necessarily impose liability on the person by whom the act was done equivalent to the liability the person would have had in tort had the extension been granted when the act was done. The fiction created by the section enables the patentee to enforce the statutory liability created by the section by starting infringement proceedings against the person, to which s 120 then applies. As will be explained, legislative perception of the need to create that statutory fiction must be taken to reflect legislative acceptance that the grant of an extension under s 76 after the expiration of the term of the patent does not itself operate to give rise to liability in tort for an act that occurred between the date of the expiration and the date of the grant. Legislative acceptance of limitation can be seen as an that acknowledgement of the application to the power conferred by s 76 of the standard common law presumption "that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the 44 cf R v Ward (1978) 140 CLR 584 at 588-589; Kodak (Aust) Pty Ltd v The Commonwealth (1988) 22 FCR 197 at 201-202. 45 cf Minister for Home Affairs v DMA18 (2020) 95 ALJR 14 at 23-24 [31]; 385 ALR 46 cf Re Macks; Ex parte Saint (2000) 204 CLR 158 at 203 [115]. Steward Gleeson past events"47. The presumption, in other words, is "that prima facie a statute must not be construed so as to change the legal character, or the legal consequences, of past events and transactions"48. The presumption applies to the interpretation of a statute conferring power to affect rights and liabilities in the same way as it applies to the interpretation of a statute operating directly to affect rights and liabilities49. Understanding an exercise of the power conferred by s 76 to have an operation consistent with the application to the section of the standard common law presumption does no violence to the word "extension". The word is not defined in the Act and has been acknowledged in the context of patent law to have a meaning which "may well vary with the nature of the subject matter"50. Once it is accepted that "extension" in the context of Pt 3 of Ch 6 is not to be read according to its usual connotation to imply "that what is to be extended must be current or existing"51, there is no reason to regard the grant of the extension to which s 76 refers as necessarily operating to give exclusive rights that are contiguous with those given by the original grant. The construction of the section rather lends itself to being analogised to what has been said to be "trite law"52 in respect of the grant of a lease expressed to take effect from a date earlier than the date on which the lease is in fact granted: that "[t]he 'term' ... only designates the time for which it is to run, by way of calculation"53 and that "its operation as a grant [of an interest in property] is merely prospective"54. The date of expiration 47 Chang Jeeng v Nuffield (Australia) Pty Ltd (1959) 101 CLR 629 at 637-638. 48 Ku-Ring-Gai Municipal Council v Attorney-General for the State of New South Wales (1957) 99 CLR 251 at 269. 49 ADCO Constructions Pty Ltd v Goudappel (2014) 254 CLR 1 at 21 [51]. 50 Sanofi v Parke Davis Pty Ltd [No 2] (1983) 152 CLR 1 at 7. 51 Parke Davis Pty Ltd v Sanofi (1982) 43 ALR 487 at 503. 52 Perpetual Trustee Co Ltd v Morley (1968) 121 CLR 659 at 662-663. 53 Perpetual Trustee Co Ltd v Morley (1968) 121 CLR 659 at 663, quoting Cooper v Robinson (1842) 10 M & W 694 at 696 [152 ER 651 at 652]. 54 Perpetual Trustee Co Ltd v Morley (1968) 121 CLR 659 at 662, quoting Wyburd v Tuck (1799) 1 B & P 458 at 464 [126 ER 1009 at 1012]. Steward Gleeson of the term of the original grant can be understood as marking the commencement of the extension the duration of which is calculated in accordance with s 77. The grant of further exclusive rights to exploit the invention is prospective only from the date that the grant is in fact made under s 76. Legislative history supports that understanding of an exercise of the power conferred by s 76 operating to give to the patentee further exclusive rights to exploit the invention only during the period (if any) from the date of the grant of the extension to the date of the expiration of the term of the extension calculated in accordance with s 77. Under s 84(5) of the Patents Act 1903 (Cth), and under s 94(1) of the 1952 Act until the 1989 Act, power was conferred on a court either to order an extension of the term of any patent or to order the grant of a new patent. The power was exercisable where the court was of the opinion that the patentee had been inadequately remunerated by the patent. An extension of the term of a patent and the grant of a new patent were each understood to be a "graft" onto the original grant so as to have "no existence apart from the parent grant"55. Where the order of the court was made before the expiration of the original term, the practice was normally to extend the term. Where the original term had expired, the practice was normally to order a new grant. Irrespective of whether the order was to extend the term of the patent or to grant a new patent, however, an order made after the expiration of the patent would be made subject to a condition that no proceeding could be commenced or prosecuted in respect of acts of infringement which occurred after the date of expiration of the original term and before the date of the order56. In re Robinson's Patent (1918) 25 CLR 116 at 137 and Sanofi v Parke Davis Pty Ltd [No 2] (1983) 152 CLR 1 at 11, each quoting Bovill v Finch (1870) LR 5 CP 523 at 532. See also Ex parte Celotex Corporation; In re Shaw's Patents (1937) 57 CLR 56 Ex parte Celotex Corporation; In re Shaw's Patents (1937) 57 CLR 19 at 25. See eg In re Robinson's Patent (1918) 25 CLR 116 at 139; Gillette Industries Ltd v Commissioner of Patents (1943) 67 CLR 529 at 535; In re Usines de Melle's Patent (1954) 91 CLR 42 at 52. Steward Gleeson In Sanofi v Parke Davis Pty Ltd [No 2]57, Mason A-CJ, Wilson and Dawson JJ referred to the imposition of a condition in those terms as "appropriate to protect the interests of those members of the public who might otherwise be prejudiced by the extension of the term of the patent"58. Brennan J, who concurred in the result, went further. His Honour explained the imposition of a condition in those terms to be necessary to ensure that the order that was made was within the power conferred by s 94(1) of the 1952 Act. Focusing specifically on the power to order the grant of a new patent conferred by s 94(1)(b) of the 1952 Act, Brennan J explained59: "The general terms of a statute are not construed as affecting retrospectively a person's freedom to act in a way which was lawful at the time for it manifestly shocks one's sense of justice that an act legal at the time of doing it should be made unlawful by some new enactment. By parity of reasoning, if a statute confers a power to affect another person's freedom to act, the statute is not construed as conferring a power to impose a liability retrospectively for doing what was lawful at the time unless the terms of the statute clearly require that construction. It follows that, if the grant of a new patent without conditions in extension of a term which has expired would confer rights upon the patentee against a person who had made, used or sold the subject matter of the patent when it was in the public domain, such a grant would exceed the power conferred by s 94(1)(b). There is a strong general presumption that a legislature does not intend to impose a new liability in respect of something that has already happened. There is no indication that the [1952] Act intends a retrospective alteration of the rights of the patentee so as to permit him to treat as an infringer a person who lawfully made, used or sold the subject matter of the patent when it was in the public domain. However, if such an innocent infringer can be protected and is protected by appropriate ... conditions ... contained in the new patent exempting him from liability for acts done while the invention was in the public domain, an order for the grant of such a new patent is within the power conferred by s 94(1)(b). A new patent containing such conditions does not retrospectively destroy the legal immunity of an innocent infringer for acts done prior to the grant of the new patent." (1983) 152 CLR 1. (1983) 152 CLR 1 at 15. (1983) 152 CLR 1 at 20-21 (cleaned up). Steward Gleeson The explanation given by Brennan J in Sanofi of the proper construction of s 94(1) of the 1952 Act involved an application to that provision of the standard common law presumption to which reference has already been made. When the 1989 Act replaced s 94(1) of the 1952 Act with the regime for the administrative grant of an extension of the term of a standard patent relating to a pharmaceutical substance on which Pt 3 of Ch 6 of the Act came to be modelled, the approach taken by Brennan J to the proper construction of a power to extend the term of a patent must be taken to have been heeded. Of the numerous respects in which the regime for the administrative grant of an extension of the term of a standard patent relating to a pharmaceutical substance introduced by the 1989 Act differed from the earlier regime for the curial extension of a patent or grant of a new patent, two are of present significance. The first was abandonment of the former provision for a grant of a new patent in favour of an extension of the term of a patent in every case. The second was abandonment of the former curial discretion as to the period of an extension and as to the conditions of an extension in favour of what the explanatory memorandum for the Bill for the 1989 Act referred to as "more straightforward administrative procedures"60. The approach adopted in the 1989 Act, as later carried through into Pt 3 of Ch 6 of the Act as amended by the 1998 Act, was to make automatic and exhaustive legislative prescription as to: the period of the extension; the limitation of the exclusive rights of the patentee during the period of the extension; and the rights of the patentee in respect of acts of infringement which occurred after the date of expiration of the original term and before the grant of the extension. Within that context, the provision of the 1952 Act as amended by the 1989 Act which was the progenitor of s 79 of the Act61 was explained in the explanatory memorandum for the Bill for the 1989 Act to have had "the effect that, where a patent's term is extended after the original term expired, the patentee's rights will backdate to the date of expiry"62. It was the equivalent to s 79 (s 96A) that was explained as having that backdating effect on the patentee's rights, not the equivalent of s 76 (s 90). The same approach was taken in the 1998 Act. The 60 Australia, Senate, Patents Amendment Bill 1989, Explanatory Memorandum at 2 61 Section 96A of the 1952 Act. 62 Australia, Senate, Patents Amendment Bill 1989, Explanatory Memorandum at 6 Steward Gleeson legislature's approach both in 1989 and in 1998 was consistent with an appreciation of the application of Brennan J's reasoning in Sanofi. The position, in short, is that the power conferred by s 76 to extend the term of a standard patent relating to a pharmaceutical substance contained in goods included in the ARTG is a power to grant further exclusive rights to the patentee to exploit the invention from the date of the grant of the extension to the date of the expiration of the period that commences with the date of the expiration of the term of the original grant and that ends on the date determined in accordance with s 77. Where the power conferred by s 76 is exercised after the expiration of the term of the original grant, there is a temporal gap in the conferral of exclusive rights on the patentee. The function of s 79 is to fill that gap. In conferring rights to start proceedings in respect of acts that occurred between the expiration of the term of the original grant and the subsequent grant of an extension, s 79 operates to impose a substantive liability for those acts which does not arise merely by force of the exercise of the power conferred by s 76. In respect of acts that occurred between the expiration of the term of the original grant and the subsequent grant of an extension of the term, the rights to start proceedings conferred by s 79 (as qualified by s 78) are substantive and exhaustive. The Settlement Agreement The background to Sandoz having entered into the Settlement Agreement with Lundbeck Denmark and Lundbeck Australia in February 2007 had as its genesis the inclusion of Cipramil in the ARTG in December 1997. Lexapro was not included in the ARTG until September 2003. In December 2003, Lundbeck Denmark applied for an extension of the term of the Patent based on the inclusion of Lexapro in the ARTG. Based on the inclusion of Lexapro in the ARTG, the Commissioner in 2004 granted an extension of the term of the Patent to end on 13 June 2014. However, the Commissioner in 2006 corrected the grant of the extension so as to result in it ending on 9 December 2012. The correction was based on the earlier inclusion of Cipramil in the ARTG. Four separate proceedings were then commenced in the Federal Court. Lundbeck Denmark appealed the decision of the Commissioner to correct the extension of the term of the Patent from 13 June 2014 to 9 December 2012. Sandoz and two other suppliers of generic pharmaceutical products each commenced separate proceedings against Lundbeck Denmark challenging the validity of the Patent. The Settlement Agreement resolved Sandoz's challenge to the validity of the Patent, following which Sandoz's proceeding against Lundbeck Denmark was discontinued by consent. Steward Gleeson The Settlement Agreement defined "Patent" to mean the Patent and defined "Proceeding" to mean Sandoz's proceeding against Lundbeck Denmark for revocation of the Patent. Under the Settlement Agreement, Lundbeck Denmark and Lundbeck Australia jointly and severally released Sandoz "from all claims, actions and causes of actions ... present and future, relating to the Proceeding". By the settlement clause, cl 3 of the Settlement Agreement, Lundbeck Denmark and Lundbeck Australia jointly and severally granted Sandoz what was described as "an irrevocable non-exclusive licence to the Patent". The settlement clause was expressed as follows: "(1) Lundbeck Denmark and Lundbeck Australia jointly and severally grant Sandoz an irrevocable non-exclusive licence to the Patent effective from: 31 May 2009 if the Patent expires on 13 June 2009; 26 November 2012 if the Patent expires on 9 December 2012; 31 May 2014 if the Patent expires on 13 June 2014; or 2 weeks prior to the expiry of the Patent if the Patent expires on a date other than a date described in clause 3(a) to (c). In addition to the licence granted under clause 3(1), Lundbeck Denmark and Lundbeck Australia jointly and severally grant Sandoz an irrevocable non-exclusive licence to the Patent, effective from the beginning of the calendar month in which the licence granted under sole purpose of clause 3(1) becomes effective, manufacturing, importing, marketing and offering to sell (but not selling or supplying) pharmaceutical products containing escitalopram. the for For the avoidance of doubt, nothing in this Agreement is to be taken as granting a licence of, or authorisation to exploit, any patent other than the Patent." The inspiration for each of the first three of the dates specified in the settlement clause as a possible date for the expiration of the Patent is not difficult to discern. 13 June 2009 was the prospective date for the expiration of the Patent if there were no extension of its term. 9 December 2012 was the prospective date for the expiration of the Patent if there were an extension of its term based on the inclusion of Cipramil in the ARTG. 13 June 2014 was the prospective date for the Steward Gleeson expiration of the Patent if there were an extension of its term based on the inclusion of Lexapro in the ARTG. The challenges to the validity of the Patent by the other suppliers of generic pharmaceutical products continued afterwards in the Federal Court. These challenges were largely unsuccessful at first instance63 and on appeal to the Full Court64, save importantly that the extension of the term was held to have been wholly invalid. That is to say, the Patent was held not to have been extended either to 9 December 2012 or to 13 June 2014. The outcome was accordingly that the Patent remained due to expire at the end of the term of its original grant, being 13 June 2009. On 12 June 2009, the day after the decision of the Full Court confirming that the extension of the term was invalid and the day before the expiration of the term of the original grant of the Patent, Lundbeck Denmark applied to the Commissioner for an extension of time to apply for an extension of the term based on the inclusion of Cipramil in the ARTG. The Commissioner granted that application65 in a decision which was later upheld on appeal by the Administrative Appeals Tribunal66 and on further appeal to the Full Court of the Federal Court67 and to this Court68. The extension of time for the making of the application having been upheld, the Commissioner on 25 June 2014 granted the extension of the term to 9 December 2012 based on the inclusion of Cipramil in the ARTG. The grant of 63 Alphapharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618. 64 H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151. 65 Alphapharm Pty Ltd v H Lundbeck A/S (2011) 92 IPR 628. 66 Re Aspen Pharma Pty Ltd and Commissioner of Patents (2012) 132 ALD 648. 67 Aspen Pharma Pty Ltd v H Lundbeck A/S (2013) 216 FCR 508. 68 Alphapharm Pty Ltd v H Lundbeck A/S (2014) 254 CLR 247. Steward Gleeson the extension was challenged by Sandoz and others in the Federal Court. The challenge was unsuccessful at first instance69 and on appeal to the Full Court70. From the standpoint of the parties entering into the Settlement Agreement in February 2007, the prospect of the Patent being extended so as to end on 9 December 2012 after its term had expired on 13 June 2009 was found by the primary judge71 and accepted by the Full Court72 to have been a "possibility" but one which was "objectively remote". Her Honour found73, and the Full Court accepted74, that the parties in entering into the Settlement Agreement can be taken to have expected that they would know by 1 May 2009 when the Patent would expire. Construction of the settlement clause Parties to a written contract by which they contract in respect of statutory rights can ordinarily be taken to use statutory language according to its statutory meaning. To recognise as much is to recognise no more than that the statute is central to the matrix of fact within the context of which the common intention of the parties falls to be objectively determined75. Absent reason to consider that the parties together intend language used in a statute to have some other meaning, there is no reason not to attribute to them a common intention to use that language according to its statutory meaning. All parties to the appeals implicitly recognised that principle. But only the appellants applied it consistently. 69 Alphapharm Pty Ltd v H Lundbeck A/S (2014) 110 IPR 59. 70 Alphapharm Pty Ltd v H Lundbeck A/S (2015) 234 FCR 306. 71 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 483 [291]. 72 Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 51 [69]. 73 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 484 [294]. 74 Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 49 [59]. 75 Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 at [176]. See also Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 at 53 [12]; Carter, The Construction of Commercial Contracts (2012) at 202-203 [6-29]. Steward Gleeson The parties were agreed on the hearing of the appeals that the words "Patent" and "expire" in the settlement clause took their content from the Act. One consequence was that they were agreed that the "irrevocable non-exclusive licence to the Patent" granted to Sandoz by the settlement clause amounted to a grant of permission to exploit the invention including by selling pharmaceutical products containing escitalopram. Another consequence was that they were agreed that (notwithstanding the later grant on 25 June 2014 of the extension to 9 December 2012) the Patent in fact expired with the expiration of its original term on 13 June 2009. Accordingly, they were agreed that cl 3(1)(a), and not cl 3(1)(b), was triggered with the result that the licence was effective from 31 May 2009. But only the appellants applied the word "Patent" consistently to conclude that the licence "to the Patent" granted to Sandoz by cl 3(1)(a) was for a term which commenced on 31 May 2009 and which expired with the expiration of the original term of the Patent on 13 June 2009. The argument for Sandoz was that the licence granted was for a term which commenced on 31 May 2009 but which had no fixed end date. The licence, according to Sandoz, was not only irrevocable but indefinite. The argument for Sandoz failed to give temporal effect to the licence granted to Sandoz by cl 3(1)(a) being expressed to be "to the Patent" which was expressed to "expire" on 13 June 2009 and failed also to be attentive to the internal logic of the settlement clause. When cl 3(1)(a) is read in context with cl 3(1)(b), cl 3(1)(c) and cl 3(1)(d), it is apparent that each of those paragraphs of the settlement clause was consistent in treating the date of the expiration of the licence as the date of the expiration of the Patent and that each paragraph of the settlement clause was consistent in specifying as the date of the commencement of the licence a date two weeks before expiration. The overall effect was that, no matter what the date of the expiration of the term of the Patent might end up being, the irrevocable non-exclusive licence to the Patent granted was to commence two weeks before that date and was to expire on the date of that expiration. The "commercial result" which the parties can be inferred to have intended to produce by the settlement clause structured in that way76 was to allow Sandoz to sell generic pharmaceutical products containing escitalopram during the final two weeks of the term of the Patent. During that period other suppliers of generic pharmaceutical products would still be excluded from selling products containing escitalopram through the continuing operation of the exclusive rights to exploit the 76 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656-657 [35], quoting Re Golden Key Ltd [2009] EWCA Civ 636 at [28]. Steward Gleeson invention conferred on Lundbeck Denmark for the term of the Patent. The benefit of being able to sell generic pharmaceutical products containing escitalopram during the final two weeks of the term of the Patent through the operation of the licence conferred by cl 3(1) was enhanced by the more limited licence conferred through the operation of cl 3(2), which allowed Sandoz to start manufacturing, importing, marketing and offering to sell (but not yet to sell) its generic pharmaceutical products containing escitalopram at the beginning of the calendar month in which the two week licence enabling it to sell was to become effective. Through the settlement clause Sandoz accordingly got the modest but valuable commercial benefit of a two week head-start over competing suppliers of generic pharmaceutical products containing escitalopram, who would not be able to start selling until after the Patent expired. That is what Lundbeck Denmark and Lundbeck Australia were conceding to Sandoz in exchange for Sandoz giving up its challenge to the validity of the Patent. True it is that the parties cannot be taken to have foreseen the grant of an extension of the term after the original term of the Patent had expired as anything more than a remote possibility, that Sandoz by entering into the Settlement Agreement was giving up for the future as well as for the present any right to challenge the validity of the Patent, and that the parties can be taken to have recognised the commercial importance to Sandoz of being able to continue to sell its generic pharmaceutical products containing escitalopram once it had started. But equally, it is not easy to regard the parties as having bargained away substantially the whole of the commercial benefit to Lundbeck Denmark of obtaining a grant of an extension of the term after the original term had expired in the event that what seemed to be a remote possibility became a reality. Objectively construed in the context within which the parties entered into the Settlement Agreement, the language of the settlement clause cannot be interpreted as saying anything about any right to bring proceedings against Sandoz that Lundbeck Denmark or Lundbeck Australia might have under s 79 of the Act in the event of an extension of the term of the Patent being granted after the original term of the Patent expired. In the events that subsequently occurred, the settlement clause relevantly operated to confer on Sandoz no more than permission to sell pharmaceutical products containing escitalopram during the period which commenced on 31 May 2009 and which expired with the expiration of the original term of the Patent on 13 June 2009. Steward Gleeson Lundbeck Australia had no rights to bring infringement proceedings against Sandoz Once it is recognised that the only rights to bring proceedings in respect of acts occurring between the date of the expiration of the original term of a patent and the date of the grant of an extension of the term of that patent are those conferred by s 79 of the Act, it is apparent on the face of the section that the rights to bring proceedings in respect of those acts are limited to the patentee. Whether s 79's non-conferral of rights to bring proceedings on an exclusive licensee can be explained, as the Full Court surmised77, by reference to the patentee alone having a right to apply for an extension of the term, or whether the potential position of an exclusive licensee was simply overlooked in the framing of the section, does not emerge from the legislative history or extrinsic material and does not ultimately matter. The province of statutory construction is the attribution of meaning to the enacted statutory text, not the remediation of perceived legislative oversight78. Here, the text is intractable and unambiguous. Lundbeck Denmark, as patentee, had rights to bring proceedings against Sandoz under s 79 of the Act. Lundbeck Australia, as exclusive licensee, did not. Lundbeck Denmark's cause of action against Sandoz accrued only on the grant of the extension Section 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) empowers the Federal Court in "any proceedings for the recovery of any money" to "order that there be included in the sum for which judgment is given interest ... on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date as of which judgment is entered". A cause of action does not arise within the meaning of the provision until all of the facts which the applicant must prove to obtain judgment for the recovery of the money have come into existence79. 77 Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 62-63 [109]. 78 Taylor v Owners – Strata Plan No 11564 (2014) 253 CLR 531 at 556-557 [65]. 79 Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 at 245. See also Ferrier v Civil Aviation Authority (1994) 55 FCR 28 at 92. Steward Gleeson When it is again recognised that the only rights Lundbeck Denmark had to recover damages against Sandoz in respect of acts which occurred between 13 June 2009 and 25 June 2014 were the rights conferred by s 79 of the Act, it is apparent that all of the facts that Lundbeck Denmark needed to prove to establish those rights did not come into existence until the grant of the extension of the term on 25 June 2014. The fact that "the extension is granted" is a precondition to the rights to bring proceedings which s 79 of the Act confers on a patentee coming into existence. Not for nothing did Lundbeck Denmark wait until 26 June 2014 to commence proceedings against Sandoz for infringement of the Patent. Only on 25 June 2014 did its cause of action arise under s 79 of the Act. And only from then could it obtain interest under s 51A(1)(a) of the Federal Court of Australia Act on the damages to which it is entitled through the operation of s 79 of the Act. Sandoz did not engage in misleading or deceptive conduct Resolution of the issue about misleading or deceptive conduct raised by the notice of contention in the Pharma Appeal does not call for revisitation of the principles pertaining to the characterisation of conduct as misleading or deceptive considered in Campomar Sociedad Limitada v Nike International Ltd80 and in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd81. It is enough to highlight two of those principles. One is the need, where the conduct is not said to be directed to identified individuals, "to isolate by some criterion" a representative member of the class of persons to whom the conduct is directed82. The other is the need, where the misleading or deceptive character of the conduct is said to lie in non-disclosure of some circumstance, ordinarily to establish that the representative member of the class to whom the conduct is directed would hold (2000) 202 CLR 45 at 81-88 [92]-[107]. (2010) 241 CLR 357 at 368-371 [14]-[23]. 82 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 85 Steward Gleeson a reasonable expectation that the circumstance would be disclosed if the circumstance exists83. Pharma's pleaded case was that, in supplying its generic escitalopram products, Sandoz engaged in misleading or deceptive conduct on one or other of two bases. The first was that it failed, refused or neglected to warn its customers or potential customers (including distributors, pharmacies, medical practitioners, end users and others) that the exploitation of its generic products could infringe the Patent. The other was that it impliedly represented to those customers and potential customers that they could use its products without infringing the Patent. The primary judge's finding of misleading or deceptive conduct was something of an amalgam of Pharma's pleaded alternatives. Her Honour said84: "It is not necessary to go so far as to say that there is a general principle that a failure to warn of a potential patent infringement by the supply of a product is likely to involve misleading and deceptive conduct. It may be accepted that each case turns on its own facts." Her Honour continued85: "Sandoz achieved its sales to pharmacists on the basis of an implied misrepresentation that its products did not infringe any patent, but the products would infringe if and when the extension of term was granted. The extension of term was granted and thus the products infringed. This is sufficient the to constitute misleading and deceptive conduct circumstances." No exception is taken by Sandoz to the primary judge's finding that it achieved its sales on the basis of an implied misrepresentation that its products did not infringe any patent. The finding accords with findings of misleading or deceptive conduct having been implicit in the sale of infringing products in a 83 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 369-370 [18]-[21]. 84 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 543 [545]. 85 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 543 [545]. Steward Gleeson number of other patent infringement cases86 to which her Honour had earlier referred87. The problem with the balance of the primary judge's finding to which Sandoz points lies in the absence of a foundation in the evidence for considering pharmacists to have held a reasonable expectation that Sandoz would inform them, not of an existing fact, but of the possibility that they might be exposed to proceedings for infringement (through the operation of s 79 of the Act) if and when an extension of the term of the Patent came to be granted in the future. That pharmacists would have held an expectation of being informed about a possibility of that nature is not self-evident. Their holding of such an expectation was not the subject of admission on the part of Sandoz and was not the subject of evidence adduced by Pharma. The finding that Sandoz engaged in misleading or deceptive conduct in its generic escitalopram products between 15 June 2009 and supplying 9 December 2012 cannot be sustained. Disposition of the appeals The Pharma Appeal must be dismissed with costs. The Lundbeck Appeal must be allowed. The orders of the Full Court allowing the appeal and dismissing the cross-appeal from the decision of the primary judge, setting aside the substantive orders made by the primary judge, and dismissing the proceedings, must each be set aside. In their place, the appeal and the cross-appeal from the decision of the primary judge must each be allowed in part, the orders made by the primary judge for damages and pre-judgment interest payable to each of Lundbeck Denmark and Lundbeck Australia must be set aside, and the matter must be remitted to the primary judge for recalculation of damages and pre-judgment interest payable to Lundbeck Denmark alone. 86 Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1995) AIPC ¶91-129; Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 164 ALR 239; Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd [No 3] (2011) 196 FCR 1 at 81-83 [275]-[282]; Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd [No 2] (2012) 204 FCR 494 at 518 [91]; Sandvik Intellectual Property AB v Quarry Mining & Construction Equipment Pty Ltd (2016) 118 IPR 421 at 496-497 87 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 541-543 [538]-[544]. Steward Gleeson There is no dispute between the parties that the recalculation of damages must be undertaken in accordance with an adjustment made by the Full Court to the primary judge's discount of the damages from 25% to 2 to 3%. The recalculation of pre-judgment interest on those damages must be undertaken in accordance with the holding of this Court that Lundbeck Denmark's cause of action arose only on the grant of the extension of the term of the Patent on 25 June 2014. There is also no dispute between the parties that the order remitting the matter to the primary judge for the recalculation of damages should be framed to ensure that it does not prejudice the outcome of a pending review by the Administrative Appeals Tribunal sought by Lundbeck Denmark of the decision by the Commissioner, after the decision of the primary judge but before the decision of the Full Court, to grant a licence under s 223(9) of the Act and reg 22.21 of the Patents Regulations 1991 (Cth)88. As Lundbeck Denmark has had a substantial measure of success in the Lundbeck Appeal, Lundbeck Denmark and Lundbeck Australia are to have their costs to date of the proceedings before the primary judge, of the appeal and cross- appeal to the Full Court and of the appeal to this Court. 88 H Lundbeck A/S v Sandoz Pty Ltd (2019) 153 IPR 170. Edelman The issue of contractual implication and the consequential issues The appellants in one of the appeals before this Court are H Lundbeck A/S ("Lundbeck Denmark") and its subsidiary and exclusive licensee, Lundbeck Australia Pty Ltd ("Lundbeck Australia"), collectively described below as the "Lundbeck entities". In February 2007, the Lundbeck entities entered into a settlement agreement with the respondent in both appeals, Sandoz Pty Ltd ("Sandoz"). By cl 5 of the settlement agreement, Sandoz agreed to discontinue proceedings that it had brought against the Lundbeck entities which had sought revocation of a patent that Lundbeck Denmark held in relation to a pharmaceutical substance called escitalopram, which is a treatment for depression ("the Patent"). The principal issue on these appeals concerns the interpretation of a bespoke clause in the settlement agreement and its application to remote circumstances which were not expected by either party to occur. By the bespoke clause, cl 3, the Lundbeck entities granted to Sandoz irrevocable non-exclusive licences "to the Patent". Clause 3 carefully provided for a commencement date for the licences based on various contingencies concerning when the term of the Patent might expire. The commencement date for the primary licence was set to be a date that was two weeks before the expiry of the term of the Patent. The principal interpretation issue arises because there was no express provision of an end date to the licences. The appellants in both appeals submitted that the licences came to an end when the term of the Patent expired. This would have the effect that, if an extension of the term of the Patent were granted after expiry of the Patent term89, Sandoz's licence would have expired and proceedings could be brought against Sandoz for post-expiry acts that would have infringed the Patent "as if the [Patent] extension had been granted"90 at the time of those acts. The primary judge accepted this submission91. By contrast, Sandoz submitted that there was an absence of any expressed or implied end date in the licences which meant that the licences must be perpetual. Hence, Sandoz would have a defence to an action against it for infringement of the Patent on the basis that it acted under a licence. The Full Court of the Federal Court of Australia accepted this submission92. For the reasons below, and gratefully relying upon the comprehensive background and legislative history 89 See Patents Act 1990 (Cth), s 76. 90 Patents Act, s 79. 91 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 484-485 [296]-[303]. 92 Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 51 [67]-[69]. Edelman set out in the joint judgment, the proper approach to recognition of implications means that the conclusion of the primary judge best reflects the implications in cl 3 that would be recognised by a reasonable person in the position of the parties. This conclusion gives rise to three consequential issues. The first consequential issue concerns whether, in addition to the claim by Lundbeck Denmark as patentee, a claim can be brought against Sandoz for infringement of the Patent by Lundbeck Australia, as an exclusive licensee. Under s 79 of the Patents Act 1990 (Cth), a patentee has the "same rights to start proceedings" for infringement following an extension of the term of a standard patent "as if the extension had been granted at the time when the act was done". The Full Court correctly concluded that this right to start proceedings under s 79 is conferred only upon a patentee and not upon an exclusive licensee93. Lundbeck Australia had no "right" to start proceedings under s 79 of the Patents Act. The second consequential issue is the date from which pre-judgment interest runs pursuant to s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) for Lundbeck Denmark's claim under s 79 of the Patents Act. Although it was unnecessary for the Full Court to address this issue, the Full Court correctly reasoned that the power to award interest to Lundbeck Denmark arose from the time at which its cause of action accrued, being the date when the term of the Patent was extended94. Prior to this date, Lundbeck Denmark had no legal rights that were enforceable by legal action, and therefore no "cause of action" within the meaning of s 51A(1)(a). The third consequential issue arises by a notice of contention in the second appeal, which is brought by a subsidiary of Lundbeck Australia, CNS Pharma Pty Ltd ("Pharma"). Pharma purchases from Lundbeck Denmark, and then sells, a generic product containing escitalopram. Pharma joined with the Lundbeck entities in support of the finding of the primary judge that the licences ended when the term of the Patent expired. Pharma then claimed that when Sandoz entered the market to sell products containing escitalopram Sandoz engaged in misleading or deceptive conduct within s 52 of the Trade Practices Act 1974 (Cth) and s 18 of the Australian Consumer Law95. The primary judge found that Sandoz engaged in misleading or deceptive conduct by an implied misrepresentation from Sandoz that the products sold did not infringe any patent without the qualification that the products would infringe a 93 Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 62-63 [105]-[110]. 94 Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 71-73 [140]-[147]. 95 Competition and Consumer Act 2010 (Cth), Sch 2. Edelman patent if and when an extension of the term were granted to Lundbeck Denmark96. The Full Court did not need to address this issue since its conclusion that Sandoz's licences were perpetual meant that the products did not infringe any patent. Ultimately, this third consequential issue reduces to whether Pharma established that the existence of the remote possibility of an extension of the term of the Patent was sufficiently material that Sandoz should have qualified its implied representation that its products did not infringe any patent in order to have the effect that the non-disclosure of that qualification could be misleading or deceptive. That remote possibility was not material. The express and implied meaning of the terms of the primary licence No express provision for an end date to the primary licence Clause 3 of the settlement agreement provides as follows: "Licence to exploit the Patent (1) Lundbeck Denmark and Lundbeck Australia jointly and severally grant Sandoz an irrevocable non-exclusive licence to the Patent effective from: 31 May 2009 if the Patent expires on 13 June 2009; 26 November 2012 if the Patent expires on 9 December 2012; 31 May 2014 if the Patent expires on 13 June 2014; or 2 weeks prior to the expiry of the Patent if the Patent expires on a date other than a date described in clause 3(a) to (c). In addition to the licence granted under clause 3(1), Lundbeck Denmark and Lundbeck Australia jointly and severally grant Sandoz an irrevocable non-exclusive licence to the Patent, effective from the beginning of the calendar month in which the licence granted under sole purpose of clause 3(1) becomes effective, manufacturing, importing, marketing and offering to sell (but not selling or supplying) pharmaceutical products containing escitalopram. the for (3) For the avoidance of doubt, nothing in this Agreement is to be taken as granting a licence of, or authorisation to exploit, any patent other than the Patent." 96 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 543 [545]. Edelman The licence in cl 3(1) is described in these reasons as the "primary licence" and the licence in cl 3(2) is described as the "supplementary licence". The possible commencement dates for the primary licence, and their objective, shared rationale, were clear. The first date, 31 May 2009, represented two weeks before the expected expiry date of the term of the Patent, 13 June 2009, if no extension were granted. The second and third dates represented two weeks before the expected expiry dates of the term of the Patent if there were an extension of the term of the Patent based on the inclusion of one or other of two pharmaceutical products containing escitalopram in the Australian Register of Therapeutic Goods97. One of the problems with the drafting of the primary licence and the supplementary licence is the expression "an irrevocable non-exclusive licence to the Patent". The best that can be said of that expression is that it is ambiguous. The primary judge took one view of what it meant. The Full Court took another. In its literal terms, the expression "licence to the Patent" is nonsense. A licence is a freedom from a duty: it is "an authority to do something which would otherwise be wrongful or illegal or inoperative"98. A patent over an invention is a grant of "the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention"99. It makes no more sense to speak of a person having a "licence to the Patent" than it does to speak of an invitee to a leased property having a "licence to the lease". It appears that the expression "licence to the Patent" was used interchangeably with the notion, as expressed in the heading to the clause and in cl 3(3), of a licence to exploit the Patent. But even then the expression is nonsensical. A patent is not something that is exploited. The subject matter of exploitation is the invention with which the patent is concerned. The only sensible meanings that can be given to the expression "licence to the Patent" are either: (i) a freedom to exploit the invention that is the subject matter of the Patent; or (ii) a freedom to exploit the invention that is the subject matter of the Patent during the term of the Patent. Consistently with the meaning of "exploit" in the Patents Act100, the freedom to exploit the invention includes making, selling, or otherwise disposing of pharmaceutical products containing escitalopram. 97 See Patents Act, ss 70, 77. 98 Federal Commissioner of Taxation v United Aircraft Corporation (1943) 68 CLR 99 Patents Act, s 13(1). 100 Patents Act, s 3 read with Sch 1 definition of "exploit". Edelman Sandoz's essential submissions in this Court were simple and clear. First, it was submitted that cl 3 expressly provides for a commencement date but does not expressly provide for any end date for the licences. Hence, any end date for the licences required an implication to be recognised in cl 3. Sandoz submitted that the interpretation of the primary judge that limited the primary licence to a two-week period "had the same effect ... as implying a term for an end date". Secondly, it was submitted that the strictness of the test for recognition of an implied term, requiring satisfaction of five factors101, was not met. Expressions and implications There are ephemeral borders, to which lawyers sometimes cling, between three categories of interpretation of words in legal instruments: (i) interpretation of the meaning of express words in a clause; (ii) drawing inferences that recognise implications within a clause; and (iii) drawing inferences that recognise the implication of a new "term". All three are "an exercise in interpretation"102. All three are concerned with "what the [instrument] actually means"103. And all three involve drawing inferences and recognising matters that are implied in the sense that they are not confined to the semantics of literally expressed meaning. For instance, like the latter two categories, even the first category will often involve drawing inferences from context by recognising explicatures from the express text104. In all three categories, context and purpose supply additional information for the meaning that combines with the literal text. By this means, the "implication is included in [the meaning of] what is expressed"105. 101 See BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 102 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 345; Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at 186 [22]. 103 Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 at 1994 [22]; [2009] 2 All ER 1127 at 1134; Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at 186 [22]. 104 Sperber and Wilson, Relevance: Communication and Cognition, 2nd ed (1995) at 182; Carston, Thoughts and Utterances: The Pragmatics of Explicit Communication (2002) at 116-125. And see Haugh, "The Intuitive Basis of Implicature: Relevance Theoretic Implicitness versus Gricean Implying" (2002) 12 Pragmatics 117 at 105 Merchant Service Guild of Australasia v Newcastle and Hunter River Steamship Co Ltd [No 1] (1913) 16 CLR 591 at 624. See also Lubrano v Gollin & Co Pty Ltd Edelman The distinction between the three categories can be so fine that in the same case some members of this Court have treated the interpretation exercise as falling within one category while others have treated it as falling within another category106. A decision that can illustrate the fine distinction is Prenn v Simmonds107, which was considered by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW108. As Mason J explained, the expression considered in that case, "profits of RTT", was held to mean "the consolidated profits of the group of companies consisting of RTT and its subsidiaries" by interpretation of the meaning of an express word – profits – having regard to surrounding circumstances. But the reasoning in Prenn v Simmonds might equally have been expressed as recognising an implication as though the word "consolidated" appeared before "profits" or as recognising an implied term that "profits of the RTT group shall be treated as profits of RTT". Despite the close, perhaps inseparable, association between these three categories of interpretation, it can sometimes appear as though courts are applying a different test for interpretation in each different category. Putting to one side any issue concerning whether ambiguity is required before extrinsic circumstances and context can be considered109, a constraint which does not arise in relation to the meaning of written documents or instruments generally110, a simple approach is generally taken in the category where the meaning of express words is concerned. In that category, the task of interpretation is commonly said simply to be a matter of ascertaining what would have been intended by a reasonable person in the position of the parties, with inferences about that meaning to be drawn from the (1919) 27 CLR 113 at 118; R v Rigby (1956) 100 CLR 146 at 151; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 368 [120]. 106 Compare, for instance, the approaches in Lewis Construction (Engineering) Pty Ltd v Southern Electric Authority of Queensland (1976) 50 ALJR 769 at 770-771 (Barwick CJ in dissent), 773-775 (Gibbs J), with 777 (Stephen and Murphy JJ); 11 ALR 305 at 309, 314-318, 321-323. 107 [1971] 1 WLR 1381 at 1388; [1971] 3 All ER 237 at 243. 108 (1982) 149 CLR 337 at 348. 109 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352, considered in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 at 617 [17(b)]; Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633 at 654-655 [78]-[79]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 132 [110]. 110 Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514 at 548 [83]. Edelman information reasonably available to the parties111. In Chartbrook Ltd v Persimmon Homes Ltd112, Lord Hoffmann said that "there is not, so to speak, a limit to the amount of red ink or verbal rearrangement or correction which the court is allowed. All that is required is that it should be clear that something has gone wrong with the language and that it should be clear what a reasonable person would have understood the parties to have meant." By contrast, the task of interpretation is sometimes expressed as a more rigid test, requiring much greater restraint, where the meaning of a clause requires an inference that is said to involve the addition or removal of words in the instrument. So, for drawing inferences that recognise an unexpressed implication within a clause, in Fitzgerald v Masters113, Dixon CJ and Fullagar J said that "[w]ords may generally be supplied, omitted or corrected, in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency". And an even stricter approach to drawing inferences that recognise an entire implied term in a contract appears from the famous passage in Codelfa114, where Mason J (with whom Stephen and Wilson JJ agreed) said that "courts have been at pains to emphasize that it is not enough that it is reasonable to imply a term" and that there are five "conditions necessary to ground the implication of a term". The proposed implied term: (1) must be reasonable and equitable; (2) must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) must be so obvious that "it goes without saying"; (4) must be capable of clear expression; and (5) must not contradict any express term of the contract. The ephemeral nature of the borders between the three categories of interpretation makes it difficult to justify any sharp distinctions between them. It has thus, albeit controversially, been suggested that the categories be entirely 111 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at 188 [11], quoting Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912; [1998] 1 All ER 98 at 114. See also Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 at 1993 [16]; [2009] 2 All ER 1127 112 [2009] AC 1101 at 1114 [25]. 113 (1956) 95 CLR 420 at 426-427. 114 (1982) 149 CLR 337 at 346-347, approving BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. See also Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 605-606. Edelman collapsed115. The best approach is to recognise that implications fall on a continuum that depends upon the extent of the contribution that the general or particular circumstances of context or purpose must make to the required inference beyond the language of the provision116. In contracts that are entirely in writing, like other entirely written instruments such as legislation, the larger the contribution from surrounding circumstances beyond the text that is required to those the greater must be recognise circumstances117 and the greater the "force as to carry conviction to the mind"118 that is needed before the implication can be recognised as one that would have been intended by a reasonable person in the position of the parties. the relevance of implication the At one end of the continuum, an implication beyond the literal meaning of express words might be slight and in contractual interpretation the inference of that implied meaning can be readily drawn if that was the meaning that would have been intended by a reasonable person in the position of the parties. It does not matter if the inference is described as inserting new words. As Lord Eldon LC said in Wight v Dicksons119, "[i]t had been said that it was too strong to insert a word; but the answer was, that the other words in the [contract] could not have their proper effect without it". At the other end of the continuum, a contractual implication beyond the literal meaning of the express words might be large, requiring a high level of satisfaction by the court that the implication would have been intended by a reasonable person in the position of the parties. Hence, if the implication is properly characterised as a new, and separate, term of the contract, the present state of the law is that a court will require satisfaction of all five of the factors endorsed in Codelfa before the implication is recognised. 115 See Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 at 1993-1995 [16]-[27]; [2009] 2 All ER 1127 at 1132-1135. 116 See Sternau et al, "Levels of interpretation: New tools for characterizing intended meanings" (2015) 84 Journal of Pragmatics 86 at 88. 117 Sperber and Wilson, Relevance: Communication and Cognition, 2nd ed (1995) at 118 Butt v Long (1953) 88 CLR 476 at 488. 119 (1813) 1 Dow 141 at 147 [3 ER 651 at 653]. Edelman An implied end date? These principles concerning implication arise on the interpretation of cl 3, and in particular the resolution of whether the expression "licence to the Patent" means only a freedom to exploit the invention that is the subject matter of the Patent or whether the meaning of that expression also includes the implication that the freedom is limited to the initial term of the Patent without regard to any extension. Neither of the competing interpretations, either that of Sandoz (perpetual licences) or that of the appellants (licences until the initial expiry of the Patent), treated the term of the licences as the term of the Patent with any extensions. Such an interpretation would not have been contemplated by a reasonable person in the position of the parties since it would leave the licences in a form of suspended animation between the expiry of the initial term of the Patent and any subsequent post-expiry extension of the term. A licence to exploit the subject matter of a patent does not always terminate when the term of the patent expires; indeed, without a condition to the contrary, the licence will be valid even if the patent is invalid120. Section 145 of the Patents Act assumes that there will be instances where the licence continues after the expiry of the term of the patent. In circumstances where "the instrument does not expressly provide for what is to happen when some event occurs", such as where there is no express provision that the licence is to come to an end when the term of the patent expires, the "most usual inference ... is that nothing is to happen"121. The licence does not terminate. That was the central, and powerful, plank of the reasoning of the Full Court122. On the other hand, as explained above, it is clear that something went wrong with the manner in which the parties expressed themselves in cl 3. It requires only a slight inference beyond the literal meaning of the words to conclude that the reference in cll 3(1) and 3(2) to a "licence to the Patent", like the equally nonsensical words in cl 3(3) "licence of ... the Patent", carries the implication that the freedom to exploit the invention is limited to the term of the Patent. With the ease by which the implied meaning can be derived from the garbled words used, it is not necessary for background facts and reasonable assumptions to provide a high 120 As to consequences of this see, eg, Taylor v Hare (1805) 1 B & P (NR) 260 [127 ER 461]; Lawes v Purser (1856) 6 E & B 930 at 935 [119 ER 1110 at 1112]. Compare Mitchell, Mitchell and Watterson (eds), Goff and Jones: The Law of Unjust Enrichment, 9th ed (2016) at 468 [13-23]. 121 Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 at 1993 [17]; [2009] 2 All ER 1127 at 1132. 122 Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 50-51 [66]-[67]. Edelman level of satisfaction that this implication would have been intended by a reasonable person in the position of the parties. The background facts in this case provide sufficient satisfaction that a reasonable person in the position of the parties would have intended to limit the term of the licences to the initial term of the Patent. One background fact is that the parties were aware that there was a "remote possibility that the term of the Patent might be extended sometime after it had expired"123. On the first of the proposed dates, in cl 3(1)(a), which turned out to be the commencement of the primary licence, the period of extension would be approximately three and a half years. The appellants relied upon the remote possibility of this extension as a matter of commercial context that was said to favour their interpretation. If the primary and supplementary licences ended when the term of the Patent expired, then they would preserve the exclusivity of the Lundbeck entities' rights upon an extension of the term of the Patent. Whilst it will always be an important matter of context for the interpretation of a commercial agreement if an interpretation would be "commercial nonsense"124, it will rarely assist for the interpretation of an agreement that the court considers that, from the perspective of one party, one or more clauses are not commercially wise or convenient. As Neuberger LJ said in Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd125: "[T]he court must be careful before departing from the natural meaning of the provision in the contract merely because it may conflict with its notions of commercial common sense of what the parties may must or should have thought or intended. Judges are not always the most commercially-minded, let alone the most commercially experienced, of people, and should, I think, avoid arrogating to themselves overconfidently the role of arbiter of commercial reasonableness or likelihood." Perhaps with this principle in mind, but not without a flourish of comic hyperbole, the appellants submitted that Sandoz's interpretation was "madness" and "commercially incomprehensible" because Sandoz's interpretation suggested that the Lundbeck entities would have given up a right to exclude others from 123 Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 51 [69]. 124 Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85 at 111 [78]; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656-657 [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 117 [51]. 125 [2006] EWCA Civ 1732 at [22]. See also Thomson, Warnick and Martin, Commercial Contract Clauses: Principles and Interpretation, 3rd ed (2019) at Edelman exploiting escitalopram products for three and a half years, without any royalties in return. This submission cannot be accepted. At the time of the settlement agreement, on any interpretation of cl 3 no reasonable person in the position of the parties would have considered that the Lundbeck entities were giving up such valuable rights. On Sandoz's interpretation of cl 3, all that the Lundbeck entities were giving up was possible rights against one legal person, Sandoz, in circumstances where the rights would only exist on the remote possibility of an extension. Moreover, even if that remote possibility were to be treated as a certainty, it would equally be "madness" for Sandoz to discontinue its litigation in exchange for primary and supplementary licences that would enable it to sell escitalopram products when those licences were worthless because they expired within a very short period. If Sandoz knew that its primary licence would only be for two weeks, it would be unlawful to sell to pharmacists without disclosing that fact126 and no reasonable pharmacist would purchase escitalopram products at short notice, knowing that even with instantaneous distribution the products could only be sold to customers for a small number of days from the date of purchase by the pharmacist. Ultimately, therefore, the background fact that the parties were aware of the remote possibility that the term of the Patent might be extended after the initial expiry, to apply retrospectively, does not assist either interpretation of cl 3. Other background facts and circumstances are much more useful in interpreting the meaning of cl 3, and any implications contained in it. Another objective background fact relevant to the interpretation of the settlement agreement127 is the expressed purpose of the licences in pre-contractual communications between the parties. The purpose was expressed in each case as an "early entry licence" with a period from the start of the month "to stockpile and offer for sale (but not actually supply)" in order to take immediate advantage of the early entry licence. A further background fact at the time of the settlement agreement, which the primary judge also found would have been reasonably ascertainable by a reasonable person in the position of the parties, was that "various generic entities ... were keen to launch their own escitalopram products"128. 126 See, eg, Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 371 [23]. 127 See Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 128 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 477-478 [264]. Edelman In short, the purpose of the licences was to enable Sandoz to get a head start over other entities seeking to enter the market to sell generic pharmaceutical products on the expiry of the term of the Patent. Even a short, two-week head start could enable Sandoz to establish itself as a preferred supplier, especially with the supplementary licence period from the start of the month for manufacturing, importing, marketing, and offering to sell. As the primary judge correctly explained129: "The parties also would have appreciated that, for generic entities, every day counted for entry into a market to maximise the opportunity to take market share and so any early entry Sandoz could negotiate in exchange for discontinuing its proceedings would have value to Sandoz." In light of this purpose, a reasonable person in the position of the parties would have expected the primary licence to be for the two weeks until the expiry of the term of the Patent, with the earlier commencement of the supplementary licence. The purpose was effectively to give a head start to Sandoz shortly before the expiry of the term of the Patent, albeit that once that term had expired Sandoz would be placed in the same position as its competitors. The primary judge was therefore correct to conclude that, in effect, the licences "to the Patent" carried the implication that the freedom to exploit the invention was limited to the term of the Patent. The consequential issues Can Lundbeck Australia bring infringement proceedings? The first issue that is consequential upon the conclusion that Sandoz's licences ended upon the expiry of the term of the Patent is whether Lundbeck Australia, as exclusive licensee, could bring infringement proceedings against Sandoz or whether the only party entitled to bring proceedings in such circumstances is Lundbeck Denmark, as patentee. Section 79 of the Patents Act confers upon a patentee the "same rights to start proceedings" for the doing of an act, including an infringement, where an extension of the term of a standard patent is granted after the expiry of the initial term of the patent as if the extension had been granted when the act was done. The appellants submitted that the absence of an express conferral of the same "right" for an exclusive licensee to start proceedings was anomalous for three reasons: (i) the statutory scheme of the Patents Act contemplates that exclusive licences might be granted (for example, in s 13(1)), so it would be anomalous if the exclusive licensee did not have the "right" to pursue infringement proceedings; (ii) if an extension of the term were granted immediately before the expiry of the 129 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 478 [269]. Edelman term of a patent, then the patentee or exclusive licensee could bring proceedings, so it would be anomalous if only the patentee could do so immediately after the extension of the term were granted; and (iii) if the extension of the term is granted either during or after the term of the patent, then s 78 limits the exclusive rights of the patentee during the period of the extension but, since Parliament could not have contemplated freedom from those limits for the exclusive licensee, both ss 78 and 79 must impliedly extend also to exclusive licensees. In effect, the submission of the appellants – that s 79 applies to an exclusive licensee – is that these anomalies combine to require that s 79 be read with the implication expressed in italics: "the patentee or exclusive licensee has, after the extension is granted, the same rights to start proceedings". The appellants' submission is effectively that this is an occasion of an error or infelicity in the drafting of legislation. Such errors, by inclusion or omission of only a few words, can radically change statutory meaning. But the correction of drafting errors, even substantial errors, does not defeat the intention of Parliament. To the contrary, such correction respects that intention. As with written contracts130, an implication might exist that gives a statutory provision a meaning that would directly contradict, or would substantially change the effect of, the literal meaning of the provision131. But the more that an implication "departs from the natural and ordinary meaning of the terms of the provision in the context in which they appear", the more plain it must be that the meaning is one that "Parliament intended it to have"132. The implication for which the appellants contended involves a large addition to the language of the provision, akin to the creation of a new term by applying s 79 also to exclusive licensees. Like implications in contractual instruments, a statutory implication that has effect as if the provision "contained additional words or omitted words involves a judgment of matters of degree" which is readily answered against "an insertion which is 'too big, or too much at variance with the language in fact used by the legislature'"133. To the extent that 130 Fitzgerald v Masters (1956) 95 CLR 420 at 426-427. 131 Associated Newspapers Ltd v Wavish (1956) 96 CLR 526 at 528; Director of Public Prosecutions (Nauru) v Fowler (1984) 154 CLR 627 at 630; Burragubba v Queensland (2015) 236 FCR 160 at 164 [18]. 132 Esso Australia Pty Ltd v Australian Workers' Union (2017) 263 CLR 551 at 582 133 Taylor v Owners – Strata Plan No 11564 (2014) 253 CLR 531 at 548 [38], citing Western Bank Ltd v Schindler [1977] Ch 1 at 18 and Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586 at 592; [2000] 2 All ER 109 at 115. Edelman they are anomalies at all, the alleged three anomalies identified by the appellants are insufficient to justify recognition of such a large implication. The first two anomalies depend upon an assumption that Parliament intended to treat the position of an extension of the term before the expiry of the term of a patent in the same way as the position after expiry. As the Full Court observed, that assumption may not be correct134. The third and final asserted anomaly is based on a misconception. No implication is needed in s 78 because, by limiting the rights of the patentee, s 78 also limits the derivative rights135 of the exclusive licensee to commence infringement proceedings conferred by s 120 of the Patents Act. The Full Court was therefore correct to conclude that Lundbeck Australia has no power to commence a proceeding for infringement of the Patent in respect of conduct which occurred during the extended term of the Patent. This ground of appeal in each of the appeals should be dismissed. Interest The second consequential issue concerns the date from which Lundbeck Denmark can claim interest under s 51A(1)(a) of the Federal Court of Australia Act on its claim under s 79 of the Patents Act. Section 51A(1)(a) empowers the Federal Court, in any proceedings for the recovery of any money, to include in the judgment sum an amount of interest on the whole or any part of the money due. The interest is to be awarded for the whole or any part of the period "between the date when the cause of action arose and the date as of which judgment is entered". The issue reduces to the time at which the "cause of action arose". The expression "cause of action" is slippery. It can mean different things in different contexts. Sometimes the expression is taken to mean a right136. The most common use of "cause of action", however, is in the sense set out in Letang v Cooper137, where, in a passage relied upon on many occasions in Australia138, Diplock LJ 134 Sandoz Pty Ltd v H Lundbeck A/S (2020) 384 ALR 35 at 62-63 [109]-[110]. 135 See, especially, Patents Act, s 120(2). 136 See Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 611. 137 [1965] 1 QB 232 at 242-243. See also the similar expositions in Carter v Egg and Egg Pulp Marketing Board (Vic) (1942) 66 CLR 557 at 600; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 611. 138 See, eg, Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 539; Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569 at 572; Edelman commenced his reasons with the description of a cause of action as "simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person". This common sense of a cause of action is the sense in which it is used in s 51A(1)(a) of the Federal Court of Australia Act. As Gaudron J described the reference to "cause of action" in that provision in The Commonwealth v SCI Operations Pty Ltd139, it is a "legal right enforceable by legal action". Section 79 of the Patents Act operates on past facts in that it creates a power for a patentee to "start proceedings" in respect of acts done after the expiry of the term of the patent and prior to the extension of the patent "as if the extension had been granted at the time when the act was done". The retroactive operation relies on a fiction that the extension was granted at the earlier date when the act was done. But s 79 does not create a further fiction to deem a patentee to have had the ability to obtain a remedy from the court at that earlier date. In other words, s 79 creates a new cause of action from the date of the grant of the extension, with that cause of action operating on past facts. It does not deem a cause of action to have arisen at that earlier date. The Full Court was therefore correct that interest under s 51A(1)(a) of the Federal Court of Australia Act could only accrue for Lundbeck Denmark's claim from 25 June 2014, being the date on which the Commissioner of Patents granted the extension to the term of the Patent. This ground of appeal in each of the appeals should be dismissed. Misleading or deceptive conduct The issue raised by Sandoz's notice of contention in the Pharma appeal is whether Sandoz engaged in misleading or deceptive conduct by its non-disclosure of the existing fact or circumstance that there was a possibility that the term of the Patent might be extended, thus exposing pharmacists to potential liability for infringement. Sandoz submitted that its conduct was not misleading or deceptive. Sandoz submitted that the primary judge erred by concluding that Sandoz made an implied representation that its products sold to pharmacists did not infringe any patent since, it was submitted, "a vendor would not normally be taken merely by selling a product to be warranting that the product does not infringe any patent". There is force in that submission, just as a licensor will not generally be Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 558; Keet v Ward [2011] WASCA 139 at [24]. 139 (1998) 192 CLR 285 at 303 [35]. Edelman taken to have impliedly warranted to the licensee that the patent is valid140. But this issue was not thoroughly argued in this Court, is arguably outside the terms of the notice of contention, and is not necessary to decide. The notice of contention must succeed on a different point. It is possible for an implied representation of fact to be misleading or deceptive if the representation, whilst true, is subject to a qualification which is not disclosed. If the qualification is material, then the non-disclosure of that qualification can be misleading141. In this case, any implied representation by Sandoz that the products it sold did not infringe any patent was true at the time the representation was made. But a qualification to such a representation, that there was a remote possibility that a future extension to the term of a patent might permit proceedings to be brought against the purchaser, was not material. That is, there was no material qualification to which any implied representation by Sandoz should have been subject. The primary judge found that the possibility that the term of the Patent might be extended was remote at the time of the settlement agreement in February 2007142. Her Honour did not suggest that this possibility was any more likely at the time of Sandoz's sales to pharmacists in June 2009. For this reason, Pharma did not establish at trial that the existence of the remote possibility was a sufficiently material qualification to any implied representation that Sandoz's products did not infringe any patent to have the effect that the non-disclosure of that qualification could be misleading or deceptive. There is a distinction between (i) an implied representation that medical practitioners, pharmacists, and patients are legally entitled to prescribe, dispense, or use a pharmaceutical product when they may not presently be so entitled143, and (ii) an implied representation that such persons are so entitled but that there is a remote possibility that a future extension to the term of a patent might permit proceedings to be brought against them. Any implied representation to pharmacists by Sandoz would fall within the second category. The remoteness of the possibility is such that the sales by Sandoz did not involve any misleading or deceptive conduct by Sandoz. 140 Suhr v Crofts (Engineers) Ltd (1932) 49 RPC 359 at 366. See also Johnson, Roughton and Cook, The Modern Law of Patents, 3rd ed (2014) at 568 [10.79]; Terrell on the Law of Patents, 19th ed (2020) at 564 [16-82]. 141 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 371 [23]. 142 H Lundbeck A/S v Sandoz Pty Ltd (2018) 137 IPR 408 at 483 [290]-[291]. 143 See, eg, Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd [No 3] (2011) 196 FCR Edelman Conclusion Orders should be made as proposed in the joint judgment.

HIGH COURT OF AUSTRALIA ROY MORGAN RESEARCH PTY LTD APPELLANT AND COMMISSIONER OF TAXATION & ANOR RESPONDENTS Roy Morgan Research Pty Ltd v Commissioner of Taxation [2011] HCA 35 28 September 2011 ORDER 1. Appeal dismissed. 2. The appellant pay the costs of the first respondent. On appeal from the Federal Court of Australia Representation J J Batrouney SC and K L Walker with G A Hill for the appellant (instructed by Hall & Wilcox) S P Donoghue for the first respondent (instructed by Australian Government Solicitor) S J Gageler SC, Solicitor-General of the Commonwealth with S P Donoghue and D F O'Leary for the second respondent (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Roy Morgan Research Pty Ltd v Commissioner of Taxation Constitutional law (Cth) – Taxation – s 51(ii) – Superannuation guarantee charge imposed upon employers who fail to provide to employees a prescribed level of superannuation – Charge debt due to Commonwealth and paid into Consolidated Revenue Fund for benefit of employees – Whether law imposing charge not a law with respect to taxation because charge is not imposed for "public purposes", and because it confers a "private and direct benefit" on employees of those employers who pay charge. Words and phrases – "charge", "compulsory exaction", "private and direct benefit", "public purposes". Constitution, s 51(ii). Superannuation Guarantee (Administration) Act 1992 (Cth), ss 16, 17. Superannuation Guarantee Charge Act 1992 (Cth), ss 5, 6. FRENCH CJ, GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ. In Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation1, the Full Court of the Federal Court (Keane CJ, Sundberg and Kenny JJ), on an "appeal" under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth), upheld the validity of the Superannuation Guarantee (Administration) Act 1992 (Cth) ("the Administration Act") and the Superannuation Guarantee Charge Act 1992 (Cth) ("the Charge Act"). By special leave, the appellant appeals to this Court against that decision. The appellant submits, inter alia, that the only available head of power to support the legislation is s 51(ii) of the Constitution, and that the superannuation guarantee charge ("the Charge") provided for in the legislation is not a tax because it is not imposed for "public purposes". For the reasons which follow, the constitutional challenge to the Administration Act and the Charge Act in this Court fails and the appeal should be dismissed. The legislation Broadly speaking, the effect of the legislation under challenge is that if, as specified in the Administration Act, an employer fails to provide to all employees a prescribed minimum level of superannuation then any shortfall represented by failure to meet that minimum level in full, becomes the Charge. This impost is levied on the employer by the Charge Act. The amount of the Charge is a debt due to the Commonwealth and payable to the respondent, the Commissioner of Taxation: Taxation Administration Act 1953 (Cth), Sched 1, s 255-5. The Charge includes a component for interest and an administration cost. The result is to supply an incentive to employers to make contributions to superannuation for their employees without incurring a liability to the Commissioner for the Charge. The revenue raised by the Charge is dealt with as "public money" to which Pt 3 (ss 8-16) and Div 2 of Pt 4 (ss 26-27) of the Financial Management and Accountability Act 1997 (Cth) apply. This reflects the operation of s 81 and s 83 of the Constitution. Section 81 states: "All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be (2010) 184 FCR 448. Crennan Bell appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution." Section 83 provides that money is not to be drawn "from the Treasury of the Commonwealth except under appropriation made by law". As the Full Court noted, in providing separately for the Charge Act and the Administration Act, the Parliament followed the well-established procedure to comply with the requirement of s 55 of the Constitution that laws imposing taxation shall deal only with the imposition of taxation2. Thus the Charge Act does no more than impose what is said to be a tax and fix the rate. It is the Administration Act which deals with the incidence, assessment and collection of the Charge. Section 3 of the Charge Act states that the Administration Act is incorporated and to be read as one with the Charge Act. In the argument advanced in this Court by the appellant, an attempt was made to draw support from the linkage between the Charge Act and the Administration Act for the proposition that the Charge Act is not what otherwise it obviously appears to be, namely, a law imposing taxation which complies in form with s 55 of the Constitution, and is not a law supported by s 51(ii). In response, the Attorney-General of the Commonwealth, the second respondent, referred to the rejection of a similar argument in Logan Downs Pty Ltd v Federal Commissioner of Taxation3. That argument had emphasised the association between the laws imposing taxation4 and the separate provisions for administration made by the Wool Industry Act 1962 (Cth). These required any wool broker who sold shorn wool for another to pay the tax imposed by the taxation laws and authorised recoupment of an amount equal to the tax paid by retention out of the proceeds of sale or by recovery from the purchaser of the wool. Barwick CJ, Kitto, Taylor, Menzies and Windeyer JJ5 observed that the (2010) 184 FCR 448 at 452. See also Northern Suburbs General Cemetery Reserve Trust v The Commonwealth (1993) 176 CLR 555 at 585; [1993] HCA 12; Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict) (2004) 220 CLR 388 at 407-412 [38]-[50]; [2004] HCA 53. (1965) 112 CLR 177 at 186; [1965] HCA 16. 4 Wool Tax Acts (No 1)-(No 5) 1964 (Cth). (1965) 112 CLR 177 at 186-187. Crennan Bell submission by the plaintiff invited an inference that the taxing legislation had been enacted to raise money to increase the Consolidated Revenue Fund with a view to making partial provision for the appropriations thereout to support the operations of the Australian Wool Board. Their Honours then said6: "However, even to draw this inference would not lead to the conclusion that the Wool Tax Acts were not laws with respect to taxation. It would do no more than reveal why Parliament had imposed the taxation in question." In that regard, it should be added that Pt 8 (ss 63A-71) of the Administration Act is headed "Payments of amounts of shortfall components for the benefit of employees". Part 8 applies to a charge payment in respect of the benefiting employees which is made by or on behalf of an employer (s 63A(1)). Section 63B is headed "Overview of this Part" and states that if a payment to which Pt 8 applies is made, the Commissioner is required to pay or otherwise deal with an amount called "the shortfall component" for the benefit of benefiting employees, as provided in ss 65-67. The "shortfall component", in general terms, is the lesser of the amounts paid by the employer as the Charge, and the amount of employee entitlement calculated at the time the payment was made (s 64A, s 64B). The Commissioner is obliged by Pt 8 to deal with this shortfall for the benefit of the employee by payments, directly to an employee aged 65 years or more and to an employee who has retired due to permanent incapacity or invalidity (ss 65A and 66); or to the legal personal representative of a deceased employee (s 67). Otherwise, the Commissioner is to deal with the shortfall by payment to a retirement savings account, an account with a complying superannuation fund or an account with a complying approved deposit fund, which in each case is held in the name of the employee and that is determined by the Commissioner to belong to the employee (s 65). Amounts which the Commissioner is required to pay under Pt 8 are payable out of the Consolidated Revenue Fund (established by s 81 of the Constitution). This is appropriated in accordance with s 83 of the Constitution by the standing appropriation made by s 71 of the Administration Act. (1965) 112 CLR 177 at 187. Crennan Bell The appellant's case The Full Court held (and this conclusion is not challenged by the appellant) that Pt 8 of the Administration Act is supported at least by the provision in s 51(xxiii) of the Constitution for the making by the Parliament of laws with respect to "invalid and old age pensions"7. However, the appellant challenges the validity of the provisions made in the Administration Act and the Charge Act dealing with the Charge itself. It submits, first, that these provisions confer a "private and direct benefit" on the employees of those employers who pay the Charge and that this is effected by the compulsory transfer of money from the employers. The second submission is that by reason of the conferring of a private and direct benefit in this way, the Charge is not imposed for "public purposes". The third submission is that an essential element for the characterisation of a "tax" is that it be imposed for "public purposes". It follows, the appellant submits, fourthly and finally, that neither the Charge Act nor the Administration Act is a law with respect to "taxation" within the meaning of s 51(ii) of the Constitution, and that, there being no other head of supporting power to be found in s 51, the legislation establishing the Charge and providing for its administration is invalid. The first and second submissions should not be accepted in an unqualified form, and, that being so, the final submission fails. In order to demonstrate why this is so, it is necessary to begin with some general considerations. Taxation The legislative power conferred by s 51(ii) is subject to the restriction in that paragraph "but so as not to discriminate between States or parts of States". Of the term "taxation" as it appears in s 51(ii), Isaacs J said in 1908 that it was "a word so plain and comprehensive that it would be difficult to divine anything to surpass it in simplicity and amplitude"8. Subsequently, in The Commonwealth v (2010) 184 FCR 448 at 481 [98]-[100]. 8 R v Barger (1908) 6 CLR 41 at 82; [1908] HCA 43. Crennan Bell Colonial Combing, Spinning and Weaving Co Ltd9, Isaacs J emphasised that the executive power does not extend to the levying of taxation and that this requires the exercise of legislative power. There are a number of references in the Constitution to taxation, in addition to that in s 51(ii). Reference has already been made to s 55. Sections 53, 54 and 55 impose particular requirements upon the powers and procedures of the two Chambers of the Parliament with respect to laws and proposed laws imposing or dealing with the imposition of taxation. Failure to observe the requirements of s 55 brought down the legislation at issue in Air International v The Commonwealth10 and Australian Tape Caledonie Manufacturers Association Ltd v The Commonwealth11. Section 114 is a prohibition directed both to the Parliaments of the Commonwealth and those of the States. Without the consent of the Parliament of the Commonwealth, a State may not the Commonwealth; the Commonwealth, on its part, may not impose any tax on property of any kind belonging to a State. tax on property of any kind belonging impose any Further, with respect to federal laws, s 51(xxxi) of the Constitution requires just terms for certain acquisitions of property. However, taxation stands outside the guarantee provided by s 51(xxxi)12. The result is that some laws which are held not to impose taxes nevertheless may be invalid by reason of s 51(xxxi). In Tape Manufacturers, the law under challenge was held not to be a law with respect to the acquisition of property but to be a law imposing taxation which nevertheless was invalid because there had been a contravention of s 55 of the Constitution. It should be added that the discernment of a legislative objective to raise revenue is not necessarily a determinant that the exaction in question bears the (1922) 31 CLR 421 at 433-434, 443-445; see also at 459-461 per Starke J; [1922] HCA 62. See further Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 44 [80]; [2009] HCA 23. 10 (1988) 165 CLR 462 at 471-472; [1988] HCA 61. 11 (1993) 176 CLR 480 at 507-508; [1993] HCA 10. 12 Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 408; [1979] HCA 47. Crennan Bell character of taxation13. For example, the objective of the imposition of a customs tariff at a high level may be to protect domestic industry by providing a disincentive to the importation of competing products. The point was made by Kitto J in Fairfax v Federal Commissioner of Taxation14 with reference to the statement in United States v Sanchez15: "It is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed. Sonzinsky v United States16. The principle applies even though the revenue obtained is obviously negligible, Sonzinsky v United States17, or the revenue purpose of the tax may be secondary, J W Hampton [Jr] & Co v United States18. Nor does a tax statute necessarily fall because it touches on activities which Congress might not otherwise regulate". The notion expressed in various other taxation cases of "the purposes of the administration of Government" and variants thereof thus have to be understood as encompassing the considerations just mentioned. Public purposes This expression, upon which the appellant placed much emphasis for its argument, is used in various legal contexts. These include its use in statutory expressions designed to confer or preserve an immunity from rating and other revenue laws, and in expressions designed to limit the scope of powers of 13 cf Airservices Australia v Canadian Airlines International Ltd (1999) 202 CLR 133 at 178 [90]; [1999] HCA 62; Luton v Lessels (2002) 210 CLR 333 at 343-344 [13]; [2002] HCA 13. 14 (1965) 114 CLR 1 at 12; [1965] HCA 64. 15 340 US 42 at 44 (1950). 16 300 US 506 at 513-514 (1937). 17 300 US 506 at 513-514 (1937). Crennan Bell resumption19. But, as was indicated in Griffiths v Minister for Lands, Planning and Environment20, this statutory usage has reflected longstanding authority which treats "public purposes" as the purposes of the administration of government, a notion associated with the expressions "the use and service of the Crown" and of "the Public Service". These latter expressions were used in the United Kingdom and then in the Australian colonies21 to identify charges by statute upon the Consolidated Fund. They were used, not as a limitation upon the activities of the executive branch of government, but to encompass the range of those activities it conducted from time to time, whether in exercise of the executive power itself, or in the exercise of functions conferred by statute22. This particular source in United Kingdom and colonial constitutional practice should be kept in mind when considering the earlier authorities in this Court which link the expression "public purposes" to the constitutional conception of "taxation". In particular, the phrase "public purposes" is not synonymous with "public interest"23. Section 81 of the Constitution does not use the expression "public service of the Commonwealth"; the phrase "the purposes of the Commonwealth" was preferred, so as to encompass the return of moneys to the States and thus to broaden, not narrow, the notions of "public service" and "public purposes"24. 19 See for example, Lands Acquisition Act 1955 (Cth), s 5(1); Clunies-Ross v The Commonwealth (1984) 155 CLR 193 at 199-200; [1984] HCA 65; Griffiths v Minister for Lands, Planning and Environment (2008) 235 CLR 232 at 242-244 [23]-[34]; [2008] HCA 20. 20 (2008) 235 CLR 232 at 242 [25]. 21 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 78-80 [198]-[202]. 22 Pfizer Corporation v Minister of Health [1965] AC 512 at 533-534, 566-567. 23 cf Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 504-505. 24 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 41-43 [68]-[75], Crennan Bell Against this background it is not surprising that in R v Barger25, "The primary meaning of 'taxation' is raising money for the purposes of government by means of contributions from individual persons." (emphasis added) However, it became apparent in the early days of this Court that the necessary "purposes of government" might still be served where, pursuant to statute, the entity imposing, collecting and applying the proceeds of a tax was not the Commonwealth or a State itself. The Municipal Council of Sydney, established and continued by the Sydney Corporation Act 1879 (NSW) and the consolidating statute, the Sydney Corporation Act 1902 (NSW) ("the 1902 Act") respectively, was empowered to levy rates in respect of lands situated within the City of Sydney. Those lands included land which had become vested in the Commonwealth by operation of s 85(i) of the Constitution. It was unsuccessfully contended in The Municipal Council of Sydney v The Commonwealth26 that a municipal rate could not be a tax within the meaning of s 114 of the Constitution. The Court accepted the submission by the Commonwealth that the rates must be regarded as imposed by the State because the legislation operated as a permissible delegation of the taxing power of the State27. O'Connor J said28: "[Section 114] would, indeed, fall short of its object if it prohibited only taxation directly imposed by a State Act of Parliament, and left Commonwealth property open to taxation by a municipality or any other agency which the State Parliament might choose to invest with powers of taxation. But no such restricted interpretation is necessary or reasonable. The State, being the repository of the whole executive and legislative powers of the community, may create subordinate bodies, such as municipalities, hand over to them the care of local interest, and give them 25 (1908) 6 CLR 41 at 68. 26 (1904) 1 CLR 208; [1904] HCA 50. 27 (1904) 1 CLR 208 at 230, 234, 240. 28 (1904) 1 CLR 208 at 240. Crennan Bell such powers of raising money by rates or taxes as may be necessary for the proper care of these interests. But in all such cases these powers are exercised by the subordinate body as agent of the power that created it." His Honour then referred to what had been said by Field J in Meriwether v Garrett29 with respect to the character of municipal corporations, as "mere instrumentalities of the State for the more convenient administration of local government". It should be noted that the rates levied and received by the Municipal Council of Sydney under the 1902 Act were raised "for the general expenditure of the city" (s 120(1)) and were to be paid not into the treasury of the State, but "into the office of the city treasurer" (s 120(2)). Hence, by parity of reasoning, it is not the case that an impost by federal law cannot be a tax unless it is received by the Commonwealth and so attracts s 81 of the Constitution30. The excise cases – "public authorities" Section 90 of the Constitution is directed to what otherwise might have been the concurrent powers of the Parliament of the Commonwealth and other Australian legislatures31 to impose particular forms of taxation, namely duties of customs and excise. Duties of customs must be uniform (s 88). Section 90 renders exclusive that power of the Parliament of the Commonwealth to impose duties of customs and excise and denies that competency to other legislatures. Many of the cases in which this Court has considered the nature of a law imposing taxation have concerned not federal but State laws. The issues that arose in those matters included, inter alia, whether the challenged impost answered the description of a tax and, if so, whether it answered the further description of a duty of excise. 29 102 US 472 at 511 (1880). 30 Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 503-504. 31 Including those to be established for the Territories: Capital Duplicators Pty Ltd v Australian Capital Territory (1992) 177 CLR 248; [1992] HCA 51. Crennan Bell The State laws successfully challenged in Attorney-General (NSW) v Homebush Flour Mills Ltd32, Matthews v Chicory Marketing Board (Vict)33 and Parton v Milk Board (Vict)34 involved statutory marketing schemes. These established: in Homebush35, a committee to fix price on flour consisting of a Minister, two officers of his Department, representatives of the flour mills and a representative of the master bakers; in Matthews36, Marketing Boards constituted by one member, appointed by the Governor in Council and by others elected by producers of the commodity; and, in Parton37, a Milk Board, which was a body corporate, whose members were appointed by the Governor in Council. The levy considered in Matthews was to be applied in work directed to the improvement of the quality of the commodity38, in Homebush to the relief of necessitous wheat farmers39, and in Parton for the provision of what were regarded by the legislature as benefits to those engaged in the milk industry40. In this setting, an issue was presented whether the statutory bodies had the character of public authorities sufficient to give to them the ability to impose, collect and expend moneys which had the character of taxes. In each case it was held that the State legislation imposed a tax (and that this was an excise). This was so notwithstanding the intermediate role of the 32 (1937) 56 CLR 390; [1937] HCA 3. 33 (1938) 60 CLR 263; [1938] HCA 38. 34 (1949) 80 CLR 229; [1949] HCA 67. 35 (1937) 56 CLR 390 at 409. 36 (1938) 60 CLR 263 at 287. 37 (1949) 80 CLR 229 at 230, 239. 38 (1938) 60 CLR 263 at 269. 39 (1937) 56 CLR 390 at 398. 40 (1949) 80 CLR 229 at 244, 254-255. Crennan Bell relevant committees and boards. In that regard, in Matthews, Dixon J41 remarked: "The Chicory Marketing Board is a public authority constituted under the statute by the Executive Government of the State. It is true that s 8(4) provides that a board shall not be deemed to represent the Crown for any purpose whatsoever. But this simply means that it is not a corporate servant or agent of the Crown, so that nothing it does can impose any liability upon the Crown nor, on the other hand, can it claim any of the immunities of the Crown." In Parton42, Dixon J said of the levy imposed upon "dairymen" that it was "clearly a tax", adding: "It is a compulsory exaction. It is an exaction for the purposes of expenditure out of a Treasury fund. The expenditure is by a government agency and the objects are governmental. It is not a charge for services." The Canadian decisions In Homebush43, counsel for the successful party, the defendant, cited as an authority indicating that which constitutes a tax, the recent decision of the Privy Council in Lower Mainland Dairy Products Sales Adjustment Committee v Crystal Dairy Ltd44. The Privy Council held to be taxes the "adjustment levies" imposed as part of a dairy marketing scheme in British Columbia. This involved the fixing of levies by an "adjustment committee" created pursuant to statute, with one member appointed by the Lieutenant-Governor in Council and the other two by local dairy farmers. Their Lordships further held that these were indirect taxes and thus beyond the powers of the Province of British Columbia having regard to ss 91(3) and 92(2) of the British North America Act 186745. 41 (1938) 60 CLR 263 at 289. 42 (1949) 80 CLR 229 at 258. 43 (1937) 56 CLR 390 at 393. 44 [1933] AC 168 at 172, 175, 176. 45 30 & 31 Vict c 3. Crennan Bell Their Lordships noted, in reaching this conclusion46, that the adjustment levies were compulsorily imposed by a statutory adjustment committee, that they were enforceable by law and added: "Their Lordships are of opinion that the Committee is a public authority, and that the imposition of these levies is for public purposes. Under s 22 the Lieutenant-Governor in Council has power to suspend the functions of a Committee, if its operations are adversely affecting the interest of consumers of milk or manufactured products, and the Committee is to report annually to the Minister and to send him every three months the auditor's report on their accounts (s 12, sub-s 2, and s 8A). The fact that the moneys so recovered are distributed as a bonus among the traders in the manufactured products market does not, in their Lordships' opinion, affect the taxing character of the levies made." The Privy Council referred, with apparent approval, to what had been said by Duff J in the Supreme Court of Canada in Lawson v Interior Tree Fruit and Vegetable Committee of Direction47. The legislation of British Columbia, considered by the Supreme Court in that case, constituted a Committee of Direction with the exclusive power to control and regulate the marketing of all tree fruits and vegetables grown in a particular portion of that Province. Duff J said he had no doubt that the levies imposed by the Committee under the powers conferred upon it by statute were taxes. He noted that the levies were enforceable by law and imposed under the authority of the legislature by a public body, namely a Committee, the chairman of which was appointed by the Lieutenant-Governor in Council. The Committee was invested with wide powers of regulation and control over the fruit and vegetable industry. Duff J added48: "The levy is also made for a public purpose. When such compulsory, not to say dictatorial, powers are vested in such a body by the [L]egislature, the purposes for which they are given are conclusively presumed to be public purposes." 46 [1933] AC 168 at 175. 47 [1931] SCR 357 at 362. 48 [1931] SCR 357 at 363. Crennan Bell It is apparent, when this reference to "public purposes" is understood with an appreciation of its provenance outlined earlier in these reasons, that Duff J had been concerned to emphasise that, notwithstanding the interposition by statute of the Committee of Direction, and the conferral of the power to impose the levies, the levies still answered the basal requirement that a tax be imposed for the purposes of government. The remarks set out above by Dixon J in Matthews and Parton are of the same tenor. The Canadian authorities were cited in submission in Matthews49 and were taken up by Latham CJ50, Rich J51, Starke J52 and at length by Dixon J53. The usual description of a tax In Matthews, Latham CJ cited what had been said by the Privy Council in Lower Mainland Dairy Products Sales Adjustment Committee v Crystal Dairy Ltd54 in support of the proposition that the levy by the Chicory Marketing Board was "plainly a tax"55. His Honour added, in a sentence which has been repeated, but not always with acknowledgement of its derivation: "It is a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered." (footnote omitted) The majority in Tape Manufacturers56 suggested that it is not essential to the concept of a tax that the exaction should be by a public authority. That 49 (1938) 60 CLR 263 at 266. 50 (1938) 60 CLR 263 at 276. 51 (1938) 60 CLR 263 at 281. 52 (1938) 60 CLR 263 at 284. 53 (1938) 60 CLR 263 at 289-291. 54 [1933] AC 168 at 175. 55 (1938) 60 CLR 263 at 276. 56 (1993) 176 CLR 480 at 501. Crennan Bell suggestion would constitute a large and controversial step beyond what was said in Matthews. As the reasons of the majority in Tape Manufacturers show, whether that step could or should be taken depends, at least in part, upon what meaning would be given to the expression "non-public" authority if "one of its functions is to levy, demand or receive exactions to be expended on public purposes"57. It was not necessary to decide that question in Tape Manufacturers and the majority in that case did not do so. Nor is it necessary in this case, given the addition of the proceeds of the Charge to the Consolidated Revenue Fund, to pursue that question, or any broader questions about whether it is essential to the concept of a tax that the exaction should be by a public authority. Speaking of the "recoupment tax" imposed by the federal legislation considered in MacCormick v Federal Commissioner of Taxation58, Gibbs CJ, Wilson, Deane and Dawson JJ said59: "The exactions in question answer the usual description of a tax. They are compulsory. They are to raise money for governmental purposes. They do not constitute payment for services rendered: see Matthews v Chicory Marketing Board (Vict)60, per Latham CJ; Leake v Commissioner of State Taxation61, per Dwyer J. They are not penalties since the liability to pay the exactions does not arise from any failure to discharge antecedent obligations on the part of the persons upon whom the exactions fall: see R v Barger62, per Isaacs J. They are not arbitrary. Liability is imposed by reference to criteria which are sufficiently general in their application and which mark out the objects and subject-matter of the tax: see Federal Commissioner of Taxation v Hipsleys Ltd63." 57 (1993) 176 CLR 480 at 501. 58 (1984) 158 CLR 622 at 639; [1984] HCA 20. 59 (1984) 158 CLR 622 at 639. 60 (1938) 60 CLR 263 at 276. 61 (1934) 36 WALR 66 at 67-68. 62 (1908) 6 CLR 41 at 54. 63 (1926) 38 CLR 219 at 236; [1926] HCA 34. Crennan Bell Their Honours added64: "For an impost to satisfy the description of a tax it must be possible to differentiate it from an arbitrary exaction and this can only be done by reference to the criteria by which liability to pay the tax is imposed. Not only must it be possible to point to the criteria themselves, but it must be possible to show that the way in which they are applied does not involve the imposition of liability in an arbitrary or capricious manner." The source of that last requirement was located by their Honours in what was said by Dixon CJ in Deputy Federal Commissioner of Taxation v Brown65, namely that compliance with the Constitution requires that liability for tax be not imposed, without leaving open to the taxpayer some judicial process by which the taxpayer may show that in truth the tax was exigible or not exigible in the sum assessed. The notion of "compulsory exaction" has received some refinement in the decided cases. The nature of a particular exaction or the end to which revenues raised might be put may be such as to take the exaction outside the constitutional conception of "taxation". As s 53 of the Constitution itself recognises, a law does not impose taxation by reason only that it contains provisions for the imposition or the appropriation of fines or other pecuniary penalties, or for the demand or payment of fees for licenses, or fees for services. Further examples are provided by decisions in Moore v The Commonwealth66, Clyne v Federal Commissioner of Taxation67, Airservices Australia v Canadian Airlines International Ltd68, and 64 (1984) 158 CLR 622 at 640. See also Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 467. 65 (1958) 100 CLR 32 at 40; [1958] HCA 2. See also Commissioner of Taxation v Clyne (1958) 100 CLR 246 at 258; [1958] HCA 10. 66 (1951) 82 CLR 547; [1951] HCA 10; cf Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 94 [255]. 67 (1958) 100 CLR 246. 68 (1999) 202 CLR 133. 69 (2002) 210 CLR 333. Crennan Bell In Moore, the money raised from each wool producer was to be applied in satisfaction of its assessed income tax or provisional income tax and otherwise was to be refunded to the producer; the laws in question were supported by s 51(ii) of the Constitution but did not themselves impose a tax so as to have required observance of s 55 by the Parliament70. Likewise, it was held in Clyne that the liability to pay provisional tax was but ancillary to the liability to pay income tax71. The charges imposed on the airlines which were considered in Airservices Australia were examples of financial burdens placed upon "users" to fund the maintenance of public assets and the provision of public services. Finally, the scheme established by the two statutes considered in Luton v Lessels provided a new mechanism for the enforcement of existing obligations to make child maintenance payments. The legislation did so by the substitution of a new obligation to the Commonwealth to be owed by the obligor and a new right against the Commonwealth owed by the obligee, measured by reference to the The present appeal - conclusion The exaction represented by the Charge, contrary to the appellant's submission, is not of a nature which takes it outside the constitutional conception of "taxation". None of the examples considered above are applicable here. The legislation considered in the recent decisions which bears the closest analogy to the Charge Act and the Administration Act is that which was the subject of Northern Suburbs General Cemetery Reserve Trust v The Commonwealth73. In that case, the Court upheld the validity of the Training Guarantee Act 1990 (Cth) and the Training Guarantee (Administration) Act 1990 (Cth). The 70 (1951) 82 CLR 547 at 568-569, 576, 581-582. 71 (1958) 100 CLR 246 at 260-261. 72 (2002) 210 CLR 333 at 355 [60]. 73 (1993) 176 CLR 555. Crennan Bell legislation defined a minimum amount which the employer notionally was required to expend in the training of its workforce. A charge was imposed corresponding to the amount by which the actual expenditure on training by each employer fell short of that minimum amount; the employer was rendered liable to pay the amount of the shortfall to the Commissioner and thus into the Consolidated Revenue Fund; an equivalent amount was appropriated from the Consolidated Revenue Fund into a trust account which was expended on workforce training, in particular by payments made pursuant to agreements between the Commonwealth and the States. The appellant in its submissions concerning Northern Suburbs emphasised that under the training guarantee scheme upheld in that case, and unlike the situation in the present case, there was no "linkage" in the sense of a requirement that funds collected under the charge be expended on training of the particular employees paying the charge. That consideration was significant for the decision in Northern Suburbs but not in the way in which the appellant submitted. The absence of a requirement that moneys disbursed be expended upon eligible training programs by those employers who had incurred a liability to pay the charge was significant. This indicated an absence of a sufficient relationship between the liability to pay and the provision of employment related training, to warrant characterising the liability to pay the charge as a fee for services, or as something akin to a fee for services provided to that employer74. The Court in Northern Suburbs also emphasised a point made earlier in these reasons: that the raising of revenue is secondary to the attainment of some other legislative object is no reason for treating an impost otherwise than as a tax75. As Latham CJ pointed out in Radio Corporation Pty Ltd v The Commonwealth76, this is so even if the legislation is designed for the purpose of carrying out a policy affecting matters not directly within the legislative competence of the Parliament of the Commonwealth. 74 (1993) 176 CLR 555 at 568. 75 (1993) 176 CLR 555 at 569, 589. 76 (1938) 59 CLR 170 at 179-180; [1938] HCA 9. Crennan Bell The submission by the appellant that the Charge is invalid because the legislation confers upon employees a "private and direct benefit" cannot be accepted. Nor does this "linkage" indicate that the Charge is not imposed by the Parliament for "public purposes". It is settled that the imposition of a tax for the benefit of the Consolidated Revenue Fund is made for public purposes77. That is not to say that the receipt of funds into the Consolidated Revenue Fund conclusively establishes their character as the proceeds of a tax. But it does establish in the present case that the Charge is imposed for "public purposes" and thus, if other necessary criteria are met, as they are in this case, the Charge is a valid tax. Moneys received into the Consolidated Revenue Fund are available to be appropriated for any purpose for which the Parliament may lawfully spend money; this is so, whatever the purpose for which those moneys were raised78. In the First Uniform Tax Case, Latham CJ explained79: "It is doubtful whether Commonwealth revenue can be earmarked except at the point of expenditure (ie, not as revenue) by an appropriation Act ... All taxation moneys must pass into the Consolidated Revenue Fund (s 81), where their identity is lost, and whence they can be taken only by an appropriation Act. An appropriation Act could provide that a sum measured by the receipts under a particular tax Act should be applied to a particular purpose, but this would mean only that the sum so fixed would be taken out of the general consolidated revenue. Thus there can be no earmarking in the ordinary sense of any Commonwealth revenue." The case presented by the appellant appears to depend upon the proposition that payments of the Charge by an employer can be traced through the Consolidated Revenue Fund with the consequence that any payments made to employees under Pt 8 of the Administration Act are properly viewed as having 77 Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 503, 522. 78 Moore v The Commonwealth (1951) 82 CLR 547 at 561 per Latham CJ, 572 per McTiernan J; Parton v Milk Board (Vict) (1949) 80 CLR 229 at 258 per Dixon J; R v Barger (1908) 6 CLR 41 at 82 per Isaacs J. 79 South Australia v The Commonwealth (1942) 65 CLR 373 at 414. Crennan Bell come from the employer. That would involve earmarking of the very kind that the establishment of the Consolidated Revenue Fund (and its predecessors in the United Kingdom and the Australian colonies) was designed to prevent. When the Charge is paid by a particular employer into the Consolidated Revenue Fund, its identity is lost. The funds raised by the Charge are thereafter available under s 83 of the Constitution for an appropriation to be spent on any purpose for which the Commonwealth may lawfully spend money. Orders The appeal should be dismissed with costs. HEYDON J. There is no general duty on private employers to pay superannuation contributions to superannuation funds for the benefit of their employees. But particular obligations to pay superannuation contributions can arise in various ways. They may be created by an award or certified agreement. They may be created by contract. This appeal concerns the legislative validity of an indirect method of ensuring the payment of superannuation contributions80. The legislation Sections 5 and 6 of the Superannuation Guarantee Charge Act 1992 (Cth) impose a superannuation guarantee charge on employers. It is calculated by reference to an employer's "superannuation guarantee shortfall": Superannuation Guarantee (Administration) Act 1992 (Cth), s 17. That shortfall is the difference between nine percent of a given employee's total salary or wages for a quarter and what the employer contributed to a retirement savings account or certain types of superannuation fund for the employee's benefit81, plus a nominal interest component and an administration component82. The function of the interest component is to compensate for fund earnings foregone by the failure to pay the nine percent. The function of the administrative component is to recover expenses associated with administering the superannuation guarantee charge. The legislation creates an obligation on the employer to pay that charge to the Commissioner of Taxation which is enforceable as a debt due to the Commonwealth83. The superannuation guarantee charge is to be paid into the Consolidated Revenue Fund. A similar sum (but without the administration component) is then to be paid out to a superannuation fund for the benefit of the The appellant's submission in outline The appellant submitted that the superannuation guarantee charge is not a tax within the meaning of s 51(ii) of the Constitution. It contended that the payment into the Consolidated Revenue Fund is directly correlated with the payment out to a superannuation fund for the benefit of the relevant employee. It submitted that the superannuation guarantee charge is not a "tax" because 80 The relevant circumstances and provisions are described in the joint judgment. 81 See ss 19, 22 and 23 of the Superannuation Guarantee (Administration) Act 1992 (Cth). 82 See s 17 of the Superannuation Guarantee (Administration) Act 1992 (Cth). 83 See Taxation Administration Act 1953 (Cth), Sched 1, s 255-5(1)(a). 84 See Pt 8 of the Superannuation Guarantee (Administration) Act 1992 (Cth). although it might be characterised as an exaction imposed in the public interest, it is not for a public purpose because it confers "a private and direct benefit" on the relevant employee. In Matthews v Chicory Marketing Board (Vict)85 Latham CJ described a tax as follows: "a compulsory exaction of money by a public authority for public purposes, enforceable by law, and … not a payment for services rendered". Inherent in the appellant's submissions was an acceptance of the fact that the superannuation guarantee charge met every requirement but one of that description – the "public purposes" requirement. The function of the legislation The superannuation guarantee charge provides an incentive to employers to make superannuation contributions at the rate of nine percent of employees' wages. It ensures that in relation to the employees of employers who fail to do so there will be payments into approved superannuation funds equivalent to those which the employers did not make. There are significant factors influencing employers to make superannuation contributions directly to superannuation funds for their employees' benefit rather than pay the superannuation guarantee charge. Direct superannuation contributions are tax deductible86; payments of the superannuation guarantee charge are not87. Payments of direct superannuation contributions avoid the nominal interest component and the administration component of the superannuation guarantee shortfall. And in other respects the superannuation guarantee charge may be higher than the corresponding direct superannuation contribution. In a perfect world, no superannuation guarantee charge would be levied at all. But it tends to persuade employers to make direct superannuation contributions. This achieves public purposes quite independently of any revenue collected through it. Those public purposes centre on the encouragement of employers to contribute to superannuation funds so as to meet the needs of aged or infirm employees and to reduce the pension burdens which would otherwise have to be funded by the government. 85 (1938) 60 CLR 263 at 276; [1938] HCA 38. 86 Income Tax Assessment Act 1997 (Cth), s 290-60; prior to 15 March 2007, Income Tax Assessment Act 1936 (Cth), s 82AAC. 87 Income Tax Assessment Act 1997 (Cth), s 26-95; prior to 14 September 2006, Income Tax Assessment Act 1936 (Cth), s 51(9). Some authorities In Fairfax v Federal Commissioner of Taxation, Windeyer J said88: "Taxes are ordinarily levied to replenish the Treasury, that is to provide the Crown with revenue to meet the expenses of government." Leaving to one side the "administration component" in the superannuation guarantee shortfall, what is paid into the Consolidated Revenue Fund pursuant to the legislative scheme under consideration is not to meet the expenses of government. The difficulty for the appellant is that even if taxes are ordinarily levied to replenish the Treasury, there are authorities illustrating less ordinary instances where financial exactions have not replenished the Treasury but have been held to be taxes. Thus in Fairfax v Federal Commissioner of Taxation89, a law denying tax advantages to employees' superannuation funds unless their trustees invested in Commonwealth and other public securities was held to be supported by s 51(ii) of the Constitution. Kitto J said90: "it is by no means a settled doctrine that a law which purports to provide for a tax upon behaviour is in substance not a law with respect to taxation if it exhibits on its face a purpose of suppressing or discouraging the behaviour and is to be explained more convincingly as a means to that end than as a means to provide the Government with revenue." The superannuation guarantee charge is modelled on the Training Guarantee Act 1990 (Cth) and the Training Guarantee (Administration) Act 1990 (Cth). The validity of that legislation was upheld in Northern Suburbs General Cemetery Reserve Trust v The Commonwealth91. The legislation created a training guarantee scheme. That scheme defined a minimum amount that each employer was notionally required to expend in training its workforce. The legislation imposed a charge corresponding to the amount by which the employer's actual expenditure on training fell short of that minimum amount. The employer was liable to pay that amount to the Commissioner of Taxation, ie into the Consolidated Revenue Fund. Provision was made for monies to be taken from the Consolidated Revenue Fund to be expended, among other things, on workforce training pursuant to training guarantee agreements between the Commonwealth on the one hand and the States and Territories on the other on the advice of bodies containing representatives of government, employers and 88 (1965) 114 CLR 1 at 19; [1965] HCA 64. 89 (1965) 114 CLR 1. 90 (1965) 114 CLR 1 at 11. 91 (1993) 176 CLR 555; [1993] HCA 12. trade unions. The reasoning of this Court upholding the charge as a tax operated on the basis that industrial training is a public purpose. The provision of workplace superannuation is similarly a public purpose. The appellant did not submit that the Northern Suburbs case should be overruled, but did submit that it was distinguishable. The point of distinction relied on was that the scheme in that case did not require the funds that were collected from employers which had not trained their workforces to be spent on training the employees of those particular employers. Instead the funds were, among other things, to be spent by State or Territory governments under training guarantee agreements. That circumstance was used by this Court as the basis for a conclusion that the charge was not a fee for service; it was not crucial in reaching the conclusion that the funds raised were applied for "public purposes"92. Accordingly the point of distinction relied on is not available. In all other basic respects the two legislative schemes are materially similar. In particular, each scheme contemplated as the preferable and primary course direct payment by the employers rather than payment only through the charges. The charges are only secondary in the sense that the duty to pay them serves as a means of achieving the preferable course of ensuring direct payment by the employers. As Mason CJ, Deane, Toohey and Gaudron JJ said93: "the fact that the revenue-raising burden is merely secondary to the attainment of some other object or objects is not a reason for treating the charge otherwise than as a tax." The similarity in the two legislative schemes invalidates the appellant's reliance on "private and direct benefit" as pointing against the existence of a public purpose. Even if the superannuation legislation confers a "private and direct benefit", that conferral operates as part of a scheme in which the threat of having to pay the superannuation guarantee charge into the Consolidated Revenue Fund, thereby operating as an indirect source of payments from the Consolidated Revenue Fund in favour of employees' superannuation funds, is essentially a method of vindicating the primary purpose of influencing employers to make payments directly into superannuation funds. That primary purpose is a public purpose. The question, then, is whether the superannuation guarantee charge, considered as an exaction, is a tax. To the extent that employers make payments directly into employees' superannuation funds, there will be no exaction; to the extent that they do not, there will be. The legislative scheme uses the threat of the exaction to prevent the need to pay it from arising. But each occasion when 92 (1993) 176 CLR 555 at 567-568 per Mason CJ, Deane, Toohey and Gaudron JJ, 584 per Brennan J, 587-588 per Dawson J and 596 per McHugh J. 93 (1993) 176 CLR 555 at 569 (footnote omitted). the need to pay it arises tends to encourage others later so to arrange their affairs that they do not have to pay it. In the Northern Suburbs case the spending of the exaction on training did not prevent the exaction from being a tax. So here, the spending of the exaction on payments into superannuation funds for the benefit of employees does not prevent the exaction from being a tax. The appellant did not submit that the Northern Suburbs case should be overruled. It cannot be distinguished. It must therefore be applied. Its application leads to the conclusion that the superannuation guarantee charge is a tax. The appellant contended that Luton v Lessels94 was indistinguishable from the present case. The legislative scheme under consideration in Luton v Lessels was directed to persons who had defaulted in their existing obligations to make payments of child maintenance. The legislation terminated those obligations. It substituted for them a new right in the person caring for the child to claim payment from the Commonwealth, and gave powers to an official to collect the relevant amounts from the defaulter, including a power to issue garnishee notices to the defaulter's employer. This Court held that the legislation did not have to comply with s 55 of the Constitution because it did not provide for the imposition of a tax. Instead it created a new mechanism for the enforcement of an existing private obligation by substituting for the obligation of the defaulter to pay a carer for the child's upkeep an obligation of the defaulter to pay the Commonwealth coupled with the creation of new rights in the carer against the Commonwealth. Luton v Lessels is distinguishable because there the obligation created in the Commonwealth was created in substitution for a former obligation of another person which was terminated. Here no particular obligations of employers to make payments into superannuation funds for the benefit of their employees are terminated, although compliance with those obligations will reduce the charge, and to the extent that payments are made into superannuation funds from the Consolidated Revenue Fund this will eliminate or destroy the quantum of damages which the employees can claim from their employers for breach of these obligations. The duty to pay the superannuation guarantee charge does not depend on the existence of any obligation to make payments into superannuation funds. And no duty is created on employers to make contributions into those superannuation funds. In Luton v Lessels the legislation created a new legal obligation to do something in substitution for an existing one. Here the legislation merely creates an incentive to do something, whether or not there was any obligation to do it. 94 (2002) 210 CLR 333; [2002] HCA 13. Finally, the appellant relied on Luton v Lessels as exemplifying a distinction between "public purposes" as a necessary element in a tax and "the public interest" which was not sufficient to satisfy the "public purposes" element in a tax. The appellant did not demonstrate that the references to "public interest" on which it relied in Luton v Lessels95 were supportive of the proposition that the purposes of the superannuation legislation were matters only of "public interest", not "public purpose". A single characterisation fallacy There is one other difficulty in the appellant's submissions. They postulate a distinction between characterising legislation as having "public purposes" and characterising legislation as conferring "private and direct benefits", as though an instance falling within the second branch of the distinction necessarily prevented it from also falling within the first. That does not follow. In this case the legislative conferral of what the appellant called "private and direct benefits" vindicates public purposes. Questions not arising For those reasons the superannuation guarantee charge is a tax. It is therefore not necessary to express a view on other issues which arose in argument, such as whether a tax can include an exaction by a non-public authority96; whether an exaction can be a tax even though it is not for public purposes97; whether the appellant's argument must fail because it erroneously treats the way the monies spent out of the Consolidated Revenue Fund as controlling the character of the superannuation guarantee charge; whether Luton v Lessels98 overruled Australian Tape Manufacturers Association Ltd v The Commonwealth99; and whether it is a sufficient definition of a tax that it be a compulsory exaction by reference to criteria of sufficiently general application. 95 (2002) 210 CLR 333 at 343 [12] and 352 [48]. 96 Cf Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 467; [1988] HCA 61; Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 501; [1993] HCA 10. 97 Cf Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 467. 98 (2002) 210 CLR 333. 99 (1993) 176 CLR 480. Orders The second respondent (the Attorney-General of The first respondent (the Commissioner of Taxation) took no active part in the argument. the Commonwealth) did. The first respondent sought a costs order. The second respondent did not, for the reason that his status as a party arose directly from his intervention before the Full Court of the Federal Court of Australia. That is a stance highly favourable to the interests of the appellant. In the circumstances the appeal should be dismissed, and the appellant should pay the first respondent's costs.

HIGH COURT OF AUSTRALIA ROADS AND TRAFFIC AUTHORITY APPELLANT AND GRANT ROYAL & ANOR RESPONDENTS Roads and Traffic Authority v Royal [2008] HCA 19 14 May 2008 ORDER 1. Appeal allowed with costs. 2. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 4 April 2007 as varied by the further order made by consent on 1 August 2007, and in their place order that the appeal to that Court be dismissed with costs. On appeal from the Supreme Court of New South Wales Representation J E Maconachie QC with T F McKenzie for the appellant (instructed by McCabe Terrill Lawyers) S J Harben SC with S B Lowe for the first respondent (instructed by Rankin & Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Roads and Traffic Authority v Royal Torts – Causation – Motor vehicle accident – Whether design of intersection a cause of the accident. Negligence – Causation of damage at common law – Causation in fact – Whether multiple causes of damage exist – Whether highway construction and design a material contribution to collision – Whether foreseeable risk of harm to persons such as the plaintiff – "But for" test in causation – Considerations relevant to deciding contested questions of causation – Whether correct approach taken to question of causation by Court of Appeal in reversing conclusion of primary judge – Whether existence of Law Reform (Miscellaneous Provisions) Act 1946 (NSW) providing for contribution by tortfeasors relevant to causation in fact. Appeal – Advantages enjoyed by primary judge in deciding contested question of causation of motor vehicle collision – Decision on question of fact – Whether Court of Appeal erred in giving effect to its own conclusion about causation – Whether Court of Appeal fulfilling duty to conduct an appeal on disputed questions of fact by reaching its own independent conclusion on the facts – Whether advantages of primary judge ought to have restrained Court of Appeal from substituting its own conclusion – Whether Court of Appeal applied incorrect legal test for deciding question of causation of motor vehicle collision. Words and phrases – "a result of a tort" – "the extent of responsibility for the damage". Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5. Supreme Court Act 1970 (NSW), s 75A. GUMMOW, HAYNE AND HEYDON JJ. The background At about 8.40am on Monday 12 March 2001, Grant Royal, the first defendant and first respondent in this Court ("the defendant") was driving north along the Pacific Highway in a rural area near Wauchope. His car struck a car driven by George Smurthwaite, the plaintiff and second respondent ("the plaintiff"). The weather was fine. The light was good. Although the road was slightly damp in places from overnight rain, that played no role in the collision. The plaintiff was driving from the west to the east along a road which intersected with the Pacific Highway. To the west of the intersection it was called "Bago Road", and to the east it was called "Boyds Road". The plaintiff brought proceedings in negligence against the defendant and the Roads and Traffic Authority of NSW ("the appellant"). Both the defendant and the appellant denied negligence and alleged contributory negligence by the plaintiff. They also cross-claimed against each other. The trial was conducted in the District Court of New South Wales (Phelan DCJ). The trial judge found that the "primary cause" of the collision was the defendant's breach of his duty of care to the plaintiff. He also found that the damages payable to the plaintiff should be reduced by one-third on account of the contributory negligence of the plaintiff. He gave judgment for the plaintiff for $871,019.50. He appeared to find that the appellant was not in breach of its duty to the plaintiff. Accordingly he said nothing about the causative role of the appellant, and dismissed the defendant's cross-claim against it. The defendant appealed to the Court of Appeal, Supreme Court of New South Wales (Santow, Tobias and Basten JJA). The defendant's appeal against the trial judge's orders in favour of the plaintiff, apart from complaints about damages and costs orders, contended that the plaintiff was 80 percent responsible for the collision. This aspect of the defendant's appeal was unanimously rejected. However, the Court of Appeal by majority (Basten JA dissenting) allowed the defendant's appeal against the trial judge's dismissal of the defendant's cross-claim against the appellant. The majority considered that the appellant was in breach of its duty of care: it knew that there had been crashes at the intersection, it should have moved a Stop sign so as to improve the vision of drivers the existing cross-intersection constructed in 1993, it should have constructed "a staggered T-intersection and not a cross-intersection which was pregnant with avoidable the plaintiff, and the position of instead of risk"1. After discussing causation questions in a manner complained of by the appellant in the present appeal, the majority concluded that the appellant should bear one-third of the judgment ordered against the defendant. Basten JA, on the other hand, considered that the issue of breach of duty could not be dealt with until one had identified what the cause of the collision was2. While he displayed some scepticism about the contention that the appellant was in breach of duty3, he did not deal with the question of the appellant's breach of duty beyond saying: "whatever the faults of the design of the intersection, they did not materially contribute to the accident in any relevant sense"4. He found the cause of the collision to lie in the negligent driving of the defendant and the plaintiff. The appellant was not given special leave to challenge the majority's conclusion that it was in breach of duty. The grant of special leave was limited to the question whether that breach caused the plaintiff's loss. The plaintiff, whose interests will not be affected by the outcome of the appeal either way, was joined in the appeal as second respondent, but filed a submitting appearance. The division in the Court of Appeal the cross-intersection from west Basten JA described the background of the collision as follows. For drivers proceeding over the cross-intersection was controlled by a Stop sign. At that point, the Pacific Highway had two lanes for through traffic proceeding north, a left turn lane for traffic turning into Bago Road, and a right turn lane for traffic turning off the highway to the east down Boyds Road. The plaintiff stopped his vehicle at the Stop sign on Bago Road, and then proceeded to cross. At that moment there were four vehicles on the highway in the vicinity of the cross-intersection. Two were in the left-hand turn lane turning into Bago Road. A third was a vehicle driven by the defendant. The fourth was a Telstra van, which was a little to east, 1 Royal v Smurthwaite (2007) 47 MVR 401 at 419 [92]. By the expression "staggered T-intersection" the majority meant a configuration pursuant to which drivers coming from Bago Road from west to east and wishing to cross the Pacific Highway in order to get to Boyds Road would make a left-hand turn into the left lane of the northbound carriageway, move across it to the right, and then make a right-hand turn some distance to the north so as to reach a new road connecting to the southbound carriageway. 2 Royal v Smurthwaite (2007) 47 MVR 401 at 429-430 [140]. 3 Royal v Smurthwaite (2007) 47 MVR 401 at 424 [122]. 4 Royal v Smurthwaite (2007) 47 MVR 401 at 434 [155]. distance behind the defendant's vehicle, and was driven by Mr Anthony Relf. The plaintiff crossed the two through lanes, and reached the right-hand turn lane before being hit by the defendant's vehicle. Basten JA described the cross-intersection as being set in a State forest, on the crest of a hill. For drivers coming from the west on Bago Road, there was a "reasonably steep inclination"5 approaching the Stop sign. For drivers going north on the Pacific Highway, the inclination was gentle. Although there was a dip in the Pacific Highway to the south of the cross-intersection, which meant that a driver at the Bago Road Stop sign could not see the road surface at all points, there was no interference with the vision of traffic approaching along the Pacific Highway. However, the Pacific Highway curved to the east on either side of the cross-intersection. As the plaintiff moved along Bago Road from the west and looked to his right, the Pacific Highway curved away from his side of the road and he was required to look across a grassy shoulder in order to see traffic approaching from a distance of more than 200 metres. His sight line of traffic up to 280 metres from the intersection was "reasonably unrestricted"6. (There was, however, according to the Court of Appeal majority, a visibility problem, to be discussed below7.) The speed limit on the Pacific Highway was 100 kilometres per hour, but there was an advisory speed sign 300 metres before the cross-intersection showing 85 kilometres per hour as the appropriate speed for negotiating the bend. The right-hand lane on the Pacific Highway for traffic wishing to go down Boyds Road in an easterly direction commenced 210 metres before the cross-intersection. The left turn lane for traffic leaving the Pacific Highway and travelling to the west along Bago Road commenced 150 metres before the intersection. Each of the lanes on the Pacific Highway was marked with arrows. Thus each of the turn lanes had arrows indicating that they were for turning traffic only and the two through lanes had arrows indicating that they were through lanes only. Basten JA then turned to the conduct of the plaintiff and the defendant. He found that although the plaintiff was unable to recall the events leading up to the collision because of his injuries, it was clear that he had stopped at the Stop sign. the cross-intersection that he looked to the south, in which case he would have seen the defendant's vehicle. He found that if the plaintiff had accelerated across the familiarity with the plaintiff's Basten JA inferred from 5 Royal v Smurthwaite (2007) 47 MVR 401 at 423 [112]. 6 Royal v Smurthwaite (2007) 47 MVR 401 at 423 [113]. intersection in a normal manner, he would have taken no more than 3.5 seconds to cross the Pacific Highway. The defendant was travelling with his vehicle set on cruise control for fuel economy reasons at 105 kilometres per hour, and, like the plaintiff, had travelled the road on many occasions. He accepted that he was about 150 metres away from the intersection when he saw the plaintiff begin to move off. Basten JA then said8: "Accepting the defendant's evidence that he was travelling at 105 km per hour when he saw the plaintiff move off from the stop sign, that speed equated with 29.2 m per second so that, even if the plaintiff had taken 4 seconds to reach the right-hand turn lane across the highway, which seems generous, and assuming that the defendant had remained in the through lanes, he would have been able to travel 116 m before colliding with the plaintiff. Two inferences can be drawn from this fact. The first is that if, as the trial judge accepted, he was 150 m back when he saw the plaintiff move off, he had ample time to slow down sufficiently to avoid the plaintiff's vehicle. The other inference is that he was well within view of the plaintiff when the plaintiff commenced to cross the highway, but was really too close for the plaintiff to safely undertake the crossing at that stage. If the defendant was in the right-hand lane, there is no reasonable explanation for the failure of the plaintiff to see him, if that had occurred. In my view the probable explanation for the plaintiff's conduct is that he observed the defendant in the right-hand turn lane and, without realising his speed, or that he was not slowing down, assumed that he intended to turn right. To do that he would have had to dramatically reduce his speed before reaching the Boyd[s] Rd turning and the plaintiff would no doubt have crossed the highway comfortably in front of him. It is possible that the plaintiff had seen him indicate when he moved into the right-hand lane, and thought he was indicating an intention to turn right." Basten JA continued9: "The inference that he went into the right-hand turn lane near its commencement is consistent with the evidence of Mr Relf, is consistent with his view that he could use a right-hand lane as an overtaking lane 8 Royal v Smurthwaite (2007) 47 MVR 401 at 433 [153]. 9 Royal v Smurthwaite (2007) 47 MVR 401 at 433-434 [154]. even though he was travelling through the intersection and was consistent with his intention to keep on cruise control at 105 km per hour through a curve which had an 85 km per hour advisory speed sign. In other words, his action in seeking 'to cut the corner' probably [misled] the plaintiff. The plaintiff was undoubtedly partly responsible for the accident, in failing to keep a better lookout and observing that the defendant was not reducing his speed. On the other hand, the defendant had every opportunity to avoid the plaintiff, but took no evasive action until it was far too late. As the trial judge found, he must bear the bulk of the responsibility for the accident." Basten JA concluded that any faults in the design of the cross-intersection did not materially contribute to the accident. The cause was error by drivers who knew Basten JA dealt with the defendant's criticisms of the trial judge thus11: "The trial judge was criticised for dealing with the liability of the [appellant] in cursory terms, without giving due consideration to the evidence of the experts. For the reasons set out above, in my view his Honour came to the correct conclusion. The opinions of the experts were of little relevance in making that assessment. The conclusion was primarily based upon the particular circumstances of the accident and the errors on the part of the plaintiff and the defendant. Even if I held doubts as to his Honour's assessment of these matters (which I do not) I would have been reluctant to interfere given that his Honour had a view of the intersection, and was able to make an assessment of the defendant, in particular in the witness box, which may have allowed him to form a view as to his explanations of his own conduct which may not be readily inferred from the somewhat surprising attitudes revealed by parts of the cross-examination. The appeal with respect to issues of liability should be dismissed." Basten JA's conclusions about the behaviour of the drivers before the collision coincide with those of the trial judge, who relied upon the evidence of two independent eyewitnesses, Mr Relf and Mr Hubbard. Basten JA's conclusions also coincide with the reasoning of the majority in the part of their reasons for judgment in which they declined to interfere with the trial judge's apportionment for contributory negligence. 10 Royal v Smurthwaite (2007) 47 MVR 401 at 434 [155]. 11 Royal v Smurthwaite (2007) 47 MVR 401 at 434 [156]. The majority's approach to causation, however, differed from that of Basten JA. After finding that the appellant was in breach of duty, the majority said12: "The remaining question is whether the supervening conduct of [the defendant] represented an intervening cause that could be said to have broken the chain of causation from the [appellant's] original negligent design of the crossing so as to obviate any liability on its part in causal terms." They said13: "[The appellant] could readily foresee that accidents of the very kind that The accidents statistics at here occurred were highly probable. cross-intersections in rural areas should have brought home to the [appellant] that inattention, even negligence, of the kind manifested by [the defendant] as well as the contributory negligence of [the plaintiff] were features of a crossing of this kind, avoidable by the adoption of a different design which would have been reasonable in the circumstances. There is considerable authority for the proposition that where an act was reasonably foreseeable by the initial tortfeasor, the chain is not broken when that action brings about injury, so that the initial tortfeasor remains responsible for the consequences of the intervening act ... It follows that the initial tortfeasor remains responsible for the consequences to the extent it has materially contributed to them." They also said14: "Moreover, where an intervening intentional act is the very type of act against which the defendant, being the [appellant] here, was obliged to take precautions, such an act does not break the chain of causation for that reason also". 12 Royal v Smurthwaite (2007) 47 MVR 401 at 419 [92] (emphasis added). 13 Royal v Smurthwaite (2007) 47 MVR 401 at 419 [94] (emphasis added). 14 Royal v Smurthwaite (2007) 47 MVR 401 at 419 [95] (emphasis added). They then quoted the following passage from Gaudron J's reasons for judgment in Bennett v Minister of Community Welfare15: "[T]he question whether some supervening event broke a chain of causation which began with or which relates back to an omission or a failure to perform a positive duty, is one that can only be answered by having regard to what would or would not have happened if the duty had been performed. It is only by undertaking that exercise that it is possible to say whether the breach was 'still operating', or, continued to be causally significant when the harm was suffered." The majority then applied Gaudron J's test in the following passage16: than rather "[A]ssuming the duty was performed, one is required to hypothesise that a the staggered T-intersection had been designed cross-intersection. This is in order to answer the question, what would have or would not have happened in that event? If the accident would have happened anyway, the appellant must lose. When one relates that here to the very different circumstances so hypothesised, it is impossible to answer with an affirmative the question, would the accident have occurred in any event. We may start again by assuming the existence of a driver like [the defendant], his cruise-control engaged at a speed of around 105 km per hour who insists on his right-of-way while cutting the corner by placing himself in the right-hand lane. But then the facts to be hypothesised are of a staggered T-intersection with [the plaintiff] gradually entering the left-hand lane, doing so well to the left of [the defendant] whose supervening conduct is in question. It is not possible to assume that the vehicles so positioned would then have collided. In a 'but for' sense, the defective design therefore materially contributed to the accident." The majority expressed their conclusion as follows17: "[T]he supervening conduct of [the defendant] so understood did not render the antecedent breach of duty of the [appellant] as no longer operative. Nor did it cause that breach to cease to be causally significant so as to break the chain of causation." 15 (1992) 176 CLR 408 at 421 (emphasis added; footnote omitted); [1992] HCA 27. 16 Royal v Smurthwaite (2007) 47 MVR 401 at 420 [97]. 17 Royal v Smurthwaite (2007) 47 MVR 401 at 420 [98] (emphasis added). The appellant's arguments The appellant advanced two submissions. First, it submitted that the collision was not caused by any breach of duty on its part, but only by the negligence of the defendant and the plaintiff. Secondly, the appellant submitted that the majority of the Court of Appeal moved straight from a conclusion that the appellant was in breach of duty to consideration of whether the defendant's supervening conduct broke the chain of causation, without first examining whether the chain of causation actually existed. In that respect the words emphasised in the passages quoted above have significance. Some aspects of the evidence It is desirable to make clear that whether or not the plaintiff, from his stationary position at the Stop sign, did see the defendant's vehicle moving north along the Pacific Highway, he was undoubtedly able to do so. That follows from three categories of evidence. First, there is the evidence of the defendant that he saw the plaintiff, both when the plaintiff's car was stationary and when he had begun to move forward. Secondly, there is the evidence of Mr Relf, driving in a through lane three or four seconds behind the defendant in the right-hand turn lane, that he saw the plaintiff's vehicle "pulled out from the stop sign", ie he "saw it move out". If Mr Relf could see the plaintiff moving out, it is likely that the plaintiff, while halted at the Stop sign, could have seen the defendant three or four seconds earlier. The trial judge thought that Mr Relf "made accurate assessments" and showed "very real care ... in reporting his observations." Thirdly, there is the evidence of Mr Hubbard, driving immediately behind the plaintiff, that he saw the defendant. The defendant met the last point by arguing that what Mr Hubbard saw was an observation made just after the plaintiff began to move forward, and was thus made at a different point of time from the point at which the plaintiff, from a stationary position, could have looked right. "Whatever Mr Hubbard saw could not have been that same snapshot because it was a dynamic situation." That submission is inconsistent with the evidence of Mr Hubbard, whom the trial judge described as "a careful and accurate witness". He said that as he approached the Stop sign in Bago Road he saw the plaintiff's vehicle stopped at the Stop sign waiting to cross the Pacific Highway. Both before and after the time when the plaintiff's vehicle started to move off, he looked right. He saw one car that had turned left off the Pacific Highway into Bago Road, and two other cars in the left turning lane with their blinkers on with a view to turning left into Bago Road. He also saw Mr Relf's vehicle, and he saw the defendant's vehicle in the right-hand turning lane slightly ahead of Mr Relf and travelling faster than Mr Relf. Then he saw the defendant's vehicle braking, skidding and hitting the plaintiff's vehicle. With the cars so positioned – Mr Relf's behind and to the left of the defendant's – there was no possibility of the former masking the latter from observation by a driver at the Stop sign, and Mr Hubbard specifically identified them as distinct vehicles at all stages of his observations. He also said that the two vehicles in the left turning lane with their blinkers on turning left into Bago Road did not obscure his view of the defendant's vehicle. Did the Court of Appeal majority find causation? It is convenient to deal with the second submission of the appellant at once – that the Court of Appeal failed to make any finding about causation. This is a submission which has much support in the emphasised words quoted above18. The defendant sought to meet it by contending that the difficulty in the appellant's submission was that even if the passages quoted assumed an antecedent finding of causation, that finding had in fact been made in an earlier passage. In that earlier passage the majority said that the cross-intersection design adopted by the appellant in 1993 "gave rise to a statistical inevitability of a proportion of cross-vehicle crashes ... While it does not make the present accident inevitable it did materially contribute to its occurrence, by creating a heightened risk of such an accident."19 However, the appellant is correct in submitting that the majority did not specifically deal with the causation of this particular collision. The majority said what it said in the passage just quoted because of what it described as a "problem with sight distances"20. That problem was identified in part of an expert report which the majority appeared to find acceptable. The expert, Mr Keirnan, attributed to another expert the view "that eastbound drivers who do not carefully observe highway and traffic for a significant length of time, may not see vehicles that are obscured by vehicles in the adjoining lane because of the curved approach". Mr Keirnan said he agreed that "the curved approach is probably a factor"21. The majority referred to the problem a little later22: 18 See [14] and [16]. 19 Royal v Smurthwaite (2007) 47 MVR 401 at 416 [85]. 20 Royal v Smurthwaite (2007) 47 MVR 401 at 417 [88]. 21 Quoted by the majority in Royal v Smurthwaite (2007) 47 MVR 401 at 413 [65]. 22 Royal v Smurthwaite (2007) 47 MVR 401 at 416 [84]. "For approaching Pacific Hwy traffic travelling north, there was a right-hand curve and a dip in the highway south of the intersection ... [T]his configuration ... created a foreseeable problem for the observation of traffic travelling north by those vehicles exiting Bago Rd." The majority found the appellant in breach of duty for not dealing with this "known danger"23 – a problem of one car masking another – by constructing a staggered T-intersection so as to avoid the risk with which the existing cross-intersection was "pregnant"24. The problem – the danger, the risk – thus discussed, however, had nothing to do with the collision in question. The problem or danger or risk was that where two vehicles were approaching in adjoining lanes, one might obscure the other. That did not happen in this case. It was clear from the evidence of the defendant, the evidence of Mr Relf (driving behind the defendant) and the evidence of Mr Hubbard (driving behind the plaintiff), that the defendant's vehicle was not obscured from the plaintiff's view by another vehicle25. In short, even if it could be said that the appellant's breach of duty "did materially contribute" to the occurrence of an accident, "by creating a heightened risk of such an accident" due to the obscuring effect of one vehicle on another in an adjoining lane, it made no contribution to the occurrence of this accident. Similar considerations apply to a report prepared by the appellant which stated that between December 1993 and March 2001 there had been 20 crashes at the intersection, 17 the result of cross-traffic. The significance of those figures depends on the causes of the crashes. The majority of the Court of Appeal did not assign any cause for the crashes, and no doubt was not in a position to. It identified, as the relevant danger which the appellant was in breach of duty for not dealing with, the problem of one car obscuring another. Whether that was the cause of the 20 crashes or not, the fact remains that this crash had nothing to do with that problem. The passage on which the defendant relied as a causation finding, while it might have been a step towards a causation finding in some other case, could not have been such a step in this case. That is because there was no evidence that any aspect of the plaintiff's decision, having stopped at the intersection, to move forward was caused by the fact that the defendant's vehicle was masked by some other vehicle. Neither Mr Relf nor Mr Hubbard gave any 23 Royal v Smurthwaite (2007) 47 MVR 401 at 419 [91]. 24 Royal v Smurthwaite (2007) 47 MVR 401 at 419 [92]. 25 See [19]-[22] above. evidence of any other vehicle capable of having a masking effect. In addition, the defendant, in whose interest it would have been to give that evidence, did not give it. Hence to submit, as the defendant did, that the appellant's breach of duty "restricted the [plaintiff's] view of the intersection" and created "problems of vision" for him may have been correct for some sets of circumstances, but was not correct for the circumstances preceding the collision in question in this appeal. The defendant submitted that the Court of Appeal majority must have had causation in mind, and had not overlooked the need for it to be established, because at one point they referred to the trial judge's view that there had been a failure to demonstrate causation in relation to the appellant's conduct26. This does not, however, suggest that the majority made findings about causation after finding breach of duty; rather it suggests that by that much later stage of the judgment27 the need to do so had been overlooked. Hence the appellant's second submission should be accepted. What did cause the collision? The appellant's first argument should also be accepted. The appellant correctly submitted that before the accident both plaintiff and defendant were in a position to see each other quite clearly. The plaintiff was in a position either to move decisively across the intersection or to wait until the cars on the Pacific Highway passed. The defendant had ample time to stop, slow down, change lanes or otherwise avoid a collision. The defendant and the plaintiff were each in a position to see the other in more than sufficient time for each of them to avoid the collision. The design of the cross-intersection was thus irrelevant to the cause of the accident. If the plaintiff failed to see the defendant, that could have been one causal factor in the collision. But it is not a failure for which the appellant was responsible: for since in clear conditions the defendant could and did see the plaintiff's vehicle as it stopped at the intersection and then began to move forward, the plaintiff could also have seen the defendant, just as Mr Hubbard, approaching the intersection behind the plaintiff, did. If the plaintiff did see the defendant, just as the defendant had seen the plaintiff, a causal factor was his failure to use his very good knowledge of the intersection to drive sufficiently carefully to avoid the risk of a collision. A further causal factor was the defendant's failure to act on his very good knowledge of the intersection, 26 Royal v Smurthwaite (2007) 47 MVR 401 at 411 [56]. 27 Royal v Smurthwaite (2007) 47 MVR 401 at 419-420 [92]-[98]. and use the ample time available to take steps to deactivate cruise control, slow down, stop or change lanes or otherwise avoid hitting the plaintiff's vehicle, when that vehicle was apparently doing nothing to avoid a collision, just as the driver behind him did. He had the time to do any of these things despite being in the wrong lane doing 105 kilometres per hour on cruise control in an area where the speed limit was 100 kilometres per hour and the advisory speed sign recommended 85 kilometres per hour. Another causal factor was the potentially misleading effect on the plaintiff of the defendant being in the right-hand turn lane rather than one of the through lanes. In essence these propositions correspond with Basten JA's reasoning. The defendant's submission in answer to them was that there would have been no cross-intersection accident if there had not been a cross-intersection; the cross-intersection had a design fault in that one car visible from the Stop sign could mask another car in an adjoining lane; that fault could be overcome by eliminating the cross-intersection; and the failure to do this caused the accident. If the last step in this submission by the defendant were to be valid, it would be necessary to establish that the masking problem prevented the plaintiff from seeing the defendant's car. There was no evidence of that proposition, and no finding to support it. The defendant endeavoured to overcome this difficulty by submitting that the appellant's argument depended on the proposition that when the defendant observed the plaintiff's vehicle, the plaintiff also observed the defendant's vehicle; but that that was speculation, and that there was no evidence that the plaintiff made that observation or that it was possible for him to do so. It is true that there is no direct evidence that the plaintiff made that observation. But it is not true that there was no evidence that it was not possible for him to do so. There is the evidence of the defendant, Mr Relf and Mr Hubbard already mentioned28. Further arguments of the defendant The argument from Betts v Whittingslowe. The defendant (but not the majority of the Court of Appeal) also relied on the following statement by Dixon J in Betts v Whittingslowe29: "[B]reach of duty coupled with an accident of the kind that might thereby be caused is enough to justify an inference, in the absence of any 28 Above at [19]-[22]. 29 (1945) 71 CLR 637 at 649; [1945] HCA 31. sufficient reason to the contrary, that in fact the accident did occur owing to the act or omission amounting to the breach of statutory duty." He went on to say that in the case before him "the facts warrant no other inference inconsistent with liability on the part of the defendant". The defendant submitted that the negligent driving of the defendant or the plaintiff was not a "sufficient reason to the contrary" because negligent driving was foreseeable by the appellant. That does not meet the appellant's argument. There was ample material in the behaviour of the drivers to create a "sufficient reason to the contrary", or "warrant [an] inference inconsistent with liability on the part of the" appellant. The argument from March v Stramare (E & M H ) Pty Ltd. The defendant also relied on the third-last paragraph of Mason CJ's reasons for judgment in March v Stramare (E & M H ) Pty Ltd 30. He there said, inter alia: "[I]t makes no sense to regard the negligence of the plaintiff or a third party as a superseding cause or novus actus interveniens when the defendant's wrongful conduct has generated the very risk of injury resulting from the negligence of the plaintiff or a third party and that injury occurs in the ordinary course of things." That passage is inapplicable here. Discussions about the effect of a novus actus interveniens necessarily assume that a breach of duty has been causative. In the majority's view, there was a potential risk of injury, depending on the position of the cars on the Pacific Highway in any given circumstances, arising from the problem of one car masking another in an adjoining lane. That risk did not exist in relation to any of the cars involved in this collision: there was no car on the defendant's left masking it from the plaintiff. The collision did not occur as a result of "the ordinary course of things" in the particular circumstances. "[I]n the nature of things, there will be some cases in which a court concludes that a precondition does not play such a part in the consequence that it deserves to be characterized as a cause." 30 (1991) 171 CLR 506 at 518-519; [1991] HCA 12. 31 (1991) 171 CLR 506 at 512. That is the case here. Furthermore the reliance by the majority on a "but-for" test as a comprehensive causation test is erroneous since March v Stramare (E & M H ) Pty Ltd 32. The application of Bennett v Minister of Community Welfare The defendant also relied on the majority's application of the test stated by Gaudron J in Bennett v Minister of Community Welfare33. That application is unconvincing. In the first place, Gaudron J's reasoning proceeds on the assumption that a chain of causation has been established: that assumption is not made out here. In the second place, it is no doubt true that if there had been a staggered T-intersection the plaintiff would not have been trying to negotiate a cross-intersection and would not have been injured doing so. But to say that is only to say that there would not have been a cross-intersection collision if there had not been a cross-intersection. It does not say that there would not have been a collision between drivers as careless as the defendant and the plaintiff as the plaintiff came onto the Pacific Highway in the left-hand lane and began to move over to the right-hand lane to execute a right-hand turn in order to get to Boyds Road. Orders In consequence the appeal should be allowed with costs, the Court of Appeal's orders allowing the defendant's appeal in relation to the appellant's responsibility should be set aside and it should be ordered that the appeal to that Court be dismissed with costs. This will leave in place the trial judge's orders. A difficulty arises in relation to the orders made by the trial judge in relation to the costs of the trial, however. The trial judge favoured making a Bullock order in favour of the plaintiff against the defendant in relation to the costs of the appellant: that is, that the defendant (the unsuccessful defendant at trial) take responsibility for the costs which the plaintiff would have to pay to the appellant (the successful defendant at the trial). The defendant argued in the Court of Appeal that the trial judge erred in concluding that a Bullock order should be made. Basten JA agreed, and proposed varying the trial judge's costs orders. The majority did not deal specifically with this contention of the defendant, but considered that since in their view the appellant was liable for one-third of the judgment against the defendant, the costs to be paid by the 32 See in particular Deane J: (1991) 171 CLR 506 at 522-524. 33 (1992) 176 CLR 408 at 421. appellant should be "proportionate to its liability overall"34. Matters were then further complicated by the fact that, after the Court of Appeal's orders were taken out, they were varied by agreement. In this Court the appellant has adopted inconsistent positions. On the one hand, in the notice of appeal it sought orders in relation to the costs of the trial consistent with those which Basten JA preferred. On the other hand, in its written submissions it sought restoration of the "judgment of the trial judge and the orders for costs made by him". The latter approach appears the sounder, in view of the fact that the defendant has not cross-appealed against the costs order made by the majority, and, in particular, he has not sought to repeat in this Court the arguments which found favour with Basten JA but which were not dealt with by the majority. The second order below will have the effect of causing the orders made by the trial judge to be restored. The following orders should be made: Appeal allowed with costs. The orders of the Court of Appeal of the Supreme Court of New South Wales be set aside and in their place it be ordered that the appeal to that Court be dismissed with costs. 34 Royal v Smurthwaite (2007) 47 MVR 401 at 421 [101]. Kirby KIRBY J. This appeal comes from a judgment of the Court of Appeal of the Supreme Court of New South Wales35. That Court was divided. As admitted to this Court by a limited grant of special leave36, the appeal concerns only the cause or causes of a motor vehicle collision. That collision occurred on the Pacific Highway at Herons Creek, near Wauchope, in rural New South Wales. The spectacle of five Justices of this Court labouring over highway plans and photographs and sifting through four appeal books in relation to such a question would be bound to cause surprise. The record describes the 12 day trial of these proceedings in the District Court of New South Wales, and the two day hearing in the Court of Appeal. What is, and is not, for legal purposes, a material cause of a motor vehicle collision is a question of fact. Ordinarily, it gives rise to no principle of law, binding on lower courts and future parties37. On the face of things, it concerns only the immediate parties and the outcome of their dispute. There is not, in this case, even the residual human interest as to whether a seriously injured plaintiff will maintain, or lose, a verdict recovered in earlier proceedings38. In this appeal, the plaintiff's recovery (reduced by one third for his contributory negligence) is unchallenged39. The Court of Appeal was unanimous that the assessment of contributory negligence should not be disturbed, and that issue has not concerned this Court. The issue that divided the judges below was whether the judgment entered at trial against the driver of the other vehicle involved in the collision should be amended, so as to uphold the claim made by that driver for contribution by the Roads and Traffic Authority of New South Wales ("the RTA"). The RTA is the statutory authority responsible for the design and maintenance of the Pacific Highway and adjoining roads at the intersection at which the accident occurred. At trial, the plaintiff sued in negligence, naming both the other driver and the RTA as defendants. The primary judge in the District Court (Phelan DCJ) rejected the claim against the RTA. Because, nonetheless, the primary judge 35 Royal v Smurthwaite (2007) 47 MVR 401. 36 [2007] HCATrans 596. 37 cf Joslyn v Berryman (2003) 214 CLR 552 at 602 [158] per Hayne J; [2003] HCA 38 cf New South Wales v Fahy (2007) 81 ALJR 1021; 236 ALR 406; [2007] HCA 20; Roads and Traffic Authority of NSW v Dederer (2007) 81 ALJR 1773; 238 ALR 761; [2007] HCA 42. 39 See (2007) 47 MVR 401 at 422 [108]. Kirby upheld the plaintiff's claim in negligence against the other driver, the plaintiff is now unconcerned about the ongoing contest between that driver and the RTA. He submits to such orders as this Court might make. The majority in the Court of Appeal concluded that the judgment at trial should be amended so that the RTA would pay the plaintiff one-third of the judgment entered against the other driver. The costs orders made at trial were modified to reflect this variation. The appeal to the Court of Appeal proceeded by way of rehearing. By the terms of its statute40 and established law41, the Court of Appeal had the power and duty to decide whether legal or factual errors had occurred in the trial. It had the responsibility to reconsider, independently and for itself, the contested factual determinations reached at trial and, if persuaded that the primary judge erred in approach or conclusion, to state and give effect to its own conclusions on the facts, so far as it could properly do so. This the majority in the Court of Appeal did in respect of their conclusion that the RTA was liable to contribute in proportion to its responsibility for the damage suffered by the plaintiff. In accordance with the Constitution, as it has been interpreted42, an appeal to this Court is not a rehearing43. It is a strict appeal. This is a Court of error. Ordinarily, it would not involve itself in suggested errors of fact, least of all in respect of the cause of a motor vehicle accident and the responsibility of various parties for it. Such questions are inherently contestable. This Court would usually leave them to be determined by an intermediate court unless some important question of principle or apparent miscarriage of justice were demonstrated. Nevertheless, once special leave is granted and a case of the present kind is before this Court, the Court must necessarily decide the matter by the application of the relevant legal rules to the facts as found or otherwise appearing in the record. There is no question of principle and no injustice in the present case. The conclusion reached by the majority of the Court of Appeal was clearly open. No error of law or other error affected the approach of the majority. There is no warrant for our intervention. The judgment of the Court of Appeal should stand. The appeal should be dismissed. 40 Supreme Court Act 1970 (NSW), s 75A. 41 See eg Fox v Percy (2003) 214 CLR 118 at 126-127 [24]-[26]; [2003] HCA 22. 42 R v Taufahema (2007) 228 CLR 232 at 272 [105]; [2007] HCA 11 citing Mickelberg v The Queen (1989) 167 CLR 259 at 267, 279, 298-299; [1989] HCA 35 and Eastman v The Queen (2000) 203 CLR 1 at 79-89 [240]-[266]; [2000] HCA 43 Fox (2003) 214 CLR 118 at 129 [32]. Kirby The facts A vehicular collision: The collision between the motor vehicles of Mr George Smurthwaite, the second respondent ("the plaintiff") and of Mr Grant Royal, the first respondent ("the defendant") occurred at an intersection near Herons Creek where Bago Road meets the northbound carriageway of the Pacific Highway ("the highway") on its western side. The plaintiff, having stopped at a stop sign and holding line controlling traffic exiting Bago Road at its intersection with the highway, attempted to cross the northbound carriageway to proceed into Boyds Road opposite. His purpose was to follow that road to the southbound carriageway of the highway, some 250 metres to the east. The plaintiff's intended path required him to traverse two lanes of northbound through-traffic, as well as a dedicated right-turn lane designed to allow northbound vehicles to exit to Boyds Road. Obviously, the traffic on the highway commonly proceeds with speeds typical on such a major national road. In the result, the plaintiff's vehicle did not reach the safety of Boyds Road. Instead, some 21 metres from the Bago Road stop sign, at a point within the right-turn lane, his vehicle came into collision with that of the defendant. The point of impact was in the vicinity of the driver's side door of the plaintiff's vehicle. It occasioned serious and permanent injuries to the plaintiff. Because of those injuries, including cerebral trauma, the plaintiff was unable to remember, or describe, the circumstances immediately preceding the impact. Specifically, he was unable to give evidence of exactly what he could, or could not, see when his vehicle was stationary in Bago Road before proceeding across the highway. The collision occurred at 8.40am on a Monday. It was daylight and the weather was fine. As a result of overnight rain, the road surface was slightly damp in places. However, both the plaintiff and the defendant were familiar with the highway and roads as they intersected. The defendant was travelling at 105 km/hour. This reflected the setting at which he had fixed a "cruise control" device governing the speed of his vehicle. The legally mandated maximum speed at the relevant section of the highway was 100 km/hour. An advisory sign, not far from the intersection, indicated a safe driving speed of 85 km/hour. The lower speed advisory sign was presumably placed in recognition of the geography of the highway and the intersecting roads. The terrain was undulating. The highway proceeded through a succession of curves and inclines which occasioned visual difficulties, including for drivers of vehicles standing at the holding line in Bago Road, looking towards the oncoming traffic travelling north along the highway. In approaching the intersection, such traffic negotiates a right-hand curve. There is also a dip in Bago Road some 200 metres from the intersection. These features were illustrated by aerial and road surface Kirby photographs and a plan produced by terrestrial photogrammetry. These were in evidence and are thus part of the record. Also part of the record are photographs taken at successive intervals of a few seconds illustrating the rapid movement of vehicles travelling towards the intersection (as the defendant was), and the degree to which such vehicles could be obscured, from the perspective of a driver stopped at the holding line in Bago Road, by any vehicles turning left (however quickly) from the highway into Bago Road. Whether the plaintiff's vision of the defendant's vehicle approaching the point of the intersection was in fact obstructed in this way by a turning vehicle or by another vehicle travelling at speed along the highway in a northerly direction is unknown because of the plaintiff's post-accident memory loss. However, such obstruction was entirely possible. It would be consistent with, and predictable upon, the foregoing photographic evidence. Evidence of the drivers: The plaintiff and the defendant each gave evidence at the trial. So did two other drivers who were in the area. One, Mr George Hubbard, was travelling along Bago Road behind the plaintiff. The other, Mr Anthony Relf, was proceeding north along the highway, to the rear of the defendant's vehicle. Each witness described what he had been able to see. Mr Hubbard indicated that the plaintiff's vehicle started to move off from the holding line shortly after coming into his field of vision. As he himself approached the holding line, he saw the oncoming vehicle of the defendant. Mr Relf gave evidence that, from his position, he had seen the plaintiff's vehicle standing at the stop sign. In his evidence, the defendant admitted that he had seen the plaintiff stationary at the intersection on his left. He did not reduce his speed, or disengage the cruise control. Although it was suggested that this was because of a concern with fuel economy, a fair reading of the defendant's evidence was that he considered that he had right of way and did not expect that the plaintiff would be so foolish as to attempt to traverse the highway in the face of the oncoming vehicles that would be visible to him (including that of the defendant). In short, the defendant expected that the plaintiff would wait for a safe break in the highway traffic before proceeding to cross. Expert evidence on highway design: Both the plaintiff and the defendant relied on expert evidence to establish that the RTA was, in part, causally responsible for the occurrence of the collision. The plaintiff tendered such evidence from Mr Grant Johnston. The defendant called Mr Michael Griffiths and Mr Roger Stuart-Smith. The RTA, in response, called Mr Warwick Keirnan44. Without reference to the evidence of the experts, the issues raised 44 (2007) 47 MVR 401 at 404 [20]. Kirby against the RTA cannot be understood or properly decided. It is arguable that such reference is required given the manner in which the case developed. Putting it out of consideration reduces the case to a banal contest between the imperfect and incomplete knowledge and recollections of the motorists who gave evidence. Judges, dissecting the testimony of motorists years after the event, do so to the best of their abilities. Nevertheless, it is critical to remind oneself that, in cases such as the present, the court is examining events that occurred within the space of a few minutes, if not seconds. Given the speed at which he was travelling along the highway, the defendant argued that he had only 2.8 to 3.5 seconds to react to the sudden action of the plaintiff in leaving Bago Road and, in effect, "running the intersection"45. In the Court of Appeal, Santow JA, for the majority, concluded that this timeframe was "never reliably established to be no more than 3.5 seconds"46. However, incontestably, it was only a tiny space of time. The competing evidence propounded at the trial suggested that it was, at most, 6.5 seconds47. Although, physically, such an interval might have afforded enough time, in perfect conditions, for an attentive and alert driver of average reflexes to avoid a collision, it is important to keep the timeframe at the forefront of attention, especially when considering evidence concerning causative factors additional to driver behaviour and determining the "material" cause or causes of the collision according to law. In essence, it was the defendant's (and the plaintiff's) case at trial that the RTA had negligently imposed such a short timeframe on drivers by seriously faulty design, construction and maintenance of the intersection – despite being aware of the occurrence of multiple collisions of an identical kind. Evidence of a "black spot": Importantly, the evidence demonstrated that the intersection of the Pacific Highway and Bago Road was regarded as a "black spot" by the RTA itself48. In his reasons in the Court of Appeal, Santow JA extracted the following passage from a report of Mr Keirnan, the RTA's own expert49: "Details of crashes recorded as occurring at the intersection of Pacific Highway and Bago Road between December 1993 and March 2001, ie, 45 (2007) 47 MVR 401 at 407 [37]. 46 (2007) 47 MVR 401 at 408 [42]. 47 (2007) 47 MVR 401 at 409 [48]. 48 (2007) 47 MVR 401 at 411 [57]. 49 (2007) 47 MVR 401 at 411-412 [57]. Kirby since dual carriageway construction and this crash, are tabulated on an The following is a summary of the characteristics of these crashes: There have been 20 recorded crashes that were either fatal, injury or tow away. Two of these crashes resulted in a fatality and 14 resulted in one or more person being injured, ie, 16 casualty crashes – 2 per year. 17 of the 20 crashes were the result of 'cross traffic at the intersection'. All 20 crashes were in dry weather conditions, and all but one were in daylight. No identifiable hazardous features at the site were recorded. One crash involved a motor cycle, one other a semi-trailer and the remainder were light passenger type vehicles. Speed was recorded by police as a factor in one crash. In 16 of the 20 crashes the unit at fault was identified as the eastbound driver. Details of crashes recorded as occurring between April 2001 and March 2003 are [also recorded]. The following is a summary of characteristics of these crashes. There have been 6 crashes recorded in this 2 year period. Two crashes resulted in a fatality and four resulted in injuries, ie, 3 casualty crashes per year. All six crashes were cross traffic at the intersection. Three crashes were in wet weather. All six crashes were in daylight. All six crashes were light passenger type vehicles. No hazardous features were identified. Speed was not identified by the police as a factor in all crashes. Kirby Because of the significant number of casualty crashes over a period of 10 years, the RTA have examined possible improvements, and modifications to traffic control devices have been carried out at the intersection." When evidence of this kind is produced, almost entirely from the records of the RTA itself, and forms part of the record of the trial, it is unsurprising that it should attract the attention of the Court of Appeal. Individual motorists have no power or authority to alter, or eliminate, highway "black spots". They cannot change the configuration of roads and intersections so as to make them safer and to reduce established risks of accidents. Where action is required by standards of reasonable conduct, that is the responsibility of the authority with the duty to act, the RTA. Especially so, where the evidence revealed (as it did in this case) that the configuration of the particular intersection was altered by the RTA in material ways both prior to, and following, the serious collision involving the plaintiff and the defendant. The record indicates that, before the RTA reconstructed the Pacific Highway in the area of the Bago Road intersection in 1993, the highway had only two lanes: one travelling north and the other south. At that stage, Bago Road formed a "T" intersection with the highway. This permitted entering traffic either to turn left into the northbound lane of the highway or to cross that lane, turning right in order to head south. In 1993, the RTA effected modifications such that at the relevant point, the southbound carriageway was separated from the northbound. Thereafter it proceeded on a new and different roadway. Near the point of the Bago Road intersection, the southbound carriageway was some 250 metres distant from the northbound. Options to change the intersection: In effecting this change, a question was necessarily presented to the RTA as to how vehicles exiting from Bago Road would access the southbound carriageway of the highway. Leaving aside expensive solutions such as overhead fly-overs or under-road tunnels, the reasonably available options for dealing with such vehicles were: to direct all traffic from Bago Road left into the northbound carriageway of the highway, and construct a designated turning point further north to facilitate safe entry into the now separated southbound carriageway (the "staggered entry option"); or to permit traffic from Bago Road to cross directly over the northbound carriageway of the highway and to join the southbound carriageway by way of Boyds Road (the "cross-intersection option"). Although the cross-intersection option (which the RTA chose) had some advantages, it had important disadvantages, especially in terms of road safety. Kirby These were acknowledged by the RTA's expert, Mr Keirnan, in his evidence at the trial. In particular, he accepted that: It is generally desirable to avoid "cross-intersections", inferentially especially where involving a vehicular trajectory across the lanes of a fast- moving major highway; The distance which cross-traffic exiting Bago Road was obliged to negotiate was increased by the reconstruction (from one northbound lane to, in effect, three lanes); The distance through which cross-traffic had to pass was, in effect, even greater than the width of three lanes given the placement of the stop sign and holding line regulating egress from Bago Road. At the time of the subject collision, the sign and holding line were several metres back from the highway in Bago Road. Afterwards, the RTA shifted them to a point much closer to the actual intersection. However, the original placement required a motorist crossing the highway from Bago Road to cover a distance of about 30 metres before entering Boyds Road proper; The established point of impact and the absence of road surface evidence of evasive action on the defendant's part tended to indicate that the defendant did not anticipate that the plaintiff would cross the highway and hence the path of his vehicle; The number of crashes at the intersection was significant and remedial action on the part of the RTA was required, although Mr Keirnan contested that the defects were causative of this particular accident; and The curve of the highway at this point may have reduced the ability of drivers exiting Bago Road to anticipate gaps in the northbound traffic in order to determine when it would be safe to proceed across the highway without unreasonable risk to themselves and other motorists. Mr Keirnan agreed with the defendant's expert, Mr Griffiths, that, because of the curved trajectory, drivers such as the plaintiff, who did not observe potential northbound traffic for a sufficient time, might not see, or adequately notice, oncoming vehicles obscured by other northbound vehicles in adjoining lanes. He conceded that the crash history following the 1993 reconfiguration demonstrated that most of the collisions were the fault of drivers exiting Bago Road. Dangers of cross-intersections: The effect of this evidence, given by the RTA's own expert, and reinforced by the evidence of other experts in highway design, construction and maintenance, was that the intersection created in 1993 was such that, at that time, experts in highway design would reasonably have expected accidents to occur, as indeed they did. As noted, in terms of safe Kirby highway design, Mr Keirnan agreed that it was generally desirable to avoid cross-intersections. Common sense suggests that this was especially so where: The cross-intersection was created in substitution for earlier, less dangerous traffic conditions, and compelled drivers proceeding across the highway to negotiate a multi-lane roadway containing fast-moving traffic all proceeding in the same direction; The oncoming traffic approached the intersection through an undulating landscape and on a curved trajectory, which had the potential to obscure sight lines and render appreciation of the existence and speed of other vehicles difficult or impossible; and (3) A significant distance had to be traversed by the cross-traffic, starting from a stationary position well behind the intersection itself, and then crossing, in effect, three lanes of one of the major arterial highways of the Commonwealth50. The decisional history The decision at trial: The primary judge dealt with the issue that is now before this Court very briefly. Relevantly, he said51: "There remains the case against the [RTA]. The evidence … clearly establishes that this part of the roadway was seen by the RTA as a 'black spot'. There had been a number of serious accidents, including some fatalities, over the period of time that the highway had been upgraded. The RTA had taken steps from time to time to deal with the problem and the chief problem seems to have been … the difficulty of somebody stopped facing east at the Bago intersection being in a position of not being aware of traffic behind other cars proceeding north, particularly in the left hand lane." The primary judge acknowledged that there had been fewer serious accidents following changes effected by the RTA after the present collision. 50 In his report of 24 November 2003, Mr Keirnan expressed the opinion: "I agree there may be some visual obscuring of vehicles on the curve. Also there may be some uncertainty as to which lane the approaching vehicles were travelling around the right curve when viewed from the stop line in Bago Road." 51 George Smurthwaite v Grant Royal, unreported, District Court of NSW, 7 February 2006 at 33 ("reasons of the primary judge"). Kirby However, in a single sentence, he rejected the claims which the plaintiff and the defendant had presented against the RTA52: "Whilst I conclude that in a number of respects more could have been done by the RTA to improve this intersection, in the end result I am not satisfied that the accident represented a failure by the RTA in the circumstances of this case and thus there will be a verdict for the [RTA]." Effectively, the primary judge's reasons on this point are unelaborated. The majority in the Court of Appeal: The reasons of the majority of the Court of Appeal were given by Santow JA, with whom Tobias JA agreed. Santow JA acknowledged the complaint of the defendant about the adequacy of the reasons of the primary judge addressed to the issue of the liability of the RTA. He remarked that those reasons were "conclusionary and extremely brief"53. His Honour obviously considered that they were inadequate, such that the Court of Appeal was obliged to embark upon a review of the evidence addressed to the issue. That evidence included the expert evidence on highway design that I have described. But the review was not limited to expert evidence. It was addressed to all of the factual evidence of the trial. After reviewing the evidence in some detail, Santow JA made a number of findings, including that: "[The post-1993] configuration, as the [defendant] contends, created a foreseeable problem for the observation of traffic travelling north by those vehicles exiting Bago Rd. It can be taken … that those physical features must have been known to the RTA before the reconfiguration of the intersection in 1993, but neither the crest nor the curve were changed at all in the reconstruction."54 "[The choice of the cross-intersection option] gave rise to a statistical inevitability of a proportion of cross-vehicle crashes, as demonstrated by the statistics to which I have … referred. While it does not make the present accident inevitable it did materially 52 Reasons of the primary judge at 34. 53 (2007) 47 MVR 401 at 411 [56]. 54 (2007) 47 MVR 401 at 416 [84]. Kirby contribute to its occurrence, by creating a heightened risk of such an accident."55 "The adverse traffic history started to manifest itself almost immediately after 1993 in accidents … [D]espite the RTA being alive to the problem with sight distances in 1997, nothing further was done until after the present accident and then only to move the stop sign further forward."56 After noting that the standard of care required of an authority such as the RTA, having powers in relation to the design, construction and maintenance of roads, was that of taking "reasonable care that their exercise … does not create a foreseeable risk of harm to a class of persons (road users) which includes the plaintiff"57, Santow JA said58: "In my view, the RTA failed to take the steps that would have been reasonable in this case, not just to move the stop sign as it did only after the accident but more fundamentally to have constructed a staggered T- intersection and not a cross-intersection which was pregnant with avoidable risk. It thus breached its duty-of-care in that regard. The remaining question is whether the supervening conduct of [the defendant] represented an intervening cause that could be said to have broken the chain of causation from the RTA's original negligent design of the crossing so as to obviate any liability on its part in causal terms." After examining the facts and further decisional authority, Santow JA rejected the RTA's submission that the supervening conduct of the defendant was such that it rendered the "antecedent breach of duty of the RTA as no longer operative" or caused it "to cease to be causally significant so as to break the chain of causation"59. There followed consideration of issues of apportionment, damages and costs. Applying the statute on contribution between tortfeasors found to be 55 (2007) 47 MVR 401 at 416 [85] (emphasis added). 56 (2007) 47 MVR 401 at 417 [87]-[88]. 57 Brodie v Singleton Shire Council (2001) 206 CLR 512 at 577 [150]; [2001] HCA 29 cited (2007) 47 MVR 401 at 417 [89]. See also Commissioner of Main Roads v Jones (2005) 79 ALJR 1104 at 1111 [40]; 215 ALR 418 at 427; [2005] HCA 27. 58 (2007) 47 MVR 401 at 419 [92]. 59 (2007) 47 MVR 401 at 420 [98]. Kirby liable60, Santow JA concluded that the RTA should bear one-third responsibility for the judgment entered against the defendant61. The dissenting opinion: In his reasons, Basten JA rejected the foregoing conclusions. Relevantly, his Honour dissented for reasons which, like those of the primary judge, were expressed in short and largely conclusionary terms62: "[W]hatever the faults of the design of the intersection, they did not materially contribute to the accident in any relevant sense. Both parties knew the intersection well; each knew it was a cross-intersection and that it had turn lanes; indeed, the only mistakes which were made related to the conduct of the other driver, based on common knowledge of the design features of the intersection. The trial judge was criticised for dealing with the liability of the RTA in cursory terms, without giving due consideration to the evidence of the experts. For the reasons set out above, in my view his Honour came to the correct conclusion. The opinions of the experts were of little relevance in making that assessment. The conclusion was primarily based upon the particular circumstances of the accident and the errors on the part of the plaintiff and the defendant. Even if I held doubts as to his Honour's assessment of these matters (which I do not) I would have been reluctant to interfere given that his Honour had a view of the intersection, and was able to make an assessment of the defendant, in particular in the witness box, which may have allowed him to form a view as to his explanations of his own conduct which may not be readily inferred from the somewhat surprising attitudes revealed by parts of the cross-examination." Basten JA would therefore have dismissed the appeal against the liability of the RTA. All other contested issues were agreed between the members of the Court of Appeal. That Court's judgment gave effect to the conclusions of the majority. The issues The limited grant of leave: When approaching this Court for special leave to appeal, the RTA persisted with its objection to the conclusion that it owed a duty of care to the plaintiff and that it had breached such duty. The grant of special leave excluded these issues. The RTA was therefore obliged to accept the 60 Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5. 61 (2007) 47 MVR 401 at 420 [99]. 62 (2007) 47 MVR 401 at 434 [155]-[156]. Kirby conclusions of the Court of Appeal in favour of the defendant to this extent. In addition, were it to be held liable in negligence, it brought no challenge to the quantum of recovery or to the apportionment ordered by the Court of Appeal. The emerging issues: The central issue thus presented is whether the majority of the Court of Appeal erred in concluding that the factual evidence justified the opinion that the trial judge was wrong in deciding that the RTA was not liable to the plaintiff (and hence, under the contribution statute, liable to the defendant on his cross-claim). Specifically, did the majority of the Court of Appeal err in finding that the evidence, properly considered, required the conclusion that the acts and omissions of the RTA in designing, constructing and maintaining the intersection caused, in the appropriate legal sense, the subject collision and hence the damage suffered by the plaintiff? In support of its argument, the RTA presented submissions that raise three relevant issues: The incorrect approach issue: Did the majority of the Court of Appeal err by failing specifically to address the issue of causation? The RTA argued that the majority had inappropriately proceeded from a finding of breach of duty on the part of the RTA to the consequential question of whether a break in the chain of causation was established, thereby reducing the defendant's negligence to an issue of its "supervening effect"63; The incorrect conclusion issue: Even if the foregoing error was not made, did the majority nonetheless err in fact in concluding that the evidence in the record justified a conclusion that the RTA's acts and omissions were causative of the damage sued upon? and The appellate review issue: Did the majority err in giving effect to their own conclusions on causation, overriding those of the primary judge despite the advantages that he enjoyed having conducted the trial? These reasons will seek to demonstrate that each of these issues should be resolved in favour of the defendant. The conclusion reached by the majority of the Court of Appeal should be affirmed. The applicable principles on causation Before addressing the three stated issues, it is appropriate to note the common law principles that have been accepted by this Court as governing 63 See (2007) 47 MVR 401 at 419 [92]. Kirby decisions on contested issues of causation in relation to claims framed in negligence. The Court has considered these principles in a number of decisions in recent years64. Because there was no substantial contest about them in this appeal, it is appropriate to state them without much elaboration. The authorities are well known65. This appeal, in substance, concerns the application of the principles, not their content. First, it is important to recognise that, in the context of the law of negligence, causation is essentially a question of fact. Relevantly, the decision- maker must reach a conclusion by the application to the entirety of the evidence of common sense and the lessons of common experience. The fact-specific nature of contested problems of causation tends to render them unsuitable for determination by this Court. As Professor Jane Stapleton has said, the "question rarely gives rise to appellate case law because the question is one of fact"66. Secondly, the burden of proving causation-in-fact, whether at trial or in a review of factual findings on an appeal by way of rehearing, is on the claimant. The standard of proof that must be met is the balance of probabilities67. But to disturb a conclusion reached on this issue in a strict appeal to this Court, it is necessary for an appellant (here the RTA) to demonstrate error in the determination under challenge. This Court does not merely give fresh effect to its own view. Thirdly, whilst the "but for" test may be useful in defining the outer limits of liability where causation is contested, it is "not a comprehensive and exclusive criterion, and the results which are yielded by its application properly may be tempered by the making of value judgments and the infusion of policy 64 See eg Henville v Walker (2001) 206 CLR 459; [2001] HCA 52; Travel Compensation Fund v Tambree (2005) 224 CLR 627; [2005] HCA 69. 65 See eg March v Stramare (E & M H) Pty Ltd (1991) 171 CLR 506; [1991] HCA 12; Bennett v Minister of Community Welfare (1992) 176 CLR 408; [1992] HCA 27; Medlin v State Government Insurance Commission (1995) 182 CLR 1; [1995] HCA 5; Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55. 66 Stapleton, "Lords a'leaping evidentiary gaps", (2002) 10 Torts Law Journal 276 at 279 (emphasis in original). 67 Chappel (1998) 195 CLR 232 at 270-271 [93(4)]; Stapleton, "Lords a'leaping evidentiary gaps", (2002) 10 Torts Law Journal 276 at 279-280 referring to Bonnington Castings Ltd v Wardlaw [1956] AC 613 at 620 per Lord Reid. Kirby considerations"68. Where a question is presented in respect of statutory liability, the primary duty of the court is to determine the ambit of that liability by reference to the statutory subject, scope and purpose69. However, where, as here, the issue is the ambit of common law liability, it is settled that70: "[w]here several factors operate to bring about the injury to a plaintiff, selection of the relevant antecedent (contributing) factor as legally causative requires the making of a value judgment and, often enough, consideration of policy considerations. This is because the determination of a causal question always involves a normative decision." The reference to policy choices does not imply an open-ended judicial assignment of legal liability according to indeterminate criteria. However, it comprises a recognition of the fact that ultimately, a finding on causation depends not on a philosophical or theoretical criterion but involves a practical decision as to whether the common law will assign the whole, or part, of legal responsibility (usually sounding in an obligation to pay monetary damages) to a particular party. It would be a mistake to turn the legitimate use of "policy" considerations, based on identified legal principles, into the use of "value judgments at large"71. But the determination of causation-in-fact is not one that can be made without recourse to broader considerations. Fourthly, where, as is sometimes argued to be the case, several acts or omissions on the part of contesting parties are alleged to be causes-in-fact of a claimant's damage, the resolution of the contest presents a question of fact that is itself to be decided by reference to the foregoing considerations. The search is not necessarily for "the" cause because, in some cases, two or more factors may be found to have contributed in a legally relevant way to the damage that occasions the action. If, by the foregoing criteria, a conclusion is reached that two or more causes have played a part in causing the damage, legal liability will attach so long as a nominated cause is held to have "materially contributed" to 68 Chappel (1998) 195 CLR 232 at 255 [62] per Gummow J. See also March (1991) 171 CLR 506 at 510. 69 Travel Compensation Fund (2005) 224 CLR 627 at 644 [50] per Gummow and 70 Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568 at 586-587 [55] per McHugh J (footnote omitted); [2005] HCA 26. See also March (1991) 171 CLR 506 at 515 per Mason CJ; Henville (2001) 206 CLR 459 at 491- 71 Travel Compensation Fund (2005) 224 CLR 627 at 639 [29] per Gleeson CJ. Kirby that result72. The position under Australian law was correctly described in Henville v Walker73 by McHugh J: "If the defendant's breach has 'materially contributed'74 to the loss or damage suffered, it will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing the loss or damage. As long as the breach materially contributed to the damage, a causal connection will ordinarily exist even though the breach without more would not have brought about the damage." This exposition puts paid to the suggestion in this appeal that the search must be for "the" cause, as if for legal purposes all damage could simplistically be attributed only to one possible cause on the basis that that is what "common sense" dictates. The law recognises the possibility of multiple causes. So long as they can be classified as contributing "materially" to the occurrence of the damage, it is open to the judicial decision-maker to find causation-in-fact on that basis. Fifthly, in cases where causation-in-fact may appear to be established on the foregoing bases, it may sometimes be the case that legal liability will nevertheless be denied because the decision-maker comes to a conclusion that an occurrence has intruded which is effectively "the" cause of the damage, to the exclusion of other putative causes. This is sometimes described in terms of the occurrence of a novus actus interveniens. In Henville, McHugh J also said75: "In exceptional cases, where an abnormal event intervenes between the breach and damage, it may be right as a matter of common sense to hold that the breach was not a cause of damage. But such cases are exceptional." Sixthly, the way in which individual decision-makers ought to reason to their conclusions about contested issues of causation-in-fact cannot be expressed in terms of imperative rules of universal application. As with most legal reasoning, several considerations will typically combine to bring the mind of the decision-maker to his or her conclusion about the preferable view of the facts. In 72 March (1991) 171 CLR 506 at 512-514 per Mason CJ; Henville (2001) 206 CLR 459 at 480 [60] per Gaudron J. 73 (2001) 206 CLR 459 at 493 [106]. 74 Bonnington Castings [1956] AC 613 at 620 per Lord Reid. 75 (2001) 206 CLR 459 at 493 [106]. Kirby Betts v Whittingslowe76, Dixon J helpfully explained the way in which a finding of the existence of a duty of care and the breach of that duty may open the way for (whilst not compelling) an inference of causation-in-fact. His Honour said77: "[b]reach of duty coupled with an accident of the kind that might thereby be caused is enough to justify an inference, in the absence of any sufficient reason to the contrary, that in fact the accident did occur owing to the act or omission amounting to the breach". Seventhly, where the decision-maker concludes that causation-in-fact has been established, but that more than one cause has materially contributed, rights will then arise, in accordance with the contribution statute, as between the tortfeasors so held to be liable. In the present case, the statute concerned is the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). The applicable provision is s 5(1), which enacts: "Where damage is suffered by any person as a result of a tort … any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage … ". Section 5(2) of the Act expresses the criteria for the determination of such contribution: "In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity." The foregoing provisions indicate that questions of causation are inextricably linked to the entitlement to recovery and, if so, its extent. The tortfeasor seeking recovery must show that the damage is "a result of a tort". And the extent of the recovery is determined by "the extent of that person's responsibility for the damage". Clearly, the contribution statute is a remedial provision. It is designed to facilitate just and equitable apportionment of "liability to make contribution" to an award of damages by reference to considerations of causative responsibility. Inherent in the scheme of the Act is 76 (1945) 71 CLR 637; [1945] HCA 31. 77 (1945) 71 CLR 637 at 649. Kirby the recognition that material causes, contributing to the same actionable damage, may be several in number and differ in degrees of significance. As Mason CJ remarked in March v Stramare (E & M H) Pty Ltd78: "[T]he courts are no longer constrained as they were to find a single cause for a consequence and to adopt the 'effective cause' formula. These days courts readily recognize that there are concurrent and successive causes of damage on the footing that liability will be apportioned as between the wrongdoers." The contribution statute, and decisions upon it, acknowledge that judgments upon respective causative contributions will doubtless differ. To some extent, they may depend upon intuitive notions of justice and equity in evaluating "the extent of the person's responsibility for the damage". The common law evolves in the orbit of statute79. Given that, in Australia, contribution statutes have been in force for 50 years80, it is inevitable that the existence of the contribution facility has influenced the approach of courts to decisions about causation in circumstances where there are multiple material causes. The foregoing considerations are all to be considered within the framework of the traditional approach to causation, as observed by this Court. Neither party to the present appeal argued for a different approach reflecting, for example, the views expressed by the House of Lords in McGhee v National Coal Board81, Fairchild v Glenhaven Funeral Services Ltd82 or Barker v Corus UK Ltd83, or approaches to proportional recovery adopted in civil law countries such 78 March (1991) 171 CLR 506 at 512. 79 Brodie v Singleton Shire Council (2001) 206 CLR 512 at 602 [231]; [2001] HCA 80 See now Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5; Law Reform Act 1995 (Q), Pt 3 Div 2; Law Reform (Contributory Negligence and Apportionment Of Liability) Act 2001 (SA), s 6; Wrongs Act 1954 (Tas), s 3; Wrongs Act 1958 (Vic), Pt IV; Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA), s 7; Law Reform (Miscellaneous Provisions) Act (NT), Pt IV; Civil Law (Wrongs) Act 2002 (ACT), Pt 2.5. 81 [1973] 1 WLR 1; [1972] 3 All ER 1008. Kirby as France84. In the absence of argument calling for reconsideration of the traditional approach, it has not been attempted in these reasons. The Court of Appeal's approach was not erroneous The issue of approach: Because of the constraints that apply to this Court in correcting the suggested errors of the majority of the Court of Appeal, it is appropriate to start with the RTA's submission that Santow JA adopted an incorrect approach to the questions presented in the appeal before it. Naturally, if this could be demonstrated, it would render it easier for this Court to find error on the part of the intermediate court. Certainly, error might then be clearer than ordinarily it would be in a challenge to conclusions based on no more than another court's performance of its own fact-finding functions. The RTA's complaint is that Santow JA did not expressly address the "causation-in-fact" question, but assumed such causation to have been proved and then asked whether the RTA had established, in effect, a novus actus interveniens, that is, an "abnormal event interven[ing] between the breach and damage [such that] it may be right as a matter of common sense to hold that the breach was not a cause of damage"85. In my view, this is not a correct reading of what Santow JA said or of how the majority in the Court of Appeal reasoned. Correct majority reasoning: It is true that Santow JA expressly addressed the novus actus interveniens question. Presumably, his Honour did so because, as in this Court, the RTA urged that "common sense" dictated a simple conclusion that the material causes of the plaintiff's damage were limited to the negligence of the two drivers86. On this issue, Santow JA concluded87: "I consider that the supervening conduct of [the defendant] did not render the antecedent breach of duty of the RTA as no longer operative. Nor did it cause that breach to cease to be causally significant so as to break the chain of causation." 84 cf Khoury, "Causation and Risk in the Highest Courts of Canada, England, and France", (2008) 124 Law Quarterly Review 103 at 121-130. 85 Henville (2001) 206 CLR 459 at 493 [106] per McHugh J. 86 Reasons of Gummow, Hayne and Heydon JJ at [17] ("joint reasons"). 87 (2007) 47 MVR 401 at 420 [98]. Kirby If this had been the sole reference to causation-in-fact in Santow JA's reasons, there might have been some merit in the RTA's submission. However, it was not. At an earlier point in his reasons, Santow JA clearly addressed himself to the causation-in-fact issue. His Honour accepted that the configuration of the highway, as the defendant contended, created "a foreseeable problem for the observation of traffic travelling north by those vehicles exiting Bago Rd"88. He also concluded that the RTA was aware of the defect but had failed to address it in effecting the 1993 reconstruction, instead compounding the problem by creating cross-traffic to Boyds Road. Santow JA then went on89: "[The reconstruction] gave rise to a statistical inevitability of a proportion of cross-vehicle crashes, as demonstrated by the statistics to which I have earlier referred. While it does not make the present accident inevitable it did materially contribute to its occurrence, by creating a heightened risk of such an accident." Against the background of the authorities that I have collected, establishing that causation-in-fact may be proved by establishing a "material contribution" to the occurrence of damage, there is no other way to read the foregoing passage than as an expression of a conclusion that the acts and omissions of the RTA in its reconstruction of the intersection had caused the collision between the vehicle of the plaintiff and that of the defendant. The RTA had done so by materially contributing to the heightened risk of such an accident. That this is so is made even clearer by the description which Santow JA gave a little earlier of the way in which the plaintiff had to "cross the path of two lanes of high-speed through traffic"90. The conclusions so stated by Santow JA were plainly open on the evidence. By reconfiguring the intersection as it did, the RTA compounded the difficulties confronting motorists in the respective positions of the plaintiff and the defendant. The plaintiff was tempted into running the intersection so as to reach Boyds Road directly, even though there was not a completely safe break in the traffic. The defendant was tempted to assume that no careful driver would do anything so foolish. Each was negligent. But the predisposing negligence of the RTA was causative-in-fact because it materially contributed to the happening of the subject collision. Conclusion: no error: The result is that the RTA's complaint that Santow JA adopted an incorrect approach is without substance. In fact, given 88 (2007) 47 MVR 401 at 416 [84]. 89 (2007) 47 MVR 401 at 416 [85] (emphasis added). 90 (2007) 47 MVR 401 at 416 [85]. Kirby that Santow JA considered the establishment of causation by reference to the criterion of "material contribution" and then addressed the suggested disentitling novus actus interveniens, his Honour's reasoning was impeccable. It was fully in accord with the instruction of this Court on the law governing decisions on causation. The Court of Appeal's conclusion involved no error The issue about the conclusion: Once the complaint of erroneous approach is disposed of, the question that remains is a very narrow one. It is whether it was open to the majority of the Court of Appeal to conclude, on all of the evidence in the record, that the RTA's breach of duty materially contributed to the plaintiff's damage. If it did, it was open to the Court of Appeal to find causation-in-fact, subject to any disqualifying reasons, such as the establishment of a relevant novus actus interveniens. A separate question is whether there was any particular reason to refrain from disturbing the primary judge's conclusion because he enjoyed advantages which the Court of Appeal could not replicate91. With respect to those of a different view, the conclusion of Santow JA that the antecedent negligence of the RTA materially contributed to the occurrence of the collision in this case was one fully available to the Court of Appeal on the evidence in the record. Not to labour the point unduly, the most important considerations (all mentioned in the reasons of Santow JA) are as follows: The case was not one, such as commonly arises, involving an old road whose defects were inherited from long ago. The evidence showed that the RTA had reconstructed the subject intersection in 1993 and created a new hazard of direct cross-traffic. The peril thus occasioned was clearly demonstrated by the crash statistics92; The dangers inherent in electing for cross-traffic at the intersection, instead of a staggered approach, were shown to be known to highway designers in 1993 and before. Effectively, by acting as it did, the RTA created the "black spot". Then, despite the occurrence of multiple entirely predictable collisions, it failed to take action to mitigate the heightened risk of accidents which the reconstruction had occasioned93; 91 This is the third issue considered below at [119]-[125]. 92 (2007) 47 MVR 401 at 416 [85]. 93 (2007) 47 MVR 401 at 416 [85]. Kirby (3) At the time of, and after, the 1993 reconstruction, the RTA was aware of the significant impediments to the vision of drivers approaching the intersection caused by the undulating terrain and the curved trajectory of the highway94. As Santow JA observed95: "[D]espite the RTA being alive to the problem with sight distances in 1997, nothing further was done until after the present accident and then only to move the stop sign further forward." The RTA's movement of the stop sign and holding line to a point much closer to the actual intersection of Bago Road with the highway was an initiative which the RTA could have taken earlier, but did not take until it was too late for the plaintiff and the defendant. Not only did this change improve the capacity of drivers in their respective positions to see and appreciate the movements of each other. It also reduced the distance which a driver crossing the highway from a stationary position in Bago Road had to traverse96. The obligation to take appropriate preventive measures, and to put in place warning signs so as to avoid, or reduce the risk of, collisions, is manifestly part of the duty of a body such as the RTA97. The fact that the change was not effected by the RTA until after the subject collision does not, of itself, prove that the omission in fact caused that collision, in the sense of materially contributing to it. However, after so many earlier collisions, several of them very serious, the RTA's belated movement of the stop sign and holding line clearly shows what it might have done in fact. Given that the point of impact with the plaintiff's vehicle was near the driver's seat, reducing the distance involved in a safe crossing of the highway would obviously have reduced the risk-in-fact of the present collision in a material way; and In judging causation-in-fact (and hence whether an anterior cause of poor highway design, construction and maintenance materially contributed to a collision) it is erroneous for a decision-maker to act on the assumption that every driver has perfect vision, cognition, alertness, reaction time, attention and responsiveness to danger. According to standards of reasonable care, highway design, construction and maintenance must take into account all material circumstances, including imperfections on the part of users of the road. The dangers to which human misjudgment can 94 (2007) 47 MVR 401 at 415-416 [80]. 95 (2007) 47 MVR 401 at 417 [88]. 96 (2007) 47 MVR 401 at 417 [88]. 97 Brodie (2001) 206 CLR 512 at 578 [153]. Kirby give rise were well-known to have resulted in multiple earlier collisions at the subject intersection. This imposed on the RTA affirmative duties to seek to reduce or avoid those dangers98. Clearly, in light of the evidence before the Court of Appeal, it was open to that Court to conclude, as the majority did, that the RTA had failed to take steps to alleviate the dangers, such as constructing a staggered T-intersection, or at least moving the stop sign and holding line forward much earlier than it did99. The dissenting reasons: Santow JA noted the dissenting opinion of Basten JA but disagreed with it100. Such disagreement was clearly open to the majority. In his reasons, Basten JA was influenced by the fact that the defendant was driving in the right-turn lane of the highway even though he was travelling through the intersection constituted by Bago and Boyds Roads. His Honour considered that this "probably mislead the plaintiff" and that the defendant "had every opportunity to avoid the plaintiff, but took no evasive action until it was far too late"101. Such conclusions do not make proper allowance for the fact that the highway approaches the intersection on a curve and contains fast-moving lanes of through-traffic which enjoy priority over traffic entering from country roads. The defendant did not expect the plaintiff to cut across his path. In any case, the negligence of the defendant is accepted. Driving in the third (turning) lane may have involved some degree of negligence, as might the slight degree by which the defendant's speed exceeded the maximum speed limit, given the advisory speed signs and the known sight lines of this portion of the highway102. The contributory negligence of the plaintiff is unchallenged. The observation of Basten JA is not, therefore, responsive to the defendant's cross-claim against the RTA. That cross-claim is based essentially upon the fact that the poor design and construction of the intersection exposed both drivers to the serious perils so frequently arising in precisely the same way as on this occasion, such that an affirmative duty to reduce the risk was enlivened. It was either a good argument or a bad one; but it had to be answered. 98 (2007) 47 MVR 401 at 419 [91]. 99 (2007) 47 MVR 401 at 419 [92]. 100 (2007) 47 MVR 401 at 420 [100]. 101 (2007) 47 MVR 401 at 433-434 [154]. 102 cf joint reasons at [29]. Kirby Next, Basten JA remarked that "[b]oth parties knew the intersection well". He attributed to them "[mistaken] conduct … based on common knowledge of the design features of the intersection"103. It is one thing for drivers to know about an intersection. It is quite another to expect them to react in the available seconds so as to avoid an impact caused by the sudden movement of a vehicle, such as the plaintiff's, across the highway. The defendant had no responsibility or opportunity to contribute to improving the "design features of the intersection". That was the responsibility of the RTA alone. And it is enough to support the conclusions of the majority that the evidence was sufficient to sustain an opinion that these "design features" materially contributed to the ensuing damage. Basten JA was dismissive of the "opinions of the experts", which he regarded as being "of little relevance"104. However, given that the only way that the defendant could establish duty, breach and causation against the RTA was by calling evidence on reasonably safe highway design, construction and maintenance, his Honour here evidences, in my respectful view, the same error as was manifest in the reasons of the primary judge. If the evidence adduced by a party is ignored or dismissed by the judicial decision-maker, it will not be surprising that the decision-maker will fail to address attention to (and resolve judicially) that party's propounded case. The only way that the reasons of the dissenting judge can be supported, based on such an approach, is by embracing a theory that the defendant's conduct comprised a novus actus interveniens or by a simplistic return to a related theory of "last opportunity" of avoiding damage. But to adopt the "last opportunity" approach would be to reintroduce into the law of negligence an approach that this Court has for some time regarded as disputable, confusing and difficult to apply105. So far as the novus actus interveniens argument was concerned, it was convincingly answered by Santow JA. By reference to the evidence which he explained, his Honour concluded that the RTA's "material contribution" continued to operate to the point of the collision. It had not ceased to be "causally significant"106. That conclusion was open. It is the more convincing because Santow JA's reasons are the only place in which the causative "material 103 (2007) 47 MVR 401 at 434 [155]. 104 (2007) 47 MVR 401 at 434 [156]. 105 Alford v Magee (1952) 85 CLR 437 at 450-464; [1952] HCA 3; cited March (1991) 171 CLR 506 at 511-512. 106 (2007) 47 MVR 401 at 420 [98]. Kirby contribution" of the RTA is adequately explained or even mentioned. In reaching their conclusions, the trial judge and Basten JA did not give sufficient attention to the manner in which the evidence at trial established the "material contribution" of the RTA. Nor, with respect, do the majority in this Court. Conclusion: no error: Because this Court does not conduct a rehearing but is a court of error, the Supreme Court judgment in favour of the defendant must be upheld if it can be shown that the conclusion reached by Santow JA, for the majority, was open on the evidence. That the defendant has demonstrated. This Court cannot repeatedly remind intermediate courts of their duty in civil107 and criminal108 appeals to conduct their own independent review of evidence and to give effect to their own independent conclusions, only to deny the result although the intermediate court has carefully and thoroughly performed that function. Santow JA did this in the present case. In doing so, his Honour, with respect, conducted an analysis of the evidence relating to the defendant's cross-claim that the Court of Appeal was obliged to undertake, such analysis having been neglected by the primary judge. Correct approach: correct conclusion: There are additional considerations of a general kind that support this conclusion. They include: the undesirability of giving encouragement to the sophistry of single causes where evidence shows that more than one cause has materially contributed to the damage complained of109; and the fulfilment of an important objective of the law of torts. The law of actionable civil wrongs exists not only to provide monetary compensation (and contribution) where that is justified, but also to encourage appropriate conduct (including on the part of public officials) by the imposition of appropriate monetary sanctions110. I realise, of course, the 107 Warren v Coombes (1979) 142 CLR 531 at 551; [1979] HCA 9; Fox (2003) 214 CLR 118 at 127-128 [27]-[29]. 108 Weiss v The Queen (2005) 224 CLR 300 at 316 [42], 318 [47]; [2005] HCA 81. 109 cf Travel Compensation Fund (2005) 224 CLR 627 at 648 [62]. 110 Fleming, The Law of Torts, 9th ed (1998) at 13-14. See also Linden, "Tort Law as Ombudsman", (1973) 51 Canadian Bar Review 155; Linden, "Reconsidering Tort Law as Ombudsman", in Steel and Rodgers-Magnet (eds), Issues in Tort Law, (1983) at 1; Schuck, Suing Government: Citizen Remedies for Official Wrongs, (1983) at 184; cf Neindorf v Junkovic (2005) 80 ALJR 341 at 359-360 [84]-[85]; (Footnote continues on next page) Kirby imperfections, inefficiencies and paradoxes involved in treating the law of torts as a guardian of communal fairness and as a stimulus to accident prevention111. Doubtless, there are other, usually legislative, means of attaining these ends. However, so long as the law of torts survives, its role in distributive justice and in promoting safety should be maintained rather than denied. The joint reasons in this Court substantially confine their attention to the particular danger known to the RTA, being the "problem of one car masking another"112. With respect, this approach to causation-in-fact is far too narrow. It ignores the fact that the RTA was the statutory authority with relevant powers and functions to seek out ways of improving safety. It overlooks the RTA's actual knowledge of the "black spot" that it had created. And it gives no weight to the fact that this particular collision might have been avoided had simple and inexpensive improvements been made to the design of the intersection. It neglects the fact that, after the subject collision, the RTA at last took action to reduce the risks that had made the reconstructed intersection a "black spot". How many deaths and injuries were necessary to establish some degree of negligence in the authority responsible for the highway's design and safety? I do not accept that to uphold the approach of the Court of Appeal majority is "to impose something approaching absolute liability" on the RTA113. Indeed, the apportionment of responsibility favoured by the majority in the Court of Appeal plainly denies this. I accept that "[t]he accident was caused by driver error"114. But that is not the question. The question is whether the accident was only caused by driver error. The majority in the Court of Appeal demonstrate why that was not so. The contrary has not been shown to warrant reversal. To hold that the defendant motorist was the only tortfeasor liable for negligence in the present case, for decisions made or not made by him in the space of seconds when confronted by the sudden peril of the plaintiff's vehicle crossing his path, and to exculpate the RTA entirely for the dangers it caused at the intersection, is to do nothing at all to address the "material contribution" 222 ALR 631 at 653; Fahy (2007) 81 ALJR 1021 at 1055 [169]; 236 ALR 406 at 449; Dederer (2007) 81 ALJR 1773 at 1805 [166]; 238 ALR 761 at 801. 111 Smillie, "The future of negligence", (2007) 15 Torts Law Journal 300 at 303 (fn 112 Joint reasons at [24]. See also reasons of Kiefel J at [145]. 113 Reasons of Kiefel J at [145]. 114 Reasons of Kiefel J at [145]. Kirby involved in the RTA's conduct and omissions. Until such contributions are brought home to an authority such as the RTA, no stimulus is provided by the law of negligence for risk assessment, measures of accident prevention and safer highway design, construction and maintenance. It follows that considerations of relevant legal principle and policy support the majority's approach in the Court of Appeal. It conformed to the manner in which the question of causation-in-fact should be resolved in a case such as the present. The majority were correct to scrutinise carefully the evidence presented against the RTA. The conclusions reached by them were supported by that evidence. Subject to what follows, those conclusions should not be disturbed by this Court. There was no error of appellate review The suggested issue: Finally, the RTA complained that, notwithstanding its conclusions, the Court of Appeal had erred in substituting its view on causation-in-fact for that of the primary judge, having regard to what were said to be unique advantages which the primary judge enjoyed in conducting the trial. The defendant objected to the maintenance of this ground of appeal. However, in my view it should be dealt with. It was raised in the RTA's written grounds of appeal. No injustice is done to the defendant in deciding the point. Basis of the objection: Because appeals to an intermediate court are ordinarily conducted, as here, substantially on the written record, a rehearing involves recognised disadvantages. These include the lack of opportunity to observe witnesses giving their evidence and the less structured way in which an appellate court typically receives, and considers, such evidence115. It is necessary for the appellate court to accord appropriate respect to any material advantage that the primary judge enjoyed which is denied to it by the nature of its process. It may be accepted that, in these proceedings, the primary judge enjoyed the advantage of seeing witnesses and hearing all the evidence informing the conclusion on the facts to which he gave expression in his reasons. However, in this appeal no significant issue of credibility remains live. The primary judge was not very impressed with some of the evidence of the defendant. But what the defendant did, or failed to do, happened in a matter of seconds. His negligence is now accepted to some degree. The outstanding question is whether 115 cf State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 73 ALJR 306 at 327-330 [87]-[88]; 160 ALR 588 at 615-618; [1999] HCA 3; Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at 1614-1616 [90]-[100], 1627 [164]; 200 ALR 447 at 470-473, 488; [2003] HCA 48. See also Fox (2003) 214 CLR 118 at 125-126 [23]. Kirby negligence on the part of the RTA materially contributed at all to the collision that occurred. Absence of appellate error: In his reasons, Basten JA said that he would have been reluctant to interfere with the decision of the primary judge because he "had a view of the intersection, and was able to make an assessment of the defendant"116. On the outstanding issue of the cross-claim against the RTA, neither of these considerations impeded the conduct by the Court of Appeal of an analysis of the facts, considered in their entirety. This was an analysis that the primary judge had failed to undertake. Understandably, in my view, the very careful examination of the evidence undertaken by Santow JA led to his conclusion about the inadequacy of the primary judge's reasons in this respect. By rejecting that complaint, Basten JA compounded, in my view, the defects in the treatment of the cross-claim at trial. He accepted the wholly simplistic case presented by the RTA which could only be rebutted by a thorough analysis of the evidence that was relevant to the cross- claim. Only Santow JA performed that analysis. The conclusion of the primary judge on the cross-claim could carry but little weight when all of the evidence relevant to that cross-claim was taken into account. Likewise, the primary judge's poor opinion of the defendant could not displace the substantial and largely unchallenged evidence of known design faults and maintenance failings that Santow JA carefully demonstrated. Conclusion: no error: Conformably with the recent authority of this Court117, there was therefore no impediment to the Court of Appeal's review of the evidence relevant to the cross-claim against the RTA. Especially is this so because the primary judge inferentially rejected that evidence but did so unconvincingly because he failed to consider it in an appropriate, or any real, way. It was that defect that the majority in the Court of Appeal identified and cured. The contrary approach amounts to an attempt by the RTA to have this Court return to the unjust days of single causes and last opportunities which March, and cases since, have finally rejected. We should reject that attempt and adhere to our own established authority. We should not continue down the path, for unpersuasive reasons and in the absence of demonstrated error, of substituting 116 (2007) 47 MVR 401 at 434 [156]. 117 See in particular Earthline Constructions (1999) 73 ALJR 306 at 321 [63]-[64], 332 [94], 343-344 [154]; 160 ALR 588 at 607, 622, 636; Fox (2003) 214 CLR 118 at 129 [32]; CSR Ltd v Della Maddalena (2006) 80 ALJR 458 at 462 [1], 470 [46], 479 [105]; 224 ALR 1 at 3, 14, 26; [2006] HCA 1. Kirby differing views about the facts in this Court for those of judges who have the function, time and duty to address them thoroughly118. Conclusion and order None of the RTA's arguments succeeds. The appeal should be dismissed with costs. 118 Fahy (2007) 81 ALJR 1021 at 1055 [168]; 236 ALR 406 at 448; Dederer (2007) 81 ALJR 1773 at 1805 [166]; 238 ALR 761 at 801. 127 KIEFEL J. On 12 March 2001 a collision occurred between a vehicle driven by the first respondent, Mr Royal, and one driven by Mr Smurthwaite near the intersection of Bago Road with the Pacific Highway, south of Wauchope in New South Wales. In proceedings brought by Mr Smurthwaite, to recover damages for his injuries, he and Mr Royal were found to have contributed to the accident, by their negligence, although Mr Royal was held largely responsible. The Roads and Traffic Authority of New South Wales ("the RTA") was joined in the proceedings. Mr Smurthwaite and Mr Royal claimed that the intersection was designed in such a way as to put drivers at risk. The trial judge (Phelan DCJ) dismissed the claim against the RTA. It may be inferred that his Honour was not satisfied that any failure on the RTA's part materially contributed to the accident. A majority in the Court of Appeal of the Supreme Court of New South Wales (Santow and Tobias JJA) disagreed. This appeal concerns the method by which their Honours determined that the RTA was liable. On the date in question Mr Smurthwaite was travelling from Wauchope in an easterly direction along Bago Road. Where that road intersects with the northbound section of the Pacific Highway there is a stop sign and lines marked on the roadway. The highway at this point is four lanes wide, with an additional left-turn lane into Bago Road and a right-turn lane into Boyds Road. A vehicle crossing the highway at the intersection proceeds from Bago Road and into Boyds Road which connects, to the east, with the Pacific Highway southbound. That was Mr Smurthwaite's intended route. Mr Smurthwaite had no recollection of the accident, as a consequence of his injuries, and Mr Royal's account was largely rejected by the trial judge as unreliable. The evidence of two other drivers provided a detailed account of what had occurred. After stopping at the stop sign, Mr Smurthwaite's vehicle proceeded across the highway. His vehicle continued to move forward without any alteration of speed. Mr Royal's vehicle was seen by the driver of the vehicle immediately behind that of Mr Smurthwaite at the same time as he observed Mr Smurthwaite's vehicle move off. Mr Royal was travelling faster than he should. At a point where the highway curves to the right, his vehicle changed from the left lane to the right lane and then moved into the right-turning lane. It appeared to be cutting the corner. The driver observing Mr Royal saw Mr Smurthwaite's vehicle and he braked. Mr Royal did not do so until some time later. It later emerged that he had maintained the cruise control of his vehicle. He did not attempt to swerve or steer clear of Mr Smurthwaite's vehicle, which he could have done. The two vehicles collided. A finding by the trial judge that Mr Royal had been negligent, by reason of his multiple failures to take reasonable care, presented no difficulty. It was more difficult to understand why Mr Smurthwaite did not appear to have appreciated the danger presented by Mr Royal's vehicle. The witnesses and Mr Smurthwaite were familiar with the intersection and with the degree of visibility from it to the right along the highway. The witnesses said that there was good visibility at the intersection and that, so long as a driver waited for a gap in the highway traffic, they could easily cross it without having to speed. Mr Smurthwaite, who worked in the area, said that he knew when it was safe to cross. His Honour the trial judge conjectured that Mr Royal's vehicle may have been in a dip in the highway at the moment when Mr Smurthwaite proceeded from the intersection, but if that was so he should have had sufficient time to clear the intersection without colliding with Mr Royal's vehicle. Amongst other possibilities his Honour considered, one was whether Mr Smurthwaite may have been misled by Mr Royal travelling in the right-hand turn lane. He may have assumed that Mr Royal would slow down. This, however, involved the assumption of a risk of collision. Whatever the true reason for Mr Smurthwaite's inaction, his Honour concluded that he had been inattentive and thereby contributed to the accident. There was evidence before his Honour that that part of the roadway, upon which the accident occurred, had been considered as something of a "black spot" by the RTA. A number of serious accidents, including some involving fatalities, had occurred at that point. The chief problem created by the intersection, identified by his Honour, was that a driver stopped at the entry into the intersection from Bago Road may have had obscured from their view cars travelling behind other northbound vehicles, particularly those in the left-hand lane. The expert evidence concerning the design of the intersection was reviewed in the Court of Appeal. The intersection had been reconstructed in 1993. At this point and subsequently the RTA could have chosen to construct a staggered T-intersection, which would have obviated the need for vehicles to travel across the highway. It would have required drivers from Bago Road wishing to join the southbound highway to turn left, join the highway northbound, proceed for a distance sufficient to enable them to move across the lanes and utilise a right-turn lane which would connect with a roadway to the southbound highway. The construction of such an intersection was not impracticable. The requirement of such an intersection was not accepted by Basten JA. His Honour did not consider the selection of the intersection to have been unreasonable, at the time. His Honour observed that many of the risks said to be associated with the intersection design, and which affect the statistics as to accidents, were irrelevant to this case119. It is not necessary to determine the correctness of his Honour's assessment. These considerations are rendered 119 Royal v Smurthwaite (2007) 47 MVR 401. hypothetical if the configuration of the intersection did not materially contribute to Mr Smurthwaite suffering his injuries120. Santow JA (with whom Tobias JA agreed) held that the RTA owed a duty to road-users, such as Mr Royal and Mr Smurthwaite, to take steps to alleviate a known danger at a specific location, given available options to do so121. In failing to take steps reasonably open to it, not just to move the stop sign, as it did after the accident, but to construct a staggered T-intersection, the RTA breached that duty. His Honour then said that "[t]he remaining question is whether the supervening conduct of Mr Royal represented an intervening cause that could be said to have broken the chain of causation from the RTA's original negligent design"122. His Honour posed the question whether the accident would have happened if the duty had been performed, following the approach of Gaudron J in Bennett v Minister of Community Welfare123, and concluded that in a "but for" sense the defective design materially contributed to the accident124. The but for test has clear limitations. It was rejected as the exclusive test of factual causation in March v Stramare (E & M H) Pty Ltd125. Its inadequacy as a test for whether an earlier wrongful act or omission, although amounting to a condition of the occurrence of the ultimate harm, was a true cause of that harm, was acknowledged by Mason CJ, Deane and Toohey JJ in Bennett126. In Chappel v Hart127 McHugh J said that, underlying the rejection of the but for test in such 120 Bonnington Castings Ltd v Wardlaw [1956] AC 613; Duyvelshaff v Cathcart & Ritchie Ltd (1973) 47 ALJR 410; 1 ALR 125; March v Stramare (E & M H) Pty Ltd (1991) 171 CLR 506; [1991] HCA 12. 121 Royal v Smurthwaite (2007) 47 MVR 401 at 419 [91], referring to Brodie v Singleton Shire Council (2001) 206 CLR 512; [2001] HCA 29 and Commissioner of Main Roads v Jones (2005) 79 ALJR 1104; 215 ALR 418; [2005] HCA 27. 122 Royal v Smurthwaite (2007) 47 MVR 401 at 419 [92]. 123 (1992) 176 CLR 408 at 420-421; [1992] HCA 27. 124 Royal v Smurthwaite (2007) 47 MVR 401 at 420 [97]. 125 (1991) 171 CLR 506 at 508 per Mason CJ, 522-523 per Deane J, 524 per Toohey J. 126 (1992) 176 CLR 408 at 413; and see Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 6 per Deane, Dawson, Toohey and Gaudron JJ; [1995] HCA 5; Chappel v Hart (1998) 195 CLR 232 at 243-244 [24]-[26] per McHugh J; [1998] HCA 55. 127 (1998) 195 CLR 232. cases, is the instinctive belief that a person should not be liable for every wrongful act which is a necessary condition of the occurrence of the injury128. Causation for legal purposes is concerned with the allocation of responsibility for harm, according to commonsense ideas; its concern is not that of philosophy or science, to explain phenomena by reference to the relationship between conditions and occurrences, as Mason CJ explained in March129. For that reason, McHugh J observed, the mere fact that injury would not have occurred but for the defendant's act or omission here is often not enough to establish a causal connection for legal purposes130. The reasons of Santow JA disclose a conclusion of liability before the application of the but for test. His Honour reasoned from a failure, on the part of the RTA, to reduce an identifiable risk, to a conclusion of liability. The submissions for the first respondent seek to support such an approach. They rely upon observations by Dixon J in Betts v Whittingslowe131 and by Mason CJ in March132 to show that causation may be taken as proved in the circumstances of the present case and by the method applied by Santow JA. In Betts Dixon J said133: "breach of duty coupled with an accident of the kind that might thereby be caused is enough to justify an inference, in the absence of any sufficient reason to the contrary, that in fact the accident did occur owing to the act or omission amounting to the breach of statutory duty." In March Mason CJ said134: "it makes no sense to regard the negligence of the plaintiff or a third party as a superseding cause or novus actus interveniens when the defendant's wrongful conduct has generated the very risk of injury resulting from the 128 Chappel v Hart (1998) 195 CLR 232 at 243-244 [26]. 129 (1991) 171 CLR 506 at 509. 130 Chappel v Hart (1998) 195 CLR 232 at 243-244 [26]. 131 (1945) 71 CLR 637 at 649; [1945] HCA 31. 132 (1991) 171 CLR 506 at 518-519. 133 (1945) 71 CLR 637 at 649. 134 (1991) 171 CLR 506 at 518-519. negligence of the plaintiff or a third party and that injury occurs in the ordinary course of things." Betts concerned a statutory duty, on the part of the employer, to securely fence and safeguard all dangerous parts of machinery. The observations of Dixon J were referrable to the circumstances of that case. The fact that a young worker's hand came into contact with part of the machinery which needed to be guarded permitted an inference of breach of that duty. Indeed, as his Honour went on to say immediately after the passage relied upon, "the facts warrant no other inference inconsistent with liability on the part of the defendant"135. His Honour's reasons do not suggest any presumption to operate or any alteration to the requirement of proof of causation. They have not been understood to suggest any lessening of it136. As Dixon CJ later confirmed in his judgment in Jones v Dunkel137, the facts proved must form a reasonable basis for a definite conclusion, affirmatively drawn138. The statement of Dixon J in Betts does not provide support for a conclusion of liability to be drawn from a failure to address, or reduce, a risk. That of Mason CJ in March, relied upon by the first respondent, confirms the commonsense approach to causation, spoken of in that case. It does not suggest to the contrary of the requirement that the risk must come to pass. It is "that" injury which occurs "in the ordinary course of things". The approach of Santow JA in the present case implies that there is some equivalence between a failure to address the risk identified as created by the intersection and causation in fact. It has been suggested that a finding that an injury has occurred within an identified area of foreseeable risk may be sufficient to prove that it has caused or materially contributed to the injury139. The conclusion so reached has been explained by a shift in the evidentiary onus of 135 Betts (1945) 71 CLR 637 at 649; and see 641 per Latham CJ, 645 per Starke J. 136 See Duyvelshaff v Cathcart & Ritchie Ltd (1973) 47 ALJR 410 at 417 per Gibbs J; 1 ALR 125 at 138. 137 (1959) 101 CLR 298; [1959] HCA 8. 138 (1959) 101 CLR 298 at 305, as pointed out in Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262 at 289 [168] per Spigelman CJ and Flounders v Millar (2007) 49 MVR 53 at 59 [33] per Ipp JA. 139 Bennett (1992) 176 CLR 408 at 420-421 per Gaudron J; Naxakis v Western General Hospital (1999) 197 CLR 269 at 279 [31] per Gaudron J; [1999] HCA 22; Chappel v Hart (1998) 195 CLR 232 at 273 per Kirby J. proof taking place140. This approach was taken up in North Sydney Council v Binks141. In that case Santow JA suggested that the statement from Betts, set out above, required no more than that the accident which occurred be a reasonable possibility. This might be inferred from the use of the word "might" which his Honour considered142: "invokes notions of foreseeability and a degree of correlation, not merely temporal, which is typically referred to as within an 'area of foreseeable risk' connecting the defendant's negligence to the accident which follows." His Honour there held that the accident was within the foreseeable area of risk which arose from inadequate and delayed signage143. Liability was thereby established. It remains a requirement of the law that a plaintiff prove that a defendant's conduct materially caused the injury144. Nothing said in Betts detracts from that requirement, which forms the basis for the restatement of the test of causation in March. The question whether there is no real distinction between breach of duty and causation145, and the question whether a failure to take steps which would reduce a risk amounts to a material contribution to the injury, have been discussed elsewhere in connection to a possible shift in the onus of proof146. No decision of this Court holds that there is that equivalence or some lessening of 140 Bennett (1992) 176 CLR 408 at 420 per Gaudron J; cf 416 per Mason CJ, Deane and Toohey JJ; Naxakis v Western General Hospital (1999) 197 CLR 269 at 279 [31] per Gaudron J; cf Chappel v Hart (1998) 195 CLR 232 at 270-271 [93] per 141 (2007) 48 MVR 451 per Santow JA, Beazley JA agreeing, Basten JA dissenting; see also Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell (2007) 34 WAR 109. 142 North Sydney Council v Binks (2007) 48 MVR 451 at 458 [30]. 143 North Sydney Council v Binks (2007) 48 MVR 451 at 459 [37]. 144 Bonnington Castings Ltd v Wardlaw [1956] AC 613; Duyvelshaff v Cathcart & Ritchie Ltd (1973) 47 ALJR 410; 1 ALR 125; March (1991) 171 CLR 506. 145 McGhee v National Coal Board [1973] 1 WLR 1; [1972] 3 All ER 1008. 146 As noted in Bennett (1992) 176 CLR 408 at 416 per Mason CJ, Deane and the requirement of proof. As the majority in Bennett observed, they are questions which have not been considered by this Court147. The present state of authority does not accept the possibility of risk of injury as sufficient to prove causation. It requires that the risk eventuate148. Kitto J in Jones v Dunkel said that one "does not pass from the realm of conjecture into the realm of inference" unless the facts enable a positive finding as to the existence of a specific state of affairs149. Spigelman CJ pointed out in Seltsam Pty Ltd v McGuiness150, with respect to an increased risk of injury, that the question is whether it did cause or materially contribute to the injury actually suffered151. This enquiry is consistent with the commonsense approach required by March. In the present case the only risk arising from the nature of the intersection, which might possibly have been referrable to the circumstances of the accident, was that Mr Smurthwaite may have had part of his vision of cars travelling north on the highway obscured momentarily. But his Honour the trial judge discounted this and, as Basten JA pointed out152, Mr Royal was not travelling in the left lane, but in the right. The better inference is that Mr Smurthwaite thought that Mr Royal was turning right and would therefore slow down. There is nothing to suggest that Mr Royal could not be seen by Mr Smurthwaite. The evidence did not show that the design of the intersection contributed to the accident. It is not sufficient to suggest that there was a statistical possibility of an accident at the intersection because it was not the best design. To hold the RTA liable on this account would be to impose something approaching absolute liability. The accident was caused by driver error. I would allow the appeal, set aside the orders of the Court of Appeal and in their place order that the appeal to that Court be dismissed with costs. 147 (1992) 176 CLR 408 at 416. 148 Chappel v Hart (1998) 195 CLR 232 at 244-245 [27] per McHugh J. 149 (1959) 101 CLR 298 at 305. 150 (2000) 49 NSWLR 262 at 280 [118]. 151 See Bendix Mintex Pty Ltd v Barnes (1997) 42 NSWLR 307 at 318 per Mason P; Van Den Heuvel v Tucker (2003) 85 SASR 512 at 531 [98] per Doyle CJ and Duggan J; Batiste v State of Queensland [2002] 2 Qd R 119 at 124 [9] per Thomas JA, McMurdo P agreeing. 152 Royal v Smurthwaite (2007) 47 MVR 401 at 433 [153].

HIGH COURT OF AUSTRALIA McHUGH ACJ, Matters No. S122/2003 and S123/2003 AND APPELLANT ROADS AND TRAFFIC AUTHORITY & ORS RESPONDENTS Matters No. S124/2003 and S125/2003 NADIA CATHERINE RYAN BY HER TUTOR HEATHER RYAN AND APPELLANT JACK PLEDGE & ORS RESPONDENTS Pledge v Roads and Traffic Authority; Ryan v Pledge [2004] HCA 13 11 March 2004 Matters No. S122/2003, S123/2003, S124/2003 and S125/2003 1. Appeals allowed with costs. ORDER 2. Judgment and orders of the Court of Appeal of the Supreme Court of New South Wales on 10 April 2002 set aside. 3. Matter remitted to the Court of Appeal to determine re-apportionment of liability among the Respondents to the second appeal and other matters that were before the Court of Appeal but not dealt with in its judgment including the matter of costs in that Court. On appeal from Supreme Court of New South Wales Representation: Matters No. S122/2003 and S123/2003 D F Jackson QC with J M Morris for the appellant (instructed by Abbott Tout) D L Davies SC with S Woods for the first respondent (instructed by Crown Solicitor for New South Wales) J D Hislop QC with G J Gemmell for the second respondent (instructed by McCabe Terrill) A S Morrison SC with S E Torrington for the third respondent (instructed by Stacks – The Law Firm with Tom Goudkamp) Matters No. S124/2003 and S125/2003 A S Morrison SC with S E Torrington for the appellant (instructed by Stacks – The Law Firm with Tom Goudkamp) D F Jackson QC with J M Morris for the first respondent (instructed by Abbott Tout) J D Hislop QC with G J Gemmell for the second respondent (instructed by McCabe Terrill) D L Davies SC with S Woods for the third respondent (instructed by Crown Solicitor for New South Wales) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Pledge v Roads and Traffic Authority; Ryan v Pledge Negligence – Apportionment of liability – Assessment of causative factors in motor vehicle and pedestrian accident – Role of appellate court – Whether Court of Appeal justified in preferring own findings of fact to those of trial judge – Disadvantages faced by appellate court in assessing evidence – Where Court of Appeal made own assessment of photographs in evidence in preference to oral evidence of witnesses at trial – Where trial judge had undertaken viewing of accident site – Where Court of Appeal made speed, distance and timing calculations not proposed at trial. Words and phrases – "appeal". Evidence Act 1995 (NSW), s 54. Supreme Court Act 1970 (NSW), s 75A. McHUGH ACJ. The facts and the issues in these appeals are set out in the judgment of Callinan and Heydon JJ which I have had the advantage of reading. Their Honours hold that the Court of Appeal of New South Wales erred in three respects in exculpating the Roads and Traffic Authority of New South Wales and the Blue Mountains Council from responsibility for the harm suffered by the plaintiff. They were: no proper basis for preferring observations of the photographic exhibits to the oral evidence of four witnesses whose evidence was accepted by the trial judge; reliance on time, speed and distance calculations that involved so many imponderables as to make the calculations little more than speculation; failing to give sufficient weight to the advantage that the trial judge enjoyed by viewing the scene of the accident. For the reasons given by Callinan and Heydon JJ, the Court of Appeal erred in these three respects. It follows that these appeals must be allowed and the matters remitted to the Court of Appeal to re-apportion liability between the three defendants and to determine the issues not dealt with by the Court of Appeal in the appeal to that Court. Kirby KIRBY J. I agree, for the reasons given by Callinan and Heydon JJ, that error has been shown on the part of the Court of Appeal of New South Wales in exculpating the Roads and Traffic Authority of New South Wales and the Blue Mountains Council from responsibility for the damage suffered by the plaintiff. I also agree with the additional reasons of Hayne J and his analysis of the issues raised in these appeals. It follows that I agree that the appeals must be allowed with costs. The proceedings must be remitted to the Court of Appeal to determine the outstanding issues and to reapportion liability between the three defendants in the light of the conclusions of the Court of Appeal with which this Court has agreed. These are the lack of causative negligence in (1) the absence of the propounded traffic sign; and (2) the provision of parking bays at an angle of 90 degrees to the service road. The orders proposed by Callinan and Heydon JJ should be made. Hayne HAYNE J. I agree with Callinan and Heydon JJ that the appeals should be allowed with costs and the matters remitted to the Court of Appeal. I agree generally with their Honours' reasons. I add something on my own account, first, in order to amplify what is said about the issues of causation that arise and, secondly, to say something more about what issues will have to be dealt with when the matters are remitted to the Court of Appeal. As is so often the case when a motor accident is examined closely, there were many features of the history of the event in which Nadia Ryan was struck by the vehicle driven by Mr Pledge which may be thought to have contributed to its happening. Neither the injured pedestrian, Nadia, nor the driver of the vehicle that struck her, Mr Pledge, saw the other until too late. The father of the injured pedestrian did not see the vehicle that struck her until too late. The driver's opportunity to see pedestrians, and the pedestrians' opportunity to see approaching traffic, was reduced by the foliage on the median strip which divided the highway from the service lane. The pedestrians (father and daughter) did not take enough care to look properly for oncoming vehicles. The driver's attention was distracted by the consequences of a vehicle coming out of the parking bays at the side of the service road. There were no signs warning drivers of pedestrians, or requiring, or suggesting, a reduction in speed. The driver was driving within the speed limit but at a speed which the trial judge found to be faster than was reasonable in all the circumstances. Many of these factors were under the control of either the pedestrians, or the driver. But not all were. The state of the foliage on the median strip had been brought about by either or both of the Roads and Traffic Authority of New South Wales ("the RTA") or the Blue Mountains Council ("the Council"). (Whether it was the RTA or the Council which was, or both which were, responsible for the state of the foliage will have to be determined on remitter of the matter to the Court of Appeal. So too will any question of apportionment of that responsibility.) It was the Council which designed and permitted the use of off-road parking, at 90 degrees to the direction of travel, in bays beside the service road. It was the Council which would have provided warning signs. Why then should there be a distinction drawn between the legal significance which is attached to the presence of the foliage and the significance attached to either the off-street parking or the absence of a warning sign? The distinction is not to be found by attempting to identify the cause of the event. Examination will usually reveal that the event came about as the result of a complex mixture of acts or omissions. It may be right to say of each of those acts or omissions that, but for its happening, the accident would not have happened as it did. It would be wrong, however, to argue from that observation to a conclusion that one or other of those acts or omissions (for example, the driver's failure to keep a proper lookout) is to be given special significance. Equally, it would be wrong to argue from the identification of every act or omission which played a role in the accident happening as it did to the Hayne conclusion that legal responsibility attaches to all of those responsible for every one of those acts or omissions. As Windeyer J said in Faulkner v Keffalinos1, "lawyers must eschew this kind of 'but for' or sine qua non reasoning about cause and consequence"2. The questions that are relevant to legal responsibility are first, whether, as a matter of history, the particular acts or omissions under consideration (here the acts or omissions which led to the presence of the foliage, and the parking bays, and the absence of warning signs) did have a role in the happening of the accident. It is necessary then to examine the role that is identified by reference to the purpose of the inquiry – the attribution of legal responsibility3. It is at this second level of inquiry that it may be necessary to ask whether, for some policy reason, the person responsible for that circumstance should nevertheless be held not liable4. But that kind of policy inquiry apart, it is necessary to identify the nature of the role which the conduct in question played in bringing about the damage suffered. What role did the foliage, the parking bays, and the absence of signs have in the happening of this accident? It is convenient to deal first with the parking bays. To say that the driver was distracted by the vehicle coming out of the parking bays and the consequent reaction of the oncoming vehicle, is no more than a particular and positive statement of the negative proposition that he was not keeping a proper lookout. What attracted his attention was, as the Court of Appeal said, an event of an otherwise unremarkable kind, namely, the entry of one vehicle on to the carriageway from a point outside the bounds of that carriageway and the reaction of another vehicle into the path of which the first vehicle was moving. It was not suggested that the driver of either of those other (1970) 45 ALJR 80 at 86. 2 See also Chappel v Hart (1998) 195 CLR 232 at 243-244 [24]-[26] per McHugh J, 268-270 [93] per Kirby J, 284 [120] per Hayne J. 3 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 269 [38]-[40] per Gleeson CJ; Moneywood Pty Ltd v Salamon Nominees Pty Ltd (2001) 202 CLR 351 at 375-376 [82]-[84] per Gummow J; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at 128 [56] per Gaudron, Gummow and Hayne JJ; Environment Agency v Empress Car Co (Abertillery) Ltd [1999] 2 AC 22 at 29 per Lord Hoffmann; Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 at 71-73 [50]-[58] per Lord Hoffmann. 4 Stapleton, "Unpacking 'Causation'", in Cane and Gardner (eds), Relating to Responsibility, (2001) 145 at 166-173. Hayne vehicles caused or contributed to the happening of the accident. Rather, the trial judge found that the authority which had permitted cars to be put in the position from which the first vehicle had come was to some extent responsible for the accident. No doubt the positioning of the parking bays and their use on the day of the accident were events which form a part of the history which led to Nadia Ryan being struck by the vehicle which Mr Pledge was driving. But did the presence or design of the bays play a role which, in the context of an inquiry about negligence, can properly be described as causative? If the provision or the design of the parking bays (as distinct from driving in or out of one of them in a particular way, or at a particular point in the traffic flow) played any role in the happening of this accident it was so slight as properly to be discarded from consideration in assessing legal responsibility. There are at least two related reasons why that is so. First, the danger created by the presence of the parking bays was at all times evident. It was evident because any danger lay not in the fact that cars parked off the carriageway, it lay in the movement of cars into and out of the parking bays. And that was obvious. The bays stood at the side of a sufficiently long stretch of straight road for the view of vehicles entering or leaving them to be uninterrupted for a long distance. Secondly, what distracted the attention of Mr Pledge was, as I have said, the movement of the vehicle out of a parking bay and the reaction of another vehicle coming, past the emerging vehicle, towards Mr Pledge. All that the design and placement of parking bays did was provide the opportunity for this combination of events. In the circumstances of this case, that should not be held to have been a cause of the accident in which Nadia was injured. The issue about the parking bays may be contrasted with the foliage on the median strip. The foliage was as obvious as were the parking bays. But what was not obvious was that pedestrians could and did cross the median strip at an otherwise unmarked point in the strip. And as they did so, they were hidden from the view of drivers approaching that point, and cars were hidden from the pedestrians' view. It was the presence of the foliage (in its then state) which hid pedestrian from driver, and vehicle from pedestrian. The role which a particular act or omission played in the occurrence of an event can often be identified by asking what would have happened if the act or omission had not occurred. This kind of counterfactual inquiry may not always be easy. In this case, asking what would have happened if the foliage had been trimmed or cleared from the vicinity of the edge of the median strip led the Court of Appeal into attempting to calculate the time for which the pedestrians would have been visible to Mr Pledge. There were too many uncertainties in the evidence for the Court to make a calculation of that kind. Further, the conclusion drawn from the calculation (that Mr Pledge still would not have seen the pedestrians until too late) depended upon assuming that Mr Pledge's field of vision was very narrow, and directed to only one part of the roadway ahead. But Hayne vision and awareness of colour and movement are far less precise than the assumption that was made. It was well open to the trial judge to conclude that, had the foliage been less, Mr Pledge's attention would have been attracted to the pedestrians and the accident avoided or the impact lessened. The absence of a sign warning of the possibility of pedestrians crossing, or a sign requiring or suggesting a speed slower than the generally applicable speed limit on roads like the service road was dealt with by the trial judge very shortly and by way of conclusion rather than articulation of reasons. Evidence was given, at trial, that a sign reading "LOCAL TRAFFIC ONLY DRIVE SLOWLY" might have been erected in the area. Such signs were in use at the time and were usually accompanied by a speed restriction sign requiring a speed less than 60 kmh. But the trial judge made no clear finding that the Council had been negligent in failing to provide either the warning sign or a speed restriction sign. The trial judge said only that he was satisfied that there was "a need of warning signs or a notice limiting the speed of vehicles (or directing them to proceed slowly) etc" (emphasis added). This "need" was treated by the trial judge as a corollary of the likelihood of pedestrians crossing where the foliage was too dense and 90 degree parking bays were inappropriate. No doubt this treatment of the subject of warning signs owed much to the way the trial proceeded. At trial the chief focus of debate was upon three issues: first, the lookout kept by the driver; secondly, the significance of and responsibility for the state of the foliage on the median strip; and, thirdly, the provision of parking bays at 90 degrees to the direction of travel on the carriageway. These were the only subjects explored in the cross-examination of Mr Pledge, the driver. The subject of warning signs was not raised with him in the course of his evidence. In the Court of Appeal, the absence of signs was understood to present two issues: one about breach of duty and the other about causation. Ipp AJA concluded that it was "questionable" whether the Council was duty bound to have erected a sign of the kind suggested but that "there were insufficient grounds to hold that a sign of the kind postulated would have caused [the driver] to drive in any different way". I, too, would very much doubt that not to erect a sign of the kind suggested was a breach of any duty owed by the Council to the injured pedestrian5. But whether or not that is so, there was no evidence that the presence of a warning sign would have affected the way in which the driver drove on this day. There was, therefore, no basis in the evidence for concluding that the absence of a sign was a cause of the accident. And there was, in any event, no finding that the Council was negligent in failing to provide signs of the kind discussed. 5 Romeo v Conservation Commission (NT) (1998) 192 CLR 431. Hayne These conclusions do not dispose of all the issues that were raised in the proceedings in the Court of Appeal. As between the Council and RTA there remains undecided in this Court what role each played in designing or maintaining the foliage on the median strip. What has not been determined, therefore, is what responsibility each had for the state of the foliage at the time of the accident. That will be a matter for the Court of Appeal. It follows that whether the amount of any damages which the Council may otherwise be liable to pay is affected by Pt 6 of the Motor Accidents Act 1988 (NSW) is a question for the Court of Appeal. It also follows that apportionment of responsibility between the parties found to have been negligent is a matter which should be determined by the Court of Appeal. Finally, Mr Pledge's cross-appeal to that Court remains undecided. CALLINAN AND HEYDON JJ. The question in this appeal is whether the Court of Appeal of New South Wales was right to disturb an apportionment of negligence between defendants made by a trial judge who had the benefit of a view of the locality in which a motor vehicle accident occurred. The facts The Great Western Highway ("the Highway") passes through the town of Blaxland in New South Wales. It consists of a service road, about 7.4 metres wide, a fairly densely planted nature strip about 3.4 metres wide bisected by an almost continuous post and rail fence, two traffic lanes for Sydney bound traffic and two traffic lanes for Katoomba bound traffic. Coughlan Road forms a T-junction with the Highway on the side of the Katoomba bound lanes. On the side of the Sydney bound lanes, between them and the service road, was a well trodden path across the nature strip through a gap in the fence. It was that path that Nadia Ryan ("the plaintiff") followed shortly before she was struck by a vehicle driven by the appellant, Mr Pledge. It was frequently used by other pedestrians to cross the service road. It was also located within comfortable walking distance of a marked pedestrian crossing on the Highway controlled by traffic lights. Off the service road was a car park which ran from a point level with the marked crossing and the T-junction on which parking at an angle of 90 degrees to the Highway was the practice. One of the purposes of the dense planting on the nature strip was to shield passing vehicles from the glare of headlights at night. The provision of the service road and nature strip was part of a scheme for the widening and improvement of the Highway, and the design of the service road and nature strip were all the work of the Roads and Traffic Authority of New South Wales ("the RTA"). The Blue Mountains Council ("the Council") was responsible for the maintenance of the nature strip. It had also designed the car park beside the service road. During the afternoon of 9 July 1994 the plaintiff, who was then nine years old, her sister and their father, Mr Ryan, crossed from the Katoomba bound lanes of the Highway and reached the nature strip. They passed through the post and rail fence and paused momentarily. Mr Ryan said that he thought that they had stopped about 18 inches to two feet from the kerb of the service road. It was then that Mr Ryan apparently released the plaintiff's hand. Mr Pledge was driving his vehicle in a northerly direction, towards Katoomba. His view of the family was partially obscured by vegetation. Mr Ryan's vision was also reduced. The plaintiff moved forward one or two steps. She was struck by Mr Pledge's vehicle. Mr Ryan had tried to grasp the plaintiff's hand immediately before the impact but missed it by about a foot. At this stage the plaintiff was the only one of the family who was on the road surface. At the time of the accident another vehicle was reversing at an angle of 90 degrees from the car park in front of a hardware store. The trial The plaintiff suffered very severe injuries in the collision. She sued Mr Pledge, the RTA and the Council for negligence in the Supreme Court of New South Wales. The only issue at the trial which was heard by Dunford J was liability.6 During the trial, his Honour had what he rightly saw as the particular advantage of a view of the site of the accident. Relevant changes in the vicinity were pointed out at that time. The trial judge turned first to the case against Mr Pledge. His Honour accepted his evidence generally but was of the view that he had underestimated his speed at the time of the collision. He held that he was negligent in travelling at a speed which was excessive and in failing to keep a proper lookout. His Honour then considered the case against the RTA and the Council. He held that the RTA was negligent in the design, construction, planting and maintenance of the vegetation on the nature strip. He found that the negligence of both the RTA and the Council in those respects "contributed to the plaintiff's accident". He was of the opinion that the Council was negligent in two other respects, in allowing parking bays at an angle of 90 degrees beside the service road, and in failing to erect an appropriate traffic sign. The former was said by his Honour to offer a distraction to motorists proceeding along the service road. The trial judge concluded that the RTA and the Council were both liable to the plaintiff, and that the appropriate apportionment of responsibility was as to Mr Pledge 50 per cent, the RTA 25 per cent and the Council 25 per cent. He also made a finding of contributory negligence of 10 per cent against the plaintiff. The appeal to the Court of Appeal of New South Wales The RTA and the Council appealed to the Court of Appeal (Meagher and Giles JJA and Ipp AJA) against the findings of negligence against them, and in respect of some other currently non-relevant matters. Mr Pledge cross-appealed, but only as to the extent of the contribution assessed against him. The Court of Appeal allowed the appeals by the RTA and the Council for reasons given by Ipp AJA with whom the other members of the Court, with one 6 Ryan v Pledge (2001) 33 MVR 453. minor exception stated by Giles JA, agreed. These were, first, that for some significant distance before the point of impact Mr Pledge's vision was not affected by the vegetation on the nature strip. Secondly, any failure of the RTA and the Council to clear the vegetation on the nature strip to the extent of one metre as suggested by non-binding guidelines did not cause the collision. Thirdly, failure by the Council to erect warning signs of any kind would not have caused Mr Pledge to drive in any different manner from the way in which he did. And fourthly, the finding that the provision of 90 degree angle parking bays was negligent was not "justified", as the presence of the bays was not a causative factor in the collision. Ipp AJA dwelt in his reasons upon the visibility of Mr Pledge as he approached the point of impact and related matters. In doing so his Honour had regard to some photographs in evidence and what he considered could be deduced from them: "Constable Mills, a police officer who attended the scene, stated that the vegetation on the nature strip constituted an obstruction to visibility for pedestrians and drivers but did not say to what extent and from what point the view of drivers was impeded. In cross-examination he agreed that 'as a consequence of [his] investigations, including [his] examination of the scene,' he formed the opinion that Mr Pledge had no vision of Nadia until she had commenced to walk out onto the road. The weight of this view, however, is questionable as Constable Mills appears to have obtained his information largely from one of the policemen at the scene and not from any eye witness to the collision. Constable Schneiders, another police officer who attended at the scene, also described the visibility to drivers and pedestrians in the vicinity of the collision as 'poor'. He said: 'There is a slight gap where the pedestrians go through but the vegetation still extends up to the kerb and you could not see a pedestrian coming off the kerb'. The 'slight gap' where pedestrians crossed the nature strip was nine metres wide. It is obvious from photographs that, for some distance (significantly more than nine metres) to the south of the point where Nadia stepped on to the service road, a pedestrian standing at that point would be clearly visible to a driver proceeding from south to north. The evidence as to visibility, given by the police witnesses, Mr Ryan and Mr Pledge, has to be qualified by this fact. To the extent that their evidence suggests that a pedestrian would not have been visible at all, or difficult see-irrespective of the position of such a driver, it is plainly wrong. There was however no direct evidence as to the distance over which such a pedestrian would readily have been visible to the driver. None of the witnesses dealt with this question. jacket standing A photograph, exhibit C2, showed a police officer with a yellow reflective to Constable 'pretty close' Schneiders) to the point of impact. The officer concerned was standing virtually on the kerb. It is obvious from the photograph that the view from the photographer to the police officer was entirely unimpeded (the photographer was on the service road as if driving north). There was no evidence, however, as to the distance between the photographer and the police officer. (according Exhibit C2, was taken a distance further to the south of the point of impact than another photograph, exhibit C7. Exhibit C7 is a photograph of the nature strip and the service road showing the point of impact (and also indicating that the view from the point of impact to the camera was unimpeded). According to Constable Schneiders the distance from the photographer of exhibit C7 to the point of impact was approximately 30 metres. If that is correct then the distance from the point of impact to the photographer in exhibit C2 would be greater and, on my assessment, could be about 50 metres. Mr Garling SC, senior counsel for Mr Pledge, submitted however that the 30 metres to which Constable Schneiders testified (in regard to exhibit C7) must be a mistake, and the photographer of exhibit C7 must have been much closer to the point of impact than 30 metres. Although Constable Schneiders was not cross-examined about this estimate, there is force in Mr Garling's submission. A photograph of some significance is exhibit C3, which was taken at what appears to be virtually the same distance from the point of impact as exhibit C2. Exhibit C3 differs from exhibit C2 in that the police officer with the reflective jacket is not standing on the edge of the kerb of the nature strip but a metre or two west of the kerb. Only his head and shoulders are visible and these are difficult to see. Exhibit C3 is compelling evidence of the difficulty that drivers travelling south to north along the service road would have had in seeing a pedestrian standing about a metre or more to the west of the eastern kerb of the nature strip. The fact is that it is not possible from the evidence to determine with any precision or even approximate reliability the point at which Nadia, her sister and her father first would have become visible to Mr Pledge as he was driving from south to north along the service road. The reasons of Dunford J, however, do throw some light on this issue. His Honour's findings in this regard are of particular value as he held a view on site during the trial when various features of the scene were pointed out (albeit that the vegetation was then in a different condition). In addition, he drove along the service road in the same direction as Mr Pledge drove on the day in question. Dunford J found that Mr Pledge's speed of close to 60 kilometres per hour as he came along the service road was excessive 'having regard to the narrowness of the road and the limited vision on account of the trees and shrubs on the nature strip which [were] liable to obscure the presence of persons there who might be heading in the direction of the hardware store'. Dunford J accepted that when Mr Pledge became concerned about the traffic in the area of the parking bay he took his foot off the accelerator but he was not satisfied that Mr Pledge's speed was reduced significantly thereby. 'I am satisfied that if he had been keeping a proper lookout on both sides he would, notwithstanding the foliage, have been able to see [Nadia] in sufficient time to stop or swerve to avoid her, at least if he had been travelling at a more appropriate speed in the light of the road conditions to which I have referred'. This finding was not challenged. It follows that Mr Pledge's vision of the point where Nadia was standing was, for some significant distance, not impeded by the vegetation. This is consistent with the photographs exhibits C3 and C7." Ipp AJA dealt separately with the parking bays: "The provision of parking bays at such an angle [of 90 degrees], having regard to the width of the service road, was in conflict with the relevant Australian Standard. Dunford J said that having regard to the Standard 'and the opinions expressed by the expert witness Mr Wingrove', designing the parking bays so that they were in conflict with the Standard amounted to negligence. His Honour gave as his reason for this conclusion the fact that 'vehicles reversing out of the parking bay, even if intending to travel south on the service road, necessarily had to back out onto the northbound (or opposite) side of the service road'. This, he found, 'created a potential hazard for drivers proceeding north on the service road when a vehicle was backing out of the bay in that it distracted them from other matters requiring their attention directly ahead, particularly the possibility of pedestrians moving off the nature strip to cross the road'. His Honour considered that the provision of parking bays in these circumstances constituted negligence on the part of the Council which contributed to the collision. The Standard was not mandatory, but was a guide only. Matters such as width of carriageway, abutting land use, speed characteristics and vehicle volumes were all relevant in deciding whether to permit angle parking. Generally 90 degree angle parking was permitted in streets that carried predominantly local traffic (such as the service road). Nevertheless, according to the Standard, the width of the service road was such that only parallel parking should have been provided. Mr Wingrove said: 'There is nothing to say you have to always comply to the Standard'. This is manifest from the Standard itself. In my view, neither the Standard nor the evidence of Mr Wingrove justified the finding that the provision of 90 degree angle parking on the service road was negligent. In any event, in my view, on a common sense basis, the provision of the parking bays was not causative of the collision. Mr Pledge said that he could see a potential traffic hazard occurring 'between the car backing out and the one coming rather quickly down the service road towards me'. He had ample time to take appropriate action. The movements of the vehicles concerned were quite ordinary, and often experienced in the ordinary course of suburban driving. The parked car began to reverse out of its parking bay. It was passed by the oncoming vehicle that continued safely along the service road. The potential hazard was simply one of a kind that occurs frequently in everyday life. It has to be coped with by careful driving. There is nothing to suggest that, had the parking bays been of the parallel kind, and had the parked car moved out in front of the oncoming vehicle behind it, Mr Pledge's attention would not have been distracted. In my opinion, therefore, Dunford J erred in finding that the Council was negligent in providing 90 degree angle parking bays and that its negligence contributed to the collision." Ipp AJA reversed the finding of negligence made by the trial judge in respect of the absence of a traffic sign on this basis: "I now turn to the finding that the Council was negligent in failing to erect a warning sign or a notice limiting the speed of vehicles or directing them to proceed slowly. It was submitted that the warning sign should have reflected a speed of below 60 kilometres an hour or the words 'Slow down: Pedestrians'. It was, however, not general practice at the time to restrict the speed limit on minor roads to speeds below 60 kilometres an hour. Secondly, there was no evidence as to the speed limit that should have appeared on the sign. Thirdly, there was expert evidence to the effect that there was no warrant for warning signs to be erected. In my opinion, the finding that the Council was duty bound to have erected a sign of the kind suggested is questionable. In any event, Mr Pledge accepted in cross-examination that he knew that particular care was required in the area where the collision occurred and said that he had driven along the service road on a number of occasions. He was familiar with the area. A sign would not have told him anything he did not already know. Nevertheless, his knowledge made no difference to his driving. In my view, there were insufficient grounds to hold that a sign of the kind postulated would have caused him to drive in any different way." The Court of Appeal, whilst rightly noting and attaching weight to the fact that the trial judge inspected the scene of the accident, made no reference to s 54 of the Evidence Act 1995 (NSW) ("Evidence Act") which elevates an inspection to the status of evidence in that it can provide a foundation for the drawing of inferences. It is as follows: "54 Views to be evidence The court (including, if there is a jury, the jury) may draw any reasonable inference from what it sees, hears or otherwise notices during a demonstration, experiment or inspection." The appeal to this Court The appellant's submissions Mr Pledge seeks in this Court the restoration of the judgment of the primary judge. His submissions focused upon the substitution by the Court of Appeal of its opinion as to his visibility of the locale for that of the trial judge. He emphasized that the trial judge actually accepted the evidence of several witnesses that in fact a driver in his situation, and persons in that of the plaintiff's family would have had their vision obscured. The plaintiff's father could only see Mr Pledge's vehicle "through some shrubbery". It was very difficult for pedestrians in his position, and for drivers in Mr Pledge's situation to see each other because of the state of the vegetation. The plaintiff's father was a tall man. The plaintiff was on his left and would have had even less opportunity to see an approaching vehicle. Mr Pledge's evidence which was for the most part accepted by the primary judge, was that the plants and shrubbery on the nature strip were "very full ... very bushy hanging over the kerb maybe 300 or 400 mill[imetres]": he did not see the plaintiff before the moment of impact; his only explanation for failing to see the plaintiff and her family was the foliage. And it was in the light of that evidence that the trial judge found that the foliage significantly restricted his vision. Reference should also be made to the evidence of Constable Mills, the weight of which the Court of Appeal questioned for want of a reliable or identifiable source. It was not however directly challenged in cross-examination or contradicted by other evidence and it largely coincided with Constable Schneiders' evidence that visibility each way was poor. Their evidence was not weakened in cross-examination. It followed, Mr Pledge submitted, that in circumstances in which the trial judge had accepted credible, indeed substantially unchallenged evidence that the foliage in fact affected vision on the day, the Court of Appeal erred in engaging in its own analysis, based particularly on photographs, and culminating in a conclusion contrary to that of the trial judge. Mr Pledge made similar submissions with respect to the reversal by Ipp AJA of the trial judge's findings of negligence on the part of the Council and the RTA in respect of the location of the car park beside a service road of only about 7.4 metres in width, and the absence of a warning sign. The primary judge's view, he submitted, as to the design of the parking bays was also open: it involved the acceptance of oral evidence of an expert, Mr Wingrove. His Honour specifically found that a potential hazard was created, and that the consequences of it manifested themselves on the day. That a potential hazard may be "of a kind that occurs frequently in everyday life" and may have "to be coped with by careful driving", does not mean that it may not be one of a number of causes of an accident. The primary judge's view of the desirability of a sign was based on the presence of several potential hazards, including the density and closeness to the kerb of the foliage on the nature strip, and the location of the parking bays, as well as the evidence of the expert, Mr Wingrove. Accordingly, it was submitted, there was no reason to set it aside. The decision Statements in the joint judgment of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy7 are of relevance to this appeal: "In New South Wales a right of appeal from a judgment of the District Court lies to the Supreme Court pursuant to the District Court Act 1973 (NSW), s 127(1). In the present case such appeal lay as of right8. Within the Supreme Court such an appeal is assigned to the Court of Appeal9. The character and features of the appeal are governed by the Supreme Court Act 1970 (NSW). Section 75A of that Act provides, relevantly: '(5) Where the decision or other matter under appeal has been given after a hearing, the appeal shall be by way of rehearing. The Court shall have the powers and duties of the court … from whom the appeal is brought, including powers and duties concerning: the drawing of inferences and the making of findings of fact, and the assessment of damages and other money sums. The Court may receive further evidence. (8) Notwithstanding subsection (7), where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds. (10) The Court may make any finding or assessment, give any judgment, make any order or give any direction which ought (2003) 77 ALJR 989 at 993-995 [21]-[25], [27]; 197 ALR 201 at 206-209. 8 District Court Act 1973 (NSW), s 127(3). See also s 127(2)(c)(i). 9 Supreme Court Act 1970 (NSW), s 48(1)(a)(iv) and (2)(f). to have been given or made or which the nature of the case requires.' The nature of the 'rehearing' provided in these and like provisions has been described in many cases. To some extent, its character is indicated by the provisions of the subsections quoted. The 'rehearing' does not involve a completely fresh hearing by the appellate court of all the evidence. That court proceeds on the basis of the record and any fresh evidence that, exceptionally, it admits. No such fresh evidence was admitted in the present appeal. the record11. The foregoing procedure shapes the requirements, and limitations, of such an appeal. On the one hand, the appellate court is obliged to 'give the judgment which in its opinion ought to have been given in the first instance'10. On the other, it must, of necessity, observe the 'natural limitations' that exist in the case of any appellate court proceeding wholly or substantially on the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses' credibility and of the 'feeling' of a case which an appellate court, reading the transcript, cannot always fully share12. Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole13. limitations These include 10 Dearman v Dearman (1908) 7 CLR 549 at 561. The Court there was concerned with s 82 of the Matrimonial Causes Act 1899 (NSW) which provided that "on appeal every decree or order may be reversed or varied as the Full Court thinks proper": see (1908) 7 CLR 549 at 558. 11 Dearman v Dearman (1908) 7 CLR 549 at 561. See also Scott v Pauly (1917) 24 CLR 274 at 278-281. 12 Maynard v West Midlands Regional Health Authority [1984] 1 WLR 634 at 637; [1985] 1 All ER 635 at 637 per Lord Scarman with reference to Joyce v Yeomans [1981] 1 WLR 549 at 556; [1981] 2 All ER 21 at 26. See also Chambers v Jobling (1986) 7 NSWLR 1 at 25. 13 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 73 ALJR 306 at 330 [89]-[91]; 160 ALR 588 at 619-620 citing Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207 at 209-210; Jones v The Queen (1997) 191 CLR 439 at 466-467. Nevertheless, mistakes, including serious mistakes, can occur at trial in the comprehension, recollection and evaluation of evidence. In part, it was to prevent and cure the miscarriages of justice that can arise from such mistakes that, in the 19th century, the general facility of appeal was introduced in England, and later in its colonies14. Some time after this development came the gradual reduction in the number, and even the elimination, of civil trials by jury and the increase in trials by judge alone at the end of which the judge, who is subject to appeal, is obliged to give reasons for the decision15. Such reasons are, at once, necessitated by the right of appeal and enhance its utility. Care must be exercised in applying to appellate review of the reasoned decisions of judges, sitting without juries, all of the judicial remarks made concerning the proper approach of appellate courts to appeals against judgments giving effect to jury verdicts16. A jury gives no reasons and this necessitates assumptions that are not appropriate to, and need modification for, appellate review of a judge's detailed reasons. Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge's reasons. Appellate courts are not excused from the task of 'weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect'17. In Warren v Coombes18, the majority of this Court reiterated the rule that: 14 Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 at 619-620; State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 73 ALJR 306 at 322-325 [72]-[80]; 160 ALR 588 at 609- 15 Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 666-667 citing Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 257-258, 16 eg Hocking v Bell (1945) 71 CLR 430; (1947) 75 CLR 125 at 131-132; cf Naxakis v Western General Hospital (1999) 197 CLR 269 at 271-272 [2], 274-275 17 Dearman v Dearman (1908) 7 CLR 549 at 564 citing The Glannibanta (1876) 1 PD 283 at 287. '[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it.' [Other cases do not] derogate from the obligation of courts of appeal, in accordance with legislation such as the Supreme Court Act applicable in this case, to perform the appellate function as established by Parliament. Such courts must conduct the appeal by way of rehearing. If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute." There is no doubt that the Court of Appeal in this case strove to carry out its statutory appellate duty in accordance with the statements of principle that we have quoted. In our opinion it succeeded in doing so in discarding, as causative factors, the absence of any traffic sign, and the provision of parking bays at an angle of 90 degrees to the service road. The reasons for this are comprehensively stated by Ipp AJA. In addition, the proximity of parking bays to a service road is in no way remarkable. A service road is of quite a different character from an open highway. Motorists should proceed with caution along such a road because it necessarily will be used by motorists and their passengers proceeding to and from the establishments which it is designed to service. We are unable to reach the same conclusion however with respect to the rejection by the Court of Appeal, of the nature, density and location of the vegetation on the nature strip as a causative factor of the collision. It cannot, in our opinion, be doubted that it was a contributing cause. It obscured not only the visibility of Mr Pledge, but also the visibility of the plaintiff and her father. Its presence inevitably brought the plaintiff close to the roadway before she could obtain any useful view of passing traffic. Similarly, its presence produced the same consequence for Mr Pledge with respect to any opportunity that he might have had to see the plaintiff. Its presence would also suggest to any motorist proceeding as Mr Pledge was, that any pedestrian would need to be, and would be, cautious in proceeding through and from it on to the roadway. It is no answer to say that Mr Pledge did not in any event see the plaintiff before the impact and 18 (1979) 142 CLR 531 at 551. that therefore the presence of the foliage was of no significance. The eye may be attracted by a shape, or a movement, or contrasting colour. Mr Pledge would have had a greater opportunity to catch a glimpse of these phenomena had the foliage been less dense. The denial of that opportunity, by reason of an obstruction in the form of the dense foliage, probably contributed to this accident. The denial of an opportunity, by the presence of an obstruction such as dense foliage, to catch a glimpse of these can and must necessarily have contributed, as the trial judge found, to this accident. In our opinion Mr Pledge has successfully demonstrated that the Court of Appeal fell into error in exculpating the RTA and the Council. The errors were threefold. First, their Honours had no sufficient basis for preferring what they thought the photographs showed to the evidence accepted by the trial judge and coming from several and opposed sources, namely the plaintiff's father, Mr Pledge, two police officers and an expert, Mr Wingrove. The circumstances of the accident themselves point strongly to that error. Secondly, their Honours' reliance on the calculations that Ipp AJA made was unjustified. They depended on too many imponderables which were really little more than matters of speculation: estimates based on the plaintiff's father's evidence as to how long the plaintiff paused before she moved, and how long it took her to walk to the point of impact; that the appropriate extent of clearing of foliage should be one metre only, as indicated by the non-binding guidelines; Mr Pledge's estimated speed; the distance of his vehicle from the plaintiff as she stood on the nature strip before leaving it; and the effectiveness of Mr Pledge's attempts to decelerate19. It is not irrelevant that the calculations in question were not sought to be made during the trial by any party where the assumptions upon which they were based could have been fully tested and explored. The third error was the failure of the Court of Appeal to have sufficient regard to the utility of the trial judge's experiences in inspecting the site of the accident and driving along the road towards the accident site, particularly the enhanced utility accorded to it by s 54 of the Evidence Act. Abalos v Australian Postal Commission20, a case relied on by Mr Pledge, and which affirmed the 19 See comments as to the difficulties of such calculations in Public Transport Commission (NSW) v Perry (1977) 137 CLR 107 at 114-115 per Barwick CJ, 143 per Stephen J. See also Reville v Simpson (1950) 24 ALJ 217 and Fox v Percy (2003) 77 ALJR 989 at 1017 [149]; 197 ALR 201 at 239. 20 (1990) 171 CLR 167 at 178. special position of the trial judge, was a case in which the trial judge had enjoyed an analogous advantage, of an in-court demonstration. Even before the enactment of the Evidence Act, appeals courts customarily accorded significance to a demonstration or view at first instance. It was not accorded the weight that it deserved here. It is also relevant to the first error that has been identified. It must have supplied to the trial judge the valuable third dimension that the photographs necessarily lacked, and which formed the basis for much of the intermediate court's exculpation of the RTA and the Council. We would allow the appeals. But that does not mean that the trial judge's apportionment should necessarily stand. His Honour does seem to have had regard to the absence of a sign, and the provision of angle parking as negligent, and causative factors. Because in our opinion they were not, re-apportionment of negligence as between Mr Pledge, the RTA and the Council should now be made. Other issues arose before the Court of Appeal. The identification of the issues that remain to be determined and their resolution should be left to the Court of Appeal. As the Court of Appeal will need to decide these in any event, and because some of them relate at least to the respective obligations and liabilities of the RTA and the Council inter se, it is better that the Court of Appeal undertake any re-apportionment of liability rather than this Court. Each appeal should be allowed with costs. The judgment of the Court of Appeal of the Supreme Court of New South Wales should be set aside. The proceedings should be remitted to the Court of Appeal for reapportionment of liability among Mr Pledge, the RTA and the Council consistently with the decision of this Court and for the determination of the other issues before, and not decided by, the Court of Appeal, including the costs to date in the Court of Appeal having regard to the decision of this Court.

HIGH COURT OF AUSTRALIA PLAINTIFFS AND STATE OF NEW SOUTH WALES & ANOR DEFENDANTS McCloy v New South Wales [2015] HCA 34 7 October 2015 ORDER The questions stated by the parties in the special case dated 28 January 2015 and referred for the opinion of the Full Court be answered as follows: Question 1 Is Division 4A of Part 6 of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid (in whole or in part and, if in part, to what extent) in its application to the plaintiffs because it impermissibly burdens the implied freedom on communication on governmental and political matters contrary to the Commonwealth Constitution? Answer In so far as Division 4A prohibits the making by a property developer of a political donation or acceptance of a political donation from a property developer, it is not invalid. It does not impermissibly burden the implied freedom of communication on governmental and political matters contrary to the Constitution. Question 2 Is Division 2A of Part 6 of Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid (in whole or in part and, if in part, to what extent) in its application to the plaintiffs because it impermissibly burdens the implied freedom of communication of governmental and political matters contrary to the Commonwealth Constitution? Answer Question 3 Is s 96E of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid in its application to the plaintiffs because it impermissibly burdens the implied freedom of communication of governmental and political matters contrary to the Commonwealth Constitution? Answer Question 4 Who should pay the costs of the special case? Answer The plaintiffs. Representation D M J Bennett QC with I D Faulkner SC, A K Flecknoe-Brown and B A Mee for the plaintiffs (instructed by Toomey Pegg Lawyers) M G Sexton SC, Solicitor-General for the State of New South Wales and J K Kirk SC with A M Mitchelmore for the first defendant (instructed by Crown Solicitor (NSW)) Submitting appearance for the second defendant Interveners J T Gleeson SC, Solicitor-General of the Commonwealth with C L Lenehan for the Attorney-General of the Commonwealth, intervening (instructed by Australian Government Solicitor) G R Donaldson SC, Solicitor-General for the State of Western Australia with K A T Pedersen for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) P J Dunning QC, Solicitor-General of the State of Queensland with A D Keyes for the State of Queensland, the Attorney-General of intervening (instructed by Crown Law (Qld)) M G Evans QC with D F O'Leary for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) K L Walker QC with A D Pound for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS McCloy v New South Wales Constitutional law – Implied freedom of communication on governmental and political matters – Provisions of Election Funding, Expenditure and Disclosures Act 1981 (NSW) impose cap on political donations, prohibit property developers from making such donations, and restrict indirect campaign contributions – Whether provisions implied freedom of political communication. impermissibly burden Words and phrases – "appropriate and adapted", "deference", "implied freedom of communication on governmental and political matters", "margin of appreciation", "proportionality". Constitution, ss 7, 24, 62, 64, 128. Election Funding, Expenditure and Disclosures Act 1981 (NSW), Pt 6, Divs 2A, 4A, s 96E. FRENCH CJ, KIEFEL, BELL AND KEANE JJ. Introduction The Election Funding, Expenditure and Disclosures Act 1981 (NSW) ("the EFED Act") imposes restrictions on private funding of political candidates and parties in State and local government elections in New South Wales. The plaintiffs contend in this special case that provisions of the EFED Act, which impose a cap on political donations, prohibit property developers from making such donations, and restrict indirect campaign contributions, are invalid for freedom of political communication on impermissibly governmental and political matters (hereinafter "the freedom"), which is an implication from the Australian Constitution. infringing the As explained in the reasons that follow, the question whether an impugned law infringes the freedom requires application of the following propositions derived from previous decisions of this Court and particularly Lange v Australian Broadcasting Corporation1 and Coleman v Power2: The freedom under the Australian Constitution is a qualified limitation on legislative power implied in order to ensure that the people of the Commonwealth may "exercise a free and informed choice as electors."3 It is not an absolute freedom. It may be subject to legislative restrictions serving a legitimate purpose compatible with the system of representative government for which the Constitution provides, where the extent of the burden can be justified as suitable, necessary and adequate, having regard to the purpose of those restrictions. The question whether a law exceeds the implied limitation depends upon the answers to the following questions, reflecting those propounded in Lange as modified in Coleman v Power: Does the law effectively burden the freedom in its terms, operation or effect? (1997) 189 CLR 520; [1997] HCA 25. (2004) 220 CLR 1; [2004] HCA 39. 3 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560. Bell If "no", then the law does not exceed the implied limitation and the enquiry as to validity ends. If "yes" to question 1, are the purpose of the law and the means adopted to achieve that purpose legitimate, in the sense that they are compatible with the maintenance of the constitutionally prescribed system of representative government4? This question reflects what is referred to in these reasons as "compatibility testing". The answer to that question will be in the affirmative if the purpose of the law and the means adopted are identified and are compatible with the constitutionally prescribed system in the sense that they do not adversely impinge upon the functioning of the system of representative government. If the answer to question 2 is "no", then the law exceeds the implied limitation and the enquiry as to validity ends. If "yes" to question 2, is the law reasonably appropriate and adapted to advance that legitimate object5? This question involves what is referred to in these reasons as "proportionality testing" to determine whether the restriction which the provision imposes on the freedom is justified. The proportionality test involves consideration of the extent of the burden effected by the impugned provision on the freedom. There are three stages to the test – these are the enquiries as to whether the law is justified as suitable, necessary and adequate in its balance in the following senses: suitable — as having a rational connection to the purpose of the provision6; 4 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 561-562, 5 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 562. 6 Unions NSW v New South Wales (2013) 252 CLR 530 at 558-559 [55]-[56]; [2013] HCA 58. Bell necessary — in the sense that there is no obvious and compelling alternative, reasonably practicable means of achieving the same purpose which has a less restrictive effect on the freedom; adequate in its balance — a criterion requiring a value judgment, consistently with the limits of the judicial function, describing the balance between the importance of the purpose served by the restrictive measure and the extent of the restriction it imposes on the freedom. If the measure does not meet these criteria of proportionality testing, then the answer to question 3 will be "no" and the measure will exceed the implied limitation on legislative power. As noted, the last of the three questions involves a proportionality analysis. The term "proportionality" in Australian law describes a class of criteria which have been developed by this Court over many years to determine whether legislative or administrative acts are within the constitutional or legislative grant of power under which they purport to be done. Some such criteria have been applied to purposive powers; to constitutional legislative powers authorising the making of laws to serve a specified purpose; to incidental powers, which must serve the purposes of the substantive powers to which they are incidental; and to powers exercised for a purpose authorised by the Constitution or a statute, which may limit or restrict the enjoyment of a constitutional guarantee, immunity or freedom, including the implied freedom of political communication. Analogous criteria have been developed in other jurisdictions, particularly in Europe, and are referred to in these reasons as a source of analytical tools which, according to the nature of the case, may be applied in the Australian context. Acceptance of the utility of such criteria as tools to assist in the determination of the limits of legislative powers which burden the freedom does not involve a general acceptance of the applicability to the Australian constitutional context of similar criteria as applied in the courts of other jurisdictions. It does not involve acceptance of the application of proportionality analysis by other courts as methodologically correct. The utility of the criteria is in answering the questions defining the limits of legislative power relevant to the freedom which are derived from Lange. As explained in the reasons that follow, while the impugned provisions effectively burden the freedom, they have been enacted for legitimate purposes. They advance those purposes by rational means which not only do not impede the system of representative government provided for by the Constitution, but Bell enhance it. There are no obvious and compelling alternative, reasonably practicable means of achieving the same purpose. The provisions are adequate in their balance. The burden imposed on the freedom is therefore justified as a proportionate means of achieving their purpose. The substantive questions stated in the special case should be answered in favour of the validity of the impugned provisions and the plaintiffs should pay the costs of the special case. The EFED Act Provisions of the EFED Act were considered by this Court in Unions NSW v New South Wales7. That decision confirmed the operation of the freedom across State or Territory and federal divides and at all levels of government8. The submission that it did not apply to the EFED Act was rejected9. The general purpose of Pt 6 of the EFED Act was not in dispute in that case. In the joint judgment10 it was accepted that this purpose is to secure and promote the actual and perceived integrity of the Parliament and other institutions of government in New South Wales. A risk to that integrity may arise from undue, corrupt or hidden influences over those institutions, their members or their processes. That risk arises largely from the need, on the part of political parties and candidates, for large donations in order to compete Since the decision in Unions NSW, the EFED Act has been amended by the addition of an objects clause. Section 4A12 provides: (2013) 252 CLR 530. 8 Unions NSW v New South Wales (2013) 252 CLR 530 at 550 [25]. 9 Unions NSW v New South Wales (2013) 252 CLR 530 at 553 [34], 582-583 [155]. 10 Unions NSW v New South Wales (2013) 252 CLR 530 at 545 [8], 557 [49], 558 11 Unions NSW v New South Wales (2013) 252 CLR 530 at 545-546 [8], 557 [49], 12 Inserted by the Electoral and Lobbying Legislation Amendment (Electoral Commission) Act 2014 (NSW), Sched 2 [4]. Bell "The objects of this Act are as follows: to establish a fair and transparent election funding, expenditure and disclosure scheme, to facilitate public awareness of political donations, to help prevent corruption and undue influence in the government of the State, to provide for the effective administration of public funding of elections, recognising the importance of the appropriate use of public revenue for that purpose, to promote compliance by parties, elected members, candidates, groups, agents, third-party campaigners and donors with the requirements of the election funding, expenditure and disclosure scheme." Although the purpose of Pt 6 of the EFED Act was accepted as legitimate13 in Unions NSW, in the sense referred to in Lange14, the provisions of Pt 6 in question in Unions NSW15 were held to be invalid because they could not be seen as rationally connected to that purpose. This case concerns Div 2A of Pt 6 ("Div 2A"), Div 4A of Pt 6 ("Div 4A") and s 96E, which also appears in Pt 6 of the EFED Act. Part 6 applies to State and local government elections and to elected members of Parliament and councils, except Div 2A, which applies only to State elections and elected members of Parliament16. Section 95A(1), in Div 2A, provides general caps on the amount of political donations which a person can make to or for the benefit of a particular political party, elected member, group, candidate or third-party campaigner. 13 Unions NSW v New South Wales (2013) 252 CLR 530 at 546 [9], 579 [138]. 14 (1997) 189 CLR 520 at 561-562. 15 Election Funding, Expenditure and Disclosures Act 1981 (NSW), ss 96D and 16 Election Funding, Expenditure and Disclosures Act 1981, s 83. Bell Political donations to a registered political party are limited to $5,000 in a financial year17. This cap (as well as the caps referable to the other categories of recipients) is subject to indexation18. For any cap, donations during a financial year are aggregated19. Subject to certain exceptions, it is unlawful for a person to accept a political donation which exceeds the applicable cap20. A political donation is essentially a gift21. However, a gift made in a private capacity to an individual for his or her personal use, which is not used, and is not intended by the individual to be used, for a purpose related to an election or to his or her duties as an elected member, is not a political donation22. A candidate's contribution to finance his or her own campaign is not included in the applicable caps on political donations23. A subscription which is below a prescribed amount, paid to a political party by an industrial organisation, member, entity or other person, is disregarded for the purposes of Div 2A24. Although not in issue in these proceedings, two other aspects of the scheme of the EFED Act should be mentioned. The provisions of Div 2A reduce the income available to candidates for election purposes. Division 2B of Pt 6 contains complementary provisions which cap "electoral communication expenditure". That term is defined25 to include expenditure on advertisements and other matters associated with campaigning. The restriction on political donations is ameliorated, to some extent, by the provision made in Pt 5 for public funding of State election campaigns. 17 Election Funding, Expenditure and Disclosures Act 1981, s 95A(1)(a). 18 Election Funding, Expenditure and Disclosures Act 1981, s 95A(5), Sched 1, cl 2. 19 Election Funding, Expenditure and Disclosures Act 1981, ss 95A(2)-95A(3). 20 Election Funding, Expenditure and Disclosures Act 1981, s 95B(1). 21 Election Funding, Expenditure and Disclosures Act 1981, s 85. 22 Election Funding, Expenditure and Disclosures Act 1981, s 85(4)(a). 23 Election Funding, Expenditure and Disclosures Act 1981, s 95A(4). 24 Election Funding, Expenditure and Disclosures Act 1981, s 95D(1). 25 Election Funding, Expenditure and Disclosures Act 1981, s 87(2). Bell Section 96E(1) prohibits the "indirect campaign contributions" which are there listed. They include the provision of office accommodation, vehicles, computers or other equipment for no or inadequate consideration for use solely or substantially for election campaign purposes, and payment by someone else of electoral expenditure incurred or to be incurred by a party, elected member, group or candidate. Sub-section (2) of s 96E prohibits the acceptance of any of the listed indirect campaign contributions. Section 96GA, in Div 4A, prohibits the making or acceptance, directly or indirectly, of a political donation by a "prohibited donor" or the soliciting of a person by or on behalf of a "prohibited donor" to make a political donation. "Prohibited donor" is defined by s 96GAA to mean: a property developer, or a tobacco industry business entity, or a liquor or gambling industry business entity, and includes any industry representative organisation if the majority of its members are such prohibited donors." The special case, as the plaintiffs acknowledge, is limited to the prohibition in Div 4A applying to property developers, not the other two classes of "prohibited donors". A "property developer" is defined in s 96GB(1) as: a corporation engaged in a business that regularly involves the making of relevant planning applications by or on behalf of the corporation in connection with the residential or commercial development of land, with the ultimate purpose of the sale or lease of the land for profit, a person who is a close associate of a corporation referred to in paragraph (a)." The other two classes of prohibited donors are also, in part, defined as corporations and their close associates26. 26 Election Funding, Expenditure and Disclosures Act 1981, ss 96GB(2A), 96GB(2B). Bell A "relevant planning application"27 has the same meaning as in the Environmental Planning and Assessment Act 1979 (NSW) ("the EPA Act"), which covers a wide range of planning related applications under that Act28. A "close associate" of a corporation is defined29 to include a director or officer of the corporation or the spouse (which includes a de facto partner) of that person; a related body corporate of the corporation; a person whose voting power in the corporation or related body corporate is more than 20 per cent, or their spouse; or, when a corporation is a trustee, manager or responsible entity in relation to a trust, a person who holds more than 20 per cent of the units in a unit trust or is a beneficiary of a discretionary trust. The third plaintiff is a "property developer" within the meaning given to that term by the EFED Act. The first plaintiff is a director and "close associate" of the third plaintiff and therefore himself a "property developer" within the meaning of the EFED Act. The first plaintiff made donations of money to candidates for the March 2011 New South Wales State election. The second plaintiff, a corporation of which the first plaintiff is a director, made an "indirect campaign contribution" within the meaning of the EFED Act by way of payment towards the remuneration of a member of the campaign staff of a candidate for that election. Each of the plaintiffs intends, if permitted by law, to make donations in excess of $5,000 to the New South Wales division of a particular political party or to other political parties. The plaintiffs challenge the validity of Div 2A, Div 4A and s 96E. They submit that the ability to pay money to secure access to a politician is itself an aspect of the freedom and therefore the subject of constitutional protection. To the extent that the freedom may be abridged by laws which are proportionate to a legitimate end, one which is consistent with the system of representative government for which the Constitution provides30, the plaintiffs submit that these provisions are not of that kind. 27 Election Funding, Expenditure and Disclosures Act 1981, s 96GB(3). 28 Environmental Planning and Assessment Act 1979 (NSW), s 147. 29 Election Funding, Expenditure and Disclosures Act 1981, s 96GB(3). 30 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 561-562, Bell The questions in this case The following questions are stated by the parties for the opinion of the Court: Is Division 4A of Part 6 of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid (in whole or in part and, if in part, to what extent) in its application to the plaintiffs because it impermissibly burdens the implied freedom on communication on governmental and political matters contrary to the Commonwealth Constitution? Is Division 2A of Part 6 of Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid (in whole or in part and, if in part, to what extent) in its application to the plaintiffs because it impermissibly burdens the implied freedom of communication of governmental and political matters contrary to the Commonwealth Constitution? Is s 96E of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid in its application to the plaintiffs because it impermissibly burdens the implied freedom of communication of governmental and political matters contrary to the Commonwealth Constitution? 4. Who should pay the costs of the special case?" Section 96E is merely an anti-avoidance provision. Its purpose is to prevent political donations being made to a monetary value larger than the applicable cap by indirect means. Its validity depends upon that of Div 2A. The effect on the freedom The constitutional basis for the freedom is well settled. The Court was not invited by any party to reconsider the basis for the implication. Lange is the authoritative statement of the test to be applied to determine whether a law contravenes the freedom. All parties accepted that the Lange test was to be applied in this case to determine whether the impugned provisions of the EFED Act are consistent with the freedom. The only question, then, is as to what is required by the Lange test. In that regard, whether the impugned provisions are consistent with the freedom is to be determined, not by a side by side comparison of the challenged provisions with the text of ss 7, 24, 64 and 128 of the Constitution, nor by a determination of whether the impugned provisions are reasonably necessary in the pursuit of a purpose adjudged to be sufficiently Bell important, nor by an impressionistic judgment as to whether the impugned provisions are consistent with the freedom. The Lange test requires a more structured, and therefore more transparent, approach. In the application of that approach it is necessary to elucidate how it is that the impugned law is reasonably appropriate and adapted, or proportionate, to the advancement of its legitimate purpose. Central to the questions posed by Lange31 is how the EFED Act affects the freedom. In Unions NSW, it was accepted by the parties, and by the Court, that the provisions of the EFED Act effect a burden on the freedom32. A restriction on the funds available to political parties and candidates to meet the costs of political communication, which operates by restricting the source of those funds, effectively burdens the freedom because, even with the public funding which is provided for, a party or candidate will have to fund any shortfall33. The restrictions imposed by the general capping provisions of Div 2A, and the prohibitions upon political donations from property developers in Div 4A and upon indirect campaign contributions in s 96E, burden the freedom in this sense. It is, then, incumbent upon New South Wales to justify that burden, by reference to the requirements drawn from Lange. The plaintiffs contend that the provisions in question have a further effect on the freedom, namely upon the ability of donors to make substantial political donations in order to gain access and make representations to politicians and political parties. They accept, as they must, that the act of donation is not itself a political communication, but they submit that donors are entitled to "build and assert political power" and that this is an aspect of the freedom which has been recognised by this Court. Political influence may be acquired by many means, they say, and paying money to a political party or an elected member is but one. The words quoted by the plaintiffs and repeated above are taken from a passage in Archibald Cox's text34, which was referred to by Mason CJ in 31 (1997) 189 CLR 520 at 567, see also at 561-562; as those questions were amended by Coleman v Power (2004) 220 CLR 1 at 51 [95]-[96], 78 [196], 82 [211]. 32 Unions NSW v New South Wales (2013) 252 CLR 530 at 555 [43], 574 [120]-[121]. 33 Unions NSW v New South Wales (2013) 252 CLR 530 at 554 [38]. 34 Cox, The Court and the Constitution, (1987) at 212. Bell Australian Capital Television Pty Ltd v The Commonwealth35 ("ACTV") and by the joint judgment in Unions NSW36: "Only by uninhibited publication can the flow of information be secured and the people informed … Only by freedom of speech … and of association can people build and assert political power". In Unions NSW37 this passage was referred to in order to explain the need for an unfettered exchange of ideas. It was said that persons other than electors have a legitimate interest in matters of government and may seek to influence who should govern. This was in the context of a provision which purported to restrict donors to being individuals who are enrolled as electors. In ACTV, Mason CJ38 referred to the last sentence in the passage quoted as a "striking comment" on Professor Harrison Moore's statement39 that "'[t]he great underlying principle' of the Constitution was that the rights of individuals were sufficiently secured by ensuring each an equal share in political power" (footnote omitted). Neither the passage from Archibald Cox nor the use made of it by this Court supports the plaintiffs' argument that the ability to make substantial donations is part of the freedom. To the contrary, guaranteeing the ability of a few to make large political donations in order to secure access to those in power would seem to be antithetical to the great underlying principle to which Professor Harrison Moore referred. In any event, what the plaintiffs identify is something in the nature of a personal right. The plaintiffs' argument appears to mistakenly equate the freedom under our Constitution with an individual right such as is conferred by the First Amendment to the United States Constitution, which operates in the 35 (1992) 177 CLR 106 at 139; [1992] HCA 45. 36 (2013) 252 CLR 530 at 551 [29]. 37 (2013) 252 CLR 530 at 551-552 [30]. 38 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 39 Harrison Moore, The Constitution of the Commonwealth of Australia, (1902) at 329; that statement as summarised by Mason CJ. Bell field of political donations and is in the nature of both a right of political expression and a right of political association40. It has repeatedly been explained, most recently in Unions NSW41, that the freedom is not a personal right. In ACTV42, Brennan J said that "the freedom cannot be understood as a personal right the scope of which must be ascertained in order to discover what is left for legislative regulation". The freedom is best understood as a constitutional restriction on legislative power and the question is more generally as to the effect that the impugned legislation has upon the freedom. The EFED Act is not to be approached by viewing the restrictions it imposes upon the plaintiffs' ability to access politicians as a burden on the freedom. The relevant burden is that identified in Unions NSW. Compatibility of the legitimate purpose and means with the Constitution? Accepting that Div 2A and Div 4A burden the freedom, in the way explained in Unions NSW, the process of justification for which Lange provides commences with the identification of the statutory purpose or purposes. The other questions posed by Lange are not reached unless the purpose of the provisions in question is legitimate. A legitimate purpose is one which is compatible with the system of representative government provided for by the Constitution43; which is to say that the purpose does not impede the functioning of that system and all that it entails. So too must the means chosen to achieve the statutory object be compatible with that system44. Div 2A and s 96E The plaintiffs' argument in support of their submission that the effect of Pt 6 of the EFED Act shows that its true legislative purpose is other than that described in s 4A of the EFED Act does not identify any matter which detracts 40 Buckley v Valeo 424 US 1 at 21-22 (1976). 41 (2013) 252 CLR 530 at 551 [30], 554 [36]. 42 (1992) 177 CLR 106 at 150. 43 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 561-562, 44 Coleman v Power (2004) 220 CLR 1 at 50-51 [92]-[96], 78 [196], 82 [211]. Bell from the view expressed in Unions NSW45. It may be accepted that the words "corruption" and "undue influence" did not appear in the legislation until after that decision but, in relevant aspects, s 4A simply reflects the opinion stated in Unions NSW as to the general purpose of the EFED Act. The fact that the words are not repeated in Div 2A or other parts of the EFED Act does not detract from that purpose. The provisions of Div 2A are most clearly directed to the object stated in s 4A(c), the prevention of "corruption and undue influence in the government of the State". The capping provisions of Div 2A are intended to reduce the risk of corruption by preventing payments of large sums of money by way of political donation. It may be accepted, as the plaintiffs submit, that the EFED Act targets money which may be used for political communication, but this is not inconsistent with a purpose to prevent corruption. The provisions of Div 2A, and those of the EFED Act more generally, may additionally have an ancillary purpose. They are also directed to overcoming perceptions of corruption and undue influence, which may undermine public confidence in government and in the electoral system itself. In a report of the Parliament of New South Wales Joint Standing Committee on Electoral Matters, which made recommendations as to capping46, the Committee noted the submission that the purchase of access to politicians through large donations, which is not available to ordinary citizens, can result in "actual or the perception of undue influence"47 and said that "the need for reform to restore public confidence in the integrity of the system was recognised by most of the political parties that are currently represented in the New South Wales Parliament"48. The plaintiffs submit that gaining access through political donations to exert persuasion is not undue influence. This mirrors what was said by 45 (2013) 252 CLR 530 at 545-546 [8]. 46 New South Wales, Parliament, Joint Standing Committee on Electoral Matters, Public Funding of Election Campaigns, Report No 2/54, (2010) at 3-5. 47 New South Wales, Parliament, Joint Standing Committee on Electoral Matters, Public Funding of Election Campaigns, Report No 2/54, (2010) at 90 [5.34], summarising the submission of the Public Interest Advocacy Centre. 48 New South Wales, Parliament, Joint Standing Committee on Electoral Matters, Public Funding of Election Campaigns, Report No 2/54, (2010) at 90 [5.33]. Bell Kennedy J, writing the opinion of the Court in Citizens United v Federal Election Commission49, that "[i]ngratiation and access … are not corruption." In practice, however, the line between them and corruption may not be so bright. There are different kinds of corruption. A candidate for office may be tempted to bargain with a wealthy donor to exercise his or her power in office for the benefit of the donor in return for financial assistance with the election campaign. This kind of corruption has been described as "quid pro quo" corruption50. Another, more subtle, kind of corruption concerns "the danger that officeholders will decide issues not on the merits or the desires of their constituencies, but according to the wishes of those who have made large financial contributions valued by the officeholder."51 This kind of corruption is described as "clientelism". It arises from an office-holder's dependence on the financial support of a wealthy patron to a degree that is apt to compromise the expectation, fundamental to representative democracy, that public power will be exercised in the public interest. The particular concern is that reliance by political candidates on private patronage may, over time, become so necessary as to sap the vitality, as well as the integrity, of the political branches of government. It has been said of the nature of the risk of clientelism that52: "unlike straight cash-for-votes transactions, such corruption is neither easily detected nor practical to criminalize. The best means of prevention is to identify and to remove the temptation." Quid pro quo and clientelistic corruption threaten the quality and integrity of governmental decision-making, but the power of money may also pose a threat to the electoral process itself. This phenomenon has been referred to as "war- chest" corruption53. This form of corruption has been identified, albeit using 49 558 US 310 at 360 (2010). 50 Buckley v Valeo 424 US 1 at 26-27 (1976); McCutcheon v Federal Election Commission 188 L Ed 2d 468 at 485, 495-498 (2014). 51 McConnell v Federal Election Commission 540 US 93 at 153 (2003). 52 McConnell v Federal Election Commission 540 US 93 at 153 (2003). 53 Federal Election Commission v Beaumont 539 US 146 at 154-155 (2003). Bell different terminology, as a matter of concern both in Australia54 and in other liberal democracies of the common law tradition. In R (Animal Defenders International) v Secretary of State for Culture, Media and Sport55, Lord Bingham of Cornhill said that in a democracy it is highly desirable that the playing field of public debate be so far as practicable level and that: "This is achieved where, in public discussion, differing views are expressed, contradicted, answered and debated. … It is not achieved if political parties can, in proportion to their resources, buy unlimited opportunities to advertise in the most effective media, so that elections become little more than an auction." The plaintiffs' submission, that the relevant provisions of the EFED Act have as their true purpose the removal of the ability of persons to make large donations in the pursuit of political influence, would appear to confuse the effect of Div 2A, and other measures employed, with the overall purpose of these provisions. In so far as the submission also seeks to make the legitimacy of legislative purpose contingent upon consistency with a personal right to make political donations as an exercise of free speech, it appears once again to draw on First Amendment jurisprudence. In Austin v Michigan Chamber of Commerce56, the prospect that the power of money concentrated in corporate hands could distort the electoral process, by dominating the flow of political communication, was identified by the Supreme Court of the United States as a threat to the democratic political process sufficient to justify restrictions on political campaign contributions. However, this First Amendment jurisprudence has not been maintained. More recently, it has been held that the United States Congress may impose restrictions on campaign contributions only to target quid pro quo corruption and the appearance of such corruption57. The decision in Austin is now regarded as inconsistent with the primacy awarded by the First Amendment to an individual's right to free 54 Discussed in Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 144-145, 154-155, 188-189. 55 [2008] AC 1312 at 1346 [28]. 56 494 US 652 at 660 (1990). 57 McCutcheon v Federal Election Commission 188 L Ed 2d 468 at 494-495 (2014). Bell speech and has been overruled58. The view that now prevails is that an attempt by the legislature to level the playing field to ensure that all voices may be heard is, prima facie, illegitimate. That is not the case with respect to the Australian Constitution. As this Court said in Lange59, ss 7, 24, 64 and 128 of the Constitution, and related provisions, necessarily imply a limitation on legislative and executive power in order to ensure that the people of the Commonwealth may "exercise a free and informed choice as electors." Sections 7 and 24 contemplate legislative action to implement the enfranchisement of electors, to establish an electoral system for the ascertainment of the electors' choice of representatives60 and to regulate the conduct of elections "to secure freedom of choice to the electors."61 Legislative regulation of the electoral process directed to the protection of the integrity of the process is, therefore, prima facie, legitimate. In ACTV it was accepted that the fact that a legislative measure is directed to ensuring that one voice does not drown out others does not mean that measure is illegitimate for that reason alone62. The legitimacy of the concerns that the electoral process be protected from the corrupting influence of money and to place "all in the community on an equal footing so far as the use of the public airwaves is concerned" was accepted63. The legislation struck down in that case did not give equality of access to television and radio to all candidates and parties. The constitutional vice identified by Mason CJ was that the regulatory regime severely restricted freedom of speech by favouring the established political parties and their candidates. It also excluded from the electoral process 58 Citizens United v Federal Election Commission 558 US 310 at 365, 469 (2010). 59 (1997) 189 CLR 520 at 560. 60 Attorney-General (Cth); Ex rel McKinlay v The Commonwealth (1975) 135 CLR 1 at 56; [1975] HCA 53; McGinty v Western Australia (1996) 186 CLR 140 at 182; [1996] HCA 48. 61 Smith v Oldham (1912) 15 CLR 355 at 358; [1912] HCA 61. 62 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 63 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 130, see also at 161, 175, 189, 239. Bell action groups who wished to present their views to the community without putting forward candidates64. In Harper v Canada (Attorney General)65 the Supreme Court of Canada upheld legislative restrictions on electoral advertising. Bastarache J, delivering the opinion of the majority of the Court, explained66 that the restrictions were legitimately imposed in accordance with "the egalitarian model of elections adopted by Parliament as an essential component of our democratic society." His Honour continued that the premise for the model is equal opportunity for participation, and wealth is the major obstacle to equal participation. His Honour said that the state can equalise participation in the electoral process in two ways: "First, the State can provide a voice to those who might otherwise not be heard. … Second, the State can restrict the voices which dominate the political discourse so that others may be heard as well." Speaking of the provisions in question as seeking to create a "level playing field for those who wish to engage in the electoral discourse", his Honour observed that, in turn, this "enables voters to be better informed; no one voice is overwhelmed by another." Equality of opportunity to participate in the exercise of political sovereignty is an aspect of the representative democracy guaranteed by our Constitution67. In ACTV, the law which was struck down was inimical to equal participation by all the people in the political process and this was fatal to its validity. The risk to equal participation posed by the uncontrolled use of wealth 64 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 132, 145-146; see also at 171-173 per Deane and Toohey JJ, 220-221 per Gaudron J, 236-237, 239 per McHugh J. 65 [2004] 1 SCR 827. 66 Harper v Canada (Attorney General) [2004] 1 SCR 827 at 868 [62]. 67 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 72; [1992] HCA 46; Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 136; Unions NSW v New South Wales (2013) 252 CLR 530 at 578 [135]-[136]; Tajjour v New South Wales (2014) 88 ALJR 860 at 901 [197]; 313 ALR 221 at 271; [2014] HCA 35. Bell may warrant legislative action to ensure, or even enhance, the practical enjoyment of popular sovereignty68. The risks that large political donations have for a system of representative government have been acknowledged since Federation. Part XIV of the Commonwealth Electoral Act 1902 (Cth) contained certain limits on expenditure in electoral campaigns and would appear to have been based upon the Corrupt and Illegal Practices Prevention Act 1883 (UK)69. Speaking of that latter Act, "if its provisions are honestly carried out, the length of a man's purse will not, as now, be such an important factor; and the way will be opened for many men of talent, with small means, to take part in the government of the country". Capping of political donations is a measure which has been adopted by many countries with systems of representative government71. It is a means that does not impede the system of representative government for which our Constitution provides. The purpose of Div 2A and the means employed to achieve that purpose are not only compatible with the system of representative government; they preserve and enhance it. Div 4A The plaintiffs submit that the prohibitions in Div 4A cannot be based upon any rational perceived risk that property developers are more likely to make corrupt payments than others. Whilst they accept that the commercial interests of property developers are affected by the exercise of public power, they argue that the same may be said of any number of persons in the community. There is nothing special about property developers. 68 See Coleman v Power (2004) 220 CLR 1 at 52 [97]. 69 46 & 47 Vict c 51. 70 Seager, The Corrupt Practices Act, 1883, with Introduction and Full Index, (1883) 71 Transparency International, Money, Politics, Power: Corruption Risks in Europe, (2012) at 54 identifies 13 European countries which have done so. Bell New South Wales submits that the degree of dependence of property developers on decisions of government about matters such as the zoning of land and development approvals distinguishes them from actors in other sectors of the economy. Property developers are sufficiently distinct to warrant specific regulation in light of the nature of their business activities and the nature of the public powers which they might seek to influence in their self-interest, as history in New South Wales shows. These submissions of New South Wales should be accepted. Recent history in New South Wales tells against the plaintiffs' submission. The plaintiffs may be correct to say that there is no other legislation in Australia or overseas which contains a prohibition of the kind found in Div 4A, but a problem has been identified in New South Wales and Div 4A is one means to address it. The Independent Commission Against Corruption ("ICAC") and other bodies have published eight adverse reports since 1990 concerning land development applications. Given the difficulties associated with uncovering and prosecuting corruption of this kind, the production of eight adverse reports in this time brings to light the reality of the risk of corruption and the loss of public confidence which accompanies the exposure of acts of corruption. In ICAC's Report on Investigation into North Coast Land Development72, the report author, Mr Roden QC, said that: "A lot of money can depend on the success or failure of a lobbyist's representations to Government. Grant or refusal of a rezoning application, acceptance or rejection of a tender, even delay in processing an application that must eventually succeed, can make or break a developer. And decisions on the really mammoth projects can create fortunes for those who succeed. The temptation to offer inducements must be considerable." True it is that the eight reports relate to applications processed at a local level and that local councils consider most development applications. However, decisions as to land development are also made by relevant State departments, and Ministers are often consulted in the approval process. Pursuant to the EPA Act73, the Minister determines applications for State significant development. It 72 New South Wales, Independent Commission Against Corruption, Report on Investigation into North Coast Land Development, (1990) at 652-653. 73 Environmental Planning and Assessment Act 1979, ss 89D-89E. Bell is the Minister who is responsible for making local environmental plans74, which contain zoning and development controls75. State environmental planning policies are made by the Governor on the recommendation of the Minister and they may make provision for any matter that, in the Minister's opinion, is of State or regional environmental planning significance76. The purpose of Div 4A is to reduce the risk of undue or corrupt influence in an area relating to planning decisions, where such risk may be greater than in other areas of official decision-making. This purpose furthers the general purpose of Pt 6 of the EFED Act and is "legitimate" within the meaning given to that term in Lange, as are the means adopted to achieve it. No rational connection to purpose? The plaintiffs submit that Div 2A and Div 4A have no rational connection to the purpose of targeting corruption. In the language of proportionality analysis, discussed later in these reasons, that is a submission that the impugned provisions are not "suitable". By analogy with the reasons of the joint judgment in Unions NSW, the plaintiffs submit that it is not explained why Div 4A targets only corporations and their close associates who are property developers and not individuals or firms. Other deficiencies are pointed to in Div 2A such as a failure to distinguish between corrupt political donations and those made without a corrupting purpose, and a failure to capture personal gifts. These factors bear no similarity to the problem associated with the provisions at issue in Unions NSW. In that case, s 96D(1) prohibited the acceptance of a political donation unless it was from a person enrolled as an elector. Section 95G(6) effectively aggregated the amount spent by way of electoral communication expenditure by a political party and its affiliated organisations for the purposes of the capping provisions in Div 2A. Unlike other provisions in Pt 6, it was not possible to discern how these provisions could further the general anti-corruption purpose of the EFED Act. The provisions of Div 2A and Div 4A do not suffer from such a problem. New South Wales submits that it may be expected that most commercial land developments will be undertaken by corporations, but it does not matter whether 74 Environmental Planning and Assessment Act 1979, Pt 3, Div 4. 75 Environmental Planning and Assessment Act 1979, s 26. 76 Environmental Planning and Assessment Act 1979, s 37. Bell that was the reason for excluding other entities and persons from the operation of Div 4A. If there is a deficiency of the kind contended for by the plaintiffs, it is not one which severs the connection to the anti-corruption purpose of the EFED Act. The same may be said of the other alleged deficiencies in Div 2A. An equally practicable alternative? – necessity In Lange77 it was observed that the law in question in ACTV was held to be invalid because there were other, less drastic, means by which the objects of the law could have been achieved. In Unions NSW78 it was said that the Lange test may involve consideration of whether there are alternative, reasonably practicable means of achieving the same purpose which have a less restrictive effect on the freedom. If there are other equally appropriate means, it cannot be said that the selection of the one which is more restrictive of the freedom is necessary to achieve the legislative purpose. This method of testing mirrors, to an extent, that which has been applied with respect to legislation which restricts the freedom guaranteed by s 92 of the Constitution. In Monis v The Queen79 it was said that any alternative means must be "obvious and compelling", a qualification which, as French CJ pointed out in Tajjour v New South Wales80, ensures that the consideration of alternative means is merely a tool of analysis in applying this criterion of proportionality. Courts must not exceed their constitutional competence by substituting their own legislative judgments for those of parliaments. The plaintiffs put forward two alternatives to the measures in Div 2A. They say that it would be less restrictive of the freedom if the prohibition on receiving political donations in excess of the applicable caps were confined to those donations which are intended as corrupting; which is to say to limit it to occasions of bribery. They also say that the best method of targeting corruption is transparency and that the requirements in the EFED Act for disclosure of donations could be strengthened. 77 (1997) 189 CLR 520 at 568. 78 (2013) 252 CLR 530 at 556 [44]. 79 (2013) 249 CLR 92 at 214 [347]; [2013] HCA 4. 80 (2014) 88 ALJR 860 at 876 [36]; 313 ALR 221 at 238. Bell Division 2 of Pt 6 of the EFED Act contains provisions requiring the disclosure to the Electoral Commission81 of political donations made or received during a relevant disclosure period and of electoral expenditure82. The Commission publishes reportable donations and electoral expenditure on its website83. The plaintiffs do not explain how these provisions might be strengthened in a way which would render the capping provisions unnecessary. Whilst provisions requiring disclosure of donations are no doubt important, they could not be said to be as effective as capping donations in achieving the anti- corruption purpose of the EFED Act. Limiting restrictions on political donations to acts of bribery would undoubtedly reduce the efficacy of the statutory scheme. The difficulties inherent in detecting and proving bribery in the context of political donations do not suggest that it can be considered a reasonable alternative to capping. Further, it is not the subjective intention of the donor so much as the objective tendency of large payments of money to corrupt both government and the electoral system which is the justification for the restriction. In the course of argument there was some discussion about whether, given the provision made for capping in Div 2A, the outright prohibition of some donors in Div 4A could be said to be necessary. However, the matter is complicated by the fact that capping and the associated public funding for election campaign purposes are not extended to local government elections, whereas the prohibition in Div 4A is. It was not suggested that the legislature should allocate resources to extend the capping and public funding provisions in order to give them the same scope as the prohibition, nor was it suggested that a partial removal of the prohibition, for local government elections, would be practicable. The plaintiffs did not pursue such a line of argument, eschewing capping altogether for being unnecessary. 81 Election Funding, Expenditure and Disclosures Act 1981, s 91(2); formerly, disclosures had to be to the Election Funding Authority of New South Wales. 82 Election Funding, Expenditure and Disclosures Act 1981, ss 88, 92, 93. 83 Election Funding, Expenditure and Disclosures Act 1981, s 95(1). Bell Other submissions as to proportionality The plaintiffs submit that Div 2A, and s 95B in particular, does not go far enough and does not achieve its object comprehensively because it does not capture all dealings between a donor and donee. Whether or not this identifies a shortcoming of the provisions, the submission does not identify a want of proportionality. Turning to the object of Div 2A, the plaintiffs say that it goes further than is necessary to target actual corruption and pursues a "wider cosmetic objective" of targeting a "perceived lack of integrity". It is difficult to accept that the public perception of possible corruption in New South Wales is a "cosmetic" concern. Even First Amendment jurisprudence accepts that the "appearance" of corruption in politics is a legitimate target of legislative action84. The submission is also at odds with the plaintiffs' concession that the maintenance of public confidence is a public benefit which can be relied upon as a justification for a legislative restriction on the freedom. Justification: compatibility and proportionality testing The plaintiffs' submissions as to proportionality proceed on a correct basis, that proportionality analysis of some kind is part of the Lange test. However, those submissions, and others which have been put to the Court, tend to treat the question of proportionality as one at large and involving matters of impression, such as whether the legislative measures go too far, or not far enough. Something more should be said about the reason why it is necessary to enquire into the proportionality of a legislative measure which restricts the freedom. This requires examination of the nature of the proportionality enquiries which Lange renders necessary, their limits and their relationship with the Lange test of compatibility. The process of justification called for by Lange commences with the requirement that the purpose of the provisions in question, which is to be identified by a process of construction, must be compatible with the system of representative government for which the Constitution provides. Other legal systems which employ proportionality testing to determine the limits of legislative power to restrict a right or freedom also require, before that testing commences, that there be a legitimate purpose, because only a legitimate purpose 84 Buckley v Valeo 424 US 1 at 27-28 (1976). Bell can justify a restriction85. But what is there spoken of as legitimate is that the purpose is one permitted by the relevant constitution. The test in Lange requires more, both as to what qualifies as legitimate, and as to what must meet this qualification. It requires, at the outset, that consideration be given to the purpose of the legislative provisions and the means adopted to achieve that purpose in order to determine whether the provisions are directed to, or operate to, impinge upon the functionality of the system of representative government. If this is so, no further enquiry is necessary. The result will be constitutional invalidity. Otherwise, if this first test, of compatibility, is met, attention is then directed to the effect of the provisions on the freedom itself. It is at this point that proportionality testing is applied. The reason it is required is that any restriction of the freedom must be justified, given that the freedom is protective of the constitutionally mandated system of representative government. It is not sufficient for validity that the legislative provisions in question are compatible with the system of representative government, for if the protective effect of the freedom is impaired the system will likely suffer. Therefore, it is also necessary that any burden on the freedom also be justified, and the answer to whether this is so is found by proportionality testing. The difference between the test of compatibility and proportionality testing is that the latter is a tool of analysis for ascertaining the rationality and reasonableness of the legislative restriction, while the former is a rule derived from the Constitution itself. Proportionality testing in relation to the freedom A legislative measure will not be invalid for the reason only that it burdens the freedom. It has been pointed out on many occasions that the freedom is not absolute86. On the other hand, legislative incursions upon the freedom are not to be simply accepted without more. It was said by members of 85 Grimm, "Proportionality in Canadian and German Constitutional Jurisprudence", (2007) 57 University of Toronto Law Journal 383 at 387-388; Lübbe-Wolff, "The Principle of Proportionality in the Case-Law of the German Federal Constitutional Court", (2014) 34 Human Rights Law Journal 12 at 13-14. 86 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 76-77, 94-95; Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 142, 159, 169, 217-218; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 299, 336-337, 363, 387; [1994] HCA 44; Monis v The Queen (2013) 249 CLR 92 at 141 [103], Bell the Court in Nationwide News Pty Ltd v Wills87 and in ACTV88 that what is called for is a justification for a burden on the freedom. Similar statements were made in cases which followed, both before89 and after90 Lange. Until Lange, questions remained about how a legislative restriction of the freedom, and that restriction's means, could be said to be justified. Since Lange, the focus has been upon what is involved in the conditions the Lange test states for validity. In the present case, the Commonwealth submitted that the second question in the Lange test is directed to the "sufficiency of the justification", but did not say how such a conclusion is reached, or is not reached. It is true that in some judgments in ACTV91, and in cases which followed92, it was said that a "compelling justification" may be required, but this is to say no more than that a more convincing justification will be required when the restrictive effect of 87 (1992) 177 CLR 1 at 76-77, 78 per Deane and Toohey JJ. 88 (1992) 177 CLR 106 at 143, 146, 147 per Mason CJ, 169, 171, 175 per Deane and Toohey JJ, 233, 234, 238 per McHugh J. 89 Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 178-179, 183- 184 per Deane J; [1994] HCA 46; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 299, 300, 301, 304, 306 per Mason CJ, 339-340, 341-346 per Deane J. 90 Levy v Victoria (1997) 189 CLR 579 at 647; [1997] HCA 31; Kruger v The Commonwealth (1997) 190 CLR 1 at 92-93, 128, 129; [1997] HCA 27; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 284 [205]; [2001] HCA 63; Coleman v Power (2004) 220 CLR 1 at 43 [76], 53-54 [102]-[103], 123 [326]; Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 200 [40], 201 [41], 279 [292]; [2004] HCA 41; APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 404 [222]; [2005] HCA 44; Wotton v Queensland (2012) 246 CLR 1 at 22 [52], 34 [90]; [2012] HCA 2; Monis v The Queen (2013) 249 CLR 92 at 129 [62], 146 [124], 148 [126], 191 [271], 193- 194 [280], 213 [343]; Unions NSW v New South Wales (2013) 252 CLR 530 at 555 [39], 557 [50]-[51], 560 [60], 561 [65], 586 [166]; Tajjour v New South Wales (2014) 88 ALJR 860 at 892-893 [145], 893-894 [149]-[152], 895-896 [160]-[167]; 313 ALR 221 at 259-260, 260-262, 263-264. 91 (1992) 177 CLR 106 at 143, 147, 233, 234-235, 236, 238. 92 Cunliffe v The Commonwealth (1994) 182 CLR 272 at 299; Levy v Victoria (1997) 189 CLR 579 at 647; Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 200 [40], 201 [41]; Tajjour v New South Wales (2014) 88 ALJR 860 at 896 [164]; 313 ALR 221 at 264. Bell legislation on the freedom is direct and substantial. It does not explain how the legislation may be justified. However, Lange, in addition to noting the other requirements arising from the Constitution, pointed clearly in the direction of proportionality analysis. Lange is a judgment of the whole Court. Its terms may be expected to reflect some compromise reached. It is not to be expected that, in its reference to a legislative measure being "reasonably appropriate and adapted" to achieve a legitimate end, which the Court equated with "proportionality"93, it was providing a complete statement of what is involved in that enquiry. Lange did identify as relevant in ACTV the availability of alternative measures, as mentioned earlier in these reasons. It identified as relevant the relationship between the legitimate end and the means by which this is achieved94. It identified as relevant the extent of the effect the legislative measure has on the freedom, when it expressed concern that the burden not be "undue"95. In so doing, it identified elements of proportionality testing. Much has been written since Lange and Coleman v Power on the topic of proportionality analysis, including, perhaps most influentially, by Professor Aharon Barak. In the period since those decisions the use of proportionality in other jurisdictions, to test the justification of a restriction on a constitutional right or freedom, has gained greater acceptance. Nevertheless, it is not to be expected that each jurisdiction will approach and apply proportionality in the same way, but rather by reference to its constitutional setting and its historical and institutional background. This reinforces the characterisation of proportionality as an analytical tool rather than as a doctrine. It also explains why no decision of this Court has imported into Australian jurisprudence the scrutiny of compelling government interests applied in United States constitutional jurisprudence. More importantly, since Lange and Coleman v Power, considerable attention has been given in judgments in this Court to what the test in Lange requires. A majority of the Court in Unions NSW identified as relevant to, if not inhering in, the test, the first two tests of proportionality. The submissions in this case now direct 93 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 562, 567 94 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 568. This is now part of the Lange test following Coleman v Power (2004) 220 CLR 1 at 50-51 95 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 569, 575. Bell attention to the relevance of purpose in connection with the extent to which the freedom is burdened. The freedom which is implied from provisions of the Australian Constitution is not a right, of the kind to which proportionality testing is applied by courts in other constitutional systems. Nevertheless, such testing has evident utility as a tool for determining the reasonableness of legislation which restricts the freedom and for resolving conflicts between the freedom and the attainment of legislative purpose. Proportionality provides a uniform analytical framework for evaluating legislation which effects a restriction on a right or freedom. It is not suggested that it is the only criterion by which legislation that restricts a freedom can be tested. It has the advantage of transparency. Its structured nature assists members of the legislature, those advising the legislature, and those drafting legislative materials, to understand how the sufficiency of the justification for a legislative restriction on a freedom will be tested. Professor Barak suggests that "members of the legislative branch want to know, should know, and are entitled to know, the limits of their legislative powers."96 So far as concerns the courts, the question whether a legislative measure which restricts the freedom can be said to be justified is not to be approached as a matter of impression. It should not be pronounced as a conclusion, absent reasoning. It is not to be inferred that, in stating the test in Lange, it was intended that the test was to be answered by reference to a value judgment as to what is reasonable, made without reference to any generally applicable criteria. To the contrary, as earlier explained, Lange identifies the structure for and, to an extent, the content of proportionality testing. Accepting that value judgments cannot be avoided altogether, their subjectivity is lessened and a more objective analysis encouraged by this process. In so far as proportionality may be considered to involve a conclusion that a statutory limitation is or is not reasonably necessary, the means of testing for this conclusion have already been identified in the test of reasonable necessity, as Unions NSW confirms. It cannot then be said that another, more open ended, enquiry is also required. Something more, and different, must be required. 96 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 379. Bell In an article by a former member of the Federal Constitutional Court of Germany97, referred to by Lord Mance JSC in Pham v Secretary of State for the Home Department (Open Society Justice Initiative intervening)98, it was said that proportionality testing may be seen: "as a tool directing attention to different aspects of what is implied in any rational assessment of the reasonableness of a restriction. … [It] is designed to … help control intuitive assessments, [and] make value judgments explicit. Whether it is also used as a tool to intensify judicial control of state acts is not determined by the structure of the test but by the degree of judicial restraint practised". In a system operating according to a separation of powers, judicial restraint should be understood to require no more than that the courts undertake their role without intruding into that of the legislature. In Bank Mellat v HM Treasury (No 2)99, Lord Reed JSC observed that, in the domestic courts of the United Kingdom, a more clearly structured approach to proportionality analysis was necessary than that taken by the European Court of Human Rights because the former accords with the analytical approach to legal reasoning which is characteristic of the common law. Its attraction as a heuristic tool, his Lordship explained, "is that, by breaking down an assessment of proportionality into distinct elements, it can clarify different aspects of such an assessment, and make value judgments more explicit." It is generally accepted that there are at least three stages to a test of proportionality100. As stated in the introduction to these reasons, they are whether the statute is suitable, necessary, and adequate in its balance. 97 Lübbe-Wolff, "The Principle of Proportionality in the Case-Law of the German Federal Constitutional Court", (2014) 34 Human Rights Law Journal 12 at 16 (emphasis in original). 98 [2015] 1 WLR 1591 at 1622 [96]; [2015] 3 All ER 1015 at 1044. 99 [2014] AC 700 at 790 [72]-[74]. 100 The Supreme Courts of the United Kingdom and Canada divide the same concepts into four: see Bank Mellat v HM Treasury (No 2) [2014] AC 700 at 771 [20], 790- 791 [74], 805 [132], 814 [166]; R v Oakes [1986] 1 SCR 103 at 138-139. Bell Suitability is also referred to as "appropriateness" or "fit"101. Despite this language, it does not involve a value judgment about whether the legislature could have approached the matter in a different way. If the measure cannot contribute to the realisation of the statute's legitimate purpose, its use cannot be said to be reasonable. This stage of the test requires that there be a rational connection between the provision in question and the statute's legitimate purpose, such that the statute's purpose can be furthered. This was the approach followed in Unions NSW102. It is an enquiry which logic requires. The second stage of the test – necessity – generally accords with the enquiry identified in Unions NSW103 as to the availability of other, equally effective, means of achieving the legislative object which have a less restrictive effect on the freedom and which are obvious and compelling. If such measures are available, the use of more restrictive measures is not reasonable and cannot be justified. It is important to recognise that the question of necessity does not deny that it is the role of the legislature to select the means by which a legitimate statutory purpose may be achieved. It is the role of the Court to ensure that the freedom is not burdened when it need not be. Once within the domain of selections which fulfil the legislative purpose with the least harm to the freedom, the decision to select the preferred means is the legislature's104. The first two stages of the test for the proportionality, or reasonableness, of a legislative measure concern the relationship between the legitimate legislative purpose ("ends") and the means employed to achieve it ("means"). Neither the importance of the legislative purpose nor the extent of the effect on the freedom are examined at these stages. The Lange test identifies the extent of the effect on the freedom as relevant105, but does not say what, if anything, is to be balanced against the effect on the freedom in order to determine whether the measure is justified. The Lange test does not expressly identify assessment of the importance of the legislative purpose as a relevant factor. 101 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 303. 102 (2013) 252 CLR 530 at 557-558 [50]-[55], 561 [64], 579 [140], 586 [168]. 103 (2013) 252 CLR 530 at 556 [44]. 104 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 409. 105 Coleman v Power (2004) 220 CLR 1 at 50 [92]. Bell It is not possible to ignore the importance of a legislative purpose in considering the reasonableness of a legislative measure because that purpose may be the most important factor in justifying the effect that the measure has on the freedom. The submissions for the Commonwealth bear this out. The Commonwealth submitted that the Court cannot consider the relationship between the means adopted by the law and "the constitutional imperative" to not infringe the freedom without having the object of the law in view, for some statutory objects may justify very large incursions on the freedom. The example the Commonwealth gave was the object of protecting security of the nation at a time of war. If, by "the constitutional imperative", it is meant the maintenance of the system of representative government, the submission may blur the distinction between the first Lange requirement, of compatibility with that system, and the second test, for proportionality of the effects on the freedom. Nevertheless, this submission correctly directs attention to the legislative purpose as a key element of a justification. The last stage of the Lange test did not mandate an enquiry limited to the extent of the burden on the freedom. The question whether a statutory effect on the freedom is "undue" or "impermissibly burdens" the freedom must, logically, bring into consideration the statutory purpose. To leave it out of consideration is to deny the most important aspect of justification from the perspective of the legislature. The cases before and after Lange speak in terms of legislative justification as earlier mentioned106. The enquiry must be whether the burden is undue, not only by reference to the extent of the effect on the freedom, but also having regard to the public importance of the purpose sought to be achieved. This is the balance which necessarily, and logically, inheres in the Lange test. The purpose of and benefit sought to be achieved by legislative provisions assume relevance in the third stage of the test for proportionality. This stage, that of strict proportionality or balancing, is regarded by the courts of some legal systems as most important. It compares the positive effect of realising the law's proper purpose with the negative effect of the limits on constitutional rights or freedoms. It requires an "adequate congruence between the benefits gained by the law's policy and the harm it may cause"107, which is to say, a balance. Balancing is required because it is rare that the exercise of a right or freedom will 106 See [69] above. 107 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 340. Bell be prohibited altogether. Only aspects of it will be restricted, so what is needed, to determine whether the extent of this restriction is reasonable, is a consideration of the importance of the purpose and the benefit sought to be achieved108. Logically, the greater the restriction on the freedom, the more important the public interest purpose of the legislation must be for the law to be proportionate. It has been observed109 that notions of balancing may be seen in Castlemaine Tooheys Ltd v South Australia110, in the context of the s 92 freedom. It will be evident from the conclusion to these reasons that the methodology to be applied in this aspect of proportionality does not assume particular significance. Fundamentally, however, it must proceed upon an acceptance of the importance of the freedom and the reason for its existence. This stands in contrast to the basic rule of balancing as applied to human rights, which has been subject to criticism for failing to explain the reasons underlying the creation of the right in order to put the reasons for its protection, or which justify its limitation, in perspective111. The balance struck between the importance of the purpose and the extent of the restriction on the freedom necessarily involves a value judgment. The fact that a value judgment is involved does not entitle the courts to substitute their own assessment for that of the legislative decision-maker112. This accords with the view, so often expressed by this Court, as to the role of Chapter III courts under the separation of powers effected by the Constitution. However, the courts have a duty to determine the limit of legislative power affecting constitutionally guaranteed freedoms, and assessments by courts of the public interest and benefit in a piece of legislation are commonplace. In ACTV and Nationwide News, and 108 Grimm, "Proportionality in Canadian and German Constitutional Jurisprudence", (2007) 57 University of Toronto Law Journal 383 at 396. 109 Zines, The High Court and the Constitution, 5th ed (2008) at 59. 110 (1990) 169 CLR 436; [1990] HCA 1. 111 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 542. 112 Bank Mellat v HM Treasury (No 2) [2014] AC 700 at 789-790 [71] per Lord Reed JSC; R (Lord Carlile of Berriew) v Secretary of State for the Home Department [2015] AC 945 at 964 [20] per Lord Sumption JSC. Bell in later cases, the public interest pursued by the legislation in question was identified as relevant to whether a restriction on the freedom was justified113. To say that the courts are able to discern public benefits in legislation which has been passed is not to intrude upon the legislative function. The courts acknowledge and respect that it is the role of the legislature to determine which policies and social benefits ought to be pursued. This is not a matter of deference. It is a matter of the boundaries between the legislative and judicial functions. Deference to legislative opinion, in the sense of unquestioning adoption of the correctness of these choices, does not arise for courts. It is neither necessary nor appropriate for the purposes of the assessment in question. The process of proportionality analysis does not assess legislative choices except as to the extent to which they affect the freedom. It follows from an acceptance that it is the constitutional duty of courts to limit legislative interference with the freedom to what is constitutionally and rationally justified, that the courts must answer questions as to the extent of those limits for themselves. It should also be said that deference in the sense mentioned is not to be confused with a "margin of appreciation", a term which is sometimes given an extended meaning. In the context of courts of the European Community and now European Union, it is best understood as reflecting an acceptance by those courts of the advantage that courts of member states have with respect to particular matters, for example, moral standards applicable and the necessity for a restriction or penalty to meet them114. In the national context, it is said to require the examination of the constitutionality of a limitation on a human right from the standpoint of the international community115. Neither meaning would appear to have any application in the context of an Australian court determining the limits to legislative power affecting the freedom. In this case, the third stage of the test presents no difficulty for the validity of the impugned provisions. The provisions do not affect the ability of any 113 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 77; Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 142, 143, 146, 169, 171; Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 183- 184; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 341-344. 114 Handyside v United Kingdom (1976) 1 EHRR 737. 115 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 420. Bell person to communicate with another about matters of politics and government nor to seek access to or to influence politicians in ways other than those involving the payment of substantial sums of money. The effect on the freedom is indirect. By reducing the funds available to election campaigns there may be some restriction on communication by political parties and candidates to the public. On the other hand, the public interest in removing the risk and perception of corruption is evident. These are provisions which support and enhance equality of access to government, and the system of representative government which the freedom protects. The restriction on the freedom is more than balanced by the benefits sought to be achieved. The questions stated should be answered as follows: In so far as Div 4A prohibits the making by a property developer of a political donation or acceptance of a political donation from a property developer, it is not invalid. It does not impermissibly burden the implied freedom of communication on governmental and political matters contrary to the Constitution. The plaintiffs. Introduction This is the second case in as many years in which provisions of Pt 6 of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) have been challenged in the original jurisdiction of this Court on the ground that they impermissibly burden freedom of political communication. implied constitutional the The challenge in the first case, Unions NSW v New South Wales116, was to s 96D and to s 95G(6). Section 96D prohibited political donations by corporations, industrial associations and individuals who were not on the roll of electors. Section 95G(6) aggregated electoral communication expenditure of a political party with that of an affiliated organisation for the purpose of determining whether the political party exceeded the applicable cap on electoral communication expenditure imposed by Div 2B. Both provisions were held to impose impermissible burdens on the implied constitutional freedom. The challenge in this case is to Div 2A (ss 95AA to 95D), s 96E and Div 4A (ss 96GAA to 96GE) in Pt 6 of the Act. Division 2A imposes a general cap on the amounts which all persons are permitted to give as political donations in relation to State elections. Section 96E prohibits the making of certain indirect contributions to election campaigns. Division 4A relevantly prohibits the making of any political donations by corporate property developers and individuals closely associated with corporate property developers. Together with a majority of the Court, I hold that none of the provisions challenged in this case imposes an impermissible burden on the implied constitutional freedom. Unlike a majority of the Court, however, I do not reach that result through the template of standardised proportionality analysis. I reach that result instead by concluding that the restrictions on political communication imposed by the provisions are no greater than are reasonably necessary to be imposed in pursuit of a compelling statutory object. The compelling statutory object is the object of preventing corruption and undue influence in the government of the State. To explain my analysis, it is appropriate to commence by reiterating the structural reasons identified in Lange v Australian Broadcasting Corporation117 for the implication of the constitutional freedom of political communication, and by relating those structural reasons to the analytical framework established by 116 (2013) 252 CLR 530; [2013] HCA 58. 117 (1997) 189 CLR 520; [1997] HCA 25. that case for determining whether or not a law impermissibly burdens the implied constitutional freedom. Explaining why the freedom exists Brennan CJ explained in McGinty v Western Australia118: "Implications are not devised by the judiciary; they exist in the text and structure of the Constitution and are revealed or uncovered by judicial exegesis. No implication can be drawn from the Constitution which is not based on the actual terms of the Constitution, or on its structure." Brennan CJ went on to restate the explanation given by Mason CJ in Australian Capital Television Pty Ltd v The Commonwealth ("ACTV")119 that "where the implication is structural rather than textual ... the term sought to be implied must be logically or practically necessary for the preservation of the integrity of that structure". Freedom of political communication, as authoritatively expounded in Lange, is an implication drawn from the structure of the Constitution. In Lange, as in its earliest expositions in ACTV and in Nationwide News Pty Ltd v Wills120, the implication was explained to be necessary for the preservation of the integrity of the system of representative and responsible government established by Chs I and II of the Constitution, and for the preservation of the integrity of the method of constitutional alteration prescribed by s 128 of the Constitution. Neither the scope nor the content of the freedom can adequately be understood except by reference to the features of that system of representative and responsible government, and that method of constitutional alteration, which give rise to the necessity for its implication. Chapter I of the Constitution establishes and sustains the Parliament of the Commonwealth. Section 1 vests the legislative power of the Commonwealth in the Federal Parliament, which that section provides is to consist of the Senate, the House of Representatives and the Queen. The composition of the Senate is governed by the requirement of s 7 that it "shall be composed of senators for each State, directly chosen by the people of the State". The composition of the House of Representatives is governed by the corresponding requirement of s 24 that it 118 (1996) 186 CLR 140 at 168; [1996] HCA 48 (footnotes omitted). 119 (1992) 177 CLR 106 at 135; [1992] HCA 45. See McGinty v Western Australia (1996) 186 CLR 140 at 169. 120 (1992) 177 CLR 1; [1992] HCA 46. "shall be composed of members directly chosen by the people of the Commonwealth", and by the additional requirement of that section that the number of members "shall be, as nearly as practicable, twice the number of the senators". Section 13, and ss 28 and 32, respectively require the holding of an election for half of the Senate, and the holding of a general election for the House of Representatives, at least once every three years. Sections 8 and 30 combine: to equate the qualifications of electors of senators with the qualifications of electors of members of the House of Representatives; to equate the qualifications of electors of members of the House of Representatives with the qualifications of electors of the more numerous House of Parliament of each State until otherwise provided by the Parliament under s 51(xxxvi); and to mandate that, in the choosing of senators and members, "each elector shall vote only once". The Parliament is required, by ss 5 and 6 respectively, to be summoned to meet not later than 30 days after the day appointed for the return of the writs for a general election and to hold a session at least once every year. Questions in the Senate and in the House of Representatives are required, through the operation of ss 23 and 40 respectively, to be determined by a majority of votes, with no senator or member having more than one vote. Section 53 makes clear that the Senate has "equal power with the House of Representatives in respect of all proposed laws", with the exceptions that proposed laws appropriating revenue or moneys, or imposing taxation, cannot originate in the Senate, and that the power of the Senate to amend such laws is limited. Disagreements between the Senate and the House of Representatives about any proposed law are capable of resolution under s 57: by simultaneous dissolution of the Senate and the House of Representatives (resulting, under ss 12 and 32, in the issuing of writs for elections to both); and, if disagreement persists after such a dissolution, by holding a joint sitting of the Senate and the House of Representatives, in which the proposed law is taken to be duly passed if affirmed by an absolute majority of the total number of senators and members. Chapter II of the Constitution establishes and sustains the Executive Government of the Commonwealth. Section 61 vests the executive power of the Commonwealth in the Queen, and makes that executive power "exercisable by the Governor-General as the Queen's representative". Section 64 empowers the Governor-General to appoint officers to administer departments of State for the Commonwealth, who are to be Ministers of State for the Commonwealth. Tying the structure of the Executive Government to the structure of the Parliament, s 64 adds the centrally important qualification that "no Minister of State shall hold office for a longer period than three months unless he is or becomes a senator or a member of the House of Representatives". The link made in that qualification in s 64 – between the structure of the Parliament established and sustained by Ch I and the structure of the Executive Government established and sustained by Ch II – makes plain the design of those chapters to facilitate the application of the particular system of representative government, known as "responsible government", to the "indissoluble Federal Commonwealth" established by the Constitution. That system had developed in the second half of the nineteenth century in each of the six colonies which, on federation, became the Australian States. Evatt J was not inaccurate in stating that "prior to the establishment of the Commonwealth of Australia in 1901, responsible government had become one of the central characteristics of our polity"121. And Isaacs J did not exaggerate in proclaiming that "the Constitution is for the advancement of representative government"122 and that responsible government "is part of the fabric on which the written words of the Constitution are superimposed"123. The theory and practical operation of responsible government, as it had come to be understood in the Australian colonies by the end of the nineteenth century, were encapsulated in the explanation given by Sir Samuel Griffith in notes he prepared on the 1891 draft of the Constitution. Sir Samuel wrote124: "The system called Responsible Government is based on the notion that the head of the State can himself do no wrong, that he does not do any act of State of his own motion, but follows the advice of his ministers, on whom the responsibility for acts done, in order to give effect to their volition, naturally falls. They are therefore called Responsible Ministers. If they do wrong, they can be punished or dismissed from office without effecting any change in the Headship of the State. Revolution is therefore no longer a necessary possibility; for a change of Ministers effects peacefully the desired result. The system is in practice so intimately connected with Parliamentary Government and Party Government that the terms are often used as convertible. The present form of development of Responsible Government is that, when the branch of the Legislature which more immediately represents the people disapproves of the actions of Ministers, or ceases to have confidence in them, the head of the State dismisses them, or accepts their resignation, and appoints new ones. The 121 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 114; [1931] HCA 34. 122 Federal Commissioner of Taxation v Munro; British Imperial Oil Co Ltd v Federal Commissioner of Taxation (1926) 38 CLR 153 at 178; [1926] HCA 58. 123 The Commonwealth v Kreglinger & Fernau Ltd and Bardsley (1926) 37 CLR 393 at 413; [1926] HCA 8. 124 Griffith, Notes on Australian Federation: Its Nature and Probable Effects, (1896) at 17, quoted in Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 704. effect is that the actual government of the State is conducted by officers who enjoy the confidence of the people." Brennan J drew on that explanation in Nationwide News125 to identify responsible government as amongst the "constitutional imperatives which are intended – albeit the intention is imperfectly effected – to make both the legislative and executive branches of the government of the Commonwealth ultimately answerable to the Australian people". The entire Court drew again on that explanation in Lange to make the pivotal point that the confidence of the Australian people which the legislative and executive branches of the government of the Commonwealth are to enjoy "is ultimately expressed or denied by the operation of the electoral process"126. Within the structure of representative and responsible government established by Chs I and II of the Constitution, "the Australian people" are more precisely identified as the electors, who are to vote at least once every three years, in an election for at least one half of the Senate and in a general election for the House of Representatives127. Although that structure could be changed by a constitutional alteration under s 128 of the Constitution, the method of constitutional alteration for which that section provides is an extension of the legislative process established by Ch I of the Constitution, which relies directly on the participation of the same electors. They are to vote on a proposed law for the alteration of the Constitution within six months of the passage of the proposed law by an absolute majority of each of the House of Representatives and the Senate. The proposed law is then to be presented to the Governor- General for assent only if approved by a majority of all electors as well as a majority of electors in each State. Professor Harrison Moore, writing in 1902, identified "the prevalence of the democratic principle" as the "predominant feature" of the Constitution128. After noting the studied absence of a constitutionally entrenched bill of rights, he explained that "[t]he great underlying principle is, that the rights of individuals are sufficiently secured by ensuring, as far as possible, to each a share, and an equal share, in political power"129. 125 (1992) 177 CLR 1 at 47. 126 (1997) 189 CLR 520 at 559. 127 Cf McGinty v Western Australia (1996) 186 CLR 140 at 279. 128 Moore, The Constitution of the Commonwealth of Australia, (1902) at 327. 129 Moore, The Constitution of the Commonwealth of Australia, (1902) at 329. That "great underlying principle" was prominent in the reasoning of Mason CJ in ACTV130. Its exposition underlines an important aspect of the manner in which the system of representative and responsible government established by Chs I and II of the Constitution is dependent on the choice made by electors. Electoral choice is the means of constituting the Parliament of the Commonwealth, and of indirectly constituting the Executive Government of the Commonwealth. Electoral choice thereby constitutes the principal constraint on the constitutional exercise by the Parliament of the legislative power of the Commonwealth, and on the lawful exercise by Ministers and officers within their departments of the executive power of the Commonwealth. The concept of electoral choice acting as a constraint on the exercise of Commonwealth legislative and executive power accords with the classic explanation given in the joint reasons for judgment in the Engineers' Case131, that "the extravagant use of the granted powers in the actual working of the Constitution is a matter to be guarded against by the constituencies and not by the Courts". The explanation continued132: "When the people of Australia, to use the words of the Constitution itself, 'united in a Federal Commonwealth,' they took power to control by ordinary constitutional means any attempt on the part of the national Parliament to misuse its powers. If it be conceivable that the representatives of the people of Australia as a whole would ever proceed to use their national powers to injure the people of Australia considered sectionally, it is certainly within the power of the people themselves to resent and reverse what may be done. No protection of this Court in such a case is necessary or proper." The constitutional freedom of political communication does not contradict that Engineers' Case orthodoxy. The implication of the constitutional freedom is founded on an acceptance that electoral choice constitutes the "ordinary constitutional means" of constraining "the extravagant use of the granted powers in the actual working of the Constitution". The necessity for the implication of the constitutional freedom as a limitation on legislative and executive power arises from a paradox inherent in the nature of the majoritarian principle which governs that electoral choice. The 130 (1992) 177 CLR 106 at 136, 139-140. 131 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 at 151; [1920] HCA 54. 132 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR paradox is that communication of information relevant to the making of an informed electoral choice is peculiarly susceptible to being restricted or distorted through the exercise of legislative or executive power precisely because the exercise of legislative or executive power is subject to the ultimately controlling influence of electoral choice. The ever-present risk within the system of representative and responsible government established by Chs I and II of the Constitution is that communication of information which is either unfavourable or uninteresting to those currently in a position to exercise legislative or executive power will, through design or oversight, be impeded by legislative or executive action to an extent which impairs the making of an informed electoral choice and therefore undermines the constitutive and constraining effect of electoral choice. The risk, in other words, is of legislative or executive impairment of "the capacity of, or opportunity for, the Australian people to form the political judgments required for the exercise of their constitutional functions"133. The judicial power, insulated from the electoral process by the structural requirements of Ch III of the Constitution, is uniquely placed to protect against that systemic risk. Here, as elsewhere within our constitutional tradition, "the absolute independence of the judiciary is the bulwark of the constitution against encroachment whether by the legislature or by the executive"134. Mason CJ emphasised the reality of the ever-present risk to the system of representative and responsible government of legislative or executive restriction of information relevant to the making of an informed electoral choice when he said in ACTV135: "Experience has demonstrated on so many occasions in the past that, although freedom of communication may have some detrimental consequences for society, the manifest benefits it brings to an open society generally outweigh the detriments. All too often attempts to restrict the freedom in the name of some imagined necessity have tended to stifle public discussion and criticism of government." 133 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 51. 134 Attorney-General of the Commonwealth of Australia v The Queen (1957) 95 CLR 529 at 540; [1957] AC 288 at 315. 135 (1992) 177 CLR 106 at 145. The risk has been demonstrated by experience to be greatest in respect of legislation which has as its subject-matter the restriction of political association136 or the restriction of communication within a category of communication which has an inherently political content137. Referring to a subset of that latter category, Mason CJ suggested in ACTV138 that it is in the area of "restrictions affecting free communication in the conduct of elections for political office" that the implied freedom "fulfils its primary purpose". That suggestion has been borne out by the outcomes in ACTV and in Unions NSW. The necessity which gives rise to the implication of the constitutional freedom of political communication also defines its scope and content. That was the point made in Lange when, after it was said that "ss 7 and 24 and the related sections of the Constitution necessarily protect that freedom of communication between the people concerning political or government matters which enables the people to exercise a free and informed choice as electors", it was added that "to the extent that the freedom rests upon implication, that implication defines the nature and extent of the freedom"139. The freedom implied as a matter of necessity does not go beyond freedom of political communication. The freedom exists to protect: systemic integrity, and political not personal communication, not communication in general. The protection "creates an area of immunity from legal control" as a consequence of its operation and not as a reason for its existence140. communication, not expression; liberty; That limitation in its scope immediately distinguishes the implied freedom of political communication from express guarantees of freedom of speech or expression in many other constitutional systems. Securing the "flow of information" necessary for people to "build and assert political power" has long been recognised as an important purpose of the free speech clause of the First 136 See Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 187- 188; [1951] HCA 5. 137 See Nationwide News Pty Ltd v Wills (1992) 177 CLR 1. 138 (1992) 177 CLR 106 at 144. 139 (1997) 189 CLR 520 at 560, referring in the latter quote to Cunliffe v The Commonwealth (1994) 182 CLR 272 at 326; [1994] HCA 44. 140 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560, quoting Cunliffe v The Commonwealth (1994) 182 CLR 272 at 327. Amendment to the Constitution of the United States141, but the time when that might have been argued to be its only purpose has long passed142. A range of purposes also informs the guarantees of individual freedom of expression in the Canadian Charter of Rights and Freedoms143 and in the European Convention on Human Rights144. United States, Canadian and European judicial decisions have provided analogical assistance in the development of the case law on the implied freedom. But, as has been recognised from an early stage in that development, those judicial decisions must be treated "with some caution" given that "[t]heir constitutional provisions are not the same as ours"145. The content of the implied constitutional freedom is defined by the need to preserve the integrity of both the system of representative and responsible government established by Chs I and II of the Constitution and the method of constitutional alteration prescribed by s 128 of the Constitution. The freedom implied, as it was put in Lange, "is not absolute", but "is limited to what is necessary for the effective operation of that system of representative and responsible government provided for by the Constitution"146. The freedom constitutionally afforded to political communication is not the laissez-faire of an unregulated marketplace of ideas147. Nor is it fully described in terms of freedom in "an ordered society"148 or a "society organized 141 Cox, The Court and The Constitution, (1987) at 212, quoted in Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 139. See to similar effect Barendt, Freedom of Speech, (1985) at 152 and Meiklejohn, Political Freedom, (1960) at 42, both quoted in Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 124; [1994] HCA 46. 142 See, eg, Virginia State Board of Pharmacy v Virginia Citizens Consumer Council 425 US 748 (1976); Sorrell v IMS Health Inc 180 L Ed 2d 544 (2011). See also Citizens United v Federal Election Commission 558 US 310 at 329 (2010); McCutcheon v Federal Election Commission 188 L Ed 2d 468 at 484 (2014). 143 Section 2(b). 144 Article 10. 145 Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 125. 146 (1997) 189 CLR 520 at 561. 147 Cf Abrams v United States 250 US 616 at 630 (1919). 148 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 142, quoting Hughes and Vale Pty Ltd v New South Wales [No 2] (1955) 93 CLR 127 at 219; [1955] HCA 28. under and controlled by law"149. The freedom is freedom within a constitutional system in which the accountability of the legislature and the executive to electors constitutes the ordinary constitutional means of preventing misuse of the exercise of legislative and executive power, and in which the role of the judiciary is relevantly limited to safeguarding that mechanism of accountability. That vital, and necessarily limited, role for the judiciary in the preservation of the implied freedom of political communication was highlighted by Brennan J in Nationwide News150 when he said that "[t]he balancing of the protection of other interests against the freedom to discuss governments and political matters is, under our Constitution, a matter for the Parliament to determine and for the Courts to supervise". The two-step analytical framework formulated in Lange for determining whether or not a law impermissibly burdens political communication guides the performance of that supervisory role. The two steps are "together a functional reflection of the nature of the protected freedom"151. Determining whether the freedom is infringed The two steps in the Lange analysis are together directed to the determination of whether a law impermissibly burdens the implied constitutional freedom of political communication. The systemic risk of impairment of electoral choice by State or Territory legislative or executive action being not materially different from the systemic risk of impairment of electoral choice by Commonwealth legislative or executive action, the Lange analysis applies equally to a State law or Territory law as to a Commonwealth law. The first step in the Lange analysis is to inquire whether, and if so how, the law effectively burdens political communication in its legal or practical operation. "The expression 'effectively burden'", as Hayne J pointed out in Monis v The Queen152 and Keane J reiterated in Unions NSW153, "means nothing 149 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 142, quoting Samuels v Readers' Digest Association Pty Ltd (1969) 120 CLR 1 at 15; [1969] HCA 6. 150 (1992) 177 CLR 1 at 50. 151 Tajjour v New South Wales (2014) 88 ALJR 860 at 892 [144]; 313 ALR 221 at 259; [2014] HCA 35. 152 (2013) 249 CLR 92 at 142 [108]; [2013] HCA 4. 153 (2013) 252 CLR 530 at 574 [119]. more complicated than that the effect of the law is to prohibit, or put some limitation on, the making or the content of political communications." The simplicity of the inquiry should not detract from its importance. The oral argument in this case seemed at times to proceed on the assumption that the first step is perfunctory – no more than a box to be ticked before moving to the second step. If that were the case, the Lange analysis would be detached from the function that it was formulated to perform. The first step is critical. If a law does not operate to impose a meaningful restriction on political communication, the supervisory role of the courts is not engaged. If the law does operate to impose a meaningful restriction on political communication, the supervisory role of the courts is engaged to consider the justification for that restriction. The whole point of the second step in the Lange analysis is to determine whether the restriction on political communication identified at the first step is consistent with the preservation of the integrity of the system of representative and responsible government established by Chs I and II of the Constitution, and of the method of constitutional alteration prescribed by s 128 of the Constitution. The second step, as refined and restated by a majority in Coleman v Power154, is to inquire into whether the law, in operating to restrict political communication, is reasonably appropriate and adapted to serve a legitimate end in a manner which is compatible with the system of representative and responsible government established by the Constitution. To conclude that the law is so reasonably appropriate and adapted "requires finding that the object of the law is of importance and the method of achieving that object is reasonable when regard is had to the demands of representative government"155. The inquiry necessarily proceeds in two stages. The first stage is concerned to identify the end – the object or purpose – of the law. To be legitimate, a legislative end must itself be compatible with the system of representative and responsible government established by the Constitution. The first stage requires that the imposition of the restriction on political communication is explained by the law's pursuit of an end which is consistent with preservation of the integrity of the system of representative and responsible government. Explanation precedes justification. The second stage is concerned to examine whether the law imposing the restriction on political communication pursues that end in a manner which is consistent with preservation of the integrity of the system of representative and responsible government. The second stage requires that the restriction on 154 (2004) 220 CLR 1; [2004] HCA 39. 155 Stellios, Zines's The High Court and the Constitution, 6th ed (2015) at 589. political communication that is imposed by the law be justified by the law's reasonable pursuit of the identified legitimate end. The object or purpose of a law is what the law is designed to achieve in fact. Identification of what the law is designed to achieve in fact is akin to identification of the "mischief" which the law is designed to address156. The object or purpose will sometimes be stated in the text of the law and will sometimes emerge from the context. Where identification of the object or purpose is controversial, the degree of congruence between the legal criterion by which communication is burdened and such object or purpose as the party seeking to uphold its validity ascribes to the law will bear on the determination of that controversy. Absent some rational connection between that criterion of legal operation and the asserted end, it may not be possible to conclude that the restriction on political communication imposed by the law is explained by the law's pursuit of that putative object or purpose. In Unions NSW, French CJ, Hayne, Crennan, Kiefel and Bell JJ considered such a rational connection to be wanting. Their Honours found ss 96D and 95G(6) of the Act to impose a practical restriction on political communication, and found that the practical restriction was sufficiently identified for the purposes of the analysis in that case as the removal of a source of donor funding which would otherwise have been available to political parties and candidates to meet the costs of engaging in political communication, as regarded s 96D157, and the restriction of the amount that a political party could incur by way of electoral communication expenditure, as regarded s 95G(6)158. They noted the argument of the State that the provisions were designed to protect its electoral and governmental system from corruption and undue influence, and stated that they saw no reason to doubt that to be the legitimate end of the Act as a whole159. The problem they identified lay in the absence of any satisfactory explanation as to how the terms of the prohibition imposed by the two challenged provisions were calculated to promote that legitimate end. The absence of such the restriction on political an explanation communication imposed by those provisions was not explained by the law's pursuit of that end, let alone justified by the law's pursuit of that end160. to conclude them that led 156 APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 394 [178]; [2005] HCA 44. 157 (2013) 252 CLR 530 at 554 [38]. 158 (2013) 252 CLR 530 at 560 [61]. 159 (2013) 252 CLR 530 at 545-546 [8], 557 [49]. 160 (2013) 252 CLR 530 at 559-560 [59]-[60], 561 [64]. Keane J took a different route to conclude that ss 96D and 95G(6) of the Act failed the Lange analysis. His Honour held that the restrictions on political communication imposed by those provisions did not pursue the identified end in a manner consistent with preservation of the integrity of the system of representative and responsible government established by Chs I and II of the Constitution because the restrictions unjustifiably disfavoured some sources of political information and favoured others161. The vice so identified was the same vice which had led to invalidity in ACTV. ACTV was said in Lange to be a case in which the majority holding was "that a law seriously impeding discussion during the course of a federal election was invalid because there were other less drastic means by which the objectives of the law could be achieved"162. A reference to "less drastic means" in this context is to other means of achieving the objectives of the law that are less restrictive of political communication. The existence of other means of achieving the objectives of the law that are less restrictive of political communication will always be relevant to the inquiry, and will sometimes be decisive. There is, however, another, more specific, explanation for the holding of the majority in ACTV. As Keane J pointed out in Unions NSW, the legislation in ACTV "was held to be invalid on the basis of the discriminatory character of its proscription of some sources of political communication relating to electoral campaigning"163. The discriminatory character of the legislative proscription considered in ACTV was brought out most strongly in the reasons for judgment of Mason CJ. Mason CJ was prepared to assume that the legislation in question, which restricted political advertising on television and radio during an election campaign to allocated and publicly funded time slots, had as its legitimate end the safeguarding of "the integrity of the political process by reducing pressure on parties and candidates to raise substantial sums of money, thus lessening the risk of corruption and undue influence"164. The fundamental problem which he identified was that the method of allocation of publicly funded time slots discriminated in favour of incumbent participants in the political process and 161 (2013) 252 CLR 530 at 579 [140]-[141], 586 [167]-[168]. 162 (1997) 189 CLR 520 at 568. 163 (2013) 252 CLR 530 at 578-579 [137], citing Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 131-132, 145-146, 171-173, 218, 164 (1992) 177 CLR 106 at 144. against potential participants in that process165. It was that problem which led to the conclusion of invalidity, which Mason CJ expressed in terms that there was "no reasonable justification for the restrictions on freedom of communication imposed" by the legislation166. The words "reasonably appropriate and adapted" were explained in Lange to have been adopted in the formulation of the second step in the Lange analysis to ensure uniformity. It was recorded that some members of the Court had favoured different expressions in earlier cases, and that no member of the Court then thought it necessary to distinguish between them. Other expressions of the formulation were noted to have included "proportionality"167. in Mulholland v Australian Electoral Commission168 that the alternative expressions may be used interchangeably. The advantage of the expression "reasonably appropriate and adapted" is that there is a long history of its judicial application in Australia169. The advantage of "proportionality" is that "it is commonly used in other jurisdictions in similar fields of discourse"; the disadvantage of "proportionality" is that "in the course of such use, it has taken on elaborations that vary in content, and that may be into a different context without explanation"170. imported sub silentio Gleeson CJ noted that its use is unobjectionable "provided such use does not bring with it considerations relevant only to a different constitutional context"171. There is no magic in a label. This case does not require a choice to be made between the alternative expressions of the "reasonably appropriate and adapted" formulation. Much less does this case warrant consideration of the benefits and detriments of the wholesale importation into our constitutional jurisprudence, under the rubric of proportionality, of a particular and prescriptive form of proportionality analysis 165 (1992) 177 CLR 106 at 132, 144-147. 166 (1992) 177 CLR 106 at 147. 167 (1997) 189 CLR 520 at 562. 168 (2004) 220 CLR 181 at 195-200 [27]-[40]; [2004] HCA 41. 169 (2004) 220 CLR 181 at 199-200 [39]. 170 (2004) 220 CLR 181 at 197-198 [34]. 171 (2004) 220 CLR 181 at 200 [39]. See also Roach v Electoral Commissioner (2007) 233 CLR 162 at 178-179 [17]; [2007] HCA 43; Rowe v Electoral Commissioner (2010) 243 CLR 1 at 59 [162]; [2010] HCA 46. drawn from that which has come to be applied in relation to the Canadian Charter of Rights and Freedoms and the European Convention on Human Rights. The content and consequences of the approach now propounded by a majority of this Court must await consideration in future cases. Issues which have the potential to arise in relation to such an approach were anticipated more than a decade ago in the published scholarship of Professor Adrienne Stone172. Without the benefit of full argument in this case, I limit myself to recording two principal reservations. that standardised criteria, expressed First, I am not convinced that one size fits all. In particular, I am not convinced terms of "suitability" and "necessity", are appropriate to be applied to every law which imposes a legal or practical restriction on political communication irrespective of the subject-matter of the law and no matter how large or small, focussed or incidental, that restriction on political communication might be. in unqualified I think it important in that respect to bear in mind the significance to proportionality analysis, as actually undertaken in other jurisdictions, of the varying degrees of latitude that are in practice afforded to governmental action. Those degrees of latitude are rarely captured in generic descriptions of "tests" of proportionality. Often they are not articulated but are embedded within the institutional arrangements and practices within which those tests are applied. Within a national jurisdiction, the degree of latitude afforded by the judiciary to the legislature or executive has sometimes been referred to as the "zone of proportionality". Between national jurisdictions, the degree of latitude afforded to nation states is commonly referred to as the "margin of appreciation"173. Two examples of judicial recognition of those varying degrees of latitude are sufficient. Both relate to the European Convention on Human Rights. The first example concerns the Supreme Court of the United Kingdom. The Supreme Court has of late adopted a four-part proportionality test as a "heuristic tool" for determining whether or not a legislative or executive measure infringes a Convention right174. The Supreme Court has nevertheless simultaneously 172 Eg Stone, "The Limits of Constitutional Text and Structure: Standards of Review and the Freedom of Political Communication", (1999) 23 Melbourne University Law Review 668 at 676-679, 681-684; Stone, "The Limits of Constitutional Text and Structure Revisited", (2005) 28 University of New South Wales Law Journal 173 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 396- 174 Bank Mellat v HM Treasury (No 2) [2014] AC 700 at 790-791 [74]. emphasised that "the intensity of review ... varies according to the nature of the right at stake and the context in which the interference occurs"175. The second example concerns the European Court of Human Rights, sitting at Strasbourg. The Strasbourg Court has long expressly afforded European States a margin of appreciation in the determination of whether or not national measures introduced by their national governments infringe Convention rights. That margin of appreciation has featured prominently in the reasoning of the Strasbourg Court in relation to the determination of whether or not a restriction on "the right to freedom of expression" guaranteed by Art 10(1) of the Convention answers the description in Art 10(2) of being "necessary in a democratic society"176. The margin of appreciation featured with particular prominence in the 2013 judgment of the Strasbourg Court which upheld a longstanding ban on political advertising in the broadcast media as re-enacted by the United Kingdom Parliament in 2003 and as upheld by the Appellate Committee of the House of Lords in 2008177. The Strasbourg Court emphasised that, in light of the institutional, cultural and historical differences between them, it was "for each state to mould its own democratic vision"178. The Strasbourg Court stated179: "The central question as regards such measures is not ... whether less restrictive rules should have been adopted or, indeed, whether the state could prove that, without the prohibition, the legitimate aim would not be achieved. Rather the core issue is whether, in adopting the general measure and striking the balance it did, the legislature acted within the margin of appreciation afforded to it." Second, I am not convinced that to require a law which burdens political communication to be "adequate in its balance" is to adopt a criterion of validity which is sufficiently focussed adequately to reflect the reasons for the to capture implication of freedom and adequately the constitutional 175 Eg Lawrence v Fen Tigers Ltd (No 3) [2015] 1 WLR 3485 at 3497 [32], quoting Bank Mellat v HM Treasury (No 2) [2014] AC 700 at 789 [71]. See generally Rivers, "Proportionality and Variable Intensity of Review", (2006) 65 Cambridge Law Journal 174. 176 Eg Handyside v United Kingdom (1976) 1 EHRR 737. 177 R (Animal Defenders) v Culture Secretary [2008] AC 1312. 178 Animal Defenders International v United Kingdom (2013) 57 EHRR 21 at 644 179 Animal Defenders International v United Kingdom (2013) 57 EHRR 21 at 644 considerations relevant to the making of a judicial determination as to whether or not the implied freedom has been infringed. I think it important in that respect to bear in mind that the equation of "strict proportionality" with "specific (or ad hoc) balancing" has always been controversial. Indeed, it has been the subject of reservation even by its most prominent proponent. In his influential treatise tracing the Germanic origins and global expansion of structured proportionality analysis, published in 2012, Professor Aharon Barak described the transition involved from the expression of the "basic rule" of balancing to the concrete application of that basic rule through specific (or ad hoc) balancing on a case-by-case basis as "particularly sharp" and "not desirable"180. He wrote181: "The basic rule of balancing is too abstract. It does not specifically relate to many of the aspects in which the particular right in question becomes a special object of either limitation or protection. It does not contain the required focus on the reasons underlying the creation of those rights, and thus does not directly relate to the reasons that justify their limitation or protection. It also does not include a proper roadmap of all the considerations that would justify the protection of a constitutional right. In contrast, the specific rule of balancing is at too low a level of abstraction. It only relates to the case at hand, and lacks a more general viewpoint of the system as a whole." Professor Barak went on to advocate the development of what he termed an "intermediate-level rule" of "principled balancing" in accordance with which the "basic rule" would be implemented through the adoption of a number of "principled rules or principled formulas"182. He proposed that each such rule or formula "would be phrased in a lower level of abstraction" and that the choice and phrasing of each such rule or formula "would express the principled consideration which underlies the constitutional right and the justification of its limitation"183. Were such element of balancing as might be incorporated into the Lange analysis to be formulated in terms of "principled balancing", along the lines Professor Barak has advocated, it would go some way to alleviating the concern 180 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 542. 181 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 542. 182 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 542. 183 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 542- which underlies the second of the reservations I have recorded. The adoption of principled balancing only at a final stage of a standardised proportionality analysis would, however, bring the first of the reservations I have expressed into even sharper relief. It would do so by highlighting the question of why a refinement of that nature should be limited to that final stage of analysis. Why shouldn't the principled consideration which underlies a constitutional right or freedom, and the justification of its limitation, permeate the entirety of the analysis? In the context of the judicial consideration of an to an express express constitutional right which constitutional limitation, it might well be possible to dismiss such a question as entirely rhetorical. The text enshrining the right requires that a judgment be made and, by one means or another, that judgment must be made. In the context of a constitutional freedom which arises only by implication, the question demands an answer. The judgment to be made can never be divorced from the reasons why there is a judgment to be made. is conferred subject In my view, it is imperative that the entirety of the Lange analysis is undertaken in a manner which cleaves to the reasons for the implication of the constitutional freedom which it is the sole function of the Lange analysis to protect. Whatever other analytical tools might usefully be employed, fidelity to the reasons for the implication is in my view best achieved by ensuring that the standard of justification, and the concomitant level or intensity of judicial scrutiny, not only is articulated at the outset but is calibrated to the degree of risk to the system of representative and responsible government established by the Constitution that arises from the nature and extent of the restriction on political communication that is identified at the first step in the analysis. No refinement of the formulation of the second step in the Lange analysis could ever be expected to remove the element of judgment required in the exercise of supervisory jurisdiction by a court. Nor should it ever be expected to remove the need for reasoned elaboration of that judgment in a particular case. Judicial identification of the standard of justification, or level of scrutiny, actually applied in a particular case or category of cases nevertheless forms an essential part of that reasoned elaboration. It contributes to consistency and predictability in the application of the implied freedom. No unitary standard of justification can or should be applied across all categories of cases. To date that has repeatedly been recognised when it has been accepted that a law which operates to impose a content-based restriction will demand closer scrutiny than a restriction based on the form or manner of communication184, just as when it has been recognised that a law which operates 184 Eg Levy v Victoria (1997) 189 CLR 579 at 618-619; [1997] HCA 31. to prohibit or regulate communications which are inherently political will demand closer scrutiny than a law which operates incidentally to restrict political communication185. Those distinctions are not complete dichotomies, and each distinction may or may not have analytical utility in a particular case. Other considerations which bear on the degree of risk which a particular legislative or executive restriction on political communication poses to the making of an informed electoral choice will also bear on the standard of justification applicable to that restriction. Gleeson CJ went on in Mulholland to identify the standard of justification applicable to a restriction on political communication in the conduct of elections for political office. The standard he identified was that stated by Mason CJ in ACTV186 in a passage cited by Gaudron J in Levy v Victoria187. The identified standard requires both a "compelling justification" for the restriction, and that the restriction be "no more than is reasonably necessary to achieve the protection of the competing public interest which is invoked"188. Gleeson CJ explained that he did not "take the phrase 'reasonably necessary' to mean unavoidable or essential, but to involve close scrutiny, congruent with a search for 'compelling justification'"189. Here, the context for the application of the Lange analysis is relevantly the same: the conduct of elections for political office. Constitutional principle and judicial consistency combine to require that the standard applied at the second step in the analysis remains that stated by Mason CJ in ACTV and adopted by What is required to sustain the validity of Div 2A, s 96E and Div 4A in the application of the second step in the Lange analysis is therefore appropriately stated as being: that such restriction as each imposes on political communication is imposed in pursuit of an end which is appropriately characterised within our system of representative and responsible government as compelling; and that the 185 Eg Coleman v Power (2004) 220 CLR 1 at 31 [30]-[31]; Hogan v Hinch (2011) 243 CLR 506 at 555-556 [95]; [2011] HCA 4; Wotton v Queensland (2012) 246 CLR 1 at 16 [30]; [2012] HCA 2. 186 (1992) 177 CLR 106 at 143. 187 (1997) 189 CLR 579 at 618-619. 188 (2004) 220 CLR 181 at 200 [40], quoting Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 143. 189 (2004) 220 CLR 181 at 200 [40]. imposition of the restriction in pursuit of that compelling end can be seen on close scrutiny to be a reasonable necessity. In the application of that standard, much turns on identification of the precise nature and degree of the restriction which each of the impugned provisions imposes on political communication. Much also turns on the identification and characterisation of the end each is designed to achieve. It is convenient to address those topics globally in relation to Div 2A, s 96E and Div 4A before going to address the necessity for the particular restrictions imposed by each of Div 2A and Div 4A. The necessity for s 96E can then be dealt with shortly and distinctly. The nature and degree of the restrictions on political communication Conformably with the finding in Unions NSW in relation to s 96D and s 95G(6), it is common ground between the parties that Div 2A, s 96E and Div 4A operate to restrict political communication by restricting the funds available to candidates and political parties to meet the costs of political communication. The nature and degree of that practical restriction differs for each of Div 2A and Div 4A. It is as well to mention that difference now. The cap on political donations imposed by Div 2A applies in relation to State elections, not in relation to local government elections. The Division's relevant legal operation is to prohibit a candidate or political party accepting a political donation from a person in excess of the applicable cap, being $2,000 per person per financial year for political donations to candidates or $5,000 per person per financial year for political donations to registered political parties190. The practical effect of the prohibition in restricting the funds available to candidates and to political parties is to some extent mitigated by two related sets of legislative provisions. One is the capping of their permitted electoral communication expenditure191. The other is the provision of public funding to meet a proportion of their electoral communication expenditure192. The structure of those related provisions, and also of Div 2, which governs public disclosure of political donations, was sufficiently described in Unions NSW193. Their detail is not now relevant. 190 See ss 95A(1)(a) and (e), 95A(2) and 95B(1). 191 Division 2B of Pt 6. 192 Part 5. 193 (2013) 252 CLR 530 at 544-545 [4]-[6]. The prohibition on political donations imposed by Div 4A applies equally in relation to local government elections, in respect of which no public funding is available, and where there are no caps on the permitted electoral communication expenditure imposed on candidates and political parties. The relevant legal operation of Div 4A is to make it unlawful for a corporate property developer, or a close associate of a corporate property developer, to make any political donation to a candidate or political party194. For completeness, it can be noted that the relevant practical effect of the prohibition on indirect campaign contributions in s 96E is complementary to Div 2A and Div 4A. Its legal operation is to prohibit any person from conferring on candidates and political parties specified kinds of benefits which might be of assistance in the conduct of an election campaign. Its practical operation is thereby to limit the assistance capable of being received by candidates and political parties engaged in State and local government elections to political donations regulated, relevantly, by Div 2A and Div 4A. The plaintiffs eschew any argument that the payment of money (or the conferral of other benefits) could itself be political communication. They are right to do so. Whether or not it might in another context be capable of being characterised as a form of expression, mere payment of money can hardly be regarded as a form of communication. The mere fact of making a political donation communicates nothing. As New South Wales rightly points out, making a political donation does not even necessarily communicate support for the recipient's policies. It is not unheard of for donors to donate to more than one party. The plaintiffs do, however, argue that the impugned provisions restrict political communication in another way. Indeed, they place that other restriction on political communication at the forefront of their argument that the provisions impermissibly burden the implied constitutional freedom. What the plaintiffs say is that, by restricting political donations (the payment of money or the provision of other benefits), the provisions restrict political communication by removing a means of facilitating donors making political representations to candidates and parties. The plaintiffs' principal argument, in effect, is that Div 2A, s 96E and Div 4A restrict political communication by removing the preferential access to candidates and political parties which would otherwise come to those who have the capacity and incentive to make large political donations. The argument is as perceptive as it is brazen. It goes to the heart of the mischief to which the provisions are directed. 194 Sections 96GAA(a), 96GA(1) and 96GB(1). The identification and compelling nature of the legislative ends Section 4A of the Act, inserted by amendment after the decision in Unions NSW195, includes amongst the express objects of the Act "to help prevent corruption and undue influence in the government of the State"196. To explain the restrictions imposed on political communication by Div 2A and Div 4A, it is unnecessary to go beyond that express legislative object. Section 96E is more readily explained by reference to the separately stated object "to promote compliance … with the requirements of the election funding, expenditure and disclosure scheme"197. What it is necessary to do in order to explain the restrictions imposed on political communication by Div 2A and Div 4A is to unpack the relevant meaning of corruption and undue influence. Corruption is perhaps more readily recognised than defined. One universally recognised form of corruption, however, is for a public official to receive money in a private capacity in circumstances calculated to influence the performance of the official's public duties. The corrosive impact of that form of corruption on the functioning of representative and responsible government was addressed in two decisions of this Court in the 1920s, in terms which resonate with the reasons later held to necessitate the implication of the constitutional freedom of political communication. The issue in Horne v Barber198 was as to the status of an agreement between private individuals, the performance of which involved the payment of money to a member of the Victorian Parliament as an inducement to use his official position for the purpose of procuring a sale of land which could only result from favourable exercises of statutory discretions on the part of an administrative board and a Minister performing functions under the Closer Settlement Act 1915 (Vic) and the Discharged Soldiers Settlement Act 1917 (Vic). The agreement was held to be contrary to public policy because of its tendency to interfere with the proper discharge of the duties of the member. Knox CJ and Gavan Duffy J described the tendency of the agreement to interfere with the proper discharge of the duties of the member as twofold: it 195 Inserted by item [4] of Sched 2 to the Electoral and Lobbying Legislation Amendment (Electoral Commission) Act 2014 (NSW). 196 Section 4A(c). 197 Section 4A(e). 198 (1920) 27 CLR 494; [1920] HCA 33. "afforded an inducement to [the member] to misuse his position and influence as a member of Parliament for his own pecuniary gain … and was also calculated to hamper him in forming an unbiased judgment and in expressing a free and honest criticism on the transaction as an act of the Executive Government or its agents"199. The separate reasons for judgment of Isaacs J and of Rich J expanded on those two themes. Isaacs J explained that "the whole essence of responsible government, which is the keystone of our political system, and is the main constitutional safeguard the community possesses", lay in the performance of a duty on the part of each member of Parliament of "watching on behalf of the general community the conduct of the Executive"200. Isaacs J continued201: "The effective discharge of that duty is necessarily left to the member's conscience and the judgment of his electors, but the law will not sanction or support the creation of any position of a member of Parliament where his own personal interest may lead him to act prejudicially to the public interest by weakening (to say the least of it) his sense of obligation of due watchfulness, criticism, and censure of the Administration." "Members of Parliament are donees of certain powers and discretions entrusted to them on behalf of the community, and they must be free to exercise these powers and discretions in the interests of the public unfettered by considerations of personal gain or profit. So much is required by the policy of the law." In R v Boston203, the holding of the majority was that an agreement by which a member of the New South Wales Parliament agreed to accept money as an inducement to use his official position for the purpose of influencing or putting pressure on a Minister or another public official constituted a criminal conspiracy at common law, irrespective of whether the end sought to be induced 199 (1920) 27 CLR 494 at 499. 200 (1920) 27 CLR 494 at 500. 201 (1920) 27 CLR 494 at 500. 202 (1920) 27 CLR 494 at 501. 203 (1923) 33 CLR 386; [1923] HCA 59. by the payment was lawful and irrespective of whether the pressure was to be exercised by conduct inside or outside Parliament. Knox CJ said204: "Payment of money to a member of Parliament to induce him to persuade or influence or put pressure on a Minister to carry out a particular transaction tends to the public mischief in many ways, irrespective of whether the pressure is to be exercised by conduct inside or outside Parliament. It operates as an incentive to the recipient to serve the interest of his paymaster regardless of the public interest, and to use his right to sit and vote in Parliament as a means to bring about the result which he is paid to achieve. It impairs his capacity to exercise a disinterested judgment on the merits of the transaction from the point of view of the public interest, and makes him a servant of the person who pays him, instead of a representative of the people." After restating the views they had each separately expressed in Horne v Barber, Isaacs and Rich JJ together summed up the "fundamental obligation" of a member of Parliament in terms of "the duty to serve and, in serving, to act with fidelity and with a single-mindedness for the welfare of the community"205. The reasons for judgment of the remaining member of the majority, Higgins J, were to similar effect206. Undue influence has different meanings in different contexts. Influence is a matter of degree; whether or not influence is undue is a matter of judgment; and judgment is a matter of perspective. The perspective here is the effect on the integrity of government. The influence which comes with the preferential access to government resulting from the making of political donations does not necessarily equate to corruption. But the line between a payment which increases access to an elected official and a payment which influences the official conduct of an elected official is not always easy to discern. The difficulty of drawing such a line was highlighted in a report to the Parliament of New South Wales made by the Independent Commission Against Corruption soon after its establishment in 1988207. The report was in relation to an investigation into possible corrupt conduct with respect to land development on the north coast of New South Wales. The investigation was conducted, and 204 (1923) 33 CLR 386 at 393. 205 (1923) 33 CLR 386 at 400 (emphasis in original). 206 (1923) 33 CLR 386 at 410-411. 207 Independent Commission Against Corruption, Report on Investigation into North Coast Land Development, (1990). the report was prepared, by Adrian Roden QC. The report revealed a practice by which the lobbying of members of the New South Wales Parliament on behalf of some land developers was accompanied by the making of political donations. Turning to his concluding observations regarding that practice, Mr Roden explained the nature of the problem by reference to the submissions of counsel made in the course of the investigation. Mr Roden said208: "Mr Davison argued in favour of the practice of paying for access to Ministers and Members of Parliament. He said that donors to party funds were invited to functions where they had the opportunity of mixing with Ministers and other Parliamentarians at a social level. He said, 'One has better prospects dealing with anybody, if one is able to deal with them on a personal basis'. Speaking on Dr Munro's behalf, he said, with disarming frankness:- 'One pays money to get in the door. One can't dance at the ball unless one has paid the entry fee.' Developing the argument further, Mr Davison said that those who paid money for access, were simply putting themselves on the same footing so far as access is concerned, as members of the particular Minister's party or party branch, who had the opportunity of enjoying access to the Minister on a regular basis. The proposition is really that there are some people who enjoy privileged access through mateship, or membership of the party or the 'Old Boys' Club', and that outsiders should have the right to buy their way into the select group, and out of the disadvantage which they would otherwise suffer. Senior counsel assisting the Commission [Mr Toomey] put the contrary argument. It is that rather than speaking in terms of outsiders paying to enjoy the same advantages as mates, the advantage of privileged access for commercial purposes should not be enjoyed by anyone. It is one thing, and proper, for a party member to be able to discuss political issues at close quarters with Government leaders who are members of his party. It is another thing, and improper, for advantage to be taken of that relationship to push personal or commercial interests. Mr Toomey was arguing a matter of principle. Mr Davison was asserting a fact of life." 208 At 651 (italics in original). Under the heading "Payment for Favours", Mr Roden then stated and illustrated the reality of the threat to the integrity of government posed by the making of political donations. He said209: "Corruption of the system is complete, when it allows the payment of money for political favours, and when decisions by public officials can be bought. That is almost universally understood. Corruption of the system is well on the way, when it allows favours even without payment, or payment without obvious favour. That is not so well understood. Favours without payment Mr Watkins acknowledged that he saw Dr Munro more readily than he would see members of the general public. He undoubtedly made representations for Dr Munro's and Mr Cassell's clients, more readily than he would for members of the general public. Mr Watkins and Mr Enderbury both lent their names and their positions to representations they did not know to be true. They did that because Dr Munro asked them to. They both showed favour to Mr Cassell and Dr Munro. They both said they received no payment for that. If what they say is true, that is favour without payment. One consequence is denial of the fundamental right of all citizens to equality of treatment at the hands of public officials. The more time spent on the favoured, the less there is available for others. People suffer unfairly, and the system fails, even if there was no payment. And how is the ordinary citizen who is kept waiting, or who misses out altogether, to be satisfied that there was no payment? The next step is for those who are missing out, to try to share in the favoured treatment. How can they go about that? Mr Davison's argument must seem attractive to them. If they have to pay to get through the door, then those who can, and are prepared to, will. Those who cannot, or are not prepared to, will still miss out. The corruption of the system will then be complete. 209 At 654-656 (italics in original). Payment without favour Mr Beck knew of Ocean Blue's $25,000 gift to his party's funds. He helped arrange its receipt. At that very time, he was making representations to Ministers on behalf of the donors. He continued to do so, even when they were involved in a competitive process. He said he treated them no differently because of the gift. If what he says is true, that is payment without favour. But how is anyone to know whether he was influenced or not? How is he to know himself? He said that if he suspected an ulterior motive, there would have been 'no further support or action' from him. He was clearly doing something for them which he could do or not, as he chose. It is impossible to expect people to have confidence in a system which allows public officials to receive money or benefits, directly or indirectly, from people with whom they are dealing in their official capacity. Ocean Blue, after paying $25,000, were successful in achieving what they were seeking. Others missed out. It is not too cynical to suggest that those facts alone will be encouragement enough to others to do as Ocean Blue did, to give themselves a better chance next time. Selling to the highest bidder could take on a new meaning. The corruption of the system would then be complete." The thrust of what Mr Roden was saying was that, although there might be favours without payment and payment without favours, the basic human tendency towards reciprocity means that payments all too readily tend to result in favours. Whether the causal sequence is that of payment for favours or that of favours for payment, the corrupting influence on the system of government is little different. In the preface to his report, Mr Roden wrote210: "It is for the community to decide what level of integrity it requires of its public officials, and in particular the extent to which, if at all, it will allow access to decision-makers, and influence upon them, to depend upon considerations such as friendship or payment." 210 At xxv. One of the individuals named elsewhere in Mr Roden's report, Mr Glynn, was subsequently indicted on two counts framed as follows211: "On 29 January 1988 at Sydney in the State of New South Wales [Mr Glynn] did bribe a public officer, namely, Jack Hallam, then Minister for Lands in the New South Wales Government by the payment of $20,000 to the Australian Labour [sic] Party (New South Wales), to incline the said Jack Hallam to act in a manner contrary to his duty. ... On 26 May 1988, at Sydney in the State of New South Wales [Mr Glynn] did bribe a public officer, namely, Ian Causley, the Minister for Natural Resources in the New South Wales Government by the payment of $25,000 to the National Party (New South Wales), to incline the said Ian Causley to act in a manner contrary to his duty." The Court of Criminal Appeal of the Supreme Court of New South Wales, affirming the upholding of a demurrer to the indictment, held the facts alleged in the two counts to disclose no crime known to the common law. Allen J (with whom Hunt CJ at CL and Finlay J agreed), after stating that at common law "the crime of bribery is constituted by the offering to the public officer of reward for the desired improper conduct"212, identified the essential deficiency in the allegation of fact contained in each count as being that "[t]he payment communicated no offer to the politician that if he accepted the money it would be upon the implied understanding that he would act dishonestly or improperly for the benefit of the payer"213. He continued214: "Indeed the principle can be more nicely demonstrated. Assume having made the payment to the campaign funds of the politician, accepted by the politician as being a wholly proper contribution from a political supporter with no strings attached, the person who made the payment thereafter approaches the politician and says: 'I made this contribution to your campaign funds, I now need this favour. It is irregular but don't you think you owe it to me?' Is that a bribe by the person soliciting the favour? Again the answer must be 'No'. The payment when made implied no condition that if it were accepted the recipient would act improperly in the future in the payer's favour." 211 R v Glynn (1994) 33 NSWLR 139 at 140. 212 (1994) 33 NSWLR 139 at 144. 213 (1994) 33 NSWLR 139 at 145. 214 (1994) 33 NSWLR 139 at 145. "It well may be thought that the law should be developed to make the subsequent request for the improper favour, or at least the giving by the political figure of the subsequent favour, criminal. This is a matter for the legislature." The capacity to make the legislative choice to which Mr Roden referred in the preface to his report, and to which the reasons for judgment of Allen J drew further attention, is undoubtedly within the competence of the New South Wales Parliament. There is no place within the system of representative and responsible government as it has developed in Australia for the notion, recently reiterated by a narrow majority of the Supreme Court of the United States, that the legitimate end of limiting campaign financing is the elimination of "quid pro quo corruption"216. The legitimate end of limiting campaign financing here surely extends to the elimination of what has there been labelled "clientelism"217: "the danger that officeholders will decide issues not on the merits or the desires of their constituencies, but according to the wishes of those who have made large financial contributions valued by the officeholder"218. In Canada, where the system of government is closer to that of Australia, it has been recognised that preventing wealthy voices from dominating political discourse so that other voices may be heard "is necessary for meaningful participation in the electoral process and ultimately enhances the right to vote"219. The same has been recognised in the United Kingdom220. 215 (1994) 33 NSWLR 139 at 145-146. 216 Citizens United v Federal Election Commission 558 US 310 at 345, 359 (2010); McCutcheon v Federal Election Commission 188 L Ed 2d 468 at 494-495 (2014). 217 Issacharoff, "On Political Corruption", (2010) 124 Harvard Law Review 118 at 218 McConnell v Federal Election Commission 540 US 93 at 153 (2003). 219 Harper v Canada (Attorney General) [2004] 1 SCR 827 at 872 [72]. 220 R (Animal Defenders) v Culture Secretary [2008] AC 1312 at 1346 [28]. The legitimacy of the elimination of undue influence, understood in the sense of unequal access to government based on money, was expressly accepted by all members of the Court in Unions NSW221. Gauged by reference to the system of representative and responsible government established by Chs I and II of the Constitution, as that system is extended by s 128 to permit alteration of the Constitution, the elimination of preferential access to government which results from the making of political donations is a legitimate legislative objective. More than that, the elimination of that form of influence on government is properly characterised as a compelling legislative objective. The necessity for Div 2A to cap political donations Once elimination of unequal access to members of the New South Wales Parliament based on money is recognised as a legitimate and compelling objective of the Act, the plaintiffs' arguments that the practical restriction on political communication imposed by Div 2A's cap on political donations is not reasonably and appropriately adapted to serving a legitimate end in a manner compatible with the system of representative and responsible government fall away. It is not to the point that the cap on political donations is not tailored to the elimination of the actuality or appearance of corruption in the narrow sense of payment for favours. The targeting of the actuality or appearance of corruption in that narrow sense would not meet the systemic problem of the corrupting influence that inequality of access based on money may have on the pursuit of public duties by elected public officials. It would not address the mischief. Nor is it plausible to think that the mischief of inequality of access based on money could be addressed only through the promotion of transparency. The preferential access which the plaintiffs accept is removed by the cap on political donations would not be removed by the existing provisions governing public disclosure of political donations in Div 2, and could not be expected to be removed by another regime merely requiring public disclosure of large donations. Moreover, it does not assist the plaintiffs' argument to point out that a person who is able to influence a large number of other people each to give smaller amounts under the caps would be able to have exactly the same degree of influence as a single person who makes a larger donation. The equivalence of influence to which the argument points is the equivalence of the influence which results, on the one hand, from the organised political action of many individuals 221 (2013) 252 CLR 530 at 545 [8], 557 [51], 579 [138]. who are motivated to act in a common cause and the influence which, on the other hand, a wealthy individual is able alone to exert by reason only of wealth. The argument only demonstrates the beneficial operation of the cap on the democratic process. On close scrutiny, congruent with a search for compelling justification, is no warrant for considering Div 2A's restrictions on political there communication to be other than reasonably necessary for the fulfilment of its identified statutory purpose. The necessity for Div 4A to prohibit donations by corporate property developers and their close associates Division 4A on its face presents more difficulty. The plaintiffs argue that it discriminates against them. How can it be reasonably necessary for the elimination of preferential access to government, they ask, to deny corporate property developers and their close associates the same degree of access to candidates and political parties that comes with the making of a political donation available to everyone else? The answer is that the reasonable necessity for singling out corporate property developers and their close associates for differential treatment as political donors is to be found in what differentiates them from the mainstream of political donors when it comes to the potential for corruption and undue influence in the government of the State. The definition of "property developer" for the purpose of the Division is "a corporation engaged in a business that regularly involves the making of relevant planning applications by or on behalf of the corporation in connection with the residential or commercial development of land, with the ultimate purpose of the sale or lease of the land for profit"222. The definition of "relevant planning application"223 encompasses specified requests and applications for approval or consent under the Environmental Planning and Assessment Act 1979 (NSW). The scheme of that Act is to make the success of those requests and applications dependent, at least in the first instance, on the exercise of one or more statutory discretions, many of which are exercisable at the level of local government and some of which are exercisable at the level of State government. forms of 222 Section 96GB(1)(a). 223 Section 96GB(3). See also s 147(2) of the Environmental Planning and Assessment Act 1979 (NSW). What it is that relevantly differentiates corporate property developers from the mainstream of political donors is the nature of the business in which they are engaged. By definition, it is a profit-making business which is dependent on the exercise of statutory discretions by public officials. It is the nature of their business that gives corporate property developers a particular incentive to exploit such avenues of influence as are available to them, irrespective of how limited those avenues of influence might be. The problem is not merely theoretical. The unfortunate experience in New South Wales has been one of exploitation of influence leading too readily to the corruption of official conduct. Property development was the particular focus of the report authored by Mr Roden, to which extensive reference has already been made. The special case reveals that, between then and 2008, property development was the focus of seven further adverse reports presented to the New South Wales Parliament. Debating the introduction of Div 4A in 2009, the Attorney-General, the "The Government has made it quite clear that it is time to end speculation about the influences of donations on major developments in New South Wales. To that end, it is acknowledged that the donations have cast a shadow over the good work of the Government and have tainted the decent public servants who run our planning system. ... [This] legislation will go some way to restoring the confidence of the public in the Government's first-rate planning system, which, regrettably, has been maligned by the accusations and imputations that have effectively raised perceptions that somehow donations have influenced outcomes." Despite the cap on political donations in relation to State elections later imposed by Div 2A, which was introduced in 2010225, there is no basis on which it could be concluded that the total prohibition on property developers making any political donations does not continue to make a material contribution to the prevention of corruption and undue influence in the government of the State, and does not continue to be reasonably necessary. The plaintiffs point out that participants in many other forms of business which routinely rely on favourable exercises of statutory discretions in order to carry on a profit-making enterprise are not subject to the prohibition in Div 4A. 224 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 3 December 2009 at 20570. 225 By item [23] of Sched 1 to the Election Funding and Disclosures Amendment Act 2010 (NSW). That may be so. But, without more, it provides no reason to conclude that, in its application to property developers, Div 4A is not squarely aimed at preventing corruption and undue influence in the government of the State and is not a reasonably necessary means of preventing corruption and undue influence in the government of the State. The Parliament is not relegated by the implied freedom to resolving all problems of corruption and undue influence if it resolves any. The Parliament can respond to felt necessities. The special case discloses no basis for thinking that property developers have been singled out because of the unpopularity of their views. The plaintiffs also draw attention to the width of the definition of "close associate", which extends to encompass persons, including electors, who are directors or officers of the corporation or who have significant voting power in the corporation (or a related body corporate), as well as their spouses226. The definition is not so wide as to cause the prohibition of political donations by close associates of corporate property developers to go beyond what is justified by reference to the same reasonable necessity which justifies the primary ban on political donations by corporate property developers. The prohibition of political donations by close associates, like the prohibition of political donations by corporate property developers, does not prevent them from expressing political views. It does not prevent them from making contact with elected officials. Section 96E Section 96E presents no such difficulty. It is an anti-avoidance provision. If Divs 2A and 4A are reasonably necessary means of preventing corruption and undue influence in the government of the State, then s 96E is reasonably necessary to ensure their efficacy. Formal answers to questions reserved The three substantive questions stated for the opinion of the Full Court in the special case ask whether each of Div 2A of Pt 6, s 96E and Div 4A of Pt 6 of the Act is invalid in its application to the plaintiffs because it impermissibly burdens the implied constitutional freedom of political communication. Each question should be answered in the negative. The plaintiffs should pay the costs of the special case. 226 Section 96GB(3). Nettle 201 NETTLE J. The issue in this special case is whether certain of the provisions of Divs 2A and 4A of Pt 6 and s 96E in Div 4 of Pt 6 of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) ("the EFED Act") infringe the implied constitutional freedom of political communication. Section 4A of the EFED Act provides that the objects of the Act are: to establish a fair and transparent election funding, expenditure and disclosure scheme, to facilitate public awareness of political donations, to help prevent corruption and undue influence in the government of the State, to provide for the effective administration of public funding of elections, recognising the importance of the appropriate use of public revenue for that purpose, to promote compliance by parties, elected members, candidates, groups, agents, third-party campaigners and donors with the requirements of the election funding, expenditure and disclosure scheme." Although s 4A was not enacted until after the impugned provisions227, its enactment confirms that the statutory objective of the EFED Act is to keep State political institutions free of corruption and to maintain public confidence in the integrity of those institutions. Apart from Divs 2A and 2B, Pt 6 of the EFED Act applies both to State elections and elected members of the State Parliament and to local government elections and elected members of local councils228. Division 2 of Pt 6 requires certain disclosures of both political donations and electoral expenditure. Division 2A, which is restricted to State elections and elected members of the State Parliament (and so does not apply to local government229), imposes restrictions on the maximum amount of each political donation. Division 2B caps the amount of electoral communication expenditure which can be incurred during the period leading up to a State election. Division 4 (which applies to 227 See Electoral and Lobbying Legislation Amendment (Electoral Commission) Act 2014 (NSW), Sched 2 [4]. 228 EFED Act, s 83. 229 EFED Act, s 95AA. Nettle State elections and elected members of the State Parliament and also to local government230) prohibits certain types of political donations, and Div 4A (which also applies at both State and local government levels231) prohibits political donations by persons associated with particular kinds of businesses. A "political donation" includes gifts made (directly or indirectly) to or for the benefit of a party, elected member, candidate or group of candidates232; amounts paid by persons as a contribution, entry fee or other payment to entitle a person to participate in or otherwise obtain any benefit from a fund-raising venture or function233; an annual or other subscription paid to a party by a member of the party or a person for affiliation with the party234; dispositions of property to the New South Wales branch of a party from the federal or another State or Territory branch of the party, or to a party from an associated party235; and uncharged interest on a loan to an entity or other person236. Gifts made to individuals in a private capacity for the individual's personal use and that he or she has not used, and does not intend to use, solely or substantially for a purpose related to an election or to his or her duties as an elected member are excluded from the definition237. If, however, any part of such a gift is subsequently used to incur electoral expenditure238, that part of it becomes a political donation239. Section 95A(1) in Div 2A of the EFED Act imposes a cap on the amount of political donations that can be made per person per financial year to or for the benefit of a registered party ($5,000); an unregistered party ($2,000 – thus encouraging registration); an elected member ($2,000); a group ($5,000); a candidate ($2,000); and a third-party campaigner ($2,000). These amounts, like 230 EFED Act, s 83. 231 EFED Act, s 83. 232 EFED Act, s 85(1). 233 EFED Act, s 85(2). 234 EFED Act, s 85(3). 235 EFED Act, s 85(3A). 236 EFED Act, s 85(3B). 237 EFED Act, s 85(4). 238 As defined in EFED Act, s 87. 239 EFED Act, s 85(5). Nettle other relevant monetary amounts in the EFED Act240, are indexed241, but it is sufficient for present purposes to refer to the amounts set out in the Act. For the purposes of the donation caps, a party subscription242 is to be disregarded, provided it does not exceed the maximum subscription243 (eg, $2,000 for membership of a party244). Section 95A includes a number of aggregation provisions the purpose of which is to ensure that a person cannot circumvent the applicable cap by making more than one donation in a financial year245 or by making more than one donation to elected members, groups or candidates of the same party246. Section 95B(1) prohibits a person from accepting a political donation to a party, elected member, group, candidate or third-party campaigner if the donation exceeds the applicable cap. The prohibition is subject to a number of exceptions, including: (a) if the donation (or the part exceeding the cap) "is to be paid into (or held as an asset of) an account kept exclusively for the purposes of federal or local government election campaigns"247; and (b) if the donation exceeds the cap because of the aggregation of political donations made to other persons and the person who received the donation did not know and could not reasonably have known of the political donations made to the other persons248. Division 4 of Pt 6 prohibits making or accepting certain kinds of political donations by reference to: their source: if the donor is a party, or a candidate or elected member endorsed by a party, and the candidate or group of candidates to whom the donation is made is not endorsed by that or any other party249; or if the 240 See Sched 1. 241 EFED Act, s 95A(5). 242 As defined in EFED Act, s 95D(2). 243 EFED Act, s 95D(1). 244 EFED Act, s 95D(3). 245 EFED Act, s 95A(2). 246 EFED Act, s 95A(3), (6). 247 EFED Act, s 95B(2). 248 EFED Act, s 95B(5). 249 EFED Act, s 96EA. Nettle donor does not identify his or her name or address to the person accepting the donation250; their nature: indirect campaign contributions such as provision of office accommodation or full or part payment of electoral expenditure for advertising or other purposes to be incurred by a party, elected member, group or candidate251; or the conditions of their receipt: the receipt of a reportable loan other than from a financial institution without recording the terms and conditions of the loan and the name and address of the lender252. Division 4A of Pt 6, which is entitled "Prohibition of donations from property developers or tobacco, liquor or gambling industries", prohibits political donations by certain classes of donor. The proscribed categories of donor are defined individually in s 96GB and collectively as "prohibited donor[s]" in s 96GAA. One of the proscribed categories is "property developer", which is defined as253: a corporation engaged in a business that regularly involves the making of relevant planning applications by or on behalf of the corporation in connection with the residential or commercial development of land, with the ultimate purpose of the sale or lease of the land for profit, [and] a person who is a close associate of a corporation referred to in paragraph (a)." A "relevant planning application", which is defined254 by reference to s 147 of the Environmental Planning and Assessment Act 1979 (NSW) ("the EPA Act"), covers a broad range of planning-related applications that may be made under that Act, including: to initiate the making of an environmental planning instrument; to request that development on a particular site be declared as "State significant development", "State significant infrastructure" or a project to which 250 EFED Act, s 96F. 251 EFED Act, s 96E. 252 EFED Act, s 96G. 253 EFED Act, s 96GB(1). 254 EFED Act, s 96GB(3). Nettle Pt 3A of the EPA Act (now repealed) applies; for approval of a concept plan or project under Pt 3A; or for development consent under Pt 4 of the EPA Act. A "close associate" of a corporation is defined in s 96GB(3) of the EFED Act as meaning each of: a director or officer of the corporation or the spouse of such a director or officer, a related body corporate of the corporation[255], a person whose voting power in the corporation or a related body corporate of the corporation is greater than 20% or the spouse of such a person[256], if the corporation or a related body corporate of the corporation is a stapled entity in relation to a stapled security—the other stapled entity in relation to that stapled security, if the corporation is a trustee, manager or responsible entity in relation to a trust—a person who holds more than 20% of the units in the trust (in the case of a unit trust) or is a beneficiary of the trust (in the case of a discretionary trust)." Pursuant to s 96GA it is unlawful for a prohibited donor, or someone on behalf of a prohibited donor, to make a political donation257 and it is unlawful for a prohibited donor to solicit another person to make such a donation258. It is also unlawful for a person to accept a political donation that was made (wholly or partly) by a prohibited donor or by a person on behalf of a prohibited donor259, or to solicit a person on behalf of a prohibited donor to make a political donation260. In the following reasons, the provisions of Div 2A of Pt 6 of the EFED Act will be referred to as "the donation caps". The provisions of Div 4A of Pt 6, 255 See Corporations Act 2001 (Cth), s 50. 256 See Corporations Act, ss 9, 10-17, 610. 257 EFED Act, s 96GA(1)-(2). 258 EFED Act, s 96GA(4). 259 EFED Act, s 96GA(3). 260 EFED Act, s 96GA(5). Nettle in so far as they apply to the plaintiffs, will be referred to as "the prohibited donor provisions". The plaintiffs The facts agreed in the special case record that each of the plaintiffs has breached, or intends to breach, the donation caps or the prohibited donor provisions. Hence, the questions reserved raise for decision the validity of those provisions in their application to the plaintiffs. The first plaintiff is a director of the second and third plaintiffs and of Nuove Castelli Pty Ltd ("Nuove Castelli"). The third plaintiff is a property developer within the meaning of s 96GB(1)(a), and thus the first plaintiff is a close associate within the meaning of s 96GB(1)(b). The first plaintiff made political donations in excess of the donation caps in connection with the New South Wales State election held in March 2011 ("the 2011 election"). To the extent permitted by law, he intends to make further donations in excess of the donation caps in the future. The second plaintiff made an indirect campaign contribution, within the meaning of s 96E, in connection with the 2011 election. Though not itself a property developer, the second plaintiff is related to Nuove Castelli, which made some five relevant planning applications in 2008-2009. The plaintiffs' standing to challenge the impugned provisions in so far as applicable to them was not challenged. It is convenient to assume, therefore, that the planning applications are sufficiently regular to render Nuove Castelli a property developer, and the second plaintiff its close associate, within the meaning of s 96GB(1). The implied freedom of political communication A law infringes the constitutionally implied freedom of political communication if it so burdens, restricts or distorts the free flow of political communication between the governed, their representatives and candidates for elected office as to be incompatible with the continued existence of the political sovereignty which resides in the people and is exercised by their representatives according to ss 7, 24, 62, 64, 128 and related provisions of the Constitution261. "Political sovereignty" in this sense means the freedom of electors, through communication between their political representatives, to implement legislative and political changes262. It may be themselves and with 261 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 557-562; [1997] HCA 25. 262 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 137-138 per Mason CJ; [1992] HCA 45 ("ACTV"). Nettle infringed by restricting the freedom of electors and their political representatives to disseminate or receive information bearing on electoral choices. It may be infringed, too, by restrictions on political communications to and from persons other than electors263. Political sovereignty further necessitates that those who govern take account of the interests of all those whom they govern and not just the few of them who have the means of buying political influence264. Reducing opportunities for the purchase of political influence tends to reduce undue influence, encourage candidates and parties to seek support from more individuals and broader segments of society, and motivate individuals with common interests to build political power groups. Each of those effects is conducive to enhancing the system protected by the implied freedom of political communication by increasing the amount of communication between electors and parties and between electors themselves. For that reason, it has previously been suggested, but not yet determined, that laws which put a general limit on political donations and expenditure and which provide for wholly or partly state- funded political campaign expenses are unlikely to infringe the freedom265. Recent changes in the interpretation of the Free Speech Clause of the First Amendment to the Constitution of the United States suggest that laws which put a general limit on private political donations would be considered to be unconstitutional in that country266. However, unlike the "great underlying principle" of the Australian Constitution – "that the rights of individuals are sufficiently secured by ensuring, as far as possible, to each a share, and an equal share, in political power"267 – United States constitutional law puts emphasis on individual rights. Consequently, much of the United States judicial discourse regarding the First Amendment's right to free speech and what it necessitates by way of political freedom cannot be transposed to Australia's constitutional context without making allowances for that difference. 263 ACTV (1992) 177 CLR 106 at 139. 264 Unions NSW v New South Wales (2013) 252 CLR 530 at 578 [136] per Keane J; [2013] HCA 58. 265 ACTV (1992) 177 CLR 106 at 155-156 per Brennan J, 175 per Deane and 266 McCutcheon v Federal Election Commission 188 L Ed 2d 468 (2014). 267 Harrison Moore, The Constitution of the Commonwealth of Australia, (1902) at 329; see ACTV (1992) 177 CLR 106 at 139-140 per Mason CJ. Nettle As was established in Lange v Australian Broadcasting Corporation268, in this country the question of whether a law offends the constitutionally implied freedom of political communication is to be determined according to the two- limbed test of whether the law in its legal or practical operation effectively burdens communication on governmental or political matters; and, if so, whether it is reasonably appropriate and adapted, or in other words proportionate, to serving a legitimate end in a manner that is compatible with the maintenance of the system of representative and responsible government established by the Constitution. As a result of differences between some of the views expressed in Monis v The Queen269, Unions NSW v New South Wales270 and Tajjour v New South Wales271, a degree of uncertainty has arisen as to several aspects of the second limb of the Lange test. Those aspects include whether the standard of appropriateness and adaptedness varies according to the nature and extent of the burden; what significance should be attributed to the availability of less restrictive alternative means; and whether the criterion of appropriateness and adaptedness necessitates a test of "strict proportionality". For reasons which will later be explained, it should now be accepted that the standard of appropriateness and adaptedness does vary according to the nature and extent of the burden. A law which imposes a discriminatory burden will require a strong justification. And the availability of alternative means is a relevant but not determinative consideration. For present purposes, however, it is unnecessary to delve into strict proportionality. Division 2A of Pt 6 – donation caps In this case, it is not in issue that the donation caps imposed by Div 2A indirectly burden, restrict or distort the free flow of political communication by restricting the flow of money to political parties to fund their political communications. The question is whether the donation caps are imposed for a legitimate end and, if so, whether they are appropriate and adapted to the achievement of that end in a manner which is compatible with the maintenance 268 (1997) 189 CLR 520 at 561-562. The formulation of the second limb of the test was revised in Coleman v Power (2004) 220 CLR 1 at 50 [92]-[93], 51 [95]-[96] per McHugh J, 77-78 [196] per Gummow and Hayne JJ, 82 [211] per Kirby J; [2004] HCA 39. 269 (2013) 249 CLR 92; [2013] HCA 4. 270 (2013) 252 CLR 530. 271 (2014) 88 ALJR 860; 313 ALR 221; [2014] HCA 35. Nettle of the system of representative and responsible government established by the Constitution. As appears from the terms of Div 2A read in conjunction with s 4A, the aim of the Division is to reduce the risk of State political parties and individual politicians being induced to extend political patronage to large-scale political donors and, concomitantly, to ameliorate the perception that those who have the capacity to make large-scale political donations are likely to be accorded commensurately greater political influence. Each of those objectives is a legitimate aim. As Mason CJ said in ACTV, "the representatives who are members of Parliament and Ministers of State are not only chosen by the people but exercise their legislative and executive powers as representatives of the people"272. They must exercise their public powers solely in the public interest and upon the merits of any particular proposal, not in their private interest. To the same effect, as Brennan J observed in ACTV273: "[T]he salutary effect of freedom of political discussion on performance in public office can be neutralized by covert influences, particularly by the obligations which flow from financial dependence. The financial dependence of a political party on those whose interests can be served by the favours of government could cynically turn public debate into a cloak for bartering away the public interest." As was submitted on behalf of the Attorney-General for Victoria, any instance of public decision-making affecting a person's interests which is influenced by that person making a substantial political donation to the decision- maker or his or her party or group may be regarded as an unduly influenced decision. Thus, provisions which seek to remove the need for and ability to make large-scale donations to a political party or candidate are properly to be viewed as directed to the mischief of possible corruption or undue influence. As Keane J remarked in Unions NSW274, it is consistent with the implied freedom of political communication that wealthy donors not be permitted to distort the flow of political communication according to the size of their political donations. Contrary to the central theme of the plaintiffs' submissions, which at least in part were based on the recent shift in the interpretation of the United States 272 (1992) 177 CLR 106 at 138. 273 (1992) 177 CLR 106 at 159. 274 (2013) 252 CLR 530 at 578 [136]. Nettle First Amendment right of free speech earlier referred to, there is also nothing new or otherwise remarkable about limiting the size of political donations. The idea that unregulated political donations pose a threat to the integrity of the system of representative and responsible government established by the Constitution is logical and of long standing. As recorded in the 19th edition of Rogers on Elections, which was published in 1918275: "The evil consequent on the enormous expense commonly incurred at elections has long been acknowledged." As far back as 1695, the preamble to the Treating Act 1695276 referred to "excessive and exorbitant expenses, contrary to the laws, and in violation of the freedom due to the election of representatives for the commons of England in parliament, to the great scandal of the kingdom, dishonourable, and may be destructive to the constitution of parliaments". One of the objects of that Act and of a succession of subsequent enactments was to regulate the amount of election expenses and to prohibit donors funding expenses in excess of the limits. The Treating Act was directed to preventing candidates or persons on their behalf buying votes by payment of money, or provision of meat, drink, gifts, reward or entertainment to potential electors. The next step, which was taken in the Corrupt Practices at Parliamentary Elections Act 1729277, was to prohibit voters themselves from offering or receiving inducements in exchange for a vote (or a refusal to vote) in an election. That was followed by the Corrupt Practices Prevention Act 1854278, which required the appointment of an auditor to be responsible for payment of all election expenses and to publish a detailed statement of all expenses incurred by candidates. The Corrupt and Illegal Practices Prevention Act 1883279 then introduced a limit on both the nature and amount of election expenses which might be incurred. Comparable provisions were enacted in South Australia in 275 Rogers on Elections, 19th ed (1918), vol 2 at 192. 276 7 & 8 Will III c 4. 277 2 Geo II c 24. 278 17 & 18 Vict c 102, ss 15, 19, 26. 279 46 & 47 Vict c 51. See Rogers on Elections, 19th ed (1918), vol 2, ch XIII. 280 Electoral Law Amendment Act 1893 (SA). Nettle Prohibited donor provisions – nature and extent of the burden on the implied freedom The prohibition imposed by s 96GA against certain classes of political donors making political donations raises different considerations. The plaintiffs contended that, because the prohibition is narrowly focussed on a small group of identified prohibited donors who are not united by any feature of particular susceptibility to corruption, and drafted in a manner which leaves open opportunities for avoidance, the prohibition does not appear to have a rational connection with the aim or effect of preventing corruption. That submission should be rejected. Approaching the question first as one of statutory interpretation281, it is apparent from the text of the legislation that the prohibition in so far as it applies to property developers is rationally directed to dealing with corruption and undue influence, and the perception of it, arising as the result of political donations from property developers. Hence, the mischief at which the prohibition is aimed282 is a perceived risk of susceptibility of members of State and local government to corruption and undue influence in relation to planning and property development decisions. There is, too, an apparently strong factual basis for the perception of a risk of corruption and undue influence as the result of political donations from property developers. A series of seven reports and a position paper of the New South Wales Independent Commission Against Corruption ("ICAC") has identified corruption and other misconduct in the handling of property development applications since 1990, and the existence of a large measure of public concern over the influence which property developers have hitherto exercised over State and local government members and officials. Admittedly, those concerns are more based upon inference than on direct evidence of widespread corruption by property developers. But it is not illogical or unprecedented for the Parliament to enact legislation in response to inferred legislative imperatives. More often than not, that is the only way in which the Parliament can deal prophylactically with matters of public concern. Contrary to the plaintiffs' submissions, it does not detract from that conclusion that the prohibition might have been crafted in a manner which was more effective in restricting corruption in relation to planning and property development decisions or that there might not be the same rational connection 281 Monis (2013) 249 CLR 92 at 147 [125] per Hayne J; Unions NSW (2013) 252 CLR 530 at 557 [50] per French CJ, Hayne, Crennan, Kiefel and Bell JJ. 282 APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 394 [178] per Gummow J; [2005] HCA 44. Nettle between the perception of the risk of corruption and the prohibition against political donations by other prohibited donors. As Hayne J explained in Tajjour283, once it is seen that an impugned law is rationally connected to a legitimate end, it logically follows that the impugned law is capable of realising that end, and it is neither possible nor appropriate to attempt assessment of the efficacy of the impugned law in realising the desired end. For the same reason, it is not inconsistent with the prohibition being capable of dealing with corruption and undue influence that its effectiveness in that respect might have been enhanced by extending the prohibition to a broader class of political donors. As the plaintiffs further contended, however, the fact that the prohibition may be rationally connected to a legitimate end of dealing with corruption and undue influence as the result of political donations from property developers is not determinative of whether it is consistent with the maintenance of the system of government established by the Constitution. The way in which the prohibition discriminates against property developers is also of importance. As Mason CJ said in ACTV284, whether a restriction on the implied freedom of political communication which discriminates against a particular group or groups is justified calls for a balancing of the public interest in free communication against the competing public interest which the restriction is designed to serve. If the restriction imposes a burden on free communication which outweighs the competing public interest, it is indicative that the purpose and effect of the restriction is to impair the implied freedom of communication. New South Wales emphasised that the implied freedom of political communication is not a personal right of communication but a systemic guarantee of the free flow of information and ideas between the electors and the elected and each of them inter se. It submitted that the prohibited donor provisions do nothing of themselves to curtail the ability of prohibited donors to communicate their wishes and ideas to candidates and the electorate and, therefore, nothing to reduce the free flow of information and ideas within the political system. Superficially, that presents as an attractive solution to the problem. In one sense it is true and, therefore, it is convenient for New South Wales to say that the prohibited donor provisions leave prohibited donors free to be as vocal as they choose in the expression of their political views. But upon closer examination it will be seen that the submission is unconvincing. In the practical reality of the political system, the ability of a 283 (2014) 88 ALJR 860 at 884 [81]-[82]; 313 ALR 221 at 247-248. 284 (1992) 177 CLR 106 at 143-145. Nettle corporation to make a political donation is likely to be considered as important a method as any of expressing ideas about politics and government; especially where there is a requirement for public disclosure of political donations. As the Supreme Court of the United States recognised in Buckley v Valeo, the fact of a political contribution, as opposed to its amount, serves as a "general expression of support" for a candidate and his or her views, albeit not the underlying basis for the support, and as a "symbolic expression of support"285: "Making a contribution, like joining a political party, serves to affiliate a person with a candidate [and] enables like-minded persons to pool their resources in furtherance of common political goals." It is therefore beside the point that the prohibited donor provisions leave prohibited donors free to express their political preferences by other means. As McHugh J observed in Levy v Victoria (with respect to a prohibition upon a particular form of protest)286: "It is beside the point that [the protesters'] arguments against the alleged cruelty of duck shooting could have been put by other means during the periods when the Regulations operated. What the Regulations did was to prevent them from putting their message in a way that they believed would have the greatest impact on public opinion". And to the same effect, Brennan CJ concluded that287: "The [implied freedom] denies legislative or executive power to restrict the freedom of communication about the government or politics of the Commonwealth, whatever be the form of communication, unless the restriction is imposed to fulfil a legitimate purpose and the restriction is appropriate and adapted to the fulfilment of that purpose. In principle, therefore, non-verbal conduct which is capable of communicating an idea about the government or politics of the Commonwealth and which is intended to do so may be immune from legislative or executive restriction so far as that immunity is needed to preserve the system of representative and responsible government that the Constitution prescribes." 285 424 US 1 at 21-22 (1976) per curiam. 286 (1997) 189 CLR 579 at 625; [1997] HCA 31. 287 (1997) 189 CLR 579 at 594-595 (emphasis added, footnote omitted). Nettle Other members of the Court in Levy agreed that non-verbal conduct that is a means of communicating a message is within the scope of the freedom288. In the result, to deny one section of donors the ability to make political donations while leaving others free to make them is both a significant restriction of the freedom of the prohibited donors to communicate their ideas about politics or government through the non-verbal means of making political donations and, logically, also a significant relative enhancement of the ability of non-prohibited donors to have their ideas about politics and government prevail. It follows that, although the implied freedom of political communication is properly conceived of as a safeguard of systemic integrity as opposed to protecting individual liberties, the prohibited donor provisions necessarily lessen the free flow of information and ideas within the system and thereby burden the freedom of political communication. New South Wales countered that, even if that were so, the burden was bound to be small because of the relatively small number of prohibited political donors and thus the relatively small effect on the resources available to recipients for political purposes289. Superficially, that also presents as an attractive submission. Although there is no evidence about the number of prohibited donors disposed to make political donations, it is fair to assume that they represent only a small proportion of the electorate; and the extent of the burden cast on the freedom of political communication is a plainly relevant consideration in the determination of whether the prohibition and the means by which it is implemented satisfy the second limb of the Lange test290. It would be wrong to conclude, however, that, just because the prohibited donor provisions affect only a small section of the electorate, they can have only a small effect on the implied freedom. As Deane and Toohey JJ observed in ACTV291: "[T]he fact that the number of groups or individuals who might wish to express their political views in a particular way is limited, does not suffice 288 (1997) 189 CLR 579 at 613 per Toohey and Gummow JJ, 625 per McHugh J, 641 289 Cf Unions NSW (2013) 252 CLR 530 at 555 [40]. 290 Tajjour (2014) 88 ALJR 860 at 890 [126]-[127] per Crennan, Kiefel and Bell JJ; 313 ALR 221 at 256. 291 (1992) 177 CLR 106 at 175. Nettle to justify a law suppressing the freedom of communication in that particular way." Given that the prohibition discriminates against a class of political donors who, if afforded the same freedom to make political donations as other sections of the electorate, would ex hypothesi have a significant effect on ideas about politics and government, the prohibition has the capacity to have a significant effect on the free flow of political communication between the governed, the candidates and the representatives. More generally, any measure like the prohibited donor provisions is likely to suppress a minority's expression of ideas about politics and government, thus distorting the level playing field which is considered to be the essence of the political system, and, in that sense, have a significant effect on the free flow of information and ideas within the system. Consequently, as Gageler J concluded in Tajjour292: "To confine constitutional protection to a law which operates to place some 'general' constraint on communication on governmental or political matter – in the apparently volumetric sense in which New South Wales and some of the interveners would employ that term – would be inimical to the nature of the freedom to be protected, which exists to ensure that even the smallest minority is not, without justification, denied by law an ability to be heard in the political process. That minority, as the cases illustrate, might be as small as those who seek to engage in non-verbal protests in a hunting area during restricted hours in a hunting season, or those who seek to express political views to named individuals by means of offensive communications sent through the post." It is to be noted that, although the parties were not in dispute that the prohibited donor provisions imposed some burden on the implied freedom of political communication, they appeared to accept that the only relevant burden was a reduction in the amount of money available to members, parties and candidates to spend on election campaigning. The plaintiffs pleaded that the impugned provisions burden the implied freedom by "effect[ing] a restriction upon the funds available to political parties and candidates to meet the costs of political communication by restricting the source of those funds". New South Wales admitted that the provisions restrict the funds available to political parties. The plaintiffs also pleaded in the alternative that the impugned provisions inhibit or prohibit affected donors from associating with elected members "by means of making political donations", and those allegations were denied. But counsel for 292 (2014) 88 ALJR 860 at 892-893 [145]; 313 ALR 221 at 259-260 (footnotes omitted). Nettle the plaintiffs stated in argument that there was "no real disagreement" as to the nature of the burden. Possibly, the parties' lack of "real disagreement" was based on observations in the joint judgment in Unions NSW that the implied freedom does not seek to protect a personal right but rather political communication more generally, and, therefore, that293: "the question is not whether a person is limited in the way that he or she can express himself or herself, although identification of that limiting effect may be necessary to an understanding of the operation of a statutory provision upon the freedom more generally. The central question is: how does the impugned law affect the freedom? The plaintiffs submit that the making of a political donation is a form of political communication which the legislation denies. If the submission is to be understood as referring to a restriction effected by the EFED Act upon the right of particular persons and entities to make communications, it may blur the distinction referred to above concerning the freedom. In any event, the question whether s 96D limits the freedom is simply resolved. That section effects a restriction upon the funds available to political parties and candidates to meet the costs of political communication by restricting the source of those funds." The parties might have considered that the kind of effect on the implied freedom so identified in Unions NSW was the only relevant burden that the impugned provisions impose294. Whether or not, however, that was the reason for their lack of "real disagreement", it should be understood that the reasoning in Unions NSW did not foreclose the conclusion that the nature and extent of the burden imposed by the political donation provisions in this case is different from, and greater than, the reduction in the total funds available for election spending. The central question posed by the first limb of the Lange test is "what the impugned law does, not how 293 (2013) 252 CLR 530 at 554 [36]-[38] per French CJ, Hayne, Crennan, Kiefel and 294 The plaintiffs also submitted that the impugned provisions "also [take] away from the system a means by which electors and others may express support and seek to communicate with political parties or candidates", being facilitating access to candidates and incumbents as a consequence of making (or offering) a large donation. Nettle an individual might want to construct a particular communication"295. That is what informed the emphasis given in the joint judgment in Lange to identifying the burden of an impugned provision on the constitutionally protected system of government, communicate296. But as was further noted in Unions NSW, "identification of that limiting effect [upon an individual] may be necessary to an understanding of the operation of a statutory provision upon the freedom more generally"297. than on any particular individual's abilities rather Appropriateness and adaptedness As was earlier observed, one important aspect of the justification for the donation caps imposed by Div 2A is the countervailing benefit in terms of the implied freedom that results from the caps. To reiterate, the imposition of relatively low donation caps is conducive to "levelling the playing field" by reducing the distortion of political communication which results from purchased political influence, encouraging candidates and parties to seek support from more individuals and broader segments of society and encouraging individuals with common interests to build political power groups. Each of those effects is likely to enhance the system protected by the implied freedom by tending to increase the amount of communication between electors and parties and between electors themselves. In contrast, the prohibited donor provisions tend to undermine those effects by denying particular individuals the ability to donate. To do so is likely to diminish their incentive to build political power by becoming a donor bloc, reduce the incentive of candidates and parties to identify them as a political interest group which needs to be considered, and so render affected persons less likely to seek to communicate between themselves and with candidates and parties. Authority establishes that burdens which discriminate between, or have an unequal effect upon, segments of the community, political parties and candidates or certain political viewpoints require strong justification. In ACTV, the disparate effect of the scheme as between incumbents and challengers and as between major and minor parties formed a key part in the reasoning of Mason CJ298 and 295 APLA (2005) 224 CLR 322 at 451 [381] per Hayne J, quoted with approval in Monis (2013) 249 CLR 92 at 129 [62] per French CJ and Unions NSW (2013) 252 CLR 530 at 572 [110] per Keane J. 296 (1997) 189 CLR 520 at 559-560. 297 (2013) 252 CLR 530 at 554 [36] per French CJ, Hayne, Crennan, Kiefel and 298 (1992) 177 CLR 106 at 146. Nettle Deane and Toohey JJ299. That reasoning assumed significance in Keane J's judgment in Unions NSW300 and was cited with approval by Gageler J in Tajjour301. In ACTV, Mason CJ distinguished between restrictions on communication which targeted ideas or information and restrictions on an activity or mode of communication by which ideas are transmitted. He observed that302: "Generally speaking, it will be extremely difficult to justify restrictions imposed on free communication which operate by reference to the character of the ideas or information. ... On the other hand, restrictions imposed on an activity or mode of communication by which ideas or information are transmitted are more susceptible of justification." To similar effect, Deane and Toohey JJ distinguished between direct and incidental burdens on political communication303, thus: "[A] law whose character is that of a law with respect to the prohibition or restriction of [political communications] will be much more difficult to justify as consistent with the [implied freedom] than will a law whose character is that of a law with respect to some other subject and whose effect on such communications is unrelated to their nature as political communications." McHugh J also reasoned that regulations which restrict the freedom of electoral communications require a "compelling justification", unless they are merely "[r]easonable time, place, and manner regulations, which do not discriminate among speakers or ideas"304 (emphasis added). 299 (1992) 177 CLR 106 at 172, 175. 300 (2013) 252 CLR 530 at 580-581 [144]-[148], 585-586 [163]-[168]. 301 (2014) 88 ALJR 860 at 894 [152]; 313 ALR 221 at 262, citing Unions NSW (2013) 252 CLR 530 at 581 [147]-[148] per Keane J. 302 (1992) 177 CLR 106 at 143. 303 (1992) 177 CLR 106 at 169. 304 (1992) 177 CLR 106 at 235, quoting Buckley 424 US 1 at 18 (1976). Nettle The distinction between direct and indirect burdens was later accepted in Hogan v Hinch305 albeit that, in subsequent cases, there has been an apparent lack of unanimity as to what follows from the distinction, and in particular as to whether different kinds of burden attract different levels of scrutiny. Hitherto, the prevailing view appears to have been that the Lange test may not require different standards of scrutiny but that laws which directly burden the implied freedom of political communication are more difficult to justify, and, therefore, fail the Lange test more easily, than laws that impose incidental burdens. Leastways, that seems to have been the gist of the reasoning of French CJ and Crennan, Kiefel and Bell JJ in Monis306 and again in Tajjour307. In contrast, in Tajjour, Gageler J concluded that "the sufficiency of the justification will be calibrated to the nature and intensity of the burden" imposed by the measure; with the result that a rational relationship between the means and ends may suffice to justify slight burdens, whereas more significant burdens will require "close scrutiny, congruent with a search for 'compelling justification'" in terms of a "pressing and substantial" public interest308. The weight given to putative less restrictive means will vary according to the nature and intensity of the burden309. In recent decisions there have also been some differences as to whether the second limb of the Lange test necessitates the consideration of "strict proportionality". In Tajjour, Crennan, Kiefel and Bell JJ observed that strict proportionality, as applied in other jurisdictions that employ proportionality analysis, had been described as involving "the ultimate question whether the severity of the effect on a right outweighs the importance of the legislative objective"310 and that, if strict proportionality were to be accepted, it would be 305 (2011) 243 CLR 506 at 555-556 [95] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; [2011] HCA 4. 306 (2013) 249 CLR 92 at 130 [64] per French CJ, 212 [342] per Crennan, Kiefel and Bell JJ citing Wotton v Queensland (2012) 246 CLR 1 at 16 [30]; [2012] HCA 2. 307 (2014) 88 ALJR 860 at 877 [37] per French CJ, 891 [132] per Crennan, Kiefel and Bell JJ; 313 ALR 221 at 238, 257. 308 (2014) 88 ALJR 860 at 894 [151]; 313 ALR 221 at 261, quoting Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 200 [40] per Gleeson CJ; [2004] HCA 41. 309 (2014) 88 ALJR 860 at 894 [152]; 313 ALR 221 at 262. 310 (2014) 88 ALJR 860 at 890 [128]; 313 ALR 221 at 256, citing Bank Mellat v HM Treasury (No 2) [2014] AC 700 at 791 [74] per Lord Reed JSC; R (Nicklinson) v Ministry of Justice [2015] AC 657 at 808-809 [168]; Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 340. Nettle applied "only when the burden effected by the legislation is substantial" rather than incidental311. As against that, the spectrum of scrutiny proposed by Gageler J suggested a different kind of balancing such that, as the nature and extent of the burden imposed by the law increases, the corresponding burden of justification also increases, and therefore, at the upper end, requires a "public interest which is itself so pressing and substantial as properly to be labelled compelling"312. For present purposes, it is unnecessary to attempt to resolve such differences. It is enough to observe that each approach involves questions of judgment. Each implies that a direct or severe burden on the implied freedom requires a strong justification in order to satisfy the second limb of the Lange test. And each is consistent with the view that a burden which discriminates between segments of the electorate, political parties, candidates or political viewpoints requires no less as strong a justification to satisfy the second limb of the test. Donation caps valid but prohibited donor provisions invalid For the reasons already stated, the burden imposed by the donation caps313 and the restrictions on indirect contributions314 is not great and those provisions are rationally connected to the object of eliminating or reducing corruption and undue influence in the manner already described. Hence, it should be concluded that the donation caps are consistent with the second limb of the Lange test. The same applies to the restriction on indirect contributions. In contrast, for the reasons already stated and those which follow, it should be concluded that, because of the way in which the prohibited donor provisions discriminate against a particular segment of the community, and thus against the expression of their particular political views, the prohibited donor provisions are not sufficiently justified to satisfy the second limb of the Lange test. In Unions NSW315, the plurality considered that resolution of the question of whether a provision is appropriate and adapted to the achievement of a 311 (2014) 88 ALJR 860 at 891 [133]; 313 ALR 221 at 257. 312 (2014) 88 ALJR 860 at 894 [151]; 313 ALR 221 at 261. 313 EFED Act, Div 2A. 314 EFED Act, s 96E. 315 (2013) 252 CLR 530 at 556 [44] per French CJ, Hayne, Crennan, Kiefel and Bell JJ, citing Monis (2013) 249 CLR 92 at 214-215 [347]-[348] per Crennan, (Footnote continues on next page) Nettle legitimate end in a manner which is compatible with the maintenance of the system of representative and responsible government established by the Constitution is likely to be aided by consideration of whether there are any obvious and compelling alternatives of at least equal efficacy which would be productive of a lesser burden on the freedom of political communication than the impugned provision. In this case, the plaintiffs submitted that there were a number of obvious and compelling alternatives. The first was a prohibition limited to donations that constituted quid pro quo corruption. It was also submitted that the mandatory disclosure of all political donations according to the regime enacted in Div 2 of Pt 6 of the EFED Act, or a more stringent version of it, would be equally effective in reducing actual and apparent corruption and undue influence. The idea that a prohibition limited to corrupt donations could be as effective at stemming corruption and less restrictive of the freedom of political communication is not compelling; because of the ease with which such a limited prohibition could be circumvented. Furthermore, as New South Wales submitted, it would not address the legitimate end of reducing undue influence not amounting to quid pro quo corruption. The idea of mandatory disclosure of all donations is more compelling; for, as counsel for the plaintiffs posed the question rhetorically, why would not mandatory disclosure of political donations from property developers do just as much to ameliorate corruption and undue influence as denying property developers the ability to make any form of political donation at all? How likely is it that a politician would risk making an improper decision in consideration of political donations if the source and amount of political donations were readily available to the press and public? But, as against that, as New South Wales responded, mandatory disclosure might not be as effective as the prohibited donor provisions because of the time which would elapse between the making of a political donation and when it was required to be disclosed316; even though it is not immediately apparent why that would be so if a political donation were required to be disclosed at the time of payment or shortly afterwards, or why the disclosure regime could not be amended in those terms. Assuming, however, that the disclosure regime is not an obvious and compelling alternative to the prohibited donor provisions and that there are no other obvious and compelling alternatives, that is not the end of the matter. Kiefel and Bell JJ. Cf Unions NSW (2013) 252 CLR 530 at 576 [129] per Keane J; Tajjour (2014) 88 ALJR 860 at 876 [36] per French CJ; 313 ALR 221 at 237-238. 316 See EFED Act, s 89. Nettle Nothing which was said in Unions NSW implies that such a lack of obvious and compelling alternatives would necessarily be dispositive of the constitutional validity of the prohibition. It is still necessary to decide whether, despite the lack of an obvious and compelling alternative, the prohibition is productive of sufficient benefit in terms of eliminating or reducing property developer related corruption to justify the discriminatory burden on the implied freedom which the prohibition entails. The plaintiffs contended that, given the availability of donation caps of the kind imposed under Div 2A, there was no evident or sufficient justification for taking the further step of subjecting prohibited donors to a discriminatory total prohibition against the making of political donations. Alternatively, it was contended that the effect of the prohibition on corruption and undue influence was bound to be so limited that it could not justify the significant discriminatory restriction on the implied freedom of which it is productive. Counsel for the plaintiffs argued that the prohibited donor provisions were not likely to deter those who are disposed to the giving and receiving of "paper bags". If corruption be their aim, they are more likely to find other covert or clandestine means of perpetuating their corruption. Perhaps it might be easier to mask corrupt payments as political donations than as other forms of legitimate benefaction. But there is no evidence or other indication of the likelihood of that being so. Those submissions cannot be accepted in the terms in which they were stated. To start with, as New South Wales responded, there are no donation caps applicable at the local government level and it may be presumed that is so because the Parliament took the view that there were insufficient resources to provide for State-subsidised local government elections. If so, the Parliament may justifiably have considered that it faced a choice between either tolerating such corruption and undue influence as unrestricted donations from property developers and other prohibited donors might involve or imposing a total prohibition against such donations. Secondly, whether or not the prohibited donor provisions add anything in fact to the anti-corruptive effect of the donation caps at State level or otherwise have a significant effect on corruption or undue influence at either State or local level is essentially irrelevant to whether they meet the requirements of the second limb of the Lange test. As Hayne J observed in Tajjour, once it can be seen that an impugned law is rationally connected to a legitimate end, it is not for the Court to attempt an assessment of how likely it is to achieve that objective: "[t]he relevant inquiry is about how the law relates to the identified end or object and about the nature and extent of the burden the law imposes on political communication"317. 317 (2014) 88 ALJR 860 at 884 [82]; 313 ALR 221 at 248. Nettle That said, however, it remains that the discriminatory nature of the prohibition is objectionable. Although there might be a solid basis for inferring that property developers are prone to engage in corruption and undue influence318, it would be unrealistic to suppose that there is not also a broad spread of political donors apart from property developers and other prohibited political donors who make political donations with a view to obtaining political favours, exerting political influence or otherwise advancing their self-interest. Hence, by focussing on property developers, the prohibited donor provisions arbitrarily discriminate against property developers in a manner which deprives them as a section of the electorate of an ability enjoyed by other sections of the electorate of making political donations and so participating in the political system. It would be different if the only political donations that property developers were ever disposed to make were calculated to effect corruption. It might also be different if the only political donations that property developers were ever disposed to make were calculated to achieve some degree of undue influence. But, even then, who is to say what is or is not "undue" as opposed to being inconsistent with the interests of others? Although there is a clear conceptual difference between a political donor corruptly purchasing political favours and a political donor supporting a political candidate because of the candidate's espoused political convictions, views may reasonably differ about where one process ends and the other begins. Obviously, the larger the amount of a donation, the greater the potential for corruption and plainly unacceptable undue influence in the sense earlier described. Hence the legitimacy of the donation caps previously explained. But the difficulty with the prohibited donor provisions is the assumption, upon which they appear to be predicated, that any prohibited donation will lead to corruption or plainly undue influence. Common sense and the ICAC reports justify the assumption that some donations from property developers would do so. But there is no direct evidence or sufficient basis for inference that all political donations, of any amount, from property developers, let alone all prohibited political donations, were or would be of a corrupt or unduly influential character. In the result, it should be concluded that the degree of burden which the prohibited donor provisions impose on the implied freedom of political communication is not reasonably appropriate and adapted, or proportionate, to serving a legitimate end in a manner that is compatible with the maintenance of the system of representative and responsible government established by the Constitution. 318 See above at [233]. Nettle It remains to mention two things. First, although the considerations which apply to all prohibited donors appear to be similar, the prohibition of political donations by donors other than property developers may involve different considerations and, therefore, what is said in these reasons is not determinative of their position. Secondly, a general prohibition on political donations, as opposed to one which discriminates against a class of political donors, would also be likely to involve different considerations. The Court has previously expressed itself unlikely to gainsay the Parliament's determination that it would be desirable that political donations be outlawed in order to prevent political corruption and otherwise preserve the integrity of the political system319. A general prohibition on political donations might have a large effect on the flow of funds to political parties and in that sense on political communication. But it would preserve the equality of political power which is at the heart of the Australian constitutional conception of political sovereignty. In contrast, an impugned law which restricts the ability of some sections of the electorate to engage in a significant aspect of the political process while leaving others free to do as they choose mandates an inequality of political power which strikes at the heart of the system. Conclusion Division 4A of Pt 6 of the EFED Act is invalid to the extent that it applies to property developers. The plaintiffs' challenge otherwise fails. The questions reserved in the special case should be answered as follows: Sections 96GAA(a) and 96GB(1)-(2) are invalid. It is unnecessary to answer the question whether the other provisions of Div 4A of Pt 6 of the EFED Act are invalid. No order as to costs. 319 ACTV (1992) 177 CLR 106 at 157-158 per Brennan J, 175 per Deane and Introduction The plaintiffs contend that certain provisions in Pt 6 of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) ("the Act") are invalid freedom of political because communication. impermissibly burden implied they the Four questions were stated for the opinion of the Full Court. The first three questions asked whether particular provisions in Pt 6 of the Act (Div 4A, Div 2A and s 96E) were invalid (in whole or in part and, if in part, to what extent) in their application to the plaintiffs because each impermissibly burdens the implied freedom of communication on governmental and political matters contrary to the Commonwealth Constitution. Question 4 was who should pay the costs of the special case. For the reasons that follow, I agree that the four questions should be answered in the manner proposed in the joint reasons. Structure These reasons will consider the facts, the Act (including the impugned provisions), the issues, the implied freedom of political communication, whether a law infringes that implied freedom, the methods of analysis and structure of the reasoning and then each of the four stated questions. Facts The first plaintiff, Mr McCloy, is a director of the second plaintiff ("McCloy Admin") and the third plaintiff ("North Lakes"). Mr McCloy is also a close associate of North Lakes within the meaning of s 96GB(3) of the Act and, by reason of that last relationship, a property developer within the meaning of s 96GB(1)(b) of the Act. Mr McCloy from about October 2010 made political donations (within the meaning of the Act) exceeding the cap imposed in Div 2A of Pt 6 of the Act to and for the benefit of candidates in connection with the March 2011 New South Wales State election. Mr McCloy intends, to the extent permitted by law, to make further political donations (within the meaning of the Act) to political parties in excess of the cap. McCloy Admin made an indirect campaign contribution (within the meaning of the Act) in full or part payment of the remuneration of a member of the staff of the election campaign of a candidate for the seat of Newcastle in the Legislative Assembly in the March 2011 New South Wales State election. Each of McCloy Admin and North Lakes intends, to the extent permitted by law, to make political donations (within the meaning of the Act) to political parties in excess of the cap. The Act The Act, as its long title explains, makes "provision for the public funding of Parliamentary election campaigns and to require the disclosure of certain political donations and electoral expenditure for Parliamentary or local government election campaigns; and for other purposes". The Act seeks to regulate electoral funding and expenditure in a transparent manner and to secure and promote the actual and perceived integrity of the Parliament of New South Wales, the government of New South Wales and local government bodies in New South Wales320. The regulatory regime is multi-faceted. Part 5 of the Act makes provision for some public funding of State election campaigns through the Election Campaigns Fund established under s 56. Part 6, entitled "[p]olitical donations and electoral expenditure", applies in relation to State elections and elected members of the Parliament of New South Wales, and local government elections and elected members of councils321. Relevantly, there are restrictions on political donations by type (Div 4), from certain kinds of businesses and persons associated with them (Div 4A) and by amount in relation to State elections (Div 2A). A limitation is imposed on electoral communication expenditure for State election campaigns (Div 2B). Political donations and electoral expenditure are required to be disclosed (Div 2). Aspects of Pt 6 require closer examination. Restriction on political donations Part 6 regulates "the making of political donations to parties, candidates, elected members and others in New South Wales by limiting the amount or value of what may be given to them by any one person, organisation or other entity"322. Division 2A deals with caps on political donations for State elections. It does not 320 Unions NSW v New South Wales (2013) 252 CLR 530 at 545 [8]; [2013] HCA 58. 322 Unions NSW (2013) 252 CLR 530 at 545 [7]. apply to donations in relation to local government elections and elected members of councils323. The phrase "political donation" is defined in s 85 of the Act. It comprises gifts made (directly or indirectly) to or for the benefit of a party, elected member, candidate or group of candidates324. Certain things are taken to be gifts: an amount paid as a contribution or an entry fee to a fund-raising venture or function325; a subscription paid to a party for affiliation with the party326; certain dispositions of property to the New South Wales branch of a party, or to a party from an associated party327; and uncharged interest on a loan to an entity or other person328. Section 85(4)(a) provides that a gift to an individual in a private capacity for his or her personal use that the individual has not used, and does not intend to use, solely or substantially for a purpose related to an election or to the individual's duties as an elected member is not a political donation. However, if any part of a gift referred to in s 85(4)(a) is subsequently used to incur "electoral expenditure", that part of the gift becomes a political donation329. The phrases "electoral expenditure" and "electoral communication expenditure" are defined in s 87. "Electoral expenditure" is "expenditure for or in connection with promoting or opposing, directly or indirectly, a party or the election of a candidate or candidates or for the purpose of influencing, directly or indirectly, the voting at an election". "Electoral communication expenditure" is a subset of electoral expenditure, and includes, for example, expenditure on radio, television and billboard advertisements. Section 95A(1), in Div 2A of Pt 6, identifies a cap on the amount of political donations to or for the benefit of a registered party ($5,000), an unregistered party ($2,000), an elected member ($2,000), a group ($5,000), a candidate ($2,000) and a third-party campaigner ($2,000). The caps are imposed 323 s 95AA(1). 327 s 85(3A). 328 s 85(3B). per person per financial year330 and there are aggregation provisions to ensure that a person cannot circumvent the cap by making multiple donations in a financial year331 or by making multiple donations to elected members, groups or candidates of the same party332. Section 95B contains a general prohibition that it is unlawful for a person to accept a political donation to a party, elected member, group, candidate or third-party campaigner if the donation exceeds the applicable cap on political donations333. There are exceptions, qualifications and defences to this general prohibition334. Division 4 of Pt 6 imposes a series of prohibitions on making or accepting certain political donations. The donations are proscribed including by reference to their source335 and their nature336. Section 96E provides that it is unlawful to make certain indirect campaign contributions, including: the provision of office accommodation, vehicles, computers or other equipment for no or inadequate consideration for use solely or substantially for election campaign purposes; and payment or waiver of payment of electoral expenditure for advertising or other purposes incurred or to be incurred by a party, elected member, group or candidate337. Division 4A of Pt 6 concerns donors defined as "prohibited donors". That phrase is defined in s 96GAA to mean: a property developer, or a tobacco industry business entity, or 330 s 95A(2). 331 s 95A(2). 332 s 95A(3), (6). 333 s 95B(1). 334 See, eg, s 95B(2)-(5). 335 s 96D(1). 336 s 96E. 337 Certain things that are not indirect campaign contributions are specified in s 96E(3). a liquor or gambling industry business entity, and includes any industry representative organisation if the majority of its members are such prohibited donors." It is unlawful for a prohibited donor to make a political donation338. It is unlawful for a person to make a political donation on behalf of a prohibited donor339. It is unlawful for a person to accept a political donation that was made (wholly or partly) by a prohibited donor or by a person on behalf of a prohibited donor340. It is unlawful for a prohibited donor to solicit another person to make a political donation341 and, finally, it is unlawful for a person to solicit another person on behalf of a prohibited donor to make a political donation342. Section 96GB defines "property developer": "(1) Each of the following persons is a property developer for the purposes of this Division: a corporation engaged in a business that regularly involves the making of relevant planning applications by or on behalf of the corporation in connection with the residential or commercial development of land, with the ultimate purpose of the sale or lease of the land for profit, a person who is a close associate of a corporation referred to in paragraph (a). In this section: close associate of a corporation means each of the following: a director or officer of the corporation or the spouse of such a director or officer, 338 s 96GA(1). 339 s 96GA(2). 340 s 96GA(3). 341 s 96GA(4). 342 s 96GA(5). a related body corporate of the corporation, a person whose voting power in the corporation or a related body corporate of the corporation is greater than 20% or the spouse of such a person, if the corporation or a related body corporate of the corporation is a stapled entity in relation to a stapled security – the other stapled entity in relation to that stapled security, if the corporation is a trustee, manager or responsible entity in relation to a trust – a person who holds more than 20% of the units in the trust (in the case of a unit trust) or is a beneficiary of the trust (in the case of a discretionary trust). Section 96GE(1) provides that a person may apply to the Electoral Commission343 ("the Commission") for a determination that the applicant or another person is not a prohibited donor for the purposes of Div 4A. The Commission is authorised to make such a determination if the Commission is satisfied that it is more likely than not that the person is not a prohibited donor344. The Commission is to make its determination solely on the basis of information provided by the applicant345. Disclosure requirements The disclosure and publication regime in Div 2 of Pt 6 applies not only to parties, elected members, groups of candidates and individual candidates, but also to "third-party campaigners"346 and "major political donors"347. That division requires parties, elected members, groups of candidates and individual candidates to disclose political donations received or made, as well as electoral 343 s 4(1) of the Act. Prior to 1 December 2014, the Election Funding Authority of New South Wales: Electoral and Lobbying Legislation Amendment (Electoral Commission) Act 2014 (NSW), Sched 2. 344 s 96GE(2). 345 s 96GE(2). 346 Defined in s 4(1). 347 Defined in s 84(1). expenditure incurred, during the "relevant disclosure period", being each 12- month period ending on 30 June348. Third-party campaigners are required to disclose electoral communication expenditure incurred in a capped expenditure period during the relevant disclosure period and political donations received during the relevant disclosure period for the purposes of incurring that expenditure349. Major political donors are required to disclose reportable political donations350 made during the relevant disclosure period351. The Commission is required to publish on its website the disclosures of reportable political donations and electoral expenditure352. Issues The plaintiffs contend that each of Div 2A of Pt 6 (Question 2), Div 4A of Pt 6 (Question 1) and s 96E in Pt 6 (Question 3) is invalid, in whole or in part, because it impermissibly burdens the implied freedom of communication on government or political matters contrary to the Constitution. Each stated question will be considered separately. Before undertaking that task, it is important to identify some premises that underpin what follows. Implied freedom of political communication Freedom of communication on matters of government and politics is an the system of representative and responsible indispensable element of government which the Constitution creates and requires353. The system of 349 s 88(1A). 350 Those of or exceeding $1,000: s 86(1). 353 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 138; [1992] HCA 45; Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 559; [1997] HCA 25; Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539 at 555-556 [44]; [2010] HCA 42. representative and responsible government is part of the "fabric on which the written words of the Constitution are superimposed"354. Communication concerning government or political matters can occur between electors and legislators and officers of the Executive, and between electors themselves355. It is not one-way traffic356, or even a two-way affair357. The implied freedom of political communication operates as a constraint on legislative and executive power358. The freedom is implied because ss 7, 24 and 128 of the Constitution (with Ch II, including ss 62 and 64) create a system of representative and responsible government359. As the electoral choice given by ss 7 and 24 of the Constitution must be a true choice with "an opportunity to gain an appreciation of the available alternatives"360, ss 7 and 24 (and the related sections of the Constitution) necessarily protect that freedom of communication which enables the people to exercise a free and informed choice as electors361. The implied freedom also operates as a constraint on the legislative power of the States362. 354 ACTV (1992) 177 CLR 106 at 135, citing The Commonwealth v Kreglinger & Fernau Ltd and Bardsley (1926) 37 CLR 393 at 413; [1926] HCA 8. 355 Lange (1997) 189 CLR 520 at 559-560; Aid/Watch Inc (2010) 241 CLR 539 at 356 ACTV (1992) 177 CLR 106 at 139. 357 Unions NSW (2013) 252 CLR 530 at 551 [30]. 358 Lange (1997) 189 CLR 520 at 560; Hogan v Hinch (2011) 243 CLR 506 at 554 [92]; [2011] HCA 4; Unions NSW (2013) 252 CLR 530 at 554 [36]; Tajjour v New South Wales (2014) 88 ALJR 860 at 880-881 [59], 892 [140]; 313 ALR 221 at 243, 258-259; [2014] HCA 35. 359 Lange (1997) 189 CLR 520 at 557-562. 360 Lange (1997) 189 CLR 520 at 560, quoting ACTV (1992) 177 CLR 106 at 187. 361 ACTV (1992) 177 CLR 106 at 186-187; Lange (1997) 189 CLR 520 at 557, 560; Unions NSW (2013) 252 CLR 530 at 570-571 [103], 572 [112]. 362 Unions NSW (2013) 252 CLR 530 at 550 [25]. The freedom of communication which the Constitution protects is not absolute363. The limit on legislative power is not absolute364. It is restricted to what is necessary for the effective operation of the system of representative and responsible government provided for by the Constitution365. Does a law infringe the implied freedom of political communication? When a law is alleged to infringe the freedom of political communication protected by the Constitution, two questions must be answered to determine the validity of the law366. does Question 1: the freedom of communication about government or political matters either in its terms, operation or effect? law effectively burden the Question 2: if the law effectively burdens that freedom, is the law reasonably appropriate and adapted367 to serve a legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government? If question 1 is answered "yes" and question 2 is answered "no", the law is Methods of analysis and structure of the reasoning No party or intervener challenged the decision in Lange v Australian Broadcasting Corporation369 or the reasoning which justifies the implication of 363 Lange (1997) 189 CLR 520 at 561. 364 Tajjour (2014) 88 ALJR 860 at 881 [59]; 313 ALR 221 at 243. 365 Tajjour (2014) 88 ALJR 860 at 891-892 [140]-[141]; 313 ALR 221 at 258-259. 366 Lange (1997) 189 CLR 520 at 561, 567 as modified by Coleman v Power (2004) 220 CLR 1 at 50 [93], 51 [95]-[96]; [2004] HCA 39; Tajjour (2014) 88 ALJR 860 at 874-875 [32], 888 [113]; 313 ALR 221 at 235-236, 254. 367 For the reasons given by Gleeson CJ in Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 196-197 [31]-[32]; [2004] HCA 41, the phrase "reasonably appropriate and adapted" is sufficient to describe the "substance" of the relevant idea. 368 Lange (1997) 189 CLR 520 at 567-568. 369 (1997) 189 CLR 520. the freedom of political communication. No party or intervener sought to have the Court discard or modify the substance of the two questions identified in Lange370 and restated in Coleman v Power371 as the questions that must be asked and answered in deciding whether a statutory provision is beyond power because it infringes the implied freedom. No party or intervener suggested that the Court should now state a new method of analysis of the two questions or a new mandatory structure for the reasoning that should be adopted in considering those questions. More recent decisions of this Court may be understood as attaching some significance to distinctions drawn between conclusions about the second question expressed in terms of the legislation being "reasonably appropriate and adapted to serve a legitimate end" and conclusions which are expressed according to a framework of proportionality372. It may be suggested that a statement that a law is "reasonably appropriate and adapted to serve a legitimate end" is a statement of conclusion rather than a statement of the reasoning which supports a conclusion. Taken in isolation from the context in which it appears, a statement of that kind may warrant that description. But the two questions call for judgment. However expressed, identifying the relevant objects or ends of an impugned law and considering whether those objects or ends can be classed as "legitimate" is, and must be, a question for judgment. And considering whether that impugned law advances those legitimate objects or ends in a manner compatible with the maintenance of the constitutionally prescribed system of representative and responsible government also is, and must be, a question for As Gleeson CJ said in Mulholland v Australian Electoral judgment. Commission373, "[w]hichever expression is used, what is important is the substance of the idea it is intended to convey". The two questions to be asked to determine if a law impermissibly burdens the implied freedom of communication on government or political matters contrary to the Constitution, and the tools of analysis used in answering those questions, are known and have been applied without apparent difficulty since the decision in Lange. Observing that the Court has divided in opinion about the outcome of particular cases shows no more than that the questions at 370 (1997) 189 CLR 520 at 561, 567. 371 (2004) 220 CLR 1 at 50 [93], 51 [95]-[96]. See also Tajjour (2014) 88 ALJR 860 at 874-875 [32], 888 [113]; 313 ALR 221 at 235-236, 254. 372 See, eg, Monis v The Queen (2013) 249 CLR 92 at 213-214 [344]-[347]; [2013] HCA 4. 373 (2004) 220 CLR 181 at 197 [32]. issue call for judgment, and that opinions may differ about the answers that should be given to them in a particular case. The questions stated for the opinion of the Court in this case are able to be answered by reference to the known questions and tools. This is not one of those cases where the Court is required to address a question which cannot be answered applying accepted methods of reasoning and analysis. The method or structure of reasoning to which the plurality refers does not yield in this case an answer any different from that reached by the accepted modes of reasoning. It does not avoid the judgments that the two questions require and, as always, it is necessary to explain how and why those judgments are formed. It is now appropriate to address Div 2A of Pt 6 (Question 2), then Div 4A of Pt 6 (Question 1) and finally s 96E in Pt 6 (Question 3). Donation caps in Div 2A of Pt 6 Division 2A of Pt 6 deals with caps on political donations for State elections374. It does not apply to donations in relation to local government elections and elected members of councils375. Question 1 – is the implied freedom burdened? Section 95B(1) (with s 95A) operates to impose a limit on the amount of political donations that may be accepted from any one person. New South Wales accepts that it imposes a restriction on the funds available to political parties and candidates and therefore imposes a burden on the implied freedom376. Accordingly, and to that extent, Div 2A effectively burdens the freedom of communication about government or political matters in its terms, operation or effect. The answer to the first of the two questions is "yes". The plaintiffs' contention that Div 2A imposes a restriction on the means by which members of the community may choose to engage with political affairs and thereby express their support for, and lend support to the expression by others of support for, political positions and objectives should be rejected. Division 2A does not directly restrict political communication. It does not directly touch upon the "indispensable element" of the system of representative and responsible government. Division 2A does not constrain any donor from voicing support for or otherwise publicly associating themselves with (or 374 See [289]-[290] above. 375 s 95AA(1). 376 See Unions NSW (2013) 252 CLR 530 at 554 [38]. disassociating themselves from) a party or candidate or the policies of the party or candidate. Division 2A does not constrain any donor from advocating or communicating as they wish, subject to the general expenditure caps377 (the validity of which is not in dispute). Division 2A operates to impose a cap upon the amount of political donations that may be made, as opposed to imposing any limit on "publicising the support which the making of donations might be taken to imply"378. Are the plaintiffs correct to contend that question 1 is also satisfied because Div 2A imposes a restriction on the ability of members of the community to "build and assert" political power? The answer is no. The implied freedom does not "create a personal right akin to that created by the First Amendment to communicate in any particular way one might choose"379. Sections 7 and 24 of the Constitution "do not confer personal rights on individuals"380. The implication which is drawn from those and related sections "preclude[s] the curtailment of the protected freedom by the exercise of legislative or executive power"381. Any constitutional implication must be securely based382 and must inhere in the Constitution383. There is no constitutionally protected right that permits an 377 Pt 6 Div 2B. 378 cf Unions NSW (2013) 252 CLR 530 at 572 [112]. 379 Unions NSW (2013) 252 CLR 530 at 571 [109]; also at 554 [36], 572 [110]-[111]. See also ACTV (1992) 177 CLR 106 at 150; Lange (1997) 189 CLR 520 at 560; Levy v Victoria (1997) 189 CLR 579 at 622, 625-626; [1997] HCA 31; Mulholland (2004) 220 CLR 181 at 223-224 [107]-[109], 246 [184]; APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 451 [381]; [2005] HCA 44; Monis (2013) 249 CLR 92 at 189 [266], 192 [273]. 380 Lange (1997) 189 CLR 520 at 560. 381 Lange (1997) 189 CLR 520 at 560. This statement was affirmed by Kiefel J in Rowe v Electoral Commissioner (2010) 243 CLR 1 at 127 [407]; [2010] HCA 46. That the implied freedom of political communication is a limitation on the exercise of legislative as well as executive power was recently confirmed in Tajjour (2014) 88 ALJR 860 at 880-881 [59], 891-892 [140], 901 [195]; 313 ALR 221 at 243, 382 ACTV (1992) 177 CLR 106 at 134. 383 ACTV (1992) 177 CLR 106 at 135. individual to "build and assert" political power384. That "right" does not inhere in the Constitution and there is no basis, let alone any secure basis, to imply such a right. Indeed, a right of an individual to "build and assert" political power would be, and is, contrary to the "great underlying principle" of the Constitution that the rights of individuals are secured by ensuring that each individual has an equal share in political power385. As Mason CJ said in Australian Capital Television Pty Ltd v The Commonwealth386: signifies government by "The very concept of representative government and representative their democracy representatives. Translated into constitutional terms, it denotes that the sovereign power which resides in the people is exercised on their behalf by their representatives." the people through The plaintiffs' reference to and reliance on the statement by Archibald Cox cited by Mason CJ in ACTV387 that people can "build and assert" power is misplaced. That statement was that "[o]nly by freedom of speech, of the press, and of association can people build and assert political power"388. It says nothing about an implied right. It may be put to one side. Question 2, first condition – legitimate object of the impugned law? The first condition that Div 2A must satisfy under the second question is that the object or end that it serves is compatible with the maintenance of the responsible constitutionally prescribed government389. That condition directs the inquiry to the purpose (the object or end) of the impugned law as disclosed by its text and context and, if relevant, its history. An aspect of the condition is that the operation of the impugned law must be rationally connected to the end that it serves390. representative system of and 384 cf ACTV (1992) 177 CLR 106 at 139. 385 ACTV (1992) 177 CLR 106 at 139-140. 386 (1992) 177 CLR 106 at 137. 387 (1992) 177 CLR 106 at 139. 388 Cox, The Court and the Constitution, (1987) at 212. 389 Lange (1997) 189 CLR 520 at 561-562; Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 61 [131]; [2013] HCA 3; Unions NSW (2013) 252 CLR 530 at 556 [46]. 390 Unions NSW (2013) 252 CLR 530 at 557 [50], 558-560 [55]-[60]. As has already been noted, ss 95A and 95B of the Act operate to impose a cap upon the amount of political donations that may be made by any one person by reference to the nature of the recipient. The provisions operate generally so as to limit the amount of political donations that may be accepted from any one person. What then is the object or end of the division, as disclosed by its text and context and, if relevant, its history? First, the caps remove the need for, and ability to make, large-scale political donations to a party or candidate. In so doing, they reduce the risk to the actual and perceived integrity of governmental processes. That is so because it is self-evident that the larger the donation provided or obtained, the greater the influence the donor is likely to have, as well as be seen to have, in relation to those processes. Second, by imposing a uniform limit on the amount that can be obtained from any one source, ss 95A and 95B reduce the extent to which those persons or entities with more money have, and are perceived to have, greater political influence than others who do not have such substantial funds. Third, Div 2A works to ensure that the rights of individuals are secured so that each individual has an equal share, or at least a more equal share than they would otherwise have, in political power391. Each of those objects or ends is legitimate and compatible with the maintenance of the constitutionally prescribed system of representative and responsible government. The plaintiffs contended that donation caps do not rationally serve the objects or ends of reducing the risk to the actual and perceived integrity of governmental processes. For the reasons just explained, that contention should be rejected392. Question 2, second condition – is the law reasonably appropriate and adapted to serve that legitimate end? The second condition that Div 2A must satisfy under the second question is that the law is reasonably appropriate and adapted to serve the identified legitimate objects or ends in a manner which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government. 391 See ACTV (1992) 177 CLR 106 at 139-140. 392 cf Unions NSW (2013) 252 CLR 530 at 558 [53], 578 [136]. The answer to this condition may involve and be assisted by a consideration of whether there are alternative, reasonably practicable and less restrictive means of achieving the same end which are obvious and compelling393. To qualify as a true alternative for this purpose, a hypothetical law must be as effective as the impugned law in achieving the identified objects and ends394. The requirement that the alternative means be "obvious and compelling" ensures that consideration of the alternatives remains a tool of analysis in applying the required criterion395 and that the courts do "not exceed their constitutional competence by substituting their own legislative judgments for those of parliaments"396. If no other hypothetical legislative measure that would be as effective can be identified it may be concluded that the impugned law goes no further than is reasonably necessary in achieving its object or end397. The plaintiffs' contention that Div 2A was not reasonably appropriate and adapted to serve the identified legitimate objects or ends relied upon four primary submissions. Each submission will be dealt with in turn. First, the plaintiffs submitted that Div 2A goes too far because it "fails to target only actual instances of corruption". That submission should be rejected. Division 2A legitimately targets both actual and perceived threats to the integrity of the system of representative and responsible government. The plaintiffs' submission postulates an alternative law confined to donations which are intended as corrupting, or, in other words, constitute bribery. Bribery, generally or in the context of political donations, is inherently difficult to detect and prove. The law proposed by the plaintiffs would address actual but not perceived threats to the integrity of the system. It would not achieve the identified legislative objectives. In this context, it is relevant to observe that donation caps are used in many other countries398. This suggests that caps have commonly been perceived 393 Monis (2013) 249 CLR 92 at 214 [347]; Unions NSW (2013) 252 CLR 530 at 556 394 Tajjour (2014) 88 ALJR 860 at 888 [114]; 313 ALR 221 at 254. 395 Tajjour (2014) 88 ALJR 860 at 876 [36], 889 [115]; 313 ALR 221 at 238, 254. 396 Tajjour (2014) 88 ALJR 860 at 876 [36]; 313 ALR 221 at 238. See also ACTV (1992) 177 CLR 106 at 159; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 325; [1994] HCA 44; Coleman v Power (2004) 220 CLR 1 at 52-53 [100]; Adelaide City Corporation (2013) 249 CLR 1 at 42-43 [65]; Monis (2013) 249 CLR 92 at 214 [347]. 397 Tajjour (2014) 88 ALJR 860 at 889 [115]-[116]; 313 ALR 221 at 254. 398 For example, a 2012 report referred to in the Special Case and extracted in part in the Special Case Book states that caps on donations by individuals were imposed (Footnote continues on next page) to be a useful means to the ends identified. The plaintiffs' alternative law is not an obvious and compelling alternative to Div 2A. Second, the plaintiffs submitted that requirements of public disclosure399 could achieve the identified ends. That submission should be rejected. Disclosure is one of the tools already employed in Pt 6 of the Act. That fact does not establish that it is a sufficient tool of itself to achieve the identified ends. Next, the plaintiffs submitted that the provisions do not achieve the stated legislative objective "comprehensively". That submission does not advance the matter. That the Parliament might have gone further does not establish that the law is not reasonably appropriate and adapted to serve the identified legitimate objects or ends. Questions of legislative judgment form no part of the analysis of the second condition400. Finally, the plaintiffs submitted that Div 2A imposes a burden on political communication "in a discriminatory way", first by "singling out those kinds of donors who might otherwise have wished to make donations in amounts above the applicable caps" (said to be a minority of overall donors), and second by having "an unequal practical effect upon the recipients of those donations" (because those who might have greater financial support from fewer sources are "effectively discriminated against"). That submission should be rejected. The law affects those whom the law affects. The donation cap provisions in ss 95A and 95B operate in a uniform manner as between all donors and all recipients, regardless of what parties, members, candidates or causes donors wish to support. Division 2A is addressed in part to the inequality of political influence in favour of wealthy entities or persons that results from large political donations. Parliament was entitled to take the view that that inequality should be addressed. The plaintiffs have not advanced any hypothetical provision that would be as effective as Div 2A in achieving the legislative purposes401. No other hypothetical legislative measure that would be as effective having been by Belgium, Bulgaria, Finland, France, Greece, Ireland, Latvia, Lithuania, Poland, Portugal, Romania, Slovenia and Spain: Transparency International, Money, Politics, Power: Corruption Risks in Europe, (2012) at 54. 399 See [297]-[298] above. 400 Tajjour (2014) 88 ALJR 860 at 876 [36]; 313 ALR 221 at 238. 401 cf Tajjour (2014) 88 ALJR 860 at 888-889 [114]; 313 ALR 221 at 254. identified, it may be concluded that the impugned law goes no further than is reasonably necessary in achieving its object or end. The next available tool of analysis to assess the second condition in question 2 is to examine the extent of the identified burden on the implied freedom402. This is not "an 'ad hoc balancing' process without criteria or rules for measuring the value of the means (the burden of the provision) against the value of the end (the legitimate purpose)"403 (emphasis added). Because there are no criteria or rules by which a "balance" can be struck between means and ends, the question is not one of balance or value judgment but rather whether the impugned law impermissibly impairs or tends to impair the maintenance of the constitutionally prescribed system of representative and responsible government having regard not only to the end but also to the means adopted in achieving that end404. That, of course, is a question of judgment. It is a question of judgment about the nature and extent of the effect of the impugned law on the maintenance of the constitutionally prescribed system of representative and responsible government. The extent and nature of the burden on the implied freedom of political communication imposed by the means adopted to achieve an identified end will be case specific and, therefore, any analysis must be case specific. This common law approach has at least two distinct advantages. It recognises that we are dealing not with protected individual rights405 but with negative restrictions on legislative powers and, secondly, it permits the development of different criteria for different constitutional contexts406. 402 Tajjour (2014) 88 ALJR 860 at 885 [91], 889 [116]; 313 ALR 221 at 250, 254-255. 403 Coleman v Power (2004) 220 CLR 1 at 46 [83], citing Stone, "The Limits of Constitutional Text and Structure: Standards of Review and the Freedom of Political Communication", (1999) 23 Melbourne University Law Review 668. 404 Coleman v Power (2004) 220 CLR 1 at 50 [92]. 405 cf Charter of Human Rights and Responsibilities Act 2006 (Vic); Human Rights Act 2004 (ACT). 406 See Dietrich v The Queen (1992) 177 CLR 292 at 319-321; [1992] HCA 57; ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 199 [141]; [2009] HCA 51. See also, eg, the incremental development of the law in negligence: Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 481; [1985] HCA 41; Hill v Van Erp (1997) 188 CLR 159 at 178-179; [1997] HCA 9; Cattanach v Melchior (2003) 215 CLR 1 at 24 [39]; [2003] HCA 38. Thus, when asking what is "the extent of the burden effected by [Div 2A] on the freedom"407 or to what extent does Div 2A affect or burden the freedom408, it is neither right nor relevant to ask whether the benefits which will follow from application of the impugned law are "larger than" or "outweigh" the diminution in political communication (a test of proportionality strictly so called and sometimes seen as part of proportionality analysis409). In this and other respects, there can be no automatic adoption or application of forms of legal analysis made in overseas constitutional contexts410. Not only do those analyses reflect the contexts in which they are made, they are analyses made for purposes different from the application of the accepted principles of Lange (as now understood) and the constitutional framework which underpins those principles in Australia. The danger of uncritical use of proportionality from other legal contexts was explained by Gleeson CJ in Roach v Electoral Commissioner411. After reviewing decisions of the European Court of Human Rights and the Supreme Court of Canada, Gleeson CJ acknowledged that aspects of reasoning from other contexts could be instructive but said412: "There is a danger that uncritical translation of the concept of proportionality from [other] legal context[s] ... to the Australian context could lead to the application in this country of a constitutionally inappropriate standard of judicial review of legislative action. Human rights instruments which declare in general terms a right, such as a right to vote, and then permit legislation in derogation of that right, but only in the case of a legitimate objective pursued by means that are no more than necessary to accomplish that objective, and give a court the power to 407 Tajjour (2014) 88 ALJR 860 at 889 [116]; 313 ALR 221 at 254. 408 Unions NSW (2013) 252 CLR 530 at 554 [36], 555 [40]. 409 cf Canada (Attorney General) v Bedford [2013] 3 SCR 1101, especially at 1150- 410 Coleman v Power (2004) 220 CLR 1 at 46-50 [83]-[91]; Mulholland (2004) 220 CLR 181 at 200 [39]; Tajjour (2014) 88 ALJR 860 at 890 [129]; 313 ALR 221 at their Limitations, (2012) at 240-241. Constitutional Rights and 411 (2007) 233 CLR 162; [2007] HCA 43. 412 (2007) 233 CLR 162 at 178-179 [17]. See also Zines, "Federalism and Administrative Discretion in Australia, with European Comparisons", (2000) 28 Federal Law Review 291 at 302. decide whether a certain derogation is permissible, confer a wider power of judicial review than that ordinarily applied under our Constitution. They create a relationship between legislative and judicial power significantly different from that reflected in the Australian Constitution". (emphasis added) So, what is the extent of the burden imposed on the implied freedom by Div 2A? That is, does the impugned law impermissibly impair or tend to impair the maintenance of the constitutionally prescribed system of representative and responsible government having regard not only to the end but also to the means adopted in achieving that end? In the case of Div 2A, the burden on the freedom is slight. First, Div 2A imposes a cap on the amount of political donations that may be made, thereby limiting the funds available to a party, candidate or member413. However, that limitation is addressed, at least in part, by a regime of public funding for parties and candidates in State elections in Pt 5 of the Act. Second, as already noted, Div 2A does not directly restrict political communication414. It does not directly touch upon the "indispensable element" of representative and responsible government. Third, making a donation communicates no content to electors. The act of donating is private. The donation may be made to support the political process generally (donors may donate to more than one party), to garner influence, to support the recipient's policies or for other reasons. If any particular message is to be communicated by the donor, it would need to be expressed by words separate from, and in addition to, the donation. The public disclosure requirements in the Act do not alter that conclusion. The fact that details of donations of or exceeding $1,000 are required to be disclosed within weeks of the end of June of each year, and made public as soon as practicable thereafter415, does not alter the character or effect of any donation, regardless of amount. Fourth, Div 2A arguably maintains and enhances the implied freedom. It seeks to prevent corruption and the appearance of corruption by restricting large contributions that could be given to secure a political quid pro quo416. Division 2A seeks to prevent patronage, undue influence or buying access (or the 413 ss 95A and 95B. 414 See [315] above. 415 ss 89, 91 and 95. 416 cf Citizens United v Federal Election Commission 558 US 310 at 345 (2010). appearance of them) by restricting large contributions. And Div 2A works to ensure that the rights of individuals are secured so that each individual has an equal share, or at least a more equal share than they would otherwise have, in political power. These effects may be seen not to distort and corrupt the political process, but to enhance it. For those reasons, Div 2A is reasonably appropriate and adapted to achieve its legitimate objects or ends. The answer to Question 2 stated for the opinion of the Full Court is "No". Division 4A as it relates to property developers Section 96GA, the central operative provision in Div 4A, prohibits a property developer from making political donations and prohibits a person from accepting political donations from a property developer. It applies to both State and local government. Question 1 – is the implied freedom burdened? Section 96GA restricts the funds available to political parties and candidates to meet the costs of political communication417. Accordingly, and to that extent, Div 4A effectively burdens freedom of communication about government or political matters in its terms, operation or effect. Indeed, the burden is admitted. The answer to question 1 is "yes". Are the plaintiffs correct to contend that question 1 is also satisfied because Div 4A imposes a restriction on the means by which members of the community may choose to engage with political affairs and thereby express support for, and lend support to the expression by others of support for, political positions and objectives? The answer is no. The implied freedom does not create a personal right418. No less importantly, as with Div 2A, s 96GA does not directly restrict political communication. It does not directly touch upon the "indispensable element" of representative and responsible government419. The fact of making a donation communicates no content to electors420. 417 See Unions NSW (2013) 252 CLR 530 at 554 [38]. 418 See [316]-[319] above. 419 See [301] above. 420 See [343] above. Question 2, first condition – legitimate object of the impugned law? Is the object or end that Div 4A serves compatible with the maintenance of the constitutionally prescribed system of representative and responsible government? As already seen, that condition directs the inquiry to the purpose of the impugned law as disclosed by its text and context and, if relevant, its history. Section 96GA prohibits the making and acceptance of political donations from "prohibited donors". A "property developer" is a prohibited donor421. A property developer, as defined, has certain characteristics. A corporation is a property developer if it is engaged in a business that regularly involves the making of planning applications of a specified nature by or on behalf of the corporation, where those applications are in connection with the residential or commercial development of land with the ultimate purpose of the sale or lease of the land for profit422. A person who is a close associate of such a corporation is also a property developer423. Section 96GA is part of a larger suite of measures in the Act, the purpose of which is to closely regulate political donations. The Act is evidently directed to seeking to address the potential for persons and entities to exercise – or to be perceived to exercise – undue, corrupt or hidden influence over the Parliament of New South Wales, the government of New South Wales and local government bodies within New South Wales, together with their members and processes424. Division 4A is specific – not general. It prohibits donations by particular types of businesses, and by associated persons – relevantly, property developers. The plaintiffs contended that there is no rational connection between the operation of Div 4A in its application to property developers and the achievement of the identified purpose. The plaintiffs also contended that setting out to prohibit a class of persons from participating in the political process, to the extent that Div 4A does so, does not serve a legitimate end. The plaintiffs asserted that there "is nothing different or special … about property developers as a class of persons, or their business", seeking "to encourage social or regulatory change in [their] own interest by participating in public political affairs". Those contentions should be rejected. 421 s 96GAA(a). 422 s 96GB(1)(a). 423 s 96GB(1)(b). The definition of close associate is extracted at [295] above. 424 See [280]-[298] above. The plaintiffs observed that all members of the community are subject to varying forms of regulation and submitted that there is nothing to distinguish property developers from "trade unions, banks, lawyers, accountants, financial advisers, real estate agents, media proprietors, supermarket chains, or pharmaceutical companies". But property developers are sufficiently distinct from these other classes of persons to merit specific regulation in light of the nature of their business activities and the nature of the public powers which they may seek to influence in their self-interest. The value of land is peculiarly tied to governmental decisions relating to such matters as zoning and whether or not particular development applications are approved. These governmental decisions often involve State and local government officers in an individualised, discretionary decision-making process. It is therefore unsurprising that there are concerns about the actual and perceived susceptibility of members of State and local government to influence from property developers. Accordingly, there is a rational connection between the class of persons (property developers) and the end sought to be achieved. The prohibition in s 96GA as it relates to property developers is rationally directed to serving a legitimate end that is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government425. Question 2, second condition – is the law reasonably appropriate and adapted to serve that legitimate end? Is Div 4A reasonably appropriate and adapted to serve the identified legitimate objects or ends in a manner which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government? There are a number of points to be made about the plaintiffs' submissions about whether Div 4A meets this standard. First, the plaintiffs have not identified any material distortion of the constitutional system resulting from the prohibition on property developers (as defined) making political donations to parties or candidates, and on parties or candidates accepting such donations, which might suggest that the law does not meet the standard. Second, so far as the plaintiffs rely upon the absence of any equivalent provision in other jurisdictions as indicating a legislative assumption that political donations by property developers are not "inherently corrupt", that assumption, even assuming it to be correct, says nothing about whether the means in Div 4A are reasonably appropriate and adapted to serve the object or 425 Unions NSW (2013) 252 CLR 530 at 556 [46], 557 [50]. end of that division. New South Wales has its own history426. The implied freedom does not mandate some lowest common denominator approach to regulation. Third, the plaintiffs' argument did not squarely address the existence and operation of s 96GE. Section 96GE(1) provides that a person, the applicant, may apply for a determination by the Commission that the applicant or another person is not a prohibited donor for the purposes of Div 4A. The Commission is authorised to make such a determination if the Commission is satisfied that it is more likely than not that the person is not a prohibited donor427. Not insignificantly, the Commission is to make its determination solely on the basis of information provided by the applicant428. Fourth, the key alternative hypothetical advanced by the plaintiffs (namely that Div 4A could have been confined to "the making of political donations with some form of intention corruptly to solicit favour") does not assist. Provisions of that kind already exist429 and those measures deal directly with the aftermath of corruption, not its prevention. They deal with actual corruption, not with the perception of corruption. Those provisions do not and cannot achieve the regulatory end to the same extent. They are not a true alternative for the purposes of the analysis430. Finally, the other suggestion seemingly proffered by the plaintiffs – that there be no regulation of property developers – is also not a true alternative and is not obvious and compelling. No other, less drastic, means of achieving the legitimate end have been identified. No other hypothetical legislative measure that would be as effective 426 See, eg, Independent Commission Against Corruption, Report on Investigation into North Coast Land Development, (1990); Independent Commission Against Corruption, Report on Investigation into the Conduct of Brian Zouch, (1993); Independent Commission Against Corruption, Report on Investigation into Randwick City Council, (1995); Independent Commission Against Corruption, Report into corrupt conduct associated with development proposals at Rockdale City Council, (2002); Independent Commission Against Corruption, Corruption risks in NSW development approval processes, (2007). See also, for example, Environmental Planning and Assessment Act 1979 (NSW), ss 89D and 89E. 427 s 96GE(2). 428 s 96GE(2). 429 See, eg, Crimes Act 1900 (NSW), ss 249B(1), 249B(2), 249D, 249F. 430 Monis (2013) 249 CLR 92 at 214 [347]; Tajjour (2014) 88 ALJR 860 at 888-889 [113]-[114]; 313 ALR 221 at 254. having been identified, it may be concluded that the impugned law goes no further than is reasonably necessary in achieving its object or end. It is then necessary to move to consider how, or to what extent, Div 4A affects or burdens the freedom. As stated above, this requires answering the following question – does the impugned law impermissibly impair or tend to the constitutionally prescribed system of impair representative and responsible government having regard not only to the end but also to the means adopted in achieving that end? This question should be addressed at two levels – the burden on political communication generally and the specific burden on property developers. the maintenance of Division 4A does not impose a significant burden on political communication. In particular, Div 4A does not directly restrict political communication. It does not constrain a prohibited donor from voicing support for or otherwise publicly associating themselves with (or disassociating themselves from) a party or candidate. It does not constrain them from advocating or communicating as they wish, subject to the general expenditure caps431 (which are not the subject of challenge). Division 4A "proscribes the making of donations" – it does not proscribe "publicising the support which the making of donations might be taken to imply"432. Indeed, Div 4A maintains and arguably enhances the implied freedom. It seeks to prevent corruption and the appearance of corruption by contributions from property developers that could be given to secure a political quid pro quo433. Division 4A seeks to prevent patronage, undue influence or buying access (or the appearance of one of them) by restricting contributions from property developers. And Div 4A works to ensure that the rights of individuals are secured by ensuring that each individual has an equal, or at least a more equal, share in political power. These may be seen not to distort and corrupt the political process, but to enhance it. The other aspect is to consider whether Div 4A imposes an undue burden on political communication by property developers. Or, to put it in other terms, is Div 4A discriminatory in its nature in relation to property developers such that it is invalid? The answer is no. As has been explained434, property developers are one of a limited group of entities and individuals defined as "prohibited 431 Pt 6 Div 2B. 432 See Unions NSW (2013) 252 CLR 530 at 572 [112]. 433 cf Citizens United 558 US 310 at 345 (2010). 434 See [293]-[295] above. donors". Under the Act, a property developer is a corporation that meets certain criteria (or a close associate of such a corporation). The extent of the burden peculiar to property developers (as defined in the Act) is that they are prevented from making any political donations in State elections and local government elections. The burden on the freedom of communication in relation to a property developer is slight. As we have seen, Div 4A does not constrain a property developer from voicing support for or otherwise publicly associating themselves with (or disassociating themselves from) a party or candidate. It does not constrain a property developer from advocating or communicating as they wish, subject to the general expenditure caps (which are not the subject of challenge). Why then the focus on property developers as distinct from other donors? For the reasons outlined at [354] above, property developers are sufficiently distinct from other classes of persons to merit specific regulation. And, of course, the ban can be lifted. A property developer can apply under s 96GE for a determination by the Commission that the applicant or another person is not a prohibited donor for the purposes of Div 4A. Finally, the burden on property developers may in fact enhance the implied freedom435. For those reasons, Div 4A is reasonably appropriate and adapted to achieve its legitimate purpose. I agree with the answer to Question 1 stated for the opinion of the Full Court proposed by the plurality. Section 96E – indirect benefits Section 96E of the Act makes it unlawful (subject to certain exceptions436) to make indirect campaign contributions of four kinds: first, the provision of office accommodation, vehicles, computers or other equipment for no consideration or inadequate consideration for use solely or substantially for election campaign purposes437; second, the full or part payment by a person other than the party, elected member, group or candidate of electoral expenditure for advertising or other purposes incurred or to be incurred by the party, elected member, group or candidate (or an agreement to make such a payment)438; third, the waiving of all or any part of payment to the person by the party, elected member, group or candidate of electoral expenditure for advertising incurred or 435 See [365] above. 436 s 96E(3). 437 s 96E(1)(a). 438 s 96E(1)(b). to be incurred by the party, elected member, group or candidate439; and fourth, any other goods or services of a kind prohibited by the regulations440 – of which there are presently none. Question 1 – is the implied freedom burdened? As is apparent from their collective description as "indirect campaign contributions" in s 96E(1), the making of each of the contributions identified in s 96E is not as readily detectable as a political donation. Indeed, in each instance listed in s 96E(1) there is a particular character required – each category involves the provision of something of value. The first category involves the provision of certain goods or services for no or inadequate consideration and for use solely or substantially for election campaign purposes. The second and third categories involve payment, or waiver of payment, for electoral expenditure for advertising for the party, member, group or candidate. A person wishing to benefit the party, member, group or candidate in the relevant way could instead do so in money, to equivalent effect. There is no dispute that these constraints operate as a burden on the implied freedom. The answer to question 1 is "yes". Question 2, first condition – legitimate object of the impugned law? Is the object or end that s 96E serves compatible with the maintenance of the constitutionally prescribed system of representative and responsible government? Section 96E prohibits indirect campaign contributions (subject to the exclusions), thus directing the provision of benefits into a monetary form. The provision aids the disclosure requirements in Div 2 of Pt 6 by enabling the ready expression of benefits in monetary terms. It also aids the efficacy of the caps, cutting off a possible route of circumvention where detection may be difficult441. It is an anti-avoidance provision. Viewed in the context of the suite of legislative measures in the Act which are aimed at the transparent regulation of political donations and expenditure, s 96E can be taken to further the purpose of minimising the risk to the actual and perceived integrity of the State Parliament and the institutions of local government. 439 s 96E(1)(c). 440 s 96E(1)(d). 441 See, eg, New South Wales, Legislative Council, Parliamentary Debates (Hansard), 18 June 2008 at 8579. The purposes of s 96E are legitimate within the context of the constitutionally prescribed system of representative and responsible government for the same reasons that the disclosure and donation cap provisions are legitimate. The plaintiffs' contention that because there is no textual link between s 96E and the disclosure provisions in Div 2 of Pt 6 and, further, that the donation caps in Div 2A of Pt 6 were only introduced later and so any congruence of operation between them and s 96E "is sheer happenstance" may be put to one side. It is not necessary for the provision to refer expressly to the other divisions to draw the conclusion that because the provision does aid the other divisions, aiding those divisions can be taken to be a purpose of the provision. The amendments are to be read together "as a combined statement of the will of the legislature"442. Question 2, second condition – is the law reasonably appropriate and adapted to serve that legitimate end? Is s 96E reasonably appropriate and adapted to serve the identified legitimate objects or ends in a manner which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government? The only alternative that the plaintiffs advanced is that there could be a requirement for either the donor or recipient of an indirect campaign contribution to provide "a reliable valuation". Such a requirement is impractical. It would impose a potentially significant transaction cost. It would raise issues as to what was sufficient evidence of a reliable valuation. And it would also raise potentially complex definitional issues. The proffered alternative is not an obvious and compelling means of achieving the same end as s 96E. The plaintiffs have not advanced any hypothetical provision that would be as effective as s 96E in achieving the legislative purposes443. It may therefore be concluded that s 96E goes no further than is reasonably necessary in achieving its purpose. The burden imposed on the freedom is incidental and slight. The provision operates as a partial limit on the ability of parties, members and candidates to raise funds, or equivalent benefits, which might be used by those 442 Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 at 463; [1995] HCA 44; Plaintiff S297/2013 v Minister for Immigration and Border Protection (2014) 88 ALJR 722 at 726-727 [25]; 309 ALR 209 at 214; [2014] HCA 24. 443 cf Tajjour (2014) 88 ALJR 860 at 888-889 [114]; 313 ALR 221 at 254. recipients to engage in political communication. Equivalent monetary benefits could otherwise be provided – subject to the limits which have been addressed above. The provision is only a restriction on the form in which donations may be made. Section 96E is reasonably appropriate and adapted to serve its legitimate object or end. It seeks to prevent corruption and the appearance of corruption by restricting indirect campaign contributions. This may be seen not to distort and corrupt the political process but to maintain and enhance the implied freedom. For those reasons, the answer to Question 3 stated for the opinion of the Full Court is "No". Question 4 The plaintiffs should pay the costs.

HIGH COURT OF AUSTRALIA PLAINTIFF M68/2015 PLAINTIFF AND MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ORS DEFENDANTS Plaintiff M68/2015 v Minister for Immigration and Border Protection [2016] HCA 1 3 February 2016 ORDER The questions stated by the parties in the amended special case dated 7 October 2015, as paraphrased, be answered as follows: Question (1) Does the plaintiff have standing to challenge whether the conduct of the Commonwealth or the Minister in securing, funding and participating in the plaintiff's detention at RPC 3 on Nauru was authorised by a valid law of the Commonwealth or was part of the executive power of the Commonwealth? Answer Yes. Question (2a) Was the conduct of the Commonwealth in signing the Memorandum of Understanding dated 3 August 2013 authorised by s 61 of the Constitution? Answer Yes. Question (2b) Was the conduct of the Commonwealth in giving effect to that arrangement authorised by a valid law of the Commonwealth? Answer Yes, it was authorised by s 198AHA of the Migration Act 1958 (Cth), which is a valid law of the Commonwealth. Question (3) Were the laws by which the plaintiff was detained on Nauru contrary to the Constitution of Nauru? Answer The question does not arise. Questions (4) and (5) Was the conduct of the Commonwealth in securing, funding and participating in the plaintiff's detention at RPC 3 on Nauru authorised by a valid law of the Commonwealth? Answer Yes, see the answer to questions (2a) and (2b). Question (6) If the plaintiff were returned to Nauru, would the Commonwealth or the Minister be authorised to continue to perform the Memorandum of Understanding dated 3 August 2013 and to secure, fund and participate in the plaintiff's detention on Nauru? Answer Unnecessary to answer. Question (7) If the plaintiff were returned to Nauru would her detention there be contrary to Art 5(1) of the Constitution of Nauru? Answer Unnecessary to answer. Questions (8) and (9) If the plaintiff were returned to Nauru, would the Commonwealth or the Minister be authorised to secure, fund and participate in the plaintiff's detention by a valid law of the Commonwealth? Answer Unnecessary to answer. Questions (10) and (12) If the plaintiff were to be returned to Nauru, does s 198AD(2) of the Migration Act 1958 (Cth) require that she be taken there as soon as reasonably practicable? Answer Unnecessary to answer. Question (11) If yes to question (10), if the plaintiff were returned to Nauru would her detention be contrary to the Constitution of Nauru? Answer Unnecessary to answer. Question (13) What, if any, relief should be granted to the plaintiff? Answer The plaintiff is not entitled to the declaration sought. Question (14) Who should pay the costs of the special case and of the proceedings generally? Answer The plaintiff should pay the defendants' costs. Representation R Merkel QC and C L Lenehan with R Mansted, D P Hume and E Bathurst for the plaintiff (instructed by Human Rights Law Centre) J T Gleeson SC, Solicitor-General of the Commonwealth and G R Kennett SC with A M Mitchelmore and P D Herzfeld for the first and second defendants (instructed by Australian Government Solicitor) S P Donaghue QC with K E Foley and C J Tran for the third defendant (instructed by Corrs Chambers Westgarth Lawyers) Interveners G R Donaldson SC, Solicitor-General for the State of Western Australia with F B Seaward for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) P J Dunning QC, Solicitor-General of the State of Queensland with F J Nagorcka for the Attorney-General of the State of Queensland, intervening (instructed by Crown Solicitor (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Plaintiff M68/2015 v Minister for Immigration and Border Protection Migration – Regional processing – Where plaintiff was "unauthorised maritime arrival" upon entry into Australian migration zone – Where plaintiff was removed to regional processing centre on Nauru pursuant to s 198AD of Migration Act 1958 (Cth) – Where Commonwealth entered into arrangement in relation to regional processing functions – Whether plaintiff was detained by Commonwealth at Nauru Regional Processing Centre – Whether principles in Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 apply. Constitutional law (Cth) – Executive power of Commonwealth – Whether conduct of Commonwealth authorised by s 61 of Constitution – Whether conduct of Commonwealth authorised by s 198AHA of Migration Act. Constitutional law (Cth) – Legislative power of Commonwealth – Whether s 198AHA of Migration Act is a law with respect to aliens – Whether s 198AHA of Migration Act is a valid law of Commonwealth. Procedure – Standing – Whether plaintiff has standing to challenge lawfulness of conduct of Commonwealth with respect to plaintiff's past detention. Private international law – Act of State doctrine – Where plaintiff's detention imposed by laws of Nauru – Whether Australian court should pronounce on constitutional validity of legislation of another country. Words and phrases – "aliens power", "constraints upon the plaintiff's liberty", "control", "detention", "effective control", "memorandum of understanding", "non-statutory executive power", "regional processing country", "regional processing functions". Constitution, ss 51(xix), 61. Migration Act 1958 (Cth), ss 198AB, 198AD, 198AHA. FRENCH CJ, KIEFEL AND NETTLE JJ. The plaintiff is a Bangladeshi national who was an "unauthorised maritime arrival" ("UMA") as defined by s 5AA of the Migration Act 1958 (Cth) upon entering Australia's migration zone. She was detained by officers of the Commonwealth and taken to Nauru pursuant to s 198AD(2) of the Migration Act, which provides that: "An officer must, as soon as reasonably practicable, take an unauthorised maritime arrival to whom this section applies from Australia to a regional processing country." Section 198AD(3) of the Migration Act provides that, for the purposes of sub-s (2), an officer may place and restrain the UMA on a vehicle or vessel, remove the UMA from the place at which he or she is detained or from a vehicle or vessel, and use such force as is necessary and reasonable. Nauru is a country designated by the Minister for Immigration and Border Protection ("the Minister") under s 198AB(1) of the Migration Act as a "regional processing country". The reference to "processing" is to a determination by Nauru of claims by UMAs to refugee status under the Refugees Convention1. Both Australia and Nauru are signatories to that Convention. Directions have been made under s 198AD(5) of the Migration Act by the Minister as to the particular classes of UMAs who are to be taken to Nauru. On 3 August 2013, the Commonwealth and Nauru entered into an arrangement relating to persons who have travelled irregularly by sea to Australia and whom Australian law authorises to be transferred to Nauru. This second Memorandum of Understanding ("the second MOU") recorded an agreement that the Commonwealth may transfer and Nauru would accept such persons, there referred to as "transferees". Administrative arrangements for regional processing and settlement arrangements in Nauru of 11 April 2014 between the governments of the two countries ("the Administrative Arrangements") confirm that transferees will remain on Nauru whilst their claims to refugee status are processed. By the second MOU and the Administrative Arrangements, Nauru undertook to allow transferees to stay lawfully in its territory and the Commonwealth agreed to lodge applications with the Government of Nauru for visas for transferees. The Commonwealth was to bear the costs associated with the second MOU. 1 Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967). Nettle The plaintiff claims to be a refugee to whom the Refugees Convention applies. She has applied to the Secretary of the Department of Justice and Border Control of Nauru to be recognised by Nauru as a refugee. Her application has not yet been determined. Upon her arrival on Nauru the plaintiff was granted a regional processing centre visa (an "RPC visa") by the Principal Immigration Officer of Nauru under reg 9 of the Immigration Regulations 2013 (Nauru). Pursuant to reg 9(6)(a), the plaintiff's RPC visa specified that the plaintiff must reside at the Nauru Regional Processing Centre ("the Centre"). If a person is recognised by Nauru as a refugee an RPC visa becomes a temporary settlement visa pursuant to reg 9A of the Immigration Regulations 2014 (Nauru) (which replaced the Immigration Regulations 2013 (Nauru)) and the person is no longer required to reside at the Centre and may depart and re-enter Nauru. Because the plaintiff is a UMA brought to Nauru pursuant to s 198AD of the Commonwealth Migration Act, the plaintiff is a "protected person" for the purposes of the Asylum Seekers (Regional Processing Centre) Act 2012 (Nauru) ("the RPC Act"). Pursuant to s 18C(1) of the RPC Act, a protected person may not leave the Centre without the approval of an authorised officer, an operational manager of the Centre, or other authorised persons. Any protected person who attempts to do so commits an offence against the law of Nauru and is liable on conviction to imprisonment for a period not exceeding six months2. The Centre comprised three sites – RPC 1, RPC 2 and RPC 3. RPC 1 contained the administrative offices of the Centre, other facilities and specialised accommodation. The other sites contained compounds which housed asylum seekers who were single adult males (RPC 2) and single adult females and families (RPC 3). The Commonwealth contracted for the construction and maintenance of the Centre, and funds all costs associated with it, in accordance with the second MOU. From 24 March 2014 to 2 August 2014, the plaintiff resided in RPC 3. It was surrounded by a high metal fence through which entry and exit was possible only through a check-point which was permanently monitored. The plaintiff was able to move freely within RPC 3 save for certain restricted areas and at specified hours. However, if the plaintiff had attempted to leave the Centre without permission, the Centre staff would have sought the assistance of the Nauruan Police Force. 2 Asylum Seekers (Regional Processing Centre) Act 2012 (Nauru), s 18C(2). Nettle The plaintiff did not consent to being taken to Nauru. She did not apply for an RPC visa and did not consent to being detained in RPC 3. Pursuant to reg 9(3) of the Nauruan Immigration Regulations 2013, an application for an RPC visa could only be made by an officer of the Commonwealth of Australia. An application was made by an officer of the Commonwealth ostensibly on the plaintiff's behalf in accordance with cl 2.2.6 of the Administrative Arrangements, and the fee for the visa was paid by the Commonwealth. Pursuant to the Administrative Arrangements, it was agreed that the Government of Nauru would appoint an operational manager, to be in charge of the day-to-day management of the Centre; and that the Government of Australia would appoint an officer as a programme coordinator, to be responsible for managing all Commonwealth officers and service contracts in relation to the Centre, including the contracting of a service provider to provide services at the Centre for transferees and to provide for their security and safety. A Joint Committee and a Joint Working Group were to be established. A Ministerial Forum was established to oversee the implementation of the regional partnership between Australia and Nauru and to provide updates on the delivery of projects in Nauru, including the operation of the Centre, and was co-chaired by the Commonwealth Minister and by the Nauru Minister for Justice and Border Control. The Joint Committee, comprised of representatives of the respective governments, met regularly to discuss the operation of the Centre. The Joint Working Group, chaired by the Nauru Minister, met each week to discuss matters relating to the Centre, including regional processing issues. Transfield Services (Australia) Pty Ltd ("Transfield") has been a service provider at the Centre pursuant to a contract with the Commonwealth, represented by the Department of Immigration and Border Protection ("the Transfield Contract"), since March 2014. Transfield undertook to provide "garrison and welfare services" to transferees and personnel at the regional processing centres. "Garrison services" include security, cleaning and catering services. As service provider it was required to ensure that the security of the perimeter of the site was maintained. The Department provides fencing, lighting towers and other security infrastructure. Transfield subcontracted the Transfield Contract to Wilson Security Pty Ltd ("Wilson Security"). Representatives of the two companies attend regular meetings with, and report to, the Department of Immigration and Border Protection and to the Government of Nauru. The Commonwealth occupies an office at RPC 1 at which officers of the Australian Border Force carry out functions in relation to the Centre or transferees at the Centre, including managing service provider contracts, Commonwealth-funded projects, such as Nettle construction projects, and relationships and communications between the Commonwealth, the service providers and the Government of Nauru. On 2 August 2014, officers of the Commonwealth brought the plaintiff to Australia from Nauru temporarily for purposes relating to her health, pursuant to s 198B(1) of the Migration Act. The plaintiff no longer needs to be in Australia for those purposes and is liable to be returned to Nauru. Section 198AHA The principal statutory authority relied upon by the Commonwealth for its participation in the plaintiff's detention on Nauru is s 198AHA of the Migration Act. It was recently inserted3 into Pt 2 Div 8 ("Removal of unlawful non-citizens etc") subdiv B ("Regional processing"), but has effect from 18 August 2012. It provides: "(1) This section applies into an arrangement with a person or body in relation to the regional processing functions of a country. the Commonwealth enters The Commonwealth may do all or any of the following: take, or cause to be taken, any action in relation to the arrangement or the regional processing functions of the country; make payments, or cause payments to be made, in relation to the arrangement or the regional processing functions of the country; do anything else that is incidental or conducive to the taking of such action or the making of such payments. To avoid doubt, subsection (2) is intended to ensure that the Commonwealth has capacity and authority to take action, without otherwise affecting the lawfulness of that action. (4) Nothing in this section limits the executive power of the Commonwealth. 3 Migration Amendment (Regional Processing Arrangements) Act 2015 (Cth). Nettle In this section: action includes: exercising restraint over the liberty of a person; and action in a regional processing country or another country. arrangement includes an arrangement, agreement, understanding, promise or undertaking, whether or not it is legally binding. regional processing functions includes the implementation of any law or policy, or the taking of any action, by a country in connection with the role of the country as a regional processing country, whether the implementation or the taking of action occurs in that country or another country." The proceedings is an injunction against In the proceedings brought by the plaintiff in this Court part of the relief she claims the Commonwealth and a writ of prohibition prohibiting them from taking steps to remove her to Nauru if she is to be detained at the Centre. The plaintiff also seeks orders prohibiting and restraining the Commonwealth from making future payments to Transfield pursuant to the Transfield Contract. the Minister and officers of Recent steps taken by the Government of Nauru suggest that it is unlikely that the plaintiff will be detained at the Centre if and when she is returned to Nauru. In early 2015, "open centre arrangements" were implemented at RPC 2 and RPC 3 in the exercise of the discretion of the operational managers. Pursuant to those arrangements, persons who resided there could be granted permission to leave the Centre on certain days, between certain hours and subject to certain conditions. Those arrangements were not formalised in writing. Shortly prior to the hearing of this matter, the Government of Nauru published a notice in its Gazette to the effect that it intended to expand the open centre arrangements to allow for freedom of movement of asylum seekers 24 hours per day, seven days per week and that the arrangements were to be made the subject of legislation at the next sitting of the Parliament of Nauru. The operational managers of RPC 2 and RPC 3 were said to have approved all asylum seekers residing there to be eligible to participate in these new open centre arrangements. the Nauruan Immigration Regulations 2014, which placed restrictions on the movements of Regulations 9(6)(b) and 9(6)(c) of Nettle RPC visa holders, have been repealed. Given these developments, the injunction and writ that the plaintiff seeks no longer assume relevance in these proceedings. There is not a sufficient basis for making them. The focus of these proceedings is therefore upon another remedy that the plaintiff seeks, namely, a declaration to the effect that the conduct of the Minister or the Commonwealth in relation to her past detention was unlawful by reason that it was not authorised by any valid law of the Commonwealth nor based upon a valid exercise of the executive power of the Commonwealth under s 61 of the Constitution. The conduct, in summary, is particularised as the imposition, enforcement or procurement by the Commonwealth or the Minister of constraints upon the plaintiff's liberty, including her detention, or the Commonwealth's entry into contracts and expenditure of monies in connection with those constraints, or the Commonwealth having effective control over those constraints. The questions stated for the opinion of the Court are lengthy and we will not set them out in these reasons. They are to be found in the document which follows the judgments in this case. They are directed principally to the plaintiff's standing and to whether the Commonwealth and the Minister were authorised to engage in the conduct by which the plaintiff was detained at the Centre. If the answer to the latter question is in the affirmative, it is further asked whether the restrictions on the plaintiff are contrary to the Constitution of Nauru. Standing The question of standing cannot be detached from the notion of a "matter"4 and is related to the relief claimed. It is submitted5 by the first and second defendants, being the Minister and the Commonwealth (hereinafter together referred to as "the Commonwealth"), that these proceedings concern past conduct and would have no further consequences for the plaintiff beyond the making of the declaration. The plaintiff does not seek damages for her wrongful detention. Nevertheless the declaration sought by the plaintiff would resolve the question as to the lawfulness of the Commonwealth's conduct with respect to the plaintiff's detention and whether such conduct was authorised by Commonwealth law. This is not a 4 Abebe v The Commonwealth (1999) 197 CLR 510 at 528 [32]; [1999] HCA 14; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 637 [122]; [2000] HCA 11. 5 By reference to Gardner v Dairy Industry Authority (NSW) (1977) 52 ALJR 180 at 188; 18 ALR 55 at 69. Nettle hypothetical question6. the Commonwealth is at liberty to repeat that conduct if things change on Nauru and it is proposed, once again, to detain the plaintiff at the Centre. the question whether It will determine The issues – non-statutory executive power and s 198AHA The Commonwealth relies upon s 61 of the Constitution to authorise its entry into the second MOU with Nauru. The Commonwealth submits that such entry either is within the Executive's power to conduct external relations or falls within the express terms of s 61 of the Constitution, in that it is for the "execution and maintenance of … the laws of the Commonwealth". The purpose of the entry into the second MOU is to give effect to the scheme of the Migration Act, by ensuring that Nauru remains willing and able to perform the functions of a regional processing country under that scheme. It may be taken that the scheme to which the Commonwealth refers includes ss 198AB(1) and 198AD(2) and, following entry into the second MOU, s 198AHA. The Commonwealth relies on s 198AHA as statutory authority for the Executive to give effect to the arrangement made between the Commonwealth and Nauru by the second MOU. It submits that, in recently enacting s 198AHA, the Parliament gave its permission to the Executive to implement the arrangements contemplated by the Commonwealth contends that it had non-statutory executive power or executive power under s 61 of the Constitution to give effect to the MOU. the second MOU. Alternatively, The Commonwealth does not, however, rely on either s 198AHA, non-statutory executive power or executive power under s 61 of the Constitution as authorising the detention of the plaintiff. It consistently maintained the position that the detention of the plaintiff on Nauru was by the Executive government of Nauru. As will be explained in these reasons, although the declaration which the plaintiff seeks was claimed in terms that the Commonwealth itself detained the plaintiff, that was not the argument which the plaintiff presented at the hearing of the matter. The plaintiff's case as put is that the Commonwealth participated in a practical sense, and at a high level, in her detention, and that the extent of the Commonwealth's participation in her detention was not authorised by statute or otherwise. 6 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582; [1992] HCA 10. Nettle For these reasons, whether or not the Commonwealth had statutory power or executive power to itself detain the plaintiff is not in issue. The issue is whether the Commonwealth had power to participate, to the extent that it did, in Nauru's detention of the plaintiff. Detention on Nauru The central question the identified by Commonwealth's involvement in her detention was authorised by a valid Commonwealth statute. the plaintiff is whether It is necessary at the outset to be clear about who detained the plaintiff on Nauru. "Detention" in this context is detention in the custody of the State7 and involves the exercise of governmental power. There can be no doubt that the Commonwealth had the statutory power to remove the plaintiff from Australia to Nauru and to detain her for that purpose. In Plaintiff S156/2013 v Minister for Immigration and Border Protection8 it was held that s 198AD(2) of the Migration Act is a law with respect to a class of aliens and so is a valid law within s 51(xix) of the Constitution. Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs9 holds that the legislative power conferred by s 51(xix) encompasses the conferral upon the Executive of authority to detain an alien in custody for the purposes of deportation or expulsion. That power is limited by the purpose of the detention and exists only so long as is reasonably necessary to effect the removal of the alien. It follows that the Commonwealth's power to detain the plaintiff for the purpose of removing her from Australia and taking her to Nauru ceased upon her being handed over into the custody of the Government of Nauru. The plaintiff thereafter was detained in custody under the laws of Nauru, administered by the Executive government of Nauru. The Immigration Act 2014 (Nauru) requires that a person who is not a citizen must have a valid visa to enter or remain in Nauru10. Even if the plaintiff was taken to Nauru without her consent, the Immigration Act applied to her. The plaintiff was obliged to remain 7 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 27; [1992] HCA 64. (2014) 254 CLR 28 at 42-43 [22]-[25], 46 [38]; [2014] HCA 22. (1992) 176 CLR 1 at 10, 32-33. 10 Immigration Act 2014 (Nauru), s 10. Nettle at the Centre under supervision and was not free to leave it, because of the residency requirements of the RPC visa issued by the Government of Nauru, the prohibition on leaving the Centre in s 18C(1) of the RPC Act, which applies to the plaintiff because she has the status of a "protected person", and the offence provision in s 18C(2). The only exception to the prohibition in s 18C(1) is where prior approval is given to a resident of the Centre by an authorised officer, an operational manager of the Centre or other authorised persons. The Secretary of the Department of Justice and Border Control of Nauru appoints authorised officers and must declare the appointment of an operational manager by notice in the No Commonwealth officers were appointed as authorised officers by the Secretary for the purposes of the RPC Act. Staff of Wilson Security were appointed by the Secretary as authorised officers and were therefore authorised by the law of Nauru to exercise powers under the RPC Act. Contrary to the plaintiff's submissions, it is very much to the point that the restrictions applied to the plaintiff are to be regarded as the independent exercise of sovereign legislative and executive power by Nauru. The recognition that it was Nauru that detained the plaintiff is important, for it is central to the plaintiff's case that the legislative authority which the Commonwealth required, and which it is argued was not provided, is an authority to detain the plaintiff, with the concomitant power to authorise others to effect that detention. Contrary also to the plaintiff's submissions, it is very much to the point that the Commonwealth could not compel or authorise Nauru to make or enforce the laws which required that the plaintiff be detained. There was no condominium, which exists where two or more States exercise sovereignty conjointly over a territory12, and no suggestion of any other agreement between Nauru and Australia by which governmental authority is to be jointly exercised on Nauru; assuming such an agreement to be possible. Paragraph 76 of the facts agreed by the parties for the purposes of the special case assumes relevance here: "If Nauru had not sought to impose restrictions on the plaintiff as set out … above, none of the Commonwealth, the Minister, Transfield or its subcontractors would have sought to impose such restrictions in Nauru or asserted any right to impose such restrictions." 11 Asylum Seekers (Regional Processing Centre) Act 2012 (Nauru), s 3(2). 12 See the discussion in Jennings and Watts (eds), Oppenheim's International Law, 9th ed (1992), vol 1 at 565 §170; Brownlie, Principles of Public International Law, 7th ed (2008) at 113-114. Nettle This statement recognises that if Nauru had not detained the plaintiff, the Commonwealth could not itself do so. Once it is understood that it was Nauru that detained the plaintiff, and that the Commonwealth did not and could not compel or authorise Nauru to make or enforce the laws that required that the plaintiff be detained, it is clear that the Commonwealth did not itself detain the plaintiff. Accordingly, although the declaration the plaintiff seeks claims the Commonwealth itself detained the plaintiff and the word "detention" was used loosely in argument in connection with the Commonwealth's conduct, it is apparent that the plaintiff's case concerns the participation by the Commonwealth and its officers in the detention by Nauru of the plaintiff. It is that participation which is required to be authorised. The principle in Lim The plaintiff contends that her detention on Nauru was "funded, authorised, caused, procured and effectively controlled by, and was at the will of, the Commonwealth". She relies upon the statement in Lim13 that an officer of the Commonwealth Executive who "purports to authorize or enforce the detention in custody of … an alien" without judicial mandate will be acting lawfully only to the extent that their conduct is justified by a valid statutory provision. Clearly the Commonwealth sought the assistance of Nauru with respect to the processing of claims by persons such as the plaintiff. It may be accepted that the Commonwealth was aware that Nauru required the plaintiff to be detained. In order to obtain Nauru's agreement to receive the plaintiff, the Commonwealth funded the Centre and the services provided there in accordance with the The Commonwealth concedes the causal Administrative Arrangements. connection between its conduct and the plaintiff's detention. It may be accepted that its involvement was materially supportive, if not a necessary condition, of Nauru's physical capacity to detain the plaintiff. But, for the reasons given above, it cannot be said that the Commonwealth thereby authorised or controlled the plaintiff's detention in the sense discussed in Lim. That is sufficient to remove the basis for the plaintiff's reliance upon what was said in that case. In any event, the plaintiff's reliance upon Lim is misplaced. The principle established in Lim is that provisions of the Migration Act which authorised the detention in custody of an alien, for the purpose of their removal from Australia, 13 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 19. Nettle did not infringe Ch III of the Constitution because the authority, limited to that purpose, was neither punitive in nature nor part of the judicial power of the Commonwealth. As a general proposition, the detention in custody of a citizen by the State is penal or punitive in character and exists only as an incident of the exclusively judicial function of adjudging and punishing criminal guilt14. A qualification to this proposition is provided by the recognition that the Commonwealth Parliament has power to make laws for the expulsion and deportation of aliens and for their restraint in custody to the extent necessary to make their deportation effective15. Contrary to the plaintiff's submissions, Lim does not refer more generally to a "concept of 'authorise or enforce' detention" which extends to a situation in which the detention is "not actually implemented" by the Commonwealth and its officers. Lim has nothing to say about the validity of actions of the Commonwealth and its officers in participating in the detention of an alien by another State. It is nevertheless necessary that the Commonwealth's indisputable participation in the detention of the plaintiff on Nauru be authorised by the law of Australia. This directs attention to the statutory authority claimed by the Commonwealth under s 198AHA of the Migration Act. For the reasons set out below, that section provides the requisite authority. It is not necessary, therefore, to consider the hypothetical question whether, absent that statutory authority, the Commonwealth would otherwise be authorised by s 61 of the Constitution, or as a matter of non-statutory executive power, to participate in Nauru's detention of the plaintiff. Authorisation for participation in detention? The plaintiff submits that s 198AHA is not supported by the aliens power in s 51(xix) of the Constitution because it does not single out that class of persons in its text or in its practical operation, and any connection with the enumerated subject matter is too remote or insubstantial. The submission should not be accepted. Section 198AHA is concerned with the regional processing functions of a country declared by the Minister under s 198AB(1) as a regional processing country to which UMAs may be taken under s 198AD(2). Just as s 198AD(2) is a law with respect to aliens16, so too is s 198AHA. Section 198AHA concerns 14 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 27. 15 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 30-31. 16 See [31] above. Nettle the functions of the place to which an alien is removed for the purpose of their claim to refugee status being determined. The requirement that there be a connection between the subject matter of aliens and the law that is more than insubstantial, tenuous or distant17 is satisfied. The plaintiff next submits that s 198AHA does not apply because the arrangement referred to in sub-s (1) is one with "a person or body" and the Government of Nauru is neither. The sub-section itself makes a distinction between a "person or body" and a "country". Were it necessary to resolve the meaning of "a person or body", resort could be had to s 2C(1) of the Acts Interpretation Act 1901 (Cth), by which "person" is to be taken to include a body politic. In any event the "body" referred to in s 198AHA(1) is apt to include the Executive government of a country through which arrangements would be made. The arrangements spoken of must include international arrangements which would be effected with the government of a regional processing country. So much is confirmed by the Explanatory Memorandum18 and the Second Reading Speech19 of the Bill inserting s 198AHA. It would be an odd construction which has s 198AHA applying to contracts by the Commonwealth with service providers in a regional processing country but not to arrangements with the country itself relating to the provision of services. According to the natural and ordinary meaning of s 198AHA, it applies where the Commonwealth has entered into an arrangement with a regional processing country for the regional processing of unlawful non-citizens. The section does not in terms authorise the Commonwealth to enter into any such arrangement. It is, however, within the scope of the executive power of the Commonwealth with respect to aliens to enter into such an arrangement in order to facilitate regional processing arrangements. The second MOU provides for the regional processing of UMAs who are sent to a regional processing country in accordance with ss 198AB(1) and 198AD(2). It is essential to the scheme for the 17 Cunliffe v The Commonwealth (1994) 182 CLR 272 at 314; [1994] HCA 44; New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 143 [275]; [2006] HCA 52. 18 Australia, House of Representatives, Migration Amendment (Regional Processing Arrangements) Bill 2015, Explanatory Memorandum at 2. 19 Australia, House of Representatives, Parliamentary Debates (Hansard), 24 June Nettle removal of aliens to a regional processing country for that purpose that that country not only be willing but also have the practical ability to do so. Section 198AHA(2) authorised the Commonwealth to give effect to the second MOU including by entry into the Administrative Arrangements with Nauru and the Transfield Contract. The Commonwealth had power to fund the Centre and the other services to be provided under those arrangements. "Regional processing functions" are defined in sub-s (5) to include the implementation of any law in connection with the role of the country as a regional processing country, and therefore the authority in sub-s (2) would extend to permitting the Commonwealth to provide services to carry into effect the laws of Nauru. In so far as those services extend to the exercise of physical restraint over the liberty of a person, that was authorised by the definition of "action" in sub-s (5). The nature and duration of that action, including participation in the exercise of restraint over the liberty of a person, is limited by the scope and purpose of s 198AHA. Section 198AHA is incidental to the implementation of regional processing functions for the purpose of determining claims by UMAs to refugee status under the Refugees Convention. The exercise of the powers conferred by that section must also therefore serve that purpose. If the regional processing country imposes a detention regime as a condition of the acceptance of UMAs removed from Australia, the Commonwealth may only participate in that regime if, and for so long as, it serves the purpose of processing. The Commonwealth is not authorised by s 198AHA to support an offshore detention regime which is not reasonably necessary to achieve that purpose. If, upon a proper construction of s 198AHA, the section purported to authorise the Commonwealth to support an offshore detention regime which went beyond what was reasonably necessary for that purpose, a question might arise whether the purported authority was beyond the Commonwealth's legislative power with respect to aliens. The Nauru Constitution The plaintiff seeks to agitate the question whether the laws by which the plaintiff was detained on Nauru are valid laws, given Art 5(1) of the Constitution of Nauru. Article 5(1) provides that a person shall not be deprived of their personal liberty except as authorised by law for purposes there specified. The plaintiff says that this point is raised in response to the Commonwealth's defence that her detention was required by the laws of Nauru. The plaintiff also raises a point relating to the construction of ss 198AHA(2) and 198AHA(5) in order to argue for the invalidity of the Nauruan laws. It is submitted that these sub-sections should not be construed as referring to detention which is unlawful under the law of the country where the detention is occurring. In that regard the laws cannot be viewed in isolation from the Constitution of that country. Nettle These submissions raise questions about whether an Australian court should pronounce on the constitutional validity of the legislation of another country. Whilst there may be some occasions when an Australian court must come to some conclusion about the legality of the conduct of a foreign government or persons through whom such a government has acted20, because it is necessary to the determination of a particular issue in the case, those occasions will be rare. This is not such an occasion. The Commonwealth's amended defence does not raise any question as to the constitutional validity of the laws of Nauru. It merely pleads that the plaintiff's detention was imposed by the laws of Nauru; which is to say, she was not detained by Australian law. Strictly speaking, no issue arises on the plaintiff's case either. The plaintiff's case concerns, and the declaration she seeks is framed around, the question whether the Commonwealth's conduct was authorised by a valid statute of the Commonwealth. It concerns the power of the Commonwealth. It does not concern the lawfulness of her detention by reference to the laws of Nauru. The plaintiff did not articulate any basis to conclude that s 198AHA depends for its operation upon the constitutional validity of the laws of a regional processing country under which regional processing functions are undertaken. It may be observed, however, that s 198AHA tends to point the other way. Due to the definition of "regional processing functions" in sub-s (5), authority is given by sub-s (2) to implement Nauruan law, which, in context, must be a reference to laws passed by the Nauruan Parliament relating to regional processing. Such authority is not further qualified by a requirement that such laws be construed as valid according to the Constitution of Nauru. A further submission? On 28 January 2016, the parties filed in the Melbourne Registry of this Court a proposed consent order seeking re-opening of the proceedings for the limited purpose of amending the special case to make reference to the swearing-in of staff members of Wilson Security as reserve officers of the Nauru Police Force Reserve in July 2013. The amendment was based on documents which were disclosed to the plaintiff on 17 October 2015, after completion of the hearing in this matter. It is not apparent why no step was taken to re-open the proceedings before 28 January 2016. In any event, the amendment would not affect the outcome. The proposed consent order was therefore refused. 20 Moti v The Queen (2011) 245 CLR 456 at 475 [51]; [2011] HCA 50. Nettle Orders The questions raised by the special case, and which are set out in the document which follows the judgments in this case, should be answered only to the extent necessary for the resolution of the matters truly in controversy. Paraphrasing the relevant aspect of the question stated, we would answer as follows: Question (1): Does the plaintiff have standing to challenge whether the conduct of the Commonwealth or the Minister in securing, funding and participating in the plaintiff's detention at RPC 3 on Nauru was authorised by a valid law of the Commonwealth or was part of the executive power of the Commonwealth? Answer: Yes. Question (2a): Was the conduct of the Commonwealth in signing the second MOU authorised by s 61 of the Constitution? Answer: Yes. Question (2b): Was the conduct of the Commonwealth in giving effect to that arrangement authorised by a valid law of the Commonwealth? Answer: Yes, it was authorised by s 198AHA of the Migration Act, which is a valid law of the Commonwealth. Question (3): Were the laws by which the plaintiff was detained on Nauru contrary to the Constitution of Nauru? Answer: The question does not arise. Questions (4) and (5): Was the conduct of the Commonwealth in securing, funding and participating in the plaintiff's detention at RPC 3 on Nauru authorised by a valid law of the Commonwealth? Answer: Yes, see the answer to questions (2a) and (2b). Question (6): If the plaintiff were returned to Nauru, would the Commonwealth or the Minister be authorised to continue to perform the second MOU and to secure, fund and participate in the plaintiff's detention on Nauru? Answer: Unnecessary to answer. Question (7): If the plaintiff were returned to Nauru would her detention there be contrary to Art 5(1) of the Constitution of Nauru? Nettle Answer: Unnecessary to answer. Questions (8) and (9): If the plaintiff were returned to Nauru, would the Commonwealth or the Minister be authorised to secure, fund and participate in the plaintiff's detention by a valid law of the Commonwealth? Answer: Unnecessary to answer. Questions (10) and (12): If the plaintiff were to be returned to Nauru, does s 198AD(2) of the Migration Act require that she be taken there as soon as reasonably practicable? Answer: Unnecessary to answer. Question (11): If yes to question (10), if the plaintiff were returned to Nauru would her detention be contrary to the Constitution of Nauru? Answer: Unnecessary to answer. Question (13): What, if any, relief should be granted to the plaintiff? Answer: The plaintiff is not entitled to the declaration sought. Question (14): Who should pay the costs of the special case and of the proceedings generally? Answer: The plaintiff should pay the defendants' costs. The answer to question 14 in part responds to a submission by the plaintiff that the defendants should pay for her costs thrown away by amendments to the special case necessitated by changes in the circumstances of detention effected by the Government of Nauru, which were referred to earlier in these reasons. In our opinion, that submission should be rejected. Bell BELL J. The facts, the legislative scheme and the issues, as they were developed at the hearing of the parties' amended special case, are set out in the joint reasons of French CJ, Kiefel and Nettle JJ. They need not be repeated, save to the extent it is convenient to do so in order to explain my reasons. The claims for relief and standing By her amended application for an order to show cause filed on 21 August 2015, the plaintiff claims writ, injunctive and declaratory relief against the first defendant, the Minister for Immigration and Border Protection ("the Minister"), and against the second defendant, the Commonwealth of Australia ("the Commonwealth") (collectively, "the Commonwealth parties"), arising out of conduct that is said directly or indirectly to have procured or enforced constraints upon her liberty in Nauru. At the hearing of the parties' amended special case, the Commonwealth parties submitted that there is nothing left in the proceeding: the writ and injunctive relief that the plaintiff claims is predicated upon this Court finding that on her return to Nauru it is likely that she will again be subjected to the constraints upon her liberty particularised in her amended statement of claim. The Commonwealth parties contend that there is no longer a basis for that finding. The plaintiff also claims a declaration that the Commonwealth parties' conduct in enforcing or procuring, directly or indirectly, her detention from 24 March 2014, including by entering into contracts requiring or causing the enforcement of constraints on her liberty, was unlawful. The Commonwealth parties contest the plaintiff's standing to seek this relief, because they claim the declaration would produce no foreseeable consequence for her. On 2 October 2015, the Nauru Government Gazette contained an announcement that, from 5 October 2015, open centre arrangements at the Regional Processing Centre in Nauru ("the RPC") were to be expanded to allow asylum seekers freedom of movement 24 hours per day, seven days per week ("the Notice"). On 4 October 2015, regs 9(6)(b) and 9(6)(c) of the Immigration Regulations 2014 (Nauru), which required asylum seekers not to leave the RPC without permission, were repealed. At the date of the hearing, it remained a criminal offence for an asylum seeker to leave the RPC without prior approval from an authorised officer, an Operational Manager or other authorised persons21. 21 Asylum Seekers (Regional Processing Centre) Act 2012 (Nauru), s 18C. Bell The intention of the Government of Nauru to enshrine the expanded open centre arrangements in legislation at the next sitting of Parliament was stated in the Notice. In the interim, effect was given to the new regime by Operational Managers granting general approval to all asylum seekers to participate in the expanded open centre arrangements. While it is open to Nauru to decide to return to a scheme under which asylum seekers are detained in the RPC until their claims for recognition of refugee status22 ("protection claims") are determined, the introduction of the expanded open centre arrangements has removed the premise for the grant of the writ and injunctive relief claimed by the plaintiff. However, the declaratory relief that the plaintiff claims does not raise some abstract or hypothetical question. It involves the determination of a legal controversy in respect of which the plaintiff has a "real interest"23. The declaration sought cannot be said to have no foreseeable consequences given that Nauru may choose to revert to a scheme under which asylum seekers taken to it by the Commonwealth are detained. The plaintiff's case The plaintiff's pleaded case acknowledges that her detention was required under the law of Nauru. She contends that from 24 March 2014, when the Commonwealth entered into a contract with the third defendant, Transfield Services (Australia) Pty Ltd ("Transfield"), for the provision of garrison and welfare services at the RPC ("the Transfield contract"), until 2 August 2014, when she was brought to Australia for medical treatment, the Commonwealth parties funded, caused and effectively controlled her detention in Nauru. She contends that their conduct in so doing was unlawful because it was not authorised by a valid law of the Commonwealth nor was it a valid exercise of the executive power conferred by s 61 of the Constitution. The Commonwealth parties' principal submission is that it is within the legislative power of the Commonwealth Parliament to authorise the Executive to expend monies to establish, maintain and otherwise provide support to Nauru to 22 Article 1A of the Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967). 23 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582 per Mason CJ, Dawson, Toohey and Gaudron JJ; [1992] HCA 10; Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 359 [103] per French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; [2010] HCA 41, citing Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 355-356 [46]-[47] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [1999] HCA 9. Bell detain unauthorised maritime arrivals ("UMAs") who have been removed from Australia under s 198AD of the Migration Act 1958 (Cth) ("the Migration Act"), for the purpose of determining any protection claim made by those UMAs. They submit that s 198AHA of the Migration Act is such a law. I accept that is so. This conclusion makes it unnecessary to consider the Commonwealth parties' alternative submissions which invoke s 61 of the Constitution and s 32B of the Financial Framework (Supplementary Powers) Act 1997 (Cth), read with several items in the regulations, and a Schedule to the regulations, made thereunder24. It also makes it unnecessary to address Transfield's wider submission that the Commonwealth Executive may be invested with functions not forming part of the executive power of the Commonwealth. For the reasons to be given, I agree with French CJ, Kiefel and Nettle JJ that not all the questions asked in the amended special case should be answered and I agree with the orders that their Honours propose. Section 198AHA and the MOU Section 198AHA was inserted into the Migration Act by the Migration Amendment (Regional Processing Arrangements) Act 2015 (Cth). It has effect from 18 August 2012. On 29 August 2012 the Commonwealth entered into a Memorandum of Understanding with Nauru relating to the transfer of persons to and assessment of persons in Nauru. That Memorandum of Understanding was superseded by the Memorandum of Understanding signed on 3 August 2013, which remains in effect ("the MOU"). Each Memorandum of Understanding was entered into in the exercise of the non-statutory executive power of the Commonwealth to establish relations with other countries25. The MOU records the common understanding of the Governments of Nauru and the Commonwealth with respect to the transfer to Nauru of persons who have travelled irregularly by sea to Australia, or who have been intercepted by Commonwealth authorities in the course of trying to reach Australia by irregular maritime means, and who are authorised to be transferred to Nauru under Australian law ("transferees"). The purpose of the transfer is given as the processing of any protection claims made by transferees and the settlement in Nauru of an agreed number of transferees who are found by Nauru to be in need of international protection. The Commonwealth states its commitment to bearing all of the costs to be incurred under and incidental to the MOU. Nauru states its willingness to host one or more regional processing centres, while reserving the 24 Financial Framework (Supplementary Powers) Regulations 1997 (Cth), reg 16 and items 417.021, 417.027, 417.029 and 417.042 of Sched 1AA. 25 R v Burgess; Ex parte Henry (1936) 55 CLR 608 at 643-644 per Latham CJ; [1936] HCA 52. Bell right to host transferees under other arrangements including community-based arrangements. Neither the MOU, nor the administrative arrangements giving effect to it, require that transferees be detained while their protection claims are being considered. Throughout the period that the plaintiff was in Nauru, however, there was such a requirement under the law of Nauru. On its face, s 198AHA provides a complete answer to the plaintiff's case. Nauru is designated as a regional processing country under s 198AB of the Migration Act. Section 198AHA seemingly applies because the MOU is an arrangement entered into by the Commonwealth in relation to the regional processing functions of Nauru26. Section 198AHA(2) confers authority on the Commonwealth to make payments and to take, or cause to be taken, any action in relation to the arrangement or the regional processing functions of Nauru. Action includes exercising restraint over the liberty of a person in a regional processing country27. The regional processing functions of a country include the implementation of any law or policy, or the taking of any action, by a country in connection with its role as a regional processing country28. The plaintiff contends that as a matter of construction s 198AHA does not apply to the arrangement between the Commonwealth and Nauru recorded in the MOU. Alternatively, she submits that s 198AHA is invalid because it is not supported by a head of legislative power or that the provision is invalid to the extent that it exceeds the constitutional limitation on legislative power identified in Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs29. The plaintiff's construction argument that "[t]his section applies Section 198AHA(1) provides the Commonwealth enters into an arrangement with a person or body in relation to the regional processing functions of a country". The plaintiff submits that the provision does not apply to an arrangement entered into with a "country" as distinct from a "person or body". The submission is maintained in the face of s 2C(1) of the Acts Interpretation Act 1901 (Cth) ("the Interpretation Act"), which provides that expressions used to denote persons generally include a body 26 Migration Act, s 198AHA(1). 27 Migration Act, s 198AHA(5). 28 Migration Act, s 198AHA(5). 29 (1992) 176 CLR 1 at 27-28 per Brennan, Deane and Dawson JJ; [1992] HCA 64. Bell politic or corporate as well as an individual. Section 198AHA(1) is said to evince an intention that s 2C(1) of the Interpretation Act does not apply because "person" is not used in this setting to denote "persons generally": if "person" had that denotation, the addition of the words "or body" would be superfluous. There is no reason not to interpret "person" in s 198AHA, conformably with s 2C(1) of the Interpretation Act, as including the artificial persons to which s 2C(1) refers, including bodies politic. As the Commonwealth parties submit, the reference to a "body" in the context of this statutory scheme has evident work to do: international bodies such as the United Nations High Commissioner for Refugees and the International Organization for Migration, while not legal persons, are bodies within the scope of s 198AHA(1). Legislative power The Commonwealth parties submit that s 198AHA is supported by the aliens power in s 51(xix), the external affairs power in s 51(xxix) and the Pacific islands power in s 51(xxx). It is sufficient to consider the parties' submissions with respect to the aliens power. The plaintiff's submissions draw on what is said to be the "limiting effect" of s 198AHA(3), which makes clear that s 198AHA(2) confers authority on the Commonwealth to make payments and to take action in relation to the regional processing functions of a designated regional processing country without otherwise affecting the lawfulness of the payment or action. Thus, it is argued, the provision does not regulate the rights, liabilities or duties of aliens and is not to be characterised as a law with respect to that subject matter30. Aliens, it is said, are not singled out in the text or in the provision's practical operation, and any connection to that subject matter is too remote or insubstantial. Section 198AHA is in Pt 2 Div 8 subdiv B of the Migration Act, which provides a scheme for "regional processing". The processing to which the subdivision refers is of the protection claims of aliens who have entered Australia by sea and who become unlawful non-citizens because of that entry. A duty is imposed on Commonwealth officers to take aliens of this description from Australia to a regional processing country31, designated as such by the Minister32 following a determination that the designation is in the national interest33. In 30 Cf Williams v The Commonwealth [No 2] (2014) 252 CLR 416 at 461 [50] per French CJ, Hayne, Kiefel, Bell and Keane JJ; [2014] HCA 23. 31 Migration Act, s 198AD(2). 32 Migration Act, s 198AB(1). 33 Migration Act, s 198AB(2). Bell determining whether it is in the national interest to designate a country to be a regional processing country, the Minister must have regard to whether the country has given assurances to Australia that it will not expel or return ("refouler") a person taken to it for processing and that it will make an assessment, or permit an assessment to be made, of whether a person taken to it under the scheme is a refugee34. The scheme is predicated upon a country agreeing to take aliens transferred to it from Australia for regional processing35. As the Commonwealth parties submit, the actions and payments in relation to the regional processing functions of the regional processing country authorised by s 198AHA(2) are, in legal operation and practical effect, closely connected to the processing of protection claims made by aliens who have been taken by the Commonwealth from Australia to the regional processing country for that processing. This provides a sufficient connection between s 198AHA and the power conferred by s 51(xix)36. The Lim principles The plaintiff's remaining arguments depend upon the principles enunciated in Lim having application to an alien who is removed from Australia and taken, under s 198AD of the Migration Act, to Nauru and there detained under the law of Nauru. The first premise of the plaintiff's argument is that she was involuntarily detained in Nauru and the second premise is that the Commonwealth parties procured, caused and effectively controlled that detention. At the hearing, the Commonwealth parties accepted that they provided the material support necessary for the establishment and maintenance of the detention regime at the RPC. They did not accept that they procured, caused or substantially controlled the plaintiff's detention. These submissions direct attention to the nature of the plaintiff's detention in Nauru between 24 March and 2 August 2014 and to the Commonwealth parties' role in the operation of the RPC, both directly and indirectly through the contractual obligations imposed on Transfield under the Transfield contract. 34 Migration Act, s 198AB(3)(a). 35 Migration Act, s 198AG. 36 Plaintiff S156/2013 v Minister for Immigration and Border Protection (2014) 254 CLR 28 at 43 [26]; [2014] HCA 22. See also Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 492 [16] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [2000] HCA 14; New South Wales v The Commonwealth (2006) 229 CLR 1 at 143 [275] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; [2006] HCA 52. Bell Detention at the RPC On 22 January 2014, Commonwealth officers took the plaintiff, a UMA, to Nauru pursuant to s 198AD(2) of the Migration Act. On arrival in Nauru on 23 January 2014, the plaintiff ceased to be in the custody of the Commonwealth under s 198AD(3) of the Migration Act. At that time, s 9(1) of the Immigration Act 1999 (Nauru) provided that a person who was not a Nauruan citizen could not enter or remain in Nauru without a valid visa. The Act conferred power on the Cabinet of Nauru to make regulations, including with respect to classes of visa and the conditions of a visa37. Regulations made under that power provided for a class of visa known as a "regional processing centre visa" ("RPC visa")38. An RPC visa could only be granted to a UMA as defined in the Migration Act, who was to be, or who had been, brought to Nauru under s 198AD of that Act39. An application for an RPC visa had to be made before the person to whom it related entered Nauru40. The application for an RPC visa could only be made by an officer of the Commonwealth41. On 21 January 2014, an officer of the Commonwealth applied for an RPC visa in the plaintiff's name without seeking the plaintiff's consent. On 23 January 2014, the Principal Immigration Officer of Nauru granted the application and issued an RPC visa to the plaintiff, conditioned upon the requirement that she reside at the RPC. The plaintiff did not consent to the issue of the RPC visa. The plaintiff was subject to constraints on her freedom in Nauru arising from the conditions of her RPC visa and from her status as a "protected person" under s 3(1) of the Asylum Seekers (Regional Processing Centre) Act 2012 (Nauru) ("the RPC Act"). As a protected person, she was required not to leave the RPC without prior approval from an authorised officer, an Operational Manager or other authorised persons42. She was subject to the same obligation 37 Immigration Act 1999 (Nauru), s 44. 38 Immigration Regulations 2013 (Nauru), reg 4(1)(d). 39 Immigration Regulations 2013 (Nauru), reg 9(1)(a). The only other category of person to whom an RPC visa could be granted was a person who was to be, or had been, brought to Nauru under s 199 of the Migration Act: reg 9(1)(b). 40 Immigration Regulations 2013 (Nauru), reg 9(2). 41 Immigration Regulations 2013 (Nauru), reg 9(3). 42 RPC Act, s 18C. Bell under rules made by the Operational Manager of RPC3, the site within the RPC in which she was housed43, and by the Immigration Regulations 2013 (Nauru), which regulations required the plaintiff to reside in the premises nominated in her RPC visa44. The Commonwealth did not seek to have Nauru detain persons taken to it for regional processing. Nonetheless, by applying for an RPC visa in the plaintiff's name and by taking the plaintiff to Nauru, in a practical sense the Commonwealth brought about her detention under the regime that applied in Nauru. The Commonwealth parties accept so much, but submit that such a causal connection has nothing to say about the application of the principles enunciated in Lim, which apply to detention in custody by the Commonwealth. Under the administrative arrangements giving effect to the MOU, Nauru was required to appoint an Operational Manager to be responsible for the day to day management of the RPC. The administrative arrangements contemplated that the Operational Manager would be supported by contracted service providers and staff members who would provide a range of services, including security services. The Operational Manager would monitor the welfare, safety and conduct of transferees with the assistance of the service providers. The Commonwealth was to appoint a Programme Coordinator to be responsible for managing all Australian officers and service contracts in relation to the RPC, including by ensuring that service providers deliver services to the appropriate standard. The Programme Coordinator has at all times been an officer of the Department of Immigration and Border Protection ("the Department") and is stationed in Nauru. The governance structures for which the administrative arrangements provide comprise a Ministerial Forum, a Joint Advisory Committee and a Joint Working Group. The Ministerial Forum, co-chaired by the Minister and the Nauru Minister for Justice and Border Control, oversees the regional partnership between Nauru and Australia, including the operation of the RPC. The Joint Advisory Committee the Commonwealth, who advise and oversee matters including the practical management of security services for the RPC. The Commonwealth provides secretariat support to the Joint Advisory Committee. The Joint Working Group is co-chaired by the Commonwealth and Nauru, and meets weekly. Its terms of reference include that it is to advise on technical, operational and legal aspects of the management of the RPC, including the delivery of security services. representatives of Nauru comprises and 43 Nauru Regional Processing Centre, Centre Rules, July 2014, r 3.1.3: Republic of Nauru, Government Gazette, No 95, 16 July 2014. 44 Immigration Regulations 2013 (Nauru), reg 9(6)(a), (b) and (c). Bell Under the Transfield contract, Transfield undertook to improve the security infrastructure, and to enhance security arrangements, at the RPC. The Department undertook to provide security infrastructure, which might include perimeter fencing, lighting towers and an entry gate. Transfield is required to ensure that the security of the perimeter of the RPC is maintained at all times in accordance with the policies and procedures of the Department as notified to it by the Department from time to time. Transfield undertook responsibility for "access control procedures" that are "sufficiently robust" to eliminate the possibility of unauthorised access to the RPC. Further, Transfield is required to verify that all transferees are present and safe in the RPC at least twice each day, at times which take account of any curfew arrangements. Among the "garrison services" which Transfield undertook to provide are include "structured security services" enabling security services, which Transfield to manage routine events at the RPC and to respond promptly and flexibly to any incident. Transfield is required to provide the Department with security risk assessments and security audits. It may conduct searches within the RPC only with the prior approval, or on the request, of the Department. Transfield is required to discharge its contractual obligations in a manner that is adaptable to and readily accommodates changes in Commonwealth policy during the term of the contract, in order to ensure that the services it delivers accord with Commonwealth policy. The step-in rights under the Transfield contract allow the Secretary of the Department, if he or she considers that circumstances exist which require the Department's intervention, at his or her absolute discretion, to suspend the performance of any service performed by Transfield and arrange for the Department, or a third party, to perform the suspended service or otherwise to intervene in the provision of the services by written notice to Transfield. Transfield provides security and other services at the RPC through a subcontract with a subsidiary of Wilson Parking Australia 1992 Pty Ltd ("Wilson Security"). The subcontract at the time of the hearing was entered into on 28 March 2014. Transfield was required to obtain, and did obtain, the Commonwealth's approval of its subcontract with Wilson Security. Employees of Wilson Security are authorised officers under the RPC Act. Among the other service providers engaged by the Commonwealth to perform services at the RPC is International Health and Medical Services Pty Ltd, which provides primary health care for transferees. Where, as occurred here, a transferee requires medical attention that is not available in Nauru, the transferee may be brought to Australia from Nauru for the temporary purpose of receiving treatment45. On no occasion has Nauru refused any permission 45 Migration Act, s 198B. Bell necessary under the law of Nauru for a transferee to be taken from Nauru to Australia to receive medical treatment. In the period covered by the plaintiff's claim, from 24 March 2014 until 2 August 2014, when she was removed from Nauru by the Commonwealth for the purpose of being brought to Australia for medical treatment, the plaintiff resided in RPC3. RPC3 was surrounded by a high metal fence through which entry and exit was possible only through a checkpoint. The checkpoint was permanently staffed by employees of Wilson Security, who monitored ingress and egress. The plaintiff was entitled to move freely within RPC3, save that she was not permitted to be present in other transferees' accommodation areas between 5:00pm and 6:00am and was not permitted to enter specified restricted areas. Contrary to the Commonwealth parties' submission, the detention to which the plaintiff was subject is not analogous to the lesser forms of restriction on liberty considered in Thomas v Mowbray46. As a condition of its acceptance of a transferee from Australia, Nauru required that the transferee be detained in custody while any protection claim was processed and while any arrangements were made for removal from Nauru in the event the transferee was found not to be in need of international protection. It is correct, as the Commonwealth parties submit, to observe that while only an officer of the Commonwealth could apply for an RPC visa in the plaintiff's name, it remained for Nauru to determine whether or not to grant the visa. However, Nauru committed itself under the MOU to take those persons whom the Commonwealth transferred to it under s 198AD of the Migration Act. The Commonwealth parties brought about the plaintiff's detention in Nauru by applying for the issue of an RPC visa in her name without her consent. The Commonwealth funded the RPC and exercised effective control over the detention of the transferees through the contractual obligations it imposed on Transfield. The first premise of the plaintiff's Lim challenge, that her detention in Nauru was, as a matter of substance, caused and effectively controlled by the Commonwealth parties, may be accepted. The Lim challenge to the validity of s 198AHA In Australia, unlawful non-citizens can be detained in custody without judicial warrant, under valid provisions of the Migration Act, for purposes which include the investigation and determination of any protection claim47. The plaintiff is unwilling to return to Bangladesh because she claims to be a refugee. 46 (2007) 233 CLR 307 at 330 [18] per Gleeson CJ, 356 [114]-[116] per Gummow and Crennan JJ; [2007] HCA 33. 47 Migration Act, s 189. Bell She has applied to the Secretary of the Department of Justice and Border Control of Nauru to be recognised as a refugee under s 5 of the Refugees Convention Act 2012 (Nauru). Her application has not been determined. The plaintiff contends that the Commonwealth Parliament cannot enact a valid law authorising the Commonwealth to engage in conduct causing, or effectively controlling, her detention in Nauru while her protection claim is investigated and determined because detention in Nauru under the scheme for regional processing is avowedly punitive in character. An alternative ground of challenge to the validity of s 198AHA submitted by the plaintiff is that the section does not confine the authority that it confers, to exercise restraint over the liberty of a person in relation to the regional processing functions of a country, to that which is reasonably capable of being seen as necessary for the purposes of investigating and assessing any protection claim and removal from Nauru48. Each of these challenges derives from the principles stated in the joint reasons of Brennan, Deane and Dawson JJ in Lim. The Commonwealth parties submit that the true principle enunciated in the joint reasons in Lim, with the concurrence of Mason CJ, is that legislation conferring power on the Executive to detain a person will only be invalid if it is a conferral of the judicial power of the Commonwealth. Even if officers of the Commonwealth have, directly or indirectly, exercised restraint over the plaintiff's liberty in Nauru, the Commonwealth parties submit that the conferral of authority to do so under s 198AHA(2) is not of the judicial power of the Commonwealth. They contend that the lawfulness of the plaintiff's detention is governed by the law of Nauru and that s 198AHA(3) makes plain that the authority it confers does not make lawful detention that would otherwise be unlawful. To the extent that the joint reasons in Lim state that an officer of the Commonwealth who purports to authorise or enforce the detention in custody of an alien will act lawfully only to the extent that the conduct is justified by valid statutory provision49, the Commonwealth parties submit their Honours are stating a principle of common law. Their Honours' reference to the constitutional immunity of citizens, in other than exceptional cases, from being imprisoned without judicial warrant50 is criticised by the Commonwealth parties as inconsistent with the "true principle" for which Lim stands. 48 Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 233 [34]; [2014] HCA 34. 49 (1992) 176 CLR 1 at 19 per Brennan, Deane and Dawson JJ. 50 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 27-29 per Brennan, Deane and Dawson JJ. Bell The analysis in the joint reasons in Lim, which commences with the common law's rejection of the lettre de cachet or other executive warrant authorising arbitrary arrest or detention, proceeds to a consideration of that rejection under a system of government in which the separation of judicial from legislative and executive power is constitutionally mandated51. It is to be kept in mind that the object of that separation is the protection of individual liberty52. It is in this context that their Honours explain that the purported investment of an executive power of arbitrary detention will be beyond the legislative power of the Commonwealth Parliament even if the investment were conferred in a manner which sought to divorce it from the exercise of judicial power53. It remains that Lim allows for the Parliament to confer power on the Executive to detain aliens without judicial warrant for identified purposes54. The constitutional holding in Lim is that a law, authorising or requiring the detention in custody of an alien without judicial warrant, will not contravene Ch III of the Constitution provided the detention that the law authorises or requires is limited to that which is reasonably capable of being seen as necessary for the purposes of deportation or for the purposes of enabling an application by the alien to enter and remain in Australia to be investigated and determined55. So limited, the detention is an incident of executive power. If not so limited, the detention is punitive in character and ceases to be lawful. There is no principled reason why the Parliament may confer a power on the Commonwealth to cause and effectively control the detention of an alien taken from Australia, to a country which has been designated by Australia as a regional processing country, without being subject to the same constitutional limitations as apply to the detention of aliens for the purposes of processing their 51 (1992) 176 CLR 1 at 27-29 per Brennan, Deane and Dawson JJ. 52 Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 11 per Brennan CJ, Dawson, Toohey, McHugh and Gummow JJ; [1996] HCA 18. 53 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 27 per Brennan, Deane and Dawson JJ. 54 (1992) 176 CLR 1 at 32 per Brennan, Deane and Dawson JJ. 55 (1992) 176 CLR 1 at 33 per Brennan, Deane and Dawson JJ; Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 12-13 [18] per Gleeson CJ; [2004] HCA 49; Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 369 [138] per Crennan, Bell and Gageler JJ; [2013] HCA 53. Bell protection claims in Australia56. In my opinion, the plaintiff's invocation of the Lim principle fails, not because that principle has no application but because her detention in Nauru did not infringe the principle. The plaintiff points to statements in the MOU as evidencing that the purpose of the detention of transferees in Nauru was punitive. These include the parties' recognition of the need for "practical action to provide a disincentive against Irregular Migration, People Smuggling syndicates and transnational crime", the need to ensure that "no benefit is gained through circumventing regular migration arrangements" and the need to "take account of the protection needs of persons who have moved irregularly and who may be seeking asylum". It may be accepted that a purpose of the regional processing scheme for which Pt 2 Div 8 subdiv B of the Migration Act provides is to deter irregular migration to Australia. This object is pursued by the removal of UMAs to a regional processing country for the determination of their protection claims. However, the requirement for transferees to be detained, while the administrative processes involved in the investigation, assessment and review of their claims take place, does not thereby take on the character of being punitive. Section 198AHA(2) does not confer unconstrained authority on the Commonwealth to take action involving the exercise of restraint over the liberty of persons. The authority is limited to action that can reasonably be seen to be related to Nauru's regional processing functions. Those functions, identified in the MOU, are the processing of any protection claim made by a transferee and the removal from Nauru of transferees who are found not to be in need of international protection. If a transferee were to be detained for a period exceeding that which can be seen to be reasonably necessary for the performance of those functions, the Commonwealth parties' participation in the exercise of restraint over the transferee would cease to be lawful57. As French CJ, Kiefel and Nettle JJ observe, the plaintiff's pleaded case does not raise an issue as to the lawfulness of her detention under the law of Nauru. I agree with their Honours' reasons for concluding that the plaintiff's case is not an occasion to pronounce on the constitutional validity of the laws of Nauru. The questions of law stated in the amended special case should be answered in the terms stated by French CJ, Kiefel and Nettle JJ. 56 CPCF v Minister for Immigration and Border Protection (2015) 89 ALJR 207 at 240 [149]-[150] per Hayne and Bell JJ; 316 ALR 1 at 39-40; [2015] HCA 1. 57 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 34 per Brennan, Deane and Dawson JJ. Introduction The Migration Act 1958 (Cth) has, since the insertion of subdiv B into Div 8 of Pt 2 in 201258, established a regime under which a person who is a non- citizen and who on entering Australia becomes an "unauthorised maritime arrival" must be detained59 and taken to a designated "regional processing country"60. The non-citizen may be brought back to Australia for a temporary purpose61 but must be returned once the need to be in Australia for that temporary purpose has passed62. into an understanding set out On 29 August 2012, the Commonwealth of Australia and the Republic of in a document entitled Nauru entered "Memorandum of Understanding between the Republic of Nauru and the Commonwealth of Australia, relating to the Transfer to and Assessment of Persons in Nauru, and Related Issues". that Memorandum of Understanding – which was replaced by another Memorandum of Understanding ("the Second Memorandum of Understanding") in relevantly identical terms on 3 August 2013 – the Republic of Nauru agreed to accept the transfer of persons authorised by Australian law to be transferred to Nauru, and assured the Commonwealth, amongst other things, that it will make an assessment, or permit an assessment to be made, of whether or not a transferee is covered by the definition of "refugee" in the Refugees Convention63. Under On 10 September 2012, the Republic of Nauru was designated as a regional processing country. More than 2000 unauthorised maritime arrivals have since been taken to Nauru. There they have been detained at a Regional Processing Centre, pending processing of their claims to be refugees within the meaning of the Refugees Convention. Their detention at the Regional Processing 58 Migration Legislation Amendment (Regional Processing and Other Measures) Act 2012 (Cth). 59 Section 189 of the Migration Act. 60 Section 198AD of the Migration Act. 61 Section 198B of the Migration Act. 62 Section 198AH of the Migration Act. 63 Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967). Centre has been under the authority of Nauruan legislation, the validity of which under the Constitution of Nauru is controversial. Since 24 March 2014, the Regional Processing Centre on Nauru has been operated by Wilson Parking Australia 1992 Pty Ltd or a subsidiary ("Wilson Security") in accordance with a written contract between Transfield Services (Australia) Pty Ltd ("Transfield") and the Commonwealth of Australia ("the Transfield contract"). Under the Transfield contract, the Commonwealth has paid Transfield to provide what are generically described in the contract as "garrison and welfare services" to non-citizens taken to Nauru, and the Commonwealth has consented to services within that description being provided by Wilson Security under a subcontract between Transfield and Wilson Security. The Transfield contract requires that the services be provided in accordance with all applicable Australian and Nauruan laws, including Nauruan laws pertaining specifically to the Regional Processing Centre, and in accordance with all applicable Commonwealth policies as notified to Transfield from time to time. The plaintiff is a Bangladeshi national who, as an unauthorised maritime arrival, was taken to Nauru after its designation as a regional processing country and who was detained at the Regional Processing Centre on Nauru. There is no dispute that she was detained there between 24 March 2014 and 2 August 2014, when she was brought back to Australia for a temporary purpose. In a proceeding commenced in the original jurisdiction of the High Court under s 75(iii) and s 75(v) of the Constitution to which the Commonwealth, the Minister for Immigration and Border Protection and Transfield are parties, the plaintiff seeks a declaration to the effect that the Commonwealth and the Minister acted beyond the executive power of the Commonwealth under s 61 of the Constitution by procuring and enforcing her detention at the Regional Processing Centre between 24 March 2014 and 2 August 2014. She also seeks other relief directed to restraining performance of the Transfield contract and to preventing her return to Nauru. Her entitlement to that other relief depends on her first establishing an entitlement to the declaration which she seeks as to past events. No part of her case is to seek damages for wrongful imprisonment. Two events of significance occurred during the course of the proceeding. The first was the enactment on 30 June 2015 of the Migration Amendment (Regional Processing Arrangements) Act 2015 (Cth), which inserted s 198AHA into the Migration Act, with retrospective effect to 18 August 201264. The efficacy and validity of s 198AHA are now both in issue in the proceeding. 64 Section 2 of the Migration Amendment (Regional Processing Arrangements) Act 2015 (Cth). The second was the announcement on 2 October 2015 by the Government of Nauru of its intention "to allow for freedom of movement of asylum seekers 24 hours per day, seven days per week" from 5 October 2015 and to introduce legislation to that effect at the next sitting of the Nauruan Parliament. The plaintiff, being "affected in [her] person" by the conduct she claims to have been unconstitutional, had a sufficient interest to give her standing to seek such a declaration at the commencement of the proceeding65. The plaintiff did not lose that standing by reason of the change of circumstances which can be predicted to occur on Nauru as a result of the announcement66. Nor has the announcement rendered the proceeding moot: it could not be said that the declaration, if made, would have no foreseeable consequences for the plaintiff67. To address the merits of the plaintiff's claim that her detention at the Regional Processing Centre was procured and enforced by Commonwealth action that was in excess of Commonwealth executive power, it will be necessary in due course to examine the operation and validity of s 198AHA. It will also be necessary to examine the practical operation of the Nauruan legislation which authorised her detention and the interaction of that legislation with some of the "garrison" services provided by Wilson Security in accordance with the Transfield contract. It will not be necessary to address the validity of the Nauruan legislation under the Constitution of Nauru. Given the manner in which the proceeding has unfolded and the absence of any concession that the plaintiff's claim was well-founded until the insertion of s 198AHA, it is appropriate to commence with a consideration of the nature of Commonwealth executive power and then to move to an identification of the nature of its relevant limits. Executive Government in the Constitution The framers of the Australian Constitution engaged in what was fairly described informed contemporary commentary as an endeavour of "constructive statesmanship", in which they "used the experience of the mother country and of their predecessors in the work of federation-making ... in no 65 Toowoomba Foundry Pty Ltd v The Commonwealth (1945) 71 CLR 545 at 570; [1945] HCA 15, quoted in Croome v Tasmania (1997) 191 CLR 119 at 126, 137; [1997] HCA 5. 66 Cf Wragg v State of New South Wales (1953) 88 CLR 353 at 371, 392; [1953] HCA 34. 67 Cf Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582; [1992] HCA 10. slavish spirit, choosing from the doctrines of England and from the rules of America, Switzerland, and Canada those which seemed best fitted to the special conditions of their own country"68. Nowhere was their careful appropriation and adaptation of constitutional precedent to local circumstances more apparent than in their framing of what is described in Ch II of the Constitution as "The Executive Government" and of its relationship with what are described in Chs I and III of the Constitution as "The Parliament" and "The Judicature". The second half of the nineteenth century had seen the development of systems of responsible government in each of the colonies which were to become Australian States. Professor Finn (later to become Justice Finn of the Federal Court of Australia) observed of that development69: "Responsible government left unsevered the many constitutional links with the Queen. Even the royal power of veto of colonial legislation remained. And in each colony the Queen's representative, the Governor, persisted as a fixture on the local stage. But so also did the Executive Council, a body hitherto formed of official appointees to advise the Governor in the exercise of the majority of his powers. Now for the first time composed of the elected ministry of the day, the Executive Council became the institutional symbol of an elected ministry – of 'the government'. Behind it … the cabinet system developed. Through it the colonists expressed a very practical view of the proper allocation of responsibilities in the new order." "Untroubled by concerns as to the juristic nature of 'the Crown' the colonists appear to have adopted both a personalized and functionalized view of the Queen (the Crown) and of her constitutional powers and responsibilities. And if the Queen had her place, her province, in the imperial scheme of things, so too in the local arena did 'the Government', of whom a similarly personalized and functionalized view was taken." The practical setting within which that peculiarly functionalised Australian conception of "the Government" took root was acknowledged by the 68 Bryce, Studies in History and Jurisprudence, (1901), vol 1 at 476, 482. 69 Finn, Law and Government in Colonial Australia, (1987) at 4 (footnotes omitted). 70 Finn, Law and Government in Colonial Australia, (1987) at 4 (footnote omitted). Privy Council in 1887, when it commented in advice given on an appeal from the Supreme Court of New South Wales71: "It must be borne in mind that the local Governments in the Colonies, as pioneers of improvements, are frequently obliged to embark in undertakings which in other countries are left to private enterprise, such, for instance, as the construction of railways, canals, and other works for the construction of which it is necessary to employ many inferior officers and workmen. If, therefore, the maxim that 'the king can do no wrong' were applied to Colonial Governments in the [same] way … it would work much greater hardship than it does in England." Chapter II of the Constitution was framed against that political and practical background. The Executive Government of the Commonwealth was established to take from its inception the form of a responsible government which was to have its own distinct national identity and its own distinctly national sphere of governmental responsibility. The executive power of the Commonwealth, although vested in the monarch as the formal head of State, was to be exercisable by the Governor-General as the monarch's representative in the Commonwealth72. There was to be a Federal Executive Council "to advise the Governor-General in the government of the Commonwealth"73, which was to be made up of "Ministers of State for the Commonwealth" whom the Governor- General was to appoint to "administer such departments of State of the Commonwealth as the Governor-General in Council may establish"74. After the first general election, Ministers of State were not to hold office for longer than three months unless they were or became senators or members of the House of Representatives75. Until the Parliament otherwise provided, as the Parliament was specifically empowered to do under s 51(xxxvi), the Governor- General was to have power to appoint and remove "all other officers of the Executive Government of the Commonwealth"76. Transitional provision was made for the transfer to the Commonwealth of "departments of the public service 71 Farnell v Bowman (1887) 12 App Cas 643 at 649. 72 Sections 61 and 2 of the Constitution. 73 Section 62 of the Constitution. 74 Section 64 of the Constitution. 75 Section 64 of the Constitution. 76 Section 67 of the Constitution. in each State"77. The departments to be transferred were specified to include not only "departments of customs and of excise", "naval and military defence" and "quarantine", but two which were at the time of the establishment of the Commonwealth involved in the ongoing practical delivery of government services: "posts, telegraphs, and telephones", and "lighthouses, lightships, beacons, and buoys"78. "[I]t is of the very nature of executive power in a system of responsible government that it is susceptible to control by the exercise of legislative power by Parliament"79. That critical aspect of the relationship between the Executive Government of the Commonwealth and the Parliament of the Commonwealth was not left to chance in the design of the Constitution. In addition to giving the Parliament power to legislate for the appointment and removal of all officers of the Executive Government other than the Governor-General and Ministers, and in addition to enumerating other subject-matters of legislative power under which the Parliament might confer statutory authority on an officer of the Executive Government of the Commonwealth, Ch I of the Constitution conferred on the Parliament by s 51(xxxix) specific power to make laws with respect to matters "incidental to the execution" of power vested by the Constitution "in the Government of the Commonwealth" as well as "in any department or officer of the Commonwealth". Subject to constitutional limitations, including limitations imposed by Ch III of the Constitution, the incidental power conferred by s 51(xxxix) extends not only to legislative facilitation of the execution of the executive power of the Commonwealth80, but also to legislative regulation of the manner and circumstances of the execution of the executive power of the Commonwealth. "Whatever the scope of the executive power of the Commonwealth might otherwise be, it is susceptible of control by statute. A valid law of the Commonwealth may so limit or impose conditions on the exercise of 77 Section 69 of the Constitution. 78 Section 69 of the Constitution. 79 Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 441; [1997] HCA 36 (footnote omitted). 80 Eg Davis v The Commonwealth (1988) 166 CLR 79 at 95, 111-112, 119; [1988] HCA 63. 81 Brown v West (1990) 169 CLR 195 at 202; [1990] HCA 7. the executive power that acts which would otherwise be supported by the executive power fall outside its scope." the relationship between The Executive Government having been so subordinated the Executive Government of the Parliament, the Commonwealth and the federal Judicature was then spelt out in Ch III of the Constitution. Section 75(iii) entrenched original jurisdiction in the High Court in all matters "in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party". Section 75(v) went on in addition to entrench original jurisdiction in the High Court in all matters "in which a writ of Mandamus or prohibition or an injunction is sought against an officer of the Commonwealth". The purpose of s 75(iii), as Dixon J observed, "was to ensure that the political organization called into existence under the name of the Commonwealth and armed with enumerated powers and authorities, limited by definition, fell in every way within a jurisdiction in which it could be impleaded and which it could invoke"82. The term "Commonwealth", Dixon J pointed out, while "[i]t is perhaps strictly correct to say that it means the Crown in right of the Commonwealth", has in s 75(iii) the meaning of "the central Government of the country" understood in accordance with "the conceptions of ordinary life"83. The term was used in s 75(iii) to encompass the totality of what is established by Ch II as the Executive Government of the Commonwealth, and the jurisdiction conferred by s 75(iii) was "expressed so as to cover the enforcement of actionable rights and liabilities of officers and agencies in their official and governmental capacity, when in substance they formed part of or represented the Commonwealth"84. The inclusion of s 75(iii) in the Constitution involved a rejection of any notion, which might otherwise have been drawn from the common law principle then still prevailing in England that the monarch could "do no wrong", that the Executive Government of the Commonwealth was to enjoy immunity from suit for its own actions or for the actions of its officers or agents85. The inclusion of 82 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 363; [1948] HCA 7. 83 (1948) 76 CLR 1 at 362-363. See also Maitland, "The Crown as Corporation", (1901) 17 Law Quarterly Review 131 at 140, 143. 84 (1948) 76 CLR 1 at 367. 85 Werrin v The Commonwealth (1938) 59 CLR 150 at 167-168; [1938] HCA 3; Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 367; The Commonwealth v Mewett (1997) 191 CLR 471 at 549-550; [1997] HCA 29. s 75(iii) had the consequence of exposing the Commonwealth from its inception to common law liability, in contract and in tort, for its own actions and for actions of officers and agents of the Executive Government acting within the scope of their de facto authority86. Any exclusion of actions of the Executive Government from common law liability was to result not from the existence of a generalised immunity from jurisdiction but through the operation of such substantive law as might be enacted by the Parliament under s 51(xxxix)87 or under another applicable head of Commonwealth legislative power. The purpose of s 75(v), as Dixon J put it, was "to make it constitutionally certain that there would be a jurisdiction capable of restraining officers of the Commonwealth from exceeding Federal power"88. It was, in particular, to safeguard against the possibility of s 75(iii) being read down by reference to United States case law so as to exclude a matter in which a writ of mandamus was sought against an officer of the Executive Government89. The purpose was to supplement s 75(iii) so as to ensure that any officer of the Commonwealth acted, and acted only, within the scope of the authority conferred on that officer by the Constitution or by legislation. Its effect was also to ensure that an officer injunction from acting inconsistently with any applicable legal constraint even when acting within the scope of the authority conferred on that officer by the Constitution or by legislation90. the Commonwealth could be restrained by The conception of an officer of the Commonwealth was held at an early stage not to be confined to a person holding executive office under Ch II of the Constitution: so as to encompass judicial and non-judicial officers of courts established by the Parliament under Ch III of the Constitution91 as well as holders 86 James v The Commonwealth (1939) 62 CLR 339 at 359-360; [1939] HCA 9. Cf Little v The Commonwealth (1947) 75 CLR 94 at 114; [1947] HCA 24. 87 Werrin v The Commonwealth (1938) 59 CLR 150 at 165. Eg Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155; [1994] HCA 9. 88 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 363. 89 Ah Yick v Lehmert (1905) 2 CLR 593 at 608-609; [1905] HCA 22. See also Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 92 [18]; [2000] HCA 57. 90 Church of Scientology v Woodward (1982) 154 CLR 25 at 57, 64-65; [1982] HCA 91 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Whybrow & Co (1910) 11 CLR 1; [1910] HCA 33; R v Commonwealth Court of Conciliation (Footnote continues on next page) of independent statutory offices established in the exercise of legislative power under Ch I of the Constitution92. Section 75(v) is nevertheless at its apogee in its application to Ministers and other officers of the Executive Government93. The overall constitutional context for any consideration of the nature of Commonwealth executive power is therefore that, although stated in s 61 of the Constitution to be vested in the monarch and to be exercisable by the Governor- General, the executive power of the Commonwealth is and was always to be permitted to be exercised at a functional level by Ministers and by other officers of the Executive Government acting in their official capacities or through agents. It is and was always to involve broad powers of administration, including in relation to the delivery of government services. Its exercise by the Executive Government and by officers and agents of the Executive Government is and was always to be susceptible of control by Commonwealth statute. And its exercise is and was always to be capable of exposing the Commonwealth to common law liability determined in the exercise of jurisdiction under s 75(iii) and of exposing officers of the Executive Government to writs issued and orders made in the exercise of jurisdiction under s 75(v). In "the last resort" it is necessarily for a court to determine whether a given act is within constitutional limits94. The nature of executive power The nature of Commonwealth executive power can only be understood within that historical and structural constitutional context. It is described – not defined – in s 61 of the Constitution, in that it is extended – not confined – by that section to the "execution and maintenance" of the Constitution and of laws of the Commonwealth. It is therefore "barren ground for any analytical approach"95. Alfred Deakin said of it in a profound opinion which he gave as and Arbitration; Ex parte Brisbane Tramways Group Ltd (1914) 18 CLR 54; [1914] HCA 15. 92 Re Cram; Ex parte NSW Colliery Proprietors' Association Ltd (1987) 163 CLR 117 at 127-128; [1987] HCA 28. 93 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 380; [1975] HCA 52. 94 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 380, quoting Attorney-General (Vict) v The Commonwealth (1935) 52 CLR 533 at 566; [1935] HCA 31. 95 Zines, "The Inherent Executive Power of The Commonwealth", (2005) 16 Public Law Review 279 at 279, quoting Morgan, The Separation of Powers in the Irish Constitution, (1997) at 272. Attorney-General in 1902 that "it would be dangerous, if not impossible, to define", emphasising that it "is administrative, as well as in the strict sense executive; that is to say, it must obviously include the power not only to execute laws, but also to effectively administer the whole Government"96. Without attempting to define Commonwealth executive power, Professor Winterton usefully drew attention to its dimensions when he distinguished its "breadth" from its "depth": "breadth" referring to the subject-matters with respect to which the Executive Government of the Commonwealth is empowered to act having regard to the constraints of the federal system; "depth" referring to the precise actions which the Executive Government is empowered to undertake in relation to those subject-matters97. Put in terms of the nomenclature of Professor Winterton, Mason J referred to the breadth of Commonwealth executive power when, in a frequently cited passage, he said that it "enables the Crown to undertake all executive action which is appropriate to the position of the Commonwealth under the Constitution and to the spheres of responsibility vested in it by the Constitution"98. He referred to its depth when he immediately added that it "includes the prerogative powers of the Crown, that is, the powers accorded to the Crown by the common law"99. Put in terms of the same nomenclature, Brennan J referred exclusively to the depth of Commonwealth executive power when he noted that "an act done in execution of an executive power of the Commonwealth is done in execution of one of three categories of powers or capacities: a statutory (non-prerogative) power or capacity, a prerogative (non-statutory) power or capacity, or a capacity which is neither a statutory nor a prerogative capacity"100. In framing those categories of actions which the Executive Government is empowered to undertake in relation to subject-matters with respect to which the Executive Government is empowered to act, Brennan J used the term 96 Deakin, "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 97 Winterton, Parliament, the Executive and the Governor-General, (1983) at 29, 111. 98 Barton v The Commonwealth (1974) 131 CLR 477 at 498; [1974] HCA 20. 99 Barton v The Commonwealth (1974) 131 CLR 477 at 498. 100 Davis v The Commonwealth (1988) 166 CLR 79 at 108. "prerogative" in the strict and narrow sense in which it had been used by Sir William Blackstone in the middle of the eighteenth century: to refer only to "those rights and capacities which the King enjoys alone, in contradistinction to others, and not to those which he enjoys in common with any of his subjects"101. He framed the second and third categories of permissible acts so as together to cover the wider sense in which Professor Dicey had used the same term in the late nineteenth century, after the emergence of responsible government in the United Kingdom: to refer to "the residue of discretionary or arbitrary authority, which at any given time is legally left in the hands of the Crown"102 and thereby to encompass "[e]very act which the executive government can lawfully do without the authority of [an] Act of Parliament"103. The tripartite categorisation posited by Brennan J has utility in highlighting, in relation to acts done in the exercise of a non-statutory power or capacity, the essential difference between an act done in the execution of a prerogative executive power and an act done in the execution of a non- prerogative executive capacity. An act done in the execution of a prerogative executive power is an act which is capable of interfering with legal rights of others. An act done in the execution of a non-prerogative executive capacity, in contrast, involves nothing more than the utilisation of a bare capacity or permission, which can also be described as ability to act or as a "faculty"104. Such effects as the act might have on legal rights or juridical relations result not from the act being uniquely that of the Executive Government but from the application to the act of the same substantive law as would be applicable in respect of the act had it been done by any other actor. In this respect, the Executive Government "is affected by the 101 Davis v The Commonwealth (1988) 166 CLR 79 at 108, quoting Blackstone, Commentaries on the Laws of England, (1765), Bk 1, Ch 7 at 232. See also Clough v Leahy (1904) 2 CLR 139 at 156; [1904] HCA 38; Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at 155; [1982] HCA 31. 102 Davis v The Commonwealth (1988) 166 CLR 79 at 108, quoting Dicey, Introduction to the Study of the Law of the Constitution, 10th ed (1959) at 424. 103 Dicey, Introduction to the Study of the Law of the Constitution, 10th ed (1959) at 425. Eg Johnson v Kent (1975) 132 CLR 164 at 169; [1975] HCA 4. 104 Cf Heiner v Scott (1914) 19 CLR 381 at 393-394; [1914] HCA 82; In re K L Tractors Ltd (1961) 106 CLR 318 at 335; [1961] HCA 8. condition of the general law"105. Subject to statute, and to the limited extent to which the operation of the common law accommodates to the continued existence of "those rights and capacities which the King enjoys alone" and which are therefore properly to be categorised as prerogative106, the Executive Government must take the civil and criminal law as the Executive Government finds it, and must suffer the civil and criminal consequences of any breach107. That inherent character of non-prerogative executive capacity is given emphasis by the absence of any prerogative power to dispense with the operation of the general law: a principle which Brennan J noted in A v Hayden108 "is fundamental to our law, though it seems sometimes to be forgotten when executive governments or their agencies are fettered or frustrated by laws which affect the fulfilment of their policies". In that case intelligence officers engaged in a bungled training exercise were unable to rely on the authority of the Executive Government to shield them from the investigation of the criminal consequences of their actions under State law. The comments of Deane J are instructive109: "The [officers'] trust in the Commonwealth and in those who approved the exercise or gave them their directions or instructions was completely misplaced. The 'authority or consent necessary to make any act or thing lawful' was not obtained and, in the absence of special statutory provision, was probably not within the power of any person or combination of persons to grant. The 'direction' to participate in the exercise, in the manner in which it was carried out, was a direction which the Commonwealth executive could not lawfully give. To the extent that the [officers] may themselves have been involved in criminal activities, the 'Commonwealth exercise cards' which they were 'instructed ... to show' should they be questioned were completely ineffectual to establish legal justification." 105 Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 439, quoting Federal Commissioner of Taxation v Official Liquidator of E O Farley Ltd (1940) 63 CLR 278 at 308; [1940] HCA 13. 106 Cf Cadia Holdings Pty Ltd v New South Wales (2010) 242 CLR 195 at 210 [30]- [32]; [2010] HCA 27. 107 Clough v Leahy (1904) 2 CLR 139 at 155-156. 108 (1984) 156 CLR 532 at 580; [1984] HCA 67. 109 (1984) 156 CLR 532 at 593. Limitations on executive power The tripartite categorisation posited by Brennan J also has utility in highlighting, in relation to acts done by the Executive Government in the exercise of non-statutory power or capacity, the essential similarity between an act done in the execution of a prerogative executive power or capacity and an act done in the execution of a non-prerogative executive capacity. The essential similarity lies in the identity of their provenance. Non-prerogative executive capacities, no less than prerogative executive powers and capacities, are within the non-statutory executive power of the Commonwealth which is constitutionally conferred by s 61 of the Constitution and which is accordingly constitutionally limited by s 61 of the Constitution. Its constitutional limits are to be understood (as distinct from merely interpreted) in light of the purpose of Ch II being to establish the Executive Government as a national responsible government and in light of constitutional history and the tradition of the common law. Limitations on the executive power of the Commonwealth, rooted in constitutional history and the tradition of the common law, were important to the reasoning of at least two members of the High Court in The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd110 in holding that the Executive Government of the Commonwealth lacked non-statutory power to make or ratify agreements with a company engaged in the manufacture of wool-tops under which the Commonwealth agreed to consent to the sale of wool-tops by the company in return for a share in the profits of sale. Isaacs J emphasised the impossibility of understanding the executive power referred to in s 61 of the Constitution other than by reference to common law principles bearing on the operation of responsible government111. He referred to s 61 as describing the "constitutional domain" or "field on which Commonwealth executive action lawfully operates", adding that it was "plain that the 'constitutional domain' does not determine the existence or non-existence of the necessary power in ... a given case"112. He held the agreements in question to be beyond Commonwealth executive power by reference to the "vitiating 110 (1922) 31 CLR 421; [1922] HCA 62. 111 (1922) 31 CLR 421 at 437-439. 112 (1922) 31 CLR 421 at 440. cause" that they amounted in substance to a form of taxation forbidden to the Executive Government in the absence of parliamentary warrant113. The reasoning of Starke J was to similar effect. He said114: "The question … is whether the King – the Executive Government of the King in the Commonwealth – can, without parliamentary sanction, exact the payment of the moneys mentioned in these agreements, as a condition of or as consideration for giving consent to acts necessary to the conduct of the subject's business? So stated, the problem recalls many conflicts in the past between the King and the subject as to the right of the King to levy taxes upon, or to exact or extort money from, the subject without the consent of Parliament. But that contest has long since ended; and we may now say, with confidence, that it is illegal for the King – or the Executive Government of the King – without the authority of Parliament, to levy taxes upon the subject, or to exact, extort or raise moneys from the subject for the use of the King 'as the price of exercising his control in a particular way' or as a consideration for permitting the subject to carry on his trade or business." Starke J said of s 61 of the Constitution that it "simply marks out the field of the executive power of the Commonwealth, and the validity of any particular act within that field must be determined by reference to the Constitution or the laws of the Commonwealth, or to the prerogative or inherent powers of the King", concluding that "the general principles of the constitutional law of England make it clear ... that no prerogative or inherent executive power residing in the King or his Executive Government supports the agreements"115. The analysis of the executive power of the Commonwealth to which I have referred is not, I think, affected by recent cases which have focussed on the capacity of the Executive Government of the Commonwealth to expend appropriated funds. Pape v Federal Commissioner of Taxation116 decided that ss 81 and 83 of the Constitution are not a source of Commonwealth legislative power to authorise executive expenditure, with the result that Executive Government 113 (1922) 31 CLR 421 at 433, 443-445, referring to Attorney-General v Wilts United Dairies Ltd (1921) 37 TLR 884; (1922) 38 TLR 781. 114 (1922) 31 CLR 421 at 459-460. 115 (1922) 31 CLR 421 at 461. 116 (2009) 238 CLR 1; [2009] HCA 23. expenditure of appropriated funds involves more than simple execution of the law which has appropriated those funds. There must be executive power to make the expenditure. There is, of course, a difference between spending and doing: "[t]he power to make a present to a man is not the power to give him orders"117. Even prior to Pape, it had never been thought that an appropriation alone provided statutory authority for the Executive Government to engage in activities in relation to which it permitted funds to be spent118. Williams v The Commonwealth119 was described in Williams v The Commonwealth [No 2]120 as having been characterised by the Commonwealth parties in that latter case as having held "that many, but not all, instances of executive spending and contracting require legislative authorisation". Whether that characterisation is warranted need not be explored. For present purposes, what is to be taken from the various strands of reasoning in Williams [No 1] is a rejection of any notion that the breadth of Commonwealth executive power is to be measured simply by reference to the reach of Commonwealth legislative power121, and a rejection of any notion that the non-statutory and non-prerogative capacity of the Executive Government of the Commonwealth is to be equated for all purposes with the capacity of an individual122. The focus in the present case is not on the capacity of the Executive Government of the Commonwealth to spend, but on its capacity to procure or enforce a deprivation of liberty. 117 Australia, Royal Commission on the Constitution of the Commonwealth, Report of Proceedings and Minutes of Evidence (Canberra), 22 September 1927 at 72 [396] 118 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 396. 119 (2012) 248 CLR 156; [2012] HCA 23 ("Williams [No 1]"). 120 (2014) 252 CLR 416 at 465 [68]; [2014] HCA 23. 121 (2012) 248 CLR 156 at 189 [30], 232-233 [134]-[137], 358 [544]. 122 (2012) 248 CLR 156 at 193 [38], 237-238 [154]-[155], 253-254 [204], 352-353 Executive power and liberty In Re Bolton; Ex parte Beane123, a proceeding in the original jurisdiction of the High Court under s 75(v) of the Constitution for writs of habeas corpus and prohibition against officers of the Commonwealth, Brennan J observed: "Many of our fundamental freedoms are guaranteed by ancient principles of the common law or by ancient statutes which are so much part of the accepted constitutional framework that their terms, if not their very existence, may be overlooked until a case arises which evokes their contemporary and undiminished force." The order of the Court in that case directed an officer of the Commonwealth to discharge from custody a citizen of another country who had been detained within Australia without statutory authority. Deane J identified the informing principle in the following terms124: "The common law of Australia knows no lettre de cachet or executive warrant pursuant to which either citizen or alien can be deprived of his freedom by mere administrative decision or action. Any officer of the Commonwealth Executive who, without judicial warrant, purports to authorize or enforce the detention in custody of another person is acting lawfully only to the extent that his conduct is justified by clear statutory mandate." Subsequently, in Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs125, Brennan, Deane and Dawson JJ (with whom "Under the common law of Australia and subject to qualification in the case of an enemy alien in time of war, an alien who is within this country, whether lawfully or unlawfully, is not an outlaw. Neither public official nor private person can lawfully detain him or her or deal with his or her property except under and in accordance with some positive authority conferred by the law. Since the common law knows neither lettre de cachet nor other executive warrant authorizing arbitrary arrest or detention, any officer of the Commonwealth Executive who purports to authorize or enforce the detention in custody of such an alien without 123 (1987) 162 CLR 514 at 520-521; [1987] HCA 12. 124 (1987) 162 CLR 514 at 528. 125 (1992) 176 CLR 1 at 19; [1992] HCA 64 (footnotes omitted). judicial mandate will be acting lawfully only to the extent that his or her conduct is justified by valid statutory provision." Those statements of principle are not disputed in the present case. There is, however, no agreement about their application. The Commonwealth and the Minister are equivocal. They accept the statement in Chu Kheng Lim as a statement of the content of the common law of Australia. To treat the statement as bearing on the capacity of the Executive Government, they suggest, would require "some considerable extension of the language". Transfield has no equivocation. Transfield argues that the statements of principle in Re Bolton and in Chu Kheng Lim should be understood as directed solely to the content of the common law of Australia, and that they do not bear on the capacity of the Executive Government of the Commonwealth. Transfield's argument is that the inability of an officer of the Executive Government to authorise or enforce the detention in custody of another person is not in consequence of any incapacity on the part of the Executive Government to authorise or enforce a deprivation of liberty. It is rather in consequence of the absence of any prerogative power on the part of the Executive Government to dispense with the operation of the common law. The inability of the Executive Government to authorise or enforce a deprivation of liberty, so the argument goes, is nothing more or less than the consequence of its officers being subjected like everyone else to common law sanctions for the invasion of common law rights. The common law of Australia, it is said, imposes no impediment to an officer of the Executive Government authorising or enforcing a deprivation of liberty where the common law of Australia does not run. The common law of Australia does not run to Nauru. The logic of Transfield's argument is that the ability of an officer of the Executive Government of the Commonwealth to authorise or enforce a deprivation of liberty depends on the positive law of the place in which the detention occurs. Recognising that the common law of Australia can always be modified or displaced by State legislation, Transfield is driven to argue that the Parliament of a State could confer power on an officer of the Executive Government of the Commonwealth to detain a person in that State, even to punish that person for a breach of a State law, provided only that the Parliament of the Commonwealth consented to its conferral. Ingenious as it is, Transfield's argument is three centuries too late. In Re Bolton, Brennan J specifically identified the Habeas Corpus Act 1679126, as 126 31 Car II c 2. extended by the Habeas Corpus Act 1816127, as amongst the ancient statutes which remain of undiminished significance within our contemporary constitutional structure. Brennan J might equally have identified the Petition of Right 1627 (which declared in substance that orders of the monarch were not sufficient justification for the imprisonment of his subjects) and the Habeas Corpus Act 1640128 (which provided that anyone imprisoned by command of the King or his Council or any of its members without cause was to have a writ of habeas corpus on demand to the judges of the King's Bench or the Common Pleas). The Habeas Corpus Act 1640 is inadequately characterised merely as a manifestation of the general subjection of officers of the King to the common law. The writ of habeas corpus had come, by the time of its enactment, to play "a structural role in limiting executive power"129. The enactment of the Habeas Corpus Act 1640 confirmed the writ as "of the highest constitutional importance"130. The Habeas Corpus Act 1640 is properly characterised as having abolished "the capacity of the monarch to order detentions without the authorization of the law"131 and as having resulted in a "transformation" in "what counted as lawful imprisonment for reasons of state"132. Thenceforth, state imprisonment would not be able to occur in the exercise of any inherent executive capacity because any such inherent capacity had been denied. Lawful state imprisonment, at least of a subject in a time of peace, would occur only if and to the extent permitted by statute133. The significance of the principles established by the Petition of Right 1627 and the Habeas Corpus Act 1640 within colonial government in nineteenth century Australia is sufficiently illustrated by the rejection by the Supreme Court of New South Wales in 1888 as a sufficient return to a writ of habeas corpus of a colonial officer's statement that "I am detaining this person in my custody ... on 127 56 Geo III c 100. 128 16 Car I c 10. 129 Hafetz, "The Untold Story of Noncriminal Habeas Corpus and the 1996 Immigration Acts", (1998) 107 Yale Law Journal 2509 at 2526. 130 Halsbury's Laws of England, 1st ed, vol 10 at 40 [92]. 131 Clark and McCoy, The Most Fundamental Legal Right, (2000) at 37. 132 Halliday, Habeas Corpus, (2010) at 225-226. 133 Clark and McCoy, The Most Fundamental Legal Right, (2000) at 41. the authority of the Government of this colony"134. Of that statement, Darley CJ said135: "It is nothing more than the old return, which never was submitted to, and which no Englishman ever will submit to, and that is that the prisoner is held under the 'special command of the king', and whether it be the king or the Government it is one and the same thing." Those principles, which derive from the history of habeas corpus, pertain specifically to liberty. They are within the compass of what Isaacs J identified in Ex parte Walsh and Johnson; In re Yates136 (a proceeding for a writ of habeas corpus removed into the High Court) as "fundamental principles" of a more general nature which "cannot be found in express terms in any written Constitution of Australia" but which "taken together form one united conception for the necessary adjustment of the individual and social rights and duties of the members of the State"137. Those fundamental principles, in the terms articulated "(1) primarily every free man has an inherent individual right to his life, liberty, property and citizenship; (2) his individual rights must always yield to the necessities of the general welfare at the will of the State; (3) the law of the land is the only mode by which the State can so declare its will." The inability of the Executive Government of the Commonwealth to authorise or enforce a deprivation of liberty is not simply the consequence of the absence of any prerogative power on the part of the Executive Government to dispense with the operation of the common law. It is the consequence of an inherent constitutional incapacity which is commensurate with the availability, long settled at the time of the establishment of the Commonwealth, of habeas corpus to compel release from any executive detention not affirmatively authorised by statute. 134 Ex parte Lo Pak (1888) 9 NSWR 221 at 235. 135 (1888) 9 NSWR 221 at 240. See also at 248. 136 (1925) 37 CLR 36; [1925] HCA 53. 137 (1925) 37 CLR 36 at 79. 138 (1925) 37 CLR 36 at 79. As succinctly explained by Hogg, Monahan and Wright139: "[T]here is no Crown immunity from habeas corpus, despite the fact that, like the other prerogative remedies, habeas corpus takes the form of a command by the Queen. It is obviously vital to the effectiveness of the writ that it be available against ministers and Crown servants, even when they are not persona designata." The Executive Government and any officer or agent of the Executive Government acting in the ostensible exercise of his or her de facto authority is always amenable to habeas corpus under s 75(iii) of the Constitution140. Habeas corpus is in addition available as an incident of the exercise of the jurisdiction of the High Court under s 75(v) of the Constitution in any matter in which mandamus, prohibition or an injunction is bona fide claimed against any officer of the Commonwealth141. That inherent constitutional incapacity of the Executive Government of the Commonwealth to authorise or enforce a deprivation of liberty is a limitation on the depth of the non-prerogative non-statutory executive power of the Commonwealth conferred by s 61 of the Constitution. As such, it cannot be removed by a law enacted by the Parliament of any State: "from its very nature" it must be outside the legislative power of a State to alter142. Nor can the inherent constitutional incapacity be removed by a law enacted by the Commonwealth Parliament under s 51(xxxix) of the Constitution; it is not "incidental to the execution" of executive power to change an inherent characteristic of that power143. It need hardly be said that the inherent constitutional incapacity cannot be removed by a law of another country. 139 Hogg, Monahan and Wright, Liability of the Crown, 4th ed (2011) at 62. 140 R v Davey; Ex parte Freer (1936) 56 CLR 381 at 384-385; [1936] HCA 58; Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 20. 141 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 90-91 [14]. 142 Cf In re Foreman & Sons Pty Ltd; Uther v Federal Commissioner of Taxation (1947) 74 CLR 508 at 531; [1947] HCA 45; The Commonwealth v Cigamatic Pty Ltd (In Liq) (1962) 108 CLR 372 at 377-378; [1962] HCA 40; Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 143 Davis v The Commonwealth (1988) 166 CLR 79 at 111-112. The Commonwealth Parliament can, consistently with s 61 of the Constitution, confer a statutory power or authority to detain on the Executive Government. In addition to finding an available head of Commonwealth legislative power, any Commonwealth law conferring such a power or authority must pass muster under Ch III of the Constitution. The extent of the inherent constitutional incapacity of the Executive Government of the Commonwealth to authorise or enforce a deprivation of liberty can be discerned for the purposes of the present case in the extent of its amenability to habeas corpus. There is no suggestion in the present case of the applicability of any prerogative to detain (using "prerogative" in the strict and narrow sense in which it had been used by Blackstone and adopted by Brennan J), such as that which might arise in relation to enemy aliens in time of war144, or which might be argued to arise as an incident of a prerogative power to prevent an alien from entering Australia145. The extent of that amenability to habeas corpus is sufficiently illustrated for present purposes by the decision of the English Court of Appeal in 1923 to issue a writ of habeas corpus directed to the Home Secretary in respect of a prisoner who had already been handed over to the Irish Free State146. In the House of Lords, in the course of dismissing an appeal from the decision of the Court of Appeal on jurisdictional grounds, it was said on the authority of Darnel's Case147 to be "very old law" that148: "[T]he function of a return to a writ of habeas corpus … is to set out the facts and the grounds of the detention to enable the Court mentioned in the writ to determine two questions, first whether the person to whom the writ is addressed, either directly by himself or by his agents, detained in custody the person named in the writ? and second, if so, was that detention legal or illegal?" 144 Cf Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 19. 145 Cf CPCF v Minister for Immigration and Border Protection (2015) 89 ALJR 207 at 239-240 [148]-[150], 255-258 [259]-[276], 284-286 [478]-[492]; 316 ALR 1 at 39-40, 60-64, 101-104; [2015] HCA 1. 146 R v Secretary of State for Home Affairs; Ex parte O'Brien [1923] 2 KB 361. 147 (1627) 3 St Tr 1 at 6. 148 Secretary of State for Home Affairs v O'Brien [1923] AC 603 at 624. The decision shows that the question of amenability to the writ is quite distinct from the question of the legality or illegality of the detention. Amenability to the writ is determined solely as a question of whether the person to whom the writ is addressed has de facto control over the liberty of the person who has been detained, in relation to which actual physical custody is sufficient but not essential149. That is the measure which I think is appropriate to be applied in considering whether the plaintiff's detention involved action on the part of the Commonwealth or the Minister in excess of the non-statutory executive power of the Commonwealth. Executive deprivation of liberty The agreed facts show that the plaintiff was detained at the Regional Processing Centre on Nauru under Nauruan legislation in circumstances which can be sufficiently summarised as follows. By virtue of being taken to Nauru under the Migration Act, the plaintiff became a "protected person" under the Asylum Seekers (Regional Processing Centre) Act 2012 (Nauru). On an application made to the Secretary of the Department of Justice and Border Control of Nauru by an officer of the Commonwealth without her consent, the Principal Immigration Officer of Nauru granted her a Nauruan regional processing centre visa. It was a condition of that visa that she was to reside at the Centre. The visa was for a three month period and was renewed, without her consent, every three months subject to the same condition. As a protected person residing at the Centre, the plaintiff was then obliged by a provision of the Asylum Seekers (Regional Processing Centre) Act to comply with rules made for the security, good order and management of the Regional Processing Centre by a Nauruan official appointed as the Operational Manager. The rules relevantly required that she not leave, or attempt to leave, the Regional Processing Centre without prior approval from the Operational Manager or an "authorised officer". Another provision of the same Act made it an offence for a protected person to leave, or attempt to leave, the Regional Processing Centre without prior approval from the Operational Manager or an authorised officer and specifically provided that a member of the Nauruan Police Force could arrest a person for that offence. Staff of Wilson Security held appointments by the Secretary of the Department of Justice and Border Control 149 R v Secretary of State for Home Affairs; Ex parte O'Brien [1923] 2 KB 361 at 391, 398. See now Rahmatullah v Secretary of State for Defence [2013] 1 AC 614 at of Nauru as authorised officers for the purpose of the Asylum Seekers (Regional Processing Centre) Act. The Regional Processing Centre was at the time of the plaintiff's detention surrounded by a high metal fence through which entry and exit were possible only through a checkpoint. The checkpoint was permanently monitored by Wilson Security staff for the purpose of monitoring ingress and egress without permission of the Operational Manager. If the plaintiff had attempted to leave the Regional Processing Centre without permission, and Wilson Security staff had been unable to persuade her not to do so, the staff would have sought to gain the assistance of the Nauruan Police Force to deal with her unauthorised departure. Those functions of Wilson Security staff – to act as authorised officers capable of giving prior approval to the plaintiff to leave the Regional Processing Centre and to seek to engage in measures designed to prevent her leaving without permission of the Operational Manager – were all within the scope of the garrison services which the Commonwealth had contracted Transfield to provide and which Transfield had subcontracted Wilson Security to perform. They were all services which, under the Transfield contract, were to be provided not only in compliance with Nauruan law but also in compliance with Commonwealth policies as notified to Transfield from time to time. The conclusion to be drawn is that Wilson Security staff exercised physical control over the plaintiff so as to confine her to the Regional Processing Centre. The circumstance that any physical restraint of the plaintiff would only have occurred as a result of calling in the Nauruan Police Force does not affect that conclusion. The further conclusion to be drawn is that Wilson Security staff exercised that physical control over the plaintiff in the course and for the purpose of providing services which the Executive Government of the Commonwealth had procured to be performed under the Transfield contract. They acted, in the relevant sense, as de facto agents of the Executive Government of the Commonwealth in physically detaining the plaintiff in custody. The procurement of the plaintiff's detention lay beyond the non-statutory executive power of the Commonwealth. Whether or not it was lawful under the law of Nauru is for that purpose irrelevant. The Parliament of Nauru can no more overcome a limitation in the depth of Commonwealth executive power than can the Parliament of a State. The procurement of the plaintiff's detention on Nauru by the Executive Government of the Commonwealth under the Transfield contract was therefore beyond the executive power of the Commonwealth unless it was authorised by valid Commonwealth law. Before 30 June 2015, there was no applicable Commonwealth law. On that day, as has already been noted, s 198AHA was inserted with retrospective effect to 18 August 2012. It is necessary now to turn to consider the operation and validity of that section. Statutory authority Section 198AHA of the Migration Act is set out in the reasons for judgment of other members of the Court. the application of The precondition for the section, as set by s 198AHA(1), is the Executive Government entering into an arrangement in relation to the regional processing functions of a country with any "person" or body. There is no reason not to read the word "person" in this context as extending, in accordance with s 2C of the Acts Interpretation Act 1901 (Cth), to include a body politic. The precondition for the application of the section set by s 198AHA(1) is therefore met by the Executive Government entering into an arrangement in relation to the regional processing functions of a country with the government of the country in question. into The precondition for the application of the section is met in the circumstances of the present case by the Commonwealth of Australia and the the Second Memorandum of Republic of Nauru having entered Understanding, under which the Commonwealth that it will make an assessment, or permit an assessment to be made, of whether or not a transferee is covered by the definition in the Refugees Convention. Entering into the Second Memorandum of Understanding was not itself an act which falls within the scope of the authority retrospectively conferred by the section, but rather involved the exercise by the Executive Government of its non-statutory prerogative capacity to conduct relations with other countries. the Republic of Nauru has assured The making of an assessment of whether or not a transferee is covered by the definition in the Refugees Convention fairly answers the description in s 198AHA(2)(a) of action in relation to the arrangement recorded in the Second Memorandum of Understanding. The detention of a transferee in accordance with Nauruan law or policy pending the completion of such an assessment fairly answers the further description in s 198AHA(2)(a) of action in relation to the regional processing functions of Nauru, or further action that is incidental or conducive to the taking of such action in s 198AHA(2)(c). That action taken under s 198AHA(2) can extend to the exercise of restraint over the liberty of a person on Nauru is made plain by s 198AHA(5). The procurement of the plaintiff's detention on Nauru by the Executive Government of the Commonwealth under the Transfield contract therefore falls within the scope of the statutory authority retrospectively conferred on the Executive Government by s 198AHA(2). To the extent statutory authority might be argued to be required for other aspects of the Transfield contract or its operation, including the payment of appropriated funds to Transfield, that further statutory authority has also been retrospectively conferred on the Executive Government by s 198AHA(2). Section 198AHA(3) is important in clarifying that s 198AHA(2) is directed to nothing other than ensuring that the Commonwealth has capacity and authority to take action and that it does not otherwise affect the lawfulness of that action. That is to say, s 198AHA(2) is directed to nothing other than conferring statutory capacity or authority on the Executive Government to undertake action which is or might be beyond the executive power of the Commonwealth in the absence of statutory authority. The section has no effect on the civil or criminal liability of the Executive Government or its officers or agents under Australian law or under the law of a foreign country. The lawfulness or unlawfulness of Executive Government action under Australian law or under the law of a foreign country conversely does not determine whether or not that action falls within the scope of the statutory capacity or authority conferred by the section. I am unable to accept that there is any substance in the plaintiff's argument that s 198AHA is unsupported by any head of Commonwealth legislative power. In so far as it authorises the Executive Government to take action or cause action to be taken outside Australia in relation to an arrangement entered into by the Executive Government and the government of a foreign country, it is a law with respect to external affairs, within the scope of s 51(xxix) of the Constitution150. In so far as it authorises the Executive Government to take action or cause action to be taken outside Australia that involves, or is incidental or conducive to, assessment in that country of claims to refugee status by non-citizens who have been transferred from Australia, it is also a law with respect to aliens, within the scope of s 51(xix) of the Constitution. It is sufficient for a law to answer the description of a law with respect to aliens that the substantial practical operation of the law is to discriminate in a manner which is peculiarly significant to aliens151. The reach of the aliens power is not subject to any territorial or purposive limitation. The plaintiff's argument that s 198AHA is inconsistent with Ch III of the Constitution warrants closer consideration. The plaintiff does not argue that executive detention of a non-citizen outside Australia pending assessment of a 150 R v Burgess; Ex parte Henry (1936) 55 CLR 608 at 644; [1936] HCA 52; Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 258; [1982] HCA 27. 151 Cunliffe v The Commonwealth (1994) 182 CLR 272 at 316; [1994] HCA 44; Plaintiff S156/2013 v Minister for Immigration and Border Protection (2014) 254 CLR 28 at 42-43 [22]-[25]; [2014] HCA 22. claim by that non-citizen to refugee status is detention for a purpose that is inherently incompatible with Ch III. The plaintiff accepts the application of the holding in Chu Kheng Lim to the purpose of regional processing: that authority to detain an alien in custody can constitute a valid incident of executive power. What the plaintiff argues is that a legislative mandate for executive detention must be for no longer than is reasonably necessary for the administrative processes required to carry that purpose into effect. Section 198AHA, the plaintiff argues, does not have that requisite characteristic. I accept the major premise of the plaintiff's Ch III argument. I have recently explained my understanding that no law conferring a power of executive detention could escape characterisation as punitive therefore as transgressing on the inherently judicial) unless the duration of that detention meets at least two conditions152. The duration of the detention must be reasonably necessary to effectuate a purpose which is identified in the statute conferring the power to detain and which is capable of fulfilment. The duration of the detention must also be capable of objective determination by a court at any time and from time to time. In that regard, I see no principled reason to distinguish between a law which confers a power of executive detention and a law which confers a capacity for executive detention so as to allow for the exercise of power from another legislative source. (and On its proper construction, however, I am satisfied that s 198AHA meets those conditions. Notwithstanding the use of the word "includes", I would not read the definition of "regional processing functions" in s 198AHA(5) as extending beyond the implementation of a law or policy, or the taking of an action, by a regional processing country that is in connection with the role of that country specified in the arrangement which satisfies the precondition for the application of the section under s 198AHA(1). The extent to which action taken on the authority of s 198AHA(2)(a) may involve detention is, on that reading, limited to detention that is in connection with the role of the regional processing country as specified in the arrangement. The requisite connection with that role would be broken were the duration of the detention to extend beyond that reasonably necessary to effectuate that role or were that role to become incapable of fulfilment. The duration of the detention is in the meantime capable of 152 North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 90 ALJR 38 at 64 [99]; 326 ALR 16 at 43; [2015] HCA 41, citing Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 369-370 [138]-[140]; [2013] HCA 53; Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 231-232 [25]-[29]; [2014] HCA 34 and CPCF v Minister for Immigration and Border Protection (2015) 89 ALJR 207 at 272 [374]; 316 ALR 1 at 83; [2015] HCA 1. objective determination by a court by reference to what remains to be done by the regional processing country to fulfil its role as specified in the arrangement. Formal answers to questions The parties have agreed in stating a number of questions for the consideration of the Full Court. The questions are quite detailed. None needs to be answered in full, and some need not be answered at all. As to questions of substance, I would answer Question (1) to the effect that the plaintiff has standing to challenge whether the Commonwealth or the Minister was authorised to engage in conduct which procured and enforced her detention at the Regional Processing Centre; Question (4) to the effect that the conduct of the Commonwealth or the Minister was authorised by s 198AHA of the Migration Act; and Question (5) to the effect that s 198AHA of the Migration Act is supported by s 51(xix) and s 51(xxix) of the Constitution and is not contrary to Ch III of the Constitution. I would not formally answer any other substantive question. As to questions of procedure, I would answer Question (13) to the effect that the proceeding should be dismissed; and Question (14) to the effect that the costs of the special case and of the proceeding generally should be determined in the discretion of a single Justice. It will be apparent from what I have written, and may be relevant to costs, that I consider the plaintiff's central claim (that the Commonwealth and the Minister acted beyond the executive power of the Commonwealth by procuring and enforcing her detention at the Regional Processing Centre between 24 March 2014 and 2 August 2014) to have been well-founded until 30 June 2015, when s 198AHA was inserted with retrospective effect. 189 KEANE J. The plaintiff is a citizen of Bangladesh who claims to be a refugee within the meaning of Art 1 of the Refugees Convention153. On 19 October 2013, the plaintiff was on board a vessel that was intercepted at sea by officers of the Commonwealth. On 20 October 2013, she was transferred to Christmas Island, thereby entering the "migration zone" for the purposes of the Migration Act 1958 (Cth) ("the Migration Act"). The plaintiff did not hold a visa for entry into the migration zone. She therefore met the definition of "unlawful non-citizen" in s 14 of the Migration Act and "unauthorised maritime arrival" in s 5AA of the Migration Act. Consequently, she was detained by officers of the Commonwealth as required by s 189 of the Migration Act. On 21 January 2014, an officer of the Commonwealth applied, on behalf of the plaintiff, but without her actual consent, to the Secretary of the Department of Justice and Border Control of Nauru for a Regional Processing Centre visa ("RPC visa")154. On 22 January 2014, officers of the Commonwealth transferred the plaintiff to Nauru, and she arrived there on 23 January 2014. That day, the RPC visa was granted. The RPC visa specified that the plaintiff "must reside at the Regional Processing Centre, Topside, in Meneng District" ("the Nauru RPC")155. On 23 April 2014 and 23 July 2014, the plaintiff was granted further RPC visas upon the same residential condition as the first. On 2 August 2014, the plaintiff was temporarily transferred from Nauru to Australia for the purpose of undergoing obstetric and gastroenterological review. At this time, she was approximately 20 weeks pregnant. Upon arrival in Brisbane, the plaintiff entered the "migration zone" for the purposes of the Migration Act, once more met the definition of "unlawful non-citizen", and was therefore detained by officers of the Commonwealth pursuant to s 189 of the Migration Act. On 16 December 2014, the plaintiff gave birth to her daughter. On 20 June 2015, the Department of Immigration and Border Protection was advised that the plaintiff had been diagnosed with a gastroenterological condition which is able to be managed at the Nauru RPC. Pursuant to a ministerial direction made under s 198AD(5) of the Migration Act on 15 July 2014, if the plaintiff is to be taken from Australia to a regional processing 153 The Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967). 154 Immigration Regulations 2013 (Nauru), reg 9. 155 Immigration Regulations 2013 (Nauru), reg 9(6)(a). country, she will be transferred back to the Nauru RPC. To facilitate her transfer, an officer of the Commonwealth will have to apply on her behalf to the Secretary of the Department of Justice and Border Control of Nauru for a further RPC visa. Before the plaintiff's transfer back to Nauru could be effected, she commenced proceedings in the original jurisdiction of this Court, pursuant to s 75 of the Constitution, seeking, among other things, a writ of prohibition directed to the Minister to prevent the taking of steps by officers of the Commonwealth Executive to return her to Nauru. Her contention is that, pursuant to the arrangements between the Commonwealth and Nauru, she was subjected to restrictions upon her liberty at the Nauru RPC that amounted to detention in custody caused by the Commonwealth Executive without lawful authority. The Minister and the Commonwealth provided a number of responses to the plaintiff's contention. Among other things, it was said that the plaintiff was detained in custody in Nauru, not by the Commonwealth, but by Nauru under the law of Nauru. It is common ground that the Republic of Nauru is a sovereign State, and the Commonwealth has no legal power to compel Nauru to make, vary or maintain the laws of Nauru or the administrative arrangements made pursuant to those laws. To the extent that the Commonwealth is said to have participated in the restraints upon the plaintiff's liberty in Nauru, the Minister and the Commonwealth contend that s 198AHA of the Migration Act affords such statutory authority as may be necessary to enable that action and to make any payments related to it. The parties agreed upon the terms of a Special Case, which posed a large number of questions for determination by this Court in relation to the plaintiff's claim. Those questions included questions as to the validity of laws of Nauru under the Constitution of Nauru. The parties were agreed that, if it is unnecessary to answer any such question, that question should not be answered. Further, the Special Case also posed questions concerning the operation and validity of s 32B of the Financial Framework (Supplementary Powers) Act 1997 (Cth) and reg 16 and items 417.021, 417.027, 417.029 and 417.042 of Sched 1AA to the Financial Framework (Supplementary Powers) Regulations 1997 (Cth) (together "the Financial Framework Provisions"). The parties agreed that any question concerning the Financial Framework Provisions is unnecessary to answer if it is concluded that the conduct of the Commonwealth to which that question is directed was authorised by s 198AHA of the Migration Act and that provision is not invalid. As will be seen from the reasons which follow, it is unnecessary or inappropriate to answer many of the questions posed in the Special Case. A statement of those questions is attached at the end of the Court's reasons for judgment. The issues which were agitated by the parties in the course of argument in this Court are summarised in the reasons of French CJ, Kiefel and that The plaintiff's contention the Commonwealth Executive has unlawfully caused her detention in custody in Nauru must be rejected because the plaintiff was detained in custody in Nauru by the Republic of Nauru. And to the extent that the Commonwealth Executive procured, funded or participated in the restraint upon the plaintiff's liberty which occurred in Nauru, that restraint was authorised by s 198AHA because it related to the processing by Nauru of the plaintiff's claim to refugee status; and s 198AHA is a valid law of the Commonwealth. Section 198AHA of the Migration Act provides as follows: "(1) This section applies into an arrangement with a person or body in relation to the regional processing functions of a country. the Commonwealth enters The Commonwealth may do all or any of the following: take, or cause to be taken, any action in relation to the arrangement or the regional processing functions of the country; (b) make payments, or cause payments to be made, in relation to the arrangement or the regional processing functions of the country; do anything else that is incidental or conducive to the taking of such action or the making of such payments. To avoid doubt, subsection (2) is intended to ensure that the Commonwealth has capacity and authority to take action, without otherwise affecting the lawfulness of that action. (4) Nothing in this section limits the executive power of the Commonwealth. In this section: action includes: exercising restraint over the liberty of a person; and action in a regional processing country or another country. arrangement includes an arrangement, agreement, understanding, promise or undertaking, whether or not it is legally binding. regional processing functions includes the implementation of any law or policy, or the taking of any action, by a country in connection with the role of the country as a regional processing country, whether the implementation or the taking of action occurs in that country or another country." The Commonwealth's arrangement with the executive government of the Republic of Nauru in relation to the regional processing functions of Nauru For the purposes of s 198AHA(1) of the Migration Act, and pursuant to the non-statutory executive power of the Commonwealth under s 61 of the Constitution, on 3 August 2013 the Commonwealth and Nauru signed the "Memorandum of Understanding between the Republic of Nauru and the Commonwealth of Australia, relating to the Transfer to and Assessment of Persons in Nauru, and Related Issues" ("the MOU"). The MOU superseded a previous memorandum of understanding between the governments of the two countries which had been signed on 29 August 2012. The MOU recorded an arrangement between the President of Nauru and the Prime Minister of Australia involving the acceptance by Nauru of transferees (being persons who have sought to travel to Australia irregularly by sea) from Australia at one or more RPCs in Nauru, and the provision to transferees of settlement opportunities if the Republic of Nauru determines that they are in need of international protection. The MOU contemplated that detailed administrative measures would be settled between the parties to give effect to the arrangement. These measures are recorded in a document entitled "Administrative Arrangements for Regional Processing and Settlement Arrangements in Nauru", signed on 11 April 2014 by the Secretary of the Commonwealth Department of Immigration and Border Protection and the Minister for Justice of Nauru ("the Administrative Arrangements"). Under the Administrative Arrangements, Nauru agreed to accommodate transferees at an RPC while their claims to refugee status under Nauruan law are processed, and the Commonwealth agreed to bear all costs incurred under and incidental to the MOU. The Government of Nauru is required to appoint an Operational Manager, who is responsible for the day-to-day running of the Nauru RPC, and who is to be supported by service providers and staff members engaged by the Commonwealth. The Commonwealth is required to appoint a Programme Coordinator, who is responsible for managing all Australian officers and services contracts in relation to the Nauru RPC. The Commonwealth has agreed to engage and fund contractors to assist with the refugee status assessment process. The relevant determinations are to be made pursuant to Nauruan law, and Nauru is required to provide access to merits review. The merits review process is to be funded by the Commonwealth. The MOU and the Administrative Arrangements also provide for the establishment of a Joint Committee, to be co-chaired by representatives from the Commonwealth Department of Immigration and Border Protection and Nauru, which is responsible for overseeing the practical arrangements required to implement the MOU. The Administrative Arrangements provide for a Joint Working Group, which meets weekly to confer on technical, operational and legal aspects of the running of the Nauru RPC. The Commonwealth's contractual arrangements with Transfield The third defendant, Transfield Services (Australia) Pty Ltd ("Transfield"), is a company incorporated in Australia. On 24 March 2014, the Commonwealth and Transfield entered into a contract entitled "Contract in relation to the Provision of Garrison and Welfare Services at Regional Processing Countries" ("the Transfield Contract"). The "site", as defined in the Transfield Contract, notified by the Commonwealth to Transfield in Nauru, in respect of which the Commonwealth contracted to obtain Transfield's services, is and was at all material times the Nauru RPC. On 2 September 2013, Transfield entered into a contract with Wilson Parking Australia 1992 Pty Ltd entitled "Subcontract Agreement General Terms and Conditions in relation to the Provision of Services on the Republic of Nauru". On 28 March 2014, that contract was replaced by a contract between Transfield and Wilson Security Pty Ltd ("Wilson Security") with the same title. Clause 6.1 of the Transfield Contract requires the Commonwealth to approve subcontracting arrangements; that approval was given on 26 July 2013 and 28 March 2014 in respect of each of the subcontracts. The Commonwealth has also contracted for the provision of services at the Nauru RPC with several other providers, such as Save the Children Australia, International Health and Medical Services Pty Ltd, Craddock Murray Neumann Lawyers Pty Ltd, Adult Multicultural Education Services, and the Corporation of the Trustees of the Roman Catholic Archdiocese of Brisbane, trading as Brisbane Catholic Education. The circumstances of the plaintiff's accommodation in Nauru The circumstances of the plaintiff's accommodation in Nauru were governed by the Asylum Seekers (Regional Processing Centre) Act 2012 (Nauru) ("the RPC Act"). The plaintiff was, by reason of having been brought to Nauru under s 198AD of the Migration Act, a "protected person" for the purposes of the RPC Act. On 21 May 2014, the Asylum Seekers (Regional Processing Centre) (Amendment) Act 2014 (Nauru) inserted s 18C into the RPC Act. Section 18C(1) provides that "protected persons" are prohibited from leaving or attempting to leave an RPC in Nauru without the prior approval of an authorised officer, an Operational Manager, or another authorised person. Section 18C(2) provides that any protected person found to be in breach of the prohibition is liable upon conviction to imprisonment of a maximum period of six months. Pursuant to s 7 of the RPC Act, in July 2014 rules were made for the Nauru RPC ("the Centre Rules"). Rule 3.1.3 of the Centre Rules provides that: "At all times, asylum seekers residing at the Centre must ... not leave, or attempt to leave, the Centre without prior approval from an authorised officer, an Operational Manager or other authorised persons, except in the case of emergency or other extraordinary circumstance". Pursuant to s 17(1) of the RPC Act, the Secretary of the Department of Justice and Border Control of Nauru can appoint as an "authorised officer" a staff member who is employed by a service provider who has been contracted to provide services for the Nauru RPC. As at 7 October 2015, 138 staff of Wilson Security were "authorised officers" for the purposes of the RPC Act. No staff of Transfield or officers of the Commonwealth have been appointed authorised officers for the purposes of the RPC Act. Under the Administrative Arrangements, the Commonwealth is required to lodge an application for an RPC visa in respect of each transferee pursuant to reg 9(3) of the Immigration Regulations 2013 (Nauru) ("the 2013 Immigration Regulations"). Regulation 9(3) provided that an application for an RPC visa could only be made by an officer of the Commonwealth. Pursuant to reg 5(7) of the 2013 Immigration Regulations, the Commonwealth was required to pay to Nauru the associated visa fee of $3,000. As at 30 March 2015, the total of the RPC visa fees paid to Nauru by the Commonwealth was $27,893,633. On 21 January 2014, an officer of the Commonwealth made an RPC visa application on behalf of the plaintiff. On 30 January 2014, shortly after the plaintiff's transfer to the Nauru RPC, the Immigration Regulations 2014 (Nauru) ("the 2014 Immigration Regulations") came into effect, providing for the issuing of RPC visas in relevantly identical terms to those in the 2013 Immigration Regulations. Pursuant to reg 9(5) of the 2014 Immigration Regulations, an RPC visa has a maximum duration of three months. Further RPC visas were granted to the plaintiff by the Secretary of the Department of Justice and Border Control of Nauru pursuant to reg 9(5A) of the 2014 Immigration Regulations, on 23 April 2014 and 23 July 2014. According to the Special Case, all of the plaintiff's RPC visas required that she reside at the Nauru RPC. Regulation 9(6)(a) of both the 2013 and 2014 Immigration Regulations required compliance with that condition. The plaintiff's 23 July 2014 visa was subject to the conditions that she was only permitted to leave the Nauru RPC in an "emergency or other extraordinary circumstances" or "in circumstances where the absence [was] organized or permitted by a service provider and the [visa] holder [was] in the company of a service provider". These conditions replicate the requirements in reg 9(6)(b) and (c) of the 2013 and 2014 Immigration Regulations. The visas granted to the plaintiff were conditional upon her refraining from behaving in a manner prejudicial to peace or good order in Nauru. If the plaintiff breached the conditions of her visa, the Secretary of the Department of Justice and Border Control of Nauru was empowered by reg 20(1)(a)(iii) of the 2013 Immigration Regulations and reg 19(1)(a)(iii) of the 2014 Immigration Regulations to cancel the plaintiff's visa. If the plaintiff's visa were cancelled and she were to remain in Nauru, she would be liable to pay a penalty of up to $10,000, pursuant to s 9(1) of the Immigration Act 1999 (Nauru) or s 10(1) of the Immigration Act 2014 (Nauru). She would also be exposed to a removal order under s 11(1) of the Immigration Act 1999 (Nauru) or s 11(1) of the Immigration Act 2014 (Nauru). The 2014 Immigration Regulations were amended in 2015 to provide, under reg 9(6)(c)(ii), that a visa holder must remain at the specified premises except "in circumstances where the absence is organised or permitted by a service provider". This change reflected the implementation in 2015 of "open centre" arrangements, whereby residents at the Nauru RPC could leave the centre unsupervised on certain days during specified hours. On 2 October 2015, shortly before the hearing of this case, the Department of Justice and Border Control of Nauru announced the expansion of the "open centre" arrangements. As of 5 October 2015, all residents at the Nauru RPC have total freedom of movement at all times. The plaintiff's submissions The plaintiff argued that her detention in custody at the Nauru RPC under the regional processing arrangement between the Commonwealth and Nauru was caused by the Commonwealth Executive acting without the necessary support of a valid statutory authority. She submitted that the possible application of the "open centre" arrangements would not alter that conclusion in respect of her detention in the past. The plaintiff submitted that her detention in custody in Nauru was contrary to the principle stated in Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs156, that "any officer of the Commonwealth Executive who purports to authorize or enforce the detention in custody of ... an alien without judicial mandate will be acting lawfully only to the extent that his or her conduct is justified by valid statutory provision." The plaintiff submitted that the notion of "authorising or enforcing" the executive detention of an alien extends to situations in which the detention is not actually implemented by a particular officer of the Commonwealth, and even though the conduct amounting to authorisation or enforcement takes place outside Australian territory157. It was said that the Commonwealth "procured or caused" the creation of the Nauru RPC and the plaintiff's detention there by requesting that Nauru host an RPC and entering into the MOU. The plaintiff emphasised the "general control" by the Commonwealth Executive over the practical management of the Transfield Contract, and argued that employees of Transfield and Wilson Security had effective control over various aspects of the plaintiff's movement. It was said that, but for the Commonwealth's involvement in Nauru's regional processing functions, the plaintiff would not have been detained, and Nauru would have had no occasion to detain her. Further, the plaintiff would not have been detained in Nauru but for the Commonwealth making a visa application on her behalf, paying the visa fee, and taking her to Nauru under s 198AD(2). The plaintiff submitted that s 198AHA(2) of the Migration Act does not authorise the Commonwealth Executive to cause the plaintiff's liberty to be restricted by the arrangements applicable in Nauru. The plaintiff argued that s 198AHA, which operates when the Commonwealth has entered into an "arrangement with a person or body in relation to ... regional processing functions", does not authorise entry into arrangements with "countries". This was said to be so notwithstanding s 2C of the Acts Interpretation Act 1901 (Cth), which provides that words used to denote persons generally, such as "person", include a body politic. The plaintiff also argued that ss 198AD and 198AHA of the Migration Act activate a process under Nauruan law whereby persons are detained in a manner contrary to Art 5(1) of the Constitution of Nauru, and that their operation is constrained to the extent of that unlawfulness. Article 5(1) of the Constitution of Nauru relevantly provides: 156 (1992) 176 CLR 1 at 19; [1992] HCA 64. 157 CPCF v Minister for Immigration and Border Protection (2015) 89 ALJR 207 at 239-240 [148]-[150]; 316 ALR 1 at 39-40; [2015] HCA 1. "No person shall be deprived of his personal liberty, except as authorised by law in any of the following cases: for the purpose of preventing his unlawful entry into Nauru, or for the purpose of effecting his expulsion, extradition or other lawful removal from Nauru." The plaintiff invited this Court to hold that detention at the Nauru RPC does not fall within the exception to the general guarantee of liberty in Art 5(1)(h) of the Constitution of Nauru. This was said to be so because the detention is not "for the purpose of effecting ... expulsion ... or other lawful removal from Nauru." It was said that when s 198AHA(5) refers to the "implementation of any law … in connection with the role of [a] country as a regional processing country", it must be taken to refer to all the law of the regional processing country including its constitutional law, so that if a law promulgated by that country is invalid by reason of its constitutional law, s 198AHA has no relevant operation. In this regard, the plaintiff relied upon observations in Moti v The Queen158 which suggest that an Australian court may make a finding in relation to the lawfulness of conduct under the law of a foreign country in which the conduct occurs as a step along the way to making a determination about the operation of an Australian law. Alternatively, the plaintiff submitted that, to the extent that s 198AHA purports to authorise the restraints upon the plaintiff's liberty in Nauru, it is not a valid law of the Commonwealth. In this regard, the plaintiff submitted that s 198AHA of the Migration Act is not supported by a head of legislative power in s 51 of the Constitution, and secondly, that if it is a law with respect to aliens within s 51(xix) of the Constitution it authorises detention of an alien for other than a permitted purpose. It was said that a law will only be a valid law with respect to the detention of aliens if it is limited to one of three purposes: removal from Australia; receiving and determining an application for a visa for entry into Australia; or determining whether to permit such an application to be made159. The plaintiff relied upon the observations of Brennan, Deane and Dawson JJ in Lim that laws effecting the detention of aliens will be valid only 158 (2011) 245 CLR 456 at 476 [52]; [2011] HCA 50. 159 Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 231 [26]; [2014] HCA 34. 160 (1992) 176 CLR 1 at 33. "the detention which they require and authorize is limited to what is reasonably capable of being seen as necessary for the purposes of deportation or necessary to enable an application for an entry permit to be made and considered. On the other hand, if the detention which those sections require and authorize is not so limited, the authority which they purportedly confer upon the Executive cannot properly be seen as an incident of the executive powers to exclude, admit and deport an alien. In that event, they will be of a punitive nature and contravene Ch III's insistence that the judicial power of the Commonwealth be vested exclusively in the courts which it designates." The plaintiff submitted that the purpose of s 198AHA was not the removal of persons in the position of the plaintiff from Australia because "removal" requires the relinquishment of control over a person, and in this case s 198AHA enables the ongoing control of that person's detention. Further, it was said not to be directed to the purpose of allowing the Commonwealth to determine whether to permit an application for a visa to enter Australia, or to receive, investigate or determine the outcome of that application, because refugee status determinations in Nauru are directed to the possible grant of a visa to remain in Nauru, not Australia. It was also said that the MOU has a clear deterrent and punitive purpose. The plaintiff cited the observation of McHugh J in Re Woolley; Ex parte Applicants M276/2003161 that a law will not be punitive in nature unless "deterrence is one of [its] principal objects". Consequently, it was said, the agreements in the MOU to "create disincentives ... through possible transfer" purport to allow the Executive to inflict punishment, which cannot be valid under any head of legislative power. The defendants' submissions The Minister and the Commonwealth submitted that the plaintiff lacked standing to bring the proceedings. It was said that to determine whether the Commonwealth's past conduct facilitated the detention of the plaintiff would have no foreseeable practical consequences for the plaintiff. A declaration that the plaintiff's past detention in Nauru was not authorised under Australian law could not found a claim for damages for false imprisonment because the law applicable to that claim would be the law of the place of the tort, namely, the law of Nauru. All the defendants argued that, even if it could be said that s 198AHA(2) authorises the Commonwealth to procure or fund the detention of the plaintiff in 161 (2004) 225 CLR 1 at 26 [61]; [2004] HCA 49. Nauru, it does not cause the detention of the plaintiff in the custody of the Commonwealth and so does not purport to confer the judicial power of the Commonwealth on the Commonwealth Executive. It was also said that the detention at the Nauru RPC is incidental to arrangements directed to the regional processing functions of a foreign country, and can readily be seen not to have any punitive purpose. Transfield submitted that the plaintiff's case involves the assertion of a level of Commonwealth responsibility for her detention that is inconsistent with the agreed facts, in that the Special Case records that the combined effect of the 2013 Immigration Regulations, the 2014 Immigration Regulations and s 18C of the RPC Act – assuming those laws are valid – was to impose legal restrictions on the plaintiff's freedom of movement. It was said that it is not to the point that the Commonwealth was instrumental in causing regional processing to occur in Nauru; the point is that regional processing in Nauru involves detention in custody only because of Nauruan law. In respect of the performance by Transfield of its contractual obligations, Transfield submitted that it is fallacious to treat contractual provisions specifying services to be provided to people detained in Nauru as if they create the detention in custody itself. The defendants submitted that s 198AHA of the Migration Act is supported by the aliens power in s 51(xix), the external affairs power in s 51(xxix) and the Pacific islands power in s 51(xxx). Standing A party who has been detained in custody has standing to question the lawfulness of that detention even though that party has not chosen to pursue a claim for damages for false imprisonment. The interference with the liberty of that person is sufficient to confer standing to seek a declaration of the legal position from a court even though no other legal consequences are said to attend the case162. And even though it may be unlikely, as a practical matter, that the arrangements under which the detention was effected will be applied in the future, it is difficult not to be "impressed with the view that really what is at issue is whether what has been done can be repeated."163 Accordingly, the plaintiff has standing to the extent necessary for the determination of the matter as to the lawfulness of any restriction on her liberty 162 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582, 596-597; [1992] HCA 10. 163 Wragg v State of New South Wales (1953) 88 CLR 353 at 371; [1953] HCA 34. procured or funded by the Commonwealth164. That having been said, it is not necessary to determine whether the plaintiff has standing to challenge the validity of the Commonwealth's contractual arrangements with Transfield or the validity of Nauruan laws said to be contrary to the Constitution of Nauru. Detention in custody It is common ground between the parties that by reason of the combined effect of the requirement in the RPC visas that the plaintiff must reside in the Nauru RPC, s 18C of the RPC Act and r 3.1.3 of the Centre Rules (assuming that those laws are not rendered invalid by Art 5(1) of the Constitution of Nauru), it was unlawful in Nauru for the plaintiff to leave or to attempt to leave the Nauru RPC without the permission of an Operational Manager or an authorised officer under the RPC Act, or some other authorised person. The plaintiff did not consent to these restrictions on her movements. It is important to appreciate that the statement of constitutional principle from Lim on which the plaintiff's argument rests is concerned with "detention in custody" by the Commonwealth. That statement elaborates one consequence of the separation of judicial power from the other governmental powers of the Commonwealth effected by Ch III of the Constitution. This principle is engaged by the statutory conferral upon the Commonwealth Executive of the power to detain a person in custody for the purpose of punishment, that power being essentially judicial in character. It may be noted at this point that the actual decision in Lim recognised that laws for the detention by the Executive of aliens necessary to enable their deportation are not punitive in character; but the point of central importance is that the relevant limitation on Commonwealth legislative power is concerned with detention of an alien in the custody of the Commonwealth; that is, with the legal authority of the Commonwealth to hold an alien in detention. The plaintiff's detention in Nauru was not detention in the custody of the Commonwealth. The very purpose of her removal from Australia to Nauru was to deliver her from detention in the custody of the Commonwealth otherwise required by s 189 of the Migration Act. The plaintiff's detention in Nauru was in the custody of the Republic of Nauru. That is because the legal authority by which she was held in custody in Nauru, an independent sovereign nation, was that of Nauru and not that of the Commonwealth. While it might be said that the Commonwealth's arrangements with Nauru procured or funded or caused 164 The Real Estate Institute of New South Wales v Blair (1946) 73 CLR 213 at 227; [1946] HCA 43; Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 401-402; [1975] HCA 52; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 34-35 [49], 69 [156], 99 [272]-[273]; [2009] HCA 23. restraints over the plaintiff's liberty, the plaintiff's detention in custody was a consequence of the exercise of governmental power, being that of Nauru, an independent sovereign State. There was no suggestion in the Special Case that the Commonwealth requested or required that the Nauruan regime of detention in custody be put in place. Indeed, to the contrary, the parties agreed that it was the fact that, if Nauru had not sought to impose these restrictions on the plaintiff, none of the Commonwealth, the Minister, Transfield or its subcontractors would have sought to impose such restraints over the plaintiff's liberty in Nauru or asserted any right to impose such restraints. Accordingly, the limitation on Commonwealth executive power discussed in Lim is not engaged in the circumstances of this case. Section 198AHA – operation To the extent that statutory authority was necessary to enable the Commonwealth lawfully to procure or fund or participate in the restraints over the plaintiff's liberty which occurred in Nauru, that authority was provided by s 198AHA(2) of the Migration Act. Section 198AHA must be understood in its context as part of the statutory scheme for the regulation of the detention in, and removal from, Australia of unlawful non-citizens165. On 10 September 2012, the Minister designated the Republic of Nauru a "regional processing country" under s 198AB(1) of the Migration Act. Section 198AD(2) of the Migration Act provides that persons meeting the definition of "unauthorised maritime arrival" who have been detained pursuant to s 189 of the Migration Act must be taken, as soon as reasonably practicable, from Australia to a regional processing country. Within this scheme, s 198AHA is enlivened if the Commonwealth enters into "an arrangement with a person or body in relation to the regional processing functions of a country."166 It contemplates an arrangement to which the Commonwealth is a party in relation to the regional processing functions of a country other than Australia. In accordance with s 198AHA(5), Nauru's regional processing functions include the implementation of the RPC Act, the 2013 and 2014 Immigration Regulations and the Administrative Arrangements. The MOU is an arrangement with the executive government of Nauru in relation to the regional processing 165 Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 363-364 [115]-[119]; [2013] HCA 53. 166 Section 198AHA(1). functions of Nauru. As a result, s 198AHA(2) authorises the Commonwealth to "take, or cause to be taken, any action in relation to the [MOU] or the regional processing functions of [Nauru]", and to "make payments, or cause payments to be made, in relation to the [MOU] or the regional processing functions of [Nauru]". At this point, it is convenient to note that the expression "a person or body" is apt to encompass a person or body who constitutes or represents the executive government of that other country. The MOU was executed by a person representing the executive government of Nauru. Accordingly, the plaintiff's contention that s 198AHA has no application because Nauru itself is not "a person or body" must be rejected. reason of the the definition of "action" Commonwealth is authorised to cause restraint to be exercised over the liberty of a person where that exercise of restraint relates to the MOU or Nauru's regional processing functions. The degree of restraint over the liberty of any person that the Commonwealth is authorised to cause depends on whether such restraint can be said to relate to the MOU or the regional processing functions of Nauru. in s 198AHA(5), Contrary to the plaintiff's argument, the authority conferred on the Commonwealth by s 198AHA(2) is not conditional upon a judgment by the domestic courts of this country as to the validity of the laws of Nauru. While it may be said that a statute which authorises conduct by officers of the Commonwealth in another country authorises only conduct which is lawful in that country, one cannot discern in the language of s 198AHA an intention that Australian courts should pass judgment upon the validity of the laws of a foreign State in order to determine whether s 198AHA(2) and (5) apply in the circumstances. Section 198AHA contains textual indications that the operation of s 198AHA(2) does not depend upon the constitutional validity of a Nauruan law. Section 198AHA(5) includes within the concept of "regional processing functions" the "implementation of any law or policy … by a country". This text does not support the plaintiff's argument that because s 198AHA(5) refers to the law of a regional processing country, it must be taken to refer to all the law of that country (and so necessarily requires consideration of whether any particular law propounded for the purposes of s 198AHA(5) is a valid law under the Constitution of Nauru). The text of s 198AHA(5) refers, not to the law of a regional processing country, but to any law. The reference is thus to a particular law as promulgated by Nauru. Further in this regard, s 198AHA(5) refers to "any … policy": that reference is necessarily to a policy as that policy is promulgated by the processing country. The collocation of "any law" with "any policy" suggests that the reference to "any law" is to be regarded in the same way. Further, s 198AHA(3) is an indication that s 198AHA(2) is, in its operation, indifferent as to whether or not a restraint over the liberty of a person in the processing country is, for any reason, unlawful in that country. In addition, considerations of international comity and judicial restraint militate strongly against a construction of s 198AHA(5) that would require an Australian domestic court to accept an invitation to rule upon the validity or invalidity of a law of Nauru as a matter of Nauru's domestic law167. In Attorney-General (United Kingdom) v Heinemann Publishers Australia Pty Ltd168, Mason CJ, Wilson, Deane, Dawson, Toohey and Gaudron JJ acknowledged: "[the] principle of international law, which has long been recognized, namely that, in general, courts will not adjudicate upon the validity of acts and transactions of a foreign sovereign State within that sovereign's own territory. The statement of Fuller CJ in Underhill v Hernandez169 that 'the courts of one country will not sit in judgment on the acts of the government of another done within its own territory' has been repeated with approval in the House of Lords (Buttes Gas v Hammer170) and the Supreme Court of the United States: Banco Nacional de Cuba v Sabbatino171. The principle rests partly on international comity and expediency. So, in Oetjen v Central Leather Co172 the Supreme Court said: 'To permit the validity of the acts of one sovereign State to be re-examined and perhaps condemned by the courts of another 167 Underhill v Hernandez 168 US 250 at 252 (1897); Potter v Broken Hill Proprietary Co Ltd (1906) 3 CLR 479 at 495, 506, 511; [1906] HCA 88; Attorney-General (United Kingdom) v Heinemann Publishers Australia Pty Ltd (1988) 165 CLR 30 at 40-41; [1988] HCA 25. See also Aksionairnoye Obschestvo A M Luther v James Sagor & Co [1921] 3 KB 532 at 546, 548, 558-559; Banco de Espana v Federal Reserve Bank of New York 114 F 2d 438 (1940); Banco Nacional de Cuba v Sabbatino 376 US 398 at 416 (1964); Buttes Gas and Oil Co v Hammer [1982] AC 168 (1988) 165 CLR 30 at 40-41. 169 168 US 250 at 252 (1897). 170 [1982] AC 888 at 933. 171 376 US 398 at 416 (1964). 172 246 US 297 at 304 (1918). would very certainly "imperil the amicable relations between governments and vex the peace of nations".' As Lord Wilberforce observed in Buttes Gas v Hammer173, in the context of considering the United States decisions, the principle is one of 'judicial restraint or abstention' and is 'inherent in the very nature of the judicial process'." These well-established principles of international comity and judicial restraint are inconsistent with the impertinence and paternalism involved in a presumption that a reference in an Australian statute to the law of a foreign sovereign State is only to a law which, in the view of an Australian court, conforms to the constitution of the foreign State. Accordingly, it is not to be presumed that s 198AHA(5) should be read exegetically as if it speaks of "any law of another country held valid by a court of this country". It may be said that s 198AHA(5) could be read as if it referred simply to "a valid law of another country". But, in truth, the second exegetical reading implicitly involves the proposition which is explicit in the first. That is because any question as to the validity of a law of another country for the purposes of the municipal law of the Commonwealth can be resolved only by a decision of an Australian court: under our system of the separation of powers at the federal level, "[i]t is emphatically the province and duty of the judicial department to say what the law is."174 There may be exceptions to the operation of the principles of judicial restraint and international comity established by the authorities. In The Conflict of Laws175 by Dicey, Morris and Collins, it is said that: "[T]here may be circumstances in which foreign legislation may be held by the English court to be unconstitutional under the foreign law. But the court will not entertain an action the object of which is to obtain a determination of the constitutionality of the foreign legislation." To similar effect, in Moti176, this Court noted that there "will be occasions" when an Australian court must state "conclusions about the legality of the 173 [1982] AC 888 at 931-932. 174 Marbury v Madison 5 US 137 at 177 (1803); Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35; [1990] HCA 21. 175 15th ed (2012), vol 1 at 123-124. 176 (2011) 245 CLR 456 at 475 [51]. conduct of a foreign government or persons through whom such a government has acted." It may be said immediately that implicit in this observation is the recognition that the statement of conclusions about the legality of conduct under the law of a foreign sovereign State may be justified as an exception to the settled principles of judicial restraint and international comity but not as being subversive of them. This Court's decision in Moti certainly does not carry the plaintiff's argument as far as it needs to go. In that case, the accused had been brought to Australia from the Solomon Islands without his consent. While the deportation had been effected by officials of the government of the Solomon Islands, officials of the Commonwealth government had supplied the necessary travel documents relating to the accused, knowing that these documents would be used to deport him in circumstances that made the deportation unlawful under the law of the Solomon Islands. The unlawfulness of the accused's removal from the Solomon Islands, in which officials of the Commonwealth government had knowingly assisted, was an issue to be resolved in deciding whether a stay of the proceedings brought against the accused in Australia by the Commonwealth Executive should be granted. As was said by French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ177: "In considering whether prosecution of the charges laid in the indictment preferred against the appellant would be an abuse of process of the Supreme Court of Queensland, the focus of the inquiry must fall upon what Australian officials had done or not done in connection with the appellant's deportation from Solomon Islands. To conclude that the deportation was not effected lawfully was a necessary but not a sufficient step towards a decision about abuse of process." The issue of present concern is not whether conduct of officers of a foreign government involving officers of the Commonwealth, which was indisputably contrary to the law of the foreign sovereign State, led to an abuse of the process of an Australian court. The question here is whether the operation of s 198AHA, a statute of the Commonwealth Parliament, is to be understood as conditional upon the opinion of an Australian court as to the validity or invalidity of a law of a foreign country under the municipal law of that country. In summary on this point, there is no good reason to read s 198AHA(5) as if it were conditional upon the determination by an Australian court of the constitutionality of a law of a foreign country. And in any event, the terms of s 198AHA(5) confirm that the operation of s 198AHA(2) does not depend upon such a determination. 177 (2011) 245 CLR 456 at 477 [53]. Section 198AHA – validity Unauthorised maritime arrivals are aliens within the meaning of s 51(xix) of the Constitution. Section 198AHA, in its operation in relation to the MOU and the implementation by Nauru of its regional processing functions, facilitates the removal of aliens from Australia and their removal to Nauru pursuant to ss 198AB and 198AD of the Migration Act. In this regard, as Hayne J observed in Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship178, "[r]emoval means removal to a place" (emphasis in original). Two points may be made here. First, because the place to which an unauthorised maritime arrival is to be removed will be outside Australia, these provisions necessarily have an extraterritorial operation. Secondly, unless a sovereign country to which the unauthorised maritime arrival is removed is willing and able to receive such persons, the removal of that person from Australia is not reasonably practicable. Accordingly, within the statutory scheme, s 198AHA seeks to ensure the reasonable practicability of removal to a country willing and able to receive these aliens. This operation is sufficient to enable s 198AHA to be characterised as a law with respect to aliens within s 51(xix) of the Constitution179. In this regard, and contrary to the plaintiff's submission, it is well settled that s 51(xix) does not require that a law made thereunder operate only on aliens180. It must be accepted that the Commonwealth is authorised by s 198AHA(2) to cause a restriction upon the liberty of an alien in the country to which the alien is removed only if that restriction is reasonably capable of being seen as a necessary condition of the willingness and ability of that country to receive the alien for regional processing. In Plaintiff M76181, Crennan, Bell and Gageler JJ said: "The constitutional holding in Lim ... was that laws authorising or requiring the detention in custody by the executive of non-citizens, being laws with respect to aliens within s 51(xix) of the Constitution, will not contravene Ch III of the Constitution, and will therefore be valid, only if182: 'the detention which they require and authorize is limited to what is 178 (2013) 251 CLR 322 at 364 [119]. 179 Plaintiff S156/2013 v Minister for Immigration and Border Protection (2014) 254 CLR 28 at 43 [25]-[26]; [2014] HCA 22. 180 Plaintiff S156/2013 v Minister for Immigration and Border Protection (2014) 254 CLR 28 at 42-43 [24]-[25]. 181 (2013) 251 CLR 322 at 369 [138]. 182 (1992) 176 CLR 1 at 33. reasonably capable of being seen as necessary for the purposes of deportation or necessary to enable an application for an entry permit to be made and considered.'" The authority to cause the restriction on liberty conferred by s 198AHA(2) may be seen to be incidental to s 198AD(2), which requires the removal of aliens from Australia, and hence to be necessary for the purposes of the plaintiff's deportation from Australia. As noted above, the facts agreed in the Special Case establish that the detention in custody of the plaintiff was effected by the Republic of Nauru, not by the Commonwealth. Even if these facts do not prevent the conclusion that the Commonwealth caused the liberty of the plaintiff to be restricted in Nauru, they do establish that any restraint on liberty which the Commonwealth caused served to facilitate the removal of the plaintiff from Australia to Nauru because the plaintiff's detention in custody in Nauru by Nauru was a condition of Nauru's readiness and willingness to receive the plaintiff. It may also be noted here that the authority which s 198AHA(2) confers to cause detention in custody and to make payments is confined to causing detention or making payments related to the implementation of the MOU or the regional processing functions of Nauru. As a result, as the Solicitor-General of the Commonwealth rightly accepted, the authority conferred on the executive government of the Commonwealth by s 198AHA(2) expires when the regional processing functions of Nauru come to an end. Finally, the plaintiff's submission that regional processing is punitive because it is designed to have a deterrent effect on the movement of asylum seekers must be rejected. A deterrent effect may be an intended consequence of the operation of regional processing arrangements, but the immediate purpose of s 198AHA is the facilitation of the removal of unauthorised maritime arrivals from Australia. In summary as to the validity of s 198AHA, the authority conferred by s 198AHA(2)(a) to cause the plaintiff's liberty to be restrained is "reasonably capable of being seen as necessary for the purposes of deportation" of aliens. Accordingly, it does not "contravene Ch III's insistence that the judicial power of the Commonwealth be vested exclusively in the courts which it designates."183 The determination of the questions Given these conclusions, the questions posed in the Special Case for determination by this Court should be answered only to the extent necessary for 183 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 33; Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 369 [138]. the resolution of the matter concerning the defendants' participation in the plaintiff's detention in custody in Nauru. I would answer as follows: The plaintiff has standing to seek a declaration that the conduct of the Commonwealth or the Minister in procuring, funding and participating in the plaintiff's detention in Nauru was not authorised by a valid law of the Commonwealth or was not part of the executive power of the Commonwealth. The conduct of the Commonwealth was authorised by s 198AHA of the Migration Act. Section 198AHA is a valid law of the Commonwealth. It is unnecessary to answer whether it was also authorised by s 61 of the Constitution or other legislation. The plaintiff is not entitled to the declaration sought. The proceedings should be dismissed. The plaintiff should pay the defendants' costs. Introduction The Plaintiff, a Bangladeshi national, was on board a vessel intercepted at sea by officers of the Second Defendant ("the Commonwealth") and was then transferred to a Commonwealth vessel and taken to Christmas Island. Upon entering the migration zone184 at Christmas Island, the Plaintiff did not hold any visa to enter or remain in Australia and became an "unlawful non-citizen"185 and an "unauthorised maritime arrival"186 under the Migration Act 1958 (Cth) ("the Migration Act"). The Plaintiff was detained by officers of the Commonwealth under s 189 of the Migration Act. On 22 January 2014, officers of the Commonwealth took the Plaintiff to the Republic of Nauru ("Nauru"), a regional processing country187, pursuant to s 198AD(2) of the Migration Act. The Plaintiff arrived on Nauru on 23 January 2014. For the purposes of effecting that taking of the Plaintiff to Nauru, officers of the Commonwealth exercised powers in s 198AD(3) of the Migration Act, and upon the commencement of the exercise of those powers, the Plaintiff ceased to be detained pursuant to s 189 of the Migration Act. Any detention of the Plaintiff that occurred while she was being taken to Nauru pursuant to s 198AD(2) of the Migration Act was for the purpose of taking the Plaintiff to Nauru. On 21 January 2014, an officer of the Commonwealth, without seeking the Plaintiff's consent, had applied on behalf of the Plaintiff to the Secretary of the Department of Justice and Border Control of Nauru ("the Nauruan Justice Secretary") for a "regional processing centre visa" ("RPC Visa")188. On 23 January 2014, the Principal Immigration Officer of Nauru granted a RPC Visa to the Plaintiff189. On the expiry of that visa (and a subsequent visa), the Principal Immigration Officer of Nauru granted190 the Plaintiff a further RPC 184 As defined in s 5(1) of the Migration Act 1958 (Cth) ("the Migration Act"). 185 As defined in s 14 of the Migration Act. 186 As defined in s 5AA of the Migration Act. 187 As defined in s 198AB of the Migration Act. 188 Pursuant to reg 9 of the Immigration Regulations 2013 (Nauru). 189 Pursuant to reg 9 of the Immigration Regulations 2013 (Nauru). 190 Pursuant to reg 9 of the Immigration Regulations 2014 (Nauru). Visa. Each RPC Visa specified that the Plaintiff had to reside at the regional processing centre on Nauru ("the Nauru RPC")191. The Plaintiff resided at a compound within the Nauru RPC known as "RPC3". In March 2014, the Commonwealth made a contract with Transfield Services (Australia) Pty Ltd ("Transfield"), the Third Defendant, to operate the Nauru RPC ("the Transfield Contract"). Under that contract, Transfield was required to and did restrict the Plaintiff's liberty. Transfield could engage, and has engaged, subcontractors to perform the Transfield Contract. But under the Transfield Contract the Commonwealth can, at any time and at its discretion, take over the operation of the Nauru RPC from Transfield and its subcontractors. The Plaintiff is unwilling to return to Bangladesh because the Plaintiff claims to be a refugee192. The Plaintiff applied to the Nauruan Justice Secretary to be recognised by Nauru as a refugee under s 5 of the Refugees Convention Act 2012 (Nauru) ("the Refugees Convention Act"). That application has not been determined. On 2 August 2014, the Plaintiff was brought to Australia for the temporary purpose of undergoing review in a centre of medical excellence. The Plaintiff remains in Australia. In the proceedings in this Court, the Plaintiff seeks an injunction against the First Defendant ("the Minister") and other officers of the Commonwealth and a writ of prohibition prohibiting them from taking steps to remove her to Nauru if she is to be detained at the Nauru RPC. The Plaintiff also seeks orders prohibiting and restraining the Commonwealth from making any further payments to Transfield and a declaration to the effect that her detention on Nauru was unlawful under Australian law. Questions were stated for the opinion of the Full Court by way of a Special Case and concern two time periods – the period when the Plaintiff was detained on Nauru ("the past conduct") and the future period if the Plaintiff were to be returned to Nauru ("future arrangements"). In relation to the past conduct, the questions stated for the opinion of the Full Court (Questions 1-5) ask, in substance, whether the Commonwealth detained the Plaintiff on Nauru and, if so, whether the Commonwealth 191 Pursuant to reg 9(6)(a) of the Immigration Regulations 2013 (Nauru) and reg 9(6)(a) of the Immigration Regulations 2014 (Nauru). 192 Within the meaning of the Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967) ("the Refugees Convention"). Parliament has power to pass a law authorising the detention of an alien by the Commonwealth, outside Australia, and after the Commonwealth has exercised its undoubted power to expel that alien from Australia or prevent entry by that alien into Australia. The Commonwealth denies that it detained the Plaintiff on Nauru at any time between January and August 2014 but it says that in any event s 198AHA of the Migration Act gave the Executive the power to detain her on Nauru after the Executive had prevented her from entering Australia and her removal from Australia was complete. the powers of These proceedings are concerned only with the Commonwealth. These proceedings must focus upon what the Commonwealth has done, or what it would propose to do if the Plaintiff were again to be taken to Nauru. It is neither relevant nor appropriate for this Court to pass any judgment upon what the Government of Nauru has done or proposes to do. In particular, it is neither relevant nor appropriate for this Court to ask whether or to what extent Nauru has detained or could detain the Plaintiff. To answer the questions about the past conduct, it is necessary to address the nature, and extent, of the acts and conduct of the Commonwealth in relation to the Plaintiff and her detention on Nauru. That analysis will explain that the Plaintiff was detained by the Commonwealth on Nauru. And it is that detention which raises the fundamental question of the power of the Commonwealth Parliament to pass a law authorising the detention of an alien by the Commonwealth outside Australia and after the Commonwealth has exercised its undoubted power to expel that alien from Australia or prevent entry by that alien into Australia. The established and unchallenged doctrine193 of this Court requires the conclusion that in the circumstances set out in the Special Case, to the extent that s 198AHA purported to authorise the Executive to effect that detention, s 198AHA of the Migration Act is invalid and no other power supports that detention. In relation to any future arrangements, these reasons will explain that it is not appropriate to answer the stated questions (Questions 6-12) because they are hypothetical. Questions 13 and 14 are directed to the form of relief and costs and are addressed below. Facts This section of the the reasons will address Commonwealth made in relation to Nauru and the nature and extent of its involvement on Nauru. The facts were stated in the Special Case. the arrangements 193 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1; [1992] HCA 64. The facts primarily concern the past conduct as it involved the detention of the Plaintiff on Nauru. Any future arrangements if the Plaintiff were returned to Nauru are addressed in Part (6) of this section of the reasons. Steps taken by the Minister under the Migration Act Nauru was designated a "regional processing country" under s 198AB(1) of the Migration Act in September 2012. On 29 July 2013 and 15 July 2014, the Minister made directions194 with respect to the regional processing countries to which particular classes of unauthorised maritime arrivals must be taken. Nauru was listed in each direction. International arrangements (a) MOU The Commonwealth and Nauru signed a "Memorandum of Understanding … relating to the transfer to and assessment of persons in Nauru, and related issues" ("the MOU") on 3 August 2013. The MOU remains in effect. The Preamble to the MOU records that the Commonwealth and Nauru are State parties to the Refugees Convention and acknowledge the importance of inter-country co-operation to undermine the "People Smuggling"195 industry; that the Commonwealth and Nauru share a longstanding bilateral relationship of co- operation on migration and in combating transnational crime; that "Irregular Migration"196 is a continuing challenge for the Asia-Pacific region; and that the Commonwealth "appreciates the acceptance by [Nauru] to host Transferees in Nauru, including at one or more Regional Processing Centres or under community-based arrangements, and to provide Transferees who [Nauru] determines international protection with settlement opportunities". A "Transferee" is a person transferred to Nauru pursuant to the MOU. The Plaintiff was and remains a Transferee. in need of to be The Preamble also refers to the Fourth Ministerial Conference of the Bali Process on People Smuggling, Trafficking and Related Transnational Crime197. 194 Pursuant to s 198AD(5) of the Migration Act. 195 Defined to mean "the procurement, in order to obtain, directly or indirectly, a financial or other material benefit, of the unauthorised entry of a person into a country of which [the person] is not a national or permanent resident". 196 Defined to mean "the phenomenon of people moving without proper authorisation to a country including for the purpose of seeking asylum". 197 Held in Indonesia on 29 and 30 March 2011. The Preamble records that, having regard to those and other matters, the Commonwealth and Nauru had reached a "common understanding regarding the transfer, assessment and settlement arrangements, whereby [the Commonwealth] would Transfer persons to Nauru for processing of any asylum claims that Transferees may raise and [Nauru] would settle an agreed number of those who it determines are in need of international protection". Three objectives are listed in the MOU198. First, combating People Smuggling and Irregular Migration in the Asia-Pacific region is stated as a shared objective. That objective goes on to record that transfer arrangements and the establishment of regional processing centres ("RPCs") are a visible deterrent to people smugglers. The second stated objective is enabling "joint cooperation, including the development of enhanced capacity in Nauru, to address these issues". The third stated objective is that because the Commonwealth and Nauru understand the importance of regional co-operation, they have determined to continue discussions as to how these transfer, assessment and settlement arrangements might over time be broadened under the regional co-operation framework. The MOU records that the Commonwealth and Nauru are to conduct all activities in respect of the MOU in accordance with their own Constitutions and "all relevant domestic laws"199. The Commonwealth bears "all costs incurred under and incidental to" the The MOU acknowledges that this may require the additional MOU. development of infrastructure or services on Nauru but goes on to state that it is envisaged that there will be a broader benefit for communities in which those settled are initially placed200. Operation of the MOU is then addressed201. The Commonwealth may transfer but Nauru will accept Transferees from Australia202. "Administrative measures" giving effect to the MOU were to be settled between the Commonwealth and Nauru. Further specific arrangements could be made, as 198 cll 1-3 of the MOU. 199 cll 4 and 5 of the MOU. 200 cl 6 of the MOU. 201 cll 7-24 of the MOU. 202 cl 7 of the MOU. jointly determined to be necessary, on more particular aspects of the MOU for the purpose of giving effect to its objectives203. After identifying the persons who were to be transferred to Nauru204, the MOU records that Nauru will host one or more RPCs for the purposes of the MOU and may also host Transferees under other arrangements205. The "[o]utcomes" for the Transferees are identified as follows: [Nauru] undertakes to enable Transferees who it determines are in need of international protection to settle in Nauru, subject to [the Commonwealth and Nauru] on agreement between arrangements and numbers. This agreement between [the Commonwealth and Nauru] on arrangements and numbers will be subject to review on a 12 monthly basis through the Australia- Nauru Ministerial Forum. [The Commonwealth] will assist [Nauru] to settle in a third safe country all Transferees who [Nauru] determines are in need of international protection, other than those who are permitted to settle in Nauru pursuant to Clause 12. [The Commonwealth] will assist [Nauru] to remove Transferees who are found not to be in need of international protection to their countries of origin or to third countries in respect of which they have a right to enter and reside." On the question of timing, and subject to cl 12, the MOU records that the Commonwealth is to make all efforts to ensure that all Transferees depart Nauru within as short a time as is reasonably necessary for the implementation of the MOU, bearing in mind the objectives set out in the Preamble and cl 1206. In relation to "[c]o-operation", the MOU records that "[c]ommunications concerning the day-to-day operation of activities undertaken in accordance with this MOU will be between the [Nauruan Justice Secretary] and the Australian Department of Immigration and Citizenship"207. A Joint Committee was to be 203 cl 8 of the MOU. 204 cl 9 of the MOU. 205 cll 10 and 11 of the MOU. 206 cl 15 of the MOU. 207 cl 21 of the MOU. established with responsibility for the oversight of the practical arrangements required to implement the MOU208. The Joint Committee was required to meet regularly and was to be co-chaired by mutually agreed representatives of the Australian Department of Immigration and Citizenship and Nauru. Relevant non-government organisations and service providers could participate in the Joint Committee, where appropriate. It is evident from the terms of the MOU that it was intended that the Commonwealth would maintain a significant involvement in the outcome for each Transferee after their removal to Nauru, in the day-to-day operation of processing activities and in overseeing the practical arrangements to implement the MOU. Administrative Arrangements On 11 April 2014, the Secretary of the Department of Immigration and Border Protection of the Commonwealth and the Nauruan Minister for Justice their respective governments entitled signed a document on behalf of "Administrative Arrangements for Regional Processing and Settlement Arrangements in Nauru: Supporting the [MOU]" ("the Administrative Arrangements"). The Administrative Arrangements remain in effect. They form part of the "Administrative measures" referred to in cl 8 of the MOU. Clause 1.1 of the Administrative Arrangements confirms that, consistent with cl 6 of the MOU, the Commonwealth will "bear all costs incurred under and incidental to the MOU, including any reasonable costs associated with legal claims arising from activities under the MOU", but "excluding costs resulting from actions by employees or agents of [Nauru] that are malicious, fraudulent, illegal or reckless". The Administrative Arrangements deal with the transfer process from Australia to Nauru209. After identifying that a Transferee is a person who is able to be transferred to Nauru under Australian law210, amongst other requirements, cl 2.2.6 of the Administrative Arrangements records that: "Australian officials will lodge applications with [Nauru] for [RPC Visas] for Transferees pursuant to subsection 9(3) of the Nauru Immigration Regulations 2013 as soon as reasonably practicable prior to the scheduled departure of a flight or arrival of a sea vessel." 208 cl 22 of the MOU. 209 cl 2 of the Administrative Arrangements. 210 cl 2.1(c) of the Administrative Arrangements. Nauru is to process those visas "as soon as reasonably practicable"211. When the Transferees arrive on Nauru, "Service Providers"212 with assistance from Nauruan officials are to escort the Transferees to transport and take them to a RPC213. There is currently one RPC on Nauru, the Nauru RPC, comprising three sites known as RPC1, RPC2 and RPC3. On arrival at the Nauru RPC, it is the Australian officials who provide all relevant documentation to "Staff Members"214. That documentation may include Transferee files and identity documents215. The arrangements at the Nauru RPC are then addressed. Nauru appoints an Operational Manager responsible for the day-to-day management of the Nauru RPC216. That Operational Manager is declared to hold that position under s 3(2) of the Asylum Seekers (Regional Processing Centre) Act 2012 (Nauru) ("the RPC Act"). The Operational Manager is supported by contracted Service Providers and Staff Members217. It is the Operational Manager, with assistance from Service Providers, who monitors the welfare, conduct and safety of Transferees218. The Commonwealth appoints a Programme Coordinator, who is responsible for managing all Australian officers and services contracts in relation to the Nauru RPC, including by ensuring that all contractors deliver the contracted services. This is done "in close liaison with the Operational Manager"219. The role of the Programme Coordinator under the Administrative 211 cl 2.2.9 of the Administrative Arrangements. 212 Defined as a "company or organisation/entity contracted to provide a service at [the Nauru RPC] or in relation to Transferees". 213 cl 3.4 of the Administrative Arrangements. 214 Defined as a "person who is involved in providing services at [the Nauru RPC], including a person employed by a Service Provider". 215 cl 3.6.1 of the Administrative Arrangements. 216 cl 4.1.2 of the Administrative Arrangements. As will become evident, under the Asylum Seekers (Regional Processing Centre) Act 2012 (Nauru) ("the RPC Act"), the appointer of the Operational Manager is altered to be the person (however described) who has been given responsibility by the Commonwealth or by the Nauruan Minister (s 3(1)). There is one Operational Manager for each of RPC1, 217 cl 4.1.3 of the Administrative Arrangements. 218 cl 4.1.6 of the Administrative Arrangements. 219 cl 4.1.4 of the Administrative Arrangements. Arrangements has at all times been filled by an officer of the Department of Immigration and Border Protection of the Commonwealth. Security at the Nauru RPC is provided by a Service Provider220. As will become apparent, that Service Provider is contracted by the Commonwealth and is Transfield. It will be necessary to return to consider the terms of Transfield's engagement by the Commonwealth in Part (4) of this section of the reasons below. The duration and purpose of a Transferee's stay at the Nauru RPC are addressed in cl 4.2 of the Administrative Arrangements. Nauru is to accommodate Transferees at the Nauru RPC "while their claim to be recognised as a Refugee under Nauruan law and/or claims for the purposes of Clause 19(c) of the MOU are assessed"221. Clause 19(c) of the MOU is an assurance by Nauru that it will "not send a Transferee to another country where there is a real risk that the Transferees [sic] will be subjected to torture, cruel, inhumane or degrading treatment or punishment, arbitrary deprivation of life or the imposition of the death penalty". The Administrative Arrangements record to be made under Nauruan the refugee status the However, determination Commonwealth is to engage and fund contractors to assist in that refugee status determination process223 and to assist Nauru to develop arrangements for the administration of those determinations224. Nauru is to provide access to a merits review process for a Transferee determined not to be a refugee after preliminary determination225. The Commonwealth funds the costs of that review226. that law222. Outcomes for Transferees are addressed in cl 6 of the Administrative Arrangements. The arrangements record that the Commonwealth and Nauru will agree to arrangements to cover "their respective responsibilities relating to the settlement of Refugees and other persons in need of international protection in 220 cl 4.3.1 of the Administrative Arrangements. 221 cl 4.2.1 of the Administrative Arrangements. 222 cl 5.2.1 of the Administrative Arrangements. 223 cl 5.2.2 of the Administrative Arrangements. 224 cl 5.2.5 of the Administrative Arrangements. 225 cl 5.3.1 of the Administrative Arrangements. 226 cl 5.3.2 of the Administrative Arrangements. Nauru under Clause 12 of the MOU"227 and that the Commonwealth will meet agreed settlement support costs for those settled on Nauru228. Where it is determined that a Transferee does not engage international protection obligations, the Administrative Arrangements record two important matters: first, that the Commonwealth and Nauru accept that voluntary return to the Transferee's home country or a third country that they have a right to enter and reside in is the preferred option229; and second, that in the case of involuntary removal, Nauru may order the removal of a Transferee and the Commonwealth will assist Nauru in accordance with cl 14 of the MOU230. Governance of the Nauru RPC is addressed in cl 8 of the Administrative Arrangements. Two principal methods are set out – a Joint Committee (being that identified in cl 22 of the MOU) to provide advice on practical arrangements to implement the MOU including issues relating to the stay of Transferees231; and a Joint Working Group to liaise on the technical, operational and legal aspects of the operation and management of the Nauru RPC232. The Commonwealth has a significant role in relation to the Joint Committee and the Joint Working Group. The work of the Joint Committee relates to the implementation and operation of the Nauru RPC. It convenes on a regular basis and its membership includes representatives from the Nauruan and Commonwealth Governments, including subject matter experts from the Minister's Council on Asylum Seekers and Detention. The Deputy Commonwealth Ombudsman is an observer. It is co-chaired by mutually agreed representatives of the Nauruan Government and the Department of Immigration and Border Protection of the Commonwealth. The Joint Working Group meets weekly to discuss matters relating to the Nauru RPC, including construction, general updates on regional processing issues, visas, legal challenges, staffing statistics and training, activities for Transferees and refugees, and events occurring inside and outside the Nauru RPC. The Joint Working Group is chaired by the Nauruan Minister for Justice 227 cl 6.2.1 of the Administrative Arrangements. 228 cl 6.2.2 of the Administrative Arrangements. 229 cl 6.3.1 of the Administrative Arrangements. 230 cll 6.5.2-6.5.4 of the Administrative Arrangements. 231 cl 8.1.1 of the Administrative Arrangements. 232 cl 8.2.1 of the Administrative Arrangements. and Border Control ("the Nauruan Justice Minister"), and members include the Australian High Commissioner for Nauru and officers of the Department of Immigration and Border Protection of the Commonwealth. Each Operational Manager is a standing member of the Joint Working Group. Unsurprisingly, the Commonwealth occupies an office at the Nauru RPC, at which officers of the Australian Border Force of the Commonwealth carry out functions in relation to Transferees or the Nauru RPC. Those functions include managing Service Provider contracts, managing and monitoring Commonwealth- funded projects, including construction projects, and managing relationships and communication between the Commonwealth, Service Providers, and the Government of Nauru. The officers wear official clothing bearing the insignia of the Australian Border Force of the Commonwealth and the Australian coat of arms. What is described as "Regional Cooperation Framework and Processing" is then dealt with as follows: In support of a Regional Cooperation Framework, the MOU between [the Commonwealth] and Nauru enable [sic] joint cooperation, including the development of enhanced capacity in Nauru, to address people smuggling and irregular migration issues in the Asia-Pacific region. 9.2 Both countries will undertake a broad range of functions under the Regional Cooperation Framework. Including: processing protection claims for persons seeking asylum; providing learning and training opportunities for officials in the region to undertake refugee status determinations; administering capacity building activities to develop practical skills in asylum processes (such as registration and reception practices); including assisting with the development of international protection frameworks, the development of domestic legislative frameworks as a complement to other capacity building activities in Nauru (and/or other countries in the region); and using [RPC] facilities to provide short-term, temporary facilities to assist in the response to emergency situations. [The Commonwealth] will provide skills development and training opportunities to the local Nauruan workforce employed in a [RPC] to build employment." their skills and knowledge in relation their Nauruan law Immigration Act 2014 (Nauru) and Immigration Regulations 2014 (Nauru) As seen earlier, a RPC Visa is one of the visas that may be granted233 under the Immigration Regulations 2014 (Nauru)234. The fee for a RPC Visa, $3,000235, is payable by the Commonwealth when a demand for its payment is made on behalf of Nauru236. Such a visa may only be granted to an offshore entry person within the meaning of the Migration Act who is to be, or has been, brought to Nauru under s 198AD of the Migration Act or a person who is to be, or has been, brought to Nauru under s 199 of the Migration Act237. An application for such a visa must be made before the entry into Nauru of the Transferee and can only be made by an officer of the Commonwealth238. A RPC Visa may only be granted for one of the following purposes239: the making by the [Nauruan Justice] Secretary of a determination in respect of the person under section 6 of the [Refugees Convention Act]; enabling a person in respect of whom the [Nauruan Justice] Secretary has made a determination that he or she is not recognised as a refugee, or a decision to decline to make a determination on his or her application for recognition as a refugee, to remain in Nauru until all avenues for review and appeal are exhausted and arrangements are made for his or her removal from Nauru; 233 reg 4(1)(d) of the Immigration Regulations 2014 (Nauru). 234 These regulations were made under s 33 of the Immigration Act 2014 (Nauru). 235 reg 5(7) and Sched 2 to the Immigration Regulations 2014 (Nauru). 236 reg 5(7) of the Immigration Regulations 2014 (Nauru). 237 reg 9(1) of the Immigration Regulations 2014 (Nauru). 238 reg 9(2) and (3) of the Immigration Regulations 2014 (Nauru). 239 reg 9(4) of the Immigration Regulations 2014 (Nauru). enabling a person whose recognition as a refugee has been cancelled to remain in Nauru until all avenues for review and appeal are exhausted and arrangements are made for his or her removal from Nauru; enabling a person in respect of whom the [Nauruan Justice] Secretary has made a determination that he or she is recognised as a refugee to remain in Nauru pending the making of arrangements for his or her settlement in another country; enabling a person [who is to be, or has been, brought to Nauru under s 199 of the Migration Act] to reside, as a dependant, with the holder of a [RPC Visa] issued for a purpose mentioned in paragraph (a), (b), (c) or (d)." Conditions attaching to a RPC Visa include that the holder must reside in premises specified in the visa240. If a holder of a RPC Visa is notified in writing that a determination has been made that the holder is recognised as a refugee, is granted derivative status or is in need of complementary protection, the RPC Visa automatically becomes a temporary settlement visa241. The fee for that visa is $3,000 a month and paid by the Commonwealth242. A Commonwealth officer has made application to the Nauruan Justice Secretary for a RPC Visa243 in respect of each Transferee taken to Nauru since its designation as a regional processing country. Each application has been granted. In making an application for a RPC Visa on behalf of a Transferee, Commonwealth officers did not as a matter of practice, and were not required by the law of Nauru to, seek the consent of the Transferee. On the expiry of a RPC Visa held by a Transferee, which occurs not more than three months after the RPC Visa is granted244, it has been the general practice of the Nauruan Justice 240 reg 9(6)(a) of the Immigration Regulations 2014 (Nauru). 241 reg 9A(1) of the Immigration Regulations 2014 (Nauru). 242 reg 5(7) and Sched 2 to the Immigration Regulations 2014 (Nauru). 243 Pursuant to reg 9A of the Immigration Regulations 2000 (Nauru) or, subsequently, pursuant to reg 9 of the Immigration Regulations 2013 (Nauru) or reg 9 of the Immigration Regulations 2014 (Nauru). 244 In accordance with reg 9(5) of the Immigration Regulations 2013 (Nauru) and subsequently reg 9(5) of the Immigration Regulations 2014 (Nauru). Secretary to grant a further RPC Visa to the Transferee245 without requiring a further application by a Commonwealth officer for a further RPC Visa for that Transferee and without seeking the consent of that Transferee. It has been the invariable practice on Nauru for the form of the RPC Visa issued in respect of Transferees to specify the Nauru RPC as the place at which the Transferees must reside. The Commonwealth has paid all RPC Visa fees payable, which, as at Following arrival on Nauru, all 30 March 2015, totalled $27,893,633. Transferees have resided at the Nauru RPC. RPC Act The RPC Act is stated to be "[a]n Act to regulate the operation of centres at which asylum seekers and certain other persons brought to Nauru under the Migration Act 1958 of the Commonwealth of Australia are required to reside; to establish certain protections for those persons and set out their obligations; to impose duties on the person managing operations at a centre and confer powers on certain persons in relation to a centre or persons residing there; to appoint the Minister as guardian of certain children and for related purposes". The RPC Act prescribes the duties of the "Operational Manager"246. In s 3(1) of the RPC Act, "Operational Manager", in relation to a RPC, is defined to mean "the person (however described) who has been given responsibility by the Commonwealth of Australia or by the Minister for managing operations at the centre and who is declared under subsection (2)". A careful reader will notice that under the RPC Act a person can be given this responsibility by the Commonwealth or by a Nauruan Minister. That is not consistent with the definition of Operational Manager in the Administrative Arrangements247. The duties of an Operational Manager are set out in ss 5, 6 and 7 of the RPC Act. It is unnecessary to list each of them. It is sufficient for present purposes to record that the Operational Manager is to ensure that each Transferee residing at the Nauru RPC is treated in a fair and humane manner consistent with the law of Nauru248 and is provided with certain facilities and protections249. A particular duty imposed on the Operational Manager is to ensure that restrictions on the 245 Pursuant to reg 9(5A) of the Immigration Regulations 2014 (Nauru). 246 Pt 2 of the RPC Act. 247 See [297] above. 248 s 5 of the RPC Act. 249 s 6 of the RPC Act. movement of those at the Nauru RPC are "limited to the minimum necessary to maintain the security and good order" of the Nauru RPC250. An important duty of the Operational Manager is to make rules ("the RPC Rules") for the "security, good order and management" of the Nauru RPC and the "care and welfare" of the Transferees residing there251. A Transferee residing at the Nauru RPC has to comply with those rules252. It will be necessary to return to consider some aspects of the RPC Rules in the next part of this section of the reasons. In addition to the Operational Manager, the RPC Act provides for the appointment, by the Nauruan Justice Secretary, of an "authorised officer", being a staff member employed by a Service Provider contracted to provide services for the Nauru RPC253. A "staff member" is defined in the RPC Act to mean a person employed or engaged to provide services at the Nauru RPC "or to assist in any way in its management or operation" and extends to include any officer of Nauru or the Commonwealth who has been assigned duties at the Nauru RPC and any person working as a volunteer at the Nauru RPC254. Transferees residing at the Nauru RPC were detained at the Nauru RPC. They were not to leave, or attempt to leave, the Nauru RPC without prior approval from an authorised officer, an Operational Manager or other authorised persons255. Any Transferee found to have left or be attempting to leave the Nauru RPC without prior approval commits an offence, which could result in up to six months imprisonment256. Police are given the power to arrest absentees from the Nauru RPC257 and are authorised to use reasonable 250 s 6(3) of the RPC Act. 251 s 7(1) of the RPC Act. 252 s 9(a) of the RPC Act; r 3.1.1 of the RPC Rules. 253 s 17(1) of the RPC Act. 254 s 3(1) of the RPC Act. 255 By reason of the specification in the RPC Visa that a Transferee must reside at the Nauru RPC: s 18C of the RPC Act; r 3.1.3 of the RPC Rules. Rule 3.1.3 of the RPC Rules provided that a person may leave without prior approval in the case of emergency or other extraordinary circumstance. That qualification is not found in s 18C of the RPC Act. 256 s 18C of the RPC Act. 257 s 23 of the RPC Act. force258. The RPC Act provides for Transferees, in certain circumstances, to be required to submit to a frisk search259, a strip search260 or a scanning search261. RPC Rules As noted above, the RPC Rules stated that "[a]t all times, asylum seekers residing" at the Nauru RPC had to: "3.1.1 comply with these [RPC] Rules; 3.1.3 not leave, or attempt to leave, the [Nauru RPC] without prior approval from an authorised officer, an Operational Manager or other authorised persons, except in the case of emergency or other extraordinary circumstance; The RPC Rules noted that, as explained above, a breach of r 3.1.3 was a criminal offence which could result in up to six months imprisonment262. Breaches of other RPC Rules (except rr 3.1.3 and 3.1.11) by asylum seekers could result in the withdrawal of privileges. The extent and type of penalty was to be agreed between the Operational Managers and senior representatives of the health, welfare and security Service Providers263. Transfield Contract Service Providers for the provision of services at the Nauru RPC had to be engaged. Those contracts with Service Providers were entered into by the Commonwealth, not Nauru. 258 s 24 of the RPC Act. 259 ss 19(2), 19B and 21 of the RPC Act. 260 ss 19(2), 19B and 19D of the RPC Act. 261 ss 19(2) and 19E of the RPC Act. 262 r 11.2 of the RPC Rules; s 18C of the RPC Act. 263 r 11.4 of the RPC Rules. On 24 March 2014, the Commonwealth264 and Transfield entered into the Transfield Contract, which was entitled "Contract in relation to the Provision of Garrison and Welfare Services at Regional Processing Countries". The Transfield Contract remains in effect. The site notified by the Commonwealth to Transfield on Nauru, for the purposes of the Transfield Contract, was and remains the Nauru RPC. What is presently important is that Transfield and the Commonwealth were the contracting parties. Transfield owed obligations to the Commonwealth and the Commonwealth took the benefit of those obligations. The Transfield Contract provided that Transfield was not the agent for the Commonwealth265. That provision may have some relevance to tortious or contractual liabilities incurred by Transfield but the provision does not deny the fact that the Commonwealth, by contract, procured and obliged Transfield to detain the Plaintiff. This section of the reasons will explain why that is so. The primary objectives of the Transfield Contract are to provide "Services" to Transferees and personnel at RPCs266. The Services are set out in a Statement of Work attached as a schedule to the contract267. The Services are divided into three Parts. Part 1, entitled "Nature of the Services", is instructive. It relevantly provides that the "Department" requires garrison and welfare services for Transferees and personnel at "Offshore Processing Countries"268. "Department" is defined as "the Commonwealth of Australia as represented by any department, agency or authority of the Commonwealth which is from time to time responsible for administering this Contract"269. Significantly, cl 1.1.2 of Pt 1 of Sched 1 to the Transfield Contract records that "[t]he focus is on an end to end process, encompassing logistical services, governance, Offshore Processing Centre (OPC) services, refugee determination assessment and review and outcomes, removals and returns and settlement in host countries". transfers, coordination and 264 In fact, the contract is recorded as being entered into by the Commonwealth of Australia represented by the Department of Immigration and Border Protection. 265 cl 17.7.1 of the Transfield Contract. 266 cl 2.1.1 of the Transfield Contract. 267 cll 2.1.1 and 3.1.1 of the Transfield Contract. 268 cl 1.1 of Pt 1 of Sched 1 to the Transfield Contract. 269 cl 1 of the Transfield Contract. Clause 1.1.2 goes on to provide that "[h]ost governments are responsible for in-country arrangements and operations with support being provided by the Australian government". The fact and significance of the Commonwealth's involvement is recognised in cl 1.1.6, which identifies the longer-term objective as being "to support Regional Processing Countries to manage and administer the suite of Offshore Processing activities with a view to them becoming increasingly independent in this regard". The parameters within which "Offshore Processing" will operate are stated to include "Australian and Host country legislation, Ministerial directions, Joint Agency Task Force (JATF) arrangements, Regional Resettlement Arrangement Memoranda of Understanding and Regional Resettlement Arrangement Administrative Arrangements [and] Australia's international obligations, such as the United Nations Refugee Convention and Convention on the Rights of a [sic] Child"270. Offshore Processing Guidelines ("OPC Guidelines") are provided for in cl 1.5 of Pt 1 of Sched 1. Transfield is required to contribute to the OPC Guidelines, limited to matters relevant to the scope of works provided by it271. The OPC Guidelines must be submitted to the Department for review and approval272. Moreover, Transfield must amend its draft section of the draft OPC Guidelines as directed by the Department and then provide the amended updated draft to the Department for review and approval273. Indeed, the OPC Guidelines could not be implemented until Transfield received prior written approval from the Department274. Part 2 of the Statement of Work identifies the "Transferee Welfare Services" that are to be provided by Transfield. Significantly, Transfield co- ordinates the reception, transfer and discharge processes at the Nauru RPC275. Part 3 of the Statement of Work identifies the "Garrison Services" that are to be provided by Transfield. One of the Garrison Services is security. For present purposes, it is sufficient to note that the Department provides "security 270 cl 1.1.5 of Pt 1 of Sched 1 to the Transfield Contract. 271 cl 1.5.1 of Pt 1 of Sched 1 to the Transfield Contract. 272 cl 1.5.2 of Pt 1 of Sched 1 to the Transfield Contract. 273 cl 1.5.3 of Pt 1 of Sched 1 to the Transfield Contract. 274 cl 1.5.4 of Pt 1 of Sched 1 to the Transfield Contract. 275 cl 4.1.1 of Pt 2 of Sched 1 to the Transfield Contract. infrastructure" at the Nauru RPC, which may include "perimeter fencing, lighting towers and an entry gate"276. Transfield "must ensure that the security of the perimeter of the [Nauru RPC] is maintained at all times in accordance with departmental policies and procedures as notified from time to time by the Department"277 (emphasis added). Transfield is required to, in conjunction with other Service Providers, verify that all Transferees are present and safe in the Nauru RPC at least twice a day278 and Transfield is "required" to "exercise use of force" within the Nauru RPC only in certain circumstances279. Transfield reports any complaints about the conduct of any of its staff or contractors, and any other person working at the Nauru RPC, to the Department of Immigration and Border Protection of the Commonwealth. Finally, reference should be made to cl 17.13 of the Transfield Contract, which contains the Department's "Step in Rights". It provides that if, at any time, the Secretary of the Department "considers that circumstances exist which require the Department's intervention, the Department may, in its absolute discretion, suspend the performance of any service by [Transfield], arrange for the Department or a third party to perform such suspended service or otherwise intervene in the provision of the Services by giving written notice to [Transfield] (Step-in Right)". (5) Other contracts On 2 September 2013, Transfield and Wilson Parking Australia 1992 Pty Ltd ("Wilson Security"280) entered into a contract entitled "Subcontract Agreement General Terms and Conditions in relation to the Provision of Services on the Republic of Nauru" ("the 2013 Wilson Security Subcontract"). The 2013 Wilson Security Subcontract was in effect from 2 September 2013 to 28 March On 28 March 2014, Transfield and Wilson Security entered into a second contract, also entitled "Subcontract Agreement General Terms and Conditions in relation to the Provision of Services on the Republic of Nauru" ("the 2014 276 cl 4.1.3 of Pt 3 of Sched 1 to the Transfield Contract. 277 cl 4.18.1 of Pt 3 of Sched 1 to the Transfield Contract. 278 cl 4.14.1 of Pt 3 of Sched 1 to the Transfield Contract. 279 cl 4.16.1 of Pt 3 of Sched 1 to the Transfield Contract. 280 References to "Wilson Security" include Wilson Security Pty Ltd, a subsidiary of Wilson Parking Australia 1992 Pty Ltd. Wilson Security Subcontract"). The 2014 Wilson Security Subcontract was in effect from 28 March 2014 and remains in effect. Approval for entry into the 2013 Wilson Security Subcontract and the 2014 Wilson Security Subcontract, as required by cl 6.1 of the Transfield Contract, was given by the Commonwealth on 26 July 2013 and 28 March 2014, respectively. Representatives of Transfield and Wilson Security meet daily, and Wilson Security provides Transfield with reports concerning, among other things, conditions at the Nauru RPC and the persons resident there on a daily, weekly and monthly basis. Transfield and Wilson Security attend regular meetings with, and provide reports to, the Department of Immigration and Border Protection of the Commonwealth and Nauru. Wilson Security reports any security incident that occurs at the Nauru RPC to the Department of Immigration and Border Protection of the Commonwealth and to Nauru. The Commonwealth also has contracts with other Service Providers for the provision of services to Transferees including Transferees who reside at the Nauru RPC281. These Service Providers do not have contracts with, and are not remunerated for their services by, Nauru. Changes in arrangements including future arrangements The facts set out in Parts (1)-(5) above were directed to the arrangements in place when the Plaintiff resided at the Nauru RPC. Most of the formal arrangements – the legislation, the regulations and the contractual arrangements – have not been relevantly amended or modified. This part of the reasons addresses some of the changes to the arrangements in relation to Transferees on Nauru that occurred in February and March 2015 and announcements made in October 2015. Since 25 February 2015 at RPC3, and since 21 March 2015 at RPC2, the Operational Managers of the Nauru RPC have exercised their discretion under s 18C of the RPC Act and r 3.1.3 of the RPC Rules to implement, as a matter of policy and practice, but not at the date of this Special Case reduced to writing in a document issued by the Operational Managers, what they refer to as "open centre arrangements". Pursuant to those arrangements (which were able to be amended or terminated at any time without any obligation to give reasons), Transferees 281 These include Save the Children Australia, International Health and Medical Services Pty Ltd, and a law firm to assist Transferees in making protection claims on Nauru. residing at the Nauru RPC could be granted permission to leave the Nauru RPC each Monday, Wednesday, Friday, Saturday and Sunday, unescorted, between 9am and 9pm ("the OCA Days"), subject to stated conditions. A Transferee was eligible to participate in the open centre arrangements if they completed an orientation programme, received a medical clearance, were not the subject of a behaviour management plan (because, for example, they had breached the RPC Rules), had signed a code of conduct and had received a health and security clearance certificate. If a Transferee satisfied these criteria, the Operational Manager of the site of the Nauru RPC in which the Transferee was resident could approve the Transferee to participate in the open centre arrangements. Once approved, the Transferee was permitted to leave the Nauru RPC through a designated exit point each OCA Day between 9am and 9pm, unless the permission was revoked. All Transferees so approved were required to return to the Nauru RPC no later than 9pm on each OCA Day. From the start of the open centre arrangements in February 2015 until 24 August 2015, an average of 69 Transferees residing in RPC3 (and 85 Transferees residing in RPC2) participated in those arrangements each day (although the number of Transferees who were eligible to participate was greater). There was no cap on the number of approved Transferees who could participate in the arrangements each OCA Day. During each OCA Day, approved Transferees could come and go as they wished (including by returning to the Nauru RPC for meals if they chose to do so). A shuttle bus service facilitated the movement around Nauru of Transferees who chose to leave the Nauru RPC under the open centre arrangements. In early October 2015, it was decided that the open centre arrangements would be "expanded" to "allow for freedom of movement of asylum seekers 24 hours per day, seven days per week". On 2 October 2015, the following notice was published in the Nauruan Government Gazette by the Acting Nauruan Justice Minister: "REGIONAL PROCESSING – OPEN CENTRE It is notified for general information that from Monday 05th October 2015, Open Centre arrangements of the [Nauru RPC] will be expanded to allow for freedom of movement of asylum seekers 24 hours per day, seven days per week. It is the intent of the Government of Nauru that these arrangements are enshrined in legislation at the next sitting of Parliament. The Operational Managers … hereby approve all asylum seekers residing therein to be eligible to participate in Open Centre arrangements." On 4 October 2015, the Immigration (Amendment) Regulations No 3 2015 (Nauru), which repealed reg 9(6)(b) and (c) of the Immigration Regulations 2014 (Nauru), were made under s 33 of the Immigration Act 2014 (Nauru). The repeal of those regulations removed two conditions from a RPC Visa, namely, the need for a health and security clearance certificate to be granted before a Transferee could leave the Nauru RPC and the further condition that once a Transferee obtained such a certificate, they were required to remain at the Nauru RPC. It is to be noted that reg 9(6)(a), which imposes the condition that a holder of a RPC Visa reside at the Nauru RPC, was not repealed. As the summary of these developments makes plain, most of the formal arrangements addressed earlier – the legislation, the regulations and the contractual arrangements – have not been relevantly amended or modified. Analysis This section of the reasons will consider (1) the Plaintiff's standing to challenge whether the Commonwealth was authorised in the past to engage in the conduct which the Plaintiff contends constituted detention of her by the Commonwealth on Nauru (Question 1 of the Special Case), (2) whether the Commonwealth in fact detained the Plaintiff on Nauru, (3) whether the Commonwealth was authorised to detain the Plaintiff on Nauru (Questions 2 and 4 of the Special Case) and, (4) if so, whether that authorisation was beyond power (Question 5 of the Special Case). It will be explained that Question 3, concerning lawfulness of conduct under, and the validity of, Nauruan law, does not need to be addressed282. Standing – Question 1 The Commonwealth contended283 that the Plaintiff lacked standing to challenge whether the Commonwealth was authorised to engage in the acts or conduct in the past which the Plaintiff contends constituted detention of her by the Commonwealth on Nauru. The Commonwealth's contention should be rejected. The Plaintiff has standing to challenge the Commonwealth's past conduct. The Plaintiff seeks a declaration that the acts or conduct of the Minister or the Commonwealth were or would be unlawful because they were or are neither authorised or supported by a valid law of the Commonwealth nor supported by or 282 See [413]-[414] below. 283 Throughout these reasons, references to submissions by the Commonwealth include the First Defendant (the Minister for Immigration and Border Protection). based on a valid exercise of the executive power of the Commonwealth under s 61 of the Constitution. The declaratory relief sought by the Plaintiff is directed to a live legal question284 – was her detention at the Nauru RPC unlawful under Australian law – which, if answered in her favour, has foreseeable consequences for the Plaintiff. A declaration of that nature may provide the Plaintiff with a possible entitlement to damages against the Commonwealth for false imprisonment because the Commonwealth was not authorised to detain her on Nauru, if that is what it was doing. Question 1 should be answered "yes". That last issue – was the Plaintiff detained on Nauru by the Commonwealth – will be addressed next. (2) Was the Plaintiff detained on Nauru by the Commonwealth? A premise of many of the questions in the Special Case is that the conduct of the Commonwealth "facilitated, organised, caused, imposed, procured, or resulted in the detention of the plaintiff at RPC3". In argument, the Plaintiff contended that the detention had been "funded, authorised, caused, procured and effectively controlled by, and was at the will of, the Commonwealth". The effect of this, according to the Plaintiff, was that as a matter of substance the Commonwealth detained the Plaintiff. That contention should be accepted. The Commonwealth detained the Plaintiff on Nauru. This part of the reasons will explain why that is so. The Commonwealth, by its acts and conduct, detained the Plaintiff outside Australia, and after the Commonwealth had exercised its undoubted power to expel the Plaintiff (an alien) from Australia or prevent entry by the Plaintiff into Australia. Those acts and conduct were or at the least included: (1) making the directions on 29 July 2013 and 15 July 2014, pursuant to s 198AD(5) of the Migration Act, with respect to regional processing countries to which particular classes of unauthorised maritime arrivals must be taken and stipulating that Nauru was such a country; signing the MOU with Nauru, whereby the Commonwealth could decide to transfer unauthorised maritime arrivals to Nauru, would bear all costs incurred under or incidental to the MOU, would put in place and participate in the Administrative Arrangements and the day-to-day practical arrangements for the implementation of the 284 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582; [1992] HCA 10. MOU on Nauru and would assist Nauru in removing Transferees not found to be in need of international protection; removing the Plaintiff from Christmas Island to Nauru pursuant to s 198AD(2) of the Migration Act on 22 January 2014 and, for the purposes of effecting s 198AD(3) of the Migration Act; removal, exercising powers that applying to the Nauruan Justice Secretary, without the consent of the Plaintiff, for the grant of a RPC Visa to the Plaintiff and paying to Nauru the fee payable for the grant of the RPC Visa to the Plaintiff, whilst knowing that the RPC Visa specified that the Plaintiff had to reside at the Nauru RPC and that the RPC Act also required the Plaintiff to reside at the Nauru RPC; on the Plaintiff's arrival on Nauru, first the Service Providers contracted by the Commonwealth (with the assistance of Nauruan officials) escorting the Plaintiff to transport and taking her to the Nauru RPC and, then, the Commonwealth officials providing all the relevant documentation relating to the Plaintiff to Staff Members at the Nauru RPC; having the power to contract with, contracting with, and paying for, Transfield to provide the Nauru RPC; providing the "security infrastructure" at the Nauru RPC, which includes "perimeter fencing, lighting towers and an entry gate"; having the power to contract with, contracting with, and paying for, Transfield to ensure that the security of the perimeter of the Nauru RPC is maintained at all times in accordance with policies and procedures as notified from time to time by the Commonwealth285; "requiring" Transfield to "exercise use of force" within the Nauru RPC in certain circumstances; (10) having significant governance responsibilities and control at the Nauru RPC, including participation in the Joint Committee, participation in the Joint Working Group, the power to appoint the Operational Manager responsible for the day-to-day operation of the Nauru RPC, the power to appoint the Programme Coordinator responsible for managing all Australian officers and services 285 cl 4.18.1 of Pt 3 of Sched 1 to the Transfield Contract read with the definition of "Department" in cl 1 of the Transfield Contract. contracts in relation to the Nauru RPC and the power to appoint the provider of the Nauru RPC; (11) having contracted for, and having, the power to terminate (at its own discretion) the contract for the provision of the Nauru RPC and to "Step In" and take over the Nauru RPC; and (12) having contracted for, and having, the power to control the content of and compliance with the OPC Guidelines. The Plaintiff could not leave Nauru. The Plaintiff was confined to the Nauru RPC. The acts and conduct of the Commonwealth just set out demonstrate that her detention in the Nauru RPC was "facilitated, organised, caused, imposed [or] procured" by the Commonwealth. The Commonwealth asserted the right by its servants (or Transfield as its agent286) to apply force to persons detained in the Nauru RPC for the purpose of confining those persons within the bounds of the place identified as the place of detention, the Nauru RPC287. To that end, the Commonwealth asserted the right by its servants or agents to assault detainees and physically restrain them. Put another way, there could be no dispute that the Commonwealth took the Plaintiff to a place outside Australia (namely Nauru). But, on Nauru, the Commonwealth did not discharge the Plaintiff from its detention288. Despite having removed the Plaintiff to a place outside Australia289, the Commonwealth intended to and did exercise restraint over the Plaintiff's liberty on Nauru, if needs be by applying force to her. Notwithstanding that there is no explicit mention of detention in the MOU or the Administrative Arrangements, the Commonwealth detained the Plaintiff on Nauru by its acts and conduct. It was agreed in the Special Case that, if Nauru had not sought to impose the restrictions on the Plaintiff, none of the Commonwealth, the Minister or Transfield would have sought, or asserted any right, to impose such restrictions. But the Commonwealth in fact engaged in. And to focus on the exercise of the sovereign power by Nauru, or on the words "in custody" in the phrase "detention in that statement does not address the acts or conduct which 286 See [323] above. 287 See [330] above. 288 cf CPCF v Minister for Immigration and Border Protection (2015) 89 ALJR 207 at 230 [85]; 316 ALR 1 at 26; [2015] HCA 1. 289 cf Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 364 [118]; [2013] HCA 53. custody" in Chu Kheng Lim v Minister for Immigration290 (addressed in detail below at [397]-[400]), is to distract attention from the fundamental point to which Lim is directed and which this Court is here asked to consider – the power of the Commonwealth Executive to detain an alien and thereby deprive her of her liberty. That raises the next question – was that detention of the Plaintiff by the Commonwealth on Nauru authorised? (3) Was the Plaintiff's detention by the Commonwealth on Nauru authorised? – Questions 2 and 4 Questions 2 and 4 of the Special Case ask, in substance, the same question – whether the detention of the Plaintiff by the Commonwealth on Nauru was authorised by s 61 of the Constitution, s 198AHA of the Migration Act or s 32B of the Financial Framework (Supplementary Powers) Act 1997 (Cth), read with reg 16 and items 417.021, 417.027, 417.029 and 417.042 of Sched 1AA to the Financial Framework (Supplementary Powers) Regulations 1997 (Cth) ("the FFSP Act"). Both questions assume the validity of those provisions. Question 2, however, further assumes that certain restrictions imposed on the Plaintiff were lawful under the law of Nauru and that the specification in the RPC Visa that the Plaintiff had to reside at the Nauru RPC, s 18C of the RPC Act and r 3.1.3 of the RPC Rules were lawful and valid under the law of Nauru. Both questions can be answered together. They can be answered together because, as these reasons will explain when dealing with Question 3 of the Special Case291, whether the Plaintiff's detention on Nauru was lawful and valid under the law of Nauru does not and cannot affect the lawfulness of the Commonwealth's detention of the Plaintiff on Nauru. The Commonwealth contended the Commonwealth Parliament or by s 61 of the Constitution to detain the Plaintiff on Nauru. That contention should be accepted insofar as it concerns s 198AHA of the Migration Act. This part of the reasons will consider the Migration Act, and in particular s 198AHA, the FFSP Act and the executive power of the Commonwealth. The validity of s 198AHA is addressed in Part (4) below. it was authorised by that (a) Migration Act The "framework" for the Plaintiff's transfer to Nauru has been set out above. On 22 January 2014, officers of the Commonwealth took the Plaintiff to 290 (1992) 176 CLR 1 at 19. 291 See [413]-[414] below. Nauru pursuant to s 198AD(2) of the Migration Act. The Plaintiff arrived on Nauru on 23 January 2014. For the purposes of effecting that taking of the Plaintiff to Nauru, officers of the Commonwealth exercised powers in s 198AD(3) of the Migration Act, at which time the Plaintiff ceased to be detained pursuant to s 189 of the Migration Act. Any detention of the Plaintiff that occurred while she was being taken to Nauru pursuant to s 198AD(2) of the Migration Act was for the purpose of that taking and that taking alone. The detention of the Plaintiff to that point was lawful292. The detention of the Plaintiff to that point was necessary for the purposes of making her removal to Nauru complete293. If the acts or conduct of the Commonwealth stopped then, it could not be said that the detention of the Plaintiff by the Commonwealth effected to that point was not authorised. However, as seen earlier, the acts or conduct of the Commonwealth were far more extensive and extended to detaining the Plaintiff on Nauru. Section 198AHA provides: "(1) This section applies into an arrangement with a person or body in relation to the regional processing functions of a country. the Commonwealth enters The Commonwealth may do all or any of the following: take, or cause to be taken, any action in relation to the arrangement or the regional processing functions of the country; (b) make payments, or cause payments to be made, in relation to the arrangement or the regional processing functions of the country; do anything else that is incidental or conducive to the taking of such action or the making of such payments. To avoid doubt, subsection (2) is intended to ensure that the Commonwealth has capacity and authority to take action, without otherwise affecting the lawfulness of that action. (4) Nothing in this section limits the executive power of the Commonwealth. 292 cf CPCF (2015) 89 ALJR 207; 316 ALR 1. 293 cf Plaintiff S156/2013 v Minister for Immigration and Border Protection (2014) 254 CLR 28 at 42-43 [23]-[25], 44 [31], 46 [38]; [2014] HCA 22. In this section: action includes: exercising restraint over the liberty of a person; and action in a regional processing country or another country. arrangement includes an arrangement, agreement, understanding, promise or undertaking, whether or not it is legally binding. regional processing functions includes the implementation of any law or policy, or the taking of any action, by a country in connection with the role of the country as a regional processing country, whether the implementation or the taking of action occurs in that country or another country." Section 198AHA(1) of the Migration Act provides that the section applies "if the Commonwealth enters into an arrangement with a person or body in relation to the regional processing functions of a country". The Commonwealth accepts that it does not refer in terms to entry into an arrangement with a "country". However, the word "person" engages s 2C(1) of the Acts Interpretation Act 1901 (Cth), which provides that: "In any Act, expressions used to denote persons generally (such as 'person', 'another' and 'anyone', 'whoever'), include a body politic or corporate as well as an individual." 'someone', 'no-one', 'party', 'one', There is no dispute that Nauru is a "body politic". Section 198AHA extends to arrangements the Commonwealth has with a body politic in relation to regional processing functions of a country. What then is the "arrangement" to which s 198AHA(1) applies? The arrangement is the arrangement entered into between the Commonwealth and Nauru as evidenced by the MOU. Entry into that arrangement by the Executive was authorised as an act within the non-statutory power of the Executive or as an act in execution of the statutory power given in s 198AHA. Did s 198AHA authorise the Commonwealth on Nauru? In its terms, s 198AHA authorises what the Commonwealth did – restrain the Plaintiff's liberty on Nauru294. It authorises the the detention of the Plaintiff by 294 Although s 198AHA was inserted into the Migration Act by the Migration Amendment (Regional Processing Arrangements) Act 2015 (Cth), it commenced on 18 August 2012. Commonwealth to "take, or cause to be taken, any action in relation to the arrangement" (in this case the MOU) or the "regional processing functions of the country"295. "Action" is defined in s 198AHA(5) to include exercising restraint over the liberty of a person in a regional processing country or another country. Moreover, "regional processing functions" is defined in s 198AHA(5) to include "the implementation of any law or policy, or the taking of any action, by a country in connection with the role of the country as a regional processing country, whether the implementation or the taking of action occurs in that country or another country". As the Commonwealth submitted, those provisions, in their terms, extend to authorise the detention of the Plaintiff by the Commonwealth on Nauru in the Nauru RPC. The next question in relation to s 198AHA is whether it is beyond power. That question is addressed in Part (4) below. The FFSP Act The Commonwealth only relied on the FFSP Act if the Court did not accept that the impugned conduct was supported by s 198AHA of the Migration Act. The impugned conduct was supported by s 198AHA but, as will be seen below, that section is invalid. However, it is unnecessary to address the provisions of the FFSP Act because those provisions cannot and do not repair the more fundamental deficiency that will be identified in Part (4) below. Executive power of the Commonwealth The Commonwealth submitted that the impugned conduct was supported by its executive power. However, no separate question arises about executive power because if s 198AHA is valid, the question of executive power is not reached, and if s 198AHA is not valid, the following analysis demonstrates that the executive power of the Commonwealth cannot fill the gap296. That last statement requires elaboration. The limits of the executive power in s 61 of the Constitution have not been defined and there are "undoubtedly significant fields of executive action which do not require express statutory authority"297. But the executive power in s 61 is not unlimited. 295 s 198AHA(2)(a) of the Migration Act (emphasis added). 296 Williams v The Commonwealth [No 2] (2014) 252 CLR 416 at 454 [24], 457 [36], 467-469 [78]-[83]; [2014] HCA 23. 297 Williams v The Commonwealth (2012) 248 CLR 156 at 191 [34]; see also at 184- 185 [22], 226-227 [121], 342 [483], 362 [560]; [2012] HCA 23. As seen earlier, the entry into the MOU, an arrangement by the Executive, was authorised as an act within the non-statutory power of the Executive or as an act in execution of the statutory power given in s 198AHA. But the MOU says nothing about detention. It does not and cannot provide the basis for the right to detain in s 198AHA of the Migration Act or for the Plaintiff's detention on Nauru otherwise. The executive power of the Commonwealth does not itself provide legal authority for an officer of the Commonwealth to detain a person and commit a trespass298. Absent statutory authority, the Executive does not have power to detain299. Or, to put the matter another way, the Executive "cannot change or add to the law; it can only execute it"300. That is what the Commonwealth sought to do by s 198AHA of the Migration Act – to permit the Commonwealth to detain certain aliens, in a foreign state, after those persons have been removed from (or denied entry into) Australian territory. That was seeking to change or add to the law, not execute the MOU. That conclusion is not surprising. It must be recalled that when the Executive wishes to translate arrangements like the MOU into the domestic legal order, the Executive must procure the passage of legislation to implement those arrangements "if it wishes to create individual rights and obligations or change existing rights and obligations under that legal order"301. The executive power of the Commonwealth cannot fill the gap302. The question, then, is whether s 198AHA is beyond power or contrary to Ch III of the Constitution. 298 cf CPCF (2015) 89 ALJR 207 at 239-240 [147]-[150], 255-258 [258]-[276]; 316 ALR 1 at 39-40, 60-64. 299 Lim (1992) 176 CLR 1 at 19, 63; CPCF (2015) 89 ALJR 207 at 239-240 [147]- [150], 255-258 [258]-[276]; 316 ALR 1 at 39-40, 60-64. 300 R v Kidman (1915) 20 CLR 425 at 441; [1915] HCA 58. 301 Victoria v The Commonwealth (Industrial Relations Act Case) (1996) 187 CLR 416 at 481; [1996] HCA 56. 302 Williams v The Commonwealth [No 2] (2014) 252 CLR 416 at 454 [24], 457 [36], Is s 198AHA beyond power? – Question 5 The Commonwealth relied on a number of heads of power to support s 198AHA – the aliens power, the immigration power, the external affairs power and the Pacific Islands power. Each will be considered in turn. Aliens power – s 51(xix) of the Constitution Introduction Sections 198AB and 198AD of the Migration Act are laws with respect to aliens within s 51(xix) of the Constitution303. The scheme established by ss 198AB and 198AD regulates the entry of aliens into, or provides for their removal from, Australia. That is consistent with the object of the Migration Act304. But more importantly, a law regulating entry of aliens into or providing for removal of aliens from Australia is a law with respect to aliens. The relevant operation of the law now in issue (s 198AHA) goes beyond regulation of entry of aliens and goes beyond providing for removal of aliens. It goes beyond those subjects by providing (in the operation now relied upon by the Commonwealth) for the Commonwealth to detain certain aliens, in a foreign state, after those persons have been removed from (or denied entry into) Australian territory. That operation of s 198AHA presents a fundamental question about the power of the Parliament to provide for detention by the Commonwealth outside Australia. That is, it presents a fundamental question about the powers (or more specifically, the limit of the powers) of the Commonwealth beyond its borders. Those powers are not unlimited. Principles The legislative powers conferred by s 51 are bounded by Ch III of the Constitution. That is, the grants of legislative power contained in s 51 (which are expressly "subject to this Constitution") do not permit the conferral upon any organ of the Executive Government of any part of the judicial power of the Commonwealth305. 303 Plaintiff S156/2013 (2014) 254 CLR 28 at 43 [25], 46 [38]. 304 s 4 of the Migration Act; see also Plaintiff S4/2014 v Minister for Immigration and Border Protection (2014) 253 CLR 219 at 230 [22]-[23]; [2014] HCA 34. 305 Lim (1992) 176 CLR 1 at 26-27. See also Polyukhovich v The Commonwealth (War Crimes Act Case) (1991) 172 CLR 501 at 606-607; [1991] HCA 32. The principle identified in Lim306 gives effect to the fundamental proposition that the Parliament's legislative power to provide for the Executive to be able to effect compulsory detention, and associated trespass to the person, without judicial order is limited. That principle is no less applicable here, where detention by the Commonwealth was effected by the Commonwealth's acts and conduct307. Laws will be valid if "the detention which they require and authorize is limited to what is reasonably capable of being seen as necessary for the purposes of deportation or necessary to enable an application for an entry permit to be made and considered"308. Therefore, the validity of the provisions upheld in Lim depended upon identifying an exceptional reason permitting a law authorising executive detention. The exceptions recognised309 (and long since recognised) are the power to detain for expulsion or deportation and the power to exclude admission or to deport. That is, the legislative power conferred by s 51(xix) extends to conferring upon the Executive authority to detain an alien in custody to the extent necessary to make that expulsion or deportation effective310. That authority, when conferred in the context and for the purposes of executive powers to receive, investigate and determine an application by an alien for an entry permit to Australia and (after determination) to admit or deport that alien, is an incident of those executive powers and to that limited extent does not impermissibly restrict or infringe the judicial power of the Commonwealth vested in Ch III courts311. That authority is reflected in the object of the Migration Act – "to regulate, in the national interest, the coming into, and presence in, Australia of non-citizens"312 – and the statement that, to advance that object, the Migration Act is to provide "for the taking of unauthorised maritime arrivals from Australia to a regional processing country"313. That statement is not expressed to be an 306 (1992) 176 CLR 1. 307 See Part (2) of the Analysis section above. 308 Lim (1992) 176 CLR 1 at 33. 309 Lim (1992) 176 CLR 1 at 32. 310 Lim (1992) 176 CLR 1 at 30-31. 311 Lim (1992) 176 CLR 1 at 10, 32. 312 s 4(1) of the Migration Act. 313 s 4(5) of the Migration Act. See also s 198AA(c) of the Migration Act. independent object. It is explicitly stated in s 4(5) of the Migration Act as being to advance the only object – "to regulate, in the national interest, the coming into, and presence in, Australia of non-citizens". The list of permissible purposes for executive detention under the aliens power may not be closed314. And this Court has said that the authority to detain an alien in custody extends to a power to detain outside Australia's borders for the purposes of repelling entry and for the purposes of making removal from Australia complete315. But whether that is the outer limit of the aliens power is not the question here. The question is whether the detention of the Plaintiff by the Commonwealth after her removal to Nauru by the Commonwealth was complete is validly authorised. Section 198AHA is part of a statutory scheme316. Is s 198AHA a law with respect to aliens? The people s 198AHA deals with may be aliens. But observing that they may be aliens ignores the fundamental question of the power of the Commonwealth Parliament to pass a law requiring the detention of an alien outside Australia and after the Commonwealth has exercised its undoubted power to expel that alien from Australia, or prevent entry by that alien into Australia. Observing that the law relates to persons who are aliens may establish that it prima facie falls within the scope of the legislative power with respect to aliens conferred by s 51(xix)317. But it does not say anything about whether the law nevertheless is beyond power because the law goes beyond the limits identified in Lim318. Saying that the aliens power is "plenary" obscures the need to consider those limits. As was said in Lim, "any officer of the Commonwealth Executive who purports to authorize or enforce the detention in custody of … an alien without 314 Lim (1992) 176 CLR 1 at 55; Al-Kateb v Godwin (2004) 219 CLR 562 at 648 [258]; [2004] HCA 37; Re Woolley; Ex parte Applicants M276/2003 (2004) 225 CLR 1 at 12 [16]-[17], 26-27 [62], 85 [264]; [2004] HCA 49; Vasiljkovic v The Commonwealth (2006) 227 CLR 614 at 648 [108]; [2006] HCA 40. 315 CPCF (2015) 89 ALJR 207 at 240 [149]-[150]; 316 ALR 1 at 39-40. 316 See Plaintiff M76/2013 (2013) 251 CLR 322 at 363-364 [115]-[119]. 317 Lim (1992) 176 CLR 1 at 25-26. 318 (1992) 176 CLR 1. judicial mandate will be acting lawfully only to the extent that his or her conduct is justified by valid statutory provision" (emphasis added)319. The "constitutional" holding in Lim was described in Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship in the following terms320: "[T]hat laws authorising or requiring the detention in custody by the executive of non-citizens, being laws with respect to aliens within s 51(xix) of the Constitution, will not contravene Ch III of the Constitution, and will therefore be valid, only if: 'the detention which they require and authorise is limited to what is reasonably capable of being seen as necessary for the purposes of deportation or necessary to enable an application for an entry permit to be made and considered.'" (emphasis added, footnote omitted) It is the application of those principles to s 198AHA that is considered next. (iii) Application of principles Section 198AHA is invalid because it "contravene[s] Ch III's insistence that the judicial power of the Commonwealth be vested exclusively in the courts which it designates"321. It does that because it restricts liberty otherwise than by judicial order and beyond the limits of those few and confined exceptional cases where the Executive, without judicial process, can detain a person. Section 198AHA does not deal with the power to exclude admission or to deport. Exclusion and deportation are complete and finally effective on landing on Nauru. Section 198AHA is relied upon as authorising the Executive to detain persons on Nauru. But there is a fundamental problem. The aliens power does not authorise a law which permits or requires detention in those circumstances. It does not authorise that kind of law because the involuntary detention of persons at the behest of the Executive is permitted in only exceptional circumstances. Detention under s 198AHA does not fall within either of the 319 (1992) 176 CLR 1 at 19. 320 (2013) 251 CLR 322 at 369 [138], citing Lim (1992) 176 CLR 1 at 33. See also Plaintiff S4/2014 (2014) 253 CLR 219 at 231-232 [25]-[29]; CPCF (2015) 89 ALJR 207 at 272 [374]; 316 ALR 1 at 83. 321 Lim (1992) 176 CLR 1 at 33; Plaintiff M76/2013 (2013) 251 CLR 322 at 369 recognised exceptions in Lim. And a new exception should not be created for this kind of detention. This section of the reasons will explain these conclusions. First, a preliminary point should be made. The fact that the place of detention is outside Australia does not mean that legislative power is relevantly unconstrained. The Parliament's legislative powers are not larger outside the territorial borders than they are within the borders. Put another way, what the Commonwealth contends amounts, in effect, to an argument that s 51(xix) permits Parliament to enact a law allowing the Executive Government to do anything to the person or property of any person who is an alien so long as the conduct occurs outside the territorial borders of Australia. Why is the "aliens" power to be read as circumscribed by Ch III in the case of laws dealing with conduct in Australia but not affected by Ch III so long as the conduct occurs outside Australia? The detention of the Plaintiff by the Commonwealth on Nauru, which the Commonwealth asserts s 198AHA both requires and authorises, is not limited to what was reasonably capable of being seen as necessary for the purposes of removal of the Plaintiff from Australia (or the prevention of the Plaintiff's entry into Australia). Removal from Australia was complete when the Plaintiff arrived on Nauru. Moreover, the detention by the Commonwealth on Nauru was not necessary to enable an application for an entry permit to Australia to be made and considered. The Plaintiff is unable to make such an application322. Further, the Plaintiff's detention by the Commonwealth on Nauru could not have been for the purpose of completing Australia's obligation to consider her application for refugee status, because that obligation rested on Nauru. It is to be noted that the detention of the Plaintiff (either at all or in its duration) was not reasonably necessary to effect a purpose identified in the Migration Act which was capable of fulfilment. As seen earlier, the object of the Migration Act is to regulate, in the national interest, the coming into, and presence in, Australia of non-citizens323. The Plaintiff's detention was not reasonably necessary for that stated object or any of the other stated purposes which are set out in s 4 of the Migration Act to "advance" that stated object. But the determinative point is more than one of statutory construction. It is a point about legislative power. Put simply, the aliens power does not provide the power to detain after removal is completed. 322 s 46A of the Migration Act. 323 s 4(1) of the Migration Act. The Commonwealth submitted that detention under s 198AHA is limited to detention which can be related to the regional processing functions of another country, and that s 198AHA simply "completes" the process of removal required by s 198AD. But those submissions are no answer. First, s 198AHA does not remove aliens from Australia to Nauru. That is addressed in ss 198AB and 198AD. Second, s 198AHA does not "facilitate" or "complete" that removal. The removal is complete when the alien is taken to Nauru, consistent with the stated object of the Migration Act324. Third, the Commonwealth's submission does not engage with, and treats as irrelevant, the fact that the Commonwealth detained the Plaintiff. It is the detention by the Commonwealth of the Plaintiff outside Australia and after the Commonwealth exercised its undoubted power to expel her from Australia, or prevent entry by her into Australia, that cannot be lawfully justified. In short, the effect of the Commonwealth's submission is that it can do outside Australia what it cannot do inside Australia – detain an alien in custody for a purpose other than one of the two relevant purposes stated in Lim325 (leaving aside, for the moment, the prospect of the creation of a new category of permissible detention). It is no answer for the Commonwealth to say that it can do so because it does this outside Australia. Why? Because the subject matter of the power is an alien, which prima facie engages the aliens power. And the aliens power is subject to the limitation on power identified in Lim. It is that limitation on power that the Commonwealth cannot address. that the Commonwealth The further contention is authorised by s 198AHA to detain the Plaintiff in custody on Nauru if that detention is a condition of the willingness and ability of Nauru to receive the Plaintiff for processing, and that the authority to cause detention in custody conferred by s 198AHA(2) is therefore incidental to ss 198AB and 198AD of the Migration Act (which validly, under the aliens power, regulate the entry of aliens into or the removal of aliens from Australia), should be rejected. The Executive Government of Australia cannot, by entering into an agreement with a foreign state, agree the Parliament of Australia into power. The removal of an alien to a foreign country cannot sensibly be said to continue once that alien has been removed to that foreign country. Upon the Plaintiff's arrival on Nauru, the Commonwealth's process of removal was complete and the purpose for which removal was undertaken had been carried out. Removal was not ongoing. 324 s 4(5) of the Migration Act. See also s 198AA(c) of the Migration Act. 325 As explained in Plaintiff S4/2014 (2014) 253 CLR 219 at 231 [26], there is a third permissible purpose – determining whether to permit a valid application for a visa which was peculiar to the statutory framework then in issue. Australia can provide assistance to Nauru. But Australia cannot detain the Plaintiff on Nauru. It was suggested in argument, in effect, that whether the Commonwealth was found to detain the Plaintiff was irrelevant and, further, that because the Commonwealth could validly provide foreign aid to Nauru to detain the Plaintiff, whether the Commonwealth detained the Plaintiff was a matter of form over substance – the Plaintiff would have been detained anyway, by Nauru alone, with the benefit of funding provided by Australia. Neither point is right. First, and fundamentally, questions of constitutional validity are not to be determined by reference to hypothetical assumptions about what steps might have been taken to achieve some desired objective. Especially is that so when the steps that are assumed are steps that would have to be taken by a foreign state. Second, the error is revealed by consideration of the "Step In" provision in the Transfield Contract. Under that provision the Commonwealth may at any time and from time to time take over the contractor's functions at the Nauru RPC. That is, the Commonwealth may by its servants (leave aside the contractor as its agent) itself apply force to persons detained in the Nauru RPC for the purpose of confining those persons within the bounds of the place identified as the place of detention, the Nauru RPC (recalling that we are dealing here with the past conduct). To that end, the Commonwealth may by its servants assault detainees and physically restrain them. That it is the Commonwealth that may do this is no mere matter of form. The argument which describes the relationships established as mere matters of form, to be ignored by observing that the Commonwealth could validly provide funding to Nauru for Nauru alone to effect the detention, stands principle on its head. It does so because it treats the Commonwealth's detention of the Plaintiff as irrelevant. the Commonwealth, The fact that if Nauru had not sought to impose restrictions on the Plaintiff, none of its subcontractors would have sought to impose such restrictions on Nauru or asserted any right to impose such restrictions may be put to one side. The fact that a foreign state requests the Commonwealth to detain the Plaintiff in that foreign state does not and cannot authorise the Commonwealth to detain the Plaintiff in that foreign state. the Minister, Transfield or All of this makes clear that if, apart from Ch III considerations, s 198AHA would be a law with respect to aliens, it falls foul of the rule that the Commonwealth Parliament cannot give to the Executive a power to detain an alien for purposes outside the Lim exceptions (of which this is not one). And the same reasons make it clear that there is no basis (as a matter of fundamental principle, necessity or otherwise) to craft any new exception to the Lim rule just stated. As a matter of fundamental principle, the detention function, by its nature and because of historical considerations, is essentially and exclusively judicial in character326. Section 198AHA vests part of that function in the Executive. That is not permitted. As a matter of necessity, the Plaintiff's removal from Australia by the Commonwealth was complete when she arrived on Nauru. The Commonwealth had no need to and had no right to detain the Plaintiff in a foreign state. No other basis has been identified that would justify, let alone authorise, the crafting of a new exception which would allow the detention of an alien by the Commonwealth, in a foreign state, after the Commonwealth has exercised its undoubted power to expel that alien from Australia or prevent entry by that alien into Australia. The matter may be tested this way – what would be the content of any exception? What would be the basis for any exception? No answers have been provided to those questions. And, in any event, there may be much to be said for the view327 that the aliens power is not engaged at all. Section 198AHA imposes special disabilities on aliens which are unconnected with their entitlement to remain in Australia (they have been excluded and their removal is complete) and which are in no way connected with regulation of past or future entry into Australia, or with facilitating or requiring their removal or departure from Australia. However, it is not necessary to decide whether this is so because it is sufficient for present purposes that s 51(xix) is confined by Ch III. Immigration power – s 51(xxvii) of the Constitution For the same reasons that s 198AHA is not a valid law under the aliens power, it is not supported by the immigration power in s 51(xxvii) of the Constitution. The removal of the Plaintiff to Nauru was complete on her arrival on Nauru. The Commonwealth had exercised its undoubted power to expel her from Australia or prevent her entry into Australia. That power was spent at the time of the Plaintiff's arrival on Nauru. External affairs power – s 51(xxix) of the Constitution Section 51(xxix) of the Constitution authorises the Commonwealth Parliament to legislate with respect to external affairs. One aspect of that power is the power to enact laws of domestic application that implement international agreements to which Australia is a party. Section 51(xxix) can be relied upon to support legislation which implements an international agreement, regardless of the subject matter of the 326 Lim (1992) 176 CLR 1 at 27. 327 Lim (1992) 176 CLR 1 at 57. agreement, but subject to certain limits328. The relevant limits on the external affairs power are that it cannot be used indirectly to amend the Constitution and, importantly, like the other powers in s 51, it is subject to the limitations and prohibitions in the Constitution329. What then is the scope of the obligation in the MOU? That is a question of fact which the Court must decide330. The objectives and scope of the MOU have been addressed. The stated objectives include regional processing and the establishment of RPCs. As seen earlier, neither the MOU nor the Administrative Arrangements refer to detention. That raises the next question – can s 198AHA be described as implementing the MOU? Section 198AHA applies if an arrangement has been entered into by the Commonwealth in relation to the regional processing functions of another country. The MOU between the Commonwealth and Nauru is necessarily a matter which concerns Australia's external relations331. Section 198AHA is directed at implementing arrangements such as the MOU. Section 198AHA is therefore a law with respect to external relations. It deals with a subject directly within the subject matter of s 51(xxix). However, to the extent that s 198AHA authorises the Commonwealth to restrain the liberty of an alien in a regional processing country where removal of that alien from Australia is complete, that authorisation is not valid. As has been explained, the power in s 51(xxix) is subject to the limitations and prohibitions in the Constitution332. It is bounded by Ch III. That includes the Lim limitation, which has already been addressed and which has been contravened. In particular, the Commonwealth to make a law permitting the Executive to make an agreement with a foreign state that would permit or require the Commonwealth Executive to the external affairs power does not authorise 328 R v Burgess; Ex parte Henry (1936) 55 CLR 608 at 640-641, 681-682, 687; [1936] HCA 52; The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 127, 170, 218-219, 258; [1983] HCA 21; Industrial Relations Act Case (1996) 187 CLR 416 at 478, 483-485. 329 R v Burgess; Ex parte Henry (1936) 55 CLR 608 at 642. 330 Queensland v The Commonwealth (1989) 167 CLR 232 at 239; [1989] HCA 36. 331 Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 201-202, 220-221, 237, 257- 258; [1982] HCA 27. 332 R v Burgess; Ex parte Henry (1936) 55 CLR 608 at 642. detain persons other than for purposes constituting some exception to Ch III requirements about judicial power. The legislative power with respect to external affairs does not extend to authorising the Executive to detain persons contrary to Ch III. That the detention may be associated with, even facilitate, some action by a foreign government (in this case determination of refugee status) does not deny the conclusion that the law purports to authorise the Executive to detain persons contrary to Ch III. Unwarrantable interference with an individual's liberty is not authorised and is to be prevented333. Here, the interference with an individual's liberty by the Commonwealth was no longer warranted once the person's removal to Nauru was complete. To the extent that the detention by the Commonwealth of the Plaintiff on Nauru was no longer warranted, it may be, at least in Australian law, a tortious act334. The Commonwealth does not and cannot rely on the defence power in s 51(vi) of the Constitution, which, in times of war or conflict, may warrant the detention of a person335. Section 198AHA was not (and could not be) said to be a law supported as a law with respect to the naval and military defence of the Commonwealth and the several States336. For those reasons, although the external affairs power in s 51(xxix) can be relied upon to support s 198AHA to implement the MOU, s 198AHA is invalid because it impermissibly restricts or infringes Ch III. Relations with the Islands of the Pacific – s 51(xxx) of the Constitution For the same reasons that s 198AHA is not a valid law under the external affairs power, it is not supported by the Pacific Islands power in s 51(xxx) of the Constitution. It is not in dispute that, in respect of the acts and conduct of the Commonwealth at issue in the Special Case, the Commonwealth's power under s 51(xxx) does not extend further than the external affairs power. As with the external affairs power, s 51(xxx) is bounded by Ch III of the Constitution. Section 198AHA is invalid because it impermissibly restricts or infringes Ch III. 333 cf Vasiljkovic v The Commonwealth (2006) 227 CLR 614 at 618 [6]. 334 cf Barton v The Commonwealth (1974) 131 CLR 477 at 483; [1974] HCA 20. 335 Ferrando v Pearce (1918) 25 CLR 241 at 253, 261, 270, 274; [1918] HCA 47; Jerger v Pearce (1920) 28 CLR 588 at 592, 594; [1920] HCA 42; Lim (1992) 176 CLR 1 at 57. 336 s 51(vi) of the Constitution. Lawfulness of conduct under, and validity of, Nauruan laws – Question 3 We are concerned with the lawfulness under Australian law of the conduct of the Commonwealth and its officers in detaining the Plaintiff on Nauru. That is a question about the validity of the Commonwealth legislation on which the Commonwealth relies as authorising that conduct. We are not concerned with the lawfulness of that conduct under Nauruan law. As already stated, the Executive cannot, by entering into an agreement with a foreign state, agree the Parliament of Australia into power. Likewise, the Executive cannot obtain power from the Parliament of a foreign state. The Commonwealth accepted that no question of its authority to detain the Plaintiff on Nauru turned on whether the detention of the Plaintiff on Nauru was lawful under the law of Nauru. That is unsurprising. Australia is bound to respect the independence of another sovereign state, and the courts of one country will not, except in limited and presently irrelevant circumstances, sit in judgment on the acts of the government of another state done in the territory of that other state337. The question of the lawfulness of the detention by the Commonwealth of the Plaintiff does not require this Court to "sit in judgment" on the conduct of or the laws of Nauru. The lawfulness of that conduct is judged according to Australian law and, for the reasons stated, it is not validly authorised under Australian law. Future arrangements – Questions 6-12 The relevant facts, as far as they are able to be ascertained, were addressed in Part (6) of the Facts section of these reasons. There is insufficient material before this Court to identify with precision what arrangements are currently in place and, no less importantly, what arrangements would be in place if the Plaintiff was returned to Nauru. This Court does not answer hypothetical questions or provide advisory opinions338. It 337 Underhill v Hernandez 168 US 250 at 252 (1897), approved in Potter v Broken Hill Proprietary Co Ltd (1906) 3 CLR 479 at 495, 506-507, 511; [1906] HCA 88; Attorney-General (United Kingdom) v Heinemann Publishers Australia Pty Ltd (1988) 165 CLR 30 at 40-41; [1988] HCA 25; Moti v The Queen (2011) 245 CLR 456 at 475 [51]; [2011] HCA 50. 338 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265; [1921] HCA 20; Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 303; [1991] HCA 53; Croome v Tasmania (1997) 191 CLR 119 at 124-126, 136; [1997] HCA 5; Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 262 [37]; [1998] HCA 49; Kuczborski v Queensland (2014) 254 CLR 51 at 87-88 [98]-[99]; [2014] HCA 46. is therefore not appropriate for this Court to answer Questions 6-12 of the Special Case, which are directed at arrangements which might be in place if the Plaintiff were to be returned to Nauru. Relief and costs – Questions 13 and 14 The question of the form and content of the relief should be remitted to a single judge of the Federal Court. The Defendants should pay the costs of the Special Case and of the proceedings generally. Conclusion For those reasons, I would answer the questions of law which the parties agreed in stating in the form of a Special Case for the opinion of the Full Court under r 27.08.1 of the High Court Rules 2004 (Cth) as follows: Question 1: Yes. Question 2: (a) No; (b) Yes; (c) Unnecessary to answer. Question 3: Unnecessary to answer. Question 4: (a) No; (b) Yes; (c) Unnecessary to answer. Question 5: Yes. Section 198AHA is beyond power and therefore invalid. Questions 6-12: Not appropriate to answer. Question 13: Remit to a single judge of the Federal Court. Question 14: The Defendants should pay the costs of the Special Case and of the proceedings generally. SPECIAL CASE QUESTIONS1 The parties agree in stating the following questions of law for the opinion of the Full Court: Standing (1) Does the plaintiff have standing to challenge whether the Commonwealth or the Minister was authorised, in the past, to engage in one or more of the following acts or conduct: make the direction referred to at paragraph 6 [of the special case]; sign the Memorandum of Understanding; (iii) sign the Administrative Arrangements; give approval for Transfield to enter into the 2013 Wilson Security Subcontract and the 2014 Wilson Security Subcontract; contract for the construction and maintenance of, and fund, security infrastructure at the Nauru RPC, including a perimeter fence, as required by the Memorandum of Understanding; fund all costs of the Nauru RPC, as required by the Memorandum of Understanding; (vii) enter into the Transfield Contract; (viii) exercise rights and discharge obligations under the Transfield Contract; establish and participate in the bilateral committees referred to at paragraphs 31‒34 [of the special case]; discharge Administrative Arrangements; the role of Programme Coordinator under the attending meetings with, and receive reports from, Transfield and Wilson Security; (xii) occupy an office on site at the Nauru RPC and carry out the functions referred to at paragraph 37 [of the special case]; 1 See [21] and [198] above. (xiii) take the plaintiff to Nauru pursuant to s 198AD(2) of the Migration Act on 22 January 2014; (xiv) for the purposes of effecting that taking, exercise powers contained in s 198AD(3) of the Migration Act; (xv) apply to the Secretary of the Department of Justice and Border Control of Nauru, without the consent of the plaintiff, for the grant of an RPC visa to the plaintiff; (xvi) pay to Nauru the fees payable for the grant of RPC visas to the plaintiff; in so far as those acts or that conduct facilitated, organised, caused, imposed, procured, or resulted in the detention of the plaintiff at RPC3? Authority for the Commonwealth's past conduct (2) Assuming that: the restrictions imposed on the plaintiff set out at paragraphs 66‒72 of the special case were lawful under the law of Nauru; and the specification in the RPC visas referred to at paragraphs 53‒55 [of the special case] that the plaintiff must reside at the Nauru RPC, s 18C of the RPC Act and rule 3.1.3 of the Centre Rules were lawful and valid under the law of Nauru, to the extent that the answer to question (1) is "yes" in respect of any acts or conduct, was the Commonwealth or the Minister authorised, in the past, to engage in those acts or that conduct by: s 61 of the Constitution? s 198AHA of the Migration Act (assuming it is valid)? s 32B of the Financial Framework (Supplementary Powers) Act 1997 (Cth), read with reg 16 and items 417.021, 417.027, 417.029 and 417.042 of sched 1AA the Financial Framework (Supplementary Powers) Regulations 1997 (Cth) (together, the Financial Framework Provisions) (assuming each is valid)? If the answer to question (2)(a), (b) or (c) is "yes": (a) were the restrictions imposed on the plaintiff set out at paragraphs 66‒72 [of the special case] contrary to Art 5(1) of the Constitution of Nauru? (b) was the specification in the RPC visas referred to at paragraphs 53‒55 [of the special case] that the plaintiff must reside at the Nauru RPC, s 18C of the RPC Act and/or rule 3.1.3 of the Centre Rules invalid by reason of s 5(1) of the Constitution of Nauru? To the extent that the answer to question (1) is "yes" in respect of any acts or conduct, was the Commonwealth or the Minister authorised, in the past, to engage in those acts or that conduct by: s 61 of the Constitution? s 198AHA of the Migration Act (assuming it is valid)? the Financial Framework Provisions (assuming each is valid)? If the answer to question (4)(b) or (c) is "yes", is the statutory provision referred to therein invalid because it is not supported by any head of Commonwealth legislative power or is contrary to Ch III of the Constitution? Authority for the Commonwealth's future conduct (6) Assuming that, if the plaintiff were returned to Nauru: the restrictions imposed on the plaintiff set out at paragraphs 66‒72 and 88–89 [of the special case] would be lawful under the law of Nauru; and the specification in any RPC visa referred to at paragraph 87 [of the special case] that the plaintiff must reside at the Nauru RPC, s 18C of the RPC Act and rule 3.1.3 of the Centre Rules would be lawful and valid under the law of Nauru, would the Commonwealth or the Minister be authorised to engage in one or more of the following acts or conduct: give effect to or rely upon the direction referred to at paragraph 6 [of the special case]; continue to perform the Memorandum of Understanding; (iii) continue to perform the Administrative Arrangements; continue to perform any contract for the construction and maintenance of, and continue to fund, security infrastructure at the Nauru RPC, including a perimeter fence, as required by the Memorandum of Understanding; continue to fund all costs of the Nauru RPC, as required by the Memorandum of Understanding; continue to exercise rights and discharge obligations under the Transfield Contract; (vii) continue to participate in the bilateral committees referred to at paragraphs 31‒34 [of the special case]; (viii) continue to discharge the role of Programme Coordinator under the Administrative Arrangements; (ix) continue to attend meetings with, and receive reports from, Transfield and Wilson Security; continue to occupy an office on site at the Nauru RPC and carry out the functions referred to at paragraph 37 [of the special case]; apply, if required to do so, to the Secretary of the Department of Justice and Border Control of Nauru, without the consent of the plaintiff, for the grant of an RPC visa to the plaintiff; and (xii) pay, if required to do so, to Nauru the fees payable for the grant of RPC visas to the plaintiff, in so far as those acts or that conduct facilitated, organised, caused, imposed, procured, or resulted in the detention of the plaintiff at RPC3, s 61 of the Constitution? s 198AHA of the Migration Act (assuming it is valid)? the Financial Framework Provisions (assuming each is valid)? If the answer to question (6)(a), (b) or (c) is "yes", if the plaintiff were returned to Nauru: (a) would the restrictions imposed on the plaintiff set out at paragraphs 66‒72 and 88‒89 [of the special case] be contrary to Art 5(1) of the Constitution of Nauru? (b) would the specification in any RPC visa referred to at paragraph 87 [of the special case] that the plaintiff must reside at the Nauru RPC, s 18C of the RPC Act and/or rule 3.1.3 of the Centre Rules be invalid by reason of Art 5(1) of the Constitution of Nauru? If the plaintiff were returned to Nauru, would the Commonwealth or the Minister be authorised to engage in one or more of the acts or conduct specified in question (6) by: s 61 of the Constitution? s 198AHA of the Migration Act (assuming it is valid)? the Financial Framework Provisions (assuming each is valid)? If the answer to question (8)(b) or (c) is "yes", is the statutory provision referred to therein invalid because it is not supported by any head of Commonwealth legislative power or is contrary to Ch III of the Constitution? Section 198AD(2) of the Migration Act (10) Assuming that, if the plaintiff were returned to Nauru: the restrictions imposed on the plaintiff set out at paragraphs 66‒72 and 88‒89 [of the special case] would be lawful under the law of Nauru; and the specification in any RPC visa referred to at paragraph 87 [of the special case] that the plaintiff must reside at the Nauru RPC, s 18C of the RPC Act and rule 3.1.3 of the Centre Rules would be lawful and valid under the law of Nauru, does s 198AD(2) of the Migration Act authorise and require that the plaintiff be taken as soon as reasonably practicable to Nauru? If the answer to question (10) is "yes", if the plaintiff were returned to Nauru: (a) would the restrictions imposed on the plaintiff set out at paragraphs 66–72 and 88–89 [of the special case] be contrary to Art 5(1) of the Constitution of Nauru? (b) would the specification in any RPC visa referred to at paragraph 87 [of the special case] that the plaintiff must reside at the Nauru RPC, s 18C of the RPC Act and/or rule 3.1.3 of the Centre Rules be invalid by reason of Art 5(1) of the Constitution of Nauru? (12) Does s 198AD(2) of the Migration Act authorise and require that the plaintiff be taken as soon as reasonably practicable to Nauru? Relief (13) What, if any, relief should be granted to the plaintiff? Costs (14) Who should pay the costs of the special case and of the proceedings generally?

HIGH COURT OF AUSTRALIA THE TRUSTEES OF THE PROPERTY OF APPELLANTS AND MARY ELIZABETH CUMMINS AND ANOR RESPONDENTS The Trustees of the Property of John Daniel Cummins, A Bankrupt v Cummins [2006] HCA 6 7 March 2006 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court of Australia made on 30 July 2004 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Federal Court of Australia Representation: B A J Coles QC with C R C Newlinds SC and P Kulevski for the appellants (instructed by Clayton Utz) W Sofronoff QC with M A Ashhurst for the respondents (instructed by Russell and Company) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Trustees of the Property of John Daniel Cummins A Bankrupt v Cummins Bankruptcy − Transfer to defeat creditors − Main purpose − Bankrupt transferred interest in matrimonial property to first respondent wife and transferred shares to second respondent − Whether evidence sufficient to permit inference that bankrupt's main purpose in transferring assets was to defeat or delay creditors − Whether main purpose of transfers to protect assets against future professional negligence suits − Whether transfer of assets void against trustee in bankruptcy − Bankruptcy Act 1966 (Cth), s 121(1)(b). Evidence − Judicial notice − Bankrupt, a Queen's Counsel who maintained two sets of chambers, failed to lodge tax returns for about 45 years − Whether inference should be drawn that bankrupt had a taxable income at a level which gave rise to a liability to pay income tax − Whether income disclosed in later tax returns relevant to establish income from earlier period of time − Whether Australian Taxation Office a creditor of the bankrupt. Trusts − Resulting trusts − Joint tenancy − Bankrupt and wife purchased land as joint tenants − Purchase money provided in unequal shares − Whether presumption of resulting trust applies such that property beneficially held in proportion to contributions − When appropriate point in time for determination of equitable interests in property − Bankrupt and wife in subsisting matrimonial relationship to purchase by constructing matrimonial home − Whether evidence sufficient to rebut presumption of resulting trust − Whether transfer was of bankrupt's interest as joint tenant without any adjustment to allow for beneficial tenancy in common in unequal shares. improved property subsequent Bankruptcy Act 1966 (Cth), ss 6, 121. GLEESON CJ, GUMMOW, HAYNE, HEYDON AND CRENNAN JJ. The appellants ("the Trustees") were appointed by a resolution of creditors passed on 16 March 2001 to be trustees of the bankrupt estate of John Daniel Cummins. Mr Cummins had become bankrupt by force of s 55(4A) of the Bankruptcy Act 1966 (Cth) ("the Act") when the Official Receiver endorsed his debtor's petition dated 12 December 2000. The statement of affairs disclosed that as at 30 January 2001 the assets of Mr Cummins totalled $259,614 and his liabilities to unsecured creditors $1,040,400. Of the gross receipts disclosed in the 1992-1999 income tax returns, the great bulk was derived from practice as a barrister. There was a public examination of Mr Cummins under s 81 of the Act held on 6 June 2001, but, in the litigation from which this appeal arises, he was not a party1, and the Trustees could not use the transcript of what he had said at his examination2. The dramatis personae Mr Cummins was admitted first as a solicitor in 1957 and practised at the New South Wales Bar after his admission in April 1961. He took silk in December 1980. At that time, appointments in New South Wales as Queen's Counsel were made by the Executive Council upon nomination by the Attorney- General, who, by convention, was advised by the President of the New South Wales Bar Association3. The first respondent, Mrs Cummins (formerly Mary Elizabeth Power), married Mr Cummins in 1964. They lived thereafter as husband and wife but, in February 2002, they had separated and by June 2002 proceedings were pending in the Family Court. The second respondent ("Aymcopic") is the trustee of the Cummins Family Trust, the beneficiaries of which are Mrs Cummins and the four children 1 Mr Cummins ceased to be a party by order of Sackville J on the first day of the trial: Prentice v Cummins (2002) 194 ALR 94 at 100; see also Prentice v Cummins (2002) 124 FCR 67 at 70. 2 See s 81(17)(a) of the Act. 3 See the remarks of Gleeson CJ upon the announcements on 10 December 1992 of appointments of Queen's Counsel: (1993) 67 Australian Law Journal 171. Crennan of her marriage with Mr Cummins. Mr Cummins is not a beneficiary. The deed whereby Aymcopic became trustee of the Cummins Family Trust was executed on 24 August 1987, a week after Mr and Mrs Cummins each had acquired one share in Aymcopic which had been a "shelf" company. The tax history of Mr Cummins The largest creditor by far in the bankruptcy is the Commonwealth in the guise of the Australian Taxation Office ("the ATO"). This indebtedness of Mr Cummins followed the issue of assessments upon the lodgment on 14 February 2000 of income tax returns for the years ended 30 June 1992 to 30 June 1999 and the ATO had instituted proceedings to recover $955,672.92. Before lodging these returns on 14 February 2000, Mr Cummins had not lodged any income tax return since about 1955. Section 208 of the Income Tax Assessment Act 1936 (Cth) ("the Assessment Act") stipulates that income tax when due and payable is a debt due to the Commonwealth, and s 222 provides for the imposition of additional tax, by way of penalty, upon a taxpayer who has failed to furnish a return4. Part XXIV of the Taxation Laws Amendment Act 1984 (Cth) had introduced into the Taxation Administration Act 1953 (Cth) detailed offence provisions5 for failure to furnish returns when required under a taxation law. No default assessments under s 167 of the Assessment Act were made against Mr Cummins. The upshot was that, during the whole of the period in which he had practised as a barrister, Mr Cummins had paid no income tax. Upon success in their appeal to this Court, the Trustees seek two declarations and consequential relief with respect to two transactions in August 1987 ("the August transactions"). The first declaration is that the transfer made on or about 26 August 1987 by Mr Cummins to Mrs Cummins of his legal and beneficial interest as joint tenant in the property at 77 Alexandra Street, Hunters Hill, a Sydney suburb, ("the Hunters Hill property") is void against the Trustees, 4 Throughout this period, there was stipulated (with variations from Budget to Budget) a rather modest sum for the taxable income of resident individuals below which no tax was imposed. For example, under the terms of the 1988 Budget, no tax was imposed on a resident individual whose taxable income did not exceed $5,100: O'Grady and O'Rourke, Ryan's Manual of the Law of Income Tax in Australia, 7th ed (1989) at 14. ss 8B-8H. Crennan pursuant to s 121 of the Act. The Hunters Hill property is land registered under the provisions of the Real Property Act 1900 (NSW). The second declaration is that the transfer of 6,000 shares in Counsel's Chambers Ltd ("the Shares") made by Mr Cummins to Aymcopic on or about 26 August 1987 is void as against the Trustees, again pursuant to s 121 of the Act. The Shares entitled Mr Cummins to occupancy of a double room on a floor of barristers' chambers in Wentworth Chambers in Phillip Street, Sydney. In addition to his chambers in Phillip Street, Mr Cummins maintained chambers at Parramatta. In 1986 he acquired for $30,000 units in the Barristers Chambers Parramatta Unit Trust. These formed part of the bankrupt estate and ultimately were sold by the Trustees for $100,000. Mr Cummins had intended in 1987 to transfer these units to Aymcopic by way of gift, but his instructions to his solicitor were not implemented. The documents to give effect to the August transactions were prepared by Mr Harris, a solicitor practising as "B C Harris & Co". Mr Harris did not give evidence but his file notes and some of his correspondence with Mr Cummins respecting the August transactions were in evidence. None of the other them. participants Mrs Cummins gave evidence but upon what were then other live issues. Little of the documentary evidence was in dispute; the principal area for debate at all stages of the litigation has been the nature of the inferences to be drawn from that evidence. transactions gave evidence respecting the August The Federal Court litigation Upon application made by the Trustees to the Federal Court in 2001 and heard by Sackville J, they obtained declarations in the terms described above and consequential relief. His Honour gave detailed reasons for judgment on 24 September 20036. Sackville J had earlier, on 5 December 2002, rejected a "no case" submission made by the respondents in respect of the Trustees' s 121 applications regarding the Hunters Hill property and the Shares. His Honour proceeded upon the footing provided by his earlier decision in Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd7 6 Prentice v Cummins (2003) 134 FCR 449. (2000) 169 ALR 344 at 356-357. Crennan that the Federal Court Rules8 authorised the entertainment of "no case" submissions. Sackville J gave detailed reasons upon the "no case" submission9. We shall refer to the two sets of reasons in order of their delivery and respectively as "the first judgment" and "the second judgment". An appeal to the Full Court of the Federal Court by Mrs Cummins and Aymcopic was successful. The Full Court (Carr and Lander JJ; Tamberlin J dissenting)10 set aside the final orders made by Sackville J, including the declaratory and consequential relief, and ordered in place thereof that the application by the Trustees be dismissed. Hence the reinstatement of those orders which is sought on the appeal by the Trustees to this Court. The August transactions The Hunters Hill property had been purchased in 1970 and the title was taken by Mr and Mrs Cummins as joint tenants. They were registered as proprietors on 10 August 1970. The solicitors acting for the purchasers were Messrs J P Grogan and Co. The property so acquired was then vacant land. A dwelling was erected on it shortly thereafter which served as their matrimonial home. Sackville J found that Mrs Cummins had contributed 65.8 per cent of the purchase price of $31,000; in the Full Court, further allowance was made in Mrs Cummins' favour for the whole of the deposit she provided, raising her contribution to 76.3 per cent. In the second judgment, Sackville J held that any presumption of resulting trust in shares proportionate to the respective contributions of Mr and Mrs Cummins had been rebutted, and that in 1970 they had shared the intention to acquire the Hunters Hill property as joint tenants, legally and beneficially11. It was the disposition in favour of Mrs Cummins, made in August 1987 by severance of that joint beneficial interest of 8 Order 35 r 1 empowers the Federal Court, at any stage of proceedings and on application of any party, to "pronounce such judgment or make such order as the nature of the case requires". 9 Prentice v Cummins (2002) 124 FCR 67. 10 Cummins v Trustees of the Property of Cummins (a bankrupt) (2004) 209 ALR 11 (2003) 134 FCR 449 at 469. Crennan Mr Cummins, which s 121 of the Act rendered an ineffective subtraction from his bankrupt estate. The disposition being void against the Trustees by operation of s 121, the upshot would be that the joint tenancy was severed by the Given the conclusion by the majority of the Full Court that the case for the Trustees under s 121 failed, it was unnecessary for their Honours to go on to consider the resulting trust issue. However, they did so and differed from Sackville J, holding that the presumption of a resulting trust to reflect the contributions to the purchase price in 1970 had not been rebutted13. In this Court, the first respondent supports that conclusion and the Trustees challenge it. The contract and transfer in respect of the interest of Mr Cummins as joint tenant in the Hunters Hill property were executed on the same day, 26 August 1987. A valuation had been obtained by Mr Harris on account of Mr and Mrs Cummins for the stated purpose of "stamp duty assessment", and the five bedroom residence was valued at $410,500. The price was stated in the contract and transfer to be one-half of this sum, namely $205,250, and the transfer included an acknowledgment by Mr Cummins that he had received that consideration. It was, however, common ground before Sackville J that Mrs Cummins did not pay the purchase price or any part of it. She did pay ad valorem stamp duty on the contract and provided the $300 for payment of the valuer's fee. The transfer was registered and Mrs Cummins thereby became registered proprietor of an estate in fee simple in the Hunters Hill property. The Hunters Hill property was sold after the bankruptcy and by agreement between the parties. The share of the net proceeds of sale for which Mrs Cummins was obliged by the orders of Sackville J to account to the Trustees was $1,064,417.82 with accrued interest. The transfer of the Shares to Aymcopic, also executed on 26 August 1987, had recited payment of consideration of $360,000 paid by Aymcopic. Sackville J found that it had been the intention of the parties that the two transactions effected on 26 August were to be completed together. Again, it was common 12 Re Francis (1988) 82 ALR 335 at 339. 13 (2004) 209 ALR 521 at 549. Crennan ground that Aymcopic did not pay any part of the purchase price. (It will be necessary later in these reasons to revert to the significance of the absence of payment both by Aymcopic and Mrs Cummins.) The funds to meet the stamp duty on the transfer were provided by Mrs Cummins. The Shares were registered in the name of Aymcopic in December 1987. The Shares also were sold. The proceeds of sale for which Aymcopic was obliged by the orders of Sackville J to account to the Trustees was $405,882.73 and $120,010, each with interest, in respect of two parcels of 4,000 and 2,000 of the Shares. Section 121 of the Act Section 121, in its present form, was substituted for the previous s 121 by the Bankruptcy Legislation Amendment Act 1996 (Cth)14. The 1996 legislation had its genesis in the Harmer Report, published in 198815. As originally enacted in 1966, s 121 rendered void as against the trustee in bankruptcy "a disposition of property ... with intent to defraud creditors, not being a disposition for valuable consideration in favour of a person who acted in good faith" (s 121(1)). Protection was given to the title or interest of a person purchasing or acquiring property "in good faith and for valuable consideration" (s 121(2)). Section 121 had had no immediate counterpart in the Bankruptcy Act 1924 (Cth). Its provenance lay rather in the Elizabethan Statute of Fraudulent Dispositions16, which in New South Wales is represented by s 37A of the Conveyancing Act 1919 (NSW) ("the Conveyancing Act"). The current form of s 121 is more broadly drawn than the earlier s 121. Distinctions between the two provisions were explained by Sackville J in the first 14 Sched 1, Item 208, with application to bankruptcies for which the date of the bankruptcy is on or after 16 December 1996 (Sched 1, Item 457). 15 Australia, The Law Reform Commission, General Insolvency Inquiry, Report No 16 13 Eliz 1 c 5 (1570). See Cannane v J Cannane Pty Ltd (In liq) (1998) 192 CLR 557 at 573-574 [37]-[40], 588-589 [85]-[88]; R v Dunwoody (2004) 212 ALR 103 Crennan judgment17, and it is unnecessary to refer further to them here. So far as presently material, s 121 states: "(1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if: the property would probably have become part of the transferor's estate and would probably have been available to creditors if the property had not been transferred; and the transferor's main purpose in making the transfer was: to prevent the transferred property from becoming divisible among the transferor's creditors; or to hinder or delay the process of making property available transferor's creditors. for division among the The transferor's main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent. Subsection (2) does not limit the ways of establishing the transferor's main purpose in making a transfer. (4) Despite subsection (1), a transfer of property is not void against the trustee if: the consideration that the transferee gave for the transfer was at least as valuable as the market value of the property; and the transferee did not know that the transferor's main purpose in making the transfer was the purpose described in paragraph (1)(b); and 17 (2002) 124 FCR 67 at 88-91. Crennan the transferee could not reasonably have inferred that, at the time of the transfer, the transferor was, or was about to become, insolvent. The trustee must pay to the transferee an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee."18 The term "property" means real or personal property of every description and includes "any estate, interest or profit ... arising out of or incident to any such real or personal property" (s 5(1)). For the purposes of s 121, the "market value" of property transferred is the market value of property at the time of its transfer (s 121(9)). That sub-section also states that "a person who does something that results in another person becoming the owner of property that did not previously exist is taken to have transferred the property to the other person"19. Section 121(8) protects the rights of a person who acquired property from the transferee both in good faith and for at least the market value of the property. The issues Comprehensive pleadings were filed. It is important to note that the Defence did not place any reliance upon par (a) of s 121(4) of the Act. Neither respondent asserted that in respect of either the sale of the Shares or the transfer of the interest of Mr Cummins in the Hunters Hill property, consideration had been given which "was at least as valuable as the market value of the property" (s 121(4)(a)). It followed that there was no occasion in the relief granted by Sackville J for the operation of the refund provision in s 121(5). 18 Certain matters have no value as consideration for the purposes of s 121(4) and (5). The transferee's promise to marry or to become de facto spouse of the transferor, and the transferee's love or affection for the transferor do not suffice. Neither does the fact that the transferee is related to the transferor, nor, if the transferee is the spouse or de facto spouse of the transferor, does the making of a deed by the transferee in favour of the transferor. These exclusions are found in s 121(6). 19 It is not contended by the respondents that the transfer in August 1987 of the interest of Mr Cummins in the Hunters Hill property could not answer the description of a "transfer of property" for the purposes of s 121 of the Act; cf Anderson v Peldan [2005] FCA 1179. Crennan As indicated earlier in these reasons, the case for the Trustees for the most part was documentary. The respondents elected to call no evidence on the Trustees' claims respecting the Hunters Hill property and the Shares20. Upon the appeal to this Court, the respondents accepted in their oral submissions that the case had been conducted on the conventional basis that the transfers had been voluntary. (treated as In that forensic setting, there were two questions for the primary judge concerning the operation of s 121 which remained live issues on the appeal to this Court. One was whether at the time of the August transactions the Commonwealth the indistinguishable Commissioner of Taxation) was a "creditor" of Mr Cummins within the sense of s 121. The other was whether the Court was to draw the inference that Mr Cummins, in making the transfers in August 1987, had the "main purpose" required by s 121(1)(b) of the Act. Was that purpose to prevent the property becoming divisible among his creditors or to hinder or delay the process of making property available for division among his creditors? Sackville J found that such inferences were available and should be drawn. His Honour accordingly decided both issues in favour of the Trustees. the ATO and from "Creditors" Section 121(1)(b) of the Act speaks of the transfer of property being divisible "among the transferor's creditors". Section 6 states: "A reference in this Act to an intent to defraud the creditors of a person or to defeat or delay the creditors of a person shall be read as including an intent to defraud, or to defeat or delay, any one or more of those creditors." Section 6 addressed the terms of s 121 in its previous incarnation; the section then used the phrase "with intent to defraud creditors". However, the need to rewrite s 6 in the light of the current text of s 121 appears to have been overlooked. Section 6 does retain some operation. Counsel for the respondents pointed to the use in s 266 of the phrase "with intent to defraud his or her creditors". That section creates an offence where, to put it shortly, there is with the necessary intent a disposition or charging of property by a person who becomes or has become bankrupt. 20 (2003) 134 FCR 449 at 455. Crennan Whatever may be the operation retained by s 6, there was no substantial controversy between the parties to the present appeal that in an appropriate case it was enough that one or more of the creditors of the transferor was the object of the main purpose spoken of in s 121(1)(b). The question then arises whether the creditor or creditors spoken of in the section must have that status at the time of the transfer. In P T Garuda Indonesia Ltd v Grellman21, a case upon s 121 in its previous form, the Full Court of the Federal Court rejected a submission that the class of creditors referred to is limited to those who at the time of the disposition in question have claims of a nature which then would be susceptible to proof under s 82 of the Act22. In R v Dunwoody, an appeal against convictions under s 266 of the Act, "It is true that statutory enactments of this kind consistently refer to defrauding or deceiving 'creditors'; but the course of judicial decision over the centuries shows that this expression is not to be confined to its limited and technical sense of a person to whom a debt is presently due and owing." Section 40(1)(c) stipulates as an act of bankruptcy the departure from or remaining out of Australia of a person "with intent to defeat or delay his or her creditors". Of that expression, in Barton v Deputy Federal Commissioner of Taxation24, Stephen J treated as sufficient for the commission of that act of bankruptcy "awareness of an impending impending indebtedness". In support of that conclusion, his Honour referred to decisions construing the Elizabethan statute and s 37A of the Conveyancing Act. liability" or "some In the light of authorities such as these, there was no real dispute in the present appeal that, if the other elements of s 121 were made out, the 21 (1992) 35 FCR 515 at 526. 22 cf Coventry v Charter Pacific Corporation Ltd (2005) 80 ALJR 132; 222 ALR 23 (2004) 212 ALR 103 at 132. 24 (1974) 131 CLR 370 at 374. Crennan Commonwealth, represented by the ATO, was a creditor for the purposes of the section. Given the further proposition that the section may be satisfied in the absence of a plurality of such creditors, it is unnecessary to consider a further point. This concerns whether an apprehension of actions for professional negligence against a barrister such as Mr Cummins and the taking of action with the main purpose of preventing the transfer of property becoming divisible among that class of potential plaintiffs could satisfy the section. However, on the appeal to this Court, the respondents restated the submission that no inference should be drawn as to the level of receipts by Mr Cummins in the period preceding the August transactions. The proposition appeared to be that his "tax liability" did not exist, or was in such a low range as to make it implausible that this provided his "main purpose". With that contention it will be necessary to deal further in these reasons. "Main purpose" What had been required for the Trustees to succeed at trial was that the circumstances appearing in the evidence gave rise to a reasonable and definite inference, not merely to conflicting inferences of equal degree of probability, that, in making the August transactions, Mr Cummins had the "main purpose" required by the statute25. Further, counsel for the Trustees accepted that, in determining the inferences to be drawn from the primary facts, regard was to be had to the seriousness of the allegations made against Mr Cummins (although he was not a party) and the gravity of the consequences of findings adverse to him26. Reference was made to the well-known judgment of Dixon J in Briginshaw v Briginshaw27. 25 See Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5 per Dixon, Williams, Webb, Fullagar and Kitto JJ; Luxton v Vines (1952) 85 CLR 352 at 358 per Dixon, Fullagar and Kitto JJ; Jones v Dunkel (1959) 101 CLR 298 at 304-305 per Dixon CJ, 310 per Menzies J, 318-319 per Windeyer J; Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155 at 161-162 per Stephen J, 168 per Mason J; Anikin v Sierra (2004) 79 ALJR 452 at 459-460 [45]-[46] per Gleeson CJ, Gummow, Kirby and Hayne JJ; 211 ALR 621 at 631. 26 (2002) 124 FCR 67 at 95. 27 (1938) 60 CLR 336 at 361-362. Crennan The circumstances, taken together, which satisfied the primary judge that Mr Cummins had the requisite "main purpose" were identified by his Honour in the first judgment as follows28: [Mr Cummins] was well aware in August 1987 that he had incurred very substantial liabilities to [the ATO], contingent only on [the ATO] issuing assessments in respect of past income years; [Mr Cummins] was well aware at that time that [the ATO] would issue assessments once [his] longstanding tax delinquency became known, an event that could occur at any time; [Mr Cummins] divested himself voluntarily of virtually all his substantial assets in August 1987; in any event, the assets retained by [Mr Cummins] were not sufficient to meet his taxation liabilities, if [the ATO] decided to issue assessments; and [Mr Cummins] saw the transfers as increasing the chances that his assets would be protected from any claims made by [the ATO]." Particular items of evidence impressed the primary judge. The notes of the solicitor, Mr Harris, at the time of the August transactions showed that he had paid attention to s 121 of the Act (which then spoke of "intent to defraud creditors") and to s 37A of the Conveyancing Act. Documentary evidence in part emanating from Mrs Cummins' bank referred to assets being in her name for reasons to do with her husband's occupation. Sackville J did not infer that Mr Harris was privy to the information that his client had not put in tax returns. But his Honour concluded that it was very likely that Mr Harris discussed with his client the legal perils that the August transactions might encounter, and that Mr Cummins would have seen these perils in a special light. Sackville J said29: "It is clear that [Mr Harris] directed his attention to the effect on the proposed transactions of ss 120 and 121 of [the Act]. It is also clear 28 (2002) 124 FCR 67 at 100. 29 (2002) 124 FCR 67 at 100. Crennan enough that [Mr Harris] recommended that the transfers should record that the expressed consideration had actually been received, because he thought (rightly or wrongly) that this would increase the chances that the transactions would survive subsequent scrutiny if challenged under the relevant legislation. (His notes say that 'Mary must be a purchaser' and a letter written by him 10 years after the events suggests that he thought in 1987 that if the transfers were for an expressed consideration and [Mr Cummins] subsequently forgave the indebtedness, the transfers would not constitute 'settlements' for the purposes of [the Act], s 120.)" (original emphasis) Mr Cummins was a gentleman of the turf. At one stage he was a member of the Committee of the Australian Jockey Club and records later assembled by an accountant, Mr Morelli, in connection with preparation of the income tax returns for 1992-1999, showed items of significant expenditure in betting and the maintenance of race horses. It may be, though the reasoning of Sackville J did not rely upon the point, that it was to be inferred that the expenditure on turf interests pre-dated 1992, and was an element in the manner of living enjoyed by Mr Cummins at the time of the August transactions. trial, counsel for identified several possible the respondents explanations of the August transactions. One was that Mr Cummins had sought to alleviate what in 1987 were matrimonial difficulties. Another was a wish to provide for his wife and children. (Hence, perhaps, the absence of a plea of market value consideration under s 121(4)(a) of the Act.) The primary judge described the first explanation as no more than unsupported speculation and, as to the second, a desire by Mr Cummins to benefit his family played no more than a minor part in the decision-making process; in any event, it was consistent with a main purpose of defeating or delaying the creditors of Mr Cummins30. With respect to the second explanation, some reference should be made, by way of contrast, to Williams v Lloyd31. In that case, both the bankrupt and his wife had died at the time of the hearing of applications to set aside various transactions upon grounds including the Elizabethan statute and s 37A of the Conveyancing Act. Evidence, however, was given by two of the bankrupt's adult children. The applications succeeded at first instance but an appeal to this Court 30 (2002) 124 FCR 67 at 101. 31 (1934) 50 CLR 341. Crennan was successful. Dixon J described the source of the impugned dispositions as the persuasions of the wife of the bankrupt. These were directed not to protecting the property of the husband against future creditors, but to withdrawing capital from apprehended improvident hazardous investments32. His Honour also remarked that at the time of the dispositions the bankrupt had been "in a perfectly sound financial position" with "nothing to fear"33. The third hypothesis to explain the August transactions was a concern that, given what was on 26 August 1987 the pending appeal to this Court in what became Giannarelli v Wraith34, the law relating to the liability of counsel in negligence might be changed, and a desire of Mr Cummins to avoid his assets being at risk if a future client sued him for in-court work35. Sackville J questioned whether such a "main purpose" would not in any event answer s 121(1)(b) of the Act36. He concluded that protection against such claims had been seen by Mr Cummins as but a "side benefit" of the transfers in question, and held that Mr Cummins' "main purpose in transferring his assets was being to prevent the assets being divisible among his creditors, specifically [the ATO]"37. Sackville J put to one side, as being made too late in the course of the litigation, the contention of the Trustees that it was significant support for their case that, on 2 April 1987, the Senate had rejected for the second time the Australia Card Bill 1987, which would have provided a precursor to the present compulsory tax file number system, and that the government of the day, whose bill it had been, had been returned at a general election held on 11 July 198738. Thereafter, the tax file number system was introduced by the Taxation Laws Amendment (Tax File Numbers) Act 1988 (Cth) and commenced on 1 January 32 (1934) 50 CLR 341 at 372. 33 (1934) 50 CLR 341 at 372. 34 (1988) 165 CLR 543. Special leave was granted on 14 August 1987. 35 (2002) 124 FCR 67 at 101. 36 (2002) 124 FCR 67 at 102. 37 (2002) 124 FCR 67 at 102. 38 (2002) 124 FCR 67 at 86. Crennan The Full Court The majority in the Full Court displaced the reasoning and conclusions of the primary judge, but erred in doing so, so that, subject to the outcome on the resulting trust issue, the appeal to this Court by the Trustees must succeed. The Full Court said that "there was no evidence that during the years before 1987 ... [Mr Cummins'] taxable income was at a level which gave rise to an obligation to pay tax"39. Reference has been made earlier in these reasons to the rather modest sums above which such an obligation arose. Their Honours expressed their ultimate conclusion as follows40: "There is nothing in the evidence to suggest that in 1987 [Mr Cummins] anticipated being unmasked as a person who had not filed income tax returns for many, many years. On the contrary, the pattern of not filing income tax returns continued for another 12 years until Mr Harris referred [Mr Cummins] to Mr Morelli for the purpose of preparing and lodging the returns." Their Honours added41: "On the evidence, the only thing special about 1987 was the Earlier in their joint reasons, the majority discounted the treatment by Sackville J of the appointment of Mr Cummins to the rank of senior counsel as recognition of his professional attainments and expertise and its use as an indicator of his derivation of substantial income. There was nothing in their view to "permit the jump from the significance of the appointment as a senior counsel to an assumption about even the approximate level of [Mr Cummins'] taxable income"42. The majority also remarked43: 39 (2004) 209 ALR 521 at 535-536. 40 (2004) 209 ALR 521 at 542. 41 (2004) 209 ALR 521 at 542. 42 (2004) 209 ALR 521 at 538. 43 (2004) 209 ALR 521 at 538. Crennan "It might well be expected that, on average, a barrister who had been in practice for 22 years, including 6 years as senior counsel, would have enjoyed a large taxable income. But, in our opinion, [the Trustees] needed to adduce some evidence (albeit slight) of the likely level of taxable income which this particular barrister enjoyed, that is did he fit the stereotype average? Or even, was it likely that he did?" The force of the first sentence is not diminished by the following two sentences. It was entirely appropriate for Sackville J to have placed the significance he did upon the duration of Mr Cummins' practice at the bar, particularly as senior counsel. The circumstances that must have attended his taking silk in 1980 have been referred to earlier in these reasons. It is in the highest degree unlikely that a junior counsel with an insubstantial practice would obtain a favourable recommendation by the President of the New South Wales Bar Association to the New South Wales Attorney-General. It is also unlikely that a senior counsel with a meagre practice would be able to maintain two sets of chambers, one being generous accommodation in Phillip Street. The majority in the Full Court also emphasised that the purchase of the Shares and the units, relating to the two sets of chambers maintained by Mr Cummins, may have been funded by loan moneys44. That could have been the case but, if so, Mr Cummins would have needed the means to service the indebtedness. As was pointed out in the course of argument in this Court, the competing possibilities seem to have been that, rather than relying upon receipts from his practice, Mr Cummins had been supported for many years by Mrs Cummins. As to that, there was no evidence from Mrs Cummins. Another possibility might have been that Mr Cummins was sustained by resort to capital. But that would only raise the further question as to why it should be assumed that that was not income-producing capital. The majority in the Full Court also accepted criticism by the present respondents of the use by Sackville J of the figures of gross receipts and net business income shown in the returns eventually filed for the years 1992-1999. The respondents appeared to have persuaded the majority in the Full Court that it 44 (2004) 209 ALR 521 at 537. Crennan was an inference of equal probability that in respect of the years 1987 and earlier the net taxable income of Mr Cummins had been below the taxable threshold45. It was well within the application of accepted principle for Sackville J to have approached the matter in the way he did. In the joint judgment of five members of this Court in Kizbeau Pty Ltd v W G & B Pty Ltd46, authorities were collected upon an analogous point to that considered by Sackville J. The takings of a business subsequent to purchase are generally admissible to prove the value of the business at the date of purchase. The state of affairs disclosed in the returns for the period commencing 1992 was not so remote as to be incapable of throwing light on the level of receipts from Mr Cummins' earlier practice as senior counsel47. As to the significance attached by the majority in the Full Court to the Giannarelli litigation, Tamberlin J in his dissenting judgment remarked48: "It would be most unusual to take the significant decision to commit to a divesting of major assets before the decision of the High Court on a special leave application, when that decision may have brought an end to the question of barristers in-court immunity by refusal of leave. At the time when the steps were taken to effect the transfer of assets by [Mr Cummins], the decision of the Victorian Full Court, following a well- settled line of authority, was in effect a unanimous decision rejecting the proposition that barristers did not have in-court immunity. In my view, the likelihood is that the existence of the Giannarelli litigation focused the attention of [Mr Cummins] on the need to protect his assets from pursuit by the Commissioner in the light of his decisions over the preceding [3]5 years not to lodge any tax returns." We agree with Tamberlin J. 45 (2004) 209 ALR 521 at 538. 46 (1995) 184 CLR 281 at 291. 47 cf McAllister v Richmond Brewing Co (NSW) Pty Ltd (1942) 42 SR (NSW) 187 at 48 (2004) 209 ALR 521 at 560. Crennan The primary judge reached his conclusions as to the existence of the main purpose required by s 121(1)(b) of the Act without drawing adverse inferences against the respondents by reason of their failure to adduce evidence50. His Honour went on to indicate that he would have more readily inferred from the absence of evidence from Mr Cummins that his main purpose in effecting the transfers was to prevent the transferred assets from becoming divisible amongst his creditors51. In this Court, the Trustees sought to strengthen their case by inviting the Court to draw such an inference and to do so by application of the principles generally associated with Jones v Dunkel. That, in turn, invited debate as to the applicability of the reasoning in that case to a situation where there had been a "no case" submission coupled with an election not to call evidence. The respondents challenged the conclusion by the primary judge that, while the inference is not available against a party making a no case submission when the party is not put to its election, it is available when the party has elected to adduce no evidence in its case52. It is unnecessary to embark upon that matter. Sackville J did not err in putting his conclusion on its primary basis, unassisted by Jones v Dunkel, and the majority in the Full Court erred in upsetting that conclusion. There remains one issue, which stands apart. The ownership of the Hunters Hill property The generally accepted principles in this field, affirmed for Australia by Calverley v Green53, were expressed as follows in that case by Gibbs CJ54: 49 (1959) 101 CLR 298. 50 (2002) 124 FCR 67 at 103. 51 (2002) 124 FCR 67 at 103-104. 52 cf Protean (Holdings) Ltd (Receivers and Managers Appointed) v American Home Assurance Co [1985] VR 187 at 215 per Young CJ. 53 (1984) 155 CLR 242. 54 (1984) 155 CLR 242 at 246-247. Crennan "[I]f two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money". Further, the presumption of advancement of a wife by the husband has not been matched by a presumption of advancement of the husband by the wife55. The "presumption of advancement", where it applies, means that the equitable interest is at home with the legal title, because there is no reason for assuming that any The subject-matter of the August transactions with respect to the Hunters Hill property was identified in the transfer as "all that the [sic] interest of the Transferor as joint tenant of and in the land above described". The following remarks by Professor Butt in his work, Land Law, are in point57: "Strictly speaking, joint tenants do not have proportionate shares in the land. However, a joint tenant is regarded as having a potential share in the land commensurate with that of the other joint tenants. Where there are two joint tenants, that potential share is one-half; where there are three joint tenants, it is one-third; and so on. This potential share the joint tenant can deal with unilaterally during his or her lifetime." Hence the significance of the valuation which was obtained and the identification in the transfer of a consideration of $205,250, being one-half of the valuation. What was there to conclude in August 1987 that the face of the register did not represent the full state of the ownership of the Hunters Hill property, and that the ownership as joint tenants was at odds with, and subjected to, the beneficial ownership established by trust law? 55 Calverley v Green (1984) 155 CLR 242 at 268 per Deane J. 56 Calverley v Green (1984) 155 CLR 242 at 267 per Deane J. 57 4th ed (2001) at 222 (footnote omitted). Crennan No part of the purchase price of $205,250 was paid by Mrs Cummins and the August 1987 transfer was voluntary, as explained earlier in these reasons. However, Mrs Cummins did pay the ad valorem stamp duty on the contract and the valuer's fee. There is force in the submission for the Trustees that it is unlikely these steps would have been taken by Mrs Cummins and that the August transaction with respect to the Hunters Hill property would have been cast in the way that it was had she believed that she already held approximately a two-thirds beneficial interest. At all events, these matters suggest that in August 1987 the parties were proceeding on the conventional basis that the equitable estate was at home with the registered estate of joint tenancy58. There is no necessary inconsistency between this conventional basis as to the nature of the ownership being dealt with in August 1987 and the later conventional basis on which the litigation was conducted, namely that the consideration stipulated was not paid and that the property interest, ascertained as just described, was being dealt with on a voluntary basis. It is important for a consideration of the issues concerning the operation, if any, of the principles respecting resulting trusts that the registered title was that of joint tenants rather than tenants in common. The severance effected in August 1987 had the effect of putting to an end the incident of survivorship. The dislike by equity of survivorship and of what Deane J described as "the gamble of the tontine"59 was the expression of its preference for proportionate carriage of benefit and burden; equity reacted against the operation of chance to produce a result at odds with proportionate distribution between claimants. In Corin v Patton60, Deane J said that there were two aspects of joint tenancy which attracted the operation of overriding equitable doctrine, based upon notions of good conscience and actual or presumed intention. They were61: "(i) the equality of the interests of joint tenants, regardless of intention or contribution, in the undivided rights constituting ownership of the relevant 58 See Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244-245. 59 Corin v Patton (1990) 169 CLR 540 at 573. 60 (1990) 169 CLR 540. 61 (1990) 169 CLR 540 at 573. Crennan property, and (ii) the right of accretion by survivorship until there is a sole owner of the whole". "Where legal joint tenancy persists, severance in equity must involve the creation of some distinct beneficial interests, that is to say, the creation of a trust for the joint tenants themselves as tenants in common in equal shares or for different beneficiaries or beneficial shares." In Malayan Credit Ltd v Jack Chia-MPH Ltd63, Lord Brightman, in delivering the advice of the Privy Council, considered an argument that, in the absence of an expressed agreement, persons who take as joint tenants at law hold as tenants in common in equity only in three classes of case. The first was the provision of purchase money in unequal shares, where the beneficial interest is held to reflect those unequal shares; the second, security taken jointly by parties who advance the loan moneys in unequal shares; and the third, partnership property64. The Privy Council held that the circumstances in which, in the absence of express agreement, equity may presume joint tenants at law to be tenants in common in equity of the beneficial interest of property were not limited in this way. In the circumstances of Malayan Credit, the Privy Council inferred from "[a]ll the circumstances"65 that, since the commencement of a lease of property for the business purposes of the joint lessees, they had held beneficial interests in the lease as tenants in common in unequal shares representing the distinct and differing areas of the leased premises they occupied. Upon the sale of the leasehold premises, the net proceeds were to be divided not equally but in accordance with these proportions. This manifested the precept that among merchants the right of survivorship has no place66. 62 (1990) 169 CLR 540 at 573. 63 [1986] AC 549 at 559-560. 64 See Snell's Equity, 31st ed (2005) at 103-104; White and Tudor's Leading Cases in Equity, 9th ed (1928), vol 2 at 881-893. 65 [1986] AC 549 at 561. 66 Buckley v Barber (1851) 6 Exch 164 at 179 per Parke B [155 ER 498 at 504]. Crennan Among the features taken into account in Malayan Credit67 as pointing in equity unmistakably towards a tenancy in common in unequal shares were the facts that, after the grant of the lease, the parties had paid stamp duties and survey fees in the same unequal shares and that the rental service charges had been paid in the same way. In Malayan Credit, there was, of course, no scope for any "competing" presumption of advancement seen in family relations cases. In Charles Marshall Pty Ltd v Grimsley68, and subsequently in Calverley v Green69, this Court was concerned with family dealings in property: shares in the first case and improved land in the second case. In Charles Marshall, the plaintiffs were daughters of the donor and the Court said that the presumption of an intention of advancement, that they be made beneficial as well as legal owners of the shares, might be rebutted by evidence manifesting a contrary intention. Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ said of the rebuttal of presumptions by manifestation of a contrary intention70: "Apart from admissions the only evidence that is relevant and admissible comprises the acts and declarations of the parties before or at the time of the purchase (in this case before or at the time of the acquisition of the shares by allotment) or so immediately thereafter as to constitute a part of the transaction." (emphasis added) However, as Malayan Credit71 illustrates, whilst evidence of subsequent statements of intention, not being admissions against interest, are inadmissible, evidence of facts as to subsequent dealings and of surrounding circumstances of the transaction may be received72. 67 [1986] AC 549 at 561. 68 (1956) 95 CLR 353. 69 (1984) 155 CLR 242. 70 (1956) 95 CLR 353 at 365. 71 [1986] AC 549 at 559-560. 72 White and Tudor's Leading Cases in Equity, 9th ed (1928), vol 2 at 882. Crennan What then was the "transaction" to which attention must be directed in determining whether, subsequent admissions or conventional assumptions or arrangements apart, the registered title to the Hunters Hill property acquired by Mr and Mrs Cummins was not at variance with an equitable title? The Hunters Hill property, at the time of their registration as joint proprietors on 10 August 1970, was vacant land. The purchase moneys were contributed, as explained earlier in these reasons, in the proportions 76.3 per cent (Mrs Cummins) and 23.7 per cent (Mr Cummins). A mortgage over the Hunters Hill property executed by Mr and Mrs Cummins in favour of the Commonwealth Savings Bank of Australia on 16 July 1971 secured an advance to them jointly of $8,000 on a covenant that they would erect and complete within six months of that date a dwelling house at a cost of not less than $33,500. The tax return by Mrs Cummins for the year ended 30 June 1971 but lodged by her tax agent in 1972 showed the Hunters Hill property as her place of residence. The "transaction" to which attention must be directed, in the sense given in Charles Marshall respecting the principles of resulting trusts, is a composite of the purchase of the Hunters Hill property followed by construction of a dwelling house occupied as the matrimonial home for many years preceding the August transactions. The relevant facts bearing upon, and helping to explain, the nature of the joint title taken on registration on 10 August 1970 include the other elements in that composite. To fix merely upon the unequal proportions in which the purchase moneys were provided for the calculation of the beneficial interests in the improved property which was dealt with subsequently in August 1987 would produce a distorted and artificial result, at odds with practical and economic realities73. Looked at in this way, this is not a case which requires consideration of the authorities where an equitable lien or charge secures expenditure on improvements made but no beneficial interest in the land is conferred74. Calverley v Green concerned the beneficial ownership of an improved property acquired as joint tenants by a man and a woman who had lived together for about 10 years as husband and wife. The decision of this Court was that the presumption that they held the registered title in trust for themselves in shares proportionate to their contributions was not rebutted by the circumstances of the 73 cf the remarks of Lord Diplock in Gissing v Gissing [1971] AC 886 at 906. 74 See Giumelli v Giumelli (1999) 196 CLR 101 at 119-120 [31]-[32]. Crennan case. Mason and Brennan JJ75 referred to the statement by Lord Upjohn in Pettitt v Pettitt76 that, where spouses contribute to the acquisition of a property then, in the absence of contrary evidence, it is to be taken that they intended to be joint beneficial owners. Their Honours said that Lord Upjohn's remarks reflected the notion that both spouses may contribute to the purchase of assets through their marriage "as they often do nowadays"77 and that they would wish those assets to be enjoyed together for their joint lives and by the survivor when they were separated by death. However, Mason and Brennan JJ considered such an inference to be appropriate only between parties to a lifetime relationship, being the exclusive union for life undertaken by both spouses to a valid marriage, though defeasible and oftentimes defeated78. It is unnecessary for the purposes of the present case to express any concluded view as to the perception by Mason and Brennan JJ of the particular and exclusive significance to be attached to the status of marriage in this field of legal, particularly equitable, discourse. It is enough to note that, as Dixon CJ observed 50 years ago in Wirth v Wirth79, in this field, as elsewhere, rigidity is not a characteristic of doctrines of equity. The reasoning of the Privy Council in Malayan Credit80 is an example of that lack of rigidity. In the present case, Sackville J referred in the second judgment to the operation of statute law to produce divergent outcomes in particular classes of case81. In particular, his Honour referred to the regimes established by the Family Law Act 1975 (Cth), s 79, and, in New South Wales, by the Property (Relationships) Act 1984 (NSW)82. The New South Wales statute provides for 75 (1984) 155 CLR 242 at 259. 76 [1970] AC 777 at 815. 77 (1984) 155 CLR 242 at 259. 78 (1984) 155 CLR 242 at 259. 79 (1956) 98 CLR 228 at 238. 81 (2003) 134 FCR 449 at 462-463. 82 See also Property Law Act 1958 (Vic), Pt IX; Property Law Act 1974 (Q), Pt 19; De Facto Relationships Act (NT); Domestic Relationships Act 1994 (ACT); (Footnote continues on next page) Crennan the declaration of title or rights in respect of property held by either party to a "domestic relationship". That term is broadly defined in s 5 as extending beyond the already broad definition of "de facto relationship" in s 4. The extent to which these statutory innovations may bear upon further development of the principles of equity is a matter for another day83. The present case concerns the traditional matrimonial relationship. Here, the following view expressed in the present edition of Professor Scott's work respecting beneficial ownership of the matrimonial home should be accepted84: "It is often a purely accidental circumstance whether money of the husband or of the wife is actually used to pay the purchase price to the vendor, where both are contributing by money or labor to the various expenses of the household. It is often a matter of chance whether the family expenses are incurred and discharged or services are rendered in the maintenance of the home before or after the purchase." To that may be added the statement in the same work85: "Where a husband and wife purchase a matrimonial home, each contributing to the purchase price and title is taken in the name of one of them, it may be inferred that it was intended that each of the spouses should have a one-half interest in the property, regardless of the amounts contributed by them." (footnote omitted) That reasoning applies with added force in the present case where the title was taken in the joint names of the spouses. There is no occasion for equity to fasten upon the registered interest held by the joint tenants a trust obligation representing differently proportionate interests as tenants in common. The subsistence of the matrimonial relationship, as Mason and Brennan JJ De Facto Relationships Act 1996 (SA); Family Court Act 1997 (WA), Pt 5A; Relationships Act 2003 (Tas). 83 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 59-63 [18]-[28]. 84 The Law of Trusts, 4th ed (1989), vol 5, §454 at 239. 85 The Law of Trusts, 4th ed (1989), vol 5, §443 at 197-198. Crennan emphasised in Calverley v Green86, supports the choice of joint tenancy with the prospect of survivorship. That answers one of the two concerns of equity, indicated by Deane J in Corin v Patton87, which founds a presumed intention in favour of tenancy in common. The range of financial considerations and accidental circumstances in the matrimonial relationship referred to by Professor Scott answers the second concern of equity, namely the disproportion between quantum of beneficial ownership and contribution to the acquisition of the matrimonial home. In the present litigation, the case for the disinclination of equity to intervene through the doctrines of resulting trusts to displace the incidents of the registered title as joint tenants of the Hunters Hill property is strengthened by further regard to the particular circumstances. Solicitors acted for Mr and Mrs Cummins on the purchase in 1970. The conveyance was not uneventful. The contract was dated 14 April 1970 and was settled on 27 July 1970, but only after the issue by the solicitors for the vendor on 10 July of a notice to complete. It is unrealistic to suggest that the solicitor for the purchasers, Mr and Mrs Cummins, did not at any point advise his clients on the significance of taking title as joint tenants rather than as tenants in common. Secondly, use of the valuation obtained in 1987 to fix what was shown as the purchase price for the acquisition by Mrs Cummins of the interest of her husband is consistent, as already indicated, with the conventional basis of their dealings which treated the matrimonial home as beneficially owned equally. Finally, there is the question of the funding of the building operations which were necessary for the use of the previously vacant land as the matrimonial home. Reference is made earlier in these reasons to the treatment of the purchase of the unimproved land and the subsequent building operations as the one transaction for the purpose of considering the principles respecting resulting trusts. Since October 1967, Mr and Mrs Cummins had owned as joint tenants a property at 12A Ferdinand Street, Hunters Hill. This was sold in December 1971. The proceeds of that sale were paid on 22 December 1971 into a bank account styled "John Daniel Cummins and Mrs Mary Elizabeth Cummins Fully Drawn Loan Account". Sackville J held that in these circumstances it appeared likely that the net proceeds of sale of the Ferdinand Street property had been paid to Mr and Mrs Cummins jointly. While there was no finding to this 86 (1984) 155 CLR 242 at 259. 87 (1990) 169 CLR 540 at 573. Crennan effect by the primary judge, there is force in the submission in this Court by counsel for the Trustees that the likely source of funds for the building operations were, first, the joint borrowing of $8,000 on the mortgage to the Commonwealth Savings Bank of Australia, supplemented after December 1971 by the joint proceeds of the sale of the other property. Sackville J correctly concluded in the second judgment that the subject of the disposition in 1987 was that which appeared on the transfer, namely the interest of Mr Cummins as joint tenant of the Hunters Hill property, without any displacement to allow for a beneficial tenancy in common in shares, of which the larger was that of Mrs Cummins88. Conclusion and orders The result is that the Trustees have succeeded in this Court on the grounds dealing both with s 121 of the Act and the beneficial ownership of the Hunters Hill property. The appeal should be allowed with costs. The orders of the Full Court should be set aside and in place thereof the appeal to that Court should be dismissed with costs. These orders will have the effect of reinstating the orders made by Sackville J on 24 October 2003. 88 (2003) 134 FCR 449 at 470.

HIGH COURT OF AUSTRALIA JEMENA ASSET MANAGEMENT (3) PTY LTD & ORS APPELLANTS AND COINVEST LIMITED RESPONDENT Jemena Asset Management (3) Pty Ltd v Coinvest Limited [2011] HCA 33 7 September 2011 Appeal dismissed with costs. ORDER On appeal from the Federal Court of Australia Representation A J Myers QC with C B O'Grady for the appellant (instructed by Herbert Geer) P J Hanks QC with S J Moore for the respondent (instructed by Maddocks) S J Gageler SC, Solicitor-General of the Commonwealth with C P Young intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Jemena Asset Management (3) Pty Ltd v Coinvest Limited Constitutional law (Cth) – Inconsistency between Commonwealth instrument and State law – Appellants employed construction workers and were bound by certain federal industrial instruments ("federal instruments") made under Workplace Relations Act 1996 (Cth) ("Commonwealth Act"), which contained provisions regarding long service leave – Construction Industry Long Service Leave Act 1997 (Vic) ("State Act") provided for scheme of portable long service leave benefits for workers in construction industry – Commonwealth Act provided for paramountcy of industrial instruments made under federal legislation over State laws, to extent of any inconsistency – Whether State Act inconsistent with Commonwealth Act as embodied in federal instruments. Words and phrases – "alter, impair or detract from", "cover the field", "direct inconsistency", "indirect inconsistency". Constitution, s 109. Construction Industry Long Service Leave Act 1997 (Vic), ss 1, 3, 4, 6. Workplace Relations Act 1996 (Cth), ss 17(1), 152(1), 170LZ(1). FRENCH CJ, GUMMOW, HEYDON, CRENNAN, KIEFEL AND BELL JJ. The three appellants, companies incorporated in Victoria, carry on businesses in the operation of electricity infrastructure assets. In the course of those businesses, the appellants employ persons to perform construction work, and are bound by several federal industrial instruments made under the Workplace Relations Act 1996 (Cth) ("the Commonwealth Act") in relation to long service leave ("the federal instruments"). In early October 2007, in circumstances more fully set out below, the appellants brought proceedings in the Federal Court because they feared imminent prosecution under the provisions of the Construction Industry Long Service Leave Act 1997 (Vic) ("the State Act") which provides for a scheme for portable long service leave benefits in the construction industry. This appeal is from the judgment and orders made by a Full Court of the Federal Court (Moore, Middleton and Gordon JJ)1 dismissing an appeal from the judgment and orders made by the primary judge (Marshall J)2, by which answers were given to separate questions stated pursuant to O 29 r 2 of the Federal Court Rules (Cth)3. Those separate questions were directed to assessing whether the State Act, including the scheme established under it, is inconsistent with certain provisions of the Commonwealth Act embodied4 in the federal instruments, and therefore invalid by reason of s 109 of the Constitution. That required consideration of the provisions for long service leave established by the federal instruments made under the Commonwealth Act and the scheme for portable long service leave benefits established under the State Act. It is convenient to note the curial setting in which the separate questions arose before turning to the legislation to be considered. At all relevant times the appellants were bound by the following federal instruments: Jemena Asset Management Pty Ltd v Coinvest Ltd (2009) 180 FCR 576. Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2009) 182 IR 49. 3 The separate questions are set out in Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2009) 182 IR 49 at 50-51 [3]. 4 Ex parte McLean (1930) 43 CLR 472 at 480 per Rich J; [1930] HCA 12. Crennan Bell the Power and Energy Industry Electrical, Electronic and Engineering Employees Award 1998 ("the 1998 Award"); and a succession of certified agreements (collectively "the certified agreements"), namely the AGL Electricity Limited Enterprise Agreement 1999 ("the 1999 Certified Agreement"), the AGL Electricity and Agility Certified Agreement (Victoria) 2002 ("the 2002 Certified Agreement"), and the AGL Electricity and Agility (Victoria) CEPU/ETU Certified Agreement 2004 ("the CEPU/ETU Agreement") and the AGL Electricity and Agility (Victoria) APESMA/ASU Certified Agreement 2004 ("the APESMA/ASU Agreement") (together "the 2004 Certified Agreements"). The certified agreements obliged the appellants to comply with the 1998 Award and current policies, customs and practices including the practice in respect of the granting of, and payment for, long service leave. Further, specific provision was made for long service leave in the 2004 Certified Agreements. The State Act obliged the appellants to pay to the respondent "a long service leave charge in respect of every worker employed by [them] to perform construction work in the construction industry"5. The respondent is the trustee of the Construction Industry Long Service Leave Fund ("the Fund") established by the State Act under a trust deed executed by the respondent on 1 April 1997 ("the trust deed")6. On 24 February 2006, the respondent requested the appellants to provide relevant details of their workers and to make payments pursuant to the State Act. Between May 2006 and July 2007, the respondent issued the appellants with various notices under s 10 of the State Act7 requesting information regarding 5 State Act, s 4(1). 6 State Act, s 3(1). The trust deed is a "subordinate instrument" as defined in the Interpretation of Legislation Act 1984 (Vic), s 38. 7 Section 10(1) relevantly enables the trustee to give written notice to seek information or documents from an employer which are relevant to rights and liabilities under the trust deed. Failure to comply attracts a penalty (s 10(3)). Crennan Bell certain of the appellants' employees between the dates 21 January 2000 and 28 February 2007 ("relevant times"). On 3 October 2007, the respondent advised the second appellant that it would commence proceedings against the second appellant in relation to its failure to comply with one of the s 10 notices. The appellants contended that they were not obliged to comply with the State Act due to its inconsistency with the federal instruments made under the Commonwealth Act. Calling in aid certain provisions of the Commonwealth Act described below, and s 109 of the Constitution, the appellants contended the inconsistency rendered the State Act invalid, to the extent that it applied to them, and brought proceedings against the respondent in the Federal Court on 5 October 20078. The relief sought included a declaration that the respondent had no rights, under the State Act, against the appellants in relation to their employees employed under any of ("relevant employees"), and an injunction restraining the respondent from exercising powers under the State Act in respect of the appellants and relevant employees. instruments federal the The Commonwealth Act For the purposes of s 109, an industrial award, whilst not of itself a law of the Commonwealth, has the force and effect of such a law where so provided by the machinery of a Commonwealth statute9. Sections 152(1) and 170LZ(1) of the Commonwealth Act prior to 27 March 2006, and s 17(1) of that Act on and after 27 March 2006, expressly provided for the paramountcy of instruments made under federal legislation. An earlier version of these provisions (s 65 of the Conciliation and Arbitration Act 1904 (Cth)) was recognised as evincing a statutory intention that an award made pursuant to the Act was to operate "to the exclusion of any State law."10 8 At this time, the appellants were known respectively as Alinta Asset Management (3) Pty Ltd, Alinta Asset Management (4) Pty Ltd and Alinta AE Limited. 9 Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466 at 494-496, 499 per Isaacs J; [1926] HCA 6; Ex parte McLean (1930) 43 CLR 472 at 479 per Isaacs CJ and Starke J, 480 per Rich J, 484-485 per Dixon J; Colvin v Bradley Brothers Pty Ltd (1943) 68 CLR 151 at 158 per Latham CJ; [1943] HCA 41; Collins v Charles Marshall Pty Ltd (1955) 92 CLR 529 at 548-549; [1955] HCA 44. 10 Metal Trades Industry Association v Amalgamated Metal Workers' and Shipwrights' Union (1983) 152 CLR 632 at 648-649 per Mason, Brennan and (Footnote continues on next page) Crennan Bell At all material times prior to 27 March 2006, ss 152(1) and 170LZ(1) of the Commonwealth Act respectively provided that, subject to the sections, and to the extent of any inconsistency, federal awards and certified agreements prevailed over State laws and State awards (s 152(1)) and terms and conditions of employment specified in a State law, State award or State employment agreement (s 170LZ(1)). Section 170LZ(2) provided that provisions in a certified agreement which dealt with occupational health and safety, workers' compensation, apprenticeship, or any other matter prescribed by the regulations, operated "subject to the provisions of a State law that deal[t] with the matter". Following the enactment of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) ("the Work Choices Act"), s 170LZ continued to apply to certified agreements entered into prior to the Work Choices Act reforms11. On and after 27 March 2006, and during relevant times, s 17(1) and (2) of the Commonwealth Act contained like provisions similar in effect, but not identical to, those in ss 152(1) and 170LZ(1) and (2). "Award" was relevantly defined in this version of the Commonwealth Act to mean an award within the meaning of s 4(1) of the Commonwealth Act as in force immediately before the commencement of the Work Choices Act12. Deane JJ; [1983] HCA 28; see also Dao v Australian Postal Commission (1987) 162 CLR 317 at 337; [1987] HCA 13. See, generally, R v Credit Tribunal; Ex parte General Motors Acceptance Corporation (1977) 137 CLR 545 at 563 per Mason J; [1977] HCA 34; Bayside City Council v Telstra Corporation Ltd (2004) 216 CLR 595 at 628-629 [36]-[37]; [2004] HCA 19; John Holland Pty Ltd v Victorian WorkCover Authority (2009) 239 CLR 518 at 527-528 [21]; [2009] HCA 45. 11 Commonwealth Act on and after 27 March 2006, Sched 7, pt 2, div 1, cl 2(1)(g). 12 See the definitions of "award" and "pre-reform award" contained in s 4(1) of the Commonwealth Act on and after 27 March 2006, and Work Choices Act, Sched 4, pt 2, div 2, item 4 (which relevantly replaced pre-existing awards with instruments in identical terms designated "pre-reform awards"). Crennan Bell Upon the repeal of the Commonwealth Act by the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) ("the Fair Work Act"), awards and certified agreements in operation immediately before the date of the Commonwealth Act's repeal continued in existence as "transitional instruments"13. These transitional instruments remain subject to the same "instrument interaction rules" and "State and Territory interaction rules"14 as in force immediately before the date of repeal15. However, no issue arises in this appeal in respect of the Fair Work Act. The federal instruments The 1998 Award and the certified agreements impose obligations on employers bound by them to grant, and pay for, long service leave in relation to their qualifying employees, and govern the circumstances in which such entitlements will accrue. The 1998 Award In the words of the Full Court below, "the 1998 Award deals with all the ordinary aspects of long service leave entitlements which might arise in the industrial relationship between employee and employer."16 Clause 24 prescribes, among other things, an entitlement to long service leave calculated and paid at a particular rate17, requirements for accruing and taking leave18, and mechanisms 13 Fair Work Act, Sched 3, pt 2, item 2. 14 Respectively, Commonwealth laws governing priority between instruments of the kind that become transitional instruments, and Commonwealth laws governing priority between State and Territory laws and such instruments: Fair Work Act, Sched 3, pt 2, items 5(2) and 5A(2). 15 Fair Work Act, Sched 3, pt 2, items 5(1) and 5A(1). 16 Jemena Asset Management Pty Ltd v Coinvest Ltd (2009) 180 FCR 576 at 578 [8]. 17 Clause 24.2. 18 Clause 24.3-24.4. Crennan Bell for making payments in lieu of leave in the event of termination of employment19. The certified agreements The certified agreements oblige affected employers to comply with the 1998 Award and current policies, customs and practices20, including the practice in respect of the granting of, and payment for, long service leave. The 2004 Certified Agreements contain "guide" provisions21 governing the accrual, calculation and payment of long service leave22. The State Act The State Act's purpose is: "to repeal the Construction Industry Long Service Leave Act 1983 [(Vic)] and provide for the scheme established by that Act to be administered in accordance with a trust deed by a company incorporated under the Corporations Law"23. 19 Clause 24.5. 20 1999 Certified Agreement, cl 4; 2002 Certified Agreement, cl 4; 2004 Certified Agreements, cl 5. 21 The heading to Attachment D (Leave Entitlements) of the CEPU/ETU Agreement, and to Attachment C (Leave Entitlements) of the APESMA/ASU Agreement, reads: "The following leave provisions are a guide only and are to be read in conjunction with the Parent Awards" – which include the 1998 Award. 22 CEPU/ETU Agreement, Attachment D, cl 3.d; APESMA/ASU Agreement, Attachment C, cl 3. 23 State Act, s 1. The predecessor legislation, the Construction Industry Long Service Leave Act 1983 (Vic) ("the 1983 Act"), provided for long service leave for persons in the construction industry. Entitlements were dealt with by the board of a statutory fund. Payments described as "a long service leave charge" were made to the Board by employers in respect of each worker performing building, electrical or metal trade work. See Pts I, V and VI. Section 46A allowed the responsible Minister to make a reciprocal arrangement with a Minister of another State or of a (Footnote continues on next page) Crennan Bell In essence, the State Act requires employers bound by it to contribute to the abovementioned Fund so as to provide portable long service leave benefits for workers in the construction industry. Reciprocal arrangements with the relevant Minister of another State or of a Territory are possible24. As mentioned above, s 4(1) of the State Act provides that an employer "must pay to [the respondent]25 a long service leave charge in respect of every worker employed by the employer to perform construction work in the construction industry." Section 4(2) provides that the date for payment of the charge, the period for which it is payable, the amount of the charge and the method of calculating the charge "are as determined from time to time by the trustee in accordance with the trust deed"26. The charge imposed in respect of a worker may not exceed 3% of the worker's ordinary pay27. Section 6 of the State Act provides: "(1) Every worker is entitled to long service leave, and to be paid benefits out of the [F]und, in respect of continuous service in the construction industry[28]. Territory, responsible for the administration of a corresponding law of that State or Territory. 24 State Act, s 18. 25 See definition of "trustee" contained in s 3(1) of the State Act: "CoINVEST Limited ACN 078 004 985 or any new trustee appointed under, and in accordance with, the trust deed." 26 See definition of "trust deed" contained in s 3(1) of the State Act. 27 State Act, s 4(3). 28 Section 40(1) of the 1983 Act, governing entitlements, was expressed differently: "Subject to this Act every worker shall be entitled to long service leave on ordinary pay in respect of continuous service in the construction industry (whether before or after the commencement of this section)." Crennan Bell Every working sub-contractor who has paid long service leave charges is entitled to be paid benefits out of the [F]und in respect of continuous service in the construction industry. The amount of the entitlement and the method by which that amount is to be calculated are as determined from time to time by the trustee in accordance with the trust deed." Employers are under obligations to register with the respondent in accordance with the trust deed or they are prohibited from employing workers in the construction industry for over five days in any month29, and must keep records and send the respondent information relating to their employed construction workers30. Disputes concerning the operation of the State Act and the scheme dealt with by the trust deed are deemed to have been referred to arbitration in accordance with the Commercial Arbitration Act 1984 (Vic)31. The State Act scheme The respondent is required to exercise powers under the trust deed in accordance with the State Act32. The respondent has made rules relating to the Fund "established under the trust deed"33 ("the Fund rules") which are to be construed as part of the trust deed34. The Fund rules have been amended by the respondent from time to time pursuant to its rule-making power in cl 5.1 of the trust deed. The relevant rules are those in existence as at 29 August 2006. 29 State Act, s 8. 30 State Act, s 9. 31 State Act, s 12. 32 Clause 6.2.2 of the trust deed. 33 See definition of "fund" contained in s 3(1) of the State Act. 34 Clauses 5.1 and 5.3 of the trust deed. Clause 5.3 of the trust deed provides that the provisions of the trust deed prevail over the Fund rules to the extent of any inconsistency. Crennan Bell Words and expressions used in the State Act have the same respective meanings as they have in the Fund rules35. Relevant Fund rules Entitlement to long service leave benefits. Rule 27.1 provides that "[e]very Worker[36] is entitled to a Long Service Leave Benefit in respect of Continuous Service[37] performing Construction Work[38] for an Employer[39]". "Long Service Leave Benefit" is defined in r 1.1 as "an entitlement paid out of the Fund, in accordance with these Rules". "Long Service Leave" is defined as "long service leave which a Worker is entitled to under these Rules by virtue of the [State] Act". Rules 27.2 and 27.3 prescribe a method for calculating the amount of the entitlement due to each Worker depending on the length of his or her period of continuous service and the relevant date of assessment. Rule 27.4 obliges the respondent to pay from the Fund to the Worker "forthwith upon receipt of a request in writing from the Worker the Long Service Leave Benefit to which he is entitled." Payment of a long service leave charge. Rule 11.1 requires every Employer, in respect of every Worker employed to perform Construction Work during each Prescribed Period40, to pay a Long Service Leave Charge to the respondent for the work performed by those Workers during that period. "Long 35 State Act, s 3(2). 36 A person who "is ordinarily resident in Victoria" and "performs work under a contract of employment"; this includes "a foreman, sub-foreman and an Apprentice": r 1.1 of the Fund rules. 37 As defined, relevantly, in r 21: r 1.1 of the Fund rules. 38 As defined in r 1.1 of the Fund rules. 39 Including, relevantly, a person (other the Commonwealth or the State of Victoria, or any Commonwealth or Victorian public statutory body) who employs Workers under a contract of employment: r 1.1 of the Fund rules. in right of the Crown than 40 Any period of two months determined by the respondent: r 11.11 of the Fund rules. Crennan Bell Service Leave Charge" is defined in r 1.1 as a "contribution paid into the Fund by any Employer … in accordance with these Rules". Rule 11.2(a) authorises the respondent's Directors to fix the amount of the Long Service Leave Charge per Worker by special resolution, in default of which the method of assessment set out in rr 11.2(b) and 11.3 applies. Rules 11.4-11.5 stipulate the method of calculating this charge for persons who have engaged in more than one kind of Construction Work during any Prescribed Period. Reimbursement of employers. Rule 40.3 entitles an Employer to reimbursement from the Fund where (a) a person is given Long Service Leave or payment in lieu thereof to which he or she is entitled otherwise than under the Fund rules, and (b) the Employer giving the leave or making the payment has paid the prescribed Long Service Leave Charges for the relevant period of employment. It also needs to be noted that r 50.2 provides for refunds of overpaid benefits and r 23.10 ensures that there are no double claims; no worker may recover a long service leave benefit under the Fund in circumstances where the amount has already been received from a source other than under the State Act. Payments in and out of the Fund. Under r 6.1, the only payments to be made into the Fund are the Long Service Leave Charges paid to the respondent under the Rules and in accordance with the State Act; proceeds of investment of the Fund; and any other money paid into the Fund under the Fund rules. Monies to be paid out of the Fund under r 6.2 are the Long Service Leave Benefits provided for under the Fund rules; Fund administration costs; and other payments which the respondent reasonably believes should be paid from the Fund or which are authorised by the Fund rules. Reasoning in the courts below It was common ground throughout the proceedings that the inconsistency alleged by the appellants was said to arise between the State Act and the applicable provisions of the Commonwealth Act, as embodied in the federal instruments41, and the separate questions were framed accordingly. 41 Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2009) 182 IR 49 at 55-56 [27], citing Metal Trades Industry Association v Amalgamated Metal Workers' and Shipwrights' Union (1983) 152 CLR 632 at 648-649. See also Jemena Asset Management Pty Ltd v Coinvest Ltd (2009) 180 FCR 576 at Crennan Bell The primary judge's answer to each of the separate questions concerning the existence of any inconsistency was "No"42 reflecting his views that the scheme under the State Act did not alter, impair or detract from the operation of the federal instruments43 or enter the field intended to be covered by them44. In particular, his Honour considered that nothing in the federal instruments indicated that they were intended to cover the subject matter of the State Act scheme, namely "portable long service leave in the construction industry funded by way of a charge … and paid out of a fund."45 On the question of whether the State Act scheme altered, impaired or detracted from the operation of the federal instruments (and, therefore, the Commonwealth Act46), the Full Court of the Federal Court found that the duty imposed on particular employers under the State Act scheme did not conflict with that imposed by the federal instruments, nor did the former regime deny or vary any right, power or privilege conferred by the latter47. Their Honours agreed with the primary judge that the State Act and the federal instruments "co-exist in harmony such that each of them may be considered supplementary to or cumulative upon the other"48. 42 Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2009) 182 IR 49 at 59 [44]. It was unnecessary to answer other separate questions concerning the extent of any inconsistency. 43 Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2009) 182 IR 49 at 44 Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2009) 182 IR 49 at 45 Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2009) 182 IR 49 at 58 [42]. 46 Compass Group (Australia) Pty Ltd v Bartram (2007) 239 ALR 262 at 266 [22], citing Metal Trades Industry Association v Amalgamated Metal Workers' and Shipwrights' Union (1983) 152 CLR 632 at 643, 648; cited by the Full Court in Jemena Asset Management Pty Ltd v Coinvest Ltd (2009) 180 FCR 576 at 582 [32]. 47 Jemena Asset Management Pty Ltd v Coinvest Ltd (2009) 180 FCR 576 at 583 [37]. 48 Jemena Asset Management Pty Ltd v Coinvest Ltd (2009) 180 FCR 576 at 583 [38], quoting from Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2009) 182 IR (Footnote continues on next page) Crennan Bell The Full Court of the Federal Court also agreed with the primary judge that the Fund rules "fundamentally provide[d] for the entitlement to be paid monies out of the [F]und, and not the entitlement for actual long service leave or payment in lieu."49 This, in turn, determined the ambit of the entitlement to long service leave under s 6(1) of the State Act by virtue of the interpretative rule contained in s 3(2)50. In the Full Court's view, the primary entitlement afforded under the Fund rules could be characterised as a Long Service Leave Benefit, defined in r 1.1 as an entitlement to be paid out of the Fund in accordance with the Fund rules51. Although the amount of this entitlement was expressed in certain circumstances as a period of leave – for example, the entitlement to 13 weeks' leave "on Ordinary Pay" under r 27.2(a) – nevertheless the respondent's only obligation under the Fund rules was to make payments from the Fund upon receipt of a request for a long service leave benefit52. The Attorney-General of the Commonwealth intervened in this appeal pursuant to s 78A of the Judiciary Act 1903 (Cth) in support of the respondent, asserting the lack of inconsistency. For the reasons which follow, the respondent's submissions on the validity of the State Act must be accepted and the appeal should be dismissed. 49 at 58 [40]. The expression "supplementary to or cumulative upon" can be traced to Ex parte McLean (1930) 43 CLR 472 at 483 per Dixon J referring to the operation of a Commonwealth law within the setting of other laws. 49 Jemena Asset Management Pty Ltd v Coinvest Ltd (2009) 180 FCR 576 at 580 [21]. 50 Jemena Asset Management Pty Ltd v Coinvest Ltd (2009) 180 FCR 576 at 580 [17]. 51 Jemena Asset Management Pty Ltd v Coinvest Ltd (2009) 180 FCR 576 at 580 [22]. 52 Jemena Asset Management Pty Ltd v Coinvest Ltd (2009) 180 FCR 576 at Crennan Bell Applicable principles The paramountcy53 of the Parliament of the Commonwealth under the Constitution resolves any conflict between Commonwealth and State law as set out in covering cl 5 and s 109 of the Constitution: This Act, and all laws made by the Parliament of the Commonwealth under the Constitution, shall be binding on the courts, judges, and people of every State and every part of the Commonwealth, notwithstanding anything in the laws of any State … When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid." Quick and Garran describe s 109 as "practically a corollary"54 of ss 106, 107 and 108 of the Constitution which deal respectively with the saving of State Constitutions, powers of State Parliaments and State laws, all of which are made subject to the Constitution. In the context of the law-making powers of the State and Commonwealth Parliaments under their respective Constitutions, s 109 requires a comparison between any two laws which create rights, privileges or powers, and duties or obligations, and s 109 resolves conflict, if any exists, in favour of the Commonwealth. The expressions "a law of the State" and "a law of the Commonwealth" in s 109 are sufficiently general for s 109 to be capable of applying to inconsistencies which involve not only a statute or provisions in a statute, but also, as mentioned, an industrial order or award55, or other legislative instrument or regulation56, made under a statute. 53 Ex parte McLean (1930) 43 CLR 472 at 485 per Dixon J. 54 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, 55 See note 9 above. 56 O'Sullivan v Noarlunga Meat Ltd (1954) 92 CLR 565 at 576, 591-594, 598; [1954] HCA 29. See also Co-operative Committee on Japanese Canadians v Attorney-General of Canada [1947] AC 87 at 106. Cf Commonwealth v Colonial (Footnote continues on next page) Crennan Bell Applicable principles have been reiterated in the joint reasons of the whole Court in Dickson v The Queen57: "The statement of principle respecting s 109 of the Constitution which had been made by Dixon J in Victoria v The Commonwealth [('the Kakariki Case')]58 was taken up in the joint reasons of the whole Court in Telstra Corporation Ltd v Worthing59 as follows: 'In Victoria v The Commonwealth60, Dixon J stated two propositions which are presently material. The first was: "When a State law, if valid, would alter, impair or detract from the operation of a law of the Commonwealth Parliament, then to that extent it is invalid." The second, which followed immediately in the same passage, was: "Moreover, if it appears from the terms, the nature or the subject matter of a Federal enactment that it was intended as a complete statement of the law governing a particular matter or set of rights and duties, then for a State law to regulate or apply to the same matter or relation is regarded as a detraction from the full operation of the Commonwealth law and so as inconsistent." …' Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 431 per Knox CJ and Gavan Duffy J; [1922] HCA 62 (dealing, inter alia, with the expression "the laws of the Commonwealth" in covering cl 5 of the Constitution). 57 (2010) 241 CLR 491 at 502 [13]-[14]; [2010] HCA 30. 58 (1937) 58 CLR 618 at 630; [1937] HCA 82. 59 (1999) 197 CLR 61 at 76 [28]; [1999] HCA 12. 60 (1937) 58 CLR 618 at 630. Crennan Bell The first proposition is often associated with the description 'direct inconsistency'[61], and the second with the expressions 'covering the field'[62] and 'indirect inconsistency'." The expression "cover the field" means "cover the subject matter", which was the description used and explained by Dixon J in Ex parte McLean63. From the outset the aspect of inconsistency associated with the expression "covering the field" has not been free from criticism64. There can be little doubt that indirect inconsistency involves "more subtle … contrariety"65 than any "textual"66 or "direct collision"67 between the provisions of a Commonwealth law and a State law. The crucial notions of "altering", "impairing" or "detracting from" the operation of a law of the Commonwealth have in common the idea that a State law conflicts with a Commonwealth law if the State law undermines the 61 See, for example, Colvin v Bradley Brothers Pty Ltd (1943) 68 CLR 151 at 159 per Latham CJ and 161 per Starke J. See also Blackley v Devondale Cream (Vic) Pty Ltd (1968) 117 CLR 253 at 258; [1968] HCA 2; Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 78; Dickson (2010) 241 CLR 491 at 504 [22]. 62 See Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466 at 489, 491, 499 per Isaacs J; Wenn v Attorney-General (Vic) (1948) 77 CLR 84 at 108-109 per Latham CJ; [1948] HCA 13. 63 (1930) 43 CLR 472 at 483-486. 64 Stock Motor Ploughs Ltd v Forsyth (1932) 48 CLR 128 at 147 per Evatt J; [1932] HCA 40; Kakariki Case (1937) 58 CLR 618 at 633-634 per Evatt J. 65 Australian Broadcasting Commission v Industrial Court (SA) (1977) 138 CLR 399 at 406 per Stephen J; [1977] HCA 51. 66 Miller v Miller (1978) 141 CLR 269 at 275 per Barwick CJ; [1978] HCA 44. 67 Blackley v Devondale Cream (Vic) Pty Ltd (1968) 117 CLR 253 at 258 per Crennan Bell Commonwealth law. Therefore any alteration or impairment of, or detraction from, a Commonwealth law must be significant and not trivial68. Although the utility of accepted tests of inconsistency, based on recognising different aspects of inconsistency for the purposes of s 109, is well established as Mason J observed in Ansett Transport Industries (Operations) Pty Ltd v Wardley69, it is not surprising that different tests of inconsistency directed to the same end are interrelated and in any one case more than one test may be applied in order to establish inconsistency for the purposes of s 109. All tests of inconsistency which have been applied by this Court for the purpose of s 109 are tests for discerning whether a "real conflict"70 exists between a Commonwealth law and a State law. The appellants' case incorporated the language of the two propositions of Dixon J set out above and involved asserting the existence of both direct and indirect inconsistency between the Commonwealth Act as embodied in the federal instruments and the State Act71. With concurrent federal and State powers, the question of inconsistency does not involve the limits of constitutional powers under the respective Constitutions, but rather the operation of both Acts. As explained by Dixon J in Wenn v Attorney-General (Vic)72: 68 See Metal Trades Industry Association v Amalgamated Metal Workers' and Shipwrights' Union (1983) 152 CLR 632 at 642-643, 651; Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 76 [27]. 69 (1980) 142 CLR 237 at 260; [1980] HCA 8. 70 See, for example, Collins v Charles Marshall Pty Ltd (1955) 92 CLR 529 at 553. 71 The test of direct inconsistency adverted to in Australian Boot Trade Employes Federation v Whybrow & Co (1910) 10 CLR 266 at 286, 289, 299; [1910] HCA 8 (the "impossibility of simultaneous obedience test") was not relied upon. See also, subsequently, Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 at 398; [1994] HCA 17 and Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 76 [27]. 72 (1948) 77 CLR 84 at 120, 122. Crennan Bell "There is no doubt great difficulty in satisfactorily defining the limits of the power to legislate upon a subject exhaustively so that s 109 will of its own force make inoperative State legislation which otherwise would add liabilities, duties, immunities, liberties, powers or rights to those which the Federal law had decided to be sufficient. … [W]hile s 109 invalidates State legislation only so far as it is inconsistent, the question whether one provision of a State Act can have any operation apart from some other provision contained in the Act must depend upon the intention of the State legislation, ascertained by interpreting the statute." Similarly, in Western Australia v The Commonwealth (Native Title Act Case)73 it was recognised that the extent of any inconsistency "depends on the text and operation of the respective laws." A proper understanding of the policy and purpose of the State Act underpins the task of construing it and identifying its operation74. Because it was accepted by all parties that the 1998 Award covered employee entitlements and correlative employer obligations in respect of the grant of, and payment for, long service leave, the respondent conceded by reference to Wenn, that if, and to the extent that, the State Act scheme dealt with the grant of long service leave it would operate inconsistently with the federal instruments. Does the State Act undermine the federal instruments? The federal instruments made detailed provision for the grant of, and payment for, long service leave. The appellants contended that the State Act and the scheme were directly Commonwealth Act embodied in the federal instruments, because obligations the relevant provisions of inconsistent with 73 (1995) 183 CLR 373 at 465 per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ; [1995] HCA 47. 74 Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397 per Dixon CJ; [1955] HCA 27, quoted with approval in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69] per McHugh, Gummow, Kirby and Hayne JJ; [1998] HCA 28. Crennan Bell imposed by the State Act were additional to, hence greater75 than, the obligations imposed under the federal instruments. Reliance was placed upon the Minister's Second Reading Speech76 in respect of the Construction Industry Long Service Leave Bill which emphasised that the State Act was replacing the Construction Industry Long Service Leave Act 1983 (Vic) in circumstances where the earlier Act described long service leave entitlements differently77. Reliance was also placed on the references to "long service leave" in s 6(1) of the State Act, in an obsolete Fund rule78 and in a number of the current Fund rules. It was asserted that, in its terms, s 6(1) provides for both an employee's entitlement to long service leave and a separate entitlement to be paid a long service leave benefit out of the Fund. These considerations were relied on to show that the State Act undermined the operation of the federal instruments insofar as the latter dealt with long service leave. The respondent submitted that the State and Commonwealth laws are different because the former provides for workers to access the Fund, supported by long service leave charges levied on employers, and does not purport to create or modify the industrial relationship between employee and employer and entitlements and obligations in respect of long service leave under the federal instruments. It was contended that a power to amend the Fund rules79 cannot impair the operation of the federal instruments unless and until the rules are amended so as to bring about such an impairment. 75 Blackley v Devondale Cream (Vic) Pty Ltd (1968) 117 CLR 253 at 257, 258, 259 and 271; Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 76 [27]; Dickson (2010) 241 CLR 491 at 504 [22]. 76 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 23 April 1997 77 See note 23 above. 78 Rule 35.1 of the original Fund rules, deleted by a deed poll executed by the respondent on 2 December 1997. 79 See s 6(3) of the State Act. Clause 5.2 of the trust deed followed s 6(3). Crennan Bell As this Court has stated many times, statements of legislative intention made by a Minister do not overcome the need to consider the text of a statute to ascertain its meaning80. A reading of the whole of the State Act, the trust deed and the Fund rules shows that despite references to "long service leave" in s 6(1) of the State Act and in some of the current Fund rules the operation of the State Act is limited to the provision of a long service leave benefit which can apply in circumstances where a worker may work with different employers during continuous service in the construction industry. Those references to "long service leave" are adjectival in respect of the "benefit" provided under the State Act and do not encompass the distinguishable obligations of an employer and the entitlements of an employee in respect of the grant of, and payment for, long service leave by an employer, although they unavoidably allude to long service leave in dealing with the "long service leave benefit" which is the subject matter of the State Act. An employee's entitlement to a long service leave benefit under the State Act can only be in the form of payment from the Fund (for example, see rr 27.1 and 29.1 of the Fund rules) paid out in accordance with the Fund rules (for example, see rr 1.1 and 27.1). There is no provision for the grant of any long service leave, a subject which is covered by the federal instruments. Importantly, the State Act scheme contemplates that long service leave, as between an employer and an employee, may be paid under the federal instruments. When that occurs employers are entitled to be reimbursed (r 40.3) and a correlative reduction in the worker's entitlements under the State Act would also follow The State Act, and the scheme under it, for the provision of portable long service leave benefits in the construction industry, do not undermine an employer's obligations under the federal instruments to grant, and pay for, long service leave or an employee's correlative entitlement to receive such leave. 80 Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 264-265 [31] per French CJ, Gummow, Hayne, Crennan and Kiefel JJ; [2010] HCA 23; see also Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27 at 46 [47] per Hayne, Heydon, Crennan and Kiefel JJ; [2009] HCA 41. Crennan Bell Are the federal instruments exhaustive? The appellants also alleged indirect inconsistency by submitting that the field covered exhaustively by the federal instruments is the appellants' obligations in respect of long service leave accrued in whole or in part through service with the appellants and the entitlements of employees of the appellants in respect of such leave. It was submitted that the Full Court erred in not characterising the State Act scheme as pertaining to the employment relationship between employers and employees. In answer, the respondent essentially submitted that the State Act and the scheme made under it do not enter the field covered by the federal instruments because they do not regulate long service leave. Rather they provide portable long service leave benefits intended to apply in the construction industry in which workers may move from one employer to another, albeit whilst in continuous service in the industry. The mischief81 which the State Act remedies is that workers in continuous service in the construction industry will be disadvantaged if they cannot qualify for long service leave, by reason of the itinerant nature of their employment. That subject matter, of portable long service leave benefits in the construction industry, is not covered in the federal instruments. There is no doubt that provision of long service leave for employees in continuous employment with an employer, and the provision of a long service leave benefit for workers in continuous service in the construction industry, are both just and beneficial legislative aims. As with the concurrent legislation for the removal of shipwrecks considered in the Kakariki Case82, it is possible to infer from the Commonwealth legislature did not intend to exclude a compatible State law. the beneficial nature of the federal instruments that In Collins v Charles Marshall Pty Ltd83, indirect inconsistency was alleged between a federal award dealing comprehensively with conditions of 81 Heydon's Case (1584) 3 Co Rep 7a at 7b [76 ER 637 at 638]. 82 (1937) 58 CLR 618 at 628 per Starke J, 630-631 per Dixon J. 83 (1955) 92 CLR 529. Crennan Bell leave84, the power of in circumstances where employment but not long service leave, and State legislation dealing with long service the conciliation commissioner to deal with long service leave was expressly excluded. Although the federal award may have been an "exhaustive statement" of the relations between employer and employee in the relevant industry, there was "no attempt in the award" to deal with the subject matter of long service leave and, accordingly, there was "no real conflict" between the provisions of the federal award and the State legislation85. A similar result followed in T A Robinson & Sons Pty Ltd v Haylor86 where a conciliation commissioner was empowered to deal with long service leave in an award but did not do so. It was concluded by a unanimous Court that "an award which has nothing to say about … a topic" (there, long service leave) cannot be said to be incompatible with a State law dealing with that subject matter87. The importance of clearly identifying the field said to be covered exhaustively by a law of the Commonwealth and correctly characterising a law of a State was also crucial in New South Wales v The Commonwealth and Carlton ("the Hospital Benefits Case")88, which dealt with certain State levies89 in the context of Commonwealth legislation regulating hospital benefits providers and contributors, particularly the benefits payable to the contributors. Whilst the federal instruments deal with all the obligations and entitlements of employers and employees in respect of the grant of, and payment for, long service leave, arising in the employment relationship between employers and employees, they do not deal with, or even mention, portable long 84 Factories and Shops (Long Service Leave) Act 1953 (Vic). 85 Collins v Charles Marshall Pty Ltd (1955) 92 CLR 529 at 553 per Dixon CJ, McTiernan, Williams, Webb, Fullagar and Kitto JJ. 86 (1957) 97 CLR 177; [1957] HCA 76. 87 T A Robinson & Sons Pty Ltd v Haylor (1957) 97 CLR 177 at 183 per Dixon CJ, McTiernan, Williams, Webb, Kitto and Taylor JJ. 88 (1983) 151 CLR 302 at 316-319 per Gibbs CJ, Murphy and Wilson JJ, 326-328 per Mason J; [1983] HCA 8. 89 Levies imposed under the Hospital Benefits (Levy) Act 1982 (Vic) and the Health Insurance Levies Act 1982 (NSW). Crennan Bell service leave benefits, for workers in continuous service within the construction industry. Conclusions The results of applying accepted tests of direct and indirect inconsistency in this appeal turn on the same consideration, namely that the State law providing for portable long service leave benefits for workers in the construction industry does not conflict with the federal instruments providing for the grant of, and payment for, long service leave arising in the employment relationship because, as demonstrated, the federal instruments are not incompatible with the State Act which operates in a manner which is complementary to the operation of the federal two different aspects of inconsistency relied upon by the appellants yields the same result, namely, that there is no real conflict between the State law and the Commonwealth law embodied in the federal instruments. A consideration of instruments. the Accordingly the State Act is not invalid by reference to s 109 of the Constitution. Orders The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA SUSAN JOY TAYLOR IN HER OWN CAPACITY AND FOR AND ON BEHALF OF THE DEPENDANTS OF THE LATE CRAIG TAYLOR APPELLANT AND THE OWNERS – STRATA PLAN NO 11564 & ORS RESPONDENTS Taylor v The Owners – Strata Plan No 11564 [2014] HCA 9 2 April 2014 ORDER Appeal allowed. Set aside orders 3 and 4 of the Court of Appeal of the Supreme Court of New South Wales made on 18 March 2013, and orders 1 and 2 of that Court made on 5 June 2013, and, in their place, order that: the appeal be allowed; the orders of the Supreme Court of New South Wales made on 27 July 2012 be set aside and, in their place, order that: the separate question: "Insofar as the plaintiffs claim damages pursuant to ss 3 and 4 of the Compensation to Relatives Act 1897, is any award of damages limited by the operation of s 12(2) of the Civil Liability Act 2002?" be answered: "No, the operation of s 12(2) of the Civil Liability Act 2002 (NSW) does not limit the first plaintiff's claim for damages pursuant to ss 3 and 4 of the Compensation to Relatives Act 1897 (NSW) as pleaded on behalf of herself and any other entitled relatives of the late Mr Craig Taylor in that it does not require the court to disregard the amount by which the gross weekly earnings of Mr Craig Taylor would, but for his death, have exceeded an amount that is three times the average weekly earnings at the date of the award"; and the first to sixth defendants pay the first and second plaintiffs' costs of the separate question; and the first to fourth and sixth respondents pay the appellant's costs of the appeal. The first to fourth and sixth respondents pay the appellant's costs in this Court. On appeal from the Supreme Court of New South Wales Representation J Poulos QC with V M Heath for the appellant (instructed by Craddock P W Taylor SC with A C Scotting for the first to fourth respondents (instructed by Meridian Lawyers) S R Donaldson SC with S P W Glascott for the sixth respondent (instructed by DLA Piper Australia) Submitting appearances for the fifth and seventh to tenth respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Taylor v The Owners – Strata Plan No 11564 Statutes – Statutory construction – Whether Court of Appeal erred in construction of Civil Liability Act 2002 (NSW), s 12(2) – Whether Civil Liability Act 2002 (NSW), s 12(2) limits awards of damages under Compensation to Relatives Act 1897 (NSW), ss 3, 4 – Whether s 12(2) limitation applies to deceased's gross weekly earnings. Words and phrases – "claimant", "deceased", "gross weekly earnings", "loss of expectation of financial support". Civil Liability Act 2002 (NSW), ss 12(1), 12(2). Compensation to Relatives Act 1897 (NSW), ss 3, 4. FRENCH CJ, CRENNAN AND BELL JJ. Section 12(2) of the Civil Liability Act 2002 (NSW) ("the Liability Act") directs a court, when awarding damages relating to the death of or injury to a person, to disregard the amounts (if any) by which the claimant's gross weekly earnings would, but for the injury or death, have exceeded three times the amount of average weekly earnings at the date of the award ("the s 12(2) limitation"). The s 12(2) limitation applies to awards of damages for past and future economic loss due to the deprivation or impairment of earning capacity, for past economic loss due to loss of earnings, and for "the loss of expectation of financial support"1. The latter expression is apt to describe an award of damages under the Compensation to Relatives Act 1897 (NSW) ("the Relatives Act"). The issue presented by the appeal is whether, in the case of an award of damages for the loss of expectation of financial support, the s 12(2) limitation is to be construed as applying to the deceased's gross weekly earnings. Background The appellant is the widow of the late Mr Craig Taylor. Mr Taylor was killed when an awning outside a shop collapsed on him. The appellant commenced proceedings in the Supreme Court of New South Wales against the first to sixth respondents claiming damages under ss 3 and 4 of the Relatives Act. The action is a representative proceeding brought for the benefit of the appellant and any entitled children of the deceased2. The deceased was a land surveyor in private practice. It was accepted for the purpose of present proceedings that had the deceased lived he would have earned income substantially in excess of three times the amount of average weekly earnings. The appellant claims damages for the loss of benefits that she and the children expected to receive had the deceased lived, derived from his personal exertion, investment, creation and maintenance of capital assets and services. No component of the damages claimed is based upon any loss of the appellant's, or the children's, earnings. The trial of the appellant's representative action is yet to take place. With the consent of the parties, the primary judge (Garling J) agreed to the separate determination of one question3: 1 Civil Liability Act 2002 (NSW), s 12(1). 2 Compensation to Relatives Act 1897 (NSW), ss 4(1), 5, 6B(2). 3 Uniform Civil Procedure Rules 2005 (NSW), r 28.2. Crennan Bell "Insofar as the [appellant] claim[s] damages pursuant to ss 3 and 4 of the Compensation to Relatives Act 1897, is any award of damages limited by the operation of s 12(2) of the Civil Liability Act 2002?"4 Garling J answered the separate question adversely to the interests of the appellant, holding that insofar as the damages claimed include damages for the loss of an expectation of financial support provided by the deceased, the court is to disregard the amount (if any) by which the deceased's gross weekly earnings would (but for his death) have exceeded an amount that is three times the amount of average weekly earnings at the date of the award5. The appellant appealed by leave to the Court of Appeal of the Supreme Court of New South Wales (McColl, Basten and Hoeben JJA). By majority (McColl JA, Hoeben JA agreeing) the appeal was dismissed. On 6 September 2013 the appellant was granted special leave to appeal. For the reasons to be given, the appeal should be allowed and the separate question answered in the negative. The statutory scheme Section 12 of the Liability Act, relevantly, provides: "(1) This section applies to an award of damages: for past economic loss due to loss of earnings or the deprivation or impairment of earning capacity, or for future economic loss due impairment of earning capacity, or the deprivation or for the loss of expectation of financial support. In the case of any such award, the court is to disregard the amount (if any) by which the claimant's gross weekly earnings would (but for the injury or death) have exceeded an amount that is 3 times the amount of average weekly earnings at the date of the award." Section 12 is in Pt 2 of the Liability Act, which governs the award of "Personal injury damages". That phrase is defined to mean damages that relate to 4 Taylor v The Owners – Strata Plan No 11564 [2012] NSWSC 842 at [1]. 5 Taylor v The Owners – Strata Plan No 11564 [2012] NSWSC 842 at [83]. Crennan Bell the death of or injury to a person6. Part 2 applies to the award of personal injury damages regardless of whether the claim is brought in tort, in contract, under statute or otherwise7. Damages awarded under the Relatives Act for the injury occasioned by the death of the deceased are personal injury damages to which Pt 2 applies. A court cannot award damages contrary to Pt 28. "Claimant" is not defined in the Liability Act9. As enacted, s 3 in Pt 1 of the Liability Act defined a number of terms used in Pt 2. These included "claimant", which was defined to mean "a person who makes or is entitled to make a claim for personal injury damages". Section 10 in Pt 2 of the Liability Act as enacted precluded a court from awarding damages to a claimant contrary to Pt 2. The Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW) effected extensive amendments to the Liability Act, inserting Parts dealing with negligence, mental harm, proportionate liability, the liability of public and other authorities, intoxication, self-defence and recovery by criminals, good samaritans, volunteers, and apologies. New sections were inserted in Pt 2 dealing with damages for loss of superannuation entitlements, tariffs for damages for non-economic loss, and structured settlements. Defined terms relating to personal injury damages were removed from Pt 1 and some were inserted in s 11 in Pt 210. The word "claimant" then also appeared in Pt 5, which dealt with the liability of public authorities11. The definition of "claimant", which it will be recalled was confined to persons making, or who were entitled to make, a claim for personal injury damages, was repealed12. Section 10, which precluded the award of damages to a claimant otherwise than in accordance with Pt 2, was also 6 Civil Liability Act 2002 (NSW), s 11. 7 Civil Liability Act 2002 (NSW), s 11A(2). 8 Civil Liability Act 2002 (NSW), s 11A(3). 9 Section 26BA of the Liability Act, however, refers to "claimant" as a person "who makes or is entitled to make a claim". This provision came into effect on 12 November 2008. 10 Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW), Sched 2 [2] and [5]. 11 Civil Liability Act 2002 (NSW), s 44(1). The word "plaintiff" is currently used in 12 Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW), Sched 2 [2]. Crennan Bell repealed13. Section 11A(3) was inserted in Pt 2 and precluded the court from awarding damages contrary to the Part14. Nothing in the structure of the Act or the legislative history suggests that the repeal of the definition was intended to alter the meaning of "claimant" in s 12(2) from its ordinary meaning of a person who makes or is entitled to make a claim. Loss of expectation of financial support The only personal injury damages that may be characterised as compensation for the loss of expectation of financial support within the meaning of s 12(1)(c) are damages under the Relatives Act. The Relatives Act is a derivative of the Fatal Accidents Act 1846 (UK) (9 & 10 Vict c 93), commonly referred to by the name of its proponent as Lord Campbell's Act. The Relatives Act gives a right of action against a person whose wrongful act, neglect or default caused the death of another in such circumstances as would have entitled the deceased to maintain an action and recover damages15. The action is brought by and in the name of the executor or administrator and is for the benefit of specified classes of relatives of the deceased16. Where there is no executor or administrator or where the executor or administrator does not bring an action under the Relatives Act within six months of the death, the action may be brought by any of the relatives entitled to benefit by the proceedings17. In a Relatives Act action the jury, or, where the action is tried without a jury, the judge18, is to assess damages "proportioned to the injury resulting from such death to the parties respectively for whom and for whose benefit such action is brought"19. This somewhat imprecise statutory formulation has acquired a well-settled meaning as the result of judicial exegesis. From shortly after the 13 Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW), Sched 2 [5]. 14 Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW), Sched 2 [5]. 15 Compensation to Relatives Act 1897 (NSW), s 3(1). 16 Compensation to Relatives Act 1897 (NSW), s 4(1). 17 Compensation to Relatives Act 1897 (NSW), s 6B. 18 Compensation to Relatives Act 1897 (NSW), s 6D. 19 Compensation to Relatives Act 1897 (NSW), s 4(1). Crennan Bell enactment of Lord Campbell's Act it was determined that no component of damages in the statutory action was to be awarded by way of solatium for injury to the feelings of the relatives20. Damages are compensation for pecuniary loss21, the assessment being "a hard matter of pounds, shillings and pence"22. Barwick CJ explained the principle in contemporary language in Ruby v Marsh23: "[Q]uite clearly, the damages, the right to which the statute gives, are to compensate for the loss by death of the financial support reasonably expected to have been given by the deceased, had he continued to live. Thus the situation in relation to that financial support, or to its expectation as at the date of death, will be definitive of the loss which has been suffered." (emphasis added) It is the loss of the chance of obtaining a financial benefit from the continuance of the life of the deceased that is the subject of the action24. The money value of the injury occasioned by the death is the product of the loss of the expectation of material benefits less any gains accruing from the death25. The assessment of the former takes into account not only the expectation of support derived from the deceased's income and capital but also the value of any services that the deceased would have provided had life continued. A surviving spouse (or other eligible relative) may reasonably choose to give up or alter his or her employment in order to provide the services that were formerly provided by the deceased. One means of valuing the loss of the expectation of the services in such a case is to have regard to the claimant's lost earnings26. In some cases the 20 Blake v Midland Railway Co (1852) 18 QB 93 [118 ER 35]. 21 Taff Vale Railway v Jenkins [1913] AC 1 at 4 per Viscount Haldane LC. 22 Davies v Powell Duffryn Associated Collieries Ltd [1942] AC 601 at 617 per Lord Wright. 23 (1975) 132 CLR 642 at 647; [1975] HCA 32. 24 De Sales v Ingrilli (2002) 212 CLR 338 at 371 [91] per McHugh J; [2002] HCA 52 citing Davies v Taylor [1974] AC 207 at 213 per Lord Reid. 25 Public Trustee v Zoanetti (1945) 70 CLR 266 at 279 per Dixon J; [1945] HCA 26. 26 Mehmet v Perry [1977] 2 All ER 529 at 533 per Brian Neill QC; Croker v Wright unreported, New South Wales Court of Appeal, 12 June 1980 at 6 per Samuels JA; Nguyen v Nguyen (1990) 169 CLR 245 at 263-264 per Dawson, Toohey and McHugh JJ; [1990] HCA 9; Roads & Traffic Authority v Jelfs (2000) Aust Torts (Footnote continues on next page) Crennan Bell deceased's services may have generated income directly in the hands of a Relatives Act claimant and the loss of that income may be taken into account in estimating the pecuniary injury resulting from the death27. The paradigm Relatives Act claim, styled a "dependency" claim, has been said to be one brought on behalf of the wife for the loss occasioned by the death of her husband, the breadwinner. In De Sales v Ingrilli, Gleeson CJ noted that it is now common for both parties to a legal or de facto marriage to have income-producing occupations and for each to have an expectation of obtaining financial advantage from the other28. In a marriage in which each partner is in paid employment the provision of household services and the responsibility for raising children will often be shared. The injury occasioned by the wrongful death of either spouse in such a marriage is likely to include the loss of his or her services. That loss may come more frequently to be estimated by reference to a reduction in the claimant spouse's income occasioned by the reasonable need to assume increased parenting responsibilities. The constructions at first instance and in the Court of Appeal The primary judge identified the purpose of s 12 of the Liability Act as being "to limit claims for tortiously caused damage, and to restrict financial loss claims for high earning individuals"29. His Honour considered that the typical or paradigm Relatives Act claim is one arising out of the death of the principal income earner30. His Honour acknowledged that there may be cases in which the income of the claimant is relevant to the assessment but he considered such cases to be "very rare indeed"31. His Honour determined that it is consonant with the purpose of the scheme to apply the s 12(2) limitation to the deceased's income. He held that in order to give the provision operative effect in the case of an award Reports ¶81-583 at 64,271-64,272 [24] per Mason P; Dwight v Bouchier (2003) 37 MVR 550 at 561 [78] per Stein JA. 27 Franklin v The South Eastern Railway Company (1858) 3 H & N 211 at 214-215 per Pollock CB [157 ER 448 at 449]; Cookson v Knowles [1977] QB 913 at 922 per Lord Denning MR. 28 (2002) 212 CLR 338 at 347 [12]. 29 Taylor v The Owners – Strata Plan No 11564 [2012] NSWSC 842 at [59]. 30 Taylor v The Owners – Strata Plan No 11564 [2012] NSWSC 842 at [57]. 31 Taylor v The Owners – Strata Plan No 11564 [2012] NSWSC 842 at [58]. Crennan Bell for the loss of expectation of financial support, "claimant" in s 12(2) is to be construed as meaning "the deceased upon whose earnings the claim depends"32. The primary judge's construction reads s 12(2) as if it provided33: "In the case of any such award, the court is to disregard the amount (if any) by which: in the case of an injury, the claimant's; or in the case of death, the deceased's gross weekly earnings would (but for the injury or death) have exceeded an amount ..." In the Court of Appeal McColl JA, writing for the majority, said that the ordinary meaning of "claimant" is "someone who makes a claim"34 or "[o]ne who makes or enters a claim; one who has a claim upon anything"35. Her Honour observed that the person killed by the defendant's wrongful conduct giving rise to a Relatives Act claim is neither the person who makes the claim nor the person who is entitled to do so. The Court of Appeal was unanimous in concluding that the literal meaning of s 12(2) does not apply the limitation to the gross weekly earnings of the deceased36. McColl JA considered that the primary judge was right to find that a literal construction of s 12(2) produces a result that is inconsistent with the provision's purpose37. Her Honour proceeded to consider the circumstances in which a court may construe a provision as if the provision contains additional 32 Taylor v The Owners – Strata Plan No 11564 [2012] NSWSC 842 at [60]. 33 Taylor v The Owners – Strata Plan No 11564 [2012] NSWSC 842 at [75]. 34 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 8 [27] citing Macquarie Dictionary, 5th ed (2009). 35 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 8 [27] citing the Oxford English Dictionary Online. 36 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 7 [24] per McColl JA, 15 [65] per Basten JA, 22 [98] per Hoeben JA. 37 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 9 [34]. Crennan Bell words to give effect to its evident purpose. Her Honour concluded that the court may only do so if three conditions stated by Lord Diplock in Wentworth Securities Ltd v Jones38 and an additional condition39 are satisfied. Her Honour was satisfied that all four conditions are met in the case of s 12(2) of the Liability Act40. Her Honour's conclusion took into account three other statutory schemes that impose a limitation on the award of damages for injury or death calculated by reference to earnings: s 9 of the Health Care Liability Act 2001 (NSW) ("the HCL Act"); s 151I of the Workers Compensation Act 1987 (NSW) ("the WC Act"); and s 125 of the Motor Accidents Compensation Act 1999 (NSW) ("the Section 151I(1) of the WC Act, which is contained in Div 3 of Pt 5, dealing with modified common law damages, directs the court in awarding damages to "disregard the amount (if any) by which the injured or deceased worker's net weekly earnings would (but for the injury or death) have exceeded" a specified amount (emphasis added). The section applies to awards of damages including for the loss of expectation of financial support41. Section 125 of the MAC Act applies to an award for past or future economic loss due to loss of earnings, or the deprivation or impairment of earning capacity, or for loss of expectation of financial support. Section 125(2) of the MAC Act provides that "[i]n the case of any such award, the court is to disregard the amount (if any) by which the injured or deceased person's net weekly earnings would (but for the injury or death) have exceeded $2,500" (emphasis added). the Section 9 was in Pt 2 of the HCL Act, which governed the award of damages in health care claims. Part 2 of the HCL Act was repealed by the Liability Act42. McColl JA observed that s 12 of the Liability Act appears to 38 [1980] AC 74 at 105. 39 Mills v Meeking (1990) 169 CLR 214 at 235 per Dawson J; [1990] HCA 6; Director of Public Prosecutions v Leys (2012) 296 ALR 96 at 126-127 [97]. 40 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 10 [41]. 41 See Workers Compensation Act 1987 (NSW), ss 151E(1), 151E(3), 151G(2), 42 Civil Liability Act 2002 (NSW), Sched 2.1 [1]. Crennan Bell have been transposed from s 9 of the HCL Act43. Her Honour considered that the omission of a reference to the deceased's gross weekly earnings in s 12 of the Liability Act was a clear drafting error44. The first of Lord Diplock's conditions requires the identification of the precise purpose of the provision. McColl JA said that s 12 of the Liability Act and s 125 of the MAC Act evince the same legislative purpose. Her Honour adopted Hodgson JA's description of the latter as demonstrating45: "a clear legislative intention that there be an effective limit put on claims by dependants of persons whose efforts would have produced very high financial benefits to those dependants". 43 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 10 [42]. Section 9 of the Health Care Liability Act 2001 (NSW) provided: This section applies to an award of damages: for past economic loss due to loss of earnings or the deprivation or impairment of earning capacity, or for future economic loss due to the deprivation or impairment of earning capacity, or for the loss of expectation of financial support. In the case of any such award, the court is to disregard the amount (if any) by which the claimant's net weekly earnings would (but for the injury or death) have exceeded $2,603. The annual adjustment under section 146 of the Motor Accidents Compensation Act 1999 of the amount applying under section 125 of that Act applies to and in respect of the amount referred to in subsection (2). Accordingly, an amount declared for the time being under section 146 of the Motor Accidents Compensation Act 1999 applies subsection (2)." the exclusion of the amount referred 44 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 9 [34], 10 45 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 9 [33] citing Kaplantzi v Pascoe (2003) 40 MVR 146 at 152 [32]. Crennan Bell The second of Lord Diplock's conditions requires satisfaction that the drafter and the Parliament inadvertently overlooked an eventuality that must be dealt with if the provision is to achieve its purpose. McColl JA considered it plain the drafter of s 9 of the HCL Act had failed to appreciate the irrelevance of the claimant's earnings to a damages award falling within the equivalent to s 12(1)(c) and that this omission had been carried over to s 12(2)46. The third of Lord Diplock's conditions requires the court to identify the words that the legislature would have included in the provision had the deficiency been detected before its enactment. McColl JA was satisfied that had the deficiency been identified the legislature would have included the words "or deceased person's" after the word "claimant's" consistently with the drafting of s 125 of the MAC Act and s 151I of the WC Act47. The fourth condition which McColl JA held to be necessary of fulfilment before a court is justified in reading words into a provision is taken from Dawson J's statement of the principles (dissenting in the result) in Mills v Meeking. His Honour said that the modification "must be consistent with the wording otherwise adopted by the draftsman"48. McColl JA's construction reads s 12(2) as if it provided49: In the case of any such award, the court is to disregard the amount (if any) by which the claimant's or deceased person's gross weekly earnings would (but for the injury or death) have exceeded an amount that is 3 times the amount of average weekly earnings at the date of the award." (emphasis of McColl JA) Before the primary judge and the Court of Appeal there was an issue as to whether damages awarded in a Relatives Act action are personal injury damages within Pt 2 of the Liability Act. The appellant submitted that the damages in such a claim are not damages that relate to personal injury or death. That issue was correctly decided against her and is not challenged on the appeal. The first 46 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 10 [42]. 47 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 11 [43]. 48 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 10 [40] citing Mills v Meeking (1990) 169 CLR 214 at 235 per Dawson J and Director of Public Prosecutions v Leys (2012) 296 ALR 96 at 126-127 [97]. 49 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 11 [43]. Crennan Bell to fourth and sixth respondents' contention below was that the phrase "loss of expectation of financial support" in s 12(1)(c) refers to damages awarded in a Relatives Act action. The primary judge and the Court of Appeal proceeded upon the correctness of that assumption50. The primary judge and McColl JA each adopted a purposive construction requiring that s 12(2) be read as if it contained additional words. Their Honours differed with respect to the words to be added with the result that they gave differing operation to the s 12(2) limitation. McColl JA did not explain the basis of her satisfaction that the addition of the words "or deceased person's" after "claimant's" in s 12(2) is consistent with the language otherwise used by the drafter. However, it will be observed that unlike the construction proposed by the primary judge, her Honour's construction does not result in the s 12(2) limitation having no application to the claimant's gross weekly earnings in a Relatives Act action in which the court has regard to those earnings. The submissions The appellant submits that McColl JA erred by not giving s 12(2) its ordinary grammatical meaning. She submits that her Honour exceeded the proper limits of statutory implication by re-writing s 12(2). The submission is supported by reference to Spigelman CJ's analysis of the principles in R v Young51 and R v PLV52. Aspects of his Honour's analysis were rejected by the Victorian Court of Appeal in Director of Public Prosecutions v Leys53. The appellant submits that McColl JA erred in following Leys. The first to fourth respondents and the sixth respondent, the active respondents to the appeal, submit that consideration of the principles stated in Wentworth Securities and the more recent discussion of those principles in Young and Leys is a distraction. In the first to fourth respondents' submission, the Wentworth Securities restrictions on "reading in" words to a statutory text apply in a case in which the court is asked "to add words that are quite beyond any tenable view of the contextual meaning". They contend that "claimant" in 50 Taylor v The Owners – Strata Plan No 11564 [2012] NSWSC 842 at [60]; Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 7 [22]. 51 (1999) 46 NSWLR 681 at 686-691 [5]-[35]. 52 (2001) 51 NSWLR 736 at 742-744 [80]-[90]. 53 (2012) 296 ALR 96 at 124-127 [92]-[98]. Crennan Bell s 12(2) has the contextual meaning of "the impaired person": an expression that accords with the conceptual basis of the three awards that are the subject of the s 12(2) limitation. The sixth respondent in written submissions supported McColl JA's construction of s 12(2), contending that the addition of the words "or deceased person's" after "claimant's" is the correction of an obvious drafting error of a kind that does not invoke Lord Diplock's conditions. Before addressing these submissions, it is necessary to refer to a contention, not agitated below, respecting the scope of s 12(1)(c). The active respondents contend that the words "expectation of financial support" in s 12(1)(c) refer to the expectation of benefit to be derived from the deceased's income or capital ("direct financial support") and not to the expectation of other pecuniary benefit in a Relatives Act award. On this analysis the s 12(2) limitation can have no application to an award of damages under s 12(1)(c) unless the words "claimant's gross weekly earnings" are given an extended, ungrammatical meaning. On the hearing of the appeal the active respondents embraced a further construction of s 12(2) posited on acceptance of s 12(1)(c) as being confined to direct financial support. The phrase "the claimant's gross weekly earnings", they submit, is to be understood as meaning the gross weekly earnings on which the claimant relies. The active respondents differ on the question of whether, in a Relatives Act award in which the court has regard to the claimant's earnings, the s 12(2) limitation applies. The sixth respondent submits that s 12(1)(b) would engage the s 12(2) limitation in such a case. The submission misconceives the basis of a claim for economic loss under s 12(1)(b). A claimant who reasonably chooses to give up, reduce or change his or her employment in order to perform the services previously performed by the deceased is not awarded damages for the deprivation or impairment of earning capacity. The first to fourth respondents are correct to acknowledge that, on the construction of s 12 for which they contend, the s 12(2) limitation has no application to an award under the Relatives Act in which a component of the loss is calculated by reference to the claimant's gross weekly earnings. The principles In Young Spigelman CJ suggested that the authorities do not warrant the court supplying words in a statute that have been "omitted" by inadvertence Crennan Bell per se54. Construing the words actually used by the legislature in "their total context", Spigelman CJ suggested that the process of construction admits of reading down of general words or giving the words used an ambulatory operation55. His Honour cited Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation56 as an instance of the former and Bermingham v Corrective Services Commission (NSW)57 as an instance of the latter58. In R v PLV his Honour expanded on his analysis in Young, observing59: "The authorities which have expressed the process of construction in terms of 'introducing' words to an Act or 'adding' words have all, so far as I have been able to determine, been concerned to confine the sphere of operation of a statute more narrowly than the full scope of the dictionary definition of the words would suggest. I am unaware of any authority in which a court has 'introduced' words to or 'deleted' words from an Act, with the effect of expanding the sphere of operation that could be given to the words actually used. … There are many cases in which words have been read down. I know of no case in which words have been read up." (emphasis in original) In Leys the Victorian Court of Appeal was critical of Spigelman CJ's characterisation of purposive construction as a process of construing "the words actually used"60 (emphasis in original). Their Honours said that the process requires the court to determine whether the modified construction is reasonably open in light of the statutory scheme and against a background of the satisfaction of Lord Diplock's three conditions61. Their Honours questioned the utility of the distinction between "reading up" and "reading down" and rejected the 54 (1999) 46 NSWLR 681 at 687 [14]. 55 R v Young (1999) 46 NSWLR 681 at 688 [15]-[16]. 56 (1981) 147 CLR 297; [1981] HCA 26. 57 (1988) 15 NSWLR 292. 58 R v Young (1999) 46 NSWLR 681 at 689 [22], 690 [30]-[31]. 59 (2001) 51 NSWLR 736 at 743-744 [88]. 60 Director of Public Prosecutions v Leys (2012) 296 ALR 96 at 124 [92]. 61 Director of Public Prosecutions v Leys (2012) 296 ALR 96 at 126 [96]. Crennan Bell proposition that a purposive construction may not result in an expanded operation of a provision62. Consistently with this Court's rejection of the adoption of rigid rules in statutory construction63, it should not be accepted that purposive construction may never allow of reading a provision as if it contained additional words (or omitted words) with the effect of expanding its field of operation. As the review of the authorities in Leys demonstrates, it is possible to point to decisions in which courts have adopted a purposive construction having that effect. And as their Honours observed by reference to the legislation considered in Carr v Western Australia64, the question of whether a construction "reads up" a provision, giving it an extended operation, or "reads down" a provision, confining its operation, may be moot65. The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision66. It is answered against a construction that fills "gaps disclosed in legislation"67 or makes an insertion which is "too big, or too much at variance with the language in fact used by the legislature"68. 62 Director of Public Prosecutions v Leys (2012) 296 ALR 96 at 130 [107], [109]. 63 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 401 per Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ; [1996] HCA 36. (2007) 232 CLR 138; [2007] HCA 47. 65 Director of Public Prosecutions v Leys (2012) 296 ALR 96 at 129-130 [105]-[107]. 66 Director of Public Prosecutions (Nauru) v Fowler (1984) 154 CLR 627 at 630 per Gibbs CJ, Murphy, Wilson, Deane and Dawson JJ; [1984] HCA 48; Minister for Immigration and Citizenship v SZJGV (2009) 238 CLR 642 at 651-652 [9] per French CJ and Bell J; [2009] HCA 40. 67 Marshall v Watson (1972) 124 CLR 640 at 649 per Stephen J; [1972] HCA 27. 68 Western Bank Ltd v Schindler [1977] Ch 1 at 18 per Scarman LJ cited by Lord Nicholls of Birkenhead in Inco Europe Ltd v First Choice Distribution (a firm) [2000] 1 WLR 586 at 592; [2000] 2 All ER 109 at 115. Crennan Bell Lord Diplock's three conditions (as reformulated in Inco Europe Ltd v First Choice Distribution (a firm)69) accord with the statements of principle in Cooper Brookes70 and McColl JA was right to consider that satisfaction of each could be treated as a prerequisite to reading s 12(2) as if it contained additional words before her Honour required satisfaction of a fourth condition of consistency with the wording of the provision. However, it is unnecessary to decide whether Lord Diplock's three conditions are always, or even usually, necessary and sufficient. This is because the task remains the construction of the words the legislature has enacted. In this respect it may not be sufficient that "the modified construction is reasonably open having regard to the statutory scheme"71 because any modified meaning must be consistent with the language in fact used by the legislature. Lord Diplock never suggested otherwise. Sometimes, as McHugh J observed in Newcastle City Council v GIO General Ltd, the language of a provision will not admit of a remedial construction. Relevant for present purposes was his Honour's further observation, "[i]f the legislature uses language which covers only one state of affairs, a court cannot legitimately construe the words of the section in a tortured and unrealistic manner to cover another set of circumstances."72 Lord Diplock's speech in Wentworth Securities laid emphasis on the task as construction and not judicial legislation73. In Inco Europe Lord Nicholls of Birkenhead observed that even when Lord Diplock's conditions are met, the court may be inhibited from interpreting a provision in accordance with what it is satisfied was the underlying intention of Parliament: the alteration to the language of the provision in such a case may be "too far-reaching"74. In Australian law the inhibition on the adoption of a purposive construction that 69 [2000] 1 WLR 586 at 592 per Lord Nicholls of Birkenhead; [2000] 2 All ER 109 at 115. The reformulation was of the third condition: the court must be abundantly sure of the substance, although not necessarily the precise words, the legislature would have enacted. 70 (1981) 147 CLR 297. 71 Director of Public Prosecutions v Leys (2012) 296 ALR 96 at 126 [96]. 72 (1997) 191 CLR 85 at 113; [1997] HCA 53. See also IW v City of Perth (1997) 191 CLR 1 at 12 per Brennan CJ and McHugh J; [1997] HCA 30. 73 Wentworth Securities Ltd v Jones [1980] AC 74 at 105-106. 74 Inco Europe Ltd v First Choice Distribution (a firm) [2000] 1 WLR 586 at 592; [2000] 2 All ER 109 at 115. Crennan Bell departs too far from the statutory text has an added dimension because too great a departure may violate the separation of powers in the Constitution75. Conclusion The primary judge's construction and that proposed by the active respondents on the appeal each require that the phrase "claimant's gross weekly earnings", in the case of an award of damages under s 12(1)(c), be read as referring to the gross weekly earnings of the deceased. On no view can the deceased be "the claimant". To read s 12, in the case of an award under s 12(1)(c), as applying the s 12(2) limitation to the deceased's gross weekly earnings cannot be reconciled with the language that the Parliament has enacted. The phrase "the claimant's gross weekly earnings" is incapable of identifying the gross weekly earnings of the deceased. The phrase "loss of expectation of financial support" in s 12(1)(c) is susceptible of the construction proposed by the active respondents and that given to it by McColl JA. Her Honour described the phrase as a reflection of this Court's characterisation of Relatives Act damages76. On this view "expectation of financial support" is apt to encompass any material benefit having a money value. Construed in this way s 12(1)(c) and s 12(2) operate harmoniously77. It is a construction to be preferred to one that gives s 12(2) no work in the case of an award under s 12(1)(c)78. There is no warrant for the conclusion that the s 12(2) limitation has the same purpose as the limitation in s 125 of the MAC Act. Relatives Act claims arising from motor accidents, by reason of their number or otherwise, may have called for a different legislative response to Relatives Act claims arising from other wrongful acts. And as Basten JA observed79, the circumstance that the 75 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 512-513 [102] per Gaudron, McHugh, Gummow, Kirby and Hayne JJ; [2003] HCA 2; Zheng v Cai (2009) 239 CLR 446 at 455-456 [28] per French CJ, Gummow, Crennan, Kiefel and Bell JJ; [2009] HCA 52. 76 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 7 [22]. 77 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [70]-[71] per McHugh, Gummow, Kirby and Hayne JJ; [1998] HCA 28. 78 Interpretation Act 1987 (NSW), s 33. 79 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 18 [83]. Crennan Bell legislature chose to depart from the language used in s 125 of the MAC Act (and s 151I of the WC Act) does not provide a foundation for the assumption that the different words enacted in s 12 of the Liability Act (and its predecessor, s 9 of the HCL Act) are directed to the achievement of the same object. The purpose of s 12 may be identified as the limitation of the component of the award that is assessed by reference to a claimant's high earnings, in claims for personal injury damages brought by or on behalf of high-earning individuals. The fact that the occasions for the application of the s 12(2) limitation in Relatives Act awards may be infrequent is not a reason for identifying some different legislative purpose outside the terms of the statute80. For these reasons the following orders should be made: Appeal allowed. Set aside orders 3 and 4 of the Court of Appeal of the Supreme Court of New South Wales made on 18 March 2013, and orders 1 and 2 of that Court made on 5 June 2013, and, in their place, order that: the appeal be allowed; the orders of the Supreme Court of New South Wales made on 27 July 2012 be set aside and, in their place, order that: the separate question: "Insofar as the plaintiffs claim damages pursuant to ss 3 and 4 of the Compensation to Relatives Act 1897, is any award of damages limited by the operation of s 12(2) of the Civil Liability Act 2002?" be answered: "No, the operation of s 12(2) of the Civil Liability Act 2002 (NSW) does not limit the first plaintiff's claim the for damages pursuant to ss 3 and 4 of 80 Lacey v Attorney-General (Qld) (2011) 242 CLR 573 at 592 [44] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [2011] HCA 10; Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378 at 389 [25] per French CJ and Hayne J; [2012] HCA 56. Crennan Bell Compensation to Relatives Act 1897 (NSW) as pleaded on behalf of herself and any other entitled relatives of the late Mr Craig Taylor in that it does not require the court to disregard the amount by which the gross weekly earnings of Mr Craig Taylor would, but for his death, have exceeded an amount that is three times the average weekly earnings at the date of the award"; and the first to sixth defendants pay the first and second plaintiffs' costs of the separate question; and the first to fourth and sixth respondents pay the appellant's costs of the appeal. The first to fourth and sixth respondents pay the appellant's costs in this Court. Introduction Mrs Susan Taylor commenced proceedings in the Supreme Court of New South Wales claiming damages under ss 3 and 4 of the Compensation to Relatives Act 1897 (NSW) ("the CRA") arising out of the death of her husband, Mr Craig Taylor. A preliminary question in those proceedings asked whether any such award of damages would be limited by s 12(2) of the Civil Liability Act 2002 (NSW) ("the CLA"). The primary judge (Garling J)81 gave an answer which was upheld by the Court of Appeal (McColl and Hoeben JJA, Basten JA majority dissenting)82. The answer was that, "insofar as it includes damages for the loss of an expectation of the financial support provided by the late Mr Taylor", the claim is to be determined in accordance with s 12(2) of the CLA by the Supreme Court "disregarding the amount (if any) by which the late Mr Taylor's gross weekly earnings would (but for his death) have exceeded an amount that is three times the amount of average weekly earnings at the date of the award". We agree with that answer. We would therefore dismiss Mrs Taylor's appeal from the judgment of the Court of Appeal. Our reasons differ slightly from those expressed in the reasons for judgment of the majority in the Court of Appeal. They are best explained by addressing the nature and potential scope of a claim for damages under ss 3 and 4 of the CRA before addressing the construction of s 12 of the CLA. The CRA The CRA is in the familiar form of fatal accidents legislation deriving from Lord Campbell's Act83, which created a novel and confined statutory cause of action "in an area where the common law conferred no right of action at all, namely, where [an] injured person had died"84. Section 3 is expressed to apply "[w]hensoever the death of a person is caused by a wrongful act ... such as would (if death had not ensued) have entitled 81 Taylor v The Owners – Strata Plan No 11564 [2012] NSWSC 842. 82 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1. 83 Fatal Accidents Act 1846 (UK) (9 & 10 Vict c 93). 84 Nguyen v Nguyen (1990) 169 CLR 245 at 251; [1990] HCA 9. the party injured to maintain an action and recover damages". It provides that "in every such case the person who would have been liable if death had not ensued shall be liable to an action for damages". Section 4, operating with later sections, specifies by whom and for the benefit of whom the statutory action for damages may be brought, and how the damages recoverable in the action are to be measured and divided. The action "shall be for the benefit of" relatives of the deceased comprising "the spouse, brother, sister, half-brother, half-sister, parent, and child". The action "shall be brought by and in the name of the executor or administrator" of the deceased but, if not brought by the executor or administrator within six months after the death of the deceased, may be brought by any one or more of the specified relatives 85. The damages recoverable are such damages as the jury (or judge trying the action without a jury86) "may think proportioned to the injury resulting from such death to the parties respectively ... for whose benefit such action is brought" and "the amount so recovered ... shall be divided amongst the before-mentioned parties in such shares as the jury [or judge] ... find and direct". The "injury" to the relatives resulting from the death of the deceased person, in respect of which damages are recoverable in the statutory action, "consists in the loss of material benefits or of the reasonable prospect of material benefits which depended on the continuance of the life of the deceased"87. Accordingly, "[w]hat must be ascertained [in every case] is whether any and what loss has been sustained by the relatives of the deceased after comparing the material benefits depending upon his life with any material gains accruing from his death"88. The "paradigm case" of a Lord Campbell's Act action has historically been that of "a claim by a dependent wife [for the benefit of herself and her children] for damages arising from the death of her husband, who was the family breadwinner"89. In that paradigm case, and in other cases where the material benefits which depended on the continuance of the life of the deceased comprise 85 Section 6B. 86 Section 6D. 87 Public Trustee v Zoanetti (1945) 70 CLR 266 at 279; [1945] HCA 26. See also The National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569 at 588; [1961] HCA 15. 88 Public Trustee v Zoanetti (1945) 70 CLR 266 at 279. 89 De Sales v Ingrilli (2002) 212 CLR 338 at 347 [12]; [2002] HCA 52. material benefits which the deceased would have provided to relatives out of his or her earnings, the damages recoverable have appropriately been described as "for the loss of the expectation of financial support"90. The description of the damages in those terms emphasises that they are not "for the loss of earning capacity which has been destroyed by death"91. Loss of material benefits recoverable as damages in a Lord Campbell's Act action is not, however, confined to loss of expectation of financial support92. A lost material benefit might comprise, for example, an activity which the deceased would have undertaken for the benefit of one or more relatives such as housekeeping93, handyman services94, child care95 or aged care96. In some cases, of which an example is Nguyen v Nguyen97, damages proportioned to a loss of a material benefit of that nature might appropriately be measured by reference to the commercial value of the activity. In other cases, of which an example is Croker v Wright98, damages proportioned to the loss of the material benefit might appropriately be measured by reference to earnings forgone by a specified relative who steps in to undertake the activity in place of the deceased. 90 Ruby v Marsh (1975) 132 CLR 642 at 651; [1975] HCA 32. See also De Sales v Ingrilli (2002) 212 CLR 338 at 371 [91]. 91 Ruby v Marsh (1975) 132 CLR 642 at 651, referring to East v Breen [1975] VR 19 92 De Sales v Ingrilli (2002) 212 CLR 338 at 347 [13]. 93 Eg Nguyen v Nguyen (1990) 169 CLR 245; Roads & Traffic Authority v Jelfs (2000) Aust Torts Reports ¶81-583. 94 Eg Dwight v Bouchier (2003) 37 MVR 550 at 560 [75]. 95 Eg Croker v Wright unreported, Court of Appeal of the Supreme Court of New South Wales, 12 June 1980. 96 Eg De Sales v Ingrilli (2002) 212 CLR 338 at 348 [13]. 97 (1990) 169 CLR 245. 98 Unreported, Court of Appeal of the Supreme Court of New South Wales, 12 June The CLA The CLA was extensively amended soon after its original enactment99. It applies in its current amended form and is therefore to be construed in that form100. Legislative history is not irrelevant to its construction, but sheds no light on the present question. The extrinsic materials are at too high a level of generality to illuminate. Contrasting the language of s 12 with that of earlier provisions in other statutes having a similar statutory purpose101 highlights but does not resolve its ambiguity. Part 2 is headed "Personal injury damages". "Personal injury damages" are defined for the purposes of the Part to mean "damages that relate to the death of or injury to a person"102. The Part is expressed to apply "to and in respect of an award of personal injury damages" except as specifically excluded103. It is also expressed to apply "regardless of whether the claim for the damages is brought in tort, in contract, under statute or otherwise"104. A "court" (defined "in relation to a claim for damages" to mean "any court or tribunal by or before which the claim falls to be determined"105) "cannot award damages" (defined to include "any form of monetary compensation"106) contrary to the Part107. Damages recoverable under the CRA are plainly "damages that relate to the death of ... a person" which are claimed under statute. Damages recoverable under the CRA are therefore plainly "personal injury damages" in respect of which Pt 2 of the CLA applies. 99 Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW). 100 Commissioner of Police v Eaton (2013) 87 ALJR 267 at 286 [97]; 294 ALR 608 at 631; [2013] HCA 2. 101 Section 151I of the Workers Compensation Act 1987 (NSW) and s 125 of the Motor Accidents Compensation Act 1999 (NSW). 102 Section 11. 103 Section 11A(1). 104 Section 11A(2). 105 Section 3, "court". 106 Section 3, "damages". 107 Section 11A(3). Section 12, which is within Pt 2, provides in part: "(1) This section applies to an award of damages: for past economic loss due to loss of earnings or the deprivation or impairment of earning capacity, or for future economic loss due impairment of earning capacity, or the deprivation or for the loss of expectation of financial support. In the case of any such award, the court is to disregard the amount (if any) by which the claimant's gross weekly earnings would (but for the injury or death) have exceeded an amount that is 3 times the amount of average weekly earnings at the date of the award." The structure of s 12, within the context of Pt 2, is a significant guide to the construction of s 12(2). Section 12(1) identifies three categories of personal injury damages. Section 12(2) then sets out a rule which binds a court awarding personal injury damages within each of those categories: "[i]n the case of any such award". That structure makes clear that the targets of the rule set out in s 12(2) are awards of damages within each of the three categories of personal injury damages identified in s 12(1). The express statutory identification of those targets leaves no room for the invocation of any presumption against statutory interference with the common law or statutory rights which would be vindicated by such awards of damages108, even assuming that such a presumption might otherwise have scope for operation109. "If the target of a legislative provision is clear, the court's duty is to ensure that it is hit rather than to record that it has been missed"110. Unless s 12 is to miss one or more of its legislatively defined targets entirely, s 12(2) must be construed to allow the rule it sets out to operate in 108 Lee v New South Wales Crime Commission (2013) 87 ALJR 1082 at 1152 [313]; 302 ALR 363 at 452; [2013] HCA 39. 109 Cf Daly v Thiering (2013) 88 ALJR 67 at 72 [32]-[33]; 303 ALR 188 at 194-195; [2013] HCA 45. 110 Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 113; [1997] HCA 53. respect of at least some awards of damages within each of the three categories of personal injury damages identified in s 12(1). The path to the construction of s 12(2) therefore has s 12(1) at its gate. Section 12(1) identifies the categories of personal injury damages as at the time of the making of an award in respect of which s 12(2) is to operate. The category identified by par (a) is defined in terms apt at that time to encompass at least part of an award of damages under the CRA in so far as the paragraph refers to damages "for past economic loss due to loss of earnings". The category is inapt to encompass an award of damages under the CRA in so far as the paragraph refers to damages "for past economic loss due to ... deprivation or impairment of earning capacity". The category identified by par (b), being confined to damages "for future economic loss due to the deprivation or impairment of earning capacity", is inapt ever to encompass any award of damages under the CRA. The category identified by par (c), in contrast, is defined in terms which are apt always to encompass an award of damages in an action under the CRA and only ever to encompass such an award of damages. Paragraph (c), however, cannot be read as encompassing all awards of damages in an action under the CRA. That is because the paragraph refers not to damages for the expectation of material benefits, but to the narrower subset of damages for the loss of expectation of financial support. Paragraph (c) as cast in those narrower terms is directed to the paradigm case, of which Mrs Taylor's claim is an example, in which the award of damages is for the loss of relatives' expectation of financial support by the deceased. Paragraph (c) does not encompass a case such as Nguyen v Nguyen or Croker v Wright, in which the award of damages is for the loss of expectation of a different material benefit. The category of personal injury damages identified in par (c) of s 12(1) being limited to damages for the loss of the relatives' expectation of financial support by the deceased, the constructional challenge is then to determine whether, and if so how, s 12(2) can be construed to operate in respect of an award of damages within that limited category. The majority in the Court of Appeal sought to meet the challenge by construing the statutory text as implicitly containing additional words so as to refer to "the claimant's or deceased person's gross weekly earnings"111. Statutory construction involves attribution of legal meaning to statutory text, read in context. "Ordinarily, that meaning (the legal meaning) will 111 Taylor v The Owners – Strata Plan No 11564 (2013) 83 NSWLR 1 at 11 [43]. correspond with the grammatical meaning ... But not always."112 Context sometimes favours an ungrammatical legal meaning. Ungrammatical legal meaning sometimes involves reading statutory text as containing implicit words. Implicit words are sometimes words of limitation. They are sometimes words of extension. But they are always words of explanation113. The constructional task remains throughout to expound the meaning of the statutory text, not to divine unexpressed legislative intention or to remedy perceived legislative inattention. Construction is not speculation, and it is not repair. Context more often reveals statutory text to be capable of a range of potential meanings, some of which may be less immediately obvious or more awkward than others, but none of which is wholly ungrammatical or unnatural. The choice between alternative meanings then turns less on linguistic fit than on evaluation of the relative coherence of the alternatives with identified statutory objects or policies. The construction of s 12(2) adopted by the majority in the Court of Appeal coheres with the statutory object of subjecting an award of damages of the kind identified in par (c) of s 12(1) to the rule set out in s 12(2). But it is a very strained construction. The statutory object is equally achieved if "the claimant's gross weekly earnings" is read as meaning the gross weekly earnings on which the claimant relies, as "claimant", in making the claim for damages that is the subject of an award of damages. And the text of s 12(2) is less strained. The word "claimant" is naturally understood to denote a person who makes (or is entitled to make) a claim. To read "the claimant's gross weekly earnings" as meaning the gross weekly earnings on which the person making the claim for damages relies gives the rule in s 12(2) work to do in respect of an award of damages falling within par (c) of s 12(1) in exactly the same way as it gives that rule work to do in respect of an award of damages falling within pars (a) and (b) of s 12(1). The claimant in relation to an award of damages falling within par (c) of s 12(1) may (but need not) be one of the relatives of the deceased for whose benefit the action is brought and may simply be the executor or administrator. To establish the claimed loss of expectation of financial 112 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 384 [78]; [1998] HCA 28. 113 Eg Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 310-311, 319-321; [1981] HCA 26; MacAlister v The Queen (1990) 169 CLR 324 at 330; [1990] HCA 15. support which is the subject of the award, such a claimant relies on the gross weekly earnings of the deceased. The construction of s 12(2) which we prefer is therefore that which we put to learned senior counsel for Mrs Taylor in the course of argument: it is to construe s 12(2)'s reference to "the claimant's gross weekly earnings" as a reference to the gross weekly earnings on which the claimant relies in the claim for damages that is the subject of an award of damages. The alternative grammatical meaning, for which counsel for Mrs Taylor resolutely contended, involves reading "the claimant's gross weekly earnings" as meaning the gross weekly earnings of the person who happens to be the claimant. The problem with that meaning is that the gross weekly earnings of the claimant could then never bear on the loss of expectation of financial support to be quantified in an award of damages falling within par (c) of s 12(1). While it would leave s 12(2) with work to do in respect of awards of damages falling within pars (a) and (b) of s 12(1), the meaning would deprive s 12(2) of any work to do in respect of any award of damages falling within par (c) of s 12(1). Indeed, the meaning would render par (c) of s 12(1) a statutory curiosity: a target which could never be hit. Orders Mrs Taylor's appeal should be dismissed.

HIGH COURT OF AUSTRALIA Matter No S75/2016 MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR APPELLANTS AND SZSSJ & ANOR Matter No S76/2016 RESPONDENTS MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ORS APPELLANTS AND SZTZI RESPONDENT Minister for Immigration and Border Protection v SZSSJ Minister for Immigration and Border Protection v SZTZI [2016] HCA 29 27 July 2016 S75/2016 & S76/2016 ORDER Matter No S75/2016 Appeal allowed. Set aside orders 1 and 2 made by the Full Court of the Federal Court of Australia on 25 September 2015, and in their place order that: order 2 made by the Federal Circuit Court of Australia on 28 April 2015 be set aside and in its place order that the first respondent pay the applicant's costs; and the appeal from the orders made by the Federal Circuit Court on 28 April 2015 be otherwise dismissed. Matter No S76/2016 Appeal allowed. Set aside orders 1, 2 and 3 made by the Full Court of the Federal Court of Australia on 25 September 2015, and in their place order that: order 2 made by the Federal Circuit Court of Australia on 12 May 2015 be set aside; and the appeal from the orders made by the Federal Circuit Court on 12 May 2015 be otherwise dismissed. On appeal from the Federal Court of Australia Representation S B Lloyd SC with J E Davidson for the appellants in each matter (instructed by Australian Government Solicitor) N L Sharp and A M Hochroth with D P Hume for the first respondent in S75/2016 (instructed by N L Sharp) Submitting appearance for the second respondent in S75/2016 M J Finnane QC with S E J Prince and P W Bodisco for the respondent in S76/2016 (instructed by Michaela Byers, Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Minister for Immigration and Border Protection v SZSSJ Minister for Immigration and Border Protection v SZTZI Migration – Refugees – Protection visas – Procedural fairness – Where SZSSJ and SZTZI ("respondents") applied for protection visas – Where respondents' personal information published on Department of Immigration and Border Protection website and accessed from 104 unique IP addresses – Where IP addresses known to Department – Where Department conducted International Treaties Obligations Assessments ("ITOAs") to determine impact of publication on non-refoulement obligations – Where ITOAs conducted in accordance with publicly available "Procedures Advice Manual" – Where Department notified respondents of ITOAs and instructed officers conducting ITOAs to assume personal information may have been accessed by authorities in countries where respondents feared persecution or other relevant harm – Where Department neither disclosed IP addresses nor provided unabridged report relating to disclosure of personal information – Whether obligation to afford procedural fairness applied to ITOA processes – Whether ITOA processes procedurally fair. Courts and judges – Jurisdiction – Federal Circuit Court of Australia – Whether respondents' claims to relief engaged jurisdiction of Court – Whether jurisdiction excluded by s 476(2)(d) of Migration Act 1958 (Cth). Words and phrases – "conduct preparatory to the making of a decision", "International Treaties Obligations Assessment", "privative clause decision", "procedural decision to consider whether to grant a visa or to lift the bar", "substantive decision to grant a visa or to lift the bar". Migration Act 1958 (Cth), ss 48B, 195A, 417, 474, 476. FRENCH CJ, KIEFEL, BELL, GAGELER, KEANE, NETTLE AND GORDON JJ. These two appeals are from a decision of the Full Court of the Federal Court1 on appeal from decisions of the Federal Circuit Court. They arise from separate proceedings commenced in the Federal Circuit Court by two former visa applicants. The relief sought in those proceedings included declarations that the former visa applicants had been denied procedural fairness in the implementation of procedures undertaken by officers of the Department of Immigration and Border Protection to assess the consequences to them of an incident that has become known as "the Data Breach". For reasons which follow, the Full Court of the Federal Court was right to conclude that the Federal Circuit Court had jurisdiction to entertain the proceedings, and was right to conclude that the applicants were owed procedural fairness, but was wrong to conclude that the applicants have been denied procedural fairness. Each appeal must be allowed. The Data Breach and the administrative response The Data Breach occurred on 10 February 2014. The Department routinely publishes statistics on its website. This time the particular electronic form of the document in which the statistics were published included embedded information which disclosed the identities of 9,258 applicants for protection visas who were then in immigration detention. The document containing the embedded information remained on the website until 24 February 2014. On any view, the Data Breach was very serious. The information disclosing the identities of the applicants for protection visas embedded in the document published by the Department was information protected from unauthorised access and disclosure by criminal prohibitions in Pt 4A of the Migration Act 1958 (Cth). Having been alerted to the Data Breach, the Department retained external consultants, KPMG, to investigate. KPMG prepared a report for the Department. An abridged version of the KPMG report was later made available to affected applicants. The abridged version of the report recorded that, during the 14 days in which the document disclosing the identities of the visa applicants had 1 SZSSJ v Minister for Immigration and Border Protection (No 2) (2015) 234 FCR 1. Bell Nettle Gordon remained on the website, the document had been accessed 123 times and that the access had originated from 104 unique internet protocol ("IP") addresses. The abridged version of the KPMG report did not record those IP addresses or give the precise time of access. Rather, the abridged version stated: "It is not in the interests of detainees affected by this incident to disclose further information in respect of entities [who] have accessed the Document, other than to acknowledge that access originated from a range of sources, including media organisations, various Australian Government agencies, internet proxies, TOR network and web crawlers". The abridged version went on to record that its authors had "not identified any indications that the disclosure of the underlying data was intentional or malicious". Irrespective of the cause of the disclosure there was obviously a risk that those in other countries from whom applicants for protection visas claimed to fear persecution or other relevant harm might have gained access to the document containing the embedded information so as to become aware of the identities of applicants for protection visas in Australia. The question for the Department was what to do about that risk. In early March 2014, the Secretary of the Department sent a standard form letter to each of the affected applicants. The letter informed those applicants of the Data Breach and expressed deep regret. The letter continued: "The information that it was possible to access was your name, date of birth, nationality, gender, details about your detention (when you were detained, reason and where) and if you have other family members in detention. The information did not include your address (or any former address), phone numbers or any other contact information. It also did not include any information about protection claims that you or any other person may have made, and did not include any other information such as health information. The department will assess any implications for you personally as part of its normal processes. You may also raise any concerns you have during those processes." Bell Nettle Gordon Beyond showing that the Department sent follow-up letters to applicants in June 2014, the record in the appeals does not reveal what was being done by the Department about the Data Breach at a systematic level before the end of September 2014. The departmental response appears by then to have been channelled into processes known as "International Treaties Obligations Assessments" ("ITOAs") conducted in accordance with standardised procedures set out in the Department's publicly available Procedures Advice Manual. The purpose of conducting these particular ITOAs was to assess the effect of the Data Breach on Australia's to affected applicants. The particular international obligations to which the ITOAs were directed were Australia's non-refoulement obligations under the Refugees Convention2, the Torture Convention3 and the International Covenant on Civil and Political Rights4. international obligations with respect Departmental officers conducting the ITOAs were specifically instructed to assess the effect of the Data Breach on Australia's non-refoulement obligations adopting the assumption that an applicant's personal information may have been accessed by authorities in the country in which the applicant feared persecution or other relevant harm. Standard departmental instructions in the Procedures Advice Manual for the conduct of an ITOA indicated that a finding by an officer that a non- refoulement obligation was engaged in respect of a particular applicant might result in referral of that applicant's case to the Minister for decision by the Minister whether or not to exercise a power conferred by specified sections of the Act. Relevantly to an applicant in respect of whom a non-refoulement obligation might be found to be engaged as a consequence of the Data Breach, the sections specified included ss 48B, 195A and 417. Common features of those sections are that they confer "non-compellable" powers on the Minister to grant a visa in the cases of ss 195A and 417 or to lift a 2 Convention relating to the Status of Refugees (1951) as amended by the Protocol relating to the Status of Refugees (1967). 3 Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (1984). International Covenant on Civil and Political Rights (1966). Bell Nettle Gordon statutory bar to the making of an application for a visa in the case of s 48B. Each is a power: which the Minister "may" exercise if "the Minister thinks that it is in the public interest to do so"; which can only be exercised by the Minister personally; and of which the Minister has no duty to consider the exercise. Another common feature of the sections is that the powers they confer can (and, in the case of the power conferred by s 195A, can only) be exercised in respect of unlawful non-citizens who are in immigration detention under s 189 of the Act for the duration provided by s 196. One of the possible end-points of immigration detention for which s 196 provides is removal from Australia under s 198. Section 198 relevantly provides: "(1) An officer must remove as soon as reasonably practicable an unlawful non-citizen who asks the Minister, in writing, to be so removed. (6) An officer must remove as soon as reasonably practicable an unlawful non-citizen if: the non-citizen is a detainee; and the non-citizen made a valid application for a substantive visa that can be granted when the applicant is in the migration zone; and one of the following applies: the grant of the visa has been refused and the application has been finally determined; (iii) the visa cannot be granted; and the non-citizen has not made another valid application for a substantive visa that can be granted when the applicant is in the migration zone." Bell Nettle Gordon Section 197C of the Act, which was inserted into the Act with effect from 16 December 20145, provides: "(1) For the purposes of section 198, it is irrelevant whether Australia has non-refoulement obligations in respect of an unlawful non- citizen. (2) An officer's duty to remove as soon as reasonably practicable an unlawful non-citizen under section 198 arises irrespective of whether there has been an assessment, according to law, of Australia's non-refoulement obligations in respect of the non- citizen." The view was taken in the Full Court of the Federal Court that s 197C has no application in relation to the removal of an unlawful non-citizen who had commenced a proceeding for an injunction against an officer before 16 December 2014. That view was mistaken. A transitional provision applied the section in relation to the removal of an unlawful non-citizen on or after 16 December 20146. Other standard departmental instructions set out in the Procedures Advice Manual concern removal of unlawful non-citizens in immigration detention. One of those instructions is that a person who is the subject of an ongoing ITOA is not to be considered available for removal from Australia until the ITOA process is complete unless the person requests removal. No party to either appeal suggests that s 197C prevents an officer from giving effect to that instruction. For the purposes of the appeals, no further consideration need be given to the operation of that section. The circumstances of the two former applicants Applicant SZSSJ is a Bangladeshi national. He arrived in Australia on a student visa in 2005. He was taken into immigration detention when his student 5 Migration and Maritime Powers Legislation Amendment (Resolving the Asylum Legacy Caseload) Act 2014 (Cth), Sched 5, Item 2. 6 Migration and Maritime Powers Legislation Amendment (Resolving the Asylum Legacy Caseload) Act 2014 (Cth), Sched 5, Item 27. Bell Nettle Gordon visa expired in 2012. Shortly afterwards, he applied for a protection visa. At the time of the Data Breach, his application for the protection visa had been refused and he had exhausted his rights to merits and judicial review under Pts 7 and 8 of the Act. He was in immigration detention awaiting removal under s 198 of the Act. There he has remained. On 7 March 2014, SZSSJ commenced a proceeding in the Federal Circuit Court seeking declaratory and injunctive relief against the Minister and the Secretary arising from the Data Breach. The relief sought was ill-defined and the Federal Circuit Court initially dismissed that application for want of jurisdiction7. On appeal, the Full Court of the Federal Court held that the Federal Circuit Court did have jurisdiction, and remitted to the Federal Circuit Court for determination on the merits the claim as was by then proposed to be reformulated8. In the meantime, an officer of the Department had written to SZSSJ on 1 October 2014. The letter informed SZSSJ that an ITOA had been commenced the previous day to assess the effect of the Data Breach on Australia's non- refoulement obligations with respect to him. After referring to previous correspondence and stating that information SZSSJ had already provided would be taken into account in the ITOA, the letter went on to invite SZSSJ to provide any further information which he wished to have taken into account in the assessment within 14 days of receiving the letter. On 23 December 2014, another officer of the Department wrote to SZSSJ enclosing country information proposed to be taken into account in the ITOA. The country information was said to indicate "that Bangladesh accepts involuntary and voluntary returnees; that people who return to Bangladesh from abroad, either voluntarily or involuntarily, are unlikely to face adverse attention on their return; and that the return of failed asylum seekers is unlikely to be reported by Bangladeshi airport authorities to other Bangladeshi government agencies". The letter invited a response within a further 14 days. By that time, communications between the Department and SZSSJ were overlapping with communications between the solicitors for the parties in the proceeding which remained pending in the Federal Circuit Court. On 7 SZSSJ v Minister for Immigration [2014] FCCA 1379. 8 SZSSJ v Minister for Immigration and Border Protection (2014) 231 FCR 285. Bell Nettle Gordon 1 December 2014, SZSSJ's solicitors had written to the Australian Government Solicitor asserting that procedural fairness required that SZSSJ at least be provided with the full unabridged version of the KPMG report and "all information about the IP addresses used to access the data". The Australian Government Solicitor responded on 12 February 2015, refusing to accept the assertion made on behalf of SZSSJ as to what procedural fairness required. The Australian Government Solicitor's letter annexed pages from the Procedures Advice Manual explaining the ITOA procedures and set out the terms of the instruction given to officers conducting the ITOAs to assume that an applicant's personal information may have been accessed by authorities in the country in which the applicant feared persecution or other relevant harm. The letter continued: "Once the assessing officer has completed the ITOA, your client will be notified of the outcome. If your client remains in immigration detention when the ITOA is completed, he will be handed a notification letter. If he is not in detention at that time, the notification letter will be sent to the most recent postal address provided to the Department and to any authorised recipient if one has been appointed. If the ITOA concludes that Australia's non-refoulement obligations are not engaged (that is, it is a negative outcome), your client will be given a copy of the ITOA. If your client receives a positive outcome, he will not receive a copy of the ITOA. If the ITOA concludes that Australia's non-refoulement obligations are engaged (that is, it is a positive outcome), your client's case will be referred to the Minister for consideration under the Minister's intervention powers under the Migration Act 1958 (the Act). If the ITOA concludes that Australia's non-refoulement obligations are not engaged (that is, it is a negative outcome), subject to any other proceedings challenging the ITOA or any other impediments to removal, removal planning will commence and your client will be expected to depart Australia." The Federal Circuit Court heard and determined SZSSJ's claim for relief on the merits on 28 April 2015. The ITOA process in relation to him had then still not been completed and his claim as then reformulated was focused on the fairness of the process that had been conducted up until that time. Concerned that the relief was premature, the Federal Circuit Court dismissed the proceeding Bell Nettle Gordon on the basis that the Court was not satisfied that SZSSJ had then been denied procedural fairness and not satisfied that SZSSJ faced a realistic threat of sudden removal while the ITOA process was continuing9. SZSSJ appealed to the Federal Court. Applicant SZTZI's circumstances are more straightforward. She is a Chinese national who arrived in Australia as an authorised air arrival on a visitor's visa of three months' duration. That visa expired and she was taken into immigration detention in September 2013. Her application for a protection visa, made the following month, was refused in November 2013. That refusal was affirmed on merits review under Pt 7 of the Act in January 2014. Like SZSSJ, she was in immigration detention at the time of the Data Breach. There she too has remained. On 13 January 2015, an officer of the Department sent a letter to SZTZI in similar terms to the letter sent to SZSSJ on 1 October 2014. The letter informed SZTZI that an ITOA had been commenced on 13 January 2015 with respect to her and invited her to provide any further information she wished to have taken into account within 14 days of receiving the letter. On 5 February 2015, the officer wrote again to SZTZI and to her migration agent. The letter explained, in response to a claim by the migration agent that SZTZI would be denied procedural fairness unless the Department disclosed "all relevant information related to" the Data Breach, that she and other officers conducting ITOAs in relation to the Data Breach had been instructed to assume that an applicant's personal information had been accessed by authorities in the country in which the applicant feared persecution or other relevant harm. The letter went on to refer in detail to SZTZI's personal circumstances and to country information from which the letter suggested that an inference was available to be drawn that SZTZI did not have an adverse profile with Chinese authorities and would not be exposed to a real chance of serious harm or real risk of significant harm on returning to China even assuming that it was known to Chinese authorities that she had applied for a protection visa in Australia. The letter invited a response within a further 14 days. 9 SZSSJ v Minister for Immigration (No 2) [2015] FCCA 1148. Bell Nettle Gordon The migration agent argued in response to that invitation that the assumption that an applicant's personal information had been accessed by authorities in another country was too narrow in that the assumption did not deal with the scenario of republication and fear of persecution by non-State actors. The migration agent went on to argue that, because the Department had been responsible for the Data Breach, an officer of the Department "cannot effectively assess the real chance of serious or significant harm that it has placed the applicant in and should find that the applicant is now a refugee sur place". The officer completed to SZTZI on 23 March 2015, concluding that non-refoulement obligations were not engaged. Detailed written reasons sent to SZTZI and the migration agent on that day concluded with the finding foreshadowed in the letter of 5 February 2015. ITOA with respect the SZTZI commenced a proceeding in the Federal Circuit Court seeking declaratory and injunctive relief against the Minister and the officer who had conducted the ITOA. The Federal Circuit Court dismissed the proceeding on 12 May 2015, holding that it lacked jurisdiction and that SZTZI had in any event been neither owed nor denied procedural fairness in the ITOA process10. SZTZI appealed to the Federal Court. The appeals by SZSSJ and SZTZI were heard together by the Full Court of the Federal Court comprising Rares, Perram and Griffiths JJ and determined by that Court unanimously in joint reasons for judgment delivered on 2 September 2015. The Full Court went on to make orders disposing of each appeal on 25 September 2015. Allowing each appeal, the Full Court set aside the orders of the Federal Circuit Court. The Full Court substituted declarations that the process conducted from 12 March 2014 to 25 September 2015 to assess the implications of the Data Breach for each of SZSSJ and SZTZI had been procedurally unfair. In the appeal by SZSSJ, the Full Court also granted an injunction restraining the Minister and the Secretary from removing SZSSJ until after the determination of the process. 10 SZTZI v Secretary of the Department of Immigration [2015] FCCA 1271. Bell Nettle Gordon The Full Court's reasons Of the issues identified and addressed by the Full Court, it is sufficient for the purpose of the appeals to this Court to focus on three. One was whether the jurisdiction of the Federal Circuit Court was excluded by s 476(2)(d) of the Act: the Full Court concluded that it was not. Another was whether procedural fairness was required in the process undertaken to assess the implications of the Data Breach: the Full Court concluded that the ITOA process was a statutory process in which procedural fairness was required. Another concerned whether the process afforded procedural fairness: the Full Court concluded that procedural fairness had not been afforded to SZSSJ and SZTZI. As a step in reasoning to the conclusion that the ITOA process was a statutory process in which procedural fairness was required, the Full Court made an important factual finding which is not challenged in this Court. That finding was to the effect that the inference to be drawn from the totality of the evidence before it was that the Minister had personally decided to consider whether to exercise the powers conferred by ss 48B, 195A and 417 of the Act in respect of applicants for visas affected by the Data Breach. The Full Court referred to the evidence supporting that finding as having "lifted the shroud" on the process being undertaken to assess the effects of the Data Breach, allowing the Full Court to state11: "That process is as follows: the Minister has decided to consider the exercise of his dispensing powers under s 48B, s 195A or s 417; departmental officials acting under the ultimate direction of the Minister have commenced an ITOA process to assist him in making that decision, which process is directed to gauging Australia's non- refoulement obligations; and the relevant criteria for the Minister's decision under each provision is the public interest." 11 SZSSJ v Minister for Immigration and Border Protection (No 2) (2015) 234 FCR 1 Bell Nettle Gordon Turning to whether the ITOA process afforded procedural fairness, the Full Court found the process to have been unfair on two bases. The first was that the process itself had not been adequately explained. Referring to SZSSJ, the Full Court said12: "Although by 12 February 2015 he was aware that what was sought were his views on any non-refoulement obligations arising from the Data Breach, he still did not know the identity of his decision-maker, the function being exercised by that decision-maker, the relevance of the ITOA process to that function or the criteria by which it would be decided." Whether or not the Full Court considered the ITOA process to have been procedurally unfair to SZTZI on that first basis is not entirely clear from its reasons. The second basis on which the Full Court considered the process to have been unfair to both SZSSJ and SZTZI was in the refusal of the Department to provide the unabridged KPMG report. The Full Court inferred from the abridged version of the report, which SZSSJ and SZTZI had been given, that there was "further information" in the unabridged version which they had not been given. What was contained in that further information was unknown to SZSSJ and SZTZI just as it was unknown to the Full Court. The Full Court took the view that fairness in the circumstances of the Data Breach required that the Department reveal "all that it knows about its own disclosures"13. The Full Court said14: "Rare is the case where a decision-maker asks a claimant to make submissions about what should happen in consequence of a failure to 12 SZSSJ v Minister for Immigration and Border Protection (No 2) (2015) 234 FCR 1 13 SZSSJ v Minister for Immigration and Border Protection (No 2) (2015) 234 FCR 1 14 SZSSJ v Minister for Immigration and Border Protection (No 2) (2015) 234 FCR 1 Bell Nettle Gordon adhere to statutory safeguards of confidentiality committed by the decision-maker affecting the claimant. In such a case, it is inevitable that the decision-maker must show its full hand subject to any proper (and curially supervisable) consideration of confidentiality." Continuing in the same vein, the Full Court said: "No argument was addressed to us that the bias rule had the effect of wholly barring the Department from addressing that issue, but at the very least, in a practical way, it undermines fairness to suggest that in such an unusual situation the Department does not have to reveal the full circumstances so that the person affected can assess, with full information, whether some adverse impact occurred or may have occurred on which he or she wishes to be heard (absent some good reason not to do so, such as confidentiality)." The want of procedural fairness in failing to provide whatever further information was contained in the unabridged KPMG report, according to the Full Court, was not ameliorated by the assumption that SZSSJ's and SZTZI's personal information may have been accessed by authorities in Bangladesh and China. That assumption, the Full Court thought, only made things worse. The assumption was so vague and generic as effectively to impose on SZSSJ and SZTZI the burden of showing that their own personal information "was accessed and by whom and why access by those people poses such a significant risk"15. The assumption also ignored the possibility of "gradations in the risk" associated with those who actually had access to the information. There was, the Full Court pointed out, "a world of difference between access by the tax authorities … and access by … security services"16. 15 SZSSJ v Minister for Immigration and Border Protection (No 2) (2015) 234 FCR 1 16 SZSSJ v Minister for Immigration and Border Protection (No 2) (2015) 234 FCR 1 Bell Nettle Gordon The issues in the appeals to this Court The three dispositive issues in the appeals to this Court are: (1) Did the Federal Circuit Court have jurisdiction? (2) Was procedural fairness required in the ITOA process? If so, was procedural fairness afforded? To address each of those issues, it is necessary to be clear from the outset about how the ITOA process is to be characterised in terms of the Act. Characterisation of the ITOA process Plaintiff M61/2010E v The Commonwealth17 and Plaintiff S10/2011 v Minister for Immigration and Citizenship18 show that characterisation of an administrative process undertaken with a view to informing the Minister as to the possible exercise of non-compellable powers requires close attention both to the structure of those powers and to the facts. Plaintiff M61/2010E raised questions as to the characterisation of Refugee Status Assessment ("RSA") and Independent Merits Review ("IMR") processes implemented by the Department with a view to informing the Minister as to the possible exercise of the non-compellable powers conferred by ss 46A and 195A in respect of offshore entry persons in immigration detention on Christmas Island who claimed to be persons to whom Australia owed protection obligations. The Department implemented the processes following an announcement of the Minister. As to the structure of those powers, the Court stated that "[e]xercise of the powers given by ss 46A and 195A is constituted by two distinct steps: first, the decision to consider exercising the power to lift the bar or grant a visa and 17 (2010) 243 CLR 319; [2010] HCA 41. 18 (2012) 246 CLR 636; [2012] HCA 31. Bell Nettle Gordon secondly, the decision whether to lift the bar or grant a visa". The Court noted that the Minister "is not obliged to take either step"19. As to the facts, the Court made three critical findings. The first was that the Minister, in the announcement, had taken the first of those two distinct statutory steps: the Minister had decided to consider the exercise of one or other of the powers to lift the bar or to grant the visa in respect of every offshore entry person on Christmas Island who claimed to be a person to whom Australia owed protection obligations20. The second was that, although "the Minister did not seek to (and did not) delegate any power"21, the RSA and IMR processes "were inquiries made after a decision to consider exercising the relevant powers and for the purposes of informing the Minister of matters that were relevant to the decision whether to exercise one of those powers in favour of a claimant"22. The third was that the RSA and IMR processes had the practical effect of prolonging the detention of the offshore entry persons for so long as those processes continued23. The relevant conclusion was that the RSA and IMR processes were themselves steps taken under and for the purposes of ss 46A and 195A and, as such, were conditioned by an implied statutory requirement for those conducting the processes to afford procedural fairness24. As the Court put it by way of summary25: Because the Minister has decided to consider exercising power under either s 46A or s 195A of the Migration Act in every case 19 (2010) 243 CLR 319 at 350 [70]. 20 (2010) 243 CLR 319 at 351 [70]. 21 (2010) 243 CLR 319 at 350 [69]. 22 (2010) 243 CLR 319 at 351 [73]. 23 (2010) 243 CLR 319 at 353 [76]. 24 (2010) 243 CLR 319 at 353-354 [78]. 25 (2010) 243 CLR 319 at 334-335 [9]. Bell Nettle Gordon where an offshore entry person claims to be a person to whom Australia owes protection obligations, the RSA and IMR processes taken in respect of each plaintiff were steps taken under and for the purposes of the Migration Act. (b) Because making the inquiries prolonged the plaintiffs' detention, the rights and interests of the plaintiffs to freedom from detention at the behest of the Australian Executive were directly affected, and those who made the inquiries were bound to act according to law, affording procedural fairness to the plaintiffs whose liberty was thus constrained." Plaintiff S10/2011 raised questions as to the characterisation of processes undertaken by the Department by reference to guidelines issued by the Minister setting out circumstances in which cases were in the ordinary course to be referred to the Minister for consideration of the possible exercise of one or more of the non-compellable powers conferred by ss 48B, 195A, 351 and 417. Two of the four plaintiffs were in immigration detention. The Department had not referred the cases of some plaintiffs to the Minister. The Department had referred the cases of other plaintiffs to the Minister following which the Minister had indicated that he would "not intervene". Members of the Court, with the possible exception only of Heydon J, interpreted the guidelines as directed to when the Department was to refer cases to the Minister in order to allow the Minister to decide whether or not to consider exercising a non-compellable power: where the Department had not referred a case to the Minister, no statutory power had been engaged; where the Department had referred a case to the Minister and the Minister had indicated that he would "not intervene", the Minister had made a personal decision that he would not consider exercising any of the non-compellable powers26. The unanimous conclusion of the Court was that in none of the cases was the process undertaken by the Department or the decision of the Minister conditioned by any requirement to afford procedural fairness. 26 (2012) 246 CLR 636 at 653 [46], 655 [52], 665 [91]. Bell Nettle Gordon Gummow, Hayne, Crennan and Bell JJ, having listed supporting statutory indicia27, stated that conclusion in terms that "[u]pon their proper construction and in their application to the present cases", the provisions conferring the relevant non-compellable powers were "not conditioned on observance of the principles of procedural fairness" for the reason that the Act revealed a "necessary intendment" that "the provisions are not attended by a requirement for the observance of procedural fairness"28. French CJ and Kiefel J said29: "With no statutory duty to consider the exercise of the Minister's powers being enlivened by a request or by the occurrence of a case to which the power might apply, no question of procedural fairness arises when the Minister declines to embark upon such a consideration. If, on ministerial instructions, certain classes of request or case are not even to be submitted to him or her for consideration, the position in law is unchanged. There is no exercise of a statutory power under the Act conditioned upon compliance with the requirements of procedural fairness." "The structure of the Act suggests that the powers which the empowering provisions confer on the Minister need not be exercised in compliance with the rules of procedural fairness. It would be strange if the activities of officials of the Minister's Department preparatory to the Minister either deciding whether to consider exercising those powers or deciding to exercise them would have to comply with the rules of procedural fairness." 27 (2012) 246 CLR 636 at 667-668 [99]. 28 (2012) 246 CLR 636 at 668 [100]. 29 (2012) 246 CLR 636 at 654-655 [50]. 30 (2012) 246 CLR 636 at 673 [119]. Bell Nettle Gordon Three principles are to be drawn from Plaintiff M61/2010E and Plaintiff S10/2011 concerning the construction and relevant application of ss 48B, 195A and 417 of the Act. First, each section confers a non-compellable power that is exercised by the Minister personally making two distinct decisions: a procedural decision, to consider whether to make a substantive decision; and a substantive decision, to grant a visa or to lift the bar. The Minister has no obligation to make either decision, and neither the procedural decision nor the substantive decision of the Minister is conditioned by any requirement that the Minister afford procedural fairness. Second, processes undertaken by the Department to assist in the Minister's consideration of the possible exercise of a non-compellable power derive their character from what the Minister personally has or has not done. If the Minister has made a personal procedural decision to consider whether to make a substantive decision, a process undertaken by the Department to assist the Minister's consideration has a statutory basis in that prior procedural decision of the Minister. Having that statutory basis, the process attracts an implied statutory requirement to afford procedural fairness where the process has the effect of prolonging immigration detention. If the Minister has not made a personal procedural decision to consider whether to make a substantive decision, a process undertaken by the Department on the Minister's instructions to assist the Minister to make the procedural decision has no statutory basis and does not attract a requirement to afford procedural fairness. Third, the question whether the Minister personally has made a procedural decision to consider whether to grant a visa or to lift a bar in a particular case or class of cases is a question of fact. Here, on the unchallenged finding of the Full Court, the Minister has made a personal procedural decision to consider whether to grant a visa under s 195A and s 417 of the Act or to lift the bar under s 48B in the case of each applicant for a protection visa affected by the Data Breach. The ITOA processes have been undertaken by officers of the Department to assist the Minister in that consideration. An ITOA is accordingly properly characterised as a process undertaken by an officer of the Department under and for the purposes of ss 48B, 195A and 417 of the Act. Bell Nettle Gordon That characterisation of an ITOA, as a process undertaken by an officer of the Department under and for the purposes of ss 48B, 195A and 417, informs the resolution of the issue whether procedural fairness was required in the process. The same characterisation also informs the resolution of the issue whether the Federal Circuit Court had jurisdiction. The Federal Circuit Court had jurisdiction Section 476 of the Act relevantly provides: "(1) Subject to this section, the Federal Circuit Court has the same original jurisdiction in relation to migration decisions as the High Court has under paragraph 75(v) of the Constitution. The Federal Circuit Court has no jurisdiction in relation to the following decisions: a privative clause decision or purported privative clause decision mentioned in subsection 474(7)." The jurisdiction conferred on the Federal Circuit Court by s 476(1), by reference to the jurisdiction conferred on this Court by s 75(v) of the Constitution, is jurisdiction in matters in which the relief sought is or includes a writ of mandamus or prohibition or an injunction against an officer of the Commonwealth. Conferral of that statutory jurisdiction on the Federal Circuit Court "in relation to migration decisions" is in a statutory context in which "migration decision" is defined to include a "privative clause decision" and a "purported privative clause decision"31 and in which s 474(1) operates to render a privative clause decision incapable of being called into question in any court other than for jurisdictional error32. Understood within that statutory context, the words "in relation to" are not words of expansion. They are words which connect the 31 Section 5(1) of the Act. 32 Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476; [2003] HCA 2. Bell Nettle Gordon particular relief sought in a matter to a particular migration decision which is relevantly either a privative clause decision (because it is unaffected by jurisdictional error) or a purported privative clause decision (because it is affected by jurisdictional error). The jurisdiction conferred on the Federal Circuit Court by s 476(1), subject to s 476(2), is jurisdiction in any matter in which relief being or including a writ of mandamus or prohibition or an injunction against an officer of the Commonwealth is sought on a ground that a migration decision is affected by jurisdictional error. That is to say, the jurisdiction is in a matter in which the basis for the claim to relief is that the migration decision is in truth no more than a purported privative clause decision. Excluded from that conferral of jurisdiction by s 476(2) is correspondingly jurisdiction in a matter in which relief being or including a writ of mandamus or prohibition or an injunction against an officer of the Commonwealth is sought on a ground that a particular migration decision is affected by jurisdictional error where that particular migration decision answers a description in s 476(2). The issue in the appeals about whether the Federal Circuit Court had jurisdiction to hear and determine the matters in which SZSSJ and SZTZI claimed relief is confined to an issue about whether jurisdiction in those matters was excluded by s 476(2)(d). The issue is whether an ITOA conducted by an officer of the Department answers the description in s 476(2)(d) of a privative clause decision or purported privative clause decision mentioned in s 474(7). To put that narrow issue in context, however, it is important to be clear about the identification of the migration decisions which SZSSJ and SZTZI claimed to be affected by jurisdictional error so as affirmatively to engage the jurisdiction of the Federal Circuit Court under s 476(1). The expression "privative clause decision" is defined in s 474(2) to mean "a decision of an administrative character made, proposed to be made, or required to be made, as the case may be, under this Act". Section 474 goes on relevantly to provide: "(3) A reference in this section to a decision includes a reference to the following: Bell Nettle Gordon granting, making, varying, suspending, cancelling, revoking or refusing to make an order or determination; granting, giving, suspending, cancelling, revoking or refusing to give a certificate, direction, approval, consent or permission (including a visa); granting, refusing to issue an authority or other instrument; issuing, suspending, cancelling, revoking or imposing, or refusing to remove, a condition or restriction; (e) making or revoking, or refusing to make or revoke, a declaration, demand or requirement; retaining, or refusing to deliver up, an article; doing or refusing to do any other act or thing; conduct preparatory to the making of a decision, including the taking of evidence or the holding of an inquiry or investigation; a decision on review of a decision, irrespective of whether the decision on review is taken under this Act or a regulation or other instrument under this Act, or under another Act; a failure or refusal to make a decision. To avoid doubt, the following decisions are privative clause decisions within the meaning of subsection 474(2): a decision of the Minister not to exercise, or not to consider the exercise, of the Minister's power under ... section 48B ... section ... 195A ... or [s] 417 ...; Bell Nettle Gordon Subject to s 476(2)(d), the claims to declaratory and injunctive relief made by SZSSJ and SZTZI engaged the jurisdiction of the Federal Circuit Court under s 476(1). That was because, the Minister having made a procedural decision to consider whether to grant a visa or to lift the bar in the exercise of one or other of the powers conferred by ss 48B, 195A and 417 of the Act, the conduct of an ITOA by an officer of the Department met the definition of a "privative clause decision" in s 474(2). The conduct of the officer met that definition by reason of the extended definition of "decision" in s 474(3)(h). The conduct of an ITOA by an officer of the Department is conduct under the Act preparatory to the making of a substantive decision by the Minister – specifically, it is the holding of an inquiry or investigation. To conclude that the jurisdiction so engaged is excluded by s 476(2)(d), it would be necessary to read the same extended definition of "decision" in s 474(3)(h) into the reference in s 474(7) to "a decision of the Minister not to exercise, or not to consider the exercise, of the Minister's power", relevantly under s 48B, s 195A or s 417. The structure of s 474 is against that reading. The section is more naturally read sequentially: s 474(3) serving to spell out an extended meaning of the generic term "decision" for the purpose of the operative expression "privative clause decision", and s 474(7) serving the distinct and specific function of clarifying that operative expression to include specified statutory decisions of the Minister. None of the other paragraphs of s 474(3) can sensibly be read into s 474(7), and s 474(3)(h) should be treated no differently. Section 474(3)(h) for that textual reason should not be read into s 474(7). But even if it could, s 474(3)(h) as read into s 474(7) could not sensibly be read as encompassing conduct other than that of the Minister. The reference in s 474(7) to a decision of the Minister not to exercise the Minister's power is properly read as limited to a substantive decision made by the Minister personally not to exercise one or more non-compellable powers. The reference to a decision of the Minister not to consider the exercise of the Minister's power is limited to a procedural decision made by the Minister personally not to consider whether to make a substantive decision. Neither reference is apt to encompass conduct of an officer of the Department preparatory to the making of a decision by the Minister. Operating by reference to s 474(7) so construed, s 476(2)(d) excludes the jurisdiction of the Federal Circuit Court in a matter in which the relief sought is Bell Nettle Gordon founded in a claim that a decision made by the Minister personally not to exercise or not to consider whether to exercise a non-compellable power is affected by jurisdictional error. Section 476(2)(d) does not exclude the jurisdiction of the Federal Circuit Court in a matter in which the relief sought is founded in a claim that an officer of the Department has failed to observe an implied limitation on his or her statutory power in holding an inquiry or conducting an investigation to inform the Minister as to the making of a substantive decision after the Minister has made a procedural decision. Together, ss 474(7) and 476(2)(d) can be seen to implement a comprehensible legislative policy. A challenge to conduct undertaken by an officer of the Department under the Act and for the purpose of assisting the Minister's consideration of the exercise of a non-compellable power can be heard and determined by the Federal Circuit Court. A challenge to a decision made by the Minister personally not to exercise a non-compellable power can only be heard and determined by this Court under s 75(v) of the Constitution. Three earlier decisions of the Federal Court on which the appellants rely do not support a contrary construction. The first two33 concerned an earlier and materially different form of the Act. The third is consistent with the construction explained: the only decision that was found in fact to have been made was a decision of the Minister personally not to consider the exercise of a non- compellable power34. The resolution of the jurisdictional issue is therefore that the jurisdiction of the Federal Circuit Court to hear and determine the matters in which SZSSJ and SZTZI sought declaratory and injunctive relief on the ground that the ITOA process was procedurally unfair was not excluded by s 476(2)(d) of the Act. 33 Minister for Immigration and Multicultural Affairs v Ozmanian (1996) 71 FCR 1 and S1083/2003 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1455. 34 See Raikua v Minister for Immigration and Multicultural and Indigenous Affairs (2007) 158 FCR 510 at 522 [62]-[64]. Bell Nettle Gordon Procedural fairness was required Characterisation of an ITOA as a process undertaken by an officer of the Department under and for the purposes of ss 48B, 195A and 417 of the Act leads directly to the conclusion that procedural fairness is required in the undertaking of that process. Why that conclusion follows is that it must now be taken to be settled that procedural fairness is implied as a condition of the exercise of a statutory power through the application of a common law principle of statutory interpretation. The common law principle, sufficiently stated for present purposes, is that a statute conferring a power the exercise of which is apt to affect an interest of an individual is presumed to confer that power on condition that the power is exercised in a manner that affords procedural fairness to that individual. The presumption operates unless clearly displaced by the particular statutory scheme. Plaintiff M61/2010E and Plaintiff S10/2011 show that the powers conferred by ss 48B, 195A and 417 of the Act have the potential to attract the presumption in two distinct ways. In the case of the Minister personally making a procedural decision to consider whether to make a substantive decision or of the Minister personally making a substantive decision to grant a visa or to lift the bar, the exercise of the power is apt to affect the interest of an applicant in the actual or potential relaxation of a legal prohibition on his or her continued presence in Australia35. In the case of an officer of the Department engaging in a process of assessment after the Minister has made a procedural decision, the exercise of power is apt to affect the interest in liberty of an applicant whose immigration detention is prolonged by that process36. What Plaintiff M61/2010E and Plaintiff S10/2011 critically hold is that, while the presumption is displaced by the scheme of the Act in its application to the personal exercise of power by the Minister37, the presumption is not displaced 35 Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 36 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 353 [76]-[77]. 37 Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 Bell Nettle Gordon in relation to the exercise of power by an officer of the Department38. Procedural fairness is required as an implied condition of the exercise by the officer of statutory power to engage in the process of assessment where the exercise of that power is apt to prolong immigration detention. SZSSJ and SZTZI having been in immigration detention at the time of the Data Breach and having remained there, the inference to be drawn is that the ITOA process has contributed to the length of their detention. That being its practical effect, characterisation of the ITOA process as a statutory process undertaken consequent on the making of a procedural decision by the Minister to consider the exercise of one or other of the powers conferred by ss 48B, 195A and 417 leads to the conclusion that the process is conditioned by procedural fairness. Procedural fairness is required in the ongoing process of assessment of SZSSJ and was required in the now completed process of assessment of SZTZI. The issue remaining is whether they have been afforded procedural fairness. Procedural fairness has been afforded Engaging with the Full Court's conclusion, that procedural fairness was denied because the ITOA process was inadequately explained and because the unabridged KPMG report was not provided, involves returning to some basic principles. First, it is axiomatic that a court exercising its own curial jurisdiction to review administrative action on a ground of jurisdictional error – including a jurisdictional error constituted by a failure to exercise a statutory power in a manner that complies with an implied condition of procedural fairness – does not "go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power". That is not to say that the court must proceed in a normative vacuum; but it is to say that the court can proceed only for that purpose. "If, in so doing, the court avoids administrative 38 Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 353-354 [78]. Bell Nettle Gordon injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error."39 Second, compliance with an implied condition of procedural fairness requires the repository of a statutory power to adopt a procedure that is reasonable in the circumstances to afford an opportunity to be heard to a person who has an interest apt to be affected by exercise of that power. The implied condition of procedural fairness is breached, and jurisdictional error thereby occurs, if the procedure adopted so constrains the opportunity of the person to propound his or her case for a favourable exercise of the power as to amount to a "practical injustice"40. Ordinarily, affording a reasonable opportunity to be heard in the exercise of a statutory power to conduct an inquiry requires that a person whose interest is apt to be affected be put on notice of: the nature and purpose of the inquiry; the issues to be considered in conducting the inquiry; and the nature and content of information that the repository of power undertaking the inquiry might take into account as a reason for coming to a conclusion adverse to the person41. Ordinarily, there is no requirement that the person be notified of information which is in the possession of, or accessible to, the repository but which the repository has chosen not to take into account at all in the conduct of the inquiry. 39 Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36; [1990] HCA 21 quoted with approval in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 at 160 [25]; [2006] HCA 63. 40 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 14 [37]; [2003] HCA 6 as explained in Minister for Immigration and Border Protection v WZARH (2015) 90 ALJR 25 at 33 [36], 36 [57]; 326 ALR 1 at 9, 12-13; [2015] HCA 40. 41 SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 at 162 [32] quoting Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 590-591; Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 at 95-96 [14]-[17]; [2005] HCA 72 explaining Kioa v West (1985) 159 CLR 550 at 629; [1985] HCA 81. Bell Nettle Gordon Extraordinary as they are, the circumstances of the Data Breach do not warrant a departure from those ordinary requirements. That the Department was responsible for its occurrence is regrettable. That the Department was its occurrence nevertheless provides no foundation for responsible for apprehending that an officer of the Department tasked with assessing the consequences of the Data Breach for an individual applicant would not bring an impartial and unprejudiced mind to the conduct of an assessment. Nor does that circumstance provide a principled foundation for converting the ordinary requirement of procedural fairness that an affected person be given notice into a duty that the Department reveal "all that it knows" about the Data Breach. Neither of the two bases on which the Full Court found the notice given to SZSSJ and SZTZI to have been inadequate to afford procedural fairness can be sustained. Whatever the inadequacy of the standard letter sent to them and to other applicants in March 2014, there could be no doubt that SZSSJ and SZTZI were put squarely on notice of the nature and purpose of the assessment and of the issues to be considered in conducting the assessment from the time of the formal notification of the commencement of the ITOA process with respect to each of them. In the case of SZSSJ, that occurred in the letter of 1 October 2014. In the case of SZTZI, it occurred in the letter of 13 January 2015. SZSSJ and SZTZI were each then told that an assessment was to be conducted. They were told that the assessment to be conducted was an ITOA in accordance with procedures set out in the Procedures Advice Manual. They were told that the purpose of conducting the ITOA was to assess the effect of the Data Breach on Australia's non-refoulement obligations under the Refugees Convention, the Torture Convention and the International Covenant on Civil and Political Rights with respect to them. The Procedures Advice Manual was available to them and to their representatives. The Procedures Advice Manual made clear that the consequence of an officer conducting an ITOA finding that a non-refoulement obligation was engaged might be referral to the Minister to decide whether or not to exercise a relevant non-compellable power in the particular case. That was again made clear in relation to SZSSJ in the subsequent letter from the Australian Government Solicitor. Bell Nettle Gordon Unclear until the decision of the Full Court was the characterisation of the ITOA process in each of their cases as having a statutory basis arising from a prior personal procedural decision of the Minister to consider whether to exercise the powers conferred by ss 48B, 195A and 417 of the Act in respect of applicants for visas affected by the Data Breach. But while the fact of the Minister's decision affected the legal characterisation of the ITOA process, neither that fact nor that characterisation had any effect on what was in fact to occur in the ITOA process or on the possibility of that process leading ultimately to the making of a substantive decision by the Minister to grant a visa or to lift the bar. While the Minister's power to make such a substantive decision was conferred in terms of what the Minister thought to be in the public interest, the ITOA process was concerned only to inquire into a particular aspect of the public interest: compliance with Australia's non-refoulement obligations. The absence of notification of the fact of the Minister's decision and the correct legal characterisation of the ITOA process deprived neither SZSSJ nor SZTZI of any opportunity to submit evidence or to make submissions bearing on the subject- matter of their respective ITOAs. The assumption made in the ITOA process that their personal information may have been accessed by authorities in Bangladesh and China removed from the scope of factual inquiry any question of precisely who accessed their personal information as a result of the Data Breach. The assumption was sensible because the true extent of access to the personal information of each affected applicant must in practical terms have been unknowable. Once downloaded from the Department's website, the document containing the personal information of the 9,258 visa applicants could have been forwarded to and interrogated by anyone, anywhere and at any time. Attempting to make a finding about precisely who had obtained access to the personal information of any one of them, and when, might be expected to have been a hopeless endeavour. Sensibly interpreted and applied in the context of making an assessment of whether the Data Breach engaged Australia's non-refoulement obligations with respect to them, the assumption was not simply that some of their personal information might have been accessed by some authorities. The assumption was rather that all of their personal information had been accessed by all of the persons or entities from whom they feared persecution or other relevant harm. That is how the assumption was in fact interpreted and applied by the officer who conducted SZTZI's ITOA and how it could reasonably be expected to be interpreted and applied in the conduct of SZSSJ's ITOA. Bell Nettle Gordon SZSSJ and SZTZI were not deprived of any opportunity to submit evidence or to make submissions relevant to the subject-matter of the ITOA process as a result of not having such further information as might be inferred to have been contained in the unabridged version of the KPMG report. Exactly how and why the Data Breach occurred was simply not relevant to the question of whether one or more of Australia's non-refoulement obligations were engaged in respect of them. And irrespective of what the unabridged KPMG report might have to say about the identities of the 104 IP addresses from which the document had been accessed during the 14 day period of the Data Breach, the fact would remain that once the document was downloaded the personal information of SZSSJ and SZTZI could have been accessed by anyone. Even if the unabridged KPMG report might have allowed SZSSJ and SZTZI to prove by reference to the report that one or more of those IP addresses were associated with persons or entities from whom they feared harm, that proof would advance their cases for engagement of Australia's non-refoulement obligations no further than the assumption already made in their favour. Orders Each appeal is to be allowed. The consequential orders to be made will reflect undertakings as to costs given by the Minister as a condition of the grant of special leave to appeal. In the appeal concerning SZSSJ, the orders to be made are: (1) Appeal allowed. Set aside orders 1 and 2 made by the Full Court of the Federal Court on 25 September 2015, and in their place order that: order 2 made by the Federal Circuit Court on 28 April 2015 be set aside and in its place order that the first respondent pay the applicant's costs; and the appeal from the orders made by the Federal Circuit Court on 28 April 2015 be otherwise dismissed. In the appeal concerning SZTZI, the orders to be made are: (1) Appeal allowed. Bell Nettle Gordon Set aside orders 1, 2 and 3 made by the Full Court of the Federal Court on 25 September 2015, and in their place order that: order 2 made by the Federal Circuit Court on 12 May 2015 be set aside; and the appeal from the orders made by the Federal Circuit Court on 12 May 2015 be otherwise dismissed.

HIGH COURT OF AUSTRALIA CALIDAD PTY LTD & ORS APPELLANTS AND SEIKO EPSON CORPORATION & ANOR RESPONDENTS Calidad Pty Ltd v Seiko Epson Corporation [2020] HCA 41 Date of Hearing: 11 & 12 August 2020 Date of Judgment: 12 November 2020 ORDER Appeal allowed with costs. Set aside the orders made by the Full Court of the Federal Court of Australia on 5 July 2019 and the declaration and orders made by the Full Court of the Federal Court of Australia on 29 October 2019 and, in lieu thereof, order that: the appeal to that Court be allowed with costs and the cross- appeal to that Court be dismissed with costs; declaration 1 and orders 2 to 8, 10 and 11 of the orders made by the primary judge on 16 February 2018 be set aside and, in lieu thereof, it be ordered that: the applicants' originating application, including the applicants' claims of patent infringement, breach of cl 2(a)(ii) of the settlement deed, breach of statutory duties under ss 145 and 148 of the Trade Marks Act 1995 (Cth) and contravention of ss 18 and 29 of Sch 2 to the Competition and Consumer Act 2010 (Cth), otherwise be dismissed; and subject to order 9 of the orders made by the primary judge on 16 February 2018, the applicants pay the respondents' costs of the proceeding; and the matter be remitted to the primary judge for determination of the respondents' claim for pecuniary relief for breach of cl 2(a)(i) of the settlement deed. On appeal from the Federal Court of Australia Representation D Shavin QC with P J T Creighton-Selvay for the appellants (instructed by A J L Bannon SC with C L Cochrane and D Larish for the respondents (instructed by Quinn Emanuel Urquhart & Sullivan) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Calidad Pty Ltd v Seiko Epson Corporation Patents – Infringement – Where printer ink cartridges embodied inventions claimed in two patents – Where used cartridges acquired by third party and modified for re-use – Where modified cartridges imported into Australia for sale to public – Where patentee alleged infringement of patent rights – Where s 13(1) of Patents Act 1990 (Cth) provides patentee has exclusive rights to exploit invention – Where "exploit" includes make, hire, sell or otherwise dispose of product and to use it – Whether modifications to cartridges constituted impermissible "making" of new product – Whether doctrine that patentee's exclusive rights with respect to product are exhausted on first sale ("exhaustion doctrine") should be accepted – Whether doctrine that implied licence arises on sale of patented goods to purchaser ("implied licence doctrine") should continue to be applied. Words and phrases – "conditions as to use", "embodying the claimed invention", "essential features", "exclusive statutory rights", "exhaustion doctrine", "exhaustion of rights", "exploit", "implied licence", "implied licence doctrine", "infringement", "invention", "make, hire, sell or otherwise dispose of", "make, use, exercise, and vend", "making", "manufacture", "modifications", "monopoly", "monopoly rights", "patent", "patent rights", "personal property", "product", "repair", "re-use", "single use", "use". Patents Act 1903 (Cth), s 62. Patents Act 1990 (Cth), ss 2A, 13, 135, 144, Sch 1. KIEFEL CJ, BELL AND KEANE JJ. The exclusive statutory rights of a patentee to exploit an invention which is a product include the rights to "make, hire, sell or otherwise dispose of the product" and to "use" it1. The question of principle which arises on this appeal concerns the scope of those rights and whether a patentee's rights with respect to the sale and use of a particular product should be regarded as exhausted when that product is sold or whether they continue. It requires consideration of the approach taken by this Court in National Phonograph Co of Australia Ltd v Menck2 ("Menck (High Court)") and that of the Privy Council on appeal3 ("Menck (Privy Council)"). The other question that arises is no less important. Accepting that a patentee retains the exclusive right to make a product embodying the essential features of the invention, the question is whether modifications made to a product to enable its re-use amount to a making of a new product and infringe on that account. The questions arise in this context. The first respondent manufactures and sells computer printers and printer ink cartridges under the brand name "Epson" ("the original Epson cartridges"). The original Epson cartridges embody the inventions claimed in two patents of which the first respondent is the patentee. The original Epson cartridges are manufactured and sold in a form which permits only a single use. When the ink in the cartridge runs out it is usually necessary to replace the cartridge. Empty original Epson cartridges are obtained by a third party, Ninestar Image (Malaysia) SDN BHD ("Ninestar"), from various sources. Ninestar makes modifications to the cartridges which enable them to be refilled and re-used (potentially on multiple occasions). The appellants (together "Calidad") acquire the modified cartridges from Ninestar and import them into Australia for the purpose of sale to the public. In proceedings in the Federal Court of Australia4 the respondents (together "Seiko") alleged that by doing so Calidad infringed the first respondent's rights as patentee. In those proceedings Seiko did not contend that any contractual conditions restricting the use to which the original Epson cartridges could be put were imposed at the time of the sale to the original purchaser. 1 Patents Act 1990 (Cth), s 13(1), Sch 1 (definition of "exploit"). (1908) 7 CLR 481. 3 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15; [1911] AC Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1. Bell It is not disputed that on the sale or resale of a patented product the purchaser becomes the owner of that item of property. It is a principle of the law of personal property that the owner of chattels has an absolute right to use or dispose of them as they think fit. This principle was applied by a majority of this Court in 1908 in Menck (High Court), where it held that conditions on resale could only be imposed as a matter of binding agreement. The Court applied a doctrine that a patentee's monopoly rights of use and sale with respect to a product arising from statute are exhausted on sale (the "exhaustion doctrine"). In Menck (Privy Council) it was held that a patentee may impose conditions on the sale or use of patented goods at the time of their sale to the original purchaser. Any conditions so imposed continue to apply to the goods after sale so long as persons later obtaining title to them have notice of the conditions. If no conditions are imposed, the owner of the goods has the ordinary rights of ownership, but only because in such a case the law implies a full licence5 (the "implied licence doctrine"). The proceedings in the Federal Court were conducted by the parties by reference to the approach taken in Menck (Privy Council). A Full Court6 held that the implied licence did not extend to the modifications made by Ninestar. Further, the modifications amounted to a "making" of a new patented product or a remaking of the original and infringed the patentee's rights. In the Full Court Calidad reserved its right to argue on any appeal to this Court that the decision in Menck (High Court) was correct and that Menck (Privy Council) should not be followed. It now asks this Court to hold that the exhaustion doctrine should be applied in cases of this kind. Seiko contends to the contrary and further argues that regardless of which doctrine is applied the modifications amount to a "making" of the patented product. The modifications made to the original Epson cartridges are within the scope of the rights of an owner to prolong the life of a product and make it more useful. They do not amount to an impermissible making of a new product. This Court has not been bound by decisions of the Privy Council for some time7. The rule, that a patentee's rights with respect to a particular product are exhausted once 5 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 28; [1911] AC 336 at 353. 6 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572. 7 Viro v The Queen (1978) 141 CLR 88; Privy Council (Limitation of Appeals) Act 1968 (Cth); Privy Council (Appeals from the High Court) Act 1975 (Cth). Bell that product is sold without conditions as to use, should be accepted. The appeal should be allowed, for the reasons which follow. Menck (High Court) and the exhaustion doctrine The plaintiffs in Menck (High Court) manufactured and sold products of which they were patentees to purchasers on whom restrictions as to resale were imposed. The plaintiffs claimed an injunction against the defendant, a retail seller who had bought the products from the original purchaser. It was alleged that he had obtained the goods from the purchaser contrary to the terms of the restrictions, of which he had notice, and resold them at a price lower than that permitted by the plaintiffs. This was a use of the plaintiffs' invention without their permission and therefore an invasion of their monopoly rights. The plaintiffs claimed to be entitled to condition the future use or sale of the patented products following their initial sale, not by reference to any contract but by reference to the patent itself and the rights given by s 62 of the Patents Act 1903 (Cth) to "make, use, exercise, and vend the invention". Griffith CJ, with whom Barton and O'Connor JJ agreed, rejected the plaintiffs' claim of an invasion of their patent rights. Griffith CJ and Barton J referred with approval to decisions of the Supreme Court of the United States in the mid-19th century which held that when a patentee sells a patented machine to a purchaser, the machine is "no longer within the limits of the monopoly"8. The patentee having received on sale the royalty for their invention in that particular product, "it is open to the use of the purchaser without further restriction on account of the monopoly of the patentees"9. Griffith CJ10 described as "an elementary principle of the law of personal property", that: 8 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 509-510 per Griffith CJ (referring to Bloomer v Millinger (1864) 68 US 340 at 351 and Adams v Burke (1873) 84 US 453 at 456), 524 per Barton J (referring to Bloomer v McQuewan (1853) 55 US 539 at 549 and Adams v Burke (1873) 84 US 453 at 456). 9 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 510 per Griffith CJ, quoting Adams v Burke (1873) 84 US 453 at 456. 10 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 510. Bell "the owner of chattels has an absolute right to use and dispose of them as he thinks fit, and that no restrictions can be imposed upon this right, except by positive law or by his own contract". That being the state of the common law, the right asserted by the plaintiffs, his Honour considered, must depend on the meaning of the words "use" and "vend" in s 62 of the Patents Act 190311. In his Honour's view, the words "use the invention" mean putting the idea of the invention into practice for some purpose. They do not continue to apply where the patented article is made and sold by the patentee and comes lawfully into circulation in the market as a chattel12. As to the word "vend", his Honour reasoned that it could not have been intended by the legislature to effect a change to a fundamental principle of the common law by introducing a new class of chattels which were effectively inalienable, without clear words expressing that intention13. The words "vend the invention" should be understood to mean "to put the product of the invention in the possession of the public" and not to refer to a sale of the product once it has been lawfully sold on Menck (Privy Council) and the implied licence doctrine The Privy Council did not deny the fundamental nature of the principle of the common law respecting an owner's right to use and dispose of chattels. Lord Shaw, who gave the advice of the Board, recognised that it would be contrary to the "public interest and to the security of trade" were it otherwise15. The difficulty, in his Lordship's view, was the enforcement of that principle "without impinging upon ... the right of property granted by the State and by way of monopoly to a patentee, and his agents and licensees, 'to make, use, exercise, and vend the 11 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 510. 12 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 511-512. 13 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 512. See also at 526-527 per Barton J. 14 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 512 per 15 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 22; [1911] AC 336 at 347. Bell invention … in such manner as to him seems meet'"16. These rights extended to "the imposition of conditions in the transactions of making, using and vending, which are necessarily an exception by Statute to the rules ordinarily prevailing"17. This in turn led to the need to "adjust the incidence of ownership of ordinary goods with the incidence of ownership of patented goods" so as to "avoid any collision of principle"18. Lord Shaw accepted that if the conditions imposed by the patentee were said, as a matter of patent law, to "run with the goods", a "radical change in the law of personal property" would have been effected19. But there would be no such radical change in allowing for a restriction on the alienation and use of a chattel where the restrictions were known to the person who had become owner. That was merely to acknowledge that in the case of patented goods, but not ordinary goods, ownership is subject to a limitation of this kind. These principles were considered to "harmonize" the rights of the patentee with those of the owner20. Lord Shaw said21 that it could be gleaned from the decided cases22 that a patentee, by virtue of the statutory monopoly, could impose conditions restrictive of sale or use at the time of sale which would not apply to ordinary chattels. If no such conditions were imposed (a sale "sub modo") it is presumed that it was 16 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 22; [1911] AC 336 at 347. 17 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 22; [1911] AC 336 at 347. 18 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 22; [1911] AC 336 at 347. 19 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 23; [1911] AC 336 at 348. 20 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 23-24; [1911] AC 336 at 348-349. 21 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 28; [1911] AC 336 at 353. 22 The references include Betts v Willmott (1871) LR 6 Ch App 239. See also Société Anonyme des Manufactures de Glaces v Tilghman's Patent Sand Blast Co (1883) 25 Ch D 1; Incandescent Gas Light Co Ltd v Cantelo (1895) 12 RPC 262. Bell intended to vest the full rights of ownership in the purchaser. The qualification to this last-mentioned proposition is that an owner's rights in a patented chattel will be limited if it is shown they knew of the conditions sought to be imposed by the patentee at the first sale. That was the position in which Mr Menck found himself. The exhaustion doctrine more recently Impression Products Inc v Lexmark International Inc23 is a recent decision of the Supreme Court of the United States. It is a case which bears a striking similarity to the facts of this case and is a clear example of the application of the exhaustion doctrine. Roberts CJ, speaking for the majority24, confirmed that the Court had adhered to that doctrine for over 160 years, applying it to the statutory right25 to "exclude others from making, using, offering for sale, or selling [a patentee's] invention[s]". The landmark case, in 185326, identified by his Honour was one to which reference had been made in Menck (High Court). Lexmark sold toner cartridges the subject of its patents for use with laser printers. The used cartridges were refilled by Impression Products, among others, for resale and re-use. In an endeavour to meet this competition Lexmark offered discounts to customers who agreed to use the cartridge only once and not to transfer the empty cartridge to anyone but Lexmark. It installed a microchip on each such cartridge that prevented re-use. Its competitors, including Impression Products, developed methods to counter the microchip. Lexmark brought proceedings for infringement of its patent constituted by the refurbishment and resale of the cartridges. A majority of the Supreme Court held that Lexmark had exhausted its patent rights in the cartridges "the moment it sold them". Their Honours acknowledged that the single-use/no-resale restrictions in Lexmark's contracts with its customers may be enforceable under contract law but they did "not entitle Lexmark to retain patent rights in an item that it has elected to sell"27. (2017) 137 S Ct 1523. Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523 at 1531. 25 35 USC § 154(a). 26 Bloomer v McQuewan (1853) 55 US 539. Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523 at 1531. Bell Roberts CJ explained28 that the "exhaustion doctrine" is not a presumption that arises on sale, rather it recognises a limit on the scope of the patentee's statutory rights. His Honour said that a patentee is free to set the price and negotiate contracts with purchasers but they may not, "'by virtue of his patent, control the use or disposition' of the product after ownership passes"29. Acknowledging that the effect of a patent is to grant to a patentee a right to prevent others from using or selling their product, his Honour explained that the exhaustion doctrine regards that exclusionary power as extinguished when the product is sold. His Honour reiterated what had been said in the earlier cases – that when a patentee chooses to sell a patented product it "is no longer within the limits of the monopoly". Instead it becomes the "private, individual property" of the purchaser with all the rights Roberts CJ31 also referred to a case in 1918 which bears some similarity to the facts in the Menck decisions. Retailers were required to resell graphophones at a specified price pursuant to a contract with the patentee. When the agreement was breached the patentee sought to enforce the resale price agreement through patent infringement suits. The decision32 did not turn upon the illegality of the restrictions, his Honour said, but the fact of sale. It was beyond controversy that by selling the graphophone the manufacturer placed it beyond patent law. The manufacturer could not, by imposing restrictions as to its use, keep it under the patent monopoly. The policy underlying the exhaustion doctrine was said to involve both the public interest and the object of patent statutes. Roberts CJ observed33 that since at Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523 at 1534. Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523 at 1531, quoting United States v Univis Lens Co Inc (1942) 316 US 241 at 250. Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523 at 1531. Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523 at 1533. 32 Boston Store of Chicago v American Graphophone Co (1918) 246 US 8; see also United States v Univis Lens Co Inc (1942) 316 US 241. Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523 at 1531- Bell least the time of Lord Coke34 restrictions on the resale or use of an item after its sale have been held void as contrary to the public interest. Patent statutes promote the progress of science by granting a limited monopoly to inventors to secure the financial rewards for their inventions. But once a patentee sells an item, they have enjoyed the rights secured by that monopoly and the purpose of the patent law is fulfilled. A similar policy is said35 to have been the original rationale for the exhaustion doctrine applied by the Court of Justice of the European Union36. Once an intellectual property right owner has received their reward by marketing a product in the European Union they cannot prevent the further circulation of that product in the market. The doctrine is used to balance the exclusive rights of intellectual property owners with the protection of the internal market as an area in which the free movement of goods is ensured37. The development of the exhaustion doctrine in the European Union has been traced38 to a publication in Germany in 1900, not long before the Menck decisions. The author reasoned from factors which included the purpose of the monopolistic rights to conclude that the reward should be obtained once for each product. Once the patentee themselves had used the patented invention with 34 Referring to Coke, The First Part of the Institutes of the Laws of England (1628), § 360 at 223a. 35 Tritton on Intellectual Property in Europe, 5th ed (2018) at 785 [7-008]-[7-009]. 36 See Deutsche Grammophon Gesellschaft mbH v Metro-SB-Grossmärkte GmbH & Co KG [1971] ECR 487; Centrafarm BV v Sterling Drug Inc [1974] ECR 1147; Merck & Co Inc v Primecrown Ltd [1996] ECR I-6285. See also United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24 at 458 [69]. 37 Tritton on Intellectual Property in Europe, 5th ed (2018) at 785 [7-009]. 38 Heath, "Exhaustion and Patent Rights", in Okediji and Bagley (eds), Patent Law in Global Perspective (2014) 419 at 421-423, 426-431, referring to Kohler, Handbuch des Deutschen Patentrechts in rechtsvergleichender Darstellung (1900). Bell respect to a certain product, whether by way of sale or otherwise, they could no longer exercise those patent rights for that specific product39. The Patents Act 1990 and the right to exploit The scope of the right to exploit given by the Patents Act 1990 (Cth) is to be ascertained by reference to s 13(1) of the Act read with the definition of the term "exploit" in Sch 1 to the Act. Section 13(1) provides: "Subject to this Act, a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention." The Patents Act 1990 provides for infringement proceedings to be brought to enforce the rights40 referred to in s 13(1) and for a patentee to obtain relief by way of injunction, damages or an account of profits41. In Northern Territory v Collins42, Gummow A-CJ and Kirby J observed that no definition is provided in the Act for what constitutes an "infringement". The statutory scheme instead focuses upon the exclusive rights given by the patent "as illuminated by the definition of 'exploit'"43. The term "exploit" in relation to an invention which is a product is defined to include44: "make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things". 39 Heath, "Exhaustion and Patent Rights", in Okediji and Bagley (eds), Patent Law in Global Perspective (2014) 419 at 422-423, referring to Kohler, Handbuch des Deutschen Patentrechts in rechtsvergleichender Darstellung (1900). 40 Patents Act 1990, s 120. 41 Patents Act 1990, s 122. (2008) 235 CLR 619. 43 Northern Territory v Collins (2008) 235 CLR 619 at 624 [20]. 44 Patents Act 1990, Sch 1 (definition of "exploit"). Bell The term "invention" means "any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies, and includes an alleged invention"45. An invention is disclosed in the complete specification of the patent46. A "patented product" means "a product in respect of which a patent has been granted and is in force"47. The object of the Act is stated in s 2A48, "to provide a patent system in Australia that promotes economic wellbeing through technological innovation and the transfer and dissemination of technology. In doing so, the patent system balances over time the interests of producers, owners and users of technology and the public". The patents, the product and the modifications The two patents in which the inventions embodied in the original Epson cartridges are claimed are Australian Patents No 2009233643 ("the 643 patent") and No 2013219239 ("the 239 patent"). Claim 1 of the 643 patent is a combination claim divided into 11 integers. In summary they comprise: [1] a printing material container adapted to be attached to a printing apparatus; [2] a memory driven by a memory driving voltage; [3] an electronic device; [4] a plurality of terminals; and [5]-[11] the layout of those terminals. The infringement proceedings below were conducted by the parties on the basis that consideration of claim 1 of the 643 patent would suffice, no doubt because there was no material difference between the 643 patent and the 239 patent. Ink cartridges for printers were in existence before the priority dates of the patents. The "background art" information to the 643 patent states that it had become common practice to equip cartridges with a memory for storing information concerning the ink and another device such as a higher voltage circuit to detect the level of ink remaining in the cartridge. It states that the cartridge and printer could be electronically connected through terminals. Where a cartridge has two or more devices, such as a memory and high voltage circuit, there is a risk that shorting could occur between the terminal for each device. The patents propose a 45 Patents Act 1990, Sch 1 (definition of "invention"). 46 Patents Act 1990, s 40(2)(a). 47 Patents Act 1990, Sch 1 (definition of "patented product"). Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 (Cth), Sch 1 item 1. Bell solution which involves a particular layout of the electrical terminals to reduce this risk. Original Epson cartridges contain a memory chip which is mounted on or connected to an integrated circuit board. Printers with which the original Epson cartridges are compatible are able to read and process the data in the memory chip. The primary function of the memory chip is to keep track of how much ink remains in the cartridge. When the printer determines from the memory chip that the ink has fallen below a threshold amount it prevents printing from taking place. For so long as the data stored in the memory chip indicates an inadequate ink supply in the cartridge, a compatible printer would treat the cartridge as empty and would not print. When the ink in a printer cartridge runs out it is usually necessary for the cartridge to be replaced. Seiko supplies replacement Epson cartridges for its printers. Third party suppliers obtain original Epson cartridges which are empty from a number of sources, including the original purchasers and recycling facilities, and supply them to Ninestar, which modifies them for re-use. In order that the cartridges may be used again they must be refilled with ink. A needle is used to create a small hole in the side of the cartridge, replacement ink is injected through that "injection port" and the port and the outlet hole through which the ink was originally disposed are resealed using thin plastic and heat. The information on the memory chip is modified to indicate that the ink is not exhausted, either by rewriting the information on the memory chip or by replacing the chip with a generic memory chip. Some of the categories of cartridges were subject to further modifications such as the removal of the "interface pattern", which comprises a series of protruding "ribs" on the exterior surface of the cartridge, so that the cartridge could be made compatible with other printers. A small cut was also made to the gas membrane of some cartridges in order to improve the gas exchange within the cartridge. And in some cartridges the integrated circuit assembly was removed and placed in another cartridge. The decisions below The primary judge The primary judge (Burley J) correctly described the effect of the decision in Menck (Privy Council) to be that the first owner of patented goods obtained without restrictions on their use, and any person into whose hands the products subsequently come, is entitled to assume that a "full licence" has been given so Bell that they may do with them as they think fit49. Nevertheless his Honour considered that the licence was subject to an inherent limitation arising from the sale of the product. His Honour reasoned that as the licence related only to the particular product sold50 the modifications made by Ninestar to the original Epson cartridges put the continuation of the licence at risk. The question to be addressed, in his Honour's view, was whether the implied licence "survive[d]" the modifications made to them51 or was extinguished52. the His Honour eschewed an approach which enquired whether modifications amounted to a repair of the product, on the one hand, or a making of a new product, on the other. The question, his Honour said, is not whether the product is altered, made or repaired, but rather whether the implied licence can be said to apply to the modifications made by Ninestar53. The issue is whether the product, "insofar as it is an embodiment of the invention as claimed, was materially altered, such that the implied licence can no longer sensibly be said to apply"54. The primary judge assigned the modified cartridges into nine categories, based on the different steps undertaken by Ninestar in order for them to be rendered capable of re-use. His Honour held that in five of the categories the modifications were such as to extinguish any implied licence. The licence was terminated before Calidad imported the products55. As to the remaining four categories, his Honour considered that the modifications were not material56. 49 Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1 at 30 [115]. 50 Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1 at 39 [166]. 51 Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1 at 38 [158]. 52 Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1 at 38 [163]. 53 Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1 at 38-39 [162]-[164]. 54 Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1 at 39 [164]. 55 Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1 at 38 [160]-[161]. 56 Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1 at 52 [238], 54 [256], Bell The Full Court Calidad appealed the primary judge's findings regarding the five categories found to infringe and Seiko cross-appealed regarding the other four categories. A Full Court (Greenwood, Jagot and Yates JJ)57 allowed Seiko's cross-appeal and dismissed Calidad's appeal, holding that in none of the nine categories were the modifications made to the original Epson cartridges authorised by the implied licence and that the changes effected to them constituted a making of a new embodiment of the invention claimed in the patents58. The Full Court agreed with the primary judge that the implied licence was one only to use the patented product in the form in which it was sold. Jagot J, with whom Greenwood J generally agreed, said the "product" referred to in s 13(1) of the Patents Act 1990, read together with the definition of "exploit", that is the subject of the exclusive rights of use and sale is the product embodying the claimed invention59. Yates J said that the implied licence does not extend beyond the use of the patented product in the form in which it comes into the hands of the first owner60. The Full Court did not agree with the question identified by the primary judge. The correct question, in their Honours' view61, was not whether the licence was terminated by the unauthorised modifications, but rather what was the scope of the licence. That question was to be determined, at least in part, by reference to the nature of the article sold62. As sold, it was a product which had a certain 57 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572. 58 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 590 [85]-[87] per Greenwood J, 591 [91], 618 [165] per Jagot J, 642-643 [290], [295] per Yates J. 59 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 615 [153]. 60 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 642-643 [288]- 61 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 588 [68] per Greenwood J, 616 [154]-[155] per Jagot J, 628 [206], 642 [291] per Yates J. 62 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 616 [156] per Jagot J, 642-643 [292] per Yates J. Bell lifespan63. It could never have been within the contemplation of Seiko and any purchaser that a printer cartridge exhausted of ink would be repurposed in the manner of the Calidad products, Jagot J accepted64. Jagot J held that Ninestar's actions recreated or remade the product altogether in new embodiments of the invention65. Her Honour rejected Calidad's argument that it had repaired the cartridges because they no longer worked66. No part of the cartridge was damaged or worn, her Honour observed67. When a cartridge ran out of ink it had merely exhausted its function and this was precisely how it was designed to work68. Jagot J also rejected Calidad's contention that not all of its modifications fell within the patent claim. In her Honour's view the changes made by Ninestar involved essential integers of the invention the subject of the patents, which included the unmaking and then remaking of a feature of the invention69. The products Seiko sold all embodied the claimed invention including the first integer, consisting of a "printing material container". While the primary judge described the making of a hole in it to enable it to be filled with ink and its resealing as a minor physical alteration, her Honour considered that at the moment the new hole was created there was no longer an essential integer of the claimed invention. It ceased to be a printing material container as it could no longer contain printing ink. When the original and new holes were sealed it was made into a new container. That is not the use of the patented article as sold, her Honour said; it is the making of a new article within the scope of the patent. When sold to Ninestar the patented container could not be used for two reasons: the container was empty of ink and the memory recorded this state of affairs. As repurposed the product was still an embodiment of the invention but was now capable of re-use. These facts alone 63 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 622 [177]. 64 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 613 [142]-[143], 65 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 622 [177]. 66 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 620 [169]. 67 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 622 [177]. 68 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 620 [168]-[169]. 69 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 622 [179]. Bell indicated to her Honour and Greenwood J that the modifications involved the making of a new embodiment of the invention, outside of any implied licence for use70. Jagot J did not accept the primary judge's view that the reference to "a memory driven by a memory driving voltage" in integer [2] involves a reference only to the mere physical existence of the memory chip. Although her Honour accepted that the information and content of the memory as to the level of ink present in the cartridges was not part of the patent claim, she did not think it was irrelevant. The fact that repurposing a cartridge involves reprogramming to change the memory tended to confirm that the modified cartridges were outside the scope of the implied licence71. In some of the categories of cartridges the memory chip was substituted altogether, not merely reprogrammed, and this required removal of the printed circuit board and the substitution of memory chips, Jagot J noted72. Here too, her Honour said, the original Epson product as sold ceased to exist, probably at the moment the printed circuit board was removed. The product was no longer that sold by Seiko. The removal of the interface patterns from some of the cartridges, in order to make them compatible with Australian printers, had been described as "borderline" by the primary judge, although his Honour concluded it served to terminate the licence73. Jagot J characterised the removal as enabling a new kind of adaptation for attachment and therefore a new embodiment74. The removal of the integrated circuit assembly from one cartridge and its placement in another also involved the making of a new embodiment of the invention outside the scope of the implied licence, her Honour found. The assembly was central to the invention as claimed, including in the layout of the terminals described in integers [4] to [11]. 70 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 586 [56]-[57], 590 [85] per Greenwood J, 619 [166] per Jagot J. 71 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 620 [172]-[173]. 72 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 619 [167]. 73 Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1 at 58 [281]. 74 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 620 [170]. Bell It too could not have been within the scope of the implied licence to use the patented product as it was purchased from Seiko75. Making a new embodiment? Regardless of whether the exhaustion doctrine or the implied licence doctrine is to be preferred, neither doctrine has any part to play in determining whether there has been an infringement of a patent by reason that a new product embodying the claimed invention has been made. The sale of a patented product cannot confer an implied licence to make another and it cannot exhaust the right of a patentee to prevent others from being made76. The right to make a product is a separate and distinct right from the right to use or to sell. The definition of "exploit" in the Patents Act 1990 makes this plain. To establish infringement by making a new embodiment of the invention it is of course necessary for Seiko to show that the new product takes each of its essential features77 by reference to the description of the invention78. Calidad submits that some of the modifications relate to features which are not the subject of the patent claim and that not all the features claimed can be regarded as essential to the invention because they either are a generic component or were the subject of common usage before the priority date of the patents. In the latter respect the "printing material container" referred to in integer [1] describes an article previously commonly used to hold ink. It was also common practice to equip ink cartridges with a memory such as that referred to in integer [2]. Calidad points out that the claim distinguishes between the memory chip and its contents, which is to say that which is stored on it, as the primary judge found. A device such as a high voltage circuit to detect ink levels was also 75 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 620 [171]. 76 United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24 at 458 [70] per Lord Hoffmann. 77 Rodi & Wienenberger AG v Henry Showell Ltd [1969] RPC 367 at 383 per Lord Hodson, 391 per Lord Upjohn; Olin Corporation v Super Cartridge Co Pty Ltd (1977) 180 CLR 236 at 246; Populin v HB Nominees Pty Ltd (1982) 41 ALR 471 at 78 D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 370-371 [87]-[88] per French CJ, Kiefel, Bell and Keane JJ, 373 [94], 387-388 [144]-[145] per Gageler Bell commonly used. The interface pattern, which was removed from some cartridges, either was a generic feature or was not claimed. Whatever view is taken of other features, there can be little doubt that those the subject of integers [4] to [11] were essential to the invention and that modifications involving replacement of the integrated circuit assembly were directed to an aspect of them. Calidad's submission that the substance of the invention resides in the particular layout of the electrical terminals defined by integers [4] to [11], which is the means by which the problem of shorting is resolved, accepts as much. Its answer is that the integrated circuit assemblies were merely replaced with an equivalent assembly from another Epson cartridge and the layout of the terminals was not changed. That answer directs attention to the real issue in relation to infringement, namely whether the modifications resulted in a new product being made. The conclusion for which it contends, that the refilled and restored cartridges were merely modified versions of the products sold by Seiko, should be accepted. In D'Arcy v Myriad Genetics Inc79 it was observed that the idea of something which can be "made" by human invention is central and of long standing in patent law. The word "manufacture" in the Statute of Monopolies 1623 (21 Jac I c 3) connotes the making of something. It may be observed at the outset that ordinarily it would not be said that an article which has been purchased and altered in such a way that it retains much of its essential features but is now able to be re- used is "made". It is much the same article with improved functionality. The modifications which were made in the present case may be contrasted with what was undertaken in United Wire Ltd v Screen Repair Services (Scotland) Ltd80. The patent there in question concerned improvements to sifting screens used to recycle drilling fluid in the offshore oil-drilling industry. The screen was described in the first claim of the patent as a sifting screen assembly, comprising a frame to which mesh screens were secured, for use in a vibratory sifting machine. The defendants stripped down the screen to its frame and then secured new mesh screens to it. This was regarded by Aldous LJ, in the Court of Appeal81, as equivalent to purchasing the frames on the open market and then using them to (2015) 258 CLR 334 at 344 [16] per French CJ, Kiefel, Bell and Keane JJ. [2001] RPC 24. 81 United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24 at 450 [28]. Bell produce an assembly82. The House of Lords83 held that the Court of Appeal was entitled to conclude that the totality of the work amounted to "making" a new article because the removal of the meshes and the stripping down and repairing of the frame resulted in a mere component of the patented article remaining "from which a new screen could be [and was] made". In United Wire an argument that the defendants had merely prolonged the life of the machine by its repair was rejected. Lord Hoffmann observed84 that while the concepts of repair and making can overlap in ordinary usage, in the context of patent law they are mutually exclusive. It may therefore be preferable to ask whether the product in question was "made". Further, the notion of there being a licence to repair is apt to confuse and to distract attention from the statutory question whether the defendant has made the patented product. That observation is apposite in the present case because the Full Court appears to have reasoned from the premise that there was no licence to modify the cartridges as sold to a conclusion that what was thereby achieved was the making of something new. Lord Hoffmann85 viewed an owner's right to repair a patented article not as an independent right conferred by licence, but as a residual right forming part of the right to do whatever does not amount to making the product. There are two matters to which his Lordship referred in part of his speech which might imply acceptance of a wider notion of "repair" in this context. "Repair", he said, "is one of the concepts (like modifying or adapting) which shares a boundary with 'making' but does not trespass upon its territory." His Lordship also approved the statement attributed to Lord Halsbury, in a case decided not long before the Menck decisions86, that "you may prolong the life of a licensed article but you must not make a new one under the cover of repair". 82 See also United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24 at 458 [67] per Lord Hoffmann. 83 United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24 at 459 [73] per Lord Hoffmann. 84 United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24 at 459 [71]. 85 United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24 at 458-459 86 Sirdar Rubber Co Ltd v Wallington, Weston & Co (1907) 24 RPC 539 at 543. Bell In Schütz (UK) Ltd v Werit (UK) Ltd87, Lord Neuberger appears to have accepted that, whilst the focus should be on the question whether a new article is made, a consideration of whether an alleged infringer is repairing rather than making an article may sometimes be useful. It is reflected in the approach, his Lordship observed, which is taken by German courts to infringement. His Lordship gave as an example the mere replacement of a part of an article, which does not necessarily mean that a "making" is involved. The jurisprudence of courts of the United States has employed the dichotomy of "permissible repair" and "impermissible reconstruction" to resolve questions of infringement by making a new article having the features of the claimed invention. It has consistently been held that for an infringement to be established there must be a true reconstruction so as to in fact make a new article88. The replacement of individual unpatented parts may involve a right to repair where what is done bears on the usefulness of the old combination of the product89. Modifications of this kind tend to be characterised on the spectrum closer to repair than to reconstruction or making90. In Impression Products91, the issue whether the ink cartridges in question had been "made", "remade" or "reconstructed" does not appear to have been raised and was not the subject of discussion by the Supreme Court. But the repurposing of single-use products to enable their re-use had been the subject of earlier decisions in other courts in the United States. The patent in Hewlett-Packard Co v Repeat-O-Type Stencil Manufacturing Corporation Inc92 was directed to an ink jet pen, which is an ink cartridge, that was [2013] RPC 16 at 410-411 [48]-[51]. 88 Aro Manufacturing Co Inc v Convertible Top Replacement Co Inc (1961) 365 US 336 at 346; Hewlett-Packard Co v Repeat-O-Type Stencil Manufacturing Corporation Inc (1997) 123 F 3d 1445 at 1451. 89 Hewlett-Packard Co v Repeat-O-Type Stencil Manufacturing Corporation Inc (1997) 123 F 3d 1445 at 1451-1452. 90 Hewlett-Packard Co v Repeat-O-Type Stencil Manufacturing Corporation Inc (1997) 123 F 3d 1445 at 1452. Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523. (1997) 123 F 3d 1445. Bell designed to be non-refillable. Repeat-O-Type purchased them as new, rather than spent, and modified and sold them as refillable cartridges. Hewlett-Packard argued that the modifications created new cartridges because as modified they had different properties and different performance characteristics compared with those as sold by it93. This argument has something in common with the approach of the Full Court in this case. The Court of Appeals, Federal Circuit, held that the modifications were not impermissible reconstruction. Whilst accepting that they were not a conventional repair, since the parts replaced or modified were not broken or defective, the Court found that the modifications nevertheless did not amount to a reconstruction; they were closer to "repair"94. The Court approved the proposition that the mere replacement of individual unpatented parts is no more than the exercise of the lawful right of an owner to repair their property95. In Jazz Photo Corporation v International Trade Commission96, the Commission had determined that a number of respondents had infringed the patents of Fuji Photo Film Co with respect to single-use cameras. The discarded cameras were purchased and refurbished for re-use. The steps taken included removal of the cardboard cover, cutting open the plastic casing, inserting new film and a container to receive it, replacing the winding wheel, replacing the battery, resetting the counter, resealing the outer case and adding a new cardboard cover. The Court of Appeals, Federal Circuit, held that the purchaser of a patented item had the rights of an owner to preserve the useful life of the original article97. So long as a new article was not in fact made it was a right of repair. The decided cases treated as repair the replacement of unpatented parts that were worn or spent, 93 Hewlett-Packard Co v Repeat-O-Type Stencil Manufacturing Corporation Inc (1997) 123 F 3d 1445 at 1450. 94 Hewlett-Packard Co v Repeat-O-Type Stencil Manufacturing Corporation Inc (1997) 123 F 3d 1445 at 1452. 95 Hewlett-Packard Co v Repeat-O-Type Stencil Manufacturing Corporation Inc (1997) 123 F 3d 1445 at 1451, 1454. (2001) 264 F 3d 1094. 97 Jazz Photo Corporation v International Trade Commission (2001) 264 F 3d 1094 at Bell in order to preserve the utility of the article. Reconstruction required a more extensive rebuilding98. The wide scope given to alterations to a purchased product which improve the usefulness of it is evident from a decision of the Supreme Court of the United States99 which was discussed in Hewlett-Packard100. In that case the purchaser resized or relocated six of the 35 elements of a patented fish-canning machine so that the machine could pack fish into smaller cans. The Supreme Court held that the purchaser had merely adapted the old machine to a related use. Whilst that was more than "repair" in the ordinary sense, it was akin to repair for it "bore on the useful capacity of the old combination" for which the royalty had been paid101. The approach of the courts in these cases recognises the rights of an owner of a chattel to the full use and control of it. The first error made by the Full Court was to restrict the use to which the original Epson cartridges could be put, not by reference to what the patentee had claimed, but by reference to a characteristic of the product. And that led the Full Court into error concerning the question of whether a new article was made, as will shortly be explained. Even according to Menck (Privy Council) a person acquiring a patented product is intended to have all the rights of an owner unless those rights are subject to express restrictions notified to the person, and here there were none. The fact that a product presents as capable of a single use is not a notification of this kind. Moreover, single usage is not a feature of the invention claimed. The expectations of Seiko or the original purchasers as to the limited functionality of the cartridges are not relevant to the question of infringement. In Aro Manufacturing Co Inc v Convertible Top Replacement Co Inc102, it was said that the question whether a new article is "made" cannot depend on what the 98 Jazz Photo Corporation v International Trade Commission (2001) 264 F 3d 1094 at 99 Wilbur-Ellis Co v Kuther (1964) 377 US 422. 100 Hewlett-Packard Co v Repeat-O-Type Stencil Manufacturing Corporation Inc (1997) 123 F 3d 1445 at 1452. 101 Wilbur-Ellis Co v Kuther (1964) 377 US 422 at 424-425. 102 (1961) 365 US 336 at 354 per Black J. Bell patentee's or the purchaser's intentions were at the time of sale. In Schütz103, Lord Neuberger agreed with the view expressed by the German courts104, that how a party views or markets its products is irrelevant to whether those products should be characterised as repaired or made. And in Hewlett-Packard105, an argument that the boundary between repair and reconstruction turns on the intention of the patentee, that the product be used only once, was rejected. The Court held that unless such a term was embodied in an enforceable contract, it was no more than a hope or wish. The error made by the Full Court, as to the scope of the implied licence, led it to adopt an incorrect approach to the question of whether a new product containing the embodiments of the patented invention had been "made". Treating the licence as restricted by the usefulness of the product in the form in which it was sold led the Full Court to characterise the modifications made by Ninestar as the manufacture of new cartridges. The Full Court reasoned, in effect, that because the original Epson cartridges were sold for a single use and were modified to be re-used, they became new products. This impermissibly elides infringement by use and infringement by making. A failure to observe the distinction drawn by the Patents Act 1990 between infringement by use and infringement by making renders the task of discerning the difference between modification of a product (an aspect of use) and the making of a new embodiment of the invention an unguided and impressionistic exercise, which is apt to allow the undue expansion of the patentee's monopoly to the detriment of consumers and competitors. Indeed, as the decision of the Full Court in the present case shows, to fail to appreciate the boundary drawn by the Patents Act 1990 between modification of a product by the purchaser of the product and the making of a new embodiment of the patented invention is to risk the ironic outcome that the patent right becomes a brake on the very kind of innovation that patent rights are meant to encourage. 103 Schütz (UK) Ltd v Werit (UK) Ltd [2013] RPC 16 at 410 [47]. 104 Flügelradzähler (Impeller Flow Meter), Bundesgerichtshof [German Federal Court of Justice], X ZR 48/03, 4 May 2004; Palettenbehälter II, Schütz v Mauser (Pallet Container II), Bundesgerichtshof [German Federal Court of Justice], X ZR 97/11, 17 July 2012. 105 Hewlett-Packard Co v Repeat-O-Type Stencil Manufacturing Corporation Inc (1997) 123 F 3d 1445 at 1453. Bell In Solar Thomson Engineering Co Ltd v Barton106 it was said that the "cardinal question" whether what has been done by the alleged infringer can fairly be termed repair has regard "to the nature of the patented article". Such an approach is not consistent with the Patents Act 1990. The question of infringement under the Patents Act 1990 is not addressed to the nature of the article but rather to the invention described by the integers of the claim107. Where what has been done does not involve the replication of the combination of integers that describe the invention it cannot be said that what has been done is the making of it. When a small hole was made in the printing material container of the original Epson cartridge to enable it to be refilled with ink, the cartridge did not cease to exist, and it was not made anew when the two holes were sealed. The product did not cease to exist when the memory chip was substituted. An argument that an article has been "unmade" and then "remade" might have some weight in a circumstance such as United Wire108. However, it is somewhat artificial in cases where parts are changed so as to permit continuation of use. In Wilson v Simpson109, referred to with approval in Aro Manufacturing110, the Court refused to accept that a tangible machine could be said to have ceased to have a material existence because a part that had become inoperative was repaired or replaced. The reprogramming of the memory chip in the original Epson cartridges and the removal of the interface patterns did not constitute the making of a new embodiment of the patented product. It may be accepted that the substitution of an "integrated circuit assembly" was a substantive modification which included the layout of the electrical terminals, but it did not constitute a making. The particular layout of the electrical terminals as defined by integers [5] to [11] was not affected by this action. Moreover, as Calidad submits, it was an action undertaken to enable 106 [1977] RPC 537 at 555 per Buckley LJ. 107 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 14 [19], [21]; D'Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at 339- 340 [6], 343-344 [13]-[14]; Catnic Components Ltd v Hill and Smith Ltd [1981] FSR 60 at 65; Schütz (UK) Ltd v Werit (UK) Ltd [2013] RPC 16 at 407 [28]. 108 United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24. 109 (1850) 50 US 109 at 123. 110 Aro Manufacturing Co Inc v Convertible Top Replacement Co Inc (1961) 365 US 336 at 352 per Black J. Bell the data in the memory chip to be replaced and the cartridge to be re-used, not to change the layout of the terminals in any way. When all of Ninestar's modifications to each of the categories of cartridges were completed what remained were the original Epson cartridges with some modifications which enabled their re-use. The modifications did not involve the replication of parts and features of the invention claimed. There was no true manufacture or construction of a cartridge which embodied the features of the patent claim. The modifications to the original Epson cartridges were consistent with the exercise of the rights of an owner to alter an article to improve its usefulness and enable its re-use. Both English111 and United States authority accept the prolonging of the life of a product to be within an owner's rights of use of a patented product. Regardless of whether it is said to be something done which is closer to "repair" than "making", it clearly does not involve a manufacture or making. And this is so regardless of whether the exhaustion doctrine or the implied licence doctrine is applied. The preferable doctrine? The fundamental difference The idea of treating a patentee as granting an implied licence, the approach adopted in Menck (Privy Council), is largely attributed112 to the decision in Betts v Willmott113. There Lord Hatherley LC observed that when a person purchases an article "he expects to have the control of it"114. The problem was how it might be said that a purchaser could use or dispose of a patented article without the need for 111 United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24 at 458-459 [70] per Lord Hoffmann, quoting Sirdar Rubber Co Ltd v Wallington, Weston & Co (1907) 24 RPC 539 at 543. 112 See eg United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24 at 458 [68]; see also Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV (1977) 138 CLR 534 at 540 per Gibbs J. 113 (1871) LR 6 Ch App 239. 114 Betts v Willmott (1871) LR 6 Ch App 239 at 245. Bell the patentee's consent. The answer, he said, was that the purchaser could be said to do so by a licence implied by the law. The unstated premise, that a patentee's monopoly rights respecting the use of a patented article continue after its sale, was to emerge more clearly in Incandescent Gas Light Co Ltd v Cantelo115, where it was held that a patentee could condition or restrict the licence conferred on a purchaser and the conditions or restrictions could be enforced as a matter of "common sense" and not contract law. The decision in Menck (Privy Council) appears to have amalgamated these ideas. Lord Shaw spoke of giving effect to the line of authority to which he referred116, which consisted of largely single-judge decisions. It does not appear that any consideration was given to an alternative solution, that applied by the Supreme Court of the United States, by which the scope of patent rights with respect to a product was limited by the fact of sale. And unlike the approach taken by Griffith CJ, no process of statutory construction was undertaken by the Privy Council. Rather it was assumed that the negative nature of the monopoly right carried with it the power to impose conditions on subsequent owners of a patented product117. In United Wire118, Lord Hoffmann acknowledged that the exhaustion doctrine is an alternative explanation for why a patentee cannot be heard to complain about a purchaser's use of a patented product and he observed that it is adopted in European patent systems. The difference between the two theories, his Lordship suggested, is that an implied licence "may be excluded by express contrary agreement or made subject to conditions while the exhaustion doctrine leaves no patent rights to be enforced". A qualification is necessary with respect to this last-mentioned observation. It is that the exhaustion doctrine leaves no patent rights to be enforced with respect to the particular product sold. Under the exhaustion doctrine a patentee's rights to make and to sell another product embodying the claimed invention remained 115 (1895) 12 RPC 262 at 264. 116 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 28; [1911] AC 336 at 353. 117 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 22; [1911] AC 336 at 347; see also Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 513 [83]. 118 United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 24 at 458 [69]. Bell unaffected. So too does the patentee continue to have the right to use a product so made and to prevent others from doing so, at least until the product is sold. The exhaustion doctrine does not accept the premise that a patentee's rights of use with respect to the particular product survive its sale. That is the fundamental difference between the two doctrines. According to the exhaustion doctrine the purchaser of a patented product buys "'the use of the whole' of the combination"119, as would result from an ordinary sale. The exhaustion doctrine accepts that a patentee has special rights deriving from the patent which are given statutory effect, but holds that they are exhausted when the reward which is the object of those special rights is achieved by the patentee. The sale takes the product outside the scope of the patentee's monopoly rights. Operation and effect The exhaustion doctrine has the virtues of logic, simplicity and coherence with legal principle. It is comprehensible and consistent with the fundamental principle of the common law respecting chattels and an owner's rights respecting their use. At the same time, it does not prevent a patentee from imposing restrictions and conditions as to the use of a patented product after its sale but simply requires that they be obtained by negotiation in the usual way and enforced according to the law of contract or in equity. The implied licence doctrine is complicated in its operation and effects. It can achieve only a partial alignment with the fundamental principle of the law and then only when it is clear that no restrictions have been imposed at the point of first sale. It may give rise to difficult questions concerning whether restrictions were imposed and whether an owner many times removed from the first sale had notice of them. The prospect that restrictions might be imposed on the further use or sale of a patented product after its first sale may be more theoretical than real now. Even if such restrictions were acceptable to consumers, they would face the hurdle of modern statutes concerned with anti-competitive conduct in the market. It may well be that the practice of patentees upon which the doctrine is founded has less relevance today. It should not be overlooked that the licence upon which the doctrine depends is a fiction. It is not a licence in fact granted by a patentee to a purchaser 119 Aro Manufacturing Co Inc v Convertible Top Replacement Co Inc (1961) 365 US 336 at 342-343, quoting Wilson v Simpson (1850) 50 US 109 at 123. Bell or later owner of a patented product120. It is not implied to give business efficacy to the sale agreement. It is imposed by the courts in an endeavour to resolve a perceived tension in the law. In Pyrenees Shire Council v Day 121, Gummow J remarked that a legal fiction, such as trespassers being treated as having been upon a defendant's land under an imputed licence, may "operate to reconcile a specific legal outcome or result with a premise or postulate involving unexpressed considerations of social and economic policy". His Honour considered that the modern preference for substance over form did not favour the preservation of legal fictions. In that regard it may also be said that greater emphasis would now be given to the maintenance of fundamental legal principle. Any adjustment of rights arising according to fundamental legal principle with statutory rights would not be undertaken without first determining the scope of the statutory rights, by a process of construction. The implied licence doctrine is likely to cause confusion in part because it combines a fictional licence with the possibility of real restrictions. Whilst it seeks to provide the purchaser of patented goods with the full rights of ownership, it leaves open the possibility that there may be other restrictions which have been notified by the patentee. It engenders uncertainty. That confusion is evident in the approach that the Full Court felt compelled to take in this case. It sought in the first instance to determine the scope of the licence by reference to the characteristic of the cartridges being single-use. The confusion was compounded when the Full Court then treated the limited permission to use the product as pivotal to the question whether a new product had been made. The result reached by the Full Court with respect to infringement is likely to have been very different had the Court been in a position to apply the exhaustion doctrine. The starting point would have been that Seiko had no rights with respect to the cartridges after they were first sold. Attention would then have been directed to the rights of an owner with respect to a chattel and whether the modifications made to the cartridges were consistent with those ordinary rights – to adapt a chattel to improve its usefulness and extend its life. A conclusion that the 120 cf Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV (1977) 138 CLR 534 at 542 per Gibbs J. 121 (1998) 192 CLR 330 at 387 [163]. Bell modifications did not thereby amount to a manufacture would more likely have been reached. The implied licence doctrine is not consistent with the certainty demanded by trade and commerce or with consumer expectations. The need for certainty requires the maintenance of the fundamental principle of the law which recognises that an owner has full rights as to the use and disposal of a chattel. It is not met by treating a restriction on the use or sale of a product as running with the product, which, contrary to the view of Lord Shaw122, is the effect the implied licence doctrine has where there is notice of that restriction. The example given by Roberts CJ in Impression Products123, of the position which would prevail if the exhaustion doctrine were not applied, is apposite. His Honour pointed to the circumstance of businesses restoring and selling second-hand cars and asked what would be the position if each of the companies that make the thousands of parts which go into a motor vehicle could keep their patent rights after the first sale. The United States cases and those of the Court of Justice of the European Union recognise that the maintenance of patent rights with respect to a product after sale is not conducive to the free flow of goods in a market. That understanding informs their acceptance of the exhaustion doctrine, as does their view that that doctrine correctly accepts the statutory object of the right of exploitation by sale as having been met upon first sale. The implied licence doctrine is not founded upon considerations of this kind. Conclusion – the exhaustion doctrine The matters which inform the adoption of a policy of the law as to the scope of the patent rights to sell and use a product, as they affect a patentee and owner of a chattel, point strongly to an acceptance of the exhaustion doctrine and away from the implied licence doctrine. Indeed there seems little to be said in favour of the latter unless consistency with the statute which grants the patent rights requires a different outcome. This, it will be recalled, was not the conclusion arrived at by Griffith CJ in Menck (High Court) by a process of orthodox construction. 122 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 23, 28; [1911] AC 336 at 348, 353. 123 Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523 at 1532. Bell The exhaustion doctrine and the Patents Act 1990 The nature of the rights It is well understood, and was in both of the Menck decisions124, that the monopoly rights given by statute do not confer a "positive authority" on a patentee125. The rights granted are better understood as negative in nature, a right to exclude others from exploiting the patent126. This is what the exclusive or monopoly rights granted by statute are and no more. It was observed in Steers v Rogers127 that a patent does not confer on a patentee the right to use the invention or the right to manufacture according to it. Those are rights the patentee already has even absent a patent. The patent confers the right to exclude others from manufacturing in a particular way and using a particular invention. According to the exhaustion doctrine the right to exclude an owner from the full use of a product comes to an end when that product is sold. Section 13(1) of the Patents Act 1990 is expressed to give the patentee "the exclusive rights" to "exploit the invention" (and to authorise another to do so) during the term of the patent. The words "during the term of the patent" refer to the period during which the rights may be exercised and do not bear upon the question of whether each of the monopoly rights continues to exist for the whole term regardless of legal transactions entered into by the patentee. That question is largely resolved by the nature of the right and what it entails. It is generally accepted that a patentee's rights to "make" a product according to the patented invention and to exclude others from doing so are unaffected by the sale of a particular manufactured product. A patentee may proceed to make other products embodying the invention and prevent others from doing so. Likewise a patentee may exclude others from the "use" of a manufactured 124 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 508 per Griffith CJ; National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 22; [1911] AC 336 at 347. 125 Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 514 126 Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 513 [83], quoting National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 22; [1911] AC 336 at 347. 127 [1893] AC 232 at 235. Bell product where that use would be inconsistent with the patentee's exclusive right to use it. That would be for so long as it was retained by the patentee for use, but it could not be said to be kept for use after it was sold. It is not without significance that the definition of "exploit"128 concludes with the words "or keep [the product] for the purpose of doing any of those things". It would be necessary to keep the product in order to "use" it (and perhaps to "hire" it out). It would be necessary to keep a patented product until the point of sale, when it is disposed of. After a sale of the product has occurred a patentee could hardly be said to "keep" the product, let alone to keep it in order to use it. Griffith CJ in Menck (High Court) considered that to "vend" an article conveyed a product being sold into the market and that the rights of ownership of it as a chattel pass from the patentee129. That is surely correct. The terms of the Patents Act 1990 convey an even stronger sense of finality than does the ordinary meaning of the verb "sell". The words "or otherwise dispose of" qualify "sell". It would not be sensible to read the words "sell or otherwise dispose of" as conveying that the patentee who does so is intended to have a continuing and exclusive right to "use" or "sell or otherwise dispose of" the article. Nothing in the definition of "exploit" suggests that the sale of the product there referred to is different from a sale as ordinarily understood or that it is intended to have different consequences so far as concerns a purchaser. It may be accepted that a patentee's rights respecting sale and use are properly to be understood as excluding others from doing the same with respect to an embodiment of the invention so as to protect the patentee's rights of exploitation. But an exploitation by selling and using is completed on that first sale. An approach to the construction of s 13(1) which accepts that an exploitation by selling concludes with the first sale is consistent with its objects. It is therefore to be preferred130. The objective discernment of statutory purpose is integral to contextual construction131. 128 Patents Act 1990, Sch 1 (definition of "exploit"). 129 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 512. 130 Acts Interpretation Act 1901 (Cth), s 15AA. 131 Thiess v Collector of Customs (2014) 250 CLR 664 at 672 [23]. Bell It may be taken from the object stated in s 2A that one component of that object is to ensure the efficiency of the market economy. This topic has been dealt with earlier in these reasons132. Another is to encourage innovation. This latter objective is achieved by ensuring that a patentee is rewarded for the often considerable efforts and expense which have contributed to a useful invention. That reward is obtained on the sale of a product on terms for which the patentee has negotiated. There is nothing in the Patents Act 1990 to suggest that a patentee is to be rewarded more than once. When the provisions of the Patents Act 1990 are read, it is not at all apparent that Parliament has adopted, or otherwise acted in any way on, the assumption that the implied licence doctrine is the explanation for why a purchaser of a patented product may use or sell the product as the purchaser wishes without any further consent from the patentee. Sections 135 and 144 Seiko argued that s 135, which initially appeared as an amendment to s 87 of the Patents Act 1903 but has since been repealed133, may be taken to have assumed the operation of the implied licence doctrine. Section 135(1)(b) provided that one condition for the grant of a compulsory licence might be satisfied if "a trade or industry in Australia is unfairly prejudiced by the conditions attached by the patentee … to the purchase, hire or use of the patented product". The fact that this provision was introduced in 1909, before the decision in Menck (Privy Council), may be put to one side. To take proper account of that circumstance would require consideration of the extent to which the implied licence doctrine was settled law prior to that decision or whether, as Lord Shaw implied134, the authorities did not go quite that far. The submission is met more simply. Section 135(1)(b), in its reference to conditions which might be attached by a patentee, could only be said to reflect the implied licence doctrine if it was construed to apply to cases other than express conditions agreed to by a purchaser, hirer or user of the product. Seiko's argument therefore begs the question. 132 See [82] above. 133 Patents Act 1909 (Cth), s 14; Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act, Sch 4 item 13. 134 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 22; [1911] AC 336 at 346-347. Bell Seiko also argued that the implied licence doctrine may be said to be recognised in s 144 of the Patents Act 1990. Section 144(1) provides, in general terms, that a condition in a contract relating to the sale of a patented invention is void if its effect includes the restriction of the buyer from using a product supplied or owned by a person other than the seller. Section 144(4) provides that it is a defence to proceedings for infringement that the patented invention was the subject of a contract containing such a provision. Sub-section (5) provides that where a new contract is offered by the patentee, without such conditions, sub-s (4) ceases to apply but the patentee is not entitled to damages or an account of profits for an infringement committed before the offer of a new contract. Seiko argued that the defence contained in s 144(4) is consistent only with the implied licence doctrine since it would be superfluous if the Patents Act 1990 assumed that a patentee's rights were exhausted upon first sale. Likewise s 144(5) was said to assume the entitlement of a patentee to damages or an account of profits for infringement of a patent where there has been a breach of a restrictive condition in a contract of sale. Section 144 neither gives effect to nor recognises the implied licence doctrine. The original provision135, like s 135, was introduced into the Patents Act 1903 in 1909136. In any event, the evident purpose of s 144 is to prohibit oppressive tying contracts137, then prevalent in certain manufacturing industries in the United States. To that end, s 144 does not restrict a purchaser's use of a patented product; rather it prohibits conditions in a contract of sale that have the effect of extending a patentee's monopoly beyond the patent. Extrinsic materials Seiko also referred to materials extrinsic to the Act which, it submitted, support the implied licence doctrine. In the report of the Industrial Property 135 Patents Act 1903 (Cth), s 87B. 136 Patents Act 1909, s 15. 137 Australia, Senate, Parliamentary Debates (Hansard), 11 August 1909 at 2261-2263; Australia, Senate, Parliamentary Debates (Hansard), 26 August 1909 at 2610-2611. Bell Advisory Committee on "Patents, Innovation and Competition in Australia" ("the IPAC report") it was said138: "This principle [of exhaustion of rights] is already part of the existing Australian law, subject to a qualification that importation of the patented article put into circulation outside Australia by the Australian patentee will be an infringement if, at the time of first putting the article into circulation, that patentee attached an express stipulation against bringing it into Australia." (emphasis added) It may be observed that the report was concerned largely with economic considerations. More to the point is the statement in the Explanatory Memorandum to the Patents Bill 1990, which relevantly provided139: "It is intended that the question whether such a resale or importation constitutes an infringement in a particular case will continue to be determined as it is now, having regard to any actual or implied licences in the first sale and their effect in Australia, and to what is often known as the doctrine of 'exhaustion of rights' so far as it applies under Australian law." (emphasis added) Seiko contends that the words emphasised are a reference to the IPAC report and that the reference in the Explanatory Memorandum to infringement being determined having regard to any actual or implied licences in the first sale is a clear indication of an expectation that the position established by Menck (Privy Council) was intended to continue to apply under the Patents Act 1990. The extrinsic materials do not suggest that that Act was premised on either doctrine. Rather they, and more clearly the Explanatory Memorandum, leave the adoption of either doctrine open, presumably to the courts. 138 Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia (1984) at 34. 139 Australia, Senate, Patents Bill 1990, Explanatory Memorandum at 5 [24]. Bell Section 13(2) Seiko also submitted that the exhaustion doctrine, affirmed in Impression Products140 to be that "the patentee does not retain patent rights in [an item sold by the patentee]", is inconsistent with s 13(2) of the Patents Act 1990. Section 13(2) provides that "[t]he exclusive rights", that is, those referred to in s 13(1), are "personal property and are capable of assignment and of devolution by law". The relevant provision in the United States141 is not materially different. It is that "patents shall have the attributes of personal property" and "shall be assignable in law by an instrument in writing". No authority was cited by Seiko for its submission. The answer to it, stated shortly, is that s 13(2) and the exhaustion doctrine are concerned with different matters. Section 13(2) is addressed to the character of the exclusive rights. It attributes to them the status of a personal right of property and confirms that as such they are capable of being assigned to another person or may devolve by operation of law. The exhaustion doctrine is concerned with the scope of and limits to the exclusive patent rights in s 13(1). The fact that those rights are personal property is irrelevant to that question. Seiko's submission that a right of personal property cannot cease to exist and that s 13(2) does not contemplate such a possibility misapprehends the transaction to which the exhaustion doctrine applies and its effect on patent rights. The doctrine is not directed to a transaction such as that to which s 13(2) refers, involving the transmission to another of the patent rights themselves, as the personal property of the patentee; it is directed to the sale of a particular product. The doctrine does not regard the exclusive rights referred to in s 13(1) as extinguished; it merely holds that when they are exploited by the making and sale of a particular product the patentee's rights of use and sale with respect to that product are at an end. The patentee retains the exclusive rights of exploitation with respect to the patent by making, using or selling any new embodiment of the invention there specified. Seiko also pointed to the legislative history of s 13(2) as a basis for distinguishing Menck (High Court). The first provision, in terms similar to s 13(2), was added to the Patents Act 1903 in December 1909142, which is to say after 140 Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523 at 1532- 141 35 USC § 261. 142 Patents Act 1903, s 110A(1), inserted by Patents Act 1909, s 18. Bell Menck (High Court) and before Menck (Privy Council). It is to be inferred that the point Seiko seeks to make is that had it been appreciated that the rights were not only of the nature of exclusive rights under s 62 of the Patents Act 1903 but were also personal rights of property, a different approach may have been taken by this Court. It has already been explained that a provision of this kind is irrelevant to the question whether the exhaustion doctrine operates consistently with statute. On the other hand it is noteworthy that no mention was made in Menck (Privy Council) of the provision as relevant to the nature and extent of the exclusive patent rights. Court approval of the implied licence doctrine? The inconvenience which might result from displacement of a long-standing decision is an important factor to be considered when contemplating the adoption of a different approach. Seiko referred to decisions of this Court which appear to accept the implied licence doctrine and to its application in patent cases in lower courts. In Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV143 Gibbs J144 and Stephen J145 discussed Menck (Privy Council) at some length without apparent disapproval. This is hardly surprising. The question whether that doctrine was correct, and the alternative exhaustion doctrine, were not raised for consideration in that case. At issue there was whether a bookseller held an implied licence from the copyright owner to import and sell books in Australia. Their Honours were largely concerned with whether the implied licence doctrine expounded in Menck (Privy Council) translated to the law. In Grain Pool of Western Australia v The sphere of copyright Commonwealth146 reference was made to Menck (Privy Council) in connection with the negative nature of monopoly patent rights, a matter which is not in dispute. It is notable though that in Time-Life Gibbs J, referring to Menck (Privy Council), said that it seemed "a misuse of words to say that a person who sells an article 143 (1977) 138 CLR 534. 144 Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV (1977) 138 CLR 534 at 541-542. 145 Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV (1977) 138 CLR 534 at 550-552. 146 (2000) 202 CLR 479 at 513-514 [83]-[85]. Bell consents to its being used in any way that the buyer wishes"147. His Honour's observation highlights the artificiality of the implied licence doctrine. It may also be accepted that the implied licence doctrine has been applied in decisions of the Federal Court. Seiko was able to point only to a few such cases where this has occurred148. It could hardly be suggested that great inconvenience is likely to follow an abandonment of that doctrine. In any event neither principle nor authority supports the proposition that this Court should persist with an unworkable doctrine as to patent rights which cannot be said to be required by the statute which grants them. Seiko has not identified any decision of an Australian court in which the ratio decidendi required the application of the implied licence doctrine to the exclusion of the exhaustion doctrine149. Continued adherence to the implied licence doctrine is an unjustifiable gloss on the statutory language that confers monopoly rights on a patentee. The decisions of the courts below show the danger of distraction from the language of the statute that is encouraged by that doctrine. In this case the implied licence doctrine was utilised as a juridical peg on which to hang not the patentee's permission to use the patented product, but rather unexpressed restrictions on the purchaser's rights in that regard to which the purchaser had not consented. Orders The following orders should be made: Appeal allowed with costs. Set aside the orders made by the Full Court of the Federal Court of Australia on 5 July 2019 and the declaration and orders made by the Full Court of the Federal Court of Australia on 29 October 2019 and, in lieu thereof, order that: 147 Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV (1977) 138 CLR 534 at 541. 148 See Austshade Pty Ltd v Boss Shade Pty Ltd (2016) 118 IPR 93; Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd (2018) 356 ALR 149 cf Austshade Pty Ltd v Boss Shade Pty Ltd (2016) 118 IPR 93 at 130 [121]. Bell the appeal to that Court be allowed with costs and the cross-appeal to that Court be dismissed with costs; declaration 1 and orders 2 to 8, 10 and 11 of the orders made by the primary judge on 16 February 2018 be set aside and, in lieu thereof, it be ordered that: the the applicants' originating application, applicants' claims of patent infringement, breach of cl 2(a)(ii) of the settlement deed, breach of statutory duties under ss 145 and 148 of the Trade Marks Act 1995 (Cth) and contravention of ss 18 and 29 of Sch 2 to the Competition and Consumer Act 2010 (Cth), otherwise be dismissed; and including subject to order 9 of the orders made by the primary judge on 16 February 2018, the applicants pay the respondents' costs of the proceeding; and the matter be remitted to the primary judge for determination of the respondents' claim for pecuniary relief for breach of cl 2(a)(i) of the settlement deed. 112 I agree entirely with the judgment and reasons for judgment of Kiefel CJ, Bell and Keane JJ. I considered whether I should simply concur. Had I simply concurred, conventional courtesies would have resulted in an invitation to join, which I would have gratefully accepted. A joint judgment signifies adherence to the substance of what is written. A joint judgment does not necessarily imply joint authorship. I have chosen to write additionally, as distinct from separately. In deference to the closely reasoned dissent of Nettle, Gordon and Edelman JJ, I feel the need to explain in my own words why I cannot accept the reasons their Honours advance for considering that the implied licence doctrine should not be abandoned in favour of the exhaustion of rights doctrine. I hope to express myself without undue repetition of points made in the joint majority judgment of Kiefel CJ, Bell and Keane JJ. I adopt the structure of the joint dissenting judgment and adopt the abbreviations of the joint majority judgment. I start with the history. Uncertainty and controversy about the nature of the right granted by a patent for an invention became less pronounced in the second half of the nineteenth century150. There remained a residue of imprecision attributable to the ongoing use for the making of the grant of "Letters Patent" − an open letter "addressed by the king to all his subjects at large"151 − couched in pre-modern terminology152 which would have carried more freight in the Tudor era in which it originated153. By the turn of the twentieth century, that terminology was an historical relic. The nature of the right granted by a patent had been determined judicially. In the United Kingdom, where Letters Patent for an invention were expressed to grant the "full power, sole privilege, and authority" to "make, use, exercise, and vend the ... invention"154, the House of Lords held in 1893 that a patent did not confer a positive right to use the invention but rather a negative right 150 See Sherman and Bently, The Making of Modern Intellectual Property Law (1999) 151 Blackstone, Commentaries on the Laws of England (1766), bk 2, ch 21 at 346. 152 See quoted in Terrell on The Law of Patents, 19th ed (2020) at [1-03]-[1-04]. 153 See Gordon, Monopolies by Patents (1897) at 121-122; Hulme, "The History of the Patent System under the Prerogative and at Common Law: A Sequel" (1900) 16 Law Quarterly Review 44; Fletcher Moulton, The Present Law and Practice Relating to Letters Patent for Inventions (1913) at 4. 154 Patents, Designs, and Trade Marks Act 1883 (UK), The First Schedule, Form D. "to prevent the rest of the world from using it"155. Thus, one of several holders of a patent was not required to account to the other holders of the patent for profits made from using the invention. In the United States, where the effect of a patent was expressed by statute as being to grant "the exclusive right to make, use, and vend the invention"156, the Supreme Court held to like effect in 1897 that a patent conveyed to a patentee "nothing that he did not have theretofore" other than the right "to restrain others from manufacturing and using that which he invented"157. Thus, the Government of the United States parted with nothing in granting a patent and had no proprietary interest in setting aside the patent as wrongfully issued. In so holding, the Supreme Court gave effect to the understanding it had articulated in 1853, from which it had never departed, that "[t]he franchise which the patent grants, consists altogether in the right to exclude every one from making, using, or vending the thing patented, without the permission of the patentee. This is all that he obtains by the patent."158 the timing of those authoritative The significance of judicial pronouncements in the United Kingdom and in the United States is that they occurred before the Constitution came to confer power on the Commonwealth Parliament to make laws with respect to "patents of inventions" in 1901159. Two years later, the Commonwealth Parliament enacted that "[t]he effect of a patent shall be to grant to the patentee full power, sole privilege and authority, by himself, his agents, and licensees during the term of the patent to make, use, exercise, and vend the invention"160. The Patents Act 1903 provided for the grant of a patent to be by Letters Patent issued by the Crown in right of the Commonwealth161. But the issue of those Letters Patent was to occur only under the authority of that Act162, and the nature 155 Steers v Rogers [1893] AC 232 at 235. 156 Revised Statutes of the United States, 2nd ed (1878), § 4884. 157 United States v American Bell Telephone Company (1897) 167 US 224 at 238-239. 158 Bloomer v McQuewan (1853) 55 US 539 at 549. 159 Section 51(xviii) of the Constitution. 160 Section 62 of the Patents Act 1903 (Cth). 161 The First Schedule to the Patents Act 1903 (Cth). 162 See In re Usines de Melle's Patent (1954) 91 CLR 42 at 45. and extent of the right granted by the Letters Patent was to be as defined by that Act. Consistently with the position that had been reached in the United Kingdom and in the United States, the only right granted to the patentee, and the only right that could have been granted pursuant to a law of the Commonwealth Parliament with respect to patents of inventions163, was the right to prevent others from using, exercising and selling the patented invention. Uncontroversial in Menck (High Court)164 and in Menck (Privy Council)165 was the characterisation of the right of a patentee as "a sole right", meaning, "put negatively", a "power to exclude all others from the right of production [etc] of the patented article". In British Mutoscope and Biograph Co Ltd v Homer166, to which favourable reference was made both in Menck (High Court)167 and in Menck (Privy Council)168, the right of a patentee had been appropriately described as a "chose in action" as distinct from a "chose in possession". The right was "a right to bring an action to restrain infringement" and to obtain other court-ordered remedies. No less, no more. The controversy in Menck (High Court) and in Menck (Privy Council) was not about the nature of the right of a patentee as a right limited to preventing others from using and selling patented goods. The controversy was about the extent of the right: did the right of the patentee to prevent others from using and selling patented goods extend to preventing others from using and selling patented goods that the patentee had sold? The majority in Menck (High Court) answered that question, no. The majority gave that answer adopting the approach which had been taken in the 163 Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 513- 164 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 508, 535. See earlier Potter v Broken Hill Proprietary Co Ltd (1906) 3 CLR 479 at 493-494, 165 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 22; [1911] AC 336 at 347. 166 [1901] 1 Ch 671 at 675-676. 167 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 515. 168 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 26-27; [1911] AC 336 at 351-352. United States since at least 1853169 and which continues to be taken now170. Patented goods, once sold, "passed out of the limit of the monopoly"171. In dissent in Menck (High Court), Isaacs J answered the same question, yes. The common law rights that a purchaser of patented goods acquired as owner of those goods coexisted with, and were subject to, the continuing exclusionary right of the patentee. The consequence was that a purchaser of patented goods had no ability to use the patented goods at all, and no ability to resell the patented goods to anyone, other than if and to the extent that the purchaser was permitted to do so as a licensee of the patentee. This exclusionary right of the patentee being unqualified, the "ambit of the licence ... is within the absolute discretion of the patentee"172. "The right of the licensee is coextensive with the permission granted − no greater and no less."173 If Isaacs J was correct in considering that patented goods, once sold, remained within the scope of the exclusionary right granted to the patentee, then his exposition of the consequences for use and resale of the patented goods could not be faulted. The consequences followed as a matter of logic. In Menck (Privy Council), Lord Shaw recognised the potential for the consequences spelt out by Isaacs J to create "a radical change in the law of personal property"174. In the absence of some added mechanism of constraint, the right of the patentee to prevent others from using and selling patented goods would run roughshod over the ancient common law principle against imposition of restraints on the alienation of goods. That principle was assumed as the foundation for free trade in goods. Unthinkable to him was that the exclusionary right granted by a 169 Bloomer v McQuewan (1853) 55 US 539 at 549-550. See also Chaffee v Boston Belting Co (1859) 63 US 217 at 223; Bloomer v Millinger (1864) 68 US 340 at 351. 170 Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523. 171 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 511. 172 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 538. 173 National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 539. 174 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 23; [1911] AC 336 at 348. patent would allow the patentee to impose conditions on use and resale which would "run with the goods"175. Yet Lord Shaw thought it possible to "harmonize" the right of a patentee to prevent use and resale of patented goods with the common law rights of a subsequent owner of patented goods. The mechanism of harmonisation which he then devised involved the notion of an unlimited licence to use and resell being implied by law upon the sale of patented goods in combination with an acknowledgement of capacity on the part of the patentee to impose an express limitation on the terms of that licence by notice given to the purchaser at the time of sale but not afterwards. Entry into the contract of sale would imply consent of the patentee to the unrestricted use and resale of patented goods subject only to such "restrictive conditions" as might be "clearly brought home" to the purchaser at the time of purchase176. There we have the first, and only, full articulation of the implied licence doctrine, which his Lordship sourced in English case law dating back to 1871177. If the starting premise is that the right of a patentee to prevent others from using and selling patented goods extends to preventing use and resale of patented goods that have been sold by the patentee, then the Menck (Privy Council) harmonisation of that ongoing right with the rights of a subsequent owner of the goods works well enough for so long as the subsequent owner remains the purchaser of the patented goods from the patentee. The implied grant of an unrestricted licence to use and resell absent restrictive conditions notified at the time of sale is a convenient legal fiction. Restrictive conditions notified at the time of sale bind not by force of the contract of sale but as a condition of the grant of the licence with the consequence that "if the conditions are not complied with, there is no grant at all"178. The capacity of the patentee to introduce restrictions on use and resale by notice at the time of sale nevertheless meshes comfortably with principles of contract law. Discordance sets in where the subsequent owner of patented goods is a sub-purchaser. The discordance is amplified where patented goods have been 175 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 28; [1911] AC 336 at 353. 176 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 24, 28; [1911] AC 336 at 349, 353. 177 National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15 at 24-28; [1911] AC 336 at 349-353. 178 Dunlop Rubber Co Ltd v Longlife Battery Depot [1958] RPC 473 at 476. abandoned and the owner is a scavenger or, as here, a recycler. For such a downstream owner, the notion of a licence to use and resell being implied at the time of the contract of sale does not work at all. Either there is no contract of sale or, if there is a contract of sale, the patentee is not privy to it. Equity must come to the rescue. But whom does equity rescue? How? And why? Whether there is any recognisable basis on which equity could assist a patentee to enjoin a downstream owner who acquired patented goods with notice of a restrictive condition granted by the patentee to a predecessor in title from acting inconsistently with that condition is by no means apparent179. Whether equity would assist a patentee to enjoin such a downstream owner even if it could is at the very least doubtful given that the effect of the assistance would run counter to the common law principle against the imposition of a restraint on the alienation of goods. For reasons I am about to explain, however, those questions do not really arise. If the right of the patentee to prevent others from using and selling patented goods truly extends to preventing use and resale of patented goods sold by the patentee, then the patentee does not need the assistance of equity to exercise that right against any downstream owner. Rather, it is the downstream owner who must come cap in hand to equity to try to find some recognisable basis for restraining as unconscientious the exercise of the right by the patentee. The question then becomes: by reference to what equitable doctrine does absence on the part of the downstream owner of knowledge or notice of some restriction on use or resale imposed by the patentee result in exercise of the right by the patentee becoming unconscientious? Presumably, it is some form of estoppel. Perhaps it is an estoppel against the assertion of the right. Perhaps it is an estoppel against denial of an implied licence. How, consistently with equitable principles180, are the elements of some such estoppel established? And how in such a context does equity 179 See Howie v New South Wales Lawn Tennis Ground Ltd (1956) 95 CLR 132 at 156- 157, discussing Lord Strathcona Steamship Co Ltd v Dominion Coal Co Ltd [1926] AC 108 (referring to De Mattos v Gibson (1859) 4 De G & J 276 [45 ER 108]). See generally Heydon, Leeming and Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, 5th ed (2015) at [21-235]. 180 See Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 675-676; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 449-450. accommodate the notion of caveat emptor, said to be "inherent ... in common law conceptions of economic freedom"181? Menck (Privy Council) did not explore any of those difficulties inherent in applying the implied licence doctrine to downstream owners. The difficulties had barely begun to be grappled with in one or two first instance English decisions which had concerned downstream owners before182 Menck (Privy Council). They have not since been grappled with at the level of principle in the few reported English cases that have considered downstream owners after183 Menck (Privy Council). The dearth of further analysis in the English case law can be explained in part on the basis that the articulation of the doctrine in Menck (Privy Council) was seen to remove the need184. Another part of the explanation may be that, for most of this century, the scope for application of the implied licence doctrine in England has been diminished by the overlay of principles of European law restricting patentees to pursuing infringement proceedings consistently with the exhaustion of rights doctrine185. The point to be made here and now is that there is simply no settled understanding of the implied licence doctrine in its application to downstream owners. Their position is a riddle, if not a muddle. It is certainly a mess. The exhaustion of rights doctrine cuts through that mess. It does so as a matter of statutory construction, on the clear-eyed understanding that "the purpose of the patent law is fulfilled with respect to any particular article when the patentee has received his reward for the use of his invention by the sale of the article, and that once that purpose is realized the patent law affords no basis for restraining the use and enjoyment of the thing sold"186. Applied to the Patents Act 1990, it involves nothing more than construing the references to "hire", "sell", "otherwise dispose of", "use" and "import" in the definition of "exploit" in relation to an invention as having no application to a product in relation to which the patentee 181 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 at 75 [88]. 182 See Badische Anilin und Soda Fabrik v Isler [1906] 1 Ch 605 at 611. 183 See HTC Corporation v Nokia Corporation [2014] RPC 19 at 585 [165]. 184 See Gillette Industries Ltd v Bernstein [1942] 1 Ch 45 at 47. 185 Terrell on The Law of Patents, 19th ed (2020) at [14-294]-[14-301]; Johnson, Roughton and Cook, The Modern Law of Patents, 4th ed (2018) at [7.186]-[7.191]. 186 United States v Univis Lens Co Inc (1942) 316 US 241 at 251. See Nard, The Law of Patents, 5th ed (2020) at 701-703. has already exploited the invention by exercising the patentee's common law right to sell the product. The exhaustion of rights doctrine has a lineage that is decades longer than the lineage of the implied licence doctrine. It has been shown by repeated application in the United States to be workable and coherent. It sets clear statutory boundaries. It respects longstanding common law principle. It does not need to enlist equity in some way to prop it up. It strikes an appropriate balance between the interests of patentees and the owners of patented products. In so doing, it fits comfortably with the statutory object of the Patents Act 1990 as well as with the statutory language. From the perspective of the patentee, abandonment of the implied licence doctrine in favour of the exhaustion of rights doctrine as a result of the majority decision now made can fairly be said to result in a "loss" both of rights and of remedies. Exhaustion of the right of the patentee to prevent others from using and selling patented goods upon exercise of the patentee's right to sell will have the consequence that a patentee who seeks to restrict downstream use or resale or other disposal of patented goods will be confined to seeking to impose those restrictions by contract or other enforceable arrangement. Patentees will accordingly not be able to avail themselves of remedies under the Patents Act 1990 to enforce such restrictions as they might otherwise permissibly impose. Accepting as I do that the construction arrived at through the application of the exhaustion of rights doctrine strikes a balance between the interests of patentees and the interests of the owners of patented products that conforms to the statutory object of the Patents Act 1990, I am unable to regard the diminution in remedies available to patentees as counting against that construction. That brings me finally to the question of constructional choice. Now to abandon the implied licence doctrine in favour of construing the Patents Act 1990 in conformity with the exhaustion of rights doctrine is no small step. The magnitude of the step does not lie in its departure from a decision of the Privy Council. What weighs against taking the step is that Menck (Privy Council) has been understood to state the law in Australia for more than a century. The most that can be said for the implied licence doctrine propounded in Menck (Privy Council), however, is that it has survived. Although the saga of the Menck litigation was thought to warrant inclusion as a chapter in a book entitled Landmarks in Australian Intellectual Property Law published in 2009, the authors of that chapter commented in conclusion that the "relative obscurity" of Menck (Privy Council) was "remarkable"187. Earlier in the chapter, the authors explained188: "Eight years after the Privy Council's decision, National Phonograph, which by then had changed its name to Thomas A Edison Ltd, obtained an injunction against a retailer in New Zealand who sold Edison products below list price despite a warning from the company: Thomas A Edison Ltd v Stockdale189. In this case the defendant was a second-hand dealer who had no contractual or other business connection with the company. But after Stockdale there is no report of an Australian or New Zealand case citing Menck involving patented products. It is not until the 1970s that Menck appears to be mentioned at all, and then only for the purpose of distinguishing it in copyright litigation." Between the enactment of the Patents Act 1952 (Cth) and the enactment of the Patents Act 1990, Menck (Privy Council) was referred to without criticism in Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV190. Almost contemporaneously with the enactment of the Patents Act 1990, and with reference to Time-Life International, a statement was made in Avel Pty Ltd v Multicoin Amusements Pty Ltd, that in its application to patents the implied licence doctrine "would seem to be settled law"191. Both were copyright cases. Were there reason to consider that the Commonwealth Parliament assumed the continued application of the implied licence doctrine in enacting the Patents Act 1990, I would have unhesitatingly taken the view that the implied licence doctrine is now incapable of judicial abandonment. In enacting the Patents 187 Heerey and Malone, "RPM for RPM: National Phonograph Company of Australia v Menck", in Kenyon, Richardson and Ricketson (eds), Landmarks in Australian Intellectual Property Law (2009) 37 at 52. 188 Heerey and Malone, "RPM for RPM: National Phonograph Company of Australia v Menck", in Kenyon, Richardson and Ricketson (eds), Landmarks in Australian Intellectual Property Law (2009) 37 at 44. The authors appear to have overlooked just one first instance decision in Australia: Columbia Gramophone Co Ltd v Fossey (1927) 27 SR (NSW) 246. 189 [1919] NZLR 276. 190 (1977) 138 CLR 534. 191 (1990) 171 CLR 88 at 98. Act 1990, however, the Parliament did not even re-enact the statutory language in the context of which the implied licence doctrine was articulated in Menck (Privy Council). Neither the Explanatory Memorandum to the Patents Bill 1990 nor the IPAC report which preceded it provides a firm foundation for considering that anything in the text or structure of the Patents Act 1990 reflected an implicit legislative choice to perpetuate the implied licence doctrine in preference to the exhaustion of rights doctrine. The acknowledgement of both doctrines in the passage in the Explanatory Memorandum quoted in the joint majority judgment rather suggests the legislative adoption of an attitude of studied agnosticism. I would have also been loath to abandon the implied licence doctrine were there grounds for thinking that abandonment of the doctrine would interfere with realisation of legitimate commercial expectations formed in reliance on the doctrine. Opportunities for patentees to exploit the implied licence doctrine by expressly imposing downstream restrictions on the use or resale of patented goods have been reduced by amendments to the Competition and Consumer Act 2010 (Cth) in 2019192 removing an exemption from statutory provisions prohibiting restrictive trade practices for conditions imposed by patentees relating to articles made by use of an invention which had existed since 1974193. The Explanatory Memorandum to the 2019 amending Act included the observation that the number of arrangements affected by the removal of the exemption was "likely to be small"194. Tellingly, the well-resourced, well-represented and heavily invested parties to the present appeal did not point to any commercial expectations that ought to be taken into account in resolving the ground of appeal concerning the implied licence doctrine, and no application for leave to intervene was made by any patent holder claiming to have a legal interest which might be affected by abandonment of the doctrine195. The constructional choice is therefore open. In my view, it is properly made in this case in the manner and for the reasons set out in the joint majority judgment. 192 Treasury Laws Amendment (2018 Measures No 5) Act 2019 (Cth). 193 See s 51(3)(a) of the Competition and Consumer Act 2010 (Cth), formerly s 51(3)(a) of the Trade Practices Act 1974 (Cth). See Gummow, "Abuse of Monopoly: Industrial Property and Trade Practices Control" (1976) 7 Sydney Law Review 339 194 Australia, House of Representatives, Treasury Laws Amendment (2018 Measures No 5) Bill 2018, Explanatory Memorandum at [4.3]. 195 cf Levy v Victoria (1997) 189 CLR 579 at 601-603. 142 NETTLE, GORDON AND EDELMAN JJ. Seiko Epson Corporation ("Seiko") manufactures and sells patented printer cartridges. Ninestar Image (Malaysia) SDN BHD ("Ninestar"), a third party to the proceedings, obtained used Seiko cartridges and modified those cartridges so that they could be re-used. The modified cartridges embodied all integers of Seiko's patent claim. Calidad Distributors Pty Ltd, related companies (collectively, "Calidad"), then imported and sold those modified cartridges in Australia. Did the actions of Ninestar and Calidad infringe Seiko's patents? That issue can, and should, be resolved by asking what Lord Hoffmann once described as a "very short" point196 – did Ninestar make the patented invention contrary to s 13(1) of the Patents Act 1990 (Cth)? in connection with three For the reasons which follow, the work performed on Category 1, 2, 3 and 4 and Category A cartridges – as later described – did not amount to making the patented invention but the work performed on Category 5, 6 and 7 and Category B cartridges did. Thus, the appeal should be allowed in part. licence That answer could not, and, it was common ground, did not, change according to which of two competing juridical bases for understanding the nature and extent of the monopoly rights which the Australian Patents Act 1990 grants – the "implied is adopted. As Lord Hoffmann correctly stated in United Wire Ltd v Screen Repair Services (Scotland) Ltd197, "[w]here ... it is alleged that the defendant has infringed by making the patented product, the concepts of an implied licence or exhaustion of rights can have no part to play". Neither theory allows the "making" of a new invention without authorisation from the patentee198. the "exhaustion theory" or theory" – Although this matter could be decided without choosing between the implied licence theory and the exhaustion theory, Calidad submitted that Australia 196 Schütz (UK) Ltd v Werit (UK) Ltd [2013] RPC 395 at 408 [35], citing United Wire Ltd v Screen Repair Services (Scotland) Ltd [2001] RPC 439 at 458-459 [68]-[73]. 197 [2001] RPC 439 at 458 [70] (emphasis in original). 198 In relation to the implied licence theory, see Solar Thomson Engineering Co Ltd v Barton [1977] RPC 537 at 554, quoting Sirdar Rubber Co Ltd v Wallington, Weston & Co (1907) 24 RPC 539 at 543; United Wire [2001] RPC 439 at 458 [70]. In relation to the exhaustion theory, see Aro Manufacturing Co Inc v Convertible Top Replacement Co Inc (1961) 365 US 336 at 343, 346, citing United States v Aluminum Co of America (1945) 148 F 2d 416 at 425; Impression Products Inc v Lexmark International Inc (2017) 137 S Ct 1523 at 1534. now should adopt the exhaustion theory instead of the implied licence theory. That is not a step we are prepared to take. It is necessary therefore to address the competing theories before turning to address the second issue – whether the modifications of the used Epson printer cartridges amounted to making the patented invention and thereby infringed Seiko's patents. As these reasons will explain, for more than a century, understanding the nature and extent of the monopoly rights granted by Australian (and English) patents Acts has been resolved by the implied licence theory. The exhaustion theory was developed and applied in the United States (and elsewhere) by reference to different legislative provisions. Such textual differences are not surprising. Unlike the law of copyright, the law of patents is not harmonised across countries199. To now adopt the exhaustion theory diminishes the rights granted under the Australian Patents Act 1990. Under the exhaustion theory, a patentee cannot seek to control or limit, as a matter of patent law, what can be done by a purchaser of a patented product on notice of a condition of restraint; the patentee is left with only whatever rights and remedies are available in contract, and no rights and remedies under patent law. For our part, there is no principled reason for such a change. Stripping patentees of rights which they have held for more than a century200 is a question for the legislature, not the courts. This Court should not make such a significant change in the rights of patentees, let alone in an appeal where decision of the point is not necessary to resolve the appeal. Resolution of the question does not affect the disposition of the litigation between these parties and, unsurprisingly, the adverse effects of such a change upon commercial arrangements negotiated by reference to those longstanding rights and remedies201 were not addressed. Patents Act 1990 The patents in issue in this appeal were granted under the Patents Act 1990. It is necessary to start with the text of that Act. A patent granted under the Patents Act 1990 protects the inventive step202. Section 13, headed "Exclusive rights given by patent", states: 199 See, eg, Lexmark (2017) 137 S Ct 1523 at 1539. 200 See National Phonograph Co of Australia Ltd v Menck (1911) 12 CLR 15; [1911] AC 336 ("Menck (PC)"). 201 See fnn 302-304 below. 202 Patents Act 1990, ss 7(2)-(3) and 18(1)(b)(ii). "(1) Subject to this Act, a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention. The exclusive rights are personal property and are capable of assignment and of devolution by law. (3) A patent has effect throughout the patent area." (emphasis added) The term "exploit" in relation to an invention is now relevantly defined in Sch 1 to the Patents Act 1990 as including, where the invention is a product, to "make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things" (emphasis added). Thus, under s 13 of the Patents Act 1990, a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention and, where the invention is a product, to "make, hire, sell or otherwise dispose of the product, ... use or import it, or keep it for the purpose of doing any of those things". Each of those exclusive rights is separately "capable of assignment and of devolution by law"203. It is necessary to address the concept of monopoly rights in order to properly characterise the rights arising from the grant of a patent under the Patents Act 1990. Monopoly rights The patent grants the patentee a monopoly over the exploitation of the invention. The practical reality of the monopoly is and always has been the right to forbid the exploitation – the making, hiring or sale – of the invention by others204. The right is valuable. The price for that right is that the invention must 203 Patents Act 1990, s 13(2). 204 See, eg, Daniel, A Complete Treatise upon the New Law of Patents, Designs and Trade Marks (1884) at 1-2; Martin, The English Patent System (1904) at 43-44; Terrell, The Law and Practice relating to Letters Patent for Inventions, 4th ed (1906) at 274-276; Bannon, Australian Patent Law (1984) at 1-2; Birss et al, Terrell on the Law of Patents, 19th ed (2020) at 1 [1-01]. be disclosed in the patent205 and the patentee must exploit the invention206. Where the invention is a product, the invention is exploited by making it or licensing someone else to make it207. But to describe the right granted as merely a right to exclude others from exploiting the invention is incomplete. The Statute of Monopolies208 was the first comprehensive enactment in England that regulated what monopolies could be granted. Its focus was, as its name suggested, on the royal grants of monopolies209. The Statute of Monopolies was declaratory of the common law210. Thus, that Act focused on monopolies against a background where, as a general rule, apart from any lawful grant of a monopoly, the common law permitted any person to manufacture and sell any article of commerce211 and where the common law disfavoured restraints on alienation212. The grant of any monopoly in respect of the manufacture or sale of any item of commerce thus qualified the position that obtained under the common law. How those two ideas intersected depended then, and depends now, upon the precise operation of the law permitting the grant of monopoly rights. 205 See Patents Act 1990, ss 40 and 55. 206 See Patents Act 1990, Ch 12, Pt 2. 207 See Patents Act 1990, s 133(3). 208 21 Jac I c 3 (1623). 209 See Frost, Treatise on the Law and Practice relating to Letters Patent for Inventions, 4th ed (1912), vol 1 at 1; Federico, "Origin and Early History of Patents" (1929) 11 Journal of the Patent Office Society 292 at 299-302; Birss et al, Terrell on the Law of Patents, 19th ed (2020) at 5 [1-16]-[1-17]. 210 Statute of Monopolies, s 1. See Australian Gold Recovery Co Ltd v Lake View Consols Ltd [1901] AC 142 at 149. 211 See Darcy v Allin (1602) Noy 173 [74 ER 1131]; Clothworkers of Ipswich Case (1614) Godb 252 [78 ER 147]. See also Letwin, "The English Common Law Concerning Monopolies" (1954) 21 University of Chicago Law Review 355; Birss et al, Terrell on the Law of Patents, 19th ed (2020) at 2-4 [1-07]-[1-15]. 212 See Coke upon Littleton (1628), s 360 at 223a. See also Hall v Busst (1960) 104 CLR 206 at 217-218; Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665 at 694-698 [142]-[156]. It may be accepted that the Statute of Monopolies fixed upon the granting of monopolies and contained a prohibitory clause213. But the Anglo-Australian law of patents is not sufficiently or completely described or understood by focusing only on that prohibition214. The Anglo-Australian law of patents also grants valuable rights to patentees, earlier found in the terms of letters patent, and later finding expression in s 13 of the Patents Act 1990 and its progenitor215. By the end of the 18th century, it was evident that patents conferred valuable rights upon the patentee in addition to a right to exclude others from exploiting the invention the subject of the patent. In his Commentaries216, Blackstone spoke of the King's grant of letters patent in terms of the transfer of property, created as a matter of public record, and, ordinarily, "ex speciali gratia, certa scientia, et mero motu regis"217. That formulation finds replication in the form of letters patent granted into the 20th century218. letters patent were cast terms of a positive grant. An enactment219 in 1775 extending the duration of a patent in respect of James Watt's steam engine inventions described the nature of the grant in the following terms220: "King George the Third, by his Letters Patent, under the Great Seal of Great Britain ... did give and grant unto James Watt ... his Executors, Administrators, and Assigns, the sole Benefit and Advantage of making and vending certain Engines ... 213 Statute of Monopolies, ss 1, 5 and 6. 214 cf National Phonograph Co of Australia Ltd v Menck (1908) 7 CLR 481 at 510-511 ("Menck (HCA)"). 215 See [155]-[163] below. 216 Blackstone, Commentaries on the Laws of England (1766), bk 2, ch 21 at 344-348. 217 "By the special favour, certain knowledge and mere motion of the king." 218 See [158]-[159] below. 219 15 Geo III c 61. 220 15 Geo III c 61, Preamble, s 1. [F]rom and after the passing of this Act, the sole Privilege and Advantage of making, constructing, and selling the said Engines ... shall be, and are hereby declared to be, vested in the said James Watt, his Executors, Administrators, and Assigns ... and for no others, from Time to Time, and at all Times, during the Term of Years herein before mentioned, shall and lawfully may make, use, exercise, and vend the said Engines ... and that no other Person or Persons within the Kingdom of Great Britain, or any of his Majesty's Colonies or Plantations abroad, shall, at any Time during the said Term of twenty-five Years, either directly or indirectly, do, make, use, or put in Practice, the said Inventions ... without the Licence, Consent, or Agreement of the said James Watt, his Executors, Administrators, or Assigns." (emphasis added) That Act and patent were considered in Boulton v Bull221. Despite the enactment of the 1775 Act, the Statute of Monopolies and the royal prerogative remained the fundamental sources of legal principle to grant the patent. It is reported that the defendant argued in the Court of Common Pleas that the relevant patent was "not good in law because it [did] not fall within the construction of the [Statute of Monopolies], upon which alone it must, if at all, be supported"222 (emphasis added). Each of Rooke J, Heath J, Buller J, and Eyre CJ – who formed the coram – treated the Statute of Monopolies as determinative of the question of whether the patent in issue was valid by reason of being a novel invention223. But, at the same time, the concept of patent rights – beyond the mere right to exclude – was recognised. As Eyre CJ said224: "Though we have had many cases upon patents yet I think we are here upon ground which is yet untrodden, at least was untrodden till this cause was instituted, and till the discussions were entered into which we have heard at the bar, and now from the court. Patent rights are no where that I can find accurately discussed in our books. Sir Edward Coke discourses largely, and sometimes not quite intelligibly, upon monopolies, in his chapter of 221 (1795) 2 H Bl 463 [126 ER 651]. 222 Boulton (1795) 2 H Bl 463 at 471 [126 ER 651 at 655]. 223 Boulton (1795) 2 H Bl 463 at 477-478, 481, 486, 491-492 [126 ER 651 at 658-659, 224 Boulton (1795) 2 H Bl 463 at 490-491 [126 ER 651 at 665]. monopolies, 3 Inst 181[225]. But he deals very much in generals, and says little or nothing of patent rights, as opposed to monopolies. ... The case of Edgeberry v Stephens, 2 Salk 447[226], is almost the only case upon the patent right, under the saving of the [Statute of Monopolies], that is to be found." (emphasis added) Eyre CJ's criticism of Coke's definition of "monopolies" for lacking specificity and for failing to distinguish between "patent rights" and "monopolies" is significant and revealing227. Three Acts were then passed in relatively quick succession in England – the Statute 5 & 6 Will IV c 83 in 1835228, the Patent Law Amendment Act 1852229 and the Patents, Designs, and Trade Marks Act 1883230. The 1852 Act was the first substantive legislative reform of patent law after the Statute of Monopolies231. 225 Coke, The Third Part of the Institutes of the Laws of England (1644), c 85. 226 (1691) 2 Salk 447 [91 ER 387]. See a more comprehensive report at Holt KB 475 227 See Dutton, The Patent System and Inventive Activity During the Industrial Revolution 1750-1852 (1984) at 69-71. 228 Section 2 of the 1835 Act included the prohibitory clause in relation to letters patent granted by the monarch to a patentee who was found not to be the first inventor, but whose letters patent were confirmed – or re-issued – by satisfying criteria not presently relevant. Section 2 provided that the confirmed or re-issued letters patent conferred "the sole Right of using, making, and vending such Invention as against all Persons whatsoever, any Law, Usage, or Custom to the contrary thereof notwithstanding" (emphasis added). 229 15 & 16 Vict c 83. 230 46 & 47 Vict c 57. 231 The 1852 Act: established what would come to be known as the Patent Office (Patent Law Amendment Act, ss 2 and 4); authorised certain persons (such as the Lord Chancellor and the Master of the Rolls) to exercise powers as Commissioners of Patents for Inventions, including the power to seal letters patent (ss 1 and 2); required a register of patents to be kept (s 34); and conferred jurisdiction upon common law courts to grant injunctions and order an inspection and account when determining infringement claims (s 42). In addition to the substantial administrative reforms reflected in the 1852 Act232, the form of letters patent, already then in use but not prescribed in legislation, was set out in a schedule to the 1852 Act and relevantly provided233: "We, of Our especial Grace, certain Knowledge, and mere Motion, have given and granted, and by these Presents, for Us, Our Heirs and Successors, do give and grant unto the said [named patentee] his Executors, Administrators, and Assigns, Our especial Licence, [1] full Power, sole Privilege, and Authority that [the patentee] ... and no others, from Time to Time and at all Times hereafter during the Term of Years herein expressed, shall and lawfully may make, use, exercise, and vend his said Invention ... and ... [2] We do by these Presents, for Us, Our Heirs and Successors, require and strictly command all and every Person and Persons ... and all other Our Subjects whatsoever ... that neither they nor any of them ... either directly or indirectly do make, use, or put in practice the said Invention ... without the Consent, Licence, or Agreement of the [patentee]". (emphasis added) The form of letters patent provided in the 1852 Act reflected the form of grant that appears to have existed from at least the 18th century234. And while the 1852 Act was chiefly concerned with reforming the administration of patents, there is no indication that it was intended to substantially amend the nature and content of the rights conferred upon the patentee. Most pertinently, the terms of the form of letters patent in the 1852 Act stipulated – and were understood to articulate – that the privilege was not only or in "substance"235 the right to forbid the use of an invention by others. The 1883 Act consolidated the law applicable to patents236. The effect of the 1883 Act, consistent with the position prior to its enactment, was to confer 232 See MacLeod, "Patents for Invention: Setting the Stage for the British Industrial Revolution?" (2009) 18 Empiria 37 at 41-42. See also Dickens, Little Dorrit (1868) 233 Patent Law Amendment Act, Schedule. 234 See [155] above. 235 cf Menck (HCA) (1908) 7 CLR 481 at 510. 236 Frost, Treatise on the Law and Practice relating to Letters Patent for Inventions, 4th ed (1912), vol 1 at 4. upon the patentee the sole benefit of the right to exploit the invention. By s 46, the "patentee" was "the person for the time being entitled to the benefit of a patent". And the form of patent issued under the 1883 Act, set out in the First Schedule to the Act, was expressed as follows237: "Know ye, therefore, that We, of our especial grace, certain knowledge, and mere motion do by these presents, for us, our heirs and successors, give and grant unto the said patentee our especial license, full power, sole privilege, and authority, that the said patentee by himself, his agents, or licensees, and no others, may at all times hereafter during the term of years herein mentioned, make, use, exercise, and vend the said invention ... in such manner as to him or them may seem meet, and that the said patentee shall have and enjoy the whole profit and advantage from time to time accruing by reason of the said invention, during the term of fourteen years from the date hereunder written of these presents". (emphasis added) Thus the 1852 and 1883 Acts expressly recognised the rights arising from a grant of letters patent: not only a monopoly over the exploitation of the invention, but also a positive grant of rights including the right to vend the invention. To see patent rights in the 19th century only through the lens of monopoly (and as a statutory power to prevent others exploiting the invention) was, and remains, too narrow a view of the effect of a grant of a patent. It was not then, and is not now, sufficient to see the 19th and 20th century patents Acts as doing no more than giving a patentee a statutory right to exclude others from exploiting the invention, nor is it sufficient to see the statutes as giving a patentee a piece of property sufficiently described as a "patent". Over time, patentee rights have come to be recorded expressly in the provisions of patents Acts, rather than simply in the form of the patent provided for by the relevant Act. Thus, the terms of s 62 of the Patents Act 1903 (Cth) – that the "effect of a patent shall be to grant to the patentee full power, sole privilege and authority, by himself, his agents, and licensees during the term of the patent to make, use, exercise, and vend the invention" (emphasis added) – were taken from the italicised words in the form of patent under the 1883 Act238. The recording of the rights granted culminated in the enactment of the Patents Act 1990, an Act which did not alter the law in Australia in any relevant 237 Patents, Designs, and Trade Marks Act 1883, First Schedule, Form D. 238 See Menck (HCA) (1908) 7 CLR 481 at 510. respect239. And it is of the first importance to notice what was said in the Explanatory Memorandum. First, it was said that the definition of "exploit", when read with s 13, avoided some "obscure language"240 in the Patents Act 1903 setting out a patentee's rights and, second, that: "Clause 13 is not intended, in particular, to modify the operation of the law on infringement so far as it relates to subsequent dealings with a patented product after its first sale. This applies particularly where a patented product is resold or where it is imported after being purchased abroad. It is intended that the question whether such a resale or importation constitutes an infringement in a particular case will continue to be determined as it is now, having regard to any actual or implied licences in the first sale and their effect in Australia, and to what is often known as the doctrine of 'exhaustion of rights' so far as it applies under Australian law." (emphasis added) Thus, seeing the Patents Act 1990 as conferring only a power to limit the otherwise free conduct of others in relation to the manufacture and sale of articles of commerce is to focus on one aspect – the negative aspect – of the grant of the monopoly. To see the grant of the monopoly (as s 13(2) of the Patents Act 1990 expressly does241) as the grant of rights of personal property is to recognise the obverse and positive aspect of the grant. And implicit in that grant is the freedom of the person granted these property rights to deal with them in whole or in part, and absolutely or conditionally, as they see fit (subject always of course to any express statutory limitation on that freedom). It is the terms of the legislative grant of patent rights and the proper construction of the grant that are determinative of the scope and content of a patentee's rights. Seeing the grant of the monopoly in s 13(2) in those terms as having both negative and positive aspects recognises that a patent grants to the patentee a negative right, namely a right to exclude others from exploiting the invention and, no less importantly, recognises that the negative right carries with it the consequence that others do not have the ordinary liberty to make, use, exercise and 239 Australia, Senate, Patents Bill 1990, Explanatory Memorandum at 5 [23]-[24]. 240 Australia, Senate, Patents Bill 1990, Explanatory Memorandum at 5 [23]. 241 And as Australian patents legislation has since s 18 of the Patents Act 1909 (Cth) inserted s 110A into the Patents Act 1903 to provide that the rights granted to a patentee by a patent are personal property and are capable of assignment and of devolution by operation of law. sell the patented article. That approach gives full measure to both elements of the expression "negative right", which are rights of monopoly242. The particular area where the conflicting theories have been engaged is the sale of a patented article by a patentee. Could a patentee complain when someone to whom they had "sold the patented product then, without any further consent, uses it or disposes of it to someone else"243? On its face, this would be conduct prohibited by the grant of an exclusive right to sell244. Over time, two possible answers emerged. The first is that the patentee sells the product to a buyer with an "implied licence" that the buyer may dispose of it as the buyer sees fit. That position has been adopted in Australia and in the United Kingdom for more than a century245. The other is that "[t]he patentee's rights in respect of the product are exhausted by the first sale"246. As has been noted earlier, the latter theory has been adopted in the United States247 and some European patent systems248. The difference between theories was described by the Lord Hoffmann in United Wire as being that "an implied licence may be excluded by express contrary agreement or made subject to conditions while the exhaustion two 242 See Hohfeld, "Some Fundamental Legal Conceptions as Applied in Judicial Reasoning" (1913) 23 Yale Law Journal 16 at 30-31, 37-38; Douglas and McFarlane, "Defining Property Rights", in Penner and Smith (eds), Philosophical Foundations of Property Law (2013) 219 at 226-228. cf Fejo v Northern Territory (1998) 195 CLR 96 at 126 [43], 128 [47]; Western Australia v Brown (2014) 253 CLR 507 at 522 [36]. 243 United Wire [2001] RPC 439 at 458 [68]. 244 cf Patents Act 1990, s 13. 245 See Menck (PC) (1911) 12 CLR 15; [1911] AC 336. 246 United Wire [2001] RPC 439 at 458 [69]. See also Lexmark (2017) 137 S Ct 1523 247 Lexmark (2017) 137 S Ct 1523 at 1531-1532. 248 See United Wire [2001] RPC 439 at 458 [69]. doctrine leaves no patent rights to be enforced"249. So which theory applies, what is that theory and why does it matter? The patents Acts and the implied licence theory The decision of the Privy Council in National Phonograph Co of Australia Ltd v Menck ("Menck (PC)")250 settled the answer to those questions, and the law in Australia, more than a century ago. In that case, the Privy Council recognised the difficulty posed by the Patents Act 1903251: enforcement of the general principle applicable to ordinary goods that an owner is not bound by any restrictions in regard to use or sale of the goods so that any restrictive conditions do not run with the goods252 (which was never open to doubt) without impinging upon the right granted by the Patents Act 1903 to "exclude all others from the right of production ... of the patented article" and the power to impose "conditions in the transactions of making, using and vending, which are necessarily an exception by [the Patents Act 1903] to the rules ordinarily prevailing"253. The Privy Council based its decision on the undisputed acceptance that there was no relevant difference between the patents Acts of Australia and the United Kingdom254. The Privy Council held that it was possible to adjust the incidents of ownership of ordinary goods with the incidents of ownership of patented goods so as to harmonise the rights of the patentee with the rights of the owner255. And it is important to restate the principles set out by the Privy Council256: 249 [2001] RPC 439 at 458 [69]. 250 (1911) 12 CLR 15; [1911] AC 336. 251 Menck (PC) (1911) 12 CLR 15 at 22; [1911] AC 336 at 347. 252 See Taddy & Co v Sterious & Co [1904] 1 Ch 354 at 358; McGruther v Pitcher [1904] 2 Ch 306 at 309-310; Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd [1915] AC 847 at 860, 865; Barker v Stickney [1918] 2 KB 356 at 359. See also Menck (HCA) (1908) 7 CLR 481 at 510, 527-528, 538. 253 Menck (PC) (1911) 12 CLR 15 at 22; [1911] AC 336 at 347. 254 Menck (PC) (1911) 12 CLR 15 at 17; [1911] AC 336 at 342. 255 Menck (PC) (1911) 12 CLR 15 at 23-24; [1911] AC 336 at 348-349. 256 Menck (PC) (1911) 12 CLR 15 at 24; [1911] AC 336 at 349. "All that is affirmed is that the general doctrine of absolute freedom of disposal of chattels of an ordinary kind is, in the case of patented chattels, subject to the restriction that the person purchasing them, and in the knowledge of the conditions attached by the patentee, which knowledge is clearly brought home to himself at the time of sale, shall be bound by that knowledge and accept the situation of ownership subject to the limitations. These limitations are merely the respect paid and the effect given to those conditions of transfer of the patented article which the law, laid down by Statute, gave the original patentee a power to impose. Whether the law on this head should be changed and the power of sale sub modo should be withdrawn or limited is not a question for a Court. It may be added that where a patented article has been acquired by sale, much, if not all, may be implied as to the consent of the licensee to an undisturbed and unrestricted use thereof. In short, such a sale negatives in the ordinary case the imposition of conditions and the bringing home to the knowledge of the owner of the patented goods that restrictions are laid upon him. These principles harmonize the rights of the patentee with the rights of the owner." (emphasis added) And, as the Privy Council stated, that reconciliation of rights had, at the time of judgment, "been done for a long period of years in England by decisions which are consistent and sound"257. The Privy Council rejected the reasoning adopted by the majority of the in National Phonograph Co of Australia Ltd v Menck High Court ("Menck (HCA)")258. It is important to understand why that was so and why those considerations continue to apply in Australia in 2020. The majority's reasoning in Menck in the High Court proceeded from a mistaken premise. It is sufficient to address the reasons for judgment of Griffith CJ to illustrate the point. 257 Menck (PC) (1911) 12 CLR 15 at 22-23; [1911] AC 336 at 347-348. See also Menck (HCA) (1908) 7 CLR 481 at 534, citing Incandescent Gas Light Co Ltd v Cantelo (1895) 12 RPC 262; Incandescent Gas Light Co Ltd v Brogden (1899) 16 RPC 179; British Mutoscope and Biograph Co Ltd v Homer [1901] 1 Ch 671; McGruther [1904] 2 Ch 306 at 312; Badische Anilin und Soda Fabrik v Isler [1906] 1 Ch 605; Frost, Treatise on the Law and Practice relating to Letters Patent for Inventions, 3rd ed (1906), vol 1 at 377-379; Wallace and Williamson, The Law and Practice relating to Letters Patent for Inventions (1900) at 339. 258 (1908) 7 CLR 481. After correctly identifying that "[t]he plaintiffs' right, whatever it may be" was founded on the terms of s 62 of the Patents Act 1903, his Honour stated that "the patentee's right to put his invention in practice [was] not conferred upon him by the patent, but [arose] at common law"259 and, second, that the common law did not admit restraint on alienation260. It was right to say then, as it is now, that there can be no restraint on alienation at common law261. But it is not right to say only that there can be no restraint on alienation at common law and therefore the grant of letters patent, and especially the enactment of the patents Acts of 1903 and 1990, made no difference. The question is whether the Australian patents Acts made a difference and, if they did, how far that difference reaches. Those Acts did then, and do now, make a difference and their reach is settled. As the Privy Council pointed out in Menck, the error in the High Court arose because the issue in the High Court was obscured by the breadth of the patentee's proposition in that case – that its restraint extended to all subsequent sales with or without notice of the patentee's conditions262. Those arguments invited a binary choice – the Patents Act 1903 does not speak to the position of any purchaser (which the majority in the High Court held) or the Patents Act 1903 speaks to all subsequent purchasers (regardless of the terms on which they dealt). All judges in the High Court and in the Privy Council rejected the second choice263. As the Privy Council explained, the true area of debate was the position of a purchaser who had notice of any limitation264. Absent notice, no such limitations applied to the articles in the purchaser's hands. But, as the Privy Council and Isaacs J in the High Court 259 Menck (HCA) (1908) 7 CLR 481 at 508. 260 Menck (HCA) (1908) 7 CLR 481 at 508-515. 261 See Hall (1960) 104 CLR 206 at 218, citing In re Ridley; Buckton v Hay (1879) 11 Ch D 645 at 648-649; Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 649. 262 Menck (PC) (1911) 12 CLR 15 at 21; [1911] AC 336 at 346. 263 Menck (HCA) (1908) 7 CLR 481 at 508-509, 519, 525-527, 531, 537-539, 543; Menck (PC) (1911) 12 CLR 15 at 28; [1911] AC 336 at 353. 264 Menck (PC) (1911) 12 CLR 15 at 24; [1911] AC 336 at 349. recognised, the Patents Act 1903 did speak to a purchaser who buys a patented chattel subject to conditions imposed by the patentee265. The approach of the High Court in Menck, which was rejected by the Privy Council, may be explained as follows. Griffith CJ's judgment proceeded from an incorrect premise: that the Patents Act 1903 merely restricted otherwise exercisable common law liberties to make, own and alienate property. Griffith CJ stated that the effect of the Patents Act 1903 was "not [to] confer on [a patentee] a right to enjoy his own domain, but to prevent other persons from trespassing upon it"266. His Honour saw the foundation of patent law as the Statute of Monopolies, and stated that since its enactment "it appears to have been the accepted law" that267: "once the patentee ... had by putting the invention in practice produced an article and disposed of it to some member of the public the making use of the article so disposed of by anyone whomsoever was not an infringement of the monopoly of 'working or making' the new manufacture". His Honour referred to Crane v Price268, the reasoning of which was affirmed in the Supreme Court of the United States decision in Bloomer v Millinger269, as authority for the proposition that upon sale, the patentee's "exclusive privileges" in respect of an article the subject of letters patent are at an end "in respect of that particular portion of the article so sold"270. Unsurprisingly, the Chief Justice then observed that271: 265 Menck (HCA) (1908) 7 CLR 481 at 538-539; Menck (PC) (1911) 12 CLR 15 at 24; [1911] AC 336 at 349. 266 Menck (HCA) (1908) 7 CLR 481 at 508. 267 Menck (HCA) (1908) 7 CLR 481 at 509. 268 (1842) 4 Man & G 580 [134 ER 239]. 269 (1864) 68 US 340 at 351. 270 Menck (HCA) (1908) 7 CLR 481 at 509, citing Crane (1842) 4 Man & G 580 [134 ER 239] as reported in Webster, Reports and Notes of Cases on Letters Patent for Inventions (1844) at 413 fn (p). 271 Menck (HCA) (1908) 7 CLR 481 at 510. "[i]t is an elementary principle of the law of personal property that the owner of chattels has an absolute right to use and dispose of them as he thinks fit, and that no restrictions can be imposed upon this right, except by positive law or by his own contract." (emphasis added) And, thus, his Honour construed the words "vend the invention" in s 62 of the Patents Act 1903 to mean "to put the product of the invention in the possession of the public, and ... not [to] refer to any sale of the article after it has once, without violation of the monopoly, become part of the common stock"272. Griffith CJ rejected the alternative construction (adopted by Isaacs J and then the Privy Council) because his Honour said he could not conceive that the legislature would have "made a change in the fundamental principles of the common law without express and clear words"273. But Griffith CJ's analysis does not account for the reality that, from at least the 18th century, the English monarchs exercised a prerogative power to grant patentees the sole right to make, use and vend their invention274, that the English patents Acts of 1775, 1835 and 1852 proceeded on the assumption that the grant of letters patent entailed the conferral of such rights275 and, further, that the 1883 Act (on which the Patents Act 1903 was based) reflected the change foreshadowed by Eyre CJ in the 18th century276. As Lord Cranworth LC stated in Mathers v Green277, which concerned the obligations of grantees of the same patents to account between themselves for profit made from exploitation of the invention the subject of the patents, the letters patent granted that each of the grantees, and no others, shall, for the term of the assignment, "use, exercise, and vend the ... invention. The right conferred is a right to exclude all the world other than the grantees from using the invention." True it is, one may find occasional, aberrant dicta expressed from time to time during that period, even at 272 Menck (HCA) (1908) 7 CLR 481 at 512. 273 Menck (HCA) (1908) 7 CLR 481 at 512. 274 Terrell, The Law and Practice relating to Letters Patent for Inventions, 4th ed 275 See [155]-[160] above. 276 See [157] above. 277 (1865) LR 1 Ch App 29 at 33. See also Steers v Rogers [1893] AC 232 at 235. the highest level. Thus, for example, in Steers v Rogers278, Lord Herschell LC observed that "letters patent do not give the patentee any right to use the invention ... What the letters patent confer is the right to exclude others from ... using a particular invention." But so to observe was, in effect, contrary to the holding in Mathers v Green279, which his Lordship cited280 as authoritative, and directly contrary to his Lordship's own, settled reasoning four years later in Basset v Graydon281. In Basset, Lord Herschell LC expressly observed that neither an to manufacture a patented article, exclusive nor purchasers of the article from the exclusive licensee, "could use the [article], when completed, without a license from the Patentee"282. Lord Morris agreed with Lord Herschell LC, as did Lord Watson, who delivered a speech to the same effect that "no individual or Company ... can proceed to use [the article] ... until they have settled with and obtained a license from the [patentee]"283. Griffith CJ failed to recognise that the Patents Act 1903 granted, and patentees held, sui generis rights in respect of patents and patented articles. By contrast, Isaacs J took as the starting point of his Honour's analysis the existence of the statutory monopoly rights, what he described as a fundamental consideration284, and not the general common law rule about restraints on alienation. the Patents Act 1903 and recognises that it conferred monopoly rights that were both a right to exclude others and an exclusive right or privilege to exploit the invention, then generalised references to freedom of trade or to the common law's rejection of restraints on alienation are shown to be inapposite. As Isaacs J said285: reasons demonstrate if one starts with Isaacs J's that, 278 [1893] AC 232 at 235. 279 (1865) LR 1 Ch App 29. 280 Steers [1893] AC 232 at 234-235. 281 (1897) 14 RPC 701 at 710. 282 (1897) 14 RPC 701 at 710. 283 Basset (1897) 14 RPC 701 at 713. 284 Menck (HCA) (1908) 7 CLR 481 at 534. 285 Menck (HCA) (1908) 7 CLR 481 at 536. "[W]hile it is perfectly true that no person can of his own will create a new species of property, or impress upon property a character which the law does not recognize, or create a negative obligation to follow or attend ordinary rights of ownership, yet the law itself can. And when an Act of Parliament followed by a grant from the Crown reverses the public policy which gave rise to the general unfettered alienability of property, and ... creates an exclusive privilege in favour of the grantee, the common law principle no longer controls the matter, but becomes inapplicable to the case." (emphasis added) And what was created by the law was described by Isaacs J, citing Saccharin Corporation v Reitmeyer & Co286, as follows287: "The patentee obtains from the Crown, under legislative authority in Australia, the exclusive right to make, or use, or exercise, or vend the invention, that is, in such a patent as this, to make, use, or sell articles made according to the invention or in any way 'put in practice' the invention." Thus, the law – the Patents Act 1903, followed by the grant of exclusive patent rights under that Act – created the exclusive rights identified, to exclude others and to exploit the invention. The area of debate in Menck was the interaction between those exclusive rights granted by the statute and a contract of sale that "'put in practice' the invention"288. Central to the resolution of that question was whether the rights of the patentee were properly to be conceived of as limited to preventing others using and selling patented goods or were such as to confer on the patentee an exclusive right to make, use and vend them. If the former, as Griffith CJ reasoned, a patentee was not by operation of the patent, and apart from contract, entitled to impose conditions upon the use or sale of the patented articles289. But if the latter, as Isaacs J and the Privy Council concluded, the exclusive right or privilege of the patentee to make, use and vend the patented invention entitled the patentee in 286 [1900] 2 Ch 659 at 663. 287 Menck (HCA) (1908) 7 CLR 481 at 535 (emphasis in original). 288 (1908) 7 CLR 481 at 535. 289 See Menck (HCA) (1908) 7 CLR 481 at 512-519. selling patented articles to impose any conditions as to future sales that the patentee pleased290. As Isaacs J said291: "The right of ownership in the article itself must be kept distinct from the right to the privilege under the patent. ... This idea of leave and licence – that is the permission – permeates all the cases in the English Courts and all the American cases I refer to. The right of the licensee is coextensive with the permission granted – no greater and no less." Thus, the correct starting point for the analysis was the text of the Patents Act 1903, which granted to the patentee monopoly rights "to make, use, exercise ... the invention"292. And those rights were construed by the Privy Council in Menck, consistent with the text, so that the imposition of conditions in a transaction involving the making, using and selling of a patented article was necessarily an exception by statute to the general principle applicable to ordinary goods bought and sold293. That construction is entirely orthodox. For if, as Griffith CJ understood the position294, putting an invention into practice was merely an exercise of an existing common law "freedome[] or liberty"295, then the express provisions conferring exclusive rights and privileges to make, use, exercise and vend an invention were, and are, redundant296. Thus, resolution of the interaction between patent monopoly rights on the one hand, and, on the other, a contract of sale that puts the invention in practice, 290 See Menck (HCA) (1908) 7 CLR 481 at 533-539; Menck (PC) (1911) 12 CLR 15 at 26-28; [1911] AC 336 at 351-353. 291 Menck (HCA) (1908) 7 CLR 481 at 538-539. 292 See [154]-[164] above. 293 (1911) 12 CLR 15 at 22; [1911] AC 336 at 347. 294 Menck (HCA) (1908) 7 CLR 481 at 508. 295 Coke, The Third Part of the Institutes of the Laws of England (1644), c 85 at 181. 296 cf Baume v The Commonwealth (1906) 4 CLR 97 at 112; Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 at 679. was readily explained under the 1903 Act and is now readily explained under the 1990 Act. As Buckley J said in Badische Anilin und Soda Fabrik v Isler297: "If a patentee sells the patented article to a purchaser and the purchaser uses it, he, of course, does not infringe. But why? By reason of the fact that the law implies from the sale a licence given by the patentee to the purchaser to use that which he has bought. In the absence of condition this implied licence is a licence to use or sell or deal with the goods as the purchaser pleases". This was not obiter298. Buckley J's statement was the consequence of recognising the existence of the monopoly rights and their interaction with the common law rule against alienation that then subsisted in Anglo-Australian law. In 1977, in Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV299, after stating that those words of Buckley J had to be regarded as a "correct statement of the patent law"300, Gibbs J went on to explain the importance of the law of patents and why it necessarily created a different result compared to an owner of copyright, who, under the applicable statute, did not have the exclusive right to use or sell the work. His Honour said301: "By the grant of a patent in traditional form [issued under the 1883 Act and reflected in the Patents Act 1903], a patentee is granted exclusive power to 'make, use, exercise and vend' the invention. The sale of a patented article, by the patentee, would be quite futile, from the point of view of the buyer, if the buyer was not entitled either to use or to resell the article which he had bought. It therefore seems necessary, in order to give business efficacy to such a sale, to imply a term that the patentee consents to the use of the patented article by the buyer and those claiming under him. The law accordingly does ordinarily imply the consent of the patentee 'to an undisturbed and unrestricted use' of the patented article. To make such an 297 [1906] 1 Ch 605 at 610, quoted in Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV (1977) 138 CLR 534 at 541-542. 298 cf Menck (HCA) (1908) 7 CLR 481 at 517-518. 299 (1977) 138 CLR 534. 300 (1977) 138 CLR 534 at 542. 301 Time-Life International (1977) 138 CLR 534 at 542. implication, for the purpose only of avoiding the restrictions upon the use of the article that would otherwise be imposed by the patent, seems to be perfectly consistent with the ordinary rules governing the implication of terms in contracts." (emphasis added, citation omitted) Applicable principles Thus, what has been the law for over a century, repeatedly relied upon in England302 and Australia303 in circumstances extending beyond the first sale, and reiterated by text writers304, may be simply stated. 302 See, eg, Columbia Graphophone Co v Vanner (1916) 33 RPC 104 at 106; Columbia Graphophone Co Ltd v Murray (1922) 39 RPC 239 at 241; Columbia Graphophone Co Ltd v Thoms (1924) 41 RPC 294 at 296; The Chloride Electrical Storage Co Ltd v Silvia Wireless Stores (1931) 48 RPC 468 at 470; Gillette Industries Ltd v Bernstein (1941) 58 RPC 271 at 278-279; Dunlop Rubber Co Ltd v Longlife Battery Depot [1958] RPC 473 at 476; Sterling Drug Inc v C H Beck Ltd [1973] RPC 915 at 917-918; Solar Thomson [1977] RPC 537 at 554-555; Dellareed Ltd v Delkim Developments [1988] FSR 329 at 345-347; Roussel UCLAF SA v Hockley International Ltd [1996] RPC 441 at 443-445; United Wire [2001] RPC 439 at 458-459 [68]-[72]; Schütz [2013] RPC 395 at 413 [66]; HTC Corporation v Nokia Corporation [2014] RPC 577 at 582-583 [154]-[156], 585 [165]. 303 See, eg, Columbia Gramophone Co Ltd v Fossey (1927) 27 SR (NSW) 246 at 249-251; Time-Life International (1977) 138 CLR 534 at 541-542, 549-550; Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 20 FCR 46 at 50-51; Levi Strauss & Co v Wingate Marketing Pty Ltd (1993) 43 FCR 344 at 370; Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 513-514 [83]-[84]; Austshade Pty Ltd v Boss Shade Pty Ltd (2016) 118 IPR 93 at 116-119 [78]-[82]; Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd (2018) 356 ALR 582 at 729-730 [592]-[594]. 304 See, eg, Moulton, The Present Law and Practice relating to Letters Patent for Inventions (1913) at 161-163; Terrell on the Law of Patents, 6th ed (1921) at 150-151, 232-233; 7th ed (1927) at 173, 249; 8th ed (1934) at 183-184, 273; 9th ed (1951) at 165-166, 264; 10th ed (1961) at 148-149, 240-241; 11th ed (1965) at 152-153 [380]-[382]; 12th ed (1971) at 158-159 [381]-[383]; 13th ed (1982) at 277-279 [9.63]-[9.67]; 14th ed (1994) at 201-202 [6.60]-[6.61]; 15th ed (2000) at 224-226 [8.45]-[8.47]; 16th ed (2006) at 332-334 [8-65]-[8-67]; 17th ed (2011) at 468-469 [14-110]-[14-113]; 18th ed (2016) at 467-469 [14-221]-[14-228]; 19th ed (2020) at 492-494 [14-272]-[14-282]; Blanco White, Patents for Inventions and the Absent a contract of sale, only the patentee may exercise any of the statutory monopoly rights in s 13(1) of the Patents Act 1990 in respect of a patented article. As the sub-section makes clear, to exercise those rights, a person must be the patentee or a person authorised by the patentee305. The form of that authorisation is not prescribed. An unconditional contract of sale of a patented article transfers title in the patented article to the purchaser, and, consistent with s 13(1) and (2) of the Patents Act 1990, that contract of sale ordinarily carries with it a licence of, or release from, the patentee's exclusive right to use and sell that patented article306. That licence or release to the purchaser of the patentee's rights to use and sell that patented article arises as a matter of necessary implication from the need to give business efficacy to the contract of sale307. As Gibbs J observed308 in Time-Life International, that implication is necessary to bring the patentee's exclusive rights of sale and use of that article under the statutory monopoly to an end and to permit Registration of Industrial Designs, 1st ed (1950) at 63-64, 207-209; 2nd ed (1955) at 78-79, 263-265; 3rd ed (1962) at 91-93, 295-297; 4th ed (1974) at 104-105 [3-219], 360-362 [10-104]-[10-105]; Bannon, Australian Patent Law (1984) at 98 [251]; Ricketson, Intellectual Property: Cases, Materials and Commentary, 1st ed (1994) at 734 [15.1.2]; 2nd ed (1998) at 707 [15.1.2]; 3rd ed (2005) at 821 [15.2]; 4th ed (2009) at 816 [14.2]; 5th ed (2013) at 924 [14.2]; 6th ed (2020) at 870 [13.2]; Heerey and Malone, "RPM for RPM: National Phonograph Company of Australia v Menck", in Kenyon, Richardson and Ricketson (eds), Landmarks in Australian Intellectual Property Law (2009) 37 at 43; Johnson, Roughton and Cook, The Modern Law of Patents, 3rd ed (2014) at 422-423 [7.190], 568-569 [10.81]. 305 See Steers [1893] AC 232 at 235; British Mutoscope [1901] 1 Ch 671 at 675-676; Badische [1906] 1 Ch 605 at 610. 306 Betts v Willmott (1871) LR 6 Ch App 239 at 245; Société Anonyme des Manufactures de Glaces v Tilghman's Patent Sand Blast Co (1883) 25 Ch D 1 at 9; Heap v Hartley (1888) 5 RPC 603 at 610; Cantelo (1895) 12 RPC 262 at 264-265; Brogden (1899) 16 RPC 179 at 183; Badische [1906] 1 Ch 605 at 610; Menck (HCA) (1908) 7 CLR 481 at 537-538; Menck (PC) (1911) 12 CLR 15 at 24, 28; [1911] AC 336 at 349, 353; Time-Life International (1977) 138 CLR 534 at 542. 307 Time-Life International (1977) 138 CLR 534 at 542. 308 (1977) 138 CLR 534 at 542. the purchaser to do that for which the purchaser contracted to be able to do – to use and sell that patented article. The purchaser's entitlement to use and sell the patented article can also be conceived in terms of release or devolution under s 13(2) of the Patents Act 1990. As a matter of necessary implication, an unconditional contract of sale releases (or gives rise to an enforceable promise on the part of the patentee not to enforce) the patentee's right to exclude others from using and selling that patented article. That is, consistent with s 13(2), unless the contract of sale provides otherwise (by conditions or restrictions), the transfer of title under a contract of sale carries with it a licence (or release) to use and sell the article309. As a matter of law and practice, for more than a century, a purchaser of an article has expected to have, and has had, control of the article unless there is some agreement to the contrary to justify the vendor saying that they have not given the purchaser their licence to sell the article or to use the article wherever the purchaser pleases as against the vendor310. Thus, where there is a conditional sale of a patented product, then, to the extent of the conditions, the patent rights are not licensed or released and the patentee retains them311. Consistent with longstanding authority and practice, if conditions in relation to the resale or use of the patented article by the purchaser are imposed by the patentee, any steps taken by the purchaser beyond or inconsistent with those conditions are an infringement of the patentee's exclusive patent rights. Those steps may also be a breach of contract312. And, significantly, a choice of remedies remains. If there is both infringement of patent rights and 309 Cantelo (1895) 12 RPC 262 at 264; Brogden (1899) 16 RPC 179 at 183; British Mutoscope [1901] 1 Ch 671 at 673-674; McGruther [1904] 2 Ch 306 at 312; Menck (HCA) (1908) 7 CLR 481 at 538; Menck (PC) (1911) 12 CLR 15 at 24, 28; [1911] AC 336 at 349, 353; Time-Life International (1977) 138 CLR 534 at 549. 310 See fn 305 above. 311 See fn 309 above. 312 See Menck (PC) (1911) 12 CLR 15 at 28-29; [1911] AC 336 at 353-354. breach of contract, the patentee has a choice of remedies. But that is common in many areas of Australian law313. In relation to downstream purchasers, the position, as so analysed, remains consistent with longstanding principle. In an unconditional sale, a downstream purchaser is unaffected. The sale is unconditioned and thus both the initial purchaser and any downstream purchaser are unconstrained as to use or on-selling314. By the turn of the 20th century, the constraint on downstream purchasers from acting inconsistently with those conditions was regarded as absolute at law, albeit subject to equities. As Buckley J observed in Badische315: "If a person innocently uses a patented invention, not knowing that there is a patent, he is none the less an infringer, and if a person innocently buys a patented invention from a licensee and uses it not knowing that there are limits on the licence, I conceive that he is equally an infringer." But in equity316: "[T]he patentee may be estopped, as between himself and [the downstream purchaser], from saying that [the downstream purchaser] is not so licensed, and as regards Incandescent Gas Light Co v Cantelo, this must, I think, have been the ratio decidendi, for it would seem that the agent there was not authorized to sell except subject to conditions. If the purchaser knows the restrictions of course he is bound by them: Incandescent Gas Light Co v Brogden. In such a state of facts the patentee cannot be estopped, and to a patented article conditions may be attached because the goods have this special quality or characteristic, that, except with the licence of the patentee, they cannot be used or sold, thus differing from goods in general to which 313 See, eg, Mann v Paterson Constructions Pty Ltd (2019) 93 ALJR 1164 at 1188 [91], 1201-1202 [165]-[166]; 373 ALR 1 at 26, 43-44. See also Nocton v Lord Ashburton [1914] AC 932 at 956. 314 Menck (PC) (1911) 12 CLR 15 at 28; [1911] AC 336 at 353; Time-Life International (1977) 138 CLR 534 at 540. 315 [1906] 1 Ch 605 at 611. 316 Badische [1906] 1 Ch 605 at 611. a condition cannot be attached so as, so to speak, to follow the goods: McGruther v Pitcher." (footnotes omitted) Although thus conceived of as a rule of law, however, it is apparent that the notion that a downstream purchaser who acquired the patented article with notice of conditions was bound by them was ultimately a rule of equitable origin. In Werderman v Société Générale d'Électricité317, Jessel MR stated that it was "quite plain" in equity that "no one taking with notice of that bargain can avoid the liability". Hence, as it was held in that case, a downstream assignee of a licence to use patent rights who took with notice that royalties were payable to the patentee in respect of each use of the patent rights could not avoid liability to account to the patentee even though the downstream assignee was not party to the licence. And although the precise basis of the rule was not specified, it appears very likely that it was, or was the result of reasoning by analogy with, the rule in De Mattos v Gibson318 (which was in substance the counterpart in equity of the tort of knowing interference with contractual rights319), that: "Reason and justice seem to prescribe that, at least as a general rule, where a man, by gift or purchase, acquires property from another, with knowledge of a previous contract, lawfully and for valuable consideration made by him with a third person, to use and employ the property for a particular purpose in a specified manner, the acquirer shall not, to the material damage of the third person, in opposition to the contract and inconsistently with it, use and employ the property in a manner not allowable to the giver or seller." In Carlton & United Breweries Ltd v Tooth & Co Ltd320 Young J recognised the operation of the rule in De Mattos v Gibson as the wellspring of Jessel MR's pronouncement in Werderman. 317 (1881) 19 Ch D 246 at 252. 318 (1859) 4 De G & J 276 at 282; see also 298-299 [45 ER 108 at 110, 116]. 319 See Swiss Bank Corporation v Lloyds Bank Ltd [1979] Ch 548 at 569-575. See also Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584 at 593, 598. 320 (1986) 7 IPR 581 at 635-636. See also Beneficial Finance Corporation Ltd v Multiplex Constructions Pty Ltd (1995) 36 NSWLR 510 at 539. Following Werderman, in Incandescent Gas Light Co Ltd v Brogden321 Kennedy J treated the equitable rule propounded by Jessel MR in Werderman as equally applicable at law, holding that, where a patented article is sold under a limited licence, and the purchaser, whether taking directly from the patentee or from a third party, takes with notice of the limitation, the purchaser's infringement of the limits of the licence constitutes an infringement of the patent rights. In turn, the approach in Brogden was followed in British Mutoscope and Biograph Co Ltd v Homer322, in which the patentee had licensed the licensee to use patented machines on condition that the licensee not sell or part with possession of the machines. The licensee having defaulted in the payment of rent due in respect of premises in which the machines were housed, the landlord distrained on the machines. Farwell J held that the distress was an infringement of the patentee's patent rights, because323: "Having regard to the decision in Incandescent Gas Light Co v Brogden, the [purchaser from the landlord] is in no better position than if [the licensee] had been a mere infringer. It is not a question of contract inter partes affecting a chattel seized and sold by a landlord, but of the absence of any licence, in the event that has happened, to use the patented invention." (footnote omitted) Three years later again, in McGruther v Pitcher324, Cozens-Hardy LJ observed, consistently with British Mutoscope, that: "Now this action is neither in form nor in fact an action by a patentee claiming an injunction to restrain an infringement of his patent. In such an action it is open to the defendant to plead a licence by the plaintiff. That licence may be express, or it may be implied from the sale by the patentee of the patented article, but, if the defendant pleads a licence, then it is competent for the plaintiff to reply, 'The licence which I granted is a limited licence, and you, the person who has now got the patented article, were aware it was only a limited licence, and you cannot therefore defend yourself against my claim for an infringement of my patent, because you are going outside the licence which to your knowledge I gave with reference 321 (1899) 16 RPC 179 at 183. 323 British Mutoscope [1901] 1 Ch 671 at 676. 324 [1904] 2 Ch 306 at 312. to this article.' Such a case would not depend upon any condition running with or attaching to the article. It would depend only upon the limits of the licence which the patentee had granted when he first parted with the goods." Then finally, in Menck (PC)325, after referring to each of the cases just mentioned, the Privy Council synthesised the position at law as follows: "In their Lordships' opinion, it is thus demonstrated by a clear course of authority, first, that it is open to the licensee, by virtue of his statutory monopoly, to make a sale sub modo, or accompanied by restrictive conditions which would not apply in the case of ordinary chattels; secondly, that the imposition of these conditions in the case of a sale is not presumed, but, on the contrary, a sale having occurred, the presumption is that the full right of ownership was meant to be vested in the purchaser; while thirdly, the owner's rights in a patented chattel will be limited if there is brought home to him the knowledge of conditions imposed, by the patentee or those representing the patentee, upon him at the time of sale. It will be observed that these propositions do not support the principles relied upon in their absolute sense by any of the Judges of the Court below. On the one hand, the patented goods are not, simply because of their nature as chattels, sold free from restriction. Whether that restriction affects the purchaser is in most cases assumed in the negative from the fact of sale, but depends upon whether it entered the conditions upon which the owner acquired the goods. On the other hand, restrictive conditions do not, in the extreme sense put, run with the goods, because the goods are patented." (emphasis added) In the result, what started as an application of equity's equivalent to the tort of knowing interference with contract, or perhaps as an instance of estoppel, over time became a rule of law sanctioned by the Privy Council in Menck that, although the sale of a patented article may be made subject to conditions which restrict the right of use or sale of the patented article and breach of which will constitute an infringement of patent, a downstream purchaser will not be liable for patent infringement of patent rights committed in breach of the conditions unless the downstream purchaser took with notice of the conditions. And that approach, having now been "laid down and accepted for a long period of time, ought not to be altered" given that it cannot be said "positively that it was wrong and productive 325 (1911) 12 CLR 15 at 28; [1911] AC 336 at 353. of inconvenience"326. Indeed, to the contrary, there is nothing at all unusual, and the legal system operates efficiently and conveniently in many areas, with bona fide purchasers for value without notice taking their rights free from prior equitable interests327. In this, as in so many other cases, equity moulds its answers to questions about who is entitled to what relief, and when, according to the circumstances of the case. More specifically, a downstream purchaser without notice will not be liable for patent infringement of any of the patent rights retained by the patentee which are the subject of the conditions328. But, in a sale subject to conditions, a downstream purchaser with notice of the conditions will be liable for patent infringement of any of the patent rights committed in breach of the conditions329. A downstream purchaser of a patented article, like an initial purchaser of that article, will be on notice of conditions if they are "clearly brought home" to the purchaser at the time of sale330. For example, a purchaser may be on notice where at the time of sale the vendor says "Mind, I only give you this licence on this condition"331 or the contract states the conditions on which the article is sold332. However, a purchaser will not be on notice if conditions are made known to them only after the time of sale333. Thus, if a purchaser becomes aware of the conditions 326 Bourne v Keane [1919] AC 815 at 874. See Lord Strathcona Steamship Co Ltd v Dominion Coal Co Ltd [1926] AC 108 at 117-120. 327 See, eg, Pilcher v Rawlins (1872) LR 7 Ch App 259 at 267-269. 328 Menck (PC) (1911) 12 CLR 15 at 28; [1911] AC 336 at 353. cf Badische [1906] 1 Ch 605 at 611. 329 Brogden (1899) 16 RPC 179 at 183; Badische [1906] 1 Ch 605 at 611; Menck (PC) (1911) 12 CLR 15 at 28-29; [1911] AC 336 at 353-354. 330 Menck (PC) (1911) 12 CLR 15 at 24, 28; [1911] AC 336 at 349, 353. See also Betts v Willmott (1871) LR 6 Ch App 239 at 245; Cantelo (1895) 12 RPC 262 at 264-265. 331 See Cantelo (1895) 12 RPC 262 at 264. 332 See Menck (PC) (1911) 12 CLR 15 at 28-29; [1911] AC 336 at 353-354. 333 Cantelo (1895) 12 RPC 262 at 264-265; Menck (PC) (1911) 12 CLR 15 at 26; [1911] AC 336 at 351. after the time of sale by reason of a label affixed to a box containing the patented article, that will not constitute notice334. The power of a court to compel a downstream purchaser to refrain from dealing with the article contrary to the conditions imposed335, or to order an account of profits336, is an exercise of equitable jurisdiction in aid of legal rights. A patentee's power to impose conditions, and to demand compliance with those conditions, are rights derived from the Patents Act 1990337, the breach of which may attract an injunction in accordance with the "doctrines of equity as they have developed over time"338. But, for the reasons given, there is no breach by a person who directly purchases a patented article without notice of the patentee's conditions339, or a downstream purchaser without notice, and thus injunction will not go against them340. So, what is said to replace this settled understanding? 334 See Cantelo (1895) 12 RPC 262 at 264-265. 335 See Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 394-395 [28]-[30]. 336 See Nocton [1914] AC 932 at 956-957; Warman International Ltd v Dwyer (1995) 182 CLR 544 at 556-562. 337 See Menck (HCA) (1908) 7 CLR 481 at 535-536, 538-541; Menck (PC) (1911) 12 CLR 15 at 23-24, 28; [1911] AC 336 at 348-349, 353; United Wire [2001] RPC 439 at 458 [68]. cf British Mutoscope [1901] 1 Ch 671 at 673-674, 676-677. 338 Smethurst v Commissioner of the Australian Federal Police (2020) 94 ALJR 502 at 538 [146]; 376 ALR 575 at 612. 339 See Lamshed v Lamshed (1963) 109 CLR 440 at 453; The Commonwealth v Verwayen (1990) 170 CLR 394 at 409, 434-435. See also Menck (HCA) (1908) 7 CLR 481 at 540-541. 340 See Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 217-218 [11]-[16], 231-232 [60]-[61], 241 [91]. Exhaustion theory The exhaustion theory does not exist independently of the legal framework in which it has been developed. It is a theory adopted in the United States341 and some European patent systems342. It is a theory which finds its juridical basis in the specific laws being administered in those countries. As Ginsburg J said in dissent in Impression Products Inc v Lexmark International Inc, patent protections are not harmonised across countries; "patent laws vary by country; each country's laws 'may embody different policy judgments about the relative rights of inventors, competitors, and the public in patented inventions'"343. There is no one exhaustion theory or regime and exhaustion is not a general principle applied to all intellectual property rights344. Much depends on the terms of the relevant legislation or regulation. For example, Art 6 of the Regulation (EU) No 1257/2012 of the European Parliament and of the Council of 17 December 2012 Implementing Enhanced Cooperation in the Area of the Creation of Unitary Patent Protection provides that the rights conferred by a European patent with unitary effect do not extend to acts concerning a patented product after that product has been placed on the market in the European Union "unless there are legitimate grounds for the patent proprietor to oppose further commercialisation of the product"345. The position in the United States is likewise a product of the terms of patents legislation in that country. The specific laws which provide the juridical 341 See 35 USC §§ 154(a)(1) and 261. 342 See Italian Code of Industrial Property 2010 (Italy), Art 5; Act XXXIII of 1995 on the Protection of Inventions by Patents (Hungary), Art 20; Law on Patents and Utility Model Registration 1993 (Bulgaria), Art 20a. 343 (2017) 137 S Ct 1523 at 1539, citing Microsoft Corp v AT&T Corp (2007) 550 US 344 Depending on the jurisdiction, a distinction is often drawn between national, regional and international (or extra-communitary) exhaustion. For example, domestic and international exhaustion applies in the United States: Lexmark (2017) 137 S Ct 1523 at 1535. See also Heath, "Exhaustion and Patent Rights", in Okediji and Bagley (eds), Patent Law in Global Perspective (2014) 419. 345 [2012] OJ L 361/1. See also Notices from European Union Institutions, Bodies, Offices and Agencies – Council – Agreement on a Unified Patent Court [2013] OJ C 175/1, Art 29. basis for the theory in the United States are to be found in Title 35 of the United States Code. Section 261 currently provides, in part: "Subject to the provisions of this title, patents shall have the attributes of personal property. ... Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representatives may in like manner grant and convey an exclusive right under his application for patent, or patents, to the whole or any specified part of the United States." A patent entitles a patent holder to "exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States"346. And whoever engages in one of those acts "without authority" from the patentee may face liability for patent infringement347. Immediately, it is apparent that the specific patent law in the United States is different from the Australian patents Acts. It provides that the patent is to have the attributes of personal property. It does not provide that the exclusive rights which a patentee has shall be recognised as personal property rights. It does not permit, or contemplate, a patentee to have exclusive rights with which a patentee can freely deal in a manner which would impose restrictions or exclusions on, for example, the use of patented property. This difference in the text of the provisions is not unimportant. Presently, there are amendments to Title 35 of the United States Code proposed in the United States Congress to seek to address this issue348. Whether those amendments are passed is not to the point. The fact is that the United States legislation is different and, unsurprisingly, therefore construed differently. Next, the theory. It was most recently described by Roberts CJ in Lexmark, which is said to have prompted some of the proposed legislative amendments 346 35 USC § 154(a)(1). 347 35 USC § 271(a). 348 Restoring America's Leadership Innovation Act of 2020, HR 7366, 116th Congress (2020). currently before Congress349. In that case, Lexmark International ("Lexmark"), a patentee, alleged that a competitor infringed its patent relating to toner cartridges by refurbishing and reselling cartridges that Lexmark had sold subject to an express prohibition on re-use and resale contained in Lexmark's contracts with its customers350. The United States Supreme Court held that the contractual restrictions may have been clear and enforceable under contract law, but that they did not entitle Lexmark to retain patent rights in an item that it had elected to sell351. The juridical bases for understanding the particular monopoly which the applicable United States patents legislation granted are readily distinguishable from those which underpin the implied licence theory. First, as Roberts CJ explained352: "The Patent Act grants patentees the 'right to exclude others from making, using, offering for sale, or selling [their] invention[s].' 35 USC § 154(a). For over 160 years, the doctrine of patent exhaustion has imposed a limit on that right to exclude. See Bloomer v McQuewan, 14 How 539 ... (1853). The limit functions automatically: When a patentee chooses to sell an item, that product 'is no longer within the limits of the monopoly' and instead becomes the 'private, individual property' of the purchaser, with the rights and benefits that come along with ownership. Id, at 549-550. A patentee is free to set the price and negotiate contracts with purchasers, but may not, 'by virtue of his patent, control the use or disposition' of the product after ownership passes to the purchaser. United States v Univis Lens Co, 316 US 241, 250 ... (1942) (emphasis added). The sale 'terminates all patent rights to that item.' Quanta Computer, Inc v LG Electronics, Inc, 553 This well-established exhaustion rule marks the point where patent rights yield to the common law principle against restraints on alienation. The Patent Act 'promote[s] the progress of science and the useful arts by granting to [inventors] a limited monopoly' that allows them to 'secure the financial rewards' for their inventions. Univis, 316 US, at 250 ... 349 Restoring America's Leadership 116th Congress (2020), § 9. Innovation Act of 2020, HR 7366, 350 Lexmark (2017) 137 S Ct 1523 at 1530. 351 Lexmark (2017) 137 S Ct 1523 at 1529, 1531. 352 Lexmark (2017) 137 S Ct 1523 at 1531-1532; see also 1533, 1534. But once a patentee sells an item, it has 'enjoyed all the rights secured' by that limited monopoly. Keeler v Standard Folding Bed Co, 157 US 659, 661 ... (1895). Because 'the purpose of the patent law is fulfilled ... when the patentee has received his reward for the use of his invention,' that law furnishes 'no basis for restraining the use and enjoyment of the thing sold.' Univis, 316 US, at 251 ..." (emphasis added) The theory starts from the premise, as it must given the terms of the statute, that the patent is the property and that "[w]hat a patent adds – and grants exclusively to the patentee – is a limited right to prevent others from engaging in those practices"353, of using, selling, importing and making. The United States provisions strike a different balance354 in law from the balance struck in Australia, and in the United Kingdom. The United States law does not grant to the patentee a right of property by way of monopoly "to make, use, exercise ... the invention"355. It grants the patentee a limited exclusionary power as a statutory right. And the "doctrine of patent exhaustion [that] has imposed a limit on that right to exclude"356 is said to derive from Bloomer v McQuewan357, a decision in 1853 that is regarded as the first appearance of substantive due process358, a concept that has never taken root in Australia. It is in that context that the exhaustion theory is said to "mark[] the point" where those limited statutory rights yield to the common law principle against 353 Lexmark (2017) 137 S Ct 1523 at 1534. 354 See Lexmark (2017) 137 S Ct 1523 at 1539. 355 cf Patents Act 1990, s 13(1). See [155]-[163] above. 356 Lexmark (2017) 137 S Ct 1523 at 1531. 358 Dufresne, "The Exhaustion Doctrine Revived? Assessing the Scope and Possible Effects of the Supreme Court's Quanta Decision" (2009) 24 Berkeley Technology Law Journal 11 at 12-13; Hovenkamp, "The Emergence of Classical American Patent Law" (2016) 58 Arizona Law Review 263 at 289, 291-292; Ernst, "Why Patent Exhaustion Should Liberate Products (And Not Just People)" (2016) 93 Denver Law Review 899 at 909-910; Tur-Sinai, "Exhaustion in the Service of Progress" (2019) 37 Cardozo Arts & Entertainment Law Journal 87 at 92. restraints on alienation359. The theory is not that a patentee cannot sell a patented item subject to alienation under an express, otherwise lawful, restriction360. On the contrary. The theory acknowledges that the sale may be a sale on condition but says that the limited statutory exclusive right (for example, to sell) is exhausted by any and every sale (whether conditional or unconditional). The patentee does not retain any patent rights in relation to the article sold by the patentee361. That theory proceeds from the stated premise that in any sale the patentee cannot assign or devolve, as a matter of patent law, the right to use or sell because "the sale transfers the right to use, sell, or import because those are the rights that come along with ownership" and thus "the buyer is free and clear of an infringement lawsuit because there is no exclusionary right left to enforce"362. This reflects the different understanding of a differently framed patents statute. By contrast, the Australian patents Acts, and the courts, have made plain that the patentee has rights to exploit the invention and that those rights may continue beyond a sale. The difference? The starting point for the implied licence theory is not the common law governing chattels but the statutory grant, which has vested certain, and specific, rights in the patentee which they can trade away, or not, as they see fit363. As the Privy Council said in Menck364: "[T]he general doctrine of absolute freedom of disposal of chattels of an ordinary kind is, in the case of patented chattels, subject to the restriction that the person purchasing them, and in the knowledge of the conditions attached by the patentee, which knowledge is clearly brought home to himself at the time of sale, shall be bound by that knowledge and accept the 359 Lexmark (2017) 137 S Ct 1523 at 1531. 360 cf Société Anonyme (1883) 25 Ch D 1 at 9; Cantelo (1895) 12 RPC 262 at 264; Menck (HCA) (1908) 7 CLR 481 at 539; Menck (PC) (1911) 12 CLR 15 at 27-28; [1911] AC 336 at 352-353. 361 Lexmark (2017) 137 S Ct 1523 at 1532-1534. 362 Lexmark (2017) 137 S Ct 1523 at 1534, citing Bloomer v McQuewan (1853) 55 US 363 Menck (HCA) (1908) 7 CLR 481 at 538. 364 (1911) 12 CLR 15 at 24; [1911] AC 336 at 349. situation of ownership subject to the limitations. These limitations are merely the respect paid and the effect given to those conditions of transfer of the patented article which the law, laid down by Statute, gave the original patentee a power to impose." And it was for that reason that, in Time-Life International, Stephen J said patent cases "should ... be seen as confined to the quite special case of the sale by a patentee of patented goods and as turning upon the unique ability which the law confers upon patentees of imposing restrictions upon what use may after sale be made of those goods"365. Put in modern terms, the starting point is the statute, not the common law366. What the law confers upon patentees is a unique set of rights of property and the ability to impose restrictions upon what use may be made of patented goods after sale. Loss of rights and remedies The debate about juridical bases is not arid. Since at least 1852367 in Anglo-Australian law, in a case of infringement of a patent, a patentee has had a choice of remedies: damages368 and, in equity, an injunction and an account of profits incidental to an injunction. The difference between the remedies was explained by Windeyer J in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd369: 365 (1977) 138 CLR 534 at 549. 366 Menck (HCA) (1908) 7 CLR 481 at 538; Time-Life International (1977) 138 CLR 534 at 549; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 31 [4]; Baini v The Queen (2012) 246 CLR 469 at 476 [14]; Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39]; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at 368 [14]. 367 See [158] fn 231 above. 368 Including additional damages: see Patents Act 1990, s 122(1A). 369 (1968) 122 CLR 25 at 32. See also Lever v Goodwin (1887) 36 Ch D 1 at 7; Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101 at 110-111; Warman (1995) 182 CLR 544 at 558-559. "The distinction between an account of profits and damages is that by the former the infringer is required to give up his ill-gotten gains to the party whose rights he has infringed: by the latter he is required to compensate the party wronged for the loss he has suffered. The two computations can obviously yield different results, for a plaintiff's loss is not to be measured by the defendant's gain, nor a defendant's gain by the plaintiff's loss. Either may be greater, or less, than the other. If a plaintiff elects to take an inquiry as to damages the loss to him of profits which he might have made may be a substantial element of his claim: see Mayne on Damages, 11th ed (1946), p 71 note. But what a plaintiff might have made had the defendant not invaded his rights is by no means the same thing as what the defendant did make by doing so." A patentee must elect between the remedies of damages and an account of profits370: the two remedies "are hardly reconcilable"371. As a majority of this Court said in 1993 in Dart Industries Inc v Decor Corporation Pty Ltd372, citing Neilson v Betts373 and Lever v Goodwin374, "[d]amages and an account of profits are alternative remedies. An account of profits was a form of relief granted by equity whereas damages were originally a purely common law remedy." The existence of, and resort to, these alternative remedies for infringement of patent rights is necessary to overcome real and, at times, unjust impediments to a patentee's recovery. Indeed, there may be circumstances where the only right, or only valuable right, arises from a claim based on infringement of patent rights. If, for example, a patentee gives patented goods to a charity to exploit, by sale and use, in the 370 Patents Act 1990, s 122(1). 371 Neilson v Betts (1871) LR 5 HL 1 at 22. See also De Vitre v Betts (1873) LR 6 HL 319 at 321; Lever (1887) 36 Ch D 1 at 7; Siddell v Vickers (1892) 9 RPC 152 at 162; Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd [1936] Ch 323 at 325; Dart (1993) 179 CLR 101 at 110-111; Unilin Beeher BV v Huili Building Materials Pty Ltd [No 2] (2007) 74 IPR 345 at 365-366 [70]. See further Seton, Forms of Judgments and Orders in the High Court of Justice and Court of Appeal, 7th ed (1912), vol 1 at 651. 372 (1993) 179 CLR 101 at 110-111 (footnotes omitted). 373 (1871) LR 5 HL 1 at 22. 374 (1887) 36 Ch D 1 at 7. education sector and the charity proceeds to sell and use the patented goods in the medical sector, how are those conditions enforceable, legally and practically, except under the Patents Act 1990 for infringement of patent rights? Other justifications for the existence of the two rights, and thus the two remedies, are practical: issues of onus and the relative cost of proving loss. A patentee that seeks an account of profits is not required to prove any loss375. Although there is a defence of innocent infringement376, there is no defence to an account of profits claim that the patentee might have been "unwilling, unlikely or unable to make the profits for which an account is taken"377. For damages, the patentee has the burden of proving loss or proving injury for which a licence fee might be awarded378. And an award of licence fee damages, which might be substantially less than the profits made by a conscious infringer, requires evidence to be adduced of "the practice, as regards royalty, in the relevant trade or in analogous trades; perhaps of expert opinion"379. The evidentiary difficulties in, and cost of, proving loss have been laid bare in the authorities380. Thus, an account of profits is often the preferred remedy where the quantum of the patentee's loss is relatively small as, for example, may be the case where a new or boutique inventor has a lower capacity to profit from a patent and where the injury or wrongful act 375 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 394, citing Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 376 Patents Act 1990, s 123. 377 Warman (1995) 182 CLR 544 at 558; Mann (2019) 93 ALJR 1164 at 1190 [98]; 373 ALR 1 at 27-28. 378 General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819 at 824; [1975] 2 All ER 173 at 177. See also Watson, Laidlaw & Co Ltd v Pott, Cassels, and Williamson (1914) 31 RPC 104 at 117-120; One Step (Support) Ltd v Morris-Garner [2019] AC 649 at 669-671 [25]-[30]. 379 General Tire [1975] 1 WLR 819 at 826; [1975] 2 All ER 173 at 179. 380 See, eg, Ungar v Sugg (1892) 9 RPC 113 at 117; Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157 at 164-165; General Tire [1975] 1 WLR 819 at 827-835; [1975] 2 All ER 173 at 179-187; Pearce v Paul Kingston Pty Ltd (1992) 25 IPR 591 at 595; Gerber Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443 at 453-456. which might attract damages is significantly exceeded by the profits made by the infringer or the cost of proof of damages. By contrast, adopting an exhaustion theory would confine a patentee complaining of breach of a condition on which the patentee sells the patented article to whatever rights the patentee may have in contract. The failure to comply with the condition would not be an infringement of the patent and would not attract the statutory remedies381. Furthermore, by contrast with the solution implemented by regulation in the European Union, which confines the exhaustion theory to sales within the European Union382, the removal of a patentee's ability to impose conditions enforceable as patent rights after an international sale could have consequential effects on the viability of the sale of patented goods in international markets at reduced rates. The ability to bring an action for infringement of patent following parallel importing might, practically speaking, be necessary protection before a patentee can sell internationally at lower prices. Thus, as Professor Nard observes383, the theory of exhaustion of patent rights may reduce the positive effects of price discrimination – the ability to charge a different price for the same good in different geographical areas – which is of concern in developing and less-developed countries. Matter for Parliament, not the courts As Calidad stated, it is well established that the Patents Act 1990 is to be construed in the context of the law that existed when it was enacted384. Calidad then stated that: "[the] state of the law included, relevantly, the common law concerning personal property rights in chattels, which cannot be sold subject to conditions that will 'run with the product'. Thus, where a patentee elects to 381 cf Patents Act 1990, Ch 11, Pt 1. 382 Regulation (EU) No 1257/2012 of the European Parliament and of the Council of 17 December 2012 Implementing Enhanced Cooperation in the Area of the Creation of Unitary Patent Protection [2012] OJ L 361/1, Art 6. See also Coty Prestige Lancaster Group GmbH v Simex Trading AG [2010] ETMR 703 at 710 [31]. 383 Nard, The Law of Patents, 5th ed (2020) at 728-729. 384 Time-Life International (1977) 138 CLR 534 at 541-542, 548-553. exercise its exclusive rights in s 13(1) by 'selling or otherwise disposing of' a patented product, or authorising others to do so, it should be taken to have exhausted its exclusive rights in that embodiment of the invention." The difficulty for Calidad is, as has been seen, that that was a misstatement of the state of the law that existed when the Act was enacted. When the Patents Act 1990 was enacted, the law had resolved the tension between the terms of the English and Australian patents Acts and personal property rights by the implied licence theory. At the time that the Patents Act 1990 was enacted, that had been the law for about 80 years385. There have been successive iterations of patents Acts in Australia386, including the Patents Act 1990, with which this appeal is concerned and which was enacted after Time-Life International387, and no attempt has been made to overturn that settled understanding. The pages of the Commonwealth Law Reports388, and the Federal Court Reports389, as well as those of law reports in the United Kingdom390, are not blank and should not be read as though the authority of a 385 Betts v Willmott (1871) LR 6 Ch App 239; Société Anonyme (1883) 25 Ch D 1; Heap (1888) 5 RPC 603; Cantelo (1895) 12 RPC 262; Brogden (1899) 16 RPC 179; Saccharin Corporation [1900] 2 Ch 659; British Mutoscope [1901] 1 Ch 671; McGruther [1904] 2 Ch 306; Badische [1906] 1 Ch 605; Menck (HCA) (1908) 7 CLR 481; Menck (PC) (1911) 12 CLR 15; [1911] AC 336; Time-Life International (1977) 138 CLR 534. 386 Patents Act 1903; Patents Act 1952 (Cth); Patents Act 1990. See also Menck (HCA) (1908) 7 CLR 481 at 508-509, 529, 542-543; Menck (PC) (1911) 12 CLR 15 at 16-17; [1911] AC 336 at 341-342; Time-Life International (1977) 138 CLR 534 at 387 (1977) 138 CLR 534. 388 See, eg, Menck (HCA) (1908) 7 CLR 481; Menck (PC) (1911) 12 CLR 15; [1911] AC 336; Time-Life International (1977) 138 CLR 534; Grain Pool (2000) 202 CLR 389 See, eg, Computermate (1988) 20 FCR 46 at 50-51; Levi Strauss (1993) 43 FCR 344 at 370. See also Austshade (2016) 118 IPR 93 at 116-119 [78]-[82]. 390 See, eg, Betts v Willmott (1871) LR 6 Ch App 239; Société Anonyme (1883) 25 Ch D 1; Heap (1888) 5 RPC 603; Cantelo (1895) 12 RPC 262; Brogden (1899) 16 RPC 179; Saccharin Corporation [1900] 2 Ch 659; British Mutoscope [1901] 1 Ch 671; decision (in this case one that has stood unchallenged for more than a century) "did not survive beyond the rising of the Court"391. It is for Parliament, not the courts, to make such a fundamental change to patent rights392. Parliament, though of course well able and willing to do so when appropriate and prospectively393, has chosen not to do so394. The patents in suit It is now necessary to address whether the modification of the used Epson printer cartridges amounted to making the patented product and thereby infringed Seiko's patents. There are two patents in suit: patent number 2009233643 ("the 643 patent") and patent number 2013219239. However, the proceedings below and before this Court have been conducted on the basis that there is no material distinction between the content of the two asserted claims constituting those patents, and it is therefore sufficient to refer to claim 1 of the 643 patent alone. The patent proposes "a structure for preventing the information storage medium [or memory] from shorting and becoming damaged due to a drop of liquid being deposited on the terminals connecting the printing apparatus with the storage medium". The patent specification describes an ink cartridge that has two or more devices (such as a memory and a high voltage piezoelectric device for detecting ink levels) fitted with electrical terminals that give rise to a risk of short-circuiting McGruther [1904] 2 Ch 306; Badische [1906] 1 Ch 605; Menck (PC) (1911) 12 CLR 15; [1911] AC 336. See also fn 302 above. 391 Queensland v The Commonwealth (1977) 139 CLR 585 at 599. 392 As the Commonwealth Parliament did in Australia in 1909 with the introduction of s 87B into the Patents Act 1903 limiting the kinds of conditions that a patentee might impose on subsequent purchasers: Patents Act 1909, s 15. 393 See, eg, Competition and Consumer Act 2010 (Cth), s 51(3)(a) (as in force on 11 September 2019); Treasury Laws Amendment (2018 Measures No 5) Act 2019 (Cth), Sch 4. 394 Indeed, when the Commonwealth Acts were consolidated in 1935 and 1950, including the Patents Act 1903, s 62 was accompanied by a footnote which stated "[a]s to the right of a patentee to attach restrictive conditions to the sale of a patented article see National Phonograph Co of Australia Ltd v Menck, [1911] AC 336; 12 CLR 15; 17 ALR 94": Patents Act 1903, as published in Australia, Commonwealth Acts 1901-1935 (1936), vol 2 at 1264 fn (a); Patents Act 1903, as published in Australia, Commonwealth Acts 1901-1950 (1953), vol 4 at 3201 fn (d). between the terminals, and describes two broad forms of solving the short-circuiting problem. The first is to position the terminals (or pads) relative to each other in a manner that reduces or prevents the likelihood of short-circuiting between them, and the second is to use one or more "short detection circuits" to detect short-circuiting and take appropriate action to prevent consequent damage. In some embodiments of the invention, the two solutions are combined. The integers of claim 1 of the 643 patent are identified in the patent as follows: "[1] A printing material container adapted to be attached to a printing apparatus by being inserted in an insertion direction, the printing apparatus having a print head and a plurality of apparatus-side terminals, the printing material container including: a memory driven by a memory driving voltage; an electronic device driven by a higher voltage than the memory driving voltage; a plurality of terminals including a plurality of memory terminals electrically connected to the memory, and a first electronic device terminal and a second electronic device terminal electrically connected to the electronic device, wherein: the plurality of terminals each include a contact portion for contacting a corresponding the plurality of apparatus-side terminals, terminal of the contact portions are arranged in a first row of contact portions and in a second row of contact portions, the first row of contact portions and the second row of contact portions extending in a row direction which is generally orthogonal to the insertion direction, the first row of contact portions is disposed at a location that is further in the insertion direction than the second row of contact portions, the first row of contact portions is longer than the second row of contact portions, and, the first row of contact portions has a first end position and a second end position at opposite ends thereof, [10] a contact portion of the first electronic device terminal is disposed at the first end position in the first row of contact portions and [11] a contact portion of the second electronic device terminal is disposed at the second end position in the first row of contact portions." The facts The facts as found by the primary judge are in substance as follows. Seiko sells printer products, including printer cartridges ("original Epson printer cartridges"), under or by reference to the trade mark "EPSON". All original Epson printer cartridges embody the invention claimed in Seiko's patents. There are several different types of original Epson printer cartridges, and each type is designed to fit a different range of Epson printers. All original Epson printer cartridges have an integrated circuit chip mounted on or connected to a printed circuit board (or integrated circuit board). But the type of circuit chip fitted to each type of printer cartridge is peculiar to that type of cartridge and has differing compatibility with Epson printers. A memory chip on an original Epson printer cartridge stores information about the printer cartridge. The memory chip's primary function is to store information about the amount of ink remaining in the cartridge. When the memory chip signals to the printer that the ink remaining in the cartridge is below a pre-determined level, the printer ceases to operate. Other functions of the memory chip include storing information about the original size of the ink supply (for example, whether it is a regular or high-capacity cartridge), the expiration date of the cartridge, and the length of time since the cartridge was first inserted into the printer. The memory chip has two different operating modes: "normal" mode and "test" mode. A cartridge is in normal mode when in use in a printer, and test mode is selected when the chip is being tested after manufacture or when certain types of data stored on the chip are rewritten. Seiko designs and manufactures original Epson printer cartridges with the intention that, once the ink in the cartridge has been consumed, the purchaser will discard the used cartridge and purchase another new original Epson printer cartridge to replace it. There is, however, a substantial international trade in recovering discarded used printer cartridges and reconditioning them for resale at cheaper prices than new original replacement cartridges. Ninestar is one of the world's largest manufacturers of generic printer consumables and is part of that trade. It purchases discarded used original Epson printer cartridges from third party suppliers who acquire them from recycling facilities and other sources, and then Ninestar reconditions the used cartridges to a standard suitable for resale as generic, recycled replacement cartridges. The work involved in reconditioning the used original Epson printer cartridges varies between the different types of cartridge. When Ninestar acquires a used original Epson printer cartridge, the information on the cartridge's memory chip records that the cartridge is "used", such that the cartridge will not produce ink when connected to a printer because the chip conveys information to the printer that the cartridge is empty. In order to make the used cartridge ready for resale, it is necessary for Ninestar both to refill the cartridge with ink, and to reconfigure or rewrite the information on the memory chip, or replace the memory chip with another, so as to indicate to any printer in which the cartridge is installed that it is not used or empty. Apex Microelectronics Co Ltd ("AMC") is a related company of Ninestar and a manufacturer and supplier of equipment that rewrites the memory of memory chips installed in original equipment manufacturer ("OEM") printer cartridges, including the memory chips installed in original Epson printer cartridges. AMC also manufactures and supplies replacement integrated circuit chips ("compatible chips") that may be substituted for the OEM chips. Ninestar engages AMC to rewrite the memory chips installed on some of its used original Epson printer cartridges and fits AMC compatible chips to others. Proceedings at first instance Calidad purchased from Ninestar and imported into Australia and resold to purchasers in Australia 11 different categories of original Epson printer cartridges reconditioned by Ninestar. Seiko alleged that, by so doing, Calidad infringed the claims of its patents. Calidad accepted that each of the reconditioned printer cartridges fell within the claims of Seiko's patents but contended that it had a complete answer to the allegation of patent infringement, on the basis either that Seiko's patent rights in relation to the cartridges were exhausted upon Seiko's initial sale of the cartridges or, alternatively, that by selling the cartridges to the initial purchasers, Seiko impliedly licensed the initial purchaser, and all subsequent purchasers, to use the cartridges despite Seiko's patent rights in respect of the cartridges. The primary judge held395 that a defence relying on the exhaustion theory was not available under the law in Australia and that while the implied licence defence succeeded the categories of cartridges (Categories 1, 2, 3 and A, described below), on the basis that the modifications that in respect of four of 395 Seiko Epson Corporation v Calidad Pty Ltd (2017) 133 IPR 1 at 6 [4], 53 [246], Ninestar made to those original cartridges in the process of reconditioning them did not materially alter them, the defence failed in respect of the remaining categories of cartridges because the modifications which Ninestar made in reconditioning those categories of cartridges did materially alter them. The primary judge usefully summarised the 11 different categories of original Epson printer cartridges, and the extent of modifications involved in each, as follows396: Type of modification Calidad model / type Current (all cartridges sold after April 2016, excluding the Calidad 260H referred to in Category 1) Category 1 (1) Preparation (2) refilling processes + (3) Reset in normal mode; (4) Normal mode R&D processes+ Calidad 260 Std (originally Epson T200) Formerly, Calidad 260H (originally Epson T200XL) Category 2 (1) Preparation Some Calidad 253 (originally Epson 133) (2) Refilling processes + (3) Reset/reprogram in test mode for ink level, cartridge status Some Calidad 258 (originally Epson 138) (4) Test mode R&D processes + Category 3 (1) Preparation Some Calidad 253 (originally cartridges other than Epson 133) (2) Refilling processes + 396 Seiko (2017) 133 IPR 1 at 20-21 [73]. (3) Reset/reprogram in test mode for model number, ink colour, ink level, cartridge status and date of manufacture (4) Test mode R&D processes + Some Calidad 258 (originally cartridges other than Epson 138) Category A Cartridge categories 2 or 3 above, without the gas membrane cut (95% of cases) 5% of Calidad 253 and Calidad 258 cartridges Former (all cartridges sold before April 2016) Category 4 (1) Preparation cartridges other than Epson T200XL) (2) refilling processes + (3) Chip replacement process (4) Compatible chip R&D processes + Category 5 Same as category 4 cartridges which Some Calidad 250 have also had interface pattern cutting process Category 6 Same as categories 2 or 3 plus Some Calidad 253 interface pattern cutting process Some Calidad 258 Category 7 Categories 5 or 6 cartridges plus replace integrated circuit assembly Some Calidad 250 imported in Some Calidad 253 imported in Some Calidad 258 imported in Category B Cartridge categories 5, 6, or 7 above, without the gas membrane cut (95% of cases) Some Calidad 250 Some Calidad 253 Some Calidad 258 The primary judge set out each step in the process of modifying the original Epson printer cartridges, corresponding to the middle column of the preceding summary. Step 1, "preparation", consisted of inspecting an original Epson printer cartridge to confirm that it was the correct type and in a suitable condition to be restored, emptying and cleaning the cartridge in preparation for refilling, removing any residual ink inside the cartridge by inserting a vacuum device, washing the cartridge with water in cases where the original ink contained pigment (rather than dye), and preparation of the outlet hole by removing the original seal that was broken when the cartridge was first used. Step 2, "refilling", consisted of creating a second hole – or injection port – by inserting a needle into the middle of the main side of the cartridge, infusing ink through that hole, using the vacuum device to extract air from the outlet hole, and then resealing the injection port and outlet hole by placing pieces of thin clear plastic over them and applying force and heat to effect a seal. Step 3, "reset in normal mode", was a process by which the data stored on the memory chip in the addresses relating to the ink level and cartridge status was rewritten from one series of binary bits to another, to record that the ink volume was "full" and that the cartridge status was either "unused" or "has been used previously but is not yet empty". That process takes only seconds and involves holding the terminals of the cartridges up to a connector to equipment that causes the rewriting to take place. Step 4 took different forms: "normal mode research and development processes", "test mode research and development processes", and "compatible chip research and development processes". Step 4 in respect of "normal mode research and development processes" consisted of steps that had to be undertaken to identify the mechanisms of the original Epson printer cartridges and their interaction with Epson printers, to enable the modifications identified above to take place. It included obtaining used and unused samples of the original Epson printer cartridges; inspecting them in order to ascertain the path that the ink follows inside the cartridge and understand where the sensor is located; determining how the memory chips operate by removing a seal on top of the memory chip, removing protective layers to reveal circuitry around each transistor, photographing each block of circuitry including each transistor (of which there could be hundreds) and conducting electrical testing; determining the interface protocol by which the printer and chip communicate by use of an oscilloscope to identify the data stored and determine what it means and the memory addresses at which information needs to be read or written; and, finally, programming electronic equipment to "reset" the data relating to ink level and cartridge status. These processes required a reasonable degree of expertise and entailed an invasive examination of sample original Epson printer cartridges. In respect of "test mode research and development processes", in addition to the processes undertaken in respect of normal mode, this step required determination of how to activate test mode and the applicable interface protocol for test mode with the use of specialist third party technology which, the primary judge found, was a costly, time-consuming process requiring considerable expertise and skill. Finally, in respect of "compatible chip research and development processes", in addition to understanding the mechanical and physical attributes of original Epson printer cartridges and the interface protocol by which the printer and chip communicate, this step involved understanding the electrical circuitry by removing a seal on top of the cartridge and protective layers to reveal the circuitry around each transistor, photographing each block of circuitry and transistor, and then testing, constructing and simulating the circuitry using automation software and, with that information, designing and developing a compatible memory chip to substitute for the chip in the original Epson printer cartridge. On the basis of those facts, the primary judge concluded that the modifications made to the Category 1 cartridges did not exceed the licence to use that was implicit in the original unconditional sale of the original Epson printer cartridges, because the modifications did not have a material bearing on the manner in which the original Epson printer cartridges embodied the invention as claimed. As the primary judge found: Step 1 – the preparatory work – involved no change to the printing material container identified in integer [1] of the claim, it required only that the printing material container be adapted to be attached to a printing apparatus by being inserted in an insertion direction, and that aspect of the container was not materially altered. Step 2 – refilling – involved minor physical alterations to the cartridge container in the result of creating an injection port or a slit in the gas membrane, but those changes bore no relationship to the subject of the integers of the claim. Step 3 – reset in normal mode – did not entail material alterations since, properly construed, the claim distinguished between the memory chip and the matter stored on it (whether it be data, software or otherwise) and the combination of integers claimed was thus the existence of the chip as part of the combination and not for a monopoly referable to the content of the chip. Step 4 – normal mode research and development processes – was irrelevant in that that work was anterior to the making of changes to the embodiment of the claimed invention (the claim being for a product, not a process) and, in any event, the research and to the information development concerned alterations made contained in the memory chip, which was not a feature of the invention as claimed. The primary judge also found that the modifications made to the Category 2 cartridges did not have a material bearing on the manner in which the original Epson printer cartridges embodied the invention as claimed, in substance because: the work comprising steps 1 to 3 was not materially different from the work comprised in steps 1 to 3 for Category 1 cartridges; and the primary difference between Categories 1 and 2 was that the resetting or reprogramming of the memory chip was undertaken in test mode and required a greater degree of research and development to be able to rewrite its contents, but the fact that there was an additional degree of difficulty in preparing to make the alterations to the memory was legally irrelevant. The primary judge found that steps 1 and 2 for the Category 3 cartridges were the same as for Category 1, and, although step 3 was more complicated, and involved additional modifications to the contents of the memory chip, that fact was irrelevant for the reasons given in relation to Category 2 cartridges. Consequently, the primary judge concluded that the Category 3 cartridges were within the scope of the implied licence. Category A cartridges – being cartridges otherwise within Category 2 or 3 that do not have the gas membrane cut in the modification process – were likewise held to be within the scope of the implied licence. Category 4 cartridges had not been sold since April 2016 and were modified from original Epson printer cartridges acquired from outside Australia. Steps 1 and 2 for Category 4 cartridges were the same as for Category 2 cartridges. Step 3, however, was different in that, instead of reprogramming or resetting the integrated circuit chip in the cartridge, the integrated circuit boards were removed from the cartridges using a cutting tool, the memory chips on the integrated circuit boards were replaced with generic memory chips, and then each integrated circuit board so fitted with a generic memory chip was refitted to a cartridge although not necessarily, or, in all probability, at all, to the same cartridge from which the circuit board had been removed. As set out in the table above, the Category 4 cartridges also involved a different step 4 to that in the preceding categories of cartridges, being the research and development of a compatible memory chip. The primary judge held that, because Category 4 cartridges had their original memory chips removed from the original Epson printer cartridges and replaced "with an entirely different item of hardware", step 3 in relation to Category 4 cartridges fell "on the wrong side of the line for the implied licence to be maintained"397. In his Honour's view, that process of removal and replacement materially affected, and changed, "the embodiment [of the patented device] that Category 5 cartridges were modified in the same way as Category 4 cartridges but with the addition of cutting off the "interface pattern". The interface pattern was part of the exterior shape of one of the short sides of the original Epson printer cartridge and was the means by which Seiko physically limited the range of Epson printers to which the cartridges could be fitted. The primary judge held that because integer [1] of the patent requires that the printing material container be adapted to be attached to a printing apparatus by being inserted into it, the interface pattern formed part of the mechanism by which Seiko's embodiment achieved that function, and although the modifications made might be regarded as "borderline", in the context of "the present analysis" they fell on the wrong side of the line of the implied licence. Like Category 4 cartridges, Category 6 cartridges had not been sold since April 2016. The processes used to modify these cartridges were the same as for Category 2 and 3 cartridges but with the addition of cutting off the interface pattern in the manner described in the case of Category 5 cartridges. The primary judge held that, as with Category 5 cartridges, cutting off the interface pattern led to the conclusion that Category 6 cartridges were beyond the scope of the implied licence. Category 7 cartridges consisted of cartridges that fell within Category 5 (ie, Category 4 cartridges with the interface pattern cut off) or Category 6 397 Seiko (2017) 133 IPR 1 at 57 [276]. 398 Seiko (2017) 133 IPR 1 at 57 [276]. (ie, Category 2 or 3 cartridges with the interface pattern cut off) that had also had the integrated circuit assembly replaced. The primary judge held that they were beyond the scope of the implied licence. Category B cartridges consisted of cartridges that fell within Category 5, 6 or 7 which had not had their gas membranes cut. The primary judge did not consider that cutting the gas membrane was a material modification to the embodiment as claimed, but, for the reasons given in relation to Categories 5, 6 and 7, his Honour held that Category B cartridges were beyond the scope of the implied licence. Proceedings before the Full Court of the Federal Court Each member of the Full Court of the Federal Court of Australia held that the primary judge erred, but for different reasons. Greenwood J considered399 that the primary judge failed to examine the "true scope and content" of the implied licence. His Honour posited400 that the implied licence included "all the normal rights of an owner" or the "'absolute right' to deal with the product as the buyer thinks fit", and so included the right to "hire, sell, otherwise dispose of the product, offer to sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things". But, his Honour said, the implied licence did not include the right to make the product, and, in his Honour's view, the modifications made to each category of cartridge constituted making an article embodying the integers of a claim defining Seiko's invention401. Jagot J reasoned similarly but in more detail. Her Honour noted that step 2 of the process for all categories of cartridges involved drilling a new hole in the ink container to enable it to be filled with fresh ink, and then sealing both the new hole and the original hole by the application of plastic with heat and pressure. Her Honour stated that, although the primary judge regarded that as but a "minor physical alteration" with no relationship to the claimed invention, in her Honour's view it was more, because, at the moment that the new hole was created, there was no longer an essential integer of the claimed invention, namely, a "printing material container", and that remained so until the new seals were 399 Calidad Pty Ltd v Seiko Epson Corporation (2019) 270 FCR 572 at 588 [68] (emphasis in original). 400 Calidad (2019) 270 FCR 572 at 590 [83]. 401 Calidad (2019) 270 FCR 572 at 590 [84]-[85]. applied402. And in her Honour's view, the modifications carried out by Ninestar in refilling and resealing the ink container could not be regarded as a repair because the original Epson printer cartridges as sold and ultimately acquired by Calidad could not be re-used (since the ink container was empty and the memory chip recorded that the container was empty of ink), but the product as "repurposed" was capable of re-use. Her Honour regarded that as the making of a new embodiment of the invention and thus beyond the scope of the implied licence403. Jagot J considered that, in the case of Category 4 cartridges, because the memory chip was substituted (which required removal of the printed circuit board from each cartridge and the attachment of a new substitute chip to each of the printed circuit boards), and because the printed circuit boards with substitute chips installed were supplied in bulk separately from the cartridges from which they had been removed and were then refitted to different cartridges to those from which they had been removed, the original Epson product as sold necessarily ceased to exist either at the moment its printed circuit board was removed or by the time the new chip was attached to a printed circuit board and that printed circuit board was inserted into a different cartridge. In her Honour's view, the functional equivalence of the substituted memory chips was beside the point. The product was no longer the product that Seiko had sold404. Jagot J also considered that the same was true of Category 5 cartridges, and, contrary to the primary judge's conclusion, that the cutting off of the interface pattern on Category 5 cartridges was not just "borderline" but rather enabled "a new kind of adaption for attachment to the printer"405. For that reason, her Honour said, it was clearly a new embodiment of the claimed invention containing all of the integers of the claim. Jagot J was further of the opinion that the same conclusion applied to Category 7 cartridges because the reconditioning process involved the removal of the integrated circuit assembly from one cartridge, which, in her Honour's view, was "central to the invention as claimed and which includes within it the layout of the terminals which are described in integers [4]-[11]", and the replacement of the integrated circuit assembly in another cartridge as necessary resulted in the 402 Calidad (2019) 270 FCR 572 at 619 [166]. 403 Calidad (2019) 270 FCR 572 at 619 [166]. 404 Calidad (2019) 270 FCR 572 at 619 [167]. 405 Calidad (2019) 270 FCR 572 at 620 [170]. creation of a "new embodiment of the invention" beyond the scope of the implied licence406. Finally, with respect to changes made to cartridge memory, Jagot J stated that she was unable to agree with the primary judge that the memory claim of the patent involved the mere physical existence of the memory chip. In her Honour's view, integer [2] claimed a memory "driven by" a memory driving voltage, and the only thing that was driven by the memory driving voltage was the memory "in the sense of the information stored on the chip"407. It followed, in her Honour's view, that the fact that the chip had information on it that was able to be changed (driven) by the memory driving voltage was an essential part of the claimed invention408. Her Honour concluded409: "It may be accepted that the actual status of the memory (that is, whether it shows the cartridge as full, empty or anywhere in between) is not part of the claim, but the fact that the claim involves a memory driven by a memory driving voltage is not irrelevant. Considered in the context of the product as sold, which is essential to the scope of the implied licence to use the product without infringement of the patents, the fact that the re-purposing of the cartridges, as a minimum, involves re-programming the chip to change the memory supports the conclusion that the imported Calidad cartridges are outside the scope of any possible implied licence or any concept of repair." Yates J reasoned410 that, whereas the primary judge's analysis of Calidad's cartridges was confined to the materiality of the modifications made to the claimed features of the invention, the correct approach was to ask whether, in each particular category, the modifications that Ninestar made to the original Epson printer cartridges altered them in such a way that they were, in substance, different articles from those Seiko had put into the market. And in his Honour's view, the modifications made in each category of cartridge materially altered the original Epson printer cartridges that Seiko had put into the market and amounted to remanufacture of the discarded original Epson printer cartridges to produce reborn printer cartridges that could not be said to have been of Seiko's making. 406 Calidad (2019) 270 FCR 572 at 620 [171]. 407 Calidad (2019) 270 FCR 572 at 620 [172]. 408 Calidad (2019) 270 FCR 572 at 620-621 [172]. 409 Calidad (2019) 270 FCR 572 at 621 [172]. 410 Calidad (2019) 270 FCR 572 at 643 [293]-[294]. Repair and modification In cases of this kind, where the question is whether steps taken to recondition or restore a used patented article constitute an infringement of the patent, the principle is clear. Consistently with the release that an implied licence in the contract of sale effects from the exclusive rights in s 13 of the Patents Act 1990, the purchaser has the liberty to "use" or "sell" the article but not to "make" a new article. The implied licence therefore permits a purchaser to repair and restore the article which embodies the patented invention, or otherwise to use the article, but not to make a new one. As Lord Halsbury famously observed in Sirdar Rubber Co Ltd v Wallington, Weston & Co411: "The principle is quite clear although its application is sometimes difficult; you may prolong the life of a licensed article but you must not make a new one under the cover of repair." Likewise, in Solar Thomson Engineering Co Ltd v Barton412, Buckley LJ (with whom Orr and Goff LJJ agreed) endorsed the observations of Swinfen Eady J at first instance in Sirdar Rubber413, where his Honour stated that: "The purchaser of a patent article has a right to prolong its life by fair repair, but he has not a right to obtain ... a substantially new article made in accordance with the invention, retaining only some subordinate part of the old article so that it may be said that the combination is not an entirely new one." And, in Buckley LJ's view414: "The cardinal question must be whether what has been done can fairly be termed a repair, having regard to the nature of the patented article." 411 (1907) 24 RPC 539 at 543. 412 [1977] RPC 537 at 554-555. 413 Solar Thomson [1977] RPC 537 at 554-555, quoting Sirdar Rubber (1905) 22 RPC 414 Solar Thomson [1977] RPC 537 at 555. Subsequently, in United Wire, Lord Hoffmann observed415: "Repair is one of the concepts (like modifying or adapting) which shares a boundary with 'making' but does not trespass upon its territory. I therefore agree with the Court of Appeal that in an action for infringement by making, the notion of an implied licence to repair is superfluous and possibly even confusing. It distracts attention from the question raised by section 60(1)(a) [of the Patents Act 1977 (UK)], which is whether the defendant has made the patented product. As a matter of ordinary language, the notions of making and repair may well overlap. But for the purposes of the statute, they are mutually exclusive. ... In Solar Thomson remark of Lord Halsbury LC ... [and] said that the question was one of fact and degree and ... that the 'cardinal question' was whether 'what has been done can fairly be termed a repair, having regard to the nature of the patented article'. The context shows that Buckley LJ saw no difference between this question and the question of whether, having regard to the nature of the patented article, the defendant could be said to have made it. Speaking for myself, I prefer the latter formulation." the But more recently, in Schütz (UK) Ltd v Werit (UK) Ltd, Lord Neuberger (with whom Lord Walker, Lady Hale, Lord Mance and Lord Kerr agreed) confirmed the utility of the distinction between repair of a patented item and the making of a new one416: "The approach of Buckley LJ [in Solar Thomson] supports the notion that, subject to the overriding point that it should not obscure the central issue of whether the alleged infringer 'makes' the patented article, it may sometimes be useful to consider whether the alleged infringer is repairing rather than 'making' the article. ... The mere fact that an activity involves replacing a constituent part of an article does not mean that the activity involves 'making' of a new article rather than constituting a repair of the original article. Repair of an item frequently involves replacement of one or some of its constituents." 415 [2001] RPC 439 at 459 [71]-[72], quoting Solar Thomson [1977] RPC 537 at 555. 416 [2013] RPC 395 at 410-411 [49]-[50]. His Lordship then referred to the example of repairing a roof by the replacement of tiles or repairing a house by replacement of the roof and continued417: "In the more directly relevant context of chattels rather than buildings, the normal use of 'making' and 'repairing' demonstrates the same point. Works to a ship or a motor car, which involve removal and replacement of defective significant constituent parts, could be substantial in terms of physical extent, structural significance, and financial cost, without amounting to 'making' a ship or motor car, as a matter of ordinary language: in such a case, they would be 'repair' of the existing ship or motor car." Although, as has been seen, the law of patent infringement in the United States is affected by its recognition of the exhaustion theory418, the United States approach to the question of how much a patented item may be changed without making a new item is essentially similar to the Anglo-Australian approach under the implied licence theory, albeit that, in the United States, the distinction between repair and making is described in terms of the difference between modifications, improvements and repairs on the one hand and reconstruction in the sense of making a "substantially new article"419 on the other. Thus, in Aro Manufacturing Co Inc v Convertible Top Replacement Co Inc420, the United States Supreme Court stated: "This Court's decisions specifically dealing with whether the replacement of an unpatented part, in a patented combination, that has worn out, been broken or otherwise spent, is permissible 'repair' or infringing 'reconstruction', have steadfastly refused to extend the patent monopoly beyond the terms of the grant. ... [A]lthough there is no right to 'rebuild' a patented combination, the entity 'exists' notwithstanding the fact that destruction or impairment of one of its elements renders it inoperable; and ... accordingly, replacement of that worn-out essential part 417 Schütz [2013] RPC 395 at 411 [50]-[51]. 418 See [196]-[202] above. 419 See Varex Imaging Corporation v Richardson Electronics Ltd (unreported, United States District Court, ND Illinois, 27 August 2019) at 4. 420 (1961) 365 US 336 at 342. permissible restoration of the machine to the original use for which it was bought." To the same effect, in Hewlett-Packard Co v Repeat-O-Type Stencil Manufacturing Corporation Inc421, the United States Court of Appeals, Federal Circuit said this: "Generally, when a seller sells a product without restriction, it in effect promises the purchaser that in exchange for the price paid, it will not interfere with the purchaser's full enjoyment of the product purchased. The buyer has an implied license under any patents of the seller that dominate the product or any uses of the product to which the parties might reasonably contemplate the product will be put. ... The authority to use and sell a purchased device, however, does not include the right to make a new device or to reconstruct one which has been spent. Reconstruction, ie, the re-creation of a patented combination, is an infringement because such activity is beyond the implied authorization to use and sell a patented device. As the Supreme Court has stated: 'The decisions of this Court require the conclusion that reconstruction of a patented entity, comprised of unpatented elements, is limited to such a true reconstruction of the entity as to "in fact make a new article," after the entity, viewed as a whole, has become spent. In order to call the monopoly, conferred by the patent grant, into play for a second time, it must, indeed, be a second creation of the patented entity ... Mere replacement of individual unpatented parts, one at a time, whether of the same part repeatedly or different parts successively, is no more than the lawful right of the owner to repair his property.' Aro Mfg Co v Convertible Top Replacement Co, 365 US 336, 346 ... (1961) ... (citations omitted)." The reasoning in Hewlett-Packard is notable inasmuch as it proceeded from an implied licence conception of patentees' rights later repudiated by the Supreme Court of the United States in Lexmark. But, for present purposes, the significance of the decision in the former case (which relevantly is not affected by the choice 421 (1997) 123 F 3d 1445 at 1451; see also Zenith Electronics Corporation v PDI Communication Systems Inc (2008) 522 F 3d 1348 at 1362. between implied licence and exhaustion theories) is twofold. First, it represents a clear recognition that the purchase of used second-hand patented single-use printer cartridges, their modification to render them refillable, and their resale, did not infringe the patent, because the modifications made did not cause the cartridges to cease to exist422: "HP correctly states that ROT's modification is not conventional repair. The caps on the purchased cartridges are not broken or defective. On the other hand, neither is ROT's modification a 'reconstruction' of the patented combination. A reconstruction occurs after the patented combination, as a whole, has been spent, when 'the material of the combination ceases to exist.' Wilson v Simpson, 50 US ... 109, 123 ... Secondly, the Court of Appeals specifically rejected the notion that, because the cartridges were designed and marketed as single-use cartridges, the modification of them to render them refillable necessarily crossed the boundary of permissible repair and impermissible reconstruction423: "HP also argues that the boundary between 'permissible repair' and 'impermissible reconstruction' turns on the intention of the patentee. HP contends that it has clearly manifested its intent that the ink jet cartridges be ... discarded once they are empty; HP does not sell refillable cartridges, and HP does not sell ink refills. Because it has always manifested an intent that its cartridges be discarded, it argues, the creation of refillable or refilled cartridges are unauthorized acts which constitute an infringement of its patents. HP in effect argues that any change to a patented product that is not intended by the patentee constitutes reconstruction. ... We do not agree ... [A]bsent a restriction having contractual significance, a purchase carries with it the right to modify as long as reconstruction of a spent product does not occur. ... The question is not whether the patentee at the time of sale intended to limit a purchaser's right to modify the product. Rather the purchaser's freedom to repair or modify its own property is overridden under the patent laws only by the patentee's right to exclude the purchaser from making a new patented entity." (emphasis added) 422 Hewlett-Packard (1997) 123 F 3d 1445 at 1452. 423 Hewlett-Packard (1997) 123 F 3d 1445 at 1453. Importantly, the same idea was emphasised by the Privy Council in Canon Kabushiki Kaisha v Green Cartridge Co (Hong Kong) Ltd424, in which it appears to have been regarded as going without saying that commercial refilling of single-use cartridges and selling them at less than the price of new cartridges was not an infringement of patent. In Jazz Photo Corporation v International Trade Commission425, the United States Court of Appeals, Federal Circuit applied similar reasoning in concluding that the purchase of used second-hand single-use cameras and their refurbishment by removal of the cardboard outer cover of each camera, opening the sealed body of the camera (usually by cutting at least one weld), replacing the winding wheel or modifying the film cartridge to be inserted, resetting the film counter, replacing the battery in flash cameras, winding new film out of a canister onto a spool or into a roll, and resealing the body using tape or glue and applying a new cardboard outer cover, was not an infringement of patent426. As in Hewlett-Packard, the Court held that it was not to the point that the patentee intended that the cameras be single-use cameras or that it was manifest that the cameras were intended to be single-use cameras427. The Court also rejected a contention that because the cameras were refurbished using assembly-line procedures in which parts were mixed and matched between cameras, the process was reconstruction428. Consistently with earlier decisions of the United States Court of Appeals, Federal Circuit in Dana Corporation v American Precision Co Inc429 (which concerned the mass-production refurbishment of used heavy-duty truck clutches), and of the United States Court of Claims in General Electric Co v United States430 (which concerned the mass-production refurbishment of patented gun mounts), the Court in Jazz Photo reasoned that the adoption of assembly-line refurbishment and reassembly without regard to where each component had originated was simply a matter of efficiency and economy with the same effect as if each camera 424 [1997] AC 728 at 735. 425 (2001) 264 F 3d 1094. 426 (2001) 264 F 3d 1094 at 1101, 1110-1111. 427 Jazz Photo (2001) 264 F 3d 1094 at 1106. 428 Jazz Photo (2001) 264 F 3d 1094 at 1103-1104. 429 (1987) 827 F 2d 755. 430 (1978) 572 F 2d 745. had been individually refurbished by disassembly and reassembly of its original components with replacement parts used to replace worn elements431. The reasoning in Jazz Photo was also later referred to with approval in Varex Imaging Corporation v Richardson Electronics Ltd432. It was noted433 there that courts considering whether a defendant had made a new article by refurbishing it after the device has become spent must analyse the nature of the defendant's actions; the nature of the device and how it is designed (namely, whether one of the components has a shorter useful life than the whole); and whether a market has developed to manufacture or service the part at issue. Given that the Patents Act 1990 is in relevant respects similar to the English legislation, the utility of the distinction between, on the one hand, repair or "use" and, on the other hand, "making" – being a distinction that Lord Neuberger emphasised in Schütz – is just as significant here as it is in England, and given that English, United States and Australian approaches to patent infringement are grounded in comparable techno-economic considerations, there is no reason why the concept of repair and modification falling short of making (or "reconstruction" as it is termed in the United States) should be conceived of in any narrower sense than it is in the United Kingdom or the United States. The central issue is whether an alleged infringer has "made" a patented article as defined by the integers of the claim434. In each case, that is a question of fact and degree to be decided according to the nature of the article as so defined435. 431 Jazz Photo (2001) 264 F 3d 1094 at 1103-1104. 432 Unreported, United States District Court, ND Illinois, 27 August 2019 at 5. 433 Varex Imaging (unreported, United States District Court, ND Illinois, 27 August 434 See [215]-[216] above; Schütz [2013] RPC 395 at 406 [25]. 435 See Radiation Ltd v Galliers & Klaerr Pty Ltd (1938) 60 CLR 36 at 46, 51-52; Olin Corporation v Super Cartridge Co Pty Ltd (1977) 180 CLR 236 at 246; Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 at 286; Catnic Components Ltd v Hill and Smith Ltd [1981] FSR 60 at 65-66; Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] RPC 169 at 190-191 [50]-[52]; GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser Healthcare (UK) Ltd (2016) 120 IPR 406 at 420 [54]; Actavis UK Ltd v Eli Lilly and Co [2017] RPC 957 at 989 [66]. See also Schütz [2013] RPC 395 at 406 [25], 413 [63]-[67]. In making that decision, it assists to ask whether what the alleged infringer has done is to repair the article as opposed to making a new article436. It needs also to be borne in mind that "repair" may entail considerable disassembly, the removal and replacement of significant constituent parts, and reassembly on a to "making" a new article. mass-production basis, without amounting Further, as Windeyer J observed in MP Metals Pty Ltd v Federal Commissioner of Taxation437, "whether a thing is so different a thing from the thing or things out of which it was made as to be properly described as a new commodity may depend not only upon physical characteristics but also on differences in its utility for some purpose" although, subject to the nature of the article, it is to be borne in mind that the fact that a product may have been intended as a single-use item is largely irrelevant. That being so, the disposition of this appeal is relatively straightforward. The primary judge was correct that the reconditioning processes carried out on Category 1, 2, 3 and A cartridges did not amount to the making of a new or different embodiment of the cartridge438. Contrary to the Full Court's reasoning, it was beside the point that Seiko may have designed its cartridges in the hope that they might be used only once or that Seiko sold its cartridges as single-use, throw-away cartridges. Nor is it to the point that the printer cartridges could not be refilled without drilling a hole. Contrary to the Full Court's reasoning, drilling holes in the ink containers did not make them cease to be ink containers any more than removing the tops from the ink reservoirs in Hewlett-Packard made them cease to be ink reservoirs, or any more than cutting the welds on the single-use cameras in Jazz Photo to obtain access to install new film made them cease to be cameras. And reprogramming the memory chips did not make the memory chips cease to be memory chips, or transmogrify them into new and different memory chips, any more than changing the operating system on a computer makes it cease to be a computer or to become a new and different computer as opposed to the same computer running a different program. As the primary judge rightly held, 436 Sirdar Rubber (1905) 22 RPC 257 at 266; Sirdar Rubber (1907) 24 RPC 539 at 543; Solar Thomson [1977] RPC 537 at 554-555; United Wire [2001] RPC 439 at 458-459 [68]-[72]; Schütz [2013] RPC 395 at 406 [27], 412 [57]-[59]. 437 (1967) 117 CLR 631 at 638. An appeal to the Full Court was dismissed: MP Metals (1968) 117 CLR 631 at 650. 438 See [232]-[234] above. the combination of integers claimed was the existence of the chip as part of the combination and not a monopoly referable to the content of the chip439. Moreover, contrary to the primary judge's findings, Category 4 cartridges were relevantly no different from Category 1, 2 and 3 cartridges. The replacement of the memory chips involved in the refurbishment of Category 4 cartridges is as a matter of substance properly to be viewed as the replacement of but one unpatented part with another – just as in Schütz, Dana Corp, General Electric and Jazz Photo – and the fact that the replacement was effected with mass-production techniques resulting in the mixing and matching of chips with printed circuit boards should no more be regarded as resulting in the manufacture of new articles – as opposed to achieving efficiency and economy with the same effect as if each cartridge had been individually disassembled and reassembled using original components and replacement parts – than the adoption of similar mass-production techniques was regarded in Dana Corp, General Electric or Hewlett-Packard as resulting in reconstruction. For the same reason, Category A cartridges involved no infringement of Seiko's patents. The primary judge was, however, correct in holding that Category 5, 6 and 7 cartridges involved the making of new, different cartridges: because the processes used to modify those cartridges440 included cutting off the interface pattern to make them fit a different printer from that for which they were designed. Relative to each cartridge in its totality, that was such a significant change to the form and function of the cartridges as properly to be viewed as changing each cartridge from the cartridge it had been into a new and different cartridge adapted to a new and different task. When that significant change was combined with the other modifications, there was a making of the patented invention thereby infringing Seiko's patents. For the same reason, Category B cartridges infringed Seiko's patents441. Conclusion In the result, the appeal should be allowed in part and the orders of the Full Court varied accordingly. The respondents should pay the costs of the appeal to this Court. 439 See [232(3)] above. 440 See [226], [237], [239]-[240] above. 441 See [241] above.

HIGH COURT OF AUSTRALIA BENOY BERRY & ANOR APPELLANTS AND CCL SECURE PTY LTD RESPONDENT Berry v CCL Secure Pty Ltd [2020] HCA 27 Date of Hearing: 3 June 2020 Date of Judgment: 5 August 2020 ORDER Appeal allowed. Set aside orders 1 and 2 made by the Full Court of the Federal Court of Australia on 4 June 2019 and, in lieu thereof, order that, in place of order 2 made by Rares J on 17 August 2018, there be judgment for the appellants in the sum of $27,078,507, plus interest pursuant to statute. The respondent pay the appellants' costs of the appeal to the Full Court of the Federal Court of Australia and to this Court. On appeal from the Federal Court of Australia Representation J T Gleeson SC with C S Ward SC and P F Santucci for the appellants (instructed by Marque Lawyers) G K J Rich SC with J L Roy and J E Taylor for the respondent (instructed by Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Berry v CCL Secure Pty Ltd Damages – Misleading or deceptive conduct – Where first appellant induced to give up agreement by respondent's misleading or deceptive conduct in contravention of s 52 of Trade Practices Act 1974 (Cth) – Where appellants sought damages pursuant to s 82 of Trade Practices Act referable to amounts payable had agreement not been terminated – Whether respondent entitled to contend that but for its misleading or deceptive conduct it would have lawfully terminated agreement – Whether presumption against wrongdoers applied – Whether evidence established real (not negligible) possibility that respondent would have terminated agreement by lawful means. Words and phrases – "balance of probabilities", "counterfactual lawful termination", "deliberate contravention", "evidential burden", "lawful means alternative", "legal burden", "misleading or deceptive conduct", "notice of (not negligible) termination", "presumption against wrongdoers", "real possibility", "recovery of damages for lost commercial opportunities", "reversal of onus of proof". Trade Practices Act 1974 (Cth), ss 52, 82. BELL, KEANE AND NETTLE JJ. This is an appeal from a judgment of the Full Court of the Federal Court of Australia (McKerracher, Robertson and Lee JJ)1 allowing in part an appeal from judgments of the Federal Court (Rares J)2. The question is whether the Full Court erred in their assessment of the amount recoverable by the appellants under s 82 of the Trade Practices Act 1974 (Cth) ("the TPA") for the loss or damage they suffered by the respondent's misleading or deceptive conduct contrary to s 52 of the TPA, where such conduct caused the appellants to give up an agreement beneficial to them yet where, but for the misleading or deceptive conduct, the respondent would have been entitled lawfully to terminate the agreement. For the reasons which follow, the Full Court erred in their assessment of the damages payable, and the appeal should be allowed. The facts The facts of the matter were found by the primary judge in very considerable detail, but, for present purposes, they may be stated compendiously. Up until about 2013, the Reserve Bank of Australia and Innovia Films Ltd (a United Kingdom company and a subsidiary of Union Chimique Belge) ("Innovia Films") conducted a 50-50 joint venture through the respondent (then named Securency Pty Ltd) ("Securency"). Together, they had succeeded in commercialising the production and printing of polymer banknotes using production facilities at Securency's premises in Craigieburn, which was then an outer suburb of Melbourne. The polymer printing process consisted of three stages. The first involved Innovia Films producing a large bubble or film of polymer to be cut into many sheets. Innovia Films had two production plants, one of which was at Craigieburn. The second stage involved the conversion of the polymer film sheets into opacified polymer or polymer substrate, a process known as "opacification". Innovia Films had two opacification plants, one of which was also at Craigieburn. The third stage involved a mint or commercial banknote printer using suitable equipment to print banknotes or other specialised documents on the opacified polymer. Although more expensive to produce, opacified polymer banknotes have distinct technical and economic advantages over paper banknotes, including the principal advantage that they last in circulation at least four or five times longer than their paper equivalents, resulting in a cost saving for the central bank or mint of the issuing government. In 1992, the Commonwealth of Australia began 1 CCL Secure Pty Ltd v Berry [2019] FCAFC 81. 2 Berry v CCL Secure Pty Ltd [2017] FCA 1546; Berry v CCL Secure Pty Ltd [No 2] [2018] FCA 1351. Bell Nettle printing Australian banknotes on polymer. Thereafter, throughout the 1990s, Securency set about marketing polymer banknotes and opacified polymer to other nations' central banks, governments and mints. By 2004, a total of 17 countries had switched to printing one or more denominations of their banknotes on opacified polymer. The Federal Republic of Nigeria ("Nigeria") was one of the countries to which Securency directed its marketing efforts, but, initially, to no avail. It was only later, when the first appellant ("Dr Berry") became involved in the marketing effort, that the then president of Nigeria, President Obasanjo, and the then Governor of the Central Bank of Nigeria ("the CBN"), Governor Soludo, agreed to place an order. Dr Berry is a successful entrepreneur who resides primarily in the United Kingdom. Since 1978, he has controlled several companies which, under contract or by participation in public-private partnerships, have provided substantial services to Nigeria and other countries. In or around 2004, Dr Berry became involved in Securency's efforts to market polymer banknotes to Nigeria. While Dr Berry was valuable to Securency as a person who held influence with senior officials within the Nigerian government, Dr Berry's aim, from the outset, was to be commercially involved in constructing and operating an opacification plant in Nigeria. With Securency's encouragement, between 2004 and 2006 Dr Berry negotiated Nigeria's possible adoption of polymer banknotes with Nigerian government officials on the basis that, in the long term, an opacification plant would be built in Nigeria in which Dr Berry, Securency (if it wished) and the CBN or Nigerian Security Printing and Minting Plc (the mint for the Nigerian government) ("the Nigerian Mint") would hold interests. To this end, by early June 2006, Dr Berry had procured, on Securency's behalf, the sale of 20,000 reams of opacified polymer to the Nigerian Mint for use in the printing of polymer banknotes. At around the time that this order was placed, Dr Berry met with Securency's director of sales and marketing, Mr Hugh Brown, to negotiate the final terms of an agency agreement ("the Agency Agreement") under which Dr Berry and the second appellant (a company controlled by Dr Berry and incorporated in the United Kingdom in 2004 for the purposes of negotiating with the Nigerian government on Securency's behalf) ("GSC") would act as the sole agent of Securency in Nigeria. They agreed that the Agency Agreement should provide for Dr Berry and GSC to receive a commission of 15% on the net invoiced sale value of opacified polymer sold to the Nigerian government. The Agency Agreement was subsequently executed and backdated to take effect from 2 February 2006 to accommodate Dr Berry's earlier success in procuring the sale of 20,000 reams of opacified polymer and the considerable expense incurred in doing so. Bell Nettle Clause 3.1 of the Agency Agreement provided that the Agency Agreement would continue "until the Expiry Date unless terminated earlier in accordance with this Agreement". The "Expiry Date" was defined in Sch 1 to the Agency Agreement as follows: "This agreement remains valid until 30th June, 2008 and will be automatically renewed for further terms every two years unless terminated as per the Termination clauses contained in the contract." Clause 3.2 provided that the Agency Agreement would continue until terminated by 30 days' written notice given by either party to the other party at any time on or after the date 30 days before the Expiry Date. Clause 2.6 provided that the agreement was also terminable at any time upon Securency giving 60 days' written notice. During the latter part of 2006 and in 2007, one of the companies controlled by Dr Berry, Continental Transfert Technique Ltd ("Contec"), became involved in an unrelated commercial dispute with agencies of the Nigerian government. On 20 November 2007, Contec commenced an international arbitration proceeding in London against the Nigerian government, its Attorney-General and its Minister for the Interior. In the latter part of November 2007, Dr Berry met with Governor Soludo, the Nigerian Minister for Finance and the Nigerian High Commissioner at the Nigerian High Commissioner's residence in London to discuss means of increasing the value of the naira. Shortly afterwards, on around 20 or 21 November 2007, Dr Berry met with Governor Soludo and Mr Brown at the Metropole Hotel in London. During the latter meeting, Governor Soludo made clear that a written commitment by Securency to move towards establishing an opacification plant in Nigeria was integral to the conversion of all of Nigeria's denominations of banknotes to polymer. Mr Brown allowed Governor Soludo to believe that Securency would be willing to establish such a plant if Nigeria converted all its denominations to polymer and met numerous conditions, including the use of sufficient polymer notes to satisfy Securency. Mr Brown also sought to persuade Governor Soludo to proceed with a further order for five and ten naira notes to be printed on polymer, by assuring Governor Soludo that Securency would send him a letter within the next few weeks dealing with Securency's proposals for the construction of an opacification plant in Nigeria. Those assurances were false. Mr Brown well knew that Securency had no wish to build an opacification plant in Nigeria. Nonetheless, he gave the false assurances because he believed that Securency would not gain further contracts to supply printed polymer banknotes or opacified polymer to Nigeria unless Governor Soludo, the other Nigerian authorities, and Dr Berry were persuaded that an opacification plant would be built. Bell Nettle Soon afterwards, on 23 January 2008, the Nigerian Mint placed an order with Securency for a further 10,000 reams of opacified polymer, and, between 23 and 28 January 2008, the managing director of the Nigerian Mint informed Securency that the Mint would be placing orders for a further 20,000 reams in 2008. These were very valuable orders which would result in invoiced sales worth tens of millions of euros. But Securency did not tell Dr Berry or GSC about them. Instead, as the primary judge found3, Securency hatched a surreptitious plan to replace Dr Berry and GSC as Securency's agent in Nigeria, and to do so retrospectively in order to deprive Dr Berry and GSC of the 15% commission to which they would otherwise be entitled under the Agency Agreement on the sales to Nigeria. Pursuant to that plan, on 24 February 2008, Securency's director of business development for Africa and the Middle East, Mr Peter Chapman, had a meeting and lunch with Dr Berry at Dr Berry's home in London. During the two or so hours that the occasion lasted, Mr Chapman told Dr Berry that he had brought some documents with him which had been drafted by lawyers in Australia and which Dr Berry was required to sign as a matter of "routine" administration. One of the documents was a letter of termination dated 14 February 2008, addressed to Dr Berry, in the following terms ("the termination letter"): "Securency Agency Agreement – Nigeria I refer to our recent discussions and confirm that the Agency Agreement with Securency dated 2nd February 2006 was terminated in accordance with the terms of the Agreement as from 31 December 2007. Kindly acknowledge the formal termination of the Agency Agreement by signing and returning the duplicate copy of the letter attached. Yours faithfully Chief Financial Officer Securency International Pty Ltd" 3 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [12], [166], [170]. Bell Nettle The other document was a draft memorandum of understanding, which Mr Chapman identified as a partnership agreement that laid the foundations for the development of the opacification plant in Nigeria. Mr Chapman told Dr Berry, falsely, that the Agency Agreement had to be terminated before the partnership agreement could be put into place. Mr Chapman also said that all Dr Berry needed to do in relation to the memorandum of understanding was sign it and that it would then be taken back to Australia, put through the normal routine of being endorsed, and sent back to Dr Berry. Mr Chapman said that, in the meantime, the existing financial terms of the Agency Agreement would continue. Believing what Mr Chapman told him to be true, Dr Berry signed an acknowledgement at the foot of a copy of the termination letter, which read as follows: "I hereby acknowledge that the Agency Agreement with Securency dated 2nd February 2006 was terminated on 31 December 2007 in accordance with the terms of the Agreement. Global Secure Currency Limited" The memorandum of understanding was not endorsed or sent back to Dr Berry or even retained by Securency. But, as the primary judge found4, Dr Berry continued to act as agent believing that he and GSC remained the agent. There was some evidence that, unbeknownst to Dr Berry and GSC, on 5 or 6 February 2008 JH Marketing (Africa 2000) Ltd (a company incorporated in the United Kingdom) ("JH Marketing") executed an agreement to act as Securency's agent in the territory of Nigeria and the Economic Community of West African States ("the ECOWAS") which was countersigned by Securency shortly afterwards and that, on or about 6 August 2008, Securency terminated the agency agreement with JH Marketing and entered into a replacement agency agreement with JHM Global (FZC) (a company incorporated in the United Arab Emirates) ("JHM Global"). But, as will be seen5, both of those events were contrived retrospectively to make it appear that there was a legitimate basis for diverting the commissions that would otherwise have been payable to Dr Berry and GSC to JH Marketing, JHM Global and another company, SPT Ltd ("SPT"). It was not until well into 2009 that Dr Berry learned the truth of what had occurred, after the media 4 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [236]. See [52] below. Bell Nettle had publicised allegations that officers of Securency, including Mr Chapman, had paid bribes or been party to corrupt payments to government officials to procure contracts or orders of opacified polymer or polymer banknotes for Securency. Proceedings at first instance Before the primary judge, each party proceeded on the basis that, if Securency were found to have engaged in misleading or deceptive conduct contrary to s 52 of the TPA, the amount recoverable by Dr Berry and GSC under s 82 of the TPA depended on the commissions that would have been payable had the termination letter not been signed in reliance on Securency's wrongful conduct. Dr Berry and GSC based their claim on the provisions of the Agency Agreement that provided for its automatic renewal every two years, and contended that damages should be assessed as if, but for Dr Berry being tricked into signing the termination letter, the Agency Agreement would have continued indefinitely or at least until June 2010, when Securency terminated all of its other agency agreements (as the result of public disclosure in or about May 2009 of the bribery allegations). Securency countered that it should be concluded that, if Dr Berry had not signed the termination letter, Securency would have terminated the Agency Agreement lawfully on 60 days' notice under cl 2.6 or on 30 days' notice, expiring on 30 June 2008, under cl 3.2. Securency relied on evidence given by Mr Brown, who, with Mr Chapman, had recommended to Messrs Curtis, Ellery and Mamo of "the senior management" that the Agency Agreement should be terminated because: "[Dr Berry was] not travelling into Nigeria, as far as we were concerned, and therefore he was not carrying out his functions as agent … He was uncontactable and also we believed that he was ill and was hospitalised in India … and most compelling of all, was that he had started proceedings against the Nigerian government … we felt that would have denigrated his ability to perform for Securency." The primary judge rejected Mr Brown's evidence and concluded6 that Securency would not have been prepared to terminate the Agency Agreement lawfully because: unilateral termination of the Agency Agreement would have converted Dr Berry from a person who was using his influence with the Governor and other senior Nigerian officials to advance Securency's interests into a person who would be likely to impede those interests; 6 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [314]-[319]. Bell Nettle after 15 May 2007, Securency, through Mr Chapman, had, by his handwriting on the second version of the signed Agency Agreement, recently extended its territory to include the ECOWAS following Dr Berry's consistent urging of Securency to develop a proposal for the opacification plant, which the Governor also wanted; there was no evidence to support Mr Brown's assertion that Dr Berry's and Contec's legal issues or the arbitration had any effect on Dr Berry's other relationships with the Nigerian government or his capacity to do business with it; there was no evidence that Dr Berry was inhibited, and no contemporaneous evidence that Securency perceived him in 2007 or 2008 to be inhibited, in performing the agency whether by reason of his inability, unwillingness or failure to travel to Nigeria, or at all; (5) Mr Brown's suggestion that Dr Berry was in ill health or hospitalised had no evidentiary basis and was belied by Mr Brown's request for, and use of, Dr Berry in the November 2007 meeting at the Metropole Hotel, which was an important step in procuring the January 2008 order from the Nigerian Mint; and Securency's action in tricking Dr Berry into signing the termination letter at the February 2008 meeting implied that it was not prepared at the time to use its contractual right to terminate. The primary judge thus concluded7 that, having committed the fraud which his Honour found the misleading or deceptive conduct to have been, Securency could not be heard to complain that it had a lawful alternative path which it chose not to take. His Honour's preliminary view8, which apparently formed the basis for the judgment ultimately awarded9, was that damages should be assessed by reference to the presumed continuation of the Agency Agreement, as automatically renewed, based on actual sales to Nigeria by Securency, less just allowances for expenses that Dr Berry and GSC did not have to incur, up to the date of trial. 7 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [322]. 8 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [327]. 9 Berry v CCL Secure Pty Ltd [No 2] [2018] FCA 1351 at [19], [21], [24]. Bell Nettle Proceedings before the Full Court Before the Full Court, Securency contended that, as no attack had been made on the evidence (given by Innovia Films' chief executive officer, Mr Beeby) that Securency decided to terminate all agency agreements in 2010, there was no proper basis for damages to exceed what could have been earned under the Agency Agreement up until, at the latest, 29 November 2010. The Full Court accepted that contention10, and it is not now suggested that their Honours were wrong to do so. Before the Full Court, Securency further contended that the primary judge had erred in not accepting Mr Brown's evidence that Securency had considered Dr Berry to be unable to fulfil his obligations under the Agency Agreement due to his ongoing dispute with the Nigerian government. Securency argued that, if that were accepted, and given that Securency had in fact moved to terminate the Agency Agreement by procuring Dr Berry's signature to the termination letter and further appointing other entities to act as its agents in the region, the overwhelming likelihood was that, if Dr Berry had not signed the termination letter, Securency would have exercised its unhindered right to terminate the Agency Agreement either immediately on 60 days' notice, or, at the latest, by giving 30 days' notice expiring on 30 June 2008. By and large, the Full Court accepted that argument. Their Honours held11 that the primary judge erred in reasoning that, because the termination letter was "ineffective" as a result of the "fraud", it was to be presumed that the Agency Agreement would have continued to operate according to its terms, including in respect of the rate of commission and provision for automatic renewal, for the purpose of assessing damages. The Full Court stated12 that such an approach gave insufficient weight to the counterfactual possibility of lawful termination and its inherent probabilities. Their Honours observed13 that, while the "fraud" sufficed to "invalidate" the termination letter, it did not obviate the need in assessing statutory compensation under s 82 of the TPA to consider on the balance of probabilities what Securency would otherwise have done if the wrongful conduct had not occurred. 10 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [195]. 11 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [209]. 12 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [209]. 13 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [218]. Bell Nettle The Full Court did not accept that it was more probable than not that, if Dr Berry had not signed the termination letter, Securency would have given a lawful termination notice on 24 February 2008, or, therefore, that the Agency Agreement would have been terminated by 25 April 2008. Their Honours said14 that they agreed with the primary judge's reasoning to the extent that, if Securency had at that time been prepared to give lawful notice of termination, there would have been no point in Securency engaging in the fraudulently misleading or deceptive conduct at the 24 February 2008 meeting. For much the same reason, the Full Court said15 that they also did not accept that Securency would have given a notice of termination on 26 March 2008 expiring on 26 May 2008. Their Honours appear to have reasoned that a period of just four weeks was too short to make a relevant difference. The Full Court applied the same reasoning to conclude that Securency would not have issued a notice of termination on 22 April 2008, just eight weeks after the February 2008 meeting. The Full Court acknowledged the primary judge's finding that text messages between Dr Berry and Mr Chapman and Dr Berry's requests for information and meetings in the period after 24 February 2008 demonstrated, first, that Dr Berry was unaware that his agency had been terminated, and secondly, that Mr Chapman was treating Dr Berry as if he and GSC continued to be Securency's agent. Their Honours found16, however, that such messages recorded no more than "logistical details of setting up a meeting, and pleasantries", that any involvement of Dr Berry after the February meeting was limited and that, although Securency procured that involvement by inducing Dr Berry to believe that he remained the agent, absent the misleading or deceptive conduct the factors that motivated the replacement of Dr Berry would have ensured that his agency would have been lawfully terminated. Ultimately, their Honours concluded17 that, in the absence of evidence of positive and substantive involvement of Dr Berry in Securency's business after February 2008, it was to be inferred that, but for the misleading or deceptive conduct, Securency would lawfully have terminated the agreement on 30 June 2008 by 30 days' notice given on 1 June 2008. Thus, damages were to be computed accordingly. 14 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [219]. 15 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [220]. 16 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [227]. 17 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [228]. Bell Nettle The appellants' contentions In their written submissions before this Court, Dr Berry and GSC contended that three principles govern the correct approach to the determination of damages in a case of deliberate contravention of s 52 of the TPA where the contravener contends it would otherwise have used lawful means to bring about the same end, and that the Full Court failed to observe them. The first, which was said to derive from Armory v Delamirie18 and has been recently recognised by the Full Court of the Federal Court in Pitcher Partners Consulting Pty Ltd v Neville's Bus Service Pty Ltd19, is that the court should assess damages in a "robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party 'whose actions have made an accurate determination so problematic'". The second principle, which was said to be evident in this Court's decisions in Potts v Miller20, Gould v Vaggelas21 and The Commonwealth v Amann Aviation Pty Ltd22, is that a wrongdoer will not be heard to set up a lawful means alternative to escape or reduce its liability in damages while at the same time retaining the benefit of its wrong, and, moreover, that the court will not allow the wrongdoer to set up hypothetically innocent intentions and consequences unless they are truly independent of the wrong. It was contended that it follows from these two constraints that a wrongdoer must be able to point to some matter wholly independent of its wrongdoing which would have justified the wrongdoer lawfully achieving the result achieved by the wrong. The third principle, which was put in the alternative and supported by reference to Malec v J C Hutton Pty Ltd23 and Sellars v Adelaide Petroleum NL24, is that a wrongdoer alleging that, but for its (1722) 1 Strange 505 [93 ER 664]. (2019) 271 FCR 392 at 417 [109] per Allsop CJ, Yates and O'Bryan JJ, quoting Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 at 59 per Handley JA (Mason P and Beazley JA agreeing at 48, 60), in turn quoting LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1990) 24 NSWLR 499 at 508 per (1940) 64 CLR 282 at 298 per Dixon J. (1984) 157 CLR 215 at 220 per Gibbs CJ. (1991) 174 CLR 64 at 114 per Brennan J. (1990) 169 CLR 638. (1994) 179 CLR 332 at 355 per Mason CJ, Dawson, Toohey and Gaudron JJ. Bell Nettle contravening conduct, it would have deployed lawful means to bring about the same detriment to the victim, must at least prove on the balance of probabilities that there was a "substantial prospect" or "prospect of value" that it would have so acted. In oral argument, Dr Berry and GSC principally submitted that the Full Court erred in finding that "it [was] clear that Securency wanted to end its agency with Dr Berry"25, and erred in law – in effect, reversing an onus of proof – in holding that, in the absence of evidence of positive and substantive involvement of Dr Berry in Securency's business after February 2008, "there [was] no reason to assume in the counterfactual that Securency would not have acted to terminate the Agency Agreement"26. The respondent's contentions Securency submitted to the contrary that there is no principle that the onus lies on a wrongdoer to establish the facts necessary to justify the inference of a counterfactual lawful termination, or, if there is, that Securency discharged the onus by adducing evidence sufficient to establish on the balance of probabilities that the Agency Agreement would have been terminated, at latest, by the end of the first half of 2008. Securency further contended that there is no principle that a wrongdoer must be able to point to a matter wholly independent of its wrongdoing in order to advance a counterfactual argument supported by evidence and relevant causal inquiry as to the proper assessment of damages. And Securency argued that, if and insofar as the appellants' invocation of the principles of assessment identified in Sellars and Malec was for the purpose of impugning the Full Court's approach to the assessment of damages, it was misplaced, because the parties agreed before the Full Court that the method followed by the Full Court (of determining on the balance of probabilities the date on which, but for the termination letter, the Agency Agreement would have been terminated) was the way that damages were properly to be assessed. The effect of the termination letter Before turning in detail to the three principles for which Dr Berry and GSC contended, it is to be observed that, if the termination letter had been "ineffective" 25 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [224]. 26 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [225]. Bell Nettle in law, as the primary judge at one point in his Honour's reasons said it was27, and the Full Court, at least in terms, accepted it was28, then Dr Berry and GSC could not have suffered any loss or damage by reason of Securency's misleading or deceptive conduct. If the termination letter had been "ineffective", the Agency Agreement would have continued, and, in that event, Dr Berry's and GSC's only claim would have been for commissions accrued due under the Agency Agreement up until that contract was lawfully terminated29. But, contrary to the reasoning of the courts below, the termination letter was not "unravelled"30 or "invalidate[d]"31 by Securency's "fraud". As was observed in SZFDE v Minister for Immigration and Citizenship32, "[t]he vitiating effect of fraud is not universal throughout the law". A transaction induced by misrepresentation is not void, but merely voidable33, and, if the misrepresentee brings proceedings like the subject proceedings claiming loss and damage dependent on the efficacy of the "transaction" (scil dependent upon the termination letter having deprived Dr Berry and GSC of the benefit of the Agency Agreement), the misrepresentee is taken to affirm the transaction34. Given, therefore, that the termination letter was effective, the loss and damage suffered by Dr Berry and GSC by reason of Dr Berry being tricked into signing the termination letter was and is properly cognisable as the loss of their legal rights under the Agency Agreement. It is also to be observed that it is not entirely clear what the primary judge intended to convey by his Honour's observation that Securency, having committed 27 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [320], [333]. 28 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [209]. 29 See Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 379 per Dixon and Evatt JJ. 30 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [334]. 31 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [218]. (2007) 232 CLR 189 at 196 [16] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan, 33 See, eg, Larratt v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 225 per Jordan CJ. 34 See, eg, McAllister v Richmond Brewing Co (NSW) Pty Ltd (1942) 42 SR (NSW) 187 at 191-192 per Jordan CJ. Bell Nettle the fraud of deceiving Dr Berry into signing the termination letter, could not be heard to assert in mitigation of damages that it had a lawful alternative path to termination, albeit which it chose not to take, of terminating the Agency Agreement under cl 3.2 or cl 2.635. Some of his Honour's reasoning suggests that he was of the opinion that reliance on such an hypothetical counterfactual was precluded as a matter of law because to allow it to be advanced would be to allow Securency to take advantage of its fraud. But on another reading of his Honour's reasoning, it appears that his Honour may have meant no more than that the fact of the fraud demonstrated, as a matter of forensic proof, that Securency was not prepared to use its contractual rights to terminate the Agency Agreement, and, hence, it was to be inferred that, in the absence of the fraud, Securency would not have been prepared to do so. If his Honour intended to convey the former, it would have been an error. Permitting a fraudster to plead and prove a lawful counterfactual which, but for its fraud, the fraudster would have pursued, is not in any sense to permit the fraudster to take advantage of its fraud. As will be explained36, it is to do no more than to limit the amount recoverable by the victim to the amount of loss or damage which the victim is shown to have suffered "by" the contravening conduct within the meaning of s 82 of the TPA. That accords with the general principle at common law that a wrongdoer is not required to compensate a victim for loss which the wrongdoer does not cause, even where the cause of action is the tort of deceit37. By contrast, if his Honour meant to convey that, in circumstances where a party has resorted to fraud to achieve an objective which it was open to achieve by lawful means, it becomes more difficult, if not impossible, to draw an inference that, but for the fraud, that party would have chosen to proceed by lawful means, then, as will be explained, his Honour's process of reasoning was entirely consistent with established principle and authority. Ultimately, however, it makes no difference to the result in this matter because, as will be seen, it was not established that there was a real (not negligible) 35 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [322]. 36 See fn 39 below. See also Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525 per Mason CJ, Dawson, Gaudron and McHugh JJ; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at 116 [16] per Gleeson CJ; Travel Compensation Fund v Tambree (2005) 224 CLR 627 at 643-644 [49] per Gummow and Hayne JJ. 37 See fnn 47-49 below. See also The National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569 at 597 per Windeyer J; March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 at 509, 514 per Mason CJ; Chappel v Hart (1998) 195 CLR 232 at 242 [23] per McHugh J. Bell Nettle possibility that Securency would have terminated the Agency Agreement by lawful means at any time before June 2010. First principle: onus of proof As claimants under s 82 of the TPA, Dr Berry and GSC generally bore the legal burden of establishing the existence and amount of the loss or damage that they suffered by Securency's misleading or deceptive conduct in contravention of s 52 of the TPA38. That entailed establishing the net "value or worth of the rights and benefits" that they surrendered upon Dr Berry signing the termination letter39. Since that value inhered in the commissions that would have been payable under the Agency Agreement if not so terminated, it depended on both the period for which the Agency Agreement would have continued and the commissions that would have been payable under it for as long as it did. For example, assuming counterfactually that, if Securency had not tricked Dr Berry into signing the termination letter, it appeared certain that Securency would have given notice lawfully terminating the Agency Agreement on 24 February 2008, one would have to conclude that Dr Berry and GSC did not suffer any loss or damage by reason of signing the termination letter: for, on that hypothesis, they would have been no worse off by signing the letter than they would have been if they had not signed it. By contrast, if it appeared certain that Securency would not have lawfully terminated the Agency Agreement until sometime after 24 February 2008 when commissions would have become payable, one would have to conclude that Dr Berry and GSC had suffered loss or damage in an amount dependent on the time for which the Agency Agreement would have thus continued before lawful 38 Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 7 per Gibbs CJ, 15 per Mason, Wilson and Dawson JJ; Sellars (1994) 179 CLR 332 at 353 per Mason CJ, Dawson, Toohey and Gaudron JJ, 359, 367 per Brennan J; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 513 [43] per McHugh, Hayne and Callinan JJ, 533 [111] per Gummow J; Henville v Walker (2001) 206 CLR 459 at 482 [68] per Gaudron J. See generally Watts v Rake (1960) 108 CLR 158 at 159 per Dixon CJ; Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1984) 157 CLR 149 at 160 per Gibbs CJ, Mason, Wilson and Dawson JJ, 172-173 per Brennan J; Amann Aviation (1991) 174 CLR 64 at 80, 88 per Mason CJ and Dawson J, 99 per Brennan J, 118 per Deane J, 137 per Toohey J; Chappel v Hart (1998) 195 CLR 232 at 270 [93(4)] per Kirby J. 39 cf Wardley (1992) 175 CLR 514 at 527 per Mason CJ, Dawson, Gaudron and Bell Nettle termination and the commissions payable under the Agency Agreement during that period. While a claimant bears the legal burden of establishing the amount of its loss or damage, the nature and circumstances of the wrongdoer's conduct may support an inference or presumption40 that shifts the evidentiary burden41. That accords with the principle encapsulated in Armory v Delamirie42 that, where a wrongdoer has destroyed or failed to produce evidence which the innocent party requires to show how much he or she has lost, it is just that the wrongdoer should suffer the resulting uncertainty. Hence, in that case, since the defendant by his wrongful conversion of the plaintiff's stones, and failure to produce them at trial, had made it impossible for the plaintiff to prove the quality of them, the stones were presumed to be of the highest quality and value43. One relevant modern application of that principle is reflected in this Court's decision in Amann Aviation, in which it was held44 that where, upon acceptance of the Commonwealth's repudiation of a contract, Amann claimed damages for loss of the contract, Amann was entitled to recover "reliance damages" assessed on the basis of a rebuttable presumption that the net benefits to which Amann would have been entitled under the contract (if the contract had not been rescinded) would have been sufficient to cover the expenditure which Amann incurred pursuant to the contract. As 40 See Masson v Parsons (2019) 93 ALJR 848 at 858-859 [32] per Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ; 368 ALR 583 at 594. 41 See, eg, Morison v Walton (unreported, House of Lords, 10 May 1909), as explained in Coldman v Hill [1919] 1 KB 443 at 458 per Scrutton LJ; H West & Son Ltd v Shephard [1964] AC 326 at 363 per Lord Devlin, cited in Skelton v Collins (1966) 115 CLR 94 at 99 per Kitto J. (1772) 1 Strange 505 at 505 per Pratt CJ [93 ER 664 at 664]. See also Lupton v White (1808) 15 Ves Jun 432 at 440 per Lord Eldon LC [33 ER 817 at 820]; The Ophelia [1916] 2 AC 206 at 229-230 per Sir Arthur Channell for the Privy Council; Allen v Tobias (1958) 98 CLR 367 at 375 per Dixon CJ, McTiernan and Williams JJ; cf Rosebanner Pty Ltd v EnergyAustralia (2009) 223 FLR 406 at 473-474 [456]- 43 See Chitty, Denning and Harvey, Smith's Leading Cases, 13th ed (1929), vol 1 at (1991) 174 CLR 64 at 86-89 per Mason CJ and Dawson J, 105-107 per Brennan J, 126-127 per Deane J, 142-143 per Toohey J, 155-156 per Gaudron J. Bell Nettle Brennan J explained45, because the Commonwealth had repudiated the contract and thereby deprived Amann of the ability to establish that the contract would have returned sufficient to recoup Amann's contractual expenses, it was to be presumed that Amann would not have incurred its expenditure in reliance on the contract without a reasonable expectation that its performance of the contract would have returned it sufficient to recoup its expenses, and thus it was just that the Commonwealth should bear the ultimate onus of proving at least a prospect that Amann's returns under the contract would not have been sufficient to recoup that expenditure. By contrast, as Brennan J observed46, if a claimant seeks "expectation damages" for the loss of a chance that, had an agreement run to term, it may have been renewed or extended, the onus is on the claimant to establish those facts, although, even then, since the existence and degree of such an hypothetical possibility is, by reason of the wrongful termination of the contract, incapable of proof on the balance of probabilities, it is considered just that the wrongdoer should suffer the resulting uncertainty to the extent that proof to the level of a real (more than negligible) possibility is regarded as enough. The worth of the chance is then valued by a process of informed estimation. For reasons to be explained, in this case it is unnecessary to invoke either of the presumptions considered in Amann Aviation, and for that reason it is convenient to delay consideration of Pitcher Partners until later in these reasons. Second principle: innocent hypotheses Potts v Miller47 and Gould v Vaggelas48 relevantly stand as authority that, where a claimant is induced by deceit to enter into a transaction, the claimant is entitled to recover by way of damages the actual damage "directly" flowing from the fraudulent inducement – including losses flowing from causes "inherent" in the transaction – but is not entitled to recover losses of which the cause is "independent", "extrinsic", "supervening" or "accidental" such that those losses cannot rationally be regarded as caused by the deceit49. There is nothing, however, 45 Amann Aviation (1991) 174 CLR 64 at 105-106, 113. 46 Amann Aviation (1991) 174 CLR 64 at 108. (1940) 64 CLR 282 at 298 per Dixon J. (1984) 157 CLR 215 at 220-222 per Gibbs CJ. 49 See also Twycross v Grant (1877) 2 CPD 469 at 544-545 per Cockburn CJ; Toteff v Antonas (1952) 87 CLR 647 at 650 per Dixon J; Doyle v Olby (Ironmongers) Ltd Bell Nettle in or about those decisions which suggests that a wrongdoer will not be heard to set up a lawful means alternative while retaining the benefits of its wrong or if considerations that justified the wrong at all feature in the calculus that the wrongdoer would otherwise have undertaken. Nor is there anything in or about Amann Aviation which lends any weight to that notion. Rather to the contrary, it was expressly recognised in Amann Aviation50 that, ordinarily, the purpose of "compensatory damages" in the common law is "fair and adequate compensation", not punishment, and that "artificial forms of reasoning", including in assessing such compensation, are increasingly rejected "in favour of allowing tribunals of fact to give such probative force to evidentiary materials as they think fit having regard to all the circumstances of the case". Third principle: Sellars By parity of reasoning with Malec51 and Amann Aviation52, in Sellars53 it was held that, where a claimant established on the balance of probabilities that misleading or deceptive conduct contrary to s 52 of the TPA caused the claimant the loss of a commercial opportunity of some value (not being a negligible value), the value of that lost opportunity was to be ascertained by reference to hypotheses and possibilities which, though they were speculative and therefore not capable of proof on the balance of probabilities, could be evaluated as a matter of informed estimation. Similarly, in this matter, if the state of the evidence were that, although it did not establish on the balance of probabilities that, but for Securency's misleading or deceptive conduct, the Agency Agreement would have continued beyond 30 June 2008, it nevertheless established that there was a more than negligible chance that, but for Securency's misleading or deceptive conduct, the Agency Agreement would have continued beyond that date, Dr Berry and GSC [1969] 2 QB 158 at 167 per Lord Denning MR; South Australia v Johnson (1982) 42 ALR 161 at 170 per Gibbs CJ, Mason, Murphy, Wilson and Brennan JJ. (1991) 174 CLR 64 at 116 per Deane J, 166 per McHugh J. (1990) 169 CLR 638 at 639-640 per Brennan and Dawson JJ, 642-643 per Deane, Gaudron and McHugh JJ. See also Badenach v Calvert (2016) 257 CLR 440 at 454 [39]-[40] per French CJ, Kiefel and Keane JJ. (1991) 174 CLR 64 at 92 per Mason CJ and Dawson J, 102-104 per Brennan J, (1994) 179 CLR 332 at 355 per Mason CJ, Dawson, Toohey and Gaudron JJ, 368 Bell Nettle would have been entitled to claim that the measure of their damages fell to be determined by reference to the hypothetical possibility that, but for Securency's misleading or deceptive conduct, Securency would have waited a substantial time after 24 February 2008 before terminating the Agency Agreement. In that event, and subject to questions of the way in which the matter was conducted below, it would have been necessary to undertake an assessment of the likelihood of the various hypothetical possibilities and to compute an award based on that assessment. But, as will be explained, in fact the state of the evidence was and is that it establishes on the balance of probabilities that, but for Securency's misleading or deceptive conduct, the Agency Agreement would have continued until 30 June 2010; and so, therefore, the assessment of damages is properly to be undertaken on the basis of the commissions which would have been payable under the Agency Agreement up to that point. The appellants' reliance on Pitcher Partners In Pitcher Partners, the Full Court of the Federal Court (Allsop CJ, Yates and O'Bryan JJ) discerned54 the existence of a qualification to the general proposition that a claimant bears the onus of proving damages, to the effect that, in cases where damage is claimed to have been suffered by reason of a deliberate wrong, the court should assess the damages in a robust manner relying on the presumption against wrongdoers whose actions have made an accurate determination problematic. As appears from the Full Court's reasons, their Honours considered55 that the existence of such a qualification was supported by three lines of authority. The first, of which Armory v Delamirie is representative and Amann Aviation is a specific exemplar, consists of cases where a wrongdoer is made to suffer the uncertainty resulting from its own conduct56. In Indian Oil Corporation Ltd v Greenstone Shipping SA (Panama)57, Staughton J characterised such cases as those where the court does "the only justice that [can] be done". The second consists of cases supporting the notion approved by Gummow J in Palmer (2019) 271 FCR 392 at 418 [116]. 55 Pitcher Partners (2019) 271 FCR 392 at 413-418 [94]-[117]. 56 See [29] above. [1988] QB 345 at 362, 368, quoting Lupton v White (1808) 15 Ves Jun 432 at 440 per Lord Eldon LC [33 ER 817 at 820]. Bell Nettle Bruyn & Parker Pty Ltd v Parsons58 that, whereas the exclusion of heads of loss in the law of negligence reflects considerations of legal policy, in cases of deliberate wrongdoing the object of damages is to compensate the claimant for all the loss it has suffered so far as money can do. Gould v Vaggelas demonstrates the point59. The third, and seemingly most influential, line of authority in the Full Court's reasoning consists of decisions of the Court of Appeal of the Supreme Court of New South Wales in Houghton v Immer (No 155) Pty Ltd60, McCartney v Orica Investments Pty Ltd61 and Tyco Australia Pty Ltd v Optus Networks Pty Ltd62, to the effect that the Armory v Delamirie presumption against a wrongdoer goes beyond cases where the nature of wrongdoing makes it impossible for the claimant to prove the precise amount of damage suffered to cases in which the wrongdoing thrusts a claimant into a difficult task of proving a past hypothetical. On those bases, the Full Court in Pitcher Partners concluded63 that, where a claimant had entered into a contract on the faith of the company's accountants' negligently erroneous advice (to the effect that amounts payable under the contract would be sufficient to cover the cost of finance leases which the claimant was required to enter into as part of the contract) and the claimant subsequently took over the finance leases at a time when the accountants, although having since become aware of the error, deliberately concealed it from the claimant, the claimant was entitled to recover damages for the accountants' misleading or deceptive conduct computed on the basis that, if not so deceived, the claimant could and would have renegotiated the amounts payable under the contract to cover the costs of the finance leases. Moreover, and more significantly, the Full Court (2001) 208 CLR 388 at 413 [78], citing Smith New Court Securities Ltd v Citibank NA [1997] AC 254 at 279 per Lord Steyn. See also Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39 per Lord Blackburn. 59 See [31] above. See also Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483 per Bowen LJ, cited in Standard Chartered Bank v Pakistan National Shipping Corpn [Nos 2 and 4] [2003] 1 AC 959 at 967 [16] per Lord Hoffmann. (1997) 44 NSWLR 46 at 59 per Handley JA (Mason P and Beazley JA agreeing at 48, 60), quoting LJP Investments Pty Ltd (1990) 24 NSWLR 499 at 508 per [2011] NSWCA 337 at [149]-[154] per Giles JA (Macfarlan and Young JJA agreeing at [192], [193]). [2004] NSWCA 333 at [246] per Giles JA. (2019) 271 FCR 392 at 419-420 [124] per Allsop CJ, Yates and O'Bryan JJ. Bell Nettle held64 that it was not necessary for the claimant to prove on the balance of probabilities that it would have been successful in so renegotiating the contract. According to the Full Court, it was enough that there was a "sufficient likelihood" of that occurring to permit the court, using the "robust approach" warranted by the contribution of the wrongdoer to the claimant's difficulties of proof, to award damages equal to the full costs of the finance leases. Prima facie, the conclusion that the claimant was entitled to damages equal to the full costs of the finance leases presents as questionable. Although the primary judge in Pitcher Partners found65 it to be proved on the balance of probabilities that the claimant would have been successful in negotiating full recoupment of the finance lease costs, the Full Court stated66 that such a finding was unnecessary to justify full recovery. As has been seen, their Honours considered67 that it was enough that there was a "sufficiently real possibility" or "sufficient likelihood" – expressions which, used as they were in contradistinction to proof "on the balance of probabilities", imply that their Honours conceived of "sufficient likelihood" as being something less than proof on the balance of probabilities. Of course, there was no doubt that the accountants' deceit deprived the claimant of a commercial opportunity of negotiating for recoupment of the finance lease costs. But, as has been seen68, previous decisions of this Court concerning the recovery of damages for lost commercial opportunities – regardless of whether they are commercial opportunities to earn an extension or renewal of a contract, as in Amann Aviation, or to negotiate a new contract, as in Sellars, or even to institute proceedings for the recovery of damages, as in Malec – have held that, once it is established on the balance of probabilities that the defendant's wrong caused the loss of opportunity, the value of the loss falls to be determined (and discounted) according to the assessed degree of likelihood that, assuming the claimant had been able to exploit the opportunity, it might not have resulted in all of the gain that was hoped for. On that basis, but for the primary judge's finding in Pitcher Partners that it was proved on the balance of probabilities that the claimant would have been successful in negotiating total recoupment of the finance lease 64 Pitcher Partners (2019) 271 FCR 392 at 420 [125] per Allsop CJ, Yates and 65 Neville's Bus Service Pty Ltd v Pitcher Partners Consulting Pty Ltd [2018] FCA 2098 at [243] per O'Callaghan J. 66 Pitcher Partners (2019) 271 FCR 392 at 420 [125]. 67 Pitcher Partners (2019) 271 FCR 392 at 419 [123], 420 [125]. 68 See [29], [32] above. Bell Nettle costs, it might be thought that the amount of damages awarded for the lost opportunity to negotiate should have been no more than the proportion of the finance costs assessed according to the degree of likelihood that, if the claimant had been able to renegotiate the contract, the negotiation would have proved entirely successful. For present purposes, however, it is unnecessary finally to determine whether the decision of the Full Court in Pitcher Partners correctly states the law relating to damages for deceit. The established authority of this Court governing the assessment of damages under s 82 of the TPA for the loss of a commercial opportunity caused by misleading or deceptive conduct contrary to s 52 of the TPA is relevantly as laid down in Sellars. Where a claimant establishes on the balance of probabilities that misleading or deceptive conduct contrary to s 52 has caused the loss of a commercial opportunity of some value (not being a negligible value), the value of the lost opportunity is to be ascertained by reference to hypotheses and possibilities which, though they may not be capable of proof on the balance of probabilities, are to be evaluated as a matter of informed estimation. But, to repeat, this matter is capable of resolution without resort to that principle. Error in the Full Court's approach Onus of proof In accordance with general principle69, where a contract is terminated for anticipatory breach, or, as in this matter, terminated as a result of misleading or deceptive conduct, a claimant claiming damages for loss of the contract bears the onus of establishing on the balance of probabilities what would have been the value of the contract to the claimant had it not been so terminated. The value is to be determined objectively, and thus, where the lost contractual rights were by their terms capable of being rendered less valuable in certain events, the assessment must take account of the possibility that those events might have eventuated70. More generally, if there are two or more ways in which a wrongdoer could lawfully 69 See fn 38 above. 70 Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164 at 196-197 per Lord Denning MR, 202-203 per Edmund Davies LJ, 209-210 per Megaw LJ; Golden Strait Corpn v Nippon Yusen Kubishika Kaisha [2007] 2 AC 353 at 382 [36] per Lord Scott of Foscote; Bunge SA v Nidera BV [2015] 3 All ER 1082 at 1092 [23] per Lord Sumption JSC (Lord Neuberger PSC, Lord Mance and Lord Clarke JJSC agreeing). Bell Nettle have performed a contract which is rescinded for anticipatory breach, it is to be assumed that, but for rescission, the wrongdoer would have adopted the mode of performance most beneficial to the wrongdoer71. And so, if the contract was lawfully terminable at the instance of the wrongdoer, it must be valued accordingly and, subject to the evidence, not as if it were bound to continue. So to say, however, does not mean that the mere existence of the wrongdoer's right to terminate the contract operates automatically to restrict the damages that can be awarded72. The question is whether, absent rescission, the wrongdoer would have terminated the contract. And to decide that requires the court to have regard to all the facts and circumstances of the case, including events extraneous to the contract that were within the control of the wrongdoer, such as the need to retain third party custom. As Diplock LJ observed in Lavarack v Woods of Colchester Ltd73, one must not assume that a wrongdoer would cut off its nose to spite its face by controlling such events so as to reduce its legal obligations to the claimant and incurring greater loss in other respects. By parity of reasoning, in this matter, it would be wrong to assume, without proof, that Securency would have been prepared to give a lawful notice of termination to Dr Berry and GSC before June 2010. Furthermore, although a claimant bears the burden of proof in the sense of the ultimate burden of establishing its case on the balance of probabilities, the burden of proof in the sense of introducing evidence is liable to shift constantly "according as one scale of evidence or the other preponderates"74. Consequently, where, as here, it is established on the balance of probabilities that a wrongdoer purposely chose to achieve a certain result by means of a calculated deceit, the natural inference is that the wrongdoer was not and would not have been prepared 71 See, eg, Cockburn v Alexander (1848) 6 CB 791 at 814 per Maule J [136 ER 1459 at 1468-1469]; Withers v General Theatre Corporation Ltd [1933] 2 KB 536 at 551 per Scrutton LJ. 72 See Amann Aviation (1991) 174 CLR 64 at 91-93 per Mason CJ and Dawson J, 113-115 per Brennan J, 132-133 per Deane J, 143-144 per Toohey J, 149-150 per Gaudron J; TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 154 per Hope JA (Priestley and Meagher JJA agreeing at 161, 163). [1967] 1 QB 278 at 295-296. 74 Purkess v Crittenden (1965) 114 CLR 164 at 168 per Barwick CJ, Kitto and Taylor JJ, quoting Argyle, Havers and Benady, Phipson on Evidence, 10th ed (1963) Bell Nettle to bring about that result by lawful means. As the majority observed in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd75, the conventional perception is that members of our society do not ordinarily engage in fraudulent conduct. That perception, which underpins the need for clear evidence of fraud76, implies that a person would not intentionally mislead another without sufficient cause to do so. So, in the absence of contrary evidence, it may be inferred that the reason for engaging in the fraud was sufficient to dissuade the fraudster from proceeding by lawful means. The evidential burden thereupon shifts to the fraudster to adduce evidence sufficient to establish that, if it had not acted as it did, it would have been prepared to bring about the same result by lawful means. And in the absence of such evidence, it is fair to infer that there was not a realistic possibility of that occurring. Ultimately, the Full Court reasoned to their conclusion that the Agency Agreement would have been lawfully terminated by no later than 30 June 2008 as "As we have said, if Securency wanted to engage another agent it was free to do so and it is clear that in the first half of 2008, it did want to do so. We note, for example, that, on the findings of the primary judge78, on 5 or 6 February 2008, JH Marketing ... executed an agency agreement for the territory of Nigeria and the [ECOWAS] which was, by 14 February 2008, countersigned by Securency. As recorded79, on about 6 August 2008, Securency terminated the agency agreement with JH Marketing ... and entered into a replacement agency agreement with JHM Global ... We do not see it as significant whether or not Dr Berry was in any relationship with JHM whereby he would be doing work for them. As we noted80 above, one (1992) 67 ALJR 170 at 171 per Mason CJ, Brennan, Deane and Gaudron JJ; 110 ALR 449 at 450. 76 See Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 per Dixon J. See also Helton v Allen (1940) 63 CLR 691 at 701 per Starke J; Hocking v Bell (1944) 44 SR (NSW) 468 at 475 per Davidson J. 77 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [226]-[228]. 78 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [174]-[178]. 79 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [222], [255]. 80 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [110]. Bell Nettle of the practical consequences of the contravening conduct was to bring Dr Berry's agency to an end without unnecessarily alienating him, which allowed Securency to continue to make some limited use of Dr Berry possibly including a meeting between Mr Chapman and Dr Berry as late as November 2008 (although, as the primary judge noted81, there was no evidence of what transpired at that meeting). Although the primary judge said that Dr Berry's texts with Mr Chapman and his requests for information and meetings was a demonstration that he was not acting as if his agency had been terminated and Mr Chapman was not treating Dr Berry as if it had, in our opinion the text messages themselves record no more than logistical details of setting up a meeting, and pleasantries. What is evident is that any post February Meeting involvement of Dr Berry was limited and although the misleading conduct of Securency made that limited involvement possible, in the counterfactual, absent the misleading conduct, the factors that motivated the replacement of Dr Berry would have ensured that his agency would have been brought to an end. Ultimately, without evidence of positive and substantive involvement of Dr Berry in Securency's business, we consider no more should be made of evidence such as Dr Berry's texts and his requests for information and meetings, in terms of proving that in the counterfactual Dr Berry would have continued to act as Securency's agent. We therefore find, for the purpose of assessing quantum that, absent the contravening conduct, the Agency Agreement would have terminated on 30 June 2008." Hence, as it appears, although their Honours were satisfied on the balance of probabilities that Securency was sufficiently concerned about alienating Dr Berry and Nigeria to refrain from serving a lawful notice of termination on 24 February 2008, 26 March 2008, and 22 April 2008, their Honours concluded82 that there was "no reason to assume in the counterfactual" that "the factors that motivated the replacement of Dr Berry" would not have ensured that his agency would have been brought to an end at the first expiry date. More specifically, despite accepting that, until 22 April 2008, Securency was so concerned about the potential ramifications of lawful termination as to eschew the option of lawful termination, the Full Court considered that it was probable that, just over a month later, on 1 June 2008, Securency would have become sufficiently unconcerned 81 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [271]. 82 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [225], [227] (emphasis added). Bell Nettle about the ramifications of lawful termination as to embrace that option, and that Dr Berry and GSC had failed to negative that possibility. Reversal of onus of proof There are two problems with that process of reasoning. The first is that it appears to proceed upon an assumption that "the factors that motivated the replacement of Dr Berry" would have been sufficient to overcome Securency's reticence about giving a lawful notice of termination, thereby suggesting that the evidential burden lay on Dr Berry and GSC to adduce evidence to dispel the assumption. If so, the reasoning is unsound. As has been explained83, since Dr Berry and GSC had established on the balance of probabilities that Securency terminated the Agency Agreement by deliberately deceiving Dr Berry, the natural inference was that Securency was not and would not have been prepared to terminate the Agency Agreement by lawful means. The evidential burden thereupon shifted to Securency to adduce evidence sufficient to establish that there was a real (not negligible) possibility that circumstances so changed by 1 June 2008 (or some later date before June 2010) that Securency would then have been prepared to terminate the Agency Agreement by lawful means. Securency adduced no such evidence. Facts not proved The second problem is that, even if the Full Court intended to convey that their Honours were of opinion that "the factors that motivated the replacement of Dr Berry" were sufficient to establish that there was a real (not negligible) possibility that Securency would have terminated the Agency Agreement by notice given on 1 June 2008, it is clear that was not the case. The Full Court identified these "factors" as being: (1) that Securency "patently wished to terminate the Agency Agreement (in particular having regard to its attempts to do so)"; (2) that "Dr Berry was unable to fulfil his obligations as a result of his ongoing dispute with the Nigerian Government"; and (3) that "Securency had in fact appointed other entities to act as its agents"84. The difficulty with that, as counsel for Dr Berry and GSC submitted, is that none of those "facts" was established. 83 See [39] above. 84 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [204]. Bell Nettle There was no evidence that Securency patently wished to terminate the Agency Agreement. As the primary judge found85, there were no contemporary documents that could or did provide any explanation for replacing Dr Berry and GSC as Securency's agent for Nigeria. The evidence included a memorandum from Mr Chapman to Mr Ellery and Mr Brown purportedly dated 15 August 2007 which proposed that SPT and JH Marketing be appointed to replace Dr Berry and GSC on the basis that Mr Chapman was "very conscious of [Dr Berry's] ongoing health issues which might impact on his travelling and therefore his capacity to fulfil his duties under the agreement". But, as the primary judge found86, the document was created by Mr Chapman well after 15 August 2007 and its contents were fabricated. And, as has been seen87, there was no evidence that Dr Berry's and Contec's legal issues or arbitration proceeding had any effect on Dr Berry's other relationships with the Nigerian government. To the contrary, Governor Soludo's determination in the November 2007 meeting, and in another meeting in March 200888, was that Dr Berry should be involved in the construction of the opacification plant, and Securency was conscious of the importance of that objective to the Nigerian government. Further, such evidence as there was in support of the notion that, "on 5 or 6 February 2008, JH Marketing ... executed an agency agreement for the territory of Nigeria and the [ECOWAS] which was, by 14 February 2008, countersigned by Securency"89 was highly problematic. None of Securency's records covering the period between 15 August 2007 (being the date of the backdated memorandum) and 1 January 2008 (being the date of a further backdated document entitled "REQUEST FOR APPOINTMENT OF AN AGENT") made any reference to SPT or JH Marketing, and, as the primary judge found90, the latter document was created much later in 2008 (certainly after late May 2008) and backdated in order to provide a false audit trail. The primary judge similarly found91 that a handwritten note from Mr Chapman to Mr Ellery dated 21 or 26 January 2008 purportedly requesting Dr Berry's release from the Agency 85 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [123]. 86 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [114]. 87 See [16(3)] above. 88 See [46] below. 89 See [40] above. 90 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [156]. 91 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [169]-[170]. Bell Nettle Agreement and referring to his "continuing ill health" was backdated for the purposes of creating a false audit trail. His Honour concluded92 that Securency's creation of a false audit trail was motivated by a desire "to explain why, despite the contemporaneous commercial success of Dr Berry's agency in securing orders for 30,000 reams of opacified polymer or polymer substrate, Securency had 'released' Dr Berry and GSC from the agency agreement as from 31 December 2007 and so would not be liable to pay them all the commission that they would otherwise have been entitled to receive". The capacity of SPT and JH Marketing to act as Securency's agent was also, to say the least, highly suspect. On 9 July 2007, Mr Chapman emailed Mr Ellery a company profile of JH Marketing, which, as the primary judge observed93, described JH Marketing's clients as "supermarkets, food, beverage, diaper and battery suppliers". The backdated memorandum of 15 August 2007 proposed that Securency conduct formal due diligence on SPT and JH Marketing with a view to both companies being appointed to operate "within the same scope and commission parameters as the entities they are replacing". There was no evidence of any such due diligence having been conducted. Furthermore, Mr Chapman accepted in cross-examination that, as at August 2007, neither JH Marketing nor SPT was based in Nigeria, and he accepted unequivocally that neither of them could supply the service of providing security and transport in Nigeria. Mr Chapman testified that, as at 15 August 2007, a company called "SPT Limited" had offices in or near Pretoria in South Africa (although he did not know whether it was incorporated or not and there was no document in evidence that referred to any company named "SPT Limited" or "SPT" that was based in South Africa). He claimed that a Don McArthur and a Dave Marais, with whom he and Messrs Brown and Curtis of Securency had worked previously, as well as one John McKay, were the principals of "SPT Limited". But, as the primary judge found94, "[i]n comparison to the ability of Dr Berry to meet directly with the President of Nigeria, Ministers in its Government and other senior officials, Mr Brown's perception of what Mr McArthur might be able to achieve in Nigeria through his contacts with a mobile telephone company [made] no apparent commercial sense". Mr Brown sought to explain the incongruity of appointing SPT by saying that "SPT was intended to be a hub for Africa, and we were setting up hubs in three different parts of the world", namely, Africa (based in South Africa), Latin America, and "the Far 92 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [170]. 93 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [107]. 94 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [122]. Bell Nettle East, Asia and the Pacific" (to be dealt with from the head office in Australia). But the primary judge rejected that evidence on the basis95 that it was "not supported by any document" and "in the teeth of the documents and agreements [Mr Brown] or Securency wrote to and made with SPT and JH Marketing that confined their activities to Nigeria". His Honour concluded96 that Mr Brown gave that evidence falsely "because he realised that no contemporary documents existed that could or did provide any explanation for replacing Dr Berry and GSC as Securency's agent for Nigeria". Contrary also to the Full Court's reasoning, Securency's conduct towards Dr Berry after he signed the termination letter manifestly bespoke continuation of the Agency Agreement. For example, on 16 March 2008, Mr Chapman signed two letters on Securency's letterhead addressed to GSC, the first dealing with Securency's conditions for the supply of polymer substrate and the second headed "Conditions for the consideration of a Memorandum of Understanding pertaining to the construction of an Opacification Plant in Nigeria". In late March 2008, Dr Berry and Mr Chapman met with Governor Soludo in the United Kingdom. The primary judge inferred97 that, although neither Dr Berry nor Mr Chapman referred to Securency's letters dated 16 March 2008 in connection with this meeting, Mr Chapman had ensured Dr Berry had received them "for the purpose of his being able to assure the Governor of the then position on the progress that Securency and Dr Berry were making to progress towards the construction of the opacification plant". In mid-July 2008, Dr Berry contacted Mr Chapman by text noting that he had not heard from him, and Dr Berry followed that up with a further text in mid- August 2008. In late August 2008, Mr Chapman responded, suggesting a meeting in early September 2008, when he would be in the United Kingdom. On 29 September 2008, Dr Berry texted Mr Chapman, informing him that he was soon to meet Governor Soludo, and, in November 2008, Dr Berry and Mr Chapman had a meeting at Dr Berry's home in the United Kingdom. Admittedly, as the primary judge observed, there was "no evidence of what transpired" at the meeting98, but, in the absence of evidence of any other reason for it, it is a fair inference that it concerned matters pertinent to the agency. 95 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [123]. 96 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [123]. 97 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [240]. 98 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [271]. Bell Nettle On 2 June 2009, Dr Berry sent Mr Chapman a text informing him that Governor Soludo had been replaced by Governor Sanusi. On 17 June 2009, Dr Berry asked Mr Chapman for clarification on Securency's position and plans moving forward, emphasising that he was under pressure. That was followed by further texts requesting meetings. In response, on 20 July 2009, Mr Chapman sent Dr Berry a text asking if he could have "GSC position ready to discuss tomorrow afternoon". Dr Berry gave evidence, which the primary judge accepted99, that he understood from his discussions and dealings with his lawyers and Governor Sanusi that Mr Chapman wanted to know what guarantees GSC required or could accept from Securency for the supply of polymer for an opacification plant. All of that correspondence is entirely inconsistent with the idea of any sort of transition to SPT and JH Marketing or JHM Global. Mr Brown gave evidence as to why, he said, he would have supported the termination of the Agency Agreement if the termination letter had not been signed, and gave as his reasons that Dr Berry was not travelling to Nigeria, and therefore not discharging his functions as agent, that Dr Berry was unwell and was hospitalised in India, and that Dr Berry had started the Contec arbitration proceedings against the Nigerian government. But the primary judge not only rejected Mr Brown as a credible witness generally but rejected each of the three reasons as contrary to the objective evidence100. As his Honour observed101, there was no evidence that Dr Berry was inhibited in his agency obligations in relation to Nigeria, and no contemporaneous evidence that in 2007 or 2008 Securency perceived him to be so inhibited by reason of his inability, unwillingness or failure to travel to Nigeria. The suggestion that he was so inhibited was inconsistent with Mr Brown's request for, and use of, Dr Berry in the meeting with Governor Soludo in late November 2007 at the Metropole Hotel in London (which was an important step in procuring the January 2008 order from the Nigerian Mint). None of the documents that Messrs Chapman, Brown, Ellery or Mamo of Securency created immediately after that meeting suggested that there was any problem with Dr Berry's performance of the agency. Mr Brown conceded that immediately before the meeting he and Dr Berry had discussed the possibility of Dr Berry's appointment as agent in India. Mr Chapman continued to use Dr Berry after 24 February 2008, including by having him meet Governor Soludo in London on 24 March 2008. There was no evidence that Dr Berry was unwell or restricted by illness in his ability to travel and, as has been seen, in fact he travelled extensively. And the suggestion that Dr Berry was in ill health or hospitalised had no 99 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [280]. 100 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [314]-[318]. 101 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [317]. Bell Nettle evidentiary basis and was also belied by Mr Brown's request for, and use of, Dr Berry in the November 2007 meeting. On 6 February 2008, Ms Whatley on behalf of JH Marketing wrote to Securency enclosing two executed copies of what purported to be an agency agreement between Securency and JH Marketing for the territory of Nigeria and the ECOWAS. It was later purportedly executed by Messrs Curtis and Ellery on behalf of Securency. But, on 22 July 2008, Mr Ellery emailed Mr Chapman attaching two draft agency agreements for SPT and JHM Global, noting that "we are still awaiting completion of the due diligence for SPT". The terms of the SPT agency agreement were materially similar to those for JH Marketing and JHM Global except that the SPT agreement provided that SPT was entitled to a commission of 12% and the territory was limited to only Nigeria. Mr Chapman responded the next day that the agreement for JHM Global looked "fine" and that he had emailed the draft SPT agency agreement to SPT for review. He suggested that Mr Ellery "issue" the agreement for SPT's execution to hold pending "final due diligence". But, as the primary judge observed102, there was "no evidence of what, if any, due diligence Securency ever performed in respect of SPT", and, "[c]learly enough, these emails show[ed] that nothing of substance had been done to appoint any entity called SPT at any time contemporaneous with the documents that Mr Ellery, Mr Brown and Mr Chapman created for the paper or audit trail". On 6 August 2008, Ms Whatley, on behalf of JH Marketing, and Messrs Curtis and Ellery, on behalf of Securency, signed a letter of that date purporting to terminate the agency agreement between Securency and JH Marketing of February 2008, and, on the same date, Ms Whatley, on behalf of JHM Global, signed a new agency agreement between JHM Global and Securency on the same terms as the agreement between Securency and JH Marketing. There was equally no evidence of any due diligence conducted in respect of JH Marketing and no reason to suppose that it was a suitable Nigerian agent. On 13 August 2008, Mr Chapman emailed Mr Ellery attaching a draft letter for Securency to execute and stating as the purpose of the letter that, once the SPT agency agreement was signed, SPT "could prove their status and bona fides to those with whom they need to discuss on our behalf and might require proof on a confidential basis". But the reality was that, only a few days later, on 22 August 2008, Securency made its first payment of commissions to SPT, which Securency's commission statement described as being "[i]n respect of 16,000 reams of N20 substrate shipped April-July 2008", being commissions supposedly earned long before SPT was appointed as agent. Then, on 25 August 2008, Mr Ellery signed a formal letter about SPT's appointment. Based, therefore, on the payment of commission on 22 August 2008, and the fact that Mr Ellery signed the 102 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [252], [254]. Bell Nettle formal letter about SPT's appointment on 25 August 2008, the primary judge concluded that SPT and Securency entered into the SPT agency agreement on 22 August 2008 and that it was backdated to 1 January 2008 in an attempt to justify the payment of commissions in respect of sales going back that far103. In the result, the primary judge found104 that, overall, SPT received five 12% commission payments totalling about €5.23 million, and that it was safe to infer that Securency paid JH Marketing and JHM Global at the least €3.3 million, being their 8% commission for the same period and shipments, and yet there was no evidence of anything that JH Marketing or JHM Global or SPT had ever done to bring about any order from Nigeria for opacified polymer. The Full Court did not overturn any of those findings and it would not have been open to their Honours to do so. On the basis of the available evidence, the inference was ineluctable that the supposed agency agreements between Securency and SPT and JH Marketing, and later JHM Global, were a pretence retrospectively fabricated in an effort to provide the appearance of a lawful justification for the diversion to SPT, JH Marketing and JHM Global of commissions that, but for the fraudulently procured termination letter, Dr Berry and GSC would have received under the Agency Agreement. It is also apparent on that basis that the sole "factor" that "motivated the replacement of Dr Berry" was Securency's resolve to cheat Dr Berry and GSC of the commissions to which they were entitled under the Agency Agreement, by tricking Dr Berry into signing the termination letter, while pretending to him and to the Nigerian government that Dr Berry and GSC remained as Securency's agent in Nigeria. Finally, and most significantly for present purposes, it is plain that Securency had very good reason to maintain that pretence. As the primary judge in effect found105, Dr Berry had proved to be of critical importance in winning the sales to Nigeria, and Securency likely considered him to be critical to attracting further orders: "Since Dr Berry was aware that the commercial justification for constructing an opacification plant could only be that Nigeria had converted all its banknotes to polymer, it is inconceivable that, first, Dr Berry's interactions with Governor Soludo did not involve Dr Berry pushing the 103 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [265]. 104 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [272], [281]. 105 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [272]. Bell Nettle case for that conversion and, secondly, Securency, and Mr Chapman in particular, were unaware of this fact." In the face of those circumstances, it is objectively highly improbable that Securency would have served a notice of termination on Dr Berry, of which the inevitable effect would have been to put Dr Berry and Nigeria on notice that Dr Berry was no longer Securency's agent and to convey to Dr Berry and Nigeria that Securency had no intention of proceeding with the opacification plant that Nigeria conceived of as integral to the switch to polymer. Of course, the pretence that Dr Berry and GSC remained as agent and that Securency would honour its assurances regarding the opacification plant could not have been maintained indefinitely, since, sooner or later, Dr Berry was bound to demand payment of the commissions that were due (as he did in fact in September 2009), and Securency would then face the prospect of having to respond with the assertion (which Securency advanced at trial) that, because of the termination letter, Dr Berry and GSC had given up their rights to the commissions. But, axiomatically, it was in Securency's interests to delay that day of reckoning for as long as it could, and so any thought of Securency giving a lawful notice of termination before then must be regarded as highly improbable. Notice of contention Under cover of a notice of contention, Securency submitted that the Full Court should have found that Dr Berry's dispute with the Nigerian government had a negative impact on his ability to perform his contractual obligations under the Agency Agreement and that, but for the termination letter, the Agency Agreement would have been terminated with effect from 30 June 2008 because Dr Berry had been unable to travel to Nigeria since mid-2006, and was suing the Nigerian government for US$252 million, Mr Harding of JH Marketing was already known to the Governor of the CBN and the Nigerian Mint and involved with Securency in the provision of services in Nigeria, and all four individuals, Messrs Brown, Chapman, Ellery and Curtis, who would have been involved in any decision to terminate the Agency Agreement had shown a preparedness to do so. That contention is unpersuasive. Sufficient has already been said of the primary judge's findings to show that it was well open to his Honour to reject Messrs Chapman and Brown's evidence generally, and, specifically, in relation to their claims that the reasons for Securency wishing to end the Agency Agreement were that Securency believed Dr Berry to be unwell, and compromised in his ability to act as agent because of his arbitration proceedings with the Nigerian government. Bell Nettle The notion that Mr Harding would have been a preferred agent because Mr Harding was already known to Governor Soludo rested on evidence given by Mr Chapman that, on 20 April 2007, he received a text from Dr Berry, then in India, informing Mr Chapman of a proposed meeting to be held at Heathrow Airport that evening between Mr Harding and Governor Soludo, and that Dr Berry had brought Mr Harding in as a person who he understood held 40% of the shares in GSC on behalf of Securency. The primary judge rejected Mr Chapman's evidence that he was told by Mr Harding, Governor Soludo and Dr Berry of a discussion at a meeting at around the time of the text between Dr Berry, the Governor and Mr Harding. His Honour observed106 that: "Mr Chapman gave that evidence after being shown the text, yet there is no written record of such a meeting in evidence, Mr Chapman could not recall what he had been told about the discussion at the meeting and, crucially, Dr Berry could not have been at Heathrow to attend it since his passport showed that he was in India." Counsel for Securency did not suggest any reason why the primary judge's reasons for rejecting Mr Chapman's evidence on that issue were insufficient to sustain his Honour's conclusion. The contention that they were is unsustainable. Finally, neither Mr Ellery nor Mr Curtis, who were Messrs Brown and Chapman's superiors at Securency, and, as it appeared, the ultimate Securency decision makers in relation to the engagement of Securency agents, was called to give evidence as to whether he considered that it was in Securency's best interests to terminate the Agency Agreement and appoint JH Marketing or JHM Global and SPT in place of Dr Berry and GSC. Naturally, the primary judge inferred107 that nothing which either man might have said on those subjects would have assisted Securency's case. Conclusion It follows that the appeal should be allowed. Orders 1 and 2 of the Full Court made on 4 June 2019 should be set aside and, in their place, it should be 106 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [103]. 107 Berry v CCL Secure Pty Ltd [2017] FCA 1546 at [31], applying Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 at 412-414 [167], [169] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ, Jones v Dunkel (1959) 101 CLR 298 at 308 per Kitto J, 312 per Menzies J, 320-321 per Windeyer J and Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at 384-385 [63]-[64] per Heydon, Crennan and Bell JJ. Bell Nettle ordered that there be judgment for the appellants in the sum of $27,078,507, plus interest pursuant to statute, and costs. The respondent should pay the costs of the appeal to the Full Court and to this Court. Edelman GAGELER AND EDELMAN JJ. Together with Bell, Keane and Nettle JJ, we would allow the appeal by Dr Berry and GSC. Their Honours' detailed recitation of the facts and procedural history allows us to state our reasons shortly. Though some large issues of legal principle were canvassed in written and oral submissions, the appeal can and in our opinion should be allowed on the narrow basis suggested by Dr Berry and GSC in their written reply. The narrow basis is that Securency failed at trial to discharge the evidentiary onus imposed upon it by the way it had joined issue with Dr Berry and GSC on the pleadings on the question of causation of the loss they claimed to have suffered. Given that the only action on which Dr Berry and GSC succeeded against Securency was an action under s 82 of the Trade Practices Act 1974 (Cth) to recover the amount of the loss which Dr Berry and GSC claimed to have suffered by conduct of Securency in breach of s 52 of that Act, the findings of the primary judge couched in the conclusory language of a common law action in deceit have been an unfortunate distraction. A feature of the statutory action on which Dr Berry and GSC succeeded against Securency is that the statute itself requires for the action "the suffering of loss or damage", requires a connection between the loss or damage and the contravention of s 52 through the requirement that the loss or damage "must be sustained 'by' the contravention", and instructs that "the measure of compensation is 'the amount of' the loss or damage sustained"108. "Economic loss may take a variety of forms"109 all of which involve the identification of some "prejudice or disadvantage" that has occurred110. Plaintiffs pursuing the statutory action are initially responsible for formulating how such loss or damage as they claim to have suffered is to be identified. The initial question must always be: "what loss or damage does the plaintiff allege"111? The plaintiff then bears the legal onus of proving that the identified loss or damage has been suffered by the contravention of which they complain and of establishing the amount of that loss or damage. The plaintiff bears, in other words, the ultimate burden of establishing both the required connection with the contravention and 108 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 527 [95]. 109 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527. 110 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 513 [46]. 111 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 555. See also Henville v Walker (2001) 206 CLR 459 at 488-489 [94], 507 [153]. Edelman quantum by inferences drawn from the whole of the evidence. That legal onus is constant. The practical burden of introducing evidence − the so-called "evidentiary onus"112 − is a different matter. In the pre-trial and trial processes that lead up to a court ultimately having to determine whether a plaintiff has discharged the legal onus of proof by inferences drawn from the whole of the evidence, the practical burden of introducing evidence can and often does shift. Whether, and if so how and to what extent, an evidentiary onus might shift from a plaintiff during the conduct of an action depends in large measure on how the plaintiff chooses to formulate the loss or damage claimed to have been suffered, and on how the parties thereafter choose to join issue on the questions of connection with the contravention and quantum that arise in respect of the chosen formulation. Much, in other words, depends on the pleadings. Dr Berry and GSC did not formulate the loss they claimed to have suffered by the misleading or deceptive conduct of Securency in terms of the loss of contractual rights under the Agency Agreement. Had they formulated their loss in that way, they would have proved that the misleading or deceptive conduct of Securency was sufficiently connected with the identified loss by proving nothing more than that Dr Berry signed the termination letter in reliance on the misleading or deceptive conduct. There being no dispute that the termination letter was effective to bring the Agency Agreement to an end, the amount of their loss would have been the value of the contractual rights under the Agency Agreement that they gave up at the date of termination. The value of those contractual rights would have been assessed at the date of termination of the Agency Agreement having regard to the degree of probability that the Agency Agreement would have continued to exist into the future had it not been ended by the termination letter and having regard to the degree of probability that a future stream of commission would have been paid under it113. Dr Berry and GSC chose instead to formulate the loss they claimed to have suffered by the misleading or deceptive conduct of Securency exclusively in terms of the loss of commission they would have received under the Agency Agreement had the Agency Agreement not been brought to an end by the termination letter. It was common ground that the formulation of their loss in that way required them to prove that the misleading or deceptive conduct of Securency caused the loss by proving on the balance of probabilities the counterfactual that, but for Dr Berry having signed the termination letter in reliance on the misleading or deceptive 112 See Purkess v Crittenden (1965) 114 CLR 164 at 167-168. 113 cf Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 514 [48]-[49]. Edelman conduct so as to bring the Agency Agreement to an end, the Agency Agreement would have continued in existence and commission would have been paid under Prima facie discharge of the onus of proving that the Agency Agreement would have continued in existence required no more of Dr Berry and GSC than that they point to the provision for automatic renewal in the Agency Agreement. The "mere existence" of contractual rights to terminate the Agency Agreement was insufficient to displace the inference that the Agency Agreement would have continued in existence which arose from that provision for its automatic renewal114. The practical burden of introducing evidence to show on the balance of probabilities that the Agency Agreement would have been terminated through the affirmative exercise of a contractual right to terminate fell to Securency. By its pleaded defence, Securency indicated that it sought to shoulder that practical burden by proving that it would have terminated the Agency Agreement no later than 30 June 2008 either by reason of Dr Berry's health or by reason of Dr Berry having significantly damaged his close working relationship with members of the Nigerian Government. To discharge the burden, Securency indicated by its defence that it relied on the evidence of Mr Brown. The evidence of Mr Brown having been thoroughly disbelieved by the primary judge in findings undisturbed on appeal to the Full Court, Securency's pleaded defence on causation was left devoid of evidentiary foundation. Rejection of Securency's pleaded defence ought to have been the end of the issue. "The function of pleadings is to state with sufficient clarity the case that must be met" and thereby to "ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and ... to define the issues for decision"115. A plaintiff should be expected to plead all material facts on which the plaintiff relies to constitute the statutory cause of action, including any counterfactual on which that plaintiff relies to establish the requisite causal link between identified loss or damage and identified misleading or deceptive conduct. In the same way, a defendant resisting the statutory action should be expected to plead any different counterfactual on which that party might rely to deny the causal link. Unless and to the extent that the parties choose to depart from the pleadings in the way they go on to conduct the trial116, choice 114 The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 93, citing TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 154. 115 Banque Commerciale SA (En liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286. 116 Banque Commerciale SA (En liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 287. Edelman between the competing pleaded counterfactuals on the balance of probabilities should then exhaust the fact-finding that is required to be undertaken by the court on the issue of causation. The error of the Full Court, in an otherwise meticulous judgment, was sourced in the observation that there was "no reason to assume in the counterfactual that Securency would not have acted to terminate the Agency Agreement at the time when that agreement would otherwise have been automatically renewed"117. The way the issue of causation had been joined on the pleadings was reason enough to confine consideration of whether Securency would have terminated the Agency Agreement to whether Securency would have terminated the Agency Agreement for the reasons Securency sought to advance through the evidence of Mr Brown. No broader factual inquiry was warranted. Our preference is to defer consideration of the correctness of the reasoning of the Full Court of the Federal Court in Pitcher Partners Consulting Pty Ltd v Neville's Bus Service Pty Ltd118 to a case in which adoption or rejection of a "robust" approach to fact-finding against the interests of a party found to have engaged in dishonest misleading or deceptive conduct is determinative. For these reasons, we agree with the orders proposed by Bell, Keane and 117 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 at [225]. 118 (2019) 271 FCR 392.

HIGH COURT OF AUSTRALIA THE MARITIME UNION OF AUSTRALIA & ANOR PLAINTIFFS AND MINISTER FOR IMMIGRATION AND BORDER PROTECTION & ANOR DEFENDANTS Maritime Union of Australia v Minister for Immigration and Border Protection [2016] HCA 34 31 August 2016 ORDER The questions stated by the parties in the special case dated 6 May 2016 and referred for consideration by the Full Court be answered as follows: Question 1 Is paragraph 2 of Determination IMMI15/140, registered on the Federal Register of Legislative Instruments on 14 December 2015, invalid? Answer Yes. Question 2 If the answer to Question 1 is "Yes", what relief, if any, should be granted? Answer It should be declared that paragraph 2 of Determination IMMI15/140, the Federal Register of Legislative Instruments on registered on 14 December 2015, is invalid and of no effect. Question 3 Who should pay the costs of the Special Case? Answer The second defendant. Representation N J Williams SC with B K Lim for the plaintiffs (instructed by Slater and S P Donaghue QC with A M Mitchelmore for the defendants (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Maritime Union of Australia v Minister for Immigration and Border Protection Statutes – Delegated legislation – Validity – Migration Act 1958 (Cth) – Offshore resources industry – Where amendments to Migration Act had effect of extending migration zone to non-citizens participating in or supporting offshore resources activity – Where amendments created specified visa requirements for such persons – Where amendments conferred power on Minister to make determination excepting operations and activities from extended migration zone – Where Minister's determination purported to except from migration zone, and specified visa requirements, all operations and activities to extent certain vessels or structures were used – Whether determination entirely negated operation of general rule to non-citizens participating resources activity – Whether determination beyond power and invalid. in extending migration zone in or supporting offshore Words and phrases – "Australian resources installation", "exception", "migration zone", "offshore resources activity". Legislation Act 2003 (Cth), s 42. Migration Act 1958 (Cth), ss 5, 8, 9A, 13(1), 41. Migration Amendment (Offshore Resources Activity) Act 2013 (Cth). Offshore Minerals Act 1994 (Cth), s 4, Ch 2. Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth), s 7, Chs 2, 3. FRENCH CJ, BELL, GAGELER, KEANE AND NETTLE JJ. The plaintiffs are associations of employees including persons employed in the offshore resources industry. The offshore resources industry is concerned with the exploration and exploitation of offshore natural resources including greenhouse gas, petroleum and other minerals. In 2013, the Migration Act 1958 (Cth) was amended with the effect that from 29 June 2014 non-citizens participating in or supporting an activity or operation within the statutory definition of "offshore resources activity" are deemed to be within the migration zone and therefore subject to specified visa requirements. The amendments conferred power on the first defendant ("the Minister") to make a determination under s 9A(6) of the Migration Act excepting an operation or activity from the statutory definition of "offshore resources activity". In 2015, the Minister made a determination excepting from that definition all operations and activities to the extent that they use any vessel or structure that is not an Australian resources installation ("the 2015 Determination"). The purported effect of the 2015 Determination is thus to negate the operation of the specified visa requirements in relation to non-citizens engaged in operations and activities to the extent that they use any vessel or structure that is not an Australian resources installation. This special case has been stated in order to determine the validity of the 2015 Determination. For the reasons which follow, the 2015 Determination exceeded the limits of the power conferred on the Minister under s 9A(6) and for that reason is invalid. Legislative history Since 1982, provisions of the Migration Act have provided to the effect that the migration zone1 and therefore the requirement for a non-citizen to hold a visa2 extends to non-citizens working on Australian resources installations3. Under the Migration Act, a structure or vessel is an Australian resources installation if it is attached to the Australian seabed in the sense described in s 5(14)4 and is a fixed structure (ie, unable to move or be moved) that is used off- shore in exploring or exploiting natural resources or in associated activities5; a 1 See now Migration Act 1958 (Cth), s 5(1). 2 See now Migration Act, s 13(1). 3 See now Migration Act, s 5(1) definition of "Australian resources installation", s 8. 4 Migration Act, s 5(1) definition of "Australian seabed". 5 Migration Act, s 5(10). Bell Nettle floating and moveable structure, other than a vessel, that is used wholly or principally in what broadly may be described as drilling or associated exploration activities6; or a vessel used wholly or principally in such drilling or associated exploration activities7. At all relevant times, s 5(13) of the Migration Act has provided, however, that the reference to "vessel" in s 5(11)(a) does not include certain kinds of vessel used or to be used wholly or principally in transporting persons or goods to or from a resources installation or manoeuvring a resources installation, or in operations relating to the attachment of a resources installation to the Australian seabed ("the s 5(13) exclusion"). Vessels falling within the include supply and accommodation vessels, tugs and s 5(13) exclusion construction vessels. In Allseas Construction SA v Minister for Immigration and Citizenship8, the Federal Court of Australia (McKerracher J) held that certain pipe-laying vessels fell within the s 5(13) exclusion and, accordingly, that non-citizens on those vessels were not within the migration zone and so did not require visas. In response to the Allseas decision, the Department of Immigration and Citizenship ("the Department") developed a taskforce to conduct a review on "how best to apply the [Migration Act] to workers in offshore maritime zones"9. On the basis of the taskforce's recommendations, the Department rejected "the simple option" of amending s 5(13) to remove the exception for non-citizens working on pipe-laying vessels and other ships manoeuvring resources installations into place while attached to the Australian seabed – because, as the Department observed, that would have left non-citizens free to work in the offshore resources industry on free-floating vessels without the need to obtain a visa. Instead, the Department preferred "the broader option" of creating a "specific offshore resource work visa" and requiring all non-citizens working in the offshore resources industry to hold such a visa with an appropriate work 6 Migration Act, s 5(11)(b). 7 Migration Act, s 5(11)(a). (2012) 203 FCR 200 at 214-215 [77]. 9 Australia, House of Representatives, Migration Amendment (Offshore Resources Activity) Bill 2013, Explanatory Memorandum at 1. Bell Nettle condition10 but that "the legislation ... be drafted [so as] to enable particular activities to be included or excluded from the application of the migration zone as it applies to the offshore resource sector"11. The 2013 Amending Act Pursuant to the Department's recommendation, the Parliament enacted the Migration Amendment (Offshore Resources Activity) Act 2013 (Cth) ("the 2013 Amending Act"). Relevantly, it added s 41(2B) and (2C) to the Migration Act12, with the effect of imposing a requirement that all non-citizens participating in or supporting the offshore resources industry hold a permanent or prescribed visa with an appropriate work condition; and a new s 9A13, with the effect of extending the migration zone to include not only specified geographical locations and offshore installations but also participation in or support of certain operations or activities that are regulated or licensed under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) ("the Offshore Petroleum Act") and the Offshore Minerals Act 1994 (Cth). The new s 41(2B) and (2C) – a visa regime for the offshore resources industry Section 41 of the Migration Act is entitled "Conditions on visas". Sub-section (1) provides that regulations may impose conditions on visas or visas of a specified class. Sub-section (2)(b) stipulates that such conditions may restrict the work that a visa-holder may undertake in Australia. Sub-section (2B) states that the fact that a visa-holder is permitted to undertake work in Australia does not necessarily allow that person to participate in or support an offshore resources activity. "Offshore resources activity" is 10 Australia, Department of Immigration and Citizenship, Migration Amendment (Offshore Resources Activity) Bill 2013, Regulation Impact Statement at 10, 14- 11 Australia, Department of Immigration and Citizenship, Migration Amendment (Offshore Resources Activity) Bill 2013, Regulation Impact Statement at 14. 12 Migration Amendment (Offshore Resources Activity) Act 2013 (Cth), Sched 1, item 8. 13 Migration Amendment (Offshore Resources Activity) Act, Sched 1, item 6. Bell Nettle defined in s 9A(5)14 as a regulated operation within the meaning of s 7 of the Offshore Petroleum Act, or an activity performed under a licence or a special purpose consent within the meaning of s 4 of the Offshore Minerals Act, that is carried out or to be carried out within an area and is not an operation or activity excepted by the Minister under s 9A(6). It follows that, unless an offshore resources activity is so excepted, a non-citizen will only be permitted to participate in or support that activity if he or she holds a permanent or prescribed visa. Sub-section (2C) stipulates that the requirement for a non-citizen to hold such a permanent or prescribed visa extends to persons in an area regardless of whether they are on an Australian resources installation, such as an oil rig or drilling ship, or are otherwise in the area, for example, on vessels or other structures unconnected to the Australian seabed (hereafter referred to as "vessels or unmoored structures"), such as seismic exploration vessels or submarines. The new s 9A(1)-(5) – an operational extension of the migration zone Section 9A(1) provides that a person is "taken to be in the migration zone while he or she is in an area to participate in, or to support, an offshore resources activity in relation to that area". Section 9A(5) defines "offshore resources activity" as follows: "offshore resources activity, in relation to an area, means: a regulated operation (within the meaning of section 7 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006) that is being carried out, or is to be carried out, within the area, except an operation determined by the Minister under subsection (6); or an activity performed under a licence or a special purpose consent (both within the meaning of section 4 of the Offshore Minerals Act 1994) that is being carried out, or is to be carried out, within the area, except an activity determined by the Minister under subsection (6); or an activity, operation or undertaking (however described) that is being carried out, or is to be carried out: 14 See below at [10]. Bell Nettle under a law of the Commonwealth, a State or a Territory determined by the Minister under subsection (6); and (ii) within the area, as determined by the Minister under subsection (6)." The Explanatory Memorandum to the Bill which became the 2013 Amending Act stated with respect to s 9A(1)-(5)15: "New section 9A is based on the recommendations of the Taskforce. The Taskforce recommended that the existing legislative framework that essentially provides that persons are in the migration zone based on where they are physically located be supplemented with a new legislative concept. The policy intention is to provide that all offshore resource workers, including support staff, are taken to be in the migration zone when they are engaged to conduct activities regulated by Commonwealth, State and Territory legislation relating to the exploration and exploitation of Australia's natural resources. New subsection 9A(1) does not define what 'an area' is and has been left deliberately broad. Instead, it is intended for the relevant area to be read in conjunction with the definition of offshore resources activity in new subsection 9A(5). New subsection 9A(5) refers to certain operations or activities under the Offshore Petroleum Act, Offshore Minerals Act or a law of the Commonwealth, a State or a Territory determined by the Minister. Those Acts themselves will define the area (for example, a licence under the Offshore Minerals Act will define a particular area in which the regulated operation may take place). New paragraphs 9A(5)(a) and 9A(5)(b) make it clear that all regulated operations under the Offshore Petroleum Act and all activities performed under a licence or a special purpose consent under the Offshore Minerals Act are captured by the definition of offshore resources activity unless the 15 Australia, House of Representatives, Migration Amendment (Offshore Resources Activity) Bill 2013, Explanatory Memorandum at 10-17. Bell Nettle Minister has excluded the operation or activity by using his powers under subsection 9A(6)." The new s 9A(6) and (7) – the Minister's power to except operations and activities from the extended visa regime Section 9A(6) provides that: "The Minister may, in writing, make a determination for the purposes of the definition of offshore resources activity in subsection (5)." Section 9A(7) provides that a determination made under sub-s (6) is a legislative instrument but that s 42 of the Legislation Act 2003 (Cth), which provides for parliamentary disallowance of legislative instruments, does not apply to determinations made under s 9A(6). The Explanatory Memorandum to the Bill which became the 2013 Amending Act stated with respect to s 9A(6)16: "[It] would allow the Minister to exclude from the Act activities defined under the Offshore Petroleum Act and the Offshore Minerals Act which the Minister considers unsuitable to be captured by the definition of offshore resources activity. The purpose of this amendment is to provide the Minister with the flexibility and ability to exempt certain activities administered by the Offshore Petroleum Act and the Offshore Minerals Act from the definition of offshore resources activity. Further, this amendment will provide the Minister with to capture certain other activities not administered by these two Acts but administered by a law of the Commonwealth, a State or a Territory. the ability This amendment will also provide the Minister with an additional tool to ensure that any future emergency can be effectively dealt with and to exclude any unintended consequences which may breach Australia's international obligations. 16 Australia, House of Representatives, Migration Amendment (Offshore Resources Activity) Bill 2013, Explanatory Memorandum at 17-19. Bell Nettle A legislative instrument is to be utilised as the Minister would need flexibility to make determinations for the purpose of the definition of offshore resources activity and these instruments would need to be revised frequently, in consultation with stakeholders." Subsequent developments Following the general election in September 2013, the newly elected federal government introduced the Migration Amendment (Offshore Resources Activity) Repeal Bill 2014 with the object of repealing the 2013 Amending Act. The Bill was passed by the House of Representatives but lapsed in the Senate. On 29 May 2014, the Governor-General made the Migration Amendment (Offshore Resources Activity) Regulation 2014 (Cth), which had the purported effect of prescribing certain visas for the purposes of s 41(2B) of the Migration Act. That regulation was disallowed by the Senate on 16 July 2014. On the following day, the Assistant Minister for Immigration and Border Protection made a determination in apparent reliance on s 9A(6) of the Migration Act, which had the purported effect of excepting all regulated operations and activities identified in s 9A(5)(a) and (b) from the whole of the defined content of "offshore resources activity", and therefore the apparent consequence that non- citizen workers involved in those operations and activities would not require visas. On 26 March 2015, the Full Court of the Federal Court of Australia held that the determination made on 17 July 2014 was invalid. The basis of the Full Court's decision was that a power to create exceptions to a rule cannot be used to eviscerate a substantial part of the rule by denuding the rule of any content and, therefore, that the Minister's power of determination pursuant to s 9A(6) of the Migration Act cannot be exercised so as completely to extinguish the items within the relevant category or class in s 9A(5)17. There was no appeal from the Full Court's decision but there were two further developments: a ministerial determination on 27 March 2015 and a declaration as to special purpose visas on 17 Australian Maritime Officers' Union v Assistant Minister for Immigration and Border Protection (2015) 230 FCR 523 at 541 [67]; see also Cockle v Isaksen (1957) 99 CLR 155 at 165 per Dixon CJ, McTiernan and Kitto JJ, 168 per Williams J; [1957] HCA 85. Bell Nettle 30 March 2015. Each was directed to restricting the coverage of the visa regime prescribed by s 41(2B) and (2C), but each was promptly challenged by the plaintiffs and then revoked by the Minister before a final hearing of the matter. The 2015 Determination On 2 December 2015, the Minister took what may be seen as the final step in this legal minuet between the Minister and the Parliament18, by making the 2015 Determination. So far as is relevant, it provides as follows: for the purposes of paragraph 9A(5)(a) of the Act, a regulated operation (within the meaning of section 7 of the Offshore Petroleum and Greenhouse [Gas] Storage Act 2006), [is not a regulated operation] to the extent that the operation uses any vessel or structure that is not an Australian resources installation; for the purposes of paragraph 9A(5)(b) of the Act, an activity performed under a licence or a special purpose consent (both within the meaning of section 4 of the Offshore Minerals Act 1994), [is not a regulated activity] to the extent that the activity uses any vessel or structure that is not an Australian resources installation." The 2015 Determination is invalid It will be observed that, although the 2015 Determination is drafted in the singular – in the sense that it refers to "a regulated operation" and "an activity" – its purported effect is to except from s 9A(5)(a) and (b) all operations and activities to the extent that they use any vessel or structure that is not an Australian resources installation. There are a number of reasons why such a broad-ranging exception exceeds the limited terms of the power conferred on the Minister by s 9A(6). To start with, the power of exception vested in the Minister is conferred in terms of a power to except an operation or activity from the operation of s 9A and hence from the reach of s 41(2B) and (2C). Arguably, that includes power to except more than one operation or activity and perhaps even a class or more than one class of operation or activity19. But the language of s 9A(6) is ill adapted to 18 See Plaintiff S297/2013 v Minister for Immigration and Border Protection (2014) 255 CLR 179 at 182 [6] per French CJ; [2014] HCA 24. 19 Acts Interpretation Act 1901 (Cth), s 33(3A); Legislation Act 2003 (Cth), s 13(3). Bell Nettle the exception of an operation or activity to some or other specified extent, still less to the exception of all operations or activities to that specified extent. Secondly, the 2015 Determination does not accord with ordinary conceptions of a power to provide for exceptions. As was stated in Cockle v Isaksen20, the ordinary understanding of an exception is that: "An exception assumes a general rule or proposition and specifies a particular case or description of case which would be subsumed under the rule or proposition but which, because it possesses special features or characteristics, is to be excluded from the application of the rule or proposition." In Cockle v Isaksen terms, s 9A(1) (understood in accordance with the definition in sub-s (5)) represents the general rule that is subject to the exception under s 9A(6) of particular cases of operations or activities possessed of special features. The 2015 Determination does not provide for such an exception. The 2015 Determination is drafted in terms of "the extent [to which an operation or activity] uses any vessel or structure that is not an Australian resources installation" and is thereby calculated to appear as the marking out of a particular case of operations or activities possessed of a special feature. But, despite that appearance, by stipulating that s 9A(1) shall not apply to any offshore resources activity to "the extent that the operation [or activity] uses any vessel or structure that is not an Australian resources installation", the 2015 Determination purports in effect to deprive s 9A(1) of all content and so entirely to negate the operation of the general rule. And, contrary to the defendants' contentions, it is not impossible to identify content that is necessarily within s 9A(1). As will be explained later in these reasons, the text and temporal context of the enactment of s 9A(1) inform and define its content. 20 (1957) 99 CLR 155 at 165 per Dixon CJ, McTiernan and Kitto JJ, see also at 168 per Williams J; see also South Australia v Totani (2010) 242 CLR 1 at 73 [172] per Hayne J, 166-167 [459]-[461] per Kiefel J; [2010] HCA 39. Bell Nettle Thirdly, and for the same reason, the 2015 Determination is opposed to the apparent statutory purpose of s 9A(6)21. Granted, the power conferred by s 9A(6) is expressed in relatively broad terms, in as much as it does not specify any preconditions of its exercise or require observance of any mandatory considerations22 and because the notion of an "offshore resources activity" is unconstrained by reference to any particular geographic or other location. It may be, therefore, that s 9A(6) entitles the Minister to take into account a wide range of factors23. But, as Stephen J observed in R v Toohey; Ex parte Northern Land Council24, a power of the kind conferred by s 9A(6) is seldom if ever unconstrained by express or implied purposes or criteria. Given that s 9A(1) was enacted in order to extend the operation of the visa regime in s 41(2B) and (2C) to non-citizens on vessels or unmoored structures who are in an area to participate in or support an offshore resources activity, it is not to be supposed that s 9A(6) was enacted with the object of enabling the entire negation of that extension. To the contrary, the text and context of the provision imply that its purpose is to provide for limited exceptions for particular activities or operations to which it may be determined from time to time the visa regime should not apply. By entirely negating the extension of the visa regime to non- citizens on vessels or unmoored structures who are in an area to participate in or support an offshore resources activity, the 2015 Determination purports in effect to repeal the operation of s 9A(1) and thereby to thwart that legislative purpose. The defendants contended to the contrary that, because the sole effect of s 5(13) is to prevent vessels that are engaged in particular offshore resources activities from falling within the migration zone as defined in s 5(1), and since s 5(13) was not repealed at the time of enactment of s 9A(1), it cannot be that the statutory purpose of s 9A(1) is to extend the reach of the visa regime to non- citizens on vessels or unmoored structures who are in an area to participate in or 21 See State of New South Wales v Law (1992) 45 IR 62 at 75 per Kirby P, 89 per Priestley JA. 22 Cf Swan Hill Corporation v Bradbury (1937) 56 CLR 746 at 756-758 per Dixon J; [1937] HCA 15. 23 See Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at 528 [61], 539 [102] per Gleeson CJ and Gummow J, 564-565 [187] per Hayne J, 584 [246] per Callinan J; [2001] HCA 17. 24 (1981) 151 CLR 170 at 204; [1981] HCA 74. Bell Nettle support an offshore resources activity; for, otherwise, s 5(13) would be otiose. In the defendants' submission, the preferable view of the purpose of s 9A(1) is to leave the Minister entirely free under s 9A(6) to determine the extent to which the visa regime should apply to non-citizens on vessels or unmoored structures who are in an area to participate in or support an offshore resources activity. According to the defendants, that construction is reinforced by the fact that, perforce of s 9A(7), s 42 of the Legislation Act does not apply to any such determination. Those arguments are not persuasive. As already observed, it is apparent from the text of s 9A(1) and (5) and the temporal proximity of the 2013 Amending Act to the decision in Allseas that the purpose of s 9A is to create a general rule extending the visa regime in s 41(2B) and (2C) to non-citizens on vessels or unmoored structures who are in an area to participate in or support an offshore resources activity25. The logical implication is that the object of retaining s 5(13) and adding s 9A – as opposed simply to repealing s 5(13) – was substantially to negate the effect of s 5(13) while retaining a degree of ministerial discretion to provide by way of specific exceptions under s 9A(6) for the application of s 5(13) in particular cases of operations or activities possessed of special features. The text of s 9A(6) fortifies that construction. As was earlier noticed26, "offshore resources activity" is defined in s 9A(5) in terms of a regulated operation (within the meaning of s 7 of the Offshore Petroleum Act) or an activity performed under a licence or a special purpose consent (within the meaning of s 4 of the Offshore Minerals Act) that is carried out or to be carried out within an area, except any operation or activity determined by the Minister under s 9A(6). Each regulated operation within the meaning of s 7 of the Offshore Petroleum Act is defined and regulated under Chs 2 and 3 of that Act. Similarly, each activity performed under licence or special purpose consent within the meaning of s 4 of the Offshore Minerals Act is in effect defined and regulated under Ch 2 of that Act. In turn, each of those provisions operates by reference to precisely delineated geographic areas comprised of graticular blocks of no more than five minutes longitude and five minutes latitude and thus an area 25 See Thiess v Collector of Customs (2014) 250 CLR 664 at 671-672 [22]-[23]; [2014] HCA 12. 26 See above at [7] and [10]. Bell Nettle of no more than approximately 25 square nautical miles27. That suggests that any exception of such an operation or activity determined by the Minister under s 9A(6) should be similarly directed. For the same reasons, it cannot be that the inapplication of s 42 of the Legislation Act to s 9A(6) was designed to afford the Minister freedom to negate the operation of the general rule established by s 9A(1). The more logical and therefore preferable view of the matter is that s 9A(7) implies a legislative recognition of the likelihood that the need for particular exceptions will arise from time to time on an irregular but presumably not infrequent basis calling for rapid, bespoke responses that the requirements of s 42 would be likely to hamper. If there were any doubt about that, it is excluded by the extrinsic materials to which reference has already been made. It was expressly stated in the Explanatory Memorandum to the Bill which became the 2013 Amending Act that the purpose of retaining s 5(13) and enacting s 9A(1) was to afford the Minister a degree of flexibility in particular cases by means of determinations under s 9A(6). There is no suggestion in those materials of affording the Minister power in effect to negate the operation of the general rule established by s 9A(1); and, since power to negate the operation of the general rule would confound the ordinary understanding of an excepting power, any provision conferring such power would need to be drafted in very clear terms28. The defendants submitted by way of alternative contention that it was wrong to characterise the 2015 Determination as effectively negating the operation of s 9A(1) because, despite the 2015 Determination, s 9A(5)(a) and (b) continue to serve the function of defining "offshore resources activity" and that concept still includes what the defendants described as "a substantial part of the Australian resources industry". 27 Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth), s 33 and Ch 1, Div 2; Offshore Minerals Act 1994 (Cth), s 17. 28 See for example R v Secretary of State for Social Security; Ex parte Britnell [1991] 1 WLR 198 at 204 per Lord Keith of Kinkel (the other members of the House agreeing at 205); [1991] 2 All ER 726 at 731-732, 732; Law (1992) 45 IR 62 at 75 per Kirby P, 89 per Priestley JA; Public Service Association and Professional Officers' Association Amalgamated Union (NSW) v New South Wales (2014) 242 IR 338 at 360-361 [103]-[108] per Basten JA. Bell Nettle That argument should also be rejected. It is true that s 9A(5)(a) and (b) continue to serve the function of defining "offshore resources activity". It is also correct that, as a result, the visa regime laid down by s 41(2B) and (2C) continues to apply to offshore resources activities as so defined and so is not deprived of relevant operation in relation to a substantial part of the offshore resources industry. But it remains that the purported effect of the 2015 Determination is to remove from the definition of "offshore resources activity" all non-citizens on vessels or unmoored structures who are in an area to participate in or support an offshore resources activity, and thereby to except the sole aspect of offshore resources activities to which s 9A(1) is capable of application. The purported effect of the 2015 Determination is, therefore, entirely to negate the operation of s 9A(1) and so confound the purpose of extending the visa regime to non-citizens on vessels or unmoored structures who are in an area to participate in or support an offshore resources activity. Finally, the defendants called in aid a volume of expert evidence and analysis which was said to show that, on the basis of the most recent figures available, the number of non-citizens on vessels or unmoored structures who are in an area to participate in or support an offshore resources activity represents at most only a small portion of the total number of persons working in the offshore resources industry. The defendants contended on that basis that the effect of the exclusion of those persons from the definition of "offshore resources activity" by the 2015 Determination was de minimis. That argument is misplaced. Whatever proportion of persons working in the offshore resources industry comprised non-citizens on vessels or unmoored structures who are in an area to participate in or support an offshore resources activity, it is apparent from the text and context of the legislation and the extrinsic materials to which reference has been made that the purpose of s 9A(1) is to subject all such persons to the visa regime of s 41(2B) and (2C) except in relation to specifically excepted operations or activities. Whether those persons comprise a small or large proportion of persons working in the offshore resources industry is for present purposes irrelevant. It is enough that, in enacting s 9A(1), the Parliament considered that the actual or potential number of such persons is sufficiently significant to warrant the application to them of the visa regime established by s 41(2B) and (2C). Conclusion and orders In the result, because the 2015 Determination purports to negate the effect of s 9A(1), it should be concluded that it is beyond power and invalid. It follows that the questions posed by the special case are to be answered as follows: Bell Nettle Question 1: Is paragraph 2 of Determination IMMI15/140, registered on the Federal Register of Legislative Instruments on 14 December 2015, invalid? Answer: Yes. Question 2: Answer: If the answer to Question 1 is "Yes", what relief, if any, should be granted? that paragraph 2 of It should be declared Determination the registered on Federal Register of Legislative Instruments on 14 December 2015, is invalid and of no effect. IMMI15/140, Question 3: Who should pay the costs of the Special Case? Answer: The second defendant.

HIGH COURT OF AUSTRALIA Matter No B28/2011 APPELLANT RESPONDENT APPELLANT RESPONDENT AND THE QUEEN Matter No B24/2011 AND THE QUEEN Hargraves v The Queen [2011] HCA 44 26 October 2011 B28/2011 & B24/2011 ORDER In each matter, appeal dismissed. On appeal from the Supreme Court of Queensland Representation J T Gleeson SC with P Kulevski for the appellant in B28/2011 (instructed by Robinson Legal) B W Walker SC with J R Hunter SC for the appellant in B24/2011 (instructed by W J Abraham QC with A J MacSporran SC and J G Renwick for the respondent in both matters (instructed by Commonwealth Director of Public Prosecutions) Interveners S J Gageler SC, Solicitor-General of the Commonwealth with G A Hill and R J Orr intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) M G Sexton SC, Solicitor-General for the State of New South Wales with J K Kirk intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW)) W Sofronoff QC, Solicitor-General of the State of Queensland with A D Scott and A D Anderson intervening on behalf of the Attorney-General of the State of Queensland (instructed by Crown Law (Qld)) M K Moshinsky SC with C J Horan intervening on behalf of the Attorney- General for the State of Victoria (instructed by Victorian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Hargraves v The Queen Criminal law – Trial – Directions to jury – Appellants convicted of charges arising from tax avoidance scheme – Appellants' dishonesty only issue at trial – Appellants gave evidence – Prosecution called appellants' accountant as witness – Appellants' counsel cross-examined accountant suggesting he tailored evidence to avoid own prosecution – Trial judge told jury they could evaluate credibility by considering a witness's "interest in the subject matter of the evidence" including "self-protection" – Whether misdirection causing miscarriage of justice – Whether direction deflected jury from need to be persuaded beyond reasonable doubt of appellants' guilt – Whether direction invited jury to test appellants' evidence according to appellants' interest in outcome of trial – Principles applicable to directions about evaluation of evidence. Criminal Code (Q), s 668E. FRENCH CJ, GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ. Phone Directories Company Pty Ltd ("PDC") produced local telephone directories. Until July 2001, the appellant Adam John Hargraves and his brother Glenn Luke Hargraves held all the shares in PDC. In July 2001, the appellant Daniel Aran Stoten and his wife, as trustees of a family trust, acquired a 10 per cent shareholding in PDC. In January 2010, the two appellants and Mr Glenn Hargraves were presented in the Supreme Court of Queensland on an indictment charging each with one count of conspiracy to defraud the Commonwealth, contrary to s 29D and s 86(1) of the Crimes Act 1914 (Cth), between 18 June 1999 and 23 May 2001 and one count of conspiracy to dishonestly cause a loss to the Commonwealth, contrary to s 135.4(3) of the Criminal Code (Cth), between 24 May 2001 and 9 June 2005. It was alleged that each of the appellants and others (including the other accused, Mr Glenn Hargraves) had conspired to defraud the Commonwealth by making false representations about the amount of allowable deductions that were to be made from the assessable income of PDC. That two counts were laid against each accused, one alleging an offence against the Crimes Act and the other alleging an offence against the Criminal Code, reflected the coming into operation of the relevant provisions of the Criminal Code1 on 24 May 2001 and repeal of s 29D of the Crimes Act2. It is not necessary to explore the differences between the two offences. It is enough to observe that both required3 proof of dishonesty. It was the prosecution case that the appellants engaged in a dishonest scheme of tax evasion by which they knowingly claimed as deductions from the assessable income of PDC amounts that were greater than the amount of outgoings incurred by PDC in gaining or producing its assessable income. After a trial before Fryberg J and a jury, at which the appellants gave evidence, each appellant was convicted of the offence charged in the second Inserted by Sched 1, item 15 of the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 (Cth) ("the 2000 Amendment Act"). 2 Repealed by Sched 2, item 149 of the 2000 Amendment Act. 3 See Peters v The Queen (1998) 192 CLR 493; [1998] HCA 7; Criminal Code (Cth), s 135.4(3)(a). Crennan Bell count but acquitted on the other count. Glenn Hargraves was acquitted on both counts. Each appellant appealed to the Court of Appeal of the Supreme Court of Queensland against his conviction. The Court of Appeal (Muir and Fraser JJA and Atkinson J) dismissed4 each appellant's appeal against conviction. The Court of Appeal held that the trial judge had misdirected the jury about how to assess the appellants' evidence but held that the appeals should be dismissed because there had been no substantial miscarriage of justice5. By special leave, each appellant now appeals to this Court alleging that the Court of Appeal was wrong to conclude that there had been no substantial miscarriage of justice and further alleging that application of the proviso6, at least in the circumstance of these cases, contravened the requirement of s 80 of the Constitution that "[t]he trial on indictment of any offence against any law of the Commonwealth shall be by jury". The respondent submitted that both grounds of appeal advanced by the appellants should be rejected. The respondent further contended that the Court of Appeal was wrong to conclude that the trial judge had misdirected the jury about how to assess the appellants' evidence. These reasons will show that the respondent's contention that the Court of Appeal was wrong to hold that the trial judge had misdirected the jury should be accepted. There is no occasion in these matters to consider whether the proviso was correctly applied. The constitutional issue which the appellants sought to raise is thus not reached. Before identifying that part of the trial judge's charge to the jury that was impugned, it is necessary to say something about some aspects of the trial and the evidence that was given. 4 R v Hargraves and Stoten [2010] QCA 328. 5 Criminal Code (Q), s 668E(1A). 6 Criminal Code (Q), s 668E(1A). Crennan Bell Trial At trial the appellants did not dispute that they had participated in a scheme which reduced the amount of income taxation that PDC paid. They contended that they believed that it was a legitimate tax minimisation scheme. The scheme was said to have been devised by a Swiss accounting firm, Strachans. There was evidence that, in 1999, Mr Adam Hargraves was put in touch with Mr Philip Egglishaw, a representative of Strachans, by Mr John Feddema. Mr Feddema was an accountant who had done accounting work for PDC and both Mr Adam Hargraves and his brother, Glenn. The scheme that was proposed, and was implemented, was one in which QH Data, a Chinese company that PDC used to compile data for incorporation into PDC's products, rendered its invoices to Amber Rock Ltd, a company established in the British Virgin Islands by Strachans. Amber Rock would inflate the amount specified in QH Data's invoice by an amount fixed by one of the appellants, and would send an invoice issued by Amber Rock to PDC for payment of the inflated amount. PDC would pay Amber Rock's invoice and claim the full amount of the invoice as a deduction. From the amount paid by PDC, Amber Rock would pay QH Data its invoice and pay the balance to certain trusts administered by Strachans, which were trusts established under and governed by Jersey law. Distributions would then be made from the trusts to overseas bank accounts to which the appellants (and Glenn Hargraves) had access by withdrawing amounts from automatic teller machines. In this way, the appellants could and did withdraw substantial sums from the overseas accounts. In his evidence at trial, Mr Adam Hargraves said that he had withdrawn about $1.6 million over a period of "four or so years". The appellants did not themselves declare the sums they withdrew from the overseas accounts as income. The prosecution called Mr Feddema to give evidence at the appellants' trial. He gave evidence of his introducing Mr Adam Hargraves to Strachans and of what he knew about the scheme that was implemented for PDC. He gave evidence of various events and conversations that occurred at and after the time he first became aware of authorities investigating the matters that culminated in the charging of the appellants. In particular, Mr Feddema gave evidence of the execution of a search warrant at his home: a warrant in which it was alleged that there were reasonable grounds for suspecting that Mr Feddema had "aided and abetted Daniel Stoten, Glenn Hargraves, Adam Hargraves, Phone Directories Group or PDC Group" to commit an offence against s 29D of the Crimes Act and an offence against s 134.2(1) of the Criminal Code. Crennan Bell Trial counsel for the appellants and Mr Glenn Hargraves cross-examined Mr Feddema at some length. In the course of cross-examination it was suggested to Mr Feddema that he knew more about the scheme that was implemented by and for PDC than he had revealed in his evidence, and that his evidence was tailored to avoid him being charged with an offence. The evident thrust of much of the cross-examination was to provide a basis for the appellants and Mr Glenn Hargraves to argue that their conduct in relation to the scheme was not dishonest because they were acting upon the advice of the company's accountant, Mr Feddema, about a structure that, so far as they knew, was to be lawfully established and operated overseas by expert specialists in whom they could have confidence: Mr Egglishaw and Strachans. The prosecution called Mr Dirk Smibert to give evidence. He had been involved in PDC's business for many years, first as an independent contractor and later as an employee. Mr Smibert had first become acquainted with the Hargraves brothers when they, with their parents, attended the church of which Mr Smibert was a part-time lay minister. Mr Smibert gave evidence that in 1999 either Mr Adam Hargraves or both Mr Adam Hargraves and Mr Stoten had told him that "there had been a tax program presented to them [by the company's then accountant, Mr Feddema] that would help reduce the amount of tax that they needed to pay". Mr Smibert's understanding of the "program", as revealed in his evidence-in-chief, was less than certain. But it was consistent with the proposal being that what he called the "listing company" for PDC (QH Data) would invoice "the broker in Jersey", which would in turn invoice PDC for an inflated amount, the balance of which after payment of the "listing company" "would come back into Australia … through an ATM machine". At about the time that Mr Stoten and his wife took up a 10 per cent interest in PDC, it was suggested that Mr Smibert should acquire a 4 per cent interest. Mr Smibert said that he was told that he would receive dividends on his shares in PDC "through this ATM process". Who told Mr Smibert this was not made clear. He said that he was told (by whom was again not made clear) that, if that was done, tax would not be paid on the amount he would receive. Mr Smibert said that he did not agree with that course of action and that "it was agreed upon that [he] could receive [his dividend] in the usual way". Mr Smibert gave evidence that, in April 2002, Mr Stoten again explained the scheme to him and accepted that he told Mr Stoten that he did not "feel comfortable" about receiving dividends in cash. Mr Smibert recorded his Crennan Bell concerns in a letter he wrote to both Glenn and Adam Hargraves and Mr Stoten. In his letter Mr Smibert said, among other things: "You will recall, that upon learning of company monies being sent to Jersey, that I expressed my concern. Admittedly, financial management is not among my talents. Despite the assurances given about the propriety of such an arrangement, I elected not to utilise the 'Jersey' facility personally. This was not a criticism of any of you. When described as 'ignorant' on the subject, I accept that, but nevertheless I question the ethics and legitimacy of such an arrangement. At the time that the share agreement was established, it was verbally agreed that I would not use the 'Jersey facility' as I elected to pay tax on all my dividend. This week however, I learned that my declaring the full amount of my dividend to the A.T.O. would jeopardise my fellow share holders standing with the Taxation dept. It is surely your business how and when you pay your tax but I am now left in a regrettable position." Mr Smibert sent with the letter a letter of resignation as a director of PDC. Later, on 14 February 2004, Mr Egglishaw was detained by Australian authorities. Mr Feddema gave evidence that on the day Mr Egglishaw was detained, Mr Adam Hargraves and Mr Stoten contacted him and told him that Mr Egglishaw had been "apprehended" in Melbourne. The trial judge sentenced the appellants on the basis that the verdict returned by the jury (convicting the appellants of the second count but acquitting them of the first count) was consistent with the jury regarding Mr Smibert's dealings with the appellants in April 2002 as pointing out to them that what they were doing was dishonest. The Court of Appeal was later to hold that the apprehending of Mr Egglishaw was the proper explanation of the different verdicts. For present purposes, nothing turns on which event was treated as the watershed. The impugned direction The trial judge told the jury that his summing-up would fall into four parts: first, some general matters; second, "something about the process of assessing evidence and assessing credibility"; third, directions on the law to be applied; and, fourth, a conclusion. Crennan Bell As earlier noted, the appellants alleged, in the Court of Appeal, that the trial judge erred in the instructions he gave in the second area: "the process of assessing evidence and assessing credibility". The appellants submitted, successfully, that the trial judge's directions on these matters had contravened a rule said to be established by this Court's decision in Robinson v The Queen7. What the trial judge told the jury on these matters and some other subjects dealt with in the charge were summarised in Powerpoint slides shown to the jury during the judge's charge. Copies of the slides were given to the jury to take with them into the jury room when they retired to consider their verdict. Two slides dealt with a subject described as "Credibility". The slides, taken together, set out a list of subjects to which attention could be given in assessing evidence and assessing credibility. The slides read: Care and attentiveness Evasiveness Nervousness Demeanour and presentation Sources of knowledge Likelihood Memorising Opportunity to observe Reliance on statements of others Interest Friendship Self protection (1991) 180 CLR 531; [1991] HCA 38. Crennan Bell Lies". (emphasis added) Accept in whole or in part Comparison with documents Comparison with known facts In his oral instructions the trial judge introduced the subject by telling the jury that "[t]here are a number of techniques that you can use in assessing truthfulness and reliability; that is in assessing credibility". He invited the jury to take notes of the techniques and said that "[i]n using these techniques remember that any one of them can be misleading as well as helpful". The trial judge then developed each of the particular subjects indicated on the slides. Of the subject described as "Interest" he said: "Does the witness have an interest in the subject matter of the evidence? For example, friendship, self-protection, protection of the witness's own ego. There are any number of personal interests which people have and which they sometimes try to protect in giving evidence." (emphasis added) The trial judge completed the part of his charge that dealt with the assessment of witnesses, first, by telling the jury in unexceptionable terms that they could "accept the evidence of a witness in whole, in part or not at all" and, second, by giving the jury some directions about lies. In that context the trial judge said that the jury should remember that "a lie does not prove the opposite of what was said in the lie", that "[a] lie by an accused person does not prove guilt" and that "[t]he Crown always carries the onus of proving the case even against a liar". At the next available opportunity, trial counsel for Mr Stoten, with the support of trial counsel for Mr Adam Hargraves, took exception to what the trial judge had said to the jury about a witness's interest in the case and "self-protection". Trial counsel submitted that what the trial judge had said was contrary to a rule or principle established by this Court in Robinson forbidding a trial judge from inviting the jury to assess the credibility of evidence given by the accused by reference to the accused's interest in the outcome of the trial. They submitted that the jury should be discharged. The trial judge rejected the application saying, among other things, that the direction did not refer to any interest in the outcome of the case and that it was a direction about Mr Feddema's evidence. Crennan Bell Court of Appeal On appeal to the Court of Appeal, Muir JA (with whose reasons the other members of the Court agreed) concluded8 that what the trial judge had told the jury "would not have been understood by the jury 'as meaning that the evidence of [each] appellant had to be scrutinised more carefully [than] that of any other witness'" (as had the direction which was the subject of consideration by this Court in Robinson). Rather, Muir JA concluded9 that taken in the context in which it was given (as "the seventh point in a nine point treatise on the assessment of credibility") "the direction was unlikely to have been given much prominence by jurors". Yet being of the opinion that "recent authority favours a rigorous application of the Robinson principle", Muir JA concluded10 that what the trial judge had said "breached the prohibition against the giving of a direction, directly or indirectly, to evaluate the reliability of the evidence of an accused on the basis of the accused's interest in the outcome of the trial". Having thus concluded11 that, in the words of the Queensland form of the criminal appeal statute12, "on any ground whatsoever there was a miscarriage of justice", Muir JA went on to consider13 the application of the proviso14: whether, notwithstanding the conclusion that the point raised by the appeals might be decided in favour of the appellants, no substantial miscarriage of justice had actually occurred. As already noted, his Honour concluded15 that no substantial miscarriage had occurred. [2010] QCA 328 at [128], quoting from Robinson v The Queen (1991) 180 CLR [2010] QCA 328 at [128]. 10 [2010] QCA 328 at [129]. 11 [2010] QCA 328 at [130]. 12 Criminal Code (Q), s 668E(1). 13 [2010] QCA 328 at [150]-[159]. 14 Criminal Code (Q), s 668E(1A). 15 [2010] QCA 328 at [130], [159]. Crennan Bell It is convenient to begin examination of whether the third of the grounds identified in the criminal appeal statute ("on any ground whatsoever there was a miscarriage of justice") was established by considering what was decided in Robinson. The decision in Robinson: a rule? The appellant in Robinson was tried for rape. The complainant gave evidence that she "consented" to intercourse after a struggle and as a result of threats. The appellant gave evidence that the complainant's consent had been freely given. The trial judge directed16 the jury about the assessment of the credibility of witnesses. Twice he suggested to the jury that the appellant had a greater interest in the outcome of the case than anyone else and that, as a result, the jury might say that they should look at his evidence "closely". Early in his charge the trial judge suggested that the jury might say that they should look at the appellant's evidence "more closely than perhaps we would look at [the evidence of] others". Later, in the charge, the trial judge said: "Another test [by which to assess the credibility of witnesses] was what interest does a witness have in the outcome of a case? If you thought a witness had a large interest in the outcome you, as the judges of the facts, might well conclude that you should scrutinise that witness's evidence closely. You might think – it is a matter solely for you – that the accused had the greatest interest of all the witnesses you saw and heard and that, therefore, you should scrutinise his evidence closely." Trial counsel for the appellant in Robinson did not ask for either of these directions to be withdrawn but did ask the trial judge to direct the jury "that the complainant also had an interest in the outcome of the case". In the course of giving a further direction along the lines that trial counsel had sought, the trial judge reminded the jury that he had suggested that "you might well conclude that the accused has the greatest interest of all the witnesses" and that the jury "might think that the greater the interest the more carefully you should scrutinise a witness's evidence". The trial judge told the jury that they might conclude that 16 The relevant parts of the directions are set out at (1991) 180 CLR 531 at 533-534. Crennan Bell the complainant also had an interest in the outcome of the case and that "the interest in the outcome of the case test" was to be applied "to all the witnesses if you believe that test is applicable". On appeal to this Court, the Court concluded17 that the directions the trial judge had given "had the effect that the evidence of the appellant had to be scrutinised more carefully than the evidence of any other witness, including the complainant, for no reason other than that he was the accused". That is, the "the directions virtually had the effect that the appellant was to be treated as a 'suspect witness' in the same way as an accomplice, a complainant in a sexual case and a young child have been treated as 'suspect witnesses', that is, as witnesses whose evidence is to be accepted only after most careful scrutiny19". Counsel for the respondent in Robinson had accepted20 in this Court that an express direction to the effect identified "would have been a clear misdirection". This being so, it followed that the appeal was allowed. The relevant legal point having been accepted in Robinson, without argument except as to its application to the particular directions given at trial, there are evident difficulties in treating the case as having established some new rule or principle. And that Robinson was not intended to establish some new rule or principle is suggested by the caveat which was entered21 in the reasons of the Court: "Nothing in the above is intended to suggest that the evidence of an accused person is not subject to the tests which are generally applicable to 17 (1991) 180 CLR 531 at 535. 18 (1991) 180 CLR 531 at 535. 19 See R v Hester [1973] AC 296 at 324-325; Longman v The Queen (1989) 168 CLR 79 at 85, 104-105; [1989] HCA 60. 20 (1991) 180 CLR 531 at 535. 21 (1991) 180 CLR 531 at 536. Crennan Bell witnesses in a criminal trial. Thus, in examining the evidence of a witness in a criminal trial – including the evidence of the accused – the jury is entitled to consider whether some particular interest or purpose of the witness will be served or promoted in giving evidence in the proceedings. But to direct a jury that they should evaluate evidence on the basis of the interest of witnesses in the outcome of the case is to strike at the notion of a fair trial for an accused person. Except in the most exceptional case, such a direction inevitably disadvantages the evidence of the accused when it is in conflict with the evidence for the Crown." Whether Robinson did establish some new rule or principle is not unimportant. Understanding the content of the principle that was applied is assisted by identifying whether the Court sought to establish some new principle or, as counsel for the respondent submitted, did no more than apply pre-existing principle to the facts and circumstances of the particular case. Subsequent decisions of the Court refusing special leave to appeal in Stafford v The Queen22 and Ramey v The Queen23 emphasised that trial judges should not give a direction to evaluate the evidence of an accused on the basis of the accused's interest in the outcome of the case. And while there was reference in Ramey24 to "the principle laid down by this Court in Robinson", there was not in either Stafford or Ramey any occasion to explore the principle that was engaged. Later decisions of intermediate courts generally treated25 Robinson as standing "for a rigorous principle to be faithfully applied"26. But the "principle" for which Robinson was treated as standing was usually stated negatively: a trial judge should not direct a jury to evaluate an accused's evidence on the basis of 22 (1993) 67 ALJR 510. 23 (1994) 68 ALJR 917. 24 (1994) 68 ALJR 917 at 917. 25 See, for example, R v Brotherton (1992) 29 NSWLR 95; Asquith (1994) 72 A Crim R 250; R v Brown [1995] 1 Qd R 287; Haggag (1998) 101 A Crim R 593; Morris v The Queen (2006) 201 FLR 325; cf R v McMahon (2004) 8 VR 101. 26 Haggag (1998) 101 A Crim R 593 at 598 per Callaway JA. Crennan Bell the accused's interest in the outcome of the case. Such a negative statement does not identify the content or source of the relevant principle in a way that permits its application except by some mechanical comparison between those forms of words that have passed muster and those that have not. This is not a satisfactory form of "rule" or "principle". And Robinson did not establish or apply any new or distinct rule or principle that is to be expressed in the negative terms identified. Rather, the decision in Robinson depended upon a more basic principle which, examination will show, stems from the fundamental features of a criminal trial. Examination will also show that this more basic principle is the foundation for several decisions which are sometimes treated as if they establish separate and distinct rules governing what may or may not be said in instructing a jury. To identify that principle it is necessary to begin by recognising what was the question at issue in Robinson and what is the question at issue in these matters. In both Robinson and the present case the immediate question was and is whether on any ground whatsoever there was a miscarriage of justice at the trial. The appellants' allegation in this case that there was a misdirection was not an allegation of any of the other grounds of appeal identified in the common form criminal appeal statute. It was not an allegation that the verdict of the jury should be set aside on the ground that it was unreasonable or cannot be supported having regard to the evidence; it was not an allegation of the wrong decision, at trial, of any question of law. The governing principle applied by the Court in Robinson was not identified as being new. Rather, the Court directed27 attention to whether the directions that were given at trial constituted a miscarriage of justice because they affected the fairness of the trial and, in particular, did so by undermining "the benefit" which the "presumption [of innocence] gives to an accused person". That is, the Court determined whether there was on any other ground whatsoever a miscarriage of justice by applying a principle which, when stripped of the rhetorical overtones that may be sounded by reference to "the presumption of innocence", directed attention to the fundamental features of a criminal trial. 27 (1991) 180 CLR 531 at 536. Crennan Bell The plurality in RPS v The Queen28 described those features as being that "a criminal trial is an accusatorial process in which the prosecution bears the onus of proving the guilt of the accused beyond reasonable doubt" (emphasis added). Or, as the Court put the same point in Robinson29, "the jury must act on the basis that the accused is presumed innocent of the acts which are the subject of the indictment until they are satisfied beyond reasonable doubt that he or she is guilty of those acts" (emphasis added). These being the fundamental features of a criminal trial, it follows that the judge's instructions to the jury must accord with them and departure from them would be a miscarriage of justice. As has been repeatedly pointed out30, the judge in a criminal trial must accept the responsibility of deciding what are the real issues in the case, must tell the jury what those issues are, and must instruct the jury on so much of the law as the jury needs to know to decide those issues. The trial judge may, but need not, comment on the facts of the case31. The trial judge may, but need not, suggest how the jury might evaluate the credibility of evidence that has been given. In 28 (2000) 199 CLR 620 at 630 [22]; [2000] HCA 3. 29 (1991) 180 CLR 531 at 535-536. 30 Alford v Magee (1952) 85 CLR 437 at 466; [1952] HCA 3. See also, for example, Melbourne v The Queen (1999) 198 CLR 1 at 52-53 [143]; [1999] HCA 32; RPS v The Queen (2000) 199 CLR 620 at 637 [41]; Zoneff v The Queen (2000) 200 CLR 234 at 256-257 [56]; [2000] HCA 28; Azzopardi v The Queen (2001) 205 CLR 50 at 69 [49]; [2001] HCA 25; KRM v The Queen (2001) 206 CLR 221 at 259 [114]; [2001] HCA 11; Doggett v The Queen (2001) 208 CLR 343 at 373 [115]; [2001] HCA 46; Jenkins v The Queen (2004) 79 ALJR 252 at 257 [28]; 211 ALR 116 at 122-123; [2004] HCA 57; De Gruchy v The Queen (2002) 211 CLR 85 at 96 [44]; [2002] HCA 33; Nicholls v The Queen (2005) 219 CLR 196 at 321-322 [372]; [2005] HCA 1; Stevens v The Queen (2005) 227 CLR 319 at 326-327 [18]; [2005] HCA 65; Clayton v The Queen (2006) 81 ALJR 439 at 444 [24]; 231 ALR 500 at 506; [2006] HCA 58; Tully v The Queen (2006) 230 CLR 234 at 248-249 [44], 256-257 [75]-[77]; [2006] HCA 56; Libke v The Queen (2007) 230 CLR 559 at 590 [86]; [2007] HCA 30; HML v The Queen (2008) 235 CLR 334 at 386-387 [121]; [2008] HCA 16; R v Keenan (2009) 236 CLR 397 at 425 [91], 436-437 [133]; [2009] HCA 1; Pollock v The Queen (2010) 242 CLR 233 at 251-252 [67]; [2010] HCA 35. 31 RPS (2000) 199 CLR 620 at 637 [42]. Crennan Bell some circumstances the common law32 or statute33 may require the trial judge to give a particular warning to the jury about factual issues. But informing and underpinning all of these requirements is that the judge's instructions to the jury, whether by way of legal direction or judicial commentary on the facts, must not deflect the jury's attention from the need to be persuaded beyond reasonable doubt of the accused's guilt before returning a verdict of guilty. The cases demonstrate that a jury's attention can be deflected from its fundamental task in different ways. RPS concerned distraction of a jury from its task by the trial judge's commenting on the failure of an accused to give evidence. The plurality held34 in RPS that in an accusatorial process in which the prosecution has the onus of proving the guilt of the accused beyond reasonable doubt, it will seldom35 be reasonable to expect that the accused will give evidence and that it therefore follows that it will seldom be right to draw any inference (of the kind dealt with in Jones v Dunkel36) from the accused's failure to do so. Thus a direction to the jury that it may have been reasonable to expect some denial or contradiction from the accused, if such a denial or contradiction were available, was held37 to be contrary to fundamental features of a criminal trial: that the prosecution must prove its case beyond reasonable doubt. Those features of a criminal trial entail38 that the accused is not bound to give evidence. In Palmer v The Queen39, the plurality held that to ask a person accused of sexual offences, in cross-examination, whether that person could offer any reason 32 See, for example, Longman v The Queen (1989) 168 CLR 79; Domican v The Queen (1992) 173 CLR 555; [1992] HCA 13; Jenkins v The Queen (2004) 79 ALJR 252; 211 ALR 116. 33 See, for example, Evidence Act 1995 (Cth), s 165. 34 (2000) 199 CLR 620 at 630-636 [22]-[39]. 35 cf Weissensteiner v The Queen (1993) 178 CLR 217; [1993] HCA 65. 36 (1959) 101 CLR 298; [1959] HCA 8. 37 RPS (2000) 199 CLR 620 at 634 [32]. 38 RPS (2000) 199 CLR 620 at 633 [28]. 39 (1998) 193 CLR 1 at 9 [9]; [1998] HCA 2. Crennan Bell or motive for the complainant to lie diminished the standard of proof by strengthening the complainant's credibility. As the plurality in Palmer pointed out, absence of proof of a motive for the complainant to lie about the incident in issue "is entirely neutral"40 and, as a result, the fact that the accused can point to no reason for the complainant to lie is "generally irrelevant"41. To introduce an inquiry into why would the complainant lie would focus the jury's attention on irrelevancies by inviting the jury to accept the complainant's evidence unless there were some demonstrated motive to lie. That would deny that the trial is an accusatorial process in which the prosecution bears the onus of proving the offence beyond reasonable doubt. Robinson, too, is to be seen as a particular application of this more general principle. Inviting a jury to test the evidence given by an accused according to the interest that the accused has in the outcome of the trial, or suggesting that the accused's evidence should be scrutinised more carefully than the evidence of other witnesses, deflects the jury from recognising and applying the requisite onus and standard of proof. It is for the prosecution to prove its case, not for the accused to establish any contrary proposition. The instructions which a trial judge gives to a jury must not, whether by way of legal direction or judicial comment on the facts, deflect the jury from its fundamental task of deciding whether the prosecution has proved the elements of the charged offence beyond reasonable doubt. The principle that is identified is expressed at a high level of abstraction: did the judge's instructions deflect the jury from its fundamental task of deciding whether the prosecution proved the elements of the charged offence beyond reasonable doubt? Directions given by a trial judge can often be assessed against that principle by observing no more than that the judge has so instructed the jury that it would be open to the jury to evaluate an accused's evidence on the basis of the accused's interest in the outcome of the trial. It is to be emphasised that trial judges must not instruct juries in that way: whether as a direction of law or as a judicial comment on the facts of the case. And it should also be emphasised that nothing that is said in these reasons should be understood as diminishing the need for intermediate courts of appeal to insist upon the observance of this requirement. Whether there has been on any other ground whatsoever a 40 (1998) 193 CLR 1 at 9 [9]. 41 (1998) 193 CLR 1 at 7 [7]. Crennan Bell miscarriage of justice must always require consideration of the whole of the judge's charge to the jury. In every case, the ultimate question must be whether, taken as a whole, the judge's instructions to the jury deflected the jury from its proper task. Misdirection? In this matter there was a real and lively issue about whether Mr Feddema's evidence of what he knew about the scheme and what he had told the appellants about the scheme was full and frank. As noted earlier, it was suggested to Mr Feddema, in cross-examination, that his evidence was neither full nor frank and that he had a distinct and pressing interest not to give evidence that would show that he had known how the scheme would work or that he had given a truthful explanation to either of the appellants or to Mr Glenn Hargraves of how the scheme would work. And in their closing addresses trial counsel for each appellant laid emphasis on these matters. Taken in the context of the whole of the instructions from the trial judge, both the oral directions given about using the possible interest of witnesses in assessing their credibility, and the Powerpoint slides on that subject that were given to the jury, would have been understood by the jury as directed to the evidence of Mr Feddema. It may be accepted that those directions could have been understood as capable of application to the evidence given by the appellants. But the trial judge referred to two kinds of interest: friendship and self-protection. At no point did the trial judge refer to the outcome of the case as a matter in which a witness could have an interest. As Muir JA rightly concluded42, the direction was unlikely to have been given much prominence by jurors and "would not have been understood by the jury 'as meaning that the evidence of [each] appellant had to be scrutinised more carefully [than] that of any other witness'". The impugned direction differed in both its form and its effect from that considered in Robinson. Almost immediately after giving the impugned direction the trial judge told the jury that "[a] lie by an accused person does not prove guilt" and that "[t]he Crown always carries the onus of proving the case even against a liar". Read as a whole, the instructions which the judge gave were not such as would deflect the jury from its task of deciding whether the prosecution had 42 [2010] QCA 328 at [128] (footnote omitted). Crennan Bell proved its case beyond reasonable doubt. There was not, therefore, a miscarriage of justice occasioned by the trial judge giving the impugned directions. It follows that the Court of Appeal was right to dismiss the appellants' appeals against conviction but should have done so on the footing that the appellants had not established that on any ground whatsoever there was a miscarriage of justice. Each appeal to this Court should be dismissed. HEYDON J. The appellants took as their starting point the opinion of the Court of Appeal of the Supreme Court of Queensland that the trial judge had "breached the prohibition against the giving of a direction, directly or indirectly, to evaluate the reliability of the evidence of an accused on the basis of the accused's interest in the outcome of the trial."43 The appellants described this as a breach of "the prohibition in Robinson v The Queen"44. The appellants focussed their attention on the Court of Appeal's decision to "apply the proviso", ie s 668E(1A) of the Criminal Code (Q). They contended that it was wrong to apply the proviso for two main reasons. The first was that s 668E(1A) was in substance inconsistent with s 80 of the Constitution, requiring that trials on indictment of offences against laws of the Commonwealth be by jury. Secondly, it was said that a breach of "the prohibition in Robinson v The Queen" was a significant breach of the presuppositions of a procedurally fair trial by jury and hence not curable by an application of the proviso. The terrain to which each of these reasons relates is largely unexplored. Each was thus of great interest to the appellants and the numerous intervenors. The appellants came fully prepared to argue these two points. However, the respondent in each appeal challenged the starting point of the appellants, and contended that the Court of Appeal was wrong to criticise the summing up in the way that it did. The appellants defended the Court of Appeal by submitting that the trial judge's summing up is to be interpreted as containing a direction to the jury that in assessing their credibility it was relevant to take into account their interest in protecting themselves from conviction. A consideration of the summing up as a whole reveals that it will not bear that interpretation. Hence there was no misdirection about the burden or standard of proof. It follows that there was no miscarriage of justice, that the question of applying the proviso does not arise, that the contentions of the appellants that, if the question of applying the proviso arose, it should not be applied for the reasons they advanced do not need to be dealt with, and that the appeals to this Court should be dismissed. It is therefore not necessary to examine closely various issues which either were raised in argument by members of the Court but were far from fully dealt with in argument, or were not raised in argument at all. One question which was raised was: to what extent can Robinson v The Queen be regarded as an authority in view of the scanty nature of the argument in that case, its non-examination of authority, the somewhat extreme character of the judge's direction, and the 43 R v Hargraves & Stoten [2010] QCA 328 at [129]. 44 (1991) 180 CLR 531; [1991] HCA 38. concession which prosecution counsel made in this Court? Another group of questions less explicitly raised relate to the following two sentences45: "in examining the evidence of a witness in a criminal trial – including the evidence of the accused – the jury is entitled to consider whether some particular interest or purpose of the witness will be served or promoted in giving evidence in the proceedings. But to direct a jury that they should evaluate evidence on the basis of the interest of witnesses in the outcome of the case is to strike at the notion of a fair trial for an accused person." The second sentence forbids a certain type of "direction". Does the first permit directions? Or does it merely leave it open to the jury to reason by reference to the interest of the accused, unassisted by any directions at all about the dangers in that course, or at least any directions of the kind forbidden in the second sentence? A question not raised at all in argument before this Court was: does Robinson v The Queen rest on ideas so obscure or unconvincing as to lead to diversity and bewilderment among trial judges? All the questions so far identified are related to the type of issue associated with Palmer v The Queen46 – a case not discussed in argument, save in its references to Robinson v The Queen. The difficulty is illustrated by the facts of Robinson v The Queen. That was a rape case in which the accused admitted intercourse but denied non-consent. A jury would inevitably be struck by the circumstance that someone on trial for rape who puts in issue only non-consent has a great deal to lose by not presenting the strongest possible testimony supporting consent. The jury would also be likely to think that a witness complaining of rape may have a lot to lose if a jury experiences a reasonable doubt about the correctness of her testimony. And the jurors might well ask themselves: "She has suffered many disadvantages in going to the police and now in coming to the court: why should she lie?" Palmer v The Queen forbids the questioning of the accused about whether he could suggest any motive in a complainant to lie, and also forbids the prosecution asking rhetorical questions along those lines in address47. But the law does not require that the jury be directed not to ask themselves why a complainant would lie. The issues raised by Robinson v The Queen and Palmer v The Queen, so far as they relate to the burden and standard of proof, are, as the plurality point 45 Robinson v The Queen (1991) 180 CLR 531 at 536. 46 (1998) 193 CLR 1; [1998] HCA 2. 47 Palmer v The Queen (1998) 193 CLR 1 at 7-10 [8]-[11]. out48, with respect correctly, also related to the role of silence on the part of the accused. That topic was not discussed at all in argument. Authorities in this Court like RPS v The Queen49 and Azzopardi v The Queen50 have settled the law, but only over the type of dissenting judgment which is usually described as "strong" – by McHugh J in the first case and by Gleeson CJ and McHugh J in the second. The present case is not a satisfactory occasion on which to consider the connections between these authorities and between the large and difficult questions each of them throws up, or their relationship with the burden and standard of proof. A detailed examination of those issues must await another case in which their centrality to the outcome ensures that the attention of the litigants will be riveted on them and that the litigants will therefore be fully prepared to deal with them. In short, it is not necessary to deal with the wide issues related to Robinson v The Queen, Palmer v The Queen and Azzopardi v The Queen. Since it is not necessary to do so, it is not desirable to do so. The appeals should be dismissed. 48 See above at [43]. 49 (2000) 199 CLR 620; [2000] HCA 3. 50 (2001) 205 CLR 50; [2001] HCA 25.

HIGH COURT OF AUSTRALIA PLAINTIFF M47/2018 PLAINTIFF AND MINISTER FOR HOME AFFAIRS & ANOR DEFENDANTS Plaintiff M47/2018 v Minister for Home Affairs [2019] HCA 17 Date of Order: 13 February 2019 Date of Publication of Reasons: 12 June 2019 ORDER The questions stated in the special case for the opinion of the Full Court are answered as follows: On their proper construction, do ss 189 and 196 of the Migration Act 1958 (Cth) authorise the present detention of the plaintiff? Answer: Does not arise. If so, are those provisions beyond the legislative power of the Commonwealth insofar as they apply to the plaintiff? Answer: Does not arise. What relief, if any, should issue to the plaintiff? Answer: None. Who should pay the costs of and incidental to this special case? Answer: The plaintiff. Representation R Merkel QC with L T Livingston, E M Nekvapil and C G Winnett for the plaintiff (instructed by Human Rights for All Pty Ltd) S P Donaghue QC, Solicitor-General of the Commonwealth, with P D Herzfeld and Z C Heger for the defendants (instructed by Australian Government Solicitor) Australian Human Rights Commission appearing as amicus curiae, limited to its written submissions Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Plaintiff M47/2018 v Minister for Home Affairs Immigration – Unlawful non-citizens – Detention pending removal from Australia – Where s 189 of Migration Act 1958 (Cth) requires unlawful non-citizen be detained – Where s 196 requires unlawful non-citizen detained under s 189 be kept in immigration detention – Where plaintiff an unlawful non-citizen – Where plaintiff arrived in migration zone using false passport and personal details – Where plaintiff kept in immigration detention since arrival in migration zone – Where plaintiff previously used false personal details – Where plaintiff's identity and nationality not known – Whether ss 189 and 196 authorise plaintiff's detention – Whether ss 189 and 196 constitutionally valid in application to plaintiff. High Court – Original jurisdiction – Practice – Special case – Drawing of inferences – Where factual basis of questions of law depends on drawing inferences under r 27.08.5 of High Court Rules 2004 (Cth) – Where inferences concern likelihood of plaintiff's future removal from Australia – Where prospects of plaintiff's future removal depend on information provided by plaintiff and cooperation by plaintiff – Where plaintiff made false statements and failed to assist and cooperate – Where plaintiff gave inconsistent accounts of personal and family background – Where plaintiff seeks to take advantage of falsehoods and non-cooperation – Whether inferences can be drawn. Words and phrases – "habeas corpus", "identity", "immigration detention", "inferences", "onus of proof", "prospects of removal", "real prospect", "reasonably foreseeable", "special case", "unlawful non-citizen". High Court Rules 2004 (Cth), r 27.08.5. Migration Act 1958 (Cth), ss 189, 196, 198. KIEFEL CJ, KEANE, NETTLE AND EDELMAN JJ. Section 189 of the Migration Act 1958 (Cth) ("the Act") provides that an officer1 who knows or reasonably suspects that a person in the migration zone2 is an unlawful non-citizen3 must detain the person. Section 196 of the Act requires that an unlawful non-citizen detained under s 189 be kept in immigration detention until he or she is removed from Australia under s 198 or s 199, deported under s 200, or granted a visa4. Section 198(6) of the Act provides that an officer must remove an unlawful non-citizen "as soon as reasonably practicable" if the non-citizen is a detainee and an application for a visa has been refused and finally determined. The plaintiff is an unlawful non-citizen. He has been in immigration detention since his arrival in the migration zone in 2010. He has exhausted his rights under Australian law to seek a visa authorising his entry into Australia. The defendants, the Minister for Home Affairs ("the Minister") and the Commonwealth, rely on ss 189 and 196 of the Act as lawful authority to detain the plaintiff "for the purpose of removal from Australia as soon as that becomes reasonably practicable". The proceedings The plaintiff commenced proceedings in the original jurisdiction of the Court seeking a declaration that his detention is unlawful on the ground that it is not authorised by ss 189 and 196 of the Act. He seeks the issue of a writ of habeas corpus, or mandamus, requiring his release from custody. The plaintiff claimed that there is, in fact, no prospect that he will be removed from Australia to another country. Against that background, it was said on his behalf that his continued detention is not authorised by ss 189 and 196 for two reasons. First, it was said that as a matter of construction, the mandate in ss 189 and 196 to keep an unlawful non-citizen in custodial detention suspends when his or her removal is not practicable at all, or in the reasonably foreseeable future, so that those provisions no longer authorise the plaintiff's detention. Secondly, it was said that even if ss 189 and 196 cannot be read as operating in 1 As defined in s 5(1) of the Act. 2 Other than an excised offshore place. 3 Within s 14 of the Act. 4 Or an officer begins to deal with the non-citizen under s 198AD(3) of the Act. Nettle Edelman that way, they are invalid in their application to the plaintiff because his continued detention is not sufficiently connected to a constitutionally permissible purpose of administrative detention, and so may be imposed only through the exercise of the judicial power of the Commonwealth by the courts designated by Ch III of the Constitution. In Al-Kateb v Godwin5, it had been found as a matter of fact that, although the "possibility of removal in the future remained"6, there was "no real likelihood or prospect of removal of the appellant in the reasonably foreseeable future"7. This Court held, by majority (McHugh, Hayne, Callinan and Heydon JJ), that the authority conferred by ss 189 and 196 of the Act is not limited, either as a matter of the proper construction of those provisions8, or as a matter of their constitutional validity9, to cases where there is a prospect of the detainee being removed to another country within the reasonably foreseeable future. The minority in Al-Kateb (Gleeson CJ, Gummow and Kirby JJ) concluded, on the basis of the finding of fact referred to above, that ss 189 and 196, properly construed, did not authorise the appellant's detention10. Gleeson CJ did not consider the constitutional question. Gummow J held that the administrative detention of aliens and their segregation thereby from the Australian community for a purpose unconnected with the regulation of their entry, investigation, admission or deportation is not compatible with Ch III of the Constitution11. His Honour also concluded that the continued viability of the (2004) 219 CLR 562; [2004] HCA 37. 6 Al-Kateb v Godwin (2004) 219 CLR 562 at 603 [105]. See also at 639-640 [230], 7 Al-Kateb v Godwin (2004) 219 CLR 562 at 572 [2], 580 [31], 581 [33], 603 [105], 8 Al-Kateb v Godwin (2004) 219 CLR 562 at 581 [34], 638-640 [226]-[231], 9 Al-Kateb v Godwin (2004) 219 CLR 562 at 585-586 [48], 650-651 [267]-[268], 10 Al-Kateb v Godwin (2004) 219 CLR 562 at 578 [22], 608-609 [122]-[125], 11 Al-Kateb v Godwin (2004) 219 CLR 562 at 604-605 [110]-[111], 609 [126]-[127], Nettle Edelman purpose of deportation or expulsion cannot be treated by the legislature as a matter purely for the opinion of the executive government12. Kirby J agreed that indefinite detention at the will of the executive government, and according to its to Australia's constitutional opinions, actions and arrangements13. In the present case, the plaintiff submitted, among other things, that the view of the minority should now be adopted by the Court. judgments, is alien Pursuant to r 27.08 of the High Court Rules 2004 (Cth), the parties agreed upon a special case, stating questions of law for the opinion of the Full Court and setting out the facts said to be necessary to enable the Full Court to decide those questions. At the end of oral argument, the questions were answered as follows: (1) On their proper construction, do ss 189 and 196 of the Act authorise the present detention of the plaintiff? Answer: Does not arise. If so, are those provisions beyond the legislative power of the Commonwealth insofar as they apply to the plaintiff? Answer: Does not arise. (3) What relief, if any, should issue to the plaintiff? Answer: None. (4) Who should pay the costs of and incidental to this special case? Answer: The plaintiff. At that time, the Court announced that it would publish its reasons at a later date. Our reasons now follow. Controversial inferences of fact The procedure by way of special case provided for by r 27.08 of the High Court Rules allows the Court to determine questions of law where the parties are able to agree upon the facts that are said to give rise to those questions. In the 12 Al-Kateb v Godwin (2004) 219 CLR 562 at 609 [126]-[127], 613-614 [139]-[140]. 13 Al-Kateb v Godwin (2004) 219 CLR 562 at 615 [146]. Nettle Edelman present proceeding, the special case contains no agreement between the parties to the effect that there is currently no prospect that the plaintiff will be able to be removed from Australia in the reasonably foreseeable future. Rule 27.08.5 of the High Court Rules allows the Court to "draw from the facts stated and documents identified in the special case any inference, whether of fact or law, which might have been drawn from them if proved at a trial"14. The plaintiff was thus able to argue that the facts in the special case gave rise to one or more inferences of fact of the kind which engaged the reasoning of the minority Justices of the Court in Al-Kateb. In particular, the plaintiff invited the Court to draw one or more of the following inferences from the facts stated, and documents identified, in the special case: there is no real prospect or likelihood that the plaintiff will be removed from Australia potentially in his lifetime, or alternatively during his natural life; there is no real prospect or likelihood that the plaintiff will be removed from Australia within the reasonably foreseeable future; the plaintiff's removal from Australia is not practically attainable; and the defendants are not presently able to effect the plaintiff's removal within a reasonable period. The drawing of one or more of these inferences is of critical importance to the argument advanced by the plaintiff. As the defendants submitted, if none of these inferences is drawn, the correctness of Al-Kateb does not arise for decision because, even on the minority view in that case, ss 189 and 196 of the Act provide lawful authority for the plaintiff's detention. 14 Rule 27.08.5, like its predecessor, O 35 r 1(4) of the High Court Rules 1952 (Cth), overcomes a difficulty that arose under procedures whereby a case was stated by an authority or a lower court to enable a higher court to determine a question of law. In such cases, the facts stated were required to be taken as the ultimate facts for the purpose of determining the question, and the court determining that question was not at liberty to draw inferences of fact: see Merchant Service Guild of Australasia v Newcastle and Hunter River Steamship Co Ltd [No 1] (1913) 16 CLR 591 at 622-624; [1913] HCA 76; Mack v Commissioner of Stamp Duties (NSW) (1920) 28 CLR 373 at 381; [1920] HCA 76; R v Rigby (1956) 100 CLR 146 at 150-151; [1956] HCA 38. Nettle Edelman It is not necessary to attempt to expound the differences in the formulation of these inferences, or the significance of those differences. That is because none of the inferences may be drawn from the facts agreed, and the documents referred to, in the special case. For the sake of completeness, it should be noted that senior counsel for the plaintiff also sought to mount further arguments that the present case should be determined in the plaintiff's favour for reasons which were said not to depend on the drawing of one or more of the inferences set out above. No purpose would be served by essaying those arguments here because, ultimately, senior counsel for the plaintiff conceded that if one or more of the inferences were not drawn in the plaintiff's favour, the questions posed in the special case as to the operation and validity of ss 189 and 196 of the Act do not arise. The contentions of the parties On the plaintiff's behalf, it was said that the plaintiff is a stateless person. It was said that the defendants remain unsatisfied of the plaintiff's identity and have been unable to locate any country to which he could be removed, notwithstanding the steps they have taken over almost nine years. That state of affairs is unlikely to change. It was said that the Department's15 unsuccessful efforts to locate a country to which to remove the plaintiff demonstrate that there is no real prospect, as distinct from a mere possibility, of removal. The defendants submitted that their inability to establish the plaintiff's identity and country of origin is due to the plaintiff's want of cooperation. Many aspects of the information provided by the plaintiff are inconsistent, and these inconsistencies are not explicable by genuine uncertainty, ignorance or medical difficulties on the part of the plaintiff. That being so, it cannot be accepted that it is beyond the power of the plaintiff to provide accurate and verifiable information concerning his identity and nationality. It cannot be said that the plaintiff's nationality cannot be established, because what might be achieved with 15 In these reasons, a reference to "the Department" is a reference to: from 28 January 2010 to 17 September 2013, the Department of Immigration and Citizenship; from 18 September 2013 to 19 December 2017, the Department of Immigration and Border Protection; and (iii) from 20 December 2017 to the present, the Department of Home Affairs. Nettle Edelman the plaintiff's cooperation cannot be known. In particular in this regard, there is at least some reason to think that he is most likely Algerian, and the Algerian Embassy has advised that in order to make real progress in attempting to establish the plaintiff's identity and nationality, it would be valuable to know the plaintiff's true name and his place and date of birth, the names of his parents and their dates of birth, and his residences, if any, in Algeria. Accordingly, it was said, the Court cannot infer that the plaintiff is a stateless person or that there is no real likelihood or prospect of removal in the reasonably foreseeable future. In addition, the defendants argued that the Department, while continuing its attempts to establish the plaintiff's identity and nationality, has approached various countries to ascertain whether they might be prepared to accept the plaintiff for resettlement. These approaches are continuing, notwithstanding that the defendants have not identified a country willing to accept the plaintiff as a national or as a person with a right of entry. While none of those approaches has yet resulted in a favourable response, the defendants do not accept that the task is hopeless. Even though the defendants accept that there is currently no country willing to accept him as a national or as a person with a right of entry, the Department is continuing to attempt to make genuine attempts to identify countries that might accept the plaintiff. The defendants contend that in these circumstances the options for the plaintiff's removal from Australia have not yet To understand the parties' submissions, it is necessary to refer to the highly unusual circumstances of the present case. The plaintiff's circumstances The plaintiff arrived in Australia by aeroplane at Melbourne airport on 28 January 2010. He had previously identified himself to authorities in other countries using at least three different names. When he travelled to Australia he did so on a Norwegian passport under a fourth name. The plaintiff destroyed that passport and presented himself to immigration officers in Australia under a fifth name, as a "citizen" of Western Sahara. It may be significant that, when the plaintiff was told that no Norwegian interpreter was available to assist him, he advised that his second preference was for an Algerian interpreter. 16 cf Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 371-372 [147]; [2013] HCA 53. Nettle Edelman The plaintiff had previously identified himself to Danish authorities as a citizen of Iraq born in 1990, and to authorities in the Netherlands under a different name as a citizen of Gaza, Israel, born on 1 March 1988. In or about 2007, he applied for protection in Iceland under a different name, as a "citizen" of Western Sahara born in 1991. On 30 December 2009, the plaintiff was intercepted at Singapore airport attempting to travel to New Zealand via Australia on a counterfeit British passport which gave his date of birth as 27 March 1989. On or around 5 January 2010, the plaintiff sought asylum in Germany using the same date of birth. In this proceeding the plaintiff has sworn an affidavit to the effect that: he does not know but believes that he was born in the Canary Islands, Spain, and was taken to Western Sahara as a new-born baby; he does not know the name, date of birth or ethnicity of his mother but he believes that she resided in Western Sahara around the time of his birth; and (iii) he has no information about his father. Understandably, given the different accounts given by the plaintiff on other occasions, this account has not been accepted by the defendants. At the time of his arrival, the plaintiff held a Norwegian temporary residence permit which entitled him to reside in Norway ("the Norwegian Permit"). During the currency of that permit, on 29 March 2010, the plaintiff made a written request to the Department that he be removed from Australia. The Norwegian Permit expired on 24 September 2010. The plaintiff applied for the renewal of the Norwegian Permit, but his application was rejected by the Norwegian government on or around 7 November 2011. Between 2010 and 2017, the plaintiff lodged a number of applications for protection visas, as well as an application for a bridging visa and an application for a safe haven enterprise visa17. In some of these applications, the plaintiff 17 The application for a safe haven enterprise visa was made after the Minister exercised his power under s 48B of the Act to permit the plaintiff to make a further protection visa application. Nettle Edelman stated that he had in the past used false names, personal details and passports. Each application was refused by a delegate of the Minister18. In interviews with officers of the Department which took place between 2010 and 2013, the plaintiff said that his parents were dead and that he had no relatives. In 2013, he said on two occasions that he had a Norwegian wife and son. On a third occasion in 2013, he again claimed he had a Norwegian son. In 2017, he said that he did not have a son in Norway. On 31 May 2012, the plaintiff attended a meeting with officials of the Moroccan Embassy organised by the Department. He was told that the meeting was for the purpose of assisting the Department in the process of investigating his identity. He participated in the meeting for some time, but then walked out advising that he did not wish to participate further. The Moroccan officials advised the Department that in their view the plaintiff was not from Western Sahara, but appeared to be an Algerian, who spoke "fluent (and not childlike) Algerian Berber dialect". The Moroccan officials also stated that it was unlikely that the plaintiff was from Las Palmas in that he could not identify any suburb, city or village at Las Palmas. In an interview on 24 September 2014 with officers of the Department, the plaintiff claimed to have been born in Tindouf, Algeria. In that interview, he claimed that his parents were living in Dakhla, Western Sahara, and that he had three brothers living in Algeria. On this occasion, the plaintiff claimed that his elder brother, with whom he communicates on Skype, told him that he, the plaintiff, was born in 1987. The plaintiff was adamant that he would not accept being removed to Algeria or Morocco. It may be noted that during an earlier interview with officials from the Algerian Embassy on 28 June 2012, he refused to speak Arabic. In an interview on 22 March 2016, the plaintiff informed an officer of the Department that he had no knowledge of his parents as he was an orphan. On 27 April 2016, he said that he lived with his parents until he was six years of age, when he went to Spain. On 30 May 2016, he claimed that he was born in El Paso in Spain. 18 With the exception of the first protection visa application, which was withdrawn, and the application for a bridging visa, which was determined to be invalid by a delegate of the Minister. Nettle Edelman On 8 November 2018, the Department wrote to the plaintiff's solicitor seeking the plaintiff's agreement to the Department's proposal to arrange meetings between the plaintiff and the Moroccan and Algerian Embassies in Canberra in order to establish the plaintiff's identity and nationality. The plaintiff's solicitor replied that the plaintiff declined to attend any further meeting because the Commonwealth had not demonstrated the utility of a further meeting in terms of establishing the plaintiff's identity. In light of the plaintiff's position, the Department did not seek to arrange the foreshadowed meetings. Given that whether or not the proposed meetings would assist in establishing the plaintiff's identity could not be known with any reasonable certainty unless the meetings took place, and given that it is not apparent that attending the meetings would have cost the plaintiff anything, the response given on behalf of the plaintiff tends to confirm his distinct preference for a policy of non-cooperation with the Department. The uncertainty surrounding the plaintiff's identity and nationality also affects his prospects of resettlement in a country other than his home. Thus, for example, on 8 November 2018, an officer of the Department met with an official of the Embassy of the United States of America in Canberra in relation to the possibility of resettling the plaintiff in the United States. The official advised that the United States would not be in a position to settle the plaintiff at that stage, having regard to the ongoing questions surrounding the plaintiff's identity. Should the inferences be drawn? In the Department's dealings with the plaintiff, he has adopted a posture that involves, at best, non-cooperation and, at worst, deliberate obfuscation and falsehood. No good reason has been advanced for the adoption of this posture. For an unlawful non-citizen seeking entry into Australia, matters relating to his identity cannot sensibly be thought to be private matters of legitimate concern only to him. Further, it was not suggested that the plaintiff's inconsistent accounts of his personal background and his refusal to cooperate with the authorities are due to any medical condition or mental illness on his part. The possibility that the inconsistencies in the plaintiff's accounts of his origins might be explicable by difficulties of that kind was explicitly raised with senior counsel for the plaintiff before the special case was referred to the Full Court19, and no suggestion to that effect has subsequently been made on the plaintiff's behalf. 19 [2018] HCATrans 221 at 4-5, 7. Nettle Edelman Because the plaintiff has contributed to the frustration of lines of enquiry as to his identity and nationality, what might be established about his identity and nationality if he were to assist the Department in its enquiries cannot be known. It certainly cannot be inferred that genuine assistance from the plaintiff would not be helpful. As the Algerian Embassy stated, information as to the plaintiff's true name and place and date of birth, the true names and dates of birth of his parents, and details of his residences, if any, in Algeria, would be valuable in making progress to establish the plaintiff's identity and nationality. Such information has not been forthcoming from the plaintiff, and the Court has been given no good reason to regard the plaintiff as incapable of giving a factual and verifiable account of those matters should he choose to do so. Indeed, the plaintiff seeks to take advantage of difficulties to which he has contributed to contend that enquiries as to his identity and country of origin have no prospect of success. In this regard, the plaintiff submitted that his own statements that he has no knowledge as to his parentage or family are manifestly unreliable, going so far as to argue that without independently verifiable material capable of substantiating his identity, there is no real possibility, prospect or likelihood of the defendants identifying any country to which he could be returned, and no real possibility, prospect or likelihood of any new information coming to light. This is not an attractive argument. The attempt on behalf of the plaintiff to turn his falsehoods to his advantage needs only to be noted to be rejected in accordance with the general disinclination of the courts to allow a party to take advantage of his or her own wrongful conduct20. There is no basis in the materials before the Court for any conclusion other than that the plaintiff has deliberately failed to assist the defendants in their attempts to establish his true identity and nationality when, so far as the agreed facts are concerned, he does not appear to have anything legitimate to lose by cooperating. Absent any explanation for the inconsistent and irreconcilable statements made by the plaintiff, some of those statements must be deliberate falsehoods. That the plaintiff has chosen to adopt a course of non-cooperation involving the deployment of falsehoods also tends to suggest that he may be seeking to hide something which he fears might be discovered if he cooperates with the Department. As Gibbs J observed in Steinberg v Federal Commissioner 20 Gnych v Polish Club Ltd (2015) 255 CLR 414 at 426-427 [45]; [2015] HCA 23. Nettle Edelman of Taxation21, "[t]here may be circumstances in which an inference can be drawn from the fact that the witness has told a false story, for example, that the truth would be harmful to him". In the present case, there is at least a live possibility that the prospect of concern to the plaintiff is removal to Algeria. In addition, the Department is still engaged in pursuing the possibility of removing the plaintiff from Australia. There is no reason to doubt that this pursuit is genuine and further, given the posture of non-cooperation adopted by the plaintiff, the Court is in no position to conclude that the pursuit is futile. The defendants' submission that the options for the plaintiff's removal have not yet been exhausted should be accepted22. For the sake of completeness, it should be noted that, on behalf of the plaintiff, it was also said that the defendants bear the onus of proving the facts concerning the identity of the plaintiff's parents and his place of birth in order to show that there is a real prospect of removing the plaintiff to his country of origin within a reasonable time. It was said that because those facts are not verifiable independently of the inconsistent information provided by the plaintiff, the defendants cannot discharge that burden. In this regard, the plaintiff placed reliance on the decision of the Judicial Committee of the Privy Council in Tan Te Lam v Superintendent of Tai A Chau Detention Centre23. Tan affords the plaintiff no assistance. In that decision, the applicants' claims for habeas corpus were determined upon evidence adduced at trial by the parties and findings made upon that evidence, rather than upon facts stated in a special case agreed between the parties24. Thus, in relation to the issue as to whether the detention of some applicants could be justified as detention "pending removal", it was held that because the evidence was that the Vietnamese government had unequivocally refused to accept the return of the applicants, the continuing detention of the applicants could not be said, on the evidence, to be "pending removal"25. Whatever may be the position in a trial on evidence, the 21 (1975) 134 CLR 640 at 694; [1975] HCA 63. 22 cf Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship (2013) 251 CLR 322 at 371-372 [147]. 24 [1997] AC 97 at 103, 107, 109-110. 25 [1997] AC 97 at 109, 115-116. Nettle Edelman special case procedure adopted by the parties in the present case was adopted as an alternative to such a trial. The special case contains no agreed fact of the kind that was of crucial importance in Tan. The questions presented to the Court upon the facts agreed between the parties do not fall to be resolved by the application of the onus of proof as if this Court were conducting a trial. The questions stated by the parties must be resolved in accordance with r 27.08 of the High Court Rules on the agreed facts and documents and the inferences that may properly be drawn from those facts and documents. In addition, the plaintiff's contention that the defendants bear the onus of negativing the inferences which he propounds is a distinctly unfair departure from the course adopted by the plaintiff in his statement of claim, where he asserted the inferences on which he seeks to rely as matters of fact. The plaintiff assumed, by his pleading, the burden of establishing those inferences as matters of fact26. It is not only "an elementary rule of the law of evidence", but "a rule of common sense"27 that the burden of proof is upon the party who asserts a fact, not on the party who denies it. That is not to overlook that where, as here, the claim is one for habeas corpus, the onus is on the defendant Minister to justify the plaintiff's detention28. But where, as here, the plaintiff's detention is apparently lawful – because it is admitted that the plaintiff is an unlawful non-citizen, and ss 189 and 196 of the Act are lawful authority to detain an unlawful non-citizen for the purpose of lawful removal from Australia as soon as that becomes practicable – the plaintiff carries at least an initial evidentiary burden of establishing that there is reason to suppose that his detention has ceased to be lawful by reason that it is no longer reasonably foreseeable that he will be removed from Australia29. 26 Fraser v Victorian Railways Commissioners (1909) 8 CLR 54 at 59, 66, 72; [1909] HCA 5; Attorney-General for New South Wales v Martin (1909) 9 CLR 713 at 721-722; [1909] HCA 74; Joseph Constantine Steamship Line Ltd v Imperial Smelting Corporation Ltd [1942] AC 154 at 174. 27 Attorney-General for New South Wales v Martin (1909) 9 CLR 713 at 721-722. 28 R v Davey; Ex parte Freer (1936) 56 CLR 381 at 385; [1936] HCA 58; Liversidge v Anderson [1942] AC 206 at 245; Trobridge v Hardy (1955) 94 CLR 147 at 152; [1955] HCA 68; R v Governor of Metropolitan Gaol; Ex parte Di Nardo [1963] VR 61 at 62. 29 Greene v Secretary of State for Home Affairs [1942] AC 284 at 295, 306; cf R v Governor of Brixton Prison; Ex parte Ahsan [1969] 2 QB 222 at 231; Yoxon v Secretary to the Department of Justice (2015) 50 VR 5 at 14-15 [35]-[40]; and see (Footnote continues on next page) Nettle Edelman This consideration is compelling in this case: it is the plaintiff, not the defendants, who could reasonably be expected to provide information on the facts relating to the identity of his parents and their place of birth and residence. Insofar as the special case is deficient by reason of the absence of this information, that deficit does not provide a basis for drawing any one of the inferences urged by the plaintiff. In that regard, the present case brings to mind the maxim stated by the considerations of common sense underlying Lord Mansfield in Blatch v Archer30 that "all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted". Conclusion The inconsistent statements made by the plaintiff as to his identity and place of origin are not explicable by genuine uncertainty or ignorance, and so it cannot be assumed that it is beyond his power to provide further information concerning his identity that may shed positive light on his prospects of removal. Neither can it be concluded that the options for his removal within a reasonable time, if his cooperation is forthcoming, have been exhausted. Accordingly, the Court answered the questions referred to it on the basis that the inferences urged by the plaintiff were not available and no factual basis for the application of the view of the minority in Al-Kateb was established. The result was that no question arose as to the lawfulness of the plaintiff's detention. Aronson, Groves and Weeks, Judicial Review of Administrative Action and Government Liability, 6th ed (2017) at [14-110]. 30 (1774) 1 Cowp 63 at 65 [98 ER 969 at 970]. In this Court see, eg, Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 454 [36]; [2001] HCA 12. Bell GagelerJ BELL, GAGELER AND GORDON JJ. The plaintiff has been held in detention by officers of the second defendant since his arrival in Australia on 28 January 2010. The defendants rely on ss 189 and 196 ("the provisions") of the Migration Act 1958 (Cth) to authorise the plaintiff's detention. In proceedings commenced in the Court's original jurisdiction, the plaintiff challenges the lawfulness of his detention on the ground that, on their proper construction, the provisions have ceased to authorise his detention; alternatively, on the ground that, in their purported operation on him, the provisions exceed the legislative power of the Commonwealth and, to that extent, are invalid. The factual predicate of the challenge, in each way it is put, is the inability of the defendants to establish the plaintiff's identity at any time in the future such that there is "currently no practical possibility" of his removal from Australia to any other country. As Kiefel CJ, Keane, Nettle and Edelman JJ in their joint reasons explain, the revised special case stating questions of law for the opinion of the Full Court does not contain agreement that there is no prospect of the plaintiff's removal from Australia in the reasonably foreseeable future. Prior to the hearing, the parties were notified that the Court would be assisted by the identification of the inferences that the plaintiff invites the Court to draw from the facts stated and the documents identified in the special case31 as would give rise to the questions of law. In response to that invitation the plaintiff identified four inferences of fact: there is no real prospect or likelihood that the plaintiff will be removed from Australia potentially in his lifetime, alternatively during his natural life; there is no real prospect or likelihood that the plaintiff will be removed from Australia within the reasonably foreseeable future; the plaintiff's removal from Australia is no longer practically attainable; it has become apparent that the defendants have not been able to effect the plaintiff's removal within a reasonable period. The fourth inference was reformulated on the hearing to make clear that it, too, looks forward from the plaintiff's present situation. Senior counsel for the plaintiff stated that each inference is a different way of expressing the conclusion 31 High Court Rules 2004 (Cth), r 27.08.5. Bell GagelerJ that there is no real prospect or likelihood that the plaintiff will be deported from Australia. The procedural history, the questions of law reserved for the opinion of the Full Court and the facts are set out in the joint reasons of Kiefel CJ, Keane, Nettle and Edelman JJ and need not be repeated. As their Honours observe, the possibility of the existence of a medical explanation for the inconsistent accounts given by the plaintiff of his history was raised with his senior counsel before the special case was referred to the Full Court32. There is nothing in the special case to suggest that the plaintiff suffers from a psychiatric or other medical condition which would affect his capacity to give a coherent, factual account of his background including the reasons for giving inconsistent accounts in the past. We agree with their Honours' reasons for the conclusion that the plaintiff has deliberately failed to assist the defendants in their attempts to establish his true identity. The plaintiff's argument builds on the practical necessity for the Department of Home Affairs ("the Department") to establish his identity before any other country will agree to receive him. The plaintiff points to the advice prepared by the Complex Identity Advice section of the Department that, in light of his lengthy history of providing false, misleading and/or inconsistent information, any determination as to his identity must be made "exclusively on independently verifiable information". Accepting this criterion, the plaintiff submits that the only information that might produce a change in his circumstances is objective information and he observes that nothing in the special case identifies "any independently verifiable information that is prospectively available". The "real question", in the plaintiff's submission, is whether the Court is satisfied that he is withholding information that is independently verifiable about his birth and his parents' identity. The circumstance that any account that the plaintiff now gives of his identity and nationality will require verification by independent evidence says nothing as to the prospect of that evidence being available. One inference to be drawn from the materials in the special case is that it is within the plaintiff's power to give a factual account of his name, date and place of birth, and that of his parents. An allied inference is that it is within the plaintiff's power to cooperate in other ways with requests made by the Department in its attempt to establish his identity and nationality. In the absence of his cooperation, it cannot be known whether the plaintiff's identity can be established, nor can the Court essay any conclusion as to the prospect or likelihood of his removal from Bell GagelerJ Australia. It follows that none of the inferences on which the plaintiff relies is open. Senior counsel for the plaintiff acknowledged that in these circumstances the first two questions reserved for the Full Court's opinion do not arise. The answers to the third and fourth questions follow as of course.

HIGH COURT OF AUSTRALIA NOMINATED REPRESENTATIVE ON BEHALF OF VARIOUS LLOYDS UNDERWRITERS) APPELLANT AND HIGHWAY HAULIERS PTY LTD RESPONDENT Maxwell v Highway Hauliers Pty Ltd [2014] HCA 33 10 September 2014 ORDER Appeal dismissed. On appeal from the Supreme Court of Western Australia Representation B W Walker QC with P Kulevski for the appellant (instructed by Meridian Lawyers) B W Rayment QC with G R Hancy for the respondent (instructed by WHL Legal Pty Ltd) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Maxwell v Highway Hauliers Pty Ltd Insurance – Statutory construction – Where contract of insurance covered accidental damage to vehicles – Where contract of insurance required drivers to obtain satisfactory driver test score – Where drivers of vehicles involved in accidents had not completed driver tests – Where failure to complete driver test did not cause or contribute to accidents – Whether s 54(1) of Insurance Contracts Act 1984 (Cth) requires insurer to indemnify insured for loss caused by accidents. Words and phrases – "act", "claim", "contract of insurance", "indemnity", "scope of cover". Insurance Contracts Act 1984 (Cth), s 54. HAYNE, CRENNAN, KIEFEL, BELL AND GAGELER JJ. This appeal, from a decision of the Court of Appeal of the Supreme Court of Western Australia, turns on the construction of s 54(1) of the Insurance Contracts Act 1984 (Cth) ("the Act"). Highway Hauliers Pty Ltd ("the Insured") owned a fleet of vehicles which it used to operate an interstate freight transport business. The vehicles included prime movers and trailers able to be linked together in double combinations known as "B Doubles". The Insured entered into a contract of insurance with certain Lloyd's Underwriters ("the Insurers"). Under the contract, the Insurers indemnified the Insured against specified loss, damage or liability occurring to or in respect of the vehicles during the period 29 April 2004 to 30 April 2005 ("the Period of Insurance"). The contract of insurance was constituted in part by a nominated policy of an agent of the Insurers ("the Policy"). Referring to the Insured as "You" and the Insurers as "We", the Policy provided: "After You have paid or agreed to pay the premium ... We will Insure You against loss, damage or liability as described herein, occurring within the Commonwealth of Australia, during the Period of Insurance, subject to the terms and conditions of the [P]olicy ..." Section 1 of the Policy provided in part: "If during the Period of Insurance Your Vehicle: Incurs Accidental Damage [defined as a happening or event, not otherwise excluded, which is unexpected and unintended], or damage caused by fire, hail, flood, storm or earthquake; Is lost by theft and not found; or Incurs malicious damage; We will at Our option: Pay the reasonable cost of repairing or replacing Your Vehicle; Repair or replace Your Vehicle; or Hayne Crennan Bell Pay the lesser of the Sum Insured or Market Value of Your Vehicle, less any applicable Excess." Section 2 of the Policy provided in part: "Your policy protects You for Your legal liability for damage to someone else's property as a result of an accident during the Period of Insurance arising out of the use of Your Vehicle. We will in the event of a claim under this Section ... Pay an amount sufficient to meet such liability. Pay legal costs incurred with Our written consent." The Policy also relevantly provided that any "Endorsement" formed part of the contract and was "always to be considered together" with the Policy. Endorsements to the Policy included one in the following terms: "No indemnity is provided under this policy of Insurance when Your Vehicle/s are being operated by drivers of B Doubles ... unless the driver: Is at least 28 years of age and has a minimum of 3 years proven continuous recent experience in B Double[s] ... and, Has a PAQS driver profile score of at least 36, or an equivalent program approved by Us and, Does not have diabetes ... and, Has been approved in writing by Us to drive Your Vehicle." The Policy defined "PAQS" to refer to People and Quality Solutions Pty Ltd, a company which undertook psychological testing of drivers' attitudes towards safety. Vehicles of the Insured, each comprising a prime mover linked with two trailers as a B Double, were damaged in separate accidents on 16 June 2004 and 2 April 2005. Each was being driven at the time of the accident by a driver who had not undertaken a PAQS test or an equivalent program approved by the Insurers. Hayne Crennan Bell Following each accident, the Insured made a claim on the Insurers. It did so using a claim form of an agent of the Insurers. Each claim form identified the claim as one for indemnity under the Policy arising out of the occurrence of the accident which it described. Subsequent correspondence clarified that each claim was for accidental damage to the Insured's vehicles, liability to a third party and legal costs. The Insurers refused to pay each claim for the stated reason that the effect of the relevant endorsement to the Policy was that there was "an absence of relevant cover ... by virtue of the fact that the vehicle was being driven by an untested driver". The Insured commenced proceedings against the Insurers in the Supreme Court of Western Australia, seeking indemnity under the Policy together with consequential damages for breach of that contract. The Insured was successful at first instance1, and on appeal by the Insurers to the Court of Appeal2. Issue Section 54(1) of the Act provides: "Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer's liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act." Section 54(2) provides: "Subject to the succeeding provisions of this section, where the act could reasonably be regarded as being capable of causing or contributing to a loss in respect of which insurance cover is provided by the contract, the insurer may refuse to pay the claim." 1 Highway Hauliers Pty Ltd v Maxwell (2012) 17 ANZ Insurance Cases ¶61-925. 2 Maxwell v Highway Hauliers Pty Ltd (2013) 45 WAR 297. Hayne Crennan Bell Sub-sections (3)-(5) are of no present relevance. Section 54(6) defines a reference in s 54 to an "act" to include a reference to "an omission" and "an act or omission that has the effect of altering the state or condition of the subject-matter of the contract or of allowing the state or condition of that subject-matter to alter". The Insurers conceded at trial that the fact that each vehicle was being operated by an untested driver could not reasonably be regarded as being capable of causing or contributing to any loss incurred by the Insured as a result of each accident. It followed that s 54(2) had no application. The Insurers also conceded at trial that their interests were not prejudiced to any extent as a result of each vehicle being operated at the time of the accident by an untested driver. It followed that, if s 54(1) was engaged, the Insurers were prevented from refusing to pay either claim for the sole reason they had stated. The only issue on liability in the Supreme Court was, and the only issue in the appeal by special leave to this Court remains, whether s 54(1) was engaged. Would the effect of the contract of insurance be that, but for s 54, the Insurers "may refuse to pay a claim ... by reason of some act of the [I]nsured or of some other person, being an act that occurred after the contract was entered into"? The argument of the Insurers focussed on the contractual effect of the relevant endorsement being that no indemnity was provided under the Policy in respect of an accident which occurred when a vehicle was being operated by an untested driver. The substantive effect of the Policy, as the Insurers put it, was that the claims for indemnity which the Insured made were for damage to vehicles whose drivers had a characteristic that removed the accidents from the scope of cover. Their argument reduced to the proposition that the "claim" to which s 54(1) refers is limited to a claim for an insured risk. For that proposition the Insurers sought to rely on reasoning of the plurality in this Court in FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd3, as interpreted and applied in the Court of Appeal of the Supreme Court of Queensland in Johnson v Triple C Furniture & Electrical Pty Ltd4. The Court of Appeal of the Supreme Court of Western Australia declined to follow Johnson in the decision under appeal, as more recently did the Court of Appeal (2001) 204 CLR 641; [2001] HCA 38. [2012] 2 Qd R 337. Hayne Crennan Bell of the Supreme Court of New South Wales in Prepaid Services Pty Ltd v Atradius Credit Insurance NV5. Section 54 The Act is described in its long title as an Act to reform and modernise the law relating to certain contracts of insurance so that a fair balance is struck between the interests of insurers, insureds, and other members of the public and so that the provisions included in such contracts, and the practices of insurers in relation to such contracts, operate fairly. recommended the Australian Law Reform Commission which The more specific objects of s 54 of the Act were explained in the report its introduction6. Those objects included striking a fair balance between the interests of an insurer and an insured with respect to a contractual term designed to protect the insurer from an increase in risk during the period of insurance cover7. That balance was to be struck irrespective of the form of that contractual term. In particular, no difference was to be drawn between a term framed: as an obligation of the insured (eg "the insured is under an obligation to keep the motor vehicle in a roadworthy condition"); as a continuing warranty of the insured (eg "the insured warrants he will keep the motor vehicle in a roadworthy condition"); as a temporal exclusion from cover (eg "this cover will not apply while the motor vehicle is unroadworthy"); or as a limitation on the defined risk (eg "this contract provides cover for the motor vehicle while it is roadworthy")8. Antico v Heath Fielding Australia Pty Ltd9 established, conformably with those objects, that s 54 takes as its starting point nothing more than the existence (2013) 302 ALR 732. 6 Law Reform Commission, Insurance Contracts, Report No 20, (1982). See also Australia, House of Representatives, Insurance Contracts Bill 1984, Explanatory Memorandum at 78-80. 7 Law Reform Commission, Insurance Contracts, Report No 20, (1982) at xxxi- xxxii, 132-140. 8 Law Reform Commission, Insurance Contracts, Report No 20, (1982) at 140, 289- (1997) 188 CLR 652; [1997] HCA 35. Hayne Crennan Bell of a claim and of a contract the effect of which is that the insurer may refuse to pay that claim by reason of some act which the insured (or someone else) has done or omitted to do after the contract was entered into; it does not postulate a liability of the insurer to pay the claim that has been made. In terms consistent with the reasoning of the majority10, Brennan CJ there said that s 54(1)11: "focuses not on the legal character of a reason which entitles an insurer to refuse to pay a claim – falling outside a covered risk, coming within an exclusion or non-compliance with a condition – but on the actual conduct of the insured, that is, on some act which the insured does or omits to do. ... It is engaged when the doing of an act or the making of an omission would excuse the insurer from an obligation to pay a claim for a loss actually suffered by the insured." The Antico construction of s 54(1) is inconsistent with the Insurers' proposition that the "claim" to which the section refers is limited to a claim for an insured risk. That construction is reinforced by the reasoning in FAI. The plurality there emphasised both that s 54(1) "directs attention to the effect of the contract of insurance on the claim on the insurer which the insured has in fact made"12 and that "[n]o distinction can be made", for the purposes of the section, "between provisions of a contract which define the scope of cover, and those provisions which are conditions affecting an entitlement to claim"13. The Insurers sought support for their argument from a statement of the plurality in FAI that the section "does not operate to relieve the insured of restrictions or limitations that are inherent in [the] claim"14. They misapply that statement in equating its reference to restrictions or limitations that are inherent in a claim with any restriction or limitation on the scope of the cover that is provided under the contract. A restriction or limitation that is inherent in the claim which an insured has in fact made, in the sense in which the plurality in FAI used that terminology, is a restriction or limitation which must necessarily be 10 (1997) 188 CLR 652 at 669-670, 673. 11 (1997) 188 CLR 652 at 660-661. 12 (2001) 204 CLR 641 at 659 [40] (emphasis in original). 13 (2001) 204 CLR 641 at 656 [33]. 14 (2001) 204 CLR 641 at 659 [41]. Hayne Crennan Bell acknowledged in the making of a claim, having regard to the type of insurance contract under which that claim is made. Thus, as explained in FAI, the making of a claim under a "claims made and notified" contract necessarily acknowledges that the indemnity sought can only be in relation to a demand made on the insured by a third party during the period of cover15. The section does not operate to permit indemnity to be sought in relation to a demand which the third party omitted to make on the insured during the period of cover but made after that period expired. Similarly, the making of a claim under a "discovery" contract, of the type in issue in FAI itself, necessarily acknowledges that the indemnity sought can only be in relation to an occurrence of which the insured became aware during the period of cover16. The making of a claim under an "occurrence based" contract, the type of insurance contract in the present case, necessarily acknowledges that the indemnity sought can only be in relation to an event which occurred during the period of cover. That restriction or limitation is inherent in a claim which is made under such a policy. But it is of no moment in the present case. Here the fact that each vehicle was being operated at the time of the accident by an untested driver is properly characterised as having been by reason of an "act" that occurred after the contract of insurance was entered into. There was an omission of the Insured to ensure that each vehicle was operated by a driver who had undertaken a PAQS test or an equivalent program approved by the Insurers. That omission occurred during the Period of Insurance. The Insured having made claims seeking indemnity under the Policy in relation to accidents which occurred during the Period of Insurance, it is sufficient to engage s 54(1) that the effect of the Policy is that the Insurers may refuse to pay those claims by reason only of acts which occurred after the contract was entered into. Precisely how the Policy produced that effect is not to the point. The conclusion of the Court of Appeal in the present case was correct. It remains finally to refer to Johnson. That case concerned an occurrence based contract of insurance under which the insured was indemnified for amounts for which it became liable in respect of accidental injuries to passengers whilst on board an aircraft subject to a temporal exclusion expressed in terms that 15 (2001) 204 CLR 641 at 659 [42]. 16 (2001) 204 CLR 641 at 659-660 [43]. Hayne Crennan Bell "this policy does NOT apply whilst the aircraft ... is operated in breach of [air safety regulations]". The Court of Appeal of the Supreme Court of Queensland accepted an argument that s 54(1) was not engaged in circumstances where the insurer, relying on the temporal exclusion, refused to pay a claim in fact made by the insured by reason of the operation of the aircraft in breach of air safety regulations17. To that extent it erred, and its decision on this point should not be followed. The operation of the aircraft in breach of air safety regulations was an "act" which occurred after the contract was entered into. The temporal exclusion did not qualify the "claim" that was made. Orders The appeal is to be dismissed. As a condition of the grant of special leave to appeal, the Insurers undertook to pay the Insured's reasonable costs of the appeal. That undertaking makes an order for costs unnecessary. 17 [2012] 2 Qd R 337 at 354-355 [78]-[83].

HIGH COURT OF AUSTRALIA Matter No H7/2009 C.A.L. NO 14 PTY LTD T/AS TANDARA MOTOR INN & ANOR APPELLANTS AND MOTOR ACCIDENTS INSURANCE BOARD RESPONDENT Matter No H8/2009 C.A.L. NO 14 PTY LTD T/AS TANDARA MOTOR INN & ANOR APPELLANTS AND RESPONDENT C.A.L. No 14 Pty Ltd v Motor Accidents Insurance Board C.A.L. No 14 Pty Ltd v Scott [2009] HCA 47 10 November 2009 H7/2009 & H8/2009 Matter No H7/2009 ORDER Appeal allowed. Orders of the Full Court of the Supreme Court of Tasmania set aside, and in lieu thereof order that the appeal to that Court be dismissed. The respondent is to pay the appellants' costs of the hearing in the Full Court of the Supreme Court of Tasmania and in this Court. Matter No H8/2009 Appeal allowed. Orders of the Full Court of the Supreme Court of Tasmania set aside, and in lieu thereof order that the appeal to that Court be dismissed. The respondent is to pay the appellants' costs of the hearing in the Full Court of the Supreme Court of Tasmania and in this Court. On appeal from the Supreme Court of Tasmania Representation J Ruskin QC with K E Read and S A O'Meara for the appellants (instructed by Richard Mole & Associates) B W Walker SC with C J Barlett for the respondent in H7/2009 (instructed by Bartletts) S P Estcourt QC with A Darcey for the respondent in H8/2009 (instructed by Wallace Wilkinson & Webster) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS C.A.L. No 14 Pty Ltd v Motor Accidents Insurance Board C.A.L. No 14 Pty Ltd v Scott Torts – Negligence – Duty of care – Operator of hotel and liquor licensee – Intoxicated patron died in road accident after leaving hotel on motorcycle – Where patron and licensee agreed motorcycle and its keys should be held by licensee and patron's wife called when patron ready to leave – Patron refused licensee's offer to call wife to collect patron as arranged and requested keys – Whether licensee had duty to take reasonable care to prevent intoxicated patron from riding motorcycle from hotel – Whether an exceptional case. Torts – Negligence – Breach – Whether alleged duty required licensee to call wife – Whether alleged duty discharged by offer to call wife. Torts – Negligence – Causation – Whether calling wife would have prevented death – Whether on balance of probabilities wife would have received and responded to call in time. Words and phrases – "balance of probabilities", "an exceptional case". Criminal Code (Tas), ss 43, 45. Liquor and Accommodation Act 1990 (Tas), ss 62, 78, 79, 79A, 80. Road Safety (Alcohol and Drugs) Act 1970 (Tas), ss 4, 5(1). Traffic Act 1925 (Tas), s 41A. FRENCH CJ. I agree that the appeals should be allowed and that the orders proposed by Gummow, Heydon and Crennan JJ should be made. I do so for the reason, explained by their Honours1, that the appellants did not owe to the deceased, in the circumstances of this case, a relevant duty of care. I agree also with their Honours' conclusions on causation2 and breach of duty3. I express no opinion on more general questions about the duty of care owed by publicans to their customers or to persons other than their customers. The resolution of these questions in future will be likely to require consideration of the liquor licensing laws and the civil liability statutes of the relevant State or Territory. The latter statutes now contain provisions dealing with the effect of intoxication upon one or more of duty and standard of care, breach and contributory negligence4. As pointed out in the joint judgment5, the Civil Liability Act 2002 (Tas) was only enacted on 19 December 2002 and is irrelevant to these proceedings. 1 See below at [31]-[45]. 2 See below at [14]-[20]. 3 See below at [21]-[30]. 4 Civil Liability Act 2002 (NSW), ss 47-50; Wrongs Act 1958 (Vic), s 14G; Civil Liability Act 1936 (SA), ss 31(2) and 46-48; Civil Liability Act 2003 (Q), ss 46-49; Civil Liability Act 2002 (WA), s 5L; Civil Liability Act 2002 (Tas), s 5; Personal Injuries (Liabilities and Damages) Act (NT), ss 14-17; and Civil Law (Wrongs) Act 2002 (ACT), ss 95 and 96. 5 See below at [58]. Crennan GUMMOW, HEYDON AND CRENNAN JJ. At or shortly after 8.30pm on 24 January 2002, Shane Scott left the Tandara Motor Inn, Triabunna, Tasmania ("the Hotel"). His home was about seven kilometres away. He planned to travel there on his wife's motorcycle. He ran off the road about 700 metres from home and suffered fatal injuries. It was common ground that the accident resulted from his ingestion of alcohol. His blood alcohol reading was 0.253g per 100ml of blood. He had drunk seven or eight cans of Jack Daniels and cola at the Hotel from 5.15pm onwards. Procedural history The claims. Mr Scott's wife, Sandra Scott, instituted proceedings in the Supreme Court of Tasmania against CAL No 14 Pty Ltd, the proprietor of the Hotel ("the Proprietor"). She instituted additional proceedings against Michael Andrew Kirkpatrick, who was the licensee of the Hotel ("the Licensee"). The proceedings were consolidated. The Motor Accidents Insurance Board of Tasmania ("the Board") commenced proceedings to recover sums it had paid to or on behalf of Mrs Scott. Those proceedings, like Mrs Scott's proceedings, alleged that the Proprietor and the Licensee owed, and were in breach of, duties of care to Mr Scott. The trial judge. In the Supreme Court of Tasmania, Blow J held that the Proprietor and the Licensee did not owe any relevant duty of care to Mr Scott; but that if they did, they were in breach of it, and that their breaches caused the injuries which brought about his death6. The Full Court. Mrs Scott and the Board each appealed to the Full Court of the Supreme Court of Tasmania. The appeals were allowed by Evans and Tennent JJ (Crawford CJ dissenting). The majority differed from the trial judge and the Chief Justice in concluding that the Proprietor and the Licensee did each owe a duty of care, but agreed with the trial judge that there was a breach of duty causing damage7. The appeal to this Court. The Proprietor and the Licensee, by special leave, have appealed to this Court against the allowing by the Full Court of Mrs Scott's appeal and the Board's appeal. Each appeal should be allowed for the following reasons. 6 Scott v CAL No 14 Pty Ltd (2007) 17 Tas R 72 at 80 [24] and 83-84 [36]-[37]. 7 Scott v CAL No 14 Pty Ltd t/as Tandara Motor Inn (No 2) (2009) 256 ALR 512. Crennan The facts Mr Scott worked for the Glamorgan-Spring Bay Council as a backhoe operator. The Council's depot was adjacent to the Hotel. At lunchtime on 24 January 2002, Mr Scott agreed to meet a workmate, Mr Rex Kube, for a drink at the Hotel after work. After drinking a stubby of beer at the Council's depot at about 5.00pm, Mr Scott arrived at the public bar of the Hotel at 5.15pm, where he met Mr Kube. Mr Scott had been a regular purchaser of liquor from the Hotel's bottle shop for consumption at home, but was not a regular patron of the public bar. Mr Scott began to drink cans of Jack Daniels and cola, while Mr Kube drank eight ounce glasses of full strength beer. At least initially, they made purchases from the Licensee's wife. She ceased work between 5.30 and 6.00pm. The Licensee then took over. He was responsible for all areas of the Hotel: the public bar, the bottle shop, the area in which "Keno" gambling could take place, and the lounge. The "arrangement". Between 6.00 and 6.30pm, a rumour circulated that there was a police breathalyser or speed camera near Orford, where Mr Scott lived. Mr Kube suggested to Mr Scott that he place his wife's motorcycle in a lockable room known as the storeroom or plant room. Mr Scott agreed. Mr Kube asked the Licensee whether the motorcycle could be secured in that way. It was the Licensee's understanding that Mrs Scott would pick up her husband later that night and that he would collect the motorcycle the next day. Mr Scott and Mr Kube, aided by the Licensee, put the motorcycle in the storeroom a little later. The Licensee then placed the keys to the motorcycle in the petty cash tin, which was the normal receptacle for keys handed over by customers. At about 7.00pm Mrs Helen Kube arrived. She offered Mr Scott a lift home two or three times, but he refused, and said on the last occasion that he would call his wife to come and get him. Mrs Kube did not detect signs of intoxication in Mr Scott. She said that he "seemed okay" and "was talking okay"; that he did not seem to be uncoordinated, clumsy, fumbling, unsteady, slurred in speech, or agitated; and that he did not lack focus. She did not support suggestions that he was smelling of alcohol and had glazed eyes. Mr and Mrs Kube left between 7.45 and 8.15pm. Mr Scott refuses the Licensee permission to ring Mrs Scott. After the Kubes had left, a significant incident took place. Mrs Patricia Thirlway and her 10 year old daughter entered the public bar in order to watch tennis on television. Mrs Thirlway had a conversation with Mr Scott about her brother, who also worked for the Council. Mr Scott appeared "friendly and normal". Mr Scott then left the public bar. He returned 10 or 15 minutes later and placed his head on his hands on the bar. The Licensee came into the bar, told Mr Scott he had had Crennan enough, said it was time to go home, and asked for Mrs Scott's telephone number so that she could be contacted to come and get him. According to Mrs Thirlway, Mr Scott said: "If I want my wife I'll fucken ring her myself". According to the Licensee, after he had asked Mr Scott whether he wanted him to ring Mrs Scott, Mr Scott became agitated and said: "If I want you to ring my fuckin' wife, I'd fuckin' ask ya." The Licensee responded: "Whoo hang on, whoo, whoo, whoo, this is not, you know, don't go crook at me, this is not the arrangement that was made." Mrs Thirlway told Mr Scott that the Licensee was only trying to do the right thing. Mr Scott then directed to Mrs Thirlway "a bit of a rant about the local council" – "a bit of a hate session about the local council and the local community". Mrs Thirlway said he had changed "very quickly", he "fired up all of a sudden", he became agitated, angry, stroppy and sufficiently strange and unpleasant for her not to want to talk to him again. Mrs Thirlway did not want to be involved in a confrontation and tried to ignore Mr Scott. Mr Scott put his head back on the bar and went quiet. Mrs Thirlway and her daughter then left. Like Mrs Kube8, Mrs Thirlway did not notice any signs of intoxication in Mr Scott, either before he left the public bar or after he returned. Mr Scott's departure. Mr Scott went outside for a couple of minutes and upon his return asked the Licensee for the motorcycle and its keys. The Licensee asked three times whether Mr Scott was "right to ride" and each time Mr Scott answered: "Yes, I'm fine". The Licensee then said he would grab the motorcycle keys and the keys to the plant room. He unlocked the plant room. Mr Scott jumped on the motorcycle, backed it out on his own without any apparent trouble, adjusted his helmet straps and drove off. The failure of the Licensee to insist that he call Mrs Scott to collect her husband constitutes the only alleged breach of duty which remained a live issue in this Court. Mrs Scott's alarm. On the evening in question Mrs Scott had planned not to return home until 8.00pm, since she had to run an errand after work. She thought this may have been a reason for Mr Scott staying at the Hotel instead of going home. She reached home at 8.00pm. By 8.30pm she began to feel worried because her husband had not returned. She drove past his place of work to see if he was working late. She also drove past the Hotel but did not see the motorcycle and returned home. The fatal accident took place around 8.30pm. The outcome of the appeal The Proprietor and the Licensee must succeed for each of three independent reasons. First, even if there was a duty of care, and even if it was 8 See [9] above. Crennan breached, it has not been shown that the breach caused the death. Secondly, even if there was a duty of care, it was not breached. Thirdly, there was no duty of care. Causation For the Board and Mrs Scott to succeed, it is necessary for them to prove that if the Licensee had complied with the alleged duty by telephoning Mrs Scott, that act would have prevented the damage. The death of Mr Scott made causation inherently difficult to prove. The Licensee accepted in his evidence that he had often rung the wife of a customer who had been "abusive" or a "handful" and asked her to collect him. Mrs Scott gave evidence that if the Licensee had telephoned her and requested her to collect her husband at about 8.30pm, she would have done so. However, there are several obstacles to be surmounted before it could be concluded on the balance of probabilities that the Licensee could have called Mrs Scott, that if he had she would have received the call, and that if she had come to the Hotel, Mr Scott would have gone home in her car. First, although Mrs Scott had a telephone at home and a mobile telephone, there is no evidence that the Licensee knew either number. It was not suggested that the mobile telephone number was available in the local telephone directory. The records of dealings with Mr Scott in the Hotel's bottle shop did not contain his telephone number. Both the trial judge and Evans J said that simple inquiries would have produced one of the telephone numbers, but the evidence was that at the time Mr Scott left there was no-one else in the public bar, and there was no evidence that anyone else was on the premises. Hence it cannot be concluded that there was anyone present of whom the Licensee could have made inquiries except for Mr Scott. Secondly, it cannot be concluded that if Mr Scott had been asked for one of his wife's telephone numbers he would have given it. The Licensee had already asked him once, but that request had apparently angered Mr Scott so much that, in the presence of a woman and a small girl, he refused with such aggression as to preclude, for practical purposes, any further request being sensibly made. The reaction to the Licensee's request had created an unpleasant and bitter atmosphere. The reaction was so strong that it caused the Licensee to wonder whether there was not something in Mr Scott's family life which had caused it, and whether, just as Mr Scott obviously had troubles at work, he could have had troubles at home. The trial judge was not mealy-mouthed in his assessment of the Licensee's credibility: he considered that he was not reliable about the quantity Mr Scott drank, that an answer to an interrogatory on that subject was dishonest, and that he "might well have invented" another part of his Crennan evidence. But he did not criticise what the Licensee said about the possible causes of Mr Scott's anger. Hence any further broaching by the Licensee of a telephone call by him to Mrs Scott would only have been likely to produce a second outburst, not a telephone number. Thirdly, there was necessarily imprecision in the times assigned by witnesses for the events of the evening, and particularly for the times leading up to Mr Scott's departure from the Hotel and the time of Mrs Scott's departure from her home to search for Mr Scott. This is no criticism of either the witnesses who gave the evidence or the counsel who elicited it. The Scott home was only about seven kilometres away. Even if the Licensee had discovered the home number, it is not possible to conclude on the balance of probabilities that a call would have reached Mrs Scott, before she left home to search for Mr Scott or after she had returned, at a time which would have enabled her to come to the Hotel in time to forestall her husband's departure by motorcycle. Fourthly, even if the Licensee had overcome all these obstacles and managed to procure the attendance of Mrs Scott at the Hotel before Mr Scott had departed, it cannot be inferred on the balance of probabilities that Mr Scott would have responded meekly to her arrival. On the case against the Licensee, if he decided to procure the arrival of Mrs Scott before Mr Scott left on the motorcycle and to obtain Mrs Scott's telephone number by means other than asking Mr Scott, he would have had to have adopted tactics of delay and deception. And he would have had to disobey Mr Scott's emphatically expressed command not to ring Mrs Scott9. Once Mr Scott appreciated that these tactics had been used against him, the possibility that he would have grabbed the keys and driven off on the motorcycle is at least as likely as the possibility that he would have agreed to being driven home by his wife. For those reasons it has not been shown that, even if the Licensee had complied with the alleged duty, the accident would have been prevented. Breach of duty Five alleged breaches of duty. The Full Court majority considered that the Proprietor and the Licensee had breached a duty to take reasonable care to "avoid Mr Scott riding" the motorcycle while so affected by alcohol as to have a reduced capacity to do so safely. Avoidance here must mean prevention. Evans J found breach in three respects – a failure by the Licensee to ring Mrs Scott; his failure to "deflect" Mr Scott from driving the motorcycle, or 9 See above at [10]. Crennan "delay" his departure, or "stall" him, which was said to be "easy" to do; and his failure "to have manifested some resistance to the return of the motorcycle."10 To these three breaches Tennent J added a fourth – the Licensee could have simply refused to hand over the motorcycle – and a fifth – the Licensee could have taken These five alleged breaches may be taken in turn. Failure to ring Mrs Scott. The first alleged breach, namely the failure to ring Mrs Scott, was essentially the only one relied on by counsel for the Board and for Mrs Scott in this Court11. It is unsound for some of the reasons already given in relation to causation: the Licensee had no means of ringing Mrs Scott unless he asked Mr Scott for the number, and to do so would be likely to generate, not the number, but a further violent – perhaps more violent – scene. Failure to deflect, delay, stall or manifest some resistance. The second and third alleged breaches involve the difficulty that deflecting, delaying or stalling Mr Scott, apart from the deception which it would probably require and which itself might have irritated Mr Scott, could not have lasted very long. If it lasted for any length of time, it would have involved non-compliance with Mr Scott's desire to exercise his legal rights to possession of the motorcycle. It would be unlikely, given Mr Scott's mood, that the Licensee could maintain a posture of open non-compliance for long, for a point would soon have been reached at which any manifestation of resistance by the Licensee to returning the motorcycle would involve the actual commission of a tort in refusing possession and would provoke Mr Scott into an attempt to vindicate his rights by self-help. The Licensee could not lawfully detain Mr Scott, or his wife's motorcycle, or the keys to it. Deflecting, delaying or stalling would have been as ineffective as offering counselling to Mrs Cole in Cole v South Tweed Heads Rugby League Football Club Ltd, or persuading her to regain her sobriety in a quiet place before There are two flaws underlying the reasoning of Evans J (which was supported by Tennent J) in relation to the second and third alleged breaches. One 10 Scott v CAL No 14 Pty Ltd t/as Tandara Motor Inn (No 2) (2009) 256 ALR 512 at 11 Senior counsel for the Board and Mrs Scott who appeared in this Court did not appear in either the trial or the Full Court. 12 (2004) 217 CLR 469 at 504 [125]; [2004] HCA 29. Crennan rests on the view that all that matters in assessing the question of breach is what the person allegedly in breach of duty thought at the time. Thus Tennent J said13: "Much was made of the legal position of [the Licensee] and Mr Scott in relation to the bike. That is, could [the Licensee] have refused to hand the bike over and, had he done so, could Mr Scott have used [force] to recover it? However, it is implausible to suggest that either of the men gave any thought at all to those issues. They have, with respect, been raised in hindsight to justify what actually happened." And Evans J was "inclined to the view of Tennent J that it is implausible to suggest that, at the time, either of the men addressed [the] question" of the legal rights and obligations of Mr Scott and the Licensee in relation to the motorcycle14. The actual thinking of the person allegedly in breach of a duty of care is not irrelevant, but since the issue turns on what a reasonable person in the circumstances in which the person allegedly in breach is placed would do, factors other than those which actually occurred to that person can also be material15. The second flaw appears in what Evans J said of the third breach of duty16: "I am … not suggesting that [the Licensee] should have refused to return the motorcycle at all costs. It would, however, have been reasonable for him to have manifested some resistance to the return of the motorcycle. A response to the effect that he would release the motorcycle upon checking with Mrs Scott that she was content that Mr Scott ride her motorcycle home in the state that he was in would not have been inappropriate. Had Mr Scott responded to any resistance with the threat of violence, it may well have been reasonable to have given way. I am not, however, satisfied that if [the Licensee] had resisted providing the motorcycle to Mr Scott he would have been met with the threat of violence. It was not necessary for [the Licensee] to do anything, let alone manhandle Mr Scott, in order to 13 Scott v CAL No 14 Pty Ltd t/as Tandara Motor Inn (No 2) (2009) 256 ALR 512 at 14 Scott v CAL No 14 Pty Ltd t/as Tandara Motor Inn (No 2) (2009) 256 ALR 512 at 15 Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48; [1980] HCA 12. 16 Scott v CAL No 14 Pty Ltd t/as Tandara Motor Inn (No 2) (2009) 256 ALR 512 at Crennan deny him access to the motorcycle which was locked away in a storeroom." Similarly, Tennent J said that there was no evidence that Mr Scott was likely to be physically aggressive17. To the contrary, Mr Scott had manifested a fair bit of verbal violence in relation to the question of his wife being telephoned. To say that he would not have threatened or used physical violence is to speculate, not to reach a conclusion sustainable on the balance of probabilities. While the Licensee did not have to manhandle Mr Scott to deny him access to the motorcycle, he may have had to defend himself physically if Mr Scott had begun to demand the keys and back the demand by force. Detached reflection is not demanded in assessing whether to give motorcycle keys to a man who is entitled to them and who, though he has been drinking and is angry, does not appear to be unfit to drive. Counsel for the Proprietor and the Licensee correctly submitted that a duty which required the Licensee to deny Mr Scott access to the keys carried a risk of exposing him to physical harm. Refusal to hand over the motorcycle. As to the fourth alleged breach of duty – that the Licensee could simply have refused to hand over the motorcycle – counsel for the Board and Mrs Scott correctly declined to defend what Tennent J said. If the Licensee had done that, he would have been committing an illegal act. Licensee's failure to drive Mr Scott home. Counsel refused to support the view that a fifth breach of duty was to be found in the Licensee's failure to drive Mr Scott home. There is no reason to suppose that Mr Scott would have submitted tamely to being driven home by the Licensee. Mr Scott had already refused two or three offers of a lift from the Kubes. The trial judge specifically found that in view of Mr Scott's mood he would have refused an offer of transport from the Licensee or from anyone else whom the Licensee may have arranged as a driver. Would it have been reasonable for the sole person in charge of the Hotel and its various areas to leave it for the period necessary to enable a drive of about 15 kilometres to be undertaken? This question was not investigated in the evidence. If it had been, the Licensee's departure from his post may have been revealed to be a breach of his contractual or statutory duties. It is far from clear that the answer to the question should be in the affirmative. Earlier compliance with duty. Another obstacle to the case advanced by the Board and Mrs Scott on breach of duty is that the duty was complied with 17 Scott v CAL No 14 Pty Ltd t/as Tandara Motor Inn (No 2) (2009) 256 ALR 512 at Crennan once the Licensee had made the offer to Mr Scott to ring Mrs Scott. There is an analogy with the finding in Cole v South Tweed Heads Rugby League Football Club Ltd18 that the Club discharged any duty of care to Mrs Cole by offering her safe transport home. For those reasons, even if there was a duty of care, it was not breached. Duty of care: the specific allegation in this case The duty found by the Full Court majority. There is no doubt that the Proprietor and the Licensee owed Mr Scott various duties to take reasonable care – for example, a duty to take reasonable care to ensure that the premises were physically safe, and a duty to take reasonable care to ensure that equipment in operation, like gambling machines and kegs, did not injure him. As indicated above19, the duty relied on by the Full Court majority was a duty to take reasonable care to prevent Mr Scott from riding the motorcycle while so affected by alcohol as to have a reduced capacity to ride it safely. It was not a duty to restrict service of alcohol to Mr Scott. The duty advocated by counsel. In this Court counsel defended a somewhat narrower version of the duty relied on by the Full Court majority. The duty was said to be a duty to take the reasonable care selected prospectively by Mr Scott and the Licensee as the means by which Mr Scott's interests in not facing the risks of driving the motorcycle while intoxicated could be protected. The relevant means of taking care was to ring Mrs Scott so that she could collect Mr Scott. Counsel for the Board and Mrs Scott defended the Full Court majority's finding that the duty – or at least that more qualified version of it – existed by referring to Mr Scott's vulnerability and to the capacity of the Proprietor and the Licensee to influence events. They also referred to the central features of the relationship between the Proprietor and the Licensee, on the one hand, and Mr Scott, on the other. Those features were said to be as follows. Conformably with the commercial self-interest of the Proprietor and the Licensee, it was repeatedly stressed, intoxicating drinks were being served to Mr Scott. Mr Scott was known to have arrived on the motorcycle. The Licensee understood that the drinks had the capacity to impair, and had probably already affected, Mr Scott's capacity to ride the motorcycle home safely. The rumoured 18 (2004) 217 CLR 469 at 488 [59], 491 [76] and 492 [80] per Gummow and Hayne JJ; see also at 479-480 [22]-[24] per Gleeson CJ and at 504-505 [125]-[126] 19 See [21]. Crennan deployment of a breathalyser check led to the Licensee and Mr Scott arranging for the motorcycle to be locked away because it was likely that Mr Scott would break the law if he were to ride it away. The arrangement permitted the Licensee to continue serving intoxicating drinks to Mr Scott, if Mr Scott so chose, because he would not be trying to ride away drunk on the motorcycle. The contemplated impairment of Mr Scott's capacity to ride safely included a diminished capacity to make sensible judgments. The solution reached by the arrangement was for Mrs Scott to be contacted when Mr Scott was ready to go home. Eventually, the Licensee decided, reasonably, that Mr Scott had had enough to drink. Mr Scott then announced his changed judgment, such as it was, that he would try to ride home. Duty of care: the specific allegation rejected Was Mr Scott vulnerable? So far as this defence of the Full Court majority reasoning depends on the view that Mr Scott was "vulnerable" or afflicted by a reduction in his capacity to make sensible judgments, it must be rejected. He was a man of 41. He was an experienced drinker – "moderate to heavy", according to Mrs Scott. Neither Mrs Kube nor Mrs Thirlway noticed any of the conventional signs of drunkenness in him. The Licensee did refuse Mr Scott service, but he was likely to be conscious of his own capacity under the influence of drinking. He assured the Licensee three times that he was fit to drive. He drove the motorcycle out of the storeroom without alerting the Licensee to any incapacity to drive. He knew the short route home very well. Commercial conduct. As to the commercial aspect of the parties' dealings, counsel did not suggest that the Licensee was pressing drinks on Mr Scott, and accepted that the Licensee may not even have supplied Mr Scott with any more drinks after the arrangement was made. No duty. Even if there can sometimes be a duty of care on a publican to take reasonable care in relation to the future service of alcohol or the consequences of having served it in the past, no duty can arise in the present circumstances. Nature of the arrangement. The first reason why that is so turns on the nature of the arrangement. In some respects it was mischaracterised in the arguments of counsel for the Board and Mrs Scott. The arrangement was no more than an informal arrangement instigated by Mr Kube to meet Mr Scott's convenience. The goal was to store the motorcycle in order to avoid Mr Scott being breathalysed, not in order to avoid him being physically injured or killed. It was Mr Kube, not Mr Scott, who requested that the motorcycle be locked up. The arrangement gave no authority over the motorcycle to the Licensee. The arrangement did not deprive Mr Scott of his right of immediate possession of the Crennan motorcycle. The arrangement imposed no duty on the Licensee to ring Mrs Scott: it merely assumed that Mrs Scott would come in response to a call from Mr Scott or Mr Kube. The arrangement left it open to Mr Scott to terminate it if he wished: the sub-bailment of the keys and the motorcycle was both gratuitous and at will. Narrow formulation of duty. The second reason for rejecting the duty of care found by the Full Court majority, or any qualified version of it, lies in the following circumstances. The formulation of the duty of care propounded on behalf of the Board and Mrs Scott is narrow. It selects a particular chain of circumstances leading towards Mr Scott's death and contends that there was a duty to take care to prevent that chain of circumstances from occurring by preventing Mr Scott from riding the motorcycle. The formulation obscures difficulties in recognising the duty. Mr Scott's autonomy. One of those difficulties is that the duty conflicts with Mr Scott's autonomy. The duty on the Licensee would have prevented Mr Scott from acting in accordance with his desire to ride his wife's motorcycle home20. This conflict does not arise where for some supervening or overriding reason a person who is owed the putative duty is not autonomous, or fully autonomous – because, for example, some control must be exercised by the defendant over another person who either was vulnerable before the control was first exercised, or has become vulnerable by reason of the control having begun to be exercised. That is so for pupils in relation to their teachers, wards in relation to their guardians, prisoners in relation to the risk of fire caused by the negligence of gaolers21, prisoners in relation to the risk of harm from other prisoners not properly restrained by gaolers22, patients in relation to hospitals, crowds in relation to those charged with the duty to control them, and employees in relation to their employers. But the relationship between Mr Scott, on the one hand, and the Proprietor and the Licensee, on the other, did not impair Mr Scott's autonomy, and neither did the informal arrangement devised by Mr Kube. Lack of coherence with other torts. Another difficulty obscured by the narrow formulation of the duty of care in the light of the particular eventuality which came to pass is that of legal incoherence. If the duty claimed to rest on the 20 Cf Cole v South Tweed Heads Rugby League Football Club Ltd (2004) 217 CLR 469 at 473 [3] per Gleeson CJ and 503 [121] per Callinan J. 21 Howard v Jarvis (1958) 98 CLR 177 at 183; [1958] HCA 19. 22 New South Wales v Bujdoso (2005) 227 CLR 1; [2005] HCA 76. Crennan Licensee existed, it would be incompatible with other duties owed by the Licensee23. If the claimed duty extended to a duty to threaten or to use physical force to prevent Mr Scott from obtaining the keys to the motorcycle, for example, it clashed with the Licensee's duty not to commit the torts of assault and battery, and not to commit corresponding crimes. There are justifications which may be relied on as defences to those torts, but the significance of those torts in preventing violence – abuse of police power against subjects and disorders between subjects – means that the torts should not be narrowed by recognising new justifications as the result of a side wind blowing from the law of negligence. They are torts which ought not to receive significant reduction in scope unless the legislature sees fit. Lack of coherence with law of bailment. The claimed duty also clashes with the Licensee's duty as sub-bailee to hand over the keys and the motorcycle to Mr Scott, bailee for his wife24. The postulated duty on the Licensee would further clash with s 45 of the Criminal Code (Tas)25 which gave Mr Scott the right to use force to obtain the keys and the motorcycle. It is true that the Licensee was entitled to use reasonable force to protect the keys and the motorcycle from being taken by a trespasser26. But Mr Scott was not a trespasser. In addition to these clashes with the common law of Australia and the 23 Sullivan v Moody (2001) 207 CLR 562 at 581 [55] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ; [2001] HCA 59. 24 The Premier Group Pty Ltd v Followmont Transport Pty Ltd [2000] 2 Qd R 338. 25 It provides: "It is lawful for a person entitled by law to the possession of movable property to take it from a person who is in possession of the property, but who neither claims right to it nor acts by the authority of a person so claiming, and if the person in possession resists him, to use such force as is necessary to obtain possession of the property; provided that such force is not intended and is not likely to cause death or grievous bodily harm." 26 Criminal Code (Tas), s 43, which provides: "It is lawful for any person in peaceable possession of any movable property, and for any person lawfully assisting him or acting by his authority, to use such force as he believes on reasonable grounds to be necessary to resist the taking of such property by a trespasser, or to retake it from a trespasser; provided that such force is not intended and is not likely to cause death or grievous bodily harm to the trespasser." Crennan enacted law of Tasmania, if the claimed duty extended to a duty to prevent Mr Scott leaving the premises on the motorcycle to the possession of which he was entitled and which he had requested, it clashed with the Licensee's duty not to commit the tort of false imprisonment. Lack of coherence with legislative regimes in relation to alcohol. Further, even though the claimed duty did not clash directly with the schemes appearing in the enacted law of Tasmania for controlling excessive drinking in hotels, it did not sit well with them. The Licensee had a statutory duty to refuse Mr Scott service27 and not to supply him with liquor28 if he appeared to be drunk, to require him to leave the Hotel29, and to take reasonable steps to prevent the 27 Liquor and Accommodation Act 1990 (Tas), s 78. It provided, on pain of a fine: "A person shall not sell liquor to a person who appears to be drunk." The legislation is now entitled "Liquor Licensing Act 1990" – see Liquor and Accommodation Amendment Act 2004 (Tas), s 5. 28 Liquor and Accommodation Act 1990 (Tas), s 79. It provided, on pain of a fine: "A person shall not supply liquor to a person who appears to be drunk on – (a) licensed premises; or (b) premises specified in a special permit." 29 Liquor and Accommodation Act 1990 (Tas), ss 62 and 80(1). Section 62 provided: "A licensee shall require a person who – (a) is acting in a violent, quarrelsome or disorderly manner; or (b) is using disgusting, profane or foul language – to leave the licensed premises." Section 80(1) provided, on pain of a fine: "A person shall leave licensed premises when required to do so by – (a) the licensee or a person acting with the authority of the licensee; (b) a police officer – acting in accordance with this Act." Section 80(2) provided, on pain of a fine: (Footnote continues on next page) Crennan commission of an offence – but only on licensed premises30. A police officer had power to arrest Mr Scott if that officer had reasonable grounds to suspect that Mr Scott had committed an offence by driving a vehicle under the influence of liquor to the extent that he was incapable of having proper control of a vehicle31. "A person who – (a) has left licensed premises in compliance with subsection (1); or (b) has been removed from licensed premises by a police officer acting in accordance with this Act – shall not re-enter or attempt to re-enter those premises within the period of 24 hours immediately after leaving or being removed from the premises." Section 80(3) provided: "A police officer may – (a) arrest without warrant a person whom the police officer reasonably believes is committing, or has committed, an offence under subsection (1) or (2); and (b) use such reasonable force as may be necessary to remove from licensed premises a person whom the police officer reasonably believes is committing, or has committed, an offence under subsection (1) or (2)." 30 Liquor and Accommodation Act 1990 (Tas), s 79A. It provided, on pain of a fine: "A licensee who knows or has reason to believe that an offence under this or any other Act is being, or is about to be, committed on the licensed premises must take reasonable action to prevent the commission of the offence." 31 Road Safety (Alcohol and Drugs) Act 1970 (Tas), ss 4 and 5(1). Section 4 provides: "A person who drives a vehicle while under the influence of one or more of the following things to the extent that he or she is incapable of having proper control of the vehicle is guilty of an offence: (a) intoxicating liquor; (b) a drug." Section 5(1) provides: (Footnote continues on next page) Crennan A police officer had power to forbid Mr Scott to drive the motorcycle if that officer was of the opinion that he was incapable of having proper control of it, to direct him to deliver up the keys of the motorcycle, and to take such steps as may have been necessary to render the motorcycle immobile or to remove it to a place of safety32. As Crawford CJ pointed out33, the legislation did not give power of this kind to citizens who were not police officers. The failure to comply with a direction so given or the doing of an act so forbidden is a criminal offence, provided the police officer had reasonable grounds for believing that, in all the circumstances of the case, the direction or prohibition was necessary in the interests of Mr Scott, or of any other person, or of the public34. The legislation "If a police officer has reasonable grounds to suspect that a person has committed an offence against section 4, the police officer may exercise either or both of the following powers: (a) arrest the person without warrant; (b) impound the vehicle driven by the person and have it removed to a convenient place for safe-keeping." 32 Traffic Act 1925 (Tas), s 41A(1). It provides: "Where a police officer is of the opinion that a person who is for the time being in charge of a motor vehicle is, by reason of his physical or mental condition, however arising, incapable of having proper control of the motor vehicle, the police officer may – (a) forbid that person to drive the motor vehicle; (b) direct that person to deliver up to the police officer forthwith all ignition keys and other keys of the motor vehicle that are in that person's possession; and (c) take such steps as may be necessary to render the motor vehicle immobile or to remove it to a place of safety." 33 Scott v CAL No 14 Pty Ltd t/as Tandara Motor Inn (No 2) (2009) 256 ALR 512 at 34 Traffic Act 1925 (Tas), s 41A(2). It provides: "A person who fails to comply with a direction given to him under subsection (1) or does an act that is for the time being forbidden under that subsection is guilty of an offence against this Act, but no person shall be convicted of an offence under this subsection unless the court before which (Footnote continues on next page) Crennan contains further detailed safeguards for those persons subjected to the prohibitions, directions, and other conduct of police officers pursuant to its terms35. These provisions leave no room for the suggestion that the law relating he is charged is satisfied that the police officer had reasonable grounds for believing that, in all the circumstances of the case, the direction or prohibition was necessary in the interests of the defendant, or of any other person, or of the public." 35 Traffic Act 1925 (Tas), s 41A(3)-(4). Section 41A(3) provides: "Subject to subsection (4), where a police officer exercises the powers conferred by subsection (1), he shall retain the ignition keys and other keys of the motor vehicle and cause the motor vehicle to be kept immobile or in a place of safety until such time as, in his opinion, the person referred to in the last-mentioned subsection is capable of having proper control of the motor vehicle." Section 41A(4) provides: "Notwithstanding anything in subsection (3), a person who is directed or forbidden to do anything, pursuant to subsection (1), may, at the time when the direction or prohibition is given or imposed or at any time thereafter, request that – (a) his capacity to have proper control of the motor vehicle be determined by a police officer (in this subsection referred to as 'the senior police officer') of a higher rank than the police officer who gave the direction or imposed the prohibition, if the last-mentioned police officer is of a rank lower than inspector; or (b) he be permitted to submit himself for examination by a legally-qualified medical practitioner – and if it is reasonably practicable that the request be granted the police officer who gave the direction or imposed the prohibition shall make the necessary arrangements accordingly, and if the senior police officer or the medical practitioner, as the case may be, certifies that he is of the opinion that that person is capable of having proper control of the motor vehicle, the police officer who has possession of the ignition keys and other keys of the motor vehicle shall forthwith return them to that person and, if the motor vehicle has been rendered immobile, shall also without further delay cause it to be again returned to running order." Crennan to the tort of negligence gave the Licensee, without regard to the careful statutory safeguards against abuse of police power, a power to arrest Mr Scott or control his freedom to use property – the motorcycle and its keys – to which he had a right of possession. Perhaps recognising this, counsel for the Board and Mrs Scott contended at trial that the Licensee had a duty to call the police so that they could exercise their statutory powers, but the trial judge rejected the view that this would have prevented the accident. That rejection was accepted by Evans J, and the contention was not put to this Court. Further, the assumption underlying the general criminal law of Tasmania and the Liquor and Accommodation Act 1990 (Tas)36 is that licensed premises are to be conducted in such a way as to minimise the risk of antagonism and violence. The conduct which the claimed duty was said to require of the Licensee – paltering with Mr Scott, deceiving him, repeating suggestions about ringing Mrs Scott which had upset him, refusing his lawful requests for his wife's property – was liable to stimulate antagonism and violence, not minimise it. As this case is dealing with the common law of negligence across Australia, not just in Tasmania, it should be noted that all jurisdictions have legislation raising similar problems of legal coherence to those which are raised by the Tasmanian legislation. Conclusion on legal coherence. In the words of Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ in Sullivan v Moody37, to conclude that the law of negligence creates a duty in the present circumstances "would subvert many other principles of law, and statutory provisions, which strike a balance of rights and obligations, duties and freedoms." Conflict between case on duty and case on breach. Yet another difficulty is that the case urged by counsel for the Board and Mrs Scott in relation to duty conflicts with the case which Evans J accepted in relation to breach. As already noted, Evans J said in relation to breach that the Licensee should have delayed, deflected and stalled in order to prevent Mr Scott getting the keys and hence the motorcycle; that he should have "manifested some resistance" to returning those items, but not that he "should have refused to return the motorcycle at all costs."38 The assumptions underlying this reasoning are that the Licensee had no power to refuse to return the keys and the motorcycle, and no power to resist Mr Scott's desires. The assumptions underlying the duty case, once it is moved, as it must be, away from its narrow formulation tailored to the precise circumstances of the 36 Especially ss 62 and 79A: see above at [41], n 29 and [41], n 30. 37 (2001) 207 CLR 562 at 576 [42]. 38 See [26] above. Crennan damage, are that the Licensee did have power to refuse to return the keys and the motorcycle, and did have power to use force if Mr Scott tried to obtain the keys and the motorcycle by force, or tried to leave on the motorcycle. These contradictions point against the soundness of the case on duty. An "exceptional" case? Judges who have generally opposed the creation of duties of care on the part of publicans to their customers in relation to the consequences of serving alcohol have left open the possibility that they may exist in "exceptional" cases39. Examples of exceptional cases may include those where "a person is so intoxicated as to be completely incapable of any rational judgment or of looking after himself or herself, and the intoxication results from alcohol knowingly supplied by an innkeeper to that person for consumption on the premises"40. Blow J thought that it would be reasonable also to make exceptions for intellectually impaired drinkers, drinkers known to be mentally ill, and drinkers who become unconscious41. But the present circumstances bear no resemblance to those. This was not an exceptional case in that sense, nor, though counsel repeatedly hinted to the contrary, in any other sense. Conclusion. For those reasons Blow J and Crawford CJ were correct to hold that no duty of care was owed by the Proprietor or the Licensee. Duty of care owed by publicans to customers: general General questions. Do publicans owe a duty to take care not to serve customers who have passed a certain point of inebriation? And do they owe a duty to take positive steps to ensure the safety of customers who have passed that point after they leave the publican's premises42? 39 Cole v South Tweed Heads Rugby League Football Club Ltd (2004) 217 CLR 469 at 477 [14] per Gleeson CJ and 507 [131] per Callinan J. See also South Tweed Heads Rugby League Football Club Ltd v Cole (2002) 55 NSWLR 113 at 146 [197] per Ipp AJA. 40 South Tweed Heads Rugby League Football Club Ltd v Cole (2002) 55 NSWLR 113 at 146 [197] per Ipp AJA. 41 Scott v CAL No 14 Pty Ltd (2007) 17 Tas R 72 at 84 [37]. 42 Counsel for the Board and Mrs Scott contended that while these duties lay on persons supplying liquor for consideration, they did not lie on social hosts and hostesses. The latter issue need not be resolved in these appeals, but Gleeson CJ saw it as difficult to confine any duty of care owed by the suppliers of alcohol to (Footnote continues on next page) Crennan Because of the very specific duty which the Full Court majority found in this case, and the even more specific duty which counsel for the Board and Mrs Scott advocated in this Court, these general questions in one sense do not arise. The approach at least of counsel assumes that in general the answers to those questions will be in the negative. Counsel pursued their clients' interests by concentrating instead on endeavouring to treat the present case as falling within an exception to those general principles of non-liability. A question of stare decisis. However, it is important to note that the proceedings in the Supreme Court of Tasmania reveal a split in approach to stare decisis. Blow J adopted one approach. The Full Court majority adopted another. The latter approach was erroneous and potentially damaging. The split arises in this way. The decision of this Court in Cole v South Tweed Heads Rugby League Football Club Ltd43 was not, strictly speaking, an authority binding the Tasmanian courts to hold that publicans owe no duty of care to patrons in relation to the amount of alcohol served and the consequences of its service, save in exceptional cases. Callinan J upheld that proposition44. Gleeson CJ45 decided that in the circumstances of that case there was no duty of care, but did so in terms consistent with the proposition upheld by Callinan J. On the other hand, McHugh J denied the proposition46. So did Kirby J47. Gummow and Hayne JJ expressly declined to decide the point48. Blow J49, while not considering the decision of this Court to be binding in relation to duty, did follow the ratio decidendi of the decision of the New South Wales Court of Appeal in Cole's commercial supply: Cole v South Tweed Heads Rugby League Football Club Ltd (2004) 217 CLR 469 at 478 [17]. 43 (2004) 217 CLR 469. 44 (2004) 217 CLR 469 at 506-507 [129]-[132]. 45 (2004) 217 CLR 469 at 475-478 [9]-[18]. 46 (2004) 217 CLR 469 at 481-484 [32]-[39]. 47 (2004) 217 CLR 469 at 494-497 [90]-[97]. 48 (2004) 217 CLR 469 at 492 [81]-[82]. 49 Scott v CAL No 14 Pty Ltd (2007) 17 Tas R 72 at 83 [35]. Crennan case, which this Court upheld in the result50. The proposition that there was no duty save in exceptional cases was one ratio of that case. It was the duty of Blow J to follow that decision unless he thought it plainly wrong. This was required by the decision of this Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd51. He did not think it plainly wrong, and he complied with that duty. It was said by the New South Wales Court of Appeal in Gett v Tabet52 that Farah Constructions "expanded" the principle applied to the construction of national legislation and explained in Australian Securities Commission v Marlborough Gold Mines Ltd53. But that is not correct. The principle has been recognised in relation to decisions on the common law for a long time in numerous cases before the Farah Constructions case. It was also recognised in Blow J's judgment in this very case54. The principle simply reflects, for the operation of the common law of Australia within Australia, the approach which this Court took before 1986 in relation to English Court of Appeal and House of Lords decisions, as stated in Wright v Wright55. In contrast, the Full Court majority did not say whether it thought the decision of the New South Wales Court of Appeal in Cole's case was plainly wrong, but it did not follow it. It distinguished it. This was a legitimate course to take, and consistent with the New South Wales Court of Appeal's approach, if the Full Court majority regarded the present case as "exceptional". Counsel for the Board and Mrs Scott submitted to the Full Court, as they also submitted to 50 (2002) 55 NSWLR 113. 51 (2007) 230 CLR 89 at 151-152 [135]; [2007] HCA 22. 52 (2009) 254 ALR 504 at 564 [286]. 53 (1993) 177 CLR 485 at 492; [1993] HCA 15. 54 (2007) 17 Tas R 72 at 83 [35]. See also, for example, Marshall v Watt, Struthers, and County [1953] Tas SR 1 at 14-16 (to which Blow J referred at 83 [35]); Body Corporate Strata Plan No 4303 v Albion Insurance Co Ltd [1982] VR 699 at 705; Grime Carter & Co Pty Ltd v Whytes Furniture (Dubbo) Pty Ltd [1983] 1 NSWLR 158 at 161; Akins v Abigroup Ltd (1998) 43 NSWLR 539 at 547 (where Mason P applied the principle to a Full Federal Court decision relating to the impact of uniform legislation on the common law); R v Morrison [1999] 1 Qd R 397 at 401; S v Boulton (2006) 151 FCR 364 at 369-370 [22]-[27]. 55 (1948) 77 CLR 191 at 210; [1948] HCA 33, where Dixon J described diversity in the development of the common law as an "evil". Crennan this Court, that the present case was exceptional, and that Blow J had erred in not finding that it was exceptional56. The Full Court majority did not in terms describe the case as exceptional. Unless the Full Court majority had concluded, giving reasons, either that the present case was exceptional, or that the New South Wales Court of Appeal was plainly wrong, it was its duty to follow the New South Wales Court of Appeal. The Full Court majority did not conclude that the present case was exceptional or that the New South Wales Court of Appeal was plainly wrong. Hence it did not carry out its duty to follow the New South Wales Court of Appeal. If these appeals had not been brought, there would have been an undesirable disconformity between the view of the New South Wales Court of Appeal as to the common law of Australia and the view of the Tasmanian Full Court majority. At best the Full Court decision would have generated confusion. At worst it would have encouraged the commencement of baseless and ultimately doomed litigation, to the detriment both of the unsuccessful plaintiffs and of the wrongly vexed defendants. There is in general no duty. The conclusion in this Court that the Full Court majority decision must be reversed as a practical matter overcomes these problems. However, even though the arguments in this Court proceeded in a much narrower way, being closely tied to the specific facts of this case, it is desirable to avoid repetition in future of what happened in this case by explicitly stating the fundamental reason why the Full Court majority decision on duty of care is wrong. The reason is that outside exceptional cases, which this case is not, persons in the position of the Proprietor and the Licensee, while bound by important statutory duties in relation to the service of alcohol and the conduct of the premises in which it is served, owe no general duty of care at common law to customers which requires them to monitor and minimise the service of alcohol or to protect customers from the consequences of the alcohol they choose to consume. That conclusion is correct because the opposite view would create enormous difficulties, apart from those discussed above57, relating to customer autonomy and coherence with legal norms. The difficulties can be summarised as follows. Expressions like "intoxication", "inebriation" and "drunkenness" are difficult both to define and to apply. The fact that legislation compels publicans not to serve customers who are apparently drunk does not make the introduction of a civil duty of care defined by reference to those expressions any more 56 Scott v CAL No 14 Pty Ltd t/as Tandara Motor Inn (No 2) (2009) 256 ALR 512 at 519 [29] and 530 [64]-[65]. Crennan workable or attractive. It is difficult for an observer to assess whether a drinker has reached the point denoted by those expressions. Some people do so faster than others. Some show the signs of intoxication earlier than others. In some the signs of intoxication are not readily apparent. With some there is the risk of confusing excitement, liveliness and high spirits with inebriation. With others, silence conceals an almost complete incapacity to speak or move. The point at which a drinker is at risk of injury from drinking can be reached in many individuals before those signs are evident. Persons serving drinks, even if they undertake the difficult process of counting the drinks served, have no means of knowing how much the drinker ingested before arrival. Constant surveillance of drinkers is impractical. Asking how much a drinker has drunk, how much of any particular bottle or round of drinks the purchaser intends to drink personally and how much will be consumed by friends of the purchaser who may be much more or much less intoxicated than the purchaser would be seen as impertinent. Equally, to ask how the drinker feels, and what the drinker's mental and physical capacity is, would tend to destroy peaceful relations, and would collide with the interests of drinkers in their personal privacy58. In addition, while the relatively accurate calculation of blood alcohol levels is possible by the use of breathalysers, the compulsory administration of that type of testing by police officers on the roads was bitterly opposed when legislation introduced it, and it is unthinkable that the common law of negligence could compel or sanction the use of methods so alien to community mores in hotels and restaurants. Then there are issues connected with individual autonomy and responsibility. Virtually all adults know that progressive drinking increasingly impairs one's judgment and capacity to care for oneself59. Assessment of impairment is much easier for the drinker than it is for the outsider60. It is not against the law to drink, and to some degree it is thought in most societies – certainly our society – that on balance and subject to legislative controls public drinking, at least for those with a taste for that pastime, is beneficial. As Holmes J, writing amidst the evils of the Prohibition era, said: "Wine has been 58 Cole v South Tweed Heads Rugby League Football Club Ltd (2004) 217 CLR 469 at 475-476 [10]-[12] and 506 [130]; South Tweed Heads Rugby League Football Club Ltd v Cole (2002) 55 NSWLR 113 at 140-142 [166]-[171]. 59 Cole v South Tweed Heads Rugby League Football Club Ltd (2004) 217 CLR 469 at 476 [13] and 507 [131]. 60 Cole v South Tweed Heads Rugby League Football Club Ltd (2004) 217 CLR 469 at 476 [13]. See also South Tweed Heads Rugby League Football Club Ltd v Cole (2002) 55 NSWLR 113 at 141 [166]. Crennan thought good for man from the time of the Apostles until recent years."61 Almost all societies reveal a propensity to resort to alcohol or some other disinhibiting substance for purposes of relaxation. Now some drinkers are afflicted by the disease of alcoholism, some have other health problems which alcohol caused or exacerbates, and some behave badly after drinking. But it is a matter of personal decision and individual responsibility how each particular drinker deals with these difficulties and dangers. Balancing the pleasures of drinking with the importance of minimising the harm that may flow to a drinker is also a matter of personal decision and individual responsibility. It is a matter more fairly to be placed on the drinker than the seller of drink. To encourage interference by publicans, nervous about liability, with the individual freedom of drinkers to choose how much to drink and at what pace is to take a very large step. It is a step for legislatures, not courts, and it is a step which legislatures have taken only after mature consideration. It would be paradoxical if members of the public who "may deliberately wish to become intoxicated and to lose the inhibitions and self-awareness of sobriety"62, and for that reason are attracted to attend hotels and restaurants, were to have that desire thwarted because the tort of negligence encouraged an interfering paternalism on the part of those who run the hotels and restaurants. A duty to take reasonable care to ensure that persons whose capacity to care for themselves is impaired are safeguarded also encounters the problems of customer autonomy63 and legal coherence64 discussed above. A further problem of legal coherence arises where legislation compels a publican to eject a drunken customer but the tort of negligence requires the person's safety to be safeguarded by not permitting the person to drive or to walk along busy roads, and hence requires the person to be detained by some means. Even if the customer wants to leave, the publican is caught between the dilemma of committing the torts of false imprisonment or battery and committing the tort of negligence. 61 Tyson & Brother v Banton 273 US 418 at 446 (1927). 62 South Tweed Heads Rugby League Football Club Ltd v Cole (2002) 55 NSWLR Crennan The Canadian position. The conclusion that there is no relevant duty accords with English authority65. It has, however, been rejected in the Supreme Court of Canada in Jordan House Ltd v Menow66. That case is distinguishable. The defendant, unlike the Proprietor and the Licensee in this case, was aware of the plaintiff's intoxicated condition. Martland, Spence and Laskin JJ noted that the defendant knew that the plaintiff "had a tendency to drink to excess and then to act recklessly" and annoy other customers, that a year earlier he had been banned from the hotel for a period of time because he annoyed other customers, and that the hotel's employees had been instructed not to serve him unless he was accompanied by a responsible person67. Judson and Ritchie JJ stressed that the defendant knew of the plaintiff's "somewhat limited capacity for consuming alcoholic stimulants without becoming befuddled and sometimes obstreperous"68. More fundamentally, however, the reasoning is unconvincing because of its failure to take into account and analyse the considerations of principle referred to above, particularly the consideration of legal incoherence69. Australian authorities which have adopted or appear to have approved the Canadian approach should not be followed70. Duty of care of publicans to persons other than their customers The conclusion that, save in exceptional circumstances, publicans owe no duty of care to their customers in relation to how much alcohol is served and the consequences of serving it says nothing about whether publicans owe a duty to third parties who may be damaged by reason of the intoxication of those customers. Defendants owe duties of care not to the world, but to particular plaintiffs. Some of the arguments against imposing a duty of care on publicans to their customers may have less application where the plaintiff is a third party 65 For example, Barrett v Ministry of Defence [1995] 1 WLR 1217; [1995] 3 All ER 87 (which illustrates the absence of a general duty up to the point when the drinker collapsed, but its existence as an "exceptional" matter thereafter). 66 [1974] SCR 239. 67 [1974] SCR 239 at 242. 68 [1974] SCR 239 at 251. 70 For example, Johns v Cosgrove (1997) 27 MVR 110 at 113-114; Desmond v Cullen (2001) 34 MVR 186 at 192-194 [32]-[41]; Rosser v Vintage Nominees Pty Ltd (1998) 20 SR (WA) 78 at 82. Crennan injured by the customer. The Supreme Court of Canada has recognised, in statements not necessary to the decision, that there is a duty of care to a third party71. The Supreme Court regarded this as a logical step from the conclusion that there is a duty to the customer72. In this country, since there is generally no duty to the customer, the step cannot be taken on that ground. Whether it is open on some other ground must be left to a case raising the issue. The Civil Liability Act 2002 (Tas) Mr Scott died on 24 January 2002. The Civil Liability Act 2002 (Tas) contains some provisions relevant, contributory negligence and breach of duty. But since the legislation was only enacted on 19 December 2002 and came into force thereafter prospectively, it is irrelevant to the issues in these appeals. intoxication, involving in cases Orders The following orders should be made. Matter No H7 of 2009 Appeal allowed. Orders of the Full Court of the Supreme Court of Tasmania set aside and in lieu thereof order that the appeal to that Court be dismissed. The respondent is to pay the appellants' costs of the hearing in the Full Court of the Supreme Court of Tasmania and in this Court. Matter No H8 of 2009 Appeal allowed. Orders of the Full Court of the Supreme Court of Tasmania set aside and in lieu thereof order that the appeal to that Court be dismissed. The respondent is to pay the appellants' costs of the hearing in the Full Court of the Supreme Court of Tasmania and in this Court. 71 Stewart v Pettie [1995] 1 SCR 131. 72 Stewart v Pettie [1995] 1 SCR 131 at 143. Crennan Hayne HAYNE J. Mr Shane Scott, the husband of the respondent to one of these appeals, died when the motorcycle he was riding home from a hotel near his workplace left the road and collided with the guardrail on a bridge. He was about 700 metres from home. He had a blood alcohol reading of 0.253g per 100ml of blood. Mr Scott's widow and the Motor Accidents Insurance Board alleged that the Proprietor and the Licensee of the hotel at which Mr Scott had been drinking owed and breached a duty of care to Mr Scott and that the negligence of each was a cause of his death. The facts and the arguments of the parties are set out in the joint reasons of Gummow, Heydon and Crennan JJ. I agree with Gummow, Heydon and Crennan JJ that, for the reasons their Honours give, neither the Proprietor nor the Licensee owed Mr Scott a relevant duty. Questions of breach and causation need not be decided. I also agree with what their Honours say under the heading "A question of stare decisis". There was no relevant duty of care. For the reasons given by Gummow, Heydon and Crennan JJ, outside exceptional cases, persons in the position of the Proprietor and the Licensee owe no general duty of care at common law to customers which requires them to monitor and minimise the service of alcohol or to protect customers from the consequences of the alcohol they choose to consume. Whether or when there could be any exception to that general rule need not be decided. This was not such a case. It was not submitted that the Proprietor or the Licensee breached any duty of care by serving or continuing to serve alcohol to Mr Scott. That is, it was not submitted that either the Proprietor or the Licensee owed a duty of care that required them to monitor or minimise the service of alcohol to Mr Scott. As the joint reasons show, this Court's decision in Cole v South Tweed Heads Rugby League Football Club Ltd73, and the decision of the Court of Appeal of New South Wales from which that appeal was brought74, would have presented serious obstacles in the way of any such submission. In this Court the duty allegedly owed by the Proprietor and the Licensee concerned protecting Mr Scott from the consequences of the alcohol he chose to consume. As ultimately framed in oral argument, the duty was very specific – to 73 (2004) 217 CLR 469; [2004] HCA 29. 74 South Tweed Heads Rugby League Football Club Ltd v Cole (2002) 55 NSWLR Hayne take reasonable steps to do as the Licensee and Mr Scott had originally agreed: telephone Mrs Scott when Mr Scott was ready to go home. Expressing the duty in this way had the parties to the arrangement fix the content of the duty which one owed to the other. It did that not as a particular statement of some more general duty to take reasonable care for the safety of another, but as if the arrangement were one for breach of which damages should be allowed. But there was no contract. I would add to the reasons given by Gummow, Heydon and Crennan JJ for rejecting this formulation of the duty of care, the following additional consideration. Because the duty relied on in this Court was framed so specifically, it merged the separate inquiries about duty of care and breach of duty. The merger that resulted carried with it the vice of retrospective over-specificity of breach identified in Romeo v Conservation Commission (NT)75 and in the diving cases of Vairy v Wyong Shire Council76, Mulligan v Coffs Harbour City Council77, and Roads and Traffic Authority (NSW) v Dederer78. The duty alleged was framed by reference to the particular breach that was alleged and thus by reference to the course of the events that had happened. Because the breach assigned was not framed prospectively the duty, too, was framed retrospectively, by too specific reference to what had happened. These are reasons enough to reject the formulation of duty advanced in argument in this Court. The appeal should be allowed and consequential orders made in the form proposed by Gummow, Heydon and Crennan JJ. 75 (1998) 192 CLR 431 at 490-491 [163]-[164]; [1998] HCA 5. 76 (2005) 223 CLR 422 at 433-434 [29], 441 [54], 443 [60]-[61], 460-463 [122]-[129]; [2005] HCA 62. 77 (2005) 223 CLR 486 at 501-502 [50]; [2005] HCA 63. 78 (2007) 234 CLR 330 at 353 [65]; [2007] HCA 42. See also New South Wales v Fahy (2007) 232 CLR 486 at 505 [57], 524-525 [123], [125]; [2007] HCA 20.

HIGH COURT OF AUSTRALIA AND APPELLANT THE QUEEN & ANOR RESPONDENTS HT v The Queen [2019] HCA 40 Date of Hearing: 10 September 2019 Date of Judgment: 13 November 2019 ORDER Appeal allowed. Set aside the two sets of orders made by the Court of Criminal Appeal of the Supreme Court of New South Wales, when reserving its judgment and when disposing of the appeal, and in lieu thereof order that the Crown appeal be dismissed. The contents of Exhibit C be suppressed until further order of this Court pursuant to section 77RE of the Judiciary Act 1903 (Cth) on the grounds set out in section 77RF(1)(a), being that the order is necessary to prevent prejudice to the proper administration of justice, and section 77RF(1)(c), being that the order is necessary to protect the safety of any person. On appeal from the Supreme Court of New South Wales Representation T A Game SC with G E L Huxley for the appellant (instructed by Maria Walz Legal) D T Kell SC with E S Jones for the first respondent (instructed by Solicitor for Public Prosecutions (NSW)) N L Sharp SC with T M Glover for the second respondent (instructed by Crown Solicitor's Office (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS HT v The Queen Criminal practice – Appeal – Crown appeal against sentence – Procedural fairness – Where appellant provided assistance to law enforcement authorities – Where court required by statute to take assistance into account in sentencing – Where evidence of assistance kept confidential from appellant and appellant's legal representatives in sentencing proceedings – Where evidence contained highly sensitive criminal intelligence – Where appellant sought access to confidential evidence on appeal – Where Court of Criminal Appeal denied appellant access to confidential evidence on basis of public interest immunity – Where Court of Criminal Appeal exercised discretion under s 5D(1) of Criminal Appeal Act 1912 (NSW) to re-sentence – Whether appellant denied procedural fairness – Whether Court of Criminal Appeal had power to deny appellant access to the confidential evidence – Whether Court of Criminal Appeal should have declined to exercise discretion to re-sentence. Words and phrases – "access to evidence", "assistance to law enforcement authorities", "confidential information", "Crown appeal against sentence", factor", in sentence", "evidence of assistance", "mitigating "discount "non-disclosure", "open interest fairness", "public justice", "procedural immunity", "residual discretion", "tailored order". Court Suppression and Non-publication Orders Act 2010 (NSW), ss 7, 8. Crimes (Sentencing Procedure) Act 1999 (NSW), ss 21A, 23. Criminal Appeal Act 1912 (NSW), ss 5D(1), 12. Evidence Act 1995 (NSW), s 130. KIEFEL CJ, BELL AND KEANE JJ. The appellant pleaded guilty in the District Court of New South Wales to five counts of obtaining money by deception contrary to s 178BA(1) of the Crimes Act 1900 (NSW) and six counts of dishonestly obtaining a financial advantage by deception contrary to s 192E(1)(b) of the Crimes Act. The maximum penalty respectively for such offences is imprisonment for five years and ten years. The sentencing judge sentenced the appellant to an aggregate sentence of three years and six months imprisonment with a non-parole period of 18 months. The Crown lodged an appeal pursuant to s 5D(1) of the Criminal Appeal Act 1912 (NSW) ("the CA Act"), on the ground that the aggregate sentence was manifestly inadequate. The appeal was allowed by the Court of Criminal Appeal of New South Wales1 and the appellant was re-sentenced to an aggregate sentence of six years and six months imprisonment with a non-parole period of three years and six months. The sentencing judge found that the offences involved very serious criminal conduct and a high level of moral culpability. The offending occurred over a number of years and involved a substantial number of fraudulent transactions with a high total monetary value. The offending was described by his Honour as planned and sophisticated. The appellant's criminal record disentitled her to leniency. On the other hand the appellant's co-operation in repaying part of the money to the victims was accepted as evidence of her contrition. A factor of significance to the appellant on sentencing in both the District Court and the Court of Criminal Appeal was the assistance, both past and anticipated, that she had rendered to a law enforcement authority. The appellant was a registered police informer. Evidence relating to this assistance was placed before the sentencing judge, who specified a combined discount of 35 per cent for the appellant's assistance and guilty pleas, with 15 per cent identified for her guilty plea. His Honour considered that this acknowledgement of the level of assistance paid due regard to s 23(3) of the Crimes (Sentencing Procedure) Act 1999 (NSW) ("the C(SP) Act"). When re-sentencing the appellant on the Crown appeal, the Court of 1 The judgment of the Court of Criminal Appeal, the sentencing decision of the District Court, the transcript of the decision of the District Court and a portion of the transcript of the proceedings before the District Court are the subject of non-publication orders. Bell Criminal Appeal, whilst increasing the aggregate sentence, also increased the combined discount for her assistance and guilty pleas to 40 per cent. The C(SP) Act Section 21A of the C(SP) Act requires a court, in determining the appropriate sentence for an offence, to take into account certain factors. They the court2. include mitigating factors Section 21A(3) lists the mitigating factors that are to be taken into account. They include assistance by the offender to law enforcement authorities, as provided by that are relevant and known Section 23(1) provides that a court may impose a lesser penalty than it would otherwise impose on an offender, having regard to the degree to which that person has assisted, or undertaken to assist, law enforcement authorities in the prevention, detection or investigation of, or in proceedings relating to, the offence concerned or any other offence. Section 23(2) provides that in deciding whether to impose a lesser penalty for an offence and the nature and extent of the penalty to be imposed, the court must consider certain matters. Included amongst these matters are: the significance and usefulness of the offender's assistance to the authorities, taking into consideration any evaluation by the authorities of the assistance rendered or undertaken to be rendered3; the truthfulness, completeness and reliability of any information provided by the offender4; the nature and extent of the offender's assistance or promised assistance5; the timeliness of the assistance or undertaking to assist6; any danger or risk of injury to the offender resulting from the assistance7; and whether the assistance or promised assistance concerns the offence for which the offender is being sentenced or an unrelated offence8. Section 23(3) requires that a lesser penalty that is imposed under s 23 2 C(SP) Act, s 21A(1)(b). s 23(2)(b). s 23(2)(c). s 23(2)(d). s 23(2)(e). s 23(2)(h). s 23(2)(i). Bell must not be unreasonably disproportionate to the nature and circumstances of the offence. Section 23(4) requires a court that imposes a lesser penalty, because the offender has assisted or undertaken to assist the authorities, to: (a) indicate to the offender and record the fact that the lesser penalty is being imposed for either or both of those reasons; (b) state the penalty that it would otherwise have imposed; and (c) where the lesser penalty is being imposed for both reasons, state the amount by which the penalty has been reduced for each reason. None of the information required to be given by s 23(4) was provided by the sentencing judge in this case. These omissions may have resulted from the procedure which was followed at sentencing. The confidential information A portion of the sentencing proceedings were held in closed court. An affidavit by a police officer, to which was annexed details of the assistance provided by the appellant to the police, was admitted into evidence and marked "Exhibit C". It contained observations as to the truthfulness, reliability and usefulness of information supplied; the risk to which the appellant had put herself on occasions in supplying information; the timeliness of the assistance; and the value to current and future police investigations. It also contained information which may be described as criminal intelligence of a highly sensitive nature. The Crown Prosecutor had seen Exhibit C but the appellant's counsel had not and did not at any point see its contents. Counsel for the appellant advised the sentencing judge that he had been contacted by a representative of the Office of the Crown Solicitor and presented with two options: if he wished to be privy to the information to be provided to the Court it would have to be highly redacted and consequently would be a lot shorter; if he were not to be privy to the information, it would be a lengthy document, inferentially one more favourable to the appellant. Unsurprisingly the appellant's counsel chose the latter course – but the consequence was that he could not see Exhibit C. He was assured that the information which would be provided to the sentencing judge would be of a "high order", which, it is to be inferred, would be advantageous to the appellant's case. The Crown Prosecutor accepted that the amount of co-operation disclosed was significant. The sentencing judge agreed, but indicated that the level of discount was open to argument and that his task in determining the discount was difficult given that defence counsel had no knowledge to enable him to make submissions on that issue. Bell On the hearing of the Crown appeal, counsel for the appellant (the respondent to that appeal) sought access to Exhibit C. This had been foreshadowed prior to the hearing. Counsel submitted that recourse to Exhibit C was necessary not only in the event that the Court of Criminal Appeal found error and proceeded to re-sentence the appellant, but also as relevant to the sole ground of appeal, namely whether the sentence was inadequate. The Commissioner of Police opposed making the information in Exhibit C available to the appellant or her legal representatives even with the imposition of conditions. The basis given for this was public interest immunity. The Crown supported that stance. For the purpose of the claim to public interest immunity respecting Exhibit C three affidavits by police officers were before the Court. The first was an "open affidavit" by an Acting Assistant Commissioner of Police, which identified a confidential affidavit that he had made and made an objection to disclosure of that confidential affidavit to any person other than the judges of the Court of Criminal Appeal. This confidential affidavit spoke in general terms about the concerns regarding disclosure of information about assistance to the authorities and possible effects on ongoing police investigations. Despite the objection, both affidavits were made available to the appellant's counsel. A further confidential affidavit, which identified particular difficulties in the case of the appellant, was not. The Court of Criminal Appeal upheld the Commissioner's objection on one of the two bases for which the Commissioner had contended, namely that the information contained in Exhibit C comes within a particular class of document to which public interest immunity attaches. As a consequence, the appellant's legal representatives did not view that Exhibit, but the Crown had already had access to it. The Court of Criminal Appeal allowed one sentence from that part of Exhibit C concerned with the evaluation by the police of the appellant's assistance to be provided in written form to the appellant's representatives. The sentence addressed matters to which s 23(2)(c) refers favourably to the appellant. In the course of the hearing which followed, the appellant's counsel made a further submission concerning Exhibit C to the Court of Criminal Appeal in connection with the residual discretion provided by s 5D(1) of the CA Act. He submitted that the ruling made by the Court with respect to public interest immunity had itself created a basis for the Court refusing to intervene to vary the sentence in the exercise of its discretion. That submission was rejected and the Court of Criminal Appeal proceeded to determine for itself the extent of the discount. On this appeal the appellant repeats that submission. It remains to mention that for the purposes of this appeal Exhibit C and the other affidavits mentioned above were provided to counsel for the appellant. It became evident in the course of the hearing that parts of them had been redacted. Bell Senior counsel for the appellant asked the Court nevertheless to proceed with the appeal but relied upon these circumstances as a further basis for the residual discretion not being exercised. A denial of procedural fairness? It is a fundamental principle of our system of justice that all courts, whether superior or inferior, are obliged to accord procedural fairness to parties to a proceeding9. This obligation requires not only that courts be open and judges impartial but that the person against whom a claim or charge is made be given a reasonable opportunity of being heard, which is to say appearing and presenting his or her case10. In an adversarial system it is assumed, as a general rule, that opposing parties will know what case an opposite party seeks to make and how that party seeks to make it11. A party can only be in a position to put his or her case if the party is able to test and respond to the evidence on which an order is sought to be made12. Whilst stated as principles or rules deriving from the more general principle of procedural fairness, these rules do not have immutably fixed content. The content of procedural fairness may vary according to the circumstances of particular cases. Procedural fairness is not an abstract concept; rather, it is essentially practical. The concern of the law is the avoidance of practical injustice13. It is that consideration which guides a court in deciding whether its procedures should be adapted to meet difficulties which may arise. 9 Cameron v Cole (1944) 68 CLR 571 at 589; Commissioner of Police v Tanos (1958) 98 CLR 383 at 395-396; Taylor v Taylor (1979) 143 CLR 1 at 4; Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 99 [156]. 10 Cameron v Cole (1944) 68 CLR 571 at 589; Taylor v Taylor (1979) 143 CLR 1 at 11 Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 100 [157]. 12 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 359 [56]; International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319 at 348 [39]; Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 105 [177], 108 13 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 14 [37]; Condon v Pompano Pty Ltd (2013) 252 CLR 38 Bell The principal issue before the Court of Criminal Appeal on the Crown appeal was whether the sentence which had been imposed on the appellant was so manifestly inadequate as to constitute an affront to the administration of justice such that the discretion to vary the sentence should be exercised14. A question necessary to be addressed in the course of considering that wider question was whether it was open to the sentencing judge, in the exercise of the discretion given by s 23 of the C(SP) Act, to conclude that the lesser sentence imposed was not unreasonably disproportionate to the nature and circumstances of the offence15. The term "unreasonably" in s 23(3) has a wide operation. It includes an evaluation of the "nature and extent of the assistance provided to law enforcement authorities"16. In the event that the Court of Criminal Appeal found error in the exercise by the sentencing judge of the s 23 discretion, it was then required to consider whether to exercise the "residual discretion" under s 5D(1) of the CA Act. Section 5D(1) provides that on a Crown appeal, the Court of Criminal Appeal may in its discretion vary the sentence and impose such sentence as may seem proper to that Court. In exercising that discretion, the Court of Criminal Appeal will take into account the limited purposes of a Crown appeal, namely to state the principle to be applied in future appeals to provide guidance to sentencing judges17. Exhibit C contained the evidence relating to the appellant's assistance to the authorities and the evaluation by the police of the assistance given. In light of the issues before the Court of Criminal Appeal, Exhibit C was relevant to many of the matters to which s 23(2) refers, whether error by the sentencing judge was made out, and the exercise of the discretion in varying the sentence. As a result of the appellant and her counsel being denied access to Exhibit C, the appellant did not have the opportunity of considering and testing the accuracy of evidence, or of making submissions as to the mandatory considerations in s 23(2) of the C(SP) Act, whether it was open to the sentencing 14 Green v The Queen (2011) 244 CLR 462 at 479 [42]; CMB v Attorney-General (NSW) (2015) 256 CLR 346 at 360 [37]. 15 C(SP) Act, s 23(3). 16 CMB v Attorney-General (NSW) (2015) 256 CLR 346 at 361 [41]. 17 CMB v Attorney-General (NSW) (2015) 256 CLR 346 at 366 [55], citing Green v The Queen (2011) 244 CLR 462 at 465-466 [1]. Bell judge to conclude that the sentence given was not unreasonably disproportionate, whether the discount in sentence was appropriate and whether the residual discretion should be exercised in her favour. On this appeal the respondents – the Crown and the Commissioner of Police – submitted that the appellant had not been denied procedural fairness on the Crown appeal. Each placed reliance on the fact that the appellant's counsel had consented to Exhibit C being dealt with as closed evidence during the sentencing proceedings. The Commissioner went so far as to say that the appellant should be held to the election made. It is in the public interest to do so, the Commissioner submitted, because the consent on the terms of there being no access to the material affected what information was provided in what became Exhibit C. The appellant for her part denied that there was a true choice made. The appellant submitted that the Crown was under a duty to provide material relevant to sentence and that material relating to the mandatory considerations in s 23(2), which is within the knowledge of the authorities and not the offender, should be placed before the court. Each of the respondents pointed to the fact that the information in Exhibit C was not adverse to the appellant and indeed was wholly favourable. The Crown submitted that the appellant did not need access to Exhibit C because she knew what assistance she had given and, inferentially, she could give instructions as to these facts. Reliance was placed upon that part of the police evaluation of the appellant's assistance which was provided to the appellant's legal representatives in written form in the course of the hearing before the Court of Criminal Appeal (being material within Exhibit C which was favourable to the appellant and was also before the sentencing judge). It is plainly correct that the appellant's counsel was given no real choice. The fact that the information in Exhibit C was not adverse to the appellant is not to the point. The appellant had no way of knowing whether it detailed all of the assistance that she had provided and the risks she had taken in providing it. Her counsel had no way of checking any instructions she had given about her assistance against what was recorded in Exhibit C. Regardless of these considerations, the appeal by the Crown overtook what had taken place at sentencing. The consent which had been given was for the purposes of sentencing in the District Court where no Crown appeal lay in prospect. Indeed it might reasonably have been considered that such an appeal was unlikely given the orders for non-publication made both in the District Court and in the Court of Criminal Appeal. The existence of those orders made it most unlikely that the limited purposes of a Crown appeal would be achieved. Bell The appellant was denied procedural fairness in the Court of Criminal Appeal. The question then is whether that denial was justified. Public interest immunity The common law recognises that there are certain documents which by their nature fall into a class of documents which should not be disclosed no matter what the documents individually contain. The law accepts that there may be a public interest in such documents being immune from disclosure18. Cabinet minutes and documents which concern the framing of government policy at a high level may fall within this class19, as do documents relating to national security20. It was on the basis that Exhibit C fell into this class of documents that the Court of Criminal Appeal ruled in the Commissioner's favour. Whether documents which detail the assistance provided by police informers can properly be said to fall within the class mentioned is not in issue on this appeal. The appellant's point is that the doctrine of public interest immunity has no application in circumstances such as these. The point is well made. True it is that a successful claim to public interest immunity means that the material need not be disclosed to the other party21. But the non-disclosure results from the objection to their production being upheld. The immunity provided with respect to documents by the doctrine is from their production. The doctrine has nothing to say about whether a document should be admitted into evidence or, when it is admitted, whether it should then be seen by one party and the court but kept confidential from the other party. The application of the doctrine prevents the document being admitted into evidence at all. The Crown accepted that public interest immunity is a doctrine which is concerned with the exclusion of documents from evidence. It submitted that, if at the end of the traditional enquiry the court determines that a document cannot be disclosed for reasons associated with the public interest but needs to be available 18 Sankey v Whitlam (1978) 142 CLR 1 at 39. 19 Sankey v Whitlam (1978) 142 CLR 1 at 39. 20 Alister v The Queen (1984) 154 CLR 404. 21 Sankey v Whitlam (1978) 142 CLR 1 at 43; The Commonwealth v Northern Land Council (1993) 176 CLR 604 at 616; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 556 [24], 559 [36]; Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 63 [47], 97 [148]. Bell to the court, it is open to the court to use it as confidential, or "closed", evidence. This course may be seen as at least closely connected with, or ancillary to, the public interest immunity process. In Al Rawi v Security Service22, Lord Clarke of Stone-cum-Ebony JSC accepted that such a course was open to the courts and that the common law may develop by directing that some form of "closed material procedure" take place. Al Rawi concerned a civil claim for damages by persons who had been detained at foreign locations and who alleged that the defendants had caused or contributed to their detention, ill-treatment and other suffering. A preliminary issue in that case was whether the court was entitled to adopt a closed material procedure23. The view of the majority was that there was no compelling reason justifying an important change to a fundamental common law right such as to open justice. If there was to be a change to the existing process for dealing with claims to public interest immunity it would be necessary for Parliament to effect the change. Lord Clarke JSC dissented from these views. It is not necessary in this case to comment upon whether the latter view reflects that of the Australian common law. It is sufficient to observe that in the view of the majority in Al Rawi, in no way could any form of closed material procedure, by which documents are withheld from a party, properly be described as a development of the common law of public interest immunity24. As Lord Dyson JSC observed25, closed material procedures and public interest immunity procedures are fundamentally different, not the least because the public interest immunity procedure respects common law principles of natural justice. If it is held that the documents should be produced, and thereby disclosed, they are available to both parties; if they are not to be produced they are not available to either and the court may not use them. There is no question of unfairness or inequality. The procedure developed by the common law with respect to claims of public interest immunity in the course of litigation is of narrow compass. It [2012] 1 AC 531 at 616 [178], 618-619 [188]. 23 Al Rawi [2012] 1 AC 531 at 570 [1]. 24 Al Rawi [2012] 1 AC 531 at 580 [41] per Lord Dyson JSC, 586 [71] per Lord Hope of Craighead DPSC, 592 [92] per Lord Kerr of Tonaghmore JSC, 595 [107] per Lord Mance JSC (with whom Baroness Hale of Richmond JSC agreed). 25 Al Rawi [2012] 1 AC 531 at 580 [41]. Bell involves balancing competing interests: for example whether the benefit of disclosure to the forensic process outweighs the risk to national security26. The balance may be struck differently in civil and criminal proceedings27. The documents in question are viewed by the court and treated as confidential only for the purpose of determining the objection to disclosure, a process which is tailored to the demands of the public interest and fairness in litigation. The withholding of evidence such as Exhibit C in a matter of sentencing cannot be regarded as a development of the common law relating to public interest immunity. It cannot be said to be the application of that doctrine by analogy. In reality it involves the creation of a new rule, a rule which would have a blanket application in cases such as the present and reduce procedural fairness to nought. Other sources of power? The Commissioner sought to identify alternative sources of a power which would permit a court to deny a party access to evidence admitted in substantive proceedings. The Commissioner pointed to ss 7 and 8 of the Court Suppression and Non-publication Orders Act 2010 (NSW) ("the Suppression Act"). The Crown had also raised s 130 of the Evidence Act 1995 (NSW) on the special leave application. This is despite the fact that the Court of Criminal Appeal's orders were made solely on the basis of public interest immunity. These contentions may be dealt with shortly. It may be noted at the outset that the Evidence Act applies to a proceeding relating to sentencing only if the court so directs28. No such direction was sought or made in the present case with respect to s 130. It is unlikely that it would have been made in circumstances such as this. Section 130 of the Evidence Act permits a court to direct that the information or document to which it applies not be adduced as evidence. It is a rule relating to admissibility. Section 8 of the Suppression Act permits a court to make a suppression or non-publication order on certain grounds, those set out in s 8(1). Section 3 defines a "non-publication order" as an order that prohibits or restricts the publication of information and a "suppression order" as an order that prohibits or 26 Alister v The Queen (1984) 154 CLR 404. 27 Al Rawi [2012] 1 AC 531 at 594 [101]. 28 Evidence Act 1995 (NSW), s 4(2). Bell restricts the disclosure of information. "Publish" is defined to mean to "disseminate or provide access to the public or a section of the public by any means". Section 8 of the Suppression Act is not concerned with access to documents required by the parties to proceedings. So much follows from its terms. Neither s 130 of the Evidence Act, nor s 7 or s 8 of the Suppression Act, is expressed to refer to material which is admitted into evidence but is not disclosed to another party to substantive proceedings. Nor can this be said to arise as a matter of necessary implication. The powers of the Court of Criminal Appeal The respondents submitted that the Court of Criminal Appeal had the inherent power of the Supreme Court as a result of s 12 of the CA Act, or alternatively an implied power, to consider the contents of Exhibit C. This was said to be necessary to its function in determining the appeal. Every court possesses jurisdiction arising by implication upon the principle that a grant of power to do something carries with it a power to do everything necessary for its exercise29. Here it was necessary for the Court of Criminal Appeal to have regard to the confidential material because it was required to consider the evidence which was before the sentencing judge30. Each of the respondents relied upon the exercise of the power as justified by what were said to be the "exceptional" circumstances of this case. The circumstances were said to be exceptional because: the District Court was obliged by s 23 of the C(SP) Act to consider the assistance the appellant had provided to the authorities; the material had been before the sentencing judge; the public interest against disclosure of Exhibit C to the appellant and her legal representatives was "extremely high"; the appellant had consented to non- disclosure; the affidavit which was prepared benefitted her; and the factual nature of the assistance was known to her. It may be doubted whether the circumstances of this case are truly exceptional. It would hardly be the first time that a police informer has been the subject of a sentencing process, hence the need for s 23 of the C(SP) Act. But neither that provision nor any other provision of the C(SP) Act purports to 29 Grassby v The Queen (1989) 168 CLR 1 at 16. 30 Mickelberg v The Queen (1989) 167 CLR 259 at 267, 274, 298; Betts v The Queen (2016) 258 CLR 420 at 425 [10]. Bell prevent an informer who is to be sentenced, or his or her legal advisers, from accessing in any way the information relevant to the mandatory considerations in The respondents' arguments on this appeal had as their focus the source of the Court of Criminal Appeal's power to vary its procedures to take account of a need for confidentiality of sensitive material. They tended to direct attention away from the real question which arose in this case. The question is not whether there is such a power. It may be accepted that a superior court may vary its procedures to meet the exigencies of a particular case and on occasions have done so even with respect to matters such as open justice and procedural fairness. The real question which arose before the Court of Criminal Appeal was how to provide a sufficient level of procedural fairness whilst at the same time maintaining a sufficient level of confidentiality of the sensitive information. This question was not addressed. Tailoring orders There is a distinction to be drawn between a court having jurisdiction and the exercise of that jurisdiction. The question in cases of this kind is how power should be exercised31. It should not be assumed that procedural fairness should altogether be denied in order that sensitive information be kept confidential. Just as the principle of open justice has been held to yield to the need to do justice in a particular case32, so must the requirements of natural justice in a particular case yield to some extent. Although there have been statements that the variable nature of procedural fairness means that it may in some circumstances be reduced to nothingness33, it is difficult to conceive of a case such as the present where orders could not be tailored to meet the competing demands. It is well known that the courts have modified and adapted the content of the general rules of open justice and procedural fairness in particular kinds of cases. Orders for non-publication are an example of the former. The non- 31 Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 100 [157]. 32 Scott v Scott [1913] AC 417 at 437-438, applied in Dickason v Dickason (1913) 17 CLR 50. See also, eg, Hogan v Hinch (2011) 243 CLR 506 at 531 [21]. 33 Kioa v West (1985) 159 CLR 550 at 615-616; cf Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 105 [177]. Bell disclosure of evidence in wardship cases is an example of the latter34. More relevant for present purposes is litigation concerning trade secrets where disclosure is sometimes limited, for example with "confidentiality rings" being placed around disclosure and the persons who are permitted to see the confidential material35. In Roussel Uclaf v Imperial Chemical Industries Plc36, Aldous J observed that each case has to be decided on its own facts and on the broad principle that the court has the task of deciding how justice can be achieved taking into account the rights and needs of the parties. The relevant party should have as full a depth of disclosure as would be consistent with the adequate protection of the secret. In such cases, arrangements are often made to allow access to a person who represents the party from whom it is necessary to maintain confidentiality. And as Brereton J observed in Portal Software v Bodsworth37, protective limitations may be introduced at the time of production or inspection. Orders can be made for inspection by an independent solicitor reporting directly to the court38. This is similar to the position of an amicus curiae, which was referred to in the course of argument on the appeal. Orders for inspection might be limited to the party's lawyers or experts and not extended to the party itself39. In such a circumstance the order has permitted to be conveyed to the party in some way such information as is necessary40 for the purpose of giving instructions. In cases such as the present it is difficult to accept that orders could not have been tailored to meet the concerns of the Commissioner, for example by providing the 34 Secretary of State for the Home Department v MB [2008] AC 440 at 486 [58], cited in Al Rawi [2012] 1 AC 531 at 584 [63]. 35 Al Rawi [2012] 1 AC 531 at 585 [64] per Lord Dyson JSC. See also Roussel Uclaf v Imperial Chemical Industries Plc [1990] FSR 25 at 29-30. [1990] FSR 25 at 29-30. [2005] NSWSC 1115 at [41]-[43]. 38 Colley v Hart (1890) 7 RPC 101 at 104. 39 Swain v Edlin-Sinclair Tyre Co [1903] RPC 435; British Xylonite Co Ltd v Fibrenyle Ltd [1959] RPC 252; Ex parte Fielder Gillespie Ltd [1984] 2 Qd R 339 at 341 per McPherson J. 40 British Xylonite Co Ltd v Fibrenyle Ltd [1959] RPC 252; Lenark Pty Ltd v TheChairmen1 Pty Ltd [No 2] [2012] NSWSC 415. Bell appellant's counsel with access to Exhibit C on terms which would have enabled him meaningfully to take instructions and make submissions. True it is that orders of the kind referred to, excepting disclosure from the general rule of the common law, are made for identifiable purposes: in the case of wards because the object of the proceedings is to protect and promote the best interests of the child; in the case of trade secrets because the very subject of the litigation may be destroyed. Clearly a case such as the present does not fall into either of those categories. But once it is accepted that there are certain classes of cases where a departure from the general rule may be justified for good reason, it makes it difficult to suggest that the court lacks jurisdiction to vary the basic principles of open and natural justice41 or to say that the proper administration of justice may not require it. The trade secrets cases in particular show that the general rule is not absolute42. Consistently with the general rule of the common law regarding fairness in the conduct of proceedings, the concern of the courts is to avoid practical injustice43. The position in the District Court This appeal concerns the ruling made by the Court of Criminal Appeal on the subject of non-disclosure. Nevertheless something should be said respecting what occurred at and prior to sentencing in the District Court. There was some dispute between the parties as to whether what occurred between the Crown and the appellant's counsel reflected something approaching a common practice. Senior counsel for the Crown informed the Court that those persons instructing him were not aware of a practice whereby the legal representative of an offender is confronted with a choice between a fuller, beneficial but confidential account and a shorter, less beneficial non-confidential account of the offender's assistance given to authorities. This is not supported by a statement in T v The Queen44. In that case, referring to the evidence before the sentencing judge of the appellant's assistance to the authorities, the Court of Criminal Appeal said that "[the appellant's] legal representatives do not have a 41 Al Rawi [2012] 1 AC 531 at 597 [114] per Lord Mance JSC (with whom Baroness Hale of Richmond JSC agreed). 42 Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 100 [157]. 43 Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 99 [156]. [2015] NSWCCA 28 at [15]. Bell copy of these documents (as is the usual practice) but apparently understand that the assistance was 'extensive'". Plainly enough the Commissioner should put before a sentencing judge such evidence as is necessary to enable the judge fully to comprehend the assistance provided by the offender and an evaluation of that assistance from the perspective of the police. Section 23 mandates that the court must have regard to this material and to the authority's evaluation of the assistance. The evidence as to these matters must be such as to enable the sentencing judge comprehensively and fairly to assess the matters referred to in s 23. If a question arises as to the need to keep some of that information confidential from the other party, the sentencing judge should be approached with a view to making orders of the kind referred to above. It may be that a case where a tailored order is not possible will be rare. Such a circumstance may raise the question whether a consent to confidentiality can be effective, whether it may in effect be waived45. In Al Rawi two members of the Supreme Court considered that a party should be able to consent to a closed material procedure46. Other members of the Court took the view that it was a matter of importance which had not been argued and therefore left the question open47. No concluded view need be expressed in this case. The parties did not argue this question. The respondents' argument proceeded upon the assumption that consent could be effective. In any event the question is not an issue in this appeal. The residual discretion As has been mentioned earlier in these reasons48, the limited purpose of Crown appeals under s 5D(1) is relevant to the exercise of the residual discretion it provides. There may be circumstances where the guidance provided to 45 See, eg, the discussion in Aronson, Groves and Weeks, Judicial Review of Administrative Action and Government Liability, 6th ed (2017) at 492-496 and the cases there referred to. 46 Al Rawi [2012] 1 AC 531 at 597 [113] per Lord Mance JSC (with whom Baroness Hale of Richmond JSC agreed). 47 Al Rawi [2012] 1 AC 531 at 581 [46] per Lord Dyson JSC, 587 [75] per Lord Hope of Craighead DPSC. 48 See [20] above. Bell sentencing judges will be limited, in which case it may be appropriate for the appeal to be dismissed in the exercise of the residual discretion49. This was such a case. Because of the existence of non-publication orders no such guidance could be provided by a court exercising its powers under s 5D(1). Moreover there was the fundamental difficulty which counsel for the appellant advanced at the hearing before the Court of Criminal Appeal. The objection of the Crown, which the Court upheld, to making Exhibit C available on any conditions meant that the appellant was denied procedural fairness. She could not have her case properly presented. In the absence of an order tailored to ensure that basic procedural fairness was accorded to the appellant, the Court of Criminal Appeal should have declined to exercise its discretion on this basis alone. Orders The two sets of orders made by the Court of Criminal Appeal in this matter, when reserving its judgment and when disposing of the appeal, should be set aside and in lieu thereof the Crown appeal be dismissed. The orders made by the Court of Criminal Appeal on the first occasion, when reserving its judgment, contained an order suppressing the publication of Exhibit C. The appellant seeks an order that the contents of Exhibit C remain suppressed. There should be a further order that the contents of Exhibit C be suppressed until further order of the Court. This order is made pursuant to s 77RE of the Judiciary Act 1903 (Cth) on the grounds set out in s 77RF(1)(a), being that the order is necessary to prevent prejudice to the proper administration of justice, and s 77RF(1)(c), being that the order is necessary to protect the safety of any person. 49 Green v The Queen (2011) 244 CLR 462 at 466 [2]. Nettle Edelman NETTLE AND EDELMAN JJ. We agree with Kiefel CJ, Bell and Keane JJ, for the reasons their Honours give, that, in the circumstances of this matter, proper exercise of the residual discretion should have led the Court of Criminal Appeal to dismiss the Crown's appeal against sentence. We also agree with their Honours regarding public interest immunity. The Court of Criminal Appeal's invocation of that doctrine as a basis for keeping secret from a prisoner information supplied to a sentencing judge for the purpose of imposing sentence is misconceived. In the absence of statutory authorisation, however, we are less sanguine than their Honours as to how far courts may go to protect the confidentiality of sensitive information provided to a sentencing judge to equip the judge to undertake the sentencing exercise mandated by s 23 of the Crimes (Sentencing Procedure) Act 1999 (NSW) ("the C(SP) Act"). Plainly enough, as this matter demonstrates, the competing needs of ensuring that sentencing judges are fully informed of the matters prescribed by s 23(2) of the C(SP) Act and ensuring that the confidentiality of sensitive information is not compromised calls for a detailed legislative solution. But until and unless such a solution is enacted, we consider that there are several aspects of the existing situation which should be regarded as clear. First, it is fundamental to the Anglo-Australian criminal justice system that no-one is to be sentenced for a criminal offence without first being apprised of the basis on which he or she stands to be sentenced and being afforded the opportunity to be heard on it50. It is, therefore, self-evidently unacceptable for a sentencing judge to be provided with information pertinent to sentence that the prisoner may not see or upon which the prisoner may not give effective instructions to his or her counsel51. 50 Pantorno v The Queen (1989) 166 CLR 466 at 473-474 per Mason CJ and Brennan J, 482-483 per Deane, Toohey and Gaudron JJ; Burrell v The Queen (2008) 238 CLR 218 at 226 [28] per Gummow A-CJ, Hayne, Heydon, Crennan and Kiefel JJ; Moss v The Queen [2013] 1 WLR 3884 at 3887 [5] per Lord Hughes JSC for the Privy Council; DL v The Queen (2018) 92 ALJR 764 at 772 [39] per Bell, Keane, Nettle, Gordon and Edelman JJ; 358 ALR 666 at 675. 51 See Eastman v Director of Public Prosecutions (ACT) (2003) 214 CLR 318 at 359 [117] per Heydon J. See also Al Rawi v Security Service [2012] 1 AC 531 at 578 [36], 580 [42] per Lord Dyson JSC, 589 [83] per Lord Brown of Eaton-under- Heywood JSC; Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 69 [62] per Nettle Edelman Secondly, and consequently, in our view, it is not open in a criminal sentencing proceeding in which evidence of assistance is provided to the sentencing judge to order that the prisoner be denied access to all or some of that evidence. Such orders cannot be justified in the same way as orders restricting parties' access to trade secrets and other confidential information in civil proceedings, or restricting the access of parties to information tendered by a guardian in wardship proceedings, where disclosure would undermine the core purpose of the proceedings such as protecting information from trade rivals or ensuring the best interests of the child52. Thirdly, the practice that appears until now to have been followed of offering a prisoner a "choice" between the tender of a truncated, presumably less favourable statement of assistance, to which the prisoner will be afforded access, and the tender of a complete, presumably more favourable statement of assistance, to which he or she will be denied access, should cease. Whatever the sentencing judge sees, the prisoner must be able to see, and must be able to give instructions on to his or her counsel. Whether or not a prisoner may waive obligations of procedural fairness in sentencing, and whatever the consequence of any purported waiver, he or she cannot waive the Crown's "duty to the court to assist it in the task of passing sentence by an adequate presentation of the facts"53. Nor can a Crown prosecutor abrogate the "lonely" responsibility54 which accompanies that duty, to determine what evidence is led. That duty and responsibility owed by a Crown prosecutor, who appears not just as counsel but as a "minister of justice"55, is an aspect of "the general obligation ... imposed upon a Crown Prosecutor to act fairly in the discharge of the function which he [or she] performs in a criminal trial [which] is ultimately to assist in the attainment of justice between the Crown and the accused"56. 52 See and compare Al Rawi [2012] 1 AC 531 at 584-585 [63]-[65] per Lord Dyson JSC, 590-591 [85] per Lord Brown of Eaton-under-Heywood JSC. 53 R v Tait (1979) 24 ALR 473 at 477 per Brennan, Deane and Gallop JJ. 54 R v Apostilides (1984) 154 CLR 563 at 575 per Gibbs CJ, Mason, Murphy, Wilson 55 Libke v The Queen (2007) 230 CLR 559 at 586 [71] per Hayne J, citing Randall v The Queen [2002] 1 WLR 2237 at 2241 [10] per Lord Bingham of Cornhill for the Privy Council, citing in turn R v Puddick (1865) 4 F & F 497 at 499 per Crompton J [176 ER 662 at 663] and R v Banks [1916] 2 KB 621 at 623 per 56 Whitehorn v The Queen (1983) 152 CLR 657 at 675 per Dawson J. Nettle Edelman Fourthly, although not inconceivable, the occasions should be rare when it is impossible so to draft a statement of assistance that it fully and completely conveys the nature, extent and utility of assistance given or to be given and yet eschews mention of names and precise details which might put persons or operations at risk. It could be that to do so requires more effort and takes more time than merely truncating statements of assistance in the way apparently done until now. But, if so, it is incumbent on the Crown to ensure that the police and others involved in the preparation of such statements make that greater effort and take such greater amount of time as is required. Section 23 of the C(SP) Act leaves no doubt that it is Parliament's intention that sentencing judges be fully informed of the factors identified in s 23(2) and that they sentence accordingly with explicit reference to the weight they accord to those factors. Finally, as Kiefel CJ, Bell and Keane JJ in effect observe, there is no reason why, if the need for secrecy demands it, a plea hearing may not be conducted in camera57, or orders may not be made to prohibit or restrict disclosure of sensitive information by the prisoner and his or her counsel58, or suppression or non-publication orders may not be made to the extent necessary to ensure the preservation of confidence59. If, however, those qualifications on the principle of open justice are thought to be inadequate, and impingement of the prisoner's entitlement to see, and give instructions on, evidence is regarded as necessary, it is for Parliament so to provide, by legislation clearly expressed60. 57 See, eg, R v Ealing Justices; Ex parte Weafer (1981) 74 Cr App R 204 at 205-206 per Donaldson LJ (Skinner J agreeing at 207). 58 Hogan v Hinch (2011) 243 CLR 506 at 531-532 [21], 534 [26] per French CJ. 59 See, eg, Court Suppression and Non-publication Orders Act 2010 (NSW). See also Smith (1996) 86 A Crim R 308. 60 See Hogan v Hinch (2011) 243 CLR 506 at 526 [5] per French CJ; Al Rawi [2012] 1 AC 531 at 574-575 [21]-[22] per Lord Dyson JSC. GORDON J. The appellant, who was convicted and sentenced in the District Court of New South Wales, was a registered police informer who had provided assistance to law enforcement authorities and remained a registered informer. The sentencing judge was required, by statute, to take that assistance into account as a mitigating factor61. Confidential evidence of the appellant's assistance was given to the sentencing judge and had been seen by the Crown Prosecutor. It was not given to the appellant's counsel. That was an error. The appellant received an aggregate sentence of three years and six months' imprisonment, with a non-parole period of 18 months. The Crown appealed to the Court of Criminal Appeal of the Supreme Court of New South Wales on the ground that the appellant's sentence was manifestly inadequate62. That appeal was allowed and the appellant's sentence was increased to six years and six months' imprisonment, with a non-parole period of three years and six months. Updated confidential evidence of the appellant's assistance to law enforcement authorities was provided to the Court of Criminal Appeal and had been seen by the Crown Prosecutor. It was not given to the appellant's counsel on the grounds of public interest immunity. That was also an error. Procedural fairness lies at the heart of the judicial function63. It requires a court, making an order that finally alters or determines a right or legally protected interest, to afford to the parties a fair opportunity to test and respond to evidence upon which the order might be made64. In other words, a court must provide each party before it an opportunity to be heard, and to tender evidence and advance arguments relating to its own case and to answer the case put against it65. 61 Crimes (Sentencing Procedure) Act 1999 (NSW), ss 21A(1)(b) and (3)(m), 23. 62 Pursuant to s 5D(1) of the Criminal Appeal Act 1912 (NSW). International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319 at 354 [54]. See also Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 359 [56]; K-Generation Pty Ltd v Liquor Licensing Court (2009) 237 CLR 501 at 520 [48]; South Australia v Totani (2010) 242 CLR 1 at 43 [62], 47 [69]; Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 46 [1], 105 [177], 64 Condon (2013) 252 CLR 38 at 105 [177], 106-108 [184]-[188], citing Leeth v The Commonwealth (1992) 174 CLR 455 at 470, Bass (1999) 198 CLR 334 at 359 [56] and International Finance Trust (2009) 240 CLR 319 at 352 [50], 354 [54], International Finance Trust (2009) 240 CLR 319 at 354 [54], 363-364 [88], quoting Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 594 [175], in turn quoting Bass (1999) 198 CLR 334 at 359 [56]. The justifications for the requirements of procedural fairness are numerous and of such force that exceptions are narrow66. However, the content of the requirements of procedural fairness is not fixed; it varies according to the circumstances of each case67. Procedural fairness is essentially practical – the concern is to avoid practical injustice68. The circumstances in issue in this appeal are set out in the reasons of Kiefel CJ, Bell and Keane JJ69. It is unnecessary to repeat them here except to the extent necessary to explain these reasons. Confidential evidence of the appellant's assistance to law enforcement authorities was relevant in the District Court and the Court of Criminal Appeal. It was relevant in the District Court because the sentencing statute required it to be taken into account as a mitigating factor in the sentencing process70. It was relevant in the Court of Criminal Appeal because, in assessing whether the appellant's sentence was manifestly inadequate such that the discretion to vary the sentence should be exercised, the sentencing statute continued to require that the nature and extent of the assistance provided to law enforcement authorities be assessed71. The appellant, having been denied access to the confidential evidence, and thus an opportunity to test and respond to it, was denied procedural fairness. The denial of procedural fairness arose because three different principles or sets of principles, each applicable at different stages of litigation, intended to achieve different objectives, with different sources of power, were not kept separate: what material was immune from production in litigation (public interest immunity); how confidential material might be produced to an opposing party before trial, irrespective of its subsequent admission or receipt into evidence (confidentiality orders); and how confidential evidence might be adduced at trial but not otherwise disclosed (suppression or non-publication orders). International Finance Trust (2009) 240 CLR 319 at 379-380 [141]. International Finance Trust (2009) 240 CLR 319 at 354 [54]. 68 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 14 [37]; Condon (2013) 252 CLR 38 at 99 [156]. 69 See reasons of Kiefel CJ, Bell and Keane JJ at [1]-[5], [9]-[16]. 70 Crimes (Sentencing Procedure) Act 1999 (NSW), ss 21A(1)(b) and (3)(m), 23. 71 CMB v Attorney-General (NSW) (2015) 256 CLR 346 at 360 [37], 373-374 [78]. See also Crimes (Sentencing Procedure) Act 1999 (NSW), s 23(2)(d). It is necessary to address each of these in turn. Public interest immunity Public interest immunity is a basis for objecting to production by the executive of relevant and otherwise admissible evidence in the course of litigation72. It provides an immunity from production of such evidence where it would be against the public interest to disclose the contents of a document, or where the document "belongs to a class of documents which in the public interest ought not to be produced, whether or not it would be harmful to disclose the contents of the particular document"73. It is "the duty of the court, and not the privilege of the executive government"74, to decide whether the public interest which requires that evidence should not be produced outweighs the competing public interest that a court should not be denied access to relevant and otherwise admissible evidence75. The objection to production of relevant evidence on the grounds of public interest immunity is an objection taken by an arm of the executive. And, as occurred in this matter, that arm of the executive is often not a party to the litigation. The role of the executive is limited to objecting to production; the executive does not undertake the balancing exercise or decide whether the evidence will be produced or withheld. Thus, it is for the court to consider the evidence and undertake the exercise of balancing the public interest in the evidence not being produced and the public interest in the administration of justice76. If an objection to production on the grounds of public interest immunity is upheld by a court, then that evidence is immune from production and, in the case of documentary evidence, immune from inspection. It is not disclosed to any of 72 Sankey v Whitlam (1978) 142 CLR 1 at 38. 73 Sankey (1978) 142 CLR 1 at 39; The Commonwealth v Northern Land Council (1993) 176 CLR 604 at 616. 74 Sankey (1978) 142 CLR 1 at 38. 75 Sankey (1978) 142 CLR 1 at 38-39; Northern Land Council (1993) 176 CLR 604 76 Sankey (1978) 142 CLR 1 at 38-39. the parties and it is not adduced in evidence in the litigation77. In a criminal proceeding, a successful claim of public interest immunity can have the consequence of a prosecuting authority not being able to prefer a particular charge or the case not proceeding on the charge that had been preferred78. There is no basis in principle for public interest immunity to be used to permit evidence to be tendered in litigation but withheld from one party to that litigation79. If an objection on the grounds of public interest immunity is upheld, the evidence is immune from production in the litigation and may not be used by any party80. If an objection is not upheld, the evidence is produced and disclosed to the parties and then, if relevant and admissible, adduced in evidence to the court. And a court, in deciding a claim for public interest immunity, may consider the evidence over which public interest immunity is claimed only to determine whether the public interest lies in the evidence being produced or withheld81. It cannot be used by the court for any other purpose. The second respondent, the New South Wales Commissioner of Police, contended that public interest immunity could be invoked in exceptional circumstances to justify the admission into evidence of information that had not been seen by a party or their legal advisers. That contention should be rejected. The cases cited by the Commissioner of Police82 are, in that respect, either distinguishable or wrongly decided. 77 Sankey (1978) 142 CLR 1 at 43; Northern Land Council (1993) 176 CLR 604 at 616; Gypsy Jokers (2008) 234 CLR 532 at 556 [24]; Condon (2013) 252 CLR 38 78 Al Rawi v Security Service [2012] 1 AC 531 at 595 [107]. See also Gypsy Jokers (2008) 234 CLR 532 at 556 [24]; Strickland v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1 at 32 [146]-[147]; 361 ALR 23 at 60-61. 79 Al Rawi [2012] 1 AC 531 at 580 [41], 586 [71], 592 [92], 595 [107]. 80 Sankey (1978) 142 CLR 1 at 43; Northern Land Council (1993) 176 CLR 604 at 616; Gypsy Jokers (2008) 234 CLR 532 at 556 [24]; Condon (2013) 252 CLR 38 81 Sankey (1978) 142 CLR 1 at 46; Condon (2013) 252 CLR 38 at 97 [148]. 82 Chu v Minister for Immigration and Ethnic Affairs (1997) 78 FCR 314; R v Ngo (2003) 57 NSWLR 55; Nicopoulos v Commissioner for Corrective Services (2004) 148 A Crim R 74; Hussain v Minister for Foreign Affairs (2008) 169 FCR 241; Eastman v Director of Public Prosecutions (ACT) [No 2] (2014) 9 ACTLR 178; Ibrahimi v The Commonwealth [No 8] [2016] NSWSC 1539. Public interest immunity is an exclusionary principle83 and, as the reasons of Kiefel CJ, Bell and Keane JJ explain, neither s 130 of the Evidence Act 1995 (NSW) nor the Court Suppression and Non-publication Orders Act 2010 (NSW) ("the Suppression Act") permits the admission of evidence excluded on the grounds of public interest immunity84. Confidential material Nothing that has been said so far detracts from the proposition that production and disclosure of confidential material might, in appropriate circumstances and on appropriate terms, be restricted. In this matter, those issues were required to be addressed at two distinct times in the litigation: production and disclosure of the confidential material prior to the hearing, and then suppression or non-publication of what transpired at the hearing. The circumstances are distinct but the orders that may be made often overlap. Confidentiality orders If a case for production is made, then a party should have as full a degree of appropriate disclosure as is consistent with adequate protection of any confidential information85. A court must therefore balance these competing interests in a fashion that, to the extent possible, meets each of them86. The appropriate balance is case specific. It may be achieved by regulating the taking and safeguarding of copies of documents containing confidential information, or by limiting the circulation of copies and restricting disclosure of 83 Condon (2013) 252 CLR 38 at 97 [148]; Al Rawi [2012] 1 AC 531 at 610 [154]. 84 See reasons of Kiefel CJ, Bell and Keane JJ at [35]-[38]. 85 Warner-Lambert Co v Glaxo Laboratories Ltd [1975] RPC 354 at 358; Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 at 40; Mackay Sugar Co-operative Association Ltd v CSR Ltd (1996) 63 FCR 408 at 414-415; Conor Medsystems Inc v The University of British Columbia [No 4] [2007] FCA 324 at [7], [9]; Cargill Australia Ltd v Viterra Malt Pty Ltd [2018] VSCA 260 at [122], 86 Warner-Lambert [1975] RPC 354 at 358; Church of Scientology of California v Department of Health and Social Security [1979] 1 WLR 723 at 746; [1979] 3 All ER 97 at 115-116; Roussel Uclaf v Imperial Chemical Industries Plc [1990] FSR 25 at 29-30; Portal Software v Bodsworth [2005] NSWSC 1115 at [41]-[45]; Lenark Pty Ltd v TheChairmen1 Pty Ltd [No 2] [2012] NSWSC 415 at not only the contents of the documents but, in appropriate cases, the nature or even the existence of the documents87. A court could restrict inspection of confidential information to a specified person or persons – for example, a nominated member or members of a party's legal team – on an express restriction on the further communication and use of the information obtained88. Such a restriction could, in an appropriate case, be achieved through a direction or order that the material be disclosed only to one or more of a party's legal representatives and not to the party. In exceptional circumstances, in addition to the implied undertaking that documents produced will not be used for a purpose other than the conduct of the legal proceeding on foot89, an express undertaking might be necessary to "bring explicitly home to the minds of those giving it how important it is that the documents [and the information] only be used for the purpose of [the] proceedings"90, or to reinforce that the disclosure or use of the particular confidential information is restrained even for the purposes of the litigation itself91. Whether information is relevant depends on the nature of the proceeding92 and the issues. As it is for the court to provide each party before it an opportunity to be heard, and to tender evidence and advance arguments relating to its own case and to answer the case put against it93, it is for the court to ensure that each 87 See Dal Pont, Law of Confidentiality (2015) at 358 [17.31]. 88 See, eg, Swain v Edlin-Sinclair Tyre Co [1903] RPC 435; British Xylonite Co Ltd v Fibrenyle Ltd [1959] RPC 252; Warner-Lambert [1975] RPC 354 at 361-362; Ex parte Fielder Gillespie Ltd [1984] 2 Qd R 339 at 341; Mackay Sugar (1996) 63 FCR 408; Mobil Oil [1996] 2 VR 34 at 40. 89 Hearne v Street (2008) 235 CLR 125 at 130 [1]. 90 Hearne (2008) 235 CLR 125 at 162 [116]. 91 See Dal Pont, Law of Confidentiality (2015) at 359 [17.32]. 92 For example, prosecutors have a common law obligation to disclose all relevant evidence to an accused: see Grey v The Queen (2001) 75 ALJR 1708; 184 ALR 593; Mallard v The Queen (2005) 224 CLR 125 at 133 [17]. Similar obligations are contained in prosecutorial guidelines: see, eg, New South Wales, Office of the Director of Public Prosecutions, Prosecution Guidelines (2007), guideline 18. International Finance Trust (2009) 240 CLR 319 at 354 [54], 363-364 [88], quoting Gypsy Jokers (2008) 234 CLR 532 at 594 [175], in turn quoting Bass (1999) 198 CLR 334 at 359 [56]. party has, so far as is practicable, access to information on which the court is asked to act. There are limits94. As Lord Dyson JSC said in Al Rawi v Security Service95: "[T]he court's power to regulate its own procedures is subject to certain limitations. The basic rule is that (subject to certain established and limited exceptions) the court cannot exercise its power to regulate its own procedures in such a way as will deny parties their fundamental common law right to participate in the proceedings in accordance with the common law principles of natural justice and open justice." But, within the confines of those limits and the particular circumstances of the case, the court's task of ensuring that each party has, so far as is practicable, access to information on which the court is asked to act remains essentially practical. Suppression or non-publication orders The position at trial is different. Material that is admitted into evidence is part of the court record96. The principle of open justice requires that this evidence ordinarily be open and available to the public97. It says nothing about material not in fact admitted into evidence98. Superior courts have an inherent power to suppress the publication or dissemination of material that is on the court record99. Any exercise of the 94 See, eg, National Security Information (Criminal and Civil Proceedings) Act 2004 (Cth). [2012] 1 AC 531 at 575 [22]. 96 P v Australian Crime Commission (2008) 250 ALR 66 at 70 [18]-[19]. 97 See Scott v Scott [1913] AC 417 at 441, 445; Russell v Russell (1976) 134 CLR 495 at 520; Alcan (NT) Alumina Pty Ltd v Commissioner of Taxes (2007) 67 ATR 98 Alcan (NT) Alumina (2007) 67 ATR 82 at 85 [10]; P (2008) 250 ALR 66 at 70 99 John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 476-477; John Fairfax Publications Pty Ltd v District Court of New South Footnote continues discretion to make a suppression or non-publication order starts from the premise of open justice100. The court's discretion is not unbounded. As Lord Diplock said in Attorney-General v Leveller Magazine Ltd101, "[a]part from statutory exceptions ... where a court in the exercise of its inherent power to control the conduct of proceedings before it departs in any way from the general rule [of open justice], the departure is justified to the extent and to no more than the extent that the court reasonably believes it to be necessary in order to serve the ends of justice". Thus, except for doing what is reasonably necessary for the purposes of securing the administration of justice, there is no inherent power to prohibit a person from publishing or otherwise disclosing the evidence in a proceeding. Any such prohibition must do no more than is reasonably necessary to achieve the due administration of justice, based on the material before the court. Every court, including a court with limited jurisdiction, has power arising from the implication that a grant of power carries with it everything necessary for its exercise102. Thus, both the Court of Criminal Appeal103 and the District Court have implied powers in the exercise of their jurisdiction to limit the application of the open justice principle where doing so is necessary to secure the proper Wales (2004) 61 NSWLR 344 at 356 [39]-[40]; Hogan v Hinch (2011) 243 CLR 100 See Scott [1913] AC 417 at 435, 441, 445; Russell (1976) 134 CLR 495 at 520; Attorney-General v Leveller Magazine Ltd [1979] AC 440 at 449-450. 101 [1979] AC 440 at 450. See also Ex parte The Queensland Law Society Incorporated [1984] 1 Qd R 166 at 170; John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 476-477; Nine Network Australia Pty Ltd v McGregor SM (2004) 14 NTLR 24 at 30-31 [19]; Hogan (2011) 243 CLR 506 at 534 [26]; Rinehart v Welker (2011) 93 NSWLR 311 at 320-321 [27]-[31]; Deputy Commissioner of Taxation v Karas (2011) 83 ATR 879 102 Grassby v The Queen (1989) 168 CLR 1 at 16. 103 R v JS [No 2] (2007) 179 A Crim R 10 at 12 [3]. There is also a view that the Court of Criminal Appeal has inherent jurisdiction. See Burrell v The Queen (2008) 238 CLR 218 at 243-244 [103]; Criminal Appeal Act 1912 (NSW), ss 3(1), 12(1). It is not necessary to decide whether this view is correct for the purposes of this appeal. administration of justice104. The limitations identified by Lord Dyson JSC in Al Rawi105 apply with equal force here. The orders that a court might make must specify precisely how information should be treated and who is bound by the orders. The particular content of each order will depend on the facts of each case. What is described as an "in camera order", or a closed court order, which excludes the public from proceedings, is a different kind of order. By itself, it does not restrain the publication or disclosure of evidence in the proceedings by persons permitted to attend the hearing. A suppression or non-publication order may stand without an in camera order. The distinction between the two types of order is important. Unlike an in camera order, a suppression or non-publication order binds persons in the courtroom and, depending on its terms, third parties, who may be found to be in contempt if they intentionally interfere with the proper administration of justice by deliberately frustrating the effect of the order106. In New South Wales, the common law position has been modified by the Suppression Act. A court may make a suppression order107 or a non-publication order108 on certain grounds to prohibit or restrict the publication or other disclosure of, among other matters, "information that comprises evidence, or information about evidence, given in proceedings before the court"109. The grounds on which a court may make a suppression or non-publication order are specified and include, among others, that "the order is necessary to prevent 104 John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 476-477; John Fairfax Publications Pty Ltd v District Court of New South Wales (2004) 61 NSWLR 344 at 356 [39]-[40]; Hogan (2011) 243 CLR 506 at 105 See [79] above. 106 John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 107 Section 3 of the Suppression Act defines a "suppression order" as "an order that prohibits or restricts the disclosure of information (by publication or otherwise)". 108 Section 3 of the Suppression Act defines a "non-publication order" as "an order that prohibits or restricts the publication of information (but that does not otherwise prohibit or restrict the disclosure of information)". 109 Suppression Act, s 7(b). prejudice to the proper administration of justice"110 or that "it is otherwise necessary in the public interest for the order to be made and that public interest significantly outweighs the public interest in open justice"111. A suppression or non-publication order may be made on more than one ground112. Orders regarding confidential material District Court In the District Court, the Commissioner of Police should have put before the sentencing judge such evidence as was necessary to enable the sentencing judge fully to comprehend the assistance provided by the appellant and the evaluation of that assistance from the perspective of law enforcement authorities. So much was required by ss 21A(1)(b) and (3)(m) and 23 of the Crimes (Sentencing Procedure) Act 1999 (NSW). Given the apparent need to keep some of that information confidential from the appellant, that Court should have been approached before the sentencing hearing with a view to seeking orders restricting disclosure of the confidential material, and those orders should have been made. For example, disclosure of the confidential material could have been restricted to a nominated legal representative of the appellant (and not disclosed to the appellant herself), on terms that would have permitted the legal representative to take instructions and make submissions113. At the sentencing hearing, when the confidential material was tendered in evidence, the sentencing judge would then have needed to consider and make appropriate suppression and non-publication orders to restrict both the disclosure and publication of the confidential evidence. As has been explained, those orders would need to have considered and addressed any confidentiality orders made before the sentencing hearing. Court of Criminal Appeal In the Court of Criminal Appeal, where access was again sought by the appellant's counsel to confidential material, it was necessary for that Court, prior to the hearing of the appeal, to address restrictions on the disclosure of the material on terms that would have permitted a nominated legal representative of 110 Suppression Act, s 8(1)(a). 111 Suppression Act, s 8(1)(e). 112 Suppression Act, s 8(1). 113 See also reasons of Kiefel CJ, Bell and Keane JJ at [49]. the appellant to take instructions from the appellant and make submissions (without disclosing the confidential material to the appellant)114. And, at the hearing, when the confidential material was tendered in evidence, that Court again needed to consider and make appropriate suppression and non-publication orders to restrict both the disclosure and publication of the confidential evidence. Discretion For the reasons given by Kiefel CJ, Bell and Keane JJ115, the Court of Criminal Appeal should have declined to exercise the discretion. Orders I agree with the orders proposed by Kiefel CJ, Bell and Keane JJ. 114 See also reasons of Kiefel CJ, Bell and Keane JJ at [45]. 115 Reasons of Kiefel CJ, Bell and Keane JJ at [51]-[52].

HIGH COURT OF AUSTRALIA BRENT BURGE & ORS APPELLANTS AND RESPONDENT Burge v Swarbrick [2007] HCA 17 26 April 2007 ORDER 1. Appeal allowed with costs. 2. Set aside the orders of the Full Court of the Federal Court of Australia and in their place order that: (a) the appeal to that Court be allowed with costs; and (b) the orders made by Carr J on 24 June 2004 be set aside and in their place order that: (i) the respondent's application to the Federal Court be dismissed; and (ii) all questions respecting the cross-claims be stood over for determination by a judge of the Federal Court in conformity with the reasons of this Court; and (iii) the respondent pay the costs of the appellants of the proceedings before Carr J up to 7 July 2004, including any reserved costs and the costs of the two motions notice of which was filed on 12 September 2003 and 3 October 2003. On appeal from the Federal Court of Australia Representation J J J Garnsey QC with R J L McCormack for the appellants (instructed by D M Stone with T J Carmady for the respondent (instructed by Williams & Hughes) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Burge v Swarbrick Copyright – Artistic works – Works of artistic craftsmanship – The respondent obtained an injunction against infringement by the appellants of the respondent's ownership of copyright in works constituted by a "plug" from which a mould for a yacht hull could be derived, and in the hull and deck mouldings of that yacht – Whether works protected by copyright or should have been protected, if at all, under the designs registration law. Copyright – Artistic works – Works of artistic craftsmanship – Whether "work of artistic craftsmanship" is a composite phrase to be construed as a whole – Relevance of aesthetic appeal to the existence of a work of artistic craftsmanship – Relevance of machine production to the existence of a work of artistic craftsmanship – Relevance of functional or utilitarian constraints to the existence of a work of artistic craftsmanship – Whether the "plug" and mouldings constituted works of artistic craftsmanship. Copyright – Anti-overlap provisions – Interaction between the statutory protection of copyright and designs – Absence of registered "corresponding design" – Exclusion of copyright protection three-dimensional reproduction of artistic works, other than works of artistic craftsmanship, where the "corresponding design" has been "applied industrially" – Whether the "plug" and mouldings were protected by copyright. the Intellectual property – Anti-overlap provisions – Interaction between statutory protection of copyright and designs – Position of works of artistic craftsmanship in the statutory scheme – Meaning of "corresponding design". Words and phrases – "applied industrially", "artistic work", "corresponding design", "work of artistic craftsmanship". Copyright Act 1911 (Imp), ss 4, 22(1). Copyright Act 1912 (Cth), ss 4, 8. Copyright Act 1968 (Cth), ss 10, 21(3), 31(1)(b)(i), 36(1), 74, 77. Copyright Amendment Act 1989 (Cth). Copyright Regulations 1969 (Cth). Designs Act 1906 (Cth). Designs Act 2003 (Cth). GLEESON CJ, GUMMOW, KIRBY, HEYDON AND CRENNAN JJ. The respondent, Mr J H Swarbrick, is a naval architect who has designed numerous yachts. He controls Swarbrick Yachts International Pty Ltd ("Swarbrick Yachts") which manufactures a yacht marketed as the "JS 9000" in Australia, Europe, the United States and elsewhere. The first JS 9000 to be built was named Bateau Rouge. At the time of the institution of the present copyright infringement litigation against the appellants in 2003, 32 of the JS 9000 yachts had been constructed. Twenty of these had been delivered to customers and the prices ranged from $A50,000 to $A65,000. The litigation turns upon the construction and application of provisions of the Copyright Act 1968 (Cth) ("the Copyright Act"), particularly the phrase "a work of artistic craftsmanship" which appears in the definition of "artistic work" in s 10 and in s 77(1). The reference to the Copyright Act is to that statute in its form before amendment after the institution of this litigation by the Designs (Consequential Amendments) Act 2003 (Cth) ("the 2003 Act")1. The marketing of the JS 9000 The evidence tendered by Mr Swarbrick included journal articles promoting the advantages of the JS 9000 as, for example, "this remarkable 30 footer from down under". These articles appeared in yachting magazines published in the United States and the United Kingdom. Their content sets the stage for the issues which arise on the appeal, particularly the indicia of "a work of artistic craftsmanship" and their application to the JS 9000. In the United States publication, Sailing World, the following appeared in an article headed "Three New Inexpensive Imports": List the characteristics you want in a sportboat – in addition to speed – and that's what Swarbrick Yachts promises with the JS 9000: 1 Section 2(1) of the 2003 Act provided that Sched 1, amending the Copyright Act, was to commence immediately after the commencement of s 4 of the Designs Act 2003 (Cth) ("the New Designs Act"), namely, 17 June 2004. Schedule 1, Item 18 of the 2003 Act made detailed provision for the application of the amendments to the Copyright Act. The result is that amendments to s 10 and s 77 have no bearing on this appeal. Kirby Crennan lifting keel for trailering, easy to singlehand or race with a crew of three or four, self-tacking non-overlapping jib, asymmetric chute tacked to the bow, no backstay, and good stability. Add to that the pedigree of designer John Swarbrick, the brains behind the 12-Meters Kookaburra I and II and Chris Dickson's Whitbread 60 Tokio, and it's easy to get excited about a $26,500 speedster that comes fully rigged with Spectra running rigging, die-form standing rigging, aluminium mast and boom, and Dacron mainsail and jib." The United Kingdom publication, Yachts and Yachting, contained an article by Ms Gael Pawson recounting an interview she had conducted with Mr Swarbrick when she inspected a JS 9000 at Lake Zurich. She reported Mr Swarbrick as saying: "We wanted to design an offshore racing yacht that was spectacularly fast yet easily controlled by only two or three crew members without having to rely on crew strength, agility or weight." In cross-examination, Mr Swarbrick said that he had had a conversation with Ms Pawson, and could have made that statement, but did not now remember making it. Earlier in his cross-examination, he said that he had designed America's Cup and Whitbread boats and that it was "pretty hard for me to design a slow boat". Another United Kingdom publication, Yachting Monthly, contains an article which, in his oral evidence, Mr Swarbrick suggested was written largely by the United Kingdom agent of Swarbrick Yachts. The article states that Mr Swarbrick had wanted "a spectacularly fast boat for himself that could be sailed easily with two or three people, without having to rely on crew strength, agility or weight". The article also contains a photograph of the JS 9000 with the caption, "The JS is a picture of elegance on the water". A business plan for Swarbrick Yachts dated April 2003, under the heading "Concept" stated: "The JS 9000 is a unique high performance racing yacht with the following characteristics: – absolute simplicity in fitout – economical building costs – easily sailable by just a crew of two Kirby Crennan – exceptionally fast – easily transportable in the security of Shipping containers for export The original construction was on a part-time basis, but as the sales of yachts increased it became clear to the Directors that the JS 9000 project was extremely viable and can successfully fill a void in the burgeoning international sportsboat market place All yachts produced by [Swarbrick Yachts] are protected by T[r]ademark and copyright the Commonwealth of Australia." the state of Western Australia, and laws of The scope of intellectual property law Mr Swarbrick owned several books on copyright law, patent law and design law; he said in his evidence that he believed that copyright in drawings used in the design of his yachts "extends to the three-dimensional object", but had noted that "there are exemptions to it". Here is to be found the genesis of the issues of intellectual property law upon which the present appeal turns. The appeal cannot be resolved by recourse to any general proposition that what is worth copying is worth protecting2. The design and construction of yachts and other wind-propelled articles, such as sailboards, may attract the protection of intellectual property law in various ways. The Windsurfing litigation3 concerned patent law. There is no patent involved in this case. For much of its history, the Designs Act 1906 (Cth) ("the Designs Act")4 provided a definition: 2 See Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at 3 Windsurfing International Inc v Tabur Marine (Great Britain) Ltd [1985] RPC 59; Windsurfing International Inc v Petit [1984] 2 NSWLR 196. 4 After the institution of this litigation that statute was repealed and replaced, with effect from 17 June 2004, by the New Designs Act. Kirby Crennan "'Design' means an industrial design applicable, in any way or by any means, to the purpose of the ornamentation, or pattern, or shape, or configuration, of an article, or to any two or more of those purposes". Various decisions have held that a definition in these terms is concerned with matters of appearance rather than of function5 and this distinction was thought to mark off design law from patent law. The present case concerns the distinction which, at the other end of the scale, marks off copyright law from design law. It should be noted immediately that whilst title to a design derives from statutory registration, and a publicly accessible register, there is no registration system for copyright. Further, copyright subsists for a much longer period than the maximum period of protection under the Designs Act of 16 years from the priority date6, now reduced to a maximum of 10 years protection from the filing date under the New Designs Act. In cases of possible dual protection, the legislative policy manifested since 1911 in the United Kingdom and then in Australia has been to encourage design registration7 and to limit or remove copyright protection for artistic works which are applied to industrial products. But, as these reasons will seek to explain, the means adopted to that end have varied and successive legislative schemes have sought to overcome the shortcomings of their predecessors. The evidence includes numerous examples of registrations by other parties under the Designs Act in respect of the shape or configuration of vessel hulls. The international design classification, used by Design Offices in many countries, including Australia, identifies "Ships and Boats" as Class 12-06. Mr Swarbrick does not rely upon any design registration; it is the absence of any utilisation of the protection offered by registration under the Designs Act that is critical for this appeal. Rather, as noted above, Mr Swarbrick founds his claim for intellectual property protection upon the Copyright Act and its provisions respecting that species of original "artistic work" which comprises "a work of artistic craftsmanship". In the absence of a design registration, s 77 of the Copyright Act permits reliance by Mr Swarbrick only on those copyrights he 5 These are collected in Hosokawa Micron International Inc v Fortune (1990) 26 FCR 393 at 417-421. 6 See Ricketson, The Law of Intellectual Property, (1984) at 485. 7 Hosokawa Micron International Inc v Fortune (1990) 26 FCR 393 at 422. Kirby Crennan may have in works of "artistic craftsmanship". The ultimate issue is whether the JS 9000 embodies "a work of artistic craftsmanship" in the statutory sense. If so, Mr Swarbrick may pursue his claim of copyright infringement and the absence of a design registration is no answer to his action for copyright infringement. The appellants in this Court challenge Mr Swarbrick's success to date on this issue. For the reasons which follow, the appeal should be allowed. The litigation In June 2003, the first appellant, Mr B J Burge, was engaged by the fourth appellant, Boldgold Investments Pty Ltd ("Boldgold") as operations manager of its factory premises. He had the task of overseeing work on the hull and deck of a JS 9000 yacht using a hull and deck moulding which Boldgold had acquired from the second appellant, Mr T Rogers, for the sum of $7,500. Mr Rogers and the third appellant, Mr B Warren, were also engaged by Boldgold to work at its factory; they had been employed by Swarbrick Yachts previously in the moulding of hulls and decks. Late in 2002, Mr Swarbrick had given to Mr Rogers the hull and deck moulding which he later sold to Boldgold. The circumstances in which Mr Swarbrick had given the moulding to Mr Rogers were disputed and that dispute has not been resolved. The fifth and sixth appellants, Mr G P Bosman and Mr S E Zaza, are directors of Boldgold. Work at the Boldgold factory ceased on 13 September 2003, upon the service of an ex parte interlocutory injunction granted by the Federal Court (Carr J) on the previous day upon the application of Mr Swarbrick. The injunction, modified after an interlocutory hearing inter partes before Carr J8, still remains in force until further order. Relevantly, the appellants are enjoined from reproducing or authorising the reproduction in a material form of the object identified as "the Plug" and from manufacturing or procuring the manufacture of any mould using the JS 9000 hull and deck mouldings. The Plug was identified by Carr J as a hand-crafted full scale model of the hull and deck sections of what became the finished yacht and is visually identical to the hull and deck of a finished JS 9000. The hull and deck mouldings were produced from moulds taken by Mr Swarbrick separately of the hull and deck sections, the moulds themselves being exact, although inverted, copies of the Plug. 8 See Swarbrick v Burge (2003) 59 IPR 129. Kirby Crennan The Plug was destroyed. But Mr Swarbrick asserts an incorporeal right, namely that given by the copyright law, whose continued subsistence does not depend upon the fate of its first material embodiment9. It is important to note several fundamental provisions of Pt III of the Copyright Act which deals with copyright in original works. Copyright in the case of an original artistic work includes the exclusive right to reproduce it in a material form (s 31(1)(b)(i)). An artistic work is deemed by s 21(3) to have been reproduced, in the case of a work in a two-dimensional form, if a version is produced in a three-dimensional form, and vice versa. It is an infringement to do or authorise the doing in Australia of any act comprised in the copyright (s 36(1)) and thus indirect copying may infringe. The re-amended defences dated 28 January 2004 filed on behalf of each of the present appellants included the assertion that the Plug, and hull and deck mouldings of the JS 9000, embody designs which when applied to an article result in a reproduction of an artistic work, and so are "corresponding designs" within the meaning of that phrase in s 74 of the Copyright Act. The term "design" in s 74 picks up the definition in the Designs Act10. The result is said to be that, in the absence of registrations under the Designs Act, s 77 of the Copyright Act applies and there is no copyright infringement by the appellants. On 6 November 2003, by consent, Carr J ordered that questions of liability for infringement be heard and determined separately and that this hearing be expedited. Other matters remained outstanding, particularly certain cross-claims including those brought by Mr Burge and Mr Warren against Mr Swarbrick for defamation. In his detailed reasons delivered following a seven day hearing, Carr J rejected the defence based upon s 77 of the Copyright Act11. He granted declaratory relief to the effect that Boldgold had infringed the copyright of Mr Swarbrick in the Plug, the hull mould and the hull moulding, being artistic 9 See Pacific Film Laboratories Pty Ltd v Federal Commissioner of Taxation (1970) 121 CLR 154 at 167-170; Moorhouse v Angus & Robertson (No 1) Pty Ltd [1980] FSR 231 at 236; George Hensher Ltd v Restawile Upholstery (Lancs) Ltd [1976] AC 64 at 77, 79-80, 83, 96; Kevlacat Pty Ltd v Trailcraft Marine Pty Ltd (1987) 79 ALR 534 at 543. 10 Muscat v Le (2003) 204 ALR 335 at 349. 11 Swarbrick v Burge (2004) 138 FCR 353 at 368-372. Kirby Crennan works, and had engaged in conduct which, but for the grant of interlocutory relief, would have resulted in infringement of Mr Swarbrick's copyright in artistic works being the deck mould and deck moulding. An appeal to the Full Court (Moore, North and Emmett JJ) by the present appellants in this Court was unsuccessful12. At first instance and in the Full Court, some attention was given to the significance of drawings by Mr Swarbrick, free drawn and computer digitised, which were made and utilised at various stages in the design of the Plug and the finished item, the Bateau Rouge. However, the effect of Mr Swarbrick's evidence, as his counsel saw it, was that the creative design effort had been in the fashioning of the Plug. In the course of submissions for Mr Swarbrick in this Court, counsel accepted that the only relevant artistic works which could be works of "artistic craftsmanship" were the Plug and the final hull and deck mouldings for the Bateau Rouge and that no wider injunctive relief under the Copyright Act could be maintained. With that in mind, it is convenient now to consider the central importance of this species of artistic work for the operation of the copyright legislation in this case. The statutory expression "artistic craftsmanship" has a double significance for this case. The first is as a species of "artistic work" whose appearance in copyright legislation almost a century ago marked a significant step in the development of the nature and scope of the subject-matter for copyright protection under the rubric of "artistic work". The second involves the use in the Australian statute law of "artistic craftsmanship" for a more recent and quite different purpose. This is to supply the discrimen to mark off the "overlap" between copyright and registered designs law. Both matters call for an understanding of the course taken over more than a century by the statute law in the United Kingdom and then in Australia. We turn first to the matter of "overlap". Copyright and design "overlap" and the 1911 Act The Second Schedule to the Copyright Act 1911 (Imp) ("the 1911 Act") repealed no fewer than 21 statutes, beginning with The Engraving Copyright Act 1734 (UK) ("the 1734 Act")13, including the Sculpture Copyright Act 1814 (UK) 12 Burge v Swarbrick (2005) 149 FCR 193. 13 8 Geo II c 13. Kirby Crennan ("the 1814 Act")14, and ending with The Musical Copyright Act 1906 (UK). The 1911 Act provided comprehensively for copyright in published and unpublished works15. It was brought into force in Australia by s 8 of the Copyright Act 1912 (Cth) ("the 1912 Act"). Until the commencement of the Australian legislation passed in 1968, the 1911 Act remained in force as Imperial law16, with adjustments made by the 1912 Act, and notwithstanding the enactment of the Copyright Act 1956 (UK) ("the 1956 UK Act")17. Something more should be said respecting the earlier Australian legislation. Section 4 of the 1912 Act repealed the Copyright Act 1905 (Cth) ("the 1905 Act"). This had largely superseded the future application of State laws on the subject (s 8)18. The 1905 Act was an anticipation in Australia of the Imperial statute, the 1911 Act. The 1905 Act drew19 upon the recommendations of a British Royal Commission20 which had reported in 187821; it had recommended the consolidation of the copyright law in the one statute22. That proposal did not bear fruit in the United Kingdom until the 1911 Act. 14 54 Geo III c 56. 15 Section 31 acknowledged the jurisdiction to restrain breaches of trust or confidence, but otherwise abrogated common law rights in unpublished works. 16 Gramophone Co Ltd v Leo Feist Incorporated (1928) 41 CLR 1. 17 Copyright Owners Reproduction Society Ltd v EMI (Australia) Pty Ltd (1958) 100 CLR 597. 18 As to the colonial and State legislation, see Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 at 359-363; Burrell, "Copyright Reform in the Early Twentieth Century: The View from Australia", (2006) 27 The Journal of Legal History 239 at 19 Australia, Senate, Parliamentary Debates (Hansard), 24 August 1905 at 1429-1430. 20 Royal Commission on Laws and Regulations relating to Home, Colonial, and International Copyrights. 21 Report of the Commissioners, (1878) [C 2036]. 22 Copinger and Skone James on Copyright, 15th ed (2005), vol 1, §2-25. Kirby Crennan The law with respect to designs also had a lengthy legislative history in the United Kingdom23, and in the Australian colonies24. The Designs Act came into force on 1 January 1907, the same day as the first federal copyright statute, the 1905 Act. Neither statute had any provision dealing with any "overlap" between them. Why was this so? One explanation lies in what was then understood to be the position which had then been reached in the United Kingdom legislation. Designs for sculptures within the protection of the 1814 Act were excluded from the definition of "design" in s 60 of the Patents, Designs, and Trade Marks Act 1883 (UK)25 and thereafter in s 93 of the Patents and Designs Act 1907 (UK) ("the 1907 UK Act")26. Copyright in drawings and other such two-dimensional works was generally treated as restricted to two-dimensional reproduction for a purpose and in a medium sui generis with the form of the work27; further, whilst registration was not required by the 1814 Act for copyright protection for sculpture, in other respects before the 1911 Act registration was a precondition to the bringing of an action for copyright infringement28. Another explanation may have been the view that any overlapping should be tolerated, to the resultant advantage of copyright and design owners. That was the attitude taken in the United Kingdom in the Report of the Committee on the Law of Copyright ("the Gorell Committee")29 which reported in 1909 to the 23 See Polyaire Pty Ltd v K-Aire Pty Ltd (2005) 221 CLR 287 at 294-295 [12]-[16]; Hosokawa Micron International Inc v Fortune (1990) 26 FCR 393 at 398-399, 416-422; Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 at 358-359; Sherman and Bently, The Making of Modern Intellectual Property Law, (1999) at 24 The statutes are collected in Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 25 46 & 47 Vict c 57. 26 See Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 at 356-357. 27 Russell-Clarke, Copyright in Industrial Designs, 3rd ed (1960) at 87-88. 28 Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 at 358; Sherman and Bently, The Making of Modern Intellectual Property Law, (1999) at 164. 29 [Cd 4976] at 10, par 4. Kirby Crennan President of the Board of Trade30. But that was not the policy adopted in the 1911 Act. The question of "overlapping" became critical for the new legislative scheme. The 1911 Act required no formalities such as registration of copyrights and adopted a lengthy period of protection, generally, for published works, the life of the author plus 50 years. The 1911 Act also (s 1(2)) so defined the copyright monopoly in terms to include the reproduction of the work or of a substantial part thereof "in any material form whatsoever", thereby encompassing three-dimensional reproductions of two-dimensional works. The fear of industrialists, which impressed the Board of Trade, was that "the grant of full copyright to designs intended to be multiplied by an industrial process would destroy the efficacy of the Patents and Designs Acts, which are regarded as valuable by the manufacturers which use designs (eg calico printers)"; as a result, the Board "decided to exclude such design[s] if registrable under the Patents and Designs Acts from the Bill [for the 1911 Act]"31. The upshot was the provision made by s 22 of the 1911 Act. In particular, the awkwardly drafted s 22(1) stated: "This Act shall not apply to designs capable of being registered under [the 1907 UK Act], except designs which, though capable of being so registered, are not used or intended to be used as models or patterns to be multiplied by any industrial process." In King Features Syndicate, Inc v O & M Kleeman, Ltd ("the Popeye Case")32, Lord Maugham LC said that the sub-section would be easy to understand if, disregarding the double negative, it was read as having the form: 30 Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 at 363. In the United States, when construing the Copyright Act of 1909, the Supreme Court held that eligibility for design patent registration did not bar the enforcement of copyright for the relevant work of art (Mazer v Stein 347 US 201 at 216-217 (1954)) but both were registration systems. 31 Board of Trade document quoted in Sherman and Bently, The Making of Modern Intellectual Property Law, (1999) at 165, fn 23. 32 [1941] AC 417 at 427. Kirby Crennan "This Act shall apply to designs capable of being registered under [the 1907 UK Act], which are not used or intended to be used as models or patterns to be multiplied by any industrial process. With that exception this Act shall not apply to designs capable of being registered under [the 1907 UK Act]." The effect of the decision in the Popeye Case was that the question of whether protection for a work under the 1911 Act was excluded by s 22 was to be decided once and for all when the work was made; unless at that date it could be said that the work was used or intended to be used as a model or pattern to be multiplied by industrial process, the work would enjoy protection for the full period under the 1911 Act notwithstanding that it afterwards was used for such a purpose. The effect was to keep copyright out of most "industrial territory", although not designs originally intended for a non-industrial activity such as comic-strip illustration33. In 1952, Pt X (§§227-263) of the Report of the Copyright Committee ("the Gregory Report")34 dealt comprehensively with the subject of artistic copyright and industrial designs and the borderline between them. The Report noted "[I]n general, before 1911, copyright in a drawing of a three-dimensional article would apparently only have been infringed by another drawing, while a registered design for the same article would only have been infringed under [the 1907 UK Act] by actually making the article. But since [the 1911 Act] came into force, with the reference in Section 1(2) to reproduction of a work in 'any material form whatsoever', the unauthorised reproduction of the article in three dimensions may be an infringement both of a registered design and of the artistic copyright." The Committee referred to various criticisms of s 22(1) of the 1911 Act and of the consequences of the decision in the Popeye Case. They went on "It does seem to us to be inequitable that, in certain circumstances dependent upon the original intention of the artist, industrial designs (such 33 Cornish and Llewelyn, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 5th ed (2003), §14-03. 34 [Cmd 8662]. Kirby Crennan as 'Pop-Eye' dolls and brooches) can have automatic protection for fifty years or more under [the 1911 Act] while most industrial designs are only protected for a maximum of fifteen years and then only if they are registered under [the 1907 UK Act]. Such a state of affairs, it has been pointed out to us, might encourage a manufacturer to seek for designs amongst artistic works already in copyright rather than to employ artists to create new designs. Further, according to the evidence before us, it encourages subterfuge on the part of the artist or others as to his original intention." Subsequent "over-lapping" legislation The sequel to the Gregory Report was the new provision made for overlapping in the 1956 UK Act and then in 1968 in the Australian legislation. The effect of s 10 of the 1956 UK Act was that, if a "corresponding design" was registered or if it was applied industrially without registration, subsisting artistic copyright, during 15 years, would not be protected against acts of infringement which were within the scope of the design; after 15 years, the copyright law would give no protection against infringement within the scope of the design as extended to associated designs and articles35. The new provision made in the 1956 UK Act, rather than providing as had the 1911 Act that, in the circumstances stated, the copyright legislation was not to apply to certain works, provided that certain acts were not to constitute copyright infringement; a limit was thus placed upon acts constituting copyright infringement but without denying for other purposes the subsistence of the copyright. In this respect, the 1956 UK Act was unsuccessful law reform. The situation to which it led is described in a leading British text in the following terms36: "The 1956 Act set out to eliminate dual protection by copyright as well as design registration on a different, highly complex basis. The essential feature of s 10 was that while copyright now subsisted in designs of all kinds, industrial application of them would not amount to infringement of the copyright if a registered right had been applied for, or if the copyright 35 Copinger and Skone James on the Law of Copyright, 9th ed (1958) at 79. 36 Cornish and Llewelyn, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 5th ed (2003), §14-04. Kirby Crennan owner had used the design on industrially produced articles. In the regrettable decision of Dorling v Honnor Marine,37 the Court of Appeal chose to distinguish between designs capable of registration which were subject to s 10, and designs which were not registrable (chiefly because they were functional) and so bore full-term artistic copyright even in respect of industrial products.38" The upshot in the United Kingdom was the Design Copyright Act 1968 (UK) which in turn was regarded as unsatisfactory and was replaced by a new regime in the Copyright, Designs and Patents Act 1988 (UK) ("the 1988 UK Act")39. It is unnecessary here to consider the operation of this system and its interaction with European Union requirements to produce what has been called a "variegated territory"40. What is relevant for present purposes is the statement by Pumfrey J in Mackie Designs Inc v Behringer Specialised Studio Equipment (UK) Ltd41 that: "[i]t was clearly the intention of the framers of [the 1988 UK Act] that copyright protection was no longer to be available to what can be compendiously described as ordinary functional commercial articles". In Australia, the Report of the Copyright Law Review Committee ("the Spicer Committee")42 referred (§432) to the treatment by the Gregory Committee of the difficulties experienced in applying s 22 of the 1911 Act. Unable to foresee the complexities to which s 10 of the 1956 UK Act would give rise, the 38 If the reason why a design was unregistrable was that it was not novel, this was eventually treated as not giving it full artistic copyright. 39 Copinger and Skone James on Copyright, 15th ed (2005), vol 1, §§13-19–13-29. 40 Cornish and Llewelyn, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 5th ed (2003), §14-09. See also Stokes, Art and Copyright, 41 [1999] RPC 717 at 723. 42 Report of the Committee Appointed by the Attorney-General of the Commonwealth to Consider what Alterations are Desirable in the Copyright Law of the Commonwealth, (1959). Kirby Crennan Spicer Committee recommended (§436) the enactment of provisions to the same effect as those in the 1956 UK Act. This was followed by the enactment in 1968 of the Copyright Act, Div 8 of Pt III of which (ss 74-77) was headed "Industrial Designs". Kevlacat Pty Ltd v Trailcraft Marine Pty Ltd43 was an unsuccessful attempt in the Federal Court to restrain the copying of a catamaran marketed as the "Kevlacat" and in respect of which there was no design registration. French J held that, even if copyright subsisted in drawings from which the prototype of the "Kevlacat" had been made, the production of the catamarans was an industrial application of the "corresponding design" and copyright protection was denied by s 77 of the Copyright Act44. The Copyright Act as amended in 1989 As was the case with s 10 of the 1956 UK Act, the Australian legislation proved unsatisfactory in various respects and was amended by the Copyright Amendment Act 1989 (Cth) ("the 1989 Act")45. It is the text of the 1989 Act which governs the outcome of the present appeal. The Explanatory Memorandum, circulated by authority of the Attorney- General, on the Bill for the 1989 Act stated46: "A number of problems have arisen in recent years over the interaction between [the Copyright Act] and [the Designs Act]. These problems have affected manufacturers and designers of a diverse range of 43 (1987) 79 ALR 534. 44 (1987) 79 ALR 534 at 547. 45 The Parliament later acted on advice that s 55 of the Constitution operated to invalidate the whole of the 1989 Act, in the light of the decision in Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480, and, in consequence, the Parliament repealed and re-enacted the 1989 Act, by the Copyright Amendment (Re-enactment) Act 1993 (Cth): Australia, Senate, Parliamentary Debates (Hansard), 20 October 1993 at 2168-2169. But, in these reasons, it is convenient to continue to refer to the 1989 Act. 46 Copyright Amendment Bill 1988 (Cth), House of Representatives, Explanatory Memorandum at [16]. Kirby Crennan articles, as well as artists. In particular, the difficulties have related to the complex nature of the provisions and the extent to which industrial designs have been able to receive protection under [the Copyright Act]." The Memorandum went on to state that the amendments proposed would "remove copyright protection for essentially 'industrial products', [and] eliminate the inequitable effects that arise from the interaction and the uncertainty in interpretation of the provisions [of the Copyright Act]"47. The 1989 Act changed Pt III, Div 8 of the Copyright Act in various respects. It introduced a new s 74 which defined the expression "corresponding design" as meaning, in relation to an artistic work: "a design that, when applied to an article, results in a reproduction of that work, but does not include a design consisting solely of features of two- dimensional pattern or ornament applicable to a surface of an article". (emphasis added) In the Explanatory Memorandum, this new definition was said to help "remove the possibility of both copyright and design protection being available for commercial reproductions of artistic works in the three-dimensional category, but [leave] open the possibility for such dual protection for two-dimensional commercial reproductions of artistic works"48. The present case does not concern any two-dimensional commercial reproduction of an artistic work, so that the definition of "corresponding design" is not displaced. A new s 77 was introduced to set out the circumstances for the limitation of copyright protection resulting from the use of a corresponding but unregistered design. The scheme of the new s 77 was to deny copyright protection against three-dimensional reproduction where the "corresponding design", whether registrable or not under the Designs Act, had been "applied industrially" by or with the licence of the copyright owner (whether in Australia or elsewhere) and articles to which the design has been applied are sold, let for hire or offered or exposed for sale or hire (again whether in Australia or elsewhere). The term "applied industrially" was given content by regulations made under s 77(4). For 47 Copyright Amendment Bill 1988 (Cth), House of Representatives, Explanatory Memorandum at [17]. 48 Copyright Amendment Bill 1988 (Cth), House of Representatives, Explanatory Memorandum at [19] (original emphasis). Kirby Crennan the purposes of s 77 of the Copyright Act, a design relevantly was taken to be applied industrially if applied to more than 50 articles49. At the trial, Mr Swarbrick conceded that, if there were a "corresponding design", then it had been applied industrially. Section 77(2) provided: "It is not an infringement of the copyright in the artistic work to reproduce the work, on or after the day on which articles made to the corresponding design are first so sold, let for hire or offered or exposed for sale or hire, by applying that, or any other, corresponding design to an article." However, this curtailment of the benefits of copyright ownership in artistic works did not apply where the corresponding design concerned was excluded from registration under the Designs Act by regulations made thereunder (s 77(3)). Nothing in this appeal turns upon that form of exclusion. A further exception from the operation of the limitation imposed by s 77 was provided in par (a) of s 77(1) and it is this which is critical for the present appeal. The paragraph provides that s 77 may be engaged where copyright subsists in artistic work "other than a building or a model of a building, or a work of artistic craftsmanship". The reason for this special provision was stated tersely in the Explanatory Memorandum to be that "these articles are more appropriately protected under [the Copyright Act] whether industrially applied or not"50. The effect of that special provision is that buildings or models of buildings or works of artistic craftsmanship retained copyright protection, but only if they were not registered as designs. This is not, speaking strictly, overlapping or dual protection. Subsequently, in his reasons in Coogi Australia Pty Ltd v Hysport International Pty Ltd51, Drummond J observed of what was said in the Explanatory Memorandum: 49 Copyright Regulations (Amendment) 1990 No 301 (Cth), amending the Copyright Regulations 1969 (Cth). See Press-Form Pty Ltd v Henderson's Ltd (1993) 40 FCR 274 at 277-278. 50 Copyright Amendment Bill 1988 (Cth), House of Representatives, Explanatory Memorandum at [24]. 51 (1998) 86 FCR 154 at 168. Kirby Crennan "What may justify the special status conferred on works of artistic craftsmanship by ss 74-77 is recognition that the real artistic quality that is an essential feature of such works and the desirability of encouraging real artistic effort directed to industrial design is sufficient to warrant the greater protection and the accompanying stifling effect on manufacturing development that long copyright gives, in contrast to relatively short design-protection." The result of the 1989 Act is that, as the copyright legislation stood at the time relevant for this litigation, a criterion for the denial of protection against infringement of copyright in artistic works turned upon the expression "a work of artistic craftsmanship". Hence the defence under s 77 in this case that there was no copyright infringement because the Plug and the final hull and deck mouldings were not works of artistic craftsmanship. This then invites consideration of the part played since 1911 by the work of "artistic craftsmanship" as a species of artistic work under the Copyright Act. Attention should therefore now be given to this development in the law of copyright. Artistic works and the place of works of "artistic craftsmanship" Copyright in respect of artistic works developed in a piecemeal fashion. Reference has been made earlier in these reasons to the treatment of sculpture by the 1814 Act. Some provision was made with respect to engravings, beginning with the 1734 Act. Provision for paintings, drawings and photographs was made by the Fine Arts Copyright Act 1862 (Imp) ("the 1862 Act")52. The reference in the title to the 1862 Act to the fine arts was significant. Section 1 spoke of "every original Painting, Drawing and Photograph". The 1911 Act drew together, but went beyond, the earlier statute law. Section 35(1) of the 1911 Act included the definition: "'Artistic work' includes works of painting, drawing, sculpture and artistic craftsmanship, and architectural works of art and engravings and photographs". (emphasis added) 52 25 & 26 Vict c 68. In the United States, the Copyright Act of 1870 included "models or designs intended to be perfected as works of the fine arts" but, even before the removal from the statute law of this "fine arts clause", the practice of the Copyright Office had been to allow registration in respect of articles which might also serve a useful purpose: Mazer v Stein 347 US 201 at 209-214 (1954). Kirby Crennan In Australia, the definition of "artistic work" in s 4 of the 1905 Act did not refer to works of "artistic craftsmanship"53. Nor were works of architecture protected under the old law, save for architects' plans54. The definition of "artistic work" in the 1911 Act thus went beyond the class of works treated as "fine arts" in the 1862 Act. As matters stood in Australia at the time the present litigation commenced, s 10 of the Copyright Act contained the following definition: "artistic work means: a painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not; a building or a model of a building, whether the building or model is of artistic quality or not; or a work of artistic craftsmanship to which neither of the last two preceding paragraphs applies; but does not include a circuit layout within the meaning of the Circuit Layouts Act 1989 [(Cth)]." (emphasis added) The expression in pars (a) and (b) "whether ... of artistic quality or not" has its provenance in the United Kingdom. The phrase "irrespective of artistic quality" is found in the definition of "artistic work" in s 3(1)(a) of the 1956 UK 53 It did include: "any ... other work of art produced by any process, mechanical or otherwise, by which impressions or representations of works of art can be taken or multiplied". 54 Copinger and Skone James on Copyright, 15th ed (2005), vol 1, §3-60; cf Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 81 ALJR 352; 231 ALR 663. Kirby Crennan Act55. The genesis of the phrase "irrespective of artistic quality" in the 1956 UK Act was explained at the time as follows56: "It was generally considered under [the 1911 Act] that the word 'artistic' was merely used as a generic term to include the different processes of creating works set out in the definition section and that provided that a work was produced by one of such processes, and that its creation involved some skill or labour on the part of the artist, it was protected. The use of the word 'artistic' was thought to be akin to that of the word 'literary' which ... was held to refer only to the nature of the material being written or printed matter. In fact, under [the 1911 Act] merely commercial designs were protected. This matter is now clarified, as above mentioned." In Cuisenaire v Reed57, which turned upon the 1911 Act, Pape J said that the phrase "artistic work" was "a generic term or label"; this included subject- matters not necessarily possessing any element of artistic quality at all, and so had a wider meaning than the word "artistic" in the phrase "works of artistic craftsmanship". But the circumstance that a work falling within par (a) or par (b) of the definition of "artistic work" now found in the Australian legislation need not be of artistic quality does not deny that a particular work to which par (a) or par (b) applies may be of such quality. It will be necessary to return to this point later in these reasons. This appeal immediately concerns the expression in par (c) of the definition of "artistic work" in s 10 of the Copyright Act "a work of artistic craftsmanship to which neither [par (a) nor par (b)] applies". Paragraph (c) of the definition in s 3(1) of the 1956 UK Act is in terms essentially indistinguishable from s 10 of the Copyright Act. The 1956 UK Act was enacted after the treatment of "artistic work" by the Gregory Committee. In Australia, the Spicer Committee (§72) had recommended a definition of "artistic work" which was in 55 Paragraph (a) of s 3(1) reads: "the following, irrespective of artistic quality, namely paintings, sculptures, drawings, engravings and photographs". 56 Copinger and Skone James on the Law of Copyright, 9th ed (1958) at 65-66 (footnotes omitted). 57 [1963] VR 719 at 727. Kirby Crennan conformity with that in the 1956 UK Act. The Report of the Gregory Committee stated (§260): "It is clear that some protection of this kind is required to cover works of art other than such things as works of painting, drawing and sculpture, which are mentioned by name. We are here concerned not with articles manufactured under conditions of ordinary industrial production (artistically meritorious as many of these are) which can secure their own appropriate protection under [the Registered Designs Act 1949 (UK)], but with the works of craftsmen working in many media (silversmiths, potters, woodworkers, hand-embroiderers and many others) in circumstances for which that Act does not provide appropriate protection. We do not think it will be questioned that original works of the kind we have in mind are fully entitled to protection and but for [the 1911 Act] this would be lacking. We believe that copyright provides the proper basis for protecting these works and to ensure this protection we believe that it is necessary to retain the term 'works of artistic craftsmanship' in the Act." The Gregory Committee went on to eschew any attempt at a further definition of the term "works of artistic craftsmanship"58. However, its reference to the inadequate protection given by the designs law to the work of craftsmen working in many media anticipated the statement by Drummond J in Coogi59, set out above, emphasising, for the purposes of the 1989 Act, the desirability of encouraging "real artistic effort" in the field of industrial design. The significance of the 1989 Act In its form after the changes made by the 1989 Act, the Copyright Act employed the expression "a work of artistic craftsmanship", both as a criterion to mark out the nature, duration and ownership of copyright in artistic works (Pt III, Div 1, ss 31-35) and to differentiate the protection given where artistic works were applied as industrial designs without a design registration (Pt III, Div 8, 58 The phrase "works of artistic craftsmanship" was not defined in either the 1911 Act or the 1956 UK Act. By the time of debate on the Copyright Act 1988 (UK), it was suggested that no satisfactory definition of the phrase could be given in the statute: United Kingdom, House of Lords, Parliamentary Debates (Hansard), 30 November 1987 at 847-848. 59 (1998) 86 FCR 154 at 168. Kirby Crennan ss 74-77A). The statute in this amended form is to be considered with respect to subsequent events as a coherent whole. The phrase "a work of artistic craftsmanship" should be read consistently. There has been debate as to the extent to which a statute in its unamended form may be construed with respect to past events by reference to amendments60. But however that may be, the phrase "a work of artistic craftsmanship" was introduced by the 1989 Act into the "overlap" provisions of Pt III, Div 8 of the Copyright Act upon a particular legislative view of the purpose it would serve. That view, as Drummond J indicated in Coogi61, was the encouragement of "real artistic effort" in industrial design. Several consequences for this appeal follow from this state of affairs. First, as the facts of this case demonstrate, encouragement of "real artistic effort" to industrial design may be constrained by the nature of the functional purposes to be served by the object to which industrial design is applied and by the marketing imperatives for mass production. The evidence of the marketing of the JS 9000 class of racing yacht, described in the first part of these reasons, is illustrative of these constraints. It is these constraints which make it difficult to support the Plug as "a work of artistic craftsmanship". Secondly, the need after the 1989 Act to read consistently throughout the Copyright Act the phrase "a work of artistic craftsmanship"62 entails caution, lest too little weight be given to the need for a real or substantial artistic element in what is posited for any purpose of the Copyright Act as "a work of artistic craftsmanship". Thirdly, the 1989 Act places some check upon entire acceptance of what had been said earlier with respect to the 1956 UK Act in the most significant judicial treatment of the scope and purpose of the special treatment given the phrase "a work of artistic craftsmanship". This was the speech of Lord Simon of 60 Commissioner of State Revenue (Vict) v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651 at 669 [51]-[52], 670 [54]. 61 (1998) 86 FCR 154 at 168. 62 Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR Kirby Crennan Glaisdale in George Hensher Ltd v Restawile Upholstery (Lancs) Ltd63. We now turn to what was said by Lord Simon. Hensher in Hensher, The plaintiff successfully before Graham J64 but unsuccessfully in the Court of Appeal65 and in the House of Lords, asserted infringement of copyright in artistic works, being the chairs which were components of a suite of furniture marketed as the Bronx66. The artistic copyright relied upon was that in respect of works of "artistic craftsmanship" as provided in the 1956 UK Act. There were no design registrations relied upon and the issue was a threshold one of whether, in any event, copyright subsisted in respect of any original artistic work. Several points should be made respecting the Hensher litigation. First, the consideration in various of the speeches in the House of Lords of the purpose and scope of the term "artistic craftsmanship" was skewed by a concession. The concession was that there was no dispute that the prototype from which the Bronx suite was constructed in 1966 and mass produced was "a work of craftsmanship"; the only issue being whether the "craftsmanship" involved was "artistic"67. Secondly, the concession notwithstanding, Lord Simon went on to construe as a whole the phrase "a work of artistic craftsmanship" as it appeared in s 3(1)(c) of the 1956 UK Act. He noted that the concession that the Bronx prototype was a work of craftsmanship had tended to distort the argument and that "works of artistic craftsmanship" was a composite phrase to be construed as a whole68. That approach by Lord Simon should, subject to what has been said 63 [1976] AC 64; [1975] RPC 31. 64 [1973] 1 WLR 144; [1973] 1 All ER 160; [1975] RPC 31 at 34-44. 65 [1973] 3 WLR 453; [1973] 3 All ER 414; see also [1976] AC 64 at 66-73. 66 A photograph of the Bronx suite is reproduced in the RPC report: [1975] RPC 31 67 [1976] AC 64 at 77, 80-81, 84, 88, 96. 68 [1976] AC 64 at 91. Kirby Crennan above respecting the significance of the 1989 Act, be adopted in dealing with the present appeal. In Australia, thus, there will be no occasion to attempt from all five speeches in Hensher a distillation of what can be regarded as the ratio decidendi69. Thirdly, Lord Simon noted that there was no relevant distinction between the phrase used in the 1956 UK Act and that found in the 1911 Act70. His Lordship went on, in a manner now regarded in this Court as involving orthodox principles of interpretation71, to consider what he called the social and legal backgrounds to the 1911 Act, saying72: "When this is undertaken it will be found that [the social and legal backgrounds] chime together remarkably, leaving no doubt as to what sort of work it was that Parliament was extending copyright protection to in Fourthly, after referring to the activities of Ruskin and Morris and the foundation of the Arts and Crafts Exhibition Society and the Central School of Arts and Crafts, and other events in the period 1862 to 1910, Lord Simon continued73: "These are no more than a handful of key events; but they put beyond doubt what it was that prompted Parliament in 1911 to give copyright protection to 'works of artistic craftsmanship' – namely, the Arts and Crafts movement with its emphasis on the applied or decorative arts." 69 cf Commissioner of Taxation v Murray (1990) 21 FCR 436 at 438-440, 451-452; Coogi Australia Pty Ltd v Hysport International Pty Ltd (1998) 86 FCR 154 at 164-168; Sheldon and Hammond Pty Ltd v Metrokane Inc (2004) 135 FCR 34 at 55-60; Muscat v Le (2003) 204 ALR 335 at 347. 70 [1976] AC 64 at 89. 71 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408. 72 [1976] AC 64 at 89. 73 [1976] AC 64 at 90. Kirby Crennan In that regard, the biographer of William Morris writes74: "In a totally convincing way he showed the wrong-headedness in separating off the design process from making: one was a necessary stage towards the other; the designer and maker could be one and the same person, the person who came to be defined as artist-craftsman. Another false perception he attacked was that the fine artist had no role in industrial production. Morris had designed for many factories and workshops, on varying scales and in different materials, and had proved this to be patently untrue." There are further points respecting statutory construction to be made here. First, the statutory expression is "artistic craftsmanship", not "artistic handicraft", notwithstanding that the aesthetic of the Arts and Crafts movement may have been that of the living artisan in his workshop. Lord Simon noted that some leaders of the Arts and Crafts movement recognised that they would have to come to terms with the machine, and referred to a lecture by Frank Lloyd Wright, "The Art and Craft of the Machine". Lord Simon concluded75: "The Central School of Arts and Crafts, though foremost a school of handicrafts, had as a declared aim to encourage 'the industrial application of decorative design.' So, although 'works of artistic craftsmanship' cannot be adequately construed without bearing in mind the aims and achievements of the Arts and Crafts movement, 'craftsmanship' in the statutory phrase cannot be limited to handicraft; nor is the word 'artistic' incompatible with machine production: see Britain v Hanks Brothers and Secondly, coming to terms with machine production involves acceptance that a prototype such as the Plug may qualify as "a work of artistic craftsmanship" even though it was to serve the purpose of reproduction and then be discarded. Doubts upon the matter expressed by several of the Law Lords in Hensher77 were somewhat misplaced. These doubts influenced the reasoning of 74 MacCarthy, William Morris: A Life for Our Time, (1994) at 590. 75 [1976] AC 64 at 91. 76 (1902) 86 LT 765. [Wright J restrained the pirating of metal models of toy soldiers and horses, as being protected by the 1814 Act.] 77 [1976] AC 64 at 77 per Lord Reid, 84 per Viscount Dilhorne. Kirby Crennan the Full Court in the present case, a matter as to which it will be convenient to say more later in these reasons. Thirdly, whilst not denying an enduring distinction between fine arts and useful or applied arts, in dealing with artistic craftsmanship there is no antithesis between utility and beauty, between function and art. In that regard, Lord Simon said in Hensher78: "A work of craftsmanship, even though it cannot be confined to handicraft, at least presupposes special training, skill and knowledge for its production ... 'Craftsmanship', particularly when considered in its historical context, implies a manifestation of pride in sound workmanship – a rejection of the shoddy, the meretricious, the facile." "Even more important, the whole antithesis between utility and beauty, between function and art, is a false one – especially in the context of the Arts and Crafts movement. 'I never begin to be satisfied,' said Philip Webb, one of the founders, 'until my work looks commonplace.' Lethaby's object, declared towards the end, was 'to create an efficiency style.' Artistic form should, they all held, be an emanation of regard for materials on the one hand and for function on the other." Finally, it may be noted that the course of the statutory and case law in the United States respecting works of artistic craftsmanship requires separate identification of pictorial, graphic or sculptural features from utilitarian aspects of the article concerned; the former features must be capable of "existing independently" of utilitarian aspects80. However, given what has just been said, such an approach should not be adopted in construing the Australian legislation. This is derived from the 1911 Act, which must be understood in the light of what 78 [1976] AC 64 at 91. 79 [1976] AC 64 at 93. 80 Copyright Act 1976, 17 USC §101; Pivot Point International Inc v Charlene Products Inc 372 F 3d 913 (2004). In the United States, the Vessel Hull Design Protection Act 1998, 17 USC §§1301, 1302, conferred a sui generis form of protection upon designs for vessel hulls, including "plugs" and "molds": Nimmer on Copyright, vol 2, §8A.13-§8A.21. Kirby Crennan was said in Hensher respecting the Arts and Crafts movement and because the language of the 1911 Act is apt to carry forward the objects of that movement. Was the Plug "a work of artistic craftsmanship"? – the evidence The answer to the question whether the Plug is a "work of artistic craftsmanship" cannot be controlled by evidence from Mr Swarbrick of his aspirations or intentions when designing and constructing the Plug. His evidence was admissible. But the operation of the statute does not turn upon the presence or absence of evidence of that nature from the author of the work in question. The matter, like many other issues calling for care and discrimination, is one for objective determination by the court, assisted by admissible evidence and not unduly weighed down by the supposed terrors for judicial assessment of matters The statute does not give to the opinion of the person who claims to be the author of "a work of artistic craftsmanship" the determination of whether that result was obtained; still less, whether it was obtained because he or she intended that result. Given the long period of copyright protection, the author, at the stage when there is litigation, may be unavailable. Indeed, as Pape J noted in Cuisenaire82, the author may be dead. Again, intentions may fail to be realised. Further, just as few alleged inventors are heard to deny the presence of an inventive step on their part, so, it may be expected, will few alleged authors of works of artistic craftsmanship be heard readily to admit the absence of any necessary aesthetic element in their endeavours83. This is not to deny the admissibility of such evidence, nor to disparage the good character of such witnesses, and certainly not that of Mr Swarbrick; it is to reaffirm the well-recognised dangers of hindsight which are present in various 81 cf Attorney-General v Trustees of National Art Gallery of NSW (1944) 62 WN (NSW) 212; In re Pinion dec'd [1965] Ch 85; Picarda, The Law and Practice Relating to Charities, 3rd ed (1999) at 61-62; Cowen, "An Artist in the Courts of Law", (1945) 19 Australian Law Journal 112. 82 [1963] VR 719 at 730. 83 cf Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR Kirby Crennan fields of intellectual property law, as in many other disputes that come to litigation. The various aspects of the definition of "a work of artistic craftsmanship" which are discussed above with reference to Hensher have particular significance here. The primary judge considered "craftsmanship" and "aesthetic appeal" as distinct and consecutive questions, before going on and "considering both aspects together"84. This was an error in the construction and application of the Copyright Act and requires re-examination of what transpired at the trial. Upon that footing, the primary judge started his analysis of the evidence from the proposition that the evidence of intention of the author of the alleged work was important, albeit not essential85. Whilst allowing that Mr Swarbrick was "scarcely a disinterested person", the primary judge gave very great weight to his evidence as to that intention. His Honour accepted that Mr Swarbrick had intended to design and build a yacht of "great aesthetic appeal", that the JS 9000 had "a high level of aesthetic appeal" and that this was the outcome intended by Mr Swarbrick86. The primary judge added that Mr Swarbrick had not been cross-examined on these views. The appellants properly dispute this. They point, among other things, to the passage in his lengthy cross-examination: "Your main concerns with design, I suggest to you, were to provide yachts for that market performing in accordance with the design brief you had set for yourself? –– Yes. I wanted a well mannered, easily balanced boat that was fast by contemporary standards." The "design brief" referred to was that set out in an affidavit by Mr Swarbrick. This stated that the market at which the JS 9000 was aimed comprised persons who, in no particular order, were reasonably experienced amateur sailors, aged 45 or more, who wanted a yacht of good performance, capable of racing, but for typical use in day sailing, relatively simple to sail with a minimum crew size, and visually attractive. 84 (2004) 138 FCR 353 at 367. 85 (2004) 138 FCR 353 at 363-364. 86 (2004) 138 FCR 353 at 366. Kirby Crennan The promotional material and business plan described earlier in these reasons are relatively contemporaneous evidence. They are confirmatory of that design brief but, it should be noted, do not give prominence to matters of visual and aesthetic appeal. However, the primary judge gave this material little apparent weight, beyond saying that the documentary evidence did not lead him to doubt Mr Swarbrick's evidence at the trial. His Honour did give much attention to the steps by which the Plug came into existence in its final form. There were disputes between witnesses on these matters. But, as a whole, that evidence is equivocal; it suggests that yacht design requires engineering skills and that the problems overcome as Mr Swarbrick progressed had been predominantly to do with matters of function. The primary judge gave limited attention in his reasons to the whole of the evidence of Mr Warwick Hood, a very experienced yacht designer who has practised naval architecture since 1954. Carr J did accept Mr Hood as an appropriately impartial expert witness, but said he preferred the evidence of Mr Swarbrick to that of Mr Hood to the extent there was a conflict87. His Honour did not disclose why that was his preference. Mr Hood described the JS 9000 as an example of a popular class of yacht, known as a "sports boat", designed to sail as fast as possible within the constraints of an overall length of about 9 metres. Speed was said to be the overriding consideration in the design of "sports boats" and all other factors were of secondary importance. Mr Hood said the design of "sports boats" was not substantially or mainly governed by considerations of appearance or pleasing aesthetics. Taken as a whole and considered objectively, the evidence, at best, shows that matters of visual and aesthetic appeal were but one of a range of considerations in the design of the Plug. Matters of visual and aesthetic appeal necessarily were subordinated to achievement of the purely functional aspects required for a successfully marketed "sports boat" and thus for the commercial objective in view. 87 (2004) 138 FCR 353 at 366. Kirby Crennan Conclusions respecting the Plug This state of the evidence must strongly influence the answer to the question whether the Plug was "a work of artistic craftsmanship", within the meaning of the Copyright Act and allowing for the "overlap" provision made by the 1989 Act. With wallpaper, a tapestry, stained glass window, piece of jewellery or Tiffany artefact, there is considerable freedom of design choice relatively unconstrained by the function or utility of the article so produced. But, as the evidence disclosed, that was not the case with the design constraints upon a class of yacht such as the JS 9000. The general considerations in play in deciding whether the Plug was "a work of artistic craftsmanship" appear from a discussion by Professor Denicola in his influential article, "Applied Art and Industrial Design: A Suggested Approach to Copyright in Useful Articles"88. The writer referred to the statement by Frank Lloyd Wright in 1894 challenging designers to use the machine to best advantage rather than to produce "with murderous ubiquity forms born of other times"; Professor Denicola continued89: "The dominant feature of modern industrial design is the merger of aesthetic and utilitarian concerns. It is the influence of nonaesthetic factors, the nexus between what the product must do and how it must look, industrial design from other artistic endeavors. The industrial designer as engineer – a perspective no less valid than industrial designer as artist – is subject to the functional constraints inherent in each undertaking." that distinguishes true During his cross-examination, Mr Swarbrick agreed that yacht design was a very specialised branch of naval architecture and that a naval architect was "basically an engineer". Mr Hood referred to a number of works on the practice of naval architecture and the design of yachts. He described as the main and 88 (1982-83) 67 Minnesota Law Review 707. The thesis of the article was accepted by the majority of the Court of Appeals for the Seventh Circuit in Pivot Point International Inc v Charlene Products Inc 372 F 3d 913 at 927 (2004). 89 (1982-83) 67 Minnesota Law Review 707 at 739. Kirby Crennan essential requirements of yacht design the application of mathematical and engineering principles together with the relevant principles of physics. In cross-examination, Mr Hood was taken to a number of books written by yacht designers and agreed that there was a substantial body of opinion that yacht design is an art or involves creative ability and artistic ability. Some of these authors Mr Hood did not hold in high regard because he saw them as influenced by a poetic view of a vocation that was basically concerned with engineering. Naval architects who held themselves out as accepting design briefs to produce beautiful vessels for the rich and famous were regarded by Mr Hood as "stylists". If a client told Mr Hood that he wanted a beautiful boat, Mr Hood would be unable to proceed further with the brief without going into matters of purpose and function, of what must be always a significant piece of engineering. This evidence adds force to the further statement by Professor Denicola in his article90: "The designer cannot follow wherever aesthetic interests might lead. Utilitarian concerns influence, and at times dictate, available choices. Indeed, aesthetic success is often measured in terms of the harmony achieved between competing interests.91" After referring to what he describes as "utilitarian considerations", including ease of operation, maintenance and cost of manufacture, Professor Denicola concludes that the cumulative influence of such matters "can render the designer's task quite unlike that confronting the painter or sculptor"92. That was true of the design of the Plug for the JS 9000. In Hensher93, Lord Simon asked whether the work in question was "the work of one who was in this respect an artist-craftsman?" He referred to "aim 90 (1982-83) 67 Minnesota Law Review 707 at 739. 91 "All design is a compromise of conflicting requirements and the most satisfying results are those where the priorities of the conflicting needs have been correctly assessed ...", Ashford, The Aesthetics of Engineering Design (1969) at 29. 92 (1982-83) 67 Minnesota Law Review 707 at 740. 93 [1976] AC 64 at 94. Kirby Crennan and impact"94. The works of a cobbler or dental mechanic, and a wheelwright were not works of artistic craftsmanship95. At the other extreme, the work of the maker of hand-painted tiles would be so regarded. Lord Simon went on96: "In between lie a host of crafts some of whose practitioners can claim artistic craftsmanship, some not – or whose practitioners sometimes exercise artistic craftsmanship, sometimes not. In the former class, for example, are glaziers. The ordinary glazier is a craftsman, but he could not properly claim that his craftsmanship is artistic in the common acceptation. But the maker of stained glass windows could properly make such a claim; and, indeed, the revival of stained glass work was one of the high achievements of the Arts and Crafts movement. In the latter class is the blacksmith – a craftsman in all his business, and exercising artistic craftsmanship perhaps in making wrought-iron gates, but certainly not in shoeing a horse or repairing a ploughshare. In these intermediate – or rather, straddling – classes come, too, the woodworkers, ranging from carpenters to cabinet-makers: some of their work would be generally accepted as artistic craftsmanship, most not. Similarly, printers, bookbinders, cutlers, needleworkers, weavers – and many others. In this straddling class also fall, in my judgment, the makers of furniture. Some of their products would be, I think, almost universally accepted as 'works of artistic craftsmanship'; but it would be a misuse of language to describe the bulk of their products as such." The thread running through this discussion is the significance of functional constraints, extreme for a dental mechanic, less so for a glazier or blacksmith, and depending upon the nature of the particular design brief. A horseshoe is one task; the Tijou gates, screens and grilles wrought for St Paul's Cathedral, Hampton Court and Chatsworth by the French Huguenot ironmaster97 were in a very different category. 94 [1976] AC 64 at 95. 95 [1976] AC 64 at 91. 96 [1976] AC 64 at 91-92. 97 Jean Tijou arrived in England in about 1689 and worked there until about 1712: see "Decorative Arts and Furnishings", The New Encyclopaedia Britannica, 15th ed (1988), vol 17 at 160. Kirby Crennan It may be impossible, and certainly would be unwise, to attempt any exhaustive and fully predictive identification of what can and cannot amount to "a work of artistic craftsmanship" within the meaning of the Copyright Act as it stood after the 1989 Act. However, determining whether a work is "a work of artistic craftsmanship" does not turn on assessing the beauty or aesthetic appeal of work or on assessing any harmony between its visual appeal and its utility. The determination turns on assessing the extent to which the particular work's artistic expression, in its form, is unconstrained by functional considerations. To decide the appeal it is sufficient to indicate the following. The more substantial the requirements in a design brief to satisfy utilitarian considerations of the kind indicated with the design of the JS 9000, the less the scope for that encouragement of real or substantial artistic effort. It is that encouragement which underpins the favourable treatment by the 1989 Act of certain artistic works which are applied as industrial designs but without design registration. Questions of fact and degree inevitably arise. In the present case, notwithstanding what Mr Swarbrick later said on the matter after litigation was on foot, the earlier statements in the promotional material and in the business plan, with the evidence of Mr Hood, should have led the primary judge to conclude that the Plug was not "a work of artistic craftsmanship" because the work of Mr Swarbrick in designing it was not that of an artist-craftsman. The hull and deck mouldings The hull and deck mouldings assumed particular importance in the Full Court. In its reasons98, the Full Court said that the primary judge "may have erred" in concluding that the Plug was a work of artistic craftsmanship because it was "no more than the means to the end of creating the mouldings that were to constitute the hull and deck of the Bateau Rouge". As explained earlier in these reasons, the primary judge had erred in his conclusion, but not because the Plug had been created as the preliminary step in a process of manufacture or, as the Full Court put it, "the means to the end". The conclusion expressed earlier in these reasons that the Plug was not a work of artistic craftsmanship has as a necessary corollary that the hull and deck moulds made from it were not works of that character. In any event, at trial Mr Swarbrick had not contended that the 98 (2005) 149 FCR 193 at 206. Kirby Crennan hull and deck moulds were independent works of artistic craftsmanship and Carr J therefore did not enter upon any such question99. Recognising this, in this Court counsel for Mr Swarbrick relied upon the hull and deck mouldings for the Bateau Rouge as independent works of artistic craftsmanship irrespective of their derivation from the Plug. Whilst the primary judge found that the hull and deck mouldings were works of artistic craftsmanship100 later in his reasons101, his Honour described both the moulds and the mouldings as "manifestations" of the same object, the Plug. In this Court, counsel for Mr Swarbrick referred to the findings by the primary judge as to the steps by which the hull and deck mouldings were produced from the moulds. A spray gel coat was applied to the moulds, a skin layer was hand-laid using derecane resin and the remainder of the laminate, skin and core was applied using a vacuum infusion process102. This was not the work of an artist-craftsman in the sense discussed earlier in these reasons. The upshot is that the primary judge correctly described, for present purposes, the hull and deck mouldings as manifestations of the Plug. Put another way, they might well be regarded as reproductions in a material form of the Plug within the meaning of s 31 of the Copyright Act. Thus, the statement of Lord Reid in the following passage in Hensher103 applies here: "It is common ground that we must consider the prototype and not the furniture put on the market by the appellants. Apparently this is because the articles put on the market were not works of craftsmanship. But if there was copyright in the prototype then the furniture put on the market by the appellants was copied from it, and the respondents' products were copied from the furniture which the appellants put on the market. 99 (2004) 138 FCR 353 at 372. 100 (2004) 138 FCR 353 at 372. 101 (2004) 138 FCR 353 at 375. 102 (2004) 138 FCR 353 at 358. 103 [1976] AC 64 at 77; see also at 79-80 per Lord Morris of Borth-y-Gest, 83 per Viscount Dilhorne. See also Coogi Australia Pty Ltd v Hysport International Pty Ltd (1998) 86 FCR 154 at 170. Kirby Crennan The respondents do not deny that this would be infringement of that copyright." There is no substance in the claim that the hull and deck mouldings are to be supported independently as works of artistic craftsmanship, thereby obviating the obstacle placed by s 77 of the Copyright Act in the path of Mr Swarbrick. Works of sculpture At first instance and in the Full Court, the appellants put an independent argument which they renewed in this Court. That argument should be rejected. In short, the appellants submit that (i) the Plug and the hull and deck mouldings of the Bateau Rouge were original artistic works, being sculptures within the meaning of par (a) in the definition of "artistic work" in s 10 of the Copyright Act; (ii) the primary judge so held104; (iii) therefore, these works do not fall within par (c) of the definition – "a work of artistic craftsmanship to which neither of the last two preceding paragraphs applies" – because one of the proceeding paragraphs, par (a), applies; (iv) as a consequence of (iii), neither the Plug nor the hull and deck mouldings is "a work of artistic craftsmanship" within the sense of par (a) of s 77(1); (v) the exception in par (a) of s 77(1) of the defence to the action of copyright infringement therefore cannot apply in the present case. Step (iv) in this chain of argument does not follow from step (iii). It has been remarked earlier in these reasons that some works within par (a) and par (b) of the definition of "artistic work" in s 10 may, and others may not, be of "artistic quality". Further, the text of the definition of "artistic work" accommodates, in par (c), the readily apparent proposition that, for example, at least some sculptures will be works of a rtistic craftsmanship105. Paragraph (c) of the definition sweeps up works of artistic craftsmanship which fall outside pars (a) and (b). Paragraph (c) does not exclude as works of artistic craftsmanship those works which also happen to answer the specific criteria of par (a) or par (b). Thus, par (a) of s 77(1) removes any work of artistic craftsmanship from the scope of the defence for infringement provided by s 77(2). 104 (2004) 138 FCR 353 at 372. 105 See, for example, the craftworks depicting Territorian animals, reptiles and insects considered by Angel J in Wildash v Klein (2004) 16 NTLR 66; 61 IPR 324. Kirby Crennan During the course of this litigation, the Copyright Act was further amended, with effect from 17 June 2004, by the 2003 Act. This accommodated changes made by the New Designs Act and also made amendments with respect to the design-copyright "overlap". From par (c) of the definition of "artistic work", the words "to which neither of the last two preceding paragraphs applies" are now omitted and in their place the paragraph reads, "whether or not mentioned in paragraph (a) or (b)"106. In the Explanatory Memorandum to the Bill for what became the 2003 Act, the following was said of this amendment107: "This amendment clarifies that a work can be both a work of artistic craftsmanship and an artistic work under paragraph (a) or (b) of the definition of 'artistic work'. For example, a sculpture can be a work of artistic craftsmanship notwithstanding that it is also an artistic work under paragraph (a). This amendment is intended to remove uncertainty as to the meaning of the term 'work of artistic craftsmanship' for the purposes of section 77. Section 77 provides a defence to copyright infringement where a corresponding design is applied industrially and the design is not registered or is not registrable under the Designs Act. Section 77 does not operate where the artistic work that relates to the corresponding design is a work of artistic craftsmanship. If a sculpture is a work of artistic craftsmanship, it will retain copyright protection after being applied industrially (but copyright protection is lost if a corresponding design is registered as a design)." referred The uncertainty the Explanatory Memorandum, independently of the amendment made by the 2003 Act was resolved in the manner explained above in these reasons. The outcome in this Court thus is consistent with the more explicit provision later made by the 2003 Act but has not been dictated by the existence of the subsequent amendment. 106 2003 Act, Sched 1, Pt 1, Item 1. 107 Designs (Consequential Amendments) Bill 2002 (Cth), House of Representatives, Explanatory Memorandum at 2. Kirby Crennan the Explanatory Memorandum108, reference recommendations 170-181 by the Australian Law Reform Commission in its Report No 74, titled Designs. Recommendation 172 is in the following terms: is also made "Works of artistic craftsmanship produced in multiple quantities should continue to be protected by copyright. 'Artistic craftsmanship' should be defined in the Copyright Act. The Copyright Act should make clear that a work can be both a work of 'artistic craftsmanship' and an artistic work under s 10(1)(a) and (b)." The amendment made by the 2003 Act and discussed above implemented the proposal in the third sentence of recommendation 172. The proposal for a definition of "artistic craftsmanship" was not implemented. Hence, the continuing importance of the primary issue decided in this appeal. Orders The appeal should be allowed with costs. The orders of the Full Court made on 8 December 2005 should be set aside. In place thereof, the appeal to that Court should be allowed with costs. The question then arises as to what, in the light of the reasons of this Court, should follow for orders 1-8 made by Carr J on 24 June 2004 upon the issues which, on 6 November 2003, he had directed there be a separate hearing and determination. Order 1 was a declaration as to the subsistence of copyright in respect of artistic works, being the Plug, the moulds, the hull and deck mouldings, the Bateau Rouge and certain drawings. However, the critical issue was whether they were works of artistic craftsmanship, a matter upon which turned the defence to infringement. The declaration in order 1 did not reflect that situation and should also be set aside. Orders 2, 3 and 4 were declarations respecting infringement of copyright. In the light of the decision now made in this Court, those declaratory orders cannot stand. They must be set aside. 108 Designs (Consequential Amendments) Bill 2002 (Cth), House of Representatives, Explanatory Memorandum at 1. Kirby Crennan Order 8 continued in force until further order the interlocutory injunction granted on 12 September 2003. In the light of the concession by counsel in this Court to which reference has been made, this injunction was cast in terms which were too wide. In any event, given the outcome of this appeal, order 8 should be set aside with the consequence that the interlocutory relief is dissolved. This will also operate to release any of the appellants from the undertakings so given. Order 6 held over for further determination questions of any additional relief to which Mr Swarbrick might be entitled against the present appellants. That portion of order 6 cannot stand. The remainder of order 6 and the whole of order 5 was directed to questions arising in respect of the cross-claims. Orders 5 and 6 should be set aside and it should be ordered that all questions remaining with respect to the cross-claims be stood over for determination by a judge of the Federal Court in conformity with the reasons of this Court. In his reasons for judgment, Carr J gave detailed consideration to issues of costs109. Order 7 provided that the present appellants pay Mr Swarbrick's costs of the proceedings to date including any reserved costs and the costs of the motions, notice of which was filed on 12 September 2003 and 3 October 2003 respectively. These were the motion whereby Mr Swarbrick obtained an interlocutory injunction and the unsuccessful motion by the appellants to discharge the injunction. In place of order 7, it should be ordered that the respondent pay the costs of the appellants of the proceedings before Carr J up to 7 July 2004, the date of entry of his orders made on 24 June 2004, including any reserved costs and also the costs of the two motions. The outcome is that all of the orders made by Carr J should have been set aside by the Full Court. This Court should now so provide. In place of the orders of Carr J, an order should now be made dismissing the present respondent's application to the Federal Court with consequential orders as set out above. 109 (2004) 138 FCR 353 at 380-383.

HIGH COURT OF AUSTRALIA COMMISSIONER OF TAXATION APPELLANT AND SYMONE ANSTIS RESPONDENT Commissioner of Taxation v Anstis [2010] HCA 40 11 November 2010 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation S J Gageler SC, Solicitor-General of the Commonwealth with S H Steward SC and L A Hespe for the appellant (instructed by Gadens Lawyers) M L Anstis for the respondent (instructed by Michael Anstis) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Anstis Income tax – Assessable income – Respondent received periodic payments of youth allowance under Social Security Act 1991 (Cth) – Whether receipts income according to ordinary concepts. Income tax – Allowable deductions – Respondent incurred certain expenses in undertaking university study – Respondent required to undertake full-time study to establish and retain entitlement to youth allowance – Whether expenses incurred in gaining or producing assessable income – Whether expenses of a private nature. Words and phrases – "incurred in gaining or producing", "ordinary income", "private or domestic nature". Income Tax Assessment Act 1997 (Cth), ss 6-5(1), 8-1, 51-1, 51-10, 51-35. FRENCH CJ, GUMMOW, KIEFEL AND BELL JJ. The central issue in this appeal is whether certain expenses incurred by a student undertaking university studies may be deducted under s 8-1 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act") from the assessable income of that student as a recipient of a "youth allowance" payment. Provision for that payment is made by Pt 2.11 (ss 540-567F) of the Social Security Act 1991 ("the Social Security Act")1. During the relevant period, the respondent (Ms Anstis) was enrolled as a full-time student undertaking a teaching degree at the Australian Catholic University. In her tax return for the year ended 30 June 2006, the respondent returned $14,946 as wages earned as a part-time sales assistant, and $3,622 received by way of youth allowance payments. She claimed as an allowable deduction an amount of $920 for "expenses of self-education", which was reduced from $1,170 by operation of s 82A(1) of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"). The self-education expenses comprised the depreciation in value of a computer ($692), textbooks and stationery ($264), a "student administration fee" ($80), supplies for children during the respondent's teaching rounds ($75) and travel expenses other than to university ($59). The Commissioner of Taxation ("the Commissioner") maintains that such expenses are not deductible by the recipient of a youth allowance under s 8-1 of the 1997 Act. The Commissioner disallowed the deduction of $920, and later disallowed an objection by the respondent against the amended assessment issued the Commissioner's decision in the Administrative Appeals Tribunal. However, her application to the Federal Court (Ryan J) to "appeal" against the decision of the Tribunal was successful2. Thereafter, the Full Court (Finn, Sundberg and Edmonds JJ) dismissed an appeal by the Commissioner against the decision of The respondent unsuccessfully sought review of to her. The resolution of the Commissioner's appeal to this Court turns upon three questions. The first is whether youth allowance is assessable income under the 1997 Act. The second is whether the respondent's self-education expenses were 1 Provisions of the Social Security Act applicable in the present appeal have been amended since the relevant year of income. References in this judgment are to the provisions of the Act as they stood at 30 June 2006. 2 Anstis v Federal Commissioner of Taxation (2009) 72 ATR 940. 3 Federal Commissioner of Taxation v Anstis (2009) 180 FCR 288. Bell incurred "in gaining or producing" her assessable income. And the third is whether, if the expenses were so incurred, they were nonetheless to be disallowed as being of a "private" nature. For the following reasons, the income was assessable, the expenses claimed were deductible and not of a "private" nature, and the appeal should be dismissed with costs. The social security legislation Sections 540-540C of the Social Security Act dealt with qualification for payments of youth allowance. The parties do not dispute that the respondent was qualified to receive youth allowance. In the respondent's circumstances, the relevant qualification criteria were contained in s 540 and required her, throughout the relevant period, to: (i) satisfy "the activity test" in s 541; (ii) be of "youth allowance age" as defined in ss 543-543B; and (iii) be an "Australian resident" as defined in s 7(2). It appears that the respondent, presumably because of her status as a full-time student, was not required to enter into a "Youth Allowance Activity Agreement" under s 544A and so the remaining requirement, in s 540(c), may be put to one side. Section 541(1) provided that a person could satisfy "the activity test" in one of four ways. In the present case, the respondent could satisfy the activity test if she satisfied the Secretary to the relevant Department that she was "undertaking full-time study". Section 541B(1) relevantly provided as follows: "For the purposes of this Act, a person is undertaking full-time study if: the person: is enrolled in a course of education at an educational institution; … and the person: is undertaking in the particular study period (such as, for example, a semester) for which he or she is enrolled for the course; or intends to undertake in the next study period for which he or she intends to enrol for the course; Bell (iii) … at least three-quarters of the normal amount of full-time study in respect of the course for that period … … and the course in question is an approved course of education or study (see subsection (5)); and in the Secretary's opinion, the person is making satisfactory progress towards completing the course." In forming an opinion under par (d) of s 541B(1), the Secretary was to have regard to the guidelines set by the Minister by legislative instrument (ss 541B(3A)-(3B)). Those guidelines provided that, in the respondent's case, satisfactory progress generally meant completion of the course within the standard minimum length of the course plus an additional period for completion of one uncompleted subject or unit that was part of the course4. Part 3, Div 2 of the Social Security (Administration) Act 1999 (Cth) ("the Administration Act") deals with the determination by the Secretary of claims made under s 11 of that Act for a "social security payment". Section 3(2) of the Administration Act provides that, unless the contrary intention appears, expressions used in the Social Security Act bear the same meaning when used in the Administration Act. Thus a "social security payment", as defined in s 23(1) of the Social Security Act, includes a "social security benefit", which in turn includes youth allowance. Section 37(1) of the Administration Act provides that the Secretary must determine that a claim be granted if satisfied that the claimant is qualified for the payment and the payment is payable. Youth allowance becomes payable to a qualified person on his or her "start day" (s 41(1)). This, if the person is qualified for the payment on the day on which they make a claim for the payment, is the day of the claim (Sched 2, Pt 2, cl 3(1)). It follows that youth allowance became payable to the respondent once she was qualified under Pt 2.11 of the Social Security Act and had made a claim for the payment. Section 43(1) of the Administration Act stipulates that a "social security periodic payment" is to be paid in arrears, and by instalments relating to such periods, not exceeding 14 days, as the Secretary determines. Those periodic 4 Youth Allowance (Satisfactory Study Progress Guidelines) Determination 1998 (Cth), s 2.1. Bell payments are defined to include a social security benefit such as youth allowance (Sched 1, cl 1(1)). The instalments are to be paid at such times as the Secretary determines (s 43(2)). The rate of youth allowance payable to the respondent was determined in accordance with a formula set out in s 1067G of the Social Security Act (s 556(1)). In essence, s 1067G provides for a basic rate of allowance (Module B) which may be subject to certain additions or reductions, depending upon the means and circumstances of the recipient and, in some cases, the recipient's parents or partner. The additions include amounts supplementary to the basic rate such as a pharmaceutical allowance (Module C) or remote area allowance (Module K). Further, an amount of "rent assistance" may be added to the person's basic rate under Pt 3.7 of the Social Security Act "to help cover the cost of rent" (s 1070A). The rate of youth allowance payable was liable to reduction for a period if the respondent committed an "activity test breach" by failing to satisfy the activity test without reasonable excuse (ss 550A(a) and 556(2)). If she committed three or more breaches within a period of two years, the payment would not have been payable to the respondent for a period (ss 550 and 550B). It follows that the respondent would have been liable to a period of reduction or non-payment of youth allowance if she was no longer undertaking full-time study without reasonable excuse. Section 80(1) of the Administration Act also provided that, if satisfied that a person is not or was not qualified for their payment or that their payment is not or was not payable, the Secretary "is to determine that the payment is to be cancelled or suspended". Thus it appears that during the relevant time it was also possible for, if not required of, the Secretary to cancel or suspend the respondent's youth allowance payment if she was not qualified for it due to her ceasing to undertake full-time study or make satisfactory progress in her course5. In any event, a sufficient failure, or number of failures, to satisfy the activity test would have resulted in either a period of reduction or non-payment under the provisions outlined above, or a cancellation or suspension of payment under s 80(1). 5 Section 80(3A) of the Administration Act now provides that youth allowance cannot be cancelled under s 80(1) if the person is qualified for the payment but is subject to a "compliance penalty period". This is defined in s 23(1) of the current version of the Social Security Act as including non-payment by reason of s 550B or s 551. Sections 550B and 551 provide that a failure or failures to satisfy the activity test results in non-payment for a specified period; no provision is made for reducing the rate of payment. Bell Assessable income under the 1997 Act It is desirable first to refer to the relevant provisions of the 1997 Act. Section 4-15(1) provides that taxable income for an income year is the result of subtracting a taxpayer's deductions from assessable income. The taxpayer's assessable income includes "income according to ordinary concepts", which is called "ordinary income" (s 6-5(1)). As has been said6, that is an evident reference to the statement by Jordan CJ that the forms of receipt falling within the term "income", and the principles to be applied to ascertain how much of those receipts ought to be treated as income, "must be determined in accordance with the ordinary concepts and usages of mankind, except in so far as the statute states or indicates an intention that receipts which are not income in ordinary parlance are to be treated as income"7. The reference to "ordinary parlance" and to the "ordinary concepts and usages of mankind" are "no mere matters of ritual incantation; they identify the essential nature of the inquiry"8. Amounts of ordinary income may be made exempt from income tax by a provision of the 1997 Act or another Commonwealth law (s 6-20(1)). Section 51-1 of the 1997 Act states that "[t]he amounts of ordinary income and statutory income covered by the following tables are exempt from income tax" and notes the existence of exceptions to some of those exemptions. Item 2.1A in the table in s 51-10 provides that, for a full-time student, a "scholarship, bursary, educational allowance or educational assistance" is exempt, subject to s 51-35. in par (b), a That section carves out from "Commonwealth education or training payment" made to a full-time student, which is defined to include youth allowance (s 52-145(1)(b)(iv)). However, the total supplementary amount of such a payment, including, for example, rent assistance and the pharmaceutical and remote area allowances referred to above, are made exempt from income tax (s 52-140). the exemption, relevantly 6 Federal Commissioner of Taxation v Stone (2005) 222 CLR 289 at 294 [8], 310 [73]; [2005] HCA 21; Spriggs v Federal Commissioner of Taxation (2009) 239 CLR 1 at 17 [54]; [2009] HCA 22. 7 Scott v Federal Commissioner of Taxation (1935) 35 SR (NSW) 215 at 219. 8 Federal Commissioner of Taxation v Montgomery (1999) 198 CLR 639 at 661 [64]; [1999] HCA 34. Bell Is the respondent's youth allowance assessable income? Mr Anstis, a solicitor, is the father of the respondent and appeared on her behalf on the appeal. The respondent's written submissions raised the threshold question whether in any event her youth allowance was assessable income. That issue appears not to have been the subject of dispute before the Tribunal, the primary judge or the Full Court. No notice of contention was filed by the respondent and no leave to cross-appeal sought so as to rely upon that ground. However the the Commonwealth Solicitor-General, who appeared Commissioner, took no objection to the issue being raised in this Court. Indeed he relied on the basis on which youth allowance is assessable income as supporting the submission that the relevant outgoings were not deductible. for The Commissioner contends that a payment of youth allowance is income according to ordinary concepts as a "gain which is one of a number derived periodically", there being no other element of form pointing to a different conclusion9. In Federal Commissioner of Taxation v Myer Emporium Ltd10, five members of this Court explained: "The periodicity, regularity and recurrence of a receipt has been considered to be a hallmark of its character as income in accordance with the ordinary concepts and usages of mankind." Some years earlier in Federal Commissioner of Taxation v Dixon11, this Court considered whether payments received in the year ended 30 June 1943 from an employer by a former employee, who had enlisted and was serving in the defence forces, to compensate him for the difference between his military pay and the civilian wage he would otherwise have received, were income for the purposes of the 1936 Act. The employee made no undertaking that he would return to the employ of his employer, and no undertaking was given that he would be re-employed upon completion of his war service. Dixon CJ and Williams J took several factors into account in deciding that the payment was income according to ordinary principles under s 25 of 1936 Act12. Their Honours 9 Parsons, Income Taxation in Australia (1985) at 70 [2.172], 73 [2.179]. 10 (1987) 163 CLR 199 at 215; [1987] HCA 18. 11 (1952) 86 CLR 540; [1952] HCA 65. 12 See Barrett, Principles of Income Taxation, 2nd ed (1981) at 32-33 [5.07]-[5.08]. Bell relied on the expression "allowances or gratuities received in the capacity of an employee or in relation to any services rendered" in the definition of "income from personal exertion" in s 6 of the 1936 Act13. They held that the payments were really incidental, regardless of their source, to his employment or service as a solider14. After considering the total situation of the taxpayer, they concluded15: "Because the £104 was an expected periodical payment arising out of circumstances which attended the war service undertaken by the taxpayer and because it formed part of the receipts upon which he depended for the regular expenditure upon himself and his dependants and was paid to him for that purpose, it appears to us to have the character of income." The other member of the majority, Fullagar J, referred to periodicity as having had some importance in previous cases16, but did not regard it as decisive and held the payments were in effect in substitution for wages and thus income under There is a difficulty in making good absolute propositions in this field. In Federal Commissioner of Taxation v Montgomery18, Gaudron, Gummow, Kirby and Hayne JJ recognised that: "income is often (but not always) a product of exploitation of capital; income is often (but not always) recurrent or periodical; receipts from carrying on a business are mostly (but not always) income". 13 (1952) 86 CLR 540 at 556. 14 (1952) 86 CLR 540 at 556-557. 15 (1952) 86 CLR 540 at 557. McTiernan and Webb JJ dissented. 16 Seymour v Reed [1927] AC 554 at 570; Atkinson v Federal Commissioner of Taxation (1951) 84 CLR 298 at 308; [1951] HCA 64. 17 (1952) 86 CLR 540 at 567-569. 18 (1999) 198 CLR 639 at 663 [68]. Bell Thus, by itself, periodicity of receipts will not necessarily be sufficient to give to those receipts the character of income19. The periodical nature of a receipt, as was recognised in Dixon20, enables the recipient to rely upon such amounts for regular expenditure21. However, periodicity alone was not the basis on which Dixon CJ and Williams J held that the payments to the taxpayer in Dixon were in the nature of income. The character of a receipt in the hands of the taxpayer is determined having regard to the totality of the circumstances. That a receipt is periodical is a characteristic tending to show that it is received as income. In Keily v Commissioner of Taxation22, White J derived assistance from the reasoning of Dixon CJ and Williams J in Dixon, when deciding whether an aged pension payable under a previous version of the Social Security Act was income. His Honour referred to the passage in Dixon set out above and said23: "In the case of an aged person's pension, the generally accepted characteristics of income (recurrence, regularity and periodicity) are all present. In addition, the pensioner has a continuing expectation of receiving periodic payment, an expectation arising out of established government policy with respect to the support and welfare of aged citizens. Pension payments form part of the receipts upon which a pensioner depends for support. And a pension is paid to the pensioner for that purpose. the criteria or A pensioner, characteristics of income discussed in Dixon's case." therefore, satisfies A periodic pension or allowance, paid by way of compensation for loss of income that would otherwise have been received, has also been held to be income according to ordinary concepts24. An allowance paid regularly to a student 19 Cf Federal Commissioner of Taxation v Stone (2005) 222 CLR 289 at 308 20 (1952) 86 CLR 540 at 557. 21 Cf Parsons, Income Taxation in Australia (1985) at 72-73 [2.177]-[2.178]. 22 (1983) 32 SASR 494 at 495. 23 (1983) 32 SASR 494 at 495-496. 24 Melkman's Executor v Commissioner of Taxation (1987) 15 FCR 311 at 312-313; affirmed on appeal: Melkman v Commissioner of Taxation (1988) 20 FCR 331 Bell teacher by way of a bond, a condition of which required him to repay all or part of the bond if he failed to complete a teachers' training course and be a full-time teacher for three years, was held in New Zealand not to be a gratuity but income The Solicitor-General emphasised in his submissions that youth allowance is a periodic "living allowance", enabling the recipient to rely upon the payment as regular expenditure for the recipient and any dependants. The provisions of the Social Security Act do not stipulate or limit the manner in which payments of youth allowance may be expended. Recipients are not required to account to the Secretary for the manner in which payments are in fact expended. But as is made clear in Dixon, actual reliance by the taxpayer is not required to give a receipt the character of income. In the present case, the respondent was paid periodically in accordance with s 43 of the Administration Act. It is apparent from the terms of Pt 2.11 of the Social Security Act that the legislative purpose of youth allowance is the provision of income support to young Australians who are unemployed and looking for work, who have medical conditions impeding their ability to study or work, or who are undertaking apprenticeships or full-time study26. Insofar as that policy reflects the character of the expenditure by the Commonwealth as payer, it is not determinative of the character of the receipt in the hands of the taxpayer as recipient27, but it nonetheless explains why the respondent received the payments. In the present case, the reasoning of White J in Keily applies with some force. Youth allowance payments enable recipients to rely upon them for regular expenditure, and recipients can expect to receive those payments but only so long as they satisfy the various requirements of the social security legislation. It follows that such amounts are income according to ordinary concepts. 25 Reid v Commissioner of Inland Revenue (1983) 6 TRNZ 494 at 499-501; 6 NZTC 61,624 at 61,629-61,630. See also Commissioner of Taxation v Ranson (1989) 25 FCR 57 at 64-65. 26 See also the second reading speech for the Social Security Legislation Amendment (Youth Allowance) Bill 1997 (Cth): Commonwealth, House of Representatives, Parliamentary Debates (Hansard), 2 October 1997 at 9121. 27 Federal Commissioner of Taxation v McNeil (2007) 229 CLR 656 at 663 [20]; [2007] HCA 5. Bell Such a characterisation is consistent with the assumption28 made by the Commonwealth Parliament in s 51-1 of the 1997 Act that, but for their exemption in Item 2.1A of s 51-10, payments of "educational allowances" or "educational assistance" are amounts of income according to ordinary concepts. At least since 1951, when the exemption in s 23(z) was inserted in the 1936 Act29, amounts in the nature of youth allowance were considered to be income as that term is understood in ordinary usage30. And since 1985, when par (v) of s 23(z) was inserted adding a further exception to the exemption31, amounts received by students under tertiary education assistance schemes have not enjoyed the benefit of that exemption. Were the deductions incurred in gaining or producing the respondent's assessable income? The essential provision concerning deductions is s 8-1 of the 1997 Act, which provides in relevant part as follows: "(1) You can deduct from your assessable income any loss or outgoing to the extent that: it is incurred in gaining or producing your assessable income; (2) However, you cannot deduct a loss or outgoing under this section to the extent that: 28 See Deputy Federal Commissioner of Taxes (SA) v Elder's Trustee and Executor Co Ltd (1936) 57 CLR 610 at 625-626; [1936] HCA 64; Grain Elevators Board (Vict) v Dunmunkle Corporation (1946) 73 CLR 70 at 85-86; [1946] HCA 13. 29 Income Tax and Social Services Contribution Assessment Act 1951 (Cth), s 5(c). 30 See Commonwealth, Committee on Taxation, Report on Income Tax – Scholarships and Similar Payments for Educational Purposes (Reference No. 11), 10 October 1951 at 3. 31 Taxation Laws Amendment Act (No 3) 1985 (Cth), s 21(c). Bell it is a loss or outgoing of a private or domestic nature". The deduction for depreciation of the computer properly fell to be determined not under s 8-1 but under s 40-25 of the 1997 Act. The Commissioner did not argue before the Tribunal or the primary judge that it was the different test in s 40-25 that applied. The Full Court refused to entertain the Commissioner's argument regarding s 40-2532 and the matter was not raised in this Court. As for the remainder of the expenses, the test to be applied to deductions under s 8-1(1)(a) is not materially different from its predecessors, and regard may be had to the decided cases concerning the latter33. The preposition "in" found in the phrase "in gaining or producing" has long been understood as meaning "in the course of" gaining or producing34. In Ronpibon Tin NL v Federal Commissioner of Taxation35, when dealing with s 51(1) of the 1936 Act, this Court held that for a loss or outgoing to be deductible it is: "both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income or, if none be produced, would be expected to produce assessable income". The circumstances giving rise to the present appeal are, as Ryan J noted36, quite different from the authorities37 dealing with "self-education expenses". In those cases the taxpayer carried on a business, or was already in employment, to which the studies related. The prospect of the future employment of the 32 (2009) 180 FCR 288 at 294-295 [24]-[25]. 33 Spriggs v Federal Commissioner of Taxation (2009) 239 CLR 1 at 17 [53]. 34 Amalgamated Zinc (De Bavay's) Ltd v Federal Commissioner of Taxation (1935) 54 CLR 295 at 303, 309; [1935] HCA 81; Spriggs v Federal Commissioner of Taxation (2009) 239 CLR 1 at 18 [55]. 35 (1949) 78 CLR 47 at 57; [1949] HCA 15. 36 (2009) 72 ATR 940 at 953 [59], 955 [63]. 37 Federal Commissioner of Taxation v Finn (1961) 106 CLR 60; [1961] HCA 61; Federal Commissioner of Taxation v Hatchett (1971) 125 CLR 494; [1971] HCA 47; Federal Commissioner of Taxation v Smith (1978) 19 ALR 493; Federal Commissioner of Taxation v Lacelles-Smith (1978) 8 ATR 524. Bell respondent as a teacher was not the basis on which her education expenses have been held to be deductible. Rather, the question is whether the occasion of her expenses was productive of her "passive income"38, in the form of youth allowance, and assessable on the basis of the reasoning in Dixon and Keily. It may be said that the income was assessable not by reason of any personal exertion or exploitation of property on the part of the respondent. However, contrary to the submission by the Commissioner, that does not inexorably lead to a conclusion that there may be no deductions of any kind allowed under s 8-1 of the 1997 Act. The notion of "gaining or producing" income within the meaning of s 8-1(1)(a) is wider than those activities which may be said to earn income. According to its ordinary meaning, to "gain" means not only to "earn or obtain (a living)" but to "obtain, secure or acquire" or to "receive"39. Similarly, the ordinary meaning of the verb "produce" is to "bring (a thing) into existence"40 and is not limited to bringing something into existence by mental or physical labour. Essential to the inquiry of deductibility is the identification of that which is productive of the assessable income41. To put it another way, one must ask how the assessable income was (or was expected to be) gained or produced. Contrary to what the Full Court said, the respondent was not "paid to undertake [study]"42 and that was not required to be so for the deductions to be allowable. Rather, as Ryan J said43, the assessable youth allowance income received by the respondent was gained or produced by her entitlement to that payment consequent on the determination by the Secretary that she qualified for the payment. That statutory right to payment44 would be retained by her, without 38 See Parsons, Income Taxation in Australia (1985) at 469 [8.56]. 39 New Shorter Oxford English Dictionary, 4th ed (1993). 40 New Shorter Oxford English Dictionary, 4th ed (1993). 41 See Federal Commissioner of Taxation v Day (2008) 236 CLR 163 at 179 [31]; [2008] HCA 53. 42 (2009) 180 FCR 288 at 297 [40]. 43 (2009) 72 ATR 940 at 952 [54]-[55]. 44 See Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 31 [38], 65-66 [140], 155 [452]; [2009] HCA 23. Bell reduction, non-payment, suspension or cancellation, so long as she maintained her qualification for the payment by satisfying the activity test by undertaking full-time study so defined. The reason or motive of the respondent for incurring those education expenses, which could be characterised, for example, as obtaining a qualification to undertake future employment as a teacher, is not determinative of the question whether they were incurred in gaining or producing income45. The occasion of the outgoings was to be found in what the respondent did to gain or produce, by establishing and retaining her entitlement to, the receipts provided by the terms of the social security legislation. Were the deductions of a private nature? Against the prospect that the outgoings were deductible under s 8-1(1)(a), the Commissioner relied on an alternative ground of appeal that the outgoings were nonetheless of a "private" nature and so were not deductible by reason of s 8-1(2)(b). This ground was not raised in the Federal Court but, in the absence of any further evidence the taxpayer might have led affecting this question of law, the grant of special leave in this Court encompassed that ground. In John v Federal Commissioner of Taxation46, Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ accepted that on then existing authority a loss or outgoing could be incurred in gaining or producing assessable income and yet not be deductible by reason of its domestic nature. Their Honours went on to consider losses or outgoings of a private nature and said47: "In Federal Commissioner of Taxation v Hatchett48 Menzies J commented that '[i]t must be a rare case where an outgoing incurred in gaining assessable income is also an outgoing of a private nature'. His Honour's statement was accepted by Wilson J, with whom Mason J agreed, in 45 Federal Commissioner of Taxation v Day (2008) 236 CLR 163 at 183-184 [39]; cf Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1 at 17; [1991] HCA 42. 46 (1989) 166 CLR 417 at 427; [1989] HCA 5. 47 (1989) 166 CLR 417 at 431. 48 (1971) 125 CLR 494 at 498. Bell [Federal Commissioner of Taxation v] Forsyth49. This view bears a close similarity to the view expressed in Ronpibon Tin50 in relation to a loss or outgoing incurred in gaining or producing exempt income. However, in the case of a loss or outgoing incurred in gaining or producing exempt income, it is that characteristic which takes it outside the description of a loss or outgoing incurred in gaining or producing assessable income, whilst the view expressed in Hatchett51 is that the fact that an outgoing falls within the description of a loss or outgoing incurred in gaining or producing assessable income serves (other than in a rare case) to stamp the loss or outgoing as one not bearing the character of a loss or outgoing of a private nature. We do not see any necessary antipathy between a loss or outgoing incurred in gaining or producing assessable income and a loss or outgoing of a private nature." Their Honours then applied the test of "essential character" as adopted in Handley v Federal Commissioner of Taxation52 and Forsyth. The question presented for resolution on this appeal is unusual because the outgoings incurred in study undertaken by the respondent were not deductible by reason of that study bearing some relation to an existing business or existing employment on her part. Those outgoings were deductible by reason of their being incurred in the course of her retention of a statutory right to payment. The authorities of Federal Commissioner of Taxation v Hatchett53 and Commissioner of Taxation v Finn54 are thus of limited assistance in the instant case; those taxpayers were in employment, and the outcome for each decision in this Court turned on the question of whether the outgoings were incurred in gaining or producing income. 49 (1981) 148 CLR 203 at 216; [1981] HCA 15. 50 (1949) 78 CLR 47. 51 (1971) 125 CLR 494. 52 (1981) 148 CLR 182; [1981] HCA 16. 53 (1971) 125 CLR 494. 54 (1961) 106 CLR 60. Bell The terms "private" and "domestic" in s 8-1(2)(b) would seem difficult in their application to an entity other than a natural person. It is also difficult to apply them where, unlike the situation in Commissioner of Taxation v Cooper55, there is no available dichotomy between an essentially "private" expense and an essentially "working or business" expense. In Cooper, Lockhart J and Hill J held that expenditure by a footballer, in accordance with an instruction by his coach, on amounts of food and drink he consumed in addition to his normal meals were not incurred in gaining or producing income, and were in any event of a private nature56. Hill J explained that57: "the essential character of expenditure on food and drink will ordinarily be private rather than having the character of a working or business expense. However, the occasion of the outgoing may operate to give to expenditure on food and drink the essential character of a working expense in cases such as those illustrated of work-related entertainment or expenditure incurred while away from home." Hill J, in considering the positive limb of s 51(1) of the 1936 Act, referred in Cooper to the English Court of Appeal decision in Norman v Golder (Inspector of Taxes)58. There, Lord Greene MR said that medical expenses, food and clothes were "laid out in part for the advantage and benefit of the taxpayer as a living human being" and so were not "wholly and exclusively laid out or expended for the purposes of the trade, profession, employment, or vocation" under the then applicable rule concerning deductions. The Master of the Rolls held further that medical expenses could not be deducted as they were expenses for a domestic or private purpose in contrast to being for the purpose of a trade or profession. However, that may be difficult to reconcile with his Lordship's earlier statement that medical expenses were laid out in part for the benefit of a taxpayer as a human being, which implies mixed purposes of expenditure. There is no such dichotomy of purposes under the 1997 Act, as is particularly apparent in this case, and Norman v Golder must be read accordingly. 55 (1991) 29 FCR 177. 56 (1991) 29 FCR 177 at 185, 201-202. 57 (1991) 29 FCR 177 at 201. 58 [1945] 1 All ER 352 at 354. Bell The Commissioner contended that the respondent's expenditure was private in nature as it was an attempt by her to better herself as an individual; it was an investment in "human capital". However, in Finn, Windeyer J observed59: "Outgoings incurred for the genuine purpose of acquiring or maintaining knowledge and skill in a vocation do not become an outgoing 'of a private nature' simply because the taxpayer got pleasure and satisfaction in increasing his knowledge and attainments." It follows that the respondent's desire to obtain a degree, whether to enable her to become a teacher or for some other reason, cannot deny the circumstance that expenses occasioned by her enrolment, full-time study and satisfactory progress in that degree were incurred by her as a recipient of youth allowance. The outgoings did not lose their connection with the "position" she held as a recipient of youth allowance simply because she might have been studying for reasons other than enjoying an entitlement to youth allowance. As Hill J recognised in Cooper60, in relation to the consumption of food or drink, the concept of a particular type of expenditure being absolutely or always "private" cannot be sustained. There is no sufficient foundation for a conclusion that the expenditures by the respondent were essentially private in nature within the sense of s 8-1(2)(b) of the 1997 Act. Order The appeal should be dismissed with costs. 59 (1961) 106 CLR 60 at 70. 60 (1991) 29 FCR 177 at 201. See also the remarks of Wilcox J at 189. HEYDON J. The respondent drew attention to the Second Reading Speech for the Social Security and Other Legislation Amendment (Australian Apprentices) Bill 2009, delivered in the House of Representatives on 28 May 2009 by the Minister for Education, Minister for Employment and Workplace Relations and Minister for Social Inclusion. The purpose of the respondent's reference was to refute a contention advanced by the appellant that all social security payments including Youth Allowance and Disability Support Pension have the same relevant characteristics. The respondent aimed to do this by showing that payments made pursuant to social security legislation can have multiple objectives. The passage relied on was61: "Tackling climate change and building a more environmentally sustainable base for Australian industry and the Australian economy are among the great challenges facing the nation. The programs that are the subject of this legislation represent significant steps to meet the growing demand for skills in sustainability." The Minister also said62: "Skills for Sustainability for Australian Apprentices is an outcome of the Australia 2020 Summit and aims to accelerate industry's and the tertiary education sector's response to climate change by providing practical incentives for industry to focus on developing skills for sustainability." These passages illustrate the truth that recourse to Second Reading Speeches is rarely helpful. Otherwise I agree with French CJ, Gummow, Kiefel and Bell JJ that the appeal should be dismissed, and with their reasons for that conclusion. 61 Australia, House of Representatives, Parliamentary Debates (Hansard), 28 May 62 Australia, House of Representatives, Parliamentary Debates (Hansard), 28 May

HIGH COURT OF AUSTRALIA APPELLANTS AND KYM LOUISE TIGHE & ORS RESPONDENTS Pike v Tighe [2018] HCA 9 14 March 2018 ORDER Appeal allowed. Set aside orders 2 to 5 of the orders made by the Court of Appeal of the Supreme Court of Queensland on 23 December 2016 and, in their place, order that: the appeal be dismissed; and the matter be remitted to the primary judge for the making of final orders. The first respondents pay the appellants' costs of this proceeding and the proceedings in the courts below. On appeal from the Supreme Court of Queensland Representation D R Gore QC with J G Lyons for the appellants (instructed by Wilson/ryan/grose Lawyers) D A Savage QC with A L Raeburn for the first respondents (instructed by Connolly Suthers Lawyers) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Pike v Tighe Town planning – Conditions on development – Where development approval permitted reconfiguration of lot into two lots – Where development approval subject to conditions – Where conditions included requirement to provide easement to allow access, on-site manoeuvring and connection of services and utilities – Where easement executed by registered proprietors of original lot did not comply with condition – Where Council approved survey plan to give effect to reconfiguration – Where titles for new lots created – Whether successor in title obliged to provide easement complying with condition. Town planning – Enforcement orders – Where Planning and Environment Court of Queensland may make enforcement order if satisfied that development offence "has been committed" – Where development offence to "contravene" development approval – Whether successor in title committed development offence by failing to provide easement complying with condition. Words and phrases – "binds the owner, the owner's successors in title and any occupier of the land", "contravene", "development", "development approval", "development offence", "enforcement order", "fail to comply with", "land", "lot", "the land the subject of the application to which the approval relates". Acts Interpretation Act 1954 (Q), s 36(1), Sched 1. Sustainable Planning Act 2009 (Q), ss 7, 10(1), 244(a), 245, 580, 601(1)(a), 604(1)(a), 605(1)(e), Sched 3. KIEFEL CJ, BELL, KEANE, GORDON AND EDELMAN JJ. The first question in this appeal is whether s 245 of the Sustainable Planning Act 2009 (Q) ("the Act") obliges a successor in title to ownership of a parcel of land created by the reconfiguration of a larger parcel to comply with a condition of the approval for the reconfiguration that should have been, but was not, satisfied by the original owner prior to completion of the reconfiguration. If that question is answered in the affirmative, the further question arises as to whether the Planning and Environment Court of Queensland may make an "enforcement order" under ss 601, 604 and 605 of the Act requiring the successor in title to fulfil the condition. Both questions should be answered in the affirmative for the reasons that follow. Facts On 29 May 2009, the Townsville City Council ("the Council") issued a decision notice under the Integrated Planning Act 1997 (Q) ("the IPA") (the predecessor to the Act), approving an application by the then registered proprietors of land for development by way of the reconfiguration of the existing lot into two lots. The approval was subject to certain conditions. Relevantly, condition 2 was in the following terms1: "Access and Utilities Easement An easement(s) to allow pedestrian and vehicle access, on-site maneuvering [sic] and connection of services and utilities for benefited lot (2) over burdened lot (1) must be provided. The easement(s) must be registered in accordance with the Land Title Act 1994, in conjunction with the Survey Plan." The schedule to the development approval provided that, "[u]nless explicitly stated elsewhere in this permit", all conditions had to be satisfied prior to the Council signing the survey plan2. In November 2009, the registered proprietors of the original lot executed an easement in terms which did not reflect condition 2. In particular, no mention 1 Tighe v Pike (2016) 225 LGERA 121 at 123 [1]. 2 Tighe v Pike (2016) 225 LGERA 121 at 123 [2]. Bell Gordon Edelman was made in the executed easement of on-site manoeuvring and connection of services and utilities. Despite this omission, the Council approved the relevant survey plan to give effect to the reconfiguration3. that was relevantly In November 2010, the registered proprietors of the original lot executed a the first easement. second easement Subsequently, the titles for lots 1 and 2 were created and the November 2010 easement was registered in relation to each title. The title for lot 1 was endorsed to describe the registered easement as burdening the land in that lot to the benefit of lot 2, and the title for lot 2 was endorsed to describe the easement benefitting the land in that lot4. identical On 18 January 2011, the first respondents, the Tighes, were registered as the owners of lot 1. On 11 January 2012, the appellants, the Pikes, were registered as the owners of lot 25. The Act Section 245 of the Act, which substantially reproduced s 3.5.28 of the IPA, provides: "Development approval attaches to land (1) A development approval – attaches to the land the subject of the application to which the approval relates; and binds the owner, the owner's successors in title and any occupier of the land. To remove any doubt, it is declared that subsection (1) applies even if later development, including reconfiguring a lot, is approved for the land or the land as reconfigured." 3 Tighe v Pike (2016) 225 LGERA 121 at 123 [3]. 4 Tighe v Pike (2016) 225 LGERA 121 at 123-124 [3]. 5 Tighe v Pike (2016) 225 LGERA 121 at 124 [3]. Bell Gordon Edelman The term "development" is defined in s 7 of the Act to include reconfiguring a lot. Section 10(1) of the Act defines "reconfiguring a lot" as including "creating lots by subdividing another lot". Section 10(1) also provides that the term "lot" in the Act means a "lot" under the Land Title Act 1994 (Q). Section 244(a) of the Act provides that a development approval includes any conditions imposed by the assessment manager (here, the Council6). Section 601(1)(a) of the Act authorises a proceeding in the Planning and Environment Court for an "enforcement order", which is defined as "an order to remedy or restrain the commission of a development offence". An offence against s 580 is a "development offence" according to the definition of that term in Sched 3. Section 580 of the Act is entitled "Compliance with development approval". Sub-section (1) states that a person must not "contravene" a development approval (including any conditions). Section 36(1) of the Acts Interpretation Act 1954 (Q) provides that "[i]n an Act, a term defined in schedule 1 has the meaning stated in that schedule". Schedule 1 defines "contravene" as including "fail to comply with". Section 604(1)(a) of the Act provides that the Court may make an enforcement order if satisfied that a development offence "has been committed". Section 605(1)(e) provides that an enforcement order may direct a respondent "to do anything about a development or use to comply with this Act". The Planning and Environment Court On 13 February 2015, the Pikes filed an originating application in the Planning and Environment Court. By their amended originating application dated 17 July 2015, the Pikes sought: a declaration that condition 2 of the development approval had been contravened; and 6 See Sustainable Planning Act 2009 (Q), s 246(1); Sustainable Planning Regulation 2009 (Q), Sched 6, Table 1. Bell Gordon Edelman an enforcement order directing the Tighes to comply with that condition7. Before the primary judge, the Pikes contended that the conditions of the development approval ran with lot 1 pursuant to s 245 of the Act, and so bound the Tighes, even though the relevant development, ie the reconfiguration of the original lot, had been completed and the easement registered before the Tighes had acquired lot 18. The Tighes contended that their title to lot 1 was free of any obligation under s 245 of the Act. The Tighes argued that if a development offence had been committed by reason of the failure on the part of the original registered proprietors of the original parcel of land to comply with condition 2 of the development approval, that failure had nothing to do with them9. The primary judge granted the Pikes' application, holding that s 245 had the effect that the conditions stipulated in the development approval ran with the land10. His Honour held that the Tighes had committed a development offence which warranted the making of an enforcement order to provide the Pikes with an easement conforming to condition 211. The primary judge did not actually make the enforcement order. His Honour expected that the parties would seek to agree upon appropriate terms for compliance with condition 2 as the basis for the enforcement order12. For reasons that are not apparent from the record, that expectation was not met. In this Court, the parties were agreed that in the event that the appeal to this Court were to succeed, the matter should be remitted to the primary judge for the making of final orders. 7 Tighe v Pike (2016) 225 LGERA 121 at 124 [4]. 8 Pike v Tighe [2016] QPEC 30 at [13]. 9 Pike v Tighe [2016] QPEC 30 at [39]. 10 Pike v Tighe [2016] QPEC 30 at [111]. 11 Pike v Tighe [2016] QPEC 30 at [111], [115]. 12 Pike v Tighe [2016] QPEC 30 at [115]. Bell Gordon Edelman The Court of Appeal The Court of Appeal of the Supreme Court of Queensland allowed the Tighes' appeal. Before the Court of Appeal, the Pikes supported the decision of the primary judge and sought, in the alternative, to sustain the primary judge's decision on the basis that the registered proprietors of the original parcel had committed a development offence by failing to provide the easement in conformity with condition 2 of the development approval so that the Planning and Environment Court was empowered to make an enforcement order against the Tighes on the basis that a development offence had been committed within the meaning of s 604(1)(a) of the Act. The Court of Appeal rejected the Pikes' contentions. The leading judgment was given by Fraser JA, with whom Morrison JA and Philippides JA agreed. Fraser JA noted that the primary judge did not find that the original registered proprietors had committed a development offence. In the absence of such a finding, the Pikes' alternative contention could not succeed13. In addition, Fraser JA held that this Court's decision in Hillpalm Pty Ltd v Heaven's Door Pty Ltd, concerning the Environmental Planning and Assessment Act 1979 (NSW), suggested that, if the power to make an enforcement order under s 604 of the Act was to be engaged, the development offence had to have been committed by the person against whom the order was sought14. Because the Tighes were not parties to the reconfiguration of the original parcel, condition 2 imposed no obligation on them. Accordingly, they could not have contravened s 580(1) of the Act15. As to the operation of s 245 of the Act, Fraser JA held that the obligation to provide an easement in condition 2 was not "a continuing and freestanding the approved obligation severed reconfiguration"; rather, it was "an obligation to register the easement described in condition 2 in conjunction with the Survey Plan and only as a condition of the the simultaneous creation of from 13 Tighe v Pike (2016) 225 LGERA 121 at 128 [21]. 14 (2004) 220 CLR 472 at 489 [47]-[48]; [2004] HCA 59, cited in Tighe v Pike (2016) 225 LGERA 121 at 128 [21]. 15 Tighe v Pike (2016) 225 LGERA 121 at 134 [37]. Bell Gordon Edelman simultaneous reconfiguration of the land into Lots 1 and 2"16. In his Honour's view, s 245(1) did not impose obligations in relation to the use of the land after the development approval had been "spent" by the completion of the development that it permitted17. As to the proposition that s 245 binds only the person permitted by the approval to carry out the subdivision of the original lot, the kernel of the reasoning of Fraser JA is in the following passage18: "In terms of s 245(1), Lot 1 is part of 'the land' which was 'the subject of the application to which the approval relates'. The development permit conditionally approved only the reconfiguration of 'the land' – the original lot – into Lots 1 and 2. It did not approve any reconfiguration of Lot 1 or of Lot 2 after those lots were created. Any such reconfiguration would be unlawful in the absence of a fresh development approval. Upon the [appellants'] argument it is not easy to attribute meaningful content to the provisions in s 245(1) that a development approval 'attaches to' and 'binds' the owner of a lot. In what sense did the development approval attach to Lot 1 and bind its owner where the approval did not authorise any development of that lot and where the development of the original lot which that approval did authorise had been completed when Lot 1 was created?" It is to be noted that Fraser JA, in paraphrasing the terms of s 245(1), glossed the statutory text. Section 245(1) does not attach a development approval to "a lot"; nor does it bind the owner of "a lot". Section 245(1)(a) attaches the development approval to "the land"; and s 245(1)(b) provides that the approval binds "the owner, the owner's successors in title and any occupier of the land". The approach of Philippides JA to the construction of s 245 was similar to that of Fraser JA. Her Honour observed that the reference to "the land" in s 245 of the Act is a reference to the original lot, and that s 10(1) of the Act defined 16 Tighe v Pike (2016) 225 LGERA 121 at 129 [24]. 17 Tighe v Pike (2016) 225 LGERA 121 at 129-130 [25]-[28]. 18 Tighe v Pike (2016) 225 LGERA 121 at 129-130 [27]. Bell Gordon Edelman "reconfiguring a lot" to mean, relevantly, "creating lots by subdividing another lot"19. By glossing the language of s 245 of the Act in this way, their Honours concluded the reconfiguration of the original lot bound only the owner of, and any successors in title to, that original lot. the development approval the conditions of that for The arguments in this Court The Pikes' submissions The Pikes advanced two submissions. First, they repeated their argument that the circumstance that a development offence has been committed is sufficient to engage the power to make an enforcement order, even if the actual offender is not the person against whom the order is sought. Secondly, they said that the circumstance that the Tighes were not a party to the development approval does not mean that an enforcement order cannot be made against them. Having become the registered proprietors of the servient tenement, they failed to comply with the conditions of the development approval binding upon them by reason of s 245(1) of the Act. On that basis, the Tighes had contravened s 580 of the Act so as to engage the power of the Planning and Environment Court to make an enforcement order under s 604(1)(a) of the Act. In developing their second submission, the Pikes argued that s 245(1) continues to operate notwithstanding a later reconfiguration. They contended that the mere registration of the survey plan, absent fulfilment of the conditions of the approval, did not result in the expiration of the conditions, which, by reason of s 244 of the development approval. Section 245(2) was said to be an express indication that s 245(1) had this continuing operation. the Act, were part of On behalf of the Pikes, it was noted that the Court of Appeal's construction of s 245 of the Act produced odd consequences. For example, an easement could be registered by the proprietor of the original lot and then surrendered under s 90 of the Land Title Act; yet s 245 would not be engaged as the development approval and its conditions would be "spent" upon registration of the survey plan. Further, in the case of a large residential development that had conditions attached to it, if it were discovered after registration of the survey 19 Tighe v Pike (2016) 225 LGERA 121 at 135 [45]. Bell Gordon Edelman plan that the conditions had not been complied with the Land and Environment Court would lack the power to make an enforcement order against the developer or successor in title. These examples were said to suggest that the construction of s 245 adopted by the Court of Appeal unduly attenuated the scope for protection of the public interest in the efficient and effective use of land. There is force in this submission. The Tighes' submissions The Tighes contended that the Court of Appeal was right to construe condition 2 as imposing a condition of the reconfiguration of the original lot that terminated upon registration of the easement in conjunction with the survey plan. The Tighes also raised a concern as to the potential effect of the Pikes' construction on indefeasibility of title in relation to Torrens title land. It may be said immediately that this concern ignored the circumstance that the Court of Appeal had held that the case gave rise to no issue of indefeasibility20. In this regard, their Honours were correct: as all members of this Court in Hillpalm held, where a condition of a development approval runs with land by virtue of a statutory provision to that effect, questions of indefeasibility of title under the Torrens system do not arise21. The effect of s 245 The Pikes' second submission must be accepted. That being so, it is unnecessary to consider their first submission. In the Court of Appeal, Fraser JA, in holding that s 245 operates only against the person who carries out an approved development, saw no reason to distinguish the present case from Hillpalm22; but in that case, this Court was concerned with whether effect should be given to a condition of a local council's permission to subdivide land in circumstances where the relevant legislation did not contain an equivalent of s 245 of the Act. Rather, the legislation there in question expressly obliged the person who carried out a subdivision to do so in 20 Tighe v Pike (2016) 225 LGERA 121 at 126 [13]. 21 (2004) 220 CLR 472 at 491 [53]-[54], 504-506 [98]-[104], 515 [129]. 22 Tighe v Pike (2016) 225 LGERA 121 at 128 [21]. Bell Gordon Edelman accordance with the conditions of the council's consent23. So far as the reasons of the majority in Hillpalm were concerned, it was important that the legislation did not purport to affect successors in title of the person who subdivided the land24. With all respect, the contrast between s 245 of the Act and the legislation under consideration in Hillpalm is striking. Section 245(1) is not expressed to operate in relation to the carrying out of an approved development; it expressly gives the conditions of a development approval the character of personal obligations capable of enduring in their effect beyond the completion of the development which the development approval authorised. These obligations expressly attach to "the land the subject of the application to which the approval relates". The natural and ordinary meaning of this language is that it attaches to all the land the subject of the application for development approval. The owners of the land in lots 1 and 2 are the successors in title to the owners of the land in the original lot. Section 245 draws a distinction between "the land" as the subject of development and "lot[s]" into which the land may be reconfigured. The Court of Appeal did not observe this distinction. The land to which the development approval "attaches" is all the land the subject of the development application. The term "land" is more broadly defined than the term "lot". "Land" is defined as including any estate in, on, over or under land, and the airspace above the surface of land and any estate in the airspace, and the subsoil of land and any estate in the subsoil25. By contrast, the definition of "lot" is restricted to "a separate, distinct parcel of land created on … the registration of a plan of subdivision"26. The Court of Appeal erred in regarding s 245(1)(b) as applicable only to the successors in title of the unsubdivided original lot. To read s 245(1) in that way is not only to gloss the statutory text impermissibly; it is to deprive the provision of any operation in respect of development by way of reconfiguration of a lot once the lots so produced have been sold by the owner of the original lot. 23 (2004) 220 CLR 472 at 486 [37], 487-488 [43]-[44]. 24 (2004) 220 CLR 472 at 487-488 [43]-[44]. 25 Sustainable Planning Act 2009 (Q), Sched 3. 26 Sustainable Planning Act 2009 (Q), s 10(1); Land Title Act 1994 (Q), Sched 2. Bell Gordon Edelman Under the Act, development includes reconfiguration whereby new lots are derived from an original lot relating to the same land. To read s 245 as confined in this way is to treat development by way of reconfiguration differently from other forms of development without any evident reason for doing so. Section 245(2) is significant here. It proceeds on the assumption that "the land the subject of the application to which the approval relates" is all the land contained in the lots created by the reconfiguration. In addition, s 245(2) expressly contemplates that s 245(1) may operate in respect of land comprising any lot derived from the subdivision of a larger lot, thus confirming that the focus of concern of s 245(1) is upon land as the physical subject of use and occupation rather than the more abstract issue of the quality of a registered proprietor's title to a lot. Given that a development approval is generally regarded as "a consent to the world at large in relation to the land which is its subject"27, s 245 serves the readily intelligible purpose of ensuring that the terms of any development approval regulating the use and occupation of land may be enforced against successors in title to the land. There is no reason to minimise the effect of conditions upon land use and occupation imposed in the public interest by straining against the natural and ordinary meaning of the provision. No other provision of the Act provides that the conditions of a development approval terminate once development authorised by that approval has been carried out28. As was noted by Gotterson JA in Peet Flagstone City Pty Ltd v Logan City Council, to argue that the conditions imposed on a development approval terminate in the absence of express provision to that effect is to contradict the statutory character of a condition as part of the "community price a developer must pay for a development approval" and a "vehicle for minimising adverse effects" of permitted development29. 27 Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270 at 293; [1972] HCA 33. 28 Peet Flagstone City Pty Ltd v Logan City Council [2015] QPELR 68 at 73-74 [27]-[28]. See also Genamson Holdings Pty Ltd v Caboolture Shire Council (2008) 163 LGERA 386 at 393-394 [22]. 29 [2015] QPELR 68 at 74 [28], quoting Hymix Industries Pty Ltd v Alberton Investments Pty Ltd [2001] QCA 334 at [23]. Bell Gordon Edelman The terms of condition 2 of the approval of the reconfiguration expressly applied to the land in each of the new lots. No violence is done to the language of condition 2 by applying it to the land owned by the current proprietors of lot 1 and lot 2. Indeed, that is the natural and ordinary reading of the language in which condition 2 is expressed. For these reasons, the first question raised by this appeal must be answered in the affirmative. Power to make an enforcement order Section 245 and condition 2 together obliged the Tighes to provide the easement rights that condition 2 of the development approval required. Condition 2 required that the easement be "provided" by any person bound by it. The Tighes failed to provide the easement required by condition 2 and so contravened s 580 of the Act. As noted above, for the purposes of s 580 of the Act, "contravening" the conditions of a development approval includes – but is not limited to – failing to comply with those conditions. Lest it be said that the Act operates unduly harshly by exposing a successor in title to a lot to a penalty merely by his or her acquiring land which happens to be bound by the terms of a development approval, a successor in title could not be said to have failed to comply with a condition of a development approval where he or she has had no opportunity to comply with it. It is "failure to comply", rather than bare non-compliance, which gives rise to a development offence the commission of which may lead to the making of an enforcement order under s 604(1)(a) of the Act30. Further, it may be noted here that the making of an enforcement order under s 604(1)(a) of the Act is discretionary, so that considerations of hardship may be taken into account if they arise. In the present case, more than three years elapsed between the acquisition of lot 2 by the Pikes and the filing of their application to the Planning and Environment Court. During this period, there was lengthy correspondence between the parties in which the Pikes sought compliance with condition 2. The Tighes had ample opportunity to provide an easement in the terms required 30 See generally Lambert v McIntyre; Ex parte Lambert [1975] Qd R 349 at 350; CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 at 609, 615-616. Bell Gordon Edelman by condition 2. They failed to do so, and thereby "contravened" the development approval and committed a development offence against s 580(1). Contrary to the Tighes' submission, the effect of the Act is not that a person is guilty of an offence at the moment he or she purchases land which does not comply with a condition. Rather, an offence will be committed when a reasonable time to comply with the condition has elapsed or if there is a peremptory refusal to comply with the condition. Conclusion and orders The appeal to this Court should be allowed. Orders 2 to 5 of the Court of Appeal of the Supreme Court of Queensland made on 23 December 2016 should be set aside. In their place, the appeal to the Court of Appeal should be dismissed, and the matter should be remitted to the primary judge for the making of final orders. The first respondents must pay the appellants' costs of this proceeding and the proceedings in the courts below.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT [2013] HCA 37 2 October 2013 ORDER Appeal allowed. Set aside paragraphs 1, 3 and 4 of the order of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 18 October 2012. Remit the matter to the Court of Criminal Appeal. On appeal from the Supreme Court of New South Wales Representation D Yehia SC with G A Bashir for the appellant (instructed by Aboriginal Legal Service (NSW/ACT) Ltd) L A Babb SC with K H Alder for the respondent (instructed by Director of Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Criminal law – Appeal – Prosecution appeal against sentence – Where sole ground of appeal manifest inadequacy – Where appellate court increased offender's sentence – Whether finding of manifest inadequacy required before discretion to vary sentence enlivened. Criminal law – Sentence – Principles – Relevance of deprived background of Aboriginal offender – Application of Fernando (1992) 76 A Crim R 58 – Whether effect of social deprivation diminishes with time and repeat offending – Whether social deprivation has same mitigatory effect for all purposes of punishment – Whether courts should take into account unique circumstances of Aboriginal offenders and high rate of incarceration of Aboriginal Australians when sentencing Aboriginal offender – Whether approach to sentencing Aboriginal offenders in R v Gladue [1999] 1 SCR 688 and R v Ipeelee [2012] 1 SCR 433 should be followed. Words and phrases – "deprived background", "Fernando considerations", "manifestly inadequate", "residual discretion". Crimes (Sentencing Procedure) Act 1999 (NSW), s 5(1). FRENCH CJ, HAYNE, CRENNAN, KIEFEL, BELL AND KEANE JJ. The appellant adhered to pleas of guilty in the District Court of New South Wales (Lerve ADCJ) to two offences under s 60A(1) of the Crimes Act 1900 (NSW) ("the Crimes Act") and to one offence under s 33(1)(b) of the Crimes Act. Section 60A(1) makes it an offence to assault a correctional officer1 while the officer is acting in the execution of his or her duty. Section 33(1)(b) makes it an offence to cause grievous bodily harm to a person with intent to cause harm of that kind. The appellant was sentenced to an effective sentence comprising a non-parole period of four years and three months and a balance of term of two years2. Judge Lerve recommended that the appellant should be released at the expiration of the non-parole period, subject to his parole order being conditioned on supervision that might require that he undergo treatment for alcohol and substance abuse in a residential programme. The Director of Public Prosecutions ("the Director") appealed to the New South Wales Court of Criminal Appeal on the ground that the sentences were manifestly inadequate. The Director later filed additional grounds of appeal, which contended that Judge Lerve had failed to properly assess the objective seriousness of the offence and had given too much weight to the appellant's subjective case. The Court of Criminal Appeal (Hoeben JA, Johnson and Schmidt JJ) upheld the Director's additional grounds of appeal with respect to the sentence for the s 33(1)(b) offence. The Court said that these findings made it unnecessary to decide whether the sentence was manifestly inadequate. The Court re-sentenced the appellant for the s 33(1)(b) offence to a non-parole period 1 Under s 60AA(i), a correctional officer is a "law enforcement officer" for the purposes of s 60A(1). 2 Concurrent, fixed terms of eight months' imprisonment commencing on 8 January 2011 were imposed for the s 60A(1) offences. A sentence of imprisonment comprising a non-parole period of four years commencing on 8 April 2011 with a balance of term of two years expiring on 7 April 2017 was imposed for the s 33(1)(b) offence. Hayne Crennan Bell of five years with a balance of term of two and a half years3. The Court did not consider whether to exercise the discretion conferred under statute to dismiss an appeal brought by the Director notwithstanding the demonstration of error ("the residual discretion")4. On 10 May 2013, Hayne, Bell and Gageler JJ granted the appellant special leave to appeal. The appeal gives rise to three issues. The determinative issue concerns the decision to allow the Director's appeal and to re-sentence the appellant without determining whether the sentence imposed by the primary judge was manifestly inadequate. For the reasons to be given, the appeal to this Court must be allowed and the Director's appeal remitted to the Court of Criminal Appeal to be determined in accordance with these reasons. The remitter makes it appropriate to address the two remaining issues, which concern the correctness of statements made by Hoeben JA, who gave the principal judgment, of the relevance of the appellant's deprived background and mental illness to his sentencing. Before turning to the appellant's grounds, there should be an account of the offence and the appellant's case. The facts At the date of these events the appellant was a remand prisoner at the Broken Hill Correctional Centre. He was upset at the prospect that his anticipated visitors might not arrive at the Centre before the close of visiting hours. A senior correctional officer, Mr Gould, agreed to make inquiries to find out if the visiting hours could be extended. The appellant was not satisfied with Mr Gould's response. He followed him into the wing office saying "I'll split you open, you cunt". Mr Gould contacted Assistant Superintendent Pitt and told him that the Emergency Team might be needed. The appellant left the wing office and made a telephone call to his partner. He told her that he would "split Gould open". Mr Pitt and another officer, Mr Donnelly, arrived at the scene and spoke with the appellant. The appellant threatened them in much the same terms as he had threatened Mr Gould. He then ran to a pool table and picked up a number of 3 The Court imposed the same extent of accumulation by directing the substituted sentence to commence on 8 April 2011. 4 Criminal Appeal Act 1912 (NSW), s 5D. Hayne Crennan Bell pool balls. Mr Pitt and Mr Donnelly retreated as the appellant threw pool balls at them. This was the conduct charged as the assaults. Mr Gould entered the yard and the appellant said "Gould you cunt, I told you I'm going to split you open". He threw two balls at Mr Gould, which struck his back. Mr Gould retreated into the wing office and as he attempted to secure the door a third pool ball thrown by the appellant struck him in the left eye, causing serious injury. This was the conduct charged under s 33(1)(b). The appellant climbed onto the roof of the gymnasium and from this vantage point he continued to throw pool balls at the officers. Following negotiations the appellant came down from the roof and surrendered. He expressed satisfaction at having injured Mr Gould and said that he "had not finished with Gould". Mr Gould experienced immediate loss of vision in his left eye. He was taken to the Broken Hill Hospital and from there he was transferred to the Royal Adelaide Hospital. He underwent a series of surgical procedures to repair the damage to his eye and the surrounding bony structures of his face. Mr Gould has lost the sight in his left eye. He suffered a great deal of pain before and after surgery. At the time of this incident Mr Gould was 43 years old. The psychological effects of the assault on him have been profound, in terms of both his diminished enjoyment of life and his career prospects. The appellant's case The appellant is an Aboriginal man who was raised in Wilcannia, a town in far-western New South Wales. He is one of a number of siblings. He grew up in a household in which alcohol abuse and violence were commonplace. He has had little formal education and is unable to read or write. He started drinking alcohol and taking prohibited drugs when he was 13 years old. He reports having witnessed his father stabbing his mother 15 times. He and his siblings all have records for violence. The appellant's record of juvenile offending commenced when he was 12 years old. From that age he was regularly detained in juvenile detention centres. When he turned 18 he was transferred to an adult prison. He has a long record of convictions including for offences of violence. He was 29 years old at the date of the present offences. He has spent much of his adult life in prison. He gives a history of repeated suicide attempts. He has maintained a long-term relationship with a woman by whom he has a daughter. He and his partner are both alcoholics. The child has been placed in the care of her maternal grandmother. Hayne Crennan Bell The appellant also has a history of head injury and of auditory hallucinations. He was seen by Dr Westmore, a psychiatrist, in July 2011. At the time the appellant was receiving anti-psychotic medication in custody. Dr Westmore considered that the auditory hallucinations may be related to alcohol abuse, although primary mental illness such as schizophrenia would need to be excluded. Dr Westmore's "Axis I" diagnosis was of conduct disorder arising in adolescence; alcohol and substance abuse; and probable episodes of depression most likely of an adjustment disorder or reactive type. Dr Westmore questioned whether the appellant might be suffering from early alcohol-related or head injury-related brain damage. In a supplementary report, Dr Westmore expressed the opinion that it was likely that the appellant's psychotic symptoms do not arise from drug or alcohol use but have a primary psychotic origin. He assessed the appellant as at risk of self-harm. Judge Lerve noted that the maximum penalty for an offence under s 60A(1) is imprisonment for five years and the maximum penalty for an offence under s 33(1)(b) is imprisonment for 25 years. His Honour also noted that the s 33(1)(b) offence has a standard non-parole period of seven years5 and in this connection he referred to this Court's decision in Muldrock v The Queen6. The appellant pleaded guilty to the offences before the Local Court and each sentence was reduced by 25 percent to reflect the utilitarian value of the early pleas7. His Honour considered that the s 33(1)(b) offence was aggravated by the fact that the victim was a correctional services officer8, and by reason of the significant psychological harm suffered by Mr Gould9. A further matter of aggravation was the use of the pool ball as a weapon10. 5 Crimes (Sentencing Procedure) Act 1999 (NSW), Pt 4 Div 1A and Table to s 54D. (2011) 244 CLR 120; [2011] HCA 39. 7 Crimes (Sentencing Procedure) Act 1999 (NSW), s 22(1). 8 Crimes (Sentencing Procedure) Act 1999 (NSW), s 21A(2)(a). 9 Crimes (Sentencing Procedure) Act 1999 (NSW), s 21A(2)(g). 10 Crimes (Sentencing Procedure) Act 1999 (NSW), s 21A(2)(c). Hayne Crennan Bell Judge Lerve addressed the parties' submissions respecting the objective seriousness of the s 33(1)(b) offence. He said that Mr Lawrence, who appeared for the appellant, had put in the course of oral submissions that the offence was "well below" the mid-range of seriousness. His Honour assessed that the offence was slightly less serious than the nominal mid-range of objective seriousness for an offence of this type. He said that the appellant's criminal history was a further aggravating factor11 and signified his intention to take that factor into account in the way explained in R v McNaughton12. His Honour noted, turning to Dr Westmore's reports, that there was no link between the appellant's mental condition and the offence. He referred to Mr Lawrence's submission that "significant moderation to the weight to be given to general deterrence is warranted on account of the totality of the psycho-social evidence". He said that he would allow "some moderation to the weight to be given to general deterrence because of those issues". Judge Lerve also noted Mr Lawrence's submission that the appellant is "an Aboriginal man who grew up in a violent, chaotic and dysfunctional environment" and that "Fernando type considerations" applied. His Honour referred to the decisions in Fernando13 and Kennedy v The Queen14, stating that "[c]learly enough the Fernando/Kennedy type issues are present" and that it would be necessary to take these considerations into account. The reference to the "Fernando type considerations" is to propositions stated by Wood J in sentencing an offender who had been raised in an Aboriginal community in which alcohol abuse and violence were endemic15. They were distilled from Neal v The Queen16, a number of sentencing decisions from 11 Crimes (Sentencing Procedure) Act 1999 (NSW), s 21A(2)(d). 12 (2006) 66 NSWLR 566. 13 (1992) 76 A Crim R 58. 14 [2010] NSWCCA 260. 15 Fernando (1992) 76 A Crim R 58 at 62-63. 16 (1982) 149 CLR 305; [1982] HCA 55. Hayne Crennan Bell intermediate courts of appeal17 and materials including the Report of the Royal Commission into Aboriginal Deaths in Custody18. The reference to Kennedy is to a decision of the New South Wales Court of Criminal Appeal which corrected one misconception concerning the decision in Fernando, to which we will return. The failure to consider manifest inadequacy and the residual discretion The Director's appeal to the Court of Criminal Appeal was brought against each of the sentences on the ground that "the sentence pronounced was manifestly inadequate". The Director foreshadowed that additional grounds may be filed later. In a later notice, the Director signified his intention to rely on the following grounds: "Ground 1: His Honour failed to properly determine the objective seriousness of the offence. Ground 2: His Honour failed to properly acknowledge the category of the victim as a serving prison officer in the lawful performance of his duties. Ground 3: The weight his Honour afforded the [appellant]'s subjective case impermissibly ameliorated the appropriate sentence." The focus of the appeal was on the sentence imposed for the intentional infliction of grievous bodily harm on Mr Gould19. The Court of Criminal Appeal confirmed the sentences imposed for the two assaults. Hoeben JA addressed the first and second additional grounds together. His Honour concluded that "despite the essentially discretionary nature of an assessment of the objective seriousness of an offence", Judge Lerve had erred in his assessment of the seriousness of the offence against Mr Gould20. Two considerations underpinned this conclusion. First, Hoeben JA considered that Judge Lerve had comprehensively misstated the 17 Fernando (1992) 76 A Crim R 58 at 62, citing Davey (1980) 2 A Crim R 254; Friday (1984) 14 A Crim R 471; Yougie (1987) 33 A Crim R 301; Rogers (1989) 44 A Crim R 301; Juli (1990) 50 A Crim R 31. 18 Fernando (1992) 76 A Crim R 58 at 62. 19 R v Bugmy [2012] NSWCCA 223 at [29]. 20 R v Bugmy [2012] NSWCCA 223 at [39]. Hayne Crennan Bell submissions as to where in the nominal range of objective seriousness the offence fell21. Secondly, although Judge Lerve had acknowledged the fact that Mr Gould was a correctional officer as an aggravating factor, that circumstance did not appear to have played any part in his reasoning thereafter22. The third of the Director's additional grounds was also upheld. Hoeben JA agreed with the prosecution submission that the appellant's subjective case had few positive features and that Judge Lerve had failed to take into account the appellant's lack of remorse and failure to take responsibility for his conduct23. His Honour also considered that Judge Lerve should have given greater weight to the appellant's criminal record24. Finally, his Honour considered that it was an error for Judge Lerve to have moderated the consideration of general deterrence in the light of the appellant's mental illness25. The Director's additional grounds were particulars of the ground that the sentence was manifestly inadequate26. The Director did not complain, and the Court of Criminal Appeal did not find, that Judge Lerve applied an incorrect principle of sentencing, took into account an irrelevant matter, applied a mistaken view of the facts or failed to take into account a material consideration27. The the parties' conclusion submissions may not have been justified in light of the elaborate submissions put "comprehensively misstated" Judge Lerve that 21 R v Bugmy [2012] NSWCCA 223 at [32]. 22 R v Bugmy [2012] NSWCCA 223 at [35]. 23 R v Bugmy [2012] NSWCCA 223 at [40]. 24 R v Bugmy [2012] NSWCCA 223 at [41]-[42]. 25 R v Bugmy [2012] NSWCCA 223 at [43]-[44], [47]. 26 Dinsdale v The Queen (2000) 202 CLR 321 at 325 [5] per Gleeson CJ and Hayne J, 329 [22] per Gaudron and Gummow JJ; [2000] HCA 54; Carroll v The Queen (2009) 83 ALJR 579 at 581 [8]-[9]; 254 ALR 379 at 381-382; [2009] HCA 13; Hili v The Queen (2010) 242 CLR 520 at 538-539 [58]-[60] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [2010] HCA 45. 27 House v The King (1936) 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ; [1936] HCA 40. Hayne Crennan Bell on the appellant's behalf28. Mr Lawrence sought to dissect the assessment of the objective seriousness of the offence into component parts leading to a submission that the court "must balance a mens rea that is well below the mid-range with a result that is somewhere from the mid-range to above mid-range". In any event, as Hoeben JA recognised, the assessment of the objective seriousness of the offence was a matter for Judge Lerve. The fact that Judge Lerve did not refer to the appellant's lack of remorse and failure to take responsibility for his conduct does not suggest that his Honour failed to take into account the appellant's callous disregard for his conduct. Judge Lerve detailed this in his account of the facts of the offence. In the result, the Director's appeal was allowed without determination of the sole ground of challenge. The Director submits that it is implicit in the reasons of the Court of Criminal Appeal that the Court concluded that the sentence for the offence against Mr Gould was manifestly inadequate. The difficulty with acceptance of the submission is that the Court expressly refrained from making that assessment. Sentencing is a discretionary judgment and there is no single correct sentence for an offender and an offence29. Plainly enough the Court of Criminal Appeal disagreed with the sentence imposed by Judge Lerve and favoured a more severe sentence. The difference between the Court of Criminal Appeal's assessment of the appropriate sentence and Judge Lerve's assessment may be explained by saying that Judge Lerve gave too little weight to some factors and too much weight to other factors. However, within a range of sentences for this offence and this offender, the weight to be given to the evidence and the various, conflicting, purposes of sentencing was a matter for Judge Lerve. The authority of the Court of Criminal Appeal to substitute a sentence for that imposed by Judge Lerve was not enlivened by its view that it would have given greater weight to deterrence and less weight to the appellant's subjective case30. The power could only be engaged if the Court was satisfied that Judge Lerve's 28 R v Bugmy [2012] NSWCCA 223 at [32]. 29 Pearce v The Queen (1998) 194 CLR 610 at 624 [46] per McHugh, Hayne and Callinan JJ; [1998] HCA 57. 30 House v The King (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ; Lowndes v The Queen (1999) 195 CLR 665 at 671-672 [15]; [1999] HCA 29. Hayne Crennan Bell discretion miscarried because in the result his Honour imposed a sentence that was below the range of sentences that could be justly imposed for the offence consistently with sentencing standards31. In that event, the Court was required to consider whether the Director's appeal should nonetheless be dismissed in the exercise of the residual discretion32. The Court of Criminal Appeal did not decide that the sentence for the s 33(1)(b) offence was manifestly inadequate. The Court of Criminal Appeal did not consider the exercise of the residual discretion. It follows that the appeal must be allowed. The appellant's deprived background and mental disorder In the Court of Criminal Appeal the prosecution argued that given the appellant's age and record of serious criminal offending, it had been an error for Judge Lerve to give weight to the propositions stated in Fernando. Hoeben JA said of this submission33: "I agree that with the passage of time, the extent to which social deprivation in a person's youth and background can be taken into account, must diminish. This is particularly so when the passage of time has included substantial offending." Nonetheless, Hoeben JA said that consideration of the appellant's background of social deprivation remained a matter of relevance which could properly be taken into account in sentencing. However, any reduction on this account would be "modest"34. The appellant challenges Hoeben JA's statement of the principle. He submits that the effects of childhood deprivation do not diminish with time and 31 Everett v The Queen (1994) 181 CLR 295 at 300 per Brennan, Deane, Dawson and Gaudron JJ, 306 per McHugh J; [1994] HCA 49; Lacey v Attorney-General (Qld) (2011) 242 CLR 573 at 581 [15]-[16] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [2011] HCA 10. 32 Green v The Queen (2011) 244 CLR 462 at 471 [26] per French CJ, Crennan and Kiefel JJ, 506 [131] per Bell J; [2011] HCA 49. 33 R v Bugmy [2012] NSWCCA 223 at [50]. 34 R v Bugmy [2012] NSWCCA 223 at [52]. Hayne Crennan Bell with repeated incarceration. Despite his age and his long criminal record, he contends that it was open to Judge Lerve to impose a lenient sentence reflecting his reduced moral culpability for his offence. The appellant's submissions travel beyond the assertion, which was not in issue in this Court, that his background of profound deprivation was of undiminished relevance in sentencing him. He relies on decisions of the Supreme Court of Canada35 as persuasive authority for two larger propositions. First, sentencing courts should take into account the "unique circumstances of all Aboriginal offenders" as relevant to the moral culpability of an individual Aboriginal offender. Secondly, courts should take into account the high rate of incarceration of Aboriginal Australians when sentencing an Aboriginal offender. That rate was said to reflect a history of dispossession and associated social and economic disadvantage. The Canadian decisions on which the appellant's argument relies are to be understood in the context of the provisions of the Canadian Criminal Code36 governing the purpose and principles of sentencing. In particular, they are to be understood in the light of s 718.2(e), which requires a court that imposes a sentence to take into consideration the principle that: "all available sanctions other than imprisonment that are reasonable in the circumstances should be considered for all offenders, with particular attention to the circumstances of aboriginal offenders." (emphasis added) Section 718.2 was inserted into the Criminal Code as part of a package of sentencing amendments which came into force in 1996 and which significantly changed the range of penal sanctions37. The Supreme Court of Canada had occasion to consider the effect of these amendments on the sentencing of Aboriginal Canadians for the first time in R v Gladue38. This was an appeal against the severity of a sentence of three years' imprisonment imposed on a 19 year old Aboriginal offender who had been convicted of the manslaughter of 35 R v Gladue [1999] 1 SCR 688; R v Ipeelee [2012] 1 SCR 433. 36 RSC 1985, c C-46. 37 R v Gladue [1999] 1 SCR 688 at 708-709 [38]-[40]. 38 [1999] 1 SCR 688. Hayne Crennan Bell her de facto husband. At the time of the killing the offender was significantly affected by alcohol. The sentencing judge did not consider that there were any special circumstances arising from the offender's Aboriginal status given that she and the deceased had been living "off-reserve" and not "within the aboriginal community as such"39. The issue in Gladue was the interpretation of s 718.2(e)40. The Court characterised the provision as a direction to sentencing judges "to undertake the process of sentencing aboriginal offenders differently, in order to endeavour to achieve a truly fit and proper sentence in the particular case"41. The Court explained that this does not alter the fundamental duty to impose a sentence that is fit for the offender and the offence, but that it does alter the method of analysis to be applied when sentencing an Aboriginal offender42. The direction to pay particular attention to the circumstances of Aboriginal offenders amounts to legislative recognition that those circumstances are unique43 and of the disproportionate incarceration of Aboriginal peoples44. The analysis to be undertaken when sentencing an Aboriginal offender in Canada requires the judge to take into account unique systemic or background factors which may have played a part in bringing the offender before the court45. In a case in which these factors have played a significant role, the sentencing judge is to consider whether imprisonment would serve to deter or to denounce crime in a manner that would be meaningful to the community of which the offender is a member46. This latter 39 R v Gladue [1999] 1 SCR 688 at 701 [18]. 40 R v Gladue [1999] 1 SCR 688 at 703 [24]. 41 R v Gladue [1999] 1 SCR 688 at 706 [33]. 42 R v Gladue [1999] 1 SCR 688 at 706-707 [33]. 43 R v Gladue [1999] 1 SCR 688 at 708 [37]. 44 R v Gladue [1999] 1 SCR 688 at 714-723 [50]-[65]. 45 R v Gladue [1999] 1 SCR 688 at 723-724 [66]. 46 R v Gladue [1999] 1 SCR 688 at 725 [69]. Hayne Crennan Bell consideration reflects that the purposes of sentencing under the Canadian Criminal Code include purposes that are directed to restorative justice47. The appeal was dismissed in Gladue. The Court observed that, as a matter of practical reality, the more violent and serious the offence the more likely that the terms of imprisonment for Aboriginals and non-Aboriginals would be close to each other48. It said that the sentencing of Aboriginal offenders must proceed on an individual basis, which directs attention to the appropriate sentence for this offence, committed by this offender, harming this victim, in this community49. The observation that violent and serious offences were likely to result in sentences of imprisonment for Aboriginal offenders close to those imposed on non-Aboriginal offenders appears to have given rise to a misconception that the Gladue principles had no application to Aboriginal offenders charged with offences of that kind. The Supreme Court addressed this misconception in R v Ipeelee50. Mr Ipeelee was sentenced to three years' imprisonment for breaching a condition of his long-term supervision order ("LTSO") that he not drink alcohol. The sentencing judge considered that Mr Ipeelee's Aboriginality had been taken into account at the time he was sentenced for the offence giving rise to the LTSO and that in the circumstances his Aboriginal status was of diminished importance51. LeBel J, delivering the judgment of the majority of the Supreme Court, made clear that the duty imposed by s 718.2(e) applies in every case involving the sentencing of an Aboriginal offender52. Their Honours rejected the need to establish a causal link between systemic and background factors affecting Aboriginal offenders and the offence53. They explained that these factors provide 47 R v Gladue [1999] 1 SCR 688 at 725-726 [70], referring to s 718(d), (e) and (f) of the Criminal Code (Can). 48 R v Gladue [1999] 1 SCR 688 at 730 [79]. 49 R v Gladue [1999] 1 SCR 688 at 730 [80]. 50 R v Ipeelee [2012] 1 SCR 433 at 484 [84]. 51 R v Ipeelee [2012] 1 SCR 433 at 448 [15]. 52 R v Ipeelee [2012] 1 SCR 433 at 484 [85]. Hayne Crennan Bell the context in which the appropriate sentence is to be determined. They went on "This is not to say that those factors need not be tied in some way to the particular offender and offence. Unless the unique circumstances of the particular offender bear on his or her culpability for the offence or indicate which sentencing objectives can and should be actualized, they will not influence the ultimate sentence." The appellant submits that the statements in Gladue and Ipeelee respecting the unique systemic factors applying to the sentencing of Aboriginal offenders have equal application to the sentencing of Aboriginal offenders in New South Wales. The instruction contained in s 718.2(e) of the Canadian Criminal Code was likened to s 5(1) of the Crimes (Sentencing Procedure) Act 1999 (NSW) ("the Sentencing Act"), which provides that a court must not sentence an offender to imprisonment unless it is satisfied, having considered all possible alternatives, that no penalty other than imprisonment is appropriate. One evident point of distinction between the legislative principles governing the sentencing of offenders in Canada and those that apply in New South Wales is that s 5(1) of the Sentencing Act does not direct courts to give particular attention to the circumstances of Aboriginal offenders. The power of the Parliament of New South Wales to enact a direction of that kind does not arise for consideration in this appeal55. Another point of distinction is the differing statements of the purposes of punishment under the Canadian and New South Wales statutes56. There is no warrant, in sentencing an Aboriginal offender in New South Wales, to apply a method of analysis different from that which applies in sentencing a non-Aboriginal offender. Nor is there a warrant to take into account the high rate of incarceration of Aboriginal people when sentencing an Aboriginal offender. Were this a consideration, the sentencing of Aboriginal offenders would cease to involve individualised justice. 53 R v Ipeelee [2012] 1 SCR 433 at 482-483 [81]-[83]. 54 R v Ipeelee [2012] 1 SCR 433 at 483-484 [83]. 55 Racial Discrimination Act 1975 (Cth), s 10. 56 Criminal Code (Can), s 718; Sentencing Act, s 3A. Hayne Crennan Bell An Aboriginal offender's deprived background may mitigate the sentence that would otherwise be appropriate for the offence in the same way that the deprived background of a non-Aboriginal offender may mitigate that offender's sentence. In this respect, Simpson J has correctly explained the significance of the statements in Fernando57: "Properly understood, Fernando is a decision, not about sentencing Aboriginals, but about the recognition, in sentencing decisions, of social disadvantage that frequently (no matter what the ethnicity of the offender) precedes the commission of crime." The propositions stated in Fernando are largely directed to the significance of the circumstance that the offender was intoxicated at the time of the offence. As Wood J explained, drunkenness does not usually operate by way of excuse or to mitigate an offender's conduct58. However, his Honour recognised that there are Aboriginal communities in which alcohol abuse and alcohol-related violence go hand in hand59. His Honour considered that where an offender's abuse of alcohol is a reflection of the environment in which he or she was raised it should be taken into account as a mitigating factor60. To do so, he said, is to acknowledge the endemic presence of alcohol in Aboriginal communities and61: "the grave social difficulties faced by those communities where poor self- image, absence of education and work opportunity and other demoralising factors have placed heavy stresses on them, reinforcing their resort to alcohol and compounding its worst effects." The other respect in which Wood J proposed that an offender's Aboriginality may be relevant to the sentencing determination is in a case in which because of the offender's background or lack of experience of European 57 Kennedy v The Queen [2010] NSWCCA 260 at [53]. 58 Fernando (1992) 76 A Crim R 58 at 62 (E). 59 Fernando (1992) 76 A Crim R 58 at 62 (C). 60 Fernando (1992) 76 A Crim R 58 at 62 (E). 61 Fernando (1992) 76 A Crim R 58 at 62-63 (E). Hayne Crennan Bell ways a lengthy term of imprisonment might be particularly burdensome62. In each of these respects, the propositions enunciated in Fernando conform with the statement of sentencing principle by Brennan J in Neal63: "The same sentencing principles are to be applied, of course, in every case, irrespective of the identity of a particular offender or his membership of an ethnic or other group. But in imposing sentences courts are bound to take into account, in accordance with those principles, all material facts including those facts which exist only by reason of the offender's membership of an ethnic or other group. So much is essential to the even administration of criminal justice. That done, however, the weight to be attributed to the factors material in a particular case, whether of aggravation or mitigation, is ordinarily a matter for the court exercising the sentencing discretion of first instance or for the Court of Criminal Appeal." Of course, not all Aboriginal offenders come from backgrounds characterised by the abuse of alcohol and alcohol-fuelled violence. However, Wood J was right to recognise both that those problems are endemic in some Aboriginal communities, and the reasons which tend to perpetuate them. The circumstance that an offender has been raised in a community surrounded by alcohol abuse and violence may mitigate the sentence because his or her moral culpability is likely to be less than the culpability of an offender whose formative years have not been marred in that way. Mr Fernando was a resident of an Aboriginal community located near Walgett in far-western New South Wales. The propositions stated in his case are particularly directed to the circumstances of offenders living in Aboriginal communities. Aboriginal Australians who live in an urban environment do not lose their Aboriginal identity and they, too, may be subject to the grave social difficulties discussed in Fernando. Nonetheless, the appellant's submission that courts should take judicial notice of the systemic background of deprivation of Aboriginal offenders cannot be accepted. It, too, is antithetical to individualised justice. Aboriginal Australians as a group are subject to social and economic 62 Fernando (1992) 76 A Crim R 58 at 63 (G). 63 (1982) 149 CLR 305 at 326. Hayne Crennan Bell disadvantage measured across a range of indices64, but to recognise this is to say nothing about a particular Aboriginal offender. In any case in which it is sought to rely on an offender's background of deprivation in mitigation of sentence, it is necessary to point to material tending to establish that background. It will be recalled that in the Court of Criminal Appeal the prosecution submitted that the evidence of the appellant's deprived background lost much of its force when viewed against the background of his previous offences65. On the hearing of the appeal in this Court the Director did not maintain that submission. The Director acknowledges that the effects of profound deprivation do not diminish over time and he submits that they are to be given full weight in the determination of the appropriate sentence in every case. The Director's submission should be accepted. The experience of growing up in an environment surrounded by alcohol abuse and violence may leave its mark on a person throughout life. Among other things, a background of that kind may compromise the person's capacity to mature and to learn from experience. It is a feature of the person's make-up and remains relevant to the determination of the appropriate sentence, notwithstanding that the person has a long history of offending. Because the effects of profound childhood deprivation do not diminish with the passage of time and repeated offending, it is right to speak of giving "full weight" to an offender's deprived background in every sentencing decision. However, this is not to suggest, as the appellant's submissions were apt to do, that an offender's deprived background has the same (mitigatory) relevance for all of the purposes of punishment. Giving weight to the conflicting purposes of punishment is what makes the exercise of the discretion so difficult66. An offender's childhood exposure to extreme violence and alcohol abuse may explain the offender's recourse to violence when frustrated such that the offender's moral culpability for the inability to control that impulse may be substantially reduced. However, the inability to control the violent response to 64 Steering Committee for the Review of Government Service Provision, Overcoming Indigenous Disadvantage, (2011). 65 R v Bugmy [2012] NSWCCA 223 at [48]. 66 Veen v The Queen [No 2] (1988) 164 CLR 465 at 476 per Mason CJ, Brennan, Dawson and Toohey JJ; [1988] HCA 14. Hayne Crennan Bell frustration may increase the importance of protecting the community from the offender. The point was made by Gleeson CJ in Engert in the context of explaining the significance of an offender's mental condition in sentencing67: "A moment's consideration will show that the interplay of the considerations relevant to sentencing may be complex and on occasion even intricate. In a given case, facts which point in one direction in relation to one of the considerations to be taken into account may point in a different direction in relation to some other consideration. For example, in the case of a particular offender, an aspect of the case which might mean that deterrence of others is of lesser importance, might, at the same time, mean that the protection of society is of greater importance. That was the particular problem being examined by the court in the case of Veen (No 2). Again, in a particular case, a feature which lessens what might otherwise be the importance of general deterrence, might, at the same time increase the importance of deterrence of the offender." It does not advance the appellant's case to say, as he does, that the Court of Criminal Appeal was wrong to take into account general deterrence in concluding that Judge Lerve erred in his assessment of the objective seriousness of the offence. Consideration of the objective seriousness of the offence must take account of the fact that this was an offence committed by a prisoner against an officer in a prison. These are the "particular circumstances" to which Hoeben JA was referring when he said that it appeared that Judge Lerve had given inadequate weight to general deterrence68. An issue for determination on the remitter is whether the appellant's background of profound childhood deprivation allowed the weight that would ordinarily be given to personal and general deterrence to be moderated in favour of other purposes of punishment, including rehabilitation, to the extent that Judge Lerve allowed. The appellant's case also relies on the evidence of his mental illness. As noted, the significance of a mental disorder to sentencing was the issue in Engert. Gleeson CJ observed that the existence of a causal relationship between an offender's mental condition and the offence does not automatically operate to 67 (1995) 84 A Crim R 67 at 68. 68 R v Bugmy [2012] NSWCCA 223 at [38]. Hayne Crennan Bell reduce the sentence and that the absence of such a connection does not automatically mean that the sentence will not be reduced69. The appellant relies on the latter statement. He submits that Hoeben JA wrongly held that evidence of an offender's mental illness or disorder may only be taken into account when it has contributed (directly or indirectly) to the commission of the offence. Hoeben JA's conclusion that Judge Lerve erred in taking the evidence of the appellant's mental condition into account did not depend on the absence of a causal connection with the offence. His Honour accepted the prosecution submission that the general terms of Dr Westmore's diagnosis were an inadequate foundation on which to give lesser weight to the consideration of deterrence70. At the hearing before Judge Lerve, the prosecutor conceded that the appellant's "mental illness" was a circumstance "that means necessarily that he is in some ways not a great vehicle for general deterrence". The prosecution was not bound by its concession on the hearing of its appeal. However, to the extent that its stance before Judge Lerve contributed to the imposition of a sentence that is said to be inadequate, its change of position was material to consideration of the residual discretion. The circumstance that the Director's appeal is to be remitted to the Court of Criminal Appeal for determination makes it unnecessary to consider the consequences of the Court's failure to give consideration to the residual discretion before it allowed the appeal. This Court is not a sentencing court. The appellant's invitation to the Court to dismiss the Director's appeal must be rejected. The Director's appeal has not been determined. The question of whether the sentence is manifestly inadequate must be remitted to the Court of Criminal Appeal. Orders The following orders should be made. Allow the appeal. Set aside the orders of the Court of Criminal Appeal allowing the Director's appeal and quashing the sentence imposed in the District Court on 16 February 2012 in respect of count 3 and substituting a 69 Engert (1995) 84 A Crim R 67 at 71. 70 R v Bugmy [2012] NSWCCA 223 at [47]. Hayne Crennan Bell sentence of imprisonment with a non-parole period of five years to commence on 8 April 2011 and to expire on 7 April 2016 with a balance of term of two years and six months to commence on 8 April 2016 and to expire on 7 October 2018. Remit the Director's appeal to the Court of Criminal Appeal. To enliven the discretion of the Court of Criminal Appeal, under s 5D of the Criminal Appeal Act 1912 (NSW), to vary a sentence and impose such sentence as to it seems proper, the Director of Public Prosecutions must establish that the sentence under appeal either: (1) turned on one or more specific errors of principle or of fact; or (2) in the totality of the circumstances was unreasonable or plainly unjust71. The Director's first ground of appeal to the Court of Criminal Appeal clearly invoked the second of those categories of appellate intervention72. To establish that "the sentence pronounced was manifestly inadequate", it was incumbent upon the Director to establish that the sentence was outside the range of available sentences in all the circumstances of the case73. The Director's three "additional grounds of appeal" to the Court of Criminal Appeal were not clearly framed to invoke either category of appellate intervention. The first and second were framed in terms of a failure "properly" to determine or acknowledge relevant considerations. They would be capable of invoking the first category of appellate intervention only if the asserted impropriety rose to the level of a failure to take those considerations into account. As demonstrated in the joint reasons for judgment, they were not analysed by the Court of Criminal Appeal in those terms. The third was framed only in terms of "weight". It was incapable of establishing an error in the first category of appellate intervention. It pointed at most to a circumstance which, taken with other circumstances, might be indicative of error in the second category. The appellant in this Court submitted that all three of the additional grounds were properly to be understood as no more than particulars of the ground of manifest inadequacy. The Director did not contend otherwise, submitting only that the errors found by the Court of Criminal Appeal in determining those grounds were "tantamount to a finding of manifest inadequacy". The problem with that submission is that the Court of Criminal Appeal either found manifest inadequacy or did not. To the extent it went so far as to assert that such a finding was implicit, the submission is falsified by the express holding of the Court of Criminal Appeal that it was not necessary to deal with the ground of manifest 71 Carroll v The Queen (2009) 83 ALJR 579 at 581 [7]; 254 ALR 379 at 381; [2009] HCA 13, citing House v The King (1936) 55 CLR 499 at 504-505; [1936] HCA 40. 72 (2009) 83 ALJR 579 at 581 [8]; 254 ALR 379 at 381. 73 Hili v The Queen (2010) 242 CLR 520 at 538-539 [58]-[60]; [2010] HCA 45. inadequacy because the errors identified in analysing the additional grounds of appeal were "of such a kind that it will be necessary to re-sentence"74. In the result, I agree with the conclusion reached in the joint reasons for judgment that the Court of Criminal Appeal did not determine the sole ground of appeal to it. The Court of Criminal Appeal did not determine that the sentence under appeal was outside the range of available sentences in all the circumstances of the case. Its discretion to vary the sentence and to impose the sentence it thought proper was not enlivened. The appeal must for that reason be allowed, the sentence imposed by the Court of Criminal Appeal set aside, and the Director's appeal remitted to the Court of Criminal Appeal for its reconsideration. As to whether there is, with the passage of time, a diminution in the extent to which it is appropriate for a sentencing judge to take into account the effects of social deprivation in an offender's youth and background, I am unable to accept either the Court of Criminal Appeal's categorical statement that there must be75, or the Director's categorical concession in the appeal to this Court that there is not. Consistently with the statement of sentencing principle by Brennan J in Neal v The Queen76, the weight to be afforded to the effects of social deprivation in an offender's youth and background is in each case for individual assessment. 74 R v Bugmy [2012] NSWCCA 223 at [53]. 75 [2012] NSWCCA 223 at [50]. 76 (1982) 149 CLR 305 at 326; [1982] HCA 55.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Van Beelen v The Queen [2017] HCA 48 8 November 2017 ORDER Summons filed 9 August 2017 dismissed. Appeal dismissed. On appeal from the Supreme Court of South Australia Representation K V Borick QC and F R Gerry QC with A J Redford for the appellant (instructed by Michael Hegarty & Associates) A P Kimber SC with F J McDonald for the respondent (instructed by Director of Public Prosecutions (SA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Van Beelen v The Queen Criminal law – Appeal against conviction – Second or subsequent appeal – Application for permission to appeal pursuant to s 353A(1) of Criminal Law Consolidation Act 1935 (SA) – Where appellant convicted of murder – Where expert evidence of time of death given at trial based on stomach contents of deceased – Where new evidence demonstrated expert estimation of time of death at trial erroneous – Where new evidence required to be fresh and compelling in order to be admitted – Where evidence compelling if reliable, substantial and highly probative in context of issues in dispute at trial – Whether new evidence substantial – Whether new evidence highly probative in context of issues in dispute at trial – Whether in interests of justice to consider new evidence on appeal – Whether admission of evidence based on stomach contents at trial occasioned substantial miscarriage of justice – Whether significant possibility jury acting reasonably would have acquitted had new evidence been before it. Words and phrases – "compelling", "fresh evidence", "highly probative in the context of the issues in dispute at the trial", "second or subsequent appeal", "substantial", "substantial miscarriage of justice". Criminal Law Consolidation Act 1935 (SA), s 353A. BELL, GAGELER, KEANE, NETTLE AND EDELMAN JJ. Introduction Section 353A(1) of the Criminal Law Consolidation Act 1935 (SA) ("the CLCA") confers a novel jurisdiction on the Full Court of the Supreme Court of South Australia to determine a second or subsequent appeal by a person convicted on Information1. The jurisdiction is conditioned on the Full Court's satisfaction that there is fresh and compelling evidence that should, in the interests of justice, be considered on appeal. A second or subsequent appeal may only be brought with the permission of the Full Court2. The appeal may only be allowed if the Full Court is satisfied that there was a substantial miscarriage of justice3. By special leave given by Kiefel CJ and Nettle J on 10 February 2017, the appellant appeals against the Full Court's refusal of permission to bring a second appeal against his conviction for the murder of Deborah Joan Leach. The Full Court (Vanstone and Kelly JJ; Kourakis CJ dissenting) determined that the evidence on which the application was based, while fresh, was not "compelling". For the reasons that follow, it was an error to refuse permission to appeal. The evidence meets the criteria of being fresh and compelling and it is in the interests of justice that it be considered on appeal. Consideration on appeal, however, does not disclose that there was a substantial miscarriage of justice and so the appeal must be dismissed. Background facts and procedural history Deborah, a fifteen year old school girl, was murdered on 15 July 1971. She was last seen alive at around 4:00pm that afternoon running down a track that led to Taperoo Beach. Her body was found buried under a layer of seaweed on Taperoo Beach at around 4:20am the following morning. The autopsy revealed that she had died of drowning and that her body had been sexually interfered with after death. 1 Section 353A was inserted into the CLCA by the Statutes Amendment (Appeals) Act 2013 (SA) and came into effect on 5 May 2013. 2 CLCA, s 353A(2). 3 CLCA, s 353A(3). Bell Nettle Edelman Only a handful of people were known to have been present on Taperoo Beach on the afternoon of 15 July 1971. The appellant was one of them. At 4:00pm his car was parked between some bushes adjacent to the track on which Deborah was seen running. The appellant left Taperoo Beach not later than 4:30pm. On 29 July 1971 he was interviewed by the police and he denied any knowledge of, or involvement in, Deborah's death. He agreed to the police taking possession of, and examining, the clothing that he had been wearing on the afternoon of 15 July 1971. Among the items taken by the police was a red and black woollen jumper. The fibres of that jumper matched fibres found on Deborah's singlet. Two brown fibres on the appellant's red and black jumper matched the brown fibres of Deborah's jumper. In October 1971 the appellant was charged with Deborah's murder. Following a lengthy trial in the Supreme Court of South Australia, on 19 October 1972 the jury returned a verdict of guilty of murder. The appellant successfully appealed against his conviction and a new trial was ordered4. The second trial commenced on 16 April 1973. The prosecution case was circumstantial and depended on the fibre evidence and the fact that the appellant was one of the few male persons with the opportunity to have committed the offence. On 12 July 1973 the appellant was again found guilty of murder. An appeal against conviction was dismissed5. An application to this Court for special leave to appeal was dismissed6. A petition for mercy dated 5 February 1974 was submitted to the Governor and subsequently the whole case was referred by the Chief Secretary to the Full Court to be heard and determined as an appeal. The appeal constituted by the reference was dismissed7. The application for permission to bring a second appeal On 25 August 2015, the appellant applied to the Full Court for permission to bring a second appeal. The fresh evidence on which the application relied was 4 R v Van Beelen (1973) 4 SASR 353. 5 R v Van Beelen (No 3) (1973) 7 SASR 125. 6 Van Beelen v The Queen (1973) 47 ALJR 666 (note). In the matter of a Petition by Frits Van Beelen (1974) 9 SASR 163. Bell Nettle Edelman the report of Professor Michael Horowitz dated 10 February 2016, which was critical of the expert evidence as to the time of Deborah's death. That evidence was given by Dr Colin Manock, the Director of Forensic Pathology at the Institute of Medical and Veterinary Science in Adelaide. Dr Manock examined Deborah's body at Taperoo Beach at around 5:00am on 16 July 1971. He did not measure the temperature of the body. It had rained during the night and quite a strong wind was developing that morning. Dr Manock understood that prior to his arrival, the body had been almost entirely covered with seaweed. The weather would have affected the rate at which the body lost heat and he considered that there was no utility in measuring its temperature because he could not compare the rate of cooling at the time of examination with the rate of cooling before the body was uncovered. In Dr Manock's opinion, the time of Deborah's death could be estimated from examination of the stomach contents, provided the time of her last meal was known. Dr Manock was informed that Deborah ate lunch on 15 July 1971 between 12:30pm and 12:45pm and that it consisted of a half pint of flavoured milk, an apple pie and a pasty. The stomach contained four fluid ounces of partly digested meal. Dr Manock estimated that three-quarters of the meal had emptied from the stomach. Dr Manock concluded that death had occurred between three and four hours from the start of the meal, which placed the time of death between 3:30pm and 4:30pm. Evidence given at the trial suggested that Deborah's lunch had in fact been eaten between 12:15pm and 12:30pm, and Dr Manock revised his estimate to place the time of death 15 minutes earlier, observing that "I don't think one can be very precise on these matters". Notwithstanding this caveat, Dr Manock maintained that death could not have occurred later than 4:30pm. It was the defence case that estimates of the time of death based on the rate of gastric emptying are imprecise and that the prosecution had failed to exclude the reasonable possibility that Deborah had been attacked and killed after 4:30pm, when it was common ground that the appellant had left Taperoo Beach. Dr Manock was taken to statements in authoritative texts on forensic pathology to the effect that the rate of gastric emptying is too variable to provide any certain indication of time of death, as many factors affect the rate and rates vary between individuals. Dr Manock generally agreed with these propositions but he asserted that estimates of longer emptying times were limited to cases in which there were special circumstances which altered the normal rate. Dr Manock's opinion assumed that there is a normal rate and that there was no reason to consider that Deborah's digestion was outside it. Dr Manock maintained that while it was not Bell Nettle Edelman possible to be precise as to the time of death within the range of three to four hours, the outer limit of that range was reliable. The defence called Dr Derek Pocock, a forensic pathologist with the Department of Public Health of Western Australia. Dr Pocock considered that the most reliable means of estimating time of death is to take the temperature of the body and calculate the time that it has had to cool. In his opinion, estimates based on the rate of gastric emptying are not reliable. The rate of emptying may be affected by the nature of the meal, the amount of fat and carbohydrate and the amount of fluid, the volume of the meal, the activities undertaken following the meal and the person's emotional state. Dr Pocock disputed that it was possible to put an outer limit of four hours on Deborah's death from the start of her last meal. In cross-examination he accepted that the time for stomach contents to empty is "very approximately" three to four hours. Professor Horowitz gave evidence before the Full Court on the hearing of the application for permission to appeal. He is a Professor of Medicine at the University of Adelaide and Director of the Endocrine and Metabolic Unit at the Royal Adelaide Hospital. For over 35 years, the focus of Professor Horowitz' research has been gastric emptying. Professor Horowitz explained that there has been a rapid expansion of knowledge of this subject since the mid-1970s. Before 1976 there were no techniques which permitted the reliable measurement of the rate of gastric emptying. Objectively validated studies since that time have demonstrated substantial variation in the rates of gastric emptying in individuals. Professor Horowitz characterised Dr Manock's evidence at the trial as "unequivocally highly erroneous" in light of scientific evidence available since 1972. The substantial variation in rates of emptying between individuals means that estimating time of death from the volume of stomach contents cannot be determined with less. Professor Horowitz calculated that Deborah's lunch had an energy content of 680 calories. It was a meal which in some individuals may empty from the stomach completely in less than three hours and in other individuals may take more than eight hours to do so. suggested precision of 60 minutes or the Section 353A Before turning to the Full Court's analysis, the relevant provisions of s 353A of the CLCA should be set out in full: Bell Nettle Edelman "353A – Second or subsequent appeals The Full Court may hear a second or subsequent appeal against conviction by a person convicted on information if the Court is satisfied that there is fresh and compelling evidence that should, in the interests of justice, be considered on an appeal. (2) A convicted person may only appeal under this section with the permission of the Full Court. The Full Court may allow an appeal under this section if it thinks that there was a substantial miscarriage of justice. If an appeal against conviction is allowed under this section, the Court may quash the conviction and either direct a judgment and verdict of acquittal to be entered or direct a new trial. For the purposes of subsection (1), evidence relating to an offence fresh if – it was not adduced at the trial of the offence; and (ii) it could not, even with the exercise of reasonable diligence, have been adduced at the trial; and compelling if – it is reliable; and (ii) it is substantial; and (iii) it is highly probative in the context of the issues in dispute at the trial of the offence. Evidence is not precluded from being admissible on an appeal referred to in subsection (1) just because it would not have been admissible in the earlier trial of the offence resulting in the relevant conviction." Bell Nettle Edelman The Full Court It was common ground in the Full Court that Professor Horowitz' evidence was "fresh" (sub-s (6)(a)) and "reliable" (sub-s (6)(b)(i))8. The Full Court was divided on whether the evidence was "substantial" (sub-s (6)(b)(ii)) and whether it was "highly probative in the context of the issues in dispute at the trial" (sub-s (6)(b)(iii))9. The majority rejected that "substantial" in this context is to be given its ordinary meaning of "sufficient importance, worth or value"10. To read the provision in this way, it was said, would largely duplicate the requirement of "high probative value" under the third limb11. Their Honours concluded that the second limb requirement of substantiality imposes a qualitative and a quantitative threshold: the evidence must be of substance and worth in its own right, and it must subsist or stand by itself12. Applying this test, Professor Horowitz' evidence is not "substantial" because it is evidence of research which serves only to confirm the correctness of an earlier body of opinion that was closely examined at the trial13. In their Honours' view, the fresh evidence does no more than show that Dr Manock was wrong to state that death could not have occurred after 4:30pm: a point that was well made by Dr Pocock14. Their Honours also said that Professor Horowitz' evidence did not possess high probative value in the context of the issues in dispute at the trial: Dr Manock's opinion had been 8 R v Van Beelen (2016) 125 SASR 253 at 258 [16] per Kourakis CJ, 293 [157]- [158] per Vanstone and Kelly JJ. 9 R v Van Beelen (2016) 125 SASR 253 at 258 [16] per Kourakis CJ, 294-295 [162]- [163] per Vanstone and Kelly JJ. 10 R v Keogh (No 2) (2014) 121 SASR 307 at 337 [106]. 11 R v Van Beelen (2016) 125 SASR 253 at 294 [160]. 12 R v Van Beelen (2016) 125 SASR 253 at 293-294 [159]. 13 R v Van Beelen (2016) 125 SASR 253 at 294-295 [162]. 14 R v Van Beelen (2016) 125 SASR 253 at 294-295 [162]. Bell Nettle Edelman directly challenged at the trial and Professor Horowitz' opinion was simply added ammunition supporting that challenge15. Underlying the majority's approach to the construction of the criteria which qualify fresh evidence as "compelling" is the view that jurisdiction to determine a second or subsequent appeal is a further exception to the principle of finality and the conditions governing its engagement should be construed with restraint. Their Honours cautioned as to the need for particular care in determining whether the conditions are met when the fresh evidence is expert opinion16: "The experience and the empirical evidence upon which each [expert] draws in expressing a view will vary enormously at any given time, let alone over a period of decades. Different views on any topic and new research will always be available. It is for the Court to ensure that, if the jurisdiction given in s 353A is to be exercised, the fresh evidence to be considered strictly answers each of the requirements set out in the provision." The majority's conclusion, that the fresh evidence was not "substantial" or "highly probative in the context of the issues in dispute", did not deny that the time of Deborah's death was an important issue in the trial. The conclusion reflected not only the assessment that Professor Horowitz' evidence would not have added greatly to the material before the jury, but also the assessment that the persuasive evidence of the time of death came from the civilian witnesses17. Their Honours observed that Professor Horowitz' evidence did not undermine the prosecution case18. In their view, even if Professor Horowitz' evidence answered the conditions qualifying it as "compelling", it was not in the interests of justice (sub-s (1)) that it be considered on an appeal because it would have made no difference to the resolution of the issues at trial19. For the same reason, their 15 R v Van Beelen (2016) 125 SASR 253 at 295 [163]. 16 R v Van Beelen (2016) 125 SASR 253 at 294 [161]. 17 R v Van Beelen (2016) 125 SASR 253 at 295 [164]. 18 R v Van Beelen (2016) 125 SASR 253 at 295 [164]. 19 R v Van Beelen (2016) 125 SASR 253 at 295-296 [165]. Bell Nettle Edelman Honours considered that had the evidence been considered on appeal, it would not have established that a substantial miscarriage of justice had occurred20. Kourakis CJ, in dissent, concluded that the evidence was fresh and compelling and that it was in the interests of justice that it be considered on appeal21. His Honour considered that on the research now available it would be an agreed fact that Deborah's death could have occurred well after 4:50pm22. Notwithstanding that the fibre evidence was, on its face, strongly probative of guilt, Kourakis CJ reasoned that the prosecution had not comprehensively excluded other sources of the fibres found on Deborah's singlet or the presence on Taperoo Beach of possible offenders after 4:25pm23. Kourakis CJ was not persuaded that a properly directed jury would necessarily have convicted the appellant at a trial at which Dr Manock's dogmatic opinion as to the time of death was not in evidence24. As the respondent submits, the latter conclusion is suggestive of the application of a less stringent test than applies to the determination of an appeal on fresh evidence under the common form criminal appeal provision25. Nonetheless, his Honour's ultimate conclusion26 was stated conformably with the test that commanded the support of the majority in Mickelberg v The Queen27: whether the court considers that there is a significant possibility that the jury, acting reasonably, would have acquitted the appellant had the fresh evidence been before it at the trial. 20 R v Van Beelen (2016) 125 SASR 253 at 296 [166]-[167], referring to R v Keogh (No 2) (2014) 121 SASR 307 at 344 [128]. 21 R v Van Beelen (2016) 125 SASR 253 at 258 [16]. 22 R v Van Beelen (2016) 125 SASR 253 at 258 [14]. 23 R v Van Beelen (2016) 125 SASR 253 at 276 [77]. 24 R v Van Beelen (2016) 125 SASR 253 at 276 [77]. 25 Mickelberg v The Queen (1989) 167 CLR 259 at 273 per Mason CJ, 288-289 per Deane J, 301 per Toohey and Gaudron JJ; [1989] HCA 35. 26 R v Van Beelen (2016) 125 SASR 253 at 276 [78]. 27 (1989) 167 CLR 259. Bell Nettle Edelman It is not in issue that the Full Court was right to hold that the question of whether there has been a substantial miscarriage of justice for the purposes of s 353A(3) is answered by applying the Mickelberg test28. As the majority observed, the presupposition for a second or subsequent appeal is that the accused has had a fair trial according to law on the available evidence. There is no reason why an appeal under s 353A should be determined by applying a less rigorous test than applies to an appeal against conviction on fresh evidence under s 353 of the CLCA29. The submissions The appellant submits that the majority's construction of the requirements of sub-s (6)(b) is unduly restrictive and the focus on finality misplaced. Given that the Professor Horowitz' evidence qualifies as "compelling" under each of the statutory criteria. the appellant submits is plain issues trial, that the The respondent supports the broad thrust of the majority's analysis, submitting that the requirements of sub-s (6)(b) are to be understood as imposing a "robust threshold" on the jurisdiction to determine a second or subsequent appeal. This approach, it is said, is consistent with the scheme of the CLCA: a person convicted on Information may appeal by right on a question of law and with the permission of the Full Court or on the certificate of the court of trial on any other ground30. The determination of the appeal is final31. If the conditions governing an appeal under s 353A are liberally construed, the absence of limitation on the number of applications that may be brought is said to have the capacity to undermine the statutory scheme. The Parliament's choice to retain the mechanism for the referral of a petition of mercy by the Attorney-General to the 28 R v Van Beelen (2016) 125 SASR 253 at 273 [59] per Kourakis CJ, 297-298 [171]- [173] per Vanstone and Kelly JJ, citing (1989) 167 CLR 259 at 273 per Mason CJ. 29 R v Van Beelen (2016) 125 SASR 253 at 298 [173]. 30 CLCA, s 352. 31 Grierson v The King (1938) 60 CLR 431; [1938] HCA 45; Burrell v The Queen (2008) 238 CLR 218; [2008] HCA 34. Bell Nettle Edelman Full Court to be heard as in the case of an appeal32 is suggested to reinforce the narrow compass of the s 353A appeal. The respondent does not embrace the majority's analysis that "substantial" imposes a quantitative and qualitative threshold. In the respondent's submission, "substantial" is to be understood in the context that a second or subsequent appeal may only be allowed in a case in which the Full Court thinks that there was a "substantial miscarriage of justice". The fresh evidence, it is said, must be substantial in its ability to bear on the determination of that question. The scope of s 353A Section 353A manifests an intention that finality yield in the face of fresh and compelling evidence which, when taken with the evidence at the trial, satisfies the Full Court that there has been a substantial miscarriage of justice. If, following an unsuccessful s 353A appeal, further fresh and compelling evidence is discovered, the evident intention is that the Full Court have jurisdiction to remedy any substantial miscarriage of justice. The right to approach the Full Court directly conferred by s 353A in such a case is to be contrasted with the mechanism of executive referral in the case of a petition of mercy. The concern that a convicted person may bring successive, meritless applications under s 353A is addressed by the requirement to obtain the Full Court's permission to appeal. Nothing in the scheme of the CLCA or the extrinsic material33 provides support for a construction of the words "reliable", "substantial" and "highly probative" in other than their ordinary meaning. Understood in this way, each of the three limbs of sub-s (6)(b) has work to do, although commonly there will be overlap in the satisfaction of each. The criterion of reliability requires the evidence to be credible and provide a trustworthy basis for fact finding34. The criterion of substantiality requires that the evidence is of real significance or importance with respect to the matter it is tendered to prove. Plainly enough, evidence may be reliable but it may not be relevantly "substantial". Evidence 32 CLCA, s 369(1). 33 South Australia, Legislative Council, Parliamentary Debates (Hansard), 19 February 2013 at 3165. 34 R v Keogh (No 2) (2014) 121 SASR 307 at 337 [105]; R v Drummond (No 2) [2015] SASCFC 82 at [325] per Blue J. Bell Nettle Edelman that meets the criteria of reliability and substantiality will often meet the third criterion of being highly probative in the context of the issues in dispute at the trial, but this will not always be so. The focus of the third criterion is on the conduct of the trial. What is encompassed by the expression "the issues in dispute at the trial" will depend upon the circumstances of the case. Fresh evidence relating to identity is unlikely to meet the third criterion in a case in which the sole issue at the trial was whether the prosecution had excluded that the accused's act was done in self-defence. On the other hand, fresh evidence disclosing a line of defence that was not apparent at the time of trial may meet the third criterion because it bears on the ultimate issue in dispute, which is proof of guilt. It does not do justice to Professor Horowitz' evidence to characterise it as merely supporting Dr Pocock's opinion. As earlier noted, Dr Manock's opinion was based upon acceptance that there is a normal rate of gastric emptying in the human population. Kourakis CJ was right to say that Professor Horowitz' evidence based on the results of objectively validated studies falsifies the basis for that opinion35. Had the results of these studies been known at the date of the trial, Dr Manock's opinion as to the time of Deborah's death should not have been admitted over objection. Professor Horowitz' evidence is of real significance on the issue of the time of Deborah's death. It possesses the requisite high probative value given that time of death was an issue in dispute at the trial. Jurisdiction under s 353A(1) is further conditioned on the Full Court's satisfaction that it is in the interests of justice to consider the fresh and compelling evidence on appeal. Commonly, where fresh evidence is compelling, the interests of justice will favour considering it on appeal. Nonetheless, as the respondent submits, it is possible to envisage circumstances, such as where an applicant has made a public confession of guilt, where the interests of justice may not favour that course. Contrary to the analysis of the majority36, the circumstance that a conviction is long-standing does not provide a reason why, in the interests of justice, fresh and compelling evidence should not be considered on a second or subsequent appeal. The majority's consideration of the interests of justice was posited on the view that Professor Horowitz' evidence did not undermine the conclusion of 35 R v Van Beelen (2016) 125 SASR 253 at 261 [27]. 36 R v Van Beelen (2016) 125 SASR 253 at 295-296 [165]. Bell Nettle Edelman guilt37. This was to conflate the interests of justice with the determinative issue in the appeal. As explained, Professor Horowitz' evidence is fresh and compelling and it is in the interests of justice that it be considered on appeal. The issue in the appeal is whether the appellant has established on the balance of probability that, in light of Professor Horowitz' evidence taken with the evidence adduced at the trial, there is a significant possibility that a jury, acting reasonably, would have acquitted. The answer to that question requires consideration of the whole of the evidence. The trial The evidence Deborah was living with her parents at 40 Morea Street, Osborne, South Australia. On the afternoon of 15 July 1971, Deborah and her friend, Janice Hazelwood, left school at around 3:30pm. The school was located on Morea Street, to the south of Deborah's home. The two walked north along Morea Street to Deborah's home, where they parted. The walk took about five minutes. It would seem that Deborah went inside the house, put down her school bag, put a sponge cake that she had cooked at school on the kitchen table, changed from her school uniform into a pair of tartan slacks and a brown jumper, and left the house with her dog to go for a walk on Taperoo Beach. Taperoo Beach faces west and lies between Outer Harbor (to the north) and Largs Bay (to the south). Morea Street is to the east of, and parallel with, Lady Gowrie Drive. Lady Gowrie Drive runs in a north south direction parallel to Taperoo Beach. An unfenced paddock opposite Deborah's home separated Morea Street and Lady Gowrie Drive. A track roughly opposite Deborah's home led from Lady Gowrie Drive to the beach. After a short distance the track divided into smaller tracks leading in southerly, south-westerly and westerly directions. Between the junction of two of these tracks were two stands of bushes. Opposite these bushes, about 100 yards west of Lady Gowrie Drive, was a shed belonging to the Taperoo Beach Surf Lifesaving Club. On the afternoon of these events the appellant's car was parked between the bushes, roughly opposite the shed. 37 R v Van Beelen (2016) 125 SASR 253 at 295-296 [165]. Bell Nettle Edelman At around 4:00pm Mrs Hazelwood, Janice's mother, was driving along Morea Street and saw Deborah with Deborah's dog running across the paddock towards the beach. Deborah was wearing a jumper, which Mrs Hazelwood thought was brown, and dark coloured slacks. The prosecution called persons who were known to have been present on Taperoo Beach between 2:00pm and 4:20pm on the afternoon of 15 July 1971. Sandra Drummond and her father, Colin Lukeman, were fishing on the beach between around 2:00pm and 3:40pm that afternoon. The only people that Mrs Drummond saw on the beach were a man sitting on the seaweed bank (later identified as Kenneth Streeter), two couples walking along the beach, and three men in a fishing boat. She spoke to one of the couples and learned that they had come from a liner which was moored in Outer Harbor. Mrs Drummond did not see Mr Streeter on the beach at the time she left. As she drove away from the beach a small car driven by a man turned off Lady Gowrie Drive and passed her car, travelling towards the beach. Mr Lukeman recalled the same small number of persons as present on the beach that afternoon. He spoke to Mr Streeter and the older of the two couples. He, too, said that Mr Streeter appeared to have left the beach by the time he and his daughter departed. He saw a "cherry coloured" car, which he thought was a Datsun, turn off Lady Gowrie Drive and head towards the beach as they were leaving. Mr Streeter lived about five minutes' walk from Taperoo Beach. He took his dog to the beach sometime around 2:30pm that afternoon. He was back at home at about 3:50pm to listen to the last leg of a race on which he had placed a bet. Dennis Shiels was fishing with two workmates, Alexander Dickson and Patrick Keating, at Taperoo Beach that afternoon. On the way to the beach, Mr Shiels noticed a red Torana parked near the lifesaving shed. This was at around 3:15pm. Mr Shiels saw two men, a woman and a dog on the beach (on the prosecution case, Mr Lukeman and Mr Streeter, Mrs Drummond, and Mr Streeter's dog) when they arrived. He and his companions launched their boat and went fishing. While in the boat, Mr Shiels saw two people on the beach in the vicinity of where he had seen the two men and the woman earlier, though he was not able to say whether they were the same people. In cross-examination he was asked if one of the persons he saw from the boat was wearing a red jumper. He said that one was wearing a red cardigan or jumper. He thought the person wearing the red cardigan was the woman. He went on to say that "it was too far away" and he could not say it was a woman. These people moved from the beach towards Lady Gowrie Drive. The weather was not good and Mr Shiels and his companions returned to the shore. Bell Nettle Edelman When they were leaving, Mr Shiels observed that the red Torana was parked near the lifesaving shed where he had earlier seen it. Mr Keating made a comment and Mr Shiels looked back at the Torana and saw the letters "RCC" on the number plate. As they neared Lady Gowrie Drive Mr Shiels again looked back and he noticed that the red Torana was shielded from view by bushes. Mr Shiels recalled that they left the beach at around 4:20pm. Mr Dickson remembered seeing a maroon Torana next to some bushes, to their left, as they drove down the track past the lifesaving shed on arrival. This was around 3:10pm. He saw a man and a woman who appeared to be fishing by the edge of the water. As they were leaving he again saw the maroon Torana and he noted that the first three letters of the number plate were RCC. Mr Dickson agreed that they had left Taperoo Beach at around 4:20pm. Mr Keating was in Scotland at the date of the trial and he did not give evidence. Wojciech Tajak ran the Taperoo Beach kiosk. The kiosk faced onto Lady Gowrie Drive and was located just to the north of the track leading from Lady Gowrie Drive to the beach and was approximately 100 yards due east of the lifesaving shed. Sometime between 11:30am and 12 noon on 15 July Mr Tajak saw a red Torana which was parked in front of the kiosk. He sold the driver a packet of cigarettes. He saw a similar car in the parking lot south of the kiosk at around 1:00pm. Later, at around 3:00pm, he saw a red car, which was of a similar size, parked "[o]n the corner of the Lifesaving shed". Mr Tajak was uncertain about the time he left the kiosk on that day. Initially he put it at 3:45pm or 3:50pm and said that it "must have been before" 4:00pm, but he conceded that he "wouldn't be one hundred per cent sure". As he was taking some stock from the kiosk to his car, he looked towards the sea and he saw a dog to the south-west of the kiosk running from the direction of Largs Bay towards Outer Harbor. A girl ran after the dog in the same direction. Mr Tajak said the girl was wearing something "similar to a school uniform" and he described her clothing as being "[n]avy blue, something to that effect, or it could have been black". Deborah's mother, Gwenneth Leach, arrived home from work at the usual time, which was around 4:40pm. Deborah used to take her dog for a walk on the beach each afternoon after school but Mrs Leach said that "she was always home when I got home normally". Mrs Leach looked for Deborah and saw her school clothes in her bedroom. She thought that she might have gone for a longer walk than usual. After 10 minutes Mrs Leach decided that Deborah should be at home. She looked out the front window but she could only see Deborah's dog playing on top of the bank of seaweed. This was about 4:50pm. Mrs Leach walked over to the beach and called out to Deborah. There was no sign of her Bell Nettle Edelman and it occurred to Mrs Leach that Deborah had gone home along a different path. Mrs Leach collected the dog and returned home. When she discovered that Deborah was not at home she went back to the beach and continued to look for her. This would have been at about 5:15pm or 5:20pm. On the first occasion when Mrs Leach walked to the beach, and collected the dog, she saw nobody else. On the second occasion, she saw two men walking horses in the water, a young girl riding a horse, and a woman bringing her dog down to the beach. When she was unable to find Deborah, Mrs Leach rang her husband from a nearby telephone. Mr Leach returned home at around 6:10pm and contacted the police. He and a neighbour then went to search for Deborah. After an initial search they returned home, collected the dog, and went back. They walked down the track to the beach and turned north. At its most western point the surface of the beach was sand. Moving east there was a bank of seaweed about one foot to 18 inches high38. The bank extended for about 20 yards to a second, higher bank of seaweed. The second bank was about three feet high. Mr Leach and his neighbour walked on the landward side of the high seaweed bank, proceeding some distance past the lifesaving shed. Mr Leach was looking for footprints. He observed some in a clearing. They appeared to have been made by more than one person. Mr Leach thought that one set of tracks could have been Deborah's because the pattern of the footprint was similar to the pattern of the boots that she had been wearing. The dog had led them to this clearing but the dog seemed to be confused and did not know which way to go. Mr Leach returned home and rang the police again. Later that evening Mr Leach showed two detectives the clearing. They drove down the track past the kiosk for about 100 yards. Then they got out of the vehicle and walked about 60 yards to a location on the eastern side of the high seaweed bank approximately due west of the kiosk. It had been raining and most of the markings that Mr Leach had earlier observed were no longer visible. In the early hours of 16 July the police located a rubber boot, a transistor radio and a dog lead not far from the water on the most western point of the first, lower bank of seaweed. They belonged to Deborah. Her body, buried under seaweed, was located slightly to the south of her belongings and 20 yards east of 38 Consistently with the evidence given at the trial reference to distances will be given in Imperial measures. Bell Nettle Edelman them on the second, higher bank. Her arms were extended over her head. She was wearing a brown woollen jumper which had been pulled up and was covering her mouth and nose. Her slacks had been completely removed from her right leg. Her white singlet remained in place. The autopsy revealed a small tear on the posterior of the vaginal wall. Dr Manock considered this occurred after Deborah's death and was more likely to have been occasioned by sexual intercourse than digital penetration. There was semen in the vagina. Dr Manock concluded that death had occurred as a consequence of drowning in salt water. The appellant's account of events The appellant was first questioned by police on 29 July 1971. A signed copy of the interview was in evidence. The appellant acknowledged that he was the owner of a red Torana sedan registration number RCC 718. He said that he had arrived at Taperoo Beach around 4:00pm on 15 July and that his car had been parked on the south side of the lifesaving shed, facing the sea, until around 4:25pm39. He said that he had walked for about half a mile in a southerly direction. He was asked what he had been wearing and he replied "[b]lack trousers, a red or blue jumper I cannot think which one I was wearing". The police accompanied the appellant to his home on 29 July to collect the clothes that he had been wearing. Detective Sergeant Cocks said that the appellant handed him a red and black jumper, a pair of dark trousers and a pair of black shoes. Detective Sergeant Cocks said that he also took possession of a blue jumper, a dark grey jumper and a mohair jumper. On 6 October 1971 the appellant went with the police to Taperoo Beach. He showed the police where he had parked his car: a location adjacent to a large bush on the southern side of the lifesaving shed. The police asked why he had waited until late in the afternoon to take a walk along the beach. The appellant said he had not been at Taperoo Beach all the time that day: he had driven back and forth along the beaches to Glenelg. He was asked to show the police the 39 The transcript of the interview records 4:45pm and not 4:25pm, but Detective Zeunert, in cross-examination, said that the reference to 4:45pm in the transcript was an error. The reason he thought it was a typing error was because at that time he phrased a question around the incident to the time of 4:25pm, but he could not discount the possibility that he had put the question by reference to 4:45pm. Bell Nettle Edelman route that he had taken on his walk. He said he had walked to the northernmost building of the Largs Bay Police Academy and then walked back. He had not walked or sat on the seaweed at any time that afternoon. The appellant did not give evidence at the trial. His evidence given at the first trial was read in the prosecution case. In summary, he said that he had been looking for work that day. He had checked the newspaper but had not found any jobs. He then decided to go for a drive, initially to the Adelaide Hills and then to the beaches. He stopped at Taperoo Beach and purchased a drink and an ice-cream at the kiosk. He then parked his car between the kiosk and the lifesaving shed and read a comic book. After this he drove back towards Glenelg and then he returned to Taperoo Beach and parked in the same general area: "just off the track by a bush" on the southern side of the lifesaving shed. The appellant said that he had walked south along Taperoo Beach, on the landward side of the seaweed bank, to the Police Academy and then back to his car following the same route. He saw no one on the beach. He then drove from the beach to the city to collect his wife. She was working at the Post Office on King William Street and was due to finish work at 5:00pm. He arrived at the Post Office at around 4:45pm. The appellant denied that he had been wearing his red and black jumper and he said he had handed his blue jumper to the police along with his red and black jumper. At the time he had been unsure about which jumper he had been wearing on 15 July. Subsequently, and before his arrest on 6 October, he recalled that he had been wearing the blue jumper. He rejected the suggestion that he had changed his account after hearing the prosecution evidence at the committal hearing. He recalled that he had been wearing his blue jumper because he had been looking for work and it was his best jumper. The appellant agreed that he had told the police initially that he had arrived at Taperoo Beach on the second occasion at around 4:00pm, and that he had arrived at the Post Office at 5:00pm. When the appellant was first spoken to by the police he said that he had walked as far as "the guns", a reference to the gun mountings at the Police Academy. On 6 October when he showed the police the route that he had taken he said that he had not walked as far as the guns. He denied that he had changed his account because of a realisation that he could not have walked to the guns and back and had time to get to the Post Office by 5:00pm. The appellant's wife gave evidence that on 15 July 1971 she left work at "a few minutes before 5" and the appellant was in his car in King William Street. It was not in issue that the appellant must have left Taperoo Beach not later than Bell Nettle Edelman The fibre evidence Detective Sergeant Cocks, who was in charge of the South Australian Police Forensic Science Laboratory, gave evidence of the collection and examination of fibres from Deborah's clothing and the appellant's clothing. He took samples from Deborah's singlet with tweezers and by dabbing a short length of adhesive tape on the garment. He found 17 black, 19 red, and one blue fibre on the upper front of the singlet. He also found a number of brown fibres, which were consistent with the fibres of the brown jumper that Deborah had been wearing, and a number of white fibres on the upper front of the singlet. He always ignored white fibres in forensic work because they are so common. On the lower part of the singlet there were brown fibres which were similar to the fibres of Deborah's jumper and a mixture of coloured fibres: red, black, green, blue and mauve. Deborah's slacks were of tartan design and were composed of black, green, brown, blue, red, mauve and yellow fibres. The red fibres comprised a "purply" red and a lighter red. The majority of these fibres were wool fibres. There were no differences between the black wool fibres of the slacks and the black wool fibres on the upper front of Deborah's singlet. The red fibres from the upper front of the singlet were "completely different" from the purply red fibres of the slacks. There were no differences in colour or appearance between the lighter red wool fibres of the slacks and the red wool fibres on the upper part of the singlet. The fibres on the bottom of the singlet consisted of 23 red and 25 black fibres, 14 green, 14 brown, six blue and one mauve. The green, blue and mauve fibres were all similar to the fibres of the same colours taken from the slacks. Four of the brown fibres were similar to the brown fibres in the slacks and ten were similar to the brown fibres of Deborah's jumper. In Detective Sergeant Cocks' opinion, it was of the very highest order of improbability that the red and black fibres on the upper front of the singlet had come from the slacks. The most common fibre in the slacks was green and there were no green fibres on the upper front of the singlet. The second most common fibre in the slacks was black, and there were similar black fibres on the upper front of the singlet. The third most common fibre in the slacks was brown, and there were no brown fibres on the upper front of the singlet that were consistent with the slacks. There were no blue fibres on the upper front of the singlet that were consistent with the slacks, nor were there any purply red fibres on the upper front of the singlet. The purply red fibres were more prevalent than the lighter red fibres in the weave of the slacks. Although the lighter red fibres on the upper Bell Nettle Edelman front of the singlet were microscopically similar to the lighter red fibres in the slacks, the lighter red fibres in the slacks were part of the same thread made up of brown and purply red. Although Detective Sergeant Cocks found black wool fibres in Deborah's home which were similar to the black wool fibres found on the upper front of the singlet, these were not found in association with any red wool fibres. Detective Sergeant Cocks found no fibres at all in Deborah's home which matched the red fibres on the upper front of the singlet. He did find a source in Deborah's home for the blue fibre found on the upper front of the singlet. There was seaweed in the material vacuumed from the red and black jumper and in the vacuumings from the dark trousers. In the vacuumings from the red and black jumper Detective Sergeant Cocks found two brown, artificial fibres, and green, blue, mauve, yellow and some further brown fibres. All of the fibres could have been sourced to materials in the appellant's home save for the two brown, artificial fibres. These did not appear to originate from any materials in the appellant's home. They were indistinguishable from the brown, artificial fibres of Deborah's jumper. Random samples of the fibres taken from the appellant's red and black jumper were in the ratio of 19 red to 18 black. Mr Charles Crisp, a senior analyst employed with the South Australian Government Department of Chemistry, gave evidence in the prosecution case of the results of microscopic examination and chemical testing of fibres taken from Deborah's clothing and the appellant's red and black jumper. These revealed a large number of points of similarity between the red and black fibres taken from the singlet and the red and black fibres of the jumper and no significant dissimilarities. The defence called Mr Jack Fish, who for many years held an appointment as senior biologist with the Home Office Laboratories, Nottingham, in England. At the date of trial Mr Fish was the Director of the Cardiff Forensic Science Laboratory. In his years at the Nottingham laboratory Mr Fish had extensive experience in the forensic examination of fibres. He reviewed Mr Crisp's work and agreed with his conclusions. Mr Fish agreed the fact that no green, artificial black, brown or purply red fibres were located on the upper front of the singlet indicated that the slacks were an extremely improbable source of the red and black fibres. Mr Fish agreed that the tartan slacks were made of mainly woollen fibres but with a mixture of some artificial fibres. The black woollen fibre in the slacks was associated with a black artificial fibre. The bright red fibre of the slacks occurred only as part of a thread with a brown woollen and a purply red fibre. The length of the red and black fibres taken from the upper front of the Bell Nettle Edelman singlet made it very probable, in Mr Fish's opinion, that they had come from a knitted woollen garment. Deborah's tartan slacks were a woven garment. thin jumper by a process known as In addition to the tests carried out by Mr Crisp, Mr Fish tested a sample of the fibres taken from the upper front of the singlet and the fibres of the layer appellant's red and black chromatography. The results of the tests conducted by Mr Fish established that at least three different dye mixtures were used in dyeing the bright red fibres of the slacks and at least two different dye mixtures were used in dyeing the black woollen fibres of the slacks. This was in contrast with results of all the work done on the red and black fibres found on the upper front of the singlet, which showed no variability between the blacks and the reds. Mr Fish agreed that all the black fibres in the red and black jumper were dyed with the same dye material as the black fibres located on the singlet, and all the red fibres from the red and black jumper were dyed with the same red dye material as the red dye of the fibres on the top of the singlet. Taking into account the results of the microscopic examination, chemical testing and thin layer chromatography, Mr Fish agreed there were "a very large number of points of similarity between the reds and blacks said to be on the top of the singlet and the reds and the blacks from the pullover, and no significant dissimilarity". The way the parties put their cases It was the prosecution case that Deborah died on Taperoo Beach as the result of an attack by a male who intended to sexually assault her. Taperoo Beach was a fairly lonely beach and her assailant was one of a small number of males present on the beach at the time. The red and black fibres found on the upper part of Deborah's singlet were consistent in characteristics and relative frequency with the fibres of the appellant's red and black jumper, which it was contended he was wearing that afternoon. This inference was supported by the presence of the two brown, artificial fibres and the scraps of seaweed found on the jumper. The prosecution contended that the appellant had moulded his account of the length of his walk and the clothes that he was wearing to avert suspicion. More generally, the prosecution contended that the appellant's account of his conduct was unsatisfactory: there was no explanation for why he had chosen to park in a location that was more or less concealed and no apparent reason for "hanging around" at the beach during the course of the day. In closing address, defence counsel submitted "[w]e agree that there is an indication on the evidence as it stands that someone wearing red, or red and black had contact with the singlet presumably during an act of necrophilia". It was the defence case that the prosecution had not established that Deborah died before Bell Nettle Edelman 4:30pm, when the appellant left Taperoo Beach. It was pointed out that the dyes used in the appellant's red and black jumper were common dyes. It was also pointed out that the defence had arranged for the fibres to be subjected to more sophisticated scientific testing than had been undertaken by the prosecution authorities. While Mr Fish's tests had not eliminated the appellant's jumper as the source of the fibres on the singlet, the defence invited the jury to consider the improbability that a guilty man would have taken the risk that testing might confirm the prosecution case. The way the trial judge left the issue The trial judge left the prosecution case on the question of time of death in these terms: "Taperoo Beach, on a winter's afternoon on a week-day, appears to be a fairly little used area. You must ask yourself whether Debbie died on the beach. The sea material found in her lungs may lead you to think so. If so, we must carefully consider when she died. We know that she was alive at about 4 pm on the 15th. We know that she died some time before 4.20 am on the 16th for that is when Mr Richter found the body. To try to fix a time of death more precisely we have to consider the evidence of Dr Manock the pathologist. You will have to make up your minds as to whether you accept him as a man of science, competent in his work. You will have to determine what weight you give to his evidence, and since his evidence is in some respects founded on other evidence, especially on evidence of the stomach contents and the time of the last meal before death, you will have to examine that evidence too. … [Dr Manock] placed the time of death at about three to four hours after the start of the last meal, so ... that puts the time of death at three to four hours after about 12.15; this is somewhere between 3.15 and 4.15. You will bear in the mind the submission by Mr Borick, supported by Dr Pocock and various textbooks, three to four or four and a half hours is an average time for an ordinary meal to pass through the stomach of a person in an ordinary physical state of health. … It may be, on Dr Manock's evidence alone, you could not be certain that Debbie died before 4.30 pm, although you might think this probable. However, you must consider his evidence and the strictures made upon it, and form your own conclusions. Bell Nettle Edelman You will, when considering his evidence, think also of other evidence, such as Mrs Leach's evidence, which assists in fixing the time of death." His Honour continued: "[I]f we accept the evidence that Debbie was alive on the beach at about 4 pm or a few minutes earlier we can narrow the gap at the beginning. Mrs Leach looked for Debbie first from her window and then on the beach itself. She gives her time of arriving home about 4.40 pm when Debbie was usually home. Her time of looking through the window is ten minutes later. She saw the dog through the window playing on the seaweed but not Debbie. She went down to the beach. If you are satisfied that Debbie had been attacked by this time and if you accept Mrs Leach's evidence as to time, you may also be satisfied that the attack was before 5 pm and probably before the time that the dog was playing alone." The jury was directed that unless it was satisfied that there was "chest to chest contact between the [appellant] and the deceased" it was to acquit without going any further. The jury could only be satisfied of chest to chest contact on the basis of its acceptance that the appellant was wearing his red and black jumper that day. The consideration of whether there has been a substantial miscarriage of justice is to be undertaken upon acceptance of that fact. A substantial miscarriage of justice? Dr Manock's evidence as to time of death placed the appellant as one of the few persons on Taperoo Beach at the time of the attack. The appellant adopts Kourakis CJ's analysis that Professor Horowitz' evidence markedly extends the period during which some other person had the opportunity to commit the offence40. Among the possibilities proposed by the appellant at trial and on the appeal was that Deborah may have left the beach in company with her assailant and that her body may have been deposited on the bank of seaweed later that evening. In support of this hypothesis it was argued that had Deborah's body been lying under the seaweed shortly after 4:50pm when Mrs Leach walked along the beach looking for her, the probability is the dog would have led Mrs Leach to the body. The footprints and tyre marks in the clearing were also suggested to support the hypothesis that Deborah may have left the beach with her assailant. 40 R v Van Beelen (2016) 125 SASR 253 at 275 [72]. Bell Nettle Edelman The footprints and tyre marks are neutral. No inference should be drawn from the circumstance that Mrs Leach did not see Deborah's boot or other belongings or her body when she went to the beach to look for her. On the first occasion, Mrs Leach went to where the dog was playing, looked around and called out for Deborah, and took the dog home. On the second occasion, she walked along the sand on the seaward side of the bank of seaweed in the direction of Outer Harbor. She thought that she walked nearly to the lifesaving shed. She then climbed over the seaweed and walked back on the landward side calling out for Deborah. On this occasion Mrs Leach did not have the dog with her and it is not clear that she walked as far north as the location at which Deborah's belongings were found before she turned back. Nor should the inference be drawn that Deborah's body was not buried under the seaweed at the time that Mr Leach and his neighbour carried out their searches. On the first occasion they walked down the track to the beach and turned south and walked towards Largs Bay until they reached the high school. They returned from the school walking along the roadway. On the second occasion, when they took the dog to the beach, they turned north at the end of the track and walked in the direction of Outer Harbor, proceeding some distance past the lifesaving shed. However, they were walking on the landward side of the high bank of seaweed and would not have been in a position to see Deborah's belongings, which were on the seaward side of the lower bank of seaweed. The presence of diatoms in Deborah's lungs was consistent with her having drowned in salt water. The only particulate matter adhering to the mucosa or in the air passages were extremely fine particles of sand. It was possible that she drowned in a shallow pool containing water no more than a quarter or half an inch deep. It was not in issue that there would have been small puddles of water at the edge of the seaweed bank and elsewhere on the beach. There was a stain on the front of Deborah's jumper which consisted of sand, seaweed and foam from Deborah's mouth. If, as seems likely, the jumper had been pulled up during the fatal attack such that it covered Deborah's mouth and nose, it would have acted as a filter and explain the relative absence of sand in the airways. The circumstance that the back of the jumper was relatively dry compared to the front was consistent with drowning in a shallow body of water. Whatever the precise mechanism of her death, it is implausible that Deborah left Taperoo Beach with her assailant and that she drowned in salt water at some other location. It is all the more implausible to contemplate in such an event that her killer might have returned to Taperoo Beach and buried the body at the very place at which people might be expected to be looking for her. And, finally, there is the location of Deborah's right boot: 20 yards from the body, Bell Nettle Edelman against the low bank of seaweed near the sand and not far from the water. The evidence that Deborah was sexually penetrated after death was unchallenged. The clear inference is that her assailant removed her right boot, along with her right trouser leg, to effect his purpose. It is fanciful to consider that this took place other than at Taperoo Beach and that her killer returned and deposited not only the body but the boot. The prosecution established beyond reasonable doubt that Deborah drowned on Taperoo Beach in a location not far from where her belongings were found. The strength of the fibre evidence lay in the acknowledged high degree of improbability that the red and black fibres found on the upper front of the singlet came from Deborah's tartan slacks. It is consistent with the act of post-mortem sexual intercourse that the killer's clothing would have come into contact with Deborah's singlet, given that her jumper had been pulled up over her head. The strength of the fibre evidence was also the correspondence between the ratio of red to black fibres that were transferred to the singlet and the ratio of red to black fibres of which the appellant's jumper was composed. To observe that Professor Horowitz' evidence does not exclude a time of death as late as 8:15pm is not to conclude upon a review of the whole of the evidence that it was reasonably open to find that Deborah died after 4:50pm. Putting Dr Manock's evidence to one side, the inference is overwhelming that Deborah was dead by the time Mrs Leach looked through the front window and saw Deborah's dog playing by itself. Indeed, bearing in mind Mrs Leach's evidence that Deborah was always at home when she returned from work, the inference is that Deborah was dead by 4:40pm. Deborah was last seen alive at around 4:00pm as she ran towards the beach. Had she continued running in the direction in which Mrs Hazelwood and Mr Tajak saw her running, she would have passed the location of the appellant's parked car. Her body was found 324 feet from that location. The appellant was on the beach at this time and he was wearing his red and black woollen jumper. The inference of guilt depended upon all of the circumstances, but critical to it was the conclusion that it was not reasonably possible that another man, wearing a knitted garment made of red and black woollen fibres in approximately the same proportion as the red and black woollen fibres of the appellant's jumper, was present on Taperoo Beach that afternoon, and that this other man killed Deborah. Dr Manock's evidence said nothing as to this possibility. The elimination of Dr Manock's opinion of the time of death leaves a window of 20 minutes after the appellant left the beach and before Mrs Leach saw Deborah's dog playing alone in which expert evidence does not exclude the fatal assault taking place. It does not, however, significantly reduce the improbability of a Bell Nettle Edelman second man, wearing a knitted garment made of red and black woollen fibres in approximately the proportion of the red and black woollen fibres of the appellant's jumper, being present on this relatively deserted beach that afternoon. The majority in the Full Court were right to conclude that there is not a significant possibility that a properly instructed jury, acting reasonably, would have acquitted the appellant had Dr Manock's erroneous opinion as to the time of death not been in evidence41. The application to reopen On 9 August 2017, after judgment was reserved, the appellant filed a summons seeking an order to reopen the hearing of the appeal to adduce further fresh evidence. In support of that application the appellant filed affidavits sworn by Allan Robert Brown, Mary Doreen Johnston and Maureen Alexina Wheeler. The evidence of each deponent is relied on as further fresh and compelling evidence within the meaning of s 353A(1) of the CLCA. In submissions filed in support of the summons on 9 August 2017, the appellant relied on the dissenting reasons of Deane J in Mickelberg for the proposition that in the interests of justice it was open to the Court to receive the fresh evidence42. It is well-settled that the appellate jurisdiction of this Court is confined to appeals in their true sense and does not permit the Court to receive evidence which has not been considered by the Court below43. The parties were informed that the Court was minded to deal with the application to reopen on the papers and a timetable was fixed for the filing of written submissions. The appellant requested that the Court delay any final determination of his application until the respondent answered a series of requests for information concerning the existence of police records relating to the investigation. The respondent opposes the reopening of the appeal, submitting that the Court is without power to receive the further evidence. Moreover, the respondent submits that the reliability of the evidence sought to be adduced from Allan Robert Brown would require to be tested by oral evidence, an exercise that 41 R v Van Beelen (2016) 125 SASR 253 at 298 [174]. 42 (1989) 167 CLR 259 at 282. 43 Gallagher v The Queen (1986) 160 CLR 392 at 400; [1986] HCA 26; Mickelberg v The Queen (1989) 167 CLR 259 at 266, 274, 299; Eastman v The Queen (2000) 203 CLR 1 at 10 [9]; [2000] HCA 29. Bell Nettle Edelman is inappropriate to be carried out by this Court44, and that the evidence sought to be adduced from Mary Doreen Johnston and Maureen Alexina Wheeler, even if accepted, is incapable of impugning the appellant's conviction. Following the filing of his submissions in reply on the application to reopen, the appellant forwarded further written submissions to the Court on more than one occasion. The filing of these submissions was outside the terms of the Court's direction and no regard has been had to them. The appellant does not identify any arguable ground upon which this Court would depart from the long- standing principles affirmed in Mickelberg and, more recently, in Eastman v The Queen45. There is no reason to delay the determination of the application to reopen: this Court does not have power to receive the evidence that is the subject of the application. As the appellant notes, it is open to him to apply to the Full Court of the Supreme Court of South Australia for permission to bring a subsequent appeal pursuant to s 353A of the CLCA. In the circumstances, it is inappropriate to say anything further about the material that is the subject of the application to reopen. Orders For these reasons there should be the following orders: Summons filed 9 August 2017 dismissed. Appeal dismissed. 44 Mickelberg v The Queen (1989) 167 CLR 259 at 274 per Brennan J. 45 (2000) 203 CLR 1.

HIGH COURT OF AUSTRALIA PLAINTIFF AND STATE OF QUEENSLAND & ANOR DEFENDANTS Wotton v Queensland [2012] HCA 2 29 February 2012 ORDER Order that the questions stated in the Further Amended Special Case filed on 15 August 2011 be answered as follows: Question 1: (a) Is s 132(1)(a) of the Corrective Services Act 2006 (Q) invalid because it impermissibly burdens the freedom of communication of government and political matters, contrary to the Commonwealth Constitution? Is s 132(1)(a) of the Corrective Services Act 2006 (Q) to be construed so as not to apply to a prisoner on parole? Answer: Section 132(1)(a) must be read together with s 132(2)(d) and, so read, in its application to prisoners on parole it is not invalid for impermissibly burdening the freedom of communication about government and political matters. Questions 2 and 3 should be answered together. Question 2: Is s 200(2) of the Corrective Services Act 2006 (Q) invalid to the extent it authorizes the imposition of the conditions (t) and (v) of the plaintiff's Parole Order? Question 3: If s 200(2) of the Corrective Services Act 2006 (Q) is construed so that the power it confers must be exercised in conformity with the freedom of communication with the government and political matters provided for under the Commonwealth Constitution, are conditions (t) and (v) of the plaintiff's Parole Order invalid because they impermissibly burden that freedom? Answer: Section 200(2), in its application to prisoners on parole, is not invalid for impermissibly burdening the freedom of communication about government and political matters and the question of the validity of conditions (t) and (v) of the plaintiff's Parole Order does not arise in this proceeding. Question 4: Who should pay the costs of the special case? Answer: Each party should bear its own costs. Representation R Merkel QC with A D Pound and K L Walker for the plaintiff (instructed by W Sofronoff QC, Solicitor-General of the State of Queensland with G J D del Villar and A D Scott for the first defendant (instructed by Crown Solicitor (Qld)) Submitting appearance for the second defendant Interveners S J Gageler SC, Solicitor-General of the Commonwealth with C L Lenehan intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) M G Sexton SC, Solicitor-General for the State of New South Wales with K M Richardson intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW)) S G E McLeish SC, Solicitor-General for the State of Victoria with A M Dinelli intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Wotton v Queensland Constitutional law (Cth) – Operation and effect of Constitution – Interpretation – Implied freedom of political communication about government or political matters – System of representative and responsible government – Validity of ss 132(1)(a) and 200(2) of Corrective Services Act 2006 (Q) – Whether statute complies with limitations on legislative power of State – Whether the impugned law effectively burdens freedom of communicating about government and political matters – Whether provisions reasonably appropriate and adapted to serve legitimate end in manner compatible with maintenance of representative and responsible government. Administrative law – Relationship between Judicial Review Act 1991 (Q) and determination of issues of legislative validity – Whether validity of particular conditions imposed pursuant to s 200(2) of Corrective Services Act 2006 (Q) question of constitutional law or of compliance by repository of power with statutory limits. Words and phrases – "constitutionally prescribed system of representative and responsible government", "effectively burdens freedom of communication", "impermissibly burdening", "implied freedoms", "political communication". Acts Interpretation Act 1954 (Q), s 9(1). Corrective Services Act 2006 (Q), ss 132(1)(a), 132(2)(d), 200(2). Criminal Code (Q), s 7. Judicial Review Act 1991 (Q), ss 20-40. FRENCH CJ, GUMMOW, HAYNE, CRENNAN AND BELL JJ. The plaintiff is an Aboriginal person who was born in 1967 on Palm Island which is located in the Coral Sea, north of Townsville in the State of Queensland. (That State is the first defendant.) The plaintiff has resided there for a substantial part of his life. He served from 1997 to 2000, and for some eight months in 2002-2003, as a councillor on the Palm Island Aboriginal Shire Council, which is established under the local government legislation of Queensland1. There is no dispute that the plaintiff, as a person under sentence but with the benefit of a parole order, has the necessary standing to maintain this action in the original jurisdiction of this Court. However, the plaintiff's interest does not go beyond that status to support a challenge to the operation of the legislation with respect to prisoners who are not released on parole. There was before the Full Court a Further Amended Special Case filed 15 August 2011. The second defendant ("the Parole Board") entered a submitting appearance. The opposition to the plaintiff's submissions was presented by the Commonwealth, New South Wales and Victoria. interventions by first defendant. There were the Some account of the plaintiff's circumstances may now be given. On 26 November 2004, there was a riot on Palm Island. This followed the death of an Aboriginal man, Mr Mulrunji Doomadgee, in police custody. Up to 300 persons were involved and there was significant damage to the Palm Island infrastructure. The plaintiff participated in that riot. At a jury trial in the District Court of Queensland, he was convicted of rioting causing destruction contrary to ss 61 and 65 of the Criminal Code (Q) ("the Code")2. On 7 November 2008, Shanahan DCJ imposed a head sentence of six years imprisonment and set a parole eligibility date after two years served. In his comprehensive sentencing remarks, his Honour said: "The history and disadvantages of Palm Island is not something for which successive administrations of this State and the Commonwealth could in any way be proud. It is a community that faces a number of 1 Local Government Act 2009 (Q). 2 Section 65 was omitted and a different provision was substituted for s 61 by s 11 of the Criminal Code and Other Acts Amendment Act 2008 (Q). Crennan Bell serious problems and has for a number of years. Having said that there are a number of members of that community, a large number of members, who are working towards improving that community. They should be given due recognition and support." Shanahan DCJ went on to describe the plaintiff as having played a lead role in the unacceptable acts of violence which took place over a period of three hours. However, his Honour added: "You've been involved in the Palm Island Men's Group. You've been involved with a program about alcohol and drug rehabilitation. You've made serious efforts to assist the youth of your community in relation to suicide problems and in recent years those efforts have continued. Many of the references speak highly of you and the four years that have passed since this offence enable the Court to see, in my view, that you are making significant steps to rehabilitate yourself in terms of returning to your own community and the wider community, something that was taken from it on this day." The Parole Board is a regional parole board established pursuant to Ch 5, Pt 2, Div 2 (ss 230-240) of the Corrective Services Act 2006 (Q) ("the Corrective Services Act"). One of its functions is to decide applications for parole orders under Ch 5, Pt 1 (ss 176-215) of that statute. A prisoner may apply for a parole order if the prisoner has reached the applicable parole eligibility date (s 180(1)). Sections 187-194 contain detailed provisions for the hearing and making of decisions upon applications. A prisoner released on parole is to be taken as still under sentence (s 214)3, and to remain in the custody of the chief executive until unconditionally released (s 7(4), Sched 4). Subject to any direction of the Minister, the chief executive is responsible for matters including the safe custody and welfare of all prisoners and the supervision of offenders in the community (s 263(1)). However, in making decisions about particular the chief executive "must act independently, impartially and fairly" and "is not subject to direction by any Minister": Public Service Act 2008 (Q), s 100(2). individuals, The purpose of the Corrective Services Act, stated in s 3(1), "is community safety and crime prevention through the humane containment, 3 See further Power v The Queen (1974) 131 CLR 623 at 628-629; [1974] HCA 26. Crennan Bell supervision and rehabilitation of offenders". The statute also is said to recognise pursuant to s 3(2) that "basic human entitlements" of offenders should be safeguarded, "other than those that are necessarily diminished because of imprisonment or another court sentence". It is important for the present case to note that s 9(1) of the Acts Interpretation Act 1954 (Q) ("the Interpretation Act") requires that the Corrective Services Act be interpreted to the full extent of, but not to exceed, the legislative power of the State legislature. The Corrective Services Act confers various discretionary powers which are expressed in broad terms. However, in accordance with general principles4, these powers must be understood with regard to the subject matter, scope and purpose of the statute and must be exercised on application. Further, the discretionary powers must be exercised in accordance with any applicable law, including the Constitution itself. In that latter regard, the following passage from the reasons of Brennan J in Miller v TCN Channel Nine Pty Ltd5, a case concerning s 92 of the Constitution, is on point. His Honour said: "Of necessity, the area of the discretion must be large: the nature of the subject to be regulated requires that the discretion be wide. But it is not so wide that considerations foreign to the purpose for which the discretion is conferred can be taken into account. Nor can the discretion be exercised to discriminate against interstate trade, commerce and intercourse. That is because a discretion must be exercised by the repository of a power in accordance with any applicable law, including s 92, and, in the absence of a contrary indication, 'wide general words conferring executive and administrative powers should be read as subject to s 92': per Dixon, McTiernan and Fullagar JJ in Wilcox Mofflin Ltd v New South Wales6. In 4 R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49; [1979] HCA 62. (1986) 161 CLR 556 at 613-614; [1986] HCA 60. See also McGinty v Western Australia (1996) 186 CLR 140 at 288-289; [1996] HCA 48; Kruger v The Commonwealth (1997) 190 CLR 1 at 157; [1997] HCA 27; AMS v AIF (1999) 199 CLR 160 at 176 [37], 227 [201]; [1999] HCA 26; Minister for Immigration v SZMDS (2010) 240 CLR 611 at 621 [25]; [2010] HCA 16; Wainohu v New South Wales (2011) 243 CLR 181 at 231 [113]; [2011] HCA 24. (1952) 85 CLR 488 at 522; [1952] HCA 17. Crennan Bell Inglis v Moore [No 2]7 St John J and I stated the relevant rule of construction: '… where a discretion, though granted in general terms, can lawfully be exercised only if certain limits are observed, the grant of the discretionary power is construed as confining the exercise of the discretion within those limits. If the exercise of the discretion so qualified lies within the constitutional power and is judicially examinable, the provision conferring the discretion is valid.'" The reference to judicial examination of the exercise of the discretion in question is significant for the present case, as will appear. It is sufficient immediately to note that the notion of "unbridled discretion" has no place in the Australian universe of discourse8. Section 200(3) of the Corrective Services Act requires compliance with the conditions included in a parole order; the chief executive may suspend a parole order upon the reasonable belief that there has been non-compliance (s 201(2)(a)). Section 200(1), in pars (a)-(f), specifies conditions which must be included in a parole order. There is no challenge to the validity of that subsection. However, the plaintiff challenges the validity of s 200(2). The subsection (with the examples given9) reads: "A parole order granted by a parole board may also contain conditions the board reasonably considers necessary – to ensure the prisoner's good conduct; or to stop the prisoner committing an offence. Examples – (1979) 46 FLR 470 at 476. 8 Cf Bennett v Human Rights and Equal Opportunity Commission (2003) 134 FCR 334 at 359-360; Thomas v Chicago Park District 534 US 316 at 323 9 These are parts of the statute but are not exhaustive: Interpretation Act, s 14(3). Crennan Bell a condition about the prisoner's place of residence, employment or participation in a particular program a condition imposing a curfew for the prisoner a condition requiring the prisoner to give a test sample". If asked to do so, a parole board is required by Pt 4 (ss 31-40) of the Judicial Review Act 1991 (Q) ("the Judicial Review Act") to provide a statement of reasons, and Pt 3 (ss 20-30), dealing with statutory orders for review by the Supreme Court, may then be engaged. The grounds of review include error of law (whether or not this appears on the record of the decision) (s 20(2)(f)), and that the decision was otherwise contrary to law (s 20(2)(i)). The presence of the Judicial Review Act makes it unnecessary to consider the jurisdiction of the traditional kind which the Supreme Court has in public law matters. The plaintiff applied on 17 February 2010 to the Parole Board. The written submissions to the Parole Board on behalf of the plaintiff (in pars (8)-(13)) included the following: "In our submission the safety of the community, both upon Palm Island and the broader Australian community is not threatened in any way by the release of Mr Wotton upon parole. investigations Firstly, since the events of 26 November 2004, media and political interest in Palm Island has increased significantly. There have been two coronial the first of which into Mulrunji's death, recommended significant steps be taken to reduce the possibility of a further death in custody and revised procedures to ensure the integrity and impartiality of future police investigations into any deaths in custody. The Crime and Misconduct Commission has conducted a scathing review of the police investigation which not only validated Mr Wotton's concern with that investigation, but has provided a public validation of the capacity of the Queensland government to oversee police investigations into deaths in custody. Secondly, the increased media exposure in relation to Palm Island has meant that the previously unknown Palm Island community, including Mr Wotton, now have access to effective avenues for the investigation of complaints of impropriety in police behaviour in the community. In those circumstances, the unique circumstances that gave rise to the offence in this case are unlikely to occur again. Crennan Bell Moreover, Mr Wotton has committed himself since his arrest to the use of legal and political avenues (including the media) to express any feelings of anger over perceived injustices within the Palm Island community, including: Participating in interviews in relation to the history of Palm Island and the difficulties faced by the Palm Island community; Co-authoring chapters in academic texts relating to Palm Island; (c) Giving speeches at universities and public events; (d) Accepted a role as a community consultant to the Black and White Justice Foundation, a not-for-profit foundation which provides the subsidisation of legal services to Aboriginal clients; and Filing, along with his wife and mother, a complaint with [the Human Rights and Equal Opportunity Commission], utilising legal avenues to address concerns of the Palm Island community with the Queensland Police service. Not only has Mr Wotton accepted the need to seek redress for perceived injustices through lawful means, these means are now available to him and are being utilised by him." On 19 July 2010, the Parole Board directed that the plaintiff be granted and released on parole for a period until 18 July 2014 ("the Parole Order"), unless otherwise determined by the Parole Board. The release on parole was upon 22 conditions identified as (a)-(v). Conditions (a)-(g) largely reflected the mandatory the Corrective Services Act. Condition (g) is significant. It imposed the condition that the plaintiff "not commit an offence". requirements of s 200(1) of The plaintiff objected to conditions (t)-(v). These were to be supported as an exercise of the power conferred by s 200(2) rather than by s 200(1). They required that the plaintiff: not attend public meetings on Palm Island without the prior approval of the corrective services officer; be prohibited from speaking to and having any interaction whatsoever with the media; Crennan Bell receive no direct or indirect payment or benefit to him, or through any members of his family, through any agent, through any spokesperson or through any person or entity negotiating or dealing on his behalf with the media." Conditions (u) and (v) are to be read with an appreciation of the conduct proscribed by par (a) of s 132(1) of the Corrective Services Act and s 7 of the Code. Section 7 of the Code deems to have taken part in the commission of an offence a person who aids another in committing the offence, counsels or procures it, or does any act for the purpose of enabling or aiding another to commit it. Section 132 of the Corrective Services Act appears in Ch 3, Pt 3, headed "General offences". Paragraph (a) of s 132(1) makes it an offence for a person to "interview a prisoner, or obtain a written or recorded statement from a prisoner". The term "prisoner" is defined in Sched 4 to include a person, such as the plaintiff, who is released on parole. However, the offence is not committed by a person who has the written approval of the chief executive to carry out the activity in question (s 132(2)(d))10. If an offence under s 132(1)(a) were committed, and the plaintiff himself was so involved as to attract liability under s 7 of the Code, then he would be in breach of condition (g) of the Parole Order. This requires him not to commit an offence. Something more should be said respecting par (d) of s 132(2). It states that: "A person does not commit an offence against [s 132(1)] if the person is ... a person who has the chief executive's written approval to carry out the activity mentioned in [s 132(1)]." The Queensland Solicitor-General correctly submitted that to prosecute an offence against par (a) of s 132(1), the prosecution would need to prove both the elements under par (a) of s 132(1) and the absence of any exculpation under s 132(2)11. Further, the plaintiff correctly accepted that the reference in par (d) of s 132(2) to the written approval of the chief executive is a provision which impliedly confers authority on the chief executive to grant the approval and such 10 The offence also is not committed if the activity in question is that of the prisoner's lawyer, an employee of a law enforcement agency or the ombudsman (pars (a), (b), (c) of s 132(2)). 11 Griffiths v The Queen (1994) 69 ALJR 77; 125 ALR 545; [1994] HCA 55. Crennan Bell a decision is "made ... under an enactment" within the definition of "decision to which the Act applies" in s 4 of the Judicial Review Act12. On the Special Case, the plaintiff challenges the validity of s 132(1)(a) of the Corrective Services Act in its application to prisoners on parole on the ground that it impermissibly burdened freedom of communication on governmental and political matters. However, as is emphasised below, the plaintiff's case is weakened by a focus upon s 132(1)(a), without sufficient attention to its integration with par (d) of s 132(2). Initially, the plaintiff also challenged the validity of s 200(2) to the extent that it authorises the inclusion in the Parole Order of conditions (t), (u) and (v), and, if that challenge failed, the validity of those conditions as impermissibly burdening that freedom. However, on 22 July 2011, the Parole Board amended the Parole Order by deleting condition (u) and the Special Case was amended accordingly. The starting point for consideration of the constitutional principles which the plaintiff seeks to engage is supplied by the statement in the joint reasons in Aid/Watch Incorporated v Federal Commissioner of Taxation13: "The provisions of the Constitution mandate a system of representative and responsible government14 with a universal adult franchise15, and s 128 establishes a system for amendment of the Constitution in which the proposed law to effect the amendment is to be submitted to the electors. Communication between electors and legislators and the officers of the executive, and between electors themselves, on matters of government and politics is 'an indispensable incident' of that constitutional system16." (emphasis omitted) 12 See Griffith University v Tang (2005) 221 CLR 99 at 121-122 [60]; [2005] HCA 7. 13 (2010) 241 CLR 539 at 556 [44]; [2010] HCA 42. 14 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 557-559; [1997] HCA 25. 15 Roach v Electoral Commissioner (2007) 233 CLR 162 at 174-175 [7]-[8], 186-188 [44]-[49]; [2007] HCA 43. 16 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 559-560. Crennan Bell Their Honours added17 that the system of law which applies in Australia thus postulates, for its operation, communication in the nature of agitation for legislative and political changes. This freedom of communication operates both upon the formulation of common law principles and as a restriction on the legislative powers of the Commonwealth, the States and the Territories18. As remarked earlier in these reasons, with particular reference to what was said by Brennan J in Miller, while the exercise of legislative power may involve the conferral of authority upon an administrative body such as the Parole Board, the conferral by statute of a power or discretion upon such a body will be constrained by the constitutional restrictions upon the legislative power, with the result that in this particular respect the administrative body must not act ultra vires. The Commonwealth submitted that: (i) where a putative burden on political communication has its source in statute, the issue presented is one of a limitation upon legislative power; (ii) whether a particular application of the statute, by the exercise or refusal to exercise a power or discretion conferred by the statute, is valid is not a question of constitutional law; (iii) rather, the question is whether the repository of the power has complied with the statutory limits; (iv) if, on its proper construction, the statute complies with the constitutional limitation, without any need to read it down to save its validity, any complaint respecting the exercise of power thereunder in a given case, such as that in this litigation concerning the conditions attached to the Parole Order, does not raise a constitutional question, as distinct from a question of the exercise of statutory power. These submissions, which were supported by Victoria, should be accepted. The Commonwealth further, and correctly, developed these points by emphasising in oral submissions that if the power or discretion be susceptible of exercise in accordance with the constitutional restriction upon legislative power, then the legislation conferring that power or discretion is effective in those terms. No question arises of severance or reading down of the legislation. There then 17 Aid/Watch Incorporated v Federal Commissioner of Taxation (2010) 241 CLR 539 18 Coleman v Power (2004) 220 CLR 1 at 77 [195]; [2004] HCA 39. Crennan Bell would be no occasion presented for application of the principle explained as follows by Dixon J in Shrimpton v The Commonwealth19: "[F]inality, in the sense of complete freedom from legal control, is a quality which cannot, I think, be given under our Constitution to a discretion, if, as would be the case, it is capable of being exercised for purposes, or given an operation, which would or might go outside the power from which the law or regulation conferring the discretion derives its force. An exercise of a power, whether legislative or administrative, cannot rise higher than its source, viz., the power itself, and an attempt under the power to make unexaminable what is done in ostensible pursuance of a further delegation of authority must, to that extent, fail." Accordingly, this litigation turns upon the restraint imposed by the Constitution upon the legislative power of the Queensland legislature. It is no part of this dispute to canvass any question whether conditions (t) and (v) of the Parole Order should not have been included. That would be for agitation in other proceedings, in particular, proceedings under the Judicial Review Act. Two questions ("the Lange20 questions") arise with respect to each statutory provision which the plaintiff puts in contention. The terms of the questions are settled. They were recently stated, and applied, by the whole Court in Hogan v Hinch21 as follows. The first question asks whether in its terms, operation or effect, the law effectively burdens freedom of communication about government or political matters. If this is answered affirmatively, the second question asks whether the law nevertheless is reasonably appropriate and adapted to serve a legitimate end in a manner compatible with the maintenance of the constitutionally prescribed system of government described in the passage from Aid/Watch set out above. A question arises as to what is the relevant field of communication respecting government or political matters upon which the plaintiff relies. This may be identified as follows. The executive governments of the Commonwealth and all the States include Ministers with responsibilities for Aboriginal and 19 (1945) 69 CLR 613 at 629-630; [1945] HCA 4. 20 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. 21 (2011) 243 CLR 506 at 542 [47] per French CJ, 555-556 [94]-[97] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; [2011] HCA 4. Crennan Bell Indigenous affairs, including the administration of various statutes enacted in exercise of concurrent legislative powers. The public discussion of matters relating to Aboriginal and Indigenous affairs, including perceived or alleged injustices, involves communication at a national rather than purely State level about government and political matters, in the sense of the first Lange question. The submissions, to this effect, by the Commonwealth should be accepted. Further, in Australia, law enforcement and policing depends both practically and structurally (through bodies such as the Australian Crime Commission) upon close co-operation of federal, State and Territory police services22. The interaction between those services and Aboriginal persons is a matter of national rather than purely local political concern. The relevant burden imposed by par (a) of s 132(1) is the obligation to seek and obtain under par (d) of s 132(2) the written approval of the chief executive to interview a parolee, such as the plaintiff, outside a corrective services facility. The relevant burden imposed by s 200(2) is the observance of conditions the Parole Board reasonably considers necessary to ensure good conduct of the parolee and to stop the parolee committing an offence. The Commonwealth correctly submits that the issues between the parties are appropriately considered on the assumption that with respect to the challenged legislation, the first Lange question may be answered favourably to the plaintiff, so that the second Lange question arises for decision. In answering the second Lange question, there is a distinction, recently affirmed in Hogan v Hinch23, between laws which, as they arise in the present case, incidentally restrict political communication, and laws which prohibit or regulate communications which are inherently political or a necessary ingredient of political communication. The burden upon communication is more readily seen to satisfy the second Lange question if the law is of the former rather than the latter description. With respect to s 132(1)(a), as qualified by the discretion conferred by s 132(2)(d), the legitimate end, for the second Lange question, is sufficiently identified by the statutory purposes set out in s 3(1). This expresses the need to 22 Coleman v Power (2004) 220 CLR 1 at 45 [80], 78 [197]. 23 (2011) 243 CLR 506 at 555-556 [95]-[99]. Crennan Bell consider community safety and crime prevention through humane containment, supervision and rehabilitation of offenders. Further, it would be incumbent upon the chief executive in exercising the power of approval under s 132(2)(d) to have regard to the restraint upon legislative power in the sense explained by Brennan J in Miller, and the reasoned decision of the chief executive is judicially examinable under the system established by the Judicial Review Act. However, no application for approval by the chief executive has been made by or with respect to the plaintiff. Rather, the plaintiff has sought to isolate s 132(1)(a), without regard to the power of approval which governs its operation and which is an element of the burden imposed upon political communication. With respect to s 200(2), the legitimate end, for the second Lange question, is supplied by the text of the subsection, namely the imposition of conditions the Parole Board considers reasonably necessary to ensure good conduct and to stop the parolee committing an offence. The phrase "reasonably considers necessary" in s 200(2) is akin to the phrase "reasonably appropriate and adapted" for the second Lange question. Again, it would be incumbent upon the Parole Board to have regard to what was constitutionally permissible, and the reasoned decision of the Parole Board is judicially examinable under the Judicial Review Act. The result is that both s 132(1)(a), as qualified by s 132(2)(d), and s 200(2), comply with the constitutional limitation upon the legislative power of the State. With respect to conditions (t) and (v) of the Parole Order, their validity then depends on whether, in implementing them, the Parole Board exceeded the authority conferred upon it by the valid statutory provision made by s 200(2). That would be a question for determination by the Supreme Court of Queensland on an application made under the Judicial Review Act. Again, the Special Case discloses no request by the plaintiff for approval to attend any public meeting on Palm Island, nor any negotiation or dealing on the plaintiff's behalf with the media for the receipt of payments or benefits. The amended questions presented by the Special Case ask whether s 132(1)(a) of the Corrective Services Act is to be construed so as not to apply to a prisoner on parole (Qu 1(b)). If the provision is to be construed so as to apply to a prisoner on parole, it is then asked whether s 132(1)(a) of the Corrective Services Act is invalid because it impermissibly burdens the freedom of communication about government or political matters (Qu 1(a)). Question 2 asks whether s 200(2) of the Corrective Services Act is invalid to the extent it authorises the imposition of conditions (t) and (v) of the Parole Order. Question 3 posits a construction of s 200(2) requiring the exercise of the Crennan Bell power it confers in conformity with the freedom of communication about government or political matters; it then asks whether conditions (t) and (v) of the Parole Order are invalid because they impermissibly burden that freedom. Question 1 should be answered compendiously as follows: "Section 132(1)(a) must be read together with s 132(2)(d) and, so read, in its application to prisoners on parole it is not invalid for impermissibly burdening the freedom of communication about government and political matters." Questions 2 and 3 should be considered together and answered: "Section 200(2), in its application to prisoners on parole, is not invalid for impermissibly burdening freedom of communication about government and political matters and the question of the validity of conditions (t) and (v) of the plaintiff's Parole Order does not arise in this proceeding." the In the circumstances, Qu 4, which is addressed to the payment of the costs of the Special Case, should be answered: "Each party should bear its own costs". HEYDON J. The plaintiff seeks to invalidate legislation by relying on the implied freedom of political communication stated in Lange v Australian Broadcasting Corporation24. The provenance of that freedom may be traced to at least three judgments of Murphy J delivered in the years 1977-1986 in which he was in isolated dissent25. The last was delivered on the day he died. The statements of Murphy J were one unacknowledged source of two decisions delivered in 1992, 20 years ago26, and their successors27. That provenance is disputed. In Australian Capital Television Pty Ltd v The Commonwealth28 Mason CJ said that statements in the majority judgments in Miller v TCN Channel Nine Pty Ltd that it was not possible to imply a separate guarantee of freedom of communication "were directed to the rejection of an argument for the implication of a guarantee of freedom of interstate communication, that is, a guarantee operating in the very area provided for by s 92" (emphasis in original). Murphy J's doctrine in that case was not limited to interstate communications, for it extended to "freedom of speech and other communications … not only between the States and the States and the Territories but in and between every part of the Commonwealth" (emphasis added)29. The sources from which Murphy J derived the implied freedom of which he spoke did not relate entirely to freedom of interstate communication. In McGraw-Hinds (Aust) Pty Ltd v Smith30 he placed the source partly in "the nature of our society". And what was 24 (1997) 189 CLR 520; [1997] HCA 25. 25 Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54 at 88; [1977] HCA 71; McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 144 CLR 633 at 670; [1979] HCA 19; Miller v TCN Channel Nine Pty Ltd (1986) 161 CLR 556 at 581; [1986] HCA 60. A fourth case is sometimes cited: Buck v Bavone (1976) 135 CLR 110 at 132-138; [1986] HCA 24. But in it Murphy J did not specifically deal with any implied constitutional guarantee of free speech. The contrary is, however, asserted in Miller v TCN Channel Nine Pty Ltd at 561 (argument for defendant), 569 (per Gibbs CJ) and 579 (per Mason J). 26 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1; [1992] HCA 46; Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106; [1992] HCA 45. The birthday is celebrated in the contents of vol 30, No 1, of the University of Queensland Law Journal. 27 Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104; [1994] HCA 46; Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211; [1994] HCA 45; Cunliffe v The Commonwealth (1994) 182 CLR 272; [1994] HCA 44. 28 (1992) 177 CLR 106 at 133 n 82. 29 (1986) 161 CLR 556 at 581-582. 30 (1979) 144 CLR 633 at 670. said in Lange's case is narrower than what was said in its somewhat divided predecessors. Its source was also narrower: it was ascribed not to the principles of "representative and responsible government" in general, but to particular constitutional provisions relating to representative and responsible government. Unlike its predecessors from 1992, or 1977-1986, onwards, the judgment in Lange's case was unanimous and joint. But unlike Renan's conception of a nation, it has not been the subject of a plébiscite de tous les jours. Parties in Lange litigation have not given the Court even occasional plebiscitary opportunities because in the 15 years since Lange's case was decided there has been no fundamental challenge to its correctness. It must therefore be applied, at least until the unlikely event of a successful challenge to its correctness, or until, perhaps, a particular exception to the stare decisis doctrine in constitutional cases operates31. Lange's case required two questions to be asked. The first is: "does the [impugned] law effectively burden freedom of communication about government or political matters either in its terms, operation or effect?" If the answer is affirmative, the second question arises: "is the law reasonably appropriate and adapted to serve a legitimate end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government and the procedure prescribed by s 128 [of the Constitution]?"32 Although the Lange principles must be applied, they are fluid. They have been subject to change, or the possibility of change, since they were enunciated. For example, first Kirby J33, then McHugh J, Gummow J and Hayne J34, and now all members of the Court have indicated that the words "the fulfilment of" in the second limb should be replaced by "in a manner"35. These indications were given in cases the outcome of which does not appear to have been affected by the change of wording. A very great deal of attention has been given to the second limb, which will be called "the second Lange limb". But little has been given to what will be called "the first Lange limb". Indeed it is often conceded or assumed by those defending validity that the party challenging validity has satisfied the first limb. It happened in Coleman v Power36. And to a large extent 31 See Coleman v Power (2004) 220 CLR 1 at 109 [289] and 114 [301]; [2004] HCA 32 (1997) 189 CLR 520 at 567. 33 Levy v Victoria (1997) 189 CLR 579 at 646; [1997] HCA 31. 34 Coleman v Power (2004) 220 CLR 1 at 51 [95], 78 [196] and 82 [211]. 35 Hogan v Hinch (2011) 243 CLR 506 at 542 [47] and 556 [97]; [2011] HCA 4. 36 (2004) 220 CLR 1 at 119-120 [317]. it happened in the present proceedings. One intervener expressly conceded that the impugned legislation, except in one respect, "directly or indirectly" imposed a burden on the relevant freedom. The others silently agreed that the first Lange limb was either largely or wholly satisfied. This common practice of concession or assumption that the first Lange limb is met tends to generate an insidious belief that it will always be met. But in this case the first defendant made no such concession. It is therefore necessary to ask whether the interveners' concessions were sound. What "burdens" fall within the first Lange limb? It is convenient to begin with a statement by McHugh J, a party to the Lange judgment and a member of the majority in Coleman v Power. In the latter case McHugh J said37: "In all but exceptional cases, a law will not burden [communications on political or governmental matters] unless, by its operation or practical effect, it directly and not remotely restricts or limits the content of those communications or the time, place, manner or conditions of their occurrence." The words "directly and not remotely" invalidate the concession quoted in the preceding paragraph so far as the concession extended to "indirectly" placed burdens. Legislation which, though not constitutional in character, seeks, like the Lange principles, to vindicate freedom of expression, though for different purposes, illustrates the problems raised by the first Lange limb. Section 16(2) of the Human Rights Act 2004 (ACT) provides: "Everyone has the right to freedom of expression. This right includes the freedom to seek, receive and impart information and ideas of all kinds, regardless of borders, whether orally, in writing or in print, by way of art, or in another way chosen by him or her." Section 37 of that Act requires the Attorney-General to prepare a "compatibility statement" about each Bill presented to the Legislative Assembly by a Minister. The compatibility statement must say whether, in the Attorney-General's opinion, the Bill is consistent with human rights, and, if it is not consistent, how it is not consistent. A relevant provision in that regard is s 28(1). It provides that human rights may be subject only to reasonable limits set by Territory laws that can be demonstrably justified in a free and democratic society. 37 (2004) 220 CLR 1 at 49 [91]. The Revised Explanatory Statement for the Evidence Bill 2011 (ACT) repeatedly refers to s 16 of the Human Rights Act. It does so in discussing the terms of cl 17(2) of the Evidence Bill 2011 (now s 17(2) of the Evidence Act 2011 (ACT)): "A defendant is not competent to give evidence as a witness for the prosecution." The Revised Explanatory Statement says38: "The clause engages the right to freedom of expression under section 16 of the Human Rights Act 2004. However, clause 17 of the Bill constitutes a lawful restriction on the freedom of expression under section 16 of the Human Rights Act 2004 as it acts as an important essential safeguard for the defendant to have a fair trial (section 21 Human Rights Act)." These are strange remarks about a provision which prevents the prosecution from calling defendants as witnesses in the prosecution case, while leaving defendants free to give evidence in the defence case if they wish to do so. The provision does not prevent the defendant from exercising a right to freedom of expression, if that is what testifying in a desperate struggle to preserve one's liberty involves. The calling by one party of the opposing party as a witness is not well characterised as an exercise in freedom of expression by the first party. Similarly, the Revised Explanatory Statement, on the theory that the s 16(2) right to freedom of expression includes "the right to say nothing or the right not to say certain things"39, examines cl 12 of the Evidence Bill 2011 (now s 12 of the Evidence Act 2011) in the light of s 16 of the Human Rights Act. Subject to other provisions, s 12 renders all competent witnesses compellable. This is said to be a "restriction on the right to freedom of expression" because "a witness may be compelled to answer certain questions or express certain information to the court."40 However, the provision is also said to be a "lawful restriction … as it is essential to ensuring the peaceful and effective functioning of society."41 The word "essential" is hard to square with the fact that societies have functioned peacefully and effectively with compellability regimes different from that involved in s 12. 38 Australian Capital Territory, Legislative Assembly, Evidence Bill 2011, Revised Explanatory Statement at 12. 39 Australian Capital Territory, Legislative Assembly, Evidence Bill 2011, Revised Explanatory Statement at 4-5. 40 Australian Capital Territory, Legislative Assembly, Evidence Bill 2011, Revised Explanatory Statement at 10. 41 Australian Capital Territory, Legislative Assembly, Evidence Bill 2011, Revised Explanatory Statement at 10. The Revised Explanatory Statement engages in similar analysis for cl 41 (now s 41 of the Evidence Act 2011)42. Section 41 requires various kinds of improper questions in cross-examination to be disallowed. This is said to restrict the cross-examiner's freedom of expression. On that basis any exclusionary rule of evidence would limit the freedom of expression of the party asking a question or tendering a document or thing which the rule requires to be rejected. Yet the Revised Explanatory Statement does not analyse every exclusionary rule in that light. its equivalents The Revised Explanatory Statement raises various questions in relation to the first Lange limb. Does s 17(2) of the Evidence Act 2011 fall within it? Do any of the Evidence Act 1995 (NSW), the Evidence Act 2001 (Tas) and the Evidence Act 2008 (Vic) do so? Indeed, does any provision in those enactments which restricts the capacity of a party to tender evidence fall within the first Lange limb? Are common law rules of evidence which restrict the capacity of a party to tender evidence to be modified after applying the second Lange limb because they fall within the first Lange limb? the Evidence Act 1995 (Cth), Most trials are not used by parties or witnesses to engage in communications on political or governmental matters. But some have been. Hitler in 1924, Dimitrov in 1933, Radek in 1937 and Goering in 1946 – each of them were defendants who wished to make political points, and used the witness box to make them. Any exclusionary rule of testimonial evidence, above all the rule against irrelevant testimony, can in a sense burden communications on political or governmental matters so far as they form part of testimony. But it is rare for parties in litigation or their witnesses to attempt to make political or governmental communications. It is not the point of trials to provide a facility for communications on political or governmental matters. Of course a "burden" can be imposed by legislation even though that was not its "purpose"43. But is there not incongruity in inquiring whether the rules of evidence fall into the first Lange limb? Another category of questions includes the following. Does legislation create a "burden" under the first Lange limb if it forbids employees of the Executive from disclosing government secrets? Or from joining political parties? Or from making public speeches? Or from conducting political meetings within the workplace? In the distinct but related field of First Amendment litigation, it has been said in the United States of America that "a public employee does not 42 Australian Capital Territory, Legislative Assembly, Evidence Bill 2011, Revised Explanatory Statement at 21-22. 43 Levy v Victoria (1997) 189 CLR 579 at 619 per Gaudron J. have an absolute right to speak out on matters of public concern yet keep his job. If what he says interferes unduly with the mission of his employer, the employer can fire him"44. It has also been said in a First Amendment case that45: "the workplace is for working and not, unless the employer consents, for holding meetings at which employees can discuss matters of great importance to themselves, perhaps to society as a whole, but not to the employer. … A public employer does not, by permitting its employees to use their lunch breaks or coffee breaks or other down time during the workday to talk to each other, turn over its premises to the employees for organized and scheduled meetings on topics unrelated to work. Just because like other workers they can converse on varied topics during slack periods of work or breaks between work, public employees do not obtain squatters' rights to take over the employer's property and turn it into Hyde Park corner or town hall." A further category of questions relates to the criminalisation of communications. Is a statute within the first Lange limb if it criminalises threats of physical harm, or communications in the course of a conspiracy, or incitements to substantive crimes, or fraudulent communications? What of the law of copyright, or the rules protecting confidential information? It may be that the answer to some of these questions is that there is a burden, but it is not a burden which will produce invalidity because the second Lange question will be answered affirmatively. Thus before the Lange test had been worked out, Deane and Toohey JJ said in Nationwide News Pty Ltd v Wills46: "a law whose character is that of a law with respect to the prohibition or control of some or all communications relating to government or 44 Jungels v Pierce 825 F 2d 1127 at 1131 (7th Cir 1987) per Judge Posner, Chief Judge Bauer and Judge Fairchild concurring. 45 May v Evansville-Vanderburgh School 787 F 2d 1105 at 1110 (7th Cir 1986) per Judge Posner, Judge Flaum and Judge Easterbrook concurring. 46 (1992) 177 CLR 1 at 76-77. This has been adopted in post-Lange cases: Levy v Victoria (1997) 189 CLR 579 at 618-619; Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 200 [40]; [2004] HCA 41; and Hogan v Hinch (2011) 243 CLR 506 at 558 [95]. governmental instrumentalities will be much more difficult to justify as consistent with the implication than will a law whose character is that of a law with respect to some other subject and whose effect on such communications is unrelated to their nature as communications of the relevant kind. Thus, a law prohibiting conduct that has traditionally been seen as criminal (e.g. conspiring to commit, or inciting or procuring the commission of, a serious crime) will readily be seen not to infringe an implication of freedom of political discussion notwithstanding that its effect may be to prohibit a class of communications regardless of whether they do or do not relate to political matters." The first defendant submitted that legislation which merely made it more difficult for an individual to engage in communications, some of which might be of a political or governmental character, did not necessarily create a burden on the relevant freedom. "Otherwise, all laws that restricted the publication or disclosure of information would effectively burden freedom of political communication, since there is no information that could not conceivably be used as part of a political communication." There is force in this submission. To construe the first Lange limb in such a way that there will always or almost always be a burden, so that the proponent of legislative validity will always or almost always have to fall back on the second limb, is to bring into play indeterminate considerations and render them crucial in every or almost every case. Those considerations are capable of being applied by each particular judge in a different way. They are considerations which tend to lead to sharp divisions of judicial opinion, with cases being decided by the reasoning of a bare majority or by majority agreement on the orders but not the reasoning that leads to them47. The forms of analysis appearing in the Revised Explanatory Statement regarding the Evidence Bill 2011 (ACT) may appear in judgments. None of this tends to certainty. These difficulties, and some of the questions raised above, suggest that McHugh J's formulation of the operative test for "burden" under the first Lange limb is too favourable to persons challenging validity. That suggestion may be supported by the language of the first Lange limb itself – "effectively burden"48. In Coleman v Power49 Callinan J took a view different from that of McHugh J. He said of legislation criminalising the use of insulting words: "understood in the sense … of an insult in a public place delivered to the person the subject of it, or to some person associated with that person, or a 47 For example, Coleman v Power (2004) 220 CLR 1. 48 (1997) 189 CLR 520 at 567 (emphasis added). 49 (2004) 220 CLR 1 at 112 [298]. person who, having regard to the role or any particular position of the person insulted, might be aroused to respond, offers no realistic threat to any freedom of communication about federal political, or governmental affairs. It is no burden upon it." The views of other justices of this Court suggest that the word "federal" should be qualified in this passage, for non-federal matters can relate to federal affairs50. On the assumption that it should be, Callinan J's approach appears, with respect, to be correct. The Lange "freedom" generates a limitation on legislative power. It is not a personal right. It exists to protect the institutions of representative and responsible government created by the Constitution. Those institutions are strong enough not to require protection from insubstantial burdens or unrealistic threats. The Solicitor-General of the Commonwealth correctly submitted that in the case of burdens contravening s 92 of the Constitution the practical effect of a law must be to burden inter-State trade to a significantly greater extent than it burdens intra-State trade51. He correctly submitted that in the same way the burden to which the first Lange limb directs attention must be "meaningful". That is, it must not be "insubstantial or de minimis" – it must be "a real or an actual burden upon relevant communications"; it must be "a real impediment"; and it must be "an obstacle in their way". On Callinan J's approach, the Evidence Acts, for example, offer no "realistic threat" to the relevant freedom and do not burden it within the meaning of the first Lange limb. And on Callinan J's approach neither of the legislative provisions challenged in this case creates a "burden" within the meaning of the first Lange limb. One of the legislative provisions challenged by the plaintiff is s 200(2) of the Corrective Services Act 2006 (Q)52. Pursuant to s 200(2), conditions were imposed in the plaintiff's parole order. The plaintiff objects to two of those conditions. The validity of s 200(2) can be determined by inserting those conditions into the subsection. Thus, if condition (t)53 were inserted, s 200(2) would read: 50 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 142, 169 and 215-216; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 75; Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 571-572. 51 Betfair Pty Ltd v Western Australia (2008) 234 CLR 418 at 483 [131]; [2008] HCA 52 The text is set out at [12] above. 53 Conditions (t) and (v) are set out at [16] above. "A parole order granted by a parole board may also contain conditions the board reasonably considers necessary – to ensure the prisoner's good conduct; or to stop the prisoner committing an offence, including a condition that the prisoner not attend meetings in a particular area without the prior approval of a corrective services officer." And if condition (v) were inserted, s 200(2) would read: "A parole order granted by a parole board may also contain conditions the board reasonably considers necessary – to ensure the prisoner's good conduct; or to stop the prisoner committing an offence, including a condition that the prisoner receive no direct or indirect payment or benefit to him, or through any members of his family, through any agent, through any spokesperson or through any personal entity negotiating or dealing on his behalf with the media." Although the plaintiff is on parole, he is a "prisoner" because he falls within par 1(a) of the definition of "prisoner" in Sched 4 of the Corrective Services Act, and does not fall within any of the exclusions set out in par 2 of that definition. In relation to each version of s 200(2) the question would be: Does a condition of that kind realistically threaten any freedom of communication about political and governmental affairs? The first version limits the place at which a communication may be made. But it does not deprive the plaintiff, the relevant "prisoner" – who, though still under sentence, is actually not in prison because he is on parole – of any freedom of communication on political or governmental matters to which a corrective services officer has not given prior approval except at meetings in a particular area. He is free to say what he likes except at meetings in that area. The restriction on the place of communication does not prevent the substance of what he wants to communicate from being communicated. The second version of s 200(2) does not realistically threaten the freedom either. A ban on payment for making communications about political or governmental matters does not prevent the making of unpaid communications about those matters. What the prisoner could communicate without payment is identical with what he could have communicated, but for the parole condition, with payment. All opportunities for communication that exist independently of the second version of s 200(2) continue to exist54. As the Solicitor-General of the Commonwealth correctly submitted: "It is difficult to see that the effective operation of responsible and representative government depends upon the entitlement of the citizenry to charge for their contributions to political debate. Indeed, it might be said that such a phenomenon would have a distorting effect upon Australian political discussion and the choice that is to be made at elections." The other legislative provision challenged by the plaintiff is s 132(1)(a) of the Corrective Services Act. The effect of s 132(1)(a), s 132(2)(d) and Sched 4 of the Corrective Services Act, taken with s 7 of the Criminal Code (Q), is that where a person, without the chief executive's approval, interviews the plaintiff, or obtains a written or recorded statement from the plaintiff, and the plaintiff is a secondary participant in that person's conduct, the plaintiff will have committed an offence and will be in breach of condition (g) of his parole order55. But that does not create a "realistic threat" to the plaintiff's freedom of communication. The ordinary meaning of obtaining something is to acquire it as a result of one's own efforts, for example, by request or procurement. Further, s 23(1)(a) of the Criminal Code provides that, subject to express provisions relating to negligent acts and omissions, an act that occurs independently of an exercise of a person's will does not give rise to criminal responsibility. Hence a person who receives a prisoner's unsolicited written statement, or the record of an oral statement, does not commit an offence. A person may be said to "interview" a prisoner when that person meets or telephones a prisoner and asks questions with a view to eliciting information. A written or recorded statement includes a document in the nature of a transcript or recording of an interview. The exceptions in s 132(2) for the prisoner's lawyer, an employee of a law enforcement agency and the Ombudsman suggest that the expression also means a relatively formal document to be used for some instrumental purpose like an investigation. Section 132(1)(a) does not prohibit receiving all oral or written communications emanating from prisoners, and it does not prohibit prisoners from making them. That conclusion is supported by the stark contrast between s 132(1)(a) and earlier Queensland enactments. Thus the Prisons Act 1890 (Q), s 69, provided: 54 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 305 [356]. 55 See the provisions analysed above at [17]. "Every person who, contrary to the regulations of a prison – Communicates or attempts to communicate with a prisoner; ... shall be liable on conviction to a penalty". And reg 22 of the Regulations made under that Act provided: "Officers shall use every precaution and the utmost vigilance in preventing prisoners from … holding communications with unauthorised persons." The plaintiff rejected the above construction of s 132. The plaintiff argued that the correct construction of s 132 appears in the Explanatory Notes to the Corrective Services Bill 200656: "It is not the intent of the clause to unduly restrict access to prisoners from journalists seeking to conduct interviews for bona fide purposes. However, it is intended that the clause will operate so that if a journalist wishes to publish an unsolicited letter from a prisoner, the journalist must first seek permission of the chief executive prior to publishing it." It quite often happens that a document like the Explanatory Notes – a document in the nature of an Explanatory Memorandum or a Second Reading Speech – is inconsistent with the legislative language. That is so of the passage just quoted. It incorrectly overlooked the fact that s 132(1)(a) creates a prohibition on obtaining a statement from a prisoner, not on publishing an unsolicited statement. It correctly assumed, however, that the mere receipt of an unsolicited letter from a prisoner is not prohibited. The plaintiff also argued that s 132(1)(a) is directed at the person who conducts the interview or obtains the statement, and burdens that person's freedom of political communication. The argument appears to be that s 132(1)(a) affects that person's methods of learning about a prisoner's communications, and hence that person's capacity to formulate communications to others. But that person can gain access to what the prisoner communicates by other means. That person can thereby use the content of what the prisoner says as a step towards whatever communications that person wishes to formulate. 56 Queensland, Legislative Assembly, Corrective Services Bill 2006, Explanatory Notes at 119. In these circumstances s 132(1)(a) does not create practical impediments to a prisoner making an oral or written communication without being interviewed by a person and without responding to the request of a person in such a way as to cause that person to have "obtained" it. There is nothing to stop the content of a communication which, but for s 132(1)(a), could have been made in an interview or obtained being identical with the content of a communication made in other ways. The form of the questions put to the Court should be modified slightly and they should be answered as follows: Is s 132(1)(a) of the Corrective Services Act 2006 (Q) invalid because it impermissibly burdens the freedom of communication the about government and political matters, contrary Commonwealth Constitution? Is s 132(1)(a) of the Corrective Services Act 2006 (Q) to be construed so as not to apply to a prisoner on parole? No: it applies to prisoners on parole not falling within par 2 of the definition of "prisoner" in Sched 4 of the Corrective Services Act 2006 Is s 200(2) of the Corrective Services Act 2006 (Q) invalid to the extent it authorises the imposition of conditions (t) and (v) of the plaintiff's Parole Order? If s 200(2) of the Corrective Services Act 2006 (Q) is construed so that the power it confers must be exercised in conformity with the freedom of communication about government and political matters provided for by the Commonwealth Constitution, are conditions (t) and (v) of the plaintiff's Parole Order invalid because they impermissibly burden that freedom? 4. Who should pay the costs of the special case? The plaintiff. KIEFEL J. The relevant facts and the statutory provisions in question are set out in detail in the joint reasons. The plaintiff is an Aboriginal man and a member of the Palm Island Aboriginal community. On 26 November 2004, he actively participated in a riot on Palm Island, which followed upon the death of an Aboriginal man who was in the custody of the police. Serious damage was caused by the rioters to the building housing the police station and courthouse, a dwelling house and a police vehicle. The plaintiff was convicted of the offence of rioting causing destruction57. He was sentenced to six years imprisonment and was to be eligible for parole after serving two years of the head sentence. Prior to his arrest and conviction, the plaintiff had been involved in the Palm Island Men's Group, as well as a program addressed to alcohol and drug rehabilitation and youth suicide within the Palm Island community. In submissions to the second defendant ("the Parole Board") on behalf of the plaintiff it was explained that, since his arrest, he has sought to use legal and political avenues, including the media, to express his feelings of anger over perceived injustices within the Palm Island community. The plaintiff wishes to participate in public discussion of political and social problems affecting Aboriginal persons in Australia and of problems within the prison system in Queensland. Section 200(2) of the Corrective Services Act 2006 (Q) provides that a parole order granted by a parole board may contain conditions that it "reasonably considers necessary – (a) to ensure the prisoner's good conduct; or (b) to stop the prisoner committing an offence." On 8 July 2010, the Parole Board granted the plaintiff's application for parole and released him on parole from 19 July 2010 until 18 July 2014, upon certain conditions. Conditions (t) and (v) of the Parole Order respectively require that the plaintiff not attend public meetings on Palm Island without the prior approval of the corrective services officer; and that he not receive, directly or indirectly, payment or benefit to him or through the agency of others negotiating or dealing on his behalf with the media58. The release of a prisoner on parole does not mean that that person is no longer subject to measures of control and discipline. Under the Corrective 57 Criminal Code (Q), ss 61 and 65. By s 11 of the Criminal Code and Other Acts Amendment Act 2008 (Q), s 65 was omitted and s 61 was replaced by a different provision. 58 Condition (u) was that he be prohibited from speaking to and having any interaction whatsoever with the media, but was subsequently deleted by the Parole Board on 22 July 2011. Services Act the term "prisoner" is defined (subject to exceptions) to include a person released on parole59. A prisoner released upon parole is taken to be still serving the sentence imposed60. A prisoner remains in the custody of the chief executive61, even if the person is lawfully outside a corrective services facility62. The chief executive is responsible for the security and management of all corrective services facilities, the safe custody and welfare of all prisoners and the supervision of offenders in the community63. Section 132(1)(a) of the Corrective Services Act provides that a person must not interview a prisoner, or obtain a written or recorded statement from a prisoner, whether the prisoner is inside or outside a corrective services facility64. Certain exceptions are made in s 132(2). So far as concerns sub-s (1)(a), it provides that an offence is not committed if the person is the prisoner's lawyer, an employee of a law enforcement agency, the ombudsman or is "a person who has the chief executive's written approval to carry out the activity mentioned in the subsection." Where the person is not one of the class of persons excepted under s 132(2), the offence to which s 132 refers is properly described as one where an activity referred to in s 132(1) is carried out without the approval of the chief executive. 59 Corrective Services Act 2006 (Q), Sched 4. 60 Corrective Services Act 2006, s 214. However, a parolee is not disqualified from voting in Queensland and federal elections. Section 106(3) of the Electoral Act 1992 (Q) disqualifies a person who is serving a sentence of imprisonment from voting, but s 106(4) provides that for the purposes of sub-s (3), a person is serving a sentence of imprisonment only if they are in detention on a full-time basis for an offence against a Commonwealth, State or Territory law and the detention is attributable to the sentence of imprisonment concerned; s 93(8AA) of the Commonwealth Electoral Act 1918 (Cth) provides that a person who is serving a sentence of imprisonment of three years or longer is not entitled to vote at any Senate or House of Representatives election, but s 4(1A)(a) provides that for the purposes of the Act, a person is serving a sentence of imprisonment only if, inter alia, they are in detention on a full-time basis. 61 The term "chief executive" is defined in s 10(1) of the Public Service Act 2008 (Q) as the person who holds appointment under that Act as the chief executive of that department. 62 Corrective Services Act 2006, s 7(4). 63 Corrective Services Act 2006, s 263(1). 64 The note to this provision refers to the definition of prisoner in Sched 4 as including one released on parole. No approval has been sought from the chief executive to the taking of a statement from the plaintiff or the undertaking of an interview by a person other than a person referred to in s 132(2)(a)-(c). The plaintiff has not sought a statement of reasons65 from the Parole Board as to its decision to impose the conditions in question and has not sought judicial review of that decision66. The plaintiff challenges the validity of ss 132 and 200(2) of the Corrective Services Act. The question to be addressed in connection with these sections, arising from the questions stated for the Court, is whether they, directly or indirectly, impermissibly burden the freedom of communication about government and political matters which the Constitution guarantees67. I agree with the opinion expressed in the joint reasons68 that questions as to the imposition of conditions (t) and (v) in the Parole Order do not arise in these proceedings. They may arise on an application for judicial review of the decision of the Parole Board. These proceedings raise a constitutional question, arising from the freedom mentioned and the restrictions it may render necessary upon legislative power. I agree that, having regard to the questions posed in Lange v Australian Broadcasting Corporation69, it cannot be concluded that ss 132 and 200(2) impermissibly burden the freedom of political communication. In Lange70 it was said that the freedom of communication about government and political matters "is an indispensable incident of that system of representative government which the Constitution creates". In ensuring the maintenance of that system, the freedom may operate as a restriction upon the legislative powers of Understood in this way, the maintenance of the system of representative government is a constitutional imperative which the freedom supports. the Commonwealth, 65 Judicial Review Act 1991 (Q), ss 31-40. 66 Judicial Review Act 1991, ss 20-30. 67 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520; [1997] HCA 69 (1997) 189 CLR 520. 70 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 559. 71 Coleman v Power (2004) 220 CLR 1 at 49 [90] per McHugh J, 77 [195] per Gummow and Hayne JJ; [2004] HCA 39. The questions stated in Lange, as relevant to determining whether a law could be said to infringe the freedom, are72: "First, does the law effectively burden freedom of communication about government or political matters either in its terms, operation or effect? Second, if the law effectively burdens that freedom, is the law reasonably appropriate and adapted to serve a legitimate end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government". (footnote omitted) The second question in Lange may be taken to import considerations of proportionality. It was said in Lange73 and in Roach74 that, in this context, there is little difference between the phrase "reasonably appropriate and adapted" and the notion of proportionality. The first question directs attention to the aspect of the freedom of communication about government or political matters which the law may effectively burden. A legislative provision may be said generally to burden the freedom when it effects a restriction upon it or hinders or limits its exercise. A distinction has been drawn between a law which has a direct and substantial effect upon communications and a law which has only an incidental or indirect effect75. It is necessary to identify the aspect of the freedom which is said to be burdened, in order to identify the effects of the law. Because of the constitutional context in which the freedom arises, it is necessary that the law affect communications that are of the kind which the freedom protects and that the communications have a Commonwealth dimension. As was said by the Commonwealth, intervening, in its written submissions, the increasing integration of social, economic and political matters in Australia76, including through co-operative arrangements, means that communications regarding State issues may also constitute communications regarding problems at the Commonwealth level. 72 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567. 73 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567 fn 272. 74 Roach v Electoral Commissioner (2007) 233 CLR 162 at 199 [85]; [2007] HCA 75 Hogan v Hinch (2011) 243 CLR 506 at 555-556 [95]; [2011] HCA 4. 76 Quoting Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at The nature and aspect of the communication affected by the impugned provisions are not to be discerned by reference to restrictions upon the plaintiff's ability to communicate or the manner in which he communicates. The question is how the legislative provisions, which are sought to be impugned, may affect the freedom generally. The freedom is not a personal right, although its protection may serve also to ensure that citizens are able to communicate freely on the matters the subject of the freedom. The issues which the plaintiff identifies as those which he wishes to discuss may nevertheless assist in the identification of the area of communication which may be affected by the statutory provisions and they are relevant to his standing. I agree with the joint reasons that the communications which may be affected by the provisions in question concern matters relating to Aboriginal and Indigenous affairs77. These are matters which are the concern of both State and Commonwealth governments, and involve communications at both levels. The second question in Lange requires that the fulfilment of the statutory objective or purpose (the "legitimate end") be compatible with the maintenance of the constitutionally prescribed system of representative and responsible government. As expressed it may be read as a test of statutory purpose. However, if a statute's objective was not so compatible, that would be an end to the matter. There would be no occasion for testing the statute as "reasonably appropriate and adapted" or proportionate to its purpose and that aspect of the second question in Lange would be otiose. In Coleman v Power78 McHugh J expressed the view that the Court in Lange had intended the adjectival phrase "compatible with the maintenance of the constitutionally prescribed system of representative and responsible government" to govern not only the end or purpose sought to be achieved by the statute, but also the manner of achieving that end. This was confirmed, in his Honour's view79, by the reference which followed, in the reasons in Lange, to in Australian Capital Television Pty Ltd v The what had been held Commonwealth80, namely that there were "other less drastic means by which the objectives of the law could be achieved."81 His Honour therefore read the second question as "is the law reasonably appropriate and adapted to serve a legitimate 77 At [26] of the joint reasons. 78 (2004) 220 CLR 1 at 50 [92]. 79 Coleman v Power (2004) 220 CLR 1 at 50 [93]. 80 (1992) 177 CLR 106; [1992] HCA 45. 81 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 568. end [in a manner] which is compatible with the maintenance of the constitutionally prescribed responsible government?"82. representative system of and The second Lange question, as restated by McHugh J in Coleman v Power, may be thought to require even further clarification in respect of two matters: (1) as to the relationship, if any, between the means chosen by the statute to achieve its objective and the constitutional imperative of the maintenance of the system of representative government; and (2) as to whether that imperative is intended to be part of the test of proportionality which inheres in the second question in Lange, or whether it serves only to underline the importance and purpose of the freedom. These matters were not addressed in argument and may be put to one side. It is sufficient presently to observe that the second question identifies a relationship between the legislative objective, or "end", and the means chosen to achieve that objective. I take the reference to a "legitimate" end to be to an objective or purpose within power, but subject to a test which may determine whether it exceeds that power. A lawful purpose, in the sense first mentioned, is a necessary condition for the application of any test of proportionality. It is not itself sufficient to answer the question whether a law is proportionate. That question requires, at the least, consideration of statutory ends and means. Sections 132 and 200(2) must be considered in light of the objects of the Corrective Services Act. Section 3(1) states the purpose of corrective services as "community safety and crime prevention through the humane containment, supervision and rehabilitation of offenders." Sub-section (2) of that section, whilst recognising that every member of society has "certain basic human that some entitlements are "necessarily recognises entitlements", also diminished" because of imprisonment or court sentence. The diminution spoken of may result, in part, from the need for control and discipline in relation to prisoners. This was recognised in R v Secretary of the State for the Home Department; Ex parte Simms83 and is recognised by the nature of the powers given to the chief executive in Ch 2 of the Corrective Services Act, which concern, relevantly, the management of prisoners and include powers to supervise and record communications of various kinds, and Ch 3, which deals with breaches of discipline and offences and contains s 132. Control and discipline may be seen as necessary in many respects: to the safety of the community, prisoners, and prison staff, to the security of the prison 82 Coleman v Power (2004) 220 CLR 1 at 50 [93] per McHugh J, 78 [196], 82 [211] per Gummow and Hayne JJ and Kirby J, respectively, agreeing. 83 [2000] 2 AC 115 at 127 per Lord Steyn. environment and to the rehabilitation of offenders. It was observed in Pell v Procunier84 that isolation in prison serves a protective function, quarantining offenders for a time whilst the rehabilitation processes take their course. Challenges to legislative restrictions must be considered in light of their legitimate objects85. The need for some measure of supervision and control over a prisoner's conduct may not cease when they are released upon parole. Although parolees are no longer detained, their rehabilitation may not be regarded as complete. Further, their conduct, including public statements made by them, may have repercussions for other prisoners and the prison system. Pell v Procunier provides an example. It was there observed that press attention to a small number of prisoners had resulted in them becoming "public figures" within the prison society, gaining a degree of notoriety and influence with other prisoners and becoming the source of severe disciplinary problems86. Whilst that case involved detained prisoners, the effects spoken of could apply to those on parole. The requirement of approval by the chief executive is consistent with the objects of the Corrective Services Act. It may be inferred from the terms of s 132(2)(d) that, although it applies generally, the requirement of approval will more commonly apply to the media. It provides the chief executive with the opportunity to assess the ramifications of an interview or the taking of a statement, having regard to the circumstances of the prisoner and the circumstances prevailing within the correctional facility. Section 132 does not prevent a prisoner communicating with others on matters relating to government and politics. It is directed to the method by which the media and others obtain information or opinions from a prisoner. It does not prohibit interviews or the taking of statements. The limitation it effects is to require approval from the chief executive, whose consideration of the matter must be informed by the objects of the Corrective Services Act and the existence of the freedom, and whose refusal is subject to judicial review. In the measures s 132 adopts, the section goes no further than is reasonably necessary in seeking to achieve the relevant objectives of the Corrective Services Act and is proportionate. A test of this kind has been applied 84 417 US 817 at 822-823 (1974). 85 Pell v Procunier 417 US 817 at 822 (1974). 86 417 US 817 at 831-832 (1974). in decisions of this Court87. It is evident in what was held in Australian Capital Television, to which McHugh J referred in the passage from Coleman v Power set out above88. It could not be said that the means employed by a statute were reasonably necessary if there were other, less drastic, means available by which the legislative objective could be achieved. In some cases the extent of the burden imposed by legislation on the freedom of communication on government and political matters, and the importance of the particular aspect of the freedom burdened, might require further consideration, in order to determine whether a legislative provision is proportionate. It has been said that a burden might in some cases require a "compelling justification"89 or a "'substantial' reason"90. A requirement that a burden be justified or explained suggests that substantial importance is attributed to the aspect of the freedom burdened and that the burden is significant. It also directs attention to the statutory objective sought to be achieved, as the source of the justification or explanation. But no occasion for considerations of this kind arises in the present case. The burdens imposed are not excessive in their requirements. The question with respect to s 200(2) may be dealt with shortly. The restriction allows a parole board to attach only such conditions as are reasonably necessary to the achievement of the objectives of ensuring the good conduct of a parolee and preventing that person offending. The sub-section therefore imports a requirement of proportionality into a parole board's decision-making process. That requirement would also form part of any judicial review of a decision of a parole board. The grant of power in s 200(2) cannot be said to be excessive, having regard to the manner in which it is required to be exercised. Neither s 132 nor s 200(2), tested by reference to the questions in Lange, is invalid. I agree with the answers proposed in the joint reasons, including that as to costs. 87 North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 559 at 616; [1975] HCA 45; Betfair Pty Ltd v Western Australia (2008) 234 CLR 418 at 477 [102]; [2008] HCA 11. 88 At [82] of these reasons. 89 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 143 per Mason CJ, 235 per McHugh J. 90 Roach v Electoral Commissioner (2007) 233 CLR 162 at 199 [85]; albeit with reference more directly to burdens on the franchise given by the Constitution.

HIGH COURT OF AUSTRALIA PLAINTIFFS AND THE STATE OF TASMANIA DEFENDANT Brown v Tasmania [2017] HCA 43 18 October 2017 ORDER Question 2 of the Special Case dated 9 December 2016 be amended and the questions stated in the Special Case (as so amended) be answered as follows: Question 1 Do either or both of the plaintiffs have standing to seek the relief sought in the Amended Statement of Claim? Answer The defendant abandoned its challenge to the plaintiffs' standing. Question 1 therefore need not be answered. Question 2 Is the Workplaces (Protection from Protesters) Act 2014 (Tas), either in its entirety or in its operation in respect of forestry land or business access areas in relation to forestry land, invalid because it impermissibly burdens the the Commonwealth Constitution? freedom of political communication contrary implied Answer Section 6(1), (2), (3) and (4), s 8(1), s 11(1), (2), (6), (7) and (8), s 13 and Pt 4 of the Workplaces (Protection from Protesters) Act 2014 (Tas) in their operation in respect of forestry land or business access areas in relation to forestry land are invalid because they impermissibly burden the implied freedom of political communication contrary to the Commonwealth Constitution. Question 3 Who should pay the costs of the Special Case? Answer The defendant should pay the plaintiffs' costs. Representation R Merkel QC and F I Gordon with C J Tran for the plaintiffs (instructed by Fitzgerald & Browne) M E O'Farrell SC, Solicitor-General of the State of Tasmania with S K Kay for the defendant (instructed by Solicitor-General's Office (Tas)) Interveners S P Donaghue QC, Solicitor-General of the Commonwealth with P D Herzfeld for the Attorney-General of the Commonwealth, intervening (instructed by Australian Government Solicitor) P J Dunning QC, Solicitor-General of the State of Queensland with A D Keyes and P D Mott for the Attorney-General of the State of Queensland, intervening (instructed by Crown Solicitor (Qld)) R M Niall QC, Solicitor-General for the State of Victoria with the State of Victoria, M A Hosking for intervening (instructed by Victorian Government Solicitor) the Attorney-General for C D Bleby SC, Solicitor-General for the State of South Australia with T N Golding for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) S E Pritchard SC with J E Davidson for the Attorney-General for the State of New South Wales, intervening (instructed by Crown Solicitor (NSW)) B W Walker SC with J A Redwood and P M Bindon for the Human Rights Law Centre, as amicus curiae (limited to written submissions) (instructed by DLA Piper) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Brown v Tasmania Constitutional law (Cth) – Implied freedom of political communication – Workplaces (Protection from Protesters) Act 2014 (Tas) – Where Act empowers police officers to direct protesters to leave and stay away from business premises and business access areas under pain of arrest and criminal penalties – Where business premises include forestry land – Where Act allows police officers to give such directions if they reasonably believe protester is preventing, hindering or obstructing business activity, has done so, or is about to do so – Where Forestry Tasmania authorised to undertake forest operations in Lapoinya Forest – Where plaintiffs protested in vicinity of forest operations – Where plaintiffs directed to leave and stay away from forestry land – Where plaintiffs arrested and charged, purportedly under Act, as result of protest activity – Whether Act restricts otherwise lawful protest activity – Whether implied freedom burdened – Whether Act, or provisions thereof, impose impermissible burden on implied freedom in their operation in respect of forestry land and related business access areas – Whether provisions suitable, necessary and adequate in balance. law (Cth) – Where plaintiffs charged under Workplaces Constitutional (Protection from Protesters) Act 2014 (Tas) – Where charges not pursued – Where plaintiffs intend to engage in conduct unless conduct validly proscribed by Act – Whether plaintiffs have standing to challenge validity of Act. Words and phrases – "burden", "business access area", "discriminatory effect", "implied freedom of political communication", "proportionality testing", "protest activity", "protester", "reasonably appropriate and adapted". Forest Management Act 2013 (Tas), ss 8, 9, 13, 21, 22, 23. Workplaces (Protection from Protesters) Act 2014 (Tas), ss 6, 8, 11, 13 and Pt 4. KIEFEL CJ, BELL AND KEANE JJ. In 2014 the Parliament of Tasmania enacted the Workplaces (Protection from Protesters) Act 2014 (Tas) ("the Protesters Act"), the title of which reads: "An Act to ensure that protesters do not damage business premises or business-related objects, or prevent, impede or obstruct the carrying out of business activities on business premises, and for related purposes". A "protester" is defined in the Protesters Act to mean a person engaging in a "protest activity", namely, an activity that takes place on business premises or a business access area in relation to business premises in furtherance of, or for the purposes of promoting awareness of or support for, an opinion or belief in respect of a political, environmental, social, cultural or economic issue1. A person engages in protest activity if the person "participates, other than as a bystander, in a demonstration, a parade, an event, or a collective activity, that is a protest activity"2. A person is not to be taken to be engaging in a protest activity if they have the consent of a business occupier to be on the premises and to there engage in the protest activity3. The definitions of "business premises" and "business access area, in relation to business premises" ("business access area") and their place in the Protesters Act will be discussed in more detail later in these reasons. It suffices presently to note that the definition of "business premises" includes "forestry land"4, which is relevantly "an area of land on which forest operations are being carried out"5. The two plaintiffs were present at different times in the Lapoinya Forest for the purpose of raising public and political awareness about the logging of the forest and voicing protest to it. They were each arrested and charged with offences under the Protesters Act. The charges against the plaintiffs were not proceeded with and were ultimately dismissed when no evidence was tendered by the prosecution with respect to them. 1 Workplaces (Protection from Protesters) Act 2014 (Tas), ss 4(1), 4(2). 2 Workplaces (Protection from Protesters) Act 2014 (Tas), s 4(3). 3 Workplaces (Protection from Protesters) Act 2014 (Tas), s 4(5). 4 Workplaces (Protection from Protesters) Act 2014 (Tas), s 5. 5 Workplaces (Protection from Protesters) Act 2014 (Tas), s 3. Bell The plaintiffs challenge the validity of certain provisions of the Protesters Act, and to that end invoke the test for invalidity stated in Lange v Australian Broadcasting Corporation6 as explained in McCloy v New South Wales7 with respect to laws which restrict the freedom of communication about matters of politics and government which is implied in the Constitution. The first question stated by the parties in the Special Case asks whether either or both of the plaintiffs have standing to seek the relief sought. There is now no dispute concerning the plaintiffs' standing because the defendant has conceded that the plaintiffs have standing. That question therefore need not be answered. It is necessary also to amend the second question so that it refers to business access areas in relation to forestry land, in addition to forestry land. Accordingly the two remaining questions stated by the parties for the determination of the Court should read as follows: Is the Workplaces (Protection from Protesters) Act 2014 (Tas), either in its entirety or in its operation in respect of forestry land or business access areas in relation to forestry land, invalid because it impermissibly burdens freedom of political communication contrary to the Commonwealth Constitution? implied the (3) Who should pay the costs of the Special Case? The Protesters Act has a wider application than to business premises that are forestry land. Indeed the definition of "business premises" in s 5 of the Protesters Act extends to various business premises as that term might be ordinarily understood, and to business activities conducted upon them. However, the facts in the Special Case are limited to operations conducted on forestry land and protests with respect to them. There is also a particular historical, social and legislative background to forest operations and public access to forests in Tasmania, and demonstrations in forests appear to have been the catalyst for the Protesters Act. In the course of argument the plaintiffs effectively restricted their case to key provisions of the Protesters Act so far as they concern forestry land. The Court should not speculate about the operation and effect of the Protesters Act in other contexts. These reasons are therefore limited to the question of the validity of the relevant provisions of the Protesters Act in their operation with respect to forestry land or business access areas in relation to forestry land, namely, ss 6, 7, 8, 11 and 13 and Pt 4 of the Protesters Act. (1997) 189 CLR 520 at 561-562; [1997] HCA 25. (2015) 257 CLR 178 at 193-195 [2]; [2015] HCA 34. Bell Background facts The Lapoinya Forest is situated near the township of Lapoinya in North West Tasmania. It is some 89 hectares in size. Part of the forest was identified as Forestry Coupe FD053A ("the coupe") in a Forest Practices Plan ("the FPP") which was submitted by Forestry Tasmania to the relevant authority in December 2015 to obtain authorisation to conduct forest operations8. That authorisation was provided. Those operations included tree felling in the coupe. Forestry Tasmania is the "Forest Manager" as defined by the Forest Management Act 2013 (Tas) ("the FMA") and has the management and control of all land which is "permanent timber production zone land" ("PTPZ land")9. The land in the coupe was PTPZ land within the meaning of the FMA. If forest operations are occurring on PTPZ land, that land is "forestry land" for the purposes of the Protesters Act. The map which accompanied the FPP identified the boundaries of the coupe and the boundaries of the "harvest area" within it in which tree felling was permitted. The land which the FPP so identified did not include any land declared as reserved land under the Nature Conservation Act 2002 (Tas). Land of this kind abutted the south eastern boundary of the forest ("the Reserve"). The work undertaken by Forestry Tasmania in the coupe involved clearing old forest roads and constructing new roads in preparation for logging. Forestry Tasmania decided to close two forest roads – that part of Maynes Road which was within the coupe, and Broxhams Road, which bounded the south eastern boundary of the coupe. It did so by erecting signs advising of the closure of the roads to all unauthorised vehicular and pedestrian traffic and by suspending chains across the roads a short distance from the signs, as it is entitled to do under the FMA. Some of the operations undertaken by Forestry Tasmania involve the use of heavy machinery. It is accepted that it has statutory duties and obligations to ensure, so far as reasonably practicable, the health and safety of persons from those operations10. 8 See Forest Practices Act 1985 (Tas), Pt III, Div 1, which sets out the requirements applying to Forest Practices Plans. 9 Forest Management Act 2013 (Tas), ss 7 and 8. 10 Work Health and Safety Act 2012 (Tas). Bell The plaintiffs The announcement by Forestry Tasmania of its intention to fell trees in the coupe in the Lapoinya Forest resulted in public protests, including by a public action group formed by the Lapoinya community. The group wrote letters to politicians and newspapers, sent a delegation to the relevant Minister and distributed information amongst local residents. The second plaintiff, Ms Jessica Hoyt, grew up in Lapoinya and was a founding member of the public action group referred to above. The first plaintiff, Dr Bob Brown, was formerly a Senator for Tasmania and a founding member and leader of the Australian Greens. He has been involved in environmental campaigns and protests since the 1970s. On the first occasion Ms Hoyt was present in the Lapoinya Forest, she entered the Lapoinya Forest at Broxhams Road, passing the signs referred to above. She walked through the forest to Maynes Road. An employee of Forestry Tasmania asked her to wait whilst an excavator moved away, to which request she acceded. Ms Hoyt then walked to a point in the forest on the south western side of Maynes Road where she received a direction from a police officer to leave the area. When she refused to do so she was removed to the junction of Maynes Road and Lapoinya Road. The following day Ms Hoyt returned to the forest with other members of the community who wished to protest against logging in the coupe, in order to show them what had taken place. She was walking some five to ten metres from, and to the south of, Maynes Road when she was instructed by a police officer to stop, which she did. She was then arrested and taken to Maynes Road. On the date the subject of the charge against him, Dr Brown entered Broxhams Road and walked along a section of it with three other persons. He was then filmed speaking about environmental issues and calling upon the relevant Minister to protect the forest against a background which showed preparatory work for logging being undertaken. The footage included works being undertaken by a bulldozer. When Dr Brown was approached by two police officers he was standing on a cleared part of Broxhams Road which was in the Reserve. After a conversation with one of the officers he was directed to leave the area. When he failed to do so, he was arrested. After the commencement of this proceeding by Dr Brown, the defendant, the State of Tasmania, decided not to pursue the charge made against him under the Protesters Act. Likewise, after Ms Hoyt had applied to be joined to this proceeding, it was decided not to pursue the charges made against her. Tasmania now accepts that Dr Brown was not within an area to which the Protesters Act Bell applied when he was arrested and does not allege that Ms Hoyt was in such an area, even though she contends that she was. These matters may be put to one side for present purposes. They assume more importance with respect to difficulties relating to the identification of "forestry land" to which the Protesters Act applies than they do with respect to the question of the plaintiffs' standing, which Tasmania now concedes. That concession is appropriate. Standing is not lost because charges are withdrawn after the exercise of powers under a statute. As Dixon CJ observed11 in Wragg v State of New South Wales12, what has been done may be repeated. Furthermore, the plaintiffs have a "real interest" in the question of the validity of the Protesters Act because, unless constrained by it, the plaintiffs intend to engage in conduct which it proscribes. They are therefore interested to know whether they are required to observe the law13. The background to the Protesters Act The FMA, access and powers When the Protesters Act was enacted, the FMA and its predecessor statutes had been in operation for some time. The FMA provides Forestry Tasmania, its authorised officers and police officers with powers to ensure that forest management and operations, with which Forestry Tasmania is charged, are not impeded. It contains provisions with respect to public access to PTPZ land. There is no suggestion that there have been any real difficulties associated with its operation. The validity of its relevant provisions is not questioned in these proceedings. As Forest Manager under the FMA14, Forestry Tasmania has functions which include the management and control of all PTPZ land in Tasmania, including forest operations on that land for the purposes of selling forest products15. 11 Wragg v State of New South Wales (1953) 88 CLR 353 at 371; [1953] HCA 34. 12 (1953) 88 CLR 353. 13 Croome v Tasmania (1997) 191 CLR 119 at 137-139; [1997] HCA 5; Kuczborski v Queensland (2014) 254 CLR 51 at 101 [152]-[153]; [2014] HCA 46. 14 Forest Management Act 2013 (Tas), s 7. 15 Forest Management Act 2013 (Tas), s 8. Bell Section 13(1) of the FMA provides: "The Forest Manager must perform its functions and exercise its powers so as to allow access to permanent timber production zone land for such purposes as are not incompatible with the management of permanent timber production zone land under this Act." A similar provision was introduced in 1991 as s 20B(1) of the statute which preceded the FMA, the Forestry Act 1920 (Tas), which was concerned with the functions of the Forestry Commission16: "The Commission must exercise its powers so as to afford members of the public access to State forest for such recreational purposes as are not incompatible with the management of State forest under this Act." The original s 20B, which had been inserted in 1984, was in somewhat different terms17: "The Minister may ... by notice in the Gazette, declare an area of State forest to be an area into which persons may not enter and in which persons may not remain without the authorization in writing of the Commission." It would appear from the Second Reading Speech to the 1984 Amendment Bill that it was thought necessary to include such a provision because the existing legislation was to deal with situations arising from recent demonstrations. The demonstrations referred to were those relating to the construction of the Franklin Dam18. It was said that19: inadequate "[t]he effect of the bill is to amend the Forestry Act to provide for a situation of trespass. The powers of arrest which follow from the amendment will enable the removal of person or persons causing the problem or the obstruction in the forests." 16 Public Land (Administration and Forests) Act 1991 (Tas). 17 Forestry Amendment Act (No 2) 1984 (Tas). 18 See The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1; [1983] HCA 21. 19 Tasmania, Legislative Council, Parliamentary Debates (Hansard), 6 December Bell The inference presently to be drawn from the original s 20B is that the Tasmanian Parliament considered it to be necessary to make express provision for notifying the public when they might not access forest areas. That provision, like the later s 20B(1) and the current s 13(1), recognises that there is an expectation on the part of the public in Tasmania, residents and visitors alike, that they may access forest areas and that that expectation should, so far as reasonably practicable, be met. said20: In the Second Reading Speech to the Bill which became the FMA it was "Under this bill the people of Tasmania will still be able to access and use permanent timber production zone land for the range of purposes and activities they currently enjoy and undertake in their public forest estate. The provisions of the 1920 [A]ct are essentially maintained to ensure the right to access the land continue, so long as the access does not interfere with the management of the land." Forestry Tasmania accepts many activities to be compatible with its strategic objectives with respect to PTPZ land. In the FPP concerning the forest operations here in question, it is said that such activities include "recreation sites, organised events, recreational vehicle use, hunting and firearm use, fossicking and prospecting, firewood collection, indigenous rights use, commercial or private access, apiary sites, mineral exploration and mining and tourism". The access recognised as available to the public by s 13(1) of the FMA is qualified by s 13(2), which provides that nothing said in s 13(1) prevents the Forest Manager from exercising its powers under ss 21, 22 and 23. Section 21(1) provides that the Forest Manager may erect signs on or in respect of forest roads or on PTPZ land for the purposes of discharging its responsibilities or in the interests of safety. Section 21(2) provides that it is to erect signs stating that a particular road is a "forest road" within the meaning of the FMA. By s 21(3) a person must not, without lawful excuse, undertake an activity or engage in conduct on a forest road or other land in PTPZ land contrary to the direction of the Forest Manager as expressed on a sign authorised by the Forest Manager. The Forest Manager, under s 22(2), may appoint an employee to be an authorised officer. An authorised officer may, under s 22(3), request a person not 20 Tasmania, House of Assembly, Parliamentary Debates (Hansard), 24 September Bell to enter PTPZ land or a forest road, to leave that land or road or to cease to undertake an activity or engage in conduct on them. The request may be made if the authorised officer is of the opinion that the entry or presence of that person, activity conducted or conduct engaged in may prevent the Forest Manager from effectively or efficiently performing its functions. An authorised officer may also, under s 22(4), prohibit a person from entering, or remaining in, an area of PTPZ land in particular circumstances, including when it is in the interests of the person's safety. Section 23(2) provides that the Forest Manager may close a forest road or any section thereof, either permanently or temporarily, to all traffic if it considers that closure is necessary or expedient for the purposes of discharging its responsibilities or in the interests of safety. Closure may be signified or effected by signage or signage in conjunction with barricades or trenches or any combination of them. Section 23(4) provides that a person must not drive a vehicle on or otherwise use a forest road that has been closed in accordance with the section. Sections 21 and 22 also provide for action to be taken by police officers. Section 21(5) provides that a police officer who reasonably considers that a person is offending against s 21(3) may direct the person to leave the forest road or other land in PTPZ land. Section 21(6) requires a person given such a direction to comply with it. Section 22(6) provides that a person must not, without lawful excuse, undertake an activity or engage in conduct on PTPZ land or a forest road contrary to the directions of a police officer. The penalty for a contravention of each of ss 21, 22 and 23 is a fine not exceeding 20 penalty units, which currently amounts to $3,180. Further, under ss 21(7) and 22(7), a police officer may arrest a person who fails to comply with a direction given under ss 21(5) and 22(6). Protests and the Protesters Act including protests concerning environmental The parties agree that there is a long history of political protests in Australia, in spaces accessible to the public and on Crown land. In Dr Brown's experience, which is stated in the Special Case, the primary means of bringing environmental issues to the attention of the public and politicians is to broadcast images, including by the use of social media, of that part of the environment sought to be protected and which is said to be threatened. issues, The parties agree that, historically, protests have been a means of bringing about political and legislative change on environmental issues. Onsite protests have been a catalyst for granting protection to the environment in particular places and have contributed to governments in Tasmania and throughout Bell Australia granting legislative and regulatory environmental protection to areas not previously protected. Since 2006, some 37 protests have taken place in Tasmania in areas that, at some later time, have been provided with legislative or regulatory protection. It is accepted that public debate about environmental issues generally is relevant to both State and federal politics. Public debate about environmental issues in Tasmania has featured prominently in previous federal campaigns. It is an agreed fact that some protests have involved blocking the entry of machinery to forests and interfering with tree felling activities. Protest activity has included protesters placing themselves so as to render tree felling impossible. Prior to the enactment of the Protesters Act, there were prosecutions of protesters who had prevented equipment being used in forest operations; locked themselves to a boom gate and a vehicle; occupied tree houses; blocked forest roads; and locked themselves onto various devices whilst sitting in trees in order to prevent themselves being removed from the area. A "Fact Sheet" was prepared with respect to the Workplaces (Protection From Protesters) Bill 2014 (Tas) ("the Protesters Bill"). It is a document provided to members of the Tasmanian Parliament for the purpose of debate and is said to be capable of constituting extrinsic material for the purpose of s 8B(3)(e) of the Acts Interpretation Act 1931 (Tas). The Protesters Bill is referred to in the Fact Sheet as "designed to implement the Tasmanian Government's election policy commitment to introduce new laws to address illegal protest action in Tasmanian workplaces". It says that the Bill creates indictable offences but does not seek to prohibit the right to peaceful protests. It says that it "does seek to regulate inappropriate protest activity that impedes the ability of businesses to lawfully generate wealth and create jobs". The Bill is said to send "a strong message to protest groups that intentionally disruptive protest action that prevents or hinders lawful business activity is not acceptable to the broader Tasmanian community". It is not suggested that the plaintiffs were engaged in protest action of the kind referred to above. It is not explained how the relevant police officer came to the view that the presence of the plaintiffs could have the effect of preventing, hindering or obstructing forest operations, as the Protesters Act requires. It is, however, to be inferred from the conversation that one police officer had with Dr Brown (which will be referred to later in these reasons) that it was thought that Dr Brown was on land which was "business premises" or a "business access area" to which the Act applied. The charges against Ms Hoyt under the Protesters Act must necessarily have been based on the same assumption. The uncertainty created by these terms is an important aspect of the operation and effect of the provisions of the Protesters Act, as will be explained. Bell The provisions of the Protesters Act The prohibitions in s 6 The prohibitions which are central to the Protesters Act are contained in ss 6 and 7 of the Act. The plaintiffs direct attention to s 6 and its associated provisions, namely, ss 7, 8, 11 and 13 and Pt 4 of the Act. Section 7 prohibits protesters from doing acts which cause damage to business premises or a "business-related object" and it prohibits threats of damage in relation to business premises for the purpose of promoting awareness of or support for an opinion or belief in respect of political, environmental or other issues. Section 7 is not engaged on the facts of the Special Case and no substantial argument was addressed to it. Save for the question of the purpose of the Protesters Act, to which s 7 may be relevant, it will not be further considered with respect to the principal question on the Special Case. Section 6(1) to (3) provide: "(1) A protester must not enter business premises, or a part of business premises, if – entering the business premises or the part, or remaining on the premises or part after entry, prevents, hinders or obstructs the carrying out of a business activity on the premises by a business occupier in relation to the premises; and the protester knows, or ought reasonably to be expected to know, that his or her entry or remaining is likely to prevent, hinder or obstruct the carrying out of a business activity on the premises by a business occupier in relation to the premises. (2) A protester must not do an act on business premises, or on a business access area in relation to business premises, if – the act prevents, hinders or obstructs the carrying out of a business activity on the premises by a business occupier in relation to the premises; and the protester knows, or ought reasonably to be expected to know, that the act is likely to prevent, hinder or obstruct the carrying out of a business activity on the premises by a business occupier in relation to the premises. Bell (3) A protester must not do an act that prevents, hinders, or obstructs access, by a business occupier in relation to the premises, to an entrance to, or to an exit from – business premises; or a business access area in relation to business premises – if the protester knows, or ought reasonably to be expected to know, that the act is likely to prevent, hinder or obstruct such access." A "business activity" is defined, inter alia, as a lawful activity carried out for the purposes of profit or by a Government Business Enterprise21. Section 6(7) provides that an act "prevents, hinders or obstructs the carrying out of a business activity on the business premises by a business occupier" if the act: prevents, hinders or obstructs the use, by a business occupier in relation to the business premises, of a business-related object on the business premises; or causes a risk to the safety of a business occupier in relation to the business premises." The definitions of a "protester" and of "protest activity" have been referred to at the outset of these reasons. "Business premises" and "business access areas" The term "business premises" does not evoke images of forest lands, but the scheme of the Protesters Act applies that definition to places where protests might affect activities which involve economic interests, including those of a Government Business Enterprise such as Forestry Tasmania22. The term "business premises" is defined relevantly to mean premises that are "forestry land"23. "Forestry land" is defined relevantly to mean "an area of 21 Workplaces (Protection from Protesters) Act 2014 (Tas), s 3. 22 Government Business Enterprises Act 1995 (Tas), Sched 1. 23 Workplaces (Protection from Protesters) Act 2014 (Tas), s 5(1)(b). Bell land on which forest operations are being carried out"24. "Forest operations" are defined widely to mean work comprised of, or connected with, seeding and planting trees; managing trees prior to harvest; or harvesting, extracting or quarrying forest products, and includes any related land clearing, land preparation, burning-off or access construction25. A "business access area" is relevantly defined to mean26: "so much of an area of land (including but not limited to any road, footpath or public place), that is outside the business premises, as is reasonably necessary to enable access to an entrance to, or to an exit from, the business premises". Directions and requirements A contravention of s 6(1), (2) or (3) does not itself give rise to an offence, at least not in the first instance. The relevant offences are provided for in ss 6(4) and 8(1). They require, in the first place, that a direction be given by a police officer under s 11 that a person leave business premises or a business access area without delay. For the offence under s 6(4), the requirement referred to in s 11(6) must also be specified in the direction27. Section 11(1) and (2) provide: "(1) A police officer may direct a person who is on business premises to leave the premises without delay, if the police officer reasonably believes that the person has committed, is committing, or is about to commit, an offence, against a provision of this Act, or a contravention of section 6(1), (2) or (3), on or in relation to – the business premises; or a business access area in relation to the business premises. 24 Workplaces (Protection from Protesters) Act 2014 (Tas), s 3. 25 Workplaces (Protection from Protesters) Act 2014 (Tas), s 3. 26 Workplaces (Protection from Protesters) Act 2014 (Tas), s 3. 27 Section 11(3), (4) and (5) of the Workplaces (Protection from Protesters) Act 2014 (Tas) relate to directions to a business operator and are not presently relevant. Bell (2) A police officer may direct a person who is in a business access area in relation to business premises to leave the business access area without delay, if the police officer reasonably believes that the person has committed, is committing, or is about to commit, an offence, against a provision of this Act, or a contravention of section 6(1), (2) or (3), on or in relation to – the business premises; or a business access area in relation to the business premises." Section 11(6) provides: "A direction issued under this section to a person may include a requirement that the person must not, in the period of 3 months after the date on which the direction is issued – commit an offence against a provision of this Act; or (b) … contravene section 6(1), (2) or (3)." Section 11(7) provides that a direction may be issued to either a person or "a group of persons" and s 11(8) provides that if a direction is given to a group of persons it is taken to have been issued to each person: "(a) who is a member of the group to whom the direction is issued; and (b) who ought reasonably to be expected to have heard the direction." The offences: s 6(4) and s 8(1) It is necessary then to return to s 6(4), which is in these terms: "A person commits an offence if he or she contravenes a requirement, specified in accordance with section 11(6) on a direction issued to the person under section 11(1) or (2), that the person must not, in the period of 3 months after the date on which the direction is issued, contravene subsection (1), (2) or (3) of this section." An offence is committed under s 6(4) when a direction is given under s 11(1) or (2) to leave forestry land, or the business access area in relation to it; that direction is accompanied by the requirement in s 11(6) that the protester not commit an offence under the Protesters Act or contravene s 6(1), (2) or (3) in a period of three months from the date of the direction; and the person does Bell commit an offence or contravene s 6(1), (2) or (3) in that period. No further direction is then necessary. Section 6(4) applies to both "business premises" which is forestry land, and "business access areas". Section 8(1) is limited in its terms to business access areas. It provides that: "A person must not – remain on a business access area in relation to business premises after having been directed by a police officer under section 11 to leave the business access area; or enter a business access area in relation to business premises within 4 days after having been directed by a police officer under section 11 to leave – the business premises; or a business access area in relation to the business premises." to remove An offence under s 8(1)(a) is committed where a person fails to comply themselves from a business access area. with a direction Section 8(1)(b) invites further attention. An offence is here committed where a person enters the business access area where they received the s 11 direction or enters a business access area in relation to business premises where they received such a direction, within four days of that direction. The area that the person may not enter is not limited to the area where the person was at the time of the direction but, effectively, includes any area that is outside the "forestry land" (namely, the area in which forest operations are then being conducted) as is reasonably necessary to enable access to an entrance to, or to an exit from, the forestry land. No more is required for the commission of an offence than the person's presence in such an area in that period of time. Ms Hoyt received an infringement notice with respect to the first occasion on which she was present in a part of the Lapoinya Forest. It specified an offence under s 8(1). The offence with which she was later charged, concerning the second occasion she was present, was that under s 6(4). Dr Brown was charged with an offence under s 8(1). Both plaintiffs were arrested under powers given to police officers by the Protesters Act. Powers of arrest and removal Section 13(1) provides that a police officer may arrest without warrant a person: Bell "(a) who is on business premises; and (b) who the police officer reasonably believes is committing, or has committed within the previous 3 months, an offence, against a provision of this Act, on or in relation to – the business premises; or a business access area in relation to the business premises." Section 13(2) provides the same powers of arrest in relation to a person who is on a business access area. A police officer may also remove a person from business premises or a business access area if the police officer reasonably believes that the person is committing or has committed an offence against the Act, or a contravention of s 6(1), (2) or (3)28. The powers of arrest and removal are exercisable only if the police officer "reasonably believes" that it is necessary to do so for specified purposes, which include ensuring the person's attendance at court; the preservation of public order; preventing the continuation or repetition of an offence; or the safety and welfare of the person or members of the public29. Penalties The offences referred to above are indictable offences30 but may, with the consent of the prosecutor, be heard and determined by a court of summary jurisdiction31. Relevantly, for an offence against s 6(4) or s 8(1) an individual may be fined up to $5,000 by a court of summary jurisdiction and up to $10,000 by other courts32. A further offence against s 6(4) may involve, as an alternative to that penalty, a term of imprisonment, to a maximum of 12 months in the case 28 Workplaces (Protection from Protesters) Act 2014 (Tas), s 13(3). 29 Workplaces (Protection from Protesters) Act 2014 (Tas), s 13(4). 30 Workplaces (Protection from Protesters) Act 2014 (Tas), s 16(1). 31 Workplaces (Protection from Protesters) Act 2014 (Tas), s 16(2). 32 Workplaces (Protection from Protesters) Act 2014 (Tas), s 16(3)(b). Bell of a court of summary jurisdiction, and otherwise four years, or both penalty and imprisonment33. Where an infringement notice is issued to an individual by a police officer with respect to an offence under s 6(4) or s 8(1), a penalty of two penalty units ($318) may be imposed on that individual34. The terms, operation and effect of the Protesters Act In order to answer the question whether a statute impermissibly burdens the implied freedom of political communication, it is necessary to consider in some detail the operation and effect of the statute35. That consideration assumes particular importance in this matter. An obvious feature of the Protesters Act is that it is expressed to apply only to protesters. Other persons who might be present on, or remain on, land where forest operations are taking place and who do acts which affect forest operations in the ways mentioned in s 6(1), (2) and (3) are not subject to the Protesters Act or its consequences. The Protesters Act may be contrasted in this respect with the FMA, which applies to all persons. Another feature is that the definition of "protester" in the Protesters Act refers expressly to matters about which protesters may be voicing opinions. Those matters and opinions receive no further mention in the Act, the operative provisions of which are addressed to the conduct of protesters as it may impact upon forest operations. It would seem that protesters are identified in this way because they, or some of them, are seen to be persons who are likely to engage in that conduct. It may be accepted that protesters will seek to conduct protests concerning forest operations, such as clearing or tree felling, in the vicinity of those operations. The plaintiffs refer to protests of this kind generally as "onsite protests". It is important, however, to recognise that protests will take different forms and some will occur much closer to forest operations than others. The Fact Sheet for the Protesters Bill itself distinguishes between protests which are intentionally disruptive of business activity and peaceful protests. The former 33 Workplaces (Protection from Protesters) Act 2014 (Tas), s 16(3)(b), s 17(2). 34 Workplaces (Protection from Protesters) Act 2014 (Tas), s 15(3). 35 Unions NSW v New South Wales (2013) 252 CLR 530 at 553-554 [35]-[36]; [2013] HCA 58. Bell kind of protest might involve physical interaction between protesters and machinery being used in forest operations, the physical presence of protesters in or around trees due to be felled, physical confrontations with Forestry Tasmania personnel and blocking access to forest operations. It is to be inferred from ss 6 and 7 that the Protesters Act is directed to protesters engaged in protests of that kind because it is the activities involved in such protests which are likely to damage or prevent, hinder or obstruct business activities conducted on forestry land. Not all protests can be assumed to be of that kind. Indeed, the facts in the Special Case do not suggest that activities resulting in such damage or harm have been common occurrences in protest actions which have been conducted over many years. To take one example similar to the facts of the Special Case, a protest may involve persons standing at a distance from, but within sight of, forest operations, holding placards, voicing their protests and being filmed. Protesters of this kind are also likely to be affected by the exercise of powers under the Protesters Act. The powers given to police officers by the Protesters Act are conditioned upon a primary question of fact and law – whether a protester is in an area that is "business premises", here forestry land, or a "business access area" with respect to that land. This question must be addressed when a police officer is considering whether to direct a person to leave an area under s 11(1) or (2), whether a person has remained on or entered a business access area under s 8(1), whether a person is about to contravene s 6(1), (2) or (3) or commit an offence under s 6(4) and whether to remove or arrest a person under s 13. The principal problem, practically speaking, for both police officers exercising powers under the Protesters Act and protesters is that it will often not be possible to determine the boundaries of "business premises" or a "business access area". That problem arises because the term "business premises" is inapt for use with respect to forestry land. The definition of "business premises" with respect to forestry land does not provide much guidance. The question simply becomes whether a protester is in an area of land on which forest operations (a widely defined term) are being carried out. The vagueness of the definition of "business access area" compounds the problem. Forest operations might involve the use of sheds but not "business premises" as that term is ordinarily understood. Forest operations are not conducted in premises or even enclosures; the operations will not be located at one site, because they will be carried out progressively at different locations in the harvest areas of the coupe. There will be nothing to indicate the boundaries of these locations so that it is understood where a protester may not be present. Forestry Tasmania may identify such areas by signs or by physical barriers under the powers given by the FMA, but the Protesters Act does not identify the areas Bell to which it applies as those designated under the FMA. It makes no connection with the FMA in this regard at all. The boundaries of an FPP are surveyed. They are marked by pink tape on vegetation or fixtures along the boundary, but these markings may not be visible to a person in a forest for a number of reasons. In any event they do not designate business premises, which will not comprise the whole area of the FPP, or even the harvest area within it, but a smaller area where forest operations are being conducted from time to time. It may be possible to identify as an area on which forest operations are being carried out, and therefore as "business premises", the exact location where machinery is being used, or where trees are being felled, or where roads or tracks for access are being constructed. Even in these cases, it may not be possible to discern whether a protester standing some distance from these activities is within or outside of the area to which the Protesters Act is intended to apply. It might be thought that the consequences of the conduct of a protester, or of their presence, which are sought to be avoided by the Protesters Act, might provide some guidance as to the identification of the area the subject of the Protesters Act. Tasmania's initial position was that the phrase "prevents, hinders or obstructs" should not be read narrowly, but in the course of argument it accepted that it should be construed, consistently with the principle of legality and s 3 of the Acts Interpretation Act 1931 (Tas)36, so as to apply only to the conduct or presence of a person which "substantially" or "seriously" hinders or obstructs business activities. The Protesters Act does not require a police officer, before exercising the powers it provides, to simply consider what the particular protest action involves and whether it is likely to have these effects upon business activities then being carried out on forestry land. Had it done so, attention would undoubtedly be directed to the kind of protest activity referred to earlier in these reasons, which is likely to have a direct, discernible impact upon those business activities. 36 Section 3 of the Acts Interpretation Act 1931 (Tas) provides: "Every Act shall be read and construed subject to the limits of the legislative powers of the State and so as not to exceed such powers, to the intent that, where any enactment thereof, but for this provision, would be construed as being in excess of such powers, it shall nevertheless be a valid enactment to the extent to which it is not in excess of such powers." Bell In each case the primary focus in determining whether the Protesters Act applies is upon where a protester is situated. In this statutory scheme the further enquiries, as to what effects a protester's presence or conduct might have and their foresight of those effects, are of secondary importance. In many cases it will be difficult for a police officer to be able to correctly determine where a protester is situated and where the line around business premises and business access areas is to be drawn. A protester will be in no better position in making such determinations. But the powers exercised by police officers under the Protesters Act have important consequences for protesters and for protests generally and experience suggests that their exercise will not always be based upon a correct appreciation of whether the land in which a protester is situated is forestry land to which the Protesters Act applies. In its practical operation, the Protesters Act may bring protest activity to an end upon the mistaken, albeit reasonable, belief of a police officer, unless the protesters are disposed to resist a direction, and thereby risk a breach of the peace, in order to test the issue. There can be little doubt that the determination of whether a protester is in an area of forestry land has proved difficult for police officers exercising powers under the Protesters Act. The circumstances surrounding the arrest of Dr Brown are revealing. The point is not that the police officer was unaware that Dr Brown was then standing on the Reserve, to which Tasmania now concedes the Protesters Act did not apply, but rather that he was addressing the question whether Dr Brown was present in an area where forest operations could be said to be carried out. His enquiry of Dr Brown reflects the difficulty police officers, and protesters, will experience in determining where the line is to be drawn. He asked: "Do you realise you are getting close to impinging on forestry operations?" Information about the charges made under the Protesters Act, provided in the Special Case, is also illuminating. Since the commencement of the Protesters Act nine people, including the plaintiffs, have been charged under it: seven under s 8(1)(a) and two under s 6(4). All charges were discontinued because the direction given was not correctly referable to "business premises" or a "business access area". This accords with the statement made by the Tasmanian Police Commissioner after the decision was made not to proceed with the charges against Dr Brown. The Commissioner explained that the decision was based upon advice received from the Tasmanian Director of Public Prosecutions, who had observed that "it was difficult for police officers to determine whether a person was in a business access area or on business premises". It is unlikely that the Director was referring to a difficulty in choosing between the two. Bell The point to be made is not that prosecutions of charges made under the Protesters Act are unlikely to succeed, if they do proceed. It is that the difficulty associated with identifying the area to which the Protesters Act applies in a given circumstance is likely to result in errors being made except in the clearest of cases. The result will be that some lawful protests will be prevented or discontinued and protesters will be deterred from further protesting. They will be deterred because it will come to be appreciated, if it is not already, that there is a real likelihood that if they are present on land in the vicinity of forest operations they may be subjected to a direction to leave the area and all the effects which flow from such a direction even if there is no basis in law for the direction because the area is not forestry land or a business access area in relation to that land. The vagueness of the terms "business premises" and "business access area" is also likely to work against a protester in seeking a remedy by means of judicial review of a direction made to leave the area where they were protesting. It is one thing for lawyers advising the government to determine whether it can be proved that a protester was in an area to which the Protesters Act applied. It is another for protesters to have a direction ruled unlawful in time to return to continue their protest. The result will be that protests will be stifled when they should not be. The foregoing observations reflect experience of the practical operation of the Protesters Act in relation to forestry land. That the Protesters Act may operate effectively to stifle political communication which it is not the purpose of the Act to stifle is not merely a function of the vagaries of the application of the concepts employed by the legislation to "facts on the ground"; it is a consequence of the design of the Act in its deployment of a possibly mistaken, albeit reasonable, belief of a police officer as the mechanism by which it operates. Protests may be effectively terminated in circumstances where it is not necessary that the protester has, in truth, contravened s 6(1), (2) or (3) of the Protesters Act, where it is not necessary to establish that any offence has been committed by the protester, and where judicial review of the mechanism whereby such a result is brought about is not practically possible before the protest is terminated. In this regard, the directions contemplated by s 11 may be based on a mistaken, albeit reasonable, belief on the part of a police officer that a person has committed, is committing or is about to commit, inter alia, a contravention of s 6(1), (2) or (3) on or in relation to business premises or a business access area. A protester who, in truth, has not committed, is not committing and is not about to commit a contravention of s 6(1), (2) or (3) on or in relation to business premises or a business access area may be directed to leave an area which is not, in truth, business premises or a business access area. In this way, protesters who are not disposed to risk breaching the peace in order to test in court the Bell reasonableness of the police officer's possibly mistaken belief may be moved on by the police, and their protest thereby terminated. Section 8(1)(b) requires special attention. Together with s 13, it permits protesters to be physically removed and arrested without warrant if they are present in any "business access area", wherever that is thought to be, in the period of four days after they were directed to leave the area they were in when they were given the direction. They may be guilty of an offence and liable to a substantial penalty. This provision operates in that period to deter a person from being present in the area where they were present when given the direction under s 11(1) or (2), and also from being present in any "business access area" at all with respect to the relevant forestry land, with all the vagueness that that term implies. The area of forest operations may have moved as work within the coupe is carried out. Importantly, the offence with which the person may be charged is not based upon any foresight on the part of a police officer that the person's presence might have an adverse effect on forest operations. The person's presence in a business access area alone is sufficient for the offence to be committed. The effect of these provisions should also be understood in light of their operation in conjunction with s 11(7) and (8). It will be recalled that under s 11(7), a direction under s 11(1) or (2) may be given to a group of persons, which, according to s 11(8), is taken to have been given to each person who is a member of the group and who ought reasonably to be expected to have heard the direction. The effect of s 11(7) and (8) is therefore to widen the effect of deterrence and to stifle the protest of a potentially large number of persons. All persons present in an area and within earshot of a direction given by a police officer, which may include by loudspeaker, will have to leave the area. They will be subject to s 8(1) even if most, or all, of the group are not undertaking any activity which might amount to a contravention of s 6(1), (2) or (3). A police officer is not required to even consider that prospect. Where a requirement under s 11(6) is added to a direction under s 11(1) or (2), a person will be guilty of an offence under s 6(4) if they are considered by a police officer to contravene s 6(1), (2) or (3) in a period of three months from the time the direction is given. That consideration will be subject to the same vagaries about where the person is located as have been referred to above. In summary, an exercise of the powers given under s 11(1) and (2) in combination with s 6(1), (2) and (3); the offences created under s 8(1) and s 6(4) (the latter in combination with s 11(6) and s 6(1), (2) and (3)); and the powers of arrest and removal given by s 13, are likely to have significant deterrent effects on protesters. Their effects will extend to protesters undertaking protest activities of a kind and in a place which would not affect forest operations and Bell whose presence would not be excluded by the FMA. Their effects will extend beyond individual protesters to entire groups, because of the operation of s 11(7) and (8). Protesters of this kind will be deterred from being present in the vicinity of forest operations for fear that they may be subject to a direction to leave, with all the consequences which flow from such a direction. They will be deterred from protesting even though the direction may be based upon an erroneous view of where they are situated. The combined effect of the provisions referred to above is immediate. It can bring the protest of an entire group of persons to a halt and its effect will extend over time. Protesters will be deterred from returning to areas around forest operations for days and even months. During this time the operations about which they seek to protest will continue but their voices will not be heard. The possibility that a protester might be liable to a substantial penalty should not be overlooked, but it may not loom so largely as a deterrent. This may be because no charge under the Protesters Act has been successfully prosecuted. There has been no successful prosecution for the reason that mistakes have been made about whether the Protesters Act applied. However, from the point of view of protesters, there is nothing to suggest that mistakes will not continue to be made. That circumstance will operate as a significant deterrent. That will occur as a practical matter whether or not a prosecution for an offence is pursued to a successful conclusion and without any occasion for the determination by a court of whether or not the operation of provisions infringes the implied freedom in the circumstances of the case37. A burden on the freedom? It is necessary to keep firmly in mind that the implied freedom is essential to the maintenance of the system of representative and responsible government for which the Constitution provides. The implied freedom protects the free expression of political opinion, including peaceful protest, which is indispensable to the exercise of political sovereignty by the people of the Commonwealth. It operates as a limit on the exercise of legislative power to impede that freedom of expression. The enquiries posed by Lange are the indispensable means by which a legislative measure which is apt to impede the free flow of political 37 Cf Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 144; [1992] HCA 45. Bell communications may be justified. The first enquiry is whether the freedom is in fact burdened. Tasmania does not dispute that protesters to whom the Protesters Act applies may be taken to communicate about matters relating to politics or government. It concedes that the Protesters Act may burden the freedom. It does not accept that the Protesters Act has that effect with respect to the plaintiffs, for it did not apply to them or persons in their position who were protesting on public land adjacent to a site on which a business activity was being undertaken. Tasmania says the Protesters Act therefore had no relevant operation. It may be accepted that Dr Brown was on the Reserve, which was land to which Tasmania conceded the Protesters Act did not apply, but Tasmania did not explain how that conclusion was to be reached with respect to where Ms Hoyt was situated. Where a statute is said to impermissibly burden the freedom, the first enquiry is whether the statute in fact burdens the freedom38. The extent of the burden is a matter which falls to be considered in relation to the assessments required by the second limb of Lange39. The first enquiry requires consideration as to how the statute affects the freedom generally40. It is not answered by reference to the operation of the statute in individual cases, although such evidence may provide useful examples of the statute's practical effect, and therefore of the burden the statute may have on the freedom41. This Court has said more than once42 that the freedom spoken of is not a personal right or 38 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567-568; Unions NSW v New South Wales (2013) 252 CLR 530 at 555 [40]; McCloy v New South Wales (2015) 257 CLR 178 at 201 [24]. 39 Unions NSW v New South Wales (2013) 252 CLR 530 at 555 [40]. 40 Unions NSW v New South Wales (2013) 252 CLR 530 at 553 [35]. 41 Wotton v Queensland (2012) 246 CLR 1 at 31 [80]; [2012] HCA 2. 42 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 150; Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 149; [1994] HCA 46; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 327; [1994] HCA 44; Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560; Wotton v Queensland (2012) 246 CLR 1 at 23-24 [54], 31 [80]; Attorney- General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 73-74 [166], 89 [220]; [2013] HCA 3; Monis v The Queen (2013) 249 CLR 92 at 189 [266], 192 [273], 206-207 [324]; [2013] HCA 4; Unions NSW v New South Wales (2013) 252 CLR 530 at 551 [30], 554 [36]; Tajjour v New South Wales (2014) 254 CLR 508 at (Footnote continues on next page) Bell freedom. The freedom is better understood as affecting communication on the subjects of politics and government more generally and as effecting a restriction on legislative power which burdens communications on those subjects43. In any event, Tasmania's argument that, with respect to the facts of the present case, it is not shown that the freedom is effectively burdened should not be accepted. The circumstances relating to the plaintiffs show clearly how the freedom is burdened. Even if the plaintiffs were not on business premises or in a business access area the police officers who arrested and removed them were unable to correctly determine whether they were on those premises or in that area. As a result of their error the plaintiffs' protests and their communications to others about the forest operations were silenced. The other aspect of the Protesters Act to be considered is its discriminatory effect, namely, that it imposes a burden on the freedom solely in relation to protesters. No decision of this Court holds that a law effecting a discriminatory burden is, for that reason alone, invalid and the plaintiffs did not contend for such an approach. Such an approach would seem to be at odds with the questions posed by Lange and, in particular, the second, which involves an enquiry as to whether the burden can be justified. In Australian Capital Television Pty Ltd v The Commonwealth44 ("ACTV"), Mason CJ held45 that some provisions of the statute in question were discriminatory because they were weighted in favour of established political parties and against new and independent candidates. His Honour did not say that they were invalid simply because they effected a discriminatory burden. Rather, his Honour held them not to be "justified or legitimate" after considering, and rejecting, arguments about whether the regulatory regime introduced a "level playing field" and whether equality in sharing free broadcasting time was unattainable. 569 [104], 593 [198]; [2014] HCA 35; McCloy v New South Wales (2015) 257 CLR 178 at 202-203 [30]. 43 Unions NSW v New South Wales (2013) 252 CLR 530 at 554 [36]; McCloy v New South Wales (2015) 257 CLR 178 at 202-203 [30]. 44 (1992) 177 CLR 106. 45 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 Bell A law effecting a discriminatory burden on the freedom does not necessarily effect a greater burden on the freedom. It may effect a discriminatory burden but impose only a slight, or a less than substantial, burden on the freedom. McCloy provides an example of such a law. The provisions of the statute there in question included provisions prohibiting the making or accepting of a political donation by a "prohibited donor", where the definition of "prohibited donor" singled out certain groups, such as property developers. The provisions were not considered to effect a substantial burden on the freedom because their effect was indirect, given that their direct effect was to enhance freedom of political speech generally by levelling the playing field, and there were many other available methods of communicating on matters of politics and government, including influencing politicians to a point of view46. A discriminatory law does, however, serve to identify the group targeted by a law and informs the assessment of the restrictions imposed by the law upon the ability of those persons to communicate on matters of politics and government. It is this assessment which must be undertaken in order to answer the question whether the freedom is burdened. In the present case the answer is clear. Protesters will be deterred from voicing their protests with respect to forest operations. The freedom is burdened. The purpose of the Protesters Act Once it is concluded that the freedom is burdened by a statute, the true purpose of that statute assumes importance with respect to each of the enquiries which follow, which are directed to whether the burden is justified. The identification of that purpose is to be arrived at by the ordinary processes of construction47. The plaintiffs submit that the purpose and practical operation of s 6 and associated provisions is to "prevent onsite protests that ... relate to 'political, environmental, social, cultural or economic issues', which are the key issues to which electors will have regard when choosing their representatives" and to "prevent, hinder or obstruct, or be about to prevent, hinder or obstruct, business activities at the site where private or governmental entities carry on business". For its part, Tasmania says that the purpose of the Protesters Act is to "prevent people from damaging or threatening to damage real or personal property connected with a business; to ensure that protesters do not impede, 46 McCloy v New South Wales (2015) 257 CLR 178 at 220-221 [93]. 47 Unions NSW v New South Wales (2013) 252 CLR 530 at 557 [50]. Bell hinder or obstruct the carrying out of lawful business activity on business premises or business access areas; and to protect business operators going about their business safely and without disruption. The objects of the Act are connected with the advantage of having a settled and orderly economic environment in which to conduct business." The purpose of the Protesters Act is most clearly discerned from the sections which contain the relevant prohibitions, ss 6 and 7. Those provisions are directed towards the harm that the conduct of particular kinds of protest activities may cause. They are directed to conduct which may cause damage to the property of a business or disrupt its activities. They are directed towards protesters because protesters are seen as the potential source of such harm. It is not to be inferred that the purpose of the Act is to deter protesters more generally, even if that is the effect of some of the measures it employs in seeking to achieve its purpose of prevention of damage to and disruption of forest operations. The plaintiffs' submissions elide the purpose of the Protesters Act with its operation and effect. In a later submission they recognise that it is the Act's operation in respect of onsite environmental protests which will stultify the effectiveness of protests. It is the measures for which the Act provides, and in particular the powers given to police, which affect the ability of persons to protest. But this is not to deny that those measures are directed to the protections it seeks to achieve. Although protesters are targeted and discriminated against and special measures are directed towards them, it may be seen that the legislation was enacted against a background where protesters, or at least some of them, were perceived to be those persons, or groups, who would cause damage or disrupt economic activities during protests of particular kinds. It is important, however, to be clear about the purpose of the Protesters Act. It is not correctly stated simply as the protection of the interests of business just as it is not the prevention of protests. It is the protection of businesses and their operations, here forest operations, from damage and disruption from protesters who are engaged in particular kinds of protests. This is the mischief to which the statute is directed48. Compatibility In McCloy49 it was said that the process for the justification of the burden the statute places on the freedom commences with the requirement, stated in 48 McCloy v New South Wales (2015) 257 CLR 178 at 232 [132] per 49 McCloy v New South Wales (2015) 257 CLR 178 at 212 [66]. Bell Lange50, that the purpose of the provisions in question be "compatible with the maintenance of the constitutionally prescribed system of representative and responsible government". Clearly enough, the purpose of the Protesters Act, understood in the way described above, could not be said to be incompatible with the freedom. In Coleman v Power51 it was said that the adjectival phrase referred to above does not merely qualify the "legitimate end". It qualifies the compound conception of the fulfilment of such an end. That is to say, the manner of achieving the statute's purpose, as well as the purpose itself, must be compatible with the maintenance of the constitutionally prescribed system of representative and responsible government. In its submissions in this matter the Commonwealth, intervening, drew attention to the summary version of this requirement of the Lange test which appears at the outset of the joint reasons in McCloy52. The Commonwealth said that it may be understood to suggest that a conclusion as to whether the means adopted to achieve the statutory object are "reasonably appropriate and adapted" or proportionate to a legitimate end is to be reached at a point before proportionality testing is undertaken. Clearly the statute's purpose must be assessed for compatibility with the constitutionally prescribed system of government at this stage, but in practical terms the means adopted could not be. The point is well made. The commencing words of Questions 2 and 3 stated in McCloy should read: that If "yes" to question 1, is the purpose of the law legitimate, in the sense the constitutionally prescribed system of representative and responsible government? the maintenance of is compatible with If "yes" to question 2, is the law reasonably appropriate and adapted to advance that legitimate object in a manner that is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government? 50 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567. 51 (2004) 220 CLR 1 at 50 [92]; [2004] HCA 39. 52 McCloy v New South Wales (2015) 257 CLR 178 at 194 [2]. Bell A slight burden? The submission that Tasmania puts is that where the Protesters Act does effect a burden, it will only be slight. In essence, it argues that in most cases protesters will not be able to lawfully be present in areas where forest operations are being carried out. It does not say how these areas are to be identified. It will be recalled that the plaintiffs claimed that there is a need for persons to be able to make "onsite protests" in those parts of the natural environment which are considered to be under threat of damage or destruction. The rationale for this view is that it is necessary to be present in order that images of forest operations together with protests concerning them can be communicated to the public at large. For a reason not explained, images taken by equipment such as drones flown overhead were not seen to be practicable, at least at present. The plaintiffs did not distinguish between protesters whose actions may directly affect operations and those simply present at a distance from those operations. In either case Tasmania submits that persons have no right to be "onsite". It says that there can be no right to carry out protests on the site of a business activity carried out by a business occupier in lawful possession of premises who does not consent to the presence of protesters. In such a situation a protester is a trespasser and the protester's activity on the property may amount to a nuisance, and in neither case does the freedom alter this state of affairs. Tasmania calls in aid the observations of McHugh J in Levy v Victoria53. In that case, a regulation prohibited persons other than holders of game licences from entering upon a permitted hunting area between certain hours and on specified dates. His Honour observed54 that the constitutional implication does not create rights and questioned whether, in the absence of the regulations, the protesters had the right to be present in the permitted hunting area. Unless the common law or a statute gave them a right to enter the area, it might be said that the lack of that right, not the regulations, denied them the opportunity to protest. The matter was taken no further for, as his Honour went on to explain, the argument for the parties assumed that, in the absence of the regulations, the plaintiff and others were entitled to enter the area. The question to which McHugh J adverted in Levy does not arise in this case. As has been seen, the Protesters Act may operate to stifle political 53 (1997) 189 CLR 579; [1997] HCA 31. 54 Levy v Victoria (1997) 189 CLR 579 at 625-626. Bell communication on the mistaken, albeit reasonable, belief of a police officer as to the effect of protest activity whether or not it involves the presence of protesters on land where they have no right to be and where that question may never be determined by a court. As will be explained later in these reasons, it is in consequence of this overreach of means over ends that the Protesters Act operates more widely than its purpose requires. In this regard, it may be contrasted with the FMA. It may be accepted to be logical to approach the burden which a statute has on the freedom by reference to what protesters could do were it not for the statute. But in the context of forestry land, as opposed to other business premises, this does not involve questions of right of entry or trespass, unless the powers of the FMA are invoked. The relevant enquiry involves a comparison between the effect of the FMA and the effect of the Protesters Act upon the ability of people to access forest areas and undertake protest activities on them. As earlier explained, the premise of the FMA is that persons are able to access forest areas unless the Forest Manager exercises its powers to exclude them. The Forest Manager may only exercise those powers in order to perform its functions effectively or efficiently, or in the interests of safety. It is not necessary to determine the nature of the right of public access which is recognised by the FMA, for example, whether it is some kind of conditional licence. It is sufficient to appreciate that the scheme of the FMA is that persons will not be impeded in their access to forestry land or in their use of such land for any purpose so long as their presence or the activity which they undertake is not incompatible with the management of the forestry land, which would include forest operations conducted on that land. It is difficult to comprehend that every form of protest will necessarily be incompatible with this purpose. The validity of the FMA is not challenged. Under the FMA, persons may lawfully be excluded from certain areas of land or from roads from time to time and this will be so even if a person wishes to be in the area in order to make a protest about what is taking place there. The extent of the burden effected by the Protesters Act must be determined having regard to the restrictions already imposed on the freedom by the FMA. When the powers under the FMA are exercised for the purposes of carrying out the Forest Manager's functions, the Forest Manager may be expected to designate an area at least in general terms. The Forest Manager may do so via the use of signs and physical barriers. This may be contrasted with the ambiguous definitions of "business premises" and "business access area", which, it may be inferred, were intended to operate more widely. There are indications in the circumstances surrounding the arrests of the plaintiffs that steps of the kind mentioned had been taken under the FMA. There Bell were signs concerning road closures and chains were placed across the roads. It may be assumed that the employee of Forestry Tasmania who requested Ms Hoyt to remain where she was when equipment was being moved was a person authorised under the FMA. However, neither plaintiff was requested to leave the area in which they were present in the vicinity of forest operations by an officer authorised under the FMA. As the charges later brought against them confirm, the police officers who directed them to leave, and arrested and removed them when they did not, were purporting to exercise powers under the Protesters Act. A person authorised under the FMA may direct a person not to enter or remain on land55. That person therefore exercises a power similar to that given by the Protesters Act to police officers. But the direction given under the FMA is only for statutory purposes related to actual operations and safety. The authorised person can be expected to have this clearly in mind just as they would have in mind the object of s 13 of the FMA. The area of exclusion would be limited to no more than is necessary for the operations and to ensure continued public access. The area to which the Protesters Act applies and in which a protester may not be present will in many cases not be capable of identification, but the indications given by that Act, in particular by its definitions, are that it is intended to apply more widely than land which may be the subject of powers exercised under the FMA. There is nothing in the Protesters Act to suggest that the areas to which it is intended to apply are coextensive with those designated under the FMA as unavailable for public access and use. It follows that there will be areas of forestry land which will not be the subject of the exercise of the powers of exclusion under the FMA but to which the Protesters Act will apply. It may reasonably be inferred that persons would be able to access these areas in order to effectively voice their protests were it not for the Protesters Act. It can hardly be suggested that the provisions of the Protesters Act referred to above affect the freedom only slightly. This is so even though protests about forest operations may be communicated in other ways. Further, other methods of communication are less likely to be as effective as the communication of images of protesters pointing to what they claim to be damage to the natural environment. 55 Forest Management Act 2013 (Tas), s 22(4). Bell It has been explained56 that the exercise of powers given under the Protesters Act will likely result in persons wrongly being excluded from areas of a forest, their protests being brought to an end, and them being deterred from further protests in the foreseeable future. In its practical operation the Protesters Act indirectly burdens the freedom but it does so to a significant extent. Generally speaking, the sufficiency of the justification required for such a burden should be thought to require some correspondence with the extent of that burden57. A compelling justification? The plaintiffs submit that because the Protesters Act operates by reference to political and environmental protests, it is directed to the content of these political communications and a "compelling justification" is therefore required. The submission implies that measures which burden the freedom in this way will require a higher level of justification. In ACTV, Mason CJ expressed58 the view that laws which "target ideas or information" may require "a compelling justification". His Honour was speaking of a law specifically directed at, and which prohibited, the broadcasting of matters relating to public affairs and political discourse. It effected a direct burden on the freedom. His Honour did not use the words "content-based" with respect to the laws in question. In US jurisprudence concerning the First Amendment that term may refer to a law targeting speech based on its communicative content59. Under the doctrine of strict scrutiny such a law is regarded as "presumptively unconstitutional"60 because it poses "the inherent risk that the Government seeks not to advance a legitimate regulatory goal, but to suppress unpopular ideas or information"61. 57 Tajjour v New South Wales (2014) 254 CLR 508 at 580 [151] per 58 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 59 Reed v Town of Gilbert, Arizona 192 L Ed 2d 236 at 245 (2015). 60 Reed v Town of Gilbert, Arizona 192 L Ed 2d 236 at 245 (2015). 61 Turner Broadcasting System Inc v Federal Communications Commission 512 US Bell In the context of the implied freedom and the test in Lange, what Mason CJ said in ACTV might be thought to require more by way of justification only at the balancing stage of proportionality analysis rather than justification operating presumptively at the outset of the analysis under the second limb. The only basis given in Lange for the invalidation of a law at the threshold, which is to say before testing for proportionality, is when a law does not have a legitimate purpose, in other words, where the purpose of the law is not compatible with the maintenance of the scheme of representative and responsible government for which the Constitution provides62. It should in any event be observed that neither the terms of the Protesters Act nor its purpose seeks to affect the content of the opinion which a protester may seek to voice with respect to forest operations. "Protesters" are defined by reference to those opinions, perhaps unnecessarily, but the Act takes it no further. Its terms, in their operation and effect, are directed to the conduct of protesters. McCloy and proportionality testing Although the purpose of the Protesters Act meets the requirement of compatibility, the measures it adopts to achieve that purpose effect a burden on the freedom and must be further justified63. In McCloy, it was suggested64 that the question posed in Lange65 whether a measure is reasonably appropriate and adapted, or proportionate, to its purpose might be approached by reference to certain criteria of proportionality. If the criteria were not met, and the answer is in the negative, it would follow that the burden imposed on the freedom is not justified. The means could not be said to meet the requirement of compatibility. The freedom would operate to restrict the exercise of legislative power. Tasmania submits that the methods of analysis suggested in McCloy as useful to determine whether a provision is reasonably appropriate or adapted, or proportionate, to its purpose should be reconsidered. The methods should be reconsidered, it is submitted, because there had not been full argument with respect to them in that case. Queensland, intervening, supports this submission. 62 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567-568. 63 McCloy v New South Wales (2015) 257 CLR 178 at 213 [68] per French CJ, Kiefel, Bell and Keane JJ, 232 [131] per 64 McCloy v New South Wales (2015) 257 CLR 178 at 194 [2]. 65 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 562. Bell In the course of argument it was pointed out that in McCloy it was said66 that the methods of proportionality analysis there referred to might not be the only criteria by which legislation can be tested in accordance with Lange. Tasmania did not suggest any alternative method. Queensland proposes that the question whether a statute could be said to be reasonably appropriate and adapted could be answered, for example, by simply determining if it went "too far". Such an approach would invite little more from the Court than an impression. It does not address the need for transparency in reasoning which was regarded as necessary by a majority of Justices in McCloy67. The Commonwealth contends for a "modified version of McCloy". In summary it accepts that the first enquiry, that of "suitability", which is as to the connection of a measure adopted by a statute to its purpose68, is relevant to all cases involving the freedom. The second test, that of "necessity"69, should be taken as sometimes, but not always, decisive. The last assessment, that of strict proportionality or "balancing"70, should only be undertaken where the burden on the freedom is "direct and substantial", it submits. The last-mentioned submission overlooks that Lange, correctly understood, requires that any effective burden on the freedom must be justified. The first enquiry posed by Lange is whether a burden, or restriction, is imposed on the freedom at all. If it is, the process of justification commences with the question of compatibility of purpose, as mentioned earlier in these reasons71, and it continues with enquiries as to proportionality. It is possible that a slight burden on the freedom might require a commensurate justification. Certainly a heavy burden would ordinarily require a significant justification. Much will depend upon the nature of the legislative measure and its effects. No general rule should be prescribed. It is sufficient 66 McCloy v New South Wales (2015) 257 CLR 178 at 215-216 [74]. 67 McCloy v New South Wales (2015) 257 CLR 178 at 215-216 [74]-[75]. 68 Unions NSW v New South Wales (2013) 252 CLR 530 at 560 [60], 561 [64]-[65]; McCloy v New South Wales (2015) 257 CLR 178 at 195 [2], 217 [80]. 69 McCloy v New South Wales (2015) 257 CLR 178 at 195 [2], 217 [81]-[82]. 70 McCloy v New South Wales (2015) 257 CLR 178 at 195 [2], 219 [87]. Bell here to observe that an argument that only particular degrees of burden warrant justification is inconsistent with Lange. The Commonwealth does not suggest that an enquiry as to whether a legislative measure is necessary to achieve a statute's purpose is novel. It has been utilised for some time with respect to laws which burden the freedom guaranteed by s 92 of the Constitution and, more recently, with respect to the freedom of political communication. There can be little doubt that the availability of other measures which are just as practicable to achieve a statute's purpose, but which are less restrictive of the freedom, may be decisive of invalidity72. In such a case it could hardly be said that the measure which is more restrictive of the freedom is necessary. A legislative measure could not rationally be justified by an inexplicable legislative choice. At least that would be so unless some other means of justifying the burden was identified. In McCloy the Commonwealth submitted73 that some statutory purposes may justify very large incursions on the freedom. No such submission is made by Tasmania in this case. The Commonwealth's submissions in McCloy drew attention to another method of justification, that referred to as the test of strict proportionality. The point presently to be made is that whilst the Court may propose methods of analysis, of what is proportionate or reasonably appropriate and adapted, it is for those supporting the impugned legislation to justify any of its measures which burden the freedom. Connection to purpose Given that the purpose of the Protesters Act is to prevent damage and disruption to forest operations from the conduct of protesters, the question arises whether the provisions referred to above can be said to pursue that purpose. In McCloy74, the enquiry was said to be whether the statutory provisions in question have a rational connection to their purpose. If they do not, it would follow that they are simply a burden on the freedom without a justifying purpose75. 72 McCloy v New South Wales (2015) 257 CLR 178 at 233 [135] per 73 McCloy v New South Wales (2015) 257 CLR 178 at 218 [84]. 74 McCloy v New South Wales (2015) 257 CLR 178 at 193-195 [2], 217 [80]. 75 Unions NSW v New South Wales (2013) 252 CLR 530 at 557 [51]. Bell This enquiry, as to the suitability of a legislative measure76, is not novel. It was applied in Unions NSW v New South Wales77 and was understood in McCloy to be "an inquiry which logic requires"78. The view of the Commonwealth earlier mentioned, that the question will be relevant in all cases, is correct. The prohibitions in s 6 clearly enough reflect the purpose of the Protesters Act. The fact that protesters are targeted is explained by the history of protests which provided a catalyst for the Act. The powers of direction, removal and arrest and the offences created may generally be seen as preventing harms to forest operations occurring and deterring protesters from engaging in protest activities which may have those effects. Section 8(1)(b) cannot be said to share the purpose of the Protesters Act. It deters a person being in any business access area on pain of arrest or penalty, even though they may not present any threat of damage or disruption and may not reasonably be considered to contravene s 6(1), (2) or (3). The inference to be drawn is that it is directed solely to the purpose of deterring protesters. Accordingly, it fails the test of suitability. The same conclusion may be reached with respect to s 11(7) and (8), which effect a blanket exclusion of a whole group of persons from an area by a single direction of a police officer, even when the police officer could not conceivably have formed any view about whether each person is about to contravene the Protesters Act. So understood, the only purpose of these provisions must be to bring a protest to an end and deter further protests, regardless of whether damage or disruption is foreseeable. The period over which s 11(6) applies, three months from a direction given under s 11(1) or (2), might suggest that it is intended merely to further deter protesters. However, it is not s 11(6) itself which effects that deterrence. It creates the conditions for an offence under s 6(4). It is the prospect that they might offend against that provision which will deter protesters and a necessary element of that offence is a contravention of s 6(1), (2) or (3), which is connected to the statute's protective purpose. The period of three months referred to in s 11(6) does not operate outside the statutory purpose. Properly understood, it merely effects a limit on the temporal operation of s 6(4). 76 McCloy v New South Wales (2015) 257 CLR 178 at 195 [2], 217 [80]. 77 (2013) 252 CLR 530 at 556-560 [44]-[60]. 78 McCloy v New South Wales (2015) 257 CLR 178 at 217 [80]. Bell The question whether s 11(6) and the remaining provisions referred to above which burden the freedom (s 6(1), (2) and (3), s 11(1) and (2), s 13 and Pt 4) can be justified falls to be determined by whether they can be said to be necessary. Are the measures reasonably necessary? The question whether a law can be said to be reasonably necessary, in the sense in which that term applies in the context of the freedom, does not involve a free-ranging enquiry as to whether the legislature should have made different policy choices. It involves determining whether there are alternative, reasonably practicable, means of achieving the same object but which have a less restrictive effect on the freedom79. Where such alternative measures are obvious and their practicability compelling it may be difficult for those arguing for the validity of the legislation to justify the legislative choice as necessary, as previously explained80. The FMA does not burden the freedom to the same extent as does the Protesters Act. It seeks to ensure that only those persons, protesters included, whose presence or activities are likely to interfere with forest operations will be excluded from forestry land. The Protesters Act operates more widely than its purpose requires. It is principally directed to preventing protesters being present within ill-defined areas in the vicinity of forest operations or access points to those areas, whereas its purpose is similar to that of the FMA. The powers given by the FMA, in the context of PTPZ land, are directed to the protection of Forestry Tasmania's property, to its functions and operations and to the safety of its employees and the public. The purpose of the Protesters Act is essentially the same. So far as concerns forestry land, its purpose is to prevent damage and disruption to forest operations. Tasmania points to a difference between the Protesters Act and other legislation which it submits is of importance. That difference is that the focus of the Protesters Act is on protest activity. So much may be accepted, but it serves only to identify the source of the perceived problem. It goes no way towards explaining why measures which have the effect of deterring protests generally are reasonably necessary to its more limited purpose. It is not all protest activity 79 Unions NSW v New South Wales (2013) 252 CLR 530 at 556 [44] per French CJ, Hayne, Crennan, Kiefel and Bell JJ. 80 McCloy v New South Wales (2015) 257 CLR 178 at 211 [58]. Bell which is the concern of the Protesters Act, but only that kind which is likely to result in the aforementioned harms. The Special Case contains no indication that, generally speaking, the provisions of the FMA have been ineffective to prevent the disruption of forest operations or damage to property associated with those operations. Putting aside particular powers such as those given by s 11(6), (7) and (8), the basic powers of direction, removal and arrest provided by the Protesters Act are much the same as those provided by the FMA. It must, however, be accepted that the history of environmental protests shows that, regardless of the existence of these powers, some protest activities having these effects have taken place. The Protesters Act seeks to address this by adopting measures which, in their operation and effect in the context of that statute, will have substantial deterrent effects. To an extent those effects are achieved by extending the areas of its operation, creating further consequences for non-compliance with directions including special offences and heavy penalties. More importantly they are achieved by the uncertainty which surrounds the areas within which the Act applies. Tasmania may well argue that the Protesters Act may be distinguished from the FMA because of its strong deterrent effects. Whether it will be effective with respect to the kinds of protests to which its purpose is addressed may be debatable. It is not necessary to consider that question. The concern of the Court is the extent to which the Protesters Act restricts protests more generally. It is likely to deter protest of all kinds and that is too high a cost to the freedom given the limited purpose of the Protesters Act. The purpose of the Protesters Act is not significantly different from that of the FMA. In the measures it adopts to deter protesters the Protesters Act goes far beyond those reasonably necessary for its purpose. The validity of the FMA's measures was not questioned in these proceedings. However, it is sufficient to observe that those measures, by contrast, are substantially less restrictive of the freedom. US doctrines and Lange These reasons do not invoke the void-for-vagueness doctrine which is part of US constitutional jurisprudence81. The plaintiffs make no claim to invalidity on the basis of such a doctrine. Their claim for invalidity is that the provisions of 81 See, eg, Kolender v Lawson 461 US 352 (1983). Bell the Protesters Act burden the freedom and cannot be justified by reference to what was held in Lange and further explained in McCloy. The US doctrine is addressed to First Amendment freedom of speech and is rooted in the due process requirements of the Fifth and Fourteenth Amendments, neither of which has a counterpart in the Australian Constitution and the implied freedom. It is well understood that our Constitution does not say that the uncertainty of laws violates a constitutional safeguard82. Under the US doctrine of vagueness, vague laws are per se invalid and cannot be justified83. Under Australian law a vague law is not invalid on that account alone, but laws which have that quality and which, in their practical operation and effect, burden the freedom must be justified according to the questions in Lange if they are to survive challenge. This does not involve the importation of foreign constitutional doctrine. Lange requires that a legislative measure which effects any burden on the freedom be assessed not only for its purpose, but for its operation and effect84. The ultimate question, whether a legislative measure can be justified as reasonably appropriate and adapted, or proportionate, cannot be answered without determining its operation and effect. The enquiry as to its effect on the freedom generally is necessarily one about its operation and practical effect85. Whilst the freedom is not an individual right, the extent of the burden on the freedom is usually ascertained by reference to the effect upon the ability of persons to communicate on the matters the subject of the freedom in various ways, for example by giving political donations which might meet the costs of political communication86 or, as here, by protesting. It is not to the point that a court might resolve the bounds of the physical area to which the Protesters Act applies in a given case, a question of mixed fact and law. As earlier explained, at 82 King Gee Clothing Co Pty Ltd v The Commonwealth (1945) 71 CLR 184 at 195; [1945] HCA 23. 83 Kolender v Lawson 461 US 352 at 361 (1983). 84 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567; see also Cunliffe v The Commonwealth (1994) 182 CLR 272 at 337. 85 Coleman v Power (2004) 220 CLR 1 at 49-50 [91]; Tajjour v New South Wales (2014) 254 CLR 508 at 558 [60], 578-579 [146]. 86 Unions NSW v New South Wales (2013) 252 CLR 530 at 554 [37]-[38]. Bell this point a burden has already been effected, the protest quelled and future protests deterred. Under US constitutional law, vague laws are said to offend several important values, one of which is the First Amendment freedom of speech87. In the context of First Amendment freedom of speech, this is described as the "chilling effect"88. It is not necessary to discuss how the doctrine is applied by US courts in determining the invalidity of a statute. The term "chilling effect" is not employed in these reasons. It has been used in judgments of this Court with respect to the implied freedom89; however, the term has relevantly been used only to describe an effect of inhibition or deterrence on the freedom and for the purpose of determining the practical effect upon political communication and debate. Conclusion and orders The measures adopted by the Protesters Act to deter protesters effect a significant burden on the freedom of political communication. That burden has not been justified. The means adopted cannot be considered as compatible, in the sense described in Lange90. Part 4 provides the enforcement regime for offences under the Protesters Act. To the extent that it provides for enforcement of and penalties for the provisions here held to be invalid, it too is invalid. Question 2 of the Special Case dated 9 December 2016 should be amended and the questions stated in the Special Case (as so amended) be answered as follows: Do either or both of the plaintiffs have standing to seek the relief sought in the Amended Statement of Claim? 87 Grayned v City of Rockford 408 US 104 at 108-109 (1972). 88 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 693. 89 See Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 131, 135, 155, 156-157, 174, 185; Roberts v Bass (2002) 212 CLR 1 at 40-41 [102]; [2002] HCA 57. 90 See [104] above. Bell Answer: the The defendant abandoned plaintiffs' standing. Question 1 therefore need not be answered. its challenge Is the Workplaces (Protection from Protesters) Act 2014 (Tas), either in its entirety or in its operation in respect of forestry land or business access areas in relation to forestry land, invalid because it freedom of political impermissibly burdens communication contrary to the Commonwealth Constitution? implied the Answer: Section 6(1), (2), (3) and (4), s 8(1), s 11(1), (2), (6), (7) and (8), s 13 and Pt 4 of the Workplaces (Protection from Protesters) Act 2014 (Tas) in their operation in respect of forestry land or business access areas in relation to forestry land are invalid because they impermissibly burden the implied freedom of political communication contrary to the Commonwealth Constitution. 3. Who should pay the costs of the Special Case? Answer: The defendant should pay the plaintiffs' costs. The analytical framework The Attorney-General of the Commonwealth submits without demur from any party or other intervener that the second and third of the questions stated at the beginning of the reasons for judgment of the plurality in McCloy v New South Wales91 should be reformulated to conform to the second step in the analytical framework set out in Lange v Australian Broadcasting Corporation92 and refined in Coleman v Power93. I agree. For good measure, the first question there stated should also be reformulated to conform to the first step in the same analytical framework. The result is to restate the analytical framework for determining whether a Commonwealth, State or Territory law contravenes the implied freedom of political communication, set out in Lange and refined in Coleman, in terms of three questions. They are to the following effect: Does law the communication? effectively burden freedom of political Is the purpose of the law legitimate, in the sense that it is compatible with the maintenance of the constitutionally prescribed system of government? Is the law reasonably appropriate and adapted to advance that purpose in a manner compatible with the maintenance of the constitutionally prescribed system of government? If the first question is answered "yes", and if either the second question or the third question is answered "no", the law is invalid. The Attorney-General of Queensland submits that the present opportunity should also be taken to put paid to the notion that the last of those questions must always or sometimes be answered three-staged "proportionality testing", which the explanation at the beginning of the reasons for judgment of the plurality in McCloy went on to outline94. Again, I agree. through application of 91 (2015) 257 CLR 178 at 194-195 [2]; [2015] HCA 34. 92 (1997) 189 CLR 520 at 567-568; [1997] HCA 25. 93 (2004) 220 CLR 1 at 51 [95]-[96], 77-78 [196], 82 [211]; [2004] HCA 39. 94 (2015) 257 CLR 178 at 195 [2]. Three-staged proportionality testing was not sought to be characterised in McCloy as anything more than a tool of analysis95, not to be confused with the constitutional principle it served96. The plurality did not suggest that its adoption is compelled by the reasoning which supports the implication of the freedom of political communication as authoritatively expounded in Lange97. The plurality also disavowed any suggestion that "it is the only criterion by which legislation that restricts a freedom can be tested"98. The point is therefore not one of reopening and overruling McCloy: nobody has suggested that McCloy was wrongly decided; McCloy does not elevate three-staged proportionality testing to the level of constitutional principle; and McCloy does not endow it with precedential status. The point is one of emphasising that the tool is, at best, a tool. For my own part, I have never considered it to be a particularly useful tool. the common Though it originated within a civil law tradition, three-staged testing for proportionality ("Verhältnismäßigkeit") has been found by some courts applying the methodology of to be useful when undertaking law constitutionally or statutorily mandated rights adjudication. The structure it imposes is not tailored to the constitutional freedom of political communication, which is not concerned with rights, and which exists solely as the result of a structural implication concerned not with attempting to improve on outcomes of the political process but with maintaining the integrity of the system which produces those outcomes. The first stage – "suitability" ("Geeignetheit") – can be quite perfunctory if confined to an inquiry into "rationality". The second – "necessity" ("Erforderlichkeit") – is too prescriptive, and can be quite mechanical if confined to an inquiry into "less restrictive means". The third stage – "adequacy of balance" ("Zumutbarkeit") – even if the description of it as involving a court making a "value judgment"99 conveys no more than that the judgment the court is required to make can turn on difficult questions of fact and degree100, the too open-ended, providing no guidance as to how 95 (2015) 257 CLR 178 at 213 [68], 215 [73], 216 [77], 217 [78]. See also at 235 [144], quoting Bank Mellat v HM Treasury (No 2) [2014] AC 700 at 790-791 [74]. 96 (2015) 257 CLR 178 at 213 [68]. 97 (2015) 257 CLR 178 at 214-215 [70]-[72]. 98 (2015) 257 CLR 178 at 215-216 [74]. 99 McCloy v New South Wales (2015) 257 CLR 178 at 195 [2], 216 [74]-[75]. 100 See Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 588 [149]; [1999] HCA 27. incommensurables to be balanced are to be weighted or as to how the adequacy of their balance is to be gauged101. Tinkering by introducing refinements, distinctions, exceptions or qualifications into each of the three stages would only compound a more basal problem. Constitutional adjudication within our tradition occurs through the elaboration of considerations seen in the light of history, of precedent and of contemporary circumstances to bear on the resolution of matters in issue. Constitutional analysis within that tradition cannot be reduced to the application of some pre-determined all-encompassing algorithm, and the inappropriateness of attempting to construct such an algorithm cannot be overcome by increasing its complexity. For reasons I have attempted to explain in the past102, the entirety of the analytical framework set out in Lange and refined in Coleman needs to be understood as a reflection of the underlying reason for the implication of freedom of political communication. The reason for the implication lies in the protection of political communication on which depends the efficacy of electoral accountability for the exercise of legislative and executive power within the constitutionally prescribed national system of representative and responsible government to which there is added a mechanism for constitutional change in which electors through referenda participate directly in the legislative process. The first question is directed to determining whether the law imposes a meaningful constraint on political communication. The second and third questions, as now restated, are directed in sequence to determining whether the particular constraint identified in answer to the first question can be explained, and can be justified, as compatible with the maintenance of that constitutionally prescribed system of government which the constitutional freedom exists to protect. Expression of the third question in terms no more prescriptive than whether the law is reasonably appropriate and adapted to advance its legitimate purpose in a manner compatible with the maintenance of the constitutionally prescribed system of government has the benefit of avoiding limiting or ordering in advance the considerations which might legitimately bear on the justification for a particular constraint on political communication. The terms of the question do not deny that, as with all constitutional adjudication, patterns emerge as 101 See Schauer, "Proportionality and the Question of Weight", in Huscroft, Miller and Webber (eds), Proportionality and the Rule of Law: Rights, Justification, Reasoning, (2014) 173 at 177-178, 180. 102 Tajjour v New South Wales (2014) 254 CLR 508 at 576-581 [139]-[152]; [2014] HCA 35; McCloy v New South Wales (2015) 257 CLR 178 at 222-230 [100]-[124]. precedents accumulate. What they do deny is that the analysis appropriate to be brought to bear on the determination of rights in controversy in a particular case can or should be constrained in the abstract. Expression of the third question in those terms has the additional benefit of allowing for acknowledgement of gradations in the measure of appropriateness and adaptedness. Again for reasons I have attempted to explain in the past103, not every law which effectively burdens freedom of political communication poses the same degree of risk to the efficacy of electoral accountability for the exercise of legislative and executive power. For that reason not every law which effectively burdens freedom of political communication in pursuit of a legitimate purpose demands the same degree of justification, and concomitantly not every law which effectively burdens freedom of political communication needs to be subjected to the same intensity of judicial scrutiny. The measure of the justification needs to be "calibrated to the nature and intensity of the burden"104. The answer to the initial question of burden within the restated analytical framework accordingly informs the intensity of the scrutiny appropriate to be brought to bear in answering the ultimate question of justification. Where a law effectively burdens freedom of political communication, and does so in pursuit of a legitimate purpose, the degree of fit between means (the manner in which the law pursues its purpose) and ends (the purpose it pursues) needed to conclude that the law is reasonably appropriate and adapted to advance its purpose in a manner that is compatible with the maintenance of the constitutionally prescribed system of government needs to be calibrated to the degree of risk which the burden imposed by the means chosen poses to the maintenance of representative and responsible government. That is the analytical framework to which I propose to adhere in examining the impugned provisions of the Workplaces (Protection from Protesters) Act 2014 (Tas) ("the Protesters Act"). The impugned provisions The provisions of the Protesters Act the validity of which are called into question by the circumstances of the plaintiffs disclosed in the special case are quite limited. The principal provisions impugned are ss 6, 8, 11 and 13(3), in their application to "business premises" comprised of "forestry land" that is Crown 103 Tajjour v New South Wales (2014) 254 CLR 508 at 580-581 [151]-[152]; McCloy v New South Wales (2015) 257 CLR 178 at 238-239 [151]-[152]. 104 Tajjour v New South Wales (2014) 254 CLR 508 at 580 [151]. land declared to be "permanent timber production zone land" under the Forest Management Act 2013 (Tas) ("the Management Act") and that is managed and controlled by Forestry Tasmania, and in their application to "business access areas" in relation to business premises comprised of such forestry land. Forestry land relevantly comprises any area of permanent timber production zone land on which "forest operations" (being work comprised of or connected with, relevantly, harvesting trees or with land clearing in preparation for planting trees) are being carried out105. A business access area in relation to such an area of forestry land comprises so much of any area of land, including any road or public place, outside the area of forestry land as is reasonably necessary to enable ingress to and egress from the area of forestry land106. The circumstances of the plaintiffs disclosed by the special case illustrate that the imprecision of those definitions means that difficulty can occur in working out the metes and bounds of the geographical areas within which ss 6, 8, 11 and 13(3) have application. That difficulty does not play any part in my reasoning. Impugned as well are provisions within Pt 4, which in their relevant application provide for the prosecution and consequences of conviction of offences against ss 6(4) and 8(1). Those additional provisions are of adjectival significance and raise no separate issue. The plaintiffs seek also to challenge the validity of s 7. The special case, however, discloses no basis for inferring that the plaintiffs have engaged in conduct prohibited by that section or that they might seek to do so in the future. Notwithstanding that the defendant has chosen to concede standing, the absence of facts making it necessary to decide the validity of s 7 in order to determine the rights of the parties makes it inappropriate to address that question107. Pivotal to the operation of each of ss 6, 8, 11 and 13(3) is the definition of a "protester". By virtue of that definition, a person answers that description if, but only if, the person is engaging in "a protest activity"108. Apart from an added geographical requirement that the activity occur relevantly on forestry land or on a business access area in relation to forestry land, the defining characteristic of a protest activity is that it is an activity in furtherance of or for the purpose of 105 Section 3 of the Protesters Act, definitions of "forest operations" and "forestry land". 106 Section 3 of the Protesters Act, definition of "business access area". 107 Lambert v Weichelt (1954) 28 ALJ 282 at 283; Duncan v New South Wales (2015) 255 CLR 388 at 410 [52]; [2015] HCA 13; Knight v Victoria (2017) 91 ALJR 824 at 830-831 [33]; [2017] HCA 29. 108 Section 4(1) of the Protesters Act. promoting awareness or support for "an opinion, or belief, in respect of a political, environmental, social, cultural or economic issue"109. Rarely, if ever, would an activity answering that statutory description not amount to political communication within the protection of the implied freedom. An activity which would otherwise answer that description is nonetheless excluded from the statutory definition of a protest activity in a number of circumstances. One is where it is protected industrial action within the meaning of the Fair Work Act 2009 (Cth) or part of lawful industrial action undertaken by a State Service officer or State Service employee110. Another relevantly is where Forestry Tasmania has given its expressed or implied consent to the activity111. Important also to the operation of each of ss 6, 8, 11 and 13(3) are the definitions of "business activity" and "business occupier"112. Business activity encompasses any lawful activity carried out by Forestry Tasmania or carried out on or in relation to forestry land by another entity or person who is a business occupier. The designation of business occupier is applicable to Forestry Tasmania, its employees and its contractors. Central to the operation of the remainder of each of ss 6, 8, 11 and 13(3) are prohibitions to which s 6(1), (2) and (3) give expression. Section 6(1) and (2) each prohibit a protester from engaging in specified conduct which "prevents, hinders or obstructs" the carrying out of a business activity by a business occupier in circumstances where the protester knows, or ought reasonably to be expected to know, that the conduct is likely to have that effect. The conduct specified in s 6(1) is entering or remaining on business premises or a part of business premises. The conduct specified in s 6(2) is doing an act on business premises or on a business access area in relation to business premises. Section 6(3) prohibits a protester from doing any act that "prevents, hinders, or obstructs" access to an entrance to or an exit from business premises or a business access area, in circumstances where the protester knows, or ought reasonably to be expected to know, that the act is likely to prevent, hinder or obstruct such access. The width of the collocation "prevents, hinders or obstructs" within each of s 6(1), (2) and (3) is given emphasis by s 6(7). Section 6(7) makes clear that the collocation is not limited to but encompasses any act which prevents, hinders or obstructs the use, by a business occupier in relation to business premises, of 109 Section 4(2) of the Protesters Act. 110 Section 4(7) of the Protesters Act. 111 Section 4(5) of the Protesters Act. 112 Section 3 of the Protesters Act. any object on the business premises that belongs to, is in the possession of, or is to be used by, a business occupier in relation to the business premises, as well as any act which causes a risk to the safety of a business occupier in relation to the business premises. The word "hinder" in such a context cannot be confined to physical interference and must rather encompass any significant adverse affecting of a usual way of doing that which is hindered113. Without more, a protester in contravention of s 6(1), (2) or (3) has committed no offence. To see how a contravention, or a possible past contravention or possible future contravention, of s 6(1), (2) or (3) can have a legal consequence, it is necessary to turn to ss 11 and 13(3). Section 11 confers three distinct discretions on a police officer. The first, conferred by s 11(1), empowers a police officer to direct a person who is on business premises to leave immediately "if the police officer reasonably believes that the person has committed, is committing, or is about to commit ... a contravention of section 6(1), (2) or (3)". The second, conferred by s 11(2), empowers a police officer in equivalent circumstances to issue an equivalent direction in respect of a person who is in a business access area. The third, conferred by s 11(6), empowers a police officer who gives a direction under s 11(1) or (2) to include in that direction a requirement that the person must not, in the period of three months after the date on which the direction is issued, commit an offence against the Protesters Act or contravene s 6(1), (2) or (3). A direction under s 11(1) or (2) can be issued to a person or to a group114, and if issued to a group is to be taken to have been issued to each member of the group who ought reasonably to be expected to have heard the direction115. The statutory consequence of a police officer giving a direction under s 11(1) or (2) is to trigger the operation of s 8. Section 8(1)(a) makes it an offence for a person to remain on a business access area in relation to business premises after having been directed by a police officer under s 11(2) to leave that business access area. Section 8(1)(b) makes it an offence for a person to enter a business access area in relation to business premises within four days after having been directed by a police officer under s 11(1) to leave those business premises or under s 11(2) to leave a business access area in relation to those 113 See Australian Builders' Labourers' Federated Union of Workers – Western Australian Branch v J-Corp Pty Ltd (1993) 42 FCR 452 at 459-460. 114 Section 11(7) of the Protesters Act. 115 Section 11(8) of the Protesters Act. business premises. An offence against s 8(1) is punishable, in the case of an individual, by a fine of up to $10,000116. The additional statutory consequence of a police officer including within a direction under s 11(1) or (2) a requirement under s 11(6) that the person or group directed must not in the period of three months after the date on which the direction is issued contravene s 6(1), (2) or (3), is to trigger the operation of s 6(4). Section 6(4) makes it an offence for a person to contravene a requirement under s 11(6). The offence is punishable, in the case of an individual, by a fine of up to $10,000117. By operation of s 6(5), however, a person does not commit an offence against s 6(4) by reason only of taking part in a procession (or march, or event) that passes business premises or along a business access area "at a reasonable speed, once on any day". Section 13(3) empowers a police officer to remove from business premises or from a business access area a person "who the police officer reasonably believes is committing, or has committed" a contravention of s 6(1), (2) or (3). Section 13(4) qualifies that power by subjecting removal to the further condition that the police officer reasonably believes that it is necessary to do so for any of a number of specified purposes. Those purposes include "to preserve public order", as well as "to prevent the continuation or repetition of an offence" relevantly against s 6(4) or s 8(1), and "for the safety or welfare of members of the public or of the person". The police officer is entitled to use reasonable force to effect removal118. The burden Whether, and if so how and how intensely, a law effectively burdens freedom of political communication is a qualitative question to be answered by reference to the legal operation and practical effect of the law119. The expression "effectively burden[s]" has been recognised to mean "nothing more complicated 116 Section 8(1) of the Protesters Act. 117 Section 17(2)(a) of the Protesters Act. 118 Section 14 of the Protesters Act. 119 Tajjour v New South Wales (2014) 254 CLR 508 at 578 [145]. See also Wotton v Queensland (2012) 246 CLR 1 at 15 [25], [28]-[29]; [2012] HCA 2. than that the effect of the law is to prohibit, or put some limitation on, the making or the content of political communications"120. The effect of a law on the making or content of political communications is in turn gauged by nothing more complicated than comparing: the practical ability of a person or persons to engage in political communication with the law; and the practical ability of that same person or those same persons to engage in political communication without the law. In Australian Capital Television Pty Ltd v The Commonwealth121, for example, the relevant burden on political communication resulting from prohibitions on broadcasting political advertising imposed on licensed broadcasters was found in the practical effect of excluding persons who would otherwise have done so from using radio and television as a medium of political communication during election periods. Since Levy v Victoria122 was decided contemporaneously with Lange, there can have been no doubt that political communications include non-verbal political communications and that non-verbal political communications include assembly and movement for the purpose of political protest123. A law which has the direct and substantial effect of prohibiting or limiting assembly and movement for the purpose of political protest is accordingly a law which effectively burdens freedom of political communication. The laws found in Levy effectively to burden freedom of political communication were regulations which prohibited persons who did not hold valid game licences from entering an area of Crown land designated as a hunting area within a period designated as an open season for hunting, and from approaching within a distance of less than five metres any holder of a valid game licence who was actually hunting in that area during that period. The finding that the laws effectively burdened freedom of political communication was unanimous. McHugh J alone added a qualification. Noting that the implied freedom of political communication does not create rights but merely invalidates laws, and that the implied freedom therefore "gave the protesters no right to enter the hunting area", his Honour suggested that unless the protesters had a legal 120 Monis v The Queen (2013) 249 CLR 92 at 142 [108]; [2013] HCA 4. See Unions NSW v New South Wales (2013) 252 CLR 530 at 574 [119]; [2013] HCA 58; McCloy v New South Wales (2015) 257 CLR 178 at 230-231 [126]. 121 (1992) 177 CLR 106; [1992] HCA 45. 122 (1997) 189 CLR 579; [1997] HCA 31. 123 See also Kruger v The Commonwealth (1997) 190 CLR 1 at 115; [1997] HCA 27; Tajjour v New South Wales (2014) 254 CLR 508 at 577-578 [142]-[143]. right to enter the hunting area "it was the lack of that right, and not the [r]egulations, that destroyed their opportunity to make their political protest"124. Notwithstanding a concession on the part of the defendant that the impugned provisions of the Protesters Act effectively burden freedom of political communication, the qualification McHugh J expressed in Levy looms large in the argument of the defendant and interveners in the present case. The qualification expressed by his Honour therefore requires careful consideration. His Honour's notation that the implied freedom does not create an affirmative right to engage in political communication is uncontroversial. It was confirmed in McClure v Australian Electoral Commission125. It has often since been repeated126. His Honour's addition of the suggestion that the implied freedom may not have been burdened in the absence of the protesters having a legal right to enter the hunting areas needs to be treated with caution. Understood against the background of the observation in Lange that "[u]nder a legal system based on the common law, 'everybody is free to do anything, subject only to the provisions of the law'"127, the point of general significance his Honour can be seen to have been making was that an impugned law cannot have the effect of constraining the ability of persons to engage in a form of political communication if those persons would be prohibited by some other valid law from engaging in that form of political communication in any event. That must ordinarily be so, and that is as far as his Honour's suggestion can be taken. His Honour's suggestion would not accurately reflect the nature of the implied freedom were it treated as a suggestion that political communications protected by the implied freedom are limited to those in which persons have some pre-existing legally enforceable right to engage. Mulholland v Australian Electoral Commission128 cannot be read as having taken his Honour's suggestion to that extreme. The different conclusions 124 (1997) 189 CLR 579 at 626. 125 (1999) 73 ALJR 1086; 163 ALR 734; [1999] HCA 31. 126 Eg Unions NSW v New South Wales (2013) 252 CLR 530 at 551 [30], 554 [36]; Tajjour v New South Wales (2014) 254 CLR 508 at 569 [104], 593-594 [198]; McCloy v New South Wales (2015) 257 CLR 178 at 202-203 [30]. 127 (1997) 189 CLR 520 at 564, quoting Attorney-General v Guardian Newspapers (No 2) [1990] 1 AC 109 at 283. 128 (2004) 220 CLR 181; [2004] HCA 41. expressed in Mulholland as to whether freedom of political communication was burdened need to be understood in the context of the argument there advanced. The argument was that statutory restrictions on registration of a political party, imposed by the "500 rule" and the "no overlap rule", had the practical effect of precluding that form of communication with voters about the party affiliation of a candidate which occurs as a result of the performance by the Australian Electoral Commission of its statutory function of causing the name of a registered political party to be printed on a ballot paper. Gleeson CJ and Kirby J, who concluded that there was a burden on freedom of political communication, compared the communication which would occur in that form without the 500 rule and the no overlap rule and the absence of communication which would occur in that form with those restrictions129. McHugh J, Gummow and Hayne JJ and Callinan J, who, like Heydon J, concluded that there was no burden on freedom of political communication, compared the communication which would occur in that form with and without the entirety of the statutory regime for the registration of political parties of which the 500 rule and the no overlap rule were treated as forming inseverable parts130. The considerations identified in Lange which support the implication of freedom of political communication cannot justify confining its protection to political communications in which persons seeking to communicate have a legally enforceable right to engage. Political communication, on which electoral accountability for the exercise of legislative and executive power within our constitutionally prescribed system of representative and responsible government has always depended, has never in practice been so confined. Political communication has rather in practice occurred through a range of media which have varied through time and space according to their practical availability and technological feasibility. Political communication has also occurred within a system of laws which have imposed any number of constraints on the making and content of communications. Some of those constraints have been imposed as a means of rationing limited public resources which have from time to time provided platforms for political communication, ranging from physical spaces131 to the electromagnetic spectrum132. Others have been imposed to protect 129 (2004) 220 CLR 181 at 195-196 [28], 200-201 [41], 276-277 [280]. 130 (2004) 220 CLR 181 at 223-224 [107], 224 [110], 247 [186]-[187], 298 [337]. 131 See Muldoon v Melbourne City Council (2013) 217 FCR 450 at 527 [379]-[380]; Thomas v Chicago Park District 534 US 316 at 322 (2002). 132 See Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 169, referring to Miller v TCN Channel Nine Pty Ltd (1986) 161 CLR 556 at 567, 591, 597-598, 629-630; [1986] HCA 60 and Red Lion Broadcasting Co Inc v Federal Communications Commission 395 US 367 at 375-377 (1969). See also (Footnote continues on next page) compatible yet competing public interests, including but not limited to the protection of property, of safety, of reputation, of amenity and of privacy. Accepting that some other laws (including, as the outcome in Lange illustrates, some legal rules of long standing) might themselves need to be adjusted to accommodate to the implied freedom133, the impact of any given law on political communication (and in turn on electoral accountability for the exercise of legislative and executive power) lies in the incremental effect of that law on the real-world ability of a person or persons to make or to receive communications which are capable of bearing on electoral choice. Therein lies its relevant burden. Nothing therefore turns on whether or not a protester has a legally enforceable right to enter or remain on Crown land declared to be permanent There are, as the special case reveals, timber production zone land. approximately 800,000 hectares of permanent timber production zone land in Tasmania. Historically, members of the public have in fact enjoyed access to that land. Continuation of that public access is facilitated by the general statutory obligation of Forestry Tasmania under the Management Act to "perform its functions and exercise its powers so as to allow access to permanent timber production zone land for such purposes as are not incompatible with the management" of that land under that Act134. Without concern for Hohfeldian classification, the second reading speech for the Bill for the Management Act adopted the language of everyday life in describing "the people of Tasmania" as having a "right to access the land" which would "continue so long as the access does not interfere with the management of the land"135. Nor does anything turn on the detail of the statutory functions of managing permanent timber production zone land and of undertaking forest operations on permanent timber production zone land which the Management Act confers on Forestry Tasmania or on the details of the statutory powers which the Management Act confers in support of those functions. Forestry Tasmania is specifically empowered "for the purposes of discharging its responsibilities or in the interests of safety" to erect a sign on permanent timber production zone land Federal Communications Commission v League of Women Voters of California 468 US 364 at 377 (1984). 133 See also Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539 at 555-557 [43]-[45]; [2010] HCA 42. 134 Section 13 of the Management Act. 135 Tasmania, House of Assembly, Parliamentary Debates (Hansard), 24 September or on or in respect of a forest road136, or to erect a sign or barricade closing a forest road137, with the consequence that any person by failing to comply with a direction on a sign that has been erected or by driving or being on a forest road that has been closed commits an offence punishable by a fine of up to $3,180. Irrespective of whether such a sign or barricade has been created, an authorised employee of Forestry Tasmania who forms an opinion that any person's entry, presence or action "has prevented or is about to prevent [Forestry Tasmania] from effectively or efficiently performing its functions" can request the person not to enter or to leave, or to stop some activity on, permanent timber production zone land or a forest road, with the consequence that a person who fails to comply with the employee's request commits an offence also punishable by a fine of up to $3,180138. In addition, a police officer can give directions to persons on permanent timber production zone land or a forest road, with the consequence that a person who fails to comply with the police officer's direction commits an offence also punishable by a similar fine139. No party or intervener submits that the impugned provisions depend for their relevant operation on the prior exercise of any one or more of those statutory powers under the Management Act. Each of those statutory powers is in any event itself limited by the implied freedom with the consequence that an issue of validity would arise were any of them exercised purportedly to impede political communication140. More significant to an assessment of the relevant burden imposed by the impugned provisions is the long history of political protest on Crown land in Australia. Most significant is the history of on-site political protests on Crown land in Tasmania, directed to bringing about legislative or regulatory change on environmental issues, beginning with the protest activity between 1981 and 1983 which preceded enactment of the World Heritage Properties Conservation Act 1983 (Cth). The special case reveals that, since 2006, 37 protests have taken place in Tasmania in areas that have subsequently been granted legislative or regulatory environmental protection. The communicative power of on-site protests, the special case emphasises and common experience confirms, lies in the generation of images capable of attracting the attention of the public and of politicians to the particular area of the environment which is claimed to be threatened and sought to be protected. 136 Section 21 of the Management Act. 137 Section 23 of the Management Act. 138 Section 22(1)-(5) of the Management Act. 139 Section 22(6) of the Management Act. 140 Wotton v Queensland (2012) 246 CLR 1 at 9-10 [9]-[10], 14 [22]-[23], 16 [31]. the burden intensity of The nature and imposed on political communication by the impugned provisions of the Protesters Act fall therefore to be considered against a background of historical and continuing public access to permanent timber production zone land, of limited statutory regulation of that public access, and of historical and likely continuing on-site political protests directed to bringing about legislative or regulatory change on environmental issues on Crown land in Tasmania. The nature of the burden imposed on political communication by the impugned provisions is that the burden can be expected to fall in practice almost exclusively on on-site political protests of that description. Not only are the provisions targeted by the definition of protester to political communication, but they are targeted by the same definition to political communication occurring at particular geographical locations. Given those geographical locations, and given the history of on-site protests in Tasmania, it would be fanciful to think that the impugned provisions are not likely to impact on the chosen method of political communication of those whose advocacy is directed to bringing about legislative or regulatory change on environmental issues and would have little or no impact on political communication by those whose advocacy is directed to other political ends. The intensity of the burden which the impugned provisions impose on political communication by protesters – their real-world impact on the making and receipt of communications capable of bearing on electoral choice – cannot be gauged by treating s 6(1), (2) and (3) as if they were self-executing prohibitions and by treating ss 6(4), 8(1), 11 and 13(3) as if they were merely ancillary to the enforcement of s 6(1), (2) and (3). That is not the legislative design. The extent of the practical constraint on the making and receipt of communications capable of bearing on electoral choice is rather to be seen in the ambit of the discretions conferred on police officers by ss 11 and 13(3) and in the consequences which flow from the exercise of those discretions. Once exercised to direct a group to leave a business access area in relation to forestry land, for example, the discretion conferred by s 11(2) results in each person within the group committing an offence against s 8(1)(a) if that person does not leave immediately. And once exercised to direct a group to leave forestry land or a business access area in relation to forestry land, the discretions conferred by s 11(1) and (2) each have the result that each person within the group will commit an offence against s 8(1)(b) if that person enters the same area of forestry land or any business access area in relation to that forestry land at any time during the next four days. Upon the exercise of police discretion to give a direction under s 11(1) or (2), the particular protest in which the group was engaged must for most practical purposes be at an end. The immediacy and the continuity are lost. An exercise of discretion under s 11(6) will have the added result of inhibiting the group from renewing that protest or from engaging in any other protest for the next three months. It will do so by exposing each member of the group to the jeopardy of potentially committing the considerably more serious offence created by s 6(4) if the members choose to protest on any forestry land or any business access area in relation to any forestry land by engaging in any protest activity other than marching as a group outside forestry land or along a business access area in relation to forestry land at reasonable speed once a day. There is an overlap, although not a precise overlap, between forestry land or a business access area in relation to forestry land on which only a protester might incur a fine of up to $10,000 by failing to comply with a direction given by a police officer under s 11(1) or (2) and on which only a protester might incur a fine of up to $10,000 by contravening a requirement that has in the previous three months been included in such a direction under s 11(6), on the one hand, and an area of permanent timber production zone land or a forest road on which any person might incur a fine of up to $3,180 under the Management Act by failing to obey a direction on a sign erected by Forestry Tasmania or by failing to comply with a direction by a police officer or with a request made by an authorised employee of Forestry Tasmania, on the other hand. The overlap does not diminish the discriminatory operation of the Protesters Act, but rather accentuates that discriminatory operation. Protesters, as protesters, are alone put twice in jeopardy, and are put in the greater jeopardy. The burden on political communication imposed by the impugned provisions is, as the plaintiffs correctly submit, direct, substantial and discriminatory – facially against political communication and in its practical operation more particularly against political communication expressive of a particular political view. The calibration In Australian Capital Television, Deane and Toohey JJ presciently observed that "a law whose character is that of a law with respect to the prohibition or restriction of [political] communications … will be much more difficult to justify … than will a law whose character is that of a law with respect to some other subject and whose effect on such communications is unrelated to their nature as political communications"141. Noting that their Honours' observation had been accepted and applied in a number of subsequent cases, before and after Lange, I sought to expand on that observation in Tajjour v New South Wales when I referred to the level of scrutiny 141 (1992) 177 CLR 106 at 169. appropriate to be brought to bear on a law which imposes a burden on political communication as lying within a spectrum. Using language drawn from the analyses of Gaudron J in Levy142 and of Gleeson CJ in Mulholland143, I said144: "At one end of the spectrum, establishment of a sufficient justification may require 'close scrutiny, congruent with a search for "compelling justification"', constituted by establishing that the law pursues an end identified in terms of the protection of a public interest which is itself so pressing and substantial as properly to be labelled compelling and that the law does so by means which restrict communication on governmental or political matter no more than is reasonably necessary to achieve that protection. At the other end of the spectrum, establishment of a sufficient justification may require nothing more than demonstration that the means adopted by the law are rationally related to the pursuit of the end of the law, which has already been identified as legitimate." Because it is a factor which bears on the degree of risk that political communications unhelpful or inconvenient or uninteresting to a current majority might be unduly impeded, the extent to which the legal operation or practical effect of a law might be capable of being seen to be discriminatory – against communications, against political communications, or against political communications bears correspondingly on where within that spectrum the level of scrutiny appropriate to be brought to bear on that law is located. Of course, the measure is not scientific. It can itself be nothing more than a heuristic tool. But it is a tool custom-made to place the question of the justification for the particular burden which the law imposes on political communication on a scale which reflects the reason why the question is asked. viewpoints expressing particular political Given that they operate in their terms to target action engaged in for the purpose of political communication, and given that they can be expected to operate in practice to impose a significant practical burden on political communication which is the expression of a particular political viewpoint, the impugned provisions demand very close scrutiny. To be justified as reasonably appropriate and adapted to advance a legitimate purpose in a manner that is compatible with the maintenance of the constitutionally prescribed system of government, in my opinion, the purpose of the impugned provisions must be able to be seen to be compelling and the 142 (1997) 189 CLR 579 at 618-619. 143 (2004) 220 CLR 181 at 200 [40]. 144 (2014) 254 CLR 508 at 580-581 [151] (footnote omitted). provisions must be able to be seen to be closely tailored to the achievement of that purpose in the sense that the burden they impose on political communication in pursuit of the purpose can be seen to be no greater than is reasonably necessary to achieve it. That level of scrutiny, it must be noted, is somewhat more stringent than was warranted by the circumstances in Levy, where the regulation in question did not discriminate facially against persons engaged in political communication but was rather in the form of a blanket prohibition on all persons other than those holding valid game licences entering designated areas of Crown land within a designated period. Even so, it ought also to be noted, the regulation in question in Levy would undoubtedly have withstood the intense level of scrutiny I consider to be warranted here. The statutorily identified purpose of the regulation – to "ensure a greater degree of safety of persons in hunting areas during the open season for duck" – was unanimously accepted to be the true purpose of the regulation, and was undoubtedly compelling. The manner in which the regulation sought to advance that purpose, having regard to the manner of its identification of the characteristics of persons caught by its prohibition and having regard to the precision of its geographical and temporal operation, was closely tailored to achievement of that purpose. There was, to use language drawn from the statement of conclusion by Toohey and Gummow JJ, "no greater curtailment of the constitutional freedom than was reasonably necessary to serve the public interest in the personal safety of citizens"145. The requisite analysis therefore appropriately proceeds to an examination of whether the impugned provisions might be explained as having a compelling purpose, and then to an examination of whether the burden they impose on political communication in pursuit of such a purpose might be justified as no greater than is reasonably necessary to achieve such a purpose. The possible explanation For a purpose to be legitimate, it must be seen to be a purpose that is compatible with the maintenance of the constitutionally prescribed system of government. For a legitimate purpose to be compelling, it must be seen to be protective of a public interest of sufficient importance reasonably to warrant that label. Determination of the purpose of a law has sometimes been said to be a question of construction. That description is not inaccurate insofar as it conveys that the purpose of a law cannot be equated with the subjective purpose of a law- maker and is instead a question to be answered objectively by reference to the 145 (1997) 189 CLR 579 at 614. text and context of the law. The description would be inaccurate were it to be taken to suggest that the question is confined to attributing meaning to the statutory text. The correct understanding is that "[t]he level of characterisation required by the constitutional criterion of object or purpose is closer to that employed when seeking to identify the mischief to redress of which a law is directed"146. The purpose of a law is the "public interest sought to be protected and enhanced" by the law147. The purpose is not what the law does in its terms but what the law is designed to achieve in fact148. The purpose can sometimes be found spelt out in the text of the law. More often than not, the purpose will emerge from an examination of its context. The defendant argues that the purpose of the impugned provisions is to "ensure that protesters do not prevent[,] impede, hinder or obstruct the carrying out of [lawful] business activities on business premises or business access areas". That composite description of purpose is problematic. To constrain the conduct of protesters as protesters is to limit freedom of political communication. To limit freedom of political communication is simply not a purpose that is compatible with the maintenance of the constitutionally prescribed system of government. To constrain the conduct of protesters as protesters may be a means to a legitimate end, but it cannot be a legitimate end in itself. Seizing on that weakness, the plaintiffs argue that the purpose of the impugned provisions should be identified as nothing more than the prevention of on-site protests – a purpose plainly antithetical to the maintenance of representative and responsible government. Coming to the defendant's rescue, the Attorney-General for Victoria argues that the overall purpose of the impugned provisions – what they are designed to achieve in fact – is "to protect businesses in Tasmania from conduct that seriously interferes with the carrying out of business activity, or access to business premises on which that business activity is conducted". In their relevant application, the purpose of the provisions is on that view to protect Forestry Tasmania from conduct that seriously interferes with carrying out forest operations on forestry land and from conduct that seriously interferes with access to forestry land on which those forest operations are being carried out. 146 APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 394 [178]; [2005] HCA 44. 147 Cunliffe v The Commonwealth (1994) 182 CLR 272 at 300; [1994] HCA 44. 148 McCloy v New South Wales (2015) 257 CLR 178 at 232 [132]. There could be no question that such a purpose is compatible with the maintenance of the constitutionally prescribed system of government. Although they would dispute that a purpose of protecting Forestry Tasmania from a minor or transient interference would be enough, the plaintiffs do not argue that the purpose identified by the Attorney-General for Victoria would not be sufficiently protective of an important public interest to justify the impugned provisions were they reasonably appropriate and adapted to advance that purpose compatibly with the maintenance of the constitutionally prescribed system of government. The plaintiffs' rejoinder is that the singling out of protest activity shows that the impugned provisions are so ill-adapted to the protection of Forestry Tasmania's forest operations that protection of Forestry Tasmania's forest operations cannot be concluded to have been their true purpose149. Where determination of the purpose of a law is controversial, resolution of that controversy can be assisted by considering how closely the legal operation of the law conforms to an asserted purpose. In an extreme case, the disconformity might be so great as to admit of the conclusion that the law cannot be explained as having the asserted purpose. Where an asserted purpose is plausible, however, examination of how well the legal operation of the law conforms to that purpose can sometimes more profitably be left to be examined at the stage of asking whether the law is reasonably appropriate and adapted to advance that purpose in a manner that is compatible with the maintenance of the constitutionally prescribed system of government. If the answer is that the law is not reasonably appropriate and adapted to advance the asserted purpose, the controversy as to whether the law can be explained as having the asserted purpose or is better explained as having some other purpose will have become redundant150. The explanation of the purpose of the impugned provisions advanced by the Attorney-General for Victoria being plausible, I do not think it incumbent to reach a conclusion as to whether the purpose of the impugned provisions might better be characterised (as the plaintiffs would have it) as the prevention of on- site protests. Analysis of the compatibility of the impugned provisions' burden on freedom of political communication with the constitutionally prescribed system of government can proceed to the final step in the Lange analysis on the assumption that the purpose of the provisions in their the maintenance of 149 See Unions NSW v New South Wales (2013) 252 CLR 530 at 559-560 [59]-[60], 561 [64]. See also McCloy v New South Wales (2015) 257 CLR 178 at 232-233 150 Cf Betfair Pty Ltd v Western Australia (2008) 234 CLR 418 at 480 [113]; [2008] HCA 11. relevant application is to protect Forestry Tasmania from conduct that seriously interferes with carrying out forest operations on forestry land or with access to forestry land on which those forest operations are being carried out. The attempted justification The determinative question, then, is whether the impugned provisions can be justified as compatible with maintenance of the constitutionally prescribed system of representative and responsible government on the basis that the burden they impose on freedom to engage in political communication constituted by on- site political protests is no greater than is reasonably necessary to achieve the postulated legislative purpose of protecting Forestry Tasmania from conduct that seriously interferes with carrying out forest operations on forestry land or that seriously interferes with access to forestry land on which those forest operations are being carried out. The question might be addressed in different ways. For my own part, I think it useful to isolate and consider first those respects in which the impugned provisions might be seen to be framed in terms that are narrower than reasonably necessary to achieve the postulated purpose by failing to prevent conduct that might seriously interfere with carrying out forest operations on forestry land or that might seriously interfere with access to forestry land. I think it then useful to go on to consider some significant respects in which the impugned provisions might be seen to be framed in terms that are broader and more burdensome on freedom of political communication than is reasonably necessary to achieve that purpose, in that they have the effect of penalising on-site protest activity which is plainly harmless or which, although it might reasonably be thought to interfere with the carrying out of forest operations or with access to forestry land, would not in fact do so. The narrowness – underinclusiveness – inherent in the definition of protester is stark. Particularly is that so when the targeted nature of the prohibitions in ss 6(1), (2), (3), (4) and 8(1)(a) and (b) is contrasted with the comprehensive coverage of the prohibition in Levy and with the comprehensive coverage of prohibitions that can be put in place under the Management Act by Forestry Tasmania erecting a sign or closing a forest road for the purposes of discharging its responsibilities or in the interests of safety. Two groups of persons walk along a forest road, which has not been closed by Forestry Tasmania but which provides access to an area of land within permanent timber production zone land on which Forestry Tasmania is harvesting timber. One is a group of protesters. The other is a group of school children on an excursion, or of recreational walkers on an organised hike. Or it might be a group of local residents rallying in support of the forest operations with the support of Forestry Tasmania. Or perhaps it is even a group of disgruntled employees of Forestry Tasmania engaged in lawful industrial action. Each group has the same non-trivial adverse effect on the movement of logging vehicles entering and exiting the area: the vehicles need to proceed with much more caution; they need to slow and they may even need to detour or to stop. The one group is subject to the strictures imposed by the impugned provisions. The other is not. Underinclusiveness need not be fatal to the validity of a law which burdens political communication. The upholding in McCloy of the prohibition on political donations by property developers illustrates that the implied freedom does not operate to produce the result that a legislature addressing a mischief needs always to find a solution to the whole of that mischief. Underinclusiveness which results in a legislative burden falling unevenly on political communication is nevertheless a factor which weighs against the conclusion that a law is reasonably necessary to achieve its postulated purpose, for the same reason that discrimination against political communication warrants heightened scrutiny. Where underinclusiveness is especially problematic is where it occurs in combination with other factors which tend to indicate that the targeting of one of a number of sources of a postulated problem results in a burden on political communication by a targeted segment of the population which is more extensive or more severe than might be expected had a more comprehensive solution been sought. That was not the situation in McCloy. It is the situation here. The main overreaching of the impugned provisions is in the breadth and severity of the consequences which flow not from contravention by a protester of a prohibition in s 6(1), (2) or (3), but from the exercise of the police discretions under ss 11(1), (2) and (6) and 13(3), each of which turns simply on a police officer having a reasonable belief that a protester or a group of protesters is in contravention of a prohibition in s 6(1), (2) or (3). Whether the group of protesters remains on the forest road or moves onto the area on which harvesting is being carried out, each protester within the group is liable without warning to be removed under s 13(3). The trigger for removal is not contravention of a prohibition in s 6(1), (2) or (3), but a police officer reasonably believing that the protester to be removed has committed or is committing such a contravention and reasonably believing, sufficiently, that removal is necessary to preserve the public order. The police officer's belief, although reasonable, might be wrong. The removal is still lawful. If the group of protesters remains on the forest road, the group can be given a direction under s 11(2), not if any one or more of them has contravened a prohibition in s 6(1), (2) or (3), but if a police officer reasonably believes that they have committed, are committing, or are about to commit such a contravention. If they do not immediately move off the road, each protester within the group is liable for an offence against s 8(1)(a), not because he or she has contravened a prohibition in s 6(1), (2) or (3), but because he or she has failed to comply with the direction. Again, the police officer's belief, although reasonable, might be wrong. The offence is still committed. If the group of protesters has moved from the forest road onto the area on which harvesting is being carried out, the group can be given a direction under s 11(1), again not if any one or more of them has contravened a prohibition in s 6(1), (2) or (3), but if a police officer reasonably believes that they have committed, are committing, or are about to commit such a contravention. Yet again, the police officer's belief, although reasonable, might be wrong. The criminal consequences which then follow automatically under s 8(1) from an exercise of discretion under s 11(1) or (2) travel well beyond protecting the operations of Forestry Tasmania which the police officer reasonably believed had been, were being, or were about to be prevented, hindered or obstructed at the time of exercising the discretion. So much is that so, that visiting those consequences could not even be described as using a blunt instrument to achieve that purpose. The lack of fit has a temporal dimension and a geographical dimension. Irrespective of whether the protesters would or might prevent, hinder or obstruct harvesting operations or access to the area on which forest operations are being carried out, none of them can return to that area or to any forest road providing access to that area for an arbitrary period of four days. Each protester would commit an offence merely by his or her presence. The choice of a police officer, when giving a direction under s 11(1) or (2), to add a requirement under s 11(6) is again a matter of discretion. Inexplicably, in spite of the severe criminal consequences which flow under s 6(4) from the adding of such a requirement, the police officer is not required to form any additional belief before exercising that additional discretion. The criminal consequences which flow under s 6(4) from the adding of a requirement under s 11(6) travel so far beyond protecting the operations of Forestry Tasmania which the police officer when giving a direction under s 11(1) or (2) reasonably believed had been, were being, or were about to be prevented, hindered or obstructed, as to lack even the most tenuous connection. They are nothing short of capricious in their temporal duration of three months and nothing short of punitive in their geographical coverage and intensity. During the wholly arbitrary period of three months, any protest activity in which the group or any of its members engages on or near any permanent timber production zone land which turns out to be in contravention of a prohibition in s 6(1), (2) or (3), and which in the absence of a requirement under s 11(6) being added to a direction under s 11(1) or (2) would have attracted no criminal sanction, becomes criminal activity attracting a severe penalty. By virtue only of the requirement having been imposed under s 11(6), each protester within the group who finds himself or herself in contravention of s 6(1), (2) or (3) within that three month period can be arrested and prosecuted for an offence against s 6(4) without any warning needing to be given, in circumstances where anyone else engaging in exactly the same activity would escape criminal liability entirely. With Pythonesque absurdity, however, the group is permitted by s 6(5) to march along a forest road once a day, provided they do so at a reasonable speed and irrespective of whether or not in doing so they would prevent, hinder or obstruct access to the area on which forest operations are being carried out. The burden the impugned provisions impose on freedom to engage in political communication constituted by on-site political protests is greater than is reasonably necessary to protect Forestry Tasmania from conduct that seriously interferes with carrying out forest operations on forestry land or with access to forestry land on which those forest operations are being carried out. The result It follows that, assuming the second question in the Lange framework can be answered "yes", the third question must be answered "no". Sections 6, 8, 11 and 13(3), in their application to business premises comprised of forestry land which is Crown land declared to be permanent timber production zone land under the Management Act and in their application to business access areas comprised of land which is reasonably necessary to enable ingress to and egress from such forestry land, together with those provisions of Pt 4 which provide for the prosecution and consequences of conviction of offences against ss 6(4) and 8(1) in that application, are invalid. That conclusion should not be understood to involve any conclusion about the severability of the impugned provisions, in their relevant operation, from the remainder of the Act. No issue of severability has been raised. The parties have chosen to state three questions in the special case. The first question no longer arises because the defendant has conceded that the plaintiffs have standing. As to the remaining questions, I am content to join in the formal answers proposed by Kiefel CJ, Bell and Keane JJ. Nettle 236 NETTLE J. I have had the advantage of reading in draft the reasons for judgment of Kiefel CJ, Bell and Keane JJ and, with respect, I substantially agree with their Honours' conclusions. I also gratefully adopt their Honours' summary of the way in which the Workplaces (Protection from Protesters) Act 2014 (Tas) ("the Protesters Act") came to be applied to the plaintiffs in this case. Inasmuch, however, as I am not persuaded that the Protesters Act is shown to be lacking in its necessity, but I consider that, in some respects, it is not adequate in its balance, in the sense in which those expressions are used in McCloy v New South Wales151, it is appropriate that I state my own reasons for concluding that the Protesters Act is not reasonably appropriate and adapted to advancing a legitimate legislative end and therefore impermissibly burdens the implied freedom of political communication152. The burden on the implied freedom A law is taken to impose an effective burden on the implied freedom of political communication if it at all prohibits or limits political communication, unless perhaps the prohibition or limitation is so slight as to have no real effect153. Whether the terms, operation or effect of the Protesters Act so burden the implied freedom is to be assessed by reference to the freedom of political communication generally as opposed to any notion of an individual's right to communicate154. Questions of the extent of the burden assume principal significance in relation to the assessment, to be undertaken later in these reasons, of whether the law is appropriate and adapted to its purpose155. As Gageler J 151 (2015) 257 CLR 178 at 193-195 [2] per French CJ, Kiefel, Bell and Keane JJ; [2015] HCA 34. 152 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567-568; [1997] HCA 25. 153 Monis v The Queen (2013) 249 CLR 92 at 142 [108] per Hayne J, 212-213 [343] per Crennan, Kiefel and Bell JJ; [2013] HCA 4; Unions NSW v New South Wales (2013) 252 CLR 530 at 555 [40] per French CJ, Hayne, Crennan, Kiefel and Bell JJ, 574 [119] per Keane J; [2013] HCA 58; Tajjour v New South Wales (2014) 254 CLR 508 at 569-570 [105]-[107] per Crennan, Kiefel and Bell JJ; [2014] HCA 35; McCloy (2015) 257 CLR 178 at 230-231 [126] per 154 Lange (1997) 189 CLR 520 at 567; Wotton v Queensland (2012) 246 CLR 1 at 30 [78], 31 [80] per Kiefel J; [2012] HCA 2; Unions NSW (2013) 252 CLR 530 at 548-549 [19], 553-554 [35]-[36] per French CJ, Hayne, Crennan, Kiefel and Bell JJ, 572 [112], 578 [135], 586 [166] per Keane J. 155 Unions NSW (2013) 252 CLR 530 at 555 [40] per French CJ, Hayne, Crennan, Kiefel and Bell JJ; McCloy (2015) 257 CLR 178 at 218 [83], [86] per French CJ, Kiefel, Bell and Keane JJ. Nettle observed in McCloy156, however, the first stage of analysis is not perfunctory: the careful identification of the burden upon the implied freedom is the foundation for any posterior analysis of its justification. Acknowledging that the test of an effective burden at this first stage of the analysis is qualitative, not quantitative157, it is necessary in what follows to describe the terms, operation and effect, both legal and practical, of the Protesters Act. (i) The relevance to federal and State politics of environmental issues relating to Tasmania's forests The facts stated in the Special Case make clear that Tasmania's environmental issues are of significant relevance to both federal and State politics and to the choice afforded to the people by the Constitution in respect of federal elections158. There has been a Commonwealth Minister for the Environment since 1971. The Minister is responsible, inter alia, for the administration of the Environment Protection and Biodiversity Conservation Act 1999 (Cth). The Commonwealth and each of the State governments are also signatories to the National Forest Policy Statement, the foreword to which records: "The Commonwealth, State and Territory Governments attach the utmost importance to sustainable management of Australia's forests. In order to achieve the full range of benefits that forests can provide now and in the future, the Governments have come together to develop a strategy for the ecologically sustainable management of these forests. The strategy and its policy initiatives will lay the foundation for forest management in Australia into the next century." In previous federal election campaigns, public debate about environmental issues in Tasmania has featured prominently. In 1983, the future of the Franklin River and protests against its damming were major federal election issues. In the last fortnight of the campaign in 2004, the Opposition Leader and the Prime Minister flew to Tasmania to announce their parties' respective policies relating to forests and logging. In 2007, one of the two issues which dominated the federal election campaign in Tasmania was the proposed Gunns pulp mill for the Tamar Valley, for which the feedstock was in part to be sourced from Tasmania's native forests. In 2011, the Prime Minister and the Tasmanian Premier signed the Tasmanian Forests Intergovernmental Agreement 2011, which gave interim 156 (2015) 257 CLR 178 at 231 [127]-[128]. 157 Tajjour (2014) 254 CLR 508 at 578 [145] per 158 See generally Unions NSW (2013) 252 CLR 530 at 549-550 [21]-[25], 551 [27] per French CJ, Hayne, Crennan, Kiefel and Bell JJ. Nettle protection from logging to places adjacent to the Tasmanian Wilderness World Heritage Area to enable an independent verification process to be undertaken to assess the area's value and available timber resources. In 2013, the extension to the Tasmanian Wilderness World Heritage Area was a federal election issue. Consequently, it is apparent that Tasmania's forests are a significant matter of government and politics in Australia. (ii) The history of protests against forest operations in Tasmania As is also apparent from the Special Case, there is a long history of environmental protests in Australia, especially in Tasmania, aimed at influencing public and governmental attitudes towards logging and the protection of forests. In the experience of the first plaintiff, on-site protests against forest operations and the broadcasting of images of parts of the forest environment at risk of destruction are the primary means of bringing such issues to the attention of the public and parliamentarians. Media coverage, including social media coverage, of on-site protests enables images of the threatened environment to be broadcast and disseminated widely, and the public is more likely to take an interest in an environmental issue when it can see the environment sought to be protected. On-site protests have thus contributed to governments in Tasmania and throughout Australia granting legislative or regulatory environmental protection to areas not previously protected. Since 2006, 37 protests have taken place in Tasmania in areas that have subsequently been granted legislative or regulatory environmental protection. Most of those areas were included in an extension, by some 170,000 hectares, to the Tasmanian Wilderness World Heritage Area which was approved by the World Heritage Committee in June 2013. The Tasmanian Wilderness World Heritage Area comprises approximately 1.6 million hectares. (iii) Freedom to protest against forest operations in Tasmania Forestry Tasmania has undertaken forest operations in the Lapoinya Forest, which is the area the subject of the Special Case, since mid-2014. Forestry Tasmania, a Tasmanian Government Business Enterprise, was established as the Forestry corporation under the now repealed Forestry Act 1920 (Tas) and continues in existence under s 6 of the Forest Management Act 2013 (Tas) ("the FMA"). Perforce of s 7 of the FMA, the Forestry corporation is the Forest Manager for "permanent timber production zone land". Permanent timber production zone land is defined in s 3 of the FMA as Crown land declared to be permanent timber production zone land under s 10; any land purchased by the Forestry corporation under s 12; and certain State forest land as listed in Sched 2. A "forest road" is defined as any road constructed or maintained by or for the Forest Manager either inside or outside permanent timber production zone land and any other road on permanent timber production Nettle zone land other than a State highway, subsidiary road or local highway159. Under s 8 of the FMA, the Forest Manager has the functions of managing and controlling all permanent timber production zone land and of undertaking forest operations on permanent timber production zone land for the purpose of selling forest products. Perforce of s 9, the Forest Manager has such powers as are necessary to enable it to perform its functions, including power to grant to a person a permit, licence, lease or other occupation right in relation to permanent timber production zone land. There are approximately 800,000 hectares of permanent timber production zone land in Tasmania. Section 13 of the FMA requires the Forest Manager to perform its functions and exercise its powers so as to allow access to permanent timber production zone land for such purposes as are not incompatible with the management of the land. Consistently with that provision, and as appears from the second reading speech relating to the Forest Management Bill 2013 (Tas)160, it has for a long time been accepted that members of the public are free to enter upon and enjoy permanent timber production zone land, including by way of conducting protests on such land in a manner that is not incompatible with the Forest Manager performing its functions. The freedom so to access and protest on permanent timber production zone land is, however, not unqualified. Axiomatically, it is subject to general law proscriptions of unlawful conduct and to the specific provisions of the FMA. Under s 21 of the FMA, the Forest Manager may erect signs on or in respect of forest roads or permanent timber production zone land for the purposes of discharging its responsibilities or in the interests of safety, and, in the event that such signs are erected, a person must not without lawful excuse undertake an activity or engage in conduct on the forest road or permanent timber production zone land contrary to the directions expressed on the signs. Failure to comply is an offence punishable by a fine not exceeding 20 penalty units161. Under s 22 of the FMA, a person appointed by the Forest Manager as an authorised officer may request that: a person not enter permanent timber production zone land or a forest road; a person leave permanent timber production zone land or a forest road; or a person cease to undertake an activity or engage in conduct on the land or road if, in each case, the authorised officer is of the opinion that the entry or presence of that person, or his or her activity or conduct, is preventing, has 159 See Roads and Jetties Act 1935 (Tas), s 3, Pt II; Local Government (Highways) Act 1982 (Tas), s 4. 160 Tasmania, House of Assembly, Parliamentary Debates (Hansard), 24 September 161 Forest Management Act, s 21(3). See Penalty Units and Other Penalties Act 1987 (Tas), s 4A. In January 2016, the value of 20 penalty units was $3,080. Nettle prevented or is about to prevent the Forest Manager from effectively or efficiently performing its functions. Failure to comply is an offence punishable by a fine not exceeding 20 penalty units162. Under s 23 of the FMA, the Forest Manager may, by sign or barricade, or both, close a forest road or any section of forest road either permanently or temporarily to all traffic, or to a class of traffic, if the Forest Manager considers that the closure is necessary or expedient for the purposes of discharging its responsibilities or in the interests of safety. A person who passes over a forest road that has been so closed is guilty of an offence punishable by a fine not exceeding 20 penalty units163. It is not suggested that any applicable general law proscription of unlawful conduct or any restriction imposed by the FMA is invalid. (iv) Unlawful protests against forest operations in Tasmania As further appears from the Special Case, there is a substantial history of unlawful protests against forest operations in Tasmania. Between 1981 and 1983, there was considerable protest activity concerning the proposal by the Tasmanian government and the Hydro-Electric Commission to construct a dam on the Gordon River below its junction with the Franklin River. That protest action included a blockade of an area of the Franklin River near the dam site which was intended to obstruct development works for the dam. The proposal became an election issue at the federal election called for 5 March 1983. Protests on Hydro-Electric Commission land continued with 77 protesters evicted from a State reserve on 23 February 1983 and 231 protesters arrested on 1 March 1983. More than 1,000 people were arrested over the course of the protests. It was alleged included vandalism of Hydro-Electric Commission premises and other damage to equipment. Following the election, the World Heritage Properties Conservation Act 1983 (Cth) was enacted for the purpose of preventing further work on the dam. the protest activity that A good deal of the protest activity against forest operations in Tasmania has consisted of the obstruction of equipment used in those operations. A number of prosecutions have been brought on that basis. In Ward v Visser164, a protester locked herself on to a boom gate and subsequently to a vehicle to obstruct logging operations. In Smith v Visser165, a protester occupied a tree-house for the purpose of preventing the felling of trees. In March 2007, protesters were charged with offences arising out of protest activities at Arve 162 Forest Management Act, s 22(5). 163 Forest Management Act, s 23(4). 164 [1999] TASSC 68. 165 [2000] TASSC 44. Nettle Road near Tahune which involved blocking a forest road with a large tripod in order to obstruct access to forest operations. Between January and May 2009, protesters committed offences at the Upper Florentine Valley, including tree-sitting and locking on to, or attempting to lock on to, devices so as to prevent the removal of the protesters from the area. Additionally, there have been a number of police and media reports of protest activity directed to obstructing logging and forest operations, including protests in the Styx Valley in March and May 2006; in the Weld Valley in November 2006; in the Florentine Valley in February 2007; in the Upper Florentine Valley in April 2009; in the Weld Valley in July 2010; and in the Huon Valley between July and October 2013. In May 2012, there were further protests which saw protesters board a cargo ship on the Hobart Waterfront in order to obstruct the export of veneer timber from Tasmania, and in July 2013 there were media reports of protests at timber mills in Smithton and in the Huon Valley at which protesters chained themselves to machinery and blocked access to the mill. It is apparent from the extrinsic material166 that the Protesters Act was enacted to address increasing concerns about this unlawful protest activity in respect of the forestry industry. (v) Relevant provisions of the Protesters Act A person is a protester for the purposes of the Protesters Act if he or she is engaging in a protest activity that takes place on business premises or on a business access area in relation to business premises and is undertaken in furtherance of, or for the purposes of promoting awareness of or support for, an opinion or belief in respect of a political, environmental, social, cultural or economic issue167. "Business premises" are defined by s 5(1)(b) of the Protesters Act as including "forestry land". "Forestry land" is defined in s 3 as including "an area of land on which forest operations are being carried out". "Forest operations" are defined as work comprised of, or connected with, seeding and planting trees, managing trees before they are harvested and harvesting, extracting or quarrying forest products, including any related land clearing, land preparation, burning-off or access construction. "Business access area" is defined in s 3 of the Protesters Act in relation to business premises as including so much of an area of land outside business premises as is reasonably necessary to enable access to an entrance to or exit 166 Tasmania, House of Assembly, Parliamentary Debates (Hansard), 26 June 2014 at 167 Workplaces (Protection from Protesters) Act, s 4. Nettle from the business premises. "Business occupier" is defined as including a "business operator" and a "business worker" in relation to business premises. "Business operator" is defined as including a government entity in which business premises are vested or that has management or control of the premises; a person who carries out a business activity on the premises under a contract (other than a contract of service), arrangement or agreement with a person who is a business operator in relation to the business premises; and a person who, under a permit, licence, or another authority, issued or granted under an Act, is entitled to carry out a business activity on the premises. For present purposes, it is sufficient to note that forestry land will constitute business premises; parts of permanent timber production zone land and forest roads may constitute business access areas in relation to forestry land; and Forestry Tasmania, as the Forest Manager, may constitute a business operator in respect of forestry land and therefore a business occupier. Section 6(1) of the Protesters Act prohibits a protester from entering business premises, or a part of business premises, where, by so entering or remaining on the premises, the protester prevents, hinders or obstructs the carrying out of a business activity on the premises by a business occupier in relation to those premises and the protester either knows or ought reasonably to be expected to know that his or her presence is likely to have that effect. Section 6(2) prevents a protester from doing an act on business premises, or on a business access area in relation to business premises, if the act prevents, hinders or obstructs the carrying out of a business activity on the premises by a business occupier and the protester knows or ought reasonably to be expected to know that the act is likely to have that effect. Section 6(3) prohibits a protester from doing any act that prevents, hinders or obstructs access by a business occupier to an entrance to, or exit from, business premises or a business access area in relation to the premises, if the protester knows or ought reasonably to be expected to know that his or her act is likely to have that effect. Section 6(1), (2) and (3), however, are not offence provisions. As will be explained, the enforcement of those prohibitions depends on the operation of other provisions of the Protesters Act. Section 7(1) and (2) of the Protesters Act prohibit a protester from doing an act that causes damage to business premises or a business-related object that is on business premises or is being taken to or from the premises via a business access area, if the protester knows or ought reasonably to be expected to know that the act is likely to cause such damage. Section 7(3) prohibits persons from issuing a threat of damage in relation to business premises in furtherance of, or for the purposes of promoting awareness of or support for, an opinion or belief in respect of a political, environmental, social, cultural or economic issue. A contravention of those prohibitions is an offence punishable on conviction by a fine of up to $250,000 in the case of a body corporate and $50,000 or a sentence of imprisonment for a term not exceeding five years, or both, in the case of an individual. Nettle Section 11(1) and (2) authorise a police officer to direct a person who is on business premises or a business access area to leave the premises or area without delay if the police officer reasonably believes that the person has committed, is committing or is about to commit a contravention of s 6(1), (2) or (3) or an offence against the Protesters Act. If the person fails to comply with a direction to leave the business access area, he or she is guilty of an offence which, perforce of s 16(1), is an indictable offence punishable upon conviction under s 8(1)(a) by a fine of up to $100,000 in the case of a body corporate and $10,000 in the case of an individual. Section 8(1)(b) provides that, once a person has been directed under s 11 to leave business premises or a business access area, the person is prohibited for the next four days from entering any business access area relating to the business premises  and so, in most cases, also from entering the business premises  whether or not the person's later entry on the business access area (or business premises) would have any effect at all on the business activity there conducted. And, if the person does within those four days enter the business access area (or business premises), the person is guilty of an offence for which he or she would be liable upon conviction to a fine of $100,000 in the case of a body corporate or $10,000 in the case of an individual. In addition, s 11(6) provides that, when a police officer gives a direction under s 11(1) or (2), the police officer may add a requirement that the person not contravene s 6(1), (2) or (3) or commit an offence against the Protesters Act for the next three months. If the person fails to comply with that requirement, by contravening s 6(1), (2) or (3), he or she commits an offence under s 6(4) and is liable under s 17(2)(a) to a fine not exceeding $10,000. If the person then commits a further offence under s 6(4), he or she is liable to be punished for that offence under s 17(2)(b) by a fine not exceeding $10,000 or a term of imprisonment not exceeding four years, or both. Section 11(7) provides that a police officer may give a direction of the kind provided for in s 11(1) and (2) (including any further requirement under s 11(6)) to a "group of persons" and s 11(8) provides that such a direction is taken to be given to each person who is a member of the group to whom the direction is issued and who ought reasonably to be expected to have heard the direction. Although contestable, it appears that, because s 11(7) provides that a "direction may be issued under this section to a person or to a group of persons" (emphasis added), and s 11(1) and (2) require the police officer to form a belief as to a person only, such a direction could be issued to a group of persons in circumstances where only one or some of the group were reasonably believed by the police officer to have committed, to be committing or to be about to commit a contravention of s 6(1), (2) or (3) or an offence against the Protesters Act. Nettle (vi) The effect of the Protesters Act on protests against forest operations in Tasmania As was earlier noticed, prior to the enactment of the Protesters Act, protesters were free to conduct protests on permanent timber production zone land in a manner that was not incompatible with the Forest Manager performing its functions168. It is also possible that there were circumstances in which protesters were free to conduct protests on permanent timber production zone land where those protests were incompatible with the Forest Manager performing its functions but where the incompatibility was not apparent. For example, if protesters had passed along a forest road or through permanent timber production zone land at a time when the Forest Manager was proposing to make use of the road for access to logging operations, or was proposing to conduct clearing operations on part of the land, but had not begun to do so, the protesters' conduct may not have been conceived of as prohibited unless and until the Forest Manager erected a sign under s 21 of the FMA prohibiting use of the forest road or land, or issued a direction under s 22 requiring the protesters not to enter or to depart the area, or closed the forest road under s 23. But, in the scheme of things, such instances would have been rare. In most cases where protest activity was incompatible with the the Forest Manager performing incompatibility would have been readily apparent and, presumably, the steps available under the FMA to prevent or dissolve the activity would have been taken. Accordingly, if s 6(1), (2) and (3) of the Protesters Act stood alone in prohibiting disruptive conduct by protesters in respect of forestry land (being business premises) and business access areas in relation to forestry land, the effect upon lawful protest activities against forest operations would not have been significant. functions, its As has been seen, however, s 6(1), (2) and (3) do not stand alone. They operate in conjunction with the parts of the Protesters Act providing for police directions to leave business premises or a business access area (s 11(1) and (2)); an automatic four day exclusion from a business access area in relation to the business premises upon the issuance of a police direction (s 8(1)(b)); a further police direction prohibiting contraventions of the Protesters Act for a three month period (s 11(6)); and the application of such directions to groups of persons (s 11(7) and (8)). Collectively, these provisions markedly extend the restrictions on otherwise lawful protest activities and, because of the broad application of the definitions of "business premises" and "business access area" in relation to forestry land and forest operations, it is apparent that the restrictive effects of s 6(1), (2) and (3), taken in conjunction with ss 11(1) and (2), 8(1)(b) and 11(6), (7) and (8), are significant. 168 See [242] above. See and compare Director of Public Prosecutions v Jones [1999] (vii) Burden on the implied freedom Nettle the implied (NSW)170, because Identifying a burden on the implied freedom of political communication that results from restrictions on lawful protest activities requires consideration of both the range and extent of the restrictions and the role of the restricted protest activities in the communication of the protesters' message. It is not enough of itself to constitute a burden on the implied freedom of political communication that a restriction on protest activities prevents protesters pursuing their preferred mode of protest169. As Hayne J observed in APLA Ltd v Legal Services freedom of political Commissioner communication is a limitation on legislative power, as opposed to an individual right, the question is what the impugned law does in terms of its effect on political communication, as opposed to its effect on a particular individual's preferred mode of communication. But equally it does not follow that, just because restrictions on a particular form of political communication leave those who are affected free to pursue other forms of political communication, the restrictions will not impose a burden on the implied freedom of political communication171. As Mason CJ emphasised in Australian Capital Television Pty Ltd v The Commonwealth172, if a restriction on a preferred mode of communication significantly compromises the ability of those affected to communicate their message, it may not be an answer that they are left free to communicate by other, less effective means. And as McHugh J recognised in Levy v Victoria173, in circumstances not dissimilar to those of the present case, legislative restrictions on the ability of protesters to stage their protests in close proximity to the subject of protest may so deprive the protesters of the ability to generate the type of attention most likely to sway public opinion that the 169 McClure v Australian Electoral Commission (1999) 73 ALJR 1086 at 1090 [28]; 163 ALR 734 at 740-741; [1999] HCA 31; Hogan v Hinch (2011) 243 CLR 506 at 544 [50] per French CJ; [2011] HCA 4; Unions NSW (2013) 252 CLR 530 at 554 [36] per French CJ, Hayne, Crennan, Kiefel and Bell JJ, 574 [119] per Keane J; McCloy (2015) 257 CLR 178 at 266-267 [248] per Nettle J, 283 [317] per 170 (2005) 224 CLR 322 at 451 [381]; [2005] HCA 44. 171 See, for example, Levy v Victoria (1997) 189 CLR 579 at 609 per Dawson J, 613-614 per Toohey and Gummow JJ, 617 per Gaudron J, 625 per McHugh J, 647-648 per Kirby J; [1997] HCA 31. 172 (1992) 177 CLR 106 at 145-146; [1992] HCA 45. See also at 173 per Deane and 173 (1997) 189 CLR 579 at 623-624, 625. Nettle legislation does impose a significant burden on the implied freedom of political communication. At the same time, it is necessary to bear in mind that, although the freedom of political communication is essential to the maintenance of representative democracy, it is not "so transcendent a value as to override all interests which the law would otherwise protect"174. As was emphasised in Levy175, the implied freedom of political communication is a freedom to communicate by lawful means, not a licence to do what is otherwise unlawful. Hence, in this context, it does not authorise or justify trespass to land or chattels, nuisance or the besetting of business premises, or negligent conduct causing loss176. If and insofar as an act of protest on forestry land or a related business access area amounts to a trespass, nuisance, besetting, actionable negligence, or contravention of a provision of the FMA, or is otherwise unlawful177, the fact that a provision of the Protesters Act also prohibits that act of protest cannot logically be regarded as burdening, or adding to the burden on, the implied freedom of political communication. So, too, the fact that contravention of the Protesters Act may result in the imposition of a penalty greatly in excess of the penalties that might otherwise have been imposed under the FMA or another law, or pursuant to a common law cause of action, does not mean that a burden is thereby imposed on the implied freedom of political communication. As has been emphasised178, the freedom is concerned with burdens upon political 174 ACTV (1992) 177 CLR 106 at 159. 175 (1997) 189 CLR 579 at 625-626. See also Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 224-225 [109]-[112] per McHugh J, 246-248 [184]-[188] per Gummow and Hayne JJ, 298 [337] per Callinan J, 303-304 [354] per Heydon J; [2004] HCA 41. 176 See Jones [1999] 2 AC 240 at 257-258, 259 per Lord Irvine of Lairg LC, 280-281 per Lord Clyde, 288, 293 per Lord Hutton. 177 See, for example, Police Offences Act 1935 (Tas), ss 13, 14B, 15B, 37; Dollar Sweets Pty Ltd v Federated Confectioners Association of Australia [1986] VR 383 at 388; Animal Liberation (Vic) Inc v Gasser [1991] 1 VR 51 at 59; Australian Builders' Labourers' Federated Union of Workers – Western Australian Branch v J Corp Pty Ltd (1993) 42 FCR 452 at 456-458 per Lockhart and Gummow JJ; McFadzean v Construction, Forestry, Mining and Energy Union (2007) 20 VR 250 178 APLA (2005) 224 CLR 322 at 451 [381] per Hayne J; Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 89 [220] per Crennan and Kiefel JJ (Bell J agreeing at 90 [224]); [2013] HCA 3; Unions NSW (2013) 252 CLR 530 at 554 [36] per French CJ, Hayne, Crennan, Kiefel and Bell JJ, 574 [119] Nettle communication, not burdens upon communicators. As such, what is relevant is the restriction of political communication by the prohibition of prescribed conduct and not the penalties imposed on persons contravening that prohibition. Where, therefore, an act of communication is prohibited independently of the Protesters Act, and the independent prohibition is not itself constitutionally invalid, it cannot be that the act of communication does or could contribute to the system of representative and responsible government in such a way that its further prohibition by the Protesters Act would compromise the freedom or flow of political communication generally. And here, since the prohibitions in s 6(1), (2) and (3) are not engaged unless a protester's presence on forestry land or a related business access area is such not only as in fact to prevent, hinder or obstruct forest operations, or access to or from forestry land, but also that the protester ought reasonably to be expected to know that his or her presence has that effect, there would be few, if any, acts of protest to which s 6(1), (2) or (3) apply that were not acts of trespass, nuisance, besetting or actionable negligence, or otherwise unlawful. At one point in the course of argument, counsel for the plaintiffs suggested that s 7 of the Protesters Act burdens the implied freedom by prohibiting the doing of acts that cause damage to business premises or a business-related object where the person knows or ought reasonably to be expected to know that the act is likely to cause such damage. Despite the innate unlawfulness of the proscribed conduct, it was contended that s 7 burdens the implied freedom because in terms it targets protesters and therefore is aimed at political communication. That contention must be rejected. To repeat, the implied freedom of political communication is not a licence to commit trespass to land or chattels. Section 7(3) may remove a "rhetorical device"179 of protesters by prohibiting threats of damage to business premises. But to engage in conduct of the kind proscribed is tantamount to making unwarranted demands with menaces, or, in other words, blackmail180. The idea that the implied freedom of political communication somehow frees protesters to engage in conduct of that kind is altogether misconceived. Laws which make it more difficult to engage in political communication, as for instance by imposing requirements of permission181 or the payment of 179 Hogan v Hinch (2011) 243 CLR 506 at 544 [50] per French CJ. 180 Criminal Code (Tas), s 241. 181 For example, Wotton (2012) 246 CLR 1 at 15 [28]-[29] per French CJ, Gummow, Hayne, Crennan and Bell JJ, 33 [88] per Kiefel J; Adelaide City Corporation (Footnote continues on next page) Nettle fees182, may in some circumstances impose a burden on the implied freedom of political communication. But the implied freedom bestows no affirmative right of individual expression183. The law relating to the implied freedom of political communication thus knows nothing of the United States constitutional doctrine of "chilling effects" on free speech184. Generally speaking, where the legislature has seen fit to prohibit certain forms of communication, and there is no challenge to that existing prohibition, the implied freedom is not to be regarded as restraining legislative power to do again what has already been done, by doubly prohibiting certain acts of communication or by imposing greater penalties than already apply. So to conclude, however, is not the end of the matter. For, apart from prohibiting what would be otherwise unlawful conduct, the most significant effect of the Protesters Act is the result of the way in which s 6(1), (2) and (3) operate in conjunction with ss 11(1) and (2), 8(1)(b) and 11(6), (7) and (8). More specifically, whereas s 6(1), (2) and (3) are not engaged unless a protester's presence or conduct on forestry land or a related business access area in fact prevents, hinders or obstructs the carrying out of or access to forest operations and the circumstances connote that the protester ought reasonably to be expected to know that his or her presence or conduct has that effect, under s 11(1) and (2) a police officer can give a direction to a person to leave forestry land or a related business access area, whether or not the person's presence or conduct is in fact preventing, hindering or obstructing forest operations on or access to the land, if the officer forms a reasonable belief that the person's presence or conduct is preventing, hindering or obstructing forest operations or access thereto, is about to do so or has done so at some unspecified time in the past. And, if the person fails to comply with a direction to leave the business access area, he or she will be guilty of an offence under s 8(1)(a) punishable by a fine of up to $10,000. (2013) 249 CLR 1 at 44 [67] per French CJ, 86 [209] per Crennan and Kiefel JJ (Bell J agreeing at 90 [224]). 182 For example, Cunliffe v The Commonwealth (1994) 182 CLR 272 at 301 per Mason CJ; [1994] HCA 44. 183 Cunliffe (1994) 182 CLR 272 at 327 per Brennan J; Lange (1997) 189 CLR 520 at 567; Unions NSW (2013) 252 CLR 530 at 554 [36] per French CJ, Hayne, Crennan, Kiefel and Bell JJ, 574 [119] per Keane J; McCloy (2015) 257 CLR 178 at 202-203 [29]-[30] per French CJ, Kiefel, Bell and Keane JJ. 184 See Dombrowski v Pfister 380 US 479 at 486-487 (1965); Ashcroft v Free Speech Coalition 535 US 234 at 244, 255 (2002); Citizens United v Federal Election Commission 558 US 310 at 324, 326-327, 328-329 (2010). Nettle Possibly it might not often happen that, although a protester is not in fact preventing, hindering or obstructing forest operations or access to forestry land, a police officer could nevertheless properly form the requisite reasonable belief under s 11(1) or (2) that the protester is preventing, hindering or obstructing forest operations or access thereto. But, given the history of protests against forest operations earlier referred to, it is by no means unlikely that there could arise situations where a protester who is otherwise lawfully on forestry land or a related business access area, and is not preventing, hindering or obstructing forest operations or access thereto, could be required to leave the forestry land or business access area because a police officer forms a reasonable belief that the protester has at some unspecified time in the past prevented, hindered or obstructed forest operations or access thereto, or seems likely to do so at some point in the near future. And that could be so even if the protester has never in fact done so and has no intention of doing so. Hence the restrictions potentially imposed by s 11(1) and (2) on otherwise lawful protest activities are substantial. Section 8(1)(b) then adds to the extent of the restrictions on protest activities that would otherwise be lawful by providing that, once a person has been directed to leave the forestry land or business access area (noting again that that may occur even though the person is not in fact preventing, hindering or obstructing forest operations or access thereto, and is not about to do so), the person is prohibited for the next four days from entering any business access area in relation to the forestry land (and so, in most cases, also from entering the forestry land) whether or not the person's entry onto the business access area (or forestry land) would have any effect at all on the forest operations or access to and from those operations. If the person contravenes that prohibition, he or she is guilty of an offence punishable by a fine of up to $10,000. Section 11(6) of the Protesters Act adds further again to the restrictions on protest activities that would otherwise be lawful by providing that, when a police officer gives a direction under s 11(1) or (2), the police officer may add a requirement that the person not contravene s 6(1), (2) or (3) or commit an offence under the Act for a period of three months. That has the capacity to produce very far-reaching consequences. By way of illustration, "an offence against a provision of this Act" in s 11(6) would include an offence under s 8(1)(a) of failing to comply with a direction under s 11(2), even where the direction was given on the basis of no more than a police officer having formed a reasonable belief that the person was about to prevent, hinder or obstruct forest operations or access to or from the forestry land, or that at some unspecified time in the past the person's presence on the forestry land had somehow prevented, hindered or obstructed forest operations or access to or from the forestry land. And as has been emphasised, such a direction could be given even though the person was not in fact preventing, hindering or obstructing forest operations or access to or from the forestry land, had not previously done so and was not about to do so. Yet, even in such circumstances, failure to comply with a further requirement under s 11(6) not to contravene s 6(1), (2) or (3) would constitute an offence under Nettle s 6(4) punishable under s 17(2)(a) by a fine of up to $10,000, and any further offence committed under s 6(4) by that person following conviction would be punishable by the same fine or up to four years' imprisonment, or both185. Contrary to Tasmania's submissions, such a restriction is hardly alleviated by the exception in s 6(5) for passing the forestry land or along a related business access area at a reasonable speed once a day. That exception leaves protesters deprived of the capacity for effective protest by way of a sustained presence in opposition to an activity186. Nor is the restrictive effect of ss 11(6) and 6(4) much alleviated by the defence of "lawful excuse" provided for in s 6(6): for the reason that it is implicit in the contextual relativity of s 6(5) and s 6(6) that any form of protest other than passing by once a day at a reasonable speed as provided for in s 6(5) would not constitute a "lawful excuse" within the meaning of s 6(6). There is also s 11(7), which it will be recalled empowers a police officer to give a direction of the kind provided for in s 11 (including a further requirement under s 11(6)) to a "group of persons", and s 11(8), which provides that such a direction is taken to be given to each person who is a member of the group to whom the direction is given and who ought reasonably to be expected to have heard the direction, possibly in circumstances where only one or some of the group were reasonably believed by the police officer to be preventing, hindering or obstructing forest operations on the subject forestry land or access to the land, or to have done so previously or to be about to do so. As such, an individual protester may be subject to the restrictive provisions of the Protesters Act regardless of whether that protester's conduct has any effect on forest operations. For these reasons, the operation of ss 11(1) and (2), 8(1)(b) and 11(6), (7) and (8), coupled with the prohibitions in s 6(1), (2) and (3), comprise a substantial restriction on otherwise lawful protest activities. Taken together, they confer on police what amounts in effect to a broad-ranging discretionary power to exclude protesters and groups of protesters from forestry land and related business access areas for extended periods of time in a manner which, to a significant extent, is unconfined by practically examinable and enforceable criteria. Granted, courts must proceed upon the assumption that, properly construed, the legal effect of those provisions is certain187. But, in this context, 185 Workplaces (Protection from Protesters) Act, s 17(2)(b). 186 Levy (1997) 189 CLR 579 at 625 per McHugh J. See also ACTV (1992) 177 CLR 106 at 146 per Mason CJ, 173 per Deane and Toohey JJ, 236 per McHugh J. 187 Wotton (2012) 246 CLR 1 at 9-10 [10] per French CJ, Gummow, Hayne, Crennan and Bell JJ; Adelaide City Corporation (2013) 249 CLR 1 at 64 [139]-[140] per (Footnote continues on next page) Nettle the requisite analysis looks to the burden on communication imposed by a law in its legal or practical operation188: its "terms, operation or effect"189. And, for the reasons already explained, the terms of the Protesters Act are of such breadth that the likelihood of them so operating in practice as to burden the implied freedom to a significant extent cannot be discounted. Given, therefore, the long history of protests against forest operations in Tasmania, the political response to such protests as reflected in legislative protections subsequently enacted, and the apparent importance to protesters of the ability to protest in close proximity to forest operations in order effectively to convey to the public and parliamentarians their opposition to those activities, it should be accepted, as it was by Tasmania, that the Protesters Act imposes an effective burden, in the sense of having a real or actual effect190, upon the implied freedom of political communication. Reasonably appropriate and adapted to serve a legitimate purpose As the plurality stated in McCloy191, the test of whether a law which effectively burdens the implied freedom of political communication is reasonably appropriate and adapted to serve a legitimate end the fulfilment of which is compatible with the constitutionally prescribed system of representative and responsible government is to be understood as comprised of two arms: (1) whether the law pursues a legitimate legislative purpose compatible with the system of representative and responsible government; and (2) if so, whether the law is reasonably appropriate and adapted to advancing that purpose. Hayne J. See generally R v Holmes; Ex parte Altona Petrochemical Co Ltd (1972) 126 CLR 529 at 562 per Windeyer J; [1972] HCA 20. 188 Coleman v Power (2004) 220 CLR 1 at 49-50 [91] per McHugh J, 89 [232] per Kirby J; [2004] HCA 39; Tajjour (2014) 254 CLR 508 at 548 [33], 551 [38] per French CJ, 558-559 [60]-[61] per Hayne J, 578 [145] per Gageler J; McCloy (2015) 257 CLR 178 at 230-231 [126] per Gageler J, 258 [220] per Nettle J. 189 Lange (1997) 189 CLR 520 at 567; Unions NSW (2013) 252 CLR 530 at 553 [35] per French CJ, Hayne, Crennan, Kiefel and Bell JJ; McCloy (2015) 257 CLR 178 at 194 [2] per French CJ, Kiefel, Bell and Keane JJ. 190 Monis (2013) 249 CLR 92 at 142 [108] per Hayne J, 212-213 [343] per Crennan, Kiefel and Bell JJ; Unions NSW (2013) 252 CLR 530 at 555 [40] per French CJ, Hayne, Crennan, Kiefel and Bell JJ, 574 [119] per Keane J; McCloy (2015) 257 CLR 178 at 230-231 [126]-[127] per 191 (2015) 257 CLR 178 at 193-195 [2] per French CJ, Kiefel, Bell and Keane JJ. Nettle (i) Legitimate legislative purpose According to the long title of the Protesters Act, its purpose is "to ensure that protesters do not damage business premises or business-related objects, or prevent, impede or obstruct the carrying out of business activities on business premises". Tasmania contended that the purposes of the Act also include providing for the safety of business operators on business premises192, maintaining economic opportunities for business operators of certain businesses carried out within the State of Tasmania193 and preserving public order. In Tasmania's submission, all of those are legitimate purposes which are compatible with the system of representative and responsible government. The plaintiffs argued to the contrary that, on the proper construction of the Protesters Act, its purposes, or at least the means adopted to achieve those purposes194, are not compatible with the system of representative and responsible government. In the plaintiffs' submission, it is apparent from the way that the prohibitions, preventative and coercive powers, and penalties operate exclusively on those who are engaged in protest that they target protesters and are "directed to the freedom"195 of political communication. In effect, it was submitted, the Protesters Act discriminates against particular points of view and prevents political communication causing no more than "transient and insubstantial disruptions" to business activity in circumstances where some disruption to business activity is a necessary and accepted incident of the exercise of the freedom of political communication constituted of protest. That argument should be rejected. Trivial or transient disruptions to business may be put aside. Certainly, lawful protest activities may sometimes result in trivial or transient disruptions to lawful business activities or impede access to business premises in some trivial or transient way. For example, a lawfully constituted street march might temporarily halt the flow of traffic along the street or access to premises along the way. But, as the Solicitor-General of Tasmania accepted, s 6(1), (2) and (3) should not be construed as prohibiting trivial or transient disruptions of that kind. They are to be read as one with s 3 of 192 See Workplaces (Protection from Protesters) Act, ss 6(7), 7(4) and (6). 193 See Tasmania, House of Assembly, Parliamentary Debates (Hansard), 26 June 194 Coleman (2004) 220 CLR 1 at 50-51 [93]-[96] per McHugh J. 195 ACTV (1992) 177 CLR 106 at 143 per Mason CJ, 234-235 per McHugh J. See also Cunliffe (1994) 182 CLR 272 at 299 per Mason CJ; Adelaide City Corporation (2013) 249 CLR 1 at 33 [46] per French CJ; Monis (2013) 249 CLR 92 at 215 [349] per Crennan, Kiefel and Bell JJ. Nettle the Acts Interpretation Act 1931 (Tas) as confined to substantive preventions, hindrances and obstructions of business activities and access to and egress from business premises. is a purpose compatible with There should also be no doubt that the purpose of ensuring that protesters do not substantively prevent, impede or obstruct the carrying out of business activities on business premises and do not damage business premises or business-related objects the system of representative and responsible government. The implied freedom of political communication is a freedom to communicate ideas to those who are willing to listen, not a right to force an unwanted message on those who do not wish to hear it196, and still less to do so by preventing, disrupting or obstructing a listener's lawful business activities. Persons lawfully carrying on their businesses are entitled to be left alone to get on with their businesses and a legislative purpose of securing them that entitlement is, for that reason, a legitimate governmental purpose. The plaintiffs' submission that the Protesters Act is otherwise inconsistent with the constitutionally prescribed system of representative and responsible government because it discriminates against or targets protesters involves more complex considerations, but should also be rejected. Logically, whatever the degree of discrimination, it cannot change a purpose which is ex hypothesi consistent with the constitutionally prescribed system of representative and responsible government into one that is not. Granted, it is conceivable in principle that a law which prevents certain kinds of conduct may be so focussed on protesters as to imply that the true purpose of the law is to prevent protest as opposed to preventing the proscribed conduct197. But, in point of fact, that is not this case. It was not disputed that the Protesters Act was enacted in fulfilment of an election promise in response to a problem of preventions, hindrances and obstructions of business activities which Parliament perceived to be caused, particularly and uniquely, by protest activities. And given the relevantly limited nature of that problem, it does not appear unreasonable, or therefore indicative of an ulterior purpose, for the Parliament to enact the limited solution which it 196 McClure (1999) 73 ALJR 1086 at 1090 [28]; 163 ALR 734 at 740-741; Mulholland (2004) 220 CLR 181 at 245-246 [182] per Gummow and Hayne JJ; Adelaide City Corporation (2013) 249 CLR 1 at 37 [54] per French CJ; Monis (2013) 249 CLR 92 at 206-207 [324] per Crennan, Kiefel and Bell JJ. See and compare Cox v Louisiana 379 US 536 at 553-556 (1965); Frisby v Schultz 487 US 474 at 484-485 (1988); Hill v Colorado 530 US 703 at 715-718 (2000); McCullen v Coakley 189 L Ed 2d 502 at 531-532 (2014). 197 See ACTV (1992) 177 CLR 106 at 143-144 per Mason CJ. Nettle did198. In such circumstances, Parliament may adopt laws to address the problems that confront it: the implied freedom of political communication does not require Parliament to regulate problems that do not exist199. The means adopted by the Protesters Act to achieve its purposes involves different considerations again. In Coleman v Power200, McHugh J appears to have regarded means as a relevant consideration in the identification of legitimacy of purpose. As the Solicitor-General of the Commonwealth contended, however, consideration of means is logically something that falls to be undertaken at the later stage of determining whether a law which appears to have been enacted for a purpose that is not incompatible with the constitutionally prescribed system of representative and responsible government is appropriate and adapted to the advancement of that purpose. So much is implicit in the terms of the second Lange question, as modified by Coleman201, of whether the law is reasonably appropriate and adapted to serving a legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of government. Consideration of legislative means is better understood through a process of analysis that is not binary202. Consequently, I agree with Kiefel CJ, Bell and Keane JJ that the stages of analysis proposed in McCloy should be restated in the terms that their Honours propose. (ii) Reasonably appropriate and adapted In McCloy, the plurality posited that the determination of whether a law which effectively burdens the implied freedom of political communication is reasonably appropriate and adapted to advancing a legitimate end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government may be assisted by the application of a three-part test of whether the law is suitable, necessary and adequate in its balance203. In form, the test so posited is analogous to the three 198 See Levy (1997) 189 CLR 579 at 614-615 per Toohey and Gummow JJ, 619-620 per Gaudron J, 627-628 per McHugh J. See also McCullen v Coakley 189 L Ed 2d 199 McCloy (2015) 257 CLR 178 at 251 [197] per Gageler J; Burson v Freeman 504 US 191 at 207 (1992). 200 (2004) 220 CLR 1 at 50 [92]. 201 (2004) 220 CLR 1 at 51-52 [95]-[97] per McHugh J. 202 Cf McCloy (2015) 257 CLR 178 at 212-213 [67]-[68] per French CJ, Kiefel, Bell 203 (2015) 257 CLR 178 at 194-195 [2] per French CJ, Kiefel, Bell and Keane JJ. Nettle steps of strict proportionality analysis applied in some European jurisdictions204. Importantly, however, as was stressed in McCloy205, the test which their Honours posited is not the same as European proportionality analysis: it borrows in part from its analytical techniques but, in place of its three steps, the McCloy test adopts three criteria pertinent to the Australian constitutional context as tools for assessing appropriateness and adaptedness. Following McCloy, in Murphy v Electoral Commissioner, French CJ and Bell J observed206 that the mode of analysis adopted in McCloy is not necessarily applicable to all cases. By way of example, their Honours cited Kiefel J's observation in Rowe v Electoral Commissioner207 that a test of reasonable necessity which focusses on alternative measures may not always be available or appropriate having regard to the nature and effect of the legislative measures in question. Murphy provides another example of where that may be so208. More generally, it may be observed that, although the question of whether a law is suitable will always arise, in cases where it is concluded that a law is not suitable the question of whether it is necessary will not arise. The fact that it is not suitable will dictate that it is not compatible with the maintenance of the constitutionally prescribed system of representative and responsible government. Equally, in those cases where it is appropriate to consider whether a law is necessary, and it is determined that the law is not necessary, there will be no point in going on to consider the question of whether it is adequate in its balance. In such cases, the absence of necessity will dictate that the law is not reasonably appropriate and adapted to advancing a legitimate end. Generally speaking, therefore, whether a law is appropriate and adapted is more likely to turn on the 204 See McCloy (2015) 257 CLR 178 at 217 [79] per French CJ, Kiefel, Bell and Keane JJ; Kirk, "Constitutional Guarantees, Characterisation and the Concept of Proportionality", (1997) 21 Melbourne University Law Review 1 at 4; Kiefel, "Proportionality: A rule of reason", (2012) 23 Public Law Review 85 at 87-88. 205 (2015) 257 CLR 178 at 195-196 [3]-[4], 200-201 [23], 215-216 [73]-[74] per French CJ, Kiefel, Bell and Keane JJ. See also Murphy v Electoral Commissioner (2016) 90 ALJR 1027 at 1038-1039 [37] per French CJ and Bell J; 334 ALR 369 at 381; [2016] HCA 36. 206 (2016) 90 ALJR 1027 at 1038-1039 [37] per French CJ and Bell J; 334 ALR 369 at 207 (2010) 243 CLR 1 at 136 [445]; [2010] HCA 46. 208 (2016) 90 ALJR 1027 at 1039 [39] per French CJ and Bell J, 1051 [109]-[110] per Gageler J, 1062 [202] per Keane J, 1072 [254] per Nettle J, 1079-1080 [297]-[303] per Gordon J; 334 ALR 369 at 382, 398, 413, 426-427, 436-437. Nettle question of its suitability or necessity than on whether it is adequate in its balance. That follows from recognition that the stages of analysis posited in McCloy are not constituent parts of the second question posed in Lange but rather are tools for the assessment of whether a law is reasonably appropriate and adapted to serving a legitimate end as required by Lange209. In this case, however, as will be explained, it is the question of whether the Protesters Act is adequate in its balance that is determinative. Suitability In the Australian constitutional context, a law may be regarded as suitable if it has a rational connection to the purpose of the law, and a law may be regarded as having a rational connection with such a purpose if the means for which it provides are capable of realising the purpose210. As Hayne J explained in Tajjour v New South Wales211, once it is seen that an impugned law is rationally connected to a legitimate end, and in that sense capable of achieving that end, it is neither possible nor appropriate to attempt further assessment of the efficacy of the impugned law. Evidently the Protesters Act does have a rational connection with the purpose of ensuring that protesters do not damage business premises or business-related objects, or prevent, impede or obstruct the carrying out of business activities on business premises. As such, the Protesters Act satisfies the test of suitability. (2) Necessity The test of what is necessary is not as clear cut as the test of suitability, for the reason that the Court has recognised that what is necessary is, to a large extent, within the exclusive purview of the Parliament212. More precisely, as 209 McCloy (2015) 257 CLR 178 at 195-196 [3]-[4], 201 [23], 217 [78] per French CJ, Kiefel, Bell and Keane JJ. 210 Unions NSW (2013) 252 CLR 530 at 557-558 [50]-[55], 561 [64] per French CJ, Hayne, Crennan, Kiefel and Bell JJ, 579 [140]-[141] per Keane J; McCloy (2015) 257 CLR 178 at 217 [80] per French CJ, Kiefel, Bell and Keane JJ. 211 (2014) 254 CLR 508 at 563 [82]. 212 Levy (1997) 189 CLR 579 at 598 per Brennan CJ; Coleman (2004) 220 CLR 1 at 52-53 [100] per McHugh J; Unions NSW (2013) 252 CLR 530 at 576 [129] per Keane J; Tajjour (2014) 254 CLR 508 at 550 [36] per French CJ; McCloy (2015) 257 CLR 178 at 217 [82] per French CJ, Kiefel, Bell and Keane JJ; Murphy (2016) 90 ALJR 1027 at 1039 [39] per French CJ and Bell J, 1051 [109]-[110] per Gageler J; 334 ALR 369 at 382, 398. Nettle French CJ explained in Maloney v The Queen213, the ascertainment of what is reasonably appropriate and adapted to the achievement of a legitimate end is not a prescription to engage in an assessment of the relative merits of competing legislative models. For the Court to engage in such a process would risk passing beyond the border of judicial power into the province of the legislature214. But it has been accepted that an impugned law should not be adjudged necessary if there exists such an obvious and compelling alternative of significantly lesser burden on the implied freedom of political communication as to imply that the impugned law was enacted for an ulterior purpose incompatible with the responsible constitutionally prescribed government215. representative system of and In this case, the plaintiffs contended that there are obvious and compelling alternatives capable of achieving the stated purpose of the Protesters Act with considerably less restrictive effect on the implied freedom of political communication. Counsel for the plaintiffs identified the provisions of the FMA to which reference has already been made as the most obvious example. Particular reliance was placed on: the prevention of conduct on a forest road or permanent timber production zone land contrary to directions of the Forest Manager expressed on a sign authorised under s 21; the capacity afforded to an authorised officer under s 22 to request a person not to enter permanent timber production zone land or a forest road, or to leave the land or road, or to cease to undertake an activity on the land or road, if the authorised officer is of the opinion that the presence or conduct of the person is preventing, has prevented or is about to prevent the Forest Manager from effectively or efficiently performing its functions; and the capacity of the Forest Manager to close forest roads under s 23 for the purposes of discharging its responsibilities. Counsel for the plaintiffs also identified as an alternative the provisions of the Police Offences Act 1935 (Tas), in particular s 15B, which permits a police officer to direct a person to leave a public place for not less than four hours where the police officer is of the reasonable belief that the person has committed 213 (2013) 252 CLR 168 at 183-185 [19]-[21]; [2013] HCA 28. 214 Murphy (2016) 90 ALJR 1027 at 1039 [39] per French CJ and Bell J; 334 ALR 369 215 Cunliffe (1994) 182 CLR 272 at 388 per Gaudron J. See and compare Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 253-254 per Fullagar J; [1951] HCA 5; The Commonwealth v Tasmania (1983) 158 CLR 1 at 260-261 per Deane J; [1983] HCA 21; Gerhardy v Brown (1985) 159 CLR 70 at 148-149 per Deane J; [1985] HCA 11; Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 472-473 per Mason CJ, Brennan, Deane, Dawson and Toohey JJ; [1990] HCA 1. Nettle or is likely to commit an offence (including an offence of unlawful entry on land under s 14B), is obstructing or likely to obstruct the movement of pedestrians or vehicles, is endangering or likely to endanger the safety of any other person, or has committed or is likely to commit a breach of the peace. Counsel further submitted that other alternatives were to be found in legislation enacted or proposed to be enacted in a similar context in Western Australia and New South Wales216. In Western Australia, it is proposed to amend the Criminal Code (WA) to provide that a person must not, with the intention of preventing a lawful activity that is being or is about to be carried on by another person, physically prevent that activity217. In New South Wales, the Inclosed Lands Protection Act 1901 (NSW) has been amended to make it an offence for a person to enter or remain on inclosed lands without consent, or to interfere with or attempt or intend to interfere with the conduct of a business or undertaking conducted on those lands, or to do anything that gives rise to a serious risk to the safety of the person or any other person on those lands218. Arguably, there is some force in the plaintiffs' contention that the provisions of the FMA offer a credible legislative model for the achievement of the stated purpose of the Protesters Act in its application to forestry land and related business access areas with significantly less impact on the implied freedom of political communication. But it is to be remembered that the test of necessity is not a prescription to engage in a review of the relative merits of competing legislative models. To a large extent, determination of what is necessary for the achievement of a legislative purpose must be left to the Parliament, albeit that, in the ultimate analysis, it is for the court to determine whether the constitutional guarantee has been infringed219. And in this case, although it may be that the FMA offers a means of protecting forest operations from disruptions, it cannot be said that the legislative imperative of protecting business activities, including forest operations, from disruptions caused by protesters in particular is in the nature of an "imagined necessity"220, or otherwise 216 Criminal Code Amendment (Prevention of Lawful Activity) Bill 2015 (WA); Inclosed Lands, Crimes and Law Enforcement Legislation Amendment (Interference) Act 2016 (NSW). 217 Criminal Code Amendment (Prevention of Lawful Activity) Bill, cl 4. 218 Inclosed Lands Protection Act, ss 4, 4B. 219 ACTV (1992) 177 CLR 106 at 144 per Mason CJ; McCloy (2015) 257 CLR 178 at 219-220 [89] per French CJ, Kiefel, Bell and Keane JJ. 220 ACTV (1992) 177 CLR 106 at 145 per Mason CJ. Nettle that the Protesters Act falls beyond the "domain of selections" that is to be left to the legislature221. A fortiori in the case of the New South Wales and proposed Western Australian legislation, and the Police Offences Act. Although the common theme of the former legislative regimes is to apply to persons who act to prevent, hinder or obstruct an activity, neither focusses on protest activity as such or seeks to go as far in the attempt to prevent it in respect of business activity. The definition of the land to which the New South Wales legislation applies is more restricted than the scope of the Protesters Act222. The proposed Western Australian legislation is directed towards interference with any lawful activity and so does not deal with business premises or business-related objects. Similarly, although police powers for the dispersal of persons under s 15B of the Police Offences Act apply to public places as defined in s 3(1) of that Act, the offence of unlawful entry on land under s 14B would not apply to a large part of forestry land. By comparison, the definition of business premises under the Protesters Act is broad and expressly includes forestry land. The plaintiffs submitted that the burden was on Tasmania to persuade the Court that there are no alternative means of lesser effect upon the implied freedom of political communication that would be as effective in meeting the purposes of the Protesters Act. Presumably, that contention was based upon comparable United States First Amendment jurisprudence223. But the submission should be rejected. There is nothing in principle or authority under our system of law to commend the view that a plaintiff should be relieved of the burden of persuasion as to an essential element of his or her cause of action. To the extent that there is a presumption of constitutionality224, it would be illogical to require a defendant to negative an assertion of unconstitutionality. Forensically speaking, 221 McCloy (2015) 257 CLR 178 at 217 [82] per French CJ, Kiefel, Bell and Keane JJ. 222 Inclosed Lands Protection Act, s 3(1) definitions of "Inclosed lands" and "prescribed premises". 223 See Organization for a Better Austin v Keefe 402 US 415 at 419-420 (1971); United States v Playboy Entertainment Group Inc 529 US 803 at 816-817 (2000); Ashcroft v American Civil Liberties Union 542 US 656 at 668-669 (2004). 224 See Attorney-General (WA) v Australian National Airlines Commission (1976) 138 CLR 492 at 528 per Murphy J; [1976] HCA 66; Queensland v The Commonwealth (1977) 139 CLR 585 at 610-612 per Murphy J; [1977] HCA 60; Gazzo v Comptroller of Stamps (Vict) (1981) 149 CLR 227 at 252-254 per Murphy J; [1981] HCA 73; The Commonwealth v Tasmania (1983) 158 CLR 1 at 167 per Murphy J. See Stellios, Zines's The High Court and the Constitution, 6th ed (2015) Nettle it would also be undesirable. To require a defendant to a proceeding of this kind to negative all possibility of an alternative measure of at least equal efficacy, but conceivably lesser restrictive effect upon the implied freedom of political communication, would necessitate detailed consideration of multiple possible alternatives with close examination of the properties of each of them, evidence as to the possible effects of at least some of them, and, ultimately, an assessment of the relative merits of the competing legislative models. That would add considerably to the length of proceedings and yet would be unlikely to add to the certainty of result225. It would require a defendant to advance, and the court to adjudicate, arguments as to contestable issues of policy226. And it must be kept in mind, too, that Parliament may act prophylactically or in response to inferred legislative imperatives227. In such circumstances it would be unrealistic and inappropriate to view a lack of direct evidence as to the legislative imperative as decisive. In the result, it should be concluded that it is not demonstrated that there are such obvious and compelling alternatives of significantly less restrictive effect as to signify that the Protesters Act was enacted for an ulterior purpose incompatible with the constitutionally prescribed system of representative and responsible government. And, contrary to the plaintiffs' submissions, that conclusion is in effect reinforced, not diminished, by the fact that the operative provisions of the Protesters Act are tied to protest activities having been or being considered likely to have a detrimental effect on business activities. Those provisions cannot be said to be unnecessary in achieving a legislative purpose of preventing protests productive of detrimental effects on business activities. "Adequate in its balance" The idea of a law being adequate in its balance in the Australian constitutional context is not yet fully resolved. It is to be observed, however, that, in contradistinction to the European conception  which asks where, in effect, the balance should lie  in the Australian constitutional context the description "adequate in its balance" is better understood as an outer limit beyond which implied freedom of political communication presents as manifestly excessive by comparison to the demands the burden on the extent of the 225 Cf McCloy (2015) 257 CLR 178 at 200-201 [23], 215-216 [74] per French CJ, Kiefel, Bell and Keane JJ. 226 Mulholland (2004) 220 CLR 181 at 197 [32]-[33] per Gleeson CJ; Monis (2013) 249 CLR 92 at 151 [138] per Hayne J. 227 McCloy (2015) 257 CLR 178 at 261-262 [233] per Nettle J. Nettle of legitimate purpose228. More precisely, and more consistently with the approach that has been taken to the application of express constitutional guarantees, such as s 92 of the Constitution, an impugned law that otherwise presents as suitable and necessary for the achievement of a legitimate purpose compatible with the constitutionally prescribed system of government should not be regarded as inadequate in its balance unless it so burdens the implied freedom of political communication as to present as "grossly disproportionate"229 to, or as otherwise going "far beyond"230, what can reasonably be conceived of as justified in the pursuit of the legitimate purpose. Thus, for the purposes of this case, the question may be posed in terms of whether, despite the apparent legitimacy of the purpose of the Protesters Act, and despite its suitability and necessity in the sense that has been explained, the Protesters Act so restricts protest activities on forestry land and related business access areas, and thereby so burdens the implied freedom of political communication, as to present as a manifestly excessive response to, as grossly disproportionate to, or as otherwise going far beyond, the legislative purpose of those restrictive measures. For the reasons earlier set out, it does not appear that the restrictions imposed on protest activities by s 6(1), (2) and (3) of the Protesters Act, taken alone, are significantly greater than the restrictions imposed on protest activities by the FMA, and it is not suggested that the provisions of the FMA are invalid. But, as has been seen, when the restrictions imposed by s 6(1), (2) and (3) are combined with the effects of ss 11(1) and (2), 8(1)(b) and 11(6), (7) and (8), the result is a range of restrictions that go far beyond the restrictions imposed by the FMA. Consequently, although the Protesters Act does not target communication on the basis of its content231 and, strictly speaking, regulates only the location of 228 McCloy (2015) 257 CLR 178 at 219-220 [89]-[92] per French CJ, Kiefel, Bell and Keane JJ; Kiefel, "Section 92: Markets, Protectionism and Proportionality  Australian and European Perspectives", (2010) 36(2) Monash University Law Review 1 at 12. 229 Davis v The Commonwealth (1988) 166 CLR 79 at 99-100 per Mason CJ, Deane and Gaudron JJ (Wilson and Dawson JJ agreeing at 101); [1988] HCA 63. 230 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 78 per Deane and Toohey JJ, 101-102 per McHugh J; [1992] HCA 46; Cunliffe (1994) 182 CLR 272 at 324 per Brennan J, 340 per Deane J. 231 See ACTV (1992) 177 CLR 106 at 143 per Mason CJ, 234-235 per McHugh J; Nationwide News (1992) 177 CLR 1 at 76-77 per Deane and Toohey JJ; Cunliffe (1994) 182 CLR 272 at 299 per Mason CJ. Nettle the relevant communication232, the burden so imposed upon the implied freedom is substantial. The level of justification must rise to meet the extent of that burden233. To require a protester who, ex hypothesi, may not have committed any offence to stay off designated land for four days234 for no better reason than that a police officer has formed a reasonable, but plausibly mistaken, belief that the protester is contravening, is about to contravene or did at some time in the past contravene s 6(1), (2) or (3), is on any reasonable view of the matter a very broad-ranging and far-reaching means of achieving the stated purposes of the Protesters Act. Still more so is it to provide that such a direction may be given to a "group of persons" under s 11(7), especially if it is considered that the direction may be given on no more substantial basis than the police officer's reasonable belief that only one or some of the group are contravening, are about to contravene or have at some time in the past contravened s 6(1), (2) or (3). And then to add a requirement that the protester, or group of protesters, do not for the next three months contravene s 6(1), (2) or (3) or commit an offence against the Protesters Act, in circumstances where an offence might comprise no more than failing to comply with the direction235 that, again, might have been given on no more substantial basis than a police officer forming a reasonable, but conceivably false, belief as to the effect of the protester's past, present or future conduct on the forestry land or related business access area, is on any view of the matter a far-reaching means of attempting to achieve the stated purposes of the Protesters Act. As was earlier explained, in order to determine whether a law is reasonably appropriate and adapted to the achievement of a legitimate purpose, the court must look to both the purpose of the law and the means adopted to achieve the purpose236. And where the means adopted is a power which turns upon the exercise of a discretion which is, in its terms, broad-ranging, it is the more likely that it will disproportionately burden the implied freedom even 232 See, for example, Levy (1997) 189 CLR 579 at 614 per Toohey and Gummow JJ, 617-619 per Gaudron J, 648 per Kirby J; Adelaide City Corporation (2013) 249 CLR 1 at 64 [141] per Hayne J, 89 [219] per Crennan and Kiefel JJ. 233 McCloy (2015) 257 CLR 178 at 238-239 [150]-[152] per Gageler J, 259 [222], 267-270 [251]-[255] per Nettle J. See generally Monis (2013) 249 CLR 92 at 146-147 [124] per Hayne J. 234 Workplaces (Protection from Protesters) Act, s 8(1)(b). 235 Workplaces (Protection from Protesters) Act, s 8(1)(a). 236 McCloy (2015) 257 CLR 178 at 219 [87] per French CJ, Kiefel, Bell and Keane JJ. Nettle is granted237. though it might be said, or hoped, that the "actual application may be limited by the sensible exercise" of the discretion by the person or official to whom the in Cunliffe v The discretion Commonwealth238, where the validity of a law is attacked because it confers a discretion to refuse a licence to a person who may wish to exercise a freedom guaranteed by the Constitution, then, unless it can be said that the discretion is so confined by express terms or by the purpose for which it is conferred that it cannot be exercised to impair the freedom to which the applicant is entitled, and can only be exercised in aid of a constitutionally permissible purpose, it will be recognised that the discretionary power is inimical to the validity of the law that confers it. The jurisprudence governing comparable infractions of the United States First Amendment is not dissimilar239. In this case, because the breadth of the terms of the Protesters Act provides little by way of a clear standard to guide the exercise of the relevant powers, and is likely to frustrate reliance on judicial review in respect of that exercise, ss 11(1) and (2), 8(1)(b) and 11(6), (7) and (8), coupled with s 6(1), (2) and (3), place the freedom lawfully to protest on forestry land or related business access areas at the mercy of police officers' attempts to apply the Protesters Act and thereby risk the free exchange of communication on the undoubtedly political issue of the environment. As the plurality reasoned in McCloy, whether such a risk is "undue" is to be assessed by weighing the consequent effect upon the implied freedom of political communication against the apparent public importance of the purpose sought to be achieved by the provisions240. Insofar as existing legislation, including the FMA, and existing common law causes of action, empower the Forest Manager to protect forest operations from most disruptions caused by protesters, the importance of the Protesters Act is considerably lessened. When that lessened level of importance is weighed in the balance against the extent of 237 Tajjour (2014) 254 CLR 508 at 553 [44] per French CJ. 238 (1994) 182 CLR 272 at 331. See also at 302-303 per Mason CJ; Adelaide City Corporation (2013) 249 CLR 1 at 87-88 [213]-[216] per Crennan and Kiefel JJ (Bell J agreeing at 90 [224]). 239 See Edwards v South Carolina 372 US 229 at 236-237 (1963); Adderley v Florida 385 US 39 at 41-43, 54-56 (1966); Forsyth County v Nationalist Movement 505 US 123 at 131-133 (1992); Thomas v Chicago Park District 534 US 316 at 323-325 (2002); Seattle Coalition to Stop Police Brutality v City of Seattle 550 F 3d 788 at 240 (2015) 257 CLR 178 at 218-219 [86]-[87] per French CJ, Kiefel, Bell and Nettle the burden so identified, it is apparent that ss 11(1) and (2), 8(1)(b) and 11(6), (7) and (8) are grossly disproportionate to the achievement of the stated purpose of the legislation. Upon those bases, it should be held that ss 11(1) and (2), 8(1)(b) and 11(6), (7) and (8) are not appropriate and adapted to the legitimate purpose of ensuring that protesters do not prevent, hinder or obstruct the carrying out of forest operations or access to forestry land, or damage forestry land or business- related objects. Severance Were it possible to sever ss 11(1) and (2), 8(1)(b) and 11(6), (7) and (8), it would be appropriate to do so. As has been observed, standing by themselves, s 6(1), (2) and (3) do not greatly increase existing restrictions on protest activities against forest operations and for that reason they do not engage the constitutional protection of the implied freedom. But the difficulty with severing s 11(1), (2), (6), (7) and (8) is that, because of the way in which the Protesters Act is drafted, s 11(1), (2), (6), (7) and (8) are so interlinked with s 6(1), (2) and (3) that neither the former nor the latter make sense without the other. In particular, although s 6(1), (2) and (3) prohibit certain kinds of conduct, and those provisions are not objectionable in themselves, the only consequences of contravention of s 6(1), (2) or (3) are provided through s 11. Further, while requirements to leave forestry land or a related business access area under s 11(1) and (2) are not necessarily objectionable in themselves, and nor is the stipulation in s 8(1)(a) that a person must not remain on a business access area after being directed to leave, practically speaking none of those provisions has any further meaningful operation apart from the requirement to stay away for four days which is provided for in s 8(1)(b), and which, for the reasons previously stated, is objectionable in itself. In the result, it appears that the provisions are so interconnected that Parliament intended them to operate as a whole and in no other fashion. It is, therefore, not open to conclude that the Parliament would have adopted s 6(1), (2) or (3) in the absence of ss 8(1)(b) and 11(1), (2), (6), (7) and (8), and thus all must fail241. Finally, it is to be observed that Tasmania submitted in oral argument that, if the Court were of the view that the Protesters Act impermissibly burdened the implied freedom, the Court should seek to remove the Act's operation in respect of forestry land and forest operations by severing references to forests in ss 3 241 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Whybrow & Co (1910) 11 CLR 1 at 26-27 per Griffith CJ, 35 per Barton J, 54-55 per Isaacs J; [1910] HCA 33; Owners of SS Kalibia v Wilson (1910) 11 CLR 689 at 698-699 per Griffith CJ, 701-702 per Barton J, 709 per O'Connor J, 713 per Isaacs J; [1910] HCA 77; Strickland v Rocla Concrete Pipes Pty Ltd (1971) 124 CLR 468 at 493 per Barwick CJ; [1971] HCA 40. Nettle and 5. That submission must be rejected. As Gageler J observed in Tajjour, the Court cannot make a new law from the constitutionally unobjectionable parts of the old242. Conclusion For these reasons, I am content to agree with the answers proposed by Kiefel CJ, Bell and Keane JJ to the questions stated in the Special Case. 242 (2014) 254 CLR 508 at 586 [170]. Introduction (Protection The Workplaces (Tas) ("the Protesters Act") is "[a]n Act to ensure that protesters do not damage business premises or business-related objects, or prevent, impede or obstruct the carrying out of business activities on business premises, and for related purposes"243. from Protesters) Act 2014 Various provisions of the Protesters Act prohibit persons from engaging in certain conduct on business premises, or on a business access area in relation to business premises, that is conduct in furtherance of, or for the purposes of promoting awareness of or support for, an opinion, or belief, in respect of a political, environmental, social, cultural or economic issue244. Broadly stated, the prohibitions apply where the conduct prevents, hinders or obstructs business activity or access to business areas, and where the conduct damages (or involves a threat to damage) business premises or a business-related object. "[B]usiness premises"245 includes "forestry land"246 – relevantly, land on which "forest operations"247 are being carried out. A "business access area", in relation to business premises, relevantly means "so much of an area of land[248] … that is outside the business premises, as is reasonably necessary to enable access to an entrance to, or to an exit from, the business premises"249. The plaintiffs, Dr Robert Brown and Ms Jessica Hoyt, were each arrested and charged with offences under the Protesters Act in relation to their conduct in 243 Long title of the Protesters Act. 244 See s 4(2) of the Protesters Act. 245 See par (b) of the definition of "business premises" in s 5(1) of the Protesters Act. 246 See par (a) of the definition of "forestry land" in s 3 of the Protesters Act. 247 See par (c) of the definition of "forest operations" in s 3 of the Protesters Act: "work comprised of, or connected with … harvesting, extracting or quarrying forest products" including "any related land clearing, land preparation, burning-off or access construction". See also the definition of "forest operations" in s 3 of the Forest Management Act 2013 (Tas). 248 Including but not limited to any road, footpath or public place: see par (a) of the definition of "business access area" in s 3 of the Protesters Act. 249 par (a) of the definition of "business access area" in s 3 of the Protesters Act. opposing the logging of part of a coupe in the Lapoinya Forest in North West Tasmania. While forest operations were being conducted, neither plaintiff was permitted or authorised to re-enter the coupe or the Lapoinya Forest. And it was not in dispute that, but for the Protesters Act, and to the extent permitted by other laws, the plaintiffs would go back to the Lapoinya Forest to see, and raise public awareness of, logging in that forest. The plaintiffs challenge the validity of ss 6, 7, 8, 11 and 13(3) and Pt 4 of the Protesters Act on the basis that those provisions are beyond the legislative power of the State of Tasmania because they impermissibly infringe the implied freedom of political communication, contrary the Commonwealth Constitution. Validity In its operation in relation to forestry land250, each impugned provision, other than s 8(1)(b) of the Protesters Act, burdens the implied freedom and is valid. With the exception of s 8(1)(b), each impugned provision is directed to serve a legitimate end (to protect the productivity, property and personnel of forest operations), and the means adopted to achieve that end (penalising conduct that would prevent, hinder or obstruct the carrying out of a business activity or access to business premises, or cause damage to business premises, and that would, so far as revealed in argument in this case, otherwise be unlawful) are not incompatible with the maintenance of the constitutionally prescribed system of representative and responsible government. Six basic propositions First, apart from s 8(1)(b), none of the impugned provisions makes unlawful what would otherwise be lawful. That is, the impugned provisions create and enforce rules of conduct that overlap with existing laws that prohibit the same conduct. To that extent, there is little or no change in what people may impugned provisions prohibit particular methods of political communication: methods that, these reasons will show, are for all practical purposes otherwise unlawful. To hold the impugned provisions invalid would be to ignore the wider legal context in which the impugned provisions have their legal effect and practical operation. The Second, identifying that the impugned provisions are directed at protesters251 or that what was otherwise unlawful has been made the subject of 250 That is, in its operation in respect of forestry land and/or business access areas in relation to forestry land. 251 As defined in s 4 of the Protesters Act. criminal sanction or increased penalties presents the question about the limitations that the implied freedom imposes on legislative power – it does not provide the answer. The impugned provisions are directed, and apply, to unlawful forms of protest – protest by methods that are contrary to otherwise generally applicable laws. Third, it is no answer to these observations to say that the impugned provisions are complicated or drafted in a way that may initially leave a person unsure of their effect. A fundamental assumption of the Australian legal system is that statutes have a definite legal meaning. Australia knows no doctrine of statutory uncertainty. Fourth, the critical starting point is the legal effect and practical operation of the impugned provisions. That inquiry involves questions of statutory construction. The "deterrent effect" of the provisions, if relevant at all, is to be measured only by reference to the legal effect252 and practical operation of those provisions, not by reference to whether persons may choose through caution or ignorance to give the provisions an effect or operation wider than they permit, or by reference to an anticipation of some unlawful exercise of the powers conferred by those provisions. That is, the relevant practical operation of the provisions is the practical operation they have when applied according to their proper construction, not some operation hypothesised on there being some misapplication or misconstruction of the provisions or any one of them. Fifth, the purpose and the legal effect and practical operation of the impugned provisions of the Protesters Act can properly be determined only by detailed reference to the impugned provisions. Further, as will later be explained, the intersection between the impugned provisions and the wider legal context in which the impugned provisions have their legal effect and practical operation can only be assessed after a detailed consideration of both the provisions and the context. Sixth, to observe that there have been past political protests on Crown land in Tasmania serves only to identify the kind of conduct to which the impugned provisions (and much of the wider legal context) are directed. It cannot be assumed, without positive demonstration, that these protests were lawful. And if they were not lawful, the fact that they took place does not give rise to something resembling a right, acquired by prescription, to protest unlawfully. 252 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 384 [78]; [1998] HCA 28. Exception There is one exception to the conclusion that the impugned provisions are valid in their operation in relation to forestry land: s 8(1)(b), which provides for a blanket four day exclusion from a business access area, regardless of whether the person might engage in conduct of a particular kind in that area. It impermissibly burdens the implied freedom of political communication, contrary to the Constitution. It goes beyond penalising what was unlawful before the enactment of the relevant provisions. And the resulting burden on political communication goes beyond what is reasonably appropriate and adapted to serve the legitimate object of the Protesters Act. Structure of reasons These reasons are structured as follows: the implied freedom of political communication; the Protesters Act, including its legal effect and practical operation; the wider legal framework in which the Protesters Act, in its operation in relation to forestry land, sits and operates; the constitutional validity of the impugned provisions; and (5) whether McCloy v New South Wales253 should be reopened. The facts are set out in the reasons of Kiefel CJ, Bell and Keane JJ. I gratefully adopt that summary. Implied freedom of political communication incident of Freedom of communication on matters of government and politics is an indispensable the system of representative and responsible government which the Constitution creates and requires254. The freedom is implied because ss 7, 24 and 128 of the Constitution (with Ch II, including ss 62 and 64) create a system of representative and responsible government255. It is an 253 (2015) 257 CLR 178; [2015] HCA 34. 254 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 138; [1992] HCA 45; Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 559; [1997] HCA 25; Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539 at 555-556 [44]; [2010] HCA 42. 255 See Lange (1997) 189 CLR 520 at 557-562. indispensable incident of that system because that system requires that electors be able to exercise a free and informed choice when choosing their representatives, and, for them to be able to do so, there must be a free flow of political communication within the federation256. For that choice to be exercised effectively, the free flow of political communication must be between electors and representatives and "between all persons, groups and other bodies in the community"257. The implied freedom operates as a constraint on legislative and executive power258. It is a freedom from government action, not a grant of individual rights259. The freedom that the Constitution protects is not absolute260. The limit on legislative and executive power is not absolute261. The implied freedom does not protect all forms of political communication at all times and in all circumstances. And the freedom is not freedom from all regulation or restraint. Because the freedom exists only as an incident of the system of representative and responsible government provided for by the Constitution, the freedom limits legislative and executive power only to the extent necessary for the effective operation of that system262. 256 Unions NSW v New South Wales (2013) 252 CLR 530 at 551 [27], 571 [104]; [2013] HCA 58. 257 ACTV (1992) 177 CLR 106 at 139. See also Unions NSW (2013) 252 CLR 530 at 551-552 [28]-[30]; Tajjour v New South Wales (2014) 254 CLR 508 at 577 [140]-[141]; [2014] HCA 35. 258 Lange (1997) 189 CLR 520 at 560; Hogan v Hinch (2011) 243 CLR 506 at 554 [92]; [2011] HCA 4; Unions NSW (2013) 252 CLR 530 at 554 [36]; Tajjour (2014) 254 CLR 508 at 558 [59], 577 [140]. 259 See, eg, Lange (1997) 189 CLR 520 at 561, 567; Unions NSW (2013) 252 CLR 530 at 551 [30], 554 [36]; McCloy (2015) 257 CLR 178 at 202-203 [30], 228-229 260 Lange (1997) 189 CLR 520 at 561. 261 Tajjour (2014) 254 CLR 508 at 558 [59]. 262 Tajjour (2014) 254 CLR 508 at 577 [140]-[141]. Further, law263. The common law, as an organic, developing body of substantive law, must be consistent with, and develop consistently with, the Constitution264. freedom operates on the common implied the In determining whether a law impermissibly burdens the implied freedom, two questions must be answered265. First question The first question asks: does the law effectively burden the freedom of communication about government or political matters either in its terms, operation or effect? Answering that question necessarily involves construing the law266. That task is not a matter of evidence. It is a qualitative, not a quantitative, inquiry267. And because of the integration of social, economic and political matters across federal, State and local politics, the freedom of political communication may be burdened by a State law268. Second question The second question asks: if the law effectively burdens the freedom, is the law reasonably appropriate and adapted to serve a legitimate end in a 263 Lange (1997) 189 CLR 520 at 568; Coleman v Power (2004) 220 CLR 1 at 50 [93], 77 [195]; [2004] HCA 39. 264 See Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 485-488; [1995] HCA 47; Lange (1997) 189 CLR 520 at 566, 568-569; Coleman (2004) 220 CLR 1 at 50 [93], 77 [195], 79 [199]. 265 Lange (1997) 189 CLR 520 at 561, 567 as modified by Coleman (2004) 220 CLR 1 at 50 [93], 51 [95]-[96]. See also Unions NSW (2013) 252 CLR 530 at 553 [35], 266 See, eg, Coleman (2004) 220 CLR 1 at 21 [3], 68 [158], 80-81 [207]; Monis v The Queen (2013) 249 CLR 92 at 154 [147]; [2013] HCA 4. 267 Monis (2013) 249 CLR 92 at 145-146 [118]-[122], 160-161 [173]; Unions NSW (2013) 252 CLR 530 at 555 [40]; Tajjour (2014) 254 CLR 508 at 578 [145]. 268 See Lange (1997) 189 CLR 520 at 571-572; Unions NSW (2013) 252 CLR 530 at manner which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government269? There are two conditions that must be satisfied before the second question can be answered affirmatively270. Legitimate end The first condition is that there be an identifiable "legitimate end"271. The identification of a legitimate end is necessary to explain why the burden is imposed272. The "end" is the object or purpose of the law273. That object or purpose must be "legitimate"274. To be legitimate, the end "must itself be compatible with the system of representative and responsible government established by the Constitution"275. But that does not mean that the end must itself be the maintenance or enhancement of that system276. Laws may, and often do, pursue objects unrelated to the system of representative and responsible government277. It is therefore unnecessary, 269 See Wotton v Queensland (2012) 246 CLR 1 at 15 [25]; [2012] HCA 2; Monis (2013) 249 CLR 92 at 129 [61]; Unions NSW (2013) 252 CLR 530 at 270 Lange (1997) 189 CLR 520 at 561-562; Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 61-62 [131]; [2013] HCA 3; McCloy (2015) 257 CLR 178 at 231-232 [129]-[131], 284 [320], 285 [327]; see also at 212-213 271 Unions NSW (2013) 252 CLR 530 at 556 [44]. 272 McCloy (2015) 257 CLR 178 at 231 [130]. 273 See McCloy (2015) 257 CLR 178 at 231 [130], 284 [320]. 274 Monis (2013) 249 CLR 92 at 148 [126]. 275 McCloy (2015) 257 CLR 178 at 231 [130]. See also Coleman (2004) 220 CLR 1 at 276 Monis (2013) 249 CLR 92 at 148 [128]. 277 See, eg, Levy v Victoria (1997) 189 CLR 579 at 627; [1997] HCA 31; APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 351 [29]; [2005] HCA 44; Hogan (2011) 243 CLR 506 at 544 [50], 556 [98]; Wotton (2012) 246 (Footnote continues on next page) and often unhelpful, to identify a relationship between the object of the law and the maintenance of the system of representative and responsible government established by the Constitution. The question is whether the object of the law (whatever it is ascertained to be), and the means of achieving that object, are not incompatible with the maintenance of the system of representative and responsible government established by the Constitution. Identifying the object or purpose of the law is similar to identifying the "mischief" that the law is designed to address278. The object or purpose will be disclosed by the text, the context and, if relevant, the history of the law279. Care must be taken not to identify the object or purpose of the law too narrowly. To do so would have flow-on consequences for "the scope, utility and transparency" of the subsequent reasonably appropriate and adapted analysis, such that the reasoning process that might otherwise be undertaken at that later stage "is disguised in conclusions about statutory purposes"280. The two steps would "collapse into one"281. In other words, it is important to separate the means adopted by a law from the end that it is designed to pursue. As Gageler J explained in Tajjour v New South Wales282: "Means which come at too great a cost to the system of representative and the Constitution must be responsible government established by abandoned or refined. Means which are overbroad may need to be narrowed. This consequence of the implied freedom cannot be avoided by an analysis which seeks to circumvent its application by characterising means adopted by the law which burden communication on governmental or political matter as the end the law pursues." In assessing this first condition, it is also relevant to determine whether the legal operation of the law is rationally connected to the end that it purportedly CLR 1 at 16 [31]-[32]; Adelaide City Corporation (2013) 249 CLR 1 at 90 [221]; Monis (2013) 249 CLR 92 at 215 [349]; Tajjour (2014) 254 CLR 508 at 571 278 McCloy (2015) 257 CLR 178 at 232 [132] quoting APLA (2005) 224 CLR 322 at 279 McCloy (2015) 257 CLR 178 at 284 [320]; see also at 212-213 [67], 232 [132]; Unions NSW (2013) 252 CLR 530 at 557 [50]. 280 Stellios, Zines's The High Court and the Constitution, 6th ed (2015) at 592-593. 281 cf Monis (2013) 249 CLR 92 at 134 [74]. 282 (2014) 254 CLR 508 at 584 [163]. serves283. If that connection is lacking, then the law will be invalid284. If the law is not rationally connected to the identified legitimate end, then the burden imposed by the law will be inexplicable285. Reasonably appropriate and adapted The second condition is that the law be reasonably appropriate and adapted to serve the identified legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government286. If this condition is not satisfied, then the burden imposed by the law will not be justified287. In addressing this condition, the nature and the extent of the burden are relevant. Those considerations are relevant because they directly affect whether the law is reasonably appropriate and adapted to serve the identified end. Where, as here, the conduct that is burdened is otherwise not lawful conduct, then the required justification is less and the operation of the law is more readily justified. The Protesters Act As has already been said, it is necessary to give a detailed description of, and to construe288, the relevant provisions of the Protesters Act. They are complicated both in their terms and in the way in which each provision operates in relation to other relevant legislation. Key concepts and definitions As seen earlier, the long title of the Protesters Act is: "An Act to ensure that protesters do not damage business premises or business-related objects, or prevent, impede or obstruct the carrying out of business activities on business premises, and for related purposes" (emphasis added). 283 McCloy (2015) 257 CLR 178 at 284 [320]. 284 See, eg, Unions NSW (2013) 252 CLR 530 at 557-561 [50]-[65]. 285 See McCloy (2015) 257 CLR 178 at 232 [132]. 286 McCloy (2015) 257 CLR 178 at 231-232 [131], 285 [327]. 287 McCloy (2015) 257 CLR 178 at 231-232 [131]. 288 Coleman (2004) 220 CLR 1 at 21 [3], 68 [158]; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 553 [11]; [2008] HCA 4. Section 4(1) provides that, for the purposes of the Protesters Act, "a person is a protester if the person is engaging in a protest activity". Section 4(2) identifies what is "a protest activity" by providing that: "For the purposes of this Act, a protest activity is an activity that – takes place on business premises or a business access area in relation to business premises; and in furtherance of; or for the purposes of promoting awareness of or support for – an opinion, or belief, in respect of a political, environmental, social, cultural or economic issue." (emphasis added) The balance of s 4 sets out circumstances in which a person is engaging in a protest activity289 or is not to be taken to be engaging in a protest activity290. The concept of "business premises"291 lies at the heart of the applicability and operation of the Protesters Act. Relevantly, it includes premises that are "forestry land"292, being an area of land on which "forest operations" are being carried out293. "[F]orest operations" relevantly means "work comprised of, or connected with … harvesting, extracting or quarrying forest products"294, including "any related land clearing, land preparation, burning-off or access construction"295. But business premises are not limited to, or by reference to, 289 s 4(3) and (4) of the Protesters Act. 290 s 4(5)-(8) of the Protesters Act. 291 s 5 of the Protesters Act. 292 s 5(1)(b) of the Protesters Act. 293 par (a) of the definition of "forestry land" in s 3 of the Protesters Act. 294 "[F]orest products" is defined to mean, among other things, a product of dead trees on or from forestry land: par (b) of the definition of "forest products" in s 3 of the Protesters Act. 295 See the definition of "forest operations" in s 3 of the Protesters Act. See also the definition of "forest operations" in s 3 of the Forest Management Act. specific industries; for example, "premises used as a shop, market or warehouse" are also business premises296. Another important and related concept is "business access area". A business access area, in relation to business premises, relevantly means "so much of an area of land[297] … that is outside the business premises, as is reasonably necessary to enable access to an entrance to, or to an exit from, the business premises"298. "[B]usiness activity" is defined to include a lawful activity carried out by a Government Business Enterprise299, including Forestry Tasmania300. Where the "business premises" comprise, as they did here, Crown land that is permanent timber production zone land within the meaning of the Forest Management Act 2013 (Tas), the Forestry corporation (namely, Forestry Tasmania) is defined as "owner"301. Here, in relation to those business premises, Forestry Tasmania is also a "business operator" on two separate bases: first, because it is "an owner, … or lawful occupier, of the premises"302; and second, because it is "a government entity[303] the that has management or control of 296 s 5(1)(e) of the Protesters Act. It will not be necessary to consider the operation of the Protesters Act other than in relation to forestry land: see [394] below. 297 Including but not limited to any road, footpath or public place: see par (a) of the definition of "business access area" in s 3 of the Protesters Act. 298 par (a) of the definition of "business access area" in s 3 of the Protesters Act. 299 par (b) of the definition of "business activity" in s 3 of the Protesters Act. "Government Business Enterprise" in the Protesters Act has the same meaning as in the Government Business Enterprises Act 1995 (Tas): see s 3 of the Protesters Act. 300 See Pt 1 of Sched 1 to the Government Business Enterprises Act; s 6 of the Forest Management Act. 301 par (a) of the definition of "owner" in s 3 of the Protesters Act. 302 par (a) of the definition of "business operator" in s 3 of the Protesters Act. 303 "[G]overnment entity" includes a statutory authority: s 3 of the Protesters Act. "[S]tatutory authority" relevantly includes an incorporated or unincorporated body which is established, constituted or continued under a Tasmanian Act, the governing authority of which, wholly or partly, comprises a person or persons appointed by a Minister of the Crown: see s 3 of the Protesters Act. Forestry Tasmania meets this definition as the chief executive officer of Forestry Tasmania is appointed by the Premier: see s 18(2) of the Government Business Enterprises Act. premises"304. Because Forestry Tasmania is a business operator in relation to those business premises, it is also a "business occupier" in relation to the business premises305. The balance of the Protesters Act operates primarily by reference to those definitions. It is necessary to consider the impugned provisions in Pts 2, 3 and 4 separately. Those Parts deal with the protection of business from protesters, police powers and court proceedings respectively. Part 2 – Protection of Business from Protesters (ss 6 to 9) The plaintiffs challenged the validity of s 6 ("Protesters not to invade or hinder businesses, &c"), s 7 ("Protesters not to cause or threaten damage or risk to safety") and s 8 ("Persons must, at direction of police officer, leave and stay away from business access areas"). Section 6 places three distinct prohibitions on protesters. But it is not an offence to contravene any one of these prohibitions. The relevant offence (described later) depends on disobedience of a direction (in effect) to comply with the prohibition. The first two prohibitions are concerned with a protester engaging in certain conduct that "prevents, hinders or obstructs the carrying out of a business activity on [business premises] by a business occupier". The phrase "prevents, hinders or obstructs" is not defined. The first prohibition concerns entry into business premises. Section 6(1) provides: "A protester must not enter business premises, or a part of business premises, if – entering the business premises or the part, or remaining on the premises or part after entry, prevents, hinders or obstructs the carrying out of a business activity on the premises by a business occupier in relation to the premises; and the protester knows, or ought reasonably to be expected to know, that his or her entry or remaining is likely to prevent, hinder or obstruct the carrying out of a business activity on the premises by a business occupier in relation to the premises." (emphasis added) 304 par (b) of the definition of "business operator" in s 3 of the Protesters Act. 305 See par (a) of the definition of "business occupier" in s 3 of the Protesters Act. The second prohibition concerns an act done on business premises or on a business access area in relation to business premises. Section 6(2) provides: "A protester must not do an act on business premises, or on a business access area in relation to business premises, if – the act prevents, hinders or obstructs the carrying out of a business activity on the premises by a business occupier in relation to the premises; and the protester knows, or ought reasonably to be expected to know, that the act is likely to prevent, hinder or obstruct the carrying out of a business activity on the premises by a business occupier in relation to the premises." (emphasis added) The third prohibition concerns a protester doing an act that prevents, hinders or obstructs access to business premises. Section 6(3) provides: "A protester must not do an act that prevents, hinders, or obstructs access, by a business occupier in relation to the premises, to an entrance to, or to an exit from – business premises; or a business access area in relation to business premises – if the protester knows, or ought reasonably to be expected to know, that the act is likely to prevent, hinder or obstruct such access." (emphasis added) Section 7 also contains three prohibitions. Unlike the prohibitions contained in s 6(1), (2) and (3), contravention of any one of the prohibitions in s 7 is a criminal offence. The first two prohibitions are contained in sub-ss (1) and (2) of s 7, which are concerned respectively with protesters doing an act that causes damage to business premises or to a business-related object: "(1) A protester must not do an act that causes damage to business premises if the protester knows, or ought reasonably to be expected to know, that the act is likely to cause damage to the business premises. (2) A protester must not do an act that causes damage to a business-related object that – is on business premises; or is on a business access area in relation to business premises and is being taken to or from the business premises – if the protester knows, or ought reasonably to be expected to know, that the act is likely to cause damage to such a business-related object." A "business-related object", in relation to business premises, means "an object that belongs to, is in the possession of, or is to be used by, a business occupier in relation to the business premises"306. An act causes damage to business premises, or to a business-related object, if, as a consequence of the performance of the act, the use of any business-related object by a business occupier in relation to the premises causes, or would be likely to cause, damage to the business premises, the object or any other business-related object, or cause a risk to the safety of a business occupier in relation to the business premises307. It is a defence to an offence against s 7(1) and (2) if the defendant proves that he or she had a lawful excuse for committing the offence308. The third prohibition, in sub-s (3) of s 7, must be read with sub-s (4) of s 7. Sub-sections (3) and (4) of s 7 are not concerned directly with "protesters". Those sub-sections make it an offence for a "person" to "issue a threat of damage in relation to business premises" in furtherance of, or for the purposes of promoting awareness of or support for, "an opinion, or belief, in respect of a political, environmental, social, cultural or economic issue". They provide: "(3) A person must not issue a threat of damage in relation to business premises – in furtherance of; or for the purposes of promoting awareness of or support for – an opinion, or belief, in respect of a political, environmental, social, cultural or economic issue. 306 s 3 of the Protesters Act. 307 s 7(6) of the Protesters Act, without limiting the generality of s 7(1) or (2). 308 s 7(5) of the Protesters Act. For the purposes of subsection (3), a threat of damage in relation to business premises is a threat to the effect that – damage to a business-related object that is on business premises has been, is being, or is to be, caused by a person; damage to a business-related object that – is on a business access area in relation to business premises; and is being taken to or from the business premises – has been, is being, or is to be, caused by a person; or the use of a business-related object that is on business premises has been, is being, or is to be, prevented, hindered or obstructed by a person; or the use of a business-related object that – is on a business access area in relation to business premises; and is being taken to or from the business premises – has been, is being, or is to be, prevented, hindered or obstructed by a person; or a risk to – the safety on business premises; or the safety on a business access area in relation to business premises – of a business occupier in relation to the premises has been, is being, or is to be, caused by a person." The penalty under s 7(1), (2) and (3) is, in the case of a body corporate, a fine not exceeding $250,000 and, for an individual, a fine not exceeding $50,000 or imprisonment for a term not exceeding five years, or both. It will be necessary to return to s 8. Section 9, which provides that a person must not prevent, hinder or obstruct a police officer from removing obstructions309, is not challenged by the plaintiffs. Part 3 – Police Powers (ss 10 to 15) Part 3, headed "Police Powers", confers several powers on police that are enlivened by reference to the prohibitions contained in Pt 2. Section 11, headed "Police officer may direct person to leave business premises or business access area", was purportedly relied on by the police in respect of each plaintiff. Sub-sections (1) and (2) of s 11 each confer a power on police to give certain directions to persons in certain circumstances. In each case, the power may be enlivened by reference to the prohibitions contained in s 6 and the offences created by s 7. Sections 11(1) and 11(2) provide: "(1) A police officer may direct a person who is on business premises to leave the premises without delay, if the police officer reasonably believes that the person has committed, is committing, or is about to commit, an offence, against a provision of this Act, or a contravention of section 6(1), (2) or (3), on or in relation to – the business premises; or a business access area in relation to the business premises. (2) A police officer may direct a person who is in a business access area in relation to business premises to leave the business access area without delay, if the police officer reasonably believes that the person has committed, is committing, or is about to commit, an offence, against a provision of this Act, or a contravention of section 6(1), (2) or (3), on or in relation to – the business premises; or a business access area in relation to the business premises." (emphasis added) Sub-sections (7) and (8) of s 11, which concern directions to a group of persons, provide: "(7) A direction may be issued under this section to a person or to a group of persons. 309 See s 12 of the Protesters Act. If a direction is issued under this section to a group of persons, the direction is to be taken to have been issued to each person – (a) who is a member of the group to whom the direction is issued; and (b) who ought reasonably to be expected to have heard the direction." Pursuant to s 11(6), a direction issued under s 11 "may include a requirement that the person must not, in the period of 3 months after the date on which the direction is issued", either commit an offence against a provision of the Protesters Act or contravene s 6(1), (2) or (3)310. Section 6(4) makes it an offence to contravene such a requirement. One of the plaintiffs, Ms Hoyt, was charged with an offence against s 6(4). Failure to comply with a direction given under s 11 may constitute an offence against s 8, contained in Pt 2. Section 8 is titled "Persons must, at direction of police officer, leave and stay away from business access areas" and s 8(1) relevantly provides: "A person must not – remain on a business access area in relation to business premises after having been directed by a police officer under section 11 to leave the business access area; or enter a business access area in relation to business premises within 4 days after having been directed by a police officer under section 11 to leave – the business premises; or a business access area in relation to the business premises." It is a defence to an offence against s 8(1) if the defendant proves that he or she had a lawful excuse for committing the offence311. The penalty, in the case of a body corporate, is a fine not exceeding $100,000 and, for an individual, a fine not exceeding $10,000. Each plaintiff was charged with, or received an infringement notice for committing, an offence against s 8(1). 310 Except in the case of a direction made under s 11(4), which is not presently relevant: see s 11(6)(b) of the Protesters Act. 311 s 8(2) of the Protesters Act. Under s 13(3), a police officer also has the power to remove a person from business premises, or a business access area in relation to business premises, if the police officer reasonably believes that the person is committing, or has committed, an offence against a provision of the Protesters Act, or a contravention of s 6(1), (2) or (3), on or in relation to the business premises or a business access area in relation to the business premises. Part 4 – Court Proceedings (ss 16 to 18) The plaintiffs also challenged the validity of Pt 4. Relevantly, it provides that the relevant offences are indictable312 but, with the consent of the prosecutor, can be heard and determined summarily313. Section 16(3) prescribes the maximum fine that may be imposed if an offence is dealt with summarily. In relation to convictions of an offence under s 6(4), s 17 provides that if a court convicts a body corporate, the court may impose a fine not exceeding $100,000314. If the court convicts an individual, the court may impose a fine not exceeding $10,000 for a first offence and, in respect of a further offence, a fine not exceeding $10,000 or imprisonment for a term not exceeding four years, or both315. Section 18 empowers a court to order a person convicted of an offence against s 6 or s 7 to pay to a business operator the cost of repairing the damage to business premises316 and the cost of repairing the damage to, or restoring or replacing, a business-related object317. Sub-sections (5) and (6) of s 18 empower a court to order a person convicted of an offence against s 6 to pay to the Crown the removal and repair costs in relation to an object that has been used, or an act that has been done, as part of the offence. Section 18(8) empowers a court to order a person convicted of an offence against s 6 or s 7 in relation to business premises or a business access area in relation to business premises to pay to a business operator the amount of financial loss suffered by that operator as "the natural, direct and reasonable consequence of the offence". 312 s 16(1) of the Protesters Act. 313 s 16(2) of the Protesters Act. 314 s 17(1) of the Protesters Act. 315 s 17(2) of the Protesters Act. 316 s 18(1) of the Protesters Act. 317 s 18(2)-(4) of the Protesters Act. Legal effect and practical operation of the Protesters Act What are the legal effect and practical operation of the Protesters Act? First, s 6(1), (2) and (3) and s 7(1) and (2) of the Protesters Act proscribe particular conduct on the part of persons engaging in a "protest activity". But for a person to be engaging in a "protest activity" within the meaning of the Protesters Act, the activity must take place on business premises or a business access area in relation to business premises318. As a result, a person does not contravene s 6(1), (2) or (3) or s 7(1) or (2) of the Protesters Act unless they are on or in such an area. And even if a person is on or in such an area, that person will not be taken to be engaging in a "protest activity" if they have the consent, whether express or implied, of a business occupier in relation to the business premises to be there and to engage in that activity319. Second, the prohibitions in s 6(1), (2) and (3) apply to conduct that "prevents, hinders or obstructs" particular activity on, or access to, business premises. The words "prevents, hinders or obstructs" are not defined. It is neither possible nor appropriate to define the outer limits of those words. However, as a matter of construction, those words – understood in their ordinary sense and in light of well-established interpretive principles320 – do not refer to any conduct that might affect business activity or access in any way or to any extent, however trivial. That would be at odds with the nature and degree of the interference that each of those words naturally connotes. The words are limited in scope. As will be later explained, a consequence of those limits is that the words "prevents, hinders or obstructs" capture only what is otherwise unlawful. Third, as the preceding analysis demonstrates, as a matter of statutory construction, the offences in ss 6(4) and 8(1) can only be committed after a police officer has given a valid direction under s 11. And an officer may only give such a direction to a person who is on business premises321, or in a business access area322. No valid direction can be given to a person who is not on, or in, 318 s 4(2)(a) of the Protesters Act. 319 s 4(5) of the Protesters Act. 320 See, eg, Lacey v Attorney-General (Qld) (2011) 242 CLR 573 at 591-592 [43]; [2011] HCA 10. 321 s 11(1) of the Protesters Act. 322 s 11(2) of the Protesters Act. one of those areas323. Further, a police officer may only give such a direction if he or she has reasonable grounds to believe324 that a person has committed, is committing, or is about to commit, an offence against a provision of the Protesters Act, or a contravention of s 6(1), (2) or (3) of the Protesters Act, on or in relation to the business premises or a business access area in relation to the business premises. There may be cases where that power is said to be exercised unlawfully. Those questions are not answered by reference to the implied freedom. They are questions about construction and application. So much was made clear by the plurality in Wotton v Queensland325: "(i) where a putative burden on political communication has its source in statute, the issue presented is one of a limitation upon legislative power; (ii) whether a particular application of the statute, by the exercise or refusal to exercise a power or discretion conferred by the statute, is valid is not a question of constitutional law; (iii) rather, the question is whether the repository of the power has complied with the statutory limits; (iv) if, on its proper construction, the statute complies with the constitutional limitation, without any need to read it down to save its validity, any complaint respecting the exercise of power thereunder in a given case … does not raise a constitutional question, as distinct from a question of the exercise of statutory power." Wider legal framework The Protesters Act, in its legal effect and practical operation in relation to forestry land, sits alongside, and operates in conjunction with, a wider legal framework that cannot be ignored or dismissed as irrelevant to the application of the impugned provisions. That wider legal framework includes, but is not limited to, the Forest Management Act, the Forest Practices Act 1985 (Tas), the Criminal Code (Tas), the Police Offences Act 1935 (Tas) and the common law. An examination of that wider legal framework demonstrates that the conduct that is addressed by the impugned provisions was and remains substantially unlawful conduct. None of the laws constituting this wider legal 323 Subject to one presently irrelevant exception: see s 11(4) of the Protesters Act, which deals with the issuing of a direction to a business operator in relation to business premises. 324 See George v Rockett (1990) 170 CLR 104 at 112-113; [1990] HCA 26; Gypsy Jokers (2008) 234 CLR 532 at 557-558 [28]; Prior v Mole (2017) 91 ALJR 441 at 445 [4], 449 [24], 457 [73], 461 [99]-[100]; 343 ALR 1 at 5, 10, 21, 26; [2017] HCA 10. 325 (2012) 246 CLR 1 at 14 [22]. framework was challenged as being an impermissible burden on the implied freedom. That framework was and remains a constitutionally valid baseline. The Forest Management Act Under the Forest Management Act, Forestry Tasmania326, as the Forest Manager327, has functions to "manage and control all permanent timber production zone land" and to "undertake forest operations on permanent timber production zone land for the purpose of selling forest products"328. Forestry Tasmania is a body corporate and may sue and be sued in its corporate name329. It has such powers as are necessary to enable it to perform its functions330. It also has powers as a Government Business Enterprise, including the power to acquire, hold, dispose of and otherwise deal with property331. As the Forest Manager, Forestry Tasmania may also "construct and maintain forest roads, works and other facilities" in permanent timber production zone land or "for access to" permanent timber production zone land332. It is therefore necessary to consider what are "permanent timber production zone land", "forest operations" and a "forest road" under the Forest Management Act. "[P]ermanent timber production zone land" is, relevantly, Crown land declared to be permanent timber production zone land pursuant to 326 The "Forestry corporation" established by s 6(1) of the Forestry Act 1920 (Tas), and continued in existence by s 6 of the Forest Management Act. It is a "Government Business Enterprise" within the meaning of that term in the Government Business Enterprises Act: see s 3(1) and Pt 1 of Sched 1. 327 s 7(1) of the Forest Management Act. 328 s 8(a) and (b) of the Forest Management Act. 329 s 6(a) and (c) of the Government Business Enterprises Act. 330 s 9 of the Forest Management Act. 331 s 9(1)(a) of the Government Business Enterprises Act. See also s 7(2) of the Forest Management Act. 332 s 19 of the Forest Management Act. s 10 of the Forest Management Act333. Such land remains Crown land but is not subject to the Crown Lands Act 1976 (Tas)334. "[F]orest operations" is defined in the Forest Management Act to mean335: "work connected with – seeding and planting trees; or (b) managing trees before they are harvested; or harvesting, extracting or quarrying forest products – and includes any related land clearing, land preparation, burning-off or access construction". (emphasis added) The phrase has substantially the same meaning in the Protesters Act336. The nature, extent and timing of forest operations on particular permanent timber production zone land will be set out in a forest practices plan certified by the Forest Practices Authority under the Forest Practices Act337. A certified forest practices plan contains, among other things, specifications of the forest practices338 to be carried out on the land in connection with the harvesting of timber or the clearing of trees339. A certified forest practices plan authorises the specified forest practices and associated operations340. 333 par (a) of the definition of "permanent timber production zone land" in s 3 of the Forest Management Act. 334 s 2A(b) of the Crown Lands Act. Except as otherwise provided, the Forest Management Act does not apply to Crown land that is reserved land within the meaning of the Nature Conservation Act 2002 (Tas): s 4(1) of the Forest Management Act. 335 s 3 of the Forest Management Act. 336 See the definition of "forest operations" in s 3 of the Protesters Act. 337 See Div 1 of Pt III of the Forest Practices Act. 338 See the definition of "forest practices" in s 3(1) of the Forest Practices Act. 339 See s 18(2)(a) of the Forest Practices Act. The specifications must be in accordance with the Forest Practices Code issued by the Authority: see s 18(3) and Pt IV of the Forest Practices Act. See also s 15 of the Forest Management Act. 340 s 20 of the Forest Practices Act. Under the Forest Management Act, a "forest road" relevantly means341: any road constructed or maintained by or for the Forest Manager either inside or outside permanent timber production zone land; or any other road that is – on Crown land; and being managed by a person for the purpose of timber production …" (emphasis added) The forest practices plan will identify the nature, extent and timing of work to be done in relation to a forest road for the purposes of forest operations. The Forest Manager must perform its functions and exercise its powers "so as to allow access to permanent timber production zone land for such purposes as are not incompatible with the management of permanent timber production zone land" under the Forest Management Act342 (emphasis added). Far from assuming that the public has general access to forestry land, the Forest Management Act takes as its premise, and emphasises, that Forestry Tasmania controls access to the land it manages. According to Forestry Tasmania's Forest Management Plan of January 2016, "[a]ctivities that are compatible with Forestry Tasmania's strategic objectives may be undertaken on [permanent timber production zone land]"343 and include the use of dedicated recreation sites, organised events, recreational vehicle use, hunting and firearm use, fossicking and prospecting, firewood collection, the exercise of Indigenous use rights, and commercial or private access in the exercise of property rights or for beekeeping, mineral exploration and mining and tourism. 341 s 3 of the Forest Management Act. 342 s 13(1) of the Forest Management Act. The Forest Manager may, with the approval of the Minister, charge a person or class of persons a fee for the right to access permanent timber production zone land or use a forest road for any purpose: s 14 of the Forest Management Act. 343 Forestry Tasmania, Forest Management Plan, (2016) at 62. The Forest Management Act goes on to state that the access requirement does not prevent the Forest Manager from exercising its powers under ss 21, 22 and 23 of the Forest Management Act344. Under s 21(1), the Forest Manager may erect signs on or in respect of forest roads or on permanent timber production zone land "for the purposes of discharging its responsibilities or in the interests of safety". And it was common ground that, having regard to the use of heavy machinery in conducting forest operations in issue in this matter, Forestry Tasmania was under a duty of care and had statutory duties and obligations under the Work Health and Safety Act 2012 (Tas) to ensure, so far as was reasonably practicable, that the health and safety of persons was not put at risk from work carried out as part of the conduct of its business or undertaking345. Forestry Tasmania, as the person with management or control of a workplace, had like duties to ensure, so far as was reasonably practicable, that the workplace, the means of entering and exiting the workplace and anything arising from the workplace were without risks to the health and safety of any person346. Forestry Tasmania, as the person with management or control of plant at a workplace, had like duties to ensure, so far as reasonably practicable, that the plant was without risks to the health and safety of any person347. Finally, Forestry Tasmania had like duties to take reasonable care that its acts or omissions did not adversely affect the health and safety of other persons348 and a tortious duty to take reasonable care not to expose persons to risk of harm at its workplace. Under s 21(3) of the Forest Management Act, a person "must not, without lawful excuse, undertake an activity or engage in conduct on a forest road or other land in permanent timber production zone land contrary to the directions of the Forest Manager expressed on a sign authorised by the Forest Manager". In other words, for the purposes of discharging its responsibilities or in the interests of safety, the Forest Manager has the ability, by direction, to control the activities and conduct of persons on forest roads and other land in permanent 344 s 13(2) of the Forest Management Act. 345 s 19(2) of the Work Health and Safety Act. 346 s 20(2) of the Work Health and Safety Act. 347 s 21(2) of the Work Health and Safety Act. 348 s 29(b) of the Work Health and Safety Act. timber production zone land. And if a person contravenes s 21(3), the penalty is a fine not exceeding 20 penalty units349. In addition, a police officer who reasonably considers that a person is offending against s 21(3) may direct that person to leave the forest road or other land in permanent timber production zone land and a person given such a direction by a police officer must comply with that direction350. If a person fails to comply with that direction, it is an offence and the police officer may arrest that person, without warrant351. Under s 22(3), the Forest Manager may also, through an authorised officer352, request a person: not to enter permanent timber production zone land or a forest road; or to leave permanent timber production zone land or a forest road; or to cease to undertake an activity conducted, or to cease to engage in conduct, on that land or road – if the authorised officer is of the opinion that the entry or presence of that person, or the activity conducted, or the conduct engaged in, by that person on the land or road is preventing, has prevented or is about to prevent the Forest Manager from effectively or efficiently performing its functions." (emphasis added) The Forest Manager's functions are primarily concerned with forest operations, which include work connected with harvesting, extracting or quarrying forest products as well as any related land clearing, land preparation, burning-off or access construction353. 349 In the period from 1 July 2016 to 30 June 2017, the value of a penalty unit was $157: see s 4A(4) of the Penalty Units and Other Penalties Act 1987 (Tas). 350 s 21(5) and (6) of the Forest Management Act. 351 s 21(6) and (7) of the Forest Management Act. 352 s 22(2) and (3) of the Forest Management Act. 353 See par (c) of the definition of "forest operations" in s 3 of the Forest Management Act. In addition, under s 22(4), the Forest Manager may also, through an authorised officer, prohibit a person from entering, or remaining in, an area of permanent timber production zone land in certain circumstances, including in the interests of a person's safety354. If a person fails to comply with a request under s 22(3) or (4), they are guilty of an offence355. Further, s 22(6) provides that "[a] person must not, without lawful excuse, undertake an activity or engage in conduct on permanent timber production zone land or a forest road contrary to the directions of a police officer". A person who fails to comply with such directions is guilty of an offence and may be arrested without warrant356. Of course, the exercise of that power is not at large. The exercise is informed and constrained by the subject matter, scope and purpose of the Forest Management Act – an Act to provide for the management of permanent timber production zone land, which includes forest operations357. Under s 23(2), the Forest Manager may also close a forest road or a section of forest road either permanently or temporarily to all traffic, or to a class of traffic, if the Forest Manager considers that the closure is necessary or expedient for the purposes of discharging its responsibilities or in the interests of safety358. And if a forest road or a section of forest road has been closed, a person must not drive or use a vehicle on it, or be on or otherwise use it359. If a person contravenes those prohibitions, they are guilty of an offence360. The position that prevailed prior to the enactment of the Protesters Act may relevantly be summarised as one where Forestry Tasmania (as the Forest Manager), having possession of permanent timber production zone land, was required to carry out forest operations on that land consistently with the certified forest practices plan and, while doing so: (1) was obliged to perform its functions and exercise its powers so as to allow access to that land for such purposes as were not 354 s 22(4)(c) of the Forest Management Act. 355 s 22(5) of the Forest Management Act. 356 s 22(6) and (7) of the Forest Management Act. 357 See the long title and s 8 of the Forest Management Act. 358 s 23(2) and (3) of the Forest Management Act. 359 s 23(4) of the Forest Management Act. 360 s 23(4) of the Forest Management Act. incompatible with the forest operations on that land specified in the certified forest practices plan361; could erect a sign on or in respect of a forest road or on permanent timber production zone land which contained directions that could restrict a person's activities or conduct362; could request a person not to enter the land or forest road, to leave the land or road, or to cease to undertake an activity conducted, or to cease to engage in conduct, on that land or road, if an authorised officer was of the opinion that the entry or presence of that person on the land (not just where the forest operations were being conducted) or road, or the activity conducted or the conduct engaged in by that person on the land or road, "is preventing, has prevented or is about to prevent the Forest Manager from effectively or efficiently performing its functions"363 (emphasis added); could, through an authorised officer, prevent a person from entering, or remaining in, an area of permanent timber production zone land (not just where the forest operations were being conducted), "in the interests of a person's safety"364; and could close a forest road or any section of forest road permanently or temporarily to all traffic or to a class of traffic if the closure was considered necessary or expedient for the purposes of discharging the Forest Manager's responsibilities or in the interests of safety365. The third matter – the power to make requests under s 22(3) – is instructive. A person who failed to comply with a request was guilty of an offence. The power in s 22(3), the evident purpose of which was to allow the Forest Manager to "effectively [and] efficiently perform[] its functions", would extend to preventing conduct that "prevents, hinders or obstructs the carrying out of a business activity" on the land. 361 See s 13(1) of the Forest Management Act. 362 s 21 of the Forest Management Act. 363 s 22(3) of the Forest Management Act. 364 s 22(4)(c) of the Forest Management Act. 365 s 23(2) of the Forest Management Act. At the same time, under s 22(6), a police officer could give directions that a person must not undertake an activity or engage in conduct on permanent timber production zone land or a forest road. And if, contrary to such directions, a person had undertaken an activity or engaged in conduct without lawful excuse, the police officer could arrest that person for failing to comply with a direction366. Police officers had other powers. A police officer who reasonably considered that a person, without lawful excuse, was undertaking an activity or engaging in conduct contrary to the directions on a sign authorised by the Forest Manager could direct that person to leave the forest road or the land and, if that person failed to comply with that direction, could arrest that person367. Criminal law It is next necessary to notice a number of relevant and generally applicable provisions of the criminal law of Tasmania including, in particular, those provisions of the Criminal Code and the Police Offences Act368 that create offences for: unlawfully destroying or injuring property369; unlawful entry on any land, building, structure or premises370; committing a common nuisance which endangers the lives, safety, or health of the public, or which occasions injury to the person of any individual371; 366 s 22(7) of the Forest Management Act. 367 s 21(5)-(7) of the Forest Management Act. 368 Nothing in the Police Offences Act affects or applies to any right, title or interest of the Crown, or in any way limits the Royal Prerogative, or prejudices or affects the operation of the Criminal Code: s 73 of the Police Offences Act. 369 s 273 of the Criminal Code; s 37(1) of the Police Offences Act. See also s 276 of the Criminal Code, regarding written threats. 370 s 14B of the Police Offences Act. 371 s 141(1) of the Criminal Code. A common nuisance includes an unlawful act "which endangers the lives, safety, health, property, or comfort of the public, or by which the public are obstructed in the exercise or enjoyment of any right common to all His Majesty's subjects": s 140(1) of the Criminal Code. causing public annoyance in a public place, including: behaving in a violent, riotous, offensive, or indecent manner; disturbing the public peace; engaging in disorderly conduct; jostling, insulting, or annoying any person; and committing any nuisance372; failing to comply with a direction given by a police officer to leave a public place and not return for a specified period of not less than four hours if the police officer believes on reasonable grounds that the person: has committed or is likely to commit an offence; or is obstructing or is likely to obstruct the movement of pedestrians or vehicles; or is endangering or likely to endanger the safety of any other person; or has committed or is likely to commit a breach of the peace373; and organising or conducting various activities, including a demonstration or a procession, on a public street without a permit374. Under the Police Offences Act, police officers are given powers of arrest without warrant where a person is found offending against various provisions375, including those described in points (4) and (5) above. Although that list is necessarily incomplete, these provisions and powers demonstrate that the implied freedom, as a restriction on legislative power, does not protect all forms of communication at all times and in all circumstances. They illustrate that the freedom is not an absolute freedom from all regulation or restraint. They illustrate that some regulation is often necessary and beneficial for an end that is not the maintenance or enhancement of the constitutionally prescribed system of representative and responsible government but, at the same time, is not incompatible with the maintenance of that system. The common law and the implied freedom The legal effect and practical operation of the impugned provisions must also be assessed against the background provided by the established principles of the common law, especially the law relating to trespass and nuisance. 372 s 13(1)(a)-(e) of the Police Offences Act. 373 s 15B of the Police Offences Act. 374 s 49AB of the Police Offences Act. 375 s 55 of the Police Offences Act. The law of trespass and nuisance must exist and develop in accordance with the implied freedom of political communication376 because the common law, as an organic, developing body of substantive law, must be consistent with, and develop consistently with, the Constitution377. No party or intervener suggested that the law of trespass and nuisance is inconsistent with the implied freedom. More particularly, the implied freedom does not permit, and is not to be understood as permitting, persons to trespass upon the land of others only because the person entering the land wishes to make some political point or statement. The rights of the public to enter upon and use Crown land will inevitably turn on the proper construction of the particular statutory regime for Crown land in each State and Territory. Here, the coupe in the Lapoinya Forest was and remains Crown land. That Crown land was not reserved for any public purpose. It was permanent timber production zone land within the meaning of the Forest Management Act. What rights of action would Forestry Tasmania have at common law? In an action for trespass to land, there must be direct interference, either intentional or negligent, with possession of the land without the plaintiff's consent or without other lawful authority378. The gist of the action is interference with possession. The right of possession of a freeholder (or a lessee) is sufficient, but is not necessary, to found an action in trespass379. Actual possession of land (as distinct from mere occupation in the sense of physical presence or use and enjoyment380) constitutes prima facie evidence of seisin in fee and is therefore sufficient to found a right of action in trespass against any person who is unable to show a better title: for instance, a defendant having no right of possession of their own. Under the Forest Management Act, Forestry Tasmania had control over entry to the coupe sufficient for it to be in possession of the coupe and, 376 Monis (2013) 249 CLR 92 at 141 [103]. 377 See Native Title Act Case (1995) 183 CLR 373 at 485-488. 378 Halliday v Nevill (1984) 155 CLR 1 at 10-11; [1984] HCA 80; Plenty v Dillon (1991) 171 CLR 635 at 638-639, 647-649; [1991] HCA 5; TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333 at 339 [23]. 379 Wheeler v Baldwin (1934) 52 CLR 609 at 632; [1934] HCA 58; Newington v Windeyer (1985) 3 NSWLR 555 at 563. 380 See Georgeski v Owners Corporation SP49833 (2004) 62 NSWLR 534 at 562 [102], 563 [106]. cf Manchester Airport Plc v Dutton [2000] QB 133. in particular, the business premises on which it was conducting forest operations. It would have a right of action in trespass against any person whose conduct unlawfully interfered with that possession. That would capture conduct on those business premises that prevents, hinders or obstructs business activity or damages business premises. An action for private nuisance may give a remedy to an occupier of land for certain interferences with the occupier's use or enjoyment of the land. The plaintiff must have a right over or an interest in the land that has been affected by the nuisance of which complaint is made381. The plaintiff must be more than a mere licensee382 or a person merely present on the land383. For example, the plaintiff may have a right over the land as "owner or reversioner, or be in exclusive possession or occupation of [the land] as tenant or under a licence to occupy"384. There must be a material interference, beyond what is reasonable in the circumstances, with the plaintiff's use or enjoyment of the land or of the plaintiff's interest in the land385. The effect of the interference on that interest in land then provides a measure of damages regardless of whether the nuisance was by encroachment, direct physical injury or interference with the quiet enjoyment of the land386. Again, in relation to its use and enjoyment of land on which it conducts forest operations, Forestry Tasmania would have a right of action in nuisance to deal with persons whose conduct on business premises prevents, hinders or obstructs – interferes with – that business activity. A forest road outside the permanent timber production zone land may not attract the same rights of possession. On the other hand, depending on the 381 Elston v Dore (1982) 149 CLR 480 at 488; [1982] HCA 71; Hunter v Canary Wharf Ltd [1997] AC 655 at 724. 382 Hunter [1997] AC 655 at 692, 694-695. 383 Hunter [1997] AC 655 at 724. 384 Hunter [1997] AC 655 at 724; see also at 688: "an action of private nuisance will usually be brought by the person in actual possession of the land affected, either as the freeholder or tenant of the land in question, or even as a licensee with exclusive possession of the land". 385 See Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 at 504, 515-516, 524; [1937] HCA 45; Sedleigh-Denfield v O'Callaghan [1940] AC 880 at 903; Sid Ross Agency Pty Ltd v Actors and Announcers Equity Association of Australia [1971] 1 NSWLR 760 at 768; Elston (1982) 149 CLR 480 386 Hunter [1997] AC 655 at 724-725. nature, place and effect of a person's conduct within and outside the permanent timber production zone land, an action in nuisance may be available. At common law, picketing is not necessarily a nuisance and unlawful unless it becomes obstruction and besetting387. So, for example, picketing outside a person's business premises which disrupts the operation of or supplies to that business, in order to compel the business operator to do or not to do what is lawful for that business operator not to do or to do respectively, would support an action for nuisance at common law. Again, in relation to its use and enjoyment of land on which it conducts forest operations, Forestry Tasmania would have a right of action in nuisance at common law to deal with persons whose picketing outside its business premises disrupted the operation of or supplies to those business premises in order to compel Forestry Tasmania not to do what is lawful – conduct forest operations. Because Forestry Tasmania could bring an action for trespass or nuisance, it could sue for damages and, importantly, could seek an injunction to restrain threatened trespass or nuisance. If it obtained an order, breach of that order would attract serious penal consequences including, in an appropriate case, imprisonment. In that context, it is useful to refer to Grocon v Construction, Forestry, Mining and Energy Union, a decision of the Supreme Court of Victoria388. Three companies, part of a larger group of companies engaged in the business of commercial building and construction, obtained temporary restraining orders against a trade union. The orders restrained the union from "preventing, hindering or interfering with free access to, and free egress from", certain of the group's building sites by any person or vehicle, and from "causing, inducing, procuring or inciting any person to do or attempt to do" any of those prohibited activities389. The underlying cause of action was one in nuisance. Charges of contempt of court were then brought against the union for allegedly breaching one or other of those orders on five separate days. The Protesters Act is primarily concerned with conduct on business premises or a business access area in relation to business premises. The facts and circumstances considered in Grocon are instructive. The authorities relied upon by the primary judge concerned public nuisance, which in Tasmania is an offence under s 141 of the Criminal Code. It was observed in Grocon that an obstruction can be physical or can come in the form of intimidation and need not be total; and for something to be an obstruction, it would generally not need to be "tested" 387 See Sid Ross Agency [1971] 1 NSWLR 760 at 767. 389 Grocon (2013) 234 IR 59 at 62 [2]. to see if it could be safely overcome390. It was not doubted that the blocking by a third party of even one of multiple means of access to a building site could amount to preventing "free" access, especially when the entry point blocked was a normal entry point to the site391, and there was no need for an attempt or a request to gain access to a site in order to establish an obstruction392. Indeed, as the primary judge observed, "free" access may be prevented, hindered or interfered with if access is made more difficult by an obstruction, even if persons might still be able to access the site393. Those observations provide a useful reminder of three points. First, the implied freedom cannot be, and is not, an absolute freedom from all regulation or restraint. Second, conduct comprising a protest is not uniform; each case requires a fact-specific inquiry. Third, the observations also serve to reveal a deeper and more important point. Breach of the civil law may often, even usually, be remedied by an award of damages. But if an injunction to restrain a threatened breach of the civil law is granted, penal consequences will follow for contravention of that restraint. Observing that the impugned provisions engage penal consequences is, of course, important and relevant to the consideration of the implied freedom. But where, as here, the conduct that is penalised by the impugned provisions is conduct otherwise contrary to law and may be enjoined by court order, the impugned provisions (other than s 8(1)(b)), in practical effect, do no more than provide that a particular form of conduct is generally prohibited on pain of penalty. And no party or intervener submitted that an injunction could not or should not be granted to prevent trespass or nuisance simply because the trespasser or person committing a nuisance sought to make a political point by acting in breach of the rights of another, whether that other is a private individual or, as here, a Government Business Enterprise. Hence, to ask whether a person has a right to be in a particular place at a particular point in time is to ask the wrong question. Any question about the lawfulness of a person's conduct requires consideration of the legal context in which that conduct takes place. The legal context will necessarily include the existing legal framework governing society. 390 (2013) 234 IR 59 at 100-101 [332] citing McFadzean v Construction, Forestry, Mining and Energy Union (2007) 20 VR 250 at 281-282 [121]-[124] and Haywood v Mumford (1908) 7 CLR 133 at 138; [1908] HCA 62. 391 Grocon (2013) 234 IR 59 at 102 [335]. 392 Grocon (2013) 234 IR 59 at 100 [330]. 393 Grocon (2013) 234 IR 59 at 102 [336]. Any challenge to the validity of legislation (including legislation that is targeted to a group, as the impugned provisions are) directs attention to what that law does over and above the existing legal framework. There may be cases where legislation or a set of provisions alters that framework in ways that are, or to an extent the constitutionally prescribed system of representative and responsible government. That is not this case. is, not compatible with the maintenance of that Broader operation of the Protesters Act As seen earlier, "business premises" are not limited to or by reference to specific industries. For example, "premises used as a shop, market or warehouse" are business premises394, as are "premises used for manufacturing, building, or construction, for the purposes of a business activity"395, "premises used for agriculture [or] horticulture … or as an abattoir"396 and premises on which mining within the meaning of the Mineral Resources Development Act 1995 (Tas) is being or is authorised to be carried out under an Act397. In relation to each of those business premises (and the business activity conducted on them), the Protesters Act will inevitably sit alongside, and operate in conjunction with, a different legal framework which cannot be ignored or dismissed as irrelevant. For those reasons, it is neither necessary nor appropriate to consider the constitutional validity of the Protesters Act other than in relation to forestry land. Constitutional validity of the impugned provisions First question The first question asks: does the law effectively burden the freedom of communication about government or political matters either in its terms, operation or effect? A law will effectively burden the freedom of political communication if "the effect of the law is to prohibit, or put some limitation on, the making or the content of political communications"398. 394 s 5(1)(e) of the Protesters Act. 395 s 5(1)(d) of the Protesters Act. 396 s 5(1)(c) of the Protesters Act. 397 s 5(1)(a) of the Protesters Act. 398 Monis (2013) 249 CLR 92 at 142 [108]; Unions NSW (2013) 252 CLR 530 at 574 [119]; McCloy (2015) 257 CLR 178 at 230-231 [126]. At the hearing of the special case, Tasmania conceded that the legal effect and practical operation399 of the impugned provisions of the Protesters Act were to burden the implied freedom of political communication. That concession was properly made: in their operation in relation to forestry land, the impugned provisions burden the implied freedom and the first question should be answered "yes". Just how and to what extent the impugned provisions burden the implied freedom is conveniently identified and explained in the next section of these reasons. Second question In addressing the second question – whether the impugned law is reasonably appropriate and adapted to serve a legitimate end in a manner which is not incompatible with the maintenance of the constitutionally prescribed system of representative and responsible government400 – the nature and the extent of the burden are relevant. To the extent that the impugned law is congruent with the existing law, it is any incremental burden that needs justification401. Here, as the earlier analysis of the legal effect and practical operation of the impugned provisions demonstrates, the impugned provisions prescribe norms or punish classes of conduct which are addressed by the wider legal framework. That proposition is made good in the following ways. Sections 6(1) and 6(2) – dealing with entry into business premises, and acts done on business premises or on a business access area in relation to business premises, where the conduct prevents, hinders or obstructs the carrying out of a business activity on the business premises by a business occupier in relation to those premises – identify conduct that was, and remains, unlawful and contrary to provisions such as s 14B of the Police Offences Act and the common law. Section 6(3) – dealing with an act that prevents, hinders or obstructs access, by a business occupier in relation to business premises, to an entrance to or an exit from the business premises or a business access area in relation to the 399 Monis (2013) 249 CLR 92 at 129 [63]; see also at 141 [105]. See also Unions NSW (2013) 252 CLR 530 at 553 [35]. 400 Lange (1997) 189 CLR 520 at 567-568; Coleman (2004) 220 CLR 1 at 50 [93], 401 Levy (1997) 189 CLR 579 at 625-626; Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 224 [108], 246 [184], 298 [337], 303-304 [354]; [2004] HCA 41. business premises – identifies conduct that was, and remains, unlawful and contrary to the common law. Sections 7(1) and 7(2) – concerning damage to business premises or a business-related object – penalise conduct that was, and remains, unlawful and contrary to s 273 of the Criminal Code, s 37 of the Police Offences Act and the common law. Sections 7(3) and 7(4) – concerning threats of damage in relation to business premises – penalise conduct that was, and remains, unlawful and contrary to provisions such as ss 241 (blackmail) and 276 (written threats to property) of the Criminal Code. It should be kept in mind that the prohibitions in s 6 are not themselves criminal offences. They merely enliven other provisions of the Protesters Act. For instance, a person may simply be given a direction under s 11, as the plaintiffs were. It is only a subsequent failure to comply with that direction that amounts to a criminal offence under s 8(1). And it is a defence to an offence against that provision if the defendant proves that they had a lawful excuse for committing the offence. That reflects the fact that the prohibitions in s 6 are capable of capturing a very wide range of conduct. In contrast, the prohibitions in s 7 are criminal offences, reflecting their more serious nature. And ss 7(1) and 7(2) both have a lawful excuse defence402. Sections 11(1) and 11(2) – which provide that a police officer may direct a person to leave business premises, or a business access area in relation to business premises, without delay if the police officer reasonably believes that the person has committed, is committing, or is about to commit, an offence under s 7 of the Act or a contravention of s 6(1), (2) or (3) on or in relation to the business premises or a business access area in relation to the business premises – prevent, and enforce prohibitions on, conduct that is unlawful under ss 6 and 7. Similarly, ss 11(7) and 11(8) – which provide that a direction under s 11 may be issued to a group of persons – prevent, and enforce prohibitions on, conduct that is unlawful under ss 6 and 7. Although the sub-sections allow a direction to be issued to a group, such a direction would only be valid if the condition in s 11(1) or (2) was met – that is, if a police officer has a reasonable belief that every member of the group has committed, is committing, or is about to commit, an offence under s 7 of the Protesters Act or a contravention of s 6(1), (2) or (3). So much is clear from the text and structure of s 11. It is sub-ss (1) and (2) which empower a police officer to issue a direction, provide for the content of the direction and identify the pre-conditions to its lawful issue. Sub-sections (7) and (8) confer no independent power to issue a direction: they do no more than clarify as a practical matter that, where a police officer 402 s 7(5) of the Protesters Act. forms the requisite reasonable belief about a group of persons, it is not necessary for the officer specifically to issue a direction to each person. At first blush, these police powers under s 11 may appear to confer an unfettered discretion. They do not. The exercise of the discretion is necessarily limited by the subject matter, scope and purpose of the Protesters Act403. As the section itself provides, the giving of a direction under s 11(1) or (2) is conditioned on the police officer holding a reasonable belief that a person has committed, is committing, or is about to commit, an offence under s 7 of the Protesters Act or a contravention of s 6(1), (2) or (3). If the officer holds that reasonable belief, the officer can issue a direction with or without the added requirement that the person not, "in the period of 3 months after the date on which the direction is issued", commit an offence against a provision of the Act or a contravention of s 6(1), (2) or (3)404. In practical terms, the discretion of the officer to include a requirement that the person not commit an offence against a provision of the Act or contravene s 6(1), (2) or (3) is no more than a discretion to direct that, in the next three months, the person must not do what the Protesters Act already says the person must not do. If an officer does not hold a reasonable belief that a person has committed, is committing, or is about to commit, an offence under s 7 of the Protesters Act or a contravention of s 6(1), (2) or (3), then the officer cannot issue the direction (and therefore cannot impose the additional three month requirement). And if the concern is that the discretion is exercised (or capable of being exercised) by an officer on the basis of an erroneous belief, then the question on review, in each case, would be whether objective circumstances exist sufficient to induce that state of mind in a reasonable person405. If such objective circumstances do not exist, then the direction would be held to be invalid. The same analysis applies to s 13(3) – the power of a police officer to remove a person from business premises or a business access area – which is conditioned on the police officer forming a reasonable belief that the person is committing, or has committed, an offence against a provision of the Protesters 403 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 348-349 [23], 363-364 [67], 370-371 [90]; [2013] HCA 18. See also Klein v Domus Pty Ltd (1963) 109 CLR 467 at 473; [1963] HCA 54. 404 Except in the case of a direction made under s 11(4), which is not presently relevant. 405 George v Rockett (1990) 170 CLR 104 at 112, 116; Prior (2017) 91 ALJR 441 at 445 [4], 449-450 [24]-[27], 457 [73], 460-461 [98]-[100]; 343 ALR 1 at 5, 10-11, Act or a contravention of s 6(1), (2) or (3) on or in relation to the business premises or the business access area. As was pointed out at the start of these reasons, the validity of the law must be tested against the legal effect and practical operation of the law406. It is not to be tested against the possibility that the law will be applied unlawfully, or against the possibility that persons may choose, for whatever reason, to give the law some effect or operation wider than the law permits. For that reason, it is not relevant to observe that the geographical bounds of the area within which the provisions operate may be difficult to determine or that there may be cases where a power is said to be exercised unlawfully. The provisions can lawfully apply only where all of the relevant pre-conditions are met. For example, as just seen, as a matter of statutory construction, the offences in ss 6(4) and 8(1) can only be committed after a police officer has given a valid direction under s 11. And an officer may only give such a direction to a person who is on business premises407, or in a business access area408. No valid direction can be given to a person who is not on, or in, one of those areas. Further, a police officer may only give such a direction if they have reasonable grounds to believe409 that a person has committed, is committing, or is about to commit, an offence against a provision of the Protesters Act, or a contravention of s 6(1), (2) or (3) of the Protesters Act, on or in relation to the business premises or a business access area in relation to the business premises. Identification of the bounds of the area within which the provisions operate involves questions about construction and application, as was made clear by the plurality in Wotton410. It may be accepted that it is possible for a police officer to form a reasonable but factually wrong belief about the matters identified in ss 11 and 13(3). For example, the police officer might issue a direction under s 11 on the basis of a reasonable but mistaken belief that a person has committed a contravention of s 6(1). The direction would be lawful even though the person had not in fact contravened any prohibition in the Protesters Act. But two points must then be made. First, the reasonableness of a police officer's belief is 406 cf North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW (1975) 134 CLR 559 at 607, 622, 624; [1975] HCA 45. 407 s 11(1) of the Protesters Act. 408 s 11(2) of the Protesters Act. 409 See George v Rockett (1990) 170 CLR 104 at 112-113; Gypsy Jokers (2008) 234 CLR 532 at 557-558 [28]; Prior (2017) 91 ALJR 441 at 445 [4], 449 [24], 457 [73], 461 [99]-[100]; 343 ALR 1 at 5, 10, 21, 26. 410 (2012) 246 CLR 1 at 14 [22]. necessarily determined by reference to factual circumstances. That is, the factual circumstances, viewed objectively, must permit the formation of the belief. The requirement to form a reasonable belief does not grant to a police officer sweeping latitude to form factually wrong beliefs. Circumstances which are equivocal do not and will not permit the formation of the requisite belief. Second, as already explained, any burden effected by ss 11 and 13(3) must be assessed against the existing legal framework. And the existing legal framework includes provisions which similarly condition the exercise of powers on the formation of a certain state of mind. For example, the power of an authorised officer to make a request of a person under s 22(3) of the Forest Management Act is conditioned on the "opinion" of the authorised officer about the effect or potential effect of the person's conduct on the ability of the Forest Manager to effectively or efficiently perform its functions. Similarly, under s 15B of the Police Offences Act, a police officer may direct a person to leave a public place if the officer "believes on reasonable grounds" that the person has engaged, or is likely to engage, in certain conduct. The overlap between the conduct prohibited by the impugned provisions and the conduct prohibited by the existing wider legal framework may not be perfect. It is possible that there may be some marginal differences between what the impugned provisions prohibit and what was already prohibited under the existing wider legal framework (although none were identified in the course of argument). But the overlap not only exists; it is substantial and cannot be ignored. And because there is such an overlap, the incremental burden may be described as making what was otherwise unlawful the subject of criminal sanction or subject to increased penalties. If there are differences in the scope of the prohibitions, those may also be said to form part of the incremental burden, alongside increased penalties for existing prohibitions. What is presently relevant is that the incremental burden is small and it is the identification of that incremental burden that "serves to focus and to calibrate the inquiry" required in assessing the constitutional validity of a law411. the additional sanctions and Second question, first condition – legitimate end of the impugned law? What then is the object or purpose of the Protesters Act? The Protesters Act (including the impugned provisions) creates a statutory scheme that may operate to prevent or terminate conduct that involves the presence412 of protesters on business premises or on a business access area and that has as its aim the promotion of an opinion or belief in respect of a political, environmental, social, cultural or economic issue, but only where: 411 See Tajjour (2014) 254 CLR 508 at 579 [147]. 412 Albeit presence is not always relevant to s 7 of the Protesters Act: see s 7(3). a police officer has reasonable grounds to believe, among other things, that a person is engaging in a "protest activity" as that phrase is defined in the Protesters Act; and the conduct would prevent, hinder or obstruct the carrying out of a business activity or access to business premises, or cause damage to business premises or a business-related object. The object of the Protesters Act, in relation to forestry land, is to protect the productivity, property and personnel of forest operations; in particular, to protect forest operations from activity that prevents, hinders or obstructs business activity or causes damage on business premises or in areas necessary to access business premises. That object is no more incompatible with the constitutionally prescribed system of representative and responsible government than the pre-existing wider legal framework alongside which the Protesters Act, in its operation in relation to forestry land, sits, and within which it operates. The plaintiffs' contention that the "purpose and practical operation of s 6 and associated provisions … is to prevent onsite protests that … relate to 'political, environmental, social, cultural or economic issues', which are the key issues to which electors will have regard when choosing their representatives", should be rejected. It fails to consider both the text of and the context for the impugned provisions413. It identifies the object or purpose of the impugned provisions too narrowly. It incorrectly focuses on one aspect of the impugned provisions and ignores that the conduct sought to be addressed must have certain consequences for the carrying out of a business activity or access to business premises. These matters are central to identification of the object of the impugned provisions. And if the object is identified too narrowly, there will be flow-on consequences for "the scope, utility and transparency" of the subsequent reasonably appropriate and adapted analysis414. Second question, second condition – is the law reasonably appropriate and adapted to serve that legitimate end? Provisions are reasonably appropriate and adapted Conduct involving the physical presence of protesters on business premises can constitute political communication415. But a law that prohibits 413 See McCloy (2015) 257 CLR 178 at 284 [320]; see also at 212-213 [67], 232 [132]; Unions NSW (2013) 252 CLR 530 at 557 [50]. 414 Stellios, Zines's The High Court and the Constitution, 6th ed (2015) at 592. 415 Levy (1997) 189 CLR 579 at 594-595, 613, 622-623. conduct for a legitimate purpose other than the suppression of political communication is unaffected by the implied freedom "if the prohibition is [reasonably] appropriate and adapted to the fulfilment of that purpose"416. In particular, where conduct has effects beyond the communication of ideas or information, there are likely to be legitimate reasons to regulate that conduct. The fact that a law may prevent protesting in a manner that would achieve maximum publicity, and to that extent may curtail the implied freedom to a degree, does not itself provide an answer to the constitutional question of validity417. So, are the impugned provisions reasonably appropriate and adapted to serve the legitimate end? Here, the prohibition of "protest activity" was not the object of the Protesters Act. The Act's object was to protect, relevantly, forest operations from activity that prevents, hinders or obstructs business activity or causes damage on to access business premises. business premises or The Protesters Act adopted means that were directed at what the legislature identified as the immediate or likely causes of hindrance or obstruction. in areas necessary the earlier analysis demonstrates, each impugned provision (except s 8(1)(b)) is directed to regulating effects beyond the communication of ideas or information418. The regulation of those effects is limited both in the location of its operation (business premises and business access areas) and in the conduct that it seeks to proscribe (conduct that "prevents, hinders or obstructs" the carrying out of business activity or access to business premises, or that causes damage to business premises or business-related objects). And, of course, it is not the impugned provisions but any incremental burden imposed by those provisions which must be justified. To the extent that the incremental burden may be said to consist of the marginal extension of existing prohibitions, the impugned provisions (other than s 8(1)(b)) do no more than regulate the time, place and manner of a particular and narrowly confined form of political communication – a form of protest that is disruptive or causes damage. It is difficult to conceive of any form of political communication that is disruptive or causes damage, to the extent covered by the impugned provisions, but is nonetheless lawful. 416 Levy (1997) 189 CLR 579 at 595. 417 See Levy (1997) 189 CLR 579 at 609. 418 See [326]-[356] above. To the extent that the incremental burden may be said to consist of making what was otherwise unlawful the subject of criminal sanction or subject to those criminal increased penalties, and consequences or increased penalties apply only to protesters and not to others who undertake similar unlawful conduct, that discriminatory operation is not decisive. to be discriminatory because The fact that the impugned provisions apply only to protesters and not to persons generally does not mean that the law is not reasonably appropriate and adapted. "The Parliament is not relegated by the implied freedom to resolving all problems" relating to a particular class of activity that might disrupt business "if it resolves any"419. It is open to the Parliament to "respond to felt necessities" and to target only some activities420 – here, protest activity where the conduct has significant adverse consequences for the carrying out of a business activity or access to business premises. Indeed, the plaintiffs' contention that the impugned provisions (especially Pt 4 of the Protesters Act) discriminate against protesters depends upon saying that the legislature has no power to target and deter particular kinds of unlawful conduct by prescribing criminal sanctions and punishment (or at least that such targeting is necessarily vulnerable to challenge). That premise is overbroad. The law marks the boundary of what is, and what is not, permitted conduct. Lange itself shows that the demands of the implied freedom may modify the civil law: in that case, by modifying the defence of qualified privilege. In this case, no party or intervener suggested that the implied freedom requires some modification or qualification to the civil law of trespass or nuisance or the existing criminal law of Tasmania. Here, the legislative intervention is primarily directed to creating and enforcing rules of conduct that substantially overlap with existing laws that prohibit the same conduct. As said earlier, there is little or no change in what people may do. And the legislature has power to deter particular kinds of unlawful conduct by prescribing sanctions and penalties. Just because others engaging in similar unlawful conduct (but not protesting) are not subject to the same sanctions does not mean that this form of unlawful conduct cannot and should not attract the sanctions and penalties in Pt 4 of the Protesters Act. Subject to s 8(1)(b), which is addressed later, the means adopted by the impugned provisions are both explained and justified by the Protesters Act's reasonable pursuit of a legitimate end – to protect the productivity, property and personnel of businesses from conduct that prevents, hinders or obstructs business 419 McCloy (2015) 257 CLR 178 at 251 [197]. 420 McCloy (2015) 257 CLR 178 at 251 [197]. activity or causes damage on business premises or in areas necessary to access business premises. The means adopted by the Protesters Act are capable of advancing that purpose: ss 6, 7, 8 (except for s 8(1)(b)) and 11 are directed to conduct of precisely that character. The other impugned provisions then go on to provide a means by which that conduct can be prevented or terminated. Each provision is rationally connected to that end: each advances the legitimate end of protecting the productivity, property and personnel of businesses from conduct that adversely affects business activity. Once it is accepted that any burden imposed by the impugned provisions is minimal; that those provisions do no more than regulate the time, place and manner of a particular kind of political communication (specifically, a form of protest that is disruptive or causes damage); that those provisions seek to serve a legitimate end; and that those provisions are rationally connected to that end, it is difficult to see how the provisions are not reasonably appropriate and adapted to serving that end in a manner which is compatible with the system of government established by the Constitution. "Necessity"? In the circumstances of this matter, it is not necessary (or helpful) to consider whether there are "obvious and compelling" and "reasonably practicable" alternatives to the Protesters Act. Indeed, there is a paradox in the plaintiffs' contention that the Forest Management Act – which contains wider, more general, less targeted prohibitions that, in some respects, have a greater potential to burden the implied freedom – is an alternative. The paradox lies in the suggestion that prohibitions wider than the impugned provisions are less constitutionally suspect. And the notion of necessity as a tool, or an aspect of a tool, of analysis is often imperfect. It cannot be, and is not, decisive of invalidity in every case in which it might be used421. "Adequate in its balance"? Nor is it necessary or appropriate to consider whether the impugned provisions are "adequate" in their "balance". It is necessary to say something further about this issue. The plurality in McCloy said that "proportionality testing" in relation to an impugned law required asking three questions, the third being whether the law is "adequate in its balance"422. This was described as "a criterion requiring a value 421 See Tajjour (2014) 254 CLR 508 at 581 [152]; McCloy (2015) 257 CLR 178 at 233 [135], 259 [222], 285 [328]; Murphy v Electoral Commissioner (2016) 90 ALJR 1027 at 1080 [305]; 334 ALR 369 at 437; [2016] HCA 36. 422 (2015) 257 CLR 178 at 194-195 [2(B)(3)]; see also at 217 [79]. judgment, consistently with the limits of the judicial function, describing the balance between the importance of the purpose served by the restrictive measure and the extent of the restriction it imposes on the freedom"423. It was said that, if the law does not satisfy this criterion, it "will exceed the implied limitation on legislative power"424. Asking whether a law is "adequate in its balance" as part of an inquiry into its proportionality has always been controversial425. Professor Barak has suggested that "[t]he basic rule of balancing is too abstract"426. Sir Anthony Mason has described structured proportionality, and the balancing that it entails, as "a rather cumbersome edifice which at the end of the day, at the last step, delivers nothing more than a value judgment"427. There is also controversy about the role, if any, that the concept of balancing has to play in the specific context of the implied freedom of political communication. On one view, the cases leading up to McCloy "seem to illustrate a balancing of the freedom with other social goals"428. On another view, "no question of ad hoc balancing is involved" when applying the Lange questions429. The controversy about the relevance of balancing to the implied freedom can be explained, at least in part, by different understandings of the concept of balancing. But this case does not require delving into those different 423 McCloy (2015) 257 CLR 178 at 195 [2(B)(3)]; see also at 219-220 [89]. 424 McCloy (2015) 257 CLR 178 at 195 [2(B)(3)]. 425 McCloy (2015) 257 CLR 178 at 236 [146]. 426 Barak, Proportionality: Constitutional Rights and their Limitations, (2012) at 542 quoted in McCloy (2015) 257 CLR 178 at 237 [146]. See also Tsakyrakis, "Proportionality: An assault on human rights?", (2009) 7 International Journal of Constitutional Law 468; Webber, The Negotiable Constitution: On the Limitation of Rights, (2009) at 87-115. 427 Mason, "The use of proportionality in Australian constitutional law", (2016) 27 Public Law Review 109 at 121. 428 Stellios, Zines's The High Court and the Constitution, 6th ed (2015) at 588. See also Stone, "The Limits of Constitutional Text and Structure: Standards of Review and the Freedom of Political Communication", (1999) 23 Melbourne University Law Review 668 at 681-682. 429 Coleman (2004) 220 CLR 1 at 48 [88]. See also McCloy (2015) 257 CLR 178 at understandings430. The conclusion that the impugned provisions (save for one exception) are reasonably appropriate and adapted to serve a legitimate end can be, and is, reached without recourse to an assessment of their "balance". However, it is necessary to point to two fundamental difficulties with balancing as described in McCloy. First, it remains unclear just how the value judgments that are a part of the balancing task described in McCloy are to be made. It is said that a balance must be struck between "the importance of the purpose and the extent of the restriction on the freedom"431. It is said that courts are permitted, and required, to "discern public benefits in legislation which has been passed"432. But what are the criteria for judging the importance of the legislative purpose? Without any principled answer to that question – and none is apparent – it is difficult to see how a court can undertake an objective analysis433. Second, the adoption of balancing does not account for the fact that the in a significantly different concept "has been developed and applied constitutional context"434. Unlike other countries in which "balancing" has been used, Australia does not have a Bill of Rights. The implied freedom of political communication is not a personal right435. Those very basic propositions highlight the importance of adopting criteria that are "sufficiently focused adequately to reflect the reasons for the implication of the constitutional freedom"436. If the criteria are not closely anchored to the rationale for the implied freedom, there is 430 See also Tajjour (2014) 254 CLR 508 at 575 [133]. 431 McCloy (2015) 257 CLR 178 at 219 [89]. 432 McCloy (2015) 257 CLR 178 at 220 [90]. 433 See Mason, "The use of proportionality in Australian constitutional law", (2016) 27 Public Law Review 109 at 121. See also Webber, The Negotiable Constitution: On the Limitation of Rights, (2009) at 94. 434 Mulholland (2004) 220 CLR 181 at 199 [38]. See also Roach v Electoral Commissioner (2007) 233 CLR 162 at 178-179 [17]; [2007] HCA 43; McCloy (2015) 257 CLR 178 at 234 [139], 288-289 [339]; Murphy (2016) 90 ALJR 1027 at 1079 [296]; 334 ALR 369 at 435. 435 Unions NSW (2013) 252 CLR 530 at 554 [36]; McCloy (2015) 257 CLR 178 at 436 McCloy (2015) 257 CLR 178 at 236 [145]; see also at 238 [150]. a risk that "[t]he rules themselves [will] take over, ceasing to be a means to an end and becoming the end itself"437. The implied freedom exists because it is an indispensable incident of the system of representative and responsible government for which the Constitution provides438. The judicial role extends to ensuring that this system of government is not undermined by laws burdening political communication. But the judiciary faces a conundrum: that very role places a court in a position where it must exercise judgment about laws enacted by members of Parliament, who exercise legislative power as "representatives of the people"439 and who are "accountable to the people for what they do"440. Unless a court exercises that judgment with a proper appreciation of the rationale for the implied freedom, it risks overstepping the boundaries of its supervisory role and, in doing so, undermining the very system of representative government which it is charged with protecting441. It was said in McCloy that "[t]he fact that a value judgment is involved [at the balancing stage] does not entitle the courts to substitute their own assessment for that of the legislative decision-maker"442. But a heightened danger of such encroachment is the precise consequence of an approach which requires the making of value judgments unguided by any clear principle. In short, "[t]he balancing of the protection of other interests against the freedom to discuss governments and political matters is, under our Constitution, a matter for the Parliament to determine and for the Courts to supervise"443 (emphasis added). However, the approach to balancing described in McCloy invites a court "to sit in judgment on the legislative decision, without having 437 Twomey, "Proportionality and the Constitution", speech delivered at the ALRC Freedoms Symposium, 8 October 2015. See also Murphy (2016) 90 ALJR 1027 at 1050 [101]; 334 ALR 369 at 396. 438 ACTV (1992) 177 CLR 106 at 138; Lange (1997) 189 CLR 520 at 559. 439 ACTV (1992) 177 CLR 106 at 138. 440 ACTV (1992) 177 CLR 106 at 138. 441 See McCloy (2015) 257 CLR 178 at 238 [150]. See also Unions NSW (2013) 252 CLR 530 at 548 [17], 578 [135]. 442 (2015) 257 CLR 178 at 219 [89]. 443 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 50; [1992] HCA 46. See also Mulholland (2004) 220 CLR 181 at 197 [32]; McCloy (2015) 257 CLR access to all the political considerations that played a part in the making of that decision, thereby giving a new and unacceptable dimension to the relationship between the Court and the legislature"444. Courts are ill-equipped to make judgments of that kind, not least because judges have different "skills and professional habits" from members of the legislative and executive branches445. Moreover, as the plurality in McCloy recognised, the balancing stage "is regarded by the courts of some legal systems as most important"446. It has been suggested that, in Germany, it is this stage that has become "the most decisive"447. If the same pattern were to emerge in the application of the McCloy approach in Australia, it would mark a fundamental shift in the nature of the inquiry as to whether a law infringes the implied freedom of political communication. It may be that, as the Attorney-General of the Commonwealth suggested, "balancing" of some description is relevant where a law has as its object the promotion, protection or enhancement of the constitutionally prescribed system of government. In those circumstances, a court will be directly concerned with balancing positive and negative effects on the system. It will not be called upon to examine the "importance" of a distinct legislative object. But this is not such a case. Conclusion Subject to the exception identified earlier – being s 8(1)(b) – the impugned provisions are not beyond Tasmania's legislative power in their legal effect and practical operation in relation to forestry land. Each permissibly burdens the implied freedom and is valid. 444 Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 473; [1990] HCA 1. See also Leask v The Commonwealth (1996) 187 CLR 579 at 615-616; [1996] HCA 29. 445 See Murphy (2016) 90 ALJR 1027 at 1080 [303]; 334 ALR 369 at 436-437 quoting R v Davison (1954) 90 CLR 353 at 381-382; [1954] HCA 46. See also Lord Sumption, "The Limits of Law", in Barber, Ekins and Yowell (eds), Lord Sumption and the Limits of the Law, (2016) 15 at 26. 446 (2015) 257 CLR 178 at 219 [87]; see also at 218 [84]-[86]. 447 Grimm, "Proportionality in Canadian and German Constitutional Jurisprudence", (2007) 57 University of Toronto Law Journal 383 at 384; see also at 389, 393. See also Tsakyrakis, "Proportionality: An assault on human rights?", (2009) 7 International Journal of Constitutional Law 468 at 474. Invalid provision of the Protesters Act – Question 2 Section 8(1)(b) is in a different category. It effectively burdens the implied freedom of political communication448. It goes beyond the legitimate object of the Protesters Act449 and has no rational connection to that object. Section 8(1)(b) provides that a person must not enter a business access area in relation to business premises within four days after having been directed by a police officer under s 11 to leave the business premises or a business access area in relation to the business premises. Section 8(1)(b), in its terms, does not prohibit conduct for a legitimate purpose other than the suppression of political communication. Section 8(1)(b) cannot be said to be directed to regulating effects of conduct beyond the communication of ideas or information – it does not have an object compatible with the maintenance of the constitutionally prescribed system of government. Why four days? Why prohibit a person from entering a business access area in relation to business premises irrespective of what that person intends to do by way of conduct in that area? Its legal effect and practical operation stand in stark contrast with s 6(1) (directed at regulating entry into business premises) and s 6(2) (directed at regulating acts on business premises or on a business access area in relation to business premises), which are enlivened where the specified conduct (the entry or the act) is conduct that prevents, hinders or obstructs the carrying out of a business activity on business premises by a business occupier in relation to the business premises. Section 8(1)(b) goes beyond penalising what was unlawful before the enactment of the relevant provisions. The resulting burden on communication is beyond what is reasonably appropriate and adapted to serve the legitimate object of the Protesters Act. Impugned provisions are not vague and uncertain Although not expressly articulated in this way, the plaintiffs sought to contend that the Protesters Act burdened the freedom of communication about government or political matters because it was vague and uncertain. They submitted that the prohibitions under the Protesters Act "operate in such a sweeping and uncertain fashion [because] [w]hat is a 'business access area' and what is a 'business [premises]' are by no means clear in practice". Similarly, during the course of the hearing, the plaintiffs submitted that "the uncertain boundaries" that the Protesters Act drew between a business access area and that area beyond a business access area had the effect of 448 See [395]-[396] above. 449 See [397]-[414] above. "exacerbating the burden". The basis upon which the burden might be exacerbated by uncertainty was not explained by the plaintiffs. In particular, the plaintiffs did not, in oral or written argument, appeal to any notion of deterrence or deterrent effect. A related complaint made by the plaintiffs was that the impugned provisions permit, perhaps even encourage, arbitrary and discriminatory enforcement450. But if any statutory power, including any enforcement power, is so exercised, the exercise of that power will be subject to judicial review and would be found invalid451. It is true, as the plaintiffs submitted, that by the time this process occurs, the "protest will have been quelled and the time for the protest may well have passed". On that view, political communication will have been "burdened" as a consequence of the unlawful exercise of an enforcement power. Although the plaintiffs did not contend that the impugned provisions were vague and therefore invalid per se, the plaintiffs' contentions about uncertainty and unlawful exercise had echoes of principles developed in the context of constitutional jurisprudence in the United States relating to requirements of due process under the Fifth and Fourteenth Amendments to the United States Constitution. That body of jurisprudence stands for the proposition that laws, and in particular penal laws, that are defined without "sufficient definiteness" may be invalid due to vagueness452. Vagueness is a distinct doctrine in United States constitutional law that has no equivalent in Australian constitutional law. In the United States, "[t]o satisfy due process, 'a penal statute [must] define the criminal offense [1] with sufficient definiteness that ordinary people can understand what conduct is prohibited and [2] in a manner that does not encourage arbitrary and discriminatory enforcement.' The void-for-vagueness doctrine embraces these requirements"453. And the doctrine of vagueness applies to all penal statutes, not only those regulating freedom of speech or other constitutional rights454. It operates to invalidate statutes independently from the First Amendment. 450 See, eg, Smith v Goguen 415 US 566 at 573 (1974). 451 See, eg, Prior (2017) 91 ALJR 441 at 464-465 [126]-[130]; 343 ALR 1 at 30-31. 452 See, eg, Kolender v Lawson 461 US 352 at 357 (1983); Skilling v United States 561 US 358 at 402-403 (2010). 453 Skilling 561 US 358 at 402-403 (2010) quoting Kolender 461 US 352 at 357 (1983). See also Grayned v City of Rockford 408 US 104 at 108-109 (1972). 454 See, eg, Nowak and Rotunda, Constitutional Law, 7th ed (2004) at 1158. But where a vague sensitive areas of basic First Amendment freedoms", the context in which the law is considered includes that "important value[]"455. statute "abut[s] upon There is no principle in Australian constitutional law that is equivalent to the United States constitutional law doctrine (or doctrines) about vagueness. And there is nothing to support the proposition that the assessment required by the Lange questions (or any modification of them) should take into account the notion that there is a chance a law might be enforced unlawfully. Unlike the United States, the Australian legal system does not consider that a vague law "impermissibly delegates basic policy matters to policemen, judges, and juries for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application"456. As Windeyer J said in R v Holmes; Ex parte Altona Petrochemical Co Ltd, "[c]ourts must wrestle, and are accustomed to wrestle, with difficult language. They are required to find its meaning, not permitted to abandon the task"457. Indeed, "[w]hatever the difficulties of construction may be, [a] [c]ourt is bound to give some meaning to the section, and upon no proper principles could a court ever hold that an Act of the legislature was to be regarded as a nullity because of the uncertainty of the language used"458. In King Gee Clothing Co Pty Ltd v The Commonwealth, which concerned the validity of delegated legislation rather than primary legislation, Dixon J made the following relevant observations459: "I should have thought that, in this matter, [the regulations] stood on the same ground as an Act of Parliament and were governed by the same rules of construction. I am unaware of any principle of law or of interpretation which places upon a power of subordinate legislation conferred upon the Governor-General by the Parliament a limitation or condition making 455 See Grayned 408 US 104 at 108-109 (1972). 456 Grayned 408 US 104 at 108-109 (1972). 457 (1972) 126 CLR 529 at 562; [1972] HCA 20. 458 Scott v Moses (1957) 75 WN (NSW) 101 at 102. See also Whittaker v Comcare (1998) 86 FCR 532 at 543-544. 459 (1945) 71 CLR 184 at 195; [1945] HCA 23 (citations omitted). See also Television Corporation Ltd v The Commonwealth (1963) 109 CLR 59 at 71; [1963] HCA 30. See also R v Smith [1974] 2 NSWLR 586 at 589. cf R v Hughes (2000) 202 CLR 535 at 575-576 [95]-[98]; [2000] HCA 22. either reasonableness or certainty indispensable to its valid exercise. Our Constitution contains no due process clause and we cannot follow the jurisprudence of the United States by saying that uncertainty violates a constitutional safeguard." In Cann's Pty Ltd v The Commonwealth, Dixon J reiterated the view that he expressed in King Gee and, in the course of doing so, said460: "The interpretation of all written documents is liable to be attended with difficulty, and it is not my opinion that doubts and misgivings as to what the instrument intends, however heavily they may weigh upon a court of construction, authorize the conclusion that an order made under reg 23 is ultra vires or otherwise void. If in some respects its meaning is unascertainable, then, no doubt, it fails to that extent to prescribe effectively rights or liabilities, but that is because no particular act or thing can be brought within the scope of what is expressed unintelligibly. But to resolve ambiguities and uncertainties about the meaning of any writing is a function of interpretation and, unless the power under which a legislative or administrative order is made is read as requiring certainty of expression as a condition of its valid exercise ... the meaning of the order must be ascertained according to the rules of construction and the principles of interpretation as with any other document." (emphasis added) These observations accord with the well-established approach to statutory construction: "the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have"461. That duty remains constant, regardless of whether the words of a statutory provision are uncertain or unclear462. Courts cannot abandon the task. "When inconsistencies or ambiguities appear they are dealt with by [c]ourts according to the established principles of statutory interpretation"463. Once it is accepted, as it must be, that Australia knows no doctrine of statutory uncertainty, there is no legal basis for importing a doctrine of vagueness by speaking of a law having "that quality". 460 Cann's (1946) 71 CLR 210 at 227-228; [1946] HCA 5. 461 Project Blue Sky (1998) 194 CLR 355 at 384 [78]. 462 See Lee Vanit v The Queen (1997) 190 CLR 378 at 393-394; [1997] HCA 51. 463 Kennedy v Lowe; Ex parte Lowe [1985] 1 Qd R 48 at 49. To reason that a statute is invalid by reference to the case of a police officer having a reasonable, but factually unstable, belief of the matters required by the statute is in truth to say that reasonable belief is an impermissible or unworkable criterion for imposing restrictions on conduct. If that were so (and it is not) it would mean a court could not enjoin future conduct having reached a conclusion about what is reasonably threatened or likely to occur. Moreover, despite the First Amendment, laws in the United States that have used language similar to that in the Protesters Act have survived vagueness challenges. In Cameron v Johnson, a law which prohibited "picketing ... in such a manner as to obstruct or unreasonably interfere with free ingress or egress to and from any ... county ... courthouses" was held to be valid464. The Supreme Court concluded that the "statute clearly and precisely delineat[ed] its reach in words of common understanding"465. In Grayned v City of Rockford, an impugned ordinance provided that "no person, while on public or private grounds adjacent to any building in which a school or any class thereof is in session, shall willfully make or assist in the making of any noise or diversion which disturbs or tends to disturb the peace or good order of such school session or class thereof"466. The Supreme Court "The words of the ... ordinance are marked by 'flexibility and reasonable breadth, rather than meticulous specificity,' ... but we think it is clear what the ordinance as a whole prohibits. Designed, according to its preamble, 'for the protection of Schools,' the ordinance forbids deliberately noisy or diversionary activity that disrupts or is about to disrupt normal school activities. It forbids this willful activity at fixed times – when school is in session – and at a sufficiently fixed place – 'adjacent' to the school." The same kind of analysis can and should be adopted in relation to the impugned provisions. Inapplicability of the United States "chilling effect" doctrine In United States First Amendment jurisprudence, "[a] chilling effect occurs when individuals seeking to engage in activity protected by the first 464 390 US 611 at 615-617 (1968). 465 Cameron 390 US 611 at 616 (1968). 466 408 US 104 at 107-108 (1972). 467 Grayned 408 US 104 at 110-111 (1972) (footnote omitted). amendment are deterred from so doing by governmental regulation not specifically directed at that protected activity"468 (emphasis added). "The very essence of a chilling effect is an act of deterrence"469. The concept of the "chilling effect" is reflected in, and relevant to the application of, the doctrine of vagueness in the First Amendment context470. The danger of the chilling effect has been explained in the following terms471: "Deterred by the fear of punishment, some individuals refrain from saying or publishing that which they lawfully could, and indeed, should. This is to be feared not only because of the harm that flows from the non-exercise of a constitutional right, but also because of general societal loss which results when the freedoms guaranteed by the first amendment are not exercised." (emphasis added) This explanation highlights, and reinforces, an important difference between the implied freedom of political communication under the Australian Constitution and the freedom of speech protected by the First Amendment to the United States Constitution. Because the implied freedom operates solely as a restriction on power472 and only to the extent necessary to maintain the constitutionally prescribed system of government, the notion of speech as an affirmative value has no role to play. In United States jurisprudence, the chilling effect, as a "specific substantive doctrine lying at the very heart of the first amendment"473, acknowledges that the legal system is imperfect and that it is inevitable that 468 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 693. 469 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 689. 470 See Farber, "Free Speech without Romance: Public Choice and the First Amendment", (1991) 105 Harvard Law Review 554 at 570. 471 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 693. 472 Unions NSW (2013) 252 CLR 530 at 554 [36]; McCloy (2015) 257 CLR 178 at 473 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 688. errors will be made474. It is this "possibility of error and the consequent uncertainty which create the chilling effect"475. However, there are various types of error and uncertainty. First, the machinery of the law makes mistakes – for example, the facts may be incorrectly determined or the law may be incorrectly applied to the facts476. In other words, the outcome of litigation can be unpredictable, and that might lead to persons being deterred from certain activity because they fear that conduct that is lawful may nonetheless be punished477. And the degree of fear may be influenced by the harshness of the penalty478. Second, there may be uncertainty in the minds of individuals about whether their intended behaviour is protected. This uncertainty might arise from a number of causes; "perhaps the most important is that it is often difficult to determine whether the contemplated conduct is covered by a regulating rule"479. As the Supreme Court of the United States has stated: "[u]ncertain meanings inevitably lead citizens to '"steer far wider of the unlawful zone" ... than if the boundaries of the forbidden areas were clearly marked'"480. It is this type of uncertainty that is "the chief vice of vagueness", which one commentator has described in these terms481: 474 See, eg, Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 689, 701. 475 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 694. 476 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 694-695. 477 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 695. 478 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 696. 479 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 698. 480 Grayned 408 US 104 at 109 (1972). 481 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 698 (footnote omitted). "If the terms of a statute or the concepts underlying a common-law principle are so amorphous as to create no crystalized view of what precise conduct is being regulated, an individual may be quite unsure whether his intended behavior is proscribed until after he has acted. Indeed, some legal concepts and language may be so incapable of precise definition and application that any real degree of certainty is unattainable." The United States learning in this area then takes a further step – "to determine which of the various possible errors is the more harmful"482. This step assumes that one type of error is preferable to another type of error483 – in particular, it assumes that there is a preference for errors made in favour of free speech484. One commentator has suggested that "a wrongful limitation of speech is a priori more serious than the erroneous overextension of free speech"485. The premise of that assumption is "the recognized preeminence of the first amendment"486. The implied freedom of political communication in Australia stands in stark contrast at many levels. It does not give political communication "transcendent value" equivalent to individual liberty487. It operates only to the extent necessary for the effective operation of the system of representative and responsible government established by the Constitution488 and as a limitation on legislative and executive power. It does not confer a personal right. Individual or personal reactions to a restriction may be relevant to the ambit of a personal 482 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 701. 483 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 689, 731. 484 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 704, 732. 485 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 701. 486 Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 704. 487 cf Schauer, "Fear, Risk and the First Amendment: Unraveling the 'Chilling Effect'", (1978) 58 Boston University Law Review 685 at 702, 704 citing Speiser v Randall 357 US 513 at 526 (1958). 488 Lange (1997) 189 CLR 520 at 561. freedom. Individual or personal reactions to a restriction are not relevant to determining the ambit of legislative or executive power. The differences between the implied freedom of political communication under the Australian Constitution and the freedom of speech protected by the First Amendment to the United States Constitution are too great, and too deeply entrenched, for any doctrines of vagueness, uncertainty or "chilling effect" in United States jurisprudence to be adopted directly or indirectly. Certainty and the implied freedom That the impugned provisions are not vague and uncertain, and that the United States chilling effect doctrine has no application when considering the implied freedom, both reflect fundamental aspects of the constitutional relationship in Australia between the judicial and legislative branches of government. There may be a point at which a law appears to be expressed with such indefinite width, or to delegate power to such an extent489, that it invites judicial consideration of questions of the kind discussed by the plurality in Plaintiff S157/2002 v The Commonwealth490, including whether the law truly provides for "a rule of conduct or a declaration as to power, right or duty"491. But such questions do not arise in the present case, and they are not the concern of the implied freedom. By way of further comparison, particular species of uncertainty have been the subject of consideration in the United Kingdom. In AXA General Insurance Ltd v HM Advocate, which concerned the powers of a devolved legislature, it was accepted that some provisions of the European Convention on Human Rights direct attention to the degree of certainty when determining whether an interference with a right is "lawful"492. It is enough to say that no individual right or freedom is at stake in this case, and inquiries of that kind are not relevant to the implied freedom. 489 See generally Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73; [1931] HCA 34. 490 (2003) 211 CLR 476 at 511-514 [98]-[104]; [2003] HCA 2. 491 The Commonwealth v Grunseit (1943) 67 CLR 58 at 82; [1943] HCA 47. 492 [2012] 1 AC 868 at 933-936 [116]-[123]. See also Art 1 of Protocol 1 to the European Convention on Human Rights. In R v Rimmington, which concerned the scope of the common law offence of public nuisance, lack of clarity in the definition of a criminal offence was identified as a basis, at common law, for questioning the safety of a conviction493. Even then, it was recognised that absolute certainty was not possible and the question could only arise in "extreme" situations where the ingredients of the purported offence could not be discerned in advance494. In that case, as well as AXA General Insurance, the type of legal uncertainty under consideration was uncertainty that involved retrospectivity. Reopen McCloy? In McCloy, no party or intervener challenged the decision in Lange or sought to have the Court discard or modify the substance of the two questions identified in Lange as the questions that must be asked and answered in deciding whether a statutory provision is beyond power because it infringes the implied freedom495. They remain the questions to be asked and answered. Indeed, as the Attorney-General of the Commonwealth submitted in this case, the McCloy approach does not alter the two questions identified in Lange that must be asked in determining whether an impugned law is contrary to the implied freedom of political communication496. Those questions capture the limits between judicial encroachment on the legislative function. judicial scrutiny and impermissible legitimate The method of analysis adopted by the plurality in McCloy is a tool of analysis, not constitutional doctrine. It is not a "precedent-mandated analysis"497. And, if only for that reason, it is not necessary or appropriate to apply all aspects of that approach in every case. The alternative view of the plurality's approach in McCloy – that, in each case involving the implied freedom, a cascading series of questions must be 493 [2006] 1 AC 459 at 480-484 [32]-[37]. 494 Rimmington [2006] 1 AC 459 at 482 [33] quoting R v Misra [2005] 1 Cr App R 495 See McCloy (2015) 257 CLR 178 at 281 [308]; see also at 234 [140], 259 [222], 496 McCloy (2015) 257 CLR 178 at 200-201 [23], 222 [98], 230 [124], 258 [220], 497 See Tajjour (2014) 254 CLR 508 at 578 [144]. answered, and the wrong answer to any one of them will result in invalidity498 – suffers from at least two fundamental difficulties. First, as Gageler J explained in McCloy, that approach assumes that "one size fits all"499. It is by no means apparent that a standardised formula of that kind is suitable to be applied to "every law which imposes a legal or practical restriction on political communication irrespective of the subject matter of the law and no matter how large or small, focused or incidental, that restriction on political communication might be"500. A "one size fits all" approach does not reflect the common law method of legal reasoning; rather, it involves "an abstracted top-down analysis" that reflects its civil law origins501. Because the extent and the nature of the burden on the implied freedom will be case specific, any analysis must likewise be case specific502. Just as this Court has never previously adopted a rigid analysis of the kind suggested by McCloy, "[n]or has it overtly adopted a categorical approach of the kind used in the United States" in relation to the First Amendment503. But there are elements of this approach latent in the existing authorities. This is not surprising – "[c]ategorisation is a traditional common law approach to the solution of legal problems"504. For example, it has been recognised that some laws "have only an indirect or incidental effect upon communication about matters of government and politics. Others have a direct and substantial effect. Some may themselves be characterised as laws with respect to communication about such matters"505. 498 See, eg, Murphy (2016) 90 ALJR 1027 at 1050 [99]; 334 ALR 369 at 396. 499 (2015) 257 CLR 178 at 235 [142]. 500 McCloy (2015) 257 CLR 178 at 235 [142]. 501 Murphy (2016) 90 ALJR 1027 at 1051 [109]; 334 ALR 369 at 398. 502 McCloy (2015) 257 CLR 178 at 288 [337]. 503 Tajjour (2014) 254 CLR 508 at 580 [150]. 504 Mason, "The use of proportionality in Australian constitutional law", (2016) 27 Public Law Review 109 at 121. 505 Mulholland (2004) 220 CLR 181 at 200 [40] citing ACTV (1992) 177 CLR 106 at 169. See also Hogan (2011) 243 CLR 506 at 555 [95]; Wotton (2012) 246 CLR 1 (Footnote continues on next page) Depending on the category, a law may be more or less difficult to justify. Relevantly to this case, laws imposing restrictions on the time, place and manner of political communication have been understood as forming a category that requires a lesser justification506. However, it is neither necessary nor appropriate in any given case to seek to identify different categories exhaustively or the criteria that might apply to them. The common law approach "permits the development of different criteria for different constitutional contexts"507. Second, to treat some of the "tools of analysis" identified in McCloy as determinative of the validity of a law would mark a departure from the existing stream of authority. The "necessity" of a restriction, insofar as that directs attention to reasonably available alternative measures, is a matter that may inform the analysis – but it has not been treated as a matter that is decisive in every case508. And treating the "balancing" stage as decisive would only exacerbate the difficulties with that stage outlined earlier509. It is also necessary to say something about "compatibility testing" as that concept was described by the plurality in McCloy. As this case demonstrates, a time, place or manner prohibition on protest activity is not necessarily incompatible with the system of representative and responsible government for which the Constitution provides. The "legitimacy" of the means is determined not as part of a binary inquiry about "compatibility", but as part of a graduated inquiry involving "proportionality" to a legitimate end. The use of a structured approach to proportionality in McCloy must not shift or obscure those limits510. It is for that reason that, as the Attorney-General of the Commonwealth submitted, even if the McCloy approach is appropriate to be used as a tool of analysis, the second and third steps should be reformulated along the following lines: at 16 [30]; Tajjour (2014) 254 CLR 508 at 580-581 [151]; McCloy (2015) 257 CLR 178 at 238-239 [152], 268-269 [252]-[253]. 506 See Coleman (2004) 220 CLR 1 at 49-50 [91]. 507 McCloy (2015) 257 CLR 178 at 288 [337]. 508 See Tajjour (2014) 254 CLR 508 at 581 [152]; McCloy (2015) 257 CLR 178 at 233 [135], 259 [222], 285 [328]; Murphy (2016) 90 ALJR 1027 at 1080 [305]; 334 ALR 369 at 437. 509 See [432]-[438] above. 510 (2015) 257 CLR 178 at 195-196 [4], 213 [68], 215 [72], 215-216 [74], 216 [77]. Step 2: "… is the purpose of the law legitimate, in the sense that it is compatible with the maintenance of the constitutionally prescribed system of [representative and responsible] government?" Step 3: "… is the law reasonably appropriate and adapted to advance that legitimate object in a manner that is compatible with the maintenance of the constitutionally prescribed system of [representative and responsible] government?" In those circumstances, it is unnecessary to consider whether to grant leave to reopen McCloy. Conclusion For those reasons, I would answer the questions of law stated by way of special case for the opinion of the Full Court under r 27.08.1 of the High Court Rules 2004 (Cth) as follows: Question 1: Answer: Question 2: Answer: Do either or both of the plaintiffs have standing to seek the relief sought in the Amended Statement of Claim? Tasmania abandoned its challenge to the plaintiffs' standing. Question 1 therefore need not be answered. Is [the Protesters Act], either in its entirety or in its operation in respect of forestry land or business access areas in relation to forestry land, invalid implied impermissibly burdens because freedom of political communication contrary to the Commonwealth Constitution? the In its operation in respect of business access areas in relation to forestry land, s 8(1)(b) of the Protesters Act is invalid. The Protesters Act is not otherwise invalid in its operation in respect of forestry land or business access areas in relation to forestry land. Question 3: Who should pay the costs of the Special Case? Answer: Tasmania. Edelman EDELMAN J. In an extrajudicial essay, Lord Sumption recently said that, "at the risk of sounding paradoxical", he wished to defend the "opacity, fudge or irrationality" that can characterise the political process511. These reasons likewise defend, from constitutional attack, legislation that was characterised by the plaintiffs in similar terms. A primary duty of a court is to construe relevant legislation. If legislation, properly construed, is consistent with the Constitution then it should not be held to be invalid even if it is perceived to be opaque, fudged, or irrational. In 1857, Sedgwick wrote that "[w]hen a case of doubt arises in regard to a statute, the first duty of the judge is to ascertain [its] meaning"512. For nearly a century in Australia, a similar "longstanding instruction of this Court"513 in cases of suggested constitutional invalidity has been repeated, again and again514. That instruction, in the words of French CJ, Kiefel and Bell JJ, is that515: "Before considering the constitutional validity of any statute, it is necessary to consider its construction and operation. Its construction will give effect to the ordinary meaning of its text in the wider statutory context and with reference to the purpose of the provision". The foundation of this instruction lies in fundamental tenets of the separation of powers. Members of the public are not bound by the mere words of a statute. They are bound by the meaning of those words. Constitutional validity depends upon that meaning. The meaning of statutory words is expounded by the judiciary. No matter how ambiguous or uncertain the words of legislation 511 Sumption, "The Limits of Law", in Barber, Ekins and Yowell (eds), Lord Sumption and the Limits of the Law, (2016) 15 at 24. 512 Sedgwick, A Treatise on the Rules which Govern the Interpretation and Application of Statutory and Constitutional Law, (1857) at 293-294. 513 Coleman v Power (2004) 220 CLR 1 at 84 [220]; [2004] HCA 39. 514 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 186; [1948] HCA 7; The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 152; [1983] HCA 21; Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 352 [7]; [1998] HCA 22; R v Hughes (2000) 202 CLR 535 at 582-583 [117]; [2000] HCA 22; R v Wei Tang (2008) 237 CLR 1 at 39 [84]; [2008] HCA 39; K-Generation Pty Ltd v Liquor Licensing Court (2009) 237 CLR 501 at 519 [46]; [2009] HCA 4; Plaintiff S156/2013 v Minister for Immigration and Border Protection (2014) 254 CLR 28 at 42 [23]; [2014] HCA 22. 515 North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at 581 [11]; [2015] HCA 41. See also at 625-626 [149]. Edelman may be, it is emphatically the province of the judiciary to explicate the meaning of legislation516. Legislation is never contrary to the Constitution, and invalid, merely because the Executive considers, or might consider, its words to have a particular meaning. Nor is the Executive afforded any deference to its preferred construction of legislation517. Since it is the meaning of statutory words that determines whether a legislative act complies with the Constitution, and since the task of determining meaning is the role of the judiciary, it is always necessary for the judiciary to construe the meaning of legislation before pronouncing upon whether that meaning is consistent with the Constitution. This case is a particularly apt illustration of the need to construe the meaning of legislation before finding a provision to be contrary to the Constitution, and therefore invalid. The essence of the submissions of the State of Tasmania, supported by the States of Victoria and South Australia, was that the Workplaces (Protection from Protesters) Act 2014 (Tas) ("the Protesters Act") imposes no relevant burden on political communication, because, properly construed in relation to forest operations and areas of access to, or exit from, those operations, the Protesters Act applies only to activity which is unlawful for reasons that are independent of the operation of the Act. Alternatively, those States submitted that the extent to which lawful conduct was burdened was minimal and justified. Without first ascertaining the proper construction of the challenged sections of the Protesters Act it is impossible to know whether those sections burden political communication and, if so, the extent of the burden. Although none of the submissions in this case dealt with all of the construction permutations in detail, it is necessary to construe the legislation before assessing its constitutional validity. There are two possibilities as to how the construction of the Protesters Act should be approached in its application to the relevant circumstances of this case. The first is that the Protesters Act is so uncertain, and so hopelessly vague, that it is impossible for any court to give it a construction that would permit the court to explain, and therefore any individual to know, whether and when many contraventions of the Protesters Act would occur in circumstances such as those that arise in this case. On this approach, the core concepts of "business premises" and "business access area" could, at any time, be almost anywhere within approximately 800,000 hectares of permanent timber production zone land 516 Marbury v Madison 5 US 137 at 177 (1803); Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35; [1990] HCA 21. 517 Enfield City Corporation v Development Assessment Commission (2000) 199 CLR 135 at 151-153 [40]-[43]; [2000] HCA 5. Edelman accessible to the public, provided that forest operations are being undertaken somewhere within that vast region. In many situations an individual could never know if he or she were committing an indictable offence. More fundamentally, unless the Act were (absurdly) treated as deeming the whole of the permanent timber production zone land to be business premises or a business access area whenever forest operations were occurring, then a court would have no rule by which to determine the boundaries of any business premises or business access area. On this extreme approach, if it were concluded that Parliament's "attempt ... to frame a rule" had failed, then any attempt to construe the legislation by substituting some other rule might, in Sedgwick's words, require the judge to exercise "truly legislative power"518. That would raise a constitutional issue not explored in this case519. The second construction is that the Protesters Act, in the circumstances of this case, applies only to conduct that is independently unlawful under the Forest Management Act 2013 (Tas) ("the Forest Management Act"). On this construction, "business premises" and "business access areas" are those areas that have been marked by signs, barriers, or other notices prohibiting entry, or are the subject of oral notice from an authorised officer, in the exercise of the powers of the Forest Manager under the Forest Management Act. This construction should be preferred for four reasons. First, it gives a sensible and practical operation to the text of the Protesters Act. Secondly, it follows from the application of accepted tenets of statutory construction. One of those tenets is that, where reasonable to do so, legislation should be construed narrowly to minimise any interference with freedom of speech. Hence, it need not be, and often should not be, construed broadly and then struck down as unconstitutional due to the breadth of the interference. Thirdly, the construction is supported by the interaction between the Protesters Act and the Forest Management Act, from which crucial definitions applicable to this case were relevantly copied. Fourthly, the construction is consistent with statements by both the proponents and the opponents of the Workplaces (Protection from Protesters) Bill 2014 (Tas) ("the Protesters Bill") during its Second Reading Speech and debate. In law, as in life, Occam's razor is often the best approach. 518 Cf Sedgwick, A Treatise on the Rules which Govern the Interpretation and Application of Statutory and Constitutional Law, (1857) at 294. 519 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 164 per Latham CJ, 252 per Rich and Williams JJ, 372 per Dixon J; Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 486-487; [1995] HCA 47; Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 512- 513 [102]; [2003] HCA 2; Thomas v Mowbray (2007) 233 CLR 307 at 344-345 [71] per Gummow and Crennan JJ; [2007] HCA 33; Momcilovic v The Queen (2011) 245 CLR 1 at 174-175 [437]-[438] per Heydon J; [2011] HCA 34. Edelman Properly construed, the Protesters Act therefore applies in the relevant circumstances of this case only to conduct that is already unlawful under the Forest Management Act. The freedom of political communication which is implied into the Commonwealth Constitution does not constrain legislation which imposes a burden on unlawful activity. Whatever it might mean to say that the Constitution is founded upon an assumption of the rule of law520, that assumption does not permit the creation, by implication, of a sphere of freedom from legislative interference with illegal conduct. My conclusion therefore is that the Protesters Act is valid in its entirety in the circumstances of this case. The reasons that follow explain this conclusion in detail. They are divided as follows: The facts and basis upon which the Special Case was conducted The application of the Protesters Act to the plaintiffs in summary Uncertainty of statutory words does not affect constitutional validity Construing the Protesters Act with the Forest Management Act The operation of the Forest Management Act The scheme of the Protesters Act The meaning of business premises and business access areas in the Protesters Act Relevant provisions of the Protesters Act require a person to be on business premises or on a business access area Was the freedom burdened? Legislation in relation to unlawful conduct cannot burden the implied freedom No concession of any burden was made in relation to forest operations 520 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193; [1951] HCA 5. Edelman Conclusion A. The facts and basis upon which the Special Case was conducted On 19 January 2016, the second plaintiff, Ms Hoyt, entered the Lapoinya Forest at Broxhams Road. She passed two signs in the middle of the road. The first, a large yellow sign, read "ROAD CLOSED". The second, a large blue and white sign, read: "NOTICE OF ROAD CLOSURE Forestry Tasmania has closed this forest road to all unauthorised traffic, both vehicular, and pedestrian. contravention of this notice are liable to be convicted and fined." Persons who use this road Ms Hoyt continued into the forest. An employee of the Forest Manager, Forestry Tasmania, asked Ms Hoyt to wait while an excavator was moved away, which she did. Ms Hoyt later walked further into the forest. She was stopped by a police officer on the edge of the creek on the south western side of Maynes Road. The police officer directed her to leave the area. She refused to leave. The police officer removed her to the junction of Maynes Road with Lapoinya Road. On 20 January 2016, Ms Hoyt went back into the forest with others to protest against the cutting down of trees in the coupe. She was seen by police walking through the bush about five to 10 metres away from, and to the south of, Maynes Road. She was arrested there by the police and taken to Burnie Police Station. Prior to her arrest she did not enter Maynes Road. Ms Hoyt was given an infringement notice in respect of her conduct on 19 January 2016 and separately charged with failing to comply with a requirement made by a police officer on 19 January 2016 under s 11(6) of the Protesters Act in respect of her alleged conduct of going into the Lapoinya Forest on 20 January 2016. On 25 January 2016, Dr Brown (the first plaintiff) and three others also entered the Lapoinya Forest at Broxhams Road. His intention was to (i) promote public awareness of logging of the Lapoinya Forest; (ii) express support for the local Lapoinya community's resistance to the logging proposed, and being carried out, by Forestry Tasmania; and (iii) raise public awareness of the environmental harm caused by the logging. Video footage exhibited in this Court showed Dr Brown standing in front of the same two large signs that Ms Hoyt had passed on 19 January 2016. Dr Brown continued past those signs, and stepped over a metal chain suspended between red and yellow poles, blocking the forest road. He and his three Edelman companions walked northwards along Broxhams Road for nearly a kilometre. Dr Brown was standing on the cleared part of Broxhams Road in the Reserve near where forest operations were being carried out when two police officers approached him. One of them said: "Do you realise you are getting close to impinging on forestry operations?" A police officer directed Dr Brown to leave the area. Dr Brown refused. He was arrested. After the commencement of this proceeding, the State of Tasmania chose not to pursue the charges against Ms Hoyt and Dr Brown. The charges were subsequently dismissed and the infringement notice to Ms Hoyt was withdrawn. Despite the dismissals there is, rightly, no dispute that each has standing to challenge the validity of the Protesters Act. The plaintiffs are entitled to challenge the validity of laws which will govern their potential future conduct521. However, the focus on the plaintiffs' past and future conduct requires the Special Case to focus only upon the validity of the Protesters Act as it applies in relation to forestry land. Any burden that the Protesters Act imposes upon political communication, and whether that burden is reasonably appropriate and adapted, falls to be considered only in that context. B. The application of the Protesters Act to the plaintiffs in summary As I explain below, properly construed, the application of the Protesters Act to forestry land in respects relevant to this case concerns only activities upon that land which are unlawful. The relevant provisions of the Protesters Act apply only to activities that involve criminal trespass as a result of the operation of the Forest Management Act. The Forest Management Act effectively requires the erection of signs, barricades, or trenches that inform the public that entry is prohibited at places where forest operations are taking place and places where reasonable access to forest operations is required by those undertaking those operations. Even if these techniques of notice by signs, barricades, and trenches do not suffice to inform the public that entry is prohibited there is another mechanism of notice. Any authorised officer appointed by the Forest Manager can give a person oral notice not to enter or to leave an area of permanent timber production zone land. An authorised officer can request a person not to enter or to leave if the officer is of the opinion that the person's entry or presence or activity is preventing, has prevented, or is about to prevent the Forest Manager from effectively or efficiently performing its functions. 521 Toowoomba Foundry Pty Ltd v The Commonwealth (1945) 71 CLR 545 at 570; [1945] HCA 15; Croome v Tasmania (1997) 191 CLR 119 at 137-139; [1997] HCA 5; Kuczborski v Queensland (2014) 254 CLR 51 at 101 [152]-[153]; [2014] HCA 46; CGU Insurance Ltd v Blakeley (2016) 90 ALJR 272 at 292-293 [102]; 327 ALR 564 at 589; [2016] HCA 2. Edelman These techniques of notice delimit the boundaries of business premises and business access areas in the Protesters Act. The operation of the Protesters Act in this way can be illustrated by reference to the circumstances of Ms Hoyt On 19 January 2016 and 25 January 2016 Ms Hoyt and Dr Brown, respectively, could have been stopped pursuant to the Protesters Act while engaging in a protest activity on Broxhams Road. Two signs, and also, in the case of Dr Brown, a barricade which had been erected under the Forest Management Act, had closed that road. It had been closed in order for it to be cleared in preparation for logging. On the assumption that the clearing of Broxhams Road was "access construction", and therefore "forest operations", then, at the points where the clearing was occurring, Broxhams Road was a business premises within the meaning of the Protesters Act. At the other points of the closed road, which were reasonably necessary to enable access to an entrance to, or to an exit from, the clearing operations, the areas were business access areas. Both Ms Hoyt and Dr Brown were trespassers on the road in areas of entry to, or exit from, the clearing operations. While on the road either could have been given a direction under s 11(2) of the Protesters Act to leave the area without delay. However, the place where Ms Hoyt was stopped on 19 January 2016 was not on Broxhams Road. No sign had been erected under s 21(1)(b) of the Forest Management Act closing any part of the forest or prohibiting entry to any of the permanent timber production zone land due to any other forest operations. No authorised officer had told her to leave. The only evidence of forest operations at this time was the clearing of the forest roads. The same circumstance pertained on 20 January 2016. Although Maynes Road had also been closed on that date, Ms Hoyt was stopped near to, but not on, Maynes Road. No other signs had closed any part of the forest since there were no forest operations being undertaken anywhere other than on the roads at that time. It is unnecessary to consider whether the Protesters Act would have been engaged even if Ms Hoyt was stopped on Maynes Road. Arguably, it would not have been engaged if no forest operations such as access construction on Maynes Road were taking place. As for Dr Brown, he was stopped on 25 January 2016 on the cleared part of Broxhams Road where signs had prohibited entry, and where trees, ferns and other plants had been harvested near a point where further clearing was taking place. He was given a direction under s 11(2) of the Protesters Act to leave the business access area. He was not in an area of forestry land because, as the State of Tasmania submitted in a note handed up during oral argument, he was outside permanent timber production zone land. Since he was not on forestry land, he was not in an area that would fall within the meaning of business premises as defined in the Protesters Act. Nevertheless, he was in an area that was reasonably necessary for access to the forest operations of clearing and he had been given notice of the prohibition of entry to this area. There may, therefore, Edelman be doubt about the concession by the State of Tasmania in oral argument that Dr Brown was not in a business access area. In any event, it appears that the Director of Public Prosecutions dropped the charges because of a mistaken view that Dr Brown was standing at a point where forest operations were actually taking place and therefore that Dr Brown was on business premises and not in a business access area. As a result, the Director of Public Prosecutions mistakenly formed the view that Dr Brown should have been charged with being on business premises. C. Uncertainty of statutory words does not affect constitutional validity Apart from the extreme possibility identified at the start of these reasons where Parliament's attempt to frame a rule has failed, legislation that is ambiguous or unclear is not, for that reason, unconstitutional. Nor is legislation rendered more likely to be unconstitutional because any uncertainty in the terms might lead to some practical operation, prior to judicial construction, which is inconsistent with its legal meaning. The reason why uncertainty does not have any constitutional effect is that the meaning of a statutory text is revealed by "the reasoning of courts seeking to apply that text in practice"522. Legislation, like language generally, is often unclear. Where a lack of clarity is exposed to the court, it is the task of the court to make it clear. In Australia, the resolution of statutory uncertainty is, emphatically, both the province and the duty of the judiciary523. If a statute is given a "practical operation" by the Executive that is contrary to its proper construction then the solution is not for the statute to be found to be unconstitutional. The solution is for the judiciary to construe the statute. Sometimes legislation can be in urgent need of construction. An obvious example is a statute which prescribes only broad standards, leaving the judiciary to fill the open texture created by Parliament. As Gummow and Crennan JJ said in Thomas v Mowbray524, quoting Professor Zines525: "Given a broad standard, the technique of judicial interpretation is to give it content and more detailed meaning on a case to case basis. Rules and 522 Gageler, "Common Law Statutes and Judicial Legislation: Statutory Interpretation as a Common Law Process", (2011) 37(2) Monash University Law Review 1 at 10. 523 R v Holmes; Ex parte Altona Petrochemical Co Ltd (1972) 126 CLR 529 at 562; [1972] HCA 20. 524 (2007) 233 CLR 307 at 351 [91]. 525 Zines, The High Court and the Constitution, 4th ed (1997) at 195. Edelman principles emerge which guide or direct courts in the application of the standard." The need to understand statutory text together with its judicial exegesis is the reason why Australia has no doctrine that legislation can be unconstitutional based on uncertainty526. Even in the United States, where a vagueness doctrine developed in the early twentieth century around the express due process clause527, the vagueness doctrine has been powerfully criticised for this reason. In a well-known note, Professor Amsterdam described the anomalous nature of the vagueness doctrine by contrasting it with rules of construction, where "[l]ine- drawing is the nature of the judicial process"528 and a statute is taken "as though it read precisely as the highest court of the State has interpreted it"529. Amsterdam argued that the vagueness doctrine sat alongside these principles of judicial construction, with an "almost habitual lack of informing reasoning"530 creating "a pair of mutually oblivious doctrines [that] run in infinitely parallel contrariety, like a pair of poolhall scoring racks on one or the other of which, seemingly at random, cases get hung up"531. The vagueness doctrine has also been criticised by judges in the Supreme Court itself. In a 2015 decision532, Thomas J said that the majority decision authored by Scalia J had not involved "the usual business of interpreting statutes"533 and that the majority had instead used the vagueness doctrine "to achieve its own policy goals"534. In a separate opinion, Alito J said 526 King Gee Clothing Co Pty Ltd v The Commonwealth (1945) 71 CLR 184 at 195; [1945] HCA 23. 527 International Harvester Co v Kentucky 234 US 216 (1914). 528 Amsterdam, "The Void-for-Vagueness Doctrine in the Supreme Court", (1960) 109 University of Pennsylvania Law Review 67 at 70. 529 Amsterdam, "The Void-for-Vagueness Doctrine in the Supreme Court", (1960) 109 University of Pennsylvania Law Review 67 at 74, quoting Minnesota ex rel Pearson v Probate Court 309 US 270 at 273 (1940). 530 Amsterdam, "The Void-for-Vagueness Doctrine in the Supreme Court", (1960) 109 University of Pennsylvania Law Review 67 at 70-71. 531 Amsterdam, "The Void-for-Vagueness Doctrine in the Supreme Court", (1960) 109 University of Pennsylvania Law Review 67 at 67. 532 Johnson v United States 192 L Ed 2d 569 (2015). 533 Johnson v United States 192 L Ed 2d 569 at 585 (2015). 534 Johnson v United States 192 L Ed 2d 569 at 589 (2015). Edelman that "[w]hen a statute's constitutionality is in doubt, we have an obligation to interpret the law, if possible, to avoid the constitutional problem"535. Not only does Australia have no doctrine that renders legislation constitutionally invalid directly for uncertainty but it also does not have a doctrine that renders legislation constitutionally invalid indirectly for uncertainty. As I explained in the introduction to these reasons, on many occasions for the better part of a century this Court has emphasised the need for legislation to be construed before its constitutional validity is determined. One reason for this is that the Executive does not administer statutes in a vacuum. The statutes are read, and understood, in light of their judicial construction. Their "practical effect"536 is a consequence of their terms together with how those terms are construed. An example can be given based on the circumstances of this case. Australian law does not operate on the assumption that a police officer who enforces the Protesters Act will do so by blindly making his or her own decisions about its meaning independently of the meaning given to it by the judiciary. Even before any construction is given to the Protesters Act by the judiciary, any decision by a police officer can be challenged by a person against whom the Act is sought to be enforced. That will prompt a construction by the judiciary. Enforcement will then proceed by reference to the judicial construction. Instructions such as those from which the police officers in the video recordings in this Special Case can be seen reading could not then, acting even remotely rationally, be formulated based upon a preferred view of some section of the Protesters Act independently of its judicial exposition. D. Construing the Protesters Act with the Forest Management Act The operation of the Forest Management Act The Forest Management Act was enacted in 2013, and received Royal Assent on 6 November 2013. Its long title includes the statement that it is "[a]n Act to provide for the management of permanent timber production zone land". Under the Act, land can become "permanent timber production zone land" in three ways. First, by s 12, it can be land which is purchased by the Forestry corporation. Secondly, by ss 10, 11A, and 11B, it can be Crown land, or "future potential production forest land" under the Forestry (Rebuilding the Forest Industry) Act 2014 (Tas), specified as permanent timber production zone land in 535 Johnson v United States 192 L Ed 2d 569 at 600 (2015). 536 Coleman v Power (2004) 220 CLR 1 at 49 [91]; Tajjour v New South Wales (2014) 254 CLR 508 at 558 [60], 579 [146]; [2014] HCA 35. Edelman a gazetted order of the Minister which is accepted by both Houses of Parliament. Thirdly, it can be certain forest land which Sched 2 to the Act deems to be permanent timber production zone land. The effect of the Forest Management Act is to vest possession of permanent timber production zone land in the Forestry corporation, which, by s 7(1), is the Forest Manager for permanent timber production zone land. Section 8 provides that the functions of the Forest Manager include managing and controlling all permanent timber production zone land and undertaking forest operations. Section 9(1) confers upon the Forest Manager such powers as are necessary to enable it to perform its functions. Those powers specifically include, by s 9(2), powers to grant permits, licences, leases, or other occupation rights in relation to permanent timber production zone land. Section 14 also permits the Forest Manager, with the approval of the Minister, to charge a person or class of persons a fee for a right to access permanent timber production zone land, or use a forest road, for any purpose. The coupe in which Ms Hoyt and Dr Brown were present was permanent timber production zone land within the meaning of the Forest Management Act. Permanent timber production zone land also includes forest roads which are within that zone, unless a proclamation is made under s 24 of the Forest Management Act converting the forest roads into public roads. An assumption underlying the plaintiffs' submissions in this case was that although possession of permanent timber production zone land was vested in the Forest Manager, the plaintiffs had a licence to be on that land unless they were specifically excluded by the Forest Manager or had not paid a fee charged by the Forest Manager under s 14. A licence is an accurate legal description for the permission to access the land although, speaking more colloquially, the licence was occasionally described in submissions as a (claim) "right". The basis for the assumption was that s 13(1) of the Forest Management Act either created or preserved a statutory licence permitting access by members of the public. That sub-section provides: "The Forest Manager must perform its functions and exercise its powers so as to allow access to permanent timber production zone land for such purposes as are not incompatible with the management of permanent timber production zone land under this Act." The plaintiffs relied upon Forestry Tasmania's Forest Management Plan of January 2016 as providing the content for their statutory licence. That Plan recognises activities that are compatible with Forestry Tasmania's strategic objectives on permanent timber production zone land. These include dedicated recreation sites, organised events, recreational vehicle use, hunting and firearm use, fossicking and prospecting, firewood collection, indigenous rights use, commercial or private access, apiary sites, mineral exploration and mining, and Edelman tourism. The activities described in Forestry Tasmania's Forest Management Plan are not exhaustive. They would also include peaceful protest activities such as the filming and investigation undertaken by Ms Hoyt and Dr Brown. The statutory licence in s 13(1) of the Forest Management Act is not absolute. Section 13(2) provides that nothing in s 13(1) prevents the Forest Manager from exercising its powers under ss 21, 22, and 23. The exercise of those powers prevents access to permanent timber production zone land in various circumstances. A member of the public who accesses permanent timber production zone land contrary to the restrictions imposed by those powers will become a trespasser and also commit an offence. Section 21 of the Forest Management Act permits the Forest Manager to erect signs on or in respect of forest roads or on permanent timber production zone land. Section 23 permits the Forest Manager to close forest roads by signs, barricades, or trenches. Further, under s 22, any employee appointed by the Forest Manager as an authorised officer may request a person not to enter, to leave, or to cease an activity or conduct on, permanent timber production zone land or a forest road where the authorised officer believes "that the entry or presence of that person, or the activity conducted, or the conduct engaged in, by that person on the land or road is preventing, has prevented or is about to prevent the Forest Manager from effectively or efficiently performing its functions". Sections 21 to 23 also provide that it is an offence (i) to undertake an activity or engage in conduct contrary to directions on a sign erected by the Forest Manager without lawful excuse; (ii) to be on, or otherwise use, a forest road which has been closed by a prescribed sign including with any barricade or trench; or (iii) not to comply with a request from an authorised officer. If a police officer reasonably suspects a person to be engaging in an activity contrary to directions on a sign, he or she may direct the person to leave the forest road or the permanent timber production zone land. The penalty for a contravention of any of ss 21 to 23 is a fine not exceeding 20 penalty units, currently $3,180. This assumption that the public statutory licence permits general access subject to the exercise by the Forest Manager of its powers is consistent with the Second Reading Speech to the Forest Management Bill 2013 (Tas), where the Minister for Energy and Resources said537: "Under this bill the people of Tasmania will still be able to access and use permanent timber production zone land for the range of purposes and activities they currently enjoy and undertake in their public forest 537 Tasmania, House of Assembly, Parliamentary Debates (Hansard), 24 September Edelman estate. The provisions of the 1920 [A]ct are essentially maintained to ensure the right to access the land continue so long as the access does not interfere with the management of the land. Managing access and use The forest manager will continue to be able to control and manage access to permanent timber production zone land in order to undertake its responsibilities and to protect the safety of people. To assist, the forest manager will be able to close forest roads and erect signs to regulate access to the permanent timber production zone land. This is no different to what Forestry Tasmania can do now under the 1920 [A]ct. In addition, new powers will now allow the forest manager to authorise persons who can request a person not to enter or to leave a forest road or permanent timber production zone land." The scheme of the Protesters Act A little over a year after the enactment of the Forest Management Act, the Tasmanian Parliament enacted the Protesters Act. The Protesters Act received Royal Assent on 17 December 2014. Its long title provides that it is "[a]n Act to ensure that protesters do not damage business premises or business-related objects, or prevent, impede or obstruct the carrying out of business activities on business premises, and for related purposes". Critical concepts in the Protesters Act are the meanings of "protester", "business premises", and "business access area". It suffices at this stage to introduce the critical provisions of the Protesters Act. A protester is defined broadly in s 4(1), and in the present tense, as a person "engaging in a protest activity". The term "protest activity" is defined in s 4(2) as having two requirements. The first is that the activity is "in furtherance of", or "for the purposes of promoting awareness of or support for", "an opinion, or belief, in respect of a political, environmental, social, cultural or economic issue". The second is that the activity "takes place on business premises or a business access area in relation to business premises". Section 6 of the Protesters Act is considered in detail later in these reasons. It creates various "contraventions" in s 6(1) to s 6(3), none of which, by itself, carries any sanction. Each of those sub-sections is concerned with conduct by a person that prevents, hinders, or obstructs business activity, or access to business premises or business access areas. Each also depends on the person being a protester. The definition of protester, set out above, requires that the person is engaging in the protest activity "on business premises or a business access area in relation to business premises". Edelman Section 11 of the Protesters Act, the key parts of which are set out in the reasons for decision of Kiefel CJ, Bell and Keane JJ, essentially provides for circumstances in which a police officer can give a person a direction to leave business premises or a business access area. The direction can include a requirement that the person not commit an offence against the Act, or contravene ss 6(1) to 6(3), within three months (s 11(6)). The breach of that requirement is an offence (s 6(4)). One qualification before the s 11 direction can be issued is that the person must actually be on the business premises or a business access area. Another qualification before the direction can be issued is that the police officer must reasonably believe that the person has committed, is committing, or is about to commit, an offence against a provision of the Act or a contravention of s 6(1), s 6(2), or s 6(3) on or in relation to the business premises or a business access area in relation to the business premises. The reasonableness of the belief of the police officer must be assessed against any judicial determination of it. As I explain below, that determination should require that the person is on business premises or a business access area. The combined effect of the qualifications to s 11 is therefore that a direction cannot be issued by a police officer unless conditions are satisfied, including, but not limited to, requirements that (i) the person is on the business premises or a business access area; (ii) the police officer believes that the person is on the business premises or a business access area; and (iii) it is reasonable for the police officer to believe that the person is on the business premises or a business access area. Section 8 of the Protesters Act is concerned with activities on business access areas after a direction from a police officer. Section 8(1)(a) prohibits a person from remaining on a business access area in relation to business premises after being directed to leave by a police officer. The penalty, in the case of an individual, is a fine not exceeding $10,000. There is also a prohibition in s 8(1)(b) upon entering "a" business access area in relation to business premises within four days of a direction by a police officer to leave "the business premises" or "a business access area in relation to the business premises". The prohibition must relate to a person who, within four days, enters a business access area in relation to "the" (ie the same) business premises. In other words, if a police officer directed a protester to leave "business premises" or a "business access area" in a forest then the protester could not return within four days to a business access area in relation to those premises. To do so would incur a penalty of up to $10,000. As I explain below, the business access area will necessarily be marked by a sign. Section 13 provides for police powers of arrest and removal of persons. Critically, each sub-section of s 13 requires that the person be either on business Edelman premises or on a business access area. An arrest under s 13(1) or s 13(2) requires that the person is, respectively, on business premises or a business access area. Section 13(3) implicitly requires that the person is on business premises or a business access area because it confers a power to remove a person from the business premises or business access area. In addition, there is a requirement in each sub-section that the police officer reasonably believes that the person is committing, or has committed (within the previous three months in the case of arrest), an offence against a provision of the Act, or a contravention of s 6(1), s 6(2), or s 6(3), on or in relation to the business premises or a business access area in relation to the business premises. There are further constraints in s 13(4) on the removal and arrest powers, which require that the police officer reasonably believes that the arrest or removal, and the period during which arrest persists, is necessary for particular listed purposes. Part 4 of the Act provides penalties for offences against the Act and also empowers a court to order a person to pay compensation for offences committed against ss 6 and 7, the latter of which is considered below. The meaning of business premises and business access areas in the Protesters Act In the Protesters Act, a "business access area" is defined in s 3 in relation to business premises as follows: ... so much of an area of land (including but not limited to any road, footpath or public place), that is outside the business premises, as is reasonably necessary to enable access to an entrance to, or to an exit from, the business premises". Relevantly to this case, "business premises" are defined in s 5(1) as "premises that are forestry land". "Forestry land" is relevantly defined in s 3 to include "an area of land on which forest operations are being carried out". "Forest operations" are defined as: "work comprised of, or connected with – seeding and planting trees; or (b) managing trees before they are harvested; or harvesting, extracting or quarrying forest products – and includes any related land clearing, land preparation, burning-off or access construction". Edelman The term "forest products" is defined in the same section as follows: "(a) vegetable growth on or from forestry land; a product of growing trees, or a product of dead trees on or from forestry land; shrub, timber, or other vegetable growth, that is on or from forestry land; sand, gravel, clay, loam, or stone, that is on or from forestry land". Read in a vacuum, the words of the Protesters Act initially appear rife with uncertainty in their application to forestry land. How is it possible to determine the area of land in which the forest operations are being carried out? What area, for example, is covered by the apparently innocuous reference to "managing trees before they are harvested"? Would any simple acts of managing any trees within the 800,000 hectares of permanent timber production zone land mean that the area surrounding those trees being "managed" becomes business premises? How far would that area extend? For how long? How could a protester know whether forest operations had begun and, if so, when forest operations had begun or when or whether they had ceased? These questions, and the associated uncertainty, could be multiplied when considering the scope of a "business access area". How could any protester determine whether any entrance to or exit from a potentially vast area where forest operations are being carried out is reasonably necessary to enable access to or from that area? For instance, Broxhams Road is a long track which bounds the lengthy south eastern edge of the coupe. It is used for walking, horse riding, and dirt bike riding. If Broxhams Road is reasonably necessary to obtain access to an area of forest operations, would a protester passing along any part of Broxhams Road be, without any possible way of knowing it, within a business access area if Broxhams Road had not been closed or had only been closed in part? Fortunately, the words of legislation are not interpreted, and the legislation is not construed, in a vacuum. The answer to all these questions is revealed by a proper construction of the Forest Management Act. There are four reasons why the "business premises" and "business access areas" provided for in the Protesters Act should be construed as meaning those areas where the Forest Manager has denied access to the public, in the exercise of powers under s 21, s 22, or s 23 of the Forest Management Act. First, textually, the Protesters Act employs a technique of borrowing from, and operating consistently with, the Forest Management Act. This technique is consistent with a construction of the Protesters Act that would treat Edelman business premises and business access areas as those places which had effectively been designated as such under the Forest Management Act. When considering the relationship between two interrelated statutes it is necessary to consider whether the operation of the later statute, here the Protesters Act, (i) is autonomous in relation to its own subject matter; (ii) overrides the earlier statute in case of any inconsistency; or (iii) provides "an additional layer of legislation on top of the pre-existing legislation, so that each may operate within its respective field"538. The Protesters Act, in its regulation of forestry activities, is an example of (iii), employing an additional layer of legislation on top of the pre-existing, and more specific, Forest Management Act. An immediate textual association between the two Acts is that the Protesters Act, in s 3, defines the Forestry corporation as the "owner" in relation to business premises which are Crown land that is permanent timber production zone land within the meaning of the Forest Management Act. Even more fundamentally, the definition of business premises, as relevant to this case, is "an area of land on which forest operations are being carried out". The definition of "forest operations" which, in the present, active tense, "are being carried out" determines the business premises in this case. That definition, and the associated definition of "forest products", are relevantly the same as those in the Forest Management Act. The area of land where forest operations are being carried out must therefore be understood as that area of land where forest operations are being carried out under the Forest Management Act. The operation of the Forest Management Act effectively requires that the powers under s 21, s 22, or s 23 be exercised in and around where forest operations are being carried out. Forest operations are, by s 8(b), the function, and therefore the responsibility, of the Forest Manager. The Forest Manager's powers to erect signs or to close forest roads in ss 21 and 23 of the Forest Management Act are for purposes including "discharging its responsibilities". Hence, the assumption is that the powers in ss 21 and 23 will be exercised where the Forest Manager is discharging its responsibilities in the process of carrying out forest operations. Further, as the State of Tasmania pleaded, and the plaintiffs admitted, Forestry Tasmania has legal obligations to operate safely, including under common law and s 20(2) of the Work Health and Safety Act 2012 (Tas), which require it to ensure that, so far as is reasonably practicable, the place of forest operations, and the means of entering and exiting that place, are without risks to the health and safety of any person. Another purpose of the Forest Manager's powers to erect signs or to 538 Commissioner of Police (NSW) v Eaton (2013) 252 CLR 1 at 19 [45]; [2013] HCA 2, quoting Associated Minerals Consolidated Ltd v Wyong Shire Council [1975] AC 538 at 553. Edelman close forest roads in ss 21 and 23 of the Forest Management Act is for "safety". Again, this illustrates that the powers in ss 21 to 23 will be exercised in and around the places where the Forest Manager engages in forest operations. This conclusion is further bolstered by the correct proposition, advanced by the States of Tasmania, Victoria and New South Wales, that liability under the Protesters Act will only arise where there is a substantial or serious interference with the carrying out of business activity or access to business premises or business access areas, or damage to business premises or a business-related object. It is extremely difficult to imagine any circumstance where the Forest Management Act and the Work Health and Safety Act would not require the exercise of those powers to preclude a substantial interference, as described above, with forest operations. Secondly, a consistent textual construction of the provisions of the Protesters Act also limits the meaning of "forest operations", and the associated business premises and business access areas, to areas where the Forest Manager has denied access, in the exercise of powers under s 21, s 22, or s 23 of the Forest Management Act. The terms "business premises" and "business access area" have a ready meaning when applied to shops and shopfronts. When applied to operations on forestry land it is necessary somehow to delimit the areas surrounding or providing access to the very broadly defined "forest operations" within 800,000 hectares of permanent timber production zone land in which those operations might take place. It is a difficult construction which treats that process of delimitation as being, in many cases, subjective, ad hoc, and unascertainable by those who are subject to the Protesters Act. In contrast, a simple contextual construction of the meaning of "business premises" and "business access area" when applied to forestry land is to treat those definitions in the same way as a shop or building. Signs, notices, barriers, and instructions delimit the boundaries of the premises and its entries and exits. So too, in a forest, the signs, notices, barriers, and instructions of the Forest Manager will delimit the boundaries of the premises and signify its entries and exits. Thirdly, general principles of construction support this narrow approach to the Protesters Act to create a regime which is intelligible and capable of practical operation. One of those principles is an expectation of clarity in penal provisions. In McBoyle v United States539, the United States Supreme Court held that a federal offence concerning "motor vehicles" did not apply to an aeroplane. Justice Holmes said that "it is reasonable that a fair warning should be given to the world in language that the common world will understand, of what the law intends to do if a certain line is passed"540. This was later explained by Harlan J 540 McBoyle v United States 283 US 25 at 27 (1931). Edelman (with whom Black and Stewart JJ agreed) as based on "a notion of fair play"541. It is unnecessary in this case to consider the accuracy of these explanations of the premise for the principle in the United States. It is also unnecessary to explore the manner in which, and extent to which, this principle is appropriately characterised as part of any second-order principle of construction that penal provisions are construed narrowly542 or is better seen merely as involving recognition of the context of the provision as penal543. It suffices to say that the principle that penal provisions will be construed in a manner that gives rise to as much clarity as possible is longstanding and forms part of the conventions of legal language against which legislation is drafted and is reasonably understood. In Blackstone's Commentaries on the Laws of England544, he gave the example of a statute, The Cattle Stealing Act 1740 (14 Geo II c 6), which purported to create a felony for stealing sheep or other cattle. The words "or other cattle" were said to be "much too loose to create a capital offence" so the Act was confined to sheep545. The same principle is longstanding in Australia546. In this case, even if the principle is applied as one of "last resort", the principle favours a construction which treats "business premises" and "business access areas", relevantly for this case, as areas which have been marked out for forest operations, including entry to and exit from those operations, by signs or notices. Any competing construction, in relation to forest operations, would be unworkable and unintelligible to those to whom the Protesters Act is directed. It would involve the likelihood of commission of offences in circumstances where an individual could not ascertain whether a fundamental criterion for the offence had occurred. Perhaps even more fundamental is another long-established547 principle of construction which also supports the narrow approach confining the Protesters 541 United States v Standard Oil Co 384 US 224 at 236 (1966). 542 Beckwith v The Queen (1976) 135 CLR 569 at 576; [1976] HCA 55; Waugh v Kippen (1986) 160 CLR 156 at 164-165; [1986] HCA 12; Chew v The Queen (1992) 173 CLR 626 at 642; [1992] HCA 18. 543 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 49 [57]; [2009] HCA 41. 544 Blackstone, Commentaries on the Laws of England, (1765), bk 1 at 88. 545 Blackstone, Commentaries on the Laws of England, (1765), bk 1 at 88. 546 Scott v Cawsey (1907) 5 CLR 132 at 144-145, 154-156; [1907] HCA 80. 547 Potter v Minahan (1908) 7 CLR 277 at 304; [1908] HCA 63. Edelman Act to independently unlawful conduct relating to forest operations. This is the so-called "principle of legality" that "it is highly improbable that Parliament would overthrow fundamental principles or depart from the general system of law, without expressing [this intention in language of] irresistible clearness"548. This principle is "known to both the Parliament and the courts as a basis for the interpretation of statutory language"549. One fundamental common law freedom is freedom of speech. That freedom, as French CJ has observed, has been recognised as such since as early as Blackstone550. In Attorney-General (SA) v Adelaide City Corporation551, Heydon J said, with reference to considerable authority, that: "The common law right of free speech is a fundamental right or freedom falling within the principle of legality. That must be so if there is any shadow of truth in Cardozo J's claim that freedom of speech is 'the matrix, the indispensable condition, of nearly every other form of freedom'." (footnotes omitted) For this reason, it has been said in relation to legislative intrusions upon freedom of speech that "in confining the limits of the freedom, a legislature must mark the boundary it sets with clarity"552 and that "the curtailment of free speech by legislation directed to proscribing particular kinds of utterances in public will often be read as 'narrowly limited'"553. It is very difficult to see why the Protesters Act should be construed to operate, in an unascertainable way, to create offences beyond those that would arise from protest activities in areas to which access was prohibited. It is even more difficult to see why such a construction should be adopted, which would curtail freedom of speech, only then to conclude that the construction would give rise to an operation of the Protesters Act that would make it constitutionally invalid. 548 Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 259 [15]; [2010] HCA 23, quoting Potter v Minahan (1908) 7 CLR 277 at 304. 549 Monis v The Queen (2013) 249 CLR 92 at 209 [331]; [2013] HCA 4. 550 Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 31 [43]; [2013] HCA 3. 551 (2013) 249 CLR 1 at 67 [151]. 552 Coleman v Power (2004) 220 CLR 1 at 75 [185]. 553 Coleman v Power (2004) 220 CLR 1 at 76 [188]. Edelman the Tasmanian Government's election policy commitment Fourthly, the context of the Protesters Act also supports the construction that confines "business premises" and "business access areas" to areas of forest operations, and entry to and exit from those operations, as signified by the exercise of the powers of the Forest Manager under ss 21, 22, and 23 of the Forest Management Act. In other words, in the circumstances of forest operations, the Protesters Act is concerned only with conduct that is independently unlawful under the Forest Management Act. In the Fact Sheet, which forms part of the extrinsic material from which the Protesters Act falls to be construed554, the Protesters Bill was described as being "designed to implement introduce new laws to address illegal protest action in Tasmanian workplaces" (emphasis added). It provided that the Bill did "not seek to prohibit the right to peaceful protest". In the Second Reading Speech, the Leader of the Government in the Legislative Council, Dr Goodwin, said that it was "important to stress" that the Bill was not seeking to undermine or remove a person's right to voice dissent or undertake protest action555. She said that the "context of this legislation is about addressing unlawful acts against businesses central to the Government's policy focus of developing our competitive industries in the forestry, mining, agriculture, building, construction and manufacturing sectors"556 (emphasis added). Later she emphasised that "[a]ll this bill seeks to do is ensure that protests are conducted responsibly and safely and do not impede the rights of others"557. The debates on the Protesters Bill also support this conclusion. An objection by Mr Finch to the legislation, in response to the Second Reading Speech, was that "this controversial legislation is not necessary"558. Speaking of existing laws, including trespass, Mr Finch said that all of these measures "adequately cover any future protests against forestry operations"559. Another 554 Acts Interpretation Act 1931 (Tas), s 8B(3)(e). 555 Tasmania, Legislative Council, Parliamentary Debates (Hansard), 29 October 556 Tasmania, Legislative Council, Parliamentary Debates (Hansard), 29 October 557 Tasmania, Legislative Council, Parliamentary Debates (Hansard), 29 October 558 Tasmania, Legislative Council, Parliamentary Debates (Hansard), 29 October 559 Tasmania, Legislative Council, Parliamentary Debates (Hansard), 29 October Edelman speaker, Mrs Taylor, observed that in briefings members of Parliament had been informed "that everything is covered by other statutes, except perhaps the clause governing the disruption of business activity", but that "the laws that should prevent illegal activity of this nature [had] not been properly implemented or applied"560. Mrs Hiscutt, in defence of the Bill, said that the Bill "only directs the place where you can express your opinions, namely off private property"561. Relevant provisions of the Protesters Act require a person to be on business premises or on a business access area With limited exceptions, an essential feature of the Protesters Act is that an offence generally can only be committed by, and enforcement mechanisms are only possible against, a person who is "on business premises" or "on a business access area". For instance, contraventions of ss 6(1) and 6(2) involving preventing, hindering, or obstructing the carrying out of a business activity require proof of matters, including that (i) the protester enters the business premises or part of the business premises, or (ii) the protester does an act on business premises, or on a business access area in relation to business premises. An offence under s 6(4) of the Protesters Act occurs if a person contravenes a requirement of a direction by a police officer issued under s 11(1) or s 11(2). But the terms of ss 11(1) and 11(2) are such that any direction under s 11(1) or s 11(2) will be invalid if the person is not, respectively, on business premises or a business access area. The conditions imposed on a direction under either sub-section, and the consequences which flow from any non-compliance with those conditions, are dependent upon the person having been on the business premises or business access area when directed. There are two arguable exceptions where the Protesters Act operates upon a person without the person being on business premises or a business access area. The first is that offences under s 7 can be committed outside business premises or a business access area. The core element of the offences in ss 7(1) and 7(2) is that the protester does an act that causes damage to business premises or a business-related object knowing, or where the protester could reasonably be expected to know, that the act is likely to cause damage to the business premises or business-related object. It may be doubted, however, whether this is really an exception. Sections 7(1) and 7(2) are only enlivened by acts of a protester. And, as explained above, the definition of protester includes an element which requires the person, in the present active tense, to be on business premises or a business 560 Tasmania, Legislative Council, Parliamentary Debates (Hansard), 29 October 561 Tasmania, Legislative Council, Parliamentary Debates (Hansard), 29 October Edelman access area in relation to business premises. Further, and in relation also to s 7(3), which deals with threats of damage in relation to business premises and applies to persons generally, s 7 is not engaged on the facts of the Special Case and no substantial argument was addressed to it, as Kiefel CJ, Bell and Keane JJ observe562. Indeed, when s 7(1) was addressed in oral argument, counsel for the plaintiffs in reply properly conceded that there were "other laws that already make that illegal and that would remain the position". The second possible exception where a duty is imposed on a person not being on business premises or a business access area is s 6(3), which provides that: "A protester must not do an act that prevents, hinders, or obstructs access, by a business occupier in relation to the premises, to an entrance to, or to an exit from – business premises; or a business access area in relation to business premises – if the protester knows, or ought reasonably to be expected to know, that the act is likely to prevent, hinder or obstruct such access." Three points should be made about s 6(3). First, to reiterate the point above, the sub-section is only engaged by acts of a protester, the definition of which requires the person to be on business premises or a business access area in relation to business premises. This may mean that there is no exception for this sub-section at all. Secondly, although this sub-section arguably imposes a duty upon a person who might be outside business premises or a business access area, it does not create an offence. As the plaintiffs conceded, the enforcement of s 6(3) requires that the person be on business premises or a business access area. For instance, a direction by a police officer under s 11 can only be given to persons who are on the business premises or on a business access area. The consequences which follow from a direction under s 11 are premised upon the person first having been on business premises or a business access area. Further, the criteria for an arrest without warrant under s 13 also include a requirement that the person is on business premises or on a business access area. Thirdly, it is at least arguable that an impediment of the type described in s 6(3) would also be unlawful even if it does not involve a trespass. The State of Tasmania submitted that the impediment would need to be substantial. In Mogul Steamship Co v McGregor, Gow, & Co563, Bowen LJ, in a passage in the Court of Appeal which 563 (1889) 23 QBD 598 at 614, citing Garret v Taylor (1620) Cro Jac 567 [79 ER 485]. Edelman was not doubted by the House of Lords, said that a tort would be committed by the impeding or threatening of workers. This statement was cited with approval by Nicholas J in Victoria Park Racing and Recreation Grounds Co Ltd v Taylor564. In OBG Ltd v Allan565, Lord Hoffmann described the tort as an instance of causing loss by unlawful means. There is only one circumstance in which conduct prohibited by the Protesters Act, in a forestry context, might not be independently unlawful. Section 10 permits a police officer to require any person (not a "protester" as defined) reasonably believed to be about to contravene s 6(3) to state the person's name, date of birth and address, and to give the officer any evidence of the person's identity that the person has in his or her possession. That section will therefore apply to a person who is reasonably believed to be, or about to become, a protester (and therefore on business premises or in a business access area) even if the person is not actually, or does not become, a protester. It is an offence to fail, or refuse, to comply with this requirement of the police officer: s 10(2). Section 10 is broader than the police powers under s 55A of the Police Offences Act 1935 (Tas). But s 10 was not the subject of any submissions and, in oral argument, the plaintiffs did not include s 10 in their list of challenged provisions. E. Was the freedom burdened? The preceding section of these reasons has shown that the Protesters Act, in its relevant operation in the circumstances of this case, applies only to independently unlawful activity. Two essential issues arise. The first is whether the implied freedom of political communication in the Constitution applies to constrain legislative power over political communication which is independently unlawful. Put another way, can legislation burden freedom of political communication where the conduct it prohibits is independently unlawful? The second issue is whether the State of Tasmania conceded that it could. Legislation in relation to unlawful conduct cannot burden the implied freedom The constitutional freedom of political communication that was unanimously confirmed by this Court in Lange v Australian Broadcasting Corporation566 was held to be a constraint upon the exercise of State and Commonwealth legislative power. However, the constraint only applies to State or Commonwealth legislative power if there is a "burden on the freedom". This phrase is not entirely apt but it signifies that the constitutional implication only 564 (1936) 37 SR (NSW) 322 at 341. 565 [2008] AC 1 at 19 [6]. 566 (1997) 189 CLR 520; [1997] HCA 25. Edelman constrains legislative power where that power is exercised to impede legal freedom to communicate about government and political matters. If the conduct about which legislation is concerned is independently unlawful, so that there was no legal freedom to communicate about government or political matters, then there can be no "burden" on the freedom. The implied constraint upon legislative power cannot operate. This conclusion is unassailable. In Australian Communist Party v The Commonwealth567, Dixon J said that the rule of law forms an assumption of the Constitution. Whatever is meant by the "rule of law", and however the assumption might operate in relation to constitutional implications, it would be anathema if, in a society founded upon the rule of law, this Court could be required to assess the extent to which the Constitution implies that persons be free from legislative constraints upon unlawful conduct. The Constitution does not create spheres of immunity from unlawful activity. Put another way, if there is no freedom then there cannot be any burden upon that freedom. This point was made by McHugh J in Levy v Victoria568. That case was concerned with the validity of regulations that prohibited persons from entering a permitted hunting area without a licence at a certain time. The plaintiff, who was charged with an offence under the regulations, claimed that the regulations were invalid because they prohibited him from protesting Victorian hunting laws. Justice McHugh explained, as has now been confirmed on many occasions569, that the implied freedom is not an individual right but is "a freedom from laws that effectively prevent the members of the Australian community from communicating with each other about political and government matters relevant to the system of representative and responsible government provided for by the Constitution"570 (emphasis in original). As McHugh J explained, since the implication does not create any individual right this means that before the implied freedom can operate to restrain legislative action it must inhibit an 567 (1951) 83 CLR 1 at 193; cf Kartinyeri v The Commonwealth (1998) 195 CLR 337 568 (1997) 189 CLR 579 at 622, 625-626; [1997] HCA 31. 569 APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 451 [381]; [2005] HCA 44; Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at 89 [220]; Unions NSW v New South Wales (2013) 252 CLR 530 at 551 [30], 554 [36], 574 [119]; [2013] HCA 58; Tajjour v New South Wales (2014) 254 CLR 508 at 569 [104], 593-594 [198]; McCloy v New South Wales (2015) 257 CLR 178 at 202-203 [30]; [2015] HCA 34. 570 Levy v Victoria (1997) 189 CLR 579 at 622. Edelman existing right or privilege571. In Levy, that meant that "unless the common law or Victorian statute law gave [protesters] a right to enter that area, it was the lack of that right, and not the [r]egulations, that destroyed their opportunity to make their political protest"572. In Levy, it was not necessary for McHugh J to explore this point any further because the arguments of the parties assumed that, in the absence of the regulations, the plaintiff was entitled to enter the area. The reasoning of McHugh J was expressly adopted by five Justices of this Court in Mulholland v Australian Electoral Commission573. That case concerned a challenge to two rules in the Commonwealth Electoral Act 1918 (Cth). One rule, the 500 rule, permitted registration or continued registration of political parties without a parliamentary representative only if they had 500 members. A second rule, the no overlap rule, prohibited two or more parties from counting the same person as a member. Only registered political parties could be included on the ballot paper. Justice McHugh reiterated his views from Levy and held that there was no burden on the implied constitutional freedom because the political party, of which the appellant was the registered officer, did not have any right to be put on the ballot paper independently of the Commonwealth Electoral Act574. Justices Gummow and Hayne575, in a joint judgment, and Heydon J in a separate judgment576, also quoted the passages from McHugh J in Levy described above, and concluded that no right or freedom, independent of the Commonwealth Electoral Act, had been identified by the appellant577. The point that the appellant had no right to be included on the ballot paper was also made succinctly by Callinan J, in terms which apply to this case578: 571 Levy v Victoria (1997) 189 CLR 579 at 622. 572 Levy v Victoria (1997) 189 CLR 579 at 626. 573 (2004) 220 CLR 181; [2004] HCA 41. 574 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 223-224 575 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 246 [184]. 576 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 303-304 577 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 247 [186]- 578 Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at 298 [337]. Edelman "In argument, McHugh J drew an analogy: protestors cannot complain about an interference with, or the prevention of their doing what they have no right to do anyway, for example, to communicate a protest on land on which their presence is a trespass. As the appellant has no relevant right to the imposition of an obligation upon another, to communicate a particular matter, he has no right which is capable of being burdened." (emphasis in original, footnote omitted) There are three clarifications to the principle that the implied freedom of political communication does not apply to unlawful conduct. The first clarification applies where the conduct is unlawful due to a law which is, itself, invalid because it contravenes the implied freedom. No party or intervener in this case suggested that any provision of the Forest Management Act was contrary to the implied freedom. It is very difficult to see how they could have done so in circumstances in which the common law recognises no public ius spatiandi vel manendi579. In other words, the purported burden upon freedom of political communication imposed by the Forest Management Act must be assessed with regard to the fragility of the liberty of the public to enter forestry land. That liberty could be withdrawn at any time by the Crown or the relevant person in possession of the land. That would be so whether the liberty arose from custom or, more controversially, from some fictional implied licence. A further reason why no party or intervener raised any issue concerning the validity of the provisions of the Forest Management Act may have been the difficulty in seeing how the implied freedom should restrain legislation which permitted a protester to exercise a freedom to protest in the vast majority of 800,000 hectares but not in the vicinity of works involving significant safety concerns and the potential use of heavy machinery. There is a second clarification to the principle that the implied freedom of political communication does not apply to unlawful conduct. The second clarification arises where the subsequent legislation which is challenged operates as part of a single scheme, together with the initial legislation which made the conduct unlawful. For a scheme to exist it is not enough that two statutes, such as the Forest Management Act and the Protesters Act, operate together. They must also have "a wider common purpose"580 as Acts which need "to be read together as a combined statement of the will of the legislature"581. In those 579 Randwick Corporation v Rutledge (1959) 102 CLR 54 at 74; [1959] HCA 63. 580 Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378 at 414 [97]; [2012] HCA 56. 581 Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 354 [10], quoting Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 at 463; [1995] HCA 44. Edelman circumstances the burden upon a general freedom to engage in political communication might fall to be assessed by reference to the joint effect of the two statutes582. If so, it would be no answer to say that the subsequent legislation imposes only a further incremental burden upon conduct that is already unlawful. No party, and no intervener, suggested that the Forest Management Act and the Protesters Act were to be considered as part of a single scheme with a wider common purpose in this sense. The third clarification to the principle that the implied freedom of political communication does not apply to unlawful conduct is the recognition in Lange that the common law, including common law rules that make acts unlawful, must develop consistently with the Constitution. This process of development of the common law, consistently with the Constitution, must occur by the common law analogical method. The need to develop the law of defamation in Lange was said to arise because a "different balance" was demanded by new circumstances including the "expansion of the franchise, the increase in literacy, the growth of modern political structures operating at both federal and State levels and the modern development the electronic media"583. In contrast, there is plainly no need, for example, to develop the common law in relation to assault to create a liberty by which persons can assault others for the purpose of political communication. Nor is there a need, and no party contended, for the law concerning property rights to develop so that an individual has a liberty to trespass on the property of another for the purposes of political communication. in mass communications, especially No concession of any burden was made in relation to forest operations In its written submissions, the State of Tasmania accepted that the Protesters Act "may impose a burden in some circumstances" (emphasis added). In oral submissions, the State of Tasmania explained the nature of this concession, saying that "there may be a burden imposed by the Act but it does not arise here". The State of Tasmania had earlier said that there would be no burden if the Act were only directed at permanent timber production zone land rather than including, for example, "a protest outside a shop". Similarly, the State of Victoria, whose submissions were the most focused upon the question of burden, and adopted by the State of South Australia, submitted that the "burden on the freedom" imposed by the Protesters Act was "slight or nil". The "concession" by the State of Tasmania that there may be a burden in "some circumstances", although not in this case, was no real concession at all. 582 Cf South Australia v The Commonwealth (1942) 65 CLR 373 at 411; [1942] HCA 583 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 565. Edelman The validity of the Protesters Act falls to be assessed against the existing state of facts584. Those facts, in this case, concern only the operation of the Protesters Act in relation to forestry. If there is no existing freedom of political communication in that context then the Protesters Act cannot be held invalid by reference to some hypothetical circumstance where a freedom might exist. Put another way, whether there is a burden upon an existing freedom imposed by the Protesters Act must be assessed in the context in which facts are before the Court (ie forestry) before turning to questions that are designed to test whether the freedom has been impermissibly infringed. For these reasons, the State of Tasmania did not concede that the Protesters Act imposed any relevant burden in the circumstances of this case. But even if such a concession of law had been made, I would not accept it without first construing the meaning of the Protesters Act. My construction of that Act leads to the conclusion that, as the States of Tasmania, Victoria, and South Australia submitted, no burden is imposed by the Protesters Act. F. Conclusion The necessary first step before assessing constitutional validity is to determine the meaning of legislation. On the proper construction of the Protesters Act, in relation to forest operations and areas of access to those operations, the relevant provisions apply only to conduct which is already independently unlawful under the unchallenged provisions of the Forest Management Act. Any other construction would render the meaning of the Protesters Act unintelligible to those to whom the Act is directed. Within an intelligible narrow construction, which minimises the intrusion into freedom of speech, the Protesters Act still imposes penalties and other consequences on protesters for their unlawful conduct which go beyond the burdens imposed by the Forest Management Act. Those additional consequences are only borne by protesters. But the essential point is that the additional consequences are imposed on independently unlawful conduct. However high the value that one puts upon a freedom of political communication, the constitutional area of "immunity from legal control"585 does not extend to persons whose conduct is independently unlawful. 584 Lambert v Weichelt (1954) 28 ALJ 282 at 283; Duncan v New South Wales (2015) 255 CLR 388 at 410 [52]; [2015] HCA 13; Knight v Victoria (2017) 91 ALJR 824; [2017] HCA 29. 585 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560, quoting Cunliffe v The Commonwealth (1994) 182 CLR 272 at 327; [1994] HCA 44. Edelman The substantive question remaining in the Special Case, concerning the alleged invalidity of provisions of the Protesters Act, should be answered, "no". The plaintiffs should pay the defendant's costs.

HIGH COURT OF AUSTRALIA Matter No M79/2018 AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION APPELLANT AND WILLIAM LIONEL LEWSKI & ANOR RESPONDENTS Matter No M80/2018 AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION APPELLANT AND MICHAEL RICHARD LEWIS WOOLDRIDGE & ANOR RESPONDENTS Matter No M81/2018 AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION APPELLANT AND MARK FREDERICK BUTLER & ANOR RESPONDENTS Matter No M82/2018 AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION APPELLANT AND KIM SAMUEL JAQUES & ANOR RESPONDENTS Matter No M83/2018 AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION APPELLANT AND PETER CLARKE & ANOR RESPONDENTS Australian Securities & Investments Commission v Lewski Australian Securities & Investments Commission v Wooldridge Australian Securities & Investments Commission v Butler Australian Securities & Investments Commission v Jaques Australian Securities & Investments Commission v Clarke [2018] HCA 63 13 December 2018 M79/2018, M80/2018, M81/2018, M82/2018 & M83/2018 ORDER Matters M79, M80, M81 and M82 of 2018 Appeal allowed in part. Set aside orders 2 to 6 of the orders of the Full Court of the Federal Court of Australia made on 1 November 2017 and in their place order that: the appeal be allowed in part; declarations 13, 21, 29, 37, 40, 41, 42, 43, 44, 45, 46, and 47 of the declarations and orders 1.1 to 1.4 and 2.1 to 2.5 of the orders made by the primary judge in proceeding VID 594 of 2012 ("Trial Proceeding") dated 2 December 2014 be set aside; order 3 of the orders made in the Trial Proceeding be set aside and in its place order that the second to fifth defendants pay the plaintiff's (namely, ASIC's) costs of and incidental to the proceeding; and the first respondent (namely, ASIC) pay the appellant's costs of and in connection with the dispute as to the form of orders. Remit the matter to the Full Court of the Federal Court for determination of penalty and disqualification orders, costs, and the cross-appeal to that Court. The first respondent pay the appellant's costs of the appeal to this Court. Matter M83 of 2018 Appeal allowed in part. Set aside the orders of the Full Court of the Federal Court of Australia made on 1 November 2017 and in their place order that: the appeal be allowed in part; declarations 40 to 47 and order 2.5 of the orders made by the primary judge in proceeding VID 594 of 2012 ("Trial Proceeding") dated 2 December 2014 be set aside and in lieu thereof order that the plaintiff's claim in paragraphs 6 to 19 of its originating process dated 21 August 2012 in the Trial Proceeding in so far as it is made against the sixth defendant be dismissed; and the first respondent (namely, ASIC) pay the costs of the appellant (namely, Mr Clarke) in the Trial Proceeding and in the Full Court of the Federal Court, including reserved costs. There be no order as to the costs of the appeal to this Court. On appeal from the Federal Court of Australia Representation J T Gleeson SC and R D Strong with C van Proctor for the appellant in all matters (instructed by Australian Securities and Investments Commission) B W Walker SC with M S Osborne QC and J P Tomlinson for the first respondent in M79/2018 (instructed by SBA Law) N C Hutley SC with R G Craig for the first respondent in M80/2018, M81/2018 and M82/2018 (instructed by SBA Law, Millens and DLA Piper Australia) Submitting appearance for the first respondent in M83/2018 Submitting appearance for the second respondent in all matters Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Australian Securities & Investments Commission v Lewski Australian Securities & Investments Commission v Wooldridge Australian Securities & Investments Commission v Butler Australian Securities & Investments Commission v Jaques Australian Securities & Investments Commission v Clarke Companies – Managed investment schemes – Officers – Duties – Where each first respondent director of second respondent responsible entity of managed investment scheme – Where four directors resolved to amend scheme's constitution to introduce new fees payable to responsible entity out of scheme's assets – Where all five directors resolved to lodge and lodged amended constitution with Australian Securities & Investments Commission ("ASIC") – Where all five directors resolved to pay fees and caused payments to be made – Where ASIC alleged contraventions of Corporations Act 2001 (Cth) by responsible entity and directors – Where proceedings alleging contraventions in relation to amendment resolution time-barred – Whether amendments to constitution adversely affected members' rights – Whether Full Court erred in holding amendments valid from lodgement until set aside – Whether Full Court erred in holding no breaches of duty occurred because of honest belief that constitution validly amended – Whether Full Court erred in holding directors not involved in contravention of s 208 of Corporations Act by responsible entity. Words and phrases – "adversely affect", "breach of duty", "essential element of the contravention", "financial benefit", "honest belief", "improper use of a position", "interests", "interim validity", "invalid", "involved in a contravention", "listing fee payments", "lodgement", "loyalty", "member approval", "members' rights". Corporations Act 2001 (Cth), Pt 5C.3, ss 9, 79, 136, 208, 209(2), 229, 601FC, 601FD, 601GA(2), 601GC, 601LC, 1317K, 1318, 1322. KIEFEL CJ, BELL, GAGELER, KEANE AND EDELMAN JJ. Introduction On 22 August 2006, a meeting was held of the board of directors ("the Board") of Australian Property Custodian Holdings Ltd ("APCHL"), the responsible entity of a managed investment scheme. At an earlier meeting, on 19 July 2006, the Board had approved a Deed of Variation that made amendments to the constitution of the scheme. The Deed of Variation had not taken effect because it had not been lodged with the Australian Securities and Investments Commission ("ASIC"). The Board resolved to lodge the amended constitution with ASIC. If the amendments were valid, their effect would have been to introduce, without any corresponding benefit to the members of the scheme, very substantial new fees payable to the responsible entity. One of the new fees, payable if the scheme were successfully listed on the Australian Securities Exchange ("the ASX"), amounted to $33 million, which was between one-third and two-thirds of the entire capital expected to be raised on the listing. That fee was payable from the assets of the scheme to the responsible entity, and from there to entities associated with one of the directors, Mr Lewski. Since ASIC did not bring proceedings within six years of the Board meeting on 19 July 20061, the contraventions that ASIC sought to prove at trial in the Federal Court of Australia focused upon the events at the later Board meeting on 22 August 2006 and thereafter. Central among the issues was whether the responsible entity and the directors had contravened the Corporations Act 2001 (Cth) by resolving to lodge the amended constitution with ASIC and by later acts effecting the payment of those fees. The primary judge found that the responsible entity and the directors had contravened numerous provisions of the Corporations Act, including, in broad terms, duties of care and skill, duties of loyalty, duties not to make improper use of a position, and duties of compliance. Declarations of contravention were made, as were orders imposing various pecuniary penalties and periods of disqualification on the directors. The Full Court of the Federal Court of Australia allowed appeals by the responsible entity and directors. The Full Court quashed all the declarations and orders made by the primary judge. The Full Court did not, therefore, need to consider ASIC's cross-appeals in relation to the penalties ordered. 1 Corporations Act 2001 (Cth), s 1317K. Bell Edelman The essence of the Full Court's reasoning was as follows. Since the Board had resolved on 19 July 2006 to amend the scheme constitution, then, absent dishonesty, there could be no contraventions arising from actions intended to give the amendments legal effect or actions to implement payments based upon the amendments. Effectively, any negligence, disloyalty, improper use of a position, or failure of compliance was spent. The Full Court also overturned the primary judge's conclusion that one of the directors, Mr Clarke, who was only appointed on 21 August 2006, had contravened the Corporations Act by voting in favour of the 22 August 2006 resolution. In its appeals to this Court, ASIC did not seek to disturb the Full Court's orders in relation to Mr Clarke. For the reasons that follow, the appeals to this Court should be allowed in part. With the exception of the declarations in relation to Mr Clarke and the declarations relating to one group of contraventions concerning s 208 (as modified by s 601LC)2 of the Corporations Act, all the declarations made by the primary judge should be restored. The matter should be remitted to the Full Court for the hearing of ASIC's cross-appeals against penalty in that Court and for re-determination of the penalties and disqualification periods for the directors other than Mr Clarke. Background By deed dated 27 December 2000, APCHL created a unit trust called the Prime Retirement and Aged Care Property Trust ("the Trust"). The business of the Trust was retirement villages and aged care facilities. On 23 July 2001, the Trust was registered by ASIC, as required by s 601EB of the Corporations Act, as a managed investment scheme and the consolidated trust deed became the constitution of the managed investment scheme ("the Constitution"). It was difficult for members to sell their units in the Trust, for which there was no secondary market. From March 2006, they could not redeem their units due to suspension of the redemption facility. The Constitution provided that one event that would cause the Trust to vest was where the responsible entity had not passed a resolution, on or before 31 July 2007, to seek listing of the units on an appropriate exchange (such as the ASX). APCHL was the responsible entity of the managed investment scheme. The first respondent in Matter No M79 of 2018, Mr Lewski, together with his 2 Referred to simply as "s 208" in the remainder of these reasons. Bell Edelman family and an associated company, owned all the shares in APCHL. Mr Lewski was the driving force behind APCHL and a director. Apart from Mr Clarke, the first respondent in each of the other appeals (Dr Wooldridge, Mr Butler, and Mr Jaques) was a director of APCHL at all relevant times. Mr Clarke commenced as a director on 21 August 2006. By the Board meeting on 22 August 2006, each of the first respondents was a director of APCHL ("the Directors"). The Constitution provided for various fees payable to APCHL, including (i) an "Exit Fee" payable on the determination of the Trust (2.5 per cent of its gross asset value) or the sale of all of its main assets and undertakings (2.5 per cent of the net sale proceeds), and (ii) a "Takeover Fee" of 2.5 per cent of the gross price paid for the units in any acquisition by an acquirer who held or thereby obtained more than 20 per cent of the units. In June 2006, APCHL was systematically moving towards listing the Trust on the ASX. The likelihood was that the Trust would be listed within the next 12 to 18 months. The Trust had gross assets of $568 million and total liabilities of around $356 million, its net assets therefore being around $212 million. On 20 June 2006, Mr Lewski contacted APCHL's solicitors seeking legal advice about amending the Constitution without consulting the members. Mr Lewski, Mr Butler and Dr Wooldridge said that they were concerned about the possibility of an opportunistic, "low-ball" takeover attempt on the Trust, and that those concerns prompted the Board to investigate "poison pills" to discourage such attempts. However, the primary judge held that (i) there was no real threat of an opportunistic takeover attempt that might have led to APCHL's removal as responsible entity, and (ii) a poison pill would also discourage reasonable takeover offers, which were one of the few ways that a member could crystallise her or his investment before listing or vesting3. Mr Lewski instructed APCHL's solicitors that he believed that there were "anomalies" in the Constitution because: (i) the Constitution did not provide for a fee to be paid to APCHL upon listing of the Trust; (ii) the Constitution did not provide for a fee to be paid to APCHL upon removal of APCHL as responsible 3 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1118 [303], [307]. Bell Edelman entity either after a takeover or otherwise by the members; and (iii) the Takeover Fee provided for in the Constitution was based on the net equity of the Trust rather than its gross asset value. Mr Lewski wanted to amend the Constitution "without needing to go to the Unit Holders" because he was concerned that the members would not approve these additional fees. The additional fees that Mr Lewski proposed were as follows: a new "Listing Fee" of 2.5 per cent of the gross asset value of the Trust at the time immediately before APCHL is listed on the ASX; a new "Removal Fee" of 2.5 per cent of the gross asset value of the Trust if APCHL is removed as responsible entity of the Trust (other than by reason of proven fraud or misconduct, or by ASIC); and amending the Takeover Fee to be based on the gross asset value of the Trust rather than its net equity (together, "the Amendments"). Mr Lewski discussed with APCHL's solicitors their draft advice on several occasions. The final advice was provided by the solicitors to Mr Lewski on 14 July 2006. The advice from APCHL's solicitors correctly identified s 601GC(1)(b) as an obstacle to the Amendments. The advice said that "case law" indicated that an amendment that changes the value of units does not, of itself, affect members' rights, and that a resolution of the members is not required unless a right, such as a right to a distribution, a right to vote, or a right to receive information, is adversely affected. APCHL's solicitors' advice then turned to cl 25.1 of the Constitution. Clause 25.1 provides relevantly as follows: "Amendment to Trust Subject to clause 25.1(b), the Responsible Entity for the time being may at any time and from time to time by deed revoke add to or vary all or any of the trusts, powers, conditions or provisions contained in this Deed … provided further that any such revocation, addition or variation: Bell Edelman shall not be in favour of or result in any benefit to the Responsible Entity; (b) Any amendment of this Deed must comply with the Corporations Act. [See section 601GC for power to amend. The amendment cannot take effect until a copy of the amendment is lodged with ASIC.]" The solicitors advised that cl 25.1 could be interpreted in two ways. On one interpretation, cll 25.1(a) and 25.1(b) both needed to be satisfied such that an amendment was only possible where it (i) neither was in favour of nor resulted in any benefit to APCHL, and (ii) was not contrary to the Corporations Act. On the second interpretation, cl 25.1(b) qualified cl 25.1(a) such that an amendment could be made, notwithstanding its noncompliance with cl 25.1(a), if it complied with the Corporations Act. This part of the advice concluded by saying, in effect, that the Amendments could be made without member approval if the Directors (none of whom were legally qualified) (i) interpreted cl 25.1 in the second manner, and (ii) reasonably considered that members' rights were not adversely affected. APCHL's solicitors did not advise which interpretation should be preferred. The advice was provided to each of the Directors (other than Mr Clarke, who had not yet been appointed) prior to the Board meeting on 19 July 2006. It was accompanied by a draft Deed of Variation. At the Board meeting on 19 July 2006, Mr Lewski moved, and Mr Jaques seconded, a resolution to pass the Amendments ("the Amendment Resolution"). The Amendment Resolution was passed unanimously, with all of the Directors (again, other than Mr Clarke) voting in favour of the Amendments. Although the minutes of the meeting describe discussion of "'poison pills' and [responsible entity] protection", there was either scant or no discussion of matters concerning the conflict between the interests of APCHL and its members, the gratuitous nature of the fees to be paid to APCHL, the uncertainty deriving from the solicitors' advice concerning the power to make the Amendments, and whether the Amendments were appropriate. The Deed of Variation containing the Amendments was signed by two of the Directors at the Board meeting on 19 July 2006, but, following legal advice from APCHL's solicitors, it was left undated until it could be lodged together Bell Edelman with a "Supplementary Product Disclosure Statement", which was not then ready. The Supplementary Product Disclosure Statement included matters such as: (i) the appointment of Mr Clarke; (ii) updating the fees table to include the Listing Fee and the Removal Fee; and (iii) updating compliance arrangements. On 21 August 2006, the Directors were provided with a draft Supplementary Product Disclosure Statement and a copy of the Deed of Variation signed on 19 July 2006. APCHL's solicitors advised that the Deed of Variation would take effect on the date that it was lodged with ASIC and proposed that it be dated and lodged on 22 August 2006. At the Board meeting on 22 August 2006, the Directors passed a resolution ("the Lodgement Resolution") by which the Board resolved to lodge with ASIC a consolidated Constitution incorporating the Amendments so that they would become effective. The minutes of the meeting included the following: "At the last Board meeting, the Directors approved Deed of Variation (No 7) to the Constitution which had not yet taken effect as it had not been lodged with ASIC because a Supplementary PDS had not yet been prepared. As a Supplementary PDS has now been prepared, the Directors resolved that the Consolidated Constitution incorporating Deed of Variation (No 7) be lodged with ASIC to become effective." At the meeting no further consideration was given to the issues of conflict of interest, the gratuitous nature of the fees, the uncertainty about the power to make the Amendments, or the propriety of the Amendments. The Deed of Variation, which had been signed at the 19 July 2006 meeting, was dated 22 August 2006. The form accompanying the lodgement stated that APCHL had modified the Constitution on 22 August 2006. Lodgement occurred on 23 August 2006. On 26 June 2007, with the listing process underway, the Directors formally resolved to list the Trust on the ASX. They also resolved that the Listing Fee be paid to APCHL as follows: (i) ten per cent as units issued to APCHL at the time of allotment and official quotation of the Trust units on the ASX; (ii) the remainder deferred over a three-year "Deferral Period" and payable in annual tranches, 50 per cent in cash and 50 per cent as units, subject to performance hurdles with a waiver of the annual fee if the relevant performance hurdle is not met; and (iii) in the event of removal of APCHL as responsible entity during the Deferral Period, the unpaid balance becomes immediately payable in cash. Bell Edelman The total Listing Fee was calculated by APCHL's auditors as $32,939,947. The payment of the Listing Fee was enabled by a number of resolutions and acts of the Directors in addition to the 26 June 2007 resolution, collectively described as the "Payment Resolutions" in submissions (although the defined term includes both resolutions and acts to effect payment): On 27 July 2007, the Directors resolved that the initial tranche of the Listing Fee be paid as units and that 3,293,994 units be issued to APCHL. This occurred on 3 August 2007. On 7 April 2008, the Directors resolved to amend the 26 June 2007 resolution so that if "interests associated with [Mr] Lewski cease to control [APCHL] ... prior to the end of the Deferral Period the unpaid balance will become immediately payable in cash to [APCHL]". As the Directors then knew, an agreement for Mr Lewski to sell his interests in APCHL was either finalised or close to being finalised at that time. Execution of that agreement was approved by the Directors, other than Mr Lewski, on 23 and 24 April 2008. On 27 June 2008, at a Board meeting attended by only Mr Lewski, Mr Jaques, and Mr Clarke, those Directors resolved to execute a Deed of Acknowledgement of Listing Fee Payment that provided for payment of the remainder of the Listing Fee as (i) 9,020,386 units in the Trust (with a value of $5 million), and (ii) $24,645,953 in cash. Following that execution, the unit issue, to a company controlled by Mr Lewski, and the cash payment, to APCHL and then to a company controlled by Mr Lewski, occurred on 27 and 30 June 2008 respectively. The description of the payments as "fees" in these reasons, following the approach taken in submissions, is a euphemism. None was a payment for any additional obligation upon APCHL or the Directors, nor was any a payment for any additional benefit to members. The amounts of the "fees" were substantial. For instance, the Listing Fee of about $33 million amounted to between one-third and two-thirds of the entire capital expected to be raised on the listing. As for the Takeover Fee, in one scenario it could have required that a "fee" of $15 million be paid to APCHL following a takeover, increased from only $75,000 prior to the Amendments4. Finally, the amendment of the Listing Fee payment terms on 4 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1089 [114]. Bell Edelman 7 April 2008 caused the crystallisation and acceleration of the Listing Fee payment to APCHL and Mr Lewski's associated companies. The alleged contraventions As the primary judge observed, the contraventions alleged by ASIC fell into three broad groups. None of the contraventions alleged a breach of duty by the Directors in passing the Amendment Resolution on 19 July 2006. As more than six years had elapsed since 19 July 2006, ASIC was barred by s 1317K of the Corporations Act from bringing proceedings alleging the commission of a contravention on that date. ASIC therefore relied for its allegations of contravention upon the passing of the Lodgement Resolution and the Payment Resolutions. The three groups, in chronological order of alleged contravention, were as follows. The first group of contraventions concerned the Lodgement Resolution. the Lodgement Resolution founded various ASIC alleged contraventions, which can be categorised as follows: that passing The "Negligence Duties": a breach by APCHL5 and each Director6 of their duty to exercise reasonable care and diligence; The "Loyalty Duties": a breach by APCHL7 and each Director8 of their duty to act in the best interests of the members of the Trust and to give priority to the interests of the members of the Trust over their own interests; The "Improper Use Duties": a breach by each Director of his duty not to make improper use of his position as an officer of APCHL9: 5 Corporations Act, s 601FC(1)(b), (5). 6 Corporations Act, s 601FD(1)(b), (3). 7 Corporations Act, s 601FC(1)(c), (5). 8 Corporations Act, s 601FD(1)(c), (3). 9 Corporations Act, s 601FD(1)(e), (3). Bell Edelman to provide an advantage to APCHL or to provide an indirect advantage to persons who would benefit from the fees paid to APCHL; or to cause detriment to members of the Trust; and The "Compliance Duties": a breach by APCHL of its duty to comply with cl 25.1 of the Constitution in varying or attempting to vary the Constitution in a manner that was in favour of or resulted in a benefit to APCHL10 and a breach by each Director of his duty to take all steps that a reasonable person in his position would take to ensure that APCHL complied with the Constitution and the Corporations Act11. The second group of contraventions concerned the Payment Resolutions. ASIC alleged breaches by APCHL12 and each Director13 of their Loyalty Duties and breaches by APCHL14 and each Director15 of their Compliance Duties. The third group of contraventions concerned the actual payment by APCHL of the Listing Fee in cash to itself and then to one of Mr Lewski's associated companies, and in units directly to one of Mr Lewski's associated that APCHL companies ("the Listing Fee Payments"). contravened s 208 and that the Directors each contravened s 209(2) by their involvement in APCHL's contravention. ASIC alleged 10 Corporations Act, s 601FC(1)(m), (5). 11 Corporations Act, s 601FD(1)(f), (3). 12 Corporations Act, s 601FC(1)(c), (5). 13 Corporations Act, s 601FD(1)(c), (3). 14 Corporations Act, s 601FC(1)(k), (5). 15 Corporations Act, s 601FD(1)(f), (3). Bell Edelman The Federal Court and Full Court decisions The Federal Court decision The primary judge, Murphy J, held that the Amendment Resolution was invalid. Section 601GC(1) of the Corporations Act required that an amendment to the Constitution that was not made by special resolution of the members of the scheme required the responsible entity reasonably to consider that the change would not adversely affect members' rights. Since the Amendments affected members' rights, and since APCHL did not consider whether the Amendments would adversely affect members' rights, the Amendments were not valid16. As to the Negligence Duties, the primary judge held that the Directors did not read and understand the effects of the Amendments before passing the Amendment Resolution or the Lodgement Resolution, and that the effects of the Amendments were not considered by the Directors acting as a Board17. As to their understanding, the Directors did not understand the following: (i) the Takeover Fee could be charged on multiple occasions; (ii) the increased Takeover Fee and the Removal Fee could be payable notwithstanding prior payment of the Listing Fee; (iii) the Removal Fee provided little additional protection for members against opportunistic, "low-ball offers" for their units; (iv) the increased Takeover Fee would discourage reasonable offers for members' units; and (v) the Removal Fee would significantly impair the ability of members to remove APCHL as responsible entity. As to their consideration, the Directors did not consider the fact that the introduction of substantial additional fees was effectively gratuitous. None of the Directors gave proper consideration to the mutually exclusive interpretations of cl 25.1 of the Constitution that APCHL's solicitors had left open for their consideration, including whether to seek unequivocal legal advice or a judicial direction. Nor did any Director consider whether the Amendments should be 16 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1178 [665]-[667], 1179 [673]. 17 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1119 [309]-[311], 1120 [315], Bell Edelman made, that is, whether it was proper to make them even if there were power to do The primary judge found that all of the contraventions alleged by ASIC were established. However, as his Honour held, the position of Mr Clarke, who was not a director at the time of the Amendment Resolution, was different in some respects. The primary judge accepted that it was unrealistic to expect Mr Clarke to have called for the legal advice concerning the Amendment Resolution when considering the Lodgement Resolution at the Board meeting on 22 August 200618. Nevertheless, the primary judge concluded that Mr Clarke did not give the Lodgement Resolution or the Amendments any consideration, and that he remained silent through the meeting and was a passive participant19. The primary judge concluded that if Mr Clarke had given proper consideration to the matters before him then he should have understood their deleterious effects, APCHL's conflict of interest, and the lack of any countervailing benefit to the members for the imposition of substantial additional fees20. The primary judge made 47 declarations of contravention by APCHL and the Directors under s 1317E. The declarations concerned: (i) the Lodgement Resolution (the Negligence Duties21, the Loyalty Duties22, the Improper Use Duties23, and the Compliance Duties24); (ii) the Payment Resolutions (the Loyalty 18 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1163 [580]. 19 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1147 [493(b)]-[494], 1163-1164 20 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1163-1164 [584]. 21 Declarations 1, 8, 16, 24, 32, 40. 22 Declarations 2, 9, 17, 25, 33, 41. 23 Declarations 10, 11, 18, 19, 26, 27, 34, 35, 42, 43. 24 Declarations 3, 12, 20, 28, 36, 44. Bell Edelman Duties25 and the Compliance Duties26); and (iii) the Listing Fee Payments27. Although the primary judge found that APCHL had contravened s 208, s 1317E did not require the primary judge to make a declaration of contravention by APCHL of s 208 and none was made. The primary judge also disqualified each Director except Mr Clarke from managing corporations for various periods of time28 under s 206C. His Honour ordered pecuniary penalties under s 1317G against each Director29. The Full Court decision The Directors, but not APCHL, appealed to the Full Court30. ASIC cross-appealed in relation to the adequacy of the pecuniary penalties and disqualifications imposed on the Directors. The Full Court (Greenwood, Middleton and Foster JJ) concluded that the primary judge erred because, although the Amendment Resolution was "invalid" and was "no decision at all"31, the Amendments nevertheless had "interim validity"32; once lodged with ASIC, they would be "valid until set aside"33. That concept had the effect that, despite a 25 Declarations 4, 6, 14, 22, 30, 38, 46. 26 Declarations 5, 7, 15, 23, 31, 39, 47. 27 Declarations 13, 21, 29, 37, 45. 28 Mr Lewski, 15 years (Order 1.1); Mr Butler, 4 years (Order 1.2); Mr Jaques, 4 years (Order 1.3); and Dr Wooldridge, 2 years and 3 months (Order 1.4). 29 Mr Lewski, $230,000 (Order 2.1); Mr Butler, $20,000 (Order 2.2); Mr Jaques, $20,000 (Order 2.3); Dr Wooldridge, $20,000 (Order 2.4); and Mr Clarke, $20,000 (Order 2.5). 30 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200. 31 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 32 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 33 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 Bell Edelman failure to comply with the requirement for amending the Constitution in s 601GC(1)(b), when APCHL lodged the Amendments with ASIC they were given retroactive effect unless, and until, set aside. The Full Court also concluded that the primary judge erred in finding that contraventions had occurred when, according to the Full Court, at the time of the Lodgement Resolution and the Payment Resolutions, "[t]he Directors were entitled to act in accordance with the Constitution which they honestly believed existed, and make decisions accordingly"34. Hence, the Full Court said that it should proceed on the basis that the Amendment Resolution and the Lodgement Resolution were "made and in existence, and formed a basis for subsequent decision making by the Directors"35. On that premise, the Full Court concluded that APCHL and the Directors were not liable for the breaches of duty under ss 601FC and 601FD because they had an honest belief that the Constitution had been amended36. The Full Court also overturned the primary judge's finding that, despite Mr Clarke's passive conduct and silence, he had voted in favour of the Lodgement Resolution. That finding was the sole basis for the finding of contravention against Mr Clarke for the events of 22 August 200637. Before orders were made on the appeals, the Directors submitted that the consequence of allowing the appeals was that the declarations against APCHL should not have been made. On the Directors' application, APCHL was joined to each appeal. ASIC sought leave to file a notice of contention and submitted that the Full Court should reconsider its reasons for decision. The Full Court did so but did not depart from any of its reasons or conclusions. In lengthy reasons, it reiterated its previous reasons for decision and ordered that all of the orders and declarations made by the primary judge, including those in relation to APCHL, 34 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 35 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 36 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 37 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 Bell Edelman be set aside38. As the Full Court allowed the appeals, it did not need to consider the cross-appeals brought by ASIC and simply ordered that they be dismissed. The grounds of appeal and the pleading issues The orders of the Full Court were expressed globally in relation to all of the Directors and ASIC appealed against those global orders. However, ASIC did not seek to disturb the Full Court's orders in relation to Mr Clarke (the sixth defendant at trial). Hence, although an appeal was brought from the global orders made in relation to Mr Clarke, there was no challenge to the quashing of the primary judge's particular declarations39 and penalty40 concerning Mr Clarke. ASIC relied upon three grounds of appeal in each appeal in this Court. The first alleged that the Full Court erred by concluding that Pt 5C.3 of the Corporations Act, which includes s 601GC(1)(b), contains a concept of interim validity. The second ground of appeal alleged that the Full Court erred in finding that APCHL and the Directors were not liable for the breaches of duty under ss 601FC and 601FD because they had an honest belief that the Constitution had been amended. The third ground of appeal was that the Full Court erred in concluding that the onus lay upon ASIC to prove that the Listing Fee Payments were not authorised by the Constitution consistently with s 208(3). The Directors other than Mr Clarke ("the active respondents") submitted that ASIC's first two grounds of appeal were not matters that were pleaded at trial. The active respondents submitted that ASIC had not sought declaratory relief that the Constitution had not been validly amended, and they submitted that ASIC had not pleaded any event between the Amendment Resolution on 19 July 2006 and the Lodgement Resolution on 22 August 2006. There is no substance to this pleading submission. Although ASIC did not seek a declaration that the Constitution had not been validly amended, ASIC's pleading concerning lodgement had this effect. ASIC pleaded that by lodging the Amendments APCHL intended to amend the Constitution. Section 601GC(2) prevents an amendment taking effect until it is lodged. ASIC pleaded that 38 Lewski v Australian Securities and Investments Commission [No 2] (2017) 352 ALR 64 at 128 [200]-[201]. 39 Declarations 40-47. 40 Order 2.5. Bell Edelman lodgement of a version of the Constitution containing the Amendments was not effective to amend the Constitution. ASIC also pleaded that by passing the Lodgement Resolution, the Directors contravened the Negligence Duties, the Loyalty Duties, the Improper Use Duties, and the Compliance Duties. All the pleaded facts concerning negligence, loyalty, improper use and compliance were matters that existed on 19 July 2006 and still existed on 22 August 2006. They were relied upon in ASIC's pleadings of contravention. That was ASIC's pleaded case. That was ASIC's case before the Full Court. And that was ASIC's case before this Court. Apart from the three grounds of appeal, a logically anterior matter was raised by a notice of contention filed by each of the active respondents. The notice of contention sought to uphold the findings of the Full Court on the basis that a member's "right to have a managed investment scheme administered according to its terms" was not a "member's right" within the meaning of s 601GC(1)(b), such that APCHL had the power to make the Amendments. The notice of contention and the first ground of appeal: s 601GC The notice of contention and the first ground of appeal both focus closely on the meaning of s 601GC of the Corporations Act. It is convenient to set out that section in full: "Changing the constitution The constitution of a registered scheme may be modified, or repealed and replaced with a new constitution: by special resolution of the members of the scheme; or by the responsible entity if the responsible entity reasonably considers the change will not adversely affect members' rights. The responsible entity must lodge with ASIC a copy of the modification or the new constitution. The modification, or repeal and replacement, cannot take effect until the copy has been lodged. The responsible entity must lodge with ASIC a consolidated copy of the scheme's constitution if ASIC directs it to do so. Bell Edelman The responsible entity must send a copy of the scheme's constitution to a member of the scheme within 7 days if the member: asks the responsible entity, in writing, for the copy; and pays any fee (up to the prescribed amount) required by the responsible entity." Section 601GC(1) confers a power on a responsible entity to amend the constitution of a registered scheme. That power can be exercised if, but only if, either of the conditions in para (a) or para (b) is met. The notice of contention: the meaning of "members' rights" in s 601GC The active respondents' notice of contention alleged that the primary judge and the Full Court both erred by concluding that APCHL was required, on 19 July 2006, to consider reasonably that the change to the Constitution would not adversely affect members' rights. The active respondents' submission was that the members had no "right" to the due administration of the Trust in accordance with the existing Constitution. In contrast, ASIC submitted that the relevant members' rights had two sources. First, they were sourced in a "basal rule" arising from s 601GA(2) that any rights of APCHL "to be paid fees out of scheme property" must be "specified in the scheme's constitution" and "available only in relation to the proper performance of [APCHL's] duties". Secondly, they were sourced in the Constitution itself. Clause 34.1 provided that the Constitution was not "capable of being revoked added to or varied" otherwise than in accordance with Pt 25. Part 25 contained only cl 25.1, extracted above, which empowered the responsible entity to amend the Constitution subject to conditions including that the amendment "shall not be in favour of or result in any benefit to the Responsible Entity" (cl 25.1(a)(i)) and that the amendment must comply with the Corporations Act (cl 25.1(b)). It was common ground that the Amendments resulted in a benefit to APCHL. The simple answer, however, to the notice of contention lies in the concession by senior counsel for Dr Wooldridge and Messrs Butler and Jaques that if "right" is used in s 601GC to mean "interest" then members' rights would have been adversely affected by the Amendments. That concession was properly Bell Edelman made. The word "interest" has a broad, general meaning41 which, on any view, includes the concern of the members with the due administration of the Trust. And in s 601GC(1) that is, indeed, the sense in which "right" is used. In the dictionary to the Corporations Act, s 9, a managed investment scheme is defined to include the feature that "people contribute money or money's worth as consideration to acquire rights (interests) to benefits produced by the scheme (whether the rights are actual, prospective or contingent and whether they are enforceable or not)". The definition also refers to the pooling of contributions to produce "benefits consisting of rights or interests in property, for the people (the members) who hold interests". An "interest" in a managed investment scheme is defined as "a right to benefits produced by the scheme (whether the right is actual, prospective or contingent and whether it is enforceable or not)". And a "member" in relation to a managed investment scheme is defined as "a person who holds an interest in the scheme". A further difficulty with the active respondents' interpretation of members' rights in a manner that does not treat them as "interests" generally is that this interpretation is contrary to the purpose of s 601GC to protect the members of the scheme. Section 601GC(1) is contained in Pt 5C.3 of the Corporations Act, which is concerned with the constitution of managed investment schemes. The responsible entity, which administers that constitution, was designed with a protective purpose42. Although a responsible entity is given some power to amend the constitution, the purpose of s 601GC(1) is therefore to confine that power to circumstances that, considered reasonably, will not adversely affect the members' rights unless the members so resolve. This purpose requires the notion of members' rights to have a broad construction. In contrast with the broad construction of rights (as "interests") that the purpose of s 601GC would suggest, the active respondents' submission would have the consequence that a successful members' special resolution would be needed for matters having a relatively trivial adverse effect on members but not for matters having a catastrophic effect on members. For instance, member approval would be needed if a scheme constitution were amended to change the 41 Craig v Federal Commissioner of Taxation (1945) 70 CLR 441 at 446, 457; [1945] HCA 1. 42 Australia, House of Representatives, Parliamentary Debates (Hansard), 3 December 1997 at 11928-11929. Bell Edelman frequency of reports to members from semi-annual to annual. But, on the active respondents' construction, it would not be needed for an amendment to require a payment out of scheme property that would remove most of the members' equity. An interpretation of s 601GC that has this effect gives no operation to its protective purpose. An interpretation of members' rights as "interests" also accords with the prevailing authority. In 360 Capital RE Ltd v Watts43, the Court of Appeal of the Supreme Court of Victoria considered a purported amendment to the constitution of a registered managed investment scheme which removed restrictions upon the issue of redeemable unsecured convertible notes. 360 Capital submitted, relying upon decisions of the Supreme Court of New South Wales44, that "members' rights" did not include the rights to have a managed investment scheme administered according to the constitution as it stands45. It was said that such a broad view of members' rights would deny all efficacy to s 601GC(1)(b) because any modification of the constitution would involve "an invasion of that right that is arguably adverse"46. The Court of Appeal unanimously rejected that submission and the authorities that supported it. The Court of Appeal, following an earlier decision of Gordon J47, held that members' rights included the right "to have a managed fund managed and administered in accordance with the constitution of the fund"48. As their Honours explained, that broad characterisation does not deny efficacy to s 601GC(1)(b). It may be that there are very few, if any, circumstances where an amendment to a constitution would not affect members' rights in this broad sense. But this is 44 Smith v Permanent Trustee Australia Ltd (1992) 10 ACLC 906; ING Funds Management Ltd v ANZ Nominees Ltd (2009) 228 FLR 444; Re Centro Retail Ltd (2011) 255 FLR 28. 45 (2012) 36 VR 507 at 513 [23]. 46 (2012) 36 VR 507 at 515 [31], 516-517 [39], quoting ING Funds Management Ltd v ANZ Nominees Ltd (2009) 228 FLR 444 at 461 [98]. 47 Premium Income Fund Action Group Inc v Wellington Capital Ltd (2011) 84 ACSR 600. 48 (2012) 36 VR 507 at 514 [26]. Bell Edelman because the due administration of the scheme according to the constitution is "fundamentally the most important right of membership"49. In any event, amendments can nevertheless be made where they reasonably are not considered to affect members' rights adversely. An example is abbreviating a period for redemption of units from 90 days to 60 days50. The active respondents submitted that such a broad characterisation of members' rights in these terms involved the misdescription of a "right" and the mischaracterisation of its correlativity. They submitted that the characterisation would break down a necessary distinction between the nature of the rights and their value. But the meaning to be given to "member's right" in s 601GC(1)(b) is not to be derived, independently of the legislation, from philosophical conceptions of a right, themselves disputed and used in different senses. Further, a distinction, extrinsic to the legislation, between the nature of the rights and their value is "beside the point"51. The meaning of "members' rights" is to be determined by the statutory context in and purpose for which the words are used. That context and purpose reveals that "right" is used to mean "interest". As the primary judge correctly held, each of the Lodgement Resolution and Payment Resolutions adversely affected the members' interests, and therefore their rights. The notice of contention must be dismissed. The first ground of appeal: a notion of "interim validity" in s 601GC The Full Court's conclusion that the Amendments had interim validity despite being passed contrary to s 601GC(1) was akin to a conclusion that s 601GC(1) was not a provision concerned with authority but only rendered noncompliant amendments voidable. Even then, however, the Full Court recognised two limitations that mean that the notion would be more accurately described as qualified voidability or qualified First, amendments that were not made in compliance with s 601GC(1) would only interim validity. 49 (2012) 36 VR 507 at 517 [40]. See also Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 at 498 [32]; [2003] HCA 15. 50 (2012) 36 VR 507 at 517 [41], citing Eagle Star Trustees Ltd v Heine Management Ltd (1990) 3 ACSR 232. 51 360 Capital RE Ltd v Watts (2012) 36 VR 507 at 518 [45]. Bell Edelman "ordinarily" be valid until set aside52. The Full Court left open the possibility that an amendment would have no effect if the directors knew or had reason to believe that there was no authority to make it under s 601GC(1)53. Secondly, a notion of interim validity in s 601GC would only take effect once the amendments had been lodged with ASIC54. In effect, noncompliant amendments would have no legal force until lodged, but, upon lodgement, they would become voidable unless they had been made with knowledge of noncompliance. This notion of qualified interim validity is not supported by the text of s 601GC, which confers a power and defines its scope, nor by its protective purpose. The Full Court sought to support the interim validity principle textually by analogy with this Court's approach in Project Blue Sky Inc v Australian Broadcasting Authority55. That decision held that an act will not usually be invalidated by a statutory requirement that regulates the exercise of functions already conferred, rather than imposing essential preliminaries to the exercise, especially where the provisions are expressed in indeterminate language, they do not have a rule-like quality, and the result of invalidity would be public inconvenience56. This analogy is inapt. There is no textual basis for interpreting s 601GC(1) as not invalidating a noncompliant amendment, still less as conferring some qualified interim validity upon it, based upon Project Blue Sky considerations. This is for a number of reasons: (i) the authority to amend the constitution derives from s 601GC(1) itself so the sub-section does not merely regulate an existing power; (ii) the sub-section contains a rule and is not expressed in indeterminate language; and (iii) any consideration of public 52 Lewski v Australian Securities and Investments Commission [No 2] (2017) 352 ALR 64 at 125 [186]. 53 Lewski v Australian Securities and Investments Commission [No 2] (2017) 352 ALR 64 at 127 [191]. 54 Lewski v Australian Securities and Investments Commission [No 2] (2017) 352 ALR 64 at 125 [186]. See also Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 at 274 [253], [256]. 55 (1998) 194 CLR 355; [1998] HCA 28. See Lewski v Australian Securities and Investments Commission [No 2] (2017) 352 ALR 64 at 125-126 [186]. 56 (1998) 194 CLR 355 at 391-392 [94]-[97]. See also Forrest & Forrest Pty Ltd v Wilson (2017) 91 ALJR 833 at 844 [62]; 346 ALR 1 at 14; [2017] HCA 30. Bell Edelman inconvenience cannot ignore the injustice caused to members by an amendment that permits $33 million of their equity to be paid away without authority. A notion of interim validity would also be in considerable tension with the structure of the Corporations Act in three significant respects. First, the Corporations Act has mechanisms to exonerate those who cause a constitution to be invalidly amended, which are inconsistent with the conversion of the requirement in s 601GC(2) to lodge the constitution with ASIC into a blunt guarantee of interim validity qualified only by dishonesty. Instead, the exoneration mechanisms provide the Court with wide latitude to grant relief, closely tailored to the circumstances of the case. For instance, s 1318 confers a power to relieve a person from liability for negligence, default, breach of trust or breach of duty, on such terms as the Court thinks fit, where the person has acted honestly and ought fairly to be excused. Further, s 1322(4)(c) permits the Court to make an order relieving a person from civil liability for a broad range of contraventions or failures referred to in s 1322(4)(a)57, subject to conditions in s 1322(6) that include, but are not limited to, honesty. Secondly, a general rule of interim validity after lodgement despite noncompliance with s 601GC(1), subject only to dishonesty, is in tension with provisions such as s 1322(2), which establishes a presumption of validity, but only for a procedural irregularity, defined to include matters such as the absence of a quorum at a meeting58, and only unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court. Thirdly, interim validity has never been suggested unauthorised amendments to the constitutions of corporations, either generally59 or under the Corporations Act, where the definition of "constitution" in s 9 includes both a constitution of a company and a constitution of a managed investment scheme. For instance, s 136(2) of the Corporations Act provides that a company may modify or repeal its constitution, or a provision of it, by special resolution. And s 136(5) provides that the special resolution must be lodged with ASIC. Since s 601FC(2) creates a statutory trust of scheme property, it is also relevant that the notion of interim validity is inconsistent with the general law to apply 57 See Weinstock v Beck (2013) 251 CLR 396; [2013] HCA 14. 58 Corporations Act, s 1322(1)(b). 59 Gambotto v WCP Ltd (1995) 182 CLR 432 at 454; [1995] HCA 12. Bell Edelman principles concerning unauthorised amendments to a trust deed without consent of the beneficiaries60. In none of these analogous contexts has it been held that noncompliant amendments have interim validity. The first ground of appeal must be upheld. The second ground of appeal: the Negligence, Loyalty, Improper Use and Compliance Duties The general premise of the Full Court's findings The Full Court's conclusion in relation to the contraventions of the Negligence, Loyalty, Improper Use and Compliance Duties was effectively based upon a short premise: that, in the absence of any new facts or knowledge by any Director, any breach of duty was spent after the Amendment Resolution61. The active respondents submitted that the Directors committed no breach given that there were no new facts that could have given rise to a breach of duty since the Amendment Resolution was passed on 19 July 2006, and given that the Directors acted honestly in passing the Lodgement Resolution on 22 August 2006 and the subsequent Payment Resolutions. The active respondents submitted that the Lodgement Resolution could not have involved any breach of duty because it was merely the performance of a duty required by s 601GC(2) and that duty was performed honestly. But although s 601GC(2) obliges the responsible entity to lodge an amendment with ASIC, and prevents the amendment taking effect until it has been lodged, the sub-section is concerned with amendments validly made. It does not oblige a responsible entity to lodge an amendment that was invalidly made. And it does not confer validity upon an amendment invalidly made. The step of lodging the Constitution with ASIC, and therefore the resolution to do so, was no mere administrative task by APCHL. The Directors' resolution of 22 August 2006 that the Amendments be lodged with ASIC, and the dating of the Deed of Variation that same day, were acts intended to give legal effect to the Amendment Resolution, which, even if valid, would have remained inchoate and dependent upon dating and lodging to give it legal effect. As the 60 See Re Dion Investments Pty Ltd (2014) 87 NSWLR 753 at 763-764 [45]-[46]. 61 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 Bell Edelman Directors had been advised, without lodgement the Amendments could have no legal effect. Even after the Lodgement Resolution, the Directors' subsequent actions were not insulated from the possibility of further contraventions. The Payment Resolutions, by which the Listing Fee was resolved to be paid to APCHL and Mr Lewski and his associated companies in an accelerated manner, also attracted, at least, the pleaded Loyalty Duties and Compliance Duties. The Negligence Duties found by the primary The contraventions judge based upon ss 601FC(1)(b) and 601FD(1)(b), concerning APCHL and each Director respectively, involve an objective test of the degree of care that a reasonable person would exercise tailored to the circumstances of the responsible entity or director. the circumstances of each Director other than Mr Clarke were such that he ought reasonably to have known that his consideration of the Amendments on 19 July 2006 was inadequate63. judge concluded62, on 22 August 2006 the primary The Full Court's conclusion that "a reasonable director, honestly believing the previous decisions to be adequate, would not normally re-visit such decisions"64 missed the point that the vote by the Directors in favour of the Lodgement Resolution was the step taken by the Directors to facilitate giving legal effect to the Amendments. They did so in the same circumstances as had prevailed on 19 July 2006 at the time of the Amendment Resolution. The inadequate consideration given to the Amendments by the Directors (other than Mr Clarke) on 19 July 2006, of which they should have been aware, meant that the same lack of understanding existed at the time of the Lodgement Resolution: the misunderstandings concerning the Takeover Fee and the Removal Fee 62 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1161-1162 [568]-[569]. 63 See Shafron v Australian Securities and Investments Commission (2012) 247 CLR 465 at 482 [34]-[35]; [2012] HCA 18. 64 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 at 284-285 [301]; Lewski v Australian Securities and Investments Commission [No 2] (2017) 352 ALR 64 at 111 [111]. Bell Edelman remained; there was no consideration of the nature or propriety of the introduction of substantial, additional, effectively gratuitous fees; and the uncertainty deriving from the solicitors' equivocal advice about the power to make the Amendments had not been resolved. The Loyalty Duties Sections 601FC(1)(c) and 601FD(1)(c) each involve two separate duties of loyalty. The first is a duty to act in the best interests of the members. The second is to give priority to the members' interests if there is a conflict between the members' interests and the interests of the responsible entity. The Full Court overturned the primary judge's finding65 that both duties had been contravened by the Lodgement Resolution and the Payment Resolutions. The Full Court held that the Directors were "entitled to act in accordance with the Constitution which they honestly believed existed, and make decisions accordingly"66. The Loyalty Duty requiring a director to act in the best interests of members is not purely subjective. As Bowen LJ said of the equitable progenitor from which this statutory duty was developed and adapted67, otherwise a wholly irrational but honest director could conduct the affairs of the company by "paying away its money with both hands in a manner perfectly bonâ fide yet perfectly irrational"68. Although the duty is not satisfied merely by honesty, it is a duty to act in the best interests of the members rather than a duty to secure the best outcome for members. Key factors in ascertaining the best interests of the members are the purpose and terms of the scheme, rather than "the success or 65 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1168 [617], 1169 [619], 1193 66 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 at 296 [341], see also at 283 [297], 297 [346]. See also Lewski v Australian Securities and Investments Commission [No 2] (2017) 352 ALR 64 at 88 [36], 67 Australia, House of Representatives, Parliamentary Debates (Hansard), 3 December 1997 at 11929; Australia, House of Representatives, Parliamentary Debates (Hansard), 3 March 1998 at 242. 68 Hutton v West Cork Railway Co (1883) 23 Ch D 654 at 671. Bell Edelman otherwise of a transaction or other course of action"69. The purpose and terms of the Trust are the existing legal purposes and terms of the Constitution, not the purpose or terms that are honestly believed to exist. The Loyalty Duty requiring a director to give priority to the members' interests in circumstances of conflict of interest is narrower in one respect than the equitable rule concerning conflict of interest and duty70. It does not proscribe acts of a director that put herself or himself in a position of conflict71. It only proscribes acts in the course of that conflict that do not give priority to the members' interests. Nevertheless, the duty is not satisfied by an honest or reasonable belief. A contravention occurs when a director prioritises her or his own interests over those of the members, no matter how honest or reasonable the director was in doing so. In summary, it was not sufficient for compliance with either of the Loyalty Duties that the Directors acted honestly, having regard to their belief that the Constitution had been amended. The primary judge correctly concluded that none of the Directors could reasonably have believed that it was in the best interests of the members to bring the Amendments into effect by the Lodgement Resolution or to make the accelerated Listing Fee Payments by the Payment Resolutions. His Honour also correctly concluded that the Directors should have voted against the Lodgement Resolution in order to prioritise the members' interests in having APCHL comply with the Constitution over the conflicting interest of APCHL in receiving the fees. 69 Langford, Directors' Duties: Principles and Application (2014) at 61 [4.2.2]. See also Nicholls, "Trustees and their Broader Community: Where Duty, Morality and Ethics Converge" (1996) 70 Australian Law Journal 205 at 211. 70 See Chan v Zacharia (1984) 154 CLR 178 at 198; [1984] HCA 36. 71 Compare Commonwealth Bank of Australia v Smith (1991) 42 FCR 390 at 392; Maguire v Makaronis (1997) 188 CLR 449 at 466; [1997] HCA 23; Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at 47 [200]. Bell Edelman The Improper Use Duties The Full Court overturned the primary judge's conclusion72 that, in passing the Lodgement Resolution, each Director had made improper use of his position as an officer of APCHL, contrary to s 601FD(1)(e), to (i) provide an advantage to APCHL and an indirect advantage to persons who would benefit from the fees paid to APCHL, and (ii) cause detriment to members of the Trust. Although the Full Court gave no specific reasons in relation to these duties, it must be taken to have reached its conclusion again on the basis that the Directors were entitled to act in accordance with the terms of the Constitution that they honestly believed to exist73. The Full Court erred in concluding that the Improper Use Duties were fulfilled by the honest beliefs of the Directors at the time of the Lodgement Resolution. In the context of a director's duty to the company not to use her or his position for an improper purpose, it has been repeatedly said in this Court "[i]mpropriety does not depend on an alleged offender's consciousness of impropriety. Impropriety consists in a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case. When impropriety is said to consist in an abuse of power, the state of mind of the alleged offender is important: the alleged offender's knowledge or means of knowledge of the circumstances in which the power is exercised and his purpose or intention in exercising the power are important factors in determining the question whether the power has been abused. But 72 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1172 [634]. 73 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 at 285 [302]. See also Lewski v Australian Securities and Investments Commission [No 2] (2017) 352 ALR 64 at 119-120 [159]-[160]. 74 R v Byrnes (1995) 183 CLR 501 at 514-515; [1995] HCA 1; Angas Law Services Pty Ltd (In liq) v Carabelas (2005) 226 CLR 507 at 531 [65]; [2005] HCA 23. See also Doyle v Australian Securities and Investments Commission (2005) 227 CLR 18 at 28 [35]; [2005] HCA 78. Bell Edelman impropriety is not restricted to abuse of power. It may consist in the doing of an act which a director or officer knows or ought to know that he has no authority to do." (footnote omitted) The same principles generally apply to the meaning of impropriety in s 601FD(1)(e). The primary judge correctly found that the Lodgement Resolution had the same improper purpose as the Amendment Resolution75. That purpose was to provide an advantage to APCHL. The advantage intended by the Listing Fee was to incentivise Mr Lewski to pursue listing. The advantage intended in relation to the Removal Fee and the increased Takeover Fee was to ensure that APCHL did not miss out on the Listing Fee by being removed before listing occurred. No reasonable person in each of the Directors' positions could have considered it proper to pass the Lodgement Resolution76. The Compliance Duties The primary that each Director had contravened s 601FD(1)(f), by failing to take all steps that a reasonable person would take, if he or she was in the Director's position, to ensure that APCHL complied with the Corporations Act and the Constitution. The failures arose from: (i) passing the Lodgement Resolution, by which the Directors failed to ensure that APCHL complied with cl 25.1 of the Constitution and its duty under s 601FC(1)(m) to comply with the Constitution; and (ii) passing the Payment Resolutions, by which the Directors failed to ensure that APCHL complied with s 208 when making payments from scheme property that were not in accordance with the Constitution. The payments from scheme property were, themselves, also contraventions by APCHL of s 601FC(1)(k). 75 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1170-1171 [629]-[630]. 76 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1171-1172 [631]-[632]. 77 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1173 [641], 1196 [766]. Bell Edelman Although the Full Court did not give specific reasons for overturning the primary judge's conclusion that the Directors had contravened their Compliance Duties, the basis for the Full Court's conclusion must again have been the general premise that it was sufficient, in the circumstances, that the Directors had acted honestly in passing the Lodgement Resolution and the Payment Resolutions78. But, again, this does not address the objective duty in s 601FD(1)(f), which required each Director to take all steps that a reasonable person in his position would take. The unreasonableness of the vote in favour of the Lodgement Resolution has been addressed above. As for the Payment Resolutions and related acts, the relevant declarations of the primary judge79 recorded that a reasonable person in the position of each Director would have obtained clear legal advice, a judicial direction, or member approval for the Listing Fee Payments. In the circumstances of the highly unusual and equivocal nature of the solicitors' legal advice, in addition to the circumstances of acceleration of the Listing Fee Payments, this conclusion was correct. The third ground of appeal: the Directors' involvement in the contravention by APCHL of s 208 The Full Court allowed the Directors' appeals from the primary judge's finding80 that they were involved, under s 209(2), in a contravention of s 208 by APCHL. That contravention concerned the payment of the Listing Fee by a cash payment from APCHL to itself, and then to a company associated with Mr Lewski, and by the issue of units to a company associated with Mr Lewski. By s 79(c), a person will be involved in a contravention if the person "has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention". To satisfy this requirement of s 79 against each Director, ASIC needed to prove that the Director was intentionally involved in the contravention with knowledge of all of the essential elements of the contravention81. It was common ground that ASIC could not prove that the 78 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 79 Declarations 15, 23, 31, 39. 80 Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (Receivers and Managers appointed) (In liq) (Controllers appointed) [No 3] (2013) 31 ACLC ¶13-073 at 1191 [734]. 81 Yorke v Lucas (1985) 158 CLR 661 at 669-670; [1985] HCA 65. Bell Edelman Directors knew that the Constitution did not authorise the Listing Fee. The issue in dispute was whether, as the Full Court held, a lack of authorisation in the Constitution for the Listing Fee Payments was an essential element of the contravention of s 208. One reason the Full Court held that the Directors were not involved in APCHL's contravention of s 208 was that it had not been proved that the Directors knew that the Listing Fee was not authorised by the Constitution. Section 208, as modified by s 601LC, is entitled "Need for member approval for financial benefit". Section 208(1) provides as follows: "If all the following conditions are satisfied in relation to a financial benefit: the benefit is given by: the responsible entity of a registered scheme; or an entity that the responsible entity controls; or (iii) an agent of, or person engaged by, the responsible entity the benefit either: is given out of the scheme property; or could endanger the scheme property the benefit is given to: the person or a related party; or another person referred to in paragraph (a) or a related party of that person; then, for the person referred to in paragraph (a) to give the benefit, either: the person referred to in paragraph (a) must: obtain the approval of the scheme's members in the way set out in sections 217 to 227; and give the benefit within 15 months after the approval; or Bell Edelman the giving of the benefit must fall within an exception set out in sections 210 to 216." Section 208(2) provides that member approval is "taken to have been given" if the giving of the benefit is required by a contract approved by the members and made within 15 months of that approval, or beforehand if the contract is conditional on that approval. Section 208(3) then provides: "Subsection (1) does not prevent the responsible entity from paying itself fees, and exercising rights to an indemnity, as provided for in the scheme's constitution under subsection 601GA(2)." Although a matter falling within an exception referred to in s 208(1)(e) is a matter that must be pleaded and proved by the person seeking to rely upon it, each of the elements in s 208(1)(a) to (d) is a matter that must be pleaded and proved by the person alleging the contravention82. ASIC submitted that s 208(3) was, in effect, another exception to liability like s 208(1)(e) that must be pleaded and proved by the person seeking to rely upon it83. That submission should not be accepted. Properly interpreted, s 208(3) operates to define the scope of s 208(1)(d), noncompliance with which is a matter that must be proved by ASIC. One important question concerning the scope of s 208(1)(d) is whether member approval of a contract also approves the giving of a financial benefit that is required by the contract. "Giving a financial benefit" is defined broadly and inclusively in s 229. That definition includes the financial benefit of entry into a contract (whether informal or otherwise): s 229(2)(b) provides that giving a financial benefit includes making an informal agreement, an oral agreement or an agreement that has no binding force. If member approval were given to enter a contract, consistently with s 208(1)(d), and that approval did not extend to payments required under the contract, then separate member approval would be required to make each and every payment despite the obligations to make those payments having already been approved. Section 208(2) resolves this issue by providing that member approval of payments made under a contract is taken to have been given, but only for a 15-month period and only where the contract was not itself conditional upon member approval. 82 Waters v Mercedes Holdings Pty Ltd (2012) 203 FCR 218 at 230 [38]. 83 See Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249 at 258; [1990] HCA 41. Bell Edelman A similar issue related to member approval under s 208(1)(d) is addressed by s 208(3). Section 208(3) is concerned with payments that are provided for in the scheme's constitution rather than payments required by an approved contract. The opening words, "[s]ubsection (1) does not prevent", indicate that the concern of sub-s (3) is with clarifying the scope of the required elements of s 208(1). And just as s 208(2) sets out the circumstances in which a benefit given under an approved contract is taken to have been approved by the members, s 208(3) sets out the circumstances in which a responsible entity's right in the constitution to be paid fees out of scheme property, or to be indemnified out of scheme property, is taken to be approved by the members. Those circumstances, from s 601GA(2), are that the right must be (i) specified in the scheme's constitution, and (ii) available only in relation to the proper performance of the responsible entity's duties. For these reasons, s 208(3) is directed to the circumstances of member approval under s 208(1)(d), which ASIC must prove was not obtained in order to establish a contravention of s 208. Therefore, the Full Court was correct to conclude that84, in order for ASIC to prove that the Directors were involved in the contravention of s 208 by APCHL, ASIC needed to prove that the Directors knew that the Constitution did not authorise the Listing Fee. It did not do so. This ground of appeal should be dismissed. Conclusion The orders to be made on these appeals can conveniently be divided into (i) the orders concerning the primary judge's declarations and (ii) the orders concerning the pecuniary penalties and disqualifications imposed by the primary judge. In each category the orders are the same in each of the first four appeals. The exception is the fifth appeal, in relation to Mr Clarke, where ASIC did not seek to disturb the orders made by the Full Court. As to the declarations, the effect of allowing the appeals on the first and second grounds of appeal, but dismissing the appeals on the third ground, is that in each appeal the global orders made by the Full Court should be quashed to the extent necessary to reinstate all declarations made by the primary judge other 84 Lewski v Australian Securities and Investments Commission (2016) 246 FCR 200 Bell Edelman than (i) those that were the subject of the appeal in relation to Mr Clarke85, and (ii) those that related to the contraventions of s 209(2) that were the subject of the third ground of appeal86. In place of the orders of the Full Court concerning the declarations other than those specified above, orders should made dismissing the appeals from the primary judge. As to the pecuniary penalties and disqualifications ordered by the primary judge, the effect of dismissing the appeals on the third ground is that part of the basis for the orders made by the primary judge against each Director is removed. Each matter should be remitted to the Full Court for determination of what, if any, effect this has on (i) the pecuniary penalties and disqualifications that the primary judge ordered against each Director other than Mr Clarke, and (ii) the orders as to costs. This issue can be determined together with ASIC's cross-appeals to the Full Court concerning the pecuniary penalties and disqualifications ordered by the primary judge. The orders in each appeal (Matters No M79, M80, M81 and M82 of 2018) other than the appeal in relation to Mr Clarke (Matter No M83 of 2018), consistently with the approach of the primary judge and the Full Court of making global orders that apply in each proceeding, should therefore be: Appeal allowed in part. Set aside orders 2 to 6 of the orders of the Full Court of the Federal Court of Australia made on 1 November 2017 and in their place order that: the appeal be allowed in part; declarations 13, 21, 29, 37, 40, 41, 42, 43, 44, 45, 46, and 47 of the declarations and orders 1.1 to 1.4 and 2.1 to 2.5 of the orders made by the primary judge in proceeding VID 594 of 2012 ("Trial Proceeding") dated 2 December 2014 be set aside; order 3 of the orders made in the Trial Proceeding be set aside and in its place order that the second to fifth defendants pay the plaintiff's (namely, ASIC's) costs of and incidental to the proceeding; and 85 Declarations 40-47. 86 Declarations 13, 21, 29, 37, 45. Bell Edelman the first respondent (namely, ASIC) pay the appellant's costs of and in connection with the dispute as to the form of orders. Remit the matter to the Full Court of the Federal Court for determination of penalty and disqualification orders, costs, and the cross-appeal to that Court. The first respondent pay the appellant's costs of the appeal to this Court. The orders in the appeal in relation to Mr Clarke (Matter No M83 of 2018), which were not the subject of any dispute, should be made in the following terms: Appeal allowed in part. Set aside the orders of the Full Court of the Federal Court of Australia made on 1 November 2017 and in their place order that: the appeal be allowed in part; declarations 40 to 47 and order 2.5 of the orders made by the primary judge in proceeding VID 594 of 2012 ("Trial Proceeding") dated 2 December 2014 be set aside and in lieu thereof order that the plaintiff's claim in paragraphs 6 to 19 of its originating process dated 21 August 2012 in the Trial Proceeding in so far as it is made against the sixth defendant be dismissed; and the first respondent (namely, ASIC) pay the costs of the appellant (namely, Mr Clarke) in the Trial Proceeding and in the Full Court of the Federal Court, including reserved costs. There be no order as to the costs of the appeal to this Court.

HIGH COURT OF AUSTRALIA CANTARELLA BROS PTY LIMITED APPELLANT AND RESPONDENT Cantarella Bros Pty Limited v Modena Trading Pty Limited [2014] HCA 48 3 December 2014 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court of Australia made on 30 September 2013 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Federal Court of Australia Representation A J L Bannon SC with M Green for the appellant (instructed by Clayton Utz Lawyers) I M Jackman SC with C L Cochrane for the respondent (instructed by Corrs Chambers Westgarth Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Cantarella Bros Pty Limited v Modena Trading Pty Limited Intellectual property – Trade marks – Foreign words – Appellant was registered owner of trade marks "ORO" and "CINQUE STELLE" in respect of products including coffee – Respondent sought cancellation of appellant's trade marks – Whether trade marks inherently adapted to distinguish appellant's goods from goods of other persons. Words and phrases − "covert and skilful allusion", "directly descriptive", "inherently adapted to distinguish", "ordinary signification". Trade Marks Act 1995 (Cth), s 41. FRENCH CJ, HAYNE, CRENNAN AND KIEFEL JJ. In this appeal from a decision of the Full Court of the Federal Court of Australia the appellant, Cantarella Bros Pty Limited ("Cantarella"), seeks to restore to the Register of Trade Marks ("the Register") two of its registered trade marks ordered to be cancelled by the Full Court. The appeal turns upon the provisions of the Trade Marks Act 1995 (Cth) ("the Act"), and the question of whether the two trade marks are "inherently adapted to distinguish" the goods for which they were registered from the goods of other persons. The question arose on a cross-claim of the respondent, Modena Trading Pty Limited ("Modena"), claiming as an "aggrieved person"1 that the two trade marks were liable to be cancelled because they were not "inherently adapted to distinguish" Cantarella's goods. In proceedings in the Federal Court seeking declaratory and injunctive relief and damages, Cantarella claimed that Modena had infringed two of its registered trade marks2. The first is Australian trade mark registration No 829098 for the trade mark "ORO", registered since 24 March 2000 in class 30 in respect of "Coffee; beverages made with a base of coffee, espresso; ready-to-drink coffee; coffee based beverages". The second is Australian trade mark registration No 878231 for the trade mark "CINQUE STELLE", registered since 6 June 2001 in class 30 in respect of "Coffee, coffee essences and coffee extracts; coffee substitutes and extracts of coffee substitutes; coffee-based drinks; tea, tea extracts and tea-based drinks; cocoa, cocoa-based preparations and drinks". Before the primary judge, Cantarella succeeded in establishing infringement. Modena failed in its defence that it had merely used the marks as an indication of quality, and in its cross-claim that the trade marks were not "inherently adapted to distinguish" Cantarella's goods. Modena did not appeal from the primary judge's findings concerning infringement. As to the cross-claim, the primary judge found that, although an Italian speaker would appreciate that "oro" signifies some connection with gold, and that "cinque stelle" signifies five stars, it could not be concluded that "oro" and "cinque stelle" would generally be understood in Australia as having those meanings3. Those 1 Within the meaning of the Act, s 88(1). 2 Contrary to the Act, s 120(2). 3 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 776 Hayne Crennan findings were not disturbed on appeal. Rather, the Full Court said that the test of whether a mark was "inherently adapted to distinguish" certain goods turned not on what a word constituting the mark was generally understood to mean, but on whether other traders would want to use the word in connection with the same goods. In setting aside orders made by the primary judge and ordering rectification of the Register, the Full Court purported to apply a test stated by Kitto J in Clark Equipment Co v Registrar of Trade Marks4 ("Clark Equipment"). A panel constituted by French CJ and Crennan J granted special leave to appeal from the whole of the judgment and orders made by the Full Court. The only question on the appeal in this Court is whether Cantarella's trade marks "ORO" and "CINQUE STELLE" are "inherently adapted to distinguish" Cantarella's goods within the meaning of s 41(3) of the Act. For the reasons which follow, the appeal to this Court should be allowed and the orders made by the Full Court, including the order for rectification of the Register, should be set aside. The facts Both Cantarella and Modena advertise, offer for sale and sell coffee products in the Australian coffee industry. Cantarella Cantarella has, since 1958, imported raw coffee beans sourced globally, which are then roasted, ground, and packaged under the registered trade marks "VITTORIA", "AURORA", "DELTA" and "CHICCO D'ORO". Evidence of the state of the Register on 25 May 2011 showed that Cantarella was the registered proprietor of the trade mark "ORO NERO", registered in class 30 in respect of goods which included "coffee", and the composite trade marks "MEDAGLIA D'ORO", registered in classes 29, 30 and 32 for a variety of foodstuffs and beverages, and "CHICCO D'ORO", registered in class 30 in respect of "coffee". Each of these registrations preceded the registration for "ORO" on its own. The trade marks "ORO" and "CINQUE STELLE" are used by Cantarella in relation to specific coffee blends. There was no issue at trial that the trade marks "ORO" and "CINQUE STELLE" are in fact distinctive of Cantarella's (1964) 111 CLR 511 at 514; [1964] HCA 55. Hayne Crennan goods. Each registered trade mark is used by Cantarella not only in Australia, but also in other countries, and Cantarella's trade marks are registered in many of those countries. Modena imports coffee from Molinari, a company based in central northern Italy. Molinari has, since 1965, produced a blend of coffee using the marks "CAFFÈ MOLINARI" and "ORO". Molinari exports globally, and began exporting products to Australia in about July 1996. From 1996 to 2009, various businesses distributed Molinari products in Australia, using the marks "CAFFÈ MOLINARI" together with "ORO" (from 1996) and "CAFFÈ MOLINARI" together with "CINQUE STELLE" (from 1998). In November 2009, Modena was appointed as Molinari's exclusive Australian distributor. During the period December 2009 to June 2011, Modena distributed various Molinari products, under and by reference to the abovementioned marks used by Molinari. Approximately 18 months before the trial Molinari ceased using the mark "ORO" on its own on its coffee products and substituted the phrase "QUALITÀ ORO", about which Cantarella has no complaint5. Further, "CINQUE STELLE" has come to be used by Molinari in respect of its premium blend of coffee. Other matters There was evidence at trial that coffee products were advertised, offered for sale and sold by companies operating in the coffee industry other than Cantarella and Modena, under and by reference to composite marks which included the Italian word "oro" or the form "d'oro" or the expression "five star" and, in one instance, the word "stelle". That included evidence of the state of the Register led by Cantarella, and evidence of screen shots and packaging samples relied on by Modena. Only Cantarella and Modena used "cinque stelle" in respect of their coffee products. However, Modena attached significance to the circumstance that the expression "five star" was commonly employed in Australia in relation to a variety of businesses including businesses providing accommodation and hospitality services. It was noted in the primary judge's orders that nothing in them should be taken to prevent Modena from using the phrase "QUALITÀ ORO" in respect of its products. Hayne Crennan The proceedings were conducted on the basis that the word "oro" is an Italian word meaning "gold" and that the words "cinque stelle" are Italian words meaning "five stars". As it happens, the word "oro" is also a Spanish word meaning "gold"; Italian and Spanish are Romance languages deriving the word "oro" from the Latin noun "aurum", meaning gold. As in English, "gold" is used in Italian as a noun and has adjectival forms. Therefore, both the word "oro" and the form "d'oro" readily combine with other words to form composite trade marks, as in Cantarella's registered trade marks "MEDAGLIA D'ORO" and "CHICCO D'ORO". This can also be seen in examples of registered trade marks of numerous other registered proprietors in evidence at trial – "LAVAZZA QUALITA ORO plus device", "CDO CASA DEL ORO plus device", "PIAZZA D'ORO plus device", "TAZZA D'ORO plus device", "STELLA D'ORO" and "CREMA D'ORO plus device" – which are registered in respect of a variety of goods, including coffee. It was not contended that these registered composite marks, which included foreign words, were deceptively similar, whether visually, aurally or semantically. It should also be noted that the entry in the Register for Cantarella's trade mark "CINQUE STELLE" recorded that the English translation is "five star", although "cinque stelle" means "five stars" in Italian. The expression "five star" is defined in the Macquarie Dictionary as an adjective meaning excellent quality owing to its derivation from the highest rating in a system of grading hotels, restaurants and the like6. The Act Section 17 of the Act relevantly defines a trade mark as a "sign" to distinguish one trader's goods from those of another, and "sign" is defined in s 6 to include a word, or a word plus a device. Although the Act does not set out the kinds of trade marks which are registrable, s 17 reflects the objects and policy of all Commonwealth trade marks legislation: (1) that the Register will protect distinctive trade marks7; (2) that the monopoly following registration is a sufficient basis upon which to seek relief from infringement; and (3) that the likelihood of deception and confusion between trade marks should be avoided. 6 Macquarie Dictionary, 5th ed (2009) at 628. See also The Oxford English Dictionary, 2nd ed (1989), vol 5 at 978-979, "five", sense C2. 7 E & J Gallo Winery v Lion Nathan Aust Pty Ltd (2010) 241 CLR 144 at 162-163 [41]-[42] per French CJ, Gummow, Crennan and Bell JJ; [2010] HCA 15. Hayne Crennan Sections 27, 31 and 33 of the Act govern the administrative steps required for the registration of a trade mark. Section 27 provides that a person may apply for the registration of a trade mark in respect of goods if the person claims to be the owner of the trade mark and the person is using, or intends to use, the trade mark in relation to the goods. Section 31 provides that the Registrar of Trade Marks ("the Registrar") must examine and report on whether the application has been made in accordance with the Act and whether there are grounds for rejecting it. Section 33 provides that the Registrar must, after the examination, accept the application, unless satisfied that the application has not been made in accordance with the Act or that there are grounds for rejecting the application. Division 2 of Pt 4 of the Act (ss 39-44) specifies the grounds upon which an application to register a trade mark must be rejected. Section 41 relevantly covers one of these grounds8. At the time relevant to these proceedings, s 41(2) provided that an application for registration must be rejected if the trade mark "is not capable of distinguishing the applicant's goods ... in respect of which the trade mark is sought to be registered ... from the goods ... of other persons"9. Section 41(3), which is central to this appeal, stated that in deciding whether s 41(2) applies to an application the Registrar must first take into account the extent to which the trade mark "is inherently adapted to distinguish the designated goods ... from the goods ... of other persons". Section 41(6) provided that a trade mark which lacks "inherent adaption to distinguish" may nevertheless be registered if it can be established that the extent of use before the date of application was such that factual distinctiveness could be established. The Act effected significant changes to Australian trade mark law: earlier legislation had specified the kinds of trade marks which were registrable; for the first time in Australia, the Act only specified the kinds of trade marks which were not registrable. However, it was common ground that the provisions of the Act which specify the applications for registration which must be rejected cannot be understood fully without some reference to the interpretation of provisions in the 8 Amendments brought about by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth), s 3, Sched 6, item 113 (which substituted a new s 41) commenced after any material date in these proceedings. 9 The concept of a mark being "capable of distinguishing" a trader's goods derives from s 25 of the Trade Marks Act 1955 (Cth) and the institution of Part B of the Register, explained briefly below. Hayne Crennan Trade Marks Act 1905 (Cth) ("the 1905 Act") and the Trade Marks Act 1955 (Cth) ("the 1955 Act") which specified the kinds of trade marks which were registrable. This is because the statutory language which gives rise to the question on this appeal has a well-understood provenance. Before turning to that provenance, it is worth briefly noting some additional relevant provisions. Section 88 of the Act provides for the cancelling of trade mark registrations. Section 92 provides grounds for their removal for "non-use". A trader who uses a description of goods in good faith has a defence under s 122(1)(b) to infringement proceedings brought pursuant to s 120. "Inherently adapted to distinguish" – s 41(3) The Full Court recognised, correctly, that settled principles of trade mark law concerning trade marks which are registrable apply to s 41(3) of the Act, much as they applied to earlier provisions10. The language of s 41(2) and (3) derives from earlier Australian trade marks legislation, which followed in many respects statutory language used in trade marks legislation in the United Kingdom. It is convenient to start with s 26 of the 1955 Act, which relevantly provided: "(1) For the purposes of this Act, a trade mark is not distinctive of the goods of a person unless it is adapted to distinguish goods with which that person is or may be connected in the course of trade from goods in respect of which no such connexion subsists, either generally or, where the trade mark is sought to be registered, or is registered, subject to conditions or limitations, in relation to use subject to those conditions or limitations. In determining whether a trade mark is distinctive, regard may be had to the extent to which – the trade mark is inherently adapted so to distinguish; and by reason of the use of the trade mark or of any other circumstances, the trade mark does so distinguish." 10 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 26 Hayne Crennan Plainly s 41(3) of the Act derives from s 26(2)(a) of the 1955 Act. Equally plainly, the concept of a trade mark acquiring distinctiveness through use, deployed in s 41(5) and (6) of the Act, was expressed in s 26(2)(b). In considering s 26 of the 1955 Act in Clark Equipment, Kitto J explained that whether a trade mark consisting of a word11 is "adapted to distinguish" certain goods is to be tested12: "by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives – in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it." (emphasis added) The purport of the emphasised parenthesis was a particular focus of dispute before the Full Court, which dispute was reiterated in this Court. Cantarella relied on the emphasised passage to support the proposition that the inherent adaptability of a trade mark consisting of a word (including a foreign word) is to be tested by checking the ordinary meaning (that is, the "ordinary signification") of the word to anyone ordinarily purchasing, consuming or trading in the relevant goods, characterised by Cantarella as "the target audience". Modena asserted that the emphasised language was not essential to the test because Lord Parker of Waddington in Registrar of Trade Marks v W & G Du Cros Ltd13 ("Du Cros") stated the test in terms of the likelihood that other traders might legitimately desire to use the word in connection with their goods. The debate makes it necessary to refer to some historical matters which inform and explain the test stated by Kitto J. A consideration of those matters and relevant authorities shows that Cantarella's submissions are correct and must be accepted. 11 The word in question was the geographical name "Michigan", which was proposed for registration in Part B of the Register: see ss 25 and 26 of the 1955 Act. 12 (1964) 111 CLR 511 at 514. 13 [1913] AC 624 at 635. Hayne Crennan Some historical matters In response to public pressure, the Trade Marks Registration Act 1875 (UK) first instituted a register of trade marks to overcome the limitations of passing-off actions, which depended, for their success, on proof of reputation with the public14. A grant of a monopoly under the statute simplified the costs and processes needed to protect a mark. However, significant concerns about granting a monopoly of the use of a word meant that trade marks were first admitted to registration in respect of goods in the United Kingdom on the strict condition that they consist of one or more "essential particulars"15. It quickly became clear that the "essential particulars", which confined the kinds of trade marks which were registrable, also operated to exclude certain distinctive marks from being properly included on the Register16. This led to substantial amendment and consolidation in the Trade Marks Act 1905 (UK). Of particular relevance in that consolidation was a new s 9(5), which provided that distinctive marks other than those listed by reference to "essential particulars" could be deemed "distinctive" by the Board of Trade or the courts, provided that they satisfied a new condition – drawn from a new statutory definition of distinctiveness – that they be marks "adapted to distinguish". There was no reference to "inherent adaption" in s 9(5). The 1905 Act, which was modelled on the Patents, Designs, and Trade Marks Act 1883 (UK) (as amended by the Patents, Designs, and Trade Marks Act 1888 (UK)), was amended in 191217 to follow the consolidation of trade mark law effected by the Trade Marks Act 1905 (UK). Following s 9 of the Trade Marks Act 1905 (UK), s 16(1) of the 1905 Act18 relevantly provided that a registrable trade mark must consist of: 14 Underhay, Kerly on Trade Marks, 4th ed (1913) at 4-7. See also Cornish, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 2nd ed 15 Trade Marks Registration Act 1875 (UK), ss 2 and 10. Section 10 provided, among other things, that "essential particulars" included a "name of an individual" and "special and distinctive" words. 16 Underhay, Kerly on Trade Marks, 4th ed (1913) at 10. 17 By the Trade Marks Act 1912 (Cth). 18 Later, s 24 of the 1955 Act. Hayne Crennan (c) An invented word or invented words[19]; (d) A word or words having no direct reference to the character or quality of the goods, and not being according to its ordinary signification a geographical name or a surname; (e) Any other distinctive mark [other than those which fell within the preceding paragraphs, if deemed distinctive by the Registrar, Law Officer or court]." (emphasis added) Section 16(2) provided that "'distinctive' means adapted to distinguish the goods of the proprietor of the trade mark from those of other persons"20. To the extent that the meaning of a word needed to be determined for the purposes of registration, enquiries were conducted on the basis that Australia is an English speaking nation. Relevant authorities In the United Kingdom a trio of cases concerning the scope of the new s 9(5) of the Trade Marks Act 1905 (UK)21 soon came before the Court of Appeal22. The enlargement of the category of registrable marks by reference to 19 It is convenient to note that an "invented word" was considered registrable at the time, not as a reward to the proprietor, but because "its registration deprives no member of the community of the rights which he possesses to use the existing vocabulary as he pleases": Eastman Photographic Materials Company v Comptroller-General of Patents, Designs, and Trade-marks [1898] AC 571 at 581 per Lord Herschell ("the Solio Case"). 20 Following s 9(5) of the Trade Marks Act 1905 (UK). In the 1955 Act the cognate provision was s 24(2). 21 Section 16(1) in the 1905 Act. 22 In re Joseph Crosfield & Sons Ltd [1910] 1 Ch 130 ("the Perfection Case"); In re California Fig Syrup Company [1910] 1 Ch 130 ("the California Syrup of Figs Case"); In re H N Brock & Co Ltd [1910] 1 Ch 130 ("the Orlwoola Case"). The Court of Appeal heard and determined the three cases together. In this judgment (Footnote continues on next page) Hayne Crennan the new statutory definition of distinctiveness stirred afresh familiar anxiety about the grant of a monopoly of the use of a word. Prefacing their statements as to the legal principles to apply to the new provisions, members of the Court of Appeal confirmed that the word "direct" had been added to the provisions governing registrability in order to permit the entry on the Register of words containing a skilful, covert or allusive reference to goods23. That addition gave statutory force to what had been said by Lord Macnaghten in the Solio Case24. It was also explained that the words "according to its ordinary signification" had been added to deal with the difficulty that a word may have an "ordinary signification" other than as a geographical name, even though it is also the name of a place somewhere25. Deeming a word having a direct reference to goods or a geographical name to be distinctive – a task now permitted under the new s 9(5) – was not to affect the bona fide use by other traders of a description of their goods or to cause confusion in view of their rights. The nature of the words or past use of them were the factors which "limited the possibility of other traders safely or honestly using the words"26. After stating that "[w]ealthy traders are habitually eager to enclose part of the great common of the English language"27 (which echoed their Lordships in the Solio Case), Cozens-Hardy MR explained why no monopoly could be granted under s 9(5) for laudatory epithets used as adjectives. Words such as "good" or "best" are incapable of developing a secondary meaning as indicating they are collectively referred to as "the Perfection, California Syrup of Figs and Orlwoola Cases". 23 Perfection, California Syrup of Figs and Orlwoola Cases [1910] 1 Ch 130 at 141 per Cozens-Hardy MR, 144-146 per Fletcher Moulton LJ. 24 [1898] AC 571 at 583. This was echoed later by Dixon CJ in Mark Foy's Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190 at 195 ("Mark Foy's"); [1956] HCA 41. 25 As with the trade mark "MAGNOLIA": see In re Magnolia Metal Company's Trade-marks [1897] 2 Ch 371. 26 Perfection, California Syrup of Figs and Orlwoola Cases [1910] 1 Ch 130 at 148 per Fletcher Moulton LJ. 27 Perfection, California Syrup of Figs and Orlwoola Cases [1910] 1 Ch 130 at 141 per Cozens-Hardy MR. Hayne Crennan only an applicant's goods28. Accordingly "Perfection" was not registrable as a trade mark for soap as it was a word which should be open to use by both other traders and members of the public29. Equally, no monopoly could be granted to words consisting of geographical names if their "ordinary signification" described the place of the manufacture or sale of goods30. If, however, a geographical name was part of a composite mark, identified by long use as associated only with the goods of an applicant, it could be registered (as exemplified by "California Syrup of Figs" for No monopoly could be granted to trade marks which were merely phonetic equivalents of directly descriptive words, such as "Orlwoola" for textile fabrics32. In explaining those disparate circumstances in which the "ordinary signification" of a word affected a grant of a monopoly of its use, their Lordships recognised that any word in English could prima facie be used as a trade mark but would not necessarily qualify to be registered as one. In drawing their conclusions in respect of the three trade marks under consideration, their Lordships indicated that the determination of whether a word has "direct reference" to goods (prima facie precluding a monopoly of its use) depends critically on the goods themselves, because a word containing a direct reference to goods in one trade may not convey any such direct reference to goods in 28 Perfection, California Syrup of Figs and Orlwoola Cases [1910] 1 Ch 130 at 141-142 per Cozens-Hardy MR. 29 Perfection Case [1910] 1 Ch 130 at 143 per Cozens-Hardy MR, 149 per Fletcher Moulton LJ, 153-154 per Farwell LJ. 30 Perfection, California Syrup of Figs and Orlwoola Cases [1910] 1 Ch 130 at 141 per Cozens-Hardy MR. See also the Solio Case [1898] AC 571 at 574-575 per Earl of Halsbury LC. 31 California Syrup of Figs Case [1910] 1 Ch 130 at 143 per Cozens-Hardy MR, 150 per Fletcher Moulton LJ, 154 per Farwell LJ. 32 Orlwoola Case [1910] 1 Ch 130 at 143-144 per Cozens-Hardy MR, 150 per Fletcher Moulton LJ, 154-155 per Farwell LJ. Hayne Crennan another trade33. An example given later was the use of the words "North Pole" for bananas34. It was thus established early in the development of trade mark law in the United Kingdom that the "ordinary signification" of any word, or words, constituting a trade mark is important, whether a challenge to the registrability of a trade mark is based on the word having a laudatory or directly descriptive meaning, or on the word being, according to its "ordinary signification", a geographical name (or, in those times, a surname). In Du Cros, Lord Parker's speech was also directed to s 9(5) of the Trade Marks Act 1905 (UK)35. Lord Parker was not dealing with a word but with two applications for registration of a trade mark consisting of two letters of the alphabet joined by an ampersand. The question was whether those marks were registrable under s 9(5), being "adapted to distinguish" certain goods, as letters of the alphabet were not included in the "essential particulars" in sub-ss (1), (2), (3) or (4) of s 9. Lord Parker said that the registrability of a trade mark as "distinctive" should36: "largely depend upon whether other traders are likely, in the ordinary course of their business and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connection with their own goods." As Lord Parker explained when applying the principle (since much relied upon), even though a mark may have acquired some distinctiveness through use, a person should not be given a monopoly of letters of the alphabet, which other traders may legitimately desire to use because they have the same initials37. 33 Perfection, California Syrup of Figs and Orlwoola Cases [1910] 1 Ch 130 at 144, 150 per Fletcher Moulton LJ, 151, 154 per Farwell LJ. 34 A Baily & Co Ltd v Clark, Son & Morland [1938] AC 557 at 562 per Lord 35 As already mentioned, like s 16(2) of the 1905 Act, s 9(5) did not speak of "inherent" adaption to distinguish but used only the phrase "adapted to distinguish". 36 Du Cros [1913] AC 624 at 635. 37 Du Cros [1913] AC 624 at 635-636. Another trader will not legitimately and honestly desire to use letters of the alphabet to describe their goods if the letters of (Footnote continues on next page) Hayne Crennan Earlier that same year, a similar point had been made in respect of s 9(5) and the distinctiveness of a surname, which others may share and wish to use. In In re R J Lea Ltd's Application38 ("R J Lea") Hamilton LJ said39: "Further the Act says 'adapted to distinguish'; the mere proof or admission that a mark does in fact distinguish does not ipso facto compel the judge to deem that mark to be distinctive. It must be further 'adapted to distinguish,' which brings within the purview of his discretion the wider field of the interests of strangers and of the public." The requirement that a proposed trade mark be examined from the point of view of the possible impairment of the rights of honest traders to do that which, apart from the grant of a monopoly, would be their natural mode of conducting business (Lord Parker), and from the wider point of view of the public (Hamilton LJ), has been applied to words proposed as trade marks for at least a century, irrespective of whether the words are English or foreign. The requirement has been adopted in numerous decisions of this Court dealing with words as trade marks under the 1905 Act and the 1955 Act40. Those decisions show that assessing the distinctiveness of a word commonly calls for an enquiry into the word's ordinary signification and whether or not it has acquired a secondary meaning. the alphabet have, through long use, come to distinguish only an applicant's goods, as occurred in British Petroleum Co Ltd v European Petroleum Distributors Ltd [1968] RPC 54. 39 [1913] 1 Ch 446 at 463. 40 Thomson v B Seppelt & Sons Ltd (1925) 37 CLR 305 at 312-313 per Isaacs J, 315 per Rich J; [1925] HCA 40; Mangrovite Belting Ltd v J C Ludowici & Son Ltd (1938) 61 CLR 149 at 160-161 per Rich J; [1938] HCA 67; Mark Foy's (1956) 95 CLR 190 at 201 per Williams J; Clark Equipment (1964) 111 CLR 511 at 513-515 per Kitto J; F H Faulding & Co Ltd v Imperial Chemical Industries Ltd (1965) 112 CLR 537 at 555-557 per Kitto J ("Faulding"); [1965] HCA 72; Burger King Corporation v Registrar of Trade Marks (1973) 128 CLR 417 at 425 per Gibbs J ("Burger King"); [1973] HCA 15. Hayne Crennan Foreign words Establishing the "ordinary signification" of a trade mark consisting of a word is just as critical if the word is to be found in a dictionary of a foreign language. This is particularly so when an objection to registrability is based on an assertion that the mark is not an invented word because it makes direct reference to the character or quality of the goods in question. The Solio Case concerned the registrability of "SOLIO" for photographic papers. It had been contended that "solio" (a word in Italian and Latin) was not an invented word and moreover was a word containing a "reference" to the goods41. Lord Macnaghten stated the principle to be applied to a word put forward as an invented word42: "If [a word] is an invented word, if it is 'new and freshly coined' (to adapt an old and familiar quotation), it seems to me that it is no objection that it may be traced to a foreign source, or that it may contain a covert and skilful allusion to the character or quality of the goods. I do not think that it is necessary that it should be wholly meaningless." That was followed by Parker J (as his Lordship then was) in Philippart v William Whiteley Ltd43 ("the Diabolo Case") when he found a trade mark consisting of the Italian word "diabolo" unregistrable, because it applied to a well-known game in England called "the devil on two sticks", for which reason it could not be treated as an "invented word". Parker J explained44: "To be an invented word, within the meaning of the Act, a word must not only be newly coined in the sense of not being already current in the English language, but must be such as not to convey any meaning, or at any rate any obvious meaning, to ordinary Englishmen." In Howard Auto-Cultivators Ltd v Webb Industries Pty Ltd45 ("Howard"), Dixon J stated what was required for a word to qualify as an invented word. 41 Solio Case [1898] AC 571 at 572-573. 42 Solio Case [1898] AC 571 at 583. 44 [1908] 2 Ch 274 at 279. 45 (1946) 72 CLR 175; [1946] HCA 15. Hayne Crennan Citing Lord Macnaghten in the Solio Case, his Honour said that although a word should be46: "substantially different from any word in ordinary and common use ... [it] need not be wholly meaningless and it is not a disqualification 'that it may be traced to a foreign source or that it may contain a covert and skilful allusion to the character or quality of the goods.'" These authorities show that it is not the meaning of a foreign word as translated which is critical, although it might be relevant. What is critical is the meaning conveyed by a foreign word to those who will be concerned with the relevant goods. In Kiku Trade Mark47, the Supreme Court of Ireland approved Parker J's speech in the Diabolo Case and held that the Japanese word "kiku", meaning chrysanthemum, was registrable for perfume because the word had no "direct reference" to the character or quality of the goods48. The Court considered that a word which required translation could not be said to have any signification to ordinary people living in Ireland who see and hear it. That approach accords with Dixon J's statement of principle in Howard. Words containing a reference to goods The practical difference between a word making some "covert and skilful allusion" to the goods (prima facie registrable) and a word having a "direct reference" to goods (prima facie not registrable) is well illustrated in two Australian cases decided under the 1905 Act. Understanding the distinction is the key to resolving this appeal. In Howard, this Court was considering whether a trade mark consisting of the word "rohoe" was registrable as an invented word in respect of agricultural implements49. Parker J's reference in the Diabolo Case to a word (in that case a foreign word) having an "obvious meaning" to "ordinary Englishmen" was 46 (1946) 72 CLR 175 at 181. See also the examples from English authorities given by his Honour at 183. 47 [1978] FSR 246. 48 [1978] FSR 246 at 249-250. 49 Section 16(1)(c) of the 1905 Act. Hayne Crennan considered by Dixon J50. Because of the special nature of the goods to which "rohoe" was to be applied, Dixon J said the question was whether the word "rohoe" would appear as an obvious contraction of "rotary hoe" and be so understood by "a farmer, a horticulturist, a trader in agricultural and horticultural implements or a person otherwise concerned with them"51. By comparison, in Mark Foy's, the trade mark "TUB HAPPY" was found registrable by a majority in this Court as a trade mark having no direct reference to the character or quality of cotton garments. In agreeing with Williams J, Dixon CJ described the test for a word having "direct reference to the character or quality of the goods"52 as lying "in the probability of ordinary persons understanding the words, in their application to the goods, as describing or indicating or calling to mind either their nature or some attribute they possess"53. His Honour considered "TUB HAPPY" to be allusive such that it did not convey a meaning or idea "sufficiently tangible" to amount to a "direct reference" to the character or quality of the goods54. Citing with approval Lord Macnaghten in the Solio Case and Parker J in the Diabolo Case, Williams J illustrated why a covert and skilful allusive reference to goods does not render a word directly descriptive of goods as that expression is used in trade mark law55. His Honour said the registration of "TUB HAPPY" for cotton goods did not prevent others from describing their cotton goods as having the characteristics or qualities of "washability, freshness and cheapness"56. 50 (1946) 72 CLR 175 at 183. 51 (1946) 72 CLR 175 at 185. 52 1905 Act, s 16(1)(d) (subsequently the 1955 Act, s 24(1)(d)). 53 (1956) 95 CLR 190 at 195. 54 (1956) 95 CLR 190 at 195. 55 (1956) 95 CLR 190 at 201. 56 (1956) 95 CLR 190 at 201-202. Hayne Crennan The provenance of "inherently adapted to distinguish" – s 41(3) United Kingdom In the United Kingdom the statutory conditions for registration of a trade mark were further liberalised by the introduction of Part B of the Register in 191957. In essence, Part B was reserved for marks not considered registrable in Part A as "adapted to distinguish", but which were nevertheless "capable of distinguishing" an applicant's goods from those of other traders. At first the British courts struggled to articulate the difference58. The notion that a mark fully distinctive in fact might nevertheless not be "capable of distinguishing" in law was not easy to apply59. This led to an amended and more expansive statutory definition of "distinctiveness" by reference to whether a mark was "inherently adapted to distinguish", and by reference to whether a mark had acquired distinctiveness "by reason of ... use"60. In Smith Kline & French Laboratories Ltd v Sterling-Winthrop Group Ltd61, Lord Diplock referred to that first appearance of the term "inherently adapted to distinguish" in s 9(3) of the Trade Marks Act 1938 (UK) (which influenced s 26(2) of the 1955 Act and which in turn influenced s 41(3) of the Act)62: the reference "[L]ong before inherent adaptability had been incorporated in the current statutes dealing with trade marks, it had been held upon grounds of public policy that a trader ought not to be allowed to obtain by registration under the Trade Marks Act a monopoly in what other traders may legitimately desire to use. The classic statement of this 57 Trade Marks Act 1919 (UK). 58 See "Weldmesh" Trade Mark [1966] RPC 220 at 227 per Wilmer LJ. See also White and Jacob, Kerly's Law of Trade Marks and Trade Names, 11th ed (1983) at 59 See In the Matter of an Application by Hans Lauritzen for the Registration of a Trade Mark (1931) 48 RPC 392 at 397 per Eve J. 60 Trade Marks Act 1938 (UK), s 9(3). 61 [1975] 1 WLR 914; [1975] 2 All ER 578. 62 [1975] 1 WLR 914 at 921-922; [1975] 2 All ER 578 at 585-586. Hayne Crennan doctrine is to be found in the speech of Lord Parker in [Du Cros] ... The reference to 'inherently adapted' in s 9(3) of the Consolidation Act of 1938, which was first enacted in 1937, has always been treated as giving statutory expression to the doctrine as previously stated by Lord Parker." Australia In Australia, the 1955 Act again followed legislation in the United Kingdom by instituting a Part B of the Register for marks "capable of becoming distinctive" of an applicant's goods (being the provisions of immediate concern in Clark Equipment and Burger King). The institution of Part B provided the context for the inclusion of the expanded definition of "distinctiveness" in s 26(1) and (2) extracted above. As explained by Gibbs J in Burger King, although the concepts and statutory language concerning Part B followed the United Kingdom, the drafting of those provisions differed63. "Ordinary signification" and "inherently adapted to distinguish" In Faulding, this Court considered whether the registered trade mark "BARRIER", for skin creams which protected against industrial dermatitis, should be removed from the Register because the word directly described the character or quality of the goods. In the context of the general principle stated by Lord Parker in Du Cros, Kitto J said that, but for the evidence, it might have been supposed that the word "barrier" was not a word which others might wish to use in respect of the goods. However, the evidence showed that persons concerned with skin creams – persons in industry, pharmacists and other persons (ie not just rival traders) – were all persons who might have a "need for a word ['barrier'] to describe succinctly and yet exactly the essential characteristic of protection which distinguishes the whole of the relevant class of creams"64. Kitto J went on to explain the facts and the relevance of an enquiry into the ordinary signification of a word when deciding whether a monopoly of the use of a word granted under trade marks legislation should be withdrawn65: 63 (1973) 128 CLR 417 at 424-425. See also Chancellor, Masters and Scholars of the University of Oxford v Registrar of Trade Marks (1990) 24 FCR 1 at 22-25 per 64 (1965) 112 CLR 537 at 555. 65 (1965) 112 CLR 537 at 556-557. Hayne Crennan "[A]t least by the year of the initial registration of the appellant's trade mark (1943) the word Barrier had caught on as a word peculiarly apt, according to its ordinary signification, for descriptive use in connexion with skin protective creams, so that any trader in such creams would be very likely indeed, in the ordinary course of business and without any improper motive, to desire to use the word in order to distinguish such creams in general from creams intended for other purposes ... What matters is that at all material times the word has had such a place in the vocabulary of persons concerned with skin protective creams that according to the principle which must be applied under the Trade Marks Acts the appellant cannot be allowed a monopoly of its use in connexion with such creams." In Clark Equipment, Kitto J considered for the purposes of registration in Part B the word "Michigan", which had acquired distinctiveness through 20 years of use in respect of the applicant's goods despite the fact that it was a geographical name of a State in America. After approving Lord Parker's test in Du Cros and Hamilton LJ's observation in R J Lea, his Honour explained that directly descriptive words, like geographical names, are not prima facie suitable for the grant of a monopoly because use of them as trade marks will rarely eclipse their "primary" (that is, ordinary) signification66. Such a word, his Honour said, "is plainly not inherently, ie in its own nature, adapted to distinguish the applicant's goods"67. Traders may legitimately want to use such words in connection with their goods because of the reference they are "inherently adapted to make" to those goods68. Kitto J's elaboration of the principle, derived from Lord Parker's speech in Du Cros, applies with as much force to directly descriptive words as it does to words which are, according to their ordinary signification, geographical names. In Burger King, Gibbs J applied Kitto J's test to a directly descriptive word when his Honour declined to find "WHOPPER" registrable in Part B in respect of hamburgers. His Honour explained that "whopper" is not "inherently adapted" to distinguish hamburgers because it is an ordinary English word, apt to describe a characteristic of hamburgers, namely their size, and moreover could be used in a laudatory sense69. It is because of the ordinary signification or meaning 66 (1964) 111 CLR 511 at 515. 67 (1964) 111 CLR 511 at 515. 68 (1964) 111 CLR 511 at 515. 69 (1973) 128 CLR 417 at 425. Hayne Crennan of the word "whopper" to anyone concerned with hamburgers that a rival trader might, without improper motive, desire to use "whopper" to describe that trader's hamburgers. The principles settled by this Court (and the United Kingdom authorities found in this Court to be persuasive) require that a foreign word be examined from the point of view of the possible impairment of the rights of honest traders and from the point of view of the public. It is the "ordinary signification" of the word, in Australia, to persons who will purchase, consume or trade in the goods which permits a conclusion to be drawn as to whether the word contains a "direct reference" to the relevant goods (prima facie not registrable) or makes a "covert and skilful allusion" to the relevant goods (prima facie registrable). When the "other traders" test from Du Cros is applied to a word (other than a geographical name or a surname), the test refers to the legitimate desire of other traders to use a word which is directly descriptive in respect of the same or similar goods. The test does not encompass the desire of other traders to use words which in relation to the goods are allusive or metaphorical. In relation to a word mark, English or foreign, "inherent adaption to distinguish" requires examination of the word itself, in the context of its proposed application to particular goods in Australia. The proceedings below The primary judge Before the primary judge, in reliance on s 41(3) of the Act, Modena contended that "oro" and "cinque stelle" were words that other traders might, without improper motive, wish to use as "varietal indicators on their Italian-style coffee products", and that the word "oro" was already used in Australia in relation to coffee by other traders70. It was submitted that the words were not distinctive at their respective filing dates, and that the evidence indicated the words were commonplace in marketing generally, and particularly in relation to Italian-style coffee, in Australia. Thus it was said that the words were directly descriptive of characteristics of Cantarella's goods and that they had acquired no secondary meaning – that is, distinctiveness – in respect of Cantarella's goods. In rejecting those arguments, the primary judge held that Cantarella's trade marks were distinctive, following authorities in this Court. The primary judge then considered the number of Italian speakers in Australia, and the degree to 70 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 773 Hayne Crennan which the words "oro" and "cinque stelle" are understood in Australia. His Honour concluded that only a "very small minority" of English speakers in Australia would understand the meaning of the words, and that the Italian language is not "so widely spread" that the words would be generally understood as meaning "gold" and "five stars" respectively71. His Honour concluded that Cantarella's trade marks "ORO" and "CINQUE STELLE" are sufficiently inherently adapted to distinguish the goods of Cantarella from the goods of other persons72. The primary judge found that Modena had infringed Cantarella's trade marks, made orders to that effect, and dismissed Modena's cross-claim73. Full Court The Full Court overturned the decision of the primary judge, holding that Cantarella's trade marks "ORO" and "CINQUE STELLE" should be cancelled and removed from the Register pursuant to s 88 of the Act74. The Full Court considered, correctly, that the applicable principle to apply, in interpreting s 41(3), had been stated by Kitto J in Clark Equipment. However, their Honours considered that the passage italicised above was a broad guiding principle, "not to be applied as though it were a statute"75. The Full Court considered that, in interpreting s 41(3), the primary judge had not applied the correct test and had fallen into error76. Their Honours said that Kitto J's references in Clark Equipment to the "common right of the public" and the "common heritage" are "fluid and their content will vary according to the 71 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 776 72 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 776 73 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 790 74 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 33-34 75 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 28 [71]- 76 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 24 [49]. Hayne Crennan particular case"77 and interpreted Kitto J's reference to the "common right of the public" as referring to "members of the public who are or may become traders"78. Rejecting an "Anglocentric perspective" and having considered Clark Equipment as explained, the Full Court said of Cantarella's trade marks "ORO" and "CINQUE STELLE" that "[t]he words in Italian are entirely descriptive of their quality as premium coffee products"79 and that it was "unnecessary ... that consumers know what the words mean in English" because the "common heritage" included "traders in coffee products sourced from Italy" 80. Then the Full Court turned to the factual issue of "distinctiveness" and stated that "in judging the likelihood of what traders may wish to do, it is relevant to know whether or not other traders have also used the words"81. As to the evidence, the Full Court considered that "oro" and "cinque stelle" were Italian words signifying the highest quality, that other coffee traders had used the words "according to their ordinary signification as words descriptive of the quality of the coffee products" and that they "have been used in that sense, although not as trade marks, for a significant period of time extending well before Cantarella's registration of its marks and afterwards"82. Submissions Cantarella On the appeal in this Court, Cantarella submitted that the primary judge approached the question of the meaning of Cantarella's trade marks "ORO" and "CINQUE STELLE" correctly, in the light of settled authority in which this 77 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 30-31 78 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 29-30 79 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 31 [85], 80 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 31 [85], 81 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 31 [87]. 82 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 32 [97]. Hayne Crennan Court has approved Lord Parker's speech in Du Cros and interpreted relevant provisions (prior to s 41(3))83. It was also submitted that the Full Court erred in assessing the inherent adaptability to distinguish of "ORO" and "CINQUE STELLE" by focussing on them as Italian words, as they occurred in disparate composite marks in the relevant trade (including two prior registered trade marks, one of which belonged to Cantarella), rather than determining how the words would be understood in Australia by the target audience. Cantarella submitted that assessing whether a foreign word is inherently adapted to distinguish is no different from assessing any word in English, including invented words, for the same purpose. The first step is to ask what is the ordinary signification (ie the ordinary meaning) of a word. The second step is to test the likelihood that honest traders may wish to use the word in connection with their goods because of its ordinary meaning. Modena sought to uphold the Full Court's reasoning by contending that the "inherent adaptability to distinguish" of a word, proposed as a trade mark, is not to be tested by whether the word has an "ordinary signification" or "ordinary meaning" or "a meaning to ordinary people". Relying particularly on Lord Parker's speech in Du Cros, Modena contended that the test is confined to whether other traders would be at least likely, in the ordinary course of their business and without any improper motive, to desire to use the word in connection with a particular product. It was submitted that the evidence available at trial proved that it was not just likely but certain that rival traders would want to use "oro" and "cinque stelle" in connection with coffee. This was said to reflect the circumstance that Australia has large ethnic populations such that rival traders will readily want to use "oro" and "cinque stelle" in connection with coffee products because they understand Italian or because they may be importers of Italian coffee, or because they routinely use those words in connection with such products. 83 Clark Equipment (1964) 111 CLR 511 at 513-515 per Kitto J. See also Mark Foy's (1956) 95 CLR 190 at 194-195 per Dixon CJ; Faulding (1965) 112 CLR 537 at 554-556 per Kitto J; Burger King (1973) 128 CLR 417 at 424-425 per Gibbs J. Hayne Crennan Interpretation of s 41(3) In accordance with the principles established in Mark Foy's and restated in Clark Equipment, Faulding and Burger King, determining whether a trade mark is "inherently adapted to distinguish", as required by s 41(3), requires consideration of the "ordinary signification" of the words proposed as trade marks to any person in Australia concerned with the goods to which the proposed trade mark is to be applied. As shown by the authorities in this Court, the consideration of the "ordinary signification" of any word or words (English or foreign) which constitute a trade mark is crucial, whether (as here) a trade mark consisting of such a word or words is alleged not to be registrable because it is not an invented word and it has "direct" reference to the character and quality of goods84, or because it is a laudatory epithet85 or a geographical name86, or because it is a surname87, or because it has lost its distinctiveness88, or because it never had the requisite distinctiveness to start with89. Once the "ordinary signification" of a word, English or foreign, is established an enquiry can then be made into whether other traders might legitimately need to use the word in respect of their goods. If a foreign word contains an allusive reference to the relevant goods it is prima facie qualified for the grant of a monopoly90. However, if the foreign word is understood by the target audience as having a directly descriptive meaning in relation to the relevant goods, then prima facie the proprietor is not entitled to a 84 Howard (1946) 72 CLR 175; Faulding (1965) 112 CLR 537. 85 Burger King (1973) 128 CLR 417. 86 Thomson v B Seppelt & Sons Ltd (1925) 37 CLR 305; Clark Equipment (1964) 111 CLR 511. See also Chancellor, Masters and Scholars of the University of Oxford v Registrar of Trade Marks (1990) 24 FCR 1. 87 Mangrovite Belting Ltd v J C Ludowici & Son Ltd (1938) 61 CLR 149. 88 James A Jobling & Co Ltd v James McEwan & Co Pty Ltd [1933] VLR 168. 89 Faulding (1965) 112 CLR 537. 90 Howard (1946) 72 CLR 175 and Mark Foy's (1956) 95 CLR 190 approving the Solio Case [1898] AC 571. Hayne Crennan monopoly of it91. Speaking generally, words which are prima facie entitled to a monopoly secured by registration are inherently adapted to distinguish. Application of s 41(3) Because coffee is a commodity and a familiar beverage consumed by many, the consideration of the "ordinary signification" of the words "oro" and "cinque stelle" in Australia undertaken by the primary judge accorded with settled principles. The Full Court's rejection of what it called an "Anglocentric" approach revealed a misunderstanding of the expression "ordinary signification" as it has been used in Australia (and the United Kingdom) since at least 1905 to test the registrability of a trade mark consisting of a word or words, English or foreign. Both Modena in argument and the Full Court in its reasons misunderstood Lord Parker's reference in Du Cros to the desire of other traders to use the same or similar mark in respect of their goods. Lord Parker was not referring to the desire of traders to use words, English or foreign, which convey an allusive or metaphorical meaning in respect of certain goods. What Lord Parker's "other traders" test means in practice is well illustrated by the fate of the marks considered in Faulding, Clark Equipment and Burger King. Like "TUB HAPPY" in respect of cotton goods, "ORO" and "CINQUE STELLE" were not shown to convey a meaning or idea sufficiently tangible to anyone in Australia concerned with coffee goods as to be words having a direct reference to the character or quality of the goods. The evidence, relied on by Modena at trial, did not show that "ORO" and "CINQUE STELLE" should not be registered as trade marks (and should be removed from the Register as trade marks) because their registration would preclude honest rival traders from having words available to describe their coffee products either as Italian coffee products or as premium coffee products or as premium blend coffee products. The evidence led by Modena purporting to show that rival traders used (or desired to use) the word "oro" to directly describe their coffee products showed no more than that the word "oro" or the form "d'oro" had been employed on internet sites and coffee product packaging in respect of coffee products in a range of composite marks featuring Italian words which ostensibly were 91 Howard (1946) 72 CLR 175 and Mark Foy's (1956) 95 CLR 190 approving the Diabolo Case [1908] 2 Ch 274. Hayne Crennan distinguishable aurally, visually and semantically. Further, the presence on the Register, before Cantarella's trade mark "ORO" was registered, of another proprietor's composite mark "LAVAZZA QUALITA ORO plus device" and Cantarella's own composite mark "MEDAGLIA D'ORO" in respect of coffee products fell well short of proving that the word "oro", standing alone, is understood in Australia by persons concerned with coffee products to be directly descriptive of the character or quality of such goods. The evidence led by Modena to show that some traders in Australia used the expression "five star" on packaging of coffee and many traders used "five star" in respect of a range of services including restaurant and accommodation services also fell well short of proving that "cinque stelle" is understood in Australia by persons concerned with coffee products to be directly descriptive of the character or quality of such goods. Modena's complaint that the primary judge insufficiently considered the desires of rival traders to use the words "oro" or "cinque stelle" to directly describe their coffee goods was premised on a misconception that such was demonstrated by the evidence. The primary judge was right to reject Modena's submission, based on the evidence, that honest traders might legitimately wish to use the words to directly describe, or indicate, the character or quality of their goods. Conclusion For the reasons given, Cantarella's registered trade marks "ORO" and "CINQUE STELLE" are inherently adapted to distinguish the goods for which they are registered from the goods of other persons. Orders Orders should be made as follows: Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court of Australia made on 30 September 2013 and, in their place, order that the appeal to that Court be dismissed with costs. Agreeing with the Full Court of the Federal Court's construction and application of s 41 of the Trade Marks Act 1995 (Cth) ("the Act"), I would dismiss the appeal. Construction Part of the design of the Act was to implement Australia's obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS"), which forms Annex 1C to the Marrakesh Agreement Establishing the World Trade Organization ("the WTO"), done at Marrakesh on 15 April 1994. Article 15.1 of TRIPS provides: "Any sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark. Such signs ... shall be eligible for registration as trademarks. Where signs are not inherently capable of distinguishing the relevant goods or services, Members may make registrability depend on distinctiveness acquired through use." Article 1.1 of TRIPS provides that Members of the WTO "shall be free to determine the appropriate method of implementing the provisions of [TRIPS] within their own legal system and practice". The Act tracks the language of Art 15.1 of TRIPS in defining a "trade mark", in s 17, in terms of a "sign" and requiring, in s 41, rejection of an application for a trade mark that is not "capable of distinguishing" the applicant's goods or services from the goods or services of other persons. Giving content to the expression "capable of distinguishing", however, the Act departs from the language of Art 15.1 of TRIPS in favour of language drawn from earlier Australian trade mark legislation. That departure is deliberate. The language chosen has a long history and long before 1995 had acquired a stable meaning. The Working Party, acceptance of whose recommendation by the Australian Government led to the introduction of s 4192, stated that it had "no intention of changing the current concept of distinctiveness as measured by existing provisions"93. The extent to which a trade mark is "inherently adapted to distinguish" – the language of s 41 – is the language of s 26(2)(a) of the Trade Marks Act 1955 92 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 September 1995 at 1910. 93 Working Party to Review the Trade Marks Legislation, Recommended Changes to the Australian Trade Marks Legislation, (1992) at 43. (Cth) ("the 1955 Act"). That language of the 1955 Act originated in s 9(3) of the Trade Marks Act 1938 (UK) ("the 1938 UK Act"). There it had "always been treated as giving statutory expression" to the "public policy" "that a trader ought not to be allowed to obtain by registration ... a monopoly in what other traders may legitimately desire to use"94. The public policy expressed in the speech of Lord Parker of Waddington in Registrar of Trade Marks v W & G Du Cros Ltd95 was articulated in the context of addressing the meaning of "adapted to distinguish" in s 9(5) of the Trade Marks Act 1905 (UK). It was captured by Isaacs J addressing, in Thomson v B Seppelt & Sons Ltd, the meaning of the same words in s 16(2) of the Trade Marks Act 1905 (Cth) ("the 1905 Act")96: "The statutory criterion looks wholly to the future, and seeks to know 'What will be the effect of the mark after registration?' Is it adapted in future trade to distinguish the proprietor's goods from those of other persons? That, however, does not mean 'is the word adapted to acquire distinctiveness?' but 'is the word instantly adapted to distinguish the proprietor's goods in his future trade?' ... That must in all fairness be so, because otherwise it would be enlisting registration itself as an aid in making a mark actually distinctive, and so preventing partly by statutory assistance other traders from using the mark if they so desired." The public policy gave rise to a legal discrimen which was given succinct authoritative expression in F H Faulding & Co Ltd v Imperial Chemical Industries Ltd97. Again addressing the meaning of the words "adapted to distinguish" in s 16(2) of the 1905 Act, Kitto J (with whom Barwick CJ and 94 Chancellor, Masters and Scholars of the University of Oxford (trading as Oxford University Press) v Registrar of Trade Marks (1990) 24 FCR 1 at 17, quoting Smith Kline & French Laboratories Ltd v Sterling-Winthrop Group Ltd [1975] 1 WLR 914 at 921-922; [1975] 2 All ER 578 at 585-586. 95 [1913] AC 624 at 634-635. 96 (1925) 37 CLR 305 at 312; [1925] HCA 40. See also Bayer Pharma Pty Ltd v Farbenfabriken Bayer Aktiengesellschaft (1965) 120 CLR 285 at 332-333; [1965] HCA 71. 97 (1965) 112 CLR 537; [1965] HCA 72. 98 (1965) 112 CLR 537 at 555. "[T]he question to be asked in order to test whether a word is adapted to distinguish one trader's goods from the goods of all others is whether the word is one which other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use upon or in connexion with their goods". His Honour's reasoning in that case demonstrated that actual use of the word by other traders before and after registration may be logically probative of that question99. Yet it also emphasised that application of the test was separate from and anterior to any question as to whether or not another particular trader may have begun to use the word with a view to appropriating an applicant's reputation100. The content of the test expressed in F H Faulding is illustrated by three decisions of individual judges upholding decisions of the Registrar of Trade Marks to refuse registration of a word as a trade mark in the application of s 26(2)(a) of the 1955 Act. The first decision, of Kitto J in Clark Equipment Co v Registrar of Trade Marks101, is that with which the test has come commonly to be associated. Kitto J upheld a decision to refuse registration of "MICHIGAN" as a trade mark in respect of earth-moving equipment. Whether a trade mark was to any extent "inherently adapted to distinguish", Kitto J explained, was to be tested by reference to102: "the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives – in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it." There was no evidence in Clark Equipment that any other manufacturer produced similar goods in Michigan. There was evidence that the applicant had registered the word as a trade mark in the United States. The effect of that registration, Kitto J was prepared to assume, was that no other manufacturer of earth-moving 99 (1965) 112 CLR 537 at 555-556. 100 (1965) 112 CLR 537 at 556-557. 101 (1964) 111 CLR 511; [1964] HCA 55. 102 (1964) 111 CLR 511 at 514. equipment was free to use the word as a trade mark for its goods in that country103. Yet Kitto J found it "impossible to conclude that there [was] no likelihood of other traders, in the ordinary course of their businesses and without any desire to get for themselves a benefit from the [applicant's] reputation, wishing in advertisements and otherwise to describe (eg) their power cranes from Michigan as Michigan power cranes"104. Traders "may well wish by such means to take legitimate advantage of a reputation which they believe or hope that the State of Michigan possesses among Australians for the quality of its manufacturing products, and it would be contrary to fundamental principle to grant a registration which would have the effect of denying them the right to do so by using the name of the State"105. The fundamental principle to which Kitto J referred was later articulated by Gummow J when he said106: "The point is if goods of the kind in question are produced at the particular place or in the area, or if it is reasonable to suppose that such goods in the future will be produced there, other traders have a legitimate interest in using the geographical name to identify their goods, and it is this interest which is not to be supplanted by permitting any one trader to effect trade mark registration". The second decision was that of Gibbs J in Burger King Corporation v Registrar of Trade Marks107, upholding a decision to refuse registration of "WHOPPER" as a trade mark in respect of goods described as a "hamburger sandwich". Citing Clark Equipment, Gibbs J said that "[i]nherent adaptability is something which depends on the nature of the trade mark itself" and which "cannot be changed by use or otherwise"108. "Whopper", Gibbs J found, was not inherently adapted to distinguish the goods of a particular trader. It was rather a word "which a person selling a hamburger sandwich which he claimed to be 103 (1964) 111 CLR 511 at 516. 104 (1964) 111 CLR 511 at 516-517. 105 (1964) 111 CLR 511 at 517. 106 Chancellor, Masters and Scholars of the University of Oxford (trading as Oxford University Press) v Registrar of Trade Marks (1990) 24 FCR 1 at 23. 107 (1973) 128 CLR 417; [1973] HCA 15. 108 (1973) 128 CLR 417 at 424. larger than that normally sold might use in the ordinary course of business and without any improper motive"109. The third decision was that of Rogers J in the Supreme Court of New South Wales in Eutectic Corporation v Registrar of Trade Marks110, upholding decisions to refuse registration of "Eutectic" in respect of goods (comprising chemical substances, metals and alloys, machines and tools, and electrical apparatus and instruments) for welding, soldering and brazing. "Eutectic" is an English word meaning "melting at low temperature" or "melting readily". It was not in ordinary use by members of the community; most users of the applicant's goods did not know, or had forgotten, its meaning; and there was no evidence of its use by other traders. It was, however, "a basic term used in metallurgy"111, peculiarly appropriate to convey readiness to melt as a basic property of an alloy112. Refusing to conclude that "eutectic" was inherently adapted to distinguish the applicant's goods, and citing Clark Equipment, Rogers J said that "[w]hilstsoever there remains a need and use for that word by other traders in an honest description of their goods and the word retains its primary and technical meaning, it should remain free in the public domain"113. The decisions together illustrate that the focus of the test imported by the words "inherently adapted to distinguish", now in s 41 of the Act, is on the extent to which the monopoly granted on registration of a trade mark would foreclose options otherwise available to rival traders acting in the ordinary course of their businesses without any desire to benefit from the applicant's reputation. The monopoly, relevantly, is that now granted to the registered owner of a trade mark by s 20(1) of the Act: the exclusive rights to use the trade mark and to authorise other persons to use the trade mark in relation to the goods or services in respect of which the trade mark is registered. Neither the test nor its application is affected by s 122(1)(b) of the Act, which provides a defence to an action for infringement of the trade mark to a person who uses a sign in good faith to indicate either "the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services" or "the time of production of goods or of the rendering of services". That is made clear by a Note to s 41, which states that "[t]rade marks that are not inherently adapted to distinguish goods or services are mostly trade marks that consist wholly of a sign 109 (1973) 128 CLR 417 at 425. 110 (1980) 32 ALR 211. 111 (1980) 32 ALR 211 at 214. 112 (1980) 32 ALR 211 at 219. 113 (1980) 32 ALR 211 at 220. that is ordinarily used to indicate" the precise indications to which s 122(1)(b) refers (emphasis added). None of the three decisions concerned an attempt to register a mark comprising a word shown to have an ordinary meaning in a language other than English. There is no reason, however, why the test should operate differently in relation to a mark of that kind. The parenthetic reference by Kitto J in Clark Equipment to a trader acting in the exercise of "the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess" must in that respect be understood in the context of that case, dealing as it did with a foreign place name. Plainly, his Honour's attention was not confined to traders located in Australia. Equally plainly, his Honour's reference to words forming part of the common heritage was not confined to ordinary English words. The three decisions also illustrate that the F H Faulding test is not exhausted by an inquiry into the intrinsic capacity of a word or other sign to acquire connotations which would in fact distinguish the goods or services of an applicant for registration from the goods or services of rival traders. Eutectic Corporation, in particular, illustrates that the test is not exhausted by an inquiry into how the mark might be expected to be understood in Australia by "ordinary persons" or by actual or potential purchasers of goods or services of the relevant kind. The relevant perspective is, rather, that of another trader, located in Australia or elsewhere, who might desire to use the word or other sign in the ordinary course of its business. To place the F H Faulding test in context as applied in those cases, it is necessary to recognise that distinctiveness (of which inherent adaptedness to distinguish was made an element by s 26(2)(a)) was prescribed as one of a number of criteria qualifying a mark for registration as a trade mark under the 1955 Act. Another criterion, stated in s 24(1)(d), was that a mark consisted of "a word not having direct reference to the character or quality of the goods in respect of which registration [was] sought and not being, according to its ordinary meaning, a geographical name or a surname". That other criterion, as then appearing in substantially identical terms in s 16(1)(d) of the 1905 Act, was considered in Mark Foy's Ltd v Davies Coop & Co Ltd ("Tub Happy")114. Dixon CJ in Tub Happy explained that the test for determining whether or not a word had direct reference to the character or quality of goods "must lie in the probability of ordinary persons understanding the words, in their application to 114 (1956) 95 CLR 190; [1956] HCA 41. the goods, as describing or indicating or calling to mind either their nature or some attribute they possess"115. Tub Happy was in turn considered in Registrar of Trade Marks v Muller116. The Full Court of the High Court there construed s 24(1)(d) of the 1955 Act to "connote that which is distinctive" as an additional requirement for registration117. On that basis, "LESS" was held properly to have been refused registration under s 24(1)(d) as a trade mark in respect of pharmaceutical products for two distinct reasons: first (the Full Court expressly applying the Tub Happy test) because it would be understood by the public as a representation about the ingredients or strength of those products118; and secondly (the Full Court accepting a submission which implicitly applied the F H Faulding test) because it was not adapted to distinguish the applicant's products119, in that other traders would foreseeably wish to use the word in association with their own products in a perfectly legitimate way120. How the Tub Happy test might have applied under the 1955 Act to a word shown to have an ordinary meaning in a language other than English does not appear to have arisen for consideration in any Australian court, and need not now be considered. Nor is it necessary to consider the accuracy of a suggestion that judicial application of the same criterion under the 1938 UK Act implicitly adopted principles similar to the United States' "doctrine of foreign equivalents", under which words from common modern languages were translated into English in order to determine whether a mark was disqualified from registration because it was generic or descriptive121. What is significant for present purposes is that a conclusion, based on the application of the Tub Happy test, that a word does not have direct reference to 115 (1956) 95 CLR 190 at 195. 116 (1980) 144 CLR 37; [1980] HCA 35. 117 (1980) 144 CLR 37 at 44, approving In re Fanfold Ltd's Application (1928) 45 RPC 199 at 203-204. 118 (1980) 144 CLR 37 at 40-41. 119 (1980) 144 CLR 37 at 41-44. 120 (1980) 144 CLR 37 at 38. See also Eutectic Corporation v Registrar of Trade Marks (1980) 32 ALR 211 at 218. 121 Gredley, "Foreign-language Words as Trade Marks", in Dawson and Firth (eds), Trade Marks Retrospective, (2000) 85 at 85. the character or quality of goods or services, is not itself a conclusion that the word is inherently adapted to distinguish the goods or services of the applicant from the goods or services of other persons. In the case of an ordinary English word, the considerations affecting each conclusion will often be similar. In the case of a technical word or a word in another language, other considerations will almost certainly arise. Here the primary judge, citing F H Faulding, said122: "The question to be asked in order to test whether a word is adapted to distinguish one trader's goods from the goods of all others is whether the word is one that other traders are likely, in the ordinary course of their businesses, and without any improper motive, to desire to use upon or in connection with their goods". Later, citing Tub Happy, his Honour said123: "The test must lie in the probability of ordinary persons understanding the words, in their application to the goods, as describing, indicating or calling to mind either their nature or some attribute they possess". His Honour was not persuaded "that the Italian language is so widely spread that the conclusion should be drawn that Cinque Stelle and Oro would be generally understood in Australia" to mean "five stars" and "gold" respectively124. His conclusion, expressed in terms of the Tub Happy test, was that "the Italian words are not so obvious to ordinary English speaking persons in Australia that Cinque Stelle and Oro have a specific meaning"125. The Full Court held that his Honour erred in equating the F H Faulding test with the Tub Happy test, and in applying the latter to the exclusion of the 122 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 761 123 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 774 124 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 776 125 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 776 former126. That conclusion was correct. The central contention of the appellant ("Cantarella") in this Court is that the two tests are the same. They are not. Application The Full Court went on the F H Faulding Foreshadowing the analysis in which it engaged, the Full Court explained127: to apply itself test. "There to approach is no necessity the enquiry from an Anglocentric perspective in the Australian context which has rich cultural and ethnic diversities within its population. Adopting the language of Kitto J, to accommodate this reality in the marketplace, one may consider the relevant words against the collective diverse heritage. Viewed in that way, the 'common heritage' here included that of traders in coffee products sourced from Italy. Such traders may well be Italian or local importers. They may be local distributors who have in mind the large Italian speaking population in Australia as well as other Australians who, when it comes to coffee, want something with an Italian look and feel. Much of this country's coffee heritage in its language has its provenance in the Italian language eg caffè latte; cappuccino; affogato; caffè machiatto and espresso. It is evident that pure coffee in Australia is often associated with Italy and Italian coffee products." The Full Court stated its conclusion to be that "other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the Oro and Cinque Stelle marks, or some mark nearly resembling them, upon or in connection with their own coffee-related goods". That conclusion, the Full Court explained, was based on the cumulative effect of a number of considerations which it went on to enumerate128. The first consideration which the Full Court identified as underlying its conclusion was that the words, in Italian, signify quality. Another was that pure coffee in Australia is associated with Italy, with the result that it is obvious to use Italian words to describe the quality of coffee. Another was that the Australian pure coffee market includes imported coffee products that are roasted and packaged in Italy and sold in Australia. Another was that there are many Italian speakers in Australia. Indeed, the 2001 census revealed that Italian was then the second most spoken language in Australia, spoken at home by more than 350,000 126 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 24 [44]- 127 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 31 [85]. 128 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 32 [91]. people. Another was that Cantarella itself used the words according to their ordinary significance to describe its highest quality coffee blends129. "Finally, and most importantly", said the Full Court, "other coffee traders" had used Oro and Cinque Stelle before Cantarella applied to have them registered as trade marks on 24 March 2000 and on 6 June 2001 respectively. The findings of the primary judge, it said, supported the conclusion that "these Italian words were known in the coffee trade according to their ordinary signification as words descriptive of the quality of the coffee products and have been used in that sense, although not as trade marks, for a significant period of time extending well before Cantarella's registration of its marks and afterwards". The fact that other coffee traders had so used the words in the past was an indication that other coffee traders might wish to make similar use of the words in the future130. Having found that Oro and Cinque Stelle were not inherently adapted to distinguish the goods of one coffee trader from the goods of another, the Full Court went on to find that the use of those words by Cantarella was not use as a trade mark131. Cantarella's challenge to the conclusion of the Full Court is not limited to challenging the correctness of the test applied by the Full Court. Cantarella criticises the Full Court for giving consideration to Cantarella's own post-registration use of its trade marks. There is no force in that criticism. The primary judge found that Cantarella's own use of Oro and Cinque Stelle was almost invariably in conjunction with its trade mark Vittoria to describe its highest quality coffee blends132. The Full Court's only point was that use of Oro and Cinque Stelle in that manner was in accordance with the ordinary signification of those words in Italian. Cantarella also calls into question the evidentiary basis for what the Full Court described as the most important consideration on which it relied: that before Cantarella's applications for registration other coffee traders had used Oro and Cinque Stelle, not as trade marks, but as words descriptive of the quality of the coffee products. There is force in some of Cantarella's criticisms. The Full 129 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 32 [92]- 130 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 32 [97]. 131 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 33 [105]. 132 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 778 Court referred to Cantarella's own application for trade mark registration of the words Medaglia D'oro in 1996, and to the earlier registration by the Italian company Luigi Lavazza SpA in 1979 of a composite trade mark which included the words Qualità Oro subject to an endorsement on the register which stated that registration "shall give no right to the exclusive use of the Italian words 'QUALITA ORO', which may be 'GOLD QUALITY'"133. Cantarella points out that both were different marks and that evidence of trade mark registration, or of the making of an application for registration, is not evidence of use. The Full Court also referred in that respect to a website for Lavazza coffee, which describes Qualità Oro as "the iconic product that made Lavazza famous worldwide" and states that Qualità Oro was first imported into Australia in 1955134. Cantarella points out that the website was not admitted in evidence at trial to prove the truth of that fact. But these are points of detail. into English as translated The structure of the Full Court's reasons for judgment shows that it relied for what it described as the most important consideration principally on findings made by the primary judge about the conduct of Molinari and of various Australian distributors of coffee products exported to Australia by Molinari135. Those findings were that Molinari had produced Caffè Molinari Oro in Italy continuously since 1965 and had introduced Caffè Molinari Cinque Stelle as its premium blend in 1997. Molinari began exporting from Italy in 1994 and began exporting to Australia in 1996. Australian distributors of Molinari's coffee products began distributing Caffè Molinari Oro in December 1999 and had done so since then. Australian distributors of Molinari's coffee products began distributing Caffè Molinari Cinque Stelle in May 2000, and had done so since then. The results of a search of the trade marks register conducted in 2011 for trade marks or pending applications which included Oro and Cinque Stelle were in evidence before the primary judge. That evidence made no reference to either Caffè Molinari Oro or Caffè Molinari Cinque Stelle. Cantarella points out that the primary judge made no findings as to the form of packaging of Molinari products or as to the nature of any use of Caffè Molinari Oro or Caffè Molinari Cinque Stelle by Molinari or its Australian distributors before 2009. That is so. But it takes no imagination to infer, as the Full Court implicitly did, that Italian words were used by an Italian company in Italy in accordance with their Italian signification, and that Caffè Molinari Oro (relevantly between December 1999 and March 2000) and Caffè Molinari 133 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 33 [100]. 134 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 33 [99]. 135 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 20-21 Cinque Stelle (relevantly between May 2000 and June 2001) were exported from Italy and distributed in Australia in packaging which bore those words. The significance which the Full Court attached to that prior use by Molinari and its Australian distributors is also to be evaluated in the light of the primary judge's findings of contemporary use in Australia to which the Full Court also referred136. Those findings were that, as at 2011, dozens of coffee distributors in Australia used Oro or D'oro to denote products within their ranges or to denote their house brands137. The findings were also that there was use at that time by a number of coffee distributors of 5 Stelle and Five Star138, and that hundreds of Australian businesses have Five Star in their names139. Gold and Five Star are ordinary English words. Used in respect of goods or services, they signify quality. They always have. No authority is necessary to establish that, used alone, they are not inherently adapted to distinguish goods or services of one person from goods or services of another. They are words which any person in the ordinary course of business might legitimately seek to use. The Full Court's conclusion was that the Italian equivalents of those words were not, on 24 March 2000 and on 6 June 2001 respectively, inherently adapted to distinguish the goods of one person from the goods of another when applied in Australia to goods of a kind commonly associated with Italy, often enough imported from Italy and often enough sold to Italian speakers. That conclusion, and the analysis of the Full Court which led to it, are, in my view, sound. 136 Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16 at 22-23 137 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 777 138 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 773 139 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 at 771

HIGH COURT OF AUSTRALIA AND PLAINTIFF AUSTRALIAN CRIME COMMISSION & ANOR DEFENDANTS X7 v Australian Crime Commission [2013] HCA 29 26 June 2013 ORDER The questions asked in the Case Stated dated 23 August 2012 be answered as follows: Does Div 2 of Pt II of the Australian Crime Commission Act 2002 (Cth) ("the ACC Act") empower an examiner appointed under s 46B(1) of the ACC Act to conduct an examination of a person charged with a Commonwealth indictable offence where that examination concerns the subject matter of the offence so charged? Answer: The ACC Act does not authorise an examiner appointed under s 46B(1) of the ACC Act to require a person charged with a Commonwealth indictable offence to answer questions about the subject matter of the charged offence. If the answer to Question 1 is "Yes", is Div 2 of Pt II of the ACC Act invalid to that extent as contrary to Ch III of the Constitution? Answer: This question does not arise. Representation G D Wendler with A S G Cassels for the plaintiff (instructed John D Weller & Associates) S P Donaghue SC with M J O'Meara for the defendants (instructed by Australian Government Solicitor) Interveners M G Sexton SC, Solicitor-General for the State of New South Wales with C L Lenehan for the Attorney-General for the State of New South Wales, intervening (instructed by Crown Solicitor (NSW)) W Sofronoff QC, Solicitor-General of the State of Queensland with G J D del Villar for the Attorney-General of the State of Queensland, intervening (instructed by Crown Law (Qld)) M G Hinton QC, Solicitor-General for the State of South Australia with C Jacobi for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) S G E McLeish SC, Solicitor-General for the State of Victoria with R J Orr for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor) G R Donaldson SC, Solicitor-General for the State of Western Australia with I A Repper for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS X7 v Australian Crime Commission Statutes – Interpretation – Plaintiff charged with three indictable Commonwealth offences – Plaintiff served with summons to attend examination by examiner appointed under Australian Crime Commission Act 2002 (Cth) ("Act") – Examiner asked plaintiff questions about subject matter of charged offences – Whether Act empowered examiner to conduct examination of person charged with indictable Commonwealth offence where examination concerned offence charged. Words and phrases – "accusatorial process of criminal justice", "examination", "prejudice the fair trial of a person who has been, or may be, charged with an offence", "principle of legality", "privilege against self-incrimination", "right to silence", "trial according to law". Australian Crime Commission Act 2002 (Cth), ss 7A, 7C, Pt II Div 2. FRENCH CJ AND CRENNAN J. On 23 November 2010, the plaintiff, X7, was arrested by officers of the Australian Federal Police, charged with three indictable offences1 and taken into custody. The offences, alleged to have been committed in New South Wales, are conspiracy to traffic in a commercial quantity of a controlled drug2, conspiracy to import a commercial quantity of a border controlled drug3, and conspiracy to deal with money that is the proceeds of crime4. If convicted, the plaintiff will be liable to a term of imprisonment. Whilst in custody, the plaintiff was served with a summons to appear, and give evidence, before an examiner of the first defendant, the Australian Crime Commission ("the ACC"). Established by s 7 of the Australian Crime Commission Act 2002 (Cth) ("the ACC Act")5, the ACC has functions which include the collection of criminal information and intelligence, and the investigation of federally relevant criminal activity in relation to "serious and organised crime"6. Serious and organised crime covers offences which involve two or more offenders, substantial planning and organisation, and the use of sophisticated methods and techniques7. Division 2 of Pt II of the ACC Act (ss 24A to 36) ("the examination provisions") provides for examiners appointed under the ACC Act to conduct compulsory examinations for the purposes of operations or investigations which 1 Three Court Attendance Notices (the charge sheets) were served on the plaintiff on 23 November 2010. At the time of hearing, no indictment had been presented. 2 Criminal Code (Cth), s 11.5(1), together with s 302.2(1). 3 Criminal Code (Cth), s 11.5(1), together with s 307.1(1). 4 Criminal Code (Cth), s 11.5(1), together with s 400.3(1). 5 The ACC comprises the Chief Executive Officer ("the CEO"), examiners, and members of staff of the ACC (s 7(2)). 6 Australian Crime Commission Act 2002 (Cth), s 7A(a) and (c). The expressions "federally relevant criminal activity" and "relevant criminal activity" are defined in s 4(1). The latter expression means "any circumstances implying, or any allegations, that a relevant crime may have been, may be being, or may in future be, committed against a law of the Commonwealth, of a State or of a Territory". "Relevant crime" is also defined in s 4(1) and includes "serious and organised crime". 7 Australian Crime Commission Act 2002 (Cth), s 4(1). Crennan are designated by the Board of the ACC as "special" operations or In response to the summons, the plaintiff attended a compulsory examination before an ACC examiner at which he was asked, and answered, questions relating to the subject matter of the offences with which he had been earlier charged. When the examination resumed the next day, the plaintiff declined to answer questions concerning the subject matter of the charges when he was directed by the examiner to do so. The examiner informed the plaintiff that he would, in due course, be charged with the offence of failing to answer questions9. The plaintiff subsequently commenced proceedings in the original jurisdiction of this Court. The plaintiff seeks declarations that, to the extent that Div 2 of Pt II of the ACC Act permits the compulsory examination of a person charged with an indictable Commonwealth offence, the relevant provisions are beyond the power of the Commonwealth Parliament; or that any such examination constitutes an impermissible interference with what was said to be his constitutional right to a fair trial under Ch III (including s 80) of the Constitution. The plaintiff also seeks injunctive relief against the ACC and its officers and examiners restraining further compulsory examination in respect of matters the subject of the offences with which he has been charged. Finally, the plaintiff seeks an order preventing the ACC and its officers and examiners from preserving any record of his examination. On 23 August 2012, the parties agreed to state a case for the consideration of the Full Court, which included the following two questions of law: "1. Does Division 2 of Part II of the ACC Act empower an examiner appointed under section 46B(1) of the ACC Act to conduct an examination of a person charged with a Commonwealth indictable offence where that examination concerns the subject matter of the offence so charged? 8 Australian Crime Commission Act 2002 (Cth), ss 4(1), definition of "special ACC operation/investigation", and 24A. 9 Australian Crime Commission Act 2002 (Cth), s 30(6) relevantly provides that a person who fails to answer a question as required by an examiner under s 30(2)(b) is guilty of an indictable offence, punishable on conviction by a fine not exceeding 200 penalty units or imprisonment for a period not exceeding five years. Crennan If the answer to Question 1 is 'Yes', is Division 2 of Part II of the ACC Act invalid to that extent as contrary to Ch III of the Constitution?" The questions were stated on the basis that the plaintiff's case did not involve any challenge to the sufficiency of the instrument authorising the relevant "special ACC investigation"10. Furthermore, the expression "subject matter of the offence" in question 1 was treated as including examination on the circumstances of the offence with which a person has been charged, which questions could establish that the person has committed a crime, or disclose defences upon which that person might rely at trial. These reasons will demonstrate that question 1 must be answered "Yes" and that question 2 should be answered "No". The facts and the legislative scheme The ACC Act contains provisions which govern the sharing by the ACC of specific information with other government officers and agencies, both federal and State. Where, in carrying out its functions, the ACC obtains admissible evidence of an offence, whether Commonwealth, State or Territory, the CEO must assemble the evidence and give it to the relevant law enforcement or prosecutorial agency11. In appropriate circumstances, the CEO may also furnish information in its possession to other nominated persons, agencies or bodies12. At the conclusion of an examination, the examiner must give the head of the special ACC investigation a record of the examination and any documents or other things given to the examiner13. 10 Australian Crime Commission Act 2002 (Cth), s 7C(1)(c) and (d). 11 Australian Crime Commission Act 2002 (Cth), s 12(1). The CEO must also give the evidence to the Attorney-General of the Commonwealth or the State, as the case requires (s 12(1)(a)). 12 At the time of the examination, the relevant power was found in Australian Crime Commission Act 2002 (Cth), s 59. An equivalent power now exists in s 59AA, which was inserted by the Crimes Legislation Amendment (Powers and Offences) Act 2012 (Cth), but which commenced after the plaintiff was examined. 13 Australian Crime Commission Act 2002 (Cth), s 25A(15). Crennan As required by the ACC Act, the plaintiff attended before an ACC examiner14, in response to the summons issued under s 28 in connection with the relevant special ACC investigation15. Under the ACC Act, a person appearing at an examination is not permitted to refuse or fail to answer a question, or to produce a document or other thing, which is required by the examiner16. However, by reason of the combined operation of ss 30(4) and 30(5), where a person gives an answer or produces a document or thing, that answer or that document or thing is not admissible in evidence against the person in a criminal proceeding or a proceeding for the imposition of a penalty17, provided that before answering the question or producing the document or thing, the person claims18 that the answer, document or thing might tend to incriminate him or her or make him or her liable to a penalty. A prohibition of that kind on direct use is sometimes called a "direct use immunity" or, more usually, a "use immunity". Section 25A, which is critical to the resolution of this stated case, governs the conduct of an examination, and the manner in which, and the persons to whom, publication of evidence and information obtained may be made. Section 25A relevantly provides: "(3) An examination before an examiner must be held in private and the examiner may give directions as to the persons who may be present during the examination or a part of the examination. (9) An examiner may direct that: any evidence given before the examiner; or the contents of any document, or a description of any thing, produced to the examiner; or 14 Australian Crime Commission Act 2002 (Cth), s 46B. 15 Australian Crime Commission Act 2002 (Cth), s 24A. 16 Australian Crime Commission Act 2002 (Cth), s 30(2). 17 Other than in a confiscation proceeding or a proceeding for perjury: Australian Crime Commission Act 2002 (Cth), s 30(5). 18 Australian Crime Commission Act 2002 (Cth), s 30(4). Crennan any information that might enable a person who has given evidence before the examiner to be identified; or the fact that any person has given or may be about to give evidence at an examination; must not be published, or must not be published except in such manner, and to such persons, as the examiner specifies. The examiner must give such a direction if the failure to do so might prejudice the safety or reputation of a person or prejudice the fair trial of a person who has been, or may be, charged with an offence." At the beginning of the plaintiff's examination, the examiner advised the plaintiff of his rights in the following terms: "[Y]our rights will be protected today. I want you to understand at the outset that I am not allowing anyone associated with the charges you face, anyone associated with the prosecution of those charges to either sit here [or] observe the proceedings and I'm not permitting any of those persons to get a copy of the record of these proceedings. And I will also be offering you what's known as the privilege against self-incrimination which I will explain to you shortly. So your rights will be protected because no-one associated with your prosecution or charges, investigation of your charges will be able to learn what you tell [the ACC] today, that's because you're facing current charges which haven't been dealt with. And the law is that in those circumstances your rights ought to be protected so that those persons associated with you, the investigation and prosecution do not either hear or learn subsequently what it is you told [the ACC] that is one protection. The next is the fact that you have available to you what's known as the privilege against self-incrimination." The examiner then informed the plaintiff that he could not refuse to answer questions or produce documents sought by the examiner but that he could claim that his answers to questions, or production of documents or things sought, might tend to incriminate him. The plaintiff made such a claim in relation to all of the answers that he gave during the examination. When the examination resumed the following day, the plaintiff was represented by a lawyer, and declined to answer any further questions. The examiner informed the plaintiff that he would be charged with the offence of Crennan failing to answer questions19. The examiner then made an oral direction under s 25A(9) in the following terms: "I direct that the evidence given by you, [the plaintiff], the contents of documents produced to [the ACC] during this examination, any evidence that might enable you to be identified and the fact that you've given evidence at this examination shall not be published, except only to [the CEO], examiners and members of staff of [the ACC] and for the purposes only of any charges which may result from your evidence to the office of the Director of Public Prosecutions for the Commonwealth, to the staff of any court or courts in respect of which proceedings might be brought as a result of your evidence yesterday and today and to any legal representative or representatives you may care to engage to look after your interest in respect of any charge or charges." that neither officers of Before concluding the examination, the examiner clarified the direction by stating the Commonwealth Director of Public Prosecutions nor police officers associated with the prosecution of the offences with which the plaintiff had been charged at the time of the examination were entitled by the direction to receive a copy of the evidence given by the plaintiff at the examination. Origin of the ACC The determination of the questions referred depends in part on an understanding of the predecessor legislation to the ACC Act: the National Crime Authority Act 1984 (Cth) ("the NCA Act"). In late 1983, in the Second Reading Speech for the Bill which became the NCA Act, the Attorney-General of the Commonwealth explained that reports by a series of Royal Commissions concerning organised crime and corruption led the federal Government to establish a standing authority – the National Crime Authority ("the NCA") – to deal with serious and organised crime20. The NCA was to have coercive investigative powers, including a power of compulsory examination, for the purposes of co-ordinating national investigation of serious and organised crime, and so as to supplement ordinary police methods of investigation, which do not include such powers. 19 Australian Crime Commission Act 2002 (Cth), s 30(6). 20 Australia, Senate, Parliamentary Debates (Hansard), 10 November 1983 at 2492. Crennan The NCA Act The NCA Act provided for compulsory examination and production of documents and things21, but subject to an examinee having a written immunity, in the form of an undertaking in writing from a person in authority22 that "any information, document or thing obtained as a direct or indirect consequence" of any answer given (or document or thing produced) "will not be used in evidence in any proceedings against [the examinee] for an offence"23. A prohibition on indirect use, usually called a "derivative use immunity", is a concept which arose out of American jurisprudence dealing with the language of the Fifth Amendment to the United States Constitution24. Further, s 30(10) of the NCA Act provided that a person could claim the privilege against self-incrimination when charged with an offence, if the offence was one in respect of which the answer to a question or the production of a document or thing might tend to incriminate the person, and if the offence had not been finally dealt with by a court or otherwise disposed of, in which case the person was excused from answering the question or producing the document or thing. These sections were among the provisions which, by the National Crime Authority Legislation Amendment Act 2001 (Cth), were repealed and replaced by the current provisions. The changes were explained in the relevant Explanatory "Proposed subsection 30(5) will mean that, in the circumstances set out in proposed subsection 30(4), the answer, document or thing, cannot be used as evidence against the person, except in limited circumstances. However, contrary to the current position, any evidence that is derived from that answer, document or thing may be used against the person. The Authority is unique in nature and has a critical role in the fight against serious and organised crime. This means that the public interest in the Authority having full and effective investigatory powers, and to enable, in any 21 National Crime Authority Act 1984 (Cth), s 30(2). 22 For example, the Commonwealth Director of Public Prosecutions in the case of a Commonwealth offence. 23 National Crime Authority Act 1984 (Cth), ss 30(4), 30(5) and 30(7). 24 Sorby v The Commonwealth ("Sorby") (1983) 152 CLR 281 at 292-294 per Gibbs CJ; [1983] HCA 10; see also R v S (RJ) [1995] 1 SCR 451 at 458. 25 Australia, Senate, National Crime Authority Legislation Amendment Bill 2000, Explanatory Memorandum at 8. Crennan subsequent court proceedings, the use against the person of incriminating material derived from the evidence given to the Authority, outweigh the merits of affording full protection to self-incriminatory material. The proposed provision is comparable to section 68 of the Australian Securities and Investments Commission Act 1989."26 These matters were repeated in the Second Reading Speech27: "The bill will ... allow an investigatory body to derive evidence from self-incriminatory evidence given by a person at a hearing, and for a prosecuting authority to use that derived evidence against the person at a later trial. In other words, a person's self-incriminatory admissions will not themselves be able to be used as evidence against that person, but will be able to be used to find other evidence that verifies those admissions or is otherwise relevant to proceedings. However, the bill will specifically provide that once a witness has claimed that the answer to a question might tend to incriminate him or her, then any evidence that the person gives cannot be used against the person in any later trial. The existing mechanism for a special undertaking by the DPP will not be required as this protection will be clearly set out in the legislation." By virtue of the Australian Crime Commission Establishment Act 2002 (Cth), the ACC replaced the NCA and the NCA Act became the ACC Act. (now the Australian Securities and 26 It can be noted that an immunity from derivative use of self-incriminating evidence in what is now the Australian Securities and Investments Commission Act 1989 (Cth) ("the ASIC Act") was abolished in 1992 after complaints by the Australian Securities Commission Investments Commission) that such an immunity made it difficult to prosecute examinees in subsequent criminal or penalty proceedings. See the ASIC Act, ss 68(3) and 76(1)(a). See also the Joint Submission of the Australian Securities Commission and The Commonwealth Director of Public Prosecutions for Amendment of s 68, ASC Law and s 597, Corporations Law to the Joint Committee on Corporations and Securities, 13 August 1991, referred to in Longo, "The Powers of Investigation of the Australian Securities Commission", (1992) 10 Company and Securities Law Journal 237 at 241-242. 27 Australia, House of Representatives, Parliamentary Debates (Hansard), 24 September 2001 at 31304. Crennan Submissions The plaintiff proceeded on the basis that, as recognised in Australian Crime Commission v Stoddart28, the common law privilege against self- incrimination has not been preserved in the ACC Act, but submitted that the powers of compulsory examination under the ACC Act are not exercisable after a charge has been laid, and that the privilege was preserved in this limited way. The plaintiff contended that the examination provisions did not clearly abrogate the privilege in respect of examination after charge, and relied on the settled principle that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or necessary implication to that effect29. It was contended that decisions of intermediate appellate courts to the contrary were wrong30. At a more fundamental level, the plaintiff's case was that the examination powers should be given a restricted meaning because their exercise after charge would otherwise constitute legislative authorisation of executive interference with pending criminal proceedings31, and in particular an interference with due process entrenched by Ch III (including s 80) of the Constitution. As used by the plaintiff, "due process" encapsulated those rights of an accused, including the right to silence, designed to require the prosecution to prove its case without the 28 (2011) 244 CLR 554 at 563 [8] per French CJ and Gummow J, 620 [173] per Crennan, Kiefel and Bell JJ; [2011] HCA 47. 29 Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11] per Gleeson CJ, Gaudron, Gummow and Hayne JJ; [2002] HCA 49, citing Potter v Minahan (1908) 7 CLR 277 at 304 per O'Connor J; [1908] HCA 63; Coco v The Queen (1994) 179 CLR 427 at 437 per Mason CJ, Brennan, Gaudron and McHugh JJ, 446 per Deane and Dawson JJ; [1994] HCA 15. See also Mortimer v Brown (1970) 122 CLR 493 at 495, 498-499; [1970] HCA 4; Sorby (1983) 152 CLR 281 at 294-295, 309; Hamilton v Oades (1989) 166 CLR 486 at 495; [1989] HCA 21; Environment Protection Authority v Caltex Refining Co Pty Ltd ("EPA") (1993) 178 CLR 477 at 517, 533-534; [1993] HCA 74. 30 Australian Crime Commission v OK (2010) 185 FCR 258; R v CB [2011] NSWCCA 264. See also R v Seller [2013] NSWCCA 42. 31 "Proceedings" for the purposes of contempt of court includes pending proceedings because proceedings "must be given a sufficiently broad meaning in criminal cases to cover a person who has been arrested and charged", as to which see Sorby (1983) 152 CLR 281 at 306 per Mason, Wilson and Dawson JJ, citing James v Robinson (1963) 109 CLR 593 at 606; [1963] HCA 32 and R v Daily Mirror; Ex parte Smith [1927] 1 KB 845 at 851. Crennan assistance of the accused. In the event that the examination provisions, on their proper construction, did authorise examination after charge, that was said to involve an invalid attempt to confer the judicial power of the Commonwealth on the examiner. On that basis, the plaintiff submitted that question 1 should be answered "No", in which case it would be unnecessary to answer question 2. Alternatively, if question 2 is reached, it should be answered "Yes". The defendants submitted that the powers conferred by the examination provisions are not exhausted on the laying of charges. Further, there was no general principle that a person cannot be asked questions relating to a pending criminal charge. In submitting that question 1 should be answered "Yes", the defendants stated that the examination provisions do not authorise the dissemination of information obtained during the plaintiff's examination if that dissemination would create a real risk of interference with the administration of criminal justice. It was contended, therefore, that no question arises of the consistency of the examination provisions with Ch III (including s 80) of the Constitution. The defendants submitted that the answer to question 1 should be "Yes" and, if it be necessary to answer question 2, the answer should be "No". The submissions in relation to statutory construction were informed by the Ch III submissions, and vice versa. Construction The rule of construction mentioned above, that statutory provisions are not to be construed as abrogating important common law rights and immunities in the absence of clear words or necessary implication to that effect, applies to the examination provisions, involving as they do an abrogation of the privilege against self-incrimination. The rule is based, in part, on "a working assumption about the legislature's respect for the law"32, which in this case is evidenced in provisions protecting from prejudice the fair trial of an examined person who has been charged with an offence. Beginning with the text of the ACC Act33, the examination provisions contemplate the exercise of the examination powers after a charge has been laid. There is no relevant limitation on who may be summoned under s 28, and no explicit preservation of the privilege against self-incrimination, once charges are laid, comparable to the preservation which existed under s 30(10) of the NCA 32 Gleeson, "Legality – Spirit and Principle", Second Magna Carta Lecture, New South Wales Parliament House, 20 November 2003. 33 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46 [47] per Hayne, Heydon, Crennan and Kiefel JJ; [2009] HCA 41. Crennan Act. The grant of an immunity from direct use by the prosecution in evidence against a person in a trial is another indication that an examination may occur, or continue, after a charge has been laid. That is because the immunity renders the consequences of answering questions the same whether a criminal charge has been laid or not. More importantly, where a person examined has a trial pending, statutory directions regarding the disclosure and manner of use of any self-incriminating evidence and information obtained in the examination must be given so as to safeguard the person's fair trial. Section 25A(9) expressly provides that an examiner must direct that evidence and information obtained in an examination must not be published, or must not be published except in such manner and to such persons as the examiner specifies, if the failure to give such a direction "might … prejudice the fair trial of a person who has been, or may be, charged with an offence" (emphasis added). The CEO is empowered to vary or revoke such a direction in writing34, but he or she must not do so if that "might … prejudice the fair trial of a person who has been or may be charged with an offence"35 (emphasis added). Publication of evidence or information in contravention of such a direction, or presence at an examination in contravention of a direction as to the persons who may be present during the examination36, is an offence37. A specific, protective direction under s 25A(9), the breach of which is subject to a penalty, overrides the general obligations imposed on the ACC, the CEO or the Board of the ACC by ss 12 and 59 of the ACC Act, described above, to assemble evidence and disseminate and furnish information or reports to nominated persons, bodies or agencies38. The same would also apply to the general power given to the ACC to make use of particular information and intelligence in the performance of any of its functions39. Not only do those safeguards clearly and unambiguously apply in relation to a pending (or a potential) trial, the plaintiff did not point to any provision in 34 Australian Crime Commission Act 2002 (Cth), s 25A(10). 35 Australian Crime Commission Act 2002 (Cth), s 25A(11). 36 Australian Crime Commission Act 2002 (Cth), s 25A(5). 37 Australian Crime Commission Act 2002 (Cth), s 25A(14). 38 Now see Australian Crime Commission Act 2002 (Cth), s 12(2), which was inserted by the Crimes Legislation Amendment (Powers and Offences) Act 2012 (Cth). 39 Australian Crime Commission Act 2002 (Cth), s 12(6). Crennan the ACC Act explicitly constraining the ability of a court to ensure a pending trial would be conducted according to law. Furthermore, nothing in the history of the examination provisions, including the matters referred to in the extrinsic materials, throws any doubt on the conclusion, based on the text and purpose of the provisions, that the examination powers may be exercised after charges have been laid. Turning to the privilege against self-incrimination more generally, although this privilege has been described as "deep rooted"40 in the common law, over the years it has not lacked critics41 as "an unnecessary impediment to the detection and conviction of criminal offenders and as an obstacle to the judicial ascertainment of the truth"42. Legislatures have, in different settings, abrogated or modified the privilege when public interest considerations have been elevated over, or balanced against, the interests of the individual so as to enable true facts to be ascertained43. Longstanding examples such as the compulsory public examination of a bankrupt44, or of a company officer (when fraud is suspected)45, serve a public interest in disclosure of the facts on behalf of creditors and shareholders which overcomes some of traditional consideration for the individual46. Because disclosures of a bankrupt on a the common law's 40 Lam Chi-Ming v The Queen [1991] 2 AC 212 at 222. 41 Bentham, Introductory View of the Rationale of Evidence, (1827), reproduced in Bowring (ed), The Works of Jeremy Bentham, (1843), vol 6 at 106-109; Istel Ltd v Tully [1993] AC 45 at 53 per Lord Templeman; De Luna v United States 308 F 2d 140 at 144-146 (1962) per Judge Wisdom; Palko v Connecticut 302 US 319 at 325- 326 (1937) per Cardozo J; Wigmore, "Nemo Tenetur Seipsum Prodere", (1891) 5 Harvard Law Review 71 at 85. See generally, United States v Garsson 291 F 646 at 649 (1923) per Judge Learned Hand. 42 EPA (1993) 178 CLR 477 at 533 per Deane, Dawson and Gaudron JJ. 43 EPA (1993) 178 CLR 477 at 503 per Mason CJ and Toohey J; Phillips v News Group Newspapers Ltd [2013] 1 AC 1 at 68 [14] per Lord Walker of 44 Which can be traced back to Statute 5 Geo II c 30, s 16. See also Heydon, "Statutory Restrictions on the Privilege Against Self-Incrimination", (1971) 87 Law Quarterly Review 214. 45 Mortimer v Brown (1970) 122 CLR 493. See also Companies Act 1958 (Vic), ss 146(5) and 146(6). 46 Rees v Kratzmann (1965) 114 CLR 63 at 80 per Windeyer J; [1965] HCA 49. Crennan compulsory examination can be used against him or her in other proceedings47, a judge before whom such an examination is held will need to ensure the examiner does not cause "oppression, injustice, or ... needless injury to the individual"48, and to disallow questions which would constitute an abuse of process49. In balancing public interest considerations and the interests of the individual, legislation abrogating the privilege will often contain, as in the case of the ACC Act, "compensatory protection to the witness"50, by providing that, subject to limited exceptions, compelled answers shall not be admissible in civil or criminal proceedings. The functions of the ACC, which include the investigation of serious and organised crime, serve a public interest which is apparent from the ACC Act. An examination cannot be held for a purpose other than the purpose of investigating serious and organised crime51, which remains the same whether a criminal charge has been laid or not. It is consistent with the purpose of the compulsory examination powers, which aid the functions of the ACC, that those powers are not exhausted upon the laying of a charge against an individual52. The ACC Act reflects a legislative judgment that the functions of the ACC would be impeded if the laying of a charge against one member of a group by a prosecutor prevented continuing investigation of the group's activities by way of examination of that member by the ACC. To summarise, the public interest in the continuing investigation of serious and organised crime is elevated over the private interest in claiming the privilege against self-incrimination. However, whilst a person examined under the ACC Act is compelled to give an answer, or produce a document or thing, which might otherwise be withheld because of the privilege against self- incrimination, the interest in that person being tried openly and fairly is protected both by the prohibition on direct use of answers given, or documents or things produced, and by the provisions safeguarding the fair trial of that person. 47 R v Scott (1856) Dears & B 47 at 64 per Coleridge J [169 ER 909 at 916]. 48 Rees v Kratzmann (1965) 114 CLR 63 at 66 per Barwick CJ; see also Hamilton v Oades (1989) 166 CLR 486 at 495 per Mason CJ. 49 Hamilton v Oades (1989) 166 CLR 486 at 498 per Mason CJ. 50 Sorby (1983) 152 CLR 281 at 295 per Gibbs CJ, 310-311 per Mason, Wilson and 51 Australian Crime Commission Act 2002 (Cth), ss 24A, 25A(6), 28(1) and 28(7). 52 See EPA (1993) 178 CLR 477 at 516-517 fn 62 per Brennan J. Crennan Plaintiff's reliance on Hammond The plaintiff relied on Hammond v The Commonwealth53 in urging the Court restrictive construction, to give notwithstanding their natural or ordinary meaning, in order to protect the "right to silence" of an accused person in respect of pending criminal proceedings. the examination provisions a In Hammond, in circumstances of some urgency, this Court restrained a Royal Commissioner54 from compelling an accused person to answer questions which would tend to incriminate him in relation to an alleged conspiracy upon which he had been committed for trial. Whilst the questioning was to have been undertaken in private and the accused person had the benefit of provisions granting him a direct use immunity55, it appears that the presence at the examination of the police officers who had investigated the matters upon which the accused person was to be examined was to be permitted. Furthermore, the record of argument shows that the transcript of the examination was to be made available by the Royal Commission to the prosecution. On the assumption that the privilege against self-incrimination had been abrogated by statute, it was stated by Gibbs CJ (with whom Mason and Murphy JJ agreed)56: "Once it is accepted that the plaintiff will be bound, on pain of punishment, to answer questions designed to establish that he is guilty of the offence with which he is charged, it seems to me inescapably to follow, in the circumstances of this case, that there is a real risk that the administration of justice will be interfered with. It is clear that the questions will be put and pressed. It is true that the examination will take place in private, and that the answers may not be used at the criminal trial. Nevertheless, the fact that the plaintiff has been examined, in detail, as to the circumstances of the alleged offence, is very likely to prejudice him in his defence." His Honour went on to observe that continuing questioning in the circumstances described "would, generally speaking, amount to a contempt of court"57. In 53 ("Hammond") (1982) 152 CLR 188; [1982] HCA 42. 54 Acting under two Commissions, one issued by the Governor-General of the Commonwealth, and the other by the Governor of the State of Victoria. 55 See Royal Commissions Act 1902 (Cth), s 6DD; Evidence Act 1958 (Vic), s 30. 56 (1982) 152 CLR 188 at 198. 57 (1982) 152 CLR 188 at 198. Crennan agreeing that an injunction should be granted as proposed by the Chief Justice, Brennan J said that a person committed to stand trial on a criminal charge "is not amenable to compulsory interrogation designed to obtain from him information as to the issues to be litigated at his trial: nemo tenetur seipsum prodere"58. It can be noted that the Latin maxim nemo tenetur seipsum prodere/accusare, "no one is obliged to produce [evidence against]/accuse himself" (part of a longer canon law rule), said to express the privilege against self-incrimination, came to be recognised both in common law courts and in Chancery from the seventeenth century onwards59. Whilst Deane J noted that the mere fact that there are pending proceedings does not mean that "any parallel or related administrative inquiry, conducted for proper administrative purposes, constitutes an interference with the due administration of justice in that court"60, his Honour then said61: "On the other hand, it is fundamental to the administration of criminal justice that a person who is the subject of pending criminal proceedings in a court of law should not be subjected to having his part in the matters involved in those criminal proceedings made the subject of a parallel inquisitorial inquiry by an administrative tribunal with powers to compel the giving of evidence and the production of documents which largely correspond [to] (and, to some extent, exceed) the powers of the criminal court. Such an extra-curial inquisitorial investigation of the involvement of a person who has been committed for trial in the matters which form the basis of the criminal proceedings against him constitutes, in my view, an improper interference with the due administration of justice in the proceedings against him in the criminal court and contempt of court." 58 (1982) 152 CLR 188 at 202. 59 EPA (1993) 178 CLR 477 at 526 per Deane, Dawson and Gaudron JJ; Blackstone, Commentaries on the Laws of England, (1769), bk 4 at 296; Tollefson, The Privilege Against Self-Incrimination in England and Canada, (1975) at 32-33. See also Azzopardi v The Queen (2001) 205 CLR 50 at 93-96 [125]-[135]; [2001] HCA 25; Wigmore on Evidence, McNaughton rev (1961), vol 8 at 268-269; Levy, Origins of the Fifth Amendment: The Right against Self-Incrimination, (1968) at 60 (1982) 152 CLR 188 at 206. 61 (1982) 152 CLR 188 at 206. Crennan On the basis that, on their proper construction, the examination provisions permit examination of a person after a charge has been laid, on the subject matter of the charge, the plaintiff relied on Hammond to support a proposition that such examination would cause a real risk of interference with the fair trial of an accused unless specific steps were taken to protect that accused's "right to silence" at trial, which was said to encompass a right to give or not to give evidence, and to reserve defences. The direct use immunity under ss 30(4) and 30(5) was said to be insufficient for those purposes, as in Hammond. The steps identified as necessary to protect the right to silence (in addition to the direct use immunity) included steps to prevent the prosecution from obtaining an unfair forensic advantage in the trial over and above what the prosecution would be accorded under normal trial procedure. This was said to require, among other things, directions under s 25A of the ACC Act, including directions ensuring that the prosecution made no derivative use of the evidence in the trial. In response to the plaintiff's submission based on Hammond, the defendants accepted that the Commonwealth Parliament cannot require or authorise a court in which the judicial power of the Commonwealth is vested to exercise judicial power in a manner inconsistent with the essential character of a court or with the nature of judicial power62. The defendants also submitted that the examination provisions are constrained by the law of contempt. Thus the defendants avoided the plaintiff's argument, based on the separation of powers in Ch III, that the examination provisions are invalid as a legislative authorisation of executive interference with the curial process of a criminal trial. In so contending, the defendants relied on Mason J's explanation in Pioneer Concrete (Vic) Pty Ltd v Trade Practices Commission63 of a section conferring compulsory examination powers on the Trade Practices Commission64: "It is possible to read the section as conferring power on the Commission to act in accordance with its terms, but subject to the law of contempt, so that action taken under the section is subject to the exercise by the Federal Court of its contempt powers." It is critical to appreciate that the injunctive relief in Hammond was granted in circumstances where criminal proceedings were pending and the prosecution was to have access to evidence and information compulsorily 62 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 27 per Brennan, Deane and Dawson JJ; [1992] HCA 64. 63 (1982) 152 CLR 460; [1982] HCA 65. 64 (1982) 152 CLR 460 at 473. Cf Lockwood v The Commonwealth (1954) 90 CLR 177 at 185 per Fullagar J; [1954] HCA 31. Crennan obtained which could establish guilt of the offences, and which was subject only to a direct use immunity. By way of contrast, while the examination provisions contain no express statutory prohibition on derivative use of material obtained during an examination, s 25A empowers and requires the examiner to make directions safeguarding the fair trial of a person compulsorily examined. That protection is in addition to the protection in ss 30(4) and 30(5), being the prohibition against direct use. The practical operation of ss 25A(3), 25A(9) and 25A(11) is best understood by reference to certain common law rules and principles in relation to a fair trial, to which it is now necessary to turn. Fair trial Relevant authorities have given context to the concept and importance of the right of every accused person to a fair and impartial trial according to law65. Although Deane J pointed out in Jago66 that an accused's right to a fair trial is more accurately expressed in negative terms as a right not to be tried unfairly or as an immunity against conviction otherwise than after a fair trial, for no person can enforce a right to be tried by the state, "it is convenient, and not unduly misleading, to refer to an accused's positive right to a fair trial"67. An accused's right to a fair trial is commonly "manifested in rules of law and of practice designed to regulate the course of the trial"68, but the right extends to the whole course of the criminal process69. The courts have long had inherent powers to ensure that court processes are not abused. Such powers exist to enable courts to ensure that their processes are not used in a manner giving rise 65 R v Macfarlane; Ex parte O'Flanagan and O'Kelly (1923) 32 CLR 518 at 541-542 per Isaacs J; [1923] HCA 39; Barton v The Queen (1980) 147 CLR 75 at 95-96 per Gibbs ACJ and Mason J, 103 per Stephen J, 107 per Murphy J, 109 per Aickin J, 109 per Wilson J; [1980] HCA 48; Jago v District Court (NSW) ("Jago") (1989) 168 CLR 23 at 25-31 per Mason CJ, 47-49 per Brennan J, 56-57 per Deane J, 71- 72 per Toohey J, 75-76 per Gaudron J; [1989] HCA 46; Dietrich v The Queen (1992) 177 CLR 292 at 298-300 per Mason CJ and McHugh J, 324 per Brennan J, 326-328 per Deane J, 353-357 per Toohey J; [1992] HCA 57. (1989) 168 CLR 23 at 56-57. 67 Dietrich v The Queen (1992) 177 CLR 292 at 299 per Mason CJ and McHugh J. 68 Jago (1989) 168 CLR 23 at 29 per Mason CJ, citing Bunning v Cross (1978) 141 CLR 54; [1978] HCA 22 and R v Sang [1980] AC 402; Dietrich v The Queen (1992) 177 CLR 292 at 299-300 per Mason CJ and McHugh J. 69 Jago (1989) 168 CLR 23 at 29 per Mason CJ. Crennan to injustice, thereby safeguarding the administration of justice70. The power to prevent an abuse of process is an incident of the general power to ensure fairness71. A court's equally ancient institutional power to punish for contempt, an attribute of judicial power provided for in Ch III of the Constitution72, also enables it to control and supervise proceedings to prevent injustice, and includes a power to take appropriate action in respect of a contempt, or a threatened contempt, in relation to a fair trial, as exemplified in Hammond. Right to silence In Australia, "the right to silence" is not "a constitutional or legal principle of immutable content"73, which highlights the need to identify the nature and effect of the precise immunity upon which the plaintiff relies74. Nor is the closely related, but not coextensive, common law privilege against self- incrimination a right protected by the Constitution75. It may be that the expression "the right to silence" is often used to express compendiously the rejection by the common law of inquisitorial procedures 70 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 265-266 [10]-[12] per Gleeson CJ, Gummow, Hayne and Crennan JJ; [2006] HCA 27, citing Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210 at 220-221; Dupas v The Queen (2010) 241 CLR 237 at 243 [14]-[15]; [2010] HCA 20. 71 Jago (1989) 168 CLR 23 at 31 per Mason CJ; see also at 46-47 per Brennan J, 56- 57 per Deane J, 71 per Toohey J, 74-75 per Gaudron J; Dietrich v The Queen (1992) 177 CLR 292 at 332 per Deane J. See also Barton v The Queen (1980) 147 CLR 75 at 96 per Gibbs ACJ and Mason J, 103, 104-105 per Stephen J, 107 per Murphy J, 109 per Aickin J, 109, 111, 115-117 per Wilson J. 72 Re Colina; Ex parte Torney (1999) 200 CLR 386 at 395 [16] per Gleeson CJ and Gummow J, 429 [113] per Hayne J; [1999] HCA 57; Dupas v The Queen (2010) 241 CLR 237 at 243 [15]. 73 Azzopardi v The Queen (2001) 205 CLR 50 at 57 [7] per Gleeson CJ. 74 Carr v Western Australia (2007) 232 CLR 138 at 152 [36] per Gummow, Heydon and Crennan JJ; [2007] HCA 47. 75 Sorby (1983) 152 CLR 281 at 298 per Gibbs CJ, 308-309 per Mason, Wilson and Dawson JJ; Huddart, Parker & Co Pty Ltd v Moorehead ("Huddart, Parker") (1909) 8 CLR 330 at 358 per Griffith CJ, 366 per Barton J, 375 per O'Connor J, 386 per Isaacs J, 418 per Higgins J; [1909] HCA 36. Cf Sorby (1983) 152 CLR 281 at 313 per Murphy J; Hammond (1982) 152 CLR 188 at 201 per Murphy J. Crennan made familiar by the Courts of Star Chamber and High Commission76. Be that as it may, "the right to silence" has been described by Lord Mustill in R v Director of Serious Fraud Office; Ex parte Smith77 as referring to "a disparate group of immunities, which differ in nature, origin, incidence and importance"78. Given the diversity of the immunities, and the policies underlying them, Lord Mustill remarked that it is not enough to ask simply of any statute whether Parliament can have intended to abolish the longstanding right to silence. The essential starting point is to identify which particular immunity or right covered by the expression is being invoked in the relevant provisions before considering whether there are reasons why the right in question ought at all costs to be maintained79. Two immunities or rights encompassed by the expression "the right to silence", which operate in different ways in the criminal justice system, were referred to in the plaintiff's submissions. The first was the immunity of a person suspected of a crime from being compelled on pain of punishment to answer questions put by the police or other persons in authority80, which is no wider than the privilege against self-incrimination81. The second, upon which the plaintiff's submissions critically depended, was the specific immunity of an accused person at trial from being compelled to give evidence or to answer questions, which reflects not only the privilege against self-incrimination, but also the broader consideration that a criminal trial 76 EPA (1993) 178 CLR 477 at 526 per Deane, Dawson and Gaudron JJ; Rees v Kratzmann (1965) 114 CLR 63 at 80 per Windeyer J. See also Sorby (1983) 152 CLR 281 at 317 per Brennan J; Azzopardi v The Queen (2001) 205 CLR 50 at 91 78 [1993] AC 1 at 30. 79 [1993] AC 1 at 32. 80 Petty v The Queen (1991) 173 CLR 95 at 99 per Mason CJ, Deane, Toohey and McHugh JJ; [1991] HCA 34. 81 R v Swaffield (1998) 192 CLR 159 at 184-185 [33] per Brennan CJ; [1998] HCA 1; Carr v Western Australia (2007) 232 CLR 138 at 152 [37] per Gummow, Heydon Crennan is "an accusatorial process in which the prosecution bears the onus of proving the guilt of the accused beyond reasonable doubt"82. By reference to those two immunities, the balance between competing public and private interests is struck in the examination provisions by an abrogation, to an extent, of the first immunity, while simultaneously preserving the second immunity, to the extent of ensuring the fair trial of the person examined. The recognition of the privilege against self-incrimination in relation to exposure to criminal liability is said to have been well-established by the second half of the seventeenth century83. The privilege was certainly treated as long- established at the time of procedural reforms in the nineteenth century which partly shaped the accusatorial process of the criminal trial84. Pre-trial examination of an accused by magistrates was still part of criminal procedure in England until the early decades of the nineteenth century85. In 1848, the investigative and judicial functions of the state were separated and the role of examining justices was altered86. Examining magistrates (and later investigating police officers of the professional police force87) were required by statute to caution a suspect about the right to remain silent88. In the late 82 RPS v The Queen (2000) 199 CLR 620 at 630 [22] per Gaudron ACJ, Gummow, Kirby and Hayne JJ; [2000] HCA 3; Azzopardi v The Queen (2001) 205 CLR 50 at 64 [34], 65 [38], 74 [64] per Gaudron, Gummow, Kirby and Hayne JJ. 83 EPA (1993) 178 CLR 477 at 497-498 per Mason CJ and Toohey J. 84 R v Scott (1856) Dears & B 47 at 61 [169 ER 909 at 915], cited by Brennan J in Sorby (1983) 152 CLR 281 at 316; Orme v Crockford (1824) 13 Price 376 [147 ER 1022], cited by Lord Esher MR in Martin v Treacher (1886) 16 QBD 507 at 511. 85 Criminal Law Act 1826 (UK), ss 2 and 3, extended the power of compelling pre- trial examination by justices to include misdemeanours as well as felonies. See also Sorby (1983) 152 CLR 281 at 319 per Brennan J. 86 Indictable Offences Act 1848 (UK). See also Sorby (1983) 152 CLR 281 at 319 per 87 Instituted in London by the Metropolitan Police Act 1829 (UK), followed thereafter by provincial police forces. 88 Indictable Offences Act 1848 (UK), s 18. For an example of a current cognate provision see the Crimes Act 1914 (Cth), s 23F. Crennan nineteenth century and early twentieth century, concern about the admissibility of evidence resulting from police interrogation led to the issue of the Judges' Rules governing a suspect's right to silence89. In 1898 the abolition of the rule that an accused was not a competent witness in his own trial was accompanied by an express removal of the privilege against self-incrimination if the accused chose to give evidence90. There was a related provision precluding the prosecution from commenting upon a competent accused's exercise at trial of the right to remain silent91. Different considerations shaped the development of the privilege against self-incrimination in Chancery courts, in which an examinee (always a compellable witness) who incriminated himself would be exposed to a civil penalty or forfeiture of an estate92. The abovementioned developments, adopted in Australia93, show the interweaving of interrelated rights and immunities into the criminal law, which shaped the accusatorial process of the criminal trial both by way of procedure and in substance94. In EPA, consideration was given to the accusatorial nature of a criminal trial and the interrelationship between an accused's right not to give evidence or answer incriminating questions on the one hand, and on the other, the in Woolmington v Director of Public fundamental principle stated 89 Practice Note (Judges' Rules) [1964] 1 WLR 152; see also R v Voisin [1918] 1 KB 531 at 539 and Carr v Western Australia (2007) 232 CLR 138. 90 Criminal Evidence Act 1898 (UK), s 1(e). 91 Criminal Evidence Act 1898 (UK), s 1(b). 92 Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 559 [31] per Gleeson CJ, Gaudron, Gummow and Hayne JJ, citing Naismith v McGovern (1953) 90 CLR 336 at 341-342 per Williams, Webb, Kitto and Taylor JJ; [1953] HCA 59; Rees v Kratzmann (1965) 114 CLR 63 at 80 per Windeyer J. 93 RPS v The Queen (2000) 199 CLR 620 at 629-630 [20] per Gaudron ACJ, Gummow, Kirby and Hayne JJ, 655-656 [107]-[111] per Callinan J; Azzopardi v The Queen (2001) 205 CLR 50 at 70-71 [53]-[56] per Gaudron, Gummow, Kirby and Hayne JJ, 116-119 [189]-[195] per Callinan J; Carr v Western Australia (2007) 232 CLR 138 at 147 [18] per Gleeson CJ. 94 EPA (1993) 178 CLR 477 at 527 per Deane, Dawson and Gaudron JJ. Crennan Prosecutions95: "that the prosecution must prove the guilt of the prisoner is part of the common law ... and no attempt to whittle it down can be entertained"96. Whilst in dissent on the main point, but not on this issue, Deane, Dawson and Gaudron JJ explained the interrelationship between the rules that an accused is not obliged to "testify or admit guilt"97 or "to give evidence in defence of his or her plea of not guilty"98, and the fundamental principle that the onus rests on the prosecution: "[A]n accused person (who is a competent witness only as a matter of fairly recent history) has the right to refrain from giving evidence and to avoid answering incriminating questions. The latter right is by no means wholly explained by reference to the maxim nemo tenetur seipsum prodere. Rather it is to be explained by the principle, fundamental in our criminal law, that the onus of proving a criminal offence lies upon the prosecution and that in discharging that onus it cannot compel the accused to assist it in any way."99 As has been stated in the context of abrogation of the privilege, the plaintiff's argument that an accused's rights to due process (including the right to refrain from giving evidence at trial) are entrenched by Ch III was too broadly stated. For example, the choice of the standard or burden of proof, at least in relation to specific issues, can be regulated by Parliament100, and the rules of 96 [1935] AC 462 at 481-482 per Viscount Sankey LC. See also R v Swaffield (1998) 192 CLR 159 at 170 [12] per Brennan CJ, quoting a reported address to the jury by Devlin J in R v Adams: "So great is our horror at the idea that a man might be questioned, forced to speak and perhaps to condemn himself out of his own mouth ... that we afford to everyone suspected or accused of a crime, at every stage, and to the very end, the right to say: 'Ask me no questions, I shall answer none. Prove your case.'" 97 EPA (1993) 178 CLR 477 at 501 per Mason CJ and Toohey J. 98 EPA (1993) 178 CLR 477 at 550 per McHugh J. 99 EPA (1993) 178 CLR 477 at 527. 100 See Thomas v Mowbray (2007) 233 CLR 307 at 356 [113] per Gummow and Crennan JJ; [2007] HCA 33; Nicholas v The Queen (1998) 193 CLR 173 at 190 (Footnote continues on next page) Crennan evidence may be regulated, provided, as Hayne J remarked in Nicholas v The Queen, that any law effecting such a change does not "deal directly with ultimate issues of guilt or innocence"101. This Court has also rejected arguments that an alteration by Parliament of a substantive right usurps the judicial power of the Commonwealth102. legislatures commonly require pre-trial disclosure from an accused person, as exemplified by provisions in the Criminal Procedure Act 1986 (NSW)103 requiring the giving of an alibi notice104, the disclosure of expert reports relied on to support a defence of "substantial mental impairment"105 and other disclosures relating to the case management of a criminal trial106. Furthermore, In Hamilton v Oades107, a majority of this Court construed certain provisions of the Companies (New South Wales) Code relating to a liquidator's power to examine company officers while charges were pending as effectively [24] per Brennan CJ, 203 [55] per Toohey J, 225 [123] per McHugh J, 234-236 [152]-[156] per Gummow J; [1998] HCA 9; Milicevic v Campbell (1975) 132 CLR 307 at 316-317 per Gibbs J, 318-319 per Mason J, 321 per Jacobs J; [1975] HCA 101 (1998) 193 CLR 173 at 277 [249]. 102 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1; Australian Building Construction Employees' and Builders Labourers' Federation v The Commonwealth (1986) 161 CLR 88 at 96; [1986] HCA 47. 103 Picked up by Judiciary Act 1903 (Cth), s 68. 104 Criminal Procedure Act 1986 (NSW), s 150. See also Criminal Procedure Act 2009 (Vic), s 190; Criminal Law Consolidation Act 1935 (SA), s 285C; Criminal Code (Q), s 590A; Criminal Procedure Act 2004 (WA), s 96(3)(a); Criminal Code (Tas), s 368A. 105 Criminal Procedure Act 1986 (NSW), s 151. See generally Criminal Procedure Act 2009 (Vic), s 189; Criminal Law Consolidation Act 1935 (SA), s 285BC; Criminal Code (Q), s 590B; Criminal Procedure Act 2004 (WA), s 96(3)(b). 106 Criminal Procedure Act 1986 (NSW), ss 141-147. See also Criminal Procedure Act 2009 (Vic), ss 183 and 184; Criminal Law Consolidation Act 1935 (SA), ss 285BA and 285BB; Criminal Code (Q), s 590C; Criminal Procedure Act 2004 (WA), ss 96(3)(c) and 96(3)(d). 107 (1989) 166 CLR 486. Crennan abrogating the privilege against self-incrimination. Compared with the statutory provision considered in Mortimer v Brown108, Mason CJ noted three critical aspects of the statute. First, the provisions expressly abrogated the privilege against self-incrimination by requiring a witness to answer questions after charges had been laid. Secondly, the legislature provided a use immunity. Thirdly, the legislative scheme explicitly empowered a court to give directions concerning the examination. There was no derivative use immunity under that statutory scheme. In observing that "[i]mmunity from derivative use tends to be ineffective by reason of the problem of proving that other evidence is derivative"109, Mason CJ commented that a direct use immunity achieves a protection equivalent to the privilege against self-incrimination; namely, that an examinee is not convicted "out of his own mouth"110. Importantly, however, it was noted that the court could restrain, as an abuse of process, questions directed to compel an examinee to disclose defences or to establish guilt111, which would, in any given case, necessarily qualify the derivative evidence available to the prosecution. It was also noted that in its inherent jurisdiction the court could make orders, other than orders restoring the privilege, to safeguard an examinee's fair trial112. These important difference between a compulsory observations highlight an examination supervised by a court and one conducted by a member of the executive. The examination provisions in the ACC Act work differently from those considered in Hamilton v Oades. The examination provisions do not contain a mechanism for limiting the questions asked or the documents or things sought in an examination. Rather, the person examined, and the administration of criminal justice, are protected by ss 25A(3), 25A(9) and 25A(11), and ss 30(4) and 30(5). Examination provisions and derivative use Section 25A of the ACC Act must be construed harmoniously within the entire scheme of the examination provisions. That scheme contains a statutory 108 (1970) 122 CLR 493. 109 (1989) 166 CLR 486 at 496. 110 (1989) 166 CLR 486 at 496. 111 (1989) 166 CLR 486 at 498. 112 (1989) 166 CLR 486 at 498-499 per Mason CJ, 510 per Dawson J, 517 per Crennan use immunity, and no express statutory prohibition on derivative use. The derivative use immunity as it existed under the NCA Act was repealed. In R v Director of Serious Fraud Office; Ex parte Smith113, when discussing provisions structured to override the privilege but which left in place a statutory use immunity, Lord Mustill remarked that a statute which compels self-incrimination but which provides a use immunity may in some cases inferentially permit derivative use of the self-incriminating evidence for other purposes. This is an approach to the construction of such provisions which is exemplified by the decision in Hamilton v Oades. However, because of the express terms of the above-mentioned protective provisions, a similar inference is precluded under the ACC Act. It is clear that, depending on their purposes, administrative or executive inquiries into offences under some statutory schemes are capable of prejudicing the fair trial of an accused person114. Compulsory examination by a member of the executive after a charge has been laid might prejudice the fair trial of the person examined where the prosecution is, as a result, afforded an unfair forensic advantage, being an advantage which would not otherwise be obtainable under ordinary rules of criminal procedure. A direct use immunity is a protection in that respect. However, a use immunity alone does not place an accused person in as good a position as he or she would be if able to rely on the privilege against self-incrimination, because material establishing that a person is guilty of an offence "may place [a person] in real and appreciable danger of conviction, notwithstanding that the answers themselves may not be given in evidence"115. An unfair forensic advantage may therefore take the form of the prosecution making use of derivative evidence to obtain a conviction. The clearest example is when the prosecution tenders derivative evidence which could not have been obtained, or the significance of which could not have been appreciated, but for the compulsorily obtained evidence. Given the onus on the prosecution to prove an offence, and the non- compellability of an accused, in the absence of a factor such as the independent sourcing of evidence it is not possible to reconcile a fair trial with reliance on 113 [1993] AC 1 at 40, followed in HKSAR v Lee Ming Tee (2001) 4 HKCFAR 133. 114 Clough v Leahy (1904) 2 CLR 139 at 156, 161 per Griffith CJ; [1904] HCA 38; McGuinness v Attorney-General (Vict) (1940) 63 CLR 73; [1940] HCA 6; Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at 53 per Gibbs CJ, 71-73 per Stephen J; [1982] HCA 31. 115 Sorby (1983) 152 CLR 281 at 294 per Gibbs CJ; see also Rank Film Ltd v Video Information Centre [1982] AC 380 at 443 per Lord Wilberforce. Crennan evidence against a person at trial which derives from compulsorily obtained material establishing that person's guilt, or disclosing defences. Turning to the protective provisions, the content of the "fair trial" referred to in ss 25A(9) and 25A(11) must be informed by the fundamental principle that the onus of proof of the offence rests on the prosecution, whom the accused is not required to assist, and by the rule that an accused is not compellable at his or her trial. Section 25A(9) (and s 25A(11)) can protect a person compulsorily examined against both direct use (also the subject matter of the statutory use immunity under ss 30(4) and 30(5)), and indirect use, at trial of material obtained in a compulsory examination, by a direction restricting publication, or the manner of publication, of such material. A direction under s 25A(9) must be made if the failure to do so "might" prejudice a person's fair trial. Similarly, s 25A(3) enables an examiner to protect the person examined against direct or indirect use of the material obtained, by controlling who may be present at the examination. These safeguards are capable of preventing a compulsory examination from occasioning an unfair burden on the examinee when defending criminal charges. At trial, the onus remains on the prosecution to prove the guilt beyond reasonable doubt of the accused, without the assistance of the accused. The accused may remain silent at the trial, or not, and take whatever course is desired at the close of the prosecution case, without the risk of being confronted with compulsorily obtained evidence, the use of which is subject to statutory prohibition and safeguards. To the extent that the plaintiff will nevertheless be affected by compulsory examination after he has been charged with offences, that consequence is necessarily implied by the terms of the examination provisions, which have already been described. It can be acknowledged that there may be some circumstances in which the fairness of a trial can be reconciled with the admissibility of derivative evidence116. Not all derivative evidence is of the same quality117 and derivative evidence may emerge from multiple independent sources. At the outset of an investigation, it may not be clear what derivative evidence will be critical to proving offences, or from which independent sources such evidence might be obtained. However, to the extent that the prosecution may wish to rely on a piece of derivative evidence which was independently obtained, but which was the 116 R v Sang [1980] AC 402 at 453-454 per Lord Scarman, citing R v Warickshall (1783) 1 Leach 263 at 300 [168 ER 234 at 235]. See also HKSAR v Lee Ming Tee (2001) 4 HKCFAR 133 at 167-168 per Ribeiro PJ. 117 R v Seller [2013] NSWCCA 42 at [102]-[103] per Bathurst CJ. Crennan subject of a protective direction, the CEO has a power to vary a direction given under s 25A(9), provided that the fair trial of the accused is not thereby prejudiced. In any event, the trial judge has a discretion in relation to the admissibility of such evidence, and the court has a power to control any use of derivative evidence which amounts to an abuse of process118. If there is some failure to employ the protective provisions such that the prosecution would obtain an unfair forensic advantage, a trial court's inherent power to punish for contempt119, including a power to restrain a threatened contempt, would be available, as in Hammond. A failure by an examiner to give any, or any adequate, direction under s 25A(9), or an error by the CEO in exercising the power to revoke or vary a direction under s 25A(10), would also be remediable by recourse to the constitutional writs issued pursuant to s 75(v) of the Constitution or s 39B(1) of the Judiciary Act 1903 (Cth). These considerations show that the examination provisions do not authorise executive interference with the curial process of criminal trials. Whether a direction under s 25A will be sufficient to preclude the prosecution from obtaining an unfair forensic advantage in a trial cannot be stated in any categorical or exhaustive fashion. In considering the sufficiency of any such direction, it would be necessary to consider the nature of the self- incriminating evidence as well as the role of persons who had access to it, together with the use which such persons might make of it. Matters of sufficiency are not to be determined on the stated case. In any event, the plaintiff made no complaint about the sufficiency of the directions which were made in respect of his examination. Other jurisdictions The problem of reconciling a fair trial with the use, including derivative use, of material obtained during a compulsory examination has been considered by courts in the United Kingdom120, Canada121, Hong Kong122 and Europe123. 118 See R v Seller [2013] NSWCCA 42 at [110] per Bathurst CJ. 119 Re Colina; Ex parte Torney (1999) 200 CLR 386 at 395 [16] per Gleeson CJ and Gummow J, 429 [113] per Hayne J. 120 Brown v Stott [2003] 1 AC 681. 121 Thomson Newspapers Ltd v Canada [1990] 1 SCR 425; R v S (RJ) [1995] 1 SCR 451; British Columbia Securities Commission v Branch [1995] 2 SCR 3. 122 HKSAR v Lee Ming Tee (2001) 4 HKCFAR 133. Crennan Differing results in those cases reflect the different balances struck under different statutory schemes between some identifiable public interest and the rights of the individual, and also reflect the different constitutional settings in which the statutes fell to be considered. Chapter III The plaintiff's main submission in relation to Ch III, that the examination provisions are invalid as a legislative authorisation of executive interference with the curial process of criminal trials for Commonwealth indictable offences, has been addressed, and answered, in the reasons above. There were two other submissions concerning Ch III which have not been dealt with so far. The plaintiff's submission that the privilege against self-incrimination is a necessary part of trial by jury under s 80 of the Constitution must be rejected. In Sorby124, members of the Court agreed with a unanimous conclusion reached earlier in Huddart, Parker125, that the privilege against self-incrimination is not a necessary part of trial by jury. A view to the contrary expressed by Murphy J126, which his Honour advanced earlier in Hammond127, has not commanded any subsequent assent and must be rejected. The plaintiff's further submission, that s 25A(9) empowers an examiner to exercise judicial power, must also be rejected. Executive inquiries into facts, the subject of pending proceedings, do not involve an exercise of judicial power – those conducting such inquiries are unable to make any final determination as to the facts or to apply the law to them. That was the position of the examiner and more broadly of other officers of the ACC. A statement of principle to that effect, in Pioneer Concrete (Vic) Pty Ltd v Trade Practices Commission128, involved rejecting earlier suggestions to the contrary in Huddart, Parker129 and 123 Saunders v United Kingdom (1997) 23 EHRR 313. 124 (1983) 152 CLR 281 at 298 per Gibbs CJ, 308-309 per Mason, Wilson and 125 Huddart, Parker (1909) 8 CLR 330 at 358 per Griffith CJ, 366 per Barton J, 375 per O'Connor J, 386 per Isaacs J, 418 per Higgins J. 126 Sorby (1983) 152 CLR 281 at 313. 127 (1982) 152 CLR 188 at 201. 128 (1982) 152 CLR 460 at 467 per Gibbs CJ, 474 per Mason J, 475 per Murphy J. 129 (1909) 8 CLR 330 at 379 per O'Connor J. Crennan Melbourne Steamship Co Ltd v Moorehead130. No direction made by an examiner under s 25A(9) is determinative in respect of the fair trial of a person charged. The right to a fair trial is protected by a trial judge's discretion in relation to the admissibility of evidence and by a court's institutional powers to punish for contempt, including enjoining a threatened contempt, and to deal with an abuse of process131. Conclusions For the reasons given, question 1 must be answered "Yes" and question 2 should be answered "No". 130 (1912) 15 CLR 333 at 346 per Barton J; [1912] HCA 69. 131 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at 265-266 [10]-[12] per Gleeson CJ, Gummow, Hayne and Crennan JJ; Dupas v The Queen (2010) 241 CLR 237 at 243 [14]-[15]. The issue The plaintiff was arrested and subsequently charged with three indictable Commonwealth offences: conspiracy to import a commercial quantity of a border controlled drug132, conspiracy to traffic in a commercial quantity of a controlled drug133, and conspiracy to deal with money that was the proceeds of crime134. The first two charges carried a maximum sentence of life imprisonment. While in custody, the plaintiff was served with a summons, issued under s 28(1) of the Australian Crime Commission Act 2002 (Cth) ("the ACC Act"), requiring him to appear to be examined by an examiner appointed under s 46B(1) of the ACC Act for the purposes of a "special ACC operation/investigation"135. The plaintiff was asked, and answered, questions which included questions about the subject matter of the offences with which he had been charged. Following an adjournment of the examination, the plaintiff refused to answer further questions about that subject matter. He was told that he would be charged with the offence136 of failing to answer a question that he was required to answer by the examiner. Could the examiner lawfully require the plaintiff to answer questions about the subject matter of the offences with which he had been charged but for which he had not then been tried? Could the examiner, for example, lawfully require the plaintiff to answer whether he had committed the offences charged? 132 Contrary to Criminal Code (Cth), ss 11.5(1) and 307.1(1). 133 Contrary to Criminal Code, ss 11.5(1) and 302.2(1). 134 Contrary to Criminal Code, ss 11.5(1) and 400.3(1). 135 Defined in s 4(1) of the ACC Act as: an intelligence operation that the ACC is undertaking and that the Board has determined to be a special operation; or an investigation into matters relating to federally relevant criminal activity that the ACC is conducting and that the Board has determined to be a special investigation". 136 s 30(2)(b) and (6). These reasons will show that both the general and the more particular question should be answered "No". The relevant provisions of the ACC Act should not be construed as authorising the compulsory examination of a person charged with, but not yet tried for, an indictable Commonwealth offence about the subject matter of the pending charge. Permitting the Executive to ask, and requiring an accused person to answer, questions about the subject matter of a pending charge would alter the process of criminal justice to a marked degree, whether or not the answers given by the accused are admissible at trial or kept secret from those investigating or prosecuting the pending charge. Requiring the accused to answer questions about the subject matter of a pending charge prejudices the accused in his or her defence of the pending charge (whatever answer is given). Even if the answer cannot be used in any way at the trial, any admission made in the examination will hinder, even prevent, the accused from challenging at trial that aspect of the prosecution case. And what would otherwise be a wholly accusatorial process, in which the accused may choose to offer no account of events, but simply test the sufficiency of the prosecution evidence, is radically altered. An alteration of that kind is not made by a statute cast in general terms. If an alteration of that kind is to be made, it must be made by express words or necessary intendment. The ACC Act The Australian Crime Commission ("the ACC"), established by s 7(1) of the ACC Act, has functions which can generally be described as directed to the gathering and dissemination of criminal information and intelligence. These functions are considered in further detail later in these reasons. Division 2 (ss 24A-36) of Pt II of the ACC Act provided for the compulsory examination of persons for the purposes of a special ACC operation/investigation. The ACC Act required137 that an examination for these purposes be held in private. Knowingly giving false or misleading evidence at an examination was an offence138. The person being examined was obliged139 to answer questions asked and to produce documents sought. Refusal or failure to answer a question, that the person being examined was required by the examiner to answer, was an offence140. Refusal or failure to answer could also be dealt with (by the Federal Court or a Supreme 137 s 25A(3). 139 s 30(2)(b) and (c). 140 s 30(2)(b) and (6). Court on an application by the examiner141) as a contempt of the ACC142. It is not necessary to explore how notions of "contempt" can properly be engaged in the case of an agency of the Executive like the ACC. Nor is it necessary to explore how this kind of "contempt" could intersect with, let alone coexist with, the exercise of the contempt powers of a court to prevent interference with the judicial processes of criminal justice. If the person being examined claimed that the answer to a question asked, or the production of a document or thing sought, might tend to incriminate that person, or make him or her liable to a penalty, the ACC Act provided143 that, subject to some exceptions which are not presently relevant144, the answer given, or the document or thing produced, was not admissible in evidence against the person in a criminal proceeding or a proceeding for the imposition of a penalty. Section 25A(9) of the ACC Act also provided that the examiner could give a direction preventing or limiting the publication of: evidence given before the examiner; the contents of documents produced, or the description of things given, to the examiner; information that could enable a person who had given evidence to be identified; and the fact that a person had given or was about to give evidence at an examination. The examiner was obliged145 to give such a direction "if the failure to do so might prejudice the safety or reputation of a person or prejudice the fair trial of a person" who had been, or might be, charged with an offence. The examiner gave a direction of this kind in relation to the plaintiff's examination. The ACC Act also provided146 that a summons requiring a person to attend an examination must include a notation to the effect that disclosure of information about the summons was prohibited if (among other reasons) a failure to include such a notation would reasonably have been expected to have one of the consequences just described. A notation of that kind was included in the summons issued to the plaintiff. 141 s 34B(1). 142 s 34A. 143 s 30(4)(c) and (5). 144 s 30(5)(c) and (d). 145 s 25A(9). 146 s 29A(1) and (2)(a). The provisions of the ACC Act which provided for examinations in connection with a special ACC operation/investigation were cast in general terms. Section 28(1) provided that: "An examiner may summon a person to appear before an examiner at an examination to give evidence and to produce such documents or other things (if any) as are referred to in the summons." Section 30(2) provided that: "A person appearing as a witness at an examination before an examiner shall not: (a) when required pursuant to section 28 either to take an oath or make an affirmation—refuse or fail to comply with the requirement; refuse or fail to answer a question that he or she is required to answer by the examiner; or refuse or fail to produce a document or thing that he or she was required to produce by a summons under this Act served on him or her as prescribed." Because these provisions were expressed generally, they would permit, if read literally, the examination of a person who had been charged with an indictable Commonwealth offence about the subject matter of the charged offence. But neither the provisions authorising examination, nor any other provisions of the ACC Act, stated expressly that a person charged with an offence may be examined about the subject matter of that charge. Questions reserved The plaintiff commenced proceedings against the Commonwealth, in the original jurisdiction of this Court, alleging that the ACC Act does not validly permit the examiner to ask the plaintiff about the matters which are the subject of the charges laid against him. Two questions have been reserved for the consideration of the Full Court. The Attorneys-General for the States of New South Wales, Queensland, South Australia, Victoria and Western Australia intervened in the hearing of the questions reserved in support of the ACC and the Commonwealth. the ACC and The first question asks: "Does Division 2 of Part II of the ACC Act empower an examiner appointed under section 46B(1) of the ACC Act to conduct an examination of a person charged with a Commonwealth indictable offence where that examination concerns the subject matter of the offence so charged?" The answer depends upon the construction of the provisions of the ACC Act which provide for compulsory examinations. If those questions of construction were to be resolved against the plaintiff, there would be a further question about the proper construction of the instruments establishing the relevant "special ACC operation/investigation". The second question asks: "If the answer to Question 1 is 'Yes', is Division 2 of Part II of the ACC Act invalid to that extent as contrary to Ch III of the Constitution?" This second question must be considered only if the ACC Act would otherwise permit compulsory examination of a person charged with an indictable Commonwealth offence about the subject matter of the charge. The ACC and the Commonwealth submitted that the second question reserved is not reached in this matter because the ACC Act incorporated "protections that ha[d] the effect that any questioning in relation to the subject matter of pending criminal charges [would] not create a 'real risk', as a matter of practical reality, to the administration of justice". More particularly, the ACC and the Commonwealth submitted that, because the examiner gave directions preventing those responsible for investigating or prosecuting the charges pending against the plaintiff from knowing what answers the plaintiff gave at his examination, there could be no contempt of court. It is convenient to deal at once with these submissions, which focused upon the use which might be made of answers given at an examination in the prosecution of the person examined. Direct and indirect use of answers The ACC and the Commonwealth placed at the forefront of their submissions those provisions of the ACC Act147 which prevent the direct or, depending on the terms of a direction given under s 25A(9), indirect use of answers given at an examination in the prosecution of the person examined (otherwise than for an offence under the ACC Act). Particular emphasis was given to the obligation imposed by s 25A(9) to direct that there be no, or limited, publication of what was said or produced at an examination "if the failure to [give such a direction] might prejudice ... the fair trial of a person who has been, or may be, charged with an offence". 147 Especially ss 25A(9) and 30(4) and (5). The ACC and the Commonwealth submitted that, by preventing direct or indirect use of the answers given at an examination, the ACC Act "provide[d] mechanisms to ensure that [the examination did] not result in any prejudice to the fairness of the pending trial". Accordingly, so the argument continued, the ACC Act should be read as "specifically contemplat[ing] that examination powers may be used after charges have been laid". And this conclusion was said to be supported by consideration of the legislative history of the ACC Act. Three points must be made. First, there is no express reference, anywhere in the ACC Act, to examination of a person who has been charged with, but not tried for, an offence about the subject matter of the pending charge. Contrary to the assumption that necessarily underpinned the submissions made by the ACC and the Commonwealth, the reference in s 25A(9) (and the similar reference in s 29A(2)) to prejudice to "the fair trial of a person who has been, or may be, charged with an offence" does not deal specifically with the case of the person being examined having also been charged with an offence. The words used are sufficiently general to include that case, but they do not deal directly or expressly with it. The words used in s 25A(9) (and in s 29A(2)) have ample work to do in respect of the examination of persons who may be suspected of wrong-doing but who, before examination, have not been charged with any offence. It is the generality of the words used in the ACC Act, including in ss 25A(9) and 29A(2), and the absence of specific reference to examination of a person who has been charged about the subject matter of the pending charge, which presents the issue for determination in this case. Second, the legislative history of the ACC Act provides little or no assistance in dealing with the question of construction that arises in this case. The introduction148 into the National Crime Authority Act 1984 (Cth) of a use immunity in respect of answers given at a compulsory examination, coupled with the repeal149 of a provision of that Act permitting a person examined under the Act to claim the privilege when charged with an offence, sheds little, if any, light on the issue that must be decided in this case. The ACC Act must be construed according to its terms, not by reference to earlier legislation dealing with another body, no matter what similarities the two bodies may be thought to have in their constitution, powers or functions. 148 National Crime Authority Legislation Amendment Act 2001 (Cth), Sched 1, item 12. 149 National Crime Authority Legislation Amendment Act 2001 (Cth), Sched 1, item 12. Third, and more fundamentally, these reasons will show that permitting the Executive to ask, and compelling answers to, questions about the subject matter of a pending charge (regardless of what use may be made of those answers at the trial of an accused person) fundamentally alters the process of criminal justice. It is that observation which is critical to the question of statutory construction which must be answered in this case. The applicable rule of statutory construction The question of statutory construction which arises in this case requires the consideration and application of a well-established rule. That rule, often since applied150, was stated by O'Connor J in Potter v Minahan151 by quoting Maxwell's On the Interpretation of Statutes152: "It is in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness153; and to give any such effect to general words, simply because they have that meaning in their widest, or usual, or natural sense, would be to give them a meaning in which they were not really used." (emphasis added) This rule of construction has found most frequent application in this Court with respect to legislation which may affect rights. In that context, it has come to be referred to as a "principle of legality"154. But the rule is not confined to legislation which may affect rights. It is engaged in the present case because of the effects which the asserted construction of the ACC Act provisions authorising 150 See, for example, Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 523, 532; [1987] HCA 12; Bropho v Western Australia (1990) 171 CLR 1 at 17-18; [1990] HCA 24; Coco v The Queen (1994) 179 CLR 427 at 436-438, 446; [1994] HCA 15; Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 540, 564-565, 567; [1997] HCA 3; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11], 562-563 [43], 576 [88]; [2002] HCA 49. 151 (1908) 7 CLR 277 at 304; [1908] HCA 63. 152 4th ed (1905) at 122. 153 United States v Fisher 6 US 358 at 390 (1805). 154 See, for example, Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at 329 [21] per Gleeson CJ; [2004] HCA 40; Momcilovic v The Queen (2011) 245 CLR 1 at 46-47 [43] per French CJ; [2011] HCA 34. compulsory examination would have not only on the rights, privileges and immunities of a person charged with an indictable Commonwealth offence, but also on a defining characteristic of the criminal justice system. In particular, it would alter to a marked degree the accusatorial nature of the criminal justice system. To hold that the general words of the relevant provisions of the ACC Act authorise compulsory examination of a person charged with an indictable Commonwealth offence about the subject matter of the offence charged would thus depart in a marked degree from the "general system of law". The relevance of considerations of fairness Applying this rule of construction does not depend upon classifying the result of the alteration to the general system of law as "unfair". To ask whether the compulsory examination of a person charged with an indictable Commonwealth offence about the subject matter of the charge is unfair, at best, would be unhelpful and, at worst, would be distracting. The result being considered could be described as "unfair" only by measuring it against some stated or unstated standard of what is fair. No relevant standard was identified. Likewise, applying this rule of construction does not depend upon classifying the trial of the accused, after a secret and compulsory examination about the subject matter of the pending charge, as an "unfair" trial. At least as a general rule, the methods of criminal trial that are prescribed by legislation must be taken, for the purposes of legal debate, to provide a fair trial, and the relevant question to ask is whether the accused has had, or will have, a trial according to law. Construction, power and fairness are different issues Questions of fairness must be put to one side because they are not relevant. They are not relevant because, in considering the issues in this case, it is essential to distinguish between three different questions that may be asked about the relevant provisions of the ACC Act. First, there is the question of what the legislation provides: has the legislature provided for the secret and compulsory examination of an accused person about the subject matter of the pending charge? That is a question of construction and it is the determinative question in this case. Second, there may then be a question of legislative power: can the legislature provide for the secret and compulsory examination of an accused person about the subject matter of the pending charge? That question would call for consideration not only of Ch III of the Constitution, but also, and more particularly, of s 80 of the Constitution and what is meant by "trial on indictment" and the requirement that the trial on indictment of any offence against any law of the Commonwealth shall be "by jury". But because the ACC Act, properly construed, does not permit examination of an accused person about the subject matter of a pending charge, the question of power is not reached in this case. Third, there may very well have been an antecedent question of policy: should the legislature provide for an examination of the kind described? That would have been a question for the legislature. And it is a question which may well have been affected by notions of what is "fair" or "unfair". But in considering the first, and in this case determinative, question identified ("has the legislature provided for an examination of the kind described?"), debate about the fairness of the outcome would serve only to divert discussion into generally unproductive arguments of the kind which have attended discussion of the privilege against self-incrimination. More particularly, the debate would necessarily proceed from stated or unstated assumptions about how a balance should be struck in the criminal justice system between individual rights, privileges and immunities, and societal demands for the detection and punishment of crime, especially serious crime. It is neither right nor profitable to approach the questions of construction which must be decided in this case by describing one or other of the possible constructions as leading to "unfair" or "undesirable" results. Instead, as has already been indicated, the debate about proper construction must direct attention to how the general words of the ACC Act are to be applied to a case with which those words do not deal explicitly: the secret and compulsory examination of a person charged with a crime about the subject matter of the charge. The undisputed premise for considering that question is that the general words of the ACC Act are not to be read as authorising what otherwise would be a contempt of court. Answering the allegation of contempt By arguments that a pleader would describe as "confession and avoidance", the Commonwealth and the ACC sought to meet the allegation that the secret and compulsory examination of a person charged with an indictable Commonwealth offence about the subject matter of the charge would be a contempt. The confession was that the ACC Act does not authorise a contempt. The avoidance was the argument that conducting the examination in secret, and giving directions about the use which may be made of the answers which the accused person was compelled to give, avoided what would otherwise have been a contempt. But the use of those answers to assist the prosecution of the pending charges is only one way in which the course of criminal justice may be disturbed. In this case, it is necessary to consider whether requiring the accused person to answer questions about the subject matter of a pending charge interferes with the process of criminal justice. How would requiring a person charged with, but not yet tried for, an indictable Commonwealth offence to give secret answers to an agency of the Executive to questions about the subject matter of the pending charge so alter a basic characteristic of the process of criminal justice as to constitute an interference with its administration? It is necessary to begin by identifying the process of criminal justice. The process of criminal justice For some purposes, it is sufficient to consider only the nature of a criminal trial. Often enough, it is sufficient to observe that a criminal trial, including the trial of an indictable Commonwealth offence, is both accusatorial155 and adversarial, and to observe that, subject to limited exceptions, a criminal trial is conducted in open court. The trial process is adversarial in the sense described by Barwick CJ in Ratten v The Queen156: "It is a trial, not an inquisition: a trial in which the protagonists are the Crown on the one hand and the accused on the other. Each is free to decide the ground on which it or he will contest the issue, the evidence which it or he will call, and what questions whether in chief or in cross-examination shall be asked; always, of course, subject to the rules of evidence, fairness and admissibility." The criminal trial process is accusatorial in the sense that it is for the prosecution to decide what charge is preferred against the accused157. The trial process is accusatorial in the further sense that the prosecution bears the onus of proof of all elements of the charge that is laid. But describing these aspects of a criminal trial as "accusatorial" must not distract attention from the much wider and no less fundamental observation that the whole process of criminal justice, commencing with the investigation of crime and culminating in the trial of an indictable Commonwealth offence, is accusatorial. 155 See, for example, RPS v The Queen (2000) 199 CLR 620 at 630 [22]; [2000] HCA 3; Azzopardi v The Queen (2001) 205 CLR 50 at 64-65 [34]; [2001] HCA 25. 156 (1974) 131 CLR 510 at 517; [1974] HCA 35. 157 See, for example, Maxwell v The Queen (1996) 184 CLR 501 at 512-514, 534; [1996] HCA 46; Director of Public Prosecutions (SA) v B (1998) 194 CLR 566 at 579-580 [21]; [1998] HCA 45; Cheung v The Queen (2001) 209 CLR 1 at 22 [47]; [2001] HCA 67. It is also necessary, in this respect, to exercise some care in identifying what lessons can be drawn from the history of the development of criminal law and procedure. Questions about criminal trial process may be illuminated by reference to historical considerations. But there are some features of criminal trial process which, although now considered to be fundamental, are of relatively recent origin. So, for example, what now are axiomatic principles about the burden and standard of proof in criminal trials were not fully established until, in 1935, Woolmington v The Director of Public Prosecutions158 decided that "[t]hroughout the web of the English Criminal Law one golden thread is always to be seen, that it is the duty of the prosecution to prove the prisoner's guilt". Any reference to the history of the privilege against self-incrimination, or its place in English criminal trial process, must also recognise that it was not until the last years of the nineteenth century that an accused person became a competent witness at his or her trial159. As will be shown, the whole of the process for the investigation, prosecution and trial of an indictable Commonwealth offence is accusatorial. It is accusatorial in the sense that an accused person is not called on to make any answer to an allegation of wrong-doing, or to any charge that is laid, until the prosecuting authorities have made available to the accused particulars of the evidence on which it is proposed to rely in proof of the accusation that is made. And even after that information has been provided, the accused person need say or do nothing more than enter a plea of guilty or not guilty to the charge. If the accused person chooses to plead not guilty at trial, he or she is entitled to put the prosecution to proof of the charge and, as part of that process, to test the strength of the evidence which the prosecution adduces at trial. The only relevant limit on the accused person's testing of the strength of the prosecution's case is provided by the accused person's instructions to his or her lawyer. The lawyer cannot test the prosecution case in a manner inconsistent with the accused person's instructions. 158 [1935] AC 462 at 481. 159 Azzopardi (2001) 205 CLR 50 at 65-68 [39]-[44]. See also Criminal Law and Evidence Amendment Act 1891 (NSW), s 6; Crimes Act 1891 (Vic), s 34; Accused Persons Evidence Act 1882 (SA), s 1. The privilege against self-incrimination and the "right to silence" These features of the accusatorial system of criminal justice can be described as an accused having a "right to silence"160. And discussion of the "right to silence" must often proceed in conjunction with a discussion of the privilege against self-incrimination. But, as this Court's decision in Environment Protection Authority v Caltex Refining Co Pty Ltd161 shows, the privilege against self-incrimination is distinct from what was there described as "[t]he fundamental principle that the onus of proof beyond reasonable doubt rests on the Crown" and its "companion rule that an accused person cannot be required to testify to the commission of the offence charged". In this case, it is necessary to unpack the content of both the privilege against self-incrimination and the so-called "right to silence" to identify whether compulsory examination of a person charged with an offence about the subject matter of the offence charged would be an impermissible interference with the due administration of criminal justice. As four members of this Court said in Reid v Howard162, "[t]he privilege [against self-incrimination], which has been described as a 'fundamental ... bulwark of liberty'163, is not simply a rule of evidence, but a basic and substantive common law right". The evolution of and rationale for the privilege against self-incrimination have been described in various ways164. No single explanation has achieved universal acceptance, whether in judicial decisions or academic writings165. But neither the existence nor the content of those controversies can 160 Petty v The Queen (1991) 173 CLR 95 at 99; [1991] HCA 34; RPS (2000) 199 CLR 620 at 630 [22]. See also R v Director of Serious Fraud Office; Ex parte Smith [1993] AC 1 at 30-31. 161 (1993) 178 CLR 477 at 503 per Mason CJ and Toohey J; [1993] HCA 74. 162 (1995) 184 CLR 1 at 11 per Toohey, Gaudron, McHugh and Gummow JJ; [1995] HCA 40. 163 Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 340; [1983] HCA 9. 164 See, for example, Roberts and Zuckerman, Criminal Evidence, 2nd ed (2010) at 542-563; Duff, "Adversarial Ideology and Police Questioning after Charge", (2013) Juridical Review 1 at 3. 165 Some of those disputes are referred to in this Court's reasons in Australian Crime Commission v Stoddart (2011) 244 CLR 554; [2011] HCA 47. be understood as denying that the privilege is now regarded as being "a basic and substantive common law right", and not just a rule of evidence. That is, it is not a privilege which is concerned only with the use to which answers given may be put at, or in connection with, a trial. It is a privilege which permits the refusal to make an answer regardless of whether the answer is admissible as testimonial evidence166. The accusatorial process of criminal justice and the privilege against self-incrimination both reflect and assume the proposition that an accused person need never make any answer to any allegation of wrong-doing. The notion of an accused person's "right to silence" encompasses more than the rights that the accused has at trial. It includes the rights (more accurately described as privileges) of a person suspected of, but not charged with, an offence, and the rights and privileges which that person has between the laying of charges and the commencement of the trial. Accusatorial process of investigation Part IC (ss 23-23W) of the Crimes Act 1914 (Cth) ("the Crimes Act") regulates the investigation of Commonwealth offences. Section 23A(2) provides that Pt IC "does not exclude or limit the operation of a law of a State or Territory so far as it can operate concurrently" with the Part. Section 23A(5) provides that: "The provisions of this Part, so far as they protect the individual, are in addition to, and not in derogation of, any rights and freedoms of the individual under a law of the Commonwealth or of a State or Territory." Subject to s 23F(3), if a person is under arrest for a Commonwealth offence, "an investigating official" (which includes167 a member of the Australian Federal Police and a member of the police force of a State or Territory) "must, before starting to question the person, caution the person that he or she does not have to say or do anything, but that anything the person does say or do may be used in evidence"168. Section 23F(3) provides that the obligation imposed by s 23F(1) to administer a caution does "not apply so far as another law of the Commonwealth requires the person to answer questions put by, or do things required by, the investigating official". 166 Sorby v The Commonwealth (1983) 152 CLR 281 at 290-292 per Gibbs CJ; [1983] HCA 10. 167 s 23B(1). 168 s 23F(1). Section 23F, with its requirement that, in general, persons under arrest for Commonwealth offences are to be cautioned that they need not say or do anything, is, of course, an important manifestation of an accused's right to silence. The importance of that general rule is reinforced by s 23S(a) of the Crimes Act, which provides that: "Nothing in this Part affects: the right of a person to refuse to answer questions or to participate in an investigation except where required to do so by or under an Act". These provisions of Pt IC of the Crimes Act both create and reflect one important element of the accusatorial nature of the process of criminal justice in respect of indictable Commonwealth offences: a person accused or suspected of having committed a crime is entitled to stay silent in response to the questions of investigating officials. The laying of a charge The laying of a charge marks the first step in engaging the exclusively judicial task169 of adjudicating and punishing criminal guilt. A person who lays a criminal charge maliciously, and without reasonable and probable cause, commits the tort of malicious prosecution170 if the prosecution has terminated in favour of the plaintiff. Ordinarily, then, a charge will be laid only when the informant has formed the view, on a sufficient basis, that there is a proper case for prosecution. And, having regard to the provisions of Pt IC of the Crimes Act to which reference has been made, the investigating official must decide whether there is reasonable and probable cause to charge a suspect, and thus engage the process of criminal justice, without the suspect being obliged to say anything in answer to the accusation made. Conversely, once it has been decided that there is reasonable and probable cause to commence the judicial process by laying a charge, the acquisition, before trial, of further information in proof of the accused person's guilt can serve no purpose unless it is to make that person's conviction more probable. 169 See, for example, Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27; [1992] HCA 64. 170 A v New South Wales (2007) 230 CLR 500; [2007] HCA 10. Accusatorial pretrial procedures It is next important to notice several statutory provisions governing the procedures, including pretrial procedures, for dealing with charges of indictable Commonwealth offences. First, s 68(1) of the Judiciary Act 1903 (Cth) provides that: "The laws of a State or Territory respecting the arrest and custody of offenders or persons charged with offences, and the procedure for: their examination and commitment for trial on indictment; and their trial and conviction on indictment ... and for holding accused persons to bail, shall, subject to this section, apply and be applied so far as they are applicable to persons who are charged with offences against the laws of the Commonwealth in respect of whom jurisdiction is conferred on the several courts of that State or Territory by this section." indictable offences against Division 2 (ss 69-71A) of Pt X of the Judiciary Act makes further provision with respect the Commonwealth. Section 71A provides power for the Attorney-General of the Commonwealth to file an indictment for any indictable Commonwealth offence in specified courts without preliminary examination or committal for trial. But subject to this ex officio power for direct presentment, s 68(1) of the Judiciary Act picks up and applies, as surrogate federal law, those provisions of State or Territory law which provide for the conduct of committal procedures before an indictment is filed against an accused. laws of the Although a magistrate conducting committal proceedings is not exercising judicial power171, committal proceedings have an important place in the system for the administration of criminal justice. Apart from the (rare) case where an ex officio indictment is filed directly, a person accused of an indictable Commonwealth offence will not be called on to plead to the indictment until the prosecution has assembled the evidence which it is proposed to lead at trial, and has given notice to the accused of the substance of that evidence. 171 Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 355-358, 366, 378; [1909] HCA 36; R v Murphy (1985) 158 CLR 596 at 610; [1985] HCA 50. So fundamental is this rule that, if an indictment is filed directly, without any preliminary examination or committal, the court in which the indictment is filed may stay the proceedings as an abuse of process if it is necessary to do so to ensure that the accused receives a fair trial172. And the rule finds further reflection in the procedure which may be followed if there has been a committal and, as sometimes happens, the prosecution seeks to call at trial a witness whom the accused could not have sought to cross-examine before the decision to commit him or her for trial. In such a case, the court trying the accused may allow the witness to be cross-examined, on a voir dire, before the witness is called at trial by way of what has become known as a "Basha" inquiry173. An accusatorial trial Two provisions of the Evidence Act 1995 (Cth) also create elements of, and reflect, the accusatorial nature of the trial of indictable Commonwealth offences. First, s 17(2) provides that a defendant in criminal proceedings is not competent to give evidence as a witness for the prosecution. Second, s 20(2) permits the judge at trial, and any party other than the prosecutor, to comment on a failure by the defendant to give evidence. But the judge must not suggest that the defendant failed to give evidence because the defendant was, or believed that he or she was, guilty of the offence concerned. It follows that a person accused of an indictable Commonwealth offence may stand mute at his or her trial. The accused cannot be called to give evidence by the prosecution. The prosecution may not comment on the failure of the accused to give evidence. The judge may comment on the failure to give evidence, but not so as to suggest that the failure bespeaks guilt. The accused may therefore make the decision whether to give evidence free from the pressure that would be there if the judge could tell the jury that silence bespeaks guilt. The accusatorial process of criminal justice The preceding description of the investigation, prosecution and trial of an indictable Commonwealth offence demonstrates that, at every stage, the process of criminal justice is accusatorial. It is against this background that the provisions of the ACC Act, particularly s 28(1), must be construed. If these provisions were to permit the compulsory examination of a person charged with 172 Barton v The Queen (1980) 147 CLR 75; [1980] HCA 48. 173 Basha (1989) 39 A Crim R 337 at 339; R v Sandford (1994) 33 NSWLR 172 at 180-181; Director of Public Prosecutions (Cth) v Bayly (1994) 63 SASR 97 at 119-120; Director of Public Prosecutions v Denysenko [1998] 1 VR 312 at 316. an offence about the subject matter of the pending charge, they would effect a fundamental alteration to the process of criminal justice. Statutory modification of an accusatorial process This is not to decide that statute can never effect fundamental alterations to the process of criminal justice. As explained earlier, it is not necessary to decide whether there is any relevant constitutional limitation174 to legislative power that would preclude such an alteration. But such an alteration can only be made if it is made clearly by express words or necessary intendment. The process of criminal justice that can now be described as "accusatorial" has grown over time and has its origins in both statute and judge-made law. So, for example, rules requiring the police cautioning of suspects find their origins in the Judges' Rules (the first of which were formulated in 1912 by the judges of the King's Bench Division as a guide to police in the questioning of suspects175). In Australia, the rules were at one time set out only in internal police rules or orders176, and the requirement to caution a suspect was not given direct statutory effect by Commonwealth legislation until the enactment of Pt IC of the Crimes Act in 1991177. From time to time, legislation has been enacted which has qualified the generally accusatorial nature of the process of criminal justice. Some of the earliest of those modifications are to be found in legislation providing for the examination of bankrupts, and of persons who have "taken part or been concerned in the promotion, formation, management, administration or winding up" of a corporation and who have been, or may have been, "guilty of fraud ... or other misconduct in relation to that corporation"178. Legislation provided for the 174 cf Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at 161-162 per Brennan J; [1982] HCA 31. 175 Referred to in R v Voisin [1918] 1 KB 531 at 539; cf Practice Note (Judges' Rules) [1964] 1 WLR 152. 176 See, for example, the Standing Orders promulgated by the Chief Commissioner of Police in Victoria discussed in R v Lee (1950) 82 CLR 133 at 142-144, 154-155; [1950] HCA 25. 177 Crimes (Investigation of Commonwealth Offences) Amendment Act 1991 (Cth). 178 See, for example, Companies (New South Wales) Code, s 541(2)(a); Hamilton v Oades (1989) 166 CLR 486; [1989] HCA 21. examination of bankrupts179, and those thought to have defrauded companies180, before the accused became a competent witness at trial. More recently, other changes have been made directly to the accusatorial system of criminal justice by express alteration of the laws governing criminal procedure. So, for example, State legislation, for some time, has required an accused to give notice of alibi181. Further, State criminal procedure legislation now requires an accused to give notice of intention to adduce some other kinds of evidence, such as evidence of substantial mental impairment182, or expert evidence more generally183. Some State criminal procedure legislation requires the prosecution, before the trial begins, to serve on the accused, and file in court, a summary which must outline the manner in which the prosecution will put the case against the accused184, and requires the accused to respond by identifying, again before the trial begins, "the acts, facts, matters and circumstances with which issue is taken and the basis on which issue is taken"185. These changes to the accusatorial process of criminal justice have been made directly and expressly. Neither the changes that have been made more recently, nor the existence of historical qualifications and exceptions of the kind exemplified by bankruptcy and companies examination procedures, deny that the 179 See, for example, Bankruptcy Act 1887 (NSW), s 18; Bankruptcy Act 1898 (NSW), s 18; Insolvency Statute 1871 (Vic), ss 132 and 133; Insolvency Act 1890 (Vic), ss 134 and 135; Bankruptcy Act 1883 (UK), s 17. See, also, In re Atherton [1912] 2 KB 251; In re Paget; Ex parte Official Receiver [1927] 2 Ch 85. Cf Bankruptcy Act 1924 (Cth), s 68; Bankruptcy Act 1966 (Cth), s 81. 180 See, for example, Joint Stock Companies Winding-up Act 1848 (UK), s 63; Joint Stock Companies Act 1856 (UK), s 77; Companies Act 1862 (UK), ss 115 and 117. See also, for example, Companies Winding up Act 1847 (NSW), s 13; Companies Act 1874 (NSW), ss 173 and 174; Companies Act 1899 (NSW), ss 123 and 124; Companies Statute 1864 (Vic), ss 106, 107 and 149; Companies Act 1890 (Vic), ss 109, 110 and 152. 181 See, for example, Criminal Procedure Act 1986 (NSW), s 150(2); Criminal Procedure Act 2009 (Vic), s 190(1). 182 Criminal Procedure Act 1986 (NSW), s 151(1). 183 Criminal Procedure Act 2009 (Vic), s 189. 184 Criminal Procedure Act 2009 (Vic), s 182(1) and (2). 185 Criminal Procedure Act 2009 (Vic), s 183(1) and (2). existing process for the administration of criminal justice is properly described as an accusatorial process. The qualifications and exceptions stand as particular features of the process of criminal justice that have been separately created (in important respects before the emergence of organised police forces and the modern criminal justice system). Their existence shows no more than that the modern criminal justice system is the product of growth over time and is not the product of a decision to implement some single organising theory about the administration of criminal justice. Impact on accusatorial process Even if the answers given at a compulsory examination are kept secret, and therefore cannot be used directly or indirectly by those responsible for investigating and prosecuting the matters charged, the requirement to give answers, after being charged, would fundamentally alter the accusatorial judicial process that begins with the laying of a charge and culminates in the accusatorial (and adversarial) trial in the courtroom. No longer could the accused person decide the course which he or she should adopt at trial, in answer to the charge, according only to the strength of the prosecution's case as revealed by the material provided by the prosecution before trial, or to the strength of the evidence led by the prosecution at the trial. The accused person would have to decide the course to be followed in light of that material and in light of any self-incriminatory answers which he or she had been compelled to give at an examination conducted after the charge was laid. That is, the accused person would have to decide what plea to enter, what evidence to challenge and what evidence to give or lead at trial according to what answers he or she had given at the examination. The accused person is thus prejudiced in his or her defence of the charge that has been laid by being required to answer questions about the subject matter of the pending charge. As has been explained, if an alteration of that kind is to be made to the criminal justice system by statute, it must be made clearly by express words or by necessary intendment. If the relevant statute does not provide clearly for an alteration of that kind, compelling answers to questions about the subject matter of the pending charge would be a contempt. Earlier decisions of this Court It is necessary to say something about some earlier decisions of this Court, including, in particular, Hammond v The Commonwealth186 and Hamilton v Oades187. 186 (1982) 152 CLR 188; [1982] HCA 42. Hammond Hammond concerned the compulsory examination of a person charged with an indictable Commonwealth offence about the subject matter of the charge. The examination was to be conducted under the Royal Commissions Act 1902 (Cth) and the Evidence Act 1958 (Vic). Both Acts provided188 that it was an offence for a person being examined to refuse to answer any question relevant to the inquiry being conducted. Both Acts also provided189 that answers given by the person being examined were not admissible in evidence against that person in any civil or criminal proceedings (except in proceedings for an offence against the Act in question). This Court assumed, but did not decide, that, as all parties to the litigation had submitted, a person charged with an offence was bound to answer questions designed to establish that he or she had committed the charged offence190. The Court held unanimously that continuing Mr Hammond's examination would interfere with the due administration of justice, even though the answers he gave would not be admissible in evidence against him. Accordingly, the Commissioner conducting the examination was restrained from further examining Mr Hammond until the determination of his trial. The principal reasons of the Court were given by Gibbs CJ. Those reasons (with which Mason J agreed and Murphy J generally agreed) must be read in the light of the Court's comprehensive consideration of executive inquiries into alleged offences in Victoria v Australian Building Construction Employees' and Builders Labourers' Federation191 ("the BLF Case"). Judgment in the BLF Case was delivered less than three months before Hammond was argued and decided. In the BLF Case, six members of the Court held192, following earlier authority of this Court193, that, in the absence of any law to the contrary, the 187 (1989) 166 CLR 486. 188 Royal Commissions Act 1902 (Cth), s 6; Evidence Act 1958 (Vic), s 16(b). 189 Royal Commissions Act 1902, s 6DD; Evidence Act 1958, s 30. 190 (1982) 152 CLR 188 at 197-198 per Gibbs CJ. 191 (1982) 152 CLR 25. 192 (1982) 152 CLR 25 at 52-53 per Gibbs CJ, 66-68 per Stephen J, 86-91 per Mason J, 120 per Aickin J, 123-126 per Wilson J, 152-155 per Brennan J. Crown may appoint a commission of inquiry into whether an individual has committed an offence. And the whole Court held194 that the conduct of a commission of inquiry, to the extent that it creates a risk of interference with the administration of justice, may be a contempt of court. But the Court accepted that, subject to any applicable constitutional limitation195, such a contempt might not arise if the conduct was specifically authorised by statute. It was not necessary to explore that question in the BLF Case and it is not necessary to do so in this case. In the BLF Case, Gibbs CJ examined the various reasons that had been proffered in argument, and in the Full Federal Court below, for concluding that holding the proceedings of the inquiry in public would constitute a contempt. Those reasons ranged from the fact that the proceedings would be calculated to prejudice or bias the public mind, to alleged undesirable effects on possible witnesses or even the judges who might deal with the prosecution proceedings. In his reasons, Gibbs CJ emphasised the need to demonstrate either "an actual interference with the administration of justice, or 'a real risk, as opposed to a remote possibility' that justice will be interfered with"196, and concluded (with Mason, Aickin and Wilson JJ) that contempt was not demonstrated by the conduct of the proceedings of the inquiry in public. But of most immediate significance, Gibbs CJ gave197, as an example of the continuance of a commission amounting to contempt, the case where, during the course of a commission's inquiries into allegations that a person had been guilty of criminal conduct, a criminal prosecution was commenced against that person based on those allegations. His Honour said198 that "the continuance of the inquiry would, speaking generally, amount to a contempt of court", and that 193 Clough v Leahy (1904) 2 CLR 139; [1904] HCA 38; McGuinness v Attorney-General (Vict) (1940) 63 CLR 73; [1940] HCA 6. 194 (1982) 152 CLR 25 at 53-55 per Gibbs CJ, 69-73 per Stephen J, 94-95 per Mason J, 105 per Murphy J, 119-120 per Aickin J, 129-132 per Wilson J, 158-162 195 (1982) 152 CLR 25 at 161-162 per Brennan J. 196 (1982) 152 CLR 25 at 56, citing Attorney-General v Times Newspapers Ltd [1974] AC 273 at 299 per Lord Reid. See also John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 at 372; [1955] HCA 12. 197 (1982) 152 CLR 25 at 54. 198 (1982) 152 CLR 25 at 54. the proper course would be to "adjourn the inquiry until the disposal of the criminal proceedings". Stephen J was of the same opinion199, but went further than Gibbs CJ by concluding that the continuance of the inquiry then under consideration would constitute a contempt of court. Other members of the Court expressed no view on the question of whether continuing an executive inquiry into matters the subject of pending charges would constitute contempt, this particular question not being squarely raised in the proceedings. The conclusion expressed in the BLF Case by both Gibbs CJ and Stephen J, that continuing an inquiry into whether a person charged with an offence had committed that offence would be a contempt of court, reflected what had been said in earlier decisions of this Court. In Clough v Leahy, Griffith CJ, speaking for the Court, had said200: "Nor can the Crown interfere with the administration of the course of justice. It is not to be supposed that the Crown would do such a thing; but, if persons acting under a Commission from the Crown were to do acts which, if done by private persons, would amount to an unlawful interference with the course of justice, the act would be unlawful, and would be punishable." And Griffith CJ had said201 also that "[a]ny interference with the course of the administration of justice is a contempt of Court, and is unlawful". Some decades later, in McGuinness v Attorney-General (Vict), Latham CJ adopted and repeated the views expressed by Griffith CJ in Clough v Leahy and continued202: "If, for example, a prosecution for an offence were taking place, the establishment of a Royal Commission to inquire into the same matter would almost certainly be held to be an interference with the course of justice and consequently to constitute a contempt of court." Nothing said in the discussion of these matters in Clough v Leahy and McGuinness v Attorney-General (Vict), or by Gibbs CJ and Stephen J in the BLF Case, suggested that the contemplated contempt could be avoided by continuing the inquiry in secret. 199 (1982) 152 CLR 25 at 71-73. 200 (1904) 2 CLR 139 at 156. 201 (1904) 2 CLR 139 at 161. 202 (1940) 63 CLR 73 at 85. What was said by Gibbs CJ and Stephen J in the BLF Case does not constitute any binding statement of the applicable principles. What their Honours said about executive inquiries into the facts and circumstances of pending charges was not essential to the decision reached in the BLF Case. But it is of the first importance to recognise that this Court's decision in Hammond was made very soon after, and in the light provided by, the examination of very closely related issues in the BLF Case. Two consequences follow. First, the actual decision in Hammond cannot be dismissed from consideration on the basis that it was decided in haste or improvidently. Second, the identification by Gibbs CJ of why continued examination of Mr Hammond would be a contempt is not to be treated as if expressed too loosely. Gibbs CJ said203 that: "Once it is accepted that [Mr Hammond] will be bound, on pain of punishment, to answer questions designed to establish that he is guilty of the offence with which he is charged, it seems to me inescapably to follow, in the circumstances of this case, that there is a real risk that the administration of justice will be interfered with." (emphasis added) The "circumstances of this case" to which Gibbs CJ referred were identified204 as including the fact "that the examination will take place in private, and that the answers may not be used at the criminal trial". But the interference with the administration of justice, and thus the contempt, was identified205 as lying in "the fact that [Mr Hammond having] been examined, in detail, as to the circumstances of the alleged offence, is very likely to prejudice him in his defence". It would prejudice him in his defence because he could no longer determine the course he would follow at his trial according only to the strength of the case that the prosecution proposed to, and did, adduce in support of its case that the offence charged was proved beyond reasonable doubt206. Nor can the decision in Hammond be dismissed from consideration on the basis that it was later "overtaken" in some relevant respect by the decision in 203 (1982) 152 CLR 188 at 198. 204 (1982) 152 CLR 188 at 198. 205 (1982) 152 CLR 188 at 198. 206 cf (1982) 152 CLR 188 at 206-207 per Deane J. The respondent in Hamilton v Oades, Mr Oades, had been charged with a number of offences arising out of his association with a company which had been ordered to be wound up. The appellant was the liquidator of the company. The liquidator obtained an order under s 541 of the Companies (New South Wales) Code for Mr Oades' examination in the Supreme Court of New South Wales as to matters relating to the promotion, formation, management, administration and winding up of the company. Mr Oades sought a direction under s 541(5) of the Companies (New South Wales) Code that the examination be restricted to matters not the subject of the pending charges. The Deputy Registrar before whom the examination was taking place refused that application. Mr Oades' application for review of the Deputy Registrar's decision was refused by a single judge of the Supreme Court. On appeal to the Court of Appeal, orders were made to the effect that, during the pendency of the charges, Mr Oades was not to be compelled to answer any questions which might tend to incriminate him and which concerned the facts that constituted ingredients of the pending charges, or any questions which would tend to disclose his defence to those charges. The Court of Appeal concluded207 that it was necessary to restrict the examination "to avoid the possibility that there is any trespass upon the charged person's right to a fair trial". The liquidator appealed to this Court. By majority (Mason CJ, Dawson and Toohey JJ, Deane and Gaudron JJ dissenting), the appeal was allowed and the orders made by the Court of Appeal were set aside. Mason CJ recognised208 that an examination of the kind in question might expose a person who had been charged with, but not yet tried for, offences concerning the affairs of the company to "real and appreciable danger of conviction, notwithstanding that the answers themselves may not be given in evidence"209 because of the indirect use that might be made of the answers given. Mason CJ further recognised210 that "[t]o the extent only that under the section [authorising an order for examination] rights of an accused person are denied and protections removed, an examination may even amount to an interference with the administration of criminal justice". Whether the legislation had brought about that result was to be judged in light of "a long history of legislation governing examinations in bankruptcy and under 207 Oades v Hamilton (1987) 11 NSWLR 138 at 154 per Clarke JA (Mahoney and Priestley JJA agreeing). 208 (1989) 166 CLR 486 at 494. 209 Sorby (1983) 152 CLR 281 at 294 per Gibbs CJ. 210 (1989) 166 CLR 486 at 494. the Companies Acts which abrogate or qualify the right of the person examined to refuse to answer questions on the ground that the answers may incriminate him"211. And, as Mason CJ noted212, this Court had earlier twice rejected, in Rees v Kratzmann213 and Mortimer v Brown214, arguments to the effect that a person subject to compulsory public examination in a court, under the companies legislation, could decline to answer a question on the ground that its answer might tend to incriminate that person. Each of Hamilton v Oades215 and the earlier decisions in Rees v Kratzmann216 and Mortimer v Brown217 emphasised the fact that the compulsory examinations would be conducted in court and that, accordingly, the court would retain the power to prevent abuse of its process. In each decision, however, this Court rejected the submission that examination on matters which otherwise might attract the privilege against self-incrimination would, without more, amount to an abuse of process. But all three decisions, including, in particular, Hamilton v Oades, necessarily depended on the historical pedigree of the legislation being construed. That is, each of those decisions answered particular questions about the construction of the relevant statute in light of the fact that the legislature had, for very many years, made special exceptions to the otherwise accusatorial process of the criminal law in respect of bankruptcy and companies examinations. It is then not to the point to seek to draw out whatever drafting similarities might be found between the legislation considered in the companies examination cases and the relevant provisions of the ACC Act. The question presented by the provisions of the ACC Act is whether those provisions made a new exception to the accusatorial process of the criminal law. 211 (1989) 166 CLR 486 at 494. 212 (1989) 166 CLR 486 at 494-495. 213 (1965) 114 CLR 63; [1965] HCA 49. 214 (1970) 122 CLR 493; [1970] HCA 4. 215 (1989) 166 CLR 486 at 498-499 per Mason CJ, 510 per Dawson J, 516-517 per 216 (1965) 114 CLR 63 at 78 per Menzies J (Barwick CJ and Taylor J agreeing). 217 (1970) 122 CLR 493 at 495 per Barwick CJ, 502 per Walsh J (Windeyer and Necessary intendment It is important, but not determinative, to observe that the ACC Act does not provide expressly for the compulsory examination of a person charged with an indictable Commonwealth offence. The applicable rule of construction recognises, however, that legislation may necessarily imply that its provisions work some fundamental alteration to the general system of law, or the qualification of some fundamental right, even though the Act does not expressly provide for that effect218. But the implication must be necessary, not just available or somehow thought to be desirable. It is, therefore, important to consider whether the purpose or purposes of the ACC Act generally, or of the examination provisions in particular, would be defeated by reading the ACC Act's provisions as not permitting the examination of a person charged with an indictable Commonwealth offence about the subject matter of the charge. Consideration of that question must begin by identifying the functions the ACC Act gives to the ACC, and also the role that a special ACC operation/investigation has in the ACC carrying out its statutory functions. The ACC's functions As noted at the start of these reasons, with one or two possible exceptions, the functions of the ACC are sufficiently described as functions directed to the gathering and dissemination of criminal information and intelligence. The first, and principal, exception to that general proposition is provided by s 7A(c) of the ACC Act. Section 7A(c) provides that it is a function of the ACC "to investigate, when authorised by the Board [of the ACC], matters relating to federally relevant criminal activity". The second possible exception to the proposition that the ACC is concerned with the gathering and dissemination of criminal information and intelligence is found in s 7A(g), which provides that the ACC has "such other functions as are conferred on the ACC by other provisions of this Act or by any other Act". No mention was made in argument of the conferral of any other relevant function on the ACC, whether by the ACC Act or some other Act. It may therefore be assumed that the only investigative function given to the ACC is that described in s 7A(c). The particular nature and extent of the investigative function of the ACC is elucidated by the prescription, in s 7C, of the functions of the Board of the ACC. Section 7C(3) provides that: 218 See, for example, Daniels Corporation (2002) 213 CLR 543 at 553 [11], 559-560 "The Board may determine, in writing, that an investigation into matters relating to federally relevant criminal activity is a special investigation. Before doing so, it must consider whether ordinary police methods of investigation into the matters are likely to be effective." (emphasis added) that relate powers expressly219 It is to be recalled that the examination powers which are in issue in this case are "special ACC operation/investigation", which, in the context of this case, refers220 to "an investigation into matters relating to federally relevant criminal activity that the ACC is conducting and that the Board has determined to be a special investigation". Although s 7C(3) provides that a "special investigation" cannot be undertaken without the Board of the ACC first considering "whether ordinary police methods of investigation into the matters are likely to be effective", it must be read as requiring the Board of the ACC not only to consider this question, but also to determine that ordinary police methods are not "likely to be effective". In the context of the ACC Act, "effective" can and must be understood as meaning "effective to permit the laying of charges against offenders". The word "effective" cannot and should not be read, in the context of the ACC Act generally, or in the particular context of s 7C(3), as embracing any larger task of deciding whether individual criminal guilt is demonstrated. It is only by the engagement of judicial power consequent upon the laying of a charge that individual criminal guilt will be determined. The ACC may therefore execute its function of investigating matters relating to federally relevant criminal activity by using the extraordinary processes of compulsory examination only when the Board of the ACC has determined that ordinary police methods are not "likely to be effective" to lead to the laying of charges. The performance of that investigative function is in no way restricted or impeded if the power of compulsory examination does not extend to examination of a person who has been charged with, but not yet tried for, an indictable Commonwealth offence about the subject matter of the pending charge. The general provisions made for compulsory examination, when read in their context, do not imply, let alone necessarily imply, any qualification to the fundamentally accusatorial process of criminal justice which is engaged with respect to indictable Commonwealth offences. Thus the provisions of the ACC Act which authorise compulsory examination do not permit compulsory examination of the plaintiff about the 219 Section 24A provides: "An examiner may conduct an examination for the purposes of a special ACC operation/investigation." 220 s 4(1), definition of "special ACC operation/investigation", par (b). subject matter of the offences with which he has been charged. Question 1 in the Case Stated should be answered accordingly. The authority to conduct the compulsory examination Although it is not necessary to decide the point, the better view may be that, on its proper construction, the determination made by the Board of the ACC, on which the ACC relied as permitting the examination of the plaintiff ("the Determination"), did not extend to permitting examination of the plaintiff about the subject matter of his pending charges. The Determination relied on in this case was constituted by the Australian Crime Commission Special Investigation Authorisation and Determination (High Risk Crime Groups No 2) 2009 (Cth), as amended by the Australian Crime Commission Special Investigation Authorisation and Determination (High Risk Crime Groups No 2) Amendment No 1 of 2010 (Cth). The Determination was not directed to the investigation of any named individuals or groups. It was intended to authorise investigations into the matters specified in Sched 1 from its commencement on 30 April 2009 until 30 June 2010, but was later extended, by the amending instrument, to 30 June 2011. The Determination was cast in very general terms which hinged on the expression "high risk crime groups". That expression was defined in a way that encompasses any "group" of two or more persons who were engaged in any of a wide variety of criminal acts in more than one jurisdiction. The definition of "high risk crime groups" contained a number of other criteria expressed disjunctively which not only did not confine further the application of the definition, but extended its operation. The investigation which was authorised was identified in cl 1 of Sched 1 to the Determination. It was described as: "An investigation to determine whether, in accordance with the allegations mentioned in clause 3 and in the circumstances mentioned in clause 2, federally relevant criminal activity: (a) was committed before the commencement of this Instrument; or (b) was in the process of being committed on the commencement of this Instrument; or (c) may in future be committed." One of the allegations mentioned in cl 3 of Sched 1 to the Determination was that "from 1 January 1990 certain persons, in concert with one another or with other persons, may be engaged in" any of a very wide variety of activities, including certain serious drug offences contrary to Pt 9.1 of the Criminal Code (Cth) and proceeds of crime offences. The Determination authorised an investigation "to determine whether" federally relevant criminal activity had been, was being, or may in the future be committed. Divorced from its context, that expression might suggest that the ACC was called on to perform some adjudicative function and, as has already been pointed out, it could not validly be given a function that required it to exercise the judicial power of the Commonwealth. When the expression "to determine whether" is read in the context provided by the statutory specification of the ACC's functions in s 7A of the ACC Act, the better view may well be that it does not encompass the criminal activity (federally relevant or not) of any person which is activity the subject of pending charges against that person, or activity which the person has admitted or been proved to have undertaken. The laying of charges against the person (or a subsequent guilty plea or verdict by or against the person with consequent conviction) sufficiently "determine[s] whether" that person has been engaged in the relevant conduct. Conviction evidently determines the question. But the charging of the individual also determines that question sufficiently for the purposes of the ACC Act because it must be assumed that there was reasonable and probable cause to lay the charge. Adopting this construction of the Determination would be an additional reason to conclude that Question 1 in the Case Stated should be answered "No". It is, however, not necessary to reach that issue. Question 2 in the Case Stated does not arise. Conclusion and answers to questions reserved The ACC Act does not permit the examiner to require the plaintiff to answer questions about the subject matter of the charges laid against him. The questions reserved for the opinion of the Full Court should be answered as follows: Does Div 2 of Pt II of the ACC Act empower an examiner appointed under s 46B(1) of the ACC Act to conduct an examination of a person charged with a Commonwealth indictable offence where that examination concerns the subject matter of the offence so charged? Answer: The ACC Act does not authorise an examiner appointed under s 46B(1) of the ACC Act to require a person charged to answer with a Commonwealth questions about the subject matter of the charged offence. indictable offence If the answer to Question 1 is "Yes", is Div 2 of Pt II of the ACC Act invalid to that extent as contrary to Ch III of the Constitution? Answer: This question does not arise. 157 KIEFEL J. I agree with the answers which Hayne and Bell JJ propose be given to the questions stated, substantially for the reasons given by their Honours. The Australian Crime Commission Act 2002 (Cth) ("the ACC Act") can be seen neither expressly nor by necessary intendment to require or authorise the examination of a person with respect to offences with which that person is charged and whose trial is therefore pending. The requirement of the principle of legality is that a statutory intention to abrogate or restrict a fundamental freedom or principle or to depart from the general system of law must be expressed with irresistible clearness221. That is not a low standard. It will usually require that it be manifest from the statute in question that the legislature has directed its attention to the question whether to so abrogate or restrict and has determined to do so222. Relevant to the question of legislative intention is not only the privilege of the person to refuse to answer questions which may incriminate him or her, but also a fundamental principle of the common law. The fundamental principle – that the onus of proof rests upon the prosecution – is as stated in Environment Protection Authority v Caltex Refining Co Pty Ltd223, as is its companion rule – that an accused person cannot be required to testify to the commission of the offence charged. The prosecution, in the discharge of its onus, cannot compel the accused to assist it224. The common law principle is fundamental to the system of criminal justice administered by courts in Australia, which, as Hayne and Bell JJ explain, is adversarial and accusatorial in nature. The accusatorial nature of the system of criminal justice involves not only the trial itself, but also pre-trial inquiries and investigations. This is recognised by the statutory provisions to which their Honours refer. It may be added, as to the trial itself, that the concept of an accusatorial trial where the prosecution seeks to prove its case to the jury has a constitutional dimension225. 221 Potter v Minahan (1908) 7 CLR 277 at 304; [1908] HCA 63. 222 Coco v The Queen (1994) 179 CLR 427 at 437; [1994] HCA 15. 223 (1993) 178 CLR 477 at 503, 550; [1993] HCA 74. 224 Sorby v The Commonwealth (1983) 152 CLR 281 at 294 per Gibbs CJ ("a cardinal principle"); [1983] HCA 10. 225 R v Snow (1915) 20 CLR 315 at 323 per Griffith CJ, referring to s 80 of the Constitution; [1915] HCA 90. Decisions of this Court, and in particular Clough v Leahy226, McGuinness v Attorney-General (Vict)227 and Hammond v The Commonwealth228, hold that the conduct of an inquiry parallel to a person's criminal prosecution would ordinarily constitute a contempt because the inquiry presents a real risk to the administration of criminal justice. The proper course, Gibbs CJ said in Hammond229, is to adjourn the inquiry until the conclusion of the criminal proceedings. These decisions, and particularly that in Hammond, are not to be underestimated in their importance to this area of discourse. On the other hand, the trilogy of cases dealing with examinations in the context of bankruptcy or company liquidation where fraud may be suspected230 are to be understood as the result of an historical anomaly, commencing with the divergent view taken by the Chancery Court from that of the common law and continuing through the series of legislation which preceded that dealt with in those cases231. Can it be said, by reference to the terms of the ACC Act, its purposes and its operation, that the legislature has directed its attention to an examination of a person as to offences with which that person is presently charged and whose trial is pending? Has it directed its attention to the effect of an examination in such circumstances on the fundamental principle which informs the criminal justice system, and to whether the examination may pose a real risk of interference with the administration of criminal justice? The answer to each must be "no" for the reasons given by Hayne and Bell JJ. 226 (1904) 2 CLR 139; [1904] HCA 38. 227 (1940) 63 CLR 73; [1940] HCA 6. 228 (1982) 152 CLR 188; [1982] HCA 42. 229 (1982) 152 CLR 188 at 198, referring to his earlier comments in Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at 54; [1982] HCA 31. 230 Rees v Kratzmann (1965) 114 CLR 63; [1965] HCA 49; Mortimer v Brown (1970) 122 CLR 493; [1970] HCA 4; Hamilton v Oades (1989) 166 CLR 486; [1989] HCA 21. 231 See for example Ex parte Cossens; In the Matter of Worrall (1820) 1 Buck 531 at 540; In re Paget; Ex parte Official Receiver [1927] 2 Ch 85 at 87-88; Bishopsgate Investment Management Ltd v Maxwell [1993] Ch 1 at 23-24; Rees v Kratzmann (1965) 114 CLR 63 at 80; Mortimer v Brown (1970) 122 CLR 493 at 496.

HIGH COURT OF AUSTRALIA FRANZ BOENSCH AS TRUSTEE OF THE BOENSCH TRUST APPELLANT AND RESPONDENT Boensch v Pascoe [2019] HCA 49 Date of Hearing: 11 October 2019 Date of Judgment: 13 December 2019 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation C J Bevan with M J Wells for the appellant (instructed by John D Bingham Solicitor) D A Priestley SC with M F Newton for the respondent (instructed by Gilchrist Connell) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Boensch v Pascoe Bankruptcy – Bankrupt estate – Where "the property of the bankrupt" vested in trustee in bankruptcy pursuant to s 58 of Bankruptcy Act 1966 (Cth) – Where bankrupt held estate in land under Torrens system on trust – Whether property held by bankrupt on trust capable of vesting in trustee in bankruptcy – Whether bankrupt had a valid beneficial interest – Whether estate vested in trustee in bankruptcy in equity. Real property – Torrens system – Caveats – Where trustee in bankruptcy lodged caveat claiming "Legal Interest pursuant to the Bankruptcy Act 1966" and refused or failed to withdraw caveat after request – Whether caveator liable to pay compensation under s 74P(1) of Real Property Act 1900 (NSW) for lodging and maintaining caveat "without reasonable cause" – Whether existence of caveatable interest or honest belief on reasonable grounds in such interest sufficient for "reasonable cause" – Whether claimant established that caveator had neither caveatable interest in property nor honest belief on reasonable grounds in having such interest – Whether possibility of trust being set aside under s 120 or s 121 of Bankruptcy Act conferred caveatable interest – Whether caveat adequately described equitable estate in fee simple – Whether deficiency in statement of interest demonstrated absence of "reasonable cause". Trusts – Trustees – Right of indemnity – Where trustee incurred significant expenses in his capacity as trustee ordinarily entitling him to be indemnified out of trust property – Where trustee asserted "mutually beneficial arrangement" with "the trust" – Whether asserted arrangement prejudiced trustee's right of indemnity wholly or in part – Whether value of benefits to trustee under asserted arrangement equal to or exceeded total of trust expenses incurred. Words and phrases – "beneficial interest", "caveatable interest", "caveat against dealings", "circuity of action", "contingent beneficial interest", "determination of non-dispositive issues in appeals", "honest belief on reasonable grounds", "judicial economy", "most remote possibility of interest", "property held by the bankrupt in trust for another person", "right of indemnity", "subject to the equities", "the property divisible among the bankrupt's creditors", "the property of the bankrupt", "without reasonable cause". Bankruptcy Act 1966 (Cth), ss 5(1), 58, 116. Real Property Act 1900 (NSW), ss 74F(1), 74K, 74P(1), 90. KIEFEL CJ, GAGELER AND KEANE JJ. Upon a person becoming bankrupt, s 58(1) of the Bankruptcy Act 1966 (Cth) vests in the trustee of the estate of the bankrupt property then belonging to the bankrupt that is divisible among the bankrupt's creditors together with any rights or powers in relation to that property that would have been exercisable by the person had the person not become a bankrupt. The property belonging to the bankrupt includes real or personal property and any estate or interest in real or personal property belonging to the person at the time of bankruptcy. Excluded from the property belonging to the bankrupt that is divisible among the bankrupt's creditors by s 116(2)(a) of the Bankruptcy Act is property held in trust by the bankrupt for another person. It was settled in Octavo Investments Pty Ltd v Knight1 that, where the person who becomes bankrupt is a trustee of property who has incurred liabilities in the performance of the trust, such entitlement as the person has in equity to be indemnified out of the property held on trust gives rise to an equitable interest in the property held on trust which takes that property outside the exclusion in s 116(2)(a) on the basis that the exclusion is limited to property held by the bankrupt solely in trust for another person. The bankrupt's entitlement in equity to be indemnified out of the property held on trust is property belonging to the bankrupt that is divisible among the bankrupt's creditors. The entitlement is therefore property that vests in the trustee of the estate of the bankrupt. Left open in Octavo Investments2 was the question whether the legal estate in the property held on trust by the bankrupt out of which the bankrupt has an entitlement in equity to be indemnified also vests in the trustee of the estate of the bankrupt. The question is an aspect of the more general question whether the legal estate in property held on trust by a bankrupt in which the bankrupt has an equitable interest vests in the trustee of the estate of the bankrupt. That more general question was substantially answered by the recent analysis in Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth3. The answer is informed in part by recognition of the fundamental nature of an equitable interest as something that "is not carved out (1979) 144 CLR 360 at 369-370. (1979) 144 CLR 360 at 370-371. (2019) 93 ALJR 807 at 829-830 [83]-[84], 832-833 [94]; 368 ALR 390 at 416- of a legal estate but impressed upon it"4 and in part by recognition of the consistency with the objects of the Bankruptcy Act of the trustee of the estate of the bankrupt automatically obtaining the legal estate in property held by the bankrupt in which the bankrupt has an equitable interest in order better to secure the realisation of that equitable interest for the benefit of creditors. Those considerations combine to support the answer, pithily expressed more than a century ago by Sir George Jessel MR in Morgan v Swansea Urban Sanitary Authority5, that "under the Bankruptcy Act, where a trustee has no beneficial interest, the legal estate does not pass; but where he has, it does pass". Where the legal estate in the property held on trust by the bankrupt passes to the trustee of the estate of the bankrupt, it passes with all of the equitable interests that were impressed on it when it remained in the hands of the bankrupt: equitable interests of the bankrupt as well as equitable interests of the beneficiaries of the trust6. Where the property held on trust by the bankrupt out of which the bankrupt has an entitlement in equity to be indemnified comprises legal title to land registered under the Real Property Act 1900 (NSW), the slight variation to the principles just stated is that, by operation of s 58(2) of the Bankruptcy Act, what is vested in the trustee of the estate of the bankrupt upon bankruptcy, and until the trustee can obtain legal title by registration, is not the legal estate but the equitable estate. Like the legal estate which passes to the trustee of the estate of the bankrupt under s 58(1), the equitable estate which passes to the trustee of the estate of the bankrupt under s 58(2) passes with all of the equitable interests that were impressed on the legal estate when the legal estate remained in the hands of the bankrupt7. The wrinkle in the application of those principles in the circumstances of the present case, which are described in the reasons for judgment of Bell, Nettle, Gordon and Edelman JJ, arises from the absence of a determination by the primary judge in the Supreme Court of New South Wales or by the Full Court of the Federal Court on appeal of the issue whether the bankrupt Mr Boensch had at the time of his bankruptcy an entitlement in equity to be indemnified out of the Rydalmere property which he then held on trust for his children. The primary 4 DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 at 474. (1878) 9 Ch D 582 at 585. 6 Official Trustee in Bankruptcy v Ritchie (1988) 12 NSWLR 162 at 174. Lewis v Condon (2013) 85 NSWLR 99 at 119 [91]-[92]. judge and the Full Court evidently saw no need to determine that issue because they were persuaded to the view that the legal or equitable estate in property held on trust by a bankrupt would always vest in the trustee of the estate of the bankrupt subject to equitable interests that were impressed on it, under s 58(1) or (2) of the Bankruptcy Act as the case may be, irrespective of whether or not the bankrupt had an equitable interest in the property. That view was unduly wide. Though it would have been preferable for the primary judge to have made findings on all of the facts that were in contest before him, we would not criticise the Full Court for not addressing an issue raised before it which it did not consider to be dispositive. The principle that an appellate court should confine itself to determining only those issues which it considers to be dispositive of the justiciable controversy raised by the appeal before it is so much embedded in a common law system of adjudication that we have no name for it. In some other systems, it is known as "judicial economy". Judicial economy promotes judicial efficiency in a common law system not only by narrowing the scope of the issues that need to be determined in the individual case but also by ensuring that such pronouncements as are made by appellate courts on contested issues of law are limited to those that have the status of precedent. Within the integrated Australian legal system, the mere potential for an appeal to be brought, by special leave, to the High Court provides no reason for an intermediate court of appeal to sacrifice those efficiencies. That is not to deny that there will be occasions when departure from judicial economy will enhance the overall efficiency of the system or that the prospect of an appeal being brought, by special leave, to this Court in a particular case can give rise to such an occasion8. There is accordingly no reason to deny that, "although there can be no universal rule, it is important for intermediate courts of appeal to consider whether to deal with all grounds of appeal, not just with what is identified as the decisive ground"9. But a non-universal rule making it important for intermediate courts of appeal to consider whether to deal with all grounds of appeal is quite different from a rule that always or even ordinarily requires those courts to deal eg, Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 19-20 [34]-[35]; Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274 at 312 [105]. 9 Kuru v New South Wales (2008) 236 CLR 1 at 6 [12]. See also Cornwell v The Queen (2007) 231 CLR 260 at 300-301 [105]. cf Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (2011) 244 CLR 1 at 20 with all grounds of appeal. It is important to the efficiency of the system as a whole that intermediate courts of appeal should not feel compelled to treat determination of non-dispositive issues in appeals before them as the norm. The question whether Mr Boensch had an entitlement in equity to be indemnified out of the Rydalmere property can, and in the interests of finality should, be determined in the appeal in this Court notwithstanding that it was not addressed by the primary judge or the Full Court. That is because Mr Boensch did not dispute that he had incurred liabilities in the performance of the trust of the Rydalmere property for his children in respect of which he acquired an entitlement in equity to be indemnified out of the Rydalmere property. The substance of what Mr Boensch sought by evidence to establish, taken at its highest, was that he also had an obligation in equity to account to the trust for the monetary value of a benefit he had received from living in the Rydalmere property free of rent10. Mr Boensch's obligation to account to the trust, if established by the evidence, would have impeached his entitlement to indemnification from the trust so as to result in a set-off in equity of the obligation against the entitlement11. That equitable set-off would have operated to reduce his entitlement to indemnification independently of proceedings to vindicate either the obligation or the entitlement12. If the obligation to account could have been established by Mr Boensch and shown to have had a monetary value equal to or greater than the monetary value of his entitlement to indemnification, the result would have been to negate his entitlement to indemnification, and with it his equitable interest in the Rydalmere property which arose from that entitlement. The problem for Mr Boensch is that his evidence was too ill-developed to provide a factual foundation for the obligation to account which he sought to establish. Bearing the onus of proving on the balance of probabilities the facts on which his claim for compensation under s 74P(1) of the Real Property Act was founded, Mr Boensch simply failed on this issue to discharge that onus of proof. 10 cf Chan v Zacharia (1984) 154 CLR 178 at 198-199. 11 Hill v Ziymack (1908) 7 CLR 352 at 361; Hawes v Dean [2014] NSWCA 380 at 12 Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd Receiver & Manager Appointed (formerly Cel Home Video Pty Ltd) (1997) 42 NSWLR 462 at 481; MIWA Pty Ltd v Siantan Properties Pte Ltd (2011) 15 BPR 29,545 at 29,555- 29,556 [53]-[54]. cf Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (2019) 93 ALJR 807 at 819 [31]; 368 ALR 390 at 403-404. In the result, by reason of his having an entitlement to indemnification out of the trust property, Mr Boensch had an equitable interest in the Rydalmere property which subsisted at the time of his bankruptcy. That equitable interest, and with it the equitable estate in the Rydalmere property, vested in Mr Pascoe as the trustee in bankruptcy of the estate of Mr Boensch. The equitable estate in the Rydalmere property so vested in Mr Boensch was a caveatable interest. In our opinion, that equitable estate in the Rydalmere property was adequately described in the caveat which Mr Pascoe lodged over the Rydalmere property and then refused to withdraw as a "[l]egal [i]nterest pursuant to the Bankruptcy Act". Mr Pascoe having had a caveatable interest throughout the life of the caveat, Mr Boensch's claim for compensation under s 74P(1) of the Real Property Act must fail. To sustain a claim that a caveat was lodged or maintained without "reasonable cause", a claimant for compensation under the section must establish, in the language of Clarke JA in Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd13, that "the caveator neither had a caveatable interest nor an honest belief, based on reasonable grounds, that he had one". The existence of a caveatable interest, without more, supplies "reasonable cause" for lodging and maintaining the amendment of the section to take its current form14 in circumstances15 indicating legislative advertence to and endorsement of the test for the absence of "reasonable cause" it expounded16. The test in Beca Developments should not be disturbed. the caveat. Beca Developments pre-dated For these reasons, we agree that the appeal should be dismissed with costs. (1990) 21 NSWLR 459 at 474-475. 14 Real Property Amendment Act 1996 (NSW), Sch 1 [19]. 15 New South Wales, Real Property Amendment Bill 1996, Explanatory Note at 4. 16 Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 Bell BELL, NETTLE, GORDON AND EDELMAN JJ. This is an appeal from a judgment of the Full Court of the Federal Court of Australia dismissing an appeal from the decision of the Supreme Court of New South Wales that the respondent, Mr Pascoe, did not act without "reasonable cause" within the meaning of s 74P(1) of the Real Property Act 1900 (NSW) in lodging and not withdrawing a caveat against dealings over land in respect of which the appellant, Mr Boensch, was the registered proprietor of an estate in fee simple ("the Rydalmere property"). Mr Boensch was granted special leave to appeal to this Court because the appeal raises a question of principle of general importance as to whether property held by a bankrupt on trust for another vests in the bankrupt's trustee in bankruptcy pursuant to s 58 of the Bankruptcy Act 1966 (Cth). For the reasons which follow, the question should be answered that, provided the bankrupt has a valid beneficial interest in the trust property, the trust property will vest in the trustee in bankruptcy subject to the equities to which it is subject in the hands of the bankrupt. For these purposes, a valid beneficial interest means a vested or (subject to applicable laws as to remoteness of vesting) contingent right or power to obtain some personal benefit from the trust property. Relevant statutory provisions The word "property" is defined in s 5(1) of the Bankruptcy Act 1966 for the purposes of that Act as meaning "real or personal property of every description, whether situate in Australia or elsewhere", and including "any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property". The phrase "the property of the bankrupt" is also there defined, in relation to a bankrupt and except for the purposes of s 58(3) and (4) of the Act, as meaning "the property divisible among the bankrupt's creditors" and "any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt". So far as is relevant, s 116(1) of the Bankruptcy Act 1966 provides that the property of a bankrupt divisible among his or her creditors includes "all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge". Perforce of s 116(2)(a), however, such property does not extend to "property held by the bankrupt in trust for another person". In substance, s 58(1) of the Bankruptcy Act 1966 provides that, subject to the Act, where a debtor becomes a bankrupt, "the property of the bankrupt" vests Bell in the Official Trustee or any registered trustee who has become the trustee of the bankrupt's estate under s 156A, either forthwith or as soon as the property is acquired by or devolves on the bankrupt. Nevertheless, s 58(2) of the Bankruptcy Act 1966 provides in substance that, where a Commonwealth, State or Territory law requires the transmission of property to be registered and enables the trustee of a bankrupt's estate to be registered as the owner of the property of the bankrupt, although in equity the property vests in the trustee by virtue of s 58, at law it does not so vest until the requirements of the law have been complied with. Read with the Bankruptcy Act 1966, s 90 of the Real Property Act provides, in substance and so far as is relevant, that the Official Trustee, a trustee, or any other person claiming to be entitled to land subject to the Real Property Act by virtue of the operation of the Bankruptcy Act 1966, or of anything done thereunder, may apply in the approved form to the Registrar-General to be registered as proprietor of that land, and that, on being satisfied that such an applicant is entitled to be registered as proprietor of the land, the Registrar- General may record the applicant in the Register as proprietor. Part 7A of the Real Property Act provides, inter alia, for the lodgement, lapse and withdrawal of caveats, including "caveats against dealings". In particular, s 74F(1) of the Act provides, so far as is relevant, that any person who, "by devolution of law or otherwise, claims to be entitled to a legal or equitable estate or interest in land" under the provisions of the Act "may lodge with the Registrar-General a caveat prohibiting the recording of any dealing affecting the estate or interest to which the person claims to be entitled". Section 74F(5) of the Real Property Act provides, inter alia, that a caveat against dealings must be in the approved form and specify "the prescribed particulars of the legal or equitable estate or interest ... to which the caveator claims to be entitled". Section 74L provides in substance, however, that failures strictly to comply with the formal requirements for caveats are to be disregarded by a court in determining the validity of a caveat. Section 74J(1) of the Real Property Act provides in substance that, where a caveat lodged under s 74F remains in force, the Registrar-General shall, upon an application in the approved form by the registered proprietor of an estate or interest in the land described in the caveat, prepare for service on the caveator a notice that the caveat will lapse unless the caveator has, before the expiry of 21 days after the date of service, obtained from the Supreme Court an order extending the operation of the caveat for such further period as is specified in the order or until the further order of that Court, and lodged the order or an office copy of the order with the Registrar-General. Section 74J(2) provides in substance that the applicant must lodge evidence of the due service of the notice on the caveator. Section 74J(4) then provides in substance that, if such evidence Bell is lodged in time and the caveator has not lodged the order of the Court or an office copy of the order with the Registrar-General in accordance with s 74J(1), the Registrar-General shall make a recording in the Register to the effect that the caveat has lapsed, and the caveat so lapses on the making of that recording. Section 74M(1) of the Real Property Act provides, inter alia, that a caveator may withdraw a caveat. Section 74MA(1) of the Real Property Act provides, so far as is relevant, that any person who is or claims to be entitled to an estate or interest in the land described in a caveat lodged under s 74F may apply to the Supreme Court for an order that the caveat be withdrawn by the caveator. Section 74P(1) of the Real Property Act provides, in substance and so far as is relevant, that any person who, "without reasonable cause", lodges a caveat with the Registrar-General under s 74F, or refuses or fails to withdraw such a caveat after being requested to do so, is liable to pay compensation to any person who sustains pecuniary loss attributable to the lodging of the caveat, or the refusal or failure to withdraw it. The facts At all relevant times, Mr Boensch and his former wife, Sabine Boensch, were registered as joint proprietors in fee simple of the Rydalmere property. Mr Boensch claimed that, in May 1999, he and Ms Boensch reached a matrimonial property settlement under which Ms Boensch agreed to transfer her interest in the Rydalmere property to him for a consideration of $50,000. Mr Boensch also claimed that, on 23 August 1999, he and Ms Boensch executed a memorandum of trust ("the Memorandum of Trust") in the following terms: "This is a memorandum of trust created for the benefit of Boensch family with the most important purpose to provide secure means of support to the children of the marriage ... after the divorce of their parents. The trust property is the land and buildings at [the Rydalmere property]. Sabine Boensch will cause her share of ownership of that land to be transferred to Franz Boensch for him to hold the whole of land in trust as described above. In due course Franz Boensch will arrange with a solicitor or accountant to prepare a detailed trust document, professionally drafted to Bell give best protection to the children and to ensure favourable tax treatment of income earned by the trust." The Memorandum of Trust was not stamped until 29 March 2004. In the meantime, in October 2003, Mr Boensch was served with a bankruptcy notice demanding payment of a judgment debt due to one Michael Costin. Mr Boensch claimed that, on 18 March 2004, he and Ms Boensch, as settlors, executed a deed of trust prepared by solicitors ("the Deed of Trust"). The recitals to the Deed of Trust stated that the settlors wished to confirm the settlement upon Mr Boensch as trustee in the Memorandum of Trust, constituting "the Boensch trust" (hereafter, "the Boensch Trust"). The First Group Beneficiaries of the Boensch Trust were defined as the children of Mr and Ms Boensch. Mr Boensch was nominated as the appointor. On 21 March 2004, Mr and Ms Boensch executed a transfer of their estate in fee simple in the Rydalmere property to Mr Boensch. The first mortgagee of the property at the time would not, however, consent to registration of the transfer, and it was not registered. On 12 July 2005, Mr Boensch lodged the Deed of Trust (with the Memorandum of Trust attached) with the Registrar-General and requested that the Registrar-General record a caveat over the Rydalmere property forbidding registration of any instrument not in accordance with the Boensch Trust17. A caveat to that effect was recorded on the title on 17 August 2005. By then, Mr Costin had filed a Creditor's Petition dated 15 July 2005 in the Federal Magistrates Court seeking a sequestration order against Mr Boensch. On 23 August 2005, the Federal Magistrates Court made that order and appointed Mr Pascoe as Mr Boensch's trustee in bankruptcy. Later that day, Mr Pascoe received advice from counsel that, in counsel's opinion, there were strong prospects of defeating the trust claim (presumably by demonstrating that the Boensch Trust was a sham) or, alternatively, of having any trust set aside (presumably under s 120 or s 121 of the Bankruptcy Act 1966 as a transfer of property made to defeat creditors). 17 See Real Property Act, ss 12(1)(f), 82(1). Bell On 24 August 2005, Mr Pascoe had a meeting with Mr Boensch at which Mr Boensch provided a number of documents. They included a copy of the Memorandum of Trust and at least the front page of the Deed of Trust. Mr Boensch told Mr Pascoe that Mr Boensch held the property on trust for his children. Mr Pascoe was not satisfied of the truth of Mr Boensch's claim, which he suspected might be a means of putting the Rydalmere property beyond the reach of his creditors. Mr Pascoe's usual practice when appointed as a trustee in bankruptcy was to lodge a caveat against dealings at an early stage of the administration over any land held by the bankrupt. Mr Pascoe believed that whatever beneficial interest the bankrupt might have in such land would vest in him as trustee in bankruptcy and that that was enough to support a caveat. Usually, Mr Pascoe used a standard form of words to describe his interest as trustee in bankruptcy: "Legal Interest pursuant to the Bankruptcy Act 1966". On 25 August 2005, Mr Pascoe lodged a caveat against dealings over the Rydalmere property. In accordance with his usual practice, he claimed a "Legal Interest pursuant to the Bankruptcy Act 1966". The caveat was certified by Mr Pascoe's solicitor, who declared that Mr Pascoe had a good and valid claim to the estate or interest claimed therein. At the time of lodging the caveat, Mr Pascoe did not know, and could not tell, whether Mr Boensch was insolvent when the Boensch Trust was alleged to have been established in 1999, and there was no suggestion of any imminent transfer of the Rydalmere property. Mr Pascoe believed, however, that, as a trustee in bankruptcy, he needed to lodge his caveat without delay because of the risk of unknown circumstances that could affect title. On 29 August 2005, Mr Pascoe sent a "Notice to Produce Books of an Associated Entity pursuant to s 77A of the Bankruptcy Act" to Mr Leong of Mr Boensch's solicitors at the time. The notice required the production of documents prior to 12 September 2005. Mr Leong received the letter on about 31 August 2005 but did nothing about it because, he later said, he considered that virtually all of his file relating to the trust was privileged. On 23 September 2005, Mr Pascoe sent a letter to Mr Leong stating that the period under the notice had expired and that he was referring the issue of non-compliance to the Insolvency and Trustee Service Australia ("ITSA") Fraud Investigation Unit for prosecution. Mr Leong responded on 29 September 2005. He stated, incorrectly as it seems, that the notice had been complied with. He observed that, as Mr Boensch's trustee in bankruptcy, Mr Pascoe was "defacto [sic] trustee of the Bell [Boensch Family] Trust", and he enquired whether Mr Pascoe was prepared to relinquish that position. On 30 September 2005, Mr Leong provided Mr Pascoe with a photocopy of what he said was his entire file. He did not assert any claim to privilege over it. The documents so produced included a further copy of the Memorandum of Trust dated 23 August 1999 and a copy of an executed transfer of the Rydalmere property from Mr and Ms Boensch to Mr Boensch dated 21 March 2004. This copy of the Memorandum of Trust was differently formatted from that previously provided to Mr Pascoe, and it contained no notation that the execution had been witnessed by a Justice of the Peace. Mr Pascoe thought that to be unusual in the absence of an explanation. His scepticism was increased by another document – a letter from Mr Leong to Mr Boensch dated 17 March 2004 which referred to Mr Boensch wanting to be nominated as a beneficiary of the Boensch Trust. Mr Pascoe's suspicions were further aroused by affidavits affirmed by Mr and Ms Boensch in March 2004, which Mr Pascoe thought may have been prepared to support the claim that the Rydalmere property had been held on trust since 1999, and by the fact that the executed transfer of the Rydalmere property to Mr Boensch was dated 21 March 2004, some five years after the alleged formation of the trust and approximately five months after service of Mr Costin's bankruptcy notice. Mr Pascoe suspected an attempt by Mr Boensch to defeat his creditors. Meanwhile, on 1 September 2005, ITSA had forwarded Mr Pascoe an email from Mr Boensch of the previous day, in which Mr Boensch referred to himself as being trustee of a trust of a property for his children and stated that the agreement for the trust was made with a memorandum of trust in 1999. The email also referred to a decision made in 2003 to establish a trading trust with Elise Capital Pty Ltd as trustee, and Mr Boensch and his children as beneficiaries. Mr Boensch was the sole director of Elise Capital Pty Ltd. The assertion of two different trusts, and the fact that the Deed of Trust for the Boensch Trust was not executed until 18 March 2004, after the establishment of the "trading trust" in 2003, in circumstances where Mr Costin was pursuing Mr Boensch for payment of the judgment debt, further increased Mr Pascoe's suspicions that Mr Boensch was making statements to defeat his creditors. On 22 September 2005, Mr Pascoe had another meeting with Mr Boensch. Mr Boensch there produced his Statement of Affairs, in which he answered the question of when he had first experienced difficulty in paying his debts by writing "always". In identifying his secured creditors, he stated that, as trustee of the Boensch Trust, he considered himself to be a joint guarantor of a registered mortgage over the Rydalmere property in favour of the Commonwealth Bank of Australia, and that the loan repayments were made "by the Boensch Trust". In Bell providing details of his company associations, he stated that Elise Capital Pty Ltd was the trustee of the "Boensch Family Trust No 1" and the "Boensch Family Trust No 2". Mr Pascoe was not persuaded by Mr Boensch's claims that he held the Rydalmere property on trust for the Boensch Trust and suggested to Mr Boensch that it would be sensible for him to make a proposal to creditors for the purposes of s 75 of the Bankruptcy Act 1966. On 23 September 2005, Mr Pascoe received a telephone call from one Stephen Mullette of a firm of solicitors, who said that he was acting for Mr Boensch. Mr Mullette apparently sought to persuade Mr Pascoe to remove the caveat that Mr Pascoe had lodged over the Rydalmere property. On 27 September 2005, Mr Mullette sent a letter to Mr Pascoe which included the following: "I note that following your appointment, and no doubt as a matter of course, a caveat was lodged on Property Registered in the name of Mr Boensch together with his former wife, Sabine Boensch ... ('the Property'). I am instructed that the Property is held on trust for Mr Boensch's children pursuant to the terms of a memorandum of trust created between Mr Boensch and his former wife on 23 August 1999, and confirmed by Deed of Trust dated 18 March 2004. A copy of these documents are [sic] enclosed. No doubt you will need to review these documents for your own benefit. However, the terms of the trust are clear, such that the property does not fall within the divisible property in the bankruptcy, and the trustee's interest will not support the caveat lodged on the title. My client requests that the caveat be withdrawn within 21 days from the date of this letter, in the absence of which he will need to consider his options, including whether to file a lapsing notice at the Department of Lands. I will notify you prior to filing the lapsing notice. If you require longer than the 21 days to form a view on my client's claim please advise how long and I will obtain instructions." On 11 October 2005, a chartered accountant acting for Mr Boensch and for companies associated with Mr and Ms Boensch, including Elise Capital Pty Ltd and Boensch Pty Ltd, sent various records to an assistant of Mr Pascoe. They included trust deeds dated 18 November 2003 for the "Boensch Family Trust No 1" and "Boensch Family Trust No 2 – Rentals". Mr Pascoe reviewed the deeds but had difficulty identifying the trust assets. That reinforced his doubts as Bell to whether the documents already provided by Mr Boensch were reflective of the true state of affairs. On 12 October 2005, Mr Pascoe sent a letter to Mr Mullette asking that Mr Boensch provide, by 8 November 2005, any documentation on which he intended to rely to establish the existence of the Boensch Trust and originals of the trust documents. In a further letter to Mr Mullette of the same date, Mr Pascoe asked for 60 days in which to obtain documentation and advice and form a view about the validity of Mr Boensch's claims. On 17 October 2005, Mr Pascoe, his assistant and his solicitor conferred with counsel. There was some discussion regarding the need to sight original documents. Following the conference, Mr Pascoe sent a letter to his solicitor outlining further action to be undertaken in relation to the "recovery process". At that stage, it was envisaged that, to begin with, they would obtain preliminary advice from counsel on the prospects of success, and it was contemplated that examinations of Mr and Ms Boensch may be necessary. On 21 October 2005, Mr Pascoe made his first report to creditors. He advised that he was investigating the validity of the Boensch Trust for various reasons including the fact that no action in relation to the trust appeared to have been taken until the debt recovery proceedings taken by Mr Costin were well advanced. Mr Pascoe also referred to the fact that he could not obtain registration as proprietor of the Rydalmere property because of the caveat which Mr Boensch had lodged on the title to protect the interests of the Boensch Trust. On 24 October 2005, Mr Pascoe the Commonwealth Bank of Australia concerning the mortgage over the Rydalmere property, and, on 28 October 2005, he sent a letter to Mr Boensch requiring him to produce the original Boensch Trust deed and declarations of trust. information sought from On 31 October 2005, Mr Mullette wrote to Mr Pascoe in part as follows: "I refer to your recent letters. My client relies upon the trust deed and declaration provided to you previously. If there is any reason not to accept these documents as sufficient to satisfy the trustee of the claim of my client, then please advise. Otherwise I will be advising my client to lodge an application for a lapsing notice on the caveat on the property. My client is not prepared to wait 60 days and does not understand why such a long period would be required. I note that you have requested certain documents from my client, including original trust documentation. This is not property of the Bell bankrupt estate, and is required for the administration of the trust. My client will provide a certified copy shortly, and is prepared to allow the inspection of the original trust deed at our offices by prior arrangement. ... I look forward to your advice as to when the caveat will be withdrawn." On 7 November 2005, Mr Boensch forwarded a certified copy of the Memorandum of Trust dated 23 August 1999 attached to a certified copy of the Deed of Trust dated 18 March 2004. On 9 November 2005, Mr Mullette advised that the original Deed of Trust was available for inspection at his office. On 11 November 2005, Mr Leong sent a letter to Mr Pascoe advising that he now acted for Ms Boensch, maintaining that the Rydalmere property had vested in Mr Pascoe as Mr Boensch's trustee in bankruptcy, and asking Mr Pascoe to sign a deed providing for Ms Boensch to be appointed as trustee in Mr Pascoe's place. On 15 November 2005, Mr Mullette sent a letter to Mr Pascoe in which he disputed concerns that Mr Pascoe had expressed in his report concerning the validity of the Boensch Trust. That letter included the following: "In reality, it seems to us, the only basis upon which the trust may be questioned is if the Memorandum of Trust dated 23 August 1999 is some form of fraud or sham. There is simply no evidence or indication of this and we do not understand the trustee to seriously contest otherwise. If we are incorrect, please let us know. In the circumstances, then, there can be no question of the entitlement of our client, as trustee of the Boensch Trust to hold the property clear of encumbrances including the caveat which you have caused to be lodged. Our client instructs us that he has given all such information as the trustee required in relation to the establishment of the trust, and yet the report to creditors and our previous communications have given no indication that the caveat will be withdrawn in the immediate future. In the circumstances, our client is no longer prepared to suffer the caveat to remain on title. We will be filing a Lapsing Notice after seven days from the date hereof unless the caveat is withdrawn by that time." A meeting of creditors was held on 16 November 2005. It included discussion about the possibility of action to recover property from the Boensch Trust and the funding of the action. By that stage, Mr Pascoe had formed the Bell view that, even if Mr Boensch's trust claims were valid, Mr Boensch was likely to have a trustee's right of indemnity out of the Boensch Trust assets. On about 23 November 2005, Mr Pascoe's solicitor arranged with Mr Mullette for an inspection of the original trust documents. Mr Mullette agreed that no lapsing notice would be issued in the meantime. On 30 November 2005, Mr Pascoe and his assistant attended at Mr Mullette's office to inspect the original trust documents. Mr Boensch was present and produced the original documents. He assured Mr Pascoe that there was only one original executed Memorandum of Trust. Given the existence of the second executed version of the Memorandum of Trust in Mr Leong's file, that caused Mr Pascoe to have further doubts about Mr Boensch's credibility. On 5 December 2005, Mr Mullette sent an email to Mr Pascoe's solicitor, copied to Mr Pascoe, which included an attached statutory declaration of Mr Boensch to the effect that there was only one version of the Memorandum of Trust. The email also provided an address for the Justice of the Peace who was said to have witnessed the signatures on the Memorandum of Trust. And it included the following: "On my instructions and from the documents I have seen, there can be no question that the trust is valid. My client intends filing a lapsing notice shortly. I will seek instructions and notify you beforehand. If you have any reason to suspect that the trust is not exactly what it says it is, I would be happy to take instructions regarding the trustee's concerns." On 14 December 2005, Mr Leong sent a letter to Mr Pascoe calling for execution of the deed that he had earlier forwarded and stating that, if the deed were not executed and returned by 27 January 2006, proceedings would be instituted. Mr Pascoe did not respond to Mr Mullette's email of 5 December 2005 or to Mr Leong's letter of 14 December 2005. No lapsing notice was served, and no proceedings were instituted. On 21 February 2006, Mr Boensch sent an email to Mr Pascoe which contained a signed statement of Mr Boensch that included the following: "Most of the living expenses are provided for by the Trust. I live at the trusts [sic] will. At the moment I do not have any living expenses. My accommodation is at the mercy of the Trust as it is a mutually beneficial arrangement. I provide some form of security for the balance of the property." Bell On 22 February 2006, Mr Pascoe wrote to Mr Boensch seeking further information about various matters, the "mutually beneficial arrangement" referred to in Mr Boensch's statement. Mr Boensch responded to the effect that the arrangement concerned only the room that he occupied in the Rydalmere property. He explained that the room was not of a standard that would enable it to be let and that the mutual benefit was that he had a roof over his head and the property appeared to be occupied. including It was arranged that Mr and Ms Boensch should be examined in the Federal Court on 3 May 2006. Ms Boensch attended and was examined on that date. Mr Boensch did not attend, reputedly for medical reasons, and was not examined until March 2009. Following Ms Boensch's examination, Mr Pascoe received further advice from counsel, to the effect that the underlying transaction concerning the Boensch Trust appeared to have taken place on 23 August 1999 and, that being so, a claim under s 120 of the Bankruptcy Act 1966 would not be available. As to a claim under s 121, however, counsel advised that it was clear from the terms of the Memorandum of Trust of 23 August 1999 that no consideration was paid for the transfer and that it was apparent from the file notes obtained from Mr Leong's file that it was at all times the intention of the bankrupt to retain an equity in the Rydalmere property. In counsel's opinion, therefore, it could be inferred that the terms of the Memorandum of Trust were a "sham", or illusory – not truly reflective of the parties' legal relationship, at least until the Deed of Trust was executed. It followed, in counsel's opinion, that it was appropriate for Mr Pascoe to make an application for orders under s 121 of the Bankruptcy Act 1966 setting aside the Memorandum of Trust and the Deed of Trust. Based on that advice, Mr Pascoe concluded that such proceedings would have good prospects of success. On 9 June 2006, Mr Pascoe conveyed the substance of counsel's advice to a second meeting of creditors, and, on 19 July 2006, he instituted proceedings in the Federal Magistrates Court for a declaration pursuant to s 121 of the Bankruptcy Act 1966 that the Memorandum of Trust was void as against Mr Pascoe, and for relief under s 120 or alternatively s 121 of the Bankruptcy Act 1966 in respect of the Deed of Trust and the transfer dated 21 March 2004. On 29 August 2006, counsel sent an email to Mr Pascoe's solicitor advising that principles concerning voluntary assignments discussed in a Bell then-recent decision of the Federal Court18 were of relevance to the proceedings against Mr Boensch. Counsel also expressed the view that it was obvious that the Memorandum of Trust was an imperfect gift, and so not effective to convey any equity for the purposes stated, and that the Deed of Trust made on 18 March 2004 was, if anything, a declaration of trust that would clearly fall within the ambit of s 120 or s 121 of the Bankruptcy Act 1966. Following numerous interlocutory skirmishes, on 6 September 2007 it was ordered that the question of whether the Memorandum of Trust constituted a valid declaration of trust or otherwise created a valid interest in the property be set down for determination as a preliminary question. On 6 December 2007, the Federal Magistrates Court (Federal Magistrate Raphael) concluded19 that the Memorandum of Trust was not a sham and that it manifested a sufficient intention to constitute a trust. On 10 December 2007, Mr Boensch's then solicitors, Wright Commercial Lawyers, sent a letter to Mr Pascoe's solicitor formally requesting that Mr Pascoe withdraw his caveat. The letter stated that, if the caveat were not promptly removed, Mr Boensch would apply either for an order for removal under s 74MA of the Real Property Act or for a lapsing notice to be prepared under s 74J(1) of the Real Property Act. The request was expressed to be made without prejudice to Mr Boensch's rights to claim compensation under s 74P(1) of the Real Property Act. Thereafter, Mr Pascoe received further advice from counsel: that it would be appropriate for him to seek leave to appeal from the orders of the Federal Magistrates Court and also that, even if the Boensch Trust were upheld as valid, Mr Boensch may still have a beneficial interest in the property as a beneficiary of the trust or by reason of his right of indemnity as trustee out of the trust assets, which interest would have vested in Mr Pascoe as Mr Boensch's trustee in bankruptcy. On that basis, Mr Pascoe determined to seek leave to appeal against the Federal Magistrates Court's decision and not to withdraw the caveat until that appeal had been determined. Although leave to appeal was granted, the appeal was dismissed by the Full Court of the Federal Court (Finn, Dowsett and Edmonds JJ) on 18 August 18 Re Vasiliou; Marchesi v Vasiliou (2006) 235 ALR 136. 19 Pascoe v Boensch [No 6] [2007] FMCA 2038 at [8], [19]. Bell 200820. On the same day, Wright Commercial Lawyers again requested withdrawal of the caveat. Mr Pascoe, however, continued to believe that he had a basis for maintaining his caveat, relying on his applications under ss 120 and 121 of the Bankruptcy Act 1966 and the fact that he had not received any legal advice to the effect that he should now withdraw the caveat. On 15 September 2008, Mr Pascoe filed an application for special leave to appeal to this Court. On 12 March 2009, Gummow and Kiefel JJ dismissed that application without oral argument, their Honours not being satisfied that any issue of principle could determine the matter or that an appeal would have On 13 August 2009, the Federal Magistrates Court rejected an application by Mr Pascoe to amend his application to particularise his claim under s 121 of the Bankruptcy Act 1966, and allowed Mr Boensch's application pursuant to r 13.10 of the Federal Magistrates Court Rules 2001 (Cth) for summary dismissal of the Federal Magistrates Court proceeding on the basis that Mr Pascoe did not have reasonable prospects of success in establishing Mr Boensch's insolvency at the time of the declaration of trust22. On 25 August 2009, Mr Pascoe's solicitor was served with a lapsing notice. She sent it to Mr Pascoe the same day. On 8 September 2009, she sought instructions from Mr Pascoe about whether to make an application to extend the operation of the caveat. Mr Pascoe responded on the same day in the following terms: "I have thought about this overnight and think we should try to minimise the fronts we are fighting him on by letting the caveat lapse. He still has the Reg Gen caveat and the mortgage on title. We know that he won't sell. His only option is refinance. It would take a very brave refinancer to lend against the property after doing a title search. I think this is a risk we can bare [sic]." 20 Pascoe v Boensch (2008) 250 ALR 24. 21 Pascoe v Boensch [2009] HCASL 61. 22 Pascoe v Boensch [No 9] (2009) 8 ABC (NS) 495. Bell At that stage, Mr Pascoe considered that such interest as Mr Boensch may have in the Rydalmere property by virtue of his right of indemnity as trustee "would be of limited value", and Mr Pascoe did not want to be a party to another set of proceedings that might ultimately be of little value to creditors. The caveat lapsed on 15 September 2009. Finally, on 3 November 2009, the Federal Court (Graham J) dismissed Mr Pascoe's application for leave to appeal against the Federal Magistrates Court's refusal of leave to amend and summary dismissal of the Federal Magistrates Court proceeding23. The proceedings at first instance On 24 May 2012, Mr Boensch instituted proceedings in the Equity Division of the Supreme Court of New South Wales alleging that Mr Pascoe had lodged, and later refused or failed to withdraw, the caveat without reasonable cause, and claiming compensation therefor pursuant to s 74P(1) of the Real Property Act. On 15 May 2015, Bergin CJ in Eq made orders by consent under r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) for the separate determination of the following three questions: (1) Did Mr Pascoe lodge Caveat AB721857 over the Rydalmere property without reasonable cause within the meaning of s 74P(1) of the Real Property Act? (2) Did Mr Pascoe, without reasonable cause within the meaning of s 74P(1) of the Real Property Act, refuse or fail to withdraw the caveat after being requested to do so? If the answer to question 2 above is "yes", on what date should Mr Pascoe have withdrawn the caveat? 23 Pascoe v Boensch [2009] FCA 1240. Bell Following Official Trustee in Bankruptcy v Ritchie24 and Lewis v Condon25, the primary judge (Darke J) held26 that, upon the making of a sequestration order against a bankrupt who holds property on trust, s 58(1)(a) of the Bankruptcy Act 1966 operates in equity to vest such property in the bankrupt's trustee in bankruptcy subject to the trust, and that the trustee in bankruptcy thereby acquires a caveatable interest in the property. It followed that, upon the making of the sequestration order against Mr Boensch, the Rydalmere property vested in equity in Mr Pascoe – thereby conferring a caveatable interest on Mr Pascoe. His Honour further held27 that, although Mr Pascoe's interest in the property was but equitable and would remain so unless and until Mr Pascoe obtained registration as proprietor of the property, the description of Mr Pascoe's interest in the property in the caveat as a "Legal Interest pursuant to the Bankruptcy Act 1966" was an adequate description for the purposes of s 74F(5) of the Real Property Act. Applying the two-step test laid down in Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd28 and followed in Mahendran v Chase Enterprises Pty Ltd29, the primary judge concluded30 that, because Mr Boensch had not proven that Mr Pascoe lacked a caveatable interest (the first step), it could not be said that Mr Pascoe had lodged or maintained the caveat without "reasonable cause" (1988) 12 NSWLR 162 at 174 per Powell J. (2013) 85 NSWLR 99 at 119 [91]-[92], 120 [100] per Leeming JA (McColl JA and Sackville A-JA agreeing at 102 [1], 124 [118]). 26 Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882 at [103]-[104]. 27 Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882 at [106]. (1990) 21 NSWLR 459 at 474-475 per Clarke JA, 479-480 per Waddell A-JA, see also at 463 per Kirby P. (2013) 17 BPR 32,733 at 32,739-32,740 [52] per Barrett JA (Emmett and Gleeson JJA agreeing at 32,740 [59], 32,741 [60]). 30 Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882 at [94], [107]. Bell within the meaning of s 74P(1). As his Honour observed31, so to conclude was sufficient to resolve the matter, but, in case that conclusion were wrong, his Honour then went on to determine whether, if Mr Pascoe did not have a caveatable interest, Mr Pascoe would nevertheless have had an honest belief based on reasonable grounds that he had a caveatable interest (the second step), and thus reasonable cause to lodge and maintain the caveat within the meaning of s 74P(1) of the Real Property Act. As to Mr Pascoe's beliefs, the primary judge found32 as follows: (1) At all relevant times, Mr Pascoe honestly believed in accordance with his usual practice that, by reason alone of the fact of being appointed the trustee in bankruptcy of the bankrupt Mr Boensch, who was the registered proprietor of the Rydalmere property, he acquired an interest in the Rydalmere property sufficient to support a caveat. (2) At all relevant times up to 3 November 2009, when Mr Pascoe's application for leave to appeal against the orders of the Federal Magistrates Court was rejected, Mr Pascoe honestly believed on the basis of his investigations and legal advice that there were reasonable prospects that the trust or trusts alleged by Mr Boensch in respect of the Rydalmere property would be held invalid or alternatively declared void as against him under the Bankruptcy Act 1966. From at least the time of the first meeting of creditors in November 2005, Mr Pascoe honestly believed on the basis of his investigations and legal advice that, even if Mr Boensch held the Rydalmere property on trust for others, Mr Boensch may have a right of indemnity in relation to the Rydalmere property giving Mr Boensch a beneficial interest in the property that, upon the making of the sequestration order, had vested in Mr Pascoe as trustee in bankruptcy and so supported a caveat. 31 Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882 at [108]. 32 Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882 at [109], [111]-[113]. Bell As to the grounds upon which those beliefs were based, the primary judge held33 as follows: (1) Mr Pascoe did have reasonable grounds to believe that the alleged trust might not be valid or enforceable against him, and, therefore, that he had reasonable prospects of succeeding on that basis in the Federal Magistrates Court proceedings. It had not been shown that Mr Pascoe lacked reasonable grounds to believe, at least up to 13 August 2009, that his application under s 121 of the Bankruptcy Act 1966 had reasonable prospects of success. From May 2009 at the latest, Mr Pascoe had reasonable grounds to believe that Mr Boensch might have had a right of indemnity out of the Rydalmere property, albeit that it was likely to have little value. It followed, as the primary judge concluded34, that Mr Boensch had not established that Mr Pascoe lodged or maintained the caveat without reasonable cause within the meaning of s 74P(1) of the Real Property Act. In the result, the primary judge answered35 the questions earlier set out: (1) "No", (2) "No", and (3) "Does not arise"; and his Honour ordered36 that the proceeding be dismissed with costs. The Full Court proceedings Mr Boensch appealed to the Full Court of the Federal Court, after the Court of Appeal of the Supreme Court of New South Wales (Leeming JA) had 33 Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882 at [115], [128]-[129]. 34 Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882 at [131]. 35 Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882 at [135]. 36 Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882 at [136]. See also Boensch as trustee of the Boensch Trust v Pascoe [No 2] [2016] NSWSC 343. Bell dismissed an earlier appeal as incompetent for want of jurisdiction37. The Full Court (Besanko, McKerracher and Gleeson JJ) held38 that, although the question of whether trust property vests in a trustee's trustee in bankruptcy is not free of difficulty, they, like the primary judge, should follow Official Trustee in Bankruptcy v Ritchie and Lewis v Condon, and, therefore, that, even if Mr Boensch held only a "bare legal interest" in the Rydalmere property (scil without any beneficial interest at all), the property vested in Mr Pascoe upon the making of the sequestration order and conferred on Mr Pascoe a caveatable interest in the property. The Full Court further held39 that the primary judge was right to conclude that the description of Mr Pascoe's caveatable interest as "Legal Interest pursuant to the Bankruptcy Act 1966" was adequate. Their Honours considered40 that the description was apt to cover not only the interest identified by the primary judge (the "bare legal interest") but also a "full legal interest" in the event that any purported trust was held invalid or set aside under s 120 or s 121 of the Bankruptcy Act 1966. Like the primary judge, too, the Full Court saw no reason to depart from the Beca Developments two-step test of reasonable cause, although their Honours cautioned41 that the rule may be subject to an exception where a caveator has acted from an ulterior or improper motive. But as their Honours observed42, there was no suggestion that Mr Pascoe had acted out of any ulterior or improper motive, and, accordingly, the existence of Mr Pascoe's caveatable interest sufficed for Mr Boensch's claim under s 74P(1) of the Real Property Act to be dismissed. 37 Boensch v Pascoe (2016) 349 ALR 193. 38 Boensch v Pascoe (2018) 264 FCR 25 at 46 [102], 47 [106]. 39 Boensch v Pascoe (2018) 264 FCR 25 at 47-48 [107]. 40 Boensch v Pascoe (2018) 264 FCR 25 at 48 [108]. 41 Boensch v Pascoe (2018) 264 FCR 25 at 49 [111]. 42 Boensch v Pascoe (2018) 264 FCR 25 at 49 [111]-[112]. Bell On the alternative assumption that Mr Pascoe lacked a caveatable interest, the Full Court further held43 that there was no basis for challenging the primary judge's conclusion that Mr Pascoe had reasonable grounds for considering that he had reasonable prospects of succeeding in the Federal Magistrates Court, and, for that reason, that the primary judge did not err in concluding that Mr Pascoe would have had an honest belief based on reasonable grounds that he had a caveatable interest. The Full Court stated44 that it was unnecessary to decide whether the primary judge erred in finding that Mr Pascoe had reasonable grounds from no later than May 2009 to believe that Mr Boensch might have a right of indemnity out of the Rydalmere property, or to decide whether such a right of indemnity comprised property which would have vested in Mr Pascoe sufficient to sustain a caveatable interest, because Mr Pascoe's honest belief based on reasonable grounds that the trust would be set aside or declared void made it difficult to see how a successful challenge to the primary judge's findings about the right of indemnity could affect the outcome of the case. Nonetheless, their Honours added45 that they saw no reason to interfere with the primary judge's finding that Mr Pascoe honestly believed that Mr Boensch might have a right of indemnity, given that it seemed clear that Mr Boensch had made mortgage payments on the Rydalmere property, and the so-called "mutually beneficial arrangement" was not documented. On that basis, the Full Court dismissed Mr Boensch's appeal46. The appeal to this Court By grant of special leave, Mr Boensch appeals to this Court on grounds, in substance, as follows: The Full Court erred in holding that, upon the making of the sequestration order, any interest in the Rydalmere property that was held by Mr Boensch as trustee of the Boensch Trust vested in Mr Pascoe as 43 Boensch v Pascoe (2018) 264 FCR 25 at 49 [113], 54 [136]. 44 Boensch v Pascoe (2018) 264 FCR 25 at 56-57 [155]-[156]. 45 Boensch v Pascoe (2018) 264 FCR 25 at 57 [158]. 46 Boensch v Pascoe (2018) 264 FCR 25 at 57 [159]. Bell Mr Boensch's trustee in bankruptcy, and thus conferred on Mr Pascoe a caveatable interest in the Rydalmere property. The Full Court erred in holding that Mr Pascoe was entitled for the purposes of ss 74K(1) and 74P(1) of the Real Property Act to claim inconsistent caveatable interests, namely an interest acknowledging, as well as an interest denying, the existence of the Boensch Trust. The Full Court erred in holding that, because Mr Pascoe had a caveatable interest in the Rydalmere property, it was unnecessary for the purposes of s 74P(1) of the Real Property Act to consider whether Mr Pascoe had an honest belief on reasonable grounds that he held a caveatable interest in the property. The Full Court erred in holding that, notwithstanding that it may be found that a caveator did not have a caveatable interest in real property, it is sufficient for the purposes of s 74P(1) of the Real Property Act that the caveator had an honest belief based on reasonable grounds that the caveator was possessed of the claimed caveatable interest. The Full Court erred in finding that Mr Pascoe had an honest belief based on reasonable grounds that he had a caveatable interest in the Rydalmere property. The Full Court erred in concluding that the interest claimed in the caveat was adequately described. In the course of oral argument, counsel for Mr Boensch restricted his submissions to a limited range of issues which are dealt with in greater detail in what follows. As foreshadowed at the hearing on special leave, Mr Pascoe filed a notice of contention maintaining, in substance, that the Full Court ought to have found that Mr Boensch failed to discharge his onus of proving both that Mr Pascoe in fact had no caveatable interest by reason of Mr Boensch's right of indemnity and that Mr Pascoe held no honest belief on reasonable grounds to that effect. The vesting of property held by a bankrupt on trust for another In Official Trustee in Bankruptcy v Ritchie, Powell J rejected a contention that, although property held by a bankrupt as trustee for another is property within the meaning of the definition of "property" in s 5(1) of the Bankruptcy Act 1966, it is not property divisible among creditors within the meaning of s 116 of the Bankruptcy Act 1966, and, therefore, does not vest in the bankrupt's trustee in Bell bankruptcy under s 58 of the Bankruptcy Act 1966. After referring47 to "authorities of long standing" for the "broad and general principle" that a "trustee in a bankruptcy takes only the property of the bankrupt, and takes it subject to all the liabilities and equities which affect it in the bankrupt's hands", Powell J stated48: "Although one cannot regard the matter as one which is completely free from doubt, it seems to me that the better view is that, even if the true position were that Mr Ritchie's [the bankrupt's] rights under the contract were held upon trust for Mrs Ritchie, those rights became vested in the Official Receiver upon the making of the sequestration order, but the benefit of those rights was to be regarded as held ... upon trust for In Lewis v Condon, the Court of Appeal of the Supreme Court of New South Wales held that, where land subject to the Real Property Act had been held by a bankrupt on trust for others, a trustee in bankruptcy who was registered as proprietor under s 90 of the Real Property Act also held the land on trust. Leeming JA (with whom McColl JA and Sackville A-JA agreed) stated49: "Upon the making of the sequestration order ..., s 58 of the Bankruptcy Act 1966 (Cth) applied. That had the effect that such interest as Colleen [the bankrupt] had in the Property vested forthwith in equity in Mr Condon [the trustee in bankruptcy]. Legal title did not vest forthwith in Mr Condon. (Section 90 of the Real Property Act establishes a procedure whereby a trustee in bankruptcy can obtain registration as proprietor of land pursuant to the vesting effected by s 58(2) of the Bankruptcy Act [1966].) Mr Condon ultimately took advantage of that procedure to become registered proprietor of the Property and thereby acquire legal title. 47 Official Trustee in Bankruptcy v Ritchie (1988) 12 NSWLR 162 at 174 (emphasis in original), quoting In re Clark; Ex parte Beardmore [1894] 2 QB 393 at 410 per Davey LJ and citing Tailby v Official Receiver (1888) 13 App Cas 523 at 538 per Lord FitzGerald, Ex parte Holthausen; In re Scheibler (1874) LR 9 Ch App 722 and In re Lind; Industrials Finance Syndicate Ltd v Lind [1915] 2 Ch 345. 48 Official Trustee in Bankruptcy v Ritchie (1988) 12 NSWLR 162 at 174. 49 Lewis v Condon (2013) 85 NSWLR 99 at 119 [91]-[92]. Bell But it is clear law that those statutory vestings do not destroy any trust of which the bankrupt was a trustee. Section 116(2)(a) of the Bankruptcy Act [1966] excludes from the vesting property held by the bankrupt in trust for another person, and s 82 of the Real Property Act excludes notice of trusts on the register. It follows that neither the vesting effected by s 58(1) nor the title created by registration of a transfer of an 'estate in fee simple' to Mr Condon on which he relied destroyed any trusts in respect of the Property." Subject to one qualification, what was stated by Powell J in Official Trustee in Bankruptcy v Ritchie and by Leeming JA in Lewis v Condon is substantially correct. The one qualification is that property held by a bankrupt on trust for another will not vest in the bankrupt's trustee in bankruptcy if the bankrupt does not have any interest in the property, whether vested or contingent, and no matter how remote (subject to applicable laws as to remoteness of vesting). But that is not to say that either Official Trustee in Bankruptcy v Ritchie or Lewis v Condon was wrongly decided. In each case, it appears that the ultimate decision might have been justified even on the assumption that the bankrupt had no beneficial interest in the trust property in issue. As was recently demonstrated in Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth50, a proper understanding of the manner and extent of the vesting of a bankrupt's property under the Bankruptcy Act 1966 in the trustee in bankruptcy is informed by the long history of interaction between courts of law and equity in applying earlier bankruptcy legislation. Significantly for what follows, upon a petition under the Bankrupts Act 157151, commissioners appointed by the Lord Chancellor were empowered to assign all that a bankrupt could "lawfully depart withal" for the benefit of the bankrupt's creditors. Consistently with the requirement to construe bankruptcy statutes beneficially in favour of creditors52, the property so assigned included even a (2019) 93 ALJR 807 at 817-818 [25]-[28] per Kiefel CJ, Keane and Edelman JJ, 832-833 [94] per Bell, Gageler and Nettle JJ (Gordon J agreeing at 835 [106]); 368 ALR 390 at 401-402, 421, 424. 51 13 Eliz c 7, s 2. See generally Smith v Mills (The Case of Bankrupts) (1584) 2 Co Rep 25a [76 ER 441]. 52 Bankrupts Act 1623 (21 Jac I c 19), s 1. Bell "possibility" of right – a term commonly used in bankruptcy statutes53, and consistently understood as referring to any contingent interest54, as distinct from a mere expectancy55. From the outset, however, courts of equity resolved56 that "the assignees in the commission", who "claimed under the bankrupt", "ought not to be in a better case than the bankrupt himself" and, therefore, that the property passed subject to equities in favour of third parties. Thus, where the bankrupt had no beneficial interest capable of being applied for the creditors' benefit, the assignees could be compelled in equity to settle the property upon trust for57 – or, in some circumstances, to convey the property to58 – the cestuis que trust. Further, although courts of law had traditionally refused to take notice of trusts59, during the latter half of the eighteenth century they began to consider the position in equity following assignments in bankruptcy (as well as other 53 See, eg, Bankrupts Act 1623, s 12; Bankrupts Act 1732 (5 Geo II c 30), s 1. 54 Higden v Williamson (1731) 3 P Wms 132 at 133 per Jekyll MR [24 ER 1000 at 1000], affd (1732) 3 P Wms 133 per Lord King LC [24 ER 1000]; Jewson v Moulson (1742) 2 Atk 417 at 420-421 per Lord Hardwicke LC [26 ER 652 at 654]; cf Jacobson v Williams (1717) 1 P Wms 382 at 385-386 per Lord Cowper LC [24 ER 435 at 436]. See also Bankrupts Act 1732, s 1; Bankrupts (England) Act 1825 (6 Geo IV c 16), s 63. 55 Moth v Frome (1761) Amb 394 per Clarke MR [27 ER 262 at 263]. See Dodd (ed), Bacon's A New Abridgement of the Law, 7th ed (1832), vol 1 at 613. 56 Jacobson v Williams (1717) 1 P Wms 382 at 383 per Lord Cowper LC [24 ER 435 57 Bennet v Davis (1725) 2 P Wms 316 at 318-319 per Jekyll MR [24 ER 746 at 747]. See Eden, A Practical Treatise on the Bankrupt Law, 2nd ed (1826) at 58 Ex parte Dumas (1754) 2 Ves Sen 582 at 585 per Lord Hardwicke LC [28 ER 372 59 Pawlett v Attorney General (1667) Hardr 465 at 469 per Hale CB [145 ER 550 at Bell principles "established on the other side of the hall" of Westminster60). In Scott v Surman, Willes LCJ appealed61 to "the rule concerning circuity of action"62 as supplying a rationale for why a trust might limit what vests in the assignees in bankruptcy "even at law": that "it would be very absurd to say that any thing shall vest in the assignees for no other purpose but in order that there may be a bill in equity brought against them by which they will be obliged to refund and account". In accordance with that rationale, the decision of the Court of King's Bench in Winch v Keeley established63 that property held by a bankrupt on trust for another would not pass at all to the bankrupt's trustee in bankruptcy if the bankrupt had no beneficial interest in the property whatsoever. But if, at the time of bankruptcy, the bankrupt had any form of valid beneficial interest in the property (whether vested or contingent), the whole of the property passed to the bankrupt's trustee, "subject to the rights and equities which would affect it in the hands of the bankrupt"64. In some of the older authorities, the nature of the interest sufficient to have that effect was described in terms of the "most remote possibility of interest" or 60 Alexander v Owen (1786) 1 TR 225 at 227 per Buller J [99 ER 1064 at 1065]. See Heydon, Leeming and Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, 5th ed (2015) at 24-27 [1-200]-[1-270]. (1742) Willes 400 at 402 [125 ER 1235 at 1236-1237], quoted with approval in Gladstone v Hadwen (1813) 1 M & S 517 at 526 per Lord Ellenborough CJ for the Court of King's Bench [105 ER 193 at 197]. 62 See and compare Rastell, Les Termes de la Ley, 1721 ed at 128-129; Bullen and Leake, Precedents of Pleadings in Personal Actions in The Superior Courts of Common Law, 3rd ed (1868) at 558, cited in Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) 121 CLR 584 at 614 per Windeyer J; Broom, A Selection of Legal Maxims, Classified and Illustrated, 5th ed (1870) at 343-346. (1787) 1 TR 619 at 622-623 per Ashhurst J, 623 per Buller J [99 ER 1284 at 64 Tailby v Official Receiver (1888) 13 App Cas 523 at 538 per Lord FitzGerald. Bell "any thing from which a benefit to the creditors would result"65 or "might result"66. Thus, as Littledale J summarised the position in Carvalho v Burn67: "It is quite clear that the assignment [in bankruptcy] vested in the assignees all the personal estate and effects in which the bankrupt was, at the time of the act of bankruptcy, beneficially interested (with the statutory exceptions, [6 Geo IV c 16, ss 81, 82, 86, 112]); but as the object of the assignment of the bankrupt's property is, that it may be applied to the payment of his debts, it is equally clear that nothing passed by it which the bankrupt then held in trust for others, or in which he had only a mere legal interest, Scott v Surman, Winch v Keeley, Carpenter v Marnel, Gladstone v Hadwen; but if, at the time of the act of bankruptcy, the bankrupt possessed a possibility of interest, from which a benefit to his creditors might result, if he had the legal interest in any property, and it was uncertain whether he would hold any part of that property, or if any, what part, as a trustee for others, the whole would pass by the assignment: it could not remain in the bankrupt subject to be transferred on a future contingency: and if it did pass to the assignees, it could not be divested out of them in whole or in part by the happening of events subsequent to the act of bankruptcy, which might make them hold the whole, or some specific part as trustees merely; for there is no provision in the statute which takes a right out of the assignees, that has once been vested in them." It should be understood, however, that such terms bore a different meaning at that time. According to current acceptation, terms such as "the most remote possibility of interest", or anything from which a benefit to creditors "might result", might be thought to suggest the mere possibility that the bankrupt may have or acquire a beneficial interest in the property. But, consistently with the historical usage outlined above, they are properly to be understood as describing a contingent beneficial interest which is extant and valid; and as recognising that such an interest is capable of being immediately realised for the 65 Carpenter v Marnell (1802) 3 Bos & Pul 40 at 41 per Lord Alvanley CJ (Heath, Rooke and Chambre JJ agreeing at 42) [127 ER 23 at 24]. 66 Carvalho v Burn (1833) 4 B & Ad 382 at 393 per Littledale J [110 ER 499 at 503]. (1833) 4 B & Ad 382 at 393-394 [110 ER 499 at 503] (citations and footnote omitted; emphasis added). Bell benefit of a bankrupt's creditors, even if it is likely to vest after the period of bankruptcy68. Accordingly, where the bankrupt has such a contingent interest – or, a fortiori, a vested beneficial interest – in property, the property itself will pass in bankruptcy, subject to the equities in favour of third parties. By contrast, where the bankrupt has but a mere expectancy, or a "possibility of becoming entitled in the future to a proprietary right"69, no property can pass unless and until it is acquired by or devolves upon the bankrupt during the period of bankruptcy, as indeed this Court held in Caraher v Lloyd70. As the Court of Exchequer in effect held in Parnham v Hurst71, nothing passes where there is merely the forensic possibility of a beneficial interest in the bankrupt being established. At the same time, it is also important to keep in mind that a bankrupt trustee's vested or contingent beneficial interest in trust property sufficient for the property to pass to the bankrupt's trustee in bankruptcy may arise either under the express terms of the trust or aliunde, including by reason of the bankrupt trustee's right to be indemnified out of the trust property for obligations incurred in the bankrupt's capacity as trustee. Farwell LJ in effect summarised the position in Governors of St Thomas's Hospital v Richardson72, under provisions of the Bankruptcy Act 188373 which were relevantly no different from the applicable provisions of the Bankruptcy Act 1966, thus: 68 Caraher v Lloyd (1905) 2 CLR 480 at 490-491 per Griffith CJ for the Court. See also Peter v Shipway (1908) 7 CLR 232 at 244 per Griffith CJ, 260-261 per 69 Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 26 per (1905) 2 CLR 480 at 491-492. See also Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at 133 per Brennan CJ, Gaudron and McHugh JJ, cf at 145 per Dawson and Toohey JJ. (1841) 8 M & W 743 at 748 per Parke B, 750 per Alderson B, 750-751 per Rolfe B [151 ER 1239 at 1242-1243]. See also D'Arnay v Chesneau (1845) 13 M & W 796 at 801-802 per Martin and Peacock (arguendo), 809 per Parke B [153 ER 334 at 337, 339-340]. [1910] 1 KB 271 at 284 (emphasis added). 73 46 & 47 Vict c 52. Bell "[T]he property of the bankrupt does not include property held by the bankrupt on trust for any other person. But it does include property held by the bankrupt on any trust for his own benefit, and when ... he holds property to secure his own right of indemnity in priority to all claims of any cestui que trust, and the retention of such property is necessary to give full effect to such right, it follows that the property, ie, the legal estate, and right to possession vest in the trustee in bankruptcy to the extent to which they were vested in the bankrupt. The law is stated by Jessel MR in Morgan v Swansea Urban Sanitary Authority74, where he says, 'Under the Bankruptcy Act[75], where a trustee has no beneficial interest, the legal estate does not pass; but where he has it does pass,' ... The true test is, Can the trustee be compelled to convey the estate to the cestui que trust? If he can, then it does not pass to his trustee in bankruptcy, but if he cannot, then the property does pass." Where, therefore, property is held by a bankrupt on trust for another, then, upon the making of a sequestration order, the property will pass to the bankrupt's trustee in bankruptcy (subject to the trust), unless the bankrupt has no valid beneficial interest in the property76. And, ordinarily, the burden of proving the absence of such a beneficial interest is on the bankrupt77. As has been seen, the position is complicated where the property is subject to a statutory registration scheme, such as the Torrens system. Notwithstanding s 58(1) of the Bankruptcy Act 1966, a legal estate or interest in land subject to the Real Property Act cannot pass to the bankrupt's trustee in bankruptcy unless and until the trustee in bankruptcy applies under s 90 of the Real Property Act to be, and is, registered as proprietor of the land. Nevertheless, so long as the bankrupt has some beneficial interest in the property, then, upon the making of a (1878) 9 Ch D 582 at 585. 75 Bankruptcy Act 1869 (32 & 33 Vict c 71). 76 Carter Holt (2019) 93 ALJR 807 at 818 [28] per Kiefel CJ, Keane and Edelman JJ, 833 [94] per Bell, Gageler and Nettle JJ (Gordon J agreeing at 835 [106]); 368 ALR 390 at 402, 421, 424. 77 cf Trott v Smith (1844) 12 M & W 688 at 703 per Tindal CJ for the Court of Exchequer Chamber [152 ER 1375 at 1381-1382]. See Bullen and Leake, Precedents of Pleadings in Personal Actions in The Superior Courts of Common Law, 3rd ed (1868) at 519-520. Bell sequestration order, the estate or interest of which the bankrupt is registered proprietor vests forthwith in equity in the trustee in bankruptcy, perforce of s 58(2) of the Bankruptcy Act 1966, and the trustee in bankruptcy may then apply to be registered as legal proprietor of that estate or interest in accordance with s 90 of the Real Property Act78. But of course, just as before, so, too, after the trustee in bankruptcy is so registered as proprietor, he or she will hold the estate or interest subject to the equities to which it was subject in the hands of the bankrupt. And that is so notwithstanding the principle of indefeasibility embodied in s 42 of the Real Property Act79 because, plainly enough, the provision in that Act for a trustee in bankruptcy to become a registered proprietor cannot have been intended to supply a means to circumvent limitations on the property divisible among creditors under the Bankruptcy Act 196680. The grounds for a caveat In this matter, the primary judge and, on appeal, the Full Court approached the matter on the basis that, even if Mr Boensch did not have any beneficial interest in the Rydalmere property, the fact that he was the registered proprietor of the property at the time of commencement of his bankruptcy was sufficient to confer a caveatable interest in the property on Mr Pascoe. To that extent, their Honours overstated the position. As has been seen, if the fact were that Mr Boensch did not have any valid beneficial interest in the Rydalmere property, no interest in the property could have vested in equity in Mr Pascoe. For the reasons that follow, however, that overstatement was devoid of relevant consequence. Mr Pascoe's interest by reason of Mr Boensch's right of indemnity As counsel for Mr Boensch accepted before this Court, the onus was on Mr Boensch to establish that he lacked any valid beneficial interest in the Rydalmere property. At first instance, Mr Pascoe pleaded that such an interest arose from Mr Boensch's right of indemnity, and Mr Pascoe referred to that right 78 See and compare Lewis v Condon (2013) 85 NSWLR 99 at 119 [91] per Leeming JA. 79 See Frazer v Walker [1967] 1 AC 569 at 585 per Lord Wilberforce for the Privy Council. 80 See and compare Sempill v Jarvis (1867) 6 SCR (NSW) Eq 68 at 71-72 per Bell in his affidavit filed some 15 months before trial. Whether the right in fact existed was then squarely identified as an issue in Mr Pascoe's written opening submissions; it was described by the primary judge at the start of the trial as the "one issue that does leap out a little"; and the principles and evidence on which it depended were discussed at length in counsel for Mr Pascoe's closing address and Mr Pascoe's written closing submissions. That evidence included Mr Boensch's own admission that he had incurred significant expenses in his capacity as trustee for the Boensch Trust, in the form of "bank payments, loan payments, the council rates, [and] every other cost ... required" for the trust. In the absence of any suggestion that they were not properly incurred, such expenses would ordinarily entitle Mr Boensch to be indemnified out of the trust property81, as counsel for Mr Boensch acknowledged before this Court. From the outset, Mr Boensch sought to neutralise the effect of the right of indemnity by relying on his so-called "mutually beneficial arrangement" with "the trust". It will be recalled that his letter of 22 February 2006 identified that arrangement as only, in effect, permitting him to occupy a room in the Rydalmere property which was described as unfit to be let82. In his initial affidavit at trial, he deposed that that letter "fully explained" the arrangement. As will be apparent, however, much about the arrangement alleged was unexplained, including, most obviously, the person with whom, and in what form, it was made. In turn, the legal basis upon which the arrangement is supposed to have prejudiced Mr Boensch's right of indemnity, either wholly or in part, was and remains almost entirely unexplained. Neither of the trust instruments purported to deprive Mr Boensch of his right of indemnity on the basis of any such arrangement83. If, as was posited in submissions for Mr Boensch, the alleged arrangement was made with himself only (purporting to act in different 81 See Carter Holt (2019) 93 ALJR 807 at 819 [29] per Kiefel CJ, Keane and Edelman JJ, 828 [80] per Bell, Gageler and Nettle JJ (Gordon J agreeing at 835 [106]); 368 ALR 390 at 403, 415, 424. 82 See [56] above. 83 See and compare RWG Management Ltd v Commissioner for Corporate Affairs [1985] VR 385 at 394-395 per Brooking J. Bell capacities), then it would lack "intrinsic validity" in contract84 and be "of itself inoperative" as a waiver85. Assent by Ms Boensch was also posited, but not supported by reference to evidence or any account of why her status as parent authorised her to deal with property held on trust for her children86. The alleged arrangement was not said to be a civil act in which the infant beneficiaries themselves had participated for their own benefit87. And Mr Boensch did not allege that his occupation of the trust property without paying rent constituted a breach of trust or fiduciary duty by him88 – the correctness of which might have depended on the scope of his power to allow rent-free occupation by the infant beneficiaries. In any event, Mr Boensch did not attempt to discharge his onus of proving that he had no right of indemnity because, after the taking of accounts, the value of benefits obtained under the alleged arrangement would be equal to or exceed the total of the trust expenses incurred by him89. On Mr Boensch's evidence, the sole benefit obtained under the arrangement was occupation of a room incapable of being let, and, although presumably within his power and undoubtedly in his interest in these proceedings90, Mr Boensch produced no accounts of his benefits and expenditure as trustee. In those circumstances, it cannot be said that a court Ingram v Inland Revenue Commissioners [1997] 4 All ER 395 at 423, 426 per Millett LJ, quoted in Clay v Clay (2001) 202 CLR 410 at 434 [51] per Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ. 85 O'Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 257 per Jordan CJ. 86 See Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 237 per Mason CJ, Dawson, Toohey and Gaudron JJ, 315 per McHugh J. 87 Minors (Property and Contracts) Act 1970 (NSW), s 18. 88 cf Ex parte James (1803) 8 Ves Jun 337 at 351 per Lord Eldon LC [32 ER 385 at 390]; Shallcross v Oldham (1862) 2 J & H 609 at 616 per Page Wood V-C [70 ER 89 See and compare Carter Holt (2019) 93 ALJR 807 at 819 [31] per Kiefel CJ, Keane and Edelman JJ; 368 ALR 390 at 403-404. 90 See Blatch v Archer (1774) 1 Cowp 64 at 65 per Lord Mansfield [98 ER 969 at Bell of equity would have compelled Mr Boensch to transfer title to the property to the beneficiaries of the Boensch Trust, had they been sui juris and so required91, at least unless and until there had been a final accounting92. It follows that Mr Boensch's reliance on the alleged arrangement to controvert his right of indemnity is without merit. We agree with the joint reasons of Kiefel CJ, Gageler and Keane JJ with respect to the responsibility of intermediate appellate courts when considering whether to deal with all grounds of appeal93. We also agree with their Honours' conclusion that, in the circumstances of this litigation, there is no criticism of the Full Court for not addressing an issue which it did not consider to be dispositive of the controversy before it. This is a case in which "[n]o remitter will be necessary"94. Given that the issue was pleaded and at no point abandoned, its determination by this Court on the basis of the available evidence cannot involve any denial of procedural fairness95. On the basis of such evidence as was adduced at first instance, there was and is no reason to doubt that Mr Boensch had a beneficial interest in the Rydalmere property – to the extent of his right to retain the property as security for satisfaction of his right of indemnity as trustee. By reason of that beneficial interest, an estate in the property vested forthwith in equity in Mr Pascoe pursuant to s 58 of the Bankruptcy Act 1966, subject to a subtrust on the terms of the Boensch Trust but permitting Mr Pascoe to exercise the right of indemnity. On that basis, Mr Pascoe was entitled to be registered as proprietor of the 91 CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) (2005) 224 CLR 98 at 119 [47] per Gleeson CJ, McHugh, Gummow, Callinan and Heydon JJ. 92 Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 245 [47] per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ. 93 See [7]-[8]. See also Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja [2018] NSWCA 26 at [7]-[8] per Leeming JA (Basten and Gleeson JJA agreeing at [1], [2]). 94 Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (2011) 244 CLR 1 at 20 [56] per Gummow, Heydon, Crennan, Kiefel and 95 cf Banque Commerciale SA (En liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286-287 per Mason CJ and Gaudron J. Bell Rydalmere property in accordance with s 90 of the Real Property Act, and that was a sufficient basis to sustain his caveat. Mr Pascoe's beliefs about the validity of the trust Regardless of the position in fact, it is also apparent that Mr Pascoe had good reason to believe, as he did, that the Boensch Trust was not validly constituted. Much that emerged from Mr Leong's file remained, and still remains, unexplained. Of course, had the Memorandum of Trust been a sham96, or not manifested a sufficiently certain intention to constitute a trust97, an estate in the Rydalmere property would necessarily have vested in equity in Mr Pascoe upon the making of the sequestration order. Contrary to the Full Court's reasoning, however, the possibility that the trust might have been set aside under s 120 or s 121 of the Bankruptcy Act 1966 would not have been sufficient to sustain the caveat. In Amaca Enterprises Pty Ltd v Official Trustee in Bankruptcy, O'Bryan J held98 that an alleged right under s 121 of the Bankruptcy Act 1966 to bring an action to set aside a transfer of land justified declining to order the removal of a caveat by the trustee in bankruptcy. But that proposition was disapproved in Martin v Official Trustee in Bankruptcy, in which Green CJ noted99 observations in this Court that only a legal or equitable interest in land can sustain a caveat100 and that a mere statutory right to take steps to avoid a transaction does not confer such an interest101, and 96 See Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at 486 [46] per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ. 97 See Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (Associated Alloys Case) (2000) 202 CLR 588 at 604 [29] per Gaudron, McHugh, Gummow 98 Unreported, Supreme Court of Victoria, 30 September 1983 at 5-6. [1990] Tas R 65 at 68-69. 100 Municipal District of Concord v Coles (1905) 3 CLR 96 at 107 per Griffith CJ. 101 N A Kratzmann Pty Ltd (In liq) v Tucker [No 1] (1966) 123 CLR 257 at 291-292 Bell concluded102 that rights under ss 120 and 121 of the Bankruptcy Act 1966 do not immediately confer a caveatable interest. As his Honour held103: "The interest asserted must be in existence at the time of the lodgment of the caveat. The assertion by a caveator who at the time of the lodgment of the caveat does not have an estate or interest in the land that he has commenced proceedings which may result in such an interest being vested in him does not disclose a sufficient caveatable interest". That reasoning accords with principle and has since been followed in first- instance decisions in Tasmania104, New South Wales105, Western Australia106 and Victoria107. There is no reason why it should not be adhered to. That is not to say, however, that where, as here, there are reasonable grounds to conclude that a bankrupt has an extant beneficial interest in property 102 [1990] Tas R 65 at 70. 103 Martin v Official Trustee in Bankruptcy [1990] Tas R 65 at 69, citing Ioppolo v Ioppolo (1978) 5 Fam LN No 27, Ex parte Goodlet & Smith Investments Pty Ltd [1983] 2 Qd R 792, Bethian Pty Ltd v Green (1977) 3 Fam LR 11579 at 11583 per Powell J, Re Haupiri Courts' Application [1969] NZLR 348 at 351 per Richmond J, Re Pile's Caveats [1981] Qd R 81 and Re Weeks' Caveat [1971] QWN 4. 104 Australian Eagle Insurance Co Ltd v Parry (1992) ANZ Conv R 166 at 166 per Crawford J; Shaw Excavations Pty Ltd v Portfolio Investments Pty Ltd (2000) 9 Tas R 444 at 454 [20] per Slicer J. 105 Sutherland v Vale (2008) 14 BPR 26,255 at 26,258 [15] per Brereton J; Griffiths v Falck (2008) 220 FLR 278 at 286 [63] per Young CJ in Eq. 106 Gangemi v Gangemi [2009] WASC 195 at [40] per Murphy J; Stacey v Stacey [2010] WASC 85 at [12] per Beech J; Westpac Banking Corporation v Murray Riverside Pty Ltd [2013] WASC 433 at [20] per Beech J; Watson v Gardner [2015] WASC 192 at [14] per Mitchell J; Binning v Avsar [2016] WASC 194 at [120] per Kenneth Martin J; Westpac Banking Corporation v Davey [2018] WASC 189 at [14] per Chaney J. 107 CFHW Pty Ltd (as trustee of the Watson Family Trust) v Burness [2014] VSC 451 at [23]-[24] per Warren CJ. Bell held by the bankrupt on trust for another, the trustee in bankruptcy may not lodge a caveat to protect the interest of the trustee in bankruptcy pendente lite108. For reasons later to be explained109, provided the caveat is lodged on the basis of an honest belief on reasonable grounds that the bankrupt has an extant beneficial interest in the property (including a beneficial interest by way of right of indemnity), the trustee in bankruptcy will be warranted in lodging a caveat, as Mr Pascoe did in this case. The interest claimed in the caveat As was earlier noticed110, the interest which Mr Pascoe claimed in the caveat (in accordance with his usual practice) was a "Legal Interest pursuant to the Bankruptcy Act 1966". The primary judge found111 that, read as a whole, the caveat thus claimed whatever interest in the land vested in Mr Pascoe by virtue of s 58(1)(a) of the Bankruptcy Act 1966. His Honour put the matter as follows: "The expression 'legal interest pursuant to the Bankruptcy Act 1966' is apt to describe an interest that arises as a matter of law pursuant to statute. I would not read it as expressing an intention to confine the claim to only a legal interest in the property as opposed to an equitable interest in the property. The intention seems to be to claim whatever interest arises by virtue of s 58(1)(a). The claimed interest is, in my view, adequately described in the caveat. I note further that it is not necessary, in order to comply with the requirements for particularisation of the estate or interest claimed, to specify whether the estate or interest is legal or equitable (see clause 7 and Schedule 3 to the Real Property Regulation 2003 (NSW), in force when the caveat was lodged)." 108 See, eg, Gustin v Taajamba Pty Ltd (1994) 6 BPR 13,393 at 13,396-13,397 per Handley JA (Sheller and Powell JJA agreeing at 13,398); Edmonds v Donovan (2005) 12 VR 513 at 548-549 [92]-[93] per Phillips JA (Winneke P and Charles JA agreeing at 516 [2], [3]). 109 See [113]-[114] below. 110 See [32]-[33] above. 111 Franz Boensch as trustee of the Boensch Trust v Scott Darren Pascoe [2015] NSWSC 1882 at [106]. Bell His Honour added that, if he were not correct about that, the assertion of a legal, as opposed to an equitable, interest could properly be regarded as a technical deficiency, and that it would not necessarily follow that the caveat was lodged or maintained without reasonable cause. Generally speaking, it is to be doubted that the expression "Legal Interest pursuant to the Bankruptcy Act 1966" in a caveat is adequate to describe an equitable estate vested in a trustee in bankruptcy pursuant to s 58(2) of the Bankruptcy Act 1966 by reason of the bankrupt's right of indemnity. Although a caveat against dealings is not required to specify whether the interest claimed is legal or equitable112, and although, semasiologically, the word "legal" may be capable of extending to rights recognised only in equity113, use of that word in this context is apt to mislead someone reading the caveat; even accepting that he or she is not bereft of powers of inference or access to legal advice114. More to the point, the expression as a whole does not afford the Registrar-General, or anyone else, sufficient information to determine whether any other dealing with the property would adversely affect the interest claimed. For that reason, as Brereton J observed in Sutherland v Vale115, the "description of the nature of the estate, interest or right claimed by a caveator is more than a mere formal requirement of the provisions of the Act, but goes to the heart and substance of their operation". It may be accepted that a court would not ordinarily make an order under s 74K(2) of the Real Property Act extending the operation of a caveat which employed that description116. 112 Real Property Regulation 2003 (NSW), cl 7(1)(b), (2), Sch 3, para 10(a). See now Real Property Regulation 2019 (NSW), cl 7(b), Sch 2, item 10(a). See also Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222 at 232 per Holland J. 113 See Federal Commissioner of Taxation v Everett (1980) 143 CLR 440 at 447 per Barwick CJ, Stephen, Mason and Wilson JJ. 114 Ultra Marine Pty Ltd v Misson (1981) ANZ Conv R 229 at 231-232 per 115 (2008) 14 BPR 26,255 at 26,257 [12]. 116 It is not necessary to determine whether the court would have power to order amendment of the caveat in those circumstances, as to which see Percy & Michele Pty Ltd v Gangemi [2010] VSC 530 at [92]-[102] per Macaulay J. Bell that Mr Boensch was entitled It does not follow, however, compensation under s 74P(1) of the Real Property Act because of the terms of Mr Pascoe's caveat. For, as Clarke JA concluded in Beca Developments, a mere technical deficiency in the statement of the interest claimed does not of itself demonstrate the absence of a "reasonable cause" to lodge and not withdraw the caveat, at least where the caveat does not "overstate the interest sought to be protected"117. Here, if anything, the description used in Mr Pascoe's caveat understated the extent of his interest – an estate in fee simple albeit in equity – and any prejudice to Mr Boensch from the inadequate description of that interest might have been remedied by the prompt service of a lapsing notice. The Beca Developments test of reasonable cause In Beca Developments, a majority of the Court of Appeal of the Supreme Court of New South Wales embraced Wootten J's conclusion in Bedford Properties Pty Ltd v Surgo Pty Ltd118 concerning the former s 98 of the Real Property Act that: "the foundation for reasonable cause must be, not the actual possession of a caveatable interest, but an honest belief based on reasonable grounds that the caveator has such an interest". Clarke JA, who delivered the leading judgment in Beca Developments, with which Kirby P relevantly agreed119, noted120 that "a caveat operates in much the same manner as does an injunction" and that this analogy supported the view that "in enacting s 98 the legislature intended to set up machinery for compensating persons who suffered as a consequence of a caveator, in effect, abusing the statutory power to lodge a caveat". It followed, in his Honour's view, that "Wootten J was correct to give to the phrase 'without reasonable cause' the same meaning as had been attributed to the like phrase in the tort of malicious prosecution", albeit that tort, unlike an award under s 98, also depended on proof 117 (1990) 21 NSWLR 459 at 468. 118 [1981] 1 NSWLR 106 at 108. 119 (1990) 21 NSWLR 459 at 463. 120 (1990) 21 NSWLR 459 at 471. Bell of malice121. Clarke JA proceeded to observe122 that, while s 74P(1) of the Real Property Act extended compensation to cases where a person procures the lapsing of a caveat or refuses or fails to withdraw a caveat upon request, as then drafted it also added another pre-condition by the word "wrongfully", which his Honour construed as in effect requiring an abuse of the statutory procedure "for oppressive and other reasons". Accordingly, his Honour concluded123 that, in order to sustain a claim for compensation under s 74P(1)(a), the claimant must establish124 that the caveator had neither a caveatable interest nor an honest belief based on reasonable grounds that the caveator had a caveatable interest (and thus "without reasonable cause"), and that the caveator acted deliberately, knowing that he or she had no interest in the land (and thus "wrongfully"). Although s 74P(1)(a) was amended to remove the word "wrongfully"125, the former requirement – described in these proceedings as the "two-step" Beca Developments test – has continued to be applied126. This continued approach is consistent with Parliament's aim to preserve the existing law although removing the word "wrongfully". As was observed in the Explanatory Note, the goal of the amendments was to have "the effect of reinstating the law that applied before 1986 when certain amendments to the Act relating to caveats were enacted"127. That earlier law, on "reasonable cause", was what had been explained and clarified in Beca Developments. Before the Full Court, Mr Boensch accepted that he had to satisfy that two-step Beca Developments test. Before this Court, he sought to argue that Beca 121 See A v New South Wales (2007) 230 CLR 500 at 502-503 [1] per Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ. 122 Beca Developments (1990) 21 NSWLR 459 at 472. 123 Beca Developments (1990) 21 NSWLR 459 at 472-473. 124 As to onus, see also Young v Rydalmere Credits Pty Ltd [1964-5] NSWR 1001 at 1013 per Macfarlan J; Bedford Properties [1981] 1 NSWLR 106 at 107 per 125 Real Property Amendment Act 1996 (NSW), Sch 1 [19]. 126 See fnn 136-137 below. 127 New South Wales, Real Property Amendment Bill 1996, Explanatory Note at 4. Bell Developments was wrongly decided; that the test under s 74P(1) of the Real Property Act is whether lodging and maintaining a caveat was objectively reasonable in all the circumstances, including the consequences of the caveat in preventing dealings with the property; and, accordingly, that whether the caveator in fact has a caveatable interest is not dispositive and whether the caveator had an honest belief in what was claimed in the caveat is irrelevant. The argument should be rejected. The starting point is the text of s 74P(1) of the Real Property Act, which in terms directs attention to whether the "cause"128, not consequence, of an act or omission is "reasonable", not necessarily right upon a proper application of the law to the facts. Moreover, a caveat against dealings has long been conceived of as "a statutory injunction to keep the property in statu quo until [the caveator's] title shall have been fully investigated"129, and, although that conception has been criticised130, it serves only to emphasise that a person may reasonably lodge and maintain a caveat although investigation reveals that he or she lacked an interest. True it is that, ordinarily, the price of a quia timet injunction is an undertaking as to damages, and that such an undertaking is ordinarily enforceable regardless of whether the claimant had an honest belief on the basis of reasonable grounds in the strength of his or her cause131. But the more limited protection afforded by s 74P(1) of the Real Property Act against the financial consequences of a misdirected caveat may readily be explained on the basis that the holder of an unregistered interest in land under the Torrens system is more vulnerable to inconsistent dealings132, 128 See, in a different context, New South Wales v Taylor (2001) 204 CLR 461 at 464-465 [4] per Gleeson CJ, McHugh and Hayne JJ. 129 Collins v Featherstone (1889) 10 LR (NSW) Eq 192 at 193 per Owen CJ in Eq. See also Barry v Heider (1914) 19 CLR 197 at 221 per Isaacs J; Hall v Richards (1961) 108 CLR 84 at 92 per Kitto J (Dixon CJ and Windeyer J agreeing at 86, 105); Eng Mee Yong v Letchumanan [1980] AC 331 at 337-338 per Lord Diplock for the Privy Council; Black v Garnock (2007) 230 CLR 438 at 442-443 [8] per Gummow and Hayne JJ, 475 [104] per Crennan J. 130 See, eg, Holt v Anchorage Management Ltd [1987] 1 NZLR 108 at 116 per McMullin J, 118-120 per Somers J, 122-124 per Casey J. 131 See Smith v Day (1882) 21 Ch D 421 at 424-425 per Jessel MR, 427-428 per Brett LJ, 429 per Cotton LJ. 132 See Breskvar v Wall (1971) 126 CLR 376 at 385 per Barwick CJ. Bell and so permitted reasonably to lodge and maintain a caveat without incurring liability to pay compensation, at least unless and until a lapsing notice is served and extension sought under ss 74J and 74K of the Real Property Act133. As Kirby P observed in effect in Beca Developments134, if it were otherwise, s 74P(1) would have an undesirable chilling effect on the proper lodgement of caveats that are honestly and reasonably believed to be necessary to protect legitimate interests; and, given the ready capacity of a claimant to have an unwarranted caveat discharged pursuant to s 74J or s 74MA of the Real Property Act, it is unlikely that Parliament intended that s 74P(1) should prevent the lodgement of caveats honestly and reasonably believed to be valid. Furthermore, the fact that the New South Wales Parliament enacted s 74P(1) in relevantly the same terms as the former s 98 of the Real Property Act, after s 98 had been construed in Bedford Properties as requiring no more than an honest belief based on reasonable grounds, provides "a valuable presumption as to the meaning of the language employed"135. 133 See Martyn v Glennan [1979] 2 NSWLR 234 at 242 per Waddell J; Beca Developments (1990) 21 NSWLR 459 at 478 per Waddell A-JA. 134 (1990) 21 NSWLR 459 at 463. 135 Salvation Army (Victoria) Property Trust v Fern Tree Gully Corporation (1952) 85 CLR 159 at 174 per Dixon, Williams and Webb JJ. See and compare Flaherty v Girgis (1987) 162 CLR 574 at 594 per Mason A-CJ, Wilson and Dawson JJ; Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106-107 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ; Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 at 496 [3], 502-503 [15]-[16] per French CJ, Hayne, Kiefel, Gageler and Keane JJ; Brisbane City Council v Amos (2019) 93 ALJR 977 at 986 [24] per Kiefel CJ and Edelman J, 990 [45] per Gageler J, 991 [48] per Keane J, 992 [55] per Nettle J; 372 ALR 366 at 374, 380, 381, 382. See also Pearce and Geddes, Statutory Interpretation in Australia, 8th ed Bell The Beca Developments test has been substantially followed in New South Wales136 and by intermediate appellate courts in other States137, and nothing which Mr Boensch has submitted in this matter gives cause to depart from it. It is, however, unnecessary to determine whether, if that test is not satisfied, a person may ever be liable under s 74P(1) of the Real Property Act by reason of acting with an ulterior motive138 or where the only interest supporting a caveat is de minimis in terms of legal content or economic value139. It was neither suggested that Mr Pascoe acted for an ulterior purpose nor demonstrated that his equitable estate was de minimis, even after accounting for the rights under the Boensch Trust. Finally, contrary to Mr Boensch's suggestion, Mr Pascoe did not "claim" any "inconsistent interests" by justifying his lodgement and maintenance of the 136 See Natuna Pty Ltd v Cook [2007] NSWSC 121 at [195] per Biscoe A-J, quoted with approval in Mahendran (2013) 17 BPR 32,733 at 32,739-32,740 [52] per Barrett JA (Emmett and Gleeson JJA agreeing at 32,740 [59], 32,741 [60]); New Galaxy Investments Pty Ltd v Thomson (2017) 18 BPR 36,811 at 36,815 [7], 36,816 [17] per Basten JA, 36,870 [324]-[325] per Sackville A-JA (Gleeson JA agreeing at 36,834 [121]). 137 See, eg, Bolton v Excell (1993) ANZ Conv R 562 at 564 per Owen J (Ipp J agreeing); Edmonds v Donovan (2005) 12 VR 513 at 548 [91] per Phillips JA (Winneke P and Charles JA agreeing at 516 [2], [3]); Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27 at 43 [49] per Pullin JA, 48-49 [80]-[81] per Buss JA. See also Farvet Pty Ltd v Frost [1997] 2 Qd R 39 at 45-46 per Demack J; Quarmby v Oakley [2015] TASFC 11 at [11]-[13] per Porter J; Renshaw v Queensland Mining Corporation Ltd [No 2] [2016] FCA 1482 at [94] 138 See Young v Rydalmere [1964-5] NSWR 1001 at 1014 per Macfarlan J; cf Beca Developments (1990) 21 NSWLR 459 at 475 per Clarke JA, 479 per Waddell A-JA. See also Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419 at 434 per Malcolm CJ (Pidgeon and Seaman JJ agreeing at 437); Commonwealth Bank of Australia v Baranyay [1993] 1 VR 589 at 600 per Hayne J; Brogue Tableau (2007) 35 WAR 27 at 49 [83]-[84] per Buss JA. 139 See and compare Commissioner of the Australian Federal Police v Hart (2018) 262 CLR 76 at 106 [92] per Gordon J (Kiefel CJ, Bell, Gageler and Edelman JJ agreeing at 82 [2]). Bell caveat on the basis of his alternative beliefs that the Boensch Trust was void and that, were it not, Mr Boensch would enjoy a right of indemnity140. Conclusion and orders For the reasons earlier stated, there is no reason to doubt that, upon the making of the sequestration order, the Rydalmere property vested in equity in Mr Pascoe by reason of Mr Boensch's right of indemnity and, therefore, that Mr Pascoe had a caveatable interest in the property. Nor is there any reason to doubt that Mr Pascoe honestly believed on reasonable grounds that the property so vested, either on the basis that the trust was void or on the basis of Mr Boensch's right of indemnity. On the facts as found, Mr Pascoe did not lodge or refuse to withdraw the caveat without reasonable cause. It follows that the appeal should be dismissed with costs. 140 See also New South Wales v Taylor (2001) 204 CLR 461 at 467 [14] per Gleeson CJ, McHugh and Hayne JJ.

HIGH COURT OF AUSTRALIA PLAINTIFF AND COMMONWEALTH OF AUSTRALIA & ORS DEFENDANTS Williams v Commonwealth of Australia [2012] HCA 23 20 June 2012 ORDER The questions stated in the Amended Special Case dated 26 July 2011 be answered as follows: Question 1 Does the plaintiff have standing to challenge: the validity of the Darling Heights Funding Agreement? the drawing of money from the Consolidated Revenue Fund for the purpose of making payments pursuant to the Darling Heights Funding Agreement during the following financial years: (iii) the making of payments by the Commonwealth to Scripture Union Queensland pursuant to the Darling Heights Funding Agreement during the following financial years: (iii) Answer Yes. Unnecessary to answer. Yes. Question 2 If the answer to Question 1(a) is Yes, is the Darling Heights Funding Agreement invalid, in whole or in part, by reason that the Darling Heights Funding Agreement is: beyond the executive power of the Commonwealth under s 61 of the Constitution? prohibited by s 116 of the Constitution? Answer Yes. Question 3 To the extent that the answer to Question 1(b) is Yes, was or is the drawing of money from the Consolidated Revenue Fund for the purpose of making payments under the Darling Heights Funding Agreement authorised by: the 2007-2008 Appropriation Act? the 2008-2009 Appropriation Act? the 2009-2010 Appropriation Act? the 2010-2011 Appropriation Act? the 2011-2012 Appropriation Act? Answer Unnecessary to answer. Question 4 To the extent that the answer to Question 1(c) is Yes, was or is the making of the relevant payments by the Commonwealth to Scripture Union Queensland pursuant to the Darling Heights Funding Agreement unlawful by reason that the making of the payments was or is: beyond the executive power of the Commonwealth under s 61 of the Constitution? prohibited by s 116 of the Constitution? Answer The making of the payments was not supported by the executive power of the Commonwealth under s 61 of the Constitution. Question 5 If the answer to any part of Question 2 is Yes, the answer to any part of Question 3 is No, or the answer to any part of Question 4 is Yes, what, if any, of the relief sought in the statement of claim should the plaintiff be granted? Answer The Justice disposing of the action should grant the plaintiff such declaratory relief and make such costs orders as appear appropriate in the light of the answers to Questions 1-4 and 6. Question 6 Who should pay the costs of this special case? Answer The first, second and third defendants. Representation B W Walker SC with G E S Ng for the plaintiff (instructed by Horowitz & Bilinsky) S J Gageler SC, Solicitor-General of the Commonwealth with G R Kennett SC and S J Free for the first, second and third defendants (instructed by Australian Government Solicitor) R Merkel QC with G A Hill and J A Thomson for the fourth defendant (instructed by Norton Rose Australia) Interveners M G Sexton SC, Solicitor-General for the State of New South Wales with N L Sharp intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW)) W Sofronoff QC, Solicitor-General of the State of Queensland with G P Sammon and G J D del Villar intervening on behalf of the Attorney-General of the State of Queensland (instructed by Crown Law (Qld)) G L Sealy SC, Solicitor-General of the State of Tasmania with S D Gates intervening on behalf of the Attorney-General of the State of Tasmania (instructed by Solicitor-General of the State of Tasmania) M G Hinton QC, Solicitor-General for the State of South Australia with M J Wait intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor (SA)) S G E McLeish SC, Solicitor-General for the State of Victoria with R J Orr and N M Wood intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor) R M Mitchell SC, Acting Solicitor-General for the State of Western Australia with F B Seaward intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor (WA)) P D Quinlan SC with K E Foley appearing as amicus curiae on behalf of the Churches' Commission on Education Incorporated (instructed by Mallesons Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Williams v Commonwealth of Australia Constitutional law − Executive power of Commonwealth − Commonwealth entered funding agreement with private service provider for provision of chaplaincy services at State school ("Funding Agreement") − Funding Agreement made pursuant to National School Chaplaincy Program − Whether executive power of Commonwealth extends to matters in respect of which Parliament may legislate − Whether s 61 of Constitution or s 44(1) of Financial Management and Accountability Act 1997 (Cth) ("FMA Act") source of power to enter Funding Agreement − Whether s 61 of Constitution or s 44(1) of FMA Act source of power to pay service provider. Constitutional law − Powers of Commonwealth Parliament − Whether law providing for payments in circumstances identical to Funding Agreement would be law with respect to s 51(xx) of Constitution − Whether law providing for payments in circumstances identical to Funding Agreement would be law with respect to s 51(xxiiiA) of Constitution. Constitutional law − Freedom of religion − Prohibition on religious tests as qualification for any office under Commonwealth − Under Funding Agreement, "school chaplain" to provide services − Whether "school chaplain" holds office under Commonwealth − Whether Funding Agreement or payments to service provider prohibited by s 116 of Constitution. Constitutional law − Appropriations of moneys from Consolidated Revenue Fund − Commonwealth paid appropriated moneys to service provider pursuant to Funding Agreement − Whether Appropriation Acts authorised appropriations of moneys for purpose of payments under Funding Agreement. Constitutional law − Standing − Plaintiff's children attended State school party to Funding Agreement − Whether plaintiff has standing to challenge validity of Funding Agreement − Whether plaintiff has standing to challenge validity of appropriations to pay moneys pursuant to Funding Agreement − Whether plaintiff has standing to challenge validity of payments to service provider. Words and phrases – "appropriation", "benefits to students", "capacity to contract", "execution and maintenance of this Constitution", "executive power of the Commonwealth", "office under the Commonwealth", "ordinary and well- recognised functions", "religious test". Constitution, ss 51(xx), 51(xxiiiA), 61, 64, 81, 96 and 116. Financial Management and Accountability Act 1997 (Cth), s 44(1). Introduction In 1901, one of the Commonwealth Constitution, Andrew Inglis Clark, said of what he called "a truly federal government"1: the principal architects of "Its essential and distinctive feature is the preservation of the separate existence and corporate life of each of the component States of the commonwealth, concurrently with the enforcement of all federal laws uniformly in every State as effectually and as unrestrictedly as if the federal government alone possessed legislative and executive power within the territory of each State." In this case, that essential and distinctive feature requires consideration of the observation of Alfred Deakin, another of the architects of the Commonwealth Constitution and the first Attorney-General of the Commonwealth, that2: "As a general rule, wherever the executive power of the Commonwealth extends, that of the States is correspondingly reduced." In particular, this case requires consideration of the executive power of the Commonwealth, absent power conferred by or derived from an Act of the Parliament, to enter into contracts and expend public money. The plaintiff, Ronald Williams, calls into question the validity of a contract made by the Commonwealth with a private service provider, and expenditure under that contract, for the delivery of "chaplaincy services" into schools operated by the Queensland State Government. His claim concerns the provision of such services in the Darling Heights State School in Queensland, at which his children are students. Although the expenditure is said by the Commonwealth to have met the necessary condition of a parliamentary appropriation for each year in which it has been made, no Act of Parliament has conferred power on the Commonwealth to contract and expend public money in this way. The Commonwealth relies upon the executive power under s 61 of the Constitution. That section provides: Inglis Clark, Studies in Australian Constitutional Law (1901) at 12-13. 2 Deakin, "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: "The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen's representative, and extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth." The extent to which the executive power authorises the Commonwealth to make contracts and spend public money pursuant to them is raised in these proceedings partly because, as this Court has recently held3 contrary to a long-standing assumption, parliamentary appropriation is not a source of spending power4. Initially there was another common assumption underpinning the written submissions in this case that, subject to the requirements of the Constitution relating to appropriations, the Commonwealth Executive can expend public moneys on any subject matter falling within a head of Commonwealth legislative power. The unanimity of that assumption did not survive oral argument and further written submissions were filed by leave after oral argument had concluded. For the reasons that follow, s 61 does not empower the Commonwealth, in the absence of statutory authority, to contract for or undertake the challenged expenditure on chaplaincy services in the Darling Heights State School. That conclusion depends upon the text, context and purpose of s 61 informed by its drafting history and the federal character of the Constitution. It does not involve any judgment about the merits of public funding of chaplaincy services in schools. It does not involve any conclusion about the availability of constitutional mechanisms, including conditional grants to the States under s 96 of the Constitution and inter-governmental agreements supported by legislation 5, which might enable such services to be provided in accordance with the Constitution of the Commonwealth and the Constitutions of the States. Nor does it involve any question about the power of the Commonwealth to enter into contracts and expend moneys: 3 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1; [2009] HCA 23. 4 An assumption reflected in the testimony of Sir Robert Garran to the Royal Commission on Child Endowment or Family Allowances that s 81 of the Constitution conferred "an absolute power of appropriation for general purposes": Australia, Report of the Royal Commission on Child Endowment or Family Allowances (1929) at 10; cf the opinions of Sir Edward Mitchell KC at 11, Mr Owen Dixon KC at 11-12 and Dr Evatt KC at 13. 5 See Saunders, "Intergovernmental Agreements and the Executive Power", (2005) 16 Public Law Review 294. in the administration of departments of State pursuant to s 64 of the Constitution; in the execution and maintenance of the laws of the Commonwealth; in the exercise of power conferred by or derived from an Act of the Parliament; in the exercise of powers defined by reference to such of the prerogatives of the Crown as are properly attributable to the Commonwealth; in the exercise of inherent authority derived from the character and status of the Commonwealth as the national government. What is rejected in these reasons is the unqualified proposition that, subject to parliamentary appropriation, the executive power of the Commonwealth extends generally to enable it to enter into contracts and undertake expenditure of public moneys relating to any subject matter falling within a head of Commonwealth legislative power. Procedural history The plaintiff is the father of four children enrolled in the Darling Heights State School. On 21 December 2010 he commenced proceedings in the original jurisdiction of this Court challenging the authority of the Commonwealth to draw money from the Consolidated Revenue Fund ("CRF") and to make payments to Scripture Union Queensland ("SUQ") to provide chaplaincy services at the Darling Heights State School. The payments were made pursuant to the Darling Heights Funding Agreement ("DHF Agreement") between the Commonwealth and SUQ and were made for the purposes of the National School Chaplaincy Program ("NSCP"), established by the Commonwealth. SUQ was incorporated under the Corporations Act 2001 (Cth) as a public company limited by guarantee and is registered in Queensland. It is designated in its Constitution as "the Mission". Its objects are "to make God's Good News known to children, young people and their families" and "to encourage people of all ages to meet God daily through the Bible and prayer". In furtherance of these objects, SUQ shall "undertake … a variety of specialist ministries", "shall preach the need of true conversion and of holiness in heart and life" and "shall aid the Christian Church in its ministries." In an amended writ of summons filed in the Court on 12 July 2011, the plaintiff sought declarations to the effect that Appropriation Acts enacted for the years 2007-2008 to 2011-2012 inclusive did not validly authorise the drawing of funds, pursuant to the DHF Agreement or any like agreement, and did not authorise the payment of funds to SUQ. Declarations were also sought relating to the issue of drawing rights purporting to authorise the payment of public moneys to SUQ under the DHF Agreement or other similar agreements. The plaintiff claimed injunctive relief to restrain officers of the Commonwealth from making such payments for chaplaincy services at the school. On 26 July 2011, Gummow J referred an amended special case for the opinion of the Full Court. A number of questions were posed for determination by the amended special case. Question 1 was whether the plaintiff had standing to challenge the DHF Agreement and, for each of the financial years from 2007-2008 to 2011-2012 inclusive, the drawing of money from the CRF and the payments by the Commonwealth to SUQ. For the reasons given by Gummow and Bell JJ6, I agree that the plaintiff had the requisite standing to support his challenge to the DHF Agreement and the payments made under it. I agree that it is unnecessary to answer the question relating to the drawing of money from the CRF for the purpose of making payments under the agreement. On the basis that the plaintiff had the requisite standing, the remaining questions were: is the DHF Agreement invalid, in whole or in part, by reason that the DHF Agreement is: beyond the executive power of the Commonwealth under s 61 of the Constitution? prohibited by s 116 of the Constitution? is the drawing of money from the CRF for the purpose of making payments under the DHF Agreement authorised by: the 2007-2008 Appropriation Act? the 2008-2009 Appropriation Act? the 2009-2010 Appropriation Act? the 2010-2011 Appropriation Act? the 2011-2012 Appropriation Act? 6 Reasons of Gummow and Bell JJ at [112]. was or is the making of the relevant payments by the Commonwealth to SUQ pursuant to the DHF Agreement unlawful by reason that the making of the payments was or is: beyond the executive power of the Commonwealth under s 61 of the Constitution? prohibited by s 116 of the Constitution? I agree, again for the reasons given by Gummow and Bell JJ, that neither the DHF Agreement nor the payments made under it were prohibited by s 116 of the Constitution7. The only limb of that provision relevant to this case was that which prohibits the Commonwealth from requiring any religious test "as a qualification for any office … under the Commonwealth." The persons providing chaplaincy services under the DHF Agreement did not hold offices under the Commonwealth. Questions 5 and 6 related to the relief sought, dependent upon the answers to questions 2, 3 and 4, and who should pay the costs of the special case. Factual background On 29 October 2006, Prime Minister Howard announced the introduction of the NSCP for the provision of chaplaincy services in schools. The initial level of funding announced was $90 million over a three year period. That level of funding was increased in 2007 to $165 million over three years. Prime Minister Rudd announced an extension of the NSCP in November 2009. That extension involved additional funding of $42 million over the 2010 and 2011 school years. Following Prime Minister Howard's announcement the Department of Education, Science and Training ("DEST") issued NSCP Guidelines. The guidelines were administrative in nature. They did not have statutory force. Revised guidelines were issued on 19 January 2007. Responsibility for the administration of the NSCP was brought under the Department of Education, Employment and Workplace Relations ("DEEWR") on 3 December 20078. Further revised guidelines were issued on 1 July 2008 and 16 February 2010. From July 2008 DEEWR made funds available under the NSCP for the provision of secular pastoral care workers in accordance with a Secular Service Providers Policy ("SSP Policy"). Where a school seeking funding under the NSCP had been unable to locate a suitable chaplain, it was given a copy of the SSP Policy. 7 Reasons of Gummow and Bell JJ at [107]-[110]. 8 By operation of an Administrative Arrangements Order. At the time of the Prime Minister's announcement in 2006, the Queensland Government had in place a procedural policy, published in 1998, for the supply of chaplaincy services in Queensland State schools. The policy set out requirements to be met by Queensland State schools in providing such services. Revised versions were published in July 2007 and April 2011 ("the Queensland Procedure"). Compliance with the Queensland Procedure was a condition of State Government funding. The Queensland Procedure was applicable even if the funding for a particular school's chaplaincy service did not come from the Queensland Government. Pursuant to the Queensland Procedure, SUQ entered into an agreement with the State of Queensland which required chaplains provided by SUQ to State schools to comply with a code of conduct and also with the Queensland Procedure as in force from time to time. On 9 November 2007, the Commonwealth entered into the DHF Agreement with SUQ for the provision of funding under the NSCP in respect of the Darling Heights State School. That agreement was varied in October 2008 and again in May 2010. It followed a standard form used for funding under the NSCP. SUQ provided chaplaincy services at the Darling Heights State School and received payments under the DHF Agreement. Three payments of $22,000 each were made on or about 14 November 2007, 15 December 2008 and 2 December 2009. A further payment of $27,063.01 was made on or about 11 October 2010. It covered the provision of NSCP chaplaincy services at the school for the period until 31 December 2011. No further payments were due to be made by the Commonwealth pursuant to the DHF Agreement. The Darling Heights Funding Agreement On 4 April 2007 the Darling Heights State School lodged an application for funding under the NSCP for chaplaincy services. The application was made in the name of the Deputy Principal of the school. It was endorsed by the Principal and the President of the Darling Heights State School Parents' and Citizens' Association. It was also endorsed by SUQ as the proposed chaplaincy service provider. The application was successful and led to the DHF Agreement. The stated purpose of that agreement was "the provision of funding under the National School Chaplaincy Programme on behalf of Darling Heights State School." SUQ was required under the DHF Agreement to provide chaplaincy services in accordance with the application for funding under the NSCP. The chaplain employed under the project was required to deliver services to the school and its community. A key element of that service was the provision of "general religious and personal advice to those seeking it, [and] comfort and support to students and staff, such as during times of grief". The chaplain was not to seek to "impose any religious beliefs or persuade an individual toward a particular set of religious beliefs". SUQ was required to ensure that the chaplain signed the NSCP Code of Conduct which formed part of the DHF Agreement. The DHF Agreement provided for payments to be made in accordance with a payment schedule set out in Sched 1 to the agreement. The payments made to SUQ pursuant to the DHF Agreement have been set out earlier in these reasons. The funding arrangements having been outlined, it is necessary now to refer to the legal bases for those payments, relied upon by the Commonwealth and challenged by the plaintiff. Bases for validity – the Commonwealth contentions The Commonwealth submitted the Executive Government to enter into the DHF Agreement and to make payments to SUQ pursuant to the agreement and the NSCP derived from s 61 of the Constitution. the power of that It should be emphasised at the outset that the executive power of the Commonwealth is to be understood as a reference to that power exercised by the Commonwealth as a polity through the executive branch of its government. It is, as the plaintiff submitted, an error to treat the Commonwealth Executive as a separate juristic person. The character of the Executive Government as a branch of the national polity is relevant to the relationship between the power of that branch and the powers and functions of the legislative branch and, particularly, the Senate. The Commonwealth submissions fall to be considered in relation to aspects of executive power identified in the decisions of this Court. Those decisions have been made in the context of particular controversies about specific applications of the power. They have not required a global account of its scope. Nevertheless, it can be said that the executive power referred to in s 61 extends powers necessary or incidental to the execution and maintenance of a law of the Commonwealth9; 9 R v Kidman (1915) 20 CLR 425 at 440-441 per Isaacs J; [1915] HCA 58; Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 464 per Gummow J; [1997] HCA 36. powers conferred by statute10; powers defined by reference to such of the prerogatives of the Crown as are properly attributable to the Commonwealth11; powers defined by the capacities of the Commonwealth common to legal persons12; inherent authority derived from Commonwealth as the national government13. the character and status of the It is necessary to draw a distinction between that aspect of the executive power which derives its content from the prerogatives of the Crown and that aspect defined by reference to the capacities which the Commonwealth has in common with juristic persons. 10 Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 101 per Dixon J; [1931] HCA 34; Davis v The Commonwealth (1988) 166 CLR 79 at 108 per Brennan J; [1988] HCA 63; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 55 [111] per French CJ, 121 [343]-[344] per Hayne and Kiefel JJ. 11 Farey v Burvett (1916) 21 CLR 433 at 452 per Isaacs J; [1916] HCA 36; Barton v The Commonwealth (1974) 131 CLR 477 at 498 per Mason J, 505 per Jacobs J; [1974] HCA 20; Davis v The Commonwealth (1988) 166 CLR 79 at 93-94 per Mason CJ, Deane and Gaudron JJ, 108 per Brennan J. 12 New South Wales v Bardolph (1934) 52 CLR 455 at 509 per Dixon J; [1934] HCA 74; Davis v The Commonwealth (1988) 166 CLR 79 at 108 per Brennan J; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 60 [126] per French CJ. As noted in In re KL Tractors Ltd (1961) 106 CLR 318 at 335 per Dixon CJ, McTiernan and Kitto JJ; [1961] HCA 8: "The word 'powers' here really means 'capacity', for we are dealing with the 'capacity' or a 'faculty' of the Crown in right of the Commonwealth." 13 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 397 per Mason J; [1975] HCA 52; R v Duncan; Ex parte Australian Iron and Steel Pty Ltd (1983) 158 CLR 535 at 560 per Mason J; [1983] HCA 29; Davis v The Commonwealth (1988) 166 CLR 79 at 93-94 per Mason CJ, Deane and Gaudron JJ, 110-111 per Brennan J; R v Hughes (2000) 202 CLR 535 at 554-555 [38] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [2000] HCA 22; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 63 [133] per French CJ, 87-88 [228], 91-92 [242] per Gummow, Crennan and Bell JJ, 116 [328]-[329] per Hayne and Kiefel JJ. The mechanism for the incorporation of the prerogative into the executive power is found in the opening words of s 61 which vests the executive power of the Commonwealth in "the Queen". This has been described as a "shorthand prescription, or formula, for incorporating the prerogative – which is implicit in the legal concept of 'the Queen' – in the Crown in right of the Commonwealth."14 As Dixon J said in Federal Commissioner of Taxation v Official Liquidator of "This consequence flows from the fact that the executive power of the Commonwealth is vested in the Crown, which, of course, is as much the central element in the Constitution of the Commonwealth as in a unitary constitution." The taxonomical question whether the prerogatives incorporated in the executive power of the Commonwealth include the common law capacities of a juristic person has been given different answers. Blackstone said that "if once any one prerogative of the crown could be held in common with the subject, it would cease to be prerogative any longer"16 and therefore that "the prerogative is that law in case of the king, which is law in no case of the subject."17 Dicey thought the prerogatives extended to "[e]very act which the executive government can lawfully do without the authority of the Act of Parliament"18. Professor George Winterton considered the dispute sterile and concluded that19: 14 Winterton, Parliament, the Executive and the Governor-General (1983) at 50. 15 (1940) 63 CLR 278 at 304; [1940] HCA 13. See also The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 437 per Isaacs J; [1922] HCA 62; In re Foreman & Sons Pty Ltd; Uther v Federal Commissioner of Taxation (1947) 74 CLR 508 at 514 per Latham CJ, 525-526 per Starke J, 531 per Dixon J; [1947] HCA 45; The Commonwealth v Cigamatic Pty Ltd (In Liq) (1962) 108 CLR 372 at 377 per Dixon CJ, Kitto J agreeing at 381, Windeyer J agreeing at 390; [1962] HCA 40. 16 Commentaries on the Laws of England (1765), bk 1, ch 7 at 232. 17 Blackstone, Commentaries on the Laws of England (1765), bk 1, ch 7 at 232. See also Chitty, A Treatise on the Law of the Prerogatives of the Crown (1820) at 4. 18 Dicey, Introduction to the Study of the Law of the Constitution, 10th ed (1959) at 19 Winterton, Parliament, the Executive and the Governor-General (1983) at 112. "there is neither a rational basis nor any utility in distinguishing the 'prerogative' in Blackstone's sense from the other common law powers of the Crown". In the United Kingdom that view has been said to be reflected in "the prevalence of judicial references to Dicey's definition of the prerogative and the relative marginalization of Blackstone's" indicating "a preference for the modern over the archaic, as Dicey's definition is read as functional and modern in emphasizing residuality and parliamentary supremacy."20 There is, nevertheless, a point to Blackstone's distinction in this case. It avoids the temptation to stretch the prerogative beyond its proper historical bounds21. Moreover, as appears below, one of the Commonwealth submissions suggested that the exercise of the executive "capacities" was not subject to the same constraints as the exercise of the prerogative. It is necessary now to turn to the Commonwealth submissions. In its written submissions, filed before the hearing, the Commonwealth made what was presented as a limiting assumption for the purpose of its argument. The assumption was that the breadth of the executive power of the Commonwealth, in all of its aspects, is confined to the subject matters of express grants of power to the Commonwealth Parliament in ss 51, 52 and 122 of the Constitution, together with matters that, because of their distinctly national character or their magnitude and urgency, are peculiarly adapted to the government of the country and otherwise could not be carried on for the public benefit. The "aspects" of executive power so limited were said to be the prerogative in the "narrower sense"22, the powers that arise from the position of the Commonwealth as a national government, and the capacities which the Commonwealth has in common with other legal persons. The limiting negative assumption was linked to a broad positive proposition that the executive power in all of its aspects extends to the subject matter of grants of legislative power to the Commonwealth Parliament. In oral argument at the hearing the Commonwealth nevertheless disavowed the proposition that the "executive power authorises the Executive to do anything which the Executive could be authorised by statute to do, pursuant to one of the powers in section 51". In later written submissions, filed after the hearing, in response to submissions by Tasmania and South Australia, the Commonwealth appeared to revive its broad proposition and contended that the executive power supports executive action dealing at least with matters within the enumerated heads of Commonwealth legislative power. 20 Cohn, "Medieval Chains, Invisible Inks: On Non-Statutory Powers of the Executive", (2005) 25 Oxford Journal of Legal Studies 97 at 104. 21 Cohn, "Medieval Chains, Invisible Inks: On Non-Statutory Powers of the Executive", (2005) 25 Oxford Journal of Legal Studies 97 at 108. 22 That is, in the sense used by Blackstone as outlined above. The broad proposition in each of its manifestations should not be accepted. The exercise of legislative power must yield a law able to be characterised as a law with respect to a subject matter within the constitutional grant of legislative authority to the Parliament. The subject matters of legislative power are specified for that purpose, not to give content to the executive power. Executive action, except in the exercise of delegated legislative authority, is qualitatively different from legislative action. As Isaacs J said in R v Kidman23: "The Executive cannot change or add to the law; it can only execute it". To say positively and without qualification that the executive power in its various aspects extends, absent statutory support, to the "subject matters" of the legislative powers of the Commonwealth is to make a statement the content of which is not easy to divine. Neither the drafting history of s 61 of the Constitution nor its judicial exegesis since Federation overcomes that difficulty. In reliance upon its broad premise, the Commonwealth submitted that the making of the DHF Agreement and the payments to SUQ were within the executive power in that: The DHF Agreement provided for, and its performance involved, the provision of benefits to students, a subject matter covered by s 51(xxiiiA) of the Constitution. The DHF Agreement was entered into with, and provided for assistance to, a trading corporation formed within the limits of the Commonwealth, a subject matter covered by s 51(xx) of the Constitution. The Commonwealth referred to a number of authorities in support of its broad proposition. The first of those was Victoria v The Commonwealth and Hayden ("the AAP case")24. The focus in that case, which concerned the validity of Commonwealth payments to regional councils to provide welfare services, was upon the term "purposes of the Commonwealth" in s 81 of the Constitution. "We are in no way concerned in the present case to consider the scope of the prerogative or the circumstances in which the Executive may act without statutory sanction." 23 (1915) 20 CLR 425 at 441. 24 (1975) 134 CLR 338. 25 (1975) 134 CLR 338 at 379. Observations about the executive power made in the judgments in the AAP case were generally cast in a form reflecting the negative limiting assumption which stood at the threshold of the Commonwealth's initial written submissions in this case. Barwick CJ said that the Executive "may only do that which has been or could be the subject of valid legislation."26 Gibbs J said that the Executive "cannot act in respect of a matter which falls entirely outside the legislative competence of the Commonwealth"27. The content of executive power as Mason J explained it "does not reach beyond the area of responsibilities allocated to the Commonwealth by the Constitution"28. His Honour did not define those responsibilities in terms of the subject matters of Commonwealth legislative competence. Rather, he described them as29: "ascertainable from the distribution of powers, more particularly the distribution of legislative powers, effected by the Constitution itself and the character and status of the Commonwealth as a national government." This was no simplistic mapping of the executive power on to the fields of legislative competency. His Honour described his view of the executive power as confirmed by the decisions of this Court in The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd ("the Wool Tops case")30 and The Commonwealth v Australian Commonwealth Shipping Board31. In relation to the Wool Tops case his Honour referred in his footnote32 to the joint judgment of Knox CJ and Gavan Duffy J, in which the impugned agreements were held invalid for want of constitutional or statutory authority33. His footnoted reference34 to Commonwealth Shipping Board was to a passage in the joint judgment of Knox CJ, Gavan Duffy, Rich and Starke JJ in which their Honours 26 (1975) 134 CLR 338 at 362. 27 (1975) 134 CLR 338 at 379. 28 (1975) 134 CLR 338 at 396. 29 (1975) 134 CLR 338 at 396. 30 (1922) 31 CLR 421. 31 (1926) 39 CLR 1; [1926] HCA 39. 32 (1975) 134 CLR 338 at 397, fn 40. 33 (1922) 31 CLR 421 at 432. 34 (1975) 134 CLR 338 at 397, fn 41. held that an activity unwarranted in express terms by the Constitution could not be vested in the Executive35. In R v Duncan; Ex parte Australian Iron and Steel Pty Ltd36, Mason J held that Commonwealth executive power extended to the making of inter- governmental agreements between the Commonwealth and the States "on matters of joint interest, including matters which require for their implementation joint legislative action", so long as the means used and the ends sought were consistent with the Constitution37. His Honour said that the executive power of the Commonwealth was not "limited to heads of power which correspond with enumerated heads of Commonwealth legislative power under the Constitution."38 Referring back to what he had said in the AAP case, he added39: "Of necessity the scope of the power is appropriate to that of a central executive government in a federation in which there is a distribution of legislative powers between the Parliaments of the constituent elements in the federation." These remarks are consistent with a concept of executive power in which the character and status of the Commonwealth as a national government is an aspect of the power and a feature informing all of its aspects, including the prerogatives appropriate to the Commonwealth, the common law capacities, powers conferred by statutes, and the powers necessary to give effect to statutes. His Honour's conception of executive power was consistent with that most recently discussed by this Court in Pape v Federal Commissioner of Taxation40. It does not afford support for the broad proposition that the Executive Government of the Commonwealth can do anything about which the Commonwealth could make a law. the Parliament of In Davis v The Commonwealth41 the Court was again concerned with the way in which the "character and status of the Commonwealth as the government 35 (1926) 39 CLR 1 at 10. 36 (1983) 158 CLR 535. 37 (1983) 158 CLR 535 at 560. 38 (1983) 158 CLR 535 at 560. 39 (1983) 158 CLR 535 at 560. 40 (2009) 238 CLR 1 at 62-63 [131]-[132] per French CJ, 90-91 [239] per Gummow, 41 (1988) 166 CLR 79 at 94 per Mason CJ, Deane and Gaudron JJ. of the nation" underpinned executive action and associated incidental legislation to celebrate the bicentenary of first European settlement in Australia. It was in the context of that question that Mason CJ, Deane and Gaudron JJ held the executive power to extend most clearly "in areas beyond the express grants of legislative power … where Commonwealth executive or legislative action involves no real competition with State executive or legislative competence."42 It is necessary, in considering Davis, to have regard not only to the questions which fell for decision in that case, but also to the observation of Brennan J that43: "Section 61 refers not only to the execution and maintenance of the laws of the Commonwealth (a function characteristically to be performed by execution of statutory powers); it refers also to 'the execution and maintenance of this Constitution' (a function to be performed by execution of powers which are not necessarily statutory)." (emphasis added) What his Honour said was not a prescription for a general non-statutory executive power to enter contracts and spend public money on any matter that could be referred to a head of Commonwealth legislative power or could be authorised by a law of the Commonwealth. What Davis was about is encapsulated in the observation by Wilson and Dawson JJ44: "In this case it is enough to say that, viewing its powers as a whole, the Commonwealth must necessarily have the executive capacity under s 61 to recognize and celebrate its own origins in history. The constitutional distribution of powers is unaffected by its exercise." R v Hughes45, also cited in the Commonwealth's submissions, concerned the validity of a State law conferring on the Commonwealth Director of Public Prosecutions the power to institute and carry on prosecutions for indictable offences against the law of the State. In the joint judgment, consideration was given to whether the provisions of the relevant Commonwealth Act authorising regulations conferring such functions on a Commonwealth officer could be supported as laws with respect to matters incidental to the executive power pursuant to s 51(xxxix)46. The underlying inter-governmental agreement was 42 (1988) 166 CLR 79 at 93-94. 43 (1988) 166 CLR 79 at 109-110. 44 (1988) 166 CLR 79 at 104. 45 (2000) 202 CLR 535. 46 (2000) 202 CLR 535 at 554-555 [38] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ. referred to in the joint judgment as a possible illustration of the propositions stated by Mason J in Duncan and referred to earlier in these reasons. The Commonwealth also relied upon observations in the judgments of McHugh and Gummow JJ in Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority47. As McHugh J correctly pointed out, much Commonwealth executive activity does not depend on statutory authorisation. He said48: "In the ordinary course of administering the government of the Commonwealth, authority is frequently given to Commonwealth servants and agents to carry out activities in the exercise of the general powers conferred by the Constitution." "The executive power of the Commonwealth enables the undertaking of 'all executive action which is appropriate to the position of the Commonwealth under the Constitution and to the spheres of responsibility vested in it by the Constitution'." (footnote omitted) There are undoubtedly significant fields of executive action which do not require express statutory authority. As was accepted by the Attorney-General of Tasmania in further written submissions, filed after the oral hearing, the executive power of the Commonwealth extends to the doing of all things which are necessary or reasonably incidental to the execution and maintenance of a valid law of the Commonwealth once that law has taken effect. That field of action does not require express statutory authority, nor is it necessary to find an implied power deriving from the statute. The necessary power can be found in the words "execution and maintenance … of the laws of the Commonwealth" appearing in s 61 of the Constitution. The field of non-statutory executive action also extends to the administration of departments of State under s 64 of the Constitution and those activities which may properly be characterised as deriving from the character and status of the Commonwealth as a national government. To accept those propositions is not to accept the broad proposition for which the 47 (1997) 190 CLR 410. 48 (1997) 190 CLR 410 at 455. 49 (1997) 190 CLR 410 at 464. Commonwealth contended, nor does such a proposition have the authority of a decision of this Court50. The Commonwealth sought to support the challenged expenditure on two other bases. The first was that the Commonwealth possesses capacities, in common with other legal persons, including the capacity to obtain information, to spend money lawfully available to be spent or to enter into contracts. As initially formulated by the Commonwealth, these capacities were not limited in their exercise by reference to the subject matters of the legislative powers of the Commonwealth. The second basis, put in oral argument, was that: "a relevantly unlimited power to pay and to contract to pay money is to be found in the character and status of the Commonwealth as a national government just as it would be inherent in the character and status of the Commonwealth were it a natural person." The Commonwealth accepted that, unlike a natural person, its power to pay and to contract to pay money was constrained by the need for an appropriation and by the requirements of political accountability. In oral argument, the Commonwealth submitted that its capacity to contract, and to pay money pursuant to contract, extends at least to payments made on terms and conditions that could be authorised or required by an exercise of the legislative power of the Commonwealth under s 51. The metes and bounds of aspects of executive power, however, are not to be measured by undiscriminating reference to the subject matters of legislative power. Those subject matters are diverse in character. Some relate to activities, others to classes of persons or legal entities, some to intangible property rights and some to status. Some are purposive51. The submission invites the Court to determine whether there is an hypothetical law which could validly support an impugned executive contract and expenditure under such a contract. There might be a variety of laws which could validly authorise or require contractual or spending activity by the Commonwealth. The location of the contractual capacity of the Commonwealth in a universe of hypothetical laws which would, if enacted, support its exercise, is not a means by which to judge its scope. 50 In a different context it was rejected in the Full Federal Court in Ruddock v Vadarlis (2001) 110 FCR 491 at 542 [192] per French J, Beaumont J agreeing at 51 As suggested by Dixon J in Stenhouse v Coleman (1944) 69 CLR 457 at 471; [1944] HCA 36. See also Murphyores Incorporated Pty Ltd v The Commonwealth (1976) 136 CLR 1 at 11-12 per Stephen J; [1976] HCA 20. the Federation which flow from attributing The Commonwealth submitted that the exercise by its Executive Government of its capacities does not involve interference with what would otherwise be the legal rights and duties of others, nor does the Executive Government thereby displace the ordinary operation of the laws of the State or Territory in which the relevant acts take place. This is correct as far as it goes but does not provide an answer to the question of validity. There are the consequences for Commonwealth a wide executive power to expend moneys, whether or not referable to a head of Commonwealth legislative power, and subject only to the requirement of a parliamentary appropriation. Those consequences are not to be minimised by the absence of any legal effect upon the laws of the States. Expenditure by the Executive Government of the Commonwealth, administered and controlled by the Commonwealth, in fields within the competence of the executive governments of the States has, and always has had, the potential, in a practical way of which the Court can take notice, to diminish the authority of the States in their fields of operation. That is not a criterion of invalidity. It is, however, a reason not to accept the broad contention that such activities can be undertaken at the discretion of the Executive, subject only to the requirement of appropriation. That aspect of executive power, which has been described as the "mere capacities of a kind which may be possessed by persons other than the Crown"52, is not open-ended. The Commonwealth is not just another legal person like a private corporation or a natural person with contractual capacity. The governmental contract "is now a powerful tool of public administration."53 As the Executive Government54: the capacities exercised by "Important governmental powers, such as the power to make contracts, may be attributed to this source, but the general principle must not be pressed too far. It can be applied only when the executive and private actions are identical, but this will rarely be so, because governmental action is inherently different from private action. Governmental action inevitably has a far greater impact on individual liberties, and this affects its character." Relevantly for present purposes, there is also the impact of Commonwealth executive power on the executive power of the States. 52 Davis v The Commonwealth (1988) 166 CLR 79 at 108 per Brennan J. 53 Seddon, Government Contracts: Federal, State and Local, 4th ed (2009) at 65. 54 Winterton, Parliament, the Executive and the Governor-General (1983) at 121. The Commonwealth submitted that the necessary condition, imposed by s 83 of the Constitution, for the exercise of the Commonwealth power to spend, namely that it be under appropriation made by law, had been met by the enactment of Appropriation Acts in each of the relevant years. It was not in dispute that, although a necessary condition of the exercise of executive spending power, an appropriation under s 83 is not a source of that power55. For the reasons given by Gummow and Bell JJ56 it is not necessary in this case to deal with the sufficiency of the parliamentary appropriations relied upon by the Commonwealth. No Act of Parliament existed which conferred power on the Executive Government of the Commonwealth to make the impugned payments to SUQ57. The lawfulness of the payments therefore depended critically upon whether s 61 of the Constitution supplied that authority. That question invites consideration of the construction of s 61 by reference to its drafting history and the concept of executive government which informed it. Executive power – prehistory and drafting history There were elements of the drafting history of s 61 of the Constitution which reflected some of the Commonwealth's arguments about its scope. It is helpful to consider that history. In November 1890, a few months before the first National Australasian Convention, Sir Samuel Griffith, then Premier of Queensland for the second time, proposed, by way of motion in the Legislative Assembly, a federal constitution for the Colony of Queensland involving the creation of three provinces. The motion was a political response to a long-running separatist movement58. Relevantly, he proposed executive governments of the provinces and a central "United Provinces" Executive Government. Their functions, he said, "should correspond with the functions assigned to their respective 55 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 55 [111] per French CJ, 73-74 [178]-[180] per Gummow, Crennan and Bell JJ, 113 [320] per Hayne and Kiefel JJ, 210-211 [601], 211-212 [603], 212 [606] per Heydon J. 56 Reasons of Gummow and Bell JJ at [113]-[117]. 57 The Commonwealth's submission that s 44 of the Financial Management and Accountability Act 1997 (Cth) provided such authority is dealt with later in these reasons and in the reasons of Gummow and Bell JJ at [102]-[103]. 58 See Bernays, Queensland Politics During Sixty (1859-1919) Years (1919) at 506- 524; Thomson, "Drafting the Australian Constitution: The Neglected Documents", (1986) 15 Melbourne University Law Review 533. Legislatures."59 Queensland did not become a federation but Griffith's delineation of executive powers was to have some resonance in the drafting process which led to s 61 of the Constitution of the Commonwealth. On 18 March 1891, the National Australasian Convention resolved in Committee of the Whole to approve of the formation of the framing of a Federal Constitution which would establish, among other things60: "An Executive, consisting of a Governor-General, and such persons as may from time to time be appointed as his advisers." A Constitutional Committee was created to draft a Bill. Sir Samuel Griffith, Edmund Barton, Alfred Deakin and Andrew Inglis Clark were among its members. A list of issues for decision by the Committee at its first meeting, probably prepared by Griffith61, included an Executive with "[p]owers correlative to those of Legislature."62 A framework document subsequently produced by the Committee proposed an Executive Government but made no reference to its powers63. Inglis Clark prepared a draft Constitution which, in effect, became a working document in the drafting process that ensued in the 1891 Convention and the 1897-1898 Conventions. The initial draft was based upon the Constitution of the United States in so far as it assigned enumerated legislative powers to the Federal Parliament64. In relation to the "location, nature and 59 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 11 November 1890 at 1331. 60 Official Record of the Proceedings and Debates of the National Australasian Convention, (Sydney), 18 March 1891 at lxii. 61 Williams, The Australian Constitution: A Documentary History (2005) at 53. 62 "List of matters submitted to Constitutional Committee for decision preparatory to drafting Constitution. 19 March 1891" (Document 3) in Griffith, Successive Stages of the Constitution of the Commonwealth of Australia (1891, reprinted 1973). 63 "Memorandum of Decisions of Constitutional Committee. Printed from day to day" (Document 4) in Griffith, Successive Stages of the Constitution of the Commonwealth of Australia (1891, reprinted 1973). 64 Williams, The Australian Constitution: A Documentary History (2005) at 68; La Nauze, The Making of the Australian Constitution (1972) at 25-26; Buss, "Andrew Inglis Clark's Draft Constitution, Chapter III of the Australian Constitution, and the Assist from Article III of the Constitution of the United States", (2009) 33 Melbourne University Law Review 718. See generally, (Footnote continues on next page) exercise of the Executive power"65 it followed the Constitution of Canada embodied in the British North America Act 1867 (Imp) ("the British North America Act")66. Section 9 of that Act provided: "The Executive Government and Authority of and over Canada is hereby declared to continue and be vested in the Queen." Nevertheless, Inglis Clark, perhaps having in mind the power of the central government under the Canadian Constitution, warned the delegates, in the memorandum that accompanied his draft, against67: "an Executive having an immense number of provincial offices at its disposal, and the reduction of the present local Governments to the position of large Municipal Councils with a Governor and a Ministry attached to each of them." the British North America Act and A relevant contrast between the Commonwealth Constitution was made by the Privy Council in Attorney-General (Cth) v Colonial Sugar Refining Co Ltd68. What was in the minds of those who agreed on the resolutions which gave rise to the British North America Act "was a general Government charged with matters of common interest, and new and merely local Governments for the Provinces", which were to have "fresh and much restricted Constitutions"69. The Constitution adopted by the Australian colonies was "federal in the strict sense of the term"70, in which "States, while agreeing on a measure of delegation, yet in the main continue[d] to preserve their original Constitutions."71 Winterton, Parliament, the Executive and the Governor-General (1983) and Thomson, "Executive Power, Scope and Limitations: Some Notes from a Comparative Perspective", (1983) 62 Texas Law Review 559. 65 Williams, The Australian Constitution: A Documentary History (2005) at 67. 66 30 & 31 Vict c 3. 67 Williams, The Australian Constitution: A Documentary History (2005) at 68. 68 (1913) 17 CLR 644; [1914] AC 237. 69 (1913) 17 CLR 644 at 652; [1914] AC 237 at 253. 70 (1913) 17 CLR 644 at 651; [1914] AC 237 at 252. 71 (1913) 17 CLR 644 at 651-652; [1914] AC 237 at 253. See La Nauze, The Making of the Australian Constitution (1972) at 27. Clause 5 of Inglis Clark's draft Constitution provided that the executive power and authority of the "Federal Dominion of Australasia" would continue and be vested, subject to the provisions of the Bill, in the Queen72. Clause 6 provided for the Queen to appoint a Governor-General to exercise such "executive powers, authorities, and functions" as the Queen might deem "necessary or expedient to assign to him."73 Constitution was to broadly similar effect74. The Constitution produced by the Constitutional Committee of the 1891 Convention, and submitted to the Convention, followed the Inglis Clark and Kingston model in relation to executive power. Clause 5 of the Inglis Clark draft became cl 1 of Ch II of the proposed Constitution, entitled "THE EXECUTIVE "The Executive power and authority of the Commonwealth is vested in the Queen, and shall be exercised by the Governor-General as the Queen's Representative." That clause was one of two precursors of s 61. The second precursor of s 61, a new provision with respect to executive power which had not appeared in either of the Inglis Clark or Kingston drafts, was cl 8 of the proposed Ch II76: "The Executive power and authority of the Commonwealth shall extend to all matters with respect to which the Legislative powers of the Parliament may be exercised, excepting only matters, being within the Legislative powers of a State, with respect to which the Parliament of that State for the time being exercises such powers." 72 Williams, The Australian Constitution: A Documentary History (2005) at 80. 73 Williams, The Australian Constitution: A Documentary History (2005) at 81. 74 "Mr Kingston's Draft of a Constitution Bill prepared before the Convention", 26 February 1891 (Document 6) in Griffith, Successive Stages of the Constitution of the Commonwealth of Australia (1891, reprinted 1973). See La Nauze, The Making of the Australian Constitution (1972) at 26. 75 Williams, The Australian Constitution: A Documentary History (2005) at 329. 76 Williams, The Australian Constitution: A Documentary History (2005) at 329. In speaking to the draft Bill, Sir Samuel Griffith said77: "It is proposed that [the Commonwealth's] executive authority shall be co- extensive with its legislative power. That follows as a matter of course." The 1891 draft Constitution contained a paramountcy provision, cl 3 of Ch V, in terms identical to those which became s 109 of the Constitution78. That circumstance, and the non-exclusive character of most Commonwealth legislative powers, was at least consistent with the proposition that cl 8 was directed to cases in which the Commonwealth had exercised its concurrent legislative power on a particular subject matter. The proposition is, to some degree, speculative because no explanation emerged at the time of what was meant by an executive power extending to matters with respect to which the legislative powers of the Parliament could be exercised. In the course of consideration by the Convention in Committee in April 1891, cl 8 was amended, on Sir Samuel Griffith's motion, to read79: "The Executive power and authority of the Commonwealth shall extend to the execution of the provisions of this Constitution, and the Laws of the Commonwealth." In moving the amendment, Griffith said that it did not alter the intention of cl 8 77 Official Report of the National Australasian Convention Debates, (Sydney), 31 March 1891 at 527. 78 Williams, The Australian Constitution: A Documentary History (2005) at 334. 79 "Copy Draft used in Committee of the Whole Convention. 1 April to 8 April, showing amendments made by the Committee" (Document 15) in Griffith, Successive Stages of the Constitution of the Commonwealth of Australia (1891, reprinted 1973). An identically worded provision was contained in a proposed Constitution for a federated Queensland submitted by Griffith to the Queensland Parliament in 1892. Clause 78 provided that the "Executive power and authority" of the United Provinces was to "extend to the execution of the provisions of this Constitution, and the laws of the United Provinces": Queensland Constitution Bill (No 2) 1892 (Q), cl 78. The Bill was defeated in the Legislative Council in October 1892. 80 Official Report of the National Australasian Convention Debates, (Sydney), 6 April 1891 at 777. "As the clause stands, it contains a negative limitation upon the powers of the executive; but the amendment will give a positive statement as to what they are to be." With what has been described as "an optimism that history has shown to be "That amendment covers all that is meant by the clause, and is quite free from ambiguity." The stated equivalence of the original and amended forms of cl 8 raised more questions than it answered. As amended, the clause did not, in terms or by any stretch of textual analysis, describe an executive power to do any act dealing with a subject matter falling within a head of Commonwealth legislative power. The 1891 draft Constitution failed to secure support from the colonial legislatures83. Nevertheless, it became an important working document for the the National Drafting Committee of Australasian Convention which met in Adelaide in 1897. In debate at the Adelaide session, Edmund Barton, responding to a proposal to insert the words "in council" after "Governor-General" in s 61, described the executive power of the Crown as "primarily divided into two classes"84: the Constitutional Committee of "those exercised by the prerogative … and those which are ordinary Executive Acts, where it is prescribed that the Executive shall act in Council." The latter class he described as "the offsprings of Statutes."85 Quick and Garran summarised his observation as a statement that86: 81 Crommelin, "The Executive", in Craven (ed), The Convention Debates 1891-1898: Commentaries, Indices and Guide (1986) 127 at 131. 82 Official Report of the National Australasian Convention Debates, (Sydney), 6 April 1891 at 778. 83 La Nauze, The Making of the Australian Constitution (1972) at 88-89. 84 Official Report of the National Australasian Convention Debates, (Adelaide), 19 April 1897 at 910. 85 Official Report of the National Australasian Convention Debates, (Adelaide), 19 April 1897 at 910. 86 Quick and Garran, The Annotated Constitution of the Australian Commonwealth "Executive acts were either (1) exercised by prerogative, or (2) statutory." the 1897 Convention by The draft Constitution, recommended the Constitutional Committee, made no substantial changes to the provisions of Ch II dealing with the location and nature of executive power. Sir Samuel Griffith, having become Chief Justice of Queensland, was not a delegate to the 1897-1898 Conventions. Nor was Inglis Clark present. His journey in 1897 to the United States, and his appointment in 1898 to the Supreme Court of Tasmania, precluded his attendance at those Conventions87. Nevertheless, Griffith and Inglis Clark offered written critiques of the draft Constitution under consideration in 1897. They did not propose any alterations relating to the location and scope of the executive power88. Nor did the Colonial Office beyond the suggestion, which was accepted, that the words "is exercisable" be substituted for the words "shall be exercised" in cl 6089, the provision which evolved into s 61. That change was adopted at the Sydney Convention of 189790, along with other changes to Ch II which are not material for present purposes. After consideration by colonial legislatures, pursuant to enabling Acts establishing the 1897 Convention91, the draft Constitution was revised by the Drafting Committee. As finally presented to the Melbourne Convention in 1898 the provisions which were to become s 61 of the Constitution were embodied in two clauses found in Ch II92: 87 La Nauze, The Making of the Australian Constitution (1972) at 93. 88 Griffith, "Notes on the Draft Federal Constitution framed by the Adelaide Convention of 1897", June 1897, reproduced in Queensland, Journals of the Legislative Council, vol 47 pt 1; Inglis Clark, "Proposed Amendments to the Draft of a Bill to Constitute the Commonwealth of Australia", reproduced in Williams, The Australian Constitution: A Documentary History (2005) at 705. 89 Williams, The Australian Constitution: A Documentary History (2005) at 715. 90 Official Record of the Debates of the Australasian Federal Convention, (Sydney), 17 September 1897 at 782. 91 The Australasian Federation Enabling Act (South Australia) 1895, s 26; Australasian Federation Enabling Act 1895 (NSW), s 26; Australasian Federation Enabling Act 1896 (Vic), s 26; The Australasian Federation Enabling Act (Tasmania) 1896, s 26; Australasian Federation Enabling Act 1896 (WA), s 23. 92 Williams, The Australian Constitution: A Documentary History (2005) at 1090 and 1092. "60. The executive power of the Commonwealth is vested in the Queen, and is exercisable by the Governor-General as the Queen's representative. The executive power of the Commonwealth shall extend to the execution of the Commonwealth." this Constitution, and of laws of the Clauses 60 and 67, although not debated in Committee at the Melbourne Convention of 1898, were condensed into one clause by the Drafting Committee, namely cl 61, which became s 61 of the Constitution93. The two versions of cl 8 in the 1891 draft and Griffith's comment upon moving the amendment to the clause were relied upon in the "Vondel Opinion" signed by Alfred Deakin, as Attorney-General, in 1902. In that Opinion, Deakin gave a meaning to s 61 which, at least so far as the documentary record discloses, had not been exposed during the National Australasian Convention debates. He regarded executive power as existing "antecedently to, and independently of, legislation". Its scope was "at least equal to that of the legislative power – exercised or unexercised."94 Later in his Opinion he concluded95: "the Commonwealth executive Commonwealth legislation, with respect to every matter to which its legislative power extends." independently power, has Deakin's Opinion reflected that of the Secretary to the Attorney-General's Department, Robert Garran, who may have contributed to its drafting96. Garran, 93 "Bill as proposed to be further amended by the Drafting Committee", (Melbourne), March 1898 at 17, reproduced in Williams, The Australian Constitution: A Documentary History (2005) at 1091. 94 Deakin, "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 95 Deakin, "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 96 Garran would have played an important role in preparing drafts and settling opinions – see Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 1901-14 (1981) at ix. however, was later to resile from that opinion in testimony to the Royal Commission on the Constitution of the Commonwealth. He told the Royal Commission97: "I used to have the view that some common law authority might be found for the executive; but, in view of those words in section 61, I think you must seek support for it either in the Constitution itself or in an act of Parliament." Deakin's Opinion contrasted sharply with that of Inglis Clark, expressed in 1901, that98: "It is evident that the legislative power of the Commonwealth must be exercised by the Parliament of the Commonwealth before the executive or the judicial power of the Commonwealth can be exercised by the Crown or the Federal Judiciary respectively, because the executive and the judicial powers cannot operate until a law is in existence for enforcement or exposition." It is not to be thought that Inglis Clark thereby took a narrow view of executive power. The power declared by s 61 of the Constitution to be vested in the Queen included "the discretionary authority of the Crown within the Commonwealth" and extended "to the maintenance and execution of the Constitution and of the laws of the Commonwealth."99 So far as the section referred to the Queen it was to be read as a declaration of an existing fact and not as an original grant of executive authority to her within the Commonwealth100. The extension of the executive power in the closing words of s 61 was not the subject of any exegesis by Quick and Garran, beyond their observation that the execution and maintenance of the Constitution and of laws passed pursuant to it would be "foremost" among the powers and functions conferred upon the Governor-General101. 97 Australia, Royal Commission on the Constitution of the Commonwealth, Report of Proceedings and Minutes of Evidence (Canberra), 27 September 1927 at 89. 98 Inglis Clark, Studies in Australian Constitutional Law (1901) at 38. 99 Inglis Clark, Studies in Australian Constitutional Law (1901) at 64. 100 Inglis Clark, Studies in Australian Constitutional Law (1901) at 64. 101 Quick and Garran, The Annotated Constitution of the Australian Commonwealth The similarity between the words of extension in s 61 and the language of s 101 of the Constitution, which provides for the establishment and functions of the Inter-State Commission, is striking102. In New South Wales v The Commonwealth ("the Inter-State Commission case")103, which was concerned with s 101, Isaacs J, with whom Powers J agreed104, described s 61 as according with Blackstone's observation that105: "though the making of laws is entirely the work of a distinct part, the legislative branch, of the sovereign power, yet the manner, time, and circumstances of putting those laws in execution must frequently be left to the discretion of the executive magistrate." Barton J, dissenting in the result, equated the words "execute and maintain" with "enforce and uphold the laws of which they are the guardians."106 Professor W Harrison Moore, writing in 1910, noted that the colonial constitutions were "almost silent on the subject of the powers as of the organization of the Executive."107 He identified as one function of the Executive the representation of the Commonwealth whenever necessary, "whether as a political organism, or as a juristic person making contracts and appearing as a party in Courts of justice."108 That function required no express power. It flowed from the establishment of the Commonwealth as a new political community. The 102 Section 101 provides: "There shall be an Inter-State Commission, with such powers of adjudication and administration as the Parliament deems necessary for the execution and maintenance, within the Commonwealth, of the provisions of this Constitution relating to trade and commerce, and of all laws made thereunder." 103 (1915) 20 CLR 54; [1915] HCA 17. 104 (1915) 20 CLR 54 at 106; Powers J also agreed with Griffith CJ. 105 (1915) 20 CLR 54 at 89, quoting Commentaries on the Laws of England (1765), bk 1, ch 7 at 261. 106 (1915) 20 CLR 54 at 72. 107 Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed 108 Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed other functions were those conferred by the terms of s 61109. In relation to s 61, the Commonwealth Executive had more to do with the subject matters of Commonwealth legislative power than just giving effect to Commonwealth "In relation to all such matters, the Commonwealth Executive does … represent the Commonwealth and all the States to the outside world, whether there has been any Commonwealth legislation or not". Further, where a power or duty committed to "the Commonwealth" under the Constitution was of a kind exercisable at common law by the Executive, the Commonwealth Executive was empowered to take such action as the common law allowed111. Professor A Berriedale Keith, in the first edition, published in 1912, of Responsible Government in the Dominions, described the executive power of the Commonwealth as "very large", adding112: "It includes in addition to the power conferred by Commonwealth Acts the power sole and exclusive over the transferred departments." In a subsequent edition, he also proposed that "[t]he executive power in the Commonwealth is little affected by considerations of the federal character of the Commonwealth."113 The Commonwealth submitted that it had been part of the accepted understanding of the Constitution, since the time of the National Australasian Convention debates, that the executive power of the Commonwealth supports executive acts dealing at least with matters within the enumerated heads of 109 Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed 110 Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed 111 Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed (1910) at 297. An example was the exercise of the discharge of the duty imposed by s 119 of protecting every State against invasion and, on the application of the executive government of the State, against domestic violence. 112 Berriedale Keith, Responsible Government in the Dominions (1912), vol 2 at 811. 113 Berriedale Keith, Responsible Government in the Dominions, 2nd ed (1928), vol 2 Commonwealth legislative power. There is no doubt that at the time of the Convention debates, the statement that the distribution of executive powers in a federation would follow the distribution of legislative powers was not novel. However, its meaning appears to have been no clearer then than it is now. There is little evidence to support the view that the delegates to the National Australasian Conventions of 1891 and 1897-1898, or even the leading lawyers at those Conventions, shared a clear common view of the working of executive power in a federation. The Constitution which they drafted incorporated aspects of the written Constitutions of the United States and Canada, and the concept of responsible government derived from the British tradition. The elements were mixed in the Constitution to meet the Founders' perception of a uniquely Australian Federation. In respect of executive power, however, that perception was not finely resolved. Quick and Garran distinguished the "Federal Executive power" conferred by s 61 from "the Executive power reserved to the States." 114 The executive power of the Commonwealth as a united political community was divided into two parts: "that portion which belongs to the Federal Government, in relation to Federal affairs … and that portion which relates to matters reserved to the States"115. Nevertheless, federal executive power and State executive power were "of the same nature and quality"116. for The tension between the operation of executive powers and functions under a system of responsible cabinet government and a federal constitution with a bi-cameral legislature, one element of which was a States' House, represented a difficulty the Federation movement. figures Professor Winterton wrote that there was "a direct conflict between responsible government as practised in Britain and the federal model the framers adopted from the United States."117 Quick and Garran attributed to Sir Samuel Griffith, Sir Richard Baker, Sir John Cockburn, Inglis Clark and Mr GW Hackett the view that "the Cabinet system of Executive is incompatible with a true Federation."118 leading some 114 Quick and Garran, The Annotated Constitution of the Australian Commonwealth 115 Quick and Garran, The Annotated Constitution of the Australian Commonwealth 116 Quick and Garran, The Annotated Constitution of the Australian Commonwealth 117 Winterton, Parliament, the Executive and the Governor-General (1983) at 5. 118 Quick and Garran, The Annotated Constitution of the Australian Commonwealth At the 1891 Convention at Sydney, Hackett said, in words which have frequently been quoted, "either responsible government will kill federation, or federation … will kill responsible government."119 That sentiment was repeated by the Chair of Committees at the Convention, Sir Richard Baker, in a speech at Adelaide in 1897 in which he said120: "if we adopt this Cabinet system of Executive it will either kill Federation or Federation will kill it; because we cannot conceal from ourselves that the very fundamental essence of the Cabinet system of Executive is the predominating power of one Chamber." As Quick and Garran observed, the views of the objectors were not accepted. The system of responsible government under the British Constitution was embedded in the federal Constitution and cannot now be disturbed without amendment to that Constitution121. This Court has acknowledged the centrality of responsible government in the Constitution122. Quick and Garran predicted correctly that the system of responsible government would "tend in the direction of the nationalization of the people of the Commonwealth, and [would] promote the concentration of Executive control in the House of Representatives."123 To accept the correctness of that prediction is not to reflect upon the desirability or otherwise of the way in which the operation of our constitutional system of government has developed. Quick and Garran characterised s 61 as grafting the "modern political institution, known as responsible government" onto the "ancient principle of the 119 Official Report of the National Australasian Convention Debates, (Sydney), 12 March 1891 at 280. 120 Official Report of the National Australasian Convention Debates, (Adelaide), 23 March 1897 at 28. See also Baker, The Executive in a Federation (1897) at 3-4. 121 Quick and Garran, The Annotated Constitution of the Australian Commonwealth 122 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 275 per Dixon CJ, McTiernan, Fullagar and Kitto JJ; [1956] HCA 10. See also Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan (1931) 46 CLR 73 at 114 per Evatt J. 123 Quick and Garran, The Annotated Constitution of the Australian Commonwealth Government of England that the Executive power is vested in the Crown"124. The difficulty, as they explained it, was125: "in a Federation, it is a fundamental rule that no new law shall be passed and no old law shall be altered without the consent of (1) a majority of the people speaking by their representatives in one House, and (2) a majority of the States speaking by their representatives in the other house; that the same principle of State approval as well as popular approval should apply to Executive action, as well as to legislative action; that the State should not be forced to support Executive policy and Executive acts merely because ministers enjoyed the confidence of the popular Chamber". the Conventions. Much has changed in the expectations and practices of government since the time the Commonwealth The financial dominance of Government in relation to the States was no doubt anticipated by some delegates, although almost certainly not to the degree which has eventuated, particularly in the field of taxation, the use of conditional grants under s 96 and the erroneous reliance upon the appropriations provisions of the Constitution as a source of spending power. Another important development has been the expansion of the functions of government into "activities of an entrepreneurial or commercial kind which, in general, were previously engaged in only by subjects of the Crown."126 There is no clear evidence of a common understanding, held by the framers of the Constitution, that the executive power would support acts of the Executive Government of the Commonwealth done without statutory authority provided they dealt with matters within the enumerated legislative powers of the Commonwealth Parliament. A Commonwealth Executive with a general power to deal with matters of Commonwealth legislative competence is in tension with the federal conception which informed the function of the Senate as a necessary organ of Commonwealth legislative power. It would undermine parliamentary control of the executive branch and weaken the role of the Senate. The plaintiff submitted that the requirement of parliamentary appropriation is at best a weak control, particularly given the power of the Executive to advise the Governor- General to specify the purpose of appropriations. The inability of the Senate under s 53 to initiate laws appropriating revenue and its inability to amend proposed laws appropriating revenue for "the ordinary annual services of the 124 Quick and Garran, The Annotated Constitution of the Australian Commonwealth 125 Quick and Garran, The Annotated Constitution of the Australian Commonwealth 126 Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 438 per Dawson, Toohey and Gaudron JJ. Government" also point up the relative weakness of the Senate against an Executive Government which has the House of Representatives. As the Solicitor-General of Queensland put it in oral argument, the Senate has limited powers to deal with an Appropriation Bill, whereas it has much greater powers with respect to general legislation which might authorise the Executive to spend money in specific ways. the confidence of The function of the Senate as a chamber designed to protect the interests of the States may now be vestigial. That can be attributed in part to the predicted evolution whereby responsible government has resulted in a powerful Executive which, using the mechanisms of party discipline, is in a position to exert strong influence over the government party or parties in both Houses. The Executive has become what has been described as "the parliamentary wing of a political party" which "though it does not always control the Senate … nevertheless dominates the Parliament and directs most exercises of the legislative power."127 However firmly established that system may be, it has not resulted in any constitutional inflation of the scope of executive power, which must still be understood by reference to the "truly federal government" of which Inglis Clark wrote in 1901 and which, along with responsible government, is central to the Constitution. The executive capacity to contract and spend The Commonwealth's principal submissions located the contractual and spending powers of the Executive in that aspect of executive power analogous to the capacities of a legal person. Those submissions invite reflection upon the way in which contractual and other "capacities" of the Executive have been considered by this Court in the past. An early example of such consideration concerned the power of the Executive to undertake inquiries. It was described by Griffith CJ in Clough v Leahy128 as "not a prerogative right" but "a power which every individual citizen possesses"129. That characterisation does not convey any coercive element in the 127 Mantziaris, "The Executive – A Common Law Understanding of Legal Form and Responsibility", in French, Lindell and Saunders (eds), Reflections on the Australian Constitution (2003) 125 at 130. 128 (1904) 2 CLR 139 at 156, Barton and O'Connor JJ concurring at 163; [1904] HCA 38. The case did not concern the executive power of the Commonwealth but that of a State government to establish a royal commission of inquiry. 129 An analogy not accepted by Mason J in Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at 88-89; [1982] HCA 31. power. However, coercion could be supported by statute. As O'Connor J said in Huddart, Parker & Co Pty Ltd v Moorehead130: "The right to ask questions, which, as was pointed out by this Court in Clough v Leahy, the Executive Government has in common with every other citizen, is of little value unless it has behind it the authority to enforce answers and to compel the discovery and production of documents." (footnote omitted) Importantly, the extent of the "power" was not at large. It was at least constrained by the distribution of powers in the Constitution. In Colonial Sugar Refining Co Ltd v Attorney-General (Cth)131 the Court divided equally on the question whether s 51(xxxix) of the Constitution authorises legislation, incidental to the executive power, compelling persons to give evidence on matters outside the constitutional authority of the Commonwealth132. Griffith CJ, who viewed the question from a federal perspective, rejected the proposition, as one which133: "implicitly denies the whole doctrine of distribution of powers between the Commonwealth and the States, which is the fundamental basis of the federal compact." On appeal to the Privy Council, pursuant to s 72 of the Constitution, the view of the Chief Justice and Barton J prevailed134. Even within fields of activity referable to heads of legislative power, the capacities of the Commonwealth Executive analogous to those of a juristic 130 (1909) 8 CLR 330 at 377; [1909] HCA 36. Moreover, the validity of a commission of inquiry was not conditioned upon the validity of a statute conferring coercive powers on the Commissioner: McGuinness v Attorney-General (Vict) (1940) 63 CLR 73 at 102 per Dixon J, 106 per McTiernan J; [1940] HCA 6; Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at 51 per Gibbs CJ, see also at 67 per Stephen J, 120 per Aickin J; cf at 131 per Wilson J. 131 (1912) 15 CLR 182; [1912] HCA 94. 132 Griffith CJ and Barton J answered the question in the negative; Isaacs and 133 (1912) 15 CLR 182 at 194; see also at 207 per Barton J. 134 Attorney-General (Cth) v Colonial Sugar Refining Co Ltd (1913) 17 CLR 644; person did not give it free rein. In Heiner v Scott135 Griffith CJ rejected the proposition that the carrying on of ordinary banking business was a function of the Executive Government of the Commonwealth conferred by the Constitution. He said136: "It may be that the carrying on of such a business is not unlawful in the sense of being forbidden by law, but the liberty to do so cannot be regarded as anything more than a permissive faculty, permitted only in the sense of not being prohibited by positive law." Powers J also observed that it was "not seriously contended that the Constitution gave the Commonwealth special power to establish an ordinary trading bank for profit"137. The question was not considered by the other Justices. In any event it was not suggested by anyone in that case that the conferral upon the federal Parliament, by s 51(xiii), of a power to make laws with respect to banking, could support the existence of an executive power to carry on the business of banking. Section 61 was invoked by the Commonwealth as a source of contractual power in the Wool Tops case138. The Commonwealth had made agreements, without statutory backing, under which it would give necessary regulatory consents139 for the acquisition of wool and sheepskins and the manufacture and sale of wool tops by the Colonial Combing, Spinning and Weaving Co Ltd. Section 61, however, did not confer power directly on the Commonwealth to make or ratify the agreements. In so holding, Knox CJ and Gavan Duffy J accepted that Ministers could make contracts in the administration of their 135 (1914) 19 CLR 381; [1914] HCA 82. The case concerned the application of Queensland stamp duty legislation to the Commonwealth Bank. The question whether the Bank exercised a function of the Executive Government of the Commonwealth was anterior to an invocation of the doctrine of immunity of instrumentalities, overturned in the Engineers' case: Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129; [1920] HCA 54. 136 (1914) 19 CLR 381 at 393-394. 137 (1914) 19 CLR 381 at 402. 138 (1922) 31 CLR 421. 139 The relevant regulations were the War Precautions (Wool) Regulations 1916 (Cth) and the War Precautions (Sheepskins) Regulations 1916 (Cth), made pursuant to the War Precautions Act 1914-1916 (Cth). They gave effect to a scheme underpinning an arrangement under which the Imperial Government would acquire the entire woolclip. The historical background is described in John Cooke & Co Pty Ltd v The Commonwealth (1922) 31 CLR 394 at 399-404; [1922] HCA 60. departments pursuant to s 64140. The impugned agreements had not been made on that basis. Isaacs J held that the Crown's discretion to make contracts involving the expenditure of public money would not be entrusted to Ministers unless sanctioned either by direct legislation or by appropriation of funds141. An attempt by the Commonwealth to invoke s 61 in support of an agreement for the supply of plant made by a Commonwealth statutory authority was unsuccessful in The Commonwealth v Australian Commonwealth Shipping Board142. The primary debate was about the scope of the statutory powers conferred on the Shipping Board and their constitutional underpinning. Knox CJ, Gavan Duffy, Rich and Starke JJ, however, noted that the executive power of the Commonwealth had been touched on in submissions and said143: "it is impossible to say that an activity unwarranted in express terms by the Constitution is nevertheless vested in the Executive, and can therefore be conferred as an executive function upon such a body as the Shipping Board." As a general rule the power of the Commonwealth to make agreements has always been regarded as subject to statutory constraints144. So much was explained in The Commonwealth v Colonial Ammunition Co Ltd145. The appropriation provisions of the Constitution could not be relied upon to support an exercise of executive power involving expenditure which was dependent for its validity upon the satisfaction of a statutory condition146. A general appropriation was sufficient to satisfy "one 'necessary legal condition of the transaction'"; it did not satisfy all other legal conditions147. 140 (1922) 31 CLR 421 at 432. 141 (1922) 31 CLR 421 at 451. 142 (1926) 39 CLR 1. 143 (1926) 39 CLR 1 at 10. 144 Brown v West (1990) 169 CLR 195 at 202; [1990] HCA 7. See also The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 450 per Isaacs J. 145 (1924) 34 CLR 198; [1924] HCA 5. 146 (1924) 34 CLR 198 at 222-225 per Isaacs and Rich JJ. 147 New South Wales v Bardolph (1934) 52 CLR 455 at 469 per Evatt J, commenting on the judgment of Isaacs and Rich JJ in Colonial Ammunition. The question whether the Commonwealth required statutory authority to enter into contracts was discussed in testimony given at the Royal Commission on the Constitution of the Commonwealth by Owen Dixon KC, speaking on behalf of a Committee of Counsel of Victoria. He criticised the view that the words of extension in s 61 were words of limitation restricting the Executive in effect "to operating under and in pursuance of the laws made by Parliament."148 While acknowledging that interpretation, he doubted whether the propounded restriction was intended or in practice observed149. The restrictive view, applied to the power of the Commonwealth to make contracts, would mean150: there was room for flexibility within that "that, unless a contract was in some way incidental to the administration of a statute it would be outside the power of the executive to make it." Against a background of judicial decisions which required prior appropriation to support a Crown contract he said151: "We cannot help feeling, however, that the result is unduly to hamper the executive Government if it observes the restrictions, or to inflict great hardship upon the subject who contracts with the Crown if the executive fails to observe the restrictions." On the other hand, he suggested that it would be competent for the Parliament to pass a General Contracts Act which would remove the difficulty unless it were desired to confer greater contractual power upon the Executive than the subjects of legislative power would permit Parliament to give152. It is not necessary for present purposes to express a concluded view on that suggestion. There is no such statute. 148 Australia, Royal Commission on the Constitution of the Commonwealth, Minutes of Evidence, (Melbourne), 13 December 1927 at 781. 149 Australia, Royal Commission on the Constitution of the Commonwealth, Minutes of Evidence, (Melbourne), 13 December 1927 at 781. 150 Australia, Royal Commission on the Constitution of the Commonwealth, Minutes of Evidence, (Melbourne), 13 December 1927 at 781. 151 Australia, Royal Commission on the Constitution of the Commonwealth, Minutes of Evidence, (Melbourne), 13 December 1927 at 781. 152 Australia, Royal Commission on the Constitution of the Commonwealth, Minutes of Evidence, (Melbourne), 13 December 1927 at 781. The Commonwealth looked for a general contracts statute in s 44(1) of the Financial Management and Accountability Act 1997 (Cth) ("FMA Act") which provides: "A Chief Executive must manage the affairs of the Agency in a way that promotes proper use of the Commonwealth resources for which the Chief Executive is responsible." There is a note to that provision which reads: "A Chief Executive has the power to enter into contracts, on behalf of the Commonwealth, in relation to the affairs of the Agency. Some Chief Executives have delegated this power under section 53." In the case of an agency that is a Department of State, the Chief Executive is the Secretary of that Department for the purposes of the FMA Act153. The Secretary of a Department is responsible, under s 57(1) of the Public Service Act 1999 (Cth), for "managing the Department". The Commonwealth submitted that implicit in the obligation to promote "proper use" of "Commonwealth resources for which the Chief Executive is responsible" is the power to direct those resources to government policies identified in Portfolio Budget Statements as falling within the scope of an appropriation, and any applicable Administrative Arrangements Order made by the Governor-General. Performance of that function, it was said, is impossible unless in conferring it, Parliament is understood to have conferred on the Executive Government power to spend money that has been appropriated and to enter into contracts that relate to such expenditure. The note to s 44(1) was inserted by the Financial Framework Legislation Amendment Act 2008 (Cth). It was relied upon by the Commonwealth as extrinsic material, to which regard might be had pursuant to s 15AB(2)(a) of the Acts Interpretation Act 1901 (Cth). The note was said to confirm that s 44(1) confers a statutory "power" to enter into contracts on behalf of the Commonwealth in relation to the affairs of the agency that is capable of being delegated under s 53(1) of the FMA Act. The Commonwealth submitted that the DHF Agreement was signed for the State Manager (South Australia) of DEST, acting as a delegate of the Secretary of the Department, exercising the Chief Executive's power under s 44 of the FMA Act. The plaintiff directed attention to the collocation "manage the affairs of the Agency" in s 44(1) and the similarity of its language to s 57(1) of the Public Service Act. The plaintiff submitted that neither the purported entry by the Commonwealth into the DHF Agreement nor its performance occurred in the 153 FMA Act, s 5. course of the Secretary of DEST and then of DEEWR performing a managerial function. That submission should be accepted. As is pointed out in the reasons of Gummow and Bell JJ154, the provisions of the FMA Act are directed to the prudent conduct of financial administration. It is not a source of power to spend that which is to be administered. Suffice it to say for present purposes, there was no statute, general or specific, identified by the parties, which could be invoked as a source of executive power to enter into the DHF Agreement and to undertake the challenged expenditure. In Attorney-General (Vict) v The Commonwealth ("the Clothing Factory case")155 the Commonwealth successfully argued that it had statutory authority to conduct a clothing factory providing uniforms for defence purposes and for public and private sector employees. Rich J accepted that the legislative power of the Parliament enabled it to authorise the Executive to establish and conduct a clothing factory to supply all the needs of the Commonwealth Government. However, his Honour was not prepared to accede to the argument that156: "without legislative power, the Commonwealth Executive can enter into business operations simply because it is a juristic entity, and in conducting business is not exercising governmental power over the subject." That view seems to have been echoed in Australian Woollen Mills Pty Ltd v The Commonwealth157. The decision in that case turned on a finding that a contractual claim against the Commonwealth failed for want of a contract. Nevertheless the Court said158: "Questions of general constitutional law have … been excluded from consideration, but, if there was an intention on the part of the Government to assume a legal obligation, one would certainly have expected statutory authority to be sought". 154 Reasons of Gummow and Bell JJ at [102]-[103]. 155 (1935) 52 CLR 533; [1935] HCA 31. 156 (1935) 52 CLR 533 at 562. 157 (1954) 92 CLR 424; [1954] HCA 20. 158 (1954) 92 CLR 424 at 461. The Court appears to have proceeded upon the premise that a parliamentary appropriation itself would have provided the necessary statutory authority for the payment of the subsidy which was in issue in that case. An important support for the exercise of contractual power by an executive government in advance of parliamentary appropriation was established by the decision of this Court in New South Wales v Bardolph159. The case is authority for the proposition, applicable to the Commonwealth, that the Executive Government of New South Wales could enter into a binding contract absent prior parliamentary appropriation for the expenditure of money under the contract. The case concerned a contract made by the Tourist Bureau of New South Wales for the provision of advertising services. The Tourist Bureau had been recognised for many years, both in Parliament and out, as part of the established service of the Crown160. Rich J characterised the making of the contract for advertising services as "an ordinary incident of this particular function of Government"161. Starke J made observations to similar effect162. Dixon J, with whom Gavan Duffy CJ agreed163, made a similar point, saying that164: "No statutory power to make a contract in the ordinary course of administering a recognized part of the government of the State appears to me to be necessary in order that, if made by the appropriate servant of the Crown, it should become the contract of the Crown, and, subject to the provision of funds to answer it, binding upon the Crown." (emphasis added) The words emphasised in the judgment of Dixon J reflect a characterisation of the contract in issue in Bardolph upon which all the members of the Court agreed. That characterisation suggests that the State executive power considered in Bardolph was analogous to the powers of Commonwealth Ministers, derived from s 64 of the Constitution, in relation to the administration of government departments. The case is not authority for the existence of a general contractual power derived from s 61 capable of exercise without statutory authority. Professor Enid Campbell criticised the apparent discrimen in Bardolph which would confine its application to contracts "for the public service as are 159 (1934) 52 CLR 455. 160 (1934) 52 CLR 455 at 496 per Rich J. 161 (1934) 52 CLR 455 at 496. 162 (1934) 52 CLR 455 at 502-503. 163 (1934) 52 CLR 455 at 493. 164 (1934) 52 CLR 455 at 508. incidental to the ordinary and well recognized functions of Government"165. She made the point that a rule which made the validity of non-statutory Crown contracts dependent upon the normality of their subject matters as an aspect of public administration had "the effect of enlarging the area of executive authority by prescription."166 In the context of s 61 of the Constitution and its relationship to s 64, she said167: "The Crown's power to contract is not, it is true, a prerogative power, but if the power to contract without statutory authorization has to be found within the terms of The Constitution, s 61 seems to provide just as defensible a constitutional basis as does s 64." Professor Leslie Zines expressed his agreement with Professor Campbell, observing168: "What activities the government should engage in is the province of the executive. What is normal or not will depend partly on what policies and activities have in the past been pursued and for what length of time. Why should this matter to the issue of whether parliamentary authorisation is needed?" Having regard to the sufficiency of parliamentary control of appropriations, it was "hard to see how the supposed distinction between types of contracts leads to any significant bolstering of responsible government."169 Professor Zines pointed to a passage from the judgment of Dixon J in Bardolph where, without referring to any limitations, he said170: 165 Campbell, "Commonwealth Contracts", (1970) 44 Australian Law Journal 14 at 15, quoting New South Wales v Bardolph (1934) 52 CLR 455 at 496 per Rich J. 166 Campbell, "Commonwealth Contracts", (1970) 44 Australian Law Journal 14 at 167 Campbell, "Commonwealth Contracts", (1970) 44 Australian Law Journal 14 at 17. See also Campbell, "Federal Contract Law", (1970) 44 Australian Law Journal 168 Zines, The High Court and the Constitution, 5th ed (2008) at 349-350. 169 Zines, The High Court and the Constitution, 5th ed (2008) at 350. 170 Zines, The High Court and the Constitution, 5th ed (2008) at 350, referring to New South Wales v Bardolph (1934) 52 CLR 455 at 509 per Dixon J. "the principles of responsible government do not disable the Executive from acting without the prior approval of Parliament, nor from contracting for the expenditure of moneys conditionally upon appropriation by Parliament and doing so before funds to answer the expenditure have actually been made legally available." Doctor Nicholas Seddon has observed, in reflecting upon Professor Campbell's view, that in contrast to the executive power of New South Wales, the Commonwealth's power is limited. Further, as he has correctly pointed out, the assumption that the Commonwealth is not exercising powers that are peculiarly governmental when entering into a contract is increasingly unable to be justified171. Professor Winterton, who thought that the Commonwealth would have power to enter into contractual relations about matters outside the sphere of its legislative power, also observed that172: "bearing in mind the ability of governments to use their contract power to achieve de facto regulation of an activity, the significance of the federal contract power should not be underrated." (footnote omitted) Professor Cheryl Saunders and Kevin Yam, in a paper published in 2004, pointed to the increasing use of government contracts for the performance of governmental functions and their use as a regulatory tool173. That is perhaps illustrated in this case by the quasi-regulatory setting in which the DHF Agreement was made. That setting included the NSCP Guidelines, issued by the responsible department. Under those guidelines, participating schools and their communities were required to "engage a school chaplain and demonstrate how the services provided by the school chaplain achieve the outcomes required by the [NSCP]." Funding provided under the program could "only be used for expenditure that directly relates to the provision of chaplaincy services." Funding was provided "subject to the provision of appropriate project performance reporting." The DHF Agreement was itself prescriptive about the nature of the services to be delivered by SUQ in the Darling Heights State School and required SUQ chaplains used in the school to sign the NSCP Code of Conduct which formed part of the DHF Agreement. Its implementation was amenable to the grant of supervision and control appropriate to the delivery of a governmental service. The agreement provided that funding was conditional upon, inter alia, 171 Seddon, Government Contracts: Federal, State and Local, 4th ed (2009) at 64-65. 172 Winterton, Parliament, the Executive and the Governor-General (1983) at 47. 173 Saunders and Yam, "Government Regulation by Contract: Implications for the Rule of Law", (2004) 15 Public Law Review 51 at 52. the submission of "a detailed financial statement regarding all income and expenditure relating to the [NSCP]" and progress reports. It was also agreed that in the event of a breach of the NSCP Code of Conduct by the school chaplain, the Commonwealth might require SUQ to repay some or all of the funding provided. In considering criticisms of the taxonomy of government contracts referred to in the judgments in Bardolph, it is necessary to bear in mind that that case concerned the power of the Executive in a setting analogous to that of a unitary constitution. It was not a case about the relationship between Commonwealth and State Executives and their contractual and spending powers under a federal constitution. Nor did it involve a consideration of the relationship between the executive power conferred by s 61 of the Constitution and the administration of departments of State of the Commonwealth for which s 64 of the Constitution provides. The latter section may give rise to questions of classification. Any consideration of its operation must recognise that it is a constitutional provision written to accommodate change in governmental practice. It is not a repository for bright line categories. As Gleeson CJ said in Re Patterson; Ex parte Taylor174: "The concept of administration of departments of State, appearing in s 64, is not further defined. This is hardly surprising. The practices and conventions which promote efficient and effective government administration alter over time, and need to be able to respond to changes in circumstances and in theory." In similar vein, Gummow and Hayne JJ observed175: "The Court should favour a construction of s 64 which is fairly open and which allows for development in a system of responsible ministerial government." Although both those comments were made in a case concerning the validity of the appointment of two persons to administer the same government department, they have a more general application relevant to the scope of the concept of departmental administration with which s 64 is concerned. It is sufficient for present purposes to say that the issue before the Court in Bardolph did not involve consideration of the powers of the Executive Government of the Commonwealth acting under ss 61 and 64 of the Constitution. Moreover, subsequent commentary about the application of that case to the Commonwealth Executive occurred in a setting in which parliamentary appropriations were thought to be a source of substantive power to spend public money. 174 (2001) 207 CLR 391 at 403 [15]; [2001] HCA 51. 175 (2001) 207 CLR 391 at 460 [211]. A wide view of the executive power to make contracts pursuant to s 61 has been expressed by a number of academic writers176, although not without misgivings177. Professor Winterton, in his seminal textbook Parliament, the Executive and the Governor-General, said178: "As the common law powers of the Crown have been incorporated into the executive power of the Commonwealth in s 61, the Crown in right of the Commonwealth has inherited this common law power; accordingly, the Commonwealth government has power to enter into contracts without prior parliamentary authorization." (footnotes omitted) He cited in support a comment by Viscount Haldane in Kidman v The Commonwealth179, and an observation by Aickin J, with which Barwick CJ agreed, (Operations) Pty Ltd v The Industries Commonwealth180. in Ansett Transport In Kidman, Viscount Haldane, in the course of argument in the Privy Council, referred to the decision of the Privy Council in Commercial Cable Co v "In that case we distinctly laid it down … that the Governor-General, as representing the Crown, could enter into contracts as much as he liked, and even, if he made the words clear, to bind himself personally." 176 Seddon, Government Contracts: Federal, State and Local, 4th ed (2009) at 61; Zines, The High Court and the Constitution, 5th ed (2008) at 349-351; Puri, Australian Government Contracts: Law and Practice (1978) at 44-46; Sawer, Federation Under Strain: Australia 1972-1975 (1977) at 70-71; Campbell, "Commonwealth Contracts", (1970) 44 Australian Law Journal 14 at 16-17, 23. 177 See generally, Saunders and Yam, "Government Regulation by Contract: Implications for the Rule of Law", (2004) 15 Public Law Review 51, especially at 178 Winterton, Parliament, the Executive and the Governor-General (1983) at 45. 179 [1926] ALR 1. 180 (1977) 139 CLR 54 at 113, Barwick CJ agreeing at 61; [1977] HCA 71. 182 [1926] ALR 1 at 2. In an obiter observation, Aickin J said in Ansett Transport Industries183: "It is plain that even without statutory authority the Commonwealth in the exercise of its executive power may enter into binding contracts affecting its future action." Ansett Transport Industries was primarily a case about the power of the Executive to agree to exercise statutory powers in a particular way. The agreements in issue in that case had received parliamentary approval in a statute. The case did not raise for consideration the issues which have been raised in this case and particularly raises. Viscount Haldane's remarks in Kidman harked back to a decision made in the somewhat different setting of the British North America Act. Neither of the quoted passages are, with respect, of assistance in the resolution of the matter now before this Court. federal dimension which this case the Conclusion Neither the DHF Agreement nor the expenditure made under it was done in the administration of a department of State in the sense used in s 64 of the Constitution. Neither constituted an exercise of the prerogative aspect of the executive power. Neither involved the exercise of a statutory power, nor executive action to give effect to a statute enacted for the purpose of providing chaplaincy or like services to State schools. Whatever the scope of that aspect of the executive power which derives from the character and status of the Commonwealth as a national government, it did not authorise the contract and the expenditure under it in this case. The field of activity in which the DHF Agreement and the expenditure was said, by the Commonwealth, to lie within areas of legislative competency of the Commonwealth Parliament under either s 51(xxiiiA) or s 51(xx) of the Constitution. Assuming it to be the case that the DHF Agreement and expenditure under it could be referred to one or other of those fields of legislative power, they are fields in which the Commonwealth and the States have concurrent competencies subject to the paramountcy of Commonwealth laws effected by s 109 of the Constitution. The character of the Commonwealth Government as a national government does not entitle it, as a general proposition, to enter into any such field of activity by executive action alone. Such an extension of Commonwealth executive powers would, in a practical sense, as Deakin predicted, correspondingly reduce those of the States and compromise what Inglis Clark described as the essential and distinctive feature of "a truly federal government". 183 (1977) 139 CLR 54 at 113. I would answer the questions posed in the special case in the terms set out in the judgment of Gummow and Bell JJ184. 184 Reasons of Gummow and Bell JJ at [160]-[166]. Bell Introduction The plaintiff challenges, for lack of authority under the Constitution, the provision by the Commonwealth of funding pursuant to what is known as the National School Chaplaincy Programme ("the NSCP"). The action in the original jurisdiction of this Court has led to argument in the Full Court upon a Special Case. There have been interventions by all the States and the Court also received submissions, as amicus curiae, by the Churches' Commission on Education Incorporated. On 5 October 2009, the three eldest of the plaintiff's four children were enrolled at the Darling Heights State Primary School in Queensland. The youngest child was enrolled there on 27 January 2010. As their father, the law gave the plaintiff parental responsibilities, including responsibilities for their education185. At the time of the enrolment of the four children, there was in force with respect to their school an agreement for funding under the NSCP between the Commonwealth (the first defendant) and Scripture Union Queensland ("SUQ") (the fourth defendant) with a term of three years from 8 October 2007 ("the Funding Agreement"). SUQ is incorporated under the Corporations Act 2001 (Cth) as a public company limited by guarantee. On 13 May 2010, the term of the Funding Agreement was extended to 31 December 2011. The funding of the NSCP is not provided under any statute of the Parliament. There is no law enacted, for example, in reliance upon the power conferred by s 51(xxiiiA) of the Constitution to make laws with respect to "the provision of ... benefits to students". Nor is the funding provided by the Commonwealth under s 96 of the Constitution as the "grant [of] financial assistance to any State on such terms and conditions as the Parliament thinks fit". Rather, for its power to spend so as to fund the NSCP, the Commonwealth relies upon "the executive power of the Commonwealth", which is identified in Ch II of the Constitution, particularly in s 61. It is important to bear in mind that, when ascertaining the limits of the executive power of the Commonwealth, attention is to be paid by the Court both to the position of the States in the federal system established by the Constitution 185 Family Law Act 1975 (Cth), s 61C. Bell and to the powers of the other branches of the federal government established by Ch I (the Parliament) and Ch III (the Judicature) of the Constitution186. In that regard, it should be noted that, unlike the situation in Pape v Federal Commissioner of Taxation187, where the validity of a statute, the Tax Bonus for Working Australians Act (No 2) 2009 (Cth), was in question, here there has been no engagement of the Parliament in supplementation of the exercise of the executive power by a statute supported by s 51(xxxix) of the Constitution. That paragraph confers upon the Parliament power to make laws with respect to "matters incidental to the execution of any power vested by this Constitution ... in the Government of the Commonwealth ... or in any department or officer of the Commonwealth". There has been no involvement by legislation of the Parliament in the NSCP beyond the passage of appropriation Acts. Hence the significance here of the positions both of the States and of the Parliament. It also should be emphasised at the outset that a conclusion reached on this Special Case that spending upon the NSCP is not supported as an exercise of the executive power would not foreclose any issue whether further provision of the substance of the NSCP could be achieved either by grant pursuant to s 96 of the Constitution or by legislation of the Parliament said to be supported, for example, by s 51(xxiiiA). Nothing in these reasons should be taken as expressing any view upon the scope of s 51(xxiiiA) or any other head of legislative power. The NSCP and the Funding Agreement The Funding Agreement incorporated a document identified as the "National School Chaplaincy Programme Guidelines" ("the Guidelines"), first issued in December 2006 by the Department of Education, Science and Training. The Funding Agreement was described on its title page as "For the provision of funding under the [NSCP] on behalf of Darling Heights State School". Under the heading "Your Obligations", the Funding Agreement stated that SUQ was to provide the chaplaincy services which it had described in its application and was to ensure that those services were "delivered" as they had been identified in the application and in accordance with the Guidelines. The only obligation imposed upon the Commonwealth by the Funding Agreement was to provide the funding for these services, subject to the availability of 186 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 60 [127] per French CJ; [2009] HCA 23; Winterton, Parliament, the Executive and the Governor-General, (1983) at 29-30. 187 (2009) 238 CLR 1. Bell sufficient funds and compliance by SUQ with the terms on which the Commonwealth provided the funding. The section of the Funding Agreement entitled "Project description" stated that the purpose of the funding was "to contribute to the provision of chaplaincy services at [the] school", and "to assist [the] school and community in supporting the spiritual wellbeing of students". The services to be provided included the provision of "comfort and support to students and staff, such as during times of grief" and "being approachable by all students, staff and members of the school community of all religious affiliations". The width and generality of these statements should be noted. The Guidelines which accompanied the Funding Agreement, under the heading "Overview", stated: "School chaplains are already making valuable contributions to the spiritual and emotional wellbeing of school communities across Australia, and the Australian Government has responded to the call that their services be made more broadly available. The [NSCP] aims to support schools and their communities that wish to establish school chaplaincy services or to enhance existing chaplaincy services. It is a voluntary [p]rogramme that will assist schools and their communities to support the spiritual wellbeing of their students. This might include support and guidance about ethics, values, relationships, spirituality and religious issues; the provision of pastoral care; and enhancing engagement with the broader community. Funding of up to $30 million per annum for three years will be available, commencing in the 2007 school year. Government and non- government schools and their communities can apply for up to $20,000 per annum (and a maximum of $60,000 over the life of the [NSCP]) to establish school chaplaincy services or to enhance existing chaplaincy services. [NSCP] funding will be appropriated annually by Parliament and administered by the Department of Education, Science and Training … The nature of chaplaincy services to be provided, including the religious affiliation of the school chaplain, is a matter which needs to be decided by the local school and its community, following broad consultation. However, students will not be obliged to participate, and parents and students will be informed about the availability and the voluntary nature of the chaplaincy services. Bell Access to advice, support and guidance about ethics, values and relationships may already be available at schools through existing services, such as counsellors, youth workers, social workers and psychologists. While the [NSCP] complements these services, there are also clear differences between [the NSCP] and existing services, which include the focus on spiritual and religious advice, support and guidance. It is not the Australian Government's intention that this initiative will in any way diminish or replace existing careers advice and counselling services territory governments." (emphasis added) funded by state and On 21 November 2009, the Prime Minister announced an extension of the NSCP to December 2011, with additional funding of $42 million over the 2010 and 2011 school years. The plaintiff emphasises that the Guidelines do not require that a recipient of funding under the NSCP have the character of a trading corporation. Rather, the Guidelines stipulate that payments will not be made to schools without entry into agreements with either a "School Registered Entity", a State or Territory education authority or a "Project sponsor". The term "School Registered Entity" applies to a "Government School Community Organisation" for certain government schools, and to the "legal entity for any Independent and Catholic school". Payments may also be made to a "Project sponsor" nominated by a school to manage the chaplaincy service, being "a legal entity, affiliated with or working with a religious institution to provide a school chaplain and deliver chaplaincy services in schools". The plaintiff refers to these provisions in the Guidelines to emphasise that the implementation of the NSCP was so designed as to be indifferent to the corporate nature of recipients of funding, and that had the Commonwealth sought to implement the NSCP by legislation s 51(xx) of the Constitution would not have provided a basis for doing so. The point was developed by Victoria by emphasising that a law permitting the Commonwealth to enter contracts for the payment of moneys to entities, indifferent to whether those entities be trading corporations, would not be a law supported by s 51(xx). It should be noted that at least since 1998 the Queensland Department of Education and Training has specified requirements for the provision of chaplaincy services in Queensland State schools. Since 2007 it has operated a funding programme for those chaplaincy services. On 24 January 2011, the State of Queensland entered into an agreement with SUQ for the provision by SUQ for the term of one year of "Chaplaincy Services"; this involves support (which may have a religious or spiritual component) to students attending Queensland State schools, regardless of religious or non-religious beliefs, and it is to be provided Bell "through the delivery of inclusive religiously and culturally respectful activities and programs". In the year 2010, SUQ received $781,000 in "chaplaincy funding" by Queensland; in the same year it received $11,012,000 from the Commonwealth under the NSCP. SUQ employs approximately 500 school chaplains in Queensland. For many years the Parliament has legislated for the provision of financial assistance to the States on the condition that the funds be applied for educational purposes. The Schools Assistance Act 2008 (Cth) provides for the provision of financial assistance The Nation-building Funds Act 2008 (Cth)188 provides for the grant of financial assistance for educational purposes on terms agreed between the Commonwealth and the States. for non-government schools. the States However, as noted above, the NSCP is not the creature of statute. Rather, the NSCP is administered by the second defendant, the Minister for School Education, Early Childhood and Youth. The NSCP is given effect by a series of funding arrangements for particular schools, of which the Funding Agreement is an example. On 14 November 2007, 15 December 2008 and 2 December 2009, SUQ received from the Commonwealth three payments each of $22,000 (inclusive of GST), upon invoices from SUQ for the provision of services under the Funding Agreement. On 11 October 2010, SUQ received a payment of $27,063.01 for the period until 31 December 2011. The third defendant, the Minister for Finance and Deregulation, administers the Financial Management and Accountability Act 1997 (Cth) ("the FMA Act"). Part 7 (ss 44-53) of the FMA Act imposed "special responsibilities" upon the Secretary (as "Chief Executive") of the Department of Education, Employment and Workplace Relations ("the Department") administered by the second defendant. These included the implementation of a fraud control plan (s 45), the establishment of an audit committee (s 46) and ensuring that the accounts and records of the Department were kept as required by Orders made by the third defendant under s 63 of the FMA Act (s 48). These specific requirements were directed to the efficient, effective and ethical use of the Commonwealth resources for which the Secretary was made responsible by s 44 in managing the affairs of the Department. The Commonwealth contended that Pt 7 of the FMA Act, and in particular s 44, went further. It was said that s 44 conferred upon the Department power to expend appropriated moneys and, in that regard, to enter into and make payments under the Funding Agreement. The structure of Pt 7 indicates that its provisions 188 Sections 186, 198. Bell are directed elsewhere, to the prudent conduct of financial administration, not to the conferral of power to spend that which is to be so administered. There is applicable here the statement made by Mr Dennis Rose QC with respect to the predecessor of the FMA Act, the Audit Act 1901 (Cth), and the Finance Regulations made thereunder. He wrote that189 these were "drafted on the basis that the power is derived elsewhere, and [were] concerned only with regulating the exercise of that power". The payments to SUQ were made in exercise of drawing rights issued by the third defendant to the Secretary of the Department pursuant to Pt 4, Div 2 (ss 26, 27) of the FMA Act. The Secretary had delegated the exercise of those drawing rights, pursuant to s 53 of the FMA Act, to a departmental officer. The effect of regs 8 and 9 of the Financial Management and Accountability Regulations 1997 ("the Regulations"), at the time the NSCP was entered, had been to oblige the second defendant, the Secretary of the Department, or an authorised person to give approval to the expenditure proposed under the Funding Agreement before entry into it. No distinct issue arises with respect to compliance with the Regulations. The plaintiff challenges the legality of the payments to SUQ under the NSCP on various grounds. One of these may be dealt with immediately. Section 116 of the Constitution Section 116 of the Constitution states that "no religious test shall be the required as a qualification for any office or public Commonwealth". The plaintiff contends that the "school chaplain" is an "office ... under the Commonwealth" and that the definition of "school chaplain" in the Guidelines imposes a religious test for that office. To qualify as a "school formal ordination, chaplain", a person must be commissioning, recognised qualifications or endorsement by a recognised or accepted religious institution or a state/territory government approved chaplaincy service". recognised "through trust under However, the plaintiff's case under s 116 fails at the threshold. Questions 2(b) and 4(b) presented by the Special Case should be answered accordingly. 189 Rose, "The Government and Contract", in Finn (ed), Essays on Contract, (1987) Bell The chaplains engaged by SUQ hold no office under the Commonwealth. The chaplain at the Darling Heights State Primary School is engaged by SUQ to provide services under the control and direction of the school principal. The chaplain does not enter into any contractual or other arrangement with the Commonwealth. That the Commonwealth is a source of funding to SUQ is insufficient to render a chaplain engaged by SUQ the holder of an office under the Commonwealth. It has been said in this Court that the meaning of "office" turns largely on the context in which it is found190, and it may be accepted that, given the significance of the place of s 116 in the Constitution191, the term should not be given a restricted meaning when used in that provision. Nevertheless, the phrase "office ... under the Commonwealth" must be read as a whole. If this be done, the force of the term "under" indicates a requirement for a closer connection to the Commonwealth than that presented by the facts of this case. The similar terms in which the "religious test clause" is expressed in Art VI, cl 3 of the United States Constitution was emphasised by the plaintiff but there is no clear stream of United States authority on this provision which points to any conclusion contrary to that expressed above. Standing of the plaintiff The plaintiff also asserts both the lack of any appropriation to fund the drawing of money from the Consolidated Revenue Fund under s 83 of the Constitution, and the absence of power in the Executive Government to spend, giving rise to the invalidity of the Funding Agreement and of payments which have been made thereunder to SUQ. The Commonwealth parties (which hereafter refers to the first, second and third defendants) and SUQ to varying degrees contest the standing of the plaintiff. But, in exercise of the right of intervention given by s 78A of the Judiciary Act 1903 (Cth), Victoria and Western Australia extensively support that part of the plaintiff's case which challenges the existence of the spending power and the validity of the Funding Agreement. In this respect, the questions of standing may be put to one side. Even without s 78A, any State would have a sufficient interest in the observance by the Commonwealth of the bounds of the 190 Sykes v Cleary (1992) 176 CLR 77 at 96-97; [1992] HCA 60; Kendle v Melsom (1998) 193 CLR 46 at 60-61 [32]-[33]; [1998] HCA 13. See also Edwards v Clinch [1982] AC 845 at 860, 864-867, 870-871. 191 Kruger v The Commonwealth (1997) 190 CLR 1 at 85-87, 121-124, 130-134, 160-161, 166-167; [1997] HCA 27. Bell executive power assigned to it by the Constitution to give the State standing192. It should be added that New South Wales, Queensland, South Australia and Tasmania also intervene in support of the plaintiff, but on grounds more limited than those of Victoria and Western Australia. The absence of appropriations The plaintiff challenges the payments to SUQ on the ground that the drawing rights relied upon appropriations for the ordinary annual services of the Government193, which did not in their terms refer to the implementation of the NSCP as a new policy194. Several points should be made. First, the following passage in the reasons of French CJ, Gummow and Crennan JJ in ICM Agriculture Pty Ltd v The Commonwealth195 should be noted. With reference to Pape, their Honours said: "[I]t is now settled that the provisions … in s 81 of the Constitution for establishment of the Consolidated Revenue Fund and in s 83 for Parliamentary appropriation, do not confer a substantive spending power and that the power to expend appropriated moneys must be found elsewhere in the Constitution or the laws of the Commonwealth." (footnote omitted) Secondly, the Commonwealth parties correctly submit that the issue of the validity of the Funding Agreement is not determined by the presence (or absence) during its term of appropriations by the Parliament to satisfy the obligations thereunder of the Commonwealth to make payments to SUQ. Rather, as Rich J explained in New South Wales v Bardolph196: 192 Victoria v The Commonwealth and Hayden ("the AAP Case") (1975) 134 CLR 338 at 401-402; [1975] HCA 52. 193 By Appropriation Act (No 1) 2006-2007 (Cth); Appropriation Act (No 3) 2006-2007 (Cth); Appropriation Act (No 1) 2007-2008 (Cth); Appropriation Act (No 1) 2008-2009 (Cth); Appropriation Act (No 1) 2009-2010 (Cth); Appropriation Act (No 1) 2010-2011 (Cth); and Appropriation Act (No 1) 2011-2012 (Cth). 194 See Combet v The Commonwealth (2005) 224 CLR 494 at 572-577 [148]-[161]; [2005] HCA 61; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 195 (2009) 240 CLR 140 at 169 [41]; [2009] HCA 51. 196 (1934) 52 CLR 455 at 498; [1934] HCA 74. Bell "[I]t is no more than a condition implied in the contract that before payment is made Parliament must appropriate the necessary money, but that a contract otherwise within the authority of Government is binding subject to that condition. [Part IX, especially s 65, of the] Judiciary Act is designed to give effect to the condition." to retain is considered the power of enforcing "Parliament the responsibility of the Administration by means of its control over the expenditure of public moneys. But the principles of responsible government do not disable the Executive from acting without the prior approval of Parliament, nor from contracting for the expenditure of moneys conditionally upon appropriation by Parliament and doing so before funds to answer the expenditure have actually been made legally available." Thirdly, whether the payments which have been made to SUQ under the Funding Agreement are, by reason of the absence of an appropriation, moneys had and received by SUQ to the use of the Commonwealth and recoverable as such by the Commonwealth198 is not the subject of any contest between the parties to the Special Case. Fourthly, any failure in supply by the Parliament of the necessary appropriations, if established, could be put right by subsequent appropriation199. In these circumstances, two considerations are presented. First, even if the plaintiff made good his case as to the absence of an appropriation, that would not impeach the Funding Agreement, which is the focus of his case. Secondly, there is a real issue as to the existence of a sufficient interest in the plaintiff to found a claim by him to declaratory relief upon the alleged absence of appropriations by the Parliament200. The Commonwealth parties accept only that the plaintiff has a 197 (1934) 52 CLR 455 at 509. See also Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 39-40 [62]. 198 See Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68. 199 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 39 [61]. 200 Bateman's Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 265-266 [46]-[47], 284 [105]; [1998] HCA 49. Bell sufficient interest with respect to the final payment made to SUQ on 11 October 2010 in reliance upon the appropriation Act for the financial year 2010-2011, but this acceptance is limited to the plaintiff's standing to challenge the satisfaction of the conditions precedent to that payment and does not extend to any challenge by the plaintiff to the underlying appropriation. Moreover, the interventions by the States in support of the plaintiff do not extend to this aspect of the litigation. Hence, it is preferable to proceed immediately to the alleged absence of power for the Commonwealth to enter into the Funding Agreement and to make the payments to SUQ. The validity of the Funding Agreement Question 2(a) of the Special Case asks whether the Funding Agreement is invalid, in whole or in part, by reason that entry into it was beyond the executive power of the Commonwealth. This must be read with Question 4(a), which asks whether the making of the payments under the Funding Agreement was "unlawful" by reason of the absence from the executive power of the Commonwealth of the power to pay those moneys to SUQ. This issue would be presented whether the payments were made to SUQ as grants or in discharge of contractual obligations. It will be necessary to return to this, the essential aspect of the litigation, but it is convenient first to say something respecting contracts made by the Commonwealth. Where the efficacy of a contract entered into by the Commonwealth, other than in exercise of authority conferred by or under a law made by the Parliament201, is challenged, two issues may arise. The first is the authority to bind the Commonwealth which was vested in those who purported to act on its behalf202. The Funding Agreement was expressed to be signed on behalf of the Commonwealth by a named officer of the Department of Education, Science and Training, the predecessor of the Department. No challenge is made to the authority of that officer to execute the Funding Agreement203. It is the second issue which is in contention. This is the existence of the power of the Executive Government to enter into the Funding Agreement and to 201 See, for example, Placer Development Ltd v The Commonwealth (1969) 121 CLR 353 at 365-366; [1969] HCA 29; Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54 at 61, 64, 90; [1977] HCA 71. 202 Hogg and Monahan, Liability of the Crown, 3rd ed (2000) at 225-226. 203 cf Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 38 per Mason J; [1986] HCA 40. Bell spend moneys in its performance. It appears to be accepted that entry into the Funding Agreement and spending thereunder must be supported, if at all, as an exercise of the executive power of the Commonwealth. The Commonwealth executive power This Court has eschewed any attempt to define exhaustively the content of the "executive power" which is identified but not explicated in s 61 of the Constitution204. Hence the attention in these reasons to partial but not necessarily complete descriptions of the executive spending power. To some degree this state of affairs in the analysis of s 61 may reflect the considerations expressed by Professor Crommelin in a passage in his study of the drafting of the sparse provisions of Ch II of the Constitution, which was quoted in Re Patterson; Ex parte Taylor205. The passage reads206: "The reasons were understandable, if not entirely convincing. The executive branch of government was shrouded in mystery, partly attributable to the uncertain scope and status of the prerogative. The task of committing its essential features to writing was daunting indeed. Moreover, the price of undertaking that task would be a loss of flexibility in the future development of the executive. Politicians who were the beneficiaries of half a century of colonial constitutional development placed a high value upon such flexibility." Further, in Melbourne Corporation v The Commonwealth207, Dixon J observed that the framers of the Constitution, chiefly by the text of ss 51, 52, 107, 108 and 109, had performed the task of distributing power between State and Commonwealth by reference to legislative powers. The immediate issues in this litigation require, among other matters, consideration of the relationship between the federal Executive and the 204 Johnson v Kent (1975) 132 CLR 164 at 169 per Barwick CJ; [1975] HCA 4; AAP Case (1975) 134 CLR 338 at 362-363 per Barwick CJ; Davis v The Commonwealth (1988) 166 CLR 79 at 92-94 per Mason CJ, Deane and Gaudron JJ; [1988] HCA 63; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 60 [126] per French CJ, 87 [227], 89 [234] per Gummow, Crennan and Bell JJ. 205 (2001) 207 CLR 391 at 462-463 [216]; [2001] HCA 51. 206 Crommelin, "The Executive", in Craven (ed), The Convention Debates 1891-1898: Commentaries, Indices and Guide, (1986), vol 6, 127 at 147. 207 (1947) 74 CLR 31 at 82; [1947] HCA 26. Bell legislative powers of the federal Parliament. A distinction is to be made here. The distinction is between the capacity of the Parliament to qualify or abrogate at least some aspects of the executive power, and the scope of the executive power in respect of matters which could be the subject of legislation. The Commonwealth parties rely on the latter to support the Funding Agreement. But something should be said to contrast the former. In Cadia Holdings Pty Ltd v New South Wales208 Gummow, Hayne, Heydon and Crennan JJ said: "The executive power of the Commonwealth of which s 61 of the Constitution speaks enables the Commonwealth to undertake executive action appropriate to its position under the Constitution and to that end includes the prerogative powers accorded the Crown by the common law209. Dixon J spoke of common law prerogatives of the Crown in England, specifically the prerogative respecting Crown debts, as having been 'carried into the executive authority of the Commonwealth'210." In Federal Commissioner of Taxation v Official Liquidator of E O Farley Ltd211, Evatt J distinguished what he classified as the "executive prerogatives" from those "common law prerogatives" conferring certain preferences, immunities and exceptions which were denied to the subject. The latter, particularly with respect to fiscal matters212, from time to time have been qualified or abrogated by the Parliament213. When a prerogative power is directly regulated by statute, the Executive Government must act in accordance with the statutory regime214. 208 (2010) 242 CLR 195 at 226 [86]; [2010] HCA 27. 209 Barton v The Commonwealth (1974) 131 CLR 477 at 498; [1974] HCA 20; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 61-62 [130], 83 [214]. 210 Federal Commissioner of Taxation v Official Liquidator of E O Farley Ltd (1940) 63 CLR 278 at 304; [1940] HCA 13. 211 (1940) 63 CLR 278 at 320-321. 212 See Ling v The Commonwealth (1994) 51 FCR 88 at 92-94. 213 See, for example, the Taxation Debts (Abolition of Crown Priority) Act 1980 (Cth). 214 Northern Territory v Arnhem Land Aboriginal Land Trust (2008) 236 CLR 24 at 58 [27]; [2008] HCA 29. Bell The present case concerns not these "common law prerogatives" but rather the submission that the scope of the executive power with respect to spending may be measured by that of the legislative power but in the absence of legislation conferring any authority upon the Executive Government. The executive power of the Commonwealth with respect to spending As the plaintiff framed his written submissions he accepted the proposition which at that stage had been advanced by the Commonwealth parties that the executive power of the Commonwealth extends at least to engagement in activities or enterprises which could be authorised by or under a law made by the Parliament, even if there be no such statute. That broad proposition as to the scope of s 61 of the Constitution, which had the support of Sir Robert Garran215, appears to have had a source in the Opinion given on 12 November 1902 by Alfred Deakin as Attorney-General216, that: "It is impossible to resist the conclusion that the Commonwealth has executive power, independently of Commonwealth legislation, with respect to every matter to which its legislative power extends." The width of that proposition requires consideration before it could be accepted by this Court. Its correctness was challenged, particularly by Queensland in oral submissions, and by Tasmania in written submissions filed, by leave, after the hearing. Upon the assumption that the proposition is correct the defendants rely upon the powers of the Parliament with respect to "trading … corporations" (s 51(xx)) and "the provision of … benefits to students" (s 51(xxiiiA)). The argument by the defendants appears to involve the proposition that a law authorising entry into and performance of the Funding Agreement would be supported by those heads of power, even if not also by s 51(xxxix) in its operation with respect to matters incidental to the execution of the executive power of the Commonwealth. In response, the plaintiff, New South Wales, 215 See Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 90 216 Reprinted in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, (1981), vol 1, 129 at 131. See also Winterton, Parliament, the Executive and the Governor-General, (1983) at 30-31, 226-227. See further the statements to the same effect in the House of Representatives by Mr Higgins, Sir John Forrest and Sir John Quick, collected by Hayne and Kiefel JJ in Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 108 [306]. Bell Victoria, South Australia, Western Australia and Tasmania deny that SUQ is a trading corporation in the constitutional sense; and the plaintiff, Victoria and Western Australia also deny that the Funding Agreement provides "benefits to students", rather than merely to SUQ, which is obliged by the Funding Agreement to provide the "chaplaincy services" at the Darling Heights State Primary School. However, in the course of argument the plaintiff resiled from, and asserted the contrary to, the general proposition that because s 61 empowers the executive branch of government to engage in activities authorised by or under a law made by the Parliament, the executive power extends to engagement in activities or enterprises which could be authorised by or under a law made by the Parliament, even though they have not yet been and may never be so authorised. Support for that view of s 61 which the plaintiff now disavows was based primarily upon a reading of Victoria v The Commonwealth and Hayden ("the AAP Case")217. But that decision does not provide a sufficient basis for such a broad proposition. The AAP Case The AAP Case was argued on demurrer by Victoria to the defence of those who were the Commonwealth parties in that case and was decided on what, since Pape, can be seen to have been the false assumption that the spending power of the Executive Government of the Commonwealth was to be found in Ch IV of the Constitution, in particular in ss 81 and 83. Hence the attention given in the submissions in the AAP Case and in the reasons of the Court to the phrase in s 81 "the purposes of the Commonwealth". Barwick CJ218 reasoned that this phrase was "a reasonable synonym" for the expression in s 51(xxxi) "for any purpose in respect of which the Parliament has power to make laws", and concluded219: "With exceptions that are not relevant to this matter and which need not be stated, the executive may only do that which has been or could be the subject of valid legislation. Consequently, to describe a Commonwealth purpose as a purpose for or in relation to which the Parliament may make a valid law, is both sufficient and accurate." 217 (1975) 134 CLR 338. 218 (1975) 134 CLR 338 at 363. 219 (1975) 134 CLR 338 at 362-363. Bell Gibbs J220, after stating that "the whole question is whether the purposes of the [Australian Assistance] Plan are 'purposes of the Commonwealth'", said: "According to s 61 of the Constitution, the executive power of the Commonwealth 'extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth'. Those words limit the power of the Executive and, in my opinion, make it clear that the Executive cannot act in respect of a matter which falls entirely outside the legislative competence of the Commonwealth. A view consonant with that which I have expressed has previously received acceptance in this Court: see The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd221; The Commonwealth v The Australian Commonwealth Shipping Board222. The Constitution effects a distribution between the Commonwealth and the States of all power, not merely of legislative power. We are in no way concerned in the present case to consider the scope of the prerogative or the circumstances in which the Executive may act without statutory sanction. Once it is concluded that the Plan is one in respect of which legislation could not validly be passed, it follows that public moneys of the Commonwealth may not lawfully be expended for the purposes of the Plan." The last sentence in this passage is expressed in negative terms. Gibbs J did not say that public moneys could lawfully be expended on any purpose for which legislation might be passed. It was sufficient for his Honour's decision that the Australian Assistance Plan could not have been supported by legislation. that Mason J223 concluded the phrase "for that an appropriation "does not supply the Commonwealth" had the meaning "for such purposes as Parliament may determine". His Honour, prescient of what was to be decided in Pape, went on to say the Commonwealth's engagement in the activities in connexion with which the moneys are to be spent", and added that, no legislation having been enacted with respect to the Australian Assistance Plan, it was necessary to look to the executive power224. His Honour then responded to the opposing submissions by the purposes of legal authority for 220 (1975) 134 CLR 338 at 378-379. 221 (1922) 31 CLR 421 at 431-432, 437-441; [1922] HCA 62. 222 (1926) 39 CLR 1 at 10; [1926] HCA 39. 223 (1975) 134 CLR 338 at 396. 224 (1975) 134 CLR 338 at 396. Bell the Commonwealth parties (that the devotion of an appropriation to its purpose may be secured by legislation or executive action225) and by Victoria (that s 61 of the Constitution does not confer executive power beyond the execution of laws made by the Parliament226). Mason J did so in these qualified terms227: "Although the ambit of the power is not otherwise defined by Ch II it is evident that in scope it is not unlimited and that its content does not reach beyond the area of responsibilities allocated to the Commonwealth by the Constitution, responsibilities which are ascertainable from the distribution of powers, more particularly the distribution of legislative powers, effected by the Constitution itself and the character and status of the Commonwealth as a national government. The provisions of s 61 taken in conjunction with the federal character of the Constitution and the distribution of powers between the Commonwealth and the States make any other conclusion unacceptable." However, in referring to the distribution of responsibilities between the Commonwealth and the States, Mason J was speaking in general terms and, like Gibbs J, his Honour was not adopting any broad proposition that moneys may be spent by the Executive Government upon what answers the description of any head of legislative power found in s 51 of the Constitution. That this is so is apparent from the earlier rejection by Mason J228, along with Barwick CJ229, of the application to s 51(ii) of the Constitution230 of the United States doctrine, exemplified in United States v Butler231, that because the power of Congress to tax is "unlimited" the power to spend is also "unlimited". 225 (1975) 134 CLR 338 at 342-343. 226 (1975) 134 CLR 338 at 341. 227 (1975) 134 CLR 338 at 396-397. 228 (1975) 134 CLR 338 at 395-396. 229 (1975) 134 CLR 338 at 359-360. 230 Section 51(ii), consistently with the federal character of the Constitution, cannot be "construed as a power over the whole subject of taxation throughout Australia": Victoria v The Commonwealth ("the Second Uniform Tax Case") (1957) 99 CLR 575 at 614; [1957] HCA 54. Bell On the other hand, Murphy J232 appears to have accepted the application in Australia of Butler, and Jacobs J233 said the Commonwealth" spoken of in s 81 "certainly include all the purposes comprehended within the subject matters of s 51 in respect of which the Commonwealth may legislate, including the subject matter comprised in s 51(xxxix)". that "the purposes of As the argument on the Special Case proceeded it became apparent that the AAP Case does not support any proposition that the spending power of the executive branch of government is co-extensive with those activities which could be the subject of legislation supported by any head of power in s 51 of the Constitution. First, any such proposition is too broad. Reference has been made to s 51(ii), the taxation power; it is well settled that there can be no taxation except under the authority of statute234. Many other of the heads of power in s 51 are quite inapt for exercise by the Executive. Marriage and divorce, and bankruptcy and insolvency by executive decree, are among the more obvious examples. These heads and other heads of legislative power in Ch II are complemented by the power given to the Parliament by Ch III to make laws conferring upon courts federal jurisdiction in matters arising under federal laws. Further, while heads of power in s 51 carry with them the power to create offences235, the Executive cannot create a new offence236, and cannot dispense with the operation of any law237. 232 (1975) 134 CLR 338 at 420. 233 (1975) 134 CLR 338 at 413. McTiernan J decided the case on the basis that the dispute was "within the field of politics not of law" and was non-justiciable: at 370; and Stephen J, emphasising the limited nature of an appropriation statute, held that Victoria lacked the standing to bring the action: at 390-391. 234 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 433-434. 235 R v Kidman (1915) 20 CLR 425; [1915] HCA 58. 236 Davis v The Commonwealth (1988) 166 CLR 79 at 112. 237 Port of Portland Pty Ltd v Victoria (2010) 242 CLR 348 at 357-358 [5]-[8]; [2010] HCA 44. See also the remarks of Lord Hoffmann in Higgs v Minister of National Security [2000] 2 AC 228 at 241-242. Bell Secondly, such a proposition would undermine the basal assumption of legislative predominance inherited from the United Kingdom and so would distort the relationship between Ch I and Ch II of the Constitution. No doubt the requirement of s 64 of the Constitution that Ministers of State be senators or members of the House of Representatives has the consequence that the Minister whose department administers an executive spending scheme, such as the NSCP, is responsible to account for its administration to the Parliament238. This is so whether the responsibility is to the chamber of which the Minister is a member or to the other chamber, in which the Minister is "represented" by another Minister239. But there remain considerations of representative as well as of responsible government in cases where an executive spending scheme has no legislative engagement for its creation or operation beyond the appropriation process. And that appropriation process requires that the proposed law not originate in the Senate, and that the proposed law appropriating revenue or moneys "for the ordinary annual services of the Government" not be amended by the Senate240. The questions on the Special Case are not to be answered through debate as to what legislation could have been passed by the Parliament in reliance upon pars (xx) or (xxiiiA) of s 51 of the Constitution. The determinative question The Commonwealth parties make the general submission that the executive power extends to entry into contracts and the spending of money without any legislative authority beyond an appropriation. The determinative question on this Special Case thus becomes whether the executive power is of sufficient scope to support the entry into and making of payments by the Commonwealth to SUQ under the Funding Agreement. For the reasons which follow this question should be answered in the negative. In his reply, the plaintiff submitted that the relevant aspect of the executive power was that concerned with the ordinary course of administering a recognised part of the Government of the Commonwealth or with the incidents of 238 Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54 at 87. See also Egan v Willis (1998) 195 CLR 424 at 451-452 [42]; [1998] HCA 71. 239 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 464 [218]. 240 Constitution, s 53. Bell the servicing of the ordinary and well-recognised functions of that Government241. These functions would vary from time to time242, but would include the operation of the Parliament243, and the Commonwealth, the administration of which is referred to in s 64 of the Constitution, including the funding of activities in which the departments engage or consider engagement244. The plaintiff accepted that this aspect of the executive power encompassed expenditure without legislative backing beyond an appropriation and the Commonwealth parties appeared to accept that concession. the departments of State of However, the plaintiff contended that expenditure upon the NSCP does not fall within any ordinary and well-recognised functions of the Government of the Commonwealth. The Commonwealth parties submitted that the expenditure at least now had that quality because expenditures under the NSCP had commenced in the 2007 school year and had continued thereafter. That submission assumes the determination of the issue on which the Special Case turns and should not be accepted. The plaintiff agrees that the ordinary and well-recognised functions of the Government of the Commonwealth include the Commonwealth entering into agreements with the States, particularly with reference to the referral by State Parliaments of matters pursuant to s 51(xxxvii), and to the engagement of s 96 of the Constitution. No doubt a range of agreements and understandings between the Commonwealth and State Executive Governments, recently exemplified in ICM Agriculture245, would be supported upon the plaintiff's thesis. The plaintiff did not support the outcome in Pape as having rested upon the an ordinary and well-recognised activity of Commonwealth. Rather, Pape was said by the plaintiff to have been decided in a "different universe of discourse" to that of the NSCP because the expenditure with which Pape was concerned was effected with legislative support. Several points should be made in response. the Government of 241 cf New South Wales v Bardolph (1934) 52 CLR 455 at 496 per Rich J, 507 per Dixon J; Selway, The Constitution of South Australia, (1997) at 93-94. 242 cf Ex parte Professional Engineers' Association (1959) 107 CLR 208 at 274-275 per Windeyer J; [1959] HCA 47. 243 Brown v West (1990) 169 CLR 195 at 201; [1990] HCA 7. 244 cf AAP Case (1975) 134 CLR 338 at 362 per Barwick CJ. 245 (2009) 240 CLR 140. Bell First, while the engagement of the legislative branch of government marked off Pape from cases where there is, by reason of the absence of such engagement, a deficit in the system of representative government, there remains in common with any assessment of the NSCP the considerations of federalism, stimulated by the by-passing by the Executive of s 96. Secondly, the outcome in Pape indicates that although the plaintiff's submission is satisfactory as a partial description of the executive power to spend, it does not mark any outer limit of universal application. Thirdly, fuller attention to Pape nevertheless yields support to the conclusion sought by the plaintiff: that the executive power does not go so far as to support the entry by the Commonwealth into the Funding Agreement, and the making of payments by the Commonwealth to SUQ. In Pape246, approval was given to the statement by Mason CJ, Deane and Gaudron JJ in Davis v The Commonwealth247 that: "the existence of Commonwealth executive power in areas beyond the express grants of legislative power will ordinarily be clearest where Commonwealth executive or real competition with State executive or legislative competence". legislative action involves no In Davis, Brennan J invited consideration of "the sufficiency of the powers of the States to engage effectively in the enterprise or activity in question"248. This consideration reflects concern with the federal structure and the position of the States. Further, as noted above, the NSCP contracts, such as the Funding Agreement, present an example where within the Commonwealth itself there is a limited engagement of the institutions of representative government. The Parliament is engaged only in the appropriation of revenue, where the role of the Senate is limited. It is not engaged in the formulation, amendment or termination of any programme for the spending of those moneys. The present case, unlike Pape, does not involve a natural disaster or national economic or other emergency in which only the Commonwealth has the 246 (2009) 238 CLR 1 at 62-63 [131]-[133] per French CJ, 90-91 [239] per Gummow, 247 (1988) 166 CLR 79 at 93-94. 248 (1988) 166 CLR 79 at 111. Bell means to provide a prompt response249. In Pape, the short-term, extensive and urgent nature of the payments to be made to taxpayers necessitated the use of the federal taxation administration system to implement the proposal, rather than the adoption of a mechanism supported by s 96. However, the States have the legal and practical capacity to provide for a scheme such as the NSCP. The conduct of the public school system in Queensland, where the Darling Heights State Primary School is situated, is the responsibility of that State. Indeed, Queensland maintains its own programme for school chaplains. Section 96 of the Constitution gives to the Parliament a means for the provision, upon conditions, of financial assistance by grant to Queensland and to any other State. This is subject to the qualification stated in ICM Agriculture250 that the legislative power conferred by s 96 and s 51(xxxvi) does not extend to the grant of financial assistance to a State on terms and conditions requiring the State to acquire property on other than just terms. With respect to the significance of s 96 in the federal structure, the following passage from the reasons of Barwick CJ in the AAP Case is in point251: "Section 96 ... has enabled the Commonwealth to intrude in point of policy and perhaps of administration into areas outside Commonwealth legislative competence. No doubt, in a real sense, the basis on which grants to the claimant States have been quantified by the Grants Commission has further expanded the effect of the use of s 96. But a grant under s 96 with its attached conditions cannot be forced upon a State: the State must accept it with its conditions. Thus, although in point of economic fact, a State on occasions may have little option, these intrusions by the Commonwealth into areas of State power which action under s 96 enables, wear consensual aspect. Commonwealth expenditure of the Consolidated Revenue Fund to service a purpose which it is not constitutionally lawful for the Commonwealth to pursue, is quite a different matter. If allowed, it not only alters what may be called the financial federalism of the Constitution but it permits the Commonwealth effectively to interfere, without the consent of the State, in matters 249 cf the scheme the subject of the Appropriation (HIH Assistance) Act 2001 (Cth), which was considered but not challenged in HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72; [2011] HCA 31. 250 (2009) 240 CLR 140 at 170 [46] per French CJ, Gummow and Crennan JJ, 198 [136]-[137] per Hayne, Kiefel and Bell JJ. 251 (1975) 134 CLR 338 at 357-358. Bell covered by Constitution to the State." the residue of governmental power assigned by the What then was said by the defendants for the conclusion contrary to that which would follow from the above? The Commonwealth parties' ultimate submission With the support of SUQ, and the qualified support of South Australia, the Commonwealth parties presented their ultimate submission. This was that because the capacities to contract and to spend moneys lawfully available for expenditure do not "involve interference with what would otherwise be the legal rights and duties of others" which exist under the ordinary law, the Executive Government in this respect possesses these capacities in common with other legal persons. The capacity to contract and to spend then was said to take its legal effect from the general law. A basic difficulty with that proposition is disclosed by the observation by Dixon CJ, Williams, Webb, Fullagar and Kitto JJ in Australian Woollen Mills Pty Ltd v The Commonwealth252 that: "the position is not that of a person proposing to expend moneys of his own. It is public moneys that are involved." The law of contract has been fashioned primarily to deal with the interests of private parties, not those of the Executive Government. Where public moneys are involved, questions of contractual capacity are to be regarded "through different spectacles"253. One example of what may be seen through those spectacles is the debate (which does not fall for consideration here) as to the extent to which by contract the Commonwealth may fetter future executive action in a matter of public interest254. Other examples are given in the reasons of Crennan J255. 252 (1954) 92 CLR 424 at 461; [1954] HCA 20. 253 cf The Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 51; [1980] HCA 44. 254 See the discussion of the authorities by Gibbs CJ in A v Hayden (1984) 156 CLR 532 at 542-543; [1984] HCA 67. Bell Consideration of the issues which the Commonwealth parties' submission presents (contrary to what is put in support by South Australia) is not assisted by reference to the position of the Sovereign in the United Kingdom of Great Britain and Ireland at the time of the framing of the Constitution. It was, as explained in Sue v Hill256, then well understood that the term "the Crown" was used in a number of metaphorical senses. Five of these were considered in Sue v Hill257. The first concerned the use of "the Crown" in English law as a device to dispense with the recognition of the State as a juristic person. In his doctoral thesis, which was presented some years after Federation and only published in 1987, Dr H V Evatt referred to the failure in English constitutional theory "to separate the personal rights of the monarch from the legal authority of the State"258. To this may be added the point made by the plaintiff that the Commonwealth parties' ultimate submission appears to proceed from the assumption that the executive branch has a legal personality distinct from the legislative branch, with the result that the Executive is endowed with the capacities of an individual. The legal personality, however, is that of the Commonwealth of Australia, which is the body politic established under the Commonwealth of Australia Constitution Act 1900 (Imp)259, and identified in covering cl 6. The assimilation of the executive branch to a natural person and other entities with legal personality was said by the Commonwealth parties to be supported by statements by Brennan CJ and by Gummow and Kirby JJ in The Commonwealth v Mewett260. These were to the effect that s 75(iii) of the Constitution denies any operation of doctrines of executive immunity which might be pleaded to any action for damages in respect of a common law cause of action. The absence from the Constitution of doctrines of executive immunity assists those private parties who have dealings with the executive branch of government. Different considerations arise where the question is one of executive capacity to enter into such dealings. In that situation there arise the considerations referred to at the outset of these reasons, respecting both the federal structure and the relationship between Ch I and Ch II of the Constitution. 256 (1999) 199 CLR 462 at 497-498 [83]; [1999] HCA 30. 257 (1999) 199 CLR 462 at 498-503 [84]-[94]. 258 Evatt, The Royal Prerogative, (1987) at 7. 259 63 & 64 Vict c 12. 260 (1997) 191 CLR 471 at 491, 550-551; [1997] HCA 29. See also at 530 per Bell In oral submissions the Commonwealth Solicitor-General resisted the suggestion that the references made in earlier submissions to the character and status of the Commonwealth as a national government, in support of his submission as to the assimilation of the capacities of the Commonwealth to contract and to spend to those of other legal persons, may conflate the capacities to contract and to spend with the distinct and special financial privileges associated with the prerogative; the latter have been referred to earlier in these reasons261. Rather, the Commonwealth parties' assimilation submission was said to draw support as constitutionally coherent from (i) the relationship between s 61 and the appropriation provisions in s 81 and s 83, and (ii) the extent of the power to tax. The first consideration understates the significance of the holding in Pape respecting the relationship between the provision of an appropriation and the spending power. The second shows the tenacity of his successors to the views of Sir Robert Garran, noted earlier in these reasons262. Further, for the reasons already given, considerations of constitutional coherence point away from the existence of an unqualified executive power to contract and to spend. The Commonwealth Solicitor-General also distinguished on the one hand attempts by the Executive to conscript or command individuals and entities such as trading corporations, and on the other hand the conferral of rights or benefits upon parties with the attachment of conditions to be observed by the recipient, such as those imposed upon SUQ by the Funding Agreement. The latter was within the executive power but the former was not. But the distinction rests upon what appears to be a false assumption as to the non-coercive nature of the attachment of conditions. Financial dealings with the Commonwealth have long had attached to them the sanctions of the federal criminal law. For example, the provisions added respectively as s 29A(1) and s 29B to the Crimes Act 1914 (Cth) by s 16 of the Crimes Act 1926 (Cth) created offences of obtaining from the Commonwealth, with intent to defraud, "any chattel, money, valuable security or benefit" by any false pretence, and also of imposing or endeavouring to impose upon the Commonwealth any untrue representation with a view to obtain money or any other benefit or advantage263. 262 At fn 204. 263 See now the extensive provision made by Div 135 of Pt 7.3 of the Criminal Code (Cth). Bell These submissions by the Commonwealth parties as to the scope of the executive power to contract and to spend should not be accepted. Conclusions Question 1(a) asks whether the plaintiff has standing to challenge the validity of the Funding Agreement. It should be answered "Yes". Question 1(c) asks the same question with respect to the making of payments by the Commonwealth to SUQ pursuant to the Funding Agreement for the financial years beginning 2007-2008 and ending 2011-2012. This also should be answered "Yes". Question 1(b) is directed to the drawing of money from the Consolidated Revenue Fund for the purpose of making those payments. It should be answered: "Unnecessary to answer". Question 2(a) asks whether the Funding Agreement is invalid as beyond the executive power of the Commonwealth under s 61 of the Constitution, and should be answered "Yes". Question 2(b) asks the same question but with respect to s 116 of the Constitution and should be answered "No". Question 3 asks questions with respect to the authorisation of payments by appropriation Acts beginning with that for 2007-2008 and ending with that for 2011-2012. It should be answered: "Unnecessary to answer". Question 4(a) asks whether the making of the relevant payments by the Commonwealth to SUQ was "unlawful" by reason of the lack of the executive power under s 61 of the Constitution to make those payments. It should be answered: "The making of the payments was not supported by the executive power of the Commonwealth under s 61 of the Constitution". Question 4(b) asks the same question with respect to s 116 of the Constitution. It should be answered: "No". Question 5 asks what relief sought in the statement of claim should be granted to the plaintiff. This should be answered: "The Justice disposing of the action should grant the plaintiff such declaratory relief and make such costs orders as appear appropriate in the light of the answers to Questions 1-4 and 6". Question 6, as to the costs of the Special Case, should be answered: "The first, second and third defendants". We would not make a costs order against SUQ, the fourth defendant. Hayne 167 HAYNE J. The facts and circumstances which give rise to the questions of law that have been stated by the parties for the opinion of the Full Court, in the form of a Special Case, are described in the reasons of Gummow and Bell JJ. They need not be repeated. I agree with the reasons given by Gummow and Bell JJ for answering Question 1 (concerning the standing of the plaintiff) and Questions 2(b) and 4(b) (concerning s 116 of the Constitution) as they propose. I agree that it is not necessary to answer Question 3 (concerning whether identified Appropriation Acts authorised the drawing of money from the Consolidated Revenue Fund for the purpose of making the disputed payments). I also agree with the answers Gummow and Bell JJ propose to Questions 5 and 6. These reasons are directed to the issues about executive power that are raised in the matter. It is necessary to begin consideration of those issues (raised by Questions 2(a) and 4(a) of the Special Case) by identifying the question which is raised by the complaint that the plaintiff makes. The question The plaintiff alleged that there was no power for the Executive Government of the Commonwealth to pay Scripture Union Queensland ("SUQ") moneys which the Commonwealth had agreed with SUQ should be paid under the Darling Heights Funding Agreement. The central issue in the matter is the ambit of the Commonwealth Executive's power to spend money. The spending in question was in satisfaction of an obligation which the Commonwealth had undertaken by making a contract with SUQ, the Darling Heights Funding Agreement. The obligation to pay money was the only obligation which the Commonwealth undertook by that contract as made and later varied. The Darling Heights Funding Agreement made detailed provisions the regulating how SUQ was Commonwealth. The Commonwealth thus agreed to pay money to SUQ on terms. But to ask only whether the Commonwealth had power to make the particular contract which it made with SUQ is to obscure the more fundamental question which the arrangement presented: did the Commonwealth have power to spend money on terms? The particular legal framework by which the Commonwealth chose to provide for the payments, or to provide for the terms on which they were made, is beside the point if, as the plaintiff asserted, the Executive Government had no power to spend the money. it received from the moneys to apply The ultimate question in this matter is: did the Executive Government of the Commonwealth, with no authority other than whatever authority was given Hayne by the relevant Appropriation Acts264, have power to make the impugned payments to SUQ in accordance with the Darling Heights Funding Agreement? The broader question whether the Executive Government of the Commonwealth, with no authority other than whatever authority is given by an Appropriation Act, may spend money for a purpose that is identified in that Appropriation Act is cast at a level of generality that presents issues that need not be decided in this case. Three fundamental propositions Nonetheless, the question that has been identified as the ultimate question in this matter directs attention to, and requires consideration of, three fundamental propositions, each of which is necessarily expressed at a high level of abstraction and each of which must be given more particular content before it is capable of application to a particular case. First, the expenditures in issue (the disputed payments) are expenditures made by the executive government of a polity – an artificial legal person – and are expenditures of public moneys – not moneys which are in any relevant sense the polity's "own" moneys. Second, the legislative branch of the federal polity, the Parliament, is the branch of government that controls the raising and expenditure of public moneys. Third, the legislative branch has limited legislative powers; the Constitution distributes legislative power by giving the Federal Parliament only limited legislative powers. Other equally fundamental observations about accounting for and control of public expenditures hover in the background of the issues that must be decided. They include such matters as the requirements of ss 53, 54 and 56 of the Constitution, which regulate parliamentary practice in relation to money Bills. They include the (relatively recent) adoption by the Parliament and the Executive of output accounting practices. They include the (now long-standing) practice of identifying the purposes for which the Consolidated Revenue Fund is appropriated at a very high level of abstraction. But despite the importance of these and other like considerations which loom in the background, some of which will later be considered, chief attention must be directed, at least for the most part, to the three fundamental propositions that have been identified. Attention to those propositions is required by the way in which the first, second and third defendants ("the Commonwealth parties") put their arguments about the extent of the Executive's power to spend. 264 The Acts in respect of which relief was sought were Appropriation Act (No 1) 2007-2008 (Cth), Appropriation Act (No 1) 2008-2009 (Cth), Appropriation Act (No 1) 2009-2010 (Cth), Appropriation Act (No 1) 2010-2011 (Cth) and Appropriation Act (No 1) 2011-2012 (Cth). Hayne The arguments of the Commonwealth parties The Commonwealth parties submitted that "[w]hat is truly in issue [in this case] is whether the executive power of the Commonwealth extends to making the payments". That submission proceeded on the basis that this Court decided in Pape v Federal Commissioner of Taxation265 that s 81 of the Constitution is not to be treated as an "appropriations power" that implicitly authorises the expenditure of money "for the purposes of the Commonwealth". Rather, the Commonwealth parties' submissions continued, "s 81 (with s 83) merely confirms that parliamentary appropriation is a prerequisite for the lawful availability of money for expenditure. Authority to spend such money must be found in the executive power or in legislation enacted under a head of power in ss 51, 52 or 122266." (emphasis added) In this case the Commonwealth parties submitted, at least initially, that the authority to spend was found in the executive power, not in any legislation. The Commonwealth parties proffered alternative submissions about the relevant ambit of the executive power: what was described as a "narrow basis" and a "broad basis". The narrow basis was that the executive power of the Commonwealth, in all its aspects, is: "limited to the subject-matters of the express grants of legislative power in ss 51, 52 and 122 of the Constitution (together with matters that, because of their distinctly national character267 or their magnitude and urgency268, are peculiarly adapted to the government of the country and otherwise could not be carried on for the public benefit)". On that basis the making of the Darling Heights Funding Agreement and the payments to SUQ were submitted to be within the executive power of the Commonwealth in that: 265 (2009) 238 CLR 1; [2009] HCA 23. 266 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 55 [111]-[112] per French CJ, 75 [184] per Gummow, Crennan and Bell JJ, 113 [320] per Hayne and Kiefel JJ, 211 [602] per Heydon J. 267 As in Davis v The Commonwealth (1988) 166 CLR 79 at 94 per Mason CJ, Deane and Gaudron JJ, 104 per Wilson and Dawson JJ, 110-111 per Brennan J; [1988] HCA 63. 268 As in Pape (2009) 238 CLR 1 at 63 [133] per French CJ, 91-92 [242] per Gummow, Crennan and Bell JJ. Hayne "the Agreement provides for, and its performance involves, the provision of benefits to students (cf s 51(xxiiiA)) … and … the Agreement was entered into with, and provides for assistance to, a trading corporation formed within the limits of the Commonwealth (cf s 51(xx))". That is, the Commonwealth parties submitted that the disputed payments could have been authorised by a valid law made by the Parliament and that, because there could have been a valid law, the Executive had power to make the payments even though there was no legislative authorisation for their making. The broad basis advanced on behalf of the Commonwealth parties was that the Executive's power to spend money lawfully available to it was, in effect, unlimited. It was said that the "capacities" of the Executive to spend money lawfully available to it, or to enter into a contract, "do not involve interference with what would otherwise be the legal rights and duties of others. Nor does the Commonwealth, when exercising such a capacity, assert or enjoy any power to displace the ordinary operation of the laws of the State or Territory in which the relevant acts take place." (footnote omitted) And in amplification of and support for these propositions, the Commonwealth parties further submitted that neither s 51(xxxix) (the incidental power) nor s 96 (the grants power) required some other conclusion. Several important propositions underpinned these submissions. First, as has been noted, they proceeded from the premise that there was no legislative authorisation for the disputed payments or the Darling Heights Funding Agreement. But in supplementary submissions, filed by leave after the close of oral argument, the Commonwealth parties submitted that, if legislative authority to enter the Darling Heights Funding Agreement was required, that authority was the Financial Management and Accountability provided by s 44 of Act 1997 (Cth)269. And as will later be explained, the premise that there was no 269 Section 44(1) of the Financial Management and Accountability Act 1997 (Cth) now provides: "A Chief Executive must manage the affairs of the Agency in a way that promotes proper use of the Commonwealth resources for which the Chief Executive is responsible. Note: A Chief Executive has the power to enter into contracts, on behalf of the Commonwealth, in relation to the affairs of the Agency. Some Chief Executives have delegated this power under section 53." (Footnote continues on next page) Hayne legislative authorisation for the disputed payments may require closer examination of the terms of the Appropriation Acts than was given in argument of this matter. The second proposition that underpinned the Commonwealth parties' initial submissions founded on the narrow basis was that the ambit of the Executive's power to spend money that has been the subject of a valid appropriation is fixed by whether the payment could have been validly authorised by a law of the Parliament. And at first the focus of the plaintiff and of the interveners fell only upon whether the payments could have been authorised by a law of the Parliament, rather than upon whether it was right to say that (assuming a valid appropriation) the Executive can spend in any manner and for any purpose that could validly be authorised by legislation, regardless of whether the payment is authorised in that way. The third proposition that underpinned the Commonwealth parties' initial submissions, at least on the broad basis, was that the "capacity" of the Commonwealth Executive is the same as that of a natural person. Each of these three propositions – there was no legislative authority; the executive power to spend extends to any expenditure the Parliament could authorise; and the Executive's capacities are relevantly unbounded – will require consideration of the three fundamental propositions described at the start of these reasons. How the issues are considered The balance of these reasons will proceed in the following manner. The Commonwealth parties' broad basis submission is examined first. In considering that submission it is convenient to begin by noticing that submissions to the same general effect as the broad basis submission made by the Commonwealth parties in this matter have been made, but not accepted, in those (relatively few) earlier decisions of this Court in which the validity of Commonwealth expenditure has been in issue. Next, the notion of the "capacities" of the Commonwealth, which lay at the heart of the broad basis submission, is considered. Then these reasons will turn to consider the nature and extent of parliamentary control over the expenditure of public moneys. That requires consideration of both the provisions made by the Constitution establishing, and exercises by the Parliament of, parliamentary control over the expenditure of public moneys, and consideration (by reference to the text and structure of the Constitution) of the bounds on the When the Darling Heights Funding Agreement was made, the note to s 44(1) had not been inserted. It was added by the Financial Framework Legislation Amendment Act 2008 (Cth), Sched 1, item 47. Hayne Commonwealth's executive power to spend. These reasons will thus demonstrate that the Commonwealth parties' broad basis submission should be rejected. The Commonwealth parties' narrow basis submission will then be examined. That entails consideration of the correct approach to examining whether action by the Executive Government is supported by the executive power, of notions of competition with and sufficiency of State legislative and executive power, and ultimately – on the assumption that the approach initially taken by the parties and interveners is correct – of whether the Parliament could have passed a valid law authorising the disputed payments. These reasons will demonstrate that the Parliament could not by law have authorised the disputed payments. Because the Parliament could not by law have authorised the payments, their making was not a valid exercise of the executive power of the Commonwealth. It is, then, not necessary to consider whether (if there had been power to enact such a law) specific legislative authority to make the disputed payments (in addition to the relevant Appropriation Acts) would have been necessary to their being validly made. Finally, attention will be given to Question 2(a), in which the parties asked whether the Darling Heights Funding Agreement was "invalid". As already indicated, the central issue in the case concerned the Commonwealth's power to perform the only obligation it undertook under that agreement – the obligation to make the disputed payments. Because these reasons conclude that the Commonwealth did not have power to make the disputed payments, it follows that the Commonwealth could not validly undertake an obligation to make them. The answer given to Question 2(a) should expressly reflect that absence of power, rather than risk obscuring the point by an answer couched only in terms of "invalidity". It is convenient to deal first with the course of authority in this Court. Earlier decisions In the relatively few cases where Commonwealth expenditure has been in issue, the Commonwealth has made submissions, along the lines of those advanced in the present case, that its power to expend public moneys, duly appropriated, is unlimited. As early as 1908, the Commonwealth submitted that "the Parliament is invested with the same powers of appropriation for specific purposes as are the State Parliaments in respect of their revenue"270. In 1945, the Commonwealth 270 The State of New South Wales v The Commonwealth ("the Surplus Revenue Case") (1908) 7 CLR 179 at 185; [1908] HCA 68. Hayne argued271 that s 81 (read with s 83) of the Constitution is akin to Art I, §8, cl 1 of the United States Constitution, which was said to confer a "power to spend … as wide as the power to tax". The Commonwealth power to tax, and by implication its power to spend, was said272 to be "perhaps, for all practical purposes unlimited". In 1975, at a time when it was thought that ss 81 and 83 conferred power to spend public moneys, the Commonwealth submitted273 that "[i]t is for Parliament and not the courts to determine what are purposes of the Commonwealth" (referred to in s 81) and that "[o]nce money has been appropriated by a valid law its devotion to the purpose of the appropriation may be secured by executive action or by legislation" (emphasis added). In 1990, the Commonwealth submitted274 that "all that is required [to permit expenditure] is an available appropriation" (emphasis added). This expansive view of the Commonwealth's power to spend has never been accepted by a majority of this Court. Despite the contrary views expressed by some Justices, the Court has recognised that the text and structure of the Constitution require the conclusion that the Commonwealth's power to spend public moneys is not and cannot be unlimited. The source of the Commonwealth's power to spend was a matter of some dispute until the decision in Pape. Submissions of the kind described above assumed or asserted, and judgments of some Justices of the Court appeared to proceed on the assumption275, that s 81, or some combination of ss 81, 83 and 51(xxxix), conferred power on the Commonwealth to expend public moneys. 271 Attorney-General (Vict) v The Commonwealth ("the Pharmaceutical Benefits Case") (1945) 71 CLR 237 at 245-246; [1945] HCA 30; see also at 272 per Dixon J ("this case requires us to go no further than to distinguish the carefully chosen words of our Constitution from the very different words of that of the United States"). 272 (1945) 71 CLR 237 at 245. 273 Victoria v The Commonwealth and Hayden ("the AAP Case") (1975) 134 CLR 338 at 342-343; [1975] HCA 52. See also Pharmaceutical Benefits Case (1945) 71 CLR 237 at 242-246. 274 Brown v West (1990) 169 CLR 195 at 197; [1990] HCA 7. 275 Pharmaceutical Benefits Case (1945) 71 CLR 237 at 248, 253-254, 256 per Latham CJ, 265-266 per Starke J, 268-271 per Dixon J (Rich J agreeing at 264), 274-275 per McTiernan J; AAP Case (1975) 134 CLR 338 at 354, 361 per Barwick CJ, 394, 396 per Mason J, 412 per Jacobs J, 418-419, 424 per Murphy J; cf at 378-379 per Gibbs J, 385, 387, 390-391 per Stephen J. Hayne (So also in Combet v The Commonwealth276, the Solicitor-General of the Commonwealth stated in argument that Appropriation Acts "merely authorise the drawing of money from the Treasury of the Commonwealth and its expenditure" (emphasis added).) In light of the assumption that was made, a limit, perhaps the limit, on the Commonwealth's power to spend was discerned in the words "for the purposes of the Commonwealth" in s 81. Construed in the light of the text and structure of the Constitution – in particular, the enumerated but limited heads of Commonwealth legislative power (especially ss 51, 52 and 122) and the finance provisions (especially ss 87, 94 and 96) – these words were seen as limiting the purposes for which s 81 (with or without ss 83 and 51(xxxix)) authorised appropriations and expenditure to be made277. But a conclusive statement of that limit proved to be elusive. As Gibbs J said in Victoria v The Commonwealth and Hayden ("the AAP Case")278: "This question was fully discussed in the Pharmaceutical Benefits Case279. There Latham CJ and McTiernan J held that 'the purposes of the Commonwealth' within s 81 are such purposes as the Parliament determines, and that the Courts have no power to declare that an Appropriation Act is invalid on the ground that the appropriation was made for an unauthorized purpose280. However, this view, that s 81 does not impose any effective limitation on the purpose for which an appropriation may be made, and that the Parliament may appropriate moneys for any purpose whatever, was not accepted by Rich, Starke, Dixon, and Williams JJ, the other members of the Court. Both Starke J 276 (2005) 224 CLR 494 at 511; [2005] HCA 61. 277 Pharmaceutical Benefits Case (1945) 71 CLR 237 at 266 per Starke J, 269, 271- 272 per Dixon J (Rich J agreeing at 264), 281-282 per Williams J; AAP Case (1975) 134 CLR 338 at 354-359 per Barwick CJ, 373-374 per Gibbs J, 412-415 per Jacobs J. Mason J, in the AAP Case (1975) 134 CLR 338 at 398, relied on considerations of the same kind to limit the executive power of the Commonwealth to engage in activities but at 396 appeared to treat s 81 as providing an unbounded power to spend. However, his Honour would have restrained the Commonwealth not only from carrying into effect the Australian Assistance Plan but also from "expending the moneys appropriated for the purpose of carrying the Plan into effect": at 402. 278 (1975) 134 CLR 338 at 371-372. 279 (1945) 71 CLR 237. 280 (1945) 71 CLR 237 at 254-256, 273-274. Hayne and Williams J were of the opinion that the words referred to the purposes of the Commonwealth as an organized political body281. … Dixon J (with whom Rich J concurred) agreed that if the power of expenditure 'is limited to matters to which the Federal legislative power may be addressed, it necessarily includes whatever is incidental to the existence of the Commonwealth as a state and to the exercise of the functions of a national government'282. He said283 that he did not find it necessary to choose between the view that the power is so limited and the view that the Parliament is authorized to spend money without any limitation of purpose. But it is apparent that he did not favour the latter view". The AAP Case itself did not resolve the issue. The joint dissenting reasons in Pape explained284 that decision thus: "Because of the way in which opinions were divided in the AAP Case, no proposition about the ambit of the Commonwealth's powers as to appropriation and expenditure can be identified as commanding the assent of a majority of the Justices in that case. Two members of the Court, Barwick CJ and Gibbs J, were of opinion that the Commonwealth's power of appropriation was limited to purposes in respect of which the Parliament has legislative power. By contrast, McTiernan, Mason and Murphy JJ were of opinion that the purposes of the Commonwealth are not limited to those purposes for which the Commonwealth has power to make laws and that it is for Parliament to determine what are the purposes of the Commonwealth. Although Jacobs J treated the purposes of the Commonwealth as being limited to purposes identified from within the Constitution, those purposes included, in his Honour's view285, purposes implied from the existence of 'Australia as a nation externally and internally sovereign' including 'co-ordination of services' to meet the 'various interrelated needs' of a complex society. The seventh member of the Court, Stephen J, held that the plaintiffs, the State of Victoria and the Attorney-General for that State, lacked standing to bring the proceedings." 281 (1945) 71 CLR 237 at 266, 282. 282 (1945) 71 CLR 237 at 269. 283 (1945) 71 CLR 237 at 269. 284 (2009) 238 CLR 1 at 113 [321]. 285 (1975) 134 CLR 338 at 412-413. Hayne What is said in the AAP Case, at least what is said by Barwick CJ, McTiernan J, Jacobs J and Murphy J and perhaps by Gibbs J and Mason J, can only be understood once it is recognised that that case was decided on the same assumption: that s 81 (or an Appropriation Act supported by s 81) confers power to spend moneys appropriated. The whole Court decided286 in Pape that the power to spend appropriated moneys must be found either in provisions of the Constitution other than s 81 or s 83, or in statutes made under the Constitution. This conclusion stemmed immediately from the recognition of what the plurality in Pape described287 as "the nature of the process of parliamentary appropriation", "[t]he grant of an appropriation [being] not by its own force the exercise of an executive or legislative power to achieve an objective which requires expenditure"288. But in Pape, as in the decisions that had gone before, this Court recognised that the text and structure of the Constitution impose limits on the Commonwealth's power to spend. These limits reflect federal considerations of the kind expressed by Dixon J in Melbourne Corporation v The Commonwealth289. They reflect the distribution of powers between the Commonwealth and the States that is effected by the Constitution. The executive power of the Commonwealth as power to spend It is well settled that the Executive can spend (with an available appropriation) where power to do so is conferred by valid statute290 or by the Constitution itself291. Exercise of a power of that kind can be described as an exercise of the executive power of the Commonwealth. In the former case it falls within "the execution and maintenance … of the laws of the Commonwealth" and in the latter case within "the execution and maintenance of this Constitution", 286 (2009) 238 CLR 1 at 23 [8(5)], 36 [53], 55-56 [111]-[113] per French CJ, 72-75 [176], [178], [180], [183]-[184] per Gummow, Crennan and Bell JJ, 100-101 [283], 105 [296], 113 [320] per Hayne and Kiefel JJ, 210 [600], 213 [607] per Heydon J. 287 (2009) 238 CLR 1 at 73 [178]; see also at 72-73 [174]-[177]. 288 (2009) 238 CLR 1 at 72 [176]. 289 (1947) 74 CLR 31; [1947] HCA 26. 290 See, for example, Pape (2009) 238 CLR 1 at 55 [111] per French CJ. 291 See, for example, Pharmaceutical Benefits Case (1945) 71 CLR 237 at 251 per Latham CJ; AAP Case (1975) 134 CLR 338 at 353 per Barwick CJ; Brown v West (1990) 169 CLR 195 at 205; Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed (1910) at 526. Hayne to both of which the executive power of the Commonwealth expressly "extends" by s 61. But in these reasons, reference to "the executive power of the Commonwealth" is to the power conferred by the first limb of s 61 of the Constitution, not to power conferred on the Executive Government by statute or by other provisions of the Constitution292. It must now be taken as established by the decision in Pape that the executive power of the Commonwealth referred to in s 61 of the Constitution confers, in some circumstances, power to expend public moneys. However, acceptance of the majority holding in Pape does not entail acceptance of the position the Commonwealth has long maintained that, as Deakin put the matter293: "Executive power exists antecedently to, and independently of, legislation; and its scope must be at least equal to that of the legislative power – exercised or unexercised. … It is impossible to resist the conclusion that the Commonwealth has executive power, independently of Commonwealth legislation, with respect to every matter to which its legislative power extends." (emphasis added) In particular, acceptance of the majority holding in Pape does not entail acceptance of the proposition that, absent some national emergency or crisis, because certain expenditure could be authorised by statute, it can be undertaken by the Executive. As the plurality in Pape observed, that case could be and was "resolved without going beyond the notions of national emergency and the fiscal means of promptly responding to that situation"294. Similarly, French CJ observed that his conclusions left "in place questions about the scope of the executive power which cannot be answered in the compass of a single case"295. Whether or not the wider proposition articulated by Deakin and since maintained by the Commonwealth should be accepted, and whether or not such an approach to ascertaining the scope of the executive power is apposite, may be thought to fall for decision – at least on some of the Commonwealth parties' submissions – 292 See, for example, ss 3, 48, 66, 87. 293 Deakin, "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 294 (2009) 238 CLR 1 at 91 [241]. 295 (2009) 238 CLR 1 at 55 [113]. Hayne in this case. These reasons will show, however, that the case should be decided on a narrower footing. It may nonetheless be noted that, in Brown v West296, the Commonwealth argued that the provision of benefits having a pecuniary value could, at least in some circumstances, fall "within the executive power of the Commonwealth" and, as has been mentioned, that "all that is required [to permit expenditure] is an available appropriation"297 (emphasis added). That case suggested, but did not decide, that s 61 confers power on the Executive, in at least some circumstances, to expend public moneys that have been duly appropriated. The Court's statement that certain "money appropriated was not expendable at the Crown's discretion, as appropriated moneys usually are"298 (emphasis added), was not necessary to the decision that, "[w]hatever the scope of the executive power of the Commonwealth might otherwise be, it is susceptible of control by statute"299 and that the statute considered in that case prevented, in exercise of the executive power, any conferral of benefit beyond that for which the statute provided300. The decision of a majority of this Court in Pape establishes301 that, in circumstances of national emergency or crisis, the executive power of the Commonwealth supports a determination by the Executive Government that a fiscal stimulus is needed (and that this power, with s 51(xxxix), will support legislation effectuating that payment). This was identified as an example of "activities peculiarly adapted to the government of the country and which otherwise could not be carried on for the public benefit"302 or measures "peculiarly within the Commonwealth Government"303. Opinions may differ about whether or not a particular activity meets these descriptions304, but no party contended that this aspect of the the capacity and resources of 296 (1990) 169 CLR 195. 297 (1990) 169 CLR 195 at 197. 298 (1990) 169 CLR 195 at 201 per Mason CJ, Brennan, Deane, Dawson and 299 (1990) 169 CLR 195 at 202. 300 (1990) 169 CLR 195 at 205; see also at 211-212. 301 (2009) 238 CLR 1 at 63-64 [133], [136], 83 [213], 89 [232]. 302 (2009) 238 CLR 1 at 92 [242]. 303 (2009) 238 CLR 1 at 63 [133]. 304 cf (2009) 238 CLR 1 at 121-124 [345]-[357], 178-179 [512]-[514], 191 [545]. Hayne executive power supported the Commonwealth's payments or activities in issue in this case. Nor, given that Queensland has, itself, carried on a program very similar to that impugned in this litigation, could any party have so contended. Significantly for the present case, all members of the Court in Pape held that considerations of text and structure, akin to those alluded to or elucidated in earlier decisions, limit the executive power of the Commonwealth, at least insofar as it enables the Commonwealth to spend public moneys. The plurality observed that the executive power has "at least the limitations discussed in these reasons"305, including that its content must be ascertained "having regard to the spheres of responsibility vested in [the Commonwealth]"306 and "the position of the Executive Governments of the States"307. French CJ referred308 with approval to Mason J's statement309 that: "The scope of the executive power is to be ascertained … from the distribution of the legislative powers effected by the Constitution and the character and status of the Commonwealth as a national government." Similarly, the joint dissenting reasons observed that "structural the considerations require Commonwealth in matters of spending is not unbounded"310, and referred in that regard to "the whole of the constitutional structure" (in particular the existence by s 51(xxxix) of "legislative power with respect to matters incidental to the execution of [the] executive power")311, the "limited legislative powers" of the Commonwealth312 and the "supremacy of the Commonwealth's legislative the executive power of the conclusion that 305 (2009) 238 CLR 1 at 89 [234]; see also at 87 [228]. 306 (2009) 238 CLR 1 at 83 [214]. 307 (2009) 238 CLR 1 at 85 [220]. 308 (2009) 238 CLR 1 at 63 [132]. His Honour applied this statement at 63 [133]. 309 R v Duncan; Ex parte Australian Iron and Steel Pty Ltd (1983) 158 CLR 535 at 560; [1983] HCA 29, quoted with approval in R v Hughes (2000) 202 CLR 535 at 554-555 [38] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [2000] HCA 22. 310 (2009) 238 CLR 1 at 119 [336]. 311 (2009) 238 CLR 1 at 119 [337]. 312 (2009) 238 CLR 1 at 119 [338]. Hayne power"313. Heydon J emphasised the "explicit distribution" of powers effected by the Constitution and its importance for the scope of the executive power314. The position that emerges from Pape – that federal considerations limit the scope of the executive power – is supported by and entirely consistent with prior decisions. No less importantly, the textual and structural considerations that have caused this Court not to embrace the repeated submission by the Commonwealth that its power to spend money lawfully available for expenditure is unlimited are equally applicable whether that power to spend is found in s 81 of the Constitution (a view now discarded) or is part of the executive power of the Commonwealth referred to in s 61 of the Constitution, as Pape decided. The conclusion that, consistent with earlier decisions, Pape holds that federal considerations limit the scope of the executive power is reason enough to reject so much of the submissions of the Commonwealth parties as asserted that "[t]here is no authority restricting the scope of the Commonwealth's power to spend". It is, however, necessary to examine other aspects of the broad basis submission advanced by the Commonwealth parties. It is convenient to deal next with the Commonwealth parties' reliance on the notion of the Executive's "capacities". The Executive's capacities A deal of attention was given in argument to what "capacities" the Executive Government of the Commonwealth should be found to have. In particular, attention was directed to what capacity the Executive Government had to make the Darling Heights Funding Agreement. Much of the argument in favour of validity proceeded from the premise that the Executive Government has the same capacity to contract and spend money as a natural person has and that the live issue in the case was whether there was some relevant limit (described as a limit on "power" rather than "capacity") to the kinds of contract or kinds of expenditure that could be made. Care must be taken with the use in this context of the word "capacity". As Anson explained315, the term "[c]apacity of [p]arties" is used in the law of contract to refer to the presence or absence of "some disability for making a valid contract", there being "persons [who] are by law incapable, wholly or in part, of 313 (2009) 238 CLR 1 at 120 [339]. 314 (2009) 238 CLR 1 at 190 [541]; see also at 134 [397]. 315 Principles of the English Law of Contract and of Agency in Its Relation to Contract, 11th ed (1906) at 121. Hayne binding themselves by a promise, or of enforcing a promise made to them". No issue of capacity of that kind arises here. As a polity, the Commonwealth is not under any disability preventing it from making a contract or a disposition of property. But observing this to be so does not answer the question at issue. The term "capacity" may be used in discussion of the executive power of the Commonwealth in various ways. In his thesis, H V Evatt divided316 the prerogative powers of the Crown into three categories for analytical purposes. One was described as rights "in the nature of immunities and preferences" of the Crown and included what Evatt termed "permanent and continuous characters and capacities of the Monarch"317. The term "capacity" was used in a similar but broader sense in Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority318. There, Brennan CJ319 and Dawson, Toohey and Gaudron JJ320 used the term "the capacities of the Crown" to mean "its rights, powers, privileges and immunities". No question arises in this case of the distribution between the Commonwealth and the States of "prerogative" powers or of the ability of State legislative or executive action to affect Commonwealth executive action. Hence reference to the "capacities of the Crown" is unhelpful. But what is at issue in this case is a question of power. And it follows that in this case the word "capacity" is best used in the sense of "power". Its use in any other sense is a distraction. The particular question at issue is: what power was there to make the payments to SUQ? To the extent that the Commonwealth parties' submissions implicitly sought to assert that, because the Commonwealth has some contractual and dispositive "capacity", it had power to act as it did in this case (by entering into the Funding Agreement and making the payments to SUQ), they should be rejected. Such a submission conflated the question of contractual and dispositive capacity (in the sense of absence of disability) with 316 The Royal Prerogative, (1987) at 29-31. 317 The Royal Prerogative, (1987) at 31. These included the entitlement of the Crown to be paid in preference to other creditors, not to be mulct in costs and not to give discovery. It is not necessary to consider whether or to what extent these entitlements survive. 318 (1997) 190 CLR 410; [1997] HCA 36. 319 (1997) 190 CLR 410 at 424. 320 (1997) 190 CLR 410 at 438; see also at 454 per McHugh J ("The executive capacity of the Commonwealth can only mean its legal right or power to do or refrain from doing something"). Hayne the question of whether there was power to enter into the contract and to make the payments here at issue. It is not to be assumed, and was not demonstrated, that the Executive Government of the Commonwealth has all of the capacities – in the sense of powers – to contract and spend that a natural person has. There is no basis in law for attributing human attitudes, form, or personality either to the federal polity that was created by the Constitution or, as the Commonwealth parties sought to do, to one branch of the government of that polity – the Executive. The argument asserting that the Executive Government of the Commonwealth should be assumed to have the same capacities to spend and make contracts as a natural person was no more than a particular form of anthropomorphism writ large. It was an argument that sought to endow an artificial legal person with human characteristics. The dangers of doing that are self-evident. Of course, it is important to recognise that s 61 begins by providing that "[t]he executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen's representative". But, as was pointed out in Sue v Hill321, the personification of the Executive as "the Crown" (or, I would add, as "the Queen" or "the Governor-General as the Queen's representative") must not be permitted to disguise the several different senses in which the term "the Crown" is used or to deny that the Executive Government of the Commonwealth is the executive government of an artificial legal entity – a polity. In 1896, Pollock, in the course of discussing the subject of "Persons", wrote322: "In political discourse we so constantly personify nations that we almost forget the artificial character of our language: and yet the unrestrained use of metaphor in politics is quite capable of grave consequences." (emphasis added) So, too, in talking of the new federal polity established by the Constitution – "one indissoluble Federal Commonwealth under the Crown of the United Kingdom of Great Britain and Ireland, and under the Constitution hereby established" – or of the Executive Government of that polity, the unrestrained use of the metaphor of personification is "quite capable of grave consequences". For as Pollock observed323, "the State" is "[t]he greatest of artificial persons" and "it depends on the legal institutions and forms of every commonwealth whether and how far the State or its titular head is officially treated as an artificial person". 321 (1999) 199 CLR 462 at 497-503 [83]-[94]; [1999] HCA 30. 322 Pollock, A First Book of Jurisprudence for Students of the Common Law, (1896) at 323 A First Book of Jurisprudence for Students of the Common Law, (1896) at 113. Hayne That is, the extent to which the Commonwealth may make contracts and dispose of property does not depend on assumptions about its capacities, whether based in analogies or otherwise, but instead must be ascertained by interpreting the Constitution. As a polity, the Commonwealth makes contracts. But contrary to the submissions advanced on behalf of the Commonwealth parties, what has been said in the cases about whether a contract with a government is effective if, when the contract was made, there was no parliamentary appropriation of the money necessary for the government to perform its contracted obligations, does not establish that the capacities of the Commonwealth or of the Executive Government of the Commonwealth should be understood to be the same as those of a natural person. In particular, what was said by Dixon J in New South Wales v Bardolph324 goes no further than to make the point that it is "a function of the Executive, not of Parliament, to make contracts on behalf of the Crown". But as Dixon J also made plain325: "The Crown's advisers are answerable politically to Parliament for their acts in making contracts. Parliament is considered to retain the power of enforcing the responsibility of the Administration by means of its control over the expenditure of public moneys. But the principles of responsible government do not disable the Executive from acting without the prior approval of Parliament, nor from contracting for the expenditure of moneys conditionally upon appropriation by Parliament and doing so before funds to answer the expenditure have actually been made legally available." (emphasis added) Accordingly, Dixon J concluded326, "the prior provision of funds by Parliament is not a condition preliminary to the obligation of the contract" (emphasis added). Neither in Bardolph nor in the earlier decisions in The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd ("the Wooltops Case")327 and Kidman v The Commonwealth328 did the Court decide how far the capacity of the Executive to make a contract on behalf of the Commonwealth extends. 324 (1934) 52 CLR 455 at 509; [1934] HCA 74. 325 (1934) 52 CLR 455 at 509. 326 (1934) 52 CLR 455 at 510. 327 (1922) 31 CLR 421; [1922] HCA 62. 328 (1925) 37 CLR 233; [1925] HCA 55. See also, on application for special leave to appeal to the Privy Council, (1925) 32 ALR 1. Hayne In Bardolph, Dixon J, with whom Gavan Duffy CJ concurred329, said330: "No statutory power to make a contract in the ordinary course of administering a recognized part of the government of the State [of New South Wales] appears to me to be necessary in order that, if made by the appropriate servant of the Crown, it should become the contract of the Crown, and, subject to the provision of funds to answer it, binding upon the Crown." And the reasons of other members of the Court proceeded331 from the same starting point to a consideration of whether the contract in issue was, as Rich J put it332, "incidental to the ordinary and well- recognized functions of Government". Contrary to the submissions of the Commonwealth parties, the Court did not deal only with the question of the authority of the individuals in question to make a contract on behalf of the State. The reasons of the Court in Bardolph directed attention not only to the authority of those who had made the contract in issue but also to the power (or what the Commonwealth parties in this matter identified as "capacity") to enter into the contract. And for the purposes of that case it was sufficient to decide that the contract was one which was made "in the ordinary course of administering a recognized part of the government of the State"333 or was "incidental to the ordinary and well-recognized functions of Government"334. No broader proposition defining what kinds of contract the executive government (of a State) may make, and for what purposes they may be made, emerges from Bardolph. It is important to notice, however, that in Bardolph it was submitted335 that "[t]he power of the Executive to enter into a contract is absolute so far as it is not fettered by the express statute" (emphasis added). The concern of the Court to locate the making of the contract in issue in Bardolph within the ordinary course of the administration of a recognised part of the government points strongly to the conclusions that the proposition advanced in Bardolph was not accepted and that the very similar submission made by the Commonwealth parties in this case should not be accepted. 329 (1934) 52 CLR 455 at 493. 330 (1934) 52 CLR 455 at 508. 331 (1934) 52 CLR 455 at 496 per Rich J, 502-503 per Starke J, 517-518 per 332 (1934) 52 CLR 455 at 496. 333 (1934) 52 CLR 455 at 508 per Dixon J. 334 (1934) 52 CLR 455 at 496 per Rich J. 335 (1934) 52 CLR 455 at 493. Hayne Further, nowhere in the decisions of this Court in the Wooltops Case or in Kidman was it suggested that the power of the Executive to make a contract on behalf of the Commonwealth, and to discharge the monetary obligations assumed by the Commonwealth under that contract, is unlimited. Kidman turned on whether there was statutory authorisation for the contracts and payments in question. The conclusion having been reached336 that "there was no lack of legislative authority to the Commonwealth to make such contracts, provided the ships were for defence purposes" and that there was "the necessary parliamentary appropriation", no question of executive power to contract or spend arose. In the Wooltops Case, the Court was concerned to answer the question whether "it [was] within the legal power of the Commonwealth Executive Government apart from any Act of the Parliament or regulation thereunder to make or ratify" certain agreements337. All members of the Court (apart from Powers J, who did not deliver a judgment338) held339 that the Commonwealth's entry into the agreements was beyond power, but the reasons given for this conclusion differed widely and no single view of the ambit of executive power to make agreements commanded the assent of a majority of the Court. As the Commonwealth parties submitted, these cases do suggest that a polity may make at least some contracts without statutory authority. But what is presently important is that these cases, particularly the decisions in Bardolph and the Wooltops Case, recognise that neither a State's nor the Commonwealth's power to make contracts is unlimited. Clough v Leahy340 is sometimes treated as standing for the proposition advanced by the Commonwealth parties and by the fourth defendant that the Commonwealth has the same power (or "capacity") to contract as a natural person. But it does not support that proposition. 336 (1925) 37 CLR 233 at 241 per Isaacs J; see also at 239 per Knox CJ, 247-248 per Higgins J, 251 per Rich J. Starke J agreed at 252 that the appeal should be dismissed but gave no reasons. 337 (1922) 31 CLR 421 at 430. 338 (1922) 31 CLR 421 at 461. 339 (1922) 31 CLR 421 at 432 per Knox CJ and Gavan Duffy J, 441-443, 445, 447-448 per Isaacs J, 453-454 per Higgins J, 459-461 per Starke J. 340 (1904) 2 CLR 139; [1904] HCA 38. Hayne In Clough, Griffith CJ (with whom Barton and O'Connor JJ concurred341) was responding to a submission that a commission appointed under letters patent was "'unlawful' and 'illegal'"342. Griffith CJ recognised that a State, as a polity, acts through individuals and accepted that an officer of the State executive was not somehow prevented, when "acting for the Crown"343, from undertaking an action "that every man is free to do"344, being "any act that does not unlawfully interfere with the liberty or reputation of his neighbour or interfere with the course of justice"345. Griffith CJ's statement – that "[t]he liberty of another can only be interfered with according to law, but, subject to that limitation, every person is free to make any inquiry he chooses; and that which is lawful to an individual can surely not be denied to the Crown, when the advisers of the Crown think it desirable in the public interest to get information on any topic"346 (emphasis added) – is no more than the application of the two propositions that have been identified. So much is evident from the reference to "the advisers of the Crown" getting information. It is also evident from his Honour's earlier observation that "[t]he power of inquiry … is a power which every individual citizen possesses"347 (emphasis added), the later observation that "[t]he inquiry simply amounts to the asking of questions of persons willing to give information"348 (emphasis added) and his Honour's later reference to "any person, purporting to act under the authority of a Royal Commission … [who] was acting for the Crown"349 (emphasis added). Contrary to the submissions of the Commonwealth parties and the fourth defendant, Clough does not stand for a general proposition that a polity, or the Commonwealth in particular, has the same powers or capacities as a natural person. 341 (1904) 2 CLR 139 at 163. 342 (1904) 2 CLR 139 at 155; see also at 150. 343 (1904) 2 CLR 139 at 161. 344 (1904) 2 CLR 139 at 157. 345 (1904) 2 CLR 139 at 157. 346 (1904) 2 CLR 139 at 157. See also Lockwood v The Commonwealth (1954) 90 CLR 177 at 182 per Fullagar J; [1954] HCA 31. 347 (1904) 2 CLR 139 at 156. 348 (1904) 2 CLR 139 at 160. 349 (1904) 2 CLR 139 at 161. Hayne Metaphorical comparisons between artificial legal entities and natural persons, though colourful and sometimes provocative of further thought350, do not provide a sound foundation for legal analysis. An anthropomorphic view of the powers of a corporation incorporated according to statute may now be available but that is only by dint of specific statutory provision giving such a corporation "the legal capacity and powers of an individual both in and outside this jurisdiction"351. There is no warrant for adopting such an understanding of the capacities of the Executive Government of the Commonwealth, or the polity more generally, or of the capacity of the Executive in particular, or the polity more generally, to spend money or to make a contract. Not least is that understanding not available in respect of expenditure because an anthropomorphic view of the Executive's (or polity's) capacity to spend assumes that the Executive (or the polity) is spending its "own" money, just as a natural person may do. But that equation of the position of the Executive and a natural person ignores that the money being spent is public money. It thus ignores the carefully crafted checks (worked out in England over so many years and reflected in Australia in the Constitution, especially Ch IV) that effect parliamentary control over the raising and expenditure of public moneys. As will next be demonstrated, parliamentary control over raising and expenditure of public moneys denies the notion that the Consolidated Revenue Fund may be spent as the Executive chooses. And once it is accepted, as it must be, that the Constitution does provide for parliamentary control over the raising and expenditure of public moneys, the anthropomorphic view of the Executive's capacity to spend that lay at the heart of much, if not all, of the argument advanced on behalf of the Commonwealth parties is necessarily falsified. The Commonwealth, as a polity, can make contracts and can outlay public moneys. It is the Executive's function, not the Parliament's, to make contracts and expend public moneys. But neither the Executive nor the polity itself can be assumed to have the same powers (or capacities) to contract and spend as a natural person. The question to be answered in this case is whether there was power to make the particular expenditures for which the Darling Heights Funding Agreement provided and to undertake the obligation to make those expenditures. It is necessary to make good the second fundamental proposition identified at the outset of these reasons: that the Constitution provides for parliamentary control over the raising and expenditure of public moneys. 350 cf Clough v Leahy (1904) 2 CLR 139 at 156-157. 351 Corporations Act 2001 (Cth), s 124(1). Hayne Parliamentary control It is Pt V of Ch I of the Constitution (particularly ss 53, 54, 55 and 56) and Ch IV (particularly ss 81, 83, 94, 96 and 97) that provide for parliamentary control over the raising and expenditure of public moneys. Section 97 (in Ch IV) with s 51(xxxvi) provides for parliamentary supervision of "the receipt of revenue and the expenditure of money on account of the Commonwealth" (emphasis added). The prescription of the powers of the Parliament in Pt V of Ch I, when read with the relevant provisions of Ch IV, "reflect[s] the cardinal principle of parliamentary control which underpinned the British financial system at the time of Federation and which had earlier been transported to the Australian colonies"352. The parliamentary control for which provision is made is control over both "appropriating revenue or moneys"353 and "imposing taxation"354 and supervision of what is actually received and outlaid ("the receipt of revenue and the expenditure of money on account of the Commonwealth"355). And it is control that is necessarily asserted through the exercise of the legislative power of the Commonwealth by the Parliament356, each House of which is "directly chosen by the people"357. The way in which the raising and expenditure of public moneys is controlled by the Parliament is further regulated by the provisions that govern the relationship between the two Houses of the Parliament in respect of laws or proposed laws appropriating revenue or moneys and laws or proposed laws imposing taxation. In particular, s 53 requires that laws of these kinds "shall not originate in the Senate"; s 54 requires, in the case of a proposed law appropriating revenue or moneys "for the ordinary annual services of the Government", that the proposed law "deal only with such appropriation"; and s 55 requires, in the case of laws imposing taxation, that such laws "deal only with the imposition of taxation"358. Section 56 requires that money votes ("[a] 352 Pape (2009) 238 CLR 1 at 105 [294]. 353 Sections 53, 54 and 56 all refer to a proposed law or proposed laws "appropriating" or "which appropriates" or "for the appropriation of" revenue or moneys. 354 Sections 53 and 55 deal, respectively, with proposed laws and laws "imposing taxation". 357 ss 7 and 24. 358 As to which see Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict) (2004) 220 CLR 388 at 407-420 [38]-[74]; [2004] HCA 53. Hayne vote, resolution, or proposed law for the appropriation of revenue or moneys") "not be passed unless the purpose of the appropriation has in the same session been recommended by message of the Governor-General to the House in which the proposal originated". For present purposes, it is not necessary to examine the detail of these provisions; it is enough to notice that the raising and expenditure of public moneys is subject to parliamentary control. The Parliament's control over the appropriation of public moneys is further governed by the provisions of Ch IV, especially ss 81 and 83. As was said359 in the joint dissenting reasons in Pape: "In Britain, '[t]he most ancient, as well as the most valued, prerogative of the House of Commons is the right of supreme control over taxation, to which the right to control issues is a natural corollary'360. So too, under the Constitution, the power of appropriation given by ss 81 and 83 is a logical consequence of the right of levying supplies." (emphasis added) But, as was also pointed out361 in Pape, the power of appropriation by the Parliament is a process which permits application of the Consolidated Revenue Fund for identified purposes; it does not require the application of those funds for those purposes362. Since Federation, the purposes for which the Consolidated Revenue Fund is appropriated have usually been articulated at a very high level of abstraction. And, as the output accounting practices considered in Combet363 show, there has not been any recent shift to more particular specification of the purposes for which moneys are appropriated. On the contrary, more recent parliamentary practice has been to adopt even more general and abstract descriptions of the purposes for which the Consolidated Revenue Fund is appropriated. As the plurality in Pape noted364, one consequence of the manner of drafting appropriations at a high level of abstraction is that appropriations do not provide 359 (2009) 238 CLR 1 at 105 [294]. 360 Durell, The Principles and Practice of the System of Control over Parliamentary Grants, (1917) at 3. 361 (2009) 238 CLR 1 at 105 [296]. 362 See also Maitland, The Constitutional History of England, (1908) at 445-446. 363 (2005) 224 CLR 494 at 523 [6] per Gleeson CJ, 574-575 [154] per Gummow, Hayne, Callinan and Heydon JJ. 364 (2009) 238 CLR 1 at 78 [197]. Hayne any sufficient textual basis for determining the constitutional facts that would be relevant to the validity of any particular expenditure made out of the moneys appropriated. But it also follows from the conclusion that the power to spend lies elsewhere than in ss 81 and 83 that whether any particular expenditure was validly made does not depend upon attempting to give content to the phrase, in s 81, "appropriated for the purposes of the Commonwealth" and then seeking to connect the content given to that phrase with either the (often generally expressed) words of appropriation or some more particular expenditure which is found to be authorised by those words. It is to be observed, however, that since Federation, parliamentary control over expenditure has not stopped at that point in the process of appropriation at which the legislature authorises drawing from the Consolidated Revenue Fund. As Isaacs J observed365 in the Wooltops Case, as well as "power over appropriation", "there arises the necessity for control over the actual expenditure of the sums appropriated". There has always been coupled with the authority to draw from the Consolidated Revenue Fund further legislative provision made in the appropriation legislation, which, if it has not conferred authority to make the relevant expenditures, at least has provided for, and in more recent times in Australia sometimes confined, expenditures for the designated purposes. the application of appropriated sums In order to demonstrate the generality of that proposition reference should be made first to standing appropriations of the kind considered in Pape and then to particular appropriations including those that were made in relation to the payments in issue in this case. Some examples of the exercise of parliamentary control It will be recalled that the legislation under consideration in Pape (the Tax Bonus for Working Australians Act (No 2) 2009 (Cth) – "the Tax Bonus Act") obliged366 the Commissioner of Taxation to make the relevant payments. The Tax Bonus Act contained no express provision appropriating the Consolidated Revenue Fund for the purposes of making the payment but, by giving the general administration of the Act to the Commissioner, the Tax Bonus Act, by a chain of definitions whose detail need not be noticed, engaged the standing appropriation made by s 16(1) of the Taxation Administration Act 1953 (Cth). That standing 365 (1922) 31 CLR 421 at 449. 366 Section 7(1) of the Act provided that if the Commissioner of Taxation was satisfied that a person was entitled to the tax bonus for the 2007-08 income year "the Commissioner must pay the person his or her tax bonus as soon as practicable after becoming so satisfied". Hayne appropriation provided relevantly that, where the Commissioner was required or permitted to pay an amount to a person by or under a provision of an Act of which the Commissioner had the general administration, "the amount is payable out of the Consolidated Revenue Fund, which is appropriated accordingly". Many other examples of similar provisions can be found in the statute book367: provisions permitting or requiring payments to persons which are supported by a standing appropriation of the Consolidated Revenue Fund. The first of the Appropriation Acts which provided for the National the School Chaplaincy Program ("the Program" or "the NSCP") was Appropriation Act (No 3) 2006-2007 (Cth) ("the 2007 No 3 Act"). The total of the sums dealt with by the 2007 No 3 Act (specified in Sched 1 to that Act) was stated in s 6. The services for which money was appropriated were identified by tables set out in Sched 1, organised by ministerial portfolio and divided between "Departmental Outputs" and "Administered Expenses" – expressions which engaged the defined terms "departmental item"368 and "administered item"369. For departments of State the appropriations were further divided between "outcomes", a term given content by Portfolio Budget Statements and Portfolio Additional Estimates Statements, which s 4(1) of the Act "declared to be relevant documents for the purposes of section 15AB of the Acts Interpretation Act 1901". The item in Sched 1 to the 2007 No 3 Act relevant to the NSCP was Outcome 1 for the Department of Education, Science and Training – an outcome described in Sched 1 as "Individuals achieve high quality foundation skills and learning outcomes from schools and other providers". One of the departmental items identified in the relevant Portfolio Additional Estimates Statements was an item of $4.111 million for the NSCP. This was the first appropriation made for the Program. As a departmental appropriation forming part of the total of departmental outputs for Outcome 1 of the Department, the amount appropriated 367 See, for example, Audit Act 1901 (Cth), s 4, Coronation Celebration Act 1902 (Cth), s 2, Loans Securities Act 1919 (Cth), s 4 and, more recently, Northern Territory National Emergency Response Act 2007 (Cth), s 63(2), Dental Benefits Act 2008 (Cth), s 65 and Federal Financial Relations Act 2009 (Cth), s 22. 368 Defined in s 3 as "the total amount set out in Schedule 1 in relation to an entity under the heading 'Departmental Outputs'". "[E]ntity" was defined in the same section as any of "an Agency … a Commonwealth authority … [or] a Commonwealth company". "Agency" was defined as meaning "an Agency within the meaning of the Financial Management and Accountability Act 1997" or this Court. 369 Defined in s 3 as "an amount set out in Schedule 1 opposite an outcome of an entity under the heading 'Administered Expenses'". Hayne for the NSCP was part of the total amount set out in Sched 1 to the 2007 No 3 Act that constituted a "departmental item". Section 7(1) of the 2007 No 3 Act permitted the Finance Minister, for "a departmental item for an entity", to "issue out of the Consolidated Revenue Fund amounts that do not exceed, in total, the amount specified in the item". And s 15 provided that "[t]he Consolidated Revenue Fund is appropriated as necessary for the purposes of this Act". Section 7(2) of the 2007 No 3 Act dealt with "expenditure", a term defined in s 3 as "payments for expenses, acquiring assets, making loans or paying liabilities". Section 7(2) provided that: "An amount issued out of the Consolidated Revenue Fund for a departmental item for an entity may only be applied for the departmental expenditure of the entity. Note: The acquisition of new departmental assets will usually be funded from an other departmental item (in another Appropriation Act)." Section 8 of the same Act dealt with administered items in terms generally similar to the provisions of s 7. Section 8(2) provided that: "An amount issued out of the Consolidated Revenue Fund for an administered item for an outcome of an entity may only be applied for expenditure for the purpose of carrying out activities for the purpose of contributing to achieving that outcome. Note: The acquisition of new administered assets will usually be funded from an administered assets and liabilities item (in another Appropriation Act)." Several points may be made about the provisions of ss 7 and 8 of the 2007 No 3 Act. First, in their terms, ss 7 and 8 of the 2007 No 3 Act confined the purposes for which expenditures (that is to say, "payments for expenses, acquiring assets, making loans or paying liabilities"370) could be made. In the case of departmental items, amounts issued could be applied only "for the departmental expenditure of the entity"; in the case of administered items, the restriction was identified by reference to the applicable outcome of the relevant entity. Second, by confining the purposes for which expenditures could be made, the provisions could also be understood as authorising those expenditures. And Hayne in this respect, ss 7 and 8 of the 2007 No 3 Act could be understood as providing to the same effect as earlier forms of Commonwealth Appropriation and Supply Acts371 (and even the very first Act passed by the Commonwealth Parliament – the Consolidated Revenue Act 1901, s 1) when, with some immaterial verbal variations over the years, they provided, in effect, that the Treasurer was "authorized and empowered to issue and apply the moneys authorized to be issued and applied" (emphasis added). And both the provisions of ss 7 and 8 of the 2007 No 3 Act and earlier forms of Appropriation and Supply Acts authorising the Treasurer to "apply" the moneys authorised to be issued and applied could well be understood as proceeding from that understanding of ss 81 and 83 of the Constitution which was rejected in Pape. But whether that is so need not be examined. It is enough to notice that there were provisions of the 2007 No 3 Act which could be understood as providing authority to make expenditures for the NSCP. Third, while the Appropriation Act (No 1) 2007-2008 (Cth) took the same form as the 2007 No 3 Act, later Appropriation Acts which appropriated the Consolidated Revenue Fund for purposes that included the NSCP made provision for application of moneys issued out of the Consolidated Revenue Fund for departmental items and administered items that differed in form from those made by the 2007 No 3 Act. On their face, those later Acts did not confine the purposes for which expenditures could be made in the same way as ss 7 and 8 of the 2007 No 3 Act had. So, for example, the Appropriation Act (No 1) 2008-2009 (Cth) provided in ss 7 and 8: Departmental items The amount specified in a departmental item for an Agency may be applied for the departmental expenditure of the Agency. Note: The Finance Minister manages the expenditure of public money through the issue of drawing rights under the Financial Management and Accountability Act 1997. Administered items The amount specified in an administered item for an outcome for an Agency may be applied for expenditure for achieving that outcome. the purpose of contributing 371 See, for example, Supply Act (No 1) 1950-51 (Cth), s 3. Hayne Note: The Finance Minister manages the expenditure of public money through the issue of drawing rights under the Financial Management and Accountability Act If the Portfolio Budget Statements indicate that activities of a particular kind were intended to be treated as activities in respect of a particular outcome, then expenditure for the purpose of carrying out those activities is taken to be expenditure for the purpose of contributing to achieving the outcome." It will be observed that neither s 7 nor s 8 of this later Appropriation Act spoke of application only for identified expenditures. Nonetheless, these later forms of provision dealing with application of amounts specified in either a departmental item or an administered item were still cast in terms that authorised "expenditure": "payments for expenses, acquiring assets, making loans or paying liabilities". And this legislative conferral of authority for the making of expenditures, like the earlier forms of Appropriation and Supply Acts authorising the Treasurer to issue and apply moneys, was consistent with the proposition that it is Parliament, not the Executive, which controls expenditure of public moneys, not just by "power over appropriation"372 but also by "control over the actual expenditure of the sums appropriated"373. Bounds to the power to spend? Does the Executive's power to spend extend to any expenditure that the Parliament could authorise (the narrow basis submission of the Commonwealth parties)? Is it a power that is unbounded (the broad basis submission)? Is neither proposition correct? It is convenient to approach these questions from a proposition about the parliamentary control of expenditure which can be identified as running beneath the submissions made by the Commonwealth parties about what (if any) are the bounds to the Executive's power to spend. The submissions of the Commonwealth parties asserted that parliamentary control over expenditure can cease at the point where the Parliament has identified in an Appropriation Act (with such particularity as the Parliament has chosen) the purposes for which expenditures can be made. How the Executive 372 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd ("the Wooltops Case") (1922) 31 CLR 421 at 449 per Isaacs J. 373 Wooltops Case (1922) 31 CLR 421 at 449 per Isaacs J. Hayne uses the moneys thus appropriated was treated as a matter for the Executive unless or until the the Parliament has provided otherwise. Commonwealth parties submitted that how and on what terms money lawfully drawn from the Consolidated Revenue Fund may be applied in making what the relevant Appropriation Acts referred to as "payments for expenses, acquiring assets, making loans or paying liabilities" is to be determined at the discretion of the Executive unless and until the Parliament otherwise provides. Absent legislative provision to the contrary, what expenses may be paid, what assets acquired, what loans made or what liabilities paid would all be for the Executive to decide. That The proposition that parliamentary control over expenditure can cease at the point of appropriation of the Consolidated Revenue Fund may or may not appear, on its face, to be large or dubious. For present purposes, however, attention is usefully directed to the qualification to the proposition – unless and until the Parliament otherwise provides – and what legislative power the Parliament could exercise to "otherwise provide" and regulate the expenditures that may be made of money lawfully drawn from the Consolidated Revenue Fund. Unless the qualification is soundly based, and the Parliament could otherwise provide, the submission of the Commonwealth parties would entail that appropriation by law is the only control the Parliament has over expenditure of at least some public moneys. this to be so echoes the narrow basis submission of Plainly the Parliament could otherwise provide in any case in which a law controlling expenditure of money drawn from the Consolidated Revenue Fund would be a law with respect to an enumerated head of legislative power. Observing the Commonwealth parties about the ambit of the executive power to spend. But what of the case where no head of legislative power, other than the incidental power (s 51(xxxix)), could be engaged? Would s 51(xxxix) be a sufficient basis for the Parliament to control the expenditure of money lawfully drawn from the Consolidated Revenue Fund for purposes and in circumstances which do not engage any other head of legislative power? Would such a law be a law with respect to a matter "incidental to the execution of any power vested by this Constitution … in the Government of the Commonwealth"? The answers to these questions depend upon how the relevant "power vested by this Constitution … in the Government of the Commonwealth" is identified. The broad basis submission of the Commonwealth parties depended upon the relevant executive power being not only sufficiently but completely identified as power to spend money lawfully appropriated. In cases of the kind dealt with in Pape – where the expenditures in question were directed to meeting a national emergency – and other cases of the kind commonly grouped under the notion of "nationhood", the "power vested by this Constitution … in the Government of the Commonwealth" is not identified Hayne only as a power to spend money; it is a different species of executive power. So, as has been mentioned, the decision in Pape depended upon the conclusion that the determination by the Executive of the need for an immediate fiscal stimulus enlivened the power under s 51(xxxix) to enact a law incidental to the execution of a species of executive power identified as the determination of the existence of a national crisis or emergency. But it was not suggested that the payments in issue in this case could be supported on this basis and it is, therefore, not necessary to explore here what content could be given to the notion of a "nationhood" power. Attention must focus upon cases other than those said to engage a "nationhood" power. If the "power vested by this Constitution … in the Government of the Commonwealth" includes a power to spend, as the Executive chooses, any lawfully appropriated, regardless of the purposes for which or money circumstances in which the expenditure is to be applied, several consequences would follow which at least suggest that the proposition is flawed. First, this understanding of the operation of s 51(xxxix) with s 61 in relation to Commonwealth expenditure would work a very great expansion in what hitherto has been understood to be the ambit of Commonwealth legislative power. It must be accepted that the Engineers' Case374 teaches that this is an observation that could conclude debate only if some notion of reserved powers were revived375. But it is an observation that suggests the need to pause before concluding that the premise which underpins it is sound. Second, and more tellingly, the understanding of the operation of s 51(xxxix) in relation to Commonwealth expenditure that is under consideration would not only give s 96 of the Constitution a place in the constitutional framework very different from the place it has hitherto been understood to occupy but also render it otiose. Section 96 provides: "During a period of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit." the establishment of ten years after 374 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129; [1920] HCA 54. 375 See, for example, New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 119-120 [194]; [2006] HCA 52. Hayne In The State of Victoria v The Commonwealth ("the Second Uniform Tax Case")376, Dixon CJ said of s 96 that: "It confers a bare power of appropriating money to a purpose and of imposing conditions." On the basis377 that the scope and purpose of the power given by s 96 is "to be ascertained on the footing that it was not transitional but stood with the permanent provisions of the Constitution", Dixon CJ said378 that "it is apparent that the power to grant financial assistance to any State upon such terms and conditions as the Parliament thinks fit is susceptible of a very wide construction in which few if any restrictions can be implied". As Dixon CJ recorded379, "the course of judicial decision" had put out of consideration other, more limited constructions of s 96. In particular, the course of decision precluded adopting "a not improbable supposition that the framers" conceived s 96: "as (1) a transitional power, (2) confined to supplementing the resources of the Treasury of a State by particular subventions when some special or particular need or occasion arose, and (3) imposing terms or conditions relevant to the situation which called for special relief of assistance from the Commonwealth"380. "In any case it must be borne in mind that the power conferred by s 96 is confined to granting money and moreover to granting money to governments. It is not a power to make laws with respect to a general subject matter, which for reasons such as I gave in Melbourne Corporation v The Commonwealth382, may be taken to fall short of authorising a special attempt to control the exercise of the constitutional powers of the States where there is a connexion with some part of the subject matter of the federal power. The very matter with which the 376 (1957) 99 CLR 575 at 604; [1957] HCA 54. 377 (1957) 99 CLR 575 at 605. 378 (1957) 99 CLR 575 at 605. 379 (1957) 99 CLR 575 at 609. 380 (1957) 99 CLR 575 at 609. 381 (1957) 99 CLR 575 at 609-610. 382 (1947) 74 CLR 31. Hayne interfere unconstitutionally with power conferred by s 96 is concerned relates to State finance. Further there is nothing which would enable the making of a coercive law. By coercive law is meant one that demands obedience. As is illustrated by Melbourne Corporation v The Commonwealth383, the duty may be imposed, not on the State or its servants, but on others and yet its intended operation may the governmental functions of the State in such a way as to take the law outside federal power. But nothing of this sort could be done by a law which in other respects might amount to an exercise of the power conferred by s 96. For the essence of an exercise of that power must be a grant of money or its equivalent and beyond that the legislature can go no further than attaching conditions to the grant. Once it is certain that a law which is either valid under s 96 or not at all does contain a grant of financial assistance to the States, the further inquiry into its validity could not go beyond the admissibility of the terms and conditions that the law may have sought to impose. The grant of money may supply the inducement to comply with the term or condition. But beyond that no law passed under s 96 can go." (emphasis added) Two points of immediate relevance emerge from this understanding of s 96. First, it is an understanding that is not consistent with reading s 51(xxxix) as supporting any and every law that provides for or otherwise controls the expenditure of money lawfully appropriated from the Consolidated Revenue Fund regardless of the purposes for which or circumstances in which the expenditure is to be made. It is an understanding of s 96 that is not consistent with the view of the intersection between s 51(xxxix) and the executive power to spend which underpinned the submissions of the Commonwealth parties because it would leave s 96 no work to do at all: not even to provide (whether only in the first 10 years of Federation or more permanently) for supplementation of State resources "when some special or particular need or occasion arose". All the work done by s 96 could be done by laws made under s 51(xxxix). Section 96 would be superfluous. Yet as Mason J observed of s 96 in the AAP Case384: "its presence confirms what is otherwise deducible from the Constitution, that is, that the executive power is not unlimited and that there is a very large area of activity which lies outside the executive power of the Commonwealth but which may become the subject of conditions attached to grants under s 96". And although Mason J made these observations in a context where it was assumed that the power to spend is found in s 81, it is nonetheless apposite to 383 (1947) 74 CLR 31. 384 (1975) 134 CLR 338 at 398. Hayne recognise that Barwick CJ385 and Gibbs J386 in the AAP Case, and Starke J387 in Attorney-General (Vict) v The Commonwealth ("the Pharmaceutical Benefits Case"), also saw s 96 as limiting the scope of that power. reference Second, whereas nothing in s 96 would enable the making of a coercive law (one that demands obedience), a law made under s 51(xxxix) as incidental to a power to spend money lawfully appropriated could demand obedience from the recipient. The "consensual aspect" of grants to the States under s 96 – the requirement that "the State must accept it with its conditions"388 – would be obliterated. And because a law made under s 51(xxxix) could demand obedience, the federal considerations mentioned by Dixon CJ in the Second Uniform Tax Case, by to Melbourne Corporation v The Commonwealth, as not presented by an exercise of the power conferred by s 96 would arise. That is, if, as the Commonwealth parties' submissions in this case entailed, s 51(xxxix) could be engaged to make a law regulating the application of any money lawfully appropriated, regardless of the purposes for which or circumstances in which it is to be applied, the basic considerations of federal structure which yielded the decision in Melbourne Corporation would fall squarely for consideration. And those considerations of federal structure point directly against reading the relevant "power vested by this Constitution … in the Government of the Commonwealth", with which s 51(xxxix) intersects, as sufficiently or completely described as the Executive's power to spend money that has been lawfully appropriated. How is the limit on the Executive's power to spend to be described? Opinion has divided389 on the importance that should be attached to the surplus revenue provision made by s 94 of the Constitution in deciding the ambit of the Commonwealth's power to spend. As the plurality observed in Pape390: "The governments of the States have the interest given by s 94 of the Constitution in the distribution of all surplus revenue of the 385 (1975) 134 CLR 338 at 357. 386 (1975) 134 CLR 338 at 374. 387 (1945) 71 CLR 237 at 266. 388 AAP Case (1975) 134 CLR 338 at 357. 389 AAP Case (1975) 134 CLR 338 at 356-357 per Barwick CJ, 374 per Gibbs J; cf at 390 (2009) 238 CLR 1 at 91 [240]. Hayne Commonwealth, but … the Commonwealth has no obligation to tailor its expenditure to provide a surplus391." For that reason alone it may be that s 94 is of only limited significance in deciding what is the scope of the executive power to spend. But even if s 94 gives no real guidance to how to express the limitation on the power to spend, s 94 does not point away from the conclusion that the power to spend is limited. As has already been emphasised, all decisions of this Court to date have, rightly, acknowledged that some limiting notion additional to the requirement of lawful appropriation must be introduced to the description of the executive power in question. That limiting notion has been seen as required, first and foremost, by the fact that the Constitution divides and distributes powers between the Commonwealth and the States. That is, recognition that the Parliament of the Commonwealth is a Parliament of limited legislative power392 entails that the Executive's power to spend is limited. An immediate textual foundation for limiting the power to spend has not infrequently been found in s 96. And the conclusion that the Commonwealth's executive power to expend moneys that have been appropriated is not unlimited is strengthened by recognising the intersection between the executive power and s 51(xxxix). The limit on the power to spend must be consistent with the general proposition that it is for the Parliament and not the Executive to control expenditure. And the Parliament can control expenditure only by legislation. Once it is recognised, as it was in Pape, that "appropriation made by law"393 is "not by its own force the exercise of an executive or legislative power to achieve an objective which requires expenditure"394, it follows that the Parliament's control over expenditure can be exercised by not only the mechanisms of appropriation but also more specific legislation. It follows that the relevant "power vested by this Constitution … in the Government of the Commonwealth" in relation to the spending of money, which is the power with which 51(xxxix) intersects, must be understood as limited by reference to the extent of the legislative power of the Parliament. 391 Surplus Revenue Case (1908) 7 CLR 179. 392 Pharmaceutical Benefits Case (1945) 71 CLR 237 at 271 per Dixon J. 394 (2009) 238 CLR 1 at 72 [176]. Hayne It follows that the broad basis submission made by the Commonwealth parties – that the Executive's power to spend money lawfully appropriated is unlimited – should be rejected. The narrow basis submission Is it enough, as the Commonwealth parties submitted, to show that the disputed payments could have been authorised by a valid law made by the Parliament? Posing the question in this way reflects what Barwick CJ said395 in the AAP Case (albeit in order to determine whether the Australian Assistance Plan fell within the "purposes of the Commonwealth" as those words are used in s 81): "In the long run, whether the attempt is made to refer the appropriation and expenditure to legislative or to executive power, it will be the capacity of the Parliament to make a law to govern the activities for which the money is to be spent, which will determine whether or not the appropriation is valid. With exceptions that are not relevant to this matter and which need not be stated, the executive may only do that which has been or could be the subject of valid legislation. Consequently, to describe a Commonwealth purpose as a purpose for or in relation to which the Parliament may make a valid law, is both sufficient and accurate. … An Act of the Parliament which sought to authorize the carrying out of the Plan, including its financial provisions, would, in my opinion, be beyond the power of the Parliament." (emphasis added) Approaching the matter in this way may be no more than to ask, as French CJ did in Pape396, whether it can be said that the exercise of the power in question "does not reach beyond the area of responsibilities allocated to the Commonwealth by the Constitution, responsibilities which are ascertainable from the distribution of powers, more particularly the distribution of legislative powers, effected by the Constitution itself and the character and status of the 395 (1975) 134 CLR 338 at 362-363. 396 (2009) 238 CLR 1 at 63 [132]-[133]. As has been mentioned, his Honour did so by reference to Mason J's later, but substantively identical, statement of principle in R v Duncan; Ex parte Australian Iron and Steel Pty Ltd (1983) 158 CLR 535 at Hayne Commonwealth as a national government"397. The answer to that question will be assisted, as the plurality in Pape suggested398, by the observation399 that: "the existence of Commonwealth executive power in areas beyond the express grants of legislative power will ordinarily be clearest where Commonwealth executive or real competition with State executive or legislative competence". legislative action involves no That is, as was said400 by the plurality in Pape: "the determination of whether an enterprise or activity lies within the executive power of the Commonwealth: '… invites consideration of the sufficiency of the powers of the States to engage effectively in the enterprise or activity in question and of the need for national action (whether unilateral or in co-operation with the States) to secure the contemplated benefit'." In this case, as the plaintiff submitted, these considerations point directly against the Commonwealth's executive power extending to the expenditure (or the making of the agreement) in question. The provision of funding to an organisation to provide chaplains to schools involves direct competition with State executive and legislative action and, as the chaplaincy program run by Queensland demonstrates, the powers of the States are more than adequate to provide chaplains in schools. But while these observations may point towards a finding that Commonwealth power to engage in the activities does not exist, they do not answer the question of whether the Executive's actions were beyond power under the Constitution. Asking "whether the disputed payments could have been authorised by a valid law" proceeds from the premise that the payments were not authorised by legislation and then presents two distinct issues. First, could the disputed payments (and making the Darling Heights Funding Agreement) have been authorised by a valid law? Second, if they could, is the fact that they were not in fact so authorised relevant? 397 AAP Case (1975) 134 CLR 338 at 396 per Mason J. 398 (2009) 238 CLR 1 at 90-91 [239]. 399 Davis v The Commonwealth (1988) 166 CLR 79 at 93-94 per Mason CJ, Deane and 400 (2009) 238 CLR 1 at 91 [239], quoting Davis v The Commonwealth (1988) 166 CLR 79 at 111 per Brennan J. Hayne As has already been noted, the premise – that the payments were not authorised by legislation – was assumed by the parties and interveners. No party or intervener examined whether the provision in successive Appropriation Acts which authorised the application of moneys appropriated was a relevant statutory authorisation. As previously noted, in submissions made by leave after the close of oral argument, the Commonwealth parties submitted that "if legislative authority to enter into the Darling Heights Funding Agreement was required, that authority was provided by s 44 of the [Financial Management and Accountability Act]". Given that, by their defence, the Commonwealth parties admitted that "the NSCP is not authorised by special legislation" and, more importantly, did not assert that "the Commonwealth had and has power to enter into the agreements and make the payments referred to" other than in pursuance of the executive power of the Commonwealth, the submission belatedly made about legislative authority to make the Funding Agreement was probably not open. But whether or not that is so, s 44(1) could not and does not support the making of the Darling Heights Funding Agreement if, as these reasons conclude, there was no power for the Commonwealth to perform the obligations it undertook under that agreement. On no view could it be said that the making of a contract which the Commonwealth not only did not then have, but also could not thereafter have, power to perform promoted "proper use of … Commonwealth resources". Section 44 of the Financial Management and Accountability Act did not supply power the Commonwealth parties did not submit that the requirements of s 44(1) – that a Chief Executive "manage the affairs" of an agency "in a way that promotes proper use of the Commonwealth resources for which the Chief Executive is responsible" – supported the making of any of the disputed payments. the Darling Heights Funding Agreement. to make And therefore appropriate the Commonwealth parties – that the disputed payments could have been authorised by a valid law made by the Parliament – without further consideration of the validity of the premise that lies behind the submissions. the submissions of to examine the precise content of The submissions directed attention to a hypothesis: that the disputed payments could have been authorised by law. Little attention was given in argument the Commonwealth parties submitting that account need not, indeed should not, be taken of the terms and conditions set out in the particular funding agreement in deciding whether a valid law authorising the payments could have been enacted. But if the test to be applied is whether the Parliament had power to enact a law providing for the disputed payments it is necessary to identify the content of that hypothetical law with precision. the hypothesised law beyond Hayne In identifying the content of the hypothetical law, there is no warrant for discarding as irrelevant consideration of the terms and conditions which the Commonwealth has chosen to require as the terms and conditions on which the payments will be made available. Discarding reference to those matters could be justified only on the footing that the powers of the Executive to contract are not limited in any relevant way or that the Executive may spend money lawfully available to it in whatever way it sees fit. For the reasons that have been given, neither of those propositions should be accepted and it follows that, in considering whether the Parliament could have made a law providing for the payments in question, account must be taken of the terms and conditions on which the disputed payments were made. Although the focus in this matter necessarily falls upon payments made under the Darling Heights Funding Agreement, it is necessary to recognise and take account of the fact that the disputed payments were made as part of a more general program: the NSCP. The Darling Heights Funding Agreement made repeated reference to the NSCP. What were described as the "National School Chaplaincy Programme Guidelines" ("the Guidelines") formed part of the Funding Agreement, which provided that the Guidelines "must be adhered to by all parties involved in school chaplaincy projects". No less importantly, the Guidelines set out what can properly be seen to be the defining elements of the NSCP. Section 2.1 of the Guidelines described the NSCP as "a calendar year Programme with total funding of up to $30 million available per annum for three years, commencing in the 2007 school year". Section 2.3 dealt with "Funding arrangements". It provided that: "When the school principal submits an application, he/she will be asked to nominate the organisation that will enter into a funding agreement to receive funding under the Programme. Under this Programme, the Australian Government will not make payments to schools without a funding agreement. The following organisations are eligible to enter into a funding agreement under this Programme. School Registered Entity: A Government School Community Organisation for a government school that has been approved by the Minister to receive funding under the Investing In Our Schools Programme. The legal entity for any Independent and Catholic school. Supported by state and territory or systemic arrangements: Hayne State and territory government education authorities which act on behalf of government schools. The legal entity for the systems in the non-government sector which support and act on behalf of non-government schools. Project sponsor: A project sponsor can be nominated by a school to manage the chaplaincy service on its behalf. For example, the project sponsor could be a chaplaincy service provider already approved by state or territory governments. The Department will enter into a funding agreement with the project sponsor as long as they are a legal entity, affiliated with or working with a religious institution to provide a school chaplain and deliver chaplaincy services in schools, or a state or territory government approved chaplaincy service." (emphasis added) The particular arrangements in question in this case fell within the last of the categories identified in the Guidelines. SUQ was a project sponsor nominated by a school to manage the chaplaincy service on its behalf. As has been said, in identifying the relevant hypothetical law, it is important to recognise that the impugned payments were made under the NSCP. The question being considered is whether the executive actions in question (making the Funding Agreement and making payments pursuant to it) could have been authorised by a valid law. The hypothetical law in question must be one which provided for the NSCP generally, not just for the particular payments that lie at the heart of the present litigation. That was the basis on which the Darling Heights Funding Agreement was drawn – that the agreement was made and the payments were to be made under and in accordance with the NSCP and in conformity with the Guidelines. It is the NSCP and the Guidelines that reveal the circumstances in which the impugned payments were made. Contrary to the submission of the Commonwealth parties – that the character of the executive acts in question "flows, relevantly, from the character of the legal persons to whom they relate" – attention cannot be confined to that single circumstance. The hypothetical law to be considered must be one which provides for the payment of money, under a funding agreement that accords with the requirements described in the Guidelines. Would a law of that kind be a valid law of the Parliament? Hayne Two heads of legislative power were said to be engaged: that part of s 51(xx) which provides power to make laws with respect to "trading or financial corporations formed within the limits of the Commonwealth", and that part of s 51(xxiiiA) which provides power to make laws with respect to "the provision of … benefits to students". Corporations power? The payments in issue in this case were made to SUQ as a project sponsor. It was submitted that SUQ was at the relevant times a trading or financial corporation and that it followed that a law regulating the activities of SUQ in its provision of chaplaincy services would be a law with respect to trading or financial corporations. But even if SUQ were a trading or financial corporation (and that is a question which need not be examined), it is necessary to recognise that all that the Guidelines required was that the project sponsor be "a legal entity, affiliated with or working with a religious institution to provide a school chaplain and deliver chaplaincy services in schools". The Guidelines did not require that a project sponsor be a trading or financial corporation. If, as was submitted, SUQ met that description, its being so was wholly irrelevant to the operation and engagement of the Guidelines. The hypothetical law under consideration would not in any way hinge on the constitutional conception of trading or financial corporations. It would not be a law authorising or regulating the capacity of constitutional corporations generally or of a particular corporation to make a contract. Unlike the law considered in New South Wales v The Commonwealth (Work Choices Case)401 it would not be a law authorising or regulating the activities, functions, relationships or business of constitutional corporations generally or any particular constitutional corporation; it would not be a law regulating the conduct of those through whom a constitutional corporation acts nor those whose conduct is capable of affecting its activities, functions, relationships or business402. The hypothetical law would be no more than a law authorising or requiring the making of a particular kind of contract in which one contracting party could be, but need not be, a constitutional corporation providing services for reward. The hypothetical law would not be a law supported by s 51(xx). 401 (2006) 229 CLR 1. 402 (2006) 229 CLR 1 at 116 [181]. The hypothetical law would apply indifferently to constitutional corporations and others but would produce no differential effect on such corporations: (2006) 229 CLR 1 at 114 [176], quoting Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 337 per Brennan J; [1995] HCA 16. Hayne Provision of benefits to students? The hypothetical law would not be a law with respect to the provision of benefits to students. No party or intervener sought to challenge the conclusions expressed by five members of the Court in Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth ("the Alexandra Hospital Case")403 about the meaning to be given to the words "the provision of … sickness and hospital benefits" in their context in s 51(xxiiiA). And much of the argument in this matter proceeded by seeking to apply what was said in that case to the circumstances of this. In the Alexandra Hospital Case three matters were taken as settled in connection with that part of s 51(xxiiiA) which deals with "the provision of … sickness and hospital benefits". First, it was said404 that it is settled that "the provision" of those benefits was confined to the provision of benefits by the Commonwealth405. Second, it was pointed out406 that the prohibition "but not so as to authorize any form of civil conscription" applies only to the reference to provision of "medical and dental services" but may be relevant to the scope of other elements of the power "at least to the extent that whenever medical or dental services are provided pursuant to a law with respect to the provision of some other benefit, eg, sickness or hospital benefits, 'the law must not authorize any form of civil conscription of such services'407". Third, and of most immediate relevance, it was said408 in the Alexandra Hospital Case that "the concept intended by the use in the paragraph of the word 'benefits' is not confined to a grant of money or some other commodity. It may encompass the provision of a service or services." Reference was made by the Court in the Alexandra Hospital Case409 to the discussion by Dixon J in British 403 (1987) 162 CLR 271 at 279-281 per Mason ACJ, Wilson, Brennan, Deane and Dawson JJ; [1987] HCA 6. 404 (1987) 162 CLR 271 at 279. 405 British Medical Association v The Commonwealth ("the BMA Case") (1949) 79 CLR 201; [1949] HCA 44. 406 (1987) 162 CLR 271 at 279. 407 BMA Case (1949) 79 CLR 201 at 287 per Williams J. 408 (1987) 162 CLR 271 at 280. 409 (1987) 162 CLR 271 at 280. Hayne Medical Association v The Commonwealth ("the BMA Case")410 of the meaning to be given in s 51(xxiiiA) to the word "benefit" and whether it would extend to the actual provision of services such as nursing services. The Court concluded411 in the Alexandra Hospital Case that the meaning of the word "benefit" accepted by the majority of the Court in the BMA Case was that expressed412 by McTiernan J: "The material aid given pursuant to a scheme to provide for human wants is commonly described by the word 'benefit'. When this word is applied to that subject matter it signifies a pecuniary aid, service, attendance or commodity made available for human beings under legislation designed to promote social welfare or security: the word is also applied to such aids made available through a benefit society to members or their dependants. The word 'benefits' in par (xxiiiA) has a corresponding or similar meaning." That "the word 'benefits' is not confined to a grant of money" and "may encompass the provision of a service or services" (emphasis added) may be accepted. But it by no means follows that every provision of a "service" is a "benefit" within the meaning of s 51(xxiiiA). When used in par (xxiiiA), the word "benefits" cannot be read as either "benefits or services" or "benefits and services". The paragraph distinguishes between the two ideas and uses the words differently. The word "services" is used only in the collocation "medical and dental services"; the word "benefits" is used in the collocations "unemployment, pharmaceutical, sickness and hospital benefits" and "benefits to students". As the Alexandra Hospital Case illustrates, the concept of "benefit" includes the payment of money for and on behalf of another to obtain the provision to that other of material aid in satisfaction of a human want. In that case, money was paid by the Commonwealth to a nursing home proprietor for services provided to a patient. As the Court pointed out413, "the intended ultimate beneficiary of any benefit paid [was] the patient in the nursing home to the proprietor of which the payment will ordinarily be made". And as the Court also pointed out414, the "benefit" could as much be described as money paid for and 410 (1949) 79 CLR 201 at 260-261. 411 (1987) 162 CLR 271 at 280. 412 (1949) 79 CLR 201 at 279; see also at 246 per Latham CJ, 286-287 per Williams J, 413 (1987) 162 CLR 271 at 280. 414 (1987) 162 CLR 271 at 281. Hayne on behalf of the patient as it could be described as provision of a service to the patient by the nursing home proprietor. But in the present case, unlike the Alexandra Hospital Case, the chaplaincy services to be provided by SUQ can be described only as the provision of a service to students (and others) attending or associated with the school in question. There is not, in this case, a payment of money by the Commonwealth for or on behalf of any identified or identifiable student for services rendered or to be rendered to that student. Just as "benefits to students" cannot be understood as synonymous with "benefits to or services for students", "benefits to students" does not embrace any and every form of provision of money or services that is of "advantage" to students. If the latter construction of "benefits to students" were adopted, a law that provided for the Commonwealth's payment for provision of a chaplain (whether by paying the wages of the chaplain or by paying an intermediary like SUQ to provide a chaplain at one or more schools) would be a law with respect to the provision of benefits to students. It would provide services to students that they may find helpful. But that construction of "benefits" must be rejected. If "benefits" to students encompasses every form of payment that provides advantage, the power to legislate with respect to the provision of benefits to students is a large power which approaches a general power to make laws with respect to education. It would be a power of a kind radically different from the other elements of legislative power given by s 51(xxiiiA) and a very long way away from the mischief to which s 51(xxiiiA) was directed. The Constitution Alteration (Social Services) Bill, which led to the insertion of s 51(xxiiiA), was introduced415 following this Court's decision in the Pharmaceutical Benefits Case416 that the Pharmaceutical Benefits Act 1944 (Cth) was invalid. It was a constitutional amendment evidently intended to provide federal legislative power with respect to the provision of various forms of social security benefit, including benefits which were then and for some time had been provided by the Commonwealth. When the word "benefits" is twice used in s 51(xxiiiA) the central notion that is being conveyed is a payment to or for an individual for provision of relief against the consequences of identified events or circumstances: sickness, unemployment, hospital treatment, pharmaceutical needs or being a student. To conclude that payments for the provision of chaplaincy services are a form of 415 See Wong v The Commonwealth (2009) 236 CLR 573 at 587-589 [43]-[48], 623-624 [174]-[177]; [2009] HCA 3. 416 (1945) 71 CLR 237. Hayne benefit to students would depend upon treating the central notion of "benefits to students" as no more than a particular instance of a more general concept that encompasses any and every form of payment which may be thought to provide some advantage to a person who is a student. The reference to benefits in s 51(xxiiiA), whether in the collocation "unemployment … benefits", "sickness and hospital benefits" or "benefits to students", is not to be read as encompassing every form of payment that provides some advantage. "Benefits" when used in the collocation "sickness and hospital benefits" does not readily admit of such a broad understanding and there is no warrant for giving the word an altogether different meaning when used in the collocation "benefits to students". Rather, as was accepted in the BMA Case (and not challenged in the argument of this case), the notion of benefits is more confined than a generalised reference to provision of advantage. It, like the several notions of maternity allowances, widows' pensions, child endowment and family allowances, centres upon the provision of material aid in satisfaction of human wants. The only forms of services mentioned in s 51(xxiiiA) are medical and dental services. But if either of the broad understandings of "benefit" that have been identified – any provision of a service or any provision of an advantage – were to be adopted, the reference in s 51(xxiiiA) to "medical … services" would be superfluous. Every law for the provision by the Commonwealth of medical services would be a law with respect to the provision by the Commonwealth of a form of "sickness and hospital benefits". By contrast, the understanding of "benefit" accepted in the Alexandra Hospital Case gives the separate elements of s 51(xxiiiA) independent, rather than entirely overlapping, effect. Adopting and applying the understanding of "benefit" that was accepted in the Alexandra Hospital Case, the provision of payment for a chaplain to a school is not the provision of material aid in satisfaction of human wants. It is not a form of "benefits to students". The payments that are made under the NSCP are not made to or for students. They are made to provide a service to which students may resort and from which they may derive advantage. But they are not "benefits to students". A law providing for the payment to SUQ of moneys on the terms and conditions of the Darling Heights Funding Agreement would not be a law supported by s 51(xxiiiA). The conclusion that the hypothesised law providing for the impugned payments would not be supported by either s 51(xx) or s 51(xxiiiA) entails that the impugned payments were not supported by the executive power of the Commonwealth. It also entails that the Executive had no power to make a contract undertaking to make those payments and that the terms of the Darling Heights Funding Agreement that provided for the making of the payments were unenforceable. Hayne A more fundamental reason? Is there a more fundamental reason for concluding that the making of the impugned payments was not a valid exercise of the executive power of the Commonwealth? Could those payments be made validly only if there was in fact legislation specifically authorising lawfully appropriated for that purpose? As already noted, the parties and interveners argued the case on the footing that there was no legislation of that kind (thus assuming, without debate, that so much of the Appropriation Acts as provided for the application of moneys appropriated to expenditures did not constitute such a specific authorisation). the application of money Sound governmental and administrative practice may well point to the desirability of regulating programs of the kind in issue in this case by legislation. At the least the difficulties that arise from applying tests that require the consideration of a hypothetical as distinct from an actual law made by the Parliament are avoided and the Parliament's control over expenditures is plainly asserted in a manner that is capable of review both within and beyond the Parliament. But to conclude that the Constitution requires that the Executive never spend money lawfully available for expenditure without legislative authority to do so is to decide a large and complex issue. It is better that it not be decided until it is necessary to do so. The conclusion that the impugned payments could not have been the subject of a valid law of the Parliament suffices to conclude the issues that have been raised. The answers to Questions 4(a) and 2(a) The making of the relevant payments by the Commonwealth to SUQ pursuant to the Darling Heights Funding Agreement was not supported by the executive power of the Commonwealth under s 61 of the Constitution. Question 4(a) should be answered accordingly. As foreshadowed earlier in these reasons, the question asked in the Special Case about the validity of the Darling Heights Funding Agreement should be answered in a way that directs attention to the relevant deficiency in power. Because the Commonwealth had no power to make the disputed payments, the Commonwealth could not validly make a contract purporting to oblige the making of those payments. Question 2(a) in the Special Case should be answered: "Save to say that the Commonwealth had no power to make, and thus no power to agree to make, any of the payments for which the Darling Heights Funding Agreement provided, it is inappropriate to answer this question." 291 HEYDON J. I dissent. The factual background This case concerns a Queensland school. The parties agree that it is called Darling Heights State Primary School ("the School"). The controversy concerns the constitutional validity of the way "chaplaincy services" at the School have been funded. From 1998, various "chaplains" provided "chaplaincy services" at the School for short periods. From April 2006, Mrs Jo-Anne Hawley provided "chaplaincy services" at the School for an equivalent of two school days per week. The duties of the office entailed "pastoral care (including listening to and helping students, parents and staff)", managing or building "peer relationships, child trust and refuge" and giving "support to teachers and others". The appointment of the "chaplains" was made with the permission of the Queensland Department of Education and Training. That Department issued various "policies" stating the requirements that Queensland State schools wishing to provide "chaplaincy services" had to meet. The State of Queensland entered an agreement for the provision of "chaplaincy services" with Scripture Union Queensland, the fourth defendant. In 2007, the School's Principal decided, after consultation with the Parents' and Citizens' Association and others in the School community, that students would be assisted by increasing the number of days that a "chaplain" was in attendance at the School. He made an application on 4 April 2007 for funding under a federal scheme announced in 2006. That scheme is the National School Chaplaincy Program ("the NSCP"). Its application to the School is the subject of this dispute. The defendants contend that its constitutional validity is supported by s 61 of the Constitution, but accept that it is not supported by any other constitutional provision. Pursuant to the NSCP, the first defendant (the Commonwealth) funded "chaplaincy services" for many government and non-government schools. The funds were provided through a series of funding agreements in relation to individual schools. The relevant agreement in this case had two parties. One was the fourth defendant. The other was the first defendant (as represented by the Department of Education, Science and Training, and more recently the Department of Education, Employment and Workplace Relations). The 4 April 2007 application was endorsed by the School's Principal, the President of the School's Parents' and Citizens' Association and the fourth defendant's Regional Manager. The application contained a declaration that there was broad community support for the choice of "chaplain" (Mrs Jo-Anne Hawley) and the proposed "chaplaincy services". There was also a declaration that appropriate steps had been taken to publicise the fact that use of the "chaplaincy services" was voluntary. The application stated that the fourth defendant endorsed Mrs Jo-Anne Hawley. It also stated that the proposal involved expanding the "chaplaincy services" from two to four school days per week. And the application identified the fourth defendant as the proposed sponsor with whom the first defendant would make the agreement to fund the "chaplaincy services". The application described the expanded "chaplaincy services" for which the NSCP funding was sought thus: "1. WORKING WITH STUDENTS (PREP-7): Being able to talk to/counsel students who are experiencing a range of issues that are impacting on them. This may either be referral from Teacher/s or else the child seeking assistance. Also being visible at Break Times so that children may approach and seek help. 2. READING GROUPS/CLASSROOM ASSISTANCE: Improves knowledge of individual students by observing how they function in the classroom. Invaluable information can be gleaned and observance by students assists the person to build relationships and trust with the students. Children seek the person out as she is seen as a confidante. 3. GIRLS STUFF AND BOYS STUFF: Working with both genders in the Upper School who are experiencing issues at home, display poor self- esteem/friendship skills or need extra care. The program covers self- esteem, appreciation, positive thinking/talking & responsible behaviour. 4. BOYS MENTORING PROGRAM: Overseeing the program for boys who need their emotions (anger/anxiety/fear). Boys to be mentored by a positive male role model who can help them learn to handle their emotions/behaviour. some extra help in dealing with 5. WORKING WITH TEACHERS/STAFF/PARENTS: Ensuring that all stakeholders are able to access the services provided. This involves being available to talk to people about personal issues that may be impacting on them. Having an additional support level available ensures that some minor issues do not become major issues. The existing/future role is a continuation/refinement of the initial discussions that were conducted when the first Chaplain was appointed. This is an evolving role and the various duties undertaken depend entirely on the make-up of the School Community and the range of issues that are affecting them. We are a very multicultural school and this alone brings another dimension to the range of issues that as a School we have to deal with. The role develops as there are concerns that need to be dealt with in an appropriate manner." On or about 7 July 2007, the Department of Education, Science and Training made an offer of funding to the School under the NSCP. On or about 25 July 2007, the School's Principal signed a declaration that the School intended to proceed with the "chaplaincy project". On or about 24 September 2007, the Deputy Principal of the School notified the Department of Education, Science and Training that Ms Christina Putland was to commence as "chaplain" at the School. The notification indicated that she had a Bachelor of Arts (Teaching) degree and formal qualifications in relation to Lifeline telephone counselling. The notification described her as being endorsed by the fourth defendant. The notification did not identify her as being formally ordained or commissioned by a recognised religious institution or endorsed by a religious authority. On 9 November 2007, the first defendant entered into an agreement with the fourth defendant to fund "chaplaincy services" at the School under the NSCP ("the Agreement"). The Agreement was to last three years from the date of its execution. However, the parties later changed the commencement date of the Agreement to 8 October 2007 and extended its term to 31 December 2011. The fourth defendant agreed to provide the "chaplaincy services" described in the School's application. The first defendant agreed to provide funding in three annual instalments of $22,000 upon the rendering of valid tax invoices by the fourth defendant. The parties later amended the Agreement by agreeing that the first defendant should make a fourth payment of $27,063.01. The Agreement included a "Code of Conduct" for "chaplains". "Chaplains" were to sign it before they began delivering any "chaplaincy services" under the Agreement. Breach of the Code of Conduct by a "chaplain" could result in the fourth defendant being obligated to repay all or some of the funding supplied by the first defendant. One of the duties that the Code of Conduct imposed on "chaplains" was to "[r]espect the rights of parents/guardians to ensure the religious and moral education of their children is in line with their own convictions." "Chaplaincy services" funded under the NSCP began at the School. The fourth defendant issued tax invoices to the first defendant in respect of each of the four instalments payable under the Agreement as amended. The first defendant paid the instalments. The fourth and last instalment was paid on 11 October 2010. On 5 October 2009, the plaintiff's three oldest children were enrolled at the School. On 27 January 2010, his youngest child was enrolled. The litigation began on 21 December 2010, after the date of the last payment under the Agreement, but at a time when some of the services for which the fourth defendant had been paid were still to be rendered. The plaintiff sued the Commonwealth of Australia as first defendant. The plaintiff also sued the Minister for School Education, Early Childhood and Youth and the Minister for Finance and Deregulation as the second and third defendants. Below these three defendants will together be called "the Commonwealth". The plaintiff also sued Scripture Union Queensland as fourth defendant. First preliminary point: the qualifications and work of the "chaplains" One challenge to the Agreement was that the "eligibility criteria" for the office of "chaplain" imposed a religious test contrary to s 116 of the Constitution. Section 116 provides in part: "no religious test shall be required as a qualification for any office or public trust under the Commonwealth." The eligibility criteria appear in cl 1.5 of the 2010 Guidelines for the NSCP. The words complained of are: "For the purposes of this Program, a school chaplain is a person who is recognised: by the local school, its community and the appropriate governing authority as having the skills and experience to deliver school chaplaincy services to the school and its community; and formal ordination, recognised through qualifications or endorsement by a recognised or accepted religious institution or a state/territory government approved chaplaincy service." commissioning, However, the next sentence reads: "In particular circumstances, secular pastoral care workers may be employed under this program." The next paragraph reads in part: "School chaplains will deliver services to the school and its community through: providing general religious and personal advice to those seeking it, comfort and support to students and staff, such as during times of grief; supporting students and staff to create an environment of cooperation and respect, promoting an understanding of diversity and the range of religious affiliations and their traditions; respecting the range of religious views and cultural traditions in the school and the broader community and also respecting the rights of parents/guardians to ensure the religious and moral education of their children is in line with their own convictions; working in a wider spiritual context to support students and staff of all religious affiliations and not seeking to impose any religious beliefs or persuade an individual toward a particular set of religious beliefs". This, read with the statement of the expanded "chaplaincy services" program in the School's application417, conveys the impression that, at least at this school, neither the NSCP nor the qualification for "chaplains" had much to do with religion in any specific or sectarian sense. The work described could have been done by persons who met a religious test. It could equally have been done by persons who did not. In ordinary speech a "chaplain" is the priest, clergyman or minister of a chapel; or a clergyman who conducts religious services in the private chapel of an institution or household. Those who are "school chaplains" under the NSCP's auspices fall outside these definitions. Their duties in schools are unconnected with any chapel. They conduct no religious services. Perhaps those supporting validity committed an error in calling the NSCP a "chaplaincy program" and speaking of "school chaplains". The language is inaccurate and may have been counterproductive. Some vaguer expression, more pleasing to 21st century ears, like "mentor" or "adviser" or "comforter" or "counsellor" or even "consultant", might have had an emollient effect. The plaintiff must have found the words "chaplain" and "chaplaincy" useful for his contention that the NSCP was void under s 116. Second preliminary point: the consequence of the plaintiff's arguments Before the NSCP was introduced, the School and the Queensland State Government saw it as beneficial that a "chaplaincy service" be supplied to the School for two days per week. The NSCP enabled the supply of that service to be increased to four days per week. The Queensland State Government supported that change. A federal government of one political colour initiated it before the 2007 election, two other governments of a different political colour continued it until the next election, and a third government of that political colour continued it thereafter. The Queensland State Government did not appear to see the NSCP as impinging on its rights as a State. The NSCP was not controversial as between the major political parties. It was not controversial as between the 417 See above at [297]. two houses of Parliament. It was voluntary for students and their parents. The introduction of the NSCP at the School was favoured by the School community's key institutions. The plaintiff's submission that the Commonwealth had no power to provide the NSCP funding would invalidate a voluntary program that was seen as advantageous by and had the support of four successive Commonwealth Governments, the Queensland State Government, the School and the School's community. Of course, the results to which the submission leads do not demonstrate that the plaintiff's submission is wrong. But those results do call for the submission to be closely scrutinised. The structure of the questions Question 1 of the questions stated in the Amended Special Case raises three sub-questions. The first is: does the plaintiff have standing to challenge the drawing of money from the Consolidated Revenue Fund for the purpose of making payments under the Agreement during five financial years: 2007-2008, 2008-2009, 2009-2010, 2010-2011 and 2011-2012418? The second sub-question is: does the plaintiff have standing to challenge the making of the four payments by the Commonwealth to the fourth defendant? The third sub-question, which is closely related to the second sub-question, is: does the plaintiff have standing to challenge the validity of the Agreement419? Question 3 asks: was the drawing of money from the Consolidated Revenue Fund for the purpose of making payments under the Agreement authorised by the Appropriation Acts for the years 2007-2008, 2008-2009, 2009- 2010, 2010-2011 and 2011-2012420? Questions 2(a) and 4(a) relate to whether the Commonwealth's acts in making the payments to the fourth defendant under the Agreement were unlawful because they were beyond the executive power of the Commonwealth under s 61 of the Constitution. These questions raise two sub-questions. One is: does the executive power extend to any matter on which the Commonwealth has legislative power, and in particular the powers conferred by s 51(xx) or (xxiiiA) of the Constitution421? The second sub-question only arises if the answer to the first sub-question is "Yes". It is: does the Commonwealth have legislative power to enact legislation supporting the Agreement under either of those 418 See below at [315]-[326]. 419 See below at [327]-[331]. 420 See below at [332]-[339]. 421 See below at [340]-[407]. placita422? Below it will be seen that the first sub-question was not expressly identified in the Amended Special Case and emerged only during oral argument. Questions 2(b) and 4(b) relate to whether s 116 of the Constitution prohibits the making of the payments423. Questions 5 and 6 relate to relief. The questions and sub-questions just described will be answered in the above order, save that it is not necessary to deal with s 51(xx). Standing to challenge the drawing of money from the Consolidated Revenue Fund The plaintiff has no standing to challenge the drawing of money from the Consolidated Revenue Fund. Where a declaration that executive action is not constitutionally valid is sought, or an injunction against its repetition is sought, it must be demonstrated either that a private right of the plaintiff is interfered with or that the plaintiff has "a special interest in the subject matter of the action"424. The Solicitor-General of the Commonwealth did not argue that no litigant could ever have standing to challenge the validity of an appropriation. The Solicitor-General accepted that a person who sought to challenge a payment which had a direct effect on his or her rights425 would have had standing. But the plaintiff did not claim that his rights were affected. He claimed only that he had "a special interest in the subject matter" – an interest greater than that of the public generally. The plaintiff submitted that his "children attend a school in respect of which funds have been expended by the Commonwealth." He submitted that that expenditure was the subject of his claim to relief. Accordingly, the plaintiff submitted that he did not bring the proceedings as a mere matter of "intellectual or emotional concern."426 The plaintiff also submitted that he did not bring the 422 See below at [408]-[441]. 423 See below at [442]-[448]. 424 Australian Conservation Foundation Inc v The Commonwealth (1980) 146 CLR 493 at 527; [1980] HCA 53. 425 Like the plaintiffs in Brown v West (1990) 169 CLR 195; [1990] HCA 7 and Pape v Federal Commissioner of Taxation (2009) 238 CLR 1; [2009] HCA 23. 426 Australian Conservation Foundation Inc v The Commonwealth (1980) 146 CLR 493 at 530 per Gibbs J. proceedings in an attempt to give effect to his beliefs or opinions on a matter "which does not affect him personally except in so far as he holds beliefs or opinions about it."427 The plaintiff further argued: "Given that appropriation is a necessary step in the expenditure of public monies, it is not logically possible to recognise the plaintiff's special interest in the expenditure of such monies on the provision of chaplaincy services at his children's school whilst denying a sufficient interest in the appropriation of those monies from the Consolidated Revenue Fund. The latter interest flows from the former." These arguments must be rejected. It is true that they may establish that the plaintiff may have standing to challenge the expenditure of funds. But their flaw is that they do not establish that the plaintiff has standing to challenge the appropriation of funds. It does not follow from the fact that the plaintiff may have standing to challenge the expenditure of funds by reason of having a special interest in that expenditure that he also has standing to challenge the appropriation of those funds. The appropriation of money by Parliament through an Appropriation Act authorises the Executive to withdraw money from the Treasury, and restricts its expenditure to the purpose for which it was appropriated, but creates no other rights or duties428. The plaintiff has no interest in the appropriation of the money beyond that of any other member of the public429. In Mason J's words in the Australian Assistance Plan case, "the individual taxpayer has no interest at all in funds standing to the credit of Consolidated Revenue."430 The plaintiff faces an additional difficulty. His complaint relates to his children's education at the School. They began to attend the School in the financial year 2009-2010. How, then, can the plaintiff have standing in relation to the appropriations for 2007-2008 and 2008-2009? And how can the plaintiff challenge the appropriation for 2009-2010 in relation to the third payment? There is no claim for it to be recovered. The plaintiff endeavoured to surmount 427 Onus v Alcoa of Australia Ltd (1981) 149 CLR 27 at 37 per Gibbs CJ; [1981] HCA 428 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 386-387 and 392-393; [1975] HCA 52; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 210-211 [601]-[602]. 429 Anderson v The Commonwealth (1932) 47 CLR 50 at 51-52; [1932] HCA 2. 430 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 402. this difficulty by submitting that "to the extent that funds expended during financial years prior to the enrolment of any of his children at the School assisted in entrenching a program which now affects his children at that School, … he has a sufficient interest in the legality of that expenditure to constitute his claim in respect of it a justiciable controversy." That argument too must be rejected. The validity of an appropriation is determined by examining the relevant legislation for a particular year, not by examining the validity of expenditures in previous years. The plaintiff also argued: "Because the plaintiff's argument concerning appropriations in the years during which his children were enrolled at the School depends upon demonstrating the absence of appropriations in respect of the NSCP in prior years, he has a sufficient interest in those prior purported appropriations to have standing to challenge them." This was a reference to the plaintiff's contention that there was no valid appropriation in relation to the fourth payment unless there had been valid appropriations for the earlier payments431. The argument that there was no valid appropriation in relation to the fourth payment is rejected below for reasons that do not depend on the validity of the earlier payments432. Hence the plaintiff's argument for standing in respect of the earlier payments fails. The plaintiff also argued that even if the operation of past Appropriation Acts had been exhausted and all money due had been paid under the Agreement, he had standing because the activities contemplated under the Agreement were "supposed to continue." That argument must fail unless it is shown that those activities, and the past system of funding them, are continuing at the School. This was not shown. The plaintiff advanced another argument: "With respect to the declarations sought by the plaintiff in respect of appropriations in financial years prior to the present, it is incorrect to say that these would concern no present or future rights or obligations, notwithstanding the exhausted operation of the relevant Appropriation Acts. This is because: 431 See below at [334]. 432 See below at [332]-[339]. the Executive may, in the absence of an appropriation, contract to expend monies conditional upon there being an appropriation; and if there was never an appropriation in respect of the NSCP, and in particular the … Agreement, then [the fourth defendant] was never entitled to receive payments under that agreement. Therefore, even while the plaintiff does not seek repayment of the money paid to [the fourth defendant], the declarations sought in respect of previous Appropriation Acts would affect [the fourth defendant's] present title to retain the money it has received under the … Agreement." There being no claim that the fourth defendant repay the money, a mere declaration affecting its "present title to retain the money it has received" is immaterial and should not be made. Further, it has not retained the money: it has paid it out to others, who are not parties. The plaintiff's final argument on this point was: "whilst Parliament may, subject to there being a power to spend in respect of the NSCP, make a supplementary appropriation for the NSCP to cure the absence of an appropriation, this does not mean that the relief sought by the plaintiff lacks utility: placing the matter before Parliament for its specific consideration is precisely what ss 53, 54, 56, 81 and 83 of the Constitution require." For reasons given below, there is no "absence of an appropriation"433. There is no need for the government to return to Parliament in search of a supplementary appropriation. Hence the purported basis for the argument does not exist. Question 1(b) in the Amended Special Case should be answered "No". The Solicitor-General of the Commonwealth advanced a submission going beyond the terms of the questions in the Amended Special Case. He submitted that even though the States would have had standing to commence the proceedings, the plaintiff's lack of standing could not be cured by the intervention of the States. He submitted that when the proceedings began there was no "matter" in relation to the validity of the appropriations because the plaintiff lacked standing. He submitted that the States could not intervene under s 78A of the Judiciary Act 1903 (Cth) unless there was a pre-existing "matter". And he submitted that their purported intervention did not create a matter or expand a 433 See below at [336]-[338]. matter. The Court did not have the benefit of contrary argument from any party or intervener. Subject to that, the submission appears to be sound. Standing to challenge the Commonwealth's payments to the fourth defendant, and to challenge the Agreement Because of the times when his children began attending the School, the plaintiff has no standing to challenge expenditures in 2007-2008 and 2008- 2009434. Except for arguments that relate to the 2010-2011 payment of $27,063.01, the plaintiff's arguments about expenditures already made under the Agreement are immaterial. The arrangements under which the 2007-2008, 2008- 2009 and 2009-2010 payments were made "are no longer in operation and were not in operation when these proceedings were commenced."435 That is, at the time when the proceedings started, the conduct of which the plaintiff complains in relation to those payments had already been carried out. Declarations that that conduct was unlawful should not be granted because of their inutility and futility: they "can produce no foreseeable consequences for the parties."436 However, the receipt of the $27,063.01 payment by the fourth defendant obliged it to carry out the NSCP under the Agreement until 31 December 2011, a period during which the plaintiff's children were at the School. At the time when the proceedings began, the plaintiff and his children had not participated, and they were not obliged to participate, in the NSCP. The NSCP did not affect the plaintiff's freedom of action or that of his children. The plaintiff did not contend that he wished to be a counsellor or mentor to children at the School and that his wish was frustrated because the Agreement imposed a religious test for that office contrary to s 116 of the Constitution. There is thus much to be said for the view that when the proceedings began the plaintiff was seeking no more than "the satisfaction of righting a wrong, upholding a principle or winning a contest"437. However, Mrs Jo-Anne Hawley, who was the "chaplain" named in the 4 April 2007 application for funding, did participate in conventional teaching 434 See above at [320]-[321]. 435 Gardner v Dairy Industry Authority of New South Wales (1977) 52 ALJR 180 at 188 per Aickin J; 18 ALR 55 at 71. 436 Gardner v Dairy Industry Authority of New South Wales (1977) 52 ALJR 180 at 189 per Aickin J; 18 ALR 55 at 71. See also Church of Scientology v Woodward (1982) 154 CLR 25 at 62; [1982] HCA 78. 437 Australian Conservation Foundation Inc v The Commonwealth (1980) 146 CLR 493 at 530 per Gibbs J. activities. She was said to work "on the Personal Development Programs for both males & females in the Senior School, … in varying capacities in the Options in Yrs 4/5, [and in] the Reading Programme in Yrs 2/3 and in varying capacities in the Prep/1 area." Although Mrs Hawley left the School before the plaintiff's children arrived, it may be inferred that her successor's role was similar. It was also contemplated that in future the "chaplain" would be involved in reading groups and classroom assistance. The plaintiff submitted: "The Court may infer from this material that [Mrs] Hawley – and her replacement, Ms Putland – did not merely provide services additional to those provided in the classroom by teachers, in circumstances where the plaintiff's children were free to avoid any contact or dealings with her. Rather, she was involved in aspects of the life of the School that extended far beyond the forms of individually directed pastoral care that one might ordinarily associate with the title 'chaplain'. Indeed, she was a presence in the classroom. Accordingly, if it is [said] that the plaintiff lacks the requisite standing to seek relief on the basis that there was a de facto wall separating him and his children from the activities of first [Mrs] Hawley and then Ms Putland, this proceeds upon an incorrect factual premise." The plaintiff made no concession as to the position if there had been a de facto wall. The submission of counsel for the plaintiff suggests that the plaintiff does, and did when he instituted the proceedings, feel very troubled by the "activities" of Ms Putland. "Special interests" are not limited to material interests. They can include points of conscience. Therefore at the time the proceedings began the plaintiff had a special interest in having a judicial determination of the validity of the payment made on 11 October 2010. The services for which it was paid were still being performed and to be performed, and the payment was returnable to the Commonwealth in the event of breach by the fourth defendant. The Solicitor- General of the Commonwealth was therefore correct to concede that the plaintiff has a special interest in having a judicial determination of the validity of the Agreement. No payment has been made since 11 October 2010, and hence there is no special interest in relation to 2011-2012. The lapse of time since the proceedings began might affect the form of relief to be granted to the plaintiff, but not his standing. Question 1(a) and (c)(iv) should be answered "Yes". The consequence is that the plaintiff has standing to raise his ss 61 and 116 points. Was the drawing of the money used to make the fourth payment authorised by the Appropriation Act (No 1) 2010-2011 (Cth)? Although this question does not arise, in deference to the very lengthy arguments advanced by the plaintiff it will be dealt with. Above it was concluded that the plaintiff did not have standing to challenge the appropriation of the money supplied. If, contrary to that conclusion, he did, the standing can have been no wider than his standing to challenge the 11 October 2010 payment itself. On the plaintiff's view of the interconnectedness of appropriation issues and expenditure issues, the statute relevant to the 11 October 2010 payment is the Appropriation Act (No 1) 2010-2011 (Cth) ("the No 1 Act"). It is entitled: "An Act to appropriate money out of the Consolidated Revenue Fund for the ordinary annual services of the Government, and for related purposes". The plaintiff submitted that the NSCP was outside the concept of "ordinary annual services of the Government" as understood between the houses of Parliament. The plaintiff submitted that "unless it provides otherwise in clear language, an [A]ct to appropriate moneys for the ordinary annual services of the Government should not be construed as authorising spending on policies not previously authorised by special legislation and for which no appropriations have been made in the past." The Commonwealth denied that there was an understanding between the houses of Parliament of the kind the plaintiff relied on. It also submitted that by the time of the No 1 Act, the NSCP was not a new policy, and that appropriations had been made for it in the past. It is not necessary to deal with these two arguments of the Commonwealth. It is sufficient to uphold its primary argument – that on the clear construction of the No 1 Act there was an appropriation. The No 1 Act expressly authorised the drawing of money from the Consolidated Revenue Fund for the purpose of expenditure under the NSCP. It is not necessary to resort to the meaning of "ordinary annual services of the Government" as used in the long title to construe the Act. The meaning of the Act is so clear that it is incapable of being altered by the long title. Section 17 of the No 1 Act provided: "The Consolidated Revenue Fund is appropriated as necessary for the purposes of this Act, including the operation of this Act as affected by the Financial Management and Accountability Act 1997." The "purposes of this Act" were stated in s 8, which provided: "(1) The amount specified in an administered item for an outcome for an Agency may be applied for expenditure for the purpose of contributing to achieving that outcome. If the Portfolio Statements indicate that activities of a particular kind were intended to be treated as activities in respect of a particular outcome, then expenditure for the purpose of carrying out those activities is taken to be expenditure for the purpose of contributing to achieving the outcome." "Administered item" is defined in s 3: "an amount set out in Schedule 1 opposite an outcome for an Agency under the heading 'Administered'." The relevant "outcome for an Agency" appears in Sched 1, in relation to the Agency known as "Department of Education, Employment and Workplace Relations". It is Outcome 2: "Improved learning, and literacy, numeracy and educational attainment for school students, through funding for quality teaching and learning environments, workplace learning and career advice". Under the heading "Administered" there appears opposite Outcome 2 the figure of $456,982,000. Section 3 defines "Portfolio Statements" as "the Portfolio Budget Statements". Section 3 in turn defines "Portfolio Budget Statements" as meaning: "the Portfolio Budget Statements that were tabled in the Senate or the House of Representatives in relation to the Bill for this Act." In the part of the Portfolio Budget Statements so tabled that deals with the Department of Education, Employment and Workplace Relations, "Outcome 2" is described as it appears in Sched 1 to the Act. Under the heading "Schools Support" appear the following words: "National School Chaplaincy Program – is a voluntary program which provides up to $20,000 per year for schools to establish chaplaincy services, or enhance existing services, to provide pastoral care for students and the school community." That is an activity in respect of a particular outcome within the meaning of s 8(2). Expenditure for the purpose of carrying out that activity is therefore taken to be expenditure for the purpose of contributing to achieving Outcome 2. Accordingly, s 8(1) authorised the necessary expenditure. If question 3(d) arose, the answer would be "Yes". The balance of question 3 does not arise. Executive power of the Commonwealth under s 61 Section 61 of the Constitution provides: "The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen's representative, and extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth." There were several controversies in these proceedings about the meaning of s 61, but the central one is as follows. In the end the defendants submitted that the executive power of the Commonwealth included a power to do what the Commonwealth legislature could authorise the Executive to do by enacting legislation, whether or not the Commonwealth legislature had actually enacted the legislation. The plaintiff, and some interveners, on the other hand, contended that the executive power was narrower. The defendants submitted that many modern authorities supported their submission. The plaintiff submitted that older authorities did not. The stand of the defendants is correct. Paragraph 2(a)(i) of the plaintiff's written submissions assumed that the executive power of the Commonwealth included a power to enter contracts without statutory authority as long as the Commonwealth had legislative power to give it statutory authority. The plaintiff's proposition was not a slip. It was repeated later in his written submissions. It was repeated again in his Outline of Oral Submissions. The written submissions of all other parties and interveners accepted its correctness. Indeed, Queensland specifically submitted that "[n]o party disputes" this. Queensland also went so far as to submit that the assumed proposition was "the orthodox test of the scope of executive power." In its written outline of oral argument, the Commonwealth was thus correct to describe the assumed proposition as a "common assumption" – correct at least at the time when that document was composed before the second day of oral argument commenced. There are exceptions to the assumed proposition as the plaintiff stated it, some widening it and some narrowing it. They will be referred to below438. The assumed proposition, as qualified by the exceptions, will be called "the Common Assumption". The extent to which the Common Assumption was actually common began to break down when Western Australia began its oral address. It withdrew the relevant part of its written submissions. Victoria and Queensland followed suit. In due course, the plaintiff and most government interveners withdrew their assertion of the Common Assumption and lined up against the defendants. This 438 See below at [397]-[402]. great renversement des alliances created a new and unexpected hurdle for the defendants. So the Court was as on a darkling plain, swept with confused alarms of struggle and flight, where ignorant armies clash by night – although the parties were more surprised than ignorant. The five parties and the seven interveners were represented by exceptionally capable and experienced constitutional lawyers. Those lawyers included seven Solicitors-General and a retired Federal Court judge. Their solemn adherence to the Common Assumption, during the calm and leisured composition of their written submissions, is a significant phenomenon. If Hugh Cairns and Roundell Palmer, arguing opposite sides of a case, agreed on a principle of equity, that was some indication that that principle was sound. Of course, an agreement between parties or interveners on the law does not bind the courts439. Adherence to the Common Assumption does not demonstrate or constitute the law. It is not decisive. But it is material. Why did this large group of expert constitutional lawyers initially adhere to the Common Assumption? Because they thought it to be correct. And it was correct. It is now necessary to examine, in roughly chronological order, first the legal materials supporting the Common Assumption and then the opinions of modern writers supporting it. Convention Debates. According to Cole v Whitfield, reference to the history of constitutional provisions440: "may be made, not for the purpose of substituting for the meaning of the words used the scope and effect – if such could be established – which the founding fathers subjectively intended the [provision] to have, but for the purpose of identifying the contemporary meaning of language used, the subject to which that language was directed and the nature and objectives of the movement towards federation from which the compact of the Constitution finally emerged." On 6 April 1891 the Constitutional Convention considered an early version of s 61. It was contained in Ch II cl 8 of the then draft: "The executive power and authority of the commonwealth shall extend to all matters with respect to which the legislative powers of the parliament may be exercised, excepting only matters, being within the legislative 439 Pantorno v The Queen (1989) 166 CLR 466 at 473; [1989] HCA 18. 440 (1988) 165 CLR 360 at 385 per Mason CJ, Wilson, Brennan, Deane, Dawson, Toohey and Gaudron JJ; [1988] HCA 18. powers of a state, with respect to which the parliament of that state for the time-being exercises such powers." (emphasis added) Sir Samuel Griffith then said: "This afternoon I have had circulated an amendment which I propose to make in this clause. It does not alter its intention, though it certainly makes it shorter. As the clause stands, it contains a negative limitation upon the powers of the executive; but the amendment will give a positive statement as to what they are to be. I move: That in line 2 all the words after the words 'extend to' be omitted with a view to the insertion in lieu thereof of the words 'the execution of the provisions of this constitution, and the laws of the commonwealth.' That amendment covers all that is meant by the clause, and is quite free from ambiguity."441 The amendment was agreed to, and the clause, as amended, was agreed to. This incident was referred to in Pape v Federal Commissioner of Taxation442. Those passages constitute evidence that the "contemporary meaning" of the words "execution … of the laws of the Commonwealth" used in s 61 included all matters on which Commonwealth legislative power might be exercised, even though it had not been exercised, subject to the stated exception. Opinions of the framers after 1900. The principles stated in Cole v Whitfield443 apply also to the language of lawyers at a time roughly contemporary with federation444. In 1901, Alfred Deakin, the Attorney-General, stated in an opinion for the Prime Minister445: 441 Official Report of the National Australasian Convention Debates, (Sydney), 6 April 1891 at 777-778. 442 (2009) 238 CLR 1 at 56-57 [115]-[117] per French CJ. 443 See above at [346]. 444 XYZ v The Commonwealth (2006) 227 CLR 532 at 583-591 [153]-[173]; [2006] HCA 25. 445 "Position of Commonwealth and States in Relation to Treaties: Source and Extent of Commonwealth Executive Power and External Affairs Power: Nature of Adherence to Treaties: Channel of Communication Between States and Empire or (Footnote continues on next page) "The executive power of the Commonwealth unlike the legislative is derived directly and independently from its fountain head – the Crown. It may be contended that it has a higher and larger scope than that of the States (see sections 61 and 64) but it is not necessary to discuss such a claim here. Its powers are at least coextensive with its legislative charter." In 1902, Deakin said in what is known as his Vondel opinion446: "Had it been intended to limit the scope of the executive power to matters on which the Commonwealth Parliament had legislated, nothing would have been easier than to say so." This sentence was quoted with approval in Pape v Federal Commissioner of "The framers of that clause evidently contemplated the existence of a wide sphere of Commonwealth executive power, which it would be dangerous, if not impossible, to define, flowing naturally and directly from the nature of the Federal Government itself, and from the powers, exercisable at will, with which the Federal Parliament was to be entrusted." That sentence, too, was approvingly quoted in Pape v Federal Commissioner of Taxation449. Foreign Powers", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 1901-14, (1981) 2 at 3. 446 "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 1901-14, (1981) 447 (2009) 238 CLR 1 at 59 [124] per French CJ. 448 "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 1901-14, (1981) 449 (2009) 238 CLR 1 at 59 [124] per French CJ. A little later Deakin said: "section 61 points also to executive powers which belong to prerogative", and continued450: "Shorn of prerogative powers, the Commonwealth Executive would be a mere appendage to the Parliament – a board of subordinate officers exercising such powers as might be conferred upon it, but without independent authority of any kind. Such a conception of the executive is wholly at variance, not only with every principle of English constitutional law, but with the clear and unmistakable provisions of the Constitution. Responsible government, though far more clearly established there than in any of the State Constitutions, would then be much more restricted in authority, character, and domain than it is in the States under their less explicit charters. 'The King's Ministers of State for the Commonwealth' – so described for the first time in a great constitutional document – would, individually and collectively, be less His Majesty's Ministers than are the members of the State Executives; the vast fund of powers held by the Crown in trust for the people would disappear; and the Commonwealth, instead of inheriting the fullest development of constitutional rights and privileges, would find its new political organisation had dwindled from a national to a municipal body, for making and executing continental by- laws." That suggests an amplitude in the powers conferred by s 61. How ample? Deakin answered that question thus451: "It is impossible to resist the conclusion that the Commonwealth has executive power, independently of Commonwealth legislation, with respect to every matter to which its legislative power extends. It is not contended that the Commonwealth Government has power to administer State Acts which remain in force relating to matters within the concurrent 450 "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 1901-14, (1981) 129 at 131. Deakin had stated similar ideas during the Convention Debates: Official Report of the National Australasian Convention Debates, (Sydney), 6 April 1891 at 769-773. 451 "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 1901-14, (1981) 129 at 131-132. The last sentence is an exaggeration: see below at [393], [395], [399] and [406]. power of the State Parliaments; nor that there are no executive acts requiring prior authority. What is clear is that in all matters within the scope of the legislative power of the Commonwealth, its executive possesses all the powers of the Crown properly exercisable within the Commonwealth. Although instances may be found in which there are, for the present, what may be treated as concurrent executive powers in the Commonwealth and the States, these are exceptions mainly of a temporary character. As a general rule, wherever the executive power of the Commonwealth extends, that of the States is correspondingly reduced." (emphasis added) Deakin then referred to Sir Samuel Griffith's 1891 amendment discussed above452. He proceeded453: "The original clause, therefore, extended the executive power of the Commonwealth to all matters within the legislative power of the Parliament, with a negative limitation applying to the execution of State laws on matters within the concurrent power of the States. The form was altered, to avoid even a negative limitation, but the intention remained the same." (emphasis added) In Pape v Federal Commissioner of Taxation this passage was quoted with approval. It was said that454: "Deakin did not intend to convey that the executive power was exhaustively defined by reference to the heads of Commonwealth legislative power." (footnote omitted) 452 See above at [397]. 453 "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 1901-14, (1981) 454 (2009) 238 CLR 1 at 57 [118] per French CJ. In 1907, Littleton Groom, the Attorney-General, said455: "it must be taken to be settled law that the executive power of the Commonwealth is coextensive with the whole range of its legislative powers, whether those powers are exercised or unexercised: and further, that there is vested in the Governor-General under section 61 of the Constitution the whole undefined mass of executive powers which are necessarily implied in the creation of a new political entity, sovereign within its own sphere. These general propositions are of course subject to the limitation that where the matter is one which is governed by a State law which has not been displaced by a law of the Commonwealth, the State executive power under the State law still remains." (emphasis added) As was recorded in Pape v Federal Commissioner of Taxation456, in 1903 and twice in 1912 other framers of the Constitution – H B Higgins, Sir John Forrest and Sir John Quick – stated in the House of Representatives that the Executive's power to spend was limited to the heads of legislative power457. Dr H V Evatt's view. Prerogative powers are a species of executive power. In The Royal Prerogative, completed in 1924 but not published until 1987, Dr H V Evatt gave consideration to what criterion should be applied to "the question of the division of Prerogative power between … Commonwealth and [the States]."458 He cited the opinion of Lord Buckmaster LC, Viscount Haldane, Lord Parker of Waddington and Lord Sumner in the Privy Council for the proposition that "the British North America Act has made a distribution between the Dominion and the provinces which extends not only to legislative but to 455 "Executive Power of Commonwealth – Whether Coextensive with Legislative Power: When is State Executive Power Displaced: Whether Commonwealth has Power by Executive Act to Permit Landing of Foreign Troops or Crews", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 1901-14, (1981) 358 at 360. 456 (2009) 238 CLR 1 at 108 [306]. 457 Australia, House of Representatives, Parliamentary Debates (Hansard), 9 July 1903 at 1997-1998 (H B Higgins); Australia, House of Representatives, Parliamentary Debates (Hansard), 25 September 1912 at 3422-3424 (Sir John Forrest); Australia, House of Representatives, Parliamentary Debates (Hansard), 1 October 1912 at 3639 (Sir John Quick). executive authority."459 They said that in general "the distribution under the new grant of executive authority in substance follows the distribution under the new grant of legislative powers."460 Dr Evatt also cited Canadian legal writing approving those views461. Dr Evatt considered that they were "supported by the fact that in modern times at any rate all executive power is in a sense referable to some head of legislative power." He quoted Harrison Moore: "The executive power is … closely allied to the legislative … [W]e are not encouraged to believe that the executive can make good an independent sphere of its own, free from legislative interference and control."462 Dr Evatt also referred to the statement of Knox CJ, Isaacs, Rich and Starke JJ that executive power is "necessarily correlative to legislative power"463. High Court authority before 1974. The relevant authorities contain many statements supporting the Common Assumption. All of them are in some sense dicta, as are competing statements or assumptions, and some were uttered at a time when it was thought that ss 81 and 83 of the Constitution created a power to approve expenditure. In 1935, in Attorney-General (Vict) v The Commonwealth464 Starke J said in a judgment which was dissenting, but not on this point: "It may well be that the executive power 'is co-extensive with the responsibility and power of the Commonwealth' and not limited 'to matters connected with departments actually transferred or matters upon which the Commonwealth has power to make laws and has made laws'."465 459 Bonanza Creek Gold Mining Co Ltd v The King [1916] 1 AC 566 at 579. See also Attorney-General for Canada v Attorney-General of the Province of Ontario (1894) 5 Cart 517 at 543 and Her Majesty in right of the Province of Alberta v Canadian Transport Commission [1978] 1 SCR 61 at 71. 460 [1916] 1 AC 566 at 580. 461 The Royal Prerogative, (1987) at 204-205. 462 The Constitution of the Commonwealth of Australia, 2nd ed (1910) at 98. 463 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 at 148; [1920] HCA 54. 464 (1935) 52 CLR 533 at 567; [1935] HCA 31. 465 There is a reference, preceded by "cf", to Berriedale Keith, Responsible Government in the Dominions, (1912), vol II at 809. The correct page reference is (Footnote continues on next page) In 1940, Evatt J said that in determining which aspects of the royal prerogative were exercisable by the Governor-General and which were exercisable by the Governors of the States, "the division of subject matters suggested by secs 51 and 52 of our Constitution affords a guide"466. He did not suggest that exercises of the royal prerogative needed statutory backing, only the capacity to legislate. Barton v The Commonwealth. In 1974, in Barton v The Commonwealth, "[Section 61] enables the Crown to undertake all executive action which is appropriate to the position of the Commonwealth under the Constitution and to the spheres of responsibility vested in it by the Constitution." That was later quoted with approval in Davis v The Commonwealth468. It was also quoted with approval in Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority469. And it was also referred to470 and quoted471 with approval in Pape v Federal Commissioner of Taxation. The Australian Assistance Plan case. In 1975, this Court decided the Australian Assistance Plan case. Barwick CJ said472: 800. The words are in fact those of a quotation, of which the author appears to approve, of part of a despatch from the Secretary of State for the Colonies, Joseph Chamberlain, in relation to the question of the channels through which the Imperial Government and the Commonwealth Government should communicate. 466 Federal Commissioner of Taxation v Official Liquidator of E O Farley Ltd (1940) 63 CLR 278 at 321; [1940] HCA 13. 467 (1974) 131 CLR 477 at 498; [1974] HCA 20. As Winterton noted ("The Relationship between Commonwealth Legislative and Executive Power", (2004) 25 Adelaide Law Review 21 at 33 n 87), the last sentence is "essentially quote[d]" in Re Ditfort; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347 at 369. 468 (1988) 166 CLR 79 at 93 per Mason CJ, Deane and Gaudron JJ; [1988] HCA 63. 469 (1997) 190 CLR 410 at 455 per McHugh J and 464 per Gummow J; [1997] HCA 470 (2009) 238 CLR 1 at 83 [214] per Gummow, Crennan and Bell JJ. 471 (2009) 238 CLR 1 at 116 [328] per Hayne and Kiefel JJ. 472 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 362. "In the long run, whether the attempt is made to refer the appropriation and expenditure to legislative or to executive power, it will be the capacity of the Parliament to make a law to govern the activities for which the money is to be spent, which will determine whether or not the appropriation is valid. With exceptions that are not relevant to this matter and which need not be stated, the executive may only do that which has been or could be the subject of valid legislation." Gibbs J said473, after quoting s 61 of the Constitution: "the Executive cannot act in respect of a matter which falls entirely outside the legislative competence of the Commonwealth. … We are in no way concerned in the present case to consider the scope of the prerogative or the circumstances in which the Executive may act without statutory sanction. Once it is concluded that the Plan is one in respect of which legislation could not validly be passed, it follows that public moneys of the Commonwealth may not lawfully be expended for the purposes of the Plan." Mason J said of s 61474: the area of responsibilities allocated the Constitution, "Although the ambit of the [executive] power is not otherwise defined by Ch II it is evident that in scope it is not unlimited and that its content does the not reach beyond Commonwealth by responsibilities which are ascertainable from the distribution of powers, more particularly the distribution of legislative powers, effected by the Constitution itself and the character and status of the Commonwealth as a national government. The provisions of s 61 taken in conjunction with the federal character of the Constitution and the Commonwealth and the States make any other conclusion unacceptable." the distribution of powers between That passage was summarised with approval in Davis v The Commonwealth475 and it was quoted and summarised with approval in Pape v Federal Commissioner of Taxation476. 473 (1975) 134 CLR 338 at 379. 474 (1975) 134 CLR 338 at 396-397. 475 (1988) 166 CLR 79 at 93 per Mason CJ, Deane and Gaudron JJ. 476 (2009) 238 CLR 1 at 114 [323]. The references to "allocated" and "distribution" are plainly references to ss 51 and 52 of the Constitution. The reference to the States is a reference to the limits on legislative power and therefore State power. Mason J then dealt with certain executive powers which it was appropriate for a national government to have. His Honour went on477: "However, the executive power to engage in activities appropriate to a national government, arising as it does from an implication drawn from the Constitution and having no counterpart, apart from the incidental power, in the expressed heads of legislative power, is limited in scope. It would be inconsistent with the broad division of responsibilities between the Commonwealth and the States achieved by the distribution of legislative powers to concede to this aspect of the executive power a wide operation effecting a radical transformation in what has hitherto been thought to be the Commonwealth's area of responsibility under the Constitution, thereby enabling the Commonwealth to carry out within Australia programmes standing outside the acknowledged heads of legislative power merely because these programmes can be conveniently formulated and administered by the national government." Gibbs CJ said in The Commonwealth v Tasmania478: "I completely agree with that statement." In the Australian Assistance Plan case Jacobs J said479: "When moneys are voted to the Queen by Parliament for the purposes declared by the Parliament, it falls within the prerogative to determine whether or not those moneys will be expended for that purpose and how, within the expression of the purpose to which the moneys have been appropriated, the expenditure will be made. Legislation is only needed when Parliament chooses to replace or affect the prerogative powers by legislation which either extends or limits or simply reproduces in the form of executive or other authority the powers previously comprehended within the prerogative. The exercise of the prerogative of expending moneys voted by Parliament does not depend on the existence of legislation on the subject by the Australian Parliament other than the appropriation itself. This exercise of the prerogative is in no different case from other exercises of the prerogative which fall within the powers of the 477 (1975) 134 CLR 338 at 398. 478 (1983) 158 CLR 1 at 109; [1983] HCA 21. It was also approved in Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 181 [519]. 479 (1975) 134 CLR 338 at 404-405. the Commonwealth under s 61 of Executive Government of the Constitution. If legislation were a prerequisite it would follow that the Queen would never be able to exercise the prerogative through the Governor-General acting on the advice of the Executive Council; she would always exercise executive power by authority of the Parliament. This cannot be suggested. It would, if correct, result in an inability of Australia to declare war, make treaties, appoint officers of State and members of the public service of the Commonwealth and do all the multitude of things which still fall within the prerogative, unless there was a general or special sanction of an Act of Parliament." Then he said of the prerogative480: "Primarily its exercise is limited to those areas which are expressly made the subject matters of Commonwealth legislative power." That means that while the executive power of the Commonwealth does not generally extend beyond the limits of its legislative power, the executive power does extend up to those limits. Jacobs J then indicated respects in which the executive power of the Commonwealth extends beyond those limits which are immaterial for present purposes. Finally, his Honour said481: "although the Parliament may legislate in respect of any subject matter which is within the prerogative so far as it is exercisable through the Governor-General on the advice of the Executive Council, it does not follow that legislation is necessary before a prerogative power is exercised." What do the opinions of these four Justices in the Australian Assistance Plan case say? The scope of executive power was something which it was necessary for only Mason and Jacobs JJ to examine. That is because only those two Justices decided that the appropriation of funds for the Australian Assistance Plan was valid (Barwick CJ and Gibbs J did not) but that the appropriation statute provided insufficient authority for the expenditure of the funds. Hence what Barwick CJ and Gibbs J said about s 61 was not necessary for their conclusions. And Barwick CJ and Gibbs and Mason JJ were in dissent from the result of the case as a whole. But what all four Justices said has been treated as important. The issue to which the passages quoted from those four judgments go is the principle controlling the relationship between the executive power conferred by s 61 and the legislative powers conferred by ss 51-52 and s 122. Putting aside the matter of exceptions, to which Barwick CJ referred, and which will be discussed 480 (1975) 134 CLR 338 at 405. 481 (1975) 134 CLR 338 at 406. below482, there was agreement that the power of the Executive to act extended to fields in which the Commonwealth had the power to legislate. The controversy was whether the power of the Executive to act extended further. Barwick CJ and Gibbs J denied that it extended further. Mason J thought that s 61 extended a little further in relation to "activities appropriate to a national government", but denied that s 61 could support the Australian Assistance Plan. Jacobs J, who considered that s 61 could support the Plan, thought that s 61 extended to "all matters which are the concern of Australia as a nation"483. Subject to the content of the exceptions to which Barwick CJ referred, his Honour did not say "the executive cannot go beyond the boundary marked by the legislature's capacity to legislate, and may indeed have lesser powers." Rather his Honour was saying: "the executive can go right up to the boundary marked by the legislature's capacity to legislate." In relation to what Gibbs J said484, the Solicitor-General of the State of Queensland put the following submission: something "[I]t would be to commit the fallacy of the undistributed middle to say that the Commonwealth, therefore, by reliance upon that dictum, it falls within the executive power. His Honour did not consider that." legislative competence of falls within the The submission assumes that to adopt Gibbs J's statement was to reason syllogistically. That is not so. It is true that Gibbs J said: "We are in no way concerned in the present case to consider … the circumstances in which the Executive may act without statutory sanction."485 But he was not there denying the Common Assumption. One aspect of the Common Assumption is that it deals with what has been called the "breadth" of the executive power – with how the limits of the executive power fit in with federal considerations486. Another aspect of the Common Assumption is that it deals with the "depth" of executive power, which raises questions about when the Executive can, and when it cannot, act without legislative authority. In the sentence just quoted Gibbs J was pointing out that the case did not concern the "depth" of executive power. Questions about the depth of executive power may well require different answers 482 See below at [397]-[402]. 483 (1975) 134 CLR 338 at 406. 484 (1975) 134 CLR 338 at 379, quoted above at [361]. 485 (1975) 134 CLR 338 at 379. 486 See below at [385] and [405]. in the circumstances of the Australian Assistance Plan case (which concerned the payment of money to newly created Regional Councils in order to allow them to engage in social planning) from those which arise in relation to entering contracts. But read in context, which context concerned the breadth of executive power, his Honour was proceeding on the basis that there was not much point in marking the line beyond which the Executive could not go unless the line also marked the edge of the area in which it had power to act. Gibbs J did not say that executive incapacity to act existed even within the area his Honour demarcated. In context, Gibbs J's statement that the s 61 grant of executive power is limited in the manner indicated implies that within that limit executive power exists. The same is true of what Barwick CJ, Mason and Jacobs JJ each said. Thus although Mason J, for example, spoke in the first passage quoted487 of executive power not reaching "beyond" a certain area, he did not suggest that there were islands of non-power within that area. High Court authority after 1975. In 1977 Aickin J said in Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth488: "It is plain that even without statutory authority the Commonwealth in the exercise of its executive power may enter into binding contracts affecting its future action." "[I]t is significant in this case that the Agreements have been authorized by the Parliament. There is no question, in my opinion, that the Parliament had constitutional authority to authorize their making. We are not considering an agreement resting merely on the authority of the executive, though I agree with my brother Aickin in thinking that, even if we were, there is no ground for thinking that the Agreements or any of them were beyond the competence of the executive." Aickin J's statement was quoted with approval by Gibbs CJ in A v Hayden490. 487 (1975) 134 CLR 338 at 396-397, quoted above at [362]. 488 (1977) 139 CLR 54 at 113; [1977] HCA 71. 489 (1977) 139 CLR 54 at 61. 490 (1984) 156 CLR 532 at 543; [1984] HCA 67. In 1983, in R v Duncan; Ex parte Australian Iron and Steel Pty Ltd, Mason J stated that the491: "executive power of the Commonwealth is not … limited to heads of power which correspond with enumerated heads of Commonwealth legislative power … The scope of the executive power is to be ascertained, as I indicated in the AAP Case492, from the distribution of the legislative powers effected by the Constitution and the character and status of the Commonwealth as a national government. Of necessity the scope of the power is appropriate to that of a central executive government in a federation in which there is a distribution of legislative powers between the Parliaments of the constituent elements in the federation." All but the first sentence of this passage was quoted with approval in R v Hughes493 and again in Pape v Federal Commissioner of Taxation494. In 1988, in Davis v The Commonwealth, Brennan J, after quoting parts of what Barwick CJ, Gibbs and Jacobs JJ said in the Australian Assistance Plan case, said495: "There is no reason to restrict the executive power of the Commonwealth to matters within the heads of legislative power." That implies at least that the executive power of the Commonwealth does extend to matters within the heads of legislative power. In 2002, in Western Australia v Ward, Callinan J cited Barwick CJ, Gibbs and Mason JJ in the Australian Assistance Plan case for his Honour's conclusion that496: "The scope of the Commonwealth's executive power is generally coterminous with the scope of its legislative powers." (footnote omitted) The idea that the executive power of the Commonwealth does not generally extend beyond its legislative power was considered by Gibbs and Mason JJ in the Australian Assistance Plan case497 to find support in The 491 (1983) 158 CLR 535 at 560; [1983] HCA 29. 492 (1975) 134 CLR 338 at 396-397. 493 (2000) 202 CLR 535 at 554-555 [38] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [2000] HCA 22. 494 (2009) 238 CLR 1 at 63 [132] per French CJ. 495 (1988) 166 CLR 79 at 110. 496 (2002) 213 CLR 1 at 391 [962]; [2002] HCA 28. 497 (1975) 134 CLR 338 at 379 and 396-397. Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd ("the Wool Tops case")498 and The Commonwealth v Australian Commonwealth Shipping Board499. Zines has also expressed this view500. These are, however, difficult authorities. The difficulty both of the authorities and of the problem under discussion is revealed by the fact that those opposing the Common Assumption relied on the former501. Non-High Court authority. Applications of the Common Assumption include cases upholding the validity of a contract made by the Commonwealth to refund to prospective overseas students the fees they had paid for the provision of educational services which they had been unable to receive because of visa problems, in return for an assignment of the students' rights in respect of those fees502. The opinions of writers. The Common Assumption, and in particular what was said in support of it in the Australian Assistance Plan case, has received significant support from writers. This has been true from the time that the case was decided until the present day. In 1977, Crommelin and Evans said of the passages quoted above503: "Considerable support was voiced for the proposition that the limits placed on executive power coincide with Commonwealth legislative power." those applicable Later they said that the relevant four Justices "indicated that as a matter of principle [the] limits upon Commonwealth would in general coincide."504 legislative and executive powers of the 498 (1922) 31 CLR 421 at 432; [1922] HCA 62. See also at 441, 443 and 451 (requiring a statutory sanction beyond an Appropriation Act). 499 (1926) 39 CLR 1 at 10; [1926] HCA 39. 500 The High Court and the Constitution, 5th ed (2008) at 346-347. 501 See below at [387]-[388]. 502 The Commonwealth v Ling (1993) 44 FCR 397 at 430; appeal dismissed Ling v The Commonwealth (1994) 51 FCR 88. 503 "Explorations and Adventures with Commonwealth Powers", in Evans (ed), Labor and the Constitution 1972-1975, (1977) 24 at 43. 504 "Explorations and Adventures with Commonwealth Powers", in Evans (ed), Labor and the Constitution 1972-1975, (1977) 24 at 57. In 1979, Lane said505: "If we rely on the very creation and existence of a Government of the Commonwealth as a source of federal executive power, then the limits will be found in the kind of polity in which this Government was created and exists – a federal polity. The Commonwealth may declaim that it is a national government. That may well be. But it is a national government in a federal polity. In this context the limits of the federal executive power are two: limits reflecting the federal division of legislative power and limits of a national government (as opposed to a local, that is, State government). The real difficulty will lie in applying the criterion 'an executive power peculiar to the status of a national government'." (emphasis in original) Lane then quoted parts of the first passage from Mason J's judgment quoted "When measuring the extent of the federal executive power in the light of the Commonwealth catalogue of powers we may not have great difficulty. When measuring the extent of the federal executive power in the light of the status of a national government we will falter." Lane was thus suggesting that federal executive power existed up to the limit of legislative power, but not necessarily beyond, or far beyond it. Lane was not a writer who applauded judicially recognised expansions in the central power of the Australian Commonwealth, whether it be legislative power or executive power. Nor did he permit expansions of which he disapproved to pass without comment. Thus he said, after noting the opinions of Mason and Jacobs JJ and their differing outcomes for the Australian Assistance Plan508: "The criterion, status-of-a-national-government, may be common to both Justices, but its application differs. Our current centripetal High 505 The Australian Federal System, 2nd ed (1979) at 430. 506 See above at [362]. 507 The Australian Federal System, 2nd ed (1979) at 430. 508 The Australian Federal System, 2nd ed (1979) at 431. Court, I suspect, would be as generous in its application as Jacobs [J]." (footnote omitted) He was not using the word "centripetal" in a laudatory way. Yet there is not in Lane any suggestion that the Australian Assistance Plan case was only marking a boundary beyond which the legislative power could not extend. He did not read the case as leaving open any significant areas within that boundary where executive power did not apply. When he spoke of "measuring the extent of the federal executive power in the light of the catalogue of [legislative] powers", he was not implying that there were significant unstated restrictions within the area so demarcated. Winterton, writing in 1983, said: "the contours of executive power generally follow those of legislative power."509 Winterton referred to earlier "uncertainties" on the subject. As examples of the uncertainties he gave J G Latham KC's argument in Attorney-General (Vict) v The Commonwealth510 and D M Dawson QC's argument in the Australian Assistance Plan case511. Winterton said, however, that: "[w]hatever uncertainties there may have been in the past regarding the breadth of the executive power of the Commonwealth, they have been dispelled by the clear statements of four members of the High Court in the AAP case."512 In 1987, Rose stated that the power under s 61 to enter contracts "is nowadays properly regarded as extending to any contracts that could be authorised under a Commonwealth Act (whether or not there is such an Act)" (emphasis in original)513. 509 Parliament, the Executive and the Governor-General: A Constitutional Analysis, (1983) at 30, approved in Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 181 [520]. See also at 47. 510 (1935) 52 CLR 533 at 552 ("The definition of the powers of the Commonwealth Parliament does not limit the executive powers of the Commonwealth at all"). 511 (1975) 134 CLR 338 at 341: that s 61 "does not confer executive power beyond the execution of laws made by the Parliament." 512 Parliament, the Executive and the Governor-General: A Constitutional Analysis, (1983) at 30 (footnote omitted). 513 Rose, "The Government and Contract", in Finn (ed), Essays on Contract, (1987) In 1992, 1997 and 2008, Zines asserted, in the 3rd, 4th and 5th editions of The High Court and the Constitution, in reliance on the Australian Assistance Plan case514: "It is clear that the scope of Commonwealth responsibilities which limit the executive power of the Commonwealth is to be judged primarily from the express powers granted to the Commonwealth Parliament." In 1987, Zines also said515: "Generally speaking the criterion adopted by the High Court in respect of the executive power of the Commonwealth is, as Evatt suggests, whether the subject comes within Commonwealth legislative power." And Zines said that this had been accepted by a majority of the judges in the Australian Assistance Plan case. In 1999, 2004 and 2009, Seddon said, in the 2nd, 3rd and 4th editions of Government Contracts: Federal, State and Local516: "The … generally accepted … view … is that the Commonwealth's executive power is limited by reference to specific subject-matter found in the Constitution and it can only make contracts that relate to, or are a necessary part of, the subject-matter of its legislative powers." (footnote omitted) In a paper written in collaboration with Winterton published in 2009, Gerangelos spoke of the executive power of the Commonwealth thus517: "The 514 The High Court and the Constitution, 3rd ed (1992) at 218, 4th ed (1997) at 255 and 5th ed (2008) at 347. In the 1st ed (1981) at 206 and the 2nd ed (1987) at 227, the passage read: "The prevailing view … is that any executive action that can be taken by the Commonwealth without legislative authorisation is confined to matters in respect of which Parliament can make laws." 515 "Commentary", in Evatt, The Royal Prerogative, (1987) at C12. 516 Government Contracts: Federal, State and Local, 2nd ed (1999) at 50 [2.11], 3rd ed (2004) at 58 [2.11] and 4th ed (2009) at 68 [2.11], and in each citing the relevant passages in the judgments of Barwick CJ, Gibbs and Mason JJ in the Australian Assistance Plan case. 517 "Parliament, the Executive, the Governor-General and the Republic: The George Winterton Thesis", in Lee and Gerangelos (eds), Constitutional Advancement in a Frozen Continent: Essays in Honour of George Winterton, (2009) 189 at 192. Commonwealth's constitutional sphere of activity has been interpreted as essentially coincident with its legislative powers." He gave a footnote reference to the key passages in the Australian Assistance Plan case quoted above. Gerangelos then set out some criticisms which Winterton made of Mason J's extension of executive powers beyond that limit to include those derived from the "character and status of the Commonwealth as a national government". But he set out no criticism of the proposition that executive power existed up to that limit. And Gerangelos described "the view that s 61 extended to all subjects falling within the Commonwealth's legislative power" as based on "long established authority"518. In this he was following the view of Winterton519. In 2010, Twomey stated, citing inter alia the reasons of Barwick CJ, Gibbs and Mason JJ in the Australian Assistance Plan case520, that it "has generally been accepted that executive power follows legislative power."521 She also said522: "it is necessarily an interference with the constitutional distribution of powers to confer on the Commonwealth additional executive powers (and incidental legislative powers) which do not fall within the categories of powers distributed to the Commonwealth by the Constitution. It is an even greater interference where those executive powers and associated incidental legislative powers fall within an area of state legislative and executive jurisdiction." (footnote omitted) 518 "Parliament, the Executive, the Governor-General and the Republic: The George Winterton Thesis", in Lee and Gerangelos (eds), Constitutional Advancement in a Frozen Continent: Essays in Honour of George Winterton, (2009) 189 at 195 (footnote omitted). 519 "The Relationship between Commonwealth Legislative and Executive Power", (2004) 25 Adelaide Law Review 21 at 31. 520 (1975) 134 CLR 338 at 362, 379 and 396-397. 521 "Pushing the Boundaries of Executive Power – Pape, The Prerogative and Nationhood Powers", (2010) 34 Melbourne University Law Review 313 at 321. 522 "Pushing the Boundaries of Executive Power – Pape, The Prerogative and Nationhood Powers", (2010) 34 Melbourne University Law Review 313 at 329. The most recent writer is Gerangelos523, who said of the passage from Mason J's reasons for judgment in the Australian Assistance Plan case quoted above524: "He … held that the subject matters in relation to which the Commonwealth could take [executive] action were coincident with its legislative powers, express or implied." (footnote omitted; emphasis in original) Gerangelos also supported the Common Assumption in the following passage, which relies on the parts of the Australian Assistance Plan case quoted above525: "Winterton conceived his neat distinction between the 'breadth' and 'depth' elements of Commonwealth executive power in the maintenance limb; 'breadth' referring to the subject matters in relation to which the Commonwealth executive could operate, 'depth' referring to the precise actions which may be taken in relation to those subject matters. Breadth is defined by reference to the legislative powers of the Commonwealth and is essentially coincident with them:526 'the distribution of legislative powers effected by the Constitution itself and the character and status of the Commonwealth as a national government.'527" (emphasis in original) What is the alternative to the Common Assumption? After the renversement des alliances, the plaintiff and some interveners contended that the authorities did not say that the executive power of the Commonwealth, vis-à-vis 523 "The Executive Power of the Commonwealth of Australia: s 61 of the Commonwealth Constitution, 'Nationhood' and the Future of the Prerogative", to be published in the forthcoming issue of the Oxford University Commonwealth Law Journal. 524 See above at [362]. 525 "The Executive Power of the Commonwealth of Australia: s 61 of the Commonwealth Constitution, 'Nationhood' and the Future of the Prerogative", to be published in the forthcoming issue of the Oxford University Commonwealth Law Journal. The "breadth"/"depth" distinction which Winterton drew, though it may not exhaust the possibilities which s 61 offers for analysis, is not only neat but illuminating. 526 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 362 per Barwick CJ, 379 per Gibbs J, 396-397 per Mason J and 405-406 per Jacobs J. 527 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 396 per the States, enabled the Commonwealth, in the performance of a contract, to spend money properly appropriated up to the limits of its legislative power, whether or not the expenditure is authorised by statute. They contended rather that Commonwealth executive power was subject to some further limitation. But they never identified clearly what that limitation was and what its source was. The Commonwealth Solicitor-General complained about this in oral argument more than once. The complaint was not addressed in later oral argument, nor in the written submissions filed after the close of oral argument. Of course, the complaint could easily be met by those who departed from the Common Assumption by submitting that the executive power of the Commonwealth does not extend beyond the powers that specific constitutional provisions and Commonwealth statutes give it. That rule would not sit comfortably with the fact that for the first six months of the Commonwealth's existence, the framers tolerated a state of affairs in which Parliament enacted no legislation and the first Commonwealth public servant, R R Garran, exercised a great deal of executive power528. But it would be a clear rule. It would satisfy all the demands for representative and responsible government and respect for the Senate made by those opposing the Common Assumption529. That, however, was not the submission they made. The closest that those opposing the Common Assumption came to meeting the complaint was the Solicitor-General of the State of Queensland's submission that the executive power of the Commonwealth extends, and extends only, to "all of those things [which] arise implicitly from the creation of the nation by the Act that gave effect to the Commonwealth, and the establishment of the Executive by the terms of the Constitution itself. … [O]ne then looks to the terms of a Commonwealth statute expressly or implicitly, or the terms of the Constitution expressly or implicitly." Heavy work is done in this submission by the thrice invoked adverb "implicitly". What does the submission mean? The submissions attacking the Common Assumption: authority. Those who resiled from the Common Assumption pointed to what was said to be authority contradicting it, and to its supposed difficulties. The Solicitor-General of the State of Queensland relied on dicta by Isaacs J530, Higgins J531 and Starke J532 in the Wool Tops case. Whether those 528 The first Commonwealth statute received royal assent on 25 June 1901. 529 See below at [394]-[396]. 530 (1922) 31 CLR 421 at 445-451. 531 (1922) 31 CLR 421 at 455. 532 (1922) 31 CLR 421 at 460-461. dicta support the Queensland position is obscure. If they do, they are inconsistent with many later statements. The result of that case can be explained thus. It concerned four agreements made by the Commonwealth. Their validity was impugned on the basis that they were made without power. The first three agreements were treated as amounting to taxation, which required legislative authority533. The fourth agreement was vitiated by what was then, but is no longer seen to be, a requirement that executive expenditure depends on a prior rather than a subsequent appropriation534. The dicta of Isaacs and Rich JJ in The Commonwealth v Colonial Ammunition Co Ltd535 were also relied on. Queensland submitted that their Honours were discussing the exercise of executive power without statutory authorisation. Those dicta are better understood on the basis that their Honours were discussing the grant to the Executive by legislation of power which depended on a condition – an Order in Council – which was not satisfied. Queensland relied on dicta in Kidman v The Commonwealth536. However, though these dicta appear to assume the need for statutory authority to validate executive action, it is not clear that the question was to the forefront of their Honours' minds. That case did not concern the executive power of Finally, Queensland referred to passages in New South Wales v Bardolph537. the Commonwealth (as distinct from a State). In any event, it does not support the conclusion that Queensland said followed from it, namely that for the Executive "to do an act which involves the expenditure of money it must point to a Commonwealth law or a provision of the Constitution or something which inheres in itself, as the Executive, which would permit it to do so." Submissions attacking the Common Assumption: principle. The Solicitor- General of the State of Tasmania submitted that Commonwealth executive power should be limited to the execution and maintenance of laws actually enacted by the Commonwealth Parliament, because otherwise there would be a potential for the concurrent but inconsistent exercise of Commonwealth and State executive power with respect to the same matter. Queensland adopted a similar approach. 533 (1922) 31 CLR 421 at 433-434, 443-445 and 460-461. 534 (1922) 31 CLR 421 at 434 and 445-451. 535 (1924) 34 CLR 198 at 220; [1924] HCA 5. 536 (1925) 37 CLR 233 at 240-241 and 251; [1925] HCA 55. 537 (1934) 52 CLR 455 at 496 and 507-509; [1934] HCA 74. Underlying that submission was the fact that while some Commonwealth legislative powers are exhaustive (for example, ss 52, 122, 51(vi)538, and, at least in narrower applications, s 51(xxix)539) many are concurrent. While s 109 of the inconsistency between Commonwealth and State Constitution legislation, inconsistency between Commonwealth and State executive conduct. The more actions that the Commonwealth Executive may permissibly take without support in legislation, the greater the scope for collisions between Commonwealth and State executive power540. is no provision resolves there resolving The chance of conflicts between Commonwealth and State executive power is reduced by the energy with which the Commonwealth has exercised its legislative powers to the exclusion of State laws. Any inconsistency between exercises of State executive power and Commonwealth executive power can be terminated by the Commonwealth enacting legislation which regulates or abolishes State executive power. That is so whether the source of the State executive power is non-statutory (in the prerogative or elsewhere) or in legislation. In the former case the Commonwealth legislation will prevail over 538 The defence power is not expressed to be exhaustive, but several other provisions in the Constitution indicate that it is. Section 114 prevents a State without the consent of the Commonwealth Parliament from raising or maintaining any naval or military force. Section 52(ii) makes exclusive to the Commonwealth the power of legislation with respect to "matters relating to any department of the public service the control of which is by this Constitution transferred to the Executive Government of the Commonwealth". Section 69 provides for the transfer to the Commonwealth of departments of "naval and military defence". Section 119 imposes a duty on the Commonwealth to "protect every State against invasion". The executive power in relation to defence is also extensive, because of s 70. See Joseph v Colonial Treasurer (NSW) (1918) 25 CLR 32 at 46-47; [1918] HCA 30. 539 The external affairs power is not expressed to be exclusive, but, as Barwick CJ said in New South Wales v The Commonwealth (1975) 135 CLR 337 at 373; [1975] HCA 58: "Whilst the power with respect to external affairs is not expressed to be a power exclusively vested in the Commonwealth, it must necessarily of its nature be so as the Commonwealth has international status. The colonies never were and the States are not international persons." international relations and affairs. Only 540 See Cadia Holdings Pty Ltd v New South Wales (2010) 242 CLR 195 at 210 [31]; [2010] HCA 27. non-statutory law; in the latter it will prevail by virtue of s 109 of the Constitution541. The Solicitor-General of the State of Tasmania also submitted that if Commonwealth executive power extended beyond powers granted by statute, it would operate unsatisfactorily in two respects. First, it would operate free of legislative control. Secondly, it would operate in an area of immunity from statutory judicial review. The answer to the first point is that the use of executive power can be controlled by the legislature enacting legislation. What is more, use by the Executive of its powers in a fashion displeasing to the legislature is likely to lead to the House of Representatives losing confidence in the Executive and to an inability on the part of the Executive to procure the passage of future Appropriation Bills. The answer to the second point is that quite apart from the Administrative Decisions (Judicial Review) Act 1977 (Cth), which depends on conduct "under an enactment", common law principles of judicial review can be invoked in this Court under s 75(iii) or (v) of the Constitution and s 30(a) of the Judiciary Act 1903 (Cth) and in the Federal Court of Australia under s 39B(1) and (1A)(a) and (b) of that Act. In various respects critics of the Common Assumption contended that it ignored federal considerations. Federal considerations have certainly been seen as relevant to the extent of the executive power. Different Justices grappled with the impact of federal considerations in different ways in Pape v Federal But the vice of Commissioner of Taxation, to go no further back. Commonwealth executive power is reduced when the executive power relied on is marked by the limits of the Common Assumption. For the Common Assumption that Commonwealth executive power follows the contours of Commonwealth legislative power. Commonwealth legislative power, coupled with s 109, gives the Commonwealth a preferred position over the States in certain respects. But otherwise State executive power is not fettered by Commonwealth executive power. takes federal considerations into account in holding Critics of the Common Assumption appealed to federal considerations by submitting that on the Common Assumption the Executive could bypass the Senate, damage representative and responsible government, and upset the correct balance between the House of Representatives and the Senate. They submitted that if all the Commonwealth Executive needed to act was an Appropriation Act and an unexercised capacity on the part of the legislature to legislate, the Senate's role in government would diminish. That is because Commonwealth legislation, other than appropriation and taxation legislation, requires Senate assent, can be 541 Winterton, Parliament, the Executive and the Governor-General: A Constitutional Analysis, (1983) at 47. initiated in the Senate and can be amended in the Senate, whereas appropriation and taxation Bills, though they need Senate assent, cannot originate or be amended in the Senate. Bills of that kind can only be returned to the House of Representatives with a request for amendment (s 53 of the Constitution). They submitted that if the Common Assumption were correct, the Executive would be able to avoid legislative scrutiny, and in particular the risk of amendments by the Senate to draft legislation. Those arguments may be answered thus. In practice, and by right, the Senate takes a very active role in controlling and monitoring executive expenditure. It is true that the description given to money appropriated in Appropriation Acts and their accompanying documents is often very brief and general. But Senators are able to seek information and criticise proposals to expend money. Senators can do this through the Senate Estimates Committee, through correspondence with responsible Ministers, through debate on Appropriation Bills, and through the questioning of Ministers who are Senators, or their representatives, in the Senate. Nothing in the Constitution prevents the Senate from returning Bills to which s 53 relates which it dislikes to the House of Representatives for amendment, and, in the last resort, from rejecting them. The Senate is not in the same position as some almost impotent post-Asquithean House of Lords. It cannot be said that the effect of the Common Assumption is to remove the Senate (or the House of Representatives) from the process of sanctioning executive expenditure. And nothing in the Constitution prevents the Senate initiating legislation to control the use by the Executive of its power to spend what has been appropriated. Finally, the Senate, like the House of Representatives, is a platform from which critics of how the executive power has been wielded can build up that corrosive dissatisfaction which eventually leads to a change of government after an election. Exceptions narrowing the extent of executive power as formulated in the Common Assumption. Barwick CJ in the Australian Assistance Plan case referred to the existence of exceptions to the generality of the Common Assumption. Within the area marked out by Commonwealth legislative power there certainly are exceptions to it. In part that is because the Common Assumption rests on an implication. No implication of power can be made which is inconsistent with an express power. Hence one exception to the generality of the principle that executive power follows the contours of legislative power is s 51(ii) – the taxation power. The Executive cannot raise taxes, because, even apart from the pressures of English constitutional history against that possibility542, there are express powers in, for example, ss 53, 54, 55 and 56 dealing with the raising of taxes. 542 See The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 460. Another exception was conceded by the Solicitor-General of the Commonwealth. He conceded that so far as the executive power of the Commonwealth extends to prerogative powers to affect rights or liabilities, an unexercised Commonwealth power to legislate does not permit the Executive to alter rights and liabilities arising under State law. In the absence of statutory authority the Commonwealth Executive has no power to dispense with the operation of any law. It has no power to alter the content of State law. It has no power to relieve others from their obligation to comply with it543. Thus the Commonwealth Executive (like the judiciary) has no power to create offences544. As Harrison Moore said: "[T]he executive has no inherent legislative power."545 The Commonwealth cannot by executive action seize the property of another (including a State): legislation conforming to s 51(xxxi) of the Constitution is necessary546. This concession by the Solicitor-General of the Commonwealth fitted in with a reciprocal concession by counsel for the plaintiff: that there is an executive power to contract without statutory authorisation when there is no abrogation of any other person's rights, so that there is no need for legislation to change the common law. A contract to pay money implements or uses the common law; it does not abrogate anyone's rights. Legislation is only required for conduct which affects the rights of others against their will. The Solicitor- General of the Commonwealth's concession harks back to an early draft of s 61 discussed above547. It provided in effect that Commonwealth executive power based on an unexercised legislative power did not extend to areas in which State legislative power has been exercised. It will be recollected that Sir Samuel Griffith stated that an amendment bringing that draft close to the ultimate form that s 61 took did not alter that meaning. A third exception to the Common Assumption is that the executive power to spend money must not operate so as to curtail the capacity of the States to function as governments548. 543 A v Hayden (1984) 156 CLR 532 at 580-581; Vasiljkovic v The Commonwealth (2006) 227 CLR 614 at 634-635 [49]-[50]; [2006] HCA 40. 544 Davis v The Commonwealth (1988) 166 CLR 79 at 112. There may well be other powers in s 51 only exercisable by the legislature and not the Executive. 545 The Constitution of the Commonwealth of Australia, 2nd ed (1910) at 98. 546 Federal Commissioner of Taxation v Official Liquidator of E O Farley Ltd (1940) 63 CLR 278 at 322. 547 See above at [347]. 548 The Solicitor-General of the Commonwealth referred to Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 85 [220] and Clarke v Federal (Footnote continues on next page) It is not necessary to consider what further qualifications to the Common Assumption there may be. None was identified as fatal to the defendants in this case. Exceptions broadening the extent of executive power as formulated in the Common Assumption. There are, on the authorities, exceptional cases in which the executive power of the Commonwealth goes beyond the line marked by unexercised legislative power. One illustration is Davis v The Commonwealth549. Other illustrations are found in the two approaches taken by different Justices supporting the majority orders in Pape v Federal Commissioner of Taxation550. However, these exceptions, despite the fourth defendant's submissions to the contrary, are irrelevant to the issues in the present case. Conclusion on the authorities. In view of the state of authority, particularly as analysed in constitutional scholarship, the Common Assumption should be treated as the law. Principle. Is the Common Assumption in truth so wrong as a matter of principle as distinct from authority that the authorities supporting it should be overruled? This case is not an appropriate one in which that question should be answered. All parties and interveners initially adhered to the Common Assumption. Its sudden abandonment by the plaintiff and most government interveners during oral argument meant that the submissions attacking and defending the Common Assumption were deployed only at a very late stage of the fray. Inevitably, they betrayed signs of disorganisation. It is true that the plaintiff, South Australia, Tasmania and the Commonwealth were given leave to file additional written submissions after the oral argument closed. But this gave the Commonwealth only the period between when oral argument ended on 11 August 2011, and when the additional submissions were filed on 1 September 2011, to consider the point. On 7 August 2011, urgent and important litigation affecting the Commonwealth had commenced. Interlocutory hearings took place. After 11 August 2011, written argument was filed and preparation for oral argument took place. Oral argument was then heard on 22 and 23 August 2011. That litigation was decided on 31 August 2011. This must have depleted the relevant resources of Commonwealth energy and distracted those who were to Commissioner of Taxation (2009) 240 CLR 272 at 306 [64] and 307 [66]; [2009] HCA 33. 549 (1988) 166 CLR 79. 550 (2009) 238 CLR 1 at 63 [133] per French CJ and 91-92 [242] per Gummow, tap them551. It is important that points of fundamental significance such as the one that this case belatedly raised be pondered by counsel for years – as they often are when appeals come to this Court – or at least for months – as is usual when matters in the original jurisdiction are brought to the Full Court. Above all, they need to be considered calmly. Radical changes in the construction of the Constitution should not be made without better assistance than the unpredicted conspiracy of circumstances permitted counsel to provide in this case. Two facts illustrate these problems. The first is that the argument was framed on the basis of the Common Assumption until it ceased to be common. The second is that most of the argument thereafter was devoted to the question of whether it was sound. In consequence attention was concentrated on what Winterton called the "breadth" element in s 61, and distracted from the "depth" element552. No attention was given to the "depth" element before the renversement des alliances, and very little after it. In Pape v Federal Commissioner of Taxation553, French CJ said that the powers which the Executive has under s 61 include statutory powers, "prerogative" powers and the "capacities"554 which may be possessed by persons other than the Executive. A capacity to contract is a prime example of a capacity which both the Executive and persons other than the Executive possess. In the same case, Gummow, Crennan and Bell JJ said555: "The conduct of the executive branch of government includes, but involves much more than, enjoyment of the benefit of those preferences, immunities and exceptions which are denied to the citizen and are commonly identified with 'the prerogative'." In the same case, Gummow J asked in argument556: "Why should not the newly created polity the Commonwealth of Australia have received all the executive capacities of the United Kingdom 551 Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144; [2011] HCA 32. 552 See above at [385]. 553 (2009) 238 CLR 1 at 60 [126]. 554 Davis v The Commonwealth (1988) 166 CLR 79 at 108 per Brennan J. 555 (2009) 238 CLR 1 at 83 [214]. 556 (2009) 238 CLR 1 at 18. executive save in so far as it is necessary to give effect to the interests of the States under federal considerations?" One limitation which a person responding to that question would have to consider is the "breadth" element of s 61, which goes to the federal division of powers. For reasons given below557, the Commonwealth had legislative power under s 51(xxiiiA) to enact legislation giving effect to the NSCP: hence the "breadth" element is satisfied. Gummow J's question also calls attention to the "depth" element. That element concentrates on whether the executive action in question cannot be taken without prior legislative authority. The question in the present case then becomes: Why can the Executive not pay money to the fourth defendant to carry out the NSCP pursuant to contract? If the NSCP involved the creation of rights and obligations which collided with pre-existing rights and obligations or with State or federal laws, no doubt statute would be necessary. If the conflicting law was a federal enactment, a federal enactment repealing it would be necessary. If the conflicting legal provision was a State enactment, a federal enactment would also be necessary. There would be, ex hypothesi, federal legislative power to support that enactment (since the "breadth" aspect was satisfied), and it would prevail over the State enactment by reason of s 109 of the Constitution. If the conflicting legal provision was a rule of the common law, a federal enactment would be necessary, and there would be legislative power to enact it. But the NSCP does not create rights and obligations which conflict with pre-existing rights and obligations or with State or federal laws. Hence no statute is necessary on that account. Those alleging invalidity did not demonstrate that at Federation the United Kingdom Executive could not enter a contract to further a purpose in relation to which funds had been appropriated. The lack of full argument about the "depth" element in this case is a further illustration of how the circumstances of this case do not make it one in which it is appropriate to narrow the executive power of the Commonwealth to an extent sufficient to find for the plaintiff. Immaterial points. In the circumstances it is not necessary to deal with arguments advanced by the defendants that the power conferred by s 61 was greater in various respects than that contemplated by the Common Assumption. Nor is it necessary to deal with a submission by the Commonwealth that s 44 of the Financial Management and Accountability Act 1997 (Cth) gave statutory authority to enter the Agreement. It would probably be wrong to do so, since the submission was raised only in the written submissions filed after the close of oral argument, and is outside the pleadings. 557 See below at [408]-[441]. The Commonwealth's legislative power under s 51(xxiiiA) Section 51(xxiiiA) of the Constitution provides that the Parliament has power to make laws for the peace, order and good government of the Commonwealth with respect to: "the provision of maternity allowances, widows' pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances". The plaintiff submitted that s 51(xxiiiA) did not grant legislative power to arrange for funding through the Agreement. The plaintiff accepted that "benefits to students" could fall within s 51(xxiiiA) even though the Commonwealth did not directly provide them. But the plaintiff submitted that the provision of benefits under s 51(xxiiiA): "must involve the Commonwealth, or an entity established by it, and under its control: (a) making money payments to students; supplying goods or services to students, where this may be subcontracted to a private entity, provided that the obligation to provide the goods or services to the students entitled to them remains with the Commonwealth or the Commonwealth entity; or paying, either in whole or in part, for the supply of goods or services to students, for which those students would otherwise be obliged to pay." Under the NSCP the students received no money, the Commonwealth did not itself provide services, and students were not relieved of any liability they owed to the "chaplaincy services" provider – they owed it no liability. The plaintiff accepted that the stipulated methods of providing benefits to students under s 51(xxiiiA) may not be exhaustive. But he submitted that it was not enough to provide merely a beneficial program in which students may involve themselves. The "difficulty" of "rendering justiciable a decision whether a certain course of study [or] training is a benefit to students or not" was said to justify this limitation. The plaintiff supported this submission with references to United Kingdom legislation. The National Insurance Act 1911 (UK) employed the term "benefits" to refer to both payments and medical services, so long as the obligation to provide the services was upon the Insurance Commissioners charged with their administration, not upon the practitioners engaged to provide them. The National Insurance Act 1946 (UK) drew a distinction between "benefits", which referred to money payments to individuals, and the making of a funding contribution to the provision of health services. The plaintiff did not subject these references to close analysis and they do not appear to be decisive. The plaintiff also supported this submission with references to the Second Reading Speech of the Attorney-General and Minister for External Affairs (Dr Evatt) on the Constitution Alteration (Social Services) Bill 1946, which led to the insertion of s 51(xxiiiA) into the Constitution. Dr Evatt said558: "The object of this bill is to alter the Constitution so that this Parliament can continue to provide directly for promoting social security in Australia. This is in no sense a party measure. Ever since federation, it has been assumed by successive governments and parliaments that the National Parliament could spend for any all-Australian purpose the money that it raises. In 1944, I warned the House and the country that, under the Constitution as it stands, the legal foundations for even the most urgent modern social service legislation were doubtful and insecure. The High Court's decision last year in the pharmaceutical benefits case has shown that these doubts were only too well founded. … [T]he framers of the Constitution recognized that such a matter could be dealt with more satisfactorily on an Australia-wide basis than by piecemeal and varied action on the part of separate States. This is just as true of other social services, such as, for example, child endowment, widows' pensions or medical benefits, which we realise to-day must be provided." (emphasis added) After referring to s 51(xiv) and (xxii) of the Constitution, Dr Evatt added: "[a]ny other social service payments made by the Commonwealth must, therefore, rest on some other foundation" (emphasis added). The plaintiff relied on the parts of those two passages to which emphasis has been added. The plaintiff also relied on the following words in the "Yes" case on the referendum on the proposed s 51(xxiiiA)559: 558 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 1946 at 646-647. The "pharmaceutical benefits case" to which Dr Evatt referred was Attorney-General (Vict) v The Commonwealth (1945) 71 CLR 237; [1945] HCA 30. 559 Commonwealth Electoral Office, Referendums to be taken on the Proposed Laws: Constitution Alteration (Social Services) 1946, Constitution Alteration (Organized Marketing of Primary Products) 1946, Constitution Alteration (Industrial Employment) 1946: The Case For and Against, (1946) at 5. "You probably know that the Commonwealth is already providing most of [the services described in s 51(xxiiiA)]. It provides maternity allowances, widows' pensions, child endowment, unemployment, sickness and hospital benefits, and benefits to students. But because of a legal decision last year, the Constitution now needs altering to make sure that this can continue." (emphasis in original) The plaintiff submitted that, in the light of these materials, the word "benefits" was understood in the context of the Constitution Alteration (Social Services) Bill to denote: benefits of the same character as the benefits then conferred under Commonwealth legislation; and something other than the mere provision of funding which could have occurred by way of grants pursuant to s 96 of the Constitution." In the same vein, Western Australia submitted that the services which the Commonwealth was already providing to which Dr Evatt and the "Yes" case referred were benefits in the form of financial assistance. To the plaintiff's references, it added the following. One was the National Security (Universities Commission) Regulations 1943 (Cth). They provided for the payment of tuition and other non-voluntary University fees and for the payment of allowances. They did so under the heading "Financial Assistance to Students". Western Australia also referred to the Education Act 1945 (Cth). That Act established a Universities Commission. Section 14 of the Act gave it functions which included: to arrange, as prescribed, for the training in Universities or similar institutions, for the purpose of facilitating their re-establishment of persons who are discharged members of the Forces within the meaning of the Re-Establishment and Employment Act 1945; in prescribed cases or classes of cases, to assist other persons to obtain training in Universities or similar institutions; to provide, as prescribed, financial assistance to students at Universities and approved institutions". Finally, Western Australia referred to the Universities Commission (Financial Assistance) Regulations 1946 (Cth), which, like the 1943 Regulations, made provision for the payment of tuition and other non-voluntary fees to students and for the payment of an allowance. And Western Australia submitted that nothing in these extrinsic materials suggested that s 51(xxiiiA) was to authorise Commonwealth laws regulating the operations of schools. However, when read as a whole, Dr Evatt's speech is not concerned with distinguishing between direct payments by the Commonwealth and other payments. Dr Evatt's concern was the opposite – to ensure that the Constitution gave a wide support for Commonwealth legislation in relation to social services payments, whether direct or indirect. Similarly, the "Yes" case did not distinguish between the power to provide social services directly and the power to provide them indirectly, and seek to procure power only to do the former. The argument of the plaintiff and Western Australia is undercut by one of Western Australia's examples. Section 14(a) and (b) of the Education Act conferred on the Universities Commission the function of arranging for discharged members of the armed forces to be trained and of assisting others to obtain training. Those functions were not limited to making direct payments to the identified persons to obtain training. They were not limited to services that the Commonwealth provided. And they were not limited to relieving students of any liabilities they owed to the service providers. Paragraphs (a) and (b) of s 14 of the Education Act also falsify the following submission of the plaintiff: "the benefits conferred by Commonwealth legislation at the time of the 1946 referendum involved the Commonwealth, or an entity established by it, either: providing financial assistance directly to the intended ultimate recipient of the benefits; or substituting itself for each such intended recipient as the party obliged, either in whole or in part, for paying the cost of certain services provided to that recipient." Section 14 is significant, because Dr Evatt referred to it in his Second Reading Speech. He said that opinions of senior counsel as to the validity of some Commonwealth legislation after the Pharmaceutical Benefits case had been obtained560. One provision with which the opinions dealt was s 14. Whilst Sir Robert Garran KC thought that it was probably valid, Mr Maughan KC, Mr Barwick KC and Mr Ham KC thought pars (b) and (c) of s 14 were invalid, and Dr Coppel KC thought them valid in limited respects only. The significant point is, however, that Dr Evatt asserted that the proposed s 51(xxiiiA) would be limited, "in the main, to benefits of a type provided for by legislation already on 560 Attorney-General (Vict) v The Commonwealth (1945) 71 CLR 237. the statute-book."561 In other words, Dr Evatt thought that the benefits that s 14(b) and (c) conferred would be supported by s 51(xxiiiA). Section 14(b) was concerned with assistance not limited to financial assistance. As the Solicitor- General of the Commonwealth correctly submitted in this case: "the notion that what was intended was limited to money payments is falsified by consideration of one of the very provisions that was identified as in need of shoring up." The Solicitor-General's submission is supported by another statute in the group of Commonwealth Acts on which the various senior counsel advised – the National Fitness Act 1941 (Cth). Three of them thought it to be of no or doubtful validity. Sections 3 and 5 of that Act were concerned with the promotion of "national fitness" and "physical education in schools, universities and other institutions". And the Solicitor-General's submission also finds support in another statute in that group – the Re-establishment and Employment Act 1945 (Cth). Section 57(1) gave power to a Minister to provide or arrange for the provision of facilities to disabled persons to make them fit for training or employment. Section 57(2) provided that "facilities" included training, exercise, occupational and other therapy, and other facilities under medical supervision and under circumstances likely to restore the persons concerned to physical and mental fitness. And s 48 empowered the Commonwealth Employment Service to provide various non-monetary services and facilities. In any event, there is no indication in Dr Evatt's speech that the social welfare measures in place just before 1946 exhausted the contemporary meaning of the words used in s 51(xxiiiA)562. The authorities on s 51(xxiiiA) point against the narrow construction that the plaintiff and Western Australia propounded. British Medical Association v The Commonwealth563 concerned indirect payments only. It is true that the legislation created a system of Commonwealth funding for the provision of medicines and appliances to patients by chemists. But the legislation was not struck down on that ground. It was struck down on the ground that other aspects of the scheme constituted civil conscription. The case does not reveal that s 51(xxiiiA) is limited to direct provision by the Commonwealth only. Webb J said that s 51(xxiiiA) "does not empower the Commonwealth Parliament to do more than legislate for the provision by the 561 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 562 See Cole v Whitfield (1988) 165 CLR 360 at 385, quoted above at [346]. 563 (1949) 79 CLR 201; [1949] HCA 44. Commonwealth itself of the allowances, pensions, endowment, benefits and services to which it refers"564. But his Honour was not asserting any distinction between direct provision by the Commonwealth and indirect provision by the Commonwealth. In Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth, which concerned legislation providing a benefit to be paid to the proprietor of an approved nursing home, Mason ACJ, Wilson, Brennan, Deane and Dawson JJ stated two approaches to identifying a "benefit" for s 51(xxiiiA) purposes565: "On one approach, the benefit can be identified as the money paid to the proprietor of the nursing home. On another approach, the benefit can be identified as the accommodation, sustenance and care to the extent that it is provided by the proprietor to the patient as the quid pro quo for the money payment made by the Commonwealth. Ultimately, it matters not which of these alternative identifications of the 'benefit' is preferred because no distinction relevant to the characterization of the overall legislative scheme can be drawn between them. If the scheme is capable of being supported as a law with respect to the provision of a money payment by the Commonwealth to the proprietor of a nursing home in consideration of nursing care provided to a patient it likewise will be capable of being supported as a law with respect to the provision of nursing care for that patient. In the former case, it will be seen as the means chosen by the Parliament of controlling the application and ensuring the effectiveness of the benefits paid; in the latter case, the scheme will be seen as the means adopted to provide those benefits." Their Honours concluded that legislation controlling the fees charged by nursing homes receiving benefits had a significant connection with s 51(xxiiiA). The plaintiff submitted that the scheme under consideration in British the Medical Association v The Commonwealth was one under which Commonwealth did more than merely fund the provision of pharmaceutical products; rather, it assumed and discharged what would otherwise have been a payment obligation upon the recipients of those products, thus directly providing a benefit to those recipients. In relation to Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth the plaintiff submitted that the Commonwealth subsidy for nursing home care conferred a direct benefit on the recipient of the care, namely, a partial discharge of the payment obligation he or she owed to the proprietor of the relevant nursing home. The plaintiff submitted that the Court 564 (1949) 79 CLR 201 at 292. 565 (1987) 162 CLR 271 at 281; [1987] HCA 6. did no more than recognise that the Commonwealth could provide nursing care under legislation supported by s 51(xxiiiA) in one of two ways – by providing the relevant services itself or by relieving the recipients of those services of part or all of their obligation to pay for them. In either case, that recipient would be receiving a benefit directly from the Commonwealth. The plaintiff submitted that neither British Medical Association v The Commonwealth nor Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth was authority for the proposition that the mere provision of funding by the Commonwealth, falling short of an assumption by the Commonwealth of at least part of a payment obligation that the recipient of the benefit would otherwise have owed, was "provision" within s 51(xxiiiA). It is true that this proposition was not part of the ratio decidendi of either case. But the dicta are wide enough to support it. Those cases do not support the plaintiff's submission that payment by the Commonwealth to a third party falls within s 51(xxiiiA) only if that payment relieved the person benefited from an obligation to reimburse the third party. There is, as South Australia submitted, broad similarity between those two cases and the present in that in each case the Commonwealth supplies funding for the provision of a benefit by another organisation. Both the travaux préparatoires to s 51(xxiiiA) and the authorities suggest that the expression "benefits to students" is not limited to payments of money to students any more than "hospital benefits" are limited to payments of money to patients, rather than to the hospitals which care for them. The expression "benefits to students" can extend to the funding of services that persons other than the Commonwealth provide. It is not limited to the supply of goods or services for which students would otherwise be obligated to pay. There are other matters that support that conclusion. One is the following precept566: "The simplest approach … to the problem is simply to read the paragraph and to apply it without making implications or imposing limitations which are not found in the express words. We must remember that it is part of the Constitution and go back to the general counsel to remember that it is a constitution we are construing and it should be construed with all the generality which the words used admit." 566 R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225 per Dixon CJ, Kitto, Taylor, Menzies, Windeyer and Owen JJ; [1964] HCA 15. That is a proper approach, subject to any contrary indication in the context or in the rest of the Constitution567. To treat the absence of express Commonwealth legislative power over education as a reason for limiting the meaning of s 51(xxiiiA) would be to defy that principle. Another matter which supports the conclusion concerns the contrasts within s 51(xxiiiA). Some integers of it relate to benefits in the form of monetary payments, for example allowances and pensions. Others relate to benefits which are not necessarily monetary from the standpoint of the persons benefited, though they cost money to provide – sickness and hospital benefits, and benefits to students. As Dixon J said in British Medical Association v The Commonwealth568: "The general sense of the word 'benefit' covers anything tending to the profit advantage gain or good of a man and is very indefinite. But it is used in a rather more specialized application in reference to what are now called social services; it is used as a word covering provisions made to meet needs arising from special conditions with a recognized incidence in communities or from particular situations or pursuits such as that of a student, whether the provision takes the form of money payments or the supply of things or services." In the same case Latham CJ, McTiernan, Williams and Webb JJ made similar statements569. And in Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth570, Mason ACJ, Wilson, Brennan, Deane and Dawson JJ referred approvingly to Dixon J's observations in British Medical Association v The Commonwealth. Hence s 51(xxiiiA) confers power to enact legislation permitting the Commonwealth to provide non-monetary benefits to students by financing others to provide those benefits. They need not be benefits for which the students would otherwise be obligated to pay. Against that background, it is necessary to turn to four arguments that Victoria in particular advanced. 567 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 138-143 [404]- 568 (1949) 79 CLR 201 at 260. 569 (1949) 79 CLR 201 at 230, 279-280, 286-287 and 292 respectively. 570 (1987) 162 CLR 271 at 280. Victoria's first submission was that "benefits to students" did not include "services provided to students". Victoria pointed out that the word "services" is used in s 51(xxiiiA) in the expression "medical and dental services" only. Hence it submitted that the other integers of s 51(xxiiiA) only extended to benefits in the nature of financial assistance and conceivably assistance in the nature of goods but no further. Victoria also pointed out that the words "(but not so as to authorize any form of civil conscription)" qualify "medical and dental services" only571. Victoria submitted that if "benefits" extended to "services", an anomaly would arise: civil conscription in areas other than medical and dental services would not be expressly prohibited. Victoria also submitted that "sickness and hospital benefits" was a wider expression than "benefits to students". This argument is inconsistent with Dixon J's view in British Medical Association v The Commonwealth. His Honour made it plain that the term "benefits" encompassed the supply of "services"572. Other members of the Court concurred with his opinion573. Mason ACJ, Wilson, Brennan, Deane and Dawson JJ approved it in Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth574. Victoria's argument in relation to civil conscription sheds little light on the construction of the word "benefits". The civil conscription exception was introduced not by the Government, but by the Leader of the Opposition, in order to address a concern about the nationalisation of medicine575. And there is no reason to treat the word "benefits" in the expression "benefits to students" as being narrower than the word "benefits" as used in the expression "sickness and hospital benefits". Section 51(xxiiiA) contains 11 grants of legislative power. One grant of power in s 51 does not, in the absence of express words of limitation, narrow the scope of any other by a process of implication. Victoria's second submission, in which the plaintiff joined, was that "benefits to students" did not mean anything tending to benefit students. If it did, the Court would be required to decide matters insusceptible of proof. It would be required to assess the merits of particular proposals. The submission was that "benefits to students" could only refer to material, tangible things. 571 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 254, 261, 281-282 and 286-287. 572 (1949) 79 CLR 201 at 260, quoted above at [428]. 573 See above at [428]. 574 (1987) 162 CLR 271 at 280. 575 See Wong v The Commonwealth (2009) 236 CLR 573 at 588-591 [48]-[50]; [2009] HCA 3. Victoria relied on Gilmour v Coats576. This was misplaced. No analogy can usefully be drawn between issues of public benefit in the law of charity as applied to intercessory prayers by nuns in closed orders, and counselling for various problems encountered at school. Victoria also relied on McTiernan J's account of in British Medical Association v The Commonwealth577, approved by Mason ACJ, Wilson, Brennan, Deane and in Alexandra Private Geriatric Hospital Pty Ltd v The the word "benefit" "The material aid given pursuant to a scheme to provide for human wants is commonly described by the word 'benefit'. When this word is applied to that subject matter it signifies a pecuniary aid, service, attendance or commodity made available for human beings under legislation designed to promote social welfare or security: the word is also applied to such aids made available through a benefit society to members or their dependants. The word 'benefits' in par (xxiiiA) has a corresponding or similar meaning." Contrary to Victoria's submission, however, McTiernan J did not limit benefits to "material" or "tangible" things. He spoke of "material aid", but he included within "material aid" a "service" to "promote social welfare". Those are wide expressions. Further, in speaking of legislation "designed to promote social welfare", McTiernan J was referring to legislation identifying a process working out an organised method of responding to a perceived need. The "care" provided in nursing homes to which Mason ACJ, Wilson, Brennan, Deane and Dawson JJ referred in Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth579 has intangible aspects too – the need for comfort and security for one – but their Honours assumed that it was a "benefit". Victoria said that no measurable "benefit" existed in this case. However, the Agreement does render to students a comprehensible benefit because it provides funding to meet needs that experienced school authorities have identified. The operation of the NSCP contemplates decisions about what a particular school thinks it needs, decisions about how those needs could be met by "chaplaincy services", decisions about how the efficacy of "chaplaincy services" in meeting those needs could be monitored and evaluated as time goes 576 [1949] AC 426 at 446 and 451-453. 577 (1949) 79 CLR 201 at 279. 578 (1987) 162 CLR 271 at 280. 579 (1987) 162 CLR 271 at 281, quoted above at [423]. on, and decisions taken in consequence of that monitoring and evaluation. Those decisions are made by staff who may reasonably be expected to have the capacity to form appropriate judgments about student wellbeing. Finally, in assessing the validity of legislation enacted in reliance on s 51(xxiiiA), Latham CJ expressed the view that it is appropriate for the Court to give substantial weight to a legislative judgment that the opinion of an expert about the existence of a benefit was sound580. In that case the opinion was that of a doctor about the drugs and medicines which could be beneficial to a patient. So here, while the legislature cannot delegate its statutes into validity, if legislation had been enacted to underpin the Agreement, the legislature's judgment that the opinion of the School authorities that certain structures and conduct were beneficial to the students was a sound opinion would be something to which weight would have been given. Victoria's third submission, in which the plaintiff and Western Australia joined, was that even if what students received under the Agreement were "benefits", they were not "benefits to students" because they did not benefit students as students. The submission referred to the words Dixon J used in his Honour's description of "benefit" set out above: "provisions made to meet needs arising from … [the] pursuits … of a student"581. The submission was: "While material assistance – such as the provision of books, computers and other educational equipment – may readily be seen as meeting a need arising from the pursuits of a school student, the fostering of general 'spiritual wellbeing' is not. There is no sufficient relationship between the chaplaincy services to be provided under the Agreement, and the particular needs of a student. For example, the services are not confined to services needed as a result of being a student (such as addressing bullying), but extend to any chaplaincy services that members of a school community, including staff and students, might require. In the case of students, this extends to services that may be required irrespective of the fact of being a student or not; the services would extend to counselling in respect of matters not arising at all from the pursuits of a student (for example, following the death of a family member)." (footnote omitted; emphasis in original) 580 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 233. 581 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 260, quoted above at [428]. And Western Australia submitted that while all the other benefits in s 51(xxiiiA) were defined by reference to the character of the authorised expenditure, "benefits to students" are defined by reference to the character of the recipient. To be a school student involves encountering numerous vicissitudes. Some may be closely connected with studies – worry about success or failure, overwork, a feeling of incomprehension, discontent with teachers. Some may be more connected with the fact of being a young person – horseplay which leads to victimisation, victimisation which leads to bullying, the cruelty of little clans to the outsider, bereavement, hostility between parents, divorce, a lack of personal confidence, the problems of life in a multicultural area. The latter group of vicissitudes may be rendered more acute by the school environment. That a scheme might be devised to benefit persons generally by preventing or ameliorating those woes does not prevent a scheme being devised to benefit school students by preventing or ameliorating those woes. Dixon J did not speak of benefits specifically relating to the "pursuits" of children, but of "needs arising from … particular … pursuits". The vicissitudes in question create "needs arising from special conditions with a recognized incidence in [school] communities". Those vicissitudes also create "needs arising from … particular … pursuits such as that of a student". They often flow from stress referable to the pursuit of studying, the vulnerability of those who study by reason of age, and the risks to which other students expose them. Factors which are closely connected to studying in a narrow sense are almost impossible to separate from factors which affect young people who are students. Since education is compulsory between specific ages, the category "young people within those ages" and the category "students within those ages" are substantially similar, leaving aside those who cannot and those who will not attend school. Victoria's submission would mean that s 51(xxiiiA) would not support legislation authorising the provision of benefits in the form of payments of money to alleviate financial need. Poverty is a characteristic that students (and widows and the unemployed) share with other members of the public. Victoria's fourth submission, in which Western Australia joined, was that the benefits conferred under the Agreement were not benefits "to students", but to the broader school community. Victoria drew attention to various references in the Agreement and the documents it incorporates to School staff, the wider School community, and the community of which the School is part. However, when those documents are read as a whole, it is clear that the NSCP's central object as implemented at the School through the Agreement is providing benefits to students; the provision of benefits to others is incidental to that object. It is, after all, the students, not the wider School community and the community of which the School is part, who spend most of their time at the School and to whom the services of the "chaplains" are most readily available. As for the staff, they are the servants of the students. It may be a secondary function of the "chaplains" to provide benefits to the wider communities and the staff. But the primary function of the "chaplains" is to provide benefits to students. And there is a close connection between the wellbeing of parents, teachers and the wider School community on the one hand and the wellbeing of students on the other. The function of advancing the wellbeing of parents, teachers and the wider communities is ancillary to the NSCP's primary function of benefiting students. The proposition that the NSCP assisted schools and school communities does not deny the proposition that it benefited students, because schools and communities which have been assisted are likely to benefit students. The final submission about s 51(xxiiiA) to consider was advanced by the plaintiff. He submitted that for a measure to fall within the description "benefits to students" it was necessary to demonstrate a benefit to a particular student. This submission has three flaws. First, the argument is inconsistent with Dixon J's analysis of "benefit" in British Medical Association v The Commonwealth582. Secondly, even if it is correct, it would be possible, if the enterprise were thought useful, to identify particular students at the School whom the Agreement benefited. Thirdly, it narrows s 51(xxiiiA) unduly. The arrangements at the School could result in a benefit to any student depending on that student's particular circumstances from time to time. For the above reasons s 51(xxiiiA) would support legislation authorising the provision of "chaplaincy services" by the fourth defendant using money provided by the Commonwealth. Section 116 The plaintiff advanced two submissions concerning s 116 of the Constitution, which relevantly provides: "no religious test shall be required as a qualification for any office … under the Commonwealth." First, the plaintiff submitted that NSCP "chaplains" hold an "office … under the Commonwealth" within the meaning of s 116. The plaintiff submitted that the more closely "chaplains" complied with Commonwealth their the qualifications, activities and obligations, Commonwealth and under its supervision. Secondly, the plaintiff submitted that the eligibility criteria in the Agreement imposed a religious test as a qualification for the offices of the "chaplains". In relation to his second submission, the plaintiff accepted that "this is not a scheme which proclaims its uniquely Christian character" and that it was "a scheme which forbids proselytising". But he argued that it was "to provide for spiritual guidance, and by persons who are likely to be clerics." requirements as they acted for the more In relation to the first submission, the plaintiff drew attention to the differences between s 44(iv) of the Constitution, s 75(v) of the Constitution and 582 (1949) 79 CLR 201 at 260, see above at [428]. s 116. Section 44(iv) refers to an "office of profit under the Crown", and means a permanent officer of the executive government583. The plaintiff submitted that the omission of the words "of profit" from s 116 suggests that it contemplates something less than a relationship of employment. The plaintiff also pointed to the fact that s 75(v) refers to "officer of the Commonwealth" while s 116 refers to an "office … under the Commonwealth". The plaintiff submitted that "of" indicates a person engaged or appointed by the Commonwealth, while "under" indicates the exercise of Commonwealth supervision or control over the office holder. The plaintiff submitted that if his proposed construction of s 116 were not adopted, the Commonwealth could evade s 116 by engaging subcontractors to perform its activities and stipulating that those subcontractors employ only adherents to a particular religious faith. The plaintiff contended that the Commonwealth exercised supervision or control over the "chaplains". That is because if the Code of Conduct were breached, the Commonwealth could cause the "chaplain" in breach to cease providing "chaplaincy services". And it is because the Commonwealth had the right to conduct monitoring activities. The plaintiff's construction of s 116 must be rejected. The absence of the words "of profit" from s 116 indicates only that s 116 is wider than s 44(iv). Section 116 applies to offices which are not "of profit" as well as those which are. An "office" is a position under constituted authority to which duties are attached584. That suggests that an "officer" is a person who holds an office which is in direct relationship with the Commonwealth and to which qualifications may attach before particular appointments can be made or continued. The word "under" in s 116 has no significance. It does not suggest the wider meaning which the plaintiff advocated. It simply repeats the relevant part of Art VI of the United States Constitution: "no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States." The Commonwealth has no legal relationship with the "chaplains". It cannot appoint, select, approve or dismiss them. It cannot direct them. The services they provide in a particular school are determined by those who run that school. The provision of those services is overseen by school principals. In the result, the plaintiff's construction of s 116 is an unattractive one. Under that construction, whenever the Commonwealth enters a contract under which services are to be provided by a party with whom it is to have no legal relationship, under which particular standards are stipulated, and under which reporting obligations are created to ensure compliance with those standards, that party would hold an office under the Commonwealth. This would radically 583 Sykes v Cleary (1992) 176 CLR 77 at 96; [1992] HCA 60. 584 R v Boston (1923) 33 CLR 386 at 402; [1923] HCA 59. expand s 75(v). The effect would be greatly to widen opportunities to commence litigation within the original jurisdiction of this Court, without the possibility of statutory restriction of them. Section 75(v) is a very beneficial provision, but not as beneficial as that. This is not the occasion on which to attempt an exhaustive definition of "office … under the Commonwealth". It is sufficient to say that whatever its outer limits, the "chaplains" are beyond them. It is therefore not necessary to deal with the plaintiff's other, somewhat controversial, submission, that the eligibility criteria impose a religious test. Relief The questions in the Amended Special Case should be answered thus: 1(a): Yes. 1(b): No. 1(c)(i): No. 1(c)(ii): No. 1(c)(iii): No. 1(c)(iv): Yes. 1(c)(v): No. 2(a): No. 2(b): No. 3: This question does not arise. 4(a): No. 4(b): No. 5: This question does not arise. 6: The plaintiff. Crennan CRENNAN J. The plaintiff is the father of four children currently enrolled at the Darling Heights State Primary School in Queensland ("the School"). This action, within the Court's original jurisdiction, was referred by a single Justice to the Full Court as a special case under r 27.08 of the High Court Rules 2004. The plaintiff challenged the validity of an agreement dated 9 November 2007 ("the Funding Agreement") between the Commonwealth (the first defendant) and Scripture Union Queensland ("SUQ") (the fourth defendant) for the provision of funding for chaplaincy services to the School under a Commonwealth initiative entitled the National School Chaplaincy Program ("the NSCP"). There is no special statute under any specific head of Commonwealth legislative power in the Constitution authorising the institution of the NSCP and spending on its activities. Nor is there any utilisation of s 96, which permits grants of financial assistance to the States on such terms and conditions as the Commonwealth Parliament thinks fit. In those circumstances, the present litigation concerns the scope of the Commonwealth's executive power under the Constitution, specifically s 61, to enter into and pay moneys under the Funding Agreement. The questions The special case stated four main questions for this Court's consideration. The first question is whether the plaintiff has standing to challenge the validity of the Funding Agreement, the Commonwealth's drawing of moneys from the Consolidated Revenue Fund, or the making of payments under the Funding Agreement. The second and principal question is whether the Funding Agreement is invalid because it is beyond the executive power of the Commonwealth under s 61 of the Constitution (construed either alone or in conjunction with s 51(xxiiiA) or s 51(xx)) or prohibited by s 116 of the Constitution. The third question is whether the drawing of moneys from the Consolidated Revenue Fund for the purpose of making payments under the Funding Agreement is authorised by relevant Commonwealth appropriation legislation. A sub-issue related to this question is whether the payments made to SUQ under the Funding Agreement were for an activity within "the ordinary annual services of the Government" pursuant to ss 53 and 54 of the Constitution. The fourth question is whether the making of payments by the Commonwealth to SUQ under the Funding Agreement is constitutionally invalid on either of the bases described above. The fifth question concerns relief and the sixth question relates to costs. All States intervened, and the Court received submissions from the Churches' Commission on Education Incorporated as amicus curiae. Crennan In the reasons which follow it is concluded that the executive power of the Commonwealth in s 61 of the Constitution does not authorise the expenditure of funds appropriated in the manner described below on the activities of the NSCP. It is further concluded that s 116 of the Constitution does not operate to invalidate the NSCP. The conclusions reached in these reasons do not involve any assessment of the merits or wisdom of the NSCP. In accordance with these conclusions, I agree with the answers to the questions proposed in the reasons of The NSCP The Prime Minister announced the NSCP as a new initiative of the Australian Government on 29 October 2006. Under the NSCP the Australian Government would commit up to $30 million each year for three years to provide chaplaincy services in Australian schools. The funding per school under the program was to be capped at $20,000 per year. In 2007, total funding for the program was increased to $165 million over three years. In 2009, the Prime Minister announced an extension of the NSCP until December 2011, guaranteeing "a total additional investment of $42 million over the 2010 and 2011 school years." Because the NSCP was not initiated under a special statute of the Commonwealth Parliament, it is necessary to consider constituent documents prepared by the Commonwealth Executive in order to understand the nature and purposes of the NSCP. The Guidelines The NSCP is administered by the Department of Education, Employment and Workplace Relations ("DEEWR")585 in accordance with guidelines which were initially issued in December 2006 ("the 2006 Guidelines") and subsequently replaced by updated versions issued on 19 January 2007 ("the 2007 Updated Guidelines"), 1 July 2008 ("the 2008 Updated Guidelines") and 16 February 2010 ("the 2010 Updated Guidelines"). The 2006 Guidelines and the 2007, 2008 and 2010 Updated Guidelines each state that the NSCP is a voluntary program which supports schools and their communities that wish to establish school chaplaincy services or to enhance existing chaplaincy services. To receive funding under the NSCP, schools and their communities must "engage a school chaplain and demonstrate how the services provided by the school chaplain achieve the outcomes required by the [NSCP]." The 2008 and 585 Formerly the Department of Education, Science and Training ("DEST"). Crennan 2010 Updated Guidelines provide that these services may alternatively be provided by a "secular Pastoral Care Worker". A "school chaplain" is defined in the various guidelines as: "a person who is recognised: by the local school, its community and the appropriate governing authority as having the skills and experience to deliver school chaplaincy services to the school and its community; and through formal ordination, commissioning, recognised qualifications or endorsement by a recognised or accepted religious institution or a state/territory government approved chaplaincy service." In the 2008 and 2010 Updated Guidelines, a "secular Pastoral Care Worker" is defined in the same way as a school chaplain, with the exception that the second criterion quoted above is omitted and the words "pastoral care services" are substituted for the words "school chaplaincy services" in the first criterion. The 2006 Guidelines and the 2007, 2008 and 2010 Updated Guidelines describe the tasks which school chaplains may perform in their respective schools and communities in delivering services under the NSCP. These tasks can include: "assisting school counsellors and staff in the delivery of student welfare services; supporting students to explore their spirituality; providing guidance about spiritual, values and ethical matters; and facilitating access to the helping agencies in the community, both religious-based and secular." School chaplains must abide by the NSCP Code of Conduct ("the Code of Conduct") in the course of providing services under the program. To receive funding under the NSCP, a school must nominate an organisation which will enter into a funding agreement with the Commonwealth. Eligible organisations include certain legal entities nominated as "project sponsors" by schools to manage the chaplaincy services on their behalf. The funding for a school is then covered by a separate funding agreement. Schools may use these funds only "for expenditure that directly relates to the provision of chaplaincy services." Crennan Funding is "provided on an annual basis subject to the provision of appropriate project performance reporting", and "[f]ailure to comply with reporting processes outlined in the funding agreement will be considered a breach of the funding agreement". The Funding Agreement On or about 4 April 2007, the School applied for funding under the NSCP to expand an existing chaplaincy program regulated under procedural policies made by the Queensland Parliament. The existing program had commenced at the School after consultation with staff, students and parents in 1998, and was, at the time of the application to the NSCP, a program which supported the provision of chaplaincy services at the School for an equivalent of two school days per week. In its application, the School identified SUQ as the project sponsor with which the Commonwealth would enter into a funding agreement. DEST made an offer of funding to the School under the NSCP on or about 7 July 2007, and on or about 25 July 2007 the School's Principal signed a declaration that the School intended to proceed with the NSCP-funded chaplaincy project. Ultimately, this had the effect that the School's chaplaincy services were enlarged to three school days per week, two of those three days being funded by the Commonwealth Government. On 9 November 2007, DEST (on behalf of the Commonwealth) entered into the Funding Agreement with SUQ for the provision of funding under the NSCP. The term of the Funding Agreement was three years from the date of its execution. By written variations made on or about 12 October 2008 and 13 May 2010, the parties altered the commencement date of the Funding Agreement to 8 October 2007 and extended its term to 31 December 2011. Under the Funding Agreement, SUQ agreed, among other things, to provide the chaplaincy services described in the School's NSCP application, and the Commonwealth agreed to provide funding in accordance with the project payment schedule. The funding to be provided under the original term of the Funding Agreement was $66,000 inclusive of GST in three equal instalments upon the rendering of valid tax invoices by SUQ. Pursuant to the contractual variation made on or about 13 May 2010, the parties agreed for the Commonwealth to make a fourth payment of $27,063.01 inclusive of GST, bringing the total NSCP funding in respect of the School to $93,063.01. NSCP-funded chaplaincy services commenced at the School on 8 October 2007 and continued at the date of the hearing. Each chaplain provided to the School by SUQ in accordance with the Funding Agreement signed a document in substantially the same form as the Code of Conduct, and delivered the chaplaincy services described in the School's NSCP application. SUQ issued tax invoices to the Commonwealth in respect of each instalment payable under the Funding Agreement as varied, and the Commonwealth duly paid the respective Crennan instalments to SUQ on or about 14 November 2007, 15 December 2008, 2 December 2009 and 11 October 2010. Appropriations in respect of the NSCP in relation Whilst practice the Commonwealth Parliament appropriations has varied over time, the contemporary practice is to enact appropriation statutes falling into one of two categories. An Act in the first category is described in its long title as legislation appropriating money "for the ordinary annual services of the Government, and for related purposes", and is given an odd number (for example, "Appropriation Act (No 1)"). An Act in the second category is described as legislation appropriating money "for certain expenditure, and for related purposes", and is given an even number (for This practice originated in an example, "Appropriation Act (No 2)"). arrangement between the Houses of Parliament in May 1965, which has become known as the "Compact of 1965", and which is described more fully in Combet v The Commonwealth586. There it was further said587: "[T]he Senate resolved, on 17 February 1977, that appropriations for (among other things) 'new policies not previously authorised by special legislation' were not appropriations for the ordinary annual services of the Government588." to reaffirm The reason for the practice lies in ss 53 and 54 of the Constitution. Section 53 provides, among other things, that proposed laws "appropriating revenue or moneys, or imposing taxation" are not to originate in the Senate and may not be amended by the Senate. Section 54 provides that a proposed law which "appropriates … moneys for the ordinary annual services of the Government" must deal only with such appropriation. It should also be noted that s 56 requires that a proposed appropriation Bill must not be passed unless "the purpose of the appropriation has in the same session been recommended by message of the Governor-General to the House in which the proposal originated." is recognised by the parties that there is no even-numbered appropriation Act making specific appropriation for the expenditure of moneys out of the Consolidated Revenue Fund for the purposes of the NSCP. Rather, funds directed towards the NSCP appear always to have been appropriated from 586 (2005) 224 CLR 494 at 573-574 [150]-[151] per Gummow, Hayne, Callinan and Heydon JJ; [2005] HCA 61. 587 (2005) 224 CLR 494 at 574 [151] per Gummow, Hayne, Callinan and Heydon JJ. 588 Australia, Senate, Journals of the Senate, 1976-1977, No 82, 17 February 1977 at Crennan the Consolidated Revenue Fund "for the ordinary annual services of the Government" pursuant to odd-numbered appropriation Acts commencing with the Appropriation Act (No 3) 2006-2007 (Cth). Standing of the plaintiff I agree with the reasons of Gummow and Bell JJ in respect of the issue of standing. Section 116 of the Constitution The plaintiff's contention that the NSCP contravened s 116 of the Constitution by imposing a religious test as a qualification for office under the Commonwealth must be rejected for the reasons given by Gummow and Bell JJ. Section 61 of the Constitution The parties' submissions were refined over the course of oral argument to define more precisely the issues and areas of dispute between the plaintiff and the Commonwealth defendants and SUQ. It was accepted that s 81 of the Constitution, which provides for the establishment of the Consolidated Revenue Fund589, and s 83, which provides for appropriation by Parliament590, are not capable of conferring a "substantive spending power"591. The plaintiff also accepted that success on his constitutional challenge to the entry into and payment of moneys under the Funding Agreement would render it unnecessary for the Court to deal with all of his arguments concerning the appropriations. 589 Section 81: "All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution." 590 Section 83: "No money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law." 591 ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140 at 169 [41]; [2009] HCA 51, referring to Pape v Federal Commissioner of Taxation ("Pape") (2009) 238 CLR 1; [2009] HCA 23. Crennan Reduced to essentials, the question asked in this litigation is whether the Commonwealth Executive had the power to enter into and pay moneys under the Funding Agreement in the absence of special legislation under any of the heads of legislative power in s 51, those nominated being s 51(xxiiiA) and s 51(xx), or legislation in respect of matters incidental to the execution of the NSCP under s 51(xxxix). The main question for determination is whether s 61 of the Constitution supported the Executive contracting and spending in respect of the NSCP in the absence of legislative support other than the relevant appropriation Acts. The "executive power" of the Commonwealth as described in s 61 "extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth." A number of propositions drawn from the course of authority in respect of the scope of Commonwealth executive power were not in contest and formed the backdrop to submissions. First, it was accepted that, despite the establishment of some limits, s 61 is not amenable to exhaustive definition in any single case592. Secondly, while a typical source of executive power is a special statute (of which there were none here), it was accepted that there are circumstances in which executive power can be exercised lawfully without statutory authority. Such circumstances include the exercise of prerogative powers accorded to the Crown at common law (now reposed in the Commonwealth Executive alone593), such as the power to enter a treaty or wage war. These are not relevant here. They also include the powers which derive from the capacities of the Commonwealth as a juristic person, such as the capacities to enter a contract and to spend money when exercised in the ordinary course of administering a recognised part of the Commonwealth government594. Thirdly, it was recognised that s 61 is the source of the Commonwealth Executive's capacity "to engage in enterprises and activities peculiarly adapted to 592 Pape (2009) 238 CLR 1 at 55 [113] per French CJ, 87 [227], 89 [234] per Gummow, Crennan and Bell JJ. See also Davis v The Commonwealth ("Davis") (1988) 166 CLR 79 at 92 per Mason CJ, Deane and Gaudron JJ, 107 per Brennan J; [1988] HCA 63. 593 Barton v The Commonwealth (1974) 131 CLR 477 at 498 per Mason J; [1974] HCA 20. 594 New South Wales v Bardolph ("Bardolph") (1934) 52 CLR 455; [1934] HCA 74. Crennan the government of a nation … which cannot otherwise be carried on for the benefit of the nation"595, although it may not necessarily so act in aid of any subject which the Executive regards as being of national concern and interest596. Submissions In the light of those established propositions, the plaintiff first contended that the entry into and payment of moneys under the Funding Agreement was not authorised as an enterprise or activity "peculiarly adapted to the government of a nation … which cannot otherwise be carried on for the benefit of the nation"597 – a recognised example of which is a need to deal with a national emergency598, reflecting the Commonwealth's "inherent right of self-protection"599. Secondly, the plaintiff contended that the Commonwealth Executive's entry into and making of payments under the Funding Agreement could not be described as spending on "the ordinary annual services of the Government" and therefore could not be treated as authorised under that rubric. For the purposes of this argument, the plaintiff drew a distinction between, on the one hand, the Commonwealth Executive's power to enter into and make payments under contracts for "the ordinary annual services of the Government" and, on the other, entering contracts and spending as a means of carrying out or implementing a new policy. The NSCP, as at its instigation, was said to fall into the latter category. Although the plaintiff did not challenge the validity of the initial appropriation, the plaintiff contended that the NSCP at that point should have been subject to greater scrutiny by Parliament by reason of Parliament's control of expenditure. This led to the next contention that, generally, in the absence of a the exercise of prerogative power, or a national situation calling for 595 Victoria v The Commonwealth and Hayden ("the AAP Case") (1975) 134 CLR 338 at 397 per Mason J; [1975] HCA 52. See also Davis (1988) 166 CLR 79 at 111 per Brennan J and Pape (2009) 238 CLR 1 at 87 [228] per Gummow, Crennan and 596 Pape (2009) 238 CLR 1 at 87-88 [228] per Gummow, Crennan and Bell JJ. 597 AAP Case (1975) 134 CLR 338 at 397 per Mason J. See also Davis (1988) 166 CLR 79 at 111 per Brennan J. 598 As, for example, in Pape (2009) 238 CLR 1. 599 R v Kidman (1915) 20 CLR 425 at 440 per Isaacs J; [1915] HCA 58. See Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 259 per Fullagar J; [1951] HCA 5. See also Burns v Ransley (1949) 79 CLR 101 at 109- 110 per Latham CJ, 116 per Dixon J; [1949] HCA 45; R v Sharkey (1949) 79 CLR 121 at 148-149 per Dixon J; [1949] HCA 46. Crennan emergency600, or the need for some unique national enterprise601, spending associated with a new policy requires express authorisation by Parliament beyond an appropriation – both because of the principles of responsible government and the separation of powers. It was posited that, if spending on a new policy is represented as spending on "the ordinary annual services of the Government", the Executive would not be accountable to Parliament in respect of that policy, as required by the principles of responsible government, because the Senate would effectively be bypassed by reason of ss 53 and 54 of the Constitution. The thrust of these submissions was that spending on the activities of the NSCP amounted to the Executive governing without parliamentary authorisation, or authorisation otherwise sourced in the Constitution. The Commonwealth defendants' primary contention was the Commonwealth Executive's power to spend is sourced in the Commonwealth's legal capacity as a juristic person to spend moneys lawfully appropriated to be spent, and to enter into contracts ("the wider submission"). In Davis, preferring Blackstone602 to Dicey603, Brennan J distinguished between the Crown's unique governmental prerogative rights and powers once enjoyed by "the King ... alone" and the Crown's ordinary rights and powers in its private capacity, described by his Honour as "mere capacities", which were no different from the capacities of that 600 As in Pape (2009) 238 CLR 1. 601 As in Davis (1988) 166 CLR 79. 602 Blackstone, Commentaries on the Laws of England, (1765), bk 1, c 7 at 232: "[I]t can only be applied to those rights and capacities which the king enjoys alone, in contradistinction to others, and not to those which he enjoys in common with any of his subjects: for if once any one prerogative of the crown could be held in common with the subject, it would cease to be prerogative any longer." In Federal Commissioner of Taxation v Official Liquidator of E O Farley Ltd (1940) 63 CLR 278 at 320-321, Evatt J described those rights and powers as the "royal prerogatives" or "executive prerogatives"; [1940] HCA 13. 603 Dicey, Introduction to the Study of the Law of the Constitution, 10th ed (1959) at 424-425 described the prerogative powers accorded to the Crown broadly: "The prerogative appears to be both historically and as a matter of actual fact nothing else than the residue of discretionary or arbitrary authority, which at any given time is legally left in the hands of the Crown. … Every act which the executive government can lawfully do without the authority of the Act of Parliament is done in virtue of this prerogative." Crennan ordinary persons to enter into contracts or to spend money604. This restrained approach to the prerogative is consistent with Australia's legal independence from Britain, the constraints of federalism and the paramountcy605 of the Commonwealth Parliament, and respect under our democratic system of government for the common law rights of individuals. It was submitted by the Commonwealth defendants that, whilst these capacities were the same as the capacities of a natural person, they were sourced in the character and status of the Commonwealth as a polity, which rendered constitutional spending by the Commonwealth Executive for any purpose, including purposes beyond the specific heads of legislative power in s 51. Central to this argument was the proposition that the Commonwealth could no more be constrained than a non-governmental juristic person could be if an exercise of its capacities did not unlawfully intrude on the rights of others. The exercise by the Commonwealth of its capacities to contract and to spend was said to be limited only by the need for an appropriation and any constraints arising out of the law, the principles of responsible government and the federalist distribution of executive power between the Commonwealth and the States. As to the plaintiff's reliance on the principles of responsible government and the detail of the initial appropriation, it was contended that, whilst there is general parliamentary adherence to the broad concept that a new policy is not to be included in odd-numbered appropriation legislation, "a new activity within an existing outcome is not a new policy and can be included in Acts No 1 and 3 for the ordinary annual services of government." That submission was explained by reference to a DEEWR Budget Statement tabled in the Senate and the House of Representatives relevant to the period 2010-2011 in which the relevant outcome set out was "Improved learning and literacy, numeracy and educational attainment for school students, through funding for quality teaching and learning environments, workplace learning and career advice." The NSCP was listed as an "administered item" in respect of that outcome. 604 (1988) 166 CLR 79 at 107-109. See Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at 63-64 per Stephen J, 155 per Brennan J; [1982] HCA 31. See also Joseph v Colonial Treasurer (NSW) (1918) 25 CLR 32 at 48 per Isaacs, Powers and Rich JJ; [1918] HCA 30. See further Evatt, The Royal Prerogative, (1987) at 12-13 and Goldsworthy, The Sovereignty of Parliament: History and Philosophy, (1999) at 605 Ex parte McLean (1930) 43 CLR 472 at 485 per Dixon J; [1930] HCA 12. See also Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2011) 85 ALJR 945 at 952 [36]; 280 ALR 206 at 214; [2011] HCA 33. Crennan Alternatively, in reliance on the AAP Case606, the Commonwealth defendants contended that the NSCP and the entry into and payment of moneys under the Funding Agreement could have been authorised by Parliament as the subject-matter of a grant of statutory authority under ss 51, 52 and 122 of the Constitution – which, it was said, constituted sufficient authorisation of those actions ("the narrower submission"). In a further alternative, the Commonwealth defendants argued that spending under the Funding Agreement was authorised by s 44 of the Financial Management and Accountability Act 1997 (Cth). to Bardolph607, reference the plaintiff accepted the Commonwealth Executive does not need statutory authority to enter into contracts and to spend money when the contracts concern "the ordinary annual services of the Government". An aspect of the dispute was therefore whether the Funding Agreement was such a contract and, if it were not, whether spending pursuant to it required statutory authority, there being no special statute and no reliance on s 96. that SUQ essentially supported the submissions of the Commonwealth defendants. In particular, it contended that Commonwealth executive power extended to functions, capacities and discretions appropriate to be undertaken on behalf of a national government as a polity where such activities were not subject to any lawful or constitutional limitations; it was contended by SUQ that the NSCP funding met this description. The Commonwealth defendants' wider submission, based on the common law freedom to contract enjoyed by the Commonwealth, must be assessed in the light of: the text and structure of the Constitution as it bears on the Executive's powers to protect or benefit the body politic or nation of Australia; the distribution of executive powers between the Commonwealth and the States as polities608; financial relations between the Commonwealth and States; and relations between the Commonwealth Parliament and the Commonwealth Executive affecting spending, which include the Executive's obligations of accountability to Parliament. 606 (1975) 134 CLR 338. 607 (1934) 52 CLR 455. 608 Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 82-83 per Dixon J; [1947] HCA 26. Crennan In the reasons which follow, each of these matters will be considered. Together, they establish the equipoise between executive power under s 61 and the powers of Parliament, which equipoise determines the boundaries of s 61. The reasons will then deal with the Commonwealth defendants' first alternative, the narrower submission, before finally addressing the further alternative submission in relation to s 44 of the Financial Management and Accountability Act 1997 (Cth). The nation – the distribution of powers – section 96 The Queensland Government has regulated chaplaincy services in the State of Queensland since 1998, and it initiated chaplaincy/pastoral care funding arrangements in July 2007. The initial (and subsequent) guidelines extracted above contemplated that the NSCP could operate to enhance "existing chaplaincy services", which (as explained earlier) is what occurred under the Funding Agreement. From that viewpoint alone, the present facts are readily distinguishable from those in Davis, which concerned the scope of s 61 in relation to executive acts the object of which was the commemoration of the Bicentenary throughout Australia. The facts here do not lend themselves to any characterisation of the NSCP as an enterprise or activity "peculiarly adapted to the government of a nation … which cannot otherwise be carried on for the benefit of the nation."609 The facts here are also readily distinguishable from Pape. There, an exercise of executive power was upheld in the circumstances that the agreed statement of facts referred to a global financial crisis giving rise to a national emergency610 most easily dealt with by the Commonwealth Executive (and not those of the States), and legislation incidental to the execution of power under s 61 had been passed. It was acknowledged in the joint majority judgment in Pape that, even where an exercise of executive power is authorised by reference to the understanding that s 61 gives the Commonwealth government the power to 609 AAP Case (1975) 134 CLR 338 at 397 per Mason J. See also Davis (1988) 166 CLR 79 at 111 per Brennan J and Pape (2009) 238 CLR 1 at 87 [228] per Gummow, Crennan and Bell JJ. 610 Pape (2009) 238 CLR 1 at 88-89 [229]-[231]. Crennan protect the body politic or nation of Australia (as was found in that case611), it still remains necessary to consider the scope of the power vis-à-vis the States612: "it is only by some constraint having its source in the position of the Executive Governments of the States that the government of the Commonwealth the Parliament, of expenditure of moneys raised by taxation imposed by the Parliament." the power, after appropriation by is denied Chapter IV of the Constitution includes provisions governing the financial relations between the Commonwealth and the States. Relevantly, s 96 allows the Commonwealth Parliament to make grants to the States on such terms and conditions as it thinks fit. It was noted by Barwick CJ in the AAP Case that s 96 has allowed the Commonwealth to intrude in point of policy into areas outside the Commonwealth's legislative competence, although s 96 grants which are subject to conditions wear a consensual aspect613. His Honour went on to observe that, leaving s 96 apart, the Commonwealth cannot, by executive act, intrude into an area of responsibility left by the Constitution to the States614. In a similar vein, Mason J stated that the presence of s 96 in the Constitution confirms that Commonwealth executive power is not unlimited and "there is a very large area of activity which lies outside the executive power of the Commonwealth but which may become the subject of conditions attached to grants under s 96."615 The Commonwealth makes grants of financial assistance to States under the Schools Assistance Act 2008 (Cth)616. The financial assistance is then distributed to schools, the governing authorities of which have entered into funding agreements with for defraying "recurrent the Commonwealth expenditures". Financial assistance which may be paid to a State under the Schools Assistance Act 2008 (Cth) is not limited to recurrent expenditure617, but 611 Pape (2009) 238 CLR 1 at 83 [215] per Gummow, Crennan and Bell JJ. 612 Pape (2009) 238 CLR 1 at 85 [220] per Gummow, Crennan and Bell JJ. 613 (1975) 134 CLR 338 at 357. 614 (1975) 134 CLR 338 at 357-358. 615 (1975) 134 CLR 338 at 398. 616 And the earlier Schools Assistance (Learning Together – Achievement Through Choice and Opportunity) Act 2004 (Cth). 617 See s 3(2)(a) and Pt 4. Crennan also includes capital expenditure618 and targeted expenditure619. Targeted expenditure is available, among other things, for "Literacy, numeracy and special learning needs"620. The similarity between "targeted expenditure" and the "outcome" relevant to the NSCP which is extracted above is obvious. There was nothing in the facts here amounting to a circumstance in which the nation needed protection, or invoking Commonwealth executive powers otherwise peculiarly referable to the government of Australia as a nation, such that the Commonwealth Executive was, for this or any other identifiable reason, the arm of government exclusively, best, or uniquely authorised to act in respect of the NSCP. There was nothing to explain or justify the absence of special legislation or any involvement by Parliament, beyond the appropriation Acts, or the bypassing of s 96. Further, contrary to the submissions of SUQ, the fact that an initiative, enterprise or activity can be "conveniently formulated and administered by the national government"621, or that it ostensibly does not interfere with State powers, is not sufficient to render it one of "truly national endeavour"622 or "pre-eminently the business and the concern of the Commonwealth as the national government"623. In the Tasmanian Dam Case, Deane J said624: "Even in fields which are under active State legislative and executive control, Commonwealth legislative or executive action may involve no competition with State authority". His Honour was there referring to executive and legislative power shared between the Commonwealth and the States rather than setting out a sufficient condition for characterising an initiative as a national endeavour, enterprise or 618 See s 3(2)(b) and Pt 5. 619 See s 3(2)(c) and Pt 6. 620 See Pt 6, Div 6. 621 AAP Case (1975) 134 CLR 338 at 398 per Mason J. 622 The Commonwealth v Tasmania (1983) 158 CLR 1 at 253 per Deane J ("the Tasmanian Dam Case"); [1983] HCA 21. 623 Davis (1988) 166 CLR 79 at 94 per Mason CJ, Deane and Gaudron JJ. 624 (1983) 158 CLR 1 at 252-253. Crennan activity peculiarly adapted to the government of the nation. Further, there was no issue of "the sufficiency of the powers of the States to engage effectively"625 in the provision of chaplaincy services. Whilst there are recognised circumstances in which the Commonwealth's capacities to contract and to spend can be engaged lawfully in actions extending to "the execution and maintenance of this Constitution" without statutory authority, the matters dealt with above indicate that the Executive's actions in entering the Funding Agreement and making payments to SUQ did not fall within this limb of s 61. Relations between the Parliament and the Executive affecting spending It has often been recognised that s 61 and, more generally, Ch II of the Constitution were shaped by the institution of responsible government and the exercise of executive power under the Westminster system of Britain, as at the date of Federation626. Responsible government was seen then as a "government under which the Executive is directly responsible to – nay, is almost the creature of – the Legislature."627 In Britain, relations between the Executive and Parliament altered – and the principles of responsible government particularly evolved – with the development of wider representation after the First Reform Act628. Earlier constitutional struggles between Parliament and the Sovereign had resulted in Parliament having exclusive control over taxation and supply. The principles of 625 Davis (1988) 166 CLR 79 at 111 per Brennan J. 626 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd ("the Wool Tops Case") (1922) 31 CLR 421 at 438, 446, 449-451 per Isaacs J; [1922] HCA 62; Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan ("Dignan") (1931) 46 CLR 73 at 114 per Evatt J; [1931] HCA 34; Lange v Australian Broadcasting Corporation ("Lange") (1997) 189 CLR 520 at 558-559; [1997] HCA 25. 627 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 at 147 per Knox CJ, Isaacs, Rich and Starke JJ, approving what was said by Lord Haldane, when a member of the House of Commons, introducing the Bill for the Australian Constitution into the Imperial Parliament and distinguishing it from the American Constitution; [1920] HCA 54. See also Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 703. 628 Representation of the People Act 1832 (UK) (2 & 3 Will IV c 45). See, generally, Bagehot, The English Constitution, 2nd ed (1872) at xxv-xxvi. See also Adegbenro v Akintola [1963] AC 614 at 631. Crennan responsible government were readily understood in Australia at the date of Federation629 because of their appearance in the self-governing colonial constitutions described in Rowe v Electoral Commissioner630. As explained in Egan v Willis631, responsible government was traditionally considered "to encompass 'the means by which Parliament brings the Executive to account' so that 'the Executive's primary responsibility in its prosecution of government is owed to Parliament'"632. That accountability came to be expressed in terms of the need for the Executive to enjoy the confidence of the House of Parliament dealing with finance, as the arm of government most immediately representing, and therefore responsible to, the people (that is, the electors)633. It was also expressed in the notion that Ministers are liable to the scrutiny of the chamber of which they are members, both for their conduct and for that of their departments. Prior to Federation, it was appreciated that the sharing of political power was an important mechanism for avoiding arbitrary government and thereby maintaining civil order. That appreciation underpinned the principle of responsible government634 and the idea that a democratic representative assembly would give qualified persons a "stake" in government635, both of which are sourced in the constitutional history of Britain and Australia in the 19th century. The same appreciation also underpinned the doctrine of the separation of powers636, sourced in the constitutional history of America in the 18th century. 629 Dignan (1931) 46 CLR 73 at 114 per Evatt J. 630 (2010) 243 CLR 1 at 109-112 [336]-[347] per Crennan J; [2010] HCA 46. See, generally, Twomey, The Chameleon Crown: The Queen and Her Australian Governors, (2006), Ch 1. 631 (1998) 195 CLR 424; [1998] HCA 71. 632 (1998) 195 CLR 424 at 451 [42] per Gaudron, Gummow and Hayne JJ, citing Kinley, "Governmental Accountability in Australia and the United Kingdom: A Conceptual Analysis of the Role of Non-Parliamentary Institutions and Devices", (1995) 18 University of New South Wales Law Journal 409 at 411. 633 See Bardolph (1934) 52 CLR 455 at 509 per Dixon J. 634 Sir Samuel Griffith, Notes on Australian Federation: Its Nature and Probable Effects, (1896) at 17-18. 635 Rowe v Electoral Commissioner (2010) 243 CLR 1 at 107 [330], 108-112 [333]- 636 Dignan (1931) 46 CLR 73 at 89-90 per Dixon J. See also Plaut v Spendthrift Farm Inc 514 US 211 at 219 (1995). Crennan The relationship between Ch I and Ch II of the Constitution, between the Parliament and the Executive, between s 1 and s 61, between representative and responsible government, can be discerned in numerous constitutional requirements. For the purposes of the present action, relevant requirements in Ch I include the requirement that there be a yearly session of Parliament (s 6), that both Houses of Parliament be democratically elected (ss 7 and 24), that Parliament makes laws (s 51), including in respect of taxation (s 51(ii)), and that appropriation from the Consolidated Revenue Fund be undertaken as required by ss 53, 54 and 56, described above. Chapter II of the Constitution (ss 61-70) deals with "The Executive Government". As well as s 61, Ch II contains provision for a Federal Executive Council to advise the Governor-General (s 62). Further, Ministers administering "departments of State of the Commonwealth" cannot hold office for longer than three months without being or becoming a member of one of the Houses of Parliament (s 64), thus ensuring their accountability to Parliament. Section 67 governs the appointment of civil servants, who are officers of the Executive637. Section 83, in Ch IV, secures Parliament's control over supply. Section 96, dealing with financial relations between the Commonwealth and the States, has been referred to already and s 97 imposes audit requirements. Accountability of the Executive arises not only from the requirements under the Constitution affecting the Executive mentioned above, but also from various conventions of Parliament, the established mechanisms of parliamentary debate and question time, and the requirement that members of the Executive provide information to Select Committees of both Houses of Parliament. Leaving aside appropriation legislation, Bills are conventionally introduced to Parliament, and their purposes explained, by the Minister responsible for their initiation in the House of which the Minister is a member, or by a delegate in the House of which the Minister is not a member. They are then the subject of parliamentary scrutiny and debate. The ultimate passage of a Bill into law may involve a number of compromises along the way, reflected in amendments which secure the Bill's final acceptance638. Parliament's control over expenditure is effected through the legislative process. 637 See the Public Service Act 1999 (Cth). 638 See, for example, Carr v Western Australia (2007) 232 CLR 138 at 143 [7] per Gleeson CJ; [2007] HCA 47. Crennan The practical workings of a system of government which is both responsible and democratically representative are not static, and have given rise to a more general and flexible sense of "responsible government" to indicate a government which is responsive to public opinion and answerable to the electorate639. The mechanisms and layers of accountability described above permit the ventilation, accommodation, and effective authorisation of political decisions. The notion of a government's mandate to pass laws and to spend money rests both on democratic representative government and on the relationship between Parliament and the Executive, involving, as it does, both scrutiny and responsibility. Whilst the Executive has the power to initiate new policy and to implement such policy when authorised to do so, either by Parliament or otherwise under the Constitution, Parliament has the power to scrutinise and authorise such policy (if it is not otherwise authorised by the Constitution), and the exclusive power to grant supply in respect of it and control expenditure. The principles of accountability of the Executive to Parliament and Parliament's control over supply and expenditure operate inevitably to constrain the Commonwealth's capacities to contract and to spend. Such principles do not constrain the common law freedom to contract and to spend enjoyed by non-governmental juristic persons. Although the practice of responsible government varies over time, most particularly as the party system results in close identification of Parliament and the Executive640, the scope of s 61 to encompass any expenditure by the Commonwealth Executive is limited by the system of government under the Constitution. Even apart from the limits imposed by the principles of responsible and democratically representative government, the Commonwealth's capacities to contract and to spend are not precisely analogous to those of a natural person or any non-governmental juristic person. First, the Consolidated Revenue Fund is distinguishable from funds available to non-governmental juristic persons, consisting as it does of revenues and moneys raised from the public, Parliament holding exclusive powers to raise taxes and grant supply. 639 Lange (1997) 189 CLR 520 at 559. See also Birch, Representative and Responsible Government, (1964) at 17-18 and Walker, The Oxford Companion to Law, (1980) at 1065. 640 See Byers, "The Australian Constitution and Responsible Government", (1985) 1 Australian Bar Review 233. Crennan Secondly, the Commonwealth's capacities to contract and to spend are circumscribed by s 81, in the sense that moneys appropriated must be for some governmental purpose641, a circumstance which is distinct from the rights and duties created by contracts entered into by the voluntary acts of private parties. Thirdly, unlike the capacities of a non-governmental juristic entity to contract and to spend, the Commonwealth's capacities to do so are capable of being utilised to regulate activity in the community in the course of implementing government policy. This consideration highlights the importance of the mechanisms for responsible government designed to protect the community from arbitrary government action. This is particularly so as only Parliament has the power to institute coercive measures and attach penal consequences in respect of the regulation of activity642, the power to convict and impose punishment lies entirely within judicial power643, and the Executive has no power to dispense with obedience to the law644. Fourthly, as the plaintiff, supported by Western Australia, contended, if the Commonwealth's capacities to contract and to spend generally permitted the Commonwealth Executive to intrude into areas of responsibility within the legislative and executive competence of the States in the absence of statutory authority other than appropriation Acts, access to s 109 of the Constitution may be impeded. For example, in the specific circumstances of the NSCP, such a wide view of the scope of s 61 could hypothetically lead to the result that citizens caught by any inconsistency between a State legislature's regulation of chaplaincy services and the Commonwealth Executive's acts in respect of the NSCP would be unable to avail themselves of the constitutional protection in s 109 against inconsistent legislation. 641 Cf Campbell, "Commonwealth Contracts", (1970) 44 Australian Law Journal 14, especially at 18; Campbell, "Federal Contract Law", (1970) 44 Australian Law Journal 580, especially at 580, 585-586. 642 R v Kidman (1915) 20 CLR 425 at 440-441 per Isaacs J; Davis (1988) 166 CLR 79 at 112 per Brennan J. 643 Nicholas v The Queen (1998) 193 CLR 173 at 231 [142] per Gummow J; [1998] HCA 9. 644 Pape (2009) 238 CLR 1 at 87 [227] per Gummow, Crennan and Bell JJ. See also A v Hayden (1984) 156 CLR 532 at 580-581 per Brennan J; [1984] HCA 67; White v Director of Military Prosecutions (2007) 231 CLR 570 at 592 [37] per Gummow, Hayne and Crennan JJ; [2007] HCA 29. Crennan Fifthly, the absence in the Constitution of executive immunity, explained in The Commonwealth v Mewett645, does not ameliorate the differences between the Commonwealth's capacities and those of a non-governmental juristic person which have been identified above. These considerations support the rejection of the submission that an exercise of the Commonwealth's capacities to contract and to spend would never require statutory authority, or would always, in the absence of statutory authority, fall within the scope of s 61. It remains important to note the position of the Commonwealth Executive in respect of spending on the ordinary annual services of government. In advancing the proposition that the Commonwealth's capacities to contract and to spend authorised the Commonwealth Executive's actions in respect of the NSCP, the Commonwealth defendants relied on Bardolph and the proposition that the NSCP, at its institution, was part of "the ordinary annual services of the Government". Assent to the Appropriation Act (No 3) 2006-2007 (Cth) was given on 10 April 2007, and the Funding Agreement was entered into on 9 November In dealing with the executive power of the New South Wales Government to enter a contract for advertisements relating to the Tourist Bureau of New South Wales in Bardolph, Rich J said646: "Apart from the question whether parliamentary appropriation of moneys is a prerequisite of the Crown's liability to pay under a contract made by it, the Crown has a power independent of statute to make such contracts for the public service as are incidental to the ordinary and well-recognized functions of Government." (emphasis added) "An advertising branch in the Premier's Department had been established in New South Wales as one of the ordinary activities and functions of its Government … A contract made in these circumstances is 645 (1997) 191 CLR 471 at 491 per Brennan CJ, 527, 531 per Gaudron J, 545-552 per Gummow and Kirby JJ; [1997] HCA 29. 646 (1934) 52 CLR 455 at 496. 647 (1934) 52 CLR 455 at 503. Crennan a Government contract, and in my opinion binds the Crown." (emphasis added) Dixon J said that the contract in question "concerned a recognized and regular activity of Government in New South Wales"648, and went on to say that no statutory authorisation was required for the Executive "to make a contract in the ordinary course of administering a recognized part of the government of the State"649 (emphasis added). None of these statements supports a general proposition that special or other legislation is never necessary to authorise the entry into a contract or the incurring of expenditure by the Executive. The statements made are apt for application to the constitutional phrase "the ordinary annual services of the Government" occurring in ss 53 and 54 of the Constitution. As confirmed in Pape, statutory authority for executive action (including spending) is distinct conceptually from the appropriation of funds from the Consolidated Revenue Fund for a particular purpose. It is possible for an Act to do both where it amounts to a special appropriation Act and provides some detail about the policy being authorised. In Pape, s 3 of the Tax Bonus for Working Australians Act (No 2) 2009 (Cth), read in conjunction with s 16(1) of the Taxation Administration Act 1953 (Cth), provided statutory authority for payment of the Tax Bonus and also effected an appropriation for the purposes of ss 81 and 83650. Similarly, the Appropriation (HIH Assistance) Act 2001 (Cth) made a special appropriation for the provision of financial assistance to defined "HIH eligible persons"651. The NSCP has not been subject to the parliamentary processes of scrutiny and debate which would have applied to special legislation, a special appropriation Act, legislation incidental to an exercise of power under s 61 or legislation referable to Parliament's powers under s 96. Further, whatever the position in subsequent years, at the time of entry into the Funding Agreement, the NSCP was not (by reason of an appropriation in the previous year) a recognised part of Commonwealth government administration in the sense explained in Bardolph. Insofar as the Appropriation Act (No 3) 2006-2007 (Cth) covered 648 (1934) 52 CLR 455 at 507. 649 (1934) 52 CLR 455 at 508. 650 (2009) 238 CLR 1 at 23 [8], 64 [135] per French CJ, 70-71 [167]-[171] per Gummow, Crennan and Bell JJ, 97 [267], 133 [393]-[394] per Hayne and Kiefel JJ. 651 HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72; [2011] HCA 31. Crennan appropriations for expenditure on the NSCP, for which no moneys had been appropriated in any previous year, the Senate had no power to amend that Act. For those reasons, the facts in the present case are distinguishable from those considered in Bardolph. These considerations highlight the need to characterise any particular act of contracting and spending by the Commonwealth Executive so as to determine whether or not it is authorised by s 61. The abovementioned limits on the Commonwealth Executive's capacities to contract and to spend demonstrate that, despite recognised exceptions, expenditure by the Commonwealth Executive will often require statutory authority beyond appropriation Acts. The Commonwealth Executive's entry into the Funding Agreement and the making of payments to SUQ could not be characterised as falling within any of the recognised exceptions and did not fall within the scope of s 61. For these reasons, the Commonwealth defendants' wider submission must be rejected. Sections 51, 52 and 122 of the Constitution The Commonwealth defendants' first alternative contention (the narrower submission) was that the NSCP (and the Executive's entry into the Funding Agreement and associated spending) could have been authorised by Parliament under either s 51(xxiiiA) or s 51(xx) of the Constitution, and that this was sufficient authorisation for the Executive's entry into the Funding Agreement and spending on NSCP activities. In the earlier stages of argument all parties accepted the proposition that the executive power of the Commonwealth at least covered areas of responsibility in respect of which the Commonwealth Parliament could legislate under ss 51, 52 or 122 of the Constitution. This involved no denial of prerogative powers or implied legislative power to protect the nation652 or, as articulated in the AAP Case653, Davis654 and Pape655, implied legislative and executive powers to act on behalf of the nation in certain circumstances. 652 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 259 per Fullagar J. See also Burns v Ransley (1949) 79 CLR 101 at 109-110 per Latham CJ, 116 per Dixon J; R v Sharkey (1949) 79 CLR 121 at 148-149 per 653 (1975) 134 CLR 338. 654 (1988) 166 CLR 79. 655 (2009) 238 CLR 1. Crennan Interveners addressed this point with some differences of emphasis. For example, in relation to s 51(xxiiiA) it was contended by the plaintiff, Victoria and Western Australia that the NSCP provided benefits beyond the class of students and did not provide directly measurable – that is, material – benefits to students. In relation to s 51(xx) it was contended by the plaintiff, New South Wales, Victoria, South Australia, Western Australia and Tasmania that SUQ was not a corporation for constitutional purposes and the plaintiff further submitted that, in any event, the NSCP guidelines, including those referred to above, were indifferent as to whether the providers of chaplaincy services were corporations. On the approach to this issue taken in these reasons, it is unnecessary to enter into any detailed consideration of such arguments. It is sufficient for the purposes of dealing with the submission to assume that the Commonwealth Parliament could pass valid Commonwealth legislation to support the NSCP and to then ask whether that possibility is sufficient authorisation for the Commonwealth Executive to institute the NSCP, to enter the Funding Agreement and to spend for NSCP purposes. In the AAP Case, the validity of a line item in an appropriation Act was in issue on the basis that it bypassed the federal distribution of powers. The case was not concerned with an exercise of prerogative power, or the circumstances in which the Commonwealth Executive may act without statutory authority. Furthermore, both the parties and the Court made assumptions about ss 81 and 83, since dispelled by Pape. After posing a question as to what was covered by the expression "the purposes of the Commonwealth" in s 81 and referring to "powers which are inherent in the fact of nationhood and of international personality"656, Barwick CJ said: "[w]ith exceptions that are not relevant … the executive may only do that which has been or could be the subject of valid legislation."657 Bearing in mind that prerogative powers were not being discussed, Gibbs J considered that the wording of s 61 limits the power of the Executive, which he said "cannot act in respect of a matter which falls entirely outside the legislative competence of the Commonwealth."658 Mason J recognised that Commonwealth executive power the was not unlimited and discerned Commonwealth under the Constitution by reference to the "distribution of legislative powers ... effected by the Constitution itself and the character and the responsibilities allocated 656 (1975) 134 CLR 338 at 361-362. 657 (1975) 134 CLR 338 at 362. 658 (1975) 134 CLR 338 at 379. Crennan status of the Commonwealth as a national government."659 Jacobs J recognised that not every exercise of power by the Commonwealth Executive requires the special characteristics of prerogative powers660. legislation, which recognition was closely to noting tied These statements were directed to the Constitution's allocation of areas of responsibility and competence as between the Commonwealth and the States. For the purposes of such a consideration, the specific heads of legislative power under s 51 (subject to obvious exceptions) and any implied legislative power are an obvious starting point. Taken in that context, and even allowing for an approach to s 81 no longer favoured, the statements do not support the proposition that, provided an initiative, policy or activity could be the subject of valid Commonwealth legislation, the Commonwealth Executive is, for that reason, authorised to contract and spend in respect of such an initiative, policy or activity without statutory authority. The Commonwealth defendants' narrower submission was treated as deriving, at least in part, from opinions as to the wide scope of Commonwealth executive power given by Alfred Deakin in his capacity as Attorney-General on 12 November 1902 in relation to the Vondel incident661 and by Sir Robert Garran giving evidence before the 1929 Royal Commission on the Constitution662. The conception of s 81 which underpinned Sir Robert Garran's view that the Executive's power of spending is concomitant with the Commonwealth's taxation power is no longer favoured663. Alfred Deakin's opinion that the content of the executive power of the Commonwealth extends at least to the legislative powers of Parliament can be discerned from relevant extracts set out in Pape664. Opinions about the synergy between executive power and legislative powers expressed in terms which are general, absolute or otherwise imperfect should not 659 (1975) 134 CLR 338 at 396. 660 (1975) 134 CLR 338 at 404-405. 661 Deakin, "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, Volume 1: 662 Australia, Report of the Royal Commission on the Constitution, (1929), Minutes of Evidence, Pt 1 at 71-72. 663 See Pape (2009) 238 CLR 1. 664 (2009) 238 CLR 1 at 59 [124] per French CJ. Crennan be taken to imply that expenditure by the Executive which does not fall within the second limb of s 61 is nevertheless within the scope of s 61 provided it is possible to identify special legislation which might be, but was not, passed. Different considerations might arise when enabling legislation is subsequently passed. In oral argument, examples were also given of circumstances in which the Commonwealth was said to have acted on the basis that it may engage in executive activities involving contracting and spending without the need for any statutory authority. These included a reference to Davis and references to the Commonwealth Executive's conduct of a shipping service in interstate and overseas trade between 1916 and 1923. In Davis, although the Bicentennial Authority was incorporated prior to the enactment of enabling legislation665, the incorporation and the enactment of enabling legislation were two steps in execution of the same plan: the incorporation envisaged the legislation, as evidenced by cl 3 of the memorandum of association of the Authority666. As to the shipping service referred to, at least one commentator has essayed the view that the activity fell within the same principle as that which applied in Bardolph667. If the fact that the Parliament could pass valid Commonwealth legislation were sufficient authorisation for any expenditure by the Commonwealth Executive, and, in this case, if the possibility of enabling legislation permitted the Commonwealth Executive to enter the Funding Agreement and make payments to SUQ, the Commonwealth's capacities to contract and to spend would operate, in practice, indistinguishably from the Commonwealth Executive's exercise of a prerogative power. Such a view ignores the restrained approach to the prerogative adopted by Brennan J in Davis, extracted above, and disregards the constitutional relationship between the Executive and Parliament affecting spending. For these reasons, the Commonwealth defendants' narrower submission must also be rejected. 665 Australian Bicentennial Authority Act 1980 (Cth). 666 See Davis (1988) 166 CLR 79 at 88 per Mason CJ, Deane and Gaudron JJ: "The primary object for which the Authority is established is to formulate, to plan, to develop, to promote, to co-ordinate and to implement, consistently with applicable legislation of the Parliament of the Commonwealth, a national programme of celebrations and activities". (emphasis added) 667 Renfree, The Executive Power of the Commonwealth of Australia, (1984) at 456. Crennan Financial management legislation Finally, it is necessary to refer to the Commonwealth defendants' further alternative argument that, failing all other sources of constitutional authorisation, the contracting and spending on the NSCP by the Commonwealth Executive was authorised by the Financial Management and Accountability Act 1997 (Cth). This alternative must also be rejected for the reasons explained below. Among other things, the purpose of the Financial Management and Accountability Act 1997 (Cth) is "to provide for the proper use and management of public money". The Act establishes an accounting system in respect of the Consolidated Revenue Fund and Div 2 of Pt 4 provides for "Drawing rights" in respect of officials and Ministers. Such drawing rights have no effect to the extent that a drawing right appears to authorise the application of public money in a way that was not authorised by an appropriation (s 27(5)). The Act satisfies the requirements of s 97 of the Constitution and provides for the proper management of public money. It is to be construed together with the Auditor-General Act 1997 (Cth). In its terms its provisions, most particularly ss 27 and 44, do not purport to provide, through the drawing rights mechanism, constitutional authorisation of spending by the Executive. Accordingly the Executive's actions in respect of the NSCP are not authorised under this legislation. Conclusion For the reasons given, the Commonwealth Executive's entry into the Funding Agreement was beyond the executive power in s 61 of the Constitution, and the making of payments by the Commonwealth Executive to SUQ was not supported by that power. 549 KIEFEL J. The detailed facts and circumstances relevant to this Amended Special Case are set out in the reasons of Gummow and Bell JJ and of Crennan J. The National School Chaplaincy Program ("the NSCP") was announced on 29 October 2006 as an initiative of the Australian Government by which funds were to be made available by the Government for the provision or enhancement of chaplaincy services in schools across Australia. The purpose of the funding was said to be to assist schools and their communities "in supporting the spiritual wellbeing of students." Some $165 million was made available over approximately three years from 2007 and, on 21 November 2009, an additional sum of $42 million was announced as being available over the 2010 and 2011 school years. According to the "National School Chaplaincy Program Guidelines" ("the Guidelines")668, by which the NSCP is administered, a "school chaplain" is a person who: is recognised by the school, its community and the appropriate governing authority as having the skills and experience to deliver school chaplaincy services to the school and its community; and is formally ordained, commissioned, endorsed or has qualifications recognised by a recognised or accepted religious institution or a State or Territory government approved chaplaincy service. In some circumstances secular pastoral care workers may be employed under the NSCP. In July 2008, the department administering the NSCP adopted an internal written policy relating to the provision of funds under the NSCP to secular pastoral care workers. The Guidelines require that a funding agreement be entered into with the Australian Government before payments are made to a school. A school could nominate a "project sponsor", such as a chaplaincy service provider already approved by a State or Territory government, to manage the chaplaincy service on its behalf. In the case of the Darling Heights State School in Queensland, at which four of the plaintiff's children were enrolled at the relevant times, the funding agreement with the Department of Education, Science and Training, representing the Commonwealth of Australia, was entered into by Scripture Union Queensland ("the Funding Agreement"), as varied, was for a term of approximately four years from 8 October 2007 to 31 December 2011. It was in the standard form of agreements between the Commonwealth and SUQ for funding under the NSCP. funding agreement ("SUQ"). This 668 As explained in the reasons of Crennan J at [460], the Guidelines, first issued in December 2006, have been replaced by updated versions. Nothing said in these reasons turns on the differences between various versions of the Guidelines. The NSCP Code of Conduct forms part of the Funding Agreement. A school chaplain is required to sign a Code of Conduct before providing services pursuant to the NSCP. Since July 2007, the Queensland Government has operated a "Chaplaincy/Pastoral Care Funding Program" which also makes funds available to schools in that State for the purpose of engaging the services of a chaplain, pastoral care co-ordinator, youth worker, "Youth Support Coordinator", or other support worker to provide support for vulnerable students. A policy (entitled "SM-03: Chaplaincy Services in Queensland State Schools"), which was first published in 1998 and has since been revised, governs the procedural and other requirements to be met by Queensland State schools in providing chaplaincy services. SUQ has entered into an Agreement for Chaplaincy Services with the State of Queensland, one condition of which is that SUQ's chaplains must abide by the Queensland Department of Education and Training Code of Conduct. The Commonwealth Parliament has provided financial assistance to the States for educational purposes for many years, more recently through the Nation-building Funds Act 2008 (Cth) and the Schools Assistance Act 2008 (Cth). Pursuant to the latter Act, grants of financial assistance are provided to the States on the condition that the grants be distributed to non-government669 schools with which the Commonwealth has funding agreements, for the purpose of defraying "recurrent expenditure". The NSCP does not operate in this manner. It does not involve the provision of grants to the States in the manner for which s 96 of the Constitution provides. It is not the product of, and does not have the authorisation of, Commonwealth legislation. It is merely a program for the funding of chaplaincy services, administered by the Department of Education, Science and Training (and later the Department of Education, Employment and Workplace Relations) for which funds have been provided by a series of odd-numbered Appropriation Acts which, according to contemporary parliamentary practice, describe the monies the subject of appropriation in terms such as for "the ordinary annual services of the Government and for related purposes"670. 669 The predecessor to the Schools Assistance Act 2008 (Cth), the Schools Assistance (Learning Together – Achievement Through Choice and Opportunity) Act 2004 (Cth), made provision for grants to government and non-government schools. Presently the Commonwealth provides funding for government schools under the Federal Financial Relations Act 2009 (Cth). 670 See the reasons of Crennan J at [472] for an overview of the relevant contemporary parliamentary practice regarding appropriations. The central questions raised by the Amended Special Case are those numbered 2(a) and 4(a). They ask whether the Funding Agreement is invalid and payments made under it unlawful by reason that the Funding Agreement and those payments are beyond the executive power of the Commonwealth under s 61 of the Constitution. So far as concerns questions 1(a) to (c), which relate to the plaintiff's standing to challenge the validity of the Funding Agreement and the payments under it, I agree with the answers proposed by Gummow and Bell JJ for the reasons which their Honours give. Questions 2(a) and 4(a) concern the scope of the power of the Executive Government of the Commonwealth, more particularly its power to expend monies which have been appropriated from the Consolidated Revenue Fund in circumstances where there is no legislative authorisation for expenditure. There is no doubt that the Executive can spend monies where authorisation is given by a valid Commonwealth law or by the Constitution. An Appropriation Act is a lawful authority for the segregation and disbursement of monies from the Consolidated Revenue Fund671, but it is not of itself the exercise of an executive or legislative power to achieve an objective which requires expenditure672. In Pape v Federal Commissioner of Taxation673, the Court, by a majority, concluded that the executive power extended to the taking of short term674 or emergency675 fiscal measures to address the effects of global financial conditions upon the Australian nation as a whole and which, it was said, only the Commonwealth had the capacity to implement. The Court was unanimous in the opinion that ss 81 and 83 are not the source of a substantive power to spend 671 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 104 [292] per Hayne and Kiefel JJ; [2009] HCA 23, quoting The State of New South Wales v The Commonwealth (1908) 7 CLR 179 at 190-191 per Griffith CJ, 200 per Isaacs J; [1908] HCA 68; Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 386-387 per Stephen J, 392-393 per Mason J; [1975] HCA 52. 672 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 72 [176] per Gummow, Crennan and Bell JJ. 673 (2009) 238 CLR 1. 674 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 63 [133] per 675 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 91-92 [242] per Gummow, Crennan and Bell JJ. appropriated monies and that such a power must be found elsewhere in the Constitution676. Attention was directed in the judgments in Pape to the terms of s 61 of the Constitution. It provides, in that part which has been referred to as the "third declaration"677, that the executive power of the Commonwealth "extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth." It has never been thought that these "meagre words"678 provide a definition of Commonwealth executive power679. But that is not to say that they are devoid of meaning or of implication. Alfred Deakin, in his so-called Vondel opinion680, considered that the framers of the Constitution chose not to define the power. The power, he said, was one which flowed from "the nature of the Federal Government itself, and from the powers, exercisable at will, with which the Federal Parliament was to be entrusted." The scope of the executive authority of the Commonwealth is therefore "to be deduced from the Constitution as a whole."681 676 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 36 [53], 55 [111] per French CJ, 73 [178], 75 [184]-[186] per Gummow, Crennan and Bell JJ, 113 [320] per Hayne and Kiefel JJ, 210 [600], 211-212 [603], 212-213 [606]-[607] per 677 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 438 per Isaacs J; [1922] HCA 62. 678 Zines, The High Court and the Constitution, 5th ed (2008) at 342. 679 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 437-438 per Isaacs J; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 115-116 [326]-[327]; see also Davis v The Commonwealth (1988) 166 CLR 79 at 92; [1988] HCA 63. 680 Deakin, "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, (1981), vol 1, 681 Deakin, "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, (1981), vol 1, 129 at 131; see also Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 119 [337] per Hayne and Kiefel JJ. In The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd ("the Wooltops Case")682, Isaacs J said that the third declaration in s 61 "marks the external boundaries of the Commonwealth executive power, so far as that is conferred by the Constitution", but that "it leaves entirely untouched the definition of that power and its ascertainment in any given instance." His Honour saw the third declaration as marking out, within the physical territory of the Commonwealth, a "special domain of governmental action"683, and as a "constitutional delimitation as between Commonwealth and States"684. Early commentary suggests that Commonwealth executive power was regarded as closely allied to Commonwealth legislative power685, although this does not appear to have been much discussed in the Convention Debates and may have proceeded upon an assumption, for want of better guidance from s 61. In any event, as Professor Saunders has observed 686, such an understanding does not appear to have deterred the Commonwealth from entering into schemes for which expenditure could not clearly be supported by an express power, albeit that s 96 was the preferred mechanism for Commonwealth expenditure following the broad interpretation of that provision in the line of cases commencing with Victoria v The Commonwealth687 and the uncertainty arising from the division of opinion in Attorney-General (Vict) v The Commonwealth ("the Pharmaceutical Benefits Case")688. 682 (1922) 31 CLR 421 at 437. 683 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 440. 684 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 441. 685 Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed (1910) at 98; see also the references in Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 108 [306]. 686 Saunders, "The Development of the Commonwealth Spending Power", (1978) 11 Melbourne University Law Review 369 at 381; see also Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 108-109 [306]-[307]. 687 (1926) 38 CLR 399; [1926] HCA 48. 688 (1945) 71 CLR 237; [1945] HCA 30. See Saunders, "The Development of the Commonwealth Spending Power", (1978) 11 Melbourne University Law Review In Victoria v The Commonwealth and Hayden ("the AAP Case")689, Gibbs J said that the words "extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth" limit the power of the Executive and "make it clear that the Executive cannot act in respect of a matter which falls entirely outside the legislative competence of the Commonwealth." His Honour referred in this regard to the distribution of all power between the Commonwealth and the States as effected by the Constitution. Mason J690 spoke of "the area of responsibilities allocated to the Commonwealth by the Constitution, responsibilities which are ascertainable from the distribution of powers, more particularly the distribution of legislative powers, effected by the Constitution itself and the character and status of the Commonwealth as a national government." His Honour continued that "[t]he provisions of s 61 taken in conjunction with the federal character of the Constitution and the distribution of powers between the Commonwealth and the States make any other conclusion unacceptable."691 Both Gibbs J692 and Mason J693 considered that this view of the executive power had been accepted in the Wooltops Case and in The Commonwealth v Australian Commonwealth Shipping Board ("the Shipping Board Case")694. In the Wooltops Case, the Executive had entered into a series of agreements with a company in relation to its business of manufacturing and selling wool tops. Under these agreements: the company was to carry on its business pursuant to consent from the Commonwealth in return for which the Commonwealth received a share of the profits; or the company was to carry on the business as an agent of the Commonwealth in consideration of an annual sum; or the company was to carry on the business under a combination of both such arrangements. It was relevantly held695 that the authority of valid Commonwealth legislation or the Constitution itself was necessary for the 689 (1975) 134 CLR 338 at 378-379. 690 (1975) 134 CLR 338 at 396-397. 691 See also Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 362 per Barwick CJ, 405-406 per Jacobs J. 692 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 379. 693 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 397. 694 (1926) 39 CLR 1 at 10; [1926] HCA 39. 695 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 432 per Knox CJ and Gavan Duffy J, 433, 437, 441, 447-448, 451 per Isaacs J, 453-454 per Higgins J, 461 per Starke J. Executive to enter into such agreements. That view was maintained in The Commonwealth v Colonial Ammunition Co Ltd696 but does not appear to have been the subject of further consideration by this Court. That may be because, until Pape, in connection with the executive power of expenditure, a focus was maintained upon the power of appropriation and ss 81 and 83 of the Constitution. Deakin expressed a view which may not accord with the view expressed in the Wooltops Case. He suggested that the Commonwealth "has executive power, independently of Commonwealth legislation, with respect to every matter to which its legislative power extends."697 This suggests that legislation is not necessary to support executive action. In the AAP Case, Barwick CJ considered that Commonwealth activity must fall "within the confines of some power, legislative or executive, derived from or through the Constitution." But his Honour also said that "[w]ith exceptions that are not relevant to this matter and which need not be stated, the executive may only do that which has been or could be the subject of valid legislation."698 No other member of the Court in the AAP Case expressed that view. Gibbs J did not express a view on the matter because the case did not concern the circumstances in which the Executive may act without statutory sanction699. The Commonwealth defendants' argument, on what they termed the "narrow basis", is put as an alternative to a broader argument as to the capacity of the Commonwealth to contract, a topic which will be dealt with later in these reasons. The narrow basis assumes that it is sufficient if the executive action of expenditure falls within the subject matter of Commonwealth legislative power in ss 51, 52 or 122 of the Constitution. The Commonwealth defendants do not acknowledge the need for legislative authority. On this approach, the questions concerning the validity of the Funding Agreement are to be answered by reference to legislative powers which might have been employed but were not, which is to say by hypothetical legislation. The plaintiff, together with Queensland and Tasmania, takes issue with the correctness of such an approach and points to the absence of any authority which 696 (1924) 34 CLR 198 at 220, 222-224 per Isaacs and Rich JJ; [1924] HCA 5. 697 Deakin, "Channel of Communication with Imperial Government: Position of Consuls: Executive Power of Commonwealth", in Brazil and Mitchell (eds), Opinions of Attorneys-General of the Commonwealth of Australia, (1981), vol 1, 698 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 362 (emphasis added). 699 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 379. holds that the Executive has power to engage in activities which the Parliament could authorise, but has not. Queensland submits that the Commonwealth must point to a Commonwealth law, a provision of the Constitution, or something which inheres in the Commonwealth Executive, which would permit it to enter into the Funding Agreement. It is not necessary in this case to resolve whether and in what circumstances legislative authority, or authority arising from the Constitution, is required. That is because the Commonwealth defendants identify two heads of power as appropriate to support the Funding Agreement – s 51(xxiiiA), by which "benefits" may be provided to students, and s 51(xx) respecting trading corporations – and reliance upon these heads of power is misplaced. The inclusion of s 51(xxiiiA) in the Constitution, following a referendum, was a response to this Court's decision in the Pharmaceutical Benefits Case700. In the Second Reading Speech to the Constitution Alteration (Social Services) Bill 1946701, the amendment was said by the Attorney-General of the Commonwealth to be necessary to "authorize the continuance of acts providing benefits in the nature of social services, and to authorize the Parliament in the future to confer benefits of a similar character." The Bill was said not to seek an extension of the "appropriation power", but was "limited to benefits of a social service character and, in the main, to benefits of a type provided for by legislation already on the statute-book."702 The provision of benefits to students at that time primarily took the form of financial assistance703, such as the payment of a student's tuition and other University fees and the provision of allowances704. A purpose of the introduction of s 51(xxiiiA) was to confirm the Commonwealth's power to continue providing assistance of that kind. 700 (1945) 71 CLR 237. 701 Which became the Constitution Alteration (Social Services) 1946 (Cth), s 2 of which inserted s 51(xxiiiA) into the Constitution. 702 Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 703 See the former Education Act 1945 (Cth), s 14(c), which was one of the provisions said by the Attorney-General of the Commonwealth to be of doubtful validity: Australia, House of Representatives, Parliamentary Debates (Hansard), 27 March 1946 at 648; see also the former National Security (Universities Commission) Regulations (Cth), reg 17. 704 National Security (Universities Commission) Regulations, reg 17, par 2 of Second Schedule. The word "benefits" is not limited to money; it may extend to services. So much is clear from the meaning given to the term by McTiernan J in British Medical Association v The Commonwealth ("the BMA Case")705, which was approved by the Court in Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth706. His Honour stated: "The material aid given pursuant to a scheme to provide for human wants is commonly described by the word 'benefit.' When this word is applied to that subject matter it signifies a pecuniary aid, service, attendance or commodity made available for human beings under legislation designed to promote social welfare or security: the word is also applied to such aids made available through a benefit society to members or their dependants. The word 'benefits' in par (xxiiiA) has a corresponding or similar meaning." It may be inferred from this description and the structure of s 51(xxiiiA) that the power to make provision for benefits to students is not a power to provide anything which may be of benefit to them. "Benefits" has a more tangible meaning than that. In the present context, it refers to social services provided to students. Social services provided to students might take the form of financial assistance, for example payment of fees and living and other allowances, or material assistance, such as the provision of books, computers and other necessary educational equipment, or the provision of services, such as additional tutoring. The term "benefits" in the context of s 51(xxiiiA) does not extend to every service which may be supportive of students at a personal level in the course of their education. "Benefits to students" provided pursuant to s 51(xxiiiA) must be provided by the Commonwealth707 to students. Benefits may be provided to students through a third party. The passage from the BMA Case quoted above recognises this. However, care must be taken not to give s 51(xxiiiA) a wider operation than was intended. The power given is to provide benefits to students, not funding to schools. The power to provide benefits to students is not one to assist schools to provide services associated with education which may be of some benefit to students. Moreover, benefits provided to students in reliance on s 51(xxiiiA) 705 (1949) 79 CLR 201 at 279; [1949] HCA 44. 706 (1987) 162 CLR 271 at 280; [1987] HCA 6. 707 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 243 per Latham CJ, 254 per Rich J, 260 per Dixon J, 279, 282 per McTiernan J, 292 per Webb J; Alexandra Private Geriatric Hospital Pty Ltd v The Commonwealth (1987) 162 CLR 271 at 279 per Mason ACJ, Wilson, Brennan, Deane and must be provided to students as a class. It is clear from the Funding Agreement itself that the chaplaincy services are to be provided not only to students, but to the school's staff and members of the wider school community. This suggests that there is a wider purpose to the Funding Agreement. The Funding Agreement does not provide benefits to students and is not a contract for the provision of such benefits. It is a contract to provide funds for the provision of chaplaincy services in a school, as part of the education-related program of the school. A hypothetical statute authorising the Funding Agreement could not be supported by s 51(xxiiiA). The Commonwealth defendants' contention that the Funding Agreement might be authorised by s 51(xx), the corporations power, may be dealt with shortly. The question is not whether SUQ is a trading or financial corporation, as much of the argument assumed. The Guidelines did not require a party to a funding agreement entered into pursuant to the NSCP to be a trading or financial corporation. Any statute authorising the Funding Agreement could not be said to be concerned with the regulation of the activities, functions, relationships and business of a corporation, the rights and privileges belonging to a corporation, the imposition of obligations upon it, or the regulation of the conduct of those through whom it acts708. More generally, any legislation supporting the Funding Agreement would not single out constitutional corporations as the object of its statutory command709. The Commonwealth defendants' alternative, and broader, submission is that there is no relevant limitation upon the power of the Commonwealth Executive to spend monies. That is so, it is said, because it has a capacity to contract that is not limited by reference to the division of legislative powers effected by the Constitution, a capacity which is analogous to that of a natural person. In the Commonwealth defendants' submission, the Commonwealth's power to contract to spend money is no less than that of a natural person, except that it is constrained by the political accountability of the Executive to Parliament and the need for an appropriation by Parliament before an expenditure can be effected. 708 Re Pacific Coal Pty Ltd; Ex parte Construction, Forestry, Mining and Energy Union (2000) 203 CLR 346 at 375 [83] per Gaudron J; [2000] HCA 34; New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at 114-115 [178] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; [2006] HCA 52. 709 New South Wales v The Commonwealth (Work Choices Case) (2006) 229 CLR 1 at One observation that may immediately be made about the submission concerns a difference between the Commonwealth Executive and a natural person contracting. When the Commonwealth contracts, it may be committing to the expenditure of public monies. But questions as to the capacity of the Commonwealth Executive to contract may be put aside for present purposes. They may be dealt with after consideration is given to the fundamental proposition which lies at the heart of the submission, namely that the Commonwealth Executive has a relevantly unlimited power to spend. That proposition raises questions about the relationship between the Executive and the Commonwealth Parliament and it raises questions about the position of the Commonwealth government under the Constitution. A factor which was influential to Isaacs J's view in the Wooltops Case, that Commonwealth legislation or the Constitution was required to authorise the Executive's entry into contracts, was the doctrine of responsible government710. His Honour saw the doctrine as important to an understanding of the relationship between the six separate "constitutional units" in Australia, comprised of the six colonies that existed prior to federation. In this regard, he said responsible government was "the key to the full understanding and interpretation of the third declaration in sec 61 of the Constitution."711 And he saw its operation as a necessary control over expenditure712. The principle of responsible government, derived from parliamentary history and practice in the United Kingdom, is a central feature of the Australian Constitution713. The relationship it establishes between the Parliament and the Executive may be described as one where the former is superior to the latter714. Thus it was stated in Brown v West715 that whatever be the scope of 710 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 438-439, 446-451. 711 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 439. 712 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 449-450. 713 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 at 146-147; [1920] HCA 54; R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 275; [1956] HCA 10. 714 Winterton, "The Relationship between Commonwealth Legislative and Executive Power", (2004) 25 Adelaide Law Review 21 at 36. 715 (1990) 169 CLR 195 at 202 per Mason CJ, Brennan, Deane, Dawson and Toohey JJ; [1990] HCA 7. Commonwealth executive power, it is susceptible of control by statute. Their Honours went on to say that a valid law of the Commonwealth may limit the exercise of executive power such that acts which would otherwise be supported by the executive power fall outside its scope. The decision in the Wooltops Case has been considered to have gone too far in one respect, in requiring that there be a valid Commonwealth law providing the necessary authority before the Executive could contract716. In New South Wales v Bardolph717, Dixon J agreed that the principles of responsible government impose a responsibility on the Executive to Parliament and that Parliament retains control over expenditure of public monies and therefore the power of enforcing that responsibility, but said that the principle does not disable the Executive from acting without the prior approval of Parliament, nor from contracting conditionally upon appropriation by Parliament718. Considerations as to the supremacy of Parliament which underlie the doctrine of responsible government may provide a basis for limiting executive power to certain of the legislative heads of power. As was pointed out by the plaintiff and the Solicitor-General of Queensland in argument, if the Executive's power to spend was unlimited, s 51(xxxix), when used to support the executive power, might operate to extend that power beyond those matters which may, expressly or impliedly, be otherwise the subject of legislative power. In that event the relationship between the Executive and the Parliament and the dominant position of the Parliament may be altered. Such an extension of power may enable the Commonwealth to encroach upon areas of State operation and thereby affect the distribution of powers as between the Commonwealth and the States. The executive power may extend beyond the subjects of Commonwealth legislative power in that it includes prerogative powers and the power to carry out the essential functions and administration of a constitutional government. It is not suggested that these powers are engaged in the present case. 716 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 433, 455, 460-461. 717 (1934) 52 CLR 455; [1934] HCA 74. 718 New South Wales v Bardolph (1934) 52 CLR 455 at 509, Gavan Duffy CJ agreeing at 493; and see also Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54 at 61 per Barwick CJ, 113 per Aickin J, where their Honours appear to support that view; [1977] HCA 71. The executive power also includes the capacity of the Executive to "engage in enterprises and activities peculiarly adapted to the government of a nation and which cannot otherwise be carried on for the benefit of the nation", of which Mason J spoke in the AAP Case719. That capacity is to be deduced from "the existence and character of the Commonwealth as a national government"720. This is the power upon which the majority in Pape relied721. Dixon J, in the Pharmaceutical Benefits Case722, spoke of the position that the Commonwealth occupies as a national government and suggested that "no narrow view" should be taken of its powers. But his Honour went on to identify limitations on the executive power of a kind mentioned earlier in these reasons, stating that "the basal consideration would be found in the distribution of powers and functions between the Commonwealth and the States." Mason J in the AAP Case expressly acknowledged that the distribution of legislative powers necessarily limited the scope of the power to be implied from the position and status of the Commonwealth as a national government723. It is true that, until Pape, limitations on the scope of the executive power of expenditure were mostly viewed through the prism of s 81, which involved the question whether an undertaking was "for the purposes of the Commonwealth". Even so, the judgments in the AAP Case make plain that the executive power generally was viewed as subject to limitation. And in Pape it was observed that no statement of this Court has suggested that the executive power of the Commonwealth is unbounded724. The limitation consistently observed was that arising from the distribution of powers effected by the Constitution as between the Commonwealth and the States. Isaacs J in the Wooltops Case, it will be recalled, considered the third declaration in s 61 as a constitutional delimitation as between the Commonwealth and the States725. 719 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 397. 720 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 397 per Mason J; see also at 362 per Barwick CJ, 375 per Gibbs J. 721 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 63-64 [133] per French CJ, 91-92 [241]-[242] per Gummow, Crennan and Bell JJ. 722 Attorney-General (Vict) v The Commonwealth (1945) 71 CLR 237 at 271-272. 723 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 398. 724 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 119 [335] per 725 The Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421 at 441. In the AAP Case, Mason J observed that, although the ambit of the executive power is not defined in Ch II, "it is evident that in scope it is not unlimited and that its content does not reach beyond the area of responsibilities allocated to the Commonwealth by the Constitution, responsibilities which are ascertainable from the distribution of powers, more particularly the distribution of legislative powers, effected by the Constitution itself and the character and status of the Commonwealth as a national government."726 In R v Duncan; Ex parte Australian Iron and Steel Pty Ltd727, Mason J added to these observations that "[o]f necessity the scope of the power is appropriate to that of a central executive government in a federation in which there is a distribution of legislative powers". These statements by Mason J were approved in R v Hughes728 and in Pape729. The reasons given by Mason J for the necessary limitation upon the power of the Executive Government to engage in activities "peculiarly adapted to the government of a nation" largely concern the division of responsibilities between the Commonwealth and the States. His Honour said that it would be inconsistent with that division to effect "a radical transformation" of the Commonwealth's "area of responsibility under the Constitution"730. To do so, his Honour observed, would enable the Commonwealth to carry out programs outside the acknowledged heads of legislative power merely because it was convenient for the national government to formulate and administer them. These observations are apposite to this case. In Davis v The Commonwealth731, Mason CJ, Deane and Gaudron JJ said that the scope of Commonwealth executive power had "often been discussed but never defined." Their Honours referred to the responsibilities derived from the distribution of powers and the character and status of the Commonwealth as a 726 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 396. 727 (1983) 158 CLR 535 at 560; [1983] HCA 29. 728 (2000) 202 CLR 535 at 554-555 [38] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [2000] HCA 22. 729 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 63 [132] per French CJ, 114 [323], 115-116 [327] per Hayne and Kiefel JJ; see also at 181 [519], 188-189 [537] per Heydon J. 730 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 398. 731 (1988) 166 CLR 79 at 92. national polity and said732 that "the existence of Commonwealth executive power in areas beyond the express grants of legislative power will ordinarily be clearest involves no real legislative action where Commonwealth executive or competition with State executive or legislative competence." In Davis, Brennan J also observed733 that the statement by Mason J in the AAP Case, that the Executive Government had power to engage in activities peculiarly adapted to the government of a nation and which otherwise cannot be carried on for its benefit, invites consideration of the sufficiency of the powers of the States to engage effectively in the enterprise or activity in question and therefore of the need for national action, whether unilateral or in co-operation with the States. In the present case it cannot be said that no competition may be involved between the State and Commonwealth Executives. Both governments require adherence to their respective guidelines as a condition of funding and both governments publish those guidelines independently of each other and not co- operatively. A party to a funding agreement, such as SUQ, is required to conform to the content of such guidelines as may be determined by the Commonwealth and the State of Queensland respectively. There is clearly the potential for some disparity or inconsistency in what is required. The answer to the question posed by Brennan J in Davis is tolerably clear in this case. The Queensland Government is not only in a position to administer funding for chaplaincy services in schools of that State. It funds some such services itself and it has been actively involved in the development of policy in that area. The distribution of powers effected under the Constitution directs attention to s 96. It may be that s 96 enables the Commonwealth to intrude in point of policy and administration, by the conditions it attaches to grants, into areas outside the Commonwealth's legislative competence734. However, s 96 permits that course. Importantly, it also confirms that the executive power "is not unlimited and that there is a very large area of activity which lies outside the 732 Davis v The Commonwealth (1988) 166 CLR 79 at 93-94. 733 Davis v The Commonwealth (1988) 166 CLR 79 at 111. 734 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 357 per executive power of the Commonwealth but which may become the subject of conditions attached to grants under s 96."735 The funding of school chaplains might be accommodated by grant on condition under s 96. That is the means by which funding for education-related purposes has been effected in the past. As Heydon J observed in Pape736, if the Commonwealth executive power to spend is said to be unlimited, s 96 becomes otiose. It may be accepted that the executive power extends to its prerogative powers, to subject matters of express grants of legislative power in ss 51, 52 and 122 and to matters which are peculiarly adapted to the government of a nation. None of these powers support the Funding Agreement and the payment of monies under it. By analogy with the approach taken by Gibbs CJ in The Commonwealth v Tasmania (The Tasmanian Dam Case)737, there is nothing about the provision of school chaplaincy services which is peculiarly appropriate to a national government. They are the province of the States, in their provision of support for school services, as evidenced in this case by the policy directives and funding undertaken by the Queensland Government. Funding for school chaplains is not within a discernible area of Commonwealth responsibility. The contention of the Commonwealth defendants that the Commonwealth Executive should be taken to have a relevantly unlimited capacity to contract, by analogy with a natural person, is not to the point. The question is not one of the Executive's juristic capacity to contract, but its power to act738. Actions of the Executive must necessarily fall within the confines of some power derived from the Constitution739. Such an approach is evident in the Shipping Board Case, where it was held that there was neither legislative nor executive power to set up the business in question. An activity not authorised by the Constitution could not 735 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 398 per 736 Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 199 [569]. 737 (1983) 158 CLR 1 at 109; [1983] HCA 21. 738 See Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 362 per Barwick CJ, 379 per Gibbs J, 396 per Mason J. 739 Victoria v The Commonwealth and Hayden (1975) 134 CLR 338 at 362 per Barwick CJ, 379 per Gibbs J, 396 per Mason J. fall within the power of the Executive740. The Executive is not authorised by the Constitution to expand its powers by contract. So far as concerns the further contention of the Commonwealth defendants, which relied upon s 44 of the Financial Management and Accountability Act 1997 (Cth), I agree with Gummow and Bell JJ741 that Pt 7 of that Act does not confer power to spend the monies to be advanced under the Funding Agreement. The foregoing is sufficient to dispose of questions 2(a) and 4(a). I agree with the answers to these questions proposed by Gummow and Bell JJ. It is not strictly necessary to answer questions 2(b) and 4(b), asking whether the Funding Agreement is invalid by reason of s 116 of the Constitution, which relevantly provides that "no religious test shall be required as a qualification for any office or public trust under the Commonwealth." However, I agree with Gummow and Bell JJ742 that the plaintiff's case in this regard fails at the threshold, because the chaplains engaged by SUQ hold no office under the Commonwealth. I also agree with the balance of the answers proposed by Gummow and 740 The Commonwealth v Australian Commonwealth Shipping Board (1926) 39 CLR 1

HIGH COURT OF AUSTRALIA THE QUEEN AND APPELLANT RESPONDENT The Queen v Khazaal [2012] HCA 26 10 August 2012 ORDER Appeal allowed. Set aside the orders of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 9 June 2011 and in place thereof dismiss the appeal against conviction on count 1 of the indictment. Remit the matter to the Court of Criminal Appeal of the Supreme Court of New South Wales for consideration and determination of the appeal against sentence in respect of the conviction on count 1 of the indictment. On appeal from the Supreme Court of New South Wales Representation P W Neil SC with S G Callan for the appellant (instructed by Commonwealth Director of Public Prosecutions) P D Lange with C C Waterstreet for the respondent (instructed by Lawyers Corp Pty Limited) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS The Queen v Khazaal Criminal law – Terrorism – Collecting or making documents likely to facilitate terrorist acts – Jury misdirection – Respondent convicted of making document "connected with ... assistance in a terrorist act", knowing of that connection, contrary to s 101.5(1) of Criminal Code (Cth) ("Code") – Trial judge directed jury that words "connected with ... assistance in a terrorist act" had no special or technical meaning – Whether trial judge misdirected jury. Criminal law – Terrorism – Collecting or making documents likely to facilitate terrorist acts – Exception to liability – Evidential burden – Section 101.5(5) of Code created exception to liability under s 101.5(1) if making of document "not intended to facilitate ... assistance in a terrorist act" – Respondent bore evidential burden under s 101.5(5), as defined in s 13.3(6) – Whether evidence at trial suggested reasonable possibility that making of document by respondent not intended to facilitate assistance in a terrorist act. Words and phrases – "connected with", "evidential burden". Criminal Code (Cth), ss 13.3, 101.5. Introduction respondent") was convicted on ("the 10 September 2008 of an offence against s 101.5(1) of the Criminal Code (Cth) ("the Code") namely that he "did make a document connected with assistance in a terrorist act knowing of that connection." He was sentenced to 12 years' imprisonment dating from 31 August 2008 with a nine year non-parole period expiring on 31 August 20171. The Court of Criminal Appeal of New South Wales (McClellan CJ at CL, Hall and McCallum JJ) heard his appeal against conviction and sentence on 6 October 2010 and on 9 June 2011, by majority, allowed the appeal, quashed the conviction and directed a retrial2 The document the subject of the indictment was an electronic book entitled Provisions on the Rules of Jihad: Short Judicial Rulings and Organizational Instructions for Fighters and Mujahideen Against Infidels ("the book"). It was the Crown's case that the respondent selected, compiled and edited downloaded material from the Internet and added his own text to it by way of a dedication and foreword. His conduct in so doing was said to constitute intentionally "making a document" for the purposes of s 101.5(1) of the Code. The book included advice on techniques of assassination and listed categories of targets for assassination, including holders of public office in a number of countries, one of which was Australia. A more detailed account of the content of the book and other evidence relevant to this appeal appears in the joint judgment3. The appeal was allowed by the Court of Criminal Appeal on the basis that the trial judge erred in declining to leave to the jury the defence, under s 101.5(5) of the Code, that "the document was not intended to facilitate preparation for, the engagement of a person in, or assistance in a terrorist act." The point of difference between the trial judge and the majority in the Court of Criminal Appeal was on the question whether the respondent had discharged the evidential burden necessary to invoke the defence. On 7 October 2011, Gummow, Hayne and Bell JJ granted the Crown special leave to appeal to this Court from the decision of the Court of Criminal Appeal. 1 R v Khazaal [2009] NSWSC 1015 at [51]. 2 Khazaal v The Queen [2011] NSWCCA 129. 3 Reasons of Gummow, Crennan and Bell JJ at [54]-[62]. For the reasons that follow the appeal should be allowed. The issues The two issues for determination in this appeal were: 1. Whether the respondent had discharged the evidential burden necessary to enliven the defence under s 101.5(5) of the Code - this was the question raised by the Crown's notice of appeal. 2. Whether the trial judge's direction to the jury in relation to the requirement that the document be "connected with" assistance in a terrorist act was sufficient - this was the question raised by the respondent's notice of contention. The evidential burden - general law and the statute The judge in a trial by judge and jury is required to direct the jury on the law which they must apply in determining whether the Crown has established the guilt of the accused. The judge must direct the jury as to each element of the offence which the Crown must prove and each defence lawfully available to the accused. Some defences must be negatived by the prosecution as part of establishing the commission of the offence. In such a case the accused does not have to point to evidence capable of raising the defence. There are other defences which are not lawfully available to the accused unless there is evidence capable of supporting them. In such a case the accused is said to bear the evidential burden4. Under the general law, in a case in which the evidential burden is on the accused, that burden is discharged if there is evidence which, taken at its highest in favour of the accused, could lead a reasonable jury, properly instructed, to have a reasonable doubt that the defence had been negatived5. The legal burden then shifts to the prosecution to negative the defence beyond reasonable doubt. The question whether the evidential burden has been discharged is a question of law for the trial judge. 4 Different usages of "evidential burden" in the general law relevant to civil proceedings were discussed by Heydon J in Strong v Woolworths Ltd (2012) 86 ALJR 267 at 279-280 [51]-[54]; 285 ALR 420 at 434-435; [2012] HCA 5. The usage adopted here is relevant to criminal prosecutions. 5 Braysich v The Queen (2011) 243 CLR 434 at 454 [36] per French CJ, Crennan and Kiefel JJ; [2011] HCA 14. The detailed statutory framework is set out in the joint reasons6. Section 101.5(5) provides a defence to a charge of an offence under s 101.5(1). The defence qualifies the scope of the offence which s 101.5(1) creates. Section 101.5(5) provides: "Subsections (1) and (2) do not apply if the collection or making of the document was not intended to facilitate preparation for, the engagement of a person in, or assistance in a terrorist act." Section 13.3(3) imposes the "evidential burden" upon a defendant wishing to rely upon any "qualification or justification provided by the law creating an offence"7. The term "evidential burden" is defined by s 13.3(6): "In this Code: evidential burden, in relation to a matter, means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist." The relevant Explanatory Memorandum said of s 13.3 that8: "These provisions accord with basic principles accepted in all jurisdictions. They have been reiterated by the High Court in He Kaw Teh (1984-5) 157 CLR 203 [sic]." There was only glancing reference to the evidential burden in He Kaw Teh v The Queen9. The case was concerned with whether mens rea was a necessary element of the offence of importing a prohibited drug contrary to s 233B(1) of the Customs Act 1901 (Cth). Gibbs CJ referred to "evidence which raises the question"10 of a defence of honest and reasonable mistake. Wilson J referred to the "evidential burden" as "the burden of adducing evidence"11. Brennan J spoke 6 Reasons of Gummow, Crennan and Bell JJ at [45]-[51]. 7 The note to section 101.5(5) states "A defendant bears an evidential burden in relation to the matter in subsection (5) (see subsection 13.3(3))." 8 Australia, Senate, Criminal Code Bill 1994, Explanatory Memorandum at 47. (1985) 157 CLR 523; [1985] HCA 43. 10 (1985) 157 CLR 523 at 535, Mason J agreeing at 546. 11 (1985) 157 CLR 523 at 558. of an evidential burden passing to an accused "to raise a reasonable doubt as to his knowledge"12. Dawson J spoke of "the burden of providing the necessary foundation in evidence"13. The reference to He Kaw Teh in the Explanatory Memorandum tends to suggest that the definition of "evidential burden" in s 13.3(6) was not intended to change the general law. The term "reasonable possibility" was used by this Court in Taiapa v The Queen14 in relation to the evidential burden on an accused to raise the defence of compulsion under s 31(1)(d) of the Criminal Code (Q). The Court referred to the "evidential burden" as requiring the accused to "identify some basis in the evidence raising as a reasonable possibility the existence of reasonable grounds for his belief"15. Nevertheless, it is the text of s 13.3(3), rather than the general law, that must be applied in determining whether an evidential burden imposed by the Code has been discharged. A defendant bears the evidential burden, as defined, in relation to a defence under s 101.5(5). If that burden is discharged, the prosecution bears the legal burden of negativing the defence beyond reasonable doubt16. The statutory collocation "evidence that suggests a reasonable possibility" is not readily amenable to translation into other terms. But, applying the ordinary meaning of the words of the definition, it is sufficient for the disposition of the Crown's appeal that s 13.3(3), read with s 13.3(6), requires evidence that is at least capable of supporting the inference that the matter to which the evidential burden applies "exists or does not exist." This approach reflects the general law position with respect to the evidential burden. If no such inference is able to be drawn from the evidence there is no logical basis for saying that the evidence suggests that inference as a reasonable possibility17. Evidence which is merely consistent with or not inconsistent with such a possibility does not "suggest" it. The interaction of the "evidence" and the "possibility" in such a case may be like that of ships passing in the night. Importantly, as s 13.3(5) provides, the question 12 (1985) 157 CLR 523 at 581. 13 (1985) 157 CLR 523 at 592. 14 (2009) 240 CLR 95; [2009] HCA 53. 15 (2009) 240 CLR 95 at 109 [39]. 16 Code, s 13.1(2). 17 Whether the word "reasonable" attracts a threshold requirement for the strength of the inference necessary to discharge the evidential burden need not be considered here. whether an evidential burden has been discharged is one of law. In that respect also the Code and the general law coincide. The evidential burden - the trial judge's ruling At trial the respondent's counsel asked the judge to direct the jury that: "if there is a reasonable possibility that the accused did not make the book with the intention of facilitating assistance in a terrorist act, then they must be satisfied beyond reasonable doubt that the making of the book was intended to facilitate assistance in a terrorist act." As McClellan CJ at CL correctly observed in the Court of Criminal Appeal, the direction sought conflated the functions of the trial judge and that of the jury18. The direction sought would have left to the jury the question whether the evidential burden had been discharged. That was a question of law for the judge. In the event, the judge decided the question of law and decided it adversely to the respondent. In ruling against the respondent, the trial judge, using an example proffered by the Crown, said that the defence for which s 101.5(5) provides would apply to a terrorism consultant or advisor to government and law enforcement agencies who, in the course of his or her employment, collects and collates material advocating the commission of terrorist acts. The expertise and responsibilities of such a person would be inconsistent with an intention to facilitate assistance in a terrorist act. The respondent's asserted status as a journalist and researcher was not of that character. The trial judge also identified what she called a "paradox" inherent in the respondent's application: "the accused proposes to submit to the jury that the evidence in the trial would not allow them to draw the conclusion beyond reasonable doubt that the accused knew of the book's connection with assistance in a terrorist act, and, in the event that those submissions fail, rely on the same evidence as suggestive of a reasonable possibility that the accused did not intend facilitating assistance in a terrorist act. The effect is to put the Crown to proof on a fault element that does not form part of the offence." That aspect of her Honour's reasoning was criticised by Hall J as not reflecting a matter which should have been taken into account in her determination. Hall J 18 [2011] NSWCCA 129 at [125]. pointed out that whether there was evidence to suggest a "reasonable possibility" within the meaning of s 13.3(6) was a matter that demanded "attention to the evidence in order to determine whether any of the evidence could, as a reasonable possibility, go to supporting the relevant excuse, exemption or justification."19 In the event, the trial judge, having come to the view that s 105.5(5) had not been engaged, said "but if I am wrong in that regard, I fail to see how the accused has discharged the evidentiary burden placed upon him by the Code." It was the correctness of that latter proposition that was at issue in this appeal. The evidential burden - the Court of Criminal Appeal's decision McClellan CJ at CL and Hall J both referred to aspects of the evidence relied upon by the respondent to justify a finding that the evidentiary burden in s 13.3(6) was discharged. McClellan CJ at CL referred to four aspects of the evidence, which included the facts that20: the respondent was an accredited journalist, a researcher and a publisher; he had acquired and built up a library which he used in his research; he had a significant interest in the Islamic religion; and he had written and published articles on benign Islamic issues. Hall J set out a more extensive list of matters including the following21: the range of general material published on the website to which the book was uploaded; the use of detailed footnotes and references in the book marking it as a reference or research work; and 19 [2011] NSWCCA 129 at [433]. 20 [2011] NSWCCA 129 at [127]. 21 [2011] NSWCCA 129 at [388]. the absence from the text contributed by the respondent of any notion that he was adopting or promoting the views of those whose work had been included in the book. Hall J, with whom McCallum J agreed in respect of the evidential burden, said that22: "As a matter of law, it could not ... be said that the evidence ... was incapable of suggesting, as a reasonable possibility, that [the respondent] acted as a professional journalist with an intention that was not one to facilitate assistance in a terrorist act as that expression is to be understood under the Code." With respect to their Honours, the question for the trial judge was not whether the evidence relied upon was incapable of suggesting the reasonable possibility necessary to satisfy the evidential burden on the respondent. The question was whether the evidence was capable of supporting that possibility. The fact that the matters relied upon by the respondent were not inconsistent with the absence of an intention to facilitate assistance in a terrorist act did not mean that it was logically open to infer, from those matters, the absence of that intention. The evidence relied upon by the respondent did not suggest a reasonable possibility that the making of the document was not intended to facilitate assistance in a terrorist act. The approach taken by McClellan CJ at CL was, with respect, the approach that should have been taken by the trial judge, albeit it yielded the same result. His Honour said23: "Whatever be the difficulties with [the trial judge's] approach to the legislative provision I am satisfied that this evidence was insufficient to discharge the evidentiary burden which fell upon [the respondent]. To discharge that burden [the respondent] had to point to evidence that suggested a 'reasonable possibility' that the making of the particular document was not intended to facilitate assistance in a terrorist act. The evidence to which attention was drawn was entirely neutral in relation to that issue. Whether or not [the respondent] was a journalist who had researched and published in relation to Islam it was his intention in making the document which was the issue in the trial. On that issue, apart from the document itself, without [the respondent] giving evidence or there being other evidence from which his intention could be inferred the 22 [2011] NSWCCA 129 at [441]. 23 [2011] NSWCCA 129 at [128]. evidential burden could not be discharged. There was nothing to support a reasonable possibility that he did not have the relevant intention." (emphasis omitted) His Honour's conclusion was correct. The respondent failed to discharge the evidential burden, which he had to discharge before the defence under s 101.5(5) could be left to the jury. The Crown's ground of appeal is made out. Connection - the statutory context Before turning to the question raised by the respondent's notice of contention, it is necessary to refer to the statutory provisions underpinning the allegation in the indictment that the document made by the respondent was "connected with assistance in a terrorist act". The offence created by s 101.5(1) is the collection or making of a document which is "connected with preparation for, the engagement of the person in, or assistance in a terrorist act". To commit the offence under s 101.5(1) the person who makes the document must know of the requisite connection24. A lesser offence consisting of exactly the same elements is created by s 101.5(2), save that it requires recklessness as to the existence of the connection rather than knowledge of that existence25. At the time of the commission of the offence in September 2003, s 101.5(3) provided: "A person commits an offence under subsection (1) or (2) even if the terrorist act does not occur." That subsection was repealed by the Anti-Terrorism Act 2005 (Cth) ("the ATA") and a new subsection 101.5(3) substituted, which reads26: "A person commits an offence under subsection (1) or (2) even if: a terrorist act does not occur; or the document the engagement of a person in, or assistance in a specific terrorist act; is not connected with preparation for, 24 Code, s 101.5(1)(c). 25 Code, s 101.5(2)(c). 26 ATA, Sched 1, Item 3. the document is connected with preparation for, the engagement of a person in, or assistance in more than one terrorist act." Similar amendments were made to cognate offences created by Div 101 of the Code. The amendments came into operation on 4 November 200427. Those amendments were subsequently given retrospective effect by the Anti-Terrorism Act (No 2) 2005 (Cth) ("the ATA No 2"). The ATA No 2 inserted a new section 106.3 into the Code, applying each amendment to offences committed before and after the commencement of s 106.3, but not before the commencement of the section of the Code which had been amended28. Section 106.3 took effect from 16 February 2006. In Lodhi v The Queen29 the Court of Criminal Appeal of New South Wales held that the ATA No 2 did not apply the amendments under the ATA to proceedings that had already been instituted prior to the ATA No 2 receiving Royal Assent. That limitation is not relevant in the present case30. The applicable version of s 101.5(3) therefore, is that substituted for the original s 101.5(3) by the combined operation of the ATA and the ATA No 2. The application of the substituted provision was reflected in the trial judge's direction to the jury that it did not matter if the document were not connected with a specific action or threat of action. In the Second Reading Speech for the Anti-Terrorism Bill 2005, the Attorney-General said31: "When the offences were originally drafted, it was not the intention that the prosecution would be required to identify a 'particular' terrorist act. The amendments will clarify that it is not necessary for the prosecution to identify a specific terrorist act. 27 ATA, s 2. 28 ATA No 2, Sched 1, Item 22. 29 (2006) 199 FLR 303. 30 The proceedings in the present case were commenced in 2008. 31 Australia, House of Representatives, Parliamentary Debates (Hansard), 2 November 2005 at 92. It will be sufficient for the prosecution to prove that the particular conduct was related to 'a' terrorist act." The definition of the term "terrorist act" appears in s 100.1 and is set out in the joint judgment. Relevantly, it means "an action or threat of action" which meets a number of criteria set out in the definition. There is no dispute that the assassination of public figures, for the reasons set out in the book compiled by the respondent, would, if carried out, answer the description of a "terrorist act". However, the respondent submitted that: the mere fact that a document makes reference to terrorist acts does not create the required connection to a terrorist act; the words "connected with" require that the commission of a terrorist act be within the contemplation of a person, whether the accused or another32; and a document will acquire the requisite connection only where the use of the document in preparation for, the engagement of a person in, or assistance in the terrorist act was actually contemplated. The respondent relied upon the decision of the Victorian Court of Appeal in Benbrika v The Queen33. That was a case concerned with, among other things, the offence created by s 101.4 of the Code of possession of a "thing" connected with preparation for a terrorist act. The "thing" in question was a compact disc which contained an archive of documents including a section relating to the duty of Muslims to engage in violent jihad and a "Mujahid's Handbook" described in its preamble as originating from United States Army Training and Combat Manuals. The Court of Appeal found that the trial judge in that case had erred when he directed the jury that the phrase "connected with" was "a very wide phrase" which did "not mean connected with in any particular way" and that there just had to be "some connection between the thing and a terrorist act."34 Their Honours held that the phrase means "that the thing must be shown to have been 'connected with preparation for a terrorist act' by virtue of some person's having had the purpose of using the thing in, or in aid of, preparation for the 32 The term "contemplation" was derived from Lodhi v The Queen (2006) 199 FLR 303, especially at 316-317 [62] per Spigelman CJ, quoting Whealy J at first instance. 34 (2010) 29 VR 593 at 666 [339]. terrorist act."35 The trial judge's direction had left open "the real possibility that the jury reasoned to guilt without directing any attention to whether the requisite connection had been established."36 McClellan CJ at CL distinguished Benbrika from the present case on the basis that because in Benbrika the relevant thing was an inanimate object, Benbrika's possession of it may have been innocuous. The relevant connection could not be determined by reference to the thing itself. Before "Benbrika could be found to have committed an offence against the statute there had to be a terrorist act for which preparatory activity was, at least, in contemplation"37. In the present case, as his Honour observed, the respondent was charged with making "a document connected with assistance in a terrorist act." The Crown relied upon the content of the document to establish the requisite connection. The relevant content included that which described methods of assassination, the organisation of effective assassination teams and the identification of prospective targets for assassination. McClellan CJ at CL said38: "There was more but this is sufficient to identify the fact that the document itself described a variety of terrorist acts from which the jury could conclude that the document was connected with assistance in a terrorist act. They were the acts contemplated by [the respondent]. Proof of a specific terrorist act was not required." Connection - the trial judge's direction The trial judge directed the jury that the question whether the book was connected with preparation for, the engagement of a person in, or assistance in a terrorist act, was an objective one dependent upon an examination of the contents of the document. Her Honour said: "The phrase 'connected with assistance in an action or threat of action' has no special or technical meaning. You should interpret that phrase according to its plain English meaning. If you are satisfied beyond reasonable doubt that any part of the document is connected with helping or facilitating the commission of an action or threat of action against any 35 (2010) 29 VR 593 at 666-667 [340]. 36 (2010) 29 VR 593 at 667 [343]. 37 [2011] NSWCCA 129 at [98]. 38 [2011] NSWCCA 129 at [101]. one of the persons that are set out in the particulars, then the Crown has proved that element of the offence. It does not matter if the document is not connected with a specific action or threat of action, or if it is connected with more than one action or threat of action. As long as the Crown has proved beyond reasonable doubt that the document is connected with an action or threat of action of the kind specified in the charge, that is sufficient to prove this element." Connection - the Court of Criminal Appeal decision In the Court of Criminal Appeal the respondent submitted that the jury should have at least been told that the Crown had to show more than a remote or tenuous connection between the document the subject of the charge and "assistance in a terrorist act". The respondent did not contend that a positive definition of the words "connected with" was necessary. McClellan CJ at CL concluded that the words "connected with" were ordinary words which the jury were clearly capable of understanding39. His Honour accepted that the requisite connection must be more than ephemeral but could see no reason why the jury should have been given a judicial gloss on the words of the legislation. His Honour said40: "There is nothing in the legislation to suggest that the jury should be required to do other than apply their ordinary understanding of the words 'connected with' to the fact finding required of them." McCallum J agreed with McClellan CJ at CL on this point41. Hall J disagreed. His Honour held that the trial judge's direction was erroneous as it "did not provide information or guidance to the jury on the particular meaning attaching to that statutory formulation." His Honour said42: "The trial judge, in my opinion, was required to direct the jury that, to establish the relevant connection, it was necessary that there be evidence, and that they were satisfied on that evidence, that the book was connected 39 [2011] NSWCCA 129 at [93]. 40 [2011] NSWCCA 129 at [93]. 41 [2011] NSWCCA 129 at [451]. 42 [2011] NSWCCA 129 at [374]. with assistance in a terrorist act that, at the time of making the book, was either proposed or contemplated or to an activity that was proposed, contemplated or was under way in relation to a terrorist act." The connection - general principles Relational terms such as "connected with" appear in a variety of statutory settings. Other examples are: "in relation to"; "in respect of"; "in connection with"; and "in". They may refer to a relationship between two subjects which may be the same or different and may encompass activities, events, persons or things. They may denote relationships which are causal or temporal or relationships of similarity or difference. The task of construing such terms does not involve the resolution of ambiguity. They are ambulatory words and may be designed to cover a variety of subjects and a variety of relationships between those subjects. The nature and breadth of the relationships they cover will depend upon their statutory context and purpose43. Generally speaking it is not desirable, in construing relational terms, to go further than is necessary to determine their application in a particular case or class of cases. A more comprehensive approach may be confounded by subsequent cases. The statutory purpose of Pt 5.3 of Ch 5 of the Code, of which Div 101 is part, was described by Spigelman CJ in Lodhi v The Queen44: "Preparatory acts are not often made into criminal offences. The particular nature of terrorism has resulted in a special, and in many ways unique, legislative regime. It was, in my opinion, the clear intention of Parliament to create offences where an offender has not decided precisely what he or she intends to do. A policy judgment has been made that the prevention of terrorism requires criminal responsibility to arise at an earlier stage than is usually the case for other kinds of criminal conduct, eg well before an agreement has been reached for a conspiracy charge. The courts must respect that legislative policy." 43 Workers' Compensation Board (Q) v Technical Products Pty Ltd (1988) 165 CLR 642 at 653-654 per Deane, Dawson and Toohey JJ; [1988] HCA 49; O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356 at 376 per McHugh J; [1990] HCA 16; Burswood Management Ltd v Attorney-General (Cth) (1990) 23 FCR 144 at 146; Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 288-289; Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472 at 486-487 per Hill J. 44 (2006) 199 FLR 303 at 318 [66]; McClellan CJ at CL and Sully J agreeing at 324 [96] and 327 [111] respectively. McClellan CJ at CL in this case relied upon that passage45. It is, of course, necessary to bear in mind that the offences created under s 101.5 and cognate offences in Div 101 of Pt 5.3 of the Code are very serious and punishable by significant terms of imprisonment. The courts, given the task of construction and application of general terms in such cases, must ensure that they are not construed so widely as to exceed the statutory purpose. To say that is not to detract from the proposition that the statutory purpose was, as explained in Lodhi, to cast a wide net over preparatory acts. The subjects of the requisite connection under s 101.5(1)(b) are, on the one hand, the document collected or made by the respondent and, on the other hand, the activities of preparation for, engagement in, or assistance in a terrorist act. Section 101.5(1)(b) is capable of covering various kinds of connections between those subjects. By virtue of s 101.5(3) it is not necessary that the document the subject of the offence be connected with a specific terrorist act. It is sufficient, for present purposes, to say that a document which purports to justify terrorist acts and instructs in methods of carrying them out, and identifies potential targets, is capable, as a matter of law, of answering the description "connected with ... assistance in a terrorist act". That was the aspect of the offence under s 101.5(1) with which the respondent was charged. The trial judge's direction required the jury to be "satisfied beyond reasonable doubt that any part of the document [was] connected with helping or facilitating the commission of an action or threat of action against any one of the persons set out in the particulars". Taken in the context of the evidence in this case, that direction fell within the meaning of s 101.5(1)(b) properly construed. It did not authorise the jury to convict on the basis of some ephemeral or remote or tenuous connection. The ground set out in the notice of contention is not made out. Conclusion The appeal should be allowed. I agree with the orders proposed in the joint judgment. 45 [2011] NSWCCA 129 at [89]. Crennan Bell GUMMOW, CRENNAN AND BELL JJ. In September 2003, the respondent, Belal Saadallah Khazaal, compiled and edited an electronic book entitled "Provisions on the Rules of Jihad" and sub-titled "Short Judicial Rulings and Organizational Instructions for Fighters and Mujahideen Against Infidels"46 ("the e-book"), which comprised material concerning Islam and jihad that the respondent had downloaded from the internet, together with a dedication, foreword and other short passages written by the respondent. In July 2008, the respondent was charged in relation to the e-book under s 101.5 of the Criminal Code (Cth) ("the Code") with making a document connected with assistance in a terrorist act, knowing of that connection (count 1). He was also charged under ss 11.1 and 11.4 of the Code with attempting to incite the commission by others of the offence of engaging in a terrorist act contrary to s 101.1(1) of the Code (count 2). The respondent stood trial before Latham J ("the trial judge") in the Supreme Court of New South Wales in August and September 2008. On 10 September 2008, the jury found the respondent guilty of the offence charged in count 1, but was unable to reach a verdict in relation to count 2. On 25 September 2009, the trial judge sentenced the respondent to 12 years' imprisonment, with a non-parole period of 9 years47. The respondent appealed against his conviction on four grounds. By majority (Hall and McCallum JJ; McClellan CJ at CL dissenting), the Court of Criminal Appeal of the Supreme Court of New South Wales upheld the respondent's fourth ground of appeal, quashed the conviction and ordered a new trial48. However, the Court of Criminal Appeal unanimously dismissed the respondent's second ground of appeal, and a majority (McClellan CJ at CL and McCallum J; Hall J dissenting) dismissed the respondent's first and third grounds of appeal. The respondent also appealed against his sentence. Neither Hall J nor McCallum J gave judgment in respect of the respondent's appeal against sentence. On 7 October 2011, a panel constituted by Gummow, Hayne and Bell JJ granted the prosecution special leave to appeal to this Court in relation to the 46 This was the title in English of a translation from Arabic. 47 R v Khazaal [2009] NSWSC 1015. 48 Khazaal v The Queen [2011] NSWCCA 129 ("Khazaal"). Crennan Bell fourth ground argued before the Court of Criminal Appeal49. The prosecution contends that the majority of the Court of Criminal Appeal erred in holding that the respondent had discharged the evidential burden imposed on him in relation to the exception to liability in s 101.5(5) of the Code. By notice of contention filed 26 October 2011, referring to the third ground of appeal advanced before the Court of Criminal Appeal50, the respondent contends that the majority of the Court of Criminal Appeal erred in holding that the trial judge was not required to give specific directions to the jury in relation to the meaning of the words "connected with" in s 101.5(1)(b) of the Code. For the reasons which follow, the appeal should be upheld and the notice of contention should be dismissed. The prosecution has agreed to pay the respondent's costs of the proceeding in this Court. The statutory framework Part 5.3 of the Code, which was introduced in July 200251, deals with terrorism. The context in which Parliament enacted, and later amended52, Pt 5.3 of the Code included terrorist attacks in the United States of America on 11 September 2001 and subsequent major terrorist attacks in Bali, Madrid, Jakarta and London. This context was acknowledged by several members of this 49 The fourth ground of appeal stated that the trial judge "erred in holding that the [respondent] had failed to discharge the evidential burden provided for by s 101.5(5) of the Code, and in consequence declining to direct the jury that the Crown was required to prove beyond reasonable doubt that the document was intended to facilitate preparation for, the engagement of a person in, or assistance in a terrorist act". 50 The third ground of appeal stated that the trial judge "erred in directing the jury in relation to count 1 that the words 'connected with' were simply to be given their ordinary meaning". 51 Security Legislation Amendment (Terrorism) Act 2002 (Cth). 52 Criminal Code Amendment (Terrorism) Act 2003 (Cth) and Anti-Terrorism Act 2005 (Cth). Crennan Bell Court in Thomas v Mowbray53, and in a joint judgment two members of the majority said of those incidents54: "[M]any of these attacks on major urban targets were carried out by persons with some training and skills in handling explosives and a willingness to die in the course of the attack. Many such attacks have been explained, by those claiming responsibility for them, by reference to jihad, a term encompassing bellicosity, based at least in part on religious considerations, the use of which is not confined to a single nation state55." Section 100.1 of the Code defines a "terrorist act", and provides relevantly: In this Part: terrorist act means an action or threat of action where: the action falls within subsection (2) and does not fall within subsection (3); and the action is done or the threat is made with the intention of advancing a political, religious or ideological cause; and the action is done or the threat is made with the intention of: influencing by the coercing, or government of the Commonwealth or a State, Territory or foreign country, or of part of a State, Territory or foreign country; or intimidation, 53 (2007) 233 CLR 307 at 324-325 [7] per Gleeson CJ, 349 [83]-[86] per Gummow and Crennan JJ, 369 [166] per Kirby J, 481 [523] per Callinan J; [2007] HCA 33. See also Lodhi v The Queen (2006) 199 FLR 303 at 318 [66] per Spigelman CJ. 54 (2007) 233 CLR 307 at 349 [85] per Gummow and Crennan JJ. 55 Holmes (ed), The Oxford Companion to Military History (2001) at 466-467. Crennan Bell intimidating the public or a section of the public. (2) Action falls within this subsection if it: causes serious harm that is physical harm to a person; or causes serious damage to property; or causes a person's death; or endangers a person's life, other than the life of the person taking the action; or creates a serious risk to the health or safety of the public or a section of the public; or (3) Action falls within this subsection if it: is advocacy, protest, dissent or industrial action; and is not intended: to cause serious harm that is physical harm to a person; or to cause a person's death; or (iii) to endanger the life of a person, other than the person taking the action; or to create a serious risk to the health or safety of the public or a section of the public. Section 3.1(1) of the Code stipulates that an offence consists of physical elements and fault elements. Crennan Bell Section 101.5 of the Code creates the offence with which the respondent was charged in count 1. Relevantly, s 101.5(1) creates the offence, s 101.5(3) clarifies the scope of the offence, and s 101.5(5) provides for an exception to liability for the offence, upon which the respondent sought to rely: "(1) A person commits an offence if: the person collects or makes a document; and the document is connected with ... assistance in a terrorist act; and the person mentioned in paragraph (a) knows of the connection described in paragraph (b). Penalty: Imprisonment for 15 years. (3) A person commits an offence under subsection (1) ... even if: a terrorist act does not occur; or the document is not connected with ... assistance in a specific terrorist act; or the document is connected with ... assistance in more than one terrorist act. [Subsection] (1) ... [does] not apply if the collection or making of the document was not intended to facilitate ... assistance in a terrorist act." It should be noted that ss 101.5(3)(b) and (c) were introduced to the Code in November 200556. However, the other provisions of s 101.5, being those 56 Anti-Terrorism Act 2005 (Cth). The legislative history of s 101.5(3)(a) is set out in the reasons of French CJ at [22]-[24]. Crennan Bell immediately relevant to the appeal and notice of contention, are in the form they took at the time of the offence charged in count 1 of the indictment, namely between 20 and 23 September 2003. The offence-creating provision (s 101.5(1)) and the exception-creating provision (s 101.5(5)) depend on the definition of "terrorist act", and the reference to "action" in that definition (s 100.1). Further, the provisions, in particular s 101.5(3), show that the purpose of the legislation is to create an offence under s 101.5 even if a terrorist act does not occur. Section 13.3 of the Code provides relevantly: "(1) Subject to section 13.4, a burden of proof that a law imposes on a defendant is an evidential burden only. (3) A defendant who wishes to rely on any exception, exemption, excuse, qualification or justification provided by the law creating an offence bears an evidential burden in relation to that matter. The exception, exemption, excuse, qualification or justification need not accompany the description of the offence. The defendant no longer bears the evidential burden in relation to a matter if evidence sufficient to discharge the burden is adduced by the prosecution or by the court. The question whether an evidential burden has been discharged is one of law. In this Code: evidential burden, in relation to a matter, means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist." The indictment dated 3 July 2008 set out count 1 against the respondent as follows: "Between about 20 September 2003 and 23 September 2003 at Sydney, New South Wales and elsewhere in the world [the respondent] did make a Crennan Bell document connected with assistance in a terrorist act knowing of that connection." Paragraph 1.1 of the particulars for count 1 identified the document which was the subject of count 1 as the e-book. The terrorist act particularised in par 1.2 of the particulars was "an action or threat of action [done or threatened] against any one or more of a number of persons identified in the document including diplomats, military personnel and holders of public office". The intention particularised in pars 1.2(a) and (b) was framed in terms of pars (b) and (c) of the definition of "terrorist act" in s 100.1 of the Code, and the action, or threat of action, was framed in terms of ss 100.1(2)(a) to (e) of the Code. The evidence at trial It was not disputed at trial that the respondent had made the e-book, or that he had intended to do so. The respondent made the e-book between 20 and 23 September 2003 by downloading from the internet various articles written in Arabic concerning Islam and jihad, editing and rearranging them, and inserting a dedication, introduction and other brief commentary of his own57. Shortly after creating the e-book, the respondent submitted it to the administrators of the "Al-Maqdese" website under the pseudonym "Abu Mohamed Attawheedy", and, after some final formatting changes, it was published on that website58. There was some dispute at trial about the nature of the "Al-Maqdese" website. An expert witness called by the prosecution gave evidence that the website was linked to the terrorist group Al-Qaeda, and that it contained a number of publications by leaders of known terrorist organisations59. An expert witness called by the respondent gave evidence that the website contained benign material on Islamic issues. An English translation of the e-book was tendered during the prosecution case. 57 Khazaal [2011] NSWCCA 129 at [5], [17] per McClellan CJ at CL, [187]-[188] 58 Khazaal [2011] NSWCCA 129 at [5] per McClellan CJ at CL, [189]-[194] per 59 Khazaal [2011] NSWCCA 129 at [5] per McClellan CJ at CL, [189] per Hall J. Crennan Bell The introduction to the e-book, which (unlike the various chapters) had been written by the respondent, contained the following passage: "This is but a short message I hastily prepared in response to a request from brothers working to support this religion. I was requested to prepare it, in this fashion, to serve as a reference to all brothers or small cells desiring to support this religion. With God's help I set on its compilation and I completed it in few days. I am however convinced that had I sufficient time and had I been settled in my residence I would have produced a better job than this work which has been conceived in haste. However, better 'haste' than never. I pray to the Almighty that this essay would be of benefit to everyone working to support this religion. I seek the Almighty's reward and I seek martyrdom for his sake. I do so running towards it not away from it. I beseech my brothers who read this message to pray that I may attain martyrdom." Chapters 1-9 of the e-book contained justifications for jihad emanating from religious sources. Jihad was defined as meaning "fighting the infidels to make God's word supreme." The recurrent themes in this part of the e-book were that jihad is a religious duty, that militant jihad (that is, the killing of "infidels"60), is the best form of jihad, and that jihad may involve attaining "martyrdom"61. Among other things, Ch 10 of the e-book (entitled "Reasons for Assassination") included commentary on: important characteristics for members of an assassination team; training members of an assassination team; stages of the assassination process; various methods of assassination, including wireless detonation, letter bombing, booby trapping or detonating a car, sniping, smothering, hitting with a hammer and booby trapping a room; and targets "that 60 Used in a received sense of disbelievers in Islam: The Oxford English Dictionary, 2nd ed (1989), vol 7 at 927, "infidel", senses 1 and 2b. 61 Used in a received sense of the sufferings and death of a martyr (for the sake of religious belief): The Oxford English Dictionary, 2nd ed (1989), vol 9 at 414, "martyrdom", sense 1. Crennan Bell should be assassinated". The targets listed in Ch 10 included persons holding various public offices, including "diplomats, ambassadors and the military", of "enemy nationalities" or of the Jewish, Christian, Hindu and Buddhist religions, a group called "Arab atheists", and "[h]olders of key positions" in "original countries of atheism", the list of which included Australia. Chapter 13 (entitled "The Last Word"), which the respondent attributed to "Dr Shaikh Aymen Al Zawahry", contained a number of passages promoting violent jihad62 and martyrdom. Expert evidence was given at trial that the term "jihad" had a positive meaning in ordinary Arabic but that the term had acquired a much more sinister meaning in contemporary times. The respondent was an accredited journalist with a journalist's card in New South Wales, and contributed regularly to an Islamic affairs magazine called "Nida ul-Islam" (in English, "The Call of Islam"). This magazine was published by the Islamic Youth Movement, and was freely available to the public. The respondent was largely responsible for its content63. The respondent also had a large personal collection of materials relating to Islam, referred to at trial as a library, which included documents, tapes and videos, and which was kept in the respondent's home office, from where he compiled the e-book64. The respondent did not give evidence at trial. What was essentially in dispute before the trial judge was not the body of evidence described above but rather the inferences to be drawn from it. At issue in this Court are two sets of directions requested by counsel for the respondent which the trial judge declined to give to the jury. These directions became the subject of the fourth65 and third66 grounds of appeal argued before the 62 For example, it included the following: "Pursuing Americans and Jews is not an impossible task. Killing them with a single shot, a stab or a pack of a popular mix or with an iron rod is not a difficult deed. Neither is burning their properties with a Molotov bottle. Small groups with small available means can cause horror to American and Jew alike." 63 Khazaal [2011] NSWCCA 129 at [17] per McClellan CJ at CL. 64 Khazaal [2011] NSWCCA 129 at [127] per McClellan CJ at CL, [439] per Hall J. 65 Set out in note 49 above. Crennan Bell Court of Criminal Appeal, and are now the subject of the prosecution's appeal and the respondent's notice of contention in this Court respectively. These reasons deal first with the appeal, and then turn to the notice of contention. The appeal: "evidential burden" Counsel for the respondent sought a direction from the trial judge in the following terms: "[I]n the event that the jury are satisfied beyond reasonable doubt of the essential ingredients of the offence, the summing up should contain a direction to the jury that if there is a reasonable possibility that the accused did not make the [e-book] with the intention of facilitating assistance in a terrorist act, then they must be satisfied beyond reasonable doubt that the making of the [e-book] was intended to facilitate assistance in a terrorist act." Counsel for the respondent submitted that the direction was necessary because sufficient evidence had been adduced at trial to discharge the evidential burden imposed on the respondent in relation to the exception from liability in s 101.5(5) of the Code. In particular, it was argued that the respondent's status as an accredited journalist and researcher with an academic interest in Islam, and the circumstances in which he made the e-book (at short notice, at the behest of "the brothers"), were sufficient to suggest the "reasonable possibility" required by s 13.3(6) of the Code that, in making the e-book, the respondent did not intend to facilitate assistance in a terrorist act. Counsel for the respondent claimed that the respondent intended, by lawful means, "to support the Islamic religion by compiling a reference book containing the views of authors concerning the role and rules of jihad in the Islamic religion." The prosecution resisted this submission. The trial judge rejected the respondent's argument and determined that the exception from liability in s 101.5(5) did not arise for consideration by the jury. In so concluding, her Honour considered the text of ss 13.3 and 101.5(5), and placed some emphasis on the fact that the words "the matter" in s 13.3 referred to "an exception, exemption, excuse, qualification or justification" and not to a fault element. Having concluded that s 101.5(5) was not engaged, her Honour went on to say: "but if I am wrong in that regard, I fail to see how the accused has discharged the evidentiary burden placed upon him by the Code." 66 Set out in note 50 above. Crennan Bell In the Court of Criminal Appeal, Hall J described the evidence said by the respondent to discharge the evidential burden in relation to the exception from liability in s 101.5(5) as follows: the respondent was "a career journalist, a researcher and a publisher", he had "acquired and built up a library which was used as his research facility", he "had a strong interest in the Islamic religion" and "had written and published articles on a range of issues, in particular, on benign Islamic issues."67 Hall J concluded that the trial judge erred in determining that the respondent had failed to discharge the evidential burden because the abovementioned evidence suggested (in the sense of placing or bringing forward a proposition for consideration) the "reasonable possibility" that the appellant acted as a professional journalist with an intention that was not one to facilitate assistance in a terrorist act68. In substance, McCallum J agreed with Hall J69. In dissent in relation to this ground, McClellan CJ at CL held that the abovementioned evidence did not discharge the evidential burden and said70: "To discharge that burden the [respondent] had to point to evidence that suggested a 'reasonable possibility' that the making of the particular document was not intended to facilitate assistance in a terrorist act. The evidence to which attention was drawn was entirely neutral in relation to that issue. Whether or not the [respondent] was a journalist who had researched and published in relation to Islam it was his intention in making the document which was the issue in the trial. On that issue, apart from the document itself, without the [respondent] giving evidence or there being other evidence from which his intention could be inferred the evidential burden could not be discharged. There was nothing to support a reasonable possibility that he did not have the relevant intention." (Emphasis omitted.) The issue raised by the prosecution in this Court is whether the majority of the Court of Criminal Appeal erred in finding that, at the close of evidence at the trial, the evidence suggested a reasonable possibility – sufficient to discharge the 67 Khazaal [2011] NSWCCA 129 at [439]. 68 Khazaal [2011] NSWCCA 129 at [439]-[441]. 69 Khazaal [2011] NSWCCA 129 at [477]-[485]. 70 Khazaal [2011] NSWCCA 129 at [128]. Crennan Bell evidential burden imposed on the respondent in relation to s 101.5(5) of the Code – that the making of the e-book by the respondent was not intended to facilitate assistance in a terrorist act. The prosecution relied on the contents of the e-book – especially Ch 10, which contained information and instructions for assassination and other violent acts in the cause of jihad, depicted as a means of advancing the respondent's religion. The prosecution contended that the contents of the e-book were personally endorsed by the respondent. It was further contended that an intention to support one's religion does not engage s 101.5(5) where the acts supported constitute a terrorism offence or where the religion is relied upon as justifying the commission of terrorist acts. The respondent characterised s 105.5(5) as providing an affirmative defence, and relied on Braysich v The Queen71 to support the proposition that caution should be adopted before preventing a person in the position of the respondent from relying on an affirmative defence, and that the evidence must be taken at its most favourable to an accused in determining the availability of a defence. The respondent also relied on the use of the word "suggests" in s 13.3(6), and several authorities72, to support the proposition that "slender evidence" might suffice to discharge an evidential burden which, like the evidential burden imposed in relation to s 101.5(5), is imposed in relation to a negative state of affairs. The respondent further submitted that the evidence that the respondent had acted lawfully in the past as a professional journalist interested in Islam constituted evidence which was capable of raising an inference that the respondent's action in making the e-book was part of lawful or normal journalistic activity on his part, and that the e-book itself should not be relied on to deny the engagement of s 101.5(5). It was agreed by the respondent that the e-book was crucial evidence, but the respondent put a different complexion on the e-book from that put upon it by the prosecution: the e-book was said to contain "scholarly pieces of work" and to be educational. There was no dispute about well established principles for evaluating a trial judge's directions on so much of the law as the jury must understand to 71 (2011) 243 CLR 434 ("Braysich"); [2011] HCA 14. 72 Fowkes v Deputy Director of Public Prosecutions [1997] 2 VR 506 at 512 per Winneke P, Charles JA and Southwell AJA; Jeffrey v Director of Public Prosecutions (Cth) (1995) 79 A Crim R 514 at 518 per Cole JA; Director of Public Prosecutions v Brauer [1991] 2 Qd R 261 at 267-269 per Thomas J. Crennan Bell decide the case by reference to the real issues plainly arising from the evidence73. The dispute was narrowly confined: was the evidential burden (as defined in s 13.3(6)) discharged in respect of the respondent's reliance on s 101.5(5) so as to require a direction from the trial judge in the terms proposed by the respondent? It may be accepted that the respondent was right to contend that the operative words in s 13.3(6), "adducing or pointing to evidence that suggests a reasonable possibility" in relation to the relevant negative state of affairs in s 101.5(5) required no more than slender evidence. The prosecution did not disagree. It may also be accepted that, for the purposes of establishing whether the evidential burden (as defined in s 13.3(6)) has been discharged, the evidence may be taken at its most favourable to the accused. In Braysich, evidence of good character upon which an appellant sought to rely in contending that he had discharged an evidential burden in relation to a statutory defence turning on honesty had been excluded from consideration74. Here, there had been no exclusion of any evidence relied upon by the respondent to support his contention that his making of the e-book was not intended to facilitate assistance in a terrorist act. In the absence of any evidence of his intention in making the e-book, the evidence that the respondent had acted lawfully in the past as an accredited journalist interested in Islam, and had published material about Islam, was incapable of supporting or raising an inference that the respondent's making of the e-book was a lawful activity not intended to facilitate the terrorist act particularised in the indictment in relation to count 1. Such evidence said nothing about the respondent's situation in making the e-book. As to submissions that the e-book was scholarly or educational, the e-book contained information and instructions to any possessor and others in methods of assassination of identified persons described therein as "targets". For that reason, the e-book was incapable of raising or supporting an inference that the respondent's intention in making the e-book was lawful, scholarly, or educational in the sense of making or compiling an inoffensive reference work. 73 See Tully v The Queen (2006) 230 CLR 234 at 248 [44], 250 [49] per Kirby J, 256- 257 [75]-[77] per Hayne J; [2006] HCA 56; Nicholls v The Queen (2005) 219 CLR 196 at 321-322 [372] per Hayne and Heydon JJ; [2005] HCA 1; Alford v Magee (1952) 85 CLR 437 at 466; [1952] HCA 3. See also Doggett v The Queen (2001) 208 CLR 343 at 346 [2] per Gleeson CJ; [2001] HCA 46. 74 Braysich (2011) 243 CLR 434 at 456-457 [44]-[47]. Crennan Bell None of the evidence relied on by the respondent to discharge the evidential burden in respect of s 101.5(5) suggested a possibility that the respondent's making of the e-book was not intended to facilitate assistance in the terrorist act for which the e-book provided information and instructions. This renders it unnecessary to determine whether the phrase "reasonable possibility", as it appears in s 13.3(6), excludes evidence which suggests no more than a "mere possibility" or a "bare possibility". That question is better left until facts before this Court require the question to be determined. In the absence of evidence on the question of the respondent's intention in the making of the e-book, there was no error in the trial judge's refusal to give the direction sought by the respondent. The notice of contention: "connected with" Counsel for the respondent sought a direction from the trial judge in relation to the words "connected with" in s 101.5(1)(b) of the Code in the following terms75: "The words 'connected with' mean that the [e-book] must itself have been capable of directly assisting in the commission of a terrorist act. A mere remote connection will not suffice." The trial judge declined to direct the jury in those terms, and instead directed the jury as follows: "So, let me go then to element (c)[76]. You will see that the focus of this element is on the connection between the document, that is 'Provisions on the Rules of Jihad', exhibit G, and assistance in an action or threat of action against certain persons. Now, this is an element that depends upon an examination of the contents of the document, nothing more, nothing less. We are only concerned about what the document says objectively. It is a matter for you to determine, because it is simply an 75 Khazaal [2011] NSWCCA 129 at [64] per McClellan CJ at CL. 76 The reference to "element (c)" is a reference to a written direction on count 1 provided by the trial judge to the jury on the elements of the offence: "(c) document was connected with assistance in an action or threat of action against any one or more of a number of persons, including diplomats, military personnel and holders of public office". The Crennan Bell objective factor, namely, is the document, more accurately the contents of the document, connected with assistance in a terrorist act? The phrase 'connected with assistance in an action or threat of action' has no special or technical meaning. You should interpret that phrase according to its plain English meaning. If you are satisfied beyond reasonable doubt that any part of the document is connected with helping or facilitating the commission of an action or threat of action against any one of the persons that are set out in the particulars, then the Crown has proved that element of the offence. It does not matter if the document is not connected with a specific action or threat of action, or if it is connected with more than one action or threat of action. As long as the Crown has proved beyond reasonable doubt that the document is connected with an action or threat of action of the kind specified in the charge, that is sufficient to prove this element." The respondent's position on this aspect of the case changed before the Court of Criminal Appeal. The respondent first argued that the jury should have been directed that the e-book must have factually and appreciably furthered the commission of a terrorist act, making it "more likely" to take place, before the necessary connection could exist77. Then, in supplementary written submissions, the respondent modified his position, contending only that the jury should have been directed that more than a remote connection was required78. In advancing the relevant ground of appeal before the Court of Criminal Appeal, the respondent sought to rely on the decision of the Court of Appeal of the Supreme Court of Victoria in Benbrika v The Queen79, in which the Court of Appeal (Maxwell P, Nettle and Weinberg JJA) considered appeals by two men against convictions under s 101.4(1) of the Code for possessing "a thing … connected with preparation for … a terrorist act", which led the Court to consider the words "the thing is connected with preparation for ... a terrorist act" as they occur in s 101.4(1). 77 Khazaal [2011] NSWCCA 129 at [66] per McClellan CJ at CL. 78 Khazaal [2011] NSWCCA 129 at [66]-[68] per McClellan CJ at CL. 79 (2010) 29 VR 593 ("Benbrika"). Crennan Bell McClellan CJ at CL dismissed this ground of appeal, holding that the trial judge's direction was appropriate80. His Honour distinguished Benbrika81, and was right to do so. In concluding that this ground of appeal should be dismissed, McClellan CJ at CL stated that the relevant connection in relation to the e-book was82: "said to be found within the document itself which described methods of assassination, being terrorist acts, organisation of effective assassination teams and identified prospective targets for assassination … [T]his is sufficient to identify the fact that the document itself described a variety of terrorist acts from which the jury could conclude that the document was connected with assistance in a terrorist act. They were the acts contemplated by the [respondent] … Proof of a specific terrorist act was not required." McCallum J also dismissed this ground of appeal and held that the trial judge had directed the jury appropriately83, but adopted a different path of reasoning. Her Honour declined to apply Benbrika on the basis that analogous application of the reasoning in Benbrika concerning s 101.4(1)(b) of the Code to s 101.5(1)(b) would erroneously import a fault element into the physical element of the s 101.5(1) offence84. In dissent in relation to this ground of appeal, Hall J held that the ordinary meaning of the phrase "connected with" is inappropriately broad in the context of s 101.5(1)(b)85, and that reasoning analogous to that which applied in Benbrika must apply in determining whether the requisite connection for s 101.5(1)(b) exists86. Hall J went on to hold that the trial judge's direction was erroneous87. 80 Khazaal [2011] NSWCCA 129 at [104]-[105]. 81 Khazaal [2011] NSWCCA 129 at [95]-[104]. 82 Khazaal [2011] NSWCCA 129 at [101]. 83 Khazaal [2011] NSWCCA 129 at [467]. 84 Khazaal [2011] NSWCCA 129 at [463]. 85 Khazaal [2011] NSWCCA 129 at [348]-[357], [366]-[369]. 86 Khazaal [2011] NSWCCA 129 at [366]-[370]. 87 Khazaal [2011] NSWCCA 129 at [374]-[375]. Crennan Bell The essential issues raised by the respondent on the notice of contention in this Court were whether the trial judge had erred in refusing to direct in the terms sought by the respondent and whether the direction of the trial judge to the jury in relation to the second element of the offence (namely, the required connection) was adequate. The submissions made in this Court were not substantially different from those made before the Court of Criminal Appeal. The issues raised by the respondent's notice of contention are not to be resolved by considering whether the reasoning of the Court of Appeal of the Supreme of Victoria in Benbrika, on a different section of the Code, should be applied by analogy to s 101.5(1)(b). Rather, the issues are to be resolved by a close examination of the trial judge's directions. First, the trial judge correctly stated that whether the prosecution had proven the second element of the offence in count 1 depended on the contents of the e-book. Because the e-book contained information and instructions to possessors and others in methods of assassination of identified persons described in the e-book as "targets", on any view the e-book had an obvious and direct connection with assistance in the terrorist act particularised in the indictment. The jury was not directed or encouraged to act on what the respondent described as a "mere remote or tenuous connection" between the e-book and assistance in the terrorist act particularised in par 1.2 of the indictment. Secondly, it is plain from the direction complained about that the trial judge gave that direction in the context that the jury had already been provided with a written direction about the elements of the offence in count 1. That written direction included direction about the respondent's knowledge, expressed as awareness of the required connection, at the time of the making of the e-book. That written direction also referred the jury to another written direction on the meaning of the term "terrorist act" as it is dealt with in the legislation. No complaint was made by the respondent in respect of either of those written directions, without which the direction complained about cannot be considered properly. Thirdly, contrary to the way in which the relevant ground of appeal was framed in the Court of Criminal Appeal and addressed in this Court in the notice of contention, the trial judge did not confine her direction in relation to the second element of the offence in count 1 to the words "connected with", but directed the jury in terms of the whole collocation relevant to the respondent, namely the words "connected with assistance in an action or threat of action", reflecting the particulars in par 1.2 of the indictment, to which reference has already been made. Crennan Bell Fourthly, the trial judge explained to the jury that her reference to "an action or threat of action" was a reference to an action or threat of action of "the kind specified in the charge". Fifthly, the trial judge told the members of the jury that if they were satisfied beyond reasonable doubt that any part of the e-book was "connected with helping or facilitating the commission of an action or threat of action against any one of the persons that are set out in the particulars, then the Crown has proved that element of the offence." In respect of the jury's tasks, including the task of deciding whether the prosecution had proved the second element of the offence in count 1, the trial judge's direction was adequate. Moreover, no error has been demonstrated in the trial judge's refusal to direct the jury in the terms sought by the respondent. Conclusions The appeal must be upheld because the evidential burden in respect of the exception from liability in s 101.5(5) of the Code was not discharged. The notice of contention must be dismissed because the trial judge's direction, of which the respondent complained, was adequate and no error was shown in the trial judge's refusal to direct as suggested by the respondent. Orders The following orders should be made: Appeal allowed. Set aside the orders of the Court of Criminal Appeal made on 9 June 2011 and in place thereof dismiss the appeal against conviction on count 1 of the indictment. Remit the matter to the Court of Criminal Appeal for consideration and determination of the appeal against sentence in respect of the conviction on count 1 of the indictment. As indicated earlier in these reasons, the Commonwealth Director of Public Prosecutions, who prosecutes the appeal on behalf of the Queen, has agreed to pay the costs of the respondent of the proceeding in this Court. No order, in addition to that agreement, is required. HEYDON J. This appeal raises two issues concerning the Criminal Code (Cth) ("the Code"). Evidential burden The facts giving rise to the first issue are as follows. The respondent intentionally made a document by preparing an electronic book. That conduct fell within s 101.5(1)(a) of the Code88. The book was entitled "Provisions on the Rules of Jihad". It was sub-titled "Short Judicial Rulings and Organizational Instructions for Fighters and Mujahideen Against Infidels". It advocated the widespread use of assassination. It described numerous methods of carrying out assassinations. The respondent downloaded the material for the book from the internet, reordered it into chapters, edited parts of it, renumbered the footnotes, inserted a dedication and provided a foreword. He published the book on a website connected to al-Qaeda. The website contained other publications written by leaders of known terrorist groups. The first issue is whether the making of the book "was not intended to facilitate … assistance in a terrorist act" within the meaning of s 101.5(5) of the Code. Section 101.5(5) is an "exception" to the offence charged. It therefore placed an evidential burden on the respondent within the meaning of s 13.3(3) of the Code. By reason of s 13.3(6) of the Code, that was a "burden of adducing or pointing to evidence that suggests a reasonable possibility" that the respondent did not intend to facilitate assistance in a terrorist act89. The trial judge held that the respondent had failed to discharge that evidential burden. Hence her Honour declined to direct the jury that the prosecution bore a legal burden of proving beyond reasonable doubt that the respondent intended to facilitate assistance in a terrorist act. A standard method of establishing a person's intention, or of suggesting a reasonable possibility about that intention, is testimony by that person90. But it is not the only method. For example, a person's intention can be inferred from that person's conduct91. Indeed, at common law, the placing of an evidential burden on an accused person does not require that accused to meet it by giving or calling evidence. The accused person can meet it by pointing to evidence called in the 88 The material parts of s 101.5 are set out above at [48]-[50]. 89 See above at [10]. 90 Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 at 85-86; [1975] HCA 54. 91 Vallance v The Queen (1961) 108 CLR 56 at 82; [1961] HCA 42. prosecution case. That evidence might be the testimony of prosecution witnesses in chief or in re-examination, the testimony of prosecution witnesses in cross- examination, or some other evidence92. Section 13.3(4) of the Code corresponds with the common law position93. The respondent did not give evidence. But he was entitled to attempt, as he did, to discharge the evidential burden by pointing to evidence that the prosecution had adduced. The respondent's decision only to rely on evidence that the prosecution had adduced, however, led to a self-inflicted problem. The s 101.5(5) exception demands that an accused point to evidence of a negative. In relation to legal burdens of proof, Gulson said94: "Negative evidence … is always in some sort circumstantial or indirect, and the difficulty of proving the negative lies in discovering a fact or series of facts inconsistent with the fact which we are seeking to disprove, from which it may be possible to infer its absence with anything like an approach to certainty." That observation does not hold for a negative fact like not possessing a particular intention. It does not hold because non-circumstantial and direct evidence could be called. Similarly, in discharging the evidential burden, the respondent was not confined to circumstantial or indirect evidence. But once the respondent chose not to give evidence, he was left only with circumstantial and indirect evidence to appeal to. That exposed him to a variant of the Gulson problem. Did the respondent discharge the evidential burden? In answering that question, it is desirable to assume without deciding that two of the respondent's submissions to this Court are correct. One is that evidence which satisfies the s 13.3(3) evidential burden can be slender95. The second is that the evidence 92 Momcilovic v The Queen (2011) 85 ALJR 957 at 1106 [665]; 280 ALR 221 at 405; [2011] HCA 34. 93 See above at [51]. 94 The Philosophy of Proof, 2nd ed (1923) at 153. 95 In passing it may be noted that one authority on which the respondent relied for that proposition in relation to negative states of affairs related to instances where the party not bearing the evidential burden had peculiar means of knowledge: Director of Public Prosecutions v Brauer [1991] 2 Qd R 261 at 268. In this appeal, however, it was not the prosecution which had peculiar means of knowledge, but the respondent. Other authorities which quote or cite Director of Public Prosecutions v Brauer deal with legal burdens, not evidential burdens: Jeffrey v (Footnote continues on next page) relied on should be taken at its highest in favour of the respondent96. An aspect of this second assumption is that the test stated in relation to a different statutory enactment in Braysich v The Queen97 applies to s 101.5(5). The second assumption would ordinarily require98 that in this case significant matters be put to one side – the book's content, style and tone. The inferences to be drawn from those matters would have been extremely damaging to the respondent's case had the trial judge left the s 101.5(5) exception to the jury. But as they favour the prosecution, they would ordinarily not count against the respondent in deciding whether he had discharged his evidential burden. The Chief Judge at Common Law reached a conclusion adverse to the respondent99. The respondent criticised that conclusion as "curtly expressed". The prosecution called it "pithily" expressed. It was certainly trenchantly expressed. It was also correct. So was the trial judge's conclusion. One member of the majority was McCallum J. Her Honour said that the hypothesis which the respondent wished to advance to the jury was that the book was100: "not a terrorist manual, but rather a collection of works on the topic of jihad, published over many centuries, some controversial, others not, some by authors of great repute, and some in a form of Arabic which would not today be readily comprehensible to an ordinary Arabic speaker." concluded101: the respondent's submissions. Her Honour "There was ample evidence from which a jury could conclude that the [respondent's] intention was to support his religion by preparing and DPP (Cth) (1995) 79 A Crim R 514 at 518; Fowkes v Deputy Director of Public Prosecutions [1997] 2 VR 506 at 512. 96 The respondent's submission rests on an analogy with the principles applicable to determining whether a proponent of an issue has established a case to answer. 97 (2011) 243 CLR 434 at 454 [36]; [2011] HCA 14. 98 See, eg, Wentworth v Rogers [1984] 2 NSWLR 422 at 429. 99 See above at [20]. 100 Khazaal v The Queen [2011] NSWCCA 129 at [484]. 101 Khazaal v The Queen [2011] NSWCCA 129 at [485]. publishing a properly-sourced collection of writings including religious rulings and other pieces condoning, and indeed encouraging, the ritual of assassination. Was the unequivocal purpose of doing so to facilitate assistance in a terrorist act? I think there was a reasonable possibility suggested by the evidence that the book was not intended by the [respondent] for that particular purpose." The respondent adopted that reasoning in this Court. He referred to the book's "scholarly" characteristics. He relied on its capacity to assist in "education". The respondent identified particular parts of the book as favourable to his case. And he submitted that other parts not favourable to his case ought be ignored. The respondent thus sourced his arguments in the book itself. That made them dangerous. The arguments attempted to meet the prosecution's contention that the respondent had an intention to facilitate assistance in a terrorist act by contending that he had a different intention which could be inferred from the book on its face. The argument involved abandoning the "second assumption" described above102 that the defence evidence be taken at its highest and aspects of the evidence favourable to the appellant be ignored. The respondent's argument that an intention can be inferred from the book's contents that is different from an intention to facilitate assistance in a terrorist act is to call attention to the entirety of the book's contents. It is to require the Court to examine the book as a whole. The book was not divisible into two parts, one consisting of favourable points to be relied on, the other consisting of unfavourable points to be ignored. The parts which were superficially favourable did not in fact support the respondent, because the book conveyed a single integrated message. It identified numerous people as meriting assassination. It identified many methods of assassination. And it endorsed their execution. The book promoted aims and techniques characteristic of terrorism. Once its contents are examined as a whole, it contains no material suggesting a reasonable possibility that a person who assembled and disseminated the book, as the respondent did, assembled it with some intention other than an intention to facilitate assistance in a terrorist act. The respondent's argument that there was a reasonable possibility that he had an intention to promote scholarship and education must fail. It must fail because the type of "education" and "scholarship" that the book promotes does not indicate a reasonable possibility that making the book was not intended to facilitate assistance in a terrorist act involving assassination. For example, as counsel for the respondent conceded in oral argument, the type of "education" and "scholarship" on jihad that the book supplied was instruction on who should be assassinated and how. Similarly, an intention to support a religion which, in 102 See above at [102]. the respondent's perception, encourages assassination does not indicate a reasonable possibility that making the book was not intended to facilitate assistance in a terrorist act involving assassination. A reasonable possibility of that type cannot exist where it is a tenet of the religion, in the respondent's perception, that terrorist acts be committed. In short, the tactics of the respondent legitimated the prosecution's extensive reliance on the book's contents. That reliance collided with the "second assumption". It destroyed the advantages which the second assumption gave the respondent. The manner in which the respondent used some parts of the book's contents to attempt to show that the evidential burden was discharged disabled him from claiming the advantages of the "second assumption". Hall J, the other member of the majority in the Court of Criminal Appeal, accepted a different argument of the respondent designed to show that he had met his evidential burden. The respondent relied on evidence which he claimed established the following matters. He was "a career journalist, a researcher and a publisher." He "had acquired and built up a library which was used as his research facility." He "had a strong interest in the Islamic religion." And he "had written and published articles on a range of issues, in particular, on benign Islamic issues."103 In this Court, the respondent submitted that Hall J had correctly concluded that it could not be said that this evidence "was incapable [sic] of suggesting, as a reasonable possibility, that the [respondent] acted as a professional journalist with an intention that was not one to facilitate assistance in a terrorist act"104. The evidence relied on suggests a reasonable possibility that the respondent lived a useful and blameless professional life in general. But the evidence relied on was entirely neutral about whether the respondent acted, in this particular instance, with an intention other than facilitating assistance in a terrorist act. The respondent submitted that the evidence of his past pursuit of lawful activities was not merely neutral, but favourable. That, he submitted, was because his past conduct as a journalist was relevant to the conduct charged. That is a difficult submission for a court to assess. It would need to be taken in detail to the respondent's past practices as a journalist with a view to comparing those practices to his conduct on the occasion charged. The argument assumes that the respondent was carrying out conduct as a journalist by publishing the book. His reliance on the book's contents does not reveal any reasonable possibility that he was publishing the book in his capacity as a journalist. Even if 103 Khazaal v The Queen [2011] NSWCCA 129 at [439]. 104 Khazaal v The Queen [2011] NSWCCA 129 at [441]. the contents are put to one side, the following circumstances negate the respondent's thesis that the publication was born of a journalistic intention. The respondent's case rests on the assumption that he published various articles in a magazine, The Call of Islam, which did not contain extremist material. He published them in his own name. The book, in contrast, was published on an overseas website that, whatever other information it made available, contained extremist material. The respondent conceded this much at trial. And the book was published using a pseudonym. The habitual behavior of the respondent as a journalist suggests that he was not acting as a journalist on the occasion charged. It does not suggest a reasonable possibility that making the book was not intended to facilitate assistance in a terrorist act. Before the trial judge, the respondent also additionally relied on the "circumstances under which he made the book (at short notice, at the behest of 'the brothers')". But these circumstances do not point one way or the other as to the respondent's true intention. They do not suggest a reasonable possibility that he lacked the intention of facilitating assistance in a terrorist act. The respondent alleged that the prosecution's argument in this Court was that "the evidential burden can only be satisfied in circumstances where the accused adduces evidence of a purpose and in doing so necessarily excludes the proscribed purpose" (emphasis in original). The submission continued: is almost "The ultimate effect of this proposition is to impose upon the trial judge a duty which traditionally falls within the province of the jury. The absence of a particular purpose invariably a matter proved circumstantially. Such proof would ordinarily consist of pointing to the existence of a purpose other than the proscribed purpose. In practical terms it will generally be impossible for an accused person to prove conclusively a negative …. The reason is plain: a person may hold two concurrent intentions, and these concurrent intentions might well motivate different purposes. It is properly a matter of inference for the jury to determine which purposes existed or, indeed, whether both existed. The course advocated by the [prosecution] requires the trial judge to engage in a searching analysis of the evidence. That is, however, not the role of the trial judge but rather that of the jury …. Accordingly, in order to discharge the burden, it was incumbent upon the respondent to point to evidence of another purpose. He did so. To impose an additional burden upon him, requiring him to negate the other, proscribed purpose, would present … an insurmountable difficulty for an accused person who seeks to avail himself of the affirmative defence." This submission should be rejected. The prosecution was not requiring the respondent to negate the proscribed purpose, only to point to evidence that there was a non-proscribed purpose. The respondent contended that the evidence he pointed to raised a reasonable possibility that there was a non-proscribed purpose. So far as that evidence lay outside the book, it was neutral or immaterial. So far as it came from the book, it was nullified by the balance of the book. "Connected with" The second issue in this appeal is whether the trial judge was required to give specific directions on the meaning of the words "connected with" in s 101.5(1)(b) of the Code. That paragraph creates an ingredient of the s 101.5(1) offence – that the document published be "connected with … assistance in a terrorist act". The respondent submitted to the trial judge that her Honour should distinguish between the type of connection to be found in direct assistance, on the one hand, and a "mere remote connection", on the other. But s 105.5(1)(b) does not use the word "directly". The terms of the provision do not support the view that "connection" implies "direct assistance" only. And the trial judge's direction to the jury did not suggest that a "mere remote connection" would suffice. The respondent submitted to the Court of Criminal Appeal that the trial judge should have told the jury that more than a remote and tenuous connection was needed. But the trial judge's direction did not suggest that a remote and tenuous connection would do. In this Court, the respondent argued that the directions the Court of Appeal of the Supreme Court of Victoria stipulated in Benbrika v The Queen105 should have been given. The Court of Criminal Appeal drew the parties' attention to that case after oral argument in that Court had concluded. Benbrika v The Queen106 is a decision on a different provision of the Code. The circumstances to which that provision, s 101.4(1), is directed concern possession of "a thing … connected with preparation for … a terrorist act". Issues which those words might raise in that context do not necessarily arise in relation to s 105.5(1)(b). They certainly do not arise in relation to the application of s 105.5(1)(b) to the present circumstances. These shifts in position raise considerable doubts about the validity of the respondent's stance. Whatever may be necessary in other cases involving different factual circumstances, it was not necessary for the trial judge to give any directions additional to those which her Honour gave. 105 (2010) 29 VR 593 at 660 [315]. Orders The appeal should be allowed and the orders proposed in the joint judgment should be made.

HIGH COURT OF AUSTRALIA CHIEF COMMISSIONER OF STATE REVENUE APPELLANT AND DICK SMITH ELECTRONICS HOLDINGS PTY LTD RESPONDENT Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3 8 February 2005 ORDER Appeal allowed with costs. Set aside the order of the Court of Appeal of the Supreme Court of New South Wales entered on 7 November 2003, and in its place order that: Appeal allowed with costs; Set aside the orders of Gzell J entered 8 January 2003, and in their place order that: The assessment made by the defendant on or about 13 July 2001 is confirmed; The plaintiff pay the defendant's costs. On appeal from the Supreme Court of New South Wales Representation: B A J Coles QC with H R Sorensen for the appellant (instructed by Crown Solicitor for the State of New South Wales) J W Durack SC with D G Charles for the respondent (instructed by Gilbert & Tobin) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd Stamp duty – Dutiable transactions – Sale of shares – Share acquisition agreement stipulated that a dividend would be declared on shares prior to transfer – Agreement stipulated that Purchaser was to fund dividend – Purchase price was calculated by deducting dividend amount from specified sum – Whether value of the dividend formed part of the consideration for the dutiable transaction. Words and phrases – "consideration". Duties Act 1997 (NSW), ss 8, 9, 11, 19, 21(1). GLEESON CJ AND CALLINAN J. This appeal arises out of a disputed assessment of stamp duty, on a Share Acquisition Agreement, made under the Duties Act 1997 (NSW) ("the Act"). The dispute concerns the dutiable value of the relevant dutiable property and, in particular, the consideration for the dutiable transaction for the purposes of s 21(1)(a) of the Act. Duty was assessed on the basis that the consideration was $114,139,649. The respondent contended that it was $88,555,552. The respondent's contention was upheld by Gzell J in the Supreme Court of New South Wales1, and by the Court of Appeal of the Supreme Court of New South Wales (Meagher JA and Sheller JA; Davies AJA dissenting)2. In this Court, the respondent supported the reasoning in the Supreme Court, but also advanced an alternative argument that could lead to a conclusion that both figures were wrong. The agreement The parties to the agreement were InterTAN, Inc, a company incorporated in Delaware, USA (called "the First Vendor"), InterTAN Canada Ltd, a company incorporated in Alberta and continued into British Columbia, Canada (called "the Second Vendor"), and the respondent, a company incorporated in New South Wales (called "the Purchaser"). The subject matter of the agreement was shares in the capital of InterTAN Australia Ltd, a company incorporated in New South Wales (called "the Company"). The Company carried on, in Australia and New Zealand, the business of a radio, television, and consumer electronics retailer. The First Vendor owned 12,200,000 ordinary shares in the Company and the Second Vendor owned 10,735,562 redeemable preference shares. Between them, those shares comprised the whole of the Company's issued capital. The agreement was dated 10 April 2001. It recited that the Vendors wished to sell and the Purchaser wished to purchase the shares in the Company on the terms of the agreement. Neither the Articles of Association, nor any financial accounts, of the Company were in evidence. Completion was to take place at a future date. Clause 2 contained a number of conditions precedent to completion, including receipt of certain consents and approvals from third parties, and the discharge, on terms acceptable to the Purchaser, of a charge granted by the Company in favour of a bank. Clause 3 provided for what is sometimes called "due diligence", that 1 Dick Smith Electronics Holdings Pty Ltd v Chief Commissioner of State Revenue (2002) 51 ATR 490. 2 Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd (2003) 58 NSWLR 567. Callinan is to say, further investigation by the Purchaser of the Company's affairs. Completion Date was defined to mean the first business day two days after satisfaction or waiver of the conditions precedent. The Vendors and the Purchaser respectively were given the right to terminate the agreement if certain conditions precedent were not satisfied or waived on or before 30 June 2001. Clause 5 of the agreement provided that, on completion, the Vendors would sell, and the Purchaser would purchase, the shares for the Purchase Price, which was a defined term. The clause also provided that, on completion, title to the shares would pass to the Purchaser. Clause 4 dealt with a number of matters relating to what was described as Conduct before Completion. It included the following: "4.1 Conduct of business The Vendors shall ensure that the Company does not do the following things during the period from the date of this agreement to the Completion Date (inclusive), without the prior consent of the Purchaser. (No distributions) Declare or pay or agree to declare or pay any dividend, make any other distribution of its profits, reduce its capital, repay any shareholder's loan or advance or buy back any of its shares, other than a dividend declared in accordance with clause 4.4 such dividend being payable immediately prior the that Company shall not pay such dividend until Completion). to Completion (provided 4.4 Dividend The parties agree that prior to Completion, the Vendors shall ensure that the Company shall declare a dividend on its ordinary shares equal, in total, to the Dividend Amount. The record date for the dividend shall be one day prior to the Completion Date and the dividend shall be payable on Completion. The First Vendor shall notify the Purchaser of: the amount of the Dividend Amount; and Callinan the amount, if any, by which the Dividend Amount will exceed the balance of the Company's franking account on Completion, not less than 2 Business Days prior to Completion. The First Vendor indemnifies the Purchaser against any claim, loss, liability, cost or expense, direct or indirect, which the Purchaser or the Company pays or is liable for arising from the payment of an unfranked dividend pursuant to clause 7.7 to the extent that that claim, loss, liability, cost or expense exceeds the amount withheld by the Company pursuant to clause 7.7." The term Dividend Amount was defined to mean "all retained earnings (up to a maximum of $27,000,000) which the Company is able to pay on the Shares at Completion, or such other amount as the parties agree." Clause 7 contained the following provisions: "7.6 Payment of Purchase Price the First Vendor by On Completion, after satisfaction of the Vendors' obligations under this clause, the Purchaser shall pay the Purchase Price to, or at the direction of, immediately available funds to an account nominated by the First Vendor before Completion. The parties agree that the Purchaser may pay the portion of the Purchase Price to which the Second Vendor is entitled to the First Vendor, who shall hold such amount on behalf of the Second Vendor. telegraphic transfer 7.7 Discharge of Intra-Group Liabilities On Completion, immediately after payment of the Purchase Price, the Purchaser shall fund the Company so that the Company is able to discharge the debts created by the declaration of the dividend referred to in clause 4.4. Immediately following such funding, the parties shall procure that the Company pay that dividend, less any amount which the Company is required to withhold on account of the dividend not being fully franked. Simultaneous completion Neither the Vendors nor the Purchaser need complete the sale of any Shares unless the sale of all the Shares is completed simultaneously. Neither Vendor is obliged to complete the sale of Callinan the Shares unless the Purchaser has performed, or is ready, willing and able to perform, its obligations under clause 7.7." The term Purchase Price was defined to mean "$114,139,649.00 minus the Dividend Amount." It was apportioned as to $10,735,562 to the Second Vendor and as to the balance to the First Vendor. In brief, it was agreed on 10 April 2001 that, on the Completion Date, the Vendors would sell and the Purchaser would purchase the shares in the Company; that in the meantime the Vendors would procure that the Company declare a dividend on the ordinary shares equal to all the Company's retained earnings up to completion; that the Purchaser would "fund the Company" to enable it to discharge the debts created by the declaration of the dividend; and that the purchase price for the shares would be $114,139,649 minus the amount of the dividend, apportioned between the Vendors as mentioned above. Curiously, there appears to have been no evidence of the date of actual completion. Gzell J recorded the following facts: "The dividend declared was for $25,584,097. The [respondent] claimed that the Purchase Price, therefore, became $88,555,552. Immediately after the payment of this amount, the [respondent] 'funded' [the Company] by way of a loan of $25,584,097 and it was from those funds that the liabilities created by the declaration of the dividend were discharged. In effect, the vendors sold their shares ex dividend." The concluding sentence of that paragraph was adopted in the Court of Appeal by Meagher JA and Sheller JA. It accords with both the form and the substance of the agreement and the transaction. Because of the obligation assumed by the respondent in cl 7.7, it is not a complete description of the effect of the agreement. The significance of that matter for the purposes of the Act will need to be examined. Even so, and subject to that qualification, the agreement was that title to the shares was to pass after all retained earnings had been made the subject of a declaration of dividend, and the purchase price of the shares was, in the events that occurred, $114,139,649 minus the amount of the dividend ($25,584,097), that is to say, $88,555,552. Although, as the transaction was put into effect, the application of cl 7.7 was simple enough, its meaning is not entirely plain. The requirement to "fund the Company" to enable it to discharge the debts created by the declaration of the dividend appears to assume that the Company would need such funding, because it would not have the necessary cash readily available. It is possible to infer from other provisions in the agreement that the business of the company was extensive, and its affairs complex. It was probably unlikely to have an amount equal to the whole of its retained earnings sitting in a bank account available for Callinan distribution. It probably had better ways of using its money. On the other hand, it was not inevitable that there would be a need to "fund" the whole, or even part, of the dividend. Furthermore, such funding as was required did not have to take the form of a loan from the respondent. It could, for example, have taken the form of a subscription for equity capital. Presumably, it could have taken the form of providing support, by way of security, for a loan to the Company by a third party, such as a bank. One thing is clear. If, as ultimately occurred, the respondent were to make a loan to the Company in order to satisfy the requirements of cl 7.7, then the respondent would obtain a corresponding asset in the form of the debt due from the Company. That the Company was solvent is not in question. The price that was paid for the shares in the Company reflects its ability to repay a loan. We do not know the terms and conditions of the loan that was in fact made but there is no reason to doubt that the respondent obtained full value for the loan. Similarly if the respondent were to subscribe for equity capital in order to satisfy cl 7.7, it would obtain a corresponding asset in the form of further shares in the Company. Clause 7.7 did not require, or even contemplate, that the purchaser should make a gift to the Company. The Vendors caused the Company to declare a dividend, prior to completion, of $25,584,097. The declaration of dividend created a debt in that amount owed by the Company to the holders of the ordinary shares3. That liability existed at completion, and the value of the net assets of the Company, and therefore the value of its shares, on completion was diminished by that amount, as the agreement envisaged. The respondent paid to the Vendors, by way of purchase price, the agreed price of the shares at completion, which was $114,139,649 minus the dividend, that is $88,555,552. There is no reason to doubt that this reflected the value of the shares at completion. The Company paid to the First Vendor the debt it owed it as a result of the prior declaration of the dividend: $25,584,097. The respondent lent that amount to the Company. The Company incurred a liability to the respondent of $25,584,097, and the respondent obtained an asset in the form of a debt owing by the Company to the respondent of $25,584,097. There is no justification for ignoring any of these facts, which were all provided for, or the natural consequence of what was provided for, in the agreement. The Act Chapter 2 of the Act deals with "Transactions concerning dutiable property". The imposition of duty on transactions, as well as on instruments, 3 Corporations Law, s 254V. Callinan represents a shift in emphasis as compared with earlier stamp duty legislation4. Nevertheless, many of the provisions of the Act are modelled on the previous statute. Section 8(1) provides that Ch 2 charges duty on dutiable transactions identified as including: a transfer of dutiable property, and the following transactions: an agreement for the sale or transfer of dutiable property". Section 11 defines dutiable property as including "shares ... in a NSW company". The dictionary at the end of the Act defines "NSW company" in a manner that includes the Company. Section 9(1) provides that the duty charged on a dutiable transaction referred to in s 8(1)(b) is to be charged as if each such dutiable transaction were a transfer of dutiable property. By virtue of s 9(2)(c) the transfer is taken to have occurred at the time when the agreement was entered into, that is, 10 April 2001. Duty is charged on the dutiable value of the shares at the rate set out in Pt 3 of the Act (s 19). Section 21 of the Act, so far as presently relevant, provides: "(1) The dutiable value of dutiable property that is subject to a dutiable transaction is the greater of: the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration), and the unencumbered value of the dutiable property." In the ordinary case of an arm's-length agreement for the sale of property, there is likely to be no difference between (a) and (b). Indeed, the consideration for the sale agreement would, in many cases, be the best evidence of the property's value. The section does not assume that there will be a difference between (a) and (b). It accepts that there may be a difference, and makes cf Commissioner of State Revenue (Vict) v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651. Callinan provision for that. It was common ground in argument that, in par (a), "or" means "and". In the present case, duty was assessed, and the appellant sought to uphold the assessment, on the basis, and only on the basis, that the relevant provision was s 21(1)(a) and that the amount of monetary consideration for the dutiable transaction was $114,139,649. The appellant's written submissions state: "Para 21(1)(b) of the Act is not relevant to this case." It was acknowledged in oral argument that the appellant's assessment was made without any attempt to apply the portion of s 21(1)(a) that refers to "the value of a non-monetary consideration". Senior counsel for the appellant said that, on his case, there was no question of valuing anything. Certainly, there was never any attempt by the appellant, in making the assessment, to value either the shares for the purpose of s 21(1)(b), or any non-monetary consideration for the purpose of s 21(1)(a). "Consideration" In Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW)5, Dixon J said, in relation to provisions of the Stamp Duties Act 1920 (NSW) which in the relevant respect were comparable to those of the Act: "In the context I think that the word 'consideration' should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contracts. The difference is perhaps not very material because the consideration must be in money or money's worth. But in the law of simple contracts it is involved with offer and acceptance: indeed properly understood it is perhaps merely a consequence or aspect of offer and acceptance. Under s 66 the consideration is rather the money or value passing which moves the conveyance or transfer." The question that arose in that case concerned a reduction of capital by a company, which distributed to its shareholders, in specie, shares it held in other companies. The shares were distributed at the value at which they stood in the company's books, which was less than their actual value. The Commissioner argued that duty was payable either at the rate applicable to a conveyance without consideration in money or money's worth, or at the rate applicable to a conveyance made upon a consideration in money or money's worth of less than the unencumbered value of the property conveyed. The taxpayer argued, and the Court accepted, that duty was payable at the rate applicable to a conveyance (1948) 77 CLR 143 at 152. Callinan made upon a consideration in money or money's worth of not less than the unencumbered value of the property conveyed. In order to understand the distinction drawn by Dixon J, and its relevance to that case, it is necessary to recall the meaning and significance of consideration in conveyancing. An explanation may be found in Elphinstone's Introduction to Conveyancing6. In conveyancing, marriage, for example, was treated as valuable consideration7. "Money, marriage, doing something which is troublesome to oneself, or of use to the other party ... are all valuable considerations."8 One significance of the presence or absence of either valuable or good consideration was concerned with equity's doctrine of uses. "If, before the Statute of Uses, one man enfeoffed another, the Court of Chancery held that unless the motive was one which was adequate, the feoffor remained entitled to the use; in other words, that the use 'resulted' to the feoffor ... On the other hand, if the motive was adequate, if the feoffment was made for consideration, whether valuable or good, the use enured to the feoffee."9 What Elphinstone referred to as motive is what Dixon J described as that which moves the conveyance. Marriage was valuable consideration. A motive of natural love and affection was good consideration10. But, of course, in the case of a conveyance on sale, the usual form of consideration was money or money's worth; ordinarily, the purchase price. In Archibald Howie11, Dixon J explained the decision as follows: "The reduction involving the payment off of part of the paid up share capital must therefore be considered an effectuation of a provision of the contract of membership. The allotment of the share and the payment up of the liability thereon conferred upon the holder for the time being of the share a right to have the assets of the company used and applied in the various ways in which the articles expressly or impliedly require or authorize and this is one of them. It is an effectuation or realization of the rights obtained by the acquisition of the share in the same way as is the 6 7th ed (1918) at 80-82. 7 See Stuckey and Needham, The Conveyancing Acts and Regulations, (1953) at 18. 8 Maw, Elphinstone's Introduction to Conveyancing, 7th ed (1918) at 80. 9 Maw, Elphinstone's Introduction to Conveyancing, 7th ed (1918) at 82. 10 Stuckey and Needham, The Conveyancing Acts and Regulations, (1953) at 18. 11 (1948) 77 CLR 143 at 152-153. Callinan distribution of a dividend. The consideration given is the payment up of the share capital in satisfaction of the liability for the amount of the share incurred on allotment." (emphasis added) Those observations apply to one aspect of the present case. The consideration for the dividend distributed by the Company to the First Vendor (the owner of the ordinary shares) was the amount subscribed for the share capital. The First Vendor provided full consideration for that dividend in exactly the same way as the shareholders in Archibald Howie provided full consideration for the distribution in specie. It was the original subscription for capital, and the rights thereby acquired, that "moved" the payment of the dividend. This cannot be overlooked in an analysis of the whole transaction. In Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd12, Mason J13 and Aickin J14 referred to Archibald Howie and to the distinction between the adequacy of consideration for the purpose of contract law and the adequacy of consideration for the purpose of revenue law. Again, however, in the ordinary case of a conveyance on sale following an arm's-length transaction, that distinction is unlikely to be material. In the same case, at first instance, "It is no doubt right to say that 'consideration' is used in the legislation in the conveyancing sense and not the sense in which it is used in simple contract ... But in my opinion that means no more, when one is speaking of a conveyance, than that the consideration which moves the conveyance is the money which the conveyee has agreed to pay under the pre-existing contract." In Davis Investments Pty Ltd v Commissioner of Stamp Duties (NSW)16, Dixon CJ dealt with the question of the consideration moving a conveyance or transfer on sale. It was, he held, the agreed purchase price. He said: 12 (1981) 146 CLR 336. 13 (1981) 146 CLR 336 at 375-376. 14 (1981) 146 CLR 336 at 435-436. 15 St Helens Farm (ACT) Pty Ltd v Federal Commissioner of Taxation (1979) 46 FLR 16 (1958) 100 CLR 392 at 408. Callinan "But here, for their own purposes the parties have given the transaction the form of a sale at a price. Had it not been for the situation occupied by the two companies one to another it might not have been possible, or at all events lawful, to transfer at such prices. In a practical sense doubtless the transaction was 'moved' by that circumstance. But within the meaning of the words in s 66(3A) would the consideration moving the transfers – the consideration 'upon' which the transfers are made – be anything but the price the parties chose to adopt? After all we are dealing with a transfer on sale." In that case, the dealings were not at arm's length, but the Court held that the agreed price was the consideration upon which the transfers would be made. In the present case, also, we are dealing with a transfer on sale. That is the nature of the dutiable transaction. The consideration for the dutiable transaction The declaration and payment of the dividend by the Company to the Vendors was not the dutiable transaction. It was a transaction that was envisaged, and permitted, by the agreement between the Vendors and the respondent, but it was a transaction between the Vendors and the Company. The declaration of dividend, prior to completion, involved an exercise by the Vendors of their rights as shareholders of the Company. It created a liability in the Company which was discharged by the payment of the dividend at completion. As Dixon J pointed out in Archibald Howie, the consideration for the payment of the dividend was the original subscription for capital in the Company by the shareholders, considered in the light of the rights under the Company's Articles of Association which they thereby acquired. The loan by the respondent to the Company, to provide it with the ready money to pay the debt to the Vendors incurred by the declaration of dividend, was not the dutiable transaction. The consideration for the loan was the Company's promise to repay the loan together with any interest that was payable. The purchase price of the shares in the Company clearly was not $114,139,649. Both in form and in substance, the purchase price of the shares was $114,139,649 minus the amount of the dividend. How could it have been otherwise? The agreement contemplated that, prior to completion, the Vendors would use their rights as shareholders to cause the Company to declare a dividend out of all the retained profits of the Company up to a maximum of $27 million. Inevitably, the net assets of the Company would be reduced by the amount of the dividend, because the declaration of the dividend created a liability in that amount in the form of a debt owing by the Company to the Vendors. Hence, the purchase price was agreed to be $114,139,649 minus the amount of Callinan the dividend. It was the First Vendor, the owner of the ordinary shares, whose share of the purchase price was reduced by the amount of the dividend. The consideration for which the Vendors agreed to transfer, and transferred, their shares was not $114,139,649. They received two amounts of money. They received $88,555,552 from the respondent, which was the purchase price payable under the agreement. The First Vendor received $25,584,097 from the Company, which was the dividend to which it was entitled on its ordinary shares. The Vendors received the first amount in their capacity as Vendors. The First Vendor received the second amount in its capacity as creditor of the Company; a capacity created by exercise by the Vendors of their power as shareholders to cause the Company to declare a dividend. It is wrong to treat the dividend as part of the consideration for the share transfers. It might be noted in passing that a different view would produce some surprising consequences, in relation both to revenue law and financial accounting. As has been noted, the respondent acquired, in addition to the shares, an asset in the form of a debt of $25,584,097 owing to it by the Company. To treat the capital gains tax cost base of the shares as $114,139,649 would appear anomalous. No doubt it would suit the First Vendor in some respects, as the income tax involved in a sale of the shares would be likely to be considerably more than the amount of stamp duty involved in this case. However, the Federal Commissioner of Taxation would probably have different ideas. The First Vendor received, on income account, a dividend of $25,584,097. The Vendors received, on capital account, a total amount of $88,555,552. The appellant's argument appears to imply that the Vendors received $114,139,649 in total on capital account. These curiosities result from the fact that the argument for the appellant does not reflect either the legal form or the commercial substance of the dutiable transaction. It is true that it was part of the agreement between the Vendors and the respondent that, before transferring the shares in the Company to the respondent, a dividend would be declared. That does not make the declaration and payment of the dividend part of the dutiable transaction. The right of the Vendors to declare the dividend was not conferred on them by the agreement. It was conferred on them by the Articles of Association of the Company. The agreement provided that, as between the Vendors and the Purchaser, the exercise of that right would not constitute an impermissible depletion of the Company's assets during the period between contract and completion, but it was not the source of their right to declare, or the First Vendor's right to receive, the dividend. The fallacy in the argument for the appellant is the assumption that, because the Vendors were to receive the purchase price, and one of them was to receive the dividend, the whole amount of $114,139,649 is to be regarded as the Callinan consideration for the transfer of the shares. The Vendors between them received only two monetary payments: the purchase price of the shares ($88,555,552); and the dividend ($25,584,097). The consideration for the dividend has already been identified. The First Vendor was not paid $25,584,097 by the respondent, and it did not receive it as part of the consideration for the shares. It was paid that amount by the Company, in discharge of the debt resulting from the declaration of the dividend. Counsel for the appellant disclaimed any suggestion that this transaction involved an attempt to evade or avoid duty. There is nothing particularly complicated about the arrangement. Both legally and commercially its elements are quite straightforward. It was an arm's-length transaction intended to have legal effect according to its form. There is no reason to disregard that form17. The appellant argued that it would be wrong to overlook the funding obligations undertaken by the respondent in cl 7.7 of the agreement, and given effect by the loan from the respondent to the Company of $25,584,097. So much may be accepted. What follows from that? It does not make the loan part of the dutiable transaction. Nor does it make the payment of $25,584,097 by the respondent to the Company part of the consideration for the transfer of the shares. It was a payment by way of loan, in consideration for the borrower's promise to repay. It is correct that the obligation in cl 7.7 was part of what the Purchaser was required to undertake, and was willing to undertake, in return for the promise to transfer the shares. In the course of argument in this Court, counsel for the respondent, apparently for the first time, raised the possibility that the obligation to fund was non-monetary consideration for the dutiable transaction, and therefore arose for examination, if at all, under what might be described as the second limb of the words in parenthesis in s 21(1)(a). The distinction between monetary consideration and non-monetary consideration, it was accepted on both sides, corresponds with the distinction, in earlier legislation, between money and money's worth. Clause 7.7 did not oblige the respondent to pay, and the respondent did not pay pursuant to cl 7.7, any money to the Vendors. It did not necessarily oblige the respondent to pay any amount, or at least any particular amount, to the Company. The nature and extent of any required funding was left to be decided between the respondent and the Company. Whatever else cl 7.7 required, it did not oblige the respondent to make a gift to the Company. If the respondent had been willing and able to arrange for a third party to make a loan to the Company, perhaps supported by security from the respondent, the clause would not have obliged the respondent to make any 17 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 211 ALR 101. Callinan payment to the Company. What cl 7.7 gave the Vendors was not a right to receive any money from the respondent, or even a right to have the respondent pay money to the Company, but an assurance that the Company would have available to it, on completion, liquid funds sufficient to discharge the debt created by the declaration of the dividend and that, if and to the extent necessary, those funds would be made available to the Company, whether by the provision of loan or equity capital or otherwise, by the respondent. That was what was agreed on 10 April 2001. There has never been any attempt to assess the value to the Vendors of the obligation undertaken by the respondent in cl 7.7. The respondent accepts that consideration for a transfer on sale can include the conferring by a purchaser of a benefit on a third party at the vendor's request. Even so, the respondent submits, if the conferring of a benefit takes the form of a payment of an amount of money, that amount itself will only satisfy the description of part of the consideration for the transfer if the amount is paid as the price, or part of the price, "of the subject conveyed"18. Let it be supposed, to simplify the problem, that cl 7.7 had in terms obliged the Purchaser to lend the Company an amount sufficient to put it in funds to pay the dividend. The amount of the loan would not bear the character of part of the price of the shares. The loan has its own consideration, namely the agreement to repay (with or without interest). In the present case that agreement was equal in value to the amount of the loan. The undertaking by the Purchaser of an obligation to make the loan may be regarded as part of the price of the shares, but the value to the Vendors, or the cost to the Purchaser, of that obligation, at least in the circumstances of the present case, could not be regarded as equivalent to the amount of the loan. As has already been noted, the position is more complicated, because cl 7.7 did not impose a simple obligation to make a loan, and it is the value to the Vendors of the obligation in cl 7.7 that is relevant. We are prepared to accept that the obligation accepted by the respondent under cl 7.7 is part of the consideration for the dutiable transaction. We cannot accept that it is monetary consideration for the transfer on sale. It is non- monetary consideration for the transfer on sale, and its value to the Vendors would depend upon the complex of commercial factors bearing upon the worth of the benefit of the assurance they sought and obtained in the sale agreement. Having regard to the evident financial strength of the Company, and to the variety of possible ways in which the assurance might have been provided, the value might not be substantial. That may explain why the appellant has not attempted to put a case on this basis. 18 cf Marquis of Chandos v Commissioners of Inland Revenue (1851) 6 Ex 464 at 479-480 [155 ER 624 at 632] per Pollock CB. Callinan Under the Taxation Administration Act 1996 (NSW), pursuant to which the present proceedings were considered, the parties were not limited to the grounds of objection to the assessment (s 100(2)). The respondent bore the onus, and it has established that the assessment was excessive. The Supreme Court had wide powers to dispose of the appeal (s 101). Gzell J allowed the respondent's objection to the assessment, set aside the appellant's decision disallowing the objection, remitted the matter to the appellant to be determined in accordance with his reasons for judgment, and ordered the appellant to pay the costs. The Court of Appeal dismissed the appeal with costs. Conclusion Gzell J and the majority in the Court of Appeal were correct to conclude that the appellant was wrong in assessing duty on the basis that the consideration for the dutiable transaction was $114,139,649. However, in concluding that the consideration was $88,555,552 they appear to have overlooked (because it was not argued) the value of the non-monetary consideration in the form of the value of the obligation undertaken by the respondent in cl 7.7 of the agreement. The parties to the present appeal should have the opportunity of putting before the Court in writing, within 21 days, their respective submissions as to the orders, including orders as to costs, that should now be made. Kirby Hayne GUMMOW, KIRBY AND HAYNE JJ. InterTAN Australia Ltd ("the Company") was incorporated in the State of New South Wales. At premises there and elsewhere in Australia, the Company carried on business as a radio, television and electronics retailer using the names "Tandy Electronics" and "RadioShack". Of the issued share capital of the Company, a Delaware corporation, InterTAN Inc, was the beneficial owner of 12.2 million fully paid ordinary shares19 and a British Columbia corporation, InterTAN Canada Ltd, was the beneficial owner and registered holder of 10,735,562 fully paid A class redeemable preference shares (together, "the Shares"). These two corporations are referred to respectively as "the First Vendor" and "the Second Vendor", and collectively as "the Vendors". The Shares comprised all the issued shares in the capital of the Company. Dick Smith Electronics Holdings Pty Ltd ("the Purchaser") entered into a written agreement with the Vendors dated 10 April 2001 ("the Agreement") for the purchase by it of the Shares. The Agreement was titled "Share Acquisition Agreement" and also described on the title page as "Sale of InterTAN Australia". The date on which the Agreement was completed does not appear but cl 2.3 was directed to the satisfaction of certain conditions precedent on or before 30 June 2001, and in cl 1.1 "Completion Date" was defined as the first business day two days after the satisfaction or waiver of the conditions precedent, or any other agreed date. Under cover of a letter from its solicitors dated 10 July 2001, which, from the terms of that letter, was after completion, the Purchaser lodged with the appellant ("the Commissioner") the Agreement and six share transfer forms. Thereafter, the Commissioner assessed duty under the Duties Act 1997 (NSW) ("the Act") in the sum of $684,838.20. This exceeded the $531,330.60 which had been proffered by the Purchaser, and the difference was accounted for by the Commissioner's conclusion that the consideration which had moved the transaction was $114,139,649, rather than the $88,555,552 for which the Purchaser contended. The dispute came before the Supreme Court of New South Wales (Gzell J) as an appeal by the Purchaser under Pt 10 Div 2 (ss 96-103A) of the Taxation 19 InterTAN Inc was the registered holder of 12,199,996 ordinary shares; each of four individuals was the registered holder of one ordinary share. Kirby Hayne Administration Act 1996 (NSW) ("the Administration Act"). Gzell J revoked the assessment and remitted the matter to the Commissioner for redetermination20. The appeal to this Court is brought by the Commissioner against the rejection by the Court of Appeal (Meagher and Sheller JJA; Davies AJA dissenting) of the Commissioner's appeal to that Court21. For the reasons that follow, the appeal should be allowed and an order made confirming the assessment by the Commissioner. That is the appropriate order which the Supreme Court should have made under s 101 of the Administration Act. Provisions of the parties' agreement It is convenient to refer further to provisions of the Agreement, beginning with two of the central definitions in cl 1.1: "Purchase Price means $114,139,649.00 minus the Dividend Amount." "Dividend Amount means all retained earnings (up to a maximum of $27,000,000) which the Company is able to pay on the Shares at Completion, or such other amount as the parties agree." Clause 5, headed "Sale and Purchase", provided: "5.1 Sale of Shares On Completion, the Vendors, as beneficial owners, will sell and the Purchaser will purchase, free and clear of all Encumbrances, the Shares for the Purchase Price. Title and Risk On Completion, title to the Shares and risk in the Shares shall pass to the Purchaser." 20 Dick Smith Electronics Holdings Pty Ltd v Chief Commissioner of State Revenue (2002) 51 ATR 490; 2003 ATC 4001. 21 Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd (2003) 58 NSWLR 567. Kirby Hayne On or before completion, the Vendors were to ensure, among other things, that there were delivered to the Purchaser, "Transfers in registrable form in favour of the Purchaser, or such other transferees as the Purchaser may direct, duly executed by each registered holder as transferor of the Shares" (cl 7.2(b)). It would be a misstatement of the operation of the Agreement, and of the transaction for which it provided, to refer simply to cl 5 and the statement therein that the Purchaser will purchase the Shares for the Purchase Price, for the conclusion that it was the receipt by the Vendors of that payment alone which supplied the monetary consideration actuating or moving the transfer of the Shares by the Vendors to the Purchaser. It is necessary to look further into the provisions of the Agreement. Clause 4 was headed "Conduct before Completion". Paragraph (d) of cl 4.1 obliged the Vendors to ensure that the Company did not, during the period from the date of the Agreement to the completion date, without the consent of the Purchaser: "Declare or pay or agree to declare or pay any dividend, make any other distribution of its profits, reduce its capital, repay any shareholder's loan or advance or buy back any of its shares, other than a dividend declared in accordance with clause 4.4 such dividend being payable immediately prior to Completion (provided that the Company shall not pay such dividend until Completion)." (emphasis added) Clause 4.4, headed "Dividend", provided: "(a) The parties agree that prior to Completion, the Vendors shall ensure that the Company shall declare a dividend on its ordinary shares equal, in total, to the Dividend Amount. The record date for the dividend shall be one day prior to the Completion Date and the dividend shall be payable on Completion. The First Vendor shall notify the Purchaser of: the amount of the Dividend Amount; and the amount, if any, by which the Dividend Amount will exceed the balance of the Company's franking account on Completion, not less than 2 Business Days prior to Completion. The First Vendor indemnifies the Purchaser against any claim, loss, liability, cost or expense, direct or indirect, which the Purchaser or Kirby Hayne the Company pays or is liable for arising from the payment of an unfranked dividend pursuant to clause 7.7 to the extent that that claim, loss, liability, cost or expense exceeds the amount withheld by the Company pursuant to clause 7.7." Clause 7.6 obliged the Purchaser to pay the Purchase Price to or at the direction of the First Vendor; that portion of the Purchase Price to which the Second Vendor was entitled was to be held on its behalf by the First Vendor. Clauses 7.7 and 7.8 deal with what were identified as "Discharge of Intra-Group Liabilities" and "Simultaneous completion" respectively. Their texts were as follows: "7.7 On Completion, immediately after payment of the Purchase Price, the Purchaser shall fund the Company so that the Company is able to discharge the debts created by the declaration of the dividend referred to in clause 4.4. Immediately following such funding, the parties shall procure that the Company pay that dividend, less any amount which the Company is required to withhold on account of the dividend not being fully franked." "7.8 Neither the Vendors nor the Purchaser need complete the sale of any Shares unless the sale of all the Shares is completed simultaneously. Neither Vendor is obliged to complete the sale of the Shares unless the Purchaser has performed, or is ready, willing and able to perform, its obligations under clause 7.7." (emphasis added) Clause 7.7 placed upon the Purchaser an obligation on completion and immediately after payment of the Purchase Price to "fund" the Company to enable it to discharge the duties created by the declaration of the dividend referred to in cl 4.4. One effect of cl 7.8 was that the Vendors were obliged to complete the sale of the Shares only if the Purchaser had performed or was ready, willing and able to perform the funding obligation imposed by cl 7.7. The dividend declared by the Company pursuant to cl 4.4 on its ordinary shares (beneficially held by the First Vendor) was $25,584,097. This was less than the $27 million maximum for the Dividend Amount to be subtracted from the $114,139,649 stated in the definition of the Purchase Price. On completion, the Purchaser paid out a total of $114,139,649 comprising payments of $88,555,552 to the Vendors and $25,584,097 to the Company in performance of its funding obligation under cl 7.7. The latter sum funded the Company for payment to the First Vendor of the dividend on the ordinary shares, Kirby Hayne being the Dividend Amount stipulated in cl 4.4. The funding was by way of loan by the Purchaser to the Company. The issue and disposition in the Supreme Court The litigation has turned upon the significance of the difference between these two sums of $88,555,552 and $114,139,649 for the determination of what moved the transfers by the Vendors for the purposes of the Act. The primary judge and the majority in the Court of Appeal accepted the Purchaser's submission that the relevant consideration was the smaller rather than the greater sum. In particular, Sheller JA, one of the majority in the Court of Appeal, expressed his reasoning in terms which the Purchaser strongly supported in argument in this Court. After noting the argument by the Commissioner that the consideration was the greater amount, Sheller JA continued22: "The reasoning for this conclusion depends entirely upon the [P]urchaser's agreement in cl 7.7 on completion and after payment of the [P]urchase [P]rice to 'fund the [C]ompany so that the [C]ompany is able to discharge the debts created by the declaration of the dividend'. The method of funding was not specified. Nor was the amount of necessary funding specified. The thinking was quite simply that because the [P]urchaser provided funding, in this case by making a loan, to the [C]ompany of $25,584,097, in some way this amount became part of the consideration for the transaction." However, attention is directed by this passage to with what the Purchaser (as transferee) parted, and to whom it was transferred, rather than to what the Vendors (as transferors) received. A duty on transactions Before turning to further consideration of the submissions, reference should be made to the central provisions of the Act. In DKLR Holding Co (No 2) 22 (2003) 58 NSWLR 567 at 571. Kirby Hayne Pty Ltd v Commissioner of Stamp Duties (NSW)23, Mason J, with reference to the judgment of Latham CJ in Commissioner of Stamp Duties (Q) v Hopkins24, said25: "It is a fundamental principle of the law relating to stamp duties that duty is levied on instruments, not on the underlying transactions to which they give effect". In contrast, the Act imposes duty on certain "transactions" which concern "dutiable property". The argument on the present appeal did not seek to explore what expansion (if any) may be found as a result to the propositions that "liability of an instrument to duty is not necessarily determined by its apparent tenor and that extrinsic evidence may properly bear upon the question of the real nature of the instrument"26. Chapter 2 of the Act (ss 8-104) is headed "Transactions concerning dutiable property". Sub-paragraph (i) of s 8(1)(b) states that one of the transactions on which Ch 2 charges duty is "an agreement for the sale or transfer of dutiable property". The term "dutiable property" is defined in s 11 so as to include shares in a New South Wales company such as the Company. The duty charged upon a dutiable transaction being an agreement for the sale or transfer of shares was duty charged "as if each such dutiable transaction were a transfer of dutiable property" (s 9(1)). The consequence was that the relevant dutiable transaction in this case was the Agreement; the Purchaser was to be taken as the transferee of the Shares by a transfer occurring on 10 April 2001, the date of entry into the Agreement (s 9(2))27. The duty charged by Ch 2 was payable by the Purchaser as the transferee (s 13). The liability for duty arose by the first execution of the Agreement (s 12(2)). This, it appears to be accepted, is the date of execution the instrument 23 (1982) 149 CLR 431. See also State Authorities Superannuation Board v Commissioner of State Taxation (WA) (1996) 189 CLR 253 at 266-267, 275. 24 (1945) 71 CLR 351 at 360. 25 (1982) 149 CLR 431 at 449. 26 Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 27 cf Davis Investments Pty Ltd v Commissioner of Stamp Duties (NSW) (1958) 100 CLR 392 at 406. Kirby Hayne bears, 10 April 2001. However, the transaction was to be assessed on the footing that the Agreement was performed according to its terms28. Those terms included cl 4 and cl 7, a matter to which further reference will be made. Payment of double duty was avoided by the operation of s 18(2); the duty chargeable in respect of the transfers of the Shares, made in conformity with the Agreement, was $2 provided the duty chargeable in respect of the Agreement had been paid. It was for this reason that, with the letter to the Commissioner of 10 July 2001, the share transfers were lodged with the Agreement and on the footing that the transfers would attract only nominal duty. Section 19 stated: "Duty is charged on the dutiable value of the dutiable property subject to the dutiable transaction at the relevant rate set out in [Ch 2 Pt 3]." (emphasis added) The term "dutiable value" was relevantly defined in s 21(1): "The dutiable value of dutiable property that is subject to a dutiable transaction is the greater of: the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration), and the unencumbered value of the dutiable property." The term "unencumbered value" was stated by s 23(1) as the value of the property "determined without regard to any encumbrance to which the property [was] subject". No reliance was placed by the Commissioner upon s 24, directed against arrangements reducing dutiable value. Nor was any reliance placed upon 28 The Crown v Bullfinch Proprietary (WA) Ltd (1912) 15 CLR 443. 29 This states: "An instrument that contains or relates to several distinct matters for which different duties are chargeable under this Act is to be separately and distinctly charged with duty in respect of each such matter, as if each matter were expressed in a separate instrument." Kirby Hayne Arguments of the parties The Commissioner had been empowered by s 49 to make an assessment by way of estimate where in the Commissioner's opinion the full dutiable value of the dutiable property subject to an agreement for transfer or sale could not be immediately ascertained. In the letter of 10 July 2001, the solicitors for the Purchaser wrote to the Commissioner: "Under clause 9.1 of the [Agreement] the purchase price in respect of [the Shares] is subject to adjustment dependent on the net assets of [the Company] as at 30 April 2001. The accounts which will form the basis of this adjustment have not yet been finalised and therefore, in order to avoid late stamping penalties, we would be grateful if you could interim stamp the [Agreement] ad valorem for $531,330.60 and also stamp each of the share transfer forms as having been produced. When the completion accounts for this transaction have been finalised we will produce evidence of the final consideration in order to finalise the stamping of this documentation." the whole However, in response, the Commissioner took the position that "the intended result of the Vendors receiving transaction $114,139,649" and duty was assessed accordingly. No question of interim stamping was pursued. Rather, the Purchaser contended that the monetary consideration for the transaction was reduced, for assessment purposes, by the actual sum of the Dividend Amount, while the Commissioner insisted that the requirement in cl 7.7 that the Purchaser fund the Company to discharge the debt created by the declaration of the dividend formed part of the monetary consideration for the transfer of the Shares. is of The effect of s 21(1) was that the dutiable value of the Shares was the greater of "the consideration (if any) for the dutiable transaction (being the the value of a non-monetary amount of a monetary consideration or consideration)" and "the unencumbered value" of that property. In this Court, neither side contended that the latter alternative of the definition of dutiable value was engaged. What was the monetary consideration "for" the transfer of the Shares? That is the question upon which the answer to the appeal turns. Kirby Hayne The consideration for duty purposes It was accepted by both parties that, consistent with this Court's decisions in Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW)30 and Davis Investments Pty Ltd v Commissioner of Stamp Duties (NSW)31 on earlier stamp duty legislation of New South Wales, "consideration" in s 21 of the Act is not to be read as requiring identification of the consideration sufficient to support a contract. So much follows inevitably from the recognition of the fact that s 21(1)(a) (and the expression "the consideration ... for the dutiable transaction") will find application in cases in which a transfer of dutiable property is not made pursuant to contract. So, as Dixon J pointed out in Archibald Howie32: "the word 'consideration' should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contracts". That is, as his Honour went on to say33, "the consideration is rather the money or value passing which moves the conveyance or transfer". To adapt what was said by Lord Wilberforce of other stamp duty legislation34: "In the first place, the phrase 'consideration for the transfer or conveyance' seems to me to refer clearly and naturally to that which passed to the transferor company 'for' the transferred properties." The criterion in the Act of consideration "for" the transaction, being the Agreement for the sale and transfer of the Shares to the Purchaser, upon whom s 13 imposes the liability to pay the duty, looks to what was received by the 30 (1948) 77 CLR 143. 31 (1958) 100 CLR 392. 32 (1948) 77 CLR 143 at 152. 33 (1948) 77 CLR 143 at 152. 34 Shop and Store Developments Ltd v Commissioners of Inland Revenue [1967] 1 AC 472 at 503. See also at 495 per Lord Morris of Borth-y-Gest ("that which is received") and at 498 per Lord Hodson ("a quid pro quo for that which passed by the transfer or conveyance"). Kirby Hayne Vendors so as to move the transfers to the Purchaser as stipulated in the Agreement. Consideration "for" the transfer in this case It may be accurate for general purposes to say, as the primary judge emphasised, that "[i]n effect, the [V]endors sold their shares ex dividend"35. But to say that is to invite speculation as to the commercial and other revenue considerations which may have influenced the form in which the transaction was cast. This is not to answer the question posed by s 21(1) of the Act. What was to be received by the Vendors, and was received by them, was $114,139,649. The Vendors had bargained for an obligation on the part of the Purchaser to bring about that result. The Purchaser discharged an obligation it owed the Vendors under the Agreement to "fund" the Company and so to provide for the payment by the Company of the dividend declared on the ordinary shares. The tripartite element in the transaction does not by itself provide an answer to what otherwise is the operation of the Act36. The contrary was not seriously urged in the oral submissions for the Purchaser. The consideration which moved the transfer by the Vendors to the Purchaser of the Shares which they owned in the Company was the performance by the Purchaser of the several promises recorded in the Agreement in consequence of which the Vendors received the sum of $114,139,649. It was only in return for that total sum (paid by the various steps and in the various forms required by the Agreement) that the Vendors were willing to transfer to the Purchaser the bundle of rights which their shareholding in the Company represented. Noticing the several steps which the Agreement required to be undertaken in order to achieve that result must not be permitted to obscure that the amount of monetary consideration for the transaction of the sale and transfer of the Shares was the sum identified. That part of the amount was to come as a dividend from the Company, the Vendors' shares in which were being sold, rather than immediately from the Purchaser, does not deny that proposition. 35 (2002) 51 ATR 490 at 491; 2003 ATC 4001 at 4002. 36 cf Shop and Store Developments Ltd v Commissioners of Inland Revenue [1967] 1 AC 472 at 503; Commissioner of Inland Revenue v New Zealand Forest Research Institute [2000] 1 WLR 1755 at 1758 (PC). Kirby Hayne That which passed to the Vendors "for" the transfers of the Shares was "consideration" which was "monetary" rather than "non-monetary" within the meaning of s 21(1) of the Act. The transaction was to be assessed to duty on the footing that it was performed on its terms and, completion having taken place before the Agreement was furnished by the Purchaser to the Commissioner, both sides addressed their arguments by reference to the implementation of the transaction. The Commissioner correctly took the stance that the intended result of the transaction, seen as a whole, was the receipt by the Vendors of The error of the Supreme Court The result of this analysis is that the primary judge and the majority of the Court of Appeal erred in the approach that they respectively took to the application of the Act to the uncontested facts. Approached correctly, the case may be summed up as follows. The promises which the parties made and recorded in the Agreement can be sufficiently described as being: the Vendors' promise to transfer the Shares to the Purchaser; the Vendors' promise to procure the Company to declare as large a dividend as it could (up to a maximum of $27 million); the Purchaser's promise to pay the Vendors $114,139,649 minus the Dividend Amount; and the Purchaser's promise to "fund" the Company's payment of the dividend. The consideration for each of those promises is to be found in the promises made by the opposite party37. However, what for the purposes of s 21(1) of the Act moved the transfers by the Vendors was performance of all of the various stipulations in the Agreement, not merely the promises which the Purchaser made. To put the same point in other words: why identify the consideration "for" the transfers as only what the Purchaser gives up? The Vendors transferred the Shares in return for receiving some $114 million, of which part was received from the Company because the parties had agreed that this should be so. To identify, as the submissions for the Purchaser would have it, promise 4 as one which leads to the creation of an asset which the Purchaser will hold (the 37 Chitty on Contracts, 29th ed (2004) at 217 [3-004] concerning the need to distinguish between (and the law's concern for) the consideration for a promise as distinct from consideration for a contract. Kirby Hayne debt owed by the Company to the Purchaser) is apt to mislead. Promise 2, although made by the Vendors, is a promise whose performance works to the advantage of both sides. The Vendors receive money. The Purchaser, because of promises 2 and 4, satisfies the Vendors' desire for money by a means which gives the Purchaser the asset of a debt as distinct from the indirect interest it would have obtained as shareholder in what but for the dividend would have been larger and more valuable assets of the Company. Orders The appeal should be allowed with costs. The order of the Court of Appeal should be set aside. In place thereof, it should be ordered that the appeal to that Court be allowed with costs, the orders of the primary judge set aside and in place thereof the assessment made by the Commissioner on or about 13 July 2001 be confirmed. The Purchaser should pay the costs of the Commissioner of the proceedings at first instance.

HIGH COURT OF AUSTRALIA APPELLANTS AND NEW SOUTH WALES LAND AND HOUSING CORPORATION & ORS RESPONDENTS Simic v New South Wales Land and Housing Corporation [2016] HCA 47 7 December 2016 ORDER Appeal allowed. Special leave be granted to the first respondent to cross-appeal. The cross-appeal by the first respondent be treated as instituted and heard instanter and allowed. Special leave be granted to the second respondent to cross-appeal. The cross-appeal by the second respondent be treated as instituted and heard instanter and allowed. Set aside the order of the Court of Appeal of the Supreme Court of New South Wales made on 18 December 2015, and in its place order that: the appeal be allowed in part; the cross-appeal by the first respondent be allowed; the second respondent be granted leave pursuant to s 500(2) of the Corporations Act 2001 (Cth) to commence and proceed with its cross-appeal against the third respondent; the second respondent be granted leave to file its amended notice of cross-appeal; the cross-appeal by the second respondent be treated as instituted and heard instanter and allowed; orders 1 and 4 of the Supreme Court of New South Wales made on 24 March 2015 be set aside, and in their place it be ordered that: the bank guarantees issued by the defendant/cross- claimant dated 16 April 2010 and numbered 108781 and 108783 be rectified by substituting the words "New South Wales Land and Housing Corporation ABN 24 960 729 253" for the words "New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940"; and the forms of indemnity and application for guarantee from the first cross-defendant to the defendant/cross- claimant dated 16 April 2010 with serial numbers 108781 and 108783 be rectified by substituting the words "New South Wales Land and Housing Corporation ABN 24 960 729 253" for the words "New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940"; and the appellants pay the first and second respondents' costs in the Court of Appeal. The appellants pay the first and second respondents' costs in this Court. On appeal from the Supreme Court of New South Wales Representation M A Ashhurst SC with A F Fernon for the appellants (instructed by O'Neill McDonald Lawyers) G Curtin SC with D I Talintyre for the first respondent (instructed by Sparke Helmore Lawyers) D F Jackson QC with S B Docker for the second respondent (instructed by No appearance for the third respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Simic v New South Wales Land and Housing Corporation Contract – Construction of terms – Performance bonds – Where unconditional undertakings by financial institution to pay on demand ("Undertakings") required as security under construction contract – Where Undertakings and underlying finance applications erroneously referred to non-existent entity as payee because incorrect information provided by applicant for security – Principle of autonomy – Principle of strict compliance – Whether possible to construe references to non-existent entity in Undertakings and applications as references to counterparty to construction contract. Contract – Rectification – Actual or true common intention of parties – Where references to non-existent entity in Undertakings and applications result of common mistake – Whether rectification available to correct references to non-existent entity. Words and phrases – "actual or true common intention", "bank guarantee", "common mistake", "letter of credit", "performance bond", "principle of autonomy", "principle of strict compliance", "rectification", "subjective intention of the parties". Introduction This appeal concerns a claim for payment on performance bonds issued in relation to a construction contract. It raises a general question about the proper approach to their interpretation where the erroneously named beneficiary is a non-existent entity. It also raises a particular question in the circumstances of this case about the availability of rectification to substitute the intended beneficiary. For the reasons given in the joint judgment, I agree that the bonds cannot be construed to overcome the erroneous designation of the beneficiary. However, I also agree, for the reasons given by Kiefel J, that they should be rectified to reflect the common intention of the issuing bank and the contracting party requesting the issue of the bonds that the beneficiary be the principal in the construction contract in relation to which the bonds were issued. I wish to add some observations to my concurrence. The construction question Performance bonds, sometimes misleadingly called "bank guarantees"1, are typically issued by a financial institution at the request of one party to a contract in favour of another party pursuant to a requirement of the contract. They are frequently used in relation to construction contracts2. They take the form of a promise by the issuing institution that it will pay, to the beneficiary named in the bond, an amount up to the limit set out in the bond unconditionally or on specified conditions and without reference to the terms of the contract between the parties3. The present case concerns the contested refusal by Australia and New Zealand Banking Group Ltd ("ANZ") to make payments demanded by the New South Wales Land and Housing Corporation (ABN 24 960 729 253) ("the Corporation") under performance bonds issued at the request of a construction company, Nebax Constructions Australia Pty Ltd ("Nebax"), which, because of a mistake made by the first appellant, Daniel Simic, acting on behalf of Nebax, named their beneficiary as the non-existent "New South Wales Land & Housing Department trading as Housing NSW 1 See Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 443 at 445 per Barwick CJ; [1979] HCA 21. 2 Penn, Shea and Arora, The Law and Practice of International Banking, (1987) at 3 Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545 at 551 per Young J. ABN 45754121940". The bonds were sought by Nebax in accordance with a requirement contained in a special condition of a construction contract between it and the Corporation. Nebax had provided an indemnity to ANZ in respect of each of the bonds and the appellants were guarantors whose liabilities under their guarantees depended upon Nebax's liability, which in turn depended upon the efficacy of the bonds. Following ANZ's refusal to pay the Corporation the amount of $146,965.06 pursuant to the bonds, which were referred to as "Undertakings", the Corporation instituted proceedings in the Supreme Court of New South Wales. The primary judge, Kunc J, made a declaration that the term "New South Wales Land & Housing Department trading as Housing NSW ABN 45754121940" in the description of the principal in the Undertakings meant the Corporation. That conclusion was reached as a matter of the construction of that term. It was therefore not necessary for his Honour to deal with a claim for the rectification of the Undertakings although he expressed views on that issue which would have favoured the grant of such relief had it not been for the constructional resolution4. The Court of Appeal held that the primary judge had not erred in his construction of the Undertakings5. It followed as a matter of common ground that the indemnity in favour of ANZ provided by Nebax was to be construed in the same way and that the present appellants, as guarantors of Nebax's obligations under that indemnity, were liable to ANZ6. The principles governing the legal effect and operation of performance bonds are similar to those applicable to letters of credit. A letter of credit represents payment for the performance of an obligation. A performance bond represents payment on default or in lieu of performance7. The commercial purpose of performance bonds, as described in Wood Hall Ltd v Pipeline Authority, is to provide an equivalent to cash8. 4 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [88]-[91]. 5 Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413 at [2015] NSWCA 413 at [117]. 7 McCracken et al, Everett and McCracken's Banking and Financial Institutions Law, 8th ed (2013) at 392 [11.001]. (1979) 141 CLR 443 at 445 per Barwick CJ, 453-454 per Gibbs J, 457-458 per Two complementary principles apply to letters of credit and performance bonds alike — the principle of strict compliance and the principle of autonomy or independence. According to the principle of strict compliance, a bank paying on a letter of credit or performance bond only has an obligation to do so and only has an entitlement to claim indemnity for the performance of that obligation if the conditions on which it is authorised and required to make payment are strictly observed. A demand for payment cannot be accepted on the basis that near enough is good enough9. The principle of autonomy requires that the letter of credit or performance bond be treated as independent of the underlying commercial contract10. The principles of strict compliance and autonomy serve the immediate commercial purpose of such instruments of providing an equivalent to cash and the further purpose of performance bonds of allocating risk between the parties to the underlying contract until their dispute, if there be one, is resolved11. The strict compliance principle requires that the party making demand on a performance bond be the party named in the bond as the beneficiary and that any conditions on payment set out in the bond are satisfied12. It does not describe an obligation imposed on the issuing or accepting institution. Rather, it delimits the issuing institution's obligation to make payment and, correspondingly, its right to claim on an indemnity promise by the party requesting the issue of the bond13. Where a performance bond is expressed, as in the present case, to be unconditional, strict compliance at least requires that the beneficiary making demand for payment be the beneficiary named in the bond. Unlike the autonomy principle, it is not a rule of construction of the bond. 9 Or on the strength of documents which are "almost the same, or which will do just as well": Equitable Trust Co of New York v Dawson Partners Ltd (1927) 27 Ll L Rep 49 at 52 per Viscount Sumner. 10 Ellinger, "The Doctrine of Strict Compliance: Its Development and Current Construction", in Rose (ed), Lex Mercatoria: Essays on International Commercial Law in Honour of Francis Reynolds, (2000) 187 at 187. 11 McCracken et al, Everett and McCracken's Banking and Financial Institutions Law, 8th ed (2013) at 421 [11.330]. 12 English, Scottish and Australian Bank Ltd v The Bank of South Africa (1922) 13 Ll L Rep 21 at 24 per Bailhache J; J H Rayner & Co v Hambro's Bank Ltd [1943] KB 37 at 42 per Goddard LJ; Ellinger and Neo, The Law and Practice of Documentary Letters of Credit, (2010) at 81, 86. 13 (1927) 27 Ll L Rep 49 at 52 per Viscount Sumner. The autonomy principle requires that the obligations of the issuing or accepting bank under the bond not be read as qualified by reference to the terms of the underlying contract14. That said, it does not prevent a party to a contract who procures the issue of a performance bond claiming as against the beneficiary that the beneficiary's action in calling upon the bond is fraudulent or unconscionable or in breach of a contractual promise not to do so unless certain conditions are satisfied15. However, this is not such a case. The primary question in this case concerns the obligation of the issuing bank to pay on demand of a party claiming to be the beneficiary which, due to error on the part of the requesting party, is not the beneficiary named in the bond. In approaching the constructional question, Emmett AJA, who wrote the leading judgment in the Court of Appeal, held that ordinary principles of construction were applicable16. He observed that the relationship between those principles and the principles of "strict compliance" and "autonomy" was not resolved by the authorities referred to by the parties. He approached the question of construction on the basis that it was anterior to the principle of strict compliance, which he held pertained to performance17. The principle of autonomy went to construction because it was directed to the question as to which documents could be employed for the purpose of determining what the performance bonds meant18. He found that the construction contract was not actually incorporated in the Undertakings19 but that the contract and the identity of the parties to it were referred to. It was therefore permissible to have regard to the construction contract to that extent in order to determine the correct construction of the Undertakings20. Once the Corporation had furnished ANZ with indisputable evidence that it was the entity that was a party as "Principal" to the contract with Nebax described in the Undertakings, there was no basis upon 14 Urquhart Lindsay and Co Ltd v Eastern Bank Ltd [1922] 1 KB 318 at 322-323 per Rowlatt J; Edward Owen Engineering Ltd v Barclays Bank International Ltd [1978] QB 159 at 169 per Lord Denning MR; Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 443 at 451 per Gibbs J. 15 Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd (2008) 249 ALR 458 at 478 [77]-[78] and authorities there cited. 16 [2015] NSWCA 413 at [98]. 17 [2015] NSWCA 413 at [100]. 18 [2015] NSWCA 413 at [101]. 19 [2015] NSWCA 413 at [105]. 20 [2015] NSWCA 413 at [109]. which ANZ would be entitled to refrain from meeting the demand21. Having regard to those findings, it was not necessary for his Honour to proceed to determine the availability of rectification22. Emmett AJA was, with respect, correct to hold that the identity of the beneficiary named in the Undertakings was a matter of construction. His Honour was also correct in characterising the strict compliance principle as a matter relating to performance by the issuing institution rather than as a rule of construction. However, the principle is an incident of the purposes of a performance bond, which are inconsistent with an approach to construction that would require the issuing institution to undertake an investigative function where the beneficiary named on the face of the bond is not the same entity as that demanding payment under the bond23. In the ordinary case, saving minor slips and misdescriptions, the designation of a person or entity as a beneficiary cannot simply, as a matter of construction, be transmuted into the designation of a different person or entity. Nor can a reference to a non-existent entity be construed as a reference to an existing entity with quite a different name. The name of the non-existent government department specified in the Undertakings could not be construed by reference to underlying facts, requiring inquiry by the issuing institution, as a reference to the Corporation. Such a loose approach to construction would be inconsistent with the commercial purposes of the Undertakings as performance bonds. The rectification question The particular circumstances under which the Undertakings were brought into existence in this case made it clear that the actual common intention of the requesting party and the issuing bank was that the beneficiary be the principal in the underlying construction contract. It is therefore appropriate that the Court order rectification of the instruments. There is a preliminary point, namely whose intention was relevant to rectification. It was Mr Simic representing Nebax who asked ANZ to issue the Undertakings. They were issued in favour of the Principal to the construction contract, misidentified as the "New South Wales Land & Housing Department". The true Principal was the Corporation. 21 [2015] NSWCA 413 at [114]. 22 [2015] NSWCA 413 at [118]. 23 (1927) 27 Ll L Rep 49 at 52 per Viscount Sumner. See also Gian Singh & Co Ltd v Banque de l'Indochine [1974] 1 WLR 1234 at 1238-1239 per Lord Diplock; [1974] 2 All ER 754 at 757-758. In its commercial list statement filed in the proceedings in the Equity Division of the Supreme Court, the Corporation sought rectification on the basis that it was the common intention of itself and ANZ that the Undertakings should be issued in its favour. The primary judge in his observations on rectification identified the relevant common intention as that of Nebax (in the person of Mr Simic) and ANZ (in the person of Ms Hanna)24. Both Mr Simic and Ms Hanna subjectively intended, owing to Mr Simic's mistake, to write the words "New South Wales Land & Housing Department trading as Housing NSW ABN 45754121940" on the Undertakings. His Honour went on to find, however, "ANZ and Nebax's common intention ... was for the guarantees to support Nebax's building contract referred to in the Description. ANZ and Nebax intended the Principal to be Nebax's counterparty to that contract." In the Court of Appeal in obiter remarks relating to the Corporation's cross-appeal seeking rectification, Emmett AJA expressed no concluded view on whose common intention was relevant. He doubted the existence of any relevant subjective intention by Ms Hanna. There was nothing to suggest she was aware of the existence of the Corporation. On the other hand, he suggested that it might be that the common intention of Nebax and the Corporation was all that was relevant26. The characterisation of the Undertakings has varied during the life of the litigation. The primary judge referred to them as "unilateral contracts"27. In the Court of Appeal they were referred to as "bilateral contracts" or "synallagmatic agreements"28. The term "synallagmatic" defines in civil law a category of bilateral contract where the parties' obligations are exchanged for each other and are contingent upon each other29. The appellants argued in their written 24 [2015] NSWSC 176 at [70], [91]. 25 [2015] NSWSC 176 at [92]. 26 [2015] NSWCA 413 at [120]. 27 [2015] NSWSC 176 at [69]. 28 [2015] NSWCA 413 at [22], [46]. 29 Treitel, Remedies for Breach of Contract: A Comparative Account, (1988) at 248-249 [191]. Under bilateral non-synallagmatic contracts the performance of each party is not by way of exchange; for example, a non-synallagmatic bilateral contract exists when a gratuitous agent has a duty to act while the principal has a duty to reimburse his or her expenses. The two performances are not in exchange for each other. submissions that the Undertakings were unilateral but were equivocal about the primary judge's characterisation of them as "unilateral contracts". They described them as "potential contracts". However, counsel for the appellants in oral argument adopted the primary judge's conclusion that the Undertakings were unilateral contracts. Counsel focussed for the purposes of rectification on the intentions of the Corporation and ANZ and submitted that those parties did not have a common intention in relation to the Undertakings. When asked whether the Undertakings were capable of rectification as between Nebax and ANZ, counsel said that they were not because ANZ also did not have the same intention as Nebax. In my opinion, the relevant intention is correctly characterised as that of Nebax and ANZ. It was their common intention to bring the Undertakings into existence conditioned upon Nebax entering into indemnity arrangements with ANZ. So far as equity is concerned, it must have been their common intention that the amounts specified in the Undertakings be payable on demand to the Principal of the underlying construction contract, such as to render it unconscionable for ANZ to contend otherwise. At a conceptual level, construction and rectification of a contract are different processes. The first involves determination of the meaning of the words of the contract defined by reference to its text, context and purpose30. Resort to extrinsic circumstances and things external to the contract may be necessary to identify its purpose and in determining the proper construction where there is a constructional choice. The question for constructional purposes is not about the real intentions of the parties, not what the parties meant to say, but what they actually said31. There has been debate in the United Kingdom about reliance upon the "real" as distinct from objectively attributed intentions of the parties in relation to the rectification of contracts32. One line of reasoning in the debate is that reliance upon an objectively ascertained common intention for the purpose of rectification serves to bring about coherence with the common law of contract33. In 30 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 116 [46] per French CJ, Nettle and Gordon JJ and authorities there cited; [2015] HCA 37. 31 Byrnes v Kendle (2011) 243 CLR 253 at 263 [17] per French CJ, 275 [59] per Gummow and Hayne JJ, 284 [98] per Heydon and Crennan JJ; [2011] HCA 26. 32 Etherton, "Contract Formation and the Fog of Rectification", (2015) 68 Current Legal Problems 367. 33 Smith, "Rectification of Contracts for Common Mistake, Joscelyne v Nissen, and Subjective States of Mind", (2007) 123 Law Quarterly Review 116. Chartbrook Ltd v Persimmon Homes Ltd34, Lord Hoffmann's obiter remarks supporting a requirement for an objectively attributed common intention for the purposes of rectification commanded the assent of his colleagues. However, that objective test was not argued in this case and does not represent the common law of Australia as it presently stands. A change in the law would require full argument in a case in which the question was relevant to the outcome. There is a conceptual distinction between construction and rectification but that does not mean that there is not a close connection in their practical operation. Professor Carter has pointed to the close relationship between construction and rectification and the pragmatic view that the fundamental difference between them lies in the ability to use the prior negotiations of the parties35. However, he has properly acknowledged the difference of principle between mistakes which can be corrected by construction and those for which a formal order is required, commenting that36: "The fact that rectification is a remedy informed by matters such as the prevention of unconscionable conduct must still have some relevance." (footnote omitted) As to that, it may be added that the relevance is considerable given the historical and doctrinal bases upon which rectification is granted. Conclusion For the preceding reasons, I agree with the orders proposed in the joint judgment. 35 Carter, The Construction of Commercial Contracts, (2013) at 306 [9-44]. 36 Carter, The Construction of Commercial Contracts, (2013) at 306 [9-44]. KIEFEL J. The facts and circumstances relevant to this appeal are set out in the joint reasons. For my purposes it is necessary to refer only to the more salient of them. Two instruments ("the Undertakings") were issued by the second respondent, Australia and New Zealand Banking Group Limited ("ANZ"), to the "New South Wales Land & Housing Department trading as Housing NSW ABN 45754121940 (The Principal)" at the request of Nebax Constructions Australia Pty Ltd ("Nebax"), a company of which the first appellant, Mr Simic, was a director. The Undertakings were each expressed to take effect as an unconditional promise to pay the named Principal a sum of money upon acceptance by the Principal of the Undertaking and upon its written demand. The circumstances giving rise to the issue of the Undertakings were the acceptance by the first respondent, the New South Wales Land and Housing Corporation ("the Corporation"), of Nebax's tender for building construction works to be carried out at 3-7 Karowa Street, Bomaderry, and the subsequent execution by Nebax and the Corporation of an agreement ("the Construction Contract"). It was a term of the Construction Contract that Nebax, if required, provide "security ... in the form of an unconditional undertaking to pay on demand, in a form and by a financial institution approved in writing by the Principal". The Corporation duly stated that it required security to the value of a particular sum and specified that the security was to be in the form of an enclosed draft "Unconditional Bankers Certificate". The draft identified the Corporation as the Principal to which the undertaking was to be addressed; however, as explained above, the actual Undertakings named the "Department" as the Principal. The discussions concerning the provision by ANZ of the Undertakings were conducted by Mr Simic, on behalf of Nebax, and Ms Adele Hanna, on behalf of ANZ. The Corporation took no part in these discussions. Mr Simic and Ms Hanna had previously had a number of dealings concerning Nebax's business. The primary judge, Kunc J, found37 that Ms Hanna knew that Nebax operated a construction business and regularly obtained contracts from various entities, including government departments, and that it was not unusual for ANZ to provide documents such as bank guarantees with respect to Nebax's construction contracts. That is not to say that the Undertakings were bank guarantees, despite the fact that they were referred to as such by Mr Simic and Ms Hanna and in some of the documentation provided by ANZ. They were not, as they did not involve any form of suretyship. 37 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [16]. The Undertakings came to identify the Principal as they did because of the instructions given by Mr Simic to Ms Hanna. Mr Simic told Ms Hanna that Nebax had obtained a contract from "Housing NSW" and that he required two "bank guarantees" made out to "New South Wales Land & Housing Department trading as Housing NSW". He provided her with an ABN for that entity. However, the primary judge found38 that he did not provide Ms Hanna with a copy of the Construction Contract or the draft form of undertaking originally provided by the Corporation. The two forms of "Indemnity and Application for Guarantee" ("the Indemnities") and the Undertakings produced by Ms Hanna all contained the name provided by Mr Simic. The so-called "Department" was identified in the Undertakings in two ways: as the Principal and the "Favouree" for the purposes of the Undertaking; and as the party to the contract between it and ANZ's customer, Nebax. As to the latter, one of the Undertakings contained the following request: "[ANZ] asks the Principal to accept this bank guarantee ('Undertaking') in connection with a contract or agreement between the Principal and Customer for Job Number: P0409021, Bomaderry – Design & Construct 3-7 Karowa Street. Contract No: BG2J8" The request in the other Undertaking was materially identical, except for a misspelling of the suburb as "Bombaderry". The primary judge found that Ms Hanna understood that the Undertakings were being entered into in relation to a construction contract to which Nebax was a party and that the job number, address and contract number in the Undertakings were references to that contract. Ms Hanna would have issued the Undertakings to the Corporation had she been given the correct name of "the Principal"39. Not only was the entity to which the Undertakings were addressed not the Corporation, it was a non-existent entity. There was no such Department. The inclusion of the wrong name was not the only error appearing in those instruments. The ABN was not that of the Corporation. Neither the job number nor the contract number there referred to matched those in the Construction Contract. The Undertakings did, however, identify the location of the works, albeit the name of the suburb was misspelt in one of the Undertakings. Despite 38 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [23]. 39 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [24]. these errors, the primary judge found40 that it was Nebax's and ANZ's common intention that the Undertakings were to support the Construction Contract The Principal for the purpose of the described in the Undertakings. Undertakings, so far as concerned Ms Hanna, was to be Nebax's counterparty to that contract. It would seem that the Corporation accepted the Undertakings from Nebax for the purposes of the Construction Contract. The Corporation then made demand for the monies the subject of the Undertakings but was met with a refusal by ANZ, on the ground that the Corporation was not the entity named as the Principal in those instruments. In proceedings brought in the Supreme Court of New South Wales, the Corporation made two claims as to ANZ's liability to pay the monies based upon the fact that the Corporation was the entity to which the Undertakings were intended to be addressed. It claimed that this fact could be determined as a matter of construction of the Undertakings, an argument which found favour with both the primary judge41 and the Court of Appeal (Bathurst CJ, Ward JA and Emmett AJA)42. The Corporation's alternative claim was for rectification of the mistake as to its name in the Undertakings. This claim was based upon an alleged intention, held by both it and ANZ, that the Undertakings were to be issued in the Corporation's favour. The construction of the Undertakings The terms of the Undertakings and the entity to which they were addressed did not oblige ANZ to pay the Corporation on its demands. To the contrary, as the joint reasons explain (at [90]), to have paid the Corporation would have put ANZ at risk of breaching its agreements with Nebax. ANZ was obliged only to pay the amount specified to the entity named in the Undertakings, upon production of the original Undertakings and a demand for payment. No process of construction could effect the inclusion of the Corporation's name in lieu of the name appearing in the Undertakings. ANZ was not obliged to enquire into the background giving rise to the error of identification, which was not evident from the Undertakings themselves. 40 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [92]. 41 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [92], [96]. 42 Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413 at Rectification The resolution of this matter lies in the equitable remedy of rectification, which will be provided to overcome common mistake by making an instrument conform either to a concluded antecedent agreement or to the continuing concurrent intention of the parties to the instrument43. This case was not decided by the courts below on the basis of rectification, but the reasons for judgment contain observations as to that claim. Neither the primary judge nor the Court of Appeal accepted the Corporation's submission that it was the concurrent intention of the Corporation and ANZ which was relevant to the question of rectification. The primary judge considered44 the relevant intention to be that of Nebax and ANZ, which is to say Mr Simic and Ms Hanna. In the Court of Appeal, Emmett AJA (with whom Bathurst CJ and Ward JA agreed) observed45 that the Undertakings were issued by ANZ at the behest of Nebax, not the Corporation. On the other hand, his Honour observed, they were expressed as an agreement between ANZ and the Principal. In this regard, the Undertakings provided that: "In consideration of the Principal accepting this Undertaking and its terms, ANZ undertakes unconditionally to pay the Principal on written demand …" contractual principles, particularly The Corporation submits that it was a party to the Undertakings and that they took effect as contracts between it and ANZ. It submits that despite "difficulties reconciling performance bonds and letters of credit with some traditional consideration, commercial entities and the courts have long accepted that performance bonds and letters of credit are enforceable contracts between the beneficiary and the issuing bank". In this regard it may be observed that in United City Merchants (Investments) Ltd v Royal Bank of Canada, Lord Diplock considered46 that a letter of credit gave rise to a contract between the bank and seller (ie, the regarding 43 Fowler v Fowler (1859) 4 De G & J 250 at 265 [45 ER 97 at 103]; Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 346, 349-350; [1973] HCA 23; Pukallus v Cameron (1982) 180 CLR 447 at 452, 456; [1982] HCA 63. 44 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [91]. 45 Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413 46 United City Merchants (Investments) Ltd v Royal Bank of Canada [1983] 1 AC 168 beneficiary of the letter of credit), under which the bank undertook to pay the seller against provision of the stipulated documents. As his Lordship explained, the law gave to the seller an assured right to be paid before parting with control of the goods – a right that did not admit of a dispute with the buyer even where the buyer alleges non-performance of the underlying contract of sale. The appellants' argument as to the status of the Corporation as a relevant "party" for the purposes of rectification also had regard to the nature of the Undertakings. It relies upon the primary judge's view47 that they were unilateral contracts. According to Lord Diplock's definition in United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd48, a contract is unilateral in circumstances where, although the promisor undertook to do something if the promisee did something (or did not), the promisee did not itself undertake to do or to refrain from doing that thing. The cases relied upon by the Corporation, the appellants submit, do not involve unilateral contracts but, rather, synallagmatic contracts. Although the term "synallagmatic contract" has sometimes been used in common law cases to refer to bilateral contracts, such as contracts of sale, it is perhaps best understood in a civil law context, where it more clearly refers to a contract in which the parties obligate themselves reciprocally49, without the complication of the doctrine of consideration. There is an alternative view to the unilateral vs bilateral characterisation of letters of credit and performance bonds. It is that the common law has generally regarded them as sui generis50. However, none of these considerations are relevant to the question of rectification. The characterisation of the Undertakings may have relevance to the enforcement of them as between the Corporation and ANZ, but that is not the issue presently under consideration. The present issue involves the question whether there was a mistake made in the identification of the Principal in the 47 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [69]. 48 [1968] 1 WLR 74 at 83; [1968] 1 All ER 104 at 109. 49 See eg Farnsworth, "Comparative Contract Law", in Reimann and Zimmermann (eds), The Oxford Handbook of Comparative Law, (2008) 899 at 910, 925; Zimmermann, The Law of Obligations, (1996) at 811. 50 See eg Ellinger and Neo, The Law and Practice of Documentary Letters of Credit, (2010) at 111; Mugasha, The Law of Letters of Credit and Bank Guarantees, Undertakings, brought about by Ms Hanna's preparation of those instruments on the erroneous instructions of Mr Simic. It is those persons' intentions, and therefore those of ANZ and Nebax, which are relevant to the question whether there was a common mistake and whether the instruments should be rectified. Their to questions of characterisation. intentions can be determined without resort The primary judge did not accept51 ANZ's contention that rectification was not possible because Ms Hanna's subjective intention was simply to issue a guarantee in whatever name she was given by Mr Simic. His Honour said52 that although Ms Hanna was indifferent to the precise identity of the beneficiary of the Undertakings, her intention was the same as Mr Simic's – to provide support for Nebax's compliance with the Construction Contract. In this appeal the appellants repeated ANZ's argument and submitted that ANZ had no intention other than to issue the Undertakings in accordance with its instructions. It followed that ANZ could not be said to have made a mistake in describing the Principal in the Undertakings. The primary judge adopted as correct what was said in Elders Lensworth Finance Ltd v Australian Central Pacific Ltd53 concerning the principles to be applied with respect to the remedy of rectification. In that case the Full Court of the Supreme Court of Queensland drew largely on what had been said by Street J in Australasian Performing Right Association Ltd v Austarama Television Pty Ltd54 and by Wilson J in Pukallus v Cameron55. In Street J's view56, what is necessary for rectification is to find an "identical corresponding contractual intention on each side" which was "manifested by some act or conduct". From such facts may be inferred "objectively a consensual relationship between the parties". 51 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [91]. 52 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [91]-[92]. 53 [1986] 2 Qd R 364 at 367-368. 54 [1972] 2 NSWLR 467. 55 (1982) 180 CLR 447 at 452. 56 Australasian Performing Right Association Ltd v Austarama Television Pty Ltd [1972] 2 NSWLR 467 at 473. It has for some time been settled law that the existence of an antecedent agreement is not essential to the grant of relief by way of rectification and that rectification may be granted in cases where the instrument sought to be rectified is the only agreement between the parties57. The focus of the courts turned to the common intention of the parties up to the time the relevant instrument was made. That intention must be proved by admissible evidence and proved to a high standard. In a passage from Fowler v Fowler58, which has been cited with approval by this Court59, Lord Chelmsford said that: "a person who seeks to rectify a deed upon the ground of mistake must be required to establish, in the clearest and most satisfactory manner, that the alleged intention to which he desires it to be made conformable continued concurrently in the minds of all parties down to the time of its execution". What is necessary to be shown is the actual intention of each of the parties. This has often been referred to by intermediate appellate courts as the subjective intention of the parties60. A court, in determining whether the burden of proof is discharged, may be said to view the evidence of intention objectively, in the sense that it does not merely accept what a party says was in his or her mind, but instead considers and weighs admissible evidence probative of intention. It is in this sense that statements such as that of Hodgson J in Bush v National Australia Bank Ltd61, that common continuing intention "must be objectively apparent from the words or actions" of each party, may be understood. It is not to be expected that parties to contractual negotiations will express themselves in terms of their intentions. It is therefore to be expected that proof to the necessary standard will usually require some manifestation of the intention of 57 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 350. 58 (1859) 4 De G & J 250 at 265 [45 ER 97 at 103]. 59 Australian Gypsum Ltd and Australian Plaster Co Ltd v Hume Steel Ltd (1930) 45 CLR 54 at 64; [1930] HCA 38; Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 349; Pukallus v Cameron (1982) 180 CLR 447 at 457. 60 See eg Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at 657 [267]; Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382 at 405 [107]; Newey v Westpac Banking Corporation [2014] NSWCA 319 at [175]; Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd (2014) 48 WAR 261 at 283 [134]; Mayo v W & K Holdings (NSW) Pty Ltd (in liq) (No 2) [2015] NSWCA 119 at [58]; RCR Tomlinson Ltd v Russell [2015] WASCA 154 at [53]. 61 (1992) 35 NSWLR 390 at 406. each party by their words or conduct and that the requisite common intention will be a matter of inference for the court from that evidence. As Yeldham J pointed out in Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd62, it would not be sufficient for proof of intention to refer to a party's state of mind which remained undisclosed in the course of negotiations. Yeldham J also observed63 that there was some divergence of judicial and academic opinion as to whether more was required for proof of intention and, in particular, whether intention must be evidenced by "some outward expression of accord", as was suggested in Joscelyne v Nissen64. Further, in Maralinga Pty Ltd v Major Enterprises Pty Ltd, Mason J referred to65 what had been said by Buckley LJ in Lovell and Christmas Ltd v Wall66, namely that it was necessary for rectification to find that intention "was communicated by one side to the other". In Pukallus v Cameron67 it was not necessary to resolve the question as to what was required to prove intention, but Wilson J was moved to suggest68 that, notwithstanding the views expressed in Joscelyne v Nissen and Maralinga, it may not be necessary to prove an outward expression of accord. His Honour appears to have preferred the view expressed in an article69, that the requirement of an outward expression of accord was not justified by principle or authority. On this view, the absence of an outward expression of accord may go to whether the burden of proof can be discharged, but an outward expression of accord is not itself a requirement of rectification70. 62 [1981] 1 NSWLR 429 at 431. 63 Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd [1981] 1 NSWLR 429 at 431. 64 [1970] 2 QB 86 at 98. 65 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 349-350. 66 (1911) 104 LT 85 at 93. 67 (1982) 180 CLR 447. 68 Pukallus v Cameron (1982) 180 CLR 447 at 452. 69 Bromley, "Rectification in Equity", (1971) 87 Law Quarterly Review 532 at 537. 70 Bromley, "Rectification in Equity", (1971) 87 Law Quarterly Review 532 at 538. Regardless of these issues it may be said that the traditional approach of the courts, following cases such as Fowler v Fowler, is to grant rectification only if the instrument in question did not reflect the actual common intention of the parties. That intention is proved in the usual way, by admissible evidence to the requisite standard. The assessment undertaken by the court may, in the sense referred to above, be described as an objective one. But the term "objective" is apt to be misunderstood because it can be applied with respect to a quite different process, as the decision in Chartbrook Ltd v Persimmon Homes Ltd71 shows. In Chartbrook, Lord Hoffmann suggested72 that, in cases of rectification, "the terms of the contract to which the subsequent instrument must conform must be objectively determined in the same way as any other contract". The approach to which his Lordship referred was that applied under the common law to the interpretation of contracts, namely, "what an objective observer would have thought the intentions of the parties to be". His Lordship clearly considered a consistency of approach – to rectification and to interpretation – to be both warranted and necessary. Lord Hoffmann's view involves a departure from the traditional approach of the courts to rectification. Its utility has been questioned. It has been observed73 that it is difficult to see why a prior agreement, objectively determined, should override the later instrument, unless it reflects the parties' actual intentions. The need for consistency which his Lordship thought desirable may also be questioned. Rectification is an equitable remedy which is concerned with a mistake as to an aspect of what an instrument records and with the conscience of the parties. The common law, on the other hand, deals with the interpretation of the words chosen by the parties to reflect their agreement and it does so pragmatically, by reference to considerations such as business efficacy. It is not necessary to express a concluded opinion on these and other matters to which Lord Hoffmann's view gives rise. Although that aspect of Lord Hoffmann's reasons commanded the assent of other members of the House of Lords, it was not necessary to the decision in Chartbrook. Moreover, whilst other aspects of the reasons in that case have been referred to in some recent decisions of this Court74, his Lordship's view in this regard has not been the 72 Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101 at 1126 [59]-[60]. 73 McGhee, Snell's Equity, 33rd ed (2015) at 426. 74 Byrnes v Kendle (2011) 243 CLR 253 at 284-285 [98]-[99]; [2011] HCA 26; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 135 [121]; [2015] HCA 37; Paciocco v Australia & New Zealand Banking Group Ltd (2016) 90 ALJR 835 at 876 [242]; 333 ALR 569 at 621; [2016] HCA 28. subject of any consideration. It was not the subject of argument in this appeal, which should be approached by reference to settled principle. It is not correct to say that Ms Hanna had no intention with respect to the identity of the Principal the subject of the Undertakings. True it is that she did not know who that entity was and relied upon Mr Simic for that information, but she understood that it was to be the counterparty to the Construction Contract. The inference to be drawn as to her intention may be tested by an enquiry: if Ms Hanna had been asked at the time she executed the Undertakings on behalf of ANZ who the Principal was, other than by reference to the name given, she would have identified it as Nebax's counterparty to the Construction Contract, which of course was the Corporation. The Undertakings, and the Indemnities, should be rectified so that the Corporation is named as the Principal in the Undertakings and as the Favouree in the Indemnities. I agree with the orders proposed in the joint judgment. NettleJ GAGELER, NETTLE AND GORDON JJ. The second respondent ("ANZ"), on the instructions of the third respondent ("Nebax"), issued two instruments, each in the form of an unconditional promise to pay ("Undertakings"), in favour of a named "Principal" that did not exist. The first respondent, the New South Wales Land and Housing Corporation ("the Corporation"), made a demand for payment under each Undertaking. ANZ did not pay on the demands because the Corporation was not the named "Principal". Is it possible, as a matter of construction, to regard the Undertakings as being in favour of the Corporation, instead of a named "Principal" that did not exist? If the answer is "no", should the Undertakings be rectified so that each is in favour of the Corporation? For the reasons that follow, it is not possible to construe the Undertakings as being in favour of the Corporation. However, the Undertakings (as well as the underlying finance applications) should be rectified so that each refers to the Corporation. It follows that ANZ was bound to pay on the demands and that the appellants, as guarantors of the obligations of Nebax (the customer that sought the issue of the Undertakings), were bound to pay ANZ the amount it was bound to pay. The appellants' appeal to this Court should be allowed, special leave to cross-appeal should be granted to the Corporation and to ANZ and each of those cross-appeals should be allowed. Facts By a letter dated 4 March 2010, the Corporation awarded Nebax the tender to demolish existing buildings and construct unit blocks at 3-7 Karowa Street, Bomaderry, identified in that letter as "JOB NO BG2J8 C-71561". The letter went on to state: "In accordance with clause 5 of the General Conditions of Contract and Special Condition 39, the Principal requires security in the sum of $146,965.06. Please provide original Bankers Certificate(s) totalling this amount at the time of the execution of the Contract documents. I enclose the Principal's form of Bankers Certificate of Undertaking to be used. The option of providing security by retention from progress payment is not available. The Certificate is to be executed under the Bank's Power of Attorney." A draft of the "Unconditional Bankers Certificate" was enclosed and was addressed as follows: NettleJ "TO: NEW SOUTH WALES LAND AND HOUSING CORPORATION (ABN 24 960 729 253) trading as Housing NSW (ABN 45 754 121 940) 223-239 Liverpool Road, Ashfield (hereinafter called 'the Principal')" The draft also stated that it was a security deposit by Nebax and referred to "JOB NO: BG2J8 C-71561 - BOMADERRY (3-7 Karowa Street) - MATTER NO: 20092540". On 4 March 2010, the Formal Instrument of Agreement Contract No: 51384 ("the Construction Contract") was executed. The Corporation was defined as the "Principal" and described as "NEW SOUTH WALES LAND AND HOUSING CORPORATION (ABN 24 960 729 253) a statutory authority constituted pursuant to section 6(1) of the Housing Act 2001 and having its principal office at 223-239 Liverpool Road, Ashfield in the State of New South Wales". Recital A recorded that Nebax had tendered for "Job No BG2J8 The Construction Contract incorporated General Conditions of Contract for Design and Construct (AS 4902-2000) and Standard Special Conditions of Contract. Standard Special Condition 39 deleted cl 5 from the General Conditions of the Construction Contract and relevantly substituted it with the following: the obligations of the Contractor under "If required, security must be provided by the Contractor for the purpose of ensuring the due and proper performance of the Contract and of satisfying the Contract. If required, security must be in the form of an unconditional undertaking to pay on demand, in a form and by a financial institution approved in writing by the Principal. Insurance bonds, cheques or cash are not acceptable. For the purpose of giving unconditional undertakings, the Principal has approved banks, building societies and credit unions listed by the Australian Prudential Regulation Authority ('APRA') as being regulated by APRA." (emphasis added) Mr Simic, a director of Nebax, went to the Caringbah branch of ANZ and told an employee (Ms Hanna) that Nebax had "just obtained a contract from Housing NSW" and needed two bank guarantees "made out to New South Wales Land & Housing Department trading as Housing NSW". Mr Simic gave Ms Hanna the details to enable her to generate the Undertakings using a computer template. Mr Simic did not give Ms Hanna a copy of the Construction Contract or a copy of the draft Unconditional Bankers Certificate. NettleJ Two forms of indemnity and application for guarantee ("the applications") were completed by Ms Hanna and signed by Mr Simic, on behalf of Nebax, and provided to and retained by ANZ. Each application requested ANZ to execute the security to facilitate Nebax's business transactions with "New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940". Each application stated that: "If I/we provide the guarantee to the named Favouree or Principal then by this act I/we acknowledge that the details on the guarantee are entirely to my/our satisfaction." The Undertakings, signed by Ms Hanna on behalf of ANZ, were handed to Mr Simic, who subsequently provided them to the Corporation. The Undertakings relevantly included the following75: Favouree To: New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940 (The Principal) Business name or trading name For: Nebax Constructions Australia Pty Ltd ACN 101054068 (The Customer) Description of contract/agreement [ANZ] asks the Principal to accept this bank guarantee ("Undertaking") in connection with a contract or agreement between the Principal and Customer for Job Number: P0409021, Bomaderry - Design & Construct 3-7 Karowa Street. Contract No: BG2J8 Amount In consideration of the Principal accepting this Undertaking and its terms, ANZ undertakes unconditionally to pay the Principal on written demand from time to time any sum or sums up to an aggregate amount not exceeding 73,482.53 AUD ("Amount") ANZ will pay the Amount or any part of it to the Principal upon presentation of this original Undertaking (accompanied by a written demand) at any ANZ branch located within Australia without reference to the Customer and even if the Customer has given ANZ notice not to pay the performance or non-performance of the Customer or Principal under the terms of the the money, and without regard 75 The description of the location of the works under the Construction Contract was incorrectly described as "Bombaderry" in only one of the Undertakings. Similarly, the words "Trading As" were capitalised in only one of the Undertakings. It was not suggested, however, that any significance should be attributed to these discrepancies. NettleJ contract or agreement. By accepting this Undertaking, the Principal acknowledges and agrees that ANZ may rely entirely on any demand or notice as presented to it and has no responsibility or obligation to investigate the authenticity or correctness of the matters stated in a demand or notice, the signatures on the same, the positions of such signatories or the capacity or entitlement of the Principal to give and execute the demand or notice. This Undertaking remains in force until the first to occur of:-: * The Principal notifies ANZ in writing that the Undertaking is no longer required. * This original Undertaking is returned to ANZ. * ANZ has paid to the Principal the Amount or the balance outstanding of the Amount. This Undertaking is personal to the Principal. The Principal cannot assign, transfer, charge or otherwise deal with its rights under this Undertaking and ANZ will not recognise any purported assignment, transfer, charge or other dealing. This Undertaking will be governed by the laws of New South Wales ("Governing Jurisdiction") (emphasis in original) There were problems with the Undertakings. The "Favouree" of each Undertaking, also defined as the "Principal", was expressed to be "New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940". That was an error. There was no, and never has been any, government department called the "New South Wales Land & Housing Department". As the document enclosed with the letter of 4 March 2010 showed, the party to be named as Favouree was "New South Wales Land and Housing Corporation". It was that corporation that was intended to be a party to and have the benefit of each Undertaking. As a result of those errors, the applications that Nebax made to ANZ were not for an instrument in favour of the Corporation, and the instruments that ANZ issued were not in favour of the Corporation. The Undertakings were issued to a (non-existent) "Department" and the only ABN quoted was not the ABN of times, the Corporation. The Corporation's ABN was, at all relevant NettleJ "24 960 729 253". The ABN referred to in the Undertakings was never the ABN of the Corporation itself. It was the ABN for the trading name "Housing NSW", although it is significant that the Corporation had traded as "Housing NSW" at least between October 2009 and April 201076. That ABN was cancelled on 1 July 2010. The references the Construction Contract were also wrong. The Undertakings stated that they related to "Job Number: P0409021". That reference does not appear in the Construction Contract. The "Job Number" in the Construction Contract was "BG2J8 C-71561". Equally, the "Contract Number" in the Undertakings (BG2J8) does not match the "Contract Number" in the Construction Contract (51384), although BG2J8 is part of the "Job Number". The location (Bomaderry) is misspelt in one of the Undertakings. On 2 October 2013, the Corporation sought to make a demand on ANZ for payment under each Undertaking. ANZ disputed that the Corporation was entitled to claim the benefit of Undertakings issued in favour of another named entity and refused to accept that a call had been made. On 5 February 2015, a solicitor for the Corporation presented the original Undertakings and a written demand at a branch of ANZ. ANZ did not pay out on the demand and the solicitor took the Undertakings away. Decisions below The Corporation issued proceedings in the Supreme Court of New South Wales seeking a declaration that the description of the "Principal" should be construed as referring to the Corporation or an order that each Undertaking be rectified by substituting the name of the Corporation for the named "Principal". The primary judge made the declaration sought by the Corporation77. His Honour added that, although it was unnecessary to deal with the rectification claim, he considered that the pre-requisites for the making of an order for rectification were satisfied and that, if necessary, he would have ordered that the Undertakings be rectified. The primary judge directed the entry of judgment for the Corporation against ANZ in the sum of $146,965.06. His Honour declared that ANZ was entitled to be indemnified by Nebax for that amount and made 76 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [15]. 77 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [96]. NettleJ further declarations that the appellants were liable to ANZ under various arrangements between the appellants and ANZ. The appellants appealed to the Court of Appeal of the Supreme Court of New South Wales. The two questions raised by the appeal were whether the primary judge erred in construing the Undertakings as referring to the Corporation and, if so, whether the Undertakings should be rectified by correcting the name of the "Principal" to refer to the Corporation. Emmett AJA (with whom Bathurst CJ and Ward JA agreed) concluded that, although carelessness or lack of diligence on the part of the Corporation led the Corporation to accept the Undertakings, there had not been and could not be any suggestion that the description of the "Principal" in the Undertakings was capable of referring to any entity other than the Corporation78. On the proper construction of the Undertakings, the defined "Principal" meant the Corporation79 and, it followed, "once the Corporation had furnished to ANZ indisputable evidence that it was the entity that was a party, as 'Principal', to the contract or agreement with Nebax described in the Undertakings, there was no basis upon which ANZ would be entitled to refrain from meeting the demand"80. Emmett AJA did not deal with the question of rectification but expressed some reservations about the primary judge's conclusion81. Applicable construction principles The Undertakings are in writing. ANZ accepts that it is bound to honour the Undertakings according to their terms. The Undertakings contain a contractual promise to pay, not under seal. They are contracts, although of a specific kind. When and how a contractual promise to pay, not under seal, in favour of a named principal establishes a binding contract has been the subject of 78 Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413 at 79 Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413 at 80 Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413 at 81 Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413 at NettleJ debate and discussion since at least the first half of the 20th century82. For present purposes, however, that debate and discussion may be put to one side. Consistent with established banking practice83, no party contended that the Undertakings were to be construed otherwise than in accordance with ordinary principles of contract construction. There was also no dispute about those principles of construction. The proper construction of each Undertaking is to be determined objectively by reference to its text, context and purpose84. As was stated in Electricity Generation Corporation v Woodside Energy Ltd85: "[T]he objective approach [is] to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract to be determined by what a reasonable businessperson would have understood those terms to mean. … [I]t will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd [[2009] EWCA Civ 636 at [28]], unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties … intended to produce a commercial result'. A commercial contract is to be construed so as to 'making commercial nonsense or working commercial avoid inconvenience'." (footnotes omitted) 82 See, eg, Malek and Quest, Jack: Documentary Credits, 4th ed (2009) at 92-95 83 See, eg, Hamzeh Malas & Sons v British Imex Industries Ltd [1958] 2 QB 127 at 84 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656-657 [35]; [2014] HCA 7; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at 116-117 [46]-[52]; [2015] HCA 37. 85 (2014) 251 CLR 640 at 656-657 [35]. NettleJ Proper construction of the Undertakings The starting point for the proper construction of the Undertakings is the language used in each Undertaking86. Each Undertaking was an unconditional obligation to pay a named beneficiary upon demand, in the nature of a performance bond87. No party to either Undertaking was involved in any obligations or rights of suretyship88. The beneficiary was defined in each Undertaking as the "Principal". Each Undertaking expressly provided the "Principal" accepting the Undertaking and its terms, ANZ unconditionally promised to pay that "Principal", on written demand, an amount not exceeding $73,482.53. in consideration of that, Each Undertaking recorded that ANZ asked the "Principal" to accept the Undertaking "in connection with" an identified "contract or agreement". But ANZ assumed a primary obligation, not a secondary obligation. ANZ was obliged to pay a stipulated amount without regard to the performance or non-performance of any party to that "contract or agreement". Further, each Undertaking expressly stated that "[a]ny alterations to the terms of the contract or agreement or any extensions of time or any other forbearance by [either party to the contract or agreement] will not impair or discharge ANZ's liability under the Undertaking". As has been explained, the "Principal", as defined in the opening paragraph of each Undertaking, did not exist; and for the reasons that follow, it is not open to construe "New South Wales Land & Housing Department" where it appears as the "Principal" in each Undertaking as referring to the Corporation. First, the Corporation and a "department" of the New South Wales Government are legally distinct. The Corporation is a statutory corporation that can sue and be sued in its own name89. By contrast, a department of the New South Wales Government is an emanation of the Crown in the right of the State of New South Wales, and thus an action to enforce a contract made in the name of a department of the New South Wales Government is governed by s 5 of the 86 Mount Bruce Mining (2015) 256 CLR 104 at 118 [59]. 87 Hapgood, Paget's Law of Banking, 10th ed (1989) at 652-653. 88 Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 443 at 445; [1979] HCA 21. 89 See s 6 of the Housing Act 2001 (NSW). NettleJ Crown Proceedings Act 1988 (NSW) and brought in the name of "State of New South Wales". Second, although the "contract or agreement" referred to in the third paragraph of each Undertaking provides a link to the Corporation which, as will be seen, is significant for the purposes of rectification, it is either irrelevant or of no assistance for the purposes of construction. That is because, subject to fraud perpetrated by a beneficiary, an instrument of this nature (unconditional promise to pay on demand) is independent of any underlying transaction and any other contract90. That principle – the principle of autonomy – reflects that those instruments, by their nature, stand alone. Not only are they equivalent to cash91, but, by their terms, they also require that the obligations of the issuer are not determined by reference to the underlying contract. The principle of autonomy dictates that the surrounding circumstances and commercial purpose of the Construction Contract are different from those of the Undertakings92. Here, that conclusion is fortified by the fact that there was no contract or agreement "between the Principal and [Nebax] for Job Number: P0409021, Bomaderry - Design & Construct 3-7 Karowa Street. Contract No: BG2J8". That was another error. The Construction Contract had a different job number and a different contract number and, in one of the Undertakings, the location was misspelt. Third, the inability to construe the "Principal" named in each Undertaking as the Corporation is impelled by the commercial purpose or objects of such an instrument. Although banking instruments are often not consistently described, for present purposes two categories are relevant – letters of credit or documentary credits, and performance bonds or guarantees. Both involve an undertaking, usually by a bank, to make payment on satisfaction of certain conditions93. The difference lies in their commercial uses. The former category represents the method of payment of the price of goods. The latter category, of which each Undertaking is one, is generally given "for the purpose of providing 90 See Wood Hall (1979) 141 CLR 443 at 445. 91 See McCracken et al, Everett and McCracken's Banking and Financial Institutions Law, 8th ed (2013) at 399 [11.060]. 92 Griffin Energy Group Pty Ltd v ICICI Bank Ltd (2015) 317 ALR 395 at 410 [47] citing Electricity Generation Corporation (2014) 251 CLR 640 at 656-657 [35]. 93 See McCracken et al, Everett and McCracken's Banking and Financial Institutions Law, 8th ed (2013) at 392 [11.001]. NettleJ compensation if work is not done, rather than as payment for the work actually done"94. Under the latter form of security, the issuer (here, ANZ) is not required or intended to be concerned with the terms of the underlying contract (here, the Construction Contract) or, subsequently, with whether the construction contractor (here, Nebax) has sufficiently performed its obligations under that contract. The issuer's sole concern is to provide security in accordance with its contract with its customer (here, Nebax) and, when the security is issued, to see whether there has occurred the event stipulated in the instrument on which the issuer's obligation to pay arises95. In effect, such securities "create a type of currency"96 and are treated as being "as good as cash"97. Instruments of this nature are essential to international commerce and, in the absence of fraud, should be allowed to be honoured free from interference by the courts98. Fourth, the inability to construe the named "Principal" as referring to the Corporation is necessitated by commercial reality. In issuing a banking instrument of this nature, the issuer relies upon, and acts in accordance with, the instructions of the applicant, and is contractually bound to do so. Here, Mr Simic provided the information for Ms Hanna to complete the applications and he instructed ANZ to issue the Undertakings in the form in which they were issued. The fact that the applications were completed based on incorrect instructions did not alter ANZ's contractual relationship with Nebax. ANZ was asked to provide security in the form of the Undertakings that it in fact issued consistent with its contractual arrangements with Nebax. ANZ followed the incorrect instructions provided by Nebax and the Undertakings recorded those incorrect instructions. Unless and until it is rectified, ANZ would be at risk of acting in breach of contract if, contrary to Nebax's express instructions, it were to treat the instrument as referring to the Corporation. 94 McCracken et al, Everett and McCracken's Banking and Financial Institutions Law, 8th ed (2013) at 392 [11.001]; see also at 419-421 [11.320]-[11.330]. 95 Edward Owen Engineering Ltd v Barclays Bank International Ltd [1978] QB 159 at 171-172; Hapgood, Paget's Law of Banking, 10th ed (1989) at 652-653. 96 Westpac Banking Corporation v Commonwealth Steel Co Ltd [1983] 1 NSWLR 97 Wood Hall (1979) 141 CLR 443 at 457-458. 98 See Edward Owen Engineering [1978] QB 159 at 171-172. NettleJ Each Undertaking was personal to the "Principal". The "Principal" could not assign, transfer, charge or otherwise deal with its rights under the Undertaking. Nor was it possible for the "Principal" to do what was required under each instrument – accept the Undertaking. As the Undertaking expressly stated, by accepting the Undertaking, the "Principal" acknowledged and agreed that ANZ could rely entirely on any demand or notice as presented to it and had no responsibility or obligation to investigate the matters stated in the demand or notice. As the facts of this case illustrate, the "Principal" could not accept the Undertaking and make it personal to it as the "Principal" did not exist. Under the terms of the Undertaking, ANZ was only required to pay the amount to the "Principal" upon presentation of two documents – the original Undertaking and a written demand – at any branch of ANZ within Australia. The "Principal" could not provide a written demand to ANZ because it did not exist. Fifth, after the Undertakings were issued, Mr Simic took them to the Corporation. Upon receipt of the Undertakings, the Corporation should have been able to determine whether each Undertaking satisfied the requirement that Nebax provide security under the Construction Contract and, if it did not, to take appropriate steps under the Construction Contract at that point. If the Corporation had properly reviewed the Undertakings and identified that the named "Principal" was wrong, as well as the other errors or discrepancies, the Corporation could at that point have refused to accept the Undertakings as satisfying the security requirement under Standard Special Condition 39 of the Construction Contract and requested Nebax to provide security that complied or conformed with the Construction Contract99. That was not the only available step either. The Construction Contract provided that if Nebax did not provide security in accordance with Standard Special Condition 39 of the Construction Contract, the Corporation could have given Nebax notice to show cause for a breach of the Construction Contract (Standard Special Condition 51). Nebax would have then been required to show cause why the Corporation should not remove Nebax as contractor or terminate the Construction Contract (General Condition 39.3) and, if Nebax failed to show "reasonable cause", the Corporation could have removed Nebax as contractor or terminated the Construction Contract (General Condition 39.4). 99 See Adodo, Letters of Credit: The Law and Practice of Compliance, (2014) at 66-74 [3.01]-[3.19], especially at 68 [3.05]. NettleJ The evidence in this matter did not disclose what occurred when the Corporation received the Undertakings. It is therefore not possible to address the legal consequences of the apparent failure of Nebax to provide security in accordance with its obligations under the Construction Contract or the "carelessness or lack of diligence on the part of the Corporation"100 in reviewing the Undertakings. But nor is it necessary to do so. What is important for present purposes is, as Dolan states101, to recognise that, from a commercial and banking perspective, it is more efficient to require the Principal to conduct the review of the security before performance than after it and if the Principal acts without seeing or examining the security, the Principal should bear the costs. Finally on this aspect of the matter, it is necessary to say something about the principle of strict compliance – that an issuer (like a bank) should only accept documents that comply strictly with the requirements stipulated in an instrument of this nature. The principle is fundamental to the efficacy and dependability of banking instruments such as the Undertakings. As Viscount Sumner said in Equitable Trust Company of New York v Dawson Partners Ltd102: "It is both common ground and common sense that in such a transaction the accepting bank can only claim indemnity if the conditions on which it is authorised to accept are … strictly observed. There is no room for documents which are almost the same, or which will do just as well. Business could not proceed securely on any other lines." The commercial realities of the principle are apparent. In this matter, each Undertaking was able to be presented at any ANZ branch. In Equitable Trust Company, where the instrument was able to be presented abroad, Viscount Sumner explained the commercial realities (and practicalities) in these terms103: "The bank's branch abroad, which knows nothing officially of the details of the transaction thus financed, cannot take upon itself to decide what will do well enough and what will not. If it does as it is told, it is safe; if it declines to do anything else, it is safe; if it departs from the conditions laid down, it acts at its own risk." 100 Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413 at 101 Dolan, The Law of Letters of Credit, 2nd ed (1991) at 6-9 [6.03]. 102 (1927) 27 Ll L Rep 49 at 52. 103 (1927) 27 Ll L Rep 49 at 52. NettleJ As the primary judge and Emmett AJA correctly concluded, the principle of strict compliance applies after the instrument has been construed104, and it is not a rigid rule. It must be applied intelligently, not mechanically105; the issuer must exercise its own judgment about whether the requirements stipulated in the instrument have been satisfied. Nevertheless, as each Undertaking expressly stated, ANZ was not required to make inquiries or investigate further. And it did not. An officer of ANZ inspected the documents tendered, looked at the named "Principal" in each Undertaking, looked at the demand and refused to meet the call for payment under each Undertaking. The demand did not comply with the Undertaking. The discrepancies and errors were not minor or merely typographical. At the time of compliance, consistent with the principle of strict compliance, it was not possible for ANZ to accept a demand from the Corporation. For those reasons, the definition of "Principal" in each Undertaking should not be construed as referring to the Corporation. Rectification Although it is not possible to construe the definition of "Principal" as referring to the Corporation, in the unusual circumstances of this case it is appropriate to rectify the applications completed by Nebax and the Undertakings that were then issued by ANZ. Rectification is an equitable remedy, the purpose of which is to make a written instrument "conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately"106. For relief by rectification, it must be demonstrated that, at the time of the execution of the written instrument sought to be rectified, there was an "agreement" between the parties in the sense that the parties had a "common 104 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [84]; Simic v New South Wales Land and Housing Corporation [2015] NSWCA 413 at [100]. 105 Fortis Bank SA/NV v Indian Overseas Bank [2010] 1 Lloyd's Rep 227 at 231 [33]. 106 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 350; [1973] HCA 23. See also Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 346; [1982] HCA 24. NettleJ intention", and that the written instrument was to conform to that agreement107. Critically, it must also be demonstrated that the written instrument does not reflect the "agreement" because of a common mistake108. Unless those elements are established, the "hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties" cannot be displaced109. The issue may be approached by asking – what was the actual or true common intention of the parties110? There is no requirement for communication of that common intention by express statement111, but it must at least be the parties' actual intentions, viewed objectively from their words or actions, and must be correspondingly held by each party112. However, here there was such communication, and as is apparent from the primary judge's findings, all parties to the transaction intended that the Undertakings should enure to the benefit of the party with which Nebax entered into the Construction Contract. It was Mr Simic's intention, and, therefore, Nebax's intention, that the Undertakings should operate in favour of Nebax's counterparty to the Construction Contract. Similarly, it was Ms Hanna's understanding, and, therefore, ANZ's understanding, that the Undertakings were to be entered into in relation to the Construction Contract. Granted, Mr Simic misdescribed the Construction Contract to Ms Hanna as "Job Number: P0409021, Bomaderry - Design & Construct 3-7 Karowa Street. Contract No: BG2J8". But, despite Mr Simic's misdescription of the Construction Contract, it is not suggested that there was ever more than one contract for the Design and Construct of 3-7 Karowa Street or that the contract 107 Slee v Warke (1949) 86 CLR 271 at 281; [1949] HCA 57; Maralinga (1973) 128 CLR 336 at 350-351. 108 Maralinga (1973) 128 CLR 336 at 350-351. 109 Maralinga (1973) 128 CLR 336 at 350-351. 110 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at 642 [182], [185]. 111 Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd [1981] 1 NSWLR 429 at 431; Bush v National Australia Bank Ltd (1992) 35 NSWLR 390 at 405-406. 112 Bush v National Australia Bank Ltd (1992) 35 NSWLR 390 at 405-406. NettleJ for the Design and Construct of 3-7 Karowa Street was ever anything other than the Construction Contract113. As the primary judge found, Mr Simic, and, therefore, Nebax, made a further mistake in informing Ms Hanna of the name of Nebax's counterparty to the Construction Contract. Mr Simic erroneously stated that the name of the counterparty was "New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940". That error was repeated in the applications prepared by Ms Hanna and signed by Mr Simic. Ms Hanna, and therefore ANZ, then unwittingly perpetuated the mistake by including the name "New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940" as the name of the counterparty in the Undertakings produced pursuant to the applications114. However, Nebax told ANZ, and therefore ANZ knew, that Nebax obtained a contract with the entity trading as "Housing NSW" and that the applications and the resulting Undertakings were required under that contract. At the time the applications were completed and given to ANZ, and the Undertakings were issued by ANZ, the Corporation was trading as "Housing NSW" and the ABN referred to in both the applications and the Undertakings was, at that time, used by and associated with "Housing NSW". Therefore, as the primary judge said, if someone had pointed out at the time to Mr Simic and Ms Hanna that the name of the counterparty was wrong, that would have been plain and obvious to both of them115. There can be no doubt that their actions were the result of a common mistake. Rectification of the applications and the Undertakings to refer to the Corporation gives effect to what Nebax required, as well as the stated intention of ANZ to provide the security to the entity with which Nebax had contracted to provide the building and construction services. That intention (to provide security to the entity with which Nebax had contracted) was the actual or true common intention116 of Nebax and ANZ. And that was the actual intention of each party, viewed objectively. The fact that the "Principal" was wrongly 113 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [33], [74]. 114 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [76]. 115 New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Ltd [2015] NSWSC 176 at [76]. 116 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at 642 [182], [185]. NettleJ identified in the applications and the Undertakings was, in the particular circumstances of this case, a matter that could be and should be rectified. It was contended on behalf of ANZ that this was a case of mutual mistake or, in other words, the parties being at cross-purposes, rather than of common mistake. Counsel for ANZ submitted that, on a correct view of the facts, Mr Simic made a mistake by conveying the incorrect name of the Corporation to Ms Hanna and, as a result, Ms Hanna made a corresponding but different mistake which had the effect that the Undertakings were intended to operate in favour of an entity other than the Corporation. It must follow from that submission that the parties were bound by the objective effect of the words of the instrument117 or, alternatively, that it was wholly ineffective118. That contention is opposed to the primary judge's findings of fact. It was not suggested below that Mr Simic believed that Nebax entered into the Construction Contract with a party other than the Corporation. As the primary judge found, Mr Simic's mistake was that he did not convey the correct name of the Corporation and the correct contract numbers to Ms Hanna. Nor is there a basis to suppose that Ms Hanna and therefore ANZ might have had a belief as to the identity (as opposed to the name) of the intended Favouree of the Undertakings, other than that the intended Favouree was to be the counterparty to the Construction Contract. To the contrary, Ms Hanna believed that the Undertakings related to a contract to which Nebax was a party and understood that the words "Job Number: P0409021, Bomaderry - Design & Construct 3-7 Karowa Street. Contract No: BG2J8" were intended to refer to that contract. One of Ms Hanna's mistakes, which was the result of Mr Simic's error and which, therefore, Ms Hanna shared with Mr Simic, was that the name of the counterparty was "New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940". Counsel for ANZ further contended that this Court should adopt the reasoning of the United States Court of Appeals for the Fifth Circuit in Tradax Petroleum American Inc v Coral Petroleum Inc119 that rectification is not available in a case of this kind. 117 Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 77; [1925] HCA 118 Raffles v Wichelhaus (1864) 2 H & C 906 [159 ER 375]; Babsari Pty Ltd v Wong [2000] 2 Qd R 576 at 585-589 [32]-[47]. 119 878 F 2d 830 (5th Cir 1989). NettleJ That contention should be rejected. In Tradax, the Court of Appeals held that a letter of credit could not be "reformed" because there was no "mutual mistake"120. The Court concluded that121: "We agree with the district court's determination that there was no mutual mistake here. Any mistake made was made by Tradax and Coral only – not by FABC [the financier]. FABC, without knowledge of the meanings of the technical designations included, prepared the letter of credit precisely in compliance with Coral's request. Tradax then failed to recognize that the letter of credit's terms did not reflect its agreement with Coral. In addition, there is no prior agreement between FABC and Tradax to which this letter of credit could be conformed." Earlier, the Court had quoted with approval the following statement of Harfield122: "The right to enforce express terms, without reference to equities, has long been recognized in letter-of-credit law, and is essential to the proper functioning of the letter-of-credit device." As is apparent from that reasoning, there are several bases on which Tradax stands to be distinguished. First, in contradistinction to FABC's lack of mistake, in this case ANZ made a mistake. As a result of Mr Simic's error in conveying the correct name of the Corporation to Ms Hanna, ANZ mistakenly believed that the correct name of Nebax's counterparty to the Construction Contract was "New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940", and, therefore, that the Undertakings should be drawn in favour of that name rather than the name of the Corporation. Second, the reasoning in Tradax set out above implies that the Court of Appeals considered that it was not open under United States law to order that an instrument be "reformed" for "mutual mistake" unless there were a prior agreement to which the instrument could be "conformed". By contrast, 120 878 F 2d 830 at 834 (5th Cir 1989). 121 Tradax 878 F 2d 830 at 834 (5th Cir 1989). 122 Tradax 878 F 2d 830 at 834 (5th Cir 1989) quoting Harfield, "Code, Customs and Conscience in Letter-of-Credit Law", (1971) 4 Uniform Commercial Code Law Journal 7 at 14. NettleJ in Australia, it has long been recognised that an antecedent agreement is not essential to an order for rectification. Rectification may be ordered of an instrument that does not reflect the parties' true intention even though the instrument constitutes the only agreement between the parties123. Third, it is also apparent from the reasoning in Tradax set out above that a further reason for the Court of Appeals' refusal to reform the letter of credit was that it considered that, under United States law, "equities" are excluded in relation to letters of credit. By contrast, in this case, we are not concerned with a letter of credit or with any particular doctrine of law especially applicable to letters of credit. The Undertakings are not letters of credit and, even if they were, in Australia there is no special doctrine of law precluding rectification of a letter of credit on the basis of a common mistake. Subject to the facts and circumstances of each case, the principles that apply to the rectification of letters of credit and cognate securities such as the Undertakings are the same as for the rectification of any other form of contractual instrument. Conclusion and orders For those reasons, the appeal should be allowed, special leave to cross-appeal granted and the cross-appeal by the Corporation allowed, and special leave to cross-appeal granted and the cross-appeal by ANZ allowed. The appellants are to pay the costs of ANZ and the Corporation. The orders made by the Court of Appeal on 18 December 2015 should be set aside and, in lieu thereof, it be ordered that: (1) ANZ is granted leave nunc pro tunc pursuant to s 500(2) of the Corporations Act 2001 (Cth) to commence and proceed with its cross-appeal against Nebax. (2) ANZ has leave to file its amended notice of cross-appeal in the first cross-appeal. (3) Appeal allowed in part. Second cross-appeal by the Corporation allowed. First cross-appeal by ANZ allowed. 123 Slee (1949) 86 CLR 271 at 280-281; Maralinga (1973) 128 CLR 336 at 350; Pukallus v Cameron (1982) 180 CLR 447 at 452, 456; [1982] HCA 63. NettleJ (6) Orders 1 and 4 made by the Supreme Court of New South Wales on 24 March 2015 are set aside and in lieu thereof: The bank guarantees issued by ANZ dated 16 April 2010 and numbered 108781 and 108783 be rectified by substituting the words "New South Wales Land and Housing Corporation ABN 24 960 729 253" for the words "New South Wales Land & Housing Department Trading As Housing NSW ABN 45754121940". The forms of indemnity and application for guarantee from Nebax to ANZ dated 16 April 2010 with serial numbers 108781 and 108783 be rectified by substituting the words "New South Wales Land and Housing Corporation ABN 24 960 729 253" for the words "New South Wales Land & Housing Department as Housing NSW trading ABN 45754121940". The appellants are to pay the costs of the Corporation and ANZ in the Court of Appeal.

HIGH COURT OF AUSTRALIA COMMISSIONER OF TAXATION APPELLANT AND RESPONDENT Commissioner of Taxation v Stone [2005] HCA 21 26 April 2005 ORDER Appeal allowed. Set aside orders 1 and 2 of the orders of the Full Court of the Federal Court of Australia made on 27 June 2003 and in their place order that the appeal to that Court is dismissed. Special leave to cross-appeal granted. Cross-appeal treated as instituted and heard instanter but dismissed. Appellant to pay the respondent's costs of the proceedings in this Court. On appeal from the Federal Court of Australia Representation: G T Pagone QC with S H Steward for the appellant (instructed by Australian Government Solicitor) D H Bloom QC with T M Thawley for the respondent (instructed by Blake Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Stone Income tax – Income – Whether taxpayer turned her athletic talent to account for money – Whether receipt of prize money, government grants, appearance fees and sponsorship payments constitute assessable income – Whether income derived from conduct of a "business" – Whether conduct of business a relevant consideration. Words and phrases – "assessable income", "business", "professional sport". Income Tax Assessment Act 1997 (Cth), ss 3-1, 4-1, 4-15, 6-5(1). Income Tax Assessment Act 1936 (Cth), s 6(1). GLEESON CJ, GUMMOW, HAYNE AND HEYDON JJ. During the year ended 30 June 1999 the respondent ("the taxpayer") was a Senior Constable in the Queensland Police Service. In addition to performing her duties as a police officer, she competed during that year, as she had since before 1995, in women's javelin throwing events at national and international athletics competitions. She was very successful. In 1996 she had been a member of the Australian Olympic team at the XXVI Olympiad at Atlanta and had competed in the women's javelin event at those Games. She won the women's javelin competitions at the 1998 World Cup and at the 1998 Goodwill Games. During the 1999 financial year the taxpayer received sums as prize money, as grants by the Australian Olympic Committee ("the AOC") and Queensland Academy of Sport ("the QAS"), as fees for some appearances she made, and as payments in cash or kind by sponsors. The appellant Commissioner contended that all of these sums formed part of her assessable income and assessed her to taxation accordingly. the Commissioner disallowed the objection. Pursuant to s 14ZZ of the Taxation Administration Act 1953 (Cth), the taxpayer appealed to the Federal Court of Australia against the disallowance of her objection. taxpayer objected that assessment; The At first instance, Hill J allowed1 the taxpayer's appeal in part and ordered that the taxpayer's objection be allowed in part. The taxpayer conceded2 at first instance that what she received as sponsorship benefits (in cash or kind) was assessable income. She disputed that the other receipts were assessable income. The primary judge found that some but not all3 of those other receipts were rewards of or incidental to her carrying on a business and, for that reason, were assessable income. The order made by the primary judge did not identify the particular respects in which the taxpayer's objection was allowed, but allowing the objection in part is consistent only with concluding that one or more of the disputed receipts was not assessable. It is not necessary to resolve any uncertainty about which receipts were held not to be assessable. It is enough to 1 Stone v Federal Commissioner of Taxation (2002) 196 ALR 221. (2002) 196 ALR 221 at 236 [73]. (2002) 196 ALR 221 at 238 [86], 239 [90], 244 [117]-[118]. notice that the primary judge concluded4 that the QAS grant did not "have the character of income". The taxpayer, being dissatisfied with the decision of the primary judge, appealed to the Full Court of the Federal Court. That Court (Heerey, Emmett and Hely JJ) allowed the appeal in part, holding5 that neither the sums the taxpayer received as prizes nor any of the sums received as grants were assessable income but that the appearance moneys were. (The taxpayer did not seek to depart from her concession that the sponsorship benefits she had received formed part of her assessable income.) Much of the Court's reasons focused upon whether, and to what extent, the taxpayer conducted a business. The Court concluded6 that the taxpayer "is a career police woman, who has achieved considerable success in an athletic sporting activity for which she has been rewarded [but that she] has not been engaged in a business activity to exploit her sporting prowess or to turn her talent to account in money". By special leave, the Commissioner now appeals to this Court. The taxpayer seeks special leave to cross-appeal from that part of the judgment of the Full Court by which it was decided that appearance fees paid to the taxpayer were assessable income. The Commissioner's appeal should be allowed, the orders of the Full Court except its order as to costs set aside, and in their place there should be an order dismissing the appeal to that Court. Consistent with the undertakings given at the time of the grant of special leave, the Commissioner should pay the taxpayer's costs in this Court; the costs orders made in the courts below should not be set aside or varied. The taxpayer's application for special leave to cross-appeal should be granted, the cross-appeal treated as instituted and heard instanter but dismissed. The Income Tax Assessment Act 1997 (Cth) Section 3-1 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act") says that it is an Act that "is mainly about income tax". Section 4-1 provides that "[i]ncome tax is payable by each individual and company, and by (2002) 196 ALR 221 at 244 [117]. 5 Stone v Commissioner of Taxation (2003) 130 FCR 299 at 316 [98]-[99]. (2003) 130 FCR 299 at 315 [92]. some other entities". Section 4-15 provides (in an imperative style common to the introductory provisions of the 1997 Act): "Work out your taxable income for the income year like this: taxable income = assessable income - deductions." Division 6 contains provisions elucidating the meaning of "assessable income" and "exempt income". Assessable income includes "income according to ordinary concepts"7. This reference to "income according to ordinary concepts" is an evident reference to Sir Frederick Jordan's often quoted statement in Scott v Commissioner of Taxation8: "The word 'income' is not a term of art, and what forms of receipts are comprehended within it, and what principles are to be applied to ascertain how much of those receipts ought to be treated as income, must be determined in accordance with the ordinary concepts and usages of mankind, except in so far as the statute states or indicates an intention that receipts which are not income in ordinary parlance are to be treated as income, or that special rules are to be applied for arriving at the taxable amount of such receipts". The various provisions of the 1997 Act to which reference has been made must be understood in the light of its stated relationship with the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"). Section 1-3(1) of the 1997 Act provides that the 1997 Act contains provisions of the 1936 Act "in a rewritten form". Sub-section (2) of that section provides that: that Act expressed an idea in a particular form of words; and this Act appears to have expressed the same idea in a different form of words in order to use a clearer or simpler style; the ideas are not to be taken to be different just because different forms of words were used." 7 Section 6-5(1). (1935) 35 SR (NSW) 215 at 219. It will be necessary to examine in more detail both the facts giving rise to this matter, and some decisions under the 1936 Act about what is income, but it is desirable to begin by noticing some assumptions that the use of particular forms of expression may mask. "Sport" and "professional sport" "Sport" is usually used to describe forms of (more or less) athletic pastime undertaken for pleasure or recreation. In many contexts, it may be used in contradistinction to "business" or "occupation". It is a word that may carry with it echoes of what once was commonly understood to be the Olympic ideal of the amateur pitting skill and strength against others in the pursuit of excellence. It may convey only the idea of a pursuit which is intended to do no more than provide diversion or amusement to both participants and onlookers. "Professional sport" may be thought to be a phenomenon of the second half of the 20th century. It was during that century that the expression came to be associated with those who made their principal pursuit the playing of sport for reward. During parts of the 20th century, and even before, distinctions were drawn among cricketers between those who were "gentlemen" and those who were "players", between the professional tennis player and the amateur, between the professional boxer and the amateur, between the golf club professional and the club player. What was understood as marking one group apart from the other was sometimes whether the "professional" was employed by an employer (often a club). But that was not the only basis for the distinction. Distinct codes of sport emerged in rugby football and in boxing, where the rules of the game differed according to whether those participating were professionals or amateurs. Then, as professional golf and tennis circuits developed, the distinction might be thought to have turned upon whether the individual sought to make the playing of the sport a full-time occupation and the principal source of income. The plaintiff in Tolley v J S Fry & Sons Ltd9 was a well known amateur golfer. The House of Lords upheld the award by a jury of damages for libel of the plaintiff by reason of the publication in 1928 of an advertisement for the defendants' chocolate in which there appeared a caricature of the plaintiff. The innuendo pleaded by the plaintiff had been that10: 10 [1931] AC 333 at 337. "[the] defendants meant, and were understood to mean, that the plaintiff had agreed or permitted his portrait to be exhibited for the purpose of the advertisement of the defendants' chocolate; that he had done so for gain and reward; that he had prostituted his reputation as an amateur golf player for advertising purposes, that he was seeking notoriety and gain by the means aforesaid; and that he had been guilty of conduct unworthy of his status as an amateur golfer". However, the distinctions upon which the pleading in Tolley turned 75 years ago11 were never tidy. They never accommodated what probably always was, but certainly emerged as being, the wide variety of circumstances in which some of those participating in sport have received sums of money for, or as a result of, their endeavours on a playing arena. They are distinctions that do not take account of the changing role played by those who have organised sporting competitions. No longer is the organisation of such competitions the preserve, as it once may have been, of the voluntary association or members' club. Now many competitions are conducted for the profit of those who organise them. Athletic contests for prizes are very old. Classifying a participant in such a contest as "professional" does no more than present the question: What is meant by "professional"? That is why asking no more than whether this taxpayer was a "professional" athlete either restates the relevant question, about whether the receipts in question were "income", in words that distract attention from the content of that relevant question, or it seeks to inject presuppositions into the debate that should not be made. Likewise, when considering whether a person who receives sums for, or in connection with, sport is conducting a business, or exploiting that person's skills or abilities for reward, care must be taken lest presuppositions that should not be made are injected into the debate. "Business" and "income" There is no doubt that receipts from carrying on a business are often to be identified as income according to ordinary concepts. Often, perhaps very often, the conclusion that receipts are ordinary income will proceed from, or at least carry with it, a conclusion that the recipient was conducting a business. Asking whether a person was carrying on a business may therefore be useful and necessary. But the inquiry about "business" must not be permitted to distract attention from the question presented by both the 1936 Act and the 1997 Act. 11 See Hopman v Mirror Newspapers Ltd (1960) 78 WN (NSW) 192. That question seeks to identify whether a receipt is, or receipts are, "income". As s 6-5 of the 1997 Act makes plain, that requires consideration of whether the receipt in question is income in accordance with "the ordinary concepts and usages of mankind". The proceeds on revenue account of any business carried on by a taxpayer is one form of income. Receipts of that kind fall within the understanding of income according to ordinary concepts and usages. If there were any lingering doubts about that being so, those doubts are put to rest by the 1936 Act and the 1997 Act. Because the 1997 Act contains provisions of the 1936 Act in a rewritten form, construing the word "income" in the 1997 Act requires reference to the definition in s 6(1) of the 1936 Act of "income from personal exertion" as, among other things, "income consisting of ... the proceeds of any business carried on by the taxpayer either alone or as a partner with any other person". "Business" income is one species of income. There is, however, a fundamental difficulty that lurks behind questions like whether the taxpayer was conducting a business. The question may be thought to assume that activities associated with the receipt of sums can always be divided into separate categories. As was pointed out, however, in the majority reasons in Federal Commissioner of Taxation v Montgomery12, general propositions in this field of discourse often require some qualification: "[I]ncome is often (but not always) a product of exploitation of capital; income is often (but not always) recurrent or periodical; receipts from carrying on a business are mostly (but not always) income."13 Sporting activities may often (but will not always) be distinct from business activities. A taxpayer's sport is often (but not always) distinct from that taxpayer's career or business. To conclude, as the Full Court did14, that the taxpayer "is a career police woman ... [who] has not been engaged in a business activity to exploit her sporting prowess or to turn her talent to account in money" may assume that "career" and "sport" not only lie at opposite ends of a relevant spectrum of activities, but that their location on that spectrum dictates the answer to the 12 (1999) 198 CLR 639 at 663 [67]-[68]. 13 (1999) 198 CLR 639 at 663 [68]. 14 (2003) 130 FCR 299 at 315 [92]. question which is presented. Those assumptions, if made, can mislead. To decide whether receipts of a taxpayer form part of that taxpayer's assessable income there must be undertaken15 "a wide survey and an exact scrutiny of the taxpayer's activities". To that end, it is necessary to say more about the facts. 1987-1994 – the taxpayer becomes a national competitor The taxpayer first became interested in javelin throwing in about 1987. She was then about 14 years old and she competed in junior competitions for the next few years. In 1991, the taxpayer joined the Queensland Police Service. In 1994, she began to compete in the series of Grand Prix meetings conducted by Athletics Australia (the governing body of track and field athletics competitions in Australia). The Grand Prix meetings culminated in the Australian Track and Field Championships. In that year, those who sought selection in Australian teams, or received funding from bodies like Athletics Australia, the Australian Institute of Sport16, the AOC or the Australian Commonwealth Games Association, were required to compete at a number of the eight Grand Prix meetings that were to be held. Some monetary prizes were offered to those who competed. The taxpayer did not win any prize money. In July 1994, the QAS selected the taxpayer for its "Athlete's Squad Program". The taxpayer and the State of Queensland ("acting through" the QAS) made a written agreement recording the terms governing her membership of the program. The QAS agreed to provide certain benefits to the taxpayer, including training and coaching, meeting some costs of entry and travel to some competitions, providing some sports science and sports medicine support, and providing some equipment. The funding for this was provided by the Queensland Government and the Australian Institute of Sport. The level of benefits provided varied according to the standard an athlete reached. The taxpayer participated in this program up to the 1999-2000 year at the highest level of participation and benefits. 15 Federal Commissioner of Taxation v Montgomery (1999) 198 CLR 639 at 663 [69] citing Western Gold Mines NL v Commissioner of Taxation (WA) (1938) 59 CLR 729 at 740 per Dixon and Evatt JJ. 16 The name by which the Australian Sports Commission, established by the Australian Sports Commission Act 1989 (Cth), operated in performing various of its functions. In late 1994, the taxpayer suffered some serious injuries from javelin throwing. She underwent surgery in September 1994 and again in December 1995-1996 – national and international competitions In 1995, the taxpayer again competed in local and State athletics meetings. Again she entered at least one Grand Prix meeting and came first in the women's javelin event. She won $250. In March 1995, Athletics Australia told the taxpayer that, being in the top 25 in her sport in the world, she would be paid $5,196 (by monthly instalments of $433) under what was called the "Olympic Athlete Programme". The taxpayer had not sought this payment. It was a payment administered by the Australian Sports Commission but the evidence does not reveal the source of the particular fund that was being administered by the Commission in this way. The evident objective of payments under the Programme was to encourage those who were not yet in the world's top eight or 16 competitors in their discipline to strive to reach that standard. It was said that those who reached that standard would be able "to plan for twelve months of funding leading into the Olympics" in 1996 at Atlanta. taxpayer competed at both national and During 1995-1996, international athletics meetings. She was successful in some of those competitions and she won some monetary prizes. She received a share of the gate receipts at one of the meetings at which she competed. the 1996 – Olympic selection At the 1996 Australian National Championships the taxpayer won the women's javelin event and was subsequently selected for the Australian Olympic team. To become a member of the team the taxpayer had first to sign and then observe the AOC Team Agreement, the AOC Doping Policy and the AOC Selection Guidelines. It is not necessary to describe all of the provisions of those documents. For present purposes, what is important is that the AOC Team Agreement ("the 1996 Team Agreement") stipulated the terms on which an athlete (here, the taxpayer) was selected as a member of the Australian Olympic team. The agreement stated that it was not an employment agreement and that the taxpayer was not required to provide services to the AOC. Yet it is clear from the agreement's content, and its terms, that it was intended to be, and was, an agreement providing for legally enforceable obligations. The taxpayer acknowledged in the agreement that she was bound to comply with the Olympic Charter, the constituent document of the Olympic Movement prepared and adopted by the International Olympic Committee ("the IOC"). The Olympic Charter (with which the taxpayer and other team members were bound to comply) spoke of Olympism as a "philosophy of life, exalting and combining in a balanced whole the qualities of body, will and mind". But the pursuit of such ideals was understood as entailing commercial consequences for both the IOC and the athletes who competed at the Olympic Games. The Olympic Charter, and the 1996 Team Agreement, both recorded17 that: "[T]he Olympic Games are the exclusive property of the IOC which owns all rights relating thereto including, without limitation, the rights to their organisation, exploitation, broadcasting and reproduction by any means whatsoever." This was not the only reference in the 1996 Team Agreement to commercial objectives. It regulated the subject of sponsorship. The purposes of those provisions of the agreement were said to be to "ensure the continued financial support of the AOC to enable it to fulfil its obligations to assist athletes to prepare for and participate in the Olympic Games" and also to "advise and assist athletes to effect the best projections of their reputations and personalities to enhance their activities as Olympians and potential Olympians in a manner compatible with established AOC raising of funds" (emphasis added). The taxpayer agreed to "assist and co-operate with the AOC and the Team Sponsors to enable the Team Sponsors to maximise the promotional benefits from their sponsorship of or supply to the AOC and the Team". The 1996 Team Agreement referred to what was called the "Olympic Dream Medal Reward Scheme". On being entitled to participate in this scheme, the taxpayer agreed to certain inhibitions on her permitting her "likeness, name or performance at the Games to be used for any advertising, promotion or marketing purposes". It is not necessary to examine this particular scheme further. The taxpayer finished 16th at the Atlanta Olympic Games and did not participate in the Medal Reward Scheme. It is, however, necessary to notice some other aspects of Olympic Athlete Programmes under which the taxpayer did receive sums of money, both before and during 1998-1999, the year of income now in issue. 17 There were some minor textual differences between the two provisions, but they need not be identified. In May 1996, before the Atlanta Olympic Games, Athletics Australia told the taxpayer that she would receive an annual amount of $10,020 by monthly instalments of $833. These, like the payments made to the taxpayer in 1995, were payments under an Olympic Athlete Programme. (They were described in 1996 as "AIS/OAP Direct Funding to Athlete"). The letter which Athletics Australia sent to the taxpayer recorded that she was then receiving funding at the rate of $15,000 per annum (or $1,250 per month) "to assist [her] to prepare for the Atlanta Olympics" but that payment at this higher rate would stop in July 1996. Again, as in 1995, the taxpayer did not ask Athletics Australia to make these payments. The Medal Incentive Scheme During 1996, the AOC published what it called its "2000 Gold Medal Plan – Funding Guidelines". These guidelines were later amended more than once, but nothing turns on the particular details of those changes. Three features of the plan are, however, important. First, there was the sheer size of the plan. The Olympic Athlete Programme was to cost up to $20 million for the 1996-1997 year and then up to $25 million for each of the three years 1997-1998, 1998-1999 and 1999-2000. These sums were the Australian Sports Commission from "complemented by assistance from State Institutes and Academies of Sport". to come Secondly, funding under the plan was said to be conditional upon athletes, coaches and other officials first entering into an appropriate agreement for likely 2000 Olympic Team members that would be similar to the 1996 Team Agreement. There was no evidence that the taxpayer signed any new agreement but there would be little difficulty in concluding that an agreement was reached. The terms of that agreement were, no doubt, to be found in relevant parts of the 1996 Team Agreement and the correspondence on the subject that was sent to the taxpayer by the AOC. Thirdly, provision was made for a Medal Incentive Scheme. Athletes winning medals at the 1996 Olympic Games or in a World Championship or some other major international event of a standard comparable to the Olympics (and their coaches) were to be eligible, in the following year, for participation in the scheme. A sliding scale of payments was fixed for athletes winning gold, silver or bronze medals at such events in each of the years between 1997 and 2000. In 1999, the amounts to be won by athletes were up to $40,000 for a gold medal, $24,000 for a silver medal and $12,000 for a bronze medal. During the year ended 30 June 1998, the taxpayer received $10,500 under the Medal Incentive Scheme. In the 1998-1999 year she received $22,500 under the Scheme. Whether her receipts under this Scheme in the 1998-1999 year formed part of her assessable income is at issue in these proceedings. Some other transactions and events before 1998-1999 Some other transactions and events, occurring during the period before the 1998-1999 financial year and associated with the taxpayer's athletic endeavours, should be noticed. First, she made some sponsorship arrangements. In October 1995, ASICS Tiger Oceania Pty Ltd ("ASICS"), a manufacturer of sports clothing, agreed to supply her with footwear, apparel and accessories. In return, the taxpayer agreed to make some personal appearances and to wear ASICS goods in training and competition unless obliged to wear the national team uniform. In 1998, she made a new agreement with ASICS by which ASICS agreed to pay her $7,500 per annum as well as supplying her with footwear, apparel and accessories. She also made sponsorship agreements with two companies unconnected with athletics: Multiplex Constructions (Qld) Pty Ltd ("Multiplex") and DDS Consulting Pty Ltd ("DDS"). In 1997, Multiplex agreed to provide the taxpayer with a motor vehicle. The taxpayer agreed to promote Multiplex, to wear advertising material on her sports clothing, to have advertising material on the motor vehicle the company provided, and to make some appearances. In 1997, DDS agreed to pay her up to $5,000 per annum in return for being photographed wearing promotional clothing and attending some functions. During the 1990s the taxpayer took some steps to solicit sponsorship. It may be that the sponsorships the taxpayer had did not result from these efforts so much as from personal contacts with the sponsors and from her achievements on the sporting arena. No finding was made by the primary judge about that question and it need not and cannot be pursued further. But the taxpayer did seek to secure sponsors. Secondly, for a short time, the taxpayer engaged a manager. In July 1997, the taxpayer agreed with World Sports Pty Ltd that Mr Bob Hynes of that company would manage her appearances and sponsorships for 18 months in return for 10 per cent of any payment made for appearances and sponsorships. This agreement was terminated by consent after nine months and during its currency appears to have borne no fruit. Thirdly, the primary judge accepted18 that the taxpayer did not choose the competitions she entered on the basis of money, but on the basis of her need to gain competitive experience. The taxpayer said19 that "she did not throw javelins for money and that she would still have done what she did for nothing". That is, as she said in her affidavit, for her, "javelin throwing was all about being able to wear the green and gold for Australia". To achieve that aim it was necessary for her to prepare by travelling and competing in high level competitions. The last of these further matters to notice, before turning to consider the particular receipts in question, is that the taxpayer at all times sought to pursue her career in the Queensland Police Service. She undertook training to advance through the ranks. She took such leave from her police duties (including what was called "sporting leave") as she was allowed. Except for about four months (from 11 October 1997 to 2 February 1998) she undertook full-time duties as a police officer from the time of her induction into the Police Service in May 1992 until she took maternity leave in February 2002. The receipts in question In the year ended 30 June 1999, the taxpayer received what she described in her return as: "Prize money at local and international sporting events" totalling $93,429; "Government grants" of $27,900; "Sponsorships" of $12,419; and fees for "appearances" of $2,700. The prize money she won was from two competitions – the Goodwill Games held in the United States (where she won $US6,000) and the World Cup held in South Africa (where she won $US50,000). In each case, taxation was deducted by local authorities before payment to the taxpayer. She received a total of 18 (2002) 196 ALR 221 at 237 [81]. 19 (2002) 196 ALR 221 at 237 [81]. What she described as "Government grants" were two payments: $22,500 paid under the AOC Medal Incentive Scheme and a bonus of $5,400 paid by the QAS for her being selected in the Australian Commonwealth Games Team. The taxpayer attended those Games as Female Track and Field Team Captain but, due to injury, did not compete at the Games. As noted earlier, the primary judge held that this payment by the QAS was not part of the taxpayer's assessable income. The sum for "sponsorships" was the value of payments in cash and kind made by her sponsors. Again, as noted earlier, it was conceded that these amounts formed part of her assessable income. Finally, the fees paid to the taxpayer for appearances were sums paid in respect of four of 31 appearances she made at functions during the year. Most of her appearances were at functions organised by schools or community groups. She solicited none of these appearances and did not seek payment for any of them. The competing contentions The Commissioner submitted that because the taxpayer had turned her talent as an athlete to account for money, the sums she had described in her return were business income. The Commissioner contended that an athlete was to be identified as having turned his or her talent or skills to account for money when others recognised the athlete as a celebrity or personality having marketable value. Thus, so the submission proceeded, the taxpayer was shown to have turned her talent to account for money by either or both of two events: first, when she was paid to endorse a product (as ASICS, Multiplex and DDS had) and, secondly, when she was paid more than the reimbursement of expenses to appear at a function. The absence of any subjective purpose of the taxpayer to profit from her athletic endeavours was said to be irrelevant. The taxpayer submitted that the receipts in issue were to be treated as income only if the relevant receipts arose from an act done in carrying on a business. It was necessary, so the taxpayer submitted, to find not only that a business was being carried out but also that the activity producing the receipt was an activity in the course of carrying on that business. The taxpayer submitted that she was not conducting a business. It was said that the evidence showed that the taxpayer's motivation was her desire to excel, to represent her country and win medals, not to make money. Competing contentions were made about the significance, if any, to be attached to the magnitude of the sums in question when compared with the taxpayer's income as a police officer, and to whether the payments under consideration were periodic or not. The taxpayer's submissions sought, at times, to distinguish between "sport" and "business", and to distinguish between "prizes" or "gifts" on the one hand and "income" on the other. Emphasis was given to the fact that the taxpayer had chosen the events she entered by reference to the quality of the competition she would encounter, not any consideration of the financial consequences of participation or success. What she received as prizes and under the Medal Incentive Scheme were characterised as either gifts or as a means of helping to defray the large expenses she incurred in pursuing her goal of representing her country. What was said to set sponsorship receipts apart from the other receipts in question was that the sponsorship receipts were rewards for services rendered, whereas the other payments were not. Were the receipts income? Once it is accepted, as the taxpayer did, that the sums paid by sponsors to her, in cash or kind, formed part of her assessable income, the conclusion that she had turned her sporting ability to account for money is inevitable. The sponsorship agreements cannot be put into a separate category marked "business", with other receipts being put into a category marked "sport". Nor can some receipts be distinguished from others on the basis that the activity producing a receipt was not an activity in the course of carrying on what otherwise was to be identified as a business. Agreeing to provide services to or for a sponsor in return for payment was to make a commercial agreement. What the taxpayer received from her sponsors were fees for the services she provided. But when these arrangements are set in the context of her other activities during the year, it is evident that the sponsorship arrangements she made were but one way in which she sought to advance the pursuit of her athletic activities. No doubt, as the taxpayer pointed out, pursuit of her athletic activities was expensive. And it must be accepted that her principal motivations were the pursuit of excellence and the pursuit of honour for herself and her country. But the sponsorship arrangements show not only that the taxpayer made those arrangements to assist her pursuit of athletic activities but also that she was able to make them because of her pursuit of those activities. Having this dual aspect, the sponsorship agreements cannot be segregated from other aspects of her athletic activities. All of the receipts now in question were related to the taxpayer's athletic activities. Some of those amounts (in particular, the sponsorship amounts) were paid in return for the taxpayer's agreement to provide services; some (like the Medal Incentive Scheme payments) were not. Perhaps the appearance fees may fall into that former class rather than the latter. Apart from appearance fees, and apart from the amount paid to the taxpayer by the QAS for being selected in the Australian Commonwealth Games Team, the other payments made to her appear in each case to have been paid in accordance with, or subject to, her undertaking contractual obligations or inhibitions. Thus, the Medal Incentive Scheme payments were made upon condition that she enter an agreement "similar" to the 1996 Team Agreement she had made with the several inhibitions identified earlier in these reasons. The prizes she won, it may be assumed, were paid pursuant to a contractual obligation of the event organisers. (Perhaps there was an express contract to that effect; perhaps the principles in Carlill v Carbolic Smoke Ball Company20 applied; it matters not for present purposes.) What is clear, however, is that at least some of the amounts which the taxpayer received during the 1998-1999 year in connection with her athletic activities were payments made and received in accordance with a contract which stipulated obligations undertaken by the taxpayer. Even if it is right to see payments made to the taxpayer under the Medal Incentive Scheme as unsolicited by her, they were made available only upon her undertaking certain inhibitions not only on her future sporting conduct but also on her future commercial exploitation of success in competition. Taken as a whole, the athletic activities of the taxpayer during the 1998-1999 year constituted the conduct of a business. She wanted to compete at the highest level. To do that cost money – for equipment, training, travel, accommodation. She sought sponsorship to help defray those costs. She agreed to accept grants that were made to her and agreed to the commercial inhibitions that came with those grants so that she might meet the costs that she incurred in pursuing her goals. Although she did not seek to maximise her receipts from prize money, preferring to seek out the best rather than the most lucrative competitions, her pursuit of excellence, if successful, necessarily entailed the receipt of prizes, increased grants, and the opportunity to obtain more generous sponsorship arrangements. That other sports and other athletes may have attracted larger rewards is irrelevant. No doubt it is necessary to take account of the taxpayer's statement that she did not throw javelins for money. There are, however, two things to say about that statement. First, it is not to be understood as some failure by the taxpayer to recognise that success in her sport would bring financial reward. The AOC had repeatedly drawn her attention to the financial consequences of success – especially success at an Olympic Games. Continued payments under the Olympic Athlete Programmes were conditional upon maintaining or improving performances in the arena. Secondly, the state of mind or intention with which a taxpayer undertakes activities giving rise to receipts is relevant, but it is only one fact to take into account, in deciding whether the receipts are properly to be classed as income. If a taxpayer has a view to profit, the conclusion that the taxpayer is engaged in business may easily be reached. If a taxpayer's motives are idealistic rather than mercenary, the conclusion that the taxpayer is engaged in a business may still be reached21. The "wide survey and exact scrutiny" of a taxpayer's activities that must be undertaken may reveal, as it does in this case, that the taxpayer's activities constituted the carrying on of a business. It is then necessary to say something further about two related questions. Is a distinction to be drawn (as the primary judge did) between the receipts under the Medal Incentive Scheme and the QAS grant? Is a distinction to be drawn (as the taxpayer contended) between prizes and grants? It is convenient to deal with the questions together. The QAS Grant and the Medal Incentive Scheme; Prizes and grants As noted earlier, prizes may be understood as being paid pursuant to contract. They may not be gratuitous payments. By contrast, the grants made under both the Medal Incentive Scheme and the QAS grant may be seen as gratuitous payments. Athletes undertook obligations as a condition of receiving payments under the Medal Incentive Scheme but it may be that the payer of such sums was under no enforceable obligation to offer them. In the case of the QAS grants, athletes undertook no greater obligation than to repay the sum granted if the athlete returned a positive test for a prohibited drug. The payer (the Queensland Government) was under no obligation to offer the grant. The QAS grant was described as giving effect to the Queensland Government's wish to acknowledge the achievements of Queensland athletes selected for an Olympic, Paralympic or Commonwealth Games team. It sought to do this by having the QAS make what were called "bonus grants" to those athletes who resided, trained, and competed in Queensland, and who were selected to the team "while representing Queensland in an identified selection competition". 21 cf G v Commissioner of Inland Revenue [1961] NZLR 994. The primary judge found that this payment was not income, unlike payments under the Medal Incentive Scheme which were. Of the payments under the Medal Incentive Scheme the primary judge said22: "[T]hat having regard to the terms of the award, its periodicity and its purpose of encouraging athletes towards medal status it does have the character of income. And this is so, notwithstanding that the award was not the product of any employment or an incident of any employment or business." By contrast, the primary judge said23 that the QAS grant: "is in a different category in that it is not periodical in the sense which that word was used by the Full Court in Harris[24]. ... I do not think that this amount can be seen to have been paid as consideration for being a member of the Australian Commonwealth Games squad, in the sense that it constituted a product of some service rendered or some employment of [the taxpayer]." There are three different but closely related questions presented by this reasoning. First, what significance attaches in this case to periodicity of payment? Secondly, what significance, if any, may be attached to the payer's motives and whether the payer had an obligation to make the payment? Thirdly, what, if anything, did the taxpayer give in return for the grant? Again, it is convenient to deal with them together because each was but one facet of the taxpayer's general contention that the sums in question were gifts, not income. Regularity or periodicity of payments may point to the activity from which they are produced being an income-producing activity. Income is often (but not always) recurrent or periodical25. When the payer of a sum is under no legal obligation to make the payment, identifying the sum as the "product" of an income-producing activity may be a convenient way of describing the reasons 22 (2002) 196 ALR 221 at 244 [116]. 23 (2002) 196 ALR 221 at 244 [117]. 24 Federal Commissioner of Taxation v Harris (1980) 30 ALR 10. 25 Federal Commissioner of Taxation v Montgomery (1999) 198 CLR 639 at 663 that lead to a conclusion that the sum is income26. But the question of recurrence or periodicity bears upon whether there is an income-producing activity. In the present case, it is necessary to recognise that the conclusion that the taxpayer was in business during the year in question follows from other considerations and the relevant question is no longer whether the taxpayer was in business but whether the receipts were income of that business. The taxpayer's business (of turning her athletic activities to account for money) entailed financial consequences if she achieved her aim of representing Australia. Those consequences included not only whatever effect that success may have on her capacity to attract new or more generous sponsorship; it included the financial consequences that would flow to her from those government bodies which sought to support athletes competing at her level. The receipts now in question were paid as a consequence of her success in competition and resulting selection to represent Australia. One of the bodies which sought to support athletes competing at the taxpayer's level was the Queensland Government (acting as it did through the QAS). That the taxpayer was not obliged to provide services to the Queensland Government and, unlike the Medal Incentive Scheme, undertook no new inhibition on her conduct in return for the payment, merely serves to identify the payment as gratuitous. But gratuitous payments may form part of a taxpayer's assessable income. The grant made by QAS, though not recurrent, was paid in recognition of the taxpayer's athletic success in achieving selection for a national athletics team. It was as much a financial product of her athletics activities as her winning a prize in competition, or a sponsor agreeing to pay her to have her endorse the sponsor's product. The talent as an athlete which she had turned to account for money was her ability to compete in her sport and be among the best in both national and international competition. Selection, in earlier years, as a member of the QAS Athlete's Squad Program, and her maintaining her position in the highest level of that program, was one mark of her athletic success. So, too, her inclusion in the Medal Incentive Scheme marked her success. Selection in the national team was (further) recognition of her success. The payment made by QAS, and the payments made under the Medal Incentive Scheme, were rewards for that success. That is, they were rewards from the conduct of her business – the business of deriving financial reward from competing and winning in the athletics arena. The Commissioner was right to 26 Federal Commissioner of Taxation v Squatting Investment Co Ltd (1954) 88 CLR 413; [1954] AC 182; Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47; Scott v Federal Commissioner of Taxation (1966) 117 CLR 514. disallow the taxpayer's objection to the inclusion of both the QAS grant and the Medal Incentive Scheme payments in her assessable income. The conclusion that the taxpayer was engaged in a business during the 1998-1999 year proceeds from an acceptance of the proposition that, showing that both before and during that year, the taxpayer was paid to endorse a company or its products as an athlete demonstrated that she had turned her athletic talent to account for money. The amounts involved were more than trivial. They were paid in return for the taxpayer undertaking obligations to promote the sponsor by wearing ASICS footwear, apparel and accessories, by displaying promotional material on the motorcar supplied by Multiplex, and by undertaking appearances for both Multiplex and DDS. Whether there may be other ways of showing that an athlete is engaged in the business of turning athletic talent to account for money is a question that need not be decided. Nor is it necessary to decide whether the bare receipt of sporting equipment or clothing from a seller or manufacturer of those items, coupled with undertaking an obligation to use or wear it would reveal that the athlete has turned talent to account for money. Such cases may present difficult questions of fact and degree. The conclusion that the taxpayer was in business carries with it the conclusions described earlier about the particular receipts in issue. Again, whether other forms of receipt by the taxpayer during this year would have formed part of her assessable income is a question that does not arise. Nor is this Court required to consider the consequences for deductibility of business expenses that follow from a conclusion that the taxpayer was conducting a business. An alternative argument by the Commissioner Finally, it is not necessary to deal with an alternative argument advanced by the Commissioner that, even if the taxpayer was not conducting a business, the payments made under the Medal Incentive Scheme were nonetheless assessable income. This argument depended upon the Court's decision in Federal Commissioner of Taxation v Dixon27. That case concerned sums provided by an employer to make up during wartime the difference between the military pay of a person who had enlisted in the armed forces and the pay that person would have earned if still employed in his civilian occupation. Particular attention was given in argument to the statement in the joint reasons of Dixon CJ 27 (1952) 86 CLR 540. and Williams J28 that the amount there in question had the character of income because it "was an expected periodical payment" and because it "formed part of the receipts upon which [the taxpayer] depended for the regular expenditure upon himself and his dependants and was paid to him for that purpose". The Commissioner submitted that the sums paid under the Medal Incentive Scheme met these descriptions and were, therefore, to be classed as income. This part of the joint reasons in Dixon, to which much attention was directed in argument, must be understood, however, in the light of what was said earlier in those reasons. In particular, it must be understood in the light of the relevant question being identified29 as whether the payments received were incidental to the taxpayer's past or present employment. It may, therefore, be arguable that the statement upon which the Commissioner's argument fastened is not to be understood as a statement of criteria which, apart from the particular context of past or present employment, suffice to identify a receipt as income. It is, however, unnecessary to consider this aspect of the matter further. Conclusion The Commissioner's appeal should be allowed and the taxpayer's application for special leave to cross-appeal granted, but the cross-appeal dismissed. The consequential orders we have set out earlier should be made. 28 (1952) 86 CLR 540 at 557. 29 (1952) 86 CLR 540 at 556. Kirby KIRBY J. This appeal from orders of the Full Court of the Federal Court of Australia30 concerns the meaning of "income" in the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act") in relation to certain receipts derived during the financial year ended 30 June 1999 by Ms Joanna Stone ("the taxpayer"). The point of factual interest in the appeal is that the receipts were derived, in several different forms, in consequence of the taxpayer's activities as a champion javelin thrower of such skill that she had won selection for the Australian Olympic team and for other international sporting competitions. In that sense, the appeal presents a question about the extent to which the receipts of contemporary Australian sporting champions (including as prize money), in circumstances like those in this case, are to be classified as "income" and thus liable to tax under Australian taxation law. The point of legal interest concerns the way in which the primary judge (Hill J31), the Full Court32 and this Court were invited to resolve the problem. This involved considering first whether it could be said that the taxpayer was engaged in a "business" (of a professional sportsperson) which if so found would render receipts derived in the course of that "business" (without more) "assessable income" within the 1997 Act. If the foregoing is the correct approach to the classification of the taxpayer's receipts, it obviates the awkward necessity of characterising the individual receipts derived by the taxpayer. It permits such receipts, in effect, to be aggregated as the "income" derived from the conduct of the "business" and thus to be treated as "personal income" within the 1997 Act. If this approach is correct, it arguably has significant advantages for the Commissioner of Taxation ("the Commissioner"), the appellant in this appeal. It means that the Commissioner is not obliged to show, in the case of each separate receipt, that prize money (for example) won by a champion sportsperson is "income" under Australian income tax law. Depending on the circumstances, that could be an obligation that might prove difficult. The facts and legislation The facts of the case, concerned with the employment and sporting activities of the taxpayer, are described in the reasons of Gleeson CJ, Gummow, 30 Stone v Commissioner of Taxation (2003) 130 FCR 299. 31 Stone v Commissioner of Taxation (2002) 196 ALR 221 at 223 [5]. 32 (2003) 130 FCR 299 at 301 [6]-[7]. Kirby Hayne and Heydon JJ ("the joint reasons")33. Also described there is the passage of the 1997 Act with its express statement that "assessable income includes income according to ordinary concepts, which is called ordinary income"34. As the joint reasons explain, this provision is a legislative endorsement of the explanation given by Jordan CJ in Scott v Commissioner of Taxation35 of the meaning of the word "income" as appearing in the Income Tax (Management) Act 1928 (NSW)36. As Jordan CJ pointed out in Scott37, the definition section in that Act did not define "income". It merely enumerated "by way of illustration, various forms of income which are to be treated as derived from personal exertion". The Scott case concerned the liability to income tax of a one-off payment of £7,000 recovered by the chairman of a statutory body which was dissolved under conditions permitting the recovery of compensation by certain office-holders. The Full Court of the Supreme Court of New South Wales held, by majority, that no part of the sum so payable was "income" within the meaning of the Act, so understood38. In s 6-5(1) of the 1997 Act, there is no express reference to "income" that can be classified as deriving from a "business". In s 995-1(1) ("definitions"), for the purpose of the Act and except so far as the contrary intention appears, a broad definition is given to the word "business". The word is defined to include "any profession, trade, employment, vocation or calling, but does not include occupation as an employee". However, there is nothing in s 6-5(1) on its face to permit the incorporation of this broad definition of "business", as such, in the description of "assessable income" and "ordinary income" as there appearing. It is true that the word "business" has been used many times in judicial elaborations of the meaning of the word "income". However, the special definition of 33 Joint reasons at [20]-[42]. 34 1997 Act, s 6-5(1). 35 (1935) 35 SR (NSW) 215 at 219. 36 Income taxation was first introduced in Australia in 1884 in South Australia. It was introduced in New South Wales and Victoria in 1895. The Federal Parliament first enacted taxes upon "incomes" in the Income Tax Act 1915 (Cth): Austin v The Commonwealth (2003) 215 CLR 185 at 288 [244]. 37 (1935) 35 SR (NSW) 215 at 220. 38 The dissenting judge (Stephen J) concluded that the payment was a retiring allowance within the Act, s 11(i). See (1935) 35 SR (NSW) 215 at 222. The other member of the Court, Street J, agreed with Jordan CJ that the payment was neither a retiring allowance nor a gratuity paid in a lump sum: at 223. Kirby "business" in the 1997 Act, is only for the purposes of that Act. It is not for the purpose of elaborating judicial words. There are several judicial explanations of the word "business", including in this Court where it has been described as a "chameleon-like word", taking its meaning from the context39. On that footing, s 995-1(1) and its definition of "business" are irrelevant to the task in hand. It was accepted for the Commissioner that "business" was not otherwise mentioned for the present purposes in the 1997 Act40. Accordingly, the Commissioner accepted that his first argument, which turned upon the proposition that the taxpayer was engaged in a "business" that affected the character of the receipts derived in the course of conducting that "business", depended not on the statute but upon the judicial elaborations that have developed around the notion of "income" as such41. Notwithstanding these concessions, the joint reasons point to the fact that the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act") contains in s 6(1)42 a reference to the fact that "income from personal exertion" included, amongst other things, "income consisting of … the proceeds of any business carried on by the taxpayer". Presumably, reference is made to this provision because of the instruction in s 1-3 of the 1997 Act, that this Act "contains provisions of the [1936 Act] in a rewritten form"43 and that, if the 1936 Act expressed an idea in a particular form of words and the 1997 Act appeared to have expressed the same ideas in a different form of words, "the ideas are not to be taken to be different just because different forms of words were used"44. This provision supports a comment of Professor Richard Krever about the plain English project that 39 PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 201 CLR 648 at 655 [14]. See also at 654 [12]; Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation (1990) 171 CLR 216 at 226. 40 [2004] HCATrans 368 at [56]-[59]. 41 [2004] HCATrans 368 at [65]. 42 Joint reasons at [17]. 43 1997 Act, s 1-3(1). Note that by s 995-1(1) of the 1997 Act a reference therein to "this Act" includes the 1936 Act; cf Sherlinc Enterprises Pty Ltd v Federal Commissioner of Taxation [2004] ATC 2022 at 2028 [31]; 55 ATR 1001 at 1008. 44 1997 Act, s 1-3(2). cf Commissioner of Taxation v Energy Resources of Australia (2003) 135 FCR 346 at 350 [10]: "The 1997 Act is more than a consolidating statute; it has made significant changes to the 1936 Act." Kirby culminated in the 1997 Act45. The project has been left incomplete. To some extent it has complicated matters by the need to reconcile the 1997 Act and the 1936 Act. In particular circumstances, of which this is one, the consequence of the supposed simplification has been to produce an additional complication46. Where the 1997 Act (being the most recent, later, express statement of the Parliament, applicable to the relevant year of income of the taxpayer) speaks in the language adopted in s 6-5(1) and commands that "income" is, for relevant purposes, to be construed "according to ordinary concepts", a substantial question is presented, at least so far as I am concerned. This is whether the importation of the category of "business" as a sub-classification of "income" conforms to the governing provisions of s 6-5(1) of the 1997 Act, understood according to its language. How is this question to be resolved? The introduction of the notion of "business" income Arguments against the importation: There are a number of reasons why I have hesitated to adopt the approach accepted in the joint reasons to the effect that the first step in deciding the present appeal is to consider whether the taxpayer was carrying on a "business" and, if so, whether the several receipts of various kinds that she accrued are to be accumulated as the "income" of that "business" and for that reason "ordinary income" within s 6-5(1) of the 1997 Act47. First, this approach is not expressly provided for in the 1997 Act. As I have pointed out, there is no relevant mention there of the word "business". Nor is it mentioned elsewhere in the Act in a way applicable to the resolution of the present problem. In recent times, in many cases, this Court has insisted on the primacy of the language of legislation48. That primacy derives from the constitutional command, addressed to the courts, judges and people in every part of the Commonwealth, to treat "all laws made by the Parliament of the 45 Krever, "Taming Complexity in Australian Income Tax", (2003) 25 Sydney Law Review 467 at 484. 46 Krever, "Taming Complexity in Australian Income Tax", (2003) 25 Sydney Law Review 467 at 484. 47 Deutsch, Australian Tax Handbook 2005, (2005) at 50. 48 cf Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vict) (2001) 207 CLR 72 at 77 [9], 89 [46]; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 545 [63]; The Commonwealth v Yarmirr (2001) 208 CLR 1 at 111-112 [249]; Visy Paper Pty Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 1 at 10 [24], 24-25 [73]. Kirby Commonwealth under the Constitution" as "binding" upon them49. It also derives from the character of enacted legislation as the accepted product of the expression of the will of the people who are the ultimate sovereign in the representative democracy of the Australian Commonwealth, established by the Constitution. Against such "laws", and the democratic will so expressed, judges must be hesitant to gloss the statute where doing so diverts the interpreter from giving primary effect to the instruction of the Parliament stated in a valid law. No question of constitutional validity arises in this case. The starting point for this Court's application of federal law to the facts of the case, is therefore the text of that law. There is no point in this Court's insisting that others must treat the statute as the starting point if it does not observe the same rule for itself50. This means, in this case, starting with s 6-5(1) of the 1997 Act. On the face of things, that means starting with the question whether the receipts, propounded by the Commissioner as "assessable income" within the 1997 Act, fall within the criterion stated by the Parliament. That criterion makes no reference, as such, to a sub-classification of "income" as receipts from carrying on a "business". Instead, it poses the distinct and arguably different question: whether the contested receipts constitute "income according to ordinary concepts". Secondly, the danger of incorporating judicial words when fulfilling the task of giving meaning to a legislative command (such as appears in s 6-5(1) of the 1997 Act) is that such remarks can easily be taken out of context. Thus, they might pay insufficient attention to the provisions of the legislation there under consideration. This is a very common problem in statutory interpretation. In effect, it derives from the methodology of the common law and the respect that it conventionally accords to judicial elaboration. In every case where an earlier judicial elaboration is said to be relevant to giving meaning to provisions in legislation, it is essential to compare the statutory language that is under consideration. Otherwise, judicial words, uttered in relation to earlier and different statutory formulae, will be applied unthinkingly although the foundation of the written law has changed. A good illustration of this mistake, easy enough to make, was pointed out in Gipp v The Queen51. Because the Criminal Appeal Act 1966 (UK) had used the formula "unsafe or unsatisfactory", that phrase was borrowed by judges and became 49 Constitution, covering cl 5. 50 Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317 at 359 [127]. 51 (1998) 194 CLR 106 at 147-150 [120]-[127]. See also Conway v The Queen (2002) 209 CLR 203 at 232 [80]. Kirby commonly used in Australia (and it often still is) without regard to the different language of applicable Australian legislation. The use of the borrowed shorthand, without regard to the actual language of the governing law, can lead to error. This is not a hypothetical problem in the present circumstances. Thus, in the course of argument of this appeal, reference was made to various overseas decisions in which judges have elaborated the meaning of "income". In G v Commissioner of Inland Revenue52, the former Supreme Court of New Zealand (McCarthy J) held that receipts derived by a minister of religion (described as an "evangelist") from unsolicited donations given by congregants of his denomination were assessable as his "income". This was so because, it was held, the minister was carrying on a "business". However, as appears from the report of that case53, the concept of "business" was introduced into the judicial discourse because of the provisions of s 88 of the Land and Income Tax Act 1954 (NZ), modelled on earlier English law, stating expressly that receipts were taxable income if they were "profits or gains derived from any business"54. Accordingly, it was the express mention in the Act of "business" that took the New Zealand court into an elaboration of the meaning of the notion of "business" as used in common speech55. That approach was fully justified by the terms of the New Zealand Act then applicable. If a wide definition of "business" were applied to such a statutory expression, the mere fact that the taxpayer was not primarily motivated by making a profit, would not take the "business" income outside the terms of the enacted law. Thus, for example, if the definition of "business" in s 995-1(1) of the 1997 Act were applicable, the activities of "evangelists" would have fallen within the definition of a "vocation or calling". In the present case, there is no equivalent in the language of the 1997 Act to attract such a statutory definition and to justify the incorporation of separate notions of "business" income. If such notions are to be introduced, this can only be accomplished by an elaboration of the word "income" itself, understood as the 1997 Act provides, "according to ordinary concepts". Thirdly, this brings me to the difficulty which such an elaboration occasions. If the primacy of the statutory command in s 6-5(1) is accepted, the 52 [1961] NZLR 994. 53 [1961] NZLR 994 at 997. 54 Land and Income Tax Act 1954 (NZ), s 88(a). 55 [1961] NZLR 994 at 998. Kirby first step of the Court, in a case such as the present, is not to superimpose an intermediate question as to whether the taxpayer can be treated as "carrying on a business" and then to ask whether various receipts, derived by the taxpayer during the year of income, can be aggregated in some way so as to be regarded together as the "income" of that business. Instead, it is to look individually at "the ordinary income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year"56 and to test the liability of such receipts to income tax by the criterion of whether each item of alleged "income" could be so described "according to ordinary concepts". By interposing the notion of a "business", although that word does not appear in the 1997 Act, there is a risk that the statute is glossed in a way disadvantageous to the taxpayer and unduly favourable to the Commissioner. If it were the will of the Parliament to permit the interposition of the notion of "business" (and thus the aggregation of various receipts that thereupon take their colour, in part at least, from the unifying notion of a "business"), it is arguable that the Parliament should make this plain by express enactment. In other words, it should enact some reference to income including "profits or gains derived from any business", just as was done in the New Zealand Act applied in G's case. Such an express elaboration does not appear in the 1997 Act. Fourthly, at the least, the repeated insistence by this Court upon fidelity to the primacy of legislation, understood according to its text, suggests that we should start our task (and insist that the courts below do so) by asking whether the various receipts derived by the taxpayer severally represent "income according to ordinary concepts"57 instead of jumping to the non-statutory, judicial elaboration that addresses attention to the aggregating notion of a "business". The two approaches do not necessarily produce the same outcome. That this is so may be seen in the conclusion reached by the primary judge in this case. His Honour started by analysing whether the taxpayer was carrying on a "business" and concluded that she was58. However, prudently, he then examined the "individual amounts" to decide whether "some of them would have had the character of income when paid or given to Ms Stone if she did not carry on a business"59. After this analysis, the primary judge concluded that, if the taxpayer were not carrying on a "business", three categories of the payments disclosed by the taxpayer would still be included in her assessable income in the year of 56 1997 Act, s 6-5(2). 57 1997 Act, s 6-5(1). 58 (2002) 196 ALR 221 at 238 [86]. 59 (2002) 196 ALR 221 at 239 [90]. Kirby income, inferentially because they were "income according to ordinary concepts". These were (1) sponsorship payments from corporate sponsors; (2) appearance fees; and (3) payments made under the Medal Incentive Scheme ("MIS")60. Using the same criteria, the primary judge concluded, upon the assumption that the taxpayer was not carrying on a "business" (or, by inference that that classification was legally relevant), that the taxpayer's other receipts would not have been "income in ordinary concepts". These were (1) prize money won by the taxpayer; (2) the Queensland Academy of Sport grant; (3) the Oceania Amateur Athletics Association grant; and (4) the Little Athletics reward (the last conceded by the Commissioner)61. It follows that the approach adopted to this question can make an important difference. If the command of s 6-5(1) is obeyed according to the letter and the decision-maker considers each item of contested "income" according to "ordinary concepts" as the Parliament has provided, a different consequence might ensue than if the Court interposes the judicial gloss that permits the Commissioner to accumulate all the receipts under the umbrella of a suggested "business". So, if this Court's instruction is obeyed, and the primacy of the statute is accepted, a very good reason is needed to permit the Commissioner the "business income" elaboration with the undoubted advantages that it produces for the revenue and disadvantages for the taxpayer not enacted in the 1997 Act, although that Act is the last word of the Parliament on the applicable law. to introduce The gloss should be accepted: Notwithstanding these problems, both of text and principle lying in the path of the Commissioner's primary argument, I am prepared in this appeal to resolve the present argument in the Commissioner's favour. First, the taxpayer, although represented by most experienced counsel, did not challenge the "business income" accumulation argued for the Commissioner. On the contrary, at every level of the consideration of the issues in contest in this appeal, the case has been argued on the same footing. For the taxpayer, it has been accepted that the first issue to be decided is whether she was conducting a "business". The case has therefore been presented and argued on that basis. Although the issues that concern me were raised during the argument of the appeal in this Court, no attack was made by the taxpayer on the foregoing approach. This is not, therefore, a case in which this Court should embark upon that task for itself. Especially is this so because, to do so, would require a substantial analysis of the old case law by reference to its applicability in the 60 (2002) 196 ALR 221 at 244 [119]. 61 (2002) 196 ALR 221 at 244-245 [119]-[120]. Kirby circumstances now applying under the 1997 Act, a matter not undertaken by either party. Secondly, the use of the "business income" classification is recognised in this Court's analysis of the meaning of "income", at least so far as the 1936 Act is concerned. Thus, Fullagar J made reference to it as one recognised sub-category of "income" when explaining in Hayes v Federal Commissioner of Taxation62 the distinction which the law drew at that time between receipts that are to be characterised as "income" and receipts that are "gifts". In that case, Fullagar J explained 63: "A voluntary payment of money or transfer of property by A to B is prima facie not income in B's hands. If nothing more appears than that A gave to B some money or a motor car or some shares, what B receives is capital and not income. But further facts may appear which show that, although the payment or transfer was a "gift" in the sense that it was made without legal obligation, it was nevertheless so related to an employment of B by A, or to services rendered by B to A, or to a business carried on by B, that it is, in substance and in reality, not a mere gift but the product of an income-earning activity". This way of looking at individual receipts, by reference to a context that suggests that they take on a character of "income", certainly predated the 1936 Act. Thus, Jordan CJ made reference to the "business" income classification in Scott64. Whether this course was prompted by the express language of still earlier statutes from which the idea had been borrowed or whether it was inherent in the sources of "income", as such, is not the present point. Where the receipts said to be "income" are derived from an activity that can be described as a "business" of the taxpayer, many cases in this Court have accepted the view that such a source can lend colour to the character of the receipts so as to justify the conclusion that, together, they constitute the "income" of a "business" in which the taxpayer is engaged with a view to profit being derived from such business: W Nevill & Co Ltd v Federal Commissioner of Taxation65; Martin v Federal Commissioner of Taxation66; Federal 62 (1956) 96 CLR 47. 63 (1956) 96 CLR 47 at 54 (emphasis added). 64 (1935) 35 SR (NSW) 215 at 219. 65 (1937) 56 CLR 290 at 301 (in relation to deductions incurred in producing assessable income). 66 (1953) 90 CLR 470 at 474, 479. Kirby Commissioner of Taxation v Myer Emporium Ltd67. In addition to the judicial endorsement of this approach, it has been accepted by knowledgeable scholars, such as Professor Ross Parsons68. Of course, their analysis would be influenced by the approach of this Court. In Federal Commissioner of Taxation v Montgomery69, a case concerned only with the 1936 Act, the joint majority reasons70 pointed out that some economists have long advocated an approach to the definition of "income" different from that adopted by the courts – one that would replace notions of "income flow" with concepts of gain or realised gain71. Neither in Montgomery nor in this appeal did the parties ask this Court to reconsider the approach conventionally taken to the meaning of "income"72. This is another reason why this appeal is not an occasion to consider whether the 1997 Act introduces, or warrants, a new approach. To the extent that s 6-5(1) might suggest that it does, s 1-3(2) suggests the contrary. Thirdly, the last-mentioned provision adds a textual reinforcement for the principle of construction that would, in any case, favour the assumption of both parties that the "business" classification of receipts should continue to apply into the 1997 Act. It is so often mentioned in the reasoning of this Court addressed to earlier legislation, and so frequently applied by this Court and by other courts and officials, that had it been the purpose of the Federal Parliament by the 1997 Act to change that approach, one might have expected such a change to be clearly indicated in that enactment. Thus, it would have been referred to in the Treasurer's Second Reading Speech in support of the Bill that became the 1997 Act and in the text of that Act. The absence of reference to such a change suggests a legislative purpose to continue with the established approach. That conclusion is further reinforced by 67 (1987) 163 CLR 199 at 209-210; cf Deutsch, Australian Tax Handbook 2005, 68 Parsons, Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting, (1985) at 141. 69 (1999) 198 CLR 639 at 662 [66]. 70 Of Gaudron, Gummow and Hayne JJ and myself. 71 Simons, Personal Income Taxation: The Definition of Income as a Problem of Fiscal Policy, (1938); cf Parsons, "Income Taxation – An Institution in Decay?", (1986) 12 Monash University Law Review 77. 72 (1999) 198 CLR 639 at 662 [66]. Kirby s 1-3(2). The approach permitting aggregation of income sources linked by a postulated "business" undoubtedly favours the Commissioner and facilitates the collection of the revenue. It has the advantage of accommodating significant changes in the nature of employment, such as are occurring in the Australian economy73. It permits a global approach to disparate sources of a taxpayer's receipts where they can be grouped together and attributed to a "business" which the taxpayer is found to have carried on. If sometimes this results in bringing to tax receipts which individually might not have been regarded as income according to ordinary concepts, that may not be such a surprising outcome. Thus, although viewed in isolation prize money (like lottery winnings) might not, in Australia, be regarded as income according to ordinary concepts74 – producing in other countries explicit provisions not appearing in our law so as to bring them to tax75 – viewed in the context of a receipt attributed to a taxpayer's "business", its character as "income" may become clearer. In effect, therefore, the interposition of attention to the source of the receipts (whether employment, the provision of services or the conduct of a "business" or otherwise) bears out the importance of characterising the impugned receipts by reference to all of the facts and circumstances of the case. This was the approach that the primary judge adopted, and correctly so76. In terms of the evidence, it was especially appropriate to the present case because of general and specific considerations. The general included the changing character of sporting activity at the level of elite or celebrity sporting champions77. I would be prepared to take notice of the change that has come over sport in several of its manifestations in recent decades. It is a change that has been mentioned by this Court in other contexts78. It is one closely connected to the modern media of communications, the international interest in sporting excellence and the consequent attention of advertisers, sponsors and supporters 73 cf Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 40-41 [43]-[44], 49 [69]-[70]. 74 Hannan, A Treatise on the Principles of Income Taxation, (1946) at 22. 75 For example Internal Revenue Code 1986 (US), s 74 (26 USC 74); Income Tax Act 1961 (India), s 2(24)(ix). 76 (2002) 196 ALR 221 at 239 [90]; cf Christie v Federal Commissioner of Taxation (1956) 96 CLR 59 at 61. 77 Kelly, Sport and the Law: An Australian Perspective, (1987) at 426. 78 News Ltd v South Sydney District Rugby Football Club (2003) 215 CLR 563 at 597-599 [103]-[109]; Zhu v Treasurer of New South Wales (2004) 79 ALJR 217 at 225-228 [51]-[61], 250 [167]-[168]; 211 ALR 159 at 171-174, 204-205. Kirby who see advantages for themselves in being associated with images of sporting champions of all kinds. The particular features of the evidence that indicate that the taxpayer turned her sporting skills to her economic advantage were correctly identified by the primary judge79. They were well established by the evidence. Their characterisation called forth the impression of the decision-maker based on an assessment of all of the facts80. It was no answer to say that the taxpayer was not solely motivated by the objective of economic profit. Motivation for most human activity is complex and multifarious. I would be prepared to accept that the primary motivation of the taxpayer was to pursue her "dream" of excellence in her chosen sport and success on behalf of herself, her State and her country. However, that does not negate the conclusion, which was open to the primary judge, that at a given point, before the year of income, the taxpayer decided to turn her sporting talents also to her economic advantage. In doing so, she followed what many other sporting people in Australia and elsewhere have done. There is no dishonour in it. But it has consequences for the Australian law on income tax. Doubtless the taxpayer did what she did, in part, to defray the not insubstantial costs associated with her pursuit of international sporting excellence. She did not lessen her zeal for personal excellence nor her desire to bring credit on her State and on Australia. However, once the view of profit became a real feature of the taxpayer's sporting endeavours it had a dual consequence. It gave a logical and factual unity to most of the receipts connected with her sport and unconnected with her employment as a police officer. Moreover, it warranted the Commissioner's conclusion that the receipts that individually might not have been regarded as "income" took on that character. They therefore warranted the essential conclusion of the primary judge. There was no error in that conclusion, according to the conventional approach to "business income" under Australian taxation law. The Full Court erred in giving effect to its different conclusion. The joint reasons81 suggest that the reasons of the primary judge "did not identify the particular respects in which the taxpayer's objection was allowed". The joint reasons also conclude that "allowing the objection in part is consistent only with concluding that one or more of the disputed receipts was not 79 (2002) 196 ALR 221 at 235-238 [69]-[84]. 80 Martin (1953) 90 CLR 470 at 479. 81 Joint reasons at [4]. Kirby assessable".82 However, as I read the reasons of the primary judge, it is clear that he did not conclude that the disputed receipts, or any of them, were not assessable as income. On the contrary, he dealt with the several payments separately only "in case the present matter should go further".83 This point was recognised by the Full Court.84 This explains why, at the conclusion of his reasons on assessable income the primary judge expressly said: "I would accordingly dismiss the application to the court."85 The apparent disparity in the orders which he made, allowing the application "in part"86, is readily explained. It was necessary for the primary judge to allow the appeal and set aside the objection decision, as he did, to permit the reassessment of deductions – a matter upon which the Commissioner had accepted the need to amend the assessment.87 This interpretation is confirmed by the stated purpose of the primary judge's order remitting the assessment to the Commissioner "to reassess ... such deductions as shall be [agreed or determined]".88 At no stage did Hill J hold that the Queensland Academy of Sport grant or other contested items were not "income" in the hands of the taxpayer. On the contrary, his Honour's approach and conclusion is now endorsed by this Court. When carefully considered, it was not uncertain. Orders In all other respects, I agree with what is said in the joint reasons. This is not necessarily a result to which I would have come, without the past authority accepted by this Court and uncontested in this case. In "ordinary concepts", intermittent prize money and occasional special grants would not, in most Australian eyes (or in mine), be regarded as having the character of "income", at least when such receipts are viewed individually and in isolation from each other. Prizes, in particular, depend upon providence, are usually intermittent and ordinarily lack periodicity and regularity. They depend upon so many chance 82 Joint reasons at [4]. 83 (2002) 196 ALR 221 at 239 [90]. 84 (2003) 130 FCR 299 at 301 [6]-[7]. 85 (2002) 196 ALR 221 at 245 [121]. 86 (2002) 196 ALR 221 at 245 (order 1). 87 (2002) 196 ALR 221 at 223 [3]. 88 (2002) 196 ALR 221 at 245 (order 3). Kirby factors that they would not normally take on the character of "income" without some additional unifying ingredient. It is the interposition of the postulate of the taxpayer's "business" that affords that additional ingredient that helps to link the several receipts and to colour them – each of them reinforcing the conclusion of the character of "income" that might not otherwise have been drawn reviewing them individually. Approached in this way, as the parties' counsel agreed, the Commissioner's assessment was entirely orthodox. It was correct, according to the law accepted as applicable. Because I am of the view that there was no error in the primary judge's reasons and ultimate conclusions and because the orders in the joint reasons confirm the orders made by the primary judge, I agree in the orders proposed in the joint reasons.

HIGH COURT OF AUSTRALIA ANCIENT ORDER OF FORESTERS IN VICTORIA FRIENDLY SOCIETY LIMITED APPELLANT AND LIFEPLAN AUSTRALIA FRIENDLY SOCIETY LIMITED & ANOR RESPONDENTS Ancient Order of Foresters in Victoria Friendly Society Limited v Lifeplan Australia Friendly Society Limited [2018] HCA 43 10 October 2018 ORDER Appeal dismissed. Special leave to cross-appeal, limited to the grounds in paragraphs 2 and 3 of the respondents' notice of cross-appeal, granted. Cross-appeal allowed. Set aside order 2 of the orders made by the Full Court of the Federal Court of Australia on 16 June 2017 and, in its place, order that Ancient Order of Foresters in Victoria Friendly Society Limited account to Lifeplan Australia Friendly Society Limited and Funeral Plan Management Pty Ltd for profits in equity in the sum of The appellant pay the respondents' costs of the appeal and cross- appeal. On appeal from the Federal Court of Australia Representation R Merkel QC with D C Gration and Z E Maud for the appellant (instructed by TurksLegal) N J Young QC with P W Collinson QC and M D Douglas for the respondents (instructed by Ashurst Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Ancient Order of Foresters in Victoria Friendly Society Limited v Lifeplan Australia Friendly Society Limited Equity – Knowing assistance in breach of fiduciary duty – Remedies – Account of profits – Causation – Where employees of first respondent breached fiduciary duties to respondents by assisting appellant, and then joined appellant – Where appellant knowingly assisted in breaches of fiduciary duty – Where primary judge found profits of appellant's business not direct result of appellant's knowing assistance – Whether account of profits available. Equity – Knowing assistance in breach of fiduciary duty – Remedies – Account of profits – Assessment of quantum – Whether knowing assistant obliged to account for entire capital value of business acquired – Whether account of profits may be ordered in respect of anticipated profits. Words and phrases – "account of profits", "actual profits", "anticipated profits", "as a result of", "but for", "causation", "disgorgement" "knowing assistance", "material contribution". KIEFEL CJ, KEANE AND EDELMAN JJ. We agree with the orders proposed by In our view, however, when the facts of the case are fully appreciated the issues of causation and the quantification of the benefit for which Ancient Order of Foresters in Victoria Friendly Society Ltd ("Foresters") should account to Lifeplan Australia Friendly Society Ltd ("Lifeplan") and Funeral Plan Management Pty Ltd ("FPM") may be resolved without the need for any revision of principle. An examination of the facts of the case shows that Foresters knowingly took advantage of Messrs Woff and Corby's dishonest and fraudulent design, which involved breaches of fiduciary duty, in order to enhance its business by appropriating the business connections of its competitors. It succeeded in doing so. In such a case, equity requires that Foresters account for the full value of the enhancement. Gratefully accepting the summary by Gageler J of the findings and reasons of the courts below, we proceed to explain why we take this view. Causation Foresters submitted that its liability to account and disgorge should be confined to those profits that are the direct result of each of the particular acts by which it committed the equitable wrong of knowingly assisting Woff and Corby in a dishonest and fraudulent design to breach their fiduciary obligations to Lifeplan and FPM1. By focusing on each act of knowing assistance and its direct consequences, rather than the overall effect of Foresters' wrongful conduct, the submission ignores the obvious reality that Foresters' particular interactions with Woff and Corby resulted, as they were always apt to do, in the wholesale acquisition by Foresters of the business connections that Lifeplan and FPM had with funeral directors, these connections being, as Foresters well knew, essential to Lifeplan and FPM's funeral fund business2. Another way of putting this point is to say that Foresters could not limit its liability to disgorge profits by claiming that only limited profits were caused by particular acts of knowing assistance when the consequences of those acts were inseparable from the consequences of Woff and Corby's general scheme of 1 See Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 140 [111]; [2007] HCA 22. 2 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 416 [147], 417 [152], 421 [171]; Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 15-16 [41]. Edelman breach of fiduciary duty. This point is further reinforced by the cross-appeal, which relied upon other acts by Woff and Corby for which Foresters was said to be vicariously liable. Although it is unnecessary to decide this issue of vicarious liability, it should be noted that there is no novelty in equity attributing to one person Dubai Aluminium Co Ltd v Salaam4, the Court of Chancery recognised vicarious liability of partners in this manner at least as early as 18425. the wrongful acts of another3. As Lord Millett observed In Consul Development Pty Ltd v DPC Estates Pty Ltd6, in a passage accepted as authoritative by both sides in the present case, Gibbs J said that: "a person who knowingly participates in a breach of fiduciary duty is liable to account to the person to whom the duty was owed for any benefit he has received as a result of such participation." So described, the liability to account and to disgorge benefits encompasses "any benefit" received by the knowing participant in a breach of fiduciary duty "as a result of" that participation. The benefit of a business connection is such a benefit. Foresters' submission fails to come to grips at all with the fact that the benefit that Foresters stood to gain, and in fact acquired, from its participation in the various acts of disloyalty by Woff and Corby was not sporadic deposits from retail customers; it was the business connections of Lifeplan and FPM. In addition, Foresters' submission, by framing the issue as involving an enquiry as to whether there was a causal connection between each of the particular acts of Foresters, whereby it participated in the strategy formulated by Woff and Corby, and particular deposits associated with its new business, diverts attention away from the significance of the circumstance that Foresters' acts of participation in the disloyalty of Woff and Corby were not only informed by, but were also an integral part of, the strategy for despoiling the business of Lifeplan and FPM. Whether a benefit can be said to be obtained "as a result of" knowing participation in a breach of fiduciary duty by another contrary to the principles of 3 Majrowski v Guy's and St Thomas's NHS Trust [2007] 1 AC 224 at 229 [10]. [2003] 2 AC 366 at 395 [104]. 5 Brydges v Branfill (1842) 12 Sim 369 [59 ER 1174]. (1975) 132 CLR 373 at 397; [1975] HCA 8. To similar effect see at 387 per Edelman equity is a question of causation or contribution that depends on "a precise examination of the particular facts" of the case, rather than upon attempts to refine the expression "as a result of", as if that phrase has some determinate operation of its own that may be discerned and applied independently of the equitable principle of which it is part7. The equitable disgorgement principle with which we are concerned is a "prophylactic rather than a restitutionary principle"8. It is sufficient to show that the profit would not have been made but Further, whatever may be the position for for dishonest wrongdoing. wrongdoing that is not marked by dishonesty9, a defendant cannot avoid liability to disgorge profits dishonestly made by showing that those profits might have been made honestly. This is not an approach to causation that is unique to dishonesty in equity. A defendant who is liable to compensate for deceit cannot avoid that liability by showing that the loss would have been suffered even without the deceit; and it is sufficient that the deceit was an inducement to engage in the conduct that occasioned the loss even if there were other inducements10. And in taking an account of profits for dishonest infringement of intellectual property rights, courts do not reduce the profit by reference to opportunity cost, that is, the revenue that would have been received by a lawful alternative11. As Lord Radcliffe said in the context of disgorgement of profits for a breach of fiduciary duty involving non-disclosure, "it is neither here nor there to speculate whether, if he had done his duty, he would not have been left in Jenyns v Public Curator (Q) (1953) 90 CLR 113 at 118-119; [1953] HCA 2. See also Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 426 [122]; [2013] HCA 25. Jones, "Unjust Enrichment and the Fiduciary's Duty of Loyalty", (1968) 84 Law Quarterly Review 472 at 474. 9 Glister, "Accounts of Profits and Third Parties", in Degeling and Varuhas (eds), Equitable Compensation and Disgorgement of Profit, (2017) 175 at 196. 10 Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483; Barton v Armstrong [1976] AC 104 at 118-119; Gould v Vaggelas (1984) 157 CLR 215 at 236, 250-251; [1984] HCA 68; San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340 at 366; [1986] HCA 68; Standard Chartered Bank v Pakistan National Shipping Corpn (Nos 2 and 4) [2003] 1 AC 959 at 967 [16]. 11 Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101 at 111, 114, 125; [1993] HCA 54; Celanese International Corp v BP Chemicals Ltd [1999] RPC 203 at 220 [41]. Edelman possession of the same amount of profit"12. For these reasons, the deterrent effect of an order for disgorgement of profits should not be diminished by acceding to Foresters' attempt to confine the scope of the causal enquiry implicit in the expression "as a result of". Foresters' submission also ignores the obvious reality that Foresters' participation was not merely that of a passive recipient of the benefits of the success of the Woff and Corby strategy. Foresters provided the commercial vehicle which would acquire and exploit the business connections to be appropriated from Lifeplan and FPM13. That vehicle was necessary to enable Woff and Corby to implement the strategy of despoliation that they had devised. There was no suggestion in the evidence that the strategy could have been implemented by Woff and Corby acting alone or, indeed, with any other competitor in the market. That Foresters' role was crucial to the implementation by Woff and Corby of the strategy devised by them is confirmed by the urgency and diligence with which Woff and Corby pursued Foresters' participation14, and the absence of any suggestion in the evidence that they ever had it in mind to pursue their strategy either by themselves or with some other participant. Given the knowledge and experience of Woff and Corby of this particular market15, there is no reason to suppose that their appreciation of the central importance of the participation of Foresters to the success of their strategy was not soundly based. And there is no reason apparent from the evidence to decline to attribute the same level of understanding to Foresters. As a matter of fact, the strategy proposed by Woff and Corby to acquire the valuable business connections of Lifeplan and FPM with funeral directors 12 Gray v New Augarita Porcupine Mines Ltd [1952] 3 DLR 1 at 15. See also Murad v Al-Saraj [2005] WTLR 1573 at 1591 [67], 1601 [105]-[107]; Conaglen, "The Extent of Fiduciary Accounting and the Importance of Authorisation Mechanisms", (2011) 70 Cambridge Law Journal 548. 13 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 6-7 [18]-[21], 7 [25], 12-14 [34]-[36]. 14 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 410-417 15 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 466-467 [429]; Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 13-14 [35]-[36]. Edelman succeeded, and could only have succeeded, by reason of the knowing participation of Foresters. Accordingly, the quantification of the benefit to be disgorged by Foresters requires an assessment of the attributable value of the business connections acquired by Foresters as a result of its participation in the disloyalty of Woff and Corby. Quantification Once it has been determined that a benefit or advantage has been caused by the acts of knowing assistance, there remains the question of quantification of the benefit to be disgorged. While it is true that equity will not require an errant fiduciary or a participant in a breach of fiduciary duty to account for an advantage which the breach of fiduciary duty has not caused or to which it has not sufficiently contributed16, where causation is sufficiently established the onus is upon the errant fiduciary or participant to show that he or she should not account for the full value of the advantage. That onus is not discharged by mere conjecture or supposition giving the benefit of the doubt to a proven wrongdoer. The requirement of proof conforms with the obligation of a party charged with a breach of fiduciary duty to show why the full value of an advantage obtained in a situation of conflict of duty should not be disgorged17. There are two ways in which the wrongdoer might discharge that onus and reduce the extent of the liability to disgorge profits. The first way, which can involve notorious difficulties in attribution of costs, is by proving his or her entitlement to an allowance for costs incurred, and labour and skill employed18. No issue of an allowance arises, or was relied upon, in this appeal because it was accepted that the expenses included in the discounted cash flow included an amount for the work and effort of Woff and Corby. The second way, which was the focus of this appeal, is by demonstrating that the benefit or advantage is beyond the scope of the liability for which the wrongdoer should account for profits. A wrongdoer might prove that some profit or benefit is beyond the scope of liability for which he or she should account if the profit or benefit has no reasonable connection with the wrongdoing. For 16 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557, 561; [1995] HCA 17 Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 at 398; [1929] HCA 24. 18 Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101 at 111. Edelman example, in Frank Music Corp v Metro-Goldwyn-Mayer Inc19, the Ninth Circuit Court of Appeals accepted that a copyright infringement by MGM Grand Hotel Inc in a performance at the MGM Grand Hotel entitled the plaintiffs to the profits directly from the performance. It also entitled the plaintiffs to a proportion of indirect profits, including from the consequential increase in hotel room bookings which were held to have a "sufficient nexus" with the performance20. But the direct profit from the performance to be disgorged was limited to nine per cent because the copyright infringement comprised only the substantial part of Act IV in a ten-act performance. Nor did it entitle the plaintiffs company, Metro-Goldwyn-Mayer Inc, as a result of "the advertising value" of the hotel. any profits made by liable parent the No precise test has been prescribed for determining when it will be inequitable to account for a benefit on the basis that it has no reasonable connection with wrongdoing. Nor is there any need for such a test. All of the circumstances must be considered, including the nature of the conduct. It is pertinent here that the profits were from deliberate and dishonest conduct, and were those desired to be achieved21. The advantage to be valued in this case was not limited to the flow of funds derived during the five-year period identified in the "Funeral Fund Business Concept" ("the BCP") prepared by Woff and Corby to encourage Foresters to participate in the despoliation of the business of Lifeplan and FPM. No doubt, as the Full Court held, the confidence in the success of the proposed strike against Lifeplan and FPM engendered by the five-year projections in the BCP influenced the decision of Foresters to fall in with Woff and Corby22; but the advantage to be obtained was not limited to what might be obtained by way of deposits during that period. The advantages of the business connections appropriated from Lifeplan and FPM were to be enjoyed by Foresters for as long as those connections could be retained in its business. It is important to bear steadily in mind that the onus was upon Foresters to show that it would be inequitable to require it to account for the whole of the advantage it acquired by its acquisition of the business connections of Lifeplan 19 886 F 2d 1545 (1989). See also Polar Bear Productions Inc v Timex Corp 384 F 3d 700 at 714, fn 11 (2004). 20 886 F 2d 1545 at 1553 (1989). 21 Restatement Third, Restitution and Unjust Enrichment, §51 citing Falk v Hoffman 135 NE 243 at 244 (1922). 22 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 12 [33]. Edelman and FPM23. Before the adoption and implementation of the Woff and Corby strategy for the despoliation of the funeral fund business of Lifeplan and FPM, Foresters' funeral fund business was not very profitable, if it was profitable at all24. The evidence demonstrated that, after the implementation of that strategy, there was a compelling correlation between the increase in the profitability of Foresters' funeral fund business and the decrease in the profitability of the business of Lifeplan and FPM. Annexure A to these reasons is a graph which shows the inflows into the funeral funds of Lifeplan and FPM on the one hand, and Foresters on the other, since 199925. There was no attempt by Foresters to prove that there was any reason to expect an increase in the profitability of its business apart from the success of the Woff and Corby strategy. Foresters adduced no evidence to show that what was, on any view, an extraordinary increase in the profitability of its business could be explained by any circumstance other than the success of the Woff and Corby strategy. It is also important that one not be distracted by the consideration, which seems to have weighed heavily with the primary judge, that once Woff and Corby had terminated their employment with Lifeplan they would be at liberty to solicit the business connections of Lifeplan and FPM for their own benefit and, should they so choose, for the benefit of Foresters26. So much may be accepted. But with the benefit of hindsight it can be seen that the success of the Woff and Corby strategy was assured by the arrangements that were being put in place before their employment with Lifeplan came to an end. Those arrangements were put in place, as Foresters knew, with a view to their immediate implementation so as to maximise the likelihood that Lifeplan and FPM would not be able to respond effectively to protect their business connections27. In this 23 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 561-562. 24 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 3-4 [6]. 25 This graph was tendered in evidence. It was prepared from the published annual reports of the relevant entities obtained from the Australian Securities and Investments Commission website. 26 Cf Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 464 [419], 27 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 408 [100], Edelman regard, it can be seen that the timing of the departure of Woff and Corby from their employment with Lifeplan was geared to the implementation of the sudden strike strategy. Foresters did not seek to prove that the implementation of the sudden strike strategy that was in place before the end of Woff and Corby's employment with Lifeplan did not contribute to funeral directors moving to Foresters in preference to remaining with Lifeplan and FPM. Nor did Foresters seek to prove the likely difference between the value of any migration to Foresters' new business by funeral directors unaffected by the sudden strike and the value of the business connections actually appropriated by Foresters. That requiring Foresters to account for the entirety of the advantage that it obtained by its knowing assistance is not inequitable may be demonstrated by considering the following hypothesis. If, while Woff and Corby remained in the employ of Lifeplan, they had become aware of the same strategy devised by other employees of Lifeplan and FPM, and they were loyal employees undistracted by their self-interest and the assistance in that regard forthcoming from Foresters, they would have moved to ensure that Lifeplan and FPM's business connections were shored up and kept secure against the threat that Foresters posed. It is not to be supposed that such efforts would not have been successful. As to the suggestion that it would be inequitable to require Foresters to disgorge the full value of the business connections it acquired because some of the business connections appropriated from Lifeplan and FPM might in due course return to them, it is to be noted that Foresters did not demonstrate that any of its increased profitability was generated by matters other than the business connections that were appropriated from Lifeplan and FPM28. Nor did Foresters make any attempt to prove that any of the business connections appropriated by Foresters expired after the effluxion of five years, or were likely to endure only for a short period thereafter, rather than over the lifetime of the business newly established by its acquisition of these connections. It is noteworthy that nothing in the BCP predicted that these connections, once detached from Lifeplan and FPM and attached to Foresters, would be likely, over time, to return to Lifeplan and FPM. Once again, Woff and Corby's view of the market may be taken to be soundly based given their knowledge and experience of that market. This point is graphically illustrated by Annexure A to these reasons, which shows the decline of the business of Lifeplan and FPM and the corresponding increase in the business of Foresters, closely matching the BCP predictions. 28 Cf Warman International Ltd v Dwyer (1995) 182 CLR 544 at 561. Edelman that case, In all these respects, the present case is readily distinguishable from Warman International Ltd v Dwyer, where the profits awarded were limited to the first two years' exploitation of the business opportunity appropriated by the defendants. the advantage misappropriated was apt to endure only for a short period, and, even during that period, was of diminishing value29. The present case can similarly be distinguished from Kao Lee & Yip v Koo Hoi Yan, where Ma J followed Warman, finding that the relevant business would have been lost to the principal after a year so that after that time the profits were too remote from the breach of the evidence showed that The accounting It is well established that a liability to account for profits will include profits that have been made31. However, Foresters submitted that this was the limit of the profits for which it could be called to account. In particular, Foresters submitted that the net present value of funeral bond contracts was an assessment of anticipated future profits rather than actual profits, and was therefore irrecoverable. This submission is not consistent with principle or authority. As to principle, to confine the account in this way would sever the process of accounting for, and disgorgement of, profit from its rationale in the principle of ensuring that the wrongdoer should not be permitted to gain from the wrongdoing32. As to authority, the liability to account for a profit was described in Warman as concerned with "a profit or benefit"33 in language divorced from a confined conception of benefit as accrued profit in narrow accounting terms. In any event, it is artificial to require disgorgement of realised profits but not to allow unrealised profits that will be realised upon performance of the relevant 29 (1995) 182 CLR 544 at 550-551, 565-566. 30 [2003] 3 HKLRD 296 at 340 [143], 343-344 [158]. See also Mitchell, "Causation, Remoteness, and Fiduciary Gains", (2006) 17 King's College Law Journal 325 at 31 Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 34; [1968] HCA 50; Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101 at 32 Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at 262. 33 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557. See also at 559 quoting Chan v Zacharia (1984) 154 CLR 178 at 204-205; [1984] HCA 36. Edelman contract where there is no reason to expect that performance will not occur. As Millett LJ said in Potton Ltd v Yorkclose Ltd34: "Unrealised profits are actual profits. Profits are made when they are earned, recognised when they are brought into the accounts, and realised when they accrue, that is to say when a legal right arises to receive payment. As a matter of ordinary accounting practice, profits are seldom recognised before they accrue, but this is a matter of prudence only; in a proper case they may be recognised before they accrue. Whether or not recognised, however, they are not profits which could or should have been made or which are merely capable of being made, but profits which have actually been made though not yet realised." Conclusion Given the facts of the present case, there was no principled basis for requiring Foresters to disgorge anything less than the value of the business connections appropriated by Foresters from its participation in the disloyalty of Woff and Corby. It is unnecessary to consider the scope and effect of s 1317H of the Corporations Act 2001 (Cth). 34 [1990] FSR 11 at 15. Edelman ANNEXURE A This appeal and cross-appeal, from a judgment of the Full Court of the Federal Court35 on appeal from a judgment of a single judge of the Federal Court36, provide occasion to restate the principles which govern the ordering of an account of profits against a knowing participant in a dishonest and fraudulent breach of fiduciary duty. The facts The fiduciaries in question were Mr Woff and Mr Corby. Each was an employee of Lifeplan Australia Friendly Society Ltd ("Lifeplan"). Through its wholly owned subsidiary, Funeral Plan Management Pty Ltd ("FPM"), Lifeplan engaged in the business of providing funeral products – retail investment contracts under which a customer would make payments (sometimes in a lump sum and sometimes in instalments) which were to be managed in a fund for a fee and the capital-guaranteed sum of which was to be paid out on the customer's death to a funeral director to meet the expenses of a pre-arranged funeral. FPM marketed the funeral products through distribution arrangements which it had established with funeral directors throughout Australia. Mr Woff was a senior manager at FPM and had direct oversight of its marketing and distribution arm. Mr Corby was FPM's national sales manager. In 2010, Lifeplan's inflows of funds from funeral products were in the order of $68 million. Ancient Order of Foresters in Victoria Friendly Society Ltd ("Foresters") also engaged in the business of providing funeral products, initially on a scale much smaller than that of Lifeplan. In 2010, Foresters' inflows of funds from funeral products were in the order of only $1.6 million. Foresters' provision of funeral products appears not then to have been generating profit. In July 2010, while still employed by Lifeplan, Mr Woff and Mr Corby surreptitiously proffered to Foresters a proposal to develop Foresters' funeral products business in a way that would capture for Foresters much if not all of the existing business of FPM. The proposal which they proffered involved Foresters employing Mr Woff and Mr Corby, entering into a marketing agreement with a company to be formed by Mr Woff and Mr Corby to be called Funeral Planning Australia Pty Ltd ("FPA"), and through FPA embarking on a systematic course of action to win over funeral directors through whom FPM was then distributing its funeral products. Mr Woff and Mr Corby formalised the proposal in a detailed five-year business concept plan ("the BCP") which they presented to Foresters for 35 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1. 36 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384. consideration by its Board of Directors in August 2010. The BCP was fairly characterised by the Full Court as "a comprehensive plan presented by employees of Lifeplan to Lifeplan's actual and prospective competitor, prepared utilising valuable confidential information of their employer (and to a significant degree recognisable as such) that set out a detailed strategy to attack the commercial base of that employer in order to win as many clients as possible from the employer after they left it, and so to take as quickly as possible the business presently enjoyed by Lifeplan and replicate its success for the benefit of the new prospective employer"37. Given the significance of the BCP to the determinative issue in the appeal and the cross-appeal, a summary of some of the most striking features of the BCP is warranted. The introduction to the BCP described it as a document prepared by FPA for the Board of Foresters "to discuss the concept of working together to develop a successful funeral fund operation". The introduction described FPM as "the largest and most successful operator" in the Australian funeral fund industry and described Mr Woff and Mr Corby as "FPM's two key employees". The introduction continued by explaining that Mr Woff and Mr Corby "have now established their own niche marketing company, FPA, which they present to the Board of Foresters as an opportunity to, in a very short timeframe, replicate the success enjoyed by FPM". Appended to the BCP were detailed schedules. One was headed "New Business Acquisition Timeframe". It listed by name the funeral directors to be won over to Foresters. In relation to nearly all of the named funeral directors, it listed figures for the annual inflow of funds and the number of investment contracts generated through that funeral director. It specified the year in which the business of each named funeral director was projected to be won and the annual inflow projected to be generated through that funeral director in that year. Another of the appended schedules was headed "Visitation Plan". It set out in detail a costed program of visits to funeral directors designed to win their business. Another of the appended schedules was headed "Foresters Profit Revenue Model". It set out a financial model which translated the total annual inflows projected to be generated through the funeral directors to be won over to Foresters in each of the five years of the BCP into projected revenue and profit figures for each of those years. The source of revenue was an ongoing management fee fixed as a percentage of the accumulated payments of each customer. Within the body of the BCP, a table headed "Five Year Sales Projections" summarised the projected total annual inflows of funds together with the total number of funeral directors whose business was projected to be won for each of 37 (2017) 250 FCR 1 at 12 [32]. the five years of the BCP. The projections in the table began with inflows of $10 million from 40 funeral directors in the first year and ended with inflows of $45 million from 300 funeral directors in the final year. Another table within the body of the BCP, headed "Historical Sales Performance", was introduced with the explanation that "[w]ith any projections for a start up entity there are the obvious questions of accuracy" and that "[a]s a means to give validity to what has been presented we submit our historic sales figures which have been achieved in an environment of more players and intensive competition". The table set out annual sales figures for each year from 2000 to 2010. A section of the BCP headed "Strategy for Securing New Business" referred to the "target market" as funeral directors who had a characteristic trait of being loyal to fund managers but also "to individuals with a proven track record and proven service standards". It expressed confidence that the funeral directors to be targeted, as identified in the New Business Acquisition Timeframe, would be won over to Foresters as a result of the latter loyalty prevailing. It recommended that "at the earliest possible stage Foresters establish a new funeral benefit fund" with specified characteristics. It also recommended "marketing collateral" which included tailored product disclosure documents and marketing flyers. The costs to Foresters in the first year of implementation of the plan were specified to be in the order of $700,000 and were explained in some detail. Mr Woff and Mr Corby had prepared the BCP based on what could only be described, as it was by the Full Court, as their "wholesale plundering of the confidential information and business records of Lifeplan"38. Not only were the historical sales figures obviously those of FPM, but the figures itemised as the "annual inflows" and numbers of investment contracts in relation to the named funeral directors in respect of whom those figures were given, the planned schedule of visits to funeral directors, and the financial modelling of projected revenue and profit were all unmistakably derived from information of Lifeplan relating to the current business of FPM. The primary judge and the Full Court found that that use of Lifeplan's confidential information in the preparation of the BCP must have been apparent to honest and reasonable persons in the position of members of the Board of Foresters39. Importantly from the perspective of the Board, and again as fairly characterised by the Full Court, the BCP was a document that enabled the Board "to evaluate the worth of the commercial opportunity against the risk to be undertaken, and to make the commercial decision with the confidence of 38 (2017) 250 FCR 1 at 4 [8]. 39 (2016) 259 IR 384 at 456-457 [378]; (2017) 250 FCR 1 at 15 [41]. knowing that it was privy to the detail of Lifeplan's strategies, financial analyses and up-to-date results"40. The Board considered the BCP at a meeting in August 2010. Attracted to the proposal, but having some reservations, the Board invited Mr Woff and Mr Corby to speak at its subsequent meeting in September 2010. In his oral remarks at that meeting, Mr Woff stressed that the sales projections in the BCP were realistic provided implementation of the BCP was immediate. Implicitly referring to the impact of his and Mr Corby's imminent departure from Lifeplan and of the implementation of the BCP, Mr Woff told the Board that the ensuing period of six months was a "window" in which "our competitors will be very vulnerable". The Board approved the BCP following the September 2010 meeting. Critically, the primary judge and the Full Court found that Foresters would not have proceeded with the new funeral products business without the BCP and that the information confidential to Lifeplan which the BCP contained was at least material to Foresters' decision to proceed41. Foresters' Chief Executive Officer, Mr Hughes, wrote to Mr Woff and Mr Corby telling them of the approval soon afterwards. The letter stated that "[i]n measuring the traction of the product the Board will rely heavily upon your predictions of sales/growth that you provided in [the BCP]". Mr Woff and Mr Corby wasted no time in the implementation of the BCP. To the knowledge and with the encouragement of Mr Hughes, Mr Woff and Mr Corby during the following two months and while they remained employees of Lifeplan: revised the rules of the Foresters Funeral Fund to bring them into line with the recommendation made in the BCP; prepared product disclosure documents and marketing flyers for the new business; and approached a number of funeral directors designated to be targeted in the first year of the BCP. In November 2010, Mr Woff and Mr Corby incorporated FPA. Mr Corby resigned from Lifeplan in the same month and commenced employment with Foresters at the beginning of December. Mr Woff did not resign from Lifeplan until the end of December. Two days after he resigned, Foresters entered into a marketing and service agreement with FPA. Four days after that, Mr Woff joined Mr Corby as an employee of Foresters. By the end of January 2011, the necessary revisions to the Foresters Funeral Fund rules had been approved by the Australian Prudential Regulation Authority and the product disclosure documents were in the process of final review. 40 (2017) 250 FCR 1 at 12 [33]. 41 (2016) 259 IR 384 at 446 [324]; (2017) 250 FCR 1 at 21-22 [66]. FPA subsequently reported monthly to Foresters in reports prepared in part by reference to the New Business Acquisition Timeframe appended to the BCP. For their part, as foreshadowed in Mr Hughes' letter telling Mr Woff and Mr Corby of their approval of the BCP, Foresters' Board used the sales projection figures in the BCP to benchmark the performance of the Foresters Funeral Fund at least during the first six months of the Fund's operation. The new Foresters Funeral Fund business marketed by FPA proved highly successful. Foresters' inflows and consequent profits from funeral products consequent profits increased dramatically. correspondingly declined. Whereas in 2010, as already noted, Foresters' annual inflows had been in the order of $1.6 million and Lifeplan's in the order of $68 million, just two years later Foresters' annual inflows had risen to $24 million and Lifeplan's had fallen to $45 million. inflows and In September 2011, Lifeplan's parent company wrote to Foresters complaining that "serious breaches of law and equity" appeared to have been committed by Mr Woff and Mr Corby. The breaches then complained of included Mr Woff and Mr Corby making use of Lifeplan's confidential information in the establishment and operation of FPA. Foresters did not then think that there was anything in the complaint. Nevertheless, Foresters took steps in an attempt to remove the cause of the complaint. Those steps included notifying funeral directors in September 2011 that existing documents should no longer be used and issuing replacement documents at the start of October 2011. Foresters terminated the marketing and service agreement with FPA in March 2013. From that time, Foresters promoted the Foresters Funeral Fund itself. FPA was placed in liquidation in June 2013. The judgment at first instance Lifeplan and FPM commenced a proceeding in the Federal Court against Mr Woff, Mr Corby and FPA. Foresters was subsequently joined. Lifeplan's and FPM's claims in the proceeding included that Mr Woff and Mr Corby had breached fiduciary duties owed to Lifeplan and FPM and that Foresters had knowingly assisted in those breaches. The claims also included that Mr Woff, as an officer of Lifeplan and of FPM, had contravened provisions of the Corporations Act 2001 (Cth) and that Foresters was involved in those contraventions by reason of being knowingly concerned in them. At an early stage in the proceeding, Lifeplan and FPM elected to claim accounts of profits rather than to pursue any claim for damages. In their claim for an account of profits against Foresters, what they sought was the profits earned and to be earned through the operation of Foresters' funeral products business calculated on a net present value basis by reference to the net profit projected to be made on contracts entered into and projected to be entered into in each year of the operation and projected operation of the Foresters Funeral Fund. Their primary claim was for the net present value of those projected profits on contracts entered into and projected to be entered into in every year of the actual and projected period of the operation of the Fund. That is to say, their primary claim was for the entire value of Foresters' funeral products business. Their alternative claim was for the net present value of those projected profits on contracts entered into and projected to be entered into up to a cut-off date to be determined by the Court. The primary judge (Besanko J) found that, in addition to having breached obligations of confidence to Lifeplan and FPM, Mr Woff and Mr Corby had engaged in a number of breaches of their respective fiduciary duties of loyalty to Lifeplan and FPM42. The primary judge found that Foresters had knowingly participated in some but not all of those breaches of fiduciary duties43. In language drawn from the declaratory orders which the primary judge went on to make and which were not disturbed on appeal, the precise conduct in which the primary judge found Mr Woff and Mr Corby to have engaged in breach of their fiduciary duties of loyalty to Lifeplan and FPM in respect of which he found Foresters to have knowingly participated was that: between July and December 2010, without permission, Mr Woff and Mr Corby took, used, disclosed to Foresters and retained Lifeplan's and FPM's confidential and valuable information to prepare and advance the BCP; between October and December 2010 in respect of Mr Woff, and between October and November 2010 in respect of Mr Corby, while still employees of Lifeplan, Mr Woff and Mr Corby approached funeral directors for the purpose of soliciting their business; and between September and December 2010, while still employed by Lifeplan, Mr Woff and Mr Corby were involved in the changes to be made to the rules governing the Foresters Funeral Fund and the preparation of Foresters' product disclosure documents. 42 (2016) 259 IR 384 at 456 [377], 458 [384] and [386], 460 [398]-[399], 461 [402]- [403] and [405]. 43 (2016) 259 IR 384 at 457 [379], 458-459 [385] and [387]-[388], 460 [398], 461 [402], [404] and [406]. The primary judge found that the same conduct on the part of Mr Woff constituted contraventions of obligations which Mr Woff had as an officer of Lifeplan and of FPM under ss 181, 182 and 183 of the Corporations Act and that Foresters was involved in the contraventions constituted by the last category of conduct set out above by reason of being "knowingly concerned" in them within the meaning of s 79 of the Corporations Act. The primary judge ordered an account of profits in equity against each of Mr Woff and Mr Corby, and under s 1317H of the Corporations Act against Mr Woff. Each was ordered to account for the sum of his drawings and distributions from a trust of which FPA was trustee44. The primary judge declined to order any account of profits against Foresters, either in equity or under s 1317H of the Corporations Act. In relation to the use and disclosure to Foresters of Lifeplan's and FPM's confidential information to prepare and advance the BCP, the reason which the primary judge gave for declining to order an account of profits was that the confidential information was not itself "used to generate profits"45. In relation to the approaches to funeral directors and preparation for the new business while they remained employees of Lifeplan, the reason which the primary judge gave for declining to order an account of profits related to the capacity of Mr Woff and Mr Corby to have engaged in that conduct after they left Lifeplan. Whilst "the breaches in which Foresters participated might have led to FPA and Foresters being able to establish the proposed business earlier than might have been the case had there been no breaches", those breaches did not for that reason "lead to the profits earned and to be earned in relation to the Foresters Funeral Fund"46. His Honour noted that Lifeplan and FPM did not advance a case for an account of profits for a limited period on a "headstart basis"47. The judgment on appeal Disavowing any attempt to formulate an exhaustive statement of the causal connection between breach of a fiduciary duty and a benefit obtained by a person who knowingly participated in that breach which is sufficient in equity to justify ordering an account of profits against that person, the Full Court (Allsop CJ, Middleton and Davies JJ) concluded that the primary judge's 44 (2016) 259 IR 384 at 471 [446]. 45 (2016) 259 IR 384 at 470 [443]. 46 (2016) 259 IR 384 at 470-471 [444]. 47 (2016) 259 IR 384 at 464 [419], 471 [444]. approach to ordering of an account of profits against Foresters was unduly narrow. After emphasising the stringency of a fiduciary duty, the Full Court stated48: "Here, a central, but not comprehensive, feature of what happened was that Mr Woff and Mr Corby, with the full knowledge of Foresters, dishonestly breached their duty by, amongst other things, utilising confidential information to prepare the BCP for the consideration of the board of Foresters. ... Armed with this information, Mr Woff and Mr Corby were able to persuade Foresters, and, in receipt of the information, Foresters was able to decide, with a degree of business confidence, to employ them and to undertake the business strategy proposed by them. Without the dishonest taking advantage of the information and without the breaches, Mr Woff and Mr Corby would not have been employed by Foresters, and Foresters would not have expanded its business in this segment in the hands of Mr Woff and Mr Corby as it did. Put another way, without the breaches of duty in which Foresters was knowingly involved, without Messrs Woff and Corby taking advantage of their positions and of the confidential information taken from their employer, Foresters would not have made the profits it did from the business written in the venture with Messrs Woff and Corby." The Full Court continued: "To conclude that such is a sufficient causal connection to found a liability to account for profits of the business would not be to extend the causal relationship beyond the expressions of profits actually made by reason of the breaches; rather, it would be to fashion the remedy in a way that, in terms of a causal attribution, would conform to and enforce, and not undermine the strictness of the duty by fashioning the remedy to fit the nature of the case and the particular facts." Turning to the precise scope of the profits for which it was appropriate to order Foresters to account to Lifeplan and FPM in equity, the Full Court noted that the breaches of duty by Mr Woff and Mr Corby did not transfer an extant business to Foresters but rather led to Foresters establishing a new business, the establishment of which "necessarily involved the deployment of capital, skill and expertise, and the undertaking of business risk"49. The Full Court took the view that the account of profits would be too extreme if it were to extend to the entire 48 (2017) 250 FCR 1 at 21-22 [66]. 49 (2017) 250 FCR 1 at 25 [85]. value of the Foresters Funeral Fund business. Tailoring the order to the circumstances rather required the account of profits to be a proportionate response to the breaches of fiduciary duties by Mr Woff and Mr Corby and to give due recognition to the fact that the breaches did not result in "direct generation of profit"50. The order nevertheless needed to fulfil equity's remedial objectives of vindicating the principles of fidelity, trust and honesty which underlay imposition of the fiduciary duties which were breached and of serving "as an encouragement against being swayed to participate for personal gain in the dishonest breaches of others of their duties of fidelity"51. Having regard to those considerations, the Full Court formed the opinion that the proportionate response in the circumstances was to order that Foresters account to Lifeplan for the net present value of the profits made and projected to be made on contracts entered into by Foresters between the beginning of February 2011 and the end of June 2015. The Full Court explained that its choice of the end point of June 2015 "sets the account within the framework of the five-year business plan, with a modest deduction of six months" and "sets an account for the period of planning for the new business that was the central focus of the behaviour that constituted the breaches and the participation"52. The Full Court went on to hold that the same order for an account of profits was available and should be made against Foresters under s 1317H of the Corporations Act53. Allowing Lifeplan's and FPM's appeal, the Full Court accordingly supplemented the orders of the primary judge with an order that Foresters account to Lifeplan and to FPM for profits, in equity and under s 1317H of the Corporations Act, in the sum of $6,558,495. The precise sum was based on expert evidence to which further reference will need to be made. The appeal and cross-appeal to this Court Foresters sought special leave to appeal from the judgment of the Full Court. Following a contested hearing54, special leave to appeal was granted, but was limited to just two of the grounds on which special leave had been sought. 50 (2017) 250 FCR 1 at 26 [85]. 51 (2017) 250 FCR 1 at 26 [87]. 52 (2017) 250 FCR 1 at 26 [88]. 53 (2017) 250 FCR 1 at 29 [117]. 54 [2017] HCATrans 210. The first ground of appeal on which special leave was granted is expressed in terms that the Full Court "erred in concluding that there was a sufficient causal connection between the profits the subject of the account of profits ordered against Foresters and the conduct that constituted its knowing participation in equity in breaches of fiduciary duty" by Mr Woff and Mr Corby (and that constituted its involvement in the contravention of ss 181, 182 and 183 of the Corporations Act by Mr Woff pursuant to s 1317H) "because the Full Court was satisfied that but for that unlawful conduct by Foresters the occasion for the making of the profit would not have arisen, notwithstanding that that conduct was not the real or effective cause of any profit derived by Foresters". The second ground of appeal is expressed in terms that the Full Court "erred in ordering the account of profits" based on contracts entered into by Foresters in its funeral products business for the period to the end of June 2015 "when no profits were actually made by Foresters from those contracts during that period" and "calculated on the basis of the net present value of future potential profits, which may or may not be made by Foresters from those contracts" after that period. Neither in form nor in substance does either ground of appeal canvass any factual conclusion of the Full Court. The first asserts an error of principle in the reasons given by the Full Court for ordering of an account of profits. The second asserts error in the formulation of the precise order which it made. Foresters' attempt in written and oral submissions to re-characterise the facts is rejected. Foresters' appeal is to remain strictly confined to the two grounds on which special leave was granted. As was procedurally open to them as respondents to Foresters' appeal, Lifeplan and FPM on the hearing of the appeal sought special leave to cross- appeal on a number of grounds. The first and second of those grounds combine to assert error on the part of the Full Court in failing to order Foresters to account for the entire capital value of Foresters' funeral products business. Interpreted as confined to asserting error in the reasoning of the Full Court, those grounds are a reflex of the grounds on which special leave to appeal has been granted in that they turn on the application to the facts of the same principle of equity. They alone are appropriate for the grant of special leave to cross-appeal. The remaining grounds on which Lifeplan and FPM sought special leave to cross-appeal included that the Full Court ought to have found that Foresters was vicariously liable for equitable wrongdoing by Mr Woff and Mr Corby from the respective dates of their employment by Foresters. Vicarious liability for equitable wrongdoing was rejected as a matter of principle by the primary judge55 and was not addressed in the reasoning of the Full Court56. Lifeplan and FPM 55 (2016) 259 IR 384 at 456 [374]. 56 See (2017) 250 FCR 1 at 30 [121]-[123]. conceded in argument that to hold Foresters vicariously liable for such wrongdoing as occurred after they had become employees of Foresters could add nothing of significance to Foresters' duty to account on the basis of having knowingly participated in Mr Woff's and Mr Corby's breaches of fiduciary duty when they were still employees of Lifeplan. The cross-appeal in those circumstances presents as an inappropriate vehicle for exploring any question of vicarious liability for equitable wrongdoing. Discrete issue was joined in argument on Foresters' appeal as to whether an order for an account of profits is available to be made under s 1317H of the Corporations Act. In the result, that issue of statutory construction need not be determined. For reasons to be explained, Lifeplan's and FPM's cross-appeal is to be allowed. The Full Court's order for an account of profits is on that basis to be set aside and Foresters is to be ordered to account to Lifeplan and to FPM in equity for the total capital value of the business in the sum of $14,838,063. As before the Full Court, no distinction was drawn by the parties to the appeal between the positions of Lifeplan and FPM in relation to the framing of an order to account. The equitable principles The fiduciary duty that an employee has to an employer within the scope of the relationship of employment, no less than the fiduciary duty that any other person in a fiduciary position has to any other person to whom the fiduciary duty is owed within the scope of the venture or undertaking in respect of which the person in the fiduciary position has undertaken or assumed a responsibility to act in the exclusive interests of that other person57, is a duty of "absolute and disinterested loyalty"58. That duty of loyalty is imposed in equity by means of two overlapping "proscriptive obligations"59. Each proscriptive obligation, or 57 Gibson Motorsport Merchandise Pty Ltd v Forbes (2006) 149 FCR 569 at 574-575 [11]-[12]. See also Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 at 407-409; [1929] HCA 24. 58 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 104; [1984] HCA 64, quoting Phelan v Middle States Oil Corporation 220 F 2d 593 at 602 (1955). See also Bristol and West Building Society v Mothew [1998] Ch 1 at 18; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at 344-345 59 Friend v Brooker (2009) 239 CLR 129 at 160 [84]; [2009] HCA 21, citing Breen v Williams (1996) 186 CLR 71 at 93-94, 113, 135-137; [1996] HCA 57 and Pilmer v Duke Group Ltd (In liq) (2001) 207 CLR 165 at 197-198 [74]; [2001] HCA 31. "theme"60, is "descriptive of circumstances in which equity will regard conduct of a particular kind as unconscionable and consequently attracting equitable remedies"61. "The first", often referred to as the "conflict rule", "is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest."62 The unconscionability which attracts equitable remedies in circumstances where the conflict rule alone is invoked lies not so much in receipt by the fiduciary of the benefit or gain (over which the fiduciary need not have control) as in retention by the fiduciary of the benefit or gain which in conscience ought to be disgorged to the principal63. "The second", often referred to as the "profit rule", "is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of [the] fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing [the fiduciary's] position The unconscionability which attracts equitable remedies in such circumstances lies in pursuit by the fiduciary of self-interest, or, more precisely, in pursuit of an interest other than the exclusive interest of the principal. fiduciary's] personal advantage."64 [the for Consistently with neither case does the benefit or gain to the fiduciary need to be at the expense of the principal65, though it may be. And in neither case does the fiduciary need to act dishonestly or fraudulently66, or otherwise than in good imposing each obligation, the objective of 60 Chan v Zacharia (1984) 154 CLR 178 at 198; [1984] HCA 36. 61 Concut Pty Ltd v Worrell (2000) 75 ALJR 312 at 318 [26]; 176 ALR 693 at 700; [2000] HCA 64, quoting United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766 at 799. 62 Chan v Zacharia (1984) 154 CLR 178 at 198. 63 Chan v Zacharia (1984) 154 CLR 178 at 199. 64 Chan v Zacharia (1984) 154 CLR 178 at 198-199. 65 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 562; [1995] HCA 18. 66 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 558, discussing Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 (note) and Boardman v Phipps [1967] 2 faith67, though again the fiduciary may do so. Where a fiduciary does act dishonestly and fraudulently, however, the dishonest and fraudulent character of the breach of fiduciary duty is not without consequence for the intensity of the equitable remedies available against the defaulting fiduciary. More important for present purposes is that the dishonest and fraudulent character of the conduct of the fiduciary gives rise to the potential for similar remedies to be available in equity against another person who might knowingly participate in the fiduciary's breach. Knowing participation by a non-fiduciary in a dishonest and fraudulent breach of fiduciary duty is conduct which is regarded in equity as itself unconscionable and as attracting equitable remedies against the knowing participant of the same kind as those available against the errant fiduciary68. Knowing participation in a dishonest and fraudulent breach of fiduciary duty includes knowingly assisting the fiduciary in the execution of a "dishonest and fraudulent design" on the part of the fiduciary to engage in the conduct that is in breach of fiduciary duty69. The requisite element of dishonesty and fraud on the part of the fiduciary is met where the conduct which constitutes the breach transgresses ordinary standards of honest behaviour70. Correspondingly, the requisite element of knowledge on the part of the participant is met where the participant has knowledge of circumstances which would indicate the fact of the dishonesty on the part of the fiduciary to an honest and reasonable person71. That is not to say that other participatory conduct by non-fiduciaries in other breaches of fiduciary duty cannot attract equitable remedies72. The extent to which such conduct might do so does not now arise for consideration; the conduct of the fiduciaries and the non-fiduciary in the present case was squarely within the accepted paradigm. 67 Chan v Zacharia (1984) 154 CLR 178 at 199. 68 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 397- 398; [1975] HCA 8; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 164 [179]; [2007] HCA 22. 69 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 159 [160]. 70 Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609 at 636 [124]. 71 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 163-164 72 Cf Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at 356-358 [242]-[248]. See also Gummow, "Knowing Assistance", (2013) 87 Australian Law Journal 311. The breaches of fiduciary duty on the part of Mr Woff and Mr Corby consisted of conduct in breach of the profit rule which formed an integral element of a concerted course of conduct to gain part of their existing employer's business for FPA (a company they controlled) and for Foresters (a competitor of their employer). Foresters knowingly participated in those breaches of fiduciary duty by Mr Woff and Mr Corby by choosing to take up and to implement the business plan proposed to Foresters by Mr Woff and Mr Corby in the form of the BCP with knowledge of the conduct which constituted those breaches of fiduciary duty in circumstances which would have indicated the dishonest and fraudulent nature of that conduct to an honest and reasonable person. Those circumstances were sufficient to render Foresters, no less than Mr Woff, Mr Corby and FPA, liable as a "constructive trustee". Traditionally, that label has been ascribed both to a fiduciary in breach of a proscriptive obligation73 and to a knowing participant in a dishonest and fraudulent breach of a proscriptive obligation imposed on a fiduciary74. The label was long ago explained to serve no purpose other than to indicate amenability to the range of remedies traditionally available in equity against a trustee who is in breach of a similar proscriptive obligation75. The remedies available against each, at the option of the person to whom the proscriptive obligation is owed by the fiduciary, centrally include an order for equitable compensation and an order to account76. Ordinarily, declaration of a constructive trust is warranted only if other equitable orders are not capable of doing complete justice in the circumstances of the case77. The equitable remedy of account is a personal order. The order operates to require that a defendant pay to a plaintiff the monetary value of a benefit or gain to the defendant. Although commonly referred to as an "account of profits", there is no reason why a benefit or gain to be made the subject of an account must answer the description of a "profit" in conventional accounting terms. Nor is there any reason why that benefit or gain must answer the description of 73 Eg Chan v Zacharia (1984) 154 CLR 178 at 199. 74 Eg Barnes v Addy (1874) LR 9 Ch App 244 at 251-252. 75 Rolfe v Gregory (1865) 4 De G J & S 576 at 579 [46 ER 1042 at 1044]. See also Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 290 [47]-[48]; [2009] HCA 44; Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366 at 404 [141]. 76 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 556; Maguire v Makaronis (1997) 188 CLR 449 at 468; [1997] HCA 23. 77 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 at 45 [128]; [2010] HCA 19. "property" or must have sufficient certainty as to be capable of forming the subject matter of a trust. The benefit or gain can be expectant or contingent. Indeed, it is commonplace that a benefit or gain the subject of an account might encompass an ongoing business. And it is commonplace that the benefit or gain to be made the subject of an order to account might extend to the whole of the ongoing business or be limited to a part of the business identified by reference to both a specified scope of commercial activities and a specified period of commercial activities which need not be confined to a past period but may be a period which extends into the future. The amenability of a knowing participant in a dishonest and fraudulent breach of fiduciary duty to a personal order to account for the monetary value of a benefit or gain has sometimes been described as an "accessorial" liability. The description is useful in a case such as the present in highlighting that it is the dishonest and fraudulent breach of fiduciary duty which gives the character of unconscionability to the knowing participation and which exposes the knowing participant to equitable remedies. The description would have the potential to mislead were it to be taken further78: "The reference to the liability of a knowing assistant as an 'accessorial' liability does no more than recognise that the assistant's liability depends upon establishing, among other things, that there has been a breach of fiduciary duty by another. It follows ... that the relief that is awarded against a defaulting fiduciary and a knowing assistant will not necessarily coincide in either nature or quantum. So, for example, the claimant may seek compensation from the defaulting fiduciary (who made no profit from the default) and an account of profits from the knowing assistant (who profited from his or her own misconduct). And if an account of profits were to be sought against both the defaulting fiduciary and a knowing assistant, the two accounts would very likely differ." More useful, to my mind, is the description of the amenability of a knowing participant in a dishonest and fraudulent breach of fiduciary duty to a personal order to account as an "ancillary liability", emphasising that it is the knowing participation in the dishonest and fraudulent breach by the defaulting fiduciary that renders the participant liable to account "as if" a fiduciary79. The principles by which a fiduciary is assessed as liable to account for the monetary value of a benefit or gain obtained in circumstances of breach of a fiduciary obligation "express the policy of the law in holding fiduciaries to their 78 Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at 457-458 [106]; [2011] HCA 48 (footnote omitted). 79 Williams v Central Bank of Nigeria [2014] AC 1189 at 1198 [9]. duty"80. Holding the fiduciary to account in circumstances of breach of a fiduciary obligation has been explained to serve two purposes. One is preventing the unjust enrichment of the fiduciary. The other, more general, purpose is removing the incentive for the fiduciary to act other than in the sole interests of the principal81. Holding the knowing participant in a dishonest and fraudulent breach of duty to account is explicable, and has been explained, as serving precisely the same purposes in precisely the same way82: "If the maintenance of a very high standard of conduct on the part of fiduciaries is the purpose of the rule it would seem equally necessary to deter other persons from knowingly assisting those in a fiduciary position to violate their duty. If, on the other hand, the rule is to be explained simply because it would be contrary to equitable principles to allow a person to retain a benefit that [the person] had gained from a breach of [the person's] fiduciary duty, it would appear equally inequitable that one who knowingly took part in the breach should retain a benefit that resulted therefrom." The reasons for holding the dishonest and fraudulent fiduciary to account and the reasons for holding the knowing participant to account being the same, there is no reason why the principles by which the knowing participant's liability to account is assessed should be different from those by which the dishonest and fraudulent fiduciary's liability to account is assessed. Notably, no distinction was drawn between the applicable principles in the reasoning of this Court in Warman International Ltd v Dwyer83. The suggestion that a basis of differentiation might be found in the fact that the fiduciary alone has undertaken or assumed a responsibility to act in the interests of the person to whom the fiduciary duty is owed might have some force if and to the extent that an additional reason for ordering an account might be found in equity giving effect to that undertaking or assumption of responsibility by proceeding on the fiction that the undertaking or assumption of responsibility 80 Maguire v Makaronis (1997) 188 CLR 449 at 468. 81 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557-558. See also Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at 409 [413]-[414]. 82 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 397. See also Zhu v Treasurer of New South Wales (2004) 218 CLR 530 at 571 [121]; [2004] HCA 56. 83 (1995) 182 CLR 544. has been honoured. To explain the liability of the errant fiduciary established by a personal order to account in that way is to treat the liability as equivalent in principle to the liability of a trustee established through the Chancery procedure of an account of administration in common form. That procedure was one by which the trustee could be compelled to provide a verified statement of the affairs of the trust, following which a beneficiary who alleged that the trustee had not in that statement accounted for the monetary value of property which the trustee ought to have got in for the trust estate would by notice "surcharge" the trustee's account with the amount claimed to be omitted. The surcharge, if upheld, would result in the amount which had been omitted by the trustee being treated as part of the trust estate84. The explanation of a fiduciary's duty to account in equivalent terms is not without modern adherents85. The difficulty is that it has an air of artificiality when sought to be applied to a breach of a proscriptive obligation by a person in a fiduciary position whose undertaking or assumption of responsibility to act in the interests of another person never encompassed the holding of property for the benefit of that other person. Even in those circumstances where the additional explanation of the fiduciary's liability might have credence, the additional reason for holding the errant fiduciary liable seems to me to provide a meagre basis for treating the knowing participant in the fiduciary's dishonest dealings more tenderly than the dishonest fiduciary. Those circumstances, however, were not the circumstances in Warman; nor are they the circumstances of the present case. The principles applicable to the assessment of liability to account for a dishonest and fraudulent breach of fiduciary duty, like many principles of equity, "have to be applied to such a great diversity of circumstances that they can be stated only in the most general terms and applied with particular attention to the exact circumstances of each case"86. Sufficiently for the circumstances of the 84 See Devonshire, Account of Profits, (2013) at 48-49; Stuckey and Irwin, Parker's Practice in Equity (New South Wales), 2nd ed (1949) at 269; Williams and Guthrie-Smith, Daniell's Chancery Practice, 8th ed (1914), vol 1 at 369, 420-421, 85 Eg Millett, "Equity's Place in the Law of Commerce", (1998) 114 Law Quarterly Review 214 at 225-227; Millett, "The Common Lawyer and the Equity Practitioner", (2015) 6 UK Supreme Court Yearbook 193 at 194-195. 86 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 393, quoting Boardman v Phipps [1967] 2 AC 46 at 123 and New Zealand Netherlands Society "Oranje" Incorporated v Kuys [1973] 1 WLR 1126 at 1130; [1973] 2 All ER 1222 at 1225. See also Jenyns v Public Curator (Q) (1953) 90 CLR 113 at 118-119; [1953] HCA 2. present case, and consistently with the reasoning in Warman, they can be stated as follows. The "cardinal principle of equity" is "that the remedy must be fashioned to fit the nature of the case and the particular facts"87. Contrary to approaches which have emerged in some English cases since Warman88, identification of a benefit or gain for which a defendant fiduciary or knowing participant is to be ordered to account is the outcome neither of judicial discretion nor of the determination of a mere factual issue of causation. Identification of the benefit or gain is a matter of judgment informed by equitable principle89. However contestable the judgment to be made might be on the facts of a particular case, the judgment to be made is one which admits only of a unique outcome which, once made, falls to be appraised on appeal according to a standard of correctness90. Equity is not ignorant of questions of causation. What it stresses is that questions of causal nexus in a remedial context must be addressed by reference to the equitable obligation breach of which is to be vindicated by the remedy that is sought91. The benefit or gain for which a fiduciary or knowing participant is liable to be ordered to account must, as a baseline requirement, have a causal connection to the fiduciary's breach of equitable obligation. The requisite causal connection was explained in Warman to exist if the benefit or gain has been obtained "by reason of" the fiduciary position, where the relevant breach is of the conflict rule, or if the benefit or gain has been obtained "by reason of" the 87 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 559. See also Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 278-279 [1]; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at 402-403 [503]. 88 See Murad v Al-Saraj [2005] WTLR 1573 (discussed in Devonshire, Account of Profits, (2013) at 69-70) and Novoship (UK) Ltd v Mikhaylyuk [2015] QB 499 (discussed in Gummow, "Dishonest Assistance and Account of Profits", (2015) 74 Cambridge Law Journal 405 and in Turner, "Accountability for Profits Derived from Involvement in Breach of Fiduciary Duty", (2018) 77 Cambridge Law Journal 255). 89 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 559. 90 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 567. 91 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 at 502 [44]; [2003] HCA 15. fiduciary taking advantage of an opportunity or knowledge derived from the fiduciary position, where the relevant breach is of the profit rule92. Despite an earlier influential formulation which can be read as indicating to the contrary93, the causal connection which must exist for a knowing participant to be liable to account for a benefit or gain is not between the benefit or gain and the conduct which constitutes knowing participation. To require a causal connection of that nature would recast knowing participation as a free- standing head of liability divorced from the fiduciary obligations which it is the purpose of equity's imposition of liability on the knowing participant to enhance. Foresters' first ground of appeal therefore proceeds on too narrow an understanding of equitable principle in assuming that a knowing participant cannot be liable to account unless there is a causal connection between the benefit or gain and the conduct which constitutes knowing participation. Foresters' first ground of appeal is equally mistaken insofar as it asserts a requirement for a court to determine the "real or effective cause of any profit derived". A causal connection between a fiduciary's breach of fiduciary obligation and a benefit or gain sufficient for the fiduciary or knowing participant to be liable to the equitable remedy of account will exist if the benefit or gain to the fiduciary or knowing participant would not have been obtained "but for" the breach, in the same way as a causal connection sufficient for the fiduciary to be liable to the equitable remedy of compensation will exist if a loss to the person to whom the fiduciary obligation is owed would not have been sustained but for the breach94. Because the concern of equity is to vindicate the equitable obligation that has been breached, the "but for" connection will be sufficient even though other contributing causes might be in play. That the fiduciary's breach of fiduciary obligation is dishonest and fraudulent is also good reason for treating a sufficient causal connection as existing if the dishonest and fraudulent breach can be concluded to have played a material part in contributing to the benefit or gain of the fiduciary or knowing participant even in circumstances where it cannot be 92 (1995) 182 CLR 544 at 557, 563. See also Maguire v Makaronis (1997) 188 CLR 93 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 397. 94 Re Dawson (deceased); Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211 at 215; Maguire v Makaronis (1997) 188 CLR 449 at 469- 470; O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272- 278; McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 588- 589 [21], 621-622 [135]; [2000] HCA 65; Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 at 504 [51]. concluded that the benefit or gain would not have been obtained but for the breach. Obviously enough, as with any other question of causation in equity, the causal connection between a fiduciary's breach of fiduciary obligation and a benefit or gain must be judged using common sense and "with the full benefit of hindsight"95. And as with other questions of causation in equity96, the inquiry into causation is not to be constrained by normative limitations imported from the common law. To introduce those limitations would risk confusing distinct legal policies underlying distinct bases of legal liability and limiting equity's capacity to mould equitable relief to the circumstances of the individual case. The impact on equitable relief of other potentially contributing causes, which in the context of determining the scope of compensable damage for breach of a common law obligation might be examined as part of the inquiry into causation through the doctrinal lens of remoteness or of novus actus interveniens, is examined in the context of the equitable remedy of account through another lens and at a subsequent stage of analysis. The reasoning in Warman makes explicit that where there is shown to exist a causal connection between a fiduciary's breach of fiduciary obligation and a benefit or gain to the fiduciary or knowing participant, the onus shifts to the defendant to establish that it is inequitable to order that the defendant account for the value of the whole of the identified benefit or gain97. The shifting of onus is explicable in part, but only in part, as putting the burden of proof of contested questions of fact on a party who is a proven wrongdoer. The burden on the defendant is not just evidentiary; more fundamentally, it is persuasive. The obligation of the defendant, imposed as an incident of "the fiduciary relation itself", is to "justify" the "private advantage" that has been obtained98. 95 Cf Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 at 556, adopted in Target Holdings Ltd v Redferns [1996] AC 421 at 438-439. 96 Eg Re Dawson (deceased); Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211 at 214-216; Maguire v Makaronis (1997) 188 CLR 449 at 469-470, 472; Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 97 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 561-562, citing Sheldon v Metro-Goldwyn Pictures Corp 309 US 390 at 408 (1940). 98 Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 at Putting aside those cases in which equitable relief might be withheld on established discretionary grounds by reference to disentitling conduct of the plaintiff, the defendant needs to demonstrate, in order to establish that it is inequitable to order an account of the value of the whole of the identified benefit or gain, either that the benefit or gain is attributable in part to one or more other contributing causes by reference to which it is "practically just" that the benefit or gain be apportioned or that some allowance be made in favour of the defendant99, or that there is some other reason why accounting for the whole of the gain would amount to a windfall to the plaintiff of such a nature or to such a degree that the accounting would fail to vindicate the purposes underlying equity's imposition of the fiduciary obligation that has been breached100. The judgment ultimately to be made by the court from which the order to account is sought is correspondingly not only factual; fundamentally, it is evaluative. The evaluative nature of the judgment was referenced in the "classic case" of Vyse v Foster101, in the context of assessing the extent of the liability of an errant executor to account to a beneficiary of a will for profits earned from running a business using funds of the testator, in the statement that there was "no rule for apportioning the profits according to the respective amounts of the capital, but that the division would be affected by considerations of the source of the profit, the nature of the business, and the other circumstances of the case". Factors which might bear on the judgment to be made in an individual case cannot be catalogued exhaustively in advance. They will include the relative extent to which other causes which might include the skill and industry of the defendant can be assessed as having contributed to the benefit or gain that is causally connected to the breach of fiduciary obligation. They will also include whether, and if so to what extent, the defendant's gain reflects uncompensated loss on the part of the plaintiff. And although the purpose of the remedy is not to punish, consideration of what is just in the context of the equitable obligation to be vindicated by the remedy cannot exclude consideration of the severity of the breach of the fiduciary obligation and the extent of the 99 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at 407-410 [520]- [531], quoting Erlanger v New Sombrero Phosphate Company (1878) 3 App Cas 1218 at 1279. See also Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 109-110. 100 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 561-562. See also Guinness Plc v Saunders [1990] 2 AC 663 at 701-702, quoted in Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at 382-383 [332]. 101 (1872) LR 8 Ch App 309 at 331. See Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at 409 [526], quoting Scott v Scott (1963) 109 CLR 649 at 661; [1963] HCA 65. defendant's own involvement and culpability in it102. The judgment to be made must accommodate the stringency of the equitable obligation to be vindicated to the need to ensure that the remedy is not "transformed into a vehicle for the unjust enrichment of the plaintiff"103. Importantly, it is the outcome of that ultimate evaluative judgment, and not merely the outcome of the initial inquiry into causation, which yields the "true measure" of the benefit or gain to be reflected in the order104. Where the benefit or gain which has in fact been obtained by the errant fiduciary or knowing participant is the establishment of an ongoing business, the outcome might accordingly be that the fiduciary or knowing participant is liable to account "for the entire business and its profits, due allowance being made for the time, energy, skill and financial contribution that [the fiduciary or knowing participant] has expended or made". Depending on the circumstances, the outcome in the alternative might be that some lesser measure, more favourable to the fiduciary or knowing participant, is judged better to reflect the equities of the case105. Warman itself provides a useful illustration. An Australian distributor of products of a foreign manufacturer informed the foreign manufacturer that it was not interested in entering into a joint venture to assemble and distribute those products in Australia. An employee of the distributor then dishonestly and fraudulently caused companies of which he was the controlling mind to enter into a joint venture with the foreign manufacturer for a twenty-year period. The companies were held liable to account to the Australian distributor for profits made from the joint venture. The account was limited to profits made by the companies during the first two years of the joint venture's operation. Relevant to the decision to hold the companies liable to account for profits made from the joint venture was that the distribution aspect of the joint venture could be seen to have been "carved out" of the business of the Australian distributor106. Relevant to the decision to limit the account to profits within that period was the likelihood that the distribution agreement and hence the business of the Australian 102 Australian Postal Corporation v Lutak (1991) 21 NSWLR 584 at 596-597. 103 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 561. 104 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 558, citing Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 110. 105 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 558, quoting Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 110. 106 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 568. distributor would have continued for no more than a year, making it appropriate to characterise the companies' profits made and to be made from the joint venture "as built ... upon [the employee's] breach of fiduciary duty but otherwise upon [the foreign manufacturer's] ownership of local goodwill and local assembly rights"107. "An account of profits in respect of that period", it was judged, would "clearly cover the whole of the benefits acquired by [the companies] through [the employee's] breach of fiduciary duty."108 For the two-year period, the order was that the companies account to the Australian distributor "for the entirety of the net profits of [their] businesses before tax less an appropriate allowance for expenses, skill, expertise, effort and resources contributed by them"109. With these principles in mind, it is necessary to return to the facts of the present case. The principles applied Having found that Foresters would not have expanded its funeral products business but for the dishonest and fraudulent breaches of fiduciary duty by Mr Woff and Mr Corby in which Foresters knowingly participated, the Full Court was correct in principle to proceed to assess the extent of Foresters' liability to account for its funeral products business by seeking to determine that measure of Foresters' profit from the business disgorgement of which to Lifeplan and FPM would constitute a proportionate response to the breaches of fiduciary duty, having due regard to the circumstance that those breaches were not the sole contributors to the success of the business. The question which remains on the appeal and the cross-appeal is whether, in the application of that principle, the Full Court arrived at the correct conclusion. Answering that question needs to begin by noting the nature of Foresters' funeral products business and the methodology applied to its valuation in the expert evidence adduced at trial. Foresters' funeral products were retail investment contracts under which customers made payments into the Foresters Funeral Fund. The capital- guaranteed amount of a customer's payments into the Fund was required by contract to be paid out on the customer's death to a funeral director. Foresters' revenue from the funeral products business came from charging a management fee of two per cent per annum on funds under management in the Foresters Funeral Fund. The management fees which Foresters could expect into the 107 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 566-567. 108 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 567-568. 109 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 568. future from funds under management in the Foresters Funeral Fund were calculable by reference to actuarial projections of mortality rates. Foresters' expenses of running its funeral products business in any given financial year fell broadly into two categories. One was marketing expenses, incurred to generate new contracts. The other was operational expenses, incurred in administering existing contracts and in administering the Foresters Funeral Fund. At the time of trial in June 2015, historical data were available on the actual contracts entered into by Foresters from the beginning of January 2011 until the end of June 2014 and on the actual expenses incurred by Foresters in running its funeral products business during that period. The historical data provided a basis for the calculation of past cash flows up to the end of June 2014 and for the projection of future cash flows from the beginning of July 2014. The accounting experts called by the parties agreed that the appropriate method of valuing Foresters' funeral products business was by reference to the net present value of pre-tax future cash flows comprised of actual and projected revenues less actual and projected expenses in each year of actual and projected operation of the business. Application of that methodology permitted two distinct calculations. One calculation was of the net present value of pre-tax cash flows of contracts entered or projected to be entered into by Foresters from the beginning of January 2011 on the assumption that Foresters ceased marketing funeral products at the end of a given financial year, so as thereafter to incur operational expenses for so long as those contracts could be projected to remain in existence but not marketing expenses. The other calculation was of the net present value of pre-tax cash flows for Foresters' funeral products business treated as an ongoing business. That calculation was made by taking historical cash flows for the period from January 2011 until June 2014 and projected cash flows for the period from July 2014 until June 2024 and then adopting a "terminal value" formula to take into account cash flows beyond that point. One basis for the projection of revenue that Foresters could be expected to generate in the future was the revenue historically realised by Lifeplan. To arrive at a net present value, the experts agreed that historical cash flow figures were to be adjusted upwards by applying rates of interest which reflected the time value of money but not risk, and that projected future cash flow figures were to be discounted by applying rates of interest which reflected a component for risk. Disagreements between the experts as to the appropriate rates of interest were resolved by the primary judge110. Further disagreements between the experts as to the allocation of past expenses, and consequently as to the projection of future expenses, were also resolved by the primary judge111. On the appeal to the Full Court, a joint expert report was adduced in evidence. That report followed from the primary judge's findings in relation to the areas of disagreement between the experts which had existed at trial. The joint report calculated that, as at the end of April 2015, Foresters' funeral products business treated as an ongoing business had a net present value of The joint expert report also included revised calculations of the net present values of Foresters' funeral products business, again as at the end of April 2015, on successive assumptions that Foresters ceased marketing funeral products first at the end of September 2011 and then afterwards at the end of each financial year from June 2012 to June 2025. The figure shown in the joint report as the net present value of the business on the assumption that Foresters ceased marketing funeral products at the end of September 2011 was negative, indicating that Foresters' funeral products business was not yet then profitable. The figure of $6,558,495, selected by the Full Court as the amount for which Foresters was to be ordered to account, was the figure shown in the joint report as the net present value of the business on the assumption that Foresters ceased marketing funeral products at the end of June 2015. Foresters' second ground of appeal, challenging the account of profits ordered by the Full Court on the basis that it covered profits which had not yet accrued, is therefore shown by the valuation evidence to be misguided. Foresters' funeral products business as expanded by Foresters after the Board's adoption of the BCP in September 2010 was a benefit or gain to Foresters. The net present value methodology adopted by the accounting experts was an appropriate means of determining the value of that benefit or gain. To understand the significance of the calculations of the net present value of Foresters' funeral products business, as ultimately set out in the joint expert report adduced in evidence on the appeal to the Full Court, it is necessary to refer to two features of those calculations. The first is that the calculations allowed for all incurred and projected expenditure as well as all realised and projected revenue. The second is that the discount rate applied to projected cash flows took into account the risk assumed by Foresters in carrying on the business. 110 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 476 [469]- 111 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 476-480 [471]- In particular, the discount rate determined by the primary judge as appropriate to be applied to arrive at the net present value of Foresters' funeral products business as an ongoing business had a component for risk. The risk component took into account the peculiar circumstances of Foresters as a relatively small operator offering a less diverse range of products than comparable businesses; and that Foresters' marketing of funeral products was through funeral directors, making its ongoing market position vulnerable to adverse operational or financial issues affecting the limited number of funeral directors in Australia. The risk component also specifically took into account the potential for Foresters' projected revenues from new contracts to be adversely affected by the risk that Mr Woff and Mr Corby, on whom Foresters' expert emphasised that Foresters placed significant reliance for the ongoing conduct of the business, would cease to be employed by Foresters in the future. The benefit or gain which Foresters obtained by reason of the breaches of fiduciary duty by Mr Woff and Mr Corby was the expansion of its funeral products business from a business which was so small that it appears not to have been generating profit in 2011 to an ongoing business which by April 2015, making full allowance in the method of calculation for Foresters' past and future expenses and for the risks which Foresters assumed in the future operation of that business, had a net present value of $14,838,063. That calculation of the net present value of the business, it must be acknowledged, made no allowance for risks which Foresters had already assumed in establishing and operating the business until the time of the trial. But Foresters is hardly to be compensated for the risks it assumed in doing the very thing which constituted its participation in Mr Woff's and Mr Corby's dishonest and fraudulent breaches of fiduciary duty. Further, to require Foresters to account to Lifeplan for the entirety of that net present value could hardly be described as a windfall to Lifeplan. Lifeplan's own funeral products business, which could be expected to have continued along its previous trajectory had Foresters' business not expanded, was shown by the evidence to have been decimated. The upward trajectory of the inflow of funds to Foresters from the marketing of its funeral products correlated to the downward trajectory of the inflow of funds to Lifeplan from FPM's marketing of funeral products. Apart from the expansion of Foresters' business through implementation of the BCP, no change in market conditions was suggested by the evidence to explain that downward trajectory. Foresters' gain was accordingly Lifeplan's loss. Although Mr Woff and Mr Corby would have been free to compete with FPM after the termination of their employment with Lifeplan, there is no suggestion in the evidence that they had the wherewithal to do so on their own. Mr Woff in his oral testimony denied it. And although Foresters was found by the primary judge to have had the resources to have invested in expanding its funeral products business without Mr Woff and Mr Corby, the critical finding remains that Foresters would not have done so had it not been presented with the BCP by Mr Woff and Mr Corby. That the BCP was a plan which had a five-year time horizon provides an inadequate foundation for limiting Foresters' liability to account to what would have been the net present value of the business if Foresters had ceased marketing funeral products at the end of June 2015. Foresters did not plan to cease marketing funeral products at the end of June 2015, and that was not what Mr Woff or Mr Corby or Foresters intended to occur when, in August 2010, Mr Woff and Mr Corby proffered the BCP to Foresters and when, in September 2010, Foresters decided to implement the BCP. The BCP was a plan for the establishment and development of a new funeral products business which was to continue indefinitely. The business developed on the basis of the BCP was an ongoing one. As an ongoing business, it had a capital value. That capital value could be, and was in the expert evidence, determined as at the time of trial with some precision by reference to the net present value of its expected net cash flows over the ensuing ten-year period. Such risks as could then be identified as facing Foresters in realising those net cash flows over that period could be, and were, fully taken into account in the discount rate that was used. To sum up, what Foresters obtained by reason of the breaches of fiduciary duty by Mr Woff and Mr Corby in which Foresters knowingly participated was a business. Foresters obtained that business to the cost of the business which Lifeplan operated through FPM. Foresters' business can be, and has been, appropriately valued in a manner which duly allows for all of Foresters' expenses and for all of Foresters' ongoing business risks. Foresters has failed to establish any reason for considering that an order that it account for the entirety of the business as so valued is inequitable. Orders Foresters' appeal is to be dismissed. Lifeplan and FPM are to be granted special leave to appeal limited to the first two grounds identified in their proposed notice of cross-appeal. The cross-appeal is to be allowed. The Full Court's order for an account of profits is to be set aside. In place of that order, it is to be ordered that Foresters account to Lifeplan and FPM in equity for the total capital value of the business in the sum of $14,838,063. Foresters must pay Lifeplan's and FPM's costs of the appeal and of the cross-appeal. Nettle 121 NETTLE J. The principal issue in this matter is whether the Full Court of the Federal Court of Australia erred in holding that the appellant, Ancient Order of Foresters in Victoria Friendly Society Limited ("Foresters"), was liable to account to the first respondent, Lifeplan Australia Friendly Society Limited ("Lifeplan"), and the second respondent, Funeral Plan Management Pty Ltd ("FPM"), for profits derived from funeral bond contracts written by Foresters during the financial years ended 30 June 2011 to 30 June 2015112. Foresters contends that the Full Court should have held, as the primary judge held113, that Foresters was not liable to account for any of the profits of its funeral bond business. By way of cross-appeal, Lifeplan and FPM contend to the contrary that the Full Court should have held that Foresters was liable to account not just for the profits derived from contracts written up to 30 June 2015 but for the total capital value of Foresters' funeral bond business. For the reasons which follow, the Full Court did not err in ordering as they did. The appeal and the cross-appeal should be dismissed. The facts A funeral bond is a funeral investment product offered through an investment fund. Its purpose is to enable a person to set aside funds during his or her life to meet the costs of the person's funeral expenses. Lifeplan is an Australian specialist fund manager and supplier of investment products, including funeral bonds. FPM is a wholly owned subsidiary of Lifeplan and, at relevant times, promoted, marketed and distributed Lifeplan's funeral products, and recruited and maintained relationships with funeral directors for that purpose. As at 2010, Lifeplan, in conjunction with its FPM business, enjoyed an approximately 70 per cent share of the funeral bond market in Australia, and its annual inflows from pre-paid funeral products were in the order of $68 million. Foresters is a friendly society that markets and manages investment and insurance products, including funeral bonds. It manages a number of funeral funds, including the fund that is the subject of this proceeding ("the Foresters Funeral Fund"). In 2010, its annual inflows from pre-paid funeral products were around $1.6 million. For a number of years up to and including 2010, Noel Jeffrey Woff ("Woff") and Richard John Corby ("Corby") were employed by Lifeplan in management roles in FPM. Woff was the senior manager of FPM charged with responsibility for creating and maintaining relationships with funeral directors. 112 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 22 [67], 30 [124]. 113 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 470-471 Nettle He made and participated in the making of decisions that affected the whole, or a substantial part, of the business of FPM, and was an officer of FPM within the meaning of s 9 of the Corporations Act 2001 (Cth). Corby was the national sales manager of FPM and reported to Woff. He was responsible for overseeing the sales performance of the business unit and thus for servicing existing clients and recruiting new ones. Both men had "a good understanding of how the [funeral bond] market worked and how to generate new business", and they were good at what they did114. Unbeknownst to Lifeplan, during 2010 Woff and Corby took a number of steps with the knowledge and encouragement of Foresters directed to establishing a new funeral bond business within Foresters and in effect diverting as much as possible of Lifeplan's existing funeral bond business to Foresters. Towards the end of 2010, Woff and Corby arranged for the incorporation of a private company, Funeral Planning Australia Pty Ltd ("FPA"), to provide promotional and marketing services to Foresters in connexion with the sale of Foresters funeral bonds. Kerry Allan Hughes ("Hughes") had been the chief executive officer of Foresters since October 2000. He and Woff had known each other for many years and Hughes had attempted to persuade Woff to leave Lifeplan and work for Foresters on a number of occasions. In February 2010, Woff told Hughes that he was interested in leaving Lifeplan if the offer were right. It appears that Woff had become unhappy at Lifeplan following its merger with Australian Unity Investments Ltd ("Australian Unity") in August 2009. On 15 February 2010, Woff sent an email from his Lifeplan email address to an external email address attaching two reports that had been prepared by an external market research consultant exclusively for Lifeplan. On 14 July 2010, Woff met Hughes to discuss the possibility of Woff joining Foresters. Hughes asked Woff to put together a proposed business model for Foresters' consideration and to include in the proposal details of how much business Foresters would be likely to generate and how much profit Foresters would be likely to make. Hughes also told Woff that, if the discussions progressed and Woff joined Foresters, Foresters may consider employing additional staff, and he asked Woff if he knew of anyone who would be suitable for a new sales team. Woff mentioned Corby, and Hughes asked Woff to inquire of Corby whether he would be interested in joining Foresters. On or about 23 July 2010, Woff and Corby sent a four page letter to Hughes in which they presented their preliminary proposal by outlining "a viable, sustainable and profitable product and distribution option for Foresters Friendly 114 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 466-467 [429]. Nettle Society". Annexed to the letter was a document entitled "2010/2011 Travel, Accom & Entertainment Expense Budget" which was similar in layout and form to a Lifeplan document115. In the letter, Woff and Corby recommended that Foresters concentrate on the market for funeral bonds sold via funeral firms and that it should engage Woff and Corby as two experienced funeral fund development managers to conduct that business. The letter stated that "FPM has the lion's share of the market writing $55M in gross inflows in 2009/10 purely through its distribution network of funeral firms" and provided the following estimates of the volume of business which Woff and Corby believed that they would be able to secure for Foresters over a five year period: Year Annual Inflows Year End Nos of Funeral Firms On 5 August 2010, after briefly speaking to Hughes, Woff sent an email to Hughes with an attachment entitled "Foresters Profit Revenue Model". The "Foresters Profit Revenue Model" was similar in layout and form to a Lifeplan document and it was based on the annual inflows set out in the letter from Woff and Corby to Hughes dated 23 July 2010. Also attached to the email was a copy of the "2010/2011 Travel, Accom & Entertainment Expense Budget" document that had been annexed to the letter of 23 July 2010, and a document entitled "Projected Stationary [sic] and Promotional Item Costs 2010/2011". The latter document was very similar in layout and form to a Lifeplan document bearing the same title. The email ended with an expression of hope that the attached information would be of some help to Foresters' accountant. In addition to those communications with Hughes, from July 2010 onwards Woff sent emails and attachments containing information confidential to Lifeplan from his Lifeplan email address to his private email address. The 115 In the proceedings below, no clear distinction was drawn between documents belonging to Lifeplan and documents belonging to FPM. For simplicity, any document belonging to either Lifeplan or FPM will be referred to as a "Lifeplan document". Nettle details of those emails and attachments were canvassed thoroughly by the primary judge116. Suffice it to say for present purposes that between 19 July 2010 and 25 August 2010, Woff sent at least 10 such emails attaching numerous confidential Lifeplan documents, including business plans and strategies, financial projections, spreadsheets of sales figures, spreadsheets of claim histories and internal training manuals. In August 2010, Theodore Fleming ("Fleming"), the non-executive Chairman of the Board of Foresters, and Hughes met to discuss the preliminary proposal by Woff and Corby in their letter dated 23 July 2010 and Woff's subsequent email on 5 August 2010. Fleming and Hughes were of the view that the proposal offered "a tremendous opportunity [for Foresters] to move seriously into the Funeral Bond business and fill the position previously occupied by Lifeplan"117. Fleming asked Woff to put together a formal submission for presentation to the Board of Foresters at the Board meeting planned for 30 August 2010. In response to that request, Woff and Corby prepared a 36 page paper in the name of FPA entitled "Funeral Fund Business Concept" ("the BCP"). The BCP was dated 25 August 2010 and Corby submitted it to Hughes on that date for presentation to the Board of Foresters. As is evident from the reasons of the primary judge118, several parts of the BCP were based on the confidential information gathered by Woff in his numerous emails to himself. Section 1 of the BCP, entitled "Introduction", contained the following statements: "This paper has been prepared for the Board Members of the Foresters Friendly Society ('Foresters') by Funeral Planning Australia ('FPA') to discuss the concept of working together to develop a successful funeral fund operation. The funeral industry provides two products: At Need – where the deceased is either buried or cremated Pre-need – when a person organizes his or her funeral in advance 116 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 410-415 117 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 417 [152]. 118 See in particular Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 Nettle Compared to overseas experience the Australian pre-need market is both under developed and under serviced. With the exception of the highly costly life products there are very limited suppliers of funeral fund products in an obviously aging demographic. We believe that a window of opportunity exists to introduce a viable and credible alternative to distribute an accumulation product through funeral directors. In the Australian funeral fund industry a company called Funeral Plan Management ('FPM') is recognised as the largest and most successful operator. FPM's two key employees are Noel Woff and Richard Corby. Through FPM they have established a market lead position based on performance and innovation through product, marketing capability, technical advice and service standards. Richard and Noel have now established their own niche marketing company, FPA, which they present to the Board of Foresters as an opportunity to, in a very short timeframe, replicate the success enjoyed by FPM." Section 2, entitled "Executive Summary", stated: "Foresters have an internal objective to increase its current level of new business inflows. In order to meet this objective it is recommend [sic] that Foresters give consideration to marketing a funeral fund product Australia wide through a sales channel of established funeral firms. As an adjunct to this it is additionally recommended that consideration be given to engaging the services of FPA, a newly created specialist pre-need funeral marketing firm. FPA is the creation of two experienced funeral fund development managers Messrs Richard Corby and Noel Woff. With this in mind, FPA have identified the following areas for further discussion: Five Years Sales Budget Strategies to achieve the sales projections Projected first year costs Projected profit Conclusion and Next Steps". Nettle Section 4 of the BCP addressed the size of the funeral bond market. Under the subheading "Funeral Directors", it contained a table of 37 funeral firms which were said to be the largest firms in the Australian funeral industry set out in descending order of estimated annual sales rounded to the nearest $10,000. The table stated the location of the operations of each firm and was introduced with the following statement: "The following table outlines the main participants in the Australian funeral industry together with their annual sales and current fund managers (non FPM firm's sales figures are estimated)." (emphasis added) The table was based on a confidential Lifeplan document setting out top performing funeral directors that Woff had emailed to his private email address on 17 August 2010119. The emphasised words in the introductory statement indicated that the figures in the table were, in respect of Lifeplan clients, actual figures taken from the confidential Lifeplan document120. Section 5 of the BCP contained a statement in tabular form of strengths, weaknesses, opportunities and threats of and for FPA and Foresters. By way of example, it stated as a strength "[w]ill offer professional marketing collateral", as a weakness "[a]dmin service levels may be tested due to lack of resources", and as opportunities "[Australian Unity] will be slow to react and will be reticent to invest marketing dollars", "[Australian Unity] have a very poor track record in terms of support and service" and "[Australian Unity]/Lifeplan merger created market uncertainty – FPA staff will capitalise on this". Some of the analysis in Section 5 was adapted from Lifeplan documents containing confidential information that Woff had emailed to his private email address on 17 August Section 6, entitled "Foresters – Projected New Business", contained the opinion of Woff and Corby as to projected annual new business inflows for the first five years. It began as follows: 119 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 414 [137], 120 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 446 [322]. 121 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 424 [188], Nettle "6.1 Five Year Sales Projections The following table summarises the projected new business inflows we can expect to secure over the next 5 years. These figures are supported in Attachment B to this report which itemises at funeral director level the new business planned to be secured over the next five years." There followed a table of annual inflows that was in substance identical to the one included in the letter from Woff and Corby to Hughes dated 23 July 2010 and attached to the email from Woff to Hughes of 5 August 2010122. Appendix B to the BCP (described in Section 6.1 as "Attachment B") was entitled "New Business Acquisition Timeframe". It set out funeral firms who might be persuaded to join the Foresters Funeral Fund, and estimates of the point in time over a five year period in which that might occur. Appendix B was prepared using two confidential Lifeplan spreadsheets which Woff had emailed to his private email address on 19 July 2010 and 17 August 2010 and which contained Lifeplan sales figures for the financial year ended 30 June 2010123. Section 6.2 of the BCP was in the following terms: "6.2 Historical Sales Performance With any projections for a start up entity there are the obvious questions of accuracy. As a means to give validity to what has been presented we submit our historic sales figures which have been achieved in an environment of more players and intensive competition." (emphasis added) There followed a table of figures: Year Annual Sales 122 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 419 [161]. 123 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 423-424 [183], Nettle The reference to "our historic sales figures" was a reference to Lifeplan's historical sales figures124. Woff had taken those figures directly from a confidential Lifeplan document showing historical new business inflows which he had emailed to his personal email address on 17 August 2010125. Section 6.3, entitled "Geographical Spread", contained an estimate of the percentage inflows to be attributed to each State. Again, the source of the information in that section was a confidential Lifeplan document126. Section 11 was in the following terms: "11. Market Reaction of [Australian Unity] The reaction of Australian Unity to the loss of its entire funeral fund sales team (the other two members have indicated their intention to resign) is unpredictable. However, all indications suggest that they will do nothing as their eyes seem to be clearly fixed on developing other market segments and so they are more likely to simply sit back and take heart at the short term expense savings they will now enjoy." 124 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 420 [162]. 125 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 423-424 [184], 126 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 424 [187], Nettle Appendix C, entitled "Visitation Plan", was a reproduction of the "2010/2011 Travel, Accom & Entertainment Expense Budget" attachment to Woff and Corby's email to Hughes of 5 August 2010, which, as already mentioned, was very similar in layout and form to a Lifeplan document bearing the same title127. Appendix D, entitled "Bonus Rate Comparison ('Untaxed') – Funeral Plan Management ('FPM')", was a schedule of returns of various funeral funds. It set out the bonus rate earned on 11 different funds involving seven different fund managers for each year from 1996 to 2009. Tellingly, the heading contained a reference to FPM, not FPA. Woff prepared Appendix D by using a confidential Lifeplan document with the same heading that he had emailed to his private email address on 17 August 2010128. Appendix E was entitled "Foresters Profit Revenue Model" and was similar in layout and form to the document of the same description which Woff sent to Hughes on 5 August 2010, which, as already mentioned, was similar in layout and form to a Lifeplan document129. Hughes submitted the BCP to the Foresters Board meeting held on 30 August 2010. The Board considered that the proposal was attractive and resolved to invite Woff and Corby to present the proposal to the Board at a subsequent meeting. The Board also directed Hughes to ascertain whether Woff and Corby were constrained under their employment contracts with Lifeplan by any covenant preventing or restricting them from accepting positions as employees of Foresters in competition with Lifeplan. The minutes of the meeting of 30 August 2010 recorded the following: "6.10 Funeral fund proposal: The CEO [Hughes] confirmed he had been in discussions with Noel Woff the General Manager of Funeral Plan Management concerning the possibility of he and his Sales Manager pursuing a Funeral Bond initiative with Foresters. The CEO told the Board that he was suggesting they consider the proposal and if interested get Noel and his associate in to review and discuss matters of 127 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 420 [165], 424 128 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 420 [166], 424 129 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 420 [167], 424 Nettle interest. After discussions it was agreed that a meeting be convened with Noel Woff and his associate Richard Corby but that the CEO should [first] address the following matters with them: (a) Are there any restrictions in them setting up the proposed structure in opposition to Funeral Plan Management in their current employment contracts; (b) How long they anticipate Foresters continuing to remunerate them; and Is it necessary for the commission payment to be channelled through a separate company." Hughes made inquiries of Woff and Corby and was advised that there was no contractual limitation which prevented either of them from accepting employment with Foresters. He invited Woff and Corby to make a formal presentation to the Board at a Board meeting planned for 13 September 2010. From 30 August 2010, Woff continued to send emails from his Lifeplan email address to his private email address attaching numerous confidential Lifeplan documents. They are essayed in the primary judge's reasons130. On 7 September 2010, Woff sent from his Lifeplan email address to his private email address an email of which the subject was "Recipe". It was comprised of speaking notes for the meeting with the Board of Foresters and notes of questions which Woff expected the Board might ask together with his proposed answers to those questions. The "Recipe" recorded that "competitors" in the market would be "very vulnerable" between October 2010 and March 2011 and that there would be confusion in the market when the new business was established. It is apparent from the following section of the "Recipe" that the "competitors" were Lifeplan and FPM: "There will be firms that follow and fill in stationery order forms simply because they wont [sic] know any better. But there will also be firms that will fill in our documentation and then mistakenly deposit the funds with the wrong entity. We can expect a lot of that to happen. So we need to capitalise on the confusion." (emphasis in original) 130 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 410-412 Nettle Later in the "Recipe", in a list headed "Why will firms come to us?", the following statement appeared: "There will be confusion in the market after we leave and lines of demarcation between fund management firms will be blurred (and to be honest we may at times let this happen)". There was also a statement to the effect that the biggest challenge for those pursuing the proposal would be in securing one of Lifeplan's major clients at the time, Tobin Brothers Funerals ("Tobins"), in year one. On 9 September 2010, Woff and Corby wrote to their accountant who was dealing with the incorporation of FPA and the establishment of a trust enclosing a copy of their proposal to Foresters. The letter stated that: "This information is extremely confidential given it contains figures relating to funeral industry participants. For the sake of good order could you please read the attached confidentiality deed that we can sign at our initial meeting." A special Board meeting of Foresters was convened for 13 September 2010 for the purpose of receiving and considering Woff and Corby's proposal. Woff made his presentation supported by Corby. The minutes of the meeting recorded that Woff and Corby's proposal involved them promoting a Foresters funeral bond through funeral directors in a similar manner to their work with FPM. They also recorded that the proposal involved Woff and Corby becoming employees of Foresters and establishing a marketing company and receiving a commission through that company. The Board directed Hughes to write to Woff and Corby advising them that Foresters was interested in "moving discussions forward", although there remained a number of matters to be resolved. On 20 September 2010, Hughes wrote to Woff and Corby, saying, among other things: "Please accept this letter as Foresters Friendly Society's expression of interest in moving forward with your proposed Funeral Fund venture. This expression of interest is absolutely conditional on there being no employment restrictions on either Noel Woff or Richard Corby under employment arrangements with their current employer. You will appreciate that Foresters do not wish to engage in litigation with your current employer regarding employment issues or intellectual property matters. Nettle In measuring the traction of the product the Board will rely heavily upon your predictions of sales/growth that you provided in your written proposal document. We ask that you review this proposal and come back to us with your comments and recommendations. We trust the proposed arrangement is reasonably in line with your expectations and will be happy to discuss any problems you may have, we are confident that we can come to [a] mutually suitable arrangement and can develop a satisfactory basis to move the joint venture forward." (emphasis added) The emphasised paragraph was included at Fleming's direction and the reference in it to "your written proposal document" was a reference to the BCP. Woff and Corby responded by letter dated 27 September 2010 that, subject to the resolution of matters they identified, they were ready to proceed. In October and November 2010, Woff and Corby, while still employed by Lifeplan, undertook a review of the rules and disclosure documents of the Foresters Funeral Fund. During this period, Woff suggested amendments to the Fund rules and created new disclosure documents for the Fund, which he sent to Hughes. One of the new disclosure documents contained in excess of 25 sentences or paragraphs that had been copied from a Lifeplan document. Other documents prepared by Woff for Foresters during this period which were prepared using Lifeplan documents included stationery request forms, funeral benefit claim forms, marketing flyers and pre-paid funeral contracts. Corby handed in his resignation from Lifeplan on 28 October 2010. His resignation was effective on 25 November 2010, and he commenced employment with Foresters on 6 December 2010. Woff resigned from his employment with Lifeplan on 1 December 2010. His resignation was effective on 29 December 2010, and he commenced employment with Foresters on 4 January 2011. From the time Woff and Corby became employees of Foresters, the Foresters Funeral Fund grew substantially and Lifeplan's funeral bond business diminished. At 30 June 2010, the balance of the Foresters Funeral Fund was $13,238,399; by 30 June 2013, it had grown to $62,940,608. For funeral bonds written from 2011 onwards, Foresters earned a 2 per cent management fee calculated by reference to the amounts in the Fund. The primary judge's findings As already intimated, the primary judge found that the BCP was extensively based on confidential Lifeplan information. In summary131: Nettle Section 3 of the BCP copied phraseology in a confidential Lifeplan document that Woff had sent to his private email address on 17 August 2010; Section 4.1 of the BCP was prepared using reports that had been written by an external consultant engaged to undertake research exclusively for Lifeplan that Woff had sent to an external email address on 15 February 2010; the table in Section 4.2 of the BCP was prepared using a confidential Lifeplan spreadsheet that Woff had sent to his private email address on 17 August 2010; the strengths, weaknesses, opportunities and threats analysis in Section 5 of the BCP was prepared, at least in part, by reference to confidential Lifeplan documents that Woff had sent to his private email address on 17 August 2010; the historical sales figures in Section 6.2 of the BCP and the geographical spread figures in Section 6.3 were prepared using confidential Lifeplan documents that Woff had sent to his private email address on 17 August 2010; (6) Appendix B to the BCP was prepared using information from two confidential Lifeplan spreadsheets that Woff had sent to his private email address on 19 July 2010 and 17 August 2010; (7) Appendix C to the BCP was prepared using information from a Lifeplan document; (8) Appendix D to the BCP was prepared using a confidential Lifeplan document that Woff had sent to his private email address on 17 August 2010; and the structure and form of Appendix E to the BCP followed the structure and form of a Lifeplan document. 131 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 424 [191]. Nettle The primary judge found132 that Woff and Corby had acted in breach of the fiduciary duties they owed to Lifeplan and FPM by preparing the BCP using the above information. The primary judge also found133 that Foresters was aware of circumstances which would indicate to any honest and reasonable person that the BCP was based on confidential information. As his Honour observed, the annual inflows and contract numbers in Appendix B were sufficient to found that conclusion, as were the words and table in Section 4.2, the table in Section 6.2 and the heading to Appendix D. His Honour therefore concluded that Foresters knowingly assisted134 Woff and Corby in their breaches of fiduciary duty with respect to the BCP. The primary judge found135, too, that Foresters was aware that Woff and Corby, while still employed by Lifeplan, approached Lifeplan funeral director clients to solicit their business for Foresters and FPA. This was a breach of fiduciary duty by Woff and Corby which Foresters knowingly assisted. Woff and Corby had also committed breaches of fiduciary duty by attempting to solicit for Foresters the business of Tobins, and making disparaging remarks regarding Lifeplan and FPM in the course of doing so136. On the evidence, however, the primary judge did not think that Foresters had the requisite knowledge to have knowingly assisted those breaches of fiduciary duty137. The primary judge found138 that Woff and Corby's involvement in reviewing and preparing rules and disclosure documents for the Foresters Funeral Fund while they were still employed by Lifeplan "went well beyond the conduct a current employee may permissibly undertake" and amounted to a breach of their fiduciary duties. Foresters, through Hughes, played an active role in this conduct and thus knowingly assisted those breaches. 132 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 456 [377]. 133 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 456-457 [378]. 134 See Barnes v Addy (1874) LR 9 Ch App 244 at 251-252 per Lord Selborne LC; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 163-164 [174]-[178]; [2007] HCA 22. 135 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 446-447 [326], 136 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 458 [384]. 137 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 458 [385]. 138 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 461 [402]. Nettle The primary judge also determined139 that the Lifeplan confidential information included in Appendix B to the BCP had the potential to influence and did in fact influence Foresters in at least two ways: (1) by giving Foresters confidence that the annual sales targets set out elsewhere in the BCP were achievable, or might be achieved; and (2) at a more general level, by giving Foresters confidence that Woff and Corby knew what they were talking about. It played a real and non-peripheral part in Foresters' decision to proceed. His Honour concluded140 that Foresters would not have proceeded in the absence of the BCP. The primary judge further found141, however, that the only subsequent use of the Lifeplan confidential information contained in the BCP (scil after the Board meeting of 13 September 2010) was the use of the annual sales figures of funeral directors in Appendix B to the BCP. At least some of those figures appeared in reports by FPA to the Board of Foresters in January 2011 and March 2011. In the result, the primary judge held142 that Lifeplan and FPM were not entitled to an account of the profits generated by Foresters in relation to the Foresters Funeral Fund in 2011 and subsequent financial years, because: "The confidential information was not used to generate any of these profits. There is nothing to suggest that the information in Appendix B, the table in section 4.2, the information as to geographical spread or Appendix D were used to generate profits. The use of some of the information in Appendix B by FPA in its Board Reports in early 2011 is not a use that generated profits. The fact that the proposed business would not have gone ahead without the BCP and that the confidential information with respect to which I have found Foresters had knowledge within the relevant legal test, played a part in Foresters' decision to proceed, is not sufficient to conclude that the profits claimed were attributable to those matters." 139 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 446 [324]. 140 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 446 [324], 470 141 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 424 [192], 440 142 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 470 [443]. Nettle The Full Court's reasons The Full Court took a different view of the matter. As their Honours conceived of Woff and Corby's breaches of fiduciary duty, they comprised a wholesale plundering of Lifeplan's confidential information and business records as part of an orchestrated plan to take as many of Lifeplan's clients as quickly as possible into a new venture with Foresters; the use by Woff and Corby of crucial Lifeplan confidential information for the preparation of the BCP; and the later utilisation of that information to structure and conduct operations in the new venture with Foresters, with the knowing involvement of Foresters143. It followed, the Full Court held144, that, because equity requires a person knowingly involved in a breach of fiduciary duty to account for the profits thereby gained, Foresters was required to account to Lifeplan for the profits generated in the new venture: "Without the dishonest taking advantage of the information and without the breaches, Mr Woff and Mr Corby would not have been employed by Foresters, and Foresters would not have expanded its business in this segment in the hands of Mr Woff and Mr Corby as it did. Put another way, without the breaches of duty in which Foresters was knowingly involved, without Messrs Woff and Corby taking advantage of their positions and of the confidential information taken from their employer, Foresters would not have made the profits it did from the business written in the venture with Messrs Woff and Corby. To conclude that such is a sufficient causal connection to found a liability to account for profits of the business would not be to extend the causal relationship beyond the expressions of profits actually made by reason of the breaches; rather, it would be to fashion the remedy in a way that, in terms of a causal attribution, would conform to and enforce, and not undermine the strictness of the duty by fashioning the remedy to fit the nature of the case and the particular facts." The Full Court considered145, however, that in the circumstances of this matter, it would carry the remedy of account to extremes to require Foresters to account to Lifeplan for all of the profits generated by Foresters in the new venture. Proportionality demanded due recognition of the fact that, although 143 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 4 [8]. 144 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 21-22 [66]. 145 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 25-26 [85]. Nettle Foresters would not have entered into the new venture were it not for its knowing involvement in Woff and Corby's breaches of fiduciary duty, none of the breaches of duty resulted directly in the generation of any profits. It was the setting up and conduct of the new venture which had that effect and that dictated that the account of profits be limited accordingly. The Full Court further observed that146, in those circumstances, the extent of the required limitation was not entirely susceptible to logical analysis. What appeared to be critical was that Woff and Corby's breaches of fiduciary duty, and Foresters' knowing involvement in them, delivered to Foresters the plan for the first five years of the new venture. Thus, the Full Court concluded that limiting the account to the net present value of funeral bond contracts written up to 30 June 2015 would ensure that Foresters accounted for the benefit it derived from the five year plan while recognising the reality of the contribution of factors unrelated to the breaches of duty. As the Full Court expressed it147: "The BCP and the considerations in relation to commencing the business contemplated a five-year plan. Terminating the valuation of the contracts at 30 June 2015 would adequately and proportionately account for sufficient capital profits to fulfil the above objectives. They are capital profits that would not have been made had the breaches in which the participation occurred not been committed. But the limitation to that date gives due recognition to the other factors to which we have made mention and which affect an assessment of the proportionate consequences of the breaches and participation therein. The setting of the date at 30 June 2015 sets the account within the framework of the five-year business plan, with a modest deduction of six months. It sets an account for the period of planning for the new business that was the central focus of the behaviour that constituted the breaches and the participation. The consequence of applying this measure of profit to 30 June 2015 with a valuation date of 30 April 2015 was agreed in the supplementary joint report to be $6,558,495." The Full Court ordered accordingly that Foresters account to Lifeplan and FPM in the sum of $6,558,495. 146 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 26 [87]. 147 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 26 [88]-[89]. Nettle Alleged factual errors Counsel for Foresters contended that the Full Court erred in finding148 that Foresters knowingly assisted Woff and Corby's breaches of fiduciary duty in respect of their preparation of "other documents" for Foresters, meaning thereby stationery request forms, funeral benefit claim forms, marketing flyers and pre-paid funeral contracts. That contention should be rejected. It is true that the primary judge did not find in terms that Foresters knowingly assisted Woff and Corby in misappropriating those documents. But as the Full Court stated149, consistently with the findings of the primary judge150, the facts were as follows: "In October and November [2010], Mr Woff and Mr Corby were preparing documentation for the new business, including disclosure documents and marketing flyers and communicated with Mr Hughes about these. The preparation of the suite of documents to give to prospective funeral funds was important. The easier and more seamless the task of signing up to the new business was made, the greater the likelihood of attracting business. Mr Hughes was consulted by Mr Woff about this in November. The disclosure documents, stationery request forms, funeral benefit claim forms, marketing flyers and pre-paid funeral contracts were created from Lifeplan's documents." Those being the facts, it is accurate to say that Foresters knowingly assisted Woff and Corby in the preparation of the "other documents". Counsel for Foresters contended that the Full Court erred in characterising the BCP "as a body of information to be used by the [Foresters] board to measure the success of the venture" and in stating that "[t]he BCP … was to play an important role … in the implementation of the decision [to go ahead with the new venture]"151. In counsel's submission, that went well beyond, and ran counter to, the primary judge's finding that the significance of the confidential 148 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 5 [11]. 149 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 16 [43]. 150 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 430-433 151 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 14 [38]. Nettle information in the BCP was that it gave the Board of Foresters confidence that the sales targets in the BCP were achievable and that Woff and Corby knew what they were talking about. That submission should also be rejected. Reference has already been made to the large quantity of Lifeplan confidential documents and information misappropriated by Woff and Corby and used to prepare the BCP. On any reasonable view of the matter, the BCP is aptly described as a body of information to be used by the Board of Foresters to measure the success of the new venture and which played an important role in the implementation of the Board's decision to go ahead with the new business. More accurately, as the Full "[The BCP] was a document based on confidential information taken in dishonest breach of fiduciary obligation. It was a document that enabled the Foresters' board to evaluate the worth of the commercial opportunity against the risk to be undertaken, and to make the commercial decision with the confidence of knowing that it was privy to the detail of Lifeplan's strategies, financial analyses and up-to-date results." Counsel for Foresters contended that the Full Court erred in finding153 that Foresters was guilty of "active participation in a dishonest breach of fiduciary duty" in relation to the BCP, by going well beyond the finding of the primary judge154 that Foresters assisted in the breach of fiduciary duty "because it was open to it, through Mr Hughes and Mr Fleming, to require Mr Woff and Mr Corby to remove [Lifeplan's] information from the BCP before it was presented to the Board of Foresters". That contention should also be rejected. In terms, what the Full Court found was that155: "Looking at the contents of the BCP, it discloses detailed information, some of which expressly, and plainly, came from Lifeplan's records. The information throughout the document was of such detailed 152 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 12 [33]. 153 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 16 [41]. 154 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 457 [379]. 155 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 15-16 [41]. Nettle specificity and commercial importance, including historical financial information, that no honest and reasonable person, not shutting his or her eyes to the obvious, could conclude other than that the document was based on Lifeplan's confidential information brought by current employees of Lifeplan who were seeking to persuade the board of Foresters to make a decision to attack the business of Lifeplan for the joint future benefit of the employees and Foresters. This was not mere knowledge gained in a role of spectator to another's wrong. The members of the board of Foresters, not just its chairman and CEO (Messrs Fleming and Hughes, respectively) knew or should be taken to have known (by the standards of honest and reasonable people) that they were being supplied with confidential business information of a competitor by the competitor's current employees, in order to have them make a decision to enter into a business relationship with the current employees of the competitor to the likely commercial disadvantage of the competitor, and the likely and intended commercial advantage of their company and the employees. This was not mere knowledge; this was active participation in a dishonest breach of fiduciary duty." Regardless of whether that finding goes beyond the primary judge's characterisation of Foresters' participation as comprised of its failure to require Woff and Corby to remove Lifeplan's confidential information from the BCP, the finding is correct. Woff and Corby's taking of Lifeplan's confidential information and use of it in preparing the BCP was, as the Full Court said, a wholesale plundering of the confidential information of Lifeplan of which Foresters, by the standards of an honest and reasonable person, undoubtedly should have been aware. The obligation to account As Gibbs J observed in Consul Development Pty Ltd v DPC Estates Pty Ltd156, if the strict rule of equity that forbids a person in a fiduciary position to profit from his or her position is to be seen as designed to deter fiduciaries from being swayed by interests other than duty – "a rule to protect directors, trustees, and others against the fallibility of human nature"157 – it logically applies equally to other persons to deter them from knowingly assisting fiduciaries to violate their duty. Thus158: 156 (1975) 132 CLR 373 at 397; [1975] HCA 8. See also Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557-558; [1995] HCA 18. 157 Costa Rica Railway Co Ltd v Forwood [1901] 1 Ch 746 at 761 per Vaughan 158 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 397. Nettle "a person who knowingly participates in a breach of fiduciary duty is liable to account to the person to whom the duty was owed for any benefit he [or she] has received as a result of such participation." As was later observed in Warman International Ltd v Dwyer159, the assessment of the profit derived as a result of a breach of fiduciary duty or knowing involvement in a breach of fiduciary duty is often difficult in practice. Frequently, the matter does not permit of mathematical exactness but only of reasonable approximation. The aim, however, is to determine as accurately as possible the true measure of the profit or benefit obtained as a result of the breach of fiduciary duty160. That necessitates application of what is in effect, if not in name, an equitable conception of causation of whether the breach of fiduciary duty has materially contributed to the profit the subject of account161, as opposed to legal tests of causation and remoteness162. To that end, it is necessary to draw a distinction between cases where the breach of duty or knowing involvement results in the acquisition of a specific asset and cases where the breach of duty or knowing involvement results in the acquisition of a business opportunity. As Warman demonstrates, where what is obtained as a result of a breach of fiduciary duty is a business opportunity, as opposed to a specific asset, the circumstances may dictate that the period of time over which profits are awarded should be limited. Thus, in Warman163, profits were awarded for a limited period of the first two years of operation of the relevant businesses, because those businesses were built in part on a third party's ownership of local goodwill and local assembly rights and only in part on the breach of fiduciary duty. Similarly, in Kao Lee & Yip v Koo Hoi Yan164, where in breach of fiduciary duty a partner at 159 (1995) 182 CLR 544 at 558. 160 See also Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101 at 111 per Mason CJ, Deane, Dawson and Toohey JJ; [1993] HCA 54. See and compare Devonshire, "Account of Profits for Breach of Fiduciary Duty", (2010) 32 Sydney Law Review 389 at 401-402; McInnes, "Account of Profits for Breach of Fiduciary Duty", (2006) 122 Law Quarterly Review 11 at 14. 161 See and compare Gummow, "Dishonest Assistance and Account of Profits", (2015) 74 Cambridge Law Journal 405 at 409. 162 See Lee, "Causation and Account of Profits for Breach of Fiduciary Duty", [2006] Singapore Journal of Legal Studies 488. Cf Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 at 500 [39]; [2003] HCA 15. 163 (1995) 182 CLR 544 at 566-567. 164 [2003] 3 HKLRD 296 at 343-344 [158]-[159]. Nettle the plaintiff law firm had set up a rival law firm to which he had diverted work that would otherwise have flowed to the plaintiff firm, an account of profits of the rival firm was limited to a one year period. Where what is obtained as a result of a breach of fiduciary duty is a business opportunity, it is also necessary to make a choice between awarding all of the profits of the business (whether over the whole of the life of the business or, as in Warman, for a limited time) or a percentage of the profits proportionate to the extent to which the breach of fiduciary duty has contributed to the business. As Mason J observed165 in Hospital Products Ltd v United States Surgical Corporation, referring to the judgment of Upjohn J in In re Jarvis, decd166: "One approach, more favourable to the fiduciary, is that he [or she] should be held liable to account as constructive trustee not of the entire business but of the particular benefits which flowed to him [or her] in breach of his [or her] duty. Another approach, less favourable to the fiduciary, is that he [or she] should be held accountable for the entire business and its profits, due allowance being made for the time, energy, skill and financial contribution that he [or she] has expended or made. … In each case the form of inquiry to be directed is that which will reflect as accurately as possible the true measure of the profit or benefit obtained by the fiduciary in breach of his [or her] duty." In Warman167, the Court considered the second approach (of awarding the entirety of the net profits of the businesses for a period of two years) to be appropriate, because the businesses operated by the errant fiduciary and the third party had been carved out of the plaintiff's business. The Court had earlier remarked168 that, as a general rule, a court will not apportion profits in the absence of an antecedent arrangement for profit-sharing. A further possibility, as Mason J remarked in Hospital Products, is for a court to make an allowance for the errant fiduciary or knowing assistant's skill, expertise and expenses. The onus is on the defendant to establish that an account of profits should be reduced in this way169. 165 (1984) 156 CLR 41 at 110; [1984] HCA 64. 166 [1958] 1 WLR 815 at 820; [1958] 2 All ER 336 at 340. 167 (1995) 182 CLR 544 at 568. 168 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 562. 169 Warman International Ltd v Dwyer (1995) 182 CLR 544 at 561-562. Nettle Consistently with those considerations, it was open to the Full Court to order an account of the profits derived by Foresters from funeral bond contracts written up to 30 June 2015, a period equating roughly to the first five years of the new venture (with a modest deduction of six months)170. As is explained in what follows, if the Full Court had awarded anything less than that, it would have risked enabling Foresters to benefit from its knowing involvement in Woff and Corby's breaches of fiduciary duty. By contrast, to award Lifeplan and FPM the entire value of the Foresters Funeral Fund business, as contended for by them, would require Foresters to account for profits to which the breaches of fiduciary duty had not materially contributed and, to that extent, would make the exercise one of unwarranted punishment of Foresters and a vehicle for the unjust enrichment of Lifeplan and FPM171. As the Full Court observed in substance, the BCP and the other information provided by Woff and Corby to Foresters and received by Foresters in knowing involvement in Woff and Corby's breaches of fiduciary duty included the knowhow, client information, client goodwill, logistical systems and financial projections necessary for the conduct of the proposed new business for the first five years of its operations. Together they afforded Foresters an opportunity to commence and conduct the first five years of operations according to a five year plan and with a degree of confidence in the plan which would have been impossible in the absence of Woff and Corby's breaches of duty. It was, therefore, for the benefit of that opportunity that Foresters was liable to account, and the most logical and realistic measure of that benefit was the net present value of those profits derived from that initial period of operations. It is true, as the primary judge held, that there was no evidence of Foresters making direct use of the BCP after March 2011, at least in the sense of comparing actual performance to date with BCP projected sales figures to that date. But that is not to say that Foresters did not continue to benefit from the BCP throughout the first five years after commencing its new venture with Woff and Corby. On the evidence, the BCP was not only the basis on which Foresters determined to proceed with Woff and Corby's proposal but also the basis on which the business was in fact planned and structured. In the absence of evidence to the contrary, it is naturally to be inferred that the business was 170 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 26 [88]. 171 See Vyse v Foster (1872) LR 8 Ch App 309 at 333; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 109 per Mason J; Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101 at 111, 114 per Mason CJ, Deane, Dawson and Toohey JJ, 123 per McHugh J; Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557, 561. Nettle structured and conducted accordingly. And inasmuch as the BCP was not only the basis on which Foresters determined to proceed with the new business but also the basis on which the new business was planned and structured, here, as in Warman, it was appropriate to take as the starting point for the account of profits the entirety of Foresters' funeral bond business rather than attempt to apportion the profits to reflect the particular benefits which flowed to Foresters due to its knowing assistance of Woff and Corby's breaches of fiduciary duty. Of course, Foresters incurred costs and expenses, including the cost of capital, and Foresters was required to engage managers and salespersons to provide the skills necessary to conduct the new business. But those costs were taken into account in the calculation of the net present value of the funeral bond contracts entered into in the first five years of the new venture. Hence, in financial terms, the net present value of the profits from contracts entered into in the first five years was a relatively accurate reflex of the net benefit to Foresters of its knowing involvement in Woff and Corby's breaches of fiduciary duty. Perhaps the calculation would have been even more accurate if, in addition to deducting the costs and expenses of generating the profits, there had also been deducted such if any proportion of the profits as was shown to be referable solely to the sales and management skills of the persons engaged in the business, as opposed to the benefit of Foresters being able to plan, structure and conduct the first five years of operations in accordance with the BCP. But beyond the identification of the costs and expenses incurred, Foresters did not attempt the task of identifying a share of profits which should be seen as properly attributable to its or its employees' sales and management skills alone. And, as was stated in Warman172, it is for a defendant to establish that it is inequitable to order an account of the entire profits: "If the defendant does not establish that that would be so, then the defendant must bear the consequences of mingling the profits attributable to the defendant's breach of fiduciary duty and the profits attributable to those earned by the defendant's efforts and investment, in the same way that a trustee of a mixed fund bears the onus of distinguishing what is his own." (footnotes omitted) Plainly enough, however, the position changed at the end of year five because whatever business plan was followed after that date could not have been the BCP. Possibly, the planning and practices for year six and thereafter drew on experience that Foresters acquired in operating the business during years one to five, and, to that extent, it might be that the profits derived in year six and beyond also derived from the BCP. But the extent to which they might have done so could not have been at all significant. On the available evidence, the very large 172 (1995) 182 CLR 544 at 561-562. Nettle share of the funeral bond market which Lifeplan enjoyed prior to Woff and Corby's departure was at least partly due to Woff and Corby's personal sales and management skills, and, as employees unconstrained by contrary covenants173, Woff and Corby were always free to leave Lifeplan, taking their personal sales and management skills with them, and set up in competition with Lifeplan. To say so is not to doubt the benefit to Foresters of the BCP and other confidential information which Woff and Corby took in breach of their fiduciary duties, nor the advantage which Foresters derived by reason of Woff and Corby's solicitation of Lifeplan clients while still employed by Lifeplan. Had Woff and Corby left Lifeplan lawfully and set up with Foresters without breach of fiduciary duty, they could not have made any use of Lifeplan confidential information and they would have been prohibited from soliciting Lifeplan clients as long as they remained at Lifeplan. But there was also material in the BCP, such as the business strategies set out in Section 7, that was known to Woff and Corby as part of their personal sales and management skills and experience, and of which, therefore, they would have been lawfully entitled to make use after leaving Lifeplan. Nor would it likely have taken overly long for Woff and Corby after leaving Lifeplan lawfully to solicit the clients which they unlawfully solicited before leaving Lifeplan. Granted, there was a good deal of evidence at trial about items of Lifeplan proprietary stationery such as pre-paid funeral pads, produced by an external supplier, which Woff and Corby copied and used when at Foresters, and a Lifeplan funeral director mailing list which Woff and Corby used to send out marketing material on behalf of Foresters174. But Lifeplan and FPM accepted at trial that Foresters could not be directly liable, as a knowing assistant or otherwise, in respect of that conduct by Woff and Corby175. Furthermore, the various forms of stationery were not confidential since they were in use in the market place, where they could be seen and emulated with relative ease176; and, although the client list was confidential, the clients were not177. Given that Lifeplan's clients were in business as funeral directors, and presumably listed as such in publicly available sources, Lifeplan was always at risk of losing them to the lawful blandishments of its competitors. 173 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 470 [444]. 174 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 435-439 175 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 453 [363]. 176 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 437 [266]. 177 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 439 [281]. Nettle That is not to overlook that, by the end of year five, Foresters' business had increased dramatically and Lifeplan's business had reduced correspondingly. Nor is it to gainsay that, but for the breaches of fiduciary duty that informed the BCP, and hence Foresters' decision to embrace Woff and Corby's initiative, Lifeplan's relative position at the end of year five might conceivably have remained as it was at the beginning of year one. As against that, however, it is apparent that after its merger with Australian Unity, Lifeplan had already determined not to devote the same effort to marketing funeral bonds in future that it had in the past178. It is also significant, as the primary judge found179, that there was a perception among at least some funeral directors as at 2010 that one of Lifeplan's funeral benefit funds, "Funeral Benefits Fund No 2", had performed poorly and that the reasons that funeral directors may transfer from one fund to another – in this case from Lifeplan to Foresters – included the quality of the investment returns and the extent of the personal relationship with the salespersons representing the fund. Lifeplan's chances of retaining its previous market share were problematic even before Woff and Corby decided to jump ship. Of course, Lifeplan and FPM's claim was not for what they lost by reason of Foresters' knowing participation in Woff and Corby's breaches of fiduciary duty but for an account of the profits which Foresters had gained. Still, as was held in Warman180, when accounting for profits, the amount of what has been lost by the plaintiff may in some situations be relevant to what has been gained by the errant fiduciary or knowing assistant. And here that was the case. It was not suggested that, but for Woff and Corby's breaches of fiduciary duty or Foresters' access to the confidential information which informed the BCP, it would have been impossible or impracticable for Foresters over time lawfully to build the level of funeral bond business which it did181. Nor is there reason to suppose that it could not have done so. Woff had become dissatisfied at Lifeplan after its merger with Australian Unity and Foresters was already in the funeral bond business when Woff and Corby came over from Lifeplan. Given Woff and Corby's innate sales and management skills and experience, there can be no doubt that with sufficient time, effort and resources they could have lawfully assisted Foresters to achieve the same results as were in fact achieved. 178 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 396-397 [30]. 179 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 397 [32], 180 (1995) 182 CLR 544 at 565. 181 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 397 [30]. Nettle While such a consideration does not enable Foresters to escape liability to account for the profits it received by reason of its knowing assistance of Woff and Corby's breaches of fiduciary duty182, it does have a bearing on the quantum of the account. That is because, as was stated in Warman183, the object of the exercise is to determine as accurately as possible the true measure of the profit or benefit obtained as a result of the breach of fiduciary duty and, as has been stated, that necessitates a decision as to the extent to which the breach of fiduciary duty has materially contributed to the profit for which it is sought to make the fiduciary or knowing assistant liable to account. The position in England, at least with respect to fiduciaries as opposed to knowing assistants184, may now be different. In Murad v Al-Saraj185, the majority of the Court of Appeal of England and Wales held that it did not lie in the mouth of an errant fiduciary to protest that it would have been possible without breach of fiduciary duty to make a profit in fact made in breach of fiduciary duty. The majority ordered the defendant fiduciary to disgorge all his profits from entering into a joint venture with the claimants, notwithstanding the primary judge's finding that if the defendant had not breached his fiduciary duty and had properly disclosed certain information to the claimants they would have gone ahead with the venture and simply demanded a higher profit share. Arden LJ stated186: "The fact that the fiduciary can show that [the claimant] would not have made a loss [as a result of the breach of fiduciary duty] is, on the authority of [Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134], an irrelevant consideration so far as an account of profits is concerned. Likewise, it follows in my judgment from the Regal case that it is no defence for a fiduciary to say that he [or she] would have made the profit even if there had been no breach of fiduciary duty." 182 Cf Fyffes Group Ltd v Templeman [2000] 2 Lloyd's Rep 643 at 672. 183 (1995) 182 CLR 544 at 558. 184 See generally Novoship (UK) Ltd v Mikhaylyuk [2015] QB 499. 185 [2005] WTLR 1573. 186 [2005] WTLR 1573 at 1591 [67]. Nettle Jonathan Parker LJ agreed187, and observed that that was the effect of authorities such as Regal (Hastings) Ltd v Gulliver188, Boardman v Phipps189, Brickenden v London Loan & Savings Co190 and Gwembe Valley Development Co Ltd v Koshy191. By contrast, Clarke LJ held that192: "if the matter were free from authority I would hold that a person who makes a profit in the course of a fiduciary relationship must account for the profits he [or she] makes, that prima facie he [or she] must account for all the profits but that it should be open to him [or her] to show that it was always intended that he [or she] would make a profit from the transaction and to persuade the court if he [or she] can that, in the exercise of its equitable jurisdiction to order an account, in the circumstances of the particular case, he [or she] should not be ordered to account for the whole of the profits. Thus I would hold that, while the question what the claimant would have done if told the true facts, is irrelevant to the question whether the fiduciary should be ordered to account, it is or may be relevant to the extent of the account." As Clarke LJ further observed193, with respect correctly, his Lordship's approach accords with this Court's approach in Warman. The point for present purposes, however, remains that, despite the significance of the advantage which Foresters gained by reason of its knowing participation in Woff and Corby's breaches of fiduciary duty, in essence that advantage was limited to the availability of a readymade plan in the form of the BCP for the first five years of operations and the advantage of winning over Lifeplan's clients more quickly than they otherwise could have been won over. In the market circumstances already mentioned, it would be unrealistic to conclude that the value of that kind of advantage endured beyond the first five years of operations. 187 [2005] WTLR 1573 at 1599-1605 [96], [99]-[123]. 190 [1934] 3 DLR 465. 191 [2004] 1 BCLC 131. 192 [2005] WTLR 1573 at 1611 [141]. 193 [2005] WTLR 1573 at 1613-1616 [148]-[158]. Nettle The primary judge eschewed194 ordering an account of the profits deriving from that advantage because Lifeplan and FPM had not advanced a case on a headstart basis and because it was not "the traditional way in which profits for a limited period would be assessed". But as the Full Court appreciated, the strength of Lifeplan and FPM's case was that Foresters' new venture would not have gone ahead without the breaches of fiduciary duty by Woff and Corby in which Foresters knowingly participated195. In that sense, the conclusion was ineluctable that Foresters derived the net profits of its expanded funeral bond business by reason of its knowing participation in Woff and Corby's breaches of duty. On that basis, one possibility would have been to order an account of all of the profits of the business for an indefinite period. But, as Warman made clear, and the Full Court rightly appreciated, an account of profits must be tailored to make it as much as possible a true measure of the profit or benefit obtained as a result of the breach of fiduciary duty and thereby to avoid its becoming an arbitrary punishment or a vehicle for unjust enrichment. For that reason, it was incumbent on the Full Court to gauge the extent to which Foresters' knowing involvement in Woff and Corby's breaches of fiduciary duty materially contributed to the profits of Foresters' business196. Of necessity, that exercise involved a "judicial estimation of the available indications"197, not mathematical precision, and thus was one about which reasonable minds might differ. But, as the Full Court reasoned198, a five year cut-off logically gave recognition to the contribution to profits of factors other than the breaches of fiduciary duty and, at the same time, supported the underlying principles of fidelity, trust and honesty which the obligation to account is calculated to achieve. As such, it was a choice of the most accurate means of estimation of the profits that Foresters derived as a result of its knowing assistance of Woff and Corby's breaches of fiduciary duty and so represented a principled exercise of equitable discretion. It should not be altered merely because other reasonable minds might have chosen differently. 194 Lifeplan Australia Friendly Society Ltd v Woff (2016) 259 IR 384 at 471 [444]. 195 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 25 [81]. 196 See also Kao Lee & Yip v Koo Hoi Yan [2003] 3 HKLRD 296 at 342-343 197 General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819 at 826 per Lord Wilberforce; [1975] 2 All ER 173 at 179. See also Warman International Ltd v Dwyer (1995) 182 CLR 544 at 567. 198 Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1 at 26 [87]-[88]. Nettle Nor is it of concern that the Full Court's award of the net present value of the funeral bond contracts written up to 30 June 2015 was not "the traditional way in which profits for a limited period would be assessed". For, as was further emphasised in Warman199, "[i]t is necessary to keep steadily in mind the cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts". And as has been explained, the adoption of the net present value of contracts entered into in what was roughly the first five years of Foresters' new venture was, in financial terms, an accurate reflex of the net benefit to Foresters of its knowing involvement in Woff and Corby's breaches of fiduciary duty. Actual or anticipated profits Counsel for Foresters contended that, as a matter of authority, an account of profits may be ordered only in respect of profits which have accrued, and for that reason that the Full Court erred by bringing to account the net present value not just of profits which had accrued to Foresters but also of profits which it was projected would accrue to Foresters. To understand that submission, a brief explanation of the calculation of profits relied upon by the Full Court is required. As mentioned, Foresters' profits with respect to funeral bond contracts derived from management fees that it charged under those contracts. For any particular contract, those fees would continue to be earned until the client's death, upon which the contract would be terminated. In calculating the net present value of contracts written up to 30 June 2015, the joint expert report upon which the Full Court relied included projected cash flows associated with those contracts. Foresters' submission was that projected income of this kind cannot form the basis of an account of profits. The authority relied upon by Foresters in support of that submission was the following statement of the plurality in Dart Industries Inc v Decor Corporation Pty Ltd200: "As Windeyer J pointed out in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd, even now an account of profits retains its equitable characteristics in that a defendant is made to account for, and is then stripped of, profits which it has dishonestly made by the infringement and which it would be unconscionable for it to retain. An account of profits is confined to profits actually made, its purpose being not to punish the defendant but to prevent its unjust enrichment." (footnotes omitted) 199 (1995) 182 CLR 544 at 559. 200 (1993) 179 CLR 101 at 111 per Mason CJ, Deane, Dawson and Toohey JJ. Nettle Counsel submitted that the fact that the reference to profit which the defendant has dishonestly made was expressed in the present perfect tense dictated that profits must have come in before they may be brought to account. Counsel also contended that, although the Full Court had purported to treat Foresters' capacity to generate future profits as a capital asset capable of valuation by reference to the net present value of the projected stream of future profits, it was clear according to accounting convention and the authority of this Court's decision in Federal Commissioner of Taxation v Myer Emporium Ltd201 that future profits are not a capital asset. Up to a point, those submissions may be accepted. Ordinarily, what is conceived of as an account of profits is an account of profits which have come in. That is what was ordered by Windeyer J in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd202 and also by this Court in Dart Industries. It is also correct that, for the kind of accounting and taxation purposes considered in Myer Emporium, a projected future stream of interest payments payable on a loan is not a presently existing asset. But that said, it does not mean that it is impermissible or inappropriate to assess the benefit derived by reason of a knowing involvement in a breach of fiduciary duty as being the net present value of profits likely to be derived by reason of the knowing involvement in the breach of fiduciary duty. The context in which Windeyer J wrote in Colbeam was one of accounting for profits in respect of the unauthorised use of intellectual property during a particular period that had expired203. And the context in which his Honour's remarks were adopted in Dart Industries was one in which this Court was called upon to decide whether general overhead costs should be allowed as a deduction when determining an account of profits. In neither case was there any need to consider future profits. Thus, the fact that their Honours spoke only of past profits in those contexts says nothing as to the appropriate way of accounting for the benefit of a business opportunity that is projected to generate profits into the future. And equally, the fact that, according to generally accepted accounting standards, the right of a borrower to receive a future stream of interest payments is not brought to account as a capital asset, or, therefore, characterised as such for fiscal purposes, says nothing as to the propriety of assessing the benefit of a business opportunity derived in breach of fiduciary duty by reference to the net present value of the future profits of the business. 201 (1987) 163 CLR 199 at 217; [1987] HCA 18. 202 (1968) 122 CLR 25 at 34; [1968] HCA 50. 203 (1968) 122 CLR 25 at 36. Nettle Conclusion The appeal and the cross-appeal should both be dismissed with costs.

HIGH COURT OF AUSTRALIA Matter No B60/2017 THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND RESPONDENT Matter No B61/2017 THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND RESPONDENT Matter No B62/2017 THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND RESPONDENT Matter No B63/2017 THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND RESPONDENT Federal Commissioner of Taxation v Thomas Federal Commissioner of Taxation v Martin Andrew Pty Ltd Federal Commissioner of Taxation v Thomas Nominees Pty Ltd Federal Commissioner of Taxation v Thomas [2018] HCA 31 8 August 2018 B60/2017, B61/2017, B62/2017 & B63/2017 ORDER Matter No B60/2017 The appeal be allowed in respect of the income years ending 30 June 2006, 30 June 2007 and 30 June 2008. The cross-appeal be dismissed. Set aside order 1 of the Full Court of the Federal Court of Australia made on 12 April 2017 in Matter No QUD72/2016 and orders 1, 2, 3 in Matter that Court made on 3 August 2017 and 4 of No QUD72/2016, and in their place make the following orders: the appeal be allowed in part; the cross-appeal be allowed; the objection decisions in respect of the income years ending 30 June 2006, 30 June 2007 and 30 June 2008 be remitted to the Commissioner of Taxation of the Commonwealth of Australia for determination in accordance with the reasons of this Court; the objection decision in respect of the income year ending 30 June 2009 be remitted to the Commissioner of Taxation of the Commonwealth of Australia accordance with the orders of Greenwood J made on 26 November 2015 in Matter No QUD274/2012 and otherwise in accordance with the law. for determination The respondent pay the appellant's costs of the appeal except for those costs that relate to the determination of the matters concerning the income year ending 30 June 2009. The appellant pay the respondent's costs of the appeal insofar as those costs relate to the determination of the matters concerning the income year ending 30 June 2009. Matter No B61/2017 The appeal be allowed. Set aside order 1 of the Full Court of the Federal Court of Australia made on 12 April 2017 in Matter No QUD78/2016 and orders 1, 2, 3 and 4 of in Matter that Court made on 3 August 2017 No QUD78/2016, and in their place make the following orders: the appeal be dismissed; the cross-appeal be allowed; the objection decision in respect of the income year ending 30 June 2008 be remitted to the Commissioner of Taxation of the Commonwealth of Australia accordance with the reasons of this Court. for determination The respondent pay the appellant's costs of the appeal. Matter No B62/2017 The appeal be dismissed. The appellant pay the respondent's costs. Matter No B63/2017 The appeal be dismissed. The appellant pay the respondent's costs. On appeal from the Federal Court of Australia Representation J T Gleeson SC and P A Looney QC with J A Watson and C M Pierce for the appellants (instructed by Australian Government Solicitor) F L Harrison QC and M L Robertson QC for the respondents (instructed by Hopgood Ganim Lawyers) S P Donaghue QC, Solicitor-General of the Commonwealth with K E Foley and R A Minson for the Attorney-General of the Commonwealth, intervening in B60/2017 and B61/2017 (instructed by Australian Government Solicitor) P J Dunning QC, Solicitor-General of the State of Queensland with D E F Chesterman for the Attorney-General of the State of Queensland, intervening in B60/2017 and B61/2017 (instructed by Crown Solicitor (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Federal Commissioner of Taxation v Thomas Federal Commissioner of Taxation v Martin Andrew Pty Ltd Federal Commissioner of Taxation v Thomas Nominees Pty Ltd Federal Commissioner of Taxation v Thomas Taxation – Division 207 in Pt 3-6 of Income Tax Assessment Act 1997 (Cth) – Where trustee passed resolutions purporting to distribute franking credits to beneficiaries of trust separately from and in different proportions to income comprising franked distributions – Where directions made by Supreme Court of Queensland pursuant to s 96 of Trusts Act 1973 (Q) concerning the resolutions – Whether directions determined against Commissioner of Taxation the application of Div 207. Words and phrases – "deemed assessment", "determine conclusively", "directions", "franked distribution", "franking credit", "imputation credit", "income tax return", "judicial advice", "notice of amended assessment", "notionally allocated", "streaming", "tax offset". Income Tax Assessment Act 1936 (Cth), ss 95, 97. Income Tax Assessment Act 1997 (Cth), Div 207. Taxation Administration Act 1953 (Cth), Pt IVC. Trusts Act 1973 (Q), s 96. KIEFEL CJ, BELL, KEANE, NETTLE, GORDON AND EDELMAN JJ. These appeals, arising out of proceedings in the Federal Court of Australia under Pt IVC of the Taxation Administration Act 1953 (Cth) ("the TAA"), concern the receipt of distributions that had been franked within the meaning of Div 207 in Pt 3-6 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"). In the 2006 to 2008 years of income1, the trustee of the Thomas Investment Trust ("the Trust"), Thomas Nominees Pty Ltd ("the Trustee"), received franked distributions within the meaning of Div 207 of the 1997 Act. In each of those years, the Trustee passed two relevantly identical resolutions, described respectively as the "Net Income Resolution" and the "Franking Credit Resolution". Those resolutions sought to distribute, or stream, the franking credits between beneficiaries of the Trust separately from, and in different proportions to, the income comprising the franked distributions. In these appeals, the assumption which underpinned the resolutions – that franking credits could be distributed separately from, and in different proportions to, the income comprising the franked distributions – was referred to as the "Bifurcation Assumption". The income tax returns for the Trustee and the beneficiaries of the Trust were prepared, and lodged with the Commissioner, on the basis that the Bifurcation Assumption was legally effective under Div 207. Then, in 2010, the Trustee made an application to the Supreme Court of Queensland under s 96 of the Trusts Act 1973 (Q) for, and successfully obtained, "directions" that the Trustee, by those resolutions, could give, and had given, effect to the Bifurcation Assumption ("the State Proceedings")2. In this Court, the Trustee and two beneficiaries of the Trust – Mr Martin Thomas ("Mr Thomas") and Martin Andrew Pty Ltd ("MAPL") (collectively, "the taxpayers") – accepted that the Bifurcation Assumption was legally ineffective under Div 207 in Pt 3-6 of the 1997 Act. 1 These appeals initially concerned the income years ending 30 June 2006 to 30 June 2009 (inclusive). The appellant, the Commissioner, abandoned his appeals concerning the 2009 year (part of Matter No B60 and Matter No B62) and penalties (Matter No B63). 2 Thomas Nominees Pty Ltd v Thomas (2010) 80 ATR 828 at 838-839 [50]-[52]. Bell Nettle Gordon Edelman The principal issue in this Court was whether, in the Pt IVC proceedings, the Full Court of the Federal Court was correct in holding that it was bound by the decision in Executor Trustee and Agency Co of South Australia Ltd v Deputy Federal Commissioner of Taxes (SA)3 to conclude that the "directions"4 (in the form of declarations) given by the Supreme Court of Queensland determined conclusively, against the Commissioner, the application of Div 207 to those franked distributions – in other words, that the "directions" determined the rights of the beneficiaries against the Trustee in such a way that Div 207 would operate consistently with the Bifurcation Assumption. The Commissioner submitted that the Full Court of the Federal Court was in error in holding that the Court was so bound. That submission should be accepted. If neither the Federal Court in the Pt IVC proceedings, nor the Commissioner, were bound by the "directions" of the Supreme Court of Queensland (and they were not), then the next issue concerned the proper construction of the resolutions and the application of Div 207 to those resolutions. Having abandoned reliance on the Bifurcation Assumption, in this Court the taxpayers sought to uphold an alternative construction of the resolutions adopted by the Full Court of the Federal Court – one in which franked distributions were "notionally allocated" to match the purported, and separate, distribution of the franking credits. As will be explained, the Commissioner's submission the resolutions was flawed should be accepted. this alternative construction of that By notices of contention, the taxpayers sought to raise three further issues – estoppel by convention, rectification of the resolutions and a denial of procedural fairness. Each of those grounds should be dismissed. The Commissioner's appeals in relation to the 2006 to 2008 income years should be allowed. Division 207 in Pt 3.6 The Bifurcation Assumption involves the notion that franking credits are discrete items of income that may be dealt with or disposed of as if they were property under the general law. That notion is contrary to the proper (1939) 62 CLR 545; [1939] HCA 35. ss 96 and 97 of the Trusts Act. Bell Nettle Gordon Edelman understanding of Pt 3.6. Franking credits are a creature of its provisions; their existence and significance depend on those provisions. Part 3.6 of the 1997 Act creates an imputation system which sets out the effects of receiving a "franked distribution". The Part creates a distinction between franked distributions and franking credits, the latter being "on"5 or attached to the franked distribution. Under the Part, when a corporate tax entity6 distributes profits on which income tax has already been paid, the corporate tax entity may impute credits for that tax by "franking" the relevant distribution7. As a general rule8, a member of a corporate tax entity will be taxed on the full amount of the franked distribution and the attached franking credits but will be entitled to an imputation credit, a tax offset, equal to the franking credit on the distribution included in that member's assessable income for the tax already paid by the corporate tax entity9. That general rule is modified where the distribution is made to a trustee10. In that situation, subdiv 207-B creates a system11 which notionally allocates the franking credits in the same proportions as the beneficiaries' share in the franked distributions. "notional allocation". That reference is not, as the taxpayers' argument would have it, an indication that a trustee may effect such an allocation of franking credits as it may choose in order to achieve an effect inconsistent with the provisions of Div 207. the statutory reference the significance of This 5 See, eg, ss 207-5(1)(a), 207-5(3), 207-5(4), 207-10 and 207-35(1) of the 1997 Act. 6 See the definition of "corporate tax entity" in ss 995-1(1) and 960-115 of the 1997 Act. ss 200-5 and 200-10 of the 1997 Act. ss 200-10, 200-35, 207-5(1), 207-35, 207-45 and 207-50 to 207-57 of the 1997 Act. 9 The tax offsets available under Div 207 are subject to the refundable tax offset rules: Div 67 of the 1997 Act. 10 subdiv 207-B of the 1997 Act. 11 ss 207-5, 207-25, 207-35, 207-45 and 207-50 to 207-57 of the 1997 Act. Bell Nettle Gordon Edelman The beneficiaries' share in the franked distributions, in turn, depends on how the beneficiaries share in the income of the trust under s 97 of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act")12. Subdivision 207-B ensures that the beneficiary of the trust income receives the benefit of the franked distribution to the extent that the franked distribution is received through a trust. The system comprises four steps: first, where a franked distribution is made or flows indirectly to a trustee, the assessable income of the trust for that year includes the amount of franking credits on the distribution13; second, it is necessary to identify whether any of the franked distribution flows indirectly to a beneficiary of the trust14; third, if any of the franked distribution flows indirectly to a beneficiary of the trust, it is necessary to identify if the beneficiary has assessable income attributable to all or a part of the franked distribution15; and, fourth, if so, the beneficiary's assessable income will include a franking credit amount equal to its share of the franking credit on the franked distribution16. In respect of the fourth step, s 207-55 seeks to ensure that the amount of a franked distribution made to a trustee is allocated notionally amongst the beneficiaries who derive benefits from that distribution and that the allocation corresponds with the way in which those benefits were derived. Its sub-sections provide the mechanisms to achieve that objective. Section 207-55(2) provides that the amount notionally allocated, described as a share of the franked distribution, does not have to be received by the beneficiary. The table in s 207-55(3) provides the method for determining the share amount – relevantly, the beneficiary's share of the trust's net income for the relevant income year17, usually calculated as a percentage of the trust's net income. 12 Read with s 95 of the 1936 Act. 13 s 95 of the 1936 Act and s 207-35(1)(a), (2) and (3) of the 1997 Act. 14 s 97(1)(a) of the 1936 Act and ss 207-35(3)(c), 207-50(3) and 207-55 of the 1997 Act. 15 s 207-35(3)(d) of the 1997 Act. 16 ss 207-35(3), 207-45, 207-55 and 207-57 of the 1997 Act. 17 See also s 207-50(3)(b) of the 1997 Act and ss 95 and 97(1)(a) of the 1936 Act. Bell Nettle Gordon Edelman What is clear from this stepped approach (and particularly from the fourth stage) is that the statutory notional allocation of franking credits to beneficiaries follows the proportions which have been established with respect to their notional sharing in franked distributions at the earlier stages. So long as a trust deed confers power on a trustee to apply classes of income of the trust estate to particular beneficiaries to the exclusion of other beneficiaries (or differentially among beneficiaries), Div 207 recognises that a trustee may stream the franked distribution (or any part of it) to one beneficiary and the other income to another beneficiary18. However, Div 207 does not treat franking credits as a separate source of income capable of being dealt with, and distributed, separately from the franked distribution to which they are attached. The scheme's objective in relation to trusts is to ensure that a beneficiary of a trust will have notionally attributed to it that proportion of the franked distributions received by the trustee that is referable to the amount of the net income distributed to the beneficiary while, at the same time, ensuring that the beneficiary obtains the benefit of the franking credits to the extent of those franked distributions. The franking credits are on19, or attached to, the franked distribution. the taxpayers now accept, the Bifurcation Assumption – the proposition that franking credits could be distributed separately from, and in different proportions to, the income comprising the franked distributions – was wrong. It is against that statutory framework that the terms of the Deed, and the actions of the Trustee, are to be considered. Facts The Trust The Trust was established by a Deed, subsequently amended by a number of deeds poll. Mr Thomas was the sole shareholder and director of MAPL. Mr Thomas and his mother were directors and equal shareholders of the Trustee. 18 See the example at s 207-35(3). 19 See, eg, ss 207-5(1)(a), 207-5(3), 207-5(4), 207-10 and 207-35(1) of the 1997 Act. Bell Nettle Gordon Edelman to apply Clause 4(1) of the Deed (as amended) gave the Trustee an "absolute and the Trust property. the uncontrolled discretion" Under cl 4(2), the Trustee was permitted to record identified categories of income separately in the Trust's books of account. The identified categories included dividends which were fully franked, which were unfranked, to which a foreign tax credit attached, or to which "any other separately identifiable taxation consequence or benefit" attached. income of Clause 4(3) went on to provide that the Trustee could identify, separately record and maintain, in the books of account and records of the Trust, income having, or in respect of which there was attached, individual or unique characteristics other than as referred to in cl 4(2), as the Trustee by resolution determined. Next, consistent with s 207-35 in Div 207 of the 1997 Act, cl 4(4)(a) permitted differential distribution of the whole or any part of the income between beneficiaries – commonly referred to as "streaming". The Deed did not, because it could not, treat franking credits as income. However, the Deed did, as s 207-35 provides, contemplate that franked distributions could be streamed between beneficiaries in different proportions to the other income of the Trust. Finally, cl 4(5) provided that expenses and outgoings of the Trust, at the discretion of the Trustee, could be differentially allocated against, and deducted from, categories of income. The Trustee did not purport to act under cl 4(5). Franked distributions and resolutions As noted earlier, in each of the 2006 to 2008 income years, the Trustee passed the resolutions, under cl 4 of the Deed, which were described by the taxpayers as "dual net income distribution resolutions". Each resolution purported to apply the net income of the Trust for the benefit of Mr Thomas and MAPL but in a different way. Apart from the year and the proportions, the resolutions for the 2006 year set out below were typical of the resolutions passed in each of the income years in dispute. Bell Nettle Gordon Edelman The Net Income Resolution was in these terms: TRUST INCOME DISTRIBUTION: Resolved pursuant to the powers vested in the trustee under the [Deed] establishing the abovenamed trust fund that the net income of the trust fund for the financial year ended 30 JUNE 2006 be applied for the benefit of the beneficiaries listed hereunder by credit to accounts maintained by the trustee for them. BENEFICIARY [MAPL] PROPORTION THE FIRST $21,600 THE BALANCE Should the Commissioner of Taxation disallow any amount as a deduction or take any action that would have the effect of creating undistributed net income in the trust as at 30 JUNE 2006 then such net income shall be deemed to be distributed on 30 JUNE 2006 to the abovenamed beneficiaries in proportions as stated above, except where there is a remainder nomination then this amount shall be distributed to that person. (emphasis added) The Franking Credit Resolution was in these terms: TRUST INCOME DISTRIBUTION: Resolved pursuant to the powers vested in the trustee under the [Deed] establishing the abovenamed trust fund that the net income of the trust fund for the financial year ended 30 JUNE 2006 be applied for the benefit of the beneficiaries listed hereunder by credit to accounts maintained by the trustee for them. BENEFICIARY PROPORTION FRANKING CREDITS TFN WITHHELD [MAPL] FRANKING CREDITS FOREIGN TAX CREDITS Should the Commissioner of Taxation disallow any amount as a deduction or take any action that would have the effect of creating undistributed net income in the trust as at 30 JUNE 2006 then such net income shall be deemed to be distributed on 30 JUNE 2006 to the abovenamed beneficiaries in proportions as stated above, except where there is a remainder nomination then this amount shall be distributed to that person. (emphasis added) Bell Nettle Gordon Edelman The Trust's income tax returns, prepared and lodged on the basis that the Bifurcation Assumption was effective, disclosed the following distributions: Section 95 net income Share of non PP income Franking credits TFN withheld Distributions to MAPL: Share of non PP income Franking credits Attributed foreign income Other foreign income Foreign tax credits The result sought to be achieved each year by the resolutions, and reflected in the tax returns, was not in dispute. As the taxpayers submitted to the primary judge in the Pt IVC proceedings, by the passing of the "dual net income distribution resolutions", the Trustee endeavoured to ensure that all trust income was distributed to avoid the operation of s 99A of the 1936 Act and to ensure that the distribution occurred in a way that maximised the refundable tax offsets available only to Mr Thomas. There were two steps. First, in relation to the non-primary production income (which included the franked distributions), the Trustee sought to allocate, or "stream", the income between beneficiaries to attract the most favourable marginal tax rates. In the 2006 year, that required Mr Thomas to receive an amount (just $21,600) that, together with his other income, kept his average tax rate at 30 per cent. The balance (some $763,149) was then streamed to MAPL, which had a tax rate of 30 per cent. The second step involved the franking credits. The objective was different. As a corporate entity, MAPL could not receive a cash refund from the Commissioner20. If MAPL received franking credits over and above an amount 20 s 67-25(1D) of the 1997 Act. Bell Nettle Gordon Edelman that would effectively reduce its tax to nil, the franking credits would be wasted. However, Mr Thomas, as an individual, could get a refund for excess franking credits21. It was for that reason that the bulk of the franking credits were sought to be distributed to Mr Thomas (in the 2006 year, $2,416,218), rather than to MAPL (in the 2006 year, $228,900). The income tax returns lodged by the Trustee, Mr Thomas and MAPL produced deemed assessments under s 166A of the 1936 Act. The Commissioner subsequently gave notice of an audit and expressed concern over the correctness of the Bifurcation Assumption. State Proceedings After the Commissioner had given notice of intention to conduct an audit, but before the Commissioner issued amended assessments, the Trustee applied pursuant to s 96 of the Trusts Act, by Originating Application to the Supreme Court of Queensland, for judicial advice in the form of directions. The Trustee sought directions "as to the construction of the [Trustee's] resolutions to distribute net income comprising, inter alia, of franking credits for the income tax years 30 June 2005 to 30 June 2008" and, unusually, also sought in the same Originating Application "[e]quitable rectification, if required, of the [Trustee's] resolutions to distribute net income comprising, inter alia, franking credits for the income tax years 30 June 2005 to 30 June 2008 and/or of clause 4(1) of the trust deed for the [Trust] (as amended)"22. It is necessary to describe in a little detail what happened in the State Proceedings. Mr Thomas and MAPL, as the relevant beneficiaries, were joined as respondents to the State Proceedings but played no active part in the proceedings23. The other beneficiaries of the Trust were apparently made aware of the State Proceedings, obtained independent legal advice about the 21 s 67-25 of the 1997 Act. 22 cf Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 at 91-92 [64]-[65]; [2008] HCA 42. 23 Thomas Nominees Pty Ltd v Thomas (2010) 80 ATR 828 at 831 [10]. Bell Nettle Gordon Edelman proceedings and supported the proceedings24. The Commissioner was given notice of the State Proceedings but told the Trustee's solicitors that he was neither a necessary nor an appropriate party. The Trustee did not seek to join the Commissioner as a party to the State Proceedings. In the State Proceedings, Applegarth J found that, under Div 207 of the 1997 Act, the Bifurcation Assumption was correct in law, that the Trustee intended to make a bifurcated distribution of franking credits between beneficiaries and that the resolutions gave effect to that intention25. His Honour indicated that had he reached the conclusion that the Trustee did not document the resolutions to give effect to the Bifurcation Assumption, he would have ordered that the resolutions be rectified to reflect it26. The terms of any rectified resolution or resolutions were not identified. After reasons for judgment were handed down, Senior Counsel for the Trustee prepared and filed minutes of proposed orders. The Commissioner was not given notice of the contents of the proposed orders or given notice that the orders would extend to include declarations of rights, as opposed to directions that the Trustee would be justified in acting on. Applegarth J made the declarations and orders sought ("the directions") as follows: The court directs [the Trustee] under s 96 of the Trusts Act 1973 (Qld), and declares, that: on the proper construction of the Income Tax Assessment Act 1997 (Cth), franking credits in respect of a franked distribution made to the trustee of a trust confer a financial advantage which falls to be dealt with by the trustee of that trust; and on the proper construction of the trust deed for the [Trust] and of the resolutions of the directors of [the Trustee] for the 24 Thomas Nominees Pty Ltd v Thomas (2010) 80 ATR 828 at 831 [10]. 25 Thomas Nominees Pty Ltd v Thomas (2010) 80 ATR 828 at 838-839 [50]-[52]. 26 Thomas Nominees Pty Ltd v Thomas (2010) 80 ATR 828 at 839 [53]-[54]. Bell Nettle Gordon Edelman years ended 30 June 2005 to 2008, those resolutions were effective to: the allocate the following amounts the benefits pertaining to the franking credits; and following beneficiaries entitle those beneficiaries to those benefits in the proportions which those amounts bear, each to the other: Date of Resolution [MAPL] 30 June 2005 30 June 2006 30 June 2007 30 June 2008 (iii) confer on each of those beneficiaries respectively a vested and indefeasible interest in possession in a share of the distributable income that is consistent with the above allocation to those beneficiaries of the benefits pertaining to the franking credits; distribute all the distributable income of the Trust in each beneficiaries above the among in accordance with those resolutions. year The court orders that the application for equitable rectification of those resolutions be dismissed." (emphasis added) Paragraph 1(a) is a direction and declaration that, on the proper construction of the 1997 Act, franking credits in respect of a franked distribution made to the trustee of a trust confer a financial advantage which falls to be dealt with by the trustee of that trust. Paragraph 1(a) is general in nature. That paragraph reflects and records the flawed Bifurcation Assumption that, under the 1997 Act, franking credits can be distributed or streamed between beneficiaries separately from, and in different proportions to, the income comprising the franked distributions. Bell Nettle Gordon Edelman The following paragraphs of the directions proceed from, and build on, that flawed Bifurcation Assumption. Paragraphs 1(b)(i) and (ii) construe the Deed and the resolutions for, relevantly, the 2006 to 2008 income years and declare that the resolutions were effective to allocate to Mr Thomas and MAPL benefits pertaining to the franking credits in the amounts and proportions set out in par 1(b)(ii). Paragraph 1(b)(iii) declares that the resolutions were effective to confer on Mr Thomas and MAPL a vested and indefeasible interest in possession in a share of the distributable income consistent with the allocation to each of them of the benefits pertaining to the franking credits set out in the schedule in par 1(b)(ii). Finally, par 1(b)(iv) declares that the resolutions were effective to distribute all of the distributable income of the Trust in each year among the beneficiaries in accordance with "those resolutions". The relationship between the directions and the resolutions is clear. The directions purport to give effect to both resolutions, despite the fact that the resolutions are contradictory in terms. The taxpayers' contention that par 1(b)(iii) was not, as a matter of construction or reasoning, dependent upon the Bifurcation Assumption must be rejected. Hence, the taxpayers' contention that the Full Court of the Federal Court was correct to conclude that par 1(b)(iii) of the directions could be the directions also should be rejected. divorced from Indeed, to adopt that approach would impermissibly alter the meaning of the directions contrary to the express terms of the directions and the reasoning of the balance of It will be necessary to return to consider the directions and, in particular, the argument that the Full Court of the Federal Court was bound by Executor Trustee to conclude that the directions determined conclusively against the Commissioner the application of Div 207 to the franked distributions in issue. Before doing that, reference should be made to the issue of the relevant income tax assessments and the subsequent commencement of the Pt IVC proceedings. Audit and Amended Assessments The Commissioner completed his audit in 2011. Notices of Amended Assessment were issued to, amongst others, Mr Thomas in relation to the 2006 to 2008 income years and MAPL in relation to the 2008 income year. Each lodged objections in May 2012, the Commissioner issued further Notices of Amended Assessment to Mr Thomas and MAPL ("the Amended Assessments"). Relevantly, Mr Thomas and MAPL challenged the Commissioner's Amended Assessment objection decisions those assessments and, in relation Bell Nettle Gordon Edelman concerning the primary tax for the 2006 to 2008 income years and filed appeals pursuant to s 14ZZ in Pt IVC of the TAA in the Federal Court. Part IVC proceedings In the Pt IVC proceedings, the principal issues raised by the Amended Assessments were the legal effectiveness of the Bifurcation Assumption and, in turn, how Div 207 operated upon the resolutions purporting to "stream" the franking credits between Mr Thomas and MAPL. The taxpayers contended that Executor Trustee required that the orders of Applegarth J conclusively determined the rights of Mr Thomas and MAPL, as beneficiaries, against the Trustee such that the Commissioner and the Court were bound by them, even if the result was wrong in law. The primary judge, Greenwood J, concluded that Executor Trustee did not bind the Commissioner or the Court. His Honour found that the Bifurcation Assumption was flawed in law and held that the appeals against the objection decisions should be dismissed. Appeal to the Full Court of the Federal Court The taxpayers successfully appealed to the Full Court of the Federal Court (Pagone J, Dowsett J and Perram J agreeing). Pagone J accepted that Div 207 did not operate to permit the Bifurcation Assumption. However, his Honour held that Executor Trustee required that although the Commissioner was not bound, or may not be bound, by the construction of Div 207 adopted in par 1(a) of the directions, the Court was bound by par 1(b)(iii) of the directions and that it followed that the taxpayers' appeals should be allowed. That is, Pagone J accepted that the Commissioner was not bound by the construction of Div 207 adopted by Applegarth J, but stated that the relevant question was whether Applegarth J's orders "relevantly determined conclusively the rights of the beneficiaries as against the trustee in such a way that Div 207 would operate as the taxpayers contended"27. After stating that Applegarth J's declaration in par 1(b)(iii) was perhaps surprising in its terms, Pagone J held that the beneficiaries' par 1(b)(iii) of the directions conclusively determined 27 Thomas v Federal Commissioner of Taxation (2017) 105 ATR 413 at 427 [25]. Bell Nettle Gordon Edelman respective shares of the Trust's net income for the years covered by the In relation to the 2009 year of income (which was then in issue), Pagone J adopted the alternative construction of the resolutions29, which has been described earlier in these reasons30. Dowsett J and Perram J agreed. Perram J held that Applegarth J's orders were valid and binding (apparently binding generally and without limitation) until set aside31. Executor Trustee In addressing the principal issue in this Court – whether, in the Pt IVC proceedings, the Full Court of the Federal Court was correct in holding that it was bound by Executor Trustee32 to conclude that the directions determined conclusively, against the Commissioner, the application of Div 207 to the franked distributions – Executor Trustee. As these reasons will explain, the Full Court of the Federal Court misunderstood and misapplied Executor Trustee. is necessary the decision to consider In Executor Trustee, a testator had left directions for the application of his estate. The trustee applied to the Supreme Court of South Australia for, and was granted, directions as to the application of the estate33. Dixon J described the orders made by the Supreme Court in the following terms34: 28 Thomas v Federal Commissioner of Taxation (2017) 105 ATR 413 at 428 [27]. 29 Thomas v Federal Commissioner of Taxation (2017) 105 ATR 413 at 428-430 30 See [6] above. 31 Thomas v Federal Commissioner of Taxation (2017) 105 ATR 413 at 415 [3]. 32 (1939) 62 CLR 545. 33 Executor Trustee (1939) 62 CLR 545 at 556-557. 34 Executor Trustee (1939) 62 CLR 545 at 570. Bell Nettle Gordon Edelman "The orders define the interests of the six beneficiaries. It is true that they do not purport to give new interests and that in law they operate only as declarations determining, as between trustee and beneficiary, the interests otherwise existing, that is, arising under the will. But it is none the less true that the beneficiaries can, after the making of the orders, have no interest in the land inconsistent with the orders." (emphasis added) Contrary to those orders and declarations, the trustee, who had been a party to the earlier proceedings35, sought to depart from those orders by claiming six deductions under the Land Tax Assessment Act 1910 (Cth) on the footing that the six beneficiaries were joint owners of certain land, as persons entitled to its income in the will36. The High Court held that the order of the Supreme Court had declared the position37. As Latham CJ stated38: "The order of the Supreme Court is certainly conclusive in relation to the rights inter se of the parties to the proceedings in which it was made. It could have been challenged upon appeal, but so long as it stands, the rights of the annuitants to receive income from the trustee are the rights declared in the order – no more and no less. There is no means whatever whereby either the trustee or the annuitants can, as a matter of right, vary those rights … The question which arises in this appeal depends entirely upon the rights of the annuitants against the trustee. Those rights have been defined by a court of competent jurisdiction in a manner which excludes the definition of them now preferred by the annuitants – or any other definition inconsistent with the order of the court. The commissioner is entitled to take, and must take, interests in land as he finds them". (emphasis added) 35 Executor Trustee (1939) 62 CLR 545 at 561. 36 Executor Trustee (1939) 62 CLR 545 at 558. 37 Executor Trustee (1939) 62 CLR 545 at 559, 561, 570. 38 Executor Trustee (1939) 62 CLR 545 at 561. Bell Nettle Gordon Edelman Executor Trustee is authority for the proposition that the general law rights of trustee and beneficiary inter se, to the extent that they are defined39 by a decision made in duly constituted proceedings, are defined as against the Commissioner unless the decision is set aside40. In Executor Trustee, the earlier proceedings had determined rights inter se. There was no question of res judicata or of issue estoppel, and the separate declaration did not generate rights in rem against third parties41. And, importantly, the earlier proceedings did not determine the application of the taxation law to those rights. It follows that Executor Trustee is not authority for the proposition that the Commissioner, or a court under Pt IVC42, should determine the application of the taxing acts otherwise than according to law. "When the revenue authorities come to impose a tax in relation to such rights [defined by order of the court], they must … take them as they in fact actually exist between the parties"43 (emphasis added). But directions made under the equivalent of s 96 of the Trusts Act do not bind the Commissioner in the application of the taxation laws. The Full Court of the Federal Court was wrong to conclude that it was bound by Executor Trustee to hold that the directions in the State Proceedings determined conclusively, against the Commissioner, the application of Div 207 to the franked distributions. In these appeals, that conclusion is reinforced by the following facts and matters. First, the State Proceedings, under s 96 of the Trusts Act, had the primary function of providing advice to the Trustee respecting the management 39 Executor Trustee (1939) 62 CLR 545 at 562. 40 Executor Trustee (1939) 62 CLR 545 at 563. 41 Executor Trustee (1939) 62 CLR 545 at 562-563, 570. 42 See, eg, Deputy Federal Commissioner of Taxation v Brown (1958) 100 CLR 32 at 39; [1958] HCA 2; FJ Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 at 375-376, 378; [1981] HCA 27; Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55 at 67; [1988] HCA 29; Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 at 495-496 [57]; [2008] HCA 41. 43 Executor Trustee (1939) 62 CLR 545 at 562. Bell Nettle Gordon Edelman or administration of the Trust44. It is a procedure which, if adopted, not only protects a trustee from later complaint that he or she should have acted otherwise but also protects the trustee from personal liability for costs incurred45. The question for the Supreme Court of Queensland under s 96 of the Trusts Act concerned the management and administration of the Trust. It was no part of proceedings under s 96 of the Trusts Act for the Court to decide how the taxing acts operate. And that conclusion is reinforced by two separate but interrelated facts: there was no contradictor in the State Proceedings; and the Commissioner was not a party to those proceedings. Not being party to the State Proceedings, the Commissioner was not bound by any orders made in those proceedings about the operation of the taxing acts46. The nature and course of the State Proceedings necessarily determined the limited nature and effect of the directions. Second, read as a whole, the directions were made on the basis that the Bifurcation Assumption, a question about how the taxing acts operate, was correct in law. That question was not a question suitable for determination in proceedings advising a trustee about how the trustee could lawfully administer the trust. At its highest, the advice given could only protect the trustee from later complaint47. And the answer given to the question was incorrect. Third, as the Commissioner submitted and as the preceding analysis of the directions demonstrates, the construction which the Full Court of the Federal Court placed on par 1(b)(iii) of the directions, when divorced from the balance of the directions, altered the meaning of the directions. Contrary to the approach adopted by the Full Court of the Federal Court, it was impermissible for the Court to pick out one sub-paragraph of the directions, par 1(b)(iii), and treat that sub-paragraph as somehow binding the Court, while at the same time ignoring par 1(a), which recorded and adopted the Bifurcation Assumption. Finally, as the taxpayers conceded in argument, if the Bifurcation Assumption underpinned par 1(b)(iii) of the directions (and it did), then the Court was not bound by Executor Trustee to conclude that the directions (or one 44 See Macedonian (2008) 237 CLR 66 at 86 [45], 89 [58], 91-92 [64]-[65]. 45 s 97 of the Trusts Act; Macedonian (2008) 237 CLR 66 at 86 [45], 92 [65]. 46 Executor Trustee (1939) 62 CLR 545 at 562-563, 570. 47 See s 97 of the Trusts Act. Bell Nettle Gordon Edelman the directions) determined conclusively against sub-paragraph of the Commissioner the application of Div 207 to the franked distributions. This is because, for the Federal Court in proceedings under Pt IVC were each required to determine the taxation issues according to law. the reasons explained earlier, the Commissioner and The Attorney-General of the Commonwealth and the Attorney-General of the State of Queensland intervened to provide submissions concerning s 118 of the Constitution and the requirement in s 118 that "[f]ull faith and credit … be given, throughout the Commonwealth to the laws, the public Acts and records, and the judicial proceedings of every State". The nature and scope of the State Proceedings and the directions having been identified, no issue concerning s 118 of the Constitution48 arises for determination. Section 118 does not alter, or add to, the effect of the directions. Alternative construction of the resolutions and the application of Div 207 The taxpayers contended that the resolutions in the 2006 to 2008 income years, properly construed, were effective in their terms to achieve the alternative construction adopted by the Full Court of the Federal Court. Pagone J explained the alternative construction, in the context of the 2009 year, as follows49: "The terms of the two resolutions taken together only make sense if construed as conferring upon Mr Thomas, as a share of the trust's net income covered by s 97(1)(a) of the [1936 Act] in the 2009 year, so much of the [T]rust's net income for that year as would see him receive the benefit of franking credits in the amount stated in the franking credit distribution resolution notwithstanding that the amount of income purportedly distributed to him in the 2009 year was $16,000 and to MAPL His Honour noted that the alternative construction fitted uneasily with the words of the resolutions but stated that the construction was consistent with the 48 Or s 185 of the Evidence Act 1995 (Cth). 49 Thomas v Federal Commissioner of Taxation (2017) 105 ATR 413 at 430 [29]. Bell Nettle Gordon Edelman intention of the Trustee reflected in the mind of the person drafting the resolutions. As the Commissioner submitted, this alternative construction is contrary to the terms of the resolutions, and inconsistent with the bifurcated returns and the Trustee's intention50. As has been seen, there were two resolutions – the Net Income Resolution and the Franking Credit Resolution. The Net Income Resolution, in its terms, pooled all the income of the Trust and treated it on the same basis, with the result that the whole of the income of the Trust was distributed to Mr Thomas and MAPL. There was no attempt to stream or allocate the franked distributions to one beneficiary and the rest of the income to the other. Division 207 sets out the effects, for tax, of the beneficiaries having received that income when, in each year, the income included the receipt by the trustee of franked distributions51. First, each beneficiary, for that income year, has an amount, described as a "share of the trust's net income for that income year [being the net income of the trust under s 95 of the 1936 Act] that is covered by [s] 97(1)(a) of the [1936 Act]"52. The task is to work out the amount notionally allocated to each beneficiary, as their share of the franked distributions, as was taken into account in working out each beneficiary's share of the trust's net income under s 97(1)(a) of the 1936 Act. Here, the Net Income Resolution allocated between the beneficiaries the whole of the net income for the purposes of s 97(1)(a) in the proportions consistent with the amounts stated in the resolutions. In the 2006 year, the proportions were the first $21,600 of the net income to Mr Thomas and the balance to MAPL. There was no dispute that the net income of the Trust for that year was $798,826 and that the proportions were approximately 2.7 per cent for Mr Thomas and 97.3 per cent for MAPL. Next, s 207-55(3), operating with s 207-50(3)(b)(i), notionally allocated the franked distributions between Mr Thomas and MAPL in those same proportions. The franking credits were attached to, or on, the franked distributions. 50 See [30]-[32] above. 51 s 207-50(3)(a) of the 1997 Act. 52 s 207-50(3)(b)(i) of the 1997 Act. Bell Nettle Gordon Edelman Third, s 207-57 then effected a statutory allocation of the franking credits ($2,645,118) between those beneficiaries in the same proportions with the result that, in the 2006 year, $71,418 was allocated to Mr Thomas and $2,573,700 was allocated to MAPL. As a result, there was no other income on which the second resolution – the Franking Credit Resolution – could operate. The Net Income Resolution had allocated all of the net income among the beneficiaries and there was simply no net income left over that was capable of being dealt with by the Franking Credit Resolution. Moreover, the Franking Credit Resolution, in its terms, was based on the Bifurcation Assumption, which the taxpayers accept is legally ineffective. That is, the Franking Credit Resolution seeks to have the Trustee, contrary to the 1997 Act (and the Deed), apply the franking credits as some kind of income (and they are not) separately from the franked distributions to which they are attached. Moreover, it is not possible to read the two resolutions as a single composite resolution. Indeed, even if, as the Full Court of the Federal Court suggested, it was possible to take the two resolutions together, on their proper construction they fail to achieve a distribution of so much of the net income in each year such that Mr Thomas would receive the benefit of the franking credits stated in the Franking Credit Resolution. The 2006 year is illustrative of the problem. In the Net Income Resolution, only $21,600 of the net income was distributed to Mr Thomas. That amount of income was never sufficient to match the $2,416,218 of franking credits listed against Mr Thomas' name in the Franking Credit Resolution. The Net Income Resolution was considerably short. that in substance, The taxpayers' contention, the Franking Credit Resolution is the resolution to be given primacy and that the Net Income Resolution is to be read as if, by some process of construction or amendment, the amount of net income distributed to Mr Thomas was increased from $21,600 to match the $2,416,218 of franking credits listed against Mr Thomas' name in the Franking Credit Resolution, is not only contrary to the express terms of the Net Income Resolution, it is contrary to law. A resolution of a company is a formal decision of the board of directors of the company recording a binding corporate action which must meet certain specific requirements53. It is a 53 See s 248G of the Corporations Act 2001 (Cth); Gillfillan v Australian Securities and Investments Commission (2012) 92 ACSR 460 at 464 [5]-[11]. Bell Nettle Gordon Edelman collective resolution of the board of the company and it binds the company. If it is to be amended, then it is a matter for the collective resolution of the board of the company. The net income distributed to Mr Thomas in the 2006 year was $21,600, not some greater amount. Moreover, the alternative construction does not give effect to the intention of the Trustee when the two resolutions were passed in each of the 2006 to 2008 years of income54. The Trustee endeavoured to ensure that all trust income was distributed to avoid the operation of s 99A of the 1936 Act and to ensure that the distribution occurred in a way that maximised the refundable tax offsets available only to Mr Thomas, whilst at the same time minimising Mr Thomas' tax rate. That was the intention, although as the taxpayers now accept, that was legally ineffective under Div 207. The alternative construction is not open factually or legally and it should be rejected. Notices of contention The taxpayers sought to raise three further issues by way of notices of contention: estoppel by convention, rectification and a denial of procedural fairness. Each contention should be dismissed. Estoppel by convention The taxpayers contended that because the Trustee and the relevant beneficiaries of the Trust were all present when the resolutions were passed, and then acquiesced in the tax returns being lodged with the Commissioner, the rights between the beneficiaries were fixed by the actions of the Trustee and the Commissioner was estopped by convention from administering the taxing acts according to law and, instead, had to "assess in accordance with those rights". That contention is flawed. Estoppel by convention is founded on the conduct of relations between identified parties on an agreed or assumed state of facts which the parties are estopped from denying55. The immediate difficulty for 54 See [30]-[32] above. 55 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244; [1986] HCA 14. See also Fischer v Nemeske Pty Ltd (2016) 257 CLR 615 at 647 [87], 675 [196]; [2016] HCA 11. Bell Nettle Gordon Edelman the taxpayers was and remains that the Commissioner was not a party to56 and played no part in the adoption of57 either aspect of the alleged assumption – the making of the resolutions or the lodging of the income tax returns. Moreover, the justice of an estoppel would not permit parties to create a private arrangement which produced an outcome contrary to law or produced an outcome which required a statutory officer to administer the taxing statutes58 other than according to law. That was, in substance, the effect of the taxpayers' contention. That contention was flawed: the Commissioner is obliged to administer the taxing statutes according to law. Rectification If the Court did not accept that it was bound by the construction of the resolutions adopted by Applegarth J in the Supreme Court of Queensland, the taxpayers sought rectification of the resolutions. As counsel for the taxpayers conceded in argument before this Court, as the taxpayers' application for rectification of the resolutions had been dismissed by Applegarth J, the taxpayers were bound by that decision, and the taxpayers could not now seek to raise that issue in these proceedings. That concession was properly made and is a complete answer to the question of rectification of the resolutions. The other difficulties with the application for rectification are unnecessary to address. Denial of procedural fairness As noted earlier, s 207-55 of the 1997 Act seeks to ensure that the amount of a franked distribution made to a trustee is allocated notionally amongst the beneficiaries who derive benefits from that distribution and that the allocation corresponds with the way in which those benefits were derived. Its sub-sections provide the mechanisms to achieve that objective. Section 207-55(2) provides that the amount notionally allocated, described as a share of the franked 56 Con-Stan (1986) 160 CLR 226 at 244. 57 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 675; [1937] HCA 58. 58 ss 3A and 4 of the TAA and s 8 of the 1936 Act. Bell Nettle Gordon Edelman distribution, does not have to be received by the beneficiary. The table in s 207-55(3) provides the method for determining the share amount59. No other step is necessary. It was common ground that the additional step imposed by the primary judge – that evidence be adduced of how much of the amount of the franked distributions was taken into account by the Trustee in working out the particular beneficiary's share of the s 95 net income – was not the subject of submissions from the parties. By the parties' respective appeals to the Full Court of the Federal Court, that legal question was before that Court. Any denial of procedural fairness was therefore addressed by those appeals and is no longer operative. To the extent that the taxpayers sought to have the proceedings remitted to the primary judge to adduce further evidence in relation to the actual distributions of income that were made in the 2006 to 2008 income years, that application should be rejected. An application by the taxpayers to the primary judge for leave to reopen to adduce that evidence was refused. If the taxpayers wished to raise that issue in this Court, they should have sought leave to file a cross-appeal. No such cross-appeal was filed. Conclusion and orders For those reasons, the following orders should be made: Matter No B60/2017 The appeal be allowed in respect of the income years ending 30 June 2006, 30 June 2007 and 30 June 2008. The cross-appeal be dismissed. Set aside order 1 of the Full Court of the Federal Court of Australia made on 12 April 2017 in Matter No QUD72/2016 and orders 1, 2, 3 and 4 of that Court made on 3 August 2017 in Matter No QUD72/2016, and in their place make the following orders: the appeal be allowed in part; 59 See also s 207-50(3)(b) of the 1997 Act and ss 95 and 97(1)(a) of the 1936 Act. Bell Nettle Gordon Edelman the cross-appeal be allowed; the objection decisions in respect of the income years ending 30 June 2006, 30 June 2007 and 30 June 2008 be remitted to the Commissioner of Taxation of the Commonwealth of Australia for determination in accordance with the reasons of this Court; the objection decision in respect of the income year ending 30 June 2009 be remitted to the Commissioner of Taxation of the Commonwealth of Australia for determination in accordance with the orders of Greenwood J made on in Matter No QUD274/2012 and 26 November 2015 otherwise in accordance with the law. The respondent pay the appellant's costs of the appeal except for those costs that relate to the determination of the matters concerning the income year ending 30 June 2009. The appellant pay the respondent's costs of the appeal insofar as those costs relate to the determination of the matters concerning the income year ending 30 June 2009. Matter No B61/2017 The appeal be allowed. Set aside order 1 of the Full Court of the Federal Court of Australia made on 12 April 2017 in Matter No QUD78/2016 and orders 1, 2, 3 and 4 of that Court made on 3 August 2017 in Matter No QUD78/2016, and in their place make the following orders: the appeal be dismissed; the cross-appeal be allowed; the objection decision in respect of the income year ending 30 June 2008 be remitted to the Commissioner of Taxation of the Commonwealth of Australia for determination in accordance with the reasons of this Court. The respondent pay the appellant's costs of the appeal. Bell Nettle Gordon Edelman Matter No B62/2017 The appeal be dismissed. The appellant pay the respondent's costs. Matter No B63/2017 The appeal be dismissed. The appellant pay the respondent's costs. Tax lawyers often speak of "taxable facts"60. They mean by that expression to refer to more than just facts. They mean by it to refer to the combination of events that have occurred and legal consequences of events that have occurred on which a taxing statute fixes to impose a taxation liability or to confer a taxation benefit. Most often, taxable facts are independent of and antecedent to their taxation consequences. That is because, most often, a taxing statute will operate upon "the result of a taxpayer's activities as it finds them"61. Executor Trustee and Agency Co of South Australia Ltd v Deputy Federal Commissioner of Taxes (SA)62 was concerned with identification, on an appeal against an assessment, of taxable facts of that independent and antecedent nature. The taxpayer in Executor Trustee was the trustee of the unsold residue of land devised by a will. The taxpayer claimed certain deductions from land tax. The taxing statute permitted those deductions only if the remaining beneficiaries under the will were each "entitled to ... the income" from the land63. The Commissioner disallowed the deductions by the taxpayer in assessing the taxpayer to land tax. The taxpayer appealed against the assessment. The appeal was to the High Court in its original jurisdiction. The taxpayer argued on the appeal that the will, properly construed, gave each of the remaining beneficiaries a life interest in the income from the land held on trust. The difficulty for the taxpayer was that, nearly twenty years before the tax year to which the assessment related, the Full Court of the Supreme Court of South Australia had construed the will differently in a proceeding to which the trustee and all persons having an apparent interest in the will had been parties. The Supreme Court had made an order which, in effect, declared that the will on its proper construction conferred on the remaining beneficiaries no entitlement to any of the income of the trust but only an ability to receive income from the trust as a result of the exercise of discretion on the part of the trustee. No party had appealed that declaration. The trustee had acted consistently with the declaration 60 Eg Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214 at 217; [1977] HCA 11. 61 Magna Alloys and Research Pty Ltd v Federal Commissioner of Taxation (1980) 33 ALR 213 at 222, 233, quoting Tweddle v Federal Commissioner of Taxation (1942) 180 CLR 1 at 7; [1942] HCA 40. 62 (1939) 62 CLR 545; [1939] HCA 35. 63 See Executor Trustee and Agency Co of South Australia Ltd v Deputy Federal Commissioner of Taxes (SA) (1939) 62 CLR 545 at 558. in exercising discretion to distribute trust income over the ensuing years, including in the tax year to which the assessment related. On a case stated for the consideration of the Full Court of the High Court in the appeal against the assessment, no member of the Full Court accepted the taxpayer's argument based on the construction of the will. Four of the five members rejected the argument for the reason that the argument contradicted the legal effect of the will as declared by the order of the Supreme Court. The explanations given by three of those four members were terse. The explanation given by Latham CJ as to why the order of the Supreme Court of South Australia was to be treated on the appeal against the assessment as establishing the entitlements of the remaining beneficiaries under the will was more expansive. For present purposes, that explanation is instructive. His Honour's explanation was substantially as follows. Except in relation to evasive arrangements, which the taxing statute in question itself rendered void against the Commissioner, the Commissioner was obliged in the administration of the taxing statute to take interests in land and in income from land as the Commissioner found them. The order made by the Supreme Court of South Australia might have been challenged on appeal. If made collusively or fraudulently, the order might in the alternative have been able to be set aside on the application of the Commissioner in the original jurisdiction of the Supreme Court. For so long as the order stood, however, such rights as the beneficiaries had, against the trustee and against other persons potentially interested, to receive income from the trust were "the rights declared in the order – no more and no less"64. The explanation continued65: "This view of the effect of the order does not treat it as an order in rem. The order really has the same kind of effect as the will it interprets. The will plus the order (that is, the will as interpreted by the order) is the foundation and only support of the rights in relation to which alone the commissioner can properly assess taxation. Perhaps the will 'ought' to have been different. Perhaps the order 'ought' to have been different. The first proposition is irrelevant and, for material purposes, is meaningless. I describe the second proposition in the same way." Put in other words, whether the Supreme Court of South Australia had been "right" or "wrong" in its construction of the will, the Supreme Court had in 64 (1939) 62 CLR 545 at 561. 65 (1939) 62 CLR 545 at 562. fact made an order which operated under the general law finally to determine the legal entitlements of the beneficiaries as between them, the trustee and all other persons who had an apparent interest in the will. The legal entitlements of the beneficiaries under the will, as declared in the order made by the Supreme Court, were the taxable facts on which the taxing statute operated. Turning from that case to this one, the order made by Applegarth J in the Supreme Court of Queensland purported on its face to be more than mere directions to the Trustee. The order purported on its face to be also a declaration, made in the general jurisdiction of that Court, which determined the legal entitlements of Mr Thomas and MAPL flowing from the Net Income Resolution and the Franking Credit Resolution having regard to the proper construction of those resolutions and to the proper construction of the deed which established the Trust. For my own part, I see no reason to treat the order otherwise. Like the order of the Supreme Court of South Australia considered in Executor Trustee, the order of the Supreme Court of Queensland has not been challenged on appeal and has not been set aside in the original jurisdiction of that Court on the ground of fraud or collusion. Had the order done no more than to determine the general law rights of Mr Thomas and MAPL which flowed from the Net Income Resolution and the Franking Credit Resolution, the present case would to my mind be indistinguishable from Executor Trustee. But, had the order done only that, it would have been a different order. The taxpayers' invitation to take one sub-paragraph of the order (sub-par 1(b)(iii)) and to treat that sub-paragraph alone as declaring the respective rights of Mr Thomas and MAPL to a specified franked income stream is an invitation to treat that sub-paragraph of the order as saying something that it does not say. The order must be read as a whole and in light of the reasons for judgment of Applegarth J to which the order was drafted to give effect. Neither in form nor in substance can the sub-paragraph be severed from par (a) and from the preceding sub-paragraphs of par (b). The order as a whole is concerned with the respective rights of Mr Thomas and MAPL to franking credits. To my mind, the essential difference between the order of the Supreme Court of Queensland and the order of the Supreme Court of South Australia considered in Executor Trustee lies in the subject matters with which those orders deal. Unlike the subject matter of the order in Executor Trustee, the subject matter of the order in the present case is not a taxable fact which exists independently of and antecedently to the operation of the relevant taxing statute. The subject matter of the order – franking credits – exists neither in nature nor under the general law. The subject matter has no existence other than through the operation of a taxing statute, specifically Div 207 in Pt 3-6 of the 1997 Act. Irrespective of whether the order of the Supreme Court of Queensland is right or wrong in its understanding of the operation and effect of the taxing statute, that order can have no effect on the operation of the taxing statute or on the administration of that statute. In the event, the Supreme Court order is wrong, because it was based on the erroneous Bifurcation Assumption. The critical point, however, is that the Supreme Court order is simply irrelevant to the making of the assessments and is simply irrelevant to the determination of any question of fact or of law arising on the appeals against the objection decisions under Pt IVC of the TAA. As Greenwood J correctly recognised at first instance, the jurisdiction and duty of the Federal Court on the appeals against the objection decisions was to determine for itself all contested questions of fact and law which bore on the taxation consequences of the Net Income Resolution and the Franking Credit Resolution66. Subject to those observations, I agree with the reasoning of the plurality and join in the orders proposed. 66 Thomas v Federal Commissioner of Taxation (2015) 101 ATR 576 at 644 [446].

HIGH COURT OF AUSTRALIA AVON PRODUCTS PTY LIMITED APPELLANT AND COMMISSIONER OF TAXATION RESPONDENT Avon Products Pty Limited v Commissioner of Taxation [2006] HCA 29 14 June 2006 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation S J Gageler SC with M Richmond for the appellant (instructed by Ernst & Young) B J Shaw QC with S B McGovern SC and A J O'Brien for the respondent (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Avon Products Pty Limited v Commissioner of Taxation Taxation and Revenue − Sales tax − Credit for sales tax overpaid − Passing on − CR1 in Table 3 of Schedule 1 to the Sales Tax Assessment Act 1992 (Cth) − Taxpayer did not change its pricing policy when it learned a lower rate of tax applied − Burden of proof upon taxpayer to establish it has not passed on the overpayment − Whether taxpayer satisfied onus of proof − Whether an overpayment of sales tax is passed on only if the price is increased by the amount of the tax overpaid. Words and phrases − "passing on". Sales Tax Assessment Act 1992 (Cth), Pt 4, Sched 1, Table 3 CR1. Taxation Administration Act 1953 (Cth), Pt IVC, s 14ZZO. GLEESON CJ, GUMMOW, KIRBY, HAYNE AND HEYDON JJ. This appeal from the Full Court of the Federal Court of Australia (Ryan and Merkel JJ; Conti J dissenting)1 concerns the entitlement of the appellant ("Avon") to a credit under Pt 4 of the Sales Tax Assessment Act 1992 (Cth) ("the Act") for sales tax overpaid. It is not in dispute that Avon remitted the sums in question to the they constituted an respondent ("the Commissioner"), nor overpayment. Part 4 of the Act is headed "Credits" and comprises ss 51-60. What is at issue is whether Avon passed on all or part of those amounts so as to entitle it to a credit pursuant to s 51(1) and credit ground CR1 in Table 3 of Sched 1 to the Act. indeed that The Full Court dismissed an appeal by Avon against the decision of Hill J2 which rejected Avon's claim that the disallowance of its claim to the credit be set aside. The Act The regime contained in Pt 4 of the Act for reimbursement for sales tax overpaid represents a statutory code which provides relief against overpaid sales tax to the exclusion of what otherwise could be common law claims for money paid under mistake3. This was the conclusion reached by the Full Court of the Federal Court in Chippendale Printing Co Pty Ltd v Commissioner of Taxation4 following a comprehensive discussion of the statutory scheme and the applicable authorities. It should be accepted as correct, and indeed counsel for Avon expressly did as much. Section 51(1) provides that "Tables 3 and 3A set out the situations in which a claimant is entitled to a credit". Those tables are contained in Sched 1 and set out respectively "Credit grounds" and "Transitional credit grounds". Credit ground CR1 in Table 3 applies in cases of "Tax overpaid", where the "[c]laimant has paid an amount as tax that was not legally payable". It further provides that the amount of the credit in such a case is "[t]he amount overpaid, to 1 Avon Products Pty Ltd v Commissioner of Taxation (2005) 223 ALR 259. 2 Avon Products Pty Ltd v Federal Commissioner of Taxation (2004) 55 ATR 520. 3 See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR (1996) 62 FCR 347. Kirby Hayne the extent that the claimant has not passed it on". In this way, the Act evinces a stance against automatic recovery of sales tax merely upon proof that it has been overpaid. To the contrary, even where the taxpayer can establish the existence of a credit ground by proving overpayment of sales tax, entitlement to an amount in credit depends upon proof that the taxpayer has not passed on the overpayment. The onus of proof in that regard lies upon the taxpayer by reason of the terms of the foregoing provision ("to the extent that the claimant has not passed it on") and the procedure by means of which claims for credits are determined. First, pursuant to s 51(4) of the Act, the taxpayer must submit a claim to the Commissioner in approved form and with such supporting evidence as the Commissioner requires. Secondly, following the Commissioner's decision, a dissatisfied taxpayer has a right pursuant to s 60(2) of the Act to object in accordance with Pt IVC of the Taxation Administration Act 1953 (Cth) ("the Administration Act"); this enacts a procedure for such objections to be dealt with in the first instance by the Commissioner (Div 3). Thirdly, s 14ZZ of the Administration Act provides that the taxpayer may challenge the Commissioner's "objection decision" either by review in the Administrative Appeals Tribunal (Div 4) or by "appeal" to the Federal Court (Div 5), depending upon the nature of the decision. A decision arising from a taxpayer's objection pursuant to s 60(2) of the Act constitutes an "appealable objection decision", and therefore must be dealt with under Div 5 of Pt IVC of the Administration Act. Section 14ZZO(b) deals with the burden of proof and relevantly provides that the "appellant has the burden of proving that ... the taxation decision should not have been made or should have been made differently". In this way, it is for the taxpayer to prove that it has not passed on the overpayment and is therefore entitled to a sales tax credit. Avon did not contest that it carried the burden of proof. The Act does not provide a comprehensive definition of "passed on"5. Whether or not sales tax has been "passed on" by the taxpayer is for determination according to the ordinary meaning of that term. That question ought not to be approached in an abstract way divorced from the circumstances of a particular case. To speak of a test is to invite error by superimposing upon the words of the statute some alternative formulation which obscures rather than reveals the nature of the inquiry that must be undertaken in order to determine whether a taxpayer has established an entitlement to a credit. 5 Section 5 of the Act merely states that "passed on, in relation to an amount of tax that has been borne by a person, does not include an amount that the person has passed on to another person, but has later refunded to that other person". Kirby Hayne Sales tax and "passing on" The nature of the legislative scheme for the imposition and collection of sales tax was explained in Deputy Federal Commissioner of Taxation (SA) v Ellis & Clark Ltd6. Dixon J there stated that the "whole plan" of the legislation was to impose tax prior to goods entering the retail market and (as nearly as possible) "either upon the antecedent sale by wholesale or upon the immediately antecedent wholesale value which they possessed"7. Because it is levied upon the value of goods, sales tax is generally regarded as a duty of excise within the meaning of ss 55, 86, 87, 90 and 93 of the Constitution8. A central feature informing this character of sales tax is that the economic burden of the impost is generally not intended to be borne by the person liable to remit it; it is to be passed on. The judgment of the whole Court in Deputy Commissioner of Taxation v State Bank (NSW), referring to the nature of sales tax as an excise, said9: "That view of sales tax has been based no doubt on a consideration of the central element in sales tax legislation − the imposition of the tax in respect of some dealing with goods by way of sale or distribution in the expectation, or with the intention, that the taxpayer will not bear the incidence of the tax but will indemnify himself or herself by passing it on to a purchaser or consumer. This characteristic of the tax enables one to say of it that its fundamental concern is with the goods rather than with the person from whom it is exacted." (1934) 52 CLR 85 at 89-92 per Dixon J. See also the joint judgment of Gibbs CJ, Mason, Wilson, Deane and Dawson JJ in Brayson Motors Pty Ltd (In Liq) v Federal Commissioner of Taxation (1985) 156 CLR 651 at 656-658. (1934) 52 CLR 85 at 92. 8 See Mutual Pools & Staff Pty Ltd v Federal Commissioner of Taxation (1992) 173 CLR 450 at 453. See also Deputy Commissioner of Taxation v State Bank (NSW) (1992) 174 CLR 219 at 225, and the authorities there cited. (1992) 174 CLR 219 at 225-226. See also Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 181. Kirby Hayne Nothing for present purposes turns upon the circumstance that this statement was made in the context of determining whether or not sales tax levied upon goods manufactured by the State Bank for its own use offended s 114 of the Constitution. It is the "central element" referred to by the Court which is significant to the resolution of this case. That sales tax is expected to be passed on depends upon the circumstance that sales of goods occur within an economy geared to making profit. It is the profit-making motive of business which, in the nature of things, generally results in sales tax being passed on. This is because, leaving aside rare cases where sales tax is separately identified and superadded to the invoice price after sale, sales tax can only be passed on indirectly through the price mechanism. In a profit-making structure, businesses will set prices so as to ensure at least that all foreseeable costs are recovered, anything above this being conceptualised as a margin of profit. Because sales tax is levied upon the vendor prior to the ultimate sale by retail in the manner explained by Dixon J in Ellis & Clark10, it forms part of the cost structure of doing business. There is nothing extraordinary in the proposition that in the usual course of things sales tax will be passed on. As has been explained, it is for the taxpayer to establish a circumstance out of the ordinary, namely that the amount of the overpayment of sales tax has not been passed on. Where the whole or part of the economic burden of sales tax may have been passed on indirectly through prices, the inquiry in this regard is likely to be complex. The complexity arises because prices may be set with reference to a wide range of factors (including considerations of cost of production, competitive advantage, operational cash flow and customer goodwill). However the starting point must be the seller's pricing policy and practice. In this way, the question is to be approached with reference to the actual conduct of the seller in setting prices based upon its actual knowledge at the relevant time. That knowledge includes the belief that the component of sales tax which later proves to have been an overpayment is a real cost of doing business. Accordingly, it is unsurprising that a seller's intention, whether subjective or objectively ascertained, will generally be to pass the burden of the impost on to the purchaser. Since the onus of proof lies upon the taxpayer, it will be for it to establish that a price which is set so as to ensure that it recovers its cost does not include the economic burden of the sales tax. 10 (1934) 52 CLR 85 at 89-92. Kirby Hayne Additionally, once it is appreciated that it is in the nature of sales tax to be passed on, there is nothing remarkable in the consequence that proof to the contrary will occur comparatively seldom. In his dissenting judgment in the Full Court, Conti J proceeded on the footing that what was required of the legislation was "a realistic prospect of sensible invocation at the instance of a taxpayer"11. But, given what has been said above, realism requires a recognition that in the ordinary course sales tax will have been passed on. Avon's sales and pricing operations In order to understand the application of the Act to Avon's case (and its treatment in the Federal Court), it is necessary to consider the characteristics of Avon's sales operations and the manner in which pricing occurred. These were considered in some detail by Hill J, drawing in this regard chiefly on the affidavit and oral evidence of Mr Christopher Stevens, who had been both Marketing Manager and later Vice President of Sales for the company. Avon carried on business selling a variety of products by means of a network of sales representatives who acted as its agent in door to door sales. It sold two classes of product, designated as "CFT products" (an acronym for "Cosmetics, Fragrances and Toiletries") and "non-CFT products", which accounted respectively for 60 per cent and 40 per cent of sales. Prior to introducing a product, Avon's finance department undertook a cost analysis involving preparation of a cost sheet containing a full breakdown of the estimated maximum cost of the product, including sales tax. Avon would also assign each product a "regular price", which was benchmarked wherever possible against prices charged by competitors for comparable products, or at a price which the market would bear. Avon would consider introducing a product only if the regular price exceeded the maximum estimated cost by an acceptable profit margin. Avon did not change the regular price in any way in response to the various reductions in the applicable taxable values for its goods. However, it is important to note that the regular price was not the price at which Avon generally retailed the products. This was because of the nature of Avon's marketing strategy which revolved around 18 standardised marketing "campaigns" each calendar year, each of approximately three weeks in duration. The sales campaigns were controlled by Avon's marketing department, and each 11 (2005) 223 ALR 259 at 280. Kirby Hayne campaign had a separate gross profit margin target. Integral to each campaign was the discounting of the regular price to a price or prices which were attractive to customers and also would enable Avon to meet the gross profit margin for each campaign and other campaign targets, while still covering costs (including sales tax). Discount prices were set in advance of each campaign. For each campaign, Avon produced an internal document listing all products on offer together with the regular price and any discounted "offer price" for that product, and then produced a campaign brochure based upon this information. The evidence shows that approximately 85 per cent to 95 per cent of sales of CFT products were made at the discounted offer price instead of the regular price. Given that CFT products accounted for 60 per cent of the revenue of each campaign, it is clear that the actual price at which Avon sold was commonly the discounted price. Indeed, in the Full Court, the majority were prepared to draw the inference that only about 30 per cent of total sales of all Avon's CFT and non-CFT products occurred at their "'regular' prices"12. It is also clear that the discount price almost invariably covered Avon's costs (including sales tax). Hill J made a finding to this effect and, indeed, Avon accepted as much. Avon's claim for sales tax credit The manner in which Avon operated described above rendered it liable to sales tax in respect of the class described in Table 1 of Sched 1 to the Act as "indirect marketing sale[s] as defined by section 20" of the Act. Its liability arose pursuant to s 16 and assessable dealings AD2d (Australian goods) and AD12d (imported goods) in Table 1. In both cases, the taxable value of the goods was "the notional wholesale selling price". That was defined by the Notes to Table 1 to be "the price (excluding sales tax) for which the taxpayer could reasonably have been expected to sell the goods by wholesale under an arm's length transaction". In practice, for the purposes of remitting sales tax, the notional wholesale selling price appears to have been determined by the Commissioner's various sales tax rulings. Hill J explained that the overpayments occurred because, on 5 February 1999, Avon obtained a Sales Tax Private Binding Ruling which determined that the taxable value of its products should be the "store cost of the goods plus 11.63%". That taxable value was lower that those on which Avon had previously based its remittances acting in accordance with sales tax rulings 12 (2005) 223 ALR 259 at 264. Kirby Hayne issued by the Commissioner13. Accordingly, Avon submitted claims for credits in the aggregate sum of $3,610,261 for the period from 1 March 1993 to 31 August 1998. As earlier indicated, there is no dispute that this amount was overpaid. The Commissioner disallowed Avon's claims in their entirety, and also Avon's objection to that decision, on the basis that Avon had passed on the overpaid sales tax to its customers at point of sale and had not subsequently refunded them so as to fulfil the criterion of credit ground CR1. Avon then "appealed" to the Federal Court. Hill J correctly identified the question as to whether sales tax has been passed on as a question of fact. As previously mentioned, his Honour canvassed the evidence in great detail and relied heavily upon the finding referred to earlier that the goods were always priced at a figure which exceeded cost plus sales tax and ensured a profit to Avon. His Honour held that, although the regular prices were not calculated as a function of cost, the undeniable significance of discounting in Avon's operations (which was done so as to produce an overall margin over cost for each campaign) was such that Avon had failed to prove that its prices were not set with regard to cost. The ultimate decision of Hill J was based upon the failure by Avon to satisfy the burden of proof imposed by s 14ZZO of the Administration Act. A majority of the Full Court (Ryan and Merkel JJ)14 accepted those findings of the primary judge, including the critical findings on price-setting practice and onus of proof referred to above. The essence of the majority decision was correctly identified in this Court by the Commissioner as being that, where the facts disclose that the taxpayer has set prices at a level to ensure that they exceed cost (including sales tax), it will be difficult for the taxpayer to satisfy its onus under s 14ZZO of the Administration Act to show that it has borne the tax burden itself. This Avon had failed to do. 13 Until 1 December 1995, Avon treated the taxable value as "cost plus 35%" in accordance with sales tax ruling ST 2424 effective from 1 June 1988. After 1 December 1995, Avon treated the taxable value as "cost plus 15%" in accordance with the "safe harbour" set out in sales tax ruling SST 6, issued on 5 June 1996. 14 (2005) 223 ALR 259. Kirby Hayne In the light of the analysis of the Act and the nature of sales tax contained in these reasons, the approach and conclusion of the majority were correct. We now turn to consider in more detail why this is so. Avon's contention in this Court was that a tax is only passed on if the price at which the goods are sold is increased by the amount of the tax. Its contention in the Full Court appears to have been expressed somewhat differently, namely that a tax will have been passed on if the seller made a profit less than (or sustained a loss greater than) had it not been overpaid15. Each proposition actually represents the inverse function of the other. Conti J, in his dissenting judgment, accepted both contentions and the consequence Avon said flowed Avon submits that, since its regular prices remained constant and were fixed by reference to market benchmarks without reference to cost and, further, since its discounting policy remained constant (so that no smaller discount would have been made had the true cost position been known), then the above "test" was satisfied. That is, since the buyer was no worse off when sales tax was overpaid than it would otherwise have been, and the seller was worse off, the tax was absorbed by Avon. Avon's approach suffers from the fallacy that it converts the question posed by the words of credit ground CR1 in Table 3 of Sched 1 to the Act into a hypothetical question, expressed in the nature of a "test". Avon submitted that this test is necessary in order to inform the factual inquiry required to answer the question as to whether sales tax was passed on. This should not be accepted; the "tests" merely restate the question using words different from the statutory language, and thus distract attention from the real task of the court. Apart from the fundamental incongruity in approaching a question as to whether sales tax was in fact passed on by reference to a hypothetical question of this kind, Avon's "test" is unsatisfactory at a more basic level. It assumes that, if a cost is being passed on, removing it from the entire system will have an immediate correlative effect upon price and profit. That assumption is in conflict 15 (2005) 223 ALR 259 at 263 per Ryan and Merkel JJ, 271 per Conti J. 16 (2005) 223 ALR 259 at 271. Kirby Hayne with the more complex reality of price determination referred to earlier in these reasons. Indeed, the complexity of Avon's own pricing mechanisms belies that assumption. The Act requires proof of "the extent that the claimant has not passed [the overpayment] on". This question is not to be answered merely by pointing to price as the sole indicator of passing on. The proposition for which Avon contends is also unsupported by relevant authority. The sole Australian authority relied upon by Avon in support of this contention was a passage from the judgment of Mason CJ in Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd17. That case concerned quite different legislation, and the passage from the judgment of Mason CJ provides no assistance18. The international authorities relied upon by Avon must be treated with considerable caution. They deal with different statutory regimes. In particular, Pt 4 of the Act provides a code of the applicable law relating to credits of sales tax in Australia. The international authorities tend to muddy the waters rather than to illuminate them. The United Kingdom authorities19 may be put to one side because the statutory regime in force is quite different from the scheme of the Act20. 17 (1994) 182 CLR 51 at 71. 18 Royal Insurance concerned overpayment of stamp duties by the respondent insurer in circumstances where the Court found that the discretion vested in the Commissioner as to whether to refund overpayments must be exercised in accordance with common law principles. Mason CJ was considering the doctrine of passing on in that context. See further in that regard Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 528-529 [22]-[24], 542 [69]; cf at 19 Marks and Spencer plc v Customs and Excise Commissioners [2000] STC 16; Customs and Excise Commissioners v National Westminster Bank plc [2003] STC 1072; Baines & Ernst Ltd v Customs and Excise Commissioners [2006] STC 653. 20 Section 80 of the Value Added Tax Act 1994 (UK) provided that the revenue authorities bear the onus of establishing that overpaid value added tax (VAT) should not be repaid. In that regard, s 80(3) created a defence to a claim by the taxpayer if "repayment of an amount would unjustly enrich the claimant". Kirby Hayne The United States authority upon which Avon particularly relied was Worthington Pump & Machinery Corp v United States21. There, the United States Court of Claims considered a statute which Avon urged was to similar effect to the Act in question here22. The Court in Worthington Pump said23: "[T]he fact that a firm is making a profit or loss does not in itself determine whether or not it has passed on the tax. The only test is whether the seller has made a profit less than or sustained a loss greater than had the tax not been imposed on him." This "test" was identical to that for which Avon contends. However, even if Avon is correct that the statutory provision was relevantly analogous (which is doubtful), the situation in Worthington Pump is clearly distinguishable, as Ryan and Merkel JJ pointed out in the Full Court24. This is because the taxpayer in Worthington Pump made a loss in the year for which the refund was claimed and the Court of Claims inferred an intention not to pass on the overpaid taxes. That is to say, the Court of Claims, contrary to the "test" urged by Avon, looked at factors outside price and profit margin. Conclusion Avon has failed to demonstrate any error in the approach of the majority of the Full Court in rejecting the utility of its purported test and in affirming the decision of Hill J that Avon had failed to establish that it had not passed on the overpaid sales tax. Ryan and Merkel JJ had due regard to Avon's evidence that its regular prices and its discounting policy remained unaltered whatever the 21 122 F Supp 843 (1954). 22 Section 3443(d) of the Revenue Act 1942, 56 Stat 978, 26 USC 29 provided that no credit of overpaid tax could be made unless the taxpayer established: "(1) that he has not included the tax in the price of the article with respect to which it was imposed, or collected the amount of tax from the vendee, or (2) that he has repaid the amount of the tax to the ultimate purchaser of the article". 23 122 F Supp 843 at 847 (1954). 24 (2005) 223 ALR 259 at 262. Kirby Hayne sales tax position. However, their Honours were unpersuaded that this was determinative. No error has been shown in that conclusion. The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANT AND TREVOR JOHN SCHULTZ & ORS RESPONDENTS BHP Billiton Limited v Schultz [2004] HCA 61 7 December 2004 ORDER 1. Appeal allowed. 2. Set aside Order 1 of the orders of the Supreme Court of New South Wales entered on 30 October 2002, and in its place order that: (a) Proceeding No 308 of 2002 in the Dust Diseases Tribunal of New South Wales be removed into the Common Law Division of the Supreme Court of New South Wales; and (b) The proceeding so removed thereupon be transferred to the Supreme Court of South Australia. 3. The appellant pay the costs of the first respondent in this Court. On appeal from the Supreme Court of New South Wales Representation: B W Walker SC with T G R Parker and K M Richardson for the appellant (instructed by Piper Alderman Lawyers) D F Jackson QC with J L Sharpe and A S Bell for the first respondent (instructed No appearance for the second to fifth respondents Interveners: D M J Bennett QC, Solicitor-General of the Commonwealth, with M A Perry intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) W C R Bale QC, Solicitor-General of the State of Tasmania, with C E Prideaux intervening on behalf of the Attorney-General of the State of Tasmania (instructed by the Solicitor-General of Tasmania) P A Keane QC, Solicitor-General of the State of Queensland with G R Cooper, intervening on behalf of the Attorney-General of the State of Queensland (instructed by Crown Law Division, Department of Justice) R J Meadows QC, Solicitor-General for the State of Western Australia with K H Glancy intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor's Office (Western Australia)) M G Sexton SC, Solicitor-General for the State of New South Wales, with M J Leeming intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for New South Wales) C J Kourakis QC, Solicitor-General for the State of South Australia, with C Jacobi intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor's Office (South Australia)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS BHP Billiton Limited v Schultz Courts and judges – Courts – Concurrent jurisdiction of different courts – Cross- vesting legislation – Plaintiff alleges that his asbestos-related disease resulted from exposure to asbestos while working in South Australia – South Australia identified as the place of the alleged wrong – Plaintiff commenced proceedings in Dust Diseases Tribunal of New South Wales – Plaintiff a resident of South Australia – Whether Supreme Court of South Australia a "more appropriate" forum – Whether proceeding to be transferred "in the interests of justice" – Relevance of circumstance that jurisdiction of the Dust Diseases Tribunal was regularly invoked – Relevance of plaintiff's choice of forum – Relevance of circumstance that law of other State less favourable to plaintiff than the law of the forum – Relevance of circumstance that the forum has particular experience and facility in dealing with the specific type of claim – Relationship between cross-vesting applications and forum non conveniens. Private international law – Choice of law – Lex loci delicti – New South Wales statute empowers Dust Diseases Tribunal to award further damages at a future date if the injured person develops dust-related condition – South Australian statute provides for a once and for all assessment of damages – Whether New South Wales law procedural or substantive in character. Constitutional law (Cth) – State Parliaments – Powers – Whether State Parliaments competent to legislate in a manner which curtails or interferes with the exercise of the powers of another State – Whether State Parliaments competent to legislate for the exercise of adjudicative functions by their courts outside their geographical territory. Constitutional law (Cth) – Full faith and credit – Choice of law – Lex loci delicti – Whether requirement that full faith and credit be given to the laws, the public Acts and records, and the judicial proceedings of every State, places it beyond competence of one State to require its courts or tribunals to determine the action by any system of substantive law other than the lex loci delicti. Words and phrases: "more appropriate forum", "interests of justice". Constitution, ss 73, 74, 75(v), 107, 118. Service and Execution of Process Act 1992 (Cth), ss 15, 20. Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW), ss 5, 8, 9, 13. Dust Diseases Tribunal Act 1989 (NSW), ss 10, 11, 11A, 13. Jurisdiction of Courts (Cross-vesting) Act 1987 (SA), s 11. Supreme Court Act 1935 (SA), s 30B. GLEESON CJ, McHUGH AND HEYDON JJ. This is an appeal from a judge of the Supreme Court of New South Wales, who dismissed the appellant's application to have an action pending in the Dust Diseases Tribunal of New South Wales ("the Tribunal") removed from the Tribunal to the Supreme Court of New South Wales, and then transferred to the Supreme Court of South Australia. The power of transfer is conferred by s 5 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) ("the Cross-vesting Act"). The proceedings in the Tribunal The first respondent suffers from asbestosis and asbestos-related pleural disease. Between 1957 and 1964, and between 1968 and 1977, he worked for the appellant at Whyalla in South Australia. He claims that his condition is the result of exposure to asbestos over those periods. He commenced proceedings in the Tribunal against the appellant, alleging negligence, breach of contract and breach of statutory duty, and against four other corporations, also respondents to this appeal, who were allegedly negligent in the manufacture and supply of the materials that ended up at Whyalla. At the time of the commencement of the proceedings, the first respondent was a resident of South Australia. The appellant is incorporated in Victoria, and carries on business both in South Australia and in New South Wales. The second respondent is incorporated in the United Kingdom, and is registered as a foreign corporation in New South Wales. The third and fourth respondents are incorporated in the Australian Capital Territory. The fifth respondent is incorporated in New South Wales. According to the first respondent, products containing the asbestos were manufactured, sold and supplied to the appellant and the second respondent in New South Wales by the fifth respondent. According to the appellant, the products were supplied to the appellant in South Australia. There are cross-claims between the appellant and the respondents other than the first respondent. The appellant was the moving party in the application before Sully J. The respondents other than the first respondent took no active role before Sully J or before this Court. In argument in this Court, the focus of attention was the first respondent's case against the appellant. That, however, does not mean that the claims against the other respondents, and the cross-claims, are to be ignored. Sully J identified South Australia as the place where the first respondent's causes of action against the appellant arose. In this Court, the first respondent did not challenge the view that the law of South Australia would be the substantive law that would govern his claim against the appellant, but asserted that the law of New South Wales could govern some of the claims against the other respondents and the cross-claims. McHugh Subject to proof of exposure and diagnosis, liability will not be in issue between the first respondent on the one hand and the appellant and the other respondents on the other hand. Subject to the qualification mentioned, the only issues affecting the first respondent will relate to damages and a claim that a limitation period has expired. The lay witnesses, and most (but not all) of the medical witnesses, reside in South Australia. Sully J pointed out that s 11A of the Dust Diseases Tribunal Act 1989 (NSW) ("the Tribunal Act"), a provision unique to the Tribunal, empowered the Tribunal to make an award of damages in stages. That section provides: "(2) The Tribunal may ... award damages assessed on the assumption that the injured person will not develop another dust-related condition, and award further damages at a future date if the injured person does develop another dust-related condition." The first respondent sought from the Tribunal an order preserving his right to make a future and additional claim for damages should he develop any of the conditions of asbestos-induced lung cancer, asbestos-induced carcinoma of any other organ, pleural mesothelioma, or peritoneal mesothelioma. The Cross-vesting Act The purpose of the proposed removal of the proceedings from the Tribunal to the Supreme Court of New South Wales under s 8 of the Cross- vesting Act was so that it could then be transferred to the Supreme Court of South Australia under s 5 of the same Act. The criterion for transfer established by s 5 is that it is in the interests of justice that the proceedings be determined in the Supreme Court of South Australia. From the outset, it has been recognised by courts applying the Cross- vesting Act that, although an application for transfer under s 5 will often involve evidence and debate about matters of the same kind as arise when a court is asked to grant a stay of proceedings on the ground of forum non conveniens, there are differences between the two kinds of application. Because of one controversial aspect of the reasoning of Sully J, it is useful to refer to some matters of history in order to explain those differences. McHugh The current English common law on the subject of forum non conveniens was established by the decision of the House of Lords in Spiliada Maritime Corp v Cansulex Ltd1. The current Australian common law is to be found in the decision of this Court in Voth v Manildra Flour Mills Pty Ltd2. To the extent to which they differ, the difference can be traced to a view about the nature of the power to stay proceedings. The earlier English view, overturned later by the House of Lords, was expressed by Scott LJ in St Pierre v South American Stores (Gath & Chaves) Ltd3: "A mere balance of convenience is not a sufficient ground for depriving a plaintiff of the advantages of prosecuting his action in an English Court if it is otherwise properly brought. The right of access to the King's Court must not be lightly refused." That approach, which stressed the duty of a court to exercise a jurisdiction that had been regularly invoked, was abandoned in England. In Spiliada4, Lord Goff of Chieveley said that a stay would be granted on the ground of forum non conveniens "where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, ie in which the case may be tried more suitably for the interests of all the parties and the ends of justice." When Spiliada was first considered by this Court, in Oceanic Sun Line Special Shipping Company Inc v Fay5, some members of the Court expressed concern about the "duty of an Australian court to exercise its jurisdiction".6 Deane J said: "It is a basic tenet of our jurisprudence that, where jurisdiction exists, access to the courts is a right. It is not a privilege which can be withdrawn otherwise than in clearly defined circumstances."7 Later, in Voth8, this Court settled upon the "clearly inappropriate forum" test as the basis of granting a stay (1990) 171 CLR 538. [1936] 1 KB 382 at 398. [1987] AC 460 at 476. (1988) 165 CLR 197. (1988) 165 CLR 197 at 238 per Brennan J. (1988) 165 CLR 197 at 252. (1990) 171 CLR 538. McHugh of proceedings. The reason for adopting a test somewhat stricter than the English test emerges from the joint judgment of Mason CJ, Deane, Dawson and Gaudron JJ in Voth, which referred back to what Deane J had said in Oceanic, and stated that "[t]he selected forum's conclusion that it is a clearly inappropriate forum is a persuasive justification for the court refraining from exercising its jurisdiction."9 This emphasis upon the need for justification of a judicial refusal to exercise a jurisdiction that has been regularly invoked underlay the selection of the "clearly inappropriate forum" test, in contrast to the modern English test. It has overtones of what Scott LJ said in St Pierre about the right of access to a court being something that is not lightly refused. The national scheme of legislation, of which the Cross-vesting Act is a part, was intended to operate, and to be applied, in a different juridical context. This was clearly stated in the first case to come before the Court of Appeal of New South Wales under the Cross-vesting Act, Bankinvest AG v Seabrook10. It has been recognised by the Court of Appeal in later cases in which jurisdiction of one kind or the other has been invoked11. In Bankinvest12, Street CJ said: "The cross-vesting legislation passed by the Commonwealth, the States and the Territories both conferred on each of the ten courts Australia-wide jurisdiction and set up the mechanism regulating the transferring of proceedings from one of these ten courts to another. In relation to transfer, the common policy reflected in each of the individual enactments is that there must be a judicial determination by the court in which proceedings are commenced either to transfer or not to transfer the proceedings to one of the other nine based, broadly speaking, upon consideration of the interests of justice ... It calls for what I might describe as a 'nuts and bolts' management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute." (1990) 171 CLR 538 at 559. 10 (1988) 14 NSWLR 711. 11 Compare, for example, Goliath Portland Cement v Bengtell (1994) 33 NSWLR 414 with James Hardie & Coy Pty Ltd v Barry (2000) 50 NSWLR 357. (1988) 14 NSWLR 711 at 713-714. McHugh In the context of the Cross-vesting Act, one is not concerned with the problem of a court, with a prima facie duty to exercise a jurisdiction that has been regularly invoked, asking whether it is justified in refusing to perform that duty. Rather, the court is required by statute to ensure that cases are heard in the forum dictated by the interests of justice. An application for transfer under s 5 of the Cross-vesting Act is brought upon the hypothesis that the jurisdiction of the court to which the application is made has been regularly invoked. If it appears to that court that it is in the interests of justice that the proceedings be determined by another designated court, then the first court "shall transfer" the proceedings to that other court. There is a statutory requirement to exercise the power of transfer whenever it appears that it is in the interests of justice that it should be exercised. It is not necessary that it should appear that the first court is a "clearly inappropriate" forum. It is both necessary and sufficient that, in the interests of justice, the second court is more appropriate. The reason why a plaintiff has commenced proceedings in a particular court might, or might not, concern a matter related to the interests of justice. It might simply be that the plaintiff's lawyers have their offices in a particular locality. It is almost invariably the case that a decision as to the court in which an action is commenced is made by the plaintiff's lawyers, and their reasons for making that choice may be various. To take an example at the other extreme, it might be because a plaintiff is near death, and has a much stronger prospect of an early hearing in one court than in another. The interests of justice are not the same as the interests of one party, and there may be interests wider than those of either party to be considered. Even so, the interests of the respective parties, which might in some respects be common (as, for example, cost and efficiency), and in other respects conflicting, will arise for consideration. The justice referred to in s 5 is not disembodied, or divorced from practical reality. If a plaintiff in the Tribunal were near to death, and, in an application such as the present, it appeared that the Supreme Court to which transfer was sought could not deal with the case expeditiously, that would be a consideration relevant to the interests of justice. Justice would ordinarily dictate that the interest of the plaintiff in having a hearing would prevail over the interest of the defendant in such benefit as it might obtain from the plaintiff's early death. The capacity of the Tribunal to deal expeditiously with cases has always, and rightly, been regarded as relevant to the interests of justice, bearing in mind the condition of many sufferers from dust diseases. On the other hand, there may be conflicting interests of such a kind that justice would not attribute greater weight to one rather than the other. The advantage which a plaintiff might obtain from proceeding in one court might be matched by a corresponding and commensurate disadvantage to a defendant. The reason why a plaintiff commenced proceedings in one court might be the same as the reason why the defendant seeks to have them transferred to another McHugh court. In such a case, justice may not dictate a preference for the interests of either party. As was pointed out in John Pfeiffer Pty Ltd v Rogerson13, the ordinary basis of jurisdiction of common law courts in personal actions is the presence of the defendant within the court's territory, and the defendant's resulting amenability to the court's process. In most cases, the jurisdiction of an Australian court, in the sense of authority to decide, depends upon the location of the defendant, rather than that of the plaintiff. Suing a large corporation in the place where it has its headquarters would not ordinarily be regarded as "forum- shopping", although the location of the headquarters would not necessarily be decisive as to which was the most appropriate forum. John Pfeiffer Pty Ltd v Rogerson involved an action brought in the Supreme Court of the Australian Capital Territory, against a company which had its principal place of business in the Territory, for damages for personal injury arising out of a work-related accident in New South Wales. No one suggested that the Australian Capital Territory was an inappropriate forum. The decision of this Court established that the law governing the quantum of damages, which was treated as a matter of substance, was the lex loci delicti, the law of New South Wales. There is nothing unusual, either in the State or the federal judicature, about actions between residents of different Australian law areas. Federal diversity jurisdiction is an obvious example. Actions in New South Wales courts are commonly brought by residents of other States, especially when the residence or principal place of business of the defendant is New South Wales. Reference is sometimes made to one forum or another being the "natural forum". Such a description is usually based upon a consideration of "connecting factors", described by Lord Goff in Spiliada14 as including matters of convenience and expense, such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law governing the relevant transaction. Lord Templeman described such factors as "legion", and said that it was difficult to find clear guidance as to how they are to be weighed in a particular case15. Thus, New South Wales might well be the "natural forum" for an action for damages brought by a passenger in a motor vehicle against the driver if they were both residents of New South Wales, even though the injury 13 (2000) 203 CLR 503 at 517 [13], referring to Gosper v Sawyer (1985) 160 CLR 14 [1987] AC 460 at 478. 15 [1987] AC 460 at 465. McHugh resulted from a collision that occurred on the other side of the Queensland or Victorian border. In many cases, there will be such a preponderance of connecting factors with one forum that it can readily be identified as the most appropriate, or natural, forum. In other cases, there might be significant connecting factors with each of two different forums. Some of the factors might cancel each other out. If the action is between two individuals, and the plaintiff resides in one law area and the defendant in another, there may be no reason to treat the residence of either party as determinative, although, as already noted, it will ordinarily be the residence of the defendant that is important to establish jurisdiction. Weighing considerations of cost, expense, and convenience, even when they conflict, is a familiar aspect of the kind of case management involved in many cross-vesting applications. The case of Spiliada, decided as it was in a different context, provides an example of the difficulty that might attend an identification of a "natural" forum for litigation. It involved an action by shipowners against shippers for damages resulting from the condition of cargo when loaded, which caused corrosion to the vessel. The cargo was loaded in Canada, for transportation to India. The shipowners were Liberian. Their management was in Greece, although some part of the management took place in England. The shippers carried on business in Canada. Process was served in Canada. The contract of carriage was governed by English law, a factor which the House of Lords said might be of great importance in some cases and of little importance in others16. The contention that Canada was a more appropriate forum than England was rejected. A decisive consideration was said to be the experience of the English trial judge, the trial lawyers, and the experts, gained in dealing with earlier complex litigation arising out of the same events. That experience was regarded as crucial even though "the convenience of the parties and the witnesses probably tilted the scales towards British Columbia".17 Lord Templeman regarded it as significant that the insurers of both the parties to the litigation were English18. That may be a practical reason why a high proportion of commercial litigation in London involves foreign parties. The conclusion of the House of Lords, that England was no less appropriate a forum than Canada, illustrates the wide range of factors that might govern appropriateness. 16 [1987] AC 460 at 481. 17 [1987] AC 460 at 484-485. 18 [1987] AC 460 at 465. McHugh There will often be overlapping, but there is no necessary coincidence, between factors which connect litigation to a forum, and factors which motivate one party to prefer, and another party to resist, litigating in that forum. In the context of the Cross-vesting Act, the treatment by the Court of Appeal of New South Wales, in James Hardie & Coy Pty Ltd v Barry19, of the special procedural powers of the Tribunal is illuminating. The Court of Appeal pointed out that these were not merely forensic advantages to one party that represented a corresponding disadvantage to the other party, but were factors relevant to a decision under s 5 because they have the capacity to assist both plaintiffs and defendants in the efficient and economical resolution of disputes, and therefore serve the public interest. It will be necessary to return to this matter. Their Honours were not referring to s 11A of the Tribunal Act, but to the Tribunal's powers to use evidence and experience in past cases. The reasoning of the primary judge The reasoning of Sully J in the present case must be read together with his reasons in an earlier case of BHP Co Ltd v Zunic20, which he imported by reference. Sully J acknowledged the difference between an application for a stay of proceedings on forum non conveniens grounds and a transfer application under s 5 of the Cross-vesting Act. In Zunic, he referred to Bankinvest AG v Seabrook21 and James Hardie & Coy Pty Ltd v Barry22 as the principal authorities for him to follow. He was correct to do so. In Zunic, he described the ultimate question as being: which is the more appropriate forum, upon a fair balancing of all the factors defining the relevant "interests of justice".23 No one suggests that was erroneous. In both Zunic and the present case, he listed a series of factors relevant to the interests of justice, and explained how he took them into account. Most of those factors are uncontroversial. There were differences between Zunic and the present case. In particular, the plaintiff in Zunic was an elderly man with a short life expectancy. The position of the first respondent is somewhat different. In the present case, Sully J 19 (2000) 50 NSWLR 357. 20 (2001) 22 NSWCCR 92. 21 (1988) 14 NSWLR 711. 22 (2000) 50 NSWLR 357. 23 (2001) 22 NSWCCR 92 at 103. McHugh placed particular stress on the Tribunal's powers under s 11A of the Tribunal Act. He referred to a medical prognosis of a possible future deterioration in the first respondent's condition. The prognosis was uncertain. He said that the first respondent's case was "very different" from that of Mr Zunic in that it did not require an expedited hearing. He said, however, that it was "important ... to keep open to Mr Schultz the very unusual advantages that are conferred by s 11A of the Tribunal Act." This observation was made against the background of a statement of principle, expressed in Zunic, and incorporated by reference in the present case, that a plaintiff's own choice of forum "ought not lightly to be overridden". This, on the appellant's submission, is where the primary judge fell into error. Notwithstanding his general reference to a fair balancing of all the factors defining the relevant interests of justice, the exercise was weighted in favour of the plaintiff in two ways that worked in combination: first, the plaintiff's choice of forum was "not lightly to be overridden"; secondly, the "unusual advantages" conferred on a plaintiff by s 11A were to be kept open. As to the first of those considerations, it is, as the appellant submits, redolent of the Australian forum non conveniens approach, which begins from the premise that a court whose jurisdiction has been regularly invoked needs to justify a refusal to exercise that jurisdiction. For the reasons explained earlier, and developed at some length in Bankinvest, that is not the starting point for a consideration of a transfer application under the Cross-vesting Act, where a court is simply applying a statute without any kind of presumption as to where the balance of the interests of justice might come down. The idea that a plaintiff's choice is not lightly to be overridden echoes the statement of Scott LJ in St Pierre that a right of access to a court must not be lightly refused. That idea is still influential in the Australian approach to forum non conveniens, but it is out of place in a decision about s 5 of the Cross-vesting Act. The second, and closely related, consideration gives rise to a number of difficulties. Sully J accepted that the substantive law governing the action, whether it was dealt with in the Tribunal or in the Supreme Court of South Australia, would be the law of South Australia, not the law of New South Wales. The law of South Australia concerning the assessment of damages in actions for personal injury is partly common law and partly statute. The statute law includes s 30B of the Supreme Court Act 1935 (SA), which is set out in the reasons of Callinan J. That section empowers the Supreme Court to make interim awards of damages. Sully J was not referred to it. There was debate in this Court as to whether the two statutory provisions, s 11A of the Tribunal Act, and s 30B of the South Australian Supreme Court Act, are substantive or procedural. They are significantly different, although both modify the common law, and could have an important effect on the rights of a plaintiff or a defendant. The assumption by McHugh Sully J that, if the action proceeded in the Tribunal, the assessment of damages would be governed by s 11A was challenged. It is unnecessary to resolve that question because, even if the assumption were correct, there is no warrant for concluding that the interests of justice dictate that the first respondent should be given, as against the appellant, the benefit of s 11A, or that s 11A of the Tribunal Act should be regarded as a more just dispensation than s 30B of the South Australian Supreme Court Act. They are different approaches to a similar problem by two legislatures within the Australian federation. No doubt the existence of s 11A enables the first respondent to rebut any charge that he is "forum-shopping". Let it be accepted that the first respondent has, or at least believes he has, a valid reason for preferring to commence proceedings in the Tribunal. His good faith is not in question. The question is where the interests of justice lie. If, in a particular respect, the first respondent's assumed advantage and the appellant's assumed disadvantage are commensurate, the one simply being the converse of the other, then that does not advance the matter. The scales are inappropriately weighted in favour of a plaintiff if a possibility of what might ultimately turn out to be a higher total award of damages is treated as a consideration of justice which argues against transfer and if, in addition, the plaintiff's choice of venue is treated as a matter not lightly to be overridden. Although Sully J was not given the opportunity to consider how s 30B might operate in this case, the problem would be compounded if a judge were to become involved in comparing the respective merits of New South Wales and South Australian legislation. From whose point of view would those merits be judged? How could a judge form a preference between the public policy reflected in an Act of the Parliament of New South Wales and the public policy reflected in an Act of the Parliament of South Australia? If it came to that point, the appropriate course would be for the judge to draw back, and to consider the interests of justice by reference to more neutral factors. As we have already indicated, we do not suggest that the interests of justice properly to be taken into account will be unrelated to the interests of one party or another. We do not doubt that, in the case of Zunic, it was entirely appropriate for Sully J to take into account the plaintiff's short life expectancy, and the prospect of expedition in the Tribunal. There are cases in which justice may dictate that an interest of one party be given weight. Although in a different context, Lord Goff's discussion in Spiliada24 of the "legitimate personal or juridical advantage" shows the kinds of consideration that might sometimes be relevant to a judgment as to the appropriateness of a forum. Yet, in the present case, the combination of the importance that was attached to the first respondent's choice of forum, and the treatment of s 11A as a factor relevant to the interests of justice, involved error in the application of s 5 of the Cross-vesting Act. 24 [1987] AC 460 at 482-484. McHugh There are two further matters that should be mentioned. For the reasons given by the Court of Appeal in James Hardie & Coy Pty Ltd v Barry, Sully J was right to attach importance to the procedural and evidentiary advantages offered to all parties in the Tribunal. In assessing the weight to be given to those advantages, however, his Honour may have overlooked the fact that all defendants undertook to give Mr Schultz the benefit of those provisions if the proceedings were transferred. Those undertakings are recorded in the evidence, but they were not mentioned in his Honour's reasons. Additionally, his Honour was entitled to have regard to the Tribunal's specialisation and expertise. If there were any doubt about the relevance of that to the appropriateness of the Tribunal as a forum, then it is only necessary to pay attention to the facts of Spiliada, the actual decision in that case, and the consideration that was regarded there as determinative. Conclusion and Orders The decision of the primary judge was affected by material error. That being so, it is unnecessary, and therefore inappropriate, to decide the constitutional issues argued in this Court. One of those issues related to the capacity of the Tribunal to sit in South Australia. We agree with what Gummow J has said on that subject. The first respondent, by Notice of Contention, invited this Court to hold that, even if the decision of Sully J were affected by error, it should nevertheless be upheld because the Tribunal is, on any possible view, a more appropriate forum than the Supreme Court of South Australia. That ambitious submission should be rejected. Alternatively, the first respondent submitted that the matter should be remitted to the Supreme Court of New South Wales for further consideration. Unless the case was completely clear, or there were other compelling reasons to take a different course, that would be the usual outcome. On this alternative, the first respondent did not invite this Court, out of consideration for his age and illness, to decide the s 5 issue itself. In fact, in support of a submission that the matter should be remitted, the first respondent attempted to adduce further evidence to show that he is now a resident of New South Wales. That evidence was challenged, both as to form and substance, and its tender was rejected. It is far from clear that the interests of justice require that the proceedings be transferred to South Australia. In that respect, regard may be had to the specialist nature of the Tribunal, and the procedural facilities peculiar to it. Regard should also be had, not merely to the issues that may arise between the first respondent and the appellant, but also to the issues between the first McHugh respondent and the other respondents, and the cross-claims. Those questions received little attention in argument in this Court. The matter should be remitted. We would allow the appeal on the terms as to costs pursuant to which special leave was granted and set aside the orders of the Supreme Court of New South Wales of 30 October 2002. The matter should be remitted to that Court for further consideration in accordance with the reasons of this Court. GUMMOW J. By summons in the Supreme Court of New South Wales, BHP Billiton Limited ("BHP") sought an order pursuant to s 8 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) ("the Cross-vesting Act"). The order sought was that a proceeding pending in the Dust Diseases Tribunal of New South Wales ("the Tribunal") between Mr Schultz as plaintiff and BHP and others as defendants be removed into the Common Law Division of the Supreme Court. BHP further sought a consequential order under sub-par (iii) of s 5(2)(b) of the Cross-vesting Act; this was that the proceedings when removed into the Supreme Court thereupon be transferred to the Supreme Court of South Australia. By order entered 30 October 2002, a judge of the Supreme Court (Sully J) dismissed the summons. On 22 October his Honour had delivered reasons in support of that order25. By special leave BHP appeals directly to this Court. The appeal joins Mr Schultz as first respondent. The second, third, fourth and fifth respondents were, with BHP, defendants in the proceeding in the Tribunal. They entered submitting appearances in the Supreme Court and have taken no active part in the appeal. It was a condition of the grant of special leave by this Court that BHP pay Mr Schultz's costs of the appeal in any event and not seek to disturb costs orders made in the Supreme Court. The Tribunal The Tribunal is established as a court of record by s 4 of the Dust Diseases Tribunal Act 1989 (NSW) ("the DDT Act"). The Tribunal has, wherever sitting, "jurisdiction throughout New South Wales" (s 10(3)). In the exercise of their functions, members of the Tribunal have the same protection and immunity as a judge of the Supreme Court of New South Wales (s 8). Witnesses have the same protection and are subject to the same liabilities as witnesses before the Supreme Court (s 20(4)). The Tribunal has the contempt powers of the Supreme Court (s 26). Sections 10(1) and 11 confer upon the Tribunal what is called "exclusive jurisdiction" to hear and determine proceedings under ss 11 and 11A. Section 11 deals with what might shortly be identified as claims for damages for those suffering from a dust-related condition which is attributable or partly attributable to a breach of duty, whether imposed under the common law or by statute. Reference is made hereafter to s 11A. 25 BHP Billiton Limited v Schultz [2002] NSWSC 981. In Goliath Portland Cement Co Ltd v Bengtell26, Gleeson CJ said of the DDT Act: "The scheme of the legislation is to create a specialist tribunal to deal with a certain type of claim for damages, to constitute that tribunal a court of record, and to give it the exclusive jurisdiction to hear and determine claims of the specified kind. Such proceedings would otherwise be heard in the Supreme Court or the District Court. In that respect, the Tribunal's jurisdiction replaces that formerly exercised by those courts." His Honour added27: "There is nothing in the [DDT] Act which expressly limits the Tribunal's jurisdiction to claims arising out of events that occurred, or causes of action that arose, in New South Wales. The jurisdiction of the Supreme Court is certainly not so limited, and it is not easy to understand why parliament would have intended such a limited transfer of jurisdiction, leaving the residue in this Court." The facts Mr Schultz was born in 1941 in Whyalla in South Australia and was living there at all relevant times. He is a long-term heavy smoker. By his statement of claim in the Tribunal, Mr Schultz pleads that between 1957 and 1964, and again between 1968 and 1977, he was employed by BHP at its premises at Whyalla and that, as a result of his exposure there to asbestos, he suffered asbestos-related personal injury. In addition to claiming damages for that injury, he makes a claim for prospective loss and damage under s 11A of the DDT Act. Mr Schultz's action against BHP is for negligence, for breach of an implied term in his contract of employment, and for breach of statutory duty. The statutory duty is said to have been imposed upon BHP by South Australian legislation as it stood at the relevant times. Specifically, Mr Schultz relies on the provisions of the Industrial Code 1920 (SA), the Industrial Code 1967 (SA), the Industrial Safety Health and Welfare Act 1972 (SA) and on certain regulations made thereunder. No law was pleaded as the proper law of the contract28. However, in his consideration of the matter, Sully J directed his attention to the 26 (1994) 33 NSWLR 414 at 417. 27 (1994) 33 NSWLR 414 at 417. 28 See Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 at tort claim and to the law in force in South Australia as the lex loci delicti and that course was not criticised in this Court. This is not a case in which any difficulty arises in locating the place of the tort, a prospect mentioned in John Pfeiffer Pty Ltd v Rogerson29. South Australia is the only candidate. Nor, as the above facts show, was it entirely fortuitous that the tort occurred in that State. In its submissions to the primary judge, BHP indicated that, subject to proof by Mr Schultz of his exposure and his diagnosis, liability will not be an issue and the trial will be limited to the assessment of damages. It should be observed that, in Goliath, the New South Wales Court of Appeal was dealing with an appeal against the dismissal by the Tribunal of an application, one of the grounds of which had been that it should decline to exercise its jurisdiction because, within the sense of the term given by Voth v Manildra Flour Mills Pty Ltd30, the Tribunal was "a clearly inappropriate forum"31. That is not the nature of the proceeding before the primary judge or of the present appeal, which turns principally on the construction and application of provisions of the Cross-vesting Act. The distinction between an application for a stay on the ground of forum non conveniens and a transfer application under the legislation is developed and explained in the reasons of Gleeson CJ, McHugh and Heydon JJ. It also will be necessary to make further reference to the distinction later in these reasons. The Cross-vesting Act This New South Wales statute, together with legislation passed in 1987 by the Commonwealth and each of the other States is misdescribed in the short title. This is because the legislation was designed to establish the two systems described in the preamble to the statutes. The first was a system of cross-vesting of jurisdiction between federal, State and Territory courts, without detracting from the existing jurisdiction of any court (pars (a) and (b) of the preamble). The second (par (c) of the preamble) was a system to apply where a proceeding is instituted in a court "that is not the appropriate court" and to require transfer "to the appropriate court". The present dispute concerns the operation of the second system. 29 (2000) 203 CLR 503 at 538-539 [81]. 30 (1990) 171 CLR 538. 31 See (1994) 33 NSWLR 414 at 416, 418-420, 431-439. The Cross-vesting Act does not define the sense or senses in which it employs the term "jurisdiction"32. In particular, there is no distinction expressly drawn between the uses of "jurisdiction" to identify the amenability of the defendant to the court's process, and to identify the subject-matter of actions entertained by the court. As is illustrated by Flaherty v Girgis33, the legislative derivation of the one may be quite distinct from that of the other. However, from a perusal of the statute it appears that, when dealing with the first system (of cross-vesting jurisdiction), "jurisdiction" is used in the latter sense. This is indicated by the reservation respecting "special federal matters" (s 6), by the provision made in s 11 for the exercise of cross-vested jurisdiction, and by (A) and (B) of the transfer provision of sub-par (b)(ii) of s 5(2), which is set out later in these reasons34. The cross-vesting provisions assume service of the proceeding in question, whether, as in this case from the existence of a place of business conducted by BHP in New South Wales (which may be assumed), from the personal presence of a transient defendant, or from the operation of Pt 2 (ss 13-27) of the Service and Execution of Process Act 1992 (Cth) ("the Process Act"), or of State "long-arm" jurisdiction35. However, as noted earlier, this appeal concerns the second system, that dealing with transfer of proceedings. It should be emphasised that here the subject-matter of the proceeding which is transferred to the "appropriate court" may have been within the competence of the transferor court in which it was instituted without any supplementation of its jurisdiction by the cross-vesting system. The litigation of an "interstate tort" is within the jurisdiction derived by the Tribunal from the State Supreme Court. Goliath so decided. In Re Wakim; Ex parte McNally36, this Court held that s 9(2) of the federal cross-vesting statute37 was invalid; this provision had authorised the Federal Court to exercise jurisdiction (whether original or appellate) conferred on it by State law relating to cross-vesting of jurisdiction. However, that portion of the legislative scheme which remains in operation includes the provisions for the transfer of pending proceedings between the Supreme Courts of the States. No 32 Lipohar v The Queen (1999) 200 CLR 485 at 516-517 [78]-[79]. 33 (1987) 162 CLR 574 at 598, 609. 34 See also the like provisions in s 5(1), s 5(3) and s 5(4). 35 Section 8(4) of the Process Act excludes the operation of such State laws in certain respects. 36 (1999) 198 CLR 511. 37 Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth). question arises respecting the cross-vesting of subject-matter jurisdiction between State courts. The transfer application The present litigation was instituted in the Tribunal; hence the first step in the application to the primary judge, that based upon s 8 of the Cross-vesting Act. Where a proceeding is pending in a court of New South Wales other than the Supreme Court, or in a tribunal established by or under a law of New South Wales, and "it appears to the Supreme Court" that an order removing the proceeding into the Supreme Court should be made so that consideration can be given to its transfer to another court, the Supreme Court "may" make a removal order (s 8(1)); the Cross-vesting Act then applies as if the proceeding were pending in the Supreme Court (s 8(2)). The next step in BHP's application to the Supreme Court was to seek an order under sub-par (iii) of s 5(2)(b). This required the Supreme Court to transfer the proceeding to the Supreme Court of South Australia if it appeared to the Supreme Court that it was in the interests of justice that this be done. In his reasons, Sully J did not emphasise any distinction between the two steps involved in BHP's application to the Supreme Court. The order for removal appears to have been refused because no consequential order for transfer would be made and any removal thus would be futile. The effect of a transfer order Section 9(b) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (SA) ("the SA Cross-vesting Act") provides that the Supreme Court of that State may hear and determine a proceeding transferred to it under a provision of a law of a State "relating to cross-vesting of jurisdiction". The New South Wales statute answers that description. Further, s 11 of the SA Cross-vesting Act may have an application to the proceeding when so transferred. Section 11 would apply if it appeared to the South Australian court that it would, or would be likely to, be "exercising jurisdiction conferred" by that statute or any other law "relating to cross-vesting of jurisdiction" (emphasis added). There is a question whether, in the circumstances of this case, where subject-matter jurisdiction already subsisted in the South Australian transferee court and BHP was amenable to its process by, at least, the use of the Process Act, the court, after the transfer, would have been exercising jurisdiction "conferred" by any cross-vesting law. It is unnecessary to resolve this question of construction of the cross- vesting legislation. If s 11 of the SA Cross-vesting Act did apply, par (a) thereof would require the application of the law of South Australia as the lex fori but that is also the lex loci delicti. Paragraph (b) is an exception to par (a) but only applies to cases, unlike the action here, which arise under the written law of another State or Territory. Paragraph (c) is another exception to par (a), and it states: "the rules of evidence and procedure to be applied in dealing with that the matter shall be such as circumstances, being rules that are applied in a superior court in Australia or in an external Territory". the court considers appropriate A question could arise as to whether s 11A of the DDT Act is a rule of evidence and procedure within the meaning of par (c), so that the South Australian court could consider it appropriate in the circumstances to apply it to the transferred action. The dichotomy drawn in John Pfeiffer38 between substance and procedure does not necessarily control the interpretation of par (c). There is no occasion further to consider this question of the applicability of s 11A. As will appear later in these reasons, s 11A favours the interests of Mr Schultz. If not a rule of evidence and procedure, s 11A would not apply; if s 11A does answer that description, then its application would favour Mr Schultz and not provide a reason against the transfer sought by BHP. The appeal to this Court From the decision of the presiding judge refusing BHP's application for removal and then for transfer, no appeal lay to the New South Wales Court of Appeal. Section 13 of the Cross-vesting Act states that an appeal does not lie from a decision of a court in relation to the transfer or removal of a proceeding under that statute. However, that provision is ineffective to curtail the jurisdiction of this Court, conferred by s 73(ii) of the Constitution. This confers on the High Court jurisdiction, with such exceptions and subject to such regulations as the Parliament of the Commonwealth prescribes, to hear and determine appeals from all judgments, decrees, orders and sentences of the Supreme Court of any State. The grant by this Court of special leave satisfied the exceptions and regulations prescribed by s 35 of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). In his written submissions, the Attorney-General for New South Wales, who intervened in this Court, sought to classify s 13 of the New South Wales statute as surrogate federal law by reason of it being picked up by s 79 of the Judiciary Act; s 13 was said thereby to acquire the quality of an exception or regulation prescribed by the Parliament of the Commonwealth within the meaning of s 73 of the Constitution. That submission necessarily presupposed 38 (2000) 203 CLR 503 at 542-544 [97]-[100]. the exercise of federal jurisdiction at the stage of the litigation in the Supreme Court so as to attract the operation of s 79. In the Supreme Court, no point was taken which had the consequence of rendering the proceeding a matter arising under the Constitution or involving its interpretation; constitutional questions first appeared this Court and appropriate notices then were given under s 78B of the Judiciary Act. Nor was the proceeding in the Supreme Court a matter between residents of different States within the meaning of s 75(iv) of the Constitution, given the corporate character of the defendants39. Mr Schultz, the party with the interest in doing so, did not challenge the competency of the appeal to this Court. In these circumstances, it is unnecessary further to consider the submission for New South Wales respecting the operation of s 79 of the Judiciary Act as achieving for s 13 of the Cross-vesting Act the character of an exception or regulation within the meaning of s 73 of the Constitution. It appeared to be accepted in the submissions of the parties that no distinct questions arose respecting the removal provision of s 8 of the Cross-vesting Act. The assumption was that if no case for transfer under s 5(2)(b)(iii) were made out, no removal order should be made, and if a case for transfer was established, then a removal order would be made. Section 5(2) of the Cross-vesting Act Accordingly, the primary issue to be considered concerns the construction of s 5(2) of the Cross-vesting Act. Sub-paragraph (iii) of s 5(2)(b) opens with the words "it is otherwise in the interests of justice" (emphasis added). This directs attention to sub-pars (i) and (ii) of s 5(2)(b). Sub-paragraph (i) postulates the circumstance that the relationship between the relevant proceeding and another pending proceeding in the transferee court renders it more appropriate that both proceedings be determined by that second court. Sub-paragraph (ii) poses the issue whether it is "more appropriate" that the pending proceeding in New South Wales be determined by the other Supreme Court having regard to three matters stated as follows: "(A) whether, in the opinion of the first court, apart from this Act and any law of the Commonwealth or another State relating to cross- vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being 39 British American Tobacco Australia Ltd v Western Australia (2003) 77 ALJR 1566 at 1574 [37]; 200 ALR 403 at 413. instituted in the first court and capable of being instituted in the Supreme Court of another State or Territory; the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in sub- subparagraph (A) and not within the jurisdiction of the first court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction; and the interests of justice". These criteria stipulated in par (b)(ii) of s 5(2) attach significance to the existence of jurisdiction cross-vested in the transferor court. If "it appears" to the Supreme Court that, by reason of the criteria stipulated in sub-par (i) or (ii) of par (b), "it is more appropriate" that the relevant proceeding be determined in the other designated Supreme Court, then the Supreme Court "shall transfer the relevant proceeding". The requirement to order transfer thus is imperative once the identified criteria "appear" to the Supreme Court40. No question of discretion arises41. This appeal concerns in particular the application of sub-par (iii) of s 5(2)(b). Unlike sub-pars (i) and (ii), there is no requirement of a pending proceeding in the transferee court or the presence of cross-vested jurisdiction in the transferor court. Sub-paragraph (iii) is more broadly expressed. However, as with the other sub-paragraphs, the issue on an appeal to this Court is not accurately identified as whether the primary judge erred in the exercise of a discretion. If it "appears" to the Supreme Court to be "otherwise in the interests of justice" that there be a transfer, then the Supreme Court "shall transfer the relevant proceeding". Again, no question of discretion arises. The word "shall" imposes a duty which must be performed42. Rather, the issue for this Court is whether his Honour erred in the content he gave in this case to the phrase "otherwise in the interests of justice". 40 cf Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 at 299-300 [33]; Samad v District Court of New South Wales (2002) 209 CLR 140 at 152 [32], 160-161 41 cf Norbis v Norbis (1986) 161 CLR 513 at 518, 533-534, 537; Wong v The Queen (2001) 207 CLR 584 at 613 [79]. 42 Interpretation Act 1987 (NSW), s 9(2). The reasons of the primary judge In his reasons, Sully J followed a path which he described as consistent with that which he had taken in Broken Hill Proprietary Company Ltd v Zunic43. His Honour there had dealt with applications by BHP under the Cross-vesting Act of the same nature as those now before him. In Zunic, his Honour had identified nine considerations to be taken into account in striking "the final balance" which his Honour saw as required by the expression "the interests of justice" in sub-par (iii) of s 5(2)(b) of the Cross-vesting Act44. The first was the personal circumstances of the plaintiff in the Tribunal; the second, the regular invocation of the jurisdiction of the Tribunal by the plaintiff; the third, any delay by the party seeking removal and transfer; the fourth, the particular expertise and facility of the Tribunal in dealing with dust disease claims; the fifth, the locus delicti of the torts pleaded; the sixth, the comparative availability in the Tribunal and in the proposed transferee court of an appropriately expedited hearing; the seventh, comparative cost considerations; the eighth, comparative evidentiary considerations; and the ninth, "The matter of forum shopping"45. It will be observed that these considerations do not include the respective provisions made for appeals against decisions at trial by the Tribunal and by the proposed transferee court. Section 32(1) of the DDT Act limits the appeal as of right (to the Supreme Court46) to points of law and to questions as to the admission or rejection of evidence. Section 32(4) confers an appeal by leave in limited cases. The right of appeal to the Full Court conferred by s 50 of the Supreme Court Act 1935 (SA) ("the SASC Act") is more broadly expressed. In Zunic, Sully J considered the actions of the applicants in making an application under the Cross-vesting Act to be a form of "forensic approbating and reprobating" which told against granting the application47. By contrast, in this case, Sully J held there had been nothing dilatory in the conduct of BHP in seeking orders under the Cross-vesting Act48. 43 (2001) 22 NSWCCR 92. 44 (2001) 22 NSWCCR 92 at 97. 45 (2001) 22 NSWCCR 92 at 98-103. 46 Appeals are assigned to the Court of Appeal (Supreme Court Act 1970 (NSW), 47 (2001) 22 NSWCCR 92 at 99. 48 [2002] NSWSC 981 at [23]. In Zunic, Sully J held that the identification of South Australia as the locus delicti had "obvious weight" but was not of itself determinative of where the interests of justice lay49. His Honour repeated this observation in this case and relied on his analysis from the earlier case50. Evidence of comparative cost considerations between a trial in the Tribunal and in the Supreme Court of South Australia did not indicate a relevant cost difference which was "so grossly disproportionate" as to give significant weight in favour of BHP's application51. The medical evidence that Mr Schultz's lung function already had a 30 per cent deficit and his uncertain prognosis made it important to ensure that any just claim of Mr Schultz be dealt with as simply, speedily and efficiently as the circumstances would permit. If Mr Schultz were to develop a catastrophic condition, something "at least on the cards in a real sense", then the Tribunal would be able to move with a degree of expedition that "could not fairly be expected" of the Supreme Court of South Australia52. "Regular invocation of jurisdiction" It is convenient at this stage to consider further those considerations dealing with "regular invocation" by Mr Schultz of the jurisdiction of the Tribunal and the absence of forum shopping in any offensive form. The primary judge appears to have treated these matters as giving to Mr Schultz "legitimate interests" in the "unusual advantages" conferred on him as a plaintiff in the Tribunal, which it was for BHP to satisfy the primary judge should be displaced and a transfer order made53. However, that was not an approach to BHP's application which the Cross-vesting Act supported. That statute does not ask, as would be consistent with the general law principles pronounced in Voth and applied in Goliath, whether the Tribunal is "a clearly inappropriate forum". The stance taken by the statute is quite different. The preamble to the Cross-vesting Act states in par (c) that it is desirable "if a proceeding is instituted in a court that is not the appropriate court, to provide a system under which the proceeding will be transferred to the appropriate court". 49 (2001) 22 NSWCCR 92 at 100-101. 50 [2002] NSWSC 981 at [26]. 51 [2002] NSWSC 981 at [31]. 52 [2002] NSWSC 981 at [28]. 53 [2002] NSWSC 981 at [33]-[34]. In the Second Reading Speech on the Bill for what became the Cross-vesting Act, the Attorney-General for New South Wales said54: "Under the scheme, if proceedings are commenced in an inappropriate court, or if related proceedings are begun in separate courts, the courts will have power to transfer proceedings to the most appropriate court, having regard to the nature of the dispute, the laws to be applied and the interests of justice." The Attorney-General went on55 to describe cl 5 as operating "to ensure that proceedings are always dealt with by the most appropriate court." That legislative policy is implemented by s 5(7). This provides that an order for transfer may be made not only on application by a party to the proceeding, but by the court, either of its own motion or on the application of the Attorney-General of the Commonwealth or of a State. Section 5(7) indicates that it is inapt to speak of the applicant for an order for transfer as bearing a burden of persuasion analogous to an onus of proof56. However, it would be inaccurate to describe the decision upon a transfer application as administrative, by some analogy to the orders made with no lis inter partes in the administration of assets or of trusts by courts of equity57. Section 5 assumes the regular invocation of jurisdiction, both as to amenability of the defendant to process and as to subject-matter. Therefore, regular invocation of jurisdiction itself does not favour the disposition of a transfer application by refusing it on the basis that to allow it could not be in the interests of justice. Section 5 does not manifest a legislative policy in favour of any species of "forum shopping", or of what in the United States has been called a "venue privilege" of plaintiffs, which it is for defendants to displace on a transfer application58; the emphasis on the selection of the appropriate court indicates the contrary. The Second Reading Speech and par (c) of the preamble 54 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 29 April 1987 at 10750. 55 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 29 April 1987 at 10751. 56 Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 727. 57 See R v Davison (1954) 90 CLR 353 at 368; cf Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 715, 717. 58 cf Wright and Kane, Law of Federal Courts, 6th ed (2002) at 286; Jumara v State Farm Insurance Company 55 F 3d 873 at 879 (1995). indicate that the State Parliament in enacting the Cross-vesting Act, in particular the provisions of s 5, was concerned to provide a means of ensuring that, by use of the transfer mechanism, proceedings be dealt with by the appropriate court. However, in remarks in Zunic59 which the primary judge adopted in the present case, his Honour took a different, and erroneous, view of the scope of s 5(2). He referred to the phenomenon of claims in respect of South Australian torts being brought by South Australian residents in the Tribunal and to the establishment by the Tribunal in South Australia of a "South Australian circuit". "It cannot be supposed that the Parliament of New South Wales is not well aware of the state of affairs to which attention is thus drawn. Nor can it be supposed that the Parliament of New South Wales either could not, or would not, intervene by appropriate legislation in order to correct that state of affairs if Parliament were of the opinion that there was good reason, as a matter of public policy, to do so. And yet Parliament has not intervened. It seems to me that such considerations at least take some of the pejorative sting out of the term 'forum shopping'." In construing s 5(2) and in particular par (b)(iii), the Attorney-General of the Commonwealth, who intervened, emphasised the interrelation between such provisions and the Process Act. Under Pt 2, Div 1 (ss 13-21) thereof, civil process issued in one State may be served in another without a requirement to establish a link between the State of issue and the subject-matter of the proceedings or the defendant (s 15(1))60. In a proceeding in which the court of issue is a court of a State below the Supreme Court, s 20 of the Process Act provides for orders staying the proceeding. Section 20(3) states: "The court may order that the proceeding be stayed if it is satisfied that a court of another State that has jurisdiction to determine all the matters in issue between the parties is the appropriate court to determine those matters." The matters to be taken into account are then specified but expressly exclude the fact that the proceeding is commenced at the place of issue (s 20(4)). Where the court of issue is the Supreme Court, this procedure under s 20 is not available; 59 (2001) 22 NSWCCR 92 at 102-103. 60 The term "State" is so defined as including the Northern Territory and the Australian Capital Territory (ss 5(1), 7(2)). reliance is to be placed upon s 5 in the various cross-vesting statutes of the States. Section 20(10) of the Process Act so stipulates. It is with this in mind that the significance of the following statement by Professor Nygh appears. Writing in 1995 on sub-par (iii) of s 5(2)(b), he said61: "The third category, perhaps the most important, is based on a residual clause that can be invoked by a defendant even though there are no related proceedings and no question of cross-vested jurisdiction.62 Although prima facie the court is given a wide discretion as indicated by the words 'otherwise in the interests of justice',63 some judges have taken the view that a transfer should be ordered only when the forum chosen by the plaintiff is 'clearly inappropriate'.64 Others have taken the view that the formula allows the court to choose the more appropriate forum without any specific emphasis in favour of the plaintiff's choice.65 Because s 20(4) of the [Process Act] clearly prohibits any bias in favour of the plaintiff's choice, it would be unfortunate if the method of challenging jurisdiction indicated by s 20(3) of that Act were to employ a different test to that used in the cross-vesting legislation.66" The phrase "otherwise in the interests of justice" in sub-par (iii) of s 5(2)(b) of the Cross-vesting Act requires the Supreme Court to determine a transfer application by identifying the more appropriate forum without any specific emphasis in favour of the choice of forum made by the plaintiff. That being so, error is disclosed in the treatment by the Supreme Court of BHP's application. The consequence is that the appeal to this Court should be allowed, unless this Court supports the primary judge's order on further or alternative grounds to those relied upon by his Honour. No such support appears. 61 "Choice of Law Rules and Forum Shopping in Australia", (1995) 6 Public Law Review 237 at 243-244. 62 Waterhouse v Australian Broadcasting Corporation (1989) 86 ACTR 1. 63 [Cross-vesting Act], s 5. 64 Baffsky v John Fairfax & Sons Ltd (1990) 97 ACTR 1; Mullins Investments Pty Ltd v Elliott Exploration Co Pty Ltd [1990] WAR 531. 65 Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 730 per Rogers AJA, followed in Amor v Macpak Pty Ltd (1989) 95 FLR 10; Sunbanc Australia v Multivest Corporation Ltd (1989) 97 FLR 269; Chase Corporation (Aust) Ltd v City of Melbourne (1989) 97 FLR 258. 66 McEntee v Connor (1994) 4 Tas R 18; Dawson v Baker (1994) 120 ACTR 11. Section 11A of the DDT Act Upon that inquiry as to the existence of further grounds supporting the order made in the Supreme Court, two matters emphasised by the primary judge assume particular importance. The first matter concerns what his Honour identified as the "very unusual advantages" conferred on Mr Schultz by s 11A of the DDT Act67. This section was added to the statute in 199568 and states: "(1) This section applies to proceedings of the kind referred to in section 11(1) that are brought after the commencement of this section and in which there is proved or admitted to be a chance that at some definite or indefinite time in the future the person who is suffering from the dust-related condition in respect of which the proceedings are brought (the injured person) will, as a result or partly as a result of the breach of duty giving rise to the cause of action, develop another dust-related condition. The Tribunal may, in accordance with the rules: award damages assessed on the assumption that the injured person will not develop another dust-related condition, and award further damages at a future date if the injured person does develop another dust-related condition." It is apparent from its terms that s 11A is addressed not to New South Wales courts generally, but to the Tribunal specifically. However, in this Court, reference was made also to special provision made by South Australian statute and addressed to the Supreme Court of that State. Section 30B of the SASC Act confers upon that court a power to make interim assessments of damages, by determining the question of liability and adjourning the final assessment thereof. The provisions made in s 11A and s 30B are considered by Callinan J in his reasons and I agree with the analysis there given. This indicates that s 30B may operate more favourably to the interests of BHP and less favourably to those of Mr Schultz than would s 11A were it to be part of the lex causae. It will be necessary to return to the question of the content of the lex causae. However, it should be indicated here that the emphasis placed by the primary judge upon s 11A as militating against the making of a transfer order 67 [2002] NSWSC 981 at [33]. 68 By the Courts Legislation Amendment Act 1995 (NSW), Sched 4(2). was erroneous. To fix upon the advantages it conferred upon Mr Schultz, without any consideration of the operation of s 30B upon the interests of both parties, was to give further effect to the false notion of Mr Schultz's "venue privilege", to which reference has been made above. The experience and facility of the Tribunal The second matter emphasised by the primary judge appeared in the course of considering the Tribunal's "particular experience and facility in dealing with dust disease claims"69. Sully J reiterated his adoption in Zunic70 of the following passage from the decision of the Tribunal in Hearn v Commonwealth71: "Subject to the readiness of the parties to litigation, the Tribunal will sit at any time and in any place in Australia to hear the cases of plaintiffs which are properly before it and who are unable to travel to Sydney. For this reason the Tribunal now regularly sits in Brisbane and regularly sits in Adelaide. It may be of interest to remark that sittings in Adelaide allocated for the future are slightly more than one week in each month." Sully J relied upon these considerations as indicative of the particular experience and facility of the Tribunal in dealing with dust disease claims and, it appears, as responding to the contention of BHP that the appropriate forum was South Australia and this favoured transfer to the Supreme Court of South Australia. BHP submits that the primary judge erred in giving any weight to a consideration that, in the present case, the Tribunal might hear the proceedings or any part thereof outside New South Wales and in South Australia. Before turning to evaluate that submission and the grounds urged in its support, there should be emphasised what the submission leaves untouched. First, the Evidence on Commission Act 1995 (NSW) ("the Commission Act") contains in Pt 3 (ss 17-30) detailed provision for State courts, including the Tribunal, to order the taking of evidence elsewhere in Australia before, among others, a judge of the State court in question. Section 29 provides that Pt 3 does not exclude the operation of any other State law providing for the examination of witnesses outside the State. In respect of steps taken in South Australia in pursuance of an order under Pt 3 of the Commission Act, s 67AB of the Evidence Act 1929 (SA) ("the SA Evidence Act") would facilitate the taking of evidence. 69 [2002] NSWSC 981 at [24]. 70 (2001) 22 NSWCCR 92 at 99-100. 71 (2000) 21 NSWCCR 203 at 207-208. A court established under the law of a place outside South Australia is a "foreign authority" (s 67AB(3)). Such a foreign authority may "take evidence" and for that purpose "administer an oath or affirmation to any witness" (s 67AB(1)). BHP expressly eschewed any attack upon the validity of these legislative arrangements were they to be utilised by the Tribunal. Secondly, legislation of both States, the Evidence (Audio and Visual Links) Act 1998 (NSW) and Pt 6C (ss 59IA-59IP) of the SA Evidence Act, contains reciprocal provisions the effect of which would be to permit the Tribunal on the one hand, and the Supreme Court of South Australia on the other, to receive evidence by video link from the other State. In particular, Pt 6C contains detailed provisions for enforcement by the Supreme Court of South Australia of orders made by the recognised out-of-State court (s 59IL) and for the privileges, protection and immunity of participants in video-link proceedings (s 59IM). No criticism was directed to the use by the Tribunal or the Supreme Court of this legislation were they later minded to do so. However, both statutes dealing with audio and visual links also expressly preserve (by s 59IC of the South Australian statute and s 5(1) of the New South Wales statute) the operation of other law providing for the taking of evidence outside the State. Such a law, on its face, is found in s 13 of the DDT Act. The President of the Tribunal fixes the times and places for the holding of proceedings before the Tribunal (s 13(2)). The Tribunal "may adjourn its proceedings to any time or place" (s 13(3)). Then, s 13(7) states: "If the President is of the opinion that the balance of cost and convenience in the proceedings so requires, the President may direct that the hearing of the proceedings, or any part of the proceedings, take place outside New South Wales." There appears to be no dispute that it was upon s 13 that reliance was placed for the statement in Hearn72 which was adopted by Sully J as indicative of the particular facility of the Tribunal. However, BHP submits that his Honour erred in regarding s 13 as supporting the hearing by the Tribunal in South Australia of all or any part of the present proceeding, were the President later minded so to direct. The submission was that s 13 was invalid to the extent that it authorised the exercise outside New South Wales of the judicial power of that State by the conduct there by the Tribunal of its proceedings. 72 (2000) 21 NSWCCR 203 at 207-208. BHP's constitutional submissions On its face, the provisions in s 13 answer the criterion for a sufficient territorial connection with New South Wales that it be at least "remote and general"73. Section 13 concerns the manner of exercise of the jurisdiction of a court established to assume part of the subject-matter jurisdiction of the State Supreme Court. The territorial connection is direct and specific74. The submission for BHP cannot properly found upon what may have been constraints placed by what might be called Imperial constitutional law upon the exercise by the self-governing colonies of governmental functions beyond their territorial limits. The Australian self-governing colonies became States in 1901 and any competence of the United Kingdom legislature, executive and judiciary in respect of the States ended in 198675. The result is that BHP must found on a proposition that, for reasons drawn from the text and structure of the Constitution, any legislative power of New South Wales which would support s 13 in its full operation has been "withdrawn from the Parliament of the State" as provided in s 107 of the Constitution. The courts of the States are an essential branch of the governments of the States76. In Melbourne Corporation v The Commonwealth, Starke J said77: "So we may start from the proposition that neither federal nor State governments may destroy the other nor curtail in any substantial manner the exercise of its powers or 'obviously interfere with one another's operations'78." It is far from clear whether, even if such a doctrine does apply between the States, a determination of the President of the Tribunal under s 13(7) of the DDT Act that all or part of the hearing of the present proceeding take place in South Australia would curtail, in any substantial manner, the exercise of their powers by the courts of that State. Further, it would be necessary in the situation just 73 Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 14. 74 Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 23 [10], 38 [61]. 75 Sue v Hill (1999) 199 CLR 462. 76 Austin v Commonwealth (2003) 215 CLR 185. 77 (1947) 74 CLR 31 at 74. See also State Authorities Superannuation Board v Commissioner of State Taxation (WA) (1996) 189 CLR 253 at 288-289. 78 See Graves v New York; Ex rel O'Keefe 306 US 466 (1939). postulated to consider the impact upon the exercise of the governmental authority of South Australia of the obligation imposed by s 118 of the Constitution to give full faith and credit both to the laws and to the judicial proceedings of the other States, including a proceeding under s 13(7) of the DDT Act. It also should be noted that no question could arise in the present case respecting the constitutional criterion for the judicial resolution of inconsistency or contrariety between the laws of the several States respecting the same subject- matter79. If anything, the law of South Australia, to which reference has been made, would permit the taking of evidence by the Tribunal and the administration of oaths and affirmation by witnesses before the Tribunal. The submissions by BHP were variously expressed in argument. In the end, they must be that, as a consequence of the federal structure which the Constitution establishes, there is withdrawn any competency in one State to legislate for the exercise by its courts, beyond the geographical territory of the State, of their adjudicative functions in the exercise of non-federal jurisdiction. That would be a large proposition. It would not be made good merely on the ground that the exercise of judicial power can be fully effective only with the availability of coercive powers conferred by the law of the State of origin and exercisable there. The proven utility of the declaratory remedy suggests otherwise. It is inappropriate here further to consider these constitutional questions. The appeal may be decided in favour of BHP, even assuming the questions were to be answered adversely to BHP and in favour of a construction of s 13(7) of the DDT Act which gave to the Tribunal the possibility of adjudication in South Australia of the present dispute. Authority indicates that in such a situation the Court should eschew determination of the constitutional questions80. The same is true of a further constitutional submission by BHP. This takes as a first step the undisputed proposition that under the common law choice of law rules in Australia the forum would apply the law of South Australia, the law of the place of the wrong, as the lex causae in respect of matters of substance81. Then it is said to be beyond the competence of the legislature of the forum State, here New South Wales, to require its courts to determine the action by its own substantive law which differs from that of the lex loci delicti, here that 79 Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 34 [48], 52-53 [110], 80 See Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 473-474 [248]-[252]. 81 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. of South Australia. The last step is to submit that s 11A of the DDT Act, in providing for awards of "provisional damages", deals with a matter of substance (the common law rules respecting merger in judgment and assessment of damages "once and for all") and does so in a way at variance with s 30B of the SASC Act. There is a dispute between the present parties as to the characterisation of s 11A as substantive or procedural by application of what was said respecting that distinction in the joint judgment in John Pfeiffer Pty Ltd v Rogerson82. It was recognised in Pfeiffer83 that the principles there explained may require further elucidation in subsequent decisions. Pfeiffer also left for later consideration any submission which restricted the legislative competence of the States to vary or displace the common law choice of law rules applicable to intra-Australian tort actions84. All of the above further constitutional issues may be assumed to have an unfavourable outcome to BHP and, as indicated above, the appeal then falls for decision nevertheless in BHP's favour. I turn to deal with the disposition of the appeal. Conclusions The decision of the primary judge was in error and a consideration of what the expression "otherwise in the interests of justice" involves in this case indicates not that the removal and transfer application by BHP should have been refused, but that it should have succeeded. This is an appropriate case for this Court, rather than to return the application to the Supreme Court for further consideration, to "give such judgment as ought to have been given in the first instance"85. This is not a case where there is any difficulty in locating the lex loci delicti of the tort action by Mr Schultz. It is South Australia and the courts of that State provide the forum which "gives effect to the reasonable expectation of parties"86 and to the policy manifested in the transfer provisions of the Cross- vesting Act. That has the advantage for the ready resolution of the litigation that 82 (2000) 203 CLR 503 at 542-544 [97]-[99]. 83 (2000) 203 CLR 503 at 544 [100]. 84 (2000) 203 CLR 503 at 535 [70]. 85 Judiciary Act, s 37. 86 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 540 [87]. the lex fori and the lex loci delicti coincide, and debates as to classification of statutory provisions as substantive or procedural in nature cannot arise. The views expressed by the primary judge respecting the comparative speed and efficiency of the Tribunal and the Supreme Court of South Australia favoured the former, but did not proceed from the formation of any firm conclusion on the evidence. Nor did the views expressed as to comparative expense. It is true that the Tribunal is a specialised institution, but, notoriously, educated views differ as to the quality of results obtained in courts of general and of specialised jurisdiction. To a significant degree, the witnesses at the trial for the assessment of damages would come from South Australia. To the extent that witnesses reside elsewhere, then the facilities for audio and visual links specified in Pt 6C of the SA Evidence Act may be available. The appellate procedures in South Australia have a more generous scope to appellants than those in New South Wales, a circumstance which at this stage favours both parties. The primary judge attached much significance to s 11A of the DDT Act. That provision would operate to the favour of one side in the litigation, and is specially designed to do so. The "interests of justice" are even-handed. In such a situation, remarks by Gibbs CJ, Wilson and Brennan JJ in Pozniak v Smith87 are in point. Their Honours said88: "The only safe course, in a case where the relevant law in the competing jurisdictions is materially different in its effect on the rights of the parties, is to remit to the State whose law has given rise to the cause of action. As Brennan J observed in Robinson v Shirley, the power 'is intended to facilitate the course of litigation rather than to enhance or diminish a plaintiff's rights or correspondingly alter a defendant's obligations'89." To that may be added remarks of Mason J which are particularly apposite to the legislative policy manifested in the transfer provisions of the cross-vesting "I would resist the notion that in determining which court shall hear the case when there is a material difference in the laws of the States we should give effect to the so-called right of the plaintiff to select the place of hearing, subject only to the balance of convenience. It is inconsistent with 87 (1982) 151 CLR 38. 88 (1982) 151 CLR 38 at 47. The Court was construing the remitter provision in s 44 of the Judiciary Act as it then stood. 89 (1982) 149 CLR 132 at 136. 90 (1982) 151 CLR 38 at 51. a just result that the plaintiff should be able to select the forum which applies the law most favourable to his cause, so long as he is not 'forum shopping'." Orders The appeal should be allowed. However, pursuant to the condition upon which special leave was granted, the appellant should bear the costs of the first respondent and the order for costs in the Court below should not be disturbed. Order 1 of the orders of the Supreme Court of New South Wales entered on 30 October 2002 should be set aside, and in place thereof it should be ordered that (a) proceeding No 308 of 2002 in the Tribunal be removed into the Supreme Court and (b) the proceeding so removed thereupon be transferred to the Supreme Court of South Australia. Kirby 102 KIRBY J. The Dust Diseases Tribunal ("The Tribunal") is a specialist body created by the Parliament of New South Wales under the Dust Diseases Tribunal Act 1989 (NSW) ("the DDT Act"). Its President and judges, all formerly judicial members of the Compensation Court of New South Wales, are now judges of the District Court of that State. This appeal concerns the jurisdiction and powers of the Tribunal to determine claims under the DDT Act arising in, and having the most real and substantial connection with, a State of the Commonwealth other than New South Wales, the State in which the Tribunal was created. The issues in this appeal are whether, under the federal Constitution, the Tribunal could exercise jurisdiction and powers in such a case, and whether it should do so, having regard to the applicable legislation and common law principles. In my view, it should not, and this Court must provide relief accordingly. Special features of dust-diseases litigation litigants, suffering involve profoundly sick Since its establishment, the Tribunal has earned a reputation for the efficiency and skill with which it discharges its functions. By their nature, those functions commonly from "dust-related conditions" of various kinds, as defined by the DDT Act91. Some of these litigants are close to death. Without radical adaptation of the ordinary procedures of litigation to the needs of this class of case, justice between the parties would sometimes be denied. In the nature of things, the Tribunal cannot list matters for hearing in the usual orderly way. It must be ready to respond to emergencies. This has cast extra burdens on its judges, on lawyers appearing before it and on the parties. Bedside hearings have been common. The work is more than usually distressing. Necessarily, the judges have acquired expert knowledge about the aetiology, course and treatment of dust diseases. They have been obliged, more than most, to deliver their decisions in a timely fashion. These features of the Tribunal have become known throughout Australia and beyond. Some of them are recorded in annual reports of the Tribunal92. Others appear in reported decisions93. Some have been reported in the public 91 The DDT Act, s 3. See reasons of Callinan J at [229]. 92 New South Wales, Dust Diseases Tribunal, Annual Review, (2004). 93 The decisions of the Tribunal were originally reported in the New South Wales Compensation Court Reports. Since 2004, following the change in New South Wales legislation governing workers' compensation, the reports appear in the Dust Diseases and Compensation Reports. By the Workplace Injury Management and Workers Compensation Act 1998 (NSW) a new Workers Compensation Commission of New South Wales was established. By that Act (ss 105, 366), (Footnote continues on next page) Kirby media. Most are notorious within the legal profession. As with any judicial body today, there are critics. But the extra burdens of the Tribunal have earned it widespread respect. The judge constituting the Supreme Court of New South Wales who decided the instant case (Sully J) would have known the foregoing. It has also become known to Australian litigants, sick with various dust diseases and to the legal practitioners advising them. It is of the nature of many such diseases that they do not manifest themselves quickly but have a long lead time. This too is well known. The general courts are regularly obliged to consider cases involving dust diseases as relevant to issues before them. This Court had to do so in Crimmins v Stevedoring Industry Finance Committee94. Mr Crimmins died whilst awaiting the final determination by the courts of his legal entitlements. This is a common feature of the law as it affects litigants who make claims in respect of dust diseases. The facility of a specialist tribunal has sometimes also been useful and convenient to defendants. Inevitably, the facilities and procedures of the Tribunal have attracted litigants, including some from outside New South Wales. Recent authority on choice of jurisdiction Three recent decisions: Recent decisions of this Court have upheld the entitlement of litigants in one Australian jurisdiction to invoke the jurisdiction of other State and Territory courts to sue for damages for personal injury suffered in another Australian jurisdiction95. A choice of law rule has been established to govern the exercise of such jurisdiction. Within the Commonwealth a national facility for court proceedings was acknowledged as appropriate to Australia's integrated court system96; constitutional presuppositions97; and available statutory facilities98. This approach represented a change from earlier understandings99. exclusive jurisdiction was given to the Commission, from the appointed day, to hear and determine matters arising under that Act and residual cases under the Workers Compensation Act 1987 (NSW). 94 (1999) 200 CLR 1 at 44-45 [111], 65 [183]. 95 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. 96 See Pfeiffer (2000) 203 CLR 503 at 554-555 [135]. The existence of national or federal jurisdiction is also relevant: see at 529 [50], 532-533 [59]-[63]. 97 Pfeiffer (2000) 203 CLR 503 at 556-557 [138]-[139]. 98 For example, the enactment of the Service and Execution of Process Act 1992 (Cth), rendering parties within Australia amenable to the jurisdiction and orders of (Footnote continues on next page) Kirby Somewhat more surprisingly, in Régie Nationale des Usines Renault SA v Zhang100, this Court (over the dissents of Callinan J and myself) upheld the invocation by a resident injured overseas of the jurisdiction of a State court within Australia. The plaintiff sued defendants not present in Australia in respect of wrongs alleged to have occurred outside this country. Only the initiation of the litigation and the plaintiff's residence and damage connected the case to the Australian jurisdiction that was invoked. This appeal concerns another instance of proceedings being brought outside what might be regarded as the "natural" forum for its resolution. In the present case, that forum was the proper court in South Australia, where the alleged wrong occurred, where the plaintiff lived and had lived for most of his life, where the defendant carried on business and where most of the witnesses resided and local laws had relevant provisions, some of them different from those in force elsewhere in Australia. Yet the plaintiff invoked the jurisdiction of the Tribunal in New South Wales. He wanted to secure the advantages of its procedures, expertise and powers. If Mr Rogerson could bring his claim against John Pfeiffer Pty Ltd in respect of a personal injury suffered in New South Wales by proceedings commenced in the Supreme Court of the Australian Capital Territory101, why, it might be asked, may the present plaintiff in South Australia not elect to bring his case in the Tribunal in New South Wales? If Mr Zhang, injured overseas, could bring his case against the Renault company in the Supreme Court of New South Wales (where, unlike the present defendants, that company had no presence whatever)102, why should the present plaintiff not enjoy an entitlement to bring his claim in the only specialist judicial body so far established in Australia for cases of his kind? If the challenge by Mobil Oil Australia Pty Ltd to the the courts of other States and Territories. See Pfeiffer (2000) 203 CLR 503 and the reasons of Gummow J at [44]. 99 cf Pedersen v Young (1964) 110 CLR 162 at 170 per Windeyer J. See Pfeiffer (2000) 203 CLR 503 at 549-550 [119]. 100 (2002) 210 CLR 491. The decision of the Court in Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 has been portrayed as an instance of "the long-armed … [defendants]"; see "A approach, asserting 'Category-Specific' Legislative Approach to the Internet Personal Jurisdiction Problem in US Law", (2004) 117 Harvard Law Review 1617 at 1628-1629. jurisdiction over out-of-State 101 Pfeiffer (2000) 203 CLR 503. 102 Zhang (2002) 210 CLR 491. Kirby allegedly unconstitutional over-reach of a Victorian statute that permitted proceedings to be brought in Victorian courts affecting strangers in other parts of Australia (who were not even aware of the proceedings) failed103, how could it be said that the DDT Act offended territorial assumptions of the Australian Constitution so as to make the Tribunal's exercise of jurisdiction over a "South Australian case" invalid? These are some of the questions raised by the present appeal. In Pfeiffer, I foreshadowed the possibility that they would arise in a future case104: "If … a claim depends wholly on statute and is enforceable only in a specified tribunal and in a specified way (for example, one concerning entitlements to workers' compensation benefits or dust diseases entitlements), an attempt to enforce such an entitlement in a court of another law area may fail as misconceived105. A court of the same or of another law area might have no jurisdiction to entertain such a claim." Application to this case: This appeal concerns a case involving the opposite side of the coin identified in the quoted passage. Here, substantially, the alleged cause of action exists in both relevant law areas. However, each provides a different judicial body to decide it. Each such body (respectively the Tribunal and the Supreme Court of South Australia) would, in resolving the plaintiff's claim, be bound to apply statutory provisions that are different in significant ways, presenting the possibility of differing outcomes to the proceedings in at least some circumstances, depending on the court chosen. What is the way through this forest of legal principles? The only sure way is by legal analysis addressed to the applicable legislation, read in the light of the provisions expressed in, or implied by, the Constitution. Constitutional norms cannot be ignored. They lie in the background of many contested legal questions. The primary task in this appeal is to decide whether Sully J, exercising the jurisdiction and powers of the Supreme Court of New South Wales under the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) ("the NSW Cross-vesting Act"), erred. If he did, and the error is capable of correction in this Court, possible constitutional questions (at least of invalidity) will not arise. Determination of the case in this way would conform to the settled approach of 103 Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1. 104 Pfeiffer (2000) 203 CLR 503 at 548-549 [116]. 105 cf James Hardie & Co Pty Ltd v Hall (1998) 43 NSWLR 554 at 567-573. Kirby this Court106. If he did not, his Honour's orders must stand, even if we might not have made the same orders as his Honour did, exercising his powers on the same materials and pronouncing the judgment those powers called forth. The facts, legislation and decisional history The facts: Mr Trevor Schultz (the first respondent) alleges that he developed asbestosis and asbestos-related pleural disease as a consequence of being negligently exposed to asbestos in the course of his employment with the Broken Hill Proprietary Company Ltd (now BHP Billiton Ltd) (the appellant). The exposure occurred at Whyalla in South Australia. It is alleged that the asbestos dust and fibres to which the first respondent was exposed derived from products manufactured and supplied by various other companies who are parties to these proceedings although not participating in this appeal. At all material times, the first respondent lived in South Australia. He worked there for the appellant. He suffered there the consequences of any tort of negligence or any breach of contract or breach of statutory duties applicable to the case. He was treated there by medical practitioners. At the adjourned hearing in this Court, the first respondent attempted to establish that he had recently moved to New South Wales to take up residence in Broken Hill. Conformably with this Court's authority concerning the nature of its appellate jurisdiction, proof of this new fact is legally inadmissible107. The case must be determined on the basis of the record in the Supreme Court. In any event, the belated change in the first respondent's residence is legally insignificant. There is no question that, as between the first respondent, the appellant and the other respondents whom he has sued in the Tribunal, that body has jurisdiction in the sense of the power over such parties. The companies concerned were present in New South Wales. The appellant was regularly served with process there. Nevertheless, the majority of the "connecting factors" still link the case to South Australia. That conclusion would not be altered by any late change of residence on the part of the first respondent. 106 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 186 per Latham CJ; R v Hughes (2000) 202 CLR 535 at 565-566 [65]-[66]; Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at 662 [81]. 107 Mickelberg v The Queen (1989) 167 CLR 259 at 265-271, 274-275, 298-299; Eastman v The Queen (2000) 203 CLR 1 at 12-13 [17]-[18], 24-25 [70], 51 [158], 54 [165], 63 [190], 96-97 [290]; cf at 93 [277], 117 [356]. Kirby Other facts describing the background to the proceedings appear in the reasons of other members of this Court108. I will not repeat those facts. Indeed, there was no real dispute about them. It was agreed that, subject to proof that the first respondent had been exposed to asbestos products and satisfactory proof of the diagnosis of his pathology, the liability of the appellant would not be contested. The case would be limited to the assessment of the damages to which the first respondent was entitled. The relevant legislation: Set out in other reasons are the provisions of the NSW Cross-vesting Act that founded the jurisdiction which Sully J was called upon to exercise in the Supreme Court of New South Wales109 together with the counterpart cross-vesting Act of South Australia110 that permits the Supreme Court of that State to hear and determine a proceeding transferred to it from the Supreme Court of New South Wales111. Likewise, the relevant provisions of the Service and Execution of Process Act 1992 (Cth) ("SEPA") are described there112. It is pursuant to that last enactment that, within Australia (where it is necessary), parties may be served with court process and thereby rendered amenable to the orders of courts exercising their own jurisdiction in respect of States other than those in which those parties are ordinarily resident. Because of the residence of the appellant and other defendant respondents in New South Wales, no controversy arises in this case concerning such service or jurisdiction in that sense. Most crucially, the other reasons contain sufficient extracts from the DDT Act113 to relieve me of the necessity of repeating such material. Other statutes 108 Reasons of Gleeson CJ, McHugh and Heydon JJ ("joint reasons") at [1]-[6]; reasons of Gummow J at [39]-[42]; reasons of Callinan J at [182]-[188]. 109 Reasons of Gummow J at [43]-[50], [59]-[62]; reasons of Callinan J at [219]-[222]. 110 Jurisdiction of Courts (Cross-vesting) Act 1987 (SA) ("SA Cross-vesting Act"). See reasons of Callinan J at [223]. 111 It is not necessary to decide whether, once transferred to the Supreme Court of South Australia, the jurisdiction of that Court would derive from the order made under the NSW Cross-vesting Act in conjunction with the SA Cross-vesting Act or from the jurisdiction of the Supreme Court of South Australia under the Constitution and legislation of that State, such as the Supreme Court Act 1935 (SA) ("SASC Act"), s 17. 112 Reasons of Gummow J at [45], [74]-[75]. 113 Joint reasons at [6]; reasons of Gummow J at [78]-[80], [87]-[88]; reasons of Callinan J at [210], [224], [228]-[240]. Kirby are mentioned, specifically those relating to the jurisdiction and powers of the Supreme Court of South Australia114, and the laws on evidence115 and other provisions governing interim assessments of damages by the Supreme Court of South Australia116. These provisions are included to compare and contrast the respective rights and obligations of litigants in proceedings commenced in New South Wales before the Tribunal and proceedings taken before the Supreme Court of South Australia. As appears from other reasons, there are similarities in some of the lastmentioned provisions. However, in other respects, the provisions are different. This is most notably so in the facility of appeal to challenge a decision at trial and in the facility to return to court for an award of further damages in the light of progression of the dust-related condition117. On each of these matters, the DDT Act contains provisions significantly different from the law that would govern the rights of the parties, were they to be determined by the Supreme Court of South Australia and not the Tribunal118. Potentially, the provisions of the DDT Act enlarge the rights of the first respondent and increase the obligations of the appellant. If the Tribunal's jurisdiction and powers were upheld in respect of the first respondent's action, there is legislation in South Australia that would arguably apply to facilitate the exercise of the Tribunal's jurisdiction in South Australia (in the matter of taking evidence and administering oaths or affirmations in South Australia119). The Tribunal (and before it, in New South Wales, the Workers' Compensation Commission and the Compensation Court of New South Wales) for a long time conducted hearings in States other than New South Wales in the exercise of the jurisdiction successively belonging to them120. It was a matter of 114 SASC Act, s 50 (governing appeals). See reasons of Gummow J at [65], [78]; reasons of Callinan J at [223], [225]. 115 Evidence Act 1929 (SA) ("SA Evidence Act"), s 67AB. See reasons of Callinan J 116 SASC Act, s 30B set out in the reasons of Callinan J at [223]. 117 DDT Act, s 11A. 118 See reasons of Gummow J at [78]-[79], [100]. 119 SA Evidence Act, s 67AB. See reasons of Callinan J at [195]. 120 Judges of the Workers' Compensation Commission, as originally created by the Workers' Compensation Act 1926 (NSW), regularly sat in other States and occasionally overseas to take evidence as on commission when convenient and necessary. There was no specific statutory provision authorising this course, (Footnote continues on next page) Kirby occasional pride that the successive New South Wales compensation courts, like the English judges in the reign of Henry II and thereafter, travelled to the litigants in the provinces instead of requiring them to travel to the court121. However, with rare exceptions, the New South Wales courts did so in cases concerned with claims brought by New South Wales residents, in respect of entitlements arising wholly within New South Wales, against employers resident in New South Wales, for acts and omissions that happened there. Interstate sittings were substantially designed to afford convenient opportunities to receive evidence from witnesses (mostly medical and expert) resident interstate. No question of coercion of reluctant witnesses typically arose in the foregoing arrangements. Nor was the New South Wales court purporting to compete with the jurisdiction of a court or tribunal of another State, still less the Supreme Court of such a State provided for in the Constitution122. This last feature of the present proceedings gives rise to constitutional questions. They arise against a background of the decisions of this Court on the principles of private international law. The Court's decisions appear to give comfort to the notion that, especially within Australia, courts may more readily exercise a national jurisdiction (even when not vested with federal jurisdiction) because service of process may sometimes be facilitated by SEPA. The substantive law will then be governed by established rules of national application. The orders resulting from such judicial proceedings will be given "[f]ull faith and credit ... throughout the Commonwealth" as required by the Constitution123. The "could" and "should" issues: The appellant, however, suggested that there were basic flaws in viewing the Tribunal as a court capable of deciding the first respondent's claim against it. According to the appellant, it could not do this for constitutional reasons, and should not do it having regard to the intended operation of the cross-vesting Acts. Thus are presented the essential issues in these proceedings, although there are other issues that will have to be mentioned. although the 1926 Act, s 38(b) provided that the Commission could "adjourn the proceedings to any time or place". The 1926 Act was repealed by the Workers' Compensation (Amendment) Act 1984 (NSW). The Compensation Court of New South Wales was thereby created. By s 21(1) of the Compensation Court Act 1984 (NSW), it was provided that "[t]he Court shall sit at such places and times as the Chief Judge may direct." 121 As, for example, in George (as tutor for Neil George) v Mechanical Advantage Group Pty Ltd (2002) 23 NSWCCR 303 at 314 [43] per Neilson CCJ. 122 Constitution, s 73(ii). See also s 106. 123 Constitution, s 118. Kirby Three points of common ground: Before listing the issues for decision, it is useful to refer to some matters of common ground. First, it is clear that the NSW Cross-vesting Act purports to exclude any right of appeal to the Court of Appeal from the orders of a judge of the Supreme Court exercising jurisdiction under that Act124. The appellant invoked the appellate jurisdiction of this Court pursuant to s 73(ii) of the Constitution. The first respondent did not contest this Court's jurisdiction. Although provision is made in the Constitution for the Parliament to prescribe exceptions to, and regulation of, this Court's appellate jurisdiction125, the reference is only to the Federal Parliament. A State Parliament is not competent, by its legislative prescription, to limit appeals to this Court from a Supreme Court in any way inconsistent with the Constitution. For the present purposes, Sully J constituted the Supreme Court. The only relevant federal "exception" or "regulation" governing this Court's jurisdiction is that requiring a grant of special leave126. A grant of special leave was made. Secondly, it was accepted by all parties that the substantive law applicable in determining the respective rights of the parties is the law of South Australia. As South Australia was the place where the negligence causing the damage allegedly occurred; where the contract was made and the breach thereof was said to have happened; and where the events arose giving rise to statutory duties, this conclusion was correct127. The applicable law of South Australia includes the law governing the limitation of actions128. Thirdly, it was accepted that Sully J had approached the application in the present case in conformity with his earlier decision in BHP Co Ltd v Zunic129. This Court was told that the present was the third unsuccessful attempt on the part of employers to have like proceedings transferred so that they would proceed not before the Tribunal but before the courts of the State said to have the most 124 NSW Cross-vesting Act, s 13; cf NEC Information Systems Australia Pty Ltd v Lockhart (1991) 22 NSWLR 518; Gould v Brown (1998) 193 CLR 346 at 496 125 Constitution, s 73. 126 Judiciary Act 1903 (Cth) ("Judiciary Act"), s 35. 127 Pfeiffer (2000) 203 CLR 503 at 515 [3], 540 [86]-[87], 542 [96], 562-563 [157]; cf 128 Pfeiffer (2000) 203 CLR 503 at 544 [100], 563 [161]. 129 (2001) 22 NSWCCR 92. Kirby substantial connection with the parties and the action130. Clearly enough, without the intervention of this Court or the passage of clarifying legislation, it is unlikely that a different approach would be adopted by the Supreme Court of New South Wales. The absence of a facility of intermediate appeal would encourage that consequence. The issues Four issues arise in this appeal: The constitutional validity issue: Whether, so far as the DDT Act purports to permit the Tribunal to exercise its jurisdiction and powers, in respect of a claim such as the present, is it constitutionally invalid? Is it invalid because it affords jurisdiction and power to the Tribunal, to the effective exclusion of the jurisdiction and powers of the Supreme Court of South Australia? To that extent, does it exceed the legislative power of the Parliament of New South Wales? Alternatively, is it invalid as conflicting with the implications of the Constitution as to the limits upon the jurisdiction and powers of the courts and tribunals of one State operating in relation to another State? The constitutional construction issue: Whether (whatever be the resolution of the challenge to the constitutional validity of provisions in the DDT Act) such provisions should be read down and the jurisdiction to transfer a proceeding under the Cross-Vesting Act exercised in conformity with applicable provisions of, and implications arising from, the federal Constitution? The cross-vesting issue: Whether error has been shown in the exercise by the Supreme Court of New South Wales of the jurisdiction and power conferred on that Court by the NSW Cross-vesting Act, in deciding the appellant's application for transfer of the proceedings to the Supreme Court of South Australia in the present case? The consequential orders issue: Whether, in the event that an error of the lastmentioned type is shown, the matter should be remitted to the Supreme Court of New South Wales to exercise its jurisdiction and powers in accordance with correct principles? Or whether, alternatively, this Court should "give such order as ought to have been given in the first instance"131 and, if so, in what terms? 130 See reasons of Callinan J at [190]. 131 Judiciary Act, s 37. Kirby The constitutional validity issue Logic versus prudence: Logic suggests that the appellant's "could" issue ought to be determined before its "should" issue. If, as the appellant asserts, the Tribunal had no power under the DDT Act, properly understood, to exercise its jurisdiction and powers in respect of the first respondent's proceedings, the other issues in this appeal do not arise. In effect, there is then no valid proceeding before the Tribunal. Before entering upon the exercise of jurisdiction and power, every court or tribunal must satisfy itself as to the existence of such jurisdiction and power. At least, it must do so where there is a contest or an apparent problem132. Even if, for the purpose of enlivening the jurisdiction and powers of the Supreme Court under the applicable cross-vesting Act, the "proceeding" commenced by the first respondent in the Tribunal enlivens that Act and founds an order of transfer in accordance with its terms133, an established lack of constitutional authority for such proceedings (or a clear demonstration that, were they to proceed, they would conflict with the requirements stated in, or implied from, the Constitution) would arguably be relevant to the exercise of the power afforded to the Supreme Court of New South Wales by s 5(2) of the NSW Cross- vesting Act. Indeed, the lack of constitutional foundation for the proceedings would, effectively, oblige a conclusion that it was "otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State …"134. Such a conclusion mandates (by use of the imperative "shall"135) the transfer of the relevant proceeding to "that other Supreme Court". Upon this view, to ignore the suggested constitutional deficit is to ignore a highly 132 Federated Engine-Drivers and Firemen's Association of Australasia v Broken Hill Proprietary Co Ltd (1911) 12 CLR 398 at 415; see also The Federated Amalgamated Government Railway and Tramway Service Association v The New South Wales Railway Traffic Employés Association (1906) 4 CLR 488 at 495; Cockle v Isaksen (1957) 99 CLR 155 at 161; Re Boulton; Ex parte Construction, Forestry, Mining and Engineering Union (1998) 73 ALJR 129 at 133 [21]. 133 By analogy with cases such as Calvin v Carr [1980] AC 574. See Spalvins (2000) 202 CLR 629 at 645-646 [32], 657 [69], 663 [86]; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at 125-126 [220]; Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 134 NSW Cross-vesting Act, s 5(2)(b)(iii). 135 NSW Cross-vesting Act, s 5(2). Kirby relevant, even critical, consideration upon which the procedures of the NSW Cross-vesting Act are founded. There is also a reason of convenience that suggests the desirability of first considering the constitutional issues in this case. They have been fully argued. Several law officers intervened. The proceeding has been conducted upon conditions as to costs that protect the first respondent. The constitutional validity questions involve important matters of legal principle. If the appeal is disposed of on grounds limited to the miscarriage of the discretion in the particular case, the constitutional issues may some day have to be reargued. Were this to happen, the assistance to the Court and the protective costs orders might not exist on the next occasion. The settled approach of this Court: However, whilst these are reasons for departing from the Court's normal rule of prudence that postpones decisions on constitutional questions that do not require determination to arrive at the Court's orders, it is this Court's established practice that it will normally postpone decisions on constitutional validity that do not need to be made to reach dispositive orders136. In effect, this approach conserves orders invalidating legislation under the Constitution to the occasions when they are truly essential. For a court to invalidate legislation is always a serious step. Behind the rule of restraint is the observance by the courts of respect for legislatures and the laws that they make. Courts thereby acknowledge that the legislatures of the nation will rarely enact laws deliberately that contradict the Constitution. Ordinarily, they will intend that the laws apply, and be administered, so as to remain within the bounds of constitutional validity. Conclusion: postpone the validity issue: I am of the view that orders can be reached in this appeal without ruling on the appellant's challenges to the validity of the contested provisions of the DDT Act137 in its purported application to a South Australian action138. Having come to a conclusion that the appeal can be decided on a footing other than constitutional invalidity, that is the course that I will take139. However, as will appear, it does not involve ignoring the relevance 136 See, for example, Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 473-474 [248]-[252]. See also Wong v Silkfield Pty Ltd (1999) 199 CLR 255 noted in Mobil (2002) 211 CLR 1 at 45 [88]. 137 Most especially the DDT Act, s 13(3) and (7), set out in the reasons of Gummow J 138 See also the DDT Act, s 11A. 139 See joint reasons at [29]. Kirby of the Constitution for the exercise of the jurisdiction and powers conferred on a Supreme Court by the NSW Cross-vesting Act140. The constitutional construction issue The interpretative presupposition: It is a fundamental presupposition of Australia's constitutional arrangements that all enacted law – federal, State and Territory – must comply with the requirements of the federal Constitution. Those requirements the implications concerning, the way in which the Constitution, and its institutions, are intended to operate. the express provisions governing, and include In some countries, constitutional law is set apart from other laws. Separate constitutional courts are created to give effect to constitutional law as a distinct body of doctrine141. In Australia, however, the Constitution is an integral part of a unified body of law. It is upheld by an integrated court system142. The common law must likewise conform to the Constitution143 as must every rule of equity144 and every act purportedly performed under law. Reading down legislation: Because everyone knows the foregoing propositions – and because they lie at the heart of the observance of the rule of law throughout the Commonwealth – they find expression in an approach to the task of legislative interpretation as it is practised in this country. They do so by virtue of the requirements of legislation, expressed in general terms, that oblige judges to read statutory language, so far as they can, to avoid constitutional invalidity145 and to uphold the legislation as operating within a constitutionally 140 cf Coleman v Power (2004) 78 ALJR 1166 at 1195 [158], 1199 [182]-[184] per Gummow and Hayne JJ, 1205 [219]-[221] of my own reasons; 209 ALR 182 at 221-222, 226-227, 235-236; Al-Kateb v Godwin (2004) 78 ALJR 1099 at 1136 [193] of my own reasons; 208 ALR 124 at 173-174. 141 As in the case of the Constitutional Court of South Africa, Germany and many European and other civil law countries. 142 Provided for in Ch III of the Constitution. See Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. 143 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 562-564. 144 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 279-280 [192]. 145 Acts Interpretation Act 1901 (Cth), s 15A; Interpretation Act 1987 (NSW), s 31. Kirby valid sphere146. To reinforce such general provisions, express statutory rules have been adopted providing that, where this is possible within the language chosen, courts should construe a law as operating with respect to matters of the constitutional competency of the enacting polity within the federation147. The foregoing statutory rules merely give effect to pre-existing principles of construction devised by the judges. As O'Connor J observed in this Court nearly a century ago, words in a statute may commonly, on their face, apply, in their terms, to the whole world. But courts understand that the Parliament which has enacted those words into law meant them, at least ordinarily, to apply only to the extent of the lawmaking power of that Parliament148. Legislatures did not mean, by enacting words of generality, to purport to make law for the whole world. Such an attempt would be a preposterous pretension; futile and incapable of enforcement. Such presumptions and absurdities will not be ascribed to the legislatures of Australia. In Australia, courts take positive law seriously. It is intended to be obeyed and, where it has not been, to be enforced. Australian legislatures are not given to enacting, as law, broad pronouncements of imperfect obligation or non- obligation. The legislation in issue in the present case was enacted, without exception, upon the hypothesis that it would be enforced and enforceable, certainly within Australia. This fact imports an obligation to read such legislation so that it conforms to the Constitution and its postulates. This means, so that it does not exceed the boundaries of State legislative power in a way that would result in the law of one State having an operation within (or in respect of matters occurring in) another State in a way inconsistent with the constitutional powers and institutions of that other State. Reading legislation, including State legislation, so as to comply with constitutional postulates is a regular feature of the performance by this Court of its constitutional functions149. It is the approach that should be taken in the 146 Interpretation Act 1987 (NSW), s 31. 147 Acts Interpretation Act 1901 (Cth), s 21; Interpretation Act 1987 (NSW), s 12. See O'Connor v Healey (1967) 69 SR (NSW) 111 at 114 per Jacobs JA. 148 Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 363. See also Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 74, cited by Gummow J at [91] and Ex parte Iskra (1962) 80 WN (NSW) 923 at 149 A recent instance appears in Coleman (2004) 78 ALJR 1166 at 1173 [26], 1184- [320]-[321]; 209 ALR 182 at 191, 207, 228, 230, 237-238, 256, 264-265. Kirby present case. It does not involve invalidating provisions of the DDT Act. It simply involves confining the operation of that Act in a way that avoids the risk of constitutional invalidity. It is assumed that that was the purpose of the New South Wales Parliament in enacting the DDT Act. Appropriate territorial limitations: It is inherent in a federal constitutional text that the lawmaking powers of the several States exist, and will be exercised, in conformity with the lawmaking powers of other States. If this were not so, individuals within Australia would be subjected repeatedly to conflicting legal obligations derived from the operation of incompatible State laws apparently having legal force and effect within Australia. Whilst the federal Constitution provides a specific formula for resolving a conflict between federal and State laws that are inconsistent150, there is no equivalent express formula to resolve suggested inconsistencies as between competing State laws. However, the Constitution contemplates that "the limits inter se of the Constitutional powers of any two or more States" will sometimes arise for judicial determination151. Nowadays, the responsibility to chart those "limits" belongs, ultimately, to this Court. Having no express formula, this Court must derive the applicable criteria from an implication necessarily found in the Constitution. The task of expressing this implication is made more difficult by the acceptance, since the establishment of the Commonwealth, of the large powers of the Parliaments of the States of Australia to enact laws with extra-territorial operation152. However, it is self-evident that the Constitution contains implied limits on the lawmaking powers of the Parliament of one State to enact laws having significant application to the rights, duties and interests of residents of other States in respect of matters that naturally fall within the lawmaking competence of those other States. The implication derives from necessity. Were it otherwise, there would be confusion and uncertainty about legal rights, duties and interests. In recognition of this fact, this Court said in Union Steamship Co of Australia Pty Ltd v King153: 150 Constitution, s 109. 151 Constitution, s 74. 152 Bonser v La Macchia (1969) 122 CLR 177 at 189, 224-225; R v Bull (1974) 131 CLR 203 at 263, 270-271, 280-282; New South Wales v The Commonwealth (1975) 135 CLR 337 at 468-469, 494-495; Pearce v Florenca (1976) 135 CLR 507 at 514- 520, 522. These cases follow the decision of the Privy Council in Croft v Dunphy [1933] AC 156 at 163, altering the previous Imperial rule. See also Australia Act 1986 (Cth), s 2(1) and Australia Act 1986 (UK), s 2(1). 153 (1988) 166 CLR 1 at 14 (citations omitted). Kirby in conformity with limitation the "[A]s each State Parliament in the Australian federation has power to enact laws for its State, it is appropriate to maintain the need for some the grant, territorial notwithstanding constitutional rearrangements for Australia made in 1986 that State Parliaments have power to enact laws having an extraterritorial operation ... That new dispensation is, of course, subject to the provisions of the Constitution ... and cannot affect territorial limitations of State legislative powers inter se which are expressed or implied in the Constitution." terms of the recognition recent the State laws may be construed as liberally as judges decide154. Those judges may reserve the intervention of the courts to cases of real, and not merely theoretical, conflict of laws155. Courts may withhold invalidation to clear cases. Such cases will include impermissible attempts to afford extra-territorial operation of a State law, involving an unavoidable clash between the intended scope of the respective laws of different States or a clearly demonstrated instance of operational inconsistency156. However, ultimately a point will be reached where the conflict between the laws of different States has to be resolved. When that happens, the guiding star will be found principally in the "territorial limitation" marked out by the geographical boundaries of the several States on the map of Australia. Short of the resolution of an unavoidable conflict of this kind, this Court will not pronounce the invalidity of a State's law. If the law can be construed (read down) so as to avoid such a conflict, the necessity of constitutional resolution of the apparent inconsistency disappears157. The need to read down the DDT Act: In my view, there is a potential conflict between the DDT Act in its application to the first respondent's action against the appellant and other respondents. It appears in the apparent conflict between the laws of South Australia and New South Wales applicable to the causes of action for which the first respondent has sued. The potential inconsistencies are partly operational and partly inconsistencies of scope or field of operation. The choice of law rule in Australia 154 Pearce (1976) 135 CLR 507 at 518. 155 See Mobil (2002) 211 CLR 1 at 64 [141]; Port MacDonnell Professional Fishermen's Assn Inc v South Australia (1989) 168 CLR 340 at 374. 156 Mobil (2002) 211 CLR 1 at 61 [132], 62 [134]. 157 See Coleman (2004) 78 ALJR 1166 at 1199 [182]-[184] per Gummow and Hayne JJ, 1207 [227] of my own reasons; 209 ALR 182 at 226-227, 238; Al-Kateb (2004) 78 ALJR 1099 at 1136 [193] of my own reasons; 208 ALR 124 at Kirby allows the possibility that a party, by commencing in one State jurisdiction, may acquire procedural benefits that are to be found in that State's courts and not elsewhere158. But it does not envisage that, by choosing a court in one State jurisdiction over the court in another jurisdiction having the preponderance of "connecting factors" with the case, a party will be able unilaterally to alter the substantive law applicable to the case to its own advantage. Allowing that the "dividing line is sometimes doubtful or even artificial … between substantive law and procedural law"159, it nonetheless exists160. In cases of dispute, courts must find it. In the present case, I would not doubt that the substantial innovation introduced in the DDT Act by the Parliament of New South Wales for the benefit of claimants with established dust diseases (such as s 11A of the DDT Act) amounts to an alteration of the substantive law. It applies a different rule in relation to the entitlement to, and calculation of, such a claimant's damages. Damage is the gist of the first respondent's cause of action in negligence. As Callinan J has demonstrated in his reasons, the statutory regimes applicable for the calculation, and award, of damages against parties (such as the appellant) if they were found liable would be significantly different in the Supreme Court of South Australia when compared to the Tribunal161. As Callinan J has also shown, there are provisions of the DDT Act that expressly enlarge the rights of a claimant (or the claimant's family in the case of death) against the party found liable162. These are not matters of procedure that simply facilitate the bringing of claims163. They are not just adjectival rules that provide for quicker or better hearings in more efficient and appropriate ways164. 158 Pfeiffer (2000) 203 CLR 503 at 542-544 [97]-[99], 563 [160]-[161]. 159 McKain v R W Miller & Co (SA) Pty Ltd (1991) 174 CLR 1 at 40, affirmed in the joint reasons in Pfeiffer (2000) 203 CLR 503 at 542-543 [97]. 160 Pfeiffer (2000) 203 CLR 503 at 553-554 [131]. 161 See reasons of Callinan J at [225]-[226] by reference to comparisons between the DDT Act, s 11A and the SASC Act, s 30B. 162 See reasons of Callinan J at [231]-[234] by reference to the provisions of the DDT Act, ss 12A, 12B, 12C and 12D. 163 See Mobil (2002) 211 CLR 1 at 47-48 [95]-[97], a case concerned with "group proceedings". 164 As, arguably, s 13(5) of the DDT Act may be; see reasons of Callinan J at [234] and even possibly the appellate provisions in the DDT Act, s 32 when compared to the SASC Act, s 50. See reasons of Callinan J at [246]-[247]. Kirby These are significant alterations to the substantive rights and obligations of parties, depending upon the court or tribunal determining the causes of action upon which the first respondent has sued. Such alterations in substantive rights suggest the need to read down the generality of the DDT Act where the result of its application would otherwise be to oust the jurisdiction of the Supreme Court of South Australia normally applicable to the case165. The reading down, to ensure compliance with the Constitution (and to avoid the risk of invalidity), is not difficult to perform. It involves no more than reading s 11 of the DDT Act that purports to make the jurisdiction of the Tribunal exclusive of "any other court or tribunal" as applicable only to other courts or tribunals of New South Wales. It involves the reading of other provisions of the DDT Act in a similar, orthodox manner. Even where there is no operational inconsistency, it may still be clear, from a comparison of the intended scope or field of operation of competing State laws, that for a court in one State (such as the Tribunal) to exercise its jurisdiction and power in a particular case having stronger connecting factors with another State would involve constitutional inconsistency. In a sense, inconsistency of this kind derives from the specialised nature of the Tribunal, its highly specific powers and the potential that is presented, unless such powers are accurately deployed, of intruding upon the jurisdiction of the courts, specifically the Supreme Courts, of other States and Territories of the Commonwealth contrary to the postulate of the Constitution. Unless the courts and tribunals of the several States and Territories of Australia substantially confine the exercise of their respective jurisdictions and powers with close attention to the territorial assumptions of the Constitution, the result would be confusion and uncertainty in the operation of law within the Commonwealth. invasion by "foreign authorities"166, albeit of other Australian jurisdictions, of judicial responsibilities that the Constitution contemplates and provides will be discharged by the courts of another State or Territory, notably in this case by a State Supreme Court. involve an unseemly It would Thus, it is one thing for the Tribunal, established by the Parliament of New South Wales to exercise its powers with respect to cases having the normal connections with New South Wales. Doing so, it may conduct proceedings 165 Because of the purported effect of the DDT Act, s 11 excluding the jurisdiction of any other court or tribunal. See also the DDT Act, s 10; cf reasons of Gummow J 166 The words are those used in the SA Evidence Act, s 67AB(1), heading. See reasons of Callinan J at [195]. Kirby interstate, and elsewhere, as on commission, to gather evidence for such cases as the predecessors of the Tribunal long did. Doing this is entirely consistent with the scheme of the Constitution. However, it would be quite another thing for the Tribunal to embark upon a course, in competition with the courts of competent jurisdiction of other States or Territories so as to become, in effect, a national court of dust diseases, although created by the legislature of one State only, involving only judges appointed by the executive of that State and funded by the taxpayers of that State. Reading down the DDT Act in that way avoids the risk of constitutional invalidation. Were the invocation of the Tribunal's jurisdiction successful in the present case, it would, in my view, raise issues of constitutional invalidity. It is always the duty of judges and officials in Australia to perform their functions conformably with the Constitution. Constitutional performance of functions: In Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd167 I expressed my opinion that Australian courts, asked to provide relief in accordance with powers expressed in general to do so conformably with constitutional requirements168. terms, are obliged In the present case, the Tribunal had jurisdiction over the first respondent's action, in the sense of the power to make orders binding on the appellant and other respondents, because they were served with process and present in the jurisdiction and thus before the Tribunal. However, in exercising that power, the Tribunal was required to do so in conformity with the DDT Act, read as a law made by the New South Wales Parliament complying with the requirements of the federal and State Constitutions. Where an application is made to the Tribunal to refuse the exercise of jurisdiction over an action that substantially relates to parties and controversies with respect to another State or Territory, the test to be applied, on the present authority of this Court, is whether any such exercise of jurisdiction would involve the Tribunal becoming a "clearly inappropriate forum"169. I disagree with this test. I have said so many times both in this Court170 and earlier171. 167 (2001) 208 CLR 199. 168 (2001) 208 CLR 199 at 284-285 [206]-[210]. 169 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197. 170 Zhang (2002) 210 CLR 491 at 524-525 [94]-[96]. 171 Goliath Portland Cement Co Ltd v Bengtell (1994) 33 NSWLR 414 at 436. Kirby However, it is plainly the present legal requirement. Courts, including the Tribunal, are bound to conform to it. It would obviously be "clearly inappropriate" for the Tribunal to exercise its jurisdiction and powers in a case where doing so would involve reading the DDT Act, and applying it to the parties, in a way inconsistent with the postulates of the federal Constitution. These postulates include the assumption that the courts and tribunals of the several States and Territories will not assert or exercise their jurisdiction and powers in respect of other States and Territories in ways incompatible with the jurisdictions and powers of such courts, most obviously the Supreme Courts of the States that enjoy express constitutional status under the federal Constitution. There is a distinction in law between the resolution of inconvenient forum decisions (in a case such as the present by the Tribunal itself) and decisions made under the cross-vesting Acts (where an application is advanced to one Supreme Court for cross-vesting or transfer to another Supreme Court)172. The distinction between the procedures was noticed soon after the cross-vesting legislation came into force173. It is relevant to the present case. This appeal does not involve a review of any decision of the Tribunal on an inappropriate forum ruling. Instead, it involves a challenge to a decision of the Supreme Court of New South Wales in the exercise of its powers under the NSW Cross-vesting Act. By law, those powers are to be exercised by reference to a stated criterion (whether there is a "more appropriate forum"). That criterion is more sensitive to the constitutional postulate which I prefer than the criterion presently applicable to convenient forum applications in Australia ("clearly inappropriate forum"). In exercising its powers under the applicable cross- vesting Act, the Supreme Court should do so consistently with the constitutional postulate that I have described. I view the powers conferred on Supreme Courts by the cross-vesting legislation as a means, in effect, of carrying into operation the assumption of the Constitution that the courts of the several States and Territories will, in relation to each other, exercise their jurisdiction and powers in a way that fulfils, and does not undermine, the implication of the Constitution that the national judiciary 172 Under the NSW Cross-vesting Act, s 8 (removal from the Tribunal into the Supreme Court) and s 5(2)(b)(iii) (transfer to the Supreme Court of South Australia). 173 Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 730; Goliath (1994) 33 NSWLR 414 at 438. Kirby is integrated and unified under this Court, applying to every controversy a single, and ultimately ascertainable, law. The cross-vesting issue The applicable criteria: Whatever may be the differences of principle and policy that inform the respective approaches of this Court on the inappropriate forum issue (as stated in Voth v Manildra Flour Mills Pty Ltd174) and the principle applied by most other common law courts (as formulated by Lord Goff of Chieveley in Spiliada Maritime Corporation v Cansulex Ltd175), the clear purpose of the residual criterion expressed by the legislatures of Australia in the common form of the cross-vesting Acts has been, for this purpose, to follow the approach of Lord Goff. In Bankinvest AG v Seabrook, Rogers AJA said of s 5(2)(b)(iii) of the NSW Cross-vesting Act176: "What then are the 'interests of justice' which the legislature considers should be taken into account in this process? To my mind, the relevant matters and considerations are essentially the same as were specified by the House of Lords in the Spiliada. These considerations were criticised and held to be inapplicable [by the High Court] in Oceanic[177] on the basis that they are too uncertain. Yet, in my opinion, they have already, in effect, been made applicable in Australian courts in relation to transfers between Supreme Courts by the various Australian Parliaments. Absent the presence of related proceedings or inter-State law, the inquiry directed by consideration of the 'interests of justice' encompass [sic] all the matters that determine which is the more appropriate forum that I have already discussed … [T]he principle of forum non conveniens [does not continue] to exist concurrently with the legislation. The former has been clearly subsumed by s 5(2)(b)(iii)." The foregoing approach has been repeatedly upheld by the Court of Appeal of New South Wales, both in earlier days178 and since179. It is also the 174 (1990) 171 CLR 538. 175 [1987] AC 460 at 476-478, 482-484. The speech of Lord Goff was adopted unanimously by their Lordships. 176 (1988) 14 NSWLR 711 at 730, with the approval of Street CJ and of myself. 177 (1988) 165 CLR 197. 178 Goliath (1994) 33 NSWLR 414 at 438. Kirby approach adopted in other Australian jurisdictions180. It is highly desirable that there should be consistency in the application of this principle throughout the Commonwealth. Especially is this so because the principle reflects, in a general way, the broad constitutional hypothesis that I have explained. In Spiliada181 Lord Goff endorsed a formula earlier used by Lord Keith of Kinkel in the resolution of the problems arising in The Abidin Daver182. This was to the effect that "more appropriate" forum was the "natural forum" for the trial of the action. This was described as being "that with which the action had the most real and substantial connection". In judging the action by reference to such a criterion, Lord Goff said that courts would first look to the "connecting factors" that point in the direction of the local or some other forum183: "[T]hese will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction … and the places where the parties respectively reside or carry on business." Once it is clear that some "more appropriate" forum exists, "the plaintiff will have to take that forum as he finds it, even if it is in certain respects less advantageous to him than the [chosen] forum"184. So too for the defendant. An exception is allowed where it is clear that "substantial justice" cannot be done to the plaintiff in what is otherwise the "appropriate" forum185. However, whilst this may be a consideration that it is appropriate to take into account in inconvenient forum applications which seek orders that the proceedings be continued in another country186, they scarcely apply to courts within the Australian Commonwealth. On the contrary, the suggestion that the first respondent could not obtain "substantial justice" in the relevant court of South 179 James Hardie & Coy Pty Ltd v Barry (2000) 50 NSWLR 357 at 361 [4], 377-378 180 Schmidt v Won [1998] 3 VR 435; Dawson v Baker (1994) 120 ACTR 11. 181 [1987] AC 460 at 477-478. 182 [1984] AC 398 at 415. 183 [1987] AC 460 at 478. 184 Connelly v RTZ Corporation Plc [1998] AC 854 at 872. 185 Connelly [1998] AC 854 at 873. 186 Zhang (2002) 210 CLR 491 at 503-504 [24]-[26]; cf at 548 [162]. Kirby Australia (the Supreme Court of that State) is not only contrary to common experience. It is inconsistent with the hypothesis of the Constitution. I therefore agree with the remarks of Spigelman CJ in James Hardie & Coy Pty Ltd v Barry187: "To determine which court is, in the interests of justice, the appropriate court, it is necessary to inquire, in the case of a tort, as to what is the place of the tort. Indeed, in the context of administering the co- operative national scheme in the Jurisdiction of Courts (Cross-vesting) Act, where the place of the tort and the residence of the parties coincide, this will generally be determinative of the issue of 'appropriate court', although other factors may need to be assessed in the process of determining where the interests of justice lie." Where, as here, the first respondent's claim is also framed in terms of breach of contract and of statutory duties, no different result would flow where the allegation is that the contract (of employment) was made and breached in South Australia and that the relevant statutory duties that were breached were those imposed on South Australian employers by the Parliament of that State188. The postulate of equal justice: Against the background of the foregoing analysis, the error of Sully J in exercising the powers of the Supreme Court under the Cross-vesting Act can be seen in sharp relief. It is, with respect, the same error as informed his Honour's earlier decision in Zunic189. It appears most clearly in his statement that the claimant's "own choice of forum ought not lightly to be overridden."190 I consider that this element unduly weighed the scales against the appellant's application before the Supreme Court. By hypothesis, where an application for transfer is made under a cross-vesting Act, one party has validly invoked the jurisdiction of a particular State court. In the disposition of the application, that fact must therefore be neutral. It cannot predominate in the 187 (2000) 50 NSWLR 357 at 361 [7]; see also at 386 [126] per Priestley JA; James Hardie and Co Pty Ltd v Hall as Administrator of Estate of Putt (1998) 43 NSWLR 554 at 576-577; James Hardie Industries Pty Ltd v Grigor (1998) 45 NSWLR 20 at 188 Industrial Code 1920 (SA); Industrial Code 1967 (SA); Industrial Safety Health and Welfare Act 1972 (SA). 189 (2001) 22 NSWCCR 92. 190 Zunic (2001) 22 NSWCCR 92 at 98 [18]. Kirby evaluation of the "connecting factors" to be given weight on both sides of the ledger in ascertaining which of the competing fora "is more appropriate" having regard to "the interests of justice"191. That point remains to be decided. Whether the case falls within the more particular provisions of s 5(2)(b)(ii) of the NSW Cross-vesting Act or the more general provisions of s 5(2)(b)(iii) of that Act, in each instance the competition of potential fora is a given. In each case, "the interests of justice" must be taken into account, as a general consideration. In each case, if the criteria are established, the court in which the proceeding is pending is required ("shall") to transfer it to the other Supreme Court. The "interests of justice" necessarily include justice to all parties. It would be incompatible with our notions of justice to apply the NSW Cross-vesting Act in a way that favoured the rights of one party to litigation over others, rewarding the party selecting the initial venue with significant substantive (as distinct from purely procedural) advantages for doing so192. The judge's error in this case: When these considerations inherent in the criteria stated in the NSW Cross-vesting Act are so understood, the assignment by Sully J of the weight that he gave to the regular invocation of the jurisdiction of the Tribunal by the first respondent constituted an error in a consideration that informed his exercise of the Supreme Court's powers. It is unnecessary to decide whether there were other errors, for this one is sufficient to vitiate the resulting decision. Normally, the "interests of justice" of all parties within Australia will require the transfer of proceedings to be determined by the Supreme Court of another State or of a Territory where that Court, rather than the court of the forum selected by the plaintiff, is the "natural forum" being that "with which the action has the most real and substantial connection". Usually that will be the place of the wrong, or of the contract or of the operation of the statutes sued upon and particularly where that is also the place of the residence of the parties193. 191 NSW Cross-vesting Act, s 5(2)(b)(ii)(C). 192 The International Covenant on Civil and Political Rights, done at New York on 19 December 1966, [1980] Australian Treaty Series No 23 provides in Art 14.1: "All persons shall be equal before the courts and tribunals." Australia is a party to the Covenant and to the First Optional Protocol referred to in Art 41.1. The influence of such provisions on the statements of Australian law has been acknowledged by this Court: Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42. 193 For an overview of relevant factors to consider in such proceedings, see Miller and Nicholls, "Cross-Vesting Civil Proceedings – A Practical Analysis of the Interests of Justice in the Determination of Cross-Vesting Applications", (2004) 30 Monash University Law Review 95. Kirby Although the language of the NSW Cross-vesting Act is stated in the broadest terms, and should not be glossed by court decisions, read to achieve its purpose as one harmonious with the federal Constitution the foregoing constitutes a practical rule of thumb. The fact that applying it may deny a claimant substantive benefits available under the law of another Australian State or Territory is not a reason to withhold from the parties the neutral application of the policy to which the NSW Cross-vesting Act gives effect. It has been the history of federation in Australia that innovations in substantive rights and obligations (as well as in procedural arrangements) have been enacted in one State advantaging for a time only those of that State who could lawfully invoke them. Often, as experience is accumulated, other jurisdictions in the Commonwealth have copied the innovations. Indeed, this is often advanced as one of the principal advantages of the federal system of government194. I recognise that the decision of Sully J was not, as such, made in the exercise of a common law discretion. It involved the exercise of a power afforded to the Supreme Court by statute. By the same token, that power involved the judicial evaluation of a number of factors. It required an ultimate judicial decision framed in terms of criteria expressed in very general language ("the interests of justice", "more appropriate"). It is inherent in such general language that cases will arise where there is room for difference of judicial opinion. That fact would restrain a court such as this from disturbing the evaluation by the primary judge where the "connecting factors" were otherwise finely balanced. Had this been such a case, I would not have been persuaded to interfere in the determination made by Sully J. Certainly, any suggested verbal infelicity or mention of some remote irrelevancy would not have been sufficient to warrant intervention. Conclusion: the exercise miscarried: It will be apparent that in my view the approach taken by his Honour is inconsistent with the language and purpose of the provisions for transfer of proceedings between State courts as stated in the NSW Cross-vesting Act. Especially is this so when that Act is understood, and the powers conferred by it are exercised, conformably with the implication in the federal Constitution governing the manner in which State and Territory courts will exercise their jurisdiction and powers with proper regard for the jurisdiction and powers of the courts of other States and Territories. The consequential orders issue Because error has been shown in the exercise by Sully J, as the Supreme Court of New South Wales, of the jurisdiction and power conferred on that Court by the NSW Cross-vesting Act, this Court should set aside that Court's orders. 194 Craven, Conversations with the Constitution, (2004) at 74. Kirby Normally, such an order would result in the return of the proceeding to the Supreme Court of New South Wales so that the law would be applied by that Court conformably with the opinion of this Court. In that way this Court would uphold the scheme of the NSW Cross-vesting Act which reposes the powers for which it provides in the relevant Supreme Court. However, in the present case, I agree with Gummow J and with Callinan J that it is appropriate for this Court to exercise the jurisdiction that has miscarried below. Not least amongst the considerations suggesting that conclusion is the age and illness of the first respondent and the desirability that his proceeding should be advanced without further delay of a technical kind. It should be advanced in the Supreme Court of South Australia. That is what the "interests of justice" to all parties requires. It is the "more appropriate" court in the circumstances. Orders I agree in the orders proposed by Gummow J. Hayne 177 HAYNE J. I agree with Gummow J that, for the reasons he gives, the appeal should be allowed, and orders made in the terms proposed. I also agree that it is not necessary, and it is therefore not appropriate, to decide the two constitutional issues which the appellant's arguments raised. For my own part, however, I wish to make plain that whether State legislation can validly authorise a State court to conduct its proceedings outside the geographical territory of the State remains an open question. Its resolution may depend upon examining the validity and relevance of two related propositions. The first is whether a court's proceedings are sufficiently described by reference only to the taking of evidence, hearing of argument, and adjudicating, or whether account must be taken of what lies behind those steps. A court exercising judicial power asserts the power of the polity. As Sir John Salmond said, more than 80 years ago, the administration of justice is "the maintenance of right within a political community by means of the physical force of the state" (emphasis added)195. That this element of force has largely "become merely latent" because "it is now for the most part sufficient for the state to declare the rights and duties of its subjects, without going beyond declaration to enforcement"196 may not mean that the relevant question is only whether steps associated with the exercise of judicial power are permitted (or not forbidden) by the law of the place where they are done. The second proposition depends upon what territorial limitations of State legislative powers inter se are expressed or implied in the Constitution197. State and federal jurisdiction are distinct198. The several integers of the federation, whose "continued existence as independent entities"199 is a constitutional premise, are polities each of which has its distinct judicial arm of government. Whether a State legislature may validly authorise the exercise of that form of coercive power within the boundaries of another State may require consideration of what implications must be drawn from the Constitution's adopting that structure for the judicial system of Australia. That question is different from asking whether the enacting State may make a law which is to operate as law in a place beyond its territorial boundaries, as distinct from making a law which has 195 Salmond, Jurisprudence, 7th ed (1924) at 116. 196 Salmond, Jurisprudence, 7th ed (1924) at 112. 197 Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 14. 198 Sir Owen Dixon, "Sources of Legal Authority", Jesting Pilate, 2nd ed (1997) 198 199 Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 82 per Hayne effect within its territorial boundaries with respect to things done in a place outside those boundaries200. These questions need not be answered in this matter. 200 Australia Act 1986 (Cth), s 2(1); Croft v Dunphy [1933] AC 156; Trustees Executors & Agency Co Ltd v Federal Commissioner of Taxation (1933) 49 CLR 220 at 232-236 per Evatt J; Pearce v Florenca (1976) 135 CLR 507 at 516-518 per Gibbs J; Union Steamship (1988) 166 CLR 1 at 14; Port MacDonnell Professional Fishermen's Association Inc v South Australia (1989) 168 CLR 340; Salmond, "The Limitations of Colonial Legislative Power", (1917) 33 Law Quarterly Review Callinan CALLINAN J. Several questions were argued in this appeal. An affirmative answer to the first of them would be determinative of it: whether the primary judge erred in rejecting an application by the appellant for the cross-vesting of a proceeding instituted in the New South Wales Dust Diseases Tribunal ("the Tribunal") to the Supreme Court of South Australia. Facts The first respondent who lives in South Australia, sued the appellant, the second to fourth respondents ("the Wallaby companies") and the fifth respondent in the Dust Diseases Tribunal of New South Wales. Two of those respondents were able to be, and were regularly served in New South Wales. The respondents other than the first respondent have notified the Court that they will abide the order of this Court on appeal. The first respondent claims to have contracted an asbestos-related disease as a result of exposure to asbestos in the course of his employment at the appellant's shipyard at Whyalla in South Australia during the years 1957 to 1964 and 1968 to 1977. Asbestos was used at the shipyard for insulation during those periods. The products used and containing the asbestos were supplied to the appellant in South Australia, allegedly by the Wallaby companies and the fifth respondent. The first respondent framed his claim against the appellant in tort in negligence, breach of contract, and breach of statutory duties. He sued the other respondents in negligence. The factual basis of his claim was essentially the same in each instance: of negligence by each of the other respondents in the manufacture and supply of various materials, containing and exposing him to asbestos, and consequentially asbestos-related personal injury. He sought a further order, to preserve his right to make an additional claim for damages, should he develop any of the conditions of asbestos-induced lung cancer, asbestos-induced carcinoma of any other organ, pleural mesothelioma, and peritoneal mesothelioma. The particular illness with which the first respondent claims to be afflicted is asbestosis, or benign asbestos-related pleural disease. Neither of these is life-threatening. It is accepted by all of the parties that, subject to proof by the first respondent of exposure and diagnosis, liability will not be in issue. The issues to be litigated will be damages and the application or otherwise of limitation periods. The lay witnesses on these issues, including the first respondent, and his medical witnesses all resided in South Australia. All of the parties seem to have accepted that the substantive law, certainly so far as questions of tortious liability and limitations are concerned, to be applied, is that of South Australia. It could hardly be otherwise, on the facts of the case and the necessary application to them of John Pfeiffer Pty Ltd v Rogerson201. The procedural law and practice to 201 (2000) 203 CLR 503. Callinan apply were presumably to be the procedural law and practice of the Tribunal under the Act by which it was established. As will appear however, more attention should have been paid to the difficulties of identifying, and distinguishing between, the procedural law to govern the Tribunal's processes, and the substantive law generally of South Australia, and of applying the latter to proceedings in the Tribunal. The Tribunal was established by the Dust Diseases Tribunal Act 1989 (NSW) ("the Tribunal Act") as a specialist New South Wales tribunal for determining claims for damages for dust-related diseases and ancillary matters. One such disease may be caused by exposure to asbestos. It is not controverted that in recent times plaintiffs from other States have instituted proceedings in the Tribunal rather than in the courts of the States in which they reside, or in which they have contracted dust-related diseases. A firm of solicitors which acts for plaintiffs in these matters has established branch offices in Adelaide and Brisbane to undertake some of this work. To enable such cases to be heard in the States of claimants' residence the Tribunal has established interstate "circuits". The medical report upon which the first respondent relies was obtained in February 2002. Proceedings were not instituted in the Tribunal until 9 August. The application for cross-vesting was made promptly on 16 August by the appellant. There is apparently no particular need for urgency in this case however. The Court was informed that if the case were to remain in the Tribunal, a judge of the Tribunal and the parties' lawyers would travel to Adelaide as part of the "South Australian circuit", to sit in a courtroom made available by the South Australian Supreme Court, to take evidence from South Australian witnesses, and to apply the substantive law of South Australia to determine the case. The constitutional issues During the hearing of the appeal, for the first time the possibility of a constitutional argument in favour of the appellant's position was raised. The argument was put in several ways, but in substance it was that the Tribunal Act and the Tribunal's practice of hearing cases under it in States other than New South Wales were an impermissible intrusion upon the legitimate governmental activities of the States, and involved the likelihood of breaches of the laws relating to the legal coercion of witnesses and the administration of oaths, and further exposed the judges of the tribunal, witnesses and parties to a risk of defamation suits without defences of absolute privilege usually available to such participants. Callinan The Court was informed that this case is the third in a series of unsuccessful attempts to have proceedings instituted in the Tribunal by interstate plaintiffs transferred to the courts of their home States under s 8 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) ("the Cross-vesting Act"). There is, the first respondent submits, no "governmental right" of South Australia or indeed any State, to establish courts necessary for the administration of justice within a State: and, even if there were, it could not be an exclusive right. Equally, nothing in the Constitution proscribes the administration of justice within a state by a court of another state. For the latter proposition the first respondent cites Union Steamship Co of Australia Pty Ltd v King202; Port MacDonnell Professional Fishermen's Assn Inc v South Australia203 and Mobil Oil Australia Pty Ltd v State of Victoria204. Each of these cases was concerned with the validity of State legislation intended to have extraterritorial operation. They establish that the concept of relevance to such legislation is not to be narrowly or illiberally confined, although why a question of extraterritoriality should be approached with any particular predisposition is not explained. Nor is it explained why an orthodox approach, of giving the words of the relevant, Constitutional statute, their ordinary and natural meaning, should not have been adopted. None of the cases directly addressed the question which was raised here, whether a State court may sit as a State court (and not as a commission) in another State applying its own, in this case the Tribunal's, peculiar rules and practices. Nor was it necessary in any of these cases to explore the special nature of courts as arms of, and fundamental to, the government of a State. A polity without power to establish its own courts, to confer jurisdiction, including exclusive jurisdiction with respect to matters occurring within the boundaries of the polity, and making available its executive arm for the enforcement of orders of the courts of the polity, would be a very weak polity, indeed, a polity far weaker than the colonies at federation, and the States as envisaged by the constitution. In order to be effective as a court, wherever it is sitting, the Tribunal has to be able to summon witnesses, administer oaths and punish, if need be, for 202 (1988) 166 CLR 1 at 14. 203 (1989) 168 CLR 340 at 372. 204 (2002) 211 CLR 1 at 22-23 [9] per Gleeson CJ, 33-34 [47] per Gaudron, Gummow and Hayne JJ, 58-59 [123] per Kirby J. Callinan contempt. Each of these may require at some stage the assistance and support of the executive arm of government205. Could the Tribunal sitting in South Australia issue a warrant for the arrest of a contemnor and then detain him or her in custody until brought before the Tribunal? If so, how would the arrest be carried out and where would the contemnor be detained? Could the NSW Tribunal punish a contemnor with a sentence of imprisonment, and if so in the prison of which State? The first respondent provided no satisfactory answer to these questions. Nor was a sufficient answer given to the question of the availability or otherwise of immunity from suit for defamation of a judge of the Tribunal sitting in South Australia, and the witnesses, parties and counsel appearing before that judge. The first respondent submits that the Tribunal is a "foreign authority" within the meaning of s 67AB (1) of the Evidence Act 1929 (SA): "67AB Taking of evidence in this State by foreign authorities Subject to subsection (2) of this section, a foreign authority may – take evidence; and administer an oath or affirmation to any witness for the purpose of taking evidence, in this State." Reliance is also placed on s 13 of the Tribunal Act which provides: "13 Proceedings before the Tribunal If the President is of the opinion that the balance of cost and convenience in the proceedings so requires, the President may direct that the hearing of the proceedings, or any part of the proceedings, take place outside New South Wales." It was submitted that the Tribunal may take evidence and administer oaths pursuant to s 67AB of the Evidence Act as a "foreign authority" for the purposes of that section, because it is a court established under the law of New South 205 See ss 13(7) and 26 of the Dust Diseases Tribunal Act 1989 (NSW) and r 2 of the Dust Diseases Tribunal Rules (NSW) and Pt 55 of the Supreme Court Rules (NSW). Callinan Wales. That State it may be observed, has enacted substantially similar legislation, the Oaths Act 1900 (NSW), s 26B, as have other States, for example, the Evidence Act 1958 (Vic), s 111A, and the Evidence Act 1977 (Q), s 24. The submission does not assist the first respondent. The legislation if anything, to which the first respondent refers, points up the difference between a court and a foreign authority. No matter how a court may be regarded in the jurisdiction in which it was established, its role is different when it sits elsewhere. In the latter it sits by grace and favour, but as relevantly different from, and lacking in the trappings and apparatus of a court except to the extent authorized by the host polity. The appellant submitted that federalism is concerned with the allocation of legislative power, and that it is a necessary implication of the Federal Constitution that no polity can legislate in a way that weakens the legislative authority of another polity of a federation206. The appellant sought to adapt the words of Dixon J in In Re Foreman & Sons Pty Ltd; Uther v Federal Commissioner of Taxation, "in a [federation] you do not expect to find either [state] government legislating for the other.207" Rather, it was put, it is implied in the Commonwealth Constitution that the powers of government are exercised by different governments in different localities208. It was argued that a New South Wales law that weakens the extent to which South Australia can provide for the good government of South Australia starkly interferes with South Australia's legislative capacity and competence. Inescapably, it also alters the relationship between South Australia and its subjects; with the result that the relationship between New South Wales and South Australia ceases to be one of equality. This latter proposition has echoes of the doctrine of this Court, enunciated, in relation to the distribution of State and federal power, in Melbourne Corporation v The Commonwealth209 and more recently in Austin v The 206 Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 451 per McHugh J. 207 (1947) 74 CLR 508 at 529. 208 Selway, The Constitution of South Australia (1997) at 72; see also Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 at 451 per McHugh J. 209 (1947) 74 CLR 31. Callinan Commonwealth210. Whether that doctrine may be applied to the allocation or appropriation of powers inter se between the States is another question. What would be odd in a federation however, would be the lawful toleration of a legislative and judicial usurpation by, for example, weight of numbers and resources, by one imperialistic State, of the legislative and judicial power of smaller, poorer and less intrusive other States. I do not think that s 118 of the Constitution necessarily provides an answer in favour of the first respondent. Recognition under it is a two-way street. Section 118 is a section designed, among other things, to ensure comity between the States. It obliges each State to recognise and give effect to the laws, public acts, records and judicial proceedings of other States. It would be very curious, indeed unthinkable, that similar recognition would not be accorded to the institutions of the States from which these emanate, the Parliament, the Executive and the Judiciary. These are all interesting and important questions. So too is the fundamental question: whether any or all of the controversial provisions of the Tribunal Act to which I have referred can properly be regarded, in their purported operation upon the conduct of the Tribunal's proceedings outside New South Wales, or upon the rights and obligations of persons living and conducting their affairs outside New South Wales in matters of no concern to New South Wales, as being for the peace, welfare and good government of New South Wales within the meaning of s 5 of the Constitution Act 1902 (NSW). None of these questions however have to be answered here, because, in my opinion, the appeal can and should be resolved in favour of the appellant on other grounds. Proceedings at first instance The application was heard and dismissed by Sully J. It is against that dismissal by that single judge of the Supreme Court that the appellant now appeals211. In giving his reasons his Honour said that the facts of this case were strikingly similar to the facts of Broken Hill Pty Co Ltd v Zunic212 which he had 210 (2003) 215 CLR 185 at 246-252 [116]-[131], 278-279 [214], 281-282 [223], 285 211 Section 13 of the Cross-vesting Act relevantly purports to deny appeals. It cannot however forbid an appeal to this Court; cf Crampton v The Queen (2000) 206 CLR 161 at 185 [57] per Gaudron, Gummow and Callinan JJ. 212 (2001) 22 NSWCCR 92. Callinan decided in the preceding year, and that he intended to adopt the same approach to this case as he had to that one. He then went on to consider the nine factors that he had identified there as relevant to the issue of cross-vesting. The first of these was the first respondent's personal circumstances. They did not include, as was the situation in Zunic, any of urgency. His Honour accepted that the appellant had not been dilatory in seeking cross-vesting. Although the first respondent's condition was not then catastrophic, if his condition were to deteriorate suddenly, the Tribunal would move, his Honour said, with a degree of expedition not fairly to be expected of the Supreme Court of South Australia. This was because the latter "could not reasonably be expected to have, the marked and practised experience of the Tribunal in ... changing procedural gears ... to accommodate sudden health emergencies in dust- disease cases."213 As to the comparative expense of proceedings in the Tribunal and in the Supreme Court of South Australia, his Honour seemed to think this relevant only if there were a "grossly disproportionate" difference between them. With respect to the other matters that his Honour considered to be relevant, invocation of jurisdiction by the first respondent, the particular experience and facility of the Tribunal, the place of the tort, comparative evidentiary advantages, and forum shopping, his Honour simply said that he adhered to what he had already stated in Zunic. It is to that case that I should accordingly now turn. As to the regular invocation of the jurisdiction of the Tribunal his Honour there thought this a factor weighing in favour of the Tribunal because "those charged with his professional advising and representation perceive genuinely, and not unreasonably in the light of past experience, that there are legitimate procedural, evidentiary and cost advantages to be had from litigating in the Tribunal"214. In respect of the particular experience and facility of the Tribunal Sully J did little more than repeat215 a statement of the President of the Tribunal in Hearn v Commonwealth216 in which the latter said, in effect, that the Tribunal did its work diligently, expeditiously, and when required, regularly in Adelaide and Brisbane. 213 BHP Billiton Ltd v Schultz [2002] NSWSC 981 at [28]. 214 Broken Hill Pty Co Ltd v Zunic (2001) 22 NSWCCR 92 at 98 [17]. 215 Broken Hill Pty Co Ltd v Zunic (2001) 22 NSWCCR 92 at 99-100 [23]. 216 [2000] NSWDDT 12 (6 December 2000). Callinan His Honour accepted that in Zunic and therefore in this case the "only sensible answer" was that the tort arose in substance in South Australia217 and that this was a matter of obvious weight, but in the event he appears to have failed in fact to give it much, or indeed any weight at all. His Honour's opinion on the comparative evidentiary advantages of the Tribunal in Zunic came down to this: despite the narrowing of the issues there the possibility of the application of ss 25(3), 25A and 25B of the Tribunal Act218 217 Broken Hill Pty Co Ltd v Zunic (2001) 22 NSWCCR 92 at 100 [27]. 218 "25 Evidence in proceedings before the Tribunal Historical evidence and general medical evidence concerning dust exposure and dust diseases which has been admitted in any proceedings before the Tribunal may, with the leave of the Tribunal, be received as evidence in any other proceedings before the Tribunal, whether or not the proceedings are between the same parties. 25A Material already obtained (1) Material obtained for the purposes of proceedings before the Tribunal by discovery or interrogatories may: with the leave of the Tribunal, and with the consent of: (i) subject to subparagraph (ii), the party who originally obtained the material or the party's solicitors, or (ii) another person prescribed by the rules, be used in other proceedings before the Tribunal, whether or not the proceedings are between the same parties. The rules may provide that subsection (1) does not apply in specified kinds of proceedings or in specified circumstances. 25B General issues already determined Issues of a general nature determined in proceedings before the Tribunal (including proceedings on an appeal from the Tribunal) may not be relitigated or reargued in other proceedings before the Tribunal without (Footnote continues on next page) Callinan gave rise to advantages: to whom, and of precisely what kinds were not identified, but presumably they were advantages to the first respondent, and were said not to be available in the Supreme Court of South Australia. The so-called evidentiary advantage is in fact irrelevant here because the appellant and the other respondents have undertaken to take no objection to the reception of evidence which could be led pursuant to those sections no matter where the proceedings are heard. That the appellant and the other respondents had made that concession, in writing, in these proceedings in submissions to his Honour seems to have been overlooked. His Honour dealt next with forum shopping. His response to the appellant's submission, that this was undesirable, was that, because the Parliament of New South Wales must know that it is occurring and had not legislated against it, some of the "pejorative sting [was taken out] of the term 'forum shopping'"219. His Honour did not deal with the relevance of s 30B of the Supreme Court Act 1935 (SA) (the "SASC Act") as he was not referred to it by any party. the leave of the Tribunal, whether or not the proceedings are between the same parties. In deciding whether to grant leave for the purposes of subsection (1), the Tribunal is to have regard to: the availability of new evidence (whether or not previously available), and the manner in which the other proceedings referred to in that subsection were conducted, and such other matters as the Tribunal considers to be relevant. The rules may provide that subsection (1) does not apply in specified kinds of proceedings or in specified circumstances or (without limitation) in relation to specified kinds of issues. This section does not affect any other law relating to matters of which judicial notice can be taken or about which proof is not required." 219 Broken Hill Pty Co Ltd v Zunic (2001) 22 NSWCCR 92 at 102-103 [32]. Callinan The appeal to this Court No party has sought to argue that this Court does not have jurisdiction to entertain the appeal which has been the subject of a grant of special leave.220 The grounds of the appellant's appeal are as follows: "[1] The Court erred in holding that section 11A of the [Tribunal Act] would be applicable in the proceedings should they continue in the Tribunal. [2] Alternatively, the Court erred in taking section 11A into account as a factor against the transfer of the proceedings. The Court erred in failing to give primacy, in the exercise of its powers under the [Cross-vesting Act], to the consideration that the case should proceed in: the jurisdiction in which the cause of action arose; and the jurisdiction in which the parties and the witnesses were to be found, which in this case was South Australia. The Court erred in taking into account, or alternatively gave inappropriate weight, in the exercise of its powers under the [Cross-vesting Act], to the fact that the proceedings had been regularly instituted in the Dust Diseases Tribunal." The first paragraph of the recital to the Cross-vesting Act itself identifies two of the consequences of forum shopping, "inconvenience and expense" and par (c) directs attention to the desirability of a hearing in "the appropriate court." The recital is as follows: "WHEREAS inconvenience and expense have occasionally been caused to litigants by jurisdictional limitations in federal, State and Territory courts, and whereas it is desirable: 220 cf Crampton v The Queen (2000) 206 CLR 161 at 185 [57] per Gaudron, Gummow Callinan to establish a system of cross-vesting of jurisdiction between those courts, without detracting the existing jurisdiction of any court; from to structure the system in such a way as to ensure as far as practicable that proceedings concerning matters which, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, would be entirely or substantially within the jurisdiction (other than any accrued jurisdiction) of the Federal Court or the Family Court or the jurisdiction of a Supreme Court of a State or Territory are instituted and determined in that court, whilst providing for the determination by one court of federal and State matters in appropriate cases; and if a proceeding is instituted in a court that is not the appropriate court, to provide a system under which the proceeding will be transferred to the appropriate court." Despite what Sully J said of it the legislature did, in enacting the Cross- vesting Act, indicate that it regarded forum shopping as an evil. The Explanatory Note and second reading speech in respect of the Cross-vesting Act puts this beyond doubt and invites a ruthless response by courts to it. The Explanatory Note states221: "The Jurisdiction of Courts (Cross-vesting) Bill 1987 seeks to cross-vest jurisdiction in such a way that federal and State courts will, by and large, keep within their 'proper' jurisdictional fields. To achieve this end, the Commonwealth Bill, this Bill and the proposed legislation of other States make detailed and comprehensive provision for transfers between courts which should ensure that proceedings begun in an inappropriate court, or related proceedings begun in separate courts, will be transferred to an appropriate court. The provisions relating to cross- vesting will need to be applied only in those exceptional cases where there are jurisdictional uncertainties and where there is a real need to have matters tried together in the one court. The successful operation of the cross-vesting scheme will depend very much upon courts approaching the legislation in accordance with its general purpose and intention as indicated in the preamble to the Commonwealth and State legislation. Courts will need to be ruthless in the exercise of their transferral powers to ensure that litigants do not engage in 'forum-shopping' by commencing proceedings in inappropriate courts." 221 Jurisdiction of Courts (Cross-vesting) Bill 1987 (NSW), Explanatory Note at 2. Callinan The second reading speech also shows that the legislation formed part of a the co-operative endeavour and represents a rather rare consensus of Commonwealth and the States222: "The legislation now before the House has been developed by the Special Committee of Solicitors General and approved by the Standing Committee of Attorneys General as the most realizable and effective means of removing jurisdictional disputes across Australia. Similar legislation has been introduced into the Commonwealth Parliament, and either has been or will be introduced in each State, thereby achieving a truly national solution to this most important defect in Australian law. The bill now before the House will avoid inconvenience and expense currently faced by litigants by achieving the following reforms. First, uncertainties as to the jurisdictional limits of State and federal courts will be removed, particularly in the areas of trade practices and family law. Second, the lack of power in the courts to ensure that proceedings which are instituted in different courts, but which ought to be tried together, will be remedied, so that all related proceedings will be heard and determined in one court. It is not anticipated that the new legislation will be utilized on many occasions, but the cases in which difficulties have occurred to date warrant action being taken by respective governments." I turn now to the substantive provisions of the Cross-vesting Act. Section 4(3) vests the jurisdiction of the Supreme Court of the State of New South Wales in the Supreme Courts of the other States223. Section 5(2) provides as follows: 222 New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 29 April 1987 at 10750. 223 "4 Vesting of additional jurisdiction in certain courts The Supreme Court of another State or of a Territory has and may exercise original and appellate jurisdiction with respect to State matters. The State Family Court of another State has and may exercise original and appellate jurisdiction with respect to State matters. Subsection (3) or (4) does not: invest a Supreme Court or a State Family Court with, or confer on any such court, (Footnote continues on next page) Callinan "5 Transfer of proceedings (2) Where: a proceeding (in this subsection referred to as the 'relevant proceeding') is pending in the Supreme Court (in this subsection referred to as the 'first court'); and it appears to the first court that: the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of another State or of a Territory and it is more appropriate that the relevant proceeding be determined by that other Supreme Court; having regard to: (A) whether, in the opinion of the first court, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Supreme Court of another State or Territory; the first court, the matters the extent to which, in the opinion of for the determination relevant proceeding are matters arising under or involving the application, interpretation or validity of a law of the State or Territory referred to in sub-subparagraph (A) and not within the jurisdiction of the first court questions jurisdiction with respect to criminal matters." Callinan apart from this Act and any law of the Commonwealth another State relating to cross-vesting of jurisdiction; and the interests of justice, is more appropriate proceeding be determined by Supreme Court, or that the relevant that other (iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory, the first court shall transfer the relevant proceeding to that other Supreme Court." The application at first instance here however had to be brought, first under s 8(1)(a)(ii) and (1)(b)(ii) of the Cross-vesting Act to bring the case into the Supreme Court because the proceedings were not pending in that superior jurisdiction, and then for cross-vesting to South Australia, under s 5(2)(b)(iii). Section 8 relevantly provides: "8 Orders by Supreme Court (1) Where: a proceeding (in this subsection referred to as the 'relevant proceeding') is pending in: a court, other than the Supreme Court, of the State; or a tribunal established by or under an Act; and it appears to the Supreme Court that: the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court, the Family Court or the Supreme Court of another State or of a Territory and, if an order is made under this subsection in relation to the relevant proceeding, that other there would be grounds on which proceeding could be transferred to the Supreme Court; or Callinan an order should be made under this subsection in relation that consideration can be given to whether the relevant proceeding should be transferred to another court, relevant proceeding the the Supreme Court may, on the application of a party to the relevant proceeding or of its own motion, make an order removing the relevant proceeding to the Supreme Court. Section 11 should also be set out: "11 Conduct of proceedings (1) Where it appears to a court that the court will, or will be likely to, in determining a matter for determination in a proceeding, be exercising jurisdiction conferred by this Act or by a law of the Commonwealth or a State relating to cross-vesting of jurisdiction: subject to paragraphs (b) and (c), the court shall, in determining that matter, apply the law in force in the State or Territory in which the court is sitting (including choice of law rules); subject to paragraph (c), if that matter is a right of action arising under a written law of another State or Territory, the court shall, in determining that matter, apply the written and unwritten law of that other State or Territory; and the rules of evidence and procedure to be applied in dealing with that matter shall be such as the court considers appropriate in the circumstances, being rules that are applied in a superior court in Australia or in an external Territory. The reference in subsection (1)(a) to the State or Territory in which the court is sitting is, in relation to the Federal Court or the Family Court, a reference to the State or Territory in which any matter for determination in the proceeding was first commenced in or transferred to that court. (3) Where a proceeding is transferred or removed to a court (in this subsection referred to as the 'transferee court') from another court (in this subsection referred to as the 'transferor court'), the transferee court shall deal with the proceeding as if, subject to any order of the transferee court, the steps that had been taken for the Callinan purposes of the proceeding in the transferor court (including the making of an order), or similar steps, had been taken in the transferee court." It is important to notice that s 5(2)(b)(iii) of the Cross-vesting Act uses mandatory language, " ... the first court shall transfer." A judge hearing an application for cross-vesting does not therefore have an unfettered discretion. Such a judge must apply his or her mind to the criteria stated in the Act, including the interests of justice, justice it may be observed, to all parties, and, if they are satisfied, must cross-vest the case. In this Court the first respondent drew attention to s 30B of the SASC Act which provides as follows: "30B Power to make interim assessment of damages (1) Where in any action the court determines that a party is entitled to recover damages from another party, it shall be lawful for the court to enter declaratory judgment finally determining the question of liability between the parties, in favour of the party who is entitled to recover damages as aforesaid, and to adjourn the final assessment thereof. It shall be lawful for the court when entering declaratory judgment and for any judge of the court at any time or times thereafter – to make orders that the party held liable make such payment or payments on account of the damages to be assessed as to the court seems just; and in addition to any such order or in lieu thereof, to order that the party held liable make periodic payments to the other party on account of the damages to be assessed during a stated period or until further order: Provided, however, that where the declaratory judgment has been entered in an action for damages for personal injury, such payment or payments shall not include an allowance for pain or suffering or for bodily or mental harm (as distinct from pecuniary loss resulting therefrom) except where serious and continuing illness or disability results from the injury or except that, where the party entitled to recover damages is incapacitated or partially incapacitated for employment and being in part responsible for his injury is not entitled to recover the full amount of his present or continuing loss of earnings, or of any hospital, medical or other expenses resulting from his injury, the court may order payment or payments not to exceed such loss of earnings and expenses and such payment or payments may be derived either wholly or in part from any damages to which the Callinan party entitled to recover damages has, but for the operation of this proviso, established a present and immediate right or except where the judge is of opinion that there are special circumstances by reason of which this proviso should not apply. (3) Any order for payment of moneys on account of damages made hereunder may be enforced as a judgment of the court. (4) Where the court adjourns assessment of damages under this section, it may order the party held liable to make such payment into court or to give such security for payment of damages when finally assessed as it deems just. (5) When damages are finally assessed credit shall be given in the final assessment for all payments which have been made under this section and the final judgment shall state the full amount of damages, the total of all amounts already paid pursuant to this section and the amount of damages then remaining payable, and judgment shall be entered for the last-named amount. (6) Where the court adjourns assessment of damages under this section, any party to the proceedings may apply to any judge of the court at any time and from time to time – for an order that the court proceed to final assessment of the damages; or for the variation or termination of any order which may have been made for the making of periodic payments. On the hearing of any such application the judge shall make such order as he considers just: Provided that, in an action for damages for personal injury, upon an application for an order that the court proceed to final assessment of damages, the Judge to whom such application is made shall not refuse such order if the medical condition of the party entitled to recover damages is such that neither substantial improvement nor substantial deterioration thereof is likely to occur or if a period of four years or more has expired since the date of the declaratory judgment unless the judge is of opinion that there are special circumstances by reason of which such assessment should not then be made. If it appears to the court that a person in whose favour declaratory judgment has been entered has without reasonable cause failed to undertake such reasonable medical or remedial treatment as his case might have required or require, it shall not award damages for Callinan such disability, pain or suffering as would have been remedied but for such failure. If at any time it appears to a judge that a person in whose favour declaratory judgment has been entered and who is incapacitated or partially incapacitated for employment, is not sincerely or with the diligence which should be expected of him in the circumstances of his case, attempting to rehabilitate himself for employment any payment or payments under subsection (2) of this section shall not include by way of allowance for loss of earnings a sum in excess of seventy-five per centum of such person's loss of earnings. (a) Notwithstanding anything in the Survival of Causes of Action Act 1940, when damages are finally assessed under this section for the benefit of the estate of a deceased person where the deceased person died after action brought and declaratory judgment has been entered in favour of such person, the damages finally assessed may include such damages in respect of any of the matters referred to in section 3 of that Act as the court deems proper. the declaratory received moneys (b) Where a party dies after declaratory judgment has been entered in his favour but before final assessment of his damages in circumstances which would have entitled any person to recover damages, solatium or expenses by action pursuant to Part 2 of the Wrongs Act 1936-1959, it shall be lawful for the executor or administrator of the deceased to proceed in the same action for the recovery of such damages, solatium or expenses for the benefit of such person the notwithstanding deceased has thereunder, provided, however, that in any such proceedings all moneys paid to the deceased pursuant to the declaratory judgment in excess of any actual and subsisting pecuniary loss resulting to him from the wrongful act of the party held liable shall be deemed to have been paid towards satisfaction of the damages, solatium or expenses awarded pursuant to the Wrongs Act 1936-1959 and no further damages shall be payable in respect of the injury sustained by the deceased. In any proceedings hereunder, the declaratory judgment and any finding of fact made in the course of proceedings consequent thereupon shall enure as between the party held liable and the executor or administrator of the deceased. judgment or that Callinan (c) Where a party dies in the circumstances referred to in the preceding paragraph of this subsection except that the death of the deceased is not wholly attributable to the personal injury, the subject of the declaratory judgment, but was accelerated thereby, it shall be lawful for proceedings to be taken and for the court to assess damages, solatium or expenses as in the preceding paragraph but such damages, solatium or expenses shall be proportioned to the injury to the person for whom and for whose benefit the proceedings are taken resulting from such acceleration of death. The Court may, if the justice of a case so requires, assess damages under paragraph subsection the commencement or prosecution of notwithstanding proceedings under paragraph (b) or (c) of this subsection and the damages so assessed shall be for the benefit of the estate of the deceased and no damages shall be awarded under paragraph (b) or (c) of this subsection. (a) of this In the exercise of the powers conferred by this section the court shall have regard to the facts and circumstances of the particular case, as they exist from time to time, and any allowance, or the final assessment, as the case may be, shall be such as to the court may seem just and reasonable as compensation to the person actually injured or to his or her dependants as the case may be." The appellant sought to compare that section with s 11A of the Tribunal Act which provides as follows: "11A Award of provisional damages This section applies to proceedings of the kind referred to in section 11(1) that are brought after the commencement of this section and in which there is proved or admitted to be a chance that at some definite or indefinite time in the future the person who is suffering from the dust-related condition in respect of which the proceedings are brought (the injured person) will, as a result or partly as a result of the breach of duty giving rise to the cause of action, develop another dust-related condition. The tribunal may, in accordance with the rules: award damages assessed on the assumption that the injured person will not develop another dust-related condition, and award further damages at a future date if the injured person does develop another dust-related condition." Callinan There are notable differences between the two provisions. Section 30B of the SASC Act provides for only one assessment of damages, the final assessment. An interim assessment is purely provisional and does not bind the judge on making the final assessment224. Either party may at any time move for final judgment. By contrast, s 11A of the Tribunal Act contemplates conclusive judgment for the first medical condition or stage of it, followed, if the plaintiff seeks and the court grants it, by a further, distinct final judgment for an ensuing condition. Under s 30B, the Supreme Court may, on the application of either party, take into account the progression of the disease after the declaratory judgment in assessing final damages. If an interim payment of damages has been made, there can be an increase or a decrease in the damages so far assessed. It may even be that a plaintiff could be obliged to make a refund. This cannot occur under s 11A. A subsequent assessment is confined to the damages attributable to the second condition. A particular matter of substantial difference is however that s 11A, if applicable, would operate to deprive the appellant of a defence that would otherwise be open: that the first respondent's damages had been assessed and judgment entered for him. Deprivation of a defence is a matter of substance, and a law which has that effect should be characterized as substantive. Accordingly, the parties' apparent acceptance of the substantive law of South Australia as the substantive law applicable would make any further reference to s 11A irrelevant. In accepting, as they appear to have done, that the substantive law of South Australia is to apply no matter where the proceedings are heard and which court hears them, it seems to have been assumed by the parties that what is substantive and what is procedural here are readily distinguishable. It also seems to have been assumed that significant differences in procedural law between proceedings in the Tribunal and in the Supreme Court of South Australia are of little, or no relevance to a question of cross-vesting. In order to test the validity of these assumptions the Tribunal Act as a whole will need careful analysis. This is so despite s 11(1)(a) of the Cross-vesting Act which confers a discretion with respect to the rules of evidence and procedure to be applied. It is nonetheless to be expected that the "transferee court" would ordinarily apply its own rules with respect to these matters. Distinguishing between what is substantive and what is procedural will always however be a fundamental task of the court determining a matter of this kind. The Tribunal is to be constituted by appointees from judges of the Compensation Court (s 7(1) and (2) Tribunal Act). A member is generally to enjoy the same immunity as a judge of the Supreme Court. Its decisions may be enforced in the same way as decisions of the Supreme Court (s 10(5)). 224 Settlement Wine v National & General Insurance (1994) 62 SASR 40 at 47, 54-55. Callinan The exclusive jurisdiction conferred by s 11 of the Tribunal Act is in respect of "dust-related condition(s)" which are defined by s 3 as: a disease specified in Schedule l, or any other pathological condition of the lungs, pleura or peritoneum that is attributable to dust." Schedule 1 identifies 14 diseases by name. Section 11(4) confers in the nature of a pendant or ancillary jurisdiction in respect of claims arising out of the same cause of action as gave rise to the claim for damages for a dust-related condition. Section 12A eliminates all periodic limitations upon the bringing of proceedings for damages for dust-related conditions and s 12B alters the common law, and is, if not unique, certainly an unusual provision enabling the recovery of damages for non-economic loss by the estate of a person dying after the institution of proceedings for damages with respect to a dust-related condition. The section expressly states that s 2(2)(d) of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW)225 does not apply to those proceedings. Section 12C makes special provision regarding the rights and obligations of joint tortfeasors: "12C Effect of settlement on proceedings by or against joint and several tortfeasors 225 "2 Effect of death on certain causes of action (2) Where a cause of action survives ... for the benefit of the estate of a deceased person, the damages recoverable for the benefit of the estate of that person: where the death of that person has been caused by the act or omission which gives rise to the cause of action, shall not include any damages for the pain or suffering of that person or for any bodily or mental harm suffered by the person or for the curtailment of the person's expectation of life." Callinan For the avoidance of doubt, settlement with one or more joint tortfeasors in or in relation to proceedings before the Tribunal and who are liable in respect of damage as a result of a dust-related condition is not a bar to recovery against one or more other joint tortfeasors (whether or not they are defendants in the proceedings), unless the terms of the settlement otherwise provide. (2) A tortfeasor who settles proceedings before the Tribunal that are brought against the tortfeasor by a plaintiff in respect of damage as a result of a dust-related condition is not precluded from recovering contribution in respect of that same damage under section 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 from any other tortfeasor (whether a joint tortfeasor or otherwise) who is not a party to the settlement only because a judgment giving effect to that settlement has been entered in favour of the plaintiff without the Tribunal having considered the merits of the case. This section does not affect the operation or interpretation of section 5(1)(a) of (Miscellaneous Provisions) Act 1946." the Law Reform Section 12D could have the effect of allowing a form of double recovery in part at least of damages under some conventional heads of damage if, as is probably the case in some circumstances, compensation under the Workers' Compensation (Dust Diseases) Act 1942 (NSW) is intended to compensate wholly or partly for one or more of the heads of damages referred to in the section which is as follows: "12D Damages for non-economic loss not to be reduced by certain compensation payments This section applies to proceedings before the Tribunal (including proceedings on an appeal from the Tribunal) for damages in relation to dust-related conditions. In determining damages for non-economic loss in any such proceedings, no deduction is to be made for any amount of compensation already paid or payable, or payable in the future, under the Workers' Compensation (Dust Diseases) Act 1942. In this section: Callinan damages for non-economic compensation for the following: loss means damages or pain and suffering, loss of amenities of life, loss of expectation of life, disfigurement, the need for services of a domestic nature or services relating to nursing and attendance which have been or are to be provided to a person by another person, and for which the first person has not paid and is not liable to pay any fee or charge." Sub-sections (1) to (4) of s 13 are consequential provisions. Sub-sections (5) and (6) which are as follows should be noted: "13 Proceedings before the Tribunal (5) A decision of the Tribunal is not liable: to be vitiated because of any informality or want of form, or to be questioned or appealed against in any court, except as provided by section 32 of this Act or section 48 of the Supreme Court Act 1970. (6) Whenever appropriate, the Tribunal may reconsider any matter that it has previously dealt with, or rescind or amend any decision that the Tribunal has previously made." Section 32 confines rights of appeal to the Supreme Court to appeals on points of law or on questions of admissibility of evidence, and by leave only, appeals from interlocutory decisions, on costs, and decisions in cases of claims for, or questions relating to, an amount of $20,000 or more. Is this a substantive provision? A defendant deprived of a right of appeal that it might otherwise have in South Australia would surely think so. Section 17(1) is unusual. It arguably at least allows a finding of liability to be made against a person who has not been served with process. Callinan Section 20 makes provision for the service of subpoenas. Section 20(2) imposes an obligation upon a subpoenaed person required to produce a document, to produce it written in the English language even if that is not the language of the document itself. The Tribunal may, pursuant to s 23 dispense with such rules of evidence "as might cause expense and delay arising from any commission to take evidence or arising from any other circumstance" and may also compel the making of admissions.226 The same section empowers the Tribunal to allow other dispensations as to proof, including as to identity of parties and authority to act or bind. The Court was not referred to any like provisions in the statute law of South Australia. One effect of ss 25, 25A and 25B is to allow the Tribunal to act on evidence received in other proceedings even though a party may not have had an opportunity of testing that evidence. Another is to preclude, in the Tribunal's discretion, the re-arguing of "issues of a general nature determined in [other] proceedings before the Tribunal" or an appeal from it. The balance of the Tribunal Act, apart from s 32 to which I have already referred and Pt 6, is generally taken up with provisions with respect to contempt, dismissal of frivolous proceedings, costs, service of documents, the giving of directions, mediation, the making of rules, and arbitration. Part 6 among other things makes provision for interim payments of damages against an insurer on a number of bases, including the satisfaction of the Tribunal that a plaintiff has obtained judgment for substantial damages against the (insured) defendant (s 43(3)). The Part also makes provision for the resolution of some differences between insurers when interim damages have been paid. There can be no doubt that both substantively and procedurally the Tribunal Act enacts a very special and largely unique regime for the assessment and recovery of damages by particular plaintiffs. No doubt for reasons thought to be good and valid by the legislature of New South Wales, the regime is one established for the benefit of sufferers of dust-related diseases. It is not a regime in which, as a practical matter, defendants are likely to have the same rights both procedurally and substantively, as plaintiffs, and as they would have in the ordinary course in proceedings in the Supreme Courts of the States. It is a regime not adopted by States other than New South Wales. It is one thing for 226 In commercial causes in some jurisdictions a similar power is conferred. See the discussion in Railway Commissioners of NSW v G & C Hoskins Ltd (1918) 18 SR (NSW) 424 at 427-428 per Cullen CJ. See also Pt 18 of the Supreme Court Act 1995 (Q) and Pt 1 r 26(1) of the Supreme Court Rules (NSW). There appears to be no similar provision in South Australia. Callinan one State to establish such a regime to govern the recovery of damages, and thereby affecting commerce, insurance and other activities and events occurring within it, but altogether a different matter to seek to impose it upon other States. This observation may also be made. It is certainly not immediately apparent whether all of the sections of the Tribunal Act which I have noted are either exclusively substantive or exclusively procedural. It seems to me that ambiguity in this regard is a matter highly relevant to a decision under the Cross- vesting Act whether to allow the proceedings to continue in the Tribunal. The advancing of arguable contentions both ways is likely to lead to the sorts of delays, uncertainties and expense which the Tribunal Act is said to have been designed to avoid. The remarks of Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in Regie Nationale des Usines Renault SA v Zhang227 of the choice of substantive law to be applied under the Supreme Court Rules (NSW) in litigation in a jurisdiction different from the jurisdiction in which the tort occurred, as to the need for certainty are apposite here228: "The selection of the lex loci delicti as the source of substantive law meets one of the objectives of any choice of law rule, the promotion of certainty in the law. Uncertainty as to the choice of the lex causae engenders doubt as to liability and impedes settlement. It is true that to undertake proof of foreign law is a different and more onerous task than, in the case of an intra-Australian tort, to establish the content of federal, State and Territory law. But proof of foreign law is concomitant of reliance upon any choice of law rule which selects a non-Australian lex The appellant submitted that uncertainty, as to the constitutionality of some of the provisions of the Tribunal Act, the arguments in respect of which I have earlier summarized, is itself a further reason why the issue of cross-vesting should have been resolved in its favour. There is force in this. No constitutional issue would arise for consideration if the proceedings were to be transferred to South Australia. Trial in South Australia by the Supreme Court under South Australian law both procedural and substantive is, as should already be apparent, much more likely to be conducive to certainty than trial in the Tribunal. Section 11 of the Tribunal Act purports to oust the jurisdiction of any court or tribunal other than the Dust Diseases Tribunal. A Dust Diseases 227 (2002) 210 CLR 491. 228 (2002) 210 CLR 491 at 517 [66]. Callinan Tribunal wherever sitting could not oust the jurisdiction of a South Australian court. The possibility of two or more proceedings being litigated in more than one court or tribunal therefore exists. One such proceeding might be a duly initiated application to the Supreme Court of South Australia for a prerogative writ to prohibit or quash an order or unlawful conduct of the Tribunal sitting in South Australia. It would be undesirable for there to be two proceedings on foot at the same time, a claim by a plaintiff in the Tribunal to be heard in South Australia, and, for example, an application for a declaration by the Supreme Court of South Australia made by a defendant to the former proceedings that the plaintiff's claim is statute-barred. Section 50 of the SASC Act229 which has analogues and near analogues in the other States of Australia would enable a person aggrieved by an order or "Appeals against decisions of judges and masters Subject to the rules of court an appeal shall lie to the Full Court against every judgment, including every declaratory judgment entered pursuant to section 30B of this Act and any final assessment made thereon, order, or direction of a judge, whether in court or chambers, and also from the refusal of any judge to make any order: Provided that – No appeal shall lie from – an order allowing an extension of time to appeal from a judgment or order: an order giving unconditional leave to defend an action: any judgment or order which is by statute, or by agreement of the parties, final or without appeal. No appeal shall lie without the leave of the judge from any order – made by consent of the parties: as to costs only which by law are left to the discretion of the judge. No appeal shall lie without the leave of the judge or of the Full Court from – (Footnote continues on next page) Callinan judgment of the South Australian Supreme Court (subject to some non-relevant exceptions) to appeal to the Full Court of the Supreme Court of South Australia as of right. Section 32 of the Tribunal Act limits appeals from the Tribunal, effectively to points of law unless leave be given by the Supreme Court (of New South Wales), and excludes appeals in some matters entirely. an order on appeal from the Magistrates Court: any interlocutory order or interlocutory judgment except in the following cases, namely: Any order refusing unconditional leave to defend: (ii) Where the liberty of the subject or the custody of infants is concerned: (iii) Where an injunction or the appointment of a receiver is granted or refused: (iv) Any decision determining the claim of any creditor or the liability of any contributory or the liability of any director or other officer under the Companies Act 1962, as amended, or under any corresponding previous misfeasance or otherwise: enactment, respect The grant or refusal of a decree or order nisi in a matrimonial cause: (va) Any assessment of damages not being a final assessment made pursuant to section 30B of this Act: Such other cases to be prescribed by rules of court as are, in the opinion of the authority making such rules, of the nature of final decisions. Subject to the rules of court, an appeal shall lie to a judge against a judgment, order, direction or decision of a master." Callinan Let it be assumed as I think must at least arguably be the position, that s 32 of the Tribunal Act is a substantive provision. The parties are agreed that the substantive law of South Australia is to apply. The Supreme Court of New South Wales cannot entertain a general appeal because s 32 precludes it from doing so. And no enactment of either State purports, even if it could do so, to provide for an appeal from the Dust Diseases Tribunal of New South Wales to the Full Court of the Supreme Court of South Australia. To deny a party a true and effective right of appeal is a serious and substantive matter. The effect and interaction of the two provisions to which I have just referred were not the subject of any argument by the parties and I need not express any concluded opinion as to them, but the arguable possibilities to which they give rise point strongly in favour of the cross-vesting of this case to the Supreme Court of South Australia. It must now be accepted following John Pfeiffer that s 12A of the Tribunal Act is a substantive provision. The limitations law of South Australia as substantive law, would, as the parties accept, apply. In general it is better that the laws of a State be construed by the Supreme Court of that State for the obvious reason that that Court will be more familiar with, and will construe such laws on a frequent and consistent basis. I am of the opinion that s 12B also of the Tribunal Act is a substantive provision. It effectively provides for a statutory head of damages. Except to the extent that South Australian legislation makes provision if any, of a similar kind, those damages could not be recovered in these proceedings in the Tribunal if it is to apply the substantive law of South Australia. No attention was paid to s 12C of the Tribunal Act or to any South Australian provisions with respect to the recovery of indemnity or contribution by joint tortfeasors, and accordingly it would not be appropriate to say whether the law in each case is the same, or whether there is a difference as to a substantive matter between them. The possibility that there may be, again provides reason to prefer the South Australian Supreme Court as the appropriate forum. It may be that in South Australia, as in other States, credit must be given by a successful plaintiff for the workers' compensation that he or she has received, by submitting to a reduction to that extent in the damages recoverable at common law. Section 12D of the Tribunal Act is to a contrary effect. The assessment of the quantum and heads of damages available are substantive matters. It may therefore be that in proceedings in the Supreme Court of South Australia a reduction would have to be made, if and to the extent that workers' compensation of any kind whether under the New South Wales Workers' Compensation (Dust Diseases) Act or any other Act, had been received. Callinan Section 17 of the Tribunal Act is capable of producing a situation which justice and accordingly courts generally abhor, of judgment and enforcement of it against a person who has been found liable, even though he or she may not have been served with process in, and be unaware of the proceedings. This is a provision which on its face may appear to be merely procedural but which in fact is capable of producing real and substantive injustice. This Court was not referred to any substantive law of South Australia to a like effect. Sections 23, 25, 25A and 25B do more than relax the rules of evidence. They alter, or at least would allow the Tribunal to depart from the audi alteram partem rule. Their effect is to enable the Tribunal to use against a party evidence and findings which it has had no opportunity of testing or controverting. However they may be expressed, provisions capable of producing that outcome, of denying natural justice, do not have the appearance of being merely procedural. Accordingly for those, and these further reasons, the primary judge erred and the appeal must succeed. First, the primary judge fell into error in overlooking that a concession as to the admission of evidence had been made, and in then comparing the South Australian evidentiary standards unfavourably with those of the Tribunal as enacted in the Tribunal Act. In my opinion there was no basis for his Honour's conclusion that the Supreme Court of South Australia could not shift the "procedural gears" as effectively as the Tribunal. His Honour did not specify the procedural gears that he had in mind. This appears to be pure speculation. It is also to cast an unfortunate aspersion upon a Supreme Court of parallel jurisdiction. Contemporary Supreme Courts are more flexible procedurally than in the past. Bedside hearings can and do take place. Expedited hearings are frequently granted. Supreme Courts have a very great depth of experience of injuries and illnesses and the assessment of compensation for them. The fact that the Supreme Court of South Australia is located where the first respondent and most of the witnesses live gives that Court the advantage of proximity, an advantage to which proper regard should have been, but was not had. In my view it was also erroneous to think difference in expense relevant only if the difference were "grossly disproportionate". Just what would constitute gross disproportionality was not spelled out. Any difference that was not minimal should have been weighed in the balance with other relevant considerations. His Honour at first instance emphasized as a matter favouring the Tribunal as the forum, the regular invocation of its jurisdiction by the first respondent. He coupled that with the view of the first respondent's lawyers that their client could Callinan get legitimate procedural evidentiary and cost advantage from litigating in the Tribunal. The party beginning proceedings will always be the party who selects the jurisdiction in which they are to be heard. It is to beg the question to say that because a plaintiff has chosen his or her forum, a defendant cannot ask, or should suffer a disadvantage in asking that it be changed to a more appropriate one. Furthermore, as I pointed out in Agar v Hyde230 one person's legitimate advantage is another person's disadvantage. There should be no presumption in litigation in favour of any party. Courts are required to do equal justice. It is wrong to say that proceedings should be conducted in the, or indeed any Tribunal because a plaintiff, or for that matter a defendant, is likely to have a better chance of winning or more easily winning there. It seems that here, and the trial judge at first instance accepted, that the first respondent's professional advisers who had had considerable experience with the Tribunal, thought their client had better prospects as to liability and damages in the Tribunal than elsewhere. To give effect to that view if it be correct would not be to do equal justice in the cross- vesting application. Even if it be the case that the legislature of New South Wales were to think a claimant's advantage over a defendant a legitimate end, that could provide no basis for its imposition on other States and those entitled to litigate in the courts of them. As I have already pointed out, the primary judge, whilst accepting that the tort arose in substance in South Australia, in the end failed to give this matter much, if any weight at all. In my opinion it will always be an important matter. In some of the cases the expression "natural forum" has been used231. I would take the expression to mean in most cases the forum of the jurisdiction in which the tort was committed. It seems to me to be only logical that at least prima facie that forum will be better equipped to deal with the issues. The events have taken place there. Some, if not most of the parties have had, and are likely to continue to have a presence there. Proximity to the courts there is likely to lead to both expedition, and savings in expense. But of at least equal importance to all of these is the fact that the events giving rise to the claim were at the time subject to, and regulated by the law of the jurisdiction where they occurred, and in respect of the evaluation of which the court of that place should be the most experienced and efficient. One relevant law will usually be the law relating to insurance. Policies are likely to have been implemented on the basis of the law there relating to damages, remedies, court and appeals. In other ways also, with respect, for example, to relations between employers and employees, the revenue 230 (2000) 201 CLR 552 at 601-602 [131]. 231 Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 at 641 [157] per Kirby J; Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 at 478 per Lord Goff of Chieveley; Airbus Industrie GIE v Patel [1999] 1 AC 119. Callinan laws and commercial laws, and compliance with safety and environmental standards, it may be assumed that the parties have organised their affairs with an eye to the State laws governing them. The parties' reasonable expectation would almost certainly be that in the event of a dispute about any of these matters, it would be resolved according to those laws as interpreted and applied by the court of that State. To these important matters the primary judge has made no reference. His Honour relied on his earlier reasoning in Zunic. In my respectful opinion that reasoning was flawed. There his Honour passed over the legislative disapproval of forum shopping by, in effect, saying that it was perhaps not to be regarded as warranting pejorative reference. That was not the point. The point is that the legislature had in mind and expressly set out to reduce or eliminate forum shopping. Whether it was occurring in any particular case is a matter which should be at the forefront of a judge's assessment of an application under the Cross-vesting Act, but it was not in this case. I cannot help observing that this expensive, prolonged, essentially procedural litigation is litigation of the kind against which I warned in Mobil Oil Australia Pty Limited v Victoria232 and is the sort of litigation which will inevitably be provoked whenever a legislature, by ambitious long-arm legislation, or a court by too expansive a view of its own powers, or the powers of another court of the same polity, encourages or assists plaintiffs to pursue claims in a non-natural forum. I would allow the appeal. The question remains however what order I should make. The matter could be remitted to the Supreme Court of New South Wales for reconsideration in accordance with these reasons. But I do not think I should do this. Time and expense will be saved by a decision now. It seems to me that this is a clear case for cross-vesting. The Supreme Court of South Australia is well equipped to handle the case. It can do equal justice between the parties. It can do it by applying South Australian substantive and procedural law without the necessity to distinguish between what is substantive and what is truly procedural in the unique, and far from unambiguous relevant provisions of the Tribunal Act. It will not need to decide any constitutional issues. It can determine the case leaving the parties to exercise their ordinary and generally unconstrained rights of appeal to the Full Court of the Supreme Court of South Australia. The Supreme Court of South Australia will be free to exercise its powers under s 30B of the SASC Act to the extent that it thinks it appropriate to do so. It is in the interests of justice within the meaning of s 5(2)(b)(iii) of the Cross-vesting Act, and necessary therefore that the proceedings instituted by the first respondent be determined by the Supreme Court of South Australia. 232 (2002) 211 CLR 1 at 77 [181]-[183] per Callinan J. Callinan I would order that the orders of the Supreme Court of New South Wales entered on 30 October 2002 be set aside and in lieu thereof, that: (a) proceedings number 308 of 2002 in the Dust Diseases Tribunal of New South Wales be removed to the Supreme Court of New South Wales; and (b) the proceedings so removed thereupon be transferred to the Supreme Court of South Australia.

HIGH COURT OF AUSTRALIA SHU-LING CHANG & ANOR APPELLANTS AND LAIDLEY SHIRE COUNCIL RESPONDENT Chang v Laidley Shire Council [2007] HCA 37 29 August 2007 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of Queensland Representation D R Gore QC with T N Trotter for the appellants (instructed by Robert Milne Legal) M D Hinson SC for the respondent (instructed by Connor O'Meara) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Shu-Ling Chang v Laidley Shire Council Local government – Subdivision of land – Section 5.4.2 of the Integrated Planning Act 1977 (Q) ("the Act") afforded a statutory entitlement to compensation to those affected by a change in planning scheme – Appellants applied to respondent Council for approval for reconfiguration of land – Planning provisions did not permit proposed reconfiguration – Earlier provisions would have permitted reconfiguration – Whether appellants entitled to compensation on account of diminution in value of land brought about by inability to reconfigure – Whether appellants had "accrued compensation. right" or "accrued entitlement" Statutes – Interpretation – Meaning and effect of s 3.2.1 of the Act – Section 3.2.1 prescribed the method for applying for development approval – Proposed development was refused on the basis that it was contrary to the draft regulatory provisions – Whether development application that was contrary to the draft regulatory provisions was a "properly made application" – Whether s 3.2.1 should be read down in conformity with the rule that statutes are not to be construed as interfering with vested interests unless that purpose is manifest – Whether a clear indication of the legislative purpose to abolish the right to compensation was required and was manifest. Words and phrases – "accrued interest", "accrued right", "acquired right", "development application (superseded planning scheme)", "injurious affection", "properly made application", "retrospectivity". Acts Interpretation Act 1954 (Q), s 20. Integrated Planning Act 1997 (Q), Pts 2, 5A, ss 3.2.1, 5.4.2. Local Government Act 1936 (Q), ss 33(10). Integrated Planning and Other Legislation Amendment Act 2004 (Q). KIRBY J. This appeal comes from the Court of Appeal of the Supreme Court of Queensland1. That Court refused leave to appeal from a decision of the Planning and Environment Court of Queensland2. The appeal concerns the interpretation of successive provisions of Queensland planning law affecting a parcel of land at Under earlier provisions of the planning law, the land in question could, with the requisite approval of a development application, have been reconfigured (in the old language "subdivided"3) into lots of a modest size. After supervening changes to the planning law, reconfiguration as sought was prohibited. In these proceedings, the owners of the land have been seeking to recover what they claim is their entitlement to statutory compensation, accrued before that change took effect. The owners' claim has been rejected (so far successfully) on the basis that, although the compensation sought was available for a time, it was removed by an amendment to the planning law which rendered the development application invalid. A valid development application was necessary to enliven the statutory entitlement to compensation. The owners argue that the supervening law, containing this amendment, did not apply to their case because, immediately before it came into operation, they had a vested entitlement to recover compensation for the loss of value of their interest occasioned by earlier changes to the planning law. They contend that the new procedural requirement for such applications did not clearly and explicitly govern their case. Conformably with statutory provisions4 and common law principles5, defensive of accrued entitlements (and protective against their extinguishment by amending laws not clearly stated as having that effect), the supervening law should be read so as not to apply. In their reasons ("the joint reasons"), Hayne, Heydon and Crennan JJ have concluded that the appeal must be dismissed. They have done so by reference to the language of the planning law as in force at the time the relevant application was made6. Upon their Honours’ approach, no question of retrospective 1 Chang v Laidley Shire Council (2006) 146 LGERA 283. 2 Chang v Laidley Shire Council [2006] QPELR 91. (2006) 146 LGERA 283 at 286 [2] per Jerrard JA. 4 Acts Interpretation Act 1954 (Q), s 20(2). 5 Maxwell v Murphy (1957) 96 CLR 261; Attorney-General (Q) v AIRC (2002) 213 CLR 485; Dossett v TKJ Nominees Pty Ltd (2003) 218 CLR 1; WAPC v Temwood Holdings Pty Ltd (2004) 221 CLR 30. Joint reasons at [99]-[110]. Kirby operation of the legislation truly arises7. Nor was there any accrued "right" in the owners that could attract either the statutory or common law principles protective of the continuance of vested rights8. Callinan J, too, agrees in this conclusion, although with misgivings which he has expressed9. Ultimately, I reach the same result. But I do not regard this as an "open and shut case"10. Cases of this kind (at least when they reach this Court) rarely are. In part, this is because this Court "has rejected a narrow view of the survival of accrued rights in the context of repealing [or amending] legislation"11. In particular, it has not confined the protection of the law to "rights" narrowly understood12. In part, this has been so because of the reasons of legal and constitutional principle that lie behind the general protection of accrued legal entitlements13. This appeal fails, in the end, because of the terms of the legislation governing the matter14. However, for me, this means the whole of the legislation, yielding from its detail the applicable purpose and policy of Parliament. The solution is not confined to what is meant by a supervening change to the requirements for "a properly made application" for the proposed development15. That consideration is but one factor in the analysis that leads to the stated outcome. The facts and legislation The appellants' interest in the land: Many of the background facts are set out in the joint reasons16. However, to understand fully the complaint made by Joint reasons at [113]. Joint reasons at [115]-[117]. 9 Reasons of Callinan J at [120], [123]-[125]. 10 cf Dossett (2003) 218 CLR 1 at 23 [76]. 11 Attorney-General (Q) (2002) 213 CLR 485 at 522 [108]. 12 See eg Temwood (2004) 221 CLR 30 at 45-46 [31] per McHugh J. 13 Dossett (2003) 218 CLR 1 at 25-26 [85]. 14 cf Attorney-General (Q) (2002) 213 CLR 485 at 524 [112]. 15 Joint reasons at [108]. 16 Joint reasons at [87]-[89]. Kirby the owners, Shu-Ling Chang and Tai-Hsing Chen ("the appellants"), it is helpful to explain the way they presented their case. The appellants' land, the subject of the proceedings, was within the local government area of the Laidley Shire Council ("the Council"). The Council is the respondent to this appeal. Under a previous (1977) planning scheme applicable to it, the land was included in a zone designated for development purposes "Rural A". In July 1992, an application was successfully made by the then owners for the land to be rezoned as "Rural Residential Zone". That rezoning was gazetted in December 1992. When, in 1996, the Laidley Shire Council Town Plan (the "1996 Plan") was adopted and given effect, the land was included in an area designated "Rural Residential A Zone"17. That was the relevant zoning of the land when the Integrated Planning Act 1997 (Q) ("the 1997 Act") was enacted and came into force. Injurious affection in 2003: On 28 March 2003, in accordance with the 1997 Act, a new planning scheme for the Council's local government area was adopted. It replaced the 1996 Plan. Under the 1996 Plan, an application to reconfigure the appellants' single lot of land into 25 lots, which is the subject of these proceedings, was legally permissible. When, however, the 2003 planning scheme was adopted, it required that, for approval for the development which the appellants desired, lots should be larger than the minimum size which they were proposing. On the face of things, this meant that the land could not be reconfigured. To that extent, the introduction of the new planning scheme resulted in injurious affection to the appellants' interest in the land. The value of the appellants' interest was thereby reduced. Yet when the new planning scheme was adopted in 2003, all was not lost for the owners. The 1997 Act, s 5.4.2, afforded owners of land, so affected, a special entitlement (a "privilege" or "liberty"18) to seek redress from the Council. They were entitled to do so within two years of the adoption of such a planning scheme19. Within that period, owners, such as the appellants, could make a "development application (superseded planning scheme)" ("DA(SPS)"). Such a DA(SPS) gave the "assessment manager" (relevantly, the local government authority20 and here the Council) an option on how to proceed21. As the law then 17 (2006) 146 LGERA 283 at 286-287 [3]. 18 Temwood (2004) 221 CLR 30 at 45-46 [31]. 19 1997 Act, Sched 10, definition of "development application (superseded planning scheme)". 20 Chang (2006) 146 LGERA 283 at 286 [2]. See 1997 Act, s 3.1.7, Sched 8A. 21 See 1997 Act, s 3.2.5(3). Kirby stood, the Council could consent, in whole or in part, to the development sought, and thereby avoid any obligation to pay compensation to the land owner whose land was affected by the supervening scheme22. Or it could pay compensation to the owner, being "reasonable compensation", calculated as "the difference between the market values, appropriately adjusted having regard to [specified] matters"23. Passage of IPOLA 2004: The position reached was then further complicated by yet another supervening change affecting planning law in Queensland, namely the enactment, and commencement, of the Integrated Planning and Other Legislation Amendment Act 2004 (Q) ("IPOLA 2004")24. That Act came into force on 17 September 2004. The commencement date fell within the two year period that was available to the appellants, as owners of the subject land, to make a DA(SPS). In the interval between March 2003 and September 2004, the appellants had lodged no DA(SPS) with the Council under the 1997 Act. In fact, the appellants did not make a DA(SPS) application until 3 December 2004. Then, for the first time, they applied for approval from the Council for the reconfiguration of their land from one lot into 25 lots. IPOLA 2004 had amended the 1997 Act by introducing into Ch 2 of the 1997 Act a new Pt 5A. That Part provided for a completely different scheme of regional planning for the South-East Queensland ("SEQ") Region of the State. Specifically, IPOLA 2004 amended the 1997 Act to provide for a SEQ Regional Plan ("SEQRP"), a draft SEQRP and regulatory provisions for both25. Commencement of DRP in 2004: On 27 October 2004, Draft Regulatory Provisions ("DRP") ancillary to the draft SEQRP came into effect for the SEQ Region. The appellants' land, being within that Region, thus became subject to the DRP. By those provisions, the applicable zoning of the subject land was changed yet again. This time, in accordance with the DRP, the land was designated (with the surrounding area) as a "Regional Landscape and Rural Production Area". By s 4(2) of the DRP, reconfiguration of a lot of land in such a Regional Landscape and Rural Production Area was prohibited, relevantly, unless the lot sizes proposed were of a specified minimum size. The DRP provided that "reconfiguration of a lot may not occur if any resulting lot would 22 1997 Act, s 3.5.11. 23 1997 Act, s 5.4.9. 24 Joint reasons at [99]. 25 1997 Act, Ch 2 Pt 5A, divs 3-6, inserted by IPOLA 2004, s 8. Kirby have an area less than … 100 hectares"26. Exceptions to this prohibition were permitted by s 4(3) of the DRP. However, none of the stated exceptions applied to the appellants' land. The reconfiguration sought by the appellants in their DA(SPS) envisaged 25 new lots, every one of which was considerably smaller than 100 hectares. The reconfiguration proposed was thus prohibited by the new and special SEQ Region zoning requirements. What was happening in the appellants' camp that led to the delay in their making their DA(SPS) until December 2004, after the supervening changes described above had occurred, is not explained in the record. In legal terms, it does not matter. The issue presented to the courts below, and now to this Court, is: What effect, if any, did the supervening amendments made by IPOLA 2004 have on the appellants' earlier privilege to apply by way of DA(SPS) for approval by the Council, or to claim compensation for the diminution in the value of their land once reconfiguration was refused? Rejection of application not "properly made": On 21 January 2005, the Council advised the appellants that their DA(SPS), at the time it was made, was invalid. Specifically, by reason of the amendments introduced into the 1997 Act by IPOLA 2004, the DA(SPS) made by the appellants did not conform to the added (amended) provisions of s 3.2.1(7)(f) of the 1997 Act. For the Council, by the time it received the appellants' application, that application (although it would earlier have been properly made) was no longer "properly made". This was because "the development" it proposed did not qualify with the now added requirement that such an application "would not be contrary to the regulatory provisions or the draft regulatory provisions". In fact, the application was specifically prohibited by the DRP, so that neither the development nor compensation was available. Confronted by the Council's response to their application, the appellants' argument has been a simple one. According to the appellants, the outcome of the case depended upon a decision as to when the relevant legal analysis began. If it began literally, with the date of their application (and the requirement at that date for a "properly made application"), the appellants accepted that they would fail. However, the appellants submitted that the correct starting point for analysis required the decision-maker to look back in time. To acknowledge the entitlement that had already accrued to the appellants under the 1997 Act, before the commencement of IPOLA 2004. To recognise the two year leeway which the 1997 Act then afforded to them to apply by a DA(SPS). To view that entitlement of itself as an accrued "liberty" belonging to ("vested in") the appellants by law. 26 As to the basis for such a regulation, see 1997 Act, s 2.5A.12(2)(d), inserted by IPOLA 2004, s 8. Kirby To recognise that they had exercised that liberty within the time then provided by law. And therefore to overcome the asserted derogation from that liberty, relied on by the Council, on the basis of the supervening changes affecting the requirements for a "properly made application". Analysed in this way, the appellants argued that, because the 2004 changes did not expressly apply to their entitlement to make such a DA(SPS), their entitlement survived. The appellants could therefore enforce it. Analysis: correct starting point?: As I shall show, the appellants are correct in the general approach they urged on this Court. The entirety of the legislation, and the history of its adoption, must be understood and applied. No narrow view should be taken to the protection of entitlements accruing under earlier legislation27. However, in the end, even starting where the appellants contended, the correct interpretation of the legislative scheme supports the conclusion reached by the courts below. That conclusion must therefore stand. Before explaining why I come to this conclusion, it is proper to recount the appellants' arguments in their case. They are not without persuasive force. Most especially, there can be no doubting that, in practical terms, the supervening effect of IPOLA 2004 was to deprive the appellants of what would otherwise have been their entitlement to compensation if they had made a DA(SPS) within time. Did that entitlement become worthless because the appellants delayed in making their application? Was the change to the appellants' entitlements capable of being achieved in such an indirect manner? The survival of a compensation entitlement Applicable statutory scheme: State constitutions in Australia do not contain guarantees according terms" compensation in the event of compulsory acquisition of their property interests by or under State law28. Still less do they contain guarantees of compensation in the event of supervening injurious affection occasioned by successive changes to planning law29. Nevertheless, a provision for compensation, in specified land owners entitlements to "just 27 Kettering Pty Ltd v Noosa Shire Council (2004) 78 ALJR 1022 at 1028-1029 [28]; 207 ALR 1 at 9. 28 Durham Holdings Pty Limited v New South Wales (2001) 205 CLR 399; cf Constitution, s 51(xxxi). 29 Injurious affection is explained in Edwards v Minister of Transport [1964] 2 QB 134 at 146-155 per Harman LJ. The history of injurious affection laws in Australia, the United Kingdom and North America is collected in Australian Law Reform Commission, Lands Acquisition and Compensation, Report No 14, (1980) Kirby circumstances, has appeared in Queensland law at least since the Local Government Act 1936 (Q)30, later mirrored in the City of Brisbane Town Planning Act 1964 (Q)31. These legislative schemes were, in turn, reflected in provisions enacted by the Local Government (Planning and Environment) Act 1990 (Q) ("the 1990 Act")32. By s 3.5(1) of the 1990 Act, an entitlement to compensation was conferred on the owner of an interest in premises within a planning scheme area where the interest was injuriously affected "by the coming into force of any provision contained in a planning scheme; or … by any provision or restriction imposed by the planning scheme". It was this type of entitlement that was considered by this Court in Kettering Pty Ltd v Noosa Shire Council33, where it was described as a "very expansive right to compensation". Under the 1990 Act, the compensation right so provided was "triggered" by a single event, namely a diminution in the value of property caused by a provision in a supervening State planning scheme. The 1990 Act was, in turn, repealed by the 1997 Act. By the 1997 Act, an entitlement to compensation was crystallised upon the happening of four events, as described in s 5.4.2: "An owner of an interest in land is entitled to be paid reasonable compensation by a local government if – a change reduces the value of the interest; and a development application (superseded planning scheme) for a development permit relating to the land has been made; and the application is assessed having regard to the planning scheme and planning scheme policies in effect when the application was made; and the assessment manager, or, on appeal, the court – refuses the application; or 33 (2004) 78 ALJR 1022 at 1029 [28]; 207 ALR 1 at 9. Kirby approves the application in part or subject to conditions or both in part and subject to conditions." In the case of an "interest in land" a "change", as referred to in s 5.4.2(a), was defined in s 5.4.1 to mean "a change to the planning scheme or any planning scheme policy affecting the land". The foregoing provisions maintained the basic scheme for statutory compensation expressed in the pre-existing law. The reduction in the value of the "interest" still triggered the entitlement to be paid "reasonable compensation". However, the scheme of the 1997 Act added procedural requirements relating to the making of a DA(SPS), its assessment and resolution. The provision permitting an applicant to make a DA(SPS) within two years was contained in the definition of such an "application", contained in Sched 10 to the 1997 Act. This scheme, for which s 5.4.2 of the 1997 Act provided, envisaged that a body such as the Council was effectively given a choice. Either it could accept a liability to pay compensation for a loss of value of an interest occasioned by a supervening planning scheme, or it could avoid, or reduce, that liability by assessing the development application under the former scheme. In a sense, this option explains the appellation "DA(SPS)". In the event that the local government authority, as "assessment manager", chose to proceed under the earlier planning scheme, the land owner would suffer no relevant economic loss. The development application would then be assessed on its merits as if the supervening planning scheme did not exist. If, however, the decision was made to assess the application under the supervening scheme, the land owner would be entitled to compensation if the application was then refused or constrained in some way in accordance with the new scheme, as by the imposition of new conditions or the provision of only partial approval. According to the appellants, the two year time limit, afforded for the making of a DA(SPS), permitted a measure of certainty in considering potential compensation claims of the type they brought. It allowed the new planning scheme a little time to operate and land owners time to obtain proper advice, including as to any true loss of value of their "interest". Impact on accrued entitlements and The appellants acknowledged that IPOLA 2004 introduced a major change to planning law for the development and That change contemplated the SEQ Region. implementation of the SEQRP, following advice by a SEQ Regional Coordination Committee34. In the meantime, it provided for the observance of interests: 34 1997 Act, Ch 2 Pt 5A, divs 2 and 3, inserted by IPOLA 2004, s 8. See particularly ss 2.5A.4, 2.5A(10) and 2.5A.13(2). Kirby the DRP35. The appellants argued that the novel and radical amendments introduced in this way were not intended to abolish already established entitlements accrued under the 1997 Act. Had such abolition been intended, the appellants submitted, in what were otherwise detailed provisions, it would have been relatively easy to say so clearly and expressly. The Council responded to this argument by submitting that IPOLA 2004 had expressed its legislative purpose clearly, sufficiently and expressly. It had done so by the provisions of s 3.2.1(7)(f) already noted. Moreover, it had gone on to make the purpose of the amendments to the 1997 Act even more clear by providing that the Council, as assessment manager, after receiving and considering an application for development approval, could accept one that was "not a properly made application"36. However, that provision, in turn, was not to apply to an application "if the development would be contrary to the regulatory provisions or the draft regulatory provisions"37. The DRP prohibited small lot size developments as proposed by the appellants' application. The DRP, in so providing, was authorised by s 2.5A.12, introduced by IPOLA 2004, s 8. Relevantly, the applicable provision of that paragraph states: "(1) The SEQ regional plan may include regulatory provisions. The regulatory provisions may – otherwise regulate development by, for example, stating aspects of development that may not occur in stated localities". It was Pt G of the draft SEQRP that contained the applicable DRP. Section 1 of that Part allocated all land in the SEQ Region to identified "Areas". The map of the region in the Council's area allocated the appellants' land to a 35 1997 Act, s 2.5A.24, inserted by IPOLA 2004, s 8. 36 1997 Act, s 3.2.1(9), inserted by IPOLA 2004, s 10. 37 1997 Act, s 3.2.1(10)(b), inserted by IPOLA 2004, s 10. Kirby "Regional Landscape and Rural Production Area". By Div 3 of the DRP, applicable to such an Area, "reconfiguration" was prohibited where any resulting lot would have an area of less than 100 hectares. All of the lots proposed in the appellants' application fell within that prohibition. In this way, the Council submitted that the appellants' application was not "properly made" within s 3.2.1(7)(f) of the 1997 Act, as amended by IPOLA 2004. For their part, the appellants argued that they had acted pursuant to an already accrued entitlement under the pre-existing law which had not been destroyed, or relevantly diminished, by the supervening enactment of IPOLA 2004 nor by the DRP which took effect in October 2004 under the provisions of that Act. The issues Two issues thus arise in this appeal: The correct approach: What is the correct approach to the controversy presented by the arguments of the parties? Is it to be found wholly within the requirement of a "properly made application" to enliven a compensation "right"? If so, does the appellants' claim fail at the threshold because the development proposed in their application would be contrary to the DRP superimposed by IPOLA 2004? Or is this "too literalistic" an approach to the problem in hand? Is it first necessary to resolve the anterior question of whether, as a matter of law, the requirement inserted in s 3.2.1(7)(f) of the 1997 Act applied to an application, such as the appellants', arising out of an accrued, pre-existing entitlement to compensation, pursued within the then permitted time? the appellants' "application" breached one of The correct analysis: Once the first issue is resolved, it is then necessary to resolve the arguments in the appeal according to the correct approach. In the event that the correct approach requires no more than a consideration of s 3.2.1(7)(f), as it relates to the appellants' application at the time that it was made, there could be no real contest about the outcome of the appeal. The controversy is then indeed a very narrow one. At that time, the specified preconditions. It thus failed to enliven the powers of the Council (relevantly) to decide the outcome of the application and, in turn, to pay compensation to the appellants for the diminution in the value of their interest in the land. Upon this approach, as the joint reasons suggest, the resolution of this appeal is simple. If the broader approach, urged by the appellants, is adopted, it is not so simple. But, as I shall show, the broader approach eventually yields the same conclusion. Kirby The correct approach The "credit" to legislatures: The appellants were right in their submission that the proper approach to the problem of statutory construction presented by this appeal required the decision-maker to look beyond the requirements of s 3.2.1(7)(f) (and s 3.2.1(10)(b)) of the 1997 Act. True, these provisions are very important. However, they represent only one element in the accurate analysis of the legislation for the present purpose. The essential reason why this is so is to be found in the detail of the appellants' submissions. If the construction which they urge for the legislation is correct, pars (7)(f) and (10)(b) in s 3.2.1 of the 1997 Act, introduced by IPOLA 2004, simply did not speak to their case. The amending Act was silent as to their entitlements to compensation because those entitlements had already accrued. These might not be vested legal "rights" in the strict Hohfeldian sense (to use the phrase adopted by McHugh J in WAPC v Temwood Holdings Pty Ltd38). But (depending on a more detailed analysis) they might still necessitate a strict interpretation of the supervening legislation, so as to protect the accrued "entitlements" of affected land owners, such as the appellants. them were collected by In any modern society, legislation is constantly changing. Such changes will often impinge on what are claimed to be the accrued "entitlements" of persons, derived from pre-existing law. The casebooks are full of such instances. Several of Tew v Kenderaan Bas Mara39. That was an appeal from a decision of the Federal Court of Malaysia. Lord Brightman, who delivered the judgment of their Lordships, began his reasons with cases from the nineteenth century40. He proceeded to cases in the last century, including the decision of this Court in Maxwell v Murphy41, upon which the present appellants relied, as did the Privy Council in Yew Bon Tew42. the Privy Council 38 (2004) 221 CLR 30 at 45 [31]. This is a reference to the taxonomy of rights and duties that the philosopher W N Hohfeld set out in "Some Fundamental Legal Conceptions as Applied in Judicial Reasoning", (1913) 23 Yale Law Journal 16; cf Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 537 at 584; Mathieson v Burton (1971) 124 CLR 1 at 12-13; Downs v Williams (1971) 126 CLR 61 at 83. 40 Wright v Hale (1860) 6 H & N 227 [158 ER 94]; The Ydun [1899] P 236. 41 (1957) 96 CLR 261. 42 [1983] 1 AC 553 at 560-562. Kirby At the conclusion of his reasons43, Lord Brightman qualified what he called "the generality of the proposition stated by Lord Denning MR [in Mitchell v Harris Engineering Co Ltd44]" that: "[t]he Statute of Limitations [1623 (21 Jac 1, c 16)] does not confer any right on the defendant. It only imposes a time limit on the plaintiff." Lord Brightman explained45: "In the opinion of their Lordships an accrued entitlement on the part of a person to plead the lapse of a limitation period as an answer to the future institution of proceedings is just as much a 'right' as any other statutory or contractual protection against a future suit." Effect on "interests" and "entitlements": A review of the cases, in this and other courts, suggests that, in the present field of discourse, the presumption against retrospective abolition or qualification of existing interests is not one that has, traditionally, been given a narrow application. The ultimate explanation for this approach is that given by Barwick CJ in Geraldton Building Co Pty Ltd v May46. In effect, it is the "credit" that courts give to elected legislatures, in countries such as Australia, that "by their enactments, they intend to do justice to all affected parties"47. This "credit" may be displaced by a closer examination of the legislation in question, read with an eye to the entire context, to the legislative history and to any extrinsic materials that may be used to throw light on the parliamentary "intention" or purpose. However, because the presupposition of "credit" is one concerned with the operation of the law, affecting the practical legal expectations of those subject to the law, no narrow view has been, or should be, taken of its operation. This is why I have preferred in these reasons to use the word "entitlement" rather than "right". It indicates that what is involved may fall short of an 43 [1983] 1 AC 553 at 564-565. 44 [1967] 2 QB 703 at 718. 45 [1983] 1 AC 553 at 565. 46 (1977) 136 CLR 379 at 387. 47 Dossett (2003) 218 CLR 1 at 17 [55]. See also L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd [1994] 1 AC 486 at 524-525 per Lord Mustill; Government of United States v Montgomery [2001] 1 WLR 196 at 205 per Lord Hoffmann; [2001] 1 All ER 815 at 825. Kirby immediately enforceable legal right in the strict sense. For example, it might be a right subject to procedural steps that are treated as routine and straightforward. "Accrued entitlement", it should be noted, was the phrase that Lord Brightman used in Yew Bon Tew48 to explain the broader types of "rights" protected against extinguishment by non-specific laws. The House of Lords has accepted49, as did the Privy Council earlier50, that inchoate rights, obligations and liabilities are protected by statutory provisions such as s 20 of the Acts Interpretation Act 1954 (Q) which the appellants invoked here. The same is true of the common law principle that preceded, and moulds itself to, such statutory provisions. The foregoing the approach Cases of this kind commonly provoke dissenting opinions52. This fact itself suggests that a non-mechanical approach to the protection of "entitlements", rather than of strict "rights", is at stake. The search is one for the overall effect and operation of the legislation. this Court adopted that In Attorney-General (Q) v AIRC53 and in Dossett v TKJ Nominees Pty Ltd54, there were substantial arguments for a construction of the legislation different from that which this Court unanimously accepted. Such arguments may not be appreciated, and given proper weight, if one latches onto a particular statutory word or phrase, read in isolation. The present appellants' submissions (and complaint) can thus only be appreciated if the scrutiny of the legislation commences at a point of time well before they lodged their DA(SPS). Advances in statutory interpretation: The controversy now expressed is, in a sense, another reflection of the debate about statutory interpretation more 48 [1983] 1 AC 553 at 565. 49 Plewa v Chief Adjudication Officer [1995] 1 AC 249 at 259 per Lord Woolf. 50 Free Lanka Insurance Co Ltd v Ranasinghe [1964] AC 541. 51 (1957) 96 CLR 261 at 267 per Dixon CJ, 279 per Williams J. 52 See eg the dissent of Fullagar J in Maxwell v Murphy (1957) 96 CLR 261 at 283- 291; the reasons of Kitto J at first instance in Continental Liqueurs Pty Ltd v G F Heublein and Bro Inc (1960) 103 CLR 422 at 426-427, reversed in G F Heublein and Bro Inc v Continental Liqueurs Pty Ltd (1962) 109 CLR 153 at 159-160 and note the dissent of Brennan J in Esber v The Commonwealth (1992) 174 CLR 430 at 442-453. 53 (2002) 213 CLR 485 at 521-524 [104]-[111]. 54 (2003) 218 CLR 1 at 19-23 [64]-[75]. Kirby generally. Traditionally, the English law and its derivatives (including in Australia) adopted a fairly strict, textual, literal, or "grammatical" approach to interpretation55. However, in more recent years, in part because of a growing understanding of how ideas and purposes are actually communicated by words, this Court56, English courts57 and other courts of high authority throughout the common law world have embraced a broader, contextual reading of statutory language and other texts having legal effects58. Specifically, this Court has accepted that it is an error of interpretive approach to take a word or phrase in legislation and to read that word or phrase divorced from its immediately surrounding provisions (and any other relevant indicia of meaning such as legislative history, stated purposes and admissible extrinsic materials) 59. Once it was thought necessary that there should be an "ambiguity" in the word or phrase before that wider search was proper, or even permissible. Recent authority of this Court has rejected that requirement60. It follows that the appellants' arguments are not fully met by pointing to the language of s 3.2.1 of the 1997 Act, and pars (7)(f) and 10(b) inserted by IPOLA 2004. It remains to be decided whether the added expressions apply to the appellants' already accrued entitlements under the 1997 Act. Alternatively, should the provisions of s 3.2.1 be read down in conformity with the presumption 55 A classical example of this approach in the constitutional setting is the Engineers Case: Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129. 56 See eg Potter v Minahan (1908) 7 CLR 277 at 304-305; Bropho v Western Australia (1990) 171 CLR 1 at 17-18; Coco v The Queen (1994) 179 CLR 427 at 57 R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 58 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 112-113; Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69], 59 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 396-397 applying R v Brown [1996] 1 AC 543 at 561 per Lord Hoffmann: "The significance of individual words is affected by other words and the syntax of the whole." 60 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408. Kirby explained by Griffith CJ in Clissold v Perry61, and repeatedly applied before and since in this and other courts? That is: "[i]t is a general rule to be followed in the construction of Statutes such as that with which we are now dealing, that they are not to be construed as interfering with vested interests unless that intention is manifest." The word "interests" in this passage avoids the Hohfeldian nuances imported by talk of "rights". The appellants argue that they had vested "interests", permitting them within two years to lodge a DA(SPS). They assert that they pursued those "interests" within time and that s 3.2.1(7)(f) and s 3.2.1(10)(b), by their lack of specificity and particularity, did not deprive them of such "interests". A glance at earlier decisions, in analogous circumstances, shows that this argument is far from worthless. Interpretations no more bold than that urged by the appellants have sometimes been accepted by courts in similar cases. It is therefore necessary to grapple with the broader considerations urged by the appellants in order to reach the conclusion in this appeal that is required by a correct interpretation of the legislation, and all of it. The appellants' arguments An accrued interest: The legislative background to planning law in Queensland, preceding both the 1997 Act and IPOLA 2004, establishes the fact that, for decades (since at least 1936), provisions had existed in various forms entitling the owners of interests adversely affected by supervening changes in planning law to apply for redress. Such redress might involve a quasi-fictitious treatment of a development application, as if it had been brought under the pre- existing planning law. When that option was not adopted, in whole or in part, there lay an entitlement to reasonable compensation. Such statutory provisions reflected the Queensland Parliament's attempt to balance the public interest in a principled development of planning law against the impact which changes in planning law inevitably have on the value of individual interests in land. The hypothesis behind the successive statutory provisions was that ratepayers generally should contribute to reasonable compensation of individuals who suffer loss as a direct result of supervening changes. In this way, the legislative provisions, carried into the 1997 Act, were designed to ensure overall fairness. 61 (1904) 1 CLR 363 at 373. See generally, Gray, "Can environmental regulation constitute a taking of property at common law?", (2007) 24 Environmental and Planning Law Journal 161 at 165-166. Kirby It was common ground that, had the appellants made their DA(SPS) before IPOLA 2004 altered the planning law applicable to the SEQ Region, they would, at the least, have been entitled to reasonable compensation for any planning decision of the Council refusing them development approval for reconfiguration of their land into lots of the size that they proposed. This was because, under the planning regime in force immediately before IPOLA 2004, the appellants' interests carried with them an entitlement to seek reconfiguration of the land in the manner desired, without any relevant prohibition. Moreover, the appellants had two years from the change of the earlier planning regime to make their DA(SPS), a time requirement to which they conformed. The appellants' primary argument was, therefore, that although they had not lodged their DA(SPS) before IPOLA 2004 commenced, that statute (and the particular additional provisions governing the form of a "properly made application") should not be construed so as to impinge adversely on their accrued statutory "interests". Conformably with the rule protective of accrued "interests", the only way that such "interests" could be affected was by clear and express provisions in IPOLA 2004. The appellants argued that IPOLA 2004 contained no such clear and express provisions. The amendments which that Act introduced to s 3.2.1 of the 1997 Act (and more specifically the DRP) should therefore be read prospectively. They should not be read so as to effect a deprivation of "interest" that Parliament had not provided for in terms. Such a reading of the provisions of the 1997 Act, as amended by IPOLA 2004, would not be legally impossible. Lack of explicit repeal: In particular, the appellants pointed out that nothing in IPOLA 2004 had expressly repealed the compensation provisions of the 1997 Act, in so far as those provisions concerned development applications as such, including by way of a DA(SPS) specific to land in the SEQ Region. Accordingly, their argument ran, no clear and express provision existed addressing the basis upon which the appellants had, within the allotted time, lodged their DA(SPS) for compensation. Even if, put generally, it could be argued that the supervening DRP contemplated a development regime in the SEQ Region inconsistent with the pre- existing planning scheme, the appellants submitted that such changes said nothing at all about the alternative entitlement to reasonable compensation, which was their true interest at this stage of the proceedings. If, because of the supervening DRP, the Council was prohibited from giving approval for the development proposed by the appellants, there remained available, as the appellants demanded, an entitlement to "reasonable compensation" in accordance with the 1997 Act. As the review of legislation showed, that entitlement had a long history. If the entitlement to compensation was to be abolished by Parliament, in respect of their interests, the appellants submitted that it had to be abolished Kirby in recovering clearly, certainly once "interests" the compensation had crystallised. The appellants' interests crystallised before IPOLA 2004 was enacted and commenced operation. The appellants therefore argued that their entitlement the introduction of the added requirements for a "properly made application". Any such supervening alterations should be read as affecting only future applications that did not impinge upon already crystallised "interests", such as theirs. to compensation had not been abolished indirectly by Lack of openness: To reinforce the foregoing arguments, the appellants relied on the absence of any clear identification of a legislative purpose to abolish their compensation right. Not only was such an abolition not clearly spelt out in the legislation itself (for example, by an express qualification to the right to "reasonable compensation" in s 5.4.2 of the 1997 Act). There was no statement to that effect in the Explanatory Memorandum published with IPOLA 2004. The Court was not provided with the Minister's Second Reading Speech. It can be reasonably inferred that there was nothing in it to support the abolition of entitlements or to suggest that it was specifically drawn to the notice of Parliament and the community. Moreover, there were transitional provisions for the introduction of IPOLA 2004. These were inserted in the 1997 Act as a new s 6.4.1 ("Effect of SEQ regional plan for assessing and deciding applications under transitional planning schemes")62. Nothing in the transitional provisions spelt out an abolition of accrued entitlements. these circumstances, the appellants argued, if a provision of particularity and specificity was necessary to deprive persons, such as themselves, of a vested "interest", such a provision was missing in IPOLA 2004. If the alterations to the requirements of a "properly made application" were, after October 2004, to be taken as applicable to the pursuit of the appellants' accrued entitlement, the consequence would be to render that entitlement worthless. It would still be open to the appellants to make their "application" within time by way of a DA(SPS). But, by a "trick of drafting", doing so would be no more than a charade. The "application" would be doomed to fail because the development proposed would be contrary to the DRP, rendering it impossible to make a "proper application". The only way to avoid this "trick of drafting" would be to read the altered provisions of s 3.2.1 of the 1997 Act as applicable prospectively and as not therefore relevant to claims for compensation still within time to be decided by the "assessment manager" or the courts. Rationale for openness: In further support of the foregoing arguments, the appellants reminded the Court of the reasons that lay behind both the relevant common law principle and the statutory presumption stated in the Acts 62 By IPOLA 2004, s 30. Kirby Interpretation Act 1954 (Q), s 2063. Those reasons included avoidance of the abolition of accrued entitlements by oversight, accident or mistake, and "[t]hose who set out to abolish existing rights [should be] obliged to face the consequences of what they have done. In the modern processes of to assume political democratic government accountability for their actions." (footnote omitted) they are required In the Court of Appeal, Jerrard JA acknowledged that, to the extent that it was foreshadowing a possible loss of rights, s 3.2.1(7)(f) of the 1997 Act "could have been made clearer"65. The appellants submitted that this was something of an understatement. To the extent that the amendments to s 3.2.1 of the 1997 Act had such an effect, they only achieved it in a "heavily disguised way". In the absence of any other explicit indications that this was the object of the Government and the purpose of Parliament, the appellants urged this Court to read the provisions so as to promote democratic accountability by insisting on explicit, not hidden, abolition of such entitlements. By explaining the appellants' arguments in the way that I have, I trust that I have indicated why those arguments need to be answered. I must now explain why, ultimately, I do not accept the arguments and join in the conclusion that the appeal should be dismissed. The entitlement to compensation was abolished Commencing with the legislative text: The correct starting point for the analysis of any question such as the present is the statute itself. This is a common theme of recent decisions of this Court66. Common law principles, judicial dicta and earlier cases will only take the decision-maker so far. The ultimate conclusion to a problem such as this must be derived from a close study 63 The section reads, relevantly, "[t]he repeal or amendment of an Act does not … affect a right, privilege or liability acquired, accrued or incurred under the Act": s 20(2)(c). 64 Dossett (2003) 218 CLR 1 at 26-27 [87]; cf Daniels Corp International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 65 Chang (2006) 146 LGERA 283 at 291 [20]. 66 The cases are collected in Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 80 ALJR 1509 at 1528 [84]; 229 ALR 1 at 22-23. Kirby of the legislation. This should not be confined to a single provision (such as the sub-paragraphs of s 3.2.1 of the 1997 Act added by IPOLA 2004). The whole scheme of the legislation has to be read in order to derive the meaning of particular provisions where they are said to impinge upon crystallised "interests" and already established "entitlements". The criticisms which the Court of Appeal of Queensland, in an earlier case67, made of the drafting style used in the 1990 Act, may also be made of the 1997 Act and IPOLA 2004. However, it remains the duty of the courts to derive the purpose of the legislation from the language in which that purpose is expressed68. Statutory interpretation is necessarily a text-based activity. Where the drafter has adopted a particular style, and the purpose is clear enough, the courts must give effect to the purpose whatever their feelings may be about the unfairness of the consequence of doing so. When the entitlement to compensation for a reduced value of an interest in land was enacted in s 5.4.2 of the 1997 Act, it introduced for the first time a bifurcated requirement for the remedies provided. Not only was it necessary for the owner of the interest in land to establish "a change [that] reduces the value of the interest". It was also necessary to prove three other elements, each concerned with the DA(SPS) there mentioned. Thus, from the time of the introduction of the concepts in s 5.4.2 of the 1997 Act, particular features of the DA(SPS) became preconditions to the entitlement to compensation by a local government body such as the Council. The first of these features was that a DA(SPS) for a development permit relating to the land "has been made". On the face of things, this meant "has been made in accordance with the Act". Necessarily, this provision imported requirements applicable to any DA(SPS) under the Act, as provided from time to time. When the scheme of s 5.4.2 of the 1997 Act is remembered, the introduction of new requirements into the preconditions for a "properly made application" under the Act is not as "heavily disguised" as the appellants argued. True, it would have been open to the Queensland Parliament to have altered expressly the formula for the entitlement to compensation in sub-par (a) of s 5.4.2 by qualifying that provision. But, in the logic of the legislative scheme, it was also open to Parliament to change the preconditions for a valid DA(SPS). In the event, Parliament elected for the second approach, rather than the first. 67 Ace Waste Pty Ltd v Brisbane City Council [1999] 1 Qd R 233 at 236. 68 Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518; Saraswati v The Queen (1991) 172 CLR 1 at 22; Federal Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 145 [81]-[82]. Kirby The use of the chosen drafting technique is open to many of the criticisms levelled at it by the appellants. On the face of the 1997 Act, it is less than entirely clear in its effect. It therefore attracts the more rigorous analysis that will follow. But the starting point is a realisation that, as a matter of technical drafting, it was open to parliamentary counsel to adopt the course chosen, however much it might be criticised for hiding, rather than candidly revealing, its intended effect upon the form of application. Internal evidence of legislative purpose: When Parliament established, in s 5.4.2 of the 1997 Act, the making of a DA(SPS) as a criterion for the entitlement to be paid reasonable compensation, this necessarily imported any statutory requirements as to the validity of such an application. Of its nature, an "application" is a document that makes a request. Such a request is made at a particular, identifiable moment. Legal consequences commonly attach to it. It is by no means unusual in legal practice for this to be so. An application for relief from a court, in the form of a writ of summons or statement of claim, will fix a moment by reference to which legal consequences will often flow. The application of a statute of limitations for the commencement of proceedings or of rules of court governing time to initiate process or take a step in process, are familiar cases in point. Because an "application" is a form of legal process that typically has legal consequences attached to it, identification of the time when the application is made is often critically important. Every lawyer, and many citizens, know this. In the present case, the fact that the appellants' application by a DA(SPS) was delayed (for whatever reason) and finally lodged after IPOLA 2004 had introduced new requirements for "a properly made application" into the 1997 Act, makes it unsurprising that the new requirements should apply to it. It has long been recognised that the law appointing or regulating the manner in which rights and liabilities are to be enforced or their enjoyment is to be secured by judicial remedy is not within the application of the presumption against the alteration of "interests" or "entitlements"69. In Republic of Costa Rica v Erlanger70, Mellish LJ remarked: "No suitor has any vested interest in the course of procedure, nor any right to complain, if during the litigation the procedure is changed, provided, of course, that no injustice is done." 69 This is so, for example in India. See eg Gurbachan Singh v Satpal Singh AIR 1990 SC 209 at 219; Singh, Principles of Statutory Interpretation, 9th ed (2004) at 441- 443 citing Maxwell, Interpretation of Statutes, 11th ed (1962) at 216. 70 (1876) 3 Ch D 62 at 69. Kirby The appellants, however, complained that an injustice had been done to them. Yet it was because they had not lodged their "application" by way of a DA(SPS) before the supervening changes were introduced by IPOLA 2004, that they were not in a position to assert that all of the preconditions required by s 5.4.2 had been fulfilled. This was not, therefore, a case of "transactions past and closed"71. Nor was it one where "all matters that have taken place under [the previous law] before its repeal are valid and cannot be called in question"72. Nor were all of the relevant "transactions already completed under it"73. A procedural step designated by Parliament as essential to an entitlement to be paid reasonable compensation had not been taken by the appellants before the requirements of the procedure were changed. By long authority, courts are more ready to tolerate the application of supervening procedural changes with retrospective operation than they are changes to substantive entitlements and interests. Here, the requirement of a "properly made application" was partly procedural but also partly substantive. The importance of the time of making the application by way of a DA(SPS) was made clear by the provisions of the 1997 Act, as in force before the amendments introduced by IPOLA 2004 took effect. Thus, s 5.4.2(c) provided, as a necessary precondition to an entitlement to be paid reasonable compensation: "the application is assessed having regard to the planning scheme and planning scheme policies in effect when the application was made". Ordinarily, an application will attract to its consequences the law applicable at the time when it was made74. At the time the appellants' DA(SPS) was made, the supervening amendments to s 3.2.1(7)(f) and 3.2.1(10)(b) were already in force. Thus, the internal indications of the 1997 Act75 support the Council's submission that the new requirements applied to all applications made 71 Surtees v Ellison (1829) 9 B & C 750 at 752 per Lord Tenterden CJ [109 ER 278 at 72 R v Inhabitants of Denton (1852) Dears 3 at 8 per Lord Campbell CJ [169 ER 612 73 Butcher v Henderson (1868) LR 3 QB 335 at 338 per Blackburn J. The foregoing cases are cited by Dixon CJ in Maxwell v Murphy (1957) 96 CLR 261 at 267. 74 See Yew Bon Tew [1983] 1 AC 553 at 558; Plewa v Chief Adjudication Officer [1995] 1 AC 249 at 256. 75 Section 5.3.1 of the 1997 Act expresses a common criterion in the Act. See eg ss 6.1.25, 6.1.26 and 6.1.28. Kirby after the amendment took effect. By that time, the "draft regulatory provisions" were in force, rendering the very subject matter of the application, as filed, impermissible because expressly prohibited. Enactment of an important policy: The foregoing conclusion is further reinforced by reference to other provisions of the 1997 Act and to the relevant purposes in IPOLA 2004. The latter Act provided, unusually, that "draft regulatory provisions" should have immediate effect, ie even before the final provisions contemplated by the SEQRP were adopted and brought into force. Why should such unusual provisions find their way into State law? Why would the Parliament of Queensland have inserted into the 1997 Act provisions expressed in such an unusual way? What reasons of public policy explained the adoption of this significant new approach to planning law applicable to part only of the State of Queensland, and with its commencement even in advance of the final regional planning provisions? The answers to these questions were not provided by any evidence contained in the record. Presumably, this was because the answers were well known to the Council and to the Planning and Environment Court of Queensland, a specialist Court that heard these proceedings at first instance. They may also have been known to the Court of Appeal of the State. Many of the reasons are doubtless found in the brochure containing the DRP applicable to the present case and supplied to this Court. Because this document was tendered only as a vehicle to establish the terms of the DRP and not for the factual statements otherwise contained within it, it would be wrong for this Court to treat as matters of established fact the contents of the brochure concerning the SEQRP; the reasons that lay behind its adoption; and the "regional vision" to which the plan (and specifically the DRP) was intended to contribute. Nevertheless, it is within common knowledge that, since the 1980s, the South-East Region of the State of Queensland has grown faster than virtually any other population centre in the Commonwealth. This growth has obviously required the provision of a very large number of new dwellings, supporting infrastructure services and protection of the natural environment so as to preserve bushlands, beaches, bays, waterways and other features of the region chosen for special, integrated planning laws. In the context of such a novel, comprehensive and important development for the planning law of the State, grafted by IPOLA 2004 onto the 1997 Act, it would be contrary to the canons of construction, now observed by this Court, to construe particular provisions in a way that would undermine the achievement of the apparent statutory objectives. Relevantly, for land in a "Regional Landscape and Rural Production Area" (such as the appellants' land), reconfiguration of a lot Kirby could not occur if any resulting lot would have an area of less than 100 hectares76. For the important environmental purposes for which this supervening prohibition has been introduced, and advanced in its operation by unusual provisions given effect to such DRP, a construction of the 1997 Act that contradicted such a prohibition should not, on the face of things, be favoured. The appellants, however, submitted that this was not their objective. They did not really seek planning approval inconsistent with the prohibition in the DRP. They merely asked for "reasonable compensation" for the injurious affection to their land by reason of supervening planning laws restricting their right to reconfigure the land77. the Before this Court. introduction of An integrated interpretation: This argument required the appellants to confront a further textual problem in the construction of the Act which they urged on the prohibition on reconfiguration contained in the DRP, the preconditions for the entitlement to be paid "reasonable compensation" included that set out in s 5.4.2 of the 1997 Act. This was that the application, in the form of a DA(SPS), might either be refused (by "the assessment manager, or, on appeal, the court") or approved ("in part or subject to conditions or both in part and subject to conditions"78). Thus, the assumption of the legislative scheme existing before IPOLA 2004 was that a Council (as "assessment manager") might reduce its liability to pay monetary compensation to applicants such as the appellants by electing to approve their application, in whole or part, as if the pre-existing planning scheme previously applicable to the Area, still operated. Once the pre-existing Council planning areas were replaced, relevantly, by areas designated by reference to the DRP, this option was no longer available to a local authority such as the Council. In the DRP, the prohibition against the reconfiguration sought by the appellants was clear and absolute. There was no possibility that the Council could give approval "in part or subject to conditions or both in part and subject to conditions". It follows that one hypothesis within the preconditions for the payment of "reasonable compensation" had been removed in such a case. Moreover, it was removed without qualification and with virtually immediate application so as to achieve substantial objectives of public policy treated by the Parliament of Queensland as both exceptional and urgent. 76 DRP Div 3, s 4(2)(c). 77 cf Gray, "Can environmental regulation constitute a taking of property at common law?", (2007) 24 Environmental and Planning Law Journal 161 at 163-165. 78 1997 Act, s 5.4.2(d)(i) and (ii). Kirby Against this background of statutory analysis, addressed to the entirety of the legislation, its history and objects, the introduction in s 3.2.1(7)(f) and the 1997 Act of requirements, effectively forbidding s 3.2.1(10)(b) of development approvals that would be contrary to the DRP, is less surprising. Likewise, the effective abolition of what had earlier been a crystallised "interest" or "entitlement" to reasonable compensation is less surprising because such "interest" or "entitlement" no longer enlivened the earlier legislation. The significant option for action by the Council concerned (and, on appeal, the courts) was abolished. To preserve the entitlement to monetary compensation in the absence of the previous power to moderate its burden would demand substantial surgery upon the text of the legislation and carry into effect a significantly different legislative policy than that apparent in the supervening law. The statutory presumption: Insofar as the provisions of the Acts Interpretation Act, s 20 add anything to the common law presumption against the retrospective effect of legislation on established interests, the operation of the statutory provision is excluded in this case because of the existence in the legislation, read as a whole, of a sufficient indication of a contrary intention or purpose. Dossett is distinguishable: This leaves only the appellants' complaint about the "disguised" way by which the legislature abolished their entitlement to make an application, in the form of a DA(SPS), having any chance of success. Specifically, the appellants asked how, in the circumstances, the Government and the officials who proposed the termination of accrued "entitlements" were rendered accountable, the principle of democratic answerability to a Parliament of a State of the Commonwealth. in accordance with The complaint about the opacity of the amending drafting device is a fair one. It would have required a particularly knowledgeable and diligent member of the Queensland Parliament to have appreciated the change that was being effected in such a manner to the "interests" of people such as the appellants. The prospects of a citizen appreciating the change were even slighter79. On the other hand, those who had specialised knowledge of this field of law would have been aware of the requirements for an entitlement to compensation. Had the appellants moved more quickly to assert their initial claim, they might have avoided the "unfairness" that supervened. 79 Cf Watson v Lee (1979) 144 CLR 374 at 381 per Barwick CJ: "No inconvenience in government administration can, in my opinion, be allowed to displace adherence to the principle that a citizen should not be bound by a law the terms of which he has no means of knowing." Kirby In the unanimous opinion of the House of Lords in Plewa v Chief Adjudication Officer80, Lord Woolf, who gave the reasons of their Lordships, cited with approval an approach to this problem explained by Staughton LJ in Secretary of State v Tunnicliffe81: "Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. It is not simply a question of classifying an enactment as retrospective or not retrospective. Rather, it may well be a matter of degree – the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended." In the present case, the appellants have identified an unfairness flowing from the drafting technique that was used, in effect, to destroy their surviving entitlement to make a viable DA(SPS). However, that result flows from the language of the 1997 Act; the amendments introduced to it by IPOLA 2004; the impossibility thereafter of maintaining the pre-existing scheme for entitlement to reasonable compensation; the introduction by the DRP (with the authority of Parliament) of the absolute prohibition on the development proposed; and the large environmental and social purposes for the SEQ Region to which the alteration of the law gave effect. If these considerations, and the appellants' own delay in lodging their DA(SPS), are weighed in the balance, the degree of "unfairness" in the outcome, to adopt Staughton LJ's approach, is not one that would support the strained interpretation of the 1997 Act, as amended by IPOLA 2004, urged by the appellants. It remains a misfortune that this consequence, if it was realised by the drafters at the time (as by inference it was), was not drawn explicitly to the notice of Parliament either in the text of the statutory amendments or in the supporting documents. And that it was not candidly acknowledged as an outcome to be accepted by Parliament, the people of Queensland and the affected persons as a price for the achievement of a major new planning regime for the SEQ Region. None of this occurred. Instead, the change was effected by stealth82. The parliamentary process did not operate as it is intended, so that those who were depriving people, such as the appellants, of their entitlements and expectations, shouldered the responsibility and assumed public accountability for the 80 [1995] 1 AC 249 at 257. 81 [1991] 2 All ER 712 at 724; cf L'Office Cherifien des Phosphates v Yamashita- Shinnihon Steamship Co Ltd [1994] 1 AC 486 at 524-525. 82 See also reasons of Callinan J at [125]. Kirby amendments which they enacted83. Although the appellants' delay contributed to their own misfortune, I have some sympathy for the predicament in which they now find themselves. Nevertheless, in the face of the legislative provisions, viewed in their entirety against the background of their history and purpose, there is nothing that this Court can do to breathe new life into the appellants' entitlement to seek compensation for the alteration of their interests. Conclusion and orders For these reasons, and not solely for a textual application of the expression "a properly made application" in s 3.2.1 of the 1997 Act, I agree that the appeal should be dismissed with costs. 83 See R v Home Secretary; Ex parte Simms [2000] 2 AC 115 at 131: "the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost"; approved in Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 492 [30] per Gleeson CJ, and in my own reasons in Daniels Corp (2002) 213 CLR 543 at 582 [106]. HAYNE, HEYDON AND CRENNAN JJ. In 2004 the appellants applied to the respondent Council for approval for reconfiguration of their land, at Blenheim in South East Queensland, from one lot into 25 lots. The planning provisions that then applied did not permit the proposed reconfiguration; earlier provisions would have permitted it. The issue In this Court the appellants sought to frame the issue that arises as whether, in these circumstances, the appellants are entitled to compensation from the Council on account of the diminution in value of their land brought about by their being unable to subdivide it as once they could. In the courts below, however, the issue that was decided was more narrowly focused. The determinative issue in those courts was whether the development application the appellants had made to the respondent Council was what the applicable legislation84 identified as a "properly made application"85. The Planning and Environmental Court of Queensland held86 that it was not. The Court of Appeal of Queensland refused87 the appellants leave to appeal. By special leave the appellants now appeal to this Court. Their appeal should be dismissed with costs. The applicable legislation The Integrated Planning Act 1997 (Q) ("the 1997 Act") entitles88 an owner of an interest in land to be paid "reasonable compensation" by a local government89 for the local government area where a development is proposed, if four conditions are met. Section 5.4.2 of the 1997 Act provides, and has provided at all times material to this matter, that: 84 Integrated Planning Act 1997 (Q), ("the 1997 Act") as amended by the Integrated Planning and Other Legislation Amendment Act 2004 (Q) ("IPOLA 2004"). 85 See s 3.2.1(7). 86 Chang v Laidley Shire Council [2006] QPELR 91. 87 Chang v Laidley Shire Council (2006) 146 LGERA 283. 89 s 1.3.8(e). "An owner of an interest in land is entitled to be paid reasonable compensation by a local government if— a change reduces the value of the interest; and a development application (superseded planning scheme) for a development permit relating to the land has been made; and the application is assessed having regard to the planning scheme and planning scheme policies in effect when the application was made; and the assessment manager, or, on appeal, the court— refuses the application; or approves the application in part or subject to conditions or both in part and subject to conditions." Two expressions used in s 5.4.2 require explanation. First, a "change", referred to in s 5.4.2(a), is defined90 "for an interest in land, [as] a change to the planning scheme or any planning scheme policy affecting the land". Secondly, reference is made in s 5.4.2(b) to "a development application (superseded planning scheme)". That expression is defined in the dictionary of definitions contained in Sched 10 to the 1997 Act that is applied to the Act by s 1.3.1. The definition reveals that a development application (superseded planning scheme) is a particular species of the genus "development application". It is therefore an application which engages provisions of the legislation applying generally to all development applications. The definition of a development application (superseded planning scheme) has two limbs. Both refer to a "superseded planning scheme". That is defined91, for a planning scheme area, as the planning scheme, or any related planning scheme policies, in force immediately before: the planning scheme or policies, under which a development application is made, were adopted; or 91 Sched 10 definition of "superseded planning scheme". the amendment, creating the superseded planning scheme, was adopted". The first limb of the definition of a development application (superseded planning scheme) concerns developments that would not have required a development permit under a superseded planning scheme, but require a development permit under the planning scheme in force at the time the application is made. This limb of the definition has no application in the present matter. The other limb of the definition (the limb which covers all other developments, and is presently relevant) identifies a development application (superseded planning scheme) as having three characteristics. It is an application: in which the applicant asks the assessment manager to assess the application under a superseded planning scheme; and (ii) made only to a local government as assessment manager; and (iii) made within 2 years after the day the planning scheme or planning scheme policy creating the superseded planning scheme was adopted or the amendment creating the superseded planning scheme was adopted." these When terms "change" and "development application (superseded planning scheme)" are understood, it is then apparent that s 5.4.2 of the 1997 Act provides for compensation in cases where: two there has been a change to the planning scheme that reduces the value of an interest in land (in this case the interest of the owners); the owners have made application for a development permit and have asked that the application be assessed under a superseded planning scheme (being one that was superseded no more than two years before the application was made); the application is not assessed under the superseded planning scheme but is assessed "having regard to the planning scheme and planning scheme policies in effect when the application was made"; and the application is refused in whole or in part, or approved subject to conditions. That provision for compensation may be contrasted with the provision for compensation that it replaced: s 33(10) of the Local Government Act 1936 (Q). Under that earlier provision, a person who had an estate or interest in land included within a planning scheme and whose estate or interest was "injuriously affected" by the coming into operation of the scheme was entitled to compensation. Under s 5.4.2 of the 1997 Act, more than injurious affection must be demonstrated. In particular, the appellants rightly accepted that a right to compensation under s 5.4.2 can arise only if a development application (superseded planning scheme) has been accepted by a Council, assessed in a particular way, and then either refused or approved subject to conditions. It was not disputed that no right to compensation under s 5.4.2 can arise if the Council was entitled to and did refuse to accept the development application. It follows that, contrary to the way in which much of the appellants' submissions were advanced in oral argument, the question for this Court, as it was for the courts below, is whether the development application which the appellants made to the respondent Council should have been received by the Council. That turns on whether the application was a "properly made application". The determination of that question requires some further understanding of the relevant facts and legislative events. The facts and legislative events On 3 December 2004, the appellants submitted a development application (superseded planning scheme) to the respondent Council seeking reconfiguration of their land from one lot into 25 lots. Before the appellants submitted this application there had been two significant legislative events. First, the Integrated Planning and Other Legislation Amendment Act 2004 (Q) ("IPOLA 2004") had been enacted and the relevant amendments made by that Act had come into operation on 17 September 2004. Secondly, "draft regulatory provisions" made under the "draft SEQ regional plan" had come into effect on 27 October 2004. It is necessary to say more about both of these matters. IPOLA 2004 amended the 1997 Act. Two aspects of those amendments are important. First, IPOLA 2004 introduced into the 1997 Act a new Part (Pt 5A) regulating regional planning in the "SEQ region". The "SEQ region" was defined by reference to local government areas and covered the south eastern corner of the State. It includes the local government area of the respondent Council, and thus includes the appellants' land. The new Pt 5A, introduced by IPOLA 2004, provided (s 2.5A.13) for the preparation of a "draft SEQ regional plan". That plan, once prepared, was open for public consideration and comment, but the 1997 Act, as amended by IPOLA 2004, provided (s 2.5A.24) that the proposed regulatory provisions contained in the draft (referred to as "draft regulatory provisions") "have effect until the SEQ regional plan comes into effect". The consequence of these provisions was that when the draft regulatory provisions came into effect, the reconfiguration of the appellants' land which they were later to propose was forbidden because each of the resulting lots would have an area less than the prescribed minimum area of 100 hectares92. Indeed, before the draft regulatory provisions came into effect, the planning provisions that had been adopted for the Council's local government area on 28 March 2003 ("the 2003 planning scheme") would not have permitted such a reconfiguration. Before IPOLA 2004, however, the appellants could have made a development application (superseded planning scheme) asking the Council to consider their proposed reconfiguration under the planning provisions immediately preceding the 2003 planning scheme (a scheme adopted in 1996). The second important aspect of the amendments made to the 1997 Act by IPOLA 2004 lay in the amendments made to the provisions of the 1997 Act governing applications for development approval. Part 2 of Ch 3 of the 1997 Act (ss 3.2.1 to 3.2.15) as it stood before IPOLA 2004 regulated what it described as the "Application stage". Other Parts regulated the "Information and referral stage", the "Notification stage" and the "Decision stage". The amendments to which attention must now be drawn amended a critical provision of Pt 2 of Ch 3: s 3.2.1. Section 3.2.1 prescribed the method of applying for development approval. Both before and after IPOLA 2004, the section permitted93 the person to whom the application was directed (the "assessment manager") to "refuse to receive an application that is not a properly made application". If that power of refusal was not exercised and, after consideration, the application was accepted, the application was "taken to be a properly made application"94. Sub-section (7) of s 3.2.1 identified what was "a properly made application". Before IPOLA 2004 there were five characteristics of a properly 92 Draft SEQ regional plan, Pt G, draft regulatory provisions, s 4. made application (which included such matters as being made in the approved form and being accompanied by the requisite fee). IPOLA 2004 added a sixth requirement: that "the development would not be contrary to the regulatory provisions or the draft regulatory provisions". Further, IPOLA 2004 added an additional qualification to the deeming provisions of s 3.2.1(9) (that if, after consideration, an application was accepted it "is taken to be a properly made application"). The further qualification made to this deeming provision was by amendment to s 3.2.1(10) so that it provided that sub-s (9) does not apply to an application "if the development would be contrary to the regulatory provisions or the draft regulatory provisions". This being the state of the statute law when the appellants made their development application (superseded planning scheme), the respondent Council concluded that it could not accept the application because the development proposed would be contrary to the draft regulatory provisions. The Council refused to receive the application on the footing that it was not "a properly made application". As indicated earlier in these reasons, it was this characterisation of the appellants' development application that lay at the heart of the proceedings they instituted in the Planning and Environment Court. Although other relief was sought (relief on bases not pursued in this appeal) the hinge about which the proceedings in that Court turned (in the respects that give rise to the live issue in this Court) was the claim for an order that the appellants' development application is a properly made application pursuant to s 3.2.1 of the 1997 Act. If the law as it stood at the time the appellants made their development application (superseded planning scheme) were applied according to its terms, that issue had to be resolved against the appellants. When they lodged their application, the 1997 Act (as amended by IPOLA 2004) defined a properly made application in a way that excluded the appellants' application. It excluded the appellants' application because the development they sought (reconfiguration from one lot to 25 lots) was contrary to applicable draft regulatory provisions. No doubt it was against this understanding of the operation of the relevant provisions that the appellants sought to define the relevant issue differently. The central contention of the appellants in the appeal to this Court was that they "had a potential right to statutory compensation under [the 1997 Act] ... of sufficient substance as to be preserved by s 2095 of the Acts Interpretation Act 1954 (Qld) 95 Section 20(2)(c) of the Acts Interpretation Act 1954 (Q) provided that the repeal or amendment of an Act "does not ... affect a right, privilege or liability acquired, accrued or incurred under the Act". ... at the time when [IPOLA 2004] and [the draft regulatory provisions] made under IPOLA 2004, came into effect". They contended that the application of s 20 of the Acts Interpretation Act was not displaced by a contrary intention appearing from IPOLA 2004. They sought to support their principal proposition by reference to the general rule of the common law stated in Maxwell v Murphy96 that: "a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events". Retrospectivity? "Retrospectivity" is a word that is not always used with a constant meaning97. It is, therefore, important to identify the statutory provisions which are said to be being given "retrospective" effect and to identify precisely the respect or respects in which they are being given that effect. In this case the only relevant legislative provisions that call for consideration are those provisions of IPOLA 2004 by which the requirements of a properly made application were altered by the insertion of s 3.2.1(7)(f) and s 3.2.1(10)(b). The provisions inserted by IPOLA 2004 did not apply to any development application that had been made before they came into effect. In no sense did the changes made by IPOLA 2004 provide that at some date prior to the enactment of IPOLA 2004 the law should be taken to have been that which it was not98. What those amendments did was to alter the law that was to apply to development applications made after the date on which those provisions of IPOLA 2004 came into force. In that operation the relevant provisions of IPOLA 2004 did not operate in any different way from the way in which most legislation operates. As Jordan CJ 96 (1957) 96 CLR 261 at 267 per Dixon CJ. 97 Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 309 [57] per McHugh and Gummow JJ; Forge v Australian Securities and Investments Commission (2006) 80 ALJR 1606 at 1633 [114] per Gummow, Hayne and Crennan JJ; 229 ALR 223 at 254; Coleman v Shell Co of Australia (1943) 45 SR (NSW) 27 at 30 per Jordan CJ. 98 SCI Operations (1998) 192 CLR 285 at 309 [57] per McHugh and Gummow JJ. rightly said in Coleman v Shell Co of Australia99, an Act "is not retrospective because it interferes with existing rights. Most Acts do. There is no presumption that interference with existing rights is not intended; but there is a presumption that an Act speaks only as to the future." The amendments made by IPOLA 2004 spoke only as to the future. They were engaged in respect of applications made after the amendments came into operation. As the authors of one text100 have put "All legislation impinges on existing rights and obligations. Conduct that could formerly be engaged in will have to be modified to fit in with the new law." (emphasis added) In this case, the appellants' development application being made after the amendments made by IPOLA 2004 had come into effect, their application fell to be determined in accordance with the legislative provisions that were then in force. No question of retrospective operation of the legislation arises. An accrued right? In so far as the appellants put their submissions by reference to the engagement of s 20 of the Acts Interpretation Act with respect to a "potential right to statutory compensation", it is necessary to begin by recognising that the "potential right" to which they referred was the statutory right to compensation created by s 5.4.2 of the 1997 Act. That right arises only upon satisfaction of certain conditions, the legislative definition of which did not change at any material time. The appellants did not submit that any right to compensation had been acquired or had accrued under the 1997 Act as it stood before the amendments made by IPOLA 2004. No development application having been made before that time, that submission was not open to the appellants. The highest they put the point was that they had a "potential right" to compensation. Framed in that way, the questions of characterising the right as "acquired" or "accrued", that are necessarily presented by s 20 of the Acts Interpretation Act, are obscured101. Instead the appellants emphasised the need to examine amending legislation with 99 (1943) 45 SR (NSW) 27 at 30-31. 100 Pearce and Geddes, Statutory Interpretation in Australia, 6th ed (2006) at 308 101 Attorney-General (Q) v Australian Industrial Relations Commission (2002) 213 CLR 485 at 502 [39]-[40] per Gaudron, McHugh, Gummow and Hayne JJ. care in order that the presumption of preservation of rights of the kind with which s 20 is concerned (rights acquired or accrued under the principal Act) is given full weight. In this regard, the appellants placed a deal of emphasis on what was said to be the reflection of this general approach to statutory construction found in this Court's decision in Western Australian Planning Commission v Temwood Holdings Pty Ltd102 and the earlier decision of the Queensland Court of Appeal in Resort Management Services Ltd v Noosa Shire Council103. Both decisions concerned compensation provisions that were cast in terms radically different from those now under consideration. Neither decision offers any direct guidance to the resolution of the issues tendered in this appeal. Accepting, for present purposes, that each of the two decisions may be understood as reflecting the need to give provisions like s 20 of the Acts Interpretation Act proper effect, neither is a decision that diminishes the need to identify a right that has been acquired or has accrued under the relevant legislation before it was amended. Terms like "right", "interest", "title", "power" or "privilege" when used in the context of a general interpretation provision like s 20 are to be understood by reference to the statute that has been amended or repealed. They are terms that are not used "solely in any technical sense derived exclusively from property law or analytical jurisprudence"104. But on no view of the 1997 Act, as it stood before the amendments made by IPOLA 2004, could it be said that the appellants enjoyed a "right" to compensation under s 5.4.2. The statutory right to compensation for which that section provided depended on a particular form of development application having been made and its having been dealt with in a particular way. The appellants had made no development application before IPOLA 2004 came into force and the relevant draft regulatory provisions precluding their proposed development came into force. It follows that no development application (superseded planning scheme) had been dealt with in the manner prescribed by s 5.4.2 as a condition for the allowance of compensation. 102 (2004) 221 CLR 30. 103 [1997] 2 Qd R 291. 104 Western Australian Planning Commission v Temwood Holdings Pty Ltd (2004) 221 CLR 30 at 68 [96] per Gummow and Hayne JJ. Conclusion and orders The courts below were right to hold that the development application (superseded planning scheme) submitted by the appellants to the respondent Council was not a "properly made application". Neither the arguments about retrospectivity nor the arguments about s 20 of the Acts Interpretation Act point to a different conclusion. The appeal should be dismissed with costs. Callinan CALLINAN J. It is with regret that I find myself obliged to agree, subject to what I set out below, with the reasoning and conclusion of Hayne, Heydon and Crennan JJ, regret, I hasten to say, not because of any perceived deficiency in the reasoning of their Honours, but because the relevant statutory language, whether unintentionally, or deliberately and cynically, necessarily does take away the appellant's valuable proprietary and statutory rights, suddenly and without compensation. I refer to the appellants' right to subdivide their land as a proprietary one at common law, because that is the language of Kitto, Menzies and Owen JJ in Lloyd v Robinson105 with respect to freehold land. That proprietary character was not lost because the appellants, before October 2004, might need to seek the approval of the respondent to undertake a subdivision, as, on the rezoning of the land to Rural Residential "A" in 1992, subdivisional approval, subject to reasonable and relevant considerations only, was a virtual certainty. That this is so is confirmed by a letter sent by the respondent to the appellants on 18 May 2000 which relevantly reads as follows: "I advise that as the property is currently zoned Rural Residential 'A', subdivision is possible creating allotments ranging from 4,000m2 to 7,900m2 provided that an overall average of 6,000m2 is maintained. However … whilst the Planning Scheme provides for subdivision of the subject land, the provision of infrastructure and developer contributions may impact any decision to further develop the land. As part of any development approval, [the] Council's Planning Scheme requires that a reticulated water supply be provided including external mains and headworks charges, bitumen access and internal road network including kerb and channel, contributions to bus shelters and parks and recreation. However, the final conditions which would be imposed could only be determined upon lodgement of a development application. [signed] MANAGER PLANNING SERVICES" 105 (1962) 107 CLR 142 at 154. Callinan By definition, a subdivision is a reconfiguration of the land106. Both zoning and an approval to subdivide run with the land107. Although the States are unfortunately not constitutionally bound to provide just terms on the compulsory acquisition of property108, by long practice and convention, sensitivity to the disparity between State and subject, and historical respect for property and like rights109, rarely do they fail so to provide. 106 s 1.3.5 Integrated Planning Act 1997 (Qld): "In this Act – reconfiguring a lot means – (a) creating lots by subdividing another lot; …" 107 s 3.5.28 Integrated Planning Act 1997 (Qld): "(1) The development approval attaches to the land, the subject of the application, and binds the owner, the owner's successors in title and any occupier of the land." See also Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 81 ALJR 352 at 385 [159], 386 [163] per Callinan J; 231 ALR 663 at 705, 706. 108 In 1988, as one of 4 proposals, the others of which were far less agreeable, and none of which could be dealt with separately rather than compositely, the following Constitutional changes were rejected in a referendum held pursuant to s 128 of the Constitution: "Question 4 A Proposed Law: To alter the Constitution to extend the right to trial by jury, to extend freedom of religion, and to ensure fair terms for persons whose property is acquired by any government." 109 See Coke, The Third Part of the Institutes of the Laws of England, (1809) ch 73 at "a man's house is his castle ... for where shall a man be safe, if it be not in his house?" The principle may however have more ancient origins, with some scholars pointing to a passage in the Pandectae (lib. ii. tit. iv. De in Jus vocando), one part of the Corpus Juris Civilis as the basis. (Footnote continues on next page) Callinan Indeed, since at least 1936 planning legislation has so provided in respect of the sorts of events which have happened here110. It is on the basis of such rights, and the expectation of compensation for their destruction or impairment, that transactions take place, plans are made, money expended, and people order their lives. To destroy legislatively such a valuable right, here to subdivide, in some apprehended public interest is one thing, but to exonerate the public from paying the deprived landowner is entirely another, and unacceptable thing. What the public acquires or enjoys the public should pay for. It seems to me that to take away completely, by a few strokes of the legislative pen, the appellants' right to seek to have, and undoubtedly in substance to have, their land subdivided, is to do much the same as was done by the Commonwealth Parliament by the Seafarers Rehabilitation and Compensation Act 1992 (Cth) considered by this Court in Smith v ANL Ltd111. Mr Smith however had the right to just terms as mandated by s 51(xxxi) of the Constitution. The appellants here unhappily do not. Increasingly prescriptive, restrictive, intrusive and even wrong-headed planning and heritage112 legislation and instruments, which go far beyond what a modern law of nuisance, taking account of denser populations, closer settlements, burgeoning industries, and other contemporary conditions could possibly insist upon, should not, as I fear they oppressively are, be used as a cloak to reduce, or extinguish valuable rights of, or attaching to, property. "Cloak" is an especially apt term here because, instead plainly and openly, of legislatively declaring that the various changes to zoning and uses within the designated area or region, will not attract compensation, that result is achieved by the device, clumsy and obscurantist, of a "properly made application" and the fiction of an application which is not to be treated as an application in fact and in law. If it were at all possible sensibly and properly to read the legislation as conferring a right to compensation upon the appellants I would be glad to do so. I cannot do that, but I can surely at least commend to the legislature the See also the Fifth Amendment to the US Constitution: "nor shall private property be taken for public use without just compensation". 110 s 33(10) Local Government Act 1936 (Qld). 111 (2000) 204 CLR 493. 112 See for example the oppressive and entirely unjustified heritage listings considered and rejected in Advance Bank Australia Ltd v Queensland Heritage Council [1994] QPLR 229 and Reelaw v Queensland Heritage Council (No 2) [2004] QPEC 79. Callinan restoration to the appellants, and others similarly affected, of the right to compensation to which historically and morally they are entitled. I would join in the orders proposed by Hayne, Heydon and Crennan JJ.

HIGH COURT OF AUSTRALIA CGU INSURANCE LIMITED APPELLANT AND AMP FINANCIAL PLANNING PTY LTD RESPONDENT CGU Insurance Limited v AMP Financial Planning Pty Ltd [2007] HCA 36 29 August 2007 M127/2006 & M128/2006 ORDER In M127 of 2006 1. Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court made on 2 September 2005 and order 3 of the orders made on 8 June 2006 and, in lieu thereof, order that the appeal to that Court be dismissed with costs. 3. Application for special leave to cross-appeal refused. In M128 of 2006 Set aside orders 1, 2 and 4 of the Full Court of the Federal Court made on 8 June 2006 and remit the matter of the cross-appeal to the Full Court of the Federal Court to that Court for further consideration in the light of the decision of this Court in M127 of 2006. On appeal from the Federal Court of Australia Representation A J Myers QC with P Zappia for the appellant (instructed by Deacons Lawyers) N J O'Bryan SC with P D Crutchfield for the respondent (instructed by Minter Ellison) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS CGU Insurance Limited v AMP Financial Planning Pty Ltd Insurance – Appellant agreed to provide insurance to the respondent in respect of claims for civil liability – Respondent notified the appellant of potential liability to investors arising out of misconduct of financial advisers who were representatives of the respondent for the purposes of the Corporations Law – Appellant represented to the respondent that it would not rely on clause prohibiting the respondent from admitting liability or settling claims or clause requiring formal claims against the respondent – Appellant told the respondent to act as a prudent uninsured – Respondent, for sound commercial reasons including preservation of its relations with the Australian Securities and Investments Commission, proposed a protocol for responding to the investors' claims designed to recompense investors without the need for legal proceedings – Appellant agreed in principle to the protocol – No legal proceedings were commenced – Respondent sought confirmation that the appellant would indemnify it for settlement amounts – Respondent paid settlement amounts to the investors at a time when the appellant had not accepted liability – Whether the appellant's liability to indemnify the respondent extended to payment of reasonable settlement amounts – Whether the settlement amounts were reasonable – Relevance of the requirement to act with utmost good faith in s 13 of the Insurance Contracts Act 1984 (Cth). Insurance – Requirement to act with utmost good faith in s 13 of the Insurance Contracts Act 1984 (Cth) – Meaning of utmost good faith – Whether lack of utmost good faith means only dishonesty – Whether utmost good faith may require an insurer to act with due regard to the legitimate interests of the insured as well as to its own interests – Whether the appellant's delay in accepting or rejecting liability amounted to a lack of utmost good faith – Relevance of reciprocity – Whether the respondent could invoke the appellant's lack of utmost good faith if the respondent had failed to act with utmost good faith – Whether the respondent's lack of diligence and acting for its own interests amounted to a lack of utmost good faith. Estoppel – Estoppel by convention – Appellant represented to the respondent that it would not rely on clause prohibiting the respondent from admitting liability or settling claims or clause requiring formal claims against the respondent – Appellant told the respondent to act as a prudent uninsured – Respondent, for sound commercial reasons including preservation of its relations with the Australian Securities and Investments Commission, proposed a protocol for responding to the investors' claims designed to recompense investors without the need for legal proceedings – Appellant agreed in principle to the protocol – No legal proceedings were commenced – Respondent sought confirmation that the appellant would indemnify it for settlement amounts – Respondent paid settlement amounts to the investors at a time when the appellant had not accepted liability – Whether the appellant represented that the respondent would not subsequently be required to prove its liability to the investors – Whether the respondent relied on the representation – Whether detriment established. Words and phrases – "prudent uninsured", "utmost good faith". Insurance Contracts Act 1984 (Cth), ss 13, 14. Corporations Law, s 819. GLEESON CJ AND CRENNAN J. The facts of this complex litigation appear from the reasons of Callinan and Heydon JJ. We will repeat them only to the extent necessary to explain our own reasons. It is convenient to leave to one side, for the present, the second appeal. The first appeal deals with the matter that occupied almost the whole of the time spent in argument in the Federal Court, and in this Court. It concerns the liability of the appellant ("CGU") to indemnify the respondent ("AMP"), pursuant to a contract of insurance, in respect of amounts paid by AMP ("the settlement amounts") to certain investors who placed funds for investment with two financial advisors, Mr Pal and Mr Howarth. Those two men were carrying on business through the medium of their company Macquarie Advisory Group Pty Ltd ("MAG"). The investments made by MAG failed. Messrs Pal and Howarth became bankrupt and MAG went into liquidation. The investors lost their money. It appeared that AMP may have been liable, under the Corporations Law ("the Law"), to those investors by reason of its relationship with Messrs Pal and Howarth. The circumstances in which AMP paid out the claims of some of those investors, and at the same time asserted a right to be indemnified by CGU, appear from the reasons of Callinan and Heydon JJ. Our view, which accords substantially with that of Gyles J who was in dissent in the Full Court of the Federal Court, is that the Full Court should have dismissed the appeal from Heerey J. Heerey J held, on a number of grounds, that AMP had not established a right to indemnity from CGU in respect of the settlement amounts. Gyles J did not agree with all the reasons given for that conclusion, but held that the conclusion was right. In order to explain our reasons for agreeing with Gyles J that the appeal to the Full Court should have been dismissed, it is necessary to begin by referring to certain features of the case. First, payment of the settlement amounts was not within the terms of the cover provided by the contract of insurance. (There were, in fact, two contracts, covering successive years, but it is convenient to refer to the insurance cover in the singular.) Under the insuring clause, CGU agreed to provide cover for "Claims for Civil Liability" arising from the conduct of AMP's "Insured Professional Business Practice" made while the policy was in force. "Civil Liability" was defined to mean liability for damages, costs and expenses which a civil court ordered the insured to pay on a claim. "Claim" was defined (so far as presently relevant) to mean any originating process in a legal proceeding or arbitration. None of the investors to whom settlement amounts were paid made a claim, as defined. In the events that occurred, there were no claims for civil liability within the meaning of the contract of insurance. That was not fatal to AMP's right the settlement amounts. Nevertheless, it is part of the context in which the conduct of CGU is to be evaluated, especially in considering arguments based on estoppel, or failure to in respect of indemnified to be Crennan comply with the statutory requirement to act with the utmost good faith imposed by s 13 of the Insurance Contracts Act 1984 (Cth) ("the Act"). Criticism of CGU for delay in either accepting or denying liability to indemnify AMP needs to be tempered by the reminder that, at the time the settlement amounts were paid, it could not have been suggested that the event against which cover was provided had occurred. For its own sound commercial reasons (including the need to protect its relations with the Australian Securities and Investments Commission ("ASIC"), its licence, and its goodwill) AMP adopted a procedure for dealing with investors which was designed to ensure, as far as possible, that claims for civil liability, within the meaning of the policy, were not made. There are difficulties with the idea that good faith requires an insurer to inform the insured, before the insured event has occurred, whether the insurer will accept liability if and when it occurs. For reasons that will appear, however, those difficulties do not need to be resolved. Delay in accepting or denying liability was not the possible breach of the requirement of good faith contemplated by the majority in the Full Court in formulating certain issues for further consideration by Heerey J. It is a criticism of CGU that seems to have generated more heat than light. Secondly, at the time it paid the settlement amounts, AMP was concerned not to put CGU in a position where it might decide to exercise its contractual right to take over and defend any claim in the name of AMP. In an internal memorandum after a meeting of 5 October 2001 at which CGU was briefed on the nature of the claims against AMP, AMP's senior legal counsel said that AMP was "endeavouring to conclude the claims process ASAP" so as to reduce the risk of CGU assuming conduct of the claims. As Gyles J pointed out, Heerey J's findings amounted to a conclusion "that AMP was not prepared to let the contractual process take its normal course but was manoeuvring events to serve its commercial purpose of satisfying ASIC whilst preserving, as best it could, its rights against CGU." This led Gyles J to describe AMP's complaint that CGU was not acting with the utmost good faith as "somewhat bold". Heerey J referred to complaints of delay as "a trifle disingenuous". Thirdly, most of the settlement amounts were paid during October and November 2001, and all settlement amounts were paid at a time when it was plain to AMP that CGU was not committing itself to accepting liability to indemnify AMP. A chronology of events which took no account of that fact would produce a distortion of the true picture. The pressure for urgent payment of the settlement amounts came following the meeting of 5 October 2001. At that meeting, CGU's solicitor told the AMP representatives that she was not satisfied that AMP was liable to the investors under the Law, that CGU did not have documentation to support many of the claims, that CGU would not be forced into making decisions on indemnity within 14 days of receiving liability reports, and that she intended to seek an opinion from Mr Archibald QC on Crennan AMP's liability to investors. By the end of December 2001, that opinion had not been received. On 2 December 2001, AMP's senior counsel advised AMP that in his opinion AMP was likely to be found liable to investors. Since it was between 5 October 2001 and the end of 2001 that most of the settlement amounts were paid, it could not be suggested that they were paid in reliance on any acceptance by CGU of an obligation to indemnify AMP. On the contrary, they were made at a time when CGU was questioning whether AMP was under any liability to the investors. On the other hand, it should be accepted that the conduct of CGU in relation to the protocol for claims settlement involved a representation by CGU that it would not, in any subsequent litigation concerning its liability to indemnify AMP, rely on cl 7.6 of the policy (prohibiting the insured from admitting liability or settling a claim) or upon the absence of any formal claim (as defined) by an investor to whom AMP was liable. CGU repeatedly told AMP that it should act as a prudent uninsured. As Gyles J said: "AMP was entitled to rely upon that assurance. It follows that CGU is estopped from denying liability to indemnify AMP for any payment pursuant to a settlement reached accordingly, notwithstanding any policy conditions to the contrary. Whether it did in fact act as a prudent uninsured in making the payments is another and, in my opinion, the main, issue. If it did so, it would have acted to its detriment. There would be a clear case of estoppel – whether by representation ... or convention ... To act as a prudent uninsured is, for relevant present purposes and leaving aside onus, similar to the position of an insured denied cover in breach of contract. A prudent uninsured might arrive at an objectively reasonable settlement in the light of its potential liability and pay accordingly." Although the insured event never occurred, estoppel by convention produces the legal consequence that CGU's liability to indemnify AMP operated to cover AMP's reasonable payment of the settlement amounts in satisfaction of its liabilities to investors. How the requirements imposed by s 13 of the Act, in the circumstances of the present case, add anything to that is not clear. None of the judges in the Federal Court appeared to suggest that they did so, or to explain why. There was nothing in the conduct of CGU and, in particular, nothing in the conduct of CGU between 5 October 2001 and the end of 2001, the period when most of the settlement amounts were paid, that conveyed a representation to AMP that (to use the language of AMP's written argument in the Full Court) AMP "would not be required to subsequently prove its liability to the investors with whom it had settled by calling those investors as witnesses in its case in any subsequent legal proceeding." Such a proposition is inconsistent with the findings of Heerey J. Furthermore, the conduct of AMP, as found by Heerey J, Crennan does not support a conclusion that, in paying the settlement amounts, it relied on any such representation. The orders made by the Full Court were for the remitter of the case to Heerey J for further consideration of the following questions: whether AMP was induced by CGU's conduct to assume that, if it settled [an investor's] demand on reasonable terms, it would not be required to establish by admissible evidence that it was legally liable to that investor in order to be reimbursed by CGU for the amount paid pursuant to such settlement; if so, whether AMP settled that demand in reliance upon that assumption; whether, in the light of the answers to those questions, CGU is estopped from asserting that, or it would be a want of utmost good faith for CGU to assert that, AMP is required to establish by admissible evidence that it was legally liable to that investor; whether AMP settled that demand on reasonable terms." It is that order of remitter that AMP seeks to uphold in this appeal, and that was the focus of argument in this Court. It is, therefore, necessary to attend with some particularity to the questions raised for further consideration. As to the first three questions, if they do not arise on the evidence, or if they have already been decided by primary findings of Heerey J which were not set aside in the Full Court, then nothing is achieved by the remitter. The conduct assumed by the questions to constitute reliance by AMP upon the relevant inducement is the payment of the settlement amounts. We have already pointed out when, and in what circumstances, that occurred. Furthermore, the possible breach of the requirement of utmost good faith to which the questions direct attention is the assertion by CGU, in this litigation, that AMP was required to establish by admissible evidence that it was liable to the individual recipients of the settlement amounts. It is not dilatory conduct of CGU in announcing its intention to accept or deny liability. There is a clear practical reason for that, related to the timing and circumstances of the payment of the settlement amounts. Heerey J made a finding as to the extent of the representations and reliance, when dealing with CGU's repeated statements to AMP that it should act as a prudent uninsured. He said: "The real significance of the term [prudent uninsured] to my mind is that CGU made it clear that [AMP] was to be no worse off in respect of [its] rights (if any) under the Policies by negotiating with the Investors and entering into the Settlements. One particular consequence of that is that Crennan CGU would not refuse indemnity on the basis that [AMP] had entered into the Settlements without CGU's prior written consent (Policies cl 7.6) or that Investors had not obtained an order of a civil court or an originating process (Policies cl 12.1 and cl 12.2). A prudent uninsured person, being ex hypothesi not bound by any policy of insurance, would not be subject to such restrictions. Neither would [AMP]." Heerey J found that AMP had no belief that CGU accepted liability, and that AMP paid the settlement amounts because it considered that it was in its own interests to do so, especially having regard to the attitude of ASIC. To revert to a point made above, Heerey J also found that AMP "had a motive to settle as many claims as it could while the indemnity issue remained unresolved." From the point of view of its dealings with ASIC, the last thing AMP wanted was for CGU to take over and manage the claims process. We accept the wider view of the requirement of utmost good faith adopted by the majority in the Full Court, in preference to the view that absence of good faith is limited to dishonesty. In particular, we accept that utmost good faith may require an insurer to act with due regard to the legitimate interests of an insured, as well as to its own interests1. The classic example of an insured's obligation of utmost good faith is a requirement of full disclosure to an insurer, that is to say, a requirement to pay regard to the legitimate interests of the insurer. Conversely, an insurer's statutory obligation to act with utmost good faith may require an insurer to act, consistently with commercial standards of decency and fairness, with due regard to the interests of the insured. Such an obligation may well affect the conduct of an insurer in making a timely response to a claim for indemnity. However, the Act does not empower a court to make a finding of liability against an insurer as a punitive sanction for not acting in good faith. If there is found to be a breach of the requirements of s 13 of the Act, there remains the question how that is to form part of some principled process of reasoning leading to a conclusion that the insurer is liable to indemnify the insured under the contract of insurance into which the parties have entered. Let it be assumed, for example, that CGU's failure throughout substantially the whole of the year 2002 to admit or deny liability was a failure to act with the utmost good faith. What follows from that? Most of the settlement amounts were paid during 2001. Again, even if it be said that CGU should have made up its mind about liability before October 2001 (a difficult assertion to sustain having regard to what was said at the meeting of 5 October 2001), what follows? Between a premise that 1 Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1 at 31 per Stephen J. Crennan CGU's delay constituted a failure to act with the utmost good faith, and a conclusion that CGU is liable to indemnify AMP in respect of the settlement amounts, there must be at least one other premise. What it might be has never been clearly articulated. As the questions posed by the Full Court for reconsideration by Heerey J reveal, it is not any delay on the part of CGU that is said to be the relevant form of want of good faith; it is the possibility that it is unconscientious of CGU to assert in this litigation (as it has from before the commencement of the hearing before Heerey J) that AMP must show, by admissible evidence, that it was liable to the individual recipients of the settlement amounts. The hypothesis of the first three questions posed for reconsideration by Heerey J is that AMP did not establish by admissible evidence that it was legally liable to the investors. It was accepted in argument in this Court that the remitter is not intended to give AMP an opportunity to reopen its case, and adduce further evidence. If AMP, at the trial, had established by admissible evidence that it was legally liable to the investors, then the first three questions formulated by the Full Court would not arise. It is necessary to note why the questions arise. The main area of potential doubt about AMP's liability to the investors concerned the application, in the events that happened and in the circumstances of the business of Messrs Pal and Howarth, and MAG, of Pt 7.3, Div 4 and, in particular, s 819 of the Law. Gyles J said: "The backdrop to this issue is that the conduct of the persons that led to the potential liability of AMP had nothing to do with the business of AMP. The only relevant link was that one of the individuals concerned happened to be an AMP representative at the time. It is therefore obvious that there would be a live issue as to whether there would be any liability of AMP for the conduct in question if the claims were litigated. On the face of it, applying ordinary principles of vicarious liability or agency, it would be quite unlikely that AMP would be responsible. Hence the reference to the important but complex provisions of Div 4 Pt 7.3 (including s 819) of the Corporations Law." Two particularly relevant provisions were s 819(1)(b)(ii), on which Mr Archibald QC relied in his opinion to CGU in early 2002, and s 819(4). Section 819(4), which was not considered by AMP's lawyers at the time the settlement amounts were paid, could have made MAG, rather than AMP, liable to the investors. Heerey J, on the limited information available to him, considered that s 819(4) may well have had this consequence. We say "on the limited information available", because that raises the point of the first three questions formulated by the Full Court. It was only because the information at trial was incomplete that the necessity to ask those questions is supposed to exist. Crennan At the trial before Heerey J, AMP did not set out to establish that it was legally liable to the investors. It did not call the investors, or undertake to prove the facts that would have to be decided in order, for example, to reach a conclusion about the effect on AMP of s 819. Rather, it set out to demonstrate the process it followed in settling the claims. It tendered a large number of documents, including statements by investors, and legal recommendations. When those were tendered, CGU objected on the basis that the information in them was hearsay. Senior counsel for AMP said that they were not tendered as evidence of the facts stated in them, they were tendered "to prove AMP's state of mind at the time it settled". They were received into evidence on that limited basis. Heerey J found that AMP did not enter into the settlements in reliance on any commitment or promise or representation by CGU. The evidence did not support a representation by CGU, at the time the settlement amounts were paid, that it would not put AMP to legal proof of its liability to the investors. On 5 October 2001, CGU told AMP that it did not accept that AMP was liable to the investors, and that it was taking its own legal advice on the matter. By the time it obtained, and communicated, the substance of that legal advice (which was that AMP was not liable to the investors) the settlement amounts had been paid. Heerey J dealt with the issue of estoppel as it was argued before him. His findings of fact, and the evidence, did not leave open for further consideration the issues sought to be raised by the first three questions. We turn now to the fourth question. Heerey J asked himself whether the settlements had been shown by AMP to be reasonable, that is, "based on a reasonable assessment of the risk faced by [AMP] if the Investors' claims were to proceed to trial and judgment". In this connection, he considered Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd2, referring in particular to the reasons of Brennan CJ3 and Hayne J4. He referred to the circumstances in which the investors whose claims were accepted were paid in full, the pressure from ASIC, and the haste to achieve settlements before CGU took over the claims. He also referred to the doubts about liability by reason of s 819(4) of the Law. Heerey J made the following finding: (1998) 192 CLR 603. (1998) 192 CLR 603 at 608-609 [6]. (1998) 192 CLR 603 at 653 [129]. Crennan "[T]he whole process was so dominated by pressure from ASIC that I am quite unable to conclude that the Settlements would have been reached in the agreed amounts, or indeed at all, had that pressure not existed ... A settlement can fail the reasonableness test because of flaws in the process by which it was reached, quite apart from an assessment of settlement sum against predicted result of litigation. In the present case the reasoning that led [AMP] to make the Settlements in the way that it did was not to reach a compromise based on an assessment of the prospects of success of the claims, but to satisfy the demands of ASIC. [AMP] did not merely fail to give proper weight to the interests of CGU; it was explicitly told by ASIC to ignore those interests, and did so. Apart from the question of process, the Settlements were unreasonable because they failed to take into account the availability of the s 819(4) defence." In the Full Court, Emmett J, with whom Moore J agreed, criticised the reasoning of Heerey J. He said that it was irrelevant that AMP took no account of the interests of CGU because the reasonableness of a settlement must be assessed from the point of view of an uninsured recipient of the relevant demand. However, the gist of what Heerey J found was that AMP did not reach a compromise based primarily on an assessment of the objective prospects of success of the individual claims. Emmett J said that, in this respect, Heerey J failed to pay due regard to the evidence as to the legal advice AMP received from its solicitors and as to the claims process, citing a particular example. As to the effect of s 819(4) it appears to be common ground that it was not considered. "His Honour's reasoning appears to have been that, simply because AMP did not turn its attention to s 819(4) at all, it was unreasonable to settle each of the 63 demands made by investors. His Honour did not examine, for example, the particular circumstances of the Bajada demand to see whether there was any basis for the application of s 819(4) to that demand. CGU did not dispute that AMP may have a liability under s 819(2) or s 819(3). Before deciding that it was unreasonable not to have considered the possible application of s 819(4) to a demand against AMP by an investor, because of the involvement of MAG as an indemnifying principal, it would be necessary to examine the material relied on by AMP as to the relationship between Pal and Howarth, on the one hand, and MAG, on the other, and to speculate as to whether MAG and AMP would both be parties to a proceeding in a court. The primary judge did not undertake that task in relation to any investor demand." Crennan As has been pointed out above, the hypothesis of questions 1 to 3, and the occasion for the need to ask them, was that AMP conducted the litigation on the footing that, contrary to what CGU had asserted since before the trial, AMP did not need to prove, by admissible evidence, facts which established its liability to the investors. The criticism of Heerey J for not examining the material relied on by AMP needs to be considered in that light. Heerey J considered the limited material available to him and formed a tentative view that s 819(4) could have applied. Since, at the time of the settlements, attention was not directed to s 819(4), it is difficult to see what more he could have done. When, at the trial, senior counsel for AMP tendered the documents relating to the settlements, which were in 30 lever arch files, he told Heerey J that he did not need to read through them and that it was sufficient to observe the pattern of the procedures that were adopted by AMP to reach the level of satisfaction it required to deal with each of the investors' claims. There is no occasion to doubt that Heerey J did what he was asked to do. In his reasons, "I should note an important evidentiary question. [AMP] claims that the Settlements it reached with the investors were, objectively considered, 'reasonable'. CGU says the true question is whether [AMP] became legally liable to the investors and that [AMP] cannot make out its case merely by showing that it reached settlements, whether reasonable or otherwise. Alternatively, CGU says that anyway the Settlements were not reasonable. But [AMP] has not called evidence from any of the Investors, or Pal or Howarth. There is evidence of investigations conducted by [AMP], its solicitors and ASIC, which includes reports of interviews with Investors. But there is no direct evidence from Investors and, in particular, no direct evidence of their dealings with Pal and Howarth." The concluding sentence in that passage is of particular relevance to the issue about s 819(4). The objective reasonableness of the settlements, bearing in mind the circumstances of haste and external pressure under which they were reached, could not be divorced from the question whether AMP was, as the settlements assumed, liable to the investors with whom it settled in the full amount claimed. AMP had been admonished by ASIC not to attempt to rely on technicalities in its dealings with the investors, and this appears to have been a reason why AMP was anxious to avoid CGU's taking over management of the claims. It may well be that ASIC and CGU would have had different views on what constituted a technicality. At all events, it was well open to Heerey J to conclude that AMP had not shown that the settlements were reasonable. Finally, we turn to the second appeal, M128 of 2006. This concerns the costs order made by Heerey J. The order was not to the satisfaction of CGU, which cross-appealed to the Full Court. The reasons for the order included Crennan certain views reached by Heerey J on questions of construction of the contract of insurance. They were of relevance, or potential relevance, to indemnity sought by AMP other than in respect of the settlement amounts. Before the Full Court, and in this Court, CGU sought to use its cross-appeal on the costs issue as a vehicle for arguing those questions of construction. The Full Court did not deal with the cross-appeal for the understandable reason that, since it was allowing the appeal from Heerey J and setting aside his costs order, it was moot. CGU then appealed to this Court against the decision of the Full Court, again seeking to argue the questions of construction decided by Heerey J. On those questions, we do not have the benefit of any reasoning of the Full Court. The second appeal should be remitted to the Full Court for consideration of CGU's cross-appeal to that Court. Orders In M127 of 2006, the following orders should be made: Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court made on 2 September 2005 and order 3 of the orders made on 8 June 2006 and, in lieu thereof, order that the appeal to that Court be dismissed with costs. Application for special leave to cross-appeal refused. In M128 of 2006, set aside orders 1, 2 and 4 of the Full Court of the Federal Court made on 8 June 2006 and remit the matter of the cross-appeal to the Full Court of the Federal Court to that Court for further consideration in the light of the decision of this Court in M127 of 2006. Kirby KIRBY J. This Court has before it two appeals from successive orders of the Full Court of the Federal Court of Australia. In each appeal, the appellant, CGU Insurance Limited ("CGU"), challenges decisions of the Full Court in favour of the respondent, AMP Financial Planning Pty Ltd ("AMP"). The main point in the appeals is the meaning and application of the obligation of utmost good faith, owed by an insurer to an insured under Australian law. However, there are many other issues that require consideration. That consideration demands close attention to the complex circumstances of the case and the arguments of the parties. The complex issues in the litigation The decision in the appeal below: The appeals in this Court arise out of a dispute between the parties as to the obligation of CGU to indemnify AMP under professional indemnity policies ("the Policies") issued by CGU in favour of AMP. Specifically, an important question is presented under the reformed law enacted by the Insurance Contracts Act 1984 (Cth) ("the Act"), s 13. That section implies into insurance contracts in Australia "a provision requiring each party to it to act towards the other party … with the utmost good faith". The first appeal challenges the orders originally made by the Full Court5 allowing AMP's appeal against the decision of the primary judge (Heerey J), substantially (but not on all issues) in favour of CGU6. The Full Court's decision dealt with issues relevant to the liability of CGU (as insurer) to AMP (as insured). It was concerned principally with whether, contrary to the findings of the primary judge, AMP had established entitlements to recover against CGU on the basis of the objective reasonableness of settlements arrived at between AMP and persons claiming against it ("the investors"). Those claims arose in circumstances alleged to engage the Policies and in accordance with a protocol agreed in principle between AMP and CGU as to the handling of such claims ("the Protocol"). In the appeal to the Full Court (as before the primary judge) AMP relied on the Policies, the Protocol, and also on arguments based both on the law of estoppel and on s 13 of the Act. The result of the first Full Court decision was an order, proposed by Emmett J7 (with whom Moore J agreed8), allowing AMP's appeal. The order remitted to the primary judge for further consideration 5 AMP Financial Planning Pty Ltd v CGU Insurance Ltd (2005) 146 FCR 447. 6 AMP Financial Planning Pty Ltd v CGU Insurance Ltd (2004) 139 FCR 223. (2005) 146 FCR 447 at 489 [154]. (2005) 146 FCR 447 at 449 [1]. Kirby questions "in relation to each of the investor demands" upon AMP; issues of whether AMP had been induced in any way by CGU's conduct to settle those demands; and, if so or otherwise, whether CGU was estopped from, or would be in breach of its duty of utmost good faith by, asserting that AMP was required to establish by admissible evidence that it was legally liable to each investor9. In its first decision, the majority of the Full Court effectively concluded that the approach of the primary judge to the claim by AMP against CGU had miscarried by reason of a misunderstanding of, or failure to give effect to, AMP's estoppel arguments and also its arguments based on s 13 of the Act. The third judge in the Full Court (Gyles J) agreed with some of the conclusions of the majority. He too was critical of the approach of the primary judge to AMP's claim10. However, for reasons somewhat different from those expressed by the primary judge, Gyles J rejected AMP's reliance on arguments of estoppel11 and on s 13 of the Act12. By reference to the requirements of the Policies, which he held to be unaffected by these issues, Gyles J decided that the primary judge had come to the correct conclusion13. He would have dismissed the appeal. The orders favoured by the majority were made. The decision on the application to reopen: CGU moved immediately for a stay of the entry of judgment, which was granted. CGU then applied to reopen the appeal to the Full Court in order to permit the Full Court to determine issues which CGU submitted would result in the appeal being dismissed. Those issues, which concerned the construction of the Policies, had been determined adversely to CGU by the primary judge14 and were the subject of CGU's cross-appeal in the Full Court. The second Full Court unanimously dismissed CGU's application to reopen. All three judges concluded that the reopening of the contractual issues would be "academic"15 or "futile"16 in light of the orders made in the principal decision. In consequence, those orders were duly formalised. Special leave to (2005) 146 FCR 447 at 489 [154]. 10 (2005) 146 FCR 447 at 491-492 [161]-[163], 492 [166]. 11 (2005) 146 FCR 447 at 493 [172]-[173]. 12 (2005) 146 FCR 447 at 491 [162]. 13 (2005) 146 FCR 447 at 493-494 [173]-[177]. 14 AMP Financial Planning Pty Ltd v CGU Insurance Ltd [2006] FCAFC 90. 15 [2006] FCAFC 90 at [2] per Moore J. 16 [2006] FCAFC 90 at [3]. Kirby appeal to this Court was granted to CGU in respect of the orders made in each of the Full Court decisions. The contention and cross-appeal: In this Court, AMP, for its part, filed a notice of contention asserting that the Full Court had erred in failing to uphold the primary judge's decisions in favour of AMP on the specified issues relating to "the construction of the insurance policies"17. AMP sought special leave to cross-appeal. Its proposed cross-appeal was limited to a challenge to the order of remitter made by the first decision of the Full Court. AMP contended that, instead, the Full Court should have entered judgment in favour of AMP, as it contends this Court should now do. AMP also sought to substitute an order for costs against CGU and in favour of AMP by reason of the conduct of CGU, as insurer, about which AMP complains. The foregoing description of the proceedings before this Court indicates the complexity of the litigation in the stage it has now reached. There are two appeals; an application for special leave to cross-appeal; and a notice of contention. Within the first appeal, issues are raised concerning: the liability of CGU as insurer under the contractual terms in the Policies; the reasonable settlement of investor claims pursuant to a suggested agreed Protocol; the law of estoppel; and whether the obligations of CGU are affected by the duty of good faith now contained in s 13 of the Act. As if these "substantive" complexities were not enough, by their arguments before the Full Court, and in this Court, CGU and AMP each submitted that the other was restricted in the arguments it could advance in the appeals, by reason of considerations of procedural fairness. These submissions were made having regard to the pleadings; the respective conduct of the parties both at trial and on appeal; and the limited way in which certain evidence had been received concerning the individual investor claims against AMP, the payment of which by AMP has led to AMP's present claim for indemnity against CGU. Revocation of special leave?: It must be questioned whether proceedings of this kind, proffering so many issues, most of which can only be resolved by 17 These were issues 7, 8 and 9 in the reasons of the primary judge. See (2004) 139 FCR 223 at 250-252 [108]-[120]. Kirby reference to detailed facts, are truly suitable for determination in a second-level appeal and in a final national court. A tempting thought occasionally crossed my mind that the proper resolution of the proceedings might be the revocation of the grant of special leave for which I was myself, in part, to blame18. By its order of remitter, the Full Court majority had contemplated that the primary judge would reconsider all of his conclusions, giving adequate and correct attention to the issues of estoppel and good faith. In that sense, the proceedings were at an interlocutory stage. Nevertheless, special leave having been granted, the issues having been fully explored, the amount ultimately at stake (not to say the costs) being substantial and some of the issues being important for the Australian insurance industry19, this Court must resolve such of the issues as require determination. Unfortunately, to do this it is necessary, in the nature of those issues, to set out in some detail the factual background to the parties' disputes. The facts Actions of securities representatives: In August 1991, AMP was granted a licence as a securities dealer pursuant to s 784 of the former Corporations Law ("the Law")20. As such, AMP carried on business as an adviser to investors on finance, investment and insurance and as a licensed securities dealer and mortgage originator21. AMP and CGU entered into professional risks insurance contracts for two relevant years respectively from 28 February 1999 to 28 February 2000 ("the 1999 Policy") and from 28 February 2000 to 28 February 2001 ("the 2000 Policy"). The terms of the 1999 and 2000 policies were relevantly identical. Some years previously, AMP had issued authorities to Mr Ashok Pal and Mr Anthony Howarth as "securities representatives" of AMP for the purposes of 18 [2006] HCATrans 534 at 935; cf Klein v Minister for Education (2007) 81 ALJR 582; 232 ALR 306. 19 cf Sutherland, "An Uneasy Compromise: An Analysis of the Effect of Settlement Reached by an Insured with a Third Party Claimant vis-a-vis his or her Insurer", (1998) 9 Insurance Law Journal 257; Hopkins, "AMPFP v CGU – Utmost Good Faith under section 13, the Principle in Rocco Pezzano and the 'prudent uninsured'. What does it all mean and where to from here?", (2007) 18 Insurance Law Journal 20 The Law has since been repealed. 21 (2005) 146 FCR 447 at 453 [12] per Emmett J. Kirby Ch 7 of the Law. Messrs Pal and Howarth conducted a financial advisory business through a company which they controlled, Macquarie Advisory Group Pty Ltd ("MAG"). Each of them held a proper authority from AMP. At various times they also held proper authorities from Hillross Pty Ltd ("Hillross"), a related company of AMP22. Because the role of MAG (and whether it separately conducted a securities business) was later to become relevant, AMP made the point that the evidence did not establish that MAG itself conducted a securities business. AMP contended that the evidence was consistent with MAG having been no more than an administrative or service company of Messrs Pal and Howarth. In May 1999, officers of Hillross discovered that Messrs Pal and Howarth had traded outside their proper authorities with Hillross. This discovery caused Hillross to notify the Australian Securities and Investments Commission ("ASIC") of possible breaches of the Law. At the same time, Hillross terminated the respective proper authorities of Messrs Pal and Howarth. Following an investigation, ASIC obtained an order for the winding up of MAG and orders banning Messrs Pal and Howarth and MAG from the securities industry. These steps were followed by the compulsory examination of Messrs Pal and Howarth and officers of a company ("Hibiscus Spa") in which it was suspected that approximately $3.4 million of investor funds had been invested and lost. In December 1999, MAG was placed into liquidation. Notice to insurer of the claims: On 16 December 1999, AMP informed CGU that it had become aware of a possible claim against it in relation to the activities of Mr Pal. It was this notice that gave rise to the claim under the 1999 Policy. Subsequently, on 5 September 2000, AMP gave further notification to CGU that it had become aware of matters that might give rise to additional claims. This notice was given under the 2000 Policy23. On 14 February 2001, officers of ASIC met officers of AMP. ASIC informed AMP that it was concerned about delay in compensating investors for losses arising from the conduct of Messrs Pal and Howarth, its securities representatives. A representative of ASIC told AMP that, if compensation was properly payable to investors, "there should be no discounting of valid claims and investors should not be required to follow a procedure that required court proceedings if such proceedings were unnecessary"24. It was made clear to AMP 22 (2005) 146 FCR 447 at 455 [22]. 23 (2005) 146 FCR 447 at 456 [24]. 24 (2005) 146 FCR 447 at 456 [25]. Kirby that ASIC considered that the responsibility of AMP and Hillross was to handle all demands made by investors in an efficient, fair and timely manner and that such obligations should override any insurance concerns25. It was implicit that an inadequate response to the claims by the investors could put AMP's securities dealer's licence at risk. Following the meeting between ASIC and AMP, AMP initiated discussions, through its solicitors, with CGU's then solicitors, designed to ensure that the demands by investors would be properly and quickly investigated and, where justified, paid "in the light of the comments made by [ASIC]"26. On 1 March 2001, AMP's solicitors (Minter Ellison) wrote to CGU's then solicitors (Ebsworth & Ebsworth) enclosing material in relation to AMP's "claim for indemnity for loss arising from the activities" of Messrs Pal and Howarth. In the letter, AMP's solicitors pointed to the importance for AMP's licence of a correct handling of the claims: "[T]he relationship between [AMP] and ASIC is critical to [AMP's] business. ASIC expects that securities licensees will conduct their business in a way which gives effect to their obligation to ensure that investors are adequately compensated for losses that arise from the wrong doings of securities representatives." AMP made clear its obligation and intention to pay heed to ASIC's views when dealing with the investors' claims. Provision of a protocol: The materials supplied to CGU included files maintained by AMP regarding Messrs Pal and Howarth as well as a summary of the investments that had given rise to demands for compensation by investors and details of their demands on AMP to date. As an example of how the legal liability of AMP to investors would arise, a draft liability report, prepared in relation to demands made by Bajada Retirement Fund ("Bajada") on AMP, was included. AMP's solicitors' letter went on: "When it is clear from the facts that advice was given or an investment made, at a time when Pal or Howarth, as the case may be, was authorised to act for more than one licensed securities dealer, notice will be issued to the other dealer seeking equal contribution. However, consistent with ASIC's requirements, contribution will not hold up resolution of the claim by [AMP] in any case. 25 (2005) 146 FCR 447 at 456 [25]. 26 (2005) 146 FCR 447 at 456 [26]. Kirby The proposed procedure for the handling of claims … is presently being revised to reflect ASIC's comments … These proposed procedures will be supplied to you when they have been finalised." On 26 March 2001, AMP's solicitors wrote again to CGU's solicitors enclosing a document described as "Proposed Procedure for the Management of Claims". This became known as "the Protocol". The further letter enclosed additional notification reports in relation to investor demands, as known to that time. It ended with an invitation: "We look forward to receiving, as soon as possible, confirmation that your client will indemnify [AMP] in respect of its liability arising out of the conduct of Pal and Howarth." Clause 3 of the Protocol stated27: "[AMP] proposes that the following protocol be adopted for each complaint that is received by [AMP], whether direct or via Hillross: receive claim and provide a notification report to CGU; place Pal and Howarth on notice of claim as well as any other licensees that provided Pal or Howarth with a proper authority during the period of the investor's claim; collate all relevant documentary evidence obtained from the investor; report setting out liability and prepare a recommendations on the claim, considering factors such as investor risk profile, risk of investment and knowledge of that risk ('liability report') … [AMP's] legal obtain instructions from CGU in relation to settling or defending the claim within 14 days of provision of the liability report; if settling: prepare settlement deed, including full releases, confidentiality and any assignments of interests and associated causes of action … if defending: prepare defence material for trial." On 6 April, CGU's then solicitors responded in the following terms28: 27 (2005) 146 FCR 447 at 457 [30]. 28 (2005) 146 FCR 447 at 457 [31] (emphasis added). Kirby "We understand the requirements of [AMP's] internal and external complaints resolution procedures and have sought instructions from our client in respect of indemnity. Pending indemnity your client should continue to act as a prudent uninsured." Agreement in principle to the protocol: On 11 May 2001, CGU's solicitors again wrote to AMP's solicitors29: "[W]e are instructed by CGU … to agree in principal [sic] to the protocol for the handling of claims provided to us under cover of your letter dated 26 March 2001. In accordance with the protocol our client will consider your client's claim for indemnity on an investor by investor basis consequent upon receipt of your summary document. Upon receipt of your summary document we shall arrange to attend your office and inspect the relevant primary documents which it is submitted evidence the claim and comprise the basis of liability. Thereafter we shall advise our client's instructions in respect of the particular investor." By 7 June 2001, AMP's solicitors were in a position to settle a concrete claim, namely that of Bajada. Accordingly, by letter of that day, they wrote to CGU's solicitors30: "You were provided with the liability report in respect of [Bajada's] claim on 26 March 2001. You have since indicated that CGU accepts liability in principle subject to examining the documents in support of each claim. We have since provided you with all the documents submitted by the claimants in support of their claim. [ASIC] has indicated to our client that settlement of claims ought not to be delayed due to the requirements of insurers. Accordingly, if we do not receive confirmation as requested above within 14 days of the date of this letter our client will settle this claim without the involvement of CGU. Our client will, however, expect CGU to reimburse it for the full amount of the settlement sum. Upon doing so our client will be willing to assign any assignments it takes from the claimants to CGU." The assertions contained in the foregoing letter were repeated in respect of the demand by Bajada later in June 2001. On 9 July 2001 similar letters were 29 (2005) 146 FCR 447 at 458 [31] (emphasis added). 30 (2005) 146 FCR 447 at 458 [32]. Kirby sent by AMP's solicitors in relation to specific demands upon AMP, made by other investors. On 12 July 2001, CGU's solicitors responded31: "[W]hilst our client has no difficulties with the claim protocol as noted in our letter of 11 May it has not yet determined to confer indemnity upon your client. Frankly it is interested to understand why it is that the directors (or their insurers) are not being required to meet the claims and why it appears that [AMP] has not pursued GIO Insurance for a decision on their liability. We would be grateful for your advice on precisely at what stage your client's negotiations with GIO Insurance have reached and if GIO Insurance has denied liability whether you believe such denial is sustainable." The reference in this letter to GIO Insurance was to the insurer under a professional indemnity policy held by MAG with GIO Insurance. Ensuing protracted correspondence: On 1 August 2001, AMP's solicitors again wrote to their counterparts expressing disappointment at the lack of response to their letters concerning investor demands32: "Due to our client's responsibilities under its dealers licence … to the claimants and the expectations of [ASIC], our client is obliged to go ahead with the settlements with these claimants. We enclose copies of the settlement deeds that our client proposes to use. [AMP] expects reimbursement from CGU in accordance with the terms of the above policy. Upon reimbursement, if CGU wishes, [AMP] is willing to assign any assignment it takes from the claimants to CGU." This letter was followed by one of 8 August 2001 from CGU's solicitors to their counterparts33: "We confirm that your client should continue to act as a prudent uninsured in respect of the subject claim." Some time during August 2001, the retainer of Ebsworth & Ebsworth was terminated. CGU appointed a new firm, Solomon & Associates, as its solicitors. The change of solicitors was not one that would quickly produce either a frank 31 (2005) 146 FCR 447 at 458 [34] (emphasis added). 32 (2005) 146 FCR 447 at 458-459 [35]. 33 (2005) 146 FCR 447 at 459 [35] (emphasis added). Kirby and explicit denial or acceptance of indemnity. On 19 September 2001, AMP's solicitors wrote to the new solicitors for CGU34: "Your client … appeared to consider that [in the situation where the investor was not aware of the connection between Pal or Howarth and AMP] the principal would not be liable to the claimant. [AMP] suggested that if your client's view of liability was based on legal advice which differed from our advice, that fact has [sic] best be disclosed to us straight away. From [CGU's] response, we have taken it that Ebsworths [ie CGU's former solicitors] have not given advice which differs from our view concerning liability under section 819. As is evidenced from the liability reports already sent to you (and Ebsworths) our experience in dealing with investors is that the majority of them have the clear view that they were dealing with MAG, or in some cases Macquarie Bank. That is, that Pal and Howarth were acting as representatives of MAG. For the majority, the association with [AMP] has only come to light after the event. In our view, the effect of section 819 of the Corporations Act is to make [AMP] liable to such investors, even where investors do not know of [AMP], provided they reasonably believed that Pal or Howarth were acting for 'some person', such as Despite this explicit invitation to the new solicitors for CGU to let AMP know, through its solicitors, of any contrary view concerning the operation of s 819 of the Law, there was no relevant response from Solomon & Associates. On 5 October 2001 a meeting took place between the respective solicitors at which representatives of CGU were also present. AMP's solicitors made a presentation concerning the demands that had been made by investors in respect of the conduct of Messrs Pal and Howarth. On the same day, a letter was written providing a spreadsheet which summarised the amounts in respect of which demands had been received from investors. This document indicated that some had been rejected, some deferred and some paid by AMP. The letter concluded35: "Until CGU makes a decision on indemnity under the policy, our client will continue to act in good faith as a prudent uninsured, consistently with 34 (2005) 146 FCR 447 at 459 [36]. 35 (2005) 146 FCR 447 at 460 [39] (emphasis added). Kirby its obligations under the policy and its dealer's licence, to keep its exposure (financial, regulatory or to its reputation) to a minimum." There were several further follow-up letters from AMP's solicitors to CGU's new solicitors, in each case indicating an expectation of reimbursement from CGU. There was no response either from CGU or its solicitors. Repeated offer of discussions: In March 2002, Solomon & Associates ceased practice. CGU then retained Ms Nicole Wearne of Middletons, solicitors. On 5 April 2002, AMP's solicitors wrote to the new solicitors for CGU referring to the correspondence that had taken place over more than a year with the two previous solicitors, stating36: "At all times, our client has been willing to discuss this matter with CGU and its solicitors, and to provide any documents requested. We believe that we have complied, at all times, with requests for documents. If you believe that further documents need to be provided, please indicate which documents you require and we will attempt to find them." Ms Wearne replied to this letter on 8 April 200237: "We are instructed that our client continues to reserve its rights with respect to its liability to indemnify under the professional indemnity insurance policy issued to your client … [Y]our firm has acted for both [AMP] and [Hillross] throughout the claims administration process … There is a clear conflict of interest in your firm acting for both potential defendants … Our client insists that your firm immediately ceases to act for [AMP] and [Hillross] and that independent solicitors be appointed to administer any claims made against that entity. As your firm is aware our client has obtained Senior Counsel's advice on the liability of [AMP] to clients of [MAG]. Counsel's advice is that your firm's interpretation of the Corporations Law is incorrect and accordingly in many cases no liability to a third party claimant exists. 36 (2005) 146 FCR 447 at 460 [41]. 37 (2005) 146 FCR 447 at 460-461 [42]. Kirby We confirm your … verbal advice … that [AMP] has obtained releases and paid monies to investor clients of MAG. It is our view that to the extent the payments relate to any claim covered by the policy that the insured has breached the no admission or settlement condition set out in clause 7.6 of the policy. Our client believes that the procedure adopted by the insured to resolve disputes with clients of MAG may be in breach of condition 7.2 of the policy and in breach of the obligations imposed on the insured by Section 13 of the Insurance Contracts Act 1984 as amended. However our client is prepared to consider the insured's claim for indemnity arising from claims made by the clients of MAG on an individual basis. In the circumstances we have been instructed to review each client file to assess any liability on the part of the insured to the claimants for which it is entitled to be indemnified. In order for us to do this we seek that the insured provide us with a list setting out the name of every client of MAG where [AMP] considers that a claim for indemnity exists." Senior counsel's advice: It is apparent that the foregoing letter represented a change of attitude on the part of CGU, as expressed by the new solicitors. It apparently coincided with the retainer of the new solicitors. Nevertheless, even at this time, there was no clear decision to repudiate the Protocol or to inform AMP that liability was denied by CGU. The reference to "Senior Counsel's advice" was a reference to an advice received by Solomon & Associates from Mr Alan Archibald QC on the issue of liability. That advice suggested that AMP had a defence to the claims being advanced by investors, based on the provisions of s 819(2) of the Law. As will appear, the reliance on that sub-section was later abandoned. It was not pressed before this Court. The reference to Mr Archibald's advice provoked AMP's solicitors to respond to the preceding letter, recounting once again the communications between the parties since November 2000 and enclosing a consolidated schedule of all investors in relation to whose demands AMP sought indemnity under the Policies. CGU's solicitors declined to make Mr Archibald's advice available to AMP or its solicitors at that stage. They claimed legal professional privilege in respect of it. No specific reason was nominated as to why AMP had no liability to the investors. A demand was made for further information, sought as a "bear [sic] minimum"38. 38 (2005) 146 FCR 447 at 461 [43]. Kirby Meantime, in reliance on their understanding of it, AMP's solicitors continued to deal with investor claims in accordance with the Protocol. In the result, no investor instituted any legal proceedings or proceedings by way of arbitration against AMP. In all, AMP considered 63 investor claims under the Protocol. Through its solicitors it reached settlements with 47 of the investors. It paid those investors sums totalling $3.23 million. In respect of the balance of the investor claims, AMP either rejected or deferred a decision upon them. Before this Court, it was agreed that the balance of the claims should be treated as having been rejected by AMP. There was no indication of any legal proceedings being brought to enforce such claims. Insurer's obligation to decide: Like Emmett J in the Full Court, I have taken pains to reproduce the course of correspondence between AMP and CGU, and their respective solicitors, for a reason. Only by considering the precise way in which CGU acted, over the long period from the first contact between the solicitors in March 2001 until December 2002, can the full impact of CGU's conduct be appreciated. An insurer, acting in good faith, is perfectly entitled to deny indemnity. It can put the insured to proof where it rejects a claim, where it is suspicious about it or where it has bona fide reservations concerning its obligations to indemnify the insured. Then, at least, insurer and insured know where they each stand. Each can take appropriate advice. Each can prosecute and defend its legal entitlements. For nearly two years, CGU and its successive solicitors failed to act with clarity, candour and decisiveness. At one moment CGU was telling AMP through its solicitors to "act as a prudent uninsured". Yet immediately afterwards it was agreeing in principle to the Protocol. Repeatedly it either asserted, or acted on the basis, that it had no difficulties with the Protocol. But then, when relevant materials were sent, it reverted to the injunction to AMP to act as a "prudent uninsured". CGU ignored repeated invitations to nominate any further documentation it required. Yet it withheld its refusal of indemnity. It did not exercise its entitlement (or suggest that AMP exercise its entitlement) under the Policies to bring a test case, which would have permitted any doubts or tested and hesitations authoritatively decided. It adverted to Mr Archibald's opinion. Yet then it declined to make that opinion available. Now it does not seek to sustain it. All too often, silence was the response to the letters from AMP's solicitors. it had concerning to be ventilated, liability its Certainly, there was no outright rejection of the claim for indemnity. On the contrary, whilst hinting at the existence of grounds to justify it to decline indemnity, by April 2002, the third solicitors to represent CGU were continuing to observe the Protocol. They acknowledged their instructions to "review each client file" being submitted to them in accordance with the Protocol by AMP's solicitors. Kirby When the full detail of this extended prevarication and humbug is understood, it is apparent that CGU's conduct was quite contrary to the honourable and proper conduct of insurers in relation to insureds that should be observed in Australia in accordance with the Act. It therefore occasions little surprise that the majority in the Full Court concluded that further attention should be given to the legal foundations upon which AMP sought to rely in order to repel what at last happened, close to the end of the second full year of such conduct by CGU. Denial after litany of delay: On 31 December 2002, AMP's solicitors wrote to Ms Wearne, who by now had moved from Middletons to Deacons, solicitors. The letter evinced a kind of desperation, certainly anxiety. After referring to the course of correspondence described above, the solicitors asked CGU to confirm in writing, no later than 14 January 2003, whether it admitted that the Policies responded to the demands made against AMP relating to Mr Pal's activities, detailed in an attached schedule. They insisted on knowing "whether CGU propose[d] to conduct negotiations and any legal proceedings in respect of any of the demands that remained unresolved"39. As Emmett J "There was no response to the letter because, unbeknownst to AMP and [its solicitors], CGU had written directly to AMP on 14 November 2002. The letter was addressed to AMP's brokers but, for some reason, it was not received by either AMP or [its solicitors]. By the letter of 14 November 2002, CGU declined indemnity in respect of the demands made by clients of MAG and Pal. Enclosed with the letter were three schedules, A, B and C, describing the demands made against AMP, of which CGU had received notification. In relation to the demands listed in schedule A, CGU maintained that no legal liability existed on the part of AMP to the relevant investors." The apparent lack of response would not have been surprising, given the litany of misleading delay. In the mysteriously mislaid letter of 14 November 2002 (a copy of which was subsequently provided by CGU's solicitors to AMP's solicitors on 7 January 2003) CGU went on41: "We are advised that [AMP's solicitors'] legal opinion on the operation of section 819 is flawed and not supported by case law. We are also advised 39 (2005) 146 FCR 447 at 461 [44]. 40 (2005) 146 FCR 447 at 461 [44]-[45]. 41 (2005) 146 FCR 447 at 461 [45]. Kirby that for [AMP] to be liable under section 819, what is required on the part of the claimant is actual belief that Pal's conduct in providing advice was performed in connection with [AMP's] business. Moreover, the investors' belief must be reasonably held. It is clear that none of the Schedule A investors held a belief that Pal acted on behalf of [AMP] at the time that the advice was provided or the investment made." As Emmett J remarked, it is "highly significant" that no mention was made in this letter of s 819(4) of the Law, upon which a latter-day reliance has been placed by CGU. The demands referred to in Schedules B and C of the letter are not material. The amounts paid by AMP in accordance with the Protocol all related to investor claims falling within CGU's Schedule A. At this stage, AMP's solicitors again pressed their demand for a copy of Mr Archibald's advice. Now, at last, it was provided. Emmett J noted that it made no mention at all of s 819(4) of the Law42. The cover and the pleadings Cover under the Policies: It is important now to set out the relevant provisions of the Policies. Pertinent clauses of the Policies were examined both by the primary judge43 and by Emmett J in the Full Court44. By cl 3.1, CGU agreed to provide cover for Claims (as defined) for Civil Liability (as defined) arising from the conduct of the Insured Professional Business Practice (as defined), provided prerequisites were satisfied in respect of the timing of the Claims. Special condition 4 stated: "[I]t is hereby declared and agreed that [AMP] shall be indemnified in accordance with the terms, conditions, exceptions and limitations of this Policy in respect of its liability as a principal and licensed securities dealer for acts or omission of its authorised representatives, but only on the basis that CGU … retain the rights of subrogation against the authorised representatives." The Policies were particular to the business of AMP as a securities dealer under the Law. The relevant conditions were not template clauses, but were 42 (2005) 146 FCR 447 at 462 [48]. 43 (2004) 139 FCR 223 at 235 [41], 250 [108], 251 [111]-[113]. 44 (2005) 146 FCR 447 at 454-455 [16]-[21]. Kirby specially inserted. By special condition 3, CGU agreed to insure AMP as a licensed securities dealer. CGU must thus be taken to be aware of the legislative setting within which AMP operated and the requirements to which AMP was subject (including those of ASIC) in respect of the activities of its authorised representatives in their dealings with investors. Moreover, CGU must be taken to have been aware of the discipline to which AMP was subject from ASIC under the Law and the risks that non- compliance with ASIC's discipline would pose for the continuance of AMP's licence45. As CGU would have known, AMP's licence had a value to it (and its shareholders) far exceeding the individual or aggregate investor claims in issue in these proceedings. In writing insurance in this field of business, CGU must therefore be taken to accept the consequences for its insureds of the normal operation of the Law governing their business and the ordinary superintendence by ASIC to ensure that the letter and policy of the Law is carried out by a licensed securities dealer, such as AMP. Giving this context to the Policies, the later objections by CGU that AMP had acted on the settlement of claims out of fear of ASIC, and not as a prudent uninsured acting in good faith to CGU, are singularly unpersuasive. By cl 3.2 of the Policies, it was stated that cover was to be provided in respect of any of the following types of Civil Liability Claims arising in the course of the Insured Professional Business Practice (relevantly): "(a) Breach of duty … (d) Dishonest, fraudulent, criminal or malicious acts or omissions by an Employee or Principal of [AMP] (but there is no cover to that Employee or Principal for these Claims). Breaches of the Trade Practices Act 1974 or similar Fair Trading legislation …". Under cl 12.1 of the Policies, "Civil Liability" was defined as: "Liability for the damages, costs and expenses which a civil court orders [AMP] to pay on a Claim (as opposed to criminal liability or penalties)." The term "Claim" was defined in cl 12.2 as: "Any originating process (in a legal proceeding or arbitration), cross claim or counter claim or third party or similar notice claiming compensation against and served on [AMP]." 45 cf reasons of Callinan and Heydon JJ at [225]. Kirby By cl 7 of the Policies the following provisions were made concerning the dealings between insurer and insured: [AMP] must tell [CGU] in writing about a Claim or loss as soon as possible and while this Policy is in force … [AMP] must: diligently do, and allow to be done, everything reasonably practicable to avoid or lessen [AMP's] liability or loss in relation to a Claim; immediately give [CGU] all the help and information that [CGU] reasonably require to: Investigate and defend the Claim or loss; and (ii) Work out [CGU's] liability under this Policy. [CGU] can: take over and defend or settle any Claim in [AMP's] name; and Claim in [AMP's] name, any right [AMP] may have for contribution or indemnity. [AMP] must not: admit liability for, or settle any Claim; or incur any costs or expenses for a Claim without first obtaining [CGU's] consent in writing. If [CGU's] prior consent is not obtained, [AMP's] right to cover under this Policy may be affected." The pleadings: In view of the highly technical arguments CGU pressed on this Court, concerning the suggested unfairness of the approach adopted by the majority in the Full Court (and the order of remitter that gave effect to their conclusions), it is necessary, as Emmett J concluded in the Full Court46, to make reference to CGU's pleadings before the Full Court. 46 (2005) 146 FCR 447 at 462-469 [51]-[65]. Kirby That analysis constitutes an admirable exercise Emmett J's analysis of the pleadings extends over seven pages of his Honour's reasons. thoroughness and precision. It rebuts CGU's persistent complaint that AMP went outside the cases pleaded. I will not repeat the detail in Emmett J's reasons. I incorporate that detail by reference. Suffice it to say that it bears out what is, in any case, apparent on the face of AMP's statement of claim. AMP brought its claim against CGU under several heads, relevantly47: Breach of the Insurance Policies. Estoppel against denial of indemnity under the Insurance Policies. Section 13 of the [Act]." As Emmett J observed48, AMP's claim against CGU for breach of the Policies could not ultimately succeed in contract. This was because, under cl 3.1 of each of the Policies, the obligation of CGU was to provide cover for "Claims", a defined word. Any such "Claim" involved a claim made by originating process, in a legal proceeding or arbitration, cross-claim, or counter-claim or third party or similar notice claiming compensation against AMP. In the event, and because of compliance with the Protocol, there were no such legal proceedings, and no arbitration, etc against AMP by any of the investors. Without a single express protest from CGU, each of the demands was settled by AMP before any such step was taken. "Civil Liability" on the part of AMP, as contemplated by cl 3.1 of the Policies, defined in cl 12.1 as "[l]iability … which a civil court orders [AMP] to pay on a Claim", was therefore not established. As well, cl 7.6 of the Policies prohibited AMP from admitting liability for, or settling, any Claim without first obtaining CGU's consent in writing. No such written consent was provided to AMP by CGU before the settlements with the investors. Upon these bases, a claim by AMP founded solely in contract, ie on the Policies, could not succeed. It was against the possibility that the foregoing provisions, or any of them, might be relied on by CGU to repel AMP's claim under the contracts of insurance that AMP pleaded estoppel and sought to show that, acting as a prudent uninsured, its settlements of demands by investors were 47 (2005) 146 FCR 447 at 462 [49]. 48 (2005) 146 FCR 447 at 463 [52]. Kirby reasonable in all of the circumstances and were made in good faith49. If the relevant estoppels were made out, CGU's liability to indemnify AMP would extend to cover AMP's reasonable settlement payments in satisfaction of its liabilities to investors50. In addition, AMP specifically pleaded reliance on the duty, which CGU owed pursuant to s 13 of the Act, to act towards AMP with the utmost good faith in respect of any matter arising under, or in relation to, the Policies. CGU's claim of unfairness: Before this Court (and indeed before the Full Court) CGU made a lot of fuss suggesting that AMP had shifted the content of the estoppels upon which it relied and had altered the way in which it invoked s 13 of the Act. Whilst paying tribute to the ingenuity of these arguments, I am completely unconvinced that there is any substantive merit in them. Specifically, I would reject any contention that the approach and conclusions of the majority in the Full Court worked any procedural injustice on CGU. Given the ill- focussed, prevaricatory conduct of CGU and its successive solicitors, lasting almost two years, which I have described above, the belated insistence that CGU was a victim of procedural unfairness in the issues fought and decided in the proceedings rings hollow. CGU's defence contested the estoppels relied on by AMP. The terms of the defence, however, removed any question that might otherwise have arisen from the language of cll 7.6, 12.1 or 12.2 of the Policies. Thus, by its defence, CGU accepted that it would not deny cover to AMP on the ground that no Claim (as defined) had been served on AMP by any investor; that no civil court had ordered AMP to pay monies in respect of any Claim; or that AMP had settled investor demands without CGU's prior consent in writing51. These concessions notwithstanding, CGU put in issue the question whether AMP had any liability to the investors with whom it had settled and, if so, whether such liability was of a kind to which its Policies responded. CGU pleaded a number of specific defences to AMP's claim for indemnity. Thus, CGU's defence relied on its claimed entitlement to refuse indemnity in respect of payments already made by AMP on the basis that AMP was not itself liable to the investors by reason of the provisions of ss 817, 818 or 819 of the Law. Additionally, CGU pleaded that, even if AMP were prima facie liable pursuant to s 819(2) of the Law, each of Messrs Pal and Howarth was a representative of MAG, within s 819(1)(a) of the Law, and, in accordance with 49 (2005) 146 FCR 447 at 467 [61]. 50 cf reasons of Gleeson CJ and Crennan J at [9]. 51 (2005) 146 FCR 447 at 465 [56]. Kirby the terms of s 819(4) of the Law, AMP was not liable for the allegedly wrongful conduct of either of them52. Approach of the Full Court: In his reasons, Emmett J accurately explained the position reached on CGU's specific defences53: "CGU maintains that the issues thrown up by its defence required AMP to establish that it had a liability to each of the investors described in the SC Schedule, and that that liability was one to which the Insurance Policies responded. Those issues would also involve questions of the construction of s 819 of the Law and of cl 3.2 of the Insurance Policies. The issues would also entail evidence as to the circumstances in which investors made the investments that gave rise to their demands against AMP. That in turn would involve examination of the relationship between investors, on the one hand, and Pal, Howarth or MAG, on the other." As Emmett J pointed out, whatever else it had done or not done, CGU had not at any time admitted that the Policies responded to any of the investor demands. By the time it reached the trial CGU had firmed up on the resistance suggested by Ms Wearne when she took over the matter. Its case had become that AMP itself had no liability to the investors and, if it did, that any such liability was not within the Policies54. In response to this state of the pleadings, AMP made no attempt before the primary judge to prove, ad seriatim, that it was liable in respect of the individual demands of investors described in the relevant schedule. Instead, as Emmett J put it, "AMP sought simply to establish that, acting as a prudent uninsured, its settlement of the demands by investors was reasonable in all of the circumstances. It also referred to s 13 of the [Act] in aid of its position."55 The decision of the primary judge Good faith and dishonesty: In his reasons, Emmett J pointed out56 that the primary judge had not followed the ordinary path of determining the issues between the parties in terms of their respective pleadings. Instead, he stated a 52 (2005) 146 FCR 447 at 465-466 [57]. 53 (2005) 146 FCR 447 at 467 [58]. 54 (2005) 146 FCR 447 at 467 [59], [60]. 55 (2005) 146 FCR 447 at 467 [61]. 56 (2005) 146 FCR 447 at 469 [66]. Kirby number of questions for determination. By inference, these were the questions that he believed expressed the real issues, as they had emerged from the conduct of the trial by the parties. The first two questions dealt with AMP's entitlements, and CGU's liability, under the Policies, in the events that had occurred. In view of what has already been said, it is possible to leave these issues aside and to proceed immediately to the third of his Honour's questions. This presented the issue whether AMP could avoid the result that followed from a literal application of the Policies on the basis of estoppel and/or a breach of the statutory obligation of utmost good faith. In summarising the answers of the primary judge on these issues, Emmett J encapsulated them, accurately, as follows57: "AMP could not rely on an estoppel because there was no relevant reliance by AMP. Up until receipt of the letter of 14 November 2002, AMP recognised that CGU had neither admitted nor denied liability to indemnify under the Insurance Policies. CGU made it clear that AMP was to be no worse off in respect of its rights (if any) under the Insurance Policies by negotiating with investors and entering into settlements. Further, AMP had not shown any detriment because CGU's defence makes it clear that it did not deny AMP's claim for indemnity on the basis of cll 12.1, 12.2 and 7.6. Accordingly, AMP is no worse off, vis a vis its policy rights (if any), by having entered into settlements with investors. … An allegation of breach of the duty of utmost good faith requires proof of some want of honesty. There was no want of honesty on the part of CGU and, therefore, there was no failure to act toward AMP with the utmost good faith." Application of s 819 of the Law: The primary judge's fourth issue concerned the liability of AMP to the investors in accordance with the Law. On this point the primary judge noted that the critical provision was s 819 of the Law and that CGU did not propound the view of that section's operation, adopted by Mr Archibald, that the conduct of Messrs Pal and Howarth was not in connection with a securities business or investment advice business carried on by AMP. Rather, CGU finally submitted that AMP could have relied on the exculpatory provisions in s 819(4). The fifth issue concerned AMP's reliance on s 819(4) of the Law. On this, the primary judge concluded that the purpose behind s 819(4) was to "mitigate to some extent the Draconian rigour of s 819, which creates liability whether or not the wrongdoer was the agent of the 'indemnifying principal' and whether or not 57 (2005) 146 FCR 447 at 469-470 [66]. Kirby the client had even heard of the indemnifying principal in relation to the impugned conduct". The primary judge concluded58: "At least where what might be termed the 'real' principal is before the court, it seems reasonable that it alone should bear the burden, and s 819(4) has that effect." Although the answers to the foregoing questions were legally sufficient to require that the claim be decided in favour of CGU, the primary judge went on to address his remaining issues. Finding of unreasonable settlements: As to the sixth, he concluded that the settlements reached by AMP with the investors were not reasonable, being of the view that59: "the whole process was so dominated by pressure from ASIC that I am quite unable to conclude that the Settlements would have been reached in the agreed amounts, or indeed at all, had that pressure not existed. … Apart from the question of process, the Settlements were unreasonable because they failed to take into account the availability of the s 819(4) defence … [This] seems not to have been considered at all." The primary judge then decided three further issues (his numbers 7, 8 and 9) in favour of AMP60. On issue 7, he concluded that the demands by investors against AMP could "be properly characterised as being for breach of duty" and thus within cl 3.2 of the Policies. On issue 8, he concluded that, given the purpose of the Policies to provide indemnity for the kind of liability that AMP might incur by conducting the kind of business it had, a commercial construction of the Policies required rejection of the argument that the ambit of the "Insured Professional Business Practice" of AMP was limited to its own activities and did not extend to those of authorised agents for which it might be liable under the Law. Residual primary findings: As to his ninth issue, the primary judge answered in the negative the question of whether the demands of investors were excluded from AMP's indemnity by cl 6.3(e) of the Policy. The last two issues in the primary judge's list concerned the disposition of costs and declaratory relief. In light of the primary conclusions reached by him, the primary judge entered 58 (2004) 139 FCR 223 at 248 [99]. 59 (2004) 139 FCR 223 at 250 [106]-[107]. 60 (2004) 139 FCR 223 at 250-252 [108]-[120]. Kirby judgment in favour of CGU. However, because AMP had succeeded on three issues (issues 7, 8 and 9) and CGU was otherwise successful, his Honour ordered that AMP pay ninety percent of CGU's costs61. The decision of the Full Court A critical difference: It is essential to appreciate the critical difference between the majority in the Full Court and both the primary judge and Gyles J, in dissent in the Full Court. Essentially, the majority in the Full Court concluded that the primary judge had erred in his treatment of the issues of estoppel and of AMP's reliance on s 13 of the Act. Because a proper consideration of those two issues was essential to a just and lawful determination of AMP's claim for indemnity by CGU, the mistaken treatment of those issues had caused the trial to miscarry. In effect, the approach of the primary judge had deprived AMP of the only basis upon which, in law, it might establish its entitlements against CGU. It was for that reason that the majority ordered that the proceedings be remitted to the primary judge for further consideration. The majority necessarily recognised that, in the end, the further consideration might fail to establish AMP's entitlements, in the ways in which AMP advanced them. However, it is basic to the trial system observed in this country that a party should have a decision of the trial court upon every legal claim propounded by it, freed from material errors of legal approach or significant factual misunderstandings. There was no error in the approach of the majority in the Full Court with respect to the remitter. The majority withheld the entry of judgment in favour of AMP (relief which AMP had sought at trial, on appeal and which it now seeks in this Court by its proposed cross-appeal). The order of remitter contemplated that CGU might still succeed at first instance. It simply insisted that such success should be based on a proper trial of the issues of estoppel and good faith propounded by AMP which, the majority concluded, had not so far occurred. Following such an interlocutory order, of a kind regularly made by intermediate courts which have responsibility in that regard (and more time to consider the factual complexities of a case than this Court ordinarily has), the remitter would normally be allowed to take its course before any intervention by this Court. If, in the outcome, the primary judge were to confirm his original conclusion, at least AMP would then arguably have had a full and accurate consideration of its arguments. If the primary judge reversed his conclusion, the Full Court's correction would be vindicated. CGU would be entitled to challenge 61 AMP Financial Planning Pty Ltd v CGU Insurance Ltd (No 2) [2004] FCA 1397. See (2005) 146 FCR 447 at 471 [67]. Kirby that outcome, including any still relevant interlocutory rulings made on the way, up to this Court. Emerging issues on appeal: CGU secured special leave to bring these appeals, not only because of its complaints concerning the principles that had led the Full Court majority to remit for correction of error the original determinations on the estoppel and good faith questions, but because of what CGU said were fundamental reasons undermining the correctness of remitter in this case. Those fundamental reasons were said to include the procedural unfairness inflicted on CGU by the majority's consideration of the estoppel and good faith issues in the Full Court. However, given that both such issues were unequivocally signalled in AMP's statement of claim and pursued at the trial, I have already indicated that, on appropriate analysis, there was no substance in CGU's argument in this regard. More fundamental, and arguable, was the question of whether AMP was bound to fail in any case, making remitter on the issues of estoppel and good faith futile. One such propounded "fundamental issue" was whether the settlements agreed between AMP and the investors were objectively shown to be unreasonable, taking into account the proper operation of s 819(4) of the Law62. Connected with this issue, and in a sense even more fundamental, is the question of whether AMP could prove the objective reasonableness of the settlements with the investors simply by tendering (and having admitted) the written files of the claims on AMP by such investors, without actually calling the investors and other persons to establish, by oral testimony, the circumstances in which those claims arose, the investors' respective relationships with Messrs Pal and Howarth, MAG and AMP and the reasonableness of the individual sums which AMP had paid out, given the potential sources of doubt over the fact and extent of AMP's liability to the investors. Defective treatment of estoppel: For the majority in the Full Court, Emmett J accepted the rule established by this Court in Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd63. By that rule, where one party to a contract is in breach and the breach forces the innocent contracting party into litigation with a third party, the innocent party may properly conclude that its best interest is to settle the third party's claim. The contract breaker will then be liable in law for the settlement where (1) it is in breach of its legal obligations and (2) the settlement is reasonable when judged objectively, by reference to all of the circumstances prevailing at the time the settlement was reached64. 62 (2005) 146 FCR 447 at 492 [167], 493 [169] per Gyles J. 63 (1998) 192 CLR 603 at 615-616 [33] per McHugh J. 64 cf reasons of Gleeson CJ and Crennan J at [9]. Kirby In the present case, at the time of the successive settlements with the investors (and most certainly during the early settlements) CGU was not in the position of a "contract breaker"65. This was because of the way in which the Policies defined a "Claim" and because no such Claim (as defined) had ever been made. Nevertheless, AMP argued that the lack of Claims (as defined) did not defeat its case against CGU, pleaded in terms of estoppel and, alternatively or additionally, the obligations imposed on CGU by s 13 of the Act. As the majority in the Full Court recognised66 (with support on this point from Gyles J67), the estoppel argument was crucial if AMP was to get to first base, in the face of the terms of the Policies. This made it critical that the primary judge should examine closely and accurately both the estoppel claim and the reinforcement for that claim that AMP sought to derive from s 13 of the Act. Essentially, the primary judge considered that AMP had effected the settlements with the individual investors because it regarded such settlements as desirable in its own interests (including its interest to keep on the right side of ASIC). The primary judge did not consider that AMP had acted in reliance on any commitment or promise or representation made to it by or for CGU that CGU would indemnify or reimburse AMP in respect of payments made pursuant to the settlements with the investors68. In response to the primary judge's conclusion in this regard, AMP countered that its detriment was to be found in the fact that it had proceeded (as CGU knew) along the path of individual settlements with the investors, on the footing of its own legal advice that this was a course proper for it to take as a "prudent uninsured". Because CGU had not promptly decided and announced its refusal of indemnity, AMP had put itself in a seriously disadvantageous position. When the refusal of indemnity at last came, AMP could effectively no longer require any of the investors to come forward to prove a case against AMP, so as to meet the obligation created by the belated denial of indemnity and insistence on individual proof of the investor claims. By sitting on its hands the way it did, CGU had thus lulled AMP into a belief that its agreement in principle to the Protocol would ultimately lead to the provision of indemnity for the payments to investors made by AMP. CGU knew 65 (2005) 146 FCR 447 at 472 [70]; see also at 491-492 [163] per Gyles J. 66 (2005) 146 FCR 447 at 449 [1] per Moore J, 472 [71]-[72], 474 [82], 489 [154] per 67 (2005) 146 FCR 447 at 491 [161]. 68 (2004) 139 FCR 223 at 240 [61]. Kirby of the pressure that ASIC was imposing on AMP. That pressure to act efficiently, fairly and in a timely way was inherent in AMP's business for which CGU had provided insurance. CGU was supplied by AMP with all of the relevant written material. It repeatedly omitted to respond to enquiries as to whether it needed more information. It failed to initiate, or suggest, a settlement test case. And only most belatedly did it raise its suggested defence, based on s 819 of the Law. It is true, as the primary judge pointed out, that CGU by its defence indicated that it would not rely on the absence of a "Claim" or of an order of a civil court to repel AMP's proceedings against it. However, according to AMP, these concessions were "quite illusory if, in order to obtain reimbursement from CGU under the Insurance Policies, it [was] incumbent upon AMP to conduct, as against CGU, the case that each investor, but for the settlement, would have had to conduct against AMP"69. Primary judge's critical error: It is in dealing with these arguments (which CGU contested and unconvincingly suggested were outside the original case of estoppel) that Emmett J identified the critical error of approach on the part of the primary judge concerning AMP's pleaded reliance on estoppel. "AMP says, in effect, that it was induced to assume that it would not be required to establish by admissible evidence that it was legally liable to the investors. If it were required to establish by admissible evidence that it was legally liable to each of the investors with whom it settled, it has adversely affected its capacity to obtain indemnity from CGU. If AMP's assumption was induced by CGU, it would be unconscionable for CGU to depart from that assumption by insisting upon AMP establishing by admissible evidence that it was legally liable to each investor. His Honour did not make a finding in relation to the assumption and detriment for which AMP contends. That is to say, his Honour made no finding as to whether, in reliance upon the assumption referred to above, AMP entered into any settlement with an investor and made no finding as to whether, from a practical point of view, AMP put it beyond its power to establish by admissible evidence that it was legally liable to that investor." 69 (2005) 146 FCR 447 at 473 [78]. 70 (2005) 146 FCR 447 at 474 [81]-[82]. Kirby Emmett J noted CGU's complaint that the estoppel relied on was outside the pleadings71. However, he concluded (rightly in my view) that the contention advanced by AMP was within the pleadings72. Obviously, he considered that, because the estoppel claim was crucial to the foothold of AMP's recovery against CGU, it was essential that the claim be addressed accurately and determined, one way or the other, on the available evidence. Support for the Full Court's analysis: There are many considerations sustaining Emmett J's approach. As a matter of law, the way in which AMP advanced its claim grounded on estoppel finds ample support both in the general law and equitable bases of estoppel73. Arguably, for CGU to depart from assumptions it induced in the course of its dealing with AMP (including its agreement in principle to the Protocol) would amount to unconscientious conduct74. So much was also recognised by Gyles J75. His Honour concluded, rightly in my view, that76: "[t]o act as a prudent uninsured is, for relevant present purposes … similar to the position of an insured denied cover in breach of contract. A prudent uninsured might arrive at an objectively reasonable settlement in the light of its potential liability and pay accordingly." Gleeson CJ and Crennan J reject AMP's claim grounded on estoppel, for the reason that, according to their Honours, the requisite representation and 71 (2005) 146 FCR 447 at 474 [83]. 72 (2005) 146 FCR 447 at 474 [84]. 73 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429; The Commonwealth v Verwayen (1990) 170 CLR 394 at 441-442; cf New Zealand Pelt Export Co Ltd v Trade Indemnity NZ Ltd (2004) 13 ANZ Insurance Cases ¶61-626 74 Thompson v Palmer (1933) 49 CLR 507 at 547; Tobin v Broadbent (1947) 75 CLR 75 (2005) 146 FCR 447 at 491 [161] citing (amongst other cases) Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244. 76 (2005) 146 FCR 447 at 491 [161]. Kirby reliance were lacking77. In my view, each of the suggestions is fully answered by Emmett J in the passages that I have cited78. For present purposes, it is not essential for this Court in these appeals to decide the liability of CGU finally on the basis of the estoppels propounded by AMP. The whole point of the order of remitter, favoured by the majority in the Full Court, was to allow that question to be fully considered and decided by the primary judge by the application of the law to the facts properly examined and found. The correct time for any conclusive determination by this Court of CGU's the liability, based on AMP's arguments of estoppel, would be after determination of that issue by the primary judge, following the remitter, and following any further appeal to a Full Court. For the present, it is sufficient to say that the Full Court's conclusions that the primary judge erred in his approach to the evidence; that the claim now advanced by AMP was within the pleadings; and that it was a legally viable claim, have not been shown to be erroneous. It remains to decide whether, as CGU asserts, remitter was nonetheless futile. The Full Court's analysis, and its conclusion, on the arguability of the issue of estoppel should not be disturbed. Subject to what follows, this alone supports the order of remitter which is designed to ensure the proper determination of an essential ingredient in AMP's claim against CGU. Good faith and the s 13 claim: The same conclusion, in my view, follows from an analysis of the treatment by the majority in the Full Court of the primary judge's consideration of AMP's reliance on s 13 of the Act. That section states: "A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith." The expression "utmost good faith" is not defined in the Act. At common law, contracts of insurance were contracts uberrimae fidei. Ordinarily, the obligations of good faith arose in cases involving suggested breaches of that obligation by the insured. However, at common law, as under s 13 of the Act, the principle applied equally to both parties to the insurance contract79. 78 Above, these reasons at [117]-[118]. 79 Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1 at 31; Deaves v CML Fire and General Insurance Co Ltd (1979) 143 CLR (Footnote continues on next page) Kirby Before the passage of the Act, there was no reported case in which the common law duty clearly operated to the benefit of the insured80. In part, this was because of decisional authority suggesting that the only remedy which an insured had for breach of the good faith obligation in an insurance contract at common law was avoidance of the contract. That was a remedy that would rarely, if ever, be to the benefit of the insured, given that it would effectively deny insurance cover81. The language of s 13, including the statement of the general principle as a legal obligation separate from the implication of a provision into the contract, supports AMP's submission that s 13 of the Act had the effect of introducing a larger and reciprocal obligation between the insurer and the insured in the place of what had, for all practical purposes, previously been a one-way street. Such a view of s 13 would fit comfortably with other protections for consumers, introduced into the Act, based on the report of the Australian Law Reform Commission82. In his reasons, the primary judge was unconvinced by AMP's reliance on s 13 of the Act. He dismissed the contention of a want of the utmost good faith on the part of CGU. He held that it was essential, if that complaint were to be established, for AMP to prove a want of honesty on the part of CGU, an element that the primary judge held was unproved83. Indeed, AMP had not, as such, made such an allegation at trial. It was this view concerning the requirements of s 13 that the majority in the Full Court held to have been erroneous84. They concluded that it amounted to a legal error. I agree with the opinion of the majority in this respect. The legal error, once disclosed, also justified the remitter of this issue to the primary judge for redetermination, so long as to do so was not futile. 24 at 76 per Murphy J; Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd [1991] 2 AC 249. 80 Kelly v New Zealand Insurance Co Ltd (1993) 7 ANZ Insurance Cases ¶61-197 at 78,258 is an instance where the attempt failed. 81 Kelly and Ball, Principles of Insurance Law in Australia and New Zealand, (1991) 82 Australian Law Reform Commission, Insurance Contracts, Report No 20, (1982) at 202 [328]. Note also the summary of recommendations at xxxvii [64] indicating the frequency of complaints about delay on the part of insurers. 83 (2004) 139 FCR 223 at 242 [76]. 84 (2005) 146 FCR 447 at 475-476 [86]-[92]. Kirby The relevance of dishonesty: It is true that, before these proceedings, there were dicta in Australian judicial opinions suggesting that some want of honesty had to be proved in order to establish a breach of the requirement of the utmost good faith expressed in s 13 of the Act. Ormiston JA (with whom Phillips and Kenny JJA agreed) said as much in CIC Insurance Ltd v Barwon Region Water Authority85. Ormiston JA adopted that test by reference to what he took to be the holding of the Full Court of the Supreme Court of Western Australia in Kelly v New Zealand Insurance Co Ltd86. Owen J had there observed that "the essential element of honesty" was the focus of the section. No one doubts that the absence of honesty on the part of an insurer (or insured) will, if proved, attract the provisions of s 13 of the Act. However, this does not mean that a want of honesty is a universal feature of a want of the utmost good faith in this context. Moreover, that is not what Owen J said in Kelly. The reference to the "essential element of honesty" was, in fact, derived by his Honour from a New Zealand decision in Vermeulen v SIMU Mutual Insurance Association87. However, in his reasons in Kelly, Owen J (with whom Kennedy and Steytler JJ agreed) did not confine the operation of the section so "At common law contracts of insurance are described as contracts uberrimae fidei or contracts of good faith. The precise definition of the term 'good faith' depends on the legal context in which it is used. In the context of insurance, Sutton in Insurance Law in Australia says that the phrase 'it … basically encompasses notions of fairness, reasonableness and community standards of decency and fair dealing'." After referring to Vermeulen, Owen J went on to state89: "By virtue of s 12 of the Act the duty in s 13 is an over-riding duty which must not be limited or restricted in any way." 85 [1999] 1 VR 683 at 699-700 [42]-[45]. 86 (1996) 130 FLR 97 at 111. 87 (1987) 4 ANZ Insurance Cases ¶60-812. 88 Kelly (1996) 130 FLR 97 at 111. 89 Kelly (1996) 130 FLR 97 at 111. Kirby To show that he did not restrict the criterion to dishonesty, Owen J "For all of these reasons there was no dishonest, capricious or unreasonable conduct by the respondent." In my view, the criteria of dishonesty, caprice and unreasonableness more accurately express the ambit of what constitutes a breach of s 13 of the Act91. The foregoing line of authority was noted in the Full Court by Moore J, who wrote separately on this aspect of the appeal92. As an instance of the wider application that, in Moore J's view (and my own), s 13 of the Act entails, his Honour cited the opinions of Bollen J in Moss v Sun Alliance Australia Ltd93 and of Ambrose J in Gutteridge v Commonwealth94. Both of these were cases in which the insurer had (as CGU did here) prevaricated and delayed the insured in the handling of the insurance claim. In Moss, Bollen J addressed the insurer's failure to make a prompt decision about whether it would not, or could not, provide indemnity95: "[Counsel] says that prompt admission of liability to meet a sound claim for indemnity and prompt payment is required of an insurer by virtue of its obligation to act with the utmost good faith towards its insured. I agree. The defendant here, says [counsel], did not so behave. It is, therefore, in breach of its contract, of its obligation to act with the utmost good faith, of a term in its contract with the plaintiffs. It delayed for an unreasonably long time in admitting liability and in withholding, even until now, payment. … [T]he assessor could and should, in my opinion, quite quickly have found that the plaintiffs had a true and sound claim for indemnity." 90 (1996) 130 FLR 97 at 112 (emphasis added). 91 cf reasons of Gleeson CJ and Crennan J at [15] and reasons of Callinan and 92 (2005) 146 FCR 447 at 449-452 [1]-[11]. 93 (1990) 55 SASR 145 at 154-156. 94 Unreported, Supreme Court of Queensland, 25 June 1993. 95 (1990) 55 SASR 145. Kirby Good faith and timely decisions: The same can be said of CGU. It should have arrived much more quickly at a conclusion either that AMP's claim was sound or that it was unsound, then stated clearly its position on indemnity. Instead, it delayed, it ignored letters and, arguably, it allowed AMP to continue on a course of action under the Protocol which a prompt decision on its part might have forestalled. However AMP might have hoped that CGU would not take over litigation of one, a sample, or all of the investor claims (out of concern for any reaction of ASIC) – a matter that has loomed large in the reasons of the primary judge and of Gyles J in the Full Court and now in the reasons of the majority in this Court96 – if CGU had elected to do so, that was its right. Yet it sat on its hands. Moreover, reliance on this consideration is itself disingenuous because it ascribes to ASIC a proclivity to retaliatory conduct that would be unlawful and therefore most unlikely to occur. In Gutteridge, Ambrose J followed the approach of Bollen J in Moss. Accurately, in my view, his Honour identified the principle for which Moss stands. It is one which the Full Court in the present case correctly endorsed97: "[F]ailure to make a timely decision to accept or reject an insured's claim for indemnity under a policy can amount to a failure to act towards the insured with the utmost good faith as required by s 13 of the Act, even if the failure results not from an attempt to achieve an ulterior purpose, but results merely from a failure to proceed reasonably promptly when all relevant material is, or ought to be, at hand sufficient to enable a decision on the claim to be made and communicated to the insured." In this Court, Gleeson CJ and Crennan J98 state that CGU's delay in accepting or denying liability was not the possible breach of the requirement of good faith that was contemplated by the majority in the Full Court. With respect, that is not my reading of the Full Court decision99. The majority in the Full Court decided that, by imposing on AMP's s 13 claim a requirement to establish dishonesty on the part of CGU, the primary judge's treatment of s 13 miscarried. The majority derived their own opinion, from the objective evidence, that it was open to the primary judge "to make a judgment as to whether the conduct of CGU over many months exhibited a failure to act with the utmost good faith in 96 See eg reasons of Gleeson CJ and Crennan J at [6]. 97 Unreported, Supreme Court of Queensland, 25 June 1993, cited (2005) 146 FCR 99 See (2005) 146 FCR 447 at 449 [1] per Moore J, 481 [114]-[115] per Emmett J. Kirby relation to AMP's claim to be entitled to indemnity under the Insurance Policies"100. The Full Court majority were correct to so conclude. A broader view of s 13: The relevance of this broader view of the s 13 obligation is obvious. As Emmett J pointed out, it is potentially two-fold. First, it could affect whether CGU was bound to assert, before settlement was made with any particular investor, that it would not accept liability for any such settlement. Secondly, it could entitle AMP to claim that CGU had failed to act with the utmost good faith in relation to the Policies when it belatedly claimed that AMP was required, by admissible evidence, to establish that it was legally liable to each investor when it settled that investor's demand on it101. There was not a whisper of such a requirement in any of the earlier correspondence between the solicitors of CGU and AMP. It is essential to repeat that, at this stage, all that the Full Court has done is to require that the primary judge reconsider the good faith arguments of AMP, freed from his mistaken belief that, to rely on the section, AMP had to establish dishonesty on the part of CGU. In the end, the outcome of AMP's claim might be the same. However, having regard to the large amounts at stake and the centrality in the case of AMP's reliance on estoppel and want of good faith on the part of CGU, it was not at all unreasonable that the majority in the Full Court should conclude that the proper course, and the only one conducive to the lawful disposition of AMP's claim, was to remit the entire proceedings to the primary judge for reconsideration on these issues. Subject to what follows, CGU has thus failed in this Court to establish any error in the reasoning or conclusion of the Full Court as to the mistrial of the two issues. In particular, the broad view which the Full Court majority took concerning the operation of s 13 of the Act102 is one that this Court should endorse. It sets the correct, desirable and lawful standard for the efficient, reasonably prompt, candid and business-like processing of claims for insurance indemnity in this country. The dilatory, prevaricating, confused, uncertain, inattentive and misleading way in which, over two years, CGU, with its four successive firms of solicitors, delayed and postponed its decision to deny indemnity amounts to a very sorry story. Potentially it is one of considerable disadvantage and prejudice to AMP. Whether it would ultimately entitle the Federal Court to provide relief to AMP requires further analysis of the evidence 100 (2005) 146 FCR 447 at 476 [92] per Emmett J. See also at 452 [11] per Moore J. 101 (2005) 146 FCR 447 at 474-475 [85]. 102 By contrast, Gyles J considered the reliance on s 13 to be "misplaced": (2005) 146 FCR 447 at 491 [162]. Kirby and argument, as the Full Court recognised. Nevertheless, in the circumstances, the order of remitter made by the Full Court was fully justified. Justification for remitter: The actual order, entered in the record, was one simply for the remitter of the matter to the primary judge, his earlier orders having been set aside by the Full Court. However, in the reasons of Emmett J, the purposes and scope of the remitter were made plain. As the relevant passage is set out in other reasons103, I will not repeat it. But was remitter futile? Reasonableness of the settlements: Because the primary judge was of the view that there was no breach of the Policies, no way that AMP could render CGU liable on the principles of estoppel and no relevant breach of the duty of the utmost good faith on the part of CGU, he did not strictly have to decide whether the individual settlements between AMP and the investors were reasonable in each case104. Nevertheless, the primary judge did proceed to address that question. For two given reasons he concluded that the settlements were not reasonable. If those conclusions were to stand, an order of remitter might be futile, as CGU submitted it would be. This requires consideration of the two bases upon which the primary judge held that the settlements were not reasonable. The first concerned the process by which the settlements were achieved. The second concerned the suggested failure of AMP to consider the possible application of s 819(4) of the Law to the investor claims. As to the process, the primary judge held that the reasonableness of the settlements had to be proved according to an objective standard and that AMP bore the onus of establishing that such standard had been reached. He also considered that the settlements had to be reasonable from the point of view of CGU "in the sense that they must be based on a reasonable assessment of the risk faced by AMP if the investors demands were to proceed to trial and judgment and CGU were liable to provide indemnity"105. In the Full Court, Emmett J accepted the need for determination according to an objective standard. He appears also to have accepted that the onus rested 103 See (2005) 146 FCR 447 at 489 [154]. Noted in reasons of Gleeson CJ and Crennan J at [11]; reasons of Callinan and Heydon JJ at [253]. 104 (2005) 146 FCR 447 at 481 [116]. 105 (2005) 146 FCR 447 at 481 [117]. Kirby on AMP to establish reasonableness, it being the claimant for relief. I too accept these propositions. However, Emmett J did not consider that the application of an objective standard required consideration of whether the settlements were reasonable from the point of view of CGU. He explained this conclusion on the footing that objective reasonableness had to be "assessed from the point of view of an uninsured recipient of the relevant demand"106. Reciprocity of the s 13 obligation: With respect to Emmett J, I am not convinced that this was a correct conclusion of this issue. If the insured insists on the benefit of the insurer's duty to it of "the utmost good faith", the reciprocal character of the obligation evinced in s 13 of the Act implies, in the case of breach by the insurer or of failure on its part to accord the utmost good faith, that the insured will still, for its part, act in accordance with that principle, so far as it intends later to hold the insurer obliged to it in respect of the consequent losses. Nevertheless, I agree with AMP's submission on this issue that, assuming Emmett J were wrong in this respect, CGU's interests and its views were, in fact, taken into account and given more than ample opportunity for presentation, discussion and consideration. This was done through the mechanism of the Protocol to which CGU agreed in principle. It was done through the large numbers of letters, with copious materials, supplied to CGU's solicitors by AMP's solicitors, also pursuant to the Protocol. At any stage, CGU could have instructed AMP to defend a particular claim, several claims or all claims as a test. Or CGU could have suggested the invocation of the senior counsel clause in the Policies107. Having entered this particular insurance market, CGU must be taken to have known AMP's obligation to act efficiently, honestly and fairly in relation to claimant investors108. CGU was, in fact, informed of the intervention of ASIC. The suggested role of ASIC: The primary judge appears to have been affected, adversely, by AMP's understandable desire to satisfy ASIC. Applying what he took to be an objective standard, he indicated that settlement in order to placate ASIC, rather than to compensate an investor for the value of the investor's demand recoverable from AMP, would render the settlement objectively unreasonable. However, ultimately, the primary judge did not so conclude. He simply indicated that, because the whole process relating to the settlement of the investor demands was so dominated by pressure from ASIC, he was "quite unable to conclude that the Settlements would have been reached in 106 (2005) 146 FCR 447 at 481 [118]. 107 Clause 7.8. See [2007] HCATrans 047 at 3955; cf reasons of Callinan and 108 See eg the Law, s 826(1)(j). Kirby the agreed amounts, or indeed at all, had that pressure not existed"109. In reaching this conclusion, the primary judge was greatly influenced by the fact that AMP was explicitly told by ASIC to ignore CGU's interests. He expressed the opinion that this was what AMP had eventually done110. In the Full Court, Emmett J analysed closely the process by which AMP had proceeded to settle the individual investor demands111. I will not repeat what is said there, except to say that I find no error in Emmett J's reasoning, save insofar as his Honour had earlier concluded that it was unnecessary for AMP, in effecting individual settlements, to consider the reasonableness of the settlement as between itself and CGU. For the reasons already stated, that error was immaterial to the outcome of Emmett J's analysis. Decision on settlement evidence: As Emmett J pointed out112, some 12 volumes of material evidencing the investigations that were carried out by AMP in relation to the individual investor demands were tendered at the trial. All of that material was in evidence before the primary judge. As the primary judge's reasons show, his Honour did not refer to any of the material in these volumes in his reasons. Before the Full Federal Court and this Court, CGU referred to the fact that the material tendered by AMP in relation to each particular settlement was proffered for a limited purpose, not as proof of the truth of the underlying facts referred to in the material, but as evidence of the circumstances in which AMP had decided to settle the individual claims113. Further, CGU stated that senior counsel for AMP had informed the primary judge at trial that he did not need to read through the numerous folders. CGU claimed that he had said that it would be sufficient for the primary judge to satisfy himself that a formal procedure was adopted and to observe the pattern of the procedure in each case. This account, on the part of CGU, of what transpired at the trial is somewhat misleading. The transcript reveals that the investor materials were tendered and accepted in evidence as material relevant, in each case, to the decision made by AMP on whether or not to settle the investor claim referred to. 109 (2004) 139 FCR 223 at 250 [106] (emphasis added); cf reasons of Gleeson CJ and 110 (2004) 139 FCR 223 at 250 [106]. 111 (2005) 146 FCR 447 at 482-486 [122]-[138]. 112 (2005) 146 FCR 447 at 482 [122]. 113 [2006] FCAFC 90 at [5]. Kirby In each case, the nature of the relevant documents was practically identical. It included claimant interview records (where the claimant was not legally represented), documents evidencing the investment and the basis for, and quantum of, the investor's claim as well as final liability reports. Perhaps understandably, the primary judge expressed a certain reluctance to read and consider the individual investor documents. It was this reluctance that elicited the suggestion at trial that, once AMP's process was understood, it could suffice, within the Protocol, to demonstrate the reasonableness of the ensuing settlements, unless CGU could, in any particular case, demonstrate that the material before the AMP decision-maker was inadequate for the purpose of ensuring a reasonable outcome. Immediately following the statement by senior counsel for AMP that it was not necessary for the primary judge to read everything in the volumes, counsel went on: "[B]ut it is important that the material is there … so that the other side can test any part of it that they wish to test with the people who actually [performed] the work". Once again, the pattern evident from the outset of the dealings between AMP and CGU can be observed. AMP supplied relevant documentation. CGU sat on its hands. It relied on its own lack of action, lack of response and inordinate delay. In the outcome, the investor documents were relevant to the issues pleaded by AMP. They were available to the primary judge to prove what had, in fact, happened pursuant to the Protocol as agreed in principle between AMP and CGU. They were also available to establish that AMP had a reasonable basis upon which to settle each of the claims before AMP agreed to settle it. At an earlier phase, before the Full Court, CGU appears to have acknowledged this fact. In its written submissions to the Full Court, CGU itself said: "Whether the settlements were reasonable must be judged by reference to: the reasoning that supported the advice given to the client to settle; the material the client had available to it at the time the settlement was reached114. That material was in evidence. The learned trial judge had available to him the same factual material that was available to [AMP] and its solicitors when the decision was made to reach the settlements with the investors. It cannot be contended that the learned trial judge erred in 114 See Unity Insurance (1998) 192 CLR 603 at 653 [130] per Hayne J. Kirby assessing that material … Accordingly, there is no basis for [the Full] Court to interfere with the conclusions of the learned trial judge on this issue." (emphasis added) The Full Court's conclusion was correct: Although the primary judge obviously felt that AMP had been unduly influenced by the pressure from ASIC, Emmett J, for the majority in the Full Court, dealt with that conclusion, in my view convincingly115: "It may be that AMP was influenced by pressure from [ASIC] to deal with investors' demands promptly and expeditiously. It may be also that AMP was anxious to reach a settlement of such demands quickly and before investors commenced proceedings that would constitute a Claim (as defined) under the Insurance Policies. However, it by no means follows that, because investors' demands were dealt with expeditiously under pressure from [ASIC], any of the settlements of the demands was unreasonable, judged objectively. That requires, at least, an examination of the reasoning that led to the advice upon which the settlements were based." CGU, through its successive solicitors, had long possessed the materials on the basis of which AMP's settlements with the individual investors were being negotiated and agreed. At no stage until near the breakdown of the Protocol arrangement did CGU, or its solicitors, notify AMP of its position on indemnity, despite the fact that they knew full well that AMP was proceeding to settle the claims. The first investor claim was not settled until the end of August 2001. This was more than six months after AMP's meeting with ASIC in February 2001. At no stage during that meeting, or later, did ASIC require AMP to settle all claims irrespective of their legal and factual merits. Such a requirement would have been beyond ASIC's powers, improper and of no legal force. AMP's witnesses rejected the suggestion that AMP had simply acted in accordance with ASIC's wishes. The suggestion that AMP was no more than a puppet for ASIC's demands is contradicted by the fact that, in the ultimate outcome, AMP paid less than half of the total investor claims made against it116. CGU's criticisms of the role that ASIC played in AMP's decisions would have been more convincing if they had been made earlier, with particularity and by reference to the precise material supplied to CGU and later, in the 12 volumes, provided both to CGU and to the primary judge. 115 (2005) 146 FCR 447 at 485 [133]. 116 cf reasons of Gleeson CJ and Crennan J at [7]. Kirby Illustration by a concrete case: Emmett J did not approach the issue of the reasonableness of the settlements on the basis only of general considerations of the foregoing kind. He took as an example one of the first investor demands settled by AMP (the demand of Bajada)117. By detailed reference to the folder of material relating to that claim (supplied to CGU's solicitors in March 2001) Emmett J analysed the foundations of liability claimed to render AMP liable to that investor. He pointed out that no suggestion was made by CGU, in the course of the hearing, that there was some flaw in the reasoning contained in the liability report (except to the extent of the suggested failure to advert to a possible defence under s 819(4) of the Law, shortly to be addressed). Emmett J concluded, in language which I regard as compelling and properly addressed to the dealings between an insurer and insured in contemporary Australia, conducted in accordance with the Act118: "The primary judge gave no consideration to the reasoning contained in … the liability report for Bajada. Nor did his Honour give any consideration to similar reports in relation to all of the other demands by investors that have been settled. It follows that his Honour's conclusion, that the settlements of the demands by AMP were not reasonable, should not stand. Whether they were reasonable or not requires an examination of the material indicated." It follows that the first suggested basis of futility was not made out. The majority in the Full Court were correct to so decide. Relevance of s 819(4) of the Law: As already noted, the primary judge considered that, in addition to what he saw as the defects in the process adopted by AMP for settlements with individual investors, the outcomes were unreasonable because they failed to take into account "the possible effect and availability to AMP of a defence under s 819(4) of the Law"119. Section 819 appeared in a Division of the Law (Div 4 of Ch 7) designed to expand the liability of a principal for the conduct of a "securities representative". That expression was defined in s 94 of the Law to cover a person "employed by", or who "acts for or by arrangement with", another person in connection with a securities business or investment advice business carried on by the other person. Messrs Pal and Howarth arguably answered to that description. 117 (2005) 146 FCR 447 at 485-486 [134]-[138]. 118 (2005) 146 FCR 447 at 486 [138]. 119 (2005) 146 FCR 447 at 486 [139]. Kirby As the primary judge pointed out in his reasons120, the critical provision, so far as AMP's liability for the conduct of Messrs Pal and Howarth is concerned, was s 819. That section created liability "whether or not [the] conduct is or would be within the scope of the representative's employment by, or authority from, any person"121. Section 819, at the relevant time, provided: subparagraph (1)(a)(i) applies; or subparagraph (1)(a)(ii) applies and engages in that conduct; the representative then, for the purposes of a proceeding in a court: as between the indemnifying principal and the client or a person claiming through the client, the indemnifying principal is liable; or as between any of the indemnifying principals and the client or a person claiming through the client, each of the indemnifying principals is liable; as the case may be, in respect of that conduct in the same manner, and to the same extent, as if he, she or it had engaged in it. (3) Without limiting the generality of subsection (2), the indemnifying principal, or each of the indemnifying principals, as the case may be, is liable to pay damages to the client in respect of any loss or damage that the client suffers as a result of doing, or omitting to do, as the case may be, the act referred to in paragraph (1)(b). there are 2 or more indemnifying principals; 2 or more of them are parties (in this subsection called the 'indemnifying parties') to a proceeding in a court; it is proved for the purposes of the proceeding: 120 (2004) 139 FCR 223 at 245 [91]. 121 The Law, s 819(1). Kirby that the representative engaged in that conduct as a representative of some person; and (ii) who that person is; and that person is among the indemnifying parties; subsections (2) and (3) do not apply, for the purposes of the proceeding, in relation to the indemnifying parties other than that person." A new argument based on s 819(4): In the Federal Court and before this Court, CGU did not seek to uphold Mr Archibald's opinion that s 819(2) applied in the circumstances to exclude AMP's liability for the activities of Messrs Pal and Howarth on behalf of MAG. However, CGU did rely on s 819(4). In something of an understatement, Emmett J remarked that "[t]he precise way in which s 819 operates is not entirely straight forward"122. His Honour observed that, so far as the section had been the subject of judicial consideration, there was judicial disagreement as to its effect123. In the Full Court, CGU did not dispute that AMP might be liable for the conduct of Messrs Pal and Howarth under s 819(2) or (3). However, it invoked s 819(4) and complained that AMP had not turned its attention to that sub-section at all. As Emmett J tartly observed on this argument, no mention had been made by CGU of the sub-section in any of the correspondence between the solicitors over the extensive period described. Nor did the primary judge consider, for example, the particular circumstances revealed in the Bajada demand to see if there was any basis for the application of s 819(4) to that demand in the concrete circumstances of that investor claim124. In these circumstances, Emmett J's conclusion is entirely convincing125: "Before deciding that it was unreasonable not to have considered the possible application of s 819(4) to a demand against AMP by an investor, because of the involvement of MAG as an indemnifying principal, it would be necessary to examine the material relied on by AMP as to the relationship between Pal and Howarth, on the one hand, and MAG, on the 122 (2005) 146 FCR 447 at 487 [143]. 123 Referring to Newman v Financial Wisdom Ltd (2004) 183 FLR 164; Financial Wisdom Ltd v Newman (2005) 12 VR 79. 124 (2005) 146 FCR 447 at 487 [144]. 125 (2005) 146 FCR 447 at 487 [145]. Kirby other, and to speculate as to whether MAG and AMP would both be parties to a proceeding in a court. The primary judge did not undertake that task in relation to any investor demand." CGU appears to have thought that it was sufficient to keep all of its cards hidden, close to its chest. For the better part of two years, it acted on a basis that reasonably appeared to conform to its agreement in principle to the Protocol. It ignored countless opportunities and invitations to seek further information on the ample materials supplied to it. It plainly knew that AMP was proceeding to settle the investor demands in accordance with the Protocol. It neither sought to invoke, nor to suggest, a test case or series of test cases. Nor did it invoke the senior counsel clause in the Policies. It hinted darkly at Mr Archibald's opinion. But then it refused for a long time to make that opinion available to AMP. When it was belatedly produced, it became clear that it relied on an operation of s 819(2) which CGU did not press in the Federal Court or before this Court. In the end, CGU produced s 819(4), like a deus ex machina, before the primary judge in the hope that, in some unspecified way, it would cast doubt on the reasonableness of AMP's settlements. The primary judge was persuaded to adopt, tentatively "because of the incomplete evidence", that view of the effect of s 819(4)126. Gyles J was unable to say that the primary judge's view, in this respect, was "clearly wrong"127. However, Emmett J (with Moore J agreeing) subjected the belated argument based on s 819(4) to close attention and was unpersuaded. So am I. Without undertaking particular analysis of the individual claims, it was impossible to reach a justifiable conclusion on the application of s 819(4) as a matter of broad generality. It follows that it was impossible for CGU, without plunging into the uncongenial task that was inherent in its responsibilities as insurer, poised to deny indemnity, to assert that the facts of individual claims attracted the arguable application of s 819(4) of the Law. Other suggested grounds of futility: I have already indicated that I would reject the complaints by CGU that the estoppels expressed by Emmett J and the available reliance on s 13 of the Act were outside AMP's pleadings and contrary to the way in which AMP had opened and presented its case at trial. There remain, therefore, only the issues raised by the appeal from the second, unanimous Full Court decision (concerning the application to reopen the appeal). It is sufficient for me to say that, upon any approach to the appeal 126 (2005) 146 FCR 447 at 493 [170]. 127 (2005) 146 FCR 447 at 493 [170]. Kirby itself128, no error is demonstrated in the way the Full Court disposed of the application for the reasons that it gave. It is unnecessary, in the approach that I have adopted, to consider the issues raised by AMP's notice of contention in this Court. It is enough for me to note that the primary judge's determination of issues 7, 8 and 9 (as explained in his Honour's reasons)129 on the construction of the clauses of the Policies is not disturbed by any conclusion that I have reached in the appeals. His conclusions on the construction issues therefore stand. So far as relevant, they would control the disposition of the remitter. AMP's application to cross-appeal An inappropriate cross-appeal: The foregoing leaves only AMP's application for special leave to cross-appeal to this Court. The cross-appeal was proposed to permit AMP to challenge that part of the orders of the Full Court by which it remitted the proceedings to the primary judge for further consideration. The application was advanced for AMP on the heroic expectation that this Court might be persuaded to go even beyond the extensive consideration of the matters of fact and law presented by the appeals, so as to undertake, for itself and effectively for the first time, the sifting of the evidence (including, presumably, the 12 volumes of evidence unaddressed by the primary judge) so as, in this Court, to reach finality in the litigation between the parties. When subjected to necessary questioning about this proposition, and whether it would involve a proper use of the time and function of this Court, the valour of AMP's counsel melted. It was acknowledged, correctly, that the prospect of tempting this Court into such an undertaking was remote. This was a correct assessment. The prospect is most unalluring. If the whole point of the Full Court's order of remitter to the primary judge was to ensure that the detailed evidence before the primary judge, which had not earlier been examined by him by reference to the applicable claims and principles, should now be examined for the first time, it would be quite wrong for this Court to undertake that task for itself. Apart from every other reason for not doing so, it would effectively deprive the party disappointed by the outcome, of any opportunity to challenge that outcome (essentially a first instance decision) on appeal. In a case of this kind, such a procedural injustice should not be agreed 128 cf reasons of Gleeson CJ and Crennan J at [30]. 129 (2004) 139 FCR 223 at 250-252 [108]-[120]. Kirby Leave to cross-appeal refused: The application by AMP for special leave to cross-appeal should be refused. Conclusions and orders Mutuality of the good faith duty: Is there any general principle for which this complex and difficult case stands? In my view there is. The principle is that the parties to insurance contracts in Australia, unlike most other contracts known to the law, owe each other, in equal reciprocity, an affirmative duty of the utmost good faith. This is so now by s 13 of the Act. In the context of that section, emphasis must be placed on the word "utmost"130. The exhibition of good faith alone is not sufficient. It must be good faith in its utmost quality. The resulting duty is one that pervades the dealings of the parties to an insurance contract with each other. In consequence of the Act, and of the reform that it introduced in s 13, the duty of good faith as between insurer and insured now takes on a true quality of mutuality. It governs the conduct of insurers whereas, previously, as a practical matter, the duty of good faith was confined to a duty cast upon insureds because the remedies for proof of the absence of good faith were usually of no real use to the insured131. The duty is more important than a term implied in the insurance contract, giving rise to remedies for a breach, although, by the express provision of s 13, it is certainly that. The duty imposes obligations of a stringent kind in respect of the conduct of insurer and insured with each other, wherever that conduct has legal consequences. Prompt indemnity decisions: Specifically, in my view, this case stands for the principle that an insurer cannot act as CGU did here132. An insurer cannot agree with its insured in principle to a protocol for handling relevant claims against the insured, tell the insured to act as a "prudent uninsured" and then allow the processing of such claims (which necessarily had, as it knew, to be dealt with efficiently and fairly) to proceed to successive settlements over nearly two years without indicating one way or the other whether it admitted or denied indemnity. It cannot repeatedly receive large amounts of material from the insured and fail to give relevant and timely responses to that material. It cannot ignore numerous 130 cf (2005) 146 FCR 447 at 475-476 [91]-[92]. 131 See above these reasons at [125]. 132 cf reasons of Callinan and Heydon JJ at [258]-[259]. Kirby invitations to seek further information if it needed it or to ask for further materials. It cannot leave a frank disclosure of any concerns until nearly 18 months after notification of the claims and, even then, decline a candid identification of those concerns. One way or the other, the duty of the utmost good faith obliges an insurer to make up its mind and either to accept indemnity or to refuse it to the insured, long before that was done in this case. Then, at least, if indemnity is denied, both parties will know that they are left to their remedies at law. To condone and endorse, as lawful, the conduct of the insurer in this case, as the majority do, sends quite the wrong signal to Australian insurers concerning their obligations under the Act in their dealings with insureds. It is not a signal that I would endorse. It is not one that this Court should send. Need to correct the error at trial: Arguably, here, the insurer's default in observing the duty of the utmost good faith added the ingredient that might assist the insured to overcome the difficulties presented for it by the contractual terms of the Policies, read in isolation from the circumstances. At the very least, the insured, AMP, was entitled to have the primary judge consider this issue with legal accuracy. In particular, it was entitled to have him decide the point, measured against the detailed evidence that was before him at the trial, and all of it, freed from his incorrect belief that the s 13 duty applied only to forbid dishonesty by CGU, the insurer. That was an erroneously narrow reading of s 13 which the Full Court majority rightly corrected. We should endorse the approach of the majority and its order for the reconsideration of all of the evidence in that light. Such reconsideration is not futile. It should be undertaken. Especially so because a majority in this Court, in these appeals, hold that the primary judge erred in conceiving the s 13 duty of utmost good faith as a rule against dishonesty only133. There may indeed sometimes be difficulties in deciding exactly what s 13 of the Act affirmatively obliges the insurer to do. But it is not nothing. Yet nothing is what the majority in these appeals ultimately demand134. I disagree. Orders: To give effect to the foregoing conclusions, I favour the following orders: In appeal M127 of 2006, appeal dismissed with costs; In the appeal M128 of 2006, appeal dismissed with costs; and 133 Reasons of Gleeson CJ and Crennan J at [15] and my own reasons at [129]-[135]. 134 Reasons of Gleeson CJ and Crennan J at [16] and reasons of Callinan and Kirby In appeal M127 of 2006, the application by AMP Financial Planning Pty Limited for special leave to cross-appeal refused with costs. CALLINAN AND HEYDON JJ. The Court has before it two appeals, the nature of which is described in the judgment of the Chief Justice and Crennan J. They raise issues concerning the construction of insurance policies, the Insurance Contracts Act 1984 (Cth) and the Corporations Law135, and of estoppel. Introduction The respondent, AMP Financial Planning Pty Ltd ("AMP"), carries on business as a licensed securities dealer under a licence granted on 27 August 1991 pursuant to s 784 of the Corporations Law ("the Law"). Under s 826(1)(j) of the Law, a licence may be revoked by the regulator, the Australian Securities and Investments Commission ("ASIC"), if, relevantly, ASIC has reason to believe that a holder "has not performed [its duties] efficiently, honestly and fairly … as the case requires". On 19 February 1999, AMP and the appellant, CGU Insurance Limited ("CGU"), entered into a professional risks insurance contract ("the 1999 policy"). The period of cover under the 1999 policy was from 28 February 1999 to 28 February 2000. On 22 February 2000, AMP and CGU entered into a further professional risks insurance contract ("the 2000 policy"), for the period from 28 February 2000 to 28 February 2001. The terms of the 1999 policy and the 2000 policy (together "the policies") are relevantly identical. The claims with which the Court is concerned were made during the currency of one or other of the policies. The policies were "claims made" policies. AMP's securities representatives AMP provided financial planning advice to retail clients by a group of people who were authorized under the Law to give advice and make recommendations on its behalf. Mr Ashok Pal ("Pal") and Mr Anthony Howarth ("Howarth"), who conducted the financial advisory business Macquarie Advisory Group Pty Ltd ("MAG"), were representatives of AMP for the purposes of Ch 7 of the Law, holding, as they did, appropriate authorities from AMP. At various times they also held authorities from Hillross Pty Ltd ("Hillross"), a company related to AMP. The authorities in question were given by AMP for the periods from 1 August 1996 to 2 December 1997 (Pal) and 10 November 1994 to 19 June 1995 (Howarth). 135 As set out in s 82 of the Corporations Act 1989 (Cth), since repealed by the Corporations (Repeals, Consequentials and Transitionals) Act 2001 (Cth). Pal also held authorities from Hillross for the period from 30 November 1997 to 27 May 1999 as did Howarth from 3 December 1997 to 27 May 1999. Discovery of misconduct by Pal and Howarth On about 12 May 1999 Hillross discovered that Pal and Howarth had traded beyond their proper authorities, and in a manner contrary to their representatives agreements with Hillross. Of particular concern then was an investment in Hibiscus Spas Pty Ltd ("Hibiscus"). It appeared that about $3.4 million of clients' funds had been invested and lost there. Pal himself was a director of and investor in Hibiscus. Clients had paid money for "shares" in it which were never issued, and for "debentures" which were never registered, at times when Hibiscus was in deep financial trouble. Even the most speculative of investors would not have been attracted to it had they been aware of these matters. Hillross terminated Pal's and Howarth's authorities, and notified their clients that the relationship between Hillross and AMP, and Pal and Howarth had ended. Hillross notified ASIC of possible breaches of the Law on the part of Pal and Howarth, as required under the conditions of its securities dealers licence. ASIC conducted examinations of Pal, Howarth and associated persons and obtained an order for the winding up of MAG. It banned Pal and Howarth from participation in the securities industry and from the management of companies. As investigations progressed it became apparent that some investments had been recommended and made during the period that Pal and Howarth held authorities from AMP. On 16 December 1999 AMP notified CGU that it had become aware of matters which might give rise to a claim under the 1999 policy. On 5 September 2000 further notification was given to CGU under the 2000 policy. The insurance policies Relevant clauses of the policies should be set out in some detail. By cl 3.1, CGU agreed to provide cover for Claims (as defined) for Civil Liability (as defined) arising from the conduct of the Insured Professional Business Practice (as defined), so long as the conditions in relation to the timing of the Claims were satisfied. Special Condition 4 of the policies was in these terms: "[I]t is hereby declared and agreed that [AMP] shall be indemnified in accordance with the terms, conditions, exceptions and limitations of this Policy in respect of its liability as a principal and licensed securities dealer for acts or omission of its authorised representatives, but only on the basis that CGU ... retain the rights of subrogation against the authorised representatives." By cl 3.2 of the policies, it was agreed that cover would be provided in respect of any of the following types of Civil Liability Claims arising in the conduct of the Insured Professional Business Practice: "(a) Breach of duty (including a duty of confidentiality). (d) Dishonest, fraudulent, criminal or malicious acts or omissions by an Employee or Principal of the Insured (but there is no cover to that Employee or Principal for these Claims). Breaches of the Trade Practices Act 1974 or similar Fair Trading legislation enacted throughout Australia (but not for criminal liability)." Costs of investigations were also covered: "3.3 Claim Investigation Costs We [the appellant] also pay (up to an amount equal to the Policy Limit) Claim Investigation Costs. We only pay these, however, if either: (a) We incur them; or the Insured incurs them after first obtaining Our agreement in writing and the costs and expenses are in Our view reasonable." There were obligations of prompt notice and co-operation: "7.1 We must be told about Claims The Insured must tell Us in writing about a Claim or loss as soon as possible and while this Policy is in force. If this is not done the Insured's right to cover under this Policy may be affected. 7.2 Claims co-operation Each Insured must: diligently do, and allow to be done, everything reasonably practicable to avoid or lessen the Insured's liability or loss in relation to a Claim; immediately give Us all the help and information that We reasonably require to: Investigate and defend the Claim or loss; and (ii) Work out Our liability under this Policy." The appellant reserved a right to protect itself: "7.3 We can protect our position When We receive a notification of a Claim, or of a fact or circumstance which may give rise to a Claim which would be covered under this Policy, then We can take whatever action We consider appropriate to protect Our position. This does not, however: indicate that any Insured is entitled to be covered under this Policy; or jeopardise Our rights under the Policy or at law." Full disclosure was essential: "7.4 Disclosure of information to us in respect of the cover and the Claim The solicitors instructed by Us for any Claim can disclose to Us any information they receive in that capacity, wherever they obtain it from." The appellant was entitled to manage claims: "7.5 We can manage the Claim on the Insured's behalf We can: Take over and defend or settle any Claim in the Insured's name; and (b) Claim in the Insured's name, any right the Insured may have for contribution or indemnity." A clause of particular significance here was one providing that the respondent had no right to admit liability or settle claims, or to defend them contrary to the appellant's wishes: "7.6 An Insured must not admit liability for or settle any Claim An Insured must not: admit liability for, or settle any Claim; or incur any costs or expenses for a Claim without first obtaining Our consent in writing. If Our prior consent is not obtained, the Insured's right to cover under this Policy may be affected. Insured's right to contest If an Insured elects not to consent to a settlement that We recommend and wants to contest or continue the legal proceedings, then We only cover the Insured (subject to the Policy Limit) for: the amount We could have settled the matter for, less the relevant Excess listed in the Schedule, plus the Claim Investigation Costs calculated to the date the Insured elected not to consent to the settlement." There was a "senior counsel clause" to which, regrettably, little or no attention was paid by the parties: "7.8 Senior Counsel (a) Unless a Senior Counsel, that We and the Insured both agree to instruct, advises that the Claim proceedings should be contested, then neither We nor the Insured can require the other to contest any legal proceedings about a Claim if the other does not agree to do so. In formulating his or her advice, Senior Counsel must be instructed to consider: The economics of the matter; and (ii) The damages and costs likely to be recovered; and (iii) The likely costs of defence; and (iv) The Insured's prospects of successfully defending the claim. The cost of Senior Counsel's opinion is to be taken as part of the Claim Investigation Costs. If Senior Counsel advises that the matter should be settled and if the terms of settlement are within limits which are reasonable (in Senior Counsel's opinion and in the light of the matters he/she is required to consider), then: the Insured cannot (subject to Section 7.7, Insured's right to contest) object to the settlement; and the Insured must immediately pay the relevant Excess or Excesses listed in the Schedule." The indemnity extended to legal and associated costs: "12.1 Civil Liability Liability for the damages, costs and expenses which a civil court orders the Insured to pay on a Claim … It includes the legal costs of the person making the Claim, for which the Insured become liable. 12.2 Claim Any originating process (in a legal proceeding or arbitration), cross claim or counter claim or third party or similar notice claiming compensation against and served on an Insured. 12.3 Claim Investigation Costs The legal costs and expenses of investigating, defending or settling any Claim (or anything which might result in a Claim), which would be covered by this Policy at the time the legal costs and expenses arise. Refer Section 3.3, Claim Investigation Costs. 12.4 Covered Claim Claims which We have agreed to cover, under this Policy. See Section 7.12(b), the Excess." ASIC's discussions with the respondent and Hillross In early February 2001 ASIC arranged a meeting with the respondent and Hillross. It took place on 14 February 2001. Representatives of the respondent, Hillross, Minter Ellison (the respondent's solicitors) and officers of ASIC attended. The appellant was not represented. The officers said that ASIC was concerned about delay in compensating clients: problems had been discovered as early as May 1999. They said that it was the responsibility of the respondent and Hillross to respond to all claims by clients in an "efficient, fair and timely manner"136, and that their obligation to do so transcended any concerns that they might have about insurance. The officers continued, that if the view of the respondent or Hillross was that compensation was properly payable, they should not discount valid claims, and clients should not be compelled to sue to recover the money to which they were entitled. They said further, that the procedure for dealing with complaints needed to be improved: clients should be informed of the time intended to be taken to resolve claims, they should be told of the evidence needed to support their claims, and the names of the persons on behalf of the respondent who would deal with them. There should also be, the officers of ASIC stressed, clear milestones during the evaluation of the claims, accurate tracking, reporting of complaints, and accountability. Clients of the respondent had told ASIC of their concerns about delays and of their frustration at the details required by the respondent. The ASIC officers rather ominously said that ASIC would look very carefully at the conduct of Hillross and the respondent in dealing with claims before it decided upon further action if any: ASIC might 136 See s 826(1)(j) of the Law. insist that the respondent and Hillross give enforceable undertakings to ASIC under the Law. Exchanges between the parties Following this meeting with the officers of ASIC, the respondent and Hillross prepared a plan for the investigation of demands by investors. On 1 March 2001, Minter Ellison wrote to the appellant's solicitors, Ebsworth & Ebsworth, enclosing a folder of material in relation to the respondent's "claim for indemnity for loss arising from the activities" of Pal and Howarth. The covering letter stated that the dispatch of the material had been delayed to enable a report on the outcome of the meeting with ASIC officers on 14 February 2001 to be provided. Relevantly, the letter said: "[T]he relationship between [AMP] and ASIC is critical to [AMP]'s business. ASIC expects that securities licensees will conduct their business in a way which gives effect to their obligation to ensure that investors are adequately compensated for losses that arise from the wrong doings of securities representatives. ASIC considers that investors should: be compensated promptly and be inconvenienced as little as possible in the information gathering process in relation to their claim; not be required to 'plead' their case or engage a lawyer to pursue their claim or have their claim declined or discounted because of a technical 'defence'; In order to protect its licence and business reputation, [AMP] will give effect to ASIC's views when dealing with investor claims." The folder of material included a history of Pal's and Howarth's dealings, together with a copy of the contents of files maintained by the respondent relating to them. The folder also contained a summary of the investments that had been lost, and of the demands received so far. It included a report on the respondent's actual or contingent liabilities to several of the investors. The letter of 1 March 2001 went on to say: "The proposed procedure for the handling of claims ... is presently being revised to reflect ASIC's comments made at the 14 February 2001 meeting. These proposed procedures will be supplied to you when they have been finalised." The protocol On 26 March 2001, Minter Ellison wrote again to Ebsworth & Ebsworth, enclosing a document entitled "Proposed Procedure for the Management of Claims" ("the Protocol"). The letter also enclosed notification reports in respect of the demands by investors of which Minter Ellison was aware at that time and added: "We wish to emphasise that [AMP]'s internal and external complaints resolution procedures require claims to be resolved in 45 days, otherwise the claimant must be referred to FICS [Financial Industry Complaints Service]. We look forward to receiving, as soon as possible, confirmation that your client will indemnify [AMP] in respect of its liability arising out of the conduct of Pal and Howarth." The enclosed Protocol was of importance in the proceedings and should be set out in full: "Proposed Procedure for the Management of Claims In order to comply with its internal and external complaints resolution procedures, and after discussions with ASIC, Hillross has written to all past clients of MAG of whom it is aware inviting them to contact Hillross if they wish to make a complaint. … Hillross has set up a project team who will maintain a database of complainants and will visit them to collect relevant information. [AMP] does not propose to write its own letter to investors at this stage (unless information presently in our possession indicates the claim lies against [AMP] only …). To do so would probably cause confusion. It is only once relevant information has been collected from complainants that it is possible to assess whether the liability for the claim properly lies against Hillross or [AMP] or both. [AMP] proposes that the following protocol be adopted for each complaint that is received by [AMP] … receive claim and provide a notification report to CGU; place Pal and Howarth on notice of claim as well as any other licensees that provided Pal or Howarth with a proper authority during the period of the investor's claim; collate all relevant documentary evidence obtained from the investor; prepare a report setting out [AMP]'s legal liability and recommendations on the claim, considering factors such as investor risk profile, risk of investment and knowledge of that risk ('liability report') … obtain instructions from CGU in relation to settling or defending the claim within 14 days of provision of the liability report; if settling: prepare settlement deed, including full releases, confidentiality and any assignments of interests and associated causes of action … if defending: prepare defence material for trial. The process described above … [has] been approved by ASIC and by HIH (prior to the appointment of the provisional liquidators) in relation to claims made against Hillross. If it is apparent from the information collected by Hillross that the claim falls solely under [AMP]'s licence, all further conduct of that claim will be handled by [AMP]. 6. Where a claim is identified as a joint claim, Ebsworth & Ebsworth and HIH will be notified. In the event that an investor's claim creates a situation where liability as between [AMP] and Hillross is an issue, Minter Ellison will refer that investor's claim to Ebsworth & Ebsworth and HIH for the further conduct of the matter. We envisage that such a situation may arise where Pal provided advice during the period of [AMP]'s proper authority but the investment relevant to that advice was not made until Pal held a proper authority from Hillross. (b) CGU and HIH will need to come to an arrangement in relation to the legal costs of a claim where the claimant has losses that occurred during both [AMP]'s proper authority and Hillross' proper authority. For example, where a claim seeks compensation for two investments, one of which clearly falls within [AMP]'s proper authority, and the other within Hillross' proper authority. These types of claims do not pose a conflict for Minter Ellison as it is clear which principal is liable for which investment and the resulting loss. However, the costs of dealing with such a claim will apply to both [AMP] and Hillross. It may be that Minter Ellison's costs that apply to the investigation and analysis of the claim may be apportioned between [AMP] and Hillross in a manner proportionate to the claim. For example, where an investor had a $100,000 claim, $80,000 of which related to an investment made during the proper authority of Hillross and $20,000 of which related to an investment made during the proper authority of [AMP], Minter Ellison's costs would be split 80% to Hillross (HIH) and 20% to [AMP] (CGU). As previously described, ASIC has indicated its view that settlement should involve a return of capital, plus interest and costs. An assignment of the investor's interest in the investment, together with any associated causes of action, should be obtained to enable [AMP], or CGU, to bring third party claims which may not otherwise not [sic] available to it. [AMP] has previously provided (on 1 March 2001) details of 17 claims that have already been made … For completeness, attached are notification reports for each of these claimants. Notification reports for additional claims received since 1 March 2001 will be sent under separate cover." On the same day Minter Ellison sent a "liability report" in respect of one investor, the Bajada Retirement Fund, to Ebsworth & Ebsworth. The trustee of that fund had made one of the first claims upon the respondent. The covering letter requested the appellant's authority to make an offer of settlement of $22,664.36 within 14 days. The letter continued: "If we have not heard from you within that period [AMP] shall, acting as a prudent uninsured (as you have previously advised it to do), make the settlement offer to the Bajada Retirement Fund." On 6 April Ebsworth & Ebsworth wrote to Minter Ellison a letter which included the following: "We understand the requirements of [AMP]'s internal and external complaints resolution procedures and have sought instructions from our client in respect of indemnity. Pending indemnity your client should continue to act as a prudent uninsured." On 11 May 2001, Ebsworth & Ebsworth wrote again to Minter Ellison, relevantly saying: "[W]e are instructed by CGU ... to agree in principal [sic] to the protocol for the handling of claims provided to us under cover of your letter dated 26 March 2001. In accordance with the protocol our client will consider your client's claim for indemnity on an investor by investor basis consequent upon receipt of your summary document. Upon receipt of your summary document we shall arrange to attend your office and inspect the relevant primary documents which it is submitted evidence the claim and comprise the basis of liability. Thereafter we shall advise our client's instructions in respect of the particular investor." On 7 June 2001, Minter Ellison wrote to Ebsworth & Ebsworth, enclosing a copy of the proposed deed of settlement in respect of the demand made by the Bajada Retirement Fund. The letter of 7 June 2001 said: "You were provided with the liability report in respect of the Bajada Retirement Fund's claim on 26 March 2001. You have since indicated that CGU accepts liability in principle subject to examining the documents in support of each claim. We have since provided you with all the documents submitted by the claimants in support of their claim. [ASIC] has indicated to our client that settlement of claims ought not to be delayed due to the requirements of insurers. Accordingly, if we do not receive confirmation as requested above within 14 days of the date of this letter our client will settle this claim without the involvement of CGU. Our client will, however, expect CGU to reimburse it for the full amount of the settlement sum. Upon doing so our client will be willing to assign any assignments it takes from the claimants to CGU." Minter Ellison wrote again on 25 June 2001, making similar assertions in respect of the same claim upon their client. On 9 July 2001, similar letters were sent by Minter Ellison in relation to demands by other investors. Ebsworth & Ebsworth responded on 12 July 2001: "[W]hilst our client has no difficulties with the claim protocol as noted in our letter of 11 May it has not yet determined to confer indemnity upon your client. Frankly it is interested to understand why it is that the directors (or their insurers) are not being required to meet the claims and why it appears that [AMP] has not pursued GIO Insurance for a decision on their liability. We would be grateful for your advice on precisely at what stage your client's negotiations with GIO Insurance have reached and if GIO Insurance has denied liability whether you believe such denial is sustainable." (emphasis added) MAG was apparently also an insured under an insurance policy effected with another insurer, GIO Insurance. On 1 August 2001, Minter Ellison wrote another letter to Ebsworth & Ebsworth. After referring to the earlier correspondence, Minter Ellison expressed disappointment that there had not been a satisfactory response to their earlier letters, and continued: "We have provided full details of the … claims, but CGU has not provided confirmation of indemnity or instructions to [AMP] to complete settlements. We note the comment you made at our meeting on 26 July 2001, that in these circumstances [AMP] should continue to act as a prudent uninsured. Due to our client's responsibilities under its dealers licence (which we have previously pointed out to you) to the claimants and the expectations of ASIC, our client is obliged to go ahead with settlements with these claimants. We enclose copies of the settlement deeds that our client proposes to use. [AMP] expects reimbursement from CGU in accordance with the terms of the above policy. Upon reimbursement, if CGU wishes, [AMP] is willing to assign any assignments it takes from the claimants to CGU." On 8 August 2001, Ebsworth & Ebsworth wrote to Minter Ellison, acknowledging receipt of the last letter, adding: "We confirm that your client should continue to act as a prudent uninsured in respect of the subject claim." In August 2001, the retainer of Ebsworth & Ebsworth was terminated because of a conflict of interest. Solomon & Associates replaced them as solicitors for the appellant. On 19 September 2001, Minter Ellison wrote to that firm: "At our previous meeting with your clients, and their former solicitors … on 26 July 2001, one issue that was raised was the liability of the licensed securities dealer principal, [AMP], where the claimant investor was not aware of the connection between the adviser, Pal or Howarth, and the principal [AMP]. Your client ... appeared to consider that in this situation the principal would not be liable to the claimant. [AMP] suggested that if your client's view of liability was based on legal advice which differed from our advice, that fact has [sic] best be disclosed to us straight away. From [CGU's] response, we have taken it that Ebsworths have not given advice which differs from our view concerning liability under section 819. As is evidenced from the liability reports already sent to you (and Ebsworths) our experience in dealing with investors is that the majority of them have the clear view that they were dealing with MAG, or in some cases Macquarie Bank. That is, that Pal and Howarth were acting as representatives of MAG. For the majority, the association with [AMP] has only come to light after the event. In our view, the effect of section 819 of the Corporations Act is to make [AMP] liable to such investors, even where investors do not know of [AMP], provided they reasonably believed that Pal or Howarth were acting for 'some person', such as MAG." Minter Ellison's opinion as to the operation of s 819 of the Law was attached to the letter. Solomon & Associates were invited to inform Minter Ellison whether they disagreed with it. A response was made by Solomon & Associates on 2 October 2001 in these terms: "The time frame for resolution of this matter as stipulated by you is unrealistic. We anticipate being in a position to respond to your letter within 28 days of our meeting with you." An important meeting took place on 5 October between Minter Ellison, Solomon & Associates and representatives of the appellant. On the day of the meeting, Minter Ellison wrote to Solomon & Associates as follows: "We disagree that the time specified, 14 days, for CGU to respond to these claims is unrealistic. We have provided full details of these claims. We have been providing background information about the Pal and Howarth claims, including various liability reports which state how the relevant provisions of the Corporations Act apply, for many months. The time period specified is in accordance with the procedure agreed with ASIC for the handling of claims and submitted to CGU in March this year. Ebsworths' letter dated 11 May 2001 stated that CGU agreed in principal [sic] to the protocol for handling claims. At no stage prior to your letters of 1 October 2001, has CGU indicated that this time period is too short. We have already settled claims that have been processed in accordance with this protocol. The application of the relevant Corporations Act provisions and our views on liability are clearly set out in the liability reports. We have also previously letter … dated recently 19 September 2001 to which … we have received no response) that if you or CGU disagree with the conclusions reached in the liability reports to let us know immediately. requested in our (most Fundamentally, our client's responsibilities under its dealer's licence, in particular its obligation to act efficiently, honestly and fairly, require it to go ahead with settlements. The agreement with ASIC requires claims to be settled with a minimum of delay. … To delay settlements at all in circumstances where [AMP] has formed a clear view of liability, and particularly for the period of 28 days from 5 October 2001 as you suggest is untenable and inconsistent with the agreement reached with your client in May this year and not disputed until your letters of 1 October 2001. … Our client is not prepared to put its licence and its business or its commercial reputation at risk because its insurer has not yet made a decision on indemnity on the Policy. In our view, CGU has had the information necessary to make that decision for some considerable time. … Until CGU makes a decision on indemnity under the Policy, our client will continue to act in good faith as a prudent uninsured, consistently with its obligations under the Policy and its dealers licence, to keep its exposure (financial, regulatory or to its reputation) to a minimum." At the meeting, Minter Ellison made a presentation on the claims. Ms Solomon said that the appellant would take the advice of Mr Archibald QC on the issue of the respondent's liability. She also said that more information was required to enable the questions of liability to be considered by the appellant. After the meeting, the respondent's senior legal counsel wrote an internal memorandum revealing that the respondent was trying to resolve claims as soon as possible in order to avoid the appellant's assumption of control of them. The respondent's solicitors then wrote to Solomon & Associates on 24 October 2001 requesting, among other things, that the respondent be permitted to have "an input into the brief" that had been discussed at the meeting of 5 October. Their letter concluded: "In the meantime, as we pointed out in our letter to you dated 5 October 2001 and at our meeting, until CGU informs us that it will provide indemnity under the Policy, [AMP] is obliged to continue to act as a prudent uninsured. Accordingly, and bearing in mind its obligation to act efficiently, honestly and fairly, [AMP] is obliged to go ahead with settlements." Thereafter, Minter Ellison continued to write to Solomon & Associates in relation to the demands of the investors, enclosing from time to time copies of proposed deeds of settlement. In March 2002, Solomon & Associates ceased practice. The appellant was then obliged to retain a third firm of solicitors, Middletons. On 5 April 2002, Minter Ellison wrote to that firm, saying: "We note that your client has yet to confirm with our client whether indemnity under its policy will be granted. While we understand that you have only recently received instructions in this matter, we note that we met with CGU's solicitors first in late 2000, then again with CGU's solicitors and CGU approximately 1 year ago, and again with CGU's (second) solicitors and CGU late last year. At all times, our client has been willing to discuss this matter with CGU and its solicitors, and to provide any documents requested. We believe that we have complied, at all times, with requests for documents. If you believe that further documents need to be provided, please indicate which documents you require and we will attempt to find them." Middletons replied on 8 April 2002, stating: "We are instructed that our client continues to reserve its rights with respect to its liability to indemnify under the professional indemnity insurance policy issued to your client ... [Y]our firm has acted for both [AMP] and [Hillross] throughout the claims administration process ... There is a clear conflict of interest in your firm acting for both potential defendants to any claim by the third party clients. Our client insists that your firm immediately ceases to act for [AMP] and [Hillross] and that independent solicitors be appointed to administer any claims made against that entity. As your firm is aware our client has obtained Senior Counsel's advice on the liability of [AMP] to clients of [MAG]. Counsel's advice is that your firm's interpretation of the Corporations Law is incorrect and accordingly in many cases no liability to a third party claimant exists. We confirm your ... verbal advice ... that [AMP] has obtained releases and paid monies to investor clients of MAG. It is our view that to the extent the payments relate to any claim covered by the policy that the insured has breached the no admission or settlement condition set out in clause 7.6 of the policy. Our client believes that the procedure adopted by the insured to resolve disputes with clients of MAG may be in breach of condition 7.2 of the policy and in breach of the obligations imposed on the insured by Section 13 of the Insurance Contracts Act 1984 as amended. However our client is prepared to consider the insured's claim for indemnity arising from claims made by the clients of MAG on an individual basis. In the circumstances we have been instructed to review each client file to assess any liability on the part of the insured to the claimants for which it is entitled to be indemnified. In order for us to do this we seek that the insured provide us with a list setting out the name of every client of MAG where [AMP] considers that a claim for indemnity exists. We have on file numerous lists of clients some of which duplicate names on earlier notices and some of which are stand alone lists. As stated our client believes that your office should not continue to act for [AMP] ... On a without prejudice and reserved rights basis our client is prepared to take over conduct of all outstanding claims with our office acting for the insured." Minter Ellison replied to Middletons on 23 May 2002, referring to the communications between the parties since November 2000, and enclosing a consolidated schedule of all investors in relation to whose demands the respondent sought indemnity under the policies. Middletons replied on 20 June 2002. Their letter stated that the appellant held the view that, in many cases, the respondent was not liable, in particular, to those investors who were clients of MAG. Reference was also made to the advice that had by then been obtained from Mr Archibald QC, but which the appellant declined to show to the respondent. The letter ended with a detailed request for further information, required, it was said, as a "bear [sic] minimum". The appellant yet again changed its solicitors, this time to Deacons. On 31 December 2002, Minter Ellison wrote to the new solicitors. After referring to the earlier correspondence, Minter Ellison asked that the appellant say in writing, no later than 14 January 2003: "(a) whether CGU admits that the Policy applies to the claims made against [AMP] relating to Pal's activities detailed in the enclosed table ('Claims'); if CGU admits the Policy applies to the Claims, whether CGU proposes to conduct negotiations and any legal proceedings in respect of any Claims which remain unresolved." There was no response to that letter because, unbeknown to the respondent and its solicitors, the appellant had already written to the respondent denying liability: "In relation to the claims as listed in Schedule A, CGU maintains that no legal liability exists on the part of [AMP] to the claimant investors. We note that your solicitors, Minter Ellison, have advised [AMP] that the Court is likely to find that a legal liability exists to each of the Schedule A claimants under section 819 of the Corporations Act. They have advised that the liability exists on the basis that the claimants however believe that Pal was acting on behalf of 'some principal'. We are advised that Minter Ellison's legal opinion on the operation of section 819 is flawed and not supported by case law. We are also advised that for [AMP] to be liable under section 819, what is required on the part of the claimant is actual belief that Pal's conduct in providing advice was performed in connection with [AMP]'s business. Moreover, the investors' belief must be reasonably held. It is clear that none of the Schedule A investors held a belief that Pal acted on behalf of [AMP] at the time that the advice was provided or the investment made. Consequently, in the circumstances of the subject claim, indemnity is not available to [AMP]."137 137 Claims set out in two further schedules are not presently relevant. Minter Ellison responded to Deacons on 22 January 2003. In relation to the demands set out in Schedule A (the presently relevant ones), they requested that a copy of the opinion of Mr Archibald QC be provided, and insisted that the appellant review its rejection of liability. On 28 March 2003, the appellant wrote to the respondent again. After it referred to some additional documents that had been forwarded by Minter Ellison to its solicitors, it maintained its denial of liability, this time however providing to the respondent the opinion of counsel that it had obtained: "We regret to advise that the additional documents do not contain any information that alters the basis of [AMP's] claim. We maintain our original decision to deny indemnity on the basis that [AMP] is not legally liable for the acts of Mr Pal in recommending unauthorised investments. We enclose a copy of the most recent advice received from Mr Archibald SC and Mr Settle of Counsel. You will see that their advice confirms our view that no legal liability exists on the part of [AMP] to the claimant investors." The opinion enclosed with the letter makes no mention of s 819(4) of the Law138. That omission is not without significance for reasons which will appear. Almost all of the claims by investors that were accepted or otherwise dealt with by the respondent were resolved within a period of about two months, in October and November 2001, that is, at about the time that the appellant was, among other things, making it clear that it was seeking counsel's opinion as to AMP's liability to the investors. These proceedings were commenced in the Federal Court on 13 June 2003. No investor whose claim has been recognized and settled had, by then, been obliged to sue to recover; nor has any such investor subsequently been obliged to sue. It follows that the definitions of "Civil Liability" in cl 12.1 and "Claim" in cl 12.2 of the policies had not been satisfied, and hence that the duty to indemnify created by cl 3.1 had not been triggered. Further, no claims or proceedings had been brought or made against Pal or Howarth by the respondent, and no attempt had been made to conduct a test case, to seek a judicial construction of s 819 of the Law, or to invoke the "senior counsel clause", cl 7.8, in the policies. These too are relevant and important matters. 138 AMP Financial Planning Pty Ltd v CGU Insurance Ltd (2005) 146 FCR 447 at 462 The litigation The respondent's claim was for damages to be measured by the sum of the investors' claims paid, interest and the costs of investigation. The respondent also sought a declaration of entitlement to an indemnity in respect of rejected and deferred claims. The respondent alleged that it was so entitled if settlements made with investors were reasonable. Subsequently, it sought by an amendment to its pleading to set up a cause of action in estoppel. The appellant denied that the settlements were reasonable and it denied any estoppel. It contended, alternatively, that it was not liable, even if the settlements were reasonable, and that, in any event, the claims by the investors were not risks insured by it on the proper construction of the policies. At the trial which took place before Heerey J the respondent tendered voluminous folders of material relating to the investigations which had been made by the respondent, its solicitors and ASIC. It led no evidence from any of the investors of their dealings with Pal and Howarth. The respondent's senior counsel, in tendering the folders, made it clear that the purpose of the tender was a confined one, to prove the respondent's "state of mind at the time it settled". The first appeal to this Court The questions for decision by this Court are largely defined by the questions which the majority of the Full Court of the Federal Court remitted for determination by the trial judge. Of these it is convenient to refer first to the question of estoppel. During the hearing of this appeal, there was much debate as to the precise scope of the estoppel relied on by the respondent in its pleadings, the appellant correctly submitting that it will generally be inimical to the due adminstration of justice, if, on an appeal, a party were to be permitted to raise a point not taken on trial as to which relevant evidence had not been adduced there, although it could have been139. It will therefore unfortunately be necessary to examine the pleadings, and some statements made in addresses and at other times by counsel at the trial, seeking to define their respective cases. By its further amended statement of claim the respondent made these allegations: 139 Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at 1608, [51]-[52]; 200 ALR 447 at 461. See also Water Board v Moustakas (1988) 180 CLR 491 at 497-498. "13. On or about 11 May 2001, the [appellant] represented to the [respondent] that: the [appellant] agreed in principle to the protocol; in accordance with the protocol, the [appellant] would, within 14 days of provision of the liability report in respect of each investor claim, consider the [respondent's] claim for indemnity and communicate with the [respondent] in relation ('protocol representation'). settling or defending claims such In accordance with the protocol and in reliance on the protocol representation, the [respondent]: received the investor claims set out in Schedule 1 and Schedule 2 and notified each the [appellant]; investor claim obtained legal advice in relation to issues of liability and quantum regarding each investor claim; forwarded liability reports to the [appellant] in relation to each investor claim; and provided further information in relation to the investor claims when requested to do so by the [appellant]. In accordance with the protocol and in reliance on the protocol representation, on various dates the [respondent] requested the [appellant] to provide it with instructions pursuant to the protocol in relation to each investor claim ('requests for instructions'). 16. Contrary to the protocol representation, the [appellant] did not respond to the request for instructions or otherwise communicate to the [respondent] its instructions whether to settle or to defend any of the claims. 17. On each occasion on which the [respondent] sent the [appellant] a request for instructions, the [respondent] informed the [appellant] that, if the [appellant] did not communicate its instructions in accordance with the protocol, the [respondent] would be obliged to settle the claim and it thereafter did so in relation to the investor claims in schedule 1 in the amounts and on the dates therein specified. Further or in the alternative, as a result of the making of the protocol representation alleged in paragraph 13 and as a result of the actions of the [respondent] and the [appellant] alleged in paragraphs 16 and 17 above, the [respondent] was induced by the [appellant] to believe that: the [appellant] was aware of and accepted the [respondent's] obligations and intention to deal with the investor claims prudently and in an efficient, honest and fair manner; the [appellant] would provide its instructions either to settle or to defend the investor claims within 14 days of the provision by the [respondent] to the [appellant] of each liability report in accordance with the protocol; if the [appellant] failed to respond to the [respondent's] requests for instructions, the [respondent] might reasonably proceed to settle the investor claims notified to the [appellant] under the protocol as it was legally and commercially compelled to do; and by so settling, the [respondent] would not adversely affect its rights to obtain indemnity under the insurance contracts. 22. Acting upon the beliefs alleged in paragraph 21 above, in reliance on the protocol representation, and in reliance on the absence of any objection, or suggestion by the [appellant] that the beliefs alleged in paragraph 21 were unreasonable, unjustified or wrong, the [respondent] settled the investor claims in Schedule 1 as alleged in paragraph 17 above ('the settlements'). 22A. The settlements were reasonable. In the premises of the preceding paragraphs, and in particular of paragraphs 16, 17, 21, 22 and 22A above, it would be unconscionable now and therefore the [appellant] is unable to deny indemnity to the [respondent] under the contracts of insurance in respect of the investor claims. Further or alternatively, the preceding paragraphs, and in particular of paragraphs 16, 17, 21, 22 and 22A above, the [appellant] is estopped from denying indemnity to the [respondent] under the contracts of insurance in respect of investor claims." (emphasis added) the premises of On day four of the six day trial, the respondent provided the primary judge with its amended list of disputed issues of fact and law: "Is CGU prevented by any principle of law (estoppel …) from relying upon its argument … that [AMP] is not now entitled to claim damages for breach of contract (in respect of settled investor claims) and an order that CGU indemnify it under the policies (in respect of unresolved or unknown claims) … because it settled with some investors after the claims management protocol had been agreed but before CGU had expressly repudiated the contracts of insurance, particularly having regard to the fact that [AMP] was told by CGU to act as a 'prudent uninsured' in relation to claims which to the knowledge of CGU, [AMP] proposed to settle?" The primary judge, without objection by the respondent, formulated the respondent's case on estoppel as follows140: "1. By agreeing to the Protocol as the means by which the Investors' claims would be managed and, where appropriate, settled, and by instructing [AMP] to act as a 'prudent uninsured' until a decision on indemnity was made, and by standing by while [AMP] settled Investor claims full details of which had been given to CGU, CGU is now estopped from relying on the fact that [AMP] settled claims prior to CGU denying cover under the policy in toto. As a result of CGU agreeing in principle to the Protocol and being informed on numerous occasions to act as a prudent uninsured, [AMP] was induced by CGU to believe that: (a) CGU was aware of and accepted [AMP]'s obligation and intention to deal with the Investor claims prudently and in an efficient, honest and fair manner, as required, in particular, in order to protect [AMP]'s licence under the Law (see s 826(1)(j)); 140 AMP Financial Planning Pty Ltd v CGU Insurance Ltd (2004) 139 FCR 223 at (b) CGU would provide its instructions either to settle or to defend the Investor claims within 14 days of the provision by [AMP] to CGU of each liability report in accordance with the Protocol; to respond to [AMP]'s requests for if CGU failed instructions, [AMP] might reasonably proceed to settle the Investor claims notified to CGU under the Protocol as it was legally and commercially compelled to do; and by so settling, [AMP] would not adversely affect its rights to obtain indemnity under the insurance contracts in the manner which CGU now submits occurred. There is a conventional estoppel by conduct made out here because: (a) CGU made a representation or fostered an assumption; [AMP] relied to its detriment on the representation or assumption by proceeding to deal with and settle claims with the Investors on the basis of the agreed Protocol; and for CGU to act contrary to the representation or assumption would be unconscionable in all the circumstances …" His Honour was not however prepared to find such an estoppel because, first, in his view, reliance was lacking141: "Up until the receipt of the letter of 14 November 2002 [AMP] recognised, as was the fact, that CGU had neither admitted nor denied liability to indemnify under the Policies. The most senior responsible person at [AMP] who gave evidence (although not, it would seem, the ultimate decision maker) was Mr Stephen Tudjman. He is a legal practitioner. He said in cross-examination: ... Until receipt of that letter of 14 November [2002], whenever that occurred at the earliest, there was no denial of liability? That's my recollection. So you were acting on the basis that the policy was on foot. Leave aside the question of whether it ceased to be on foot after that date, but you were acting on the basis that the policy was on foot? 141 (2004) 139 FCR 223 at 240 [60]-[61]. Yes.' [AMP] had no belief that CGU had accepted liability. On the contrary, it was apparent to it that CGU had not yet made up its mind. CGU was, to use Ms Sutherland's metaphor, sitting on the fence. It was equally possible that CGU might, at some future time, deny liability. [AMP] entered into the Settlements and paid the Investors not in reliance of [sic] any commitment or promise or representation by CGU but because [AMP] considered the Settlements were desirable in its own interests, especially having regard to the attitude of ASIC." During his opening senior counsel for the respondent had identified the actual estoppel said to have arisen, and in so doing clarified its precise and narrow operation: "[F]ormally we pleaded the protocol gave rise to an estoppel, but the estoppel would only be relevant in the circumstances that your Honour postulated earlier if CGU was now suggesting that the arrangements that were made were a breach of the policy for some reason, but that's all disappeared, your Honour." (emphasis added) The reference to "the arrangements that were made" is a reference to the Protocol which was adopted by the respondent for the settlement of investors' claims, that is to say, claims made otherwise than by way of an originating process or the like. But for those "arrangements", the making of settlements would itself not have fallen within cll 3.1 and 12.1 of the policies, and would have been an actual breach of cl 7.6 of the policies. The trial judge also held that the respondent had failed to establish a relevant detriment, and further, that no representation to induce an assumption or belief on the part of the respondent had been made by the appellant. As will appear, those holdings on the evidence providing the basis for them on the issues as argued by the parties, not only are clearly correct, but are also not either within, or indeed relevant to, the questions which the majority in the Full Court said should be remitted to the trial judge. We interpolate that his Honour rejected the appellant's argument that the investors' claims necessarily fell outside the policies. He found for it however on the other substantial issue, that it was not sufficient for the respondent to show simply, as it sought to do by the tender of the folders of the investigations, that the the settlements made were reasonable. respondent's action and ordered that the appellant recover 90% of its costs on an He accordingly dismissed ordinary party and party basis, despite that the appellant had made a Calderbank offer superior to the result for the respondent at trial142. The appellant cross-appealed against the costs order. In the appeal by the respondent to the Full Court of the Federal Court, constituted by Moore, Emmett and Gyles JJ, the parties disputed the nature and ambit of the issues that had been litigated and determined by the trial judge, the respondent contending that his Honour had failed properly to consider its case in estoppel. The appellant then argued that no claim of the kind now advanced in the Full Court had been pleaded or pursued at trial. The Full Court (Moore and Emmett JJ, Gyles J dissenting) ordered that the respondent's appeal be allowed, set aside the orders made by the primary judge, and remitted the proceeding to him143. Before the orders were entered, the appellant moved, by notice of motion dated 15 September 2005 (amended by order made on 26 September 2005), to have the appeal and cross-appeal re- opened on the basis, inter alia, that the Full Court had failed to decide other issues argued, including the construction of the policies. That application was heard and dismissed by the Full Court. The Full Court144 also ordered that the appellant pay the respondent's costs of the appeal and dismissed the cross-appeal. In his reasons for the respondent's submission that the trial judge had misapprehended the respondent's case on estoppel, notwithstanding that the appellant was able to argue correctly that no ground of appeal directed to the particular estoppel found by his Honour had been the subject of the notice of appeal, and that evidence relevant to it could have been led by the appellant at trial if it had been properly and clearly raised there. Emmett J (Moore J agreeing) nonetheless remitted the questions as follows to the trial judge145: "The appeal should be upheld and the orders made by the primary judge should be set aside. The matter should be remitted to the primary judge for further consideration, in the light of these reasons, of the following questions in relation to each of the investor demands referred to in the SC Schedule: 142 AMP Financial Planning Pty Ltd v CGU Insurance Ltd [No 2] [2004] FCA 1397. 143 AMP Financial Planning Pty Ltd v CGU Insurance Ltd (2005) 146 FCR 447. 144 AMP Financial Planning Pty Ltd v CGU Insurance Ltd [2006] FCAFC 90. 145 (2005) 146 FCR 447 at 489 [154]. whether AMP was induced by CGU's conduct to assume that, if it settled that demand on reasonable terms, it would not be required to establish by admissible evidence that it was legally liable to that investor in order to be reimbursed by CGU for the amount paid pursuant to such settlement; if so, whether AMP settled that demand in reliance upon that assumption; whether, in the light of the answers to those questions, CGU is estopped from asserting that, or it would be a want of utmost good faith for CGU to assert that, AMP is required to establish by admissible evidence that it was legally liable to that investor; whether AMP settled that demand on reasonable terms." The first reference to a claim of an estoppel as found by Emmett J had appeared in par 1 of the outline of submissions filed by the respondent in support of its appeal to the Full Federal Court. In its outline of submissions in response, the appellant specifically contended that this was a marked departure from the estoppel pleaded by the respondent, and from the grounds of appeal. This is a submission with which the Full Federal Court dealt very briefly146, and without analysis of the pleadings. It can be dealt with equally briefly here: the appellant's argument in that regard is right. The respondent's claim of an estoppel at trial hinged on the Protocol. That follows from the respondent's opening at the trial and par 21(d) of the respondent's further amended statement of claim, the former of which we have earlier relevantly, and the latter of which we fully quoted. In those circumstances the respondent's appeal to the Full Court should have been dismissed: the questions remitted by the Full Court had not been litigated at trial, and were not open on appeal, but, of greater consequence still, for the reasons given by the trial judge, could not be answered favourably to the respondent in this Court. The trial judge was also correct to find that the respondent had suffered no relevant detriment: it did not alter its position on the basis of any assumption or belief induced by the conduct of the appellant. Whatever may be said, and there is something as we will show, of the appellant's opportunism and lack of diligence, the relevant decision to make the settlements as and when it did were made for its own reasons and in its own personal interests. The question of estoppel stated by Emmett J for remittal neither arose nor could, even if it had, be answered in favour of the respondent. 146 (2005) 146 FCR 447 at 474 [83]-[84]. Utmost good faith Part II of the Insurance Contracts Act 1984 (Cth) ("the Insurance Act") imposes upon both parties to a contract of insurance a duty of utmost good faith. Section 12 of the Insurance Act provides that the provisions of Pt II may not be read down and s 13 that parties may not rely on the terms of a contract of insurance except in the utmost good faith. Section 13 is as follows: "A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith." At the outset we should say that we agree with the Chief Justice and Crennan J that a lack of utmost good faith is not to be equated with dishonesty only. The analogy may not be taken too far, but the sort of conduct that might constitute an absence of utmost good faith may have elements in common with an absence of clean hands according to equitable doctrine which requires that a plaintiff seeking relief not himself be guilty of tainted relevant conduct. We have referred to the doctrine of clean hands because, as with another equitable doctrine, that he who seeks equity must do equity, it invokes notions of reciprocity which are of relevance here. That is not to say that conduct falling short of actual impropriety might not constitute an absence of utmost good faith of the kind which the Insurance Act demands. Something less than that might well do so. Utmost good faith will usually require something more than passivity: it will usually require affirmative or positive action on the part of a person owing a duty of it. It is not necessary, however for the purposes of this case, to attempt any comprehensive definition of the duty, or to canvass the ranges of conduct which might fall within, or outside s 13 of the Insurance Act. We have already foreshadowed that in our opinion the conduct of the appellant did leave something to be desired. It does seem to us that there was certainly a degree of opportunism on the part of the appellant in dealing with the claims against the respondent by the investors. As Kirby J has pointed out147, this insurance was effected in a market in which ASIC had an important and powerful presence. It follows that it ought to have been within the contemplation of the appellant that the respondent might come under pressure from ASIC to settle claims. It may be another question, however, whether it would have been within the contemplation of the appellant that ASIC would act in the way in which it did, that is to say, on the respondent's case possibly high-handedly. We would make no judgment about this as ASIC is not a party, but it is right to point out 147 Judgment of Kirby J at [155]. that there was nothing in the Law or elsewhere disentitling a licence holder such as the respondent from defending claims and actions which it believes to be defendable. But there were other factors in play. The respondent seems to have been just as keen to stay out of court as ASIC was to keep the investors out of court. The respondent was anxious to protect its name and goodwill, and to that end to keep the appellant at a distance from the management of the claims. That the appellant may have wished to see some further documents, in order to explore in somewhat more detail some of the investors' claims, that it thought that there might be a good defence under s 819(4) of the Law, that it wished to obtain its own senior counsel's opinion, and that it changed its solicitors several times, cannot fully justify, or for that matter explain, the long delay that occurred before it denied liability. If that were all there were to the case, we might have been inclined to hold that the appellant did fail in its duty of utmost good faith. Temporizing by an insurer can be just as damaging to an insured as outright rejection of a claim. To preserve their businesses, business people often need to act expeditiously. It is often in everyone's interests if possible to keep out of court. If the respondent had not been impelled by the other reasons to which we have referred, it still might have been in the interests of the respondent and also ultimately those of the appellant, to receive and deal with the claims quickly and out of court. In those circumstances, and in the absence of other reasons and events, it might also have been open for a court to apply s 14 of the Insurance Act to hold that reliance on the strict definition of a claim, as an originating or like process would have infringed the appellant insurer's duty of utmost good faith. But there were other reasons and some of these we have discussed in detail. There is however yet another of them. It is that the respondent seems to have chosen either to ignore, or deliberately not to invoke, cl 7.8, the "senior counsel clause" of the policies. It was open at all times for the respondent to bring that clause into play. It would certainly have been, in our view, an act of much less than utmost good faith for the appellant to refuse, had it been asked to do so, to co-operate in the choice of, and obtaining of advice from, senior counsel. That advice could well have been to the effect that legal proceedings by investors ought not to be contested. Senior counsel advising pursuant to cl 7.8 was bound to have regard to the economics of the claims generally, and the respondent's prospects of defending them. Why this clause was not invoked has been left entirely unexplained. Indeed it seems to be that no reference was made to it by anyone until the parties' attention was drawn to it during the course of the appeal to this Court. Certainly no party suggested otherwise. Having regard to the failure to invoke cl 7.8 of the policies, the respondent's determination to settle the investors' claims quickly for its own reasons, and its failure to consider the possibility of exoneration under s 819(4) of the Law, even if there had been an absence of good faith on the part of the appellant as to which we make no conclusive finding, there was not such a degree of reciprocal good faith on the part of the respondent as would entitle it to relief against the appellant. If it were otherwise the respondent might perhaps have been able to make out a case that, as a practical matter, in the marketplace, both competitive and regulated as it was, in which it was operating, and having regard to the daily exigencies of business, an insurer acting opportunistically, and temporizing, was not acting in good faith, in consequence of which settlements had to be, and were, not inappropriately made, even though in some instances strictly legally they need not have been made at all, or not for the amounts for which they were in fact made. The respondent's case on Pt II of the Insurance Act fails. The last question remitted by the majority in the Full Court related to the reasonableness of the claims. That question cannot arise in view of the conclusions that we have reached about the other questions. In any event the respondent made its choice about this aspect of the case at the trial, that is, to tender documents only to show the respondent's "state of mind". There is no basis for re-opening that matter. The other appeal The other appeal is concerned, as the Chief Justice and Crennan J point out, with a matter of costs. We agree with the opinion of the Chief Justice and Conclusion We would agree with the orders proposed by the Chief Justice and

HIGH COURT OF AUSTRALIA PLAINTIFF AND DIRECTOR OF MILITARY PROSECUTIONS & ANOR DEFENDANTS White v Director of Military Prosecutions [2007] HCA 29 19 June 2007 ORDER Application dismissed with costs. Representation A W Street SC with D A McLure and J A Hogan-Doran for the plaintiff (instructed by North & Badgery) D M J Bennett QC, Solicitor-General of the Commonwealth with T F J Berkley and S B Lloyd for the defendants (instructed by Australian Government Solicitor) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS White v Director of Military Prosecutions Constitutional law (Cth) – Defence – Offences by defence members – Service offences – The Defence Force Discipline Act 1982 (Cth) created a range of offences based on offences against the laws of the Australian Capital Territory, and provided for trial and punishment of these offences exclusively by service tribunals – Whether trials for these offences require an exercise of the judicial power of the Commonwealth within the meaning of Ch III of the Constitution – Whether service tribunals can validly exercise jurisdiction over service offences. Defence and war – Offences by defence members – Service offences – The Defence Force Discipline Act 1982 (Cth) created a range of offences based on offences against the laws of the Australian Capital Territory, and provided for trial and punishment of these offences exclusively by service tribunals – Whether trials for these offences require an exercise of the judicial power of the Commonwealth within the meaning of Ch III of the Constitution – Whether service tribunals can validly exercise jurisdiction over service offences. Words and phrases – "essentially disciplinary", "exclusively disciplinary", "service offence", the Commonwealth". "Territory offence", judicial power of "the Constitution, Ch III, ss 51(vi), 71, 75(v), 76(ii), 77(i), 80. Defence Force Discipline Act 1982 (Cth), ss 33(a), 61, 114(3), 115, 129, 190. Crimes Act 1900 (ACT), s 60. Defence Force Discipline Appeals Act 1955 (Cth), s 52. GLEESON CJ. The plaintiff, a Chief Petty Officer in the Royal Australian Navy, has been charged with seven offences under the Defence Force Discipline Act 1982 (Cth) ("the Act"). The alleged offences are said to have occurred in Victoria. They involve complaints of acts of indecency, or assault, upon five other female members of the Australian Defence Force, all of lower rank. The trial of the charges has not yet occurred, but it will be either by court martial or a Defence Force magistrate. The plaintiff challenges the validity of the provisions of the Act creating the offences with which she has been charged and providing for trial and punishment of such offences. In order to sustain that challenge, the plaintiff invites the Court to overrule its previous decisions in Re Tracey; Ex parte Ryan1, Re Nolan; Ex parte Young2, and Re Tyler; Ex parte Foley3. For the reasons that follow, the invitation should be declined. Two arguments are advanced on behalf of the plaintiff. The first, which conflicts with the reasoning of all the Justices who participated in the trilogy of cases just mentioned, is that it is contrary to the Constitution, and beyond the power of the Parliament, to establish a system of military justice involving trial and punishment of service offences, being a form of Commonwealth-made criminal law, by tribunals operating outside Ch III of the Constitution. Under pressure of argument, senior counsel for the plaintiff developed a narrower submission, which was said to be supported by some of the dissenting reasoning in those cases. The alternative submission is that no such system of military justice can operate validly in the case of service offences constituted by conduct that would also be an offence against the civil law; that the Act purports to apply to such conduct; that it is impossible by any process of severance to confine its operation to exclusively disciplinary offences; and that the Act is therefore invalid. By an exclusively disciplinary offence, counsel said he meant an offence that has three characteristics: first, it is one for which there is no civilian equivalent; secondly, it pertains to service discipline; and thirdly, it involves no exposure to imprisonment. It is necessary to be clear about an argument the plaintiff did not seek to make. The alleged conduct of the plaintiff occurred at a time when the people involved were not in uniform and not on duty. However, counsel expressly disclaimed any argument that, if the Act were otherwise valid, the alleged offences in this case did not have the necessary service connection which some members of this Court have said is required for the valid application of the Act to (1989) 166 CLR 518. (1991) 172 CLR 460. (1994) 181 CLR 18. particular conduct4. The defendants made it clear that, if any such argument had been advanced, they would have wished to lead evidence as to facts and circumstances relevant to the point. Because no such point was taken, the case proceeded on the basis of the existing state of the evidence. This matter, therefore, does not raise for decision the difference between what McHugh J, in Re Aird; Ex parte Alpert5, described as the "service status" and the "service connection" view of military jurisdiction. In the Supreme Court of the United States, the former view was adopted in O'Callahan v Parker6, but the latter view prevailed in the later case of Solorio v United States7. On the plaintiff's argument, both views are wrong, and the difference is presently immaterial. Whether the proceedings against the plaintiff "can reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline", to use the test adopted by Brennan and Toohey JJ in Tracey8, is not an issue. Service offences under the Act include many offences constituted by conduct that would constitute an offence against the ordinary civil law. In Tracey9, it was pointed out that "both as a matter of history and of contemporary practice, it has commonly been considered appropriate for the proper discipline of a defence force to subject its members to penalties under service law for the commission of offences punishable under civil law", and reference was made to comparable legislation in the United States, Canada and New Zealand. Cases of sexual assault by one defence member upon another, or of offences involving prohibited drugs, provide examples of circumstances in which the requirements of Defence Force discipline and of the obedience which every citizen owes to the law may overlap. In that respect, it may be necessary to bear in mind that the seriousness of a certain form of misconduct may take on a different aspect if it occurs in the context of military service. In R v Généreux10, Lamer CJ said: "Many offences which are punishable under civil law take on a much more serious connotation as a service offence and as such warrant 4 See Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 570 per Brennan and Toohey JJ; cf Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 321-322 [36]-[37]. (2004) 220 CLR 308 at 321-322 [36]-[37]. (1989) 166 CLR 518 at 570. (1989) 166 CLR 518 at 543. 10 [1992] 1 SCR 259 at 294. more severe punishment. Examples of such are manifold such as theft from a comrade. In the service that is more reprehensible since it detracts from the essential esprit de corps, mutual respect and trust in comrades and the exigencies of the barrack room life style. Again for a citizen to strike another a blow is assault punishable as such but for a soldier to strike a superior officer is much more serious detracting from discipline and in some circumstances may amount to mutiny. The converse, that is for an officer to strike a soldier is also a serious service offence. In civilian life it is the right of the citizen to refuse to work but for a soldier to do so is mutiny, a most serious offence, in some instances punishable by death. Similarly a citizen may leave his employment at any time and the only liability he may incur is for breach of contract but for a soldier to do so is the serious offence of absence without leave and if he does not intend to return the offence is desertion." This is a topic to which it will be necessary to return when dealing with the plaintiff's second argument. The difficulty of maintaining a clear distinction between breaches of service discipline and breaches of the civil law is exacerbated in circumstances of military conflict, but it is not limited to such circumstances. This may explain the plaintiff's preference for a challenge that turns upon no such distinction. The plaintiff's primary argument is that the trial and punishment of service offences necessarily involves an exercise of the judicial power of the Commonwealth, and may occur only within the limits imposed by Ch III of the Constitution. This, it is said, is because the power conferred by s 51(vi) of the Constitution, which is the power upon which Parliament relies to create service offences and establish a system of military justice, is given "subject to [the] Constitution", that is, subject to Ch III and to the separation of powers inherent in the structure of the Constitution. The scheme of the Act, it is said, is fundamentally inconsistent with the principles stated in the Boilermakers' Case11. In Tracey12, Brennan and Toohey JJ said: "[The Act] confers on service tribunals powers which are to be exercised judicially, which are subject to procedures spelt out in the statute appropriate to the exercise of judicial power, which provide for the imposition of penalties for conduct prohibited by law and which are subject to appeals that, on questions of law, may reach the Federal Court of Australia. The powers are conferred on officers of the Commonwealth by a law of the Commonwealth. These are indicia of the judicial power of 11 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254. 12 (1989) 166 CLR 518 at 572. the Commonwealth which can be exercised only by Ch III courts. They are not powers ... which [relate] merely to domestic discipline, not to the imposition of punishments as for the commission of criminal offences ... However, the imposition of punishments by service authorities as for the commission of criminal offences in order to maintain or enforce service discipline has never been regarded as an exercise of the judicial power of the Commonwealth. If that view be erroneous, no service tribunal has been validly constituted under a law of the Commonwealth since the Commonwealth assumed responsibility for the armed forces." Their Honours went on to say that the Convention Debates are silent on this point, by which presumably they meant on the relationship between service tribunals and Ch III. The Debates are not silent on the topic of courts martial. During the debate on s 68, which vests the command in chief of the naval and military forces of the Commonwealth in the Governor-General as the Queen's representative, Mr Deakin moved an amendment to put beyond doubt that the Governor-General, as commander in chief, was to act on the advice of Cabinet or the Minister of Defence. Mr Barton opposed the amendment as being unnecessary, and in that context discussed courts martial. He said: "A court- martial is a judicial tribunal, and a Minister cannot affect its decision in any way. He could not dismiss an officer conducting a court-martial, because that man would be acting in a purely judicial capacity."13 Mr O'Connor said14: "You must have some one Commander-in-Chief, and, according to all notions of military discipline that we are aware of, the Commander-in- Chief must have control of questions of discipline, or remit them to properly constituted military courts. Dr Cockburn has referred to the trial of breaches of military discipline. Well, I should think that one of the most material parts of any Act constituting the Commonwealth would be to provide for the mode in which these courts- martial would be conducted, and the Parliament would have abundant power to decide how these matters were to be conducted, and what the particular form of the court was to be." (emphasis added) the forces of Not only is there "testimony to the absence of any consciousness on the part of the delegates that they were leaving the naval and military forces of the Commonwealth without authority to maintain or enforce naval and military discipline in the traditional manner"15, but, rather, it is clear that, as would be 13 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 10 March 1898 at 2255. 14 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 10 March 1898 at 2259. 15 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 572. expected, the delegates were well aware of the role and functions of service tribunals, and Mr O'Connor told them that Parliament would have "abundant power" to decide how such tribunals were to be set up for the purposes of the new naval and military defences forces. Five members of the Court in Tracey (Mason CJ, Wilson and Dawson JJ, and Brennan and Toohey JJ) examined the history of courts martial in Australia, the United Kingdom, and the United States, before Federation16. It is unnecessary to repeat what was there said, but it is necessary to recognise its importance. That history forms part of the context relevant to the construction of the Constitution and, in particular, to an understanding of the relationship between s 51(vi) and Ch III. In the Supreme Court of the United States, an examination of history was central to the reasoning in both of O'Callahan and Solorio. In the latter case, it was said that the earlier case understated the extent to which, in English and American history, there had been military trial of members of the armed forces committing civilian offences. The majority in Solorio said it was wrong to suggest that, at the time of the American Revolution, military tribunals in England were available only where ordinary civil courts were unavailable17. As to American practice, they referred to George Washington's statement that "[a]ll improper treatment of an inhabitant by an officer or soldier being destructive of good order and discipline as well as subversive of the rights of society is as much a breach of military, as civil law and as punishable by the one as the other"18. It may be added that the separation of powers involved in the structure of the United States Constitution, which served as an important model for the framers of the Australian Constitution, was not regarded in the United States, either before or after 1900, and was not regarded in either O'Callahan or Solorio, as incompatible with a system of military tribunals operating outside Art III. It should also be noted that the constitutional foundation for the power to establish military tribunals was said in Solorio19 to be Art I, §8, cl 14 which gives Congress power to make Rules for the "Government and Regulation of the land and naval Forces". This grant of power was said to be plenary, and cl 14 was to be given its plain meaning20. Reference was made to Alexander Hamilton's description of the power as "essential to the common defense", and to his statement: "These powers ought to exist without limitation, because it is impossible to foresee or define the extent and variety of 16 (1989) 166 CLR 518 at 539-543, 554-563. 17 483 US 435 at 444 (1987). 18 483 US 435 at 445 fn 10 (1987). 19 483 US 435 at 441 (1987). 20 483 US 435 at 441 (1987). national exigencies, or the correspondent extent and variety of the means which may be necessary to satisfy them."21 The exemption in the Fifth Amendment of "cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger" from the requirement of prosecution by indictment and the right to trial by jury was not treated in Solorio as the source of the power of Congress to establish military tribunals. The source of the power was the original grant of power, which corresponds with s 51(vi) of the Australian Constitution. Professor W Harrison Moore, writing in 191022, described courts martial as tribunals which exercise a judicial function but which stand outside Ch III. He cited an American author23 who said of such tribunals in the United States that "although their legal sanction is no less than that of the Federal Courts, being equally with them authorized by the Constitution, they are, unlike these, not a portion of the judiciary of the United States. ... Not belonging to the judicial branch of the Government, it follows that Courts martial must appertain to the executive department, and they are in fact simply instrumentalities of the executive power provided by Congress for the President as Commander-in-Chief to aid him in properly commanding the army and navy, and enforcing discipline therein, and utilized under his orders or those of his authorized military representatives." Professor Moore said that it would be dangerous to attempt an exhaustive statement of the cases in which judicial functions may be exercised under the Constitution by authorities other than the courts established or invested with jurisdiction under s 7124. He gave three examples: the power of Parliament to deal with disputes as to elections and qualifications of members; the granting and withholding of licences; and the jurisdiction of courts martial. As to the first of those examples, in Sue v Hill25 the majority held that such a power was capable of being conferred, and had been conferred, on a Ch III court (just as it would be possible for Parliament to assign service offences to Ch III courts), but nothing in any of the reasons for judgment in that case casts doubt upon Parliament's power to deal with such matters itself. There was no suggestion by any member of the Court that the principle of the separation of powers obliged Parliament to confer jurisdiction on a Ch III court. 21 483 US 435 at 441 (1987). 22 The Constitution of the Commonwealth of Australia, 2nd ed (1910) at 316-317. 23 Thayer's Leading Cases in Constitutional Law. 24 Moore, The Constitution of the Commonwealth of Australia, 2nd ed (1910) at 321. 25 (1999) 199 CLR 462. In R v Cox; Ex parte Smith26, a prisoner objected to the jurisdiction of a court martial on the ground that, because he had become a civilian again, to allow a court martial to exercise jurisdiction over him would be contrary to the principles of Ch III which confides the judicial power of the Commonwealth exclusively to courts of justice. Citing the decision of the Court in R v Bevan; Ex parte Elias and Gordon27, Dixon J rejected the argument, saying28: "In the case of the armed forces, an apparent exception is admitted and the administration of military justice by courts-martial is considered constitutional ... The exception is not real. To ensure that discipline is just, tribunals acting judicially are essential to the organization of an army or navy or air force. But they do not form part of the judicial system administering the law of the land. It is not uniformly true that the authority of courts-martial is restricted to members of the Royal forces. It may extend to others who fall under the same general military authority, as for instance those who accompany the armed forces in a civilian capacity." Dixon J's statement that military tribunals do not form part of the judicial system administering the law of the land echoes Starke J's observation in Bevan29 that the Supreme Court of the United States had held that courts martial form no part of the judicial system of the United States. Starke J went on to say30 that a similar construction of the Australian Constitution was necessary from a practical and administrative point of view. To adopt the language of Brennan and Toohey JJ in Tracey31, history and necessity combine to compel the conclusion, as a matter of construction of the Constitution, that the defence power authorises Parliament to grant disciplinary powers to be exercised judicially by officers of the armed forces and, when that jurisdiction is exercised, "the power which is exercised is not the judicial power of the Commonwealth; it is a power sui generis which is supported solely by s 51(vi) for the purpose of maintaining or enforcing service discipline." The plaintiff's primary argument fails. 26 (1945) 71 CLR 1 at 23. 27 (1942) 66 CLR 452. 28 (1945) 71 CLR 1 at 23. 29 (1942) 66 CLR 452 at 467. 30 (1942) 66 CLR 452 at 467-468. 31 (1989) 166 CLR 518 at 573-574. The plaintiff's second argument depends upon the proposition that, even if it is accepted (as established by an unbroken line of authority in this Court) that, as a matter of construction of the Constitution, military service tribunals do not exercise the judicial power of the Commonwealth within the meaning of s 71, that construction only holds good when such tribunals are dealing with exclusively disciplinary offences, as earlier defined. A somewhat similar, although by no means identical, approach appealed to Deane J and Gaudron J who were in dissent in Tracey, and for a time appealed to McHugh J, who later accepted that the weight of authority was against it32. It is an over-simplification, and an erroneous summary, of the opinion of Deane J in Tracey to say that, at least in time of peace and general civil order, and in respect of conduct in Australia, he considered that jurisdiction could be conferred on a service tribunal operating outside Ch III only in respect of exclusively disciplinary offences. To demonstrate that, it is necessary to refer in some detail to his reasoning33. Having begun his reasons by explaining the importance of the principle of the separation of powers, and of Ch III as a guarantee of due process, Deane J, rejecting by implication the primary argument for the plaintiff in this case, went on to consider the theoretical justification for accepting that in some circumstances service tribunals may be given jurisdiction outside Ch III. He said that a claim to exercise judicial power by any Commonwealth officer or instrumentality other than a court designated by Ch III can be allowed only if justified as a qualification of the provisions of Ch III, and, in the past, the Court had accepted at least two such qualifications: the powers of Parliament to deal with contempt or breach of privilege; and the powers of military tribunals to enforce military discipline. He cited the passage from the judgment of Dixon J in R v Cox quoted above, and said that the legal rationalisation for the acceptance of service tribunals outside Ch III "can only lie in an essentially pragmatic construction of the reference to 'the judicial power of the Commonwealth' in Ch III to exclude those judicial powers of military tribunals which [had] traditionally been seen as lying outside ... 'the judicial system administering the law of the land'". Accordingly, he said, it became necessary to identify the critical features of the powers that had traditionally been so regarded. Thus, Deane J saw the question as one of construction of the reference to the judicial power of the Commonwealth in Ch III, and accepted that some judicial powers of military tribunals did not involve the exercise of the judicial power of the 32 See Re Nolan; Ex parte Young (1991) 172 CLR 460; Re Tyler; Ex parte Foley (1994) 181 CLR 18. 33 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 581-592. Commonwealth. Which powers? The answer he gave was those that have traditionally been seen as lying outside the ordinary civilian judicial system. Deane J did not make the mistake of thinking that traditionally it was only exclusively disciplinary offences, in the sense of offences based on conduct that would not also constitute an offence against civil law, that were dealt with, and seen as properly dealt with, by service tribunals outside the ordinary civilian judicial system. He referred also to another category of offence, which he called service-related offences: offences involving conduct of a type which is commonly an offence under the ordinary criminal law but which takes on a "special character" by reason of the fact that it bears a particular relationship to military discipline. He gave, as an example, an assault on a superior officer34. He did not exclude such service-related offences from the matters that were traditionally accepted as falling within the proper jurisdiction of service tribunals. He said that if the legislation in question to deal with such service-related offences could properly be restricted, by a process of reading down or severance, "to a disciplinary jurisdiction, which did not supplant the jurisdiction of the ordinary criminal courts to deal with the general community aspects of such conduct, it would fall within the traditional judicial powers of military tribunals and escape the reach of Ch III of the Constitution"35. He returned to this point in Nolan36, where he summarised the view he expressed in Tracey as being that Parliament can, consistently with Ch III, confer judicial powers upon service tribunals to deal with offences that were "essentially disciplinary" in their nature, in the sense of being concerned either with "exclusively disciplinary" offences or with the disciplinary aspects of other "service-related" offences. In Deane J's view, offences that were "essentially disciplinary" included, but were not limited to, offences that were exclusively disciplinary. To ignore his acceptance of what he called service-related offences, as well as exclusively disciplinary offences, as falling within the category of essentially disciplinary offences that could be dealt with by service tribunals operating outside Ch III would be to mis-state his reasoning. However, it is this part of the reasoning of Deane J that presents a difficulty. An illustration of the problem of separating essentially disciplinary offences from civil offences may be seen in the archetypal disciplinary offence: mutiny. The essence of mutiny lies in the combination to defy authority. The offence strikes at the heart of a disciplined, hierarchical service. The overt acts that accompany, and may evidence, mutiny will commonly involve conduct that 34 (1989) 166 CLR 518 at 587. 35 (1989) 166 CLR 518 at 589. 36 (1991) 172 CLR 460 at 489. is an offence at civil law. Injury to persons or property, or even the taking of life, may be involved. Trial and punishment for mutiny, which may well occur in exigent circumstances, is unlikely to permit a neat distinction between the disciplinary aspects and what Deane J called "the general community aspects"37 of such conduct. The problem may also be illustrated by considering the example Deane J gave of a "service-related offence" – an assault upon a superior officer. How does a body dealing with such an offence distinguish between the disciplinary aspects and the general community aspects of such conduct? George Washington has a place in tradition, and his views, quoted earlier, about military abuse of civilians are impossible to reconcile with such a distinction. If, as appears to be accepted generally, a given offence, such as theft from a comrade, may have, in a military context, an aspect more serious than the same conduct would have in a civilian context, there appears to be no foundation for the proposition that tradition attempted to distinguish, in terms of procedures or punishment, between the service-related aspects and the general community aspects of such conduct. A similar problem emerges from the more general qualification made by Deane J in introducing his statements of principle by limiting their application to times of peace and general civil order38, and to offences committed within Australia39. Those limitations allow for military tribunals to deal with offences committed during combat, but not with offences committed during training (in Australia) for combat. Military exercises, during peacetime, may require the same kind of discipline as combat in wartime. There are two basic difficulties. The first comes back to what was said by Alexander Hamilton about the nature of the defence power: it is impossible to foresee or define the extent and variety of national exigencies or of the means which may be necessary to satisfy them. The second was identified by Brennan and Toohey JJ in Tracey40. It is that whether an offence is more properly to be regarded as an offence against military discipline or a breach of civil order will often depend, not upon the elements of the offence, but upon the circumstances in which it is committed. Assaulting an officer might be identified readily as "essentially disciplinary" in most circumstances, but not in some. The same may be said of a sexual offence against another defence member; or conduct in 37 (1989) 166 CLR 518 at 589. 38 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 489. 39 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 592. 40 (1989) 166 CLR 518 at 568. relation to prohibited drugs. This was the point being made by an American author41 cited in Tracey42, who said: "As to whether an act which is a civil crime is also a military offence no rule can be laid down which will cover all cases, for the reason that what may be a military offence under certain circumstances may lose that character under others." In the plaintiff's alternative argument, it is only exclusively disciplinary offences that may be tried by a service tribunal established outside Ch III, and, to decide whether an offence is of that character, one looks at the elements of the offence and asks whether those elements constitute an offence at civil law. The plaintiff's argument was not qualified by considerations of whether the offence occurred in a time of peace or war, or within or outside Australia. Insofar as the justification for the plaintiff's argument is said to be that it limits the jurisdiction of military tribunals to what is necessary for defence purposes, so as to give the exception to Ch III the narrowest scope consistent with its purpose, and thereby to allow the principle of separation of powers, and the protections of Ch III, the fullest scope, then such justification rests upon a bare and unconvincing assertion as to the requirements of necessity. If one were to ignore history, and simply to ask what jurisdiction s 51(vi) requires, as a matter of necessity, for service tribunals, then, for the reason stated by the American author in the passage quoted above, the answer will not be found in a formula that depends solely upon the elements of offences, and ignores the circumstances in which they were committed. There is a serious question of interpretation of the Constitution, involving the need to give due weight to the protections contained in Ch III, and to the separation of powers inherent in the structure of the Constitution, while at the same time acknowledging the considerations of history and necessity referred to by Brennan and Toohey JJ in Tracey. Their response to that question was to conclude that proceedings may be brought for a service offence in a tribunal established outside Ch III only if those proceedings can reasonably be regarded as substantially serving the purpose of maintaining or enforcing service discipline. That is a response that recognises the impossibility of classifying an offence as either military or civil simply by reference to the technical elements of the offence, ignoring the circumstances in which it is committed. If, contrary to the plaintiff's argument, one were to adopt a different test for conduct in wartime, 41 Davis, A Treatise on the Military Law of the United States, 3rd rev ed (1915) at 42 (1989) 166 CLR 518 at 568. or overseas, then one would be accepting that on some occasions the circumstances (of time and place) in which conduct occurred would be material, perhaps decisive, and on other occasions the circumstances would be irrelevant. This seems illogical. The plaintiff's alternative argument also fails. The application should be dismissed with costs. Crennan GUMMOW, HAYNE AND CRENNAN JJ. The plaintiff is a defence member within the meaning of the Defence Force Discipline Act 1982 (Cth) ("the Act"). She is a member of the Royal Australian Navy and a Chief Petty Officer, stationed on HMAS Manoora. The long title to the Act is "[a]n Act relating to the discipline of the Defence Force and for related purposes". The Act provides for a range of offences and for trial and punishment by service tribunals. The plaintiff challenges the validity of that system of justice. The alleged offences Part III (ss 15-65) of the Act is headed "Offences". Reference should be made to those offences which are particularly relevant to this case. Division 3 (ss 25-34) is headed "Insubordination and violence". So far as material, s 33 states: "A person who is a defence member ... is guilty of an offence if the person is on service land, in a service ship, service aircraft or service vehicle or in a public place and the person: assaults another person; ... Maximum punishment: Imprisonment for 6 months." Division 8 (s 61) is headed "Offences based on Territory offences". Section 61(3) provides: "A person who is a defence member ... is guilty of an offence if: the person engages in conduct outside the Jervis Bay Territory (whether or not in a public place); and engaging in that conduct would be a Territory offence, if it took place in the Jervis Bay Territory (whether or not in a public place)." With respect to punishment, s 61(4) states: "The maximum punishment for an offence against this section is: if the relevant Territory offence is punishable by a fixed punishment — that fixed punishment; or otherwise — a punishment that is not more severe than the maximum punishment for the relevant Territory offence." Crennan The expression "Territory offence" is so defined in s 3(1) as to "pick up" offences punishable under the Crimes Act 1900 (ACT) ("the Crimes Act"), as a law in force in the Jervis Bay Territory. On 30 June 2006, the plaintiff was charged by the Acting Director of Military Prosecutions with seven offences. All but one of them relied upon s 61(3) of the Act in conjunction with s 60 of the Crimes Act. Section 60(1) states: "A person who commits an act of indecency on, or in the presence of, another person without the consent of that person and who knows that that other person does not consent, or who is reckless as to whether that other person consents, to the committing of the act of indecency is guilty of an offence punishable, on conviction, by imprisonment for 5 years." The charges indicate that there are five female complainants, all of inferior rank to the plaintiff; three hold the rank of Able Seaman and two that of Leading Seaman. The one charge of assault under s 33(a) of the Act (Charge 4) is in the alternative to one of the charges (Charge 3) under s 61(3) of the Act in conjunction with s 60 of the Crimes Act. The legislation makes some provision for the relationship between service tribunals and the civil courts and between service offences and civil court offences. Section 190(1) of the Act states: "Subject to the Constitution, a civil court does not have jurisdiction to try a charge of a service offence." The offences with which the plaintiff is charged are "service offences" within the definition of that term in s 3(1). The expression "civil court" is defined in the same section as meaning "a federal court or a court of a State or Territory". Further, civil courts do not have jurisdiction to try charges of civil court offences committed by defence members or "defence civilians" which are "ancillary" to certain offences against the Act (s 190)43. A person acquitted or convicted by a civil court for an offence not being a service offence, but being "substantially the same" as a service offence, is not liable to trial by a service 43 Section 190 was cast in broader terms at the time when what were then sub-ss (3) and (5) were held invalid in Re Tracey; Ex parte Ryan (1989) 166 CLR 518. These provisions were removed by the Defence Legislation Amendment Act 2003 (Cth), Sched 1, Items 42, 43. Crennan tribunal for that service offence (s 144(3)). Neither s 190 nor s 144(3) is directly invoked in the present case. The High Court litigation By application made to this Court, the plaintiff seeks prohibition against the first defendant, the Director of Military Prosecutions ("the Director"), restraining the Director from requesting the Registrar of Military Justice to refer the charges to a Defence Force magistrate for trial or from requesting the Registrar to convene a general court martial or a restricted court martial to try the charges. Authority to pursue those alternative courses in the various service tribunals is conferred upon the Director by s 103(1) of the Act. Jurisdiction to try charges is conferred by s 115 upon a court martial and upon a Defence Force magistrate by s 129. The plaintiff also seeks a declaration that a trial of the charges against her requires "an exercise of the judicial power of the Commonwealth within the meaning of Ch III of the Constitution". The plaintiff seeks a further declaration that the provisions of the Act purporting to confer jurisdiction on courts martial and Defence Force magistrates (ss 115 and 129 respectively) are invalid because courts martial and Defence Force magistrates are not courts invested with federal jurisdiction within the meaning of s 71 of the Constitution. The Director has undertaken not to pursue prosecution of the charges pending determination of the plaintiff's application by this Court. By order of the Chief Justice, the application was referred to the Full Court. The place of military law Before turning to consider the submissions by the plaintiff, some general observations should be made. These provide the context in which the issues of validity fall for consideration. First, the English constitutional system as it developed after the turmoil of the seventeenth century did not allow for a military caste with its own set of all-encompassing legal norms, as was found in some other European nation states44. Secondly, the ascendency of parliamentary control denied any place for a general defence in the English criminal law of superior orders or of executive fiat, and this remains the case in Australia45. Thirdly, naval and military courts 44 Groves v The Commonwealth (1982) 150 CLR 113 at 125-126. 45 A v Hayden (1984) 156 CLR 532. Crennan martial were liable to the supervisory jurisdiction of the superior courts46. Of the English system as it developed after the Revolution of 1688 the Supreme Court of the United States later said47: "By the mutiny acts, courts martial have been created, with authority to try those who are a part of the army or navy for breaches of military or naval duty. It has been repeatedly determined that the sentences of those courts are conclusive in any action brought in the courts of common law. But the courts of common law will examine whether courts martial have exceeded the jurisdiction given them, though it is said, 'not, however, after the sentence has been ratified and carried into execution.'" Fourthly, the civil law of obligations does not cease to run merely because the obligations in question bind or confer rights upon a defence member. Thus, Groves v The Commonwealth48 established that at common law an action in negligence is maintainable against the Commonwealth by a defence member for damages caused by the negligence of a fellow defence member while on duty in peace time. Finally, the system established by the Act cannot operate wholly beyond the ambit of Ch III of the Constitution. This is because those constituting the service tribunals under the Act are officers of the Commonwealth for the purposes of s 75(v) of the Constitution. Accordingly, the Constitution mandates one avenue for judicial review, in particular for jurisdictional error. Further, it has never been suggested that the laws made by the Parliament under s 51 of the Constitution, which give rise to matters in which the Parliament may make laws under s 76(ii) and s 77 conferring federal jurisdiction, do not include laws supported by s 51(vi) or that s 51(vi) is so walled-off from Ch III as to deny the competency of such laws. Thus, the Parliament has enlarged the participation of Ch III courts in the procedures for the prosecution of offences under the Act. The Defence Force Discipline Appeals Act 1955 (Cth) ("the Appeals Act") establishes a review system which includes provision for an "appeal" to the Federal Court on a question of law involved in a decision of the Defence Force Discipline Appeal Tribunal given on an "appeal" to the Tribunal under that 46 Grant v Sir Charles Gould (1792) 2 H Bl 69 at 100 per Lord Loughborough [126 ER 434 at 450]. 47 Dynes v Hoover 61 US 65 at 83 (1857). 48 (1982) 150 CLR 113. In their joint judgment (at 134), Stephen, Mason, Aickin and Wilson JJ put to one side the position of defence members engaged in combatant duties in time of war or in training for such activities. Crennan statute (s 52)49. The legislation for that system is founded upon s 51(vi), s 76(ii) and s 77(i) of the Constitution. There is an important distinction which should be made before considering the submissions respecting the validity of the Act. No party to the present case contends that it would be beyond the competence of the Parliament, by further reliance upon s 51(vi), s 76(ii) and s 77(i) (and, if need be, upon s 71 to create an additional federal court), to achieve the result that offences under the Act were tried by the exercise of the judicial power of the Commonwealth in a Ch III court. The defendants did not assert that the functions of the service tribunals would have been insusceptible of discharge by a Ch III court if the Act had so provided. Where the parties differ is with respect to a particular submission by the plaintiff. This is to the effect that it is only by the exercise of the judicial power of the Commonwealth that the functions of the service tribunals under the Act may be exercised conformably with the Constitution and that the system established by the Act therefore is invalid. The plaintiff's first submission As the hearing developed, it became apparent that the plaintiff put her case essentially upon two grounds. The first had been developed in the written submissions. The second emerged in the course of oral argument. It is convenient to deal with these submissions in order. The first submission by the plaintiff is in the broad terms indicated above. It is that the offences which the Act creates, including those with which the plaintiff is charged, may not be tried in the manner for which the Act stipulates. This is for the following reasons: the proceedings are matters in which the Commonwealth is a party (s 75(iii)) and matters arising under a law of the Commonwealth within the meaning of s 76(ii) of the Constitution; they involve the adjudication of guilt and infliction of punishment and this requires the exercise of the judicial power of the Commonwealth; (iii) none of the service tribunals for which the Act provides is a Ch III court and none may exercise the judicial power of the Commonwealth; and 49 See Hembury v Chief of the General Staff (1998) 193 CLR 641. Crennan the Act invalidly purports to authorise the service tribunals to exercise the judicial power of the Commonwealth. The relationship between Ch III of the Constitution and service tribunals established in exercise of the legislative power conferred by s 51(vi) of the Constitution is not a straightforward one. At bottom, the relationship turns upon identification of the content of the expression "the judicial power of the Commonwealth" in s 71. In that regard, three observations by Kitto J in R v Davison50 provide an appropriate starting point. His Honour first observed51: "It is well to remember that the framers of the Constitution, in distributing the functions of government amongst separate organs, were giving effect to a doctrine which was not a product of abstract reasoning alone, and was not based upon precise definitions of the terms employed." Secondly, he said52: "[W]hen the Constitution of the Commonwealth prescribes as a safeguard of individual liberty a distribution of the functions of government amongst separate bodies, and does so by requiring a distinction to be maintained between powers described as legislative, executive and judicial, it is using terms which refer, not to fundamental functional differences between powers, but to distinctions generally accepted at the time when the Constitution was framed between classes of powers requiring different 'skills and professional habits' in the authorities entrusted with their exercise." Kitto J reached a conclusion which would seek an answer to the issues in the present case in the consideration of how similar or comparable powers to those exercised under the Act were treated in Australia at the time when the Constitution was prepared. His Honour said in that regard53: 50 (1954) 90 CLR 353. 51 (1954) 90 CLR 353 at 380-381. 52 (1954) 90 CLR 353 at 381-382. 53 (1954) 90 CLR 353 at 382. Crennan "Where the action to be taken is of a kind which had come by 1900 to be so consistently regarded as peculiarly appropriate for judicial performance that it then occupied an acknowledged place in the structure of the judicial system, the conclusion, it seems to me, is inevitable that the power to take that action is within the concept of judicial power as the framers of the Constitution must be taken to have understood it." The plaintiff seeks to turn to account the following statement by Jacobs J in R v Quinn; Ex parte Consolidated Food Corporation54: "The historical approach to the question whether a power is exclusively a judicial power is based upon the recognition that we have inherited and were intended by our Constitution to live under a system of law and government which has traditionally protected the rights of persons by ensuring that those rights are determined by a judiciary independent of the parliament and the executive. But the rights referred to in such an enunciation are the basic rights which traditionally, and therefore historically, are judged by that independent judiciary which is the bulwark of freedom. The governance of a trial for the determination of criminal guilt is the classic example." There are several difficulties in the path of unconditional acceptance of what Jacobs J called "the historical approach" and Kitto J expounded in the above passages. The modern regulatory state arrived after 1900 and did so with several pertinent consequences. First, modern federal legislation creates rights and imposes liabilities of a nature and with a scope for which there is no readily apparent analogue in the pre-federation legal systems of the colonies. Secondly, any treatment today of Ch III must allow for what has become a significant category of legislation where a power or function takes its character as judicial or administrative from the nature of the body in which the Parliament has located it. Thirdly, one upshot of this state of affairs has been the development of various theories or descriptions of judicial power which are expressed in general and ahistorical terms. Thus, consideration of the nature of the federal conciliation and arbitration system stimulated the development of a discrimen of judicial power as "concerned with the ascertainment, declaration and enforcement of the rights and liabilities of the parties as they exist, or are deemed to exist, at the moment the proceedings are instituted" and of arbitral power as the ascertainment and declaration (but without enforcement) of "what in the 54 (1977) 138 CLR 1 at 11. Crennan opinion of the arbitrator ought to be the respective rights and liabilities of the parties in relation to each other"55. In R v Bevan; Ex parte Elias and Gordon56, Starke J referred to a general description of judicial power found in some of the earlier decisions of the Court. This was the identification57 of judicial power with the exercise of sovereignty in giving binding authority to decisions upon controversies respecting life, liberty or property. The death sentences for murder imposed upon Elias and Gordon at the court martial conducted upon HMAS Australia answered that description. But, as Starke J then asked, whilst the court martial had exercised "judicial power", had it exercised "the judicial power of the Commonwealth" identified in s 71 of the Constitution58? The answer in the negative given by his Honour was based upon historical considerations. In particular, Starke J59 referred to the decision of the Supreme Court of the United States in 1857 in Dynes v Hoover60. Dynes was a seaman serving on the USS Independence who had been convicted of attempted desertion by a naval court martial, and sentenced to six months imprisonment. He sued in a civil court, among other things, for false imprisonment. In upholding the dismissal of the civil action, the Supreme Court said61 that, quite independently of Art III of the United States Constitution: "Congress has the power to provide for the trial and punishment of military and naval offences in the manner then [ie in 1789] and now practiced by civilized nations". In this way, generally expressed theories respecting the content of "judicial power" are accommodated to the constitutional term "the judicial power of the Commonwealth". The result of doing so allows for continued significance 55 Waterside Workers' Federation of Australia v J W Alexander Ltd (1918) 25 CLR 56 (1942) 66 CLR 452 at 466. 57 In Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 357. 58 (1942) 66 CLR 452 at 466. 59 (1942) 66 CLR 452 at 467. 61 61 US 65 at 79 (1857). Crennan of the historical considerations to which Kitto J referred in Davison and Jacobs J in Quinn. This brings us to the present case. Here, the decisive consideration is as follows. To the judicial system for the determination of criminal guilt to which Jacobs J referred in Quinn, there was the well-recognised exception for legislatively based military and naval justice systems of the kind which the Supreme Court of the United States had recognised in 1857 and which applied in the Australian colonies at federation. Those military and naval justice systems were directed to the maintenance of the defining characteristic of armed forces as disciplined forces organised hierarchically. By the applicable statutes, the legislature controlled and regulated the administration by and within the forces of disciplinary measures intended to maintain discipline and morale within the forces. That regulation proceeded not only by general reference to acts "to the prejudice of good order and military discipline"62 but also by reference to particular acts which would constitute offences under generally applicable laws. In Re Tracey; Ex parte Ryan63, Mason CJ, Wilson and Dawson JJ gave detailed consideration to the Imperial and Australian colonial legislation in the period leading up to the adoption of the Constitution. This included systems of courts martial based upon those provided by the Naval Discipline Act 1866 (Imp) ("the Naval Discipline Act")64 and the Army Act 1881 (Imp) ("the Army Act")65. Reference also may be made to the arrival in Sydney in 1891 of an auxiliary fleet to be equipped and maintained at the joint expense of the United Kingdom and the colonies under comprehensive legislative arrangements headed by the Imperial Defence Act 1888 (Imp)66 and to the movement, under the influence particularly of Sir Henry Parkes, for the federation of all the military forces in the Australian colonies67. 62 Army Act 1881 (Imp), s 41. 63 (1989) 166 CLR 518 at 541-543. 64 29 & 30 Vict c 109. 65 44 & 45 Vict c 58. 66 51 & 52 Vict c 32. See Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 116-117; Todd, Parliamentary Government in the British Colonies, 2nd ed (1894) at 401-403. 67 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 117-119; Todd, Parliamentary Government in the British Colonies, 2nd ed (1894) at 396-401. Crennan With respect to the continued significance of the Imperial legislation, in their joint judgment in Tracey, Brennan and Toohey JJ remarked68: "The Naval Discipline Act and the Army Act were in force when federation of the Australian colonies was under consideration and when the Constitution came into force on 1 January 1901. After federation, the Naval Discipline Act and the Army Act as in force from time to time were adopted as the legal foundations for the discipline of the naval and military forces of the Commonwealth: see the Defence Act 1903 (Cth), ss 55 and 56. The Defence Act made the military forces of the Commonwealth subject to the Imperial Army Act as in force from time to time while those forces were on active service, ie, engaged in operations against the enemy including any naval or military service in time of war: ss 4, 55. A similar provision (s 56) was made subjecting naval forces on active service to the Naval Discipline Act. In 1910, the naval forces were made subject to the Naval Discipline Act generally (Naval Defence Act 1910 (Cth), s 36) and in 1964 the application of the Army Act to the military forces was extended to service outside Australia: Defence Act 1964 (Cth), s 26. When the Air Force Act 1923 (Cth) was enacted, its members were not subject to the Army Act but in 1939 the Imperial Air Force Act (semble, The Air Force (Constitution) Act 1917 (UK)) was applied generally to the members of the air force subject to prescribed modifications: Air Force Act 1939 (Cth), s 6." That significant elements of Imperial law continued to apply in the system of courts martial, is demonstrated by the procedures followed in the World War II cases, Bevan and R v Cox; Ex parte Smith69. We now return to the primary submission for the plaintiff. This is to the effect that the adjudication of the charges presented against her and the infliction of any punishment by the service tribunals provided by the Act necessarily would require the exercise of the judicial power of the Commonwealth. To accept that submission would involve departing from the long-standing decisions in Bevan and Cox. Upon the correctness of those decisions the Parliament was entitled to rely in enacting the Act and the Appeals Act. In any event, and as indicated above, those decisions were correctly based upon a 68 (1989) 166 CLR 518 at 561-562. 69 (1945) 71 CLR 1. Crennan consideration of the operation of military justice systems in the Australian colonies and the deep importance attached to the continuation of the Imperial defence connection were the colonies to federate. It is not a matter of whether the service tribunal system was "taken outside Ch III simply by reason of the events of history"70, but whether that system was ever within the exclusive operation of Ch III. To attribute to the presence in the Constitution of Ch III a rejection of service tribunals of the nature provided by the Naval Discipline Act and the Army Act would be to prefer the "abstract reasoning alone" to which Kitto J referred in Davison71 to an appreciation of the content of "the judicial power of the Commonwealth" which must have been universally understood in 1900. The plaintiff sought to strengthen her primary submission by reference to ss 75 and 76 of the Constitution, particularly s 76(ii). This empowers the Parliament to make laws conferring original jurisdiction on this Court in any matter arising under any laws made by the Parliament. Plainly, with respect to the trial of the offences with which the plaintiff is charged, the Act does not confer the original jurisdiction spoken of in s 76(ii). Nevertheless, the plaintiff sought to draw an implication from s 76(ii) to support her first submission. The alleged implication appears to be that where a matter arises under a law of the Parliament and is "fit for determination" by the exercise of judicial power, it necessarily follows that any resolution of that matter can only be had by the exercise of the judicial power of the Commonwealth. However, the conclusion does not follow from the premise. The circumstance that the Parliament is empowered to confer jurisdiction on this Court in matters arising under laws it makes does not carry any implication that any controversy to which such a law gives rise is susceptible of resolution only by the exercise of the judicial power of the Commonwealth. The plaintiff's second submission There are in the case law secondary issues. These respect the limits upon the exercise of the legislative power conferred by s 51(vi) of the Constitution to proscribe and provide for the punishment of conduct other than through the engagement of the judicial power of the Commonwealth. Granted the capacity of the Parliament to legislate under s 51(vi) and outside Ch III for the provision of service tribunals, what are the limits of that power? Some of the limiting criteria 70 cf Re Nolan; Ex parte Young (1991) 172 CLR 460 at 497. 71 (1954) 90 CLR 353 at 380-381. Crennan have been considered in Tracey, Re Nolan; Ex parte Young72 and Re Tyler; Ex parte Foley73, in particular the so-called "service related" and "service status" tests. It is unnecessary here to recapitulate what was said on these topics. However, what is presently significant is that these secondary issues reflect the importance of what earlier in these reasons is identified as the defining characteristic of armed forces as disciplined forces organised hierarchically. In her second submission, the plaintiff fixes upon another suggested criterion of sufficient connection. This looks to the presence of substantial identity between service and civilian offences or the absence of an "exclusively disciplinary" nature in the service offences as indicative of the invalidity of the service tribunal system in the particular case in question. The offences with which the plaintiff is charged are said to have occurred in the State of Victoria. In her written submissions, the plaintiff emphasised that in Victoria the conduct alleged to found the charge of assault under s 33(a) of the Act would amount to an indictable common law assault74 and would attract a maximum penalty of five years imprisonment75. Further, the "Territory offences" providing for the basis of the charges under s 61(3) of the Act would, if committed in Victoria, be indictable offences under the law of that State76, with a maximum penalty of 10 years imprisonment. As the oral argument developed, it became apparent that the plaintiff emphasised that the charges based upon the Act involved conduct which could be charged and tried in the ordinary civil courts of the State of Victoria and the punishment of imprisonment was available in respect of both categories of offence. That conjunction of law and circumstance was said to have placed the relevant provisions of the Act outside that area within which the Parliament might legislate with respect to the prosecution of offences created by reliance upon the defence power and without necessarily engaging Ch III. 72 (1991) 172 CLR 460. 73 (1994) 181 CLR 18. 74 R v Patton, Caldwell and Robinson [1998] 1 VR 7 at 21-22. 75 Crimes Act 1958 (Vic), s 31; Sentencing and Other Acts (Amendment) Act 1997 (Vic), s 60 and Sched 1, Item 16. 76 Crimes Act 1958 (Vic), ss 2B, 39. Crennan Some footing for the distinction sought to be drawn in this way is provided by statements by Deane J and by Gaudron J in Tracey, Nolan and Tyler, and by McHugh J in Nolan. In Tracey, Deane J concluded77: "[T]he comprehensive jurisdiction purportedly conferred by the Act upon service tribunals which are not Ch III courts is valid, in so far as offences committed within an Australian State or Territory in time of peace are concerned, only to the extent that it extends to dealing with exclusively disciplinary offences. That being so, the learned defence force magistrate in the present case lacks jurisdiction to deal with the charge under s 55(1)(b) (falsification of service document) but possesses jurisdiction to deal with the two charges under s 24(1) (absent without leave)." (emphasis added) Then, in Nolan, McHugh J said78: "In my opinion, unless a service tribunal is established under Ch III of the Constitution, it has jurisdiction to deal with an 'offence' by a member of the armed services only if such an 'offence' is exclusively disciplinary in character or is concerned with the disciplinary aspect of conduct which constitutes an offence against the general law." (original emphasis) Thereafter, in Tyler, Deane J said that he continued79: "to reject what [he saw] as an unjustifiable denial of the applicability of the Constitution's fundamental and overriding guarantee of judicial independence and due process to laws of the Parliament providing for the trial and punishment of members of the armed forces for ordinary (in the sense of not exclusively disciplinary) offences committed within the jurisdiction of the ordinary courts in times of peace and general civil order". (emphasis added) In Tracey, Gaudron J declared80: 77 (1989) 166 CLR 518 at 591. 78 (1991) 172 CLR 460 at 499. 79 (1994) 181 CLR 18 at 34. 80 (1989) 166 CLR 518 at 603-604. Crennan "In my view the Act, to the extent that it purports to vest in service tribunals jurisdiction in relation to conduct engaged in by defence members in Australia constituting service offences which are substantially the same as civil court offences, is, in the present circumstances, beyond legislative power and invalid. ... [T]he charges of absence without leave have no counterpart under the general law. The order nisi must be discharged so far as it has effect with respect to these charges. The service offence created by s 55(1)(b) of the Act (falsification of service document) is in a different category." (emphasis added) In Tyler81, Gaudron J spoke of "charges under the Act in relation to acts or omissions which, although called 'service offences', are, in essence, the same or substantially the same as criminal offences under the general law". In Tyler82, McHugh J accepted, with respect correctly, that his views and those of Deane J had been rejected by a majority of Justices in Tracey and Nolan. Nevertheless, given the significance that the point assumed in oral argument in the present case, it is appropriate to look further to the notions of identity or substantial similarity of "service offences" and criminal offences under the general law. There are several implicit assumptions made here. One is that the service tribunal system established by the Act attempts to displace or overreach obligations imposed upon the population generally by the ordinary civil law. Another is that no more is involved than a comparison between the constituent elements of a service offence and a general law offence. These assumptions do not provide an adequate starting point for an analysis of what is permitted to service tribunals which are not Ch III courts, and the relationship between service and civilian offences. In many instances, service as a defence member involves additional responsibilities whose enforcement calls for more than the application of the general law by civilian courts. The location in particular instances of this intersection and accumulation of responsibilities does not call for determination 81 (1994) 181 CLR 18 at 35 (emphasis added). 82 (1994) 181 CLR 18 at 38-39. Crennan in the present case. This is because the submissions for the plaintiff were so cast as to deny any inquiry beyond the application of a false distinction based upon identity of constituent elements of two categories of offences. A more adequate starting point for analysis is apparent in the following passage in the title "Royal Forces" in the first edition of Halsbury's Laws of England83. The passage is as follows: "It is one of the cardinal features of the law of England that a soldier does not by enlisting in the regular forces thereby cease to be a citizen, so as to deprive him of any of his rights or to exempt him from any of his liabilities under the ordinary law of the land. He does, however, in his capacity as a soldier, incur additional responsibilities, for he becomes subject at all times and in all circumstances to a code of military law contained in the Army Act, the King's Regulations and Orders for the Army, and Army Orders." (footnotes omitted) The matter was taken up by Windeyer J in the following passage in Marks "The relationship of members of the armed Services to the Crown differs essentially from that of civil servants whose service is governed by the regulations of the Public Service. The members of the Forces are under a discipline that the others are not: they have duties and obligations more stern than theirs: and rights and privileges that they cannot claim." The identification of that which is reasonably necessary to the regularity and due discipline of the defence force cannot depend simply upon the absence of any counterpart for a particular norm of conduct in the general law85. Additional responsibilities of defence members may give to general norms of conduct a distinct and emphatic operation. This may be apt for enforcement in a system of military justice such as that established by the Act. 83 vol 25, par 79. 84 (1964) 111 CLR 549 at 573. In similar vein, the article contributed by Judge Babington to The Oxford Companion to Military History, Holmes (ed), (2001) at 233, defines "courts martial" as: "[t]ribunals that enforce the special laws and standards of conduct expected of soldiers, once more lax but now in general more strict than the civil courts governing non-military personnel." 85 cf Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 591, 603-604. Crennan Examples, with respect to crimes of personal violence, may be found in the discussion by McHugh J in Re Aird; Ex parte Alpert86. His Honour discussed, in the factual context of that case, the perception by foreign governments and members of the local population of defence members as representatives of Australia in a way tourist visitors are not. McHugh J also mentioned the reluctance of defence members to serve with personnel who engage in violent conduct, whether that reluctance is from fear of personal safety or rejection of such conduct or both. Thus, it is unsatisfactory to apply as a criterion of constitutional validity in a case such as the present a discrimen which fixes upon offences which can be said to be "exclusively disciplinary in character" and to dismiss from further analysis the significance to be attached to the overlap between service offences and offences under the general law. Undoubtedly difficult questions may arise in considering the significance for a particular case of that overlap. However, these questions need not be pursued in this case. The plaintiff's second submission is cast in a form which denies an occasion here for consideration of the overlap. Conclusion The application should be dismissed with costs. 86 (2004) 220 CLR 308 at 323-324 [40]-[42]. Kirby KIRBY J. These proceedings involve a challenge to the constitutional validity of the trial of charges brought under the Defence Force Discipline Act 1982 (Cth) ("the Act"). The case obliges this Court to return to first principles. In the past, there have been holdings, assumptions and dicta concerning the validity of the applicable provisions of the Act and its predecessors. However, the point now presented has not hitherto been decided. In a number of recent cases, it was reserved87. Where a challenge of such a kind is presented by a party with the requisite standing, this Court is engaged in the most important function for which it is established by the Constitution88. A laissez faire attitude to challenged federal legislation is not one that this Court has historically adopted89. It is not one that I would adopt now90. The challenge to the constitutional validity of the provisions in question succeeds on the second argument advanced in the proceedings91. Appropriate relief should issue. This would have the beneficial consequence of requiring a restructuring of the Act to confine the exercise of "military justice", outside the courts, to disciplinary offences properly defined, remitting all other contested offences to the independent courts of the Judicature, established in accordance with Ch III of the Constitution. Defence personnel are citizens. They are entitled, as much as any others, to one of the most precious guarantees that the Constitution offers – the resolution of disputed charges of serious criminal conduct before independent courts operating wholly within the Judicature and outside the Executive. 87 Hembury v Chief of the General Staff (1998) 193 CLR 641 at 657 [44]-[45], and see also at 669-670 [72]; Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 326 [57]. 88 Constitution, s 71. 89 cf Bank of NSW v The Commonwealth (1948) 76 CLR 1, affirmed (1949) 79 CLR 497; [1950] AC 235; Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193. 90 cf New South Wales v Commonwealth (2006) 81 ALJR 34 at 168 [615]; 231 ALR 1 at 165; Forge v Australian Securities and Investments Commission (2006) 80 ALJR 1606 at 1658 [218]; 229 ALR 223 at 286; Attorney-General (Vic) v Andrews (2007) 81 ALJR 729 at 758 [164]; 233 ALR 389 at 427. 91 Reasons of Gummow, Hayne and Crennan JJ ("joint reasons") at [60]. Kirby The facts The alleged offences: Ms Anne White ("the plaintiff") is a defence member92, being a member of the Permanent Navy of the Commonwealth ("the Royal Australian Navy"). The expression "defence member" includes, in certain circumstances, members of the Reserves93. The plaintiff has been charged with seven "service offences"94. Six of the alleged offences charge that the plaintiff engaged "in conduct outside the Jervis Bay Territory" which is a "Territory offence"95, being an offence of an act of indecency without consent. The remaining charge, alleged in the alternative to such an offence, asserts that the plaintiff assaulted a named person in a public place. The indecency offences are based on the Crimes Act 1900 (ACT), s 60 as applied to a defence member by s 61(3) of the Act. That section extends defined Territory offences to "a defence member or a defence civilian"96. The plaintiff denies all of the offences. A contest between the first defendant, the Director of Military Prosecutions ("the Director"), and the plaintiff is thus presented as to whether the Director can prove the charges against the plaintiff according to law in a constitutionally valid court or tribunal. Unless restrained by this Court, the Director intends to request the Registrar of Military Justice to refer the charges for trial before a Defence Force magistrate or to convene a court martial for such trial97. The determination of the charges at trial has been interrupted by these proceedings. The surrounding circumstances: Although this Court has not been asked to determine any contested facts, the record contains an affidavit of the plaintiff, included without stated objection by the Director or the Commonwealth (the latter added as second defendant). The affidavit contains unchallenged assertions which, although not determinative of any constitutional question, illustrate the 92 As defined in the Act, s 3(1). 93 The Act, s 3(1). See also s 3(4). 94 As defined in the Act, s 3(1). 95 As defined in the Act, s 3(1). 96 As defined in the Act, s 3(1). 97 Under s 103(1)(c) and (d). The jurisdiction of the Defence Force magistrate is provided by the Act, s 129. See also s 135. Trial by courts martial is provided for by the Act, s 132. Kirby kind of circumstance to which the language of the Act lends itself to application, if the Act is valid. Thus, the plaintiff states that she was not in uniform at the time of the alleged offences; nor on duty; nor on the property of the Commonwealth. Moreover, she states that the complainants were not in uniform, not on duty and not on the property of the Commonwealth at such times. As well, she states that no other person who was present at the time of the alleged offences was in uniform or on duty. These facts (and the extension of the Act to defence members in the Reserves as well as to defence civilians) give a clue as to the very wide ambit of the asserted operation of the Act. The loss of jury trial: The offences with which the plaintiff has been charged are all alleged to have occurred at a hotel at Williamstown in the State of Victoria. If the offences were prosecuted under the applicable criminal law of the State of Victoria (the Crimes Act 1958 (Vic), s 39), the offences of indecent assault would carry a punishment described as "Penalty: Level 5 imprisonment (10 years maximum)". Under s 2B of that Victorian statute, all offences against that Act are, unless a contrary intention appears, "deemed to be indictable offences". It follows that, if the plaintiff had been charged under Victorian law, in respect of the alleged offences, she would have been entitled to trial by jury. Likewise, under the criminal law of the Australian Capital Territory, as applicable in the Jervis Bay Territory, purportedly applied to the plaintiff as a defence member, the charges of indecent assault would involve offences punishable, on conviction, by imprisonment for five years98. That fact would similarly entitle the plaintiff to trial by jury, if disputing the charges, or any of them, in either of such Territories. In her affidavit, the plaintiff states that she wishes "to exercise my constitutional right to have the alleged indictable offences the subject of trial by jury". Under the Act, as it stood at the relevant time, the plaintiff purportedly has no entitlement to jury trial by federal law, whether before a jury of fellow citizens, of the kind envisaged by s 80 of the Constitution, or even before a "military jury", subsequently created by amendments to the Act which the parties agreed had not come into operation so as to apply to the plaintiff's case99. 98 Crimes Act 1900 (ACT), s 60(1). 99 Defence Legislation Amendment Act 2006 (Cth), Sched 1, items 9 and 11, inserting in the Act Pt VII, Div 4 ("Military jury") (ss 122-124) to provide for trial by the proposed Australian Military Court. Kirby The present proceedings do not call for a decision as to whether the future provisions of the Act for a "military jury" (or for the proposed Australian Military Court outside Ch III of the Constitution) are valid. However, the existence of such provisions, called to the Court's notice during the argument, alerts the Court to the implications of the present case for the future operation of Ch III in the context of military justice. The amendments provide a warning about the importance of this decision for whether criminal laws might be applied, outside the ordinary courts of the land, to citizens who happen to be members of the Defence Force. The Court cannot later complain that it was not warned of the next intended step in military exceptionalism. The legislation Service tribunals and offences: The Act contains many provisions governing the conviction and punishment of defence members. Through the vehicle of s 61 of the Act, such provisions extend to the whole gamut of criminal offences provided by the "Territory offences"100. In drafting the Act, no attempt was made to confine the "offences" to those that could be characterised as exclusively or essentially related to the discipline of defence members (or other related personnel); to discipline in a time of war, in places of combat or on overseas or remote assignments; or to offences appropriate and adapted (or proportionate) to the disciplinary control of defence members, as such. On the contrary, the Act casts the widest possible net of "offences" to which a defence member is subject. Moreover, it sets up a system of prosecutions by the Director, an office-holder distinct from the Director of Public Prosecutions of the Commonwealth101. It provides for "service tribunals", including courts martial and Defence Force magistrates, outside the ordinary courts that exercise federal jurisdiction102. Neither of these specified kinds of "service tribunals" is a court within the Judicature for which Ch III of the Constitution provides. Each envisages significant departures from the time- honoured features of such courts. Those features are essential to the independence and impartiality of the courts. 100 The Act, s 61 and the definition of "Territory offence" in s 3(1) of the Act. 101 The Act, s 103. The Director of Public Prosecutions of the Commonwealth is established by the Director of Public Prosecutions Act 1983 (Cth), ss 5 and 18. 102 As to the categories of courts martial and service tribunals established by the Act, see the reasons of Callinan J at [225]-[231]. Kirby Under the Act, courts martial may be either "general" or "restricted"103. To be eligible to be a member of a court martial, a person is not chosen by reference to legal training, skill, experience or competence but by reference to a defined association with the Defence Force and the holding of a specified rank in that Force104. Provision is made for a "judge advocate"105. However, the President, members, reserve members and the judge advocate are not appointed as part of a permanent court. Instead, they are appointed on an ad hoc basis by the Registrar of Military Justice106 as required for each particular court martial107. The lack of the necessity (or actuality) of universal legal training; the ad hoc constitution of the tribunal; the lack of tenure of members; and the requirement to select persons who must be associated with the Force (and therefore necessarily interested in the conduct of the accused), all represent very serious departures from the normal features of Ch III courts. Nor is the position of a Defence Force magistrate under the Act designed to remove the defects just mentioned. Despite the use of the word "magistrate", which in Australia (including in the new Federal Magistrates Court) now connotes judicial officers with characteristics of tenure and independence substantially the same as the judiciary of Ch III courts108, the Defence Force magistrates are quite different. They are not appointed by the Governor-General in Council109. Instead, they are appointed by the Judge Advocate General by instrument in writing110. 103 The Act, s 114. 104 The Act, s 116(1). 105 The Act, s 117. 106 Appointed under the Act, s 188FB. 107 The Act, s 119 ("Convening order"). All members of courts martial must be chosen by the Registrar from persons nominated by the Judge Advocate General who is appointed under the Act, s 179 and who must be a judge: s 180(1). See also s 129B. 108 Mack and Anleu, "The Security of Tenure of Australian Magistrates", (2006) 30 Melbourne University Law Review 370. 109 As are the judiciary of Ch III courts, including Federal Magistrates. See Federal Magistrates Act 1999 (Cth), s 9 and Sched 1, Item 1(1). 110 The Act, s 127(1). Kirby The only person who can be appointed a Defence Force magistrate is an "officer" who is a member of the judge advocates' panel111. The word "officer" is defined in the Act to mean a person so appointed including, in the Royal Australian Navy, a person holding a specified rank112. An officer is appointed to the judge advocates' panel not for the normal tenure of a magistrate in Australia (ie to age 70 years)113 but for the limited period specified in the instrument of appointment which may be no longer than a period of three years (and, by definition, may be shorter and even ad hoc)114. Provision is made for the reappointment of such a "magistrate" for a further period or periods115. This is another feature alien to the judiciary in Ch III. It is a feature susceptible to misuse, with the potential to disadvantage those who perform their duties with complete impartiality but who do not satisfy the expectations of the Executive Government or the Defence Force116. At the very least, the appointment is therefore subject to the appearance of misuse and disadvantage. Defence Force magistrates must have legal qualifications. They are required to take an oath or affirmation in substantially the form of that taken by federal judges117. However, the conditions of appointment, particularly tenure, fall far short of those applicable under Australian federal law to members of the federal judiciary, including the federal magistracy. The importation of an entire criminal statute inevitably presented the risk of overlap between other applicable federal laws (containing criminal offences) and State or Territory laws addressed to the same conduct. The Act contains provisions to reduce the risks of conflict and double jeopardy118. Thus, for certain Territory crimes on the part of a defence member (including "treason, 111 The Act, s 127(2). 112 The Act, s 3(1), definition of "officer". 113 Federal Magistrates Act 1999 (Cth), s 9 and Sched 1, item 1(4). 114 The Act, s 196(2A). 115 The Act, s 196(2B). 116 cf Forge (2006) 80 ALJR 1606 at 1659 [220]; 229 ALR 223 at 287. 117 The Act, s 196(4), Sched 5. See eg the Schedule to the Federal Court of Australia Act 1976 (Cth). 118 The Act, s 144. Kirby murder, manslaughter or bigamy"119), the consent of the Commonwealth Director of Public Prosecutions must be secured for a service prosecution. In all non- specified cases, decisions on prosecutions in "service tribunals" are to be made by the Director of Military Prosecutions120. Provision is made that "[s]ubject to the Constitution, a civil court does not have jurisdiction to try" a service offence or an offence ancillary to a service offence121. Once a person is convicted or acquitted of a service offence, or acquitted or convicted by a civil court of a civil court offence, the person is not liable to be tried by a service tribunal for the same offence or for an offence that is substantially the same offence122. Ambit of surrogate Territory offences: The integration of the "offences" in the Act and the general criminal law applied in civil courts in Australia is made clear by the incorporation, by reference, of the Crimes Act of the Australian Capital Territory as applied in the Jervis Bay Territory123 – a geographic place substantially devoted to Defence Force purposes. Other offences provided by the Act address much more specific service concerns. These include offences relating to operations against the enemy124; mutiny, desertion and unauthorised absence125; insubordination and service-related violence126; offences relating to the performance of duty127; and property offences (addressed to destruction, damage or misuse of Defence Force property128). As well, the Act provides for various ancillary and miscellaneous offences, mainly connected with procedure, anterior proceedings before service tribunals, personnel matters and the like129. 119 The Act, s 63(1). 120 The Act, s 103. 121 The Act, s 190. 122 The Act, s 144. 123 Under the Act, s 61. 124 The Act, Pt III ("Offences"), Div 1. 125 Pt III, Div 2. 126 Pt III, Div 3. 127 Pt III, Div 4. 128 Pt III, Div 5A. 129 Pt III, Divs 6 and 7. Kirby At least in certain circumstances, such offences might qualify as offences exclusively or essentially of a disciplinary character. However, even here, the Act is at pains to integrate the offences provided into the general criminal law of the Commonwealth. Thus s 10 of the Act renders Ch II of the Criminal Code of the Commonwealth (setting out general principles of criminal responsibility) applicable to "all service offences" other than transitional "old system offences". The provisions of the Act for the investigation of "service offences"130 follow an altered version of the requirements ordinarily applied to civilian criminal investigation. In a general provision concerning "[s]entencing principles", the Act prescribes that a service tribunal, in determining what action should be taken in relation to a convicted person, shall have regard to "the principles of sentencing applied by the civil courts, from time to time" and "the need to maintain discipline in the Defence Force"131. Range of service punishments: Whilst there are some restrictions, a service tribunal is generally empowered to impose a punishment of imprisonment on a person convicted of a service offence132. The maximum punishment provided for in the several service offences varies. Many punishments include imprisonment for a maximum of three months. Others provide for imprisonment for a term of years, typically up to two or five years. However, for several more serious offences, imprisonment for up to fifteen years is provided133. And for a limited number of offences a maximum punishment of imprisonment for life is provided134. Imprisonment for life is now the highest penalty provided under Australian law, whether federal, State or Territory law. Without exception, offences carrying a penalty of imprisonment for life, when provided by federal, State and Territory law, may only be prosecuted on indictment. In accordance with s 80 of the Constitution, a federal offence, prosecuted on indictment, attracts an unquestioned entitlement to jury trial in court. In fact, the offences alleged against the plaintiff do not attract a maximum punishment of life imprisonment. However, by s 61 the maximum punishment 130 The Act, Pt VI. 131 The Act, s 70. 132 The Act, s 71. 133 The Act, ss 15, 15A, 15D, 15E, 15F, 15G, 16 and 16A. 134 The Act, s 15B ("Aiding the enemy while captured"); s 15C ("Providing the enemy with material assistance"); s 16B ("Offence committed with intent to assist the enemy"); s 20 ("Mutiny"). Kirby for an offence based on a Territory offence is the relevant Territory punishment135. Had the Director charged the plaintiff only with the offence of assault under s 33 of the Act, the maximum punishment applicable for the specific service offence would have been imprisonment for six months. By electing to pursue charges of offences based on the general Territory offence of indecent assault, the Director has exposed the plaintiff to a maximum punishment of five years imprisonment for each offence of which she may be convicted136. But without an indictment, the defendants argue, the plaintiff has no entitlement to jury trial137. The issues The plaintiff's arguments: The reasons of Gummow, Hayne and Crennan JJ ("the joint reasons") point out138 that the issues presented by the plaintiff's submissions developed somewhat during the course of oral argument. Ultimately, the two issues that arise for decision are, in the alternative: The strict separation issue: Having regard to the text and structure of the Constitution, are the relevant grants of constitutional power pursuant to which the Act was enacted (notably s 51(vi) [defence] and s 51(xxxix) [incidental powers]) all subjected to the requirements of Ch III of the Constitution, allowing no relevant exceptions? Most especially, having regard to s 71 of the Constitution, and to the true character of the functions committed by the Act to the named service tribunals, has an impermissible attempt been made to vest "the judicial power of the Commonwealth" in bodies other than the courts there described? If so, does such impermissible vesting of jurisdiction render the service tribunals, before one of which the Director proposes to prosecute the offences alleged against the plaintiff, invalid, so as to support the issue of a constitutional writ of prohibition addressed to the Director as an "officer of the Commonwealth"139, to forbid that course? The limited exception issue: Alternatively to (1), is there a limited exception, consistent with the requirements of Ch III of the Constitution, 135 The Act, s 61(4). 136 Crimes Act 1900 (ACT), s 60 as applied to the Jervis Bay Territory. 137 See eg Kingswell v The Queen (1985) 159 CLR 264 at 318-319; Re Colina; Ex parte Torney (1999) 200 CLR 386 at 421-422 [92]-[95]. 138 Joint reasons at [42]. 139 Constitution, s 75(v). Kirby so that particular but restricted jurisdiction may be conferred on bodies such as the service tribunals? Do the foregoing grants of federal legislative power support the establishment of a regime for the exercise of disciplinary powers outside the Ch III courts? If such an exceptional disciplinary jurisdiction is valid, what is the ambit of this permissible exception? Does the Act, by its provisions, fall within or outside that ambit? In considering that question, what weight should be given to the provision for jury trial expressed in s 80 of the Constitution? If, in its relevant provisions, the Act falls outside the ambit of the permissible exception, can the offending provisions be severed? Is the plaintiff entitled to the relief sought? Subsidiary issues: If a conclusion in favour of the plaintiff appears to arise on a consideration of the arguments presented under one or other of the issues proffered above, the question remains whether relief should nonetheless be withheld upon all, or any, of the following arguments, referred to in the joint reasons: The decisional authority issue: Is the relief claimed by the plaintiff inconsistent with the authority of this Court, in so far as it has hitherto decided or assumed the constitutional validity of service tribunals (especially courts martial) as they have evolved during the history of the Commonwealth? The historical exception issue: Is there an exception that sustains the constitutional validity of service tribunals, supported by the long history of such tribunals in British Imperial provisions, against the background of which the Australian Constitution was written? The regulatory state issue: Does an insistence on the separation of the judicial power overlook the advent of the modern regulatory state that has arisen since the adoption of the Constitution in 1900? May the jurisdiction and powers of the service tribunals, therefore, be seen as a special kind of regulatory order, necessary to the exercise of the defence power, which inherently contemplates a disciplined force? The abstract reasoning issue: Is the supposed inconsistency of the service tribunals with the requirements of Ch III of the Constitution an illustration of the dangers of "abstract reasoning" on the part of the plaintiff and her representatives140? 140 Joint reasons at [45], [58]. Kirby The characterisation of offences issue: Does the plaintiff's second, or alternative, issue, rely upon a distinction between strictly "disciplinary" and other offences, that is illusory so that it cannot be what the Constitution requires? The separation of judicial power issues The plaintiff's arguments: It is convenient to deal with the first and second issues together. The plaintiff presented the question before the Court as a relatively straight-forward one. Basically, it was to be answered in her favour by the application of no more than the language and structure of the Constitution. She accepted that the Act was an attempt to make a law concerning the discipline of defence members such as herself. On the face of things, it therefore fell within the power which s 51 of the Constitution confers on the Parliament to make laws: "for the peace, order, and good government of the Commonwealth with respect to: (vi) The naval and military defence of the Commonwealth and of the several States, and the control of the forces to execute and maintain the laws of the Commonwealth". If those words stood on their own, a federal law on the discipline of defence members would, prima facie, be within the grant of power. Breadth of the defence power: For three reasons, at least, it is self-evident that the grant of power in s 51(vi) of the Constitution should not be narrowly construed. First, it appears in a grant to a Parliament established to serve a new nation intended to take its place amongst the nations of the world. Secondly, in addition to the general principle that such grants of constitutional power should be afforded a full and ample meaning141, the power in s 51(vi) is particularly apt for such an approach, given its purposive expression. Thirdly, above and beyond the other particular grants of power, that for the naval and military defence of the Commonwealth is in many respects special. 141 Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 367-368; R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225; cf McCulloch v Maryland 17 US (4 Wheat) 316 at 406-407 (1819) per Marshall CJ. Kirby In Australian Communist Party v The Commonwealth142, Latham CJ observed that the defence power is designed to protect the "continued existence of the community under the Constitution". In a sense, it is thus "a condition of the exercise of all the other powers contained" in the Constitution, including therefore the judicial power. Whilst Latham CJ's words in that case were written in dissent, no one can doubt the very great importance of the grant of legislative power contained in par (vi) of s 51 of the Constitution. The plaintiff did not question the amplitude of the power. But she pointed to the established doctrine that its ambit waxes and wanes according to the necessities of war or the conditions of peace, as presently prevailing143. Moreover, however wide the ambit of the power may extend, s 51(vi) is still part of the "one coherent instrument"144 that is the Constitution. The established doctrine of this Court is that a particular head of power is "intended to be construed and applied the the Constitution"145. Accordingly, the defence power is subject to restrictions such as are contained in s 51(xxxi) [acquisition on just terms]146 and s 92 [interstate trade]147. It may also be subject, in certain circumstances, to the limitations stated, for example, in s 116 [religion]148. light of other provisions of Express subjection to Ch III: The subjection of the grant of power in s 51(vi) to other grants of power in s 51, where relevant, and to any express limitations upon law-making appearing in the Constitution, would probably have been inferred from the inclusion in the one constitutional instrument of such potentially overlapping provisions. However, in Australia, the subjection is not 142 (1951) 83 CLR 1 at 141. 143 cf Farey v Burvett (1916) 21 CLR 433 at 441; R v Foster; Ex parte Rural Bank of NSW (1949) 79 CLR 43 at 81-82. 144 Lamshed v Lake (1958) 99 CLR 132 at 154; cf Re Governor, Goulburn Correctional Centre; Ex parte Eastman (1999) 200 CLR 322 at 373-374 [131]- [132]; New South Wales v Commonwealth (2006) 81 ALJR 34 at 140 [469]; 231 ALR 1 at 127. 145 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 185 per Latham CJ. 146 Johnston Fear & Kingham & The Offset Printing Co Pty Ltd v The Commonwealth (1943) 67 CLR 314 at 317-318, 325, 331. 147 Gratwick v Johnson (1945) 70 CLR 1 at 10-11. 148 cf Adelaide Company of Jehovah's Witnesses Inc v The Commonwealth (1943) 67 CLR 116 at 129, 132, 149, 155, 159-160. Kirby this Constitution". left to inference or implication. It is expressly stated by the opening words of s 51. The Parliament enjoys the powers enumerated, including in s 51(vi), includes, relevantly, Ch III ("The "subject Judicature"). Specifically, it includes s 71, by which "the judicial power of the Commonwealth" is vested in this Court, other federal courts created by the Parliament and such other courts as the Parliament invests with federal jurisdiction. It also includes s 80, dealing with trial by jury of certain offences. This According to the plaintiff, these provisions of the Constitution, and the relatively strict way in which they have been construed by this Court over the years, mean that it is impossible entirely to detach service tribunals, created pursuant to s 51(vi) of the Constitution for military discipline, and to place them as legislative adjudicators outside the requirements of Ch III and its specific provisions, including s 71 (and s 80). In so far as, properly analysed, such service tribunals exercise any part of the "judicial power of the Commonwealth", they may be created by the Parliament. However, the Parliament must create them in the form of a "court", complying with the strict requirements laid down in Ch III of the Constitution as to the appointment, tenure, remuneration (s 72), appellate supervision (ss 73, 74) and facilities for trial by jury (s 80). Because, manifestly, the service tribunals created by the Act are not "courts" within s 71 of the Constitution, because their members' appointment, tenure and remuneration do not comply with s 72 and because they are not subjected, as such, to the appellate jurisdiction of this Court (s 73), without more they do not comply with the constitutional requirements stated in Ch III. The plaintiff argued that, although on one view the Act was a law with respect to defence, it was such a law as did not comply with the requirements of Ch III. This was so because of the invalid attempts, by federal law, to confer federal judicial power upon bodies not entitled to exercise that power. An alternative argument: Alternatively, the plaintiff submitted that, in so far as the grant of power under s 51(vi) necessarily included by implication a limited determination of strictly disciplinary offences by individuals or bodies other than courts, and in so far as, out of necessity, such offences and their determination were impliedly excluded from the requirements of Ch III, notwithstanding the general subjection to that Chapter, the provisions of the Act applicable to her travelled far beyond any such permissible, limited exception. To subject defence members to the comprehensive range of all general criminal offences, and to subject them, upon conviction, to potential punishments up to life imprisonment (and in the plaintiff's case potential cumulative maximum Kirby imprisonment of up to thirty years149), went far beyond any necessity or obviousness unstated in the provisions of the Constitution itself150. According to the plaintiff, this contention was vividly illustrated in her case because the alleged facts bore, on their face, many indications of purely private, non-service features. Moreover, the result of the proceedings under the Act for the "offences" charged would be to deprive the plaintiff of the right to jury trial that would otherwise belong to her as a person subject to Australian law accused of such offences. The plaintiff's primary submission was that there was no relevant "exception" to the application of the provisions of Ch III of the Constitution to military justice. To the extent that past authority of this Court held, or suggested, otherwise, the plaintiff argued that such authority should be overruled. But, faced with the long survival of forms of service tribunals in Australia (notably courts martial) before and after the establishment of the Commonwealth, judicial authority in this and other courts concerning systems of military justice and the absence of any explicit judicial support for her primary proposition, the plaintiff fell back on her secondary submission. This was that, whatever the extent of any permitted exception to the requirements of Ch III, expressed in the language and structure of the Constitution, the provisions in the Act for her trial, and the potential convictions and punishment to which she was exposed, were well outside any such exception. On that ground, she was therefore entitled to relief. Fresh constitutional consideration: In effect, the plaintiff invited this Court to take the course followed by the Privy Council in deciding the appeal against this Court's decision in the Boilermakers' Case151. There, the Privy Council proceeded first to look at the issues raised (likewise concerned with the constitutional separation of the judicial power) as a matter of constitutional text and principle. Having done so, and concluded that this Court had been correct in its decision, and that there was "nothing in Chap III, to which alone recourse can 149 That is, six offences under the applied Territory provision, each carrying a maximum sentence of five years. 150 The test of necessity and obviousness is normally observed by this Court in deriving constitutional implications. See eg Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 133-138 per Mason CJ. 151 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254. Kirby be had, which justifies" the validity of the impugned legislation152, their Lordships said153: "Little reference has so far been made to the great volume of authority on this subject. Their Lordships have thought it right to make an independent approach to what is after all a short, if not a simple, question of construction of the Constitution." If this Court adopted the same approach as the Privy Council did in the Boilermakers' Case, the plaintiff submitted, it would reach a similar outcome. As in that case, years of constitutional assumptions would be disclosed as untenable and therefore unacceptable. Institutions built on those assumptions would be shown to be unsustainable. Some transitional inconvenience would, of course, arise. But this Court, as the only body with the power and duty to do so, would establish the correct constitutional principle. It would uphold the language and design of the Constitution, read in its entirety. Better to do so belatedly than to persist with a "defence of the indefensible"154. An exercise of judicial power: On the face of things, the plaintiff's argument for strict separation of the trial and punishment of "offences" against the Act, and the commitment of such functions exclusively to independent courts exercising federal jurisdiction, is highly persuasive. The content of "judicial power" has not been established in a formula of universal application. However, the definition that captures the main elements in the Australian constitutional context is that stated by Griffith CJ in Huddart, Parker & Co Pty Ltd v Moorehead155: "[T]he words 'judicial power' as used in sec 71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a 152 Attorney-General of the Commonwealth v The Queen (1957) 95 CLR 529 at 539; 153 (1957) 95 CLR 529 at 539; [1957] AC 288 at 314 per Viscount Simonds, delivering the judgment of the Board. 154 Mitchell and Voon, "Defence of the Indefensible? Reassessing the Constitutional Validity of Military Service Tribunals in Australia", (1999) 27 Federal Law Review 155 (1909) 8 CLR 330 at 357. See also Harrington v Lowe (1996) 190 CLR 311 at 325 per Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ. Kirby binding and authoritative decision (whether subject to appeal or not) is called upon to take action." The three features of this definition, pointing to the presence of "judicial power" in the constitutional sense, are thus (1) the existence of controversy156; which (2) is about legal rights and duties157; and (3) arises in a context where there is a capacity to reach a conclusive determination of such rights and duties158. By each of these criteria, the functions committed to service tribunals under the Act are indicative of the presence of judicial power. There is a sharply defined controversy presented by the plaintiff's contest of the accusations made against her under the Act. Those accusations are highly specific, carefully defined and made (in all but one instance) pursuant to a Territory law that is rendered applicable to defence members. It is a law otherwise of general operation that, of its character, affects the rights and duties of the individual, potentially including (upon conviction) the loss of personal liberty and of the entitlement to retain a senior employment position in the Defence Force. The determination of contested "offences" and the imposition of "punishment" extending to imprisonment classically involves the exercise of "judicial power". This historical characterisation of the function is a relevant consideration for determining whether the task committed by the Act to the service tribunals is, or involves, the exercise of "judicial power"159. In each case, the service tribunals are established to make a binding and authoritative determination. There is no general provision for an "appeal" to a court. There is provision for consideration by a reviewing authority160. However, normally, a "punishment imposed, or an order made, by a service tribunal, a reviewing authority or the Defence Force Discipline Appeal Tribunal takes effect forthwith". A punishment for a specified period "commences on the day on 156 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 267. 157 Waterside Workers' Federation of Australia v J W Alexander Ltd (1918) 25 CLR 158 Shell Co of Australia Ltd v Federal Commissioner of Taxation (1930) 44 CLR 530 at 543; [1931] AC 275 at 295-296; Rola Co (Australia) Pty Ltd v The Commonwealth (1944) 69 CLR 185 at 198-199. 159 Cominos v Cominos (1972) 127 CLR 588 at 605, 608; R v Hegarty; Ex parte City of Salisbury (1981) 147 CLR 617 at 627. 160 The Act, s 172(1). Kirby which it is imposed"161. Any fine imposed on a person is immediately recoverable by the Commonwealth out of that person's pay (if still in the employ of the Commonwealth). Otherwise, it may be sued for in a civil court162. It follows that the scheme of the Act commits to the specified service tribunals the exercise of "judicial power". Indeed, three members of this Court accepted that this proposition was virtually unarguable163: "[N]o relevant distinction can, in our view, be drawn between the power exercised by a service tribunal and the judicial power exercised by a court. Nor do we think it possible to admit the appearance of judicial power and yet deny its existence by regarding the function of a court-martial as merely administrative or disciplinary. … Thus the real question in this case is not whether a court-martial in performing its functions under the Act is exercising judicial power. There has never been any real dispute about that." I agree with this characterisation. It is reinforced by a study of the Act. The conclusion is put beyond question by the importation into the Act of the whole gamut of criminal offences applicable in the identified Territories, rendering them all applicable to all defence members at all times164. Judicial power of the Commonwealth: The supposed point of distinction, propounded to permit service tribunals to escape from this characterisation in s 71 of the Constitution, is that, whilst they exercise "judicial power", it is not "the judicial power of the Commonwealth under Ch III of the Constitution"165. As a matter of language, logic, constitutional object and policy, this supposed distinction should be rejected. It has never hitherto commanded the endorsement of a majority of this Court. It should not do so now. As to language, if what is being done is unquestionably the exercise of "judicial power" and if it is being performed under a law of the Commonwealth enacted by the Federal Parliament, that is sufficient to render it an attempted or 161 The Act, s 171(1). 162 The Act, s 174(1). 163 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 537-540 per Mason CJ, Wilson 164 See s 61(2) and (3); cf s 3(1) definition of "defence member". 165 Re Tracey (1989) 166 CLR 518 at 540. Kirby purported exercise of "the judicial power of the Commonwealth". A law of the Commonwealth could not give it any other quality. The adjectival phrase "of the Commonwealth", contained in s 71 of the Constitution, applies to it. The Act is enacted, purportedly, for a purpose of the Commonwealth (namely defence, pursuant to the Constitution, s 51(vi)). It can hardly qualify as being an exercise of "judicial power" of a State or of a Territory (so far as the latter is not itself part of the judicial power of the Commonwealth) or of a foreign nation166. As to logic, it is circular to reason that, because the character of the power committed to a body can vary in accordance with the body exercising the power167, the power committed to service tribunals could therefore be other than "the judicial power of the Commonwealth". That is the very question presented in these proceedings for this Court's decision. Surely, the so-called "chameleon" doctrine has not so far debased our adherence to logic that the mere choice by the Federal Parliament to vest a power in a named tribunal conclusively avoids the limitations stated in s 71 of the Constitution168. If this Court were to dismiss the plaintiff's arguments by reference to the chameleon metaphor, it would abandon its function and constitutional duty. It always remains for the Court to examine what the impugned body actually does and then to decide whether what it does offends the constitutional limitations stated in s 71. The mere selection of a service tribunal as the repository for a power does not foreclose the requirement of judicial characterisation. That requirement remains to be discharged. Moreover, in this case, all that is required (there being no real doubt about the exercise of "judicial power") is the determination of whether such "judicial power" is that "of the Commonwealth" or not. Only a sleight of hand, suitable to a street magician, would permit any other characterisation of the "judicial power" committed by the Act to the service tribunals in this case. As for the constitutional object of s 71, it has been repeatedly held that its the the assignment of "the purpose Commonwealth" solely to the "courts" listed in that section. During argument of this application, much mention was made of the significance of the separation of judicial power of to confine 166 Ruhani v Director of Police (2005) 222 CLR 489. 167 eg R v Spicer; Ex parte Australian Builders' Labourers' Federation (1957) 100 CLR 277 at 305 per Kitto J; Harris v Caladine (1991) 172 CLR 84 at 122. 168 cf Ratnapala, Australian Constitutional Law: Foundations and Theory, 2nd ed (2007) at 136-137; Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board [2007] HCA 23 at [70]; Visnic v Australian Securities and Investments Commission [2007] HCA 24 at [41]-[42]. Kirby the judicial power in the Boilermakers' Case169. Although not frontally attacked or questioned by the defendants, the criticisms that have been expressed of the holding in Boilermakers' Case were mentioned. Such criticisms certainly exist170. However, they are immaterial to the primary issues in these proceedings. The Boilermakers' Case concerned essentially an extension of the separation of powers doctrine by expressing a second limb. This was that this Court and other federal courts created by the Parliament may not exercise legislative or executive functions mixed with their judicial functions. That limb, so stated, has been contested since it was established. It has sometimes given rise to difficulty and controversy. However, the first limb of the separation of powers doctrine, although also occasionally the subject of disagreement as to its ambit and availability171, has not otherwise been questioned. Since the Wheat Case172 in 1915, it has been held by this Court that a body cannot exercise the judicial power of the Commonwealth under federal law if it is not a court, within the meaning of s 71. This first limb of the separation of powers doctrine has been repeatedly affirmed173 by the Court. Thus, in 1925 it proved the undoing of the Taxation Boards of Appeal, whose members were appointed for seven years. They were held to have been invalidly invested with "the judicial power of the Commonwealth"174. The parallels with this case are striking. Indeed, the powers of service tribunals under the Act, to decide whether defined criminal offences have been committed and, if so, the punishment (up to life imprisonment) that should be imposed, are even clearer instances than any earlier, or different, examples of attempted vesting of such power contrary to s 71. As to policy, the plain object of the separation of powers doctrine, expressed in s 71 of the Constitution and explained in the cases, is to ensure the 169 (1956) 94 CLR 254. 170 Starting with the dissents of Williams J, Webb J and Taylor J in the Boilermakers' Case (1956) 94 CLR 254, see esp 302, 306, 314, 315, 317. That decision was later criticised by Barwick CJ in R v Joske; Ex parte Australian Building Construction Employees & Builders' Labourers' Federation (1974) 130 CLR 87 at 90. 171 Ruhani (2005) 222 CLR 489 at 530 [119], 578 [298]; cf at 546 [177]. 172 New South Wales v The Commonwealth (1915) 20 CLR 34. 173 J W Alexander (1918) 25 CLR 434 at 450, 457, 461, 467, 489. 174 British Imperial Oil Co Ltd v Federal Commissioner of Taxation (1925) 35 CLR Kirby observance of certain basic standards when federal law commits to bodies the conclusive determination of controversies as to legal rights and duties. Where federal offences are involved, the purpose of s 71 is made even clearer by the language of s 80, with its provision for jury trial. The separation of the judicial power is also specially important in a federation because it is the Judicature that has the final say on the constitutional division of powers and on matters of large moment affecting the rights and duties (relating to life, liberty or property) of all persons subject to the laws of the Commonwealth. The scheme of s 71 is thus intended to preserve the vesting of federal judicial power to the nominated courts. In the case of the named federal courts, the Constitution itself assures to its members conditions of appointment, tenure, remuneration and appellate supervision that guarantee the existence of the requisite qualities of independence and impartiality. In the case of State courts invested with federal jurisdiction, this Court has also upheld the constitutional implication that such courts must be constituted in a way that is appropriate to the vesting of federal jurisdiction175. It follows that this is an integrated constitutional scheme which this Court should uphold. To the extent that, by verbal formulae we draw a distinction between "the judicial power of the Commonwealth" and some other kind of "judicial power" that, although under federal law, can be vested in bodies other than the courts named in s 71 of the Constitution, we permit a haemorrhage of federal judicial power to "courts" for which the Constitution does not provide. We open the door to tribunals which, in truth, exercise federal "judicial power" yet are placed outside the properly constituted courts enumerated in s 71. Such a course would, in my view, be contrary to the policy of the Constitution, that the grants of legislative power to the Parliament under s 51 be subject to the requirement that contests about rights and duties under federal law, certainly over broadly stated criminal offences and punishment, be amenable to substantive determination in independent and impartial courts. In defence of the supposed distinction between "judicial power" and "the judicial power of the Commonwealth", mention was made of various activities that State courts may be required to perform by State legislation which could not be required of a federal court. Thus, the provision of an advisory opinion was, it was argued, an instance of "judicial power" that nevertheless fell outside the "judicial power of the Commonwealth"176. Whether or not that is so, that argument has no present application. These proceedings are not concerned with 175 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. 176 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 266-267. Kirby decision-making activities that are alien to the "judicial power", such as is proper to federal courts. There is absolutely no reason why the functions assigned under the Act to service tribunals could not be performed by a Ch III court. Determining guilt of precisely defined "offences" (including those contained in a general Crimes Act) and deciding resulting questions of punishment (up to life imprisonment) are historically core functions of the courts. They are not functions performed in this country by non-court tribunals. Nor should they be. In addition, as the plaintiff pointed out, the International Covenant on Civil and Political Rights177 ("the ICCPR"), signed by Australia, expresses relevant universal principles of fundamental human rights observed by civilised countries. Thus, Art 14(1) of the ICCPR provides: "All persons shall be equal before the courts and tribunals. In the determination of any criminal charge against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law." The ICCPR does not enjoy a constitutional status in Australia. It has not been expressly incorporated into municipal law. Further, the provisions of Art 14(1) envisage both "courts" and "tribunals". An argument might exist that the determination of a service "offence" before a service "tribunal" is not necessarily the same as the determination of a "criminal charge". However that may be, the requirement that a trial of an "offence" which carries the potential on conviction of substantial imprisonment must be before a competent, independent and impartial tribunal established by law is deeply rooted in the Australian legal system itself178. The theory of the Constitution propounded by the plaintiff upholds this hypothesis. The theory propounded for the defendants does not. The trial of the plaintiff under the Act, before either of the service tribunals provided in the Act, falls short of the requirements of independence and impartiality for decision- makers. As constituted, the service tribunals have an inherent tendency, missing from the courts, to conform to the views of those higher in the chain of service 177 Opened for signature 16 December 1966; 999 UNTS 171; [1980] ATS 23; cf Re Aird (2004) 220 CLR 308 at 348-350 [126]-[133]. 178 cf Abadee, A Study into Judicial System Under the Defence Force Discipline Act, (1997) at 138-141. The author of the report, Brigadier the Honourable A R Abadee, RFD, was Deputy Judge Advocate General. Kirby command (or to appear to do so)179. The members of service tribunals might be personally acquainted with, or even have command over, the accused or have service associations with relevant personnel and witnesses180. The career aspirations of members of service tribunals (for promotion, reappointment or otherwise) might influence, or appear to influence, their conduct in the trial and its disposition181. Such concerns (and the perceived defects in the outcome of publicised trials before military tribunals in Australia) have occasioned a series of inquiries and reports addressed to the systemic defects of the tribunals created by the Act182. Such reports have led, in turn, to a comprehensive report published by the Federal Parliament Joint Standing Committee on Foreign Affairs, Defence and Trade183. Further disquiet led to yet another report184, which chronicled the long- standing institutional weaknesses that it saw in the existing service tribunals. It recorded proposals that they be replaced by "establishing a military bench of the Federal Magistrate's Court, or attributing appropriate status and perceived the Commonwealth the auspices of Chapter III of independence under Constitution (or an otherwise federally recognised court)"185. The Committee recommended that a Permanent Military Court "be created in accordance with 179 Mitchell and Voon, "Defence of the Indefensible? Reassessing the Constitutional Validity of Military Service Tribunals in Australia", (1999) 27 Federal Law Review 180 Heard, "Military Law and the Charter of Rights", (1988) 11 Dalhousie Law Journal 514 at 525. 181 Note, "Military Justice and Article III", (1990) 103 Harvard Law Review 1909 at 1920-1921; with respect to Singapore Armed Forces Act Cap 295, 1985, see Kronenburg, Lie and Wong, "Civil Jurisdiction in the Military Courts: An Unnecessary Overlap?", (1993) 14 Singapore Law Review 320 at 324. 182 Australia, Ombudsman, The Australian Defence Force: Own motion investigations into how the Australian Defence Force responds to allegations of serious incidents and offences – Review of Practices and Procedures, (1998). 183 Australian Parliament, Military Justice Procedures in the Australian Defence Force, (June 1999). See Australia, House of Representatives, Parliamentary Debates (Hansard), 21 June 1999 at 6813-6816; Senate, Parliamentary Debates (Hansard), 21 June 1999 at 5728-5731. 184 Australia, Senate, Foreign Affairs, Defence and Trade References Committee, The effectiveness of Australia's military justice system, (June 2005). 185 Australia, Senate, Foreign Affairs, Defence and Trade References Committee, The effectiveness of Australia's military justice system, (June 2005) at 80 [5.16]. Kirby Chapter III of the Commonwealth Constitution to ensure its independence and impartiality", with judges appointed by the Governor-General in Council, having tenure until retirement age186. It is wrong to suggest, as some of the defendants' submissions did, that recent decisions of this Court had moved away from the principle of the separation of the judicial power. The Court could hardly do so, given the language and structure of the Constitution itself; the long-standing authority supporting the first limb of the Boilermakers' Case doctrine; the recent decisions that have reinforced this aspect of the doctrine187; the conformability of the principle with the universal standards of international human rights law; and the practical assurance that the doctrine affords against partisan, or partial tribunals determining outside the regular courts contested controversies affecting life, liberty and property. When a direct challenge to the system of military justice is brought, as in these proceedings, the only response proper to this Court is to return to basics and to test the impugned law against the language and structure of the Constitution itself. This is what the Court and the Privy Council did when a similar challenge was brought in the Boilermakers' Case. We should not shrink from performing a similar duty today. Supposed earlier exceptions: Yet should an "exception" be accepted that, either wholly or partly, takes service tribunals, as envisaged in the Act, outside the Court's doctrine concerning the requirements of Ch III, and specifically s 71? Several analogies have been advanced to justify such an "exception". All but the last of them fails to withstand even rudimentary analysis: Prerogative power: The earliest sources of military law in British legal history may be traced to the prerogatives of the King as defender of the Realm against its enemies188. It has been suggested that military discipline 186 Australia, Senate, Foreign Affairs, Defence and Trade References Committee, The effectiveness of Australia's military justice system, (June 2005) at 102 [5.95]. 187 Including Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245; Kable (1996) 189 CLR 51; Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1; Re Wakim; Ex parte McNally (1999) 198 CLR 511; R v Hughes (2000) 202 CLR 535. 188 cf Re Tracey (1989) 166 CLR 518 at 542 per Mason CJ, Wilson and Dawson JJ, 554-562 per Brennan and Toohey JJ; Blackstone, Commentaries on the Laws of England, (1768), Bk III at 68, 103-106. Kirby in Australia might constitute a residual prerogative power outside s 51 of the Constitution and, as such, one which, of its nature, is not subject to Ch III189. There are many insurmountable difficulties with such an hypothesis. From medieval times, military law has been expressed in statutes and ordinances of war190. Necessarily, such provisions have regulated and replaced the Royal prerogative. In any case, for Australia, the Constitution itself regulates and replaces the Royal prerogative. It affords a new and sufficient national source for the governmental powers of the Commonwealth. Such powers are now ultimately derived from the people of the Commonwealth. In certain specific respects, the prerogative powers of the Crown are preserved by the Constitution191. However, within the context of the constitutional arrangements expressed in Ch I, including s 51, this is done subject to Ch III of the Constitution. There is no lacuna. In any event, the service tribunals in question in this application are, and are only, those established by the express terms of the Act. They are not created under any prerogative power. Because expressed legislatively, they must find their source in a grant of federal legislative power. As such, they are subject to whatever Ch III and ss 51 and 71 require. Parliamentary and Territory trials: The defendants pointed to instances where, it was suggested, exceptions to the separation of powers doctrine expressed in s 71 had been recognised by this Court. When examined, however, these "exceptions" do not withstand close scrutiny. One supposed exception concerned the trial and punishment of persons for breach of the privileges of the Houses of Parliament192. There are several answers to this supposed exception. In its decision concerning imprisonment by order of the House of Representatives, this Court denied, in terms, that it was offending the separation of powers doctrine, which it 189 See Mitchell and Voon, "Defence of the Indefensible? Reassessing the Constitutional Validity of Military Service Tribunals in Australia", (1999) 27 Federal Law Review 499 at 509. 190 See generally, Squibb, The High Court of Chivalry, (1959); Clode, The Military Forces of the Crown, (1869). 191 See eg the Constitution, ss 58, 59, 60 and 74. 192 R v Richards; Ex parte Fitzpatrick and Browne (1955) 92 CLR 157. Kirby did not question193. The decision was reached before the reinforcement of that doctrine in the Boilermakers' Case, decided in the following year. The supposed exception was based on s 49 of the Constitution and the unequivocal preservation there of the ancient powers, privileges and immunities of the Houses of the Parliament. Such an express constitutional source has no equivalent in respect of service tribunals. In any case, the Court's decision upholding the parliamentary power to try and punish persons for contempt (including by imprisonment) has been questioned and doubted194. In my view, it does not represent a persuasive exception. It is not analogous to the case in hand. Similarly, the invocation of the supposed exception of Territory courts, created under s 122 of the Constitution, is unpersuasive195. Although authority in this Court lends support for the conclusion that such Territory courts do not exercise the "judicial power of the Commonwealth" (and are therefore not subject to the requirements of Ch III196), I will never accept that the Territories are constitutionally disjoined from the Commonwealth, and specifically from the integrated Judicature of the nation for which Ch III provides. The earlier holdings to that effect were influenced by pragmatic concerns about life appointments of judges in the Territories (when that was the federal rule) and over jury trials for native inhabitants of the then Territories of Papua and New Guinea. Such concerns have no modern relevance. The ultimate source of the legislative power in the Territories remains the Constitution of the Commonwealth. It is from that source that the legislative powers in the self-governing Territories derive to establish courts for such Territories197. They are therefore federal 193 (1955) 92 CLR 157 at 167. 194 Discussed in Evans, "Fitzpatrick and Browne: Imprisonment by a House of Parliament", in Lee and Winterton (eds), Australian Constitutional Landmarks, (2003) 145 at 156. See also Egan v Willis (1998) 195 CLR 424 at 494 [136] and McHugh, "Does Chapter III of the Constitution Protect Substantive as Well as Procedural Rights?", (2001) 3 Constitutional Law and Policy Review 57 at 62. 195 cf Boilermakers' Case (1957) 95 CLR 529 at 545; [1957] AC 288 at 320. 196 R v Bernasconi (1915) 19 CLR 629 at 635; Porter v The King; Ex parte Yee (1926) 37 CLR 432 at 440-442, 446, 447-449; Capital TV and Appliances Pty Ltd v Falconer (1971) 125 CLR 591 at 598, 624-625. 197 cf Ruhani (2005) 222 CLR 489 at 550 [194]. Kirby courts. The stream cannot rise higher than the source. Nor can it deny its origins. On analysis, the supposed exceptions collapse198. Imperial statutes: Another suggested source for placing service tribunals outside Ch III might be found in a view that they derive their jurisdiction and powers directly from Imperial legislation. On this theory, being co- equal with the Commonwealth of Australia Constitution Act 1900 (Imp) and specific to the subject of discipline of the forces of the Crown, it would suffice if they were in accord with the specific Imperial law, although apparently in breach of the separation of powers doctrine contained in the Constitution, also initially established by the Imperial Act of 1900. One can see reflections of this thinking in R v Bevan; Ex parte Elias and Gordon199. Bevan was a case, decided in 1942, where three members of this Court200 held that legislation providing for the trial by court martial of two members of the Royal Australian Navy for murder was a valid exercise of the defence power. However, a reading of the reasons demonstrates the great weight given by the Court to the fact that Australian naval personnel had been transferred unconditionally, in time of war, to the King's naval forces and "placed at the disposal of the [British] Admiralty" within the Naval Discipline (Dominion Naval Forces) Act 1911 (Imp)201. This, it was held, applied the Naval Discipline Act 1866 (Imp) to such personnel without any modifications or adaptations made by Australian federal law. This was so, although the Defence Act 1903 (Cth), s 98 had provided that no member of the Defence Force of the Commonwealth could be sentenced to death by any court martial (except for certain offences which did not include murder)202. The record in Bevan suggests that the prisoners, who were sentenced to death by an Australian court martial, did not raise the constitutional question as to the limits of the power of the Federal Parliament to legislate for courts martial203. The reasoning of the judges appears to have been 198 See Eastman (1999) 200 CLR 322 at 378-383 [144]-[154]. 199 (1942) 66 CLR 452. 200 Starke J, McTiernan J and Williams J. 202 (1942) 66 CLR 452 at 477. 203 (1942) 66 CLR 452 at 482, 487. Kirby influenced by the exigencies of war and more particularly the operation of the Imperial statutes mentioned204. However that may be, the disparate analysis in Bevan has no relevance to the present proceedings. As noted in the joint reasons205, significant elements of Imperial law continued to apply in the system of law operating in Bevan. Here, there is no applicable, or even surrogate, Imperial law. The only relevant law is the Act. It is unquestionably an Act of the Parliament of the Commonwealth. As such, it must conform to all applicable requirements in Ch III of the Constitution. Specifically it must comply with ss 71 and 80. To the extent that Bevan, or the later decision in R v Cox; Ex parte Smith206, are said to bear on the plaintiff's challenge, they have, in my view, little, if any, persuasive force. If they are inconsistent with my conclusion, I would overrule them. (4) Military necessities: The foregoing conclusions bring me to the last, and only persuasive textual foundation for an exception authorising service tribunals outside the courts required by Ch III. This is the argument that, inherent in the grant of legislative power in s 51(vi) of the Constitution, is a necessary and obvious implied exception from the requirement to have all instances of military offences decided by courts conforming to the requirements of Ch III. Accepting that there is some (but limited) force in this submission, I am led to a conclusion that the plaintiff's alternative argument in the proceedings should be accepted. I must explain why. Accepting a limited exception for service tribunals Implications and assumptions: The grants of legislative power in s 51 of the Constitution, and all of them, are subject to the requirements of the Constitution stated elsewhere, relevantly to provisions in Ch III. The letter of the Constitution therefore appears to be contrary to an "exception" of any kind or degree. Certainly, there is no explicit mention in the Constitution of service tribunals, whether of courts martial or Defence Force magistrates207. 204 (1942) 66 CLR 452 at 468. 205 Joint reasons at [55]. 206 (1945) 71 CLR 1. 207 As to discussion in the Convention Debates, see the reasons of Gleeson CJ at [7]- [8] and of Callinan J at [237]. Kirby In this respect, the Australian Constitution took a different direction from the Constitution of the United States of America that preceded it, or the Indian Constitution that followed (and in some particular respects copied) it. In the United States Constitution, the Fifth Amendment expressly states: "No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger …" This provision affords a textual foundation for some degree of military exceptionalism. The debates in the courts of the United States have concerned the scope of such exceptions from the ordinary requirements of the Constitution. The Fifth Amendment makes it clear that some such exception exists208. As was held in Solorio v United States209, the United States Congress may legislate for the exercise of jurisdiction by courts martial over offences committed by military personnel. The source of the power for such laws is Art I, §8, cl 14, the defence power of the United States Constitution which broadly corresponds to s 51(vi) of the Australian Constitution. However, it is the Fifth Amendment which has exempted such laws from the requirements of the separation of powers, which would otherwise render them invalid210. The exception has also encouraged the Supreme Court of the United States to attribute to the President as "Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States" certain exceptional powers of law-making211. It is an exception which the courts of this country have never recognised in the Governor-General, although, as the Queen's representative, he is vested with the command-in-chief of the naval and military forces of the Commonwealth212. In India, Pt III of the Constitution enshrines certain fundamental rights. Article 13 invalidates all laws if, and to the extent that, they are repugnant to the rights enumerated in Pt III. However, in two cases the Indian Parliament is expressly empowered to restrict or abridge such fundamental rights. One 208 Toth v Quarles 350 US 11 (1955); O'Callahan v Parker 395 US 258 at 265 (1969). See discussion in Re Aird (2004) 220 CLR 308 at 354-355 [147]-[152]. 210 483 US 435 (1987); cf reasons of Gleeson CJ at [9]. 211 As in Dynes v Hoover 61 US 65 at 79 (1857). 212 Constitution, s 68. Kirby concerns a restriction while martial law is in force in any area213. Article 33 empowers Parliament, by law, to "determine to what extent any of the rights conferred by this Part shall, in their application to", relevantly, "members of the Armed Forces; or … of the Forces charged with the maintenance of public order", be restricted or abrogated "so as to ensure the proper discharge of their duties and the maintenance of discipline among them". The latter provision has been held sufficient to sustain a court martial which otherwise violates a military petitioner's fundamental right under Art 14 of the Constitution. That Article otherwise guarantees "equality before the law or the equal protection of the laws within the territory of India"214. The important point is that there is no equivalent to these express constitutional provisions in Australia affording a foundation in the Constitution itself for establishing a court martial (or other service tribunal) outside the ordinary courts referred to in Ch III. Criteria of necessity and obviousness: To import an unexpressed exception involves a serious step. Deriving implications from, or finding unexpressed assumptions in, the Constitution has commonly been controversial and often contested. The people of the Commonwealth, who have the final say in any formal amendment of the Constitution, can see the express provisions and judge them for themselves. Implied or assumed provisions, declared by judges, are controversial because of the seriousness of any glossing of the Constitution and the infrequency of opportunities to contest the results. This is why a rigorous criterion is invariably applied to test any such implication215. Once declared, implications cannot be removed unless this Court changes its mind or, exceptionally, a formal amendment to the Constitution is adopted216. All of the foregoing are reasons for hesitation in finding, and expressing, an implied exception to the text and structure of the Australian Constitution to take service tribunals outside the requirements of Ch III. 213 Indian Constitution, Art 34. See also Arts 136(2) and 227(4) excluding the appellate and supervisory jurisdiction of the Supreme Court. Notwithstanding these provisions, the Supreme Court has held that such provisions do not exclude judicial review of courts martial. See Ranjit Thakur v Union of India AIR 1987 SC 2386; S N Mukherjee v Union of India AIR 1990 SC 1984. 214 Ram Sarup v Union of India AIR 1965 SC 247; cf Prithi Pal Singh v Union of India AIR 1982 SC 1413. 215 APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 352 [33], 409-411 [240]-[248], 452-454 [385]-[389]; cf Bennett v Commonwealth of Australia [2007] HCA 18 at [136]. 216 In accordance with the Constitution, s 128. Kirby Implication of military discipline: Notwithstanding the foregoing reasons for caution in acknowledging an implied exception for service tribunals (or upholding an imputed assumption that some such tribunals might be created and operate compatibly with Ch III of the Constitution), I accept that a limited role for such tribunals may co-exist with the text and structure of the Constitution. First, the grant of power by s 51(vi) of the Constitution, read in the manner proper to its purpose and against the history that preceded it, imports powers for individuals and institutions, as necessary, to ensure the proper functioning of naval and military forces. Such forces were obviously envisaged by the Constitution217. It is of the nature of naval and military (and now air) forces that they must be subject to elaborate requirements of discipline. This is essential both to ensure the effectiveness of such forces and to provide the proper protection for civilians from service personnel who bear, or have access to, arms. Secondly, in the case of discipline, properly so called, this Court has upheld the constitutional validity of charges laid by public service disciplinary tribunals against federal officials outside the courts. By inference, similar rather confined powers would be available in respect of the discipline of other officers of the Commonwealth who serve in the naval, military and air forces where the history of disciplinary provisions and institutions is longer and the need for its maintenance more acute. In R v White; Ex parte Byrnes218 an officer of the federal public service submitted that, in imposing on him a fine of £3 under s 55 of the Public Service Act 1922 (Cth), the Chief Officer of the Department concerned (the Department of the Army) was exercising judicial power in breach of the Constitution. He argued that, in upholding the decision of the Chief Officer to impose the fine, the members of the Appeal Board were also exercising federal judicial power, contrary to Ch III. This Court rejected those arguments219: "Section 55, in creating so-called 'offences' and providing for their 'punishment', does no more than define what is misconduct on the part of a the public servant warranting disciplinary action on behalf of Commonwealth and the disciplinary penalties that may be imposed or 217 See eg ss 51(vi), 68, 69, 114 and 119. 218 (1963) 109 CLR 665. The case appears to have turned on the fact that the disciplinary penalty was not "final and binding" and hence did not constitute a purported exercise of the judicial power at all. 219 (1963) 109 CLR 665 at 670. Kirby recommended for such misconduct; it does not create offences punishable as crimes." The distinction between "disciplinary penalties" and "offences punishable as crimes" may sometimes be difficult to draw. In the plaintiff's case, because her "offences" are, in substance, defined by way of surrogate provisions of a Territory Crimes Act, the distinction appears inapplicable. But for present purposes, it is sufficient to acknowledge that, with the legislative power granted to the Parliament by s 51(vi) of the Constitution, came a power to create disciplinary offences, tried and determined in service tribunals outside the ordinary courts. It is then essential to differentiate wrong-doing proper to "discipline" from "offences punishable as crimes". The former might be committed to service tribunals, established as necessity and obviousness require. Likewise, such tribunals might enjoy a power to maintain the status quo in respect of an accused for an essential, but limited, interval. But that would leave "offences", substantially of a criminal character, to be tried and punished in the ordinary courts with all of the protections that those courts afford. Thirdly, there are some features of the defence forces and their mission that, of necessity and obviously, import a need to deal quickly and effectively with challenges to discipline. It is of the nature of such forces that they will sometimes be required to operate in remote places within Australia and overseas. Sometimes, it would be inherent in the needs of discipline in such circumstances for a commanding officer to have effective powers of various kinds. These might loss of privileges, in rank, deprivation of seniority, include reduction administration of a reprimand, dismissal from the service, fines or short-term deprivation of liberty. The advent of fast air travel, including (perhaps especially) to and from theatres of war, armed conflict, peace-keeping and like operations, has changed the content of what is necessary and obvious for the effective achievement of service discipline today. Even in the case of Bevan in 1942, the court martial which sentenced the prisoners to death did not assemble on the high seas. It was constituted on the ship in port and, once convicted and sentenced, the prisoners were transferred in custody to the New South Wales State Penitentiary at Long Bay220. Today, the spectacle of courts martial hastily convened in the field of battle appears a creature of imagination or cinema rather than a procedure for which the Act provides. The determination of a charge, the constitution of a service tribunal and the prosecution of the charge under the Act necessarily take time. In that time, a service member, where appropriate in temporary custody, 220 (1942) 66 CLR 452 at 456. Kirby could be transferred to a Ch III court or, in really urgent cases, be made to face a hearing by sound or video link by such a court. This obviates today the necessities of drumhead military trials, whatever may have occurred in other, earlier times. Nevertheless, by necessary and obvious implication, the grant of legislative power to the Parliament by s 51(vi) imports a power to deal with disputed cases of discipline, properly so called, for which prompt, local, low-key procedures, with restricted penalties, would be apt. Such cases would not challenge the language of s 71, the scheme of Ch III, or the subjection of the grant of legislative power in s 51(vi) to that Chapter of the Constitution. The difficulty arises in a case, such as the present, where what is involved is undoubtedly a "punishment" for an "offence" that amounts to a "crime", which is defined in a criminal statute and carries, on conviction, the possibility of a significant liberty and, specifically, a penalty described as "imprisonment". loss of Fourthly, in defining the boundary of military discipline proper to a service tribunal outside the courts for which Ch III provides, and distinguishing "offences punishable as crimes", this Court has been divided. In Re Tracey221, Mason CJ, Wilson and Dawson JJ concluded that service tribunals could validly exercise "judicial power" provided the exercise was "sufficiently connected with the regulation of the forces and the good order and discipline of defence members". This view was maintained by Mason CJ and Dawson J in Re Nolan; Ex parte Young222 and Re Tyler; Ex parte Foley223. However, at least until Re Aird224, it was a view of the power of such tribunals that never gathered a majority of the Court. In each of Re Tracey, Re Nolan and Re Tyler, Brennan and Toohey JJ considered that proceedings before a service tribunal, in relation to a military offence, could only be brought and determined if the proceedings substantially served the purpose of maintaining or enforcing service discipline225. Their Honours posed the question "whether the jurisdiction of a competent civil court can conveniently and appropriately be invoked to hear and determine a 221 (1989) 166 CLR 518 at 545. 222 (1991) 172 CLR 460 at 474-475. 223 (1994) 181 CLR 18 at 26. 224 (2004) 220 CLR 308. 225 Re Tracey (1989) 166 CLR 518 at 570; Re Nolan (1991) 172 CLR 460 at 486; Re Tyler (1994) 181 CLR 18 at 30. Kirby corresponding civil court offence"226. By such a criterion in the present case, the plaintiff's "offences" would clearly fall outside the "disciplinary" category postulated by Brennan and Toohey JJ. In her reasons in these cases, Gaudron J suggested that the test for permissible "disciplinary" proceedings was whether, in the particular case, the exercise of the "disciplinary" power was "reasonably capable of being regarded as appropriate and adapted to the object which gives the law in question its character as a law with respect to the relevant head of power"227. The clearest exposition of the test, in my view, was that stated by Deane J in Re Tracey228. According to his Honour, the applicable criterion confined the powers of service tribunals to those subjects of military law that are necessary for the enforcement of military discipline229. According to this view, only an essentially disciplinary offence fell outside the Commonwealth, reserved to Ch III courts230. This would include "exclusively disciplinary" offences, and offences concerned with the disciplinary aspects of other "service-related" offences, but only where they did not "supplant the jurisdiction or function of the ordinary courts in relation to the general community aspects of conduct which also constitutes an offence under the ordinary criminal law"231. Deane J called this latter class of offences "essentially disciplinary" offences. judicial power of the In Re Nolan232, McHugh J agreed with Deane J's approach. In Re Tyler, McHugh J adhered to his expressed belief that that approach was constitutionally correct and that the reasoning of the majority was erroneous233. Nevertheless, for reasons of comity, or perceived authority, McHugh J surrendered his preferred 226 Re Tracey (1989) 166 CLR 518 at 570. 227 Re Tracey (1989) 166 CLR 518 at 597. See also Re Nolan (1991) 172 CLR 460 at 498; Re Tyler (1994) 181 CLR 18 at 35. 228 (1989) 166 CLR 518 at 579-590. 229 (1989) 166 CLR 518 at 587-590. 230 The same view was taken by Deane J in Re Nolan (1991) 172 CLR 460 at 490-493 and in Re Tyler (1994) 181 CLR 18 at 34. 231 Re Nolan (1991) 172 CLR 460 at 489-490 per Deane J. 232 (1991) 172 CLR 460 at 499. 233 (1994) 181 CLR 18 at 39. Kirby view in Re Tyler to that of the majority. This was the conclusion with which his Honour persisted in Re Aird. In my opinion, for the reasons given by McHugh J in Re Nolan (and Re Tyler), Deane J's approach is the constitutionally correct one234. Only Deane J recognised the special role which Ch III of the Constitution plays as a "general guarantee of due process"235. Only Deane J limited military exceptionalism to the essential needs of discipline in the military context, so far as consistent with the functions of the Defence Force and the availability, in most circumstances, of a civilian court. Only Deane J's test is consistent with the long-standing principle of British constitutional law subjecting the military to the civilian power and committing contested military cases to civil courts where such courts are geographically available and can perform their function without unacceptable delay or interference in the military function236. It follows that the only military exceptionalism permitted by the Constitution, consistent with the requirements of Ch III, is for exclusively or essentially disciplinary offences, as Deane J suggested. However, there is an additional limitation to which effect must also be given. The right to trial by jury: The plaintiff states that she wishes to exercise her "constitutional right" to trial by jury. Provision is made for an entitlement to jury trial in s 80 of the Constitution in respect of "any offence against any law of the Commonwealth". The section posits the availability of that mode of trial where the "offence", so defined, is tried "on indictment". Differences have arisen in this Court as to the meaning of the phrase "trial on indictment". In past cases, a majority of this Court has favoured the tautological237 view that s 80's guarantee of "trial by jury" is limited to cases in which the Parliament and the Executive provide for the commencement of prosecution by filing an 234 cf Re Aird (2004) 220 CLR 308 at 320-321 [34] per McHugh J. 235 Re Tracey (1989) 166 CLR 518 at 580; cf Mitchell and Voon, "Justice at the Sharp End – Improving Australia's Military Justice System", (2005) 28 University of New South Wales Law Journal 396 at 407. 236 Re Aird (2004) 220 CLR 308 at 352 [139]. One of the complaints that led to the American War of Independence was that George III had "affected to render the Military independent of and superior to the Civil Power": Declaration of Independence, 1776. 237 Blackshield and Williams, Australian Constitutional Law and Theory, 4th ed Kirby indictment238. However, a persistent minority has rejected this view as inconsistent with the function of s 80 as providing a guarantee of jury trial which could not so easily be circumvented239. With respect, I favour what is presently the minority view. It is more harmonious with the language, constitutional context, purpose and function of the section240. The contrary view renders trial by jury for the applicable federal offences optional in the hands of the very governmental agencies against whom jury trials can be a precious protection for the individual. That cannot be the meaning of the Constitution. When Australian judges and lawyers become more accustomed to reasoning by reference to fundamental rights, they will see the truth of this proposition more clearly. Ordinarily, a judge of this Court, having expressed his or her view about a contested matter of legal authority should accept a majority ruling on the point, where it was necessary to the disposition of a case241. In matters of private law, this is the course that I have observed242. Sometimes, in constitutional adjudication, it is also the proper course to adopt243. There are cases, however, where it is appropriate for a judge of this Court to adhere to an expressed view about the meaning of the Constitution244. As 238 Bernasconi (1915) 19 CLR 629 at 637 per Isaacs J; R v Archdall and Roskruge; Ex parte Carrigan and Brown (1928) 41 CLR 128 at 139-140 per Higgins J; Zarb v Kennedy (1968) 121 CLR 283 at 294 per Barwick CJ; Kingswell (1985) 159 CLR 264 at 276-277 per Gibbs CJ, Wilson and Dawson JJ; Re Colina (1999) 200 CLR 386 at 396 [24] per Gleeson CJ and Gummow J, 439 [136] per Callinan J. 239 R v Federal Court of Bankruptcy; Ex parte Lowenstein (1938) 59 CLR 556 at 581- 582 per Dixon and Evatt JJ; Li Chia Hsing v Rankin (1978) 141 CLR 182 at 198 per Murphy J (see also at 193 per Gibbs J); Kingswell (1985) 159 CLR 264 at 307 240 Re Colina (1999) 200 CLR 386 at 422-427 [95]-[104]. 241 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 417-418 [56]. 242 See eg Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 626 [238]. 243 Queensland v The Commonwealth ("the Second Territorial Senators Case") (1977) 139 CLR 585 at 598-601; Shaw v Minister for Immigration and Multicultural Affairs (2003) 218 CLR 28 at 59 [87], 67 [110]; Singh v The Commonwealth (2004) 222 CLR 322 at 417 [265]; Ruhani (2005) 222 CLR 489 at 551 [196]; Ruddock v Taylor (2005) 222 CLR 612 at 659-660 [173]. 244 Australian Agricultural Co v Federated Engine-Drivers and Firemen's Association of Australasia (1913) 17 CLR 261 at 278 per Isaacs J; Evda Nominees Pty Ltd v (Footnote continues on next page) Kirby Barwick CJ remarked in Victoria v The Commonwealth245, "we are not construing judgments. Our task is to construe the Constitution which is always the text." The present is such an occasion. It involves the first direct challenge to the constitutional validity of the system of service tribunals established by the present Act. That system is in some respects different from that existing under earlier federal (and Imperial) statutes. Relevant to the challenge is the meaning and application of Ch III of the Constitution. That Chapter includes s 80. It is an integral part of the constitutional scheme. The terms of s 80 cannot, therefore, be ignored. It is important that that section should be given its proper meaning when resolving the plaintiff's challenge. I have previously expressed my view that the correct meaning of s 80 is that stated by Deane J in Kingswell v The Queen246. In referring to the entitlement to trial by jury of federal offences prosecuted on indictment, the Constitution meant to distinguish "a serious offence against the laws of the Commonwealth"247. To sharpen this expression, Deane J concluded, in Kingswell248, that the section applied where the federal offence in question carried a term of imprisonment of more than twelve months. This is the view that I would endorse. It should be given effect in the present context. Conclusion: provisions are invalid: The result is as follows. Because of the necessities of military discipline, strictly so called, the legislative power conferred on the Parliament by s 51(vi) of the Constitution (and other relevant powers including the express incidental power) carries with it the power, by federal law, to establish service tribunals for service discipline. However, their jurisdiction is limited to service discipline as such. That limited function is exceeded where the Parliament purports to confer on them jurisdiction and power to try and punish what are in substance contested criminal offences. Specifically, the power of such tribunals is limited by the requirement in s 80 of the Constitution that any offence against a law of the Commonwealth which carries on conviction a term of imprisonment of more than twelve months shall be, where the accused so requires, tried by jury. Victoria (1984) 154 CLR 311 at 316 per Deane J; Stevens v Head (1993) 176 CLR 433 at 461-462 per Deane J, 464 per Gaudron J. 245 (1971) 122 CLR 353 at 378. 246 (1985) 159 CLR 264 at 318-319; Re Colina (1999) 200 CLR 386 at 422 [95]. 247 The view of Dixon and Evatt JJ in Lowenstein (1938) 59 CLR 556 at 581-582. See also Murphy J in Beckwith v The Queen (1976) 135 CLR 569 at 585; Li Chia Hsing (1978) 141 CLR 182 at 198. 248 (1985) 159 CLR 264 at 318-319. Kirby The Act does not conform to the foregoing constitutional requirements. Whilst provision is made in the Act for service tribunals to hear and determine trials, and to punish defence members upon conviction of conduct which might be described as exclusively or essentially disciplinary in character and carrying penalties of imprisonment for less than twelve months249 (or a commensurate fine250), the Act has not been drafted to comply with the stated constitutional discrimen. It makes no provision for trial of serious service offences before a Ch III court. Nor does it include the procedure of indictment in those offences carrying a constitutional right to jury trial. Moreover, by importing the whole gamut of criminal offences based on Territory offences251, but without the requisite procedural limitations and protections, the Act makes clear what is in any case obvious. It was intended to adopt a scheme for the separate trial and punishment of service members before service tribunals that are not Ch III courts for what are, in terms and substance, criminal offences carrying maximum penalties rising in some cases to life imprisonment. In my opinion, the Constitution forbids such trials in service tribunals which are not courts conforming to Ch III and which do not allow for jury trial in accordance with s 80 of the Constitution, in those cases where that section must be observed. Severance is unavailing: In the case of the offences with which the plaintiff has been charged, only one (charge 4252) is for an offence which, under the Act, carries a maximum punishment of imprisonment for less than 12 months. However, this offence could not, in my view, be severed from the six other charges laid against the plaintiff. The conditions for severance are not established. The attempt to sever the provision would involve this Court in substantially rewriting the Act: an impermissible judicial function253. In the result, therefore, the provisions of the Act, invoked to support the charges against the plaintiff, are constitutionally invalid. The plaintiff is entitled to relief. However, before proposing such relief, I will mention some of the 249 See eg the Act, ss 35, 36A, 36B, 37, 40C, 43(3), 45, 46, 53(4), 54A, 56(4), 57. 250 The Act, ss 40D, 59(6) and (7). 251 The Act, s 61. 252 Based on the Act, s 33(a). 253 See New South Wales v Commonwealth (2006) 81 ALJR 34 at 165-166 [595]- [604], 252 [911]-[912]; 231 ALR 1 at 160-162, 274-275 where the relevant principles on severance are stated. Kirby issues raised in the joint reasons. In my view, they do not sustain a conclusion adverse to the plaintiff. Rejecting the arguments against relief Past authority of the Court: The joint reasons reject the plaintiff's challenge on the basis that the system of service tribunals, outside Ch III courts, constitutes an exception to the requirements for the exercise of the judicial power recognised by such "long-standing decisions" as Bevan and Cox254. It is true that Bevan, for the somewhat unsatisfactory and disparate reasons that I have described, upheld the validity of the court martial that sentenced the accused defence members to death, contrary to the express provisions of Australian federal legislation. However, Bevan can best be understood as giving effect to superior Imperial legislation that was treated as standing outside the requirements of the Constitution, then also viewed as an Imperial statute. This is not the view now taken of the Constitution. Cox followed Bevan. But, in Cox255, Dixon J did not accept the reasoning in Bevan. He stated that the "exception" recognised there "is not real". He acknowledged the possible over-reach of courts martial256. Yet he declined to elaborate. With respect, the reasoning in these cases is far from sustained or persuasive. In any event, the decisions refer to earlier legislation. The present is the first direct challenge to the validity of the service tribunals under the Act. It is fair to say that several recent decisions of this Court, addressing the present Act, assume the validity of the service tribunals created there257. However, not until these proceedings has the Court faced a specific challenge to the validity of the entire legislative scheme. Moreover, the challenge is presented, divorced from any operation of Imperial law or the exigencies of war. It arises after a great deal of elaboration by the Court, including in the Boilermakers' Case of 1956, on the importance and function of the separation of the judicial power in Ch III of the Constitution as an institutional means essential to securing the effectiveness of the rule of law in Australia258. 254 Joint reasons at [57]. 255 (1945) 71 CLR 1 at 23. 256 (1945) 71 CLR 1 at 24. 257 Including Re Tracey (1989) 166 CLR 518; Re Nolan (1991) 172 CLR 460; Re Tyler (1994) 181 CLR 18; Hembury (1998) 193 CLR 641 at 694 and Re Aird (2004) 220 CLR 308. 258 Itself expressed in the Communist Party Case (1951) 83 CLR 1 at 193. Kirby Against this background, when, as here, a direct challenge is brought, this Court should give fresh scrutiny to it. If that was good enough for the Court (and for the Privy Council) in the Boilermakers' Case, it should be sufficient for us, even if the ultimate conclusion were to go against the plaintiff. The issues presented are serious. They challenge the consistency of the Court's doctrine about Ch III in the context of service tribunals. Such a challenge is not met by an appeal to the unsatisfactory wartime decisions of Bevan and Cox. The terms of the Act, and in particular s 61 of the Act, under which the plaintiff faces six charges, introduce in the clearest possible way provisions for a parallel system of trial of offences, eo nomine, outside the courts involving the trial of Australian citizens who happen to be defence members. It envisages their "punishment", including by very lengthy "imprisonment", without most of the protections that would be afforded to them in the courts, including a right to trial by jury. This is an important issue. It has been recognised as such by scholars259 and by public inquiries, including in the Parliament itself260. When an appeal is made to the text and structure of the Constitution, this Court is bound to explain how an apparent anomaly can be sustained and an "exception" reconciled with the constitutional text and its design. This is not a case where there is clear, long-standing authority supporting the validity of the service tribunals under the present Act. Appeals to wartime authority, clearly influenced by events and Imperial statutes, will not quell the controversy presented by the plaintiff arising from the text. Imperial and other history: Nor, with respect, is it convincing to say, as the joint reasons suggest, that the exception for service tribunals, and its ambit, can be understood against the background of the history of courts martial in British constitutional law261. 259 Kronenburg, Lie and Wong, "Civil Jurisdiction in the Military Courts: An Unnecessary Overlap?", (1993) 14 Singapore Law Review 320; Griffith, "Justice and the Army", (1947) 10 Modern Law Review 292 at 297-298; Heard, "Military Law and the Charter of Rights", (1988) 11 Dalhousie Law Journal 514; Note, "Military Justice and Article III", (1990) 103 Harvard Law Review 1909. 260 Australia, Senate, Foreign Affairs, Defence and Trade References Committee, The effectiveness of Australia's military justice system, (June 2005) at 101-102 [5.92]- [5.96]. See also earlier Australian Parliament, Defence Force Disciplinary Code: Report of the 1973 Working Party, Parliamentary Paper No 48, (1974). 261 Joint reasons at [36]-[37], [51]-[52]. Kirby There are many features of English law that are copied by, or implied or assumed within, the Constitution of the Commonwealth. There are others that have no place in the system of government established by the Australian Constitution. Thus, the notion of positioning a court within the Parliament, say as a Committee of the Senate (such as the judicial sitting of the House of Lords) or within the federal Executive (such as a local equivalent of the Judicial Committee of the Privy Council) is totally alien to Australian constitutional arrangements as expressed in the language and structure of the Constitution. In this sense, the Constitution represented a new beginning for a new nation. Subject to any applicable express provisions262, the separation of the federal judicial power, and the reservation of its exercise to Ch III courts, was a requirement intended to be observed. Moreover, it is a requirement the importance of which extends far beyond formalities. In the case of service tribunals, it keeps military exceptionalism to a minimum. To that extent, it actually preserves an important general feature of our constitutional arrangements, inherited from the United Kingdom263. It protects fundamental rights, now recognised by civilised nations and international law and, for much longer, inherent in our own legal system. It prevents any attempts of the other branches of government to expand the exceptions. When pressed, the defendants would not disclaim the possibility of relying on a precedent, established by this case, to attempt to expand such exceptions to other disciplined agencies (police, firemen, counter-terrorism and security agencies spring to mind)264. Confining the "exceptions" discourages the creation of new federal "courts" outside the integrated Judicature of the Commonwealth for which Ch III provides. The fact that courts martial have existed for centuries and were in place before and after the Constitution came into effect, is a reason to pause before requiring their elimination, or the restriction of their jurisdiction and powers, by reference to Ch III of the Constitution. But so it was when the challenge was brought in 1956 to the Commonwealth Court of Conciliation and Arbitration. It had then existed since 1904265. So it was in 1997 when the use of a serving 262 eg the Constitution, s 74. 263 Re Aird (2004) 220 CLR 308 at 352 [139]. 264 [2006] HCATrans 026 at 3260; cf Head, "Calling Out the Troops – Disturbing Trends and Unanswered Questions", (2005) 28 University of New South Wales Law Journal 479 at 487; Laing, "Call-Out the Guards – Why Australia Should No Longer Fear the Deployment of Australian Troops on Home Soil", (2005) 28 University of New South Wales Law Journal 507. 265 Conciliation and Arbitration Act 1904 (Cth), s 11. Kirby Federal Court judge as persona designata to conduct an inquiry for the Executive was forbidden by this Court266, despite a history of such use stretching back to the early days of the Commonwealth and, before that, to colonial times267. If anything, the Court's holdings on Ch III have become stricter in recent years268. This is not an occasion for changing course. To the extent that an appeal is made to the "chameleon" doctrine, by which a particular power may take its character from the body to which the power is committed269, this does not avail the defendants. The trial of criminal "offences" and the imposition of "penalties" and "punishments", extending to substantial imprisonment, remain inherently "judicial" in character. The Commonwealth conceded as much in argument during the recent case of Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board270. They do not lose that character simply by being reposed in a service tribunal. The least persuasive and most dangerous argument of all, in my respectful opinion, is the suggestion that there is a peculiar variety of "judicial power" under the Commonwealth"271. This was the way Starke J reasoned in Bevan272. I have already explained why such reasoning should be rejected273. judicial power of legislation which is not "the federal In Bevan274, Starke J referred to United States jurisprudence275. A similar approach is reflected in the joint reasons276. However, with all respect, it 266 Wilson (1996) 189 CLR 1. 267 (1996) 189 CLR 1 at 32-34. These included an inquiry into the Great War conducted in 1918 for the Executive by Griffith CJ: see Joyce, Samuel Walker Griffith, (1984) at 354. 268 eg in Kable (1996) 189 CLR 51; Wilson (1996) 189 CLR 1; Re Wakim (1999) 198 CLR 511. 269 Joint reasons at [48]. 270 [2007] HCA 23 at [94]. 271 Joint reasons at [50]. 272 (1942) 66 CLR 452 at 466. 273 See above these reasons at [177]. 274 (1942) 66 CLR 452 at 467. 275 Dynes 61 US 65 (1857). Kirby overlooks the express exception in the Fifth Amendment to the United States Constitution for "cases arising in the land or naval forces, or in the Militia". As well, it overlooks the law-making power attributed to the President of the United States as "Commander in Chief", a view that has never been accepted of the Governor-General of Australia277. And if such a view were now belatedly accepted in Australia, the powers would, in any case, be subject to Ch III of the Constitution because Ch II, like Ch I, is subject to the separated judicial power in Ch III. Emergence of a regulatory state: In so far as the joint reasons suggest that an exception for service tribunals must be accepted because inherent in the "modern regulatory state [which] arrived after 1900"278, I beg to differ. Certainly, the Constitution, as a functional instrument of government of a modern nation, adapts to the needs and circumstances of changing times. Although others have been ambivalent about this, I have been consistent in accepting a functional, rather than an originalist, interpretation of the Constitution and its meaning. I have acknowledged the fact that constitutional language may take on different meanings over time so as to fulfil functions enlivened by changed social conditions279. Nevertheless, when it comes to a feature of the Constitution that is fundamental, defensive of the rule of law and protective of the rights of persons to have serious controversies about life, liberty and property settled conclusively by independent and impartial courts, this Court must be vigilant to uphold the constitutional provisions. It is not convincing to sideline such arguments by a reference to generalities about the "modern regulatory state". Executive government, in particular, will constantly complain about the subjection of its decisions to judicial scrutiny and disallowance. The constitutional writs are an important protection280. However, under current doctrine, for the most part, they are confined in the remedies that they provide to cases of "jurisdictional error". The 276 Joint reasons at [50]-[52]. 277 Coutts v The Commonwealth (1985) 157 CLR 91 at 109 per Deane J; cf White, "The Executive and the Military", (2005) 28 University of New South Wales Law Journal 438 at 442-444. 278 Joint reasons at [48]. 279 See eg Grain Pool of Western Australia v Commonwealth (2000) 202 CLR 479 at 280 Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 513-514 [103]-[104]. Kirby facility of access to the courts for the resolution of controversies under federal law is a much larger and more valuable protection. No necessity of the modern state removes this protection altogether. Certainly it does not do so in cases involving the determination of "offences", criminal in character, subject to significant "penalty" and "punishment", including in a case such as the present a lengthy loss of liberty. If this Court allows such questions to be decided outside Ch III courts because of the supposed necessities of the "modern regulatory state", there will remain virtually nothing that must, by Australian constitutional law, be dealt with by Ch III courts. This country will accept military commissions and military "courts"281. In my opinion, the Australian Constitution holds too precious the determination of controversies over life, liberty and property to permit such a conclusion. That is why the objection raised by the present plaintiff is a very important one. To dismiss it on the basis of a supposed exception applicable to service tribunals requires, at the very least, a justification by those of that view of the exception that will not undermine the function that Ch III is intended to perform in this and other cases282. Abstract reasoning objection: Is the conclusion that I favour to be dismissed as "abstract reasoning alone" inapposite to the Constitution as a practical instrument of government283? The joint reasons answer the plaintiff's submissions by rejecting her argument in such terms284. They refer to how "the judicial power of the Commonwealth", as an expression, "must have been universally understood in 1900"285. Understandings of constitutional expressions in 1900 do not control the attribution of meaning to them today. If it had been otherwise, decisions such as Sue v Hill286 and Shaw v Minister for Immigration and Multicultural Affairs287, 281 cf Hamdan v Rumsfeld 165 L Ed 2d 723 (2006). See also Military Commissions Act of 2006 (US), §2, and 10 USC Ch 47A, §948i, §948j, §949d, §949m(a), §950f, §950g, inserted by that Act. 282 cf Albarran [2007] HCA 23 at [58]-[67]. 283 cf R v Davison (1954) 90 CLR 353 at 380-381. 284 Joint reasons at [58]. 285 Joint reasons at [58]; cf Ruhani (2005) 222 CLR 489 at 553 [205]. 286 (1999) 199 CLR 462. 287 (2003) 218 CLR 28. Kirby and many others, would have been differently resolved. Common assumptions about the meaning, and content, of the federal judicial power in 1900 must be measured against the elucidation of the provisions of the Constitution and their purposes over more than a hundred years. This incorporates reference to the growing elaboration by the Court of the importance to the operation in the Constitution of the separation of the judicial power and of the requirement that certain exercises of governmental power, under federal legislation, are reserved to Ch III courts. There is nothing at all "abstract" about depriving an individual of liberty in a tribunal that is not constituted so as to be manifestly impartial and independent. There is nothing "abstract" in subjecting a defence member, exceptionally, to a different kind of prosecution, trial and punishment from that which would apply to any other Australian citizen in the same circumstances. Nor is it "abstract" to deny a defence member the protection of jury trial for the determination of charges for serious offences carrying, upon conviction, penalties of imprisonment. Characterisation and bright lines: The reasons of Gleeson CJ and the joint reasons finally object that the adoption of a criterion that would confine the constitutional exception for military discipline, permissible for trial in service tribunals, to offences that are "exclusively disciplinary in character" is unsatisfactory and therefore, by inference, outside the constitutional scheme288. In constitutional adjudication, difficult cases inevitably arise, as the joint reasons themselves acknowledge289. The desire for a "bright line" is understandable; but such clarity is often elusive. As Hayne J pointed out in Re Refugee Review Tribunal; Ex parte Aala290, this does not necessarily undermine a propounded taxonomy. One of the functions of courts in constitutional cases is to draw lines and to decide on which side of the line, so drawn, the case falls. Even before this litigation, it has long been recognised in the Defence Force that difficult questions must sometimes be answered in deciding whether a particular offence should proceed in the general courts or before a service tribunal (or both). Criteria have been developed to permit that to happen291. It is 288 Reasons of Gleeson CJ at [19]-[21]; joint reasons at [73]-[75]. 289 Joint reasons at [76]. 290 (2000) 204 CLR 82 at 141 [163]. 291 See eg amendments made to the Defence Instructions (General) on 17 February 1999, List B – Issue No PERS B/5/99. Kirby not a complaint against the correctness of the plaintiff's submissions that they would require re-expression of those criteria and, consequently, different outcomes. When effect is given to the operation of s 80 of the Constitution, as part of the scheme of Ch III of the Constitution, the delineation between the proper functions of service tribunals and those of the general courts is comparatively clear. The former might deal with contested issues that are "exclusively disciplinary" or "essentially disciplinary" in character but which attract, on conviction, a maximum punishment of less than twelve months imprisonment. Anything else must be prosecuted in a court of the integrated Judicature for which Ch III provides292. Of course, provisions for the arrest, detention and transmission of an accused service member to the courts, as soon as practicable, would be within power. But subjecting service members to the risk of imprisonment (as in the plaintiff's case, a potential aggregate maximum of thirty years imprisonment) is inconsistent with the constitutional scheme. In recent decades, many countries have abolished their separate military justice system, at least outside times of war or national emergency293. According to commentaries, Sweden has "had no serious difficulty in returning servicemen accused of crimes to Sweden for trial in a civilian court."294 Where a constitutional imperative intervenes, as in my view it does here, sensible practical arrangements are invariably devised without delay295. 292 cf Mitchell and Voon, "Justice at the Sharp End – Improving Australia's Military Justice System", (2005) 28 University of New South Wales Law Journal 396 at 418. 293 Sweden, Germany, Austria and Denmark have abolished their courts martial systems. See Kilimnik, "Germany's Army after Reunification: The Merging of the Nationale Volksarmee Into the Bundeswehr, 1990-1994", (1994) 145 Military Law Review 113 at 131-133; Lindeblad, "Swedish Military Jurisdiction", (1963) 19 Military Law Review 123 at 126; cf Sherman, "Military Justice Without Military Control", (1973) 82 Yale Law Journal 1398 at 1398, 1411-1415. 294 Sherman, "Military Justice Without Military Control", (1973) 82 Yale Law Journal 295 Such as immediately followed the decisions in British Imperial Oil Co Ltd v Federal Commissioner of Taxation (1925) 35 CLR 422, the Boilermakers' Case in 1956, and Re Wakim (1999) 198 CLR 511 (see eg Hughes (2000) 202 CLR 535); cf Groves, "The Civilianisation of Australian Military Law", (2005) 28 University of New South Wales Law Journal 364 at 375 citing R v Pinney (1832) 5 Car & P Kirby Conclusion: constitutional invalidity: The result is that none of the arguments that have found favour in the joint reasons persuades me to withhold the remedies to which, by the application of the Constitution's text and structure, the plaintiff is entitled. The time has come for this Court to limit the "exception" for military justice to "offences" that are exclusively or essentially disciplinary in character and which carry a punishment of less than one year's imprisonment. All other "offences" presently included in the Act must, by the Constitution, be tried in the ordinary courts as envisaged by Ch III. Measured by these criteria, the sections of the Act providing for the trial of the plaintiff in service tribunals are invalid. It is impossible to sever the provisions that are incompatible with Ch III from those that are not. The plaintiff has established her constitutional right to relief, based on these conclusions. Orders The following orders should be made: (1) Declare that a trial of the charges identified in the summons against the plaintiff, under the Defence Force Discipline Act 1982 (Cth), is invalid in accordance with the Constitution of the Commonwealth; (2) Order that prohibition issue to the Director of Military Prosecutions restraining the Director from requesting the Registrar of Military Justice to refer the charges against the plaintiff to a Defence Force magistrate for trial or to request the Registrar of Military Justice to convene a general court martial or a restricted court martial to try the charges; and (3) Order that the Commonwealth pay the plaintiff's costs of the application. Callinan CALLINAN J. The issues in this case are whether there is a federal military judicial power exercisable otherwise than by courts constituted under Ch III of the Constitution and, if there is, the nature and extent of that power. The facts The plaintiff is a Chief Petty Officer in the Royal Australian Navy. She was charged on 30 June 2006 by the Acting Director of Military Prosecutions under the Defence Force Discipline Act 1982 (Cth) ("the Act") with seven offences: the commission of acts of indecency without consent and, in the alternative, assault, against five women, all of whom were sailors. The offences were alleged to have been committed in Victoria when neither the plaintiff nor the servicewomen were on duty or in uniform. The plaintiff expressly disavowed reliance upon any insufficiency of connexion between the acts alleged and the service as a member of the Navy296. Section 61(3) of the Act, under which six of the charges were laid, applies s 60 of the Crimes Act 1900 (ACT)297: "A person who is a defence member or a defence civilian is guilty of an offence if: the person engages in conduct outside the Jervis Bay Territory (whether or not in a public place); and engaging in that conduct would be a Territory offence, if it took place in the Jervis Bay Territory (whether or not in a public place)." Section 60 of the Crimes Act 1900 (ACT) prohibits an act of indecency without consent. It carries a maximum penalty of five years imprisonment. The other charge, an alternative to one of the charges under s 60, was laid under s 33(a) of the Act. It provides that a member of the defence forces, or a 296 See Re Aird; Ex parte Alpert (2004) 220 CLR 308 at 359 [163] per Callinan and 297 The Jervis Bay Territory is a part of the Australian Capital Territory ("the ACT"), having been annexed in 1915 to provide the ACT with access to the sea. The agreement for the land to be ceded by New South Wales to the Commonwealth to incorporate it into the ACT was ratified by the Seat of Government Surrender Act 1915 (NSW) and the Jervis Bay Territory Acceptance Act 1915 (Cth). Section 4A of the latter provides that the laws of the Australian Capital Territory apply in the Callinan defence civilian (a defined term), who assaults another person on service land, in a service ship, aircraft or vehicle, or in a public place is guilty of an offence carrying a maximum penalty of six months imprisonment. The action in this Court has interrupted the prosecution of the charges which otherwise would be proceeding in accordance with ss 87 and 103 of the Act. Because the charges under s 61(3) are "prescribed offences", they may only be tried by court martial or a Defence Force magistrate. The plaintiff seeks an order prohibiting the first defendant from requesting the Registrar of Military Justice to refer the charges to a Defence Force magistrate, restricted court martial or general court martial for trial. She seeks, further, declarations that she may only be tried by a federal court exercising the federal judicial power under Ch III of the Constitution and that s 103 of the Act, and those provisions purporting to vest jurisdiction in a Defence Force magistrate or a court martial, are invalid. The plaintiff's arguments It is relevant to note that there was no issue raised as to the amenability of military tribunals to prerogative or other judicial supervision under Ch III of the Constitution, or the possibility of the establishment of special courts under Ch III of the Constitution to try members of the Australian Defence Force ("the ADF"). The plaintiff's argument has these as its components. There are some limited types of military discipline that can be imposed without invoking or trespassing upon the judicial power of the Commonwealth: military discipline is divisible. If the discipline goes beyond what she would describe as the "purely disciplinary" or an administrative check, which the plaintiff was reluctant to describe as punishments, for example reduction in rank, docking of pay, confinement to barracks for minor instances of misbehaviour, or other lesser infractions, then only federal courts may deal with them. An exclusively disciplinary offence is one, the plaintiff submits, that has no equivalent in the non-military law, does not involve exposure to imprisonment and is ancillary to, or serves some, disciplinary end. The alleged crimes are creatures of Commonwealth law. As such they may only be dealt with by federal courts. The defence power under s 51(vi) of the Constitution, as with all other powers exercisable under s 51, is subject to all of the other relevant provisions of the Constitution. The Act purports to vest service tribunals with the jurisdiction to make binding decisions as to the plaintiff's guilt and to resolve controversies between parties with respect to their rights and obligations arising under a law of the Commonwealth: it purports therefore to vest service tribunals with the judicial power of the Commonwealth. Callinan The tribunals constituted under the Act undoubtedly exercise a form of judicial power. That judicial power, the plaintiff submits, can only be a form of federal judicial power and one that accordingly cannot be exercised by a court martial or any other tribunal that the Act seeks to establish. The text of s 51 and Ch III cannot be circumvented by characterizing the exercise of judicial power by service tribunals as a "recognized exception". Either the Constitution permits departure from Ch III or it does not. Save possibly for Parliament's power to punish for contempt (depending upon its correct characterization), there are no true exceptions to the vesting of the judicial power of the Commonwealth exclusively in Ch III courts. In Chu Kheng Lim v Minister for Immigration298 some "exceptions" were said to have been identified, namely: arrest and custody pursuant to warrant pending trial, detention because of mental illness or infectious disease and detention of aliens for the purposes of deportation and extradition. On examination, however, these do not constitute exceptions at all. Properly understood, none of them involve the exercise of the actual judicial power of the Commonwealth as is the case here: judicial power that involves the making of binding decisions to resolve controversies arising under the Constitution or a law of the Commonwealth. The plaintiff, in support of this last submission, sought to rely on some passages in the judgment of Gummow and Hayne JJ in Vasiljkovic v Commonwealth299 in which their Honours said that detention for extradition purposes was valid even though there had not been prior adjudication of guilt by a domestic court, and the detention was not with a view to the conduct of such a trial by a domestic court300: detention of that kind pending determination or surrender, and its judicial processes, stands outside Ch III, rather than as an exception to its application. The position is different in the case of service tribunals. Their purpose is to adjudicate upon guilt and impose punishment. The plaintiff accepts that the cases in this Court upon which the defendants rely, beginning with Re Tracey; Ex parte Ryan301, do hold that there is a military judicial power standing outside Ch III but, she argues, these have no common ratio. Alternatively, and if necessary, she submits, they were wrongly 298 (1992) 176 CLR 1 at 28. 299 (2006) 80 ALJR 1399; 228 ALR 447. 300 (2006) 80 ALJR 1399 at 1422-1423 [116]; 228 ALR 447 at 476. 301 (1989) 166 CLR 518. Callinan decided and are irreconcilable with this Court's more recent jurisprudence concerning Ch III of the Constitution, particularly the apparent recognition in Vasiljkovic that there are not, in fact, any true exceptions to the vesting of federal judicial power in Ch III courts exclusively, except for Parliament which may punish for contempt. The arbitrary and harsh excesses of the English military discipline contemplated by the Naval Deserters Act 1847 (UK), the Naval Discipline Act 1866 (UK) and the Army Discipline and Regulation Act 1879 (UK) are not only currently unacceptable but are also inconsistent with the Australian Constitution. The plaintiff also refers to ss 75(iii) and 76(ii) of the Constitution. She submits that, because the Commonwealth is a party and the subject matter of the charges made against her falls within the Act, a law made under the Constitution, the charges must be tried by a Ch III court. The argument is that if the executive (here, the ADF) seeks to exercise power of a judicial kind, conferred by legislation made under the Constitution, that power can only be exercised by a federal court or, presumably, a State court vested with federal judicial power. Before dealing with the plaintiff's submissions it is necessary to consider the scope of the Act, the provisions of which have been summarized by the second defendant substantially as I set them out. The Act provides for a formal system for the maintenance of military discipline in the ADF. It applies to "defence members" (officers, soldiers, sailors and airmen, including Reservists on duty or in uniform) and "defence civilians" (persons accompanying the ADF outside Australia or on operations against an enemy anywhere, who have consented to be subject to the Act)302. It also applies to prisoners of war as if they were defence members303. Any of these can commit a "service offence", which is defined essentially as an offence against the Act or the Defence Force Discipline Regulations 1985 (Cth), or is an ancillary offence to such an offence304. Some service offences are peculiarly and historically of a military kind, such as absence without leave305 and insubordinate conduct306. Some offences do have equivalents in non-military law, including assault307, Callinan theft308 and dealing in, or possessing, narcotic goods309. Section 61 incorporates in the definition of a service offence any conduct that would be an offence in the Jervis Bay Territory310. As a general rule, service offences punishable by more than two years of imprisonment are "prescribed offences" and cannot be tried by service tribunals exercising summary jurisdiction311. Service tribunals may impose punishments ranging from imprisonment for life (general court martial) to a reprimand (all service tribunals)312. Sentences are imposed having regard to sentencing principles applied by civilian courts from time to time, as well, significantly, as to the need to maintain discipline in the ADF313. There are three categories of service tribunals: summary authorities, courts martial, and Defence Force magistrates (Pt VII). There are three types of summary authority: subordinate summary authority: an officer appointed by a commanding officer under s 105(2), who has jurisdiction to deal with (including try) a charge against a class of defence members and specified classes of offences but cannot try a prescribed offence (s 108). The subordinate summary authority is usually a Major in the Army or of equivalent rank in the other branches314 and deals with minor offences; 308 s 47C. 310 Primarily the Criminal Code 2002 (ACT) and the Crimes Act 1900 (ACT). 311 Sections 104, 107 and 108 and reg 44 of the Defence Force Discipline Regulations 1985 (Cth). 314 The Defence (Personnel) Regulations 2002 (Cth), reg 4, Sched 1 sets out the corresponding ranks in the ADF. For example, the equivalent of the rank of Major in the Army is the rank of Lieutenant Commander in the Navy or Squadron Leader in the Air Force. Callinan commanding officer: an officer who has the jurisdiction to deal with any charge against any person and to try a charge of a service offence: against any member of the ADF who is two or more ranks junior to the commanding officer; or against a person who is not a member of the ADF; unless that offence is a prescribed offence (s 107). Commanding officers usually hold the rank of Lieutenant-Colonel (or equivalent) and command a unit, ship or detachment of the ADF; superior summary authority: an officer who has jurisdiction to try a charge of a service offence against an officer who is two or more ranks junior to him or her, a warrant officer and a person who is not a member of the ADF unless the offence is a prescribed offence315. A summary service tribunal sits ad hoc as required, upon the alleged detection of the commission of a service offence by a person subject to the Act, and in the exercise of a commander's discretion to proceed against the accused person. There are two types of courts martial: restricted court martial ("RCM"): a legally qualified officer nominated by the Judge Advocate General ("JAG") from the judge advocates' panel sits as a judge advocate with at least three other officers, one of whom is the President, nominated by the Registrar of Military Justice ("RMJ")316. An RCM has jurisdiction to try charges for service offences against any person, but the maximum punishment that can be awarded for a service offence is restricted to six months imprisonment or detention317. The judge advocate gives binding directions on law and the President and members of the RCM determine the questions of fact318; 317 Sched 2. Callinan general court martial ("GCM"): a GCM is constituted in the same way as an RCM except that the judge advocate sits with a panel of at least five other officers319. A GCM has jurisdiction to try charges for service offences against any person320. A court martial sits ad hoc. It is constituted by the RMJ321 upon a request from the Director of Military Prosecutions ("DMP")322. Both the RMJ and the DMP are statutory appointments by the Minister for Defence and operate independently from the military chain of command323. The third category of service tribunal is a Defence Force magistrate, who must be a legally qualified officer nominated by the JAG from the judge advocates' panel324. A Defence Force magistrate sits alone and has the same jurisdiction and powers of punishment as an RCM325. A Defence Force magistrate assumes jurisdiction in relation to a particular charge when the DMP has requested the RMJ to refer it to a Defence Force magistrate for trial326. All service tribunals apply the criminal standard and onus of proof327. A prosecutor and a defending officer are appointed for each service tribunal at each level. The rules of evidence in force in the Jervis Bay Territory apply to a service tribunal as if that service tribunal were a criminal court in the Territory328. The defence power is stated, as are most of the provisions of s 51, in general terms: 322 s 103(1)(d). 323 ss 188FB and 188GF. 325 ss 67, 129 and Sched 2. 326 s 103(1)(c). 327 Section 10 of the Act and ss 13.1-13.6 of the Criminal Code (Cth). Callinan "The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: the naval and military defence of the Commonwealth and of the several States, and the control of the forces to execute and maintain the laws of the Commonwealth." Disposition of the case the forces required There can be no doubt, to use the introductory language of s 51, that the the "order and good government" of Commonwealth depend upon the establishment and maintenance of a relatively strict system of discipline. At the heart of this is the crucial and indubitable understanding that personnel must operate in circumstances of grave danger in which reliance upon one another and instantaneous obedience of orders are essential. The implication of this is that inevitably some discipline may have a more summary complexion, may attract somewhat more harsh penalties than, and may encompass conduct of different kinds from those found in civil life. to defend The defendants do not shrink from the proposition that the tribunals established by the Act exercise a form of judicial power. This judicial power, however, the defendants argue, stands apart from conventional judicial power: this, they say, has been so from the beginning of organized military forces and was certainly so at the time of federation. It is unnecessary to restate all of that history. It is fully surveyed in the reasons for judgment of Brennan and Toohey JJ in Re Tracey; Ex parte Ryan329. Their Honours conclude that survey with this statement, which must now be read subject to the reasoning of the Court in Aird330 but which relevantly requires no different a result here331: "The power to punish conferred by naval and military law extended to the most serious crimes in the criminal calendar, but those crimes were not to be tried by court-martial unless they were committed on active service outside the jurisdiction of the ordinary courts or in circumstances and 329 (1989) 166 CLR 518 at 554-563. 330 Re Aird; Ex parte Alpert (2004) 220 CLR 308. 331 (1989) 166 CLR 518 at 563 per Brennan and Toohey JJ. Callinan places where the jurisdiction of the ordinary courts could not be conveniently exercised." Nor is it necessary to repeat the review of the authorities in this Court as they stood in 1989, including Bevan332 and Cox333 undertaken by their Honours in Tracey. Their conclusion about them is unquestionable334: "The view which has hitherto commanded assent in this Court is that Ch III of the Constitution does not preclude the making of a law which provides for the imposition of punishments by service tribunals to effect the discipline of the defence forces of the Commonwealth." In this matter the second defendant refers to the absence of express reference in the Convention Debates to the disciplining of the defence forces. It is almost always instructive to refer to the Debates and their historical setting. Certainly, the British Empire which flourished then was seen by the United Kingdom and its dependencies, not only as a trading network, but also as a mutual defence organization, the latter in part at least in order to protect the former. What was apt for the Imperial forces would have been regarded as apt for the Australian defence forces at the time, and they might expand and be required to meet different threats in the future. I respectfully agree with what Brennan and Toohey JJ said of the history in Tracey335: "The Convention Debates are silent on this point and their silence is testimony to the absence of any consciousness on the part of the delegates that they were leaving the naval and military forces of the Commonwealth without authority to maintain or enforce naval and military discipline in the traditional manner. It could hardly have been intended by the framers of the Constitution that, in times, places or circumstances in which it would be impracticable for the ordinary courts to exercise their jurisdiction – eg, during service in a theatre of war outside Australia – the discipline of the armed forces should be imperilled by want of power to impose penalties for breaches of service law, even though those are the times, places and circumstances in which the armed forces stand in most urgent need of such powers. Contemporary writers did not understand that such a radical change had occurred. Professor W Harrison Moore, writing in 1902 (Constitution of the Commonwealth of 332 R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452. 333 R v Cox; Ex parte Smith (1945) 71 CLR 1. 334 (1989) 166 CLR 518 at 564 per Brennan and Toohey JJ. 335 (1989) 166 CLR 518 at 572-573 per Brennan and Toohey JJ. Callinan Australia, 1st ed, pp 280, 281), regarded courts-martial as not being within the provisions of Ch III of the Constitution. In the second edition (1910), Professor Moore treated the subject more extensively, asserting that proceedings before courts-martial were strictly judicial but referring to courts-martial as an instance of judicial functions being exercised otherwise than by Ch III courts: see pp 308, 321. The rationale for this view appears at pp 315-316: 'Even in those Constitutions in which the separation of powers has been accepted as fundamental, by no means every function which is in its nature judicial is exclusively assigned, or permitted, to the judicial organ. Therefore, although neither history nor usage nor practical convenience can determine the nature of "judicial power", logical consistency may have to yield something to history and familiar and established practice in determining what is the judicial power of the Commonwealth committed to the Courts by sec 71.'" It follows that the plaintiff's arguments are foreclosed by the earlier decisions of the Court. There are however two further matters of importance favouring the defendants' stance. The presence of s 68 in the Constitution is the first of these336: 336 The Constitution of the United States of America makes different provision. Although the President is, by virtue of Art II, §2, cl 1, Commander in Chief, power "[t]o declare War … and make Rules concerning Captures on Land and Water" (Art I, §8, cl 11), "[t]o raise and support Armies" (Art I, §8, cl 12), "[t]o define and punish … Offenses against the Law of Nations" (Art I, §8, cl 10), and "[t]o make Rules for the Government and Regulation of the land and naval Forces" (Art I, §8, cl 14) are vested in Congress. In Hamdan v Rumsfeld 165 L Ed 2d 723 at 781 (2006), Kennedy J (Souter, Ginsburg and Breyer JJ relevantly concurring) said: "Trial by military commission raises separation-of-powers concerns of the highest order. Located within a single branch, these courts carry the risk that offenses will be defined, prosecuted, and adjudicated by executive officials without independent review. Cf Loving v United States, 517 US 748, 756-758, 760 (1996). Concentration of power puts personal liberty in peril of arbitrary action by officials, an incursion the Constitution's three- part system is designed to avoid. It is imperative, then, that when military tribunals are established, full and proper authority exists for the Presidential directive." Callinan "Command of naval and military forces The command in chief of the naval and military forces of the Commonwealth is vested in the Governor-General as the Queen's representative." In R v Bevan; Ex parte Elias and Gordon337 Starke J saw that section as an instance of the the "special and peculiar" provision contemplated for management and disciplining of the defence forces and so do I. Another way of putting this is to say that the command and that which goes with it, namely discipline and sanctions of a special kind, for the reasons that I earlier gave, are matters of executive power, albeit that the power should still be exercised, so far as is reasonably possible, in a proper and judicial way, adapted as necessary to the special circumstances of military service, as I take the second defendant to accept. The presence of s 68 in the Constitution alone provides an answer to the plaintiff's submission that by necessary implication military judicial power may only be exercised by a Ch III court. The presence of s 68 in the Constitution may even, arguably, have further relevance to military justice, with the result that it may not be subject to judicial supervision under Ch III of the Constitution and is administrable only militarily and not by Ch III courts, whether specially constituted or not. The Convention Debates did not address this question. Their preoccupation was with the role of the Governor-General. Section 68 was left in the form that it has because the founders were content to read Governor-General as meaning Governor-General in Council338. If anything this is to emphasize rather than to detract from the unique and special nature of military power and control of it. A point about s 68 is that it vests a power of command which cannot be rejected or diminished, unlike powers exercisable under s 51 of the Constitution which Parliament may choose not to exercise. Section 71 vests the judicial power of the Commonwealth in Ch III courts and whether that vesting can include military judicial power may be a question. It is certainly true that s 75 begins with the words "In all matters" and in s 75(v) refers indiscriminately to "an officer of the Commonwealth" but, again, there may be a question whether any derogation from the absolute command, including discipline, vested in the Governor-General (in Council) is constitutionally open. 337 (1942) 66 CLR 452 at 467-468. Note that his Honour's reference to s 69 in that passage is in all likelihood a typographical error and should be a reference to s 68. 338 Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 10 March 1898 at 2249-2264. Callinan It may be that the means of checking any misuse of that command, or threat of oppression by it, lies with Parliament under ss 64 and 65, in particular in its control of the executive and the raising and appropriation of revenue for the maintenance of the military339. These are not matters which were argued and therefore are not ones on which it would be right to express even a tentative view. The other matter is one accepted by the plaintiff: that a sufficient service connexion is present in this case, a matter which might otherwise be controversial. Because it is not here, necessarily implicit in that acceptance is the proposition that the charges laid are for the proper disciplining of a member of the ADF for misconduct (alleged but not yet proved) in the course of, or in sufficient connexion with, the plaintiff's service in the ADF. The charges accordingly call for the exercise, in a judicial manner, of an aspect of the defence and executive powers outside Ch III of the Constitution. I would dismiss the plaintiff's application with costs. 339 The raising and granting, or withholding, of funds for military purposes has been the means via which the Parliament has exercised control over the military since the Bill of Rights in 1689. 246 HEYDON J. Subject to the qualifications set out below, I agree with Callinan J's account of the background340, and with his view341 that the authorities, as analysed by Brennan and Toohey JJ in Re Tracey; Ex parte Ryan342, foreclose acceptance of the plaintiff's arguments. Those authorities should not be reopened in this case. On those grounds I agree that the application should be dismissed with costs. The qualifications referred to above are: (a) When Brennan and Toohey JJ referred to the teachings of "history", "established practice" and "necessity", they are to be understood as referring to history up to the time of federation, established practice as at that time, and necessity as understood at that time343; for later history and practice, and later perceptions of what was or is necessary, cannot affect the construction of at least those parts of the constitutional language as enacted in 1900 which are relevant to the present problem. (b) When Brennan and Toohey JJ referred to what the framers of the Constitution did or did not intend344 they are to be taken to have referred to what the language drafted by the framers meant. 342 (1989) 166 CLR 518 at 554-563. 343 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 573. 344 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 572.

HIGH COURT OF AUSTRALIA APPELLANT AND THE QUEEN RESPONDENT Dupas v The Queen [2010] HCA 20 Date of Order: 15 April 2010 Date of Publication of Reasons: 16 June 2010 ORDER The appeal is dismissed. The respondent's summons is dismissed. On appeal from the Supreme Court of Victoria Representation C B Boyce with L C Carter for the appellant (instructed by Victorian Legal Aid (Criminal Law Section)) J D McArdle QC with B L Sonnet for the respondent (instructed by Solicitor for Public Prosecutions (Vic)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Dupas v The Queen Criminal law – Permanent stay of proceedings – Accused presented on charge of murder – Extensive pre-trial publicity about charge and accused's two previous convictions for murder – Whether irremediable prejudice to a fair trial justifying permanent stay of proceedings – Whether apprehended unfair consequences of pre-trial publicity were capable of being relieved against by trial judge, during trial, by thorough and appropriate directions to jury – Public interest consideration that an accused be brought to trial. Words and phrases – "fair trial", "permanent stay of proceedings". FRENCH CJ, GUMMOW, HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ. At the conclusion of oral argument on behalf of the appellant the Court ordered that the appeal be dismissed and that the respondent's summons seeking an abridgement of time in respect of filing and serving a notice of contention also be dismissed. What follows are our reasons for joining in those orders. The single ground of appeal to this Court is put in the alternative. First, the appellant complains that the Court of Appeal of the Supreme Court of Victoria1 erred in rejecting the appellant's challenge to the decision on 3 July 2007 of the trial judge (Cummins J) refusing him a permanent stay of the proceedings upon his charge of the murder of Mersina Halvagis at Fawkner, Victoria, on 1 November 1997. The ground on which the stay had been sought, prior to the empanelment of the jury, was that pre-trial publicity gave rise to irremediable prejudice such as would preclude his fair trial at any time. The trial proceeded before Cummins J and a jury. The case against the appellant was a circumstantial one in which the prosecution relied on three identification witnesses and an alleged confession by the appellant to one Andrew Fraser who was in gaol with him at the time. On 9 August 2007 the appellant was convicted and thereafter sentenced to life imprisonment with no minimum term. His appeal against conviction succeeded on grounds relating to the conduct of the trial which are not presently material, and a new trial was ordered. However, the appellant's challenge to the refusal by the trial judge of the stay application failed in the Court of Appeal. The second way in which the ground of appeal by the appellant to this Court is put is that the Court of Appeal should not have directed a retrial and should have stayed his trial permanently, or until further order. The appellant seeks orders vacating the order of the Court of Appeal for a retrial and, in its place, imposing a permanent stay or a stay until further order. Before his trial for the murder of Ms Halvagis, the appellant had twice been convicted of murder. In August 2000 he had been convicted of the murder 1 R v Dupas (No 3) [2009] VSCA 202. Crennan Bell of Nicole Patterson in April 19992 and in August 2004 he had been convicted of the murder in October 1997 of Margaret Maher3. Upon each conviction the appellant had been sentenced to life imprisonment with no minimum term. The killings of all three vulnerable women had been by knife attack and characterised by extreme violence and brutality. The appellant's applications for leave to appeal against each of the two earlier convictions for murder were refused. The two convictions for murder, the refusal of each of the leave applications, and the third murder charge had received wide media publicity, adverse to the appellant, and on the stay application Cummins J received a body of evidence of that publicity. This included publicity over some seven years, on seven internet sites, in approximately 120 newspaper articles and four books, all of which related either wholly or extensively to the appellant. The appellant had also been referred to in a number of television programs, and his image had been depicted in some of those programs. The appellant was identified in the media from an early stage as a suspect in regard to the murder of Ms Halvagis. In response to questions from the trial judge as to the currency of the pre-trial publicity and as to how easy it was to access, the appellant's counsel referred to three periods of intense media publicity – late 2000 (relating to the murder of Ms Patterson), late 2004 (relating to the murder trial where the victim was Ms Maher), and early 2005 (where the appellant was named as a suspect in the murder of Ms Halvagis); counsel referred also to material currently available on the internet and to the use of the Google search engine to access articles electronically stored on the World Wide Web. A summary of the pre-trial publicity can be found in the reasons of Ashley JA4. The essence of the appellant's submission before Cummins J was that "the ubiquity and pervasiveness of the accused's reputation as a serial killer, is such that no fair trial can now be had." It was contended that, if a permanent stay were not granted, any subsequent conviction would necessarily constitute a miscarriage of justice. 2 R v Dupas [2000] VSC 356. 3 R v Dupas [2004] VSC 281. 4 R v Dupas (No 3) [2009] VSCA 202 at [77]. Crennan Bell Cummins J considered that, if acted upon by a jury, the pre-trial publicity would have precluded a fair trial upon the third murder charge. Nevertheless, his Honour concluded that he had "very responsible confidence that the jury, appropriately directed, will firewall its deliberations and verdict from extraneous considerations and from prejudice in this case." His Honour so concluded for the following reasons: "First, each juror will swear or affirm to give a true verdict according to the evidence. Second, the jury will be directed, with reasons therefore, to give a true verdict according to the evidence. Third, the jury operationally will observe and will inevitably be influenced by the care with which evidence is received and tested during the trial. Fourth, the jury will be assisted in its task by the nature of a jury trial, its methods of testing and of consideration and of analysis, its valuing of care and of scrupulousness and its conscientious commitment to fairness. Fifth, citizens in this community selected to act as jurors show, and historically have shown, a robust capacity and conscientious capacity to act on evidence and to put aside extraneous data and considerations and demonstrate an honourable commitment to fairness." His Honour also said he considered that the jurors would comply with his directions not to do their own research, not to have access to the internet, and to have regard only to the evidence led in court, that they would not know or be able to recall much of the detail of the historical material referred to in the data placed before him and that none of the panel would prospectively know that the case for which they were summoned involved the particular accused. Something more should be said respecting the outcome in the Court of Appeal. Grounds of appeal numbered 5 and 6 concerned alleged errors in the charge of the trial judge to the jury. Weinberg JA would have dismissed all grounds on which leave was sought and dissented from the result. Nettle and Ashley JJA agreed that the conviction should be quashed on grounds 5 and 6 but, unlike Nettle JA, the grounds upon which Ashley JA allowed the appeal included ground 1 alleging error by the trial judge in refusing the stay application. Ashley JA went on to favour a stay until further order, but not a permanent stay, of a retrial. The upshot was an order of the Court of Appeal directing a retrial, but no stay order of any description. Crennan Bell Abuse of process The stay application made to the trial judge and the appeal to the Court of Appeal invoked the power of the Supreme Court to prevent abuse of its processes and in particular to prevent the prosecution of a criminal proceeding which would result in an unfair trial. In this Court, the appellant contends that pervasive pre-trial publicity attributed guilt to the appellant in respect of the crime with which he is charged and that evidence in the trial revived that pre-trial publicity with the effect that the pre-trial publicity, particularly as to the appellant's guilt in respect of other crimes and the crime charged, could not be dismissed from the jury's consideration when deciding the guilt or innocence of the appellant. The appellant submits that an accused's right not to be tried unfairly5 includes a right to be tried without a significant likelihood that the jury will be affected by substantial prejudice and prejudgment as a consequence of pre-trial publicity. From the joint reasons of Gleeson CJ, Gummow, Hayne and Crennan JJ in Batistatos v Roads and Traffic Authority (NSW)6 there appear, or are foreshadowed, several propositions which bear upon the appeal now brought to this Court. In Batistatos their Honours referred7, with approval, to the statements of Lord Blackburn in Metropolitan Bank Ltd v Pooley8 that from "early times" the courts had inherent power to see that their processes were not abused, and that the power existed to enable the courts to protect themselves and thereby safeguard the administration of justice. Having regard both to the antiquity of the power and its institutional importance, there is much to be said for the view that in Australia the inherent power to control abuse of process should be seen, along with the contempt power, as an attribute of the judicial power provided for in Ch III of the Jago v District Court (NSW) (1989) 168 CLR 23 at 57 per Deane J; [1989] HCA (2006) 226 CLR 256; [2006] HCA 27. (2006) 226 CLR 256 at 265-266 [10]. (1885) 10 App Cas 210 at 220-221. Crennan Bell Constitution. However, on the trial of the appellant the Supreme Court did not exercise federal jurisdiction and no question arises respecting the validity of any State legislation denying or limiting the inherent power of State courts to control abuse of their processes in matters not arising in federal jurisdiction9. The power of the Supreme Court was that identified by Lord Blackburn as inherent. The joint reasons in Batistatos also observe that the inherent power applies to both civil and criminal proceedings, adding10: "However, the power does so with somewhat different emphases attending its exercise. In Williams v Spautz, Mason CJ, Dawson, Toohey and McHugh JJ identified two fundamental policy considerations affecting abuse of process in criminal proceedings. Their Honours said11: 'The first is that the public interest in the administration of justice requires that the court protect its ability to function as a court of law by ensuring that its processes are used fairly by State and citizen alike. The second is that, unless the court protects its ability so to function in that way, its failure will lead to an erosion of public confidence by reason of concern that the court's processes may lend themselves to oppression and injustice.' These considerations are not present with the same force in civil litigation where the moving party is not the State enforcing the criminal law." The processes spoken of in this passage include those for trial by jury of indictable offences. The institution of trial by jury is maintained and protected at the federal level by s 80 of the Constitution and in Victoria by the law of contempt, by such common law offences as perversion of the course of justice 9 But see Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 549-550 [1] per Gleeson CJ, 552-553 [10] per Gummow, Hayne, Heydon and Kiefel JJ, 591 [159]-[162] per Crennan J; [2008] HCA 4. 10 (2006) 226 CLR 256 at 264-265 [8]. 11 (1992) 174 CLR 509 at 520; [1992] HCA 34. Crennan Bell and embracery12, and by provisions including ss 78 and 78A of the Juries Act 2000 (Vic). The constitutional dimension, in the broad sense of the term, was considered in two important decisions of the New Zealand Court of Appeal. The reasons of Richardson J in Moevao v Department of Labour13 were drawn upon for the passage in Williams v Spautz14 which has been set out above. More recently, in Fox v Attorney-General15 McGrath J, when giving the reasons of a bench also including Gault P, Keith, Blanchard and Anderson JJ, in a passage headed "The constitutional position", said16: "In our system of government, the discretion to prosecute on behalf of the state and to determine the particular charges a defendant is to face is part of the function of Executive Government rather than the Courts. That allocation of the function recognises the governmental interest in seeing that justice is done and community expectations that criminal offenders are brought to justice are met" and, after noting that the decision by a public official to prosecute involves the exercise of a public power, continued17: "The Courts traditionally have been reluctant to interfere with decisions to initiate and continue prosecutions. In part this is because of the high content of judgment and discretion in the decisions that must be reached. But perhaps even more so it also reflects constitutional sensitivities in light of the Court's own function of responsibility for conduct of criminal trials." 12 See Crimes Act 1958 (Vic), s 320. 13 [1980] 1 NZLR 464 at 481. 14 (1992) 174 CLR 509 at 520; see above at [16]. 15 [2002] 3 NZLR 62. 16 [2002] 3 NZLR 62 at 69 [28]. 17 [2002] 3 NZLR 62 at 69-70 [30]-[31]. Crennan Bell Permanent stay Cummins J noted that while no permanent stay on the ground of irremediable prejudice to a fair trial had ever been ordered by the Supreme Court, the existence of the power to make such an order had been accepted by statements made in R v Glennon18. In that case, Mason CJ and Toohey J19 said: "[A] permanent stay will only be ordered in an extreme case20 and there must be a fundamental defect 'of such a nature that nothing that a trial judge can do in the conduct of the trial can relieve against its unfair consequences'21. And a court of criminal appeal, before it will set aside a conviction on the ground of a miscarriage of justice, requires to be satisfied that there is a serious risk that the pre-trial publicity has deprived the accused of a fair trial. It will determine that question in the light of the evidence as it stands at the time of the trial and in the light of the way in which the trial was conducted, including the steps taken by the trial judge with a view to ensuring a fair trial." That statement should be regarded as an authoritative statement of principle. The passage indicates a distinction of present relevance. The Court of Appeal was not considering, in advance of the trial, an interlocutory appeal from the order of Cummins J dismissing the stay application. The majority of the Court of Appeal decided that the conviction was to be quashed on other grounds relating to the conduct of the trial, and the immediate issue then was whether there should be an order for a new trial. The question of irremediable prejudice at a retrial was now to be decided not purely prospectively, as it had been by Cummins J, but with the assistance provided by the evidence against the appellant, which had been properly admitted at the first trial, and the steps taken by the judge to ensure a fair trial. 18 (1992) 173 CLR 592; [1992] HCA 16. 19 (1992) 173 CLR 592 at 605-606. 20 Jago v District Court (NSW) (1989) 168 CLR 23 at 34. 21 Barton v The Queen (1980) 147 CLR 75 at 111 per Wilson J; [1980] HCA 48. Crennan Bell It is of particular importance to note that certain prejudicial material was admissible in the trial because the Crown case, as presented through Andrew Fraser, meant that the jury would inevitably learn of the appellant's history including at least one of his prior convictions for murder. The appellant's counsel met the forensic challenge posed by such circumstances by having the jury told at the outset that the appellant had previously been convicted of the murder of two other women. Moreover the identification evidence involved some reference back to the pre-trial publicity. It also needs to be noted that prior to the empanelment of the jury, at the outset of the trial, and in his charge to the jury, Cummins J directed jurors repeatedly about the need to act fairly, calmly, without prejudice and solely on the evidence led in court and to exclude from their considerations anything that they may have read or seen outside the court. Such directions were designed to ensure that the jurors would not be affected by the pre-trial publicity in bringing in their verdict. The terms in which the repeated directions were given are exemplified by what was said by Cummins J at the outset of the trial: "Because I am the judge of the law, ladies and gentlemen, any legal directions I give you, you must comply with. But I am not a judge of the facts and only you are the judges of the facts. So, as you are the judges of the facts, how do you act as a judge? … [Y]ou act as you would wish and expect a judge to act, fairly, calmly, without prejudice and solely on the evidence. Each of you has sworn or affirmed to give a true verdict according to the evidence. The evidence is what you hear in the four walls of this courtroom from the witnesses who will give their evidence in the witness box and the exhibits which attended as part of the evidence. [T]hat is what you judge the case on and that alone. The evidence from the witnesses here in court in front of you and the exhibits tendered as part of the evidence. During the trial, witnesses are called to give evidence and they will be questioned and tested by questions, that's the proper process of the court, ladies and gentlemen. You see that happening and you judge the case on the evidence led here in front of you in court … A very important thing follows from that and it's this: you must not decide the case on anything outside the court … The next thing is this, and this is very important in this case as in every case. Do not go and do your own homework or do your own research, don't go and look up old newspapers, don't go down to the local Crennan Bell library, do not go and look at the internet, do not do any electronic searches about anyone connected with this case, that's very important ladies and gentlemen. You have sworn or affirmed to give a true verdict on the evidence led here in court, therefore looking at anything else cannot help you because that's not the evidence … Your function is to decide the case solely [on] the evidence and I will give you various directions during the case to assist you in that regard but they are the first ones that I give you so that you know the limitations of what you should be looking at, just the evidence here in court and nothing else." These proper directions demonstrate the capacity of the trial judge to relieve against the unfair consequences of the pre-trial publicity without staying the criminal proceedings. In Glennon, Brennan J discussed the significance of the course taken by this Court (as the first and final appellate court) in Tuckiar v The King22. The public misconduct of counsel in Tuckiar was of decisive importance. Brennan J said of Tuckiar that, the conviction having been quashed, the question in that "extreme case" had been whether a new trial should be ordered, and continued23: "This Court, in exercising that discretion, declined to order a retrial. The discretion to order a retrial is affected by factors that have no relevance to an application to stay a trial, particularly because an adverse exercise of the discretion subjects an accused to the burden of a second trial. A second trial of Tuckiar would have been affected by the certain knowledge of his guilt that counsel at his first trial had indefensibly revealed to any future jury empanelled in Darwin, and no other venue was practicable." Did the Court of Appeal err in the present case by failing to treat it as an extreme or singular case in which there should be no retrial? 22 (1934) 52 CLR 335; [1934] HCA 49. 23 (1992) 173 CLR 592 at 617. Crennan Bell The function of the jury Nettle JA24 based his decision upon the footing that to grant an indefinite stay "would be to recognise that the media has the capacity to render an accused unable to be tried" and this would deny the "social imperative" that an accused be brought to trial. There is an important point here. It is often said that the experience and wisdom of the law is that, almost universally, jurors approach their tasks conscientiously. The point was made as follows by Hughes J, with the endorsement of the English Court of Appeal, in R v Abu Hamza25: "Extensive publicity and campaigns against potential defendants are by no means unknown in cases of notoriety. Whilst the law of contempt operates to minimise it, it is not always avoidable, especially where intense public concern arises about a particular crime and a particular defendant before any charge is brought. Jurors are in such cases capable of understanding that comment in the media might or might not be justified and that it is to find out whether it is that is one of their tasks. They are capable of understanding that allegations which have been made may be true or may not be and that they, the jury, are to have the opportunity and responsibility of hearing all the evidence which commentators in the media have not and of deciding whether in fact the allegations are true or not. They are not surprised to be warned not to take at face value what appears in the media, nor are they these days so deferential to politicians as to be incapable of understanding that they should make no assumptions about whether any statements made by such people are justified or not. They are also capable of understanding and habitually apply the direction that they are given about the standard of proof." In his reasons for dismissing the stay application, which are extracted in part and described above, Cummins J used similar terms with respect to the conduct of jury trials in Victoria. 24 R v Dupas (No 3) [2009] VSCA 202 at [62]-[63]. 25 See [2007] QB 659 at 685-686. Crennan Bell Earlier, in Gammage v The Queen26 Windeyer J expressed the governing principle in terms which acknowledged that the jury room might not be a place of undeviating intellectual and logical rigour (a point made by Callinan J in Gilbert v The Queen27) by saying: "A jury in a criminal case may sometimes, from compassion or prejudice or other ulterior motive, fail to perform their sworn duty to determine the case before them according to the evidence. If they do so in favour of the prisoner, and not of the Crown, the law is powerless to correct their dereliction. They must be assumed to have been faithful to their duty. Their verdict must be accepted." Conclusions of this kind are not examples of the "ordinary" questions of fact which regularly arise for determination28. The assumed efficacy of the jury system of which Windeyer J spoke, whereby the law proceeds on the basis that the jury acts on the evidence and in accordance with the directions of the judge, represents the policy of the common law and is more akin to a species of "constitutional fact", in the sense of that term explained by Heydon J in Thomas v Mowbray29. Whilst the criminal justice system assumes the efficacy of juries, that "does not involve the assumption that their decision-making is unaffected by matters of possible prejudice."30 In Glennon, Mason CJ and Toohey J recognised that "[t]he possibility that a juror might acquire irrelevant and prejudicial information is inherent in a criminal trial."31 What, however, is vital to the 26 (1969) 122 CLR 444 at 463; [1969] HCA 68. 27 (2000) 201 CLR 414 at 440 [96]; [2000] HCA 15. 28 See Thomas v Mowbray (2007) 233 CLR 307 at 512 [614]; [2007] HCA 33. 29 (2007) 233 CLR 307 at 514-520 [620]-[635]. 30 Gilbert v The Queen (2000) 201 CLR 414 at 420 [13] per Gleeson CJ and 31 (1992) 173 CLR 592 at 603. See also Murphy v The Queen (1989) 167 CLR 94 at 99; [1989] HCA 28. Crennan Bell criminal justice system is the capacity of jurors, when properly directed by trial judges, to decide cases in accordance with the law, that is, by reference only to admissible evidence led in court and relevant submissions, uninfluenced by extraneous considerations. That capacity is critical to ensuring that criminal proceedings are fair to an accused. "Extreme" or "singular" case The appellant seeks to uphold findings of Nettle and Ashley JJA that the case was an extreme, or singular32, case. The appellant contends that the balance of authority in the High Court has approved a concept of unfairness such that it might arise irrespective of its source and whether or not it was controllable by court processes33. The balance of persuasion34 in Glennon, the appellant submits, has allowed for the possibility of the grant of a stay in circumstances of prejudicial media publicity. The appellant contends that there is no reason in principle or practice why the extreme category of case warranting the imposition of a permanent stay ought not to include circumstances of prejudicial pre-trial media publicity. The appellant relies upon the example given by Deane, Gaudron and McHugh JJ, the dissentients, in Glennon of the grant of a stay as follows35: "[O]ne cannot exclude, as a matter of law, the possibility that an 'extreme' or 'singular' case might arise in which the effect of a sustained media 32 These epithets were used by members of the Court of Criminal Appeal of Victoria in Glennon: see R v Glennon (1992) 173 CLR 592 at 623 and footnotes 69 and 70. 33 Authorities relied on were Jago v District Court (NSW) (1989) 168 CLR 23 at 27- 31, 33-34 per Mason CJ, 56-58 per Deane J, 71-72 per Toohey J, 75-78 per Gaudron J; Williams v Spautz (1992) 174 CLR 509 at 518-520 per Mason CJ, Dawson, Toohey and McHugh JJ; Dietrich v The Queen (1992) 177 CLR 292 at 298-299 per Mason CJ and McHugh J, 326-329, 332 per Deane J, 357-358 per Toohey J, 362-365 per Gaudron J; [1992] HCA 57. 34 As to which see Federation Insurance Ltd v Wasson (1987) 163 CLR 303 at 314; [1987] HCA 34. 35 (1992) 173 CLR 592 at 623-624. Crennan Bell campaign of vilification and prejudgment is such that, notwithstanding lapse of time and careful and thorough directions of a trial judge, any conviction would be unsafe and unsatisfactory by reason of a significant and unacceptable likelihood that it would be vitiated by impermissible prejudice and prejudgment." However, the reference by their Honours to impermissible prejudice and prejudgment gives insufficient effect to the policy of the common law respecting the efficacy of the jury system. No doubt that policy must give way, for example, in specific instances of apprehended jury tampering and other criminal misconduct36. But that is far from the present case. This is not a case of an apprehended defect at the retrial of such a nature that (to adopt what was said by Mason CJ and Toohey J in Glennon37) nothing that the trial judge could do in the conduct of the retrial could relieve against its unfair consequences. In Glennon38, in describing cases in which a permanent stay will be ordered as extreme, Mason CJ and Toohey J refer back to a passage in Jago v District Court (NSW)39 containing a reference to R v His Honour Judge C F McLoughlin and Cooney; Ex parte The Director of Prosecutions40. There, the Full Court of the Supreme Court of Queensland recognised that for a court to grant a permanent stay of criminal proceedings is a rare occurrence, a drastic remedy to be applied in exceptional cases which might arise if there had been some conduct on the part of a prosecuting authority shown to result in prejudice to an accused in obtaining a fair trial41. 36 Sections 44 and 46 of the Criminal Justice Act 2003 (UK) confer the power to order a trial or retrial by judge alone where the likelihood of jury tampering is so substantial as to make the order necessary in the interests of justice: R v Twomey [2010] 1 WLR 630; [2009] 3 All ER 1002. 37 (1992) 173 CLR 592 at 605. 38 (1992) 173 CLR 592 at 605. 39 (1989) 168 CLR 23 at 34. 40 [1988] 1 Qd R 464. 41 [1988] 1 Qd R 464 at 470-471. Crennan Bell The decision in Tuckiar42 is referred to in Glennon variously as unique43, extreme44 and bizarre45. In Tuckiar, unfairness to the accused at a retrial, which could not be relieved against, was, as Brennan J said, "the certain knowledge of his guilt"46, revealed in open court by his counsel at his first trial. There is a difference between media opinion as to guilt and a public revelation of guilt by an accused's own counsel. The unfair consequences of the former can be the unfair relieved against by direction from consequences of the latter cannot be remedied. judge whereas trial the Characterising a case as extreme or singular is to recognise the rarity of a situation in which the unfair consequences of an apprehended defect in a trial cannot be relieved against by the trial judge during the course of a trial. There is no definitive category of extreme cases in which a permanent stay of criminal proceedings will be ordered. In seeking to apply the relevant principle in Glennon, the question to be asked in any given case is not so much whether the case can be characterised as extreme, or singular, but rather, whether an apprehended defect in a trial is "of such a nature that nothing that a trial judge can do in the conduct of the trial can relieve against its unfair consequences."47 There is nothing remarkable or singular about extensive pre-trial publicity, especially in notorious cases, such as those involving heinous acts. That a trial is conducted against such a background does not of itself render a case extreme, in 42 (1934) 52 CLR 335. 43 (1992) 173 CLR 592 at 598 per Mason CJ and Toohey J. 44 (1992) 173 CLR 592 at 617 per Brennan J. 45 (1992) 173 CLR 592 at 624 per Deane, Gaudron and McHugh JJ possibly quoting counsel who appeared for the Crown. 46 R v Glennon (1992) 173 CLR 592 at 617. 47 Barton v The Queen (1980) 147 CLR 75 at 111 per Wilson J quoted in Jago v District Court (NSW) (1989) 168 CLR 23 at 34 per Mason CJ and in R v Glennon (1992) 173 CLR 592 at 605 per Mason CJ and Toohey J. Crennan Bell the sense that the unfair consequences of any prejudice thereby created can never be relieved against by the judge during the course of the trial. A further consideration is the need to take into account the substantial public interest of the community in having those who are charged with criminal offences brought to trial48, the "social imperative" as Nettle JA called it, as a permanent stay is tantamount to a continuing immunity from prosecution49. Because of this public interest, fairness to the accused is not the only consideration bearing on a court's decision as to whether a trial should proceed50. the appellant's The apprehended defect trial, namely unfair consequences of prejudice or prejudgment arising out of extensive adverse pre-trial publicity, was capable of being relieved against by the trial judge, in the conduct of the trial, by thorough and appropriate directions to the jury. Because that is so, it is not necessary for the purposes of this case to undertake any broad inquiry into the full extent of the court's inherent power to grant a permanent stay of criminal proceedings in order to prevent unfairness to an accused. There was no error of principle in the application of Glennon by Cummins J in deciding that the appellant's trial, if allowed to proceed, would be fair. The majority in the Court of Appeal was correct in rejecting ground 1 of the appeal alleging error by Cummins J in refusing the application for a permanent stay. Furthermore, in all of the circumstances of this trial, the pre-trial publicity was not such as to give rise to an unacceptable risk that it had deprived the appellant of a fair trial. A stay permanently or until further order was not warranted. For these reasons we joined in the orders made at the conclusion of the hearing. 48 R v Glennon (1992) 173 CLR 592 at 598 per Mason CJ and Toohey J. 49 R v Glennon (1992) 173 CLR 592 at 599 per Mason CJ and Toohey J. 50 Jago v District Court (NSW) (1989) 168 CLR 23 at 33 per Mason CJ.

HIGH COURT OF AUSTRALIA APPELLANT AND DIRECTOR OF POLICE THROUGH THE SECRETARY OF JUSTICE AS DIRECTOR OF PUBLIC PROSECUTOR RESPONDENT Ruhani v Director of Police [No 2] [2005] HCA 43 31 August 2005 ORDER Appeal dismissed with costs. Respondent's costs to be set off against any balance remaining after the setting-off of costs under orders made with respect to the objection to competency and motion seeking joinder. On appeal from the Supreme Court of Nauru Representation: J W K Burnside QC with S D Hay for the appellant (instructed by Vadarlis & Associates) P J Hanks QC with S J Lee and S P Donaghue for the respondent (instructed by Clayton Utz) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Ruhani v Director of Police [No 2] Appeal from the Supreme Court of Nauru – Construction of legislation – Immigration Act 1999 (Nauru) ("the Act"), Immigration Regulations 2000 (Nauru) ("the Regulations"). Immigration – Refugees – Application for habeas corpus – Appellant brought to Nauru by Australian sea transport and granted a special purpose visa for entry and stay in Nauru on humanitarian grounds – Special purpose visa subject to conditions restricting residence in, and movement within, Nauru to sites designated by the Government of Nauru – Whether conditions beyond the power conferred upon the Principal Immigration Officer ("the PIO") of Nauru by the Regulations to attach such conditions as it thinks fit to special purpose visas – Whether the power to impose such conditions consistent with the power conferred by the Act upon the PIO to grant visa for entry into Nauru – Whether conditions may be severed from visa. Immigration – Refugees – Application for habeas corpus – Where application for visa required under the Regulations to be made in writing and extension of a special purpose visa conditioned upon application by holder – Whether issue of appellant's special purpose visa invalid because appellant had not applied for it – Whether appellant's present special purpose visa a fresh visa or an extended visa – Whether, if an extended visa, extension was invalid because appellant had not applied for it. Appeal – Mootness of issues raised by matter – Appellant in detention in Nauru granted Australian visa after lodging appeal to the High Court of Australia – Whether determination of appeal rendered moot as a result of grant of visa and removal of appellant to Australia – Order for habeas corpus can no longer be made – Whether proceedings present viable issue for the Court to determine. Statutory construction – Nauruan legislation – Relevance of international law as an aid to interpretation – Right to liberty as fundamental principle of human rights – Relevance to determination of issues in appeal – Whether Nauruan laws providing for detention of immigrants to be subject to strict construction – Whether such laws applicable to appellant in circumstances of his detention under intergovernmental agreement between Nauru and Australia. Immigration Act 1999 (Nauru), ss 8, 9, 13 and 19. Interpretation Act 1971 (Nauru), s 69. Immigration Regulations 2000 (Nauru), Regs 12(4), 13(1) and 18. Constitution of Nauru, Arts 5(1)(h), 5(4). GLEESON CJ, GUMMOW, HAYNE AND HEYDON JJ. This is an appeal from the Supreme Court of Nauru (Connell CJ). On 9 December 2004, this Court ordered the disallowance of an objection to the competency of the appeal and reserved all questions of costs. It will be necessary to return to the matter of costs later in these reasons. The appellant is an Afghan national and apparently of Hazara ethnicity. He is one of a number of persons identified as asylum seekers in a Memorandum of Understanding between the Commonwealth of Australia and the Nauru Government signed on 9 December 2002. That instrument was replaced by a Memorandum of Understanding between the same state parties signed on 25 February 2004 ("the MOU"). Paragraph 1 of the MOU states: "The Parties have mutually decided the management of asylum seekers on Nauru, in accordance with the constitutions and relevant domestic laws of each country, international law, as well as acting within their respective framework of powers and responsibilities." to cooperate on The appellant and other asylum seekers were brought to Nauru at the end of 2001 by Australian sea transport. The appellant was then aged 18. He arrived on 21 December 2001 without a passport or entry permit. The immigration legislation Section 13(1) of the Immigration Act 1999 (Nauru) ("the Act") stipulates that a person who "unlawfully enters or is unlawfully in Nauru" is guilty of an offence, the punishment for which is "a fine not exceeding $3,000 or imprisonment for one year, or both". No person shall "enter Nauru from overseas" without a "valid permit" (s 8(2)). In the case of a person arriving by sea, "enter" includes disembarkation in Nauru from the vessel on which that person has arrived (s 2). The term "permit" is defined in s 2 as including "any permit, permission, visa or other authorisation granted under [the] Act". The Principal Immigration Officer ("the PIO") may grant to a non-citizen a permit, which is to be known as a visa, to enter and to remain in Nauru according to its terms (s 9(1)). The classes, terms, conditions and fees of visas "shall be" as prescribed by regulations made under s 19 (s 9(2)). The regulations may provide for a visa held by two or more persons (s 9(4)(a)) and for extensions of visas (s 9(4)(c)). The powers conferred upon the PIO by s 9 of the Act attract s 69 of the Interpretation Act 1971 (Nauru) ("the Interpretation Act")1. The effect of that provision is that any visa or extension thereof may be issued subject to such conditions as the PIO deems expedient and which are not inconsistent with the Act. Questions of the competency of "sub-delegation" thus may be answered by reference to s 69. One class of visa prescribed by the Immigration Regulations 2000 ("the Regulations") is a special purpose visa granted in accordance with reg 12(4) to a person, such as the appellant, who enters Nauru without a passport (reg 8(1)(g)). Regulation 12(4) empowers the PIO: "on humanitarian or other grounds, [to] permit a person who arrives in Nauru without a passport to enter and remain in Nauru, or where the person has already entered Nauru, to remain in Nauru, and for the purpose may grant to the person a special purpose visa, on such conditions as the [PIO] thinks fit". The special purpose visas On 7 January 2002, the PIO granted to the appellant and 318 other asylum seekers a special purpose visa for entry and stay in Nauru on humanitarian grounds. The special purpose visa in respect of the appellant which was current at the time of the proceedings in the Supreme Court was that issued by the PIO on 28 January 2004 to the appellant and 282 other asylum seekers. This visa indicated that it was issued pursuant to regs 8(1)(g) and 12(4). The visa was "for such time as is reasonably necessary to complete humanitarian endeavours whereby such stay shall not exceed beyond (6) six months [from] the specified date". The visa further stated that it was granted subject to the following conditions: Residence in Nauru shall be restricted to sites designated by the Government of Nauru for the accommodation of asylum seekers or as directed by the office of the President of Nauru; 1 Section 69 states: "Where any written law confers a power to issue any licence, permit [or] authorisation, then unless a contrary intention appears, such licence, or permit or authorisation may be issued subject to such conditions, not inconsistent with that law, as the authority issuing it deems expedient." 2. Movement within Nauru shall be restricted to within the above- mentioned sites except with the consent of the Office of the President of Nauru; 3. Movement within Nauru outside of the designated sites shall be under escort of security personnel, or other designated persons as authorized by the Office of the President; Residence and movement within Nauru shall be subject to compliance with lawful directions which may be made by the [PIO], the Director of Police, or any other person so authorized by the Office of the President of Nauru; Completion of humanitarian endeavors shall, for the purpose of this Visa, be as determined by the Office of the President of Nauru, through directions of the undersigned and shall constitute termination of such visa." The position of the appellant This Court was told that Nauru is not a party to the Convention relating to the Status of Refugees done at Geneva on 28 July 1951 ("the Convention") or to the Protocol done at New York on 31 January 1967 ("the Protocol"). However, par 24 of the MOU provides: "Consistent with paragraph 4 of this MOU, any asylum seekers awaiting determination of their status or those recognised as refugees, will not be returned by Nauru to a country in which they fear persecution nor before a place of resettlement is identified." Paragraph 4 obliges Australia to "ensure that each person will be processed and have departed Nauru within as short a time as is reasonably possible, and that no persons will be left behind in Nauru". The evidence before the Supreme Court included an affidavit by an officer of the Australian Department of Immigration and Multicultural and Indigenous Affairs ("DIMIA") who has been DIMIA liaison officer in Nauru. He deposed that the appellant was found not to be a person in need of protection under the Convention and the Protocol. This decision was handed to the appellant in 2002 and was affirmed on review. No decision by DIMIA on a further re-examination of the appellant's case had been handed down at the time of the Supreme Court litigation. However, thereafter, the appellant was not accepted as a refugee by DIMIA. The evidence disclosed an arrangement whereby the International Organization for Migration ("the IOM") assisted the Governments of Australia and Nauru with respect to asylum seekers on Nauru. This was to be done "with the appropriate cooperation or consultation with UNHCR". The IOM was founded outside the United Nations in 1951 as the Intergovernmental Committee for European Migration and, by 1996, had some 83 states as members2. One of the purposes and functions of the IOM under its 1987 Constitution is3: "to concern itself with the organized transfer of refugees, displaced persons and other individuals in need of international migration services for whom arrangements may be made between the Organization and the States concerned, including those States undertaking to receive them". In his reasons for the decision under appeal, the Chief Justice found: "The accommodation facilities for the asylum seekers were established at two localities in Nauru called 'Topside' and 'Former State House'. During their stay on Nauru, the asylum seekers['] claims for refugee status have been or are to be processed and determined. The management of the accommodation facilities was in the hands of the [IOM]. Whilst the gates of the facilities are normally open, Chubb safety officers who are contracted by IOM monitor the access or egress of persons to and from the facilities. The overall security of the facilities is in the hands of the Nauru Police Force (NPF) who are assisted by the Australian Protective Service (APS) who have been appointed as reserve officers under the Nauru Police Force Act. If there is any contravention of the criminal law or breach of visa conditions then the NPF are responsible for enforcement of law and order." The appellant could not leave Nauru without travel documents. If sought, those documents would be arranged through the IOM and the Afghan Embassy in Canberra. The appellant has made no request to the IOM for such assistance. 2 Goodwin-Gill, The Refugee in International Law, 2nd ed (1996) at 225. See also Perruchoud, "From the Intergovernmental Committee for European Migration to the International Organization for Migration", (1989) 1 International Journal of Refugee Law 501. 3 The Constitution is set out as Item 9 in Annexe 1 of Goodwin-Gill, The Refugee in International Law, 2nd ed (1996) at 419-428. The litigation On 21 April 2004, the Chief Justice had granted ex parte an order nisi requesting the respondent to show cause why the appellant (and two others who are not parties to the present appeal) had been kept in detention in the Topside camp and why such detention should be continued. On the return of the order nisi, it was discharged. Article 5(1)(h) of the Constitution of Nauru provides that, except as authorised by law for the purpose of preventing his unlawful entry into Nauru or for the purpose of effecting his expulsion, extradition or other lawful removal from Nauru, no person shall be deprived of his personal liberty. Article 5(4) states: "Where a complaint is made to the Supreme Court that a person is unlawfully detained, the Supreme Court shall enquire into the complaint and, unless satisfied that the detention is lawful, shall order that person to be brought before it and shall release him." The Chief Justice held that asylum seekers who entered and were accommodated on Nauru in accordance with the conditions in the special purpose visa that had been issued were not unlawfully detained within the meaning of Art 5(4). No appeal may be taken from this holding respecting the interpretation or effect of the Constitution of Nauru4. The relief sought by the appellant in this Court includes a declaration that the special purpose visas issued to the appellant were invalid and of no effect. The argument here focused upon the instrument issued on 28 January 2004 and these reasons should be read accordingly. The appellant also seeks an order absolute for habeas corpus directed to the respondent and ordering the release from detention of the appellant. Since the decision of the Supreme Court, the six month period specified in the special purpose visa issued on 28 January 2004 has expired. There is no evidence as to the basis under the Act upon which the appellant presently is on Nauru. However, the first task upon this appeal is to determine whether the orders of the Supreme Court were correctly made. Only if that question be answered in favour of the appellant will questions arise of consequential relief in this Court. 4 See Ruhani v Director of Police [2005] HCA 42 at [101]. For the reasons that follow, the appeal fails and should be dismissed. The conundrum It was suggested in oral submissions for the appellant that the conditions might be severed from the special purpose visa, leaving the remainder in force. However, the Court was referred to no legislative provision in force in Nauru which would displace the operation of the common law presumption that, upon such an hypothesis, the balance of the instrument is not to be carried into effect independently of the part which fails5. It could not be said that to treat the visa as effective, shorn of the conditions, would be to effect no change to the substantial purpose and effect of the instrument. It is here that a conundrum appears. If the visa be invalid, that would remove the foundation for the operation of the condition restricting the residence of the appellant in Nauru to the Topside camp; but, without a visa, the appellant is subject to the operation of the Act in several adverse respects. First, the appellant is liable to arrest under s 5(2) of the Act and to punishment for an offence under s 13(1) of the Act, including imprisonment. Secondly, the appellant also would be liable to removal from Nauru by order of the PIO made under the power conferred by s 11(1) of the Act, and to detention under s 11(4) pending that removal. With the approval of the Minister, the appellant might be removed "to a place in the country to which he belongs", or to any other place to which he consented to be removed and whose government consented to receive him (s 11(6)(b)). The power to impose conditions However, in this Court, the appellant reagitated the submission made in the Supreme Court that the conditions attached to the special purpose visa went beyond the power conferred upon the PIO by reg 12(4) to impose "such conditions as the [PIO] thinks fit" because they imposed a form of extra-curial punishment. 5 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 370-371; Harrington v Lowe (1996) 190 CLR 311 at 326-328; Director of Public Prosecutions v Hutchinson [1990] 2 AC 783 at 804, 808; Commissioner of Police v Davis [1994] 1 AC 283 at 298-299. In his reasons for rejecting this submission, the Chief Justice observed that reg 12(4) was broadly drawn to allow for the range of circumstances that might attend the arrival in Nauru of a person without a passport. With apparent reference to the MOU, and its predecessor, the Chief Justice noted: "It was acknowledged that it was not the intention of Nauru either to settle permanently the asylum seekers in Nauru nor necessarily settle them for any length of time within the community. They were to be present in Nauru whilst their cases for refugee status were investigated and determined by officers so authorised from the IOM, UNHCR, or the DIMIA. The numbers of asylum seekers were not insignificant and considerable time would necessarily be taken before determinations were finally made. The fact of arrival without any travel documents added considerably to the time taken in investigation of claims. The special purpose visa under Regulation 8 and 12(4) was designed to allow for such a task and left the way open for the PIO, taking account of the circumstances, to impose appropriate and suitable conditions." The Chief Justice correctly stated that reg 12(4) was not inconsistent with s 9. Section 19 confers a power to make regulations "not inconsistent with this Act". Section 9(2) specifies that the classes, terms, conditions and fees of visas "shall be" as prescribed. Further, as already noted in these reasons, s 69 of the Interpretation Act answers any objection based upon "sub-delegation". The Chief Justice continued: "In relation to Nauru, a small but relatively heavily populated island, it is not uncommon to have locality restrictions for overseas workers, and tourists, particularly, in regard to accommodation. In this instance, asylum seekers are being accommodated for the express purpose of having claims for refugee status investigated and determined, and then moved on either to countries of refuge or to countries of origin as the case may be. The imposition of the conditions for the period of the operation of the visa related to specific areas where the asylum seekers were accommodated and fed, where their claims could be investigated through interviews, and where specific arrangements could be made for their recreation and provision of facilities for communication, but with sufficient flexibility to provide outside activity such as children's education and religious observance." This reasoning should be accepted. Further, in this Court, the respondent properly stressed the well-recognised principle that, as a sovereign state, it is for the Republic of Nauru to annex what conditions it pleases to permission given to an alien to enter it6. This is so whether the entry be voluntary or, as the appellant says was the case here, it be involuntary7. The attack upon the validity of the conditions attached to the special purpose visa was rightly rejected by the Supreme Court. The necessity for an application There remain the objections taken by the appellant based upon what is said to be the fatal absence of an application by the appellant for the issue of the special purpose visas. The evidence is that, as at March 2004, the appellant had not applied for, or consented to, any Nauru visa and he had not authorised any person to apply on his behalf. It is convenient to begin with the text of the special purpose visa dated 28 January 2004. This states that "the visa is granted subject to approval by submitting an application in writing, addressed and submitted to the Office of the [PIO]" (emphasis added). This had been preceded on 15 January 2004 by a request to the Department of Foreign Affairs of the Republic of Nauru by the Australian Consulate-General for "an extension of the Special Purpose Visa for the 283 residents at the Offshore Processing Centres". There followed the issue of the instrument dated 28 January 2004 which was expressed in terms not of extension but that the PIO "[does] hereby issue forth this SPECIAL PURPOSE VISA". There followed a Note dated 30 January 2004 from the Department of Foreign Affairs to the Consulate-General attaching the special purpose visa for "the 283 asylum seekers residing on Nauru". This context indicates that the two Governments were proceeding on the footing that what sufficed to meet the condition stated in the visa was the one application and that this had been made by the Australian Consulate-General. However, the appellant refers to what are said to be the essential stipulations expressed in the Regulations. Regulation 13(1) states: 6 See the references to the writings of Vattel in Robtelmes v Brenan (1906) 4 CLR (Pt 1) 395 at 400, 409. 7 See O'Keefe v Calwell (1949) 77 CLR 261 at 275, 288. "An application for a visa shall be made in writing, by the applicant for the visa or by another person acting on behalf of the applicant". Further, the power conferred upon the PIO by regs 8(2)(b) and 18 to extend a special purpose visa is expressed in reg 18 as being exercisable "upon ... application by the holder" of a visa. The appellant submits that two things follow. First, whether the instrument dated 28 January 2004 be classified as a fresh visa or as an extension of the previous visa, an application by the appellant was necessary and none was made. The second consequence is that the instrument was invalid. Neither conclusion should be accepted. We turn to explain why that is so. First, as to the alleged requirement of an application. The Regulations do not state that no visa may be issued except upon application. As might be expected, the Regulations provide for a variety of visa classifications to cover many circumstances. Within some classes there is a range of sub-classes. So, reg 8(1) provides for the grant of a special purpose visa to persons falling into any of 10 descriptions. Regulations 13(1) and 18 are so cast as to encompass all of the 10 descriptions listed in reg 8(1). However, reg 13(1) is expressed in terms which assume that there may be a requirement elsewhere arising upon a proper construction of the Regulations that there be an application. Regulation 13(1) then stipulates the form of the application, namely that it shall be made in writing by the applicant or by another person acting on behalf of the applicant. Some categories of special purpose visa listed in reg 8(1) include involuntary arrivals who are unable themselves to make written applications and unable to authorise another to do so on their behalf. Those who arrive in Nauru as emergency entrants "due to stress of weather, medical or other emergency or other similar cause" (reg 8(1)(i)) may be involuntary arrivals who are incapacitated in this sense. Other arrivals may be unwilling to apply. Stowaways who arrive without a passport (reg 8(1)(g)) may be of this description. The detailed provisions for emergency entrants (reg 10) and for entrants without passports (reg 12(4)) are specified in terms inapt to require the making of an application before the issue of those special purpose visas. That being so, there was no mandatory requirement imposed by reg 13(1) for the making of a written application by or on behalf of the applicant before the issue of a special purpose visa under regs 8(1)(g) and 12(4). The appellant points alternatively to reg 18. This regulation would, on its face, condition the exercise of the power of the PIO to extend any special purpose visa "upon ... application by the holder" of a subsisting visa. As to this, two points are to be made. The first is that the instrument issued on 28 January 2004 was expressed to be, not an extension of a visa, but a special purpose visa issued pursuant to regs 8(1)(g) and 12(4). The second is that, were such extension to be granted by the PIO despite the absence of an application, there would be much to be said for the respondent's submission that the breach of the application requirement in reg 18 would not entail invalidity of the extension. The consequence of a holding of invalidity would be the exposure of the holder of the invalid extension to criminal liability under the Act for remaining on Nauru as a prohibited immigrant, and susceptibility to arrest, imprisonment, fine and removal. The evident purpose of the stipulation in reg 18 for an application is facilitation of the consideration by the PIO of whether it would be appropriate to extend (in the present case) a special purpose visa granted on humanitarian grounds under reg 12(4). There is not to be discerned here "a legislative purpose to invalidate any act that fails to comply with the condition"8. Conclusions The appellant has shown no error in the decision of the Chief Justice to discharge the order nisi which had been granted on 21 April 2004. The reasons given above are sufficient for that conclusion and it is unnecessary to consider various alternate grounds on which the respondent sought to uphold the decision of the Chief Justice. It also is unnecessary to consider the respondent's notice of contention disputing the holding that, in the sense of the authorities dealing with habeas corpus, the appellant had suffered a deprivation of liberty, albeit one that was authorised by law. The appeal should be dismissed with costs. The respondent's costs should be set off against any balance remaining after the setting-off of costs under orders made with respect to the objection to competency and motion seeking joinder. 8 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at Kirby KIRBY J. This appeal9 comes from a judgment of the Supreme Court of Nauru constituted by Connell CJ10. By that judgment, the Chief Justice dismissed applications brought by three applicants who asked that an order nisi, previously granted ex parte, for a writ of habeas corpus for their release from detention in Nauru, be made absolute. The Chief Justice refused the application. He discharged the order nisi. The third of the applicants in the Supreme Court, Mohammad Arif Ruhani (the appellant), then commenced proceedings in this Court. The other applicants fell away, apparently because they were successively granted visas to enter Australia. Whilst this appeal stood for judgment, this Court was informed that the appellant too had been granted an Australian visa11. He was reportedly brought to Australia. The significance of this development for the proceedings needs to be considered. Whilst the appeal awaited hearing, the Director of Police of Nauru (the respondent) challenged its competency, having regard to requirements of the Australian Constitution governing this Court. That challenge was dismissed by order of the Court. The reasons for that dismissal are published concurrently with these reasons12. This Court holds that under Nauruan and Australian law, it has the jurisdiction and power to decide this appeal. Such decision must be made within the applicable functions of this Court, giving effect to Nauruan law. In matters of Nauruan constitutional law, the decisions of the Supreme Court of Nauru are final13. As presented by the appellant, this appeal concerns his personal liberty. Personal liberty is protected by the Constitution of Nauru. Indeed, it is the second of the "fundamental rights and freedoms" referred to in the Constitution's 9 Pursuant to the Constitution of Nauru, Art 57(2); the Appeals Act 1972 (Nauru), ss 44 and 45; and the Nauru (High Court Appeals) Act 1976 (Cth), ss 4 and 5. The legislation is considered in Ruhani v Director of Police [2005] HCA 42. 10 Amiri v Director of Police unreported, 15 June 2004 (Connell CJ) ("Supreme Court reasons"). 11 By letter from the appellant's lawyers to the Senior Registrar of the Court dated 1 July 2005. 12 Ruhani v Director of Police [2005] HCA 42. 13 Appeals Act 1972 (Nauru), s 45(a). Kirby statement of such rights, expressed at the outset of that document14. The appellant points to the provisions of the Constitution as a contextual consideration indicating the high value placed by the law of Nauru upon liberty and the limited instances in which derogation is permitted15. The appellant did not rely on the Constitution, as such, for his arguments. However, he addressed his contentions to the meaning and application of the written and unwritten law of Nauru, illuminated both by the fundamental principles of the common law of England, received as part of the law of Nauru, and by the principles of international human rights law contained in treaties to which Nauru is a party. The other members of this Court have concluded that the appeal fails16. I disagree. In my opinion, the appellant has shown error in the reasons of the Supreme Court. Subject to considerations of mootness, occasioned by the belated grant of an Australian visa, the appellant is entitled to relief. The facts The transfer to Nauru: The explanation of how the appellant came to Nauru, with the result that he was detained there for nearly four years, is not elaborated in the record before this Court. However, it is referred to in the reasons of the Supreme Court17. Much of it is a matter of public record. In August 2001, a large number of persons were rescued at sea in the Indian Ocean near Christmas Island, an Australian territory. They were transferred to a Norwegian vessel, MV Tampa18. They were denied access to Australia to prosecute claims that they wished to make to refugee status in 14 Constitution of Nauru, Art 5. The first listed fundamental right is the right to life (Art 4). In the Supreme Court, Connell CJ rejected an argument based on Art 5 of the Constitution. See Supreme Court reasons at [32]-[33]. 15 One such instance is Art 5(1)(h): "for the purpose of preventing his unlawful entry into Nauru, or for the purpose of effecting his expulsion, extradition or other lawful removal from Nauru". 16 Reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ at [38] ("the joint reasons"). 17 Supreme Court reasons at [3]. 18 See Victorian Council for Civil Liberties Inc v Minister for Immigration and Multicultural Affairs (2001) 110 FCR 452 at 456-457 [14]-[16]; Ruddock v Vadarlis (2001) 110 FCR 491 at 522-523 [131]-[132] (special leave refused by High Court). See also Willheim, "MV Tampa: The Australian Response", (2003) 15 International Journal of Refugee Law 159 at 161-162, 172-176. Kirby accordance with the Refugees Convention and Protocol to which Australia is a party. In early September 2001, they were transferred from MV Tampa to a vessel of the Royal Australian Navy, HMAS Manoora. At that stage, proceedings for relief under Australian law were taken in the Federal Court of Australia. Those proceedings succeeded at first instance19 but failed on appeal20. A number of the "rescuees" were then taken to Nauru21. The appellant was one such person. Like many, he claimed to derive from Afghanistan. The record shows that linguistic tests, to which he was subjected, indicated that he was fluent in the language spoken by the Hazara, an ethnic group from central Afghanistan quite commonly involved in refugee applications in Australia based on claimed fear of persecution22. The record before the Supreme Court included an affidavit by a pleader in Nauru confirming the truth of the facts stated in the originating summons. That summons contained statements, in support of the relief of habeas corpus sought, that: "[t]he Applicants are held in Topside Camp against their will by or on behalf of the Director of Police. None of the Applicants has applied for or consented to a Nauru visa of any sort. None of the Applicants has authorised any person to apply for a Nauru visa on their behalf." It was the extended detention of the appellant in Nauru, in consequence of the decisions made by others, that led to his legal claims. The Memorandum of Understanding: The record in this Court reveals something of the arrangements under which the appellant was detained in Nauru. A Memorandum of Understanding ("MoU") between the Commonwealth of Australia and the Republic of Nauru dated 25 February 2004 replaced, but essentially continued, an earlier MoU of December 2002. It records the wish of the two Governments to "co-operate on the management of asylum seekers, and support regional efforts to combat people smuggling". It allows for the reception in Nauru of "a maximum number of 1,500 persons to be accommodated at a 19 Victorian Council for Civil Liberties Inc v Minister for Immigration and Multicultural Affairs (2001) 110 FCR 452. 20 Ruddock v Vadarlis (2001) 110 FCR 491 (Beaumont and French JJ; Black CJ dissenting). 21 Ruddock v Vadarlis (2001) 110 FCR 491 at 527 [146] per French J. 22 See eg WACB v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 79 ALJR 94 at 103 [47]-[48]; 210 ALR 190 at 202. Kirby number of temporary residential asylum seekers' facilities". It records Australia's obligation under the MoU to "ensure that each person will be processed and have departed Nauru within as short a time as is reasonably possible, and that no persons will be left behind in Nauru". In accordance with the MoU, Australia accepted obligations of financial responsibility, as well as humanitarian and development assistance, to Nauru. A schedule to the MoU records the fact that "Nauru's economy has been in decline for more than a decade as the phosphate era draws to a close, and there are now numerous signs that the economy is reaching crisis point". Nauru, for its part, agreed to provide Australia with "management of asylum seekers"23. No mention is made of securing the consent of persons in the appellant's position for their "management" in this way. Management was involuntary on their part. Their agreement was treated as irrelevant. However, the record shows that Australia offered a reintegration "package" to Afghan asylum seekers in Nauru who volunteered to return to Afghanistan. A number of the detainees accepted this offer. The appellant did not. By inference, his asserted fear of persecution if returned to Afghanistan was paid for in the coinage of his prolonged loss of liberty. The involvement of Australia, and its officials, in the detention of the appellant after his arrival in Nauru did not cease on the conclusion of his transport there. By the MoU, Australia undertook to provide the facilities in Nauru in which detainees such as the appellant were housed. It undertook to provide security personnel for such facilities, as well as health and medical services. Pursuant to these undertakings, the Australian Protective Service stationed approximately twenty-three officers in Nauru. They supported the Nauru Police Force and were appointed reserve officers of that force. for the The Australian Government also arranged International Organisation for Migration to undertake management of the detention facilities in Nauru; to facilitate the return to Afghanistan of those Afghan citizens willing to be repatriated; and to assist in counselling and "processing arrangements", in cooperation with the Office of the United Nations High Commissioner for Refugees. For its part, Nauru specifically agreed in the MoU that "any asylum seekers awaiting determination of their status or those recognised as refugees, will not be returned by Nauru to a country in which they fear persecution nor before a place of resettlement is identified". In circumstances that do not appear, the appellant arrived in Nauru without a passport or other travel documents. The respondent argued that this 23 The title of the MoU is "Memorandum of Understanding Between Australia and Nauru for Cooperation in the Management of Asylum Seekers and Related Issues". Kirby fact, and the large number of detainees, explained the significant delay in processing the claims to refugee status in Australia or finding a place of resettlement elsewhere. In argument, the appellant disputed that consideration of claims to refugee status by Australia continued during his detention in Nauru. However, his assertion was not supported by the provisions of the Migration Act 1958 (Cth) to which reference was made24 nor the Australian regulations. These clearly contemplate the provision of refugee and humanitarian visas to applicants in refugee camps offshore. Moreover, the successive grants of visas to the three applicants before the Supreme Court (including the appellant) demonstrate the error of that submission. Issue of visas with detention conditions: This notwithstanding, the appellant argued that the Supreme Court erred in concluding that, by Nauruan law, the provisions requiring his detention were valid and applicable. His counsel insisted that neither at the beginning of the detention on his arrival in Nauru nor at any time thereafter did the appellant apply for, or authorise anyone else to seek on his behalf, the visa to which the detention obligation (under which he had been held) was attached. The original visa, granted to the appellant on 7 January 2002, contained four restrictions25. That visa was granted by the then Principal Immigration Officer ("PIO") of Nauru, purportedly pursuant to the Immigration Act 1999 (Nauru) ("the Act"), s 3 and Regs 8(1)(g) and 12(4) of the Immigration Regulations 2000 (Nauru) ("the Regulations"). It was uncontested that the "special purpose visa" provided was granted to 319 "Asylum Seekers", including the appellant. Moreover, this was done pursuant to an application made for that purpose by the Australian Consulate-General in Nauru. The visa so granted to the appellant and the other "rescuees" was for a stay not exceeding six months from the date of arrival. Inferentially, it was successively renewed. The most recent visa in the record is that said to have applied to the appellant at the time of the hearing before the Supreme Court. It was granted by the then PIO, also as a "special purpose visa", to 283 named "Asylum Seekers", including the appellant, "for an extension of stay in Nauru from the date of 29th January 2004, on humanitarian grounds for such time as is reasonably necessary to complete humanitarian endeavours". 24 Esp Migration Act 1958 (Cth), ss 46A and 198A ("offshore entry persons") and ss 46B and 198B ("transitory persons"). 25 These restrictions are, in substance, conditions 1, 2, 3 and 5 of the visa conditions described in the joint reasons at [8]. Kirby Once again, this visa was stated to authorise a stay not exceeding six months from the specified date. Once again, on the evidence, the visa was not initiated by any application by the appellant. Instead, the initiation came from the Australian Consulate-General in Nauru. It did so in the following document sent by the Consulate-General to the Government of Nauru in January 2004: "The Australian Consulate-General presents its compliments to the Department of Foreign Affairs of the Republic of Nauru and has the honour to request an extension of the Special Purpose Visa for the 283 residents at the Offshore Processing Centres. The current visa expires on 29 January 2004 and an extension for a further six months is sought. A list containing details of the 283 residents at the two centres is attached." The conditions imposed by the PIO unarguably involved detention of the appellant and the other 282 persons still then detained in the facilities in Nauru. By the visa conditions, residence by such persons in Nauru was restricted to the designated detention sites. Movement anywhere else had to occur under an escort of security personnel. Residence and movement were subject to lawful directions with which the visa holders were required to comply. Completion of "humanitarian endeavours" was to constitute termination of the visa. The result of the foregoing facts, derived from uncontested evidence, is that the appellant (with a large number of other persons) was taken to, and detained in, Nauru without his consent. Although he did not wish to go to, or enter, Nauru the PIO imposed on him, at the request of an official of the Australian Government, a visa that he had never sought and to which were attached conditions of detention that he opposed, severely restricting his liberty. It was those restrictions that he contested. For nearly four years, the appellant was deprived of his personal liberty by the actions of others. Was this deprivation in accordance with Nauruan law? The Supreme Court held that it was. In my view, it was not. The issues Many issues were raised by this appeal. However, it is sufficient to confine the issues to those that have to be determined as follows: The mootness issue: Having regard to the remedies claimed and to the indication that the appellant has been granted a visa and been "brought to Australia" since the hearing, should this Court decline to decide the appeal on the ground that the issues are now hypothetical and do not affect the real interests of the parties? Kirby The application of the Act and Regulations issue: If the appeal is to be determined, do the provisions of the Act and Regulations governing the issue of visas to persons entering Nauru apply to the appellant, having regard to the established facts? Is it relevant for this purpose that the appellant originally arrived in, and entered, Nauru not by his own wishes but pursuant to an express arrangement (the MoU) between Nauru and Australia for their respective purposes? Does any such want of consent and approval thereafter affect the extension visas granted to the appellant, in turn pursuant to the application in that behalf made by Australia, not by the appellant? Is the absence of an application for a visa by the appellant, or for extension of a visa, fatal to the validity of the visa granted to the appellant on 28 January 2004? (That was the visa in force at the time of the hearing in the Supreme Court.) Was the Australian Consulate-General in Nauru authorised, in accordance with the Nauruan Act and Regulations, to make the application for the visa, and extension visa, on behalf of the appellant on humanitarian or other grounds, so as to permit the consideration and processing of the appellant's application for refugee status in Australia or resettlement elsewhere? The lawfulness of the conditions issue: Having regard to the answers to the foregoing, were the conditions imposed on the appellant in the original grant of a visa, and continued in the extension visas later granted (including that of 28 January 2004), lawful having regard to the consequence of the long-term detention of the appellant, with resulting deprivation of his liberty? The conundrum issue: Would defects in the successive visas granted to the appellant fail to assist him on the basis that, without a visa, he would have been exposed to punishment under the Act for being in Nauru without a visa and to removal from Nauru with detention pending such removal? The habeas corpus issue: Is the appellant, in any case, disentitled to the remedy of habeas corpus upon the ground that he is not, and never has been, lawfully present in Nauru and thus has no right to enter the Nauruan community26? The relief issue: Assuming error is shown in the judgment of the Supreme Court, what relief, if any, should be given to the appellant having regard 26 The respondent sought to raise this point under a notice of contention. Kirby (a) His amenability as a non-citizen of Nauru within Nauru, holding no valid visa, to be treated as a "prohibited immigrant", punished for a criminal offence and removed from Nauru? The need for up to date evidence on the status of the appellant and, in particular, in the light of his departure from Nauru and entry to Australia? Liberty and its protection by law The quality of the appellant's detention: In the Supreme Court, Connell CJ recorded the submission of the respondent that there had been no deprivation of the appellant's liberty. Such a submission was repeated in this Court27. Connell CJ had to consider it (as I will) for the issue of the availability of habeas corpus. He rejected the submission in that context. But what he said (with which I agree) has a wider significance28: "The [respondent's] argument ran along the lines that as the asylum seekers arrive within the boundaries of Nauru without passports or entry permits, the PIO, in permitting the asylum seekers to enter and stay within a specified location of Nauru, did not deprive the Applicants of any liberty that they otherwise had – an anything is better than nothing rule! However, once the non-citizens have been admitted to Nauru, they each became subject to Nauruan law and part of that law is the prevailing common law with respect to habeas corpus and the rights provisions of the Constitution both of which apply to citizens and non-citizens alike." "The Respondent also pressed that the conditions imposed by the PIO did not in themselves amount to custody or detention of the asylum seekers. Some of the English cases are with respect a trifle ambivalent and speak sometimes of the need for 'total' deprivation of freedom before there is a detention that could attract habeas corpus30. While close custody involving prison incarceration is clearly a situation where habeas corpus lies, the custody requirement includes other forms of restriction short of 27 Pursuant to the respondent's notice of contention. 28 Supreme Court reasons at [25]. 29 Supreme Court reasons at [26]. 30 See, for example, R v Secretary of State for the Home Department; Ex parte Mughal [1973] 1 WLR 1133. Kirby imprisonment. In Eatts v Dawson31, the Australian Federal Court explored cases involving 'police custody' and quoted without criticism, the United States Supreme Court in Jones v Cunningham32 … 'History, usage and precedent can leave no doubt that, besides physical imprisonment, there are other restraints on a man's liberty, restraints not shared by the public generally, which have been thought sufficient in the English-speaking world to support the issuance of habeas corpus.'" The Chief Justice concluded that such a deprivation of liberty applied in the appellant's case33: "I have no difficulty in finding that, for the purposes of habeas corpus, the Applicants were in a custodial situation. They were confined to a particular location34 and that location had certain restraints such as perimeter fencing, controlled entrance and exit, and an overall police control. … [G]iven the detention, the issue at stake was whether it was legal or not." The presumption in favour of liberty: In resolving the foregoing question, by the application of Nauruan law, the starting point is the strong presumption of the common law in favour of personal liberty and against indefinite detention. The decisions of courts of Commonwealth countries are replete with instances where this proposition has been upheld35. Thus in Re Bolton; Ex parte Beane36, an Australian case, Brennan J said: "The law of this country is very jealous of any infringement of personal liberty and a statute or statutory instrument which purports to impair a right to personal liberty is interpreted, if possible, so as to respect that right." 31 (1990) 21 FCR 166 at 176. 32 371 US 236 at 240 (1963). 33 Supreme Court reasons at [27]. 34 Yasmin Ali Shah v Attorney-General [1988] SPLR 144. 35 See eg Trobridge v Hardy (1955) 94 CLR 147 at 152; R v Governor of Brockhill Prison; Ex parte Evans [No 2] [2001] 2 AC 19 at 32. 36 (1987) 162 CLR 514 at 523 (footnotes deleted). Kirby In the same case, Deane J said37: "A legislative provision should not be construed as effecting such a derogation from fundamental principle relating to the freedom of the subject in the absence of a clear legislative intent that it should be so construed." said38: To like effect in Chu Kheng Lim v Minister for Immigration, McHugh J "Absent a statutory power of detention, no public official has any power to detain an alien who has entered the country whether or not that person's entry constituted an illegal entry. In a United States immigration case39, Jackson J reminded us that: 'Executive imprisonment has been considered oppressive and lawless since John, at Runnymede, pledged that no free man should be imprisoned, dispossessed, outlawed, or exiled save by the judgment of his peers or by the law of the land.'" Reminding himself that the common law knew no lettre de cachet or executive warrant pursuant to which either citizen or alien could be deprived of freedom by mere administrative decision or action, McHugh J in Lim returned to the remarks of Deane J in Ex parte Beane40: "Any officer of the Commonwealth Executive who, without judicial warrant, purports to authorize or enforce the detention in custody of another person is acting lawfully only to the extent that his conduct is justified by clear statutory mandate." The common law of Nauru is not different from these statements of principle in content or quality. It reflects the same values. It does so apart from the express guarantee of individual liberty in the Constitution41. To deprive the appellant of his liberty in Nauru, by way of long-term detention there, under conditions of severe restriction, a clear and express mandate was required in the statute law of Nauru or in regulations lawfully made thereunder. 37 (1987) 162 CLR 514 at 532. 38 (1992) 176 CLR 1 at 63 (one footnote deleted). 39 Shaughnessy v United States; Ex rel Mezei 345 US 206 at 218 (1953). 40 (1987) 162 CLR 514 at 528. 41 Constitution of Nauru, Art 5. Kirby The lessons from international law: In addition to the foregoing, it is appropriate to observe that a court, exercising the judicial power of Nauru, will construe an Act and regulations, as far as possible, so that they conform to Nauru's international obligations. Where there is ambiguity, a construction that complies with those obligations in upholding fundamental human rights and freedoms will be preferred to one that does not. Whatever differences exist in Australian courts over the extent and application of this principle in Australian circumstances42, the general proposition is now respected in courts throughout the Commonwealth of Nations. New Zealand courts have adopted this approach to statutory interpretation for more than a decade43. There is every reason why this Court, exercising its present jurisdiction and powers, should apply the same principles to the elucidation of Nauruan law, specifically in the construction of the Act and Regulations. Nauru is not a party to the Refugees Convention and Protocol. This fact itself made the removal of the appellant by Australian officials to Nauru a source of potential disadvantage for him44. Nevertheless, Nauru is a party to the International Covenant on Civil and Political Rights ("ICCPR") and the Convention on the Rights of the Child ("CRC"). By Art 9(1) of the ICCPR, it is provided that "[e]veryone has the right to liberty and security of person. No one shall be subjected to arbitrary arrest or detention. No one shall be deprived of his liberty except on such grounds and in accordance with such procedure as are established by law." The CRC applies to children under the age of 18 years. The appellant was aged 18 when he arrived in Nauru. The CRC did not, therefore, apply to him. However, in the schedule of "asylum seekers" who entered Nauru with the appellant, and to whom visas were granted by Nauru purportedly in accordance 42 See eg Al-Kateb v Godwin (2004) 78 ALJR 1099 esp at 1112-1115 [62]-[73], contra at 1128-1136 [152]-[192]; 208 ALR 124 at 140-145, 163-173; Coleman v Power (2004) 78 ALJR 1166 esp at 1172 [19], contra at 1209-1212 [240]-[249]; 209 ALR 182 at 189-190, 241-245. 43 Tavita v Minister of Immigration [1994] 2 NZLR 257; Rajan v Minister of Immigration [1996] 3 NZLR 543; New Zealand Air Line Pilots' Association Inc v Attorney-General [1997] 3 NZLR 269 and Wellington District Legal Services Committee v Tangiora [1998] 1 NZLR 129. 44 It is one that the MoU sought to reduce by the agreement of Nauru with Australia not to return any asylum seekers to a country in which they feared persecution or before a place of resettlement was identified. See MoU, par 24. Kirby with the Act and Regulations, many were identified as children, some of tender years. All were immediately detained and kept in detention. There was no differentiation in their cases. By Art 37 of the CRC, States parties undertake to ensure that "[n]o child shall be deprived of his or her liberty unlawfully or arbitrarily. The arrest, detention or imprisonment of a child shall be in conformity with the law and shall be used only as a measure of last resort and for the shortest appropriate period of time." The foregoing principles of the international law of human rights must be kept in mind in considering the assertion by the respondent that the Act and Regulations applied to arrivals in Nauru such as the appellant and empowered Nauruan officials to impose a condition upon such arrivals destructive of their fundamental right to liberty. Pacific judicial decisions: Lest it be suggested that the foregoing principles are apt in their full measure only to developed countries of the common law, a review of the decisions of common law courts in the Pacific region shows an equal vigilance for the value of liberty and a recognition of the duty of the courts to protect it. In Fiji, in Keppel v Attorney-General of Fiji45, a question arose as to the lawfulness of the proposed removal of immigrants who had sought protection from the court. Fatiaki J restrained peremptory removal, citing English authority46 not inapposite to the present case: "It would be a mockery of justice if an applicant for asylum, refused entry, threatened with removal and possible return to the country he fears, could be granted leave for judicial review but be flown out of the country before his case was determined. Should his fears prove well-founded it would be little comfort to his relatives to hear that his application for judicial review had been allowed posthumously." In that case, Fatiaki J ordered the release of the immigrants. Whilst the legal issues are different from those arising in this appeal, they demonstrate the vigilance of courts in this region to basic rights, including liberty. 45 [1998] FJHC 16. 46 R v Secretary of State for the Home Department; Ex parte Muboyayi [1992] QB 244 at 268 per Taylor LJ. Kirby In Papua New Guinea, a power of detention of non-citizens is conferred on the Minister for limited purposes and a limited time47. In one case where detention was challenged, Perryman v Minister for Foreign Affairs and Trade48, the Supreme Court of Justice (Kapi Deputy CJ, Kaputin and McDermott JJ) was at pains to emphasise the distinction drawn in the Constitution between "the imposition of a sentence and other forms of deprivation of liberty". The Court upheld the detention by the Minister under the Migration Act as lawful. However, that detention was pursuant to express powers of detention for the purposes of removal of the immigrant from Papua New Guinea. It was not detention as a condition of a visa granted by an official in the fulfilment of intergovernmental arrangements with the government of a foreign country in respect of a person brought to that country with its express consent, who never expected, or wanted, to enter or be there. In Solomon Islands in Jakamana v Attorney-General49, a challenge was brought to a declaration by an Acting Minister that a named person could not leave Solomon Islands. The High Court (Daly CJ) held that the immigration officials and the Minister had unlawfully deprived the applicant of his right to free movement. The Court insisted that the immigration officials should have queried the lawfulness of the Minister's orders. The foundation for the Court's reasoning was the strong value attached by the law of Solomon Islands to individual freedom. In Vanuatu, the Supreme Court in Benard v Minister for Immigration50 reviewed a decision of officials to remove the applicant from the country before the expiry of fourteen days' notice which the law required to be given. The Court held that the removal order had not been made in good faith and that the procedures had not followed the applicable requirements. The detention of the applicant pending removal was therefore unlawful. In Hong Kong in Re Pham Van Ngo51, officials had destroyed a boat in which Vietnamese refugees were proceeding to Japan by way of that Territory with the intention of claiming protection there. The refugees were placed in detention under a law affording officials a discretionary power to detain refugee applicants. The Hong Kong Supreme Court held that the detention of the 47 Migration Act 1978 (PNG), ss 15A, 15D, 16. 48 [1982] PNGLR 339 at 340. 49 [1985] LRC (Const) 569. 50 [2001] VUSC 20. 51 [1991] LRC (Const) 987. Kirby refugees was, by its nature, penal. It was therefore unlawful unless the officials could establish otherwise. The Court held that the officials had detained the applicants without due exercise of their discretion and that the period of detention (eighteen months) had been unreasonable. Most of the newly independent countries of the common law in the region of Nauru enjoy, like Nauru, specific constitutional protections for individual liberty52. It is important to recognise this universality of respect for individual liberty, including, in most countries, the liberty of non-citizens as much as of citizens. It is equally important for courts such as this, on appeal from the Supreme Court of Nauru, to give real content to such legal values. It is not this Court's function to give effect to the express provision, defensive of individual liberty, in s 5 of the Constitution of Nauru. But it is its function, in deciding the present appeal, to give effect to the deeply rooted principle of the common law and to the newly expressed principles of international human rights law that together cast light on the meaning of the Act and Regulations invoked in this case. In understanding the content of the common law of Nauru, this Court, in a Nauruan appeal, should consider the judicial authority of the region and not confine itself to Australian judicial authority where it differs from that declared elsewhere. The mootness issue Because the appellant has notified this Court of the grant to him of an Australian visa, permitting him to enter Australia53, the question of mootness of this appeal is a real one. Not least is this so because the parties, in supplementary submissions filed with the leave of this Court, agreed that, if the appeal were allowed, the appropriate orders would include remittal of the proceedings to the Supreme Court of Nauru to receive evidence in relation to the present position of the appellant. 52 See eg Constitution of the Cook Islands, Art 64(1)(a); Constitution of the Federated States of Micronesia, Art IV, s 3; Constitution of the Fiji Islands, s 23; Constitution of Kiribati, s 3(a); Constitution of the Marshall Islands, s 4(1); Constitution of the Independent State of Papua New Guinea, National Goals and Directive Principles, s 5; Constitution of Solomon Islands, s 3(a); Constitution of the Independent State of Western Samoa, Art 6(1); Constitution of Tuvalu, ss 11(1)(b), 17; Constitution of Vanuatu, Art 5(1)(b). 53 As to such notifications being received in open court see Re Application by Chief Commissioner of Police (Vic) (2005) 79 ALJR 881 at 901 [120]; 214 ALR 422 at Kirby It now appears that the present position of the appellant is that he is no longer in detention in Nauru. No order of habeas corpus could therefore be made in his favour by the Supreme Court of Nauru. Exercising its powers on appeal from that Court, this Court should not make orders of habeas corpus which would be ineffective. Nevertheless, other legal consequences flow from the determination of this appeal. There remain many other detainees in Nauru who are affected by the principles fully argued in what was effectively a test case. Not without some hesitation, therefore, I will treat the proceedings as continuing to present a viable issue for the decision of this Court. This justifies its determination according to the legal merits. The application of the Act and Regulations Non-engagement of the Nauruan law: The foregoing conclusion brings me to the supposed application of the Act and Regulations to the appellant, having regard to the proved circumstances in which he arrived, and remained, in Nauru. My approach to this issue is greatly affected by the principles of interpretation favouring individual liberty and fundamental rights that I have set out above. It is also affected by the unique and extraordinary arrangements entered between the Governments of Nauru and Australia, pursuant to which the appellant arrived, entered and remained in Nauru. There may be other similar arrangements in the history of population movements of recent times54. However, if any exist like the present case, I do not know of them and none were suggested to this Court. Instances arise where a statute, apparently drawn in general language, for application to a wide range of cases, is seen upon analysis as inapplicable to the evidence in a given case because the hypothesis upon which the statute is expressed does not apply in the facts that have been proved. One such case was recently heard in this Court in an Australian appeal: Al-Kateb v Godwin55. 54 The more typical case involves rebuffing fleeing refugees so that they are forced back to sea with dire consequences as happened in the case of the vessel St Louis containing Jewish refugees fleeing from Europe. They were refused entry to the United States with consequences "forcing many back to die in Nazi gas chambers". See NAGV and NAGW of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 79 ALJR 609 at 625 [98] fn 117; 213 ALR 668 at 690. 55 (2004) 78 ALJR 1099; 208 ALR 124. Kirby In Al-Kateb, the appellant contended that he had been unlawfully detained for some years in immigration detention in Australia. He argued that mandatory detention under the Migration Act 1958 (Cth), s 196, was dependent on the validity of the assumption that he could be removed from Australia or voluntarily returned to his country of nationality or to some other country of resettlement. Because in that case the appellant was a stateless person, removal had proved impossible. This was so despite the passage of nearly four years. A majority of this Court (McHugh, Hayne, Callinan and Heydon JJ) held that the Act still applied according to its terms. It authorised the continuing, potentially However, a minority of this Court (Gleeson CJ, unlimited, detention. Gummow J and I) dissented. We held that because the hypothesis of the Act was incapable of fulfilment in the evidence of the case, the Act did not apply to such circumstances. The hypothesised evidentiary foundation for invoking s 196 was missing. The evidence did not engage the Act. The Act was intended to operate in the generality of cases. But it had no application to the facts of the given case. I adhere to the views expressed by the minority in Al-Kateb on this point. In this appeal, from the Supreme Court of Nauru, this Court is exercising a distinct jurisdiction for a country other than Australia. It is not bound to apply (although it will give the closest attention to) decisions reached by this Court in Australian decisions. In this appeal, we should follow the approach of the minority in Al-Kateb. In my view, it states the law of Nauru and is more appropriate to its circumstances. One reason for concluding in this way is that Nauru is a nation with a comprehensive constitutional Bill of Rights. This distinguishes its system of law in a fundamental way from that of the Commonwealth of Australia56. Whilst this Court has no responsibility for construing and applying that part of the Nauruan Constitution, it cannot ignore its existence as a contextual circumstance affecting (amongst other things) the approach to statutory construction and the jurisprudence of basic rights. When the approach of the minority in Al-Kateb is adopted in this appeal, it is clear that the Act, with its general provisions on immigration, was not attracted, nor did it apply, to the case of the appellant in Nauru. It was an Act designed to apply, as its terms indicate, to the ordinary case of a person entering and being in Nauru, deliberately, accidentally or by force of nature or chance. It had no application to a case of a person, like the appellant and the other "rescuees", who were deliberately brought to Nauru by the decision of the Government of Nauru, pursuant to an understanding that Nauru had with another government seemingly for reasons of international relations and financial gain. 56 Al-Kateb (2004) 78 ALJR 1099 at 1115 [73] per McHugh J; 208 ALR 124 at 144- Kirby The language of the Act bears out this interpretation. It talks of a person "entering" Nauru57 or "travel[ing] to, enter[ing] and remain[ing] in Nauru"58. These verbs connote the familiar and usual cases to which an Immigration Act is addressed, namely the action of a non-citizen entering, and staying in, the foreign country for that person's own purposes without the requisite local permission. Those assumptions have no application to the appellant. According to the uncontested evidence, he was brought to Nauru unwillingly by governmental action, without any request or wish. He was immediately detained there for reasons that seemed attractive to the Executive Governments of Nauru and Australia. In no usual sense of that word was he an immigrant. He was the object of the official actions of others bringing him to an unwanted destination, locking him up and keeping him detained there. It is true that the Act envisages emergency arrivals and such events would quite naturally arise in the ordinary application of immigration law. However, the nominated circumstances of such arrivals were confined by the Act to cases where "the entry or departure was caused by stress of weather, medical or other emergency or other reasonable cause"59. The appellant's entry, on the face of things, was far from accidental. It was the result of the deliberate action, relevantly, of the Government of Nauru which could not thereafter complain that the appellant was a "prohibited immigrant" who did not hold a valid permit granted under the Act60 and whose presence in Nauru was "unlawful"61. As a legislature of plenary powers, it may have been competent for the Parliament of Nauru to amend the Act or to enact new legislation for the MoU to make express provisions for the arrival of the appellant and his fellow "rescuees". What was not permissible was to attempt to distort the Act, a general law on immigration, for application to the unprecedented factual circumstances which the appellant and other detainees occasioned in long-term detention. In short, because the appellant and those with him were brought to Nauru under physical constraint and thereupon detained and subjected, at the request of a foreign nation, to visas they had not sought, it cannot be said, within the Act, that they have unlawfully entered Nauru or are unlawfully in Nauru62. It does not 57 The Act, s 8(1). 58 The Act, s 9(1)(a). 59 The Act, s 8(6). 60 The Act, s 10(1). 61 The Act, s 10(2). 62 The Act, s 13(1)(l). Kirby lie in the mouth of the Executive Government of Nauru and its officials, who condoned, facilitated and participated in the arrival, entry and presence of the appellant and other detainees in Nauru to contend, in the language of the Act, that they are immigrants, subject in the ordinary way to regular visas envisaged by the Act for the ordinary case. This was no ordinary case. In so far as the Act provides for the imposition of visas by immigration officers upon persons whose presence in Nauru is, or would be, unlawful and condones detention in such cases, such provisions do not apply to the case of persons like the appellant. The same considerations lead to the misapplication of the Act to the facts of this case, as were identified by Gleeson CJ, Gummow J and me in Al-Kateb. I refer to the inapplicability of the assumptions contained in the statutory language expressed for the ordinary case63; the principle of legality protective of human rights "of which personal liberty is the most basic"64; and the absence of express provisions in the Act dealing with the particular circumstances of this exceptional case65. The notion that the Government of Nauru could bring persons, such as the appellant, to Nauru, without their consent or agreement and there subject them to prolonged indefinite detention under an Act intended for the generality of immigration arrivals, is not a persuasive one. That Act envisages a power to keep such a person in custody for an unlimited period66. Such a power, if it is to be granted to fulfil the purposes of the MoU between the Executive Governments of Nauru and Australia, must be granted by the Parliament of Nauru expressly. Attempting to squeeze this case into the receptacle of the Act dealing with immigration fails. In default of any other law permitting the detention of the appellant, he was entitled to his liberty. No other law was relied on. In the words of Gummow J in Al-Kateb67: 63 Al-Kateb (2004) 78 ALJR 1099 at 1105 [18] per Gleeson CJ, 1123 [122] per Gummow J; 208 ALR 124 at 130, 156. 64 Al-Kateb (2004) 78 ALJR 1099 at 1105 [19] per Gleeson CJ, see also at 1124 [126] per Gummow J; 208 ALR 124 at 130, 156. 65 Al-Kateb (2004) 78 ALJR 1099 at 1105-1106 [22] per Gleeson CJ; 208 ALR 124 at 66 cf Koon Wing Lau v Calwell (1949) 80 CLR 533 at 556 per Latham CJ. 67 (2004) 78 ALJR 1099 at 1126 [141]; 208 ALR 124 at 160. Kirby "As it now stands, the Act itself does not authorise the imposition upon the appellant of restraints … upon his freedom of movement and action whilst he is not detained under the legislation." The decision in O'Keefe v Calwell: To counteract such reasoning, the respondent relied on O'Keefe v Calwell68. That was a decision of this Court in an Australian case concerning the dictation test then used by Australian federal law to enforce the White Australia policy69. Some little care is needed in enlisting dicta in such a case for the ascertainment of the law of Nauru in contemporary circumstances70. In O'Keefe, Latham CJ71 and Dixon J72 (who were in dissent) rejected the argument that Mrs O'Keefe, who was born a subject of the Netherlands of Celebes ethnicity, was not an immigrant for the purposes of Australian law73. Their opinions were to the effect that status as an immigrant could not depend on the intention or wish of the entrant to enter the country. Mrs O'Keefe had been brought to Australia in an Australian naval vessel with her then husband in 1942, during the Second World War. Her husband, a national of the Netherlands, had escaped from Japanese forces with his wife and children. Later that husband died and the widow married Mr O'Keefe, an Australian national. However, in 1949 Mr Calwell, the Australian Minister for Immigration, claimed the power to remove Mrs O'Keefe from Australia as a prohibited immigrant. The suggested basis for doing so was that she was subject to the administration of a dictation test. But the real basis of the proposed removal was Mrs O'Keefe's skin colour or pigmentation. An unrecorded fact in O'Keefe, known to all at the time, was that Mrs O'Keefe was not a "white" immigrant. By majority, this Court concluded that she was not a prohibited immigrant. Apart from the arrival in the country on a vessel of the Royal Australian Navy, the facts of O'Keefe are quite different from the present facts. The entrant there desired her removal to Australia. She participated in that removal as a 68 (1949) 77 CLR 261. 69 See eg Chia Gee v Martin (1905) 3 CLR 649. 70 cf Fairall and Yeo, Criminal Defences in Australia, 4th ed (2005) at 113 [7.2]. Such decisions would not be applied by this Court in a Nauruan appeal and may not now be good law in an Australian appeal. 71 (1949) 77 CLR 261 at 275. 72 (1949) 77 CLR 261 at 285. 73 And for the application of the Immigration Act 1901 (Cth). Kirby rescue from enemy forces. She settled in Australia. She moved freely about for many years and remarried in Australia. There is no suggestion that she was brought to Australia against her will and without her consent, still less that she arrived pursuant to an intergovernmental agreement under which Australia would detain her and gain financially as a consequence. Mrs O'Keefe was not subjected to detention for years in a country that she had never wanted to enter. In such circumstances, the characterisation of Mrs O'Keefe's conduct for the purpose of the then Australian Immigration Act casts no light on the characterisation of the appellant's entry and status in Nauru for the purposes of the Nauruan Act and Regulations. The lawfulness of the applications for visas The absence of request or authority: In the light of the conclusion that the Nauruan Act and Regulations do not apply to the circumstances of the appellant, many other arguments advanced by the appellant to challenge his detention need not be answered. They involve points of detail, upon an assumption, which I would reject, that the Act and Regulations applied to the circumstances of the appellant's arrival and presence in Nauru and provided a legal regime to empower the provision to the appellant of visas and the attachment to those visas of conditions obliging the appellant's long-term detention in Nauru. Absence does not affect validity: Were I of the view that the Act applied the ordinary regime of Nauruan immigration law to the arrival and presence in Nauru of persons such as the appellant, I would not accept the appellant's proposition that the lawfulness of the grant or extension of special purpose visas depended on their being applied for by the person concerned, relevantly the appellant. It was the appellant's complaint that they had been applied for, on each occasion, by the Australian Consulate-General, without his authority. It was therefore submitted that the requirement that the visa be granted subject to "submitting an application in writing" was not fulfilled. Nor was the requirement of Reg 13(1) of the Regulations satisfied that applications for a visa "shall be made in writing, by the applicant for the visa or by another person acting on behalf of the applicant". The power to grant visas under ordinary immigration law must be given a wide ambit because the grant is ordinarily to the benefit of the recipient. It obviates the consequence otherwise of unlawful entry, or presence, in the country concerned. Normally issue of such a visa assures liberty. Here, exceptionally, it deprived the recipients of liberty. Nevertheless, given the wide variety of persons requiring visas in the ordinary course, I would hesitate to construe the necessity of application as one affecting the validity of the visa once granted. Some applicants might be illiterate, confused, demented, old or of tender years and incapable of making an application. Others might be forced to rely on the voluntary assistance of community groups or individuals acting on their Kirby behalf. Here, the appellant's objection was that, as a consequence of the unsought-for application by the Australian Consulate-General, visas were issued but subject to purported conditions of prolonged detention that were not in his interests. In such circumstances, I can understand the appellant's objection to the suggestion that the Australian official was "acting on behalf of the applicant"74. However, even if that objection were made good, and the contention was rejected, namely that the "application" was made in order to advance the processing of the claims of the appellant and others to humanitarian assistance as refugee applicants, such rejection would not invalidate the application or the visa that followed it. Upon the hypothesis that the Act and Regulations applied, the visa issued pursuant to the application would remain valid. It would derive its force from a source in the Act unaffected by the validity of the application that initiated the grant. The lawfulness of the conditions of the visa The limited power to impose conditions: More persuasive is the appellant's submission that the general power afforded to the PIO under the Act to impose such conditions as he or she thinks fit did not extend to the imposition of the condition that he in fact imposed (then renewed and extended), namely the restraint condition confining the appellant to detention in Nauru and severely limiting his freedom of movement and other rights. It is here that the issue concerning the application of the Act and Regulations to the appellant's circumstances intersects with the specific complaints of the appellant on the assumption of the application of the Act and the Regulations. There is nothing expressly stated, or implied, either in the Act or in the Regulations, that permits the PIO to impose such liberty-restricting conditions on the appellant and the other "rescuees" as he did. If Nauruan law were intended to authorise long-term detention of the kind imposed on the appellant (and those who arrived with him) the previously stated principles of interpretation require that such powers be spelt out in the clearest terms. Thus if, contrary to my view, the Act and Regulations did apply to the exceptional circumstances of the arrival and presence of the appellant and others in Nauru, in the manner described in the record, the attempt to stretch the Act and Regulations to impose on the appellant a form of extra-curial imprisonment at the discretion of the PIO should be rejected. The closely settled character of Nauru and the difficulty of allowing the appellant and other "rescuees" to enjoy there the right to personal liberty is not an answer to the appellant's argument75. The duty of a court is to apply the law. 74 The Regulations, reg 13(1). 75 cf joint reasons at [24]-[26] citing Supreme Court reasons. Kirby The Government of Nauru ought to have considered this possibility before agreeing to receive the appellant and other arrivals on the conditions agreed including the assumption that they would be subjected to long-term detention. Alternatively, the Government may have been entitled to seek specific legislation to provide clearly for the long-term detention of persons such as the appellant. What could not lawfully happen was what occurred: the unique reception of a large number of persons who did not wish to be in Nauru and the use of a general immigration statute to impose upon them conditions depriving them of liberty but without express authority from the Parliament of Nauru to permit that course. Strictness in conditions for detention: In so far as the Parliament of Nauru has spoken on the detention of non-citizens in Nauru, it has done so in strictly limited terms. They are carefully expressed. Possibly this was intended to take into account the guarantee of individual liberty in s 5 of the Constitution. Thus, s 11 of the Act provides for a removal order to be made in specified circumstances. Section 11(4) authorises the person against whom such a removal order is in force to be held in custody "before he leaves Nauru and while being conveyed to the place of his departure". Clearly, all that was contemplated by such provisions was a very short-term detention. Long-term and repeatedly renewed detention under visas issued by an officer of the Executive of Nauru, subject to the restraint condition, contrary to the wishes of the persons affected, falls outside the Act and Regulations. This is an unsurprising conclusion. It is another way of saying that the Act and Regulations were not intended to apply to the peculiar situation brought about in Nauru as a consequence of the inter-governmental arrangements contained in the MoU. The supposed conundrum does not apply It was suggested that the appellant faced a conundrum in advancing his objection to the lawfulness of his detention and, by inference, that of the other involuntary arrivals in Nauru. This was said to be that, under s 5(2) of the Act, if the visas were invalid, he would be liable to punishment under s 13(1) of the Act; to removal under s 11(1); and to detention pending removal under s 11(4)76. There is no substance in this argument. If, because of the uniqueness of the circumstances in which the appellant and other arrivals were involuntarily brought to Nauru by the action of the Government, the Act and Regulations are inapplicable to those persons, no conundrum arises. The Government of Nauru is simply faced with the awkward, and urgent, obligation to set those persons at liberty; to arrange with Australia for their removal; or to secure the passage of 76 See joint reasons at [37]. Kirby legislation, if compatible with the Nauruan Constitution, apt to their detention and special circumstances which effectively turned Nauru into a place of prolonged detention of many for another country. If, contrary to my view, the Act and Regulations applied to the appellant and the other "rescuees" on their arrival in Nauru, there is also no conundrum. The regime of prolonged detention, with its objectionable burden on personal liberty and on the physical and mental wellbeing of so many persons, is unlawful. Unless valid and immediate corrective legislation could be enacted to cure the legal defects, Nauru would have to face the necessity to remove the appellant and those like him from the country. There is, in any case, a question whether, if the Act applies, the appellant and those in the same position would be subject to the offences for which s 13(1) provides. Could it really be said that he had "unlawfully enter[ed]" or "is unlawfully in Nauru" when he was actually brought there with the express agreement of the Government of Nauru77, for the purposes of Nauru itself, including financial gain for an economy "reaching crisis point"78? Assuming, however, that a prosecution of persons such as the appellant occurred, and that they were detained pending removal, the loss of liberty could be no worse than it otherwise was. Its duration would at least be more definite, purposeful and defined. And, as a practical matter, because in the MoU Nauru had agreed not to remove persons such as the appellant to the country of feared persecution, the process of considering the appellant's claim for refugee or humanitarian relief would be likely to be expedited. Four years loss of liberty may seem reasonable and acceptable to some. To those in detention who have lost their liberty it will appear intolerable. And that is how the law of Nauru views it. The availability of habeas corpus For the reasons given by Connell CJ in the Supreme Court, there is no difficulty in concluding that the appellant, and those with him, were in a custodial situation79. There was no reason to take a narrow view of the 77 The Act, s 13(1)(l). 78 MoU, Schedule, cited these reasons at [50]. 79 Supreme Court reasons at [27]. See above these reasons at [61]-[62]. Kirby availability of the Great Writ. There was every reason to reach the opposite conclusion80. In any case, the parties agreed that, were the appellant to succeed, there was a need for further evidence in relation to the current position of the appellant, making it necessary to return the case to the Supreme Court of Nauru for the making of appropriate orders to carry into effect the conclusion of this Court. As those orders might include general declarations of legal right, of relevance to other continuing detainees, and the provision of costs orders in the proceedings in the Supreme Court favourable to the appellant, that is the course that I would favour. Conclusion and orders For the reasons stated by me in Ruhani v Director of Police, the proceedings before this Court are a true appeal. Accordingly, the remedies and orders applicable to their disposition are those appropriate to an appeal. They are not those appropriate to an invocation of the original jurisdiction of this Court81. The appellant, as this Court has now been informed, has left Nauru. This fact now makes habeas corpus unavailable and its immediate issue inappropriate. However, having regard to the conclusions that I have reached and having regard to the common position of the parties in the event of conclusions favouring the appellant, the orders that I would favour are that the appeal be allowed with costs. The judgment of the Supreme Court of Nauru (Connell CJ) should be set aside. The proceedings should be remitted to the Supreme Court of Nauru to make any orders that are necessary and appropriate to give effect to these reasons in the events that have now occurred. 80 Clark and McCoy, The Most Fundamental Legal Right: Habeas Corpus in the Commonwealth, (2000) at 194-201. 81 Ruhani v Director of Police [2005] HCA 42 at [148]-[205].

HIGH COURT OF AUSTRALIA TOLL (FGCT) PTY LIMITED (formerly Finemores GCT Pty Limited) APPELLANT AND ALPHAPHARM PTY LIMITED & ORS RESPONDENTS Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52 11 November 2004 ORDER Appeal allowed with costs. Set aside order 1 of the orders of the New South Wales Court of Appeal and, in lieu thereof, order that the appeal to that Court be allowed with costs. Set aside orders 1, 2 and 4 of the trial judge and in lieu thereof, order that: the First and Second Plaintiffs' claim in the District Court of New South Wales be dismissed; judgment be entered for the Defendant; the First and Second Plaintiffs pay the Defendant's costs of the trial; and the First and Second Plaintiffs pay the costs of the First and Third Cross Defendants. Order that the First Respondent repay to the Appellant the sum of $683,061.86 together with interest from the date of payment at rates under the District Court Act 1973 (NSW) or as agreed. On appeal from the Supreme Court of New South Wales Representation: S J Gageler SC with A S Bell for the appellant (instructed by Clayton Utz) S T White with E G H Cox for the first respondent (instructed by Withnell Hetherington) J E Griffiths SC with J K Kirk for the second and third respondents (instructed Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Toll (FGCT) Pty Limited v Alphapharm Pty Limited Contract – Construction and interpretation – Terms – Officer of a corporation authorised to contract on corporation's behalf – Contractual document signed by to read document – officer contained onerous Conclusiveness of act of signature or execution – Whether notice of onerous terms or exclusions required. terms – Officer failed Principal and agent – Contract – Authority – Whether agent authorised to contract on terms that include exclusions of liability of other contracting party. GLEESON CJ, GUMMOW, HAYNE, CALLINAN AND HEYDON JJ. The issues in this appeal relate to a contract for the transportation of goods. The carrier relies upon an exclusion clause or, alternatively, a clause providing for an indemnity. The question is whether those clauses formed part of the contract and, if so, who was bound by them. The appellant ("Finemores") carried on a business which included the transportation of refrigerated goods. In February and March 1999, a quantity of influenza vaccine known as Fluvirin was imported into Australia. It was intended for supply by the first respondent ("Alphapharm") to customers in New South Wales, Queensland, Western Australia, South Australia and Victoria. The vaccine was sensitive to changes in temperature. Finemores undertook to collect the goods on arrival in Australia, transport them to its warehouse in Sydney, store them, and then deliver them to designated customers. The goods were damaged through exposure to the wrong temperatures, some while in storage, and some during transport to the customers. The damaged goods were in batches intended for supply to Alphapharm's customers in Queensland and New South Wales. Alphapharm sued Finemores, and obtained judgment for $683,061.86. The second and third respondents are Ebos Group Limited ("Ebos"), a New Zealand company, and its wholly owned Australian subsidiary Richard Thomson Pty Limited ("Richard Thomson"), a general wholesaler of medical supplies. In order to explain the relationship between the first, second, and third respondents, which forms part of the background to the dealings with Finemores, it is necessary to describe the distribution agreements under which the Fluvirin was imported. The distribution agreements What was referred to as "the flu season" extends in Australia from 1 February to 31 July. Fluvirin was imported for the 1998 flu season, and again for the 1999 flu season. The damaged vaccine was imported for the 1999 flu season. The Fluvirin was exported from the United Kingdom by Medeva Pharma Ltd pursuant to an agreement with Ebos, which was the distributor of Fluvirin for New Zealand and the rest of the South Pacific. In 1998, Ebos entered into a sub- distribution agreement with Alphapharm, appointing Alphapharm exclusive distributor of Fluvirin in Australia. Clause 5.1 of the sub-distribution agreement between Ebos and Alphapharm provided that the vaccine would be supplied by Ebos free into store to Alphapharm's designated Sydney warehouse. Clause 5.4 provided that risk would pass to Alphapharm upon delivery in accordance with cl 5.1, but that, notwithstanding the passing of risk, title to any consignment would not pass to Alphapharm until Ebos had received payment. In late 1997 or early 1998, the Managing Director of Ebos, Mr Waller, spoke to the Operations Manager of Richard Thomson, Mr Gardiner-Garden, the sub-distribution agreement between Ebos and Alphapharm. about Mr Gardiner-Garden agreed that, for an annual fee to be paid by Ebos to Richard Thomson, Richard Thomson would "look after the collection, storage and [regulatory] approval for the Fluvirin sent to Australia". That is how it came about that Richard Thomson dealt with Alphapharm and, later, Finemores. During the 1998 flu season, Richard Thomson collected the Fluvirin from the airport and stored it in its own warehouse. Employees of Alphapharm went to the warehouse and placed temperature monitors on particular batches of Fluvirin. Alphapharm then arranged for collection of those batches and delivery to its customers. Dealings in the 1998 season were uneventful. The contract with Finemores For the 1999 flu season, Richard Thomson decided to engage the services of Finemores to collect the vaccine upon arrival in Sydney, transport it to Finemores' warehouse and store it. On 15 February 1999, the General Manager of Richard Thomson, Mr McGee, spoke to the Business Planning Manager of Alphapharm, Mr van der Pluijm. Mr McGee said: "We are going to use Finemores to carry from the airport to Finemores' warehouse in [Sydney]. We recommend that you use Finemores for carriage from the warehouse to the purchasers, to reduce handling." Mr van der Pluijm said: "That is a good idea. I will accept that." In cross-examination it was put to Mr van der Pluijm that Alphapharm left it to Richard Thomson to make the arrangements with Finemores about Alphapharm's use of Finemores' services, and he agreed. He accepted that he understood that Richard Thomson would have to make a contractual arrangement with Finemores for Finemores to agree to carry the goods to Alphapharm's customers, and that he left it to Mr McGee "to enter such arrangement as was necessary in that regard". He also acknowledged that it was left to Richard Thomson to inform Alphapharm about when goods had arrived, and the details of storage. The trial judge found: "Mr van der Pluijm ... expected that Alphapharm would ultimately be liable to pay for transport from the [Finemores] depot to its customers, and left it to [Richard Thomson] to inform Finemores of when transport would be required for [the] vaccine, in what quantities and to what destinations it was to go. It was left to staff at Finemores to appropriate and assemble the boxes of vaccine from the stock, so as to be ready for packing prior to transport." In brief, Alphapharm accepted Richard Thomson's suggestion that the services of Finemores be used to collect the vaccine, store it, and transport it from the warehouse to the purchasers. The information and instructions necessary to procure transportation of the vaccine by Finemores to Alphapharm's customers were to be given to Finemores by Richard Thomson. Finemores' warehouse thus became Alphapharm's designated Sydney warehouse for the purposes of cl 5.1 of the sub-distribution agreement between Ebos and Alphapharm. The goods were to be delivered free into store. Ebos was liable to bear the cost of delivery into store. Alphapharm was liable to bear the cost of transportation from the warehouse to Alphapharm's customers. At no time up to the damage to the goods in question did Alphapharm have any direct dealings with Finemores about the terms and conditions of, or payment for, such transportation. It was Richard Thomson that agreed with Finemores on the charges to be made for storage and transportation, and directed Finemores as to delivery of the goods to Alphapharm's customers. It should be added that the goods in question were valuable, but relatively small in size and weight, so that the costs of transportation were small in comparison with the worth of the goods. That subject was raised early in the dealings between Finemores and Richard Thomson. It was a significant feature of the commercial context1. The dealings between Richard Thomson and Finemores came about as follows. On 20 January 1999, Mr McGee telephoned the Transport Manager of Finemores, Mr Cheney. Mr McGee explained the transport and storage requirements for Fluvirin, and requested a quotation for Finemores' services. By way of confirmation, Mr McGee sent a fax to Mr Cheney on the same day, which repeated the requirements and said: "These are highly perishable vaccines for flu inoculation in humans. It is therefore vital that you can assure us of being able to maintain and evidence your part of the cold chain from pick up to drop off. These goods are also of high cost and therefore could you please advise what insurance cover will be and what security you provide as the goods cannot be easily replaced if lost." In the Court of Appeal, Young CJ in Eq remarked that the distinction between goods carried at owner's risk and those carried at the carrier's risk with differential rates has been around as long as carriers. The reference to the "chain from pick up to drop off" covered collection of the goods upon arrival in Australia, transport to Finemores' warehouse, storage at Finemores' warehouse, and delivery to Alphapharm's customers. The reference to the need to "evidence" the "cold chain" related to the need for assurance to the customers and regulatory authorities of the efficacy of the vaccine. On 12 February 1999, Mr Cheney sent Mr McGee a quotation by fax. It was headed "Freight Rate Schedule". It was addressed to Richard Thomson. Rates for transportation, effective from 12 February 1999, were quoted. They varied with the destination. Rates were also quoted for "Sydney Storage". The Schedule also stated certain "Conditions". These related to the mechanics of loading and despatch. For example, pallets were to be adequately labelled, pick up drivers were to sign for pallets, no responsibility was taken for carton count, a charge was to be made for futile or rejected deliveries, unacceptable delays in loading or unloading could result in a charge for waiting time, bookings were to be confirmed in accordance with certain procedures, and consignments were to be available for pick up by a certain time. In a covering letter to Richard Thomson, dated 11 February 1999, Finemores wrote: "Further to our recent discussion regarding the transportation of your products to various interstate locations, we are pleased to have the opportunity of providing our quotation. Please note we are not common carriers and all cartage is subject to the conditions as stated on the reverse side of our consignment note, a copy of which is attached. We do not insure goods and our trading terms are strictly 14 days from the date of invoice. To ensure that your goods travel at the required temperature, each one of our refrigerated vans use a 'Partlow Card' to record the temperature throughout the entire journey. ... We trust you will find our rates competitive and that you will avail yourself of the service we provide. Following acceptance to our quotation, it would be very much appreciated if you would complete the Credit Application and sign the Freight Rate Schedule accepting our Rates and Conditions and fax back to our office at your earliest convenience." The reference to "the transportation of your products to various interstate locations" reflects the role of Richard Thomson vis-à-vis Ebos and Finemores. The products were not those of Richard Thomson. They were being supplied by Ebos to Alphapharm, and then by Alphapharm to Alphapharm's customers. The agreement as to passing of risk and title from Ebos to Alphapharm has been noted above. The interstate locations were the locations of Alphapharm's customers. It is common ground that no copy of any form of consignment note was attached to the letter. No party argued that the conditions on Finemores' form of consignment note formed part of any relevant contract. As will appear, however, the Credit Application referred to in the letter was of central importance. As was noted above, on 15 February 1999, Richard Thomson informed Alphapharm of its decision to engage Finemores, and Alphapharm agreed that it also would use the services of Finemores so as to reduce handling. On 17 February 1999, Mr Gardiner-Garden visited Finemores' premises and had a meeting with Mr Cheney. At that meeting Mr Cheney handed Mr Gardiner-Garden a form of "Application for Credit". This was the document referred to in the letter of 11 February 1999 as the Credit Application which Richard Thomson was requested to complete. The document was signed by Mr Gardiner-Garden and dated 17 February 1999. He also signed the Freight Rate Schedule. Mr Gardiner-Garden left the documents with Mr Cheney. Mr Cheney forwarded the completed Application for Credit to the Credit Department of Finemores in Melbourne. The Application for Credit was a printed form, with printing on the front and back. As completed, it identified Richard Thomson as the applicant, and the customer, and gave information about Richard Thomson, including credit references. It referred to the terms of trading as nett 7 days unless otherwise confirmed in writing. (The letter of 11 February had allowed 14 days, and this was later confirmed in writing.) Immediately above the place where Mr Gardiner-Garden signed there appeared the words: "Please read 'Conditions of Contract' (Overleaf) prior to signing." Mr Gardiner-Garden gave evidence, the legal significance of which is in dispute, that he did not read the "Conditions of Contract", and that they were not mentioned in conversation by him or by Mr Cheney. There were 15 "Conditions of Contract". There was evidence which showed that they were generally in a form that was in common use in the refrigerated transport industry. This is not surprising. There was nothing to suggest that the contractual terms on which Finemores might be willing to deal with Richard Thomson would be likely to be significantly different from those available to Richard Thomson from Finemores' competitors. Mr Gardiner- Garden did not read the Conditions of Contract, but there was nothing to prevent him from doing so. For that matter there was nothing to prevent him from seeking advice about them, or comparing them with the terms and conditions adopted by Finemores' competitors. The Conditions of Contract included the following clauses: The Customer warrants that in entering into this Contract it does so on its own account and as agent for the Customer's Associates. Notwithstanding any other clause of this Contract ... under no circumstances shall the Carrier be responsible to the Customer for any injurious act or default of the Carrier, nor, in any event, shall the Carrier be held responsible for any loss, injury or damage suffered by the Customer either in respect of: the theft, misdelivery, delay in delivery, loss, damage or destruction, by whatever cause, of any goods being carried or stored on behalf of the Customer by the Carrier at any time (and regardless of whether there has been any deviation from any agreed or customary route of carriage or place of storage) ...; any consequential loss of profit, revenue, business, contracts or anticipated savings; or any other indirect consequential or special loss, injury or damage of any nature and whether in contract, tort (including without limitation, negligence or breach of statutory duty) or otherwise. In this clause ... 'Customer' includes the Customer's Associates. The Customer agrees to indemnify the Carrier ... in respect of: any demand or claim brought by or on behalf of the Customers' [sic] Associates arising out of, related to, or connected with this Contract. It shall at all times be the Customer's responsibility to effect insurance necessary to cover its risks and the risks of any of the Customer's Associates in any way arising from, relating to or connected with this Contract. Upon the written request of the Customer, the Carrier will endeavour to arrange, on the Customers' [sic] behalf, insurance to cover those risks or some of them as may be requested, but the Carrier [shall] not be held responsible for any loss, injury or damage, direct or indirect, suffered by the Customer or any of the Customer's Associates and whether in contract, tort (including, without limitation, negligence or breach of statutory duty) or otherwise, arising from any act or default on the part of the Carrier in this regard." By cl 3(b), "Customer's Associates" was defined to mean: the owner, sender or receiver of the goods; a person having an interest in the goods; (iii) the Customer's principal; and any agent, representative, employee or sub-contractor of the Customer or those persons." The "Application for Credit" was designed to have a wider potential operation than one limited to this particular transaction. As the reply of Finemores indicated, it was an application by Richard Thomson to open an account with Finemores, and was intended to cover future dealings. Finemores responded formally by a letter dated 24 February 1999, which welcomed Richard Thomson "as an account customer", assigned Richard Thomson an "account number" 2RITH1, confirmed trading terms of 14 days, said that another copy of the Conditions of Contract was enclosed, and concluded by saying that Finemores looked forward to a long and mutually beneficial association. As will appear, in the meantime Finemores had acted on the basis of an acceptance of the application, and had already notified Richard Thomson of its account number. On 12 February 1999, Alphapharm had written to Richard Thomson providing the addresses and quantities for delivery of 72,240 doses of the vaccine to four of Alphapharm's customers, including 28,160 doses to Queensland Medical Laboratory ("QML") for Queensland Health. Richard Thomson communicated those details to Finemores on 24 February 1999, to "confirm shipping details for Alphapharm consignments to designated destinations as per their schedule." On 18 February 1999, the first shipment of Fluvirin arrived in Australia and was collected and taken into storage by Finemores. On 18, 19 and 21 February 1999, Finemores sent four invoices to Richard Thomson for the transport of Fluvirin from the airport to the warehouse and for storage and handling. Each invoice referred to Richard Thomson's customer number, 2RITH1. On 11 March 1999, Mr Gardiner-Garden gave Mr van der Pluijm what the latter described in his evidence as "a copy of Richard Thomson's contract with Finemores, including the terms and conditions." Mr van der Pluijm read them. His evidence was that they did not give him any cause for concern. The evidence also showed that Alphapharm had its own insurance cover in respect of the goods. Although it is of marginal relevance only, it may be added that on 16 March 1999, after the second loss referred to below, an officer of Finemores telephoned Mr van der Pluijm and said that Finemores would not transport any more product for Alphapharm unless Alphapharm itself became an account customer. The officer sent Mr van der Pluijm an Application for Credit, with the same terms and conditions on the reverse. Mr van der Pluijm read it, signed it and sent it back to Finemores. He said in evidence that he had no difficulty with the terms and conditions. He also said he made enquiries of a third party, and was told they were normal standard terms. The application was accepted. No one suggested that it governed the losses the subject of these proceedings. The primary judge regarded it as significant that "there was not, before the losses occurred which are the subject of this action, any discussion between Alphapharm and Finemores about the terms on which Finemores would carry its goods, and no one at Alphapharm saw or signed any Application for Credit which contained the Conditions of Contract such as were signed by Richard Thomson until after the losses occurred." However, the evident explanation was that, up until a time after the losses occurred, Alphapharm left it to Richard Thomson to make the necessary arrangements for storage of the goods (in Alphapharm's designated store) and transportation to Alphapharm's customers. The losses After the first shipment of Fluvirin arrived on 18 February 1999, Finemores took the stock into its warehouse and set quantities aside in accordance with Richard Thomson's instructions. On 25 February 1999, Mr van der Pluijm went to Finemores' warehouse, where he prepared the goods for delivery to Alphapharm's customers. He labelled each consignment, added a packing list, and inserted temperature monitors. It was common ground that at this point risk in the goods had passed to Alphapharm. On 25 February 1999, Ebos invoiced Alphapharm for 72,240 doses. Alphapharm paid on 8 March In transit from Finemores' warehouse to QML in Queensland, the temperature of 28,160 doses dropped below the minimum. The consignment was rejected by Queensland Health on 5 March 1999. On 25 and 27 February 1999, Finemores collected a second shipment of Fluvirin from the airport and stored it at its warehouse. On 3 March 1999, Alphapharm wrote to Richard Thomson with details for the delivery of 28,160 doses to the Commonwealth Serum Laboratories in Sydney. The purchaser was New South Wales Health. Richard Thomson, in turn, communicated the delivery details to Finemores. On 4 March 1999, Mr van der Pluijm visited the warehouse and prepared the consignment for shipment. On the same day, Ebos invoiced Alphapharm for 28,160 doses. Alphapharm paid for the goods on 12 April 1999. The goods dropped below minimum temperature while still in storage. The Fluvirin was rejected by New South Wales Health. The litigation Each of the four parties to the case is a substantial commercial organisation, capable of looking after its own interests. This hardly seems an auspicious setting for an argument that a party who signs a contractual document is not bound by its terms because its representative did not read the document. Although their interests appear to have been quite distinct, Ebos and Alphapharm joined as plaintiffs in an action against Finemores in the District Court of New South Wales. In the result, judgment was entered in their favour jointly in the amount of $683,061.86 for damages and interest. It was common ground in this Court that this was an error, and that judgment should have been entered in favour of Alphapharm alone. It is, therefore, convenient to refer only to Alphapharm's claim. Alphapharm's claim against Finemores, so far as presently relevant, was for damages for negligence as a bailee. Its entitlement to succeed on that claim, subject to the contractual defences raised by Finemores, is not presently in issue. Finemores, by way of defence to Alphapharm's claim, relied on cl 6 of the Conditions of Contract on the reverse of the Application for Credit, read in the light of the definition of "Customer's Associates" in cl 3, and also in the light of cl 9. There is no dispute about the meaning of those provisions. It is their application that is in question. It was common ground that Alphapharm fell within the definition of a "Customer's Associate", Richard Thomson being the customer. Finemores argued that Richard Thomson contracted with Finemores both on its own account and as agent both for Ebos and Alphapharm, in accordance with the warranty in cl 5, and that they were bound by the Conditions of Contract. Alphapharm advanced two reasons as to why it was not bound by cl 6. First it was said that, although there was a contract between Richard Thomson and Finemores, the Conditions of Contract on the reverse side of the Application for Credit did not form part of the terms of that contract. Secondly, it was denied that Richard Thomson contracted as agent for Alphapharm. Against the possibility that the first argument might fail, but the second argument might succeed, Finemores cross-claimed for an indemnity from Richard Thomson pursuant to cl 8 of the Conditions of Contract. In answer to that cross-claim, Richard Thomson relied on the first argument. Both of the arguments of Alphapharm (and, therefore, as to the first, the argument of Richard Thomson also) succeeded before the trial judge, Acting Judge Hogan. That decision was upheld in the New South Wales Court of Appeal (Sheller JA, Young CJ in Eq, Bryson J)2. There are, therefore, two principal issues for this Court. The first is whether the terms of the contract made between Richard Thomson and Finemores included the Conditions of Contract and, in particular, either or both of cl 6 and cl 8 (the terms of contract issue). The second is whether Alphapharm is bound by cl 6 (the agency issue). The terms of contract issue A striking feature of the evidence at trial, and of the reasoning of the learned primary judge, is the attention that was given to largely irrelevant Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2003) 56 NSWLR 662. information about the subjective understanding of the individual participants in the dealings between the parties. Written statements of witnesses, no doubt prepared by lawyers, were received as evidence in chief. Those statements contained a deal of inadmissible material that was received without objection. The uncritical reception of inadmissible evidence, often in written form and prepared in advance of the hearing is to be strongly discouraged. It tends to distract attention from the real issues, give rise to pointless cross-examination and cause problems on appeal where it may be difficult to know the extent to which the inadmissible material influenced the judgment at first instance. In Codelfa Construction Pty Ltd v State Rail Authority of NSW3, Mason J observed: "We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract." It is not in dispute that Finemores stored and transported the goods pursuant to a contract made between Finemores and Richard Thomson. The role of Alphapharm in that contract is a matter of dispute, and is the subject of the agency issue. It may be put to one side for the moment. The issue presently under consideration concerns the identification of the terms on which Finemores It is not in dispute that Mr Gardiner-Garden was authorised by Richard Thomson to sign the Application for Credit, and that when he signed that document he did so intending that it would affect the legal relations between Richard Thomson and Finemores. So much was acknowledged in the course of argument in this Court. Counsel for Richard Thomson said that there was no suggestion that the document that was signed was not intended to create legal relations. In their consideration in Ermogenous v Greek Orthodox Community of SA Inc4 of the requisite intention to create contractual relations, Gaudron, McHugh, Hayne and Callinan JJ said: (1982) 149 CLR 337 at 352. (2002) 209 CLR 95 at 105-106 [25]. "Although the word 'intention' is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened5. It is not a search for the uncommunicated subjective motives or intentions of the parties." The point at issue on this appeal concerns not the creation of legal relations but the nature of the legal relations created. Any suggestion that the agreement between Richard Thomson and Finemores was vitiated by misrepresentation would be untenable. Mr Gardiner- Garden signed a document which invited him to read the terms and conditions on the reverse before signing. He was not rushed or tricked into signing the document. He chose to sign it without reading it. He could have read it had he wished. Finemores did not set out to conceal from him the terms and conditions on the document, or to encourage him not to read them. Finemores had no way of knowing that he did not read the document. No case of mistake or non est factum is advanced. This Court, in Pacific Carriers Ltd v BNP Paribas6, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires 5 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348-353 per Mason J; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436; 186 ALR 289. (2004) 78 ALJR 1045; 208 ALR 213. consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction7. In Taylor v Johnson8, Mason ACJ, Murphy and Deane JJ explained the significance of the difference between the subjective and objective theories of contractual assent by reference to the impeachment of a contract on the ground of unilateral mistake. They said: "According to the subjective theory, there is no binding contract either at common law or in equity, equity following the common law in this respect. Of course in deciding whether the contract is void ab initio for the unilateral mistake, regard will be had to the doctrine of estoppel in order to determine whether effect should be given to the claim that there has been unilateral mistake. On the other hand, according to the objective theory, there is a contract which, in conformity with the common law, continues to be binding, unless and until it is avoided in accordance with equitable principles which take as their foundation a contract valid at common law but transform it so that it becomes voidable. The important distinction between the two approaches is that, according to the subjective theory, the contract is void ab initio, whereas according to the objective theory, it is voidable only." Their Honours went on to say that "the clear trend in decided cases and academic writings has been to leave the objective theory in command of the field." Consistent with this objective approach to the determination of the rights and liabilities of contracting parties is the significance which the law attaches to the signature (or execution) of a contractual document. In Parker v South Eastern Railway Company9, Mellish LJ drew a significant distinction as follows: "In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents. The parties may, 7 Pacific Carriers Ltd v BNP Paribas (2004) 78 ALJR 1045 at 1050-1051 [22]; 208 ALR 213 at 221. (1983) 151 CLR 422 at 429. (1877) 2 CPD 416 at 421. however, reduce their agreement into writing, so that the writing constitutes the sole evidence of the agreement, without signing it; but in that case there must be evidence independently of the agreement itself to prove that the defendant has assented to it." More recently, in words that are apposite to the present case, in Wilton v "In the absence of fraud or some other of the special circumstances of the character mentioned, a man cannot escape the consequences of signing a document by saying, and proving, that he did not understand it. Unless he was prepared to take the chance of being bound by the terms of the document, whatever they might be, it was for him to protect himself by abstaining from signing the document until he understood it and was satisfied with it. Any weakening of these principles would make chaos of every-day business transactions." In Oceanic Sun Line Special Shipping Company Inc v Fay11, Brennan J said: "If a passenger signs and thereby binds himself to the terms of a contract of carriage containing a clause exempting the carrier from liability for loss arising out of the carriage, it is immaterial that the passenger did not trouble to discover the contents of the contract." It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it. The statements in the above authorities accord with the well-known principle stated by Scrutton LJ in L'Estrange v F Graucob Ltd12 ("L'Estrange v 10 (1948) 76 CLR 646 at 649. 11 (1988) 165 CLR 197 at 228. 12 [1934] 2 KB 394 at 403. Graucob") that "[w]hen a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not." Scrutton LJ, in turn, was repeating the substance of what had been said by Mellish LJ in Parker v South Eastern Railway Company13. The principle was applied in Foreman v Great Western Railway Company14. A consignor of cattle sent them for transportation by a railway company. They were put in the charge of a drover, who could not read. The drover signed a contract of carriage which contained an exclusion clause. The drover's employer was held to be bound by the clause. The Exchequer Division said that "the plaintiff who sends the [illiterate] servant to sign the document is in no better or worse position than if he had signed it himself without reading it."15 In his lecture published as "Form and Substance in Legal Reasoning: The Case of Contract"16, Professor Atiyah posed, with reference to L'Estrange v Graucob, the question why signatures are, within established limits, regarded as conclusive. He answered: "A signature is, and is widely recognized even by the general public as being a formal device, and its value would be greatly reduced if it could not be treated as a conclusive ground of contractual liability at least in all ordinary circumstances." Professor Atiyah added17: "However, what is, I think, less clear is what is the underlying reason of substance in this kind of situation. The usual explanation for holding a signature to be conclusively binding is that it must be taken to show that the party signing has agreed to the contents of the document; but another possible explanation is that the other party can be treated as having relied upon the signature. It thus may be a mistake to ask, as H L A Hart once 13 (1877) 2 CPD 416 at 421. 15 (1878) 38 LT 851 at 853. 16 MacCormick and Birks (eds), The Legal Mind: Essays for Tony Honoré, (1986), Ch 2, 19 at 34. 17 MacCormick and Birks (eds), The Legal Mind: Essays for Tony Honoré, (1986), Ch 2, 19 at 35. asked, whether the signature is merely conclusive evidence of agreement, or whether it is itself a criterion of agreement.18" These themes appeared in the judgment of this Court in Petelin v Cullen19. There, the Court upheld a plea of non est factum. Under the common law rules, a plea of non est factum was a plea of the general issue which put in issue that the defendant had executed the deed alleged in its declaration20. In their joint judgment in Petelin, Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ "The principle which underlies the extension of the plea to cases in which a defendant has actually signed the instrument on which he is sued has not proved easy of precise formulation. The problem is that the principle must accommodate two policy considerations which pull in opposite directions: first, the injustice of holding a person to a bargain to which he has not brought a consenting mind; and, secondly, the necessity of holding a person who signs a document to that document, more particularly so as to protect innocent persons who rely on that signature when there is no reason to doubt its validity. The importance which the law assigns to the act of signing and to the protection of innocent persons who rely upon a signature is readily discerned in the statement that the plea is one 'which must necessarily be kept within narrow limits' ... and in the qualifications attaching to the defence which are designed to achieve this objective." The importance which, for a very long time22, the common law has assigned to the act of signing is not limited to contractual documents. Wilton v Farnworth was not a contract case. The passage from the judgment of 18 See Hart, "The Ascription of Responsibility and Rights", (1949) 49 Proceedings of the Aristotelian Society 171. 19 (1975) 132 CLR 355. 20 Bullen and Leake, Precedents of Pleadings in Personal Actions in the Superior Courts of Common Law, 3rd ed (1868) at 467-468. 21 (1975) 132 CLR 355 at 359. 22 See Whelpdale's Case (1604) 5 Co Rep 119a [77 ER 239]; Holdsworth, A History of English Law, 2nd ed (1937), vol 8 at 50-51. Latham CJ quoted above is preceded by a general statement that, where a man signs a document knowing that it is a legal document relating to an interest in property, he is in general bound by the act of signature23. Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief. In most common law jurisdictions, and throughout Australia, legislation has been enacted in recent years to confer on courts a capacity to ameliorate in individual cases hardship caused by the strict application of legal principle to contractual relations. As a result, there is no reason to depart from principle, and every reason to adhere to it, in cases where such legislation does not apply, or is not invoked24. To speak of the operation of the law of contract with respect to the signature of the document containing cl 6 requires attention both to the significance attached by the law to the presence of the signature and also to the absence of any grounds, such as a plea of non est factum, which at common law would render the contract void and of any grounds, such as misrepresentation, which might attract equitable relief, or which might elicit curial dispensation under a statutory regime. This illustrates the cogency of the statement of H L A Hart25 that usually it is not possible to define a legal concept such as "contract" merely by specifying certain necessary and sufficient conditions for its application because: "any set of conditions may be adequate in some cases but not in others and such concepts can only be explained with the aid of a list of exceptions or 23 (1948) 76 CLR 646 at 649. 24 Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 843 per Lord Wilberforce, 851 per Lord Diplock; Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 507-508; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 62 [24]. 25 Hart, "The Ascription of Responsibility and Rights", (1949) 49 Proceedings of the Aristotelian Society 171 at 174. negative examples showing where the concept may not be applied or may only be applied in a weakened form." An application of settled principle in the present case leads to the conclusion that the terms and conditions on the reverse of the Application for Credit formed part of the contract governing the storage and transportation of the goods. The reasoning of the primary judge, accepted by the Court of Appeal, was based upon the proposition that, in order for those terms and conditions to be made part of the contract, it was necessary for Finemores to establish that it had done what was reasonably sufficient to give Richard Thomson notice of the terms and conditions (the major premise), and the further proposition that Finemores had not done what was reasonably sufficient to give Richard Thomson such notice (the minor premise). It would be possible to dispose of the appeal by disagreeing with the minor premise. What more Finemores could have done to give Richard Thomson notice of the terms and conditions than requiring their representative to sign a document, and to place his signature immediately below a request that he read the conditions on the reverse side of the document before signing, is difficult to imagine. Of wider importance, however, is the major premise. If correct, it involves a serious qualification to the general principle concerning the effect of signing a contract without reading it. The proposition appears to be that a person who signs a contractual document without reading it is bound by its terms only if the other party has done what is reasonably sufficient to give notice of those terms. If the proposition is limited to some terms and not others, it is not easy to see what the discrimen might be. It appears from the reasoning of the primary judge and the Court of Appeal that the proposition was given a narrower focus, and was limited to exclusion clauses, or, perhaps, exclusion clauses which are regarded by a court as unusual and onerous. The present happens to be a case about exclusion clauses, but there is no apparent reason why the principle, if it exists, should apply only to them. Nor is the criterion by which a court might declare a contractual provision to be unusual or onerous always easy to identify. The origin of the proposition, clearly enough, is in the principles that apply to cases, such as ticket cases, in which one party has endeavoured to incorporate in a contract terms and conditions appearing in a notice or an unsigned document. When an attempt is made to introduce the concept of sufficient notice into the field of signed contracts, there is a danger of subverting fundamental principle based on sound legal policy. There are circumstances in which it is material to ask whether a person who has signed a document was given reasonable notice of what was in it. Cases where misrepresentation is alleged, or where mistake is claimed, provide examples. No one suggests that the fact that a document has been signed is for all purposes conclusive as to its legal effect. At the same time, where a person has signed a document, which is intended to affect legal relations, and there is no question of misrepresentation, duress, mistake, or any other vitiating element, the fact that the person has signed the document without reading it does not put the other party in the position of having to show that due notice was given of its terms. Furthermore, it may be asked, where would this leave a third party into whose hands the document might come? In L'Estrange v Graucob26, Scrutton LJ said that the problem in that case was different from what he described as "the railway passenger and cloak-room ticket cases, such as Richardson, Spence & Co v Rowntree27", where "there is no signature to the contractual document, the document being simply handed by the one party to the other." His Lordship said: "In cases in which the contract is contained in a railway ticket or other unsigned document, it is necessary to prove that an alleged party was aware, or ought to have been aware, of its terms and conditions. These cases have no application when the document has been signed." In the same case Maugham LJ28, who agreed with Scrutton LJ, referred to three possible circumstances in which the party who signed the document might not have been bound by its terms. The first was if the document signed was not a contract but merely a memorandum of a previous contract which did not include the relevant term. The second was a case of non est factum. The third was a case of misrepresentation. If there is a claim of misrepresentation, or non est factum, or if there is an issue as to whether a document was intended to affect legal relations or whether, on the other hand, it was tendered as a mere memorandum of a pre-existing contract, or a receipt, or if there is a claim for equitable or statutory relief, then 26 [1934] 2 KB 394 at 402-403. 28 [1934] 2 KB 394 at 406-407. even in the case of a signed document it may be material to know whether a person who has signed it was given sufficient notice of its contents. The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document. L'Estrange v Graucob explicitly rejected an attempt to import the principles relating to ticket cases into the area of signed contracts. It was not argued, either in this Court or in the Court of Appeal, that L'Estrange v Graucob should not be followed. The reasoning of the primary judge on the matter was as follows: "The question for decision then is whether the 'Conditions of Contract' on the back of the Application for Credit formed part of the contract. This is not a case where the parties have signed a single formal document which purports to contain all the terms and conditions of the contract between them. The relevant writing forms but part of one document out of a number which partly evidence the contract. Neither are the facts on all fours with those in Liaweena (NSW) Pty Ltd v McWilliams Wines Pty Ltd29, where the party receiving a notice knew that it contained conditions which the other party intended to form part of future contracts, but because of an innocent misrepresentation did not read them. In this case I accept that Mr Garden did not realise that there were conditions on the back of the Credit application, especially conditions of a kind which so radically affected the contract. However, I do not think that he was induced not to read them because of any misrepresentation, however innocent. He did not give evidence that he was so misled, because he could not remember the circumstances of his signing the document. However, I also respectfully accept the statement in that case that the underlying question is whether the defendant 'did what was reasonably sufficient to give the plaintiff notice of the condition.' I also note the 29 (1991) ASC ¶56-038. statement in Remath Investments No 6 Pty Ltd v Chanel Australia Ltd30 that this obligation applies not merely to the existence but also to the content of the conditions. Mr Garden had already read a document containing rates and conditions. He was then presented with another document which on its face related to matters relevant to his company's creditworthiness. All that was done to give him notice was the single sentence above the space provided for his signature which read 'Please read "conditions of contract" (Overleaf) prior to signing.' Had he noticed that sentence, he would have been quite justified in assuming that overleaf there were conditions relating to the terms upon which credit would be extended to his company. Conditions about cartage and storage had been set out in the previous document. There was nothing in the Application for Credit document itself, in the surrounding circumstances or in anything that Finemores had said or done that should have alerted him to the fact that the document contained conditions which so radically affected the contract. I am satisfied that Finemores did not do what was reasonably sufficient to give Richard Thomson notice of the existence or of the content of the conditions of contract on the back of the Application for Credit form. Those conditions did not therefore form part of the contract between Finemores and Richard Thomson." (footnotes added) Passing over the statement that all that was done to give notice was to provide for signature immediately below a request to read the conditions overleaf before signing (a proposition that goes to the minor premise), the reasoning proceeds upon a transposition to this area of discourse of the reasoning in the ticket cases: the very thing that L'Estrange v Graucob held should not be done. The case of Remath Investments No 6 Pty Ltd31 is clearly distinguishable. Goods were stolen from a bond store. Invoices referred to storage conditions which were said to be available on request. The Court of Appeal held that the storage conditions were not part of the contracts covering the stolen goods. "The contracts did not expressly incorporate those conditions and the invoices were 30 Unreported, Supreme Court of New South Wales Court of Appeal, 24 December 31 Remath Investments No 6 Pty Ltd v Chanel (Australia) Pty Ltd unreported, Supreme Court of New South Wales Court of Appeal, 24 December 1992. sent too late to have any contractual effect."32 Both parties accepted that the test was whether "the appellant did what was reasonably sufficient to give ... notice of the condition[s]."33 That is not the basis on which the present case is to be decided. All three members of the Court of Appeal accepted the primary judge's erroneous view that the critical question was whether Finemores gave Richard Thomson reasonably sufficient notice of the conditions on the reverse side of the Application for Credit. Bryson J, with whom Sheller JA agreed, was troubled about the negative answer that was given to the question, and said that he may have come to a different conclusion, but held that the conclusion of the trial judge was open to him and should not be disturbed. This led to a submission in this Court that the Court of Appeal had abdicated its responsibility to review the trial judge's reasoning, but it is unnecessary to pursue that point. Young CJ in Eq referred to the English case of Grogan v Robin Meredith Plant Hire34, in which the issue was whether the signature of a plant driver's time sheet by the agent of a company which had hired the driver and plant varied a pre-existing contract of hire so as to incorporate standard conditions of the Contractors Plant Association which were referred to on the time sheet. The English Court of Appeal answered the question in the negative. The question was identified as being whether in the circumstances a reasonable person would have understood the act of signing the time sheet as intended to have the effect of varying a contract that had already been made. The time sheet, the Court of Appeal said, was essentially an administrative and accounting document. That decision has no bearing on the present case, especially in light of the acknowledgment that the Application for Credit was intended to affect legal relations, and the fact that there was no pre-existing contract. There may be cases where the circumstances in which a document is presented for signature, or the presence in it of unusual terms, could involve a misrepresentation. No such problem exists in the present case. There could also 32 Remath Investments No 6 Pty Ltd v Chanel (Australia) Pty Ltd unreported, Supreme Court of New South Wales Court of Appeal, 24 December 1992 at 4. 33 Remath Investments No 6 Pty Ltd v Chanel (Australia) Pty Ltd unreported, Supreme Court of New South Wales Court of Appeal, 24 December 1992 at 9. 34 [1996] TLR 93. be circumstances in which one party would not reasonably understand another party's signature to a document as a manifestation of intent to enter into legal relations, or of assent to its terms. Again, that is not this case. It was reasonable of Finemores to treat Mr Gardiner-Garden's signature as a manifestation of assent to the conditions he had been invited to read before signing. There was, in the reasoning of the Court of Appeal, some emphasis on the fact that the document signed by Mr Gardiner-Garden was an Application for Credit, and a suggestion that there is something surprising about such a document containing anything other than terms of payment. Bryson J said that the Application for Credit "was not altogether clearly an indication that the conditions were to be part of the contractual arrangement" and that a condition such as cl 6 or cl 8 was not what might be expected in an Application for Credit. Part of the answer to this has already been mentioned. The Application for Credit was in substance an application by Richard Thomson to become an account customer, and it was to cover all future dealings with Finemores. The Application for Credit had been referred to in the first written communication from Finemores to Richard Thomson. The evidence was against any conclusion that the conditions were abnormal. There was no evidence to support a finding that applications for credit in the transport industry do not normally contain general terms of contract. Such evidence as there was on the matter was to the effect that the terms in question were not abnormal. Furthermore, it should be noted that the commercial context in which the terms and conditions operated included, as a key element, the matter of insurance. Clause 6 is to be understood in the light of cl 9. Alphapharm's later acceptance of the same standard terms was no doubt related to the fact that it had its own insurance. More fundamentally, the concern felt by the Court of Appeal was not addressed under the rubric of misrepresentation. Any suggestion of misrepresentation had been dismissed by the primary judge, and had no basis in fact. Mr Gardiner-Garden was not subjected to any pressure, and there was no element of concealment. There was no evidence that he was induced to sign the document by anything other than the request that he sign it. If the case had been one of misrepresentation, then it would have fallen within the qualification expressed in L'Estrange v Graucob; but it was not. The Victorian Court of Appeal, in Le Mans Grand Prix Circuits Pty Ltd v Iliadis (Winneke P and Tadgell JA; Batt JA dissenting)35, considered a case in which a plaintiff, attending a radio station promotional function at a go-kart track, was required to sign a document at the point of entry. He was bustled into signing the document without being given an opportunity to read it. The in bold capitals, "TO HELP WITH OUR document was headed, ADVERTISING". The plaintiff said he thought it was a form for marketing or promotional purposes. It contained an exclusion of liability clause. The plaintiff was injured. The Court of Appeal held that the exclusion clause did not apply. There was no finding that any contract of hire was made between the parties. There was no fee charged for entry, and no contract of entry. No one told the plaintiff he would be required to sign any contractual document. The defendant conceded that "contractual documents containing an onerous exemptive provision must be brought to the notice of the party against whom they are to be enforced"36. Tadgell JA (with whom Winneke P agreed) referred37 to the "trenchant" criticism of L'Estrange v Graucob in an article38 to which, however, Professor Atiyah had responded as described earlier in these reasons. The defendant, having made the concession above, took its stand on a factual issue, whether in the instant case the exemptive provision had been brought to the notice of the plaintiff39. In these circumstances, the decision stands apart from the present appeal. That being so, it is unnecessary to enter upon a question whether the outcome in Le Mans may be supported on the basis of a misrepresentation as to the nature of the document signed. In this case the printed conditions on the Application for Credit formed part of the contract of storage and transportation. There is a further point that should be mentioned. In dealing with an argument about when the contract was made, Bryson J referred to one of a number of alternatives advanced by counsel for Finemores, which was that agreement was reached on 24 February 1999, when a letter accepting the Application for Credit was posted. On that basis, his Honour said, the first consignment to Brisbane pre-dated the contract, and the loss occurred before the conditions of contract were agreed. The alternative argument with which his 36 [1998] 4 VR 661 at 667. 37 [1998] 4 VR 661 at 667. 38 Spencer, "Signature, Consent and the Rule in L'Estrange v Graucob", (1973) Cambridge Law Journal 104. 39 [1998] 4 VR 661 at 667. Honour was dealing was misconceived. Bryson J was right to point out that, if correct, it had the consequence he mentioned, but it was not correct. Finemores acted upon the Application for Credit, and accepted it by conduct, when, on 18 February 1999, it collected the first shipment of vaccine, took it into storage, and sent an invoice referring to Richard Thomson's customer number, being the same number as was confirmed in the later letter welcoming Richard Thomson as an account customer. This occurred before the first loss. The agency issue This issue was decided against Finemores by the primary judge. Because the Court of Appeal found as it did on the terms of contract issue, it did not need to consider the agency issue in detail. One member of the Court of Appeal, Young CJ in Eq, briefly stated his agreement with the trial judge on the point. The other members of the Court of Appeal said they agreed with Young CJ in Richard Thomson had no proprietary interest in the damaged goods. They were sold by Ebos to Alphapharm, for on-sale to Alphapharm's customers. Risk passed to Alphapharm when they were delivered into store, and property passed when Alphapharm paid for them. The transportation (relevantly, to Queensland) was for the purpose of delivery of the goods to Alphapharm's customers. Similar transportation to other States was also required. As between the three respondents, Alphapharm was to bear the cost of such of the services of Finemores as were provided for Alphapharm's benefit. In contracting to obtain the supply of those services, Richard Thomson was acting for the benefit of Alphapharm. As Dixon AJ said in Press v Mathers40, "in any ordinary case the question whether one person authorized another to do an act or series of acts on his behalf is best answered by considering for whose benefit or in whose interest it was intended it should be done." Such a consideration may not be conclusive, but it is a useful practical starting point. It was Richard Thomson that agreed with Finemores upon the rates to be charged for Finemores' services, but it was Ebos and Alphapharm that received the benefit, and bore the cost, of those services. It was Richard Thomson that gave Finemores the necessary information and instructions relating to delivery of the goods to Alphapharm's customers, but it did this in response to instructions it All this happened in consequence of the received from Alphapharm. 40 [1927] VLR 326 at 332. conversation between Mr McGee and Mr van der Pluijm of 15 February 1999 in which the latter accepted the former's recommendation that Alphapharm "use Finemores for carriage from the warehouse to the purchasers, to reduce handling". All relevant use by Alphapharm of the services of Finemores occurred through Richard Thomson as an intermediary. Subject only to Mr van der Pluijm's attendances at the warehouse to label the goods, and thereby appropriate them to Alphapharm, it was through Richard Thomson that Alphapharm dealt with Finemores. Mr van der Pluijm, in cross-examination, acknowledged the obvious fact that Alphapharm left it to Richard Thomson to arrange for the storage of the goods and their delivery to Alphapharm's customers. Finemores was not privy to the sub-distribution agreement between Ebos and Alphapharm. It was not aware, and could not reasonably have been expected to be aware, of the contractual provisions governing risk and title. The commercial purpose of cl 5 of the Conditions of Contract, and the provisions concerning the "Customer's Associates", is clear. It was to cover exactly the kind of situation that existed in the present case. Such a situation is common. Finemores required its account customer to agree to detailed conditions about liability for damage to the goods. Its conditions were expressed to bind all who had an interest in the goods, and it required the customer to warrant that it had authority to act as their agent as well as on its own behalf. When the goods that were sent to QML were transported from Sydney to Brisbane, they were being transported pursuant to a contract. There was no dispute about the rate of freight. That rate was agreed by Richard Thomson, but Richard Thomson was acting pursuant to the decision of 15 February 1999 that Alphapharm would use the services of Finemores. It was obvious that Richard Thomson would make a contract with Finemores upon some terms and conditions. Once again, Mr van der Pluijm acknowledged as much in cross- examination. There was no suggestion of any limitation being imposed by Alphapharm as to the terms and conditions to which Richard Thomson might agree. When, later, Mr van der Pluijm saw the terms and conditions he had no problem with them, and subsequently he accepted the same terms and conditions when Alphapharm dealt directly with Finemores. The primary judge had no difficulty in concluding that Richard Thomson acted, and had authority to act, as agent for Ebos. He said that it was "beyond doubt that Richard Thomson was the agent of Ebos for the purpose of arranging transport and storage". The reference to transport, in that finding, must have been to transport into Finemores' warehouse. The contention of Finemores was, and is, that, insofar as the services of Finemores under its contract with Richard Thomson were provided for the benefit of Ebos, Richard Thomson, in accordance with cl 5 of the Conditions of Contract, acted as agent for Ebos, and, insofar as the services were provided for the benefit of Alphapharm, Richard Thomson acted as agent for Alphapharm. No issue arises in the present appeal in relation to the contractual liability of Richard Thomson to Finemores, and it is unnecessary to examine, and no argument was directed towards, the question whether, upon analysis, there were two contracts or only one. As to Alphapharm, the primary judge accepted that, after Mr van der Pluijm labelled the goods and addressed them to Alphapharm's customers, Alphapharm "had a possessory title sufficient to give rise to a duty in [Finemores], owed to Alphapharm, to exercise reasonable care in relation to the parcels." He continued: "That duty did not arise from any contract between Alphapharm and Finemores. It arose from the handing over of possession by Alphapharm to Finemores of the parcels then and there in the warehouse. There was no contract between them. Richard Thomson was never constituted Alphapharm's agent to create a contract between Alphapharm and Finemores. There was no evidence of any express appointment of Richard Thomson by Alphapharm as its agent to create such a contract. Insofar as there was any relationship of agency between Alphapharm and Richard Thomson, it was a limited one whereby Richard Thomson made the administrative arrangements on behalf of Alphapharm for the timing and size and identification of the outbound shipments. Even if it be accepted that Mr van der Pluijm agreed with someone at Richard Thomson that, because Richard Thomson had an account with Finemores, Finemores should invoice Richard Thomson for all transportation including that from Finemores to the Alphapharm customer, and then pass the relevant cost on to Alphapharm, I would not accept that Richard Thomson was thereby constituted the agent of Alphapharm to enter into a contract on its behalf which contained the onerous conditions on which the defendant relies. Even if the exculpatory clauses in the conditions of contract signed by Richard Thomson ... were part of the contract between Finemores on the one hand and Ebos or Richard Thomson or both of them on the other, relationship between Alphapharm and they did not affect [Finemores]." the Earlier in his reasons, his Honour said, with reference to the arrangements preparatory to transport by Finemores: "I think that Mr van der Pluijm also did not then advert to any need to have a clear contractual relationship between the carrier and his company about the terms of carriage." For reasons that have already been explained, Mr van der Pluijm's subjective understanding is not important for the resolution of the issues that arose in this case. In the Court of Appeal, Young CJ in Eq said: "There is always a danger in merely asking the question, 'Was X the agent for Y?'. As the High Court made clear in Petersen v Moloney41, the vital question is 'Was X the agent of Y to make the contract?' or as the case may be. In the present case there is no doubt that [Richard Thomson] was Alphapharm's agent for some purposes. However, in my view, the trial judge was correct in his conclusion that it was not Alphapharm's agent to contract." The apparent readiness to accept that Richard Thomson contracted as agent for Ebos, and that if, for example, goods had been damaged in the course of transit into Finemores' store Ebos would have been bound by cl 6 (if it were otherwise part of the transportation contract), in contrast with the rejection of a similar contention in relation to Alphapharm, shows that the problem was seen as one of authority. Richard Thomson was a subsidiary of Ebos, and was paid a fee for administering the distribution agreement. Presumably, that was seen as making it easier to conclude that Richard Thomson had authority to bind Ebos to the relevant conditions of contract. With respect, the distinction between Ebos and Alphapharm is unconvincing. They both required the services of Finemores, and they both relied on Richard Thomson to procure those services. The conclusion that Richard Thomson was dealing with Finemores as agent of Ebos but not as agent of Alphapharm is difficult to accept. The use of the concept of agency as a method of overcoming the requirements of privity in a commercial context such as the present was suggested by Lord Reid in Midland Silicones Ltd v Scruttons Ltd42, and taken up 41 (1951) 84 CLR 91 at 94. 42 [1962] AC 446 at 474. response in New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd43, and Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd44. The technique was recently described by Lord Bingham of Cornhill as "a deft and commercially-inspired rules of contract, particularly those governing privity and consideration"45. In the case of a stevedore seeking the benefit of a Himalaya clause, courts have been ready to conclude that the carrier was acting with the stevedore's authority46. In the present case, the particular clause in question operates against, rather than in favour of, Alphapharm. On the other hand, a conclusion that Richard Thomson was authorised to act on behalf of Alphapharm may be more obvious than a conclusion that a carrier at time of shipment was authorised to act on behalf of an unknown stevedore in a foreign country. technical English The evidence made it plain that Alphapharm required services of the kind provided by Finemores, that it decided to use the services of Finemores, that it designated Finemores' warehouse as its store for the purpose of the sub- distribution agreement, that it appropriated the goods while they were in Finemores' store, and that it required Finemores to transport the goods to Alphapharm's customers. It is also clear that Alphapharm left it to Richard Thomson to arrange the necessary contract pursuant to which Finemores was to provide those services for the benefit of Alphapharm. The terms on which Richard Thomson contracted were Finemores' standard terms and conditions. The primary judge's conclusion that the relationship of agency "was a limited one whereby Richard Thomson made the administrative arrangements on behalf of Alphapharm for the timing and size and identification of the outbound shipments" appears to overlook the most obvious feature of the commercial circumstances, which was that the outbound shipments were to take place pursuant to a contract, and that, at the very least, the rates of freight and terms of payment had to be agreed. It is not enough to say that Richard Thomson was to pass the cost on to Alphapharm. Someone had to agree about the cost, which was to be borne by Alphapharm. The evidence compels the conclusion that 44 (1980) 144 CLR 300. 45 Homburg Houtimport BV v Agrosin Ltd [2004] 1 AC 715 at 744. 46 eg Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (1978) 139 CLR 231 at 241 per Barwick CJ. Alphapharm authorised Richard Thomson to contract with Finemores and to agree upon rates of freight, terms of payment, and such other standard terms and conditions of the contract of storage and transportation as were required by Finemores. So long as the terms and conditions to which Richard Thomson agreed were Finemores' standard terms and conditions then Richard Thomson was acting within its authority. In the result, Alphapharm was bound by cl 6 of the Conditions of Contract. No issue arises of the indemnity claim made under cl 8 of the Conditions of Contract. Conclusion and orders The appellant succeeds on both issues. At the conclusion of the hearing of the appeal the parties agreed upon the appropriate orders depending upon the outcome of the appeal. The following orders should be made: Appeal allowed with costs. Set aside order 1 of the orders of the New South Wales Court of Appeal and, in lieu thereof, order that the appeal to that Court be allowed with costs. Set aside orders 1, 2 and 4 of the trial judge and in lieu thereof, order that: the First and Second Plaintiffs' claim in the District Court of New South Wales be dismissed; judgment be entered for the Defendant; the First and Second Plaintiffs pay the Defendant's costs of the trial; and the First and Second Plaintiffs pay the costs of the First and Third Cross Defendants. Order that the First Respondent repay to the Appellant the sum of $683,061.86 together with interest from the date of payment at rates under the District Court Act 1973 (NSW) or as agreed.

HIGH COURT OF AUSTRALIA POLICE AND APPELLANT RESPONDENT Police v Dunstall [2015] HCA 26 5 August 2015 ORDER Appeal allowed. Set aside order 1 of the orders of the Full Court of the Supreme Court of South Australia made on 25 July 2014 and, in its place, order that: the appeal be allowed; and order 1 of the orders of Kelly J made on 5 December 2013 be set aside and, in its place, order that: the appeal be allowed; the order of the Magistrates Court of South Australia made on 20 August 2013 dismissing the charge be set aside; and (iii) the matter be remitted to the Magistrates Court for further hearing. The appellant pay the respondent's costs in this Court. On appeal from the Supreme Court of South Australia Representation M G Hinton QC, Solicitor-General for the State of South Australia with A C Moffa for the appellant (instructed by Crown Solicitor (SA)) M E Shaw QC with B J Doyle for the respondent (instructed by Caldicott Lawyers) Interveners N J Williams SC with G A Hill for the Attorney-General of the Commonwealth, (instructed by Australian Government Solicitor) intervening G R Donaldson SC, Solicitor-General for the State of Western Australia for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Police v Dunstall Criminal law – Evidence – Judicial discretion to admit or exclude evidence – Section 47B(1)(a) of Road Traffic Act 1961 (SA) created offence for person to drive motor vehicle while prescribed concentration of alcohol present in blood – Section 47K(1) of Act created presumption that breath analysis reading corresponded to blood alcohol level at time of analysis – Section 47K(1a) of Act provided presumption could only be rebutted if defendant arranged for blood sample to be taken in accordance with prescribed procedures and adduced evidence that analysis of blood demonstrates that breath analysis reading instrument gave exaggerated reading – Where respondent charged with offence against s 47B(1)(a) and pleaded not guilty – Where breath analysis reading indicated blood alcohol level above prescribed concentration – Where respondent arranged for blood sample to be taken but sample unable to be analysed through no fault of appellant or respondent – Where appellant sought to tender evidence of breath analysis reading – Whether there exists residual common law discretion to exclude lawfully obtained, probative, non-confessional evidence unaffected by impropriety or risk of prejudicial misuse where admission would render trial of accused unfair – Whether respondent's trial unfair in relevant sense if evidence of breath analysis reading admitted. Words and phrases – "Bunning v Cross discretion", "Christie discretion", "forensic unfairness", "general unfairness discretion", "Lee discretion", "unfair trial". Road Traffic Act 1961 (SA), ss 47B(1)(a), 47K. Road Traffic (Miscellaneous) Regulations 1999 (SA), reg 11, Sched 1. FRENCH CJ, KIEFEL, BELL, GAGELER AND KEANE JJ. In South Australia, it is an offence for a person to drive a motor vehicle while the prescribed concentration of alcohol is present in his or her blood. Proof of the offence is facilitated by a statutory presumption that the concentration of alcohol indicated by a breath analysing instrument as being present in the driver's blood was the concentration of alcohol in the driver's blood at the time of the breath analysis and throughout the preceding period of two hours ("the presumption"). The presumption may only be rebutted if the defendant arranges for a sample of his or her blood to be taken by a medical practitioner in accordance with prescribed procedures and adduces evidence that analysis of the blood demonstrates that the breath analysing instrument gave an exaggerated reading. The issue raised by the appeal is whether, in a case in which a medical practitioner fails to take the blood sample in accordance with the prescribed procedures, the court has a discretion to exclude evidence engaging the presumption on the ground that admission of the evidence would render the trial of the defendant unfair. The legislative scheme The offence of driving a motor vehicle with the prescribed concentration of alcohol in the driver's blood is created by s 47B(1)(a) of the Road Traffic Act 1961 (SA) ("the RTA"). It is a summary offence punishable by fine and mandatory disqualification from holding or obtaining a driver's licence. The amount of the fine and the length of the period of disqualification vary depending upon whether the offence falls within category one, two or three and whether it is a first, second, third or subsequent offence1. Relevantly, the prescribed concentration of alcohol is 0.05 grams or more of alcohol in 100 millilitres of blood2. A category one offence involves a concentration of less than 0.08 grams of alcohol in 100 millilitres of blood; a category two offence involves a concentration of alcohol of less than 0.15 grams, but not less than 0.08 grams, in 100 millilitres of blood; and a category three offence involves a concentration of alcohol of 0.15 grams or more in 100 millilitres of blood3. 1 RTA, s 47B(1), (3). 2 RTA, s 47A(1). 3 RTA, s 47A(1). Bell A police officer may require the driver of a motor vehicle to submit to an alcotest or a breath analysis or both4. A person must not be required to submit to a breath analysis unless an alcotest indicates that the prescribed concentration of alcohol may be present in the person's blood5. Where a person submits to an alcotest or a breath analysis and the alcotest apparatus or the breath analysing instrument produces a reading in terms of a number of grams of alcohol in 210 litres of the person's breath, the reading is taken to be that number of grams of alcohol in 100 millilitres of the person's blood6. A conviction or finding of guilt of the s 47B(1)(a) offence is not taken as evidence that the person was at the time under the influence of, or in any way affected by, intoxicating liquor or was incapable of driving, or of exercising effective control of, a motor vehicle for insurance or other purposes7. The presumption is provided in s 47K(1) and applies to proceedings for an offence against the RTA or the Motor Vehicles Act 1959 (SA), or a driving-related offence8. The concentration of alcohol indicated as being present in the defendant's blood by a breath analysing instrument (a "breath analysis reading") is presumed, in the absence of proof to the contrary, to be the concentration of alcohol present in the blood of the defendant at the time of the analysis and throughout the preceding period of two hours. The presumption only arises if the breath analysing instrument was operated by a person authorised by the Commissioner of Police to operate it and if the requirements and procedures in relation to breath analysing instruments and breath analysis under the RTA have been complied with. The requirements include, in sub-s (2), that the operator of the breath analysing instrument ("the operator") give a person who has submitted to breath analysis a written statement specifying the time and date of the analysis and the reading and, in sub-s (2a), that the operator give prescribed oral advice and a prescribed written notice to a person whose breath 4 RTA, s 47E(1)(a). 5 RTA, s 47E(2ab). 6 RTA, s 47EB. 7 RTA, s 47C. See Motor Vehicles Act 1959 (SA), s 124A with respect to recovery by insurers. 8 RTA, s 47K(18). Bell analysis reading indicates the presence of the prescribed concentration of alcohol in the blood and give the person an approved blood test kit on request. No evidence may be adduced in rebuttal of the presumption except evidence based on analysis of a sample of the defendant's blood that has been taken and dealt with in accordance with the prescribed procedures ("a complying blood sample")9. Evidence based on the analysis must demonstrate that the breath analysing instrument gave an exaggerated reading of the concentration of alcohol in the defendant's blood10. In practical terms, this requires the defendant to adduce expert opinion evidence based on the results of analysis of the blood sample. A second, and in this instance conclusive, presumption in proceedings for a s 47B(1)(a) offence is that the concentration of alcohol present in the defendant's blood at the time of breath analysis performed within two hours of driving was the concentration of alcohol present in the defendant's blood at the In proceedings for an offence, the prosecution may prove by certificate subject to evidence to the contrary: that the operator was duly authorised12; that the apparatus used by the operator was a breath analysing instrument13; that the instrument was in proper order and was properly operated14; that the provisions of the RTA respecting breath analysing instruments and their use were complied with15; that the apparatus referred to in the certificate was of a kind approved under the RTA for the performance of alcotests16; that the person named in the 9 RTA, s 47K(1a)(a). 10 RTA, s 47K(1a)(b). 11 RTA, s 47K(1ab), (18)(a). 12 RTA, s 47K(3)(a). 13 RTA, s 47K(3)(b)(i). 14 RTA, s 47K(3)(b)(ii). 15 RTA, s 47K(3)(b)(iii). 16 RTA, s 47K(3a). Bell certificate submitted to an alcotest on the date and at the time stated17; that the alcotest indicated the prescribed concentration of alcohol in the blood18; that the person named in the certificate submitted to breath analysis by means of a breath analysing instrument on the date and at the time stated19; that the instrument recorded the reading stated20; that a statement required by sub-s (2) was given to the person21; that the prescribed oral advice and the prescribed written notice under sub-s (2a)(a) were given to the person22; and that the person did not request a blood test kit, or an approved blood test kit was given to the person, as the case may be23. The content of the prescribed oral advice and the prescribed written notice is contained in Sched 1 to the Road Traffic (Miscellaneous) Regulations 1999 (SA) ("the Regulations"). The operator is required to orally advise a person whose breath analysis reading indicates that the prescribed concentration of alcohol is present in the blood that "[i]f you want to have such a blood test you will have to make your own arrangements and follow certain procedures, using a special blood test kit"24. The written notice sets out the procedures for the "optional blood test". The written advice states that "you must request the breath analysis operator to supply you with an approved blood test kit" and "[y]ou should then proceed promptly to a hospital or a medical practitioner ... of your choice and request that a sample of your blood be taken"25. 17 RTA, s 47K(3b). 18 RTA, s 47K(3b). 19 RTA, s 47K(5)(a). 20 RTA, s 47K(5)(b). 21 RTA, s 47K(5)(c). 22 RTA, s 47K(7)(b). 23 RTA, s 47K(7)(c). 24 Regulations, Sched 1 Pt A. 25 Regulations, Sched 1 Pt B. Bell The procedures for taking the blood sample are set out in reg 11 of the Regulations. There are 19 in all. A number are addressed to the medical practitioner who takes the sample. In summary, the medical practitioner is required to place the blood in approximately equal proportions in two containers that are supplied as part of the blood test kit26. Regulation 11(c) is of relevance to Mr Dunstall's case. This paragraph provides that each container must contain a sufficient quantity of blood to enable an accurate evaluation to be made of any concentration of alcohol present in the blood and the sample must furnish two such quantities of blood. The medical practitioner is required to seal each container with a seal that is provided as part of the kit27. The medical practitioner must take such measures as are reasonably practicable in the circumstances to ensure that the blood is not adulterated and does not deteriorate so as to prevent a proper assessment of the alcohol concentration in the blood from being made28. Further requirements are imposed on the medical practitioner as to certification of the samples29. Remaining prescribed procedures provide for the delivery of one sample to the person from whom the blood is taken30 and delivery of the other sample to a police officer or approved courier31; the further delivery of that sample to Forensic Science SA32; the analysis of the sample by Forensic Science SA33; the completion of a certificate by the analyst34 and the delivery of copies of the certificate to certain identified persons35. 26 Regulations, reg 11(b). 27 Regulations, reg 11(d). 28 Regulations, reg 11(e). 29 Regulations, reg 11(f)-(h). 31 Regulations, reg 11(j). 32 Regulations, reg 11(ja)-(jb). 33 Regulations, reg 11(l). 34 Regulations, reg 11(m). 35 Regulations, reg 11(n)-(p). Bell Background and procedural history Jason Dunstall was stopped by police while he was driving a motor vehicle in suburban Adelaide. He submitted to an alcotest, which returned a positive result. He was taken to a police station, at which he provided a sample of his breath for analysis. His breath analysis reading was 0.155 grams of alcohol per 100 millilitres of his blood. Mr Dunstall was informed of his right to have a sample of his blood taken for analysis and he was supplied with a blood test kit. The police drove Mr Dunstall to the Noarlunga Hospital, where a medical practitioner took a sample of his blood. Later attempts to analyse the sample proved unsuccessful because the blood was denatured. the charge Mr Dunstall was charged with driving a motor vehicle when there was present in his blood the prescribed concentration of alcohol36. He pleaded not guilty the Magistrates Court of South Australia (Magistrate Dixon). At the hearing, over Mr Dunstall's objection, a certificate recording the breath analysis reading was admitted in evidence37. Further certificates were tendered in the prosecution case to establish that the operator was duly authorised and that the requirements and procedures relating to breath analysing instruments and breath analysis under the RTA, including those stated in sub-ss (2) and (2a), had been complied with. The medical practitioner who took the blood sample was called in the prosecution case. She had no memory of taking the sample and no knowledge of how the sample had come to be denatured. Mr Collins, a forensic pathologist, was called in the defence case. Mr Collins considered that the likely explanation for the sample being denatured was that an insufficient quantity of blood had been taken from Mr Dunstall. Magistrate Dixon found that the blood sample was unsuitable for analysis because the medical practitioner had not taken a sufficiently large quantity of 36 RTA, s 47B(1)(a). 37 RTA, s 47K(5). 38 Police v Dunstall [2013] SAMC 25 at [14]. Bell As will appear, the Full Court of the Supreme Court of South Australia has identified a "general unfairness discretion". In R v Lobban39, the Full Court held that this discretion permits the court to exclude probative evidence untainted by illegality, impropriety or risk of prejudice where its admission would be unfair to the accused in the sense that it would make the trial of the accused an unfair trial. In his reasons for decision, Magistrate Dixon identified as a critical issue for determination whether the inability to analyse the blood samples had resulted in unfairness to Mr Dunstall such that "the breath analysis results should not be used as evidence"40. His Honour referred to Lobban among other authorities in this respect41. He held that Mr Dunstall had been deprived of his ability to rebut the presumption despite having done all that he, Mr Dunstall, could do to comply with the requirements necessary to challenge the prosecution evidence42. The loss of the opportunity to challenge the prosecution evidence was occasioned by the apparent failure of the medical practitioner to comply with reg 11(c) of the Regulations43. His Honour said that, in the result, the trial of Mr Dunstall was unfair and "[a]ccordingly, the evidence of the breath analysis should be disregarded and the charge fails"44. The charge was dismissed. As earlier explained, the prosecution case against Mr Dunstall included the certificate of the breath analysis reading and evidence satisfying all of the requirements that engage the presumption. It was, of course, open to Magistrate Dixon to review evidentiary rulings at any stage in the course of the hearing. His Honour's statement that "evidence of the breath analysis should be 39 (2000) 77 SASR 24 at 39-45 [60]-[77] per Martin J (Doyle CJ agreeing at 25 [1], Bleby J agreeing at 25 [4]). 40 Police v Dunstall [2013] SAMC 25 at [5]. 41 Police v Dunstall [2013] SAMC 25 at [15]. 42 Police v Dunstall [2013] SAMC 25 at [16]. 43 Police v Dunstall [2013] SAMC 25 at [14]. 44 Police v Dunstall [2013] SAMC 25 at [16]. Bell disregarded"45 is to be understood as a decision to exclude the evidence in the exercise of the discretion identified in Lobban. The police appealed46 to the Supreme Court of South Australia constituted by a single judge (Kelly J)47. Kelly J held that a proper basis for the exercise of "the residual discretion to exclude the prosecution evidence on the basis of unfairness" had been established48. Her Honour agreed with Magistrate Dixon that the unfairness was the product of the medical practitioner's failure to comply with reg 11(c) of the Regulations. This failure had "effectively placed [Mr Dunstall] in the same position as if no blood sample had ever been taken"49. Her Honour held that Mr Dunstall had done all that was within his power to exercise the "statutory rights" that were given to him50. The appeal was dismissed. The police appealed by leave to the Full Court of the Supreme Court of South Australia (Kourakis CJ, Gray and Sulan JJ)51. The appeal was dismissed by majority (Gray and Sulan JJ). Their Honours held that it had been open to Magistrate Dixon to exclude the certificate recording the breath analysis reading in the exercise of the "general unfairness discretion"52. Each of their Honours' reasons for this conclusion mirrored those of Kelly J. 45 Police v Dunstall [2013] SAMC 25 at [16]. 46 Magistrates Court Act 1991 (SA), s 42(1), (2)(b). Rule 12.05 of the Magistrates Court Rules 1992 (Criminal) (SA) provides that, where a complaint is made by a police officer in the execution of his duty, the complaint and the proceedings thereon may be entitled "Police v …". 47 Police v Dunstall (2013) 118 SASR 233. 48 Police v Dunstall (2013) 118 SASR 233 at 242 [46]. 49 Police v Dunstall (2013) 118 SASR 233 at 242 [46]. 50 Police v Dunstall (2013) 118 SASR 233 at 242-243 [46]. 51 Supreme Court Act 1935 (SA), s 50(1)(a), (4)(a)(ii). 52 Police v Dunstall (2014) 120 SASR 88 at 124 [88] per Gray J, 144 [173] per Bell Kourakis CJ, in dissent, was critical of deploying "subjective discretions" to deny the prosecution the proofs which the RTA provides for the prosecution of drink-driving offences53. His Honour observed that the legislative scheme does not confer a procedural right to adduce evidence of blood sample analysis and that the failure to obtain a blood sample suitable for analysis had not been that circumstances may arise that would make the prosecution of a defendant who is unable to adduce evidence of blood analysis an abuse of the process of the court55. His Honour said that this was not such a case56. On 13 March 2015, Bell and Keane JJ granted the police special leave to appeal. The appeal is brought on the ground that the Full Court majority erred in holding that evidence of a breath analysis reading obtained lawfully and without any impropriety on the part of the police should be excluded in the exercise of the "common law general unfairness discretion". For the reasons to be given, the appeal must be allowed, the orders of the courts below set aside and the matter remitted to the Magistrates Court for further hearing. The "general unfairness discretion" The Full Court was unanimous in acknowledging the existence of the common law "general unfairness discretion" to exclude evidence which was identified in Lobban57. Their Honours were divided as to the application of that discretion in the circumstances of Mr Dunstall's case58. In Lobban, which was concerned with the trial of a charge of possession of cannabis, at issue was the admission of certificates of analysis certifying that 53 Police v Dunstall (2014) 120 SASR 88 at 111 [51]. 54 Police v Dunstall (2014) 120 SASR 88 at 113 [57]. 55 Police v Dunstall (2014) 120 SASR 88 at 113 [56]. 56 Police v Dunstall (2014) 120 SASR 88 at 113 [58]. 57 Police v Dunstall (2014) 120 SASR 88 at 102-103 [19]-[22] per Kourakis CJ, 113 [59] per Gray J, 136 [133] per Sulan J. 58 Police v Dunstall (2014) 120 SASR 88 at 113 [57] per Kourakis CJ (dissenting), 124 [87]-[88] per Gray J, 144 [173] per Sulan J. Bell material seized by the police was cannabis when the seized material was no longer in existence. It had been mistakenly destroyed by the police59. Martin J, with whose reasons Doyle CJ and Bleby J agreed, held that there is a common law "general unfairness discretion" which permits the court to exclude probative evidence untainted by impropriety or risk of prejudice where the reception of the evidence would be unfair in the sense that it would make the trial of the accused an unfair trial60. The discretion is said to apply to all forms of evidence, including "real" and circumstantial evidence61. The purpose served by the discretion is to ensure that the accused is not improperly convicted62. The interaction of a residual exclusionary discretion engaged to avoid an unfair trial with the inherent power of the court to relieve against unfairness including by staying proceedings was not explored. In the event, the trial judge in Lobban was held not to have erred: although the accused had lost the opportunity to have the material tested by an analyst of his choice, there was no reason to doubt the reliability of the evidence63. Photographs of the seized material were available and the analyst had not been cross-examined on the opinions stated in the certificates64. In the 59 R v Lobban (2000) 77 SASR 24 at 26-27 [11] per Martin J (Doyle CJ agreeing at 25 [1], Bleby J agreeing at 25 [4]). 60 R v Lobban (2000) 77 SASR 24 at 39-45 [60]-[77] (Doyle CJ agreeing at 25 [1], Bleby J agreeing at 25 [4]), citing, amongst other cases, Driscoll v The Queen (1977) 137 CLR 517 at 541 per Gibbs J; [1977] HCA 43. 61 R v Lobban (2000) 77 SASR 24 at 39 [61], 46 [78] per Martin J (Doyle CJ agreeing at 25 [1], Bleby J agreeing at 25 [4]). 62 R v Lobban (2000) 77 SASR 24 at 51 [89(vii)] per Martin J (Doyle CJ agreeing at 25 [1], Bleby J agreeing at 25 [4]). 63 R v Lobban (2000) 77 SASR 24 at 50 [88] per Martin J (Doyle CJ agreeing at 25 [1], Bleby J agreeing at 25 [4]). 64 R v Lobban (2000) 77 SASR 24 at 50 [88] per Martin J (Doyle CJ agreeing at 25 [1], Bleby J agreeing at 25 [4]). Bell circumstances, Martin J said that there was no "genuine" unfairness and no risk of a miscarriage of justice65. The Full Court of the Supreme Court of South Australia constituted by a bench of five judges unanimously affirmed the existence of the "general unfairness discretion" in Police v Hall66. However, a majority held, as in Lobban, that the discretion had not been enlivened in the circumstances under consideration67. The exclusion of evidence in a criminal proceeding in the exercise of a "fairness discretion" is generally understood to refer to the principles explained in R v Lee68 ("the Lee discretion"). The Lee discretion forms part of the special body of rules applying to the admission of confessional statements69. In criminal proceedings, there are two settled bases for the discretionary exclusion of non-confessional evidence, including "real" and circumstantial evidence. The first is where the probative value of the evidence is outweighed by the risk of prejudice to the defendant ("the Christie70 discretion"). The second is where the evidence has been tainted by illegality or impropriety on the part of the law enforcement authority ("the Bunning v Cross71 discretion"). The rationale for the latter discretion is not so much a concern with fairness to the defendant as with 65 R v Lobban (2000) 77 SASR 24 at 51 [88] (Doyle CJ agreeing at 25 [1], Bleby J agreeing at 25 [4]). 66 (2006) 95 SASR 482 at 488 [24], 491 [35] per Doyle CJ (Vanstone J agreeing at 534 [215]), 497-498 [88] per Nyland J, 498-499 [94] per Bleby J, 521 [167] per 67 Police v Hall (2006) 95 SASR 482 at 495 [70] per Doyle CJ (Vanstone J agreeing at 534 [215]), 504 [121]-[122] per Bleby J (Nyland J dissenting at 498 [92], Gray J dissenting at 534 [212]). 68 (1950) 82 CLR 133 at 159; [1950] HCA 25. 69 Foster v The Queen (1993) 67 ALJR 550 at 554 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ; 113 ALR 1 at 6; [1993] HCA 80; R v Swaffield (1998) 192 CLR 159; [1998] HCA 1. 70 R v Christie [1914] AC 545. 71 (1978) 141 CLR 54; [1978] HCA 22. Bell the public policy of not giving the appearance of curial approval to wrongdoing on the part of those whose duty is to enforce the law72. These three discretions correspond with the exclusionary discretions that apply in criminal proceedings under the Uniform Evidence Acts73. In addition to these bases for discretionary exclusion of evidence in criminal proceedings, intermediate appellate courts in other Australian jurisdictions have also identified a residual common law discretion to exclude admissible evidence on the ground of unfairness74. It will have been observed that the "general unfairness discretion" applied here excluded probative, "real", evidence that was obtained without taint of impropriety or risk of prejudicial misuse. The Solicitor-General for South Australia, on behalf of the police, did not dispute the existence of a common law "general unfairness discretion" in the Full Court or in this Court. However, the Solicitor-General submits that as this is the first occasion on which this Court has been asked "to determine directly [the] existence [of the general unfairness discretion], having previously only considered it in dicta", it is appropriate to consider the "source and rationale" of the discretion in order to determine its "proper ambit". The reference to this Court's previous consideration of a "general unfairness discretion" is to statements in decisions concerning the admission of confessional statements75 and particular applications of the Christie discretion76. They are sourced in Gibbs J's statement in Driscoll v The Queen77: 72 Bunning v Cross (1978) 141 CLR 54 at 74-75 per Stephen and Aickin JJ; Ridgeway v The Queen (1995) 184 CLR 19 at 38 per Mason CJ, Deane and Dawson JJ, 49 per Brennan J, 83 per McHugh J; [1995] HCA 66. 73 See Evidence Act 1995 (Cth), ss 90, 137, 138. 74 R v Edelsten (1990) 21 NSWLR 542 at 554; R v McLean; Ex parte Attorney-General [1991] 1 Qd R 231 at 239-240 per Kelly SPJ, 241, 246 per Derrington J; Rozenes v Beljajev [1995] 1 VR 533 at 549; Haddara v The Queen [2014] VSCA 100 at [12], [16], [50] per Redlich and Weinberg JJA. 75 Driscoll v The Queen (1977) 137 CLR 517 at 541 per Gibbs J; Stephens v The Queen (1985) 156 CLR 664 at 669; [1985] HCA 30. Bell "Although as a matter of law a document is admissible against an accused person who has adopted it, that does not seem to me to be the end of the matter. It has long been established that the judge presiding at a criminal trial has a discretion to exclude evidence if the strict rules of admissibility would operate unfairly against the accused." (emphasis added) The emphasised sentence is taken directly from Lord Goddard CJ's statement in Kuruma v The Queen78. In Driscoll79, as in Kuruma80, the statement was illustrated by reference to decisions applying the Christie discretion81. In R v Sang, Lord Diplock suggested that it is unlikely that Lord Goddard intended the statement to acknowledge a wider discretion than the Christie discretion82. That suggestion may apply equally to Gibbs J's adoption of the statement. 76 Alexander v The Queen (1981) 145 CLR 395 at 402 per Gibbs CJ; [1981] HCA 17; Harriman v The Queen (1989) 167 CLR 590 at 594-595 per Brennan J; [1989] HCA 50. 77 (1977) 137 CLR 517 at 541 (Mason J agreeing at 543, Jacobs J agreeing at 543 and Murphy J agreeing at 543). 78 [1955] AC 197 at 204: "No doubt in a criminal case the judge always has a discretion to disallow evidence if the strict rules of admissibility would operate unfairly against an accused." 79 (1977) 137 CLR 517 at 541 per Gibbs J. 80 [1955] AC 197 at 204. 81 Noor Mohamed v The King [1949] AC 182 at 192 per Lord du Parcq; Harris v Director of Public Prosecutions [1952] AC 694 at 707 per Viscount Simon. 82 [1980] AC 402 at 436. Lord Goddard went on in Kuruma to suggest that, if an item of evidence such as a document had been obtained from a defendant by trick, the trial judge might properly exclude it: [1955] AC 197 at 204. In Sang, Lord Diplock considered that in this passage Lord Goddard acknowledged the existence of a discretion to exclude a self-incriminatory admission obtained after the commission of the offence by means which would justify excluding an actual confession: [1980] AC 402 at 436. See also at 439-440 per Viscount Dilhorne. Bell Nonetheless, Gibbs J's statement in Driscoll and its repetition in decisions concerned with the Lee or the Christie discretion are cited in Cross on Evidence for the proposition that there is a residual discretion to reject any evidence if the strict rules of admissibility would operate unfairly against the accused83. As the learned author observes, putting confessions to one side, it is not easy to think of circumstances in which the grounds for the exercise of the residual discretion would not fall within the more specific principle that evidence will not be admitted where its prejudicial effect exceeds its probative value84. Two examples are suggested as possibly engaging this residual discretion. The first example is where the weight and credibility of evidence cannot be effectively tested85. The second example is where evidence is excessively inflammatory, as in the case of gruesome photographs86. The second example reinforces the point earlier made, as excessively inflammatory evidence may be excluded under the Christie discretion. It is the first example on which Mr Dunstall relies. He calls in aid Gaudron J's discussion of fairness in its application to the rules of evidence in Dietrich v The Queen87: "Speaking generally, the notion of 'fairness' is one that accepts that, sometimes, the rules governing practice, procedure and evidence must be tempered by reason and commonsense to accommodate the special case that has arisen because, otherwise, prejudice or unfairness might result. Thus, in some cases, the requirement results in the exclusion of admissible evidence because its reception would be unfair to the accused in that it 83 Cross on Evidence, 10th Aust ed (2015) at [11125]. 84 Cross on Evidence, 10th Aust ed (2015) at [11125], citing R v McLean; Ex parte Attorney-General [1991] 1 Qd R 231 at 252 per Carter J; Rozenes v Beljajev [1995] 1 VR 533 at 553-554. 85 Cross on Evidence, 10th Aust ed (2015) at [11125], citing, amongst other cases, Dietrich v The Queen (1992) 177 CLR 292 at 363 per Gaudron J; [1992] HCA 57; Rozenes v Beljajev [1995] 1 VR 533. 86 Cross on Evidence, 10th Aust ed (2015) at [11125]. 87 (1992) 177 CLR 292 at 363. Bell might place him at risk of being improperly convicted88, either because its weight and credibility cannot be effectively tested89 or because it has more prejudicial than probative value and so may be misused by the jury90." (emphasis added) Her Honour's analysis was made in the context of the power to stay proceedings to prevent an unfair trial. The decisions cited in support of the emphasised passage concern the special principles that govern the admission of confessional statements at common Professor Pattenden's monograph on judicial discretion for the proposition that evidence may be excluded if its weight and credibility cannot be effectively tested by the defence91. Professor Pattenden illustrates the proposition by reference to the decision of the Ontario Supreme Court in R v Moore92. Professor Pattenden treats evidence in this category as subject to exclusion in the exercise of the Christie discretion. This was the basis for exclusion of the evidence of the deceased complainant in Moore93. is also made Reference law. The loss of evidence, whether it may have assisted the defence to mount a positive case or to raise a doubt as to the prosecution case, would not ordinarily 88 McDermott v The King (1948) 76 CLR 501 at 511-515 per Dixon J; [1948] HCA 23; Driscoll v The Queen (1977) 137 CLR 517 at 541 per Gibbs J. 89 McDermott v The King (1948) 76 CLR 501 at 511-515 per Dixon J; R v Lee (1950) 82 CLR 133 at 144 and noting Pattenden, Judicial Discretion and Criminal Litigation, 2nd ed (1990) at 233. 90 R v Christie [1914] AC 545 at 560; Harris v Director of Public Prosecutions [1952] AC 694 at 707; Driscoll v The Queen (1977) 137 CLR 517 at 541 per Gibbs J and noting Waight and Williams, Evidence: Commentary and Materials, 3rd ed (1990) at 11 and Pattenden, Judicial Discretion and Criminal Litigation, 2nd ed (1990) at 233. 91 Pattenden, Judicial Discretion and Criminal Litigation, 2nd ed (1990) at 233. 92 Pattenden, Judicial Discretion and Criminal Litigation, 2nd ed (1990) at 233, citing (1973) 17 CCC (2d) 348. 93 (1973) 17 CCC (2d) 348 at 349 per Van Camp J. Cf Rozenes v Beljajev [1995] 1 VR 533 at 557. Bell enliven the Christie discretion nor make the trial of the defendant unfair94. This is not to say that the inability to test prosecution evidence may never justify exclusion in the exercise of the Christie discretion but it is to question the application of a wider "general unfairness discretion" to exclude prosecution evidence in a case in which the loss of defence evidence does not engage the Christie discretion nor the inherent power of the court to stay proceedings. While Mr Dunstall's principal reliance is upon the "general unfairness discretion", he does obliquely raise the inability to test breath analysis evidence as justifying exclusion under the Christie discretion. He contends that the results of blood analysis possess superior probative value to the results of breath analysis and where the presumption is relied upon without possibility of contradiction there is a risk of wrong conviction or of conviction for an offence in the wrong category. The submission fails to come to terms with the legislative scheme. The Parliament has chosen to provide the prosecution with an aid to proof and to closely confine the circumstances in which rebuttal evidence may be adduced. There is no suggestion that the scheme is beyond power95. The prosecution proves the commission of a s 47B(1)(a) offence by proof, inter alia, that the defendant submitted to breath analysis by means of a breath analysing instrument within two hours of driving a motor vehicle and that the breath analysis reading indicated the presence of the prescribed concentration of alcohol in the defendant's blood. The category of the offence is established by proof of the breath analysis reading. Subject to the defence adducing opinion evidence based upon analysis of a blood sample taken and dealt with in accordance with the prescribed procedures, the reliability of the breath analysis reading is not an issue in the trial. The majority in the Full Court relied on statements made by King CJ in French v Scarman for the conclusion that it was open to Magistrate Dixon to exclude the certificate recording the breath analysis reading in the exercise of discretion96. At the time French was decided, the statutory scheme imposed an 94 R v Edwards (2009) 83 ALJR 717 at 722 [31]; 255 ALR 399 at 405; [2009] HCA 95 Williamson v Ah On (1926) 39 CLR 95 at 108 per Isaacs J; [1926] HCA 46. 96 Police v Dunstall (2014) 120 SASR 88 at 116-117 [71] per Gray J, 134-136 [125]-[132] per Sulan J, both citing (1979) 20 SASR 333 at 337, 340-341. Bell obligation on the police to do all things necessary to facilitate the taking of the blood sample97. The police were found to have deliberately refrained from doing so98. As explained in Hall, the close connection between obtaining the breath analysis reading and the police misconduct was held in French to justify exclusion under the Bunning v Cross discretion99. The reliance on King CJ's analysis in French is misplaced. Notable in the analysis of Gray J and Sulan J below is the absence of reference to the reasoning of the majority in Hall. The facts in Hall bear similarity to the facts here. Mr Hall underwent a breath analysis using a breath analysing instrument which recorded the prescribed concentration of alcohol in his blood. Mr Hall requested, and was given, a blood test kit. He attended at the Royal Adelaide Hospital to have a sample of his blood taken. Hospital staff were busy attending to patients with more pressing needs and a sample of Mr Hall's blood was not taken until it was too late for analysis to be of forensic utility. Mr Hall pleaded not guilty to a charge of driving with the prescribed concentration of alcohol in his blood. The magistrate hearing the charge found that Mr Hall had attended the hospital promptly and that it was the delay in taking the blood sample that had deprived him of the opportunity of challenging the breath analysis reading100. The majority in the Full Court considered that the admission of the proof of the breath analysis reading did not make Mr Hall's trial unfair101. Doyle CJ's analysis in this respect is instructive. His Honour observed that the RTA treats the breath analysis reading as reliable evidence and that the court should not hold otherwise102. Next, Doyle CJ observed that there had been no misconduct or 97 RTA, s 47f(2), relevantly repealed by Road Traffic (Drug Driving) Amendment Act 2005 (SA), s 13. 98 (1979) 20 SASR 333 at 340 per King CJ. 99 Police v Hall (2006) 95 SASR 482 at 488 [23] per Doyle CJ, 499 [96] per Bleby J, 534 [216] per Vanstone J, all citing (1979) 20 SASR 333. 100 Police v Hall (2006) 95 SASR 482 at 487 [20]. 101 Police v Hall (2006) 95 SASR 482 at 495 [70] per Doyle CJ (Vanstone J agreeing at 534 [215]), 504 [121]-[122] per Bleby J (Nyland J dissenting at 498 [92], Gray J dissenting at 534 [212]). 102 Police v Hall (2006) 95 SASR 482 at 492 [48]. Bell impropriety on the part of the police in association with obtaining the breath analysis reading103. Next, his Honour observed that the RTA does not confer an enforceable right on the driver of a vehicle to have a sample of blood taken104. Whether analysis of Mr Hall's blood would have assisted his defence could not be known105. In the circumstances, Doyle CJ considered that only "in the most general of senses can [the admission of the proof of the breath analysis reading] be said to be unfair" where a blood sample is not taken or is taken after a lapse of time such that it provides no forensic assistance. Unfairness in this general sense, his Honour said, did not enliven the discretion106. Mr Dunstall seeks to distinguish Hall, submitting that the failure to obtain a complying blood sample rested with Mr Hall, who could have gone to another hospital or located a medical practitioner in private practice to take the sample in a timely fashion. By contrast, the failure to obtain a complying blood sample in Mr Dunstall's case was entirely due to the fault of the medical practitioner. Hall is not to be distinguished by attributing fault to Mr Hall. As Doyle CJ noted107, the magistrate found by implication that Mr Hall was not at fault in relation to the time that elapsed before the sample was taken. In each case, the inability to challenge the presumption was occasioned by factors outside the defendant's control. Mr Dunstall acknowledges that the loss or destruction of evidence which may or may not have assisted the defence case does not ordinarily render a trial unfair. As explained in R v Edwards, it is not right to characterise the loss of evidence the contents of which is unknown as a prejudice to the defendant, as it cannot be known whether the evidence would have undermined or supported the prosecution case108. Mr Dunstall argues that his case is to be distinguished. The loss of the capacity to adduce evidence in rebuttal of the presumption is said to make the prosecution case unassailable. And the loss of that capacity is the 103 Police v Hall (2006) 95 SASR 482 at 493 [52]. 104 Police v Hall (2006) 95 SASR 482 at 493 [55]. 105 Police v Hall (2006) 95 SASR 482 at 493 [56]. 106 Police v Hall (2006) 95 SASR 482 at 494 [58]. 107 Police v Hall (2006) 95 SASR 482 at 485 [8]. See also at 497 [83]. 108 (2009) 83 ALJR 717 at 723 [33]; 255 ALR 399 at 406. Bell product of the medical practitioner's failure to comply with the requirements of reg 11(c) of the Regulations. It does not advance Mr Dunstall's case to argue as he does that, once a medical practitioner embarks on taking a blood sample using the blood test kit, the medical practitioner accepts an obligation to do so in accordance with the prescribed procedures. The medical practitioner acts on the defendant's request and is in no sense an agent of the law enforcement authorities responsible for the prosecution. Any failure by the medical practitioner to comply with the prescribed procedures does not engage the public policy considerations that inform the Bunning v Cross discretion. in accordance with A defendant does not have a "statutory right"109 to have a sample of blood the prescribed procedures. taken and dealt with Section 47K(1a) states a rule of exclusion with respect to evidence rebutting the presumption. The rule is subject to opinion evidence under sub-s (1a)(b) based upon analysis of a sample taken and dealt with in accordance with the prescribed procedures under sub-s (1a)(a)110. The onus is upon the defendant to bring himself or herself within these confines. It is evident that a defendant may fail to do so in a variety of circumstances without personal fault. No principled distinction can be drawn between the inability to rebut the presumption occasioned by the medical practitioner's failure to take a sufficient quantity of blood and any circumstance (excluding misconduct of a kind that engages the Bunning v Cross discretion) that results in the defendant failing without fault to obtain an analysis of a complying blood sample. If the reception of breath analysis evidence is unfair in any such case the posited "discretion" will invariably apply to exclude the prosecution evidence engaging the presumption. The unfairness which Mr Dunstall asserts is the product of the scheme of the RTA for the prosecution of drink-driving offences. Mr Dunstall contests that this is so by pointing to s 47K(8), which provides that a prosecution for an offence will not fail because of a deficiency in the blood test kit. It further provides that the presumption will apply despite that deficiency unless the defendant proves that the kit was delivered unopened to the medical practitioner and the medical practitioner gives evidence that because of a deficiency in the kit he or she was unable to comply with the prescribed procedures. Mr Dunstall 109 Cf Police v Dunstall (2013) 118 SASR 233 at 243 [46]. 110 RTA, s 47K(1a)(a), (1a)(b). Bell argues that sub-s (8) recognises that a prosecution engaging the presumption may fail in circumstances in which the inability to obtain a blood sample is occasioned without fault on the defendant's part. It will be recalled that the presumption is conditioned on compliance with sub-s (2a), which imposes a duty on the operator to deliver an approved blood test kit to a person who requests one. It may be implicit in the obligation cast thereby that the approved blood test kit so delivered is not deficient. Contrary to Mr Dunstall's submission, the work done by s 47K(8) is to permit the prosecution to rely on the presumption notwithstanding the possible failure to comply with sub-s (2a), subject always to the defendant proving the matters specified in pars (a) and (b). Kourakis CJ was right to conclude that admission of the evidence of the breath analysis reading did not make the trial of Mr Dunstall unfair111. This conclusion and the circumstance that neither party contested the existence of the "general unfairness discretion" make it inappropriate to determine the scope, if any, of a residual discretion lawfully obtained, probative, to exclude non-confessional evidence that is unaffected by impropriety or risk of prejudice on the ground that admission of the evidence would render the trial of the defendant an unfair trial. It remains to observe that the power of the court to prevent unfairness arising from the continuation of criminal proceedings that are oppressive or unjust involves a test of fairness that requires the court to balance the interests of the defendant and those of the community112. Where the evidence that is sought to be excluded is critical to the prosecution case and the basis of exclusion is said to be that admission of the evidence would render the trial unfair, the remedy lies in determining whether the circumstances justify a permanent stay and not in circumventing that inquiry by the exclusion of the evidence in the exercise of a "general unfairness discretion". 111 Police v Dunstall (2014) 120 SASR 88 at 113 [57]. 112 Jago v District Court (NSW) (1989) 168 CLR 23 at 33 per Mason CJ; [1989] HCA 46; Williams v Spautz (1992) 174 CLR 509 at 518-519 per Mason CJ, Dawson, Toohey and McHugh JJ; [1992] HCA 34; Subramaniam v The Queen (2004) 79 ALJR 116 at 122-123 [27]; 211 ALR 1 at 9; [2004] HCA 51; Moti v The Queen (2011) 245 CLR 456 at 463-464 [10]-[11] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [2011] HCA 50. Bell It was an error to exclude the evidence of the breath analysis reading. The appeal must be allowed and the matter remitted for further hearing before the Magistrates Court113. A condition of the grant of special leave was the appellant's agreement to pay Mr Dunstall's costs in any event. Orders The following orders should be made: Appeal allowed. Set aside order 1 of the orders of the Full Court of the Supreme Court of South Australia made on 25 July 2014 and, in its place, order that: the appeal be allowed; and order 1 of the orders of Kelly J made on 5 December 2013 be set aside and, in its place, order that: the appeal be allowed; the order of the Magistrates Court of South Australia made on 20 August 2013 dismissing the charge be set aside; and (iii) the matter be remitted to the Magistrates Court for further hearing. The appellant pay the respondent's costs in this Court. 113 Magistrates Court Act 1991 (SA), s 42(5)(b). Nettle NETTLE J. This is an appeal from a judgment of the Full Court of the Supreme Court of South Australia (Kourakis CJ, Gray and Sulan JJ). By majority (Gray and Sulan JJ), the Court upheld the affirmation by Kelly J of a magistrate's dismissal of a charge that, in contravention of s 47B(1)(a) of the Road Traffic Act 1961 (SA) ("the RTA"), the respondent drove a motor vehicle while there was present in his blood a concentration of alcohol of 0.155 grams in 100 millilitres of blood. The facts and judgments below The facts and relevant legislative provisions are set out in the joint judgment and it is unnecessary to repeat them. Suffice to say that, before the magistrate, the police sought to tender a certificate issued under s 47K(5) of the RTA ("the breath analysis test certificate"). It recorded, as was the fact, that shortly after the alleged commission of the offence the respondent submitted to a breath analysis test which showed that, at that time, he had in his breath a concentration of alcohol equivalent to 0.155 grams in 100 millilitres of blood. The magistrate excluded the certificate because blood samples taken shortly after the breath analysis had denatured due to the inadequacy of their size and so could not be tested. He ruled that, because the respondent was in those circumstances unable to contest the accuracy of the breath analysis test certificate, its receipt would be productive of such unfairness as to warrant its exclusion. On appeal to the Supreme Court, Kelly J upheld the magistrate's ruling. Her Honour concluded that the medical practitioner who took the blood samples failed to comply with reg 11(c) of the Road Traffic (Miscellaneous) Regulations 1999 (SA) (which specified the size of samples to be taken) and thereby "placed the respondent in the same position as if no blood sample had ever been taken"114. Based upon what her Honour considered to be the effect of Police v Jervis115 and R v Lobban116, she held that there was "scope for the exercise of the [fairness] discretion in favour of the respondent"117. On appeal to the Full Court, Gray J adopted an essentially similar approach, although he ultimately based his decision on observations of King CJ in French v Scarman118 as to the unfairness of admitting a breath analysis test 114 Police v Dunstall (2013) 118 SASR 233 at 242 [46]. 115 (1998) 70 SASR 429. 116 (2000) 77 SASR 24. 117 Dunstall (2013) 118 SASR 233 at 243 [50]. 118 (1979) 20 SASR 333 at 341. Nettle certificate in circumstances where the failure of police to comply with a statutory obligation to assist the accused in obtaining a blood test had deprived the accused of means of contradicting the presumed effect of the certificate119: "The failure to take an adequate amount of blood was in direct non- compliance with the regulatory scheme. As a consequence, both samples were denatured and the defendant lost the only basis of contesting the breath analysis reading. This arose in circumstances where the defendant had taken every available step, but non-compliance with the regulations had rendered his right to the obtaining of a blood sample nugatory. I would respectfully adopt the earlier extracted observations of King CJ in French v Scarman: '… Factors against excluding the evidence are slight. The offence charged, although of course serious in its way, is not a grave crime. The cogency of the evidence can be of little significance in the circumstances, especially as the non-observed safeguard was directed precisely towards enabling the respondent to check the cogency of the evidence.'" Gray J, however, did not refer to the later decision of a five-member Full Court in Police v Hall120 in which it was held that the fact that a blood sample is not taken through no fault of the driver does not make police reliance on a breath analysis test certificate unfair. Sulan J quoted121 with apparent approval the dissenting reasons of Gray J in Police v Hall and concluded, as Gray J did in the present case, that the legislation laid down a procedure for enabling the respondent to obtain a blood test against which to check the accuracy of the breath analysis test certificate122. His Honour held that, because the procedure had not been complied with, there had been a failure to avail the respondent of the safeguards recognised by the legislature and that it justified exclusion of the certificate123. In contrast, Kourakis CJ undertook an extensive review of previous decisions of the Full Court, including Police v Hall, and concluded, consistently 119 Police v Dunstall (2014) 120 SASR 88 at 124 [87] (footnote omitted). 120 (2006) 95 SASR 482. 121 (2014) 120 SASR 88 at 142-143 [161]-[162]. 122 (2014) 120 SASR 88 at 144 [170]. 123 (2014) 120 SASR 88 at 144 [172]. Nettle with that decision, that the prosecution's reliance on the breath analysis test certificate was not unfair and therefore the certificate should not have been excluded. In brief substance, his Honour reasoned as follows: (1) A trial judge has a discretion to exclude admissible evidence if its admission would operate unfairly against the accused (in the sense of "forensic unfairness")124. Forensic unfairness does not extend to some broad notion of fair play irrespective of the method of proof prescribed by Parliament, and it would be inimical to the rule of law for a judge to approach it as such125. (3) Where, therefore, a judge is asked to exclude admissible evidence on the ground of forensic unfairness, it is incumbent on the judge clearly to identify the unfairness by reference to the substantive and evidential matters in issue126. Section 47K(1a) of the RTA does not confer any procedural or substantive right on an accused. On the contrary, the provision restricts the evidence which an accused may adduce in rebuttal of a breath analysis test certificate127. (5) As was decided in Police v Hall, there is no forensic unfairness in mere inability to collect or adduce evidence which it might be supposed could assist an accused if it were available, and that is so whether or not the accused has taken all reasonable steps to procure the evidence but has failed through no fault of his or her own to procure it128. Regulation 11(c) does not cast a duty on medical practitioners with respect to taking a blood sample129. The purpose of the regulation is to prescribe the conditions precedent to the admissibility of evidence adduced pursuant to s 47K(1a)130. The word "must" in the regulation mandates the 124 (2014) 120 SASR 88 at 98 [12]. 125 (2014) 120 SASR 88 at 103 [22]. 126 (2014) 120 SASR 88 at 103 [22]. 127 (2014) 120 SASR 88 at 103 [24]. 128 (2014) 120 SASR 88 at 105 [29], [33]. 129 (2014) 120 SASR 88 at 105 [30]. 130 (2014) 120 SASR 88 at 105 [31]. Nettle procedures which must be followed to render evidence of the blood test admissible. It does not impose an obligation on a medical practitioner to carry them out131. French v Scarman, on which the majority relied, is distinguishable132. It was decided before amendments were made to the RTA which abrogated the statutory obligation previously imposed on police officers to "do all things necessary to facilitate the taking of the sample"133. Properly understood, French v Scarman was an application of the public policy discretion to exclude improperly obtained evidence134. That discretion has no application on the facts of this case. Police (SA) v Erwin135, on which the majority also relied, was wrongly decided and should not be followed136. There may be some very limited circumstances which would render the prosecution of an accused who is unable to obtain evidence of a blood analysis an abuse of process: for example, if it were shown that the prosecution had strong reason to doubt the accuracy of the breath analysis test certificate but persisted with reliance on the statutory presumption. If so, however, any stay of prosecution in such a case would be grounded in the prosecution's bad faith and consequent abuse of process as opposed to some broader notion of fairness137. In this case, the police carried no responsibility for the respondent's choice of medical practitioner or the medical practitioner's failure to take the sample in accordance with the regulations. There is no evidence which casts any doubt on the accuracy of the breath analysis test certificate. The respondent's failure to obtain a blood sample which could be admitted in evidence was not caused by any police misconduct. Consequently, there 131 (2014) 120 SASR 88 at 105-106 [34]. 132 (2014) 120 SASR 88 at 107-108 [43]. 133 See French v Scarman (1979) 20 SASR 333 at 334. 134 (2014) 120 SASR 88 at 107 [39]-[41]. 135 (1997) 26 MVR 360. 136 (2014) 120 SASR 88 at 111 [50]. 137 (2014) 120 SASR 88 at 113 [56]. Nettle is no forensic unfairness of a kind which would engage the fairness discretion138. For the reasons which Kourakis CJ gave, and those which follow, the appeal should be allowed. The fairness discretion In this case, special leave to appeal was granted because the matter was said to raise a question of general importance of whether there is discretion to exclude evidence on the ground that its reception would be unfair. There should be no doubt that there is such discretion139. It is the necessary concomitant of the obligation of a trial judge to ensure that an accused receives a fair trial according to law140. The real question is as to its nature and extent and, in particular, what counts as unfair in the relevant sense141. In R v Swaffield142, Brennan CJ spoke of the fairness discretion as the discretion recognised in R v Lee143 to exclude a voluntary statement when its reliability is put in doubt by reason of the conduct of a preceding police investigation or where, but for a trick or other unfair conduct on the part of the police, the statement would not have been made or made in the form it was144. In 138 (2014) 120 SASR 88 at 113 [57]. 139 R v Edelsten (1990) 21 NSWLR 542 at 554; R v McLean; Ex parte Attorney- General [1991] 1 Qd R 231 at 236, 239 per Kelly SPJ, 244 per Derrington J, cf at 256-257 per Carter J; R v Chai (1992) 27 NSWLR 153 at 172, 175-176 per Badgery-Parker J; Rozenes v Beljajev [1995] 1 VR 533 at 549, 553-554; R v Lobban (2000) 77 SASR 24 at 39-50 [59]-[86]; cf Selway, "Principle, Public Policy and Unfairness – Exclusion of Evidence on Discretionary Grounds", (2002) 23 Adelaide Law Review 1 at 7. 140 Driscoll v The Queen (1977) 137 CLR 517 at 541 per Gibbs J; [1977] HCA 43; R v Swaffield (1998) 192 CLR 159 at 189 [54] per Toohey, Gaudron and Gummow JJ; [1998] HCA 1. 141 Weinberg, "The Judicial Discretion to Exclude Relevant Evidence", (1975) 21 McGill Law Journal 1 at 32 et seq. 142 (1998) 192 CLR 159 at 167 [8]-[9], 171-175 [13]-[20]. 143 (1950) 82 CLR 133; [1950] HCA 25. 144 See also Duke v The Queen (1989) 180 CLR 508 at 513 per Brennan J; [1989] HCA 1; cf Harriman v The Queen (1989) 167 CLR 590 at 594-595 per Brennan J; [1989] HCA 50. Nettle future, it would be preferable to refer to that discretion as "the Lee discretion" and to regard the fairness discretion as it has come to be conceived of in Australia over the last quarter century as a residual discretion to exclude evidence which, although not attracting the operation of the Christie145, Bunning v Cross146 or Lee discretions ("the recognised discretions"), would be productive of an unacceptable risk of miscarriage of justice. In R v Sang147, Lord Scarman proposed an alternative view that the recognised discretions are in effect merely instances of a more general or overarching fairness discretion to be exercised wherever a judge considers it is necessary to exclude evidence in order to ensure a fair trial. More recently, a majority of the Victorian Court of Appeal similarly referred to the fairness discretion as encompassing the Christie and Lee discretions148. In some respects, that is an attractive idea149. But it also faces conceptual and systemic difficulties. Conceptually, the difficulty is the essentially different exclusionary bases of each of the recognised discretions and the consequent intractability of deducing an overarching principle which is capable of explaining them all. In the case of the Christie discretion, evidence is excluded where and because it would be unfair to an accused to admit evidence of which the capacity to lead a jury to reason correctly to a conclusion of guilt is outweighed by its capacity to lead the jury to reason incorrectly to a conclusion of guilt, and consequently would expose the accused to an unacceptable risk of being wrongly convicted of a crime of which he or she is presumed to be innocent150. 145 R v Christie [1914] AC 545. 146 (1978) 141 CLR 54; [1978] HCA 22. 147 [1980] AC 402 at 452-456; but see and compare Mathieson, "Fair Criminal Trial and the Exclusion of 'Unfair Evidence'", (2013) 25 New Zealand Universities Law Review 739 at 740-741. 148 Haddara v The Queen [2014] VSCA 100 at [50] per Redlich and Weinberg JJA. 149 See Selway, "Principle, Public Policy and Unfairness – Exclusion of Evidence on Discretionary Grounds", (2002) 23 Adelaide Law Review 1 at 7-8. 150 Swaffield (1998) 192 CLR 159 at 191-193 [62]-[65] per Toohey, Gaudron and Gummow JJ; Australian Crime Commission v Stoddart (2011) 244 CLR 554 at 577 [64] per Heydon J; [2011] HCA 47; see also Pfennig v The Queen (1995) 182 CLR 461 at 528-529 per McHugh J; [1995] HCA 7. Nettle In contrast, the exclusionary basis of the Bunning v Cross151 discretion is grounded in the public policy that it is better that a possibly guilty accused be allowed to go free than that society or the courts sanction serious illegality or other serious impropriety on the part of officials in gathering the evidence with which to convict the accused. It has less if anything to do with fairness to the accused than with protecting societal norms. The exclusionary basis of the Lee discretion is different again in that it rests in part on concerns regarding reliability152, and to that extent is in one sense coordinate with the Christie discretion, but increasingly and rightly it is regarded as grounded in the fundamental nature of the accusatorial process of the criminal law and hence concern that an accused should not be caused to forgo his or her right to silence by a trick or other unfair means. In effect, Lee combines notions of fairness to the accused153 with preservation of broader societal norms154. In the result, recognition of a general fairness discretion embracing all three of the recognised discretions would necessitate a conception of fairness that includes considerations that have little if anything to do with what is fair. Rather than assisting in the clarification of principle, that would tend to complicate and so make less comprehensible important aspects of the law of evidence which are now relatively well established. Systemically, the difficulty with the idea of a general fairness discretion is in the delimitation of its content. The conventional view of a residual fairness discretion is of it being directed to ensuring that the accused receives a fair trial according to law – what Kourakis CJ aptly termed "forensic" fairness – and thus the criteria of its exercise are relatively clearly delineated. In contrast, a general fairness discretion would involve an open-textured approach to fairness more 151 (1978) 141 CLR 54 at 75-80; Ridgeway v The Queen (1995) 184 CLR 19 at 31-33 per Mason CJ, Deane and Dawson JJ, 60-61 per Toohey J; [1995] HCA 66; Swaffield (1998) 192 CLR 159 at 182-183 [28] per Brennan CJ. 152 Duke v The Queen (1989) 180 CLR 508 at 513; Swaffield (1998) 192 CLR 159 at 175 [19]-[20] per Brennan CJ, 196 [74] per Toohey, Gaudron and Gummow JJ. 153 Van der Meer v The Queen (1988) 62 ALJR 656 at 666; 82 ALR 10 at 26; [1988] HCA 56; Duke v The Queen (1989) 180 CLR 508 at 513. 154 Swaffield (1998) 192 CLR 159 at 175 [19]-[20] per Brennan CJ, 189-190 [53]-[54] per Toohey, Gaudron and Gummow JJ; R v Pfitzner (1996) 66 SASR 161 at 180; R v Lobban (2000) 77 SASR 24 at 37-38 [51]-[55]; Tofilau v The Queen (2007) 231 CLR 396 at 423 [68] per Gummow and Hayne JJ; [2007] HCA 39. Nettle likely to invite application of idiosyncratic notions of what is just and fair and, for that reason, has been criticised as inimical to the rule of law155. There are, therefore, clear advantages to adhering to the notion that the fairness discretion is a residual discretion which applies where, although none of the recognised discretions is engaged, the receipt of otherwise admissible evidence would be productive of such unfairness as to result in an unacceptable risk of miscarriage of justice. The criteria of the fairness discretion The question remains, however, what are the circumstances in which, although none of the recognised discretions is engaged, the admission of otherwise admissible evidence would be productive of such unfairness as to result in an unacceptable risk of miscarriage of justice. As Gaudron J observed in another context, "what is fair very often depends on the circumstances of the particular case" and "notions of fairness are inevitably bound up with prevailing social values"156. Hence, "the inherent powers of a court to prevent injustice are not confined within closed categories"157. But in this as in other areas of the law involving the recognition of new applications of established principle, courts are bound to approach the task by a process of legal reasoning, by deduction and therefore ultimately by analogy with decided cases, recognising that the exercise may ultimately involve a value judgment involving matters of policy and degree in a context of changing societal values or "prevailing community standards"158. 155 Swaffield (1998) 192 CLR 159 at 211 [129] per Kirby J; Police v Dunstall (2014) 120 SASR 88 at 103 [22] per Kourakis CJ; see also Wong v The Queen (2001) 207 CLR 584 at 591 [6] per Gleeson CJ; [2001] HCA 64; Bingham, The Rule of Law, 156 Dietrich v The Queen (1992) 177 CLR 292 at 364; [1992] HCA 57. 157 Dietrich (1992) 177 CLR 292 at 364. 158 Swaffield (1998) 192 CLR 159 at 196-198 [74]-[79], 202 [91] per Toohey, Gaudron and Gummow JJ, 211 [131] per Kirby J. But see criticism of the concept of "contemporary community standards" in Selway, "Principle, Public Policy and Unfairness – Exclusion of Evidence on Discretionary Grounds", (2002) 23 Adelaide Law Review 1 at 25-26. Nettle The application of the fairness discretion That leads to the question of what there is about this case which might be thought to attract the operation of the discretion. Given the residual nature of the discretion and the desirability of proceeding by deduction from decided cases, it assists to begin with why the recognised discretions are not engaged. The Christie discretion is not engaged because, quite apart from the presumptive effect of the breath analysis test certificate and the consequent high probative value which Parliament decreed it be given, there is nothing which suggests that it was inaccurate. On the contrary, the undisputed evidence was that the breath analysis test equipment was working correctly. The Bunning v Cross discretion is not engaged because there is no suggestion that the police or any other authority acted unlawfully or otherwise improperly. As the magistrate found, the most likely cause of the denatured sample was that the doctor failed to take a sample of adequate volume. But it was not the responsibility of the police to take the blood sample or to ensure that an adequate sample was taken. The police had nothing to do with choosing the doctor and the doctor had nothing to do with the police. The RTA required the respondent to make his own arrangements for a blood sample to be taken and it was he who chose the doctor. It may not matter in the circumstances of this case but, for completeness, it should also be noted that there was no evidence or even suggestion that the doctor's error was deliberate. The Lee discretion does not apply because there was nothing here in the way of a confession or anything in the nature of a trick or other unfair practice causing the respondent to forgo his right to silence or other right or privilege. In those circumstances, why should the admission of the breath analysis test certificate be productive of an unacceptable risk of miscarriage of justice? As was earlier noticed, Gray J and Sulan J approached the problem by analogy with French v Scarman on the basis that, because the legislation laid down a procedure for enabling the respondent to obtain a blood sample against which to check the accuracy of the breath analysis test and the procedure had not been complied with, there had been a failure to avail the respondent of the safeguards recognised by the legislature to ensure that his trial was not unfair. As Kourakis CJ concluded, however, French v Scarman was distinguishable as having been decided on the basis of the public policy discretion to exclude evidence which had been improperly obtained due to the failure of police to comply with a statutory obligation, to which they were then subject, to "do all things necessary to facilitate the taking of the sample". By the time of the events in issue in this case, that obligation had been repealed. There was nothing improper about the way in which the evidence was obtained and it could no Nettle longer be said that Parliament regarded the availability of blood test evidence as essential to ensure that the trial was not unfair. Counsel for the respondent resisted the notion that the change in legislation had made any relevant difference to the exercise of the discretion. She contended that it was apparent from the extrinsic materials that the abrogation of the requirement that police assist in procuring blood test evidence was motivated by cost-cutting concerns rather than any thought of exposing an accused to the predicament of an irrebuttable breath analysis test certificate. But counsel did not seek to uphold the Full Court's judgment on the basis of the majority's reasoning. Rather, she contended that an unacceptable risk of unfairness inhered in the breath analysis test certificate being given a weight exceeding what it would naturally bear: because, through no fault of the respondent, but instead because of the doctor's breach of statutory obligation under reg 11(c), the respondent was deprived of his statutory right or entitlement to adduce blood test evidence with which to contradict the breath analysis test certificate. That contention faces difficulties at several levels. To begin with, as Kourakis CJ said159, s 47K(1a) did not confer any procedural or substantive right on the respondent but, to the contrary, had the effect of restricting the evidence which the respondent was permitted to adduce in rebuttal of the breath analysis test certificate. It was, however, still open to the respondent to adduce evidence that the breath analysis equipment had not been functioning correctly and it is notable that no attempt was made to do so. Secondly, reg 11(c) did not impose a statutory duty on the doctor. Such duty as the doctor owed the respondent, if any, would be a common law duty to take care or possibly a contractual duty and, therefore, something only as between the doctor and the respondent. Thirdly, despite what occurred, the respondent was given all the opportunity which the legislation afforded him to collect and adduce evidence with which to contradict the breath analysis test certificate albeit that, in the events which occurred, he was unable to collect and adduce that evidence. Fourthly, although it is conceivable that the respondent's inability to collect and adduce evidence of the blood test could have been productive of an injustice, it is impossible to say that it would have done so. For all that appears, the blood test evidence may have served to corroborate the accuracy of the breath analysis test certificate. 159 (2014) 120 SASR 88 at 104 [27]. Nettle Fifthly, although a loss of evidence may provide grounds for a stay of criminal proceedings where it is established that the absence of the evidence would constitute an unacceptable risk of injustice or unfairness160, it is insufficient for that purpose to show only that absence of the evidence could have that effect161. Parity of reasoning implies that it ought not to be a sufficient basis for excluding a breath analysis test certificate on the ground of unfairness that the absence of the blood test evidence conceivably could have, but it is not demonstrated that it would have, resulted in injustice. That does not mean that a stay of proceedings should be conceived of as the only means of dealing with the risk of an unfair trial resulting from the loss or unavailability of evidence. A stay is the ultimate and last resort because it runs counter to the societal imperative that a suspected offender be brought to trial162. Where a fair trial can be achieved by moulding or minimising prejudice in the way suggested by Brennan J in Jago v District Court (NSW)163, it should be done; and thus, where the choice comes down to one between a stay and the exclusion of evidence in exercise of the fairness discretion, the latter is likely to prevail. Even so, unless the loss or unavailability of evidence constitutes a sufficient risk of injustice to warrant a stay of proceedings, it is unlikely to, and in this case it did not, warrant exclusion of otherwise admissible evidence in the exercise of the fairness discretion. Sixthly, the notion that the breath analysis test certificate was given a weight exceeding what it would naturally bear is misplaced. As Kourakis CJ said, rightly, the presumptive effect of the breath analysis test certificate is "Parliament's response to the notorious difficulties which beset the common law means of proof"164. For that reason, it is not to be excluded merely "because the court holds the view that the method of proof prescribed by the Parliament is inferior to common law proofs"165. If, as here, Parliament decrees that a particular means of proof be given a specified evidential effect then, subject to very limited exceptions which are not here engaged, it must be given that effect. Of course, it does not necessarily follow from the fact that the Christie discretion 160 Walton v Gardiner (1993) 177 CLR 378 at 392; [1993] HCA 77. 161 R v Edwards (2009) 83 ALJR 717 at 720-721 [23]-[24]; 255 ALR 399 at 403; [2009] HCA 20; cf R v Horseferry Road Magistrates' Court; Ex parte Bennett [1994] 1 AC 42 at 74 per Lord Lowry. 162 R v Glennon (1992) 173 CLR 592 at 598-599 per Mason CJ and Toohey J; [1992] HCA 16; Dupas v The Queen (2010) 241 CLR 237 at 251 [37]; [2010] HCA 20. 163 (1989) 168 CLR 23 at 49-50, see also at 71-72 per Toohey J; [1989] HCA 46. 164 (2014) 120 SASR 88 at 112 [51]. 165 (2014) 120 SASR 88 at 103 [22]. Nettle is not engaged that the fairness discretion cannot apply. The fairness discretion is a residual discretion which exists to ensure a fair trial by means of the exclusion of otherwise admissible evidence in circumstances where none of the recognised discretions responds. But, in a case like this, the fact that the probative value of the evidence is not exceeded by such prejudicial effect as it might have is a significant indicator that the receipt of the evidence is unlikely to be unfair. Finally, and most importantly, the suggestion that there would be unfairness in the prosecution's reliance on the breath analysis test certificate in circumstances where the doctor's error deprived the respondent of the ability to obtain admissible blood test evidence misconceives the relevant conception of fairness. As was earlier identified, the fairness discretion exists to ensure a fair trial according to law. A fair trial according to law is a fair trial according to law as the law may be affected by statutory modification, and in particular as it may be affected by statutory modification of common law means of proof. The discretion facilitates a fair trial according to law in that sense by enabling the exclusion of otherwise admissible evidence which would be productive of an unacceptable risk of miscarriage of justice. It does not exist to give effect to idiosyncratic notions of "fair play" or of "whether the forensic contest is an even one"166, still less to deny effect to statutory modifications of common law means of proof of which, because of idiosyncratic notions of what is fair, a judge may disapprove. Conclusion It was not open to conclude that admission of the breath analysis test certificate would be productive of an unacceptable risk of miscarriage of justice and therefore it was not open to exclude the breath analysis test certificate in the exercise of the fairness discretion. For these reasons, the appeal should be allowed and orders should be made in the terms proposed in the joint judgment. 166 Police v Jervis (1998) 70 SASR 429 at 446 per Doyle CJ.

HIGH COURT OF AUSTRALIA RAJU KAMALJEET DHANHOA APPELLANT AND THE QUEEN RESPONDENT Dhanhoa v The Queen [2003] HCA 40 5 August 2003 ORDER Appeal dismissed. On appeal from the Supreme Court of New South Wales Representation: T A Game SC with H K Dhanji for the appellant (instructed by Legal Aid Commission of New South Wales) R D Ellis with S C Dowling for the respondent (instructed by S E O'Connor, Solicitor for Public Prosecutions (New South Wales)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Dhanhoa v The Queen Evidence – Identification evidence – Where reliability of evidence not in dispute – Whether trial judge required to inform jury of special need for caution before accepting evidence – Evidence Act 1995 (NSW), s 116. Evidence – Inconsistency between appellant's statement to police and his evidence at trial – Where prosecutor did not contend that statement to police was a lie indicating consciousness of guilt – Whether trial judge should have given direction in relation to lies. Words and phrases: "miscarriage of justice". Criminal Appeal Act 1912 (NSW), s 6. Evidence Act 1995 (NSW), ss 114, 115, 116. GLEESON CJ AND HAYNE J. The appellant was convicted of robbery in company with wounding, and kidnapping. The victim, Mr Schembri, gave evidence that, on the evening of 19 January 1999, he met four men of Indian or Sri Lankan appearance in a hotel. At his invitation, they accompanied him back to his flat. There, after a brief interval, all four of them set upon him, wounded him, robbed him, took him from his flat at knife-point and attempted to force him into a car with a view to taking him to an automatic teller machine. Mr Schembri said that the time between arriving at the flat and leaving seemed about 15 or 20 minutes. In cross-examination he said that four to five minutes elapsed between his arrival at the flat and the commencement of the attack. It was suggested to Mr Schembri in cross-examination that the violence commenced later than he indicated, but he adhered to his evidence that he was attacked only a few minutes after he arrived at his flat, and rejected the proposition that half an hour or more elapsed between his arrival at the flat and his being taken out to the street. The prosecution case was conducted as one of joint criminal enterprise; the case did not depend upon assigning to the appellant any particular individual role in the events that occurred. The trial judge, in his summing-up, told the jury: "The Crown says you will be satisfied beyond reasonable doubt that at all relevant times the accused was present when the acts described by Mr Schembri took place and therefore he is jointly responsible with the other three men [for] the robbery and wounding of Mr Schembri and also the taking [him off] from the unit for an advantage to themselves ...". Following the events the subject of the charges, Mr Schembri broke loose from his assailants. The police were called, as was an ambulance. On 20 January 1999, the police took fingerprints at Mr Schembri's flat. Some time between 20 January 1999 and 27 September 1999, the police identified certain fingerprints as those of the appellant. (There was no evidence before the jury as to when this occurred, but it appears from the trial judge's remarks on sentence that the appellant was in police custody in respect of another matter from 10 September 1999). On 27 September 1999, the police interviewed the appellant about this matter. The trial commenced on 1 May 2000. During April 2000, there had been an attempt to arrange an identification parade, but it failed because of difficulty in obtaining a sufficient number of people of an appearance similar to that of the appellant. On 28 April 2000, the police showed Mr Schembri 11 photographs. He told them, and repeated in his evidence on 2 May, that the man in photograph No 8 looked "very similar" to "one of the men that was there on the night". He also told the police, and repeated in his evidence, that two of the men looked like one another, that he was not sure which of the two was the man in photograph No 8, but that he believed the man in the photograph was the one who had "grabbed him by the neck and pinned him to the wall". This was a reference to Hayne the commencement of the attack which, he said, was followed by all four men kicking and punching him. The photographs shown to Mr Schembri on 28 April 2000, including the photograph of the appellant, were tendered and admitted into evidence at an early stage in the trial. In a pre-trial ruling on the admissibility of the photographs the trial judge rejected a submission that he should exclude them on the basis that their prejudicial effect outweighed their probative value. At the time the photographs were received in evidence, the fingerprint evidence had not been adduced. When the argument on admissibility was conducted, it was not known to the prosecution or the judge what the defence case would be, but counsel for the appellant made the point that the photographs were first shown to Mr Schembri some 16 months after the incident. This, presumably, went to the reliability of the identification of the person in photograph No 8 as one of the four men in question. Two neighbours of Mr Schembri gave evidence of what they saw after he left his flat in the company of a number of men who tried to force him into a car. They both saw Mr Schembri struggling with three men, although they did not profess to be able to see the entire scene. The jury might have considered that their evidence was not inconsistent with the presence of a fourth man. That was the background against which the appellant came to give his version of events in evidence. He did not challenge the fingerprint evidence. He did not deny that he was the man in photograph No 8. He did not deny that he and three other men had gone back with Mr Schembri to his flat on the evening in question. However, he said that he had left the flat and returned to his home before any violence occurred. The two grounds of appeal that have been pressed in this Court concern suggested inadequacies in the trial judge's directions to the jury in relation to the identification evidence, and in relation to alleged inconsistencies between what the appellant said to the police when first interviewed about the matter and what he said in his evidence. Identification By the time the trial judge came to sum up to the jury it was evident that there was no challenge to the fingerprint evidence, or to Mr Schembri's evidence that the person shown in photograph No 8, who was undoubtedly the appellant, was one of the four men who had accompanied him back to his flat. The dispute was as to whether the appellant had participated in the attack upon Mr Schembri. The critical question was whether the appellant was still in the flat when the attack occurred. Mr Schembri said that the attack commenced a few minutes after he and the four men arrived at the flat. As the judge directed the jury, the Hayne prosecution case, based upon participation in a joint criminal enterprise, did not depend upon the jury making any particular finding as to exactly what the appellant did, other than that he was present during the attack and the kidnapping. The evidence of Mr Schembri was that all four men were present when the attack was made, and they all participated in it. The issue was said by the judge to be whether the prosecution had proved beyond reasonable doubt "that [the appellant] was one of the group of men who were involved in ... the assault, the robbery and the wounding" and the kidnapping. Although Mr Schembri had, somewhat hesitantly, assigned a specific role to the appellant, in that he said he thought it was the appellant who had, at an early stage, taken him by the throat, the prosecution case did not depend upon a finding that the appellant had done that. The trial judge did not give, and was not asked to give, any directions or warnings about the identification evidence. His failure to do so was the subject of a ground of appeal in the Court of Criminal Appeal. All three members of the Court (Meagher JA, Dowd and Kirby JJ) rejected that ground. The relevant principle was taken to be that stated by this Court in Domican v The Queen1: "Whatever the defence and however the case is conducted, where evidence as to identification represents any significant part of the proof of guilt of an offence, the judge must warn the jury as to the dangers of convicting on such evidence where its reliability is disputed." (emphasis added) No reference was made in the reasons for judgment to s 116 of the Evidence Act 1995 (NSW) ("the Evidence Act"). Meagher JA, with whom Dowd J agreed, said that no significant part of the prosecution case turned on identification. The central factual dispute was whether, when the victim was attacked, there were three assailants or four. Ultimately, no question of identification arose. Kirby J said the same. He concluded that "identification evidence did not play any significant part in the proof of the appellant's guilt". In this Court, the appellant relied upon the following ground of appeal: "The Court of Criminal Appeal erred in failing to hold that section 116 of the Evidence Act 1995 [(NSW)] provides a mandatory requirement to warn a jury in relation to identification evidence where such evidence is (1992) 173 CLR 555 at 561. Hayne relied upon by the Crown, even if that evidence does not represent a 'significant part' of the proof of guilt of the offence." As framed, the ground appears to accept the factual premise upon which the Court of Criminal Appeal based its conclusion, but asserts that s 116 of the Evidence Act required a warning. Under pressure of argument, that position was modified. Part 3.9 of Ch 3 of the Evidence Act deals with identification evidence, which is defined in the Dictionary to the Act, relevantly, to mean an assertion, or a report of an assertion, that a defendant was, or resembles, a person who was present at a place where an offence was committed, or an act connected to the offence was done, at or about the time at which the offence was committed or the act was done. The identification evidence here in question was the assertion, in the evidence of the victim, and a police witness's evidence of a previous assertion to him by the victim, that the person shown in photograph No 8 (the appellant) was, or resembled, a person who was present at or about the time of the events described by Mr Schembri. It was the assertion that the appellant was, or resembled, a man who was present at or about the time when the victim was attacked and then taken from his flat that constituted the identification evidence; not the detail of his alleged conduct. By the time the case was left to the jury, the area of dispute about that matter had been confined. The appellant did not dispute that he was present at the flat, which was where the robbery occurred and the kidnapping commenced; his case was that he had departed shortly before the alleged events occurred. Having regard to the time intervals described by Mr Schembri, and the competing suggestion put to him in cross-examination, on any view the appellant was present at or about the time when the offences were committed. Part 3.9 applies only in criminal proceedings (s 113). Section 114 deals with the exclusion of visual identification evidence where an identification parade has not been held, but allows for the possibility that, as in the present case, it might not have been reasonable to hold such a parade. Section 115 deals with in certain circumstances, including cases where there is a risk of what is sometimes called the rogues' gallery effect2. Section 116 provides: the exclusion of photographic identification evidence cf Alexander v The Queen (1981) 145 CLR 395 at 412; Festa v The Queen (2001) 208 CLR 593 at 602-603 [22]. Hayne If identification evidence has been admitted, the judge is to inform the jury: that there is a special need for caution before accepting identification evidence, and of the reasons for that need for caution, both generally and in the circumstances of the case. It is not necessary that a particular form of words be used in so informing the jury." Although counsel for both parties to the present appeal began by accepting that the provisions of s 116 are "mandatory"3, upon further consideration they acknowledged that, in a context such as the present, such a description may be question-begging. It is the content of the mandate that must be decided. If read literally, and apart from its statutory context, s 116 could be taken to mean that a judge is always required to inform the jury that there is a special need for caution before accepting identification evidence whenever identification evidence has been admitted, even if the reliability of the evidence is not in dispute. That would be absurd. If a witness claims to have seen an accused at a particular place on a particular occasion, and the truth of that assertion is not questioned or in any way put in issue, then ordinarily there is no special need for caution before accepting the evidence. The common law principle, expressed in the passage from Domican quoted above, contains the obvious qualification that the warning is to be given where the reliability of the evidence of identification is disputed. The same qualification is implied in s 116; if it were otherwise the provision would offend common sense. Sections 114 and 115, like many other provisions of the Evidence Act, declare that evidence of a certain kind is not admissible in certain circumstances, or unless certain conditions are fulfilled. Yet evidence of a kind to which those sections refer may not be the subject of objection. Counsel for an accused person may have any one of a number of reasons for not objecting. A trial judge ordinarily will not know why no objection is taken, and may have no right to enquire. Counsel might decide not to object simply because he or she knows that that accused, upon giving evidence, will admit that the identification evidence is correct. The Evidence Act applies in an adversarial context. It is the parties, and their counsel, who define the issues at trial, select the witnesses, and choose the evidence that they will lead, and to which they will take objection. It is the duty cf Clarke (1997) 97 A Crim R 414 at 427 per Hunt CJ at CL. Hayne of the prosecution, in its case, to lead the whole of the evidence to which the accused is required to make answer4. It will often appear, in the course of a defence case, that some, perhaps much, of that evidence is not in dispute. In that event, it will be appropriate for a judge to point that out to the jury. Reference was made in Festa v The Queen5 to in-court acts of identification. They provide a well known example of potentially unreliable identifications. Yet such identifications are often received into evidence, without objection, simply because they are not in dispute. When that occurs, it is only in the most technical sense that there is any question of "accepting" the evidence. To give s 116 a literal meaning would produce a consequence that is wholly unreasonable6. The statutory requirement to give the jury certain information is to be understood in the light of the adversarial context in which the legislation operates, and the nature of the information the subject of the requirement. So understood, the provision means that the information referred to is to be given where the reliability of the identification evidence is disputed. In the present case the victim, Mr Schembri, asserted to a police officer, and again a few days later in court, that the person in photograph No 8 was a person who was present at or about the time he was attacked and kidnapped. His assertion in court, and the police officer's report of that assertion, was the identification evidence to which s 116 had potential application. Let it be assumed that the assertion had been comprehensively denied. It is instructive to consider the basis of the need for special caution before accepting the evidence. Because there was a reasonable explanation for the failure to conduct an identification parade, that aspect of the matter may be put to one side. The risk of suggestibility, or the displacement effect, associated with photographs would have been relevant7, as would the matter raised by counsel when originally objecting to the photograph, that is to say, the lapse of time between January 1999 and April 2000. There may also have been considerations relating to the quality of the photographs, the fact that all four men had previously been strangers the reliability of Mr Schembri's conclusion that photograph No 8 was a photograph of one of the four men who accompanied him to his flat. However, as the Court of Criminal Appeal pointed out, in the light of the appellant's evidence, the only question was the victim, and other matters affecting 4 The Queen v Chin (1985) 157 CLR 671 at 676-677 per Gibbs CJ and Wilson J. (2001) 208 CLR 593 at 600-602 [17]-[21]. cf MacAlister v The Queen (1990) 169 CLR 324 at 330. 7 Alexander v The Queen (1981) 145 CLR 395. Hayne whether the man in photograph No 8 was still there when the attack occurred, or whether he had left shortly before. It was not the reliability of the identification that was in dispute; it was the reliability of the account of the conduct of the person identified, and, in particular, of the evidence that such person remained with his three companions at all material times. This ground of appeal has not been made out. Inconsistencies This was a subject on which the Court of Criminal Appeal was divided. The ground of appeal in this Court was: "The Court of Criminal Appeal erred in holding that a direction in relation to lies was not required in the circumstances of the case." No direction in relation to lies was sought at trial. Kirby J, in dissent in the Court of Criminal Appeal, considered that the decision of this Court in Zoneff v The Queen8 required a direction. The relevant facts may be stated shortly. When the appellant was first interviewed by the police in September 1999, he was told that the police were investigating a stabbing and robbery in January 1999, involving an attack upon a man who had "invited a group of people from a pub at Rozelle back to his unit". The appellant was told that his fingerprints had been found in the unit. Having been given that very limited information, the appellant was asked whether he could explain how his prints came to be there. He said he had no idea. He was asked whether he had ever been to the Bridge Hotel at Rozelle. He said he had not. He said he knew nothing about the alleged occurrence. In his evidence at trial, in May 2000, the appellant admitted he had been at the hotel, and that he had gone back to Mr Schembri's flat with three other men, and gave an account of what he did at the flat which, if accepted, could have provided an innocent explanation of the presence of his fingerprints. In final address, the prosecutor pointed to the differences between what the appellant had said to the police in September 1999, and what he had said in evidence at the trial. The prosecutor did not put to the jury that what the appellant said to the police amounted to lies which indicated a consciousness of guilt, and no such possibility was put to the jury by the trial judge in his (2000) 200 CLR 234. Hayne summing-up. No directions of the kind considered in Edwards v The Queen9 were given, and none could reasonably have been proposed. This was not a case in which it could have been contended that it was reasonably open to the jury to find that, in his answers to the police, the appellant had deliberately lied, and that such lies reflected a knowledge on the part of the appellant that telling the truth would implicate him in the commission of the offences10. No such contention was advanced for the consideration of the jury. The appellant, in September 1999, was questioned about an occasion in January 1999, but was given scant information as to what had allegedly occurred. His statement that, at the time, he had no idea how his fingerprints came to be where they were found may well have been true. His statement that he knew nothing about the attack on Mr Schembri was consistent with his evidence at the trial, and a conclusion that it was untrue required, in substance, a conclusion that he was guilty of the offences charged. His statement that he had not been to the Bridge Hotel at Rozelle was inconsistent with his evidence at the trial, but was a very flimsy basis for any argument of the kind earlier mentioned. The appellant, in his evidence, gave an explanation of what he said to the police, and, in his summing-up, the trial judge reminded the jury of that explanation. The appellant said that, when he was interviewed, he did not know what the police were talking about. It was not until he was charged, and read the facts sheet, that he knew what was alleged to have occurred. That was consistent with his evidence, and with the defence case at the trial. The prosecutor cross-examined the appellant about the answers he had given to the police, suggesting that they were, at the least, evasive. (There was a disagreement about exactly what was put by the prosecutor. The trial judge, in his summing-up, first used, and then withdrew, the word "strange"). The trial judge said to the jury: "The Crown says that in [that] regard ... you will remember what the accused said when he was spoken to by the police officers at the time of his arrest and compare that to what he says to you now remembering that he received the police brief in this matter in February." In the context of the whole of the evidence, and the issues as they developed at trial, there was little to be made of what the appellant said to the police in September 1999, and a reading of the summing-up indicates that little was sought to be made of it. The prosecutor was entitled to suggest, as he did, (1993) 178 CLR 193. 10 Edwards v The Queen (1993) 178 CLR 193 at 211. Hayne that there were aspects of the appellant's response that could be taken to reflect adversely on his reliability. The matter did not go beyond that. The facts of the case are quite different from those of Zoneff, where the prosecutor, in cross-examination of the accused, had attributed lies to him, but had not addressed the jury. The trial judge himself, in his summing-up, had raised the question of lies and consciousness of guilt, evidently considering that there was a risk that the jury would consider that it was part of the prosecution case that the suggested lies were evidence of consciousness of guilt11. It is not necessary for a trial judge to give a direction, either of the kind referred to in Edwards, or of the kind referred to in Zoneff, every time it is suggested, in cross-examination or argument, that something that an accused person has said, either in court or out of court, is untrue or otherwise reflects adversely on his or her reliability. Where the prosecution does not contend that a lie is evidence of guilt, then, unless the judge apprehends that there is a real danger that the jury may apply such a process of reasoning, as a general rule it is unnecessary and inappropriate to give an Edwards direction12. Zoneff was said to be an unusual case13, and the direction there proposed was said to be appropriate where there is a risk of misunderstanding about the significance of possible lies. The present was not such a case. This ground of appeal has not been made out. Conclusion The appeal should be dismissed. 11 Zoneff v The Queen (2000) 200 CLR 234 at 244 [16]-[17]. 12 Zoneff v The Queen (2000) 200 CLR 234 at 244 [16]; Burge and Pegg [1996] 1 Cr App R 163 at 173. 13 (2000) 200 CLR 234 at 245 [23]. McHugh 37 McHUGH AND GUMMOW JJ. This is another appeal in which a convicted person seeks to quash a conviction on the ground that the trial judge failed to direct the jury concerning some part of the evidence in the trial even though his or her counsel did not apply for any such direction or indeed any re-direction. When no re-direction concerning evidence is sought at a criminal trial, the appellant can only rely on a failure to direct the jury on the evidence if he or she establishes that that failure constituted a miscarriage of justice. No miscarriage of justice will have occurred in such a case unless the appellant demonstrates that the direction should have been given and it is "reasonably possible" that the failure to direct the jury "may have affected the verdict"14. In the present case, the judge was not required to give one of the directions that the appellant now claims should have been given – a direction as to identification evidence. And although we think that it would have been better for the judge to give a direction concerning the other matter – a direction as to lies – the appellant has failed to establish that there is a reasonable possibility that such a direction would have affected the verdict. Accordingly, no miscarriage of justice has occurred. Statement of the case In the District Court of New South Wales, a jury convicted the appellant, Raju Kamaljeet Dhanhoa, of two offences against the Crimes Act 1900 (NSW) – "aggravated robbery in company with wounding" (s 98) and "detain for advantage and cause injury" (s 90A). The offences occurred on the night of 19 January 1999. Dhanhoa appealed to the Court of Criminal Appeal on three grounds. First, that the trial judge had failed to give directions concerning identification evidence as required by s 116 of the Evidence Act 1995 (NSW). Secondly, that the trial judge had failed to direct the jury concerning evidence from which the jury might have inferred that he had lied to police officers out of a consciousness of guilt. Thirdly, that the verdict was unreasonable. The Court of Criminal Appeal dismissed the appeal. This Court granted Dhanhoa special leave to appeal on two grounds relied on in the Court of Criminal Appeal – identification and lies – and on the further ground that that Court had failed to give adequate reasons for its decision. No oral submissions were made on the hearing of the appeal by this Court upon that third ground of appeal. It is well settled that, in giving its reasons, the Court of Criminal Appeal was obliged to articulate the essential grounds for the formation 14 Simic v The Queen (1980) 144 CLR 319 at 332. McHugh of its conclusions15. The question whether the Court of Criminal Appeal did so in the present case is subsumed by the conclusion reached in this Court, upon its examination of the record, that the result reached by the Court of Criminal Appeal, in dismissing the appeal to it, should not be disturbed. Hence it is unnecessary any further to consider the third ground of appeal to this Court. The material facts The victim testified that, while at the Bridge Hotel in Rozelle, he had invited four men – whom he had not previously met – back to his flat. They were of Indian or Sri Lankan appearance. After a few minutes, they attacked him. One man stabbed him twice, causing severe injuries to his liver and to one of his lungs. One of the men stole his wallet. The four men then forced him from his flat at knife-point with the object of taking him to an automatic-teller machine to get money from his bank account. Outside his flat, they attempted to force him into a car. After a struggle in the street and – as he later found – being stabbed again, the victim was able to escape and run into a neighbour's house. At the trial, two neighbours of the victim testified that, although they could not see everything that happened, they saw him struggling in the street with three men who were trying to force him into a car. Although they saw only three men, their evidence was not inconsistent with a fourth man being present. The police were called. They examined the flat for fingerprints. On a coffee table, they found fingerprints that were later identified as belonging to Dhanhoa. But no arrest was made for well over a year. On 27 September 1999, police officers told Dhanhoa that the police were investigating a stabbing and robbery that had occurred in January 1999 after the victim had invited some men "from a pub at Rozelle back to his unit". The officer told Dhanhoa that his fingerprints had been found on a coffee table in the victim's unit. Dhanhoa said that he had no idea how his fingerprints came to be in the unit and that he had never been to the Bridge Hotel at Rozelle. He denied knowing anything about the attack and robbery. In April 2000, fifteen months after the robbery, a police officer showed the victim 11 photographs. He said that the person in one of the photographs – No 8 – was "very similar" to one of the men who had attacked and robbed him. That photograph was of Dhanhoa. At the trial, the 11 photographs were tendered in evidence. 15 Dinsdale v The Queen (2000) 202 CLR 321 at 329 [21]. McHugh When Dhanhoa gave evidence in support of his plea of Not Guilty, he admitted he had been at the hotel at Rozelle and that he had gone to the victim's flat with three other men. He did not deny that he was the man in photograph No 8. But he denied participating in the robbery or detention of the victim. He said that, after smoking marijuana at the flat, he left the other three men and the victim who were arguing and caught a taxi home. Miscarriage of justice Section 6 of the Criminal Appeal Act 1912 (NSW) specifies the grounds upon which the Court of Criminal Appeal may allow an appeal against a conviction. It is required to do so "if it is of opinion that the verdict of the jury should be set aside on the ground that it is unreasonable, or cannot be supported, having regard to the evidence". It is also required to do so, if it is of opinion that the judgment of the trial court should be set aside on the ground "of the wrong decision of any question of law, or that on any other ground whatsoever there was a miscarriage of justice". Because the trial judge was not asked to direct the jury, he did not make a "wrong decision of any question of law". (our emphasis) Thus, the only ground that is relevant in the present case is that the failure to direct the jury on identification or lies or both "was a miscarriage of justice". In a case where the judge has misdirected the jury on the evidence16 or failed to refer to evidence17, it is for an appellant to establish that the misdirection or non-direction constituted a miscarriage of justice18. Similarly, it is for the appellant to establish that the trial judge's failure to give a direction concerning some aspect of the evidence constituted a miscarriage of justice. In such a case, a miscarriage of justice will have occurred if the direction should have been given and it is "reasonably possible" that the failure to direct the jury "may have affected the verdict"19. The trial judge's directions Identification 16 R v Brookes and McGrory [1940] VLR 330; Simic v The Queen (1980) 144 CLR 17 Cohen and Bateman (1909) 2 Cr App R 197 at 207-208. 18 Simic v The Queen (1980) 144 CLR 319 at 332; TKWJ v The Queen (2002) 76 ALJR 1579 at 1591 [71]; 193 ALR 7 at 24. 19 Simic v The Queen (1980) 144 CLR 319 at 332. McHugh The Crown conducted the case against Dhanhoa as a case of a joint criminal enterprise for which each participant in the crime was jointly responsible for the acts and omission of every other participant20. The learned trial judge directed the jury: "The Crown says you will be satisfied beyond reasonable doubt that at all relevant times the accused was present when the acts described by [the victim] took place and therefore he is jointly responsible with the other three men of the robbery and wounding of [the victim] and also the taking [him away] from the unit for an advantage to themselves ..." The victim had testified that all four men including the man in photograph No 8 were present and participated in the stabbing, robbery and detention of him. Because that was so, the judge directed the jury that the issue for them was whether the Crown had proved beyond reasonable doubt "that [Dhanhoa] was one of the group of men" who had assaulted, robbed, wounded and kidnapped the victim. His Honour gave no direction concerning the dangers of identification evidence. That is not surprising because at the end of the evidence, identification was not an issue. Dhanhoa admitted that he had been at the flat with the other men. The only issue was whether he had left the flat before the assault, robbery and detention took place. Before Dhanhoa gave evidence, identification was a vital issue in the case. Until he gave evidence, the prosecution case depended on the jury being satisfied beyond reasonable doubt that the man in photograph No 8 was one of the men who were at the flat and who had attacked and robbed the victim. If Dhanhoa had continued to deny that he was at the victim's flat, the judge would have been bound to direct the jury of the danger of relying on the victim's identification of the man in photograph No 8 as one of the attackers21. But after Dhanhoa gave evidence, identification was no longer an issue. Nevertheless, Dhanhoa contends that s 116 of the Evidence Act required the trial judge to warn the jury of the need for caution before accepting the victim's identification evidence. He points out that s 116 declares that "[i]f identification evidence has been admitted, the judge is to inform the jury ... that there is a special need for caution before accepting identification evidence, and ... of the reasons for that need for caution". The obligation imposed by s 116 must be read in the context of the adversarial system of criminal justice. It is not to be supposed that, in enacting that section, the legislature intended that juries be given directions concerning 20 Osland v The Queen (1998) 197 CLR 316. 21 Evidence Act 1995 (NSW), s 116. McHugh identification evidence when identification was not an issue. It is not to be supposed that the legislature intended a trial judge to give a direction that was not relevant to the issues in the case. Not only would it be a waste of curial time and effort but the giving of an irrelevant direction would be likely to confuse the jury who understandably would be puzzled as to what significance the direction had. The contention that the trial judge erred in not giving a direction in accordance with s 116 must be rejected. Lies Dhanhoa alleges that the Court of Criminal Appeal "erred in holding that a direction in relation to lies was not required in the circumstances of the case." At the trial, counsel for Dhanhoa did not seek any direction in relation to lies. Despite this omission, Kirby J, who dissented in the Court of Criminal Appeal, held that this Court's decision in Zoneff v The Queen22 required such a direction. In his summing up, the trial judge referred to a submission by the Crown that, when police officers had interviewed Dhanhoa in September 1999, he said that he did not know what they were talking about until he got the statement of facts after he was charged. The trial judge referred to this submission several times during his summing up. In one passage, his Honour said: "The Crown says that ... you will remember what the accused said when he was spoken to by the police officers at the time of his arrest and compare that to what he says to you now remembering that he received the police brief in this matter in February." The judge then said: "All those matters are part of the Crown case and it is for you to determine whether there is any relevance in that or whether there is not. It is entirely a matter for you." If it had not been for this last statement, there would be no arguable ground for upholding the contention that the trial judge should have directed the jury concerning the effect of lies if they thought Dhanhoa had lied to the police. If the jury found that Dhanhoa had lied to the police, they were entitled to infer that his evidence lacked credibility. But we think that, if the Crown had asked for a direction, the jury were also entitled to conclude that he had lied because he knew that the victim had been assaulted, robbed and detained. That is 22 (2000) 200 CLR 234. McHugh to say, the jury were entitled to think that he had lied because he was conscious that he was guilty of participating in the crimes and could give no innocent explanation for his presence at the flat if he had admitted that he was there23. But the Crown made no attempt to run a case of consciousness of guilt. At no stage of Dhanhoa's cross-examination did the prosecutor expressly suggest to him that he had lied to the police because he had a consciousness of guilt. And because that was so, the trial judge did not direct the jury that, if they thought he had lied to the police, they could use the lie as evidencing a consciousness of guilt on his part. But the trial judge did direct the jury that various matters – one of which was the difference between what the accused told the jury and what he told the police – was "part of the Crown case and it is for you to determine whether there is any relevance in that". It is possible, therefore, that the jury may have reasoned that the accused was guilty because he had lied to the police. It is not necessary for a trial judge to give a direction concerning lies as evidence of guilt whenever a prosecutor suggests directly or indirectly that an accused's out-of-court statement is a lie24. But in this case it would have been better if the trial judge, having given the direction that he did, had instructed the jury as to how they were to use any lie told by the accused. Given the way that the Crown conducted its case, it would have been better if the trial judge had directed the jury that the accused's lies, if they found he had lied, only affected his credibility. However, it is not enough to establish that a miscarriage of justice has occurred by showing that it would have been better if the trial judge had given an appropriate direction concerning the effect of lies or that there is a possibility that the jury may have reasoned that the accused was guilty because he had lied to the police. To succeed in the appeal, Dhanhoa must establish that it is a reasonable possibility that the failure to direct the jury "may have affected the verdict"25. We do not think that he has done so. Given the way that the prosecution conducted its case, we think that there is only a very slender possibility that the jury would have considered that his statement to the police indicated a consciousness of guilt. The jury would have done so only if, despite the way the Crown conducted its case, the jurors decided to add consciousness of guilt to the process of reasoning on which the Crown relied. It is true that the trial judge told the jury that it was a matter for them to 23 cf Eade v The King (1924) 34 CLR 154 at 158. 24 Zoneff v The Queen (2000) 200 CLR 234 at 244 [16]. 25 Simic v The Queen (1980) 144 CLR 319 at 332. McHugh determine whether there was any relevance in the claimed inconsistency. But that was not an invitation to use consciousness of guilt reasoning although it is, of course, possible the jury decided to use it. But even if the jury decided to examine the accused's answers to the police as indicating a consciousness of guilt, to succeed in this appeal Dhanhoa must show a reasonable possibility that they convicted him because they took his statements as evidencing that consciousness. The appellant's most important statement to the police was that he knew nothing about the stabbing or robbery of the victim. But that statement was consistent with his evidence at the trial. The jury's verdict shows that both his statement and his evidence about this matter were lies. But an out-of-court statement is not a lie that can be used as indicating a consciousness of guilt unless ordinarily there is other evidence that indicates it is a lie. In some cases, however, an accused's out-of-court explanation may be so patently false that it is a lie that is evidence of consciousness of guilt26. Consciousness of guilt reasoning must ordinarily precede – not follow – a criminal verdict of guilty. It may be in some extreme case, however, that the evidence of the accused is so flagrantly untruthful on a particular point that it itself indicates a consciousness of guilt27. The jury may have thought, however, that the appellant's statements that he had "no idea" how his fingerprints came to be on the coffee table and that he had never been to the hotel at Rozelle were untrue. If they did, admittedly there is a possibility that they would also have concluded that he had lied about these matters because he was conscious that he was guilty of attacking and robbing the victim. However, to conclude that the jury reasoned in this way is simply speculative. Significantly, counsel for Dhanhoa sought no direction concerning lies. Nor, as we have said, did the trial judge give any such direction. This strongly indicates that it did not occur to those present at the trial that lies as consciousness of guilt was an issue in the trial or that, from the conduct of the case, the jury might think that lies told by the appellant were evidence of a consciousness of guilt. Accordingly, we do not think that there is a reasonable possibility that the verdict of guilty would have been different if the trial judge had given a direction concerning lies. Indeed, to have given a direction about lies – to have given an 26 R v Wurch (1932) 58 CCC 204 at 206-207. 27 cf MacDonald v The King (1946) 87 CCC 257 at 267 and 269. McHugh Edwards direction28 – might not only have emphasised the issue but made it difficult for the jury to disregard consciousness of guilt as an issue. The appellant has failed to establish that his trial involved any miscarriage of justice. Order The appeal should be dismissed. 28 Edwards v The Queen (1993) 178 CLR 193 at 210-211. Callinan CALLINAN J. This appeal raises two questions: as to the meaning and application of s 116 of the Evidence Act 1995 (NSW) ("the Act"); and whether a direction should have been given to the jury with respect to evidence of the appellant from which it could be inferred that he had lied out of a consciousness of guilt. Facts On the evening of 19 January 1999 Mr Schembri went to an hotel in the Rozelle district of Sydney to play pool. The appellant and three other men whom he thought to be of Indian or like appearance befriended him. They accepted an invitation to return with him to his nearby flat to smoke some marijuana. Mr Schembri was a tidy person. During the day he had cleaned his flat and wiped a coffee table in it with a cloth. After smoking some marijuana, and a discussion about Korean martial art, one of the guests inflicted a severe head-butt on Mr Schembri. Another held him by the throat against a wall. A third took a knife from a kitchen drawer and stabbed him twice, severely damaging his liver and one of his lungs. One of the men stole his wallet, and another armed himself with Mr Schembri's (imitation) samurai sword. Mr Schembri was unable to say with certainty who committed each assault upon him. His attackers then forced Mr Schembri down to the street with a view to driving him in their car to an automatic teller machine in order to steal money from his bank account. Mr Schembri was quite certain that all four of the men did this: two of them had his arms, one walked in front of him, and another walked behind him. After some scuffles in the street, a further stabbing, and before they could put him in their car, Mr Schembri broke away and fled to the house of a neighbour who was able to succour him. It was only when he was in the neighbour's house that Mr Schembri realized he had been stabbed again, this time in the back. Two other neighbours, hearing the noise of the scuffles, opened their windows and saw what was happening. Both of these witnesses said that they saw three, and not four assailants attacking Mr Schembri. Mr Schembri was however consistently emphatic that four men, including the appellant, were present throughout. the coffee The appellant's fingerprints were found on Mr Schembri's flat. The appellant was interviewed by police officers about eight months after the assaults. He said that he had "no idea" how his fingerprints came to be on Mr Schembri's coffee table and that he had never been to the hotel at Rozelle. In short he knew "nothing about it". The appellant agreed to participate in an identification parade. Abortive attempts were made a few weeks before the trial to conduct such a parade. Difficulties in locating a sufficient number of people of generally Indian appearance had apparently prevented the police from arranging a parade at an earlier time. On 28 April 2000, some table Callinan 15 months after the attack, Mr Schembri was shown a number of photographs from which he identified the appellant. The trial The appellant was charged and convicted of the offences of "aggravated robbery in company with wounding" (s 98 Crimes Act 1900 (NSW)), and "detain for advantage and cause injury" (s 90A Crimes Act as it then stood). He was sentenced to an effective total period of imprisonment of 7 1/2 years with a non- parole period of four years, to begin from 5 May 2000. Mr Schembri's evidence at the trial with respect to the photographs was as follows: "Q Which one of the four men was picture number eight? Two of them looked very similar so I am not 100 percent of which one of the two that it was but I am sure that it was one of them. Just to recount which two of the persons were very similar? The one that got up from the couch with his arm stretched out, the one that strangled me. Yes? And the one that stood at the kitchen and grabbed the knife for the guy when he asked for it. You said they were very similar are you able to say which one of the two you believe it to be? I think it was the one that got up from the couch and walked over to An investigating police officer, Detective Cipolla, confirmed that Mr Schembri identified the appellant who was the subject of photograph number eight, and gave this evidence: "Q Did [the victim] indicate to you that number eight appeared to him to be familiar to being the person who grabbed him by the neck and pinned him to the wall, however his face was a bit thinner and I think he had a bit more hair? That's correct." Callinan The appellant's evidence was that he left the hotel with Mr Schembri and the three other men. On arrival at Mr Schembri's flat the appellant smoked some marijuana. He said that he used a bong that one of the group had brought with him. He said that he smoked two cones. When asked to account for the presence of his fingerprints on the coffee table, he said that he could not recall touching the table but that he may have done so when he put the bong on the table. The appellant said that after a while he became aware that the others were arguing. The marijuana made him "paranoid" about the arguing. He went out of the flat to get some fresh air. He walked to Victoria Road and caught a taxi home. He said that while he was at the flat he did not see a knife held at Mr Schembri, did not see him manhandled, and did not hear any demand for money. He was not part of the group in the street when Mr Schembri was again attacked. The trial judge summed up on the evidence with respect to the interview of the appellant in this way: "[The accused] told you how he came to be first spoken to by the police in September 1999 about this matter and how he was asked a series of questions about events which occurred on 20 January. He agreed that he told Constable Napper that he didn't know what he was talking about. He said I said that because at that time I didn't know what he was talking about. It was not until I was charged and I got the facts sheet that I knew what he was talking about. The Crown says, well that's strange because according to the conversation Constable Napper made it clear that they were talking about a stabbing and a robbery that happened at Balmain and a person was stabbed five times after he'd invited a group of people from a pub at Rozelle back to his unit and those people took properties from his unit and abducted him so that he could access his account at an ATM and that that was made clear to him from the outset. The accused says, in effect, that, well I didn’t appreciate that at the time, I didn't appreciate that until I was able to read the facts sheet after I had been charged." His Honour again reminded the jury of the appellant's explanation for his answers. He drew attention to the cross-examination on this issue and later said: "When I was talking about the evidence of the police officers who spoke to Mr Schembri in September 1999 I used the expression I think about that, the Crown says it is strange and the accused said to you that he had no recollection or no knowledge of what they were talking about until he got the statement of facts after he was charged. I used the expression the Crown said it was strange that he should say that bearing in mind that the police officers told him they were making Callinan inquiries about a robbery and about a wounding and a taking of property which was the brief summary of facts giving rise to their investigation. I am reminded by the Crown and by counsel for the accused that the Crown did not say it was strange and the fact is that that conversation did take place at that time between the police officers and the accused but the Crown Prosecutor did not use the word 'strange' in relation to it." The issue was again raised by the trial judge in the following direction: "The Crown says that in [that] regard ... you will remember what the accused said when he was spoken to by the police officers at the time of his arrest and compare that to what he says to you now remembering that he received the police brief in this matter in February." His Honour immediately went on to say: "All those matters are part of the Crown case and it is for you to determine whether there is any relevance in that or whether there is not. It is entirely a matter for you." Neither the appellant nor the respondent sought any redirections. The appeal to the Court of Criminal Appeal An appeal to the Court of Criminal Appeal (Meagher JA, Dowd and Kirby JJ) was dismissed. Meagher JA (with whom Dowd J agreed in substance) was of the opinion that a relevant issue of identification did not arise as the case was fought on the question whether there were three assailants or four. His Honour noted that there was "plenty of evidence either way" on this issue. He accepted that the evidence of identification was not strong. His Honour made no reference to the Act. Meagher JA determined the appellant's other ground with respect to the trial judge's summing up in this way: "The appellant's submissions are that [the interview with the appellant] can only have been led as evidence of guilt, in which case an Edwards v The Queen29 direction should be given; or as evidence going to credibility in which case a Zoneff v The Queen30 direction should have been given. It is clear enough that the second possibility can be discarded. Not so the 29 (1993) 178 CLR 193. 30 (2000) 200 CLR 234. Callinan first. I cannot see why the evidence was led unless the Crown sought to rely on it as evidence of consciousness of guilt, but if that be true, it is extraordinary that the Crown did not rely on it when addressing the jury, and equally extraordinary that the Judge did not tell the jury exactly what its significance was. Nor, for that matter, did the appellant's counsel ask for an Edwards direction. In all the circumstances, if the ground is made out (which I don't think it is), I should nonetheless dismiss the appeal by applying the proviso to s 6(1) of the Criminal Appeal Act." The appeal to this Court The appellant relies in this Court on the same grounds of appeal as he did in the Court of Criminal Appeal, and a further ground that the Court of Criminal Appeal failed to give adequate reasons for its decision. Identification evidence In the dictionary of terms used in the Act, "identification evidence" is expansively defined as follows: "identification evidence means evidence that is: an assertion by a person to the effect that a defendant was, or resembles (visually, aurally or otherwise) a person who was, present at or near a place where: the offence for which the defendant is being prosecuted was committed, or an act connected to that offence was done, at or about the time at which the offence was committed or the act was done, being an assertion that is based wholly or partly on what the person making the assertion saw, heard or otherwise perceived at that place and time, or a report (whether oral or in writing) of such an assertion." Neither the definition, nor, as will appear, s 116 of the Act makes any reference to disputes about identification. There is no doubt that Mr Schembri's evidence, that the appellant was present in his flat and in the street when he was assaulted by the four men including the appellant, and his identification of the appellant in a photograph, falls literally within the definition of identification evidence in the Act. Callinan That being so, it would appear to follow from s 116 of the Act which is expressed in mandatory language, and which I will set out, that the trial judge was bound to caution the jury about the evidence in question. "116 Directions to jury If identification evidence has been admitted, the judge is to inform the jury: that there is a special need for caution before accepting identification evidence, and of the reasons for that need for caution, both generally and in the circumstances of the case. It is not necessary that a particular form of words be used in so informing the jury." Evidence of identification has always been treated with some tenderness by the courts. Most jurisdictions are, and all in Australia should be diligent in the prevention of the publication of photographs of an accused person before the conclusion of criminal proceedings. This is so because of the two particular respects in which such a publication can contaminate a criminal trial. As Jordan CJ said in Ex parte Auld; Re Consolidated Press Ltd31: "Now, in any criminal charge in which the identity of the accused with the perpetrator of the alleged crime may be called in question, the publication of a photograph of the accused may tend very seriously to prejudice a fair trial. The reasons for this were stated by Halse Rogers J, last year, in Ex parte Brady (unreported), when his Honour said: 'Anybody who has presided in criminal courts is fully aware of the difficulties which do arise through the publication in a widely distributed newspaper, after his arrest, of the photograph of a man charged with an offence. In some cases the publication tends to injure the accused; but the fact of such publication is very often used by the defence as a method of endeavouring to discredit the evidence of Crown witnesses by suggesting that they have founded the whole of their identification of an accused person on the published photograph, though they may possibly never have seen it.'" 31 (1936) 36 SR(NSW) 596 at 597. Callinan His Honour referred32 to another disturbing tendency on the part of publishers of such material which unhappily can still be discerned on occasions in this country some 67 years later: "I repel the suggestion that, because a journalist has learnt from the police that an alleged confession has been made, or fingerprints found, he may assume that identity cannot come in question. Indeed, the evidence which has been placed before us in this case, in an attempt to justify the publication, would almost suggest that there is an impression that a junta of police officers and journalists can hold a sort of preliminary settling of the issues likely to be tried at the hearing, and that this Court ought not lightly to interfere with their rulings as to the probability of identity being raised." Auld and the numerous cases in which it has been applied33 emphasize the likelihood that in many, indeed perhaps a majority of criminal cases, the identification of the accused will be likely to be in issue. Those cases, and the cases34 in which the frailty and unreliability of identification evidence generally have been exposed on appeal provide good reason to require the giving of cautionary directions when identification is in issue. Section 116 of the Act is no doubt a legislative response to the difficulties that have been encountered in such cases. Its drafting does however create its own difficulties. It is inappropriately prescriptive, just as some other provisions of the Act and its Commonwealth analogue inappropriately confer discretions in place of earlier, reasonably clear rules which proved generally satisfactory in practice. As an Act which had as one of its purposes the clarification and simplification of evidentiary questions, it 32 (1936) 36 SR(NSW) 596 at 598. 33 For example: Attorney-General (NSW) v Time Inc Magazine Co Pty Ltd unreported, Supreme Court of New South Wales, 15 September 1994 at 9 per Gleeson CJ, with whom Sheller and Cole JJA agreed; Attorney-General (NSW) v Time Inc Magazine Co Pty Ltd unreported, Supreme Court of New South Wales, 7 June 1994; Attorney-General (NSW) v TCN Channel Nine Pty Ltd (1990) 20 NSWLR 368 at 381 per Gleeson CJ, Kirby P and Priestley JA; R v Australian Broadcasting Corporation [1983] Tas R 161; Attorney-General (NSW) v Mirror Newspapers Ltd [1962] NSWR 856; R v Pacini [1956] VLR 544 at 549. See also the consistent approach of courts in England and New Zealand: R v Daily Mirror; Ex parte Smith [1927] 1 KB 845; Attorney-General v Noonan [1956] NZLR 1021; Attorney-General v Tonks [1934] NZLR 141. 34 Smith v The Queen (2001) 206 CLR 650; Bulejcik v The Queen (1996) 185 CLR 375; Pitkin v The Queen (1995) 69 ALJR 612; 130 ALR 35; Prasad v The Queen (1994) 68 ALJR 194; 119 ALR 399; Domican v The Queen (1992) 173 CLR 555. Callinan has had at best mixed success. Far too often this Court35 has had to decide questions arising under it, for which in the past, common law, or earlier well The number and understood statutory provisions provided the answer. complexity of those cases exceed what might ordinarily be expected in respect of even a new and significantly changed legislative regime. The question is however whether as a matter of practical reality s 116 of the Act should, and can be given an invariably mandatory construction and application. Although it is true that there are numerous cases in which there is an issue about identification, there are also many in which there is not. Numerous instances of the latter were referred to in argument: for example, when a complainant gives evidence that the accused assaulted her at a certain time and place, her evidence, placing him at the scene of the crime and connecting him with it, would answer the dictionary definition of identification evidence even though the real issue may be as to consent, or mistake, and have nothing to do with identification in fact. Sometimes, an accused, appreciating that the evidence of identification is beyond dispute, will be content to have it adduced in a leading form. Nonetheless the Crown may be bound to tender the evidence to establish an element of the offence, or simply as part of the proof that the accused committed it. Sometimes the Crown will not even know whether identification is in issue until the defence case has commenced or has almost ended, particularly in New South Wales in which, remarkably, there appears to be no practice of requiring an accused to indicate in an opening speech which witnesses are to be called, or even the nature of the defence. 35 For example: MFA v The Queen (2002) 77 ALJR 139; 193 ALR 184 (ss 55 and 164); Dyers v The Queen (2002) 76 ALJR 1552; 192 ALR 181 (s 20); De Gruchy v The Queen (2002) 76 ALJR 1078; 190 ALR 441 (s 98); Azzopardi v The Queen (2001) 205 CLR 50 (s 20); Stanoevski v The Queen (2001) 202 CLR 115 (character evidence (s 112)); Grey v The Queen (2001) 75 ALJR 1708; 184 ALR 593 (s 165); Mann v Carnell (2000) 201 CLR 1 (privilege (s 118)); RPS v The Queen (2000) 199 CLR 620 (inferences from failure to give evidence (s 20)); Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 (privilege (ss 118, 119)); HG v The Queen (1999) 197 CLR 414 (opinion evidence (s 76)); Northern Territory of Australia v GPAO (1999) 196 CLR 553 (interaction between the Evidence Act 1995 (Cth) and the Family Law Act 1975 (Cth)); Papakosmas v The Queen (1999) 196 CLR 297 (previous representations (ss 55, 56, 59, 66, 135, 136)); Graham v The Queen (1998) 195 CLR 606 (the meaning of "fresh in the memory" (s 66)); Lee v The Queen (1998) 195 CLR 594 (interpretation of the effect of hearsay provisions (s 60)). Callinan These matters argue against a universally mandatory construction of s 116 of the Act. The Law Reform Commission Report36 commending the enactment of the Act throws no light upon the reason for the expansive language chosen although the words "special need for caution" appear to have been used in the first instance in the case of R v Turnbull37. Despite that, Turnbull is discussed by the Commission in terms38 which acknowledge the existence of a relevant dispute before a cautionary direction need be given, the section as drafted does not reflect that requirement. The reference to "disputed identification evidence" in the report may also be misleading because the dispute will usually be about identification, and not the evidence of it which may be clearly relevant and therefore indisputably admissible. I have formed the opinion that s 116 should not be given a reading which requires a special precautionary direction unless there is a relevant issue of identification, for three reasons. First, the use of the word "admitted" instead of "tendered" or "received" tends to suggest a dispute with respect to identification, and therefore a controversy on the evidence about it. Secondly, the use of the words "special need for caution" implies that there is something in the case in relation to identification which calls for the special treatment of the evidence of identification: if there were no issue about it there would not be a need, let alone any special need for caution. Thirdly, because s 116(1)(b) of the Act draws attention to the circumstances of the case, it is to those that regard must be had. And if in the circumstances of the case identification is not disputed, then a direction counselling caution about it, would seem to a jury to be bizarre. I would conclude therefore that s 116 applies only to those cases in which the identification of the accused as the, or a perpetrator of the relevant acts, or as the person omitting to do the relevant acts is in issue. It may be accepted, as Meagher JA in the Court of Criminal Appeal held, that the principal question that was litigated at the appellant's trial was whether there were three assailants or four. It may also be accepted that once the appellant was confronted with the fingerprint evidence he was bound to, and did concede that he had at some relevant time been in Mr Schembri's flat. Even so, I 36 Australian Law Reform Commission, Evidence, Report No 26 (Interim), (1985) vol 1. 37 [1976] 3 WLR 445 at 447; [1976] 3 All ER 549 at 551-552. 38 Australian Law Reform Commission, Evidence, Report No 26 (Interim), (1985) vol 1 at par 128. Callinan do not think that it can be said that there was no issue of identification sufficient to attract a cautionary direction of the kind which s 116 of the Act on its proper interpretation requires. There remained an issue whether the appellant was a person who was present when the offences, involving as they did, the further assault in the street, were committed. As to that matter there was conflicting evidence from the neighbours. In my opinion the trial judge should therefore have given a direction that there was a special need for caution in accepting the evidence of Mr Schembri that there were four, rather than three men in the street who were assaulting him: and, further, even though the appellant had admitted that he was present at the flat before any assaults were committed, because Mr Schembri was unable to say with clarity which of the persons present committed each assault, in dealing with Mr Schembri's evidence that four men assaulted him in the flat. Because of the continuing nature of the conduct of the assailants, any doubt engendered by a precautionary direction with respect to their number in the street might well have affected the minds of the jury as to the appellant's presence in the flat when the assaults were committed there. There was accordingly a dispute about the identity of the appellant as an assailant in both the flat and the street, although not about his identity as a person present at the flat after leaving the hotel. In my view the appellant has made out his first ground of appeal. jury should be cautious the I am of the opinion that the second ground of appeal has also been made out. Whilst it is correct that the respondent did not make any submission that the appellant had told lies with respect to his presence at the flat, and that those lies were told out of a consciousness of guilt, it is difficult to see how the evidence in relation to the appellant's account of his presence at the flat could have had any other implication. No doubt that evidence went to credit, but like a great deal of other evidence going to credit at trial, it also inevitably went to the central issue, of guilt or otherwise. And this was so as a matter of ordinary understanding, whether the respondent or indeed the trial judge chose to say anything explicit about it or not. True also it may have been that in the cross-examination to which the respondent drew the Court's attention there was no direct and overt suggestion to the appellant that he had told lies out of a consciousness of guilt, the cross-examination nonetheless, unmistakably, if subtly, made that suggestion. Occasion did therefore arise at the trial for the giving of a direction of the kind to which Edwards v The Queen39 refers. The second ground of appeal is accordingly also made out. It is unnecessary in the circumstances to deal with the appellant's third ground of appeal. 39 (1993) 178 CLR 193. Callinan The respondent submits that even if the appellant makes out any, or all of his grounds of appeal, the Court should apply the proviso and uphold the convictions in accordance with s 6 of the Criminal Appeal Act 1912 (NSW)40. Had the appellant succeeded on ground one only I might well have been inclined to uphold the respondent's submission, particularly as no application for a relevant redirection was made. The principal issue at the trial was much as the Court of Criminal Appeal described it, of the appellant's presence or not in the flat at the time of the assaults and subsequently in the street. But ground one does not stand alone, and success on it, coupled with the appellant's more substantial success on ground two, means that I cannot be satisfied that the appellant has not been deprived of a chance of acquittal41. Determination of appeals in ordinary cases The court on any appeal under section 5 (1) against conviction shall allow the appeal if it is of opinion that the verdict of the jury should be set aside on the ground that it is unreasonable, or cannot be supported, having regard to the evidence, or that the judgment of the court of trial should be set aside on the ground of the wrong decision of any question of law, or that on any other ground whatsoever there was a miscarriage of justice, and in any other case shall dismiss the appeal; provided that the court may, notwithstanding that it is of opinion that the point or points raised by the appeal might be decided in favour of the appellant, dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred. Subject to the special provisions of this Act, the court shall, if it allows an appeal under section 5 (1) against conviction, quash the conviction and direct a judgment and verdict of acquittal to be entered. On an appeal under section 5 (1) against a sentence, the court, if it is of opinion that some other sentence, whether more or less severe is warranted in law and should have been passed, shall quash the sentence and pass such other sentence in substitution therefor, and in any other case shall dismiss the appeal." 41 Whether that be: a fair chance, Festa v The Queen (2001) 208 CLR 593 at 653 [199], 662 [229] per Kirby J, 669 [253] per Callinan J; Grey v The Queen (2001) 75 ALJR 1708 at 1710 [6], 1714 [27] per Gleeson CJ, Gummow and Callinan JJ, 1717-1718 [47], 1719-1720 [56] per Kirby J; 184 ALR 593 at 595-596, 601, 606, 608-609; a real chance, Grey v The Queen (2001) 75 ALJR 1708 at 1719 [54] per Kirby J; 184 ALR 593 at 608; Stanoevski v The Queen (2001) 202 CLR 115 at 128 [50] per Gaudron, Kirby and Callinan JJ, 131-132 [67] per Hayne J; or a chance that was reasonably open to him, De Gruchy v The Queen (2002) 76 ALJR 1078 at (Footnote continues on next page) Callinan I would allow the appeal, quash the verdicts of guilt and order that the appellant be re-tried on the two counts with which he was charged. 1095 [116] per Callinan J; 190 ALR 441 at 465; Conway v The Queen (2002) 209 CLR 203 at 234-235 [87] per Kirby J.

HIGH COURT OF AUSTRALIA MAXCON CONSTRUCTIONS PTY LTD APPELLANT AND AS AUSTRALASIAN PILING COMPANY) & ORS RESPONDENTS Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5 14 February 2018 ORDER Appeal dismissed. On appeal from the Supreme Court of South Australia Representation R J Whitington QC with B J Doyle for the appellant (instructed by Diakou Faigen) M Christie SC with D P Hume for the first respondent (instructed by CCS Legal Pty Ltd) Submitting appearance for the second and third respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Maxcon Constructions Pty Ltd v Vadasz Administrative law – Judicial review – Building and Construction Industry Security of Payment Act 2009 (SA) – Where subcontract provided for sum to be paid to subcontractor after issue of certificate of occupancy – Where issue of certificate of occupancy required certification from builder that building work performed in accordance with head contract – Where adjudicator appointed to determine disputed payment claim – Where adjudicator determined provisions of ineffective because pay when paid provisions – Whether subcontract adjudicator's determination involved error of law – Whether adjudicator's determination should be quashed. Administrative law – Judicial review – Availability of certiorari – Error of law on face of record – Whether Building and Construction Industry Security of Payment Act 2009 (SA) ousts jurisdiction of Supreme Court of South Australia to make order in nature of certiorari to quash adjudicator's determination for non- jurisdictional error of law on face of record. Words and phrases – "contingent or dependent on the operation of", "error of law on the face of the record", "order in the nature of certiorari", "pay when paid provision", "retention provisions". Building and Construction Industry Security of Payment Act 2009 (SA), Pts 2, 3. Development Act 1993 (SA), s 67. Development Regulations 2008 (SA), reg 83, Sched 19A. KIEFEL CJ, BELL, KEANE, NETTLE AND GORDON JJ. This appeal, from the Full Court of the Supreme Court of South Australia1, concerns the Building and Construction Industry Security of Payment Act 2009 (SA) ("the Security of Payment Act"), an Act based2 on the Building and Construction Industry Security of Payment Act 1999 (NSW) ("the New South Wales Act"). The scheme and purposes of the New South Wales Act are described in the reasons in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd3, which was heard at the same time as this appeal. The relevant provisions of the two Acts are not materially different and what is said in the Probuild matter about the scheme and purposes of the New South Wales Act applies equally to the Act in issue here. In this case, an adjudicator determined that retention provisions in a subcontract were what the Security of Payment Act defines as "pay when paid provisions"4 and did not validly permit the builder, Maxcon Constructions Pty Ltd ("Maxcon"), to deduct an amount from a progress payment otherwise due to the subcontractor, Mr Vadasz (the first respondent in this Court). Maxcon (the appellant in this Court) brought judicial review proceedings in the Supreme Court of South Australia seeking a declaration the adjudication determination was a "nullity" and an order setting aside the determination. Among other things, Maxcon alleged that the adjudicator was wrong to decide that the relevant provisions were pay when paid provisions. that The primary judge (Stanley J) dismissed Maxcon's application for judicial review. Maxcon appealed to the Full Court. By majority, the Full Court (Blue J, Lovell J agreeing, Hinton J dissenting) dismissed Maxcon's appeal. Stanley J and each member of the Full Court proceeded upon the basis that the adjudicator had made an error of law. On appeal to this Court, Maxcon submitted that the Supreme Court had jurisdiction to make an order in the nature of certiorari to quash an adjudicator's determination for a non-jurisdictional error of law that appears on the face of the record. Maxcon further alleged that, in this case, the adjudicator had fallen into 1 Maxcon Constructions Pty Ltd v Vadasz (No 2) (2017) 127 SASR 193. 2 South Australia, House of Assembly, Parliamentary Debates (Hansard), 5 March [2018] HCA 4. s 12(2)(c) of the Security of Payment Act. Bell Nettle Gordon jurisdictional error. By notice of contention, Mr Vadasz contended that the adjudicator had made no error of law. That contention should be accepted and Maxcon's appeal dismissed. However, it is important to add that, for the reasons explained in Probuild, the Supreme Court of South Australia may grant relief (whether in the nature of certiorari or otherwise) for jurisdictional error5 by an adjudicator appointed under the Security of Payment Act; but the provisions of the Security of Payment Act, like the provisions of the New South Wales Act, oust the Supreme Court's jurisdiction to make an order in the nature of certiorari to quash an adjudicator's determination for error of law on the face of the record that is not a jurisdictional error. Facts Maxcon, a building contractor, and Mr Vadasz, a piling subcontractor trading under the name Australasian Piling Company, were parties to a subcontract under which Mr Vadasz agreed to design and construct piling for an apartment development. The subcontract required Mr Vadasz to provide security in the form of "cash retention" corresponding to five per cent of the contract sum "for the purpose of ensuring the due and proper performance of the [subcontract] and to allocate to [Mr Vadasz] the risk of being out of pocket for claimed entitlements of [Maxcon] under or in connection with the [subcontract] pending the resolution of any dispute" regarding those entitlements. Clause 11(e) of the subcontract provided: "Subject to [Maxcon's] rights to any deductions made or pending deductions which are likely to be made under the [subcontract], retention shall be released: 50% of retention within the time nominated in Schedule E Remaining 50% within the time nominated in Schedule E". ss 6 and 17 of the Supreme Court Act 1935 (SA); r 199 of the Supreme Court Civil Rules 2006 (SA); Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 580-581 [96]-[100]; [2010] HCA 1. Bell Nettle Gordon Schedule E to the subcontract provided for 50 per cent to be released "90 days after CFO is achieved", with the remaining 50 per cent to be released "365 days after date of CFO". Under the subcontract, "CFO" was defined to mean "the certificate of occupancy and any other Approval(s) required under Building Legislation which are required to enable the Works lawfully to be used for their respective purposes in accordance with [Maxcon's] Project Requirements". It will be necessary to consider this definition later in these reasons. On 25 February 2016, Mr Vadasz served on Maxcon a payment claim pursuant to s 13 of the Security of Payment Act stating that a progress payment of $204,864.55 (including GST) was due. On 8 March 2016, Maxcon provided a payment schedule pursuant to s 14 of the Security of Payment Act indicating that it proposed to pay $141,163.55 (including GST), deducting a retention sum and administration charges. Pursuant to s 17 of the Security of Payment Act, Mr Vadasz applied for adjudication of his payment claim. The adjudicator accepted Mr Vadasz's submission that Maxcon was not entitled to deduct the retention sum ($35,454.00 excluding GST) and determined the adjudicated amount to be equal to the claimed amount. In relation to the retention sum, the adjudicator concluded that cl 11(e) and Sched E to the subcontract ("the retention provisions") were pay when paid provisions which were ineffective by reason of s 12(1) and (2)(c) of the Security of Payment Act and Maxcon was not entitled to retain the retention sum. Section 12 and pay when paid provisions Section 12 of the Security of Payment Act defines a "pay when paid provision" and provides that such a provision is ineffective: "(1) A pay when paid provision of a construction contract has no effect in relation to any payment for construction work carried out or undertaken to be carried out (or for related goods and services supplied or undertaken to be supplied) under the contract. In this section— money owing, in relation to a construction contract, means money owing for construction work carried out or undertaken to be carried out (or for related goods and services supplied or undertaken to be supplied) under the contract; Bell Nettle Gordon pay when paid provision of a construction contract means a provision of the contract— that makes the liability of 1 party (the first party) to pay money owing to another party (the second party) contingent on payment to the first party by a further party (the third party) of the whole or a part of that money; or that makes the due date for payment of money owing by the first party to the second party dependent on the date on which payment of the whole or a part of that money is made to the first party by the third party; or that otherwise makes the liability to pay money owing, or the due date for payment of money owing, contingent or dependent on the operation of another contract." (emphasis added) Proceedings in the Supreme Court As already noted, Maxcon commenced judicial review proceedings in the Supreme Court. Stanley J dismissed the application. His Honour held that the adjudicator erred in concluding that the retention provisions were pay when paid provisions6. However, his Honour held that the error did not vitiate the adjudicator's determination because the error was not jurisdictional and the reasons of the adjudicator were not part of the "record" for the purposes of certiorari7. Stanley J's other conclusions are not presently relevant. Maxcon's appeal to the Full Court was dismissed. The Full Court held that the adjudicator's reasons were incorporated into the record8. It further concluded that, on "first principles", the Security of Payment Act did not exclude judicial review for error of law on the face of the record9. However, the Full Court declined to apply the latter conclusion; it instead followed the decision of 6 Maxcon Constructions Pty Ltd v Vadasz (No 2) [2016] SASC 156 at [66]. 7 Maxcon [2016] SASC 156 at [71], [78]. 8 Maxcon (2017) 127 SASR 193 at 240 [155], 272 [285]. 9 Maxcon (2017) 127 SASR 193 at 247 [186], 272 [286]. Bell Nettle Gordon the Court of Appeal of the Supreme Court of New South Wales in Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2)10, on the basis that the decision dealt with uniform national legislation and was not plainly wrong11. In relation to the retention provisions, the Full Court held that the adjudicator erred in concluding that the retention provisions were pay when paid provisions rendered ineffective by s 12 of the Security of Payment Act12, but the majority held that the error was not a jurisdictional error13. No error of law by adjudicator As we have seen, s 12(2)(c) of the Security of Payment Act provides that a pay when paid provision of a construction contract is a provision that "makes the liability to pay money owing, or the due date for payment of money owing, contingent or dependent on the operation of another contract" (emphasis added). Thus, the issue was and remains whether the retention provisions made the liability of Maxcon to pay money owing to Mr Vadasz, or the due date for payment of that money, contingent or dependent on the operation of another contract. That issue first directs attention to the provisions of the subcontract. The terms of the relevant provisions have been set out above. In general terms, the subcontract permitted Maxcon to retain, by way of security, a retention sum corresponding to five per cent of the contract sum. As we have seen, cl 11(e) and Item 8 of Sched E to the subcontract further provided that 50 per cent of the retention sum was to be released "90 days after CFO [was] achieved", with the remaining 50 per cent to be released "365 days after date of CFO". "CFO" was defined to mean "the certificate of occupancy and any other Approval(s) required under Building Legislation which [were] required to enable the Works lawfully to be used for their respective purposes in accordance with [Maxcon's] Project Requirements". "Project Requirements" was defined as the 10 (2016) 344 ALR 355. 11 Maxcon (2017) 127 SASR 193 at 247-254 [187]-[209], 272 [286]. 12 Maxcon (2017) 127 SASR 193 at 226 [113], 268 [270]. 13 Maxcon (2017) 127 SASR 193 at 238 [148]; cf at 272 [284]. Bell Nettle Gordon "design intent and intended application and use of the design and its equipment's [sic] and facilities". There was no dispute that "the Works" in the definition of "CFO" referred to the entire project, being the apartment development as a whole, not merely the piling work to be performed by Mr Vadasz. There was also no dispute that the phrase "Building Legislation" the included Development Act 1993 (SA) and the Development Regulations 2008 (SA). the definition of "CFO" Section 67(1) of the Development Act relevantly provides that a person must not occupy a building on which building work is carried out unless an appropriate certificate of occupancy has been the building. A certificate of occupancy is issued by a council14 and, in general terms, the council must issue the certificate if it is satisfied that the relevant building is suitable for occupation and complies with requirements prescribed by the regulations15. issued for Regulation 83(2)(a) of the Development Regulations provides that, to obtain a certificate of occupancy, a statement of compliance duly completed in accordance with the requirements of Sched 19A must be submitted. Those requirements include a statement by the owner that the documents issued for the purposes of the building work (referred to in these reasons as "the issued documents") are consistent with the relevant development approval as well as a statement by the builder that the building work has been performed in accordance with the issued documents. The issued documents include, among others, all contract documents. Under the subcontract, the release of the retention sum was contingent or dependent on "CFO" being "achieved". The retention provisions expressly provided that the due dates for release of the retention sum were tied to the provision of a "certificate of occupancy and any other Approval(s) required under Building Legislation which [were] required to enable the Works lawfully to be used for their respective purposes in accordance with [Maxcon's] Project Requirements". That is, before the due dates for the release of the retention sum could be calculated under the retention provisions, a certificate of occupancy had to be issued under s 67 of the Development Act. 14 s 67(2) of the Development Act. 15 s 67(6) of the Development Act. Bell Nettle Gordon The issue of that certificate of occupancy was dependent upon certification by the builder, Maxcon, that the building work had been performed in accordance with the issued documents, including the head contract between Maxcon and the owner of the land. It necessarily follows that the issue of the certificate depended on completion of the whole project in accordance with the provisions of the head contract. Until that certificate was issued on completion of the project, the retention sum was not to be released. And that certificate had not been, and could not have been, issued on 25 February 2016 when Mr Vadasz served on Maxcon a payment claim pursuant to s 13 of the Security of Payment Act. The due dates for payment of the retention sum were dependent on something unrelated to Mr Vadasz's performance16. They were dependent on the operation of another contract – namely, the completion of the head contract, which in turn would have enabled a certificate of occupancy to be issued. Accordingly, the retention provisions were pay when paid provisions within the meaning of s 12(2)(c) of the Security of Payment Act and Maxcon was not entitled to deduct the retention sum from the progress payment. The Full Court found that Maxcon's Project Requirements were to be ascertained from the head contract and that the head contract provided for Maxcon to construct a building in accordance with those requirements and to achieve practical completion, at which point a certificate of occupancy would be issued17. However, the Full Court concluded that cl 11(e) and Item 8 of Sched E to the subcontract did not make the due dates for payment of the retention sum "contingent or dependent on the operation" of the head contract; rather, the retention provisions made "payment of the retention sum contingent on an independent event which was exogenous to both the [subcontract] and the head contract"18. The Full Court reasoned that the issue of a certificate of occupancy was an "independent event" because it depended "not upon any contract that may have been entered into between owner and builder" but upon the completion of 16 cf New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 8 September 1999 at 105. 17 Maxcon (2017) 127 SASR 193 at 226 [112]. 18 Maxcon (2017) 127 SASR 193 at 226 [112]. Bell Nettle Gordon the building in accordance with the plans and specifications in the relevant development approval19. That conclusion should be rejected. As the preceding analysis demonstrates, s 12(2)(c) focuses on a provision of a contract and asks whether, on its proper construction, the provision "makes the liability to pay money owing, or the due date for payment of money owing, contingent or dependent on the operation of another contract". Here, the retention provisions did just that: they made the due dates for payment contingent or dependent on "CFO". And for "CFO" to be achieved, there had to be issued a certificate of occupancy and "any other Approval(s) required under Building Legislation which [were] required to enable the Works lawfully to be used for their respective purposes in accordance with [Maxcon's] Project Requirements". Those Project Requirements were to be ascertained from the head contract. "CFO" required satisfactory completion of the head contract before the dates for the release of the retention sum could be calculated, let alone for the retention sum to be released. Accordingly, there was no error of law on the part of the adjudicator. That analysis answers Maxcon's argument that, in circumstances where the head contract was not in evidence, there was no sufficient basis for a finding that the head contract contained an obligation to procure a certificate of occupancy. Such a finding was and remains unnecessary. The subcontract made release of the retention sum contingent on obtaining a certificate of occupancy, and obtaining that certificate depended on works being done in accordance with the issued documents, including the head contract. The conclusion that the due dates for payment of the retention sum were contingent or dependent on the operation of the head contract does not turn on whether the head contract itself contained an obligation to obtain a certificate of occupancy. The first ground in Mr Vadasz's notice of contention should be upheld. In view of that conclusion, the grounds of appeal do not arise. Order The appeal should be dismissed. It was a condition of the grant of special leave to appeal that Maxcon would pay Mr Vadasz's costs of the appeal to this Court. It is therefore unnecessary to make an order as to costs. 19 Maxcon (2017) 127 SASR 193 at 226 [111]. GAGELER J. The notice of appeal and the attendant notice of contention together raise three principal questions. Stated in logical order they are as follows. Do the adjudicator's reasons disclose the error of law found by the Full Court of the Supreme Court of South Australia? If so, is disclosure of an error of law in an adjudicator's reasons sufficient for the Supreme Court to make an order in the nature of certiorari to quash the adjudicator's determination? If not, is the error of law found by the Full Court a jurisdictional error? Were it incumbent on this Court in determining an appeal to reason only in strict logical order, I would answer the first question in the negative for the reasons given by Kiefel CJ, Bell, Keane, Nettle and Gordon JJ, with the consequence that neither of the other two questions would arise. The first question, however, is of no public importance; it is raised only by way of notice of contention in the invocation of a procedure which gives a respondent to an appeal an entitlement to contend that the judgment under appeal ought to be upheld on grounds that the court from which the appeal is brought erroneously decided or failed to decide some matter of fact or law20. The other two questions are questions of public importance on which special leave to appeal has been granted. To the extent such an outcome can be achieved consistently with the just resolution of the rights in issue between the parties, I consider that provision by this Court of answers to those questions of public importance is not only permissible but desirable. I would answer the second and third questions and answer both of them in the negative. The consequence is that the first question does not need to be addressed, despite that question being logically anterior. My negative answer to the second question is a direct application of my reasoning in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd21. There is no material difference between the supervisory jurisdiction of the Supreme Court of South Australia under s 17(2) of the Supreme Court Act 1935 (SA) and the supervisory jurisdiction of the Supreme Court of New South Wales under s 69 of the Supreme Court Act 1970 (NSW). There is also no material difference between the Building and Construction Industry Security of Payment Act 2009 (SA) ("the Security of Payment Act") and the Building and Construction Industry Security of Payment Act 1999 (NSW) on which it is modelled. The scope of the authority conferred on an adjudicator by s 22(1) of each Act – to make a valid determination despite adopting reasoning that is mistaken in law – leaves no room for the exercise by either Supreme Court of supervisory jurisdiction to make an order in the nature of certiorari to quash a 20 High Court Rules 2004 (Cth), r 42.08.5. 21 [2018] HCA 4. determination merely on the basis of an error of law in the reasons for the determination. The reasoning underlying my negative answer to the third question requires more elaboration. There are, of course, "mistakes and mistakes"22. The issue that needs to be considered in answering the third question is whether the particular mistake of law that the Full Court found the adjudicator to have committed had the effect of causing the adjudicator, for some reason other than it simply having been a mistake of law, to exceed the authority conferred by s 22(1) with the consequence that what purported to be a determination within the scope of that authority was no more than an "ostensible determination"23. The particular mistake of law which the Full Court found the adjudicator to have committed was a misinterpretation of a definition in the construction contract. The Full Court went on to find that the misinterpretation caused the adjudicator to mischaracterise a provision of the construction contract as a "pay when paid provision" within the meaning of s 12(2)(c) of the Security of Payment Act and, by reason of that mischaracterisation, wrongly to treat that provision as having no effect by operation of s 12(1) of the Security of Payment Act24. The question of whether the error of law found by the Full Court was a jurisdictional error therefore becomes a question of whether the authority conferred by s 22(1) is conditioned by a requirement that the adjudicator not incorrectly apply s 12 of the Security of Payment Act. I answer that question in the negative because the authority conferred by s 22(1) is not expressly so conditioned and because I am unable to see anything in the scheme of the Security of Payment Act to support a conclusion that the authority is impliedly so conditioned. In that respect, I cannot agree with the dissenting view of Hinton J in the Full Court25 that s 12 of the Security of Payment Act "defines a limit" on the progress payment the statutory entitlement to which is created by s 8 and the 22 R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 at 268; [1981] HCA 74, quoting Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416 at 420. 23 R v War Pensions Entitlement Appeal Tribunal; Ex parte Bott (1933) 50 CLR 228 at 242; [1933] HCA 30. 24 Maxcon Constructions Pty Ltd v Vadasz (No 2) (2017) 127 SASR 193 at 225-226 25 (2017) 127 SASR 193 at 271 [279]-[280]. resolution of a claim to the recovery of which Pt 3, including s 22(1), is directed. Notwithstanding the co-location of s 12 with s 8 within Pt 2, s 12 is neither in form nor in substance a limitation on the statutory entitlement created by s 8. Rather, as Blue J (with whom Lovell J agreed) observed26, s 12 is a provision which modifies the substantive law applicable to a construction contract. The operation, or potential operation, of s 12 is within the matters which s 22(2) requires the adjudicator "to consider" in making the determination under s 22(1). The adjudicator's determination is not expressly or impliedly governed by the operation of s 12. Conversely, as s 32(1)(b) spells out, the adjudicator's determination has no effect on any right that a party to a construction contract may have as a result of the operation of s 12. 26 (2017) 127 SASR 193 at 237-238 [146]. Edelman EDELMAN J. As Gageler J explains, the notice of appeal and notice of contention in this appeal raise three questions. (1) Did the adjudicator err in law, as the Full Court of the Supreme Court of South Australia concluded? (2) Did the Building and Construction Industry Security of Payment Act 2009 (SA) exclude judicial review for a non-jurisdictional error of law? (3) Was the error of law as found by the Full Court a jurisdictional error? Strictly, a negative answer to the first question, raised by the notice of contention, would be sufficient to dispose of this appeal. However, in the circumstances of the grant of special leave and the full argument on each issue it is appropriate to answer each question. I agree with Kiefel CJ, Bell, Keane, Nettle and Gordon JJ that the first question should be answered in the negative for the reasons given in their joint judgment. I also agree with the conclusion in the joint judgment that the second question should be answered in the affirmative. My reasons for this conclusion are the same as those that I gave in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd27. As Gageler J observes, the relevant South Australian legislation is not materially different from the New South Wales legislation considered in that case. The third question should be answered in the negative for the reasons given by Gageler J28. 27 [2018] HCA 4.

HIGH COURT OF AUSTRALIA THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT AND CITYLINK MELBOURNE LIMITED (FORMERLY KNOWN AS TRANSURBAN CITY LINK LIMITED) RESPONDENT Commissioner of Taxation v Citylink Melbourne Limited [2006] HCA 35 20 July 2006 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation B J Shaw QC with I B Stewart for the appellant (instructed by Australian Government Solicitor) A C Archibald QC with M M Gordon SC, M N Connock and S H Steward for the respondent (instructed by Freehills) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Commissioner of Taxation v Citylink Melbourne Limited Income tax – Allowable deductions – Respondent entered into contracts with the State of Victoria to design, construct, operate and maintain a major system of roads – The State conceded to the respondent rights to do all that was necessary to complete those tasks, with a view to transferring the infrastructure and all associated rights back to the State at the expiry of the concession period – Respondent paid concession fees as consideration for those rights – Whether concession fees were allowable deductions – Whether concession fees which accrued semi-annually were outgoings incurred in, and referable to, the relevant years of income, where the fees were "owing" but "not due for payment" – Whether payment was contingent or theoretical – Whether concession fees were on revenue or capital account – Whether concession fees were an outgoing in gaining or producing the taxpayer's assessable income – Whether the concession fees conferred a benefit on the taxpayer of an enduring nature – Whether acquisition of the benefit essential to the taxpayer's business – Whether concession fees were the purchase price paid for the road system as a capital asset – Whether concession fees were akin to a share of profits with the State or a dividend payable to a joint venturer – Whether payment of concession fees analogous to the payment of rent. Words and phrases – "incurred", "referable". Income Tax Assessment Act 1936 (Cth), s 51(1). Income Tax Assessment Act 1997 (Cth), s 8-1. GLEESON CJ. I agree with the orders proposed by Crennan J and with her reasons for those orders. GUMMOW J. The appeal should be dismissed with costs. I agree with the reasons of Crennan J. Kirby KIRBY J. This appeal comes from a judgment of the Full Court of the Federal Court of Australia1. It involves questions that have provided a rich source of litigation in this Court concerning whether a claimed deduction from income tax liability arises on revenue account (and is thus prima facie deductible) or on capital account (and is thus not deductible). An additional question, if the classification on revenue account is upheld, is whether the obligation giving rise to the claimed deduction was "incurred" in the 1996 to 1998 years of income ("the income years") and was "properly referable" to income which the taxpayer derived in those years. The answer to these questions is to be found, ultimately, in the operation of s 51(1) of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act")2 and s 8-1 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act")3. The appeal proceeded on the assumption that the respective provisions of the 1936 Act and the 1997 Act were identical in substance4. I agree with that assumption. The facts For the most part, the facts relevant to my reasons sufficiently appear in the reasons of Crennan J5. I incorporate and will not repeat them. In those reasons, her Honour describes the arrangements between Citylink Melbourne Limited (formerly known as Transurban City Link Limited) ("Transurban") and the State of Victoria ("the State") for the achievement of the City Link Project ("the Project"). She explains the contents of the Concession Deed6, the issue of Concession Notes7, the controlling operation of the Master Security Deed8 and the terms of the Security Trust Deed9. I will not needlessly restate any of this material. I gratefully accept these descriptions. The facts at trial were complex. As Crennan J's reasons indicate, further details of the Project, to elaborate the 1 City Link Melbourne Ltd v Commissioner of Taxation (2004) 141 FCR 69. 2 Referable to the 1996 and 1997 income tax years. 3 Referable to the 1998 income tax year. (2004) 141 FCR 69 at 71 [2]. 5 Reasons of Crennan J at [81]-[87]. 6 Reasons of Crennan J at [100]-[110]. 7 Reasons of Crennan J at [107]-[110]. 8 Reasons of Crennan J at [111]-[114]. 9 Reasons of Crennan J at [115]-[118]. Kirby relationship and arrangements between Transurban and the State, may be found in the reasons of the primary judge and of the Full Court10. The proceedings in the Federal Court fees because Before the primary judge: The primary judge11 (Merkel J), whose orders were reversed by unanimous decision of the Full Court of the Federal Court of Australia12, concluded that Transurban incurred a loss or outgoing in respect of the concession them arose unconditionally13, and was satisfied by Transurban's electing to issue the Concession Notes, under which there was a present liability to pay the amounts due at a future time14. The primary judge also concluded that the fees were "referable to the period in respect of which the liability for the fees is incurred"15. However, he reached these conclusions notwithstanding an intuitive opinion, which he expressed, as to their artificiality and unreality. Indeed, he suggested that such an outcome could normally only be expected in "a taxpayers' heaven"16. respect of liability the Despite the foregoing findings, the primary judge held that the concession fees were not deductible because they were akin to a promised share of profits or payment of a dividend to the State in return for the advantage flowing to capital which the State had contributed to the Project17. The concession fees were thus outgoings expended "on the structure within which the profits were to be earned". They were not "part of the money earning process"18. They were outgoings on capital and not on revenue account19. 10 Reasons of Crennan J at [118]. See Transurban City Link Ltd v Commissioner of Taxation (2004) 135 FCR 356 at 361ff; (2004) 141 FCR 69 at 71ff. 11 (2004) 135 FCR 356. 12 (2004) 141 FCR 69 per Hill, Stone and Allsop JJ. 13 Under the Concession Deed, cl 3.1. 14 (2004) 135 FCR 356 at 378 [75]. 15 (2004) 135 FCR 356 at 380 [81]. 16 (2004) 135 FCR 356 at 381 [84]. 17 (2004) 135 FCR 356 at 408 [188]-[189]. 18 (2004) 135 FCR 356 at 409 [191] citing BP Australia Ltd v Federal Commissioner of Taxation (1965) 112 CLR 386 at 398, 403-404; [1966] AC 224 at 266, 271. 19 (2004) 135 FCR 356 at 409 [191]. Kirby It was on this basis that the primary judge rejected Transurban's "appeal" to the Federal Court against what it claimed was the erroneous decision of the Commissioner of Taxation ("the Commissioner") disallowing Transurban's objection to the Commissioner's disallowance of deductions claimed by Transurban in respect of concession fees for the income years. In the Full Court: In allowing Transurban's appeal, the Full Court found that Transurban had incurred the concession fees in the income years although they were years during which the tollway was still under construction and therefore not generating (as it later did) substantial revenues from vehicular tolls. Moreover, the Full Court found that the concession fees were referable to the income years and that the State and Transurban were not joint venturers and did not, in any legal sense, share profits20. Finally, the Full Court concluded that the concession fees were payable for use and operation of, or the right to conduct, the Project. They were therefore a cost of conducting the business operation rather than a cost of acquiring a profit-making enterprise21. On this footing, the Full Court rejected the primary judge's conclusion that the concession fees were outgoings on capital account. By special leave, this appeal is now brought to this Court to permit the Commissioner to propound his arguments defensive of the orders made by the primary judge. The applicable legislation Primacy of the legislation: Problems of income tax law, such as the present, cannot be resolved by generalities. In each case, it is the duty of the decision-maker to apply the relevant legislation to the facts as found. Income tax law is not a mystery unto itself, to be preserved separate from other parliamentary law as a legal canon reserved to a specialised priestly caste22. It is a law enacted by the Federal Parliament and, in its new form especially, it is intended to be generally understood by taxpayers, most of whom do not have ready access to countless decisions, many of them contradictory, written on the legislation these past seventy years. 20 (2004) 141 FCR 69 at 85 [50]. 21 (2004) 141 FCR 69 at 92-93 [70]. 22 Federal Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 146 [84]; cf Steele v Deputy Federal Commissioner of Taxation (1999) 197 CLR 459 at 477 Kirby In deriving the meaning and application of income tax law, as in other areas of the written law, wisdom lies in maintaining fidelity to the statutory text and the purpose of the legislation as found in its language and elucidated by authority and admissible material23. This has been a constant, and unanimous, theme of decisions of this Court, in many fields, in recent years24. Where the outcome is governed by legislation, the starting point is always the legislative text. Income tax law is no different. We sit here to apply the legislation, not judicial approximations of it. The legislation: The applicable legislation, in its successive forms in the 1936 Act and the 1997 Act, is set out in Crennan J's reasons25. It is unnecessary for me to repeat the provisions. Effectively, both enactments allow the taxpayer to deduct from its assessable income any losses or outgoings to the extent that (relevantly) they were necessarily incurred in carrying on a business for the purpose of gaining or producing its assessable income. No such loss or outgoing may be deducted if (relevantly) it is a loss or outgoing of capital, or of a capital nature26. Here are the two sides of the legislative coin. In the case of the income of a business (such as Transurban) the statutes envisage a division of the world between losses or outgoings on revenue account and on capital account. In the case of revenue account, the deduction is available only to the extent that it is "incurred" in "gaining or producing … assessable income" or "necessarily incurred" in "carrying on a business for the purpose of gaining or producing" assessable income. The statutory language is relatively simple. It is expressed in ordinary, not technical, language. Courts should not burden it with undue elaboration. I say this whilst acknowledging that the application of the 23 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 24 See, eg, Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vict) (2001) 207 CLR 72 at 77 [9], 89 [46]; Trust Company of Australia Ltd v Commissioner of State Revenue (2003) 77 ALJR 1019 at 1033 [92]; 197 ALR 297 at 316; Federal Commissioner of Taxation v Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592 at 649-650 [181]; Commissioner of Taxation v Stone (2005) 79 ALJR 956 at 969 [79]; 215 ALR 61 at 78-79; R v Lavender (2005) 79 ALJR 1337 at 1357 [107]; 218 ALR 521 at 548; Combet v Commonwealth (2005) 80 ALJR 247 at 280 [135]; 221 ALR 621 at 660; Neindorf v Junkovic (2005) 80 ALJR 341 at 350-351 [42]; 222 ALR 631 at 641; Weiss v The Queen (2005) 80 ALJR 444 at 452 [31]; 223 ALR 662 at 671. 25 Reasons of Crennan J at [88]-[99]. 26 See Steele (1999) 197 CLR 459 at 466-472 [19]-[35], 480-487 [64]-[78]. Kirby legislation will often require explanation and justification so as to make its meaning clear and to ensure a consistency and accuracy of approach27. From the remarks of successive judges, explaining the application of the legislation to particular facts, have come observations that have sometimes hardened into supposedly fixed rules28. Every now and again, it is necessary to pause and return to the legislation itself so as to ensure that decision-makers are applying its provisions as enacted by the Parliament. This is especially necessary where, as here, there are very complex commercial arrangements involving novel transactions for a major public-private infrastructure project. The issues The issues arising in this appeal are foreshadowed in the foregoing observations. Logically, the first question is whether Transurban's liability for the concession fees constituted outgoings on capital, rather than revenue, account. If this is so, that is the end of Transurban's entitlement to claim a deduction in respect of those fees. Further issues do not then arise. If, however, the fees are judged to be on revenue account, other, subsidiary questions arise. The issues presented for decision are thus: The capital characterisation issue: Are the concession fees outgoings incurred in the performance of a promise given by Transurban as consideration for the acquisition of a capital asset, namely, the grant of the concession for the Project ("the Concession")? Are there circumstances where such payments are not of a capital nature, given the object and purpose for which the payments are made? The incurring of the obligation issue: If the first issue is determined against the Commissioner and the concession fees are characterised as being on revenue account, where the contract provides that an obligation may be satisfied by the issue of Concession Notes which are subject to identical conditions for presentation as the conditions which allow the deferral of payment, does the issue of such Notes mean that the obligation was "incurred" in the relevant income years or at some other time? 27 See, eg, Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation (1949) 78 CLR 47 at 55; cf Steele (1999) 197 CLR 459 at 481 [67]. 28 cf Teo, "'Australia's Largest Tax Case' Revisited: A Nail in the Coffin for the Objective Approach to Determining the Deductibility of Expenses?", (2005) 8 Journal of Australian Taxation 328 at 330-331. Kirby The proper referability issue: If the first issue is determined adversely to the Commissioner and the second issue in favour of Transurban, where the outgoing is "incurred" in the income years but will not fall due for payment until some uncertain time in the future, can the full amount of the outgoing nevertheless be said to be "properly referable" to the income years, and thus deductible in respect of those years? Other issues were presented at various stages in these proceedings29. Some of them are arguable and important. However, I agree with Crennan J that it is enough to decide the foregoing three issues. The propounded deduction was an outgoing on capital account The applicable principles: The primary question on the first issue is whether the concession fees are outgoings on capital account. What is the principle that distinguishes payments on capital account from payments on revenue account? The statutes alone do not answer this question. Judges and commentators have been complaining about the income and capital dichotomy for more than a century. In Inland Revenue Commissioners v British Salmson Aero Engines Ltd30, Sir Wilfrid Greene MR, after a review of much authority, observed: "There have been many cases which fall on the border-line. Indeed, in many cases it is almost true to say that the spin of a coin would decide the matter almost as satisfactorily as an attempt to find reasons. But that class of question is a notorious one, and has been so for many years." The comments of Starke J in Hallstroms Pty Ltd v Federal Commissioner of Taxation31 were to like effect. Despite these remarks, it is useful to turn to some of the judicial explanations. The distinction between capital and revenue was examined in BP Australia Ltd v Federal Commissioner of Taxation32. There, Lord Pearce, delivering the reasons of the Privy Council in an Australian appeal involving a dispute over allowable deductions under s 51 of the 1936 Act, said: 29 See reasons of Crennan J at [93]-[97]. 30 [1938] 2 KB 482 at 498. 31 (1946) 72 CLR 634 at 644. See also Steele (1999) 197 CLR 459 at 482-483 [71]. 32 (1965) 112 CLR 386 at 397; [1966] AC 224 at 264-265. Kirby "The solution to the problem is not to be found by any rigid test or description. It has to be derived from many aspects of the whole set of circumstances some of which may point in one direction, some in the other. One consideration may point so clearly that it dominates other and vaguer indications in the contrary direction. It is a commonsense appreciation of all the guiding features which must provide the ultimate answer. Although the categories of capital and income expenditure are distinct and easily ascertainable in obvious cases that lie far from the boundary, the line of distinction is often hard to draw in border line cases; and conflicting considerations may produce a situation where the answer turns on questions of emphasis and degree. That answer 'depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process' (per Dixon J in Hallstrom's Case33). As each new case comes to be argued felicitous phrases from earlier judgments are used in argument by one side and the other. But those phrases are not the deciding factor, nor are they of unlimited application. They merely crystallize particular factors which may incline the scale in a particular case after a balance of all the considerations has been taken." In this Court, this analysis was taken a step further in Federal Commissioner of Taxation v Energy Resources of Australia Ltd34: "Where a taxpayer incurs loss or expense in raising funds by issuing promissory notes at a discount to their face value, its entitlement to a s 51 deduction for that loss or expense depends on the use to which the funds are to be put. If the funds are to be used as working capital, the cost of the discounts will be deductible as a revenue expense. If the funds are to be used to strengthen 'the business entity, structure, or organisation set up or established for the earning of profit', the cost of the discounts will generally not be deductible because they will be a capital, and not a revenue, expense. But sometimes the raising of capital may be such a recurrent event in the business life of a taxpayer that the cost of raising the capital will qualify as a revenue expense." Yet these were not new thoughts. In Sun Newspapers Ltd and Associated Newspapers Ltd v Federal Commissioner of Taxation35, Dixon J had observed: 33 (1946) 72 CLR 634 at 648. 34 (1996) 185 CLR 66 at 73-74 (footnotes omitted). 35 (1938) 61 CLR 337 at 359. Kirby "The distinction between expenditure and outgoings on revenue account and on capital account corresponds with the distinction between the business entity, structure, or organization set up or established for the earning of profit and the process by which such an organization operates to obtain regular returns by means of regular outlay, the difference between the outlay and returns representing profit or loss." Later in the same reasons, Dixon J made reference to what some would now call "guidelines" to which courts might refer in order to sharpen the foregoing distinction and to apply it to the facts of a particular case36: "There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment." Nearly a decade later, Dixon J returned to this issue. In the passage cited by the Privy Council in BP Australia, he explained that the tests for distinguishing revenue and capital expenditures invoke a commercial rather than a strictly legal or jurisprudential approach. In Hallstroms37, his Honour said: "What is an outgoing of capital and what is an outgoing on account of revenue depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process." Application to the facts: The bundle of rights appearing in cl 2.8 of the Concession Deed were granted to Transurban once and for all. Such rights were a condition of Transurban's being able to establish and operate the Project. The promise to pay the concession fees was made in return for the grant of that bundle of rights. The defining feature of the Project (and an essential commercial condition of its viability) was its connection, at both ends, with the existing, publicly owned freeway infrastructure38. 36 (1938) 61 CLR 337 at 363. See also British Insulated and Helsby Cables Ltd v Atherton [1926] AC 205 at 213-214. 37 (1946) 72 CLR 634 at 648. 38 The relevant clause is set out in the reasons of Crennan J at [101]. Kirby Transurban, in this way, acquired the right to establish a profit-yielding venture. To perfect the grant of rights to Transurban, the State gave Transurban essential access to those portions of Crown land over which the tollway was to be constructed39. Transurban thereby acquired the right to place itself in a position to derive revenue for its business in the future. The advantages for which the concession fees were payable were expressed to be of a permanent and enduring character. The primary judge correctly so found40. For my approach, I would adopt the comprehensive analysis of the facts expressed by the primary judge, his application of the foregoing statements of authority as to the applicable discrimen for distinguishing payments on revenue from those on capital account and his consequent conclusion that the concession fees, by these criteria, were outgoings of a capital nature. This is what the "[W]hen the matters stated by Dixon J in Sun Newspapers42 are considered, the concession fees are of a capital nature. The advantages sought by the payment of the concession fees are to be characterised by reference to the services, facilities and entitlements contributed by the State. Those contributions … have lasting qualities, are of enduring benefit, are of a 'once and for all' nature and form part of the profit yielding structure of City Link. The services, facilities and entitlements the State, when considered cumulatively, are not contributed by contributed, and are not used, relied upon or enjoyed, on a periodic or recurrent basis. Rather they, and the advantages derived from them, are to be used, relied upon, enjoyed and not derogated from throughout the term of the Concession. Finally, the means adopted to obtain the services, facilities and entitlements (ie, payment of concession fees) is not a periodic reward or outlay for the use and enjoyment of City Link for periods commensurate with the payment. Rather, payment of the fees is in fixed amounts payable at the end of the Concession Period with provision for earlier payment if certain financial conditions are satisfied. In summary, the concession fees are outgoings expended 'on the structure within which the profits were to be earned' and were not 'part of the 39 Concession Deed, cl 4. 40 (2004) 135 FCR 356 at 405 [173]. 41 (2004) 135 FCR 356 at 408-409 [191] (emphasis in original). 42 (1938) 61 CLR 337 at 363. Kirby money earning process'43. Accordingly, it must also follow that the concession fees are outgoings on capital, rather than revenue, account44." The evidence shows that the advantages for which the concession fees were payable were clearly of a permanent and enduring character. Those advantages, secured by the obligation to pay the concession fees, comprised the grant of the Concession for a period of approximately 38 years. Clearly, that was a capital asset because it was the indispensable part of the profit-yielding structure of Transurban. The Concession was relied upon and enjoyed by Transurban in the building of the infrastructure and then in operating it, as intended, over the concession period. Transurban obtained the Concession by undertaking the obligations provided in the Concession Deed and in the other Project documents. Those obligations included the performance of Transurban's promise to build and operate the tollway and to collect tolls and other revenue and to make payments to the State, including (relevantly) the concession fees. Self-evidently, Transurban acquired the Concession in order to generate profits for its business through the operation of the tollway. This was an important capital asset so long as the Concession operated. With respect, the Full Court erred in concluding that the concession fees were "ultimately payable"45 for the right to operate the tollway. Rather, the concession fees were payable so as to secure the right to establish the essential business structure, which was a capital asset. Unsurprisingly, the Full Court felt obliged to express the extent to which the concession fees were paid for the rights to design, construct and commission the tollway. The judges in the Full Court acknowledged that such rights "may be seen to confer an advantage of an enduring kind and therefore be capital"46. However, the Full Court ignored the significance of this conceded impression in reaching its conclusion on whether the concession fees were on income or capital account (or, perhaps, partly income and partly capital). Without any supporting reasoning, the Full Court proceeded to conclude that "[t]he concession fee can thus be seen to be paid for the right to operate the ring road system to be constructed by Transurban and to impose and collect tolls 43 BP Australia (1965) 112 CLR 386 at 398, 403-404; [1966] AC 224 at 266, 271. 44 cf United Energy Ltd v Commissioner of Taxation (1997) 78 FCR 169 at 182 per 45 (2004) 141 FCR 69 at 92 [68]. 46 (2004) 141 FCR 69 at 92 [65]. Kirby for the use of the system by motorists in accordance with the toll schedule"47. Obviously there is a missing link here in the Full Court's reasoning. Its use of the word "thus" was never explained or elaborated. With respect, the Full Court was also wrong to conclude that the obligation was not to be viewed as a single "concession fee", payable in instalments, as provided. Such, in my view, was the correct characterisation of the facts. These errors justify, and require, a fresh characterisation by this Court of the concession fees in substitution for that adopted by the Full Court. Performing that re-characterisation, I prefer the analysis of the primary judge. It adheres more closely to the discrimen explained by Dixon J in Sun Newspapers and Hallstroms and to the dichotomy expressed in the legislation. This conclusion is still further reinforced by the nature of the Concession that Transurban secured under its agreements with the State. It is impossible to disaggregate those rights and to divide them up. Clearly, in composite, they were undifferentiated, both in their operation and in their character. The concession fees which Transurban was bound to pay to the State were paid "in consideration of the State granting the concession rights set out in clause 2.8"48. Those rights were to design, build and operate the tollway. They were not incurred in consideration of the right to operate the tollway separately from the other rights. The recurrent concession fees payable by Transurban are thus no more than the method agreed upon by Transurban and the State for payment by Transurban for a significant capital asset indispensable to the Project. It follows that the fees constitute an outgoing of capital or of a capital nature. Expenditure necessary to the Project: It is true that in Cliffs International Inc v Federal Commissioner of Taxation49, Barwick CJ remarked that: "the fact that payments are made or received in performance of a promise given as part of the consideration for the acquisition of a capital asset does not necessarily mean that the payments are themselves of a capital nature". However, Barwick CJ was dealing there with a case where the taxpayer, by its recurrent payments, "acquired nothing which it did not already have"50. The taxpayer in that case did not make those payments for the shares in issue. 47 (2004) 141 FCR 69 at 92 [66] (emphasis added). 48 Concession Deed, cl 3.1(a). 49 (1979) 142 CLR 140 at 148. 50 (1979) 142 CLR 140 at 149. Kirby By way of contrast, in the present proceedings, the concession fees were clearly paid for the acquisition of the Concession essential to the conduct of the Project. The better view on this issue in Cliffs International was that stated by Gibbs J and Stephen J. In his reasons, Gibbs J51 said: "the ... payments should properly be regarded as expenditure necessary for the acquisition of property or of rights of a permanent character, the possession of which was a condition of carrying on the business … at all". "In my opinion, if the expenditure can be truly characterized as the payment of consideration for a capital asset or advantage, it will be of a capital nature notwithstanding that the payments are recurrent and are continued for an indefinite period." This approach is also consonant with that taken by Fullagar J in Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation53 where his Honour said: "It does not matter how they are calculated, or how they are payable, or when they are payable, or whether they may for a period cease to be payable. If they are paid as parts of the purchase price of an asset forming part of the fixed capital of the company, they are outgoings of capital or of a capital nature." As in those cases, so in this. The payments of the concession fees formed part of the purchase price to secure an asset forming part of Transurban's fixed capital essential to the conduct on Crown land of the Project. As such, they were outgoings of capital or of a capital nature. The primary judge was correct to so hold. No analogy to rent: The Full Court came to its conclusion that the concession fees represented outgoings on revenue account by suggesting that those fees were akin to rental payments, to be treated separately from the other elements in the Concession giving rise to Transurban's investment in the 51 (1979) 142 CLR 140 at 153. 52 (1979) 142 CLR 140 at 156. See also at 162 per Stephen J. 53 (1953) 89 CLR 428 at 454. Kirby Project54. In fact, an actual identified rent of $100 per annum was payable55. However, the question is whether the analogy to rent, which would normally be an outgoing on revenue account, was a valid one. Certainly, it played an important part in the Full Court's reasoning. In my respectful view, the Full Court's rental analogy is unpersuasive. Transurban uses the tollway, designed, constructed, commissioned, operated, tolled, maintained and repaired by it, to raise revenue. It was also authorised by the Concession Deed to "raise revenues from other lawful uses of the Link approved by the State … until the end of the Concession Period, subject to and upon the terms of this Deed"56. The range of functions assigned to Transurban makes it clear that it was acquiring a distinct integrated intangible asset that did not, as such, attach to property (as does a lease to land). Nor were the concession fees expressly payable only to allow Transurban possession of the land from time to time or to obtain an income flow from the use of the land. Clause 2.8 of the Concession Deed not only granted rights with commensurate obligations. It also ensured the support of the State for a project that included the many identified governmental acts necessary for its successful implementation. The State's control over the infrastructure denied to Transurban any right to use the asset constituting the Project in the same way as a lessee usually enjoys the use of property under a lease. Unlike in a lease, there was no pre-existing distinct property right held by the State that was made the subject of use or enjoyment by Transurban. The consideration given for the Concession was given for the conveyance of new rights and not merely for their use and enjoyment. Accordingly, on the facts, the analogy between the concession fees and rent is not sustained. Additionally, an inherent feature of rent is that it typically involves a (generally regular) periodical payment. It is not a deferred payment payable over time. By way of contrast, the concession fees in the present case are, effectively, the deferred consideration payable by Transurban to secure the grant of the Concession essential to constituting the Project. The concession fees are not a series of periodic payments payable for the periodic use or enjoyment of the asset. It is true that periodic accrual, accounted for semi-annually and secured by the issue of Concession Notes, comprised the mechanism adopted for the quantification of the consideration given for the rights conferred. However, what Transurban acquired was a capital asset and an advantage of a capital nature. 54 (2004) 141 FCR 69 at 93 [70]. 55 (2004) 141 FCR 69 at 74 [12]. 56 Concession Deed, cl 2.8(a). See reasons of Crennan J at [101]. Kirby The concession fees were thus to be classified as the instalment payments for securing that asset and advantage. The Commissioner submitted that, if any analogy to an outgoing on revenue account was needed for the concession fees, a more accurate one was a promise by a lessee to pay a premium in instalments on entering into the lease. Such a payment has been described as "a cash payment made to the lessor, and representing, or supposed to represent, the capital value of the difference between the actual rent and the best rent that might otherwise be obtained"57. The Commissioner argued that, if a lease analogy were applicable, the consideration for the Concession (the concession fees) picked up the shortfall between the annual rent and a proper commercial rent for the land. On this view, the promise to pay concession fees fits comfortably with the concept of a premium. I do not find it necessary to decide whether the payment of concession fees was analogous to some other form of payment incidental to a lease. It is enough to conclude that rent is fundamentally the consideration for the right to use property. The concession fees in this case were never payable simply for Transurban's right to use land. The integrated benefits acquired and the inter- related obligations assumed future payments by Transurban for the acquisition of the Concession, which was incontestably a capital asset. They themselves therefore displayed the character of capital. The analogy to rent generally, or to rent specifically payable for a parking station lease (as the Full Court thought58), is unpersuasive. It led the Full Court to its erroneous classification of the concession fees as being on revenue account. Conclusion: on capital account: It follows that a correct application of the statutory provisions, explained in this Court's past authority, produces the conclusion that the characterisation adopted by the primary judge was the correct one. I acknowledge that dicta can be found in the cases that appear to support Transurban's argument. On this issue, there have been so many judicial remarks that one feels embarrassed to add to them. Usually they are peppered with the expenditure can be "truly characterised". invocations as Characterisation, in every branch of the law, is problematic and usually disputable. Different minds categorise payments on different sides of the income and capital divide. That is why, in new and unusual circumstances such as the present case, it is necessary to return to the statutory text and to the novel means to how 57 cf King v Earl Cadogan [1915] 3 KB 485 at 492 per Warrington LJ. 58 (2004) 141 FCR 69 at 93 [70]. Kirby adopted to acquire the Concession and thereby to secure, fund, establish, maintain and ultimately operate this major project of capital infrastructure. To be accepted as the Project controller, Transurban had, at the one moment, to accept a series of interlocking agreements that represented an integrated payment for the capital asset it acquired for the designated period. Each part of the interlocking agreements was integral to, and dependent on, the others. The capital asset would not have been provided without the carrying out of each part. The concession fees are thus to be viewed, together, as the payment of consideration for this capital asset. This conclusion makes practical and business sense. And that is the approach proper to such questions, as this Court has repeatedly affirmed59. Therefore, whilst accepting that on such issues different minds may reach different conclusions, a return to the statutory language, and the differentiation it accepts, persuades me that the primary judge's conclusion was the better one. It disclosed no error on this point. The Full Court's analysis was faulty and unpersuasive. The primary judge's conclusion should be restored. Concession fees were not incurred in the income years The remaining questions: Having reached the foregoing conclusion, it is strictly unnecessary for me to consider the remaining issues in this appeal. They arise only if the concession fees are properly to be characterised as outgoings on revenue account. Nevertheless, out of respect for the parties' arguments, and in case I am wrong in the foregoing conclusion, I will offer my opinion on the chief remaining issues. If one returns to the statutory language and the division it postulates between the income and capital accounts, there are serious factual oddities that militate against a conclusion that the concession fees, for which Transurban seeks deduction from its income tax obligations, were "incurred" in the income years. Transurban claimed a deduction for each year of income for which it incurred a liability to pay concession fees although no amount was actually paid to the State in respect of those fees in the relevant taxation years. During those years, the tollway was still being constructed. No tolls were collected. It was this feature of the evidence that led McHugh J, in the special leave hearing in relation to this appeal, to observe60: 59 Sun Newspapers (1938) 61 CLR 337 at 359. 60 [2005] HCATrans 304 at 2. Kirby "[Y]ou have been allowed a deduction of $95 million which you do not pay until [2013 on the base case] … [T]he words of section 51 … talk[] about an outgoing … [A]rguably, this is a case of form triumphing over substance. [W]hen you talk about 'present liability' you are putting a gloss on the words of the section. … [H]ere you have a situation where you pay rent, $95 million, you discharge the liability by issuing a note, and the concession note, on one theoretical view, may never be payable at all." These remarks were stated tentatively. They did not represent considered judicial conclusions and doubtless they reflect various imperfections. However, they highlight the intuitive oddity of the outcome upheld by the decision of the Full Court. They require this Court to scrutinise that outcome closely, to ensure that it accords with the text and purposes of the legislation. On the face of things, that seems unlikely. But have we, by judicial glossing of the legislation, reached such an outcome? The Commissioner's submissions: On the assumption that liability for the concession fees was "incurred", the Commissioner submitted that nonetheless such fees were not outgoings incurred in the years of income, within the applicable provisions. He submitted, first, that the payments were not due until the conditions stated in cl 1.9 of the Master Security Deed and the conditions in Pt 3 of the Concession Notes were satisfied. He argued that these conditions had not been satisfied in the income years. He further submitted that the payments were not "properly referable" to the years of income. He also argued that for the concession fees to be deductible in full in the income years, long before they would fall due for payment, was truly an anomalous outcome. This was particularly so given the large discrepancy between the face value and the net present value of the concession fees in the respective years of income. The Commissioner argued that this Court should hold that, where a contract provides that a contractual obligation to make a payment in the year of income is subject to conditions which defer payment indefinitely, or for a very long time in the future, at nil or negligible present cost, the obligation is not "incurred" in the relevant sense. He urged that the applicable statutory provisions contemplated that only the actual expenses of carrying on an income- earning activity in the year of income would be deductible in that year. This submission was made on the footing that the words "loss or outgoing" include debts but only if they have "come home" as a loss or outgoing and are "properly referable" to the income year. The concession fees, he suggested, did not answer to these descriptions. Kirby Looking afresh at the language of the legislation and its apparent purpose and assuming, contrary to my primary conclusion, that the concession fees are to be characterised as payable on revenue account, I would accept these submissions and uphold the Commissioner's arguments. Concession fees were not incurred: The trial judge, with apparent reluctance61, and the Full Court with more enthusiasm62, concluded that Transurban did "incur" a loss or outgoing in respect of the concession fees in the income years. Clause 3.1(a) of the Concession Deed arguably provides that the liability to pay the concession fees was unconditional. However, in fact, the obligation to pay was subject to conditions in cl 1.9 of the Master Security Deed and Pts 3 and 4(b) of the Concession Notes. While the Project Debt remains owing, the concession fees are owing but not due for payment, unless sufficient money is in the Distributions Account to meet the payment in full. The State thus had no absolute right to payment of the concession fees or to present the Concession Notes for payment. The practical effect of these conditions was that the State's entitlement to demand payment was dependent upon the traffic levels, revenue and available cash flows arising from the operation of the tollway. Transurban elected to issue Concession Notes with respect to the amounts of concession fees in the income years. However, the State can demand payment only when the conditions for presentation in Pt 3 of the Concession Notes are satisfied. In the absence of satisfaction of the conditions in Pt 3(b) or (c) of the Concession Notes, the State is entitled, under Pt 3(a), to present the Concession Notes within one year of the Expiry Date for payment on the Expiry Date. Like any claim for payment under Pt 3(b) and Pt 3(c)(ii), if the relevant conditions are satisfied, it is subject to cl 1.9 of the Master Security Deed. It is uncertain whether these conditions will be satisfied either by this time or before the end of the Concession (be that at the Expiry Date or another time). In New Zealand Flax Investments Ltd v Federal Commissioner of Taxation63, Dixon J said that the concept of loss or outgoing actually incurred "does not include a loss or expenditure which is no more than impending, threatened, or expected". By the application of this test, the conditions for payment in the present case indicate that any loss or outgoing in respect of the concession fees was at best "impending, threatened, or expected". It was not "actually incurred". 61 (2004) 135 FCR 356 at 378 [75]. 62 (2004) 141 FCR 69 at 83 [39]. 63 (1938) 61 CLR 179 at 207. Kirby In Nilsen Development Laboratories Pty Ltd v Federal Commissioner of Taxation64, the question arose as to whether an employer's provision for employees' leave entitlements was deductible for income tax purposes from the employer's income. This Court held that such provisions were not deductible in that case because there was no liability to make the payment either due or payable by reference to the year of income. The Court concluded that, if at all, such liability did not arise until the time when the period of leave was entered upon by an employee. Until then, the amounts were not "incurred". In his reasons in Nilsen Development, Gibbs J explained that an actual entitlement to payment was necessary to sustain the conclusion that an obligation was "incurred"65. His Honour said: "The employees were entitled to leave, but they were not entitled to payment. The entitlement to payment would not arise until the employees took leave (or died or left the employment). The event on which the entitlement … to payment depended had not occurred. There was a certainty that a liability to make payments in respect of leave would arise in the future, but it had not arisen. The present is not a case in which there was an immediate obligation to make payment in the future, or a defeasible obligation to pay, or a present obligation which as a matter of law was unenforceable – there was no accrued obligation to make any payment at all. There was no loss or outgoing 'incurred' within s 51(1)." Similarly, Barwick CJ in Nilsen Development said66: "[T]here can be no warrant for treating a liability which has not 'come home' in the year of income, in the sense of a pecuniary obligation which has become due, as having been incurred in that year. Sir John Latham's language in Emu Bay Railway Co Ltd v Federal Commissioner of Taxation67 clearly enough indicates that to satisfy the word 'incurred' in s 51(1) the liability must be 'presently incurred and due though not yet discharged'. The 'liability' of which Sir John speaks is of necessity a pecuniary liability and the word 'presently' refers to the year of income in respect of which a deduction is claimed. It may not disqualify the liability as a deduction that, though due, it may be paid in a later year. That part of 64 (1981) 144 CLR 616. 65 (1981) 144 CLR 616 at 628. 66 (1981) 144 CLR 616 at 623-624 (emphasis added). 67 (1944) 71 CLR 596 at 606. Kirby Sir Owen Dixon's statement in New Zealand Flax Investments68 which presently needs emphasis is that the word 'incurred' … 'does not include a loss or expenditure which is no more than pending, threatened or expected': and I would for myself add 'no matter how certain it is in the year of income that that loss or expenditure will occur in the future'." Conclusion: liability not incurred: A deduction need not be referable to income actually derived in a specific tax year69. Deductibility is dependent on the fact that the taxpayer has become liable to pay a pecuniary sum70. The mere existence of a debt answering to that description does not necessarily mean that the loss or outgoing has been "incurred" in the year of income. As I explained in Steele v Deputy Federal Commissioner of Taxation71: "The words 'to the extent to which' contradict a complete divorce between [the assessable income and the incurring of 'losses and outgoings']. The word 'in' also suggests the necessity of a connection between the 'losses and outgoings' in question and the real possibility of 'assessable income'. Further, the very notion of 'allowable deductions', so described, suggests a relationship of some kind between the 'losses and outgoings' in question and 'the assessable income'." It follows in the case of such a loss or outgoing, due in the year of income but payable in the future, that the liability must have "come home"72. This is a metaphor. Its utility was questioned during argument of this appeal. But income tax law is full of metaphors of this kind. Sometimes such expressions can help to explain what is meant by the language of the statute. So it is here. 68 (1938) 61 CLR 179 at 207. 69 Commissioner of Taxation (NSW) v Ash (1938) 61 CLR 263 at 271; John Fairfax & Sons Pty Ltd v Federal Commissioner of Taxation (1959) 101 CLR 30 at 35, 46; Commissioner of Taxation v Finn (1961) 106 CLR 60 at 68; AGC (Advances) Ltd v Federal Commissioner of Taxation (1975) 132 CLR 175 at 185, 197; Inglis v Federal Commissioner of Taxation (1979) 28 ALR 425 at 427-428; Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1 at 16; Steele (1999) 197 CLR 459 at 467 [22], 481-482 [68]. 70 Coles Myer Finance Ltd v Federal Commissioner of Taxation (1993) 176 CLR 640 71 (1999) 197 CLR 459 at 482 [68]. 72 Nilsen Development (1981) 144 CLR 616 at 623. Kirby In the present case, Transurban's obligation had not "come home". The concession fees were "owing" in a notional sense. However, they were not "due for payment". This was because of the payment conditions. Transurban did not, therefore, "incur" an obligation to pay the concession fees until those conditions were satisfied. Until then, the obligation in respect of the concession fees remained "impending, threatened or expected". Accordingly, Transurban had only a "hope" or "expectation" of a loss or outgoing. No such loss or outgoing had actually been "incurred". The Commissioner was therefore correct, on this ground, to reject the deduction claimed by Transurban. The fees were not referable to the income years Concession fees: a future expense: In Coles Myer Finance Ltd v Federal Commissioner of Taxation73, this Court held that the fact that a taxpayer has subjected itself in the year of income to a future liability does not necessarily compel the conclusion that the liability is "incurred", and is therefore deductible in full, in that year of income. For such a deduction, the liability, it was held, must be "properly referable to the year of income in question"74. Upon the present hypothesis, in the present case, the concession fees in issue are a future expense of Transurban's business operations. They actually fall to be met out of future assessable income75. That conclusion emerges from the terms governing the time when such payments fall due under the Concession Note arrangement, and the absence of any obligation to pay interest on amounts outstanding, in the context of the projections set out in the financial model received in evidence. To allow a deduction in the income years for the losses or outgoings when the burden of the liability only arises with the passage of time (possibly decades in the future) offends the principle of proper referability adopted by this Court in Coles Myer. judge, Before the primary in reliance upon the Commissioner argued that the concession fees were "referable" to the years of income during which they would actually fall due for payment. In my opinion, that submission was correct. It postulates an approach which appears consistent with the language and purpose of the legislation. It is reinforced by the following observations of Dixon J in Commissioner of Taxation (NSW) v Ash76 concerning the matching of deductions for expenses with income: that authority, 73 (1993) 176 CLR 640 at 677. 74 Coles Myer (1993) 176 CLR 640 at 663. 75 See above these reasons at [26]-[29]. 76 (1938) 61 CLR 263 at 282. See also Coles Myer (1993) 176 CLR 640 at 665-666. Kirby "Where the reason for allowing a deduction is that it is a normal or recurrent expenditure or an expenditure which is fairly incident to the carrying on of the business, it is evident that it can seldom be associated with any particular item on the revenue side against which to set it, and, as the ground of its allowance is that it is an incident or accident, something concomitant to the conduct of the business, it follows that to deduct it in the year when it falls to be met is consistent with the reason for deducting it and conforms with business principles." The primary judge rejected the Commissioner's submission in this respect. He did so because he considered that to allow deductions for concession fees in the year that they fall due for payment could potentially distort Transurban's operations on revenue account77. With respect, this conclusion was not correct. Payment of the concession fees was intended to be met out of later revenues rather than any revenues during the income years. It is therefore clear that distortion could arise if the outgoings are referable to years in which the liability is incurred. Such distortions may be readily avoided by adopting the "reflex principle" which this Court explained in Carden's Case78. According to that principle, only so much of the loss or outgoing is reasonably referable to the income year in question as is calculated to give a substantially correct reflex of Transurban's true income position, each year over the life of the Project. In Carden's Case79 Dixon J explained this concept in these words: in fact has been pursued must depend upon "In the present case we are concerned with rival methods of accounting directed to the same purpose, namely, the purpose of ascertaining the true income. Unless in the statute itself some definite direction is discoverable, I think that the admissibility of the method which its actual appropriateness. In other words, the inquiry should be whether in the circumstances of the case it is calculated to give a substantially correct reflex of the taxpayer's true income … Speaking generally, in the assessment of income the object is to discover what gains have during the period of account come home to the taxpayer in a realized or immediately realizable form." 77 (2004) 135 FCR 356 at 380 [82]. 78 Commissioner of Taxes (SA) v Executor Trustee and Agency Co of South Australia Ltd (1938) 63 CLR 108. 79 (1938) 63 CLR 108 at 154-155. Kirby Conclusion: no correct reflex: A correct reflex of Transurban's income was obliged to take into account the following facts: (1) No amount would be derived through the operation of the Project until some time after the income years; The Concession Notes were not interest-bearing. The true cost to Transurban was thus far less than the face value of the Concession Notes. In fact, that cost decreased the longer the period of time for which they were to be held before being presented for payment. The Project documents forecast that the payment of Concession Notes would not be a demand on revenues in the income years because it would be many years before the preconditions for presentation of the Concession Notes would probably be satisfied; By contrast, the value of the benefits enjoyed by Transurban, from the grant of the Concession, was projected to increase in later years; and The expected source of funds for payment of the concession fees was the returns enjoyed by Transurban in the later years of the Project. The anomaly of this result was recognised, and called to attention, by the primary judge. Obviously, it is a result having a considerable potential for tax avoidance. The primary judge was right to perceive the anomaly. He should have given effect to his intuition. As I have shown, it is supported by the authority of this Court. A straight line apportionment was the approach taken by this Court in Coles Myer for allocating the discount on the accommodation bills and notes in issue there in each income year. If this approach is followed, no deductions would be allowable to Transurban in any of the income years because the trial judge held that the net present value of the concession fees, in those years, was nil, or negligible. In the trial, the Finance Director of Transurban, Mr Phillips, gave evidence that, if the concession fees were only deductible when payable (that is, when the Concession Notes were redeemed), their net present value was "nil"80. It was on the basis of that evidence that the primary judge concluded, correctly in my view, that from an accounting and economic point of view, the present value (rather than the nominal value) of the concession fees was the relevant value. It follows that the primary judge was correct to conclude that the present value of the concession fees payable in the income years was "nil or 80 Trial transcript before Merkel J, 3 October 2002 at 88. 81 (2004) 135 FCR 356 at 381 [84], 399 [150]. Kirby Outcome and orders My conclusion is that the concession fees, on the assumption that they were incurred in the income years and were properly referable to those years, were not deductible because they were capital in nature. If, however, the concession fees were to be classified as an outgoing on revenue account they were not deductible because, on the evidence, they were not outgoings "incurred" in the income years. Any future obligation was neither satisfied in, nor properly referable to, those years. On this basis, the conditions for deductibility stated in the applicable income tax legislation for the income years were not established. The Commissioner was therefore right to disallow the claims. The Full Court erred in upholding Transurban's objections to the Commissioner's assessments. To give effect to these conclusions the following orders should be made. The appeal should be allowed with costs. The judgment of the Full Court of the Federal Court of Australia should be set aside. In place of that judgment, this Court should order that the appeal to the Full Court be dismissed with costs. Callinan CALLINAN J. I agree with Crennan J. HEYDON J. I agree with Crennan J. Crennan CRENNAN J. Citylink Melbourne Limited (formerly Transurban City Link Limited) ("the respondent") is the concessionaire of the State of Victoria ("the State") pursuant to a concession agreement in respect of a major infrastructure project. The main issue in this appeal is whether concession fees paid by the respondent pursuant to that concession agreement are allowable deductions at their full face value under s 51 of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"), applicable to the 1996 and 1997 years of income, and s 8-1 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"), applicable to the 1998 year of income (together "the sections"). Concession agreements are familiar in circumstances where a government, seeking to minimise public sector debt, retains private sector interests to build new infrastructure82. Charters or concessions to private sector interests, for the building and operating of infrastructure such as canals or railways, were common in nineteenth century Britain, as were municipal charters or franchises for similar purposes in the United States of America83. In Vinter, Project Finance84, it is said: "In the context of project finance, [a concession] is usually granted by a governmental or quasi-governmental authority. The concession is the cornerstone of the 'BOT' ('build, operate, transfer') project finance model. In this model, a concession is granted to a concession holder who is required to build the relevant project facilities or piece of infrastructure, operate them or it for a fixed period and, at the end of such period, transfer them (or it) back to the person who originally granted the concession." In broad terms, the common features of such commercial arrangements are: (i) the shared risks of a large project are allocated to the parties best able to incur the least cost in managing such risks85, and (ii) consideration or priority is given to the repayment of lenders and to ensuring an adequate return to investors 82 Gómez-Ibáñez, Regulating Infrastructure: Monopoly, Contracts, and Discretion, (2003) at 12 and 85-88; and also Grimsey and Lewis (eds), The Economics of Public Private Partnerships, (2005). 83 Linder, "Coming to Terms With the Public-Private Partnership", in Grimsey and Lewis (eds), The Economics of Public Private Partnerships, (2005) 75 at 85; and also Grimsey and Lewis, Public Private Partnerships: The Worldwide Revolution in Infrastructure Provision and Project Finance, (2004). 84 3rd ed (2006) at 85. 85 Victoria, Legislative Council, Parliamentary Debates (Hansard), 28 November Crennan before any concession period expires86. The fiscal consequences of certain aspects of such commercial arrangements are the subject matter of this appeal. The facts The Melbourne City Link Project ("the Project") was a major infrastructure project. The State contracted with the respondent to design, construct and maintain a major system of roads ("the Link") which was to be operated using tolls. The respondent's tasks were to be undertaken during a period when the State conceded to the respondent the right to do all that was necessary to complete those tasks, with a view to ultimate transfer to the State of the completed infrastructure, and all other rights (including relevant intellectual property rights), at the expiry of the concession period. At the point of "surrender back"87, the State will resume its right to operate the roads system, by tolling if it wishes. After a competitive bidding process in 1995, the respondent, as part of the successful consortium, and the State entered into a suite of contracts ("the Project Documents") governing the Project, some of which are discussed in more detail in the judgment at first instance88. The Melbourne City Link Authority Act 1994 (Vic) and the Melbourne City Link Act 1995 (Vic) ratified relevant Project Documents. Thus the document central to this appeal, the Concession Deed, took effect as if enacted as law89. The legislation also empowered the State to contribute Crown land for the purposes of the Project, with the necessary planning approvals, and permitted the respondent to construct and maintain the infrastructure, and to impose tolls upon the users of the infrastructure90. The respondent (together with Perpetual Trustee Company Limited, the trustee of the Transurban City Link Unit Trust ("the Trustee")) was the special purpose corporate vehicle for the Project. The respondent, the Trustee, the State and City Link Management Limited (the manager of the Trust) signed the 86 Vinter, Project Finance, 3rd ed (2006) at 86. 87 Victoria, Legislative Council, Parliamentary Debates (Hansard), 28 November 88 Transurban City Link Ltd v Commissioner of Taxation (2004) 135 FCR 356 at 89 Section 14(1) of the Melbourne City Link Act 1995 (Vic). 90 Sections 1 and 4 of the Melbourne City Link Act 1995 (Vic). Crennan Concession Deed on 20 October 1995. Between that date and 28 June 2002 there were 17 further deeds amending the Concession Deed91. As consideration for the rights conferred through the Concession Deed the respondent was required to pay concession fees to the State "from the date of the commencement of the Concession Period until the end of the twenty-fifth year after the date which [was] 6 months earlier than the Link Expected Completion Date"92. The base concession fee of $95.6m was payable semi-annually in arrears in June and December. The Link was first opened to traffic on 15 August 1999, with tolling commencing on 3 January 2000. The Commissioner of Taxation ("the Commissioner") appeals from a unanimous decision of the Full Court of the Federal Court of Australia93 allowing an appeal by the respondent from the decision at first instance94. The trial judge dismissed an appeal from the Commissioner's disallowance of deductions claimed in respect of the concession fees. The respondent claimed concession fees paid by it as deductions in the financial years ending 30 June 1996, 1997 and 1998. These were amounts of $31.25m (said to have been incurred in the 1996 year of income) and $95.6m (said to have been incurred in each of the 1997 and 1998 years of income). The applicable legislation Section 51(1) of the 1936 Act (applicable to the income years ending 30 June 1996 and 1997) provides that: "All losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income, shall be allowable deductions except to the extent to which they are losses or outgoings of capital, or of a capital, private or domestic nature, or are incurred in relation to the gaining or production of exempt income." 91 (2004) 135 FCR 356 at 361 [11]. 92 Clause 3.1(a)(i) of the Concession Deed. 93 City Link Melbourne Ltd v Commissioner of Taxation (2004) 141 FCR 69 (Hill, Stone and Allsop JJ). 94 (2004) 135 FCR 356 (Merkel J). Crennan Section 8-1 of the 1997 Act (applicable to the income year ended 30 June 1998) provides that: "(1) You can deduct from your assessable income any loss or outgoing to the extent that: it is incurred in gaining or producing your assessable income; or it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. (2) However, you cannot deduct a loss or outgoing under this section to the extent that: it is a loss or outgoing of capital, or of a capital nature; or it is a loss or outgoing of a private or domestic nature …" As the Full Court observed, the difference between the sections is not material95. The same observation may be made about s 51(1) and its predecessor96. In New Zealand Flax Investments Ltd v Federal Commissioner of Taxation97 Dixon J noted that the words of the income tax legislation give rise to particular difficulties when a transaction takes more than a year to complete, because it is the words of the section (which may not apply comfortably to certain economic or commercial practices), rather than general principles, which contain the test for deductibility98. The infinite variety99 of factual situations which have fallen to be considered since New Zealand Flax100 have led to continuing elucidation of the test for deductibility and how it applies to different facts. 95 (2004) 141 FCR 69 at 71 [2]. 96 Section 23(1)(a) of the Income Tax Assessment Act 1922 (Cth). 97 (1938) 61 CLR 179. 98 (1938) 61 CLR 179 at 199 and 206-207. See also Federal Commissioner of Taxation v Orica Ltd (1998) 194 CLR 500 at 555 [157] per Callinan J. 99 Handley v Federal Commissioner of Taxation (1981) 148 CLR 182 at 195 per 100 (1938) 61 CLR 179. Crennan In dealing with the positive limb of the test for deductibility, it is necessary to ask whether the concession fees were outgoings incurred in, and referable to, the relevant years of income. In dealing with the negative limb of the test, it is necessary to ask whether the concession fees are an expense on capital account having regard to the advantage they secure. In summary, the Commissioner contended that the Full Court erred in holding that the concession fees represented outgoings which had been incurred in gaining or producing the taxpayer's assessable income in the respective years of income. Alternatively, it was contended the Full Court should have held that if the concession fees were incurred in each of the years of income, they were incurred only to an extent to be ascertained by straight line apportionment over the concession period. In the further alternative, it was contended that the net present value of the liability to pay the concession fees should be used to calculate allowable deductions. The Commissioner applied for leave to amend the grounds of appeal to raise this point. This was opposed, particularly as the Commissioner had not raised the point at trial (or in the Full Court) and, accordingly, there was no evidence of the full implications of adopting that accounting practice101. Leave to amend was refused. Present value discounting of outgoings, payable in the future, is currently under consideration, together with other methods for assessment and deduction, spread over financial arrangements102. However, the accounting basis used to date in Australian tax law for the purposes of assessment and deductions has been historical cost accounting, rather than economic equivalents103. life of certain the 101 cf Coles Myer Finance Ltd v Federal Commissioner of Taxation (1993) 176 CLR 102 Australia, House of Representatives, Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2006, Exposure Draft, December 2005. 103 Burrill v Commissioner of Taxation (1996) 67 FCR 519 at 524 per Jenkinson, Olney and Sundberg JJ. See also J Rowe & Son Pty Ltd v Federal Commissioner of Taxation (1971) 124 CLR 421 at 448-449 per Menzies J; Federal Commissioner of Taxation v Myer Emporium Ltd (1987) 163 CLR 199 at 216-217 per Mason ACJ, Wilson, Brennan, Deane and Dawson JJ; Federal Commissioner of Taxation v Orica Ltd (1998) 194 CLR 500 at 531-532 [72] per Gaudron, McHugh, Crennan Further, the Commissioner submitted that the Full Court, having held that the relevant outgoings had been incurred, erred in holding that the outgoings were on revenue account and that it should have held that each concession fee was an outgoing of a capital nature. In brief, the respondent contended that each of the concession fees was an outgoing incurred in gaining or producing its assessable income. The basis of this argument was that the respondent was definitively committed to make payment of those concession fees as liability arose, and that they were referable to the relevant years of income. It was submitted that the Commissioner's claim for some apportionment to established jurisprudence in respect of the sections. It was also submitted that in all the circumstances, the concession fees had the indicia of an outgoing on revenue account, rather than an outgoing of a capital nature. in any deduction ran counter The result in this matter is "peculiarly dependent upon the particular facts and circumstances"104 of the concession agreement. Brief reference to certain Project Documents must be made to understand the context and the commercial and legal features105 of the concession fees. The primary determinants for the commercial arrangements for the Project, as embodied in the relevant Project Documents (including the Concession Deed), are the allocation of risk and the provision of finance primarily by loans, to be repaid out of revenues produced by the Project during the period of the concession. The Concession Deed The Concession Deed provided for the grant of certain rights during the concession period which commenced on 4 March 1996 and continued until "the date which is 33 years and 6 months after the Link Expected Completion Date" ("the Expiry Date"). The "Link Expected Completion Date" was 14 July 2000, so the concession period is due to continue until early 2034. While the fees accrued semi-annually, as explained in more detail below, the respondent was able to defer payment until some time before this date in 2034. However, the concession period could be ended earlier than the stated Expiry Date, or be extended, pursuant to cl 1 of the Concession Deed. 104 Cliffs International Inc v Federal Commissioner of Taxation (1979) 142 CLR 140 at 148 per Barwick CJ. 105 Coles Myer Finance Ltd v Federal Commissioner of Taxation (1993) 176 CLR 640 at 660-661 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ and 672-673 Crennan Clause 2.8(a) of the Concession Deed specified the rights granted by the State to the respondent as the rights to: design; construct; (iii) Commission; operate; impose and collect a toll for the use of Vehicles (within the meaning of the Toll Calculation Schedule) on; (vi) maintain and repair; and (vii) raise revenues from other lawful uses of the Link approved by the State under clause 9.4(c) and (d) in respect of, the Link until the end of the Concession Period, subject to and upon the terms of this Deed." Clause 3.1(a)(i) of the Concession Deed provided: "The [respondent] shall (provided the Concession Period then continues), in consideration of the State granting the concession rights set out in clause 2.8, pay to the State in the period from the date of the commencement of the Concession Period until the end of the twenty-fifth year after the date which is 6 months earlier than the Link Expected Completion Date an annual concession fee of $95,600,000, payable in equal instalments semi-annually in arrears, on the last Business Day of each June and December in that period and on the date of termination of this Deed (should termination occur in that period) with each such payment being adjusted on a pro rata basis for any period of less than 6 months." Clauses 3.1(a)(ii) and (iii) are expressed in similar terms to cl 3.1(a)(i) and provided for fees payable in equal instalments semi-annually in arrears of $45.2m per annum for years 26 to 34 of the scheduled operations, and of $1m per annum from the 35th year of the scheduled operations, if extended to this time. Under the Concession Deed, only the respondent had the right to impose tolls upon the roads built as a part of the Project. No tolling of the Project roads occurred during the 1996, 1997 and 1998 years of income, as their construction was still in progress. Nonetheless, the concession fees were payable by the Crennan respondent to the State during both the construction and the operation phases of the concession period. If the deductions claimed are allowed, they will reduce to nil the respondent's taxable income under assessment for the relevant years of income106. The concession fee arrangements refer to a base concession fee determined by a "Base Case Financial Model", formulated in respect of projected traffic flows and tolling, as well as referring to the potential for a higher rate of return to the State by way of additional concession fees if the assumed projections are exceeded107. Under the Concession Deed, the respondent might, at its option, satisfy the obligation to pay the base concession fees by issuing to the State "Concession Notes"108. All outstanding Concession Notes are redeemable by the State within the concession period. Concession Notes can be factored, and are transferable. They do not bear interest and are not supported by letters of credit. The respondent issued Concession Notes to the State for the base concession fees payable for the years of income ended 30 June 1996, 1997 and 1998. In the Base Case Financial Model it was anticipated, or assumed, that the State would commence redemption of the Concession Notes in the year 2013, and that this would continue until the end of the concession period. Part 3 of each Concession Note provided that certain conditions precedent must be met before presentation of the Concession Note for payment. These were: the Equity Return (determined as at a date not earlier than 4 months before presentation of this Concession Note and as if the Concession Period ended on that date) must be 10% per annum or more; and the payment of the Payment Amount under this Concession Note must not result in the aggregate of the amounts paid by the [respondent] under the Concession Notes, and of the amount payable under this Concession Note, presented in the financial year 106 (2004) 135 FCR 356 at 360 [5] per Merkel J. 107 Clause 3.1(d) of the Concession Deed. 108 As defined in cl 1.1 of the Concession Deed, as amended by a later Deed amending the Concession Deed dated 20 February 1996, in cl 3.1 and dealt with in cl 18.5 of the Master Security Deed. Crennan in which this Concession Note is presented, exceeding 30% of the Distributable Cashflow for the preceding financial year." Part 4 of each Concession Note provided that for so long as Project Debt was owing any payment to be made under the Concession Note was "owing" but "shall not be due for payment". In addition to the concession fees, the respondent was also obliged to pay rent to the State for the use of the relevant land upon which the roads and infrastructure were to be built109. Further, certain other amounts were payable to the State by the respondent, where the State incurred costs; these were included, as explained shortly, as a part of defined "State's Priority Obligations". The Master Security Deed It was agreed that the terms of the Concession Deed prevailed over all other Project Documents, except the Master Security Deed. The Master Security Deed was signed ten days after the Concession Deed on 30 October 1995 by the State, the respondent, the Trustee, the agent of the lenders to the Project (Australia and New Zealand Banking Group Limited), and the Security Trustee (ANZ Capel Court Limited). The Master Security Deed operated so that the order of priority of payments as between the lenders and the State was as follows: first, obligations defined as the "State's Priority Obligations" were to be met; then the lenders' "Project Debt" (defined in the Concession Deed so as to encompass money owed under the lending documents); followed by the other amounts owed to the State which included the concession fees and Concession Notes; and then finally any other securities. The amended form of cl 1.9 of the Master Security Deed stated: "For so long as any Project Debt is owing and notwithstanding the express terms of any Project Document to the contrary, any payment to be made by the [respondent] or the Trustee to the State under, or for breach of, any Project Document (other than payment of the State's Priority Amount) (the 'State Payment Amount') shall be owing to the State but shall not be due for payment until sufficient money is available for withdrawal from the Distributions Account (as defined in the Security Trust Deed) to meet that payment in full and each of the [respondent] and the Trustee undertakes not to apply any amounts held in the Distributions Account maintained in 109 See cl 3.1(b) of the Concession Deed; however, the rent was set at an amount which would not provide a normal economic return for the use of that property. Crennan its name for any purpose other than payment of that State Payment Amount until the balance of the Distributions Account maintained in its name equals or exceeds that State Payment Amount to the extent that it is not in dispute and all or part of the balance has been applied by it to pay that State Payment Amount in full to the extent that it is not in dispute." It can be noted that this provision is reflected in Part 4 of each of the Concession Notes as described above. The Security Trust Deed The Security Trust Deed established a number of accounts, including the special purpose Distributions Account referred to in cl 1.9 of the Master Security Deed, from which the entitlements of the State and the equity holders were to be paid110. The Security Trust Deed operated so that all the revenues of the Project were channelled through this framework of accounts, which was effectively controlled by the agent for the lenders. Clause 1.9 of the Master Security Deed had the effect that payments from the relevant Distributions Account could be made to the State only when the Project Debt owing to the lenders had been satisfied, and when there was sufficient money available to meet the payment of a Concession Note in full. The respondent's ability to issue Concession Notes subordinated the payment of the concession fees to Project Debt owed to the lenders. This gave effect to the priorities dictated by the Project's commercial lending arrangements. The system of accounts described above, referred to in the hearing as "the waterfall of accounts", ensured conformity between the parties' contractual obligations and the subordination arrangements. Further details of the Project are contained in the reasons of the trial judge111 and in the reasons of the Full Court of the Federal Court112. 110 Clause 15 of the Security Trust Deed, referring to the "Borrower's Distributions Account" and the "Guarantor's Distributions Account", each encompassed by the definition of "Distributions Account" in cl 1.1. 111 (2004) 135 FCR 356 at 361ff. 112 (2004) 141 FCR 69 at 71ff. Crennan The decisions below The trial judge determined that the respondent had incurred an outgoing in respect of the concession fees in the years of income because the liability in each of those years of income arose unconditionally under cl 3.1 of the Concession Deed and was satisfied when the respondent elected to issue Concession Notes giving rise to a present liability to pay the amounts in the future113. His Honour also found that the fees were referable to the period in respect of which the liability for the fees was incurred. However, his Honour went on to find that the concession fees were outgoings of a capital nature rather than on revenue account114. The Full Court agreed with the trial judge's findings that the respondent had incurred an outgoing, namely the concession fees, in the years of income and that they were referable to those years115. However, the Full Court went on to find that the concession fees were payable for the right to conduct the business operations of the respondent in respect of the Project during the concession period116. The Full Court then concluded that the concession fees were characterised properly as an outgoing on revenue account rather than as an outgoing of a capital nature117. In my opinion, the Full Court was correct in the conclusions reached and in the orders which it made. The commercial arrangements embodied the relevant Project Documents are that the respondent encountered a liability for, and was definitely committed to, the payment of each concession fee as it became due, in each of the years of income. The terms concerning the time at which those liabilities are to be discharged do not affect the respondent's liability for concession fees in the years of income, nor do they render that liability, in any realistic or practical sense, contingent or uncertain. The subordination of the respondent's debt and the conditions precedent to commencement of the discharge of that debt were driven by the State's desire to have publicly accessible infrastructure for the Victorian community, without incurring new public sector debt, and not by any desire of the respondent's to avoid or postpone its liability to taxation. Each of the questions raised needs to be considered in more detail. 113 (2004) 135 FCR 356 at 378 [75]. 114 (2004) 135 FCR 356 at 408 [190]. 115 (2004) 141 FCR 69 at 81 [31] and 82 [37]. 116 (2004) 141 FCR 69 at 85 [50]. 117 (2004) 141 FCR 69 at 92-93 [70]. Crennan Were the concession fees incurred in the years of income? New Zealand Flax118 concerned the deductibility of interest payments payable in the future. In considering the test for deductibility, Dixon J said119: "To come within [the] provision there must be a loss or outgoing actually incurred. 'Incurred' does not mean only defrayed, discharged, or borne, but rather it includes encountered, run into, or fallen upon. It is unsafe to attempt exhaustive definitions of a conception intended to have such a various or multifarious application. But it does not include a loss or expenditure which is no more than impending, threatened, or expected." It has long been recognised that an outgoing may be "incurred", but not "discharged"120, in the relevant year of income. In Federal Commissioner of Taxation v James Flood Pty Ltd121 Dixon CJ, Webb, Fullagar, Kitto and Taylor JJ considered commercial and accounting practice and the test for deductibility and said of s 51(1)122: "The word 'outgoing' might suggest that there must be an actual disbursement. But partly because such an interpretation would produce very strange and anomalous results, and partly because of the use of the word 'incurred', the provision has been interpreted to cover outgoings to which the taxpayer is definitively committed in the year of income although there has been no actual disbursement." (emphasis added) The Court went on to say "outgoings" could only have been "incurred" if "in the course of gaining or producing the assessable income or carrying on the business, the taxpayer has completely subjected himself to them"123. 118 (1938) 61 CLR 179. 119 (1938) 61 CLR 179 at 207. 120 Federal Commissioner of Taxation v James Flood Pty Ltd (1953) 88 CLR 492 at 506-507; Coles Myer Finance Ltd v Federal Commissioner of Taxation (1993) 176 CLR 640. 121 (1953) 88 CLR 492. 122 (1953) 88 CLR 492 at 506. 123 (1953) 88 CLR 492 at 506 (emphasis added). Crennan In Nilsen Development Laboratories Pty Ltd v Federal Commissioner of Taxation124, Barwick CJ said a liability could only be treated as having been "incurred" within the meaning of s 51(1) if it had "'come home' in the year of income"125, yet his Honour recognised that a liability could be qualified as a deduction if it falls due in the year of income, but may be paid later126. In Coles Myer Finance Ltd v Federal Commissioner of Taxation127 Deane J, agreeing with the majority128, stated129: "[T]he weight of authority supports the conclusion that, depending upon the circumstances, a liability to pay money can constitute, or give rise to, a 'loss or outgoing' which is 'incurred' within the meaning of that sub- section notwithstanding that the money is not payable until a future time and that the obligation to pay it is theoretically defeasible or contingent in that it is subject to a condition which remains unfulfilled." (footnotes omitted) Deane J considered that the critical question was whether the taxpayer was, as a practical matter, definitively committed or completely subjected to discharge of the liability in the future130. His Honour recognised that on some facts it would be apparent that a condition giving rise to a theoretical contingency could be treated, for practical purposes, as certain to be satisfied131. A Full Court of the Federal Court in Federal Commissioner of Taxation v Australian Guarantee Corporation Ltd132 held that a liability in respect of interest on debentures to be paid (or credited) on maturity or earlier redemption was incurred in the year of income in which the taxpayer subjected itself to the 124 (1981) 144 CLR 616. 125 (1981) 144 CLR 616 at 623. 126 (1981) 144 CLR 616 at 624. 127 (1993) 176 CLR 640. 128 Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ. 129 (1993) 176 CLR 640 at 670. 130 (1993) 176 CLR 640 at 670-671. 131 (1993) 176 CLR 640 at 671-672. 132 (1984) 2 FCR 483. Crennan liability to pay the interest, although actual payment was to occur at some uncertain time in the future. It was against these examples of the application of the test for deductibility, and such propositions of general application as can be derived from those authorities, that the deductibility of the concession fees fell to be assessed. Hill J essayed a synthesis of these authorities in Ogilvy and Mather Pty Ltd v Federal Commissioner of Taxation133, which was relied upon by the Full Court below134. The synthesis demonstrated that accruals based tax accounting and the jurisprudence in respect of the test for deductibility could not always be reconciled with a commercial or accounting approach. The Commissioner submitted that the concession fees were not incurred within the meaning of the sections, because payment was not possible until cl 1.9 of the Master Security Deed and the conditions in Parts 3 and 4 of the Concession Notes were satisfied, none of which conditions had in fact been satisfied in the relevant years of income. The Commissioner submitted that the effect of Part 3 of the Concession Notes and cl 1.9 of the Master Security Deed (reflected in Part 4 of the Concession Notes) is to render the liability of the respondent to the State contingent. It was argued that the practical effect of both sets of conditions was that the State's entitlement to demand payment depended on traffic levels, revenue and available cash flow. It was conceded that the concession fees were intended and meant to be paid, but it was argued that the conditions imposed on payment took the concession fees outside the scope of the sections because any loss or outgoing could at best only be "impending, threatened, or expected"135 and that liability for concession fees had not "come home"136 in the years of income. The respondent characterised the terms of cl 1.9 of the Master Security Deed as subordinating the payment of the concession fees to the payment of the Project Debt owed to the lenders. The respondent identified the essential terms as providing that for so long as any Project Debt is owing any payment to be made by the respondent or the Trustee to the State shall be owing to the State, but shall not be due for payment until the relevant criterion is satisfied. It was 133 (1990) 95 ALR 663 at 700-701. 134 (2004) 141 FCR 69 at 79-80 [28]. 135 New Zealand Flax (1938) 61 CLR 179 at 207 per Dixon J. 136 Nilsen Development Laboratories Pty Ltd v Federal Commissioner of Taxation (1981) 144 CLR 616 at 623. Crennan submitted that this clause expressly confirms the existence of a liability which shall be owing, but that it alters the sequence in which payments would be made. The respondent contended that its promise to pay the State in accordance with the sequence of subordination, and to discharge preferentially liabilities to secured creditors, did not interfere with or diminish the certainty of its commitment to pay the concession fees. Whilst there were no funds representing reserves allowing for future payment of concession fees, the accounts of the respondent refer to: "k) Non Interest Bearing Long Term Debt Non interest bearing long term debt represented by the Concession Notes has been included in the financial statements at the present value of expected future repayments. The present value of expected future repayments is determined using a discount rate applicable to the [respondent's] other borrowing arrangements. The present value of expected future repayments will be reassessed periodically." The financial statements of the respondent also contain a section headed "Non-Current Liabilities" which is broken down to include "Borrowings − Non Current". An entry for "Concession fee[s]" is also recorded, as well as an entry accounting for the "Revaluation of Concession Note[s]". In confirming the approach of the trial judge, the Full Court found that the respondent had completely subjected and definitively committed itself to paying the amount of the concession fees which accrued in each of the relevant years of income, and that the condition in cl 1.9 of the Master Security Deed that there be adequate funds in the Distributions Account did not lead to the conclusion that the liability to pay was not "incurred" within the meaning of the sections137. The Full Court went on to find that, in any event, the Concession Notes operated to satisfy the respondent's liability under the concession fees in the relevant years of income since the State could sue on the notes themselves138. The conclusion will be reached here that the concession fees were incurred in the years of income. On a semi-annual basis, the respondent was subjected to a contractual liability to pay the concession fees. The liability arose as and when each concession fee became due. That is when the outgoing was encountered or run into139. These facts exemplify a situation where a liability is 137 (2004) 141 FCR 69 at 81 [31]. 138 (2004) 141 FCR 69 at 81 [32]. 139 New Zealand Flax (1938) 61 CLR 179 at 207 per Dixon J. Crennan from those "incurred" in the year of income but not "discharged" in that same year140. The circumstances are distinguishable in Nilsen Development Laboratories Pty Ltd v Federal Commissioner of Taxation141 and Emu Bay Railway Co Ltd v Federal Commissioner of Taxation142. In Emu Bay interest on debenture stock was only payable, in respect of any year, if a certain amount of net income was achieved. No debt or liability could arise in years when no net income was earned. Accordingly, no liability to make any outgoing had come into existence143 in the relevant year of income. Clause 1.9 of the Master Security Deed is directed at conditions precedent to the timing of the discharge of the liability, not to the coming into existence of the liability. Here the liability comes into existence in the year of income. The deferral of the time for its discharge cannot alter this conclusion, nor can the length of time of the An agreement, as here, between secured creditors to subordinate the rights of one to the other, does not alter the purposive character of a debt145, nor does it render the liability, in respect of the debt, a liability which is merely impending, threatened, or expected146. The Concession Notes are a mechanism which satisfies the liability, but the liability is a contractual obligation irrespective of that mechanism. The respondent's obligation to discharge the debt is not conditional on the commercial operating risks of the Project. Those risks do no more than affect the date on which the discharge of the liability begins and the speed with which it is discharged. The Concession Notes had to be paid no later than a certain date, namely 33 years and 6 months after July 2000147. They may be paid earlier if 140 Federal Commissioner of Taxation v James Flood Pty Ltd (1953) 88 CLR 492 at 506-507; Coles Myer Finance Ltd v Federal Commissioner of Taxation (1993) 176 CLR 640. 141 (1981) 144 CLR 616. 142 (1944) 71 CLR 596. 143 (1944) 71 CLR 596 at 606 per Latham CJ. 144 Federal Commissioner of Taxation v Australian Guarantee Corporation Ltd (1984) 2 FCR 483. 145 Federal Commissioner of Taxation v The Midland Railway Co of Western Australia Ltd (1952) 85 CLR 306 at 318 per Dixon J. 146 New Zealand Flax (1938) 61 CLR 179 at 207 per Dixon J. 147 See Part 3(a) of the Concession Notes. Crennan certain conditions are satisfied. If the last possible date for payment was extended, there would still be an equally certain date for payment. A liability can be encountered in the year of income without the taxpayer knowing the precise date for satisfaction of the liability148. The only sense in which it could be said the liability on the Concession Notes is contingent is in the abstract sense that all events in the future are conditional or contingent149. In the relevant years of income, the respondent was definitively committed and had completely subjected itself to the losses or outgoings which the concession fees represent. A condition affecting the timing of the discharge of a liability (but not the creation of the liability) does not render the liability contingent in any business or commercial sense150. Were the concession fees referable to the years of income? In a joint judgment in Coles Myer151, it is stated: "But it is not enough to establish the existence of a loss or outgoing actually incurred. It must be a loss or outgoing of a revenue character and it must be properly referable to the year of income in question." (footnote omitted) The Commissioner submitted that the concession fees represented a future expense of the respondent's business operations because their payment fell to be met out of future assessable income. It was urged that the approach was consistent with observations made by Dixon J in Commissioner of Taxation (NSW) v Ash152 to the effect that it conforms to business principles to match expenses and revenue. The Commissioner also contended that only so much of the concession fees should be referable to the relevant years of income as is 148 Federal Commissioner of Taxation v Australian Guarantee Corporation Ltd (1984) 2 FCR 483. 149 Commonwealth Aluminium Corporation Ltd v Federal Commissioner of Taxation (1977) 32 FLR 210 at 224 per Newton J. 150 Federal Commissioner of Taxation v Australian Guarantee Corporation Ltd (1984) 2 FCR 483. 151 (1993) 176 CLR 640 at 663 per Mason CJ, Brennan, Dawson, Toohey and 152 (1938) 61 CLR 263 at 282. Crennan calculated to give a substantially "correct reflex"153 of the respondent's income. The respondent submitted that the criterion of referability is the advantage secured by the liability in question, not the source of funds from which the liability will be discharged. At trial and before the Full Court, it was found that the concession fees were the consideration for the respondent's entitlement to establish and operate the roads system. It was this entitlement which enabled the respondent to derive its assessable income during the relevant income years. Accordingly, there was no connection between each of the concession fees and the income expected to be derived in later years154. Clause 3.1 of the Concession Deed stipulates that each concession fee is an annual liability payable semi-annually. For periods less than six months, the amount of the fee is adjusted pro rata. The amount of the liability for concession fees corresponds precisely to the period to which a concession fee relates. Furthermore, while the concession fees represent a base fee, the additional concession fees155 were calculated on the basis of additional revenue which was generated within the particular period. These particular aspects of the concession fee arrangements make it clear that the advantages or gains referable to each concession fee "come home"156 in the relevant income years. In any event, the legislation does not require that the purposes of an outgoing be the gaining or production of income in the year in which the outgoing is claimed as a deduction157. Concession agreements are sufficiently 153 Commissioner of Taxes (SA) v Executor Trustee and Agency Co of South Australia Ltd (1938) 63 CLR 108 at 154 per Dixon J. 154 (2004) 135 FCR 356 at 380 [81]; (2004) 141 FCR 69 at 82 [37]. 155 Provided for in cl 3.1(d) of the Concession Deed. 156 Nilsen Development Laboratories Pty Ltd v Federal Commissioner of Taxation (1981) 144 CLR 616 at 623 per Barwick CJ. 157 Amalgamated Zinc (De Bavay's) Ltd v Federal Commissioner of Taxation (1935) 54 CLR 295 at 303 per Latham CJ, 306-307 per Starke J and 309 per Dixon J; Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation (1949) 78 CLR 47 at 57 per Latham CJ, Rich, Dixon, McTiernan and Webb JJ; Commissioner of Taxation v Finn (1961) 106 CLR 60 at 68 per Dixon CJ; Federal Commissioner of Taxation v Smith (1981) 147 CLR 578 at 585 per Gibbs CJ, Stephen, Mason and Wilson JJ. Crennan familiar not to require exploration by analogy. They are essentially licence agreements to use capital assets for the limited period of the concession. Here the capital assets of the Link are to be "surrendered" by the respondent to the State at the expiry of the concession period158. Apportionment The Commissioner's alternative submission was that if the concession fee is incurred every year, the nominal amount of each concession fee should be spread over, or attributed to, the income years from the date when each fee was incurred until the date upon which it would fall due for payment. The Commissioner accepted that, in general, deductions ought to be allowable at the face value of the loss or outgoing rather than at the discounted present value159. However, in reliance on Coles Myer160, it was contended that the principle to be generally applied is not inconsistent with apportioning the face amount of an outgoing which is incurred over a number of years. The facts here are distinguishable from Coles Myer161, which concerned outgoings referable to an advantage spread over two years. The semi-annual liability for concession fees here does not secure the respondent's rights under the Concession Deed for future years. Each concession fee, like any periodic licence fee, is payable for its period. Other concession fees become due in each successive year. Accordingly, straight line apportionment is not an appropriate accounting basis for calculating the deductibility of the concession fees. Were the concession fees on capital account having regard to the advantage they secured? The starting point is the statement of Dixon J in Sun Newspapers Ltd and Associated Newspapers Ltd v Federal Commissioner of Taxation162: 158 Australia, House of Representatives, Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2006, Exposure Draft, December 2005; and cl 3.4 of the Concession Deed. 159 Armco (Australia) Pty Ltd v Federal Commissioner of Taxation (1948) 76 CLR 584 at 618 per Dixon J. 160 (1993) 176 CLR 640 at 661, 663 and 665-666 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ and 673 per Deane J. 161 (1993) 176 CLR 640. 162 (1938) 61 CLR 337 at 363. Crennan "There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment." The characterisation of an outgoing depends on what it "is calculated to effect", to be judged from "a practical and business point of view"163. The character of the advantage sought by the making of the expenditure is critical164. The trial judge found that the concession fees were referable to "advantages enuring to capital"165 (in a form other than the provision of financial capital) and "akin to sharing profit"166, with the State as a joint venturer being paid a dividend. As an alternative finding, the trial judge held that the concession fees were of a capital nature because they were properly characterised as outgoings expended "on the structure within which the profits were to be earned", and not outgoings expended in gaining or producing the respondent's assessable income as a "part of the money earning process"167. The trial judge also characterised the concession fee arrangements as analogous to a large lump sum fee payable in instalments, placing an emphasis on the total rights acquired by the respondent to design, construct and establish the roads and toll business168. The Full Court recognised the danger in arguing by analogy169 because the arrangements here are sui generis commercial arrangements specific to 163 Hallstroms Pty Ltd v Federal Commissioner of Taxation (1946) 72 CLR 634 at 648 164 GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation (1990) 170 CLR 124 at 137 per Brennan, Dawson, Toohey, Gaudron and McHugh JJ. 165 (2004) 135 FCR 356 at 405 [175]. 166 (2004) 135 FCR 356 at 407 [182]. 167 (2004) 135 FCR 356 at 389 [112] and 409 [191]. 168 (2004) 135 FCR 356 at 405 [173]. 169 (2004) 141 FCR 69 at 92 [67]. Crennan infrastructure projects. The Full Court also found the concession fees were a periodical and recurrent expense of conducting the respondent's business operations rather than an expense to acquire a profit-making enterprise170. The Commissioner contended that even if the concession fees were incurred in the years of income and were properly referable to those years of income, they were not deductible because they were capital in nature. The concession rights in cl 2.8 of the Concession Deed were characterised by the Commissioner as a bundle of rights necessary to establish a profit-yielding structure. Any analogy with lease payments was rejected. Having regard to the criteria set out by Dixon J in Sun Newspapers171, the respondent submitted that the concession fees do not secure for the respondent any enduring asset in terms of the roads built; rather, the grant of the concession resulted in the acquisition of the right to build, operate and earn a profit from the tolls charged for the use of those roads for the duration of the concession period. The concession fees are only payable during the term of the concession period. The respondent does not acquire permanent ownership rights over the roads or lands used. All rights granted under the Concession Deed revert to the State at the expiry of the concession period172. Unlike periodic instalments paid on the purchase price of a capital asset, the concession fees are periodic licence fees in respect of the Link infrastructure assets, from which the respondent derives its income, but which are ultimately "surrendered back" to the State. Accordingly, they are on revenue account. Conclusion The concession fees satisfy the test for deductibility at their full face value in respect of each of the income years in which they are claimed as deductions. The appeal should be dismissed with costs. 170 (2004) 141 FCR 69 at 93 [70]. 171 (1938) 61 CLR 337 at 363. 172 cf Cliffs International Inc v Federal Commissioner of Taxation (1979) 142 CLR

HIGH COURT OF AUSTRALIA KINGDOM OF SPAIN APPELLANT AND INFRASTRUCTURE SERVICES LUXEMBOURG S.À.R.L. & ANOR RESPONDENTS Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. [2023] HCA 11 Date of Hearing: 9 & 10 November 2022 Date of Judgment: 12 April 2023 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation C S Ward SC with P F Santucci for the appellant (instructed by K&L Gates) B W Walker SC and J A Hogan-Doran SC with C W Brown for the respondents (instructed by Norton Rose Fulbright) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. Public international law – Foreign State immunity – Immunity from jurisdiction – Proceedings for recognition and enforcement of arbitral award – Where respondents obtained arbitral award under Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) ("ICSID Convention") – Where respondents sought to enforce award in Australia under s 35(4) of International Arbitration Act 1974 (Cth) – Where s 9 of Foreign States Immunities Act 1985 (Cth) ("Act") provides that a foreign State is immune from jurisdiction of Australian courts – Where appellant asserted foreign State immunity from jurisdiction – Whether appellant waived foreign State immunity from jurisdiction under s 10 of Act by submitting to jurisdiction by agreement – Whether entry into ICSID Convention and agreement to Arts 53, 54 and 55 constituted waiver of immunity from jurisdiction – Whether "recognition", "enforcement" and "execution" in Arts 53, 54 and 55 of ICSID Convention have separate and different meanings – Whether inconsistency arises between English, French and Spanish texts of ICSID Convention. Words and phrases – "arbitral award", "enforcement", "execution", "exequatur", "explicature", "express", "foreign State immunity", "immunity from jurisdiction", "implicature", principles", "recognition", "treaty interpretation", "waiver of immunity". "international "inference", "implied", law Foreign States Immunities Act 1985 (Cth), ss 9, 10. International Arbitration Act 1974 (Cth), ss 2D, 31, 32, 33, 34, 35, Sch 3. Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965), Arts 53, 54, 55. KIEFEL CJ, GAGELER, GORDON, EDELMAN, STEWARD, GLEESON AND Introduction The respondents, relying on provisions of the Energy Charter Treaty (1994)1, commenced arbitration against the Kingdom of Spain ("Spain") under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) ("the ICSID Convention")2, to which Spain is a party. Chapter IV of the ICSID Convention, entitled "Arbitration", provides in Section 1 for an arbitral tribunal to hear and determine disputes between State parties and nationals of other State parties upon request3. The respondents obtained an arbitral award of €101 million. They brought proceedings in the Federal Court of Australia seeking "to enforce [that] award under section 35(4) of the International Arbitration Act 1974 [(Cth)]" and seeking orders including that Spain pay them €101 million together with interest on that sum. Section 35(4) of that Act provides that, with leave, the Federal Court can enforce an award "as if the award were a judgment or order of that court". The Foreign States Immunities Act 1985 (Cth) provides that a foreign State is immune from the jurisdiction of the courts of Australia, except as provided by that Act4. One circumstance where this immunity does not apply is where the foreign State has submitted to the jurisdiction, including by agreement5. An "agreement" is defined to include a treaty6. The relevant treaty in this case is the ICSID Convention. 2080 UNTS 95, Art 26. 575 UNTS 159. ICSID Convention, Art 36. 4 Foreign States Immunities Act 1985 (Cth), s 9. 5 Foreign States Immunities Act 1985 (Cth), ss 10(1), 10(2). 6 Foreign States Immunities Act 1985 (Cth), s 3. As a party to the ICSID Convention, Spain agreed to the provisions in Ch IV which include, in Section 6, three articles concerning "Recognition and Enforcement of the Award": Arts 53, 54 and 55. Article 53 relevantly provides for the binding nature of the award. Article 54 relevantly provides for recognition of the award by a Contracting State as binding, enforcement of the award within a Contracting State as if it were a final judgment of a court in that State, and execution of the award which is to be governed by the laws of the State concerning execution. And Art 55 relevantly provides that nothing in Art 54 shall be construed as derogating from the law in force in a Contracting State relating to immunity of a foreign State from execution. The primary judge in the Federal Court (Stewart J) held that Spain's agreement to these articles constituted a waiver of its immunity from recognition and enforcement, but not from execution, of the award by the Court7. His Honour made orders against Spain including an order that Spain "pay the applicants €101 [million]". On appeal, the Full Court of the Federal Court of Australia (Allsop CJ, Perram and Moshinsky JJ) held that immunity from a proceeding for recognition had been waived by Spain's entry into the ICSID Convention (and concomitant agreement to Arts 54 and 55), although immunity from court processes of execution, and perhaps also from enforcement, had not8. The Full Court concluded that the orders of the primary judge went too far by "requiring Spain to do something"9. The Full Court made new orders including, in broad terms, an order recognising the award as binding on Spain, as well as that "judgment be entered" against Spain for €101 million, but providing that nothing in that order "shall be 7 Eiser Infrastructure Ltd v Kingdom of Spain (2020) 142 ACSR 616 at 648 [175], 8 Kingdom of Spain v Infrastructure Services Luxembourg Sarl (2021) 284 FCR 319 9 Kingdom of Spain v Infrastructure Services Luxembourg Sarl (2021) 284 FCR 319 at 336 [65]. See also at 322 [1], 324 [10], 345 [118]. construed as derogating from the effect of any law relating to immunity of [Spain] from execution"10. The two issues raised on this appeal by Spain are: (i) whether Spain's agreement to Arts 53-55 of the ICSID Convention involved any waiver of foreign State immunity from the jurisdiction of the courts of Australia (Spain being the subject of a binding ICSID arbitral award); and (ii) if so, whether Spain's amenability to jurisdiction is limited to "bare recognition" of the award, or to "recognition" and "enforcement" of the award, and whether the orders made by the Full Court amounted to enforcement. For the reasons below, given that Spain was the subject of a binding ICSID arbitral award, the effect of Spain's agreement to Arts 53-55 amounted to a waiver of foreign State immunity from the jurisdiction of the courts of Australia to recognise and enforce, but not to execute, the award. The orders made by each of the primary judge and the Full Court are properly characterised as orders for recognition and enforcement. Spain's challenge to the orders of the Full Court should not be accepted. The orders of the Full Court should not be disturbed. This conclusion leaves unaffected any foreign State immunity enjoyed by Spain in relation to execution. Spain's agreement to Arts 53-55 did not amount to a waiver of its immunity from court processes concerning execution. No issue arises in this proceeding concerning the scope of that immunity, including any exceptions to that immunity, such as where the execution relates to commercial property11. The issues raised on this appeal are addressed below as follows. The starting point is to explain the operation in the Foreign States Immunities Act of the concept of foreign State immunity from jurisdiction and the manner in which that immunity can be waived. Then it is necessary to explain the extent to which Spain, as the subject of a binding ICSID arbitral award, waived its foreign State immunity under the Foreign States Immunities Act by entry into the ICSID Convention. The primary issues concerning the extent of Spain's waiver of foreign State immunity are: (i) the background, purpose, and general operation of the ICSID Convention; 10 Kingdom of Spain v Infrastructure Services Luxembourg Sàrl. [No 3] (2021) 392 ALR 443 at 450-451. 11 Foreign States Immunities Act 1985 (Cth), s 32. See also s 33. (ii) the meaning of each of the concepts of recognition, enforcement, and execution in Arts 53-55; and (iii) the extent to which the words of Arts 53-55 of the ICSID Convention constitute "express" agreement by a foreign State party to waive its immunity from the jurisdiction of the courts of Australia. Foreign State immunity from jurisdiction The Explanatory Memorandum to the Bill which became the Foreign States Immunities Act explains that the proposed legislation was "based upon a report and recommendations of the Law Reform Commission ... which involved a thorough review of developments in other countries and at the international level, including the work of the International Law Commission"12. As will be seen, the Australian Law Reform Commission drew from international legal rules and principles governing the existence of foreign State immunity from jurisdiction and the waiver of that immunity. Part II of the Foreign States Immunities Act provides for a general regime of immunity of foreign States from jurisdiction. Section 9 provides that, subject to the Act, "a foreign State is immune from the jurisdiction of the courts of Australia in a proceeding". The term "jurisdiction" is used in this context to describe "the amenability of a defendant to the process of Australian courts" so that Australian courts "will not by their process make the foreign State against its will a party to a legal proceeding"13. The Foreign States Immunities Act contains a further, particular, regime in Pt IV concerning immunity from any process or order of an Australian court in respect of execution over property. This relevantly includes, in s 30, a process or order "for the satisfaction or enforcement of a judgment, order or arbitration award". In the Federal Court, the processes of court relating to execution include 12 Australia, House of Representatives, Foreign States Immunities Bill 1985, Explanatory Memorandum at 2, citing Australian Law Reform Commission, Foreign State Immunity, Report No 24 (1984). See also Australia, House of Representatives, Parliamentary Debates (Hansard), 21 August 1985 at 141. 13 PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 247 CLR 240 at 247 [17]. See also Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 258 CLR 31 at 47-48 [35]. the issue of any writ or warrant of execution for which the Sheriff of the Court is responsible14. Waiver of foreign State immunity from jurisdiction (i) Waiver of general and specific immunities from jurisdiction The general and specific foreign State immunities from jurisdiction do not apply when those immunities have been waived. The provisions for waiver in relation to the general and specific immunities respectively are contained in ss 10(2) and 31(1) of the Foreign States Immunities Act. Section 10(2) provides: "A foreign State may submit to the jurisdiction at any time, whether by agreement or otherwise, but a foreign State shall not be taken to have so submitted by reason only that it is a party to an agreement the proper law of which is the law of Australia." Section 31(1) provides: "A foreign State may at any time by agreement waive the application of section 30 in relation to property, but it shall not be taken to have done so by reason only that it has submitted to the jurisdiction." This appeal concerns whether, pursuant to s 10 of the Foreign States Immunities Act, Spain's entry into the ICSID Convention, and concomitant agreement to Arts 53-55 of that Convention, constituted a waiver of its immunity from Australian court processes concerning recognition and enforcement of a binding ICSID arbitral award (necessarily consequent upon agreement to arbitrate). (ii) Interpreting s 10(2) consistently with international law A "long standing" principle of interpretation is that statutory provisions should be interpreted, so far as possible, to be consistent with international law15. 14 Federal Court of Australia Act 1976 (Cth), s 18P(1). 15 Al-Kateb v Godwin (2004) 219 CLR 562 at 589 [63]. See also Jumbunna Coal Mine, No Liability v Victorian Coal Miners' Association (1908) 6 CLR 309 at 363; Polites This is particularly so where a provision, like s 10 of the Foreign States Immunities Act, seeks to give effect to matters of international law16. In reliance upon international law, Spain submitted that s 10 of the Foreign States Immunities Act only permits an Australian court to recognise a waiver of foreign State immunity from jurisdiction in a treaty if the words of that treaty contain an "express", and not an "implied", waiver. It was said that this requirement reflected a principle of international law that waiver of immunity by treaty must always be express, and that this was recognised by the Report of the Australian Law Reform Commission which was the foundation for the Foreign States Immunities Act. In that report, the Australian Law Reform Commission said that in a treaty17: "[t]he need for clarity and certainty entails that a waiver be express, rather than being ... inferred from such things as the fact that Australian law was chosen, or determined to be, the proper law of the contract". The extent to which this statement should be understood to reject the possibility of any implication of waiver of foreign State immunity from jurisdiction in a treaty is doubtful. Earlier in the same report, the Australian Law Reform Commission seemingly acknowledged the possibility of an implied waiver of immunity, referring to circumstances "in which parties either explicitly or (arguably) impliedly waive foreign state immunity"18. It is necessary, therefore, to consider more closely the international law principle – that waiver of immunity in v The Commonwealth (1945) 70 CLR 60 at 68-69, 77, 80-81; Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 287; Kartinyeri v The Commonwealth (1998) 195 CLR 337 at 384 [97]. 16 Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 258 CLR 31 at 50 17 Australian Law Reform Commission, Foreign State Immunity, Report No 24 (1984) 18 Australian Law Reform Commission, Foreign State Immunity, Report No 24 (1984) an international agreement must be "express" – against which s 10(2) falls to be interpreted. (iii) An international law principle that waiver of immunity in an international agreement must be express As Spain submitted, it has been said that "[t]he rule that waiver of immunity by treaty must always be express is well established in international law"19. That "rule" was enunciated by the International Court of Justice in the Case Concerning Armed Activities on the Territory of the Congo (Democratic Republic of the Congo v Uganda)20. In that case, the International Court of Justice said that "waivers or renunciations of claims or rights must either be [(i)] express or [(ii)] unequivocally implied from the conduct of the State alleged to have waived or renounced its right". There is no doubt concerning the second category to which the International Court of Justice referred. An example is the "universally recognised rule that commencement of proceedings by a foreign state constitutes a waiver of immunity with respect to those proceedings"21. As to the first category, namely where the waiver is constituted by words of a treaty rather than by conduct, the point made by the International Court of Justice is that those words must "express" waiver. A similar requirement for a waiver of immunity in a treaty to be "express" can be seen in numerous treaties of widespread operation. Article 32(2) of the Vienna Convention on Diplomatic Relations (1961)22 provides that a waiver of immunity from jurisdiction of diplomatic agents "must always be express". 19 McLachlan, "Pinochet Revisited" (2002) 51 International and Comparative Law Quarterly 959 at 961, fn 20. [2005] ICJ Rep 168 at 266 [293]. 21 Australian Law Reform Commission, Foreign State Immunity, Report No 24 (1984) at 45 [81]. See also Rothschild v Queen of Portugal (1839) 3 Y & C Ex 594 [160 ER 838]; United Nations Convention on Jurisdictional Immunities of States and Their Property (2004), Art 8(1) (not yet entered into force). 22 500 UNTS 95. Article 2 of the European Convention on State Immunity (1972)23 relevantly provides that a Contracting State cannot claim immunity from the jurisdiction of a court of another Contracting State if it has undertaken to submit to the jurisdiction of that court by "international agreement" or "an express term contained in a contract in writing". In the Explanatory Report to the latter Convention24, the drafters observe that Art 2, as a whole, "concerns cases in which a Contracting State has expressly undertaken to submit to the jurisdiction of a foreign court". This principle of international law was reflected in Lord Millett's and Lord Goff of Chieveley's judgments in R v Bow Street Magistrate; Ex parte Pinochet [No 3]25. In that case, their Lordships considered a provision concerning waiver of immunity by agreement, similarly worded to s 10(2) of the Foreign States Immunities Act26. Lord Goff accepted that a waiver of immunity could occur by implication from conduct outside the terms of a treaty, such as by taking steps in proceedings concerning the merits of the case27. However, Lord Goff said that in the interpretation of a treaty, "consent by a state party to the exercise of jurisdiction against it must ... be express"28. One source relied upon by Lord Goff for this reasoning was the 1991 Report of the International Law Commission which said that customary international law and international usage required waiver of immunity to be "expressed ... in no uncertain terms"29. Similarly, Lord Millett said 23 1495 UNTS 181. 24 Council of Europe, Explanatory Report to the European Convention on State Immunity (1972) at 5 [21]. 26 State Immunity Act 1978 (UK), s 2(2). [2000] 1 AC 147 at 215, citing Oppenheim's International Law, 9th ed (1992), vol 1 at 351-355. Consistently with this, see Crawford, Brownlie's Principles of Public International Law, 9th ed (2019) at 486. [2000] 1 AC 147 at 216. 29 United Nations General Assembly, Report of the International Law Commission on the work of its forty-third session (1991) at 53. that it was not in dispute that "where [State immunity] is waived by treaty or convention the waiver must be express"30. (iv) The meaning of the international law principle that waiver of immunity in a treaty be express There is some ambiguity about what these numerous statements mean by their insistence that a waiver of immunity in a treaty be "express". Part of the difficulty is a lack of clarity in legal discourse generally about what is meant by "express" meaning31. Properly understood, express meaning can include implications, which constitute the unexpressed content of a statement or term and which are identified by inference32. An express term of an agreement involves words that are "openly uttered" either orally or in writing33. The meaning of an express term is derived primarily from the content of the words expressed. It contrasts with an implied term, the meaning of which is derived primarily by inference from the conduct of the parties to the agreement and the circumstances in light of the express terms. There can sometimes be difficulty in distinguishing between the two types of terms, because often the imprecision of language means that inferences are required to understand an express term34. Even the words of the most carefully drafted international instrument are built upon a foundation of presuppositions and necessary implicatures and explicatures. The international authorities that insist upon express waiver of immunity in a treaty should not be understood as denying the ordinary [2000] 1 AC 147 at 268. 31 See Wilmot-Smith, "Express and Implied Terms" (2023) 43 Oxford Journal of Legal Studies 54. 32 Macquarie Dictionary, 7th ed (2017), vol 1 at 762, "implication", sense 1, 2 and especially 3. 33 See Blackstone, Commentaries on the Laws of England (1766), bk 2, ch 30 at 443. 34 Wilmot-Smith, "Express and Implied Terms" (2023) 43 Oxford Journal of Legal Studies 54 at 58-59. See also Wilson and Sperber, Meaning and Relevance (2012) and natural role of implications in elucidating the meaning of the express words of the treaty. The insistence that the waiver be "express" should be understood as requiring only that the expression of waiver be derived from the express words of the international agreement, whether as an express term or as a term implied for reasons including necessity. For instance, Lord Goff's statement in Pinochet [No 3] that consent must be "express" was based on his acceptance of the submissions of Dr Collins35, including that "[a] term can only be [recognised as] implied [in] a treaty for necessity, not to give the treaty maximum effect"36. In Li v Zhou37, this point was made in the context of rejecting a claim of waiver by a foreign State of immunity from proceedings, where the claim was based on alleged agreement by the foreign State in a treaty38 to waive the immunity. Basten JA (with whom Bathurst CJ and Beazley P agreed) said that even if the express terms of the treaty did not manifest submission to jurisdiction, it is possible that "language and context may give rise to a necessary implication to similar effect" if that implication is "readily derived from the [express] terms"39. In this sense, the insistence by international authority that a waiver of immunity in an international agreement must be "express" is an insistence that any inference of a waiver of immunity must be drawn with great care when interpreting the express words of that agreement in context. It does not deny that implications are almost invariably contained in any (expressed) words of a treaty. As senior counsel for Spain rightly put the point in oral submissions: "[T]here must be implications that surround every textual passage. The question is: what are those implications, and what level of clarity about the implication is required?" Accordingly, if an international agreement does not expressly use the word "waiver", the inference that an express term involves a waiver of immunity will 35 Later, Lord Collins of Mapesbury. [2000] 1 AC 147 at 176, 216. (2014) 87 NSWLR 20. 38 Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (1984) 1465 UNTS 85. (2014) 87 NSWLR 20 at 31 [38]. only be drawn if the implication is clear from the words used and the context. In words quoted by Lord Goff in Pinochet [No 3] from the International Law Commission's commentary upon (what were then) the draft articles on jurisdictional immunities of States and their property, there is "no room" to recognise an implication of "consent of an unwilling state which has not expressed its consent in a clear and recognisable manner"40. And as Rehnquist CJ said, delivering the opinion of the Supreme Court of the United States in Argentine Republic v Amerada Hess Shipping Corp41, a foreign State will not waive its immunity merely "by signing an international agreement that contains no mention of a waiver of immunity to suit in United States courts or even the availability of a cause of action in the United States". This reflects the "political principle that those who are independent and autonomous cannot, except by consent, exercise authority over, or establish an external source of authority over, others of independent and autonomous status"42. (v) The proper approach to waiver in s 10(2) of the Foreign States Immunities Act Against this background of international law, there is no basis to interpret s 10(2) of the Foreign States Immunities Act as requiring a novel approach to interpretation that would exclude the possibility of a waiver of immunity being evidenced by implications inferred from the express words of a treaty in their context and in light of their purpose. A high level of clarity and necessity are required before inferring that a foreign State has waived its immunity in a treaty because it is so unusual43, and the consequence is so significant. Hence, s 10(2) makes clear that the mere fact that a [2000] 1 AC 147 at 215, quoting United Nations General Assembly, Report of the International Law Commission on the work of its forty-third session (1991) at 49 (1989) 488 US 428 at 442-443. 42 Li v Zhou (2014) 87 NSWLR 20 at 30 [37], referring to Charlesworth and Chinkin, The Boundaries of International Law: A Feminist Analysis (2000) at 124, 145. 43 Australian Law Reform Commission, Foreign State Immunity, Report No 24 (1984) at 44 [79]: "The Commission is not aware of any existing bilateral treaties which contain a waiver of immunity from jurisdiction of Australian courts." State "is a party to an agreement the proper law of which is the law of Australia" is not sufficient to waive immunity from jurisdiction. But s 10(2) expressly refers to submission (and thus waiver) "by agreement". For these reasons, and contrary to Spain's submissions, s 10(2) of the Foreign States Immunities Act aligns with the approach taken to waiver of immunity in the United States, where the general immunity of a foreign State from jurisdiction44 does not apply if the foreign State "waived its immunity either explicitly or by implication"45, and where it has been accepted that words said to evidence waiver by implication must be "construed narrowly"46, as well as that waiver "is rarely accomplished by implication"47 and only arises where "the waiver was unmistakeable"48. The waiver in s 10(2) is unmistakable. The background, purpose, and operation of the ICSID Convention In 1960, in a paper entitled "The Promotion of the International Flow of Private Capital", the Secretary-General of the United Nations called for the establishment of "special international arbitration machinery for foreign investments"49. The ICSID Convention was the response to that call. It arose from 44 Foreign Sovereign Immunities Act of 1976 (28 USC §1604). 45 Foreign Sovereign Immunities Act of 1976 (28 USC §1605(a)(1)). 46 Blue Ridge Investments LLC v Republic of Argentina (2013) 735 F 3d 72 at 84, quoting Cabiri v Government of the Republic of Ghana (1999) 165 F 3d 193 at 201. See also In re Tamimi (1999) 176 F 3d 274 at 278, citing Frolova v Union of Soviet Socialist Republics (1985) 761 F 2d 370 at 377, Joseph v Office of the Consulate General of Nigeria (1987) 830 F 2d 1018 at 1022, and Foremost-McKesson Inc v The Islamic Republic of Iran (1990) 905 F 2d 438 at 444. In re Tamimi (1999) 176 F 3d 274 at 278. 48 Cabiri v Government of the Republic of Ghana (1999) 165 F 3d 193 at 201, quoting Shapiro v The Republic of Bolivia (1991) 930 F 2d 1013 at 1017. 49 See International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals the work of the World Bank, and in particular from the remarkable efforts of Mr Aron Broches, General Counsel of the Bank from 1959 to 197950. Mr Broches was rightly described by the primary judge as "the principal architect" of the ICSID Convention51, which was developed in the spirit of the Bretton Woods Conference In the History of the ICSID Convention52, it is explained how it had become "increasingly clear" during the 1960s that the growth plans of developing countries would need to rely upon international private investment as well as external government sources: "To encourage such investments, the competent international organizations considered several schemes designed to remove some of the uncertainties and obstacles that faced investors in any foreign country and in particular in many of the States that had only recently attained independence and self- government and whose need for outside capital was greatest." Following Mr Broches' preparation of the Preliminary Draft of the ICSID Convention, a series of consultative meetings were held in Addis Ababa (December 1963), Santiago de Chile (February 1964), Geneva (February 1964) and Bangkok (April-May 1964), with representatives from a large number of of Other States (1970), vol 1 at 2, fn 3, referring to Secretary-General of the United Nations, The Promotion of the International Flow of Private Capital (1960) at 50 Broches, "Awards Rendered Pursuant to the ICSID Convention: Binding Force, Finality, Recognition, Enforcement, Execution" (1987) 2 ICSID Review – Foreign Investment Law Journal 287 at 287. 51 Eiser Infrastructure Ltd v Kingdom of Spain (2020) 142 ACSR 616 at 639 [122], citing Schreuer, The ICSID Convention: A Commentary, 2nd ed (2009) at 2 [2]. See also Schreuer's Commentary on the ICSID Convention, 3rd ed (2022), vol 1 at 2 [2]. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1970), vol 1 at 2. countries (usually lawyers)53. The summary record of proceedings of the first consultative meeting at Addis Ababa records Mr Broches as repeating the concern of developing countries that one of the most serious impediments to the flow of private capital was "the fear of investors that their investment would be exposed to political risks such as outright expropriation, government interference and non- observance by the host government of contractual undertakings on the basis of which the investment had been made"54. The consultative meetings gave rise to a Revised Draft which was then the subject of intensive deliberation by a special legal committee convened in Washington (from November to December 1964). The ICSID Convention was concluded in March 1965 and entered into force in 1966. It now has 165 State parties. The primary purpose of the ICSID Convention was, and remains, to promote the flow of private capital to sovereign nations, especially developing countries, by the mitigation of sovereign risk55. The ICSID Convention mitigates risk by giving private investors, upon default by a country, an arbitral remedy which is intended to provide certainty. As was observed in the 1965 Report of the Executive Directors of the International Bank for Reconstruction and Development on the ICSID Convention56, the ICSID Convention serves the cause International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 557. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 240. International Bank for Reconstruction and Development, Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) at 40-41 [9], [12]-[13]. International Bank for Reconstruction and Development, Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) at 40 [9]. of economic development by its "creation of an institution designed to facilitate the settlement of disputes between States and foreign investors" in order to promote "an atmosphere of mutual confidence and thus stimulat[e] a larger flow of private international capital into those countries which wish to attract it". The preamble to the ICSID Convention begins by referring to "the need for international cooperation for economic development, and the role of private international investment therein" and refers to "the possibility that from time to time disputes may arise in connection with such investment between Contracting States and nationals of other Contracting States"57. In Ch I, the ICSID Convention establishes the International Centre for Settlement of Investment Disputes. In Ch II, the ICSID Convention establishes the jurisdiction of the Centre, which broadly extends to any legal dispute arising directly out of an investment between a Contracting State and a national of another Contracting State. Chapter III deals with conciliation. Chapter IV of the ICSID Convention is concerned with arbitration. It provides for the constitution, powers, and functions of an arbitral tribunal. It also provides a process by which any Contracting State or any national of a Contracting State may institute arbitration proceedings following a request in writing. This was the procedure followed by the respondents in initiating their arbitration against Spain. Section 6 of Ch IV is concerned with "Recognition and Enforcement of the Award". It contains three Articles – Arts 53, 54 and 55 – the meaning of which is the central issue on this appeal. In Australia, the International Arbitration Act gives effect to the ICSID Convention58. Section 32 gives the force of law in Australia to relevant provisions in the ICSID Convention, including Arts 53-55, with the words and expressions in Pt IV of the International Arbitration Act having the same meaning as they do in the ICSID Convention59. Section 33 provides that an award under the ICSID Convention is binding on a party to the investment dispute to which the award relates. Section 34 provides that other laws relating to the recognition and enforcement of arbitral awards, including Pts II and III of the International 57 See also International Arbitration Act 1974 (Cth), Sch 3. International Arbitration Act 1974 (Cth), s 2D(f), Sch 3. International Arbitration Act 1974 (Cth), s 31(2). Arbitration Act, do not apply. As will be discussed below, s 35 provides that the Federal Court is designated as "the competent court" for the purposes of Art 54 of the ICSID Convention60, and that awards may be "enforced in the Federal Court of Australia with the leave of that court as if the award were a judgment or order of that court"61. The meaning of recognition, enforcement, and execution in the ICSID Convention, Arts 53-55 (i) Principles of treaty interpretation The text of an international agreement or treaty is not interpreted according to particular domestic rules of interpretation, which might have slight variations from country to country62. Rather, as is reflected by the approach taken in Australia, a treaty should have the same meaning for all of the States which are party to it63. The general principles of treaty interpretation are contained in the Vienna Convention on the Law of Treaties (1969)64. Although the Vienna Convention on the Law of Treaties post-dates the ICSID Convention, it is widely International Arbitration Act 1974 (Cth), s 35(3). International Arbitration Act 1974 (Cth), s 35(4). 62 Povey v Qantas Airways Ltd (2005) 223 CLR 189 at 211 [60]. 63 Shipping Corporation of India Ltd v Gamlen Chemical Co A/Asia Pty Ltd (1980) 147 CLR 142 at 159; Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation, Berhad (1998) 196 CLR 161 at 186 [71], 213 [137]; Siemens Ltd v Schenker International (Australia) Pty Ltd (2004) 216 CLR 418 at 466-467 [153]-[154]; Povey v Qantas Airways Ltd (2005) 223 CLR 189 at 202 [25]; Basfar v Wong [2023] AC 33 at 55 [16]. 64 1155 UNTS 331. See The Commonwealth v Tasmania (The Tasmanian Dam Case) (1983) 158 CLR 1 at 93, 222; Thiel v Federal Commissioner of Taxation (1990) 171 CLR 338 at 356; Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 at 240, 251-252; Povey v Qantas Airways Ltd (2005) 223 CLR 189 at 202 [24], 211 [60]; Maloney v The Queen (2013) 252 CLR 168 at 180-181 [14], 255-256 [235]; Macoun v Federal Commissioner of Taxation (2015) 257 CLR 519 accepted that, in the respects relevant to this appeal, the Vienna Convention was declaratory of customary international law65. Article 31(1) of the Vienna Convention on the Law of Treaties provides that a treaty must be interpreted "in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose". Article 32 provides that extrinsic sources, including the travaux préparatoires, may be used to confirm the meaning or to determine the meaning when it is ambiguous or obscure or leads to a manifestly absurd or unreasonable result. Article 33(1) provides that if a treaty has been authenticated in two or more languages, then the text is equally authoritative in each language unless the treaty provides, or the parties agree, otherwise. However, under Art 33(4), if an apparent difference in meaning arises between the equally authoritative authentic texts, then the meaning that should be adopted is that which best reconciles the texts, having regard to the object and purpose of the treaty. (ii) The terms of Arts 53-55 Articles 53-55 of the ICSID Convention, which have the force of law in Australia66, are a central plank in giving effect to the primary object of the ICSID Convention: to encourage private international investment including by mitigating sovereign risk and providing an investor with the "legal security required for an investment decision"67. 65 See Territorial Dispute (Libyan Arab Jamahiriya v Chad) [1994] ICJ Rep 6 at 21-22 [41]. See also The Tasmanian Dam Case (1983) 158 CLR 1 at 93-94, 222-223; Thiel v Federal Commissioner of Taxation (1990) 171 CLR 338 at 356; Golder Case (1975) 57 ILR 200 at 213-214. International Arbitration Act 1974 (Cth), ss 31 (definition of "Investment Convention"), 32. 67 See, eg, Schreuer's Commentary on the ICSID Convention, 3rd ed (2022), vol 1 at 7. See also International Bank for Reconstruction and Development, Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) at 40-41 [9]-[13]. Articles 53-55 provide as follows: "Recognition and Enforcement of the Award Article 53 (1) The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention. (2) For the purposes of this Section, 'award' shall include any decision interpreting, revising or annulling such award pursuant to Articles 50, 51 or Article 54 (1) Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State. A Contracting State with a federal constitution may enforce such an award in or through its federal courts and may provide that such courts shall treat the award as if it were a final judgment of the courts of a constituent state. (2) A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary-General. Each Contracting State shall notify the Secretary-General of the designation of the competent court or other authority for this purpose and of any subsequent change in such designation. (3) Execution of the award shall be governed by the laws concerning the execution of judgments in force in the State in whose territories such execution is sought. Article 55 Nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution." (iii) The textual meaning of recognition, enforcement, and execution In some contexts pertaining to international arbitration, the English words "recognition", "enforcement", and "execution" have been used in vague, overlapping and even interchangeable senses. In the Convention on the Execution of Foreign Arbitral Awards (1927)68, for example, the word "execution" appeared in the title as a broad description of the subject matter of substantive obligations framed in terms of "recognition" and "enforcement". The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958)69, as a further example, does not define either term and makes no reference to "execution", although the French title uses the word "exécution" in place of the English "enforcement". In common parlance, as leading arbitration practitioners and arbitrators have observed, "enforcement" is sometimes used "loosely" to extend to "execution"70. For instance, F A Mann used the term "enforcement" not merely to mean "turning the award into a judgment or a title equivalent to a judgment by providing it with an exequatur or some similar judicial certificate" but also to extend to "execution in the accepted sense of the term"71. 68 92 LNTS 301. 69 330 UNTS 3. 70 See Reed, Paulsson and Blackaby, Guide to ICSID Arbitration, 2nd ed (2011) at 179-180; Juratowitch, "Waiver of State Immunity and Enforcement of Arbitral Awards" (2016) 6 Asian Journal of International Law 199 at 218. See also Broches, "Awards Rendered Pursuant to the ICSID Convention: Binding Force, Finality, Recognition, Enforcement, Execution" (1987) 2 ICSID Review – Foreign Investment Law Journal 287 at 318. 71 Mann, "State Contracts and International Arbitration" (1967) 42 British Yearbook of International Law 1 at 18. Within the structure of Arts 53-55 of the ICSID Convention, in contrast, the words "recognition", "enforcement", and "execution" can be seen to be used separately and with different meanings. The distinction between "recognition" and "enforcement" is apparent in the two distinct obligations that are imposed on a Contracting State by the first sentence of Art 54(1). The subject matter of each obligation is different and the extent of each obligation is identified separately with precision. The obligation to "recognize" is expressed to apply to the entirety of "an award rendered pursuant to this Convention" and to be no more than an obligation to recognise the award "as binding". The obligation to "enforce" is expressed to apply only to "the pecuniary obligations imposed by [the] award" and to go no further than to oblige the Contracting State to enforce those pecuniary obligations within its territories "as if [the award] were a final judgment of a court in that State". The disjunctive "or" in Art 54(2) makes plain that those two obligations imposed by Art 54(1) are severable, in that a party to an arbitral award might seek "recognition" by a competent court of a Contracting State without necessarily also seeking "enforcement" of the pecuniary obligations imposed by that award. The further distinction between "recognition" and "enforcement", on the one hand, and "execution", on the other hand, is then drawn out in Arts 53-54 and Art 55. This is seen in the provision by Art 54(3) that execution is a matter to be governed by the domestic law of the Contracting State, and by Art 55 that none of the international obligations imposed by Art 54 extend so far as to derogate from the domestic law of the Contracting State concerning State immunity or foreign State immunity from execution. In particular, Art 55 spells out that the obligation to "enforce" the pecuniary obligations imposed by an award as if the award were a final judgment of a court in the Contracting State stops short of an obligation to ensure their execution. Whether or not enforcement against a State party to an award can lead to execution is left entirely to be determined under the domestic law of the Contracting State concerning State immunity or foreign State immunity from execution. That usage of the words "recognition", "enforcement", and "execution" in the context of Arts 53-55 of the ICSID Convention aligns with the precise definitions adopted in the recently approved version of the proposed Restatement of the Law: The US Law of International Commercial and Investor-State Arbitration, which described "terminological confusion" that may result when these "analytically distinct" concepts are not distinguished and "recognition" is used to mean "enforcement" or "enforcement" is used to mean "execution"72. Consistently with the usage in the context of Arts 53-55, the proposed Restatement defines "recognition" as the court's "determination ... that an international arbitral award is entitled to be treated as binding"73, involving the court's "acceptance of the award's binding character and its preclusive effects"74. It describes "enforcement" as "the legal process by which an international award is reduced to a judgment of a court that enjoys the same status as any judgment of that court"75. It defines "execution" as "the means by which a judgment enforcing an international arbitral award is given effect"76 and explains that "[t]he execution process commonly involves measures taken against the property of the judgment debtor by a law-enforcement official … acting pursuant to a writ of execution"77. The distinction so drawn between "recognition" and "enforcement" accords with reasoning of Lord Rodger (with whom Lords Bingham, Hope, Walker and 72 American Law Institute, Restatement of the Law: The US Law of International Commercial and Investor-State Arbitration, Proposed Final Draft (2019) §1.1, Note n. See also §1.1, Note nn. 73 American Law Institute, Restatement of the Law: The US Law of International Commercial and Investor-State Arbitration, Proposed Final Draft (2019) §1.1(nn). 74 American Law Institute, Restatement of the Law: The US Law of International Commercial and Investor-State Arbitration, Proposed Final Draft (2019) §1.1, Note nn. 75 American Law Institute, Restatement of the Law: The US Law of International Commercial and Investor-State Arbitration, Proposed Final Draft (2019) §1.1, Note m, §1.1(m). See also Collins (ed), Dicey, Morris and Collins on the Conflict of Laws, 15th ed (2012), vol 1 at 678 [14-028]. 76 American Law Institute, Restatement of the Law: The US Law of International Commercial and Investor-State Arbitration, Proposed Final Draft (2019) §1.1(n). 77 American Law Institute, Restatement of the Law: The US Law of International Commercial and Investor-State Arbitration, Proposed Final Draft (2019) §1.1, Comment n. See also Juratowitch, "Waiver of State Immunity and Enforcement of Arbitral Awards" (2016) 6 Asian Journal of International Law 199 at 218. Neuberger agreed) in Clarke v Fennoscandia Ltd78 relating to the recognition of a foreign judgment. The distinction also accords with the reasoning of French CJ and Gageler J in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia79 in the context of examining Art 35 of the UNCITRAL Model Law on International Commercial Arbitration80, which relevantly provides that an arbitral award "shall be recognized as binding and, upon application in writing to the competent court, shall be enforced". Their Honours there observed that an appropriate order for the Federal Court to make on an application for "enforcement" of an arbitral award "would be an order that the arbitral award be enforced as if [it] were a judgment or order of the Federal Court"81. It has been noted elsewhere in relation to Art 35(1) of the UNCITRAL Model Law that "the possibility of ordering actual enforcement measures [ie execution] [i]s not a prerequisite for such a declaration of enforceability"82. Moreover, the drawing of a distinction between "enforcement" and "execution" accords with the construction of Arts 53-55 of the ICSID Convention proffered by Mr Broches writing academically some years after it had entered into force83. Mr Broches noted that "enforce" standing alone in Art 54(1) "might be considered as including execution" but he said that Art 54(3) "which deals separately with execution makes clear that that is not the intention". He 78 2008 SC (HL) 122 at 126 [18], 127 [21]-[22]. See also Briggs, The Conflict of Laws, 4th ed (2019) at 129. (2013) 251 CLR 533 at 551-552 [19]-[23]. 80 Adopted by UNCITRAL on 21 June 1985 and amended by UNCITRAL on 7 July 2006. 81 TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533 at 552 [24]. 82 United Nations Commission on International Trade Law, UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration (2012) at 170, citing Bayerisches Oberstes Landesgericht, Germany, 4 Z Sch 31/99, 27 June 1999. 83 See Broches, "Awards Rendered Pursuant to the ICSID Convention: Binding Force, Finality, Recognition, Enforcement, Execution" (1987) 2 ICSID Review – Foreign Investment Law Journal 287 at 318. nevertheless acknowledged that "a slight awkwardness remains" and that Art 54(1) might have been clearer had it been drafted to state that an award "shall be recognized as binding by each Contracting State, and the pecuniary obligations imposed by the award shall be enforceable within the territories of each such State, as if it were a final judgment of one of its courts". Importantly, he explained the substantive distinction being drawn through the making of the linguistic distinction between "enforcement" and "execution" within the structure of Arts 53-55 as "the distinction between enforceability which is governed and decreed by the Convention and its implementation by execution which is governed by domestic law". Both the linguistic distinction between "enforcement" and "execution" and the substantively intended effect of the linguistic distinction as identified by Mr Broches are borne out by the travaux préparatoires to the ICSID Convention. (iv) Confirmation of these meanings in the travaux préparatoires Following the preparation of a working paper on the ICSID Convention by Mr Broches and his team, a meeting was held on 20 September 1963 to receive comments from the Executive Directors84. The minutes of the meeting record Mr Broches' explanation that it was "desirable to have a very clear provision ... which required that each Contracting State recognize an award of a tribunal as binding and enforce it within its territories as if that award were a final judgment of the courts of that State"85. Mr Broches saw clarity, and "quite a step forward", in: (i) requiring recognition, namely that "each Contracting State recognize an award of a tribunal as binding"; (ii) requiring enforcement, namely that each Contracting State "enforce [an award] within its territories as if that award were a final judgment of the courts in that State"; (iii) recognising that "[i]n general" International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 174. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 177 [12]. forced execution "would not be possible"86 where the term "execution" was used to describe "seizing [the foreign State's] property and selling it in forced execution". The provision as framed to give effect to the approach Mr Broches outlined ultimately became Art 54 of the ICSID Convention. As it appeared in the Preliminary Draft, which was the subject of the consultative meetings in Addis Ababa, Santiago, Geneva and Bangkok, the precursor to Art 54 simply provided that "[e]ach Contracting State shall recognize an award ... as binding and enforce it within its territories as if it were a final judgment of the courts of that State"87. Referring to the provision as then appearing in the Preliminary Draft, in introductory remarks at the commencement of each consultative meeting, Mr Broches said that he "wished to make it clear that where, as in most countries, the law of State [i]mmunity from execution would prevent enforcement against a State as opposed to execution against a private party, the Convention would leave that law unaffected" and that "[a]ll the Convention would do would be to place an arbitral award rendered pursuant to it on the same footing as a final judgment of the national [c]ourts". He spelt out the result: "[i]f such judgment could be enforced under the domestic law in question, so could the award; if that judgment could not be so enforced, neither could the award"88. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 177 [12]. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 218. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 242, 372, 464-465. See also 304. In a discussion at the Santiago meeting on the impact of the provision as appearing in the Preliminary Draft on State immunity, Mr Broches volunteered that the insertion of a further provision might be warranted to make the position "completely clear"89 and noted that it had "been suggested that it might be useful to distinguish between recognition of awards as binding and their execution"90. Picking up on that language at the Geneva meeting, and referring back to the Santiago meeting, Mr Broches noted that the view had been expressed that the provision as appearing in the Preliminary Draft "would force a modification in State practice and law on the question of a State's immunity from execution". He said that he thought that view was "unfounded", but added that "an express proviso removing any doubt as to the intent of the section might be inserted"91. When subsequently explaining the language of the provision as then appearing in the Preliminary Draft at the Bangkok meeting, Mr Broches spoke with more precision92. He said that it "dealt with two problems". He said that the first was the obligation of each Contracting State "to recognize an award ... as binding". He added that "the intent of the provision" in that first respect might have been better reflected if the word "accept" had been used in place of "recognize" given that "[w]hat was contemplated in [that] part of the sentence was the force of International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 343. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 347. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 428. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 519. the award as [a] res judicata ... defence in resisting an action ... in the ordinary courts of a State, on a matter already determined in arbitral proceedings" under the ICSID Convention. He said that the second part was the obligation of each Contracting State "to enforce the award within [its] territories". He added that "the intent of the provision" in that second respect "might be better expressed if the words 'recognize ... and enforce it' were substituted by 'recognize as enforceable'". In a report summarising the issues which had been raised in relation to the Preliminary Draft during the consultative meetings, Mr Broches referred to issues having been raised about the effect of the provision on State immunity93. He explained that "[b]y providing that the award could be enforced as if it were a final judgment of a local court", the provision "implicitly imported the limitation on enforcement which in most countries existed with respect to enforcement of court decisions against Sovereigns". "However", he added, "this point might be made explicit in order to allay the fears expressed by several delegations". The fears concerning State immunity to which Mr Broches referred were allayed by the insertion into the Revised Draft of the provision which was soon to become Art 55 of the ICSID Convention94. Picking up on the suggestion concerning terminology which had been noted at the Geneva meeting, the provision expressed the intended preservation of State immunity in terms of "immunity ... from execution". In the subsequent deliberation of the legal committee in Washington, the principle of enforcement which was to be embodied in Art 54 of the ICSID Convention – requiring an award to be equated with a final decision – "survived International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 575. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 637. [an] onslaught" of opposition95. The draft of Art 54 underwent a measure of refinement, including by the limitation of the obligation of enforcement in Art 54(1) to the enforcement of pecuniary obligations and by the insertion of what would become Art 54(3), which also picked up on the language of "execution". Article 55, which Mr Broches described at a meeting of the legal committee in December 1964 as a mere "clarification"96, emerged substantially unaltered. Mr Broches provided a succinct summary of the result in a memorandum to the Executive Directors on 19 January 1965. He wrote97: "Article 54 requires Contracting States to equate an award rendered pursuant to the Convention with a final judgment of its own courts. It does not require them to go beyond that and to undertake forcible execution of awards rendered pursuant to the Convention in cases in which final judgments could not be executed. In order to leave no doubt on this point Article 55 provides that nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution." 95 Broches, "Awards Rendered Pursuant to the ICSID Convention: Binding Force, Finality, Recognition, Enforcement, Execution" (1987) 2 ICSID Review – Foreign Investment Law Journal 287 at 316. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-2 at 905. International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-2 at 963 [44]. Those remarks were reproduced in the accompanying Report of the Executive Directors on the ICSID Convention when it was published on 18 March 1965 and submitted to governments by the World Bank98. (v) French and Spanish texts of Arts 53-55 Despite the English text of Arts 53-55 embodying, clearly enough, a distinction between recognition, enforcement, and execution, with those concepts used in the senses described above, account must be taken of the fact that the ICSID Convention was done in French and Spanish, as well as English, and all three texts are equally authentic and authoritative99. As Perram J observed in the Full Court, referring to a point made by Professor Schreuer100, a difficulty that arises in interpreting Arts 53-55 is that the French and Spanish texts, respectively, use the words exécution and ejecución, and similar forms, wherever the words "enforce", "enforcement", or "execution" are used in the English text101. By contrast, in the French and Spanish texts, respectively, reconnaissance and reconocimiento, and similar forms, are used where the English text uses "recognition" and "recognize". A purely literal comparison of the French and Spanish texts with the English text might suggest that the French and Spanish texts are treating enforcement as International Bank for Reconstruction and Development, Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) at [43]. See also International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-2 at 1041, 1083. 99 See ICSID Convention, testimonium. See also Vienna Convention on the Law of Treaties (1969), Art 33(1). 100 Schreuer, The ICSID Convention: A Commentary, 2nd ed (2009) at 1134-1135. See also Schreuer's Commentary on the ICSID Convention, 3rd ed (2022), vol 2 at 101 Kingdom of Spain v Infrastructure Services Luxembourg Sarl (2021) 284 FCR 319 synonymous with execution. If that were correct, then there would be a conflict between the French and Spanish texts (where enforcement and execution would have the same meaning) and the English text (where enforcement and execution have different meanings). If such conflict existed, it would be resolved by applying the rule that if an apparent difference in meaning arises, then the meaning that should be adopted is that which best reconciles the texts, having regard to the object and purpose of the treaty. In taking this approach, Professor Schreuer102 reasoned that since there was no explanation for the inconsistency in the drafting history of the ICSID Convention, the interpretation that best reconciled the three texts was to treat "enforcement" and "execution" as having the same meaning in the English text. This would mean that the preservation of immunity from court processes relating to execution in Art 55 would extend also to enforcement. But once enforcement in Art 54 is understood to be the process of granting an award the status of a judgment of a domestic court, the reasoning of Professor Schreuer is not consonant with the purpose of the ICSID Convention, particularly Arts 53-55. The object and purpose of the ICSID Convention, which includes mitigating sovereign risk, would not favour a reconciliation of any differences in the texts by extending the application of laws concerning foreign State immunity beyond execution to enforcement (as that concept, in English, is used in Art 54). The better approach is to proceed on the basis that there is no difference in meaning between the texts that requires reconciliation. The French and Spanish texts are, of course, to be understood against the background of the civilian process of exequatur, which encompasses both recognition and the step by which a court grants an arbitral award the force of (that is, the same status as) a judgment of the domestic court103. The function of the exequatur is thus both to recognise the 102 Schreuer's Commentary on the ICSID Convention, 3rd ed (2022), vol 2 at 1493. 103 Juratowitch, "Waiver of State Immunity and Enforcement of Arbitral Awards" (2016) 6 Asian Journal of International Law 199 at 217-218. See also Reed, Paulsson and Blackaby, Guide to ICSID Arbitration, 2nd ed (2011) at 179-180. arbitral award and to render the award enforceable in the territory of the issuing State104. The literal conflation in the French and Spanish texts of "enforcement" and "execution" reflects what Allsop CJ described as "a penumbra or range of meaning in the words exécution and ejecu[ción] to encompass a non-execution procedure of enforcement"105. In other words, exécution and ejecución slide between the meanings of enforcement and execution, in the loose sense described above, so that they are used in Art 54 to refer to the process of exequatur or enforcement (granting an award the force of a judgment of the court), but are used in Art 55 in the different sense of execution (subsequent effectuation of the judgment). The real distinction within the French and Spanish texts of Arts 54 and 55 is therefore between, on the one hand, recognition and enforcement by exequatur in Art 54 and, on the other hand, "enforcement" as execution in Art 55. This is consistent with the description by the Special Rapporteur in the Second Report on Jurisdictional Immunities of States and their Property106 to the International Law Commission of "the practice of the French courts in which a strict distinction was drawn between recognition of arbitral awards and actual execution of the awards". The report then quotes a decision of the Tribunal de grand instance of Paris from 1970 which treated recognition as including enforcement, namely all steps "up to and including the procedure for granting an exequatur which was necessary for the award to acquire full force"107. The same approach, treating recognition and enforcement as loosely interchangeable but separate from the immunity from execution, was taken by the 104 See Jurisdictional Immunities of the State (Germany v Italy: Greece Intervening) [2012] ICJ Rep 99 at 150 [125], 151 [128], referred to in Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 258 CLR 31 at 50-51 [47]-[48]. 105 Kingdom of Spain v Infrastructure Services Luxembourg Sarl (2021) 284 FCR 319 106 United Nations General Assembly, Second Report on Jurisdictional Immunities of States and their Property (1989) at 12 [15]. 107 Socialist Federal Republic of Yugoslavia v Société Européenne d'Études et d'Entreprises (1970) 65 ILR 46. Court of Cassation, in SOABI (Seutin) v Senegal108. There, the Court quashed a decision of the Court of Appeal of Paris which had held that SOABI failed to demonstrate that "enforcement" against Senegal would not conflict with the State's immunity from execution. In the English translation of the report, exequatur was described by the Court of Cassation as "recognition", which the Court held "does not constitute a measure of execution". Again, the process of exequatur – which combines recognition and enforcement, as the preliminary measures to be taken before execution – can be seen in the English translation of the decision in Benvenuti et Bonfant Sarl v Government of the People's Republic of the Congo109. In that decision, the Court of Appeal of Paris described Art 54 as "lay[ing] down a simplified procedure for obtaining an exequatur" and, after quoting Art 55, said that "[t]he order granting an exequatur for an arbitral award does not, however, constitute a measure of execution but simply a preliminary measure prior to measures of execution". For these reasons, there is no real difference between the English text of Arts 53-55, and the French and Spanish texts (at least not in respect of the important distinction between recognition and enforcement, on the one hand, and execution, on the other). Waiver of immunity from court processes concerning recognition or enforcement in Art 54 (i) The text and purpose of Art 54 Spain's primary submission on this appeal was that Art 54 is not concerned with awards sought to be enforced against a State in a foreign court. Spain argued that the express words of Art 54 are not sufficiently clear to amount to a waiver of immunity from court processes concerning recognition or enforcement. Spain's primary submission concerning the interpretation of Art 54(1) was that, in its application in Australia, it contemplated recognition and enforcement in three circumstances: (i) if a State had an award against an investor and sought recognition and enforcement in an Australian court; (ii) if an investor had an award against Australia (which is not entitled to foreign State immunity in Australia) and 108 (1991) 30 ILM 1167. 109 (1981) 65 ILR 88 at 91. sought recognition and enforcement against Australia in an Australian court; and (iii) if an investor had an award against a foreign State and sought recognition and enforcement against the foreign State in an Australian court and the foreign State chose to waive immunity over the proceeding. Spain argued that since Art 54(1) said nothing "expressly" about a waiver of immunity from jurisdiction by a foreign State, there should be no inference drawn that a foreign State had waived that immunity by agreement to Art 54(1). Spain's submission requires the text of Arts 53-55 to be read in a contorted manner. In light of the effect of the provision in Art 53 that awards shall be "binding" on Contracting States, together with the preservation in Art 55 of immunity from execution only (subject to the laws of Contracting States), it would distort the terms of Art 54(1) to require separate conduct that amounted to a waiver of immunity before an award could be recognised and enforced against a foreign State. On Spain's interpretation, Art 55 would also be inaccurate, because Art 54(1) would then preserve to a Contracting State a much greater immunity than merely immunity from execution subject to the laws of the Contracting State. Spain submitted that since Arts 53 and 54(2) make no reference to execution, and since Art 54(3) leaves execution (and any immunity from execution) to be governed by the laws of the jurisdiction in which execution is sought, Art 55 would be redundant or surplus on the interpretation we prefer. This possible surplusage of Art 55 is, however, a consequence of the plain meaning of "execution" in Art 55 which, as explained above, must be adopted as a matter of text, principle, context, and purpose. The view that Art 55 has no independent work to do, other than reinforcement of the limits in Arts 53 and 54, is also supported by the travaux préparatoires to the ICSID Convention, to which reference has already been made. The textual difficulties with Spain's primary submission are compounded when the ordinary meaning of Art 54(1) is understood, as the Vienna Convention on the Law of Treaties requires, in light of its object and purpose, which includes mitigating sovereign risk. Although Spain correctly submitted that the main reason for the inclusion of Art 54 was to ensure that Contracting States were able to obtain effective remedies against private investors110, this was to ensure parity with the 110 See the discussion at the consultative meeting in Geneva: International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents obligations of the Contracting States because it was otherwise assumed that participating nation states would abide by arbitral outcomes. This assumption is most explicit in the provision in Art 53(1), restating customary international law111 that each party, that is each Contracting State, "shall abide by and comply with the terms of the award", except to the extent to which the terms are stayed. In that sense, Art 53 is the "primary provision"112. The assumption of parity was also recorded in the summary record of proceedings of the consultative meeting held at Santiago, where Mr Broches observed that the provision that became Art 54 "was intended to protect the interests of the host States which while they were themselves internationally bound to comply with the award, might want an effective assurance that the private party would be compelled to do the same"113. Again, following the last consultative meeting in Bangkok, a Chairman's Report prepared by Mr Broches referred to Art 54 as "establishing equality not only of rights, but also of obligations, between State[s] and investors"114. All of the drafts leading to the ICSID Convention thus referred "to recognition and enforcement against the parties in equal terms, without Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 111 Broches, "Awards Rendered Pursuant to the ICSID Convention: Binding Force, Finality, Recognition, Enforcement, Execution" (1987) 2 ICSID Review – Foreign Investment Law Journal 287 at 289. 112 Broches, "Awards Rendered Pursuant to the ICSID Convention: Binding Force, Finality, Recognition, Enforcement, Execution" (1987) 2 ICSID Review – Foreign Investment Law Journal 287 at 302. 113 International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 347. 114 International Centre for Settlement of Investment Disputes, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1968), vol 2-1 at 574. distinguishing between investors and host States". Giving effect to that purpose, the terms of Art 54 do "not distinguish between the recognition and enforcement of awards against investors, on the one side, and against host States, on the other"115. In light of the object and purpose of the ICSID Convention, Professor van den Berg has observed that a curiosity of the ICSID Convention is not that it requires recognition and enforcement of awards against foreign States, but that a foreign State which has agreed to arbitration is not deemed to also accept the consequence of execution. He explains the result – that Contracting States waive their immunity from jurisdiction in relation to recognition and enforcement but not any immunity that they have from execution – on the basis of political and economic considerations116: "Execution is commonly felt to be a 'more intensive interference with the rights of a State.' From the eco[n]omic point of view, restrictive immunity principles applied to execution could result in foreign States refraining from investment in countries in which they know their property could be subject to execution." (footnote omitted) (ii) International authority As explained above, there is no real distinction between the United States provision permitting a waiver of immunity to be identified "either explicitly or by implication" and s 10(2) of the Foreign States Immunities Act permitting a waiver of immunity "by agreement". And, consistently with the caution that is required before drawing inferences of a waiver of immunity, United States courts have 115 Schreuer's Commentary on the ICSID Convention, 3rd ed (2022), vol 2 at 1474. 116 Van den Berg, "Recent Enforcement Problems under the New York and ICSID Conventions" (1989) 5 Arbitration International 2 at 13. concluded, sometimes saying that they had little or no doubt117, that entry into the ICSID Convention involves a waiver of immunity from jurisdiction118. The conclusion that the express terms of Art 54(1) involve a waiver of immunity from jurisdiction in relation to recognition and enforcement is also supported by the 1991 Report of the International Law Commission which, as explained above, was relied upon by Lord Goff in Pinochet [No 3]119 for his Lordship's cautious approach to inferences supporting a waiver of immunity. That report referred to a rule of customary international law that a waiver of immunity be "expressed ... in no uncertain terms"120. The International Law Commission gave examples of State practice where a State "has previously expressed its consent to such jurisdiction in the provision of a treaty or an international agreement"121. One of those examples was the ICSID Convention. Spain's alternative submission: waiver limited to bare recognition Alternatively, Spain argued that Art 54 contemplates only a waiver of immunity from court processes relating to recognition, and not enforcement, relying heavily on the French and Spanish texts which use execution and enforcement interchangeably. In this respect, Spain submitted that the orders of the Full Court went beyond bare recognition. 117 Liberian Eastern Timber Corporation v The Government of the Republic of Liberia (1986) 650 F Supp 73 at 76; Continental Casualty Company v The Argentine Republic (2012) 893 F Supp 2d 747 at 751. 118 Blue Ridge Investments LLC v Republic of Argentina (2013) 735 F 3d 72 at 84-85; Mobil Cerro Negro Ltd v Bolivarian Republic of Venezuela (2017) 863 F 3d 96 at 113; Micula v Government of Romania (2019) 404 F Supp 3d 265 at 277. 119 [2000] 1 AC 147 at 216. 120 United Nations General Assembly, Report of the International Law Commission on the work of its forty-third session (1991) at 53. 121 United Nations General Assembly, Report of the International Law Commission on the work of its forty-third session (1991) at 52, fn 89, referring to United Nations, Materials on Jurisdictional Immunities of States and their Property (1982) at The only matter supporting Spain's alternative submission, that any waiver of immunity from jurisdiction should be confined to recognition, is the different linguistic phrasing used in the French and Spanish texts of Arts 53-55. But, for the reasons explained above, the materials before this Court strongly militate against any conclusion that the French and Spanish texts of Arts 53-55 were intended to mean, or have been interpreted to mean, anything different from the English text. No basis has been shown to conclude that those texts bear a different meaning from the English text, preserving, subject to the laws of a Contracting State, the immunity from court processes relating to enforcement and not merely immunity from court processes relating to execution. Decision of the Court of Justice of the European Union in Republic of Moldova v Komstroy LLC A final, although not fully developed, submission by Spain concerned the effect of the decision of the Court of Justice of the European Union in Republic of Moldova v Komstroy LLC122. In that case, the European Court of Justice applied the earlier decision of Slovak Republic v Achmea BV123 and decided that the agreement to arbitrate in the Energy Charter Treaty must be interpreted as not being applicable to disputes between a member state of the European Union and an investor of another member state where the dispute concerned an investment by the investor in the first member state124. Spain's contention was that this Court would "take cognisance" of Komstroy in identifying whether Spain had agreed to submit to the jurisdiction of the Australian courts for the purposes of the Foreign States Immunities Act. That contention must fail because the relevant agreement arose from Spain's entry into the ICSID Convention, which included its agreement as to the consequences of an award rendered pursuant to the ICSID Convention. 122 [2021] 4 WLR 132. 123 [2018] 4 WLR 87. 124 [2021] 4 WLR 132 at [66]. Conclusion The appeal should be dismissed with costs. It is unnecessary to consider any further the grounds in the notice of contention, which were raised by the respondents only in the event that they were unsuccessful on their primary submissions. No notice of any application for costs was given to the European Commission so there should be no order as to costs against the European Commission in relation to its unsuccessful application for leave to appear as amicus curiae.

HIGH COURT OF AUSTRALIA EAST AUSTRALIAN PIPELINE PTY LIMITED APPELLANT AND AUSTRALIAN COMPETITION AND CONSUMER COMMISSION & ANOR RESPONDENTS East Australian Pipeline Pty Limited v Australian Competition and Consumer Commission [2007] HCA 44 27 September 2007 ORDER 1. Appeal allowed. 2. Set aside order 4 of the orders of the Full Court of the Federal Court of Australia made on 2 June 2006 and orders 2, 3, 4 and 5 of the orders of that Court made on 18 August 2006. 3. The first respondent to pay the costs of the appellant of the appeal to this Court and its costs incurred to date in the Federal Court of Australia. 4. The balance of the application to the Federal Court of Australia by the first respondent for judicial review be stood over for further directions before the Full Court of that Court. On appeal from the Federal Court of Australia Representation J T Gleeson SC with N Manousaridis for the appellant (instructed by Middletons Lawyers) J B R Beach QC with S B Lloyd for the first respondent (instructed by Deacons Lawyers) Submitting appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS East Australian Pipeline Pty Limited v Australian Competition and Consumer Commission Trade Practices – Third party access regime for natural gas pipelines – East Australian Pipeline Pty Limited ("EAPL") owned a natural gas pipeline which was a Covered Pipeline under the National Third Party Access Code for Natural Gas Pipeline Systems ("the Code") – EAPL was required to submit to the Australian Competition and Consumer Commission ("the ACCC") an Access Arrangement for use of the pipeline by third parties – ACCC rejected EAPL's proposed Access Arrangement and adopted its own Access Arrangement incorporating a Reference Tariff based on a lower initial Capital Base ("ICB") than that proposed by EAPL – ACCC arrived at an ICB in a novel fashion – Section 8.10 of the Code sets out a number of factors which are to be considered in establishing the ICB for an existing pipeline – Proper construction of s 8.10 of the Code – Whether s 8.10 of the Code permits a novel asset valuation methodology. Administrative Law – Administrative review of a regulatory decision – Australian Competition Tribunal ("the Tribunal") varied the determination by the ACCC substituting a new ICB – Grounds for review included a ground that "the exercise of the relevant Regulator's discretion was incorrect or unreasonable having regard to all the circumstances" – Nature and scope of the Tribunal's jurisdiction to review decision of the ACCC. Administrative Law – Judicial review of the outcome of an administrative review – Full Court of the Federal Court set side the Tribunal's determination of the ICB –Whether error of law within the meaning of s 5(1)(f) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) established – Whether there was jurisdictional error attracting the Federal Court's jurisdiction under s 39B(1) of the Judiciary Act 1903 (Cth). Gas Pipelines Access (South Australia) Act 1997 (SA), s 39 of Sched 1, s 8.10 of Sched 2. Administrative Decisions (Judicial Review) Act 1977 (Cth), s 5(1)(f). Judiciary Act 1903 (Cth), s 39B. GLEESON CJ, HEYDON AND CRENNAN JJ. This is an appeal from orders of the Full Court of the Federal Court of Australia1 (French, Goldberg and Finkelstein JJ) ("the Full Court"). The Full Court set aside a determination of the second respondent, the Australian Competition Tribunal2 (Gyles J (Deputy President), Mr R C Davey and Ms M M Starrs) ("the Tribunal") (a submitting party), concerning and applying the methodology used to calculate the initial capital base of a particular natural gas pipeline, in the context of the regulation of an access arrangement in the gas supply industry. Some background concerning the natural gas industry in Australia, and the structures created for its regulation, is set out in the reasons of the Full Court below3. For the purposes of this appeal, the relevant background may be summarised as follows. Recognising that "certain gas transmission pipeline systems are natural monopolies and require regulation in relation to the granting and terms of access"4, on 7 November 1997 the Commonwealth, State and Territory Governments signed the Natural Gas Pipelines Access Agreement. The Gas Pipelines Access (South Australia) Act 1997 (SA) ("the SA Act"), which contains two important schedules, was then enacted by the South Australian Parliament5. Schedule 2 sets out the National Third Party Access Code for Natural Gas Pipeline Systems ("the Code") which establishes a national access regime for 1 Australian Competition and Consumer Commission v Australian Competition Tribunal (2006) 152 FCR 33; Australian Competition and Consumer Commission v Australian Competition Tribunal (No 2) (2006) 152 FCR 83. 2 Application by East Australian Pipeline Limited (2004) ATPR ¶42-006; Application by East Australian Pipeline Limited (2005) ATPR ¶42-047. 3 Australian Competition and Consumer Commission v Australian Competition Tribunal (2006) 152 FCR 33. 4 Australian Competition and Consumer Commission v Australian Competition Tribunal (2006) 152 FCR 33 at 37 [9]. 5 Other legislation relevant to the dispute includes the Gas Pipelines Access (Commonwealth) Act 1998 (Cth), the Gas Pipelines Access (New South Wales) Act 1998 (NSW) and the Gas Pipelines Access Act 1998 (ACT). Crennan natural gas pipeline systems within the framework of a national competition policy. The objectives of the Code are to establish a framework for third party access to gas pipelines which6: facilitates the development and operation of a national market for natural gas; and prevents abuse of monopoly power; and promotes a competitive market for natural gas in which customers may choose suppliers, including producers, retailers and traders; and provides rights of access to natural gas pipelines on conditions that are fair and reasonable for both Service Providers and Users; and provides for resolution of disputes." Schedule 1 to the SA Act ("Schedule 1"), entitled "Third party access to natural gas pipelines", establishes among other things a specific system of administrative review for decisions made under the Code. The schedules together comprise the Gas Pipeline Access Law ("the Access Law"). It can be noted that cl 7 of the Appendix to Schedule 1 mandates a purposive approach to interpreting the Access Law7. The appellant, Eastern Australian Pipeline Pty Limited ("EAPL") purchased the Moomba to Sydney Pipeline System ("the Pipeline") from the Commonwealth government on 30 June 1994 for $534.3 million8. It had been in operation since the latter half of the 1970s. Under the Access Law, the first Introduction to the Code; see also the Preamble to the SA Act. "Clause 7: (1) In the interpretation of a provision of this Law, the interpretation that will best achieve the purpose or object of this Law is to be preferred to any other interpretation. (2) Subclause (1) applies whether or not the purpose is expressly stated in this Law." 8 Moomba-Sydney Pipeline System Sale Act 1994 (Cth); Australian Competition and Consumer Commission v Australian Competition Tribunal (2006) 152 FCR 33 at Crennan respondent Commission ("the ACCC") is the "relevant Regulator" for the Pipeline9. the Australian Competition and Consumer this appeal, The Code required EAPL to submit to the ACCC for approval, an "Access Arrangement", which would set out the policies and basic terms and conditions upon which third parties could have access to and use the Pipeline10. The introduction to the Code11 states that the Access Arrangement is: "… similar in many respects to an undertaking under Part IIIA of the Trade Practices Act and is designed to allow the owner or operator of the Covered Pipeline to develop its own Tariffs and other terms and conditions under which access will be made available, subject to the requirements of the Code." A Covered Pipeline is one which is subject to the Code12. The Code also sets out procedures to be followed for public consultation and the making of revisions and amendments to proposed Access Arrangements, as well as the circumstances in which the ACCC can draft and impose its own Access Arrangement13. Under an Access Arrangement, a "Reference Tariff" is the charge to the third party for the provision of that access or service. In describing Reference Tariffs, the Code states that14: "The overarching requirement is that when Reference Tariffs are determined and reviewed, they should be based on the efficient cost (or anticipated efficient cost) of providing the Reference Services." 9 Section 2 of Schedule 1. 10 Section 2.2 of the Code; see also s 3 of the Code. 11 While the introduction does not form part of the Code (s 10.4), consideration may be given to it in certain circumstances specified in s 10.5 of the Code. 12 Section 10.8 of the Code; see also Sched A to the Code. 13 Section 2 of the Code. 14 Section 8 of the Code. Crennan Section 8 of the Code sets out the objectives to be considered by the ACCC in determining whether to approve a Reference Tariff in an Access Arrangement. An important objective is the replication of the outcome of a competitive market15. The calculations upon which a Reference Tariff is based utilise a number of accounting and economic concepts, some of which are defined. Together with familiar concepts such as "Total Revenue", "Internal Rate of Return", "Depreciation" and "Net Present Value"16, one integer to be used in calculating a Reference Tariff is the value of the capital assets of the Pipeline, and more particularly, the initial Capital Base ("the ICB"). It is the provision which deals with the methodology for establishing the ICB for existing pipelines which is the subject of controversy in this appeal. Simply stated, the ultimate purpose of setting an ICB is to calculate a Reference Tariff (reflecting economic A Reference Tariff requires efficiency) consideration of a rate of return on the value of the capital assets. A rate of return which is properly determined should not distort future investment decisions. in respect of an investment. Under s 39 of Schedule 1, if the ACCC makes a decision to approve its own Access Arrangement, the service provider can apply to the relevant appeals body, the Tribunal17, for a review of that decision, but only on certain express grounds. The nature and scope of the Tribunal's specific powers of administrative review under s 39 of Schedule 1 are issues which have been dealt with by Gummow and Hayne JJ in their reasons for judgment, which we have read in draft. We agree with what their Honours have said about those issues and have nothing further to add18. In this case, after a number of proposed revisions and exchanges between the ACCC and EAPL (which are summarised by the Full Court19), the ACCC 15 Section 8.1(b) of the Code. 16 Section 8.4 of the Code. 17 Section 2 of Schedule 1. 18 Reasons of Gummow and Hayne JJ at [75]-[80]. 19 Australian Competition and Consumer Commission v Australian Competition Tribunal (2006) 152 FCR 33 at 38-40 [15]-[28]. Crennan rejected EAPL's proposal and substituted its own Access ultimately Arrangement, using a methodology for calculating the ICB of the Pipeline which was conceded by the ACCC to be "idiosyncratic". EAPL then sought review of that decision in the Tribunal. The Tribunal made a number of findings, including a finding that the ACCC had erred in exercising its discretion by substituting its own Access Arrangement. The ACCC then sought judicial review of the decision of the Tribunal in the Full Court of the Federal Court under ss 5 and 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth), as well as under s 39B of the Judiciary Act 1903 (Cth). It was contended by the ACCC that the Tribunal had erred in its approach to its review function, and that its findings were tainted by jurisdictional error. After determining that it had jurisdiction to conduct judicial review20 the Full Court concluded that the ACCC had not erred in exercising its discretion in substituting its own Access Arrangement and utilising a novel method for calculating the ICB. The Full Court also found that the Tribunal had erred in interpreting and applying ss 8.10 and 8.11 of the Code and in concluding that the ACCC had miscarried in the exercise of its discretion21. EAPL now appeals to this Court in respect of the orders made by the Full Court, contending that the Full Court exceeded its judicial review jurisdiction by setting aside the Tribunal's orders. The essential question to be determined is: what is the correct construction and application of s 8.10 of the Code when establishing the ICB of an existing pipeline? The question arises in a setting which also raises for consideration the scope of the Tribunal's jurisdiction to review a decision of the ACCC under s 39 of Schedule 1. The relevant legislation The context and purpose of the Code is well understood, not least because the objectives of the legislation are articulated in the legislation itself in considerable detail. The Code as a whole provides for a regulatory regime of a kind which is "a surrogate for the rewards and disciplines normally provided by a 20 Australian Competition and Consumer Commission v Australian Competition Tribunal (2006) 152 FCR 33 at 70-71 [161]-[162]. 21 Australian Competition and Consumer Commission v Australian Competition Tribunal (2006) 152 FCR 33 at 77 [184]. Crennan competitive market"22. Competitive pressures in a market stimulate efficiency of production and resource allocation, they stimulate efficient investment decisions and they minimise costs23. No party disputed the fact that the regulatory process set out in the legislation was directed to eliminating monopoly pricing whilst nevertheless providing a rate of return to pipeline owners, commensurate with a competitive market. There was nothing controversial about the Tribunal's observation that24: "The setting of a tariff for a monopoly service provider, whether for gas, electricity or other services, is a difficult matter that has vexed regulators, service providers, producers and consumers in various parts of the world. … [A] corpus of economic theory has developed and, as will be seen, its existence is taken for granted by the form of the Code." Nor was it disputed that setting an ICB for existing infrastructure within the regulatory framework was a task requiring consideration of a number of factors. The Code was agreed by the Council of Australian Governments on 7 November 1997 and has been amended by seven amending agreements. All amendments were operative prior to the ACCC approving its own Access Arrangement on 8 December 2003. None of the amendments affects the issue in this appeal. Section 2 of the Code deals with Access Arrangements generally and the processes, including public consultation, associated with approval of such an arrangement. Relevant provisions are as follows: "Submission of Access Arrangements If a Pipeline is Covered, the Service Provider must submit a proposed Access Arrangement together with the applicable Access 22 ACCC's Draft Statement of Principles for the Regulation of Transmission Revenues, 27 May 1999, 1.1. Although the Draft Statement of Principles was produced in the context of the electricity industry, the same approach applies mutatis mutandis to the gas industry. 23 ACCC's Draft Statement of Principles for the Regulation of Transmission Revenues, 27 May 1999, Overview. 24 Application by East Australian Pipeline Limited (2004) ATPR ¶42-006 at Crennan Arrangement Information for the Covered Pipeline to the Relevant Regulator: (a) within 90 days after the Pipeline becomes Covered under section 1.19 or 1.21 if the Covered Pipeline is not described in Schedule A; or (b) within 90 days after the commencement of the Code if the Covered Pipeline is described in Schedule A." Section 2.20 provides for the ACCC, in certain circumstances, to draft and approve its own Access Arrangement instead of the Access Arrangement proposed by the Service Provider. Sections 3.3, 3.4 and 3.5 provide: "Reference Tariffs and Reference Tariff Policy 3.3 An Access Arrangement must include a Reference Tariff for: at least one Service that is likely to be sought by a significant part of the market; and each Service that is likely to be sought by a significant part of the market and for which the Relevant Regulator considers a Reference Tariff should be included. 3.4 Unless a Reference Tariff has been determined through a competitive tender process as outlined in sections 3.21 to 3.36, an Access Arrangement and any Reference Tariff included in an Access Arrangement must, in the Relevant Regulator's opinion, comply with the Reference Tariff Principles described in section 8. 3.5 An Access Arrangement must also include a policy describing the principles that are to be used to determine a Reference Tariff (a Reference Tariff Policy). A Reference Tariff Policy must, in the Relevant Regulator's opinion, comply with the Reference Tariff Principles described in section 8." Section 8.1 provides: "General Principles 8.1 A Reference Tariff and Reference Tariff Policy should be designed with a view to achieving the following objectives: Crennan providing the Service Provider with the opportunity to earn a stream of revenue that recovers the efficient costs of delivering the Reference Service over the expected life of the assets used in delivering that Service; replicating the outcome of a competitive market; ensuring the safe and reliable operation of the Pipeline; not distorting investment decisions in Pipeline transportation systems or in upstream and downstream industries; efficiency in the level and structure of the Reference Tariff; and providing an incentive to the Service Provider to reduce costs and to develop the market for Reference and other Services. To the extent that any of these objectives conflict in their application to a particular Reference Tariff determination, the Relevant Regulator may determine the manner in which they can best be reconciled or which of them should prevail." The "General Principles" are directed to balancing competing considerations relevant to a Reference Tariff. It is important to note that these include "not distorting investment decisions" in the industry. There was no suggestion in this case that the Regulator's own Access Arrangement was the result of resolving a conflict of the kind referred to in s 8.1. Whilst the statement of General Principles is not determinative, it gives "practical content"25 to various terms used in the legislation, including economic terms and processes. What would constitute the establishing of an ICB under the Code is to be considered in the light of the legislative explanations of objectives. Section 8.10 of the Code provides: "Initial Capital Base – Existing Pipelines 8.10 When a Reference Tariff is first proposed for a Reference Service provided by a Covered Pipeline that was in existence at the 25 Russo v Aiello (2003) 215 CLR 643 at 645 [5] per Gleeson CJ. Crennan commencement of the Code, the following factors should be considered in establishing the initial Capital Base for that Pipeline: the Covered Pipeline and subtracting the value that would result from taking the actual capital the cost of accumulated depreciation for those assets charged to Users (or thought to have been charged to Users) prior to the commencement of the Code; the value that would result from applying the 'depreciated optimised replacement cost' methodology in valuing the Covered Pipeline; the value that would result from applying other well recognised asset valuation methodologies in valuing the Covered Pipeline; the advantages and disadvantages of each valuation methodology applied under paragraphs (a), (b) and (c); international best practice of Pipelines in comparable situations international impact competitiveness of energy consuming industries; and the the the basis on which Tariffs have been (or appear to have been) set in the past, the economic depreciation of the Covered Pipeline, and the historical returns to the Service Provider from the Covered Pipeline; the reasonable expectations of persons under the regulatory the regime commencement of the Code; the Pipeline prior that applied the impact on the economically efficient utilisation of gas resources; the comparability with the cost structure of new Pipelines that may compete with the Pipeline in question (for example, a Pipeline that may by-pass some or all of the Pipeline in question); the price paid for any asset recently purchased by the Service Provider and the circumstances of that purchase; and any other factors the Relevant Regulator considers relevant." Crennan It is useful to note here that pars (a), (b) and (c) of s 8.10 each describe a "value", as a "factor" which "should be considered" in establishing the ICB. It was not in dispute that the opening words were mandatory, rather than merely exhortatory26. The value described in s 8.10(a) was noted by the Tribunal to refer to the "depreciated actual cost" (abbreviated to "DAC")27. This is a value which looks backwards and which would be difficult to apply when the ownership of a pipeline has changed. The value in s 8.10(b) is the depreciated optimised replacement cost of a pipeline, referred to throughout these proceedings as "DORC". It involves an assessment of what it would cost to replace a pipeline, and then a depreciation of that figure having regard to the remaining life of the pipeline. The Tribunal made the following observation concerning DORC as identified in s 8.10(b) as a factor to be considered in determining the ICB of a "DORC arrives at a hypothetical value and looks forward. The starting point to ascertain DORC is to arrive at the ORC [Optimised Replacement Cost] (which costs the hypothetical optimised replacement of the pipeline) and then depreciates that amount to what might be called a second hand value, principally because the optimised pipeline would last longer than the existing pipeline." Section 8.11 of the Code provides for the normal range of values: "The initial Capital Base for Covered Pipelines that were in existence at the commencement of the Code normally should not fall outside the range of values determined under paragraphs (a) and (b) of section 8.10." It is also illustrative to consider the means by which the ICB for a new pipeline is calculated: 26 See cl 12(2) of the Appendix to Schedule 1: "In this Law, the word 'must', or a similar word or expression, used in relation to a power indicates that the power is required to be exercised." See also s 10.9 of the Code. 27 Application by East Australian Pipeline Limited (2004) ATPR ¶42-006 at 28 Application by East Australian Pipeline Limited (2004) ATPR ¶42-006 at Crennan "Initial Capital Base – New Pipelines 8.12 When a Reference Tariff is first proposed for a Reference Service provided by a Covered Pipeline that has come into existence after the commencement of the Code, the initial Capital Base for the Covered Pipeline is, subject to section 8.13, the actual capital cost of those assets at the time they first enter service. A new Pipeline does not need to pass the tests described in section 8.16(a). If the period between the time the Covered Pipeline first enters service and the time the Reference Tariff is proposed is such as reasonably to warrant adjustment to the actual capital cost in establishing the initial Capital Base, then that cost should be adjusted the Recoverable Portion (whichever is relevant), Depreciation and Redundant Capital incurred or identified during that period (as described in section 8.9). to account for New Facilities Investment or Rate of Return 8.30 The Rate of Return used in determining a Reference Tariff should provide a return which is commensurate with prevailing conditions in the market for funds and the risk involved in delivering the Reference Service …" The approval process and the decision of the ACCC On 5 May 1999, EAPL proposed an Access Arrangement for the Pipeline with a value for the ICB of $666.7 million based on the DORC methodology. The proposed arrangement assumed a total economic life of certain parts of the Pipeline of 60 years, and for other parts, an economic life of 80 years. The ORC was assessed as being $1,058.6 million, based on a report by Venton & Associates Pty Ltd. Straight line depreciation was used. A contingency of 10 per cent was factored into the estimated ORC. On 11 August 2000, the Australian Pipeline Trust, which had become the owner of EAPL, advised the ACCC that EAPL would be revising the Access Arrangement it submitted in May 1999. Following this, EAPL wrote to the ACCC on 21 September 2000 and indicated that the Pipeline could be expected to have a life of 80 years, rather than the previously estimated 60 years, given the likelihood of upgrades and recoating. Crennan On 19 December 2000, the ACCC released a Draft Decision concerning EAPL's proposed Access Arrangement, with an ICB of $502.081 million, based on a DORC of $539.1 million (adjusted to take into account accumulated deferred tax liabilities). On 30 April 2002, EAPL submitted a revised Access Arrangement. Then EAPL made further submissions to the ACCC on 5 November 2002, submitting an estimated value for DORC of between $768 million and $972 million. On 4 December 2002 EAPL again revised its estimate for the ICB to a range between $784 million and $998 million. On 2 October 2003, the ACCC released its Final Decision. It did not approve the revised Access Arrangement proposed by EAPL. The ACCC determined, instead, that the DORC value for the Pipeline was $715 million and that the ICB should be assessed as $559 million. On 23 October 2003, EAPL submitted a final revised Access Arrangement to the ACCC; and following this also made a number of other written submissions to the ACCC. On 19 November 2003, the relevant Minister determined that a certain section of the Pipeline should no longer be covered, that is, no longer be subject to the provisions of the Code, with effect from 11 December 2003. On 8 December 2003, the ACCC released its Final Approval, in which EAPL's final revised Access Arrangement was rejected, and the ACCC's own Access Arrangement was approved pursuant to s 2.20(a) of the Code. The ACCC's Access Arrangement set an ICB of $545.4 million which figure was commensurate with the ICB calculated in the ACCC's Final Decision, minus an amount for a certain section of the Pipeline which EAPL had subsequently decided not to include in its Access Arrangement. It was not disputed that the ACCC rejected the DORC methodology. Rather, the ACCC started with ORC, an element implied in s 8.10(b), then adjusted it in a manner which was "novel"29 or "idiosyncratic"30. The ACCC supported its valuation, it said, by giving considerable weight to s 8.10(f), which it regarded as requiring it to take into account the basis on which tariffs had been set, or appear to have been set, in the past, the economic depreciation of the Pipeline and historical returns to the service provider. 29 Application by East Australian Pipeline Limited (2004) ATPR ¶42-006 at 30 The ACCC volunteered that description of its approach. Crennan Of its use of ORC as the basis of the valuation of the ICB the ACCC said in its Final Decision: "Use of ORC is preferred to some historical measure of costs as ORC reflects the current costs of the assets and eliminates any redundant assets." Of its rejection of DORC as the basis of the valuation the ACCC also stated: "… the Commission does not consider that a value equal to DORC of $715 million and based on an 80 year life is appropriate, since a 50 year life has been assumed in the past." In essence, the ACCC took into account the amounts EAPL had used for depreciation in the past in adjusting ORC under s 8.10(f). The ACCC considered its value for the ICB best allowed EAPL to recover the efficient costs over the expected life of the Pipeline and best replicated the operation of a competitive market. EAPL applied to the Tribunal for a review of the ACCC's Final Approval under s 39(1) of Schedule 1 on 19 December 2003. Decision of the Tribunal The Tribunal found that it was incorrect and unreasonable for the ACCC to put aside known valuation methodologies and devise a methodology of its own which adjusted the ORC in a "novel fashion"31 after misconstruing s 8.10 of the Code, particularly par (f). The Tribunal observed32: "The ICB is entirely a creature of the Code and what it is and what it does is defined by the Code. It is one integer in a complex of integers used to arrive at an appropriate Reference Tariff. Whilst there is a considerable amount of discretion built into the system for both the operator and the ACCC, each of them, and the Tribunal, is bound by the Code." 31 Application by East Australian Pipeline Limited (2004) ATPR ¶42-006 at 32 Application by East Australian Pipeline Limited (2004) ATPR ¶42-006 at Crennan The Tribunal construed s 8.10 of the Code as setting out factors to be considered seriatim, and concluded that the sequential process mandated by the section was important to the integrity of any determination of an ICB. The Tribunal considered that the values deriving from the methodologies referred to in each of pars (a), (b) and (c) were to be considered first, and then, by virtue of par (d) the merits and disadvantages of utilising each of those methodologies were to be considered next. As to the balance of factors to be considered the Tribunal said33: "Those other subparagraphs are considered in the light of the analysis of recognised valuation methods which the section assumes already to have taken place. The factors to which those other subparagraphs direct attention could assist in the choice between methods, or lead to some adjustment of the result of the chosen method. Those factors would not normally (and perhaps would never) permit recognised valuation methods to be put to one side. In particular, those factors do not warrant departing from a quest for value and entering upon a quest for some form of justice or equity." Of s 8.10(f), the Tribunal said that when the factors referred to in the section were considered together34: "… they point to a set of circumstances in which the combined effect of past history is such as to require a modification of normal valuation methods which may have thrown up an unreasonably high ICB that would cause an unreasonably high tariff." It is reasonably clear that factors listed in pars (g) and (j), like par (f), also look backwards. Consideration of those factors ensures that capital investment is not recovered on some abnormal or excessive basis. The Tribunal concluded that the ICB "should accord with DORC calculated upon ORC which includes a 7.5 per cent contingency for omissions" and that depreciation "should assume a life for the [Pipeline] as it stands and be based upon [Net Present Value] calculated in relation to cost"35. 33 Application by East Australian Pipeline Limited (2004) ATPR ¶42-006 at 34 Application by East Australian Pipeline Limited (2002) ATPR ¶42-006 at 35 Application by East Australian Pipeline Limited (2004) ATPR ¶42-006 at Crennan The Tribunal ultimately made orders on 19 May 2005 varying the ACCC's decision and substituting an ICB of $834.66 million (July 2003 dollars). On 26 May 2005 the ACCC filed an amended application for review in the Federal Court, to which reference has already been made36. Decision of the Full Court On 2 June 2006 the Full Court set aside the orders of the Tribunal which resulted in variation of the ICB. While the Full Court recognised that the ACCC did not adopt known valuation methods in determining the ICB, it concluded that the ACCC considered all the factors set out in pars (a)-(k) of s 8.10. It considered that the ACCC's approach was a permissible two stage method of determining the appropriate amount of depreciation and that blending of elements implied in s 8.10(b) and referred to in par (f) was not precluded by the structure or terms of s 8.10. It stated37: "Although DORC is a forward-looking concept, that is not to say that the ORC, from which is derived the DORC, cannot be 'tweaked' or adjusted or varied by reference, for example, to the factors set out in subpara (f) of s 8.10 of the Code before reaching a final figure for the ICB". Submissions on appeal On the issue of the correct construction and application of s 8.10 it was emphasised for the ACCC that the exercise being undertaken under s 8.10 was setting a capital base, not valuing the Pipeline; setting the ICB was not an exercise in commercial or market valuation but the ascribing of a regulatory amount. The ACCC did not criticise the DORC methodology. This was not surprising given the ACCC's support for the methodology in materials mentioned by the Tribunal, indicating that the ACCC considered the DORC methodology of asset valuation was particularly apt when economic efficiency was relevant38. It was not submitted by the ACCC that ORC was a well recognised asset valuation methodology as referred to in s 8.10(c). 36 See above at [15]. 37 Australian Competition and Consumer Commission v Australian Competition Tribunal (2006) 152 FCR 33 at 80 [193]. 38 ACCC's Draft Statement of Principles for the Regulation of Transmission Revenues, 27 May 1999, 3.4 and 4.3. Crennan It was contended that the Tribunal erred in giving what was called in argument "primacy" to the valuation factors in s 8.10(a)-(d) and in construing s 8.10 as a whole as laying down a sequential process. The ACCC sought to maintain the Full Court's finding of error of law in the Tribunal's construction of s 8.10 and the Full Court's alternative construction of s 8.10, namely that the elements of pars (b) and (f) could be blended to arrive at an ICB for the Pipeline. As an alternative to reliance on s 8.10(f), the ACCC relied on s 8.10(k). EAPL sought to reinstate the Tribunal's construction and application of s 8.10, as being consistent with the language and structure of s 8.10. It was contended that the Full Court misapprehended the nature of the Tribunal's jurisdiction under s 39 of Schedule 1. Proper construction of s 8.10 of the Code The differing constructions given to s 8.10 by the Tribunal and the Full Court are irreconcilable. For the reasons which follow, the construction to which the Tribunal gave effect in varying the ICB is correct. That construction takes into account the natural meaning of the words used and it best attains the purpose or objectives of the legislation as mandated by cl 7 of the Appendix to Schedule 1. The framework for third party access to natural gas pipelines set out above directs attention to the multiple objectives of an approved access regime. Stripped to essentials, such a regime is at least intended to allow efficient costs recovery to a service provider and at the same time ensure pricing arrangements for the consuming public which reflect the benefits of competition, despite the provision of such services by monopolies. The balancing of those objectives properly has a natural flow-on effect for future investment in infrastructure in Australia. The greater the degree of uncertainty and unpredictability in the regulatory process, the greater will be the perceived risk of investment. The greater the perceived risk of investment, the higher will be the returns sought. Various methodologies referred to in the Code must at least not be inconsistent with the principles stated by the legislature, which are directed to economic efficiency. Service providers, the ACCC and the consuming public (through public consultation processes)39 may have occasion to refer to and rely on s 8.10 of the Code. For example, on first submitting a proposed Access Arrangement under s 2.2 of the Code, a service provider, such as EAPL, will need to address s 8.10 and related requirements. 39 See, for example, ss 2.9-2.13 of the Code. Crennan Section 8.4 of the Code, as amended, refers to the "Capital Base" as "the value of the capital assets that form the Covered Pipeline or are otherwise used to provide Services". The ACCC referred to s 8.10(f) as supporting its "valuation" of the ICB. The primary and natural significance of the words used in, and the structure of, s 8.10(a)-(d) mandates consideration of values derived from "well recognised asset valuation methodologies" followed by a comparative weighing up of these approaches to valuation. It is clear that a range of well recognised asset valuation methodologies can be considered and within that range a choice of value may be made. The discretion permitted is wide but limited. The reference to well recognised asset valuation methodologies emphasises that valuation, in this context, is a practical exercise. Idiosyncrasy in valuing an initial capital base is capable of distorting the proper calculation of a rate of return "commensurate with prevailing conditions in the market"40 for funds and the risk involved, as provided in s 8.30. Specific factors mentioned in s 8.10 at pars (e) and (j), and "any other factors" referred to in par (k), are all factors which may bear on the range of values deriving from different, but well recognised valuation methodologies. They are to be referred to only after the range of values has been considered, and a provisional value has been established, following the process described in pars (a)-(d). There is nothing in the overall structure of the section which indicates that factors listed in pars (e) to (j) or indeed par (k) would allow the person considering all of the s 8.10 factors to jettison or ignore the factors covered by pars (a) to (d) or to give them cursory consideration only in order to put them to one side. Those first four factors are fundamental to the practical exercise which is being undertaken. The Tribunal recognised correctly that the other factors in pars (e) to (k) "could assist in the choice between methods, or lead to some adjustment of the result of the chosen method"41. The importance of pars (a) and (b) is emphasised by s 8.11 providing for the "normal range" of values. It was contended by the ACCC that the ICB established by it fell within the range referred to in s 8.11. However, the construction of s 8.10 (which sets out a process) does not depend on the arithmetical results, which may be obtained by any novel or idiosyncratic use of the factors set out in pars (a)-(k). 40 Section 8.30 of the Code. 41 Application by East Australian Pipeline Limited (2004) ATPR ¶42-006 at 48,804 [19]. Section 8.10(f) operates in that way. Crennan Whilst it is true that in its entirety, s 8.10 does not mandate the establishment of an ICB by reference only to a value established by reference to well recognised asset valuation methodologies, it does, however, mandate reference to known valuation methodologies as the starting point for setting an ICB. Commencing the process of setting an ICB by reference to values derived from well recognised asset valuation methodologies is entirely consistent with the reasons for setting an ICB in the first place, namely establishing a fair rate of return on the value of the capital base commensurate with prevailing conditions in the market for funds and the risk involved. Thus is the ICB a key factor in setting a Reference Tariff. When the express terms and the logical structure of s 8.10 are construed, particularly in the context of the Code, it is clear that the factors which should be considered are to be dealt with in a particular manner. The context of the Code, considered widely42, includes the objectives to be achieved in setting a Reference Tariff and the purposive relationship between an ICB and a rate of return, commensurate with prevailing market conditions for funds and the risk involved. Section 8.10 mandates a process for setting an ICB in which there are essentially three steps. First, a value for the asset base needs to be chosen by reference to well recognised asset valuation methodologies (pars (a)-(c)). Secondly, the advantages and disadvantages of each of the possible well recognised valuation methodologies is to be assessed (par (d)). Thirdly, the factors set out in pars (e) to (k) must be considered as they may bear on the choice of methodology and/or oblige an adjustment of value derived from the chosen methodology. No factor is an independent factor. Further, it is not unusual for any asset valuation methodology to require the taking of sequential steps. The DORC methodology itself requires steps to be taken, such as the establishment of ORC, as a preliminary to establishing DORC. Just as no factor in s 8.10 is independent of the others, no step on the way to establishing a factor is independent of the process laid down by s 8.10. There is nothing in the primary and natural significance of the words used to describe the individual factors set out in pars (a) to (k), or in the structure of s 8.10, which supports the conclusion that an implied step or element of s 8.10(b), namely ORC (the starting point for establishing the DORC) can be blended with a factor referred to in s 8.10(f) to set an ICB. 42 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ. Crennan A construction of s 8.10 which permitted the process set out in s 8.10 to be put aside would render it difficult, if not impossible, for either service providers or the consuming public (through the consultation processes) to treat s 8.10 as a certain list of factors to be taken into account in a particular manner in setting an ICB. This would complicate the task of any service provider in preparing a proposed Access Arrangement of an established pipeline, as required by s 2.2 of the Code. The complicated nature of that process can be gleaned from the chronology of the approval process in this case, set out above. Further, the task of establishing a rate of return on investment, for regulatory purposes, commensurate with prevailing market conditions for funds and the risk involved would be rendered a much less certain process than it is already. Such a result could distort future investment decisions about essential infrastructure. Conclusions and orders EAPL has succeeded on the grounds of appeal dealing with s 8.10 of the Code, as well as succeeding in respect of the grounds concerning the nature and scope of the Tribunal's powers of administrative review. The appeal should be allowed with costs. The orders of the Full Court setting aside the Tribunal's determination of the ICB should be set aside. Accordingly order 4 of the Full Court's orders of 2 June 2006 should be set aside. Orders 2, 3, 4 and 5 of the Full Court's orders of 18 August 2006 should also be set aside. The balance of the ACCC's application for judicial review being grounds (A)(2)(1)-(7) (inclusive) and any subsequent ground referring back to those grounds should be stood over for further directions before the Full Court to which the matter should be remitted. The ACCC must pay EAPL's costs of the appeal and the costs incurred to date of the application below. GUMMOW AND HAYNE JJ. The term "review" is used in various senses in public law and takes its content from the particular statutory or constitutional setting in which it appears. In the present case the term is used in several legislative schemes for administrative review and for judicial review. The one dispute attracted administrative review of a regulatory decision and then judicial review of the outcome of that administrative review. This appeal is brought from the Full Court of the Federal Court (French, Goldberg and Finkelstein JJ)43 which was exercising original jurisdiction conferred by either or both of s 8 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") and s 39B of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). The subject of the exercise of that jurisdiction was a decision of the Australian Competition Tribunal ("the Tribunal") which is the second respondent in this Court and a submitting party. The appellant ("EAPL") contended in this Court that the Federal Court wrongly concluded that there was error, judicially reviewable under the ADJR Act or s 39B of the Judiciary Act, by the Tribunal in the discharge of its powers of administrative review of rulings by the first respondent ("the ACCC") under a statutory regime for third party access to gas pipeline systems. EAPL is the owner of the Moomba-Sydney Pipeline System ("the Pipeline") which it purchased in 1994 for $534.3 million, pursuant to the Moomba-Sydney Pipeline System Sale Act 1994 (Cth) ("the 1994 Act"). The main component of the Pipeline was constructed between 1974 and 1976 by the Pipeline Authority ("the PA"), a body established by the Pipeline Authority Act 1973 (Cth). Various lateral pipelines were constructed by the PA in 1981, 1987 and 1993. The PA failed to earn commercial returns from the Pipeline or to recover its costs. The present regulatory regime, to be discussed further in these reasons, required EAPL to establish a system, approved by the ACCC, for third party access to the Pipeline. In default of approval by it, the ACCC was empowered to draft and approve its own access arrangement. That is what happened here. The litigation arises from a dispute between EAPL and the ACCC concerning the basis in the final determination by the ACCC for the calculation of charges to third parties for use of the Pipeline. 43 Australian Competition and Consumer Commission v Australian Competition Tribunal (2006) 152 FCR 33. Systems of administrative and judicial review The subject of the judicial review by the Federal Court was a "review" by the Tribunal of the final determination by the ACCC made on 8 December 200344. The Tribunal comprised Gyles J (Deputy President), Mr R C Davey and Miss M M Starrs. It acted as the "relevant appeals body" under a State access regime law for the regulation of third party access to gas pipelines, including the Pipeline. This regime is set up by the Gas Pipelines Access (South Australia) Act 1997 (SA) ("the SA Act")45. On the application of EAPL, the Tribunal varied the determination of the ACCC in important respects. Thereafter, upon the judicial review application by the ACCC, the Federal Court, to a substantial extent, set aside or modified the various orders of the Tribunal, and remitted the matter for reconsideration by the Tribunal. In this Court, EAPL seeks the restoration of its success in the Tribunal. The Tribunal is established by Pt III of the Trade Practices Act 1974 (Cth) ("the TP Act"). The ACCC is another federal body, established by Pt II of the TP Act. Thus, neither body owes its existence to State legislation. However, the effect of ss 44ZZM-44ZZMB of the TP Act46 is that a State access regime law, such as the SA Act, may confer functions or powers, or impose duties, on the ACCC or the Tribunal. In the present case, there has been no challenge to the possession by the ACCC and the Tribunal of the necessary authority under federal law47. In that regard the Full Court observed that the powers of the Tribunal and the ACCC were supportable "at least" by the interstate trade and commerce power conferred upon the Parliament by s 51(i) of the Constitution48. The Tribunal is empowered by Pt IX of the TP Act (ss 101-110) to review certain determinations made under the TP Act by the ACCC. However, the term "review" when used in Pt IX involves a re-hearing by the Tribunal of the whole matter so that it decides for itself, and on the material before it, whether the determination of the ACCC should be affirmed, varied or set aside. This was established by Re Herald & Weekly Times Ltd49. As will appear, Pt IX provides 44 [2004] A Comp T 8. 45 Schedules 1 and 2. 46 Added by the Trade Practices Legislation Amendment Act 2003 (Cth). 47 Cf R v Hughes (2000) 202 CLR 535. 48 (2006) 152 FCR 33 at 69. 49 Re Herald & Weekly Times Ltd (1978) 17 ALR 281 at 295. for a much broader measure of "review" by the Tribunal than that which is found in the special regime established by the SA Act and pursuant to which the Tribunal acted in the present case. Further, both these systems for administrative review by the Tribunal are marked off from the two avenues for judicial review which are provided for the Federal Court by the ADJR Act and by s 39B of the Judiciary Act. One of the grounds of the appeal by EAPL to this Court is that the Federal Court misapprehended or exceeded its judicial review jurisdiction in setting aside the decision of the Tribunal upon its administrative review of the final determination by the ACCC. A distinction should immediately be made here. Section 39B(1) of the Judiciary Act draws upon s 75(v) of the Constitution and thus upon principles respecting jurisdictional error. Not all errors of law go to jurisdiction and if they do not go to jurisdiction the constitutional writs do not lie. Certiorari is not a constitutional writ but does lie for error of law on the face of the record. The complexities which ensue in federal jurisdiction based upon s 75(v) are discussed by Hayne J in Re McBain; Ex parte Australian Catholic Bishops Conference50. The ADJR Act, on the other hand, does provide as a ground of judicial review (s 5(1)(f)) "that the decision involved an error of law, whether or not the error appears on the record of the decision". However, the Court in Australian Broadcasting Tribunal v Bond51 took from the word "involved" a stipulation that the error be material in contributing to the decision so that but for the error the decision, at least, might have been different. In supporting in this Court the judgment of the Federal Court, the ACCC recognised the difficulty in establishing jurisdictional error by the Tribunal and identified as the "primary basis" for the Full Court decision the exercise of its jurisdiction under the ADJR Act, rather than under s 39B of the Judiciary Act. The Tribunal was said by the ACCC to have erred in the discharge of its review function because it had misconstrued what was identified as "the Code". However, as will appear later in these reasons, there was no such error and it was the Full Court which erred in its treatment of the decision of the Tribunal. The Code Schedule 2 to the SA Act sets out the National Third Party Access Code for Natural Gas Pipeline Systems ("the Code"). The Code, as amended from 50 (2002) 209 CLR 372 at 467-472 [267]-[280]. 51 (1990) 170 CLR 321 at 353-354. time to time, gives effect, for South Australia, to a national competition policy and national pipeline access agreement made between the Commonwealth, State and Territory Governments. The Pipeline was a "Covered Pipeline" to which the Code applied. EAPL was classified as a "Service Provider" and required by the Code to propose an "Access Arrangement" for use of the Pipeline by third parties and a "Reference Tariff" of charges for such use. The ACCC was designated as a "Relevant Regulator" under the Code. The ACCC did not approve of the access arrangement proposed by EAPL under s 2.2 of the Code. Exercising its powers under s 2.20 of the Code, the ACCC substituted its own arrangement incorporating a tariff based upon a lower Initial Capital Base ("ICB") than that adopted by EAPL. The ACCC did so by the final determination made on 8 December 2003. The ACCC fixed the ICB at $545.4 million, while EAPL had submitted that the ICB should be established at $756.9 million. Review by the Tribunal Schedule 1 to the SA Act specifies the Tribunal as a "relevant appeals body". Part 6 (ss 38-39) is headed "Administrative appeals". It sets up two systems of review. First, s 38 empowers the relevant appeals body to exercise the same powers in dealing with the subject matter of the decision as may be exercised with respect to the subject matter by the decision maker (s 38(9)). However, the classes of decisions to which s 38 applies do not include the determination made by the ACCC on 8 December 2003 which EAPL disputes. The relevant regime for review of the ACCC determination is established by s 39 of Sched 1 to the SA Act. The chapeau of that section reads "Limited review of certain decisions of Regulator". Section 39(1) provides for an application to the appropriate appeals body (ie the Tribunal) by the service provider (ie EAPL) for "review" of a decision by the relevant Regulator under the Code (ie the ACCC) to approve the Regulator's own access arrangement in place of an Access Arrangement submitted for approval by the service provider. Section 39(2) states: "An application under this section – (a) may be made only on the grounds, to be established by the applicant – of an error in the relevant Regulator's finding of facts; the exercise of that the relevant Regulator's discretion was incorrect or was unreasonable having regard to all the circumstances; or (iii) that the occasion for exercising the discretion did not arise; and in the case of an application under subsection (1), may not raise any matter that was not raised in submissions to the relevant Regulator before the decision was made." (emphasis added) Section 39(5) limits the range of materials which may be considered by the Tribunal as the "relevant appeals body" in a fashion which indicates that what is involved is a review on the record which was before the ACCC as the relevant Regulator, rather than a full "merits" review of the type considered in Re Herald & Weekly Times Ltd52. It is common ground that the phrase "the exercise of the relevant Regulator's discretion" in sub-par (a)(ii) of s 39(2), encompassed the fixing by the ACCC of the ICB in its final determination53. However, the effect of s 39(6) and s 38(9) was to empower the Tribunal to make an order affirming, setting aside or varying the decision under review and it was this power which the Tribunal used to replace the ICB of $545.4 million fixed by the ACCC with an ICB of $834.66 million. Paragraph (a) of s 39(2) limits to three the grounds upon which it was open to EAPL to challenge before the Tribunal the ACCC determination. The focus of the complaints by EAPL was not upon an alleged error of the ACCC in its findings of fact (sub-par (i)), nor was it said that the occasion for the ACCC to fix the ICB in its final determination had not arisen (sub-par (iii)). Rather, attention was given to sub-par (ii). This distinguishes between, first, an exercise of the "discretion" of the ACCC which is "incorrect" and, secondly, an outcome which "was unreasonable having regard to all the circumstances". In understanding this distinction assistance is provided by the well known passage in the joint judgment of Dixon, Evatt and McTiernan JJ in House v The King54. The first branch of sub-par (ii) should be understood as encompassing the words in House, "[i]f the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him … if he does not 52 (1978) 17 ALR 281. 53 Cf BHP Petroleum Pty Ltd v Balfour (1987) 180 CLR 474 at 480-481. 54 (1936) 55 CLR 499 at 505. take into account some material consideration … ." The second branch of sub-par (ii) covers the case where failure properly to exercise the discretion may be inferred from the character of the result, again in the words of House, as "unreasonable or plainly unjust". This is the approach to sub-par (ii) of s 39(2)(a) which was taken by the Tribunal (Cooper J presiding) in Application by Epic Energy South Australia Pty Ltd55. When seen in this light, the term "unreasonable" provides the basis for inferring the presence of one or more of the well established grounds which render a decision "incorrect" in the sense of the first branch of sub-par (ii). This understanding of the notion of "unreasonableness" as founding an inference (rather than itself providing a ground of review) was developed by Dixon J in Avon Downs Pty Ltd v Federal Commissioner of Taxation56. The additional use of the term "unreasonable", in the sense of being "so unreasonable that no reasonable person could have so exercised the power", has been developed in the case law over the last 60 years as an independent ground of judicial review and is embodied in the ADJR Act57. Some account of that development was given by McHugh and Gummow JJ in Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/200258. The better view is that the limited administrative review system established by s 39 of Sched 1 to the SA Act does not include this judicial review ground by use of the word "unreasonable". In any event, the decision of the ACCC was not treated by the Tribunal as vitiated simply on Wednesbury unreasonableness grounds. Section 8 of the Code The principal area of dispute before the Tribunal had concerned application of the review provision of s 39(2) of Sched 1 to the SA Act to the treatment by the ACCC in its final determination respecting the ICB, of the criteria for existing pipelines specified in s 8.10 of the Code. Section 8.1 sets out certain "General Principles" with which Reference Tariffs included in an Access Arrangement must comply. To the extent possible, service providers are to be given a "market-based incentive to improve efficiency and to promote efficient growth of the gas market". Further, service providers 55 (2004) ATPR ¶41-977 at 48,442. 56 (1949) 78 CLR 353 at 360. See, further, Aronson, Dyer and Groves, Judicial Review of Administrative Action, 3rd ed (2004) at 334-336. 57 Sections 5(1)(e), 5(2)(g). 58 (2003) 77 ALJR 1165 at 1177-1178 [66]-[69]; 198 ALR 59 at 74-76. should be provided with "the opportunity to earn a stream of revenue that recovers the costs of delivering the Reference Service over the expected life of the assets used in delivering that Service, to replicate the outcome of a competitive market, and to be efficient in level and structure". These concerns with market-based incentives and the replication of the outcome of a competitive market would be shared with service providers by their financiers who are lending or providing other accommodation on the strength of such matters. The General Principles are important when construing the more detailed provisions respecting approval by the ACCC of a Reference Tariff. There was no immediately competitive structure to the Pipeline owned by EAPL and what was called for was a Reference Tariff which would replicate approximately a tariff in a competitive market. The effect of s 8.2 of the Code was that the ACCC had to be satisfied when determining approval of a Reference Tariff that the revenue to be generated from the sale or forecast sales of all services over the Pipeline during the Access Arrangement period (called the "Total Revenue") was established consistently with the principles and according to one of the methodologies contained in s 8 of the Code. Section 8.4 set out three methodologies for the calculation of Total Revenue. Each of these had as a component "the value of the capital assets that form the Covered Pipeline or are otherwise used to provide Services" (called the "Capital Base"). Section 8.10 should be read with s 8.11. The text of these provisions is as follows: "Initial Capital Base – Existing Pipelines 8.10 When a Reference Tariff is first proposed for a Reference Service provided by a Covered Pipeline that was in existence at the commencement of the Code, the following factors should be considered in establishing the initial Capital Base for that Pipeline: the Covered Pipeline and subtracting the value that would result from taking the actual capital cost of the accumulated depreciation for those assets charged to Users (or thought to have been charged to Users) prior to the commencement of the Code; the value that would result from applying the "depreciated optimised replacement cost" methodology in valuing the Covered Pipeline; the value that would result from applying other well recognised asset valuation methodologies in valuing the Covered Pipeline; the advantages and disadvantages of each valuation methodology applied under paragraphs (a), (b) and (c); international best practice of Pipelines in comparable international impact situations competitiveness of energy consuming industries; and the the the basis on which Tariffs have been (or appear to have been) set in the past, the economic depreciation of the Covered Pipeline, and the historical returns to the Service Provider from the Covered Pipeline; the reasonable expectations of persons under the regulatory regime the commencement of the Code; the Pipeline prior that applied the impact on the economically efficient utilisation of gas resources; the comparability with the cost structure of new Pipelines that may compete with the Pipeline in question (for example, a Pipeline that may by-pass some or all of the Pipeline in question); the price paid for any asset recently purchased by the Service Provider and the circumstances of that purchase; and any other factors the Relevant Regulator considers relevant. 8.11 The initial Capital Base for Covered Pipelines that were in existence at the commencement of the Code normally should not fall outside the range of values determined under paragraphs (a) and (b) of section 8.10." (emphasis added) The phrase "should be considered" is to be understood in a mandatory rather than a directory or exhortational sense. The ACCC accepts this and says that it complied. EAPL says the ACCC did not comply and the Tribunal rightly intervened. From the internal structure of s 8.10 several relevant considerations appear. First, pars (a)-(d) are directed to "the value" which would result from the "well recognised asset valuation methodologies" specifically identified in pars (a), (b) or any other valuation methodology which is "well recognised" (par (c)). Then, as required by par (d), it is the advantages and disadvantages of each of the methodologies identified in pars (a), (b) and (c), and of no other valuation methodology, which are to be considered in establishing the ICB for the pipeline in question. In particular, and contrary to oral submissions by the ACCC in this Court, par (k) cannot be relied upon by the regulator to sidestep the dictates of pars (a)-(d) by introducing a novel asset valuation methodology. Paragraphs (e)-(j) are not addressed specifically to any valuation methodology. Rather they are expressed as factors to be considered in establishing the ICB and so might bear upon the subject of par (d), namely advantages and disadvantages of the various well recognised asset valuation methodologies identified in pars (a)-(c). It should be added, that it was common ground that par (a) was of no direct significance in this case. This was because "the actual capital cost" was read by the parties as referring to the costs of the original construction of the Pipeline by the PA before its purchase in 1994 by EAPL and the "accumulated depreciation" spoken of in par (a) is that charged to users before the Code commenced. The asset valuation methodology identified in par (b) of s 8.10 was identified as "DORC" and was described by the Tribunal as follows59: "DORC arrives at an hypothetical value and looks forward. The starting point to ascertain DORC is to arrive at the ORC [ie Optimised Replacement Cost] (which costs the hypothetical optimised replacement of the pipeline) and then depreciates that amount to what might be called a second hand value, principally because the optimised pipeline would last longer than the existing pipeline." The determination by the ACCC EAPL's submissions to the ACCC had proposed an ICB based upon the DORC method. The value which the ACCC fixed for the ICB, however, was calculated by the application of a method it described as a "valuation", being "[t]he basis of the valuation is ORC, which the [ACCC] has depreciated on the assumption of a 50 year asset life to 2000, consistent with the useful asset life previously assumed by EAPL. From 2000 59 Application by East Australian Pipeline Ltd (2004) ATPR ¶42-006 at 48,804. onwards, the [ACCC] has used an 80 year [life], the life which EAPL has submitted is the current useful life and which the [ACCC] has accepted." The ACCC added that "[t]o support this valuation the [ACCC] has given considerable weight to section 8.10(f) of the Code." In this Court, counsel for the ACCC accepted that it had put aside any well recognised asset valuation methodologies and had been idiosyncratic. The ACCC started with ORC, but rather than depreciating it in accordance with DORC methodology, the ACCC discounted it. Counsel for the ACCC submitted that it was enough that the result could be "fitted" into s 8.10, looking at the elements of s 8.10, "collectively" and that, in any event, par (k) was sufficient support. Those submissions should be rejected. The reasoning of the Tribunal The Tribunal accepted the submission by EAPL that it had been a fundamental error for the ACCC to put aside known valuation methodologies and to devise a methodology which adjusted ORC in a novel fashion. It follows from what has been said earlier in these reasons that this error was the result of a misconstruction of s 8.10 of the Code. The result was that for this reason alone the Tribunal had been empowered in accordance with s 39 of Sched 1 to the SA Act to act as it did and to set aside the ICB determined by the ACCC. The Tribunal saw "some substance"60 in an additional submission by EAPL but did not rule upon it. This submission was that the ACCC had sought to fix the ICB at a level that would reflect the price paid by EAPL in 1994 for the Pipeline on the basis that to allow an ICB in a greater sum (as sought by EAPL) would be to give EAPL a "windfall"61 as purchaser of the privatised asset. The Tribunal observed that it was "not stretching things too far"62 to see that concern as an explanation for depreciating ORC to DORC. The Tribunal noted that the purchase price paid by EAPL in 1994 was an unreliable guide to the true value of the Pipeline at that time, saying that EAPL 60 Application by East Australian Pipeline Ltd (2004) ATPR ¶42-006 at 48,807. 61 (2004) ATPR ¶42-006 at 48,807. 62 (2004) ATPR ¶42-006 at 48,807. may be seen as having received "a bargain or a windfall"63 in the absence of an open and unconditional tender. However, the Tribunal added64: "as our earlier discussion of the Code shows, the primary quest is for a proper contemporaneous value from which to deduce a tariff that will replicate a hypothetical competitive market. It is not to provide subsidies to customers. Pricing below a tariff based upon true value would not replicate a competitive market." The Tribunal said the following with respect to the reliance by the ACCC upon ORC65: "The ACCC received a number of expert opinions as to the appropriate methodology to be used – some commissioned by EAPL and some by the ACCC. These in turn referred to other expert sources and to ACCC decisions in other cases. On 27 May 1999 the ACCC had issued a Draft Statement of Principles for the Regulation of Transmission Revenues (Draft Statement of Principles) which had canvassed appropriate methodologies. The ACCC did not cite any of that material in support of the reasoning behind its decision as to the ICB. That is not surprising. ORC is only utilised in this field as the starting point from which to deduce DORC. These are forward looking concepts and the 'depreciation' concerned is economic depreciation. There is no support for ORC to be adjusted to take account of past events particularly based upon accounting concepts of depreciation, and to do so is wrong in principle." In this Court the ACCC relied upon par (b) of s 8.10 as authorising the treatment of ORC as an independent consideration or factor, to be "blended" with other factors. The text of the paragraph denies that submission. The ACCC was required to consider as a factor "the value" that would result "from applying" DORC, not from applying an integer of DORC or an amount from which DORC is deduced. The Tribunal also considered the reliance placed by the ACCC upon par (f) of s 8.10. With respect to those submissions the Tribunal correctly said that they involved a misunderstanding of that provision. It said that when the factors in s 8.1066: 63 (2004) ATPR ¶42-006 at 48,807. 64 (2004) ATPR ¶42-006 at 48,807. 65 (2004) ATPR ¶42-006 at 48,805-48,806. 66 (2004) ATPR ¶42-006 at 48,806. "are considered together, they point to a set of circumstances in which the combined effect of past history is such as to require a modification of normal valuation methods which may have thrown up an unreasonably high ICB that would cause an unreasonably high tariff. The ACCC did not apply that reasoning in the present case. There appears to be no proper basis for doing so. When the past history of the operation of the [Pipeline] is considered as a whole, it is plain that the operation has been, and remains, seriously in debit which will never be recovered. Thus the users of the [Pipeline] have been subsidised at the expense of the operator of the [Pipeline]. The tariff that was set following acquisition of the [Pipeline] by EAPL can be assumed to be set at a more realistic level and is indeed at a level in excess of that proposed by the ACCC. Thus there would be no tariff 'shock' if the EAPL proposal were accepted. It is not possible to draw the conclusion that the few years of operation of the [Pipeline] by EAPL has caused such a gross over-recovery of depreciation as to require offset in setting the ICB under the regulatory regime." It should be added immediately that, in its rejection of the decision of the Tribunal, the Full Court did not consider this important part of its reasoning. There having been disclosed to the Tribunal error of the description in par (a)(ii) of s 39(2) of Sched 1 to the SA Act, the Tribunal's powers under s 39(6) and s 38(9) were enlivened. Several steps then followed. On 18 March 2005 the Tribunal delivered supplementary reasons67 and on 3 May 2005 it directed that EAPL submit a revised Access Arrangement. On 19 May 2005 the Tribunal made its final order whereby, with effect 1 July 2005, it varied the ACCC Access Arrangement of 8 December 2003, in particular by stipulating an ICB of $834.66 million. The Full Court The Full Court set aside that part of the Tribunal's order respecting the ICB. However, the effect of the order of the Full Court was not to reinstate fully the decision of the ACCC. This was because, in addition to the submissions which now failed in the Full Court, EAPL had submitted an argument in the Tribunal which remained outstanding. This was that par (g) of s 8.10 of the Code (which concerns the reasonable expectations of persons under the pre-Code regulatory regime for the Pipeline) would justify a finding of a potential ICB of at least $784 million. The Full Court remitted the matter to the Tribunal for consideration. 67 Application by East Australian Pipeline Ltd (2005) ATPR ¶42-047. In this Court, EAPL submits that in making its orders with respect to the Tribunal's decision, the Full Court itself erred in several respects. First, it did not find, nor even upon the reasoning by which it criticised the Tribunal's decision, could it have found, jurisdictional error required to attract relief under s 39B of the Judiciary Act. Secondly, within its jurisdiction the Tribunal had made no error of law to attract relief under the ADJR Act. The Full Court said that it was "implicit" in the reasons of the Tribunal that it gave68: "a primacy to the valuation methodologies set out in subparas (a), (b) and (c) and then allowing reference to the factors in subparas (e) to (k) to enable a [f]inal [d]ecision to be made as to the particular valuation method identified in subparas (a), (b) and (c) to be selected as the ICB, albeit with some adjustment". The Full Court continued69: "Put shortly, the factors in subparas (e) to (k) are not in every case subordinate to, or of lesser significance than, the factors in subparas (a), (b) and (c), although they only arise for consideration, as a matter of logical analysis after the values in subparas (a), (b) and (c) and their advantages and disadvantages have been considered in accordance with subpara (d)." There are difficulties with these passages. First, as the Full Court seems to agree in the second of the above extracts, as a matter of proper construction sub-pars (e)-(k) can only arise for consideration after consideration of established valuation methodologies in accordance with pars (a)-(d). In that sense, at least, pars (a)-(d) come first. Secondly, no such consideration was given by the ACCC. It was not enough for the ACCC to say in its final determination that it had considered those matters in the sense of having looked at but discarded them. Thirdly, there was error by the Full Court itself when it said of the ACCC70: "However, we do not agree that it is correct to say as the Tribunal did 'those factors would not normally (and perhaps would never) permit recognised valuation methods to be put to one side'. Of course, s 8.11 of the Code must be taken into account, but that is not to say that the figures 68 (2006) 152 FCR 33 at 77. 69 (2006) 152 FCR 33 at 77. 70 (2006) 152 FCR 33 at 78. derived by reference to any of the methodologies referred to in subparas (a), (b) and (c) cannot be varied or altered depending upon the extent and weight of the consideration of the factors referred to in subparas (e) to (k)." (emphasis added) The ACCC had not acted in the manner so described. It did not derive a figure from the methodology in par (b); it extracted ORC from that methodology. The Full Court criticised the Tribunal for having distinguished a quest under s 8.10 for value from entry upon a quest for some form of justice or equity71. But this distinction served merely, and properly, to emphasise that what was to be established was an ICB for the Pipeline, notwithstanding its history and the circumstances of its purchase by EAPL in 1994. "At the end of the day the ICB established by the ACCC was not a valuation in accordance with the valuation methodology referred to in subpara (a) or (b) or another well recognised valuation methodology referred to in subpara (c) of s 8.10. Rather it was the determination or establishment of the ICB after having considered all the factors set out in subparas (a) to (k) of s 8.10." (emphasis added) EAPL correctly submits that the difficulty lies in the second sentence. The Full Court disclosed no provision in s 8.10 which authorised the treatment by the ACCC of ORC as an independent and determinative factor in establishing the ICB. Conclusions The Tribunal discharged its functions as the "relevant appeals body" under s 39 of Sched 1 to the SA Act in a fashion which did not involve the commission of any errors of law within the meaning of s 5(1)(f) of the ADJR Act. The Tribunal committed no jurisdictional error to attract the exercise of jurisdiction conferred on the Federal Court by s 39B(1) of the Judiciary Act. To the contrary, the Tribunal correctly found that the ACCC had misconstrued, and as a result misapplied, the Code. The orders of the Tribunal made on 19 May 2005 should not have been varied or set aside by the Full Court. 71 (2006) 152 FCR 33 at 77. 72 (2006) 152 FCR 33 at 81. Orders The appeal to this Court should be allowed with the costs of EAPL against the ACCC. Order 4 of the Full Court's orders made on 2 June 2006 should be set aside. Orders 2, 3, 4 and 5 of the Full Court's orders made on 18 August 2006 should be set aside. The ACCC should pay the costs of EAPL incurred to date in the Federal Court. The balance of the application by the ACCC to that Court for judicial review should be stood over for further directions before the Full Court of that Court.

HIGH COURT OF AUSTRALIA TRENT KING AND THE QUEEN APPELLANT RESPONDENT King v The Queen [2012] HCA 24 20 June 2012 ORDER Appeal dismissed. On appeal from the Supreme Court of Victoria Representation M J Croucher SC with C A Boston for the appellant (instructed by Balmer & Associates) G J C Silbert SC with B L Sonnet for the respondent (instructed by Office of Public Prosecutions Victoria) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS King v The Queen Criminal law – Appeal against conviction – Jury misdirection – Appellant convicted of two counts of "culpable driving causing death" contrary to s 318(1) of the Crimes Act 1958 (Vic) ("the Act") – Jury had power under the Act to return an alternative verdict of "dangerous driving causing death" contrary to s 319(1) if satisfied that accused not guilty of offence charged under s 318 – Trial judge directed jury that dangerous driving established by proof accused drove in way that "significantly increased the risk of harming others" and that Crown did not have to show driving was "deserving of criminal punishment" – Whether trial judge misdirected jury – Whether R v De Montero (2009) 25 VR 694 should be followed – Whether departure from trial according to law or miscarriage of justice. Words and phrases – "culpable driving causing death", "deserving of criminal punishment", "dangerous driving causing death". Crimes Act 1958 (Vic), ss 318, 319, 422A(1). FRENCH CJ, CRENNAN AND KIEFEL JJ. Introduction This appeal against two convictions for culpable driving causing death contrary to s 318(1) of the Crimes Act 1958 (Vic) ("the Crimes Act"), concerns the way in which alternative verdicts for the lesser offence of dangerous driving causing death, contrary to s 319(1) of the Crimes Act, were left to the trial jury. In the Court of Appeal of the Supreme Court of Victoria (Buchanan, Redlich and Mandie JJA), the appellant, Trent Nathan King, contended unsuccessfully that the trial judge (Douglas J) had misdirected the jury on the lesser offence. He complained that the trial judge had pitched the standard of dangerous driving, necessary for conviction of the lesser offence, at such an erroneously low level of culpability that the jury would have been less inclined to consider convicting him of that offence. Her Honour told the jury that dangerous driving was established by proof that the accused drove in a way that "significantly increased the risk of harming others." Her Honour's direction accorded with existing authority in Victoria. The subsequent decision of the Court of Appeal in R v De Montero1 construed s 319 as imposing a higher level of culpability than set out in the trial judge's direction. It required driving that created "a considerable risk of serious injury or death to members of the public."2 It also required conduct by the accused in his manner of driving which was such as to merit punishment by the criminal law. The decision in De Montero was applied by the Court of Appeal in this case. For reasons which are set out below, De Montero should not be followed. The trial judge's direction was potentially misleading in one respect. Her Honour directed the jury that, in order to establish that Mr King had committed the offence of dangerous driving causing death, it was not necessary for the Crown to prove that the driving said to be dangerous was deserving of criminal punishment. By that direction, which was contrary to the guidelines later set down in De Montero, her Honour sought to exclude the criterion of criminal negligence from the jury's consideration of the offence under s 319. As is explained later in these reasons, her Honour's understanding of s 319 in that regard was correct. Insofar as the direction had the potential to mislead the jury, it did not constitute a miscarriage of justice. Such a conclusion is reinforced by the absence of any request for a redirection by defence counsel. The appeal should be dismissed. 2 R v De Montero (2009) 25 VR 694 at 716 [80]. Crennan Procedural history On 1 September 2008, Mr King was arraigned in the County Court of Victoria in Melbourne and pleaded not guilty to two counts of culpable driving causing death, contrary to s 318(1) of the Crimes Act. After a trial before a judge and jury he was found guilty on both counts. On 30 October 2008, he was sentenced to a total effective term of imprisonment of seven years and six months, with a non-parole period of four years and six months. On 7 November 2008, Mr King filed applications in the Court of Appeal for leave to appeal against his convictions and sentence. The applications were heard on 9 February 2011. On 17 March 2011, the Court of Appeal dismissed the application for leave to appeal against conviction but allowed the application for leave to appeal against sentence and allowed the appeals against sentence. It reduced his total effective sentence to six years and six months imprisonment with a non-parole period of three years and six months3. Pursuant to a grant of special leave made on 2 September 2011, Mr King appealed to this Court against the decision of the Court of Appeal dismissing his application for leave to appeal against his convictions. No complaint is made in the appeal to this Court about the trial judge's directions to the jury in relation to the offences of culpable driving causing death of which Mr King was convicted. The sole ground of appeal related to the standard of culpability applied in the direction concerning the alternative verdicts of dangerous driving causing death. The Crown, by notice of contention, challenged the correctness of the decision of the Court of Appeal in De Montero. Factual background On 13 July 2005 at about 1 am Mr King was driving a BMW car north along Evans Road, Cranbourne, approaching the intersection of Evans Road and Thompsons Road, which runs east/west. He was driving two friends to Oakleigh. He drove past a "Give Way" sign at the intersection and collided with a Mitsubishi tray truck entering the intersection on his left from Thompsons Road4. The BMW ended up lying on its roof in bushes to one side of the road. Mr King's two passengers died in the collision. 3 King v The Queen (2011) 57 MVR 373. 4 No issue was raised as to whether Mr King had committed an offence in relation to the "Give Way" sign – see eg Kohn v Sallmann (1965) 113 CLR 628; [1965] HCA Crennan There was evidence from the driver of the Mitsubishi truck and his passengers that the intersection was not well lit. On the other hand, there was evidence of police witnesses that the lighting at the intersection was adequate. The road was in a semi-rural area so that it did not have the same kind of lighting as would be found in a built-up area. There were two yellow signs with a black cross on the left and right hand sides of Evans Road which indicated to vehicles travelling north that they were approaching an intersection. There were also signs at the intersection itself which indicated that the northern extension of Evans Road beyond the intersection was closed for road works. There was no evidence that Mr King had consumed alcohol or that he had been driving irresponsibly prior to the collision. There was, however, evidence of tetrahydrocannabinol in his blood at a level of 13ng/mL, which was characterised by expert witnesses as a "high reading" and which, according to their evidence, would have "significantly impaired" his driving skills at the relevant time. Mr King was travelling within the applicable speed limit, which was 80 kph. His pre-impact speed was estimated by an expert police witness, who examined the vehicles and the collision site, as 75 kph. The same witness described the intersection as having a crash history. He had attended the scene of a fatal accident there in March 2004. There was evidence of a bank of trees near the intersection that would have obscured the vision of a driver travelling north on Evans Road almost to the point at which the driver reached the intersection. Mr King did not give evidence at the trial, nor did he call any witnesses in his defence. Statutory framework Mr King was charged under s 318 of the Crimes Act which relevantly provided: "(1) Any person who by the culpable driving of a motor vehicle causes the death of another person shall be guilty of an indictable offence and shall be liable to level 3 imprisonment (20 years maximum) or a level 3 fine or both. For the purposes of subsection (1) a person drives a motor vehicle culpably if he drives the motor vehicle – negligently, that is to say, if he fails unjustifiably and to a gross degree to observe the standard of care which a Crennan reasonable man would have observed circumstances of the case; or in all the (d) whilst under the influence of a drug to such an extent as to be incapable of having proper control of the motor vehicle." The alternative verdict which was left open to the jury, related to the offence of dangerous driving causing death created by s 319 of the Crimes Act. That section relevantly provided5: "(1) A person who by driving a motor vehicle at a speed or in a manner that is dangerous to the public having regard to all the circumstances of the case, causes the death of, or serious injury to another person, is guilty of an indictable offence and liable to level 6 imprisonment (5 years maximum)." The jury's authority to bring in a verdict of guilty of an offence against s 319 was conferred and conditioned by s 422A(1) which provided: "If on the trial of a person charged with an offence against section … 318 (culpable driving causing death) the jury are not satisfied that he or she is guilty of the offence charged but are satisfied that he or she is guilty of an offence against section 319 (dangerous driving causing death or serious injury), the jury may acquit the accused of the offence charged and find him or her guilty of the offence against section 319 and he or she is liable to punishment accordingly." As a matter of construction, the power to deliver an alternative verdict of guilty of the offence under s 319 is conditioned upon the jury not being satisfied that the accused is guilty of the offence charged under s 318. It is only "if" the jury are not so satisfied that their attention is directed to the lesser offence. Consideration of the s 318 offence may therefore be seen as a condition precedent to consideration of the offence under s 319. The word "may" in s 422A(1) is in the nature of a permission, which may be acted upon, when the 5 Section 319 was amended by s 5 of the Crimes Amendment (Child Homicide) Act 2008 (Vic), commencing 19 March 2008, which increased the maximum penalty for dangerous driving causing death contrary to s 319(1) to level 5 imprisonment (10 years maximum), and created a separate provision for dangerous driving causing serious injury in s 319(1A) which retained the penalty of level 6 imprisonment (5 years maximum). Crennan jury is satisfied that the accused is guilty of the offence under s 319. That word governs the composite term "acquit … and find him or her guilty of the offence against section 319". There is no other source of power conferred by the Crimes Act to return a verdict for a lesser offence where culpable driving causing death is charged6. The trial judge's directions The trial judge told the jury at the beginning of her charge to them that they would not have to concern themselves with the alternative verdict of dangerous driving causing death unless they acquitted the accused of the offence of culpable driving. That direction was reinforced later in her Honour's charge when she said: "Dangerous driving causing death, as I said, is an alternative offence to culpable driving causing death. This means that you only need to consider it if you find the accused not guilty of culpable driving causing death. If you find the accused guilty of culpable driving causing death you do not need to make a determination of whether he is also guilty of dangerous driving causing death; it is an alternative." The trial judge identified the elements of culpable driving causing death. No complaint was made of that aspect of her summing up7. The jury was told that "gross negligence" involved a failure "unjustifiably and to a gross degree to observe the standard of care which a reasonable person would have observed in all the circumstances." This required the jury to compare Mr King's conduct with the standard of care that a reasonable person would have exercised in the circumstances. The jury was told, "[p]recisely what that standard of care would have been is for you to decide". The trial judge's direction as to "gross negligence" was qualified by her additional remarks: "This is what is meant for the accused's conduct to be grossly negligent. As this is a criminal case it is not enough that his driving was merely negligent to a small degree, which is often in the civil cases of this court, 6 For authority to deliver alternative verdicts in respect of other classes of offence see ss 4, 6B, 421 and 425-435 of the Crimes Act. 7 The judge correctly directed the jury that they must agree on the kind of culpability, ie gross negligence or driving while affected by drugs. Crennan people are negligent. It must be so negligent that in your view he deserves to be punished by the criminal law." As is explained later in these reasons, the requirement that criminal negligence be negligence which "deserves to be punished by the criminal law" has its ancestry in the common law relating to involuntary manslaughter8. It was a proposition applied by this Court in Callaghan v The Queen9, to the provisions of the Criminal Code (WA) relating to involuntary manslaughter involving the negligent driving of a motor vehicle. This Court also held, in that case, that the identical standard of criminal liability applied to the statutory offence of dangerous driving causing death, created by s 291A of the Criminal Code. In relation to the alternative verdict of dangerous driving causing death contrary to s 319 of the Crimes Act, her Honour told the jury, inter alia: "The Crown must prove beyond reasonable doubt that the accused was driving dangerously. That is, he was not properly controlling his vehicle, thereby creating a real risk that somebody would be hurt." The requisite risk had to be greater than that ordinarily associated with driving. In that regard her Honour said that the accused must have driven in a manner that significantly increased the risk of harming others. A particular aspect of the direction of which Mr King complains in his appeal to this Court, involved a comparison between the criteria of liability for the offences of culpable driving causing death and dangerous driving causing death. Her Honour said: "There are two important differences between the offence of culpable driving causing death, and dangerous driving causing death that reflect the fact that the offence of culpable driving causing death is a more serious offence. First, the Crown must prove beyond reasonable doubt that the accused drove in a way that significantly increased the risk of harming others. There does not have to be a high risk of death or serious injury. That is only a requirement for culpable driving causing death by gross negligence. And secondly, unlike the offence of culpable driving causing death by gross negligence, in relation to the offence of dangerous driving causing death the Crown does not have to satisfy you that the driving is 8 As expounded by Hewart LCJ in Bateman (1925) 19 Cr App R 8 and by Lord Atkin in Andrews v Director of Public Prosecutions [1937] AC 576. (1952) 87 CLR 115; [1952] HCA 55. Crennan deserving of criminal punishment. The second element will be met as long as you find that the accused drove in a speed or manner that was dangerous to the public." No redirection was sought at trial. This is not surprising as the defence counsel's closing address was directed to securing a verdict of acquittal. The Court of Appeal's decision In dismissing Mr King's application for leave to appeal against conviction, Mandie JA, with whose reasons Buchanan JA and Redlich JA agreed, made the following points: The trial judge's directions in relation to the charge of culpable driving causing death were correct if taken in isolation and accorded with the decision in R v De'Zilwa10. Indeed there was no submission to the contrary11. (b) However, the trial judge's directions in relation to the alternative charge of dangerous driving causing death were prima facie erroneous having regard to the principles laid down in De Montero12 and the case which followed it, Guthridge v The Queen13. The correctness of De Montero is in issue on this appeal. (c) One aspect of De Montero is its requirement, in respect of the offence of dangerous driving, that there be a direction that the manner of driving must have created "a considerable risk of serious injury or death to members of the public", whereas the trial judge said that the manner of driving had to have created a real or significant risk of harm to the public14. However, the trial judge's directions are to be understood as referring to the degree of risk presented by the manner of driving. It is 11 King v R (2011) 57 MVR 373 at 377 [16]. 14 (2011) 57 MVR 373 at 377 [16] (emphasis added). Crennan unlikely that the jury would have regarded the subject of the risk as other than death or serious injury15. It was "self-evidently illogical and irrelevant … to say", in the direction relating to dangerous driving causing death, that the Crown did not have to satisfy the jury that Mr King's driving was deserving of criminal punishment16. But it must have been evident to the jury that the alternative of dangerous driving was an offence and therefore subject to criminal punishment. Indeed the trial judge made reference to, and the jury would have understood that, a person may be criminally liable for the offence17. The trial judge's direction had not watered down the elements of the offence of dangerous driving causing death in such a way as to impinge upon or dilute the correct directions that were given in relation to the offence of culpable driving causing death18. (f) Moreover, the trial judge had directed the jury that they should first consider the offence of culpable driving and only if they were not satisfied beyond reasonable doubt in relation to those charges should they turn to consider the alternative offence. It was highly improbable that the jury would not have first considered Mr King's guilt or innocence of the actual charges in the presentment in accordance with the directions of law given to them before giving consideration to the alternate offence. In any event they would not have been deflected from a proper consideration of the more serious charges by the directions given in relation to the alternate offence19. As noted at the outset of these reasons, the principal ground of appeal to this Court concerns the trial judge's direction that it was not necessary for the Crown to prove that the driving said to be dangerous was deserving of criminal punishment. The other ground of appeal raises the question referred to in (c) above, as to the nature or description of the subject of the risk created by the 15 (2011) 57 MVR 373 at 379-380 [22]. 16 (2011) 57 MVR 373 at 377 [16]. 17 (2011) 57 MVR 373 at 379-380 [22]. 18 (2011) 57 MVR 373 at 379-380 [22]. 19 (2011) 57 MVR 373 at 380 [23]. Crennan driving. It is sufficient with respect to that ground to state that the Court of Appeal was clearly correct to hold that her Honour's direction is not likely to have misled the jury. The jury is unlikely to have had any doubt about the fact that the offence related to death or serious injury. Before turning to the contentions of the parties on the principal issue, it is necessary to put those contentions and the decision in De Montero in context, by reference to the common law relating to criminal negligence and the legislative history of the statutory provisions in question. Motor vehicle homicide – common law and statute As was pointed out by this Court in Wilson v The Queen20 there are "two categories of involuntary manslaughter at common law: manslaughter by an unlawful and dangerous act carrying with it an appreciable risk of serious injury and manslaughter by criminal negligence."21 This case is concerned with the interaction between principles of criminal negligence derived from the common law relating to involuntary manslaughter and the statutory offences of culpable driving causing death and dangerous driving causing death. In his A History of the Criminal Law of England, published in 1883, Sir James Fitzjames Stephen, drawing on Foster's Discourse on Homicide, summarised the common law of unintended homicide caused by a lawful act22: "Death caused by the unintentional infliction of personal injury is per infortunium if the act done was lawful and was done with due caution, 20 (1992) 174 CLR 313; [1992] HCA 31. See also R v Lavender (2005) 222 CLR 67 at 82 [37] and [38] per Gleeson CJ, McHugh, Gummow and Hayne JJ; [2005] HCA 37. 21 (1992) 174 CLR 313 at 333 per Mason CJ, Toohey, Gaudron and McHugh JJ; Attorney-General (Ceylon) v Pereria [1953] AC 200 at 205. 22 Stephen, A History of the Criminal Law of England, (1883), vol 3 at 76. Stephen said of Foster's work at 78 that he did not think "that any writer subsequent to Foster [had] added much to the subject of the law of homicide." See also Dixon, "The Development of the Law of Homicide", (1935) 9 Australian Law Journal Supplement 64 and, relevantly to involuntary manslaughter caused by criminal negligence, Wilson v The Queen (1992) 174 CLR 313 at 319-324 per Mason CJ, Toohey, Gaudron and McHugh JJ; Brett, "Manslaughter and the Motorist", (1953) 27 Australian Law Journal 6 and 89. Crennan or was accompanied by only slight negligence. If it was accompanied by culpable negligence, the act is manslaughter." The term "culpable negligence" embodied a distinction between the kind of negligence necessary to establish civil liability and that necessary to establish criminal liability. It was a distinction which could be discerned in cases dating back to the 17th century23. It was left to the jury to determine whether the level of negligence deserved a criminal sanction. Stephen recognised and applied the distinction in his own writings and in his judicial role. In 1887, in the case of R v Doherty24, he directed the jury that25: "Manslaughter by negligence occurs when a person is doing anything dangerous in itself, or has charge of anything dangerous in itself, and conducts himself in regard to it in such a careless manner that the jury feel that he is guilty of culpable negligence, and ought to be punished. As to what act of negligence is culpable, you, gentlemen, have a discretion, and you ought to exercise it as well as you can." In his History, Stephen wrote26: "In order that homicide by omission [to perform a legal duty] may be criminal, the omission must amount to what is sometimes called gross, and sometimes culpable negligence. There must be more, but no one can say how much more, carelessness than is required in order to create a civil liability … It is a matter of degree determined by the view the jury happen to take in each particular case." The distinction was recognised and applied in Australia. In Victoria, from at least the end of the 19th century, a guilty verdict on a charge of involuntary manslaughter required "a somewhat larger degree of negligence than has to be shown in a civil case."27 In R v Gunter28, decided in 1921, the Full Court of the 23 Glanville Williams, Criminal Law, 2nd ed (1961) at 108 fn 11; see also Wharton, The Law of Homicide, 3rd ed (1907) at 703. 24 (1887) 16 Cox CC 306. 25 (1887) 16 Cox CC 306 at 309. 26 Stephen, A History of the Criminal Law of England, (1883), vol 3 at 11. 27 R v Ah Kin (1897) 3 ALR (CN) 14 at 14 per Hood J. 28 (1921) 21 SR (NSW) 282. Crennan Supreme Court of New South Wales held that culpable negligence giving rise to criminal responsibility required "a degree of recklessness beyond anything required to make a man liable for damages in a civil action."29 The most recent decision cited in that case was Doherty. The common law position in Australia and the application of the standard of criminal negligence defined at common law to the construction of statutory manslaughter under the Criminal Codes of Queensland and Western Australia were influenced by decisions of the Court of Appeal and the House of Lords in England. In 1925 in Bateman30 Hewart LCJ referred to epithets, including "culpable", "criminal" and "gross", used to describe the degree of negligence necessary to establish criminal liability. He said31: "whatever epithet be used and whether an epithet be used or not, in order to establish criminal liability the facts must be such that, in the opinion of the jury, the negligence of the accused went beyond a mere matter of compensation between subjects and showed such disregard for the life and safety of others as to amount to a crime against the State and conduct deserving punishment." In Andrews v Director of Public Prosecutions32 Lord Atkin effectively endorsed that rather instrumental criterion of criminal negligence33. Culpable negligence giving rise to criminal liability at common law was not the subject of elaboration beyond the kind of directions approved in Bateman and Andrews. In Akerele v The King34 the Privy Council referred to the impossibility of defining culpable negligence and the impossibility of making the distinction between actionable negligence and criminal negligence "except by means of illustrations drawn from actual judicial opinions."35 29 R v Gunter (1921) 21 SR (NSW) 282 at 286. 30 (1925) 19 Cr App R 8, a manslaughter case involving medical negligence. 31 (1925) 19 Cr App R 8 at 11-12. 33 [1937] AC 576 at 582-583. 35 [1943] AC 255 at 262 quoting R v Noakes (1866) 4 F & F 920; [176 ER 849]. Crennan The common law of criminal negligence as enunciated in Bateman, Andrews and Akerele, was considered in Australia in connection with the construction of ss 289 and 266 of the Criminal Codes of Queensland and Western Australia respectively. Those sections imposed a legal duty on persons in charge of dangerous things "to use reasonable care and take reasonable precautions" to avoid danger to the life, safety or health of any person. Section 266 of the Criminal Code (WA) was considered by this Court in Callaghan v The Queen36 and s 289 of the Criminal Code (Q) by the Supreme Court of Queensland in R v Scarth37. They were construed as importing the common law of criminal negligence. The common law distinction between criminal and civil negligence was to be maintained38. The Court in Callaghan referred to Doherty and Andrews, the derivation of the Criminal Code (WA) from the English Criminal Code Bill, and Stephen's discussion, in his History, of killing by omission39. The common law standard of criminal negligence expounded in Bateman and Andrews was also accepted in Victoria in its application to involuntary manslaughter. In Nydam v The Queen40 a unanimous Full Court of the Supreme Court, in a decision dealing primarily with the question of mens rea, described the requisite standard of negligence as involving41: "such a great falling short of the standard of care which a reasonable man would have exercised and which involved such a high risk that death or grievous bodily harm would follow that the doing of the act merited criminal punishment." 36 (1952) 87 CLR 115. 37 [1945] St R Qd 38. 38 Callaghan v The Queen (1952) 87 CLR 115 at 124; R v Scarth [1945] St R Qd 38 at 45-46 per Macrossan SPJ, 56 per Stanley AJ. Stanley AJ referred to Sir Samuel Griffith's Explanatory Letter to the draft Code and the identity between s 289 and s 159 of the Criminal Code Bill 1880 (UK), which was based upon s 296 of Stephen's draft Code reflecting the existing common law. 39 (1952) 87 CLR 115 at 122-124. 41 [1977] VR 430 at 445. Crennan The criterion of "a high risk that death or grievous bodily harm would follow" was adopted by the plurality in Wilson v The Queen42. Statutory developments in the Australian States and Territories throughout the 20th century created new offences relating to reckless, dangerous and negligent driving simpliciter and culpable, reckless or dangerous driving causing death.43 Section 10 of the Motor Car Act 1909 (Vic), modelled on s 1 of the Motor Car Act 1903 (UK) created, inter alia, the offence of driving "recklessly or negligently or at a speed or in a manner which is dangerous to the public". That offence, absent the reference to negligent driving, was continued by s 318 (1) of the Crimes Act as originally enacted. Although not involving any element of death or injury to any person it was available as an alternative verdict in trials for manslaughter which continued in Victoria as a common law offence punishable by statute44. The kind of direction that should be given in a manslaughter trial in relation to an alternative verdict of dangerous driving was set out by Lord Atkin in Andrews45: "the judge should in the first instance charge them substantially in accordance with the general law, that is, requiring the high degree of negligence indicated in Bateman's case and then explain that such degree of negligence is not necessarily the same as that which is required for the offence of dangerous driving, and then indicate to them the conditions under which they might acquit of manslaughter and convict of dangerous driving." (citation omitted) 42 (1992) 174 CLR 313 at 333 per Mason CJ, Toohey, Gaudron and McHugh JJ. See also R v Lavender (2005) 222 CLR 67 at 75 [17] per Gleeson CJ, McHugh, 43 Statutory offences relating to culpable or dangerous driving causing death were introduced into South Australia in 1927, Western Australia in 1945, New South Wales in 1951, Queensland in 1964 and Victoria in 1967. 44 Crimes Act 1958 (Vic), s 5 preceded by the Crimes Act 1915 (Vic), s 5 which in turn was preceded by the Crimes Act 1890 (Vic), s 5. 45 Andrews v Director of Public Prosecutions [1937] AC 576 at 584-585. See also Dabholkar v The King [1948] AC 221 where a statutory offence of criminally negligent conduct was held to establish a lower standard than negligence required for manslaughter. See also the analogy made in the latter case with dangerous driving as an alternative verdict to manslaughter at 224-225. Crennan Taken in context, that passage does not embody or rest upon the premise that negligence is an element of driving "at a speed or in a manner which is dangerous to the public". Andrews was ultimately concerned about the appropriate direction to be given in a case of manslaughter involving criminal negligence. In R v Coventry46 this Court considered the offence, created by s 14 of the Criminal Law Consolidation Act 1935 (SA), of driving a motor vehicle "in a culpably negligent manner, or recklessly, or at a speed, or in a manner, which is dangerous to the public; and … by such negligence, recklessness, or other conduct" causing the death of a person47. The plurality held that driving "at a speed or in a manner which is dangerous to the public" established an objective standard "impersonal and universal, fixed in relation to the safety of other users of the highway."48 Starke J said "all that is essential is proof that the acts of the driver constitute danger, real or potential, to the public."49 The test for dangerous driving was thus established as an objective test. That objective test was reflected in this Court's decisions in McBride v The Queen50 and Jiminez v The Queen51, relating to culpable driving causing death under s 52A of the Crimes Act 1900 (NSW). That offence was analogous, although not identical, to the offence of dangerous driving causing death created by s 319 of the Crimes Act. Section 52A of the Crimes Act 1900 (NSW) was enacted in 195152. It created the offence of culpable driving committed when the death of any person was occasioned through impact with a motor vehicle being driven by a person "at a speed or in a manner which is dangerous to the public"53. The quoted criterion 46 (1938) 59 CLR 633; [1938] HCA 31. 47 (1938) 59 CLR 633 at 637. 48 (1938) 59 CLR 633 at 637-638, quoting Hewart LCJ in McCrone v Riding [1938] 1 All ER 157. 49 (1938) 59 CLR 633 at 639. 50 (1966) 115 CLR 44; [1966] HCA 22. 51 (1992) 173 CLR 572; [1992] HCA 14. 52 Crimes (Amendment) Act 1951 (NSW), s 2(e). The section was the subject of many amendments and was replaced in 1994 with the enactment of the Crimes (Dangerous Driving Offences) Amendment Act 1994 (NSW). 53 Section 52A (1)(b), Crimes Act 1900 (NSW). Crennan of liability was, in relevant respects, similar to that used in s 319(1) of the Crimes Act. In McBride, Barwick CJ said of the criterion in s 52A54: in all circumstances, or because of "This imports a quality in the speed or manner of driving which either the particular intrinsically circumstances surrounding the driving, is in a real sense potentially dangerous to a human being or human beings who as a member or as members of the public may be upon or in the vicinity of the roadway on which the driving is taking place." The Chief Justice's observation was expressly approved by the plurality in Jiminez v The Queen55, which was concerned with s 52A of the Crimes Act 1900 (NSW). In Barwick CJ's discussion, in McBride, of the term "speed or in a manner dangerous to the public" the Chief Justice also said56: "This concept is in sharp contrast to the concept of negligence. The concept with which the section deals requires some serious breach of the proper conduct of a vehicle upon the highway, so serious as to be in reality and not speculatively, potentially dangerous to others. This does not involve a mere breach of duty however grave, to a particular person, having significance only if damage is caused thereby." (emphasis added) In its decision in R v Buttsworth57 in 1983 the Court of Criminal Appeal of New South Wales treated the offence under s 52A as "a species of negligent driving of less gravity than negligent driving appropriate to manslaughter."58 Buttsworth was referred to in a footnote by the plurality in Jiminez, but to support the proposition that the level of risk engendered by dangerous driving must be greater than that ordinarily associated with the driving of a motor vehicle59. 54 (1966) 115 CLR 44 at 49-50. 55 (1992) 173 CLR 572 at 579. 56 (1966) 115 CLR 44 at 50. 57 [1983] 1 NSWLR 658. 58 [1983] 1 NSWLR 658 at 674 per O'Brien CJ of Cr D, Street CJ and Nagle CJ at CL agreeing. 59 Jiminez v The Queen (1992) 173 CLR 572 at 579 fn 23. Crennan Jiminez does not support the proposition that negligence is an element of driving at a speed or in a manner that is dangerous to the public. Consistently with that view, the Court of Criminal Appeal of New South Wales in LKP60 held that momentary inattention can, depending upon the circumstances of the case, constitute driving in a manner dangerous to the public for the purposes of s 52A. The Court of Criminal Appeal held that Coventry, McBride and Jiminez all stand together. Buttsworth was not referred to in that decision. Nor was it referred to by the Court of Criminal Appeal in its decision in Saunders61 in 2002. In that case an appeal against a conviction for dangerous driving causing death was allowed on the basis that the trial judge did not elucidate to the jury "the concept of dangerous driving as distinct from negligent driving"62. In Gillett v The Queen63 McClellan CJ at CL, with whom Sully and Hislop JJ agreed, in a case involving an accused who drove while suffering from the medical condition of "The relevant question is whether the manner of driving, the condition of the vehicle, or the condition of the driver as a matter of objective fact made the driving a danger to the public." That is not a question which assumes that some species of criminal negligence less than that necessary to make out manslaughter is an element of driving in a manner or at a speed which is dangerous to the public. Culpable driving causing death and dangerous driving causing death in Victoria In Victoria, the offence of culpable driving causing death under s 318(2) of the Crimes Act was created in 1967 by the Crimes (Driving Offences) Act 196765. The degree of negligence to be proven for the purposes of s 318(2)(b) 60 (1993) 69 A Crim R 159. 61 (2002) 133 A Crim R 104. 62 (2002) 133 A Crim R 104 at 111 [30] per Simpson J, Hodgson JA and Smart AJ agreeing. 63 (2006) 166 A Crim R 419. 64 (2006) 166 A Crim R 419 at 430 [27]. 65 A short lived amendment in 1966 imposed a separate penalty for the existing offence of reckless or dangerous driving where death or bodily injury to a person resulted – Crimes (Dangerous Driving) Act 1966 (Vic), s 2(b). Crennan was held by the Full Court of the Supreme Court of Victoria in R v Shields66 to be "the same degree as that required to support a charge of manslaughter"67. In 2002 in R v De'Zilwa68 Charles JA referred to decisions of the Supreme Court of Victoria over a period of more than 30 years setting out the directions which should be given to a jury when s 318 (2)(b) was relied upon by the prosecution. His Honour, with whom Ormiston JA and O'Bryan AJA agreed, applied essentially the same test of criminal negligence as was set out in Nydam69 in 1977. The only relevant difference was that in De'Zilwa Charles JA referred to "a high risk" of "death or serious injury"70 rather than "death or serious bodily harm". De'Zilwa was applied by the Court of Appeal in R v Mitchell71. Callaway JA, with whom Buchanan and Vincent JJA agreed, said72: "The gross negligence required by s 318(2)(b) of the Crimes Act 1958 (culpable driving) … imports a community standard." Although negligence was made out in that case, the Court of Appeal, applying the common law criterion of criminal negligence, held that the evidence could not have satisfied the jury beyond reasonable doubt that there was73: "such a great falling short of the standard of care which a reasonable person would have exercised in the circumstances, and which involved such a high risk that death or serious injury would follow, that the driving … merited criminal punishment." 67 [1981] VR 717 at 724 per Young CJ, Anderson and Brooking JJ, referring to Akerele v The Queen [1943] AC 255 at 262; Callaghan v The Queen (1952) 87 CLR 115 at 123; Attorney-General for Ceylon v Perera [1953] AC 200 at 205. 69 Nydam v The Queen [1977] VR 430 at 444-445. 70 [2002] 5 VR 408 at 423 [46]. 71 (2005) 44 MVR 567. 72 (2005) 44 MVR 567 at 569 [9]. 73 (2005) 44 MVR 567 at 569 [9], quoting R v De'Zilwa (2002) 5 VR 408 at 423 [46]. Crennan The offence of dangerous driving causing death or serious injury was introduced into the Crimes Act in 2004 with the insertion of a new s 31974. In the Second Reading Speech for the Crimes (Dangerous Driving) Bill the Attorney- "To establish this offence the prosecution will not be required to prove criminal negligence, which is required to prove culpable driving causing death. Rather, to establish the new offence, the prosecution will have to prove that the accused drove at a speed or in a manner dangerous to the public having regard to all the circumstances of the case, and by doing so, caused the death of or serious injury to another person." The ordinary meaning of "dangerous" is "[f]raught with or causing danger; involving risk; perilous; hazardous; unsafe"76. It describes, when applied to driving, a manner or speed of driving which gives rise to a risk to others, including motorists, cyclists, pedestrians and the driver's own passengers. Having regard to the ordinary meaning of the word, its context in s 319 and the purpose of s 319, as explained in the Second Reading Speech, negligence is not a necessary element of dangerous driving causing death or serious injury. Negligence may and, in many if not most cases will, underlie dangerous driving. But a person may drive with care and skill and yet drive dangerously. It is not appropriate to treat dangerousness as covering an interval in the range of negligent driving which is of lesser degree than driving which is "grossly negligent" within the meaning of s 318(2)(b) of the Crimes Act. The offence created by s 319 nevertheless takes its place in a coherent hierarchy of offences relating to death or serious injury arising out of motor vehicle accidents. It is not necessary to that coherence that the terms of the section be embellished by reading into them a requirement for proof of some species of criminal negligence. The decision in De Montero In De Montero the Court of Appeal held that a jury should be told "that while dangerous driving necessarily involves criminal negligence, it need not, like culpable driving, be grossly negligent, but … must involve a serious breach 74 Crimes (Dangerous Driving) Act 2004 (Vic). 75 Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 3 June 2004 at 76 The New Shorter Oxford English Dictionary, 4th ed (1993), vol 1 at 591, sense 2. Crennan of the proper management or control of a vehicle on the roadway."77 That observation, with respect, misstated the concept of dangerous driving causing death by requiring an element of negligence78. As the plurality said in Jiminez, in relation to s 52A of the Crimes Act 1900 (NSW)79: "For the driving to be dangerous for the purposes of s 52A there must be some feature which is identified not as a want of care but which subjects the public to some risk over and above that ordinarily associated with the driving of a motor vehicle, including driving by persons who may, on occasions, drive with less than due care and attention." (emphasis added) In De Montero the Court of Appeal reviewed decisions of State Courts and of this Court relating to statutory offences involving driving at a speed or in a manner dangerous to the public. Their Honours set out a number of matters of which a jury had to be satisfied before they could convict a person of dangerous driving causing death or serious injury. They were80: That the accused was driving in a manner that involved a serious breach of the proper management or control of his vehicle on the roadway such as to merit criminal punishment. It must involve conduct more blameworthy than a mere lack of reasonable care that could render a driver liable to damages in civil law. That the breach must be so serious as to be in reality, and not just speculatively, potentially dangerous to others who, as members of the public, may at the time be upon or in the vicinity of the roadway. 77 (2009) 25 VR 694 at 716 [81]. 78 A proposal by the Law Reform Commission of Victoria in 1992 to replace s 318 of the Crimes Act with a dangerous driving offence applying to persons driving "in a manner that falls substantially below the level of care that a competent and careful driver would take in the circumstances" was not adopted because the government believed that the existing culpable driving offence was well understood and had been shown to work: Victoria, Legislative Assembly, Parliamentary Debates (Hansard), 20 May 1992 at 1457; Law Reform Commission of Victoria, Death Caused by Dangerous Driving, Report No 45, (1992) at 36. 79 (1992) 173 CLR 572 at 579. 80 (2009) 25 VR 694 at 716 [80]. Crennan That the manner of driving created a considerable risk of serious injury or death to members of the public. That the risk so created significantly exceeded that which is ordinarily associated with being on or near a highway. That in determining whether the manner of driving was 'dangerous' the test is an objective one. Would a reasonable driver in the circumstances of the accused have realised that the manner of driving involved a breach of the kind discussed in paras 1 and 2, and also gave rise to the risk identified in paras 3 and 4." (footnotes omitted) Their Honours also held that in any case in which dangerous driving causing death is left as an alternative to culpable driving, the offence of dangerous driving must be distinguished adequately from the offence of culpable driving. The jury should be told that dangerous driving, though a serious offence, involves conduct less blameworthy than culpable driving. They should be told that while dangerous driving necessarily involves criminal negligence, it need not, like culpable driving, be grossly negligent, but must involve a serious breach of the proper management or control of the vehicle on the roadway. Unlike culpable driving, it did not require proof of a higher risk of death or serious injury, but only a considerable risk thereof81. De Montero was applied by the Court of Appeal in Guthridge v The Queen82. Contentions in relation to De Montero The Crown, by notice of contention, challenged the correctness of the analysis in De Montero of the elements of the offence created by s 319 of the Crimes Act. It was submitted for the Crown that the decision in De Montero was erroneous in a number of respects. In particular, it was submitted that: dangerous driving is not a species of criminal negligence but is to be treated as determined by statute; 81 (2009) 25 VR 694 at 716 [81]. 82 (2010) 27 VR 452 at 459 [19]. Crennan as to the level of risk, the jury should be directed in accordance with the test set down by this Court in relation to s 52A of the Crimes Act 1900 (NSW) in McBride and Jiminez; there is no need to introduce into s 319 the concept developed in relation to criminal negligence of conduct "meriting criminal punishment". In response, counsel for Mr King pointed to the four tiers of criminal liability created by Victorian law in relation to driving offences, namely: culpable driving causing death, dangerous driving causing death, dangerous driving, and careless driving. These offences, it was said, are different in content from those in other jurisdictions and must co-exist harmoniously. Authorities from other jurisdictions were said to be of limited utility in determining the ambit of the offence under s 319. Reliance upon McBride and Jiminez was said to be misplaced because: both decisions support the view that dangerous driving stands in sharp contrast with civil negligence and, consistently with test in De Montero, must be potentially dangerous in a real sense to other road users; the both decisions concerned the offence of dangerous driving occasioning death contrary to s 52A of the Crimes Act 1900 (NSW) which, unlike s 319, did not require proof that the impugned driving caused death – absence of causation only providing a defence83; section 319 requires proof that the dangerous driving caused death and that in order to distinguish it from culpable driving and the summary offences of dangerous driving and careless driving it is necessary and appropriate that the fault element under s 319 include a considerable risk of death or serious injury. Counsel for Mr King also argued that the Court of Appeal was correct to conclude that "driving which merits criminal punishment" is apposite to describe the offence of dangerous driving created by s 319 because of its inherent quality, its potential consequences for other road users and the maximum sentences for the two offences in s 319. 83 Reliance was placed upon Giorgianni v The Queen (1985) 156 CLR 473 at 498; [1985] HCA 29. Crennan The correctness of De Montero The Crown's submissions should be accepted. The Court of Appeal in De Montero erred in treating dangerous driving as a species of the genus of criminal negligence. That error gave rise to the further error that a jury should be directed, in relation to dangerous driving causing death or serious injury, that it must involve negligence deserving of punishment by the criminal law. As discussed earlier in these reasons, the concept of "negligence deserving of punishment by the criminal law" had its origins in attempts by the common law to set a threshold for the level of criminal negligence necessary to establish manslaughter per infortunium. It was transposed to the offence of manslaughter under the Criminal Codes of Queensland and Western Australia and, by the decision of this Court in Callaghan, to the offence created by s 291A of the Criminal Code (WA). Despite its pedigree, the further transposition of that form of direction to the offence of culpable driving causing death under s 318 of the Crimes Act and similar offences in other States and Territories of Australia is questionable. It assumes that the jury understands the concept of negligence sufficient to ground civil liability. In Buttsworth the common law principle that criminal negligence differs in degree from civil negligence mutated into the proposition that "[n]egligence in the criminal sense is … a different concept from negligence in civil law."84 In any event, the direction has no role to play in relation to the offence created by s 319, which is concerned ultimately with the risk creating characteristics of the speed or manner of driving of the accused. The Court of Appeal in De Montero considered that the level of risk necessary to support the offence of dangerous driving under s 319 existed if an ordinary or reasonable person in the situation of the driver would recognise the manner of driving as involving an appreciable risk of serious injury or death to other users of the road85. Dangerous driving was said to involve "a serious breach" of proper driving standards, which exceeded the everyday lack of care sufficient for a civil negligence claim, but which fell short of the gross negligence required for culpable driving86. The formulation of the requisite level of risk rested on the premise that negligence is an element of the offence under s 319. The risk of harm, on the approach taken by the Court of Appeal, was to be 84 [1983] 1 NSWLR 658 at 677 per O'Bryne CJ of Cr D (emphasis added). 85 (2009) 25 VR 694 at 715 [78]. 86 (2009) 25 VR 694 at 715 [78]. Crennan assessed according to whether and to what extent the driver had breached a duty of care. That approach was erroneous. It may be that in many if not most cases dangerous driving is a manifestation of negligence in the sense of carelessness. It may also be a manifestation of deliberate risk-taking behaviour. It may be that in some circumstances where particular attention is required to the road and to other road users, momentary inattention will result in a manner of driving that is dangerous within the meaning of the section. The assessment of whether the manner of driving was dangerous depends on whether it gave rise to the degree of risk set out by Barwick CJ in McBride and adopted by the plurality in Jiminez in relation to s 52A of the Crimes Act 1900 (NSW). That is the level of risk which should inform a trial judge's direction to a jury in respect of the offence under s 319. It is a consequence of this conclusion that the increased penalties applicable to offences against s 319 in its present amended form apply to offences which may be committed by transgressing a lower standard of liability than that set out in De Montero. There is no doubt that s 319 is capable of encompassing a range of driving behaviours some of which, apart from their tragic consequences, may attract considerably less condemnation than others. The legislature has imposed maximum penalties which, in effect, authorise a range of dispositions capable of encompassing the variety of circumstances in which offences may be committed against s 319. That variety must be reflected in the sentences which are imposed. As Gaudron, Gummow and Hayne JJ said in Wong v The Queen87: "Equal justice requires identity of outcome in cases that are relevantly identical. It requires different outcomes in cases that are different in some relevant respect." (emphasis in original) Whether the trial judge erred For the above reasons, and subject to one qualification, the trial judge did not err in her direction to the jury relating to the alternative verdicts of guilty of offences against s 319. The qualification is that it was unnecessary and possibly confusing for her Honour to direct the jury that, in order to prove the commission of offences against s 319, the Crown did not have to satisfy them that the accused's driving was deserving of criminal punishment. 87 (2001) 207 CLR 584 at 608 [65]; [2001] HCA 64. See also Green v The Queen (2011) 86 ALJR 36 at 44 [28] per French CJ, Crennan and Kiefel JJ; 283 ALR 1 at 9; [2011] HCA 49. Crennan The common law criterion of criminal negligence as negligence deserving of punishment by the criminal law was instrumental in character. It was designed to impress upon the jury the seriousness of the degree of negligence necessary to support a verdict of guilty. At the same time, as Stephen pointed out, the gravity of the negligence in the particular case was left to the jury to determine "as a matter of degree". The application of that criterion in the Queensland and Western Australian Criminal Codes, effected by the decisions in Scarth and Callaghan, reflected the same instrumental approach to the statutory formula "to use reasonable care and take reasonable precautions". That view was justified by reference to the draftsman's reliance upon the Criminal Code Bill of 1880 and Stephen's intended incorporation in it of the common law criterion. The correctness of the criterion in its application to "gross negligence" under s 318 is not in issue in this appeal although the necessity for, and desirability of, such a direction may be questionable. In seeking to exclude the common law criterion of criminal negligence from consideration by the jury of verdicts under s 319, the trial judge did not err in law. Properly understood, the direction was correct. Its potential for creating misunderstanding about the seriousness of the offence created by s 319 and the seriousness of the punishment which could be imposed for that offence was plain enough. The question is whether the direction thereby amounted to a miscarriage of justice within the meaning of s 568(1) of the Crimes Act and if so whether the proviso to s 568(1) applied. Whether there was a miscarriage of justice Section 568(1) of the Crimes Act relevantly provided that the Court of Appeal shall allow an appeal against conviction "if it thinks that … on any ground there was a miscarriage of justice"88. This was subject to the proviso that: "Provided that the Court of Appeal may, notwithstanding that it is of opinion that the point raised in the appeal might be decided in favour of the appellant, dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred." 88 Section 568 was repealed by s 422(4) of the Criminal Procedure Act 2009 (Vic) (as amended by s 54(h) of the Criminal Procedure Amendment (Consequential and Transitional Provisions) Act 2009 (Vic)) with effect from 1 January 2010. The new provisions relating to the determination of an appeal against conviction are contained in s 276 of the Criminal Procedure Act 2009 (Vic). Crennan It was submitted for Mr King that the trial judge's direction had the potential to cause the jury to discount the alternative verdict as an inadequate reflection of the seriousness of Mr King's conduct. It was not argued that it could have affected the jurors' understanding of the standard of criminal negligence necessary for a conviction of culpable driving under s 318. The submission was based on the premises that the trial judge erred in relation to the level of risk necessary to support a conviction under s 319 and in not directing the jury that the conduct of the accused in his manner of driving had to be such as was deserving of punishment by the criminal law. For reasons already given, those premises are not made out. The question that remains is whether the potential for misunderstanding of the trial judge's direction that the Crown did not have to prove that Mr King's manner of driving was such as to merit criminal punishment amounted to a miscarriage of justice within the meaning of s 568(1) and if so whether the proviso applied. In Weiss v The Queen89 this Court held that the term "miscarriage of justice" in the opening paragraph of s 568(1) of the Crimes Act referred to "any departure from trial according to law, regardless of the nature or importance of that departure."90 That construction was based upon the historical roots of the term in the "Exchequer rule" derived from the decision of the Court of Exchequer in Crease v Barrett91. As the Court pointed out, when the term "miscarriage of justice" is so understood, the word "substantial" in the proviso has work to do. As was said in Weiss "the legislative objective in enacting the proviso was to do away with the Exchequer rule and the language of the proviso is apt to achieve that objective."92 The question whether or not by misdirection or error of law or procedure at trial the appellant had lost a fair chance of acquittal, was a matter to be considered under the proviso. In seeking to instruct the jury that the direction, applicable to s 318 of the Crimes Act, about whether the conduct of the driver was deserving of punishment by the criminal law, was not applicable to s 319, the trial judge did not err in law. Defence counsel at the trial did not seek a redirection. That judgment, which may have been made for a variety of reasons, informs consideration of the extent to which, taken in context, the direction was likely to 89 (2005) 224 CLR 300; [2005] HCA 81. 90 (2005) 224 CLR 300 at 308 [18] (emphasis in original). 91 (1835) 1 Cr M & R 919; [149 ER 1353]. 92 (2005) 224 CLR 300 at 315 [38]. Crennan confuse or mislead the jury. The direction was infelicitous but did not involve a misstatement of the law. It was not argued that it in any way qualified the correct direction given by the trial judge in relation to s 318. The direction given by the trial judge in relation to s 319 did not constitute a departure from trial according to law. It did not constitute a miscarriage of justice. That being so, no question of the applicability of the proviso arises. The Crown sought to invoke the proviso submitting, consistently with the reasons of the Court of Appeal, that the findings of fact made and the conclusion reached by the jury as to the more serious offences under s 318 meant that any misdirection as to the lesser offences under s 319 could not have affected the outcome in this case. That submission directed attention to the provisions of s 422A of the Crimes Act. That section conditions the jury's power to return a verdict of guilty of an offence against s 319, in relation to a person charged with an offence against s 318, upon their want of satisfaction that the person is guilty of the offence against s 318. That is to say, the jury has no power to return the alternative verdict unless first satisfied that the person is not guilty of the offence against s 318. Had it been necessary to consider the effect of that limitation on the application of the proviso, it would also have been necessary to have regard to the decisions of this Court in Gilbert v The Queen93, Gillard v The Queen94 and R v Nguyen95. There is, however, no need to consider either the effect of the limitation or its interaction with those decisions in order to dispose of this appeal. Conclusion For the preceding reasons the appeal should be dismissed. 93 (2000) 201 CLR 414, especially at 420 [13] and 421 [16] per Gleeson CJ and Gummow J; [2000] HCA 15. 94 (2003) 219 CLR 1, especially at 41-42 [133] per Hayne J; [2003] HCA 64. 95 (2010) 242 CLR 491 especially at 505 [50]; [2010] HCA 38. HEYDON J. This case concerns ss 318 and 319 of the Crimes Act 1958 (Vic) ("the Crimes Act"). The appellant was convicted of two counts of culpable driving causing death contrary to s 318. Section 319 provided for an alternative offence – dangerous driving causing death. At the relevant time s 422A(1) of the Crimes Act provided: "If on the trial of a person charged with an offence against section … 318 (culpable driving causing death) the jury are not satisfied that he or she is guilty of the offence charged but are satisfied that he or she is guilty of an offence against section 319 (dangerous driving causing death or serious injury), the jury may acquit the accused of the offence charged and find him or her guilty of the offence against section 319 and he or she is liable to punishment accordingly." Thus if the appellant had been acquitted on the s 318 counts, he could have been convicted of two contraventions of s 319, so long as the jury were satisfied beyond reasonable doubt that the factual criteria which s 319 sets out were satisfied. The appellant did not submit that the jury was misdirected in relation to the s 318 charges on which he was convicted. He accepted that the s 318 direction conformed with authority binding on the trial judge96. The appellant complained about, among other things, a part of the s 319 direction. The trial judge said that one of the important differences: "between the offence of culpable driving causing death, and dangerous driving causing death that reflect the fact that the offence of culpable driving causing death is a more serious offence … [is that] unlike the offence of culpable driving causing death by gross negligence, in relation to the offence of dangerous driving causing death the Crown does not have to satisfy you that the driving is deserving of criminal punishment." Counsel for the respondent in this Court submitted that the s 319 direction corresponded with the law as it was understood at the time. Counsel for the appellant accepted that it was the practice of at least some judges to direct juries in those terms. But the appellant's complaint was nonetheless that the jury was misdirected in relation to the s 319 charges, and that this misdirection invalidated his conviction under s 318. 96 R v De'Zilwa (2002) 5 VR 408 at 410 [2], 423 [46] and 425 [55]. To minds not steeped in a lifetime's experience of the criminal law, this complaint may seem strange. The jury convicted the appellant of two contraventions of s 318 after the trial judge had succeeded in the difficult task of giving a correct direction in relation to that offence. Yet the appellant submits that the convictions should be set aside because of a claimed deficiency in the trial judge's direction about s 319, to which section it was not necessary for the jury to turn. The background to the appellant's complaint is as follows. The maximum sentence of imprisonment for dangerous driving causing death contrary to s 319 was five years. The maximum sentence of imprisonment for culpable driving causing death contrary to s 318 was 20 years. The appellant's submissions in this appeal seemed to assume that a jury is subject to opposing impulses – the impulse to perform its duty and the impulse to grant mercy. Where an accused person is charged with one offence but is open to conviction on an alternative, lesser offence if not convicted on the first, a jury's merciful impulses would tend to sway it to convict on the alternative offence. Of course, it would not necessarily push it as far as an acquittal on both offences. The impulse of duty would tend to push a jury towards conviction on some other offence if it thought the facts justified conviction and that the appellant merited punishment. The greater the gap between the criteria of liability for the offence charged and the criteria of liability for the alternative, lesser offence, the less likely it is that the jury will select the lesser offence as the one on which to convict. Had this jury acquitted of the s 318 offences and convicted of the s 319 offences, the appellant would have had a considerable advantage in terms of sentence. The sentences he received in relation to s 318 were greater than the maximum sentence that attaches to a contravention of s 319. On the appellant's submissions, in cases of this kind there may come a point at which the jurors' perception of a duty to act so as to subject the accused to some punishment causes them to convict under s 318. That point may be reached if the jury directions indicated that the criteria of liability for the s 319 offences were remote from those for the s 318 offences. For if the jurors feel a duty to convict under s 318, that sense of duty may prevail over their instinct to follow the merciful course and convict under s 319. The appellant submitted to the Court of Appeal and to this Court that when s 319 is put to a jury as an alternative to s 318, it must be a "realistic alternative". In the Court of Appeal, Redlich JA more neutrally said97: "It is desirable that the content of the two offences be accurately stated, in part because the practical content of each offence may be informed not 97 King v The Queen (2011) 57 MVR 373 at 374 [4]. only by its elements being accurately described, but by the counterpoint of the content of the other offence." The appellant submitted to the Court of Appeal that one effect of the alleged misdirection on s 319 "was to set the minimum threshold of gross negligence too low, thereby impermissibly increasing the risk of conviction on the counts of culpable driving or, by making the alternate offence appear to be too minor, have had the effect of precluding any serious consideration of it by the jury."98 In the appellant's submission this meant that as a result the appellant had lost a real chance of acquittal on the culpable driving charges. And the appellant submitted to this Court that the trial judge's direction: "that 'unlike the offence of culpable driving causing death by gross negligence, in relation to the offence of dangerous driving causing death the Crown does not have to satisfy you that the driving is deserving of criminal punishment'. … was apt to cause the jury to think that dangerous driving causing death was a much less serious offence than culpable driving causing death, something akin to civil negligence, something for which the appellant would not be adequately punished. Again, contrary to the Court of Appeal's reasons, it is not open to exclude the possibility that the jury would have understood the direction to mean that a verdict of guilt of dangerous driving causing death carried with it a conclusion that the driving was not deserving of criminal punishment. This is all the more likely given that, when directing on culpable driving, the judge said that the accused's conduct 'must be so negligent that in your view he deserves to be punished by the criminal law'." (footnotes omitted) Minds not steeped in a lifetime's experience of the criminal law might also think that in a case like the present juries would first decide whether to convict on the crime charged (s 318). Only if not satisfied beyond a reasonable doubt of the accused's guilt on that charge would juries move to consideration of a crime not charged – the alternative charge under s 319. Indeed, that course is contemplated by s 422A(1). That section confers power on the jury to convict the accused under s 319 only if it is not satisfied that the accused is guilty of the offence charged under s 318. Further, in this case the trial judge told the jurors that they did not have to consider any question of the alternative s 319 contraventions unless they acquitted the accused on the s 318 charges. Her instruction was clear, and she gave it at least three times. She also told the jurors that it would be a betrayal of their oaths to arrive at a verdict by way of compromise between the s 318 and the s 319 offences. 98 King v The Queen (2011) 57 MVR 373 at 378 [19]. A point in favour of the appellant's approach is that to speak of the "jury" as approaching its task in a particular way is not always realistic. "Trial by jury" is trial by jurors. Different jurors are likely to react to what they hear and see in court in different ways. As time passes, they are likely to reflect, inside and outside the court, about their perceptions in individual ways. It is true that their formal deliberations after the end of the trial, and their informal deliberations before that time, are likely to be structured along lines which the stronger spirits on the jury mark out. But the jury is unlikely to move monolithically, obedient to a single superior will or embodying a unitary will. It is not possible in this appeal to devote any further consideration to the question of overturning the authorities which assume that, whatever statutes say, whatever judges say99, whatever the order of charges on an indictment, and whatever the order in time of the events to which particular charges relate100, the jury may convict on a lesser charge without considering whether to convict on the greater charge. There are questions about these authorities. Is it right to extend to other crimes the principles which apply in relation to murder and an alternative verdict of manslaughter? Do those authorities do any more than illustrate one virtue claimed for the jury system: the facility it offers jurors to frustrate laws which they perceive to be unjust101? How well do those authorities sit with other authorities to the effect that the entire system of jury trial in criminal cases rests on the assumption that jurors understand and comply with judicial directions? The merits of the assumption were insufficiently debated in this appeal to justify considering whether to overturn the authorities which rest on it. It is necessary now to turn to the appellant's specific complaint. To direct a jury that they should not convict unless the accused's conduct is "deserving of punishment by the criminal law" is curious. Such a direction may have merits in relation to the task which caused it to be developed – distinguishing the type of negligence which is sufficient for civil liability in tort from the type of negligence necessary to establish manslaughter102. The merits of that body of law were not argued in this appeal, and what follows is not intended to disturb it. Outside that area, however, it may be said that in modern times it is the legislature which determines what conduct is deserving of punishment. It is not the judiciary. And it is certainly not the jury. It is risky to adopt the course of 99 Stanton v The Queen (2003) 77 ALJR 1151 at 1157 [35]; 198 ALR 41 at 49; [2003] HCA 29. 100 R v Nguyen (2010) 242 CLR 491 at 505 [49]; [2010] HCA 38. 101 Devlin, Trial by Jury, 1st ed, 3rd impression (1966) at 87-88, 89-91 and 160-162. 102 Bateman (1925) 19 Cr App R 8. leaving to a jury as a criterion of guilt the question of whether particular conduct is deserving of punishment by the criminal law. When this is done with a succession of different juries, there is a risk of like cases being treated differently, and different cases being treated alike. Although it is not always possible, it is desirable for the application of legal rules to depend on clear and comprehensible factual criteria. Once particular facts are found, a conviction will follow. Once a reasonable doubt arises as to particular facts, an acquittal will follow. To say that an accused is not to be convicted of a particular crime unless his or her conduct is deserving of punishment by the criminal law may be to say only that that conduct, once established, amounts to that crime. The words which the Irish Court of Criminal Appeal used for manslaughter in The People (Attorney-General) v Dunleavy103 may be transposed to the s 318 offence: "One might reasonably suppose that any jury empanelled to try [a s 318 case] would be aware that the defendant was charged with a crime; that they should not convict him unless they believed him guilty; and that conviction for crime usually entails punishment of some kind. It can add very little to their knowledge to tell them that the negligence established must amount to a crime, must call for a conviction, and must deserve punishment." As the respondent submitted, it is implicit in a provision contained in the Crimes Act that it merits criminal punishment. And as the respondent also submitted, negligence is not an element of s 318 or s 319, and there is not present any need to distinguish between some form of statutory negligence and negligence for the purpose of civil liability at common law. With respect to those of a contrary opinion, it is not a necessary condition for conviction of an accused person under either s 318 or s 319 that the jury considers that the accused person's conduct merits criminal punishment, and juries should not be directed that it is. Even if, contrary to that view, it is a necessary condition for conviction under s 318, I agree with Bell J that to suggest that the necessary condition exists for s 318 but not s 319 carries the risk that the jury will conclude that s 319 is an offence of a minor character not meriting imprisonment104. That is what the direction under consideration in this appeal did. The trial judge's adoption of that course was a "wrong decision on [a] question of law" within the meaning of s 568(1) of the Crimes Act. Should the proviso to s 568(1) be applied? The proviso is that the relevant appellate court 103 [1948] IR 95 at 100 per Gavan Duffy P, Black and Davitt JJ. 104 See below at [106]-[107] and [114]. "may, notwithstanding that it is of the opinion that the point raised in the appeal might be decided in favour of the appellant, dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred." The appellant submitted that the prosecution case on s 318 was "weak" or "very weak". The respondent denied this. The respondent was correct in that denial. The respondent submitted: "In light of the fact-finding, any misdirection on the lesser offence could not have affected the outcome in this case." (footnote omitted) But the respondent did not engage in a detailed factual analysis sufficient to demonstrate that the prosecution case was so strong as to justify the application of the proviso. I agree with the orders Bell J proposes. Bell BELL J. The facts and the procedural history are set out in the plurality reasons and need not be repeated here. Mr King appeals against his convictions on two counts of culpable driving causing death contrary to s 318(1) of the Crimes Act 1958 (Vic) ("the Act") on the ground that the trial judge misdirected the jury as to the elements of the statutory alternative offence of dangerous driving causing death contrary to s 319(1) of the Act105. He complains that it was wrong to direct the jury that, in the case of dangerous driving, the manner of driving need only have "significantly" increased the risk of "hurting or harming others" and that it "need not be deserving of criminal punishment". The directions did not conform to the guideline respecting the elements of dangerous driving formulated by the Victorian Court of Appeal in R v De Montero106, a decision that was delivered after Mr King's trial. The correctness of that guideline is the subject of the Crown's Notice of Contention. I agree with French CJ, Crennan and Kiefel JJ that proof that an accused's manner of driving created a "considerable risk of serious injury or death to members of the public" is not an element of dangerous driving causing death. I also agree that there is no requirement for the jury to be directed that the manner of driving must have been such as to "merit criminal punishment". The trial judge's directions as to the elements of the offence of dangerous driving causing death were not wrong in either of these respects. However, this conclusion is not determinative of the appeal. The gravamen of Mr King's challenge is that the directions failed to discriminate accurately between the culpable driving and dangerous driving offences. In particular, he asserts that the trial judge's direction that, in the case of dangerous driving, it was not incumbent on the Crown to establish that Mr King's driving was deserving of criminal punishment, wrongly conveyed that dangerous driving is an offence of a relatively minor character. I accept that is so. Since, in the view that I take, proof of each offence required that the jury form a judgment as to the degree to which Mr King's driving departed from the objective standard that the law imposes on all who drive motor vehicles on or near public roads, this was a significant misdirection. I would allow the appeal. In what follows, the discussion of proof of the offence of culpable driving causing death is confined to those cases in which the form of culpability alleged is negligence. Section 318(2)(b) of the Act provides that a person drives a motor 105 Section 422A(1) of the Act provides that the offence of dangerous driving causing death is an alternative verdict on a presentment for the offence of culpable driving causing death. 106 (2009) 25 VR 694 at 716 [80] per Ashley, Redlich and Weinberg JJA. Bell vehicle in a culpably negligent manner if he fails unjustifiably and to a gross degree to observe the standard of care which a reasonable man would have observed in all the circumstances of the case. The requirement that the departure from the standard be "to a gross degree" is a statement of the same high degree of negligence required to support conviction for manslaughter107. The offence of culpable driving causing death, as enacted, was a misdemeanour punishable by a maximum of seven years' imprisonment108. At that time, manslaughter was punishable by a maximum sentence of 15 years' imprisonment109. Although the elements of the two offences overlapped, manslaughter was the more serious offence. This brought culpable driving causing death The maximum penalty for culpable driving causing death has been increased from time to time. It was increased to 15 years' imprisonment in line with manslaughter. In 1997, the maximum sentence for both offences was increased to 20 years' imprisonment111. The difference between the objective seriousness of the two offences as gauged by the maximum sentence has, since 1992, been removed. It was the recognition of this circumstance that appears to have led the Victorian Court of Appeal to characterise culpable driving causing death as a species of involuntary manslaughter112. Subsequently, in R v De'Zilwa, the Court of Appeal said that, on the trial of a presentment charging negligent culpable into 107 See, eg, R v Williamson (1807) 3 C & P 635 [172 ER 579]; Bateman (1925) 19 Cr App R 8 at 10-12 per Lord Hewart CJ; Andrews v Director of Public Prosecutions [1937] AC 576; Callaghan v The Queen (1952) 87 CLR 115; [1952] HCA 55; Nydam v The Queen [1977] VR 430 at 445; Wilson v The Queen (1992) 174 CLR 313 at 333 per Mason CJ, Toohey, Gaudron and McHugh JJ; [1992] HCA 31. 108 Crimes (Driving Offences) Act 1967 (Vic), s 3. 109 See Crimes Act 1958 (Vic), s 5 as enacted. As explained in the paragraph below, this was the maximum penalty until 1997. 110 Crimes (Culpable Driving) Act 1992 (Vic), s 3(1); Sentencing Act 1991 (Vic), 111 Sentencing and Other Acts (Amendment) Act 1997 (Vic), s 27, Sched 1 items [3] and [89]. 112 R v Franks [1999] 1 VR 518 at 520 [5]; R v O'Connor [1999] VSCA 55 at [19]; R v Wright [1999] 3 VR 355 at 358 [9]; R v Guariglia (2001) 33 MVR 543 at 544 [3]; R v Tran (2002) 4 VR 457 at 458 [1]; Director of Public Prosecutions (Vic) v Solomon (2002) 36 MVR 425 at 429 [18]; Director of Public Prosecutions v Wareham (2002) 5 VR 439 at 442 [11]. Bell driving causing death, the judge should direct the jury that guilt required proof that the accused's driving involved such a great falling short of the standard of care, and such a high risk that death or serious injury would follow, that it merited criminal punishment113. This assimilated the directions on a prosecution for culpable driving causing death with the standard directions on a prosecution for manslaughter by criminal negligence114. De'Zilwa was decided before dangerous driving causing death was introduced into the Act as an alternative verdict on the trial of a count of culpable driving. There was no occasion to consider whether the direction that the accused's driving had to be such as to "merit criminal punishment" might mislead by comparison with the statement of the elements of the alternative offence. The offence of dangerous driving was introduced into the Act in 2004115. The central concept on which liability depends, driving in a manner dangerous to the public, was one with an established meaning in the context of driving offences. In Jiminez v The Queen, six Justices approved Barwick CJ's encapsulation of that meaning in McBride v The Queen116: "The section speaks of a speed or manner which is dangerous to the public. This imports a quality in the speed or manner of driving which either intrinsically in all circumstances, or because of the particular circumstances surrounding the driving, is in a real sense potentially dangerous to a human being or human beings who as a member or as members of the public may be upon or in the vicinity of the roadway on which the driving is taking place." Jiminez and McBride were each concerned with the offence under the New South Wales statute that broadly equates to the offence of dangerous driving provided by s 319(1) of the Act117. New South Wales did not have a 113 (2002) 5 VR 408 at 410 [2] per Ormiston JA, 423 [46] per Charles JA, 425 [55] per O'Bryan AJA. 114 Nydam v The Queen [1977] VR 430 at 445. 115 Crimes (Dangerous Driving) Act 2004 (Vic). 116 Jiminez v The Queen (1992) 173 CLR 572 at 579 per Mason CJ, Brennan, Deane, Dawson, Toohey and Gaudron JJ; [1992] HCA 14, citing McBride v The Queen (1966) 115 CLR 44 at 49-50; [1966] HCA 22. 117 Crimes Act 1900 (NSW), s 52A(1). Section 52A, as enacted by s 2(e) of the Crimes (Amendment) Act 1951 (NSW) and until its replacement by the Crimes (Dangerous Driving Offences) Amendment Act 1994 (NSW), was entitled "Culpable driving" but described the offence in terms of driving "in a manner (Footnote continues on next page) Bell statutory equivalent to the offence of culpable driving causing death provided by s 318 of the Act. Grossly negligent driving occasioning death was susceptible of prosecution for manslaughter in New South Wales. However, in neither McBride nor Jiminez was the accused charged with manslaughter and no question arose in either case of discriminating between proof of driving in a manner dangerous and proof of gross negligence. The distinction between these two forms of liability for driving conduct was the question with which the Victorian Court of Appeal was concerned in De Montero. In De Montero, in his report to the Court of Appeal, the trial judge drew attention to the absence of guidance as to the directions to be given in a case in which dangerous driving was left as an alternative verdict on a presentment charging culpable driving118. The guideline that the Court of Appeal formulated in De Montero was designed to address this deficiency. It is set out in the reasons of French CJ, Crennan and Kiefel JJ119. In contention are the which is dangerous to the public". At the time of Jiminez, s 52A was entitled "Culpable driving", but relevantly provided that: "(1) Where the death of, or grievous bodily harm to, any person is occasioned through: (a) the impact with any object of a motor vehicle in or on which that person was being conveyed (whether as a passenger or otherwise), ... and the motor vehicle was at the time of the impact... being driven by another person: ... (f) at a speed or in a manner dangerous to the public, the person who was so driving the motor vehicle shall be guilty of the misdemeanour of culpable driving. ... (3) It shall be a defence to any charge under this section that the death or the grievous bodily harm occasioned, as the case may be, was not in any way attributable to ... the speed at which or the manner in which the vehicle was driven." In 1994, the Amendment Act reformulated the offence, renaming it "Dangerous driving" and providing for the offence of "dangerous driving occasioning death" in s 52A(1). 118 R v De Montero (2009) 25 VR 694 at 719 [89]. 119 See above at [40]. Bell requirements that the manner of driving "merit criminal punishment" and create "a considerable risk of serious injury or death to members of the public". The direction that the accused's conduct must merit criminal punishment derives from Bateman120, in which a medical practitioner appealed to the English Court of Criminal Appeal against his conviction for the negligent manslaughter of a patient. The direction proposed in Bateman was designed to impress upon the jury the distinction between liability in tort and the higher degree of negligence required to support liability for manslaughter121. Driving that is culpably negligent within the meaning of s 318(2)(b), or dangerous within the meaning of s 319(1), is in each case conduct that warrants punishment under the criminal law. Both sections create serious criminal offences for which substantial terms of imprisonment may be imposed. To direct the jury that, to convict an accused of culpable driving causing death, the driving must have been such as to warrant criminal punishment, and not to give a like direction with respect to dangerous driving, may suggest that the latter offence encompasses conduct that does not warrant such punishment. It was with a view to avoiding this misconception that the Court of Appeal in De Montero said that a "meriting criminal punishment" direction should be given with respect to dangerous driving. The logic of a direction on the trial of a criminal offence that the accused's conduct must "merit criminal punishment" has been questioned122. The elements of manslaughter by criminal negligence stated by the Full Court in Nydam v The Queen123 include that the accused's conduct must warrant punishment under the criminal law. This appeal does not provide the occasion to consider the continued usefulness of the direction in the case of negligent manslaughter. However, I agree with French CJ, Crennan and Kiefel JJ that there is no warrant for transposing the direction to the trial of a count of dangerous driving causing death. 120 (1925) 19 Cr App R 8. 121 Bateman (1925) 19 Cr App R 8 at 10-12 per Lord Hewart CJ. 122 Andrews v Director of Public Prosecutions [1937] AC 576 at 583 per Lord Atkin; The People v Dunleavy [1948] IR 95 at 100-101. 123 [1977] VR 430 at 445, approved in Wilson v The Queen (1992) 174 CLR 313 at 333 per Mason CJ, Toohey, Gaudron and McHugh JJ; R v Lavender (2005) 222 CLR 67 at 75 [17] per Gleeson CJ, McHugh, Gummow and Hayne JJ; [2005] HCA Bell Neither party challenged De'Zilwa in their written submissions. However, on the hearing of the appeal, the utility on the trial of a count of culpable driving causing death of the "merit criminal punishment" direction was in issue. The direction does not aid the jury's appreciation of what extent of departure from the standard of care amounts to a "gross degree" since departure from the standard of a lesser degree is also punishable as a serious criminal offence. The direction is likely to mislead in any case in which the alternative verdict is left, given that the difference between the offences does not turn on proof that culpable driving merits criminal punishment. In my opinion, the direction should be confined to the offence of manslaughter by criminal negligence. The principal concern of the Court of Appeal in De Montero was the need to contrast the quality of the conduct required for proof of each offence in a case in which dangerous driving causing death is left as an alternative to culpable driving124. The Court distinguished the offences by reference to the degree of risk of harm and the extent of potential harm125. The Court concluded that the distinction was between proof of driving conduct involving a "high" risk of serious injury or death in the case of culpable driving, and a "considerable" risk of that outcome in the case of dangerous driving126. Its assessment of the degree of risk of harm drew on the test for determining whether an act is "dangerous" in the context of manslaughter by unlawful and dangerous act127. The Court's assessment of the extent of potential harm paid regard to the circumstance that, where a charge is laid under s 319, there will have been death or serious injury128. Mr King supported the reasoning in De Montero. He acknowledged that the requirement that the manner of driving create a "considerable risk of serious injury or death to members of the public" is a more demanding test than is stated in Jiminez and McBride. He submitted that those cases are to be distinguished because the New South Wales offence with which each was concerned did not require proof that the manner of driving caused the death (or grievous bodily harm); rather, it was a defence that it did not129. More generally, Mr King urged caution in applying decisions from other jurisdictions to the offence of dangerous driving causing death under the Act because Victorian law makes provision for a 124 (2009) 25 VR 694 at 710 [57]. 125 (2009) 25 VR 694 at 710 [55], 711-712 [63]-[65], 715 [78]. 126 (2009) 25 VR 694 at 716 [81]. 127 (2009) 25 VR 694 at 703 [35]. 128 (2009) 25 VR 694 at 711-712 [64]. 129 See above at fn 117. Bell greater number of tiers of statutory liability for driving offences. In particular, it was said that other jurisdictions do not have an "intermediate tier" that equates to the offence provided by s 319(1) of the Act130. Neither of Mr King's submissions should be accepted. The difference in the number of tiers of statutory driving offences is not a relevant distinction. In other jurisdictions, conduct prosecuted in Victoria as culpable driving causing death under s 318 is prosecuted as negligent manslaughter. Nor is the requirement of a causal link between the driving and death (or serious injury in the case of an offence of negligently causing serious injury under s 24 of the Act) material to the content of driving in a manner dangerous to the public. Driving a motor vehicle on or near a public road is attended by risk of injury to persons in the vicinity. In the event of a collision with another vehicle or with a pedestrian, it is likely that at least serious injury will result. There is no need to import a variant of the test of whether an unlawful act is also a "dangerous act" in the context of manslaughter into the determination of whether the manner of driving a motor vehicle is dangerous. The content of the adverbial phrase "in a manner dangerous to the public" was one with a well understood meaning in the context of driving offences at the date Parliament enacted the offence of dangerous driving causing death. Proof of the offence in accordance with the statements in McBride does not require that the manner of driving create a "considerable risk of serious injury or death to members of the public". A test which discriminates between the culpable driving and dangerous driving offences by reference to whether the risk of serious injury or death to members of the public is "high" or "considerable" is not, in any event, well suited to its intended purpose. In the context of driving a motor vehicle on or near a public road, it calls for a judgment of excessive refinement. In my opinion, the Court of Appeal's statement in De Montero of the further directions to be given in a case in which dangerous driving is left as an alternative verdict accurately captures the difference between the offences in a way that is likely to be readily understood by a jury. The Court of Appeal said131: "The jury should further be told that dangerous driving, though a serious offence, involves conduct which is less blameworthy than culpable driving. They should be told that while dangerous driving necessarily involves criminal negligence, it need not, like culpable driving, be grossly 130 See Crimes Act 1900 (NSW), s 52A; Criminal Code (Q), s 328A(4); Criminal Law Consolidation Act 1935 (SA), s 19A; Criminal Code (Tas), s 167A; Road Traffic Act 1974 (WA), s 59; Crimes Act 1900 (ACT), s 29; Criminal Code (NT), s 174F. 131 R v De Montero (2009) 25 VR 694 at 716 [81]. Bell negligent, but … it must involve a serious breach of the proper management or control of the vehicle on the roadway." The Crown was critical of this analysis in the written submissions filed in support of its Notice of Contention. It said that the analysis "seeks to introduce the concept of fault rather than an objective test of criminal liability" and that it wrongly "treats dangerous driving as a lesser species of criminal negligence", whereas liability for the offence "is to be treated as determined by statute". The statute makes it an offence to drive a motor vehicle in a manner that is dangerous to the public, having regard to all the circumstances of the case. Driving a motor vehicle is an inherently dangerous activity. However, as Jiminez makes clear, the prohibition on driving in a manner dangerous to the public has never been an absolute one in this country132. Thus, as is explained in that case, the liability of a driver who falls asleep at the wheel depends upon whether she ought to have known that she was running a real risk of falling asleep at the wheel133. To the extent that the Crown's written submissions may be thought to propose a dichotomy between dangerous driving and negligence, they raise an issue concerning the effect of the decision in Jiminez. In the joint reasons in that case, driving in a manner dangerous was said to involve "some feature which is identified not as a want of care but which subjects the public to some risk over and above that ordinarily associated with the driving of a motor vehicle"134. The statement echoes that of Barwick CJ in McBride that the quality of being dangerous to the public is in "sharp contrast to the concept of negligence" and "requires some serious breach of the proper conduct of a vehicle upon the 132 Jiminez v The Queen (1992) 173 CLR 572 at 580-581. In Ball and Loughlin (1966) 50 Cr App R 266 at 270, Lord Parker CJ in the Court of Criminal Appeal held that the offence of driving in a manner dangerous and thereby causing death contrary to s 1 of the Road Traffic Act 1960 (UK) was an offence of absolute liability. His Lordship relied on passages in R v Evans [1963] 1 QB 412 and R v Spurge [1961] 2 QB 205 for this conclusion. In R v Gosney [1971] 2 QB 674 at 679F, the Court of Appeal, Criminal Division, disapproved Ball and Loughlin, holding that the offence of dangerous driving was not one of absolute liability and concluding that the better view of the decisions in Spurge and Evans was that fault was an element of proof of the offence. 133 (1992) 173 CLR 572 at 581 per Mason CJ, Brennan, Deane, Dawson, Toohey and 134 (1992) 173 CLR 572 at 579 per Mason CJ, Brennan, Deane, Dawson, Toohey and Bell highway"135. The contrast drawn in each case is between proof of a manner of driving amounting to a serious departure from the proper conduct of the vehicle, with the attendant risk of harm to the public, on the one hand, and liability in tort, on the other. It is the point that was made by Lord Hewart CJ in Bateman respecting liability for negligent manslaughter. His Lordship observed that, in a civil action, it does not matter how far short of the standard of reasonable care the defendant falls, "[t]he extent of his liability depends not on the degree of negligence, but on the amount of damage done"136; whereas, in a criminal court, "the amount and degree of negligence are the determining question."137 The offences of negligent culpable driving and dangerous driving are each subject to an objective test of liability. Neither requires proof that the accused possessed a subjective awareness of, and indifference to, the risk created by his or her driving. The mens rea for each is no more than the intention to do the acts involved in driving the motor vehicle. In neither case is it incumbent on the prosecution to prove a subjective "intention to drive badly."138 The law imposes on all who drive motor vehicles a duty to exercise reasonable care for the safety of others who may be on or near the roadway. In McCrone v Riding, this standard was described as "impersonal and universal, fixed in relation to the safety of other users of the highway."139 In McCrone, a charge of careless driving had been dismissed by the justices of the peace after taking into account the youthful defendant's lack of driving experience. The appellate Court identified the error in this approach as allowing the existence of two standards140. The statement of the standard formulated with respect to careless driving was adopted by this Court in R v Coventry141, a case concerned with driving in a manner dangerous. As this Court explained, the standard is impersonal in that it does not vary with individuals and universal in that it applies 135 McBride v The Queen (1966) 115 CLR 44 at 50. 136 (1925) 19 Cr App R 8 at 11. 137 (1925) 19 Cr App R 8 at 11. See also Ormerod, Smith and Hogan's Criminal Law, 13th ed (2011) at 558: "Even dangerous driving causing death is not necessarily manslaughter. There are degrees of criminal negligence, and manslaughter requires a very high degree." (emphasis in original) 138 R v Gosney [1971] 2 QB 674 at 679. 139 [1938] 1 All ER 157 at 158. 140 McCrone v Riding [1938] 1 All ER 157 at 158. 141 (1938) 59 CLR 633; [1938] HCA 31. Bell to all who drive motor vehicles142. Nothing in the decision in Coventry, in which special leave to appeal from the order of the South Australian Court of Criminal Appeal was refused, suggests that this Court considered the standard to be other than "the full standard of care which is due by anyone who undertakes to handle a dangerous instrument."143 In my opinion, the decisions of this Court in Coventry, McBride and Jiminez do not require or support a distinction, other than of degree, between proof of driving in a manner dangerous and proof of negligent culpable driving. This is not to say that driving in a manner dangerous incorporates proof of negligence as an element. If it did, no doubt it would be necessary to prove the gross departure from the standard of care necessary to support liability for an offence of criminal negligence144. Liability for driving in a manner dangerous to the public depends upon proof of a serious breach of the proper conduct of the vehicle. The determination of whether a feature, or features, of the accused's driving answers that description requires a comparison between that manner of driving and the standard of care which the law demands of all who drive a motor vehicle on or near a public road. It is that standard that gives content to the concept of "the proper conduct of a vehicle upon the highway"145. I do not agree that dangerous driving and negligence are to be distinguished upon a view that not all dangerous driving involves negligence. Any serious breach of the proper conduct of a vehicle on or near a public road that exposes the public to risk of harm is negligent, regardless of the skill with which the manoeuvre is executed. Whether the breach departs from the standard of care to a gross degree, such as to be culpably negligent within the meaning of s 318(2)(b) of the Act, is a matter for judgment. In R v Buttsworth146, the New South Wales Court of Criminal Appeal considered the relationship between negligent manslaughter and driving in a manner dangerous to the public in the context of a challenge to the adequacy of the directions respecting the distinction between the offences. The jury had been directed that the distinction was essentially one of degree. O'Brien CJ of Cr D, who gave the leading judgment, undertook a comprehensive review of the history 142 R v Coventry (1938) 59 CLR 633 at 638 per Latham CJ, Rich, Dixon and 143 R v Coventry [1938] SASR 79 at 88 per Murray CJ, Angas Parsons and Napier JJ. 144 See Callaghan v The Queen (1952) 87 CLR 115; R v Shields [1981] VR 717. 145 McBride v The Queen (1966) 115 CLR 44 at 50 per Barwick CJ. 146 [1983] 1 NSWLR 658. Bell of negligent manslaughter and of the statutory driving offences before concluding that the directions were consistent with authority147. A footnote in the plurality reasons in Jiminez refers with apparent approval to the following passage in O'Brien CJ of Cr D's judgment148: "It is, of course, true to say that it is not sufficient or appropriate simply to describe driving in a manner dangerous to the public as a degree of negligent driving. A direction to that effect would fail because it does not set out the specifics of the degree of fault appropriate to the offence of culpable driving. But to describe the driving as being of that degree of negligence which amounts to a manner of driving which is dangerous to the public, as those terms are explained in McBride's case and those which precede it, is, I think, correct, both logically and according to authority." O'Brien CJ of Cr D's account of the distinction between criminal liability for both negligent manslaughter and dangerous driving, and civil liability, is pertinent149: "What has always been made clear is that these offences are to penalize the offending quality of the driving according to the degree of its departure from the standard reasonably to be expected; and whether or not they also involved an element of harm to be caused or associated with the driving they are not concerned with the concept of an action on the case which looks to the compensation of an individual who sustains injury by reason of the existence of a legal duty to him which recognizes only one standard for the measurement of its breach". The analysis in Buttsworth draws on Lord Atkin's account of the distinction between driving in a manner dangerous and negligent manslaughter in Andrews v Director of Public Prosecutions150. The South Australian Supreme Court has analysed the relationship between driving in a manner dangerous and 147 [1983] 1 NSWLR 658 at 660-661. 148 Jiminez v The Queen (1992) 173 CLR 572 at 579 fn 23 per Mason CJ, Brennan, Deane, Dawson, Toohey and Gaudron JJ, citing R v Buttsworth [1983] 1 NSWLR 149 [1983] 1 NSWLR 658 at 677. 150 [1983] 1 NSWLR 658 at 672, citing [1937] AC 576 at 584-585. Bell the concept of negligence in the same way. The decisions are summarised in De Montero151. Nothing in the decisions of the New South Wales Court of Criminal Appeal in LKP152 or Gillett153 departs from the analysis in Buttsworth. In Saunders154, Simpson J, who gave the leading judgment, extracted a lengthy passage from the judgment of Spigelman CJ in Hopton155. The Chief Justice said, of those cases in which inattentiveness is the feature of the manner of driving particularised, that the jury would not be properly instructed if left to speculate as to "the level of negligence" which may be appropriate. More recently, in R v Borkowski, Howie J, in giving the leading judgment of the New South Wales Court of Criminal Appeal, observed156: "As the law presently stands, there is a rational, logical and cohesive hierarchy of offences concerned with the infliction of death or serious injury by the use of a motor vehicle. The offences range from negligent driving causing grievous bodily harm ... through the driving offences in the Crimes Act [1900 (NSW)] to manslaughter by gross criminal negligence. All of these offences involve varying degrees of negligence, however the actual conduct may be described, ranging from a lack of care and proceeding through dangerousness to culpable negligence: R v Buttsworth ... . This structure is acknowledged by s 52AA(4) that provides that on a trial for an offence of manslaughter … a jury can return a verdict of guilty of an offence under s 52A." In my opinion, this is an accurate statement of the relationship between the hierarchy of offences in Victoria ranging from dangerous driving causing death to culpable driving causing death (and negligent manslaughter). 151 (2009) 25 VR 694 at 708-709 [52]-[54], citing R v Duncan (1953) 11 SASR 592; R v Mayne (1975) 11 SASR 583; Pope v Hall (1982) 30 SASR 78. 152 (1993) 69 A Crim R 159. 153 (2006) 166 A Crim R 419. 154 (2002) 133 A Crim R 104. 155 (2002) 133 A Crim R 104 at 108-109 [19], citing Hopton unreported, Court of Criminal Appeal of the Supreme Court of New South Wales, 8 October 1998. 156 (2009) 195 A Crim R 1 at 15 [56] per Howie J, McClellan CJ at CL and Simpson J concurring. Bell To drive a motor vehicle into an intersection without giving way to traffic, as required by the road rules, is in all circumstances a dangerous thing to do. Depending upon the circumstances in which it occurs, that manner of driving may amount to culpable driving or dangerous driving. In some circumstances, it may not support conviction for either offence. The question for the jury in determining whether the prosecution has proved culpable driving or the lesser offence involves an assessment of the degree to which the driving conduct departed from the standard which the law imposes on all who drive. The experience in Victoria has been that juries frequently seek assistance with the scope of the gross degree of departure from the standard of care needed to establish guilt of negligent culpable driving157. The provision of the statutory alternative verdict of dangerous driving causing death is a recent development. Judges will frequently be required to leave the alternative verdict on a presentment charging negligent culpable driving. In such a case, it is necessary to give directions which meaningfully convey to the jury the distinction between the two offences. I agree with the substance of the observation in Buttsworth that an exposition of the law which does not convey that dangerous driving involves a degree of negligence that is less than that required to establish guilt of the more serious offence of culpable driving is unlikely to make practical sense to a jury. The directions need not involve a disquisition on proof of negligence in a civil action. However, they should make clear, consistently with McBride158, that criminal liability does not attach for every failure to adhere to the standard of care. Mr King's trial The features of Mr King's driving that the prosecution relied upon to establish his culpable negligence were his ingestion of cannabis; his failure to give way at a "Give Way" sign; and his conduct in proceeding into the intersection at a speed of around 75 kph, heading in the direction of the closed- off portion of Evans Road. The same features were relied upon in the alternative to establish that Mr King's manner of driving was dangerous to the public. There were two prominent factual issues at the trial: the sufficiency of the lighting at the intersection, and the extent to which the ingestion of cannabis had impaired Mr King's driving ability. The Crown relied upon the evidence of the police officers who described the lighting at the intersection as adequate. The Crown submitted that the high level of tetrahydrocannabinol (the active 157 R v De'Zilwa (2002) 5 VR 408 at 410 [3] per Ormiston JA, 422 [44] per 158 (1966) 115 CLR 44 at 50 per Barwick CJ. Bell substance in cannabis) detected in Mr King's blood would inevitably have impaired his capacity to drive. Mr King's counsel relied on the evidence of the civilian witnesses who agreed that the lighting at the intersection was bad. He relied on the unchallenged evidence that Mr King had driven a distance of about 60 kilometres in an unremarkable fashion in the period immediately preceding the collision as tending against a conclusion that the ingestion of cannabis had impaired his ability to drive. The Crown Prosecutor addressed the jury on the alternative verdict, submitting that "the absolute baseline case would be the alternative of dangerous driving causing death." While Mr King's counsel submitted that the jury should acquit Mr King of either offence, his closing submission that, "at its highest, the evidence in this case might permit you to say, we think in all the circumstances it was dangerous", is eloquent of the real ground on which this trial was fought. At this point, the direction of which Mr King complains should be set out in full. The trial judge directed the jury that: "There are two important differences between the offence of culpable driving causing death, and dangerous driving causing death that reflect the fact that the offence of culpable driving causing death is a more serious offence. First, the Crown must prove beyond reasonable doubt that the accused drove in a way that significantly increased the risk of harming others. There does not have to be a high risk of death or serious injury. That is only a requirement for culpable driving causing death by gross negligence. And secondly, unlike the offence of culpable driving causing death by gross negligence, in relation to the offence of dangerous driving causing death the Crown does not have to satisfy you that the driving is deserving of criminal punishment. The second element will be met [as] long as you find that the accused drove in a speed or manner that was dangerous to the public." In my view, the penultimate sentence of this direction is more than infelicitous; it is wrong. Although the prosecution was not required to prove, as an element of the offence of dangerous driving causing death, that Mr King's conduct merited criminal punishment, it is not correct to identify that circumstance as an important difference between the two offences. Mandie JA, giving the leading judgment in the Court of Appeal, thought it "most unlikely" that the jury would have considered that the lesser offence was not deserving of criminal punishment since it was an offence and therefore necessarily subject to criminal punishment159. Given that the jury were told that 159 King v The Queen (2011) 57 MVR 373 at 380 [22]. Bell the need to establish that Mr King's driving warranted criminal punishment was one of two important differences between the offences, I would not draw that conclusion. In my view, there is a significant risk that the jury may have understood the directions to convey that culpable driving causing death is a serious criminal offence deserving of criminal punishment, in the sense that a person convicted of it may be sentenced to a term of imprisonment, whereas dangerous driving causing death is an offence of a regulatory character, punishable by a fine and licence disqualification or the like. The Crown submitted that any error in the statement of the alternate offence was not material because the jury were directed to consider Mr King's guilt of culpable driving causing death and only in the event that they were not satisfied that guilt had been proved beyond reasonable doubt were they to consider the lesser offence. That submission should be rejected for two reasons. The first is that, to the extent that the directions wrongly diminished the seriousness of the alternative offence, they might be thought to have enlarged the scope of conduct which the jury assessed as departing "to a gross degree" from the standard that the law imposes on the drivers of motor vehicles. The point was made by Redlich JA in his concurring judgment. His Honour observed that "the practical content of each offence may be informed not only by its elements being accurately described, but by the counterpoint of the content of the other offence."160 The second reason for rejecting the Crown's submission is that Mr King was in the jury's charge for both the culpable driving and dangerous driving offences. The jurors were at liberty to organise their discussion in whatever manner appeared to them to be convenient161. This appeal does not raise the application of the principles stated in Gilbert v The Queen162 to circumstances in which the failure to leave an alternative count on a presentment for an offence other than murder is suggested to amount to a miscarriage of justice. However, there are statements in Gilbert that are apt to the issue raised in the present appeal. In their joint reasons, Gleeson CJ and Gummow J observed163: "Indeed, juries are ordinarily asked to return a general verdict. They make their findings of fact in the context of instructions as to the consequences 160 King v The Queen (2011) 57 MVR 373 at 374 [4]. 161 Stanton v The Queen (2003) 77 ALJR 1151 at 1157 [35] per Gleeson CJ, McHugh and Hayne JJ; 198 ALR 41 at 49; [2003] HCA 29; R v Nguyen (2010) 242 CLR 491 at 505 [49] per Hayne, Heydon, Crennan, Kiefel and Bell JJ; [2010] HCA 38. 162 (2000) 201 CLR 414; [2000] HCA 15. 163 (2000) 201 CLR 414 at 421 [16]. Bell of such findings, and for the purpose of returning a verdict which expresses those consequences." "The appellant was entitled to a trial at which directions according to law were given. It is contrary to human experience that in situations in which a choice of decisions may be made, what is chosen will be unaffected by the variety of the choices offered, particularly when, as here, a particular choice was not the only or inevitable choice." In their joint reasons, Gleeson CJ and Gummow J referred to the decision of the Supreme Court of Canada in R v Jackson165. In Jackson, the Crown's appeal against a decision of the Court of Appeal setting aside the prisoner's conviction and directing a new trial was dismissed, notwithstanding that the prisoner had been convicted of murder at a trial at which the elements of that offence had been correctly stated. The Court was unable to be satisfied that the verdict was just, in circumstances in which the directions respecting the alternative count were inadequate166. In R v Coutts167, Lord Bingham of Cornhill made a statement reminiscent of those in Gilbert, in the context of the failure to leave manslaughter on the trial of a count of murder. His Lordship said168: "The objective must be that defendants are neither over-convicted nor under-convicted, nor acquitted when they have committed a lesser offence of the type charged. The human instrument relied on to achieve this objective in cases of serious crime is of course the jury. But to achieve it in some cases the jury must be alerted to the options open to it." The Victorian Court of Appeal was divided in R v Kane169 on the application of the principle in Gilbert to a presentment for an offence other than 164 (2000) 201 CLR 414 at 441 [101]. 165 [1993] 4 SCR 573. 166 R v Jackson [1993] 4 SCR 573 at 593 per McLachlin J for the majority, Lamer CJ agreeing. 167 [2006] 1 WLR 2154; [2006] 4 All ER 353. 168 [2006] 1 WLR 2154 at 2159F [12]; [2006] 4 All ER 353 at 359-360. Bell murder. Of present relevance is the statement of Ormiston JA, dissenting as to the outcome, that170: "I see a significant distinction between cases in which an alternative verdict has not been put and those in which an alternative verdict has been put to the jury but about which the judge has given incorrect directions. There it may be over-simplistic in every case to say that the jury must have accepted those directions of the judge relating to the primary count and therefore the directions in relation to the alternative count should always be treated as irrelevant." As earlier stated, in my opinion, the directions respecting the difference between the principal and alternative offences were misleading. This involves no criticism of the trial judge, since they were in accord with the practice following De'Zilwa171. That circumstance may explain counsel's failure to apply for a redirection. The issue for the jury required an evaluative judgment as to the degree to which Mr King's driving departed from the objective standard. In this context, the failure to correctly distinguish the gravity of the two offences assumes significance. Mr King's driving cannot be said to have so clearly involved a departure "to a gross degree" from the standard as to render the misdirection of no consequence172. In my opinion, there is a risk that the directions deprived Mr King of a real chance that the jury might have returned a verdict for the lesser offence. For this reason, and notwithstanding the failure to seek a redirection, I would allow the appeal. Counsel for Mr King submitted that, in the event the appeal was allowed, an appropriate order would be one substituting a verdict of guilt for the lesser offence. The Crown did not demur to this submission. Taking into account the interval since the date of the collision and the circumstance that Mr King has now served the custodial portion of the sentence imposed for the more serious offence, I would allow the appeal, quash the order of the Court of Appeal, and in lieu thereof quash the conviction for culpable driving causing death and substitute a conviction for dangerous driving causing death, and remit the proceedings to the Court of Appeal for re-sentencing. 170 (2001) 3 VR 542 at 545 [6]. 171 The potential for a De'Zilwa direction respecting the need to establish that the driving conduct merited criminal punishment at a trial at which the alternative count is to be left was noted by Cummins J in Director of Public Prosecutions v Towle [2008] VSC 101 at [14] fn 5. 172 See R v De'Zilwa (2002) 5 VR 408, in which a case bearing some factual similarity to the present was characterised by Ormiston JA as "as weak a case of causing death by culpable driving as one might see": at 412 [8].

HIGH COURT OF AUSTRALIA APPLICANT VEAL OF 2002 APPELLANT AND MINISTER FOR IMMIGRATION AND MULTICULTURAL AND INDIGENOUS AFFAIRS & ANOR RESPONDENTS Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 6 December 2005 ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Federal Court made on 9 July 2004 and, in their place, order that the appeal to that Court be dismissed with costs. On appeal from the Federal Court of Australia Representation: D S Mortimer SC with R M Niall for the appellant (instructed by Victoria Legal Aid) A L Cavanough QC with J D Pizer for the first respondent (instructed by Australian Government Solicitor) No appearance for the second respondent Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs Immigration – Application for protection visa – Decision of Refugee Review Tribunal – Procedural fairness – Where Tribunal reviewed an unsolicited letter received by the Department of Immigration and Multicultural and Indigenous Affairs, which made allegations against the appellant – Where Tribunal did not inform the appellant of the existence of the letter or its contents – Where Tribunal affirmed decision under review and said that in reaching its decision it gave no weight to the letter – Whether procedural fairness required the Tribunal to inform the appellant of the existence of the letter or its contents. Words and phrases – "procedural fairness", "credible, relevant and significant". Migration Act 1958 (Cth), ss 418(3), 424A, 438. GLEESON CJ, GUMMOW, KIRBY, HAYNE AND HEYDON JJ. In June 2001, the appellant and his partner applied for protection visas. In December 2001, a delegate of the Minister refused those applications. The appellant and his partner each sought review by the Refugee Review Tribunal ("the Tribunal") of the refusal of their applications. After those applications for review had been made, but before the Tribunal had completed its review, the Department of Immigration and Multicultural and Indigenous Affairs ("the Department") received a letter about the appellant. The letter was unsolicited but not anonymous; it gave the author's name and address. The author of the letter made allegations against the appellant. First, the author said that the appellant had admitted that he had been accused of killing a person prominent in the political affairs of the appellant's country of origin (Eritrea). Secondly, the author alleged that the appellant was in fact a supporter of, and working for, the government of Eritrea. The author concluded the letter by advising the Department "to keep [this] information secret". When an application for review is made to the Tribunal, s 418(3) of the Migration Act 1958 (Cth) ("the Act")1 obliges the Secretary to the Department, as soon as is practicable after being notified of the application, to give to the Registrar of the Tribunal, all documents in the possession or control of the Secretary considered by the Secretary to be relevant to the review. The Department sent the letter to the Tribunal. But it seems that it sent the letter after the Secretary had transmitted documents to the Tribunal in the intended performance of the obligation imposed by s 418(3). In conducting its review, the Tribunal did not tell the appellant that it had received the letter; the Tribunal did not tell the appellant that the allegations made in the letter had been made; the Tribunal did not ask the appellant about the substance of any of the allegations made in the letter. The Tribunal affirmed the decisions not to grant protection visas to the appellant and his partner. At the end of its reasons, the Tribunal said that in reaching its findings it "gives no weight" to the letter sent to the Department and forwarded to the Tribunal. The Tribunal said: 1 References to the Act are to the form in which it stood at times relevant to this matter. Kirby Hayne "The writer of that letter makes clear that the material therein is provided confidentially. The Tribunal has been unable to test the claims made in the letter and, accordingly, gives it no weight. The Tribunal has decided this matter solely for reasons outlined above." The Tribunal went on to say that, because the letter had been provided in confidence to the Department and the Tribunal considered that it was in the public interest that the content of the letter be regarded as non-disclosable information for the purpose of s 424A(3)(c) of the Act, the Tribunal made a direction (under s 440(1) of the Act) that the content of the letter not be published or disclosed. The appellant applied to the Federal Court of Australia for relief under s 39B of the Judiciary Act 1903 (Cth). In his application, as amended, he alleged, among other things, that he had been denied procedural fairness. He succeeded at first instance2, but the Minister appealed to the Full Court of the Federal Court. By majority (Whitlam and Mansfield JJ; Gray J dissenting), that Court allowed the Minister's appeal3. By special leave, the appellant appeals to this Court. The issue In the appeal to this Court, the appellant and the Minister treated the determinative question as being whether procedural fairness required the Tribunal to inform the appellant of the existence of the letter, or its contents, before the Tribunal decided to affirm the refusal to grant the appellant a protection visa. That question, framed as it is by reference to common law principles of procedural fairness rather than by reference to the application of particular provisions of the Act, should be answered "yes". It was right for the Tribunal not to have provided a copy of the letter to the appellant and not to have disclosed to the appellant any information that may have revealed the identity of its author. Before reaching its decision, however, the Tribunal should have told the appellant the substance of the allegations made in the letter. 2 Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 197 ALR 741. 3 Minister for Immigration and Multicultural and Indigenous Affairs v VEAL (2004) 138 FCR 84. Kirby Hayne Because the parties identified the critical question in the way they did – what did common law principles of procedural fairness require in this case? – much of the argument was directed to examining how judicial statements of general principle should be applied to the way in which the Tribunal had conducted its review of the refusal to grant the appellant a protection visa. Before embarking upon an examination of the application of general principles it is as well to identify the premises from which the parties' arguments about the application of those principles proceeded. In particular, it is necessary to begin from an explicit recognition of the fact that the Tribunal was exercising powers and performing functions specified by the Act. Relevant provisions of the Act Section 414(1) of the Act obliged the Tribunal to review the decision to refuse the appellant's application for a protection visa. Section 415(1) empowered the Tribunal, for the purposes of the review, to "exercise all the powers and discretions that are conferred by this Act on the person who made the decision". Section 65(1) of the Act obliged the Minister to grant a visa if satisfied that the criteria for granting that visa had been satisfied. If the Tribunal was satisfied that the criteria for the visa were satisfied, the Tribunal was bound to set the delegate's decision aside and substitute a new decision granting the visa. Thus, the Tribunal was bound to set aside the delegate's decision and substitute a decision granting a visa if satisfied4 that the appellant was a non-citizen in Australia to whom Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol5. Conversely, if not satisfied that the appellant was a person to whom Australia had protection obligations, the Tribunal was bound to affirm the delegate's decision. The statutory specification of the Tribunal's duty and power to conduct the review was to be read as conditioned upon the Tribunal's observance of the requirements of procedural fairness6. The content to be given to that obligation s 36(2)(a). 5 The Convention relating to the Status of Refugees done at Geneva on 28 July 1951 as amended by the Protocol relating to the Status of Refugees done at New York on 31 January 1967. 6 Kioa v West (1985) 159 CLR 550 at 615 per Brennan J; Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 40 per Brennan J; Annetts v McCann (1990) 170 CLR 596 at 598-600 per Mason CJ, Deane and McHugh JJ, 604-605 per Brennan J; (Footnote continues on next page) Kirby Hayne to accord procedural fairness must, of course, accommodate the particular provisions made in the Act which regulated how the Tribunal was to go about its task. Nonetheless, in the form the Act took at the times relevant to this matter7, the particular provisions made in the Act to regulate the way in which the Tribunal went about conducting its review were not to be understood as an exhaustive statement of the steps that the Tribunal may have to take in any particular case in order to accord procedural fairness to the applicant for review. Neither party contended that the Act prescribed the course that the Tribunal should have taken in the present matter. In particular, although the Act made provision, in s 424A, for an applicant for review to be given certain information and, by s 438, gave the Tribunal what the heading to that section described as a "discretion in relation to disclosure of certain information etc", neither party contended in this Court that those provisions had been engaged or that the present matter was to be decided by the application of those provisions. It is as well to explain why that was so. As for s 424A, it is enough to notice that that provision is directed to "information that the Tribunal considers would be the reason, or a part of the reason, for affirming the decision that is under review". The Tribunal said, in its reasons, that it did not act on the letter or the information it contained. That is reason enough to conclude that s 424A was not engaged. A little more must be said about s 438. Section 438 applied to a document given to the Minister, or an officer of the Department, in confidence. If in compliance with a requirement of or under the Act the Secretary gave to the Tribunal a document to which s 438 applied, the Secretary was bound, by s 438(2)(a), to notify the Tribunal that s 438 applied in relation to the document or information and "may give the Tribunal any written advice that the Secretary thinks relevant about the significance of the document Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 591 per Brennan J; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 99-100 [38]-[39] per Gaudron and Gummow JJ. See also at 89 [5] per Gleeson CJ, 131 [132] per Kirby J, 142-143 [168] per Hayne J. 7 Before the amendments made by the Migration Legislation Amendment (Procedural Fairness) Act 2002 (Cth), which, among other things, inserted s 422B providing that Div 4 of Pt 7 of the Act "is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with". Kirby Hayne or information"8. In this case, the Secretary did not notify the Tribunal that s 438 applied in relation to the letter or the information it contained. Why this was so was not explored in evidence in the proceedings in the courts below or in argument of the appeal to this Court. Nor was there any examination of whether s 418(3) was to be given an ambulatory effect requiring the Secretary to give to the Registrar of the Tribunal any document coming into the Secretary's possession or control after the Secretary had first transmitted relevant documents to the Tribunal. There was, therefore, no examination of whether the condition for engaging s 438(2) (the Secretary giving the Tribunal "in compliance with a requirement of or under this Act" a document or information to which the section applied) was met. For present purposes, it is enough to notice that the Tribunal not having been notified by the Secretary that s 438 applied in relation to the letter or the information it contained, the precondition to the operation of s 438(3) ("[i]f the Tribunal is given a document or information and is notified that this section applies in relation to it") was not met. There is, therefore, no occasion to consider the meaning or effect of those provisions of s 438(3) that would have been engaged if that condition had been met9. What did procedural fairness require? In the courts below much emphasis was given to the Tribunal's statement, in its reasons, that it gave no weight to the letter or its contents. This statement was treated as inviting two questions: was the statement to be taken at face value and, if it was, could the letter nonetheless have had some influence upon the outcome of the matter? As these reasons will show, it is not useful to begin the inquiry about procedural fairness by looking to what the Tribunal said in its reasons. Rather, as procedural fairness is directed to the obligation to give the appellant a fair hearing, it is necessary to begin by looking at what procedural fairness required the Tribunal to do in the course of conducting its review. s 438(2)(b). 9 Section 438(3) provided that, in such a case, the Tribunal: "(a) may, for the purpose of the exercise of its powers, have regard to any matter contained in the document, or to the information; and (b) may, if the Tribunal thinks it appropriate to do so having regard to any advice given by the Secretary under subsection (2), disclose any matter contained in the document, or the information, to the applicant." Kirby Hayne The appellant and the Minister each began their analysis of what procedural fairness required by examining the well-known statement of Brennan J, in Kioa v West10, of what is to be done when a decision-maker has information available that is adverse to the interests of the person who will be affected by an administrative decision. Particular emphasis was given in argument in this Court, as it had in the courts below, to two propositions stated11 by Brennan J. The first proposition was that "in the ordinary case where no problem of confidentiality arises an opportunity should be given to deal with adverse information that is credible, relevant and significant to the decision to be made"; the second proposition was that "[i]nformation of that kind creates a real risk of prejudice, albeit subconscious, and it is unfair to deny a person whose interests are likely to be affected by the decision an opportunity to deal with the information". At once it can be seen why argument was directed to what, if any, significance was to be attached to the Tribunal's statement that it gave no weight to the letter. Did this, as the Minister contended, show that the letter and the information it conveyed was not relevant or significant to the Tribunal's decision? Was there, nonetheless, a real risk of subconscious prejudice? Was this a case, as the Minister contended, where the "problem of confidentiality" required some different treatment of adverse information even if that information appeared to be credible, relevant and significant? "Credible, relevant and significant"? What is meant by "adverse information that is credible, relevant and significant to the decision to be made"? As is always the case, what is said in reasons for judgment must be understood in the context of the whole of the reasons. Examining sentences, or parts of sentences, in isolation from the context is apt to lead to error. In particular, what Brennan J said about "information that is credible, relevant and significant" takes its meaning from the point his Honour had made12 only a few sentences earlier: that "[a]dministrative decision-making is not to be clogged by inquiries into allegations to which the repository of the power would not give credence, or which are not relevant to his decision or which are of little significance to the decision which is to be made". 10 (1985) 159 CLR 550 at 628-629. 11 (1985) 159 CLR 550 at 629. 12 (1985) 159 CLR 550 at 628. Kirby Hayne Moreover, what is meant by "credible, relevant and significant" must be understood having regard also to the emphasis that his Honour had given earlier in his reasons13 to the fundamental point that principles of natural justice, or procedural fairness, "are not concerned with the merits of a particular exercise of power but with the procedure that must be observed in its exercise". Because principles of procedural fairness focus upon procedures rather than outcomes, it is evident that they are principles that govern what a decision-maker must do in the course of deciding how the particular power given to the decision-maker is to be exercised. They are to be applied to the processes by which a decision will be reached. It follows that what is "credible, relevant and significant" information must be determined by a decision-maker before the final decision is reached. That determination will affect whether the decision-maker must give an opportunity to the person affected to deal with the information. And that is why Brennan J prefaced his statement about a person being given an opportunity to deal with adverse information that is credible, relevant and significant, by pointing out that there may be information, apparently adverse to the interests of a person, which can and should be put aside from consideration by the decision-maker as not credible, not relevant, or of little or no significance to the decision to be made. "Credible, relevant and significant" must therefore be understood as referring to information that cannot be dismissed from further consideration by the decision-maker before making the decision. And the decision-maker cannot dismiss information from further consideration unless the information is evidently not credible, not relevant, or of little or no significance to the decision that is to be made. References to information that is "credible, relevant and significant" are not to be understood as depending upon whatever characterisation of the information the decision-maker may later have chosen to apply to the information when expressing reasons for the decision that has been reached. It follows that the Tribunal's statement, that it gave no weight in reaching its decision to the letter or its contents, does not demonstrate that there was no obligation to reveal the information to the appellant and to give him an opportunity to respond to it before the Tribunal concluded its review. Deciding that it could reach its conclusion on other bases did not discharge the Tribunal's obligation to give the appellant procedural fairness. 13 (1985) 159 CLR 550 at 622. Kirby Hayne Subconscious effect? Is it nonetheless relevant to ask whether the letter had or might have had some subconscious effect on the Tribunal in this case? Again, what Brennan J said about subconscious effect and prejudice must be read in its context. It was said in explanation of why it is that fairness requires that the person whose interests are likely to be affected by a decision should be given an opportunity to deal with the adverse information. As has later been rightly said14, "the necessity to disclose such material in order to accord procedural fairness is not based on answering a causal question as to whether the material did in fact play a part in influencing the decision". It follows that asking whether, despite what was said in its reasons, the Tribunal may have been subconsciously affected by the information distracts attention from the relevant inquiry. The relevant inquiry is: what procedures should have been followed? The relevant inquiry is neither what decision should the decision-maker have made, nor what reasons did the decision-maker give for the conclusion reached. The letter and its contents The information set out in the letter about the appellant could not be dismissed from further consideration by the Tribunal as not credible, or not relevant, or of little or no significance to the decision. The author of the letter purported to record what the appellant had told him; the author alleged that the appellant was working for the present government of Eritrea. What the appellant was alleged to have admitted, and whether the appellant was working for the present government of his country of origin, were matters that bore upon whether he had a well-founded fear of persecution for a Convention reason. Both what he was alleged to have done, and the fact that the allegation had been made, could be seen as a reason not to wish to return to Eritrea. His alleged support of the current government of Eritrea reflected upon whether he had a well-founded fear of persecution in that country. Neither the alleged admission nor the allegation of support for the current government could be dismissed as a matter of no relevance or of little or no significance to the decision. Further, neither the alleged admission, nor the allegation about where the appellant's political sympathies lay, could be dismissed from consideration as material to which the Tribunal could not give credence. 14 NIB Health Funds Ltd v Private Health Insurance Administration Council (2002) 115 FCR 561 at 583 [84] per Allsop J. Kirby Hayne It follows that procedural fairness required that the Tribunal draw the appellant's attention to the information. But how should that have been done? The appellant contended that he should have been shown the letter. The fact that the author of the letter asked the Department to keep it secret did not mean that equitable principles about confidential information were to be engaged in deciding what course the Tribunal took. Rather, the nature and extent of the Tribunal's obligation to disclose the information were regulated by the Act and the obligation to accord the appellant procedural fairness. In this case, the particular content of the obligation to accord procedural fairness was to be identified having regard not only to the particular provisions of the Act that regulated the Tribunal's work but also to the scope and objects of the Act as a whole. In that latter regard, it is necessary to keep two propositions at the forefront of consideration. First, the Act required that those entitled to a particular visa be granted the visa they sought, and that those not entitled be refused. Secondly, the Act committed the decision to grant or refuse a visa to the Executive government and the Tribunal was likewise exercising executive power, not judicial power. It follows from this second proposition that the steps the Tribunal was bound to take in order to afford procedural fairness are not necessarily to be identified with the steps that should be taken by a court deciding a matter by adversarial procedures15. Nonetheless, it must be recognised that just as courts mould their procedures to accommodate what has become known as public interest immunity16, so too the content of the Tribunal's obligation to accord the appellant procedural fairness may be informed by those same considerations. No doubt care must be exercised in transposing what is said in the context of adversarial litigation about public interest immunity and its application to those who inform police about criminal activity to the wholly different context of inquisitorial decision-making by the Executive where the subject-matter of the information imparted was not that someone had committed a crime in Australia. Nonetheless, in identifying what the Tribunal had to do in order to give the 15 National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296 at 315 per Gibbs CJ; Allars, "Neutrality, the Judicial Paradigm and Tribunal Procedure", (1991) 13 Sydney Law Review 377. 16 Sankey v Whitlam (1978) 142 CLR 1 at 42-43 per Gibbs ACJ, 95-96 per Mason J; Alister v The Queen (1984) 154 CLR 404 at 412 per Gibbs CJ. Kirby Hayne appellant procedural fairness, it is necessary to recognise that there is a public interest in ensuring that information that has been or may later be supplied by an informer is not denied to the Executive government when making its decisions17. The existence of that public interest is not to be understood as requiring the conclusion that there is an absolute rule against an administrative decision-maker disclosing to a person, whose interests may be affected by the decision that is to be made, information that has been supplied by an informer. Nor does it necessarily mean that there is an absolute rule against disclosing the identity of an informer to such a person. It is neither necessary nor appropriate to attempt to state some all-encompassing rules about how administrative decision-makers should deal with information supplied in this way. Not least is that because use of the expression "informer" in the context of administrative decision-making not only does not reveal what kind of information is conveyed by the informant, but also does not reveal what relevance the information may have to the decision that is to be made. The application of principles of procedural fairness in a particular case must always be moulded to the particular circumstances of that case18. What is important to notice in the present case, however, is first, that information was supplied confidentially to the Department by someone who sought to remain unknown to the appellant, and secondly, that the information bore on whether the appellant was entitled to a protection visa. The Tribunal was not an independent arbiter charged with deciding an issue joined between adversaries. The Tribunal was required to review a decision of the Executive made under the Act and for that purpose the Tribunal was bound to make its own inquiries and form its own views upon the claim which the appellant made. And the Tribunal had to decide whether the appellant was entitled to the visa he claimed. The information which was contained in the letter was relevant to that inquiry and it could not be ignored by the Tribunal. The Tribunal was able to put the information aside from consideration in its reasons only because it reached the conclusion, on other bases, that the appellant was not entitled to a visa. But 17 cf Alister v The Queen (1984) 154 CLR 404. 18 See, eg, Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 13-14 [37] per Gleeson CJ, 16 [48] per Kirby Hayne that step, of putting the information in the letter aside from consideration, could not be taken before reaching the conclusion that the application should be refused. It follows that to conduct the review with procedural fairness, the appellant had at least to know the substance of what was said against him in the letter. Only then could he attempt to answer the suggestions made by the author of the letter that the appellant had reasons other than Convention reasons to absent himself from Eritrea and that he did not have a well-founded fear of persecution for a Convention reason. The appellant submitted that procedural fairness further required that he be given the letter because, if he did not know who had written the letter, one obvious form of answer to the allegations made in it would be denied to him. He could not say that the author of the letter was not to be believed. That is, he could not attack the credibility of the informer unless he knew who the informer was. So much may readily be accepted. But it by no means follows that the Tribunal was bound to give the appellant a copy of the letter, or tell him who had sent it, or even tell him that the information had been sent in written form. To give the appellant a copy of the letter or tell him who wrote it would give no significance to the public interest in the proper administration of the Act which, as pointed out earlier, required that those entitled to a visa be granted one and those not entitled be refused. It is in aid of that important public interest that, so far as possible, there should be no impediment to the giving of information to authorities about claims that are made for visas. That public interest, and the need to accord procedural fairness to the appellant, could be accommodated. They were to be accommodated, in this case, by the Tribunal telling the appellant what was the substance of the allegations made in the letter and asking him to respond to those allegations. How the allegations had been given to the Tribunal was not important. No doubt the appellant's response to the allegations would then have had to be considered by the Tribunal in light of the fact that the credibility of the person who made the allegations could not be tested. And that may well leave the Tribunal in a position where it could not decide whether the allegations made had substance. But the procedure outlined would be fair to the appellant and it would be a procedure which accommodated what Brennan J described in Kioa19 as the "problem of confidentiality". Although it may be accepted that the Tribunal sought to act fairly, the procedure it in fact adopted was not fair. 19 (1985) 159 CLR 550 at 629. Kirby Hayne Orders The appeal should be allowed with costs. The orders of the Full Court should be set aside and in their place there should be an order that the appeal to that Court is dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANT AND AUSTRALIAN ELECTORAL COMMISSION RESPONDENT Mulholland v Australian Electoral Commission [2004] HCA 41 Date of Order: 20 May 2004 Date of Publication of Reasons: 8 September 2004 ORDER Appeal dismissed with costs. On appeal from the Federal Court of Australia Representation: J B R Beach QC with B F Quinn and R J Harris for the appellant (instructed by Ebsworth & Ebsworth) P J Hanks QC with P R D Gray for the respondent (instructed by Australian Government Solicitor) Interveners: D M J Bennett QC, Solicitor-General of the Commonwealth with B D O'Donnell intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor) R J Meadows QC, Solicitor-General for the State of Western Australia with R M Mitchell intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor for the State of Western Australia) M G Sexton SC, Solicitor-General for the State of New South Wales with M J Leeming intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for the State of New South Wales) C J Kourakis QC, Solicitor-General for the State of South Australia with C Jacobi intervening on behalf of the Attorney-General for the State of South Australia and on behalf of the Attorney-General for the State of Victoria (instructed by Crown Solicitor for the State of South Australia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Mulholland v Australian Electoral Commission Constitutional law (Cth) – Parliament – Elections – Registration of political parties – Requirement that political parties have 500 members in order to become registered or remain registered ("the 500 rule") – Prohibition on one person being counted as a member of two or more parties ("the no-overlap rule") – Constitutional validity of electoral scheme. Constitutional law (Cth) – Parliament – Elections – House of Representatives and Senate – Members and senators to be "directly chosen by the people" – Meaning of "directly chosen" – Whether the 500 rule and the no-overlap rule impair "direct choice" or the making of an informed choice by electors – Whether the 500 rule and the no-overlap rule unreasonably discriminate between candidates – Whether inconsistent with constitutional provision for filling of casual vacancies by persons "publicly recognized by a particular political party". Constitutional law (Cth) – Implied freedom of political communication – Whether the 500 rule and the no-overlap rule effectively burden freedom of communication about government or political matters – Whether laws reasonably appropriate and adapted to a legitimate purpose – Whether laws proportionate to constitutional provisions. Constitutional law (Cth) – Implied freedoms – Whether the Constitution contains an implied freedom of political association – Whether the Constitution contains an implied freedom of participation in federal elections – Whether the Constitution contains an implied freedom of political privacy – Whether the 500 rule and the no-overlap rule infringe any such implied freedoms. Words and phrases – "directly chosen by the people". Constitution, ss 7, 15, 24, 64 and 128. Commonwealth Electoral Act 1918 (Cth), Pt XI. GLEESON CJ. The appellant commenced proceedings in the Federal Court of Australia, challenging the validity of two particular aspects of the provisions of the Commonwealth Electoral Act 1918 (Cth) ("the Act") dealing with the registration of political parties. The scheme for registration was first introduced in 1983, and later amended in 2000 and 2001. It was introduced in the context of legislative provision for direct funding of political parties, "list" voting for the Senate, and references to party affiliations on the ballot paper. The first aspect under challenge is a limitation of entitlement to registration, or continuing registration, to political parties with at least 500 members, unless they have at least one Parliamentary representative ("the 500 rule"). The second is a refinement of the 500 rule, introduced by s 126(2A) in 2000, which prohibits two or more parties from relying on the same person as a member in calculating the number of members ("the no overlap rule"). The 500 rule was adopted by Parliament following a recommendation of a Joint Select Committee on Electoral Reform, which presented its first report in September 1983. The report said1: The Committee also received many submissions ... calling for the printing of party affiliations on ballot papers. The Committee believes that the introduction of this procedure will assist voters in casting their vote in accordance with their intentions. The recommendation concerning the 'list' system for Senate ballot papers presupposes the inclusion of political party on the Senate ballot paper at least. This recommendation (amongst others) if adopted will require the adoption of a system for the registration of political parties. ... The Committee believes that in light of its recommendations with respect to the public funding of political parties for election campaigns, the printing of the political affiliation of candidates on ballot papers and the adoption of the list system for Senate elections, provision for the registration of political parties will be necessary. It would be provided that: in respect of a party which is not represented in a Commonwealth, State or Territory legislature but which has a membership of 500 persons or more, 10 members 1 Parliament of the Commonwealth of Australia, Joint Select Committee on Electoral Reform, First Report, September 1983. could apply for registration of the party. (The Committee discussed at length the basic level of total membership. As some indication of membership support was required – and the party's constitution should provide a basis – the figure of 500 was agreed upon. ...)" The no overlap rule was the result, not of any recommendation of a Select Committee, or of a proposal by the Government of the day, but of an Opposition amendment moved in the Senate during debate on proposed changes to the Act. A senator who supported the amendment said that "[o]therwise you could have a situation where, once you had 500 people, you could register an unlimited number of [party] names, all with the same membership and all with the same person as the registered officer, who could then control an unlimited number of preference distributions for an unlimited number of parties at a Senate election."2 The background to the appellant's dissatisfaction with the 500 rule and the no overlap rule appears from the reasons for judgment of Gummow and Hayne JJ, as do the details of the relevant legislative provisions, including those which embody the two rules. It is important to note the wider legislative context which gives content to the concept of "eligibility" of a political party. The challenge to validity failed in the Federal Court, both before Marshall J at first instance3, and before the Full Court (Black CJ, Weinberg and Selway JJ)4. The arguments relied upon by the appellant require consideration of the power of the Parliament to legislate with respect to the method of election of senators and members of the House of Representatives, and of the requirement of freedom of communication on matters of government and politics implied in consequence of the system of representative and responsible government to be found in the terms and structure of the Constitution5. Legislative power A notable feature of our system of representative and responsible government is how little of the detail of that system is to be found in the Constitution, and how much is left to be filled in by Parliament. In Lange v Australian Broadcasting Corporation6, this Court said that, in ss 1, 7, 8, 13, 25, 2 Australia, Senate, Parliamentary Debates (Hansard), 11 October 2000 at 18253. 3 Mulholland v Australian Electoral Commission (2002) 193 ALR 710. 4 Mulholland v Australian Electoral Commission (2003) 128 FCR 523. 5 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. (1997) 189 CLR 520 at 557. 28 and 30, the Constitution provides for "the fundamental features of representative government". In other cases, such as Attorney-General (Cth); Ex rel McKinlay v The Commonwealth7, and McGinty v Western Australia8, it was pointed out that representative democracy takes many forms, and that the terms of the Constitution are silent on many matters that are important to the form taken by representative democracy in Australia, at a federal or State level, from time to time. For example, while, in common with most democracies, Australia now has universal adult suffrage, this was not always so. At the time of the Constitution, most women in Australia did not have the right to vote. Aboriginal Australians have only comprehensively had the vote since 1962. Unlike most democracies, Australia now has a system of compulsory voting, but this did not exist at Federation. Members of the House of Representatives are now elected by a system of preferential voting. In the United Kingdom, as in the House of Representatives in the United States, and the House of Commons in Canada, members of the House of Commons are elected on a first-past-the-post system. One of the most striking examples of the power given to Parliament to alter, by legislation, the form of our democracy concerns the composition of the Senate. There was a major change in the method of electing senators in 1948. For many years before then, the political party that dominated the House of Representatives usually controlled introduction of proportional With representation in 1948, there came to be a much larger non-government representation in the Senate. Furthermore, a legislative change in 1984, increasing the number of senators from 10 per State to 12 per State, when combined with the system of proportional representation, produced the result that it is now unusual for a major party to control the Senate. This is of large political and practical significance. It was the result of legislative, not constitutional, change. the Senate. the In McKinlay9, Barwick CJ, contrasting the Constitutions of Australia and the United States, said that the Australian colonies, at Federation, "committed themselves to what the Parliament ... might do in relation to the franchise and the electoral distribution of the States, building in the safeguard of the equality of legislative power with one exception, in the two Houses." He explained the reason for this: (1975) 135 CLR 1. (1996) 186 CLR 140. (1975) 135 CLR 1 at 23-24. "Further, it must always be borne in mind that the American colonies had not only made unilateral declarations of independence but had done so in revolt against British institutions and methods of government. The concepts of the sovereignty of Parliament and of ministerial responsibility were rejected in the formation of the American Constitution. Thus, not only does the American Constitution provide for a presidential system, but it provides for checks and balances based on the denial of complete confidence in any single arm of government. In high contradistinction, the Australian Constitution was developed not in antagonism to British methods of government but in co- operation with and, to a great extent, with the encouragement of the British Government. The Constitution itself is an Act of the Imperial Parliament which, except for a significant modification of the terms of s 74, is in the terms proposed by the Australian colonists and accepted by the British Government. Because that Constitution was federal in nature, there was necessarily a distribution of governmental powers as between the Commonwealth and the constituent States with consequential limitation on the sovereignty of the Parliament and of that of the legislatures of the States. All were subject to the Constitution. But otherwise there was no antipathy amongst the colonists to the notion of the sovereignty of Parliament in the scheme of government." That is a useful reminder of historical facts that explain not only what the Constitution says, but also what it does not say. The silence of the Constitution on many matters affecting our system of representative democracy and responsible government has some positive consequences. For example, if then current ideas as to the electoral franchise had been written into the Constitution in 1901, our system might now be at odds with our notions of democracy. The Constitution is, and was meant to be, difficult to amend. Leaving it to Parliament, subject to certain fundamental requirements, to alter the electoral system in response to changing community standards of democracy is a democratic solution to the problem of reconciling the need for basic values with the requirement of flexibility. As to responsible government, the deliberate lack of specificity on the part of the framers of the Constitution concerning the functioning of the Executive was seen, in Re Patterson; Ex parte Taylor10, as an advantage. Constitutional arrangements on such matters need to be capable of development and adaptability. Concepts such as representative democracy and responsible government no doubt have an irreducible minimum content, but community standards as to their most appropriate forms of expression change over time, and vary from place 10 (2001) 207 CLR 391 at 402-403 [14]. to place. It is only necessary to consider the differences in the present electoral systems of New South Wales, Tasmania and New Zealand, all of which would be regarded as democratic, to see the point. The system in New South Wales is preferential voting of a kind that is orthodox in Australia. Tasmania has the Hare-Clark electoral system, which is unlike any other State system. New Zealand has changed from a first-past-the-post system to a system under which the Parliament has a number of members elected in single-seat constituencies, and a number elected by proportional representation from the lists of those parties obtaining a sufficient percentage of the national vote. Federalism itself influenced the form of our government in ways that might be thought by some to depart from "pure democracy", if there is such a thing11. Equal State representation in the Senate may be thought, and at the time of Federation was thought by some, to be inconsistent with a concept of voting equality throughout the Commonwealth. Voters in the smallest State (in terms of population) elect the same number of senators as voters in the largest State. In this respect, the "value" of votes is unequal. That inequality is one aspect of Australian democracy which, exceptionally, is enshrined in the Constitution. Where the Constitution contains an express provision for one form of inequality in the value of votes, it dictates at least some caution in formulating a general implication of equality on that subject. Section 7 of the Constitution provides that the Senate shall be composed of senators for each State, directly chosen by the people of the State, voting, until the Parliament otherwise provides, as one electorate. The section goes on to deal with some further matters relating to Senate elections, until the Parliament otherwise provides. the Commonwealth may make laws prescribing the method of choosing senators, but so that the method shall be uniform for all the States. Section 9 provides the Parliament of that Section 24 of the Constitution provides that the House of Representatives shall be composed of members directly chosen by the people of the Commonwealth, and goes on to specify the method of election, until the Parliament otherwise provides. Section 51(xxxvi) empowers the Parliament, subject to the Constitution, to make laws with respect to matters in respect of which the Constitution makes provision until the Parliament otherwise provides. That includes the matters referred to in ss 7 and 24. The expression "subject to this Constitution" picks up, among other things, the overriding requirement that senators and members of the House of Representatives are to be "directly chosen by the people". As appears from what has been said above, that qualification imposes a basic condition of 11 See La Nauze, The Making of the Australian Constitution, (1972) at 95. democratic process, but leaves substantial room for parliamentary choice, and for change from time to time. The methods by which the present senators, and members of the House of Representatives, of the Australian Parliament are chosen are significantly different from the methods by which those in earlier Australian parliaments were chosen. Judicial opinion has been divided on the presently irrelevant question as to whether the Constitution guarantees universal suffrage12. No one doubts, however, that Parliament had the power, as it did, to prescribe a minimum voting age, and, later, to reduce that age from 21 to 18. Whether Parliament would have the power to fix a maximum voting age is a question that has not yet arisen. That is the constitutional context in which the appellant's challenges to the Act are to be examined. The Full Court made the following point: "It should be noted ... that it is no part of the appellant's case to challenge the registration [of eligible political parties] scheme itself. ... [T]hat registration scheme affords various 'privileges' to registered political parties. The extent of some of those 'privileges' may not be great. For example, one of the privileges that has existed since 1983 is the payment of public funding to the political party. However, even if the political party is not registered public funding is still available although it is paid direct to the candidate or group or his or her or its agent (s 299 of the Act). Similarly, the use of list voting in Senate elections is not limited to registered parties, but can extend to 'groups' or individual candidates (see ss 168, 211, 211A, 219, 272 of the Act). Consequently, the main advantages of registration are the privilege of having party affiliation recorded on the ballot paper and the privilege of having access to the electoral roll in digital form." The appellant submits that the 500 rule and the no overlap rule contravene the constitutional requirement of direct choice by the people for two reasons: first, they impede or impair the making of an informed choice by electors; secondly, they unreasonably discriminate between candidates. As to the first reason, the respondent, and the Attorney-General of the Commonwealth intervening, accept that the choice required by the Constitution is a true choice with "an opportunity to gain an appreciation of the available 12 Attorney-General (Cth); Ex rel McKinlay v The Commonwealth (1975) 135 CLR 1. alternatives"13. In the course of argument, examples were given of forms of ballot paper prescribed for use at elections which might not conform to that fundamental requirement. A ballot paper, for example, that had printed on it only one name, being that of the government candidate, requiring the name of any alternative candidate to be written in (a form not unknown in the past in some places), might so distort the process of choice as to fail to satisfy the test. Here, the rules in question preserve a full and free choice between the competing candidates for election. The electors are presented with a true choice. The available alternatives between candidates are set out on the ballot paper. The process of choice by electors is not impeded or impaired. As to the second reason, the argument that what is involved constitutes unreasonable discrimination, like the argument that there is an unacceptable burden on freedom of communication, to be examined below, requires consideration of the reasons for the rules. Plainly, the reason for the 500 rule, in the wider context of a system of registered political parties for various purposes relating to the Act (a system which itself is not challenged by the appellant), is the view, taken by the Joint Select Committee, and then by Parliament, that to qualify as a registered political party a group must have a certain minimum level of public support, and that an appropriate minimum level is established by a membership of 500. As to the first part of that, it is reasonably open to Parliament to consider that, bearing in mind the practical significance of political parties in the operation of the democratic process, it would deprive the concept of "party" of any real meaning if any two or more people, who happened to agree on even one issue, could demand recognition as a "party". It may be added, as was pointed out in argument, that in Australia there is a long history of electoral systems which discourage multiplicity of candidates by requiring candidates to deposit a sum of money which will be forfeited if they do not achieve a minimum number of votes. Similarly, there are long-standing requirements for nominations of candidates to be supported by a minimum number of people. Those are well-known forms of regulating candidature at elections which have never been regarded as infringing the electors' right of choice, or as involving unreasonable discrimination. A requirement that, to be eligible to be treated as a political party for the purposes of the Act, a group must have some minimum level of public support, is not materially different. As to the figure of 500, it is, no doubt, to an extent arbitrary, and there is no logical process by which it can be demonstrated that it should be more than, say 100, or less than (as is the case in New South Wales) 750. Even 13 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560, quoting Dawson J in Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 187. so, the number 500 is not so large as to be outside the range of choice reasonably available to Parliament if a number is to be chosen at all. American Party of Texas v White14 is a decision of the Supreme Court of the United States in a different constitutional context. Nevertheless, it provides an interesting comparison. The Texas laws in question, which were the subject of a constitutional requirement of strict scrutiny, provided for methods of nominating candidates in a general election that varied according to levels of voter support for parties in previous elections, and that required independent candidates to establish a minimum level of support. Those provisions were claimed to infringe constitutional rights to associate for the advancement of political beliefs, and to discriminate invidiously against new and minority political parties, as well as independent candidates. The Supreme Court held that the measures were "reasonably taken in pursuit of vital state objectives that cannot be served equally well in significantly less burdensome ways."15 White J, speaking for the Court, said16: "But we think that the State's admittedly vital interests are sufficiently implicated to insist that political parties appearing on the general ballot demonstrate a significant, measurable quantum of community support." He referred to Jenness v Fortson17, in which the Supreme Court said: "There is surely an important state interest in requiring some preliminary showing of a significant modicum of support before printing the name of a political organization's candidate on the ballot – the interest, if no other, in avoiding confusion, deception, and even frustration of the democratic process at the general election." A purpose of avoiding confusion, deception, and frustration of the democratic process also underlies the no overlap rule. Marshall J accepted that the policy behind the rule was "the avoidance of 'enterpreneurial' or cynical use of the same 'block' of members to register multiple parties with no true and discrete membership, the minimising of confusion to voters, the 'tablecloth' ballot paper and the use of 'decoy' or front parties to mislead the voter into indicating a preference for a group ticket which is merely calculated to channel preferences to another party." 15 415 US 767 at 781 (1974). 16 415 US 767 at 782 (1974). 17 403 US 431 at 442 (1971). Reference was made to the recent decision of the Supreme Court of Canada in Figueroa v Canada (Attorney General)18, which considered an electoral law providing for the conferring of certain benefits (including a right to list party affiliation on ballot papers) on registered political parties, and imposing a requirement that a political party nominate at least 50 candidates in a federal election in order to be registered. That, it might be noted, is a very substantial requirement by Australian standards. The constitutional context was as follows. The Canadian Charter of Rights and Freedoms, in s 3, confers on each citizen a right to vote and to be qualified for membership of Parliament, a right that has been interpreted to involve "the right of each citizen to play a meaningful role in the electoral process", rather than the election of a particular form of government19. Further, the Charter, in s 1, requires that if there is an infringement of that right, it can only be justified if it can be shown that it is reasonable and demonstrably justifiable in a free and democratic society. That involves demonstrating that the objective of the legislation is sufficiently pressing and substantial to warrant a violation of a Charter right and that the infringement is proportionate, in the sense that "the legislation is rationally connected to the objective, that it minimally impairs the Charter right in question, and that the salutary benefits of the legislation outweigh the deleterious effects."20 The requirement as to nomination of 50 members was held to interfere with the right of each citizen to play a meaningful role in the electoral process in a number of ways, including "derogating from the capacity of marginal or regional parties to present their ideas and opinions to the general public"21. The majority judgment stressed "the likelihood that the already marginalized voices of political parties with a limited geographical base of support will be drowned out by mainstream parties"22. The constitutional context in which Figueroa was decided is different from the Australian context. So also was the requirement for registration of a political party there under consideration. The decision helpfully draws attention, in a number of ways, to the practical consequences of a requirement that a registered political party be of a certain size, but it does not suggest that all such 18 [2003] 1 SCR 912. 19 [2003] 1 SCR 912 at 934 [26]. 20 [2003] 1 SCR 912 at 949 [59]. 21 [2003] 1 SCR 912 at 946 [54]. 22 [2003] 1 SCR 912 at 945-946 [52]. requirements offend the Charter. Furthermore, the reasoning does not support a conclusion that all such requirements are inconsistent with the stipulation, in the the House of Australian Constitution, Representatives shall be directly chosen by the people. that senators and members of I accept that the stipulation goes beyond a mere prohibition of indirect election, as by an electoral college. I also accept that certain kinds or degrees of interference by the Australian Electoral Commission in the political process, including arrangements as to the form of the ballot paper, conceivably could be antithetical to the idea of representative democracy and direct choice. Even so, determining the electoral process in a representative democracy requires regulation of many matters, of major and minor significance, and the Constitution gives Parliament a wide range of choice. In the context of a system of registration of political parties eligible to receive the privileges referred to earlier, the imposition of a requirement of some minimum level of support, the fixing of that level at 500 members, and the avoidance of abuse by the no overlap rule, are consistent with the constitutional concept of direct choice by the people and with representative government. Freedom of communication In Lange v Australian Broadcasting Corporation23, in a joint judgment of Brennan CJ, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ, this Court said: the First, does "When a law of a State or federal Parliament or a Territory legislature is alleged to infringe the requirement of freedom of communication imposed by ss 7, 24, 64 or 128 of the Constitution, two questions must be answered before the validity of the law can be determined. law effectively burden freedom of communication about government or political matters either in its terms, operation or effect? Second, if the law effectively burdens that freedom, is the law reasonably appropriate and adapted to serve a legitimate end the fulfilment of which the constitutionally prescribed system of representative and responsible government and the procedure prescribed by s 128 for submitting a proposed amendment of the Constitution to the informed decision of the people ... If the first question is answered 'yes' and the second is answered 'no', the law is invalid." the maintenance of is compatible with As to the first question, there was a dispute in argument as to whether the laws presently in question effectively burden freedom of communication about 23 (1997) 189 CLR 520 at 567-568. government or political matters in their terms, operation or effect. The respondent pointed out that the only restriction on communication that results from the 500 rule and the no overlap rule relates to what the Australian Electoral Commission puts on the form of ballot paper it issues. The ballot paper, it is said, is not a communication between candidates for election and electors, and candidates are free, in their own communications with electors (such as "how-to- vote" cards), to declare their party affiliations. Reference was made in argument to the very high proportion of electors who vote "above the line" at Senate elections. We were given no corresponding information as to the proportion of electors who receive, and use, "how-to-vote" cards, but it is probably high. Even so, the argument for the respondent depends upon too narrow a view of what is involved in communication about government and political matters. Communication about elections takes place in a context which includes private or personal initiative, organised party activity, and public regulation. Candidates supply, and voters receive, information in a variety of ways right up to the time the ballot paper is marked. Candidates nominated by registered political parties know that information as to their party affiliation will appear on the ballot paper. At least by implication, they approve that communication of information and, in a substantial, practical sense, it is a communication for their benefit. In a system of compulsory voting, party affiliation is of particular importance. Relatively few voters may know much about the individual candidates between whom they are invited to choose, and most voters are unlikely to be widely informed about all, or even most, of the issues that divide the candidates. When people are compelled to vote, many of them depend heavily on the guidance of others; and the party political system is the main practical source of such guidance. The so-called conservatism of the Australian people when voting in the referendum process for proposed constitutional change sometimes may be related to the system of compulsory voting, and to an absence of what voters may regard as satisfactory explanation of the proposed change. The party system provides much less guidance on such occasions. If people are compelled to vote, are not convinced of the necessity of change, and are perhaps not clear as to the reasons for, or the consequences of, change, then it is hardly surprising that they vote for the status quo. At general elections, the influence of party leaders is important. The Prime Minister is not directly chosen by the people of Australia; he or she is not "popularly elected". The Prime Minister, in a formal sense, is chosen by the Governor-General, and, in a practical sense, is chosen by the parliamentarians whose party, or coalition of parties, controls the House of Representatives. The Prime Minister, at any given time, may or may not have been a party leader at the last election. Nevertheless, many people, at a federal election, regard themselves as voting "for" or "against" a party leader, or for or against the policies of a party, rather than as choosing between the particular candidates named on the ballot paper they receive. Party affiliation is included on a ballot paper only at the registered party's request, a request which, in a practical sense, is made in the interests of the party's candidates. It is proper, and realistic, to regard the information conveyed to electors by the Commission as involving a communication by the party and its candidates, as well as a communication by the Commission. It is a communication about a matter that is central to the competitive process involved in an election. The first question identified in Lange should be answered "yes". The form and content of the second question was the subject of some discussion in Lange. The background to that discussion was the reasoning in Theophanous v Herald & Weekly Times Ltd24 and Stephens v West Australian Newspapers Ltd25. In that connection, the Court said26: "Different formulae have been used by members of this Court in other cases to express the test whether the freedom provided by the Constitution has been infringed. Some judges have expressed the test as whether the law is reasonably appropriate and adapted to the fulfilment of a legitimate purpose. including Others have favoured different expressions, proportionality. In the context of the questions raised by the case stated, there is no need to distinguish these concepts. For ease of expression, throughout these reasons we have used the formulation of reasonably appropriate and adapted." Whichever expression is used, what is important is the substance of the idea it is intended to convey. Judicial review of legislative action, for the purpose of deciding whether it conforms to the limitations on power imposed by the Constitution, does not involve the substitution of the opinions of judges for those of legislators upon contestable issues of policy. When this Court declares legislation to be beyond power, or to infringe some freedom required by the Constitution to be respected, it applies an external standard. Individual judgments as to the application of that standard may differ, but differences of judicial opinion about the application of a constitutional standard do not imply that the Constitution means what judges want it to mean, or that the Constitution says what judges would prefer it to say. There are criticisms that can be made of both expressions, "reasonably appropriate and adapted", and "proportionality". It is to be noted, however, that, in the passage from Lange first quoted above, the test stated included the question whether the impugned law served "a legitimate end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government". Identification of the end 24 (1994) 182 CLR 104. 25 (1994) 182 CLR 211. 26 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 562. served by a law, and deciding its compatibility with a system of representative government, is a familiar kind of judicial function. To the extent to which the word "legitimate" means more than "lawful" or "within the scope of the powers of the Parliament" it may not add anything to the requirement of compatibility. For a court to describe a law as reasonably appropriate and adapted to a legitimate end is to use a formula which is intended, among other things, to express the limits between legitimate judicial scrutiny, and illegitimate judicial encroachment upon an area of legislative power. The concept of proportionality has both the advantage that it is commonly used in other jurisdictions in similar fields of discourse, and the disadvantage that, in the course of such use, it has taken on elaborations that vary in content, and that may be imported sub silentio into a different context without explanation. Reference was made above to ss 1 and 3 of the Canadian Charter. In R v Oakes27 Dickson CJ explained s 1: "The rights and freedoms guaranteed by the Charter are not ... absolute. It may become necessary to limit rights and freedoms in circumstances where their exercise would be inimical to the realization of collective goals of fundamental importance. For this reason, s 1 provides criteria of justification for limits on the rights and freedoms guaranteed by the Charter. These criteria impose a stringent standard of justification, especially when understood the violation of a constitutionally guaranteed right or freedom and the fundamental principles of a free and democratic society." terms of The Chief Justice went on to say that, to establish that a limit is reasonable and demonstrably justified in a free and democratic society, an important legislative objective must be identified, and the means used to achieve that objective must satisfy "a form of proportionality test". The elements of the "proportionality test" were as follows28: "First, the measures adopted must be carefully designed to achieve the objective in question. They must not be arbitrary, unfair or based on irrational considerations. In short, they must be rationally connected to the objective. Second, the means, even if rationally connected to the objective in this first sense, should impair 'as little as possible' the right or freedom in question ... Third, there must be a proportionality between the effects of the measures which are responsible for limiting the Charter right 27 [1986] 1 SCR 103 at 136. 28 [1986] 1 SCR 103 at 139. or freedom, and the objective which has been identified as of 'sufficient importance'." (emphasis in original) Human rights legislation, which declares fundamental rights or freedoms but, recognising that they are rarely absolute, permits limits or restrictions provided they can be "demonstrably justified in a free and democratic society", is the context in which current jurisprudence on proportionality is most likely to be seen at work. In R (Daly) v Secretary of State for the Home Department29, Lord Steyn said that "[t]he contours of the principle of proportionality are familiar", and, quoting from de Freitas v Permanent Secretary of Ministry of Agriculture, Fisheries, Lands and Housing30, applied a three-stage test, by which the court should ask itself: "whether: (i) the legislative objective is sufficiently important to justify limiting a fundamental right; (ii) the measures designed to meet the legislative objective are rationally connected to it; and (iii) the means used to impair the right or freedom are no more than is necessary to accomplish the objective." In the recent case of Campbell v MGN Ltd31, which involved a conflict between privacy and free speech, Baroness Hale of Richmond said "the interference or restriction must be 'necessary in a democratic society'; it must meet a 'pressing social need' and be no greater than is proportionate to the legitimate aim pursued; the reasons given for it must be both 'relevant' and 'sufficient' for this purpose." If the use, in the present context, of a test of "proportionality" were intended to pick up all that content, then it would be important to remember, and allow for the fact, that it has been developed and applied in a significantly different constitutional context. It should also be said that the word "necessary" has different shades of meaning. It does not always mean "essential" or "unavoidable", especially in a context where a court is evaluating a decision made by someone else who has the primary responsibility for setting policy. In Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation32, a case concerning s 51 of the Income Tax Assessment Act 1936 (Cth), Latham CJ, Rich, Dixon, McTiernan 29 [2001] 2 AC 532 at 547 [27]. 30 [1999] 1 AC 69 at 80. 31 [2004] 2 WLR 1232 at 1269 [139]; [2004] 2 All ER 995 at 1033. 32 (1949) 78 CLR 47 at 56. and Webb JJ said that the word "necessarily", in the context of the allowability of deductions for expenditure necessarily incurred in carrying on a business, meant "clearly appropriate or adapted for", not "unavoidably". Under the Income Tax Assessment Act, it was not for the Commissioner to tell a taxpayer how to run its business. The primary judgment was left to the taxpayer, and the concept of "necessarily incurred" was intended to impose a limit, enforced by the courts, but allowing due regard for the consideration that it was for the taxpayer to make the business judgment in deciding what to spend. The Commissioner could not disallow a deduction on the ground that the expenditure was not unavoidable. The reference given in Ronpibon Tin in support of the Court's view of the meaning of "necessarily" was to a judgment of Higgins J in 1910, in a case concerning the validity of delegated legislation, The Commonwealth and the Postmaster-General v The Progress Advertising and Press Agency Co Pty Ltd33. The primary Act conferred power to make regulations for matters "necessary" for carrying out the Act. Higgins J said that, in such a context, the word "necessary" may be construed, not as meaning absolutely or essentially necessary, but as meaning "appropriate, plainly adapted to the needs of the Department". He cited McCulloch v Maryland34. This seems almost to bring us round in a full circle. There is, in Australia, a long history of judicial and legislative use of the term "necessary", not as meaning essential or indispensable, but as meaning reasonably appropriate and adapted. The High Court originally took that from McCulloch v Maryland. There is, therefore, also a long history of judicial application of the phrase "reasonably appropriate and adapted". It follows that, when the concept of necessity is invoked in this area of discourse, it may be important to make clear the sense in which it is used, especially if that sense is thought to differ from reasonably appropriate and adapted. Different degrees of scrutiny may be implied by the term "necessary". I have no objection to the use of the term proportionality, provided its meaning is sufficiently explained, and provided such use does not bring with it considerations relevant only to a different constitutional context. Equally, I have no objection to the expression "reasonably appropriate and adapted", which has a long history of application in many aspects of Australian jurisprudence. The implied constitutional requirement of freedom of communication on matters of government and politics is not absolute, as the decision in Lange demonstrates. There are many laws which affect freedom to communicate, of which the defamation laws considered in Lange are an example. Some such laws have only an indirect or incidental effect upon communication about matters of government and politics. Others have a direct and substantial effect. Some may themselves be characterised as laws with respect to communication about such 33 (1910) 10 CLR 457 at 469. 34 4 Wheat 316 at 421 (1819). matters. In Australian Capital Television Pty Ltd v The Commonwealth35, Deane and Toohey JJ said that "a law whose character is that of a law with respect to the prohibition or restriction of [political] communications ... will be much more difficult to justify ... than will a law whose character is that of a law with respect to some other subject and whose effect on such communications is unrelated to their nature as political communications." The passage was cited by Gaudron J in Levy v Victoria36. Her Honour also cited Mason CJ, in the same case, as speaking of the need for "compelling justification" of a law directed to political communications, and the need to show that the restriction involved is no more than is reasonably necessary to achieve the protection of the competing public interest which is invoked37. I do not take the phrase "reasonably necessary" to mean unavoidable or essential, but to involve close scrutiny, congruent with a search for "compelling justification". That is the standard to be applied here. The circumstance that the appellant's challenge is not to the entire registration system for political parties, but to two particular aspects of that system, should not divert attention from the legislative context, which is in furtherance of, not derogation from, political communication. The idea behind the printing of party affiliations on ballot papers, as appears from the September 1983 report of the Joint Select Committee on Electoral Reform, was to "assist voters in casting their vote in accordance with their intentions." Public funding of political parties for election campaigns, and the adoption of the list system for Senate elections, were also measures in aid of political communication and the political process. Parliament took the view that those measures necessitated provision for the registration of political parties. That view was clearly open and reasonable. Parliament then took the view that some minimum level of public support was required for registration as a party and that 500 members was a reasonable figure for that purpose. It also, later, took the view that, to guard against obvious possibilities for abuse of the registration system, the no overlap rule should be introduced. Bearing in mind the context in which the two rules operate there is justification for them which this Court ought to accept as compelling. There is no reasonable basis on which this Court could legitimately form and substitute a different opinion. Furthermore, bearing in mind that the two rules under challenge are in furtherance and support of a system that facilitates, rather than impedes, political communication and the democratic process, there is no warrant for denying their reasonable necessity. 35 (1992) 177 CLR 106 at 169. 36 (1997) 189 CLR 579 at 618-619. 37 (1992) 177 CLR 106 at 143. It is unnecessary to deal separately with what were said to be cognate implied freedoms of association and privacy of political association. Since the burden on freedom of political communication has been justified, the same would apply if and to the extent to which such other or different freedoms existed. Conclusion The appeal should be dismissed with costs. McHugh 44 McHUGH J. This is an appeal from an order of the Full Court of the Federal Court of Australia38 upholding the constitutionality of certain provisions of the Commonwealth Electoral Act 1918 (Cth) whose operation may result in the Democratic Labor Party being deregistered as a political party under that Act. The order of the Full Court dismissed an appeal against a decision of Marshall J sitting in the Federal Court39. Marshall J found that the provisions were within the heads of power conferred on the Federal Parliament by the Constitution and did not infringe any express or implied limitations on those powers. The Full Court found that the challenged provisions burdened the implied constitutional freedom of political communication, but were "reasonably appropriate and adapted" to achieving the legitimate object of regulating federal elections40. The issues in the appeal are whether: the provisions of the Commonwealth Electoral Act 1918 (Cth) ("the Act") which prescribe or rely for their operation on the so-called "500 rule" and the "no-overlap rule" ("the challenged provisions") are within the scope of the legislative power of the Federal Parliament; the challenged provisions contravene the requirements of ss 7 and 24 of the Constitution that senators for each State be "directly chosen by the people of the State" and that members of the House of Representatives be "directly chosen by the people of the Commonwealth"; the challenged provisions burden implied constitutional freedom of political communication between the people by restricting the circumstances in which a candidate's party affiliation may be included on ballot-papers used in elections for the Federal Parliament; and the the Constitution recognises an implied freedom to associate for political purposes and to maintain privacy in such an association; and, if so, whether the challenged provisions infringe those freedoms. In my opinion, the challenged provisions were validly made under s 51(xxxvi) of the Constitution. They are laws "with respect to ... matters in 38 Mulholland v Australian Electoral Commission (2003) 128 FCR 523. 39 Mulholland v Australian Electoral Commission (2002) 193 ALR 710. 40 Mulholland (2003) 128 FCR 523 at 536-537. McHugh respect of which this Constitution makes provision until the Parliament otherwise provides". Matters that fall within this power include "the method of choosing senators" (s 9), the "elections of senators for the State" (s 10), "elections in the State of members of the House of Representatives" (s 31) and "the qualifications of a member of the House of Representatives" (s 34). Further, the challenged provisions do not contravene the requirements of ss 7 and 24 of the Constitution that senators for each State be "directly chosen by the people of the State" and that members of the House of Representatives be "directly chosen by the people of the Commonwealth". Nor do the challenged provisions infringe the implied constitutional freedom of political communication of registered political parties who do not comply with the "500 rule" and the "no-overlap rule". Nor do they infringe the implied freedom to associate for political purposes or any associated freedom of political privacy. The material facts Mr John Mulholland, the appellant, is the registered officer of the Democratic Labor Party ("the DLP") under s 133 of the Act. The DLP is a political party, registered under Pt XI of the Act. The Australian Electoral Commission ("the Commission"), the respondent, administers the registration of political parties under the Act. Part XI of the Act empowers the Commission to review the eligibility of political parties to remain on the Register of Political Parties ("the Register") and to request specified information concerning the continuing eligibility of a party to be registered. If the registered officer of a registered political party does not comply with a request for information from the Commission, the Commission may deregister that political party. The Commission's powers include the power to require the registered officer to provide a list of party members. In August 2001, the Commission requested Mr Mulholland to provide it with certain information, including the names and addresses of the DLP's members. Mr Mulholland did not make that information available to the Commission. In November 2001, the Commission informed Mr Mulholland that it was considering deregistering the DLP because of Mr Mulholland's failure to provide the information. In January 2002, Mr Mulholland commenced proceedings in the Federal Court of Australia, seeking judicial review of the decisions and conduct of the Commission under the Administrative Decisions (Judicial Review) Act 1977 (Cth). He also challenged, under s 39B of the Judiciary Act 1903 (Cth), the constitutionality of certain provisions of the Act which might operate to deny the DLP an entitlement to remain on the Register. Specifically, Mr Mulholland challenged the following provisions of Pt XI of the Act which establish, rely for their operation on or give effect to the so-called "500 rule" and the "no-overlap rule": ss 123(1)(a)(ii), 126(2A), 136(1)(b)(ii), 137(1)(b), 137(1)(cb), 137(5) and McHugh If a registered political party has no federal Parliamentary member, the "500 rule" requires it, in order to qualify or continue to qualify for registration, to provide to the Commission a list of the names of the 500 members of the party relied on for the purposes of registration. The "no-overlap rule" precludes two or more political parties from relying on the same member for the purpose of qualifying or continuing to qualify as an eligible political party. As I have indicated, Marshall J dismissed the applications, and the Full Court of the Federal Court (Black CJ, Weinberg and Selway JJ) dismissed an appeal against the orders of his Honour. Subsequently, this Court granted Mr Mulholland special leave to appeal on the constitutional issues involved in the case. Part XI of the Act Background Part XI of the Act is entitled "Registration of political parties". The Part was inserted into the Act (originally as Pt IXA) by the Commonwealth Electoral Legislation Amendment Act 1983 (Cth) ("the 1983 Act"). The 1983 Act introduced a system for the registration of political parties. This occurred in the context of the implementation of a scheme for election funding for registered political parties, the inclusion of party endorsement details on ballot-papers and the introduction of group voting tickets for Senate elections (also known as the "list" system). The 1983 Act also established the Commission and the Register and empowered the Commission to register and deregister political parties in certain circumstances. Amendments to the Act enacted in 2000 and 2001 by the Commonwealth Electoral Amendment Act (No 1) 2000 (Cth) ("the 2000 Act") and the Electoral and Referendum Amendment Act (No 1) 2001 (Cth) ("the 2001 Act") expanded the circumstances in which the Commission's power of deregistration was enlivened. These provisions are the subject of the challenge in the present case. Operation of Pt XI Section 4(1) of the Act defines "political party" to mean: "an organization the object or activity, or one of the objects or activities, of which is the promotion of the election to the Senate or to the House of Representatives of a candidate or candidates endorsed by it." Section 123(1) of the Act defines "eligible political party" to mean inter alia a political party that has at least 500 members (s 123(1)(a)(ii)). For the purposes of Pt XI, a reference to a "member of a political party" is a reference to McHugh a "member of the political party or a related political party" who is also entitled to enrolment to vote under the Act (s 123(3)). Under s 124 and subject to Pt XI, an eligible political party may be registered under that Part for the purposes of the Act. "Registered political party" is defined in s 4(1) to mean "a political party that is registered under Part XI." The DLP has been registered under Pt XI of the Act since 20 July 1984. Part XI sets out the requirements which must be satisfied for a political party to qualify or continue to qualify as an eligible political party and, as an eligible political party, to be registered and to remain on the Register (ss 124, 126). Since the introduction of Pt XI, one of the requirements for a party to qualify or continue to qualify as an eligible political party has been that the party must have at least 500 members (the "500 rule"). Part XI also sets out the grounds on which a political party registered under Pt XI may be deregistered (ss 135, 136 and 137). Those grounds include: in the case of a political party that was a Parliamentary party41 when it was registered, that the party has ceased to be a Parliamentary party and the party has fewer than 500 members (s 136(1)(b)); the political party has ceased to exist (s 137(1)(a)); the political party, not being a Parliamentary party, has ceased to have at least 500 members (s 137(1)(b)); the registration of the political party was obtained by fraud or misrepresentation (s 137(1)(c)); and the registered officer of the political party has failed to comply with a notice from the Commission under s 138A (s 137(1)(cb)). Section 126(2A) precludes two or more parties from relying on the same member for the purpose of qualifying or continuing to qualify as an eligible political party. Where two or more parties rely on the membership of a person, that person may nominate the party entitled to rely on the member. If the member does not nominate a party after the Commission has given the member at least 30 days to do so, none of the parties may rely on the member (s 126(2A)(a)). The members on whom a registered party relies may be changed 41 "Parliamentary party" is defined in s 123(1) to mean "a political party at least one member of which is a member of the Parliament of the Commonwealth." It is not in dispute that the DLP is not a Parliamentary party and, since its registration, has never been a Parliamentary party. McHugh at any time by an amendment of the Register (s 126(2A)(b)). Unless the Commission has taken action to determine whether the party should be deregistered on certain grounds, failure to comply with s 126(2A) does not result in the cancellation of the party's registration. Those grounds are that the political party has ceased to exist or is a non-Parliamentary party with fewer than 500 members or its registration was obtained by fraud or misrepresentation (s 137(1)(a), (b) and (c)). Section 137 provides that, in relation to a political party registered under Pt XI, if the Commission is satisfied on reasonable grounds of certain matters, the Commission may notify the registered officer of that party that it is considering deregistering the party. As indicated above, those matters include that the party has ceased to exist (s 137(1)(a)) or, not being a Parliamentary party, has ceased to have at least 500 members (s 137(1)(b)) or the registered officer has failed to comply with a notice from the Commission under s 138A (s 137(1)(cb)). On receipt of such a notice from the Commission, the registered officer may lodge a statement with the Commission that sets out reasons why the party should not be deregistered (s 137(2)). The Commission must then consider that statement and determine whether the political party should be deregistered for the reason set out in that notice (s 137(5)). Section 138A(1) empowers the Commission to review the Register to determine whether one or more of the parties included in the Register is an eligible political party or should be deregistered under s 136 or s 137. For the purposes of reviewing the Register, the Commission may give a notice to the registered officer requesting specified information on the party's eligibility to be registered under Pt XI (s 138A(3)). The registered officer must comply with the notice within the specified period (s 138A(5)). Representative government under the Constitution The scope of Commonwealth legislative power with respect to elections the Parliament of The first issue in the appeal is whether the challenged provisions are the authorised by any head of power granted Commonwealth. Section 7 of the Constitution declares that "[t]he Senate shall be composed of senators for each State, directly chosen by the people of the State". Section 24 of the Constitution declares that "[t]he House of Representatives shall be composed of members directly chosen by the people of the Commonwealth". These two sections are fundamental in ensuring that the parliamentary system for the Parliament of the Commonwealth is a system of representative government. Sections 9, 10, 31, 34 and 51(xxxvi) of the Constitution facilitate the carrying out of these requirements of representative government by conferring legislative power on the Federal Parliament with respect to elections for the Senate and the House of Representatives. However, although these grants of legislative power McHugh with respect to elections have been described as plenary42 and as purposive43 in nature, they are subject to certain express and implied constitutional limitations. The express limitations include, for example, that the method of choosing senators must be uniform for all the States (s 9) and that the electoral system must be such that both senators and members of the House of Representatives are "directly chosen by the people" (ss 7 and 24). The implied limitation is that the electoral system must satisfy the requirements of the constitutionally prescribed system of representative government44. A corollary of this requirement is that elections must result in a direct, free, informed and genuine choice by the people45. Another corollary of the requirement is that legislation must not infringe the implied constitutional freedom of political communication between the people46. However, the Constitution prescribes only the irreducible minimum requirements for representative government, including the requirement that senators and members of the House of Representatives be "directly chosen by the people". The Constitution does not prescribe equality of individual voting power47. Nor does it protect the secret ballot48. In Attorney-General (Cth); Ex rel McKinlay v The Commonwealth, the Court recognised that the concept of representative government is inherent in the structure of the Constitution, but noted that "the particular quality and character of the content" of representative government was "not fixed and precise"49. Stephen J observed that the concept of representative government is "descriptive of a whole spectrum of political 42 Langer v The Commonwealth (1996) 186 CLR 302 at 317 per Brennan CJ, citing Smith v Oldham (1912) 15 CLR 355 at 363 per Isaacs J. 43 Langer (1996) 186 CLR 302 at 324-325 per Dawson J. 44 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567. 45 Muldowney v South Australia (1996) 186 CLR 352 at 370-371 per Dawson J. 46 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106; Lange (1997) 189 CLR 520 at 560. 47 McGinty v Western Australia (1996) 186 CLR 140 at 244 per McHugh J. 48 McGinty (1996) 186 CLR 140 at 244 per McHugh J, 283 per Gummow J. 49 (1975) 135 CLR 1 at 56 per Stephen J. McHugh institutions"50. His Honour said that the Constitution permits "scope for variety" in the details of the electoral system51. Hence, the Constitution does not mandate any particular electoral system, and, beyond the limited constitutional requirements outlined above, the form of representative government, including the matter of electoral systems, is left to the Parliament52. This includes "the type of electoral system, the adoption and size of electoral divisions, and the franchise"53. As a result, the Parliament may establish an electoral system that includes compulsory voting54. It may specify a particular voting method – for example, preferential or proportional voting55 or first past the post voting56. It may provide for the election of an unopposed candidate and the election of a candidate on final preferences and may limit voters' ability to cast a formal vote and to vote against a candidate57. In McGinty v Western Australia, Gummow J found "considerable force" from Australia's Commonwealth Parliament following passage the "As numerous and as positive in expression as many of these [constitutional] provisions are, they constituted only the bare foundations of the electoral law for the representative Parliament of a new nation. The Constitution, for example, left unspecified, or open to change, a whole range of matters including: the method of voting to elect the members of the respective houses; the question of whether members of the House of 50 McKinlay (1975) 135 CLR 1 at 57. 51 McKinlay (1975) 135 CLR 1 at 56. 52 McGinty (1996) 186 CLR 140 at 183-184 per Dawson J. 53 McGinty (1996) 186 CLR 140 at 183 per Dawson J. In relation to the issue of universal suffrage, see at 244 per McHugh J, 283 per Gummow J. 54 Judd v McKeon (1926) 38 CLR 380; see McGinty (1996) 186 CLR 140 at 283 per 55 McGinty (1996) 186 CLR 140 at 244 per McHugh J, 283 per Gummow J. 56 McGinty (1996) 186 CLR 140 at 244 per McHugh J. 57 Langer (1996) 186 CLR 302 at 333 per Toohey and Gaudron JJ. 58 (1996) 186 CLR 140 at 283-284, citing Reid and Forrest, Australia's Commonwealth Parliament 1901-1988, (1989) at 86-87. McHugh Representatives would be elected by single-member or multi-member divisions; the length of time each State would continue to vote as one electorate in electing the Senate; who would be authorised to vote; the question of voluntary or compulsory registration of voters and of voting itself; the control of electoral rolls; the conduct of the ballot; the style of ballot papers; the use of postal votes; limitations on the electoral expenses of candidates; the financial deposits to be made by candidates and the conditions of their forfeiture; the role of political parties at elections; the question of financial support for political parties from public funds; the location of responsibility for the administration of the electoral law; and the extent of the delegation of authority in electoral decision-making." The provisions of the Act that prescribe the "500 rule" and the "no-overlap rule" and confer power on the Commission to administer those rules are laws "with respect to" elections. A law of the Parliament is made "with respect to" the subject matter of a power when it relates to or affects that subject matter and the connection is not "so insubstantial, tenuous or distant" that it cannot properly be described as a law with respect to that subject matter59. A law that regulates the method of voting in a federal election is a law with respect to elections60, as is a law which protects the electoral or voting system that the Parliament selects61. So too is a law that assists in the maintenance of the voting system and protects a particular method of voting62. Thus, a law which proscribes conduct that interferes with the electoral system that Parliament has chosen is a law with respect to elections63. In Levy v Victoria64, Dawson J said: "Free elections do not require the absence of regulation. Indeed, regulation of the electoral process is necessary in order that it may operate effectively or at all." The provisions of the Act that prescribe the "500 rule" and the "no-overlap rule" and confer power on the Commission to administer those rules are machinery provisions the object of which is the protection of the electoral 59 Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 369 per McHugh J, citing Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 79 per 60 McGinty (1996) 186 CLR 140 at 244 per McHugh J; Langer (1996) 186 CLR 302 at 333 per Toohey and Gaudron JJ. 61 Langer (1996) 186 CLR 302 at 349 per Gummow J. 62 Langer (1996) 186 CLR 302 at 318 per Brennan CJ. 63 Langer (1996) 186 CLR 302 at 339 per McHugh J. 64 (1997) 189 CLR 579 at 608. McHugh process. Neither the Explanatory Memorandum for the Commonwealth Electoral Legislation Amendment Bill 1983 (Cth), which introduced the "500 rule", nor the second reading speeches provide any reasons for the inclusion of the "500 rule". However, other extrinsic materials indicate the object of these provisions. They suggest that Parliament introduced the "500 rule" to support three amendments to the Act recommended by the Joint Select Committee on Electoral Reform in 1983. They were: the introduction of public funding of political parties for election campaigns, the printing of the party affiliation of candidates on ballot- papers and the adoption of the list system for Senate elections65. The Committee said that a system of registration of political parties was "necessary" in order to implement the Committee's recommendations with respect to the list system66. "[I]n respect of a party which is not represented in a Commonwealth, State or Territory legislature but which has a membership of 500 persons or more, 10 members could apply for registration of the party. (The Committee discussed at length the basic level of total membership. As some indication of membership support was required – and the party's constitution should provide a basis – the figure of 500 was agreed upon. The Electoral Commission should accept a party's claim of membership. Only if an objection to the registration of such a party is lodged with the Chief Australian Electoral Officer on the grounds of membership claimed should the number of members of such a party be checked)." The "no-overlap" provisions were inserted into the Act by the 2000 Act. The Senate Revised Explanatory Memorandum to the Commonwealth Electoral Amendment Bill (No 1) 2000 (Cth) stated that the amendments relating to 65 Australia, Joint Select Committee on Electoral Reform, First Report, (1983) at 182. The list system establishes a system of "above the line" voting for certain eligible groups of candidates. Under the list system, a horizontal line is drawn across the ballot-paper. Eligible groups of candidates are placed above the line but described under the group name. Incumbent senators may also avail themselves of this procedure. Voters have the option of recording preferences in the normal way for all candidates who are listed below the line. Alternatively, voters can vote above the line for a particular group. If the voter votes above the line, the vote is treated as voting in the preference order lodged by the particular group or incumbent senator with the Commission. 66 Australia, Joint Select Committee on Electoral Reform, First Report, (1983) at 182. 67 Australia, Joint Select Committee on Electoral Reform, First Report, (1983) at 183. 68 Commonwealth Electoral Amendment Bill 2000 (Cth): Senate Revised Explanatory Memorandum at 2. McHugh "address Government, and broader public, concerns that the political party registration provisions of the [Act] could be open to exploitation where members of parliament use their parliamentary membership to register political parties for federal election purposes, even where these parties do not have a membership base." The Full Court in the present case correctly identified the system of registration of political parties under the Act as having the legitimate end of the regulation of elections69. The Full Court said that the requirement of registration in the Act ensures that party endorsement is limited to organisations with the features of a political party – that is, a minimum number of supporters, a leader, officers, an agent and an office70. The Court found that the "500 rule" provisions address valid concerns such as the extent of public support enjoyed by a party and have the legitimate objective of minimising voter confusion71. The Court identified the "no-overlap" provisions as having the legitimate end of preventing groups of people registering as numerous political parties with "party names that might be attractive to the electorate" in order to channel preference votes to other parties72. The Parliament could reasonably take the view that some – maybe many – voters expect that parties identified on the ballot-paper are real political parties with some degree of public support, a genuine organisational structure and a leader. On that assumption, voters could be misled by a party that is a "front" party or a "decoy" party – that is, a party established only for the purpose of capturing preferences and channelling them to other candidates – or a party that has a very low level of public support. The "500 rule" therefore protects the electoral process by requiring that, before a party name can be placed on the ballot-paper, its sponsors demonstrate a minimum verifiable level of public support. As a result, the "500 rule" minimises voter confusion and prevents voters from being misled by parties with no Parliamentary representation and no substantial membership. Similarly, the object of the "no-overlap rule" is to prevent voters from being misled. It seeks to prevent Parliamentary parties or groups of 500 people from registering multiple parties, each with a "single issue" party name, calculated to catch the eye of voters and to channel preferences to 69 Mulholland (2003) 128 FCR 523 at 533-534. 70 Mulholland (2003) 128 FCR 523 at 533, citing Figueroa v Canada (Attorney General) (2000) 189 DLR (4th) 577 at 615. 71 Mulholland (2003) 128 FCR 523 at 535-536. 72 Mulholland (2003) 128 FCR 523 at 536. McHugh another party (whose policies may be entirely unrelated to the name of the "single issue" party). Without the challenged provisions, the electoral system is open to manipulation in the manner outlined above, particularly in the context of the Senate list system. The challenged provisions are therefore laws "with respect to" elections for the Senate and the House of Representatives because they have the legitimate objectives of preventing voter confusion or deception and assisting voters to make informed choices as to the person or party for whom they wish to vote73. As Doherty JA, giving the judgment of the Ontario Court of Appeal, pointed out in Figueroa v Canada (Attorney General)74, voter confusion can arise "a ballot indicated a candidate was affiliated with a political party that was in fact not a political party in any real sense of the word. Political parties are understood to be organizations with members, a leader and a platform. Reference to a political affiliation on the ballot which is in reality no more than a name selected by an individual candidate is potentially misleading. The ballot is among the most cherished symbols of our democracy. It should not be a forum in which individual candidates, under the guise of listing party affiliation, are allowed to place information on the ballot that could hold the electoral process up to ridicule or advance some purely personal agenda. By limiting identification of party affiliation on the ballot to registered political parties, the [Canada Elections Act, RSC 1985, c E-2] ensures that party affiliations listed on the ballot will be limited to those organizations that have the indicia normally associated with a political party (eg, a minimum number of supporters, a leader, officers, an agent and an office), and are prepared to submit to the significant regulatory and reporting conditions established under the scheme." Free choice The Parliament's power with respect to elections is limited by the requirement implicit in ss 7 and 24 of the Constitution that: "whatever system is employed it must result in a direct choice by the people. That must mean direct choice by the people through those eligible to vote at elections"75. 73 See also Figueroa (2000) 189 DLR (4th) 577 at 615. (2000) 189 DLR (4th) 577 at 615. 75 McGinty (1996) 186 CLR 140 at 184 per Dawson J. McHugh Representatives must be elected in free elections76. While Parliament has power to select particular methods of voting and to enact laws to protect those methods of voting, such methods are valid only if they allow a "free choice"77 among the candidates for election and an "informed choice"78. A choice is not an informed choice "if it is made in ignorance of a means of making the choice which is available and which a voter, if he or she knows of it, may wish to use in order to achieve a particular result."79 The choice "must be a true choice … a choice made with access to the available alternatives."80 Those alternatives include not only knowledge of a means of making a choice that is available and that the voter may wish to use in order to achieve a particular result but also information about the candidates among whom voters are required to choose. As Deane and Toohey JJ pointed out in Nationwide News Pty Ltd v Wills81: "The ability to cast a fully informed vote in an election of members of the Parliament depends upon the ability to acquire information about the background, qualifications and policies of the candidates for election and about the countless number of other circumstances and considerations, both factual and theoretical, which are relevant to a consideration of what is in the interests of the nation as a whole or of particular localities, communities or individuals within it." Party endorsement on a ballot-paper is an important piece of information that many voters use when making a choice between candidates on their ballots. It is one of the "countless number of other circumstances and considerations" upon which the ability to cast a fully informed vote depends. Because this is so, Mr Mulholland contends that the provisions that prescribe the "500 rule" and the "no-overlap rule" do not permit a "free and informed choice"82 or a "true choice"83 or a "fully informed" choice84 as required by ss 7 and 24. He contends 76 ACTV (1992) 177 CLR 106 at 230-232 per McHugh J. 77 Langer (1996) 186 CLR 302 at 317 per Brennan CJ. 78 Langer (1996) 186 CLR 302 at 325 per Dawson J. 79 Langer (1996) 186 CLR 302 at 325 per Dawson J. 80 Muldowney (1996) 186 CLR 352 at 370 per Dawson J. (1992) 177 CLR 1 at 72. 82 Lange (1997) 189 CLR 520 at 560. 83 Muldowney (1996) 186 CLR 352 at 370 per Dawson J. 84 Nationwide News (1992) 177 CLR 1 at 72 per Deane and Toohey JJ. McHugh rule" and the "no-overlap that the restrictions deny voters important information by precluding the inclusion of the party name on the ballot-paper next to the name of a candidate endorsed by an unregistered party, that is, a political party which does not meet the "500 requirements. Consequently, the result of this denial of important information is that the choice made by voters ceases to be a "true choice", that is, a choice made with all the relevant information required for a meaningful exercise of the franchise in an informed manner. Moreover, because the Act provides for the ballot-paper to show the party endorsement of registered parties and prevents candidates of parties that do not meet the "500 rule" and the "no-overlap rule" from doing the same, Mr Mulholland contends that the Act permits voters to be misled. registration rule" The comment of Gummow J in Langer v The Commonwealth85 that "the ballot, being a means of protecting the franchise, should not be made an instrument to defeat it" supports Mr Mulholland's contention. So too does the reasoning of the Canadian courts in Figueroa86. When Figueroa was before the Ontario Court of Appeal, Doherty JA said that the identification of party affiliation on the ballot lies at the very core of the information needed to permit electors to vote rationally and in an informed manner87. His Lordship noted the findings of the trial judge in that case that in practice political parties play an important role in the Canadian electoral system and that some voters base their choice chiefly on party affiliation. In emphasising the significance of the inclusion of party endorsement on the ballot-paper, the trial judge in Figueroa had said: "[The ballot-paper] is the last piece of information which a voter receives before casting his or her vote, and indeed may be the only information which the voter receives about a particular candidate." Doherty JA also held that voters may be uninformed or perhaps even misled into thinking that a candidate is not endorsed by any party if the candidate is endorsed by a party that does not meet the registration requirements. When Figueroa reached the Supreme Court of Canada, McLachlin CJ, Iacobucci, Major, Bastarache, Binnie and Arbour JJ said, in a judgment delivered by Iacobucci J88: "Owing to the prominence of political parties in our system of representative democracy, affiliation with an officially recognized party is (1996) 186 CLR 302 at 347. 86 (2000) 189 DLR (4th) 577; Figueroa v Canada (Attorney General) [2003] 1 SCR (2000) 189 DLR (4th) 577 at 613. [2003] 1 SCR 912 at 947-948. McHugh highly advantageous to individual candidates. In the minds of some voters, the absence of a party identifier might make candidates ... a less attractive option. It might create the impression that the candidate is not, in fact, affiliated with a political party, or that the political party with which she or he is affiliated is not a legitimate political party. In each instance, the restriction on the right of candidates to list their party affiliation interferes with the capacity of non-registered parties to compete in the electoral process. For similar reasons, the restriction on the right of candidates to include their party affiliation on the ballot paper also undermines the right of each citizen to make an informed choice from among the various candidates. In order to make such a choice, it is best that a voter have access to roughly the same quality and quantity of information in respect of each candidate. In our system of democracy, the political platform of an individual candidate is closely aligned with the political platform of the party with which she or he is affiliated, and thus the listing of party affiliation has a significant informational component. Thus, legislation that allows some candidates to list their party affiliation yet prevents others from doing the same is inconsistent with the right of each citizen to exercise his or her right to vote in a manner that accurately reflects his or her actual preferences." While Figueroa was concerned with the Canadian electoral system in the context of an express "right to vote" in the Canadian Charter of Rights and Freedoms, the observations made in that case are broadly applicable in the Australian political context. But do the challenged provisions so operate that electors do not freely and truly choose their candidates in Senate and House of Representatives elections? the At Federation, inclusion on ballot-papers of political party endorsement of candidates for the Senate and the House of Representatives was not a requirement of the constitutionally prescribed system of representative government. Although, as long ago as the 18th century, politicians and commentators often referred to "party" in describing factions and adherents of particular policies, the modern political party is very much a 20th century development. It was not until 1983 that party endorsement was included on ballot-papers for federal elections89. Nevertheless, the Constitution makes allowance for the "evolutionary nature of representative government"90. It also recognises that "representative government is a dynamic rather than a static 89 1983 Act, s 80, which inserted s 106C into the Act. See s 214 of the Act. 90 McGinty (1996) 186 CLR 140 at 279 per Gummow J. McHugh institution and one that has developed in the course of [the 20th] century."91 It may be that the role of organised political parties and their influence on voters' choices within the Australian system of representative government have both developed to such an extent that that system requires that a candidate have the right to have his or her party endorsement noted on the ballot-paper. However, even if the present conception of representative government requires recognition of the right of the candidates of genuine parties to have the party's name included on the ballot-paper alongside that of the candidate, it does not follow that every candidate of every "party" has that right. Legislation enacted with the object of ensuring that voters are not misled by political parties is regulation of the electoral process that "is necessary in order that it may operate effectively"92. The free choice of electors is not assisted by persons registering a single group of members multiple times with eye- catching "single issue" party names for the purpose of channelling preferences to other candidates. The Constitution accommodates the dynamic nature of the institution of representative government "by authorising the legislature to make appropriate provision from time to time."93 This accords Parliament a broad scope to determine what is "appropriate" – within the boundaries of the constitutionally prescribed system of representative government. It is also open to the Parliament to hold the view that, important though party identification may be, the free choice of electors will be impaired and not improved by party identification of those parties which cannot or will not comply with the challenged provisions. Given previous decisions of the Court that the Constitution prescribes only irreducible minimum requirements for representative government, the "500 rule" and the "no-overlap rule" fall within the scope of the legislative power of the Commonwealth with respect to elections. They do not infringe the true choice or fully informed choice requirements of the Constitution. the Discrimination Mr Mulholland also contends that the "500 rule" and the "no-overlap rule" amount to unreasonable discrimination between candidates contrary to the requirements of ss 7 and 24 of the Constitution. He submits that the "500 rule" discriminates in favour of parties with large membership bases to the disadvantage of small parties and discriminates in favour of Parliamentary parties 91 McGinty (1996) 186 CLR 140 at 280 per Gummow J. 92 Levy (1997) 189 CLR 579 at 608 per Dawson J. 93 McGinty (1996) 186 CLR 140 at 280-281 per Gummow J. McHugh to the disadvantage of non-Parliamentary parties. Mr Mulholland submits that ss 7 and 24 contain the implied requirement that legislation designed to facilitate the "direct choice" of the people not distort that choice by unreasonably discriminating in favour of certain candidates with respect to the manner of exercise of that choice. He relies on comments in the judgments of Mason CJ and myself in Australian Capital Television Pty Ltd v The Commonwealth94 in support of his contention. In ACTV, Mason CJ found that the impugned regime in that case was discriminatory and that, as a consequence, the "severe restriction of freedom of communication plainly fails to preserve or enhance fair access to the mode of communication which is the subject of the restriction."95 On this basis, his Honour found that the inequalities inherent in the regime were not justified or legitimate. However, Mason CJ's finding was made in the context of the freedom of communication. His judgment did not recognise or give effect to a free- standing constitutional principle of non-discrimination or declare that such a the constitutionally prescribed system of requirement was representative government provided for in ss 7 and 24. While in ACTV I said that a law which prohibits lawful political parties from contesting federal elections may violate ss 7 and 24 of the Constitution, I did not address the issue of discrimination. inherent The Commission does not challenge the proposition that legislation is invalid if it permits discrimination of a kind that is inconsistent with the requirements of ss 7 and 24 of the Constitution. However, the Commission submits that any disadvantages that may flow to a candidate as a result of the electoral system established by the Act are not unconstitutional, provided that the requirements of ss 7 and 24 are not contravened. Commonwealth96 supports this proposition. There, a Senate candidate challenged the constitutionality of the Senate list system. Gibbs CJ held that any disadvantage caused by the list system to candidates who are not members of parties or groups does not so offend "democratic principles" as to render those provisions constitutionally invalid97. Gibbs CJ accepted that "s 7 requires that the Senate be elected by democratic methods"98. However, his Honour reiterated (1992) 177 CLR 106 at 146 per Mason CJ, 227-228 per McHugh J. 95 (1992) 177 CLR 106 at 146. For a description of the impugned regime, see at [111] below. (1984) 59 ALJR 190; 57 ALR 747. 97 McKenzie (1984) 59 ALJR 190 at 191; 57 ALR 747 at 749. 98 McKenzie (1984) 59 ALJR 190 at 191; 57 ALR 747 at 749. McHugh the statement of Stephen J in McKinlay that this Court would not interfere with Parliament's choice of voting method as long as the electoral system established by the Federal Parliament is "consistent with the existence of representative democracy as the chosen mode of government and is within the power conferred by s 51(xxxvi)" of the Constitution99. By implication, Gibbs CJ was of the opinion that the list system as enacted was within the legislative powers of the Federal Parliament. The current Senate list system permits registered parties (ss 211, 168, 169), groups of candidates (ss 211, 168) and incumbent senators (s 211A) to use voting tickets. Individuals (apart from incumbent senators) may not lodge voting tickets. Registered parties may include the registered party name or abbreviation next to the "above the line" box (s 210A); groups of candidates and parties which fail to meet the current registration requirements may not. Only about 5% of voters vote below the line100. In the more populous States where there are more Senate candidates, the number of above the line votes is greater101. As a result, registered parties, groups of candidates and incumbent senators who have lodged voting tickets with the Commission can effectively guarantee the flow of up to 95% of their preferences. The exception for incumbent senators suggests that parliamentarians know the practical importance of these machinery provisions for their electability102. 99 McKenzie (1984) 59 ALJR 190 at 191; 57 ALR 747 at 749, citing McKinlay (1975) 135 CLR 1 at 57-58 per Stephen J. 100 In the 1998 federal election, 94.9% of voters voted above the line and 5.1% voted below the line: Australian Electoral Commission, Election 98: National Results, (1998), vol 1 at 80. In the 2001 federal election, 95.2% of voters voted above the line and 4.8% voted below the line: Australian Electoral Commission, Electoral Newsfile, No 104, (2002) at 3. 101 For example, in the 2001 federal election, in NSW 97% of voters voted above the line and 3% voted below the line; in Victoria 96.7% voted above the line and 3.3% voted below the line; in Queensland 95.5% voted above the line and 4.5% voted below the line; in WA 94.7% voted above the line and 5.3% voted below the line; in SA 92.1% voted above the line and 7.9% voted below the line; in Tasmania 80.5% voted above the line and 19.5% voted below the line; in the ACT 78% voted above the line and 22% voted below the line; in the Northern Territory 90.3% voted above the line and 9.7% voted below the line: Australian Electoral Commission, Electoral Newsfile, No 104, (2002) at 3. 102 Orr, "Of Electoral Jurisdiction, Senate Ballot Papers and Fraudulent Party Registrations: New Developments in Electoral Case Law", (1999) 2 Constitutional Law and Policy Review 32 at 34-35, n 31. McHugh A number of subsequent cases concerned with the Senate list system provisions of the Act have applied Gibbs CJ's judgment in McKenzie103. Since McKenzie, those provisions have been amended to expand the categories of Senate candidates who are permitted tickets. Notwithstanding the amendments, no decision of the Court on this part of the Act has questioned Gibbs CJ's conclusions in McKenzie. In Abbotto v Australian Electoral Commission, Dawson J rejected a challenge to the validity of s 211A of the Act, which permits ungrouped incumbent senators to lodge an individual voting ticket or tickets. His Honour noted that the changes effected by the amendments were not material and found that s 211A was within the scope of the legislative power of the Commonwealth104. lodge group voting Langer, Muldowney v South Australia105, McGinty, McKenzie and the cases which follow it show that the Court will not – indeed cannot – substitute its determination for that of Parliament as to the form of electoral system, as long as that system complies with the requirements of representative government as provided for in the Constitution. No doubt a point could be reached where the electoral system is so discriminatory that the requirements of ss 7 and 24 are contravened. The challenged provisions cannot be so characterised. On one view, the Act creates two classes of candidates for Senate elections by offering a voting method to one class (registered political parties, groups of candidates and incumbent senators) that is approximately 20 times more popular than that offered to the other (individuals and groups of candidates which do not lodge group voting tickets)106. Yet the constitutionality of this voting method has been consistently upheld since McKenzie. Since its introduction the number of informal Senate ballot-papers has declined by more than half, from 9.9% of the total number of ballots, to around 4%107. 103 Abbotto v Australian Electoral Commission (1997) 71 ALJR 675; 144 ALR 352; Hodgetts v Australian Electoral Commission [1998] FCA 1285; McClure v Australian Electoral Commission (1999) 73 ALJR 1086; 163 ALR 734; Ditchburn v Australian Electoral Officer for Queensland (1999) 165 ALR 147. 104 Abbotto (1997) 71 ALJR 675 at 678; 144 ALR 352 at 356. 105 (1996) 186 CLR 352. 106 Orr, "Of Electoral Jurisdiction, Senate Ballot Papers and Fraudulent Party Registrations: New Developments in Electoral Case Law", (1999) 2 Constitutional Law and Policy Review 32 at 35. 107 Informal voting for the Senate declined from 9.9% in the 1983 federal election to 4.3% in the 1984 election (the first election where "above the line" voting was included): Australia, Department of the Parliamentary Library, Federal Election Results 1949-2001, Research Paper No 9, 2001-02, (2002) at 7, 44, 45. Since 1987 (Footnote continues on next page) McHugh Implied constitutional freedom of political communication Source of the implied freedom and test for infringement Since Nationwide News and ACTV, this Court has recognised and given effect to an implied constitutional freedom of communication between the people in respect of political and government matters. In Lange v Australian Broadcasting Corporation, the Court affirmed the existence of this implied constitutional freedom but emphasised that its source is the "text and structure" of the Constitution108. The Court also held that the system of representative government and the implied freedom of political communication are not "free- standing principles". Rather, each concept is confined by reference to what the specific provisions of the Constitution are necessarily thought to require. In Lange, the Court adopted the following test for assessing the validity of a law alleged to infringe the implied constitutional freedom of political communication109: "First, does the law effectively burden freedom of communication about government or political matters either in its terms, operation or effect? Second, if the law effectively burdens that freedom, is the law reasonably appropriate and adapted to serve a legitimate end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government and the procedure prescribed by s 128 for submitting a proposed amendment of the Constitution to the informed decision of the people (hereafter collectively 'the system of government prescribed by the Constitution'). If the first question is answered 'yes' and the second is answered 'no', the law is invalid." (footnotes omitted) Application of the Lange test The first question of the Lange test raises two issues for determination: whether a ballot-paper constitutes a "communication" on political or government matters; and the percentage of informal votes has been: 4.1% (1987), 3.4% (1990), 2.6% (1993), 3.5% (1996), 3.2% (1998) and 3.9% (2001): Australian Electoral Commission, Electoral Newsfile, No 104, (2002) at 3. 108 (1997) 189 CLR 520 at 560-561, 567. 109 (1997) 189 CLR 520 at 567-568. McHugh whether the challenged provisions burden the plaintiff's freedom of communication about government or political matters. If either of these issues is answered in the negative, the second question of the Lange test does not arise. It is appropriate to consider each issue in turn. Communication Marshall J at first instance held that, although the ballot-paper constituted a communication about political matters, it was a communication between the executive government and the voter and was not a communication "between the people"110. The Full Federal Court, however, found not only that the ballot-paper was a communication on political and government matters, but that the implied freedom also extended to communication between the Executive and the people111. In this Court Mr Mulholland contends that a ballot-paper constitutes a communication to voters on political or government matters, because it communicates to electors at the very moment before a vote is cast the identities of the candidates and, in the case of candidates endorsed by registered political parties, the party affiliation and, by implication, the policy platforms of those candidates. On this view, a completed ballot-paper would also be a communication by an elector to the Commission and, indirectly, to the candidates and the political parties, if any, which have endorsed those candidates, of the elector's preferences in relation to those candidates. Mr Mulholland contends further that the Full Court correctly held that the implied freedom extends to communications between the Executive and the people. The Commission on the other hand submits that the inclusion of endorsement details on the ballot-paper is a communication from the Executive, not a communication between the people, and is not within the scope of the constitutional freedom. The Commission argues that the ballot-paper is the "medium by which a vote is cast", that "[t]he inclusion of endorsement details on the ballot-paper is a statutory incident of the conduct of the election" and that the printing of markings on a ballot-paper is not a protected mode of communication. The Commission submits that protected modes of communication are those within the "sphere of private interest". It contends that, in contrast, "the matter printed on a ballot paper is within the sphere of regulation of the manner of elections in the public interest." 110 Mulholland (2002) 193 ALR 710 at 725. 111 Mulholland (2003) 128 FCR 523 at 531. McHugh the executive government and In my opinion, the Full Court correctly held that the ballot-paper is a communication on political and government matters. For the purposes of the Constitution, communications on political and government matters include communications between the people. Representative government and responsible government are the pillars upon which the constitutional implication of freedom of communication rests. Communications between the executive government and public servants and the people are as necessary to the effective working of those institutions as communications between the people and their elected representatives. As in Cunliffe v The Commonwealth112, freedom of communication on political and government matters "extends to the broad national environment in which the individual citizen exists and in which representative government must operate." Admittedly, in so far as a ballot-paper is a communication on political and government matters for the purpose of the constitutional freedom, it is a communication of a special kind. Freedom of communication on political and government matters is a necessary implication of the Constitution because "the business of government must be examinable and the subject of scrutiny, debate and ultimate accountability at the ballot box."113 The electors must be able to ascertain and examine the performance of their elected representatives and the capabilities and policies of candidates for election. For that purpose, the electors must have access to all the information, ideas, opinions and arguments that may enable them "to make an informed judgment as to how they have been governed and as to what policies are in the interests of themselves, their communities and the nation."114 The primary purpose of a ballot-paper, however, is to record the voter's preferences among the candidates standing for election to Parliament in the voter's electorate. It is part of a process for the casting, counting and recording of votes to elect Parliamentary representatives which is the end to which the Constitution's implication of freedom of communication is directed. It does not convey information, ideas, opinions and arguments that may enable other voters to make an informed judgment as to how they should vote. Nor does it seek to persuade candidates in the election to modify or adjust their policies. The delivery of a ballot-paper to an elector is primarily a communication by the Commission to that elector that informs the elector what candidates are standing 112 (1994) 182 CLR 272 at 336. 113 ACTV (1992) 177 CLR 106 at 231 per McHugh J. 114 ACTV (1992) 177 CLR 106 at 231 per McHugh J. McHugh for election and what parties, if any, they represent. It also informs the elector of the manner in which an elector may record a valid vote. In so far as the elector makes a communication by marking the ballot-paper and lodging it in the ballot- box, the elector's primary purpose is to inform the Commission – the body charged with conducting the election – which candidate or candidates the elector wishes to have elected. But, although the ballot-paper has little resemblance to traditional communications on political and government matters, it is still properly characterised as a communication on those matters. Although the ballot-paper is printed and distributed by the Executive (the Commission), party endorsement of candidates is included only at the request of the party (see ss 169, 210A and 214 of the Act). The Commission determines the form and format of the ballot- paper, but the candidates and parties essentially provide the "content". The ballot-paper is thus the record of the communication. Accordingly, the endorsement details on ballot-papers constitute a communication on political and government matters between candidates and electors. In Figueroa, the Supreme Court of Canada pointed out that the inclusion of such endorsement details on the ballot-paper is an important way in which parties and endorsed candidates communicate to voters115. Implicit in the Court's reasoning in that case was that the ballot-paper is a medium of communication between parties and voters. In addition, the marked ballot-paper, when lodged in the ballot-box, is also a communication on such matters. That is because the marked ballot-paper contains a statement – anonymous though it is – that this candidate or these candidates should be elected to Parliament. In that respect, such a statement is no different from a statement made by an elector in the course of an election meeting claiming that X is the person who should represent the electorate. Accordingly, a ballot-paper is a communication on political and government matters. Burden Marshall J in the Federal Court, while not required to decide the issue, given his earlier findings outlined above, considered that the absence of endorsement details on a ballot-paper constituted a burden on the ability of unregistered political parties to communicate with the electorate for the purpose of the implied freedom, as it amounted to "a curtailment of the right to disseminate information of a political nature", in circumstances where the right is only available to registered political parties116. 115 [2003] 1 SCR 912 at 947-948 per McLachlin CJ, Iacobucci, Major, Bastarache, 116 Mulholland (2002) 193 ALR 710 at 725-726. McHugh The Full Federal Court held that the challenged provisions burdened the freedom of communication on political and government matters117. The Full Court said that the challenged provisions imposed a burden on the implied freedom because "a law which provides that only certain persons can have their party affiliations stated on the ballot paper must burden those who are excluded."118 The Full Court further observed that the "nature of democratic politics is competition – the discriminatory privilege of one is the burden of another."119 As a result, a law that in practice conferred a "legal preference" on one political party would burden the capacity of candidates from other parties to communicate, "simply because of the legal preference created by the relevant law"120. that in relation their application Mr Mulholland contends ballot-papers, the challenged provisions impose a burden on communications about political or government matters between the DLP and electors. The argument is that the operation of the "500 rule" and the "no-overlap rule" restricts an existing opportunity for a lawful form of communication by a registered political party, namely, to "request" (and hence require) the Commission to include party endorsement details on ballot-papers. Accordingly, in the absence of the "500 rule" and the "no-overlap rule" and subject to certain conditions, the assertion is that the DLP, a registered political party, has a statutory right to have that party's registered name (or registered abbreviation) included on ballot-papers in elections for the Senate and the House of Representatives. The Commission's response is that there is no "burden" in the relevant sense. Such a burden must be a burden on the plaintiff's communication and the burden must be on a right or privilege to communicate under the common law or under a statute121 that the plaintiff already enjoys. The relevant "plaintiff" here is the DLP. The Commission submits that Pt XI of the Act imposes no "restriction" or restraint on any activity that might be engaged in apart from the registration regime. The Commission contends that, if Mr Mulholland's argument is correct, any political party could compel the Commission to include endorsement details 117 Mulholland (2003) 128 FCR 523 at 532. 118 Mulholland (2003) 128 FCR 523 at 531. 119 Mulholland (2003) 128 FCR 523 at 531. 120 Mulholland (2003) 128 FCR 523 at 531, noting ACTV (1992) 177 CLR 106 at 146 per Mason CJ, 172 per Deane and Toohey JJ, 236-237 per McHugh J. 121 Levy (1997) 189 CLR 579 at 622, 625-626 per McHugh J. McHugh on ballot-papers. The Commission also contends that the freedom is a freedom from interference; it is not a right to compel122. The DLP is a registered political party. As a registered political party, it has a statutory entitlement under the Act to request that its registered party name or abbreviation be placed on ballot-papers adjacent to the name of the candidate or candidates which that party has endorsed (ss 169(1), 210A). This request may be made in relation to ballot-papers for elections for both Houses of Parliament. On receipt of such a request, the Commission must print the registered party name or abbreviation on the ballot-papers adjacent to the names of those endorsed candidates (ss 214(1), 210A). In addition, if the party has lodged a group voting ticket in relation to an election for the Senate under s 168, the party may request that the Commission print the registered party name or abbreviation on the ballot-papers adjacent to the "above the line" box (ss 169(4), 210A). Where the party has lodged such a group voting ticket, the Commission must print a box above the names of the candidates endorsed by the party and must print the registered party name or abbreviation adjacent both to that box (ss 211(5), 210A) and to the names of those endorsed candidates (ss 214(1), Accordingly, Mr Mulholland argues that the DLP has a statutory entitlement to request that the registered party abbreviation be included on ballot-papers next to the names of that party's endorsed candidates and next to the "above the line" box on Senate ballot-papers, and to have that information included on ballot-papers. Such an argument does not raise a claim of a "right to compel" where no right otherwise exists, as was the case in McClure v Australian Electoral Commission123. Even if it is conceded that the "500 rule" and the "no-overlap rule" do not directly target or have an impact on political communications, Mr Mulholland claims that, if the DLP is deregistered, its ability to communicate with electors through the ballot-paper is impaired. The short answer to the claim that the challenged provisions burden political communications by the DLP to electors is that the restrictions are the conditions of the entitlement to have a party's name placed on the ballot-paper. The restrictions do not burden rights of communication on political and government matters that exist independently of the entitlement. Any political communication that is involved in the delivery and lodging of a ballot-paper results solely from the Commission's statutory obligation to hold elections and 122 Cunliffe (1994) 182 CLR 272 at 326-327 per Brennan J; Lange (1997) 189 CLR 520 at 560; Levy (1997) 189 CLR 579 at 622, 625-626 per McHugh J; McClure (1999) 73 ALJR 1086 at 1090 [28] per Hayne J; 163 ALR 734 at 740-741. 123 (1999) 73 ALJR 1086; 163 ALR 734. McHugh deliver ballot-papers in the prescribed form, and from the rights of parties and candidates to have their identities marked on the ballot-paper. However, the right of a registered political party to make, or have the Commission make on its behalf, a political communication on the ballot-paper is subject to the conditions imposed by the Act. Only registered political parties may request the Commission to include endorsement details on ballot-papers. Registration requires the party to meet other statutory requirements, such as appointing officers, having a constitution and complying with reporting obligations. Unregistered political parties do not have a statutory entitlement under the Act to request the Commission to include the party's name or abbreviation next to the names of the candidates whom the party has endorsed. Nor do they have an entitlement to request the Commission to include the party's name or abbreviation next to the "above the line" box on Senate ballot-papers, in circumstances where the party has lodged a group voting ticket with the Commission. Thus, the content of the freedom in respect of any political communication by means of a ballot-paper is commensurate with the scope of the entitlements granted by the provisions of the Act which regulate the making of the communication. Because the DLP has no right to make communications on political matters by means of the ballot-paper other than what the Act gives, Mr Mulholland's claim that the Act burdens the DLP's freedom of political communication fails. Proof of a burden on the implied constitutional freedom requires proof that exists independently of that law. As I pointed out in Levy124: law burdens a freedom the challenged that "The freedom protected by the Constitution is not, however, a freedom to communicate. It is a freedom from laws that effectively prevent the members of the Australian community from communicating with each other about political and government matters relevant to the system of the representative and Constitution. Unlike the Constitution of the United States, our Constitution does not create rights of communication. It gives immunity from the operation of laws that inhibit a right or privilege to communicate political and government matters. But, as Lange shows, that right or privilege must exist under the general law." (original emphasis) responsible government provided for by I went on to say in that case125: 124 (1997) 189 CLR 579 at 622. 125 Levy (1997) 189 CLR 579 at 625-626. McHugh that laws improperly impair a person's "The constitutional implication does not create rights. It merely invalidates the communicate political and government matters Commonwealth to other members of the Australian community. It gave the protesters no right to enter the hunting area. That means that, unless the common law or Victorian statute law gave them a right to enter that area, it was the lack of that right, and not the Regulations, that destroyed their opportunity to make their political protest." freedom relating Hayne J made the same point in McClure126 when his Honour said: "The freedom is a freedom from governmental action; it is not a right to require others to provide a means of communication. The petitioner's case depends upon him having some right to require others to disseminate his views. But as was said by the Court in [Lange (1997) 189 CLR 520 at 'ss 7 and 24 and the related sections of the Constitution necessarily protect that freedom of communication between the people concerning political or government matters which enables the people to exercise a free and informed choice as electors. Those sections do not confer personal rights on individuals. Rather they preclude the curtailment of the protected freedom by the exercise of legislative or executive power.'" (original emphasis, footnote omitted) No political party or its candidates have any right under the common law or the statute law of the Commonwealth or the States other than the Act to have the party's name printed above the line or on the ballot-paper. The only rights concerning ballot-papers which political parties and their candidates have are those rights that the Act confers on them. The decision in ACTV, upon which Mr Mulholland relies, does not assist his case. Under the Broadcasting Act 1942 (Cth) and the Radiocommunications Act 1983 (Cth), the licensees of television stations had statutory rights to transmit broadcasting and television programs, including programs on political and government matters. The Political Broadcasts and Political Disclosures Act 1991 (Cth) restricted those rights by preventing the licensees and other persons at times and in particular circumstances from expressing views particular concerning political affairs through the medium of radio and television. The Political Broadcasts and Political Disclosures Act operated to burden long- existing rights that existed independently of that Act. The case is not a relevant analogue with the present case. 126 (1999) 73 ALJR 1086 at 1090 [28]; 163 ALR 734 at 740-741. McHugh Accordingly, the challenged provisions do not burden freedom of communication on political and government matters. The second question under the Lange test, therefore, does not arise. Freedom of association Mr Mulholland contends that ss 7 and 24 of the Constitution contain an implied freedom of association or participation in relation to federal elections, which includes an associated freedom of political privacy. He contends that these freedoms are derived either directly from the text and structure of ss 7 and 24 or as a corollary of the implied freedom of political communication. Mr Mulholland contends that the challenged provisions concerned with the "500 rule" and the enforcement of that rule would breach the implied right of freedom of association and the related freedom of political privacy by identifying the members of the DLP. In ACTV127, I said that the Constitution contains "rights of participation, association and communication" in relation to federal elections but that these rights extend only in so far as they are "identifiable in ss 7 and 24" of the Constitution. In Kruger v The Commonwealth128, Toohey and Gaudron JJ and I each recognised an implied constitutional freedom of association. Toohey J regarded129 the freedom of association as "an essential ingredient of political communication". Gaudron J said130 that freedom of association was an aspect of the freedom of political communication that is protected to the extent "necessary for the maintenance of the system of government for which the Constitution provides." I said131 that the Constitution recognises a freedom of association at least for the purposes of the constitutionally prescribed system of government and the referendum procedure. However, disclosure to the Commission of the names of the members of political parties – either as part of the party's initial application for registration or in answer to a statutory request of the Commission – does not breach the implied freedom of association. Disclosure of the names of members is simply a condition of entitlement to registration and continued registration as a political 127 (1992) 177 CLR 106 at 232. 128 (1997) 190 CLR 1. 129 Kruger (1997) 190 CLR 1 at 91. 130 Kruger (1997) 190 CLR 1 at 116. 131 Kruger (1997) 190 CLR 1 at 142. McHugh party for the purposes of the Act. It is up to the political party which seeks to obtain or maintain registration to decide whether or not to disclose the names of its members. If, for privacy reasons, it does not wish to do so, the party is not entitled to the benefits of registration. A political party is not compelled to disclose to the Commission the names and addresses of its members. Accordingly, disclosure of the names of the members of a political party which seeks to obtain or maintain registration under the Act is not a breach of the constitutionally implied freedom of association. In any event, upon the facts of this case, there appears to be no prospect that the names of members would become available to the general public. Although the Register is open to public inspection under s 139 of the Act, the Register does not disclose the names or other identifying characteristics of members of registered political parties. The Act requires public disclosure of the name and address of the person who is nominated as the registered officer of the party (s 126(2)). It does not require public disclosure of the personal details of other members of that party. Nor is the supply to the Commission of the details of membership of the DLP likely to breach the implied freedom of association of those members. The Privacy Act 1988 (Cth) imposes restraints on the Commission such that the prospect of public disclosure is slight132. Furthermore, in so far as the Commission obtains information concerning membership under its statutory powers, the information is of a confidential nature. Equity would restrain any attempt to disclose it133. The claim based on the implied constitutional freedom of political association therefore fails. Order The appeal should be dismissed with costs. 132 Sections 6(1), 10, 14 and 16. 133 Johns v Australian Securities Commission (1993) 178 CLR 408. 119 GUMMOW AND HAYNE JJ. The appellant is the person nominated by the Democratic Labor Party of Australia ("the DLP") as the registered officer of the DLP for the purposes of the Commonwealth Electoral Act 1918 (Cth) ("the Act"). The respondent ("the Commission") is a body established by the Act to perform various functions permitted or required of it under the statute (ss 6, The Act has been amended on a number of occasions. Amendments made by the Commonwealth Electoral Legislation Amendment Act 1983 (Cth) ("the 1983 Act") included the establishment of the Commission, the introduction of a scheme (now found in Pt XX) for election funding and the addition of a system whereby an "eligible political party" might become registered for the purposes of the Act. The term "eligible political party" was defined, with reference to the DLP, as meaning a political party that had at least 500 members. The term "political party" was (and still is) defined134 as meaning: "an organization the object or activity, or one of the objects or activities, of which is the promotion of the election to the Senate or to the House of Representatives of a candidate or candidates endorsed by it". The registration provisions introduced by the 1983 Act are now found in Pt XI (ss 123-141) and in their present form include various amendments made since the 1983 Act. Section 125 of the Act provides that the Commission shall establish and maintain a register to be known as the "Register of Political Parties" ("the Register"). This is to contain a list of the political parties that are registered under Pt XI. The DLP was first registered on 20 July 1984 and from that date its registration has been continuous. However, in the present litigation, the appellant seeks to obtain a determination of the invalidity of certain of the amendments made to the registration system. The appellant apparently was moved to take this action by apprehended removal of the DLP from the Register by the Commission under the procedures of the revised legislation. On 7 January 2002, the appellant instituted a proceeding in the Federal Court of Australia seeking, among other relief, an order for prohibition restraining the deregistration by the Commission of the DLP; of the grounds advanced, that which remains alive in this Court is that various of the provisions of the Act relied upon by the Commission are invalid. The application was 134 Then in s 5, now in s 4(1). dismissed by Marshall J on 11 October 2002135. An appeal to the Full Court (Black CJ, Weinberg and Selway JJ) was dismissed136. Special leave to appeal was granted on 3 October 2003. Thereafter, by order of a Justice made on 27 November 2003, the Commission was restrained, pending the determination of this appeal or until further order, from, among other things, determining whether the DLP should be deregistered for the reasons set out in a notice given by the Commission on 13 November 2001. The appeal was heard on 11 and 12 February 2004. On 20 May 2004 the Court ordered that the appeal be dismissed with costs. What follows are our reasons for joining in that order. The relevant provisions of the Act The nature of the complaint made by the appellant will appear from a consideration of the provisions whose validity he impugns. Section 138A was inserted by the Electoral and Referendum Amendment Act (No 1) 2001 (Cth) ("the 2001 Act")137. Section 138A(1) states: "The [Commission] may review the Register to determine whether one or more of the parties included in the Register: is an eligible political party; or should be deregistered under section 136 or 137." The expression "eligible political party" is defined in s 123(1) as meaning: "a political party that: either: is a Parliamentary party; or has at least 500 members; and is established on the basis of a written constitution (however described) that sets out the aims of the party". 135 Mulholland v Australian Electoral Commission (2002) 193 ALR 710. 136 Mulholland v Australian Electoral Commission (2003) 128 FCR 523. 137 Sched 1, Item 21. The DLP is not a "Parliamentary party" because it does not meet the criterion of having at least one of its members as a member of the Parliament of the Commonwealth (s 123(1)). Nor was the DLP a "Parliamentary party" in the defined sense when first registered in 1984. One consequence of this is that the relevant deregistration provision identified by s 138(1) is s 137(1) rather than s 136(1)(b). Section 137 assumed its present form with the amendments made by the 2001 Act. For the purposes of reviewing the Register under s 138A, the Commission may give a written notice to the registered officer of a registered political party requesting specified information on the eligibility of the party to be registered under Pt XI (s 138A(3)). By letter dated 1 August 2001, the Commission gave the appellant a notice expressed to be given under s 138A(3). The satisfaction of the Commission on reasonable grounds that the registered officer of a registered political party has failed to comply with a notice under s 138A enlivens, by force of s 137(1)(cb)138, the obligation of the Commission to give to the registered officer notice in writing that the Commission is considering deregistering the party (s 137(1)(d)). Where notice is given under s 137(1)(d), the registered officer or 10 members of the relevant political party may provide the Commission with a written statement setting out reasons why the party should not be deregistered (s 137(2)). The Commission is required to consider that statement and to determine whether the political party should be deregistered for the reasons set out in that notice (s 137(5)). The giving by the Commission on 13 November 2001 of the notice, to which reference has been made above at [125], was expressed as required by s 137(1), consequent upon the failure of the appellant to comply with the s 138A(3) notice. That obligation of the Commission is enlivened also upon the reasonable satisfaction of the Commission that a registered political party, not being a Parliamentary party, has ceased to have at least 500 members (s 137(1)(b)). The appellant asserts the invalidity of pars (b) and (cb) of s 137(1), of s 137(5) and of the whole of s 138A. He also challenges the validity of so much of s 136(1) as provides that a registered party is liable to deregistration if, in the case of a party that was a Parliamentary party when it was registered, the party has fewer than 500 members (s 136(1)(b)(ii)). These provisions are challenged also on the footing that, in so far as they turn upon the definition of "eligible political party", that definition in s 123(1) is invalid in so far as it means a political party that has at least 500 members. Taken together, these provisions were identified in submissions as "the 500 rule". A significant element in the 138 Paragraph (cb) was inserted by the 2001 Act (Sched 1, Item 20). appellant's complaint is the engagement for the enforcement of the 500 rule of the increased investigative powers conferred by s 138A on the Commission. The appellant also asserts the invalidity of the "no-overlap rule" established by s 126(2A). This was inserted by the Commonwealth Electoral Amendment Act (No 1) 2000 (Cth) ("the 2000 Act")139. Section 126(2A) prohibits two or more parties from relying on the same member for the purpose of qualifying or continuing to qualify as an eligible political party; the provision permits a member relied upon by two or more parties in this way to nominate that party which is entitled to rely on the member concerned. Registration of a party is not to be cancelled by reason of the application of s 126(2A) unless the Commission has taken action to determine whether the party should be deregistered on, among other grounds, the ground in par (b) of s 137(1) that a registered political party, not being a Parliamentary party, has ceased to have at least 500 members. In this way, the increased investigative powers conferred by s 138A with respect to the 500 rule are drawn in to the application to the DLP of the no-overlap rule. It should be emphasised that although significant changes, as indicated above, were made by the 2000 Act and the 2001 Act, the registration system since its establishment by the 1983 Act has stipulated in the definition of "eligible political party" a membership of at least 500 members for a non-Parliamentary party. However, the 1983 legislation did not contain a requirement now found in s 126(2)(ca)140 that there be included with the application for registration a list of the names of the 500 members of the party to be relied on for the purposes of registration. The Act as amended by the 1983 then s 58Q for deregistration of a Act made provision non-Parliamentary party which had ceased to have at least 500 members (s 58Q(1)(b)). But the 1983 amendments did not contain the detailed procedure now found in s 138A for the provision to the Commission of specified information concerning eligibility to remain on the Register; nor was there the engagement by par (cb) of s 137(1) of the deregistration powers of the Commission following non-compliance with a notice given under s 138A. in what was The advantages or privileges of registration The registration system has remained permissive rather than mandatory. However, various advantages or privileges flow from the existence of registration of an eligible political party. 139 Sched 2, Item 3C. 140 Inserted by the 2000 Act, Sched 2, Item 3A. First, there is an entitlement of a registered political party to receive a free copy of the latest electoral rolls for each State and Territory in which a branch or division of the party is organised (ss 91(1), 91(7) and 91AA). There is also an entitlement to nominate candidates for election by lodging the prescribed form signed by the registered officer of the party rather than by not less than 50 persons entitled to vote at the election (s 166(1)(b)). These advantages were not stressed in submissions. Secondly, registration confers an entitlement in respect of the receipt of election funding. That is a significant matter. Division 2 (ss 288-292D) of Pt XX requires any political party (whether registered or not) to have an agent for the purposes of Pt XX. Division 3 (ss 294-302) requires the Commission to make specified payments for candidates and, in the case of Senate elections, groups of candidates for each first preference vote given for that candidate or group, with a requirement that the total number of eligible votes polled in favour of the candidate or group reach a 4 per cent threshold (ss 294, 297). What is of immediate significance is that, by force of s 299, funding will be paid by the Commission to the agent of a registered political party which has endorsed the candidates or groups of candidates in question; an unregistered political party cannot obtain payment to its agent rather than to the candidate or group141. The final and very significant advantages of registration concern the form of the ballot paper. Upon request, a registered political party is entitled to have its registered name (or abbreviation appearing in the Register) printed on ballot papers adjacent to the names of its endorsed candidates (s 169(1), s 214(1)). The provision of the Act respecting voting at elections for the Senate also establishes what in submissions was called the "above the line" voting system. This permits voters, by completing one box appearing above the line on the Senate ballot paper and next to the name of a registered political party, to vote in order for the list of the endorsed candidates of a registered political party and to follow the allocation of preferences by that party without going "below the line" to indicate a vote for each of the candidates in the election one by one. Two or more candidates may jointly request that their names be grouped on the ballot paper or grouped in a specified order (s 168(1)). Then s 169(4) introduces a special further "above the line" provision in respect of endorsed candidates of registered political parties. The sub-section states: 141 Since the institution of the Commonwealth Electoral Amendment Act (No 1) 2002 (Cth), but no reliance in argument in this Court was placed upon the amendments. litigation, s 299 has been amended by the "Where: a request has been made under subsection (1) in respect of candidates in a Senate election; and the candidates propose to have a group voting ticket registered for the purposes of that election; the request may include a further request that the name of the registered political party that endorsed the candidates, or a composite name formed from the registered names of the registered political parties that endorsed the candidates, be printed on the ballot-papers adjacent to the square printed in relation to the group in accordance with subsection 211(5)." The request is to be observed in the printing of ballot papers (s 214(2)). If the DLP ceased to be a registered political party, it could group its candidates and the first of them would be named above the list as the head of a group, but there would be no identification there of the DLP as the political party which had endorsed them. The distinction is of some practical importance, given, for example, that at the 1998 general election 94.9 per cent of Senate voters used the "above the line" system rather than choosing to vote "below the line". The appellant does not seek the abolition of these advantages or privileges enjoyed by the DLP as a registered political party. Rather, he seeks to ensure their retention by removing any threat to the registration of the DLP presented by those provisions of the Act which condition the retention of registration by the 500 rule and the no-overlap rule and which give the Commission added investigative powers. Were the appellant to succeed on the case put as to invalidity, a real question would arise as to whether that would be but a pyrrhic victory. It would be a substantial victory only if the application of the principles of severance left standing sufficient of Pt XI of the Act to preserve the registration of the DLP and the advantages it presently obtains by registration. We would reject the case put by the appellant for invalidity, and so no question of severance arises. The appellant argues on several grounds for the invalidity of the provisions for the 500 rule and the no-overlap rule. To these we now turn. Legislative power The starting point is the identification of the relevant head of legislative power. Section 51(xxxvi) of the Constitution confers on the Parliament power, subject to the Constitution, to make laws with respect to: "matters in respect of which this Constitution makes provision until the Parliament otherwise provides". One of these "matters" is found in s 10 of the Constitution. This provides: "Until the Parliament otherwise provides, but subject to this Constitution, the laws in force in each State, for the time being, relating to elections for the more numerous House of the Parliament of the State shall, as nearly as practicable, apply to elections of senators for the State." However, the phrase in s 10 "subject to this Constitution" directs attention to s 9. This states: "The Parliament of the Commonwealth may make laws prescribing the method of choosing senators, but so that the method shall be uniform for all the States. Subject to any such law, the Parliament of each State may make laws prescribing the method of choosing the senators for that State. The Parliament of a State may make laws for determining the times and places of elections of senators for the State." Of s 9, it was said in Re Australian Electoral Commission; Ex parte Kelly142: "The second sentence in s 9 subjects State laws prescribing the method of choosing Senators to any federal law, such as the Act, prescribing a uniform method for all the States. The third sentence in s 9 preserves to the States an area of exclusive power that is not subject to Commonwealth legislative preemption. The area so preserved is for laws which make provision 'for determining' (i) the times and (ii) the places of, in each case, the election of State Senators143. It may be added that the provisions of s 12 of the Constitution repose in State Governors the power to cause writs to be issued for elections of Senators for the States." In the present case, no issue arises respecting the preservation by s 9 of an area of exclusive power to the States. However, it may be observed that the conferral upon the Parliament of extensive powers with respect to electoral laws and the reservation to the States in s 9 respecting "times and places" stands in marked contrast to the plan of the United States Constitution for federal 142 (2003) 77 ALJR 1307 at 1309 [13]; 198 ALR 262 at 265. 143 Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 427; Lane, The Australian Federal System, 2nd ed (1979) at 27. elections. Clause 1 of Art 1, s 4 grants to the States "broad power" to prescribe the "Times, Places and Manner of holding Elections for Senators and Representatives" (emphasis added)144. With respect to elections for the House of Representatives, the constitutional provision is more straightforward. Section 31 of the Constitution provides: "Until the Parliament otherwise provides, but subject to this Constitution, the laws in force in each State for the time being relating to elections for the more numerous House of the Parliament of the State shall, as nearly as practicable, apply to elections in the State of members of the House of Representatives." As already indicated, the Act uses the term "political party" to identify organisations with an object or activity of promoting the election of its endorsed candidates to the Senate or the House of Representatives (s 4(1)). The advantages or privileges which are to be derived from the registration under the Act of a political party and the retention of registration are connected with the electoral process for the two chambers. A law requiring registration of a political party before those advantages or privileges may be enjoyed is a law "relating to" those elections within the meaning of ss 10 and 31 of the Constitution. So also is a law providing in specified circumstances (involving, for example, the 500 rule and the no-overlap rule) for deregistration of a political party. The result is that these were "matters" attracting the head of power in s 51(xxxvi) of the Constitution145. The appellant did not seriously challenge that conclusion with respect to legislative power. Limitations upon legislative power However, the appellant fixes upon the limitation in s 51 "subject to this Constitution" and then refers to the statement in the opening words of s 7 that the Senate: "shall be composed of senators for each State, directly chosen by the people of the State ...", and to those in s 24 that the House of Representatives: 144 Timmons v Twin Cities Area New Party 520 US 351 at 358 (1997); see also, with respect to the appointment under State law of electors for the President and Vice-President, Bush v Gore 531 US 98 at 112-113, 123-124 (2000). 145 See Langer v The Commonwealth (1996) 186 CLR 302 at 317, 339, 349. "shall be composed of members directly chosen by the people of the Commonwealth ...". The appellant then submits that, even if the provisions of the Act applying the 500 rule and the no-overlap rule in procedures for deregistration were otherwise supported by s 51(xxxvi), they will be invalid if they impair the exercise of that "direct choice" required by ss 7 and 24. Then it is said that this "direct choice" requires an informed choice and one which is not made under a legislative regime which unreasonably discriminates between candidates. The last step in this argument is that the rules in question impair the making of that informed choice and unreasonably discriminate between candidates. These consequences are said to follow from the application of the 500 rule and the no-overlap rule, particularly because a deregistered or unregistered political party which has less than the requisite membership number and is not a Parliamentary party cannot request and procure the appearance of its name on ballot papers. This state of affairs is said to discriminate unreasonably between candidates endorsed by registered political parties and those endorsed by unregistered parties, to interfere with a right of association through membership of the DLP, and to be apt to mislead electors into believing that candidates in fact endorsed by a political party have no affiliation with any political party. These submissions of the appellant should not be accepted. First, the invocation by the appellant of unreasonable discrimination between candidates does not advance the argument. Certainly one meaning of the legal notion of "discrimination" is the unequal treatment of equals, but differential treatment and unequal outcomes may be the product of a legislative distinction which is appropriate and adapted to the attainment of a proper objective146. So it is that the Supreme Court of the United States has held147 that federal laws providing for the public funding of those parties which attract more than a specified minimum percentage of the vote do not invidiously discriminate between candidates in violation of the Fifth Amendment jurisprudence148; the laws further "sufficiently important governmental interests"149. These considerations return one to the 146 Cameron v The Queen (2002) 209 CLR 339 at 343-344 [15]. 147 Buckley v Valeo 424 US 1 at 93-97 (1976). 148 The case law holds that "discrimination may be so unjustifiable as to be violative of due process": Bolling v Sharpe 347 US 497 at 499 (1954). 149 Buckley v Valeo 424 US 1 at 95 (1976). other issues on the appeal, beginning with the scope of the "direct choice" requirement seen in the Constitution. Secondly, the same is to be said of the reliance upon a "right of association". There is no such "free-standing" right to be implied from the Constitution. A freedom of association to some degree may be a corollary of the freedom of communication formulated in Lange v Australian Broadcasting Corporation150 and considered in subsequent cases. But that gives the principle contended for by the appellant no additional life to that which it may have from a consideration later in these reasons of Lange and its application to the present case151. It is with the phrase "directly chosen by the people" that more attention is required. "Directly chosen by the people" The phrase "directly chosen by the people" as it appears in ss 7 and 24 of the Constitution is to be understood against the background of the differing arrangements made in the Australian colonies for what each would have regarded as their system of representative government. Some colonies imposed property qualifications upon electors for one or both chambers; the minimum ages for candidacy varied; women were enfranchised only in South Australia and Western Australia and were eligible as candidates in the former colony only152. Nevertheless, as Barwick CJ pointed out in Attorney-General (Cth); Ex rel McKinlay v The Commonwealth153, the members of the more numerous legislative chambers in the Australian colonies, even with these diverse franchise arrangements, could properly have been said to have been directly chosen by the people of the colony in question. Section 41 of the Constitution restricted the scope of federal legislative power to prescribe the franchise154. It fixed upon those adult persons who, before 150 (1997) 189 CLR 520. 151 Kruger v The Commonwealth (1997) 190 CLR 1 at 45, 68-69, 142, 157. 152 Attorney-General (Cth); Ex rel McKinlay v The Commonwealth (1975) 135 CLR 1 at 19-20; McGinty v Western Australia (1996) 186 CLR 140 at 270-271. 153 (1975) 135 CLR 1 at 21. 154 Section 41 states: (Footnote continues on next page) the establishment of the federal franchise system by the Commonwealth Franchise Act 1902 (Cth), enjoyed the right to vote at State elections for the lower houses of the Parliaments, and denied the competency of any law of the Commonwealth to prevent those in that closed class from voting at elections for either chamber of the federal Parliament155. The upshot of the 1902 federal legislation was that, while the female franchise was made universal, the limited State franchise enjoyed by some indigenous Australians was not replicated, subject only to any existing entitlements under s 41 of the Constitution156. Nevertheless, it should be added that, at the time of federation, in various respects the popular element in representative government was more advanced in the Australian colonies than elsewhere. Before the introduction in many States of the United States in the last part of the nineteenth century of the "Australian ballot system", there was a widespread practice whereby the political parties printed and distributed their own ballot papers containing only the names of that party's candidates; the voter could remain ignorant of the existence of other candidates, having merely to deposit a party ticket in the ballot box without, in some States, even marking it157, and the printing of ballot papers in distinctive party colours impaired the secrecy of the ballot158. It was only after the 1888 presidential election, "which was widely regarded as having been plagued by fraud", that many States adopted the "Australian ballot system" whereby "an official ballot, containing the names of all the candidates legally nominated by all the parties, was printed at public expense and distributed by public officials at polling places"159. The inclusion of the expression "directly chosen by the people" in s 7, respecting the Senate, and s 24, respecting the House of Representatives, was "No adult person who has or acquires a right to vote at elections for the more numerous House of the Parliament of a State shall, while the right continues, be prevented by any law of the Commonwealth from voting at elections for either House of the Parliament of the Commonwealth." 155 R v Pearson; Ex parte Sipka (1983) 152 CLR 254. 156 R v Pearson; Ex parte Sipka (1983) 152 CLR 254 at 269-270. 157 Argersinger, "'A Place on the Ballot': Fusion Politics and Antifusion Laws", (1980) 85 The American Historical Review 287 at 290. 158 Eskridge, Frickey and Garrett, Legislation and Statutory Interpretation, (2000) at 159 Timmons v Twin Cities Area New Party 520 US 351 at 356 (1997). emphatic of two propositions in the adaption made in Ch I of the Constitution of the principles of representative government to the new federal structure. First, in the drafting of the Constitution, there had been rejected the idea that the senators would be chosen by the legislatures of the State which they were to represent, as was then the position in the United States; however, the States were given some measure of exclusive legislative power by the provisions of s 9 of the Constitution to which reference has been made earlier in these reasons160. The first proposition is essentially negative in character; the second puts it positively that the process of choice of members of the two chambers will be by popular election. It is settled that the Constitution prescribes and gives effect to a system of representative and responsible government161, though the present case is concerned with the former aspect of the system of government. In the present case, the Solicitor-General of the Commonwealth accepted that representative government requires "an opportunity to gain an appreciation of the available alternatives", as it was put in Lange162. In Lange, the Court said163: "Sections 7 and 24 of the Constitution, read in context, require the members of the Senate and the House of Representatives to be directly chosen at periodic elections by the people of the States and of the Commonwealth respectively. This requirement embraces all that is necessary to effectuate164 the free election of representatives at periodic elections. What is involved in the people directly choosing their representatives at periodic elections, however, can be understood only by reference to the system of representative and responsible government to which ss 7 and 24 and other sections of the Constitution give effect165." 160 Re Australian Electoral Commission; Ex parte Kelly (2003) 77 ALJR 1307 at 1309 [13]-[14]; 198 ALR 262 at 265. See also McGinty v Western Australia (1996) 186 CLR 140 at 271. 161 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 557-559. 162 (1997) 189 CLR 520 at 560, citing the observation of Dawson J in Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 187. 163 (1997) 189 CLR 520 at 557. 164 Grannall v Marrickville Margarine Pty Ltd (1955) 93 CLR 55 at 77. 165 Attorney-General (Cth); Ex rel McKinlay v The Commonwealth (1975) 135 CLR 1 at 56; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 46-47, 70-72; Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 (Footnote continues on next page) However, what also is apparent is that room was left by the Constitution for further development by legislation of the system of representative government, particularly with respect to the franchise and the conduct of elections. (The same is true of the treatment in the Constitution of the system of responsible government166.) The limited and temporal operation of s 41 of the Constitution underlines the absence of provisions entrenching universal adult franchise, the secret ballot, compulsory voting, or the preferential or proportional or the Hare-Clark or any other voting system. The recurrent phrase in the Constitution "until the Parliament otherwise provides" accommodates the notion that representative government is not a static institution and allows for its development by changes such as those with respect to the involvement of political parties, electoral funding and "voting above the line". Some of these changes would not have been foreseen at the time of federation or, if foreseen by some, would not have been generally accepted for constitutional entrenchment. Thus, care is called for in elevating a "direct choice" principle to a broad restraint upon legislative development of the federal system of representative government. Undoubtedly examples may be given of extreme situations. One is provided in the judgment of Gaudron J in McGinty v Western Australia167. Section 34 of the Constitution sets out the qualifications of a member of the House of Representatives which are to apply "[u]ntil the Parliament otherwise provides". In McGinty, her Honour said that the requirement of ss 7 and 24 was not satisfied merely by the holding of elections and continued168: "For example, the Parliament could not legislate pursuant to s 34 of the Constitution to make membership of a particular political party the qualification for election to the House of Representatives. Such a law would so deprive the electorate of choice that persons elected pursuant to it could not be described as 'chosen by the people'." at 137, 184-185, 210, 229-230; Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 146-147, 189-190, 195-197; McGinty v Western Australia (1996) 186 CLR 140 at 201-202. 166 Re Patterson; Ex parte Taylor (2001) 207 CLR 391 at 460-464 [213]-[220]. 167 (1996) 186 CLR 140. 168 (1996) 186 CLR 140 at 220. Gaudron J added169 that there may be some feature of the electoral system which means that it cannot be said that those elected by it are "chosen by the people", but that "[t]he problem is to identify the process by which it may be determined whether or not that is so". An appreciation of the interests involved with the presence in the Constitution on the one hand of the broad specification of direct choice, and of the empowerment of successive parliaments to "otherwise provide" with respect to elections on the other, is assisted by reference to Professor Tribe's discussion of the United States experience. He writes170: "Few prospects are so antithetical to the notion of rule by the people as that of a temporary majority entrenching itself by cleverly manipulating the system through which the voters, in theory, can register their dissatisfaction by choosing new leadership." It may be added that in Australia it was legislation enacted in pursuance of the constitutional mandate to "otherwise provide" which, at the federal level, has diminished the concern of which Professor Tribe writes, by requiring compulsory voting and diminishing the prospect of control of both the House and the Senate by the one party or coalition171. Professor Tribe adds that constitutional review of election regulation in the United States has tended to permit regulation of aspects of the electoral process where the regulation does not have the potential of immunising the current leadership from successful attack172. The appellant developed his submissions upon the "direct choice" principle, particularly by reference to observations by Dawson J in his dissenting judgment in Langer v The Commonwealth173. His Honour observed of the power conferred by s 51(xxxvi) to make laws with respect to the election of members of the House of Representatives174: 169 (1996) 186 CLR 140 at 220-221. 170 American Constitutional Law, 2nd ed (1988), §13-18. 171 McGinty v Western Australia (1996) 186 CLR 140 at 283; Crisp, Australian National Government, 5th ed (1983) at 146-149. 172 American Constitutional Law, 2nd ed (1988), §13-18. 173 (1996) 186 CLR 302. 174 (1996) 186 CLR 302 at 324-325. "But it is clearly not a power which is at large. The Constitution having established in s 24 that the House of Representatives shall be composed of members directly chosen by the people of the Commonwealth, the elections with respect to which parliament is given power to make laws by ss 31 and 51(xxxvi) must necessarily be elections fulfilling the requirements of s 24. That is to say, the legislative power conferred by those provisions is a purposive power: a power to make laws for the purpose of implementing s 24." This was used as a starting point for the development by the appellant in his submissions of notions of proportionality leading to what was said to be requirements in electoral laws which were not observed by the provisions for the 500 rule and the no-overlap rule. However, the view of Dawson J as to the "purposive" nature of the head of legislative power was not adopted by the other members of the Court in Langer175 and should not now be accepted. In Langer176, Toohey and Gaudron JJ pointed out that, however broad a construction might be given to the phrase "chosen by the people" in s 7 and s 24 of the Constitution, it had to allow for various special cases. One was the possibility, since provision made in 1977 for the filling of casual Senate vacancies, that at any time the Senate as a whole might not be directly chosen by the people of the States. Secondly, to that may be added the presence of senators elected by the people of the Northern Territory and the Australian Capital Territory. Other special cases include that of the member of the House who is returned unopposed and that of the member or senator returned at an election but incapable of sitting by reason of disqualification under s 44 of the Constitution. In the first and third of these special cases, there has been no opportunity for election by an "informed choice" on the part of electors. In the fourth case, the choice is ineffective. One holding in Langer was that the prescription by s 240 of the Act of a method of full preferential voting for elections for the House of Representatives and the creation of an offence of publishing material with the intention of encouraging the filling in of ballot papers in a fashion otherwise than in accordance with s 240 did not conflict with the requirement of "direct choice" in s 24 of the Constitution. 175 (1996) 186 CLR 302 at 317 per Brennan CJ, 339 per McHugh J, 348-349 per 176 (1996) 186 CLR 302 at 332-333. Nor is there any such conflict where the receipt by an officer of a political party of public moneys as electoral funding of endorsed candidates is conditioned upon continuing party registration and subjection to investigative powers of the Commission. One of the apparent benefits from public funding under Pt XX of the Act to representative government may be the minimisation of reliance by parties on campaign contributions. It may encourage candidates from new parties and groups. But, on the other hand, that benefit will not be secured by the funding of "front" or "shell" parties with no substantial membership to which officers of the party are accountable. It is entirely consistent with the objectives of a system of representative government that the Act requires a significant or substantial body of members, and without "overlapping" with the membership of other parties, before there is an entitlement to receive public funding by a non-Parliamentary party. There must be allowable a measure of legislative choice as to the minimum number of party members. The Federal Court was not placed in a position to adjudicate as a "constitutional fact" whether a requirement of 500 members was excessive177. There is no occasion for this Court to "second guess" the legislative choice made 20 years ago with the 1983 Act. There can be even less ground for impugning as inconsistent with a system of representative government the added investigative powers given the Commission more recently by such provisions as s 138A, the exercise of which precipitated this litigation. With respect to "above the line" voting, the appellant complains that, without identification on the Senate ballot paper of the party endorsement of a group of candidates, such as those of a postulated deregistered DLP, voters would be apt to be misled. But the view was equally open to the legislature that, under the Australian ballot system referred to earlier and long established, identification of party endorsement where the party is a non-Parliamentary party will carry with it an officially sanctioned indication that the party is not a "shell" or "front" and that it has some reasonable minimum number of members. United States and Canadian authorities The grant by the United States Constitution to the States of a broad power with respect to congressional and presidential elections is "matched by state control over the election process for state offices"178. In American Party of Texas v White179, the Supreme Court rejected submissions that various provisions of the 177 The Full Court pointed this out: (2003) 128 FCR 523 at 535-536. 178 Timmons v Twin Cities Area New Party 520 US 351 at 358 (1997). Texas Election Code, by excluding the appellants from the ballot for a general election for Congress, State governor and other officials, infringed their right under the First and Fourteenth Amendments to associate for the advancement of political beliefs and invidiously discriminated against new and minority political parties as well as against independent candidates180. Under the Texas system, major parties were permitted automatic placement on the ballot if they had received at least 200,000 votes in the last general election. However, there were detailed requirements for minor parties: those that received less than 2 per cent of the votes cast in the last election were required to hold nominating conventions and to obtain signatures of at least 1 per cent of the number of voters who participated in the last election for governor of the State. In White, the Supreme Court upheld these requirements, emphasising that they allowed to minority parties a "real and essentially equal opportunity for ballot qualification" and that neither the First nor the Fourteenth Amendments required any more181. The Supreme Court acknowledged what was described as a vital State interest in the preservation of the regulation of the number of candidates on the ballot to avoid undue voter confusion and added182: "So long as the larger parties must demonstrate major support among the electorate at the last election, whereas the smaller parties need not, the latter, without being invidiously treated, may be required to establish their position in some other manner. Of course, what is demanded may not be so excessive or impractical as to be in reality a mere device to always, or almost always, exclude parties with significant support from the ballot. The Constitution requires that access to the electorate be real, not 'merely theoretical'183." More recently, the Supreme Court has been concerned with laws dealing with a situation having some affinity to the no-overlap rule found in s 126(2A) of the Act. In Timmons v Twin Cities Area New Party184, the Court upheld the validity of a Minnesota law prohibiting an individual from appearing on the ballot as the candidate of more than one party. The Supreme Court recognised the protection given by the First Amendment to the right of citizens "to associate 180 415 US 767 at 771 (1974). 181 415 US 767 at 788 (1974). 182 415 US 767 at 782-783 (1974). 183 Jenness v Fortson 403 US 431 at 439 (1971). and to form political parties for the advancement of common political goals and ideas"185. However, the Court added that186: "On the other hand, it is also clear that States may, and inevitably must, enact reasonable regulations of parties, elections, and ballots to reduce election- and campaign-related disorder." The Court indicated that, when deciding whether a State election law violated constitutionally guaranteed rights of association, it weighed the character and magnitude of the burden imposed on those rights by the State law against the interests which the State contended justified that burden187. Of the Minnesota law in question in Timmons, the Court concluded188: "Minnesota's laws do not restrict the ability of the New Party and its members to endorse, support, or vote for anyone they like. The laws do not directly limit the party's access to the ballot. They are silent on parties' internal structure, governance, and policymaking. these provisions reduce the universe of potential candidates who may appear on the ballot as the party's nominee only by ruling out those few individuals who both have already agreed to be another party's candidate and also, if forced to choose, themselves prefer that other party." Instead, These decisions have provoked some discussion in the United States as to whether their reasoning indicates some departure by the Supreme Court from a doctrine of "strict scrutiny" of the validity of laws placing restrictions on access to the ballot189. However, their significance for immediate purposes lies in their indication that laws of the same genus as the 500 rule and the no-overlap rule are upheld in the system of representative democracy prevailing in the United States where there are significant express constitutional guarantees to be considered. 185 520 US 351 at 357 (1997). 186 520 US 351 at 358 (1997). 187 520 US 351 at 358 (1997). 188 520 US 351 at 363 (1997). 189 Chemerinsky, Constitutional Law, 2nd ed (2002) at 871-875; Tribe, American Constitutional Law, 2nd ed (1988), §13-20; Hasen, "Entrenching the Duopoly: Why the Supreme Court Should Not Allow the States to Protect the Democrats and Republicans from Political Competition", (1997) The Supreme Court Review 331 at The appellant referred to the decision of the Supreme Court of Canada in Figueroa v Canada (Attorney General)190. The Supreme Court construed the provision in s 3 of the Canadian Charter of Rights and Freedoms: "[e]very citizen of Canada has the right to vote in an election of members of the House of Commons or of a legislative assembly and to be qualified for membership therein", as promoting and protecting a right of each citizen to play a meaningful role in the political life of Canada and considered the validity of the challenged legislation on that footing. That construction of the Charter may be contrasted with the more limited content given in Australia to the phrase "directly chosen by the people" in ss 7 and 24 of the Constitution. In Figueroa, the Supreme Court upheld the contention of the Communist Party of Canada that there was an infringement of s 3 of the Charter by a law requiring nomination by a party of at least 50 candidates in a federal election in order for it to obtain and retain registration under the Canada Elections Act191. Candidates nominated by political parties that did not satisfy the 50 candidate threshold were not entitled to issue tax receipts for donations received outside the election period, to transfer unspent election funds to the party or to list their party affiliation on ballot papers192. Other benefits flowing from registration were not at issue in the litigation. Nor was a provision in the legislation that a political party seeking registration have at least 100 members and appoint a leader, a chief agent and an auditor193. It also should be noted that, in concluding the judgment written for himself and five other members of the Supreme Court in Figueroa, Iacobucci J said194: "However, before I dispose of this appeal I think it important to stress that this decision does not stand for the proposition that the differential treatment of political parties will always constitute a violation of s 3. Nor does it stand for the proposition that an infringement of s 3 190 [2003] 1 SCR 912. 191 RSC 1985, c E-2. 192 [2003] 1 SCR 912 at 926. 193 [2003] 1 SCR 912 at 923. 194 [2003] 1 SCR 912 at 963-964. arising from the differential treatment of political parties could never be justified. Consequently, although the disposition of this case will have an impact on sections of the Elections Act that provide access to free broadcast time, the right to purchase reserved broadcast time, and the right to partial reimbursement of election expenses upon receiving a certain percentage of the vote, I express no opinion as to the constitutionality of legislation that restricts access to those benefits. It is possible that it would be necessary to consider factors that have not been addressed in this appeal in order to determine the constitutionality of restricting access to those benefits." Figueroa thus is an illustration, in another system of representative government in a federation, of the difficulty indicated by Gaudron J in McGinty of the identification of some feature of the electoral system which means it cannot be said that those elected by it are "chosen by the people"195. But it is not necessarily indicative of a favourable answer to the submissions of the appellant on that issue. Privacy In oral submissions, the appellant said that, while "freedom of privacy" was not put "generally", it was a very important consideration, presumably going to bolster the arguments for invalidity otherwise presented. Counsel developed the point by submitting that the provisions establishing the 500 rule and the enforcement of that rule would entail the disclosure of the personal identity of members. However, counsel for the Commission emphasised that, whilst the Register is open for public inspection pursuant to s 139 of the Act, the Register does not contain the names of the members of registered political parties. The initial contents of the Register to be entered by the Commission as required by s 133(1) include the name and address of the person who has been nominated as the registered officer of the party for the purposes of the Act (par (a)(iii)), but not any particulars of the identity of members. Provision is made by s 134 for the entry of changes to the Register but, again, these do not include the names or other details of members. The supply to the Commission of details of membership in compliance with the exercise by the Commission of its investigative powers springing from s 138A would not leave the Commission at liberty to disclose generally what it had learned. The Attorney-General for New South Wales, who intervened, 195 (1996) 186 CLR 140 at 220-221. pointed, in that regard, to the statement in s 41(1) of the Freedom of Information Act 1982 (Cth): "A document is an exempt document if its disclosure under this Act would involve the unreasonable disclosure of personal information about any person (including a deceased person)." Counsel for the Commission also referred to the constraints imposed on the Commission as an "agency" and "record-keeper" within the meaning respectively of s 6(1) and s 10 of the Privacy Act 1988 (Cth). In these circumstances it is sufficient to say that the apprehensions of the appellant respecting the disclosure to the Commission of the membership of the DLP do not provide any additional support to the submissions asserting the invalidity of the provisions for the 500 rule and the no-overlap rule. There remains for consideration the submissions founding invalidity upon the application of the principles expounded in Lange. Burden on freedom of communication about government or political matters The Court held in Lange that freedom of communication on matters of government and politics is an indispensable incident of the system of representative government created by the Constitution196. The Court emphasised that197: "[c]ommunications concerning political or government matters between the electors and the elected representatives, between the electors and the candidates for election and between the electors themselves were central to the system of representative government, as it was understood at federation". By impugning the validity of some of the requirements for retention of party registration under the Act, the appellant wishes to achieve a situation whereby the Act obliges the Commission to identify on the ballot paper for "above the line" voting in Senate elections the DLP with its endorsed candidates. In aid of that result, the appellant submits that the impugned provisions of the Act conflict with what follows from the above passage in Lange. 196 (1997) 189 CLR 520 at 559. 197 (1997) 189 CLR 520 at 560. See also Roberts v Bass (2002) 212 CLR 1 at 26 [64]. However, the matter cannot be approached at that level of generality. Further attention first is required to the principles which Lange expounded and to the nature of the freedom that is protected. The phrase "absolutely free" in the text of s 92 of the Constitution, without more, gave rise to great difficulties in interpretation of the "guarantee" provided by that section. It would have been unfortunate if, by implication, another incompletely stated "freedom" were discerned in the Constitution. However, the case law respecting this freedom of communication has refined the notions involved here. First, personal "rights" are not bestowed upon individuals by the Constitution in the manner of the Bivens198 action for damages discussed in British American Tobacco Australia Ltd v Western Australia199, and previously in Kruger v The Commonwealth200. Rather, the freedom creates an immunity or protection which has two aspects: (i) the exercise of legislative or executive power is precluded so that, for example, inconsistent statutory rules are invalid and (ii) the rules of the common law of Australia are required to conform with the Constitution201. Secondly, a body of common law, such as the tort of defamation, may be concerned with striking a compromise between a complex of relational interests on the part of the plaintiff and "the countervailing claim to freedom of speech and comment asserted by the defendant"202. One of the common law defences so developed, such as the defence of qualified privilege, may effectively burden the constitutional freedom of communication and not be reasonably appropriate and adapted to serve a legitimate end compatible with the constitutionally prescribed system of government. That will necessitate the development of the common law to conform with the Constitution203. However, the present case concerns not the common law but statute, the allegation being that certain statutory provisions are inconsistent with the constitutional freedom. 198 After Bivens v Six Unknown Named Agents of Federal Bureau of Narcotics 403 US 199 (2003) 77 ALJR 1566 at 1574-1575 [40]-[43]; 200 ALR 403 at 414-415. 200 (1997) 190 CLR 1 at 46-47, 93, 125-126, 146-148. 201 Roberts v Bass (2002) 212 CLR 1 at 26-27 [65]; Coleman v Power [2004] HCA 39 202 Fleming, The Law of Torts, 3rd ed (1965) at 490. The passage is expressed in different terms in later editions. 203 Roberts v Bass (2002) 212 CLR 1 at 27-28 [66]-[68]. Thirdly, when speaking of the constitutional freedom of communication, Hayne J emphasised in McClure v Australian Electoral Commission204: "The freedom is a freedom from governmental action; it is not a right to require others to provide a means of communication. The petitioner's case depends upon him having some right to require others to disseminate his views." (footnote omitted) In McClure, one of the unsuccessful submissions was that Australian Capital Television Pty Ltd v The Commonwealth ("ACTV")205 required every political candidate to have his or her views known through access to radio and television stations206. To begin consideration of the issue presented on this appeal first by asking whether the laws here in issue, by their terms or operation, effectively burden freedom of communication about government or political matters would be to select a false starting point for legal analysis. Failing to ask and answer the questions "whose freedom?" and "freedom from what?" would entail the error in the assumptions exposed in McClure. To dispose of the case in that way would be to throw the weight of analysis at the wrong stage, namely the destination of a When considering the validity of reg 5 of the Wildlife (Game) (Hunting Season) Regulations 1994 (Vic), which was upheld in Levy v Victoria207, McHugh J had developed in two passages in his judgment the point later emphasised by Hayne J in McClure. The first passage reads208: "The freedom protected by the Constitution is not, however, a freedom to communicate. It is a freedom from laws that effectively prevent the members of the Australian community from communicating with each other about political and government matters relevant to the system of representative and the Unlike the Constitution of the United States, our Constitution. responsible government provided for by 204 (1999) 73 ALJR 1086 at 1090 [28]; 163 ALR 734 at 740-741. 205 (1992) 177 CLR 106. 206 (1999) 73 ALJR 1086 at 1090 [27]; 163 ALR 734 at 740. 207 (1997) 189 CLR 579. 208 (1997) 189 CLR 579 at 622. Constitution does not create rights of communication. It gives immunity from the operation of laws that inhibit a right or privilege to communicate political and government matters. But, as Lange shows, that right or privilege must exist under the general law." In the second passage, after raising the question whether, in the absence of the Regulations, the protestors and the media had the right to be present in the permitted hunting area, his Honour continued209: that laws improperly impair a person's "The constitutional implication does not create rights. It merely invalidates communicate political and government matters the Commonwealth to other members of the Australian community. It gave the protesters no right to enter the hunting area. That means that, unless the common law or Victorian statute law gave them a right to enter that area, it was the lack of that right, and not the Regulations, that destroyed their opportunity to make their political protest." freedom relating It may be added that, even in the United States, the decisions of the Supreme Court construing the First Amendment do not go so far as the appellant would have this Court travel. In Timmons, when upholding the validity of the Minnesota law which prevented the New Party from using the ballot to communicate to the public its support for a "fusion" candidate who already was the candidate of another party, the Supreme Court said210: "We are unpersuaded, however, by the party's contention that it has a right to use the ballot itself to send a particularized message, to its candidate and to the voters, about the nature of its support for the candidate. Ballots serve primarily to elect candidates, not as forums for political expression." Earlier, in Burdick v Takushi211, the Supreme Court rejected a submission that the First Amendment conferred upon voters a right to cast, and an obligation on the authorities to count and report, a "protest vote" for Donald Duck212. In his 209 (1997) 189 CLR 579 at 625-626. 210 520 US 351 at 362-363 (1997). 212 504 US 428 at 438 (1992). 213 504 US 428 at 445 (1992). Kennedy J dissented as to the disposition of the case but on grounds not presently material. "Petitioner's right to freedom of expression is not implicated. His argument that the First Amendment confers upon citizens the right to cast a protest vote and to have government officials count and report this vote is not persuasive. As the majority points out, the purpose of casting, counting, and recording votes is to elect public officials, not to serve as a general forum for political expression." It is here that the case for the appellant faces a significant threshold obstacle. The ballot paper is the medium by which, in accordance with the Act, a vote is cast. The communication thereon is that required by the statute of the Commission in discharge of its functions to administer the Australian ballot system to which reference has been made. Whence derives the right of the DLP or its endorsed candidates to have the name of the DLP placed on the "above the line" ballot paper, being the right with which the Act then interferes in a way offending the constitutionally mandated freedom of communication? No such common law right was identified. Provisions such as ss 168, 169 and 214 of the Act may create certain rights against the Commission respecting the contents of ballot papers. But these are of a nature which the appellant does not regard as satisfactory and it is their very validity which, in part, is attacked by reliance upon a freedom which descends deus ex machina. Reference was made to ACTV. However, any reliance by the appellant upon ACTV in this regard is misplaced. The licensing system in force under what was then the Broadcasting Act 1942 (Cth) ("the Broadcasting Act") and the Radiocommunications Act 1983 (Cth) (which had replaced the Wireless Telegraphy Act 1905 (Cth)214) restricted what otherwise was the freedom under the common law to transmit broadcasting and television programmes to the general public and to erect, maintain and use the necessary equipment and imposed a licensing regime215. That regime was extended by the addition of Pt IIID to the Broadcasting Act by the Political Broadcasts and Political Disclosures Act 1991 (Cth), the validity of which was at stake in ACTV. Part IIID imposed various further obligations and restrictions upon the activities of licensees. 214 See Radiocommunications (Transitional Provisions and Consequential Amendments) Act 1983 (Cth), s 4. 215 See Commercial Radio Coffs Harbour Ltd v Fuller (1986) 161 CLR 47 at 53-54; Miller v TCN Channel Nine Pty Ltd (1986) 161 CLR 556 at 593-594. At the time ACTV was decided, the nature of the "freedom" involved in this area of discourse was yet to receive the analysis of the later cases discussed earlier in these reasons. The point is apparent from a passage in the judgment of Mason CJ in ACTV. Mason CJ was one of the majority which held Pt IIID wholly invalid. His Honour said216: "The consequence is that Pt IIID severely impairs the freedoms previously enjoyed by citizens to discuss public and political affairs and to criticize federal institutions. Part IIID impairs those freedoms by restricting the broadcasters' freedom to broadcast and by restricting the access of political parties, groups, candidates and persons generally to express views with respect to public and political affairs on radio and television." Under subsequent analysis, the relevant restriction is upon what was identified by Mason CJ as the broadcasters' freedom to broadcast. There was no right given by the common law or by statute to citizens or to political groups and others to require broadcasters to provide them with a forum for expression of views with respect to public and political affairs. To appreciate these matters is not to deny the holding in ACTV of the invalidity of Pt IIID. However, what does not follow is that ACTV provides support for the submissions of the appellant in the present case. In the Full Court, their Honours went straight to what they identified as the first Lange question217, namely, whether the law in question effectively burdened freedom of communication about government or political matters, either in its terms, operation or effect. Having answered that question "Yes"218, their Honours moved to the second question and answered in the affirmative that the relevant provisions of the Act were reasonably appropriate and adapted to serve a legitimate end, the fulfilment of which is compatible with the maintenance of the system of government prescribed by the Constitution219. However, there was the threshold issue identified above respecting the existence and nature of the "freedom" asserted by the appellant. That issue should be resolved as indicated in these reasons, with the result that it is unnecessary to take any further the matters which arise under Lange. 216 (1992) 177 CLR 106 at 129. 217 (1997) 189 CLR 520 at 567. 218 (2003) 128 FCR 523 at 532. 219 (2003) 128 FCR 523 at 537. Conclusion The appellant did not succeed in establishing his case for invalidity of any of the provisions of the Act which he challenged. The result is that the provisions respecting the 500 rule and the no-overlap rule and the enhanced investigative powers of the Commission apply to the continued registration under the Act of the DLP as a political party. Kirby 194 KIRBY J. This appeal from a judgment of the Full Court of the Federal Court of Australia220 challenges the validity of provisions of the Commonwealth Electoral Act 1918 (Cth) ("the Act")221. The Act regulates the conduct of elections to the Parliament provided for in the Constitution222. The challenged provisions were introduced into the Act by amendments passed in 1983223, 2000 and 2001224. They relate to the enforcement of a system for the registration of eligible political parties. Significantly for these proceedings, the challenged amendments concern the so-called "500 rule"225 and the "no overlap rule"226. The Democratic Labor Party ("the DLP") was represented in the Federal Parliament for two decades after the "split" of the Australian Labor Party that occurred in 1955227. It lost its last representation in the Parliament (the Senate) in 1974. However, since the federal system of registration of political parties was introduced in February 1984228, it has been continuously registered as a political 220 Mulholland v Australian Electoral Commission (2003) 128 FCR 523. 221 The challenged provisions of the Act are s 123(1) in the definition of "eligible political party" par (a)(ii); s 126(2A), s 136(1)(b)(ii), s 137(1)(b), s 137(1)(cb), s 137(5) and s 138A. 222 Constitution, Ch I, esp ss 7, 24. 223 Commonwealth Electoral Legislation Amendment Act 1983 (Cth) ("the 1983 Act"). 224 Commonwealth Electoral Amendment Act (No 1) 2000 (Cth) ("the 2000 Act"), Sched 2, Item 3C. See also Electoral and Referendum Amendment Act (No 1) 2001 (Cth) ("the 2001 Act"), Sched 1, Item 21 inserting s 138A into the Act. See reasons of Gummow and Hayne JJ at [126]-[131]. 225 In accordance with the definition of "eligible political party" in s 123(1) of the Act. See reasons of Gummow and Hayne JJ at [129]; reasons of Callinan J at [300]. 226 The 2000 Act, inserting s 126(2A) into the Act. 227 cf Tennant, Evatt: Politics and Justice, (1970) at 323-325, 347. The party was originally formed as the Australian Labour Party (Anti-Communist). That party later changed its name to the DLP. No DLP candidate has been elected to the House of Representatives. However, in the 1950s and 1960s the DLP's electoral preferences were highly influential in elections for the House of Representatives. In those years, the party returned candidates to the Senate. See Crisp, Australian National Government, 5th ed (1983) at 147-148, 217-220; Reilly, "Preferential Voting and its Political Consequences", in Sawer (ed), Elections: Full, Free and Fair, (2001) 78 at 86-87. 228 By the 1983 Act. Kirby party under the Act. It last fielded candidates for the Senate under its party name in the general election of 2001229. Following the 2001 election, the Australian Electoral Commission ("the AEC") gave a notice to the appellant as the registered officer of the DLP. The purpose of the notice was to enforce the "500 rule" and the "no overlap rule". On behalf of the DLP, the appellant challenged the validity of the provisions of the Act supporting the two rules, and hence the entitlement of the AEC to make the demands contained in the notice. The appellant says that the Act's provisions for the two rules are not sustained by the nominated heads of constitutional power available to the Parliament to make laws with respect to federal elections. Alternatively, he says that, if otherwise the provisions might be within constitutional power, they conflict with implications of the Constitution protecting freedom of expression and communication about political matters; the freedom of association necessary for the operation of the federal electoral system; and the freedom from invasion of the privacy of electors inherent in the constitutional design. The background facts and applicable legislation The facts and legislation: The background facts are stated in the reasons of other members of this Court230. Some additional facts, relevant to the mischief to which the impugned provisions of the Act were allegedly addressed, will need to be mentioned. Also contained in other reasons are the provisions of the Act which the appellant challenges231. The precise way the dispute between the DLP and the AEC arose is described there. So is the refusal of the DLP to supply its membership records to the AEC or to facilitate questioning of its members. Such questioning would have concerned whether those members belonged to any other (overlapping) political party. 229 In the general election of that year, candidates were endorsed by the DLP for election to the Senate from the State of Victoria. Such candidates were unsuccessful. However, they recorded 66,485 primary votes. See Mulholland v Australian Electoral Commission (2002) 193 ALR 710 at 712 [3] per Marshall J. 230 Reasons of Gleeson CJ at [1]-[5]; reasons of McHugh J at [47]-[52]; reasons of Gummow and Hayne JJ at [119]-[125]; reasons of Callinan J at [298]-[299], [302]- 231 Reasons of McHugh J at [53]-[60]; reasons of Gummow and Hayne JJ at [126]- [131]; reasons of Callinan J at [300], [311]. Kirby At first instance and on appeal: The somewhat different course which the case took respectively before the primary judge (Marshall J)232 and on the appellant's appeal to the Full Court233 is explained in other reasons234. Put shortly, the primary judge found that the impugned laws were clearly within federal constitutional power. He rejected the applicability of any implied prohibition on the Constitution. He also rejected the implications of free political association and the protection of electors' privacy raised by the appellant as going beyond any constitutional principle so far accepted by this Court235. interference with political communication found On the other hand, the Full Court concluded that a federal law that allowed only some candidates to have their party affiliation stated on the ballot paper (and to enjoy other benefits reserved to registered political parties) constituted a burden on those who were excluded from such entitlements. Nevertheless, the Full Court decided that such a burden on the constitutionally protected freedom, as proved in this case, was valid. The formulae used for expressing this conclusion used the language adopted by this Court in analogous matters236. That opaque phrase, "reasonably appropriate and adapted", was once again deployed. The even more ungainly phrase, "reasonably capable of being regarded by the Parliament as appropriate and adapted"237, urged in common by constituent governments of the Commonwealth, was also pressed in these proceedings upon the Federal Court and, later, upon this Court. However, as McHugh J recently 232 Mulholland (2002) 193 ALR 710. 233 Mulholland (2003) 128 FCR 523. 234 See reasons of Gummow and Hayne JJ at [124], [191]; reasons of Callinan J at 235 (2002) 193 ALR 710 at 731 [96]. 236 eg in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567; Levy v Victoria (1997) 189 CLR 579 at 646-647. See Mulholland (2003) 128 FCR 237 See Cunliffe v The Commonwealth (1994) 182 CLR 272 at 325, 339, 388; cf at 300; Langer v The Commonwealth (1996) 186 CLR 302 at 318, 334; Muldowney v South Australia (1996) 186 CLR 352 at 366-367, 374, 375; Levy (1997) 189 CLR 579 at 598, 615. See also Coleman v Power [2004] HCA 39 at [26] per Kirby pointed out in Coleman v Power238, that criterion has never been adopted by a majority of this Court. We should not do so now. It involves an impermissible transference to legislatures of the power, in effect, to define the limits of legislative powers. This is contrary to the basic design of the Australian Constitution, which reserves such questions, ultimately, to this Court. It is also disharmonious with the rule of law implicit in the Constitution239. For good measure, the primary judge threw in a reference to the notion of a "margin of appreciation" that he considered the Parliament enjoyed under the Constitution in designing a law for the regulation of federal elections providing for the registration of eligible political parties240. Although there has been some reference in this Court to that notion241, it represents a controversial importation. The appellant argued that it was one of doubtful application in the constitutional context of Australia242. "Appropriate and adapted": The Full Court confined itself to the cumbrous obscurity of verbal variations on the theme of "appropriate and adapted"243. Unpleasant and formulaic as it may be for judges subject to this Court's authority to have to use such expressions to explain the existence of an essential connection between a constitutional source of power and the law propounded under it, it is understandable that they invoke that formula. For ourselves, we should strive to do better: adopting an explanation of constitutional connection that is clearer and more informative. Invoking the "appropriate and adapted" test expressed in the unanimous opinion of the Court in Lange v Australian Broadcasting Corporation244, the 238 [2004] HCA 39 at [87]. See also at [196] per Gummow and Hayne JJ and my own reasons at [212]. 239 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193. 240 (2002) 193 ALR 710 at 727 [76]. 241 See eg Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 156, 162; Cunliffe (1994) 182 CLR 272 at 300, 325, 338-340, 356-357, 364, 384, 388; cf Levy (1997) 189 CLR 579 at 648. 242 See Kirk, "Constitutional Guarantees, Characterisation and the Concept of Proportionality", (1997) 21 Melbourne University Law Review 1 at 16-17, 34-36. 243 Mulholland (2003) 128 FCR 523 at 535 [33]-[35], 536-537 [38]-[39]. See reasons of Callinan J at [318]. 244 (1997) 189 CLR 520 at 562, 567. But see at 567, fn 272. Kirby judges in the Full Court found that test to be satisfied. They dismissed the appellant's appeal. Now, by special leave, the appellant brings the dispute to this Court. The AEC, by a notice of contention, seeks to challenge the Full Court's departure from the reasoning of the primary judge. It asserts that viewing the implied constitutional "freedom" as extending to an affirmative obligation to advertise party affiliation on ballot papers used in federal elections would impermissibly alter that "freedom" from an inhibition upon federal lawmaking into a free-standing "right" to enjoy a privilege that exists, if at all, only under legislation – not under the Constitution itself. Two basic arguments: Obviously the appellant's two basic attacks on the provisions of the Act that he impugns (lack of legislative power and breach of constitutional implications) are connected. They represent different sides of the same constitutional coin. However, for analysis it is useful to keep them separate and to approach them in sequence. On its own, I see no difficulty in finding a constitutional source for the impugned provisions of the Act. More difficult, in my view, is the second question. This is, accepting a constitutional source for the challenged rules, do they, when analysed, amount to an "invalid burden" upon implications to be derived from the Constitution concerning the way in which federal elections in this country must be conducted? And, if so, with what result? The Constitution's express source for electoral legislation Two aspects of the source: To respond to the appellant's challenge, it is first necessary to examine the foundation in the Constitution from which the powers of the Federal Parliament to enact the contested provisions of the Act are said to arise. Two primary grants of power were nominated. They are the powers to make laws with respect to245: "(xxxvi) matters provision until the Parliament otherwise provides;" in respect of which this Constitution makes and: "(xxxix) matters incidental to the execution of any power vested by this Constitution in the Parliament or in either House thereof When the Commonwealth was established, each of the federating colonies had enjoyed (most for many decades) an elected legislature, constituted by 1900 in accordance with colonial (later State) electoral laws246. In certain respects, 245 Constitution, s 51. 246 Reflected the Constitution, ss 9, 10 (Senate), 25, 30, 31 (House of Representatives). Kirby particular powers were conferred by the Constitution on State Parliaments to enact laws affecting the conduct of federal elections247. Because, of necessity, the Constitution was adopted and brought into force before the conduct of the first election for the Parliament for which it provided, provision had to be made in several respects "until the Parliament of the Commonwealth otherwise provides". That formula, or some variant of it, appears in numerous provisions governing elections to the Federal Parliament248. In addition, particular provisions were made in relation to the initial federal election and the ensuing first session of the first Parliament249. Other provisions were intended to be permanent requirements governing elections to the two Houses of Parliament at the first general election and thereafter until the Constitution was amended. Similarly, the express The express grant of lawmaking powers contained in s 51(xxxvi) indicates clearly that the Federal Parliament enjoyed a substantial power to make laws with respect to the election of senators and members of the House of Representatives. incidental power (s 51(xxxix)) supplements, as necessary, the legislative power incidental to the execution of the constitutional powers vested in the Parliament and in each House thereof. Because ss 10 and 31 of the Constitution respectively enact that "[u]ntil the Parliament otherwise provides" the election of senators and members of the House of Representatives should follow the laws in force in each State "relating to elections for the more numerous House of the Parliament of the State", the substitute laws, when they "otherwise provide[d]", were, by inference, to be federal laws "relating to" such elections250. The respective constitutional criteria of "relating to" (in ss 10 and 31) and "with respect to" (in s 51(xxxvi) and (xxxix)) import no relevant differentiation in the ambit of the powers thereby granted. An evolving representative democracy: No written constitution can provide for the detail essential to the conduct of a modern election that carries into effect all of the requirements of a representative democracy such as the Constitution establishes251. The power to regulate elections by more detailed 247 See eg the special provision in relation to the Parliament of the State of Queensland in Constitution, s 7 (Senate). See also s 9. 248 Constitution, ss 7, 10, 22, 29, 30, 31, 34, 39, 46, 47, 48. See also s 49. 249 Constitution, ss 5, 13, 26. 250 Reasons of Gummow and Hayne JJ at [140]-[143]. 251 cf McGinty v Western Australia (1996) 186 CLR 140 at 183 per Dawson J. Kirby federal law is therefore essential. It exists in substantial measure. Inherent in the task of electing a Parliament, as the Constitution envisages, from electors resident in all parts of a continental country (and absentee electors all over the world), is the necessity to provide a comprehensive law governing the myriad circumstances that arise in translating the sparse constitutional text into detailed machinery. Given the several express heads of power (and the necessary implied powers) it would be inappropriate in the extreme to adopt a narrow view concerning the Federal Parliament's powers to enact laws considered necessary from time to time for the conduct of federal elections. In the history of this Court's decisions on the subject, no narrow view has been taken252. Representative government is also an evolving concept, as indicated by the expansion of female suffrage in Australia (as contemplated by the Constitution253 and soon fulfilled); the elimination of racial disqualifications from voting254 and property qualifications for voting; the introduction of compulsory voting255 and variations upon different forms of election (especially in regard to the Senate256); and the signification of preferences in voting designed to maximise the reflection of electors' views and to minimise invalid or wasted votes257. The Constitution does not impose rigid limitations on the power of the Federal Parliament, in enacted electoral law, to respond to changing attitudes concerning the conduct of elections. The future will doubtless be no less adaptive in this respect than the past. Successive Parliaments will continue to search for new and improved ways to reflect the representative character of the Parliament and of the senators and members of the House of Representatives who are elected. This said, the express lawmaking powers given to the Parliament are necessarily subject to any express or implied limitations appearing in the Constitution. So much is clear because s 51, in which most of the relevant 252 See eg Judd v McKeon (1926) 38 CLR 380 at 385-386 per Isaacs J. 253 Constitution, s 41. 254 Constitution, s 25. 255 The Act, s 245. 256 Crisp, Australian National Government, 5th ed (1983) at 146-147. 257 Considered in Faderson v Bridger (1971) 126 CLR 271. See also Langer (1996) 186 CLR 302. See Reilly, "Preferential Voting and its Political Consequences", in Sawer (ed), Elections: Full, Free and Fair, (2001) 78 at 86-87. Kirby powers appear, states in plain terms that the legislative powers granted are "subject to this Constitution"258. So much was not contested by the AEC. It will be necessary to consider the implied limitations upon the powers granted to the Parliament to make laws governing federal elections. But first, in analysing the scope of the power to make laws, like those impugned in this appeal, it is appropriate to start with the express limitations stated in Ch I of the Constitution ("The Parliament"). No electoral law could contradict such provisions of, or implications in, the constitutional text. Two suggested express limitations: Two express provisions are most relevant. In charting the outer boundaries of the powers conferred on the Parliament, it is necessary to start with the limitations spelt out in Ch I of the Constitution with which any electoral law "hereafter provided" must comply. They were relied on by the appellant. The first is the provision in ss 7 (the Senate) and 24 (the House of Representatives) requiring that the candidates elected to each of those Chambers must be "directly chosen by the people". The second express provision, to which the appellant pointed, was one not existing at the time of the adoption of the Constitution but introduced by an alteration to the Constitution approved by the electors at a referendum held in 1977. Section 15 of the Constitution, as now appearing, provides a new procedure for filling casual vacancies arising in the Senate. It is in s 15 that the Constitution makes its first, and only, mention of political parties. The requirement of "directly chosen by the people" The context of the requirement: The appellant submitted that the "500 rule" and "no overlap rule" contradicted the express constitutional prescription that the Federal Parliament, in both Chambers, must be composed respectively of senators and members "directly chosen by the people". This was so because each rule constituted an impediment to the process of choice, reserved to the people. In this respect, the appellant placed emphasis upon two notions. First, that there must be a "choice", in the sense of a genuine selection, effective for the purpose of returning a senator or member to the Parliament. Secondly, that the choice must be one made by the "people", in the broad sense of that term. It must not be one unduly controlled by government officials (such as officers of the AEC), by competing political parties or by other outside influences or requirements. In the course of this Court's consideration of the phrase "directly chosen by the people", the suggestion has been made that the purpose of the expression was merely to underline the requirement of direct election as contrasted to 258 Constitution, s 51. Kirby election by indirect means, as by an electoral college259. The United States model, with several provisions for the election of the President by an electoral college260 and the choice of Senators, originally261 by the legislatures of the States262, was regarded by the founders of the Australian Commonwealth as so unsatisfactory as to require explicit provision in the Constitution to ensure a different system. The provision for direct choice by the people was obviously addressed to this problem263. However, it is now generally accepted that the constitutional phrase goes beyond this negative stipulation. It has a high constitutional purpose264. This Court must give effect to that purpose. But what is the purpose, relevant to a case such as the present? Upon this issue, narrow and broad views have been stated in this Court's decisions. None of the decisions has been concerned with a problem exactly like that raised in the present appeal. The Court's task, therefore, is one of reasoning by analogy to the lawful response to the appellant's complaints. Numerous judicial observations have recognised the significance of the requirement of direct choice by the people for the constraints that may be imposed through electoral law on the fulfilment of the constitutional idea of representative democracy. Clearly, that idea lies at the heart of the democratic character of the Constitution, by which the sovereign people of Australia control their destiny the Commonwealth265. They do this by reserving to themselves, as electors, approval of alterations to the Constitution266; by the institution of the system of responsible the deployment of governmental power within 259 McGinty (1996) 186 CLR 140 at 180-181 per Dawson J. 260 United States Constitution, Art II, s 1. 261 Until the Seventeenth Amendment (adopted 1913). 262 United States Constitution, Art I, s 3. 263 Attorney-General (Cth); Ex rel McKinlay v The Commonwealth (1975) 135 CLR 1 at 21; Australian Capital Television Pty Ltd v The Commonwealth ("ACTV") (1992) 177 CLR 106 at 228 per McHugh J; McGinty (1996) 186 CLR 140 at 170 per Brennan CJ, 276 per Gummow J. 264 Langer (1996) 186 CLR 302 at 342 per McHugh J. 265 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 71; ACTV (1992) 177 CLR 106 at 137 per Mason CJ. 266 Constitution, s 128. Kirby government that renders the Executive answerable to the Parliament267; and by the requirement that each House of Parliament must be "directly chosen by the people"268. Because it has such an important influence, direct and indirect, upon the character of the Parliament, and the laws thereafter made by the Parliament, the requirement that senators and members must be "directly chosen by the people" should not be given a narrow meaning269. It must be capable of adapting to changing circumstances270. A large constitutional purpose: An indication that the phrase "directly chosen by the people" has a large constitutional purpose is found in the use of the word "people", rather the Constitution271). This exceptional word enshrines the democratic ideal to which Ch I of the Constitution gives expression272. than "electors" (a word used elsewhere The precise details for the election of senators and members to the Parliament may not be spelt out in the constitutional text. But the critical phrase, and the overall purpose of Ch I, indicate that any attempt to introduce methods of election that are undemocratic273, or liable to frustrate an exercise of real choice on the part of "the people"274, will be examined most carefully because they may 267 Constitution, s 64. See R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 275; McGinty (1996) 186 CLR 140 at 269. 268 Constitution, ss 7, 24. 269 Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 367-368 per O'Connor J; Attorney-General (NSW) v Brewery Employees Union of NSW ("the Union Label Case") (1908) 6 CLR 469 at 611-612 per Higgins J. 270 Australian National Airways Pty Ltd v The Commonwealth (1945) 71 CLR 29 at 81; Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 228. 271 eg in Constitution, s 128. That section, in turn, incorporates the requirement of "chosen by the people" by its cross-reference to "electors qualified to vote for the election of members of the House of Representatives". 272 McKinlay (1975) 135 CLR 1 at 35-36 per McTiernan and Jacobs JJ, 56 per Stephen J; cf McGinty (1996) 186 CLR 140 at 221. The phrase was borrowed from the United States Constitution. However, the course of judicial authority has been different: Baker v Carr 369 US 186 (1962); Wesberry v Sanders 376 US 1 (1964). 273 McKenzie v The Commonwealth (1984) 59 ALJR 190 at 191; 57 ALR 747 at 749. 274 McGinty (1996) 186 CLR 140 at 170, 189. Kirby put at risk the achievement of the overall constitutional requirements. As in all matters of interpretation of the Constitution, the focus of attention is on considerations of substance rather than form275. I agree with Professor Tribe's warning against laws that permit temporary majorities to entrench themselves against effective democratic accountability276. That was the concern which led to my dissent in Attorney-General (WA) v Marquet277. I approach the present appeal in the same way. That approach has the additional advantage of conforming to the requirements of universal human rights as they express democratic ideals278 and influence our understanding of our own constitutional provisions. The appellant invoked numerous passages in this Court's reasoning in earlier electoral cases. He did so to support his attack on the impugned provisions of the Act. He portrayed those provisions as imposing practical inhibitions on the right of the "people" to organise themselves politically as they decide, without bureaucratic intrusion, and to "choose" their parliamentary representatives in a manner conducive to their constitutional entitlement of direct choice. Facilitating real electoral choice: The passage of greatest assistance to the appellant appears in McHugh J's reasons in Australian Capital Television Pty Ltd v The Commonwealth279 ("the ACTV case"): "It is not to be supposed … that, in conferring the right to choose their representatives by voting at periodic elections, the Constitution intended to confer on the people of Australia no more than the right to mark a ballot paper with a number, a cross or a tick, as the case may be. The 'share in the government which the Constitution ensures' would be but a pious aspiration unless ss 7 and 24 carried with them more than the right to cast a vote. The guarantees embodied in ss 7 and 24 could not be satisfied by their representatives from a list of names drawn up by government officers. the Parliament requiring the people to select 275 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27; Ha v New South Wales (1997) 189 CLR 465 at 498. 276 Tribe, American Constitutional Law, 2nd ed (1988), §13-18, cited in reasons of Gummow and Hayne JJ at [157]-[158]. 277 (2003) 78 ALJR 105 at 120 [89], 134 [168]; 202 ALR 233 at 253-254, 273. 278 Marquet (2003) 78 ALJR 105 at 135-137 [172]-[181]; 202 ALR 233 at 274-277; cf Al-Kateb v Godwin [2004] HCA 37 at [169]-[176] of my own reasons. 279 (1992) 177 CLR 106 at 230-231. See reasons of McHugh J at [81]-[82]. Kirby If the institutions of representative and responsible government are to operate effectively and as the Constitution intended, the business of government must be examinable and the subject of scrutiny, debate and ultimate accountability at the ballot box. The electors must be able to ascertain and examine the performances of their elected representatives and the capabilities and policies of all candidates for election. Before they can cast an effective vote at election time, they must have access to the information, ideas and arguments which are necessary to make an informed judgment as to how they have been governed and as to what policies are in the interests of themselves, their communities and the nation. ... Few voters have the time or the capacity to make their own examination of the raw material concerning the business of government, the policies of candidates or the issues in elections even if they have access to that material." Picking up these words, the appellant submitted that the impugned laws impeded the communication to electors concerning the party affiliations asserted by all candidates (facilitating the utility of voting for such candidates for election to the Senate, identified by the signification of their chosen political party "above the line"). According to the appellant, the laws impeded the necessary flow of essential information to electors in respect of such candidates. Candidates denied ballot paper identification with their chosen political party were thereby deprived of that means of communication with the "people", in their capacity as electors. By introducing a law that permitted officials (such as the AEC) to oblige party members to disclose other political affiliations (as under the "no overlap rule"), the Act impeded the direct participation of the people in elections. In effect, it confined the people's choices to political parties able and willing to assemble 500 citizens who would communicate that affiliation to the AEC. It obliged such citizens to choose, in advance of an election, amongst party affiliations all of which the citizen might support. And it ignored the unwillingness of some party members to disclose such information on the ground that it was private and personal in some circumstances, potentially damaging or even (and The appellant also relied on the dissenting opinion of Dawson J in Langer v The Commonwealth281. He suggested that it was harmonious with the opinion of McHugh J in the ACTV case. The impugned provisions of the Act effectively imposed an artificial structure on the electoral activity of the people 280 eg Communist Party Dissolution Act 1950 (Cth) considered in Australian Communist Party (1951) 83 CLR 1. 281 (1996) 186 CLR 302. Kirby that contradicted direct popular choice of parliamentary representatives. It did so by forcing effective political expression into parties of a particular size, kind and organisation and by subjecting those unwilling or unable to comply to significant political and electoral disadvantage282: "It is a law which is designed to keep from voters information which is required by them to enable them to exercise an informed choice. It can hardly be said that a choice is an informed choice if it is made in ignorance of a means of making the choice which is available and which a voter, if he or she knows of it, may wish to use in order to achieve a particular result." The appellant submitted that, in the context of the Act, which afforded knowledge to the voter of the party political affiliation of some candidates, to deny the same privilege on the ballot paper to others was effectively to prevent the elector from making "an informed choice". Yet this was the postulate of the constitutional requirement that members and senators be "directly chosen by the people"283. Only such information would truly afford the people, participating in the election, a genuine appreciation of the alternatives available to them284. Large ambit of the lawmaking power: As against these considerations, which explain the constitutional foundation for the appellant's arguments, the decisions of this Court give little support to attempts to translate the phrase "directly chosen by the people" into a large guarantee of substantial equality in the achievement of the democratic ideal reflected in Ch I of the Constitution. Thus, an appeal to implications said to be inherent in the phrase fell, for the most part, on deaf ears in a series of decisions where it was invoked before this Court285. Notwithstanding occasional references by the Court to the democratic character of the Parliament, and the representative democracy provided for in Ch I, attempts to turn the phrase "directly chosen by the people" into an effective instrument for the protection of concepts of democracy in the conduct of federal elections, when endangered by electoral law, have so far not proved fruitful. 282 Langer (1996) 186 CLR 302 at 325. 283 Langer (1996) 186 CLR 302 at 323 per Dawson J; cf Lange (1997) 189 CLR 520 at 560 citing with approval Dawson J. 284 Reliance was placed on the tendency of most electors to vote for parties rather than individual candidates; the inability or unwillingness of many electors to assess for themselves original material; and the high proportion of electors in fact voting in Senate elections above the line; cf ACTV (1992) 177 CLR 106 at 231 per 285 eg McKinlay (1975) 135 CLR 1; McKenzie (1984) 59 ALJR 190; 57 ALR 747; Langer (1996) 186 CLR 302; cf Marquet (2003) 78 ALJR 105; 202 ALR 233. Kirby Why has this been so? In part, the Court has founded its approach in textual provisions that clearly contemplate a substantial power in the Federal Parliament to provide, in considerable detail, for the conduct of elections, as indeed the Parliament has done from the earliest days of the Commonwealth286. In part, the Court's approach reflects a recognition of the variety of electoral systems that exist in the world today and the undesirability of restricting the power of the Australian Parliament to experiment amongst electoral systems in the detail of the enacted electoral law287. In part, the necessity to permit qualifications on "directly chosen by the people" to exclude babies and young children288, to allow for uncontested elections289 and to provide for casual vacancies in the Senate290 requires acceptance of some limitations upon the amplitude of the constitutional phrase. These considerations have led this Court to acknowledge the ample scope of the Parliament's power to enact electoral laws. It may do so as long as it conforms to the Constitution291. In the result, incidental limitations upon the process of free choice by the people tend to be tolerated although discriminatory limitations upon choice and on the flow of political information to the people may not be292. Over the course of a century, the requirements for election to the Federal Parliament have changed as the Parliament and this Court have given new meaning to the nominated constitutional expressions. This Court has said that it would not be acceptable today to deny a vote for the Federal Parliament to an 286 From Commonwealth Electoral Act 1902 (Cth); Constitution Alteration (Senate Elections) 1906. 287 McKinlay (1975) 135 CLR 1 at 57 per Stephen J. 288 McKinlay (1975) 135 CLR 1 at 36 per McTiernan and Jacobs JJ. 289 The Act, s 179. 290 Constitution, s 15 (as originally appearing and as amended by Constitution Alteration (Senate Casual Vacancies) 1977). 291 McKinlay (1975) 135 CLR 1 at 57-58 per Stephen J. 292 ACTV (1992) 177 CLR 106 at 235 per McHugh J. Kirby adult citizen293 or to female citizens294 or to citizens disqualified on the ground of race295. I disagree with judicial obiter dicta296 to the effect that it might be open for the Parliament today to abolish secret ballot. The phrase "directly chosen by the people" does not have a meaning fixed as those words were understood in 1901, or in colonial times. The words take their meaning from contemporary perceptions of their connotation and how they are intended to operate today. Illustrations of this interpretative process abound. They are too numerous to be denied297. What might in 1901 have been regarded as acceptable for a Parliament "directly chosen by the people" might not pass muster today. In particular circumstances, if a majority in the Parliament endeavoured to disqualify women voters or citizens of Asian ethnicity or to entrench its power in a disproportionate way, to the electoral disadvantage of candidates of other political parties, the requirement of direct election by the people might well afford protection against the offending electoral law. The applicable standard of scrutiny Standard of "scrupulous care": It follows that the Constitution affords the Federal Parliament an ample power to make laws "relating to elections" and "with respect to" electoral matters. The only express restrictions concern the requirement that both Houses be "directly chosen by the people" and that casual vacancies in the Senate ordinarily be filled by candidates of the same political party. How should this Court approach an electoral law said to offend these constitutional requirements, given that abuse of legislative power for partisan advantage is potentially a special risk in the case of electoral laws? 293 McGinty (1996) 186 CLR 140 at 286-287 per Gummow J. 294 Langer (1996) 186 CLR 302 at 342 per McHugh J, citing McKinlay (1975) 135 CLR 1 at 36 per McTiernan and Jacobs JJ. 295 Constitution, s 25. See Norberry and Williams, Voters and the Franchise: The Federal Story, Department of the Parliamentary Library Research Paper No 17, 2001-02, (2002) at 10-17; cf the 1983 Act, s 28. 296 McGinty (1996) 186 CLR 140 at 244 per McHugh J, 283 per Gummow J. 297 They include the changing content of the phrase "trial ... by jury" in s 80 of the Constitution: Cheatle v The Queen (1993) 177 CLR 541 at 560; or the phrase "subject or a citizen of a foreign power" in s 44(i) of the Constitution: Sue v Hill (1999) 199 CLR 462; or "aliens" in s 51(xix) of the Constitution: Re Patterson; Ex parte Taylor (2001) 207 CLR 391 and Shaw v Minister for Immigration and Multicultural Affairs (2003) 78 ALJR 203; 203 ALR 143. Kirby On this issue, differing views have been stated in this Court. In the ACTV case, Mason CJ suggested that restrictions on particular political activity in relation to elections must be "scrutinize[d] ... with scrupulous care"298 or, as he elsewhere put it, "very carefully"299. His Honour explained that this approach was necessary "in order to protect the integrity of the political process"300. Supporting the obligation of "scrupulous care" is the fundamental notion that protecting incumbents is not a constitutional imperative301. Upon that footing, laws that have a tendency to protect incumbents – or those who may hope or expect to enjoy long-term incumbency – need to be scrutinised very carefully. The appellant supported this approach. He argued that it left no scope for the operation, in the Australian constitutional context, of notions of weakened scrutiny such as were implied in concepts of "judicial deference" or tolerance of a "margin of appreciation", as mentioned in the Federal Court. Margin of appreciation and deference: The AEC and the Attorney- General insisted that the proper approach was to accept a reasonable "margin of appreciation" in the Parliament to choose the means it considers appropriate to achieving the many conflicting but legitimate ends open to electoral law302. It is to the Parliament, not the courts, that the Constitution affords the lawmaking power concerning the conduct of federal elections. The AEC therefore argued that courts should give primacy and deference to legislative judgment303. It submitted that this Court would respect the Parliament's choice of the means by which it sought to achieve an electoral end that was within power, unless it was plain that the means chosen was not "capable of being reasonably considered to be appropriate and adapted to achieve" the designated end304. 298 ACTV (1992) 177 CLR 106 at 144. 299 ACTV (1992) 177 CLR 106 at 145. 300 ACTV (1992) 177 CLR 106 at 145. 301 Figueroa v Canada (Attorney General) [2003] 1 SCR 912 at 947-948 [56]-[57]. 302 Theophanous (1994) 182 CLR 104 at 156; Cunliffe (1994) 182 CLR 272 at 325, 364; cf Ward, "The Margin of Appreciation in Australian Jurisprudence", (2003) 23 Australian Bar Review 189. 303 cf Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 473. 304 Cunliffe (1994) 182 CLR 272 at 325. Kirby In the past, I have reserved the question whether it is useful, in our constitutional discourse, to refer to "a margin of appreciation"305. The European courts, which invented that notion, are obliged to accommodate the substantially differing approaches of the many legal systems within the European Union and the Council of Europe306. Moreover, notions of "deference" to Parliament (at least outside matters affecting its own internal regulation307) accord more closely to the historical approach of courts to an "uncontrolled" legislature than they do to courts in Australia, bound to give effect to the requirements of written constitutions imposing limits on the exercise of legislative power. When those limits are exceeded, it is the duty of Australian courts to say so. They must then do so firmly and without "deference". Even in England in recent times, there has been criticism of the notion of judicial "deference". Judges have recognised the potential of "deference" to distract courts from their duty to uphold the law308. I do not find either of the concepts ("margin of appreciation" or "deference") helpful in the present appeal. By the same token, I do not regard the mention of them in this case by the primary judge or the Full Court309 as casting the slightest doubt on their Honours' reasoning. The judges below were reaching for a phrase to explain a consideration familiar and inescapable in this context. Sometimes an impugned law will clearly be valid and within constitutional power. The appellant, for example, accepted that the provisions of the Act for the registration of political parties, as such, were of that kind. Sometimes provisions of a law will clearly be invalid as exceeding the express conferral of lawmaking power or the limiting implications otherwise drawn from the constitutional text. The former provisions in Pt IIID of 305 Levy (1997) 189 CLR 579 at 648. 306 cf Cunliffe (1994) 182 CLR 272 at 356-357 per Dawson J; Leask v The Commonwealth (1996) 187 CLR 579 at 593-595 per Brennan CJ; cf Brown v Stott [2003] 1 AC 681 at 710-711; International Transport Roth GmbH v Secretary of State for the Home Department [2003] QB 728 at 746 [26], 765-767 [83]-[87]. 307 Egan v Willis (1998) 195 CLR 424 at 493 [133.4]; Sue v Hill (1999) 199 CLR 462 at 557 [247]-[248]; Re Reid; Ex parte Bienstein (2001) 182 ALR 473 at 478-479 [23]-[27]; Marquet (2003) 78 ALJR 105 at 123 [106]-[108]; 202 ALR 233 at 257- 308 R (ProLife Alliance) v British Broadcasting Corporation [2004] 1 AC 185 at 240 [75]-[76]; cf Rann v Olsen (2000) 76 SASR 450 at 483 per Doyle CJ. 309 Mulholland (2002) 193 ALR 710 at 727 [76]; (2003) 128 FCR 523 at 534-535 [31]-[35] (FFC). Kirby the Act, involving prohibitions on political advertisements and broadcasts in federal elections, were held to be in this latter class310. But between clearly valid and clearly invalid provisions of an Act may be other provisions that require characterisation. Such characterisation measures those laws against the constitutional text to which the courts must give meaning. "Strict" and "intermediate" scrutiny: It is doubtful that expressions such as "strict scrutiny" or "intermediate scrutiny"311 throw much light on the way in which a court evaluates the validity of a law said to exceed constitutional power. Such expressions amount to attempts to explain the psychology of differing judicial approaches to particular cases. Distinguishing between "strict", "intermediate" and "ordinary" scrutiny seems artificial when describing a common interpretative function. This notwithstanding, it is probably true to say that, in certain circumstances, courts have a heightened vigilance towards the potential abuse of the lawmaking power inimical to the rule of law312. Such vigilance may be specially needed when the power is directed against unpopular minorities313. In those cases, or in circumstances where current lawmakers pursue their own partisan advantage, courts may subject the legislative vehicles of such advantage to close attention. This is the result of applying a constitutional standard that assumes no preference for incumbents or any other particular political interest and postulates (at least in general terms) a "level playing field" for competing candidates and political parties offering their ideas, policies and programmes to the electors314. Perfect calibration of the "playing field" cannot be required of a valid electoral law315. However, circumstances will sometimes arise where the field has been too obviously graded in a particular direction so as to suggest that the lawmakers have exercised their power to their own political advantage in a way exceeding constitutional tolerance316. 310 ACTV (1992) 177 CLR 106 at 145, 175-176, 224. 311 Craig v Boren 429 US 190 (1976). See also reasons of Gleeson CJ at [21]. 312 Australian Communist Party (1951) 83 CLR 1 at 187 per Dixon J. 313 Adelaide Company of Jehovah's Witnesses Inc v The Commonwealth (1943) 67 CLR 116 at 124 per Latham CJ. 314 ACTV (1992) 177 CLR 106 at 131 per Mason CJ. 315 Reasons of Callinan J at [333]. 316 cf McKinlay (1975) 135 CLR 1 at 57 per Stephen J; McGinty (1996) 186 CLR 140 at 286-287 per Gummow J. Kirby Vigilance to partisan interest: The appellant argued that this was what had occurred in the present case. At the time that the amendments introduced the provisions for the "500 rule" and the "no overlap rule", the DLP was no longer a parliamentary party. The appellant argued that partisan interests in the parliamentary committees, reviewing electoral law317, necessarily reflected the electoral interests of registered political parties enjoying the advantages of incumbency. Obviously, the appellant said, the committees were made up of elected senators and members unlikely to be wholly impartial in the design of federal electoral laws. They would always be tempted to use the power of incumbency to secure their own political positions in future elections and to reduce the electoral chances of opponents. The "no overlap rule", for example, was introduced as an Opposition amendment in the Senate and accepted by the Government318. According to the appellant, it reflected the views and interests of incumbent parties. It disadvantaged political diversity and the future coalescence of minority political viewpoints. This was therefore a subject of lawmaking upon which incumbent political parties could not be trusted to exercise lawmaking power impartially. In the very nature of the activity involved in making an electoral law, incumbents would have shared interests against non-incumbents, such as the DLP, its candidates and members. Specifically, the appellant submitted that this is what the enforcement of the "500 rule" and the "no overlap rule" entailed in practice. Those rules sought to make it more difficult for smaller parties, like the DLP, to organise themselves as they chose; to gather members without the risk of concern of disclosure to government officials of their private political opinions; and to secure the advantage for candidates of specified political identification, particularly in the Senate ballot paper and in relation to identified groups appearing "above the line". Whatever might be the position of other political parties, the appellant pointed out that the DLP still enjoyed name recognition on the basis of its previous parliamentary experience. Candidates who subscribed to DLP policies should therefore be entitled, without hindrance, to signify that fact to electors. Specifically, by providing for the enforcement of the "500 rule" and the "no overlap rule", the Act had placed a substantial burden on the capacity of the 317 Australia, Parliament, Joint Select Committee on Electoral Reform, First Report, (September 1983), Ch 3. 318 Australia, Senate, Parliamentary Debates (Hansard), 12 October 2000 at 18409 Kirby "people" to "choose" their parliamentary candidates "directly" without let or hindrance. How, asked the appellant, could the "choice" be made "directly", as the Constitution mandated, if incumbent parties imposed an obstacle on non- incumbent parties to prevent their candidates enjoying the right to appear on the ballot paper associated with the name of the political party of their choice in a way that communicated to the "people", as electors, the alignment of the candidates of a non-incumbent party? I have endeavoured to explain the appellant's submissions in such detail because, as will be obvious, I do not regard them by any means as insubstantial. On the contrary, in my view they present a serious question for decision. They certainly justify the Full Court's conclusion that the impugned provisions of the Act impose a burden on the DLP and its candidates in their participation in the constitutionally mandated system of representative democracy. Two questions remain. The first is whether the burden so imposed is constitutionally permissible when measured against the express requirements of Ch I. And the second is whether it impermissibly offends the implied requirements governing federal elections, to be derived of necessity from the language of Ch I. Constitutional validity and proportionality The link to power: "proportionality": The ungainly and unedifying phrase "appropriate and adapted", used to explain the essential link between an impugned law and its constitutional source of power, appears to have had its origin in the reasons of Marshall CJ in McCulloch v Maryland319. It is a phrase inappropriate and ill-adapted to perform the constitutional function repeatedly assigned to it by members of this Court. The word "appropriate" is inapt because, within a given constitutional remit, it is for the Parliament (and not a court) to say whether a law is "appropriate" or "inappropriate". Appropriateness, of its nature, imports notions of political degree and judgment which normally belong to legislators, not to judges. Similarly, "adapted" is a verb signifying modification and adjustment in detail: also usually the business of legislators. In so far as the composite phrase is made still further obscure by prefacing it with a description of the law as one "capable of being reasonably considered to be" appropriate and adapted, it is subject to added objections. That phrase risks diverting judgment from the particular law and surrendering the constitutional mandate with which the courts are charged to the assessment of the Parliament or the Executive. I will continue to protest against the continued use by this Court of such an unsatisfactory and 319 17 US 159 at 206 (1819). See Coleman v Power [2004] HCA 39 at [234] of my own reasons. Kirby ugly expression to explain what it is doing in the cases where the issue of constitutional power is invoked320. A more accurate explanation of the constitutional connection in such cases is found in the word "proportionality". That word has long been used by individual judges. Some have used it as an explanation of the limits of the "appropriate and adapted" test. For example, in McKinlay321 Mason J was prepared to accept that it was "perhaps conceivable that variations in the numbers of electors or people in single member electorates could become so grossly disproportionate as to raise a question whether an election held on boundaries so drawn would produce a House of Representatives composed of members directly chosen by the people of the Commonwealth" as the Constitution requires. The word was there used in a context that acknowledged the limits of the constitutional phrase in imposing a requirement of practical equality of electors in federal electorates. Mason J was addressing the extreme perimeter of constitutional power. "Disproportionate" was taken as a description of a law that exceeded the permissible boundary. By inference, "proportionate" is a description of a law which falls on the right side of the boundary and is thus within constitutional power. Origins of the proportionality test: Mason J and Deane J were the progenitors in this Court of the more general use of "proportionality" in constitutional discourse322. Following their lead, other judges have treated the notion as equivalent to the "appropriate and adapted" test, at least in certain circumstances323. I mentioned these developments in Levy v Victoria324, 320 cf reasons of Gleeson CJ at [39]; see Coleman v Power [2004] HCA 39 at [233]- 321 (1975) 135 CLR 1 at 61 (emphasis added); cf Herald and Weekly Times Ltd v The Commonwealth (1966) 115 CLR 418 at 437 per Kitto J; Fabre v Ley (1972) 127 CLR 665 at 669. 322 See Davis v The Commonwealth (1988) 166 CLR 79 at 100 per Mason CJ, Deane and Gaudron JJ; Nationwide News (1992) 177 CLR 1 at 30-31 per Mason CJ; Kirk, "Constitutional Guarantees, Characterisation and the Concept of Proportionality", (1997) 21 Melbourne University Law Review 1 at 17. See also the references collected in Meagher, "New Day Rising?", (2002) 24 Sydney Law Review 141 at 323 ACTV (1992) 177 CLR 106 at 217-218 per Gaudron J. 324 (1997) 189 CLR 579 at 645. Kirby suggesting that proportionality represented a useful description of the actual process of constitutional reasoning. I remain of that view325. In its unanimous decision in Lange326 this Court noted that, in the context there considered, "there is little difference between the test of 'reasonably appropriate and adapted' and the test of proportionality"327. No word or phrase exists that fully explains the evaluative function of judgment involved in constitutional characterisation where a court limits of constitutional power having regard to the competing considerations of the text and implications that lend scope to, or impose restrictions on the ambit of the power in question. Nevertheless, the notion of proportionality has important advantages over other formulae328. This is especially so where (as here) the constitutional powers in issue are of a purposive character, namely powers afforded for the purpose of providing for the conduct of elections to the Federal Parliament. is deciding the Freedoms and duties: There is one characterisation of the impugned provisions of the Act, presented as an answer to the appellant's complaints, that, with respect, I would firmly reject. It was expressed in McClure v Australian Electoral Commission329 and invoked by the AEC in this appeal. It was stated in the form of an aphorism: "the freedom of communication implied in the Constitution is not an obligation to publicise"330. Without casting doubt on the correctness of the decision in McClure, I question the accuracy of the propounded dichotomy, at least if it is presented as one of general application. The appellant's attack in this case was on the "500 rule" and the "no overlap rule", and the particular provisions of the Act 325 cf Leask (1996) 187 CLR 579 at 636. 326 (1997) 189 CLR 520 at 567, fn 272, referring to Cunliffe (1994) 182 CLR 272 at 327 cf Kirk, "Constitutional Guarantees, Characterisation and the Concept of Proportionality", (1997) 21 Melbourne University Law Review 1 at 63-64; Stone, "The Limits of Constitutional Text and Structure: Standards of Review and the Freedom of Political Communication", (1999) 23 Melbourne University Law Review 668 at 681, 699. 328 cf ACTV (1992) 177 CLR 106 at 157; Leask (1996) 187 CLR 579 at 598-606. 329 (1999) 73 ALJR 1086 at 1090 [28]; 163 ALR 734 at 740-741. 330 McClure (1999) 73 ALJR 1086 at 1090 [28]; 163 ALR 734 at 740 (original emphasis). Kirby permitting their enforcement by the AEC. He sought to show that those provisions were invalid by reference both to express and implied constitutional requirements. If he could establish his contentions, and support severance of the offending provisions (as the AEC and the appellant both urged would occur if constitutional invalidity of the provisions were shown), those provisions would be excised. That would leave the Act in the position it was before the provisions were inserted. Such severance would leave standing provisions for registered political parties and for "above the line" voting with identification of the affiliation of those belonging to any such "eligible political party". Doing this would not cast on the AEC any duty that could fairly be characterised as an "obligation to publicise". It would simply restore the position of allowing candidates who are members of political parties, without discriminatory preconditions, to nominate such parties for inclusion in the Senate ballot paper absent the requirements which the appellant claimed discriminated against the DLP and in favour of incumbent parties. According to the appellant, the DLP was not seeking the conferral of any special rights of publicity. It was simply claiming protection from this Court to delete from the Act amendments that were inconsistent with the constitutional prescription. I agree with the appellant's argument to this extent. It follows that, in this respect, I disagree with the analysis on this point contained in the reasons of Gummow and Hayne JJ331. The impugned provisions are proportionate to the express grant The laws burden political activity: Approaching the Act from the standpoint of the preceding analysis, the provisions which the appellant impugns are within the powers accorded by the Constitution to the Federal Parliament to enact laws with respect to elections to the Parliament. Measured against the express provisions granting or affecting such powers, the "500 rule" and the "no overlap rule" are, it is true, a burden on the DLP and its candidates. However, in my view, the rules represent a proportionate exercise by the Parliament of its legitimate powers332. To that extent they are valid. How does the introduction into the Act of the "500 rule" and the "no overlap rule" burden the political activities of the DLP? It does so most obviously by imposing a price, that would not otherwise exist, for a benefit that 331 cf reasons of Gummow and Hayne JJ at [182]. 332 There is no difference in this context between the test of proportionality and the test of "appropriate and adapted": see Lange (1997) 189 CLR 520 at 567. Kirby is enjoyed by other (larger and better organised) political parties to have the party affiliation of their candidates signified above the line on the Senate ballot paper in accordance with the choice of those individual candidates. Given the very high proportion of Australian electors who vote for senators in this way, the practical burden that is introduced by the challenged laws cannot be treated as insignificant or trivial333. Communicating political allegiance in such a manner would sometimes, perhaps usually, represent a valuable political advantage334. This would be especially so in the case of a political party, such as the DLP, which continues to enjoy, to some extent, name recognition, as I would readily infer to be the case. I also accept the appellant's argument that the machinery of investigation and scrutiny of DLP membership and the obligation cast upon those members to reveal their political allegiances to government officials and to choose amongst several allegiances might, in individual cases, also constitute a burden on the DLP and its members. There were times in the past, and they may return, when public signification to government officials of political allegiances could carry risks of present or future disadvantage335. Even if such risks were put to one side, there are many in Australian society who cherish the privacy of their political opinions. For personal reasons, such citizens might not be willing to reveal their party affiliations to government officials. The mere fact that their names might not be available for later public or special interest disclosure336 would be no comfort to such people. The advantage of secret voting guaranteed by the Act337 is that it permits privacy in matters of political affiliation in federal elections. To impose on the DLP and its officers a requirement to disclose to the AEC the names of 500 members, and to alert those members to the necessity of such disclosure and about their inability to remain 333 In the 1998 general election, 94.9% of electors voted "above the line". In the 2001 general election, the figure was 95.2%. See reasons of McHugh J at [84], fn 100. 334 See eg the comments of Doherty JA in Figueroa v Canada (Attorney General) (2000) 189 DLR (4th) 577 at 613 [109]-[110] and of the Supreme Court of Canada [2003] 1 SCR 912 at 947-948 [56]-[57], cited by McHugh J in his reasons at [75]- 335 The reference is to the Communist Party Dissolution Act 1950 (Cth), ss 7, 9, 10, 11, 12, 14 imposing personal and property disadvantages on "communists". That Act was held beyond power: Australian Communist Party (1951) 83 CLR 1. 336 Under the Freedom of Information Act 1982 (Cth), s 41 and the Privacy Act 1988 (Cth), ss 6(1), 10. See reasons of Gummow and Hayne JJ at [173]-[176]. 337 The Act, ss 206, 207, 224(5), 225(4A). Kirby members of other political parties if they are to be counted in the 500, also constitutes a burden on the party and its members. It is particularly so in the case of a party of smaller membership. All political parties in Australia, past and present, when first formed, had few members – many fewer than 500. For example, the establishment of the "Australian Labour Party" and a "Federal Labour Platform" was approved by a meeting held in Sydney on 24 January 1900. There were 27 persons present, comprising 19 members of colonial legislatures and eight "laymen"338. The first Labour Electoral League had been formed by an undisclosed number of persons at Balmain, Sydney in April 1891339. The Liberal Party of Australia was formed by 82 delegates who responded to Mr Robert Menzies's invitation to attend a conference in Canberra in October 1944340. Thus the two major political parties in Australia over the past half-century were created by relatively small numbers of persons committed to a common political cause. The Australian Communist Party was formed at Darling Harbour in Sydney in October 1920 by 26 delegates341. For many years it exerted an influence disproportionate to its membership342. It played a significant role in the events leading to the formation of the DLP. All of the foregoing parties had numerically low founding memberships. Political movements and parties commonly originate from the initiatives of a small band of activists. Save for the amended provisions of s 15, the Constitution contains no provisions according any special status to political parties, incumbent or otherwise, big or small. The burden is not disproportionate: I therefore accept that the provisions of the Act introducing the "500 rule" and the "no overlap rule" amount to real and practical burdens on the freedom of the DLP and its members to participate in elections to the Federal Parliament and to offer candidates who freely align with it, by reference to such affiliation. But are the provisions disproportionate to the power that the Parliament enjoys, having regard to the express provisions in the 338 Crisp, The Australian Federal Labour Party 1901-1951, (1955) at 25, citing Queensland Worker, 3 February 1900. 339 See Evatt, Australian Labour Leader, (1954) at 20. 340 See Forming the Liberal Party of Australia, Record of the Conference of Representatives of Non-Labour Organisations, (1944). 341 Macintyre, The Reds: The Communist Party of Australia from Origins to Illegality, 342 Macintyre, The Reds: The Communist Party of Australia from Origins to Illegality, Kirby Constitution, so that the impugned laws should be declared invalid by that measure? I think not. First, I address the express provisions of Ch I of the Constitution, and specifically the requirement that elections to the Federal Parliament must be of senators and members "directly chosen by the people". In my opinion, the two rules, and the provisions of the Act for their enforcement, give effect to legislative objects that are not wholly, or even mainly, designed to disadvantage small-party competitors of the incumbents. Whilst some of the arguments advanced to explain the impugned provisions do not bear close scrutiny343, others were convincing. It was open to the Parliament, in exercising its powers, to accept the latter arguments in adopting both the "500 rule" and the "no overlap rule" and the provisions for their enforcement. It has been a feature of parliamentary elections in Australia in recent years, federal and State, for large numbers of political parties to field many candidates, producing extremely unwieldy ballot papers. A notable illustration of this phenomenon was the "tablecloth ballot paper" printed for the 1999 State election in New South Wales344. The consequence of that development was substantial added cost in printing and handling ballot papers345. Such cost might perhaps be diminished by the introduction, still under consideration346, of systems of electronic voting. More important were the consequences of the proliferation of candidates and their nominated political parties described in the materials in this case. Amongst the problems identified in this material, as affecting the conduct of a general election, were the following: (1) The use by candidates of party names having no apparent connection with any serious or systematic policies or 343 Such as the payment of public funds for candidates endorsed by a registered political party (s 299) and the capacity to participate in groups "above the line" with party identification (ss 169, 169B, 209, 210, 210A, 211, 214, 272). 344 Held under the Parliamentary Electorates and Elections Act 1912 (NSW). 345 Said to have been an additional $10 million in the New South Wales general election in 1999. See New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 18 November 1999 at 3380-3383 (Mr Crittenden); cf Orr, "The Law Comes to the Party: The Continuing Juridification of Political Parties in Australia", (2000) 3 Constitutional Law and Policy Review 41 at 42. 346 Australia, Parliament, Joint Standing Committee on Electoral Matters, Report of the Inquiry Into All Aspects of the Conduct of the 1996 Federal Election and Matters Related Thereto, (June 1997) at 63, Recommendation 35. See also the Act, s 273A. Kirby objectives; (2) The creation of "interlocking" political parties with exchanges of preferences unknown, or little known, to those voting for the candidates of such parties but rendered electorally significant because of the very large field of candidates; (3) The creation of political parties allegedly basing their main electoral strategy on the exchange of preferences potentially critical in resolving the return of those candidates last elected by the ultimate distribution of preferences; (4) The pretence that an individual or a very small group of candidates represents a genuine political "party", accountable to members, with party rules and audited accounts, when this is not the case; (5) The reported presentation of "party" membership forms to citizens ostensibly as petitions to Parliament, resulting in undesired affiliation of signatories with a political "party", effectively secured by trickery; and (6) The presentation of apparent political "parties" in a context of known public funding of registered parties, which may convey to voters a false impression that the "party" appearing on the ballot paper is of a size and organisation to be taken into serious account in the responsible task of electing representatives to the Parliament347. Upon the later revelation of the true character of such pretended "parties", as no more than an individual or a minuscule rump of supporters, voters could become disillusioned and cynical, thereby undermining public trust in the system of parliamentary democracy in Australia, highly reliant as it is on political parties deserving that description in such a context. Views may differ about the merits of some of these arguments advanced in the parliamentary and committee deliberations that preceded the enactment of the provisions of the Act about which the appellant complains. The effectiveness of all of the impugned provisions of the Act to correct such suggested problems might also be questioned. The protections available to ensure against excessive application of the impugned laws and certain undesirable consequences of them might likewise be debated. However, it is clear that the provisions introducing the "500 rule" and the "no overlap rule", and providing for their enforcement by the AEC, are not based only, mainly or even significantly on purely partisan or self-serving electoral grounds. It would not be accurate to treat them as measures protecting incumbent political parties, to which courts such as this Court must be alert in considering statutory amendments to electoral law348. 347 See speeches on the Parliamentary Electorates and Elections Amendment Bill 1999 (NSW): New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 18 November 1999 at 3380-3383 (Mr Crittenden, Government), 3467- 348 Round, "By Any Other Name: Parties, Candidates and their Ballot Labels", in Orr, Mercurio and Williams (eds), Realising Democracy: Electoral Law in Australia, (2003) 157 at 168-169; Tully, "Party Registration and Preselection: A Minefield for Electoral Administrators?", in Orr, Mercurio and Williams (eds), Realising Democracy: Electoral Law in Australia, (2003) 143 at 151. Kirby There are, therefore, reasons of principle and electoral policy that it was open to the Parliament to accept in enacting the impugned laws. Especially after the system of public funding for political parties was instituted, it was incontestably necessary to define the "eligible political party" that could qualify for such funding and for other statutory advantages enacted for that purpose349. Fixing the number of members for such reasons is partly (although not wholly) an arbitrary task. One could imagine the legislative assignment of a number that would be so excessive as to risk invalidation of the law as disproportionate in the constitutional sense350. Also disproportionate would be any attempt to confine the "choice" reserved in the Constitution to the "people" in relation to candidates, belonging to an "eligible political party" defined restrictively to favour incumbents. However, as B A Santamaria said with characteristic realism in "Action in common in our highly organised society means an organisation with adequate funds, staff, research officers and the rest. Otherwise action is blind." Within the scheme, and for the limited purposes of the Act, the "500 rule" and the "no overlap rule", and laws for their enforcement, are proportionate to the power conferred on the Parliament by the Constitution to enact laws with respect to, or relating to, federal elections. Specifically, the provisions are not disproportionate to the express requirement that senators and members of the House of Representatives must be "directly chosen by the people". 349 In New South Wales, as a result of the 1999 amendment, a "rule of 750" was introduced for registration as an "eligible party": see Parliamentary Electorates and Elections Act 1912 (NSW), ss 66A(1), 66D. All States of the Commonwealth provide for a minimum number of members for a political party (which is not a parliamentary party) to be eligible to be registered as such: Electoral Act 2002 (Vic), s 45(2)(e): 500 persons; Electoral Act 1992 (Q), s 70(4)(e): 500 persons; Electoral Act 1985 (SA), s 36: 150 persons; Electoral Act 1907 (WA), s 62E(4)(d): 500 persons; Electoral Act 1985 (Tas), ss 3(1), 55(1)(b): 100 persons. A "no overlap rule" appears in the legislation of New South Wales (Parliamentary Electorates and Elections Act 1912 (NSW), s 66A(2)) and Victoria (Electoral Act 2002 (Vic), s 45(2)(e)(iii)). The other States have no such provision. In South Australia, but in no other State, grouping as such entitles the candidates to apply to have the name of the group printed on the ballot paper in a manner similar to that for a political party: Electoral Act 1985 (SA), s 62(2)(d), cf s 62(1)(a). 350 cf McKinlay (1975) 135 CLR 1 at 61 per Mason J. 351 cited in Crisp, Australian National Government, 5th ed (1983) at 159. Kirby The provisions of s 15 are confirmatory: There remains the question whether the amended language of s 15 of the Constitution, with its express reference to candidates "publicly recognized by a particular political party", necessarily denies the entitlement of the Parliament to impose burdens upon political parties of the kind introduced into the Act by the "500 rule" and the "no overlap rule" and the provisions allowing the AEC to enforce those "rules". The provisions of s 15, as now amended, appear to preserve a constitutional entitlement of candidates in an election to the Senate, to organise themselves in "particular political part[ies]" without inhibitions that would frustrate the arrangements postulated by the section. None of the provisions of the Act which the appellant challenged calls into question the entitlement of the DLP to form itself as a "particular political party" for the purposes of s 15 of the Constitution. None prevents or limits the DLP offering candidates for election to the Senate as such. All that the impugned provisions do is to impose the identified restrictions upon any such "political party" if it wishes to be "registered" under the Act. Nothing in s 15 of the Constitution, as amended, therefore casts doubt on my previous conclusion. The impugned provisions are within the relevant express lawmaking powers of the Parliament referred to in the Constitution. They are proportionate to the express terms of the relevant sections of Ch I by which the Parliament is accorded power to enact electoral laws governing the election of senators and members of the House of Representatives. The first part of the appellant's challenge therefore fails. It remains to consider whether this conclusion has to be qualified, or reversed, by reference to the implied "freedoms" contained within the Constitution to which the applicable laws must also conform. The constitutional implications are burdened The implications relied on: The appellant invoked three suggested implications of the Constitution to attack the validity of the "500 rule" and the "no overlap rule". These were (1) The implied freedom from federal legislative restrictions upon political communication essential for the operation of the system of representative democracy created by the Constitution; (2) The implied freedom of association essential to the effective conduct of federal elections and the formation of "particular political part[ies]" as contemplated by the Constitution; and (3) The implied freedom of individual privacy of the people in their communication and association as candidates, as members of political parties and as electors in the conduct of a federal election as envisaged by the Constitution. I can deal with this part of the appellant's case more briefly. Many of the conclusions already stated concerning the invocation of the limits in the express Kirby provisions in Ch I of the Constitution apply equally to the complaints that the impugned provisions of the Act offend the stated constitutional implications. Implied freedom of expression: The first question is whether the provisions of the Act introducing the "500 rule" and the "no overlap rule" and the sections providing for their enforcement burden the freedom of communication about government or political matters implied from ss 7, 24, 64 and 128 of the Constitution352. If the provisions do effectively burden that freedom, a second question arises as to whether the burden in question is constitutionally permissible, in the sense of proportionate to the achievement of all of the purposes of the Constitution353. The AEC and the Attorney-General of the Commonwealth, by a notice of contention, supported the approach of the primary judge354. Contrary to the Full Court355, he concluded that the first of these questions should be answered in the negative, so that issues of proportionality of any "burden" did not need to be considered. For reasons similar to those already indicated, the approach of the Full Court is to be preferred. There is a burden on the implied freedom of political communication, in consequence of the provisions of the Act challenged by the appellant. However, alike with the Full Court, I would conclude that the burden is constitutionally acceptable. It is proportionate to the achievement of legitimate ends the fulfilment of which is compatible with the maintenance of the system of representative government prescribed in the Constitution. The existence of a burden on political communication could only be denied by the adoption of self-fulfilling criteria as to what constitutes a "burden" or by the application of a constitutional sleight of hand. The provisions enforcing the "500 rule" place a restriction on the highly valuable ballot identification of the association of certain candidates with a named political party. They do so by reference to requirements that may tend to favour larger, incumbent political parties and to disadvantage smaller, less well-organised ones which nonetheless exist and are entitled to compete for political support. 352 Lange (1997) 189 CLR 520 at 567. 353 Or "reasonably appropriate and adapted to serve a legitimate end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government": see Lange (1997) 189 CLR 520 at 354 Mulholland (2002) 193 ALR 710 at 724-725 [58]-[62]. 355 Mulholland (2003) 128 FCR 523 at 531-532 [20]-[22]. Kirby The enforcement against the DLP of laws restricting inclusion on the ballot paper of the party's name in conjunction with party candidates would inferentially have negative consequences for those candidates. Under the Act, they could still appear as a group "above the line". However, they would be politically anonymous. They would be denied ballot association with the DLP party name. For those electors who did not know the candidates personally, but knew and supported the perceived objectives of the DLP, the absence of that name from the ballot paper would frequently prove decisive. Unless electors had some other means of knowing the identity of any DLP candidates, they would effectively be deprived of the opportunity of voting for candidates of that political persuasion. It would take a great deal of political naivety to fail to see the electoral disadvantage to the DLP and its candidates of the omission of its name from the Senate ballot paper in conjunction with the candidates whom it supported and who wished to be so identified. Proof of this particular pudding may be found in the strenuous efforts of the DLP in these proceedings to win that right without having to comply with the requirements that the Act now extracts. Whatever might be the position in respect of other, new, imaginary or unknown political parties, I consider it unarguable that the name recognition of the DLP with electors has a practical value that would be measured in votes. To avoid this conclusion the AEC deployed a number of arguments. None of them succeeds. I have already rejected the supposed distinction between a freedom to communicate and an obligation to publicise356. The appellant sought no special obligation to "publicise" the association of DLP candidates with the party in any manner that discriminated in favour of the DLP. He simply sought expungement from the Act of the provisions that have the consequence of limiting publication of party affiliation on the ballot paper to "registered political parties", and hence to those complying with the "500 rule" and the "no overlap rule". Next, the AEC argued that the "freedom of communication" that the Constitution protects is limited to "rights" sustained by the common law or statutory provisions existing outside the Constitution itself357. This approach, implied freedom of pushed to extremes, could effectively neuter the 356 See above at [252]; cf McClure (1999) 73 ALJR 1086 at 1090 [28]; 163 ALR 734 at 740-741 set out in the reasons of Gummow and Hayne JJ at [182]. 357 See reasons of Gummow and Hayne JJ at [178]; reasons of Callinan J at [336]- Kirby communication. It could do so although this Court has repeatedly affirmed it358. The common law adapts to the Constitution. Where necessary, the common law would, in my opinion, afford remedies designed to uphold such an important constitutional protection359. However that may be, in the present case, if the argument of the appellant were to succeed, the provisions containing the "500 rule" and the "no overlap rule", and providing for their enforcement by the AEC, could be excised from the Act by the application of a blue pencil to its provisions. This would preserve the entitlements of political parties whilst removing the burden on them of the two impugned rules. If the primary issue were decided in favour of the appellant, the AEC and the Attorney-General of the Commonwealth urged the Court to sever any offending provisions in the Act. Such an exercise in severance would expunge the burden on communication which the appellant challenged. Thirdly, the AEC argued that the communication effected by the ballot paper was one not between citizens as to the issues in the election. It was, instead, one between a government agency and citizens and thus outside the ambit of protection by the constitutional "freedom". Only the most artificial interpretation of the scope of constitutionally protected political communication could sustain such a submission. By agreeing to identify themselves with named political parties, candidates communicate with the electors. They do so at the critical moment of electoral "choice". They thereby signify the alignment of their views, so far as the name of their political party is concerned. As such, the ballot paper represents a communication with the people, not by officials of the AEC as such but by the candidates themselves360. The communication may be highly abbreviated. In some cases it may be uncommunicative. However, in most instances it is vitally important because of the incapacity or unwillingness of most electors to research all of the issues canvassed in an election. Many electors in Australia vote for particular political parties because of what they believe, or hope, will be the policies and programmes of such parties which their candidates, if elected, will pursue. 358 ACTV (1992) 177 CLR 106; Nationwide News (1992) 177 CLR 1; Lange (1997) 189 CLR 520; Levy (1997) 189 CLR 579; Roberts v Bass (2002) 212 CLR 1; Coleman v Power [2004] HCA 39. See Stone, "The Limits of Constitutional Text and Structure: Standards of Review and the Freedom of Political Communication", (1999) 23 Melbourne University Law Review 668 at 672-675. 359 British American Tobacco Australia Ltd v Western Australia (2003) 77 ALJR 1566 at 1588-1592, esp [134]-[136]; 200 ALR 403 at 433-438. 360 cf reasons of McHugh J at [94]-[98]. Kirby It follows that the Full Court was correct to find a burden on free political communication. Unless we are blinded by matters of form, it is not in the letter of the Act that an impermissible constitutional burden is found but in the way the Act operates in practice and in effect361. The Parliament cannot, by stipulating discriminatory preconditions to electoral advantages for incumbent parties, evade the substantive requirements of the Constitution. The burden in this case was potentially important to the conduct of a Senate election. In this respect, the Full Court's conclusion was more faithful to the repeated endorsement by this Court of the existence and purposes of the constitutional "freedom" of political communication, as essential the representative parliamentary democracy for which the Constitution provides, particularly at election time when it matters most. to uphold Implied freedoms of association and privacy: I am also prepared to accept, as the appellant argued, that there is implied in ss 7 and 24 of the Constitution a freedom of association362 and a freedom to participate in federal elections extending to the formation of political parties, community debate about their policies and programmes, the selection of party candidates and the substantially uncontrolled right of association enjoyed by electors to associate with political parties and to communicate about such matters with other electors. Especially given the express recognition in the amended terms of s 15 of the Constitution of the existence of "particular political part[ies]" in the context of filling casual vacancies in the Senate, it is impossible to deny an implication of free association to some degree. At the very least, such a freedom exists in this context to the extent that it is essential to make such "political part[ies]" in s 15 a practical reality. In so far as the Full Court expressed doubts about the existence of a freedom of association for such purposes, implied in the text of the Constitution363, I consider that their Honours were unduly cautious. The logic of this Court's decision upholding freedom of political communication obliges acceptance of protected political association, at least to some extent, so that the 361 cf reasons of McHugh J at [100]. 362 See ACTV (1992) 177 CLR 106 at 232. See also Kruger v The Commonwealth (1997) 190 CLR 1 at 91, 116, 142. 363 Mulholland (2003) 128 FCR 523 at 537 [41]-[42] referring to (2002) 193 ALR 710 at 735 [117]; cf Figueroa [2003] 1 SCR 912 at 947-948 [56]-[57]. Kirby constitutional system of representative democracy will be attained as envisaged by Ch I364. Less certain is the scope of any implication of a zone of constitutionally protected privacy in the fulfilment of popular participation in the form of representative government established by the Constitution. Opinions suggesting that the secrecy of the ballot in Australia is not protected by a constitutional implication365 should not, in my view, be accepted. Given the history of voting privacy in this country, reaching back to colonial times, it is unthinkable that a federal electoral law could now introduce provisions obliging electors to reveal their voting preferences. The experience of other countries where this has occurred suggests that it would constitute a most serious impediment to "direct choice" by the people of their parliamentary representatives366. Voting privacy and privacy in membership of a political party are, however, different in kind. To the extent that an elector takes part, as a member, in the organisation of a "particular political party" of the kind mentioned in the Constitution he or she, to some degree, steps outside the anonymity of citizenship into a more active involvement in the organised electoral system of the nation. Conclusion: freedoms not absolute: From the foregoing it follows that one can accept the existence of an implied freedom of political association. Even a measure of implied political privacy, essential to fulfil the constitutional design in voting in federal elections, may be accepted. However, such implications would not necessitate the submissions of the appellant came close to suggesting. In each case where a court faces a challenge to infringements of implied constitutional "freedoms", it remains for that court to evaluate whether the burdens imposed by the impugned laws upon the achievement of those freedoms are disproportionate to the attainment of legitimate ends of electoral law, the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of those requirements as absolutes, as treating 364 McGinty (1996) 186 CLR 140 at 244 per McHugh J, 281 per Gummow J; Kruger (1997) 190 CLR 1 at 45, 142. 365 Constitution, ss 7 and 24. 366 See ACTV (1992) 177 CLR 106 at 227, 232. 367 Or, as otherwise expressed in Australian cases, "reasonably appropriate and adapted". See Lange (1997) 189 CLR 520 at 567. The Supreme Court of Canada adopts reasoning expressed in terms of proportionality: Figueroa [2003] 1 SCR Kirby The burdens are proportionate to the Constitution's purposes The considerations favouring proportionality: Accepting, as I would, that the provisions of the Act challenged by the appellant burden, to some degree, the implied freedom of political communication and the implied freedom of political association essential for the constitutional system of that such burdens are I am unconvinced representative government, constitutionally impermissible. They are not disproportionate to the attainment of all of the constitutional objectives operating in this context. the fulfilment of Similarly, to the extent to which there is inherent in the necessity of political association within "particular political part[ies]", as envisaged by the Constitution, any implied constitutional guarantee of privacy (the existence of which I would not finally decide), I reach the same conclusion. The requirements, restrictions and disadvantages imposed on the DLP by the impugned provisions of the Act are real but proportionate to the attainment of legitimate ends chosen by the Parliament. Those ends are compatible with the Constitution. In coming to these conclusions I take into account the considerations that I have mentioned earlier368. These involve the reasons of an electoral character that support and justify the impugned provisions. It was within the lawmaking powers of the Parliament to decide that regulation of "particular political part[ies]" was reasonably necessary to reduce confusion in the size and form of the ballot paper; to diminish the risk and actuality of deception of electors; to discourage the creation of phoney political parties; and to protect voters against disillusionment with the system of parliamentary democracy, reliant as it so heavily is in Australia on the organisation of political parties. Conformability with international law: The foregoing interpretation of the operation of the Constitution upon the provisions of the Act that the appellant challenged appears consistent with the applicable rules of international law that bind Australia in this connection. Australia is a party to the International Covenant on Civil and Political Rights ("ICCPR")369. Article 25 of the ICCPR states, relevantly (with emphasis added): 368 See above at [261]-[266]. 369 Done at New York on 19 December 1966, entered into force for Australia on 13 November 1980 in accordance with Art 49: 1980 Australian Treaty Series No 23. The distinctions in Art 2 of the ICCPR, referred to in Art 25, concern invalid "distinction[s] of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status" (emphasis added). Kirby "Every citizen shall have the right and the opportunity, without any of the distinctions mentioned in article 2 and without unreasonable restrictions: To take part in the conduct of public affairs … through freely chosen representatives; To vote and to be elected at genuine periodic elections which shall be by universal and equal suffrage and shall be held by secret ballot, guaranteeing the free expression of the will of the electors". The invalidation of laws that are "disproportionate" to the attainment of the legitimate ends of constitutionally prescribed representative government affords a control upon illegitimate restrictions on the conduct of federal elections in Australia. It sufficiently approximates the prohibition upon "unreasonable"370 restrictions to satisfy the principles of the ICCPR. It follows that there is no need, in this appeal, to subject the doctrine to closer re-examination371. Conclusion and orders There is, therefore, a burden on the DLP and its electoral candidates in the impugned laws, most especially because of the electoral value of its name recognition when published on the ballot paper with the names of those candidates the DLP supports for election to the Federal Parliament. However, that burden is not disproportionate to the attainment of legitimate ends of electoral law which it was open to the Parliament of Australia to accept. In consequence, the impugned provisions of the Act are valid. The appellant's attack on the constitutional validity of those provisions fails. It is for these reasons that I joined in the orders announced on 20 May 2004, dismissing the appeal with costs. 370 cf Sellars v Coleman [2001] 2 Qd R 565 at 568 [10] per Pincus JA. 371 cf Marquet (2003) 78 ALJR 105 at 136 [172]-[175]; 202 ALR 233 at 274-275; Al- Kateb [2004] HCA 37 at [169]-[176]; Behrooz v Secretary of the Department of Immigration and Multicultural and Indigenous Affairs [2004] HCA 36 at [125]- Callinan CALLINAN J. The appellant raises questions as to the constitutional validity of some provisions of the Commonwealth Electoral Act 1918 (Cth) ("the Act"), namely ss 123(1)(a)(ii), 126(2A), 136(1)(b)(ii), 137(1)(b), 137(1)(cb), 137(5) and 138A ("the challenged provisions") on the basis of a suggested burden imposed by them upon freedom of political communication. Together, these provisions require satisfaction of two conditions by a party wishing to register under the Act: first, that it have at least 500 members; and, secondly, that there be no commonality of membership between parties. These two prerequisites may conveniently be referred to as the "500 rule" and the "overlap rule". Facts The appellant is the registered officer of the Democratic Labor Party ("the DLP"). He appeals to this Court against a decision of the Full Court of the Federal Court of Australia relating to the membership of the Party. The DLP was, and remains a registered political party under the Act. The respondent, the Australian Electoral Commission ("the AEC") is the statutory regulatory authority established under the Act. Part XI of the Act states the procedures to be followed by political parties to obtain and maintain registration. Registration confers advantages unavailable to an unregistered party, as to which the Full Court of the Federal Court in the joint judgment said372: "[The] registration scheme affords various 'privileges' to registered political parties. The extent of some of those 'privileges' may not be great. For example, one of the privileges that has existed since 1983 is the payment of public funding to the political party. However, even if the political party is not registered public funding is still available although it is paid direct to the candidate or group or his or her or its agent (s 299 of the Act). Similarly, the use of list voting in Senate elections is not limited to registered parties, but can extend to 'groups' or individual candidates (see ss 168, 211, 211A, 219 and 272 of the Act). Consequently, the main advantages of registration are the privilege of having party affiliation recorded on the ballot paper and the privilege of having access to the electoral roll in digital form." It is necessary at this point to set out the challenged provisions and the relevant facts. 372 Mulholland v Australian Electoral Commission (2003) 128 FCR 523 at 526 [6]. Callinan "123 Interpretation eligible political party means a political party that: either: is a Parliamentary party; or has at least 500 members; and is established on the basis of a written constitution (however described) that sets out the aims of the party. 126 Application for registration (2A) Two or more parties cannot rely on the same member for the purpose of qualifying or continuing to qualify as an eligible political party. The following provisions apply accordingly: a member who is relied on by 2 or more parties may nominate the party entitled to rely on the member, but if a party is not nominated after the Commission has given the members at least 30 days to do so, the member is not entitled to be relied on by any of those parties; the members on whom a registered party relies may be changed at any time by an amendment of the Register of Political Parties; the registration of a party is not to be cancelled because of this subsection unless the Commission has taken action to determine whether the party should be deregistered because of paragraph 137(1)(a), (b) or Callinan 136 Deregistration of party failing to endorse candidates or ceasing to be a Parliamentary party (1) A registered political party is liable to deregistration if: in the case of a party that was a Parliamentary party when it was registered: the party has fewer than 500 members. 137 Deregistration of political party on other grounds If the Commission is satisfied on reasonable grounds that: a political party so registered, not being a Parliamentary party, has ceased to have at least 500 members; or the registered officer of a registered political party has failed to comply with a notice under section 138A (Review of eligibility of parties to remain in the Register); the Commission shall: give the registered officer of the party notice, in writing, that it is considering deregistering the party under its reasons for considering doing so and the terms of the provisions of subsections (2), (3), (4) and (5); and this section setting out publish a notice in the Gazette that it is considering deregistering the party under this section, specifying the paragraph of this subsection by reason of which it is considering doing so. Callinan (5) Where, in response to a notice given under paragraph (1)(d) in relation to a political party, a statement is lodged under subsection (2), the Commission shall consider that statement and determine whether the political party should be deregistered for the reason set out in that notice. 138A Review of eligibility of parties to remain in the Register (1) The Electoral Commission may review the Register to determine whether one or more of the parties included in the Register: is an eligible political party; or should be deregistered under section 136 or 137. The Electoral Commission may do so at any time other than during the period that: starts on the day of the issue of a writ for a Senate election or House of Representatives election; and ends on the day on which the writ is returned. For the purposes of reviewing the Register, the Electoral Commission may give a written notice to the registered officer of a registered political party requesting specified information on the party's eligibility to be registered under this Part. (4) The notice must specify a period within which the information must be provided. The period must be at least 2 months. (5) The registered officer must comply with the notice within the specified period. However, the Electoral Commission may extend that period." Should a party fail to comply with a request made under s 138A the AEC, if satisfied on reasonable grounds that the party has failed to comply with the notice, must give the registered officer notice that it is considering deregistering the party together with its reasons for doing so. Additionally, the AEC must Callinan publish a notice in the Gazette outlining that it is considering deregistering the non-compliant party and the statutory basis upon which it relies373. By letter dated 1 August 2001 the respondent wrote to the appellant, in his capacity as registered officer of the DLP, requesting that the appellant provide the following details: "(a) A list of the names of the persons upon whom the Democratic Labor Party relies for the purposes of registration – that is, for the purpose of establishing that the Party has at least 500 members – including each member's address, date of birth and contact telephone number (to the extent that this information is maintained in the Party's records) … Copies of the most recent application for membership or for renewal of membership completed by each person included in the list of names. (c) A statement by you, as registered officer of the Party, confirming that each person on the list has been accepted as a member of the Party and that the information provided to the AEC accurately reflects the Party's records. (d) A copy of the Party's current constitution." The notice required the appellant to comply within two months of receipt of the notice. Paragraph 9 of it stated: "[S]ubsection 126(2A) of the Act prevents two or more parties relying on the same member for the purpose of qualifying or continuing to qualify as an eligible political party (a) The names, addresses, birth dates and contact telephone numbers of each member on whom the Democratic Labor Party relies are required by the AEC for two purposes: first, to enable the AEC to establish (through contact with a sample of members) that the nominated persons are in fact members of the Party; and, secondly, to enable the AEC to cross-check the nominated members against the members relied on by other registered political parties. It is possible that some members of the Democratic Labor Party are also members of other registered political parties. For that reason, 373 s 137(1)(e) of the Act. Callinan it would be prudent to provide the names and other details of more than the minimum 500 members. If the AEC is satisfied, on the basis of the information supplied by you and its own inquiries, that the Democratic Labor Party has ceased to have at least 500 members (not being members relied on by another registered political party), the AEC will be authorised (and required) by paragraph 137(1)(b) of the Act to give notice of possible deregistration of the Party. That notice may lead to deregistration under either subsection 137(4) or subsection 137(6) of the Act." In response, the appellant on 2 October 2001 wrote to the Acting Deputy Electoral Commissioner stating: "With respect to the AEC's concern to cross-check nominated members of separate political parties to establish that no two or more parties rely on the same member for registration purposes, I say that the Democratic Labor Party disputes the authority of the AEC to engage in such conduct. To the extent that such conduct may be lawful, I say that any information required by the AEC for that purpose may be provided by Democratic Labor Party members themselves, if they so choose." Upon receipt of the appellant's response the AEC immediately gave notice to the appellant, as required by s 137 of the Act, that it was considering deregistering the DLP in accordance with the Act. The appellant and the respondent then exchanged various letters which referred to the respondent's authority to make the initial request none of which are relevant to the present appeal. Decision of the primary judge On 7 January 2002 the appellant made application to the Federal Court of Australia seeking judicial review of the decisions made by the AEC and conveyed by the correspondence to which I have referred. The appellant also sought a writ of prohibition to prevent the AEC from deregistering the DLP on the ground that the challenged provisions of the Act were constitutionally invalid. The appellant's Notice of a Constitutional Matter identified the constitutional point in this way374: "The issue which arises is whether ss 123(1)(a)(ii), 126(2A), 136(1)(b)(ii), 137(1)(b), 137(1)(cb) and 138A of the Commonwealth 374 Mulholland v Australian Electoral Commission (2002) 193 ALR 710 at 720-721 Callinan Electoral Act 1918 are constitutionally invalid in part in that they impede or are the antithesis of the freedom of communication between the people concerning political matters which enables the people to exercise a free and the informed choice as electors necessarily protected by Commonwealth Constitution." Before the primary judge (Marshall J), the appellant argued that the 500 rule and the overlap rule threatened the continued registration of the DLP. Such a threat was said to arise because in the event that the AEC deregistered the DLP, as an unregistered party it would be incapable of communicating with voters information as to which candidates were affiliated with it. The communication to which the appellant was referring was the inclusion of a candidate's affiliation with the DLP on ballot papers used for elections to the Commonwealth Parliament. The primary judge referred to the decision in Lange v Australian Broadcasting Corporation375, in particular the following passage376: "First, does the law effectively burden freedom of communication about government or political matters either in its terms, operation or effect? Second, if the law effectively burdens that freedom, is the law reasonably appropriate and adapted to serve a legitimate end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government ... If the first question is answered 'yes' and the second is answered 'no', the law is invalid." In his Honour's opinion the appellant's case failed at the outset for the following reason377: "[T]he inclusion of party endorsement details on ballot papers is a communication between an arm of the executive government, that is, the commission, and the electors. It is not a communication between the people of a type envisaged by the High Court in Lange378 where reference was made to protection of 'the freedom of communication between the people'. It is not to the point to contend that the only relevant issue is whether there has been denial of access to political information by voters. 375 (1997) 189 CLR 520. 376 (1997) 189 CLR 520 at 567-568. 377 (2002) 193 ALR 710 at 725 [61]. 378 (1997) 189 CLR 520 at 560. Callinan That denial, if it exists, must be referable to a communication, which is between 'the people', and not between an arm of executive government and 'the people'." This finding alone was sufficient to enable his Honour to dispose of the matter. He did, however, consider the other arguments advanced by the appellant. His Honour stated his opinion that the inclusion of the name of a candidate's party on a ballot paper would be a communication "about political parties and candidates"379. He referred to s 169 of the Act which provides as follows: "169 Notification of party endorsement The registered officer of a registered political party may request that the name, or the registered abbreviation of the name, of that party be printed on the ballot-papers for an election adjacent to the name of a candidate who has been endorsed by that party. (4) Where: a request has been made under subsection (1) in respect of candidates in a Senate election; and the candidates propose to have a group voting ticket registered for the purposes of that election; the request may include a further request that the name of the registered political party that endorsed the candidates, or a composite name formed from the registered names of the registered political parties that endorsed the candidates, be printed on the ballot-papers adjacent to the square printed in relation to the group in accordance with subsection 211(5)." The denial of this entitlement, the primary judge was prepared to accept, for the purpose of the argument, could burden communications, as it "[could] be validly seen as a curtailment of the right to disseminate information of a political nature"380. 379 (2002) 193 ALR 710 at 725 [63]. 380 (2002) 193 ALR 710 at 726 [67]. Callinan Having provisionally characterized the challenged provisions as relevantly burdensome, his Honour moved to the second stage of the test posited by Lange381, as to "the appropriateness" of the challenged law: "[T]he object of the law is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government or ... that the law is reasonably appropriate and adapted to achieving that legitimate object or end." Ultimately his Honour decided that the 500 rule382: such purpose being compatible with "is reasonably appropriate and adapted to the fulfilment of a legitimate the legislative purpose, constitutionally prescribed system of representative government, namely the maintenance of the integrity of the system of registration of political parties and the setting of qualifications for political parties to achieve before taking the benefit of other provisions of the Act. To also adopt the words of the European Court of Human Rights383, a 'margin of appreciation' must be reserved to the legislature in deciding upon the formulation of qualifications for registration as a political party … The 500 rule, in so far as it may be said to infringe the relevant implied constitutional freedom of communication by reference to the inability of non-registered parties to have their endorsed candidates identified as such on the ballot paper, it does so in a merely incidental way which is reasonably appropriate and adapted to achieve the legislative aim of regulating registered political parties. That legislative objective is legitimate, being compatible with the constitutionally prescribed system of representative government. The aim of that regulation is to ensure that not every political party with minuscule levels of public support would be entitled to the benefits of registration … The 500 rule does not effect a significant curtailment of the constitutional freedom of political communication and discussion. Its direct purpose is to secure the integrity of the system of registration of political parties." 381 (1997) 189 CLR 520 at 562. 382 (2002) 193 ALR 710 at 728 [82]-[84]. 383 See Cunliffe v The Commonwealth (1994) 182 CLR 272 at 325 per Brennan J. Callinan As to the overlap rule, his Honour said this384: "[T]he no overlap rule does not infringe the implied freedom of communication about government and political matters. The no overlap rule was designed, like the 500 rule, to make the process of registration of political parties more effective by seeking to limit the capacity of individuals to foster a multiplicity of political parties based on an identical or substantially identical membership. The no overlap rule does not endanger the registration of a party who has, among its membership, a person who is also relied upon as a member by another party for registration purposes. The 'overlapping member' can choose her or his party for registration purposes. I agree with the contentions of the Attorney-General, as adopted by the commission … which read as follows: 'In the event that two or more parties rely on the same member or members for the purposes of eligibility to register or remain registered, there is no immediate sanction against a party. The overlap provisions are on their face reasonably appropriate and adapted to allow the party to remain registered if there is an overlapping member, provided the principle of not allowing multiple parties to rely on the same member for the purposes of eligibility in connexion with registration is itself reasonably appropriate and adapted.' I accept the submission of the Attorney-General, as adopted by the commission … on the policy behind the no overlap rule, where the following was said: 'The policy behind both amendments was the avoidance of "entrepreneurial" or cynical use of the same "block" of members to register multiple parties with no true and discrete membership, the minimising of confusion to voters, the "tablecloth" ballot paper and the use of "decoy" or front parties to mislead the voter into indicating a preference for a group ticket which is merely calculated to channel preferences to another party.'" It was further argued before the primary judge that the 500 rule and the overlap rule infringed freedoms of association and participation said to be implied in the Constitution. It appears from the reasons of the primary judge that such freedoms were argued to extend to "the steps of nominating, campaigning, advertising, debating, criticizing and voting"385. It was further submitted that a 384 (2002) 193 ALR 710 at 729 [87]-[88]. 385 (2002) 193 ALR 710 at 730 [90]. Callinan freedom of association "is derived from what the freedom of political communication requires"386. The appellant further contended that there was an implied right of privacy in relation to an elector's participation in the electoral process. The challenged provisions were claimed to impinge upon the freedom of association as they provided for the dissemination of the names of the members of the DLP. After citing passages from Australian Capital Television Pty Ltd v The Commonwealth387 ("ACTV") and Kruger v The Commonwealth388 the primary judge concluded389: "In my view, taken at their highest, the parts of ACTV and Kruger referred to as support for Mr Mulholland's contention of an implied freedom of privacy of association and affiliation, are authority only for the proposition that there may exist a freedom to physically associate and move for the purpose of so associating as an incident of or corollary to the freedom to communicate. I can discern nothing in the judgments to support the contention that persons have a constitutionally entrenched freedom to keep their political associations private. Furthermore, no textual or structural foundation in the Constitution for the implication of a freedom of privacy of political association has been demonstrated in this case. Finally, even if a freedom of association of the nature described at the relevant parts of ACTV and Kruger exists, I consider that the provisions at issue in the instant case, which have the effect of setting qualifications for political parties as a prerequisite to achieving or maintaining registration under the Act, could not reasonably be viewed as hampering that freedom. The members of the DLP or people who propose to become members of the DLP are still free to associate for that purpose notwithstanding the provisions of Pt XI." The appeal to the Full Court of the Federal Court On appeal, the Full Court of the Federal Court of Australia (Black CJ, Weinberg and Selway JJ) took some different views from the primary judge. Their Honours said that freedom of communication390: 386 (2002) 193 ALR 710 at 730 [90]. 387 (1992) 177 CLR 106. 388 (1997) 190 CLR 1. 389 (2002) 193 ALR 710 at 731 [96]. 390 (2003) 128 FCR 523 at 531 [21]. Callinan and "is freedom of all political communication relevant to the system of representative the responsible government It clearly includes political communication between Constitution. Commonwealth voters and between their representatives. It clearly includes communication between political parties and the people. It must include communication between the Executive and the people as well." those represented and established by In relation to the existence or otherwise of any burden upon potential communication the Full Court observed391: "One of the conceptual problems in this case is in identifying the relevant burden. This is not helped by the manner in which the appellant puts his case. As noted above, he seeks to avail the DLP of the privileges afforded by registration. He does not attack those privileges. It is presumably for this reason that the Commonwealth Solicitor-General has referred the Court to McClure v Australian Electoral Commission392. In that case the petitioner complained that there had been a breach of the constitutional implication because he had not been afforded the same amount of publicity as had other candidates for election. But as Hayne J pointed out393: 'The short answer to this first complaint is that the freedom of communication implied in the Constitution is not an obligation to publicise. The freedom is a freedom from government action; it is not a right to require others to provide a means of communication.' So, for example, the appellant could not complain if party affiliation was not included on the ballot for anyone. ... The nature of democratic politics is competition – the discriminatory privilege of one is the burden of another. If, for example, the Commonwealth Parliament passed a law providing that the members of party X should be placed first on the ballot paper and their names be printed in bold and with a bigger font than the names of other candidates then that law would most likely be invalid. Candidates other than those standing for party X would be burdened in their capacity to communicate simply because of the legal preference created by the relevant law … Similarly, in this case, a law which provides that only certain persons can 391 (2003) 128 FCR 523 at 531 [18]-[20]. 392 (1999) 73 ALJR 1086; 163 ALR 734. 393 (1999) 73 ALJR 1086 at 1090 [28]; 163 ALR 734 at 740-741 (original emphasis). Callinan have their party affiliations stated on the ballot paper must burden those who are excluded." The Full Court then considered whether the "burden" was reasonably adapted to a legitimate end, observing that394: "the legislative limitation or burden is the requirement that a party be registered before it receive the various privileges available to registered parties. On its face the requirement of registration seems to be part of the legitimate objective of the regulation of elections … Consequently, in our view, the registration of political parties under the Act is a necessary aspect of a valid and legitimate legislative objective." Counsel for the appellant argued that the emphasis the primary judge placed on an expression "margin of appreciation" that he used when considering whether the impugned provisions were reasonably capable of being seen as appropriate and adapted to achieve a legitimate legislative purpose, was misplaced. The Full Court discussed two of the phrases used in Lange: "reasonably adapted" and "reasonably capable of being regarded as appropriate and adapted" which have subsequently found favour with other judges of this Court395. After questioning whether there is in practice much difference between the two formulations, the Full Court cited a passage from the judgment of Kirby J in Levy v Victoria396: "In Australia, without the express conferral of rights which individuals may enforce, it is necessary to come back to the rather more restricted question. This is: does the law which is impugned have the effect of preventing or controlling communication upon political and governmental matters the system of representative government for which the Constitution provides? Such cases do exist. But in the nature of their source in Australian constitutional law they will be fewer than the multitude of First Amendment cases which have engaged the attention of the courts of the United States. in a manner which inconsistent with 394 (2003) 128 FCR 523 at 533-534 [29]-[30]. 395 See Roberts v Bass (2002) 212 CLR 1 at 27 [66] per Gaudron, McHugh and 396 (1997) 189 CLR 579 at 646-647. Callinan Whilst bearing in mind the foregoing discussion, the test to be applied is that recently stated in the unanimous opinion of the Court in Lange v Australian Broadcasting Corporation." The Full Court then observed397: "The appropriate task for this Court is to apply the test as stated in Lange, acknowledging that the form of words used in Lange was intended to reflect different formulae that had been used in previous cases; which different formulae may, or may not, have reflected minor differences in principle between the judges that used them." The Full Court rejected the appellant's argument that the primary judge erred in applying the Lange test398: "It is clear from his reasons that Marshall J did not superimpose a 'margin of appreciation' test on top of a 'reasonably appropriate and adapted test'. What he did was refer to a 'margin of appreciation' as an integral aspect of determining what was reasonably appropriate and adapted. His Honour was right to do so." As to whether the 500 rule was reasonably appropriate and adapted the Full Court said this399: "The appellant says that any requirement of more than two members (presumably being the minimum to have a 'party') is too many. But there is no reason why the minimum requirement should be the only available requirement. At the very least the Parliament must be able to take into account issues such as the extent of public support enjoyed by the party. Maybe it can also take account of the degree of recognition of the party by the voters. The Parliament could hardly be required to arrange the publication on the ballot of party affiliations if the only effect of doing so is to create confusion. It is also likely that Parliament may take into account the potential farce of the ballot paper being so large that the public lose confidence in the electoral system. Presumably it is for this reason that there are statutory requirements that a candidate must have at least 50 signatories to his or her nomination form: see s 166 of the Act. The number '500' may well, in one sense, be an arbitrary number, but nothing was put before us to suggest that it is inappropriate. It was not 397 (2003) 128 FCR 523 at 535 [33]. 398 (2003) 128 FCR 523 at 535 [35]. 399 (2003) 128 FCR 523 at 535-536 [36]-[37]. Callinan suggested that a political party having what might be seen as 'public support' would be unable to comply with the 500 member requirement. Indeed, the DLP, although it has not had a federal member for many years, still apparently has 500 or more members. As we understand it, it is the requirement to provide a list of 500 members none of whom are overlapping (or if they are, who will choose the DLP as their party of choice) which is causing it difficulty. This is not to deny that if the required number of members were sufficiently large it might be in breach of the implied limitation. To take an extreme case, if it were apparent that only one political party could comply, it is hard to see how such a requirement could be reasonably adapted to a legitimate object." In relation to the overlap rule the Full Court concluded400: "The second objection of the appellant was that the no overlap rule in s 126(2A) of the Act, combined with the increased investigatory powers in s 138A of the Act are not 'reasonably appropriate and adapted' to a legitimate purpose. At one level it is probably sufficient merely to say that this requirement has the effect of changing the requirement from 500 members to '500 members who are prepared to acknowledge their membership and whose membership is not relied on by another political party for the purpose of being registered'. In practical terms, this may operate to increase the number of required members. Given that the number of 500 is itself arbitrary there is probably no reason to think that an increased number (whatever it is) changes the scheme into one that is not reasonably appropriate and adapted to the legitimate end we have previously identified. Certainly there was nothing before us to suggest what the number might be. The Court was, however, referred to material which suggested that these changes were directed to a particular problem, namely a party registering a number of other parties with the same 500 members, but with new party names that might be attractive to the electorate and then using these 'dummy' parties to direct preference votes. Apparently this problem has occurred in New South Wales. The appellant argued, in effect, that there were better or other ways to address such issues and that, in any event, it was not likely to be as significant a problem in relation to Commonwealth parliamentary elections as it had been in New South Wales. [Counsel for the appellant] argued that the relevant mischief would be better addressed, for example, by legislation directed to those responsible for the management of the party. Insofar as 400 (2003) 128 FCR 523 at 536 [38]. Callinan the mischief consisted of inappropriate party names, he argued that it would be better addressed by legislation directed to that topic. But these arguments do not answer the second limb of the Lange test. The question is whether the legislation is reasonably adapted and appropriate to a legitimate objective, not whether some different or other legislative approach might have been more effective." Appellant's submissions in this Court All of the appellant's arguments rely upon the implication of freedom of political communication found in Lange. But some of them seek to build upon, and extend that implication, indeed to draw a further implication from the implication itself. Moreover, the appellant seeks to argue that the implication of freedom found in Lange, is here, without more, infringed. That argument may be left until his others have been considered. In this Court the appellant persists in the submission that the 500 rule and the overlap rule impair the making of, or are antithetical to, an informed choice by electors and unreasonably discriminate between candidates. The impairment is said to result from the inability of a candidate, or in some cases a party, "to communicate" a party affiliation to voters on ballot papers. The appellant relies in part on the decision of the Supreme Court of Canada in Figueroa v Canada (Attorney General)401, a decision to which I will refer later in my reasons. It is unnecessary for me to repeat what I have said in earlier cases402 in relation to Lange to which I would adhere. For present purposes I will proceed, as I did in Coleman v Power403, upon the assumption that the decision in Lange accords with the Constitution and that I am bound to apply it. The appellant does not contend that legislation with respect to electoral matters may not be constitutionally enacted, but submits that it will be invalid if it is inconsistent with the provisions for direct choice of candidates in accordance with ss 7 and 24 of the Constitution. The appellant submits, first, that there can be no direct choice unless the choice be a real and informed one. Next, he submits, the legislative regime for direct choice cannot be discriminatory in operation. If it is, it will "distort" choice and be contrary to the express 401 [2003] 1 SCR 912; cf Australian Communist Party v The Commonwealth (1951) 83 CLR 1. 402 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 338-339 [348]; Roberts v Bass (2002) 212 CLR 1 at 101-102 [285]; Coleman v Power [2004] HCA 39 at [289]. 403 [2004] HCA 39. Callinan requirements in ss 7 and 24 of the Constitution. To deny to an unregistered party, or an endorsed member of it, an entitlement to include information relating to his or her choice, is to burden the communication of that information to the public, and a right which the appellant says a candidate and his or her (unregistered) party has, to communicate it. The appellant's submissions echo the language of Iacobucci J in Figueroa404 which is, in a sense, Canada's Communist Party Case405: "[P]olitical parties play such a prominent role in our democratic system that the choice of candidates by some voters is based largely, if not exclusively, on party affiliation. Many individuals are unaware of the personal identity or background of the candidate for whom they wish to vote. In the absence of a party identifier on the ballot paper, it is possible that certain voters will be unable to vote for their preferred candidate. Furthermore, it also is possible that voters who are familiar with the identity of the candidate of a particular party will be discouraged from voting for a candidate nominated by a non-registered party. Owing to the prominence of political parties in our system of representative democracy, affiliation with an officially recognized party is highly advantageous to individual candidates. In the minds of some voters, the absence of a party identifier might make candidates nominated by parties that have not satisfied the 50-candidate threshold a less attractive option. It might create the impression that the candidate is not, in fact, affiliated with a political party, or that the political party with which she or he is affiliated is not a legitimate political party. In each instance, the restriction on the right of candidates to list their party affiliation interferes with the capacity of non-registered parties to compete in the electoral process. For similar reasons, the restriction on the right of candidates to include their party affiliation on the ballot paper also undermines the right of each citizen to make an informed choice from among the various candidates. In order to make such a choice, it is best that a voter have access to roughly the same quality and quantity of information in respect of each candidate. In our system of democracy, the political platform of an individual candidate is closely aligned with the political platform of the party with which she or he is affiliated, and thus the listing of party affiliation has a significant informational component. Thus, legislation that allows some candidates to list their party affiliation yet prevents others from doing the same is inconsistent with the right of each citizen to 404 [2003] 1 SCR 912 at 947-948 [56]-[57]. 405 Australian Communist Party v The Commonwealth (1951) 83 CLR 1. Callinan exercise his or her right to vote in a manner that accurately reflects his or her actual preferences. It violates s 3 by ensuring that voters are better informed of the political platform of some candidates than they are of others." (original emphasis) The reasoning and decision in that case do not assist the appellant. The decision turned upon a very expansive reading of s 3 of the Canadian Charter of Rights and Freedoms. Adoption of the views there would require the equation of the Australian constitutional provisions for direct choice with that Canadian section, and an at least equally expansive reading of the former. I am not prepared to do that. It would require the making of further constitutional implications, in effect implications to be made from another implication. Implications of only the most necessary kind can be available in the context of a written constitution. This is not a case of necessity. Nor can s 3 of the Canadian Charter properly be equated with ss 7 and 24 of the Constitution which are directed to a particular purpose, of ensuring the direct election of members and senators, rather than election by, for example, electoral colleges. The ratio of Figueroa is a very broad one: that legislative interference with the right of citizens to play a meaningful role in the electoral process violated the Charter unless it could be justified under s 1. In particular, in determining whether the challenged provisions infringed s 3, it was inappropriate to balance this right against other democratic values. Any corresponding benefits flowing from the challenged provisions that related to other democratic values had to be considered only under s 1406. I am not prepared to hold that ss 7 and 24 of the Australian Constitution go nearly so far. And, in any event, as will appear, I am not prepared to hold that the challenged provisions do deny to electors, or groups, or parties, opportunities of meaningful participation in the election of members of the Commonwealth Parliament. For the same reasons I would reject the so-called purposive implication for which the appellant contends. There is no basis for, as the appellant puts it, a negative implication of a prohibition upon anything in derogation of a "grant" to the people of a direct choice. The appellant put his arguments that ss 7 and 24 are infringed by the challenged provisions in another way, that: 406 Section 1 of the Canadian Charter of Rights and Freedoms contained in Pt 1 of the Constitution Act 1982 (Can) provides: "The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society." Callinan "[l]egislation which unreasonably discriminates between candidates does not implement or facilitate 'direct choice' within the meaning of sections 7 and 24 of the Constitution, indeed is antithetical thereto, and accordingly is beyond the legislative power of the Commonwealth Parliament" (the "level playing field" argument). The appellant went so far as to submit, in effect that discrimination of any kind between candidates was constitutionally impermissible. He sought to rely particularly in this regard on statements made by Mason CJ in ACTV407: that "The consequence the severe restriction of freedom of communication plainly fails to preserve or enhance fair access to the mode of communication which is the subject of the restriction. The replacement regime, though it reduces the expenses of political campaigning and the risks of trivialization of political debate, does not introduce a 'level playing field'. It is discriminatory in the respects already mentioned. In this respect I do not accept that, because absolute equality in the sharing of free time is unattainable, the inequalities inherent in the regime introduced by Pt IIID are justified or legitimate." No other Justice in ACTV went so far. In any event much of what was said in that case must be read subject to the reasoning and conclusions in Lange. The appellant accepts however that: "each of McKenzie408, Abbotto409, McClure410 and Ditchburn411 proceed on the foundation ... (as expounded in McGinty v Western Australia412), that as there is no particular electoral system required by the Constitution (save that it must result in 'direct choice'), the Parliament is free to choose and that its choice of the particular electoral system may entail reasonable discrimination." 407 (1992) 177 CLR 106 at 146. 408 McKenzie v The Commonwealth (1984) 59 ALJR 190; 57 ALR 747. 409 Abbotto v Australian Electoral Commission (1997) 71 ALJR 675; 144 ALR 352. 410 McClure v Australian Electoral Commission (1999) 73 ALJR 1086; 163 ALR 734. 411 Ditchburn v Australian Electoral Officer for Queensland (1999) 165 ALR 147. 412 (1996) 186 CLR 140 at 184. Callinan itself discrimination. The Constitution In my opinion the challenged provisions cannot be said to involve any unreasonable contemplates discrimination. Some might say that the election of an equal number of senators by each State discriminates against the more populous States. So too, a legislative entitlement to vote at age 18 years, may be thought by some to discriminate against people of 17 years. Lines must be drawn somewhere. The presence in the Constitution of ss 7, 8, 9, 24, 29, 30 and 34 provides a clear indication of the very broad power of the Parliament to make laws drawing those lines. Implicit in the challenged provisions are these propositions: political parties are comprised of people having a common political philosophy; political parties endorse and support candidates subscribing that philosophy; endorsement by a political party may be a relevant matter for electors to know; and, to be a real political party of relevance, entitling it to various privileges, it should have no fewer than 500 members who are not members of other parties. Provisions containing, or based upon those propositions do not discriminate in any unreasonable way against either a party or a candidate for election. As I have pointed out, in ACTV only Mason CJ used the expression "level playing field"413. The legislated rules apply to all in exactly the same way. Any discrimination that may occur, by denying candidates of unregistered parties of 2 to 499 members the same sort of notation on a ballot paper as a candidate endorsed by a registered party of, say 501 members, is to do no more than to draw the sort of line that the Constitution empowers the Parliament to draw, and that line has not been shown to have been unreasonably drawn here. Even if I were to accept that a political surface as true and level as a well-calibrated bowling green was required by the Constitution, I would hold that the Act here substantially provides for it. The appellant put a submission that there were other constitutional implications upon which he could rely, of freedom of association in relation to federal elections "and an associated freedom of political privacy relating thereto". These too were said to be derivable from ss 7 and 24 of the Constitution, or from the implied constitutional freedom of communication itself, in short, again that there should be drawn an implication on and from another implication. The appellant argued that these were necessary precursors to, and inextricably linked with direct choice. Disclosure, it was argued, of the names of members of the party, unreasonably interfered with or burdened these freedoms. I would reject this submission also. It was not suggested by the appellant that the secret ballot was constitutionally protected, but yet he would have it that secrecy of affiliation with a party should be, even in circumstances in which disclosure is only required in order to verify a qualification applicable to all 413 (1992) 177 CLR 106 at 131. Callinan parties and people for inclusion of a notation on a ballot paper414, and other privileges415, including a public subsidy416. Implications of the type suggested fall far short of being necessary. And even if they were, the Act, and the challenged provisions of it, having as they do, the purposes to which I just referred, are not disproportionate or inappropriate, or ill-adapted to the direct election of members and senators mandated by the Australian Constitution. I have left until last the appellant's principal submission that the challenged provisions directly burden freedom of political communication itself, and accordingly the constitutional implication which protects it. I would reject this submission as well. In order to advance his argument the appellant needed to identify an implied constitutional right of non-discrimination, because he acknowledged, as I think he was bound to do, that if the legislation enacted that no party affiliations might appear on a ballot paper, the enactment would not interfere with any constitutional right. What was said by Gibbs CJ in McKenzie v The Commonwealth417 in relation to discrimination in a slightly different, but related context is relevant to the claim of unreasonable discrimination here, and its possible relationship with freedom of communication: "The second principal ground taken by the plaintiff is that it offends general principles of justice to discriminate against candidates who are not members of established parties or groups. Section 7 of the Constitution provides, amongst other things, that the Senate shall be composed of senators for each State directly chosen by the people of the State. I am prepared to assume that s 7 requires that the Senate be elected by democratic methods but if that is the case it remains true to say that 'it is not for this Court to intervene so long as what is enacted is consistent with the existence of representative democracy as the chosen mode of government and is within the power conferred by s 51(xxxvi)' of the Constitution to use the words of Stephen J in Attorney-General (Cth); Ex rel McKinlay v The Commonwealth418." The appellant has no constitutional right to have his party affiliation included on the ballot paper. Nor does any other candidate. The rights are entirely statutory. The Act could be repealed or amended so as to allow no right 414 ss 168, 169, 209 (referring to standard forms E and F), 210A and 216. 415 ss 91 and 91AA (now repealed). 416 ss 294, 299 and 299A. 417 (1984) 59 ALJR 190 at 191; 57 ALR 747 at 749. 418 (1975) 135 CLR 1 at 57-58. Callinan of inclusion of a party on the ballot paper at all. The appellant has no relevant rights other than such rights as may be conferred on him by the Act. In argument, McHugh J drew an analogy: protestors cannot complain about an interference with, or the prevention of their doing what they have no right to do anyway, for example, to communicate a protest on land on which their presence is a trespass419. As the appellant has no relevant right to the imposition of an obligation upon another, to communicate a particular matter, he has no right which is capable of being burdened. The appellant is seeking a privilege, not to vindicate or avail himself of a right420. He can communicate his affiliation with the DLP as a candidate in any way and at any time that he wishes. What he cannot do is compel the respondent to do so in a way which would effectively discriminate in his favour, and would be tantamount to treatment of him as having a relevant right. That is sufficient to dispose of the appellant's principal argument. I would dismiss the appeal with costs. 419 Levy v Victoria (1997) 189 CLR 579 at 595, fn 55. 420 Contrast the rights for which the First Amendment to the Constitution of the United States provides: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." 340 HEYDON J. It was common ground that, subject to the appellant's argument, the legislation challenged in this case (which is set out in other judgments) was supported by at least the heads of power granted by ss 9, 10, 31 and 51(xxxvi) of the Constitution. Before analysing the appellant's arguments, it is convenient to set out the objects of the challenged legislation, the Commonwealth Electoral Act 1918 (Cth) ("the Act"). The objects of the challenged legislation The overall scheme of the impugned provisions of the Act suggests that they have the following objects. First, they seek to ensure that genuine political parties (ie those that have a key characteristic of a political party, namely a modest but real level of community participation) can engage effectively in the electoral process. Secondly, they seek to protect public funds by ensuring that only those parties have access to public funding. Thirdly, they seek to reduce the risk of frustrating the choice of legislators by the people by preventing the participation of "parties" which have trivial levels of public support, but which catch the eye of the voter with a "one issue" party name and then channel preferences to other parties, thereby operating as decoys or dummies or fronts for other parties. Finally, they seek to reduce the risk of electors being misled into thinking, if all "parties" could be named on the ballot paper, that they all have existing representation in Parliament or a substantial membership. The Act seeks to achieve these aims through, in part, the application of "the 500 rule", which essentially requires that registered political parties must either have at least one member who is a parliamentarian or have at least 500 members, and "the no-overlap rule", which prohibits two or more parties from relying on the same member for the purposes of registration. The appellant relied on three principal arguments against the validity of these rules. The appellant's first argument: "directly chosen by the people" Section 7 of the Constitution provides that senators are to be "directly chosen by the people" of the relevant State. Section 24 provides that members of the House of Representatives are to be "directly chosen by the people of the Commonwealth". The appellant submitted that the 500 rule and the no-overlap rule did not result in direct choice, and indeed were inconsistent with it. He did so because he contended that a direct choice must be a true choice, and hence an informed choice, and the impugned rules impaired the making of, or were antithetical to, an informed choice by voters. This was because they had the effect of preventing a candidate and his or her party from communicating to a voter that candidate's party affiliation or endorsement on the ballot paper in certain circumstances. "A candidate may desire to communicate that he or she is endorsed by a particular party and therefore professes to hold or promotes particular political ideas or objectives. A political party involved in the electoral process may want to communicate to electors that its candidate is an endorsed candidate. An elector may desire to know, when voting, which candidates are affiliated with or endorsed by particular parties in order to make a 'true choice' or a 'real choice' as to who to vote for. Further, not to communicate party endorsement (even with parties with less than 500 members) is apt to mislead electors who may otherwise assume that a candidate not displaying party endorsement has no affiliation with any party." This argument was said to be supported by the decision of the Supreme Court of Canada in Figueroa v Canada (Attorney General)421. That argument fails. It cannot be said that elections conducted under the 500 rule and the no-overlap rule do not result in legislators being "directly chosen by the people". The "choice" must involve "an opportunity to gain an appreciation of the available alternatives"422. Regulation of the electoral process is necessary for its effective operation423. Sections 7 and 24 forbid the interposition of an electoral college between the electors and those they elect424, but otherwise permit the legislature a wide range of choice as to how to ensure that the elected are directly chosen by the electors425. The 500 rule and the no- overlap rule do not prevent communication of party endorsement of candidates in any respect save one, and hence do not prevent steps being taken to ensure that electors realise that a candidate might be affiliated with a party not noted on the ballot. The goals of the legislation establishing these rules, so far as they seek to prevent electors from being misled, are substantially achieved. Hence, far from being injurious to informed choice, the 500 rule and the no-overlap rule foster it. 421 [2003] 1 SCR 912. 422 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560, citing Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 187 per Dawson J. 423 Levy v Victoria (1997) 189 CLR 579 at 607-608 per Dawson J. 424 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 227 per McHugh J. 425 Attorney-General (Cth); Ex rel McKinlay v The Commonwealth (1975) 135 CLR 1 at 46 per Gibbs J. Figueroa v Canada (Attorney General) does not assist the appellant. While in Canada a political party seeking registered party status has to have 100 members, that requirement was not in issue in that case426. The main question in the case concerned the requirement that a political party must nominate candidates in at least 50 electoral districts in an election before it can be eligible for registered party status, and thereby obtain the right for its candidates to have their party affiliation listed on the ballot paper, together with financial advantages427. The Supreme Court of Canada concluded that the 50-candidate threshold contravened s 3 of the Canadian Charter of Rights and Freedoms, and could not be justified under s 1428. However, the case has no bearing on the present appeal, because the matter in issue in this appeal was not an issue in that case (and vice versa); the criteria against which validity of electoral laws must be tested in Canada are wholly different from the criteria here; and nothing was said in that case that affords any assistance here. The appellant's second argument: unreasonable discrimination The appellant submitted that the 500 rule and the no-overlap rule unreasonably discriminated between candidates and thereby contradicted the requirement that legislators be "directly chosen by the people", because they did not implement direct choice. He submitted that the 500 rule discriminated in favour of parties with larger membership bases to the disadvantage of smaller parties, discriminated the disadvantage of other candidates, and discriminated in favour of parties associated with incumbent parliamentarians to the disadvantage of parties incumbent parliamentarians in favour of 426 Figueroa v Canada (Attorney General) [2003] 1 SCR 912 at 923 per Iacobucci J. 427 Figueroa v Canada (Attorney General) [2003] 1 SCR 912 at 929 per Iacobucci J. 428 Sections 1 and 3 provide: "1 The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society. 3 Every citizen of Canada has the right to vote in an election of members of the House of Commons or of a legislative assembly and to be qualified for membership therein." He said incumbent parliamentarians. without reasonable discrimination would not "contaminate or undermine the choice to be made by electors", it is not reasonable that a candidate from a party with 20, 50 or 100 members cannot display party affiliation on the ballot paper, while a candidate from a party with more than 500 can, or that a parliamentarian can automatically display party affiliation (whatever the size of the relevant party), whereas other candidates who wish to do so must belong to parties with more than 500 members. that while The authorities on which the appellant relied can be dealt with at the outset. The appellant referred to a statement by McHugh J that the Commonwealth Parliament could not legislate "so as to prevent members of lawful political parties from being elected to Parliament"429. But the legislation postulated in that example goes beyond discrimination; the legislation challenged in this case is of a totally different character. The appellant also relied on statements by Mason CJ criticising as discriminatory a legislative system which favoured established political parties in allocating free broadcasting time during elections430. But those comments were made in relation to the implied constitutional freedom of political communication, not in relation to the express terms of ss 7 and 24, or the "necessary implications from the text of sections 7 and 24", on which the appellant's discrimination argument appears to rest. That argument wavered between the contention that ss 7 and 24 in their terms forbid discrimination, and the contention that there is a constitutional implication forbidding it. The 500 rule and the no-overlap rule do not contravene the terms of ss 7 and 24, because they do not prevent legislators being directly chosen by the people. In McKenzie v Commonwealth of Australia431, this Court upheld as not contravening s 7 provisions of the Act that allowed the name of "a registered political party" to be published next to the names of candidates on Senate ballot papers. Only an eligible political party could be registered, meaning a party which had at least one sitting member in a Commonwealth, State or Territory legislature, or a party with at least 500 members: ss 123 and 124. The legislation also allowed electors to vote in Senate elections either by marking boxes against the names of individual candidates set out below a line or by marking one of a number of boxes organised according to group voting tickets above the line: ss 168 and 211. Gibbs CJ said that the legislation was not 429 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 430 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 431 (1984) 59 ALJR 190; 57 ALR 747. inconsistent with the existence of representative democracy: any disadvantage caused to unaffiliated candidates did not so offend democratic principles as to render the legislation in breach of s 7432. The provisions challenged in this case are not in a different category. Even if there is a "necessary implication from the text of sections 7 and 24" forbidding unreasonable discrimination, it is not infringed here. In the context of s 92 of the Constitution, discrimination has been said to lie in the unequal treatment of equals and in the equal treatment of unequals433. Here, there is no equality between parties that have some real level of community support and parties that do not, and the requirement of a minimum of 500 members is not an irrational way of distinguishing between those two classes. In the context of s 117 of the Constitution, discrimination has been said to signify the process by which different treatment is accorded to persons or things "by reference to considerations which are irrelevant to the object to be attained", and the question therefore is whether the different treatment is reasonably capable of being seen as appropriate and adapted to a relevant difference434. Here, the difference exists in order to fulfil the objective of the 500 rule by informing voters about whether a particular candidate is endorsed by a "party" commanding some community support, and in order to fulfil the objective of the no-overlap rule by preventing "front" parties which might otherwise mislead voters. The 500 rule and the no-overlap rule assist an informed choice by electors. The difference in treatment that they effect is rationally based and is not unreasonable. The appellant's third argument: implied freedom of political communication The appellant contended that the 500 rule and the no-overlap rule contravened the implied freedom of political communication, because those rules prevented electors from being able to ascertain which candidates appearing on the ballot paper belonged to which parties. He submitted that the inclusion on the ballot paper of a candidate's party affiliation was a communication "between the people". He pointed out that the ballot paper is an official form of communication printed and published by the Australian Electoral Commission; 432 McKenzie v Commonwealth of Australia (1984) 59 ALJR 190 at 191; 57 ALR 747 at 749. See also Abbotto v Australian Electoral Commission (1997) 71 ALJR 675 at 678 per Dawson J; 144 ALR 352 at 356. 433 Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 480 per 434 Street v Queensland Bar Association (1989) 168 CLR 461 at 570-572 per that it communicates whether or not a candidate is endorsed by a particular party; that it is the final form of political communication to a voter in that it is taken to a polling booth, read, marked and deposited in the ballot box; and that "how to vote" cards from minor parties may not be available at all polling booths. He submitted that the legislation burdened the freedom of political communication by preventing some party affiliations from being revealed, and that the two rules were not reasonably appropriate and adapted to a legitimate or lawful objective. These submissions fail. First, there is no interference with any implied freedom of political communication in these circumstances because it is necessary that there be some relevant "right or privilege … under the general law"435 to be interfered with. In the absence of legislation permitting it, there is no right in any political party or candidate to have party affiliation indicated on the ballot paper. Indeed, the appellant conceded that a legislative prohibition on the appearance of any party affiliation on the ballot paper would not contravene the implied freedom. It follows that to legislate for a mixture of permissions and prohibitions, so as to permit the party affiliations of some candidates but not others to appear on the ballot paper, cannot interfere with the implied freedom436. The Full Federal Court saw the challenged statutory provisions as conferring "a limited privilege on registered political parties in relation to their communication with the voters", which was "a burden on all those seeking election that do not enjoy it"437. It would be paradoxical, however, if a complete prohibition was incontestably valid while a partial prohibition was not. It would also be paradoxical if an implied freedom created a right in individuals to have their party affiliation identified in the ballot paper, and created a correlative obligation on the Commission to include it there. Indeed, it would be contrary to principle, for "the freedom of communication implied in the Constitution is not an obligation to publicise … [I]t is not a right to require others to provide a means of communication."438 The 435 Levy v Victoria (1997) 189 CLR 579 at 622 per McHugh J; see also at 625-626 per 436 As Marshall J held at first instance: Mulholland v Australian Electoral Commission (2002) 193 ALR 710 at 724-725 [58]-[60]. 437 Mulholland v Australian Electoral Commission (2003) 128 FCR 523 at 532 [22] per Black CJ, Weinberg and Selway JJ. 438 McClure v Australian Electoral Commission (1999) 73 ALJR 1086 at 1090 [28] per Hayne J; 163 ALR 734 at 740-741 (emphasis in original). See also Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560. Full Federal Court relied on passages439 that predate Lange v Australian Broadcasting Corporation440, were enunciated in a case in which a prior freedom to communicate by radio and television broadcasts was found to exist at common law, and were directed to the inadequacy of the regime which was introduced in substitution for that prior freedom. Secondly, what appears on the ballot paper is not political communication in the sense used in Lange v Australian Broadcasting Corporation441, namely communications between the electors and the elected representatives, the electors and the candidates, and the electors themselves – that is, between the people. What is on the ballot paper is a communication only between the executive government and the electors442. The ballot paper is the medium by which a vote is cast. It is integral to the election machinery. It is not part of the process of communicating information with a view to influencing electors to vote for one candidate or another. "It is for the electors and the candidates to choose which forms of otherwise lawful communication they prefer to use to disseminate political information, ideas and argument. Their choices are a matter of private, not public, interest. Their choices are outside the zone of governmental control."443 But the conduct of the election itself is a matter of public interest and is within the zone of governmental control. That is particularly true of the form of the ballot paper. Thirdly, the 500 rule and the no-overlap rule do not create a burden on the implied freedom of political communication in that there is no restraint on any activity which candidates or parties may engage in apart from the legislative system of registration. All opportunities for communication that existed before the impugned provisions were enacted continue to exist. 439 Mulholland v Australian Electoral Commission (2003) 128 FCR 523 at 531 [20], referring to Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 146 per Mason CJ, 172 per Deane and Toohey JJ, 236-237 per 440 (1997) 189 CLR 520. 441 (1997) 189 CLR 520 at 560. 442 The Full Federal Court relied on statements of Mason CJ in Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 139, which were not directed to the present problem and which predated the refinement of the relevant principles in Lange's case: Mulholland v Australian Electoral Commission (2003) 128 FCR 523 at 531 [21]. 443 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 236 per McHugh J. Fourthly, even if there were a relevant right to communicate party affiliation, even if the ballot paper is a form of exercising it, and even if there were a burden on the implied freedom of political communication, the requirements of the legislation are reasonably appropriate and adapted to serve legitimate ends, the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government444. Legitimate ends. The ends are those described at [341] above. The appellant did not present sustained argument in support of the contention that these ends were not legitimate. Compatibility of ends with constitutionally prescribed system of government. It is plain that the objects of the legislation are compatible with the maintenance of the constitutionally prescribed system of representative and responsible government. Reasonably appropriate and adapted? Much of the appellant's argument analysed the structure and history of the legislation to support numerous detailed criticisms of its merits and numerous suggestions as to how the ends of the legislation could have been more effectively achieved by other means. However, the question is not whether the impugned provisions have established the most desirable or least burdensome regime to carry out the legitimate ends445. The question is only whether the legislation is reasonably appropriate and adapted to the achievement of the legislative purpose, and weight is to be given to the legislative judgment446. 444 The appellant advanced many detailed arguments about the meaning and application of the test stated in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 in the context of electoral laws. The respondent and the Attorney-General of the Commonwealth contended that the relevant test was whether Parliament's choice of means was "reasonably capable of being seen as" appropriate and adapted to the achievement of the relevant purpose. It is not necessary to deal with either of these sets of arguments since, on any available construction of the test, and on any available way of applying it, the appellant must fail. 445 Coleman v Power [2004] HCA 39 at [328]. 446 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 at 144 per Mason CJ. The appellant's argument depended to some extent on an analogy with Australian Capital Television Pty Ltd v The Commonwealth447. There is no analogy between the legislation struck down in that case and the legislation challenged in this case. The legislation in that case was characterised as constituting a prohibition on a traditional category of political communications being conducted through ordinarily available media. It thus burdened an ordinary mode of communication in such a way as seriously to impede discussion about elections. This is quite distinct from the enactment of a statutory scheme regulating the content of the official ballot paper, at issue in this case. The impugned legislation provides a system of funding to groups of politicians attracting sufficient community support to be capable of description and registration as "parties". The scheme of the legislation – to define "party" as a group having an elected legislator or 500 members; to prevent the misleading of voters by the channelling of preferences attaching to votes for "single issue" parties to other parties; and to prevent voters being otherwise misled – is a reasonable technique for achieving its goals. While many numbers other than 500 could have been selected, it provides a reasonable guide to an appropriate level of community support. And the other legislative technique, treating as a party one which counts among its members a member of the legislature, is not arbitrary since to be a member is usually to have received a significant measure of community support, namely enough votes to be elected. The no-overlap rule is a means of ensuring the effective operation of the 500 rule by preventing its evasion. The requirement of the two rules that members acknowledge their membership, at least to the Commission, also prevents evasion of the 500 rule. The appellant's reference to derogation from grant The appellant referred to an argument that ss 7 and 24 of the Constitution contained a "grant" to the people of "direct choice", and that the impugned legislation derogated from that grant. This was raised as a possibility rather than put as an argument, and in view of the appellant's statement that it was not necessary for his case, it need not be dealt with. The appellant's reliance on constitutional rights of privacy and association I agree with Gummow and Hayne JJ on these subjects. Order The appeal should be dismissed with costs. 447 (1992) 177 CLR 106.

HIGH COURT OF AUSTRALIA PLAINTIFF AND THE STATE OF QUEENSLAND DEFENDANT [2014] HCA 46 14 November 2014 ORDER The questions asked by the parties in the further amended special case dated 23 July 2014 and referred for consideration by the Full Court be answered as follows: Question 1 Does the plaintiff have standing to seek a declaration that any, and which, of the provisions referred to in the schedule to these questions (other than Criminal Code (Q), sections 60A, 60B(1) and 60C, and Liquor Act 1992 (Q), sections 173EB to 173ED) is invalid? Answer Question 2 Is the relief which the plaintiff seeks in answer to question 3 (other than the relief sought in relation to the Criminal Code (Q), sections 60A, 60B(1) and 60C, and Liquor Act 1992 (Q), sections 173EB to 173ED) hypothetical? Answer It is unnecessary to answer this question. Question 3 Is any, and which, of the provisions referred to in the schedule invalid on the ground that it infringes the principle of Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51? Answer None of ss 60A, 60B(1), 60B(2) and 60C of the Criminal Code (Q) or ss 173EB, 173EC and 173ED of the Liquor Act 1992 (Q) is invalid on the ground that it infringes the principle in Kable v Director of Public Prosecutions (NSW). The plaintiff does not have standing to challenge the validity of the other provisions in the schedule. Question 4 Who should pay the costs of the special case? Answer The plaintiff. Schedule Vicious Lawless Association Disestablishment Act 2013 (Q) Criminal Code (Q), ss 60A, 60B(1), 60B(2), 60C, 72(2), 72(3), 72(4), 92A(4A), 92A(4B), 92A(5), 320(2), 320(3), 320(4), 340(1A), 340(1B) and Bail Act 1980 (Q), ss 16(3A), 16(3B), 16(3C) and 16(3D) Liquor Act 1992 (Q), ss 173EB, 173EC and 173ED Representation K C Fleming QC with W Baffsky and S Robertson for the plaintiff (instructed by Irish Bentley Lawyers) P J Dunning QC, Solicitor-General of the State of Queensland with A J MacSporran QC, G J D del Villar and C M Tam for the defendant (instructed by Crown Law (Qld)) Intervenors J T Gleeson SC, Solicitor-General of the Commonwealth with C L Lenehan for the Attorney-General of the Commonwealth, intervening (instructed by Australian Government Solicitor) M G Sexton SC, Solicitor-General for the State of New South Wales with J E Davidson for the Attorney-General for the State of New South Wales, intervening (instructed by Crown Solicitor (NSW)) M P Grant QC, Solicitor-General for the Northern Territory with A K Chong-Fong for the Attorney-General for the Northern Territory, intervening (instructed by Solicitor for the Northern Territory) M G Hinton QC, Solicitor-General for the State of South Australia with C Jacobi for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor (SA)) S G E McLeish SC, Solicitor-General for the State of Victoria with C P Young for the Attorney-General for the State of Victoria, intervening (instructed by Victorian Government Solicitor) G R Donaldson SC, Solicitor-General for the State of Western Australia with A J Sefton for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Constitutional law (Cth) – Standing – Plaintiff sought declaration that Vicious Lawless Association Disestablishment Act 2013 (Q) and provisions of the Criminal Code (Q), Bail Act 1980 (Q) and Liquor Act 1992 (Q) were invalid – Where certain provisions only operated where offence committed against existing unchallenged laws – Whether plaintiff had sufficient interest to bring action. Constitutional law (Cth) – Constitution, Ch III – Institutional integrity of State courts – Where ss 60A, 60B(1), 60B(2) and 60C of Criminal Code created offences elements of which involved being a "participant" in a "criminal organisation" – Where ss 173EB, 173EC and 173ED of Liquor Act created offences elements of which involved wearing symbols of membership of a "declared criminal organisation" – Where power, by regulation, to declare organisation a "criminal organisation" – Whether impugned provisions offended principle in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 – Whether Court enlisted to implement legislative or executive policy – Whether task given to Court incompatible with institutional integrity. Words and phrases – "association", "criminal organisation", "institutional integrity", "Kable principle", "participant", "standing", "sufficient interest". Bail Act 1980 (Q), ss 16(3A), 16(3B), 16(3C), 16(3D). Criminal Code (Q), ss 60A, 60B(1), 60B(2), 60C, 72(2), 72(3), 72(4), 92A(4A), 92A(4B), 92A(5), 320(2), 320(3), 320(4), 340(1A), 340(1B), 340(3). Liquor Act 1992 (Q), ss 173EB, 173EC, 173ED. Vicious Lawless Association Disestablishment Act 2013 (Q). Introduction The plaintiff is a member of the Brisbane Chapter of the Hells Angels Motorcycle Club ("the Club") and a former office bearer of a Sydney Chapter. By proceedings instituted in the original jurisdiction of this Court, he challenges the validity of legislation enacted by the Parliament of Queensland, which is directed at disrupting the operations of such clubs and other associations. He asserts that the legislation confers functions on Queensland courts which, contrary to Ch III of the Constitution, are incompatible with their institutional integrity. The impugned legislation was enacted in a package and comprises the Vicious Lawless Association Disestablishment Act 2013 (Q) ("the VLAD Act"), new provisions of the Criminal Code (Q) ("the Criminal Code") and the Bail Act 1980 (Q) ("the Bail Act") enacted by the Criminal Law (Criminal Organisations Disruption) Amendment Act 2013 (Q) ("the Amendment Act") and amendments to the Liquor Act 1992 (Q) ("the Liquor Act") made by the Tattoo Parlours Act 2013 (Q). The VLAD Act provides for significant additional penalties by way of imprisonment to be imposed upon persons convicted of declared offences who are participants in associations which have not been shown not to have a criminal purpose. New provisions in the Criminal Code provide for enhanced penalties to be imposed on persons, convicted of certain offences against the Criminal Code, in the aggravating circumstance where such persons are participants in organisations which are found to be, or have been declared by the Supreme Court or designated by regulation as, criminal organisations. The amendments to the Bail Act impose constraints upon the grant of bail to persons who are participants in such organisations if they are charged with any offences. Further amendments to the Criminal Code create new offences which effectively impose restrictions upon the freedom of movement and association of participants in criminal organisations. Amendments to the Liquor Act proscribe the wearing or carrying in licensed premises of items bearing insignia and other markings of criminal organisations. The plaintiff seeks declarations that the impugned provisions are invalid. Given that he has not been charged with any offence which would attract the additional or enhanced penalties under the VLAD Act and the Criminal Code and the new constraints on the grant of bail under the Bail Act, Queensland contests his standing to challenge those provisions1. The parties have agreed questions in a special case referred to the Full Court going to the plaintiff's standing and the validity of the legislation. It is necessary to consider the impugned provisions, the nature of the challenges to each of them, and the related questions of 1 The text of the relevant provisions is set out in the Joint Reasons. They are, for the most part, paraphrased in these Reasons. jurisdiction and standing where they are in issue. As explained in these Reasons, the plaintiff lacks standing to challenge the VLAD Act, the aggravating circumstance provisions of the Criminal Code and the amendments to the Bail Act. His challenges to the validity of the new offence-creating provisions of the Criminal Code and the new provisions of the Liquor Act fail on their merits. Jurisdiction, standing and declaratory relief The jurisdiction which the plaintiff invokes is that conferred on this Court, pursuant to s 76(i) of the Constitution, by s 30(a) of the Judiciary Act 1903 (Cth) ("the Judiciary Act") in "all matters arising under the Constitution or involving its interpretation". That jurisdiction cannot and does not extend to authorise the Court to make a declaration of the law divorced from any attempt to administer that law2. However, in proceedings for a declaration of the invalidity of an impugned law, the law that is being administered is not the impugned law but the constitutional law which determines its validity or invalidity3. This Court held in In re Judiciary and Navigation Acts that a matter in respect of which jurisdiction is conferred on the Court under s 76 of the Constitution must be concerned with "some immediate right, duty or liability to be established by the determination of the Court."4 That criterion is not to be read unduly restrictively. Where a declaration of the invalidity of a criminal statute is sought, it is not necessary in order to satisfy it that "the Executive Government of the State has, at least, invoked legal process against the particular In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 266–267 per Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ; [1921] HCA 20; Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 303 per Mason CJ, Deane, Dawson, Gaudron and McHugh JJ; [1991] HCA 53. 3 Croome v Tasmania (1997) 191 CLR 119 at 126 per Brennan CJ, Dawson and Toohey JJ; [1997] HCA 5. (1921) 29 CLR 257 at 265 per Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ; see also Fencott v Muller (1983) 152 CLR 570 at 591 per Gibbs CJ, 603 per Mason, Murphy, Brennan and Deane JJ; [1983] HCA 12; Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 303 per Mason CJ, Deane, Dawson, Gaudron and McHugh JJ, 316 per Brennan J, 321–322 per Toohey J; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582 per Mason CJ, Dawson, Toohey and Gaudron JJ; [1992] HCA 10; Croome v Tasmania (1997) 191 CLR 119 at 127 per Brennan CJ, Dawson and Toohey JJ; Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 356 [47]–[48] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [1999] HCA 9. citizen to enforce the criminal law."5 In their joint judgment in Croome v Tasmania, in which Gaudron, McHugh and Gummow JJ made that observation, they referred6 to the judgment of Dixon J in British Medical Association v The Commonwealth7 concerning the operation of the Pharmaceutical Benefits Act 1947 (Cth) prohibiting medical practitioners from writing prescriptions, other than on a prescription form supplied by the Commonwealth, and said8: "There was no suggestion that it was necessary for the plaintiffs to show that there already had been set in motion against them the punitive provisions of the legislation. It was significant enough that the plaintiffs 'faced possible criminal prosecution'." (footnote omitted) The question whether there is a matter grounding federal jurisdiction to entertain a claim for relief is linked to the question of standing to claim that relief. They are concepts with distinct origins and histories. Standing is a question that arises in federal and non-federal jurisdictions. Both concepts are concerned to "mark out the boundaries of judicial power"9. Their attempted severance has been described as "conceptually awkward, if not impossible."10 Gummow, Crennan and Bell JJ observed in Pape v Federal Commissioner of Taxation11: "It is now well established that in federal jurisdiction, questions of 'standing' to seek equitable remedies such as those of declaration and injunction are subsumed within the constitutional requirement of a 'matter'." (footnote omitted) 5 Croome v Tasmania (1997) 191 CLR 119 at 136 per Gaudron, McHugh and Gummow JJ, see also at 127 per Brennan CJ, Dawson and Toohey JJ. (1997) 191 CLR 119 at 137–138. (1949) 79 CLR 201 at 257; [1949] HCA 44. (1997) 191 CLR 119 at 138 referring to a phrase used in Diamond v Charles 476 US 54 at 64 (1986). 9 Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 262 [37] per Gaudron, Gummow and Kirby JJ; [1998] HCA 49 quoting from Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582 per Mason CJ, Dawson, Toohey and Gaudron JJ. 10 Croome v Tasmania (1997) 191 CLR 119 at 132 per Gaudron, McHugh and 11 (2009) 238 CLR 1 at 68 [152]; [2009] HCA 23. That does not mean, as Gaudron J observed in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd12, "that, for the purposes of Ch III, questions of standing are wholly irrelevant." A negative answer to the question — is there a matter before the Court in which it has federal jurisdiction? — would render the question of the plaintiff's standing moot. On the other hand, an affirmative answer to the question — is there a matter? — may not be sufficient to answer the question whether the plaintiff has standing13. A law which proscribes specified conduct as a criminal offence affects the freedom of a person who would otherwise engage in that conduct. If there is an arguable question whether such a law, properly interpreted, would prohibit what that person intends or wishes to do, he or she may have standing, in a court with the relevant jurisdiction14, to seek a declaration that the intended or desired conduct is not unlawful15. Similarly, if there is an arguable question that the law is invalid, there may be standing to seek a declaration to that effect16. As a general rule, however, declaratory relief cannot be claimed as a way of obtaining legal advice from a court or answering an hypothetical question divorced from a real controversy. As Mason CJ, Dawson, Toohey and Gaudron JJ said in Ainsworth v Criminal Justice Commission17: "declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The 12 (2000) 200 CLR 591 at 611 [45]; [2000] HCA 11. 13 See generally Evans, "Standing To Raise Constitutional Issues Reconsidered", (2010) 22(3) Bond Law Review 38, especially at 57. 14 The question may arise in federal or non-federal jurisdictions depending upon the source of the law. 15 The Commonwealth v Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297 at 305 per Barwick CJ; [1972] HCA 19; Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 356 [47]–[48] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ. See also Royal College of Nursing of the United Kingdom v Department of Health and Social Security [1981] AC 800; Airedale NHS Trust v Bland [1993] AC 789 at 862 per Lord Goff of Chieveley, 880–881 per Lord Browne-Wilkinson. 16 If the question concerns the validity of an Act of a parliament, it will most likely arise in federal jurisdiction. If it goes to the validity of delegated legislation, it may arise in federal or non-federal jurisdiction depending upon the source of the empowering legislation. 17 (1992) 175 CLR 564 at 582. person seeking relief must have 'a real interest' and relief will not be granted if the question 'is purely hypothetical', if relief is 'claimed in relation to circumstances that [have] not occurred and might never happen' or if 'the Court's declaration will produce no foreseeable consequences for the parties'." (footnotes omitted) This Court has sometimes dealt with a question of standing as a preliminary issue and on other occasions proceeded to deal with the case on its merits, including the issue of standing as one among other issues18. In Robinson v Western Australian Museum19, Gibbs J observed that if a plaintiff's claim to have standing were merely colourable, the court would no doubt proceed to determine that question immediately and, determining it against the plaintiff, dismiss the action. His Honour went on to say that if determination of standing requires the consideration of important questions which may never fall for decision if the plaintiff's claim is dismissed on its merits, it may be more convenient to determine the validity of the challenged statute. That discretion is, of course, always subject to the constraint that the court cannot decide validity as an abstract or hypothetical question20. In Robinson, the Commonwealth and a number of States had intervened on both sides of the case and questions of validity had been very fully examined. Those facts, in the opinion of Gibbs J, supported the conclusion that the question of validity should be determined and the action should not be dismissed for want of standing21. In Williams v The Commonwealth22, where issue had been joined on both sides of the questions raised by the plaintiff, the question of the plaintiff's standing was put to one side. There was a matter before the Court agitated by parties with standing independently of the plaintiff's standing. That is not this 18 Robinson v Western Australian Museum (1977) 138 CLR 283 at 302 per Gibbs J; [1977] HCA 46; Paterson v O'Brien (1978) 138 CLR 276 at 282; [1978] HCA 2; Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 at 532–533 per Gibbs J, 546 per Stephen J, 552 per Mason J; [1980] HCA 53; Allars, "Standing: The Role and Evolution of the Test", (1991) 20 Federal Law Review 83 at 89–91; Taylor, "Standing to Challenge the Constitutionality of Legislation", in Stein (ed), Locus Standi, (1979) 143 at 145. 19 (1977) 138 CLR 283 at 302. 20 (1977) 138 CLR 283 at 302–303. 21 (1977) 138 CLR 283 at 303. 22 (2012) 248 CLR 156 at 223–224 [112] per Gummow and Bell JJ, French CJ agreeing at 181 [9], Hayne J agreeing at 240 [168], Crennan J agreeing at 341 [475], Kiefel J agreeing at 361 [557]; [2012] HCA 23. case. The Commonwealth and the intervening States and the Northern Territory made common cause in support of the impugned legislation. In any event, as appears below, the plaintiff's claim to have standing in relation to the VLAD Act, the aggravated circumstance provisions of the Criminal Code and the impugned provisions of the Bail Act is unsustainable. The question of standing converges upon the constitutional question of jurisdiction and is appropriately determined at the outset. The VLAD Act At the heart of the VLAD Act is the term "vicious lawless associate", which is defined in s 5(1) of the Act as a person who: commits a declared offence; and at the time the offence is committed, or during the course of the commission of the offence, is a participant in the affairs of an association (relevant association); and did or omitted to do the act that constitutes the declared offence for the purposes of, or in the course of participating in the affairs of, the relevant association." The status of "participant in the affairs of an association" attaches to a person who "asserts, declares or advertises his or her membership of, or association with, the association"23, a person who "seeks to be a member of, or to be associated with, the association"24 and a person who "has attended more than 1 meeting or gathering of persons who participate in the affairs of the association in any way"25. It also includes a person who "has taken part on any 1 or more occasions in the affairs of the association in any other way."26 The term "participating in the affairs of ... the relevant association" in s 5(1)(c) bears a corresponding meaning27. Participation does not necessarily involve any criminal act or purpose. 23 VLAD Act, s 4(a). 24 VLAD Act, s 4(b). 25 VLAD Act, s 4(c). 26 VLAD Act, s 4(d). 27 Acts Interpretation Act 1954 (Q), s 32. The VLAD Act provides that a court sentencing a "vicious lawless associate" for a declared offence must impose a further sentence of 15 years imprisonment28. In the case of a "vicious lawless associate" who was, at the time of the commission of the declared offence, an office bearer of an association, there is a further mandated cumulative sentence of 10 years imprisonment29. The additional sentences cannot be mitigated or reduced under any other Act or law30. If the base sentence did not involve a term of imprisonment, the vicious lawless associate is to immediately begin to serve the further sentence provided for by s 7(1)(b)31. There is no eligibility for parole during any period of imprisonment for a further sentence32. It is not necessary, in order to attract those additional sentences, that the prosecution prove that the relevant association has a criminal purpose. There is, however, a carve out from the definition of "vicious lawless associate" by way of the defence in s 5(2), the burden of proving which rests upon the alleged associate: "a person is not a vicious lawless associate if the person proves that the relevant association is not an association that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, declared offences." Declared offences are set out in Sched 1 to the VLAD Act. They may also be prescribed by regulation33. The range of the declared offences in Sched 1 is wide in subject matter and gravity. They include offences punishable by a maximum sentence of one year's imprisonment34 up to offences punishable by imprisonment for life35. Under the VLAD Act, it is quite possible that a person 28 VLAD Act, s 7(1)(b). 29 VLAD Act, s 7(1)(c). 30 VLAD Act, s 7(2)(a). 31 VLAD Act, s 7(3). 32 VLAD Act, s 8(1). 33 VLAD Act, s 3, definition of "declared offence", s 10. 34 The offence of affray under s 72 of the Criminal Code is punishable by a maximum penalty of one year's imprisonment, although it attracts an enhanced penalty under the new s 72(2) of the Criminal Code if the person convicted is a participant in a criminal organisation. 35 See eg Criminal Code, s 305. who would not receive a custodial sentence for a declared offence in the lower range of seriousness would nevertheless, if an officer of a relevant association, be sentenced to a mandatory 25 years imprisonment. Neither "vicious" nor "lawless" is a defined term. The class of persons designated by the VLAD Act as "vicious lawless associates" may include some who would attract the epithets "vicious" and "lawless" in ordinary parlance. It includes persons who would not. The class of declared offences includes offences which, according to the facts of a particular case, could be described as "vicious". It includes offences which would not. The term "association" in the VLAD Act is defined as meaning any of a corporation, an unincorporated association, a club or league and any group of three or more persons by whatever name called, whether associated formally or informally and whether the group is legal or illegal36. Only a tiny minority of the range of the bodies or groups covered by the definition of "association" could conceivably attract the description "vicious" or "lawless". The term "vicious lawless association", which appears in the title to the VLAD Act, is not defined and appears nowhere in the body of the Act. It is a piece of rhetoric which is at best meaningless and at worst misleads as to the scope and substance of the law. The challenge to the VLAD Act The plaintiff characterised the VLAD Act as requiring courts to impose long custodial sentences on certain offenders based not on the seriousness of their offences but on their association with a particular group. He pointed to the inequality of the treatment which courts are required to mete out to persons convicted of declared offences depending upon whether or not they were participants in the affairs of a relevant association. He submitted that the VLAD Act is invalid because it confers a function on courts offensive to the principle of equality before the law and thereby repugnant to the judicial process, and also because it requires the courts in reality to act as instruments of the Executive. Queensland contended that the plaintiff's claim should not be considered because, not having been charged with a declared offence, he lacked legal standing to seek a declaration that the VLAD Act is invalid. As explained below, that submission should be accepted. The question of the validity of the VLAD Act must await consideration on another day. 36 VLAD Act, s 3, definition of "association". The VLAD Act — the plaintiff's standing The plaintiff's case in relation to the VLAD Act is not one in which declaratory relief is sought concerning the lawfulness of intended conduct. He does not complain that his freedom to act is constrained by the direct legal operation of the Act. The mandatory penalties for which the VLAD Act provides would only be imposed if and when the plaintiff were convicted of a declared offence created by another law. The validity of the laws creating the declared offences is not in question. If and when the plaintiff were to commit a declared offence and the prosecution were to invoke the provisions of the VLAD Act against him, it would be open to him to contend that those provisions are invalid. The plaintiff nevertheless submitted that, as a member of the Club, he is a participant in the affairs of a "relevant association" for the purposes of the VLAD Act. He could become subject to very significant penalties and other restrictions which would not apply to him if he were to cease to be a participant in the Club or any other association. He submitted that he has a real interest in the subject matter of the proceedings which exceeds that of a member of the general public. That submission should be rejected. In a formal sense, the plaintiff's position under the VLAD Act is indistinguishable from that of any other member of the public who is a participant in the affairs of any association. It may be accepted, as a practical matter, that his current membership of the Club, which has been designated as a "criminal organisation" under two separate provisions of Queensland law37, puts him at risk of exposure to a significant additional penalty if he were to be charged with a declared offence. It may be assumed that the risk he faces in that respect is greater than that of most other members of the public. Whether the VLAD Act would apply to him, however, would depend, among other things, upon whether he was charged with a declared offence and whether it was alleged that the conduct constituting that offence was done for the purposes of, or in the course of participating in the affairs of, the Club. It is not suggested that any of the contingencies which would attract the application of the VLAD Act provisions to the plaintiff has arisen. Given that the validity of the laws creating the declared offences is not in dispute, he could hardly expect to be heard by this Court on the basis that he intended to contravene one or more of those laws. Nor does he do so. The risk of exposure to draconian penalties, which he invokes in support of the assertion that he has standing, is a risk that he will be charged with, and convicted of, committing a declared offence. The risks so based should not be accepted as founding a sufficiently concrete claim for declaratory relief. It 37 For the purposes of the Criminal Code by s 2 of the Criminal Code (Criminal Organisations) Regulation 2013 (Q) and for the purposes of the Crime and Corruption Act 2001 (Q) by s 18 of the Crime and Corruption Regulation 2005 (Q). is a foundation resting upon contingencies which, if they did occur, could occur in a variety of factual circumstances. It is a foundation which is singularly unattractive in terms of public policy as justifying access to the exercise of judicial power. The plaintiff does not have standing to challenge the validity of the VLAD Act. Criminal organisations under the Criminal Code Central to the impugned provisions, other than the VLAD Act, is the concept of a "criminal organisation" and the status of a "participant in a criminal organisation". The term "criminal organisation" in s 1 of the Criminal Code was redefined by the Amendment Act to mean: an organisation of 3 or more persons— who have as their purpose, or 1 of their purposes, engaging in, organising, planning, supporting, or otherwise conspiring to engage in, serious criminal activity as defined under the Criminal Organisation Act 2009; and facilitating, (ii) who, by their association, represent an unacceptable risk to the safety, welfare or order of the community; or a criminal organisation under the Criminal Organisation Act 2009; an entity declared under a regulation to be a criminal organisation." The new definition of "criminal organisation" applies to that term as used in the new offence-creating provisions of the Criminal Code, ss 60A, 60B and 60C, save for an exclusion in s 60C of criminal organisations under the Criminal Organisation Act 2009 (Q) ("the CO Act"), which is not material for present purposes. The definition is also adopted in the new provisions of the Criminal Code which render the status of participant in a criminal organisation an aggravating circumstance in relation to certain existing offences. It is adopted in the Bail Act38 and is used in the new subsections of that Act, ss 16(3A)–16(3D), which are challenged in these proceedings. Paragraph (c) of the definition is incorporated in the definition of a "declared criminal organisation" in s 173EA of the Liquor Act for the purposes of the impugned amendments to that Act39. 38 Bail Act, s 6, definition of "criminal organisation". 39 Liquor Act, ss 173EB–173ED. The criteria for an organisation to be found to be a criminal organisation pursuant to par (a) are closely similar to the criteria which can lead to the declaration of an organisation by the Supreme Court as a criminal organisation for the purposes of the CO Act40 and thus bring it within par (b) of the definition in the Criminal Code. In each case the characterisation of an organisation as a criminal organisation requires findings of fact by a court, either in proceedings under the Criminal Code in which par (a) of the definition is relied on, or, where par (b) is relied upon, in earlier proceedings under the CO Act. Paragraph (c) of the definition is in a different category. It contemplates the declaration of entities as criminal organisations by regulation rather than judicial determination. It directs attention to the general regulation-making power in s 708 of the Criminal Code: "The Governor in Council may make regulations under this Code." The term "Governor in Council" is defined in s 27 of the Constitution of Queensland 2001 (Q) as "the Governor acting with the advice of Executive Council."41 Section 70 of the Amendment Act, by a rather unusual mechanism, enacts a regulation titled the Criminal Code (Criminal Organisations) Regulation 2013 ("the Regulation"), which is set out in Sched 1 to the Amendment Act. The regulation so created declares entities listed in it to be criminal organisations. One of the entities so declared is "the motorcycle club known as the Hells Angels". Section 70 provides: "(1) Schedule 1 has effect to make the Criminal Code (Criminal Organisations) Regulation 2013 that is set out in schedule 1 as a regulation under the Criminal Code. To remove any doubt, it is declared that the Criminal Code (Criminal Organisations) Regulation 2013, on the commencement of schedule 1, stops being a provision of this Act and becomes a regulation made under the Criminal Code." Section 708A, introduced into the Criminal Code by the Amendment Act, sets out matters to which the Minister may have regard in "deciding whether to recommend" an amendment to the Regulation to declare an entity to be a criminal organisation. The matters to which the Minister may have regard are 40 CO Act, s 10(1). 41 See also Acts Interpretation Act, Sched 1, meaning of "Governor in Council" read with s 36(1). wide-ranging and include "any information suggesting a link exists between the entity and serious criminal activity"42 and "any other matter the Minister considers relevant."43 It may be inferred that those are matters to which the Governor in Council may have regard in amending the Regulation. The Solicitor-General of Queensland submitted the Minister would be constrained to consideration of matters relevant to whether the organisation had, as one of its purposes, the commission of serious criminal offences and the effect of such purposes on public order. It is not necessary to determine the limits of "relevant" matters for present purposes. that The status "participant in a criminal organisation" is defined in the offence-creating provision, s 60A of the Criminal Code, and that definition is adopted in the other offence-creating provisions, ss 60B and 60C. It is adopted in the aggravating circumstance provisions of the Criminal Code, ss 72(2), 92A(4A), 320(2) and 340(1A), and for the purposes of the impugned provisions of the Bail Act44. The definition covers directors or officers (if the organisation is a body corporate)45, and any person who (whether by words or conduct, or in any other way) asserts, declares or advertises his or her membership of, or association with, the organisation46 or who seeks to be a member of, or to be associated with, the organisation47. It extends to a person who attends more than one meeting or gathering of persons who participate in the affairs of the organisation in any way48 and a person who takes part in the affairs of the organisation in any other way49. It does not include a lawyer acting in a professional capacity50. 42 Criminal Code, s 708A(1)(a). 43 Criminal Code, s 708A(1)(e). 44 Bail Act, s 6. 45 Criminal Code, s 60A(3), par (a) of definition. 46 Criminal Code, s 60A(3), par (b) of definition. 47 Criminal Code, s 60A(3), par (c) of definition. 48 Criminal Code, s 60A(3), par (d) of definition. 49 Criminal Code, s 60A(3), par (e) of definition. 50 Criminal Code, s 60A(3), definition of "participant". The Criminal Code — aggravating circumstance provisions The plaintiff challenged the validity of a number of new provisions of the Criminal Code introduced by the Amendment Act which treat status as a participant in a criminal organisation as an aggravating circumstance attracting enhanced or additional penalties in respect of certain offences. The offences to which the circumstance of aggravation applies are offences for which the Criminal Code already provides. They are affray51, misconduct in relation to public office52, grievous bodily harm53 and serious assault upon a police officer54. Enhanced penalties attaching to the aggravating circumstance are provided for in new subsections introduced into each of the offence-creating provisions55. It is a defence to the circumstance of aggravation in each case "to prove that the criminal organisation is not an organisation that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, criminal activity."56 Aggravating circumstance provisions — the plaintiff's standing The plaintiff's challenge to the aggravating circumstance provisions ran along similar lines to his challenge to the VLAD Act. The liability to the greater penalties could arise whether or not there was any connection between an accused person's participation in a criminal organisation and the offences charged. The plaintiff submitted, in substance, that those provisions obliged courts to impose penalties which lacked a rational connection to the seriousness of the offender's criminal conduct. As with the plaintiff's challenge to the VLAD Act, the plaintiff's claim for declaratory relief was based upon the risk of an enhanced penalty if he should be charged with an offence in respect of which the circumstance of aggravation was 51 Criminal Code, s 72(1). 52 Criminal Code, s 92A(1) and (2). 53 Criminal Code, s 320(1). The aggravating circumstance provision applies in the circumstance in which grievous bodily harm is inflicted upon a police officer: 54 Criminal Code, s 340(1)(b). 55 Criminal Code, ss 72(2), 92A(4A), 320(2) and 340(1A). 56 Criminal Code, ss 72(3), 92A(4B), 320(3) and 340(1B). alleged. He has not been charged with any such offence. There is no suggestion that he has committed or is likely to commit any such offence. The offence-creating provisions to which the circumstance of aggravation is attached proscribe certain conduct. The plaintiff did not challenge those proscriptions. His freedom to act is not further constrained by the circumstance of aggravation. If he were charged with any of the relevant offences, and the circumstance of aggravation was alleged, he could, no doubt, raise a challenge to the validity of the enhanced penalties in or collaterally to the criminal proceedings against him. The plaintiff argues that the provisions affect the question whether he should dissociate from the Club so as to avoid their application. As with his challenge to the VLAD Act, that concern does not support his claim for declaratory relief where his standing rests upon contingencies, including the contingency that he will have been charged with one of the relevant offences. The Bail Act The Amendment Act introduced new subss (3A)–(3D) into s 16 of the Bail Act. Subsection (3A) sets out circumstances in which a court, or police officer authorised to give bail, must refuse bail. Prior to the amendment, s 16 relevantly mandated refusal of bail only if there was an unacceptable risk that the defendant, if released on bail, would not appear and surrender into custody, or would, while released on bail, commit an offence, endanger the safety or welfare of an alleged victim or anyone else, or interfere with witnesses or otherwise obstruct the course of justice57. Section 16(3A) additionally requires that, unless the defendant shows cause why detention in custody is not justified, bail must be refused where the defendant is charged with an offence and it is alleged that he or she is, or has at any time been, a participant in a criminal organisation. It does not matter, for the purposes of s 16(3A), whether the offence charged is an indictable offence, a simple offence or a regulatory offence58, or whether the defendant is alleged to have been a participant in a criminal organisation when the offence was committed59. Nor does it matter that there is no link between the defendant's alleged participation in a criminal organisation and the offence with which the 57 Bail Act, s 16(1). 58 Bail Act, s 16(3C)(a). 59 Bail Act, s 16(3C)(b). 60 Bail Act, s 16(3C)(c). The Bail Act — the plaintiff's standing The plaintiff submitted that the amendments to the Bail Act are directed towards keeping a particular class of person in custody by reason of their associations rather than by reason of the risks of release. He submitted that requiring courts to proceed in this manner would undermine their institutional integrity. It is not necessary to consider the merits of that argument. The plaintiff has not been charged with any offence to which the new provisions of the Bail Act might apply. There is a wide variety of circumstances relevant to the question under s 16(3A)(a) whether he could show cause why his detention in custody would not be justified. The inchoate nature of the question which the plaintiff's application presents to the Court on this aspect of his case again indicates that there is no concrete basis upon which he can base his claim for declaratory relief. The new offence-creating provisions of the Criminal Code the Criminal Code, In addition to providing for enhanced penalties for existing offences against introduced new offence-creating provisions, ss 60A, 60B and 60C of the Code. The new provisions make it an offence for a person who is a participant in a criminal organisation to: the Amendment Act has be knowingly present in a public place with two or more other persons who are participants in a criminal organisation61; enter, or attempt to enter, a prescribed place62; attend, or attempt to attend, a prescribed event63; or recruit, or attempt to recruit, anyone to become a participant in a criminal organisation64. It is an element of the offence in each case that the defendant "is a participant in a criminal organisation". As with the aggravating circumstance provisions, it is a defence in each case to prove that "the criminal organisation is not an 61 Criminal Code, s 60A(1). 62 Criminal Code, s 60B(1). 63 Criminal Code, s 60B(2). 64 Criminal Code, s 60C(1). organisation that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, criminal activity."65 The term "criminal activity" is not defined. The Solicitor-General of Queensland accepted that it would cover any contravention of the law attracting a penalty. Given that the plaintiff is a member of the Club, which is designated as a criminal organisation, the offence-creating provisions of the Criminal Code directly affect, inter alia, his freedom of movement and association. His claim for declaratory relief that the provisions are invalid invokes the jurisdiction of the Court under s 30(a) of the Judiciary Act. The matter is one on which it is properly conceded that the Court has jurisdiction and the plaintiff has standing66. The challenge to the offence-creating provisions of the Criminal Code In the amended statement of claim, the plaintiff alleged that the question whether an organisation is a "criminal organisation" for the purposes of ss 60A, 60B and 60C of the Criminal Code can be predetermined by declaration in a regulation. A person accused of an offence against one of the provisions would bear the onus of establishing what was described as "an impossible negative proposition" that the relevant organisation was one "whose members do not have as their purpose, or one of their purposes, engaging in, or conspiring to engage in, criminal activity". Although the amended statement of claim was wide-ranging in its attack upon those provisions, the further amended special case, as reflected in question 3, was confined to a challenge based upon principles derived from Kable v Director of Public Prosecutions (NSW)67 and subsequent decisions. The principles developed from and since the decision of this Court in Kable preclude State legislatures from enacting a law which would be repugnant to, or incompatible with, the institutional integrity of State courts as elements of the national integrated judicial system. In particular applications of that proposition it has been held that State legislatures cannot: effect an impermissible executive intrusion into the processes or decisions of a court; 65 Criminal Code, ss 60A(2), 60B(3), 60C(2). 66 The concession did not extend to s 60B(2). However, it is not necessary to consider this matter. 67 (1996) 189 CLR 51; [1996] HCA 24. authorise the Executive to enlist a court to implement decisions of the Executive in a manner incompatible with that court's institutional integrity; or confer upon a court a function (judicial or otherwise) incompatible with the role of that court as a repository of federal jurisdiction68. In so saying, I agree with Hayne J69 that, whatever particular propositions have emerged from particular cases, there is no single comprehensive statement of the content to be given to the essential notion of repugnancy to, or incompatibility with, the institutional integrity of State courts. The question of substance in relation to the plaintiff's challenge to ss 60A, 60B and 60C of the Criminal Code is whether their attachment of norms or proscriptions of conduct to participation in a class of entity determined by legislative or executive declaration to be a criminal organisation offends against that essential notion. The Club of which the plaintiff is a member was declared a criminal organisation by operation of s 70 of the Amendment Act, albeit that declaration was effected by enacting a schedule to the Amendment Act to be treated as a regulation. That regulation was subject thereafter to the regulation-making power in s 708 of the Criminal Code to be exercised, in relation to amendments to the Regulation, by reference to s 708A. The declaration of the Club and a number of other entities as criminal organisations was therefore effected by an Act of the Queensland Parliament and the amendment of that list, by addition or subtraction, entrusted to the Executive Government exercising regulation-making power. It is the function of a court in determining rights and liabilities arising under Acts of Parliament, including criminal statutes, to interpret the legislation and to apply it to the facts of the case as found on the basis of the evidence before the court. In applying an Act of Parliament, a court will give effect to a law which reflects a policy which, at the time of enactment, was in all likelihood a policy propounded to the Parliament by the Executive Government. In so doing, a court is not enlisted by and does not act at the direction of the Executive. So much was accepted by senior counsel for the plaintiff. In the application of delegated legislation, which may reflect a current policy of the Executive Government, the same is true70. Contrary to the plaintiff's submissions in reply, 68 Wainohu v New South Wales (2011) 243 CLR 181 at 210 [46] per French CJ and Kiefel J; [2011] HCA 24. 69 Reasons of Hayne J at [106]. 70 Public Service Association and Professional Officers' Association Amalgamated (NSW) v Director of Public Employment (2012) 250 CLR 343 at 365 [44] per French CJ, 368 [58] per Hayne, Crennan, Kiefel and Bell JJ; [2012] HCA 58. the declaration of a criminal organisation by regulation does not amount to an impermissible direction to the courts to do anything. It creates a factum, in relation to an entity, which has consequences provided by law. The declaration of criminal organisations by regulation in this case does not give rise to the difficulty considered by the Court in South Australia v Totani71, where a declaration of a criminal organisation mandated, upon application by the Commissioner of Police, a judicial control order against a member of such an organisation, which amounted to little more than rubber stamping an executive determination without any substantive judicial function. If the Parliament, or the Executive Government acting pursuant to statutory authority, designates an organisation as a criminal organisation, membership of which attracts penalties or disabilities in certain circumstances, it does not thereby intrude impermissibly into the judicial function. The determination of whether a person is a member of a criminal organisation and whether circumstances attracting a penalty or disability are established is left to the courts. So too, when raised as a defence, is the question whether the organisation in fact has as one of its purposes the purpose of engaging in, or conspiring to engage in, criminal activity. There is a distinct question arising from the juxtaposition of three different bases for establishing that an entity is a criminal organisation in a prosecution for an offence against ss 60A, 60B or 60C of the Criminal Code. The first basis, that set out in par (a) of the definition, would require a determination by the trial court, in a prosecution for an offence against ss 60A, 60B or 60C, of whether the entity said to be a criminal organisation had the characteristics set out in par (a). Such a finding, as Hayne J points out in his Honour's Reasons72, would preclude the defence that the entity "is not an organisation that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, criminal activity." To establish that an entity is a criminal organisation within the meaning of par (b) of the definition, it would suffice for the prosecution to prove that a declaration to that effect was made by the Supreme Court of Queensland under the CO Act. Proof of such a declaration made in earlier and different proceedings in the Supreme Court and not involving the accused would not prove anything more than the fact of the declaration. The consequence of proving the declaration is the legal characterisation of the relevant entity. Proof of the declaration would not preclude the accused, as a matter of law, from establishing 71 (2010) 242 CLR 1; [2010] HCA 39. 72 Reasons of Hayne J at [121]. the defence in proceedings under ss 60A or 60B (the definition in par (b) not being applicable to s 60C73). If the prosecution in a charge of an offence against ss 60A, 60B or 60C were to rely upon par (c) of the definition of "criminal organisation", it would have to do no more to establish the characterisation of the relevant entity than produce a regulation declaring the entity to be a criminal organisation. As with the proof of a declaration under the CO Act, evidence of the declaration by regulation would prove no more than the fact of the declaration and attract the legal characterisation of the relevant entity as a "criminal organisation". It would be open to the accused person to establish the defence. If by hypothesis the definition of "criminal organisation" in s 1 of the Criminal Code were limited to that set out in par (c), it could not be said that the offence-creating provisions, requiring the existence of a criminal organisation as so defined, involved any impermissible intrusion by the Executive upon the judicial function or an enlistment of the court to do the bidding of the Executive, nor that it conferred upon the court a function that was incompatible with its institutional integrity. Nor could it be said, more generally, that the definition of "criminal organisation" in par (c), taken by itself, would, by reason of the function that it conferred upon the court or otherwise, be repugnant to or incompatible with the institutional integrity of the court. The juxtaposition of the definitions in pars (a), (b) and (c) does not alter that consequence. The common classification of entities as "criminal organisations" according to three different processes, one directly judicial, one indirectly judicial and one executive, is, in the end, a matter of labelling. They could have been designated respectively as "a criminal organisation", "a declared criminal organisation" and "a listed criminal organisation", each characterisation attracting the same proscriptions, set out in ss 60A, 60B and 60C, for participants in such entities. The existence of alternative pathways to conviction, one of them based upon a factum determined by declaration under a regulation, does not impermissibly entangle the Executive judicial functions with Government. Although the nomenclature of "criminal organisation" and the outcomes are the same, the pathways are distinct and do not have any legally operative effect upon each other. those of The plaintiff's challenge to the validity of ss 60A, 60B and 60C of the Criminal Code must fail. 73 Criminal Code, s 60C(3), definition of "criminal organisation". The Liquor Act Sections 173EB, 173EC and 173ED combine to prevent persons being on licensed premises while wearing or carrying an item of clothing or jewellery or an accessory that displays the name, club patch, insignia or logo of a declared criminal organisation. The prohibition extends to persons carrying an item of image, symbol, clothing or abbreviation, acronym or other form of writing that indicates membership of, or an association with, a declared criminal organisation74. The term "declared criminal organisation" is defined in s 173EA by reference to par (c) of the definition of "criminal organisation" in the Criminal Code. jewellery or an accessory displaying any the prohibitions The plaintiff, having failed in his challenge to the validity of ss 60A, 60B and 60C on Kable grounds, cannot succeed on such grounds in relation to the amendments to the Liquor Act. The declaration of an entity as a criminal organisation under par (c) enlivens the circumstances in which its name, logo or other insignia may be worn or carried in licensed premises. There is nothing in the construction of the definition of the offences created by the amendments to the Liquor Act that involves executive direction to, or enlistment of, the courts to implement decisions of the Executive Government in a manner incompatible with the courts' institutional integrity. In hearing and determining a prosecution for an offence against any of the impugned provisions of the Liquor Act, courts are not undertaking any function incompatible with their role as repositories of federal jurisdiction. The challenge to the validity of the impugned provisions of the Liquor Act fails. in relation Conclusion The questions in the further amended special case should be answered as proposed in the Joint Reasons. 74 Liquor Act, s 173EA, definition of "prohibited item". Hayne HAYNE J. In October 2013, the Queensland Parliament enacted the Vicious Lawless Association Disestablishment Act 2013 (Q) ("the VLAD Act"), the Criminal Law (Criminal Organisations Disruption) Amendment Act 2013 (Q) ("the Disruption Act") and the Tattoo Parlours Act 2013 (Q). The Disruption Act made numerous amendments to several Acts. So far as presently relevant, the Tattoo Parlours Act amended the Liquor Act 1992 (Q). The plaintiff, Mr Kuczborski, is a member of the Brisbane Chapter of the Hells Angels Motorcycle Club. He has brought proceedings in the original jurisdiction of this Court challenging the validity of the VLAD Act, the validity of some of the provisions inserted or amended in other Acts by the Disruption Act and the validity of the amendments made to the Liquor Act by the Tattoo Parlours Act. He alleges that the impugned provisions offend the principles derived from Kable v Director of Public Prosecutions (NSW)75. The parties have agreed to state questions of law in the form of a special case. Those questions ask about the validity of the impugned provisions but also raise issues about whether some of the questions of validity are, so far as the plaintiff is concerned, hypothetical questions, questions which he has no standing to raise, or both. The structure of these reasons It is important to begin consideration of the questions which the parties have asked from a proper understanding of the impugned provisions. Having first identified what provisions are impugned, it is necessary to describe the general scheme of which the impugned provisions form a part and then deal with some particular features of the impugned provisions. From there it will be convenient to deal with the questions about standing and hypothetical issues, then describe the Kable principles and, finally, consider the application of those principles. The impugned provisions As the plaintiff originally framed his proceedings, he challenged the validity of provisions of a number of Acts and regulations, and he founded those challenges on a number of different bases. The parties agreed on a special case to raise those issues but, before it came on for hearing, the plaintiff confined both the provisions which he attacked and the basis on which he founded the attack. The special case was amended accordingly. 75 (1996) 189 CLR 51; [1996] HCA 24. Hayne It is necessary, therefore, to identify only those provisions which remain the subject of challenge. They are provisions of four Acts: the VLAD Act, the Criminal Code (Q), the Bail Act 1980 (Q) and the Liquor Act. The plaintiff alleges that the whole of the VLAD Act is invalid. The VLAD Act requires76 a court sentencing a "vicious lawless associate" for a "declared offence" to impose a sentence for the offence (without regard to the further punishment for which the VLAD Act provides) plus an additional sentence of 15 years' imprisonment and, if the offender held office in the relevant association, a still further additional sentence of 10 years' imprisonment. What is meant by a "vicious lawless associate" will be explained later in these reasons. The plaintiff challenges the validity of several provisions77 of the Criminal Code inserted or amended by the Disruption Act78. Put shortly, those provisions of the Criminal Code are of two kinds. Sections 60A, 60B and 60C create new offences. An element of each of those offences is that the offender is "a participant in a criminal organisation". The other provisions prescribe more severe punishment for persons convicted of certain offences if the offender is "a participant in a criminal organisation". More will be said about those provisions later in these reasons. The provisions79 of the Bail Act which the plaintiff challenges were also inserted by the Disruption Act80. They provide, among other things, that, where it is alleged that a person charged with an offence is, or has at any time been, a participant in a criminal organisation, bail must be refused unless the defendant shows cause why his or her detention is not justified. The provisions81 of the Liquor Act which the plaintiff challenges were inserted by the Tattoo Parlours Act82. They make it an offence to enter or remain 77 ss 60A, 60B(1) and (2), 60C, 72(2), (3) and (4), 92A(4A), (4B) and (5), 320(2), (3) and (4) and 340(1A), (1B) and (3). 79 s 16(3A), (3B), (3C) and (3D). 80 s 4. Sub-sections (3A), (3B) and (3C) of s 16 of the Bail Act were later amended by the Criminal Law (Criminal Organisations Disruption) and Other Legislation Amendment Act 2013 (Q), s 7. The detail of that amendment need not be noticed. 81 ss 173EB, 173EC and 173ED. Hayne in licensed premises wearing or carrying a "prohibited item" and oblige licensees and others to exclude from licensed premises persons wearing or carrying a "prohibited item". A "prohibited item" is defined83 as an item of clothing or jewellery or an accessory that displays the name of "a declared criminal organisation", "the club patch, insignia or logo" of such an organisation, or any writing (or other symbol or image) that indicates membership of, or association with, such an organisation. A legislative scheme? The Explanatory Notes to each of the Bills that became the VLAD Act and the Disruption Act referred84 to "a comprehensive package of legislative reforms, contained in three Bills". The Tattoo Parlours Bill 2013, introduced into the Queensland Parliament on the same day, was the third of the Bills which formed the "comprehensive package". The Explanatory Notes to the Bills that became the VLAD Act and the Disruption Act said85 each Bill was directed at "criminal gangs". The Explanatory Notes to the Tattoo Parlours Bill said86 the Bill was directed at "criminal organisations, including criminal motor cycle gangs and their associates". In a Ministerial Statement, the Premier said87 that the three Bills were "not designed to just contain or manage [criminal motorcycle gangs]; they [were] designed to destroy them". The provisions made by the resulting Acts do not seek to achieve the destruction of any organisation by dissolving the organisation or making membership of the organisation unlawful. The Acts provide for some new norms of conduct but, for the most part, proceed by requiring the courts to impose special additional punishment on offenders who are shown to have been, at the time of the commission of the offence, participants in a particular kind of 83 s 173EA. 84 Queensland, Vicious Lawless Association Disestablishment Bill 2013, Explanatory Notes at 1; Queensland, Criminal Law (Criminal Organisations Disruption) Amendment Bill 2013, Explanatory Notes at 1. 85 Queensland, Vicious Lawless Association Disestablishment Bill 2013, Explanatory Notes at 1; Queensland, Criminal Law (Criminal Organisations Disruption) Amendment Bill 2013, Explanatory Notes at 1. 86 Queensland, Tattoo Parlours Bill 2013, Explanatory Notes at 1. 87 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 15 October Hayne association or organisation. But the provisions made by the Acts do not operate by reference to a single definition of what are the relevant associations or organisations or even by reference to a single definition of what constitutes being a participant in the relevant group. And as will later become apparent, although the provisions can be seen as divided by reference to the two forms of association or organisation with which they deal, even that division must take account of variations and qualifications applicable to only some of the provisions dealing with the relevant form of association or organisation. The VLAD Act is directed at what it defines as a "participant" in the affairs of an "association". By contrast, the provisions made by the Disruption Act are directed at what it defines as a "participant" in a "criminal organisation", and the provisions made by the Tattoo Parlours Act are directed to articles associated with what it defines as a "declared criminal organisation". An "association" is defined in the VLAD Act in different terms from the (more than one) definition of "criminal organisation" given in the provisions of the Disruption Act. The definition of a "declared criminal organisation" in the Tattoo Parlours Act takes up only one limb of a definition of "criminal organisation" given in the Disruption Act. No doubt it is necessary to recognise that the provisions made by the Disruption Act and the Tattoo Parlours Act amended other Acts. And each of those other Acts must be construed according to its terms. But if the VLAD Act, the Disruption Act and the Tattoo Parlours Act were to constitute a "package" of laws, it might reasonably have been expected that the most basic elements of the laws (identifying the individuals and groups to which they were directed) would be defined identically. That this has not been done can only create unnecessary difficulty and complexity in the administration of the criminal law. It entails, at least, that those administering and enforcing the relevant provisions must pay the closest attention to the applicable provisions and recognise that a conclusion reached about the engagement of one set of provisions very often cannot be applied when considering the application of other provisions. The task of those administering and enforcing the relevant provisions is made no easier by the fact that the relevant provisions of the VLAD Act hinge on the definition of a "vicious lawless associate". As will shortly be explained, that expression is defined in a way that does not depend upon any determination that the person concerned is personally "vicious" or generally "lawless". The expression is, therefore, at least inapt. Perhaps it was thought to reflect the stated political objective of dealing with "criminal gangs", but it is an expression which is likely to mislead in at least two ways. First, it is an expression which suggests a much narrower focus for the Act than its provisions require. Second, it is an expression which, at a trial, can only create prejudice and divert attention from the issues which a jury would have to decide. The adoption of this manner of Hayne drafting is antithetical to the proper statement and administration of the criminal law. It is necessary to say more about the relevant definitions. An "association" for the VLAD Act Section 3 of the VLAD Act defines "association" as any of a corporation, an unincorporated association, a club or league, or "any other group of 3 or more persons by whatever name called, whether associated formally or informally and whether the group is legal or illegal". In its terms, this definition embraces any three-member conspiracy to commit a crime, as well as a wide variety of other formal and informal groups of three or more persons. A "vicious lawless associate" The definition of "vicious lawless associate" in s 5(1) of the VLAD Act has three elements: (a) the person must commit "a declared offence"; (b) "at the time the offence is committed, or during the course of the commission of the offence", the person must be "a participant in the affairs of an association"; and (c) the person must do or omit to do the act that constitutes the declared offence "for the purposes of, or in the course of participating in the affairs of, the relevant association". A schedule to the VLAD Act identifies 70 offences as "declared offences". They include, but are not limited to, offences of violence, drug offences and offences in relation to weapons. Regulations may be made88 prescribing other offences as declared offences. Section 4 of the VLAD Act prescribes what is meant by being a "participant in the affairs of an association". Four forms of conduct are identified: (a) asserting, declaring or advertising membership of, or association with, the association; (b) seeking to be a member of, or to be associated with, the association; (c) having attended more than one meeting or gathering of persons who participate in the affairs of the association in any way; and (d) having taken part on any one or more occasions in the affairs of the association in any other way. Obviously, this definition of a participant in the affairs of an association includes many kinds of connection with an "association". Some of those connections refer to past acts: having attended more than one meeting or gathering89; having taken part on any one or more occasions in the affairs of the 88 VLAD Act, s 3, definition of "declared offence". 89 s 4(c). Hayne association90. Yet the definition of "vicious lawless associate" in s 5 is cast in the present tense. Section 5(1)(b) provides that the person must be a participant in the affairs of an association "at the time the offence is committed, or during the course of the commission of the offence" (emphasis added). How the apparent tension between these requirements should be resolved was not examined in argument of this matter. Section 5(2) of the VLAD Act qualifies the definition of "vicious lawless associate". It provides that a person is not a vicious lawless associate if that person proves "that the relevant association is not an association that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, declared offences". A "criminal organisation" By contrast with the VLAD Act, those of the impugned provisions which were inserted or amended in other Acts by the Disruption Act depend upon a definition of "criminal organisation". It is convenient to proceed by reference to the definition of "criminal organisation" inserted in the Criminal Code. That definition is applied by the impugned provisions of the Criminal Code, is taken up by the impugned provisions of the Bail Act91 and, in part, is taken up by the impugned provisions of the Liquor Act92. The Criminal Code definition93 of a "criminal organisation" has three distinct limbs: (a) an organisation of three or more persons which has specified characteristics; (b) "a criminal organisation under the Criminal Organisation Act 2009 [(Q)]"; or (c) "an entity declared under a regulation to be a criminal organisation". The characteristics specified in the first limb of this definition are that the three or more persons who comprise the organisation have as their purpose, or one of their purposes, "engaging in, organising, planning, facilitating, supporting, or otherwise conspiring to engage in, serious criminal activity" as defined in the Criminal Organisation Act, and that they are persons "who, by their association, represent an unacceptable risk to the safety, welfare or order of the community". If the Commissioner of Police applies94 for a declaration under the Criminal Organisation Act that an organisation is a criminal organisation, the 90 s 4(d). 92 s 173EA. 94 Criminal Organisation Act 2009 (Q), s 8. Hayne characteristics stated in par (a) of the Criminal Code definition of "criminal organisation" are, in substance, the criteria which the Supreme Court would be required95 to find established before declaring that the organisation is a "criminal organisation" under that Act. Hence, the first two forms of "criminal organisation" identified in the Criminal Code definition of that term have relevantly identical characteristics. The persons who comprise the organisation must have a particular purpose: "engaging in, organising, planning, facilitating, supporting, or otherwise conspiring to engage in, serious criminal activity" as defined in the Criminal Organisation Act. By their association, those persons must "represent an unacceptable risk to the safety, welfare or order of the community". "Serious criminal activity", as defined96 in the Criminal Organisation Act, is the commission of a "serious criminal offence" in Queensland or an equivalent offence elsewhere. "Serious criminal offence" is defined97 as an offence against specified sections of the Criminal Code, an offence against the Criminal Organisation Act or another indictable offence punishable by imprisonment for at least seven years. If, in prosecuting an offence against one of the impugned provisions of the Criminal Code, the prosecution relies on the first limb of the definition of "criminal organisation", the prosecution must establish, beyond reasonable doubt, that the organisation in which it is alleged the accused is a participant has both of the characteristics which have been described. That is, the prosecution must prove that the members of the organisation have the purpose that has been described and that, by their association, they represent an unacceptable risk of a relevant kind. If, in prosecuting an offence against one of the impugned provisions of the Criminal Code (other than s 60C), the prosecution relies upon the second limb of the definition of "criminal organisation", it will be enough to establish that the organisation in question has been declared to be a criminal organisation under the Criminal Organisation Act. (In s 60C(3) "criminal organisation" is defined as not including an organisation under the Criminal Organisation Act.) Behind the making of a declaration under the Criminal Organisation Act would lie the litigation in, and decision of, the Supreme Court (after trial and, if needs be, appeal98) about issues not relevantly different from those presented by the two 98 Under Pt 9 Div 5. Hayne characteristics stated in the first limb of the Criminal Code definition of "criminal organisation". The first two limbs of that definition must be compared and contrasted with the third limb. It will be recalled that the third limb of the Criminal Code definition of "criminal organisation" is "an entity declared under a regulation to be a criminal organisation". The impugned provisions of the Liquor Act take up99 only this last limb of the Criminal Code definition of "criminal organisation". That is, those provisions apply only in respect of "an entity declared under a regulation to be a criminal organisation". Declaring an entity to be a "criminal organisation" The Disruption Act made100 the Criminal Code (Criminal Organisations) Regulation 2013 (Q) ("the Regulations"). As made by the Disruption Act, the Regulations provided that 26 named motorcycle clubs, including "the motorcycle club known as the Hells Angels", were declared to be criminal organisations. The Regulations also declared certain places to be "prescribed places". One prescribed place is the club premises of the Hells Angels Motorcycle Club. The Disruption Act also amended101 the Criminal Code, by inserting s 708A, to prescribe criteria for recommending that an amendment be made to the Regulations to declare an entity to be a "criminal organisation". Three points may be made about s 708A. First, it prescribes criteria to which the Minister may have regard, including not only matters of the kind which would inform the exercise of the power of the Supreme Court under the Criminal Organisation Act to declare that an organisation is a "criminal organisation" but also102 "any other matter the Minister considers relevant". Second, the criteria specified in s 708A are relevant considerations but they are not103 mandatory considerations. Third, there is no expressed connection between the criteria specified in s 708A and the legislative determination made in the Disruption Act that each of the organisations nominated in the Regulations is a "criminal organisation". 99 s 173EA. 102 s 708A(1)(e). 103 cf Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-40 per Mason J; [1986] HCA 40. Hayne Two consequences should be noticed. First, the legislative determination made in the Disruption Act, that the named organisations are "criminal Neither the information on which the organisations", is unreviewable. determination was based nor the criteria applied in making it is known. Second, if an organisation is declared by regulation to be a "criminal organisation" it is difficult to see how that declaration could be attacked. The criteria stated in s 708A are not mandatory relevant criteria and the Minister may take into account any other matter the Minister considers relevant. For all practical purposes, a declaration by regulation (like the legislative determination made in the Disruption Act) would also be unreviewable. And again, both the matters taken into account and the criteria applied in making the declaration would most likely remain unknown. A "participant" in a "criminal organisation" Section 60A(3) of the Criminal Code defines who is a "participant" in a criminal organisation. This definition is taken up by the impugned provisions of the Criminal Code104 and the Bail Act105. The term has five applications, including: (a) if the organisation is a body corporate, a director or officer of the body corporate; (b) a person who asserts, declares or advertises his or her membership of, or association with, the organisation; (c) a person who seeks to be a member of, or to be associated with, the organisation; (d) a person who attends more than one meeting or gathering of persons who participate in the affairs of the organisation in any way; and (e) a person who takes part in the affairs of the organisation in any other way. The definition expressly excludes from its reach "a lawyer acting in a professional capacity". This definition of a "participant" in a criminal organisation is similar to, but not identical with, the definition, in the VLAD Act106, of a "participant" in the affairs of an association. Those similarities, however, should not be permitted to obscure the differences between an "association" for the purposes of the VLAD Act and a "criminal organisation" for the purposes of the other impugned provisions. Something more must be said about the impugned provisions of the Criminal Code. 104 ss 60B(4), 60C(3), 72(4), 92A(5), 320(4), 340(3). Hayne Criminal Code, ss 60A, 60B and 60C Sections 60A, 60B and 60C of the Criminal Code prohibit certain acts by "[a]ny person who is a participant in a criminal organisation". The acts prohibited are: being knowingly present in a public place with two or more other persons who are participants in a criminal organisation107, entering or attempting to enter a prescribed place108, attending or attempting to attend a prescribed event109 and recruiting or attempting to recruit anyone to become a participant in a criminal organisation110. Each of ss 60A, 60B and 60C provides that it is a defence to a charge of the offence to prove that "the criminal organisation is not an organisation that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, criminal activity" 111. As already noted, some organisations, including that with which the plaintiff is associated, have been declared to be criminal organisations and some places have been declared to be prescribed places. Criminal Code, ss 72(2), (3) and (4), 92A(4A), (4B) and (5), 320(2), (3) and (4) and 340(1A), (1B) and (3) Apart from ss 60A, 60B and 60C, each of the impugned provisions of the Criminal Code makes special provision if a person convicted of the offence with which the section deals is a participant in a criminal organisation. It is convenient to take s 72 as an example. It provides for the offence of affray. Section 72(2) provides that, if the person convicted of that offence is a participant in a criminal organisation, the offence is punishable on conviction by a minimum six months' imprisonment "served wholly in a corrective services facility" and a maximum penalty of seven years' imprisonment. The penalty otherwise provided by s 72 is a maximum of one year's imprisonment, with no minimum punishment prescribed. Section 72(3) provides that, for an offence alleged to have been committed with the circumstance of aggravation mentioned in s 72(2), "it is a defence to the circumstance of aggravation to prove that the criminal organisation is not an organisation that has, as 1 of its purposes, the purpose of engaging in, or 107 s 60A. 108 s 60B(1). 109 s 60B(2). 110 s 60C. 111 ss 60A(2), 60B(3), 60C(2). Hayne conspiring to engage in, criminal activity". Section 72(4) defines "participant" in a criminal organisation by reference to s 60A. The other impugned provisions of the Criminal Code follow the pattern that has just been described. Each provides for punishment to be imposed on a participant in a criminal organisation that is more severe than the punishment provided in respect of others who commit the offence. Each provides that it is a defence to the circumstance of aggravation (being a participant in a criminal organisation) to prove that the criminal organisation in question "is not an organisation that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, criminal activity". References in the impugned provisions to the circumstance of being a participant in a criminal organisation as a "circumstance of aggravation" invite attention both to the definition of that term in s 1 of the Criminal Code and to the requirements of s 564 of the Criminal Code. Because being a participant in a criminal organisation renders an offender liable to a greater punishment than that to which the offender would be liable if the offence were committed without the existence of that circumstance, it is a circumstance of aggravation as defined in s 1 of the Criminal Code. Section 564 requires112 that, if the prosecution seeks to rely upon a circumstance of aggravation, it must charge that circumstance of aggravation in the indictment113. Hence, if it is alleged that a person is a participant in a criminal organisation, the truth of that allegation will be a matter to be determined at trial by the tribunal of fact. The defence As has been noted, the impugned provisions of the Criminal Code provide that it is a defence to a charge of an offence against any of ss 60A, 60B or 60C, and a defence to the circumstance of aggravation provided by the other impugned provisions, to prove that the criminal organisation in question "is not an organisation that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, criminal activity". This defence requires an accused person to establish a proposition larger than would be necessary to negate the expressly stated defining characteristics of a "criminal organisation". As already noted, the two defining characteristics expressly stated in par (a) of the definition of "criminal organisation" in the Criminal Code are, first, a purpose of the members of the organisation (to engage in, organise, plan, facilitate, support or otherwise conspire to engage in serious 112 R v De Simoni (1981) 147 CLR 383; [1981] HCA 31; Kingswell v The Queen (1985) 159 CLR 264 at 277 per Gibbs CJ, Wilson and Dawson JJ; [1985] HCA 72. 113 Each of the offences in ss 72, 92A, 320 and 340 is an indictable offence. Hayne criminal activity) and, second, a consequence (representing, by their association, "an unacceptable risk to the safety, welfare or order of the community"). The defence requires proof that the organisation does not have as a purpose engaging in, or conspiring to engage in, any criminal activity, regardless of whether the activity concerned is any risk to the "safety, welfare or order of the community". It will later be necessary to assess the significance of this discordance when considering the application of the Kable principles. But it is better to deal first with the questions about standing and hypothetical issues. Standing and hypothetical issues There was no dispute that the plaintiff, as a member of a declared criminal organisation, has standing to challenge the validity of ss 60A, 60B and 60C of the Criminal Code and ss 173EB, 173EC and 173ED of the Liquor Act. And no party or intervener submitted that the dispute about the validity of those provisions is hypothetical. Each provision prohibits what would otherwise be lawful conduct of a kind in which the plaintiff wishes to engage. for the Attorneys-General The State of Queensland and the Commonwealth and Victoria intervening submitted, however, that the plaintiff has no standing to challenge any of the other impugned provisions and that the issues which he seeks to raise about their validity are hypothetical. All of those other impugned provisions (the whole of the VLAD Act, those provisions of the Criminal Code which provide for imposing more severe punishment on participants in criminal organisations and the impugned provisions of the Bail Act) ("the relevant provisions") apply only to persons who have been charged with or convicted of certain offences. The arguments about standing and hypothetical issue in respect of the relevant provisions were all ultimately founded on the proposition that the plaintiff has not been accused of, or charged with, and does not say that he has committed, or will commit, any of the offences which engage the relevant provisions. And even if the relevant provisions are invalid, the plaintiff could not lawfully engage in the conduct which would have engaged those provisions. Questions of standing, matter and hypothetical issue cannot be separated into watertight compartments. in In re Judiciary and The statement Navigation Acts114 that "there can be no matter within the meaning of [s 76 of the Constitution] unless there is some immediate right, duty or liability to be established by the determination of the Court" emphasises the intersection between standing and matter and the associated question of whether an issue is 114 (1921) 29 CLR 257 at 265 per Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ; [1921] HCA 20. Hayne hypothetical. As was said in Mellifont v Attorney-General (Q)115, this statement in In re Judiciary and Navigation Acts refers not only to "the notion of an abstract question of law not involving the right or duty of any body or person", but also to "the making of a declaration of law divorced or dissociated from any attempt to administer it". In this case, the central observation to make is that the plaintiff does not seek to have this Court establish by its determination of his challenge to the relevant provisions any immediate right, duty or liability which the plaintiff claims or to which he alleges he is subject. Unlike the plaintiffs in Croome v Tasmania116, the plaintiff does not suggest that he will engage in conduct which will engage the relevant provisions. Because he does not say that he will engage in that conduct, the plaintiff does not show that he is a person who is now, or in the immediate future probably will be, affected, whether in his person or his property, by the relevant provisions117. And unlike the challenge which was made in Croome, if the plaintiff succeeded in his challenges to the validity of the relevant provisions, the relevant conduct would still be unlawful. It is not necessary, in these circumstances, to deal with any differences that may be revealed by the reasons for decision in Croome. It is not necessary to consider any more detailed questions about standing, matter or hypothetical issue. It is not necessary to consider whether, or when, a declaration may be made if the conduct in question is not lawful. It is enough to conclude that the plaintiff's challenges to the relevant provisions (the whole of the VLAD Act, those provisions of the Criminal Code which provide for imposing more severe punishment on participants in criminal organisations and the impugned provisions of the Bail Act) fail for want of standing, or because, being hypothetical questions, there is no "matter" for the purposes of s 76 of the Constitution, or for both want of standing and absence of "matter". It is not necessary, and the answers to the questions in the Further Amended Special Case should not attempt, to attribute one rather than another of those reasons to the 115 (1991) 173 CLR 289 at 303 per Mason CJ, Deane, Dawson, Gaudron and McHugh JJ; [1991] HCA 53. See also Croome v Tasmania (1997) 191 CLR 119 at 124-125 per Brennan CJ, Dawson and Toohey JJ, 136 per Gaudron, McHugh and Gummow JJ; [1997] HCA 5; Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 262 [37] per Gaudron, Gummow and Kirby JJ; [1998] HCA 49. 116 (1997) 191 CLR 119. 117 cf Toowoomba Foundry Pty Ltd v The Commonwealth (1945) 71 CLR 545 at 570 per Latham CJ; [1945] HCA 15; Croome (1997) 191 CLR 119 at 126 per Brennan CJ, Dawson and Toohey JJ, 137 per Gaudron, McHugh and Gummow JJ. Hayne plaintiff's being refused the relief which he seeks in respect of the relevant provisions. There remains for consideration, however, the plaintiff's challenge to ss 60A, 60B and 60C of the Criminal Code and to the impugned provisions of the Liquor Act. Consideration of the issues raised by those challenges should begin from an examination of the Kable principles. The Kable principles The central Kable principle is that the Parliaments of the States may not legislate to confer powers on State courts which are repugnant to or incompatible with their exercise of the judicial power of the Commonwealth118. It is now accepted119 that, as Gummow J said120 in Fardon v Attorney-General (Qld), "the essential notion is that of repugnancy to or incompatibility with that institutional integrity of the State courts which bespeaks their constitutionally mandated position in the Australian legal system". As the plurality pointed out121 in Assistant Commissioner Condon v Pompano Pty Ltd, three points must be made about this "essential notion". First, the notions of repugnancy and incompatibility are not susceptible of further definition in terms which necessarily dictate the outcome of future cases. Second, the repugnancy doctrine does not imply into the constitutions of the States the separation of judicial power required for the Commonwealth by Ch III. Third, content must be given to the notion of "institutional integrity" and that, too, is a notion not readily susceptible of definition in terms which will dictate future outcomes. As was also said122 in Pompano, independence and impartiality are defining characteristics of all of the courts of the Australian judicial system. 118 Kable (1996) 189 CLR 51 at 103 per Gaudron J. 119 See, for example, Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 591 [15], 593 [23] per Gleeson CJ, 598-599 [37] per McHugh J, 617 [101] per Gummow J, 648 [198] per Hayne J, 655 [219] per Callinan and Heydon JJ; [2004] HCA 46; Assistant Commissioner Condon v Pompano Pty Ltd (2013) 87 ALJR 458 at 487 [123] per Hayne, Crennan, Kiefel and Bell JJ; 295 ALR 638 at 673; [2013] HCA 7. 120 (2004) 223 CLR 575 at 617 [101]. 121 (2013) 87 ALJR 458 at 488 [124]; 295 ALR 638 at 673. 122 (2013) 87 ALJR 458 at 488 [125]; 295 ALR 638 at 673-674. Hayne These are notions which connote separation from the other branches of government, at least in the sense that the courts must be and remain free from external influence. But, because the repugnancy doctrine does not imply into the constitutions of the States the separation of judicial power required for the Commonwealth by Ch III, there can be no direct application to the States of all aspects of the doctrines that have been developed in relation to Ch III. The repugnancy doctrine cannot be treated as simply reflecting what Ch III requires in relation to the exercise of the judicial power of the Commonwealth. Hence, there can be no direct and immediate application of what has been said123 in the context of Ch III about the "usurpation" of judicial power. But, as the decisions in Kable, International Finance Trust Co Ltd v New South Wales Crime Commission124, South Australia v Totani125 and Wainohu v New South Wales126 show, not only the task which is given to a State court, but also the manner in which that Court is required to perform the task, may require the conclusion that the legislation in question is invalid. In Fardon, Gummow J referred127 to a metaphor adopted by the Supreme Court of the United States in Mistretta v United States128: that the reputation of the judicial branch of government may not be borrowed by the legislative and executive branches "to cloak their work in the neutral colors of judicial action". As the plurality recently said129 in Pollentine v Bleijie, the use of that metaphor can "be no substitute for consideration of the principles of repugnancy and incompatibility". Conclusions cannot and must not be formed by reference only to particular verbal formulae. A point made130 by the plurality in Pompano should be repeated. The questions of validity presented in this case "cannot be decided simply by taking what has been said in earlier decisions of the Court about the validity of other 123 See, for example, Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 26-29 per Brennan, Deane and Dawson JJ; [1992] HCA 64. 124 (2009) 240 CLR 319; [2009] HCA 49. 125 (2010) 242 CLR 1; [2010] HCA 39. 126 (2011) 243 CLR 181; [2011] HCA 24. 127 (2004) 223 CLR 575 at 615 [91]. 128 488 US 361 at 407 (1989). 129 (2014) 88 ALJR 796 at 805 [49]; 311 ALR 332 at 343; [2014] HCA 30. 130 (2013) 87 ALJR 458 at 490-491 [137]; 295 ALR 638 at 677. Hayne laws and assuming, without examination, that what is said in the earlier decisions can be applied to the legislation now under consideration"131. But likewise, observing that what is said in those other cases does not fit precisely with the issues presented in this case does not conclude the question. It remains necessary to grapple with that "essential notion" of repugnancy to or incompatibility with the institutional integrity of the State courts and to do that recognising that there cannot be any single, let alone comprehensive, statement of the content to be given to that essential notion. The plaintiff's submissions The plaintiff made two principal, partially overlapping, submissions. Both were framed with particular reference to what was described as the "role" or powers of the Queensland courts with respect to bail and sentencing. The first submission, given chief weight in oral argument, centred upon the notion of a departure from "equal justice". It was said that the impugned provisions required departure from "equal justice" "by requiring [the courts] to impose sentences on certain offenders by reason of who they associate with rather than by reason of their own 'personal and individual' guilt" (footnote omitted). The second submission was to the effect that the impugned provisions sought to enlist the courts of Queensland "to do the 'bidding' of the Queensland legislature and executive" in the exercise of the powers with respect to sentencing and bail "in a manner designed to 'destroy' certain (legal) associations of the executive's choosing" (footnote omitted). The plaintiff's first submission The plaintiff's first submission may be dealt with briefly. By appealing to a notion of "equal justice", the plaintiff invoked ideas of treating like cases alike and relevantly different cases differently. The submission thus assumed that participation in a "criminal organisation", as defined in the Criminal Code, is not a criterion which the legislature can adopt when prescribing norms of behaviour of the kind created by ss 60A, 60B and 60C of the Criminal Code. The submission assumed that participation in a "criminal organisation", as defined in the Criminal Code, is not a criterion which the legislature can adopt to identify certain persons as meriting different punishment for some offences under the Criminal Code from the punishment applicable to those to whom the criterion does not apply. The submission assumed that participation in an "association", as defined in the VLAD Act, is not a criterion which the legislature can adopt to identify certain persons as meriting different punishment for declared offences from the punishment applicable to those to whom the criterion does not apply. Only by assuming that the identified criteria could not be treated by the 131 (2013) 87 ALJR 458 at 490 [137]; 295 ALR 638 at 677. Hayne legislature as relevant differences could the plaintiff assert, as he did, that there was some failure to treat like cases alike and different cases differently. The plaintiff advanced no substantial argument to show the validity of any of the three assumptions which have been identified. That is reason enough to reject the submission. It is important to say, however, that this branch of the plaintiff's argument did not engage directly with the essential notion of repugnancy to or incompatibility with the institutional integrity of State courts. And without identifying how the impugned provisions are repugnant to or incompatible with that institutional integrity, the plaintiff cannot make good his claim that there is a contravention of the Kable principles. The plaintiff's second submission The plaintiff's second submission asserted that the impugned provisions require the courts of Queensland to do the bidding of the political branches of government by having the courts exercise the powers given by the impugned provisions to "destroy" what are otherwise lawful associations. So expressed, the submission sought to borrow the Mistretta metaphor referred to earlier: that the law cloaks the purposes of the political branches of government "in the neutral colors of judicial action". But the submission is too broad, and reveals the flaw in attempting to decide this case by application of verbal formulae rather than consideration of essential principles. The submission, as expressed, must be rejected. Statutes are framed and enacted by the political branches of government. Thus, when a court applies any statute, it might loosely be said that the court is doing the "bidding" of the political branches of government. And if, by the courts faithfully applying a statute, the aims or objectives with which the statute was enacted are achieved, it might loosely be said that the courts have exercised their powers under that Act to achieve those aims or objectives. But what has been described is no more than an unremarkable aspect of the nature of the relationship between the courts and the other branches of government. The courts must give effect to valid laws. Beneath the rhetoric of the plaintiff's second submission, however, lie deeper issues. Those issues are revealed only by paying close attention to the way in which the impugned provisions may operate. In particular, it is necessary to consider three aspects of the operation of ss 60A, 60B and 60C of the Criminal Code: the Criminal Code's three-limbed definition of a "criminal organisation"; the Regulations of some organisations (including the Hells Angels Motorcycle Club) as criminal organisations; and the discordance that has been identified between the Criminal Code definition of a "criminal organisation" and the statutory defence to an allegation of that element of an offence. It must be noted that s 60C(3) provides that, for the purposes of that section, "criminal organisation" does not legislative prescription the Hayne include a criminal organisation under the Criminal Organisation Act. While that exclusion would be important when considering the application of s 60C in a particular case, the exclusion is not one of significance for the issues in this matter. Three limbs to the definition of "criminal organisation" If, as here, a particular organisation has been declared by the Regulations to be a "criminal organisation", and a person is charged with an offence under any of ss 60A, 60B or 60C, the court of trial would not be required to determine whether the organisation has the characteristics identified in the first limb of the Criminal Code definition of the term. Nor would the Supreme Court have been required to examine and decide those questions in an application under the Criminal Organisation Act to declare that the organisation is a criminal organisation. The court trying an offence under any of ss 60A, 60B or 60C would not be required to examine, and the Supreme Court would not previously have examined under the Criminal Organisation Act, whether the members of the organisation associated for the purpose of engaging in or conspiring to engage in "serious criminal activity" or whether, by their association, the members of the organisation represent "an unacceptable risk to the safety, welfare or order of the community". But, subject to what must later be said about the application of the defence, the court of trial would be required to determine the guilt of the accused, and then impose punishment on the accused, on the footing that he or she is a participant in an organisation which is not to be distinguished from a criminal organisation as it is defined in the first limb or the second limb of the definition. It is convenient to assume, for the purpose of testing the validity of the relevant provisions, that the legislature made the Regulations prescribing the identified organisations as criminal organisations on the basis that those organisations were of a kind which met the defining characteristics identified in the first limb of the definition. It is convenient to make that assumption because allowing the possibility that those declared organisations (or subsequently declared organisations) do not meet those criteria would exaggerate, not avoid, the vice in the provisions which is now identified. The vice in the provisions The vice in the provisions lies in a legislative or regulatory determination of what is a criminal organisation being afforded the same legal significance as a judicial determination of that question, against stated criteria, in accordance with accepted judicial methods. The necessarily opaque, forensically untested and effectively untestable conclusion expressed in the legislative or regulatory identification of an organisation as a "criminal organisation" is given the same Hayne legal effect as a conclusion reached in proceedings which, subject to limited exceptions132, are held in public with either the accused person being able to test the material relied on by the prosecution to prove this element of its case or the organisation in question being afforded the opportunity to meet and test the allegations levelled against it and its members. By treating these three different paths to establishing what is a criminal organisation as legally indistinguishable, the Executive and the legislature seek to have an untested and effectively untestable judgment made by the political branches of government treated as equivalent to a judgment made in judicial proceedings according to stated criteria and by reference only to admissible evidence received in proceedings conducted chiefly in public. For the courts to be required to treat a judgment by one or both of the political branches in that way assimilates a legislative or executive judgment with the judgment which the impugned provisions otherwise require the courts to make on the same issue according to ordinary judicial processes. To require the courts to treat the two radically different kinds of judgment as equivalent is repugnant to and incompatible with the institutional integrity of the courts. It is using "confidence in impartial, reasoned and public decision-making of [judges] to support inscrutable decision-making"133 by the political branches of government. If it is thought necessary or desirable to resort to metaphor, the Mistretta metaphor of cloaking may be thought to be apt. But, if it is, the metaphor is apt for reasons different from those identified by the plaintiff. The repugnancy and incompatibility do not arise because the courts are required to do no more than implement decisions made by the political branches. Rather, by assimilating the two different kinds of judgment, each is cloaked in the dress of the other. The clothes do not fit. Contrary to the submissions of Queensland and some interveners, the availability of the defence provided by ss 60A(2), 60B(3) and 60C(2) does not remove the vice which has been identified. If anything, its provision makes the vice more apparent. There are three overlapping respects in which the provision of the defence might be thought to prevent or avoid the assimilation of a legislative or executive judgment with the judgment made by the courts. First, the defence is expressed to be available whichever limb of the definition of "criminal organisation" is engaged. Second, it is the court which will decide whether the defence is made out. Third, the defence might be thought to provide the relevant content to the 132 Criminal Organisation Act, s 108. 133 Wainohu (2011) 243 CLR 181 at 230 [109] per Gummow, Hayne, Crennan and Hayne notion of "criminal organisation". Consideration of each of those matters requires close examination of the relevant provisions. That examination will show why those matters do not meet the vice that has been identified. The defence The defence provided by ss 60A(2), 60B(3) and 60C(2) requires a defendant to prove that the criminal organisation "is not an organisation that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, criminal activity". Although expressed generally, the defence does not apply equally to all three limbs of the definition of "criminal organisation". Proof of the elements of the first limb of the definition of "criminal organisation" would necessarily deny the availability of the defence. To establish the first limb of the definition, the prosecution would have to prove beyond reasonable doubt that members of the organisation associated for purposes which included a purpose of engaging in, organising, planning, facilitating, supporting or otherwise conspiring to engage in serious criminal activity. If that was established, the accused could not show that it was no purpose of the organisation to engage in or conspire to engage in any criminal activity. Hence, if the first limb of the definition of "criminal organisation" is relied on, and established, the defence can have no application. If the prosecution relies on the second limb of the definition (a declaration under the Criminal Organisation Act), proof of the defence would require the accused to show some change in the characteristics of the organisation between the time of the declaration by the Supreme Court and the time of the offence. Unless there had been some relevant change in those characteristics, a defendant could not establish that it was no purpose of the organisation to engage in or conspire to engage in any criminal activity. If the second limb of the definition of "criminal organisation" is relied on, the defence could have application only in limited circumstances. If the prosecution relies on the third limb of the definition, other issues arise. The fact to be proved in order to establish the defence is necessarily larger than the facts which it may be assumed that the legislature or the Executive thought were (or could be) established when it prescribed the organisation to be a criminal organisation. That is, the legislative or executive judgment that the organisation is one whose members engage in, or conspire to engage in, serious criminal activity and one whose members, by their association, represent an unacceptable risk of the kind described, cannot be met by demonstrating that the organisation does not have either or both of those characteristics. It can be met only by showing that the organisation's members have no criminal purpose whatever. Absent that proof, the accused must be held subject to the same restrictive norms of behaviour and punishment as a "participant" in an organisation judicially determined to have the prescribed characteristics, Hayne regardless of how and why the legislature or the Executive decided that the organisation in which the accused is a participant should be declared to be a "criminal organisation". That it is the courts which determine whether the defence is made out does not vindicate the judgment which the legislature or the Executive has made. To the extent to which the determination of whether the defence is established gives content to what is a "criminal organisation" within the third limb of the definition, the content that is given is wider than and discordant with the content given to that expression by the first two limbs of the definition. The result is that the vice already identified is not met. Although the legislative or executive judgment which lies behind declaring an organisation to be a "criminal organisation" is not vindicated by any finding made at trial, the court must give effect to that legislative or executive judgment as if it had been found by the court to have been established. There is thus the assimilation of the legislative or executive judgment with a judgment pronounced by a court after trial. The assimilation occurs despite the provision of a single form of defence to an allegation that an organisation is a "criminal organisation". The assimilation occurs, despite the provision of a single form of defence, because of the discordance which reliance on, and proof of, the defence would give to the characteristics of a "criminal organisation", as defined in the third limb of the definition, and those characteristics that must be found by judicial determination of what is a "criminal organisation" under the first or second limbs of the definition. The assimilation is repugnant to, and incompatible with, the institutional integrity of the courts. Consequences It follows from what has been said that all of ss 60A, 60B and 60C (as inserted in the Criminal Code by s 42 of the Disruption Act) are beyond the legislative power of the Queensland Parliament. No party or intervener submitted that any part of ss 60A, 60B or 60C could be severed or given134 some reduced, but valid, operation. The reasoning which supports the conclusion that ss 60A, 60B and 60C of the Criminal Code are invalid would apply equally to those other provisions of the Criminal Code in issue in this case135 but, as explained earlier in these 134 cf Pidoto v Victoria (1943) 68 CLR 87 at 111 per Latham CJ; [1943] HCA 37. 135 ss 72(2), (3) and (4), 92A(4A), (4B) and (5), 320(2), (3) and (4) and 340(1A), (1B) and (3). Hayne reasons, the plaintiff should have no relief relating to those provisions, the VLAD Act or the impugned provisions of the Bail Act. By contrast, however, the impugned provisions of the Liquor Act136 do not suffer from the vice that has been identified in ss 60A, 60B and 60C of the Criminal Code. It is necessary to explain why that is so. As previously noted, the relevant provisions of the Liquor Act apply only in respect of prohibited items associated with an entity declared to be a criminal organisation under the third limb of the Criminal Code definition of that term. And the Liquor Act makes no provision for a defence of the kind provided by ss 60A, 60B and 60C of the Criminal Code to the allegation that an organisation is a "criminal organisation". The relevant provisions of the Liquor Act neither permit nor require the courts to make any judgment about what is or is not a "criminal organisation" for the purposes of those provisions. The legislative prescription of an element of an offence is commonplace. Provision for prescription by regulation of the content to be given to an element of an offence is equally commonplace. Legislative or regulatory prescription of what drugs may not lawfully be possessed or sold is an obvious example. The direct or indirect legislative prescription of what constitutes an element of an offence presents no threat to the institutional integrity of the courts. But that is not the vice which has been identified in ss 60A, 60B and 60C of the Criminal Code. The vice is assimilation of legislative or executive judgment with the judgment of a court. And the impugned provisions of the Liquor Act make no assimilation of that kind. They are provisions which take the common form of proscribing conduct of a kind defined by the legislature by reference to proof of an identified connection between the relevant conduct and organisations specified by legislative or regulatory instrument. The plaintiff's challenge to the validity of these provisions fails. The questions in the Further Amended Special Case should be answered accordingly. The defendant should pay the plaintiff's costs of the special case. 136 ss 173EB, 173EC and 173ED. Crennan CRENNAN, KIEFEL, GAGELER AND KEANE JJ. The plaintiff, a member of the Brisbane Chapter of the Hells Angels Motorcycle Club ("the HAMC"), seeks to challenge the validity of the Vicious Lawless Association Disestablishment Act 2013 (Q) ("the VLAD Act") and certain provisions of the Criminal Code (Q), the Liquor Act 1992 (Q) ("the Liquor Act") and the Bail Act 1980 (Q) ("the Bail Act"). The challenged provisions may conveniently be grouped into three categories for the purposes of discussion and analysis. The first category includes the VLAD Act, which, in cases where a designated offence has been proved against an individual, imposes more severe penalties than would otherwise be applicable where the individual is also proved to be a "participant" in the affairs of an association. Also in the first category are ss 72(2), 92A(4A), 320(2) and 340(1A) of the Criminal Code. They provide for either a mandatory minimum penalty, a higher maximum penalty, or both, where an individual, found guilty of a designated offence, is also found to be a participant in a criminal organisation. The HAMC and 25 other motorcycle clubs were declared to be criminal organisations for the purposes of the Criminal Code by the Criminal Code (Criminal Organisations) Regulation 2013. The second category of challenged provisions includes ss 60A, 60B and 60C of the Criminal Code, which were enacted by s 42 of the Criminal Law (Criminal Organisations Disruption) Amendment Act 2013 (Q) ("the Disruption Act"). These provisions create new offences, an element of which is being a "participant" in a criminal organisation as defined in the Criminal Code. Also in this category are ss 173EB, 173EC and 173ED of the Liquor Act, which were enacted by s 75 of the Tattoo Parlours Act 2013 (Q), and which create new offences, elements of which involve the wearing or carrying of symbols of membership of a "declared criminal organisation", such as the HAMC. The third category of challenged provisions consists of sub-ss (3A), (3B), (3C) and (3D) of s 16 of the Bail Act, which were added to the Bail Act by the Disruption Act. They effect a reversal of the presumption in favour of bail against an individual who is alleged to be a participant in a criminal organisation, such as the HAMC. None of the laws in any of the three categories operates directly to proscribe membership of the HAMC or any other organisation. The plaintiff contends, however, that all the challenged laws were enacted with the objective of destroying the HAMC and other motorcycle clubs. Crennan The proceedings The plaintiff commenced proceedings in the original jurisdiction of this Court137 seeking declarations that the challenged laws are invalid on the ground that they offend the principle in Kable v Director of Public Prosecutions (NSW)138 ("the Kable principle"). The Kable principle was most recently summarised in Attorney-General (NT) v Emmerson139, where French CJ, Hayne, Crennan, Kiefel, Bell and "The principle for which Kable stands is that because the Constitution establishes an integrated court system, and contemplates the exercise of federal jurisdiction by State Supreme Courts, State legislation which purports to confer upon such a court a power or function which substantially impairs the court's institutional integrity, and which is therefore incompatible with that court's role as a repository of federal jurisdiction, is constitutionally invalid." (footnotes omitted) Decisions of this Court establish that the institutional integrity of a court is taken to be impaired by legislation which enlists the court in the implementation of the legislative or executive policies of the relevant State or Territory140, or which requires the court to depart, to a significant degree, from the processes which characterise the exercise of judicial power141. 137 Section 76 of the Constitution and s 30 of the Judiciary Act 1903 (Cth). 138 (1996) 189 CLR 51; [1996] HCA 24. 139 (2014) 88 ALJR 522 at 533 [40]; 307 ALR 174 at 185; [2014] HCA 13. 140 Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 591 [15], 593 [23], 598- 599 [37], 617-619 [100]-[105], 648 [198], 655-656 [219]; [2004] HCA 46; South Australia v Totani (2010) 242 CLR 1 at 52 [82], 67 [149], 92-93 [236], 173 [481]; [2010] HCA 39. 141 International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319 at 353 [52]; [2009] HCA 49; South Australia v Totani (2010) 242 CLR 1 at 62-63 [131], 157 [428]; Wainohu v New South Wales (2011) 243 CLR 181 at 208-210 [44]-[45]; [2011] HCA 24. Crennan The plaintiff sought to contend that the challenged laws require the courts to perform their functions in a manner which is incompatible with the judicial process in two respects: the first and third categories of challenged provisions were said to be contrary to fundamental notions of equal justice in that they require certain offenders to be dealt with by the courts more severely than other offenders by reason of their lawful choice of associates rather than by reason of their personal and individual culpability for the offence. Secondly, all the impugned laws, considered together, were said impermissibly to enlist the courts to implement the policy of the executive and legislature to destroy associations which have not directly been made unlawful by the challenged provisions142. The defendant, the State of Queensland, argued that the plaintiff had no standing to challenge the validity of the first and third categories of impugned laws. The defendant also argued that none of the impugned laws infringes the Kable principle. The Attorney-General of the Commonwealth and the Attorneys-General of each of the States (except Tasmania) and the Northern Territory intervened in support of the defendant. The scope of the plaintiff's challenge It is necessary at the outset to be clear as to what the plaintiff's challenge does not involve. First, the plaintiff does not seek to rely upon the freedom of communication on governmental or political matters which arises from the limitations on legislative or executive power implicit in ss 7, 24, 64 and 128 of the Commonwealth Constitution or a cognate freedom of association143. Secondly, the plaintiff does not seek to raise an issue of the kind resolved in Australian Communist Party v The Commonwealth144, where it was held that the Commonwealth Parliament was not competent to determine, or to authorise 142 In a Ministerial Statement preceding the introduction of the Bills for these laws, the Premier of Queensland said that they were "not designed to just contain or manage [criminal motorcycle gangs]; they [were] designed to destroy them": Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 15 October 2013 at 3114. 143 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 560-561; [1997] HCA 25; Unions NSW v New South Wales (2013) 88 ALJR 227 at 249 [135]; 304 ALR 266 at 295; [2013] HCA 58. 144 (1951) 83 CLR 1; [1951] HCA 5. Crennan the executive government to determine, the very facts upon which the existence of a necessary head of Commonwealth legislative power depends. No such question arises in relation to the legislative competence of the State of Queensland. Apart from the question raised as to the application of the Kable principle, there is no dispute that the challenged laws are within the plenary competence of the Queensland Parliament to make laws for the peace, order and good government of the State145. Thirdly, it is not part of this Court's function to pass judgment on the political wisdom of the impugned laws146. As explained by Brennan CJ in "It is for the Parliament to prescribe the law to be applied by a court and, if the law is otherwise valid, the court's opinion as to the justice, propriety or utility of the law is immaterial. Integrity is the fidelity to legal duty, not a refusal to accept as binding a law which the court takes to be contrary to its opinion as to the proper balance to be struck between competing interests." The special case The parties agreed to state a number of questions of law for the opinion of this Court in a special case. As well as the questions of whether and the extent to which the challenged laws are contrary to the Kable principle, the special case poses questions as to the plaintiff's standing to seek a declaration that the first and third categories of the challenged laws are invalid, and whether that challenge is hypothetical. The special case includes a number of facts agreed between the parties in relation to these questions. In this regard, it may be noted that networks involving members of the subject of multiple the HAMC have been investigations by the Queensland Police Service in relation to organised crime, predominantly drug trafficking. It is also an agreed fact that a significant number of members of the HAMC in Queensland have been convicted of offences 145 R v Burah (1878) 3 App Cas 889 at 904; Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 9-10; [1988] HCA 55. 146 Attorney-General (NT) v Emmerson (2014) 88 ALJR 522 at 541-542 [85]; 307 ALR 174 at 195-196. 147 (1998) 193 CLR 173 at 197 [37]; [1998] HCA 9. Crennan including the possession, production and trafficking of dangerous drugs. The motto of the HAMC is "When we do right nobody remembers, when we do wrong nobody forgets." The plaintiff claims that the HAMC, and he as a member, have been engaged for many years in various fundraising activities for assorted registered charities, and other charitable purposes, including St John Ambulance and children's hospitals. The defendant contends that the plaintiff lacks standing to seek declaratory relief as to the invalidity of the first and third categories, and also contends that the plaintiff's challenge to those provisions is hypothetical. It must be accepted that, for reasons to be stated in more detail, the plaintiff does not have standing to challenge the validity of the laws in the first category of impugned provisions. None of those laws materially affects the plaintiff's legal position. Those laws operate only where an offence has been committed against existing unchallenged laws. The plaintiff has not been charged with any offence which might attract the operation of any of the impugned provisions. More importantly, he has not indicated that he has conducted, or intends to conduct, himself in a manner which would lead to such charges; he does not assert that he would do so were it not for the extra penalties that might be imposed under the challenged laws; and he does not assert that his freedom of action is otherwise legally or practically impeded. He cannot be assumed to intend to commit any offence that would engage the operation of the impugned provisions. In relation to the third category, the provisions of the Bail Act also have no material application in relation to the plaintiff; they do not affect his legal position in any way. By contrast, the laws in the second category do restrict the plaintiff's freedom to conduct himself as he wishes, and as he would be free to do if these laws had not been enacted. It is an agreed fact that the plaintiff does wish to continue to attend at the HAMC Clubhouse, to attend social events in public places in company with other members of the HAMC, to wear the HAMC's colours on premises licensed under the Liquor Act, and to promote to other individuals the benefits of membership of the HAMC. In these circumstances, the defendant was not disposed to make a general the plaintiff's standing to challenge the validity of these objection Crennan provisions148, nor did it argue that his challenge to these laws is in any way hypothetical. Accordingly, it should be held that the plaintiff has a sufficient interest to challenge the validity of the provisions because they have an immediate effect upon his liberty149. The plaintiff's contention that the second category of impugned laws infringes the Kable principle should be rejected. It is fair to say that the language in which these provisions are expressed is apt to create confusion as to their operation, and indeed to give colour to the plaintiff's argument. In particular, the legislative reference to "criminal organisation" is apt to mislead a casual reader as to the effect of the laws. In truth, these laws do not declare membership of any organisation a criminal offence. Rather, they make membership of a designated association one ingredient of an offence. The commission of the offence must be proved in order to establish criminal guilt and liability to criminal punishment. Notwithstanding the colour lent to the plaintiff's argument by the tendentious language in which these provisions are expressed, their effect is not to enlist the courts to implement the policies of the executive or legislative branches of government. These laws do not require a court to give effect, by judicial order, to a legislative or executive decision which establishes new norms of conduct for the plaintiff or other members of any association. Nor do they require a court to proceed otherwise than in accordance with the processes which are understood to characterise the exercise of judicial power. In these respects, the present case stands in contrast to the decision in South Australia v Totani150, on which the plaintiff founded this aspect of his challenge. It should be noted that the arguments concerning "equal justice" before the law were not advanced in support of the plaintiff's challenge to the laws in the second category. Accordingly, they need not be discussed further. 148 It may be noted that the defendant did not concede that the plaintiff had standing to challenge s 60B(2) of the Criminal Code. As will appear, the defendant's position is not prejudiced by the Court's dealing with the plaintiff's challenge to s 60B(2) on its merits. 149 Croome v Tasmania (1997) 191 CLR 119 at 137; [1997] HCA 5. 150 (2010) 242 CLR 1. Crennan The operation of each category of the challenged provisions must be considered more closely in order to explain these conclusions. In considering the merits of the plaintiff's challenge to the second category of impugned laws, it is necessary to bear in mind the plaintiff's contention that all three categories operate as a package designed to destroy organisations such as the HAMC. The operation of the first and third categories must be noted, both to explain why the plaintiff has no standing to challenge their validity, and as part of the milieu in which the laws in the second category operate. The first category of challenged laws The VLAD Act The VLAD Act seeks to achieve its "objects" by establishing a sentencing regime, involving mandatory minimum sentencing, which targets offenders connected to a relevant association. It has no operation where an offence has not been committed under existing law. Section 2(1) of the VLAD Act states that the objects of that Act are to: disestablish associations that encourage, foster or support persons who commit serious offences; and increase public safety and security by the disestablishment of the associations; and deny to persons who commit serious offences the assistance and support gained from association with other persons who participate in the affairs of the associations." Section 2(2) of the VLAD Act provides that these objects are to be achieved by: imposing significant terms of imprisonment for vicious lawless associates who commit declared offences; and removing the possibility of parole for vicious lawless associates serving terms of imprisonment except in limited circumstances; and encouraging vicious lawless associates to cooperate with law enforcement agencies in the investigation and prosecution of serious criminal activity." Crennan The substantive operation of the VLAD Act is effected by s 7(1), which provides as follows: "A court sentencing a vicious lawless associate for a declared offence must impose all of the following sentences on the vicious lawless associate – a sentence for the offence under the law apart from this Act and without regard to any further punishment that may or will be imposed under this Act; a further sentence of 15 years imprisonment served wholly in a corrective services facility; if the vicious lawless associate was, at the time of the commission of the offence, or during the course of the commission of the offence, an office bearer of the relevant association – a further sentence of 10 years imprisonment served wholly in a corrective services facility which must be served cumulatively with the further sentence mentioned in paragraph (b)." Section 7 operates by reference to the concepts of "participant" and "vicious lawless associate". In this regard, "participant" is defined in s 4 as follows: "For this Act, a person is a participant in the affairs of an association if the person – (whether by words or conduct, or in any other way) asserts, declares or advertises his or her membership of, or association with, the association; or (whether by words or conduct, or in any other way) seeks to be a member of, or to be associated with, the association; or has attended more than 1 meeting or gathering of persons who participate in the affairs of the association in any way; or has taken part on any 1 or more occasions in the affairs of the association in any other way." The concept of "participant" is relevant to the identification of an individual as a "vicious lawless associate", which is defined in s 5 as follows: Crennan "(1) For this Act, a person is a vicious lawless associate if the person – commits a declared offence; and at the time the offence is committed, or during the course of the commission of the offence, is a participant in the affairs of an association (relevant association); and did or omitted to do the act that constitutes the declared offence for the purposes of, or in the course of participating in the affairs of, the relevant association. (2) However, a person is not a vicious lawless associate if the person proves that the relevant association is not an association that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, declared offences." Section 3 of the VLAD Act contains the following material definitions: "association means any of the following – a corporation; an unincorporated association; a club or league; any other group of 3 or more persons by whatever name called, whether associated formally or informally and whether the group is legal or illegal. base sentence, for a vicious lawless associate, means the sentence imposed on the associate under section 7(1)(a). declared offence means – an offence against a provision mentioned in schedule 1; or an offence prescribed under a regulation to be a declared offence. further sentence, for a vicious lawless associate, means a sentence imposed on the associate under section 7(1)(b) or (c). office bearer, of an association, means – Crennan a person who is a president, vice-president, sergeant-at-arms, treasurer, secretary, director or another office bearer or a shareholder of the association; or a person who (whether by words or conduct, or in any other way) asserts, declares or advertises himself or herself to hold a position of authority of any kind within the association." Under s 10, the Act empowers the Governor in Council to "make regulations declaring offences for the purposes of this Act." Schedule 1 lists the declared offences under the Act. It is unnecessary to set out all the offences listed in Sched 1. It is sufficient to note that those offences are existing offences under the Corrective Services Act 2006 (Q), the Criminal Code, the Criminal Proceeds Confiscation Act 2002 (Q), the Drugs Misuse Act 1986 (Q) and the Weapons Act 1990 (Q). In addressing the question of the plaintiff's standing to challenge the validity of the VLAD Act, it is to be noted that a defendant will be liable to the additional penalty provided by s 7(1)(b) of the VLAD Act only if each of the following elements is proved by the prosecution: the defendant has committed an offence listed in Sched 1 (that is, an offence already known to the law); the defendant was a participant in the affairs of an association either when the declared offence was committed or during the course of the commission of the declared offence; and the defendant intentionally, knowingly or recklessly committed the declared offence for the purposes of the association or in the course of participating in the affairs of the association. The important point in relation to the plaintiff's standing is that the exposure of any individual to additional penalty under the VLAD Act depends upon proof that an offence, not created by the impugned provisions, has been committed. No challenge is made to the validity of the laws which create those offences; and, unsurprisingly, the plaintiff does not assert that he is at liberty to choose whether or not to commit any one of these offences. It is sufficient, for present purposes, to note that the plaintiff's freedom of action is not affected in any way by the extra punishment for which the VLAD Act provides. Crennan Sections 72, 92A, 320 and 340 of the Criminal Code Sections 72, 92A, 320 and 340 of the Criminal Code were amended by the Disruption Act to introduce more severe sentences where the offender is found guilty of one of those existing offences and is also found to be a participant in a criminal organisation. Section 72 was amended so that where an offender is convicted of the basic offence of affray, the penalty for a participant is a minimum of six months' imprisonment without parole and a maximum of seven years, whereas the maximum penalty for the basic offence is one year's imprisonment. Section 92A was amended so that where an offender has been convicted of the basic offence of misconduct in respect of public office, the maximum penalty for a participant is 14 years' imprisonment, whereas the maximum penalty for the basic offence is seven years' imprisonment. Section 320 was amended so that where an offender is convicted of the basic offence of doing grievous bodily harm, the penalty for a participant (where the grievous bodily harm is done to a police officer) is a minimum of one year's imprisonment without parole and a maximum of 14 years, whereas the maximum penalty for the basic offence is 14 years' imprisonment. Section 340 was amended so that where an offender has been convicted of the basic offence of serious assault, the penalty for a participant is a minimum of one year's imprisonment without parole and a maximum of seven years, whereas the maximum penalty for the basic offence is seven years' imprisonment. Once again, it is not suggested that the plaintiff has infringed, intends to infringe, or would like to infringe, any of the provisions which establish the basic offences. Standing The plaintiff did not call into question the authorities151 which establish that a party who seeks a declaration that a law is invalid must have sufficient 151 Pharmaceutical Society of Great Britain v Dickson [1970] AC 403; Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493; [1980] HCA 53; Croome v Tasmania (1997) 191 CLR 119; Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247; [1998] HCA 49. Crennan interest in having his or her legal position clarified. In Pharmaceutical Society of Great Britain v Dickson152, in a passage cited with approval in Croome v Tasmania153, Lord Upjohn said "[a] person whose freedom of action is challenged can always come to the court to have his rights and position clarified". In Croome v Tasmania154 it was observed that such a person would have a sufficient interest to establish a justiciable controversy, which is to acknowledge that issues as to standing and whether a question is hypothesised may overlap. The plaintiff argued that his claim was supported by the authorities and that he was entitled to know whether the impugned laws applied to him. It can be said immediately that they do apply to him, just as they apply to everyone else in Queensland. The plaintiff has no more interest than anyone else in clarifying what the law is. The pertinent question is whether the plaintiff has a sufficient interest to have his "rights and position clarified" by the declaration he seeks155. Under the established requirements as to standing, the plaintiff does not have a sufficient interest in the validity of the laws in the first category to claim a declaration that they are invalid. In Australian Conservation Foundation v The Commonwealth156, Gibbs J said of the notion of "sufficient interest" that: "A person is not interested ... unless he is likely to gain some advantage, other than the satisfaction of righting a wrong, upholding a principle or winning a contest, if his action succeeds or to suffer some disadvantage, other than a sense of grievance or a debt for costs, if his action fails. A belief, however strongly felt, that the law generally, or a particular law, should be observed, or that conduct of a particular kind should be prevented, does not suffice to give its possessor locus standi." 152 [1970] AC 403 at 433. 153 (1997) 191 CLR 119 at 127. 154 (1997) 191 CLR 119 at 127. 155 Pharmaceutical Society of Great Britain v Dickson [1970] AC 403 at 433, cited with approval in Croome v Tasmania (1997) 191 CLR 119 at 127. 156 (1980) 146 CLR 493 at 530. Crennan In Croome v Tasmania157, it was held by Brennan CJ, Dawson and Toohey JJ that a sufficient interest extends to any case where a person's freedom of action is affected by the impugned laws. The laws which the plaintiff seeks to challenge do not affect his freedom of action. The activities upon which the operation of the first category of challenged laws depends are unlawful under the general law. The new provisions add to the adverse consequences of contravention of existing norms of conduct, but do not impose any new prohibition or restriction on any person. The new provisions might lead to a more severe sentence; but their only present operation is to provide an extra incentive to obey existing, valid laws. That is not something which is said, or could be said, to be a disadvantage to the plaintiff. The laws challenged in Croome v Tasmania criminalised the plaintiffs' existing relationships with other people158. Brennan CJ, Dawson and Toohey JJ held159 that the plaintiffs' admitted conduct rendered them liable to criminal prosecution, and, on this basis, that they had sufficient interest to support their claim for declarations that the impugned laws were invalid. Gaudron, McHugh and Gummow JJ held160 that the challenged laws affected the plaintiffs by imposing "duties which require the observance of particular norms of conduct and attach liability to prosecution and subsequent punishment for disobedience." Any difference between the approaches to the question of standing taken in the two judgments in Croome v Tasmania is not material for present purposes. While in Croome v Tasmania the plaintiffs' standing to challenge the validity of the laws did not depend upon the commencement by the executive government of processes to enforce the challenged law against the plaintiffs, their liberty was constrained by the proscriptions in question. In the present case, as indeed the plaintiff emphasised in his argument, none of the challenged laws purports to criminalise the plaintiff's relationship with his fellow members of the HAMC. As noted above, the challenged laws in the first category do not impose any legal or practical restriction upon the plaintiff's freedom of action: the plaintiff does not assert that he has broken, or that he intends to break, any existing laws; and if any assumption is to be made 157 (1997) 191 CLR 119 at 127. 158 (1997) 191 CLR 119 at 131. 159 (1997) 191 CLR 119 at 127. 160 (1997) 191 CLR 119 at 137. Crennan about the plaintiff's activities in the future, it should be assumed that he will conduct his activities within the law so as to avoid prosecution and conviction161. In Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd162, Gaudron, Gummow and Kirby JJ held that a plaintiff had standing where its interest was "as a matter of practical reality … immediate, significant and peculiar to [it]." In the present case, it may be accepted that the avowed objective of the VLAD Act (whether considered alone or together with the other challenged laws) is to discourage membership of the HAMC and like associations by the threat of draconian punishment of those who break the law while a member of such an association. If the Act is effective in that regard, membership of the HAMC might be expected to decline. That might be disappointing for the plaintiff in a way which would be peculiar to him, in the sense that members of the general public would not be similarly affected. But to say that the VLAD Act is calculated to discourage membership of the HAMC is distinctly not to say that the legal position of the plaintiff is immediately or significantly affected by the VLAD Act. His liberty and other rights, duties, liabilities and obligations remain unaffected by the enactment of these provisions; and his legal position would not be materially advantaged if his challenge were to succeed163. The power to declare a law to be invalid is confined by the boundaries of judicial power164. In Robinson v Western Australian Museum165, Mason J said that the requirement as to standing to invoke the exercise of judicial power: "reflects a natural reluctance on the part of the courts to exercise jurisdiction otherwise than at the instance of a person who has an interest in the subject matter of the litigation in conformity with the philosophy 161 O'Shea v Littleton 414 US 488 at 497 (1974). 162 (1998) 194 CLR 247 at 267 [52]. 163 British Medical Association v The Commonwealth (1949) 79 CLR 201 at 257-258; [1949] HCA 44. 164 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582; [1992] HCA 10; Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 262 [37]. 165 (1977) 138 CLR 283 at 327; [1977] HCA 46. Crennan that it is for the courts to decide actual controversies between parties, not academic or hypothetical questions." The established requirements as to standing ensure that the work of the courts remains focused upon the determination of rights, duties, liabilities and obligations as the most concrete and specific expression of the law in its practical operation, rather than the writing of essays of essentially academic interest. To recognise that a person has a sufficient interest to seek the exercise of judicial power where that exercise is apt to affect "the legal situation of persons subject to the jurisdiction of the court"166 serves to maintain the ordinary characteristics of judicial power167. It may be accepted that there is a general public interest that governments act in accordance with the law enforced by the courts168; but to conclude that the plaintiff's sense of grievance at the injustice of these laws is not an interest which suffices to give him standing to challenge their validity is not to undermine this aspect of the rule of law169. Any person actually in jeopardy of punishment under these laws will have standing to challenge their validity. In addition, the established requirements as to standing help to ensure that the exercise of judicial power is informed, as fully as possible, by the "concrete adverseness which sharpens the presentation of issues"170. It may be acknowledged that the rules as to standing will not always achieve that purpose, as will be seen in the discussion of the wide-ranging arguments agitated in this case in relation to the second category of challenged laws. Nevertheless, adherence to the established requirements as to standing is generally apt to 166 Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 318; [1991] HCA 53. 167 cf Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 304-305. See also Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 609-610 [41], 637 [121]; [2000] HCA 11. 168 Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 284-285 [109]. 169 See Keyzer, Open Constitutional Courts, (2010) at 138; Evans, "Standing to Raise Constitutional Issues Reconsidered", (2010) 22(3) Bond Law Review 38 at 44-49. 170 Baker v Carr 369 US 186 at 204 (1962); O'Shea v Littleton 414 US 488 at 494 (1974); Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 262 [37]. Crennan improve the quality of judicial decision-making by ensuring that the focus and strength of the arguments advanced by the parties reflect the importance of the prospective outcome for the parties171. Finally at this stage, it may be noted that the plaintiff does not claim a declaration as to his proper sentence were he to commit an offence in circumstances which would attract the operation of the impugned provisions. Such a claim would also be an impermissible request for an advisory opinion172. It is inconceivable that a court would entertain a claim for an indication, in advance of the commission of an offence, of the extent of the punishment to be imposed on a person contemplating the commission of the offence. It is not necessary to explore these difficulties further. It is sufficient here to conclude that the plaintiff lacks standing to seek a declaration that the first category of laws is invalid. The second category of challenged laws Sections 60A, 60B and 60C of the Criminal Code The amendments made to the Criminal Code by the Disruption Act proscribe certain otherwise lawful activities by individuals who are participants in a "criminal organisation". The defendant does not dispute that these provisions operate to impede the plaintiff in the lawful exercise of his membership of the HAMC173. Accordingly, the plaintiff has standing to seek a declaration as to their invalidity, and his challenge is not hypothetical. To establish a breach of s 60A, the prosecution must prove that the defendant: (a) was a participant in a criminal organisation; 171 Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 318. 172 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265-267; [1921] HCA 20; Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 303. 173 See footnote 148 above. Crennan (b) was present in a public place with two or more other persons who were participants in a criminal organisation; and knew that those persons were participants in a criminal organisation. Section 60A(2) provides that it is a defence, to a charge of an offence under s 60A(1), to prove that "the criminal organisation is not an organisation that has, as 1 of its purposes, the purpose of engaging in, or conspiring to engage in, criminal activity." To establish a breach of s 60B, the prosecution must prove that the defendant: (a) was a participant in a criminal organisation; and intentionally entered or attempted to enter a prescribed place or attended or attempted to attend a prescribed event. Section 60B(4) provides that: "prescribed event means an event declared under a regulation to be a prescribed event. prescribed place means a place declared under a regulation to be a prescribed place." It may be noted that the clubhouse of the HAMC is a prescribed place. Section 60B(3) provides for a defence to a charge under s 60B(1) or (2) in terms similar to s 60A(2). To establish a breach of s 60C, the prosecution must prove that the defendant: (a) was a participant in a criminal organisation; and intentionally recruited or attempted to recruit another person to become a participant in a criminal organisation. Section 60C(2) provides for a defence to a charge under s 60C(1) in terms similar to s 60A(2). Section 60A(3) provides the following definitions for the purposes of ss 60A, 60B and 60C: Crennan "member, of an organisation, prospective member, however described. includes an associate member, or participant, in a criminal organisation, means – if the organisation is a body corporate – a director or officer of the body corporate; or a person who (whether by words or conduct, or in any other way) asserts, declares or advertises his or her membership of, or association with, the organisation; or a person who (whether by words or conduct, or in any other way) seeks to be a member of, or to be associated with, the organisation; a person who attends more than 1 meeting or gathering of persons who participate in the affairs of the organisation in any way; or a person who takes part in the affairs of the organisation in any other way; but does not include a lawyer acting in a professional capacity." For the purposes of ss 60A, 60B and 60C of the Criminal Code, the term "criminal organisation" is defined by s 1 of the Criminal Code174 to mean: an organisation of 3 or more persons – who have as their purpose, or 1 of their purposes, engaging in, organising, planning, supporting, or otherwise conspiring to engage in, serious criminal activity as defined under the Criminal Organisation Act 2009; and facilitating, (ii) who, by their association, represent an unacceptable risk to the safety, welfare or order of the community; or a criminal organisation under the Criminal Organisation Act 2009; 174 As amended by s 41 of the Disruption Act. Crennan an entity declared under a regulation to be a criminal organisation." By s 70 of the Disruption Act, Sched 1 was declared to have effect to make the Criminal Code (Criminal Organisations) Regulation 2013 a regulation under the Criminal Code. The HAMC is one of 26 entities declared by Sched 1 to be a criminal organisation. Section 708A(1) of the Criminal Code, inserted by the Disruption Act, provides that: "In deciding whether to recommend an amendment of the Criminal Code (Criminal Organisations) Regulation 2013 to declare an entity to be a criminal organisation, the Minister may have regard to the following matters – any information suggesting a link exists between the entity and serious criminal activity; any convictions recorded in relation to – current or former participants in the entity; or persons who associate, or have associated, with participants in the entity; any information suggesting current or former participants in the entity have been, or are, involved in serious criminal activity (whether directly or indirectly and whether or not the involvement has resulted in any convictions); any information suggesting participants in an interstate or overseas chapter or branch (however described) of the entity have as their purpose, or 1 of their purposes, organising, planning, facilitating, supporting or engaging in serious criminal activity; any other matter the Minister considers relevant." For the purposes of s 708A, the term "serious criminal activity" is defined by s 6 of the Criminal Organisation Act 2009 (Q) ("the CO Act") as meaning: a serious criminal offence; or Crennan an act done or omission made outside Queensland, including outside Australia, that, if done or made in Queensland would have been or would be a serious criminal offence." The expression "serious criminal offence" is defined in s 7 of the CO Act as an indictable offence punishable by at least seven years' imprisonment or an offence against either the CO Act itself or certain specified provisions of the Criminal Code. The defence provided by each of ss 60A(2), 60B(3) and 60C(2) requires proof that the organisation in question does not have, as one of its purposes, "the purpose of engaging in, or conspiring to engage in, criminal activity." It does not refer to "serious criminal activity". The expression "criminal activity" is not defined in the CO Act or the Criminal Code; but it would naturally be read as referring to specific criminal offences175. The breadth of these provisions The plaintiff emphasised the novelty and broad reach of these laws. It suited the plaintiff's forensic strategy to emphasise the novelty and breadth of operation of these provisions, especially the definition of "participant" and the power to declare a group of persons to be a criminal organisation. That strategy may have been based upon an assumption that the greater the extent of these novel intrusions into the liberty of the subject appeared to be, the stronger would become the prospect of their being held to be invalid. One difficulty with the plaintiff's strategy is that merely to point out the severity of the laws is not to articulate the connection between the novelty and breadth of the second category of impugned laws and the engagement of the Kable principle. A further difficulty involved in this aspect of the plaintiff's argument is that it urges a wider operation for these laws than would ordinarily be accorded to penal legislation which interferes with basic common law freedoms. It might be expected that in a setting of greater "concrete adverseness"176 than obtains in the present case – for example, in a case in which a defendant was actually charged with a contravention of one of the impugned laws – a sharper focus would be brought to bear in the interests of the defendant. In this hypothetical scenario, the defence would, no doubt, urge a narrower view 175 Assistant Commissioner Condon v Pompano Pty Ltd (2013) 87 ALJR 458 at 485 [108]; 295 ALR 638 at 670; [2013] HCA 7. 176 Baker v Carr 369 US 186 at 204 (1962). Crennan there was no of the construction of these laws than was urged by the plaintiff in the present case, where immediate prospect of substantial adverse consequences from the rejection of his expansive view of the legislation. The defence might also be expected to argue that provisions not bearing on the particular contravention charged would be severable if invalid 177, and therefore that questions as to their validity do not arise on the hearing and determination of that contravention. The plaintiff suggested, for example, that the spouse or child of a member of the HAMC who attended more than one meeting of members would thereby become a "participant" for the purposes of s 60A by reason of the wide definition of "participant" in par (d) in s 60A(3). This suggestion is arguably incorrect. A person becomes a participant by reason of this particular definition only if he or she "has attended more than one meeting of persons who participate in the affairs of the entity in any way". It is arguable that a person does not become a participant, under this definition, merely by meeting "other persons who participate in the affairs of the entity"; rather, it would seem, the definition contemplates that a participant is a person who attends the meetings as one of the persons who, together, participate in the affairs of the entity. However that may be, there can be no doubt that these provisions are capable of having a wide operation which might be thought to be unduly harsh. Thus, it is arguable that a person who has attended more than one such meeting is "marked for life" as a participant, even though the person ceased to be a member long before committing the acts which lead to a charge. And to the extent that three or more members of the HAMC may have been present in court for the hearing of the arguments in this case, it might be argued that they have contravened s 60A(1), if they were unable to make out the defence in s 60A(2). That may well be thought to be an odd and undesirable outcome. On the other hand, it must also be said that, so far as the Kable principle is concerned, that outcome would be a consequence of the enforcement of the legislation by ordinary judicial processes, not some extraordinary imposition upon the judiciary. A further concern raised in the course of argument was that the already wide reach of the challenged provisions might be expanded even further by the executive government's use of its regulation-making power under s 708 of the Criminal Code to declare a wide range of associations to be criminal organisations. According to this argument, the power to declare an entity to be a 177 Acts Interpretation Act 1954 (Q), s 9. Crennan criminal organisation is not confined by s 708A(1) to those associations believed by the executive government to be engaged in serious criminal activity. This argument, which derives from language of s 708A(1)(e), raises the concern that an association whose purposes include the active pursuit of political objectives, which might in turn involve agitation leading to breaches of laws designed to preserve public order, might be declared to be a criminal organisation. the apparently open-ended One possible answer to the concern raised by this hypothetical argument depends on the proper construction of the provisions which empower the executive to declare a group of individuals to be a criminal organisation. In a case where a person was actually charged with a contravention of s 60A, one would expect the defence to urge that the context in which ss 708 and 708A(1)(e) appear confines the power to declare a group of persons to be a criminal organisation to those associations whose activities are believed by the Minister to be connected to serious criminal offences, as distinct from lesser offences, such as regulatory offences against public order. There would be some force in such an argument. support the narrower view of Considerations of context the regulation-making power. The matters to which the Minister may have regard under s 708A, in deciding whether to declare an entity to be a criminal organisation, are all, with the exception of s 708A(1)(b) and (e), expressly concerned with the Minister's apprehension of connections between the entity and "serious criminal activity", which, as noted above, is defined in such a way that regulatory offences are not included. It might be argued that the scope of s 708A(1)(b) and (e) is informed by the other paragraphs of s 708A(1) so that the Minister may take into account only apprehended connections between the entity and serious criminal activity. It is also significant that these provisions are to be found in the Criminal Code. The context for the regulation-making power in s 708A also includes par (a) of the definition of "criminal organisation" in s 1 of the Criminal Code. That definition would be applied at a trial of a person for an offence under ss 60A, 60B and 60C unless an organisation had already been declared to be a criminal organisation. Paragraph (b) of the definition refers to a declaration to that effect made by a court under s 10 of the CO Act. Section 10(1) of the CO Act requires that a court making such a declaration be satisfied that the purpose for which members of the organisation associate is to engage in serious criminal activity and that the organisation represents an unacceptable risk to the safety, welfare and order of the community. Whilst not in terms identical to par (a) of the definition, s 10(1) of the CO Act reflects essential aspects of the par (a) Crennan definition. Consistently, any declaration made by regulation, to which par (c) refers, would also be informed by such considerations. If the hypothesised offences against public order contemplated by this argument were only regulatory offences, as opposed to serious criminal offences, the entities in question would not be within the regulation-making power. This would be because there would be no apprehended link between the entity and serious criminal offences. In this regard, s 2 of the Criminal Code provides that "[a]n act or omission which renders the person doing the act or making the omission liable to punishment is called an offence." Section 3(1) of the Criminal Code provides that offences are of "2 kinds, namely, criminal offences and regulatory offences." If the activity in question were a regulatory offence, rather than a criminal offence, it would be arguable that that activity is not criminal activity, much less serious criminal activity, and so the entity is outside the scope of the power to declare an entity by regulation to be a criminal organisation. The argument in support of this narrower view would be supported by the consideration that the right of free association under the common law178 should not be limited save by clearly expressed legislative intention. There is force in the arguments for the narrower view of the regulation-making power. One would not readily accept that a Minister who disapproved of Catholicism could rely upon his or her subjective view that that was "a relevant matter", in some general way unconnected to serious criminal activity, to justify the making of a declaration that either the St Vincent de Paul Society or the Knights of the Southern Cross is a criminal organisation. And finally in the hypothetical scenario under consideration, it is inconceivable that an issue would not be raised by the defence as to the invalidity of the declaration based on the limitation on executive and legislative power implied by the freedom of communication and association on matters of political and governmental interest179. As noted above, this issue was not agitated in this case. It does not advance the plaintiff's case to resolve these hypothetical arguments. It is not necessary to resolve these arguments in this case because they do not afford a basis to impugn the validity of the challenged laws in terms of the Kable principle. It may be accepted that the possible reach of these 178 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 200. 179 Coleman v Power (2004) 220 CLR 1; [2004] HCA 39; Monis v The Queen (2013) 249 CLR 92; [2013] HCA 4. Crennan provisions is very wide, and even that their operation may be excessive and even harsh. But as was explained in Magaming v The Queen180, to demonstrate that a law may lead to harsh outcomes, even disproportionately harsh outcomes, is not, of itself, to demonstrate constitutional invalidity. It is necessary to articulate the connection between these laws and the engagement of the Kable principle. It is also necessary to bear in mind that the Kable principle is concerned to preserve the integrity of the judicial function. The second category of laws do not, in terms, advert to the performance of any judicial function. The plaintiff's attempt to articulate the necessary connection may be considered under the headings: enlisting judicial power, cloaking, and usurpation of judicial power. They may now be considered in turn. Enlisting judicial power The plaintiff contended that, while Parliament has not directly outlawed or disestablished criminal organisations, the courts have been enlisted to give effect to that intention, and, in this way, the Kable principle has been engaged. It must be said immediately that, so framed, the plaintiff's contention is too broad. That the legislature's policies inform the laws which it passes does not mean that the court's enforcement of those laws is incompatible with its institutional integrity. As French CJ observed in Public Service Association and Professional Officers' Association Amalgamated (NSW) v Director of Public Employment181: "All legislation reflects policies attributable to the legislature but, in many if not most cases, they are policies originating with the executive government as the proponent of most statutes enacted by the parliament." In the same case182, Heydon J said: "In a system of responsible government, all legislation enacted substantially in conformity with a Bill presented to the legislature by the 180 (2013) 87 ALJR 1060 at 1071 [50]-[52], 1080-1081 [103]-[108]; 302 ALR 461 at 471-472, 484-485; [2013] HCA 40. See also Attorney-General (NT) v Emmerson (2014) 88 ALJR 522 at 540-541 [79]-[80]; 307 ALR 174 at 194-195. 181 (2012) 250 CLR 343 at 365 [44]; [2012] HCA 58. 182 (2012) 250 CLR 343 at 372 [69]. Crennan Executive may be said to 'give effect to … government policy dictated by the executive'. Most legislation is of that kind ... Once that 'policy' is reflected in statutes and regulations, it is binding as a matter of law. The judicial branch of government declares and enforces the law. In that sense, the judiciary gives effect to government policy dictated by the Executive. If the Kable statements invalidate legislation giving effect to government policy on that ground alone, they are wrong for that reason. They do not." The plaintiff did, however, present a more focused submission in relation to enlistment of judicial power, arguing that the laws in question are analogous to the law considered in South Australia v Totani183. In that case, as in this, the impugned legislation did not seek to outlaw particular organisations or kinds of organisations. Beyond this point of similarity, however, the analogy breaks down. In Totani, this Court held that s 14 of the Serious and Organised Crime (Control) Act 2008 (SA) ("the SOCC Act") was invalid. That provision required the Magistrates Court, upon application by the executive government, to make a control order if it was satisfied that the individual, the subject of the application, was a member of a declared organisation. The SOCC Act itself specified the terms of the control order. These included strict restrictions on association with other members. The SOCC Act provided criminal sanctions for a breach of a control order. There was no scope for the Magistrates Court to determine whether the restrictions were appropriate to the individual subjected to a control order: membership alone was sufficient to require the imposition by the Court of the restrictions upon the individual's liberty specified by the Act. The judgments of the members of the majority in Totani184 identified the vice of s 14 of the SOCC Act, in terms of the Kable principle, as the requirement that the Magistrates Court create new norms of conduct the content of which was determined by the executive and legislature, and which restricted the liberty of the subject (over and above the norms binding the public under the general law), without any inquiry by the Court into past or threatened contraventions by the individual of any existing legal norm. The Court was called upon to implement, under the forms of judicial process, an executive judgment to restrict the liberty of any person who was a member of a declared organisation. It was this 183 (2010) 242 CLR 1 at 91-93 [234]-[236]. 184 (2010) 242 CLR 1 at 52 [82], 67 [149], 92-93 [235]-[236], 172-173 [480]. Crennan combination of features which warranted the description of s 14 of the SOCC Act as a provision which sought to enlist the Court to implement the policy of the executive and legislature under the guise of judicial determination. Sections 60A, 60B and 60C of the Criminal Code do not require a court to lay down new norms of conduct. The new norms of conduct are created by the legislature anterior to the performance of the judicial function. Sections 60A, 60B and 60C do not require a court to perform any function other than a characteristically judicial function. They do not require a court to give effect to an executive or legislative decision to subject a given individual to new norms of conduct, much less that it should do so independently of the contravention of existing norms. They require the court to find facts and impose punishment as a result of the contravention of norms of conduct laid down by the legislature. That is not unorthodox185: it is at "the heart of judicial power" to determine whether a person has engaged in conduct which is forbidden by law and, if so, to make an order as to the consequences which the law imposes by reason of that conduct186. The processes which characterise the judicial function have been usefully, though not exhaustively, summarised as: "open and public enquiry … the application of the rules of natural justice, the ascertainment of the facts as they are and as they bear on the right or liability in issue and the identification of the applicable law, followed by an application of that law to those facts"187. These laws do not authorise or require a court to depart from these characteristic processes of the judicial function. 185 R v McDonnell [1997] 1 SCR 948 at 974-975 [33]; Markarian v The Queen (2005) 228 CLR 357 at 372 [30]; [2005] HCA 25; Magaming v The Queen (2013) 87 ALJR 1060 at 1070 [48], 1080 [104]; 302 ALR 461 at 471, 484. 186 Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 580; [1989] HCA 12; Re Nolan; Ex parte Young (1991) 172 CLR 460 at 497; [1991] HCA 29; Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 611 [76]. 187 Re Nolan; Ex parte Young (1991) 172 CLR 460 at 496; Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at 615 [92]. Crennan Cloaking It is also necessary to bear in mind that the rationale of the Kable principle was identified by Gummow J as being "to forestall the undermining of the efficacy of the exercise of the judicial power of the Commonwealth."188 His Honour went on to explain by reference to United States authorities the concerns addressed by the principle. These include, importantly, the concern that the legitimacy of the judicial branch of government, which "ultimately depends on its reputation for impartiality and nonpartisanship", should not be undermined by the political branches of government borrowing that reputation "to cloak their work in the neutral colors of judicial action."189 These laws do not purport to "cloak the work of the legislature or executive in the neutral colours of judicial action". To the contrary, it is abundantly clear that the responsibility for any perceived harshness or undue encroachment on the liberty of the subject by these laws lies entirely with the political branches of government. The public acceptability of these laws is in no way shored up by camouflaging legislative responsibility "in the neutral colours of judicial action". The only judicial activity which attends the enforcement of these laws is the characteristically judicial process of a criminal trial, upon which these laws do not trench. It makes no difference to this conclusion that these laws operate as part of a package calculated to destroy organisations such as the HAMC. Whether a law is invalid by reason of the Kable principle depends on the effect of the law upon the functioning of the courts. Whether considered together or in isolation, these laws are not incompatible with the institutional integrity of the courts. That conclusion cannot be affected by a consideration of whether the judiciary approve or do not approve of the purpose of the laws. In Grain Pool of Western Australia v The Commonwealth190, Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ said that if a law is otherwise within power, "the justice and wisdom of the law, and the degree to which the means it adopts are necessary or desirable, are matters of legislative choice". 188 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 132. 189 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 133, citing Mistretta v United States 488 US 361 at 407 (1989). 190 (2000) 202 CLR 479 at 492 [16]; [2000] HCA 14. Crennan Usurpation of judicial power The plaintiff urged, as an aspect of his challenge to the second category of impugned laws, that members of motorcycle clubs such as the HAMC are branded "criminal organisations" without judicial process. It may be said immediately that this submission sits ill with the plaintiff's emphasis of the point that the laws do not make membership of such an organisation a crime. As was recently said by French CJ, Hayne, Crennan, Kiefel and Bell JJ in Magaming v The Queen191, "adjudging and punishing criminal guilt is an exclusively judicial function." Earlier, in Leeth v The Commonwealth192, Mason CJ, Dawson and McHugh JJ had recognised that: "legislation may amount to a usurpation of judicial power, particularly in a criminal case, if it prejudges an issue with respect to a particular individual and requires a court to exercise its function accordingly". The power to declare an organisation to be a criminal organisation does not involve an adjudication of criminal guilt; and the declaration of associations as "criminal organisations", whether by the legislature or by the executive, does not involve a usurpation of judicial power. The exercise of the power to declare an organisation to be "a criminal organisation" does not purport to adjudge or punish the criminal guilt of any person; the exercise of the regulation-making power to declare a group of persons to be a criminal organisation involves no adjudication of rights or duties or liabilities. As noted above, the tendentious language in which these laws are expressed conceals their true legal effect. The only legal effect of a declaration is to establish an ingredient of an offence, the contravention of which must still be proved in the ordinary way. The argument for the plaintiff confuses the exercise of judicial power with the power of the legislature to impose norms of conduct and to provide for the consequences of breach of those norms. In Leeth v The Commonwealth, Mason CJ, Dawson and McHugh JJ explained that "a law of general application which seeks in some respect to govern the exercise of a jurisdiction which it confers does not trespass upon the judicial function."193 191 (2013) 87 ALJR 1060 at 1070 [47]; 302 ALR 461 at 471. See also Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 27; [1992] HCA 64. 192 (1992) 174 CLR 455 at 469-470; [1992] HCA 29. 193 (1992) 174 CLR 455 at 470. Crennan Barwick CJ said in Palling v Corfield194: "it is within the competence of the Parliament to determine and provide … a contingency on the occurrence of which the court shall come under a duty to impose a particular penalty or punishment." His Honour added195: "There may be limits to the choice of the Parliament in respect of such contingencies but the nature of the contingency in this case does not require any examination or discussion as to the existence and, if they exist, the nature of such limits." This case, similarly, does not require such an examination. The mere circumstance that the stipulated contingency may be established by the opinion of the legislature or executive does not mean that the stipulation is an exercise of judicial power196. The plaintiff's argument did not seek to controvert this proposition or to deny the authority of the judicial statements which support it, or to suggest that the Kable principle has somehow outflanked or superseded them. If such an attempt had been made by the plaintiff, it might be expected that the defendant would have responded by pointing out that it has never been suggested that the Kable principle is inconsistent with this proposition or the authorities which support it: it might also have been said that, if there is an inconsistency in this regard between the operation of the Kable principle and these authorities, the problem lies with the propounded application of the Kable principle that stand unchallenged. Given that the plaintiff's argument did not raise these issues, it is not necessary to speculate on how they might be resolved. than with authoritative judicial statements rather In any event, the declaration that a group of persons is a criminal organisation does not conclusively establish, without judicial process, the nature of the organisation in which the defendant is alleged to be a participant. At this 194 (1970) 123 CLR 52 at 58; [1970] HCA 53. 195 (1970) 123 CLR 52 at 59. 196 Palling v Corfield (1970) 123 CLR 52 at 59, 64-65, 67, 69; Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 97-98, 131; International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319 Crennan point one must turn to consider the defence provided by each of ss 60A(2), 60B(3) and 60C(2). The defences Under these provisions, it is a defence for an accused person to prove that the criminal organisation in question does not have, as one of its purposes, an intention to engage in, or engaging in, criminal activity. Thus, the substantive operation of these laws is confined to cases where the accused is found by a jury to be a participant in an organisation which has as one of its purposes an intention to engage or an actual engagement in criminal activity. It has long been established that it is within the competence of the legislature to regulate the incidence of the burden of proof197 of matters on which questions of substantive rights and liabilities depend. Laws which do no more than effect such changes do not "deal directly with ultimate issues of guilt or innocence"198. In Orient Steam Navigation Co Ltd v Gleeson199, Dixon J said: "[T]he Parliament may place the burden of proof upon either party to proceedings in a Court of law. The onus of proof is a mere matter of procedure. If the Parliament may place the burden of proof upon the defendant, it may do so upon any contingency which it chooses to select." To the suggestion that it is harsh to impose a burden on the defendant to prove that the purposes of the organisation did not include a purpose of criminal 197 The Commonwealth v Melbourne Harbour Trust Commissioners (1922) 31 CLR 1 at 12, 17-18; [1922] HCA 31; Williamson v Ah On (1926) 39 CLR 95 at 108, 119, 121-122, 127; [1926] HCA 46; Orient Steam Navigation Co Ltd v Gleeson (1931) 44 CLR 254 at 259-260, 262-263, 264; [1931] HCA 2; Nicholas v The Queen (1998) 193 CLR 173 at 188-190 [23]-[24], 203 [55], 234-236 [152]-[156], 272-274 [234]-[238]; Thomas v Mowbray (2007) 233 CLR 307 at 356 [113]; [2007] HCA 33; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 at 560 [39]; [2008] HCA 4; X7 v Australian Crime Commission (2013) 248 CLR 92 at 120 [48]; [2013] HCA 29. 198 Nicholas v The Queen (1998) 193 CLR 173 at 277 [249]; X7 v Australian Crime Commission (2013) 248 CLR 92 at 120 [48]. 199 (1931) 44 CLR 254 at 263. Crennan activity, one may make the same answer as Dixon J gave in Orient Steam Navigation200, namely that it "would be no less harsh if the burden of proof upon a charge … were unconditionally placed upon the defendant." In Nicholas v The Queen201, Brennan CJ identified a qualification upon the power of the legislature to regulate the incidence of the burden of proof: "The reversal of an onus of proof affects the manner in which a court approaches the finding of facts but is not open to constitutional objection provided it prescribes a reasonable approach to the assessment of the kind of evidence to which it relates." (emphasis added) It may be accepted that the "reasonable approach" adverted to by Brennan CJ would be absent where the statutory reversal of the burden of proof entailed "a moral impossibility" of the defendant obtaining the evidence necessary to establish a defence202. But it was not explained how a prosecution under these laws would give rise to the moral impossibility of a defendant adducing exculpatory evidence. In the absence of such an explanation, it seems distinctly unpersuasive to suggest that a defendant would find himself or herself in an "impossible" position in a case where the prosecution relies solely upon a declaration by legislation or regulation that an organisation is a criminal organisation in order to prove this element of the charge. It needs to be kept in mind that the declaration does not create a presumption that one or more of the organisation's purposes involve serious criminal activity. As earlier explained203, the purpose of an organisation is a matter which should inform the making of a declaration by regulation (or by statute). However, a declaration so made is not to be equated with a presumptive finding of that fact. In such a case, evidence from the defendant or his or her witnesses to the effect that, to his or her knowledge, the activities of the association were entirely innocent would, if left uncontradicted by the prosecution, support the inference that the "criminal organisation is not an organisation that has, as 1 of its 200 (1931) 44 CLR 254 at 263. 201 (1998) 193 CLR 173 at 190 [24]. 202 Williamson v Ah On (1926) 39 CLR 95 at 114. 203 See above at [212]. Crennan purposes, the purpose of engaging in, or conspiring to engage in, criminal activity." In this hypothetical case, the only evidence before the court of the only purposes of the association would be those purposes which could be inferred from the activities of the association of which the defendant gave evidence. On this hypothesis, there would be no evidence to contradict that of the defendant. It is necessary to bear in mind as well that the defendant's burden is discharged on the balance of probabilities204. Of course, the prosecution might not be content to rely upon the declaration, and might itself adduce evidence of the purposes of the association. But in such a case, the question of guilt or innocence would still depend on the curial evaluation of the evidence, not some presumptive effect of the declaration. The Liquor Act The Liquor Act was amended by the Tattoo Parlours Act 2013 (Q) to include provisions which place restrictions on persons in a "declared criminal organisation". Section 173EB of the Liquor Act prohibits a licensee from knowingly allowing entry of a person wearing or carrying certain items onto licensed premises. Section 173EC prohibits the wearing or carrying of such items on premises licensed under the Liquor Act where those items are apparently linked with a declared criminal organisation. Section 173ED empowers a licensee to require a person wearing or carrying such an item to leave licensed premises and makes failure to comply an offence. For the purposes of these provisions, s 173EA provides: "In this division – declared criminal organisation means an entity declared to be a criminal organisation under the Criminal Code, section 1, definition criminal organisation, paragraph (c). prohibited item means an item of clothing or jewellery or an accessory that displays – 204 Director of Public Prosecutions v United Telecasters Sydney Ltd (1990) 168 CLR 594 at 600-601; [1990] HCA 5. Crennan the name of a declared criminal organisation; or the club patch, insignia or logo of a declared criminal organisation; any image, symbol, abbreviation, acronym or other form of writing that indicates membership of, or an association with, a declared criminal organisation, including – the symbol '1%'; and the symbol '1%er'; and (iii) any other image, symbol, abbreviation, acronym or other form of writing prescribed under a regulation for this paragraph." As to the significance of the "1%" logo, it may be noted that, according to a report of the Australian Crime Commission referred to in the special case, outlaw motorcycle gangs identify themselves as the "one percenters" who operate outside the law. The special case refers to findings by a Canadian court that the wearing of the HAMC patch not only guarantees that a person is a member of the HAMC and not the police, it allows members of the HAMC to intimidate, threaten and extort other persons. The Kable principle is not a limitation on the competence of a State legislature to make laws of general application to determine what acts or omissions give rise to criminal responsibility. Sections 173EB, 173EC and 173ED of the Liquor Act are laws of general application. The concept of "declared criminal organisation" used in these provisions has no operative effect other than to identify items of clothing or jewellery as "prohibited items". The kinds of clothing or jewellery which are "prohibited items" may be fixed by regulation. That circumstance is not an intrusion upon judicial power205. 205 Palling v Corfield (1970) 123 CLR 52 at 59, 64-65, 67, 69; International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319 at 352 Crennan Laws of this kind are not novel206. It is significant that no concern has previously been raised as to their compatibility with the integrity of the judicial function207. These provisions do not require a court to act as an instrument of the executive. They are not analogous to the law invalidated in Totani208. The third category of challenged laws: the Bail Act Under s 16(1) of the Bail Act, if the court is satisfied that there is an "unacceptable risk" of particular matters, the presumption in favour of bail in s 9 of the Bail Act is rebutted. As a result of amendments made by Pt 2 of the Disruption Act, s 16(3A) relevantly provides: "If the defendant is charged with an offence and it is alleged the defendant is, or has at any time been, a participant in a criminal organisation, the court or police officer must – refuse to grant bail unless the defendant shows cause why the defendant's detention in custody is not justified". Prior to the amendments in question, s 16(3) of the Bail Act identified a number of circumstances in which a court is directed to refuse an application for bail unless the defendant shows cause why his or her detention in custody is not justified. Section 16(3A) added the circumstance that it is alleged that the defendant is a participant in a criminal organisation. But it remains the case that a defendant may obtain a grant of bail by satisfying the court that the risk that he or she will fail to answer his or her bail is not unacceptable. There is no basis for concluding that the plaintiff is affected in his rights or interests by the new provisions. His legal position would not be altered if these provisions were held to be invalid. He has not committed any offence. He is not an applicant for bail. It cannot be assumed that he will commit an offence, 206 Habitual Criminals Act 1869 (UK), s 10; Police Offences Act 1884 (NZ), s 22. See generally McLeod, "On the Origins of Consorting Laws", (2013) 37 Melbourne University Law Review 103. 207 APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 351 [29]; [2005] HCA 44. 208 (2010) 242 CLR 1. Crennan and so become an applicant for bail. Accordingly, the plaintiff has no standing to seek a declaration that these provisions are invalid. Conclusion The questions posed for determination by the Court should be answered as follows: Does the plaintiff have standing to seek a declaration that any, and which, of the provisions referred to in the schedule to these questions (other than Criminal Code (Q), ss 60A, 60B(1) and 60C, and Liquor Act 1992 (Q), ss 173EB to 173ED) is invalid? Answer: No. Is the relief which the plaintiff seeks in answer to question 3 (other than the relief sought in relation to the Criminal Code (Q), ss 60A, 60B(1) and 60C, and Liquor Act 1992 (Q), ss 173EB to 173ED) hypothetical? Answer: It is unnecessary to answer this question. Is any, and which, of the provisions referred to in the schedule invalid on the ground that it infringes the principle of Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51? Answer: None of ss 60A, 60B(1), 60B(2) and 60C of the Criminal Code (Q) or ss 173EB, 173EC and 173ED of the Liquor Act 1992 (Q) is invalid on the ground that it infringes the principle in Kable v Director of Public Prosecutions (NSW). The plaintiff does not have standing to challenge the validity of the other provisions in the schedule. 4. Who should pay the costs of the special case? Answer: The plaintiff. Crennan Schedule Vicious Lawless Association Disestablishment Act 2013 (Q) Criminal Code (Q), ss 60A, 60B(1), 60B(2), 60C, 72(2), 72(3), 72(4), 92A(4A), 92A(4B), 92A(5), 320(2), 320(3), 320(4), 340(1A), 340(1B) and 340(3) Bail Act 1980 (Q), ss 16(3A), 16(3B), 16(3C) and 16(3D) Liquor Act 1992 (Q), ss 173EB, 173EC and 173ED Bell BELL J. On 19 March 2014, the plaintiff commenced proceedings in the original jurisdiction of the Court claiming declarations of invalidity respecting a raft of laws enacted by the Parliament of Queensland on 15 October 2013. The scope of the plaintiff's proposed challenge has since been refined. It is now confined to the provisions listed in the Schedule ("the Schedule") to the Further Amended Special Case ("the special case") upon which the parties agreed in stating questions of law for the opinion of the Full Court209. The plaintiff challenges the validity of the Vicious Lawless Association Disestablishment Act 2013 (Q) ("the VLAD Act"); provisions of the Criminal Code (Q) ("the Code") creating offences having as an element that the accused is a "participant in a criminal organisation"210 or which make proof of that fact a circumstance of aggravation of an existing offence211; provisions of the Bail Act 1980 (Q) ("the Bail Act") which impose restrictions on the grant of bail in the case of a person who is, or has at any time been, a participant in a criminal organisation212; and provisions of the Liquor Act 1992 (Q) ("the Liquor Act") which, among other things, make it an offence to enter or remain in licensed premises while wearing or carrying clothing, jewellery or an accessory conveying an association with a "declared criminal organisation"213. The VLAD Act requires a court when sentencing a person for a "declared offence" committed for the purposes of, or in the course of participating in the affairs of, "an association" to impose a mandatory further sentence or sentences214. In these reasons, the VLAD Act and the provisions of the Code and the Bail Act that apply to the sentencing of and grant of bail to participants in criminal organisations will be referred to as "the sentencing and bail provisions". The provisions of the Code and the Liquor Act that create new offences will be referred to as "the new offence provisions". The challenged provisions of the Code and the Bail Act were enacted by the Criminal Law (Criminal Organisations Disruption) Amendment Act 2013 (Q) 209 High Court Rules 2004 (Cth), r 27.08.1. 210 Criminal Code (Q), ss 60A, 60B(1), 60B(2) and 60C. 211 Criminal Code, ss 72(2), 72(3), 72(4), 92A(4A), 92A(4B), 92A(5), 320(2), 320(3), 320(4), 340(1A), 340(1B) and 340(3). 212 Bail Act, ss 16(3A), 16(3B), 16(3C) and 16(3D). 213 Liquor Act, ss 173EB, 173EC and 173ED. 214 VLAD Act, s 7. Bell ("the Disruption Act"). The challenged provisions of the Liquor Act were enacted by the Tattoo Parlours Act 2013 (Q) ("the Tattoo Act"). The plaintiff contends that each of the provisions in the Schedule exceeds the legislative power of the Parliament of Queensland by reason of the constraint arising under Ch III of the Constitution explained in Kable v Director of Public Prosecutions (NSW)215: the Parliament of a State may not confer a power or function on a court which substantially impairs the court's institutional integrity216. The impairment here is said to arise in two ways. First, the sentencing and bail provisions require the court to impose sentences, or make bail determinations, based upon a person's choice of associates and not an assessment of "personal and individual"217 guilt in the former case or personal risk factors in the latter case. In these respects the sentencing and bail provisions are attacked as repugnant to the concept of equality before the law ("the first Kable argument"). Secondly, all of the provisions in the Schedule are said to impermissibly enlist the court to do the legislature's and the executive's bidding: they require the court "to treat certain individuals as participants in organised crime" while denying the court the power to engage in a genuine adjudicative process to determine whether the accused is in fact "a participant in organised crime" ("the second Kable argument"). The second Kable argument is focussed on the manner in which the Parliament has chosen to define the expression "criminal organisation" for the purposes of the Code, the Bail Act and the Liquor Act. Under s 1 of the Code, the expression "criminal organisation" includes an entity that is declared by a regulation to be such218. The Criminal Code (Criminal Organisations) Regulation 2013 ("the Regulation")219 declares 26 motorcycle clubs to be "criminal 215 (1996) 189 CLR 51; [1996] HCA 24. 216 Attorney-General (NT) v Emmerson (2014) 88 ALJR 522 at 533 [40] per French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ; 307 ALR 174 at 185; [2014] HCA 13. 217 South Australia v Totani (2010) 242 CLR 1 at 90-91 [232] per Hayne J; [2010] HCA 39. 218 Paragraph (c) of the definition of "criminal organisation". 219 Under s 70 of the Disruption Act, the Regulation, contained in Sched 1 to the Act, ceased, on its commencement, to be a provision of the Disruption Act and became a regulation made under the Code. Bell organisations"220. The motorcycle club known as the Hells Angels ("the HAMC") is one of these clubs. The special case The plaintiff is a current member of the Brisbane Chapter of the HAMC and a former office-bearer of a Sydney Chapter of the HAMC. He claims that his membership of the HAMC makes him a person who is "entitled to know" whether the laws listed in the Schedule are valid laws. The State of Queensland ("Queensland") concedes, subject to one reservation221, that the plaintiff's challenge to the validity of the new offence provisions raises a justiciable controversy but it disputes that the sentencing and bail provisions do. The special case states three substantive questions of law for the opinion of the Full Court222. The first question asks whether the plaintiff has standing to seek a declaration that any, and which, of the provisions referred to in the Schedule (other than the new offence provisions) are invalid. The second question asks whether the relief that the plaintiff claims in the proceeding (other than the relief claimed respecting the new offence provisions) is hypothetical. The third question asks whether any, and which, of the impugned provisions is invalid on the ground that it infringes the principle in Kable. The Attorney-General of the Commonwealth ("the Commonwealth") and the Attorney-General for the State of Victoria ("Victoria") intervened in support of Queensland's submission that question one should be answered "No" and question two should be answered "Yes". The Commonwealth, the Attorney-General for the State of New South Wales ("New South Wales"), the Attorney-General for the Northern Territory, the Attorney-General for the State of South Australia, Victoria, and the Attorney-General for the State of Western Australia intervened in support of Queensland's submission that question three should be answered "No". For the reasons to be given, the only "matter" engaging the jurisdiction of the Court is the challenge to the validity of the new offence provisions. The 220 Section 2. 221 See [288] below. 222 A fourth question asks who should pay the costs of the special case. Bell plaintiff's first Kable argument does not apply to the new offence provisions and for that reason it is inappropriate to address it223. Returning to the special case, the plaintiff accepts that Queensland enacted the challenged legislation in response to "legislative and community perceptions" of certain matters, the truth of which the plaintiff does not accept. The plaintiff makes claims concerning the contents of discussions at HAMC meetings; the uses of the HAMC clubhouse; and the HAMC's charitable activities, the truth of which Queensland does not accept. The relevance of the matters that may have prompted the enactment of the challenged legislation and of the plaintiff's claims respecting the purposes of HAMC meetings, the use of the clubhouse and the HAMC's charitable activities was not explained. Apart from the agreed fact of the plaintiff's membership of the HAMC and past office within a Sydney Chapter, the only claims made in the special case to which it is necessary to refer are the plaintiff's wish to: enter the HAMC clubhouse located at 3/31 Tradelink Drive, Hillcrest; ride his motorcycle in the company of other members of the HAMC; attend social events in public places with other members of the HAMC; wear the HAMC club colours, jewellery and rings associated with the HAMC on premises that are licensed under the Liquor Act; and, if approached by an individual to join the HAMC, promote the benefits of membership of the HAMC to that individual. The Regulation declares 3/31 Tradelink Drive, Hillcrest to be a prescribed place for the purposes of one of the new offences under the Code224. The plaintiff does not claim that he has committed, or is likely to commit, any offence under the Code for which his participation in the HAMC would constitute a circumstance of aggravation. Nor does the plaintiff claim that he has committed, or is likely to commit, any "declared offence" for the purposes of the VLAD Act. Nor, more generally, does he claim that he has committed, or is likely to commit, any offence so as to engage the provisions of s 16(3A)-(3D) of the Bail Act. Questions 1 and 2 The Constitution provides that the Parliament may make laws conferring original jurisdiction on the High Court in any matter arising under the 223 Lambert v Weichelt (1954) 28 ALJ 282 at 283 per Dixon CJ; Cheng v The Queen (2000) 203 CLR 248 at 270 [58] per Gleeson CJ, Gummow and Hayne JJ; [2000] HCA 53; Wurridjal v The Commonwealth (2009) 237 CLR 309 at 437 [355] per Crennan J; [2009] HCA 2. 224 Regulation, s 3 and Criminal Code, s 60B(4). Bell Constitution or involving its interpretation225. The Parliament has conferred jurisdiction on the Court in these respects226 and it is this jurisdiction that the plaintiff seeks to invoke by this proceeding. The exclusion of the new offence provisions from questions one and two reflects Queensland's acceptance that the restrictions thereby imposed on the plaintiff's liberty as a member of the HAMC give rise to a sufficient interest to support his claim to declarations of invalidity. The drafting of questions one and two treats standing and the relief that the plaintiff claims as discrete inquiries and not as aspects of the single inquiry of whether the plaintiff's claim is a "matter"227. The requirement that there be a "matter" engaging federal jurisdiction reflects the separation of powers under the Constitution. The Court does not have authority to determine an abstract question of the validity of a State law divorced from a real controversy about an immediate right, duty or liability of the plaintiff grounding the relief that he claims228. If, as Queensland, the Commonwealth and Victoria contend, the relief claimed by the plaintiff is hypothetical, there is no "matter" to engage the jurisdiction of the Court. The fact that the plaintiff claims declaratory relief respecting the validity of State laws that have not been the subject of attempted 225 Constitution, s 76(i). 226 Judiciary Act 1903 (Cth), s 30(a). 227 Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 at 550-551 per Mason J; [1980] HCA 53; Croome v Tasmania (1997) 191 CLR 119 at 132-133 per Gaudron, McHugh and Gummow JJ; [1997] HCA 5; Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 262 [37] per Gaudron, Gummow and Kirby JJ; [1998] HCA 49; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 611 [45] per Gaudron J; [2000] HCA 11; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 35 [50]-[51] per French CJ, 68 [152] per Gummow, Crennan and Bell JJ, 99 [272]-[273] per Hayne and Kiefel JJ; [2009] HCA 23; Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 at 659 [68] per Gummow, Hayne, Crennan and Bell JJ; [2012] HCA 31. 228 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 267 per Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ; [1921] HCA 20; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 610-611 [42]-[43] per Gaudron J, 630-631 [103]-[104] per Gummow J, 646-647 [147]-[148] per Kirby J, 660-661 [183]-[184] per Hayne J; Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 389 [5] per Gleeson CJ, 405-406 [62] per Gaudron and Gummow JJ, 449 [204] per Kirby J, 458-459 [242] per Hayne J; [2002] HCA 16. See also United Public Workers v Mitchell 330 US 75 at 90-91 (1947). Bell enforcement against him does not make the proceeding hypothetical229. However, as the plaintiff's argument accepts, he must identify an interest greater than the interest of members of the public generally in the validity of the challenged legislation to give rise to a justiciable controversy entitling him to declaratory relief230. The plaintiff identifies his sufficient interest as arising from his participation in an organisation that the Parliament has declared to be a "criminal organisation" for the purposes of the Code, the Bail Act and the Liquor Act, and which may be a "relevant association" for the purposes of the VLAD Act. He contends that he may be made subject to significant penalties and other restrictions that do not apply to other members of the public. In the case of the VLAD Act, the plaintiff's analysis fails at the outset. Proof that a person is a participant in an organisation that has been declared to be a criminal organisation by the Parliament or the executive is not an integer of liability under the VLAD Act. The VLAD Act attaches penal consequences to participation in a "relevant association" in specified circumstances. Liability to a mandatory further sentence or sentences on conviction for a "declared offence" arises where the offence is committed for the purposes of, or in the course of participating in the affairs of, a "relevant association". Any group of three or more persons, whether associated formally or informally and whether the group is lawful or unlawful, may be a relevant association under the VLAD Act. The plaintiff's participation in the HAMC will only found liability to a further sentence or sentences under the VLAD Act in the event he were to commit a declared offence for the purposes of, or in the course of participating in the affairs of, the HAMC. Were the plaintiff to cease to be a participant in the affairs of the HAMC he would remain subject to the VLAD Act in the same way that the public of Queensland generally is subject to it. 229 Toowoomba Foundry Pty Ltd v The Commonwealth (1945) 71 CLR 545 at 570 per Latham CJ; [1945] HCA 15; Croome v Tasmania (1997) 191 CLR 119 at 126 per Brennan CJ, Dawson and Toohey JJ, 132-136 per Gaudron, McHugh and 230 Toowoomba Foundry Pty Ltd v The Commonwealth (1945) 71 CLR 545 at 570 per Latham CJ, 584 per Williams J; British Medical Association v The Commonwealth (1949) 79 CLR 201 at 257 per Dixon J; [1949] HCA 44; Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 at 530-531 per Gibbs J; Croome v Tasmania (1997) 191 CLR 119 at 126-127 per Brennan CJ, Dawson and Toohey JJ, 137-138 per Gaudron, McHugh and Gummow JJ; Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 267 [51] per Gaudron, Gummow and Kirby JJ. Bell Turning to the challenged sentencing provisions of the Code and the Bail Act provisions, the plaintiff contends that his admitted participation in an organisation declared by the Parliament to be a "criminal organisation" gives him an "entitle[ment] to know"231 whether the provisions are valid. His interest is suggested to be more than a "mere intellectual or emotional concern"232: the validity of the laws affects whether he should disassociate from the HAMC "so as to avoid the operation of those provisions". The plaintiff relies on Croome v Tasmania233 as demonstrating the justiciability of his challenge. In Croome, Brennan CJ, Dawson and Toohey JJ rested their conclusion that the plaintiffs' claim to declaratory relief raised a justiciable controversy on the plaintiffs' admission to having engaged in the conduct criminalised under the challenged provisions of the Criminal Code (Tas)234. The plaintiffs were liable to prosecution, conviction and punishment if those provisions were valid laws of Tasmania235. Gaudron, McHugh and Gummow JJ in their joint reasons observed that the conduct of the plaintiffs' personal lives was in significant respects overshadowed by the impugned provisions236. Their Honours considered the fact that the plaintiffs faced possible criminal prosecution to be a sufficient interest to support their claim for declaratory relief: a claim that was not denied because it was brought to establish the legal character of a state of affairs that had not yet come to pass237. They rejected the proceeding was abstract or hypothetical238. That rejection was because the plaintiffs had a "real interest" in the question raised by that 231 University of Wollongong v Metwally (1984) 158 CLR 447 at 458 per Gibbs CJ; [1984] HCA 74. 232 Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 at 530 per Gibbs J. See also Edwards v Santos Ltd (2011) 242 CLR 421 at 436 [37] per Heydon J; [2011] HCA 8. 233 (1997) 191 CLR 119. 234 Croome v Tasmania (1997) 191 CLR 119 at 127. 235 Croome v Tasmania (1997) 191 CLR 119 at 127. 236 Croome v Tasmania (1997) 191 CLR 119 at 138. 237 Croome v Tasmania (1997) 191 CLR 119 at 138. 238 Croome v Tasmania (1997) 191 CLR 119 at 138 noting Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582 per Mason CJ, Dawson, Toohey and Gaudron JJ; [1992] HCA 10 and Oil Basins Ltd v The Commonwealth (1993) 178 CLR 643 at 649 per Dawson J; [1993] HCA 60. Bell knowing if the impugned provisions were valid in circumstances in which the State of Tasmania and the Director of Public Prosecutions did not take the position that no offences had been committed nor that offences were not continuing239. The plaintiff's argument draws on the joint reasons of Gaudron, McHugh and Gummow JJ by asserting that his freedom of action is overshadowed by the challenged sentencing provisions of the Code and the challenged provisions of the Bail Act. However, the analogy with Croome does not hold good. Unlike the plaintiffs' real interest that supported the relief claimed in Croome, no immediate right, duty or liability240 would be established by the grant of the relief here claimed. A declaration that the sentencing provisions of the Code and the Bail Act provisions are invalid would have no effect on the plaintiff's obligation to comply with the law. The "entitlement to know" the validity of a law, identified by Gibbs CJ in University of Wollongong v Metwally, arises when the controversy concerns the obligation to observe the challenged law241. The plaintiff's claim is of an entitlement to know whether, should he commit an offence, his participation in the HAMC will expose him to a more severe penalty (or, in the case of the Bail Act, whether, if he is charged with any offence, his membership of the HAMC will subject him to additional restrictions). In O'Shea v Littleton, a group of residents of Cairo, Illinois brought an action claiming injunctive relief against the claimed violation of their constitutional rights242. The violations were alleged to arise from the pattern of conduct of two judicial officers with respect to bond-setting, sentencing and jury-fee practices. None of the plaintiffs was serving a sentence imposed by either defendant and none was on trial or awaiting trial before either defendant. Among the reasons for the Supreme Court of the United States' conclusion that the action did not constitute a "case" or "controversy" within Art III of the Constitution was the view that anticipating whether the plaintiffs would be charged with any crime, and made to appear before either defendant, would take 239 Croome v Tasmania (1997) 191 CLR 119 at 138-139. 240 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265 per Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 612-613 [47]-[50] per Gaudron J. 241 University of Wollongong v Metwally (1984) 158 CLR 447 at 458; Croome v Tasmania (1997) 191 CLR 119 at 138 per Gaudron, McHugh and Gummow JJ; Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at 408 [70], [72] per Gaudron and Gummow JJ. Bell the Court into the realm of "speculation and conjecture"243. The Supreme Court considered that it should proceed upon the assumption that the plaintiffs would conduct their activities within the law244. The different constitutional context in which these observations were made245 does not detract from their aptness to the present challenge. Question two should be answered "Yes". And as the Commonwealth submits, question one should be answered "By reason of the answer to question 2, the plaintiff's claims for that declaratory relief do not give rise to a 'matter' within the meaning of s 76(i) of the Constitution or s 30(a) of the Judiciary Act 1903 (Cth) and accordingly the plaintiff has no standing to seek that relief". The validity of the new offence provisions The new offence provisions of the Code are set out in full in the joint reasons and it suffices here to refer to them in summary form. Section 60A(1) makes it an offence for a participant in a criminal organisation to be knowingly present in a public place with two or more other persons who are participants in a criminal organisation. "Participant" is defined in wide terms246. It is a defence to an offence against s 60A(1) to prove that the criminal organisation is not an organisation that has, as one of its purposes, the purpose of engaging in, or conspiring to engage in, criminal activity ("the defence")247. Section 60B(1) makes it an offence for a participant in a criminal organisation to enter, or attempt to enter, a prescribed place. Section 60B(2) makes it an offence for a person who is a participant in a criminal organisation to attend, or attempt to attend, a prescribed event. "Participant" is defined in the same wide terms as for the s 60A(1) offence248. Offences against s 60B(1) and (2) are subject to the defence249. A "prescribed place" is a place declared under a 243 O'Shea v Littleton 414 US 488 at 497 (1974). 244 O'Shea v Littleton 414 US 488 at 497 (1974). 245 Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 at 530 per Gibbs J; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 603 [21] per Gleeson CJ and 246 Criminal Code, s 60A(3). 247 Criminal Code, s 60A(2). 248 Criminal Code, s 60B(4). 249 Criminal Code, s 60B(3). Bell regulation to be a prescribed place250 and, as earlier noted, the HAMC's clubhouse is declared to be a prescribed place. A "prescribed event" is an event declared under a regulation to be a prescribed event251. Queensland's acceptance that the plaintiff's challenge to the new offence provisions constitutes a "matter" engaging the Court's original jurisdiction does not extend to the validity of s 60B(2) because to date no event has been declared to be a prescribed event. Nothing turns on Queensland's reservation in this respect. Section 60C(1) makes it an offence for a participant in a criminal organisation to recruit, or attempt to recruit, anyone to become a participant in a criminal organisation. "Participant" has the same wide meaning as for the s 60A(1) offence252. The offence is subject to the defence253. The hinge for the plaintiff's second Kable argument, insofar as the argument applies to the new offence provisions, is the manner of proving that the organisation in which the accused is a participant is a "criminal organisation". Although the provision is set out in the reasons of other members of the Court, it is convenient to extract the definition in full in these reasons. Section 1 of the Code defines "criminal organisation" to mean: an organisation of 3 or more persons – who have as their purpose, or 1 of their purposes, engaging in, organising, planning, supporting, or otherwise conspiring to engage in, serious criminal activity as defined under the Criminal Organisation Act 2009; and facilitating, (ii) who, by their association, represent an unacceptable risk to the safety, welfare or order of the community; or a criminal organisation under the Criminal Organisation Act 2009; an entity declared under a regulation to be a criminal organisation." 250 Criminal Code, s 60B(4). 251 Criminal Code, s 60B(4). 252 Criminal Code, s 60C(3). 253 Criminal Code, s 60C(2). Bell "Serious criminal activity" is relevantly defined under the Criminal Organisation Act 2009 (Q) ("the CO Act") to mean a "serious criminal offence"254, which is in turn defined to include an indictable offence punishable by at least seven years' imprisonment or an offence under the Code that is mentioned in Sched 1 to the CO Act255. The three characteristics stated in par (a) mirror the characteristics of which the Commissioner of Police is required to satisfy the Supreme Court of Queensland before that Court is authorised to declare that an organisation is a "criminal organisation" under the CO Act256. In his written submissions, the plaintiff states that his second Kable argument requires that account be taken of the objects of the legislative package passed by the Legislative Assembly of Queensland on 15 October 2013 comprising the VLAD, Disruption and Tattoo Acts. He identifies those objects by reference to s 2(1)(a) of the VLAD Act, which states that one object of the Act is to "disestablish associations that encourage, foster or support persons who commit serious offences" and by reference to the statement of the Premier of Queensland on the introduction of the Bills for the VLAD, Disruption and Tattoo Acts in the Legislative Assembly that they were "not designed to just contain or manage ['criminal motorcycle gangs']; they [were] designed to destroy them"257. Despite that stated intention, the plaintiff observes that the Parliament has not made it unlawful to be a member of any particular organisation; rather, the Parliament has determined that some motorcycle clubs are to be "branded as 'criminal organisations'" without judicial process. The intent of the legislative scheme is said to be the indirect attainment of that which the Parliament has not done directly, namely the destruction of organisations of the Parliament's choosing. In his reply, the plaintiff disavows any contention that invalidity is the consequence of the Parliament's choice to do indirectly what it has not done directly. On the hearing, the plaintiff encapsulated his second Kable argument as the conscription of the courts to do the legislature's and the executive's bidding by requiring the courts to treat certain individuals as "participants in organised crime" while denying the courts the power to engage in a genuine adjudicative process as to whether the person before the court is in fact "a participant in organised crime". Before turning to the substance of the argument, it is to be observed that the special case does not raise any issue of the enlistment of the court to do the 254 Criminal Organisation Act 2009 (Q), s 6. 255 Criminal Organisation Act, s 7. 256 Criminal Organisation Act, s 10. 257 Queensland, Legislative Assembly, Parliamentary Debates (Hansard), 15 October Bell executive's bidding. The declaration that the HAMC is a criminal organisation has been made by the Parliament of Queensland. No issue arises as to the scope of executive power to amend the Regulation by the declaration that additional entities are "criminal organisations"258. The plaintiff's submissions as to the possibility that the Beefsteak and Burgundy Club, the Australian Bar Association and the Australian Medical Association might be declared to be criminal organisations259 may be left to a case in which the issue is presented. The second Kable argument draws on the language of certain statements in South Australia v Totani260. The Serious and Organised Crime (Control) Act 2008 (SA) ("the SOCC Act"), considered in that case, empowered the Attorney-General for South Australia, on the application of the South Australian Commissioner of Police, to make a declaration respecting an organisation if he was satisfied of certain matters261. The Magistrates Court of South Australia was required upon the application of the Commissioner of Police to make a control order against a person upon proof that the person was a member of a declared organisation262. The adjudicative role of the Court was confined to the determination of whether the defendant was a member of the declared organisation within the broadly defined concept of membership under the SOCC Act263. The constitutional infirmity of s 14(1) of the SOCC Act lay in the substantial recruitment of the judicial function of the Magistrates Court of South Australia to an essentially executive process264. By contrast, the new offence provisions create criminal offences having as an element of liability proof that the accused is a participant in a criminal organisation. At the trial of an accused for such an offence, the court's powers and functions are exactly the same as on the trial of an accused for any criminal offence. 258 Criminal Code, s 708A. 259 [2014] HCATrans 187 at lines 887-888. 260 (2010) 242 CLR 1 at 36 [43] per French CJ, 80 [200] per Hayne J, 160 [436] per Crennan and Bell JJ, 169-170 [470] per Kiefel J. 261 Serious and Organised Crime (Control) Act 2008 (SA), s 10(1). 262 Serious and Organised Crime (Control) Act, s 14(1). 263 South Australia v Totani (2010) 242 CLR 1 at 25 [17] per French CJ. 264 South Australia v Totani (2010) 242 CLR 1 at 52 [82] per French CJ, 67 [149] per Gummow J, 160 [436] per Crennan and Bell JJ, 173 [481] per Kiefel J. Bell At the trial of an offence under ss 60A, 60B or 60C of the Code ("the new Code offences"), the prosecution may establish that the organisation in which the accused is a participant is a "criminal organisation" in one of three ways. It may adduce evidence of facts and circumstances that establish that the organisation has the characteristics of a criminal organisation as defined (par (a)); it may tender an order made by the Supreme Court of Queensland under the CO Act declaring that the organisation is a criminal organisation (par (b))265; or it may invite the court to take judicial notice of a declaration in a regulation that the organisation is a criminal organisation (par (c))266. It is only in a case in which the prosecution essays the first method of proof that the jury must be satisfied on the criminal standard that the organisation has as one of its purposes engaging in or supporting serious criminal activity. In a case in which the prosecution relies on the second method of proof, the jury is not required to find that the organisation has as one of its purposes engaging in or supporting serious criminal activity. Nonetheless, the CO Act declaration reflects the finding of the Supreme Court of Queensland on the civil standard that the organisation does have such a purpose. The plaintiff's second Kable argument accepts that there is no compromise of the institutional integrity of the court on the trial of an offence in a case in which the prosecution proves that the organisation in which the accused is a participant is a criminal organisation pursuant to pars (a) or (b) of the definition. In each case, that the organisation has, as at least one of its purposes, the purpose of engaging in or supporting serious criminal activity has been established by a curial proceeding. The claimed compromise of the prosecution of an offence in which the fact that the organisation is a criminal organisation is established by declaration under the Regulation. This is because the court has no role in the determination of the organisation's criminal purpose or purposes. integrity arises on institutional Queensland and the interveners point to the defence, submitting that the issue of the organisation's criminal purpose or purposes is determined by the court. They contend that no compromise to the court's integrity arises from the creation of offences that impose a reverse onus of proof with respect to an element of liability267. Victoria notes that, in a case in which the prosecution 265 Criminal Organisation Act, s 136(2). 266 Evidence Act 1977 (Q), s 43(b). 267 The Commonwealth v Melbourne Harbour Trust Commissioners (1922) 31 CLR 1 at 12 per Knox CJ, Gavan Duffy and Starke JJ, 17-18 per Isaacs J; [1922] HCA 31; Orient Steam Navigation Co Ltd v Gleeson (1931) 44 CLR 254 at 263 per Dixon J; (Footnote continues on next page) Bell proves on the criminal standard the criminal purpose or purposes of the organisation (par (a)), there will be no room for the defence. As a practical matter, Victoria submits, there is likely to be little room for the defence to operate in the case of an organisation that has been declared under the CO Act. The provision of the defence, in Victoria's submission, is best understood as guarding against the risk that an organisation is wrongly declared by regulation to be a criminal organisation. In a case in which the accused raises the defence, the court tries an issue as to the organisation's purpose or purposes. However, it does not follow, in the event of conviction, that the court is satisfied that the organisation has as one of its purposes engaging in or supporting criminal activity. The failure to establish the probability that an organisation does not have any criminal purpose is no evidence that it has such a purpose or purposes. The special case records that, at the date of the enactment of the challenged legislation, there were 13 "criminal motorcycle gangs" in Queensland. Parliament on that date chose to declare 26 motorcycle clubs to be "criminal organisations". The Parliament's selection of the pejorative descriptor "criminal organisation" (and the provision of the defence) should not obscure that the court trying a new Code offence based on the accused's participation in an organisation declared under the Regulation to be a "criminal organisation" is not required to be satisfied that the organisation in fact has any criminal purpose or purposes. The plaintiff's complaint that in such a case "there has never been a judicial determination of the issue of the criminality of the organisation"268 is not to the point. Liability does not depend upon the "criminality of the organisation", much less on proof that the accused is "a participant in organised crime". Liability arises in consequence of the choice to participate in an organisation that the Parliament has declared to be a "criminal organisation" in the circumstances proscribed in the new Code offences. Subject to the qualification that the Parliament of a State may not enact a law which subjects a court in reality or appearance to direction from the executive as to the content of its judicial decisions269, the Parliament may select whatever factum that it wishes to trigger a consequence that it determines270. [1931] HCA 2; Nicholas v The Queen (1998) 193 CLR 173 at 189-190 [24] per Brennan CJ, 234-236 [152]-[156] per Gummow J, and see 273-274 [237]-[238], 277-278 [249] per Hayne J; [1998] HCA 9. 268 [2014] HCATrans 187 at lines 512-513. 269 South Australia v Totani (2010) 242 CLR 1 at 49 [71] per French CJ. 270 Baker v The Queen (2004) 223 CLR 513 at 532 [43] per McHugh, Gummow, Hayne and Heydon JJ; [2004] HCA 45. Bell Legislative declaration of a state of affairs forming an element of liability does not, without more, amount to an impermissible direction to the court as to the content of its decision. It is a common feature of legislation criminalising the possession and supply of prohibited drugs. Here, the Parliament has chosen to declare certain entities to be "criminal organisations" and to make participation in those entities an element of liability in the new Code offences. On the trial of a new Code offence, the court performs its ordinary functions in the determination of whether guilt has been established. Queensland accepts that, had the plaintiff attended the hearing of the special case knowing that two or more other members of the HAMC were also in attendance at the hearing, he might have been liable to conviction for the s 60A(1) offence. The acknowledgment of the singular reach of the provision does not engage the limitation on the legislative power of the Parliament of Queensland that arises under the Kable principle. And, as the joint reasons note, the plaintiff does not assert any other basis of constitutional infirmity. The plaintiff's submissions do not address the provisions of the Liquor Act in terms. Correctly, Queensland submits that ss 173EB-173ED of that Act simply create offences of general application. The court on the trial of these offences, as on the trial of the new Code offences, performs its ordinary functions in the determination of criminal guilt. For these reasons, the questions of law should be answered as follows: Answer: Does the plaintiff have standing to seek a declaration that any, and which, of the provisions referred to in the schedule to these questions (other than Criminal Code (Q), ss 60A, 60B(1) and 60C, and Liquor Act 1992 (Q), ss 173EB- 173ED) is invalid? By reason of the answer to question 2, the plaintiff's claims for that declaratory relief do not give rise to a "matter" within the meaning of s 76(i) of the Constitution or s 30(a) of the Judiciary Act 1903 (Cth) and accordingly the plaintiff has no standing to seek that relief. Is the relief which the plaintiff seeks in answer to question 3 (other than the relief sought in relation to the Criminal Code (Q), ss 60A, 60B(1) and 60C, and Liquor Act 1992 (Q), ss 173EB-173ED) hypothetical? Answer: Yes. Is any, and which, of the provisions referred to in the schedule invalid on the ground that it infringes the principle Bell of Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51? Answer: Who should pay the costs of the special case? Answer: The plaintiff.

HIGH COURT OF AUSTRALIA AUSTRALIAN FINANCIAL SERVICES AND LEASING PTY LIMITED APPELLANT AND HILLS INDUSTRIES LIMITED & ANOR RESPONDENTS Australian Financial Services and Leasing Pty Limited v Hills Industries Limited [2014] HCA 14 7 May 2014 ORDER Appeal dismissed with costs. On appeal from the Supreme Court of New South Wales Representation C J Birch SC with M P Cleary and R L Gall for the appellant (instructed by Hilliard & Berry Solicitors) I M Jackman SC with T M Thawley SC for the first respondent (instructed by King & Wood Mallesons) B W Walker SC with L Gor for the second respondent (instructed by HWL Ebsworth Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Australian Financial Services and Leasing Pty Limited v Hills Industries Limited Restitution – Payments made under mistake of fact – Defence of change of position – Where appellant made mistaken payments to respondents as result of fraud committed by third party – Where respondents applied payments to discharge third party's debts, ceased pursuing recovery of debts and continued to trade with third party – Whether retention of monies inequitable in all the circumstances. Words and phrases – "change of position", "detriment", "detrimental reliance", "disenrichment", "unjust enrichment". Introduction When money is paid under a mistake of fact, the person paying the money may recover it from the recipient in a common law action for money had and received. Recovery depends upon whether it would be inequitable for the recipient to retain the benefit. Retention may not be inequitable if the recipient has changed its position on the faith of the receipt and thereby suffered a detriment. The circumstances under which the "change of position" defence may be invoked as a complete defence are in question in this appeal from the Court of Appeal of the Supreme Court of New South Wales. The facts of the case1, the reasoning of the primary judge2, that of the Court of Appeal3, and the arguments of the parties4, are set out in the joint reasons5. Two suppliers of equipment, Hills and Bosch, the respondents to the appeal, received payment from the appellant, AFSL, a finance company, which they had been led to expect, by a common commercial client, Mr Skarzynski, was in reduction of the indebtedness to them of companies controlled by that client (referred to collectively as "TCP"). The payments, having been received, were treated by the suppliers as reducing that indebtedness. The first respondent, Hills, withdrew a threat of legal action and recommenced trading with TCP. The second respondent, Bosch, agreed to file consent orders setting aside default judgments supporting garnishee orders against TCP and TCP's directors, and resumed trading. However, the payments had been made by AFSL under a mistake of fact induced by Mr Skarzynski's fraud. He had supplied AFSL with forged invoices, apparently issued by Hills and Bosch, for goods to be acquired by AFSL from them and rented to TCP. Rental agreements were entered into by AFSL on the basis of those invoices. The fraud having been discovered and TCP being insolvent, AFSL brought an action against the suppliers in the Supreme Court of New South Wales for recovery of the money it had paid to them. It obtained judgment Joint reasons at [39]–[46]. Joint reasons at [47]–[50]. Joint reasons at [52]–[60]. Joint reasons at [61]–[64]. 5 The abbreviations used in the joint reasons are adopted in these reasons. against Hills at first instance, but its claim against Bosch was dismissed6. On appeal by AFSL and by Hills, the Court of Appeal held that AFSL could recover from neither supplier7. AFSL now appeals by special leave to this Court8. The appeal should be dismissed. The respondents suffered an irreversible detriment when they decided, on the faith of the receipt of the payments made to them by the appellant, not to pursue their legal remedies against their fraudulent client and TCP. Change of position may apply as a pro tanto defence where the detriment can readily be quantified. This is not such a case. Contrary to the submissions of the appellant, change of position applies in this case as a complete defence to the appellant's claim. The change of position defence In Moses v Macferlan9, Lord Mansfield pointed to the simplicity of the common law action for money had and received from the perspective of the plaintiff, who could declare generally "that the money was received to his use"10. The defendant could defend himself "by every thing which shews that the plaintiff, ex æquo & bono, is not intitled to the whole of his demand, or to any part of it."11 In the latter proposition lay the seeds of the general change of position defence, although they were not to germinate for more than 230 years. The class of cases in which an action for money had and received would lie was not closed in Moses v Macferlan and the decisions in the decades that followed, albeit it did not extend to recovery of money paid under mistake of 6 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555. 7 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147. [2013] HCATrans 191 (Hayne and Keane JJ). (1760) 2 Burr 1005 [97 ER 676]. 10 (1760) 2 Burr 1005 at 1010 [97 ER 676 at 679]. The litigation is explained in detail in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 545–548 [76]–[83] per Gummow J; [2001] HCA 68; see also Swain, "Moses v Macferlan", in Mitchell and Mitchell (eds), Landmark Cases in the Law of Restitution, (2006) 19. 11 (1760) 2 Burr 1005 at 1010 [97 ER 676 at 679]. law12. The remedy was "available in any case in which money had been paid in circumstances where it was unjust for the defendant to retain it"13. The grounds upon which a defendant might contend that retention of the benefit would not be "unjust" were left open. Money "payable in point of honor and honesty, although it could not have been recovered ... [by the plaintiff] by any course of law" would not be recoverable14. Examples in that category included payment of a debt outside the Statute of Limitations, a debt contracted in infancy, principal and legal interest due on a usurious contract, and money fairly lost at gambling15. Lord Mansfield declared in Sadler v Evans16 that a claim could be defended by "any equity that will rebut the action."17 Payment to an innocent recipient on forged bills of exchange was held irrecoverable in Price v Neal18. The rationale of the decision was not clear, although it was thought to be the progenitor of a special change of position defence19. Whether that was so is debatable20. Nor was the rationale much 12 That limitation was enunciated by Buller J in Lowry v Bourdieu (1780) 2 Doug KB 468 at 471 [99 ER 299 at 300], although it has been taken as originating in Bilbie v Lumley (1802) 2 East 469 [102 ER 448]. For reference to early English cases see "Relief under Mistakes of Law", (1907) 7 Columbia Law Review 279. The limitation was held not to form part of the common law in Australia in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48. 13 Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 516 [30] per French CJ, Crennan and Kiefel JJ; [2012] HCA 7. 14 (1760) 2 Burr 1005 at 1012 per Lord Mansfield [97 ER 676 at 680]. 15 (1760) 2 Burr 1005 at 1012 [97 ER 676 at 680–681]. See also Bize v Dickason (1786) 1 Term Rep 285 at 287 per Lord Mansfield CJ [99 ER 1097 at 1098]. 16 (1766) 4 Burr 1984 [98 ER 34]. 17 (1766) 4 Burr 1984 at 1986 [98 ER 34 at 35]. 18 (1762) 3 Burr 1354 by Lord Mansfield delivering the judgment of the Court of King's Bench [97 ER 871]. 19 Goff and Jones, The Law of Restitution, 5th ed (1998) at 838–841. And see Ames, "The Doctrine of Price v Neal", (1891) 4 Harvard Law Review 297 at 299 in which it was said the true principle was that as between two persons who have equal equities, one of whom must suffer, the legal title shall prevail. 20 Bant, The Change of Position Defence, (2009) at 16, fn 73. clearer in those decisions which held that a payment received by an agent and paid over to the principal was not recoverable from the agent21. Lord Mansfield imported a change of position dimension into such cases in Buller v Harrison22 when, holding that money paid to an agent and credited against the principal's indebtedness to the agent was recoverable, he said23: "In this case, there was no new credit, no acceptance of new bills, no fresh goods bought or money advanced. In short, no alteration in the situation which the defendant and his principals stood in towards each other". (emphasis added) Lord Atkinson, 130 years later in Kleinwort, Sons, and Co v Dunlop Rubber Co24, cited Buller v Harrison and intervening authorities for the proposition that the liability of an agent depended upon25: "whether, before the mistake was discovered, he had paid over the money which he received to the principal, or settled such an account with the principal as amounts to payment, or did something which so prejudiced his position that it would be inequitable to require him to refund." The last disjunctive circumstance appeared to foreshadow a distinct change of position defence. It was accepted in Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation26 ("the ANZ Case") that if the defence of payment over by an agent to his principal had to be justified in terms of detriment or 21 A principle established in Buller v Harrison (1777) 2 Cowp 565 [98 ER 1243] and applied in many later cases — see Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662; [1988] HCA 17; Kleinwort, Sons, and Co v Dunlop Rubber Co (1907) 97 LT 263; Gowers v Lloyds and National Provincial Foreign Bank Ltd [1938] 1 All ER 766; Transvaal & Delagoa Bay Investment Co Ltd v Atkinson [1944] 1 All ER 579; and see generally, Goff and Jones, The Law of Restitution, 5th ed (1998) at 833–835; Burrows, The Law of Restitution, 3rd ed (2011) at 561–566. 22 (1777) 2 Cowp 565 [98 ER 1243]. 23 (1777) 2 Cowp 565 at 568 [98 ER 1243 at 1245]. 25 (1907) 97 LT 263 at 265. 26 (1988) 164 CLR 662. change of position, "the payment by the agent to the principal of the money which he has received on the principal's behalf, of itself constitutes the relevant detriment or change of position."27 Some academic writing has supported, or at least acknowledged, the proposition that payment over by an agent can be treated as an aspect of the change of position defence. Professor Virgo, commenting on Lord Atkinson's observation in Kleinwort, wrote28: "Essentially, the defence will only be available to the extent that the agent's circumstances have changed because the principal has effectively received the benefit from the agent." In so saying, Professor Virgo acknowledged that "[t]he rationale of the agent's defence is a matter of some uncertainty."29 Meagher JA, in the Court of Appeal, referred to the "payee agent's defence" as one "which rested on notions of change of position"30. He cited the Restatement Third, Restitution and Unjust Enrichment for the proposition that it is a "specific application of the general defense [of change of position] differing from the ordinary rule only by its more generous definition of the acts by the agent/recipient that constitute a change of position"31. However, as his Honour found, the appellant did not pay the respondents on the basis that they were agents for their client or TCP. Nor did the appellant intend that the respondents might pay or apply the moneys received as directed by their client or TCP32. An obscure invocation of change of position was also made in Brisbane v Dacres33, in which a payment was held irrecoverable as made under a mistake of 27 (1988) 164 CLR 662 at 682 per Mason CJ, Wilson, Deane, Toohey and Gaudron JJ — but not as a separate requirement of overall prejudice where money received by an agent is paid over to the principal — see at 683 per Mason CJ, Wilson, Deane, 28 Virgo, The Principles of the Law of Restitution, 2nd ed (2006) at 686; see also Burrows, The Law of Restitution, 3rd ed (2011) at 564–566; cf Bant, The Change of Position Defence, (2009) at 68–69. 29 Virgo, The Principles of the Law of Restitution, 2nd ed (2006) at 688. 30 (2012) 295 ALR 147 at 191 [198]. 31 (2012) 295 ALR 147 at 191 [198] citing the Restatement Third, Restitution and Unjust Enrichment, §65. 32 (2012) 295 ALR 147 at 188 [186]. 33 (1813) 5 Taunt 143 at 162 per Mansfield CJ [128 ER 641 at 648–649]. law. Chief Justice Mansfield, reflecting the sweeping language of Lord Mansfield 50 years earlier in Moses v Macferlan, said34: "it would be most contrary to æquum et bonum, if he were obliged to repay it back. For see how it is! If the sum be large, it probably alters the habits of his life, he increases his expences, he has spent it over and over again; perhaps he cannot repay it at all, or not without great distress: is he then, five years and eleven months after, to be called on to repay it?" It has been suggested that in formulating this broad legal standard for restitution, Lord Mansfield was informed variously by Roman law, by the writings of Lord Kames and by Chancery practice35. Its origin has been the subject of judicial and academic contention36. Associate Professor Swain has suggested that the roots of English hostility to an equitable explanation of Moses v Macferlan go back to the nineteenth century and can be related to sensitivities about the relationship between law and equity37. Whatever the combination of influences upon Lord Mansfield, his concepts of "ex æquo & bono", "unjust" retention, and "equity that will rebut the action", were not confined to equitable doctrines. Nevertheless, equitable principles played their part in this, as in other areas of his jurisprudence. As Gummow J observed in Roxborough v Rothmans of Pall Mall Australia Ltd38: "With varying degrees of success, Lord Mansfield sought to translate equitable principles, doctrines, and procedures into the trial of actions at law; this reflected his appreciation of equitable doctrine for its flexibility and adaptability to modern needs, particularly in commercial law. Then, as today, 'equity is the spur to new thought and further remedy, and ... provides a means of introducing new policies'." (footnotes omitted) 34 (1813) 5 Taunt 143 at 162 [128 ER 641 at 649]. 35 Swain, "Moses v Macferlan", in Mitchell and Mitchell (eds), Landmark Cases in the Law of Restitution, (2006) 19 at 26–28. 36 See generally Swain, "Unjust Enrichment and the Role of Legal History in England and Australia", (2013) 36 University of New South Wales Law Journal 1030 at 37 Swain, "Unjust Enrichment and the Role of Legal History in England and Australia", (2013) 36 University of New South Wales Law Journal 1030 at 1048. 38 (2001) 208 CLR 516 at 548 [84]. His Honour gave emphasis to the way in which "notions derived from equity have been worked into and in that sense have become part of the fabric of the common law."39 In the light of that observation, Ashburner's metaphor of the common law and equity as two streams of jurisprudence which run side-by-side in the same channel and "do not mingle their waters"40 seems at odds not only with commonsense41, but also with the reality of equity's influence on the The general application of equitable considerations to restitutionary actions, and with them the availability of a general change of position defence, were denied by Lord Mansfield's judicial descendants43. Restitutionary remedies were linked to the fiction of an implied contract44. In 1914, Lord Sumner in "There is now no ground left for suggesting as a recognizable 'equity' the right to recover money in personam merely because it would be the right and fair thing that it should be refunded to the payer." Earlier, in Baylis v Bishop of London46, as Lord Justice Hamilton, his Lordship had spoken disparagingly of the vague jurisprudence "which is sometimes 39 (2001) 208 CLR 516 at 554 [100], referring subsequently to Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 376 per Deane and Dawson JJ; [1993] HCA 4. 40 Ashburner's Principles of Equity, 2nd ed (1933) at 18. 41 "The metaphor does not work" — see Watt, Trusts and Equity, 5th ed (2012) at 13. As Windeyer J observed in Felton v Mulligan (1971) 124 CLR 367 at 392; [1971] HCA 39 "physical metaphors can be misleading when applied to concepts." 42 Mason, "The Place of Equity and Equitable Remedies in the Contemporary Common Law World", (1994) 110 Law Quarterly Review 238 at 238–240. 43 See eg Standish v Ross (1849) 3 Ex 527 [154 ER 954]; Newall v Tomlinson (1871) LR 6 CP 405; Durrant v Ecclesiastical Commissioners (1880) 6 QBD 234; see also Goff and Jones, The Law of Restitution, 3rd ed (1986) at 695–699. 44 Goff and Jones, The Law of Restitution, 5th ed (1998) at 5–11; see also Goff & Jones, The Law of Unjust Enrichment, 8th ed (2011) at 5–9. 45 [1914] AC 398 at 456. attractively styled 'justice as between man and man.'"47 On that question, conflicting views were expressed in academic writings. Professor Hanbury wrote dismissively in 1924 that "equity in the mouth of a common lawyer is apt to mean equity in its ethical and somewhat nebulous sense."48 Professor Winfield, writing in 1937, observed sceptically that the implied contract theory then underlying restitution was itself based on "compensation upon equitable principles"49. It was not the foundation of liability in this area of the law but "only the facade of it."50 At least in appearance, however, the tide was running the other way. In 1957, Professor Jones wrote, referring to Baylis v Bishop of London and other decisions51: "Moses v Macferlan and its equitable offspring of change of circumstances were regarded as the excesses of the fertile mind of Lord Mansfield, and delicately forgotten." A detrimental change of position could support a defence of estoppel if other necessary elements were present. In Holt v Markham52, the plaintiffs, 47 [1913] 1 Ch 127 at 140; see also at 133 per Cozens-Hardy MR, 137 per Farwell LJ. See generally Sinclair v Brougham [1914] AC 398 at 454–455 per Lord Sumner. 48 Hanbury, "The Recovery of Money", (1924) 40 Law Quarterly Review 31 at 35. 49 Winfield, "Notes", (1937) 53 Law Quarterly Review 447 at 448, an observation supported by Sinclair v Brougham [1914] AC 398 at 432–433 in which Lord Dunedin said that the English fiction of contract and the Roman fiction of implied contract "recognize the equitable rule, and proceed to carry it out according to the forms of their own development." See also the references in the joint reasons at [75] to Campbell v Kitchen & Sons Ltd and Brisbane Soap Co Ltd (1910) 12 CLR 515 at 531 per Barton J; [1910] HCA 50 and National Commercial Banking Corporation of Australia Ltd v Batty (1986) 160 CLR 251 at 268 per Gibbs CJ; [1986] HCA 21. 50 Winfield, "Notes", (1937) 53 Law Quarterly Review 447 at 448. See also Stone, Legal System and Lawyers' Reasonings, (1964) at 258, 262 describing the use of the implied contract as an example of "concealed circular reference"; Aroney, "Julius Stone and the End of Sociological Jurisprudence: Articulating the Reasons for Decision in Political Communication Cases", (2008) 31 University of New South Wales Law Journal 107 at 115. 51 Jones, "Change of Circumstances in Quasi-Contract", (1957) 73 Law Quarterly Review 48 at 58. He also cited Durrant v Ecclesiastical Commissioners (1880) 6 QBD 234. 52 [1923] 1 KB 504. See also Kelly v Solari (1841) 9 M & W 54 at 58 per Lord Abinger CB, 58–59 per Parke B, 59 per Gurney B, 59 per Rolfe B [152 ER 24 (Footnote continues on next page) seeking recovery of money paid under mistake, were held to be estopped from asserting mistake of fact53. Scrutton LJ, after referring to Sadler v Evans, adopted the "very pungent criticisms which Lord Sumner has made upon that now discarded doctrine of Lord Mansfield"54 . Little room was left for a general change of position defence, which, outside the framework of estoppel, would necessarily depend upon Lord Mansfield's equity. The incompatibility of the change of position defence with the implied contract theory of restitutionary claims was pointed out in the decision of the Supreme Court of Canada in 1975 in Rural Municipality of Storthoaks v Mobil Oil Canada Ltd55. Martland J, delivering the judgment of the Court, observed that if the claim for recovery of the money was founded upon Moses v Macferlan, then the recipient could "defend himself by everything which shows that the plaintiff ex æquo et bono is not entitled to the whole of his demand, or to any part of it."56 Martland J added57: "If, however, the obligation to repay is contractual, it does not depend upon whether the requirement to repay is just and equitable." In the event, the disparaging references, sceptical rejoinders, pejorative dismissals and pungent criticisms were soon to retire onto the well-populated field of "old, unhappy, far-off things, And battles long ago". New contentions arose about the theory, bases and limits of restitutionary recovery and defences against it. Professor Burrows, writing in 2004, described the law of restitution as "the most debated subject in English private law over the last ten years."58 The latter part of the twentieth century saw the rejection of the implied contract as the foundation for such claims and the rise of "unjust enrichment". In 1988, this Court in the ANZ Case held that the basis of the common law action of at 26]; Standish v Ross (1849) 3 Ex 527 at 533 per Parke B [154 ER 954 at 956– 957]; Sinclair v Brougham [1914] AC 398 at 452 per Lord Sumner. 53 [1923] 1 KB 504 at 511 per Bankes LJ, 512–513 per Warrington LJ, 514–515 per 54 [1923] 1 KB 504 at 513. 55 [1976] 2 SCR 147 at 162 per Martland J. 56 [1976] 2 SCR 147 at 162. 57 [1976] 2 SCR 147 at 162. 58 Burrows, "The English Law of Restitution: A Ten-Year Review", in Neyers, McInnes and Pitel (eds), Understanding Unjust Enrichment, (2004) 11 at 14. money had and received for recovery of money paid under "fundamental mistake of fact" should be recognised as lying not in implied contract, but in restitution or unjust enrichment59. That followed upon the rejection of implied contract as a basis for the action on quantum meruit in Pavey & Matthews Pty Ltd v Paul60. While legal principles of restitution or unjust enrichment can be equated with seminal equitable notions of good conscience, the action for money had and received was described in the ANZ Case as "a common law action for recovery of the value of the unjust enrichment"61. The change of position defence was recognised in that case in the context of recovery of money paid under a mistake of fact. The law imposed a prima facie liability on the recipient of a mistaken payment to make restitution and62: "[b]efore that prima facie liability will be displaced, there must be circumstances (eg, that the payment was made for good consideration such as the discharge of an existing debt or, arguably, that there has been some adverse change of position by the recipient in good faith and in reliance on the payment) which the law recognizes would make an order for restitution unjust." So a concept of injustice, redolent of Lord Mansfield's equity, informed the right of recovery and, at the same time, qualified and limited it. That normative concept resembled what Professor Stone called a "legal standard" in a "category of indeterminate reference"63, albeit a standard informing guiding criteria for particular classes of case. 59 (1988) 164 CLR 662 at 673 per Mason CJ, Wilson, Deane, Toohey and 60 (1987) 162 CLR 221 at 227 per Mason and Wilson JJ, 256–257 per Deane J; [1987] HCA 5; see also Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 356– 357 per Mason CJ; South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) 98 CLR 65; [1957] HCA 69 discussed in the reasons of Gageler J at [127] and Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd 61 (1988) 164 CLR 662 at 673 per Mason CJ, Wilson, Deane, Toohey and 62 (1988) 164 CLR 662 at 673 per Mason CJ, Wilson, Deane, Toohey and 63 Stone, Legal System and Lawyers' Reasonings, (1964) at 263-264. Recognition of a general change of position defence for restitutionary claims, also rooted in a broad concept of "equity", followed in the United Kingdom in 1991 in the judgment of Lord Goff of Chieveley in Lipkin Gorman v Karpnale Ltd64. That recognition had been foreshadowed in his Lordship's judgment as Robert Goff J in Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd65. In that case he held, as a matter of deduction from previous authority, that a claim for money had and received may fail if the payee "has changed his position in good faith, or is deemed in law to have done so."66 In Lipkin Gorman, he formulated the defence broadly so as not to inhibit its development on a case-by-case basis67: "At present I do not wish to state the principle any less broadly than this: that the defence is available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full." He was there dealing with change of position as a defence to restitutionary claims generally, albeit he accepted that the claim for recovery of money paid under a mistake of fact was a prominent example of a case in which the defence could be invoked68. That defence provided what Professor Burrows called69: "the normative balance to imposed by unjust enrichment: the defendant can have no objection to the reversal of the enrichment provided it is left no worse off than if it had not been enriched in the first place." the strict liability Consistently with the flexibility of its foundation standard, the defence could be applied pro tanto. Relevantly to the present appeal, that flexibility is not constrained by a global limitation based on a quantitative or pseudo-quantitative concept of disenrichment. As explained below, disenrichment, as propounded by the late Professor Birks, is at best a circumstance which may define a class of 66 [1980] QB 677 at 695 — a proposition said to be supported in part by Kleinwort, Sons, and Co v Dunlop Rubber Co (1907) 97 LT 263 at 264 per Lord Loreburn LC. 67 [1991] 2 AC 548 at 580. 68 [1991] 2 AC 548 at 580. 69 Burrows, "Good Consideration in the Law of Unjust Enrichment", (2013) 129 Law Quarterly Review 329 at 330. case in which recovery could be held to be inequitable. It is not a unifying rule for the change of position defence. In Australia, the principle enunciated in Barclays Bank was quoted with approval in David Securities Pty Ltd v Commonwealth Bank of Australia70. This Court decided in that case that the rule precluding recovery of a payment made under a mistake of law, enunciated in Bilbie v Lumley71, was not part of the common law in Australia72. As that "rule" had not been much debated in the earlier stage of proceedings in the Federal Court, the change of position defence, raised for the first time in this Court, was not supported by relevant findings of fact. The question of its application in the particular case was remitted to the Federal Court. However, in holding that change of position was available as a defence to a claim for money paid under mistake of law (and also under mistake of fact), the plurality referred to Lipkin Gorman and to academic support for the defence, particularly in light of the inflexibility of estoppel, which it was thought could not operate pro tanto73. The plurality relied also upon support for the defence in Canada74 and the United States75 and its statutory recognition in Western Australia and New Zealand76. In the event, their Honours held that77: 70 (1992) 175 CLR 353 at 380 per Mason CJ, Deane, Toohey, Gaudron and 71 (1802) 2 East 469 [102 ER 448]. 72 (1992) 175 CLR 353 at 376 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ, 393, 399 per Brennan J, 402 per Dawson J. 73 (1992) 175 CLR 353 at 385 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ referring to Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548. See also at 406 per Dawson J. In Lipkin Gorman, reference is made (at 579 per Lord Goff) to Avon County Council v Howlett [1983] 1 WLR 605; [1983] 1 All ER 1073 — but see the extended discussion of that case in Wilken and Ghaly, The Law of Waiver, Variation, and Estoppel, 3rd ed (2012) at [9.109]–[9.128]. 74 (1992) 175 CLR 353 at 385 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ referring to Rural Municipality of Storthoaks v Mobil Oil Canada Ltd [1976] 2 SCR 147. 75 (1992) 175 CLR 353 at 385 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ referring to Restatement of the Law of Restitution: Quasi Contracts and Constructive Trusts §69(1). 76 (1992) 175 CLR 353 at 374 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ referring to Property Law Act 1969 (WA), ss 124 and 125; Judicature Act 1908 (NZ), ss 94A and 94B, inserted by the Judicature Amendment Act 1958 (Footnote continues on next page) "the defence of change of position is relevant to the enrichment of the defendant precisely because its central element is that the defendant has acted to his or her detriment on the faith of the receipt." (emphasis in original) (footnote omitted) This Court has subsequently held restitutionary claims against governments in respect of overpayments of tax or tax paid under an invalid law to be subject to the same general principles and has discussed those principles in that context78. In Roxborough, Gleeson CJ, Gaudron and Hayne JJ quoted with approval the observation of Mason CJ in Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd that79: "Restitutionary relief, as it has developed to this point in our law, does not seek to provide compensation for loss. Instead, it operates to restore to the plaintiff what has been transferred from the plaintiff to the defendant whereby the defendant has been unjustly enriched." In discussing so-called "unjust enrichment theory" in Roxborough, in the context of claims for money had and received, Gummow J referred to "General rules are ... varied by change of circumstances. Cases arise within the letter, yet not within the reason, of the rule; and exceptions are introduced, which, grafted upon the rule, form a system of law." (NZ). See also Law Reform (Property, Perpetuities, and Succession) Act 1962 (WA), s 24; Trustees Act 1962 (WA), s 65(8). 77 (1992) 175 CLR 353 at 385 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ, see also at 405–406 per Dawson J. 78 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516. 79 (2001) 208 CLR 516 at 529 [26] quoting Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 75; [1994] HCA 61. 80 (2001) 208 CLR 516 at 544 [73] quoting Ringsted v Lady Lanesborough (1783) 3 Doug KB 197 at 203 [99 ER 610 at 613]. Unjust enrichment came to be seen not as a principle of "direct application in a particular case"81 but rather as a taxonomical concept82. It was not at large. As this Court said in Farah Constructions Pty Ltd v Say-Dee Pty Ltd83, it was not to "by reference is unfair or to a subjective evaluation of what unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category." (footnote omitted) That being said, the equitable norm underlying the concept of unjust enrichment is to be found in Moses v Macferlan. Neither that case nor subsequent authority precluded the emergence of "novel occasions of unjust enrichment supporting claims for restitutionary relief."85 Change of position as a pro tanto defence In his writings on the topic of restitution over many years, Professor Birks argued against a wide application of the change of position defence by reference to whether recovery would be "inequitable". That criterion he regarded as "a wholly unanalysed conception of justice."86 He proposed instead that the defence should be limited by a concept of "disenrichment", which "ties the defendant's liability to the amount of his extant gain"87. He proposed that every unjust enrichment claim should be subject to the defence of disenrichment, unless for 81 Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 299 [85] per Gummow, Hayne, Heydon, Kiefel and Bell JJ; [2009] HCA 44; see also Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 665 [85] per Gummow, Hayne, Crennan and Kiefel JJ; [2008] HCA 27. 82 (2001) 208 CLR 516 at 544–545 [74]. 83 (2007) 230 CLR 89; [2007] HCA 22. 84 (2007) 230 CLR 89 at 156 [150]. 85 Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 516 [30] per French CJ, 86 Birks, Restitution — The Future, (1992) at 127. 87 Birks, Unjust Enrichment, 2nd ed (2005) at 208. some specific reason the defendant was deprived of its protection88. That strict approach, as he acknowledged, did not find support in the English authorities. In Dextra Bank & Trust Co Ltd v Bank of Jamaica89, Lord Bingham of Cornhill and Lord Goff, delivering the judgment of the Privy Council, characterised a change of position defence as90: "a principle of justice designed to protect the defendant from a claim to restitution in respect of a benefit received by him in circumstances in which it would be inequitable to pursue that claim, or to pursue it in full." The variety of ways in which recipients might change position to their detriment on the faith of a receipt of a mistaken payment was emphasised by Robert Walker LJ in Scottish Equitable plc v Derby91. That variety militates against confinement of the defence to a quantitative "disenrichment" analysis92. Acknowledging judicial support for a more broadly stated basis of the defence, Professor Birks suggested that the safe tactic would be to divide the wide defence in two, between disenrichment and non-disenriching change of position93. As a general proposition, the change of position defence should be applied in a way that is faithful to its origins in Moses v Macferlan, reflected in the general rubric of "inequitable" recovery adopted in Lipkin Gorman. The acceptance of that standard as the foundation of the defence does not involve the acceptance of an arbitrary judicial discretion. The application of the standard on a case-by-case basis, according to the common law process, as foreshadowed by Lord Goff, allows for the development of criteria adapted to particular classes of case. than Disenrichment may be used, with a narrower application contemplated by Professor Birks, as a term descriptive of a subset of cases in which a pecuniary change of position is invoked against a claim for recovery of money paid under a mistake of fact or law. There are many areas of the common law and of statute law which require the case-by-case application of broadly stated legal rules and standards and the judicial development of guiding criteria 88 Birks, Unjust Enrichment, 2nd ed (2005) at 209. 89 [2002] 1 All ER (Comm) 193. 90 [2002] 1 All ER (Comm) 193 at 205 [38]. 91 [2001] 3 All ER 818 at 827 [32]. 92 See Commerzbank AG v Price-Jones [2003] EWCA Civ 1663 at [66]–[67], [71]– 93 Birks, Unjust Enrichment, 2nd ed (2005) at 209. of liability within them94. Such criteria may be inspired, may rise, and may be modified or displaced by the fruitful incremental interaction of advocacy, judicial reasoning, and academic suggestion and critique95. Rarely, however, do they yield all-encompassing rules for the application of a foundation standard or norm. The limited utility of disenrichment in change of position cases involving mistaken payments does not support its characterisation in the appellant's submissions as "the central core of the defence" but, at best, as a guiding criterion to its scope in particular cases. As Professor Bant has pointed out, there may be changes of position which are difficult or even impossible to value which are not, on that account, irrelevant for the purpose of the defence96. She has proposed a criterion of "irreversible detriment", which looks to detriment at the point of demand for recovery and encompasses irreversible pecuniary change of position. Such change would usually satisfy the disenrichment approach97. The requirement that detriment be assessed at the time of demand for repayment is justified by reference to the analogous requirement in estoppel explained by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd 98: "the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it." 94 The statutory prohibitions of "misleading or deceptive conduct" and "unconscionable conduct" are examples in Australian law: Competition and Consumer Act 2010 (Cth), Sched 2 — Australian Consumer Law, ss 18, 20, 21, 22. See also Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) 88 ALJR 261 at 270 [17]–[18] per French CJ, 283–284 [71]–[72] per Hayne J; 304 ALR 1 at 9–10, 27; [2013] HCA 50 in relation to judicial development of the criterion of patentability that the claimed invention be "a manner of manufacture within the meaning of s 6 of the Statute of Monopolies". 95 Proximity as a criterion of duty of care is an example — Perre v Apand Pty Ltd (1999) 198 CLR 180 at 210–212 [75]–[82] per McHugh J; [1999] HCA 36. 96 Bant, The Change of Position Defence, (2009) at 134. See also Edelman and Bant, Unjust Enrichment in Australia, (2006) at 320–321. 97 Bant, The Change of Position Defence, (2009) at 130–135. See also Edelman and Bant, Unjust Enrichment in Australia, (2006) at 322. 98 (1937) 59 CLR 641 at 674, McTiernan J agreeing at 682; [1937] HCA 58. See also Scottish Equitable plc v Derby [2001] 3 All ER 818 at 830 [45] per Robert Walker LJ; National Westminster Bank plc v Somer International (UK) Ltd [2002] QB 1286 at 1309 [61] per Clarke LJ. On the other hand, it could be argued that the normative foundation of the change of position defence would be consistent with an assessment of detriment at the point at which the recipient became aware that money it had received had been paid under a mistake. In this case, and probably in most cases, the distinction does not matter. There is no suggestion that the respondents became aware of the appellant's mistake until demand was made for repayment. As Professor Bant points out, it is a difficulty with disenrichment as proposed by Professor Birks that it is to be assessed at the time at which the change of position occurred 99. It may be that disenrichment is a criterion which, applied at the time of demand for repayment, defines a sufficient condition for the application of the change of position defence. It suffices to say, for present purposes, that irreversible detriment is a more useful and flexible guiding criterion to the examination of a change of position defence than disenrichment and is certainly more appropriate to the circumstances of this case. Guiding criteria are indispensable to judicial decision-making in the application of broad normative standards to particular classes of case. Such decision-making is, in the end, a practical exercise. As McHugh J said in Perre v Apand Pty Ltd100: "attractive as concepts of fairness and justice may be in appellate courts, in law reform commissions, in the academy and among legislators, in many cases they are of little use, if they are of any use at all, to the practitioners and trial judges who must apply the law to concrete facts arising from real life activities. While the training and background of judges may lead them to agree as to what is fair or just in many cases, there are just as many cases where using such concepts as the criteria for duty would mean that 'each judge would have a distinct tribunal in his own breast, the decisions of which would be as irregular and uncertain and various as the minds and tempers of mankind'." (footnote omitted) It is the practical exercise of the application of the standard, using the criterion of "irreversible detriment", that must now be considered. That consideration is necessarily undertaken within the factual framework of this case. It does not require an exploration of the limits of the concept of detriment for the purposes of this defence or the range of connections between detriment and receipt which would answer the requirement that change of position be "on the faith" of the 99 Bant, The Change of Position Defence, (2009) at 135. 100 (1999) 198 CLR 180 at 211–212 [80]. receipt101. I agree with the observation in the joint reasons that detriment is not a narrow or technical concept102. The application of the change of position defence in the present case The appellant's central proposition was that where the change of position relied upon by the recipient of a mistaken payment is a form of economic loss, including loss of an opportunity, the defence operates only to the extent of that value, which the court should determine as best it can. That proposition is too general and should not be accepted. A recipient of a payment made under mistake may suffer a detriment by acting on the faith of the payment. If the detriment cannot be reversed at the time that demand is made of the recipient, the recipient can be said to have changed its position and to have a defence to a claim for repayment of the money as money had and received. Whether or not the defence is available depends upon whether it would be inequitable for the recipient to refuse to repay the money. That is a judgment which the recipient, properly advised, must be able to make within a reasonable time and at a reasonable cost. Some such judgments will be straightforward. The recipient of $100,000 who has paid it into a bank account and who has given $2,000 to a charity may readily conclude that it should repay $98,000 to the payer. On the other hand, a recipient who has, on the strength of the payment, decided not to pursue its legal rights against a third party may have a more difficult task, particularly where time has passed since the receipt of the payment and actions taken on the faith of it. The question whether the defence should operate pro tanto in such a case may depend upon the extent to which the detriment suffered by the recipient is quantifiable when demand is made. Where a loss of economic opportunity is concerned, it is not sufficient to say that courts frequently assess loss of opportunity as an aspect of tortious damages. The criterion for judging change of position must be capable of practical application. If not, it departs from the norm which underlies it. It also tends to undermine the stability and finality of transactions, necessarily qualified by the action for money had and received, of which the defence is protective103. 101 Gummow, "Moses v Macferlan: 250 years on", (2010) 84 Australian Law Journal 102 Joint reasons at [88]. See discussion in Edelman and Bant, Unjust Enrichment in Australia, (2006) at 322. 103 Joint reasons at [92]. In this case, at the time when the appellant demanded repayment, the respondents had suffered economic detriment of a kind that falls well within the class of detriment relevant to the change of position defence. Whatever prospect had existed of the respondents recovering all or part of the moneys owed to them by TCP before the appellant made the payments in August and September 2009, it no longer existed. The existence of that detriment did not depend upon whether the debts owed to the respondents by TCP could be said to have been discharged or released, irreversibly or otherwise. The detriment was attributable in part to the passage of time from when the payments were made to the date of demand. That is not to say the delay was the appellant's fault. Fault is not relevant to the outcome of this appeal. Any attempt to value the detriment suffered by the respondents would involve the consideration of more than one counterfactual with varying degrees of probability. There are, as the plurality observed in Sellars v Adelaide Petroleum NL104: "peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts." The extent of the defence of change of position is not to be determined according to the outcome of an exercise which can only be undertaken long after demand is made and which involves an elaborate and potentially expensive process of assessment. I agree also with the rejection in the joint reasons of the contention that it is appropriate to apply to a detriment constituted by loss of economic opportunity, the kind of valuation approach undertaken in an assessment of damages for loss of opportunities105. Such assessments are undertaken upon an entirely different basis from that which informs the change of position defence106. The respondents' change of position in this case was a complete defence to the claims made by the appellant. It is therefore unnecessary to consider other matters raised in the judgment of the Court of Appeal and on the notice of contention. Conclusion The appeal should be dismissed with costs. 104 (1994) 179 CLR 332 at 355 per Mason CJ, Dawson, Toohey and Gaudron JJ; [1994] HCA 4. 105 Joint reasons at [83]. 106 Joint reasons at [83]. Hayne Crennan Bell HAYNE, CRENNAN, KIEFEL, BELL AND KEANE JJ. The question in this appeal is whether, in the circumstances of the case, a claim to recover money paid by mistake should have been refused because of the recipients' change of position. The essential facts which gave rise to this question may be shortly stated. The payer, a financier, made payments to suppliers of goods who were trade creditors of a customer of the payer. The payer was induced to make these payments by the fraud of the customer. At the customer's request, the recipients applied the payments to the discharge of the customer's debts. When the payer discovered the fraud and demanded repayment, the recipients resisted the claim on the basis that they had changed their position on the faith of the payments. Between the receipt of the payments and the payer's demand on the recipients for repayment more than six months elapsed, during which time each recipient treated the debts previously owed by the customer as repaid, ceased to pursue repayment of those debts from the customer and continued to trade with it. The payer also continued to trade with the customer. The customer itself continued to trade with other businesses. The recipients' reliance upon the actions which they took, consequent upon the receipt of the monies mistakenly paid by the payer, as making out a defence of change of position, directs attention to the question whether they would suffer a detriment if they were required to repay. The payer's principal contention was that a conclusion on this question could not be reached by reference only to abandonment of the opportunity to recover the debts owed by the customer and the mere entry into further transactions. It was necessary to value what had been lost in order to determine whether a recipient was "worse off" in economic terms and this had not been done. The payer's contention enjoyed mixed success at trial107 but was rejected by the Court of Appeal of New South Wales108. The payer appealed to this Court. For the reasons which follow, the payer's appeal should be dismissed. 107 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555; [2011] NSWSC 267. 108 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147. Hayne Crennan Bell Background The appellant, Australian Financial Services and Leasing Pty Ltd ("AFSL"), was a business financier and the respondents, Hills Industries Ltd ("Hills") and Bosch Security Systems Pty Ltd ("Bosch"), were manufacturers and suppliers of commercial equipment. In August and September 2009, Mr Skarzynski, a director and shareholder of various companies in the Total Concept Projects group (referred to collectively as "TCP"), created false invoices suggesting the purchase of equipment by TCP from each of Hills and Bosch109. He presented these false invoices to AFSL. AFSL agreed to purchase the equipment and lease it back to TCP110. AFSL paid the amounts of each invoice directly to Hills and Bosch respectively, by electronic transfers111. AFSL's documentation did not manifest an intention to discharge TCP's debt to Hills or Bosch112; but, as requested by Mr Skarzynski, each of Hills and Bosch credited TCP's accounts with the amount of the payments113. AFSL, in making the electronic transfers, was acting under the mistaken impression that it was paying for the purchase of the equipment for the purposes of leasing it back to TCP. In truth, the items of equipment referred to in the false invoices did not exist. Nevertheless, from time to time, TCP made payments to 109 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 558 [4]-[5]. 110 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 559 [8]-[10]. 111 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 559 [11]. 112 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 153 [23]. 113 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 149 [5]. Hayne Crennan Bell AFSL under the lease agreements114. Mr Skarzynski's fraud went undetected until late March or early April 2010, when AFSL discovered its mistake115. During October, November and December 2009, before discovering its mistake, AFSL entered into further lease agreements with TCP116. In early November 2009, AFSL took secured guarantees from Mr Skarzynski and his associates in respect of TCP's obligations under the various subsisting lease agreements117. In February 2010, Mrs Skarzynski executed a mortgage over the Skarzynskis' home at Strathfield in support of TCP's obligations118. On 27 September 2012, the Supreme Court of New South Wales ordered that $512,000, being the net proceeds of the sale of the property, be paid to AFSL, together with any interest accrued on that amount119. On 12 April 2010, the Commonwealth Bank of Australia, a secured creditor of TCP, appointed receivers and managers to TCP120. And on 5 July 2010, a liquidator was appointed to TCP121. On 22 July 2010, a sequestration 114 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 149 [6]. 115 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 157 [48]. 116 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 155-156 [38]-[41]. 117 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 155 [39]. 118 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 156 [46], 157 [53]. 119 Australian Financial Services and Leasing Pty Ltd v All Up Finance Pty Ltd [2012] NSWSC 1004. 120 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 157 [50]. 121 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 157 [54]. Hayne Crennan Bell order was made in relation to the estate of Mr Skarzynski122. In relation to TCP, the liquidator's report of 27 July 2010 stated that its total realisable assets were zero, and that its total liabilities were $11,143,322. On or about 6 April 2010, AFSL made demand upon each of Hills and Bosch for repayment of the money it had paid to them by mistake123. Each rejected the demand and AFSL commenced proceedings. It claimed that the payments had been mistakenly made and that Hills and Bosch had therefore been unjustly enriched124. Hills and Bosch each resisted AFSL's claim on the basis of their change of position. In particular, they relied upon the application of the payments to the discharge of TCP's debts, and upon the circumstances that they ceased pursuing the recovery of the debts and continued to trade with TCP. It is convenient to refer to these circumstances in greater detail in the course of summarising the decisions of the primary judge and of the Court of Appeal. Decision of the primary judge The primary judge (Einstein J) held that, as against each of the recipients, AFSL was prima facie entitled to restitution of the amount mistakenly paid (less some deductions, which, given that AFSL's appeal must be dismissed, need not be considered). Hills applied the money it received from AFSL on 25 August 2009 to discharge TCP's existing debt of $308,000125. Hills' case was that, if the payment of 25 August 2009 had not been received, Hills would have pressed 122 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 157 [55]. 123 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 149 [6], 157 [49]. 124 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 559-560 [15]-[19]. 125 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 153 [28]. Hayne Crennan Bell Mrs Skarzynski for a mortgage of land owned by her126 and commenced recovery proceedings against TCP and the guarantors of its indebtedness to Hills127. Hills, having received payment, did not pursue these courses of action, but reopened TCP's account, advanced further credit and continued to supply equipment to TCP on credit128. In April 2010, when the fraud was discovered, TCP owed Hills an amount of $21,739.03129. The primary judge rejected130 Hills' defence of change of position. Given "the precarious financial position of TCP and the extent to which it is unlikely that given TCP's debts and other creditors Hills would have been able to recover significant sums from TCP", Hills had "failed to show any real detriment arising out of a change of position."131 On the other hand, the primary judge held that Bosch had made out its change of position defence because it was able to establish "real detriment by way of actual extinguishment of [a] legal claim to TCP's property."132 In this regard, by mid-May 2009, TCP owed Bosch approximately $193,000 and Bosch 126 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 565-566 [74]; Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 153-154 [29]. 127 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 152 [19], 153-154 [29], 186 [176]. 128 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 153 [28]. 129 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 153 [28], 186 [176]. 130 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 566 [77]. 131 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 566 [76]-[77]. 132 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 576 [150]. Hayne Crennan Bell had ceased to supply TCP other than on the basis of cash on delivery133. Bosch had obtained a number of default judgments against TCP and its directors and shareholders in July and August 2009134. By 28 August 2009, Bosch had placed garnishee orders on the bank accounts of TCP135. On 2 September 2009, TCP's solicitor requested a stay of certain garnishee orders on the basis that $198,000 would be paid within 48 hours136. On 3 September 2009, Bosch received payment of $198,000 from AFSL137. On 15 September 2009, Bosch consented to the setting aside of the default judgments and discontinued its proceedings against TCP138. AFSL appealed against the decision of the primary judge to uphold Bosch's change of position defence. Hills appealed against the decision of the primary judge to reject its change of position defence. The decision of the Court of Appeal The Court of Appeal (Bathurst CJ, Allsop P and Meagher JA) dismissed AFSL's appeal and allowed Hills' appeal. 133 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 573 [117]. 134 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 573 [118]-[119]; Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 151 [14]. 135 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 573 [121]; Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 151 [14]. 136 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 151 [15]. 137 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 574 [125]-[126]. 138 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 574 [129]. Hayne Crennan Bell Allsop P (with whom Bathurst CJ139 and Meagher JA140 agreed on this point) upheld141 the defence of change of position based on the view that each of Hills and Bosch had lost a valuable opportunity to pursue its claims against TCP and was unable to demonstrate the extent of the detriment resulting from that loss of opportunity. Allsop P rejected142 the view that "purely monetary and expenditure based considerations" determine the availability of the change of position defence. Allsop P said143 that "to require the measurement of the payee's position in terms only of the currency of the payer's mistake may unfairly or mechanically restrict the just reconciliation of the competing rights." In his Honour's view, restitution's "equitable roots … tend against overly constricting the operation of the defence by requiring in all circumstances proof of sums certain as irreversibly lost on the faith of the receipt."144 It is not without importance that these transactions took place in a commercial context. The issue to be determined does not involve the simple receipt and retention by an individual of the benefit of the mistaken payment. All the parties to the transactions were involved in trade. Further, the primary judge declined to make any finding adverse to the parties by reference to their conduct in trade145. The conduct of parties in their business dealings and the extent of any 139 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 149 [1]-[3]. 140 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 195 [215]-[216]. 141 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 179 [148], 181-182 [156]-[157], 183 [165]. 142 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 181 [153]. 143 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 181 [153]. 144 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 181 [154]. 145 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 562 [33], [41], 573 [114]-[115]. Hayne Crennan Bell risk assumed by them may, in some cases, be relevant to the question whether it is inequitable to deny recovery or require repayment of monies146. But in this case, the primary judge relevantly considered that, having regard to "commercial realities", neither Hills' nor Bosch's conduct was commercially unacceptable147. It would appear that his Honour had in mind that the exigencies of business constrained the possibility of "a thorough, or indeed any, investigation as to the original source of the funds or their true ownership at the time of their receipt."148 On AFSL's behalf, complaint was directed to the observation by Allsop P149 that AFSL could "be seen to be responsible to some real degree for its own predicament, both in the making of the mistake and in the time it has taken to retrieve the effects of the mistake". It was said on behalf of AFSL that this criticism was unfounded, given that the primary judge rejected any suggestion that AFSL "had acted inappropriately at any stage" and found that "[w]hen the fraud was discovered [AFSL] acted as quickly as practicable the circumstances."150 AFSL went on to argue that this unwarranted attribution of fault to AFSL by Allsop P affected his Honour's conclusion adversely to it on this point. In this regard, Allsop P referred151 to the circumstance that the opportunities previously available to Hills and Bosch to enforce or secure payment of the debts owed to them by TCP "cannot now be taken" and that those opportunities have been "arrogated to the benefit of AFSL" by its taking of 146 See Niru Battery Manufacturing Co v Milestone Trading Ltd [2002] 2 All ER (Comm) 705 at 741 [135]; Abou-Rahmah v Abacha [2007] 1 All ER (Comm) 827 147 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 562 [41], 573 [114]-[115]. 148 Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661 at 149 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 181 [153]. 150 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2011) 5 BFRA 555 at 562 [33]. 151 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 184 [165]. Hayne Crennan Bell security. Allsop P observed152 that "[t]he events of the 6 months cannot be undone" and further that, while it may be speculative to ascribe "a precise monetary value" to the opportunities forgone by Hills and Bosch, "the difficulty in that regard stems from the timing and duration of AFSL's mistake. This length of time (inimical to the security of receipt of Bosch and Hills), and the difficulty of proof flowing from it, are relevant to the sufficiency of what has been proved in the assessment of injustice". It is apparent that AFSL goes too far in suggesting that Allsop P reached his conclusion on this aspect of the case by the attribution of blame to AFSL for its delay in discovering the fraud. His Honour regarded the length of time taken to discover the fraud, and the circumstance that AFSL took the opportunity during this period to seek the benefit of security for TCP's indebtedness, as matters of fact which bear upon the question whether it would have been inequitable to require Hills and Bosch to repay AFSL when it made its demand. But his Honour's reasoning does not suggest that the attribution of any commercial impropriety to AFSL affected his conclusion. In this regard, Allsop P said153: "that Hills and Bosch gave up, on the faith of the receipt, both the debts owed by the TCP companies by way of discharge and a real and potentially valuable commercial opportunity to enforce or secure payment from their trade debtors. It would, in my view, be unjust between these commercial parties in this commercial context to order repayment of the sums received." Allsop P also held that each of Hills and Bosch was entitled to resist AFSL's claim, "irrespective of the assessment of the then commercial worth of the TCP debt, either because of a bona fide discharge or because such, with the payment away, can be seen as a change of position."154 152 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 184 [165]. 153 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 184 [165]. 154 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 179 [145]. Hayne Crennan Bell Meagher JA did not agree with Allsop P that Hills and Bosch were entitled to succeed on the basis of a separate defence of bona fide discharge of debt155. Meagher JA held that the discharge by each of Hills and Bosch of the debts owed to it by TCP gave rise to a defence of change of position because it was equivalent to each of them paying the monies received from AFSL to TCP and receiving the money back in discharge of the debt156. It may be noted from the discussion of the defence of bona fide discharge of debt in the Court of Appeal that it would appear that no question was raised as to whether the discharge may have been reversible as between the recipients and TCP or its liquidator by reason of the circumstance that the payments were procured by the fraud of TCP. AFSL's argument in this Court AFSL submitted that the position of each of Hills and Bosch was a case of bare receipt, not a receipt associated with or related to a valid legal transaction. The enquiry should be into the net enrichment of each recipient as a result of the receipt. On that basis, a court presented with a change of position defence based on the discharge of a debt, or loss of an opportunity to recover payment of a debt, must place a value on the debt which is repaid, or upon the lost opportunity to recover the debt, because the defence operates only pro tanto to the extent of that proven value. Otherwise, the recipient will remain unjustly enriched by the mistaken payment. AFSL submitted that, in this case, the debts owed by TCP to Hills and Bosch were worthless because TCP was unable to pay. The opportunities to recover payment by enforcing or securing repayment were therefore of minimal value. Accordingly, it was submitted that it would be unjust to permit Hills and Bosch to retain the whole of the mistaken payments and that the Court of Appeal erred in dispensing with the need for a recipient to prove, on the balance of probabilities, that its change of position caused any detriment and the extent of that detriment. Since Hills and Bosch did not part with any money in treating TCP's debts as discharged, they ought to be seen as having given away nothing of value. 155 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 191-192 [199]-[200]. 156 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 194-195 [209]-[214]. Hayne Crennan Bell It is worth observing that, whilst AFSL argued that TCP's debts to Hills and Bosch and their choses in action were valueless at the time AFSL made demand, AFSL itself continued to trade with TCP and receive monies from it between the time of the mistaken payments and demand. It should be emphasised that AFSL did not suggest on this appeal that the actions of Hills or Bosch were commercially unacceptable. Nor did Hills or Bosch suggest AFSL's actions in making the payments ought to be so characterised. As in the Court of Appeal, the relevant findings of the primary judge were not challenged. The relevant enquiry: whether retention of monies unconscionable The entitlement to recover money mistakenly paid to another in an action for money had and received has its roots in the decision of the Court of King's Bench led by Lord Mansfield in Moses v Macferlan157. Lord Mansfield expressly founded the action to recover money had and received to the use of the payer on the notion that retention of the money by the payee would be "against conscience"158. Lord Mansfield explained159 that, in the case of mistaken payment, a plaintiff need not show special circumstances and may simply declare that the money was received by another to his use. His Lordship went on to say that, equally beneficially, a defendant "may go into every equitable defence, upon the general issue; he may claim every equitable allowance; … in short, he may defend himself by every thing which shews that the plaintiff, ex aequo et bono, is 157 (1760) 2 Burr 1005 [97 ER 676]. See Gummow, "Moses v Macferlan: 250 years on", (2010) 84 Australian Law Journal 756. It is not necessary to trace in any detail the general history of the development of the law in this area. A description of the history can be found in several places, including, for example, Jackman, "Why the History of Restitution Matters", in Gleeson, Watson and Peden (eds), Historical Foundations of Australian Law, Volume II: Commercial Common Law, 158 (1760) 2 Burr 1005 at 1011 [97 ER 676 at 680]. 159 (1760) 2 Burr 1005 at 1010 [97 ER 676 at 679]. Hayne Crennan Bell not intitled to the whole of his demand, or to any part of it." In Sadler v Evans160, it was said that "[t]he defence is any equity that will rebut the action." Thus, in David Securities Pty Ltd v Commonwealth Bank of Australia161, it was said that payment caused by mistake is sufficient to give rise to a prima facie obligation on the part of the recipient to make restitution. Before that prima facie liability is displaced, the recipient must point to circumstances which would make an order for restitution unjust. In words which echo those of Lord Mansfield in Moses v Macferlan, it was said that, in order to show that retention of the payment is not unjust, the recipient is entitled to raise "by way of answer any matter or circumstance". There can be no denying the equitable roots of the principle by which a claim for restitution of money had and received to the use of the payer is to be determined. In Dale v Sollet162, Lord Mansfield said of the action: "This is an action for money had and received to the plaintiff's use. The plaintiff can recover no more than he is in conscience and equity entitled to". In Clarke v Shee163, his Lordship referred to the action as "a liberal action in the nature of a bill in equity; and if, under the circumstances of the case, it appears that the defendant cannot in conscience retain what is the subject-matter of it, the plaintiff may well support this action." In Roxborough v Rothmans of Pall Mall Australia Ltd164, Gummow J explained that the "equitable notions" of which Lord Mansfield wrote have been absorbed into the "fabric of the common law" right of action for money had and received. In this regard, it is to be noted that any reference to equitable notions does not invite a balancing of competing equities as between the parties, based on considerations such as fault. The question here is whether it would be inequitable in all the circumstances to require Hills and Bosch to make restitution. The answer to that question is not at large, but neither is it simply a 160 (1766) 4 Burr 1984 at 1986 [98 ER 34 at 35]. 161 (1992) 175 CLR 353 at 379; [1992] HCA 48. 162 (1767) 4 Burr 2133 at 2134 [98 ER 112 at 113]. 163 (1774) 1 Cowp 197 at 199-200 [98 ER 1041 at 1042]. 164 (2001) 208 CLR 516 at 554-555 [100]; [2001] HCA 68. Hayne Crennan Bell measure of the monetary extent to which the recipient remains enriched by the receipt at the time of demand for repayment. In the United States, in Atlantic Coast Line Railroad Co v Florida165, "The claimant to prevail must show that the money was received in such circumstances that the possessor will give offense to equity and good conscience if permitted to retain it." The continuing influence of Lord Mansfield's view that the cause of action for money had and received depends on legal rules framed by reference to considerations of good conscience is also apparent in the judgment of Lord Wright in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd166 and in the decision of the Supreme Court of the United States in Great-West Life & Annuity Insurance Co v Knudson167. In Lipkin Gorman (a firm) v Karpnale Ltd168, Lord Goff of Chieveley stated that a defendant may rely upon a defence of change of position whenever "it would be inequitable in all the circumstances to require him to make restitution". Lord Templeman referred169, with evident approval, to the observations of Lord Wright in Fibrosa in a way which suggests that Lord Templeman identified an unjust enrichment as a benefit that it would be against "conscience" to retain. Lipkin Gorman also proceeded upon the basis that English law had accepted unjust enrichment as a legal principle to be applied as a ground for liability. By reference to what was said by Lord Goff in that case respecting the 165 295 US 301 at 309 (1935). 166 [1943] AC 32 at 63. 167 534 US 204 at 213-214 (2002). 168 [1991] 2 AC 548 at 580. See also David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 405-406; Dextra Bank & Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193 at 204 [36]. 169 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 at 559. Hayne Crennan Bell defence of change of position170, it would appear that the principle of unjust enrichment may have been intended to operate more widely than the action for money had and received, which requires the presence of vitiating factors such as mistake. In David Securities171, the submission that unjust enrichment was a definitive legal principle was rejected. That position has since been maintained consistently by this Court172. In Friend v Brooker173, it was said that the concept of unjust enrichment was not a principle supplying a sufficient premise for direct application in a particular case. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd174, it was commented that there was potential for unjust enrichment as a principle to distort equitable doctrine and to generate new fictions. In Roxborough175, Gummow J pointed out that: "[S]ubstance and dynamism may be restricted by dogma. In turn, the dogma will tend to generate new fictions in order to retain support for its thesis. It also may distort well settled principles in other fields, including those respecting equitable doctrines and remedies, so that they answer the newly mandated order of things. Then various theories will compete, each to deny the others." More recently, Equuscorp Pty Ltd v Haxton176 confirmed that unjust enrichment does not found or reflect any "all-embracing theory of restitutionary 170 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 at 578. 171 (1992) 175 CLR 353 at 378. 172 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 156 [151]; [2007] HCA 22; Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 665 [85]; [2008] HCA 27; Friend v Brooker (2009) 239 CLR 129 at 141 [7]; [2009] HCA 21; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 299 [86]; [2009] HCA 44. 173 (2009) 239 CLR 129 at 141 [7]. 174 (2007) 230 CLR 89 at 156 [151]. 175 (2001) 208 CLR 516 at 545 [74]. 176 (2012) 246 CLR 498 at 516 [30] per French CJ, Crennan and Kiefel JJ; [2012] HCA 7. Hayne Crennan Bell rights and remedies"177. That case identified unconscionability as relevant and as derived from general equitable notions which find expression in the action for money had and received178. As this Court acknowledged in Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation179, "contemporary legal principles of restitution or unjust enrichment can be equated with seminal equitable notions of good conscience". In Australia, the equitable roots of the action for money had and received were early recognised in Campbell v Kitchen & Sons Ltd and Brisbane Soap Co Ltd180. There, Barton J observed181 that recovery "depends largely on the question whether it is equitable for the plaintiff to demand or for the defendant to retain the money." In National Commercial Banking Corporation of Australia Ltd v Batty182, Gibbs CJ said: "Whether the action is based on an implied promise to pay, or on a principle designed to prevent unjust enrichment, the emphasis on justice and equity in both old and modern authority on this subject supports the view that the action will not lie unless the defendant in justice and equity ought to pay the money to the plaintiff". This is not to suggest that a subjective evaluation of the justice of the case is either necessary or appropriate. The issues of conscience which fall to be resolved assume a conscience "properly formed and instructed" 183 by established equitable principles and doctrines. As was said in Kakavas v Crown Melbourne 177 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 544 178 Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 517 [32]. 179 (1988) 164 CLR 662 at 673; [1988] HCA 17. 180 (1910) 12 CLR 515; [1910] HCA 50. 181 Campbell v Kitchen & Sons Ltd and Brisbane Soap Co Ltd (1910) 12 CLR 515 at 182 (1986) 160 CLR 251 at 268; [1986] HCA 21. 183 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 227 [45]; [2001] HCA 63. Hayne Crennan Bell Ltd184, "[t]he conscience spoken of here is a construct of values and standards against which the conduct of 'suitors' – not only defendants – is to be judged185." Change of position and detrimental reliance As Gummow J, writing extra-judicially, has said186: "[I]t is important to appreciate that 'change of position' is a species of the genus 'inequitable', not a synonym for it." One category of case in which it would be inequitable to require a recipient to repay is where the recipient has so far altered its position in relation to the receipt that it would be a detriment to it if it were now required to repay. The approach argued by AFSL does not involve an enquiry as to whether it would be inequitable to require the recipient to repay. Instead, AFSL's approach focuses upon the extent to which Hills and Bosch have been "disenriched"187 subsequent to the receipt. This approach seeks to give effect to an understanding of unjust enrichment as a principle of direct application, which operates by measuring the extent of enrichment or, where a defence of change of position is invoked, the extent of disenrichment subsequent to that receipt. Such a "principle" does not govern the resolution of this case because the concept of unjust enrichment is not the basis of restitutionary relief in Australian law. The principle of disenrichment, like that of unjust enrichment, is inconsistent with the law of restitution as it has developed in Australia. Disenrichment operates as a mathematical rule whereas the enquiry undertaken in relation to restitutionary relief in Australia is directed to who should properly bear the loss and why. That enquiry is conducted by reference to equitable principles. In §65 of the Restatement of the Law Third, Restitution and Unjust Enrichment, under the rubric "Change of Position", the American Law Institute states: 184 (2013) 87 ALJR 708 at 713 [16]; 298 ALR 35 at 39; [2013] HCA 25. 185 Gummow, Change and Continuity: Statute, Equity, and Federalism, (1999) at 186 Gummow, "Moses v Macferlan: 250 years on", (2010) 84 Australian Law Journal 187 Birks, Unjust Enrichment, 2nd ed (2005) at 208-212. See also Burrows, The Law of Restitution, 3rd ed (2011) at 526-527. Hayne Crennan Bell "If receipt of a benefit has led a recipient without notice to change position in such manner that an obligation to make restitution of the original benefit would be inequitable to the recipient, the recipient's liability in restitution is to that extent reduced." In Lipkin Gorman188, Lord Goff used similar language in explaining the basis of the change of position defence: "[W]here an innocent defendant's position is so changed that he will suffer an injustice if called upon to repay or to repay in full, the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution." In David Securities, reference was made to what was said in Lipkin Gorman concerning the defence. It was observed189 that in Lipkin Gorman, Lord Bridge of Harwich, Lord Ackner and Lord Goff said that the defence should be recognised by English law but declined to define its scope. However, in David Securities the "central element" of the defence was identified as being "that the defendant has acted to his or her detriment on the faith of the receipt190" (emphasis in original). Whether English cases subsequent to Lipkin Gorman have taken a wider view of the defence, one which eschews a requirement of detrimental reliance in favour of a mere causal link191, cannot alter what was said in David Securities regarding the defence. Whether the conclusion reached in the English cases, including Lipkin Gorman, is different from that which would be reached by reference to equitable principles is a moot point. In any event, consistently with an enquiry as to whether it is unconscionable for the recipient to retain the monies, it is necessary in cases such as the present to consider what was done by the recipient in reliance upon the receipt. In David Securities, in the passage in which reference is made to a recipient acting on the faith of the receipt, it was said that a common element in 188 [1991] 2 AC 548 at 579. 189 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 190 Birks, An Introduction to the Law of Restitution, (1989) at 410. 191 Scottish Equitable plc v Derby [2001] 3 All ER 818 (CA); Commerzbank AG v Price-Jones [2003] EWCA Civ 1663. Hayne Crennan Bell cases in Canada and the United States, where the defence has been accepted, is that it is necessary that the defendant point to "expenditure or financial commitment" which can be ascribed to the mistaken payment192. The passage does not provide precise direction as to the resolution of the issue in this case, but it is tolerably clear that their Honours did not suggest that the defence was to demonstrate monetary to a recipient who was able available only disenrichment on the faith of the mistaken payment. AFSL argued that it is necessary and appropriate to assess, forensically, the value of TCP's debts to Hills and Bosch, or their prospects of recovery, in order to measure the extent to which they remained enriched by AFSL's mistaken payments. AFSL's argument in this regard relied upon cases such as The Commonwealth v Amann Aviation Pty Ltd193 and Sellars v Adelaide Petroleum NL194. However, these cases concerned the assessment of damages by way of compensation for breach of contract or statutory or common law norms of conduct predicated upon proof of loss by reason of the breach. Here, Hills and Bosch had done AFSL no wrong that gave rise to an obligation to compensate AFSL for the loss suffered by it as a result. As Lord Goff observed in Lipkin Gorman, restitutionary claims are not founded upon a wrong done to the payer195. More importantly, under Australian law, a mathematical assessment of enduring economic benefit does not determine the availability of restitutionary remedies. The equitable doctrine which protects expectations, with which the notion of "detriment" is associated, is not concerned with loss caused by a wrong or a breach of promise196. As Deane J observed in The Commonwealth v Verwayen197, "[e]quity has never adopted the approach that relief should be 192 Rural Municipality of Storthoaks v Mobil Oil Canada Ltd [1976] 2 SCR 147 at 164; Grand Lodge, AOUW of Minnesota v Towne 161 NW 403 at 407 (1917). 193 (1991) 174 CLR 64, especially at 83-84, 89-94, 100-104, 112-113, 118-126, 138, 145-147, 157-158; [1991] HCA 54. 194 (1994) 179 CLR 332 at 349-350, 368; [1994] HCA 4. 195 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 at 578. 196 Crabb v Arun District Council [1976] Ch 179 at 198-199; The Commonwealth v Verwayen (1990) 170 CLR 394 at 415, 429; [1990] HCA 39. 197 (1990) 170 CLR 394 at 448. Hayne Crennan Bell framed on the basis that the only relevant detriment … is that which is compensable by an award of monetary damages." The equitable doctrine concerning detriment is concerned with the consequences that would enure to the disadvantage of a person who has been induced to change his or her position if the state of affairs so brought about were to be altered by the reversal of the assumption on which the change of position occurred198. On this view, the injustice which precludes such a result lies in the disadvantage which would result to the recipient if the payer were to be permitted to recover payments as mistakenly made where they have been applied by the recipient. This view accords with the understanding of detrimental reliance sufficient to ground an estoppel, as explained in Grundt v Great Boulder Pty Gold Mines Ltd199 by Dixon J. The fundamental purpose of an estoppel is to provide protection against the detriment which would flow from a party's change of position if the assumption which led to it were deserted200. While it may be accepted that estoppel affords a level of protection to expectations different from that afforded by the change of position defence201, and estoppel is also concerned with the manner in which expectations are created, both estoppel and the defence are grounded in that body of equitable doctrine that prevents the unconscientious assertion of what are said to be legal rights202. In Grundt, Dixon J explained the precise ground on which estoppel 198 Legione v Hateley (1983) 152 CLR 406 at 437; [1983] HCA 11; Riches v Hogben [1985] 2 Qd R 292 at 300-302; Giumelli v Giumelli (1999) 196 CLR 101 at 121- 124 [35]-[44]; [1999] HCA 10; Delaforce v Simpson-Cook (2010) 78 NSWLR 483 199 (1937) 59 CLR 641 at 674-675; [1937] HCA 58. See also Prime Sight Ltd v Lavarello [2014] 2 WLR 84; [2013] 4 All ER 659. 200 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674; The Commonwealth v Verwayen (1990) 170 CLR 394 at 410. 201 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 at 579. 202 Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 33; [1963] HCA 21; The Commonwealth v Verwayen (1990) 170 CLR 394 at 415, 429, 445; cf Crabb v Arun District Council [1976] Ch 179 at 195, 198-199; Riches v Hogben [1985] 2 Qd R 292 at 300-302. Hayne Crennan Bell precludes an otherwise good claim. Although lengthy, it is worthwhile setting his Honour's explanation out in full203: "[I]t is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice." It will be observed that Dixon J saw that a party's position, which had changed on the basis of an assumed state of affairs that is now sought to be altered, provided the necessary detriment. The passage makes clear that the detriment must flow from reliance upon that assumption204, when that assumption is to be departed from. Detriment has not been considered to be a narrow or technical concept in connection with estoppel. So long as it is substantial, it need not consist of expenditure of money or other quantifiable financial detriment, as Robert Walker LJ observed in Gillett v Holt205. His Lordship went on to say that the requirement of detriment must be approached as "part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the 203 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674-675. 204 The Commonwealth v Verwayen (1990) 170 CLR 394 at 415. 205 [2001] Ch 210 at 232-233, referring with approval to Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641. Hayne Crennan Bell circumstances." In the context of mistaken payments, the question is whether it would be unconscionable for a recipient who has changed its position on the faith of the receipt to be required to repay. Campbell206 is an example of a case where the continuance of an assumed state of affairs in business over a period of time and the disruption which would be caused if one or more payments were to be corrected were held to be determinative. Griffith CJ held207 that it would be inequitable to require repayment from the defendant, which had, over a long time, received mistaken payments on a regular basis and took them into account in estimating and directing annual profits. His Honour dismissed the plaintiff's action for money had and received. In London and River Plate Bank v Bank of Liverpool208, Mathew J referred to the detrimental effect of the passage of time in the context of business: "A holder of a bill cannot possibly fail to have his position affected if there be any interval of time during which he holds the money as his own, or spends it as his own, and if he is subsequently sought to be made responsible to hand it back. It may be that no legal right may be compromised by reason of the payment … but even in such a case it is manifest that the position of a man of business may be most seriously compromised, even by the delay of a day." In Lipkin Gorman209, Lord Goff referred to London and River Plate Bank as, on one possible view, an example of the change of position defence. These considerations have also, as Meagher JA observed below210, influenced courts in 206 (1910) 12 CLR 515. 207 Campbell v Kitchen & Sons Ltd and Brisbane Soap Co Ltd (1910) 12 CLR 515 at 208 [1896] 1 QB 7 at 11-12. 209 [1991] 2 AC 548 at 578-579. 210 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 194 [211]. Hayne Crennan Bell the United States in decisions such as Stephens v Board of Education of the City of Brooklyn211 and Banque Worms v BankAmerica International212. What was said in London and River Plate Bank may be understood to refer to the concern which has often been expressed in decisions of the courts about the finality of transactions and the security of receipts. In Kleinwort Benson Ltd v Lincoln City Council213, Lord Goff suggested that defences such as change of position are concerned to protect the stability or finality of transactions. It may perhaps be more accurate to say that, where the defence of change of position is made out, finality is the result that is achieved. But the desirability of "certainty of receipts" cannot itself dictate the outcome of the enquiry respecting the actions taken by a recipient where a mistaken payment is made in a commercial context. It is necessary to recall that the action for money had and received is itself a qualification upon what the law otherwise regards as the overriding importance attached to the security of actual receipts214. Here, Hills and Bosch not only continued to trade on the basis of the payments received, they discharged TCP's debts and no longer sought to recover them. In the Restatement of the Law Third, the American Law Institute acknowledges forbearance as relevant to the defence of change of position215. The disadvantage which Hills and Bosch would suffer AFSL sought to rely upon this Court's decision in Australia and New Zealand Banking Group216, where a distinction was drawn between a case in which the change of position was constituted by a payment that had involved a true parting with money, and a case in which there was no physical payment but 211 79 NY 183 at 186-188 (1879). 212 77 NY 2d 362 at 372-373 (1991). 213 [1999] 2 AC 349 at 382, 384. 214 As observed by Gummow J in "Moses v Macferlan: 250 years on", (2010) 84 Australian Law Journal 756 at 757. 215 American Law Institute, Restatement of the Law Third, Restitution and Unjust Enrichment, (2010), §65, Comment e. 216 (1988) 164 CLR 662. Hayne Crennan Bell a credit entry had been made in the books of the recipient for or on behalf of another party. In that context, it was said that217: "the courts will pay regard to the substance rather than to the form of what has occurred. Thus, the cases indicate that a mere book entry which has not been communicated to the third party or which can be reversed without affecting the substance of transactions or relationships will ordinarily not suffice". It is not accurate to characterise the payments to Hills and Bosch as "bare receipts" or "mere book entries", the amount of which affords a measure of unjust enrichment. It is an unattractive aspect of the approach urged by AFSL that a recipient who honestly appropriates a payment to discharge a debt owed to it is in the same position, so far as the change of position defence is concerned, as a recipient who receives a payment by way of advance against the supply of goods in the future. Even if it were accepted that AFSL neither entertained, nor expressed, an intention to discharge TCP's debts to Hills and Bosch, it is nevertheless the case that, as between each of Hills and Bosch on the one hand and TCP on the other, the payments were made and applied to discharge TCP's indebtedness to Hills and Bosch. Even if the discharges were legally reversible for some reason, such as TCP's fraud against AFSL, the consequence of such a reversal would be that Hills and Bosch would become unpaid creditors of TCP in its liquidation. In a practical sense, the receipts had consequences for Hills and Bosch beyond the simple fact of the receipt and these consequences were irreversible as a practical matter of business. Moreover, neither Hills nor Bosch was able to reverse the consequences of its decision to continue trading with TCP and the commercial risks that decision entailed. In the circumstances of this case, the disadvantages which would enure to Hills and Bosch if they were required to repay the monies that each received from AFSL are such that it would be inequitable to require them to do so. It will be observed that these conclusions are not reached by first attempting to state comprehensively what is encompassed by the notion of a change of position, or the circumstances in which a defence described in that way is available to meet a claim for recovery of money paid under mistake. As has 217 Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 674. Hayne Crennan Bell been explained, to apply reasoning of that kind218 would be sharply at odds with the established doctrine and unchallenged decisions of this Court in this area219. Attempts to describe the defence comprehensively, or to chart its metes and bounds, are apt to mislead by distracting attention from the content of the principle to the manner of its expression. Not only that, as Deane J rightly observed in Verwayen220: "It is undesirable to seek to define exhaustively and in the abstract the content or operation of any general legal doctrine. Inevitably, there will be unforeseen and exceptional cases. Ordinarily, there will be borderline areas in which the interaction of the doctrine with other doctrines will be uncertain. Most important, it is part of the genius of the common law that development on a case-by-case basis enables its adaptation to meet changing circumstances and demands." Other issues on appeal What has been said is sufficient to require that the appeal be dismissed. It is, therefore, not strictly necessary to refer to the other grounds on which the Court of Appeal held that AFSL's claim should be rejected. However, lest it be thought that this Court's decision involved some tacit acceptance of those other grounds, it is desirable to refer briefly to them. In David Securities221, the respondent, in addition to a defence of change of position, relied upon a defence that the payments in question had been made 218 See McGinty v Western Australia (1996) 186 CLR 140 at 232 per McHugh J; [1996] HCA 48. See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 544 [73] per Gummow J. 219 See, for example, Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 156 [151] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ; Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 661-663 [75]-[78] per Gummow, Hayne, Crennan and Kiefel JJ; Friend v Brooker (2009) 239 CLR 129 at 150-151 [47] per French CJ, Gummow, Hayne and Bell JJ; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 300 [90]-[91] per Gummow, Hayne, Heydon, Kiefel and Bell JJ. 220 (1990) 170 CLR 394 at 443. 221 (1992) 175 CLR 353. Hayne Crennan Bell for good consideration. It was noted222, with approval, that Goff J had included both defences in his formulation in Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd223. It was there said that, although a person paying money to another under a mistake of fact is entitled prima facie to recover it, his claim may nevertheless fail, inter alia, if "the payment is made for good consideration, in particular if the money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by a third party by whom he is authorised to discharge the debt". As Meagher JA correctly observed224, in rejecting AFSL's argument below, AFSL's payments were not made to discharge TCP's debts to Hills and Bosch. The payments to Hills and Bosch were not made or received in the circumstances envisaged by Goff J. To these observations, it may be added that it is doubtful whether the fraud practised on AFSL by TCP was irrelevant to whether there had been any discharge of TCP's debts to Hills and Bosch. The alternative basis for the rejection of AFSL's claim, which commended itself to Meagher JA, was based upon a view of the effect of the receipt upon the relationship of creditor and debtor. His Honour treated Hills and Bosch as if they had advanced the amount of their respective debts to TCP and then received payment back. In fact, neither creditor made a decision to make a fresh advance to TCP; and given TCP's credit history, it is somewhat artificial to view the transaction in this way. Indeed, this approach involves the kind of fiction deprecated by Gummow J in the passage from Roxborough225 set out above, which was cited with approval in Farah Constructions226. In any event, there remains the difficulty of regarding the discharge as irreversible, given that it was founded in TCP's fraud against AFSL. 222 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 223 [1980] QB 677 at 695. 224 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd (2012) 295 ALR 147 at 192 [200]. 225 (2001) 208 CLR 516 at 545 [74]. 226 (2007) 230 CLR 89 at 156 [151]. Hayne Crennan Bell Orders The appeal should be dismissed with costs. 104 This case concerns the nature of the defence of change of position to a common law action for restitution of money paid under a mistake. The nature of the defence is informed by the nature of the action. The nature of the action The nature of the action for restitution of money paid under a mistake was explained in David Securities Pty Ltd v Commonwealth Bank of Australia227. The David Securities explanation was recently summarised in Equuscorp Pty Ltd v Haxton228. Within that explanation, "unjust enrichment" is rejected as "a definitive legal principle"229 but is embraced as a "unifying legal concept"230. The explanation comes to this. The fact that a payment is caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the recipient to make restitution. That is because causative mistake is a circumstance which the law recognises to be prima facie sufficient to make the recipient's receipt, and retention, of the payment unjust. To displace that prima facie obligation, the recipient must establish some other circumstance which the law recognises would make an order for restitution unjust. The defence of change of position comprehends one of those circumstances. The defence, if established, results in the prima facie obligation of the recipient being in whole or in part displaced at the time an order for restitution is sought. The significance of that distinct two-stage analysis can only be appreciated when David Securities is placed in historical perspective. The point is not to look back to "an assumed golden age" but rather "to help us to see more clearly the shape of the law of to-day by seeing how it took shape"231. The development of the action for restitution of money paid under a mistake was described in Australia not long before David Securities as "complex, indeed tortuous"232. The development is not easily recounted and cannot be 227 (1992) 175 CLR 353 at 379; [1992] HCA 48. 228 (2012) 246 CLR 498 at 515-517 [29]-[30]; [2012] HCA 7. 229 (1992) 175 CLR 353 at 378. 230 (1992) 175 CLR 353 at 375. 231 Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460 at 496; [1967] HCA 3, quoting Attorney-General (Vict) v The Commonwealth (1962) 107 CLR 529 at 595; [1962] HCA 37. 232 Commercial Bank of Australia Ltd v Younis [1979] 1 NSWLR 444 at 447. recounted at all without some reference to common law procedure long made obsolete by statutory reform. By the eighteenth century, the common law permitted a form of action, known as indebitatus assumpsit, for "money 'had and received [by the defendant] to [or for] the use of the plaintiff'"233. For a plaintiff, that form of action had procedural advantages over an action of debt. One advantage was the brevity of the pleading. Another was that a defendant could not meet the action by "wager of law": that is, by formally swearing that he owed nothing in circumstances where he was able to bring to court "compurgators" or "oath-helpers" who would swear that his oath was not perjured234. Wager of law remained a defence to an action of debt until abolished by statute in 1833235. The pleading of an action of indebitatus assumpsit, although brief, required the plaintiff to aver breach by the defendant of a promise to pay a debt to the plaintiff236. In some cases, the pleaded promise was a fiction. One of them was Moses v Macferlan237. There, in 1760, the Court of King's Bench held that the debt would be implied and the action would lie "as it were upon a contract ('quasi ex contractu,' ...)" where "the defendant be under an obligation, from the ties of natural justice, to refund"238. Examples given included money "paid by mistake; or upon a consideration which happens to fail"239. Using terminology of a kind he would often later repeat240, Lord Mansfield described indebitatus 233 See generally Baker, An Introduction to English Legal History, 4th ed (2002) at 234 Maitland, The Forms of Action at Common Law, (1965) at 15-16. 235 Section 13 of the Civil Procedure Act 1833 (UK). 236 Explained Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 356; [1993] HCA 4. Eg Chitty, A Practical Treatise on Pleading, (1809), vol 1 at 334-335; Maitland, The Forms of Action at Common Law, (1965) at 91-92. 237 (1760) 2 Burr 1005 [97 ER 676]. Also reported as Moses v Macpherlan (1760) 1 Black W 219 [96 ER 120]. 238 (1760) 2 Burr 1005 at 1008 [97 ER 676 at 678]. 239 (1760) 2 Burr 1005 at 1012 [97 ER 676 at 681]. 240 Sadler v Evans (1766) 4 Burr 1984 at 1986 [98 ER 34 at 35]; Dale v Sollet (1767) 4 Burr 2133 at 2134 [98 ER 112 at 113]; Clarke v Shee (1774) 1 Cowp 197 at 199- 200 [98 ER 1041 at 1042]; Stevenson v Mortimer (1778) 2 Cowp 805 at 807 [98 ER 1372 at 1373]; Longchamp v Kenny (1779) 1 Doug 137 at 138 [99 ER 91 at (Footnote continues on next page) assumpsit as an "equitable action" for "money which, ex aequo et bono, the defendant ought to refund"241. Lord Mansfield said that "[o]ne great benefit" to a plaintiff was that "he may declare generally, 'that the money was received to his use;' and make out his case, at the trial"242. As to the position of a defendant, deprived of defences which would have been available to him had the plaintiff chosen another form of action, Lord Mansfield said243: "It is the most favourable way in which he can be sued: he can be liable no further than the money he has received; and against that, may go into every equitable defence, upon the general issue; he may claim every equitable allowance; he may prove a release without pleading it; in short, he may defend himself by every thing which shews that the plaintiff, ex aequo & bono, is not intitled to the whole of his demand, or to any part of it." Different views have been expressed as to the extent to which Lord Mansfield can be taken, by those and similar references to "natural justice", "conscience" and "equity", to have been drawing on the body of legal principle then separately administered by the Court of Chancery244. What is of some contemporary significance is that, after the statutory abolition of the forms of action245, and the statutory fusion in England of the administration of law and 91]; Towers v Barrett (1786) 1 TR 133 at 134 [99 ER 1014 at 1015]; Bize v Dickason (1786) 1 TR 285 at 286-287 [99 ER 1097 at 1098]. 241 (1760) 2 Burr 1005 at 1012 [97 ER 676 at 680]. 242 (1760) 2 Burr 1005 at 1010 [97 ER 676 at 679]. 243 (1760) 2 Burr 1005 at 1010 [97 ER 676 at 679]. 244 Gummow, "Moses v Macferlan: 250 years on", (2010) 84 Australian Law Journal 756 at 757; Kremer, "The Action for Money Had and Received", (2001) 17 Journal of Contract Law 93 at 99-100; Baker, "The Use of Assumpsit for Restitutionary Money Claims 1600-1800", in Schrage (ed), Unjust Enrichment: The Comparative Legal History of the Law of Restitution, (1995) 31 at 56; Restatement Third, Restitution and Unjust Enrichment §4, Comment b at 30; Swain, "Unjust Enrichment and the Role of Legal History in England and Australia", (2013) 36 University of New South Wales Law Journal 1030 at 1045. 245 Common Law Procedure Act 1852 (UK). equity246, it was able to be stated confidently in the English Court of Appeal in Rogers v Ingham that247: "[T]he law on the subject was exactly the same in the old Court of Chancery as in the old Courts of Common Law. There were no more equities affecting the conscience of the person receiving the money in the one Court than in the other Court, for the action for money had and received proceeded upon equitable considerations." That statement was quoted in the High Court of Australia in 1910 in Campbell v Kitchen & Sons Ltd and Brisbane Soap Co Ltd248. Lord Mansfield's language in Moses v Macferlan had by then been paraphrased in standard legal texts249 and repeated in courts still administering common law separately from equity250. Lord Mansfield's language was soon afterwards to be reflected in judicial statements in the High Court251 and the Privy Council252. Yet the scope of the equitable considerations potentially indicated by Lord Mansfield's language had by then been confined. Just how that occurred is of some importance to an understanding of David Securities. Two critical decisions in the first half of the nineteenth century were those of the Court of Common Pleas in Brisbane v Dacres253and of the Court of Exchequer in Kelly v Solari254. 246 Supreme Court of Judicature Act 1873 (UK). 247 (1876) 3 Ch D 351 at 355. 248 (1910) 12 CLR 515 at 531-532; [1910] HCA 50. 249 Eg Blackstone, Commentaries on the Laws of England, (1768), bk 3 at 162; Chitty, A Practical Treatise on the Law of Contracts, 2nd ed (1834) at 475; Bullen and Leake, Precedents of Pleadings in Actions in the Superior Courts of Common Law, 250 Eg Smith v Jones (1842) 1 Dowl PC (NS) 526 at 527; Shire of Rutherglen v Kelly (1878) 4 VLR (L) 119 at 121; Lyons v Hardy (1881) 2 NSWLR (L) 369 at 373- 374; White v Copeland (1894) 15 NSWLR (L) 281 at 288, 290. 251 R v Brown (1912) 14 CLR 17 at 25; [1912] HCA 6. 252 Royal Bank of Canada v The King [1913] AC 283 at 296. 253 (1813) 5 Taunt 143 [128 ER 641]. 254 (1841) 9 M & W 54 [152 ER 24]. Brisbane v Dacres255 decided that the action would not lie for the recovery of money paid under a mistake of law. As to the defendant who had received the mistaken payment in that case, Mansfield CJ there said256: "I find nothing contrary to aequum et bonum, to bring it within the case of Moses v Macfarlane, in his retaining it. So far from its being contrary to aequum et bonum, I think it would be most contrary to aequum et bonum, if he were obliged to repay it back." Kelly v Solari257 decided that carelessness on the part of the payer, and delay in bringing the action, provided no answer to an action founded on a mistake of fact. What made it unconscientious for the recipient to retain the money was said to lie simply in the circumstances of its payment and receipt. Parke B said258: "I think that where money is paid to another under the influence of a mistake, that is, upon the supposition that a specific fact is true, which would entitle the other to the money, but which fact is untrue, and the money would not have been paid if it had been known to the payer that the fact was untrue, an action will lie to recover it back, and it is against conscience to retain it; though a demand may be necessary in those cases in which the party receiving may have been ignorant of the mistake." To similar effect, Rolfe B said259: "With respect to the argument, that money cannot be recovered back except where it is unconscientious to retain it, it seems to me, that wherever it is paid under a mistake of fact, and the party would not have paid it if the fact had been known to him, it cannot be otherwise than unconscientious to retain it." 255 (1813) 5 Taunt 143 [128 ER 641]. See also Milnes v Duncan (1827) 6 B & C 671 at 677, 679 [108 ER 598 at 600, 601]. 256 (1813) 5 Taunt 143 at 162 [128 ER 641 at 648-649]. 257 (1841) 9 M & W 54 [152 ER 24]. See also Bell v Gardiner (1842) 4 Man & G 11 at 20 [134 ER 5 at 9]. 258 (1841) 9 M & W 54 at 58 [152 ER 24 at 26]. 259 (1841) 9 M & W 54 at 59 [152 ER 24 at 26]. Consistently with Kelly v Solari, the Court of Exchequer held in Standish v Ross260 that it was no defence to an action founded on a mistake of fact "that the defendant had applied the money in the meantime to some purchase which he otherwise would not have made, and so could not be placed in statu quo"261. The implications of Kelly v Solari were later spelt out by the Court of Common Pleas in Townsend v Crowdy262. Willes J there said263: "This is the simple case of one paying another money which both at the time suppose to be due, but which afterwards turns out in consequence of a mistake of fact on the part of the payer, not to have been really due. In such a case the law clearly is that the money may be recovered back. The only distinction is between error or mistake of law, for which the payer is responsible, and error or mistake of fact, for which he is not." "No doubt, at one time the rule that money paid under a mistake of fact might be recovered back, was subject to the limitation that it must be shewn that the party seeking to recover it back had been guilty of no laches. But, since the case of Kelly v Solari, … it has been established that it is not enough that the party had the means of learning the truth if he had chosen to make inquiry. The only limitation now is, that he must not waive all inquiry." Byles J said that Kelly v Solari was authority for the proposition "that you may always rip up accounts which have been settled between parties who have acted under mistake or misapprehension of the facts". Byles J continued265: "Here, the money was paid by the plaintiff under a mistake, both parties being under an impression that it was due. That being so, it was manifestly against conscience that the defendant should retain it. The law very properly casts upon the person who makes the payment the burthen 260 (1849) 3 Ex 527 [154 ER 954]. 261 (1849) 3 Ex 527 at 534 [154 ER 954 at 957]. 262 (1860) 8 CB (NS) 477 [141 ER 1251]. 263 (1860) 8 CB (NS) 477 at 494-495 [141 ER 1251 at 1259]. 264 (1860) 8 CB (NS) 477 at 494 [141 ER 1251 at 1259]. 265 (1860) 8 CB (NS) 477 at 495 [141 ER 1251 at 1259]. of shewing that it was made under a mistake. That being proved, it would be inequitable not to permit him to recover it back." In the result, as Hamilton J explained in Baker v Courage & Co266: "The question whether money can be recovered as having been paid under a mistake of fact depends upon the state of mind of the plaintiff at the time when the money was paid, just as in an action of deceit the liability of the defendant depends upon the untruth of the representation having been present to his mind at the time that the representation was made. You may be slow to believe the plaintiff if he says he had known the true facts but had forgotten them, but if you once arrive at the conclusion that he had in fact forgotten them and had paid the money under a misapprehension as to those facts, then he is entitled to recover the money unless he is already barred by the Statute of Limitations." The cause of action to recover money paid under a mistake of fact was there held to accrue at the date of payment267, the applicable limitation period being six years268. The potential for the common law action brought at any time within the limitation period to result in the ripping up of settled accounts was kept in check by rigidly maintaining the distinction between: on the one hand, a payment made under a mistake of fact (in respect of which it had been settled by Kelly v Solari that the action would lie); and, on the other hand, a payment made under a mistake of law (in respect of which it had been established in Brisbane v Dacres that the action would not lie). The significance of that distinction was highlighted in Rogers v Ingham269. In language quoted with approval by all members of the High Court in Campbell v Kitchen & Sons Ltd and Brisbane Soap Co Ltd270, Mellish LJ there observed that "the rule of law that money paid with a full knowledge of all the facts, although it may be under a mistake of law on the part of both parties, cannot be 266 [1910] 1 KB 56 at 64-65. See also R E Jones Ltd v Waring and Gillow Ltd [1926] AC 670 at 696. 267 See also Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 386, 268 Section 3 of the Limitation Act 1623 (21 Jac I c 16). 269 (1876) 3 Ch D 351 at 357. 270 (1910) 12 CLR 515 at 524, 532, 538. recovered back" was "an equitable and just rule" applicable at law and in equity. By way of explanation, Mellish LJ said that nothing "would be more mischievous than for us to say that money paid, for instance, under a mercantile contract, according to the construction which the parties themselves put upon that contract, might, years afterwards, be recovered, because perhaps some Court of Justice, upon a similar contract, gave to it a different construction from that which the parties had put on it"271. In the same case, James LJ pointed out that equity had not "adhered strictly to the rule that a mistake in law is not always incapable of being remedied" but that equitable relief had "never been given in the case of a simple money demand by one person against another, there being between those two persons no fiduciary relation whatever, and no equity to supervene by reason of the conduct of either of the parties"272. As to money paid under a mistake of fact, it was held in Durrant v Ecclesiastical Commissioners273, and again in Baylis v Bishop of London274, that an action would lie against a recipient who (without notice of the mistake) had paid the money in good faith as a principal to a third party from whom the recipient could not recover. With reference to the language of Lord Mansfield, Hamilton LJ explained in the second of those cases in 1912: that "both the equitable and the legal considerations applicable to the recovery of money paid under a mistake of fact have been crystallized in the reported common law cases"; that "[t]he question is whether it is conscientious for the defendant to keep the money, not whether it is fair for the plaintiff to ask to have it back"; that "[t]o ask what course would be ex aequo et bono to both sides never was a very precise guide, and as a working rule it has long since been buried in Standish v Ross and Kelly v Solari"; and that "[w]hatever may have been the case 146 years ago, we are not now free in the twentieth century to administer that vague jurisprudence which is sometimes attractively styled 'justice as between man and man.'"275 Two years later, Hamilton LJ had become Lord Sumner. As Lord Sumner, he said in Sinclair v Brougham276 that the action for money had and 271 (1876) 3 Ch D 351 at 357. 272 (1876) 3 Ch D 351 at 355-356. See generally New South Wales Law Reform Commission, Restitution of Benefits Conferred Under Mistake of Law, Report No 53, (1987) at 17 [3.5]. 273 (1880) 6 QBD 234 at 236. 275 [1913] 1 Ch 127 at 140 (footnotes omitted). 276 [1914] AC 398 at 453-454, 456. received could not be extended beyond the principles illustrated in the decided cases and that there was "no ground left for suggesting as a recognizable 'equity' the right to recover money in personam merely because it would be the right and fair thing that it should be refunded to the payer". Lord Sumner's "pungent criticisms"277 gave impetus to what was to become the predominant view in Australia, as in the United Kingdom, for much of the twentieth century: that Lord Mansfield's views were too vaguely expressed to be accepted as the foundation of a common law action for the recovery of money paid under a mistake278, and that the true foundation of the action lay in the implication of a promise to pay279. Despite the course of decisions having to that point rejected any defence based simply on a recipient's change of position, it had been accepted as early as 1825 that a recipient's alteration of position could give rise to a defence by way of estoppel if induced by the payer280. The defence was applied by the Court of Appeal in 1923 in Holt v Markham281 and acknowledged in the House of Lords three years later in R E Jones Ltd v Waring and Gillow Ltd282. As explained by Dixon J in 1937 in Grundt v Great Boulder Pty Gold Mines Ltd283, in the course of illustrating an analysis of the doctrine of estoppel in pais, to which it will be necessary to return, Holt v Markham was a case in which284: 277 Holt v Markham [1923] 1 KB 504 at 513. 278 Eg Smith v William Charlick Ltd (1924) 34 CLR 38 at 57, 70; [1924] HCA 13; J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 41 ALR 539 at 550-551; Bank of New South Wales v Murphett [1983] 1 VR 489 at 493, 496. 279 Eg Hirsch v Zinc Corporation Ltd (1917) 24 CLR 34 at 57-58; [1917] HCA 55; Smith v William Charlick Ltd (1924) 34 CLR 38 at 55-57, 70; Oxley v James (1938) 38 SR (NSW) 362 at 381; Turner v Bladin (1951) 82 CLR 463 at 474; [1951] HCA 13, citing James v Thomas H Kent & Co Ltd [1951] 1 KB 551. 280 Skyring v Greenwood (1825) 4 B & C 281 [107 ER 1064]; R v Blenkinsop [1892] 1 QB 43 at 46; Deutsche Bank (London Agency) v Beriro and Co (1895) 1 Comm Cas 123; affd (1895) 1 Comm Cas 255. 283 (1937) 59 CLR 641; [1937] HCA 58. 284 (1937) 59 CLR 641 at 675. "the fact that the defendant had spent the money sued for, believing it to be his own to spend, was treated as a sufficient alteration of his position to estop the plaintiff from departing from the assumption which he had induced[. T]he harm or detriment giving rise to the estoppel was that which would be done by requiring the defendant to repay money which he no longer had." That, relevantly, was the common law in the United Kingdom and Australia in 1942 when the House of Lords decided Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd285. Distancing himself from the approach of Lord Sumner, Lord Wright then observed that "any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is to prevent a man from retaining the money of or some benefit derived from another which it is against conscience that he should keep" and that "[s]uch remedies in English law … are now recognized to fall within a … category of the common law which has been called quasi-contract or Referring specifically to Moses v Macferlan, Lord Wright restitution". continued286: "This statement of Lord Mansfield has been the basis of the modern law of quasi-contract, notwithstanding the criticisms which have been launched against it. Like all large generalizations, it has needed and received qualifications in practice. … The standard of what is against conscience in this context has become more or less canalized or defined, but in substance the juristic concept remains as Lord Mansfield left it." In so explaining Moses v Macferlan as supplying the juristic concept by reference to which the common law provides a remedy in cases of "unjust enrichment", Lord Wright was influenced by developments in the United States287. The mainstream position in the United States was then founded squarely on Lord Mansfield's conception. It was also considerably less canalised. Delivering an opinion of the Supreme Court in 1935, Cardozo J said with reference to Moses v Macferlan that "[a] cause of action for restitution is a type of the broader cause of action for money had and received, a remedy which is equitable in origin and function"288 and explained that "[t]he claimant to prevail must show that the money was received in such circumstances that the possessor 285 [1943] AC 32 at 61. 286 [1943] AC 32 at 62-63. 287 Wright, "Book Reviews (Restatement of the Law of Restitution)", (1937) 51 Harvard Law Review 369. 288 Atlantic Coast Line Railroad Co v Florida 295 US 301 at 309 (1935). will give offense to equity and good conscience if permitted to retain it"289. Delivering an opinion of the Supreme Court in 1937, Stone J said, again with reference to Moses v Macferlan, that the action was used "to recover upon rights equitable in nature to avoid unjust enrichment by the defendant at the expense of the plaintiff" and that "[s]ince, in this type of action, the plaintiff must recover by virtue of a right measured by equitable standards, it follows that it is open to the defendant to show any state of facts which, according to those standards, would deny the right"290. their in Moses v Macferlan The Restatement of the Law of Restitution ("the First Restatement"), adopted by the American Law Institute in 1936, has been described as carrying Lord Mansfield's propositions logical conclusions291. On the premise that "[t]he principles by which a person is entitled to restitution are the same whether the proceeding is one at law or in equity"292, the First Restatement stated the basic rule to be that "[a] person who has been unjustly enriched at the expense of another is required to make restitution to the other"293. Another rule, explained to be "applicable to all proceedings for restitution"294, was that "[t]he right of a person to restitution from another because of a benefit received because of mistake is terminated or diminished if, after the receipt of the benefit, circumstances have so changed that it would be inequitable to require the other to make full restitution"295. With some changes of drafting style, rules in those same terms continue to appear in the Restatement Third, Restitution and Unjust Enrichment, adopted by the American Law Institute in 2010296. Unjust enrichment is there explained to be a "term of art" "concerned with identifying those forms of enrichment that the law treats as 'unjust' for purposes of imposing liability" in the application of the 289 295 US 301 at 309 (1935). 290 Stone v White 301 US 532 at 534-535 (1937). 291 Kull, "James Barr Ames and the Early Modern History of Unjust Enrichment", (2005) 25 Oxford Journal of Legal Studies 297 at 300. 292 First Restatement at 4. 293 First Restatement, §1. 294 First Restatement, §69, Comment a. 295 First Restatement, §69(1). 296 §1 and §65. "equitable conception of the law of restitution ... crystallized by Lord Mansfield's famous statement in Moses v Macferlan"297. Lord Wright's speech in Fibrosa was quoted and applied in the Full Court of the Supreme Court of New South Wales in 1954298. It was echoed in 1957 in the High Court's description of the "rule under which an action of money had [and] received lies in cases of payment by mistake" as one under which the action is available "when the payee cannot justly retain the money paid to him because it would not have come to his hands if it had not been for a false supposition of fact on the part of the payer causing the latter to believe that he was compellable to make the payment or at all events that he ought to make it"299. The influence of the speech can be seen in the statement of Windeyer J two years later that "[p]rovided it be recognized that the action for money had and received is not only the origin of but, as developed, still determines the scope of the English law of quasi-contract, it seems to me not inapt to describe it as a law of 'unjust enrichment.'"300 In 1964 Barwick CJ remarked: "as yet the subject of money paid under mistake is not fully exhausted by decision"301. And in 1986, Gibbs CJ said302: "Whether the action is based on an implied promise to pay, or on a principle designed to prevent unjust enrichment, the emphasis on justice and equity in both old and modern authority on this subject supports the view that the action will not lie unless the defendant in justice and equity ought to pay the money to the plaintiff". Against that background, the formulation of the action for restitution of money paid under a mistake which came to be adopted in David Securities in 1992 is to be understood in the context of two decisions of the High Court in 297 Restatement Third, Restitution and Unjust Enrichment at 4. 298 Watney v Mass (1954) 54 SR (NSW) 203 at 206, 222. See also Deposit & Investment Co Ltd v Kaye [1963] SR (NSW) 453 at 457. 299 South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) 98 CLR 65 at 75; [1957] HCA 69. 300 Mason v New South Wales (1959) 102 CLR 108 at 146; [1959] HCA 5. 301 Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177 at 187; [1964] HCA 49. 302 National Commercial Banking Corporation of Australia Ltd v Batty (1986) 160 CLR 251 at 268; [1986] HCA 21. the immediately preceding five years: Pavey & Matthews Pty Ltd v Paul303 and Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation304. Pavey established that a quantum meruit, which had been another of the forms of action in assumpsit, "rests, not on implied contract, but on a claim to restitution or one based on unjust enrichment", which arose in that case "from the respondent's acceptance of the benefits accruing to the respondent from the appellant's performance of [an] unenforceable oral contract"305. Deane J said of unjust enrichment in Pavey306: "It constitutes a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case". Westpac stated that the basis of the common law action of money had and received for recovery of an amount paid under a mistake of fact "should now be recognized as lying not in implied contract but in restitution or unjust enrichment" and noted that "contemporary legal principles of restitution or unjust enrichment can be equated with seminal equitable notions of good conscience"307. The High Court unanimously explained: that "receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment"; and that "[b]efore that prima facie liability will be displaced, there must be circumstances … which the law recognizes would make an order for restitution unjust"308. 303 (1987) 162 CLR 221; [1987] HCA 5. 304 (1988) 164 CLR 662; [1988] HCA 17. 305 (1987) 162 CLR 221 at 227. 306 (1987) 162 CLR 221 at 256-257. 307 (1988) 164 CLR 662 at 673. 308 (1988) 164 CLR 662 at 673. Citing Pavey and Westpac, Dawson J was able to observe in David Securities that "[t]here is now no longer any question that there is in this country a law of restitution based upon the concept of unjust enrichment which encompasses what was previously the common law of quasi-contract"309. The principal issue addressed in David Securities was whether the common law of Australia should recognise an action to recover money paid under a mistake of law. Rejecting Brisbane v Dacres and cases which had followed it, the majority held that mistakes of law were to be treated in the same way as mistakes of fact had been treated in Westpac310. The same approach to payments under mistakes of law had just before been taken in Canada311 and would soon afterwards be taken in the United Kingdom312. Before turning separately to consider the defence of change of position, the joint reasons for judgment in David Securities considered and rejected a distinct argument against the approach the majority in that case then took. The argument was that, if a cause of action for money paid under a mistake were to be recognised, "a plaintiff should be required to prove that retention of the moneys by the recipient would be unjust in all the circumstances before recovery should be granted"313. The precise argument was that money paid under a mistake of law should "only be recoverable in so far as the recipient has been unjustly enriched at the expense of the payer, such that it would be unconscionable for the recipient not to give restitution to the payer"314. The joint reasons explained that the argument embodied an approach "not greatly different" from the approach favoured by the majority, but that it had "important consequences in relation to the elements of the action which the plaintiff must plead and prove"315. The joint reasons also explained that the argument appeared to proceed "from the view that in Australian law unjust enrichment is a definitive 309 (1992) 175 CLR 353 at 401. 310 (1992) 175 CLR 353 at 376, 402. 311 Air Canada v British Columbia [1989] 1 SCR 1161. 312 Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349. 313 (1992) 175 CLR 353 at 378. 314 (1992) 175 CLR 353 at 378. 315 (1992) 175 CLR 353 at 378. legal principle according to its own terms and not just a concept", which was inconsistent with Pavey and Westpac316. The point that unjust enrichment is not a definitive principle in Australian law was in that way made in David Securities in answer to an argument that abolition of the longstanding distinction between payment under a mistake of fact and payment under a mistake of law should result in a rule that would make recovery from a recipient turn on a test of "unconscionability". The joint reasons had earlier referred to the recognition in Pavey and Westpac of "the 'unifying legal concept' of unjust enrichment"317. The joint reasons continued by explaining that the concept of unjust enrichment informed both: the circumstances in which, if proved by a plaintiff, enrichment of the defendant at the expense of the plaintiff will be prima facie unjust and in which the law will therefore recognise a prima facie obligation to make restitution of a payment; and the circumstances which, if proved by the defendant, will "show[] that his or her receipt (or retention) of the payment is not unjust" and in which the law will therefore recognise a defence318. Baltic Shipping Co v Dillon319 was decided several months after David Securities. Mason CJ then explained the basis of a claim to recover a prepaid purchase price on the ground that the consideration for which it was paid had wholly failed as being that "the continued retention by the defendant is regarded, in the language of Lord Mansfield, as 'against conscience' or, in the modern terminology, as an unjust enrichment of the defendant"320. To the same effect, Deane and Dawson JJ said that "[i]ts historical antecedent in terms of forms of action is the old indebitatus count for money had and received to the use of the plaintiff" but that "[i]ts modern substantive categorization is as an action in unjust enrichment" in that "the receipt of a payment of money for a consideration which wholly fails 'is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution … to the person who has sustained the countervailing detriment'"321. Their Honours went on to state that322: 316 (1992) 175 CLR 353 at 378-379. See also at 405-406. 317 (1992) 175 CLR 353 at 375. 318 (1992) 175 CLR 353 at 379. 319 (1993) 176 CLR 344. 320 (1993) 176 CLR 344 at 359. 321 (1993) 176 CLR 344 at 375. "[I]n a modern context where common law and equity are fused with equity prevailing, the artificial constraints imposed by the old forms of action can, unless they reflect coherent principle, be disregarded where they impede the principled enunciation and development of the law. In particular, the notions of good conscience, which both the common law and equity recognized as the underlying rationale of the law of unjust enrichment, now dictate that, in applying the relevant doctrines of law and equity, regard be had to matters of substance rather than technical form." Later that year, four members of the High Court cited that passage for the proposition that "[t]he ordinary requirement of the principles of unjust enrichment" is "that regard be paid to matters of substance rather than technical form"323. The coherent principle which had by then come to exist in the common law of restitution in Australia, following removal in Pavey and Westpac of the constraint imposed by the form of action for money had and received, lay in the two-stage analysis formulated in Westpac and confirmed in David Securities. Consistently with underlying notions of good conscience or equity tracing to Lord Mansfield, but updated to adopt modern terminology, that overall analysis was explained (as distinct from defined) by reference to the juristic concept of unjust enrichment. Equuscorp confirms the continuing utility of the two-stage David Securities analysis, and of the "taxonomical function" which unjust enrichment performs within that analysis324. Coherent legal principle should never be elevated to all-embracing legal theory. As Gummow J emphasised in Roxborough v Rothmans of Pall Mall Australia Ltd, the concept of unjust enrichment would lose its utility were it to be pressed so far as to conceal "why the law would want to attribute a responsibility to one party to provide satisfaction to the other"325. The force of that observation has been reinforced by subsequent reiteration of points made in David Securities itself: that the concept of unjust enrichment provides a link between what might otherwise appear to be distinct categories of liability; that it can assist, by the 322 (1993) 176 CLR 344 at 376. See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 554 [100]; [2001] HCA 68. 323 Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101 at 111; [1993] HCA 54. 324 (2012) 246 CLR 498 at 516 [30]. 325 (2001) 208 CLR 516 at 543 [70], quoting Finn, "Equitable Doctrine and Discretion in Remedies", in Cornish et al (eds), Restitution: Past, Present and Future, (1998) ordinary processes of legal reasoning, in the development of legal principle; and that it is not a sufficient premise for direct application in a particular case326. its less than traditional synonyms, "unconscionable" and "unconscientious", "unjust" has the potential to "mask[] rather than illuminate[] the underlying principles at stake"327. Having noted that "[t]he notion of unconscionability is better described than defined", Deane J pointed out in a related context that a question whether conduct is or is not unconscionable in the circumstances of a particular case "involves a 'real process of consideration and judgment' in which the ordinary processes of legal reasoning by induction and deduction from settled rules and decided cases are applicable but are likely to be inadequate to exclude an element of value judgment in a borderline case"328. The question is not to be resolved "by reference to some preconceived formula framed to serve as a universal yardstick"329. Appearing at each stage of the David Securities analysis, the notion of injustice conveyed by the word "unjust" is to be understood in that same sense: as descriptive, accumulative and incremental. That was the sense in which the notion was explained (as distinct from defined) by Campbell J in Wasada Pty Ltd v State Rail Authority of New South Wales (No 2)330: "'Unjust' is the 'generalisation of all the factors which the law recognises as calling for restitution'. Because we need to search for recognised factors, examination of which involves an analysis of case law, the reference to 'injustice' as an element of unjust enrichment, is not a 326 Friend v Brooker (2009) 239 CLR 129 at 141 [7]; [2009] HCA 21. See also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 156 [150]-[151]; [2007] HCA 22; Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 665 [85]; [2008] HCA 27; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 299 [86]; [2009] HCA 44. 327 Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 73 [43]; [2003] HCA 18, citing Snell's Equity, 30th ed (2000), Preface. See also Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 409-410 [34]; [1998] HCA 48. 328 The Commonwealth v Verwayen (1990) 170 CLR 394 at 440, 441; [1990] HCA 39, citing Harry v Kreutziger (1978) 95 DLR (3d) 231 at 240. 329 The Commonwealth v Verwayen (1990) 170 CLR 394 at 445. 330 [2003] NSWSC 987 at [16], citing Mason and Carter, Restitution Law in Australia, (1995) at 59-60 (emphasis in original). See also Goff & Jones, The Law of Unjust Enrichment, 8th ed (2011) at 7 [1-08]. reference to judicial discretion. Normal judicial processes are involved and it is only in cases where there is no recognised basis for saying that injustice has arisen that problems can arise." It is also important to recognise that there is no inherent reason why the notion of "enrichment", having informed the first stage of the two-stage David Securities analysis, must necessarily reappear at the second. There may well be circumstances in which it would not be unjust to make an order for restitution against a recipient who, having initially been enriched by receipt of a mistaken payment, was no longer enriched at the time of the making of the order by reason of intervening circumstances. It might well be, for example, that no defence to an action for restitution of money paid under a mistake is available to a recipient who is no longer enriched at the time of the order because of an intervening theft331. The nature of the defence The defence of change of position having been located at the second stage of an analysis founded ultimately on notions of conscience and explained (as distinct from defined) by the concept of unjust enrichment, the nature and content of the defence itself can now be addressed. By the time of David Securities, a defence of change of position to an action for the restitution of money paid under a mistake had been recognised by the Supreme Court of Canada in Rural Municipality of Storthoaks v Mobil Oil Canada Ltd332, and by the House of Lords in Lipkin Gorman v Karpnale Ltd333. In Storthoaks, Martland J had adopted the change of circumstances rule set out in the First Restatement, noting its consistency with Moses v Macferlan334. In Lipkin Gorman, Lord Goff of Chieveley had used language similar to that rule when he said that "the defence is available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full"335. 331 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 543- 544 [71], noting Martin v Pont [1993] 3 NZLR 25. 332 [1976] 2 SCR 147. 334 [1976] 2 SCR 147 at 162-164. 335 [1991] 2 AC 548 at 580. After David Securities, in Dextra Bank & Trust Co Ltd v Bank of Jamaica336, the Privy Council (in a speech delivered by Lord Bingham of Cornhill and Lord Goff) was again to use similar language in stating that "[t]he defence should be regarded as founded on a principle of justice designed to protect the defendant from a claim to restitution in respect of a benefit received by him in circumstances in which it would be inequitable to pursue that claim, or to pursue it in full"337. The Privy Council emphasised that the defence looks to practicalities not technicalities, is not concerned solely with the security of the receipt of payments, and looks to the position of the defendant not to the relative fault of the parties338. There is no reason to consider any of those descriptions to be inapplicable to the defence of change of position as recognised in David Securities. The explanation of the nature of the change of position defence in David Securities reveals, however, a more precise focus339. The joint reasons first referred to the defence in terms "that in reliance upon receipt of the payments the [recipient], in good faith, changed its position to its detriment"340. Turning later specifically to the content of the defence, and the necessity for its adoption, the joint reasons continued341: "If we accept the principle that payments made under a mistake of law should be prima facie recoverable, in the same way as payments made under a mistake of fact, a defence of change of position is necessary to ensure that enrichment of the recipient of the payment is prevented only in circumstances where it would be unjust. This does not mean that the concept of unjust enrichment needs to shift the primary focus of its attention from the moment of enrichment. From the point of view of the person making the payment, what happens after he or she has mistakenly paid over the money is irrelevant, for it is at that moment that the defendant is unjustly enriched. However, the defence of change of position is relevant to the enrichment of the defendant precisely because 336 [2002] 1 All ER (Comm) 193. 337 [2002] 1 All ER (Comm) 193 at 205 [38]. 338 [2002] 1 All ER (Comm) 193 at 204-205 [38], 207 [45]. 339 Cf Citigroup Pty Ltd v National Australia Bank Ltd (2012) 82 NSWLR 391 at 404- 340 (1992) 175 CLR 353 at 379. 341 (1992) 175 CLR 353 at 385 (emphasis in original). its central element is that the defendant has acted to his or her detriment on the faith of the receipt". joint reasons referenced, The text by Professor Birks in which he likened the change of position defence to "estoppel with the requirement of a representation struck out": "[i]n other words the enriched defendant succeeds if he can show that he acted to his detriment on the faith of the receipt"342. that respect, a then current Professor Birks was later to change his view. He came to argue that the change of position defence was justified by reference to a concept of "disenrichment" applicable where a recipient initially enriched by receipt suffers a causally related loss or detriment which reduces the extent of that initial enrichment343. The gist of his argument was that a recipient ought to be obliged only to give restitution of any net enrichment. The recipient ought for that purpose to be entitled to offset loss against gain, detriment against benefit. Treating change of position as a species of estoppel, he said, "would be adding a fifth wheel to the coach"344. Professor Birks' argument has powerful academic supporters345. It also has powerful academic detractors346. Whatever its merits were the slate to be clean, the argument cannot stand with the formulation of principle in David Securities. Nor is its adoption necessary to serve the underlying rationale of the law of unjust enrichment once the analogy to estoppel in pais to which the joint reasons in David Securities alluded is more fully worked through in an Australian context. The doctrine of estoppel in pais is concerned with estoppel by conduct347. The principle on which it is founded is that explained by Dixon J in Thompson v 342 Birks, An Introduction to the Law of Restitution, (1985) at 410. 343 Birks, Unjust Enrichment, 2nd ed (2005) at 208-210. 344 Birks, "Change of Position: The Nature of the Defence and its Relationship to Other Restitutionary Defences", in McInnes (ed), Restitution: Developments in Unjust Enrichment, (1996) 49 at 68. 345 Eg Burrows, The Law of Restitution, 3rd ed (2011) at 526-527. 346 Eg Edelman and Bant, Unjust Enrichment in Australia, (2006) at 320-321; Bant, The Change of Position Defence, (2009) at 126-130. 347 See Legione v Hateley (1983) 152 CLR 406 at 430-432; [1983] HCA 11; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 445; [1988] HCA 7. Palmer348 (where the doctrine was relied on as a defence to a claim in equity) and in Grundt349 (where the doctrine was relied on as a defence to an action at law). The principle is that the law does not permit an unjust departure by a party from an assumption which that party has had some part in occasioning another party to adopt or accept for the purpose of their legal relations. What makes such a departure "unjust" – what might in the present context be said to be the relevant "unjust factor" – is that, if departure were permitted, the other party would be left in a position of material detriment through having made the assumption the other party caused to be adopted. That is to say350: "[T]he basal purpose of the doctrine ... is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it." The foundation of an estoppel lying in a change of position to the prejudice of the party asserting the estoppel, the burden of proof lies with that party351. The "real detriment or harm" which that party must prove to ground an estoppel can be any "material disadvantage" which would arise from permitting departure from the assumption on the faith of which that party acted or refrained from acting352. Material disadvantage must be substantial353, but need not be quantifiable in the same way as an award of damages354. Material disadvantage can lie in the loss of a legal remedy355, or of a "fair chance" of obtaining a 348 (1933) 49 CLR 507 at 547-549; [1933] HCA 61. 349 (1937) 59 CLR 641 at 674-677. 350 (1937) 59 CLR 641 at 674. 351 Thompson v Palmer (1933) 49 CLR 507 at 549. 352 Thompson v Palmer (1933) 49 CLR 507 at 547. See also Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723 at 734-735; [1935] HCA 33. 353 Donis v Donis (2007) 19 VR 577 at 583 [20]. 354 The Commonwealth v Verwayen (1990) 170 CLR 394 at 448, 461-462. 355 Thompson v Palmer (1933) 49 CLR 507 at 549, referring to Greenwood v Martins Bank Ltd [1933] AC 51. commercial or other benefit which "might have [been] obtained by ordinary diligence"356. The joint reasons in David Securities noted357 that the defence of change of position had been recognised in Lipkin Gorman, against the background of two perceived inadequacies or rigidities in the doctrine of estoppel as it had then developed in the United Kingdom358. One was the perceived need for a representation by the payer to the effect that the recipient was entitled to retain the money paid359. The other was the perceived operation of the doctrine as no more than a rule of evidence so as always to produce an all-or-nothing consequence: the payer being held to the assumption to which the recipient was induced, so as to recover nothing in a case where the doctrine was found to be applicable, irrespective of the degree of detriment that would flow to the recipient were the induced assumption to be abandoned360. The doctrine of estoppel in pais has not developed so rigidly in Australia, at least since The Commonwealth v Verwayen361. First, even outside the area of conventional estoppel, in which it has long been accepted that belief in the correctness of an assumed state of affairs is not always necessary362, the doctrine is not necessarily confined to assumptions induced by representations363. The doctrine is capable of principled extension to another category of induced assumption from which departure would be unconscionable364. The doctrine, as has long been observed, is particularly apt to provide a defence to an action to 356 Thompson v Palmer (1933) 49 CLR 507 at 527-528, citing Knights v Wiffen (1870) LR 5 QB 660 at 665 and Dixon v Kennaway & Co [1900] 1 Ch 833. 357 (1992) 175 CLR 353 at 384-385. 358 [1991] 2 AC 548 at 578-579. 359 R E Jones Ltd v Waring and Gillow Ltd [1926] AC 670 at 692. 360 Avon County Council v Howlett [1983] 1 WLR 605 at 622-624; [1983] 1 All ER 1073 at 1087-1088, applying Ogilvie v West Australian Mortgage and Agency Corporation Ltd [1896] AC 257 at 270. See also National Westminster Bank plc v Somer International (UK) Ltd [2002] QB 1286 at 1302-1303 [36]-[37]. 361 (1990) 170 CLR 394 at 431-446. 362 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 676-677. 363 Thompson v Palmer (1933) 49 CLR 507 at 547. 364 The Commonwealth v Verwayen (1990) 170 CLR 394 at 444-445. enforce a potentially onerous obligation which can arise without fault on the part of the obligor365. Secondly, whatever other differences might exist between its operation in various specific categories of circumstances, the doctrine now operates at law as in equity as a substantive rule of law366. As a substantive rule of law, there is no reason to consider that the doctrine should be confined to producing an all-or- nothing consequence where that consequence would undermine the rationale for its operation. To the contrary, "the substantive doctrine of estoppel permits a court to do what is required to avoid detriment and does not, in every case, require the making good of the assumption"367. That is to say, "the prima facie entitlement to relief based on the assumed state of affairs" is "qualified if it appears that that relief would exceed what could be justified by the requirements of conscientious conduct and would be unjust to the estopped party"368. To be more precise369: "Prima facie, the operation of an estoppel by conduct is to preclude departure from the assumed state of affairs. It is only where relief framed on the basis of that assumed state of affairs would be inequitably harsh, that some lesser form of relief should be awarded. ... In particular, the prima facie entitlement to relief based upon the assumed state of affairs will be qualified in a case where such relief would exceed what could be justified by the requirements of good conscience and would be unjust to the estopped party. In such a case, relief framed on the basis of the assumed state of affairs represents the outer limits within which the relief appropriate to do justice between the parties should be framed." The precise relief which flows from an estoppel operating as a defence, whether to an action at law or to a claim in equity, is in this way tailored so as not to be 365 Thompson v Palmer (1933) 49 CLR 507 at 544-545. 366 The Commonwealth v Verwayen (1990) 170 CLR 394 at 413, 444, 487. Contra at 454, 500. See earlier Canadian and Dominion Sugar Co Ltd v Canadian National (West Indies) Steamships Ltd [1947] AC 46 at 56. 367 The Commonwealth v Verwayen (1990) 170 CLR 394 at 487. 368 The Commonwealth v Verwayen (1990) 170 CLR 394 at 442. 369 The Commonwealth v Verwayen (1990) 170 CLR 394 at 443-446, applied in Giumelli v Giumelli (1999) 196 CLR 101 at 123-125 [40]-[50]; [1999] HCA 10; Delaforce v Simpson-Cook (2010) 78 NSWLR 483 at 485-486 [3]-[5], 495 [77]. disproportionate to a measurable detriment. There is no reason in principle why that tailoring of relief cannot involve the reduction pro tanto of an order for restitution370. The joint reasons in David Securities invoked the language of estoppel when it emphasised the "central element" of the defence of change of position to be that the defendant "has acted to his or her detriment on the faith of the receipt"371. There is much to be said for treating the defence of change of position as there articulated as a particular application of that doctrine. The doctrine has always been recognised to operate as a defence to a common law action for money had and received although, for so long as the action lay for money paid under a mistake of fact but not for money paid under a mistake of law, it was understandable that it would be thought appropriate that it be constrained only to operate where there was a representation on the part of the payer. The doctrine is itself founded on notions of good conscience indistinguishable in concept from those underlying the law of unjust enrichment. In the flexible form in which it has developed in Australia, the doctrine provides a principled basis for determining circumstances in which it would be inequitable or unjust to require the innocent recipient of a mistaken payment to make restitution or full restitution. The doctrine employs established concepts capable of predictable application. Treating the defence of change of position as a particular application of it would avoid both the uncertainty of defining a separate content for the change of position defence and the complication of attempting then to determine whether, and if so how, circumstances giving rise to the defence might separately give rise to an estoppel372. Whether or not the defence of change of position is ultimately so to be assimilated to estoppel, however, is a larger question than that which need now be determined. It is sufficient for present purposes to recognise that the coherence of the law is enhanced if commonality of concept results, so far as possible, in commonality of principle. That commonality of principle, in my view, ought to produce the following result. The defence of change of position is established where a defendant proves the existence of two conditions. The first condition is that the defendant has acted (that is, done something the defendant would not otherwise have done) or 370 Cf Handley, Estoppel by Conduct and Election, (2006) at 96-97 [5-033]; R E Jones Ltd v Waring and Gillow Ltd [1926] AC 670 at 685. 371 (1992) 175 CLR 353 at 385 (emphasis in original). 372 Cf Scottish Equitable plc v Derby [2001] 3 All ER 818 at 830-831 [45]-[48]; RBC Dominion Securities Inc v Dawson (1994) 111 DLR (4th) 230 at 237. See Bant, The Change of Position Defence, (2009) at 225. refrained from acting (that is, not done something the defendant would otherwise have done) in good faith on the assumption that the defendant was entitled to deal with the payment which the defendant received. The defendant need not for the purpose of meeting this condition have acted on knowledge derived from the payer373. Whether the defendant needs also to have acted reasonably is a question which does not now arise for determination. The second condition is that, by reason of having so acted or refrained from acting, the defendant would be placed in a worse position if ordered to make restitution of the payment than if the defendant had not received the payment at all. The detriment constituted by that difference in position need not, in every case, be financial or pecuniary. If financial or pecuniary, it need not, in every case, be established with precision. It can be an opportunity forgone374. It must, in every case, be shown by the defendant to be substantial. Where the defence is so established, the prima facie entitlement of the defendant is to maintain the assumption on which the defendant acted and, on that basis, to retain the whole of the payment. That entitlement is qualified to the extent that retention of the whole of the payment can be shown to be disproportionate to the degree of the detriment. Where the detriment is financial or pecuniary, can be quantified, and is less than the amount received, the entitlement of the defendant to retain the payment is reduced pro tanto. Application of the defence in this case Turning to the application of the defence in this case, I am grateful to adopt the statement of facts and abbreviations in the joint reasons for judgment. There being no dispute that Hills and Bosch each acted in good faith (and reasonably) on the faith of receipt of the mistaken payments from AFSL, the application of the defence turns on the nature and extent of the detriment Hills and Bosch each would have suffered were they to have been ordered to make restitution of the mistaken payments. There are some differences between the position of Hills and the position of Bosch, but I do not consider them to be material. It is therefore convenient to proceed by examining the position of Hills, addressing the arguments of all parties in that process. Hills sought to identify four sources of detriment. They were that Hills: discharged $308,000 of the debt owed to it by TCP; re-opened TCP's account and 373 Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661 at 672 [15]; Citigroup Pty Ltd v National Australia Bank Ltd (2012) 82 NSWLR 391 374 Eg Palmer v Blue Circle Southern Cement Ltd (1999) 48 NSWLR 318. continued trading with it; ceased taking the steps it had proposed of engaging lawyers and seeking security and repayment; and was placed in a position of being unable to demonstrate what would or may have happened if it had not so acted on the faith of the payment. They are best examined separately. Hills did not argue that any part of the debt owed to it by TCP was discharged merely by its receipt of the mistaken payment of $308,000 from AFSL. Nor did Hills argue that any part of that debt was discharged merely by its choice to credit that mistaken payment to the trading account TCP maintained with it. Hills accepted that payment of a debt by a third person (not jointly liable for the debt) does not discharge the debt unless the payment is made by the third person as agent for the debtor and with the debtor's prior authority or subsequent ratification375. Hills also accepted that an uncommunicated book entry alone can be of no consequence376. To the extent Bosch put arguments contrary to those principles, I would reject them. Hills' argument that it discharged $308,000 of the debt owed to it by TCP was, rather, based on an inference, to be drawn from correspondence, of an agreement between Hills and TCP that the amount of $308,000 would be applied in discharge of TCP's indebtedness. The argument is in truth that there was an agreement between Hills and TCP to release TCP from its indebtedness to Hills rather than that there was in some way a discharge by performance of TCP's obligation to pay. The problem with the argument is that the inferred agreement on which Hills relied must fail for want of consideration moving from TCP. To the extent Hills purported to release TCP from its indebtedness, it was a release for which TCP provided no consideration. This was not a case of accord and satisfaction. The fraud of Mr Skarzynski ruled out any question of the purported release giving rise to an estoppel. The debt TCP owed to Hills remained. The debt was enforceable at law by Hills against TCP notwithstanding its purported discharge and was provable by Hills in the liquidation of TCP. Hills and Bosch sought to gain some support for the argument that there had been a discharge of TCP's indebtedness by drawing on an analogy between what in fact occurred and a hypothetical scenario which involved Hills paying the $308,000 to TCP for no consideration and then immediately receiving the $308,000 back from TCP in discharge of the debt. The problem with that argument from analogy, like many arguments from analogy, is that it does not come to grips with what in fact occurred. The course of action analogised is not 375 Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177 at 191-192; Chitty on Contracts, 31st ed (2012), vol 1 at 1578-1579 [21-042]. 376 Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 674. a satisfactory way of explaining what in fact occurred. It makes no commercial sense, absent perhaps the fraud of Mr Skarzynski. Hills' re-opening of TCP's account and continued trading with TCP was an undoubted source of detriment to Hills. But that detriment can be precisely quantified: as the $21,739.03 TCP owed to Hills at the time the fraud of Mr Skarzynski was discovered in April 2010. Standing alone, it would not give rise to an entitlement on the part of Hills to retain more than that amount. By ceasing to take the steps it had proposed of engaging lawyers and seeking security and repayment of the $308,000 debt owed to it by TCP, however, Hills gave up a commercial opportunity the substantial value of which Hills has now lost by reason of the intervening liquidation of TCP. Having given up that opportunity, Hills would be placed in a worse position if ordered to make restitution of the $308,000 paid to it by AFSL than if Hills had not received that payment at all. That is enough to entitle Hills to retain the whole of the payment unless it were to appear that the value of the commercial opportunity forgone was able to be quantified as some other, lesser amount. It is not necessary for Hills to go so far as to show that it has been placed in a position of being unable to demonstrate what would or may have happened if it had not so acted on the faith of the payment. Orders The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA Matter No S152/2019 BMW AUSTRALIA LTD AND APPELLANT OWEN BREWSTER & ANOR RESPONDENTS Matter No S154/2019 WESTPAC BANKING CORPORATION & ANOR APPELLANTS AND GREGORY JOHN LENTHALL & ORS RESPONDENTS BMW Australia Ltd v Brewster Westpac Banking Corporation v Lenthall [2019] HCA 45 Date of Hearing: 13 & 14 August 2019 Date of Judgment: 4 December 2019 S152/2019 & S154/2019 ORDER Matter No S152/2019 Appeal allowed. Set aside the orders made by the Court of Appeal of the Supreme Court of New South Wales on 1 March 2019 and 22 March 2019 and, in their place, order that: the question stated for separate determination be answered: "No"; and the first respondent pay the applicant's costs of the application for, and the hearing of, the separate question. The first respondent pay the appellant's costs of the appeal to this Court. Matter No S154/2019 Appeal allowed. Set aside orders 3 and 4 made by the Full Court of the Federal Court of Australia on 1 March 2019 and, in their place, order that: the appeal be allowed; orders 1 and 2 made by Lee J on 28 September 2018 be set aside and, in their place, the application for a common fund order be dismissed with costs; and the respondents pay the appellants' costs of the appeal. The respondents pay the appellants' costs of the appeal to this Court. On appeal from the Supreme Court of New South Wales (S152/2019) and the Federal Court of Australia (S154/2019) Representation J K Kirk SC with T O Prince for the appellant in S152/2019 (instructed by Ashurst Australia) J C Sheahan QC with E Holmes and R Mansted for the first respondent in S152/2019 (instructed by Quinn Emanuel Urquhart & Sullivan) Submitting appearance for the second respondent in S152/2019 A Leopold SC and S J Free SC with C G Winnett for the appellants in S154/2019 (instructed by Allens) J T Gleeson SC with W A D Edwards and Z C Heger for the first to fourth respondents in S154/2019 (instructed by Shine Lawyers) N C Hutley SC with B K Lim and S K Tame for the fifth respondent in S154/2019 (instructed by Roberts & Partners Lawyers) S B Lloyd SC with D P Hume and K N Pham for the Attorney-General of the (instructed by Australian in both matters Commonwealth, Government Solicitor) intervening K L Walker QC, Solicitor-General for the State of Victoria, with M A Hosking for the Attorney-General for the State of Victoria, intervening in both matters (instructed by Victorian Government Solicitor) J A Thomson SC, Solicitor-General for the State of Western Australia, with E J Cavanagh and B J Tomasi for the Attorney-General for the State of Western Australia, intervening in both matters (instructed by State Solicitor's Office G A Thompson QC, Solicitor-General of the State of Queensland, with F J Nagorcka for the Attorney-General of the State of Queensland, intervening in both matters (instructed by Crown Law (Qld)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS BMW Australia Ltd v Brewster Westpac Banking Corporation v Lenthall Practice and procedure – Representative action – Orders – Where s 33ZF of Federal Court of Australia Act 1976 (Cth) and s 183 of Civil Procedure Act 2005 (NSW) provide that in representative proceeding court may make any order court thinks appropriate or necessary to ensure justice is done in proceeding – Where representative proceedings commenced in Federal Court of Australia and Supreme Court of New South Wales – Where proceedings funded by litigation funders – Where litigation funders entered into litigation funding agreements with small number of group members – Where representative parties in each proceeding applied for common fund order – Whether s 33ZF of Federal Court of Australia Act and s 183 of Civil Procedure Act empower Federal Court of Australia and Supreme Court of New South Wales to make common fund order. Words and phrases – "access to justice", "appropriate or necessary to ensure that justice is done in the proceeding", "award of damages", "book building", "common fund", "common fund order", "distribution of moneys recovered", "equitable sharing of costs", "fair and reasonable to all group members", "free riding", "funding commission", "funding equalisation order", "interests of justice", "litigation funding", "representative proceeding", "risk", "unfunded group members". Civil Procedure Act 2005 (NSW), Pt 10, ss 157, 162, 165, 166, 172, 173, 175, Federal Court of Australia Act 1976 (Cth), Pt IVA, ss 33C, 33J, 33M, 33N, 33U, 33V, 33X, 33Z, 33ZA, 33ZB, 33ZF, 33ZJ. Judiciary Act 1903 (Cth), s 79. KIEFEL CJ, BELL AND KEANE JJ. The principal issue in these appeals is whether, in representative proceedings, s 33ZF of the Federal Court of Australia Act 1976 (Cth) ("the FCA") and s 183 of the Civil Procedure Act 2005 (NSW) ("the CPA") empower the Federal Court of Australia and the Supreme Court of New South Wales respectively to make what is known as a "common fund order" ("CFO"). Such an order is characteristically made at an early stage in representative proceedings and provides for the quantum of a litigation funder's remuneration to be fixed as a proportion of any moneys ultimately recovered in the proceedings, for all group members to bear a proportionate share of that liability, and for that liability to be discharged as a first priority from any moneys so recovered. This issue was resolved in the affirmative against the appellants in these appeals by the courts below, in Matter No S154 of 2019 ("the Westpac appeal") by the Full Court of the Federal Court of Australia, and in Matter No S152 of 2019 by the Court of Appeal of the Supreme Court of New South Wales ("the BMW appeal"). Because the principal issue was resolved in favour of the respondents, two further issues arose for determination by the courts below: the first being whether the sections infringe Ch III of the Constitution and the principle in Kable v Director of Public Prosecutions (NSW)1 respectively, and the second being whether the sections are contrary to s 51(xxxi) of the Constitution. Properly construed, neither s 33ZF of the FCA nor s 183 of the CPA empowers a court to make a CFO. Section 33ZF of the FCA and s 183 of the CPA each provide relevantly that in a representative proceeding, the court may make any order the court thinks appropriate or necessary to ensure that justice is done in the proceeding. While the power conferred by these sections is wide, it does not extend to the making of a CFO. These sections empower the making of orders as to how an action should proceed in order to do justice. They are not concerned with the radically different question as to whether an action can proceed at all. It is not appropriate or necessary to ensure that justice is done in a representative proceeding for a court to promote the prosecution of the proceeding in order to enable it to be heard and determined by that court. The making of an order at the outset of a representative proceeding, in order to assure a potential funder of the litigation of a sufficient level of return upon its investment to secure its support for the proceeding, is beyond the purpose of the legislation. (1996) 189 CLR 51. Bell It follows that each appeal must be allowed. As a result, the further issues determined by the courts below and agitated again by the parties in this Court do not arise for determination. There is considerable commonality of issues and arguments in the appeals; the relevant provisions of the FCA and the CPA are in all but identical terms. It is therefore convenient to deal comprehensively with the issues and arguments in the two appeals together, after first summarising separately the circumstances giving rise to each appeal and the reasons for decision of each of the courts below. The Westpac appeal Background In October 2017, the first to fourth respondents commenced, on behalf of themselves and numerous group members, representative proceedings under Pt IVA of the FCA against Westpac Banking Corporation and Westpac Life Insurance Services Ltd (together, "Westpac")2. In the proceedings, the first to fourth respondents allege that they relied on advice from Westpac's financial advisers to purchase insurance policies from Westpac Life. They contend that the financial advisers breached their statutory and fiduciary obligations to them (and group members) by failing to advise them of equivalent or more advantageous insurance policies offered by third-party insurers3. It appears that there may be in excess of 80,000 group members, each with a claim for damages in the range of The first to fourth respondents signed a funding agreement with the fifth respondent, JustKapital Litigation Pty Ltd ("JKL"), a litigation funder5. Only a small number of group members had entered into a funding agreement with the fifth respondent before the first to fourth respondents applied to the Federal Court of Australia for a CFO6. Notice of the application was given to group 2 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 25 [3]. 3 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 25 [3]. Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 704 [14]-[15]. 5 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 25 [4]. 6 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 25 [5]. Bell members7. No reasoned objection to the making of a CFO was received from group members8. The appellants objected to the making of a CFO. The evidence was that only one litigation funder other than JKL had been approached by the first to fourth respondents, but discussions with that funder did not progress to negotiating terms on which funding might be provided for the litigation9. No other funder had shown interest in funding the proceedings10. Approximately $1.2 million had already been spent by JKL on legal costs, and the likely total legal costs disclosed in the retainer with JKL were between $6.5 and $9 million11. Section 33ZF(1) of the FCA (s 183 of the CPA being in all but identical terms) provides: "In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding." Subject to an undertaking by JKL to be bound to the funding terms, the primary judge (Lee J) made a CFO pursuant to ss 23 and 33ZF of the FCA12. The CFO stipulated, among other things, and subject to further order, that any judgment or settlement sum ("resolution sum") will be pooled, and that group members will be required to pay from that pool13 the lesser of: 7 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 25 [4]. 8 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 25 [5]. Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 704 [14]. 10 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 25 [6]. 11 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 25 [6]. It was not suggested, either by the Full Court of the Federal Court or in argument in this Court, that s 23 of the FCA amplified the power conferred by s 33ZF of the FCA in any material way. Accordingly, these reasons will focus upon the scope of s 33ZF in its statutory context. 13 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 30-31 [20]-[22]. Bell three times the total expenditure on legal costs, disbursements, adverse costs orders and fees of the costs referee paid by JKL; or 25 per cent of the net resolution sum; and an additional amount for each appeal. The payments to JKL were prioritised as the first payments to be made from any resolution sum14. The CFO departed from the order sought by the first to fourth respondents only insofar as his Honour ordered that JKL's commission be calculated by reference to the net rather than gross resolution sum15. This was said to incentivise JKL to contain legal costs and to reflect the extent of the risk assumed Although the CFO set a commission rate for JKL, it was subject to the distribution "not exceeding any such amounts as the Court determines to be fair and reasonable in all the circumstances"17. The previous undertaking given by JKL removed the right it enjoyed under its funding agreement to withdraw from the funding arrangement upon giving 14 days' notice to group members18. JKL thus assumed, subject to further order, an obligation to fund the proceedings to their conclusion. The appellants sought leave to appeal from the orders of Lee J to the Full Court of the Federal Court. The Full Court The Full Court (Allsop CJ, Middleton and Robertson JJ) granted leave to appeal but dismissed the appeal. 14 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 30 [21], 31 [23]. 15 Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 712 [53]. 16 Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 712 [51]. 17 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 31 [23]. 18 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 31 [26]-[27]. Bell In the Full Court, Westpac argued that s 33ZF could not be construed as empowering the court to issue a CFO. The Full Court rejected this argument19, holding that the primary judge was correct to conclude that the question of the power of the court to make a CFO had been resolved in the affirmative by the Full Court of the Federal Court in Money Max Int Pty Ltd v QBE Insurance Group Ltd20. The Full Court reasoned that s 33ZF contains the "widest possible power", and, paraphrasing the language of s 33ZF, held that this power extends to "all procedures appropriate or necessary to deal with the matter on a just basis"21. It may be said immediately that this paraphrase is inaccurate in a significant respect. It elides the words of limitation "appropriate or necessary to ensure that justice is done in the proceeding". The Full Court cited the principle of construction that wide statutory powers given to courts should not be read down absent clear indication in the statute's terms or context22. The Full Court rejected Westpac's argument that ensuring justice in the proceeding did not extend to encouraging a litigation funder to support the proceedings23. The Full Court held that Westpac's submission as to the scope of s 33ZF was24: "too narrow in restricting the order to the 'metes and bounds' of the proceedings, which we took to mean the pleaded issues for resolution. It is not an order restricted to a particular issue requiring resolution. It is 'justice' that is to be ensured in the proceeding. That is procedural or substantive justice; and the Court is to be satisfied that there is something in the proceeding that should be addressed in order to ensure that justice in the proceeding is done. There is no reason to limit that to the pleaded 19 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 28 [11]. (2016) 245 FCR 191. 21 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 44 [86]. 22 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 44 [86], citing Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 23 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 45 [90]. 24 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 45 [90]-[91]. Bell issues. There is every reason to view as wide enough [sic] to deal, in a fair way, with circumstances that will remove a risk to the prosecution and vindication of the group's rights. ... An early order ... can place the group action on a known and stable foundation, and reduce or eliminate the risk of the action not proceeding." Once again, the Full Court, by eliding the words of limitation, gave an expanded scope to the section so as to bring within it a concern as to whether a sufficient incentive was presented to a third-party funder to ensure that the proceedings would be pursued. In addition, Westpac's submission was understood by the Full Court to propose a limit upon the scope of the section by narrowing the phrase "justice is done in the proceeding" to the resolution of the pleaded issues. That was, with respect, to set up a straw man and then proceed to demolish it. As will be explained, the section can apply, on the natural and ordinary meaning of its words, to support any interlocutory procedural order necessary to ensure that the pleaded issues are resolved justly between the parties. The Full Court addressed an argument advanced by Westpac to the effect that s 33ZF should be construed in conformity with the principle of legality so as not to allow interference with the proprietary rights of group members in the causes of action vested in them. It was held that a CFO conforms with, rather than undermines, the principle of legality. The Full Court concluded that a CFO "not so much takes away from, as supports and fructifies, rights of persons that would otherwise be uneconomic to vindicate"25. Westpac's further argument that the court's general power under s 33ZF is constrained by other provisions of Pt IVA of the FCA was also rejected. It was held that, while other provisions of the Act also empower the court to deal with distribution of moneys (or proceeds), in particular ss 33V and 33Z, it does not follow that a CFO can only be made at the conclusion of a case when s 33V or s 33Z is engaged. The Full Court held that there is nothing in those provisions evincing a statutory intention to deprive courts of the power to deal with distribution of proceeds at an earlier point of time, provisionally, in order that the ends of justice be met26. 25 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 46 [94]. 26 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 46-47 [96]. Bell The BMW appeal Background Mr Brewster, the first respondent, commenced representative proceedings in the Supreme Court of New South Wales against BMW Australia Ltd ("BMW") relating to the national recall of BMW vehicles fitted with defective airbags manufactured by Takata Corporation (or a related company)27. There are five other representative proceedings pending in the Supreme Court of New South Wales relating to vehicles recalled due to defects in their Takata-supplied airbags (Honda, Mazda, Nissan, Subaru and Toyota)28. As Mr Brewster alleges that BMW contravened the Trade Practices Act 1974 (Cth) and the Australian Consumer Law29, the BMW appeal proceeds on the basis that the Supreme Court of New South Wales was exercising its federal jurisdiction. In the BMW matter, the class may comprise over 200,000 members, each with what appears to be a distinctly modest claim for damages30. The proceedings are funded by the second respondent, Regency Funding Pty Ltd ("Regency Funding"), a litigation funder. Only a small number of group members have entered into a litigation funding agreement with Regency Funding31. In August 2018, Mr Brewster applied for a CFO. Regency Funding, the solicitor firm for Mr Brewster, and Mr Brewster each offered to undertake to each other and to the Supreme Court to comply with their obligations under funding terms annexed to the proposed order32. Regency Funding agreed to bind itself to maintain the litigation33. Upon that undertaking the Supreme Court was 27 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 172 [1]-[2]. 28 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 172 [1]. 29 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 172 [2]. 30 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 172 [2], 173 [4]. 31 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 172 [3]. 32 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 176 [21]. 33 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 176 [22]. Bell asked to order that, subject to further order of that Court pursuant to s 183 of the CPA or its inherent jurisdiction, Mr Brewster and the group members be bound to pay from any resolution sum34: the legal costs, disbursements and administration expenses expended by Regency Funding; remuneration to Regency Funding in the amount of 25 per cent of so much of the resolution sum as remains after payment of the abovementioned expenses (or such other sum as the Supreme Court considers reasonable at the time of the approval of a settlement or judgment); and any GST upon these amounts; prior to the distribution of the resolution sum to the group members. Mr Scattini, the solicitor for Mr Brewster, filed an affidavit in support of the application in which he gave evidence of his experience that litigation funders: "often considered it was uncommercial to fund class action proceedings on an open class basis where large numbers of people had individually suffered relatively modest loss and damage ... due to the prohibitive transaction costs of funding such proceedings, the low expected return to each individual group member, and therefore the corresponding risk that the funder will obtain a very limited return. This meant it was effectively impossible to obtain funding for large consumer class action proceedings, such as the Takata Proceedings." Evidently, the CFO was sought in those proceedings to assuage such a concern on the part of the litigation funder. On the application of BMW, Sackar J removed into the Court of Appeal the separate question "[d]oes the Court have the power to make Order 1 sought in the Notice of Motion filed by the Plaintiff on 14 August 2018 (Common Fund Motion)?"35. The Court of Appeal heard the separate question in the BMW matter 34 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 173 [7]. 35 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 173 [9]-[10]. Bell while sitting concurrently with the Full Court of the Federal Court hearing the The proceedings below The Court of Appeal of New South Wales (Meagher, Ward and Leeming JJA) answered the question posed for separate determination in the affirmative, holding that the court has the power to make the CFO sought37. The Court of Appeal concluded that "there is no occasion to doubt the conclusion or reasoning in Money Max in any respect relevant to the existence of power"38. The Court noted that s 183 is worded "in the utmost generality" and ought not be narrowly construed39. The Court of Appeal rejected BMW's invocation of the principle of legality, observing that s 183 is located in a legislative regime which envisages an adjustment to the rights of persons with a cause of action because they may be made group members without their consent. Once it is accepted that the property rights of group members have already been interfered with in Pt 10 of the CPA, it would be incongruous to apply the principle of legality to narrow the protections put in place by Parliament to regulate the regime40. The Court of Appeal also rejected BMW's attempt to invoke the principle in Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia41. BMW had argued that the CPA confers only "one power"42 36 The procedure adopted for the concurrent hearing of the matters is described in Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 24 [2]; BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 174-175 [13]-[17]. 37 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 196 [117]. 38 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 189 [82]. 39 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 184 [56]-[57]. 40 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 184-185 [58]-[62]. (1932) 47 CLR 1 at 7. 42 Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at 589 [59]. Bell to deal with the distribution of any resolution sum (contained in ss 173, 177 and 178) so that s 183 must be confined by the restrictions in those provisions. The Court of Appeal observed that ss 173, 177 and 178 relate to proceedings being determined consensually or at the time of judgment. In contrast, there is no temporal limitation in s 183 and nothing to suggest that it does not extend to interlocutory orders made prior to settlement or judgment43. Further, even if ss 177 and 178 confer only a "single power" to distribute amounts paid by way of damages, a CFO made on an interlocutory basis does not qualify or preclude the exercise of that power at the conclusion of the proceedings44. The Court of Appeal held that the submission advanced by the first respondent to the effect that the power to make a CFO represented the culmination of the "original intent" underlying Pts IVA and 10 "goes too far"45. The Court held that, in any event, there was a general presumption that the legislation is "always speaking" in that the application of the provision could vary over time46. The submissions of the parties In this Court, the appellants submitted that a CFO is an order of an extraordinary nature in that an application for a CFO requires the court to act, in effect, as a remuneration tribunal for litigation funders. It was submitted that an order made to maintain the viability of litigation is not one that ensures that justice is done "in the proceeding" because it does not advance the determination of the parties' legal rights and obligations. It was said that the principle of construction identified in Owners of "Shin Kobe Maru" v Empire Shipping Co Inc47 cannot be deployed to construe ss 33ZF and 183 more liberally than their 43 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 186 [66]. 44 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 186 [67]. 45 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 186 [68]. 46 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 188 [75]-[77]. (1994) 181 CLR 404. 48 Citing PMT Partners Pty Ltd (In liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 313. Bell The appellants argued that it is significant that on an application for a CFO, the court is required to fix a rate of return for the litigation funder without the benefit of practical criteria for doing so – the absence of such criteria being a contextual indication that neither s 33ZF nor s 183 was intended to authorise the involvement of the court at the outset of proceedings to promote the prosecution of the proceedings. The appellants sought to invoke the principle in Anthony Hordern and submitted that Pt IVA of the FCA49 and Pt 10 of the CPA50 contain provisions that regulate in detail the court's powers in respect of the distribution of proceeds in representative proceedings, and that the limitations in these provisions cannot be circumvented by invoking the general power in s 33ZF or s 183. BMW submitted that a CFO made at an early stage in the proceedings has an inherently infirm factual foundation because it cannot be known whether the pleadings will change, whether the matter will settle or go to trial, and, if the latter, how long the trial will take. Accordingly, it is not possible for a court to determine at an early stage what is "appropriate or necessary to ensure that justice is done in the proceeding". The respondents emphasised that ss 33ZF and 183 are framed in the broadest terms. The principle in Shin Kobe Maru means that ss 33ZF and 183 should not be read down in the absence of clear indication in the terms or context of these provisions. It was submitted that the Full Court in the Westpac matter was correct to conclude that Parliament intended that courts would over time develop new procedures in response to the circumstances in which Pt IVA of the FCA or Pt 10 of the CPA was to work; and that task would be unduly inhibited by a narrow construction of s 33ZF or s 183. The respondents submitted that the phrase "to ensure that justice is done in the proceeding" in each section is not limited to deciding the issues in dispute between the parties. A CFO was said to do "justice" in two ways. First, it helps remove a risk to the prosecution and vindication of group members' rights by placing the proceeding on a more stable foundation. Secondly, it promotes justice by ensuring that the benefits and burdens of the litigation are shared equally between group members. It was said in support of this contention that the law of restitution already recognises the right of some persons who intervene to assist 49 See FCA, ss 33V, 33Z, 33ZA and 33ZJ. 50 See CPA, ss 173, 177, 178 and 184. Bell others, without legal compulsion, to recover moneys outlaid and, in some cases, to earn reasonable remuneration51, as in the context of salvage. As to this contention, it may be said immediately that to point to the recognised entitlement to recompense for services actually rendered for the benefit of another does not advance the case for the making of orders in advance of the rendering of any service where the value of the service can only be a matter of surmise. The respondents argued inapplicable. While Pt IVA of the FCA and Pt 10 of the CPA contain specific provisions that expressly empower the court to make orders regarding the distribution of any resolution sum, those provisions do not limit s 33ZF or s 183. It was argued that: the Anthony Hordern principle that The provisions of the FCA and the CPA relating to distribution of a resolution sum deal with orders made after a determination of liability. They say nothing about orders made on an interlocutory basis. The making of a CFO does not undermine those provisions because any payment to the litigation funder remains subject to the approval of the court at the time of judgment or settlement. In any event, the provisions of the FCA and the CPA relating to the distribution of any resolution sum are not an exhaustive statement of the court's powers in relation to that subject matter. The construction of ss 33ZF and 183 The determination of the true construction of s 33ZF of the FCA and s 183 of the CPA requires consideration of the text of these provisions in their context and having regard to the mischief that Pt IVA of the FCA and Pt 10 of the CPA were intended to remedy52. The scope of each of ss 33ZF and 183 is "not confined by matters not required by [their] terms or context; however, the terms 51 Citing Mason, Carter and Tolhurst, Mason and Carter's Restitution Law in Australia, 3rd ed (2016) at 294-295 [811]; Mitchell, Mitchell and Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 9th ed (2016) at 550-551 [18-03]; Edelman and Bant, Unjust Enrichment, 2nd ed (2016) at 316-319. 52 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at Bell must be construed and the context considered"53. And context must be regarded in its widest sense to include the state of the law prior to the enactment of these sections54. There can be little doubt that when Pt IVA of the FCA was enacted, the Parliament could not have been understood to contemplate that s 33ZF might be invoked to support a CFO. That must be so because, at that time, an agreement to maintain legal proceedings by another in return for a piece of the action was unlawful under the laws against champerty in States other than Victoria55. But the question here is not about the intention with which these sections were originally enacted; rather, the question is whether, given the breadth and generality of their language, and the absence now of any objection on the ground of champerty, the making of a CFO falls, on a fair construction, within their terms56. in question In Johnstone v HIH Ltd57, Tamberlin J rightly said that the power conferred on the court by s 33ZF is not limited to the actual determination of the matter to encompass all procedures necessary to bring the matter to a fair hearing on a just basis". Section 33ZF has been invoked to support a wide range of procedural orders such as reinstating group members after they exercised the right to opt out under s 33J58, requiring discovery from group members59, regulating multiple class the proceeding, "but extends 53 Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 261 [12]. 54 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Regional Express Holdings Ltd v Australian Federation of Air Pilots (2017) 262 CLR 456 at 465 [19]. 55 Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at 56 Lake Macquarie Shire Council v Aberdare County Council (1970) 123 CLR 327 at 331; R v G [2004] 1 AC 1034 at 1054 [29]; Aubrey v The Queen (2017) 260 CLR [2004] FCA 190 at [104]. 58 King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2002] FCA 364 at [6]. 59 P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd [No 2] [2010] FCA 176 at Bell actions60, and making a "funding equalisation order" ("FEO") to redistribute settlement funds from unfunded group members to all group members61. The power conferred by s 33ZF is essentially supplementary. And the words of limitation should not be ignored. In McMullin v ICI Australia Operations Pty Ltd, Wilcox J said62: is broad, but "In enacting Pt IVA of the [FCA], Parliament was introducing into Australian law an entirely novel procedure. It was impossible to foresee all the issues that might arise in the operation of the Part. In order to avoid the necessity for frequent resort to Parliament for amendments to the legislation, it was obviously desirable to empower the Court to make the orders necessary to resolve unforeseen difficulties; the only limitation being that the Court must think the order appropriate or necessary to ensure 'that justice is done in the proceeding'. ... The criterion 'justice is done', involves consideration of the position of all parties. An order preventing unfairness to a particular party may be necessary to ensure justice is done in the proceeding." While it has rightly been acknowledged that the power conferred by each of s 33ZF and s 183 is broad, it is one thing for a court to make an order to ensure that the proceeding is brought fairly and effectively to a just outcome; it is another thing for a court to make an order in favour of a third party with a view to encouraging it to support the pursuit of the proceeding, especially where the merits of the claims in the proceeding are to be decided by that court. Whether an action can proceed at all is a radically different question from how it should proceed in order to achieve a just result. In the resolution of this issue, textual and contextual considerations must be addressed together with considerations of purpose63. These considerations all point to the conclusion that ss 33ZF and 183 do not empower the making of a 60 Kirby v Centro Properties Ltd (2008) 253 ALR 65 at 72 [31], 74 [37]. 61 P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd [No 4] [2010] FCA 1029 (1998) 84 FCR 1 at 4. 63 SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at Bell CFO. That conclusion can be reached without reliance upon any implication to narrow the scope of their operation, whether by reference to the principle of legality or otherwise. Nor is it dependent upon acceptance of the appellants' attempt to invoke the approach to construction for which Anthony Hordern stands as authority. Nor is it necessary to accept that the task of ensuring "that justice is done in the proceeding" is confined to the resolution of the substantive issues in dispute between the parties. Textual considerations The orders contemplated by s 33ZF and s 183 are orders which may be thought to make certain that justice is done in the proceeding. An order the purpose of which is to ensure that the proceeding is able to go forward is not such an order. As was said by Wigney J in Blairgowrie Trading Ltd v Allco Finance Group Ltd64: "the only real rationale for making the order at this stage is to ensure the commercial viability of the proceeding from the perspective of the litigation funder. That has nothing to do with ensuring that justice is done in the proceeding." The focus of the power conferred on the court by the text is upon ensuring, that is, making certain by the order, that justice is done in the proceeding as between the parties to it. As a matter of the ordinary and natural meaning of these words, they authorise an order apt to advance the effective determination by the court of the issues between the parties to the proceeding. Whether or not a potential funder of the claimants may be given sufficient financial inducement to support the proceeding is outside the concern to which the text is addressed. The text of each of s 33ZF and s 183 assumes that an issue has arisen in a pending proceeding between the parties to it, and that the proceeding will be advanced towards a just and effective resolution by the order sought from the court. The construction of ss 33ZF and 183 for which the respondents contend departs from this assumption. The making of a CFO does not assist in determining any issue in dispute between the parties to the proceeding; it does not assist in preserving the subject matter of the dispute, or in ensuring the efficacy of any judgment which might ultimately be made as between the parties; it does not assist in the management of the proceeding in order to bring it to a (2015) 325 ALR 539 at 565 [135]. Bell resolution. Nor does it assist in doing justice between group members in relation to the costs of litigation. Court approval of arrangements with a non-party in order to enable a proceeding to be pursued at all could only be said to be appropriate or necessary to ensure that justice is done between the parties to the proceeding if one were to assume that maintaining litigation, whatever its ultimate merit or lack thereof, is itself doing justice to the parties. That would be to make an assumption about process for its own sake rather than the outcome of the process. Such an assumption cannot be attributed to the legislature having regard to the text of ss 33ZF and 183. The making of a CFO is not apt to ensure that justice is done in the proceeding by regulating how the matter is to proceed; to the contrary, an application for a CFO is centrally concerned to determine whether the proceeding is viable at all as a vehicle for the doing of justice between the parties to the proceeding. That is a question outside the concerns of ss 33ZF and 183. As Wigney J explained in Blairgowrie in a passage that warrants citation at length65: "The requirement in s 33ZF that the order be 'appropriate or necessary' would ordinarily require, as a first step, the identification of a particular issue or problem in the proceeding that needs to be addressed. There would ordinarily have to be some specific reason or justification for making an order under s 33ZF. An order is unlikely to be either appropriate or necessary unless it is directed at resolving some issue or problem that has arisen or would, but for the order, arise. The particular issue or reason for making the order under s 33ZF must also be one that has arisen in, or relates to, 'the proceeding'. The section is not concerned with theoretical issues, or difficulties that may exist beyond the metes and bounds of the particular proceeding. It is not directed, for example, at resolving theoretical or practical problems in representative concerning proceedings generally. Nor is it concerned with issues or problems concerning the rights or interests of third parties, such as litigation funders. Justice 'in the proceeding' would not ordinarily involve any consideration of the commercial interests of a litigation funder unless they gave rise to some issue or problem that has, or is likely to have, some direct impact on the proceeding. that might occur litigation funding (2015) 325 ALR 539 at 560 [112]-[114]. Bell The criterion 'justice is done' also suggests that the particular issue or problem must somehow relate to the just hearing and determination of the claims, or the enforcement of the rights or subject matter in issue in the proceeding. That may involve a question of procedure, or it might involve a question involving the substantive rights and interests of the parties. A requirement that justice is done also suggests that the proposed order must be fair and equitable. That will ordinarily involve a consideration of the position of all parties". It can be seen that the reasons of Wigney J did not seek to confine the scope of s 33ZF to the final determination of the ultimate issues between the parties. Of course, interlocutory orders apt to move the proceeding towards a just conclusion between the parties are within the scope of the sections. But to emphasise, as the respondents do, the interlocutory nature of the CFOs of present concern by pointing to their provisional effect is to highlight that the CFO is directed to whether the litigation funder is given sufficient financial incentive to enable the proceeding to proceed at all. An order directed to that concern is not brought within the scope of s 33ZF by the expedient of structuring it as a provisional or interlocutory order. As to the practical effect of a CFO, BMW and the first to fourth respondents in the Westpac appeal argued that a CFO must be taken as a whole, or as a "package deal". That package includes provisions for meeting and sharing the costs of the representative proceeding. But it remains true to say that a central feature of the package is that the litigation funder assumes the financial risk of the failure of the claims by the representative parties in return for a commission fixed (provisionally at least) at a certain level to be paid by each group member out of the proceeds of the litigation. This last issue may be dealt with by the making of a FEO and will be discussed below. As Wigney J accepted in Blairgowrie66, the broad power conferred by s 33ZF is not to be read down by making implications or imposing limitations which are not found in the express words of the provision. (2015) 325 ALR 539 at 558 [98], citing Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421 and Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 260-261 [11]. Bell In Money Max67, the Full Court of the Federal Court treated the decision of Wigney J in Blairgowrie as distinguishable on the facts of the case. In addition, the Full Court in Money Max addressed the concern by Wigney J as to the "difficulty of setting a funding commission rate at a stage when the reasonableness of that rate could not be known" and suggested that that difficulty might be met by providing in the CFO that the funding commission rate will be as approved by the court, with approval to occur at a time when the "[c]ourt is armed with better information, including information as to the quantum or likely quantum of settlement"68. The Full Court in Money Max did not come to grips with the observations made by Wigney J as to the textual limitations upon the power conferred by s 33ZF. Neither the reasons in Money Max, nor the arguments of the respondents in this Court, provide a satisfactory answer to them. The difficulty attending the making of a CFO at the outset of the proceeding goes beyond the practical difficulty identified in Money Max69. Contrary to the view of the Full Court in that case, the problems that attend the fixing of the rate of the funder's remuneration at the beginning of the proceeding are not concerned solely with the factual and prudential aspects of the exercise of the discretion conferred by s 33ZF; they also involve the conceptual difficulty of an absence of criteria to guide the exercise of discretion by the court. In addition, there is the incongruity of reading such a power into s 33ZF or s 183 when other provisions of Pt IVA and Pt 10 make specific provision apt to accommodate that task but which operate at the conclusion of the proceeding. This incongruity is discussed in the course of considering the context in which these provisions appear. Contextual considerations In Wong v Silkfield Pty Ltd70, Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ compared the provisions of Pt IVA of the FCA to the pre-existing procedures pursuant to which representative proceedings could be brought, and their Honours observed that Pt IVA "provides its own more detailed regime". (2016) 245 FCR 191 at 220-221 [144]-[145]. (2016) 245 FCR 191 at 221 [146]-[147]. (2016) 245 FCR 191 at 221 [146]. (1999) 199 CLR 255 at 260 [11]. Bell The statutory context, in which each of ss 33ZF and 183 appears, shows that each section is a supplementary source of power. It is not to be supposed that each section does much the same work as other provisions of Pt IVA of the FCA and Pt 10 of the CPA, or that each was intended to meet the exigencies of litigation not adverted to at all by those other provisions. Two aspects of the regimes in which ss 33ZF and 183 appear deserve particular attention: first, the extent to which the legislation contemplates the involvement of the court in deciding whether an action should proceed; and secondly, the extent to which the legislation provides for meeting and sharing the cost of representative proceedings between group members. Should a proceeding proceed? As to the first of these considerations, it is to be noted that Pt IVA and Pt 10 make specific provision for the role of the court in determining whether representative proceedings should or should not proceed and for the circumstances in which that intervention by the court may occur. Part IVA of the FCA and Pt 10 of the CPA recognise that group proceedings may not "stack up" on a cost/benefit analysis. In that regard, s 33M(b) of the FCA (which is to the same effect as s 165(b) of the CPA) states that the court may stay a proceeding or direct that it no longer continue under Pt IVA where, on an application by the respondent: "the [c]ourt concludes that it is likely that, if judgment were to be given in favour of the representative party, the cost to the respondent of identifying the group members and distributing to them the amounts ordered to be paid to them would be excessive having regard to the likely total of those amounts". In addition, s 33N71 of the FCA states that the court may, on application by the respondent or of its own motion, order that the proceedings no longer continue under Pt IVA if it is satisfied that it is in the interests of justice to do so because, among other things, "the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members"72, or 71 See CPA, s 166(1)(c) and (e). 72 FCA, s 33N(1)(c). Bell "it is otherwise inappropriate that the claims be pursued by means of a representative proceeding"73. These provisions are legislative recognition that, at some point, the cost of identifying group members may simply be too high or too difficult compared to the value of the claims. If that is the case, the solution contemplated by the legislation is to halt the representative proceeding, not to make a CFO because the process of book building is proving too expensive or too difficult. Meeting and sharing costs An application for a CFO invites the court to order the establishment of a complex relationship between group members and a litigation funder with whom the group members would otherwise have no relationship at all. There is no indication in either the FCA or the CPA of any criteria for determining whether such a relationship should be established, and if so, the terms on which that might occur. Importantly, neither the FCA nor the CPA provides any criteria for the fixing, even provisionally, of a rate of remuneration for the litigation funder that is "appropriate or necessary". The court, in attempting to fix, even provisionally, a rate of remuneration at the outset of the proceeding must necessarily engage in a speculative exercise. In Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd74, Gummow, Hayne and Crennan JJ observed that "to ask whether the bargain struck between a funder and intended litigant is 'fair' assumes that there is some ascertainable objective standard against which fairness is to be measured", and that this assumption was not well founded. In addition, the circumstance that the CFOs sought in the present cases were provisional is itself an indication both of the speculative nature of the exercise in which the courts are invited to engage, and that the concern driving the application for the order is the concern of the litigation funder to be sufficiently incentivised to assume the financial risks involved in supporting the litigation. The provisions of Pt IVA of the FCA and Pt 10 of the CPA expressly provide for the making of orders distributing any proceeds of a representative proceeding. As will be seen, the occasion for the making of such an order is the conclusion of the proceeding. At that stage, if the group members happen to be indebted to a litigation funder for its support of their claims, the value of the 73 FCA, s 33N(1)(d). (2006) 229 CLR 386 at 434-435 [92]. Bell litigation funder's support to the group members will be capable of assessment and due recognition. That stage is the appropriate occasion for orders for meeting and sharing the cost burden of the litigation because the value of the litigation and the extent of the burden will have been rendered certain. In contrast, an application for a CFO at an early stage of a proceeding necessarily involves speculation on the part of the parties and the court in respect of these matters; and attention to matters of concern to the litigation funder which may not be shared by, and may well be contrary to the interests of, group members. It is reasonably to be expected that legislation intended to enlist the court in a task of this kind would make specific provision in that regard. That it has not done so is itself some contextual indication that the power to make such an order is not to be discerned in "gap-filling"75 provisions such as s 33ZF or s 183. It has been accepted, in that regard, that s 33ZF cannot be understood as "a vehicle for rewriting" Pt IVA of the FCA76. It was submitted on behalf of the first respondent in the BMW appeal that the topics addressed in ss 168, 169, 170 and 177 of the CPA (which are to the same effect as ss 33Q, 33R, 33S and 33Z of the FCA respectively) also fall within the scope of s 183. According to this submission, Pt 10 of the CPA is "redundant where it is convenient". That submission is not helpful in seeking to come to grips with the meaning to be given to the words of limitation "appropriate or necessary to ensure that justice is done in the proceeding". Further, it exalts the role of s 183 (and s 33ZF) above that of a supplementary or gap-filling provision, to say that it may be relied upon as a source of power to do work beyond that done by the specific provisions which the text and structure of the legislation show it was intended to supplement77. The work which the respondents require s 183 (and s 33ZF) to do is beyond the scope of the other provisions of the scheme. As will be seen, those other provisions are engaged upon a different occasion and address materially different circumstances from those that are involved in the making of a CFO. Section 183 (and s 33ZF) cannot be given a more expansive construction and a wider scope of operation than the other provisions of the scheme. To accept this submission would be to use s 183 (and s 33ZF) as a vehicle for rewriting the scheme of the legislation. 75 Ethicon Sarl v Gill (2018) 264 FCR 394 at 399 [17]. 76 Courtney v Medtel Pty Ltd (2002) 122 FCR 168 at 183 [52]; Blairgowrie Trading Ltd v Allco Finance Group Ltd (2015) 325 ALR 539 at 558 [100]. 77 Compare McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 at 4. Bell As will be seen, the provisions of Pt IVA of the FCA and Pt 10 of the CPA do not involve the court in any predictive exercise, or in a concern as to whether a litigation funder may be sufficiently satisfied with the prospective return on its investment to assume the financial risk of pursuing the litigation. Much less do those provisions or the extrinsic materials reveal a concern that a desire on the part of a litigation funder to avoid the effort and expense of book building is a matter of concern for the court. The provisions of Pt IVA of the FCA and Pt 10 of the CPA envisage the identification of all group members so far as that is possible. That identification facilitates the distribution of any proceeds of the proceedings, whether derived from a settlement or a favourable judgment. Section 33J of the FCA (which is to the same effect as s 162 of the CPA) is in the following terms: "Right of group member to opt out The Court must fix a date before which a group member may opt out of a representative proceeding. (2) A group member may opt out of the representative proceeding by written notice given under the Rules of Court before the date so fixed. the application of a group member, The Court, on the representative party or the respondent in the proceeding, may fix another date so as to extend the period during which a group member may opt out of the representative proceeding. Except with the leave of the Court, the hearing of a representative proceeding must not commence earlier than the date before which a group member may opt out of the proceeding." Under s 33J of the FCA, the court must fix a date before which a group member may opt out of a representative proceeding. Because that date will usually fall before the outcome of the action is known, the problem of "free riding" by group members who would seek to opt in to the proceeding only after a favourable outcome is achieved is addressed. As this Court has noted, the opt out model adopted by Pt IVA of the FCA and Pt 10 of the CPA is designed so that a representative proceeding may continue even if group members are unaware of it78; and group members "are under no obligation to identify 78 Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 31-32 [38]-[40]. Bell themselves"79. That said, both legislative schemes do allow identification of all group members (as far as is possible) in order to distribute any proceeds. That this is so is apparent from ss 33V, 33X(3)-(4), 33Z and 33ZA of the FCA. Reference to the terms of these provisions confirms that the legislative scheme contemplates that the occasion for the making of orders in relation to distribution of the proceeds of the action is its successful completion. Section 33V (which is in like terms to s 173 of the CPA) provides: "Settlement and discontinuance – representative proceeding (1) A representative proceeding may not be settled or discontinued without the approval of the Court. If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court." Sections 33V of the FCA and 173 of the CPA expressly contemplate the making of an order at the conclusion of the proceedings. Section 33X(1) (s 175(1) of the CPA is in materially the same terms) provides that notice must be given to group members of the commencement of proceedings and of their right to opt out before the date fixed under s 33J(1) (s 162(1) of the CPA). Section 33X(3) and (4) (s 175(3) and (4) of the CPA are in materially the same terms) provide: If the Court so orders, notice must be given to group members of the bringing into Court of money in answer to a cause of action on which a claim in the representative proceeding is founded. (4) Unless the Court is satisfied that it is just to do so, an application for approval of a settlement under section 33V must not be determined unless notice has been given to group members." The same point may be made in relation to s 33Z of the FCA (which is to the same effect as s 177 of the CPA, save that s 33Z(1)(g) has no equivalent in s 177(1)). Section 33Z provides: 79 P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd [No 2] [2010] FCA 176 at Bell "Judgment – powers of the Court The Court may, in determining a matter in a representative proceeding, do any one or more of the following: determine an issue of law; determine an issue of fact; (c) make a declaration of liability; grant any equitable relief; (e) make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies; award damages in an aggregate amount without specifying amounts awarded in respect of individual group members; (g) make such other order as the Court thinks just. In making an order for an award of damages, the Court must make provision for the payment or distribution of the money to the group members entitled. Subject to section 33V, the Court is not to make an award of damages under paragraph (1)(f) unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment. (4) Where the Court has made an order for the award of damages, the Court may give such directions (if any) as it thinks just in relation the manner in which a group member is to establish his or her entitlement to share in the damages; and the manner in which any dispute regarding the entitlement of a group member to share in the damages is to be determined." Similarly, s 33ZA of the FCA (which is in materially identical terms to s 178 of the CPA) provides: Bell "Constitution etc of fund (1) Without limiting the operation of subsection 33Z(2), in making provision for the distribution of money to group members, the Court may provide for: the constitution and administration of a fund consisting of the money to be distributed; and either: the payment by the respondent of a fixed sum of money into the fund; or the payment by the respondent into the fund of such instalments, on such terms, as the Court directs to meet the claims of group members; and entitlements to interest earned on the money in the fund. The costs of administering a fund are to be borne by the fund, or by the respondent in the representative proceeding, as the Court directs. (3) Where the Court orders the constitution of a fund mentioned in subsection (1), the order must: require notice to be given to group members in such manner as is specified in the order; and specify the manner in which a group member is to make a claim for payment out of the fund and establish his or her entitlement to the payment; and specify a day (which is 6 months or more after the day on which the order is made) on or before which the group members are to make a claim for payment out of the fund; and (d) make provision in relation to the day before which the fund is to be distributed to group members who have established an entitlement to be paid out of the fund. The Court may allow a group member to make a claim after the day fixed under paragraph (3)(c) if: Bell the fund has not already been fully distributed; and it is just to do so. (5) On application by the respondent in the representative proceeding after the day fixed under paragraph (3)(d), the Court may make such orders as are just for the payment from the fund to the respondent of the money remaining in the fund." Section 33ZJ (which is in relevantly the same terms as s 184 of the CPA) provides: "Reimbursement of representative party's costs (1) Where the Court has made an award of damages in a representative proceeding, the representative party or a sub-group representative party, or a person who has been such a party, may apply to the Court for an order under this section. If, on an application under this section, the Court is satisfied that the costs reasonably incurred in relation to the representative proceeding by the person making the application are likely to exceed the costs recoverable by the person from the respondent, the Court may order that an amount equal to the whole or a part of the excess be paid to that person out of the damages awarded. (3) On an application under this section, the Court may also make any other order it thinks just." In relation to s 177(1)(e) of the CPA in particular, which is equivalent to s 33Z(1)(e) cited above, it was argued on behalf of BMW that the reference to an "award of damages" encompassed any recovery of money including for debt and equitable compensation. It was said that the occasion for the exercise of the powers expressly conferred by s 177(1)(e) is the time for the making of final orders for any form of pecuniary relief as between the parties to the proceeding and as between the group members. Against this it was said that s 177(1)(e) does not apply to any funds recovered from the defendant, but only amounts consisting of damages strictly so-called. Upon this contention was advanced the further argument that because s 177(1)(e) does not make comprehensive provision for the distribution of all moneys recovered from the defendant at the conclusion of the proceeding, there is work for s 183 to do in supplementing s 177(1)(e) so as to comprehend moneys other than damages. And so it was said, if s 183 can have this operation at the conclusion of the proceeding, why should it not be available to support an interlocutory order at the outset of the proceeding? Bell This argument does not carry the respondents very far. Whether or not the powers expressly conferred by s 177(1)(e) are sufficiently comprehensive to authorise the distribution of damages, s 173(2) of the CPA is plainly intended to operate at the conclusion of the proceeding. In addition, s 173(2) readily comprehends sums of money recovered otherwise than by way of damages. Considerations of purpose Access to justice The objectives of Pt IVA of the FCA were identified by the Australian Law Reform Commission ("the ALRC") prior to its enactment. They were two-fold: first, to enhance access to justice for claimants by allowing for the collectivisation of claims that might not be economically viable as individual claims; and secondly, to increase the efficiency of the administration of justice by allowing a common binding decision to be made in one proceeding rather than multiple suits80. Part IVA of the FCA, and later Pt 10 of the CPA, which emulated Pt IVA, pursued these objectives through the regime for representative proceedings tailored to address these defects in the law. Sections 33ZF and 183 do not empower the courts to rewrite Pt IVA and Pt 10 respectively in order to pursue other objectives in different ways. The defects in the existing law targeted by the ALRC in order to improve access to justice simply did not include the absence of sufficient incentive for litigation funders to fund litigation. That is significant given that the ALRC was alive to the possibility that a representative proceeding might be funded by third parties81. The possibility that a group proceeding might not be brought because a litigation funder could not see the prospect of a sufficient return to support the proceeding cannot be said to be one of the "unforeseen difficulties" referred to by Wilcox J in McMullin82. The ALRC's report did not advert to the possibility of enlisting the aid of the court to fix, even provisionally, the terms on which financial support for the bringing of a proceeding might be secured. It would have been a large step in terms of policy to enlist the court charged with 80 Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46 (1988) at [13], [18]; Australia, House of Representatives, Parliamentary Debates (Hansard), 14 November 1991 at 3174-3175. 81 Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46 (1988), ch 8. See esp at [315]-[318]. (1998) 84 FCR 1 at 4. Bell responsibility for the determination of the merits of the claims brought in a proceeding, in the making of arrangements to allow the proceeding to be pursued. It is hardly surprising then that the Parliament refrained from taking that course. It may well be that some claims cannot attract funding, either because of a want of interest among group members or because litigation funders' assessments of the prospects of the claims lead them to decline the risk. But there is no suggestion, either in the legislation or in the relevant extrinsic materials, that it was thought to be a defect in the law requiring a remedy that all claims, no matter how dubious their merits or paltry the likely monetary recovery, were not being brought before the courts. Similarly, the possibility that claims are not brought because they do not "stack up" financially for group members or litigation funders is not a reason for concern that the legislation is not operating as it should. Common fund orders and funding equalisation orders To the extent that one aspect of the motivation for seeking a CFO is said to be to facilitate the equitable sharing of the costs of a representative proceeding, Pt IVA of the FCA and Pt 10 of the CPA recognise that the representative party ought not (necessarily) bear the entire costs of the proceeding83. These provisions allow the courts to prevent the practice of "free riding" by unfunded group members who might seek to take the benefit of the costs and risks assumed by the representative party and funded group members. It may be accepted that the concern to prevent "free riding" is relevant to doing justice as between group members who are parties to the proceeding. But the equitable sharing of the expense of the proceeding may be achieved by the making of a FEO that reduces unfunded group members' awards by an amount equivalent to that paid by funded group members to the litigation funder. The cost of litigation is thus borne equitably between all group members. Group members necessarily stand in a relationship to one another as a result of the statutory scheme; the claims in the proceeding are litigated on behalf of all of them, and orders in the proceeding bind all of them84. Subject to the creation of sub-groups and the determination of individual questions85, the statutory scheme 83 FCA, s 33ZJ(2); CPA, s 184(2). 84 FCA, s 33ZB(b); CPA, s 179(b). 85 FCA, s 33Q; CPA, s 168. Bell treats them as one group. It is, therefore, just that the costs of the proceeding be spread amongst the members of that group. In contrast, there is no reason why the amount taken from unfunded group members' awards should be directed to the litigation funder, much less that an order to that effect should be made at the outset of the proceeding rather than on the occasion contemplated by s 33ZJ(2) of the FCA and s 184(2) of the CPA. Unfunded group members have no contractual or other relationship with the funder. Nor have they any liability to the funder. The funder has no right to that money under contract or under equitable principles. A CFO is thus not the obvious solution to the problem of "free riding". A CFO is apt to impose an additional cost on the group by requiring more money to be paid to the litigation funder than would otherwise be the case. The equitable spreading of the cost is, in fact, better achieved by the making of a FEO, which takes, as its starting point, the actual cost incurred in funding the litigation. While it must be accepted that the burden of the amounts that funded group members have agreed to pay to the funder under their agreements with the funder must be distributed fairly, a FEO is apt equitably to distribute those amounts whereas a CFO seeks to impose an additional cost by imposing new obligations on the unfunded group members. A FEO is clearly available where a settlement is reached. A settlement must be approved by the court86, and, in approving a settlement, the court must be satisfied that it is "fair and reasonable to all group members"87. A settlement that allows some group members to ride for free would not be fair and reasonable to the other group members. Secondly, where a matter runs to judgment (rather than being settled), a FEO may be made under s 33ZF or s 183. That is because justice would not be done in the proceeding if it resulted in unfunded group members gaining a windfall by avoiding costs which others bore for their benefit. A FEO prevents that outcome by redistributing those costs. It falls squarely within the terms of ss 33ZF and 183. The same cannot be said of a CFO. 86 FCA, s 33V; CPA, s 173. 87 Australian Securities and Investments Commission v Richards [2013] FCAFC 89 at [55] (emphasis in the original). Bell Book building: to build or not to build? The process of book building involves "identification [of group members], contact, awareness creation and enrolment"88. Waye and Morabito state that book building is ordinarily done by "using the media and web communications with a view to persuading potential class members to register their interest or to enter into retainer and funding agreements"89. The authors cite a number of webpages set up by plaintiff law firms to advertise the class actions that they are running. The use of webpages to advertise class actions has been noted in case law90. Whether a litigation funder should not be required to incur expenditure (eg advertising) to seek to build its enterprise is not a concern that any provision of Pt IVA of the FCA or Pt 10 of the CPA invites the court to address. The making of a CFO at an early stage of the proceeding may provide some assurance, even if only provisional, to a litigation funder of a particular level of return on its investment and so relieve the litigation funder of the expense and effort of canvassing the level of public interest in the proposed proceeding and making its assessment of the commercial viability of the proceeding in light of the likely balance of risk and reward. The applications for the CFOs proposed in these appeals were prompted, as the Full Court in the Westpac matter appreciated, and as is apparent from the evidence of Mr Scattini in the BMW matter, by a desire to obviate the expense and difficulty involved in building a book. That motivation is understandable, particularly in circumstances where there may be little interest on the part of the potential group members in pursuing the claim. But while access to justice may be expected to be improved in a general way by the availability of litigation funding, it does not follow that the making of a CFO is necessary or appropriate to ensure that justice is done in a particular proceeding in accordance with Pt IVA of the FCA or Pt 10 of the CPA. To the extent that a CFO may allow a litigation funder to avoid the burden of the process of book building by enlisting the court's aid, there is no warrant to 88 Walker, Khouri and Attrill, "Funding Criteria for Class Actions" (2009) 32 University of New South Wales Law Journal 1036 at 1044. 89 Waye and Morabito, "Financial arrangements with litigation funders and law firms in Australian class actions", in van Boom (ed), Litigation, Costs, Funding and Behaviour: Implications for the Law (2017) 155 at 178. 90 Bonham v Iluka Resources Ltd (2017) 252 FCR 58 at 66-67 [24]-[27]. Bell to ease the supplement the legislative scheme by judicial involvement commercial anxieties of litigation funders or to relieve them of the need to make their decisions as to whether a class action should be supported based on their own analysis of risk and reward. Until 2016, open class actions were brought and resolved without recourse to CFOs. A suggestion that book building is an exercise in "wasted costs" ignores the reality that group members will have to take action at some stage to obtain the actual payment of any monetary relief to which they have established an entitlement. Orders In the Westpac appeal, the appeal to this Court should be allowed. Orders 3 and 4 made by the Full Court of the Federal Court of Australia on 1 March 2019 should be set aside, and in their place it should be ordered that: the appeal be allowed; orders 1 and 2 made by Lee J on 28 September 2018 be set aside and, in their place, the application for a common fund order be dismissed with costs; and the respondents must pay the appellants' costs of the appeal. The respondents must pay the appellants' costs of the appeal to this Court. In the BMW appeal, the appeal to this Court should be allowed. The orders made by the Court of Appeal of the Supreme Court of New South Wales on 1 March 2019 and 22 March 2019 should be set aside, and in their place it should be ordered that: the question stated for separate determination be answered: "No"; and the first respondent must pay the applicant's costs of the application for, and hearing of, the separate question. The first respondent must pay the appellant's costs of the appeal to this Court. Part IVA of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act") was enacted at the beginning of the last decade of the twentieth century91 in the expectation that the representative procedure for which it provides would "enhance access to justice, reduce the costs of proceedings and promote efficiency in the use of court resources"92. The Part was developed on the basis of an earlier report of the Australian Law Reform Commission93. Some years into the operation of Pt IVA of the Federal Court Act, Wilcox J, who had chaired the Division of the Australian Law Reform Commission which produced the report, explained94: "In enacting Pt IVA ... Parliament was introducing into Australian law an entirely novel procedure. It was impossible to foresee all the issues that might arise in the operation of the Part. In order to avoid the necessity for frequent resort to Parliament for amendments to the legislation, it was obviously desirable to empower the Court to make the orders necessary to resolve unforeseen difficulties; the only limitation being that the Court must think the order appropriate or necessary to ensure 'that justice is done in the proceeding'." His Honour was referring to the power conferred on the Federal Court by s 33ZF(1) of the Federal Court Act, which provides that "[i]n any proceeding ... conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding". Section 33ZF is located within Div 6 of Pt IVA, headed "Miscellaneous", and bears the heading "General power of Court to make orders". Those two features, Wilcox J noted, "support the conclusion, that would in any event arise from its wording, that s 33ZF(1) was intended to confer on the Court the widest possible power to do whatever is appropriate or necessary in the interests of justice being achieved in a representative proceeding"95. 91 Section 3 of the Federal Court of Australia Amendment Act 1991 (Cth). 92 Australia, House of Representatives, Parliamentary Debates (Hansard), 14 November 1991 at 3174. 93 Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46 (1988). 94 McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 at 4. 95 McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 at 4. The reference in s 33ZF(1) to what the Federal Court "thinks" is peculiarly apposite to indicate legislative endorsement of the notion that the Court's thinking might adapt to changing circumstances and might develop through time with experience96. What the Court might think appropriate or necessary in a contemporary setting is not hidebound by what Parliament might have expected that the Court would have thought appropriate or necessary at the time Pt IVA was enacted97. Unforeseen at the time that Pt IVA was enacted and unaddressed in the detail of the representative procedure for which Pt IVA provides was the rise, following the decision of this Court in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd98, of the phenomenon of third-party litigation funders providing the financial resources needed to conduct representative proceedings in return for sharing in the proceeds. Third-party litigation funders who have entered into contractual funding arrangements with representative parties, and often also with some or all of the individual members of represented groups, have become increasingly common. The Australian Law Reform Commission has recently reported that the number of litigation funders operating in the Australian market has grown steadily since 2006 to approximately 25 active funders in 2018. From 2013 to 2018, the percentage of funded representative proceedings pending grew to 64 per cent, with funded proceedings constituting 78 per cent of all representative proceedings commenced in 201899. The unfolding story of how the Federal Court has adapted its procedures in response to the rise of litigation funding has been told by Lee J in the Federal Court100 and need not be retold by me. The story is one of adoption, testing, evaluation and modification of a range of innovative procedures, all occurring within the pre-existing structure of Pt IVA. Parallel processes have been occurring in the Supreme Courts of those States whose Parliaments have in this century made parallel provision for representative proceedings through the enactment of legislation modelled on Pt IVA. Part 10 of the Civil Procedure Act 96 cf Hughes v The Queen (2017) 263 CLR 338 at 377 [110]. 97 cf Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 622. (2006) 229 CLR 386. 99 Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders, Report No 134 (2018) at 65-66 [2.66]. 100 Perera v GetSwift Ltd (2018) 263 FCR 1 at 9-15 [10]-[29]. 2005 (NSW) ("the Civil Procedure Act"), which commenced in 2011101, is an example102. In issue in these appeals from synchronous decisions of the Full Court of the Federal Court103 and the Court of Appeal of the Supreme Court of New South Wales104 is the capacity of s 33ZF(1) of the Federal Court Act and its almost identically worded counterpart, s 183 of the Civil Procedure Act, to allow for the making of a "common fund order" ("CFO") of a type first sanctioned by the Full Court of the Federal Court in 2016105. A CFO of the type in issue is an order made by a court at an early stage of a representative proceeding, in advance of the fixing of a date before which group members must exercise their rights to opt out of the proceeding. The order is made on the application of a representative party, who is in an existing contractual relationship with a third-party litigation funder, and on the giving of an undertaking to the court by the litigation funder to be bound for the duration of the proceeding to funding terms approved by the court. The funding terms require the litigation funder to fund the costs of conducting the representative proceeding, including by paying the costs and disbursements that are charged by the representative party's solicitor, providing any security for costs that might be required in the proceeding and meeting any costs orders that might be ordered against the representative party in the proceeding. By force of the order, the representative party and group members are required to pay to the litigation funder, out of such amount or amounts as may be jointly or severally obtained by them by way of settlement of, or judgment in, the proceeding, such amount or amounts by way of reimbursement for funded costs and by way of funding commission as are identified in the funding terms. The funding commission to be 101 Schedule 6.1 [2] read with s 2(2)(b) of the Courts and Crimes Legislation Further (NSW) and New South Wales, Commencement Amendment Act 2010 Proclamation, 2011 No 118, 2 March 2011. 102 See also Pt 4A of the Supreme Court Act 1986 (Vic), introduced by s 13 of the Courts and Tribunals Legislation (Miscellaneous Amendments) Act 2000 (Vic), and Pt 13A of the Civil Proceedings Act 2011 (Qld), introduced by s 10 of the Limitation of Actions (Child Sexual Abuse) and Other Legislation Amendment Act 2016 (Qld). 103 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21. 104 BMW Australia Ltd v Brewster (2019) 366 ALR 171. 105 Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191 at 209 paid to the litigation funder includes a premium for litigation risk. Although interlocutory in the sense that it is able to be varied or revoked by the court during the course of the proceeding, the order is final in the sense that it is framed in terms which would operate absent variation or revocation to compel payment to the litigation funder by the representative party and group members immediately upon an amount or amounts by way of settlement or judgment coming into existence prior to any distribution to them. The Full Court and the Court of Appeal were each unanimous in concluding that a CFO of that type is capable of being thought appropriate or necessary to ensure that justice is done in a representative proceeding and so is capable of being made under s 33ZF(1) of the Federal Court Act or s 183 of the Civil Procedure Act as the case may be. Neither the Full Court nor the Court of Appeal was asked to consider whether a particular CFO made or sought to be made should be made or should have been made in the proper exercise of discretion. Both Courts were asked to and did address only the question of power. My opinion is that a CFO can be thought appropriate or necessary to ensure that justice is done in the proceeding, and so can be made in the exercise of the power conferred by s 33ZF(1) of the Federal Court Act or s 183 of the Civil Procedure Act. Finding myself in dissent in this Court and in substantial agreement with the views expressed in the materially identical and unanimous reasons for decision of the Full Court and of the Court of Appeal on an important but, at the end of the day, narrow point of statutory construction, I will keep my reasons brief. There being no material difference between the scope and operation of s 33ZF(1) within the context of Pt IVA of the Federal Court Act and the scope and operation of s 183 within the context of Pt 10 of the Civil Procedure Act, I will confine my attention to the former. Turning first to the language of s 33ZF(1), it is important to recognise at the outset that the power the provision confers is applicable only in a representative proceeding conducted under Pt IVA. The nature of such a proceeding is that it is permitted to be commenced by a representative party on behalf of group members106 whose consent is not required107 but who must be given notice of and an opportunity to opt out of the proceeding108. It is not a 106 Section 33C of the Federal Court Act. 107 Section 33E of the Federal Court Act. 108 Section 33J of the Federal Court Act. necessary feature of a representative proceeding that there be conscious disagreement between each group member and the person against whom relief is sought in the proceeding as to the matter or matters substantively in issue in the proceeding109. Nor is it a necessary feature of a representative proceeding that each group member actually knows and approves of the proceeding110. Subject to powers conferred on the Court to order that the proceeding not continue as a representative proceeding111, or to order that another group member be substituted as the representative party or to make such other orders as it thinks fit where it appears to the Court on application that the representative party is not able adequately to represent the interests of the group members112, a representative proceeding once commenced is permitted to be continued by the representative party who commenced it so as to result in a judgment which, for better or for worse, binds all group members who have not exercised a right to opt out of the proceeding113. The representative party takes the group members in tow, and they sink or swim together. That being the nature of the proceeding to which the provision is uniquely directed, the notion of "ensur[ing] that justice is done in the proceeding" employed in the expression of the power conferred by s 33ZF(1) cannot be confined to ensuring that justice is done in the resolution of the matter or matters in issue between the representative party and the group members, on the one hand, and the person against whom relief is sought in the proceeding, on the other hand. The notion extends necessarily to ensuring that procedural justice and substantive justice are done as between the representative party and the group members in the conduct of the representative proceeding. So much is confirmed by the ability of the Court to exercise the power of its own motion or on application by any party or any group member. In so far as the power extends to ensuring that procedural justice is done as between the representative party and the group members in the conduct of the representative proceeding, the power cannot be divorced from the principal object of Pt IVA of enhancing group members' access to justice. The power is sufficient to enable the Court to fashion such orders as it thinks appropriate or necessary to ensure that such arrangements for the funding of the proceeding as 109 Femcare Ltd v Bright (2000) 100 FCR 331 at 354-355 [97]. 110 Femcare Ltd v Bright (2000) 100 FCR 331 at 345-347 [58]-[63]. 111 Sections 33L, 33M and 33N of the Federal Court Act. 112 Section 33T of the Federal Court Act. 113 Section 33ZB(b) of the Federal Court Act. are sought to be put in place by the representative party are adequate to protect the interests that group members have in the timely and efficient realisation of their claims. To my mind, it introduces an unrealistic dichotomy to postulate that an order that serves to shore up the commercial viability of the proceeding from the perspective of the litigation funder can have nothing to do with enhancing the interests of justice in the conduct of the representative proceeding. In so far as the power extends to ensuring that substantive justice is done as between the representative party and the group members in the conduct of the representative proceeding, the power is sufficient to enable the Court to fashion such orders as the Court thinks appropriate or necessary to ensure that expenses incurred in carrying on the litigation are shared fairly between the representative party and those group members who ultimately benefit from the representative proceeding. That the Court, as a court of law and equity114, should have power to order the fair apportionment of those expenses is consistent with the power historically exercisable by a court of equity "in doing justice as between a party and the beneficiaries of his litigation"115. The court's discretion extended to ordering that expenses (including but not confined to legal costs) incurred by a representative party be paid out of funds distributable amongst the represented class116. And there was no reason in principle why the court could not make such an order prospectively in anticipation of funds distributable amongst the represented class coming into existence as a result of the representative proceeding "to empower" the representative party "to go on with the cause"117. Putting those considerations together, I see no reason why the Court, on the application of the representative party, cannot think it appropriate or necessary to ensure that justice is done in a representative proceeding: first to accept an undertaking to fund the proceeding given to the Court by a third-party litigation funder who is in a contractual relationship with the representative party, and second to order that the representative party and group members are each to bear a specified proportionate share of a specified reasonable remuneration to be 114 Section 5(2) of the Federal Court Act. 115 Sprague v Ticonic National Bank (1939) 307 US 161 at 167. 116 National Bolivian Navigation Co v Wilson (1880) 5 App Cas 176 at 210-211; Batten v Wedgwood Coal and Iron Co (1884) 28 Ch D 317 at 325. 117 See Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (In liq) [No 4] (2008) 169 FCR 497 at 502 [15], quoting Jones v Coxeter (1742) 2 Atk 400 at 400 [26 ER 642 at 642]. See generally Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (In liq) [No 4] (2008) 169 FCR 497 at 499-502 [3]-[14]. paid to the litigation funder for funding the proceeding if and when their claims are realised as a result of it. Provided that interests of group members are adequately represented at the time of its making, I see no reason why the Court cannot think that making such an order early in the proceeding will advance the interests of justice: by placing the funding available to the representative party on a secure footing, by reducing uncertainty on the part of all concerned about how the Court might exercise statutory discretions to distribute the cost of funding the proceeding at the conclusion of the proceeding, and by allowing group members to make more informed decisions about their potential returns at the time of choosing whether or not to opt out of the proceeding. The commercial interest that the litigation funder has in securing a return on the litigation funder's investment gives no reason for the Court to be squeamish118. The commercial interest gives reason for the Court to scrutinise the terms of the proposed undertaking and the rate and structure of the proposed remuneration with particular care for the protection and advancement of the interests of group members. To the extent that making a CFO involves the Court in an evaluation of the appropriateness of the payments to be made to the litigation funder in the event of success in the proceeding, I reject the suggestion that making a CFO requires the Court to embark on an inquiry which is beyond its institutional competence, which involves the Court in inappropriate speculation, or which is inadequately guided by the broad statutory standard of what the Court thinks appropriate or necessary to ensure that justice is done in the representative proceeding. Especially in the exercise of supervisory powers to approve contracts entered into by liquidators on behalf of companies in liquidation119, courts have become accustomed to assessing appropriate rates of remuneration for the funding of pending litigation, including by reference to litigation risk120. There is a strong argument that litigation risk, and with it the appropriate premium to be paid to a litigation funder for assuming that risk, is more accurately assessed at 118 cf Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at 407 119 See now s 477(2B) of the Corporations Act 2001 (Cth). 120 eg, Buiscex Ltd v Panfida Foods Ltd (In liq) (1998) 28 ACSR 357 at 362-364; Re ACN 076 673 875 Ltd (rec and mgr apptd) (In liq) (Bendeich as liq, Greatorex intervening by leave) (2002) 42 ACSR 296 at 300-304 [16]-[33]. See also Hall v Poolman (2009) 75 NSWLR 99 at 140 [150]-[151], 144 [172]. the beginning of litigation than at the end when hindsight bias is not easy to exclude. Nothing in the detail of any of the other provisions of Pt IVA is undercut by conceding to s 33ZF(1) that scope of operation. "It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words"121. That is so for s 33ZF(1) just as it is so for each of the other provisions of the "detailed regime" of Pt IVA122. Few of the powers conferred by Pt IVA are so "limited and qualified"123 as to exclude the operation of other, more generally expressed powers located within the Part or elsewhere in the Federal Court Act. None of them is so limited or qualified as to confine the scope of s 33ZF(1) in any relevant respect. In relation to a representative proceeding which ends in a settlement approved by the Court under s 33V(1), the discretion conferred on the Court by s 33V(2) to "make such orders as are just with respect to the distribution of any money paid under a settlement" cannot be read as exhaustive or as incapable of being exercised taking into account a prior or contemporaneous exercise of power under s 33ZF(1). In relation to a proceeding which ends in judgment, and assuming without deciding that the "damages" to which s 33Z refers encompass any monetary amount which the Court might order by way of judgment, s 33Z(2)'s requirement that "the Court must make provision for the payment or distribution of the money to the group members entitled" cannot be read as excluding such order for payment out of the money to which the group members are entitled as the Court might think appropriate to be made under s 33ZF(1) to ensure that justice is done in the proceeding or as the Court might think just under s 33ZJ(3). As to the power of the Court under s 33ZJ(3) to make any order it thinks just on the application of the representative party where the Court has made an award of damages, there is no reason why it could not itself be exercised to order payment to a third party who provided funding for the proceeding and there is no reason why it could not so be exercised taking into account a prior or contemporaneous exercise of power under s 33ZF(1). 121 Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421. See also Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 279 [17] fn 23 and the cases there cited. 122 Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 260-261 [11]. 123 cf Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7. Neither alone nor in combination do ss 33V, 33Z and 33ZJ therefore prevent a CFO made under s 33ZF(1), in the absence of variation or revocation, taking effect in accordance with its terms. The power of the Court at any stage to order the notice of any matter to be given to a group member or group members124 is ample to ensure that procedural fairness is afforded to group members in the making of such an order. The constitutional objections raised by the appellants do not withstand scrutiny and do not warrant elaborate responses. As to the suggested want of judicial power, it is sufficient to bring s 33ZF(1) within the judicial power of the Commonwealth that it confers power on the Federal Court as an incident of a strictly judicial proceeding to be exercised by reference to the Court's assessment of the interests of justice in that proceeding125. I agree with the observation of the Full Court126 that "it is difficult to conceive of a function or standard more appropriate to the judicial branch of government than considering and deciding (upon application and evidence) what is appropriate or necessary to do justice in a proceeding". As to the suggested intrusion of s 33ZF(1) into the forbidden territory of s 51(xxxi) of the Constitution, it is sufficient to keep s 33ZF(1) outside the scope of the operation of s 51(xxxi) that the subject-matter of s 33ZF(1) is "the adjustment of the competing rights, claims or obligations of persons in a particular relationship"127 through an exercise of such a judicial power. The same is to be said of s 183 of the Civil Procedure Act, as picked up in a representative proceeding in federal jurisdiction in the Supreme Court by s 79 of the Judiciary Act 1903 (Cth)128. I would dismiss each appeal with costs. 124 Section 33X(5) of the Federal Court Act. 125 cf Queen Victoria Memorial Hospital v Thornton (1953) 87 CLR 144 at 150-151. 126 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 48 [100]. 127 Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 161. 128 Rizeq v Western Australia (2017) 262 CLR 1 at 14 [16], 15 [21], 16 [24], 17 [28], 34 [84], 35-36 [87]-[89], 41 [103]; Masson v Parsons (2019) 93 ALJR 848 at 857- 858 [30]; 368 ALR 583 at 593. Nettle 122 NETTLE J. Comparison of the plurality's reasons for judgment with the dissenting judgment of Gageler J shows that there are cogent arguments either way as to whether s 33ZF(1) of the Federal Court of Australia Act 1976 (Cth) ("the FCA Act") confers a power broad enough to sustain a common fund order ("CFO") of the kind in issue in these matters. On the one hand, as the reasons of Gageler J demonstrate, there is nothing new or of itself remarkable about open-textured legislative provisions which leave courts with a large measure of significantly unguided discretion in making orders considered to be appropriate to do justice in all the circumstances of a given case129. Generally speaking, provisions of that kind may be seen to reflect a legislative intention to confer on courts the widest possible power to do what is appropriate to achieve justice in the circumstances. On the other hand, as the plurality reason, seen in the context of Pt IVA of the FCA Act as a whole – as of course s 33ZF(1) must be construed – the broad generality of s 33ZF(1), compared to the detail and specificity of other provisions such as ss 33J, 33M, 33N, 33U, 33V, 33X, 33Z and 33ZA, suggests that s 33ZF(1) is in the nature only of a supplementary power to do what is necessary or incidental to achieve the objectives at which those other more detailed, specific provisions are aimed130. 129 See, eg, Cominos v Cominos (1972) 127 CLR 588 at 593-594 per Walsh J, 599 per Gibbs J, 603-604 per Stephen J, 607-609 per Mason J; Mitchell v The Queen (1996) 184 CLR 333 at 346 per Dawson, Toohey, Gaudron, McHugh and Gummow JJ; Baker v The Queen (2004) 223 CLR 513 at 532 [42] per McHugh, Gummow, Hayne and Heydon JJ; Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 54 [24] per French CJ. See also Zines, The High Court and the Constitution, 4th ed (1997) at 195, quoted in Thomas v Mowbray (2007) 233 CLR 307 at 351 [91] per Gummow and Crennan JJ. 130 See Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7 per Gavan Duffy CJ and Dixon J, 20-21 per McTiernan J; R v Wallis (1949) 78 CLR 529 at 543-544 per Latham CJ, 550 per Dixon J; R v Metal Trades Employers' Association; Ex parte Amalgamated Engineering Union, Australian Section (1951) 82 CLR 208 at 256 per Dixon J (Webb J agreeing at 259), 265-266 per Kitto J. See also Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566 at 586-587 [54]-[55], 589 [59] per Gummow and Hayne JJ; Victorian Building Authority v Andriotis (2019) 93 ALJR 869 at 884 [90] per Gageler J; 372 ALR 1 Nettle I favour the latter view. The power conferred by s 33ZF is to make orders the purpose of which is to ensure justice is done in a representative proceeding. The limits of what may properly be described as the demands of justice in a particular case, and so the court's power under s 33ZF, must be determined by the text of the Act read as a whole, taking into account the relevant context and purpose. With respect to those who may take a different view, that has precious little to do with the entitlement to restitution of salvors under admiralty law131 or of barristers and solicitors, who have long been subject to the "general jurisdiction of the Court … to regulate the charges made for work done"132. As the plurality observe, the provisions of Pt IVA, in which s 33ZF sits, make specific provision for the entities in respect of whom, and the point in time at which, orders distributing cost burdens and judgment or settlement proceeds may be made. None of those provisions expressly or impliedly contemplates the kind of CFOs sought in these matters nor the issues to which they were addressed. The context of s 33ZF strongly implies exclusion of a construction of that provision that permits of the making of a CFO. The broader context of legislative history points to the same conclusion. For, whatever Parliament may have foreseen to be the consequences of its enactment of Pt IVA of the FCA Act, what Parliament could not, and therefore most certainly did not, foresee was that a majority of this Court would later give its imprimatur to the maintenance of group proceedings that are dependent "on a harnessing of the alleged wrongs of the plaintiffs and of the curial processes established to remedy alleged wrongs for the primary purpose of generating profits" for entrepreneurial litigation funders133. It is one thing to hold, as this Court did in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd134, that representative proceedings involving a litigation funder are no longer considered invariably to be an abuse of process and contrary to public policy. It is, however, quite another thing to accept that the commercial interests of those funders formed part of the mischief that the introduction of Pt IVA was intended to confront. Plainly, the legislative purpose of the enactment of Pt IVA did not 131 See The Goring [1988] AC 831 at 846, 857 per Lord Brandon of Oakbrook (Lords Bridge of Harwich, Fraser of Tullybelton, Ackner and Oliver of Aylmerton agreeing at 844-845, 857); Aitken, "Negotiorum Gestio and the Common Law: A Jurisdictional Approach" (1988) 11 Sydney Law Review 566. 132 Woolf v Snipe (1933) 48 CLR 677 at 678 per Dixon J. 133 Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at 496 [287] per Callinan and Heydon JJ. 134 (2006) 229 CLR 386. Nettle extend to addressing uncertainties on the part of litigation funders as to the financial viability of funding such proceedings. Nor is it to the point that the insertion of Pt 10 into the Civil Procedure Act 2005 (NSW) occurred in 2010, following the decision in Fostif. The Parliament of New South Wales enacted a scheme governing the conduct of representative proceedings so substantially identical to that contained in Pt IVA that the two schemes are in pari materia. There is no reason to suppose that the Parliament of New South Wales intended the scope of operation of s 183 to extend to the making of orders to facilitate entrepreneurial litigation funders to generate profits by fomenting disputes which, but for the making of such orders, might never flare into controversy135. It may be presumed that the Parliament of New South Wales intended that s 183 should have an identical meaning and scope of operation to s 33ZF136. For these reasons, I agree in the orders that the plurality propose. 135 See Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at 487-488 [266] per Callinan and Heydon JJ. 136 See Lennon v Gibson and Howes Ltd [1919] AC 709 at 711-712 per Lord Shaw of Dunfermline; Ramaciotti v Federal Commissioner of Taxation (1920) 29 CLR 49 at 53 per Knox CJ (Isaacs and Rich JJ agreeing at 54); Federal Commissioner of Taxation v ICI Australia Ltd (1971) 127 CLR 529 at 541-542 per Walsh J. See also Pearce and Geddes, Statutory Interpretation in Australia, 8th ed (2014) at These appeals concern two representative proceedings, each involving a litigation funder. The circumstances giving rise to the appeals are set out in the reasons of other members of the Court. It is unnecessary to repeat them except to the extent necessary to explain these reasons. A legislative scheme allows representative proceedings to be commenced where seven or more people have claims against the same person, which are in respect of, or arise out of, the same, similar or related circumstances, and which give rise to a substantial common question of law or fact. That scheme is Pt IVA of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act") in the Westpac proceeding, and Pt 10 of the Civil Procedure Act 2005 (NSW)137 in the BMW proceeding. Each scheme contains a generally expressed power for the Court to make "any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding"138. The question in each appeal is whether this power allows the Court to make what has become known as a "common fund order" or a "CFO" in an open class representative proceeding. The rationale or justification for a common fund order was explained by the primary judge in the Westpac matter139 by quoting what his Honour had earlier said in Perera v GetSwift Ltd140: "Rather than the economics of a class action being dictated by the size of sign-up, a common fund order allows an open class representative proceeding to be commenced without the necessity to build a book of group members who have bargained away part of the proceeds of their claim. Instead of addressing the 'free-rider' problem by making 'funding equalisation orders' (to redistribute the additional amounts received 'in hand' by unfunded class members pro rata across the class as a whole), 137 Part 10 of the Civil Procedure Act was based on Pt IVA of the Federal Court Act: New South Wales, Legislative Council, Parliamentary Debates (Hansard), 24 November 2010 at 28066. The text of the two schemes is almost identical, and so these reasons will refer to the text of Pt IVA of the Federal Court Act, except when identifying any relevant differences from Pt 10 of the Civil Procedure Act. 138 Federal Court Act, s 33ZF(1). The text of s 183 of the Civil Procedure Act is almost identical, save for the addition of the word "that" after the words "any order" and the reference to "proceedings" rather than "proceeding". 139 Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 699-700 [3]. 140 (2018) 263 FCR 1 at 14 [25]. the Court [in Money Max Int Pty Ltd v QBE Insurance Group Ltd141] indicated its willingness to fashion a solution whereby the funder, who had borne the risks of the litigation, is recompensed from the common fund of proceeds obtained by the group as a whole." His Honour identified two issues with open class actions: the economics of a class action and the problem of free riders. And his Honour identified two different answers to those issues: first, book building and a funding equalisation order; or second, the Court making a common fund order to "recompense" the litigation funder. Before considering the significance of these matters, it is appropriate to address what is meant by each of the terms used here – "book building", a "funding equalisation order" and a "common fund order". The process of book building seeks to generate, capture and record interest in a specific class action. In this process, the representative party's solicitor and the litigation funder "undertake active efforts to persuade group members to enter into retainers with the [law] firm and funding agreements with [the litigation funder]" on particular terms142. And as the plurality explain, the interest is generated "using the media and web communications with a view to persuading potential [group] members to register their interest or to enter into retainer and funding agreements"143. The result of the book building – the number of group members who respond to those efforts and the manner in which they respond – reflects the interest in or demand for the litigation on the terms that have been offered by the law firm and the litigation funder. There is a range of responses. Some group members do not respond at all. Others register their interest but do not enter into contractual arrangements with the law firm or the litigation funder. Those group members are described as "unfunded". The balance – the "funded" group members – enter into contractual arrangements with the law firm and the litigation funder. the A funding equalisation order provides for deductions from "amounts payable to unfunded [group] members [from their entitlement on settlement or judgment] of amounts equivalent to the funding commission that would otherwise have been payable by them had they entered into a funding 141 (2016) 245 FCR 191. 142 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 173 [5]. 143 Reasons of Kiefel CJ, Bell and Keane JJ at [91], quoting Waye and Morabito, "Financial arrangements with litigation funders and law firms in Australian class actions", in van Boom (ed), Litigation, Costs, Funding and Behaviour: Implications for the Law (2017) 155 at 178. agreement" with the funder144. Such amounts are then "distributed pro rata across all [group] members, so that both funded and unfunded [group] members ... receive the same proportion of their settlement or judgment"145. Unfunded group members pay no commission to the funder, but such an order achieves equality of treatment between group members because unfunded group members do not receive any more than funded group members. A funding equalisation order is limited to redistributing actual costs incurred146. A common fund order, in general terms, is a set of court orders147, usually made early in the life of an open class proceeding, which impose on the representative party, and all group members, an obligation to pay a litigation funder a pro rata share of the legal costs incurred and a funding commission at a specified rate from the common fund of any settlement or judgment in their favour. Such an order obliges all group members, including unfunded group members, to contribute to the legal costs and to pay the litigation funder a commission. For the reasons that follow, Courts do not have the power to make a common fund order. The legislative scheme Part IVA of the Federal Court Act is procedural, not substantive; it permits representative proceedings. Division 2 of Pt IVA is concerned with the commencement, and composition, of representative proceedings. Section 33C sets out the threshold requirements for a representative proceeding. It allows one or more persons to commence a representative proceeding, where there are seven or more persons with claims against the same respondent that are in respect of, or arise out of, the same, similar or related circumstances148. The representative proceeding may represent some or all of those who have such a claim. 144 Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191 at 194 145 Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191 at 194 146 Costs are subject to the approval of the Court: Federal Court Act, ss 33V, 33Z; Civil Procedure Act, ss 173, 177. 147 cf Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191 at 194 148 Federal Court Act, s 33C(1)(a), (b). The claims of the applicant and the group members149 must give rise to a substantial common issue of law or fact150, but the group members need not necessarily share a common interest. Indeed, the claims need not be based on the same conduct. In practical terms, it is those seeking to generate, capture and record interest in a specific class action – the law firm and the litigation funder – that determine the group members to whom the proceeding, or proposed proceeding, relates; the nature of the claims to be made on behalf of those group members; the relief to be claimed; and the questions of law or fact common to the group members. Consent is generally not required to be a group member151. Thus, s 33J provides that a group member may opt out of a representative proceeding and the Court must fix a date before which a group member may opt out152. Opting out is important: the hearing of a representative proceeding must not, except with the leave of the Court, commence earlier than the date before which a group member may opt out of the proceeding153. The integrity of the scheme therefore depends upon group members having the right to opt out. That a representative proceeding might not be economic to litigate is expressly recognised by Pt IVA as a whole and, in particular, ss 33M and 33N. Section 33M provides that the Court may order that the proceeding no longer continue under Pt IVA, or stay a proceeding, on an application by the respondent if "the relief claimed in a representative proceeding is or includes payment of money to group members (otherwise than in respect of costs)", and "the Court concludes that it is likely that, if judgment were to be given in favour of the representative party, the cost to the respondent of identifying the group members and distributing to them the amounts ordered to be paid to them would be excessive having regard to the likely total of those amounts"154. 149 Section 33A, in Div 1, defines "group member" to mean "a member of a group of persons on whose behalf a representative proceeding has been commenced". 150 Federal Court Act, ss 33C(1)(c), 33H(1)(c). 151 Federal Court Act, s 33E(1). There are certain persons from which written consent is required, including the Commonwealth, a State or a Territory: s 33E(2)(a). 152 Federal Court Act, s 33J(1), (2). 153 Federal Court Act, s 33J(4). 154 Federal Court Act, s 33M(a), (b). Section 33N provides that the Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under Pt IVA where it is satisfied that it is in the interests of justice to do so because, among other things, "the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members"155 or "it is otherwise inappropriate that the claims be pursued by means of a representative proceeding"156. If a representative proceeding is uneconomic to litigate, the answer provided by the statute is for the proceeding to cease to be a representative proceeding. The existence of the power to stay a proceeding157 where the costs of the proceeding, including the costs of identifying the group members entitled to the ultimate award and distributing to them the relevant amounts, are too high, or to order that a proceeding no longer continue under Pt IVA158, recognises that some claims will simply be uneconomic to run. The Parliament provided, in effect, a viability threshold which, if not met, would cause the Court hearing the matter to order a stay of the matter or order that the proceeding no longer continue under Pt IVA. It did not provide any alternative means of ensuring viability of the matter. A representative proceeding may not be settled or discontinued without the approval of the Court159. If the Court gives approval, s 33V(2) confers power on the Court to "make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court". But that provision does not envisage a Court making orders with respect to the economics of a proceeding by ensuring that a litigation funder obtains a particular return on funds invested. Division 3 deals with notices to group members. The Court has a power to order notices at any stage160. Certain notices, however, are mandatory including: one giving group members the right to opt out prior to the hearing of a 155 Federal Court Act, s 33N(1)(c). 156 Federal Court Act, s 33N(1)(d). 157 Federal Court Act, s 33M(d). 158 Federal Court Act, ss 33M(c), 33N. 159 Federal Court Act, s 33V(1). 160 Federal Court Act, s 33X(5). representative proceeding161; one prior to the approval of a settlement (unless the Court is satisfied that it is just to dispense with this requirement)162; and one prior to the constitution of a fund consisting of the money to be distributed163. These notice provisions are an important aspect of the statutory scheme, though "the reality is that ... notice[s] may not have come to the attention of, or been fully appreciated by, all group members"164. The powers of the Court in determining a matter in a representative proceeding, usually following a final hearing, are addressed separately in Div 4. A judgment binds all group members described or identified in the judgment, except those who had opted out165. If the Court makes an award of damages for group members, the Court must make provision for the payment or distribution of the money to the group members entitled166. The Court may give directions as it thinks just in relation to the manner in which a group member is to establish his or her entitlement to share in the damages and the manner in which any dispute regarding the entitlement of a group member to share in the damages is to be determined167. Again, none of those provisions envisages the Court being engaged in making orders with respect to the economics of a proceeding by ensuring that a litigation funder obtains a particular return on funds invested. Division 6 contains a series of miscellaneous provisions addressing matters including limitation periods168, a savings clause169 and reimbursement of a representative party's costs170. Section 33ZF, in Div 6, is the provision in issue 161 Federal Court Act, ss 33X(1)(a), 33J(4). 162 Federal Court Act, s 33X(4). 163 Federal Court Act, s 33ZA(3)(a). 164 Blairgowrie Trading Ltd v Allco Finance Group Ltd (2015) 325 ALR 539 at 573 165 Federal Court Act, s 33ZB(b). 166 Federal Court Act, s 33Z(1)(e), (f) and (2). 167 Federal Court Act, s 33Z(4), read with s 33ZA. 168 Federal Court Act, s 33ZE. 169 Federal Court Act, s 33ZG. 170 Federal Court Act, s 33ZJ. in these proceedings. It is headed "General power of Court to make orders" and provides: In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding. Subsection (1) does not limit the operation of section 22[171]." (emphasis added) Section 33ZF applies in any proceeding conducted under Pt IVA. It is a supplementary or gap-filling provision172 that operates within the existing statutory scheme. It requires that the Court be satisfied that proposed orders are appropriate or necessary to ensure that justice is done in the representative proceeding. It does not empower a Court to make a common fund order. Part IVA, threshold criteria and the role of s 33ZF Section 33ZF(1) is a broad power and it may be accepted that it should not be read down by reference to limitations not found in the express words of Pt IVA173. But the text of the provision – that "[i]n any proceeding ... conducted under [Pt IVA], the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding" (emphasis added) – does not permit the making of a common fund order even when taken at its widest. Considered in the context of Pt IVA as a whole and ss 33C, 33J, 33M, 33N, 33V, 33Z, 33ZA and 33ZB in particular, s 33ZF(1) as a supplementary or gap-filling power is a power to do what is appropriate or necessary to advance the objective of Pt IVA – to provide a procedure for representative proceedings. As has been seen, none of the provisions mentioned envisages a Court being engaged in making a common fund order. 171 There is no equivalent to s 33ZF(2) of the Federal Court Act in the Civil Procedure Act. Section 22 of the Federal Court Act provides that the Court shall grant all remedies to which any party appears to be entitled so that all matters in controversy between the parties are completely and finally determined as far as possible. It may be put to one side. 172 Ethicon Sarl v Gill (2018) 264 FCR 394 at 399 [17]. 173 Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at As noted above, in the Westpac matter, the primary judge restated a view his Honour had previously expressed that "a common fund order allows an open class representative proceeding to be commenced without the necessity to build a book of group members who have bargained away part of the proceeds of their claim"174. The distinction sought to be drawn appears to be that in some cases proceedings can be commenced with a need to build a book, and in others they can be commenced without the need to build a book. But there is no mention in Pt IVA of any such distinction. A proceeding may be commenced under Pt IVA if it satisfies the threshold criteria in s 33C. It cannot be commenced on the possibility that the Court might be persuaded to make a common fund order to overcome the fact that the class action might otherwise be uneconomic or risky for a litigation funder. Relationship between parties and non-parties A common fund order seeks to have a Court craft a relationship between unfunded group members in a class action and a litigation funder who is not a party to the proceeding. Part IVA as a whole and s 33ZF(1) in particular does not allow the Court to set (or provide the statutory criteria to guide the Court in setting) the terms or contours of that relationship. As the Court of Appeal of the Supreme Court of New South Wales recognised in the BMW matter175, although all group members were to be immediately "bound" by the common fund order, "[l]ittle attention was given in argument to the nature of the binding effect of the order, if made, or the identity of the group members to whom it applied". As their Honours observed176, if a common fund order were made, it would "give rise to a possible sanction of contempt, rather than the non-consensual imposition of contractual rights and obligations upon group members". Further, as the Court of Appeal observed177, no attention had been given to the "nature of liabilities incurred by persons while a member of the [group] but who subsequently opt out". For example, do such persons continue to be bound by the obligation of confidentiality attaching to communications to them by the solicitors? The Court expressly recorded178 that 174 Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 700 [3], quoting Perera v GetSwift Ltd (2018) 263 FCR 1 at 14 [25]. 175 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 177 [24]. 176 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 177 [25]. 177 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 177 [26]. 178 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 177 [26]. nothing in its reasons was to be understood as addressing such questions. But those questions need to be addressed. Part IVA does not deal with them directly or indirectly. Setting the rate of commission to be paid to a funder is one element of that crafted relationship. The Full Court of the Federal Court in the Westpac matter suggested that what was required was "the development, on a case by case basis, on evidence led before the Court, of criteria of sufficient clarity, and of an appropriate nature upon which to exercise the power judicially and not idiosyncratically or personally"179. Judicial decisions over time might build up a body of precedent showing that a particular funding rate was considered "appropriate" by the courts for the market conditions that then applied. But that is not the statutory question. The question is whether the order sought is appropriate or necessary to do justice in the proceeding. Those, and other, "potentially problematic aspects"180 of common fund orders are strong indicators that a Court does not have the power to make such orders under the existing legislative scheme. Funding A common fund order might put the proceeding on a "known and stable foundation"181 in terms of funding, make the action a more profitable venture for a funder or reduce the risk to the funder, but none of those outcomes is properly described as appropriate or necessary to ensure that justice is done in the proceeding. Relatedly, to ask whether a funder will withdraw funding if a common fund order is not made is to ask the wrong question. A funder assesses whether to fund litigation. Once commenced, it is not appropriate or necessary to improve the economic position of the funder against the possibility that it will carry out a threat to proceed no further. The action as framed and instituted proceeds, or it does not. The Westpac matter is instructive. The primary judge stated that the making of the common fund order was appropriate, not necessary, to ensure that justice is done in the proceeding because "[w]ithout an appropriate common fund order being made, a particular injustice would result, being the likely inability, 179 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 46 [92]. 180 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 178 [28]. 181 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 45 [91]. absent funding, of the group members to have their claims advanced in this class action"182. Immediately preceding that statement, under the heading "[w]hy a common fund order should be made", his Honour summarised the reasons for the order. There were eight183: (1) the revised proposal "substantially mirrored the form of the funding terms" that his Honour had indicated were appropriate in another class action; (2) the litigation funder would "likely meet its obligations"; (3) "the funding rate (if calculated by reference to net recoveries) [was] reasonable in all the circumstances and it [was] not evident another funder would propose more favourable terms"; (4) "no conflict issues" arose; (5) "the solicitors [had] acted responsibly in the selection of the funder notwithstanding the only detailed discussion as funder, JustKapital Litigation Pty Ltd; (6) the proposed common fund order was "put forward by the applicants and their solicitors conscious [of] their duties to group members"; (7) "the legal costs [were] likely to be very considerable and without litigation funding it [was] likely that the proceeding would not advance to resolution at a mediation or on the merits"; and (8) "the making of the proposed order, and thus allowing an open class, [was] consistent with the policy objectives of Pt IVA". terms was with" litigation the That approach was misplaced. It proceeded from his Honour's assumption that his task was "to form a view on whether the proposal currently put forward is one which is in the interests of group members"184. That may be the task in assessing competing class actions185, but that was not the task here. The statutory inquiry was whether the order sought was "appropriate or necessary to ensure that justice is done in the proceeding". That it has been accepted that "[t]he subject of the claim [in a class action] may be ... no more significant than a joint enterprise seeking to use litigation as a means to make money"186 demonstrates these points. How does a court assess whether the representative proceeding is no more than "a joint enterprise seeking to use litigation as a means to make money"? Why and how should a court assess 182 Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 715 [63]. 183 Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 713 [59], 184 Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 705 [16]. 185 Perera v GetSwift Ltd (2018) 263 FCR 1 at 33 [98]. 186 Abbott v Zoetis Australia Pty Ltd [No 2] (2019) 369 ALR 512 at 513 [1]. the economics of a class action? Asking and answering these and similar questions is not appropriate or necessary in ensuring that justice is done in a proceeding. The BMW litigation is illustrative of the problems. The group members on whose behalf the class action is brought are persons who acquired BMW vehicles fitted with Takata airbags which are the subject of recall. BMW is alleged to have contravened the Trade Practices Act 1974 (Cth) and the Australian Consumer Law187 by supplying vehicles with defective airbags to group members. The evidence disclosed that there may be in excess of 200,000 group members. However, by October 2018, only 33 BMW-owning group members had entered into a contract with the litigation funder and only 116 had shown interest in doing so. It was, as the Court of Appeal described it, a "tiny proportion of the whole"188. Indeed, the evidence disclosed that as at 15 September 2018, of the 114,406 unique visits to the Takata Airbag Class Action website, 4,136 persons have registered their interest in the proceedings but only 787 persons across six class actions have signed a funding agreement with the litigation funder. It is relevant to ask why. Was it because, as was common ground, the BMW representative proceeding had a very large number of group members with very modest claims for damages, the airbags having been replaced? Or was it because there has been little or no book building in the form of active efforts seeking to persuade group members to enter into contractual arrangements with the law firm and the litigation funder? Logic suggests that it is a combination of both. Given the very modest claims for damages of most potential group members, it is hardly surprising that there is little appetite for litigation amongst them. And given the lack of appetite for litigation amongst potential class members, it may well be supposed that the litigation funder is reticent to incur costs in book building which may be largely wasted and prove irrecoverable. Far better from the litigation funder's point of view, no doubt, to obtain a common fund order which avoids the costs of book building and guarantees a handsome rate of return from the aggregate of damages which may ultimately be recovered. The reasons given for the failure to take active steps to build the book were said to be the relatively high costs of building a book in a matter such as this, and safety (based on a desire to avoid confusion with the early stages of the recall of airbags). Neither claim appears at all convincing. On the question of 187 Competition and Consumer Act 2010 (Cth), Sch 2. 188 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 172 [3]. cost of book building, the unchallenged evidence of the solicitor acting for the representative applicant based on his past experience of the cost of book building activities in other proceedings was that it "would likely exceed $1 million" and that "[a]ll or part of such costs may ultimately be deducted from the possible recoveries of Group Members" (emphasis added). A person seeking to build a business usually incurs expenditure in seeking to establish that business. Given that the size of the potential return to the litigation funder in these proceedings is not insignificant, it is difficult to accept that the cost to build the book is prohibitively expensive. Whether the litigation funder then seeks to recover that cost from the group members is a separate issue. Relevantly for present purposes, the solicitor for the representative applicant provided unchallenged evidence of a combination of methods which would, in his opinion, be "a low cost, efficient and effective means of notifying a large proportion of Group Members ... with little to no prejudice to the defendant[]". He also provided unchallenged evidence that those methods were "comprehensive, reasonable and appropriate methods of distribution which, in combination, [were] likely to bring the Common Fund Application to the attention of Group Members in accordance with sections 175 and 176 of the Civil Procedure Act 2005 and paragraph 8.1 of Practice Note SC Gen 17". The listed methods included displaying the relevant material on a website, sponsored search listings on an internet search engine, and advertisements on social media as well as in newspapers. It may be accepted that two of the identified methods involved displaying on the defendant's social media pages and websites a link to a page on the litigation funder's website. But putting those two methods to one side, the evidence does not detract from the fact that contact with group members was possible and proposed to be done in a variety of ways without incurring significant costs. And there is nothing to suggest that contact with group members to seek to build a book could not be done in substantially the same comprehensive manner at the same low cost. Indeed, when the application for a common fund order came before the Court in the BMW matter, there was an accompanying application for an opt-out notice to be distributed to group members, thereby closing the class. That application had been deferred. If a litigation funder seeks a common fund order in order to avoid the costs of book building (and that is a very real incentive for a funder to seek such an order), that objective has no connection with what is appropriate or necessary to ensure justice is done in the proceeding. As to the claim for the need for safety (to avoid confusion with the early stages of airbag recall), by the time the application for a common fund order came before the Court, the early stages of the recall were long past. Analogies not useful The Court of Appeal in the BMW matter noted that "Courts have and regularly exercise power to make interlocutory orders, which may be highly intrusive upon defendants, at an early stage in litigation, and without the benefit of findings as to the ultimate facts", including Mareva orders189. Seeking to draw analogies between the making of a common fund order and other orders made by courts in other contexts is unhelpful. The focus must be on the words of Pt IVA, a legislative scheme190. As has been explained, a common fund order seeks to craft a relationship between the litigation funder – a non-party to the proceeding – and unfunded group members who either do not know about the proceeding or, for whatever reason, have shown no interest in the proceeding. The statutory question is whether an order is appropriate or necessary to ensure that justice is done in a proceeding, not whether an order is more generally supportive of, or contrary to, justice. A common fund order is not an order that is appropriate or necessary to ensure that justice is done in a proceeding. Free riders At the start of these reasons, two issues were identified as justifications for a common fund order: the economics of an open class action and the problem of free riders. The economics aspect has been addressed. It is necessary to say something further about the problem of free riders – the unfunded group members who seek to take the benefit of the results of the litigation. No solution to the problem of free riding by unfunded group members is perfect. But as the primary judge recognised in Westpac, until the courts indicated their "willingness to fashion a solution [of a common fund order] whereby the funder, who had borne the risks of the litigation, is recompensed from the common fund of proceeds obtained by the group as a whole"191, the free rider problem was addressed by making funding equalisation orders to redistribute the additional amounts received "in hand" by unfunded class members pro rata across the class as a whole. It was not suggested by any of the parties to these appeals that the legislative scheme did not allow for the making of a funding equalisation order. 189 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 188 [78]. 190 See [130], [136]-[145] above. 191 Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 700 [3], quoting Perera v GetSwift Ltd (2018) 263 FCR 1 at 14 [25]. In short, there is already an accepted solution to the problems which the common fund order supposedly seeks to address. Conclusion For those reasons, I agree with the orders proposed by Kiefel CJ, Bell and Edelman Introduction Two things are clear in these appeals. First, the powers of a court in the relevantly identical s 33ZF(1) of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act") and s 183 of the Civil Procedure Act 2005 (NSW) ("the Civil Procedure Act") are expressed in very wide terms, permitting orders that the Federal Court of Australia and the Supreme Court of New South Wales respectively think are "appropriate or necessary to ensure that justice is done in the proceeding". Secondly, the scope of the powers conferred by those provisions is not fixed by reference to understandings or expectations held in 1991192 and 2010193, when those provisions were introduced. The application of meaning is not confined by notions whose "time has passed"194. The essential meaning of the wide, open-textured words of s 33ZF(1) and s 183, the "concept", is always speaking so that the essential meaning is applied "taking into account changes in our understanding of the natural world, technological changes, changes in social standards and ... changes in social attitudes"195. The application should also include changes in the law since the legislation was enacted196. The primary issue in dispute in these appeals is whether the innovation of a common fund order in an open class representative proceeding can be an application of the power contained in those provisions. The issue can be divided into two sub-questions. The first question is whether the provisions empower the relevant court to make a common fund order at the conclusion of proceedings. If so, the second question is whether a common fund order could be made at the start of proceedings. The background to these appeals is set out in the joint judgment of Kiefel CJ, Bell and Keane JJ. For the reasons below, in the preparation of which 192 Federal Court of Australia Amendment Act 1991 (Cth), s 3. 193 Courts and Crimes Legislation Further Amendment Act 2010 (NSW), Sch 6.1 [2]. 194 See Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 622. 195 Owens v Owens [2017] 4 WLR 74 at [39]; see also Owens v Owens [2018] AC 899 at 916-917 [30]-[32]. See also Aubrey v The Queen (2017) 260 CLR 305 at 321- 322 [29]-[30]; R v A2 (2019) 93 ALJR 1106 at 1135 [143]-[144], 1140-1141 196 See Burrows, Thinking about Statutes: Interpretation, Interaction, Improvement (The Hamlyn Lectures) (2018) at 29. Edelman I obtained much assistance from the cogent judgments of the Full Court of the Federal Court of Australia197 and the Court of Appeal of the Supreme Court of New South Wales198, the proper interpretation of s 33ZF(1) of the Federal Court Act and s 183 of the Civil Procedure Act permits the Federal Court and the Supreme Court of New South Wales, respectively, to make a common fund order. Common fund orders can be, and therefore can be thought to be, "appropriate or necessary to ensure that justice is done in the proceeding" by requiring those who obtain the benefit of a litigation funding service, including the benefit of risk and cost incurred by the litigation funder, to bear a that service. proportionate share of Common fund orders also ensure that the remuneration for the service is reasonable. remuneration reasonable the for The appellants had two subsidiary arguments: (i) that a common fund order is contrary to judicial power, and (ii) that a common fund order is an acquisition of property on other than just terms. These two subsidiary arguments were not strong. This Court dispensed with submissions from the interveners on those matters. Each argument is dismissed briefly towards the conclusion of these reasons. I would dismiss each appeal. The power to make a common fund order Section 33ZF(1) provides: "In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding." It was not in dispute that if s 33ZF(1) empowers the Federal Court to make a common fund order then s 183 of the Civil Procedure Act would also empower the Supreme Court to do so. These reasons generally focus upon s 33ZF(1) in Pt IVA of the Federal Court Act, the relevant provision in the appeal from the decision of the Full Court in the Westpac matter199. The 2010 regime that introduced Pt 10 of the Civil Procedure Act inserted s 183 in relevantly identical terms to s 33ZF(1). The 2010 regime was "substantially 197 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21. 198 BMW Australia Ltd v Brewster (2019) 366 ALR 171. 199 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21. Edelman modelled on part IVA [of the Federal Court Act]" and was designed to "provide a greater level of certainty for both litigants and the court [than the previous provisions in New South Wales] and [to] enhance the community's access to justice"200. "Common fund order" is not a term of art. It loosely describes orders made by a court providing for the remuneration of a litigation funder, borne pro rata by the group members from a common fund of the proceeds recovered from the litigation. The order generally provides for the priority of payment to the litigation funder from the common fund, and for the quantum of the payment, which might include a proportion of the money recovered in the proceedings. Sometimes a common fund order is made by the court towards the conclusion of the proceedings, such as after reasons have been delivered or after a settlement has been reached201. On other occasions, a common fund order is made by the court at a relatively early stage in the proceedings202. The four core aspects of the common fund orders that were made early in the proceedings of each matter the subject of these appeals were identified by the Full Court in the Westpac matter203. They are typical characteristics: (i) the pooling of any settlement or judgment funds obtained by the applicants or group members; (ii) an order for priority of payment to the litigation funder from that pool; (iii) the treatment of the litigation funder as a service provider to the group with the remuneration of the litigation funder as the common responsibility of the applicants and the group arising from the realisation of their claims; and (iv) undertakings by the litigation funder, the solicitors and the representative parties to comply with their obligations under the funding agreement. In some respects, the common fund orders in each appeal went beyond orders that ensured proportionate bearing of the cost of reasonable remuneration for a litigation funder. The orders contained annexures with substantive clauses 200 New South Wales, Legislative Council, Parliamentary Debates (Hansard), 24 November 2010 at 28066-28067. 201 See, eg, Caason Investments Pty Ltd v Cao [No 2] [2018] FCA 527; Hodges v Sandhurst Trustees Ltd [2018] FCA 1346. 202 See, eg, Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; Pearson v Queensland [2017] FCA 1096; Impiombato v BHP Billiton Ltd [2018] FCA 1272. 203 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 30-32 [20]-[28]. Edelman that imposed obligations including confidentiality and dispute resolution204. The obligations in the annexures were akin to a contract imposed upon persons who had manifested no consent to it. As a principle of justice, it is one thing for a court to impose a duty to pay reasonable remuneration for non-gratuitous work done for another's benefit in order to ensure the proportionate distribution of an expense among those who benefitted from it. It is quite another matter for a court to impose general obligations upon persons without their consent, including requiring those persons to accept arbitration in place of, or as a precondition to, the exercise of their right of access to courts. However, since these appeals were generally argued by reference to the obligation in the common fund orders requiring group members to pay a pro rata proportion of a reasonable remuneration, and since these are dissenting reasons, it suffices to focus upon those four core aspects concerning remuneration of the litigation funder in considering whether s 33ZF(1) of the Federal Court Act empowers the making of common fund orders at the conclusion of proceedings and, if so, whether those orders can be made on an interlocutory basis. A common fund order at the conclusion of the proceedings The breadth of the power and considerations of justice The words of s 33ZF(1) used by the Commonwealth Parliament, namely "the Court thinks appropriate or necessary to ensure that justice is done in the proceeding", confer a wide power on a superior court. Speaking of the power in s 24 of the Canadian Charter of Rights and Freedoms to grant a remedy that the court considers "appropriate and just in the circumstances", Iacobucci and Arbour JJ said that "[i]t is difficult to imagine language which could give the court a wider and less fettered discretion"205. Further, as a power-conferring provision, the generality of the words of s 33ZF(1) should not be disapplied or denied "capacity to apply to circumstances" that fall within the ambit of its words206. The grant of powers in "Pt IVA is not to be read by making 204 See BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 197-205 and the unreported schedule to the orders made in Westpac Banking Corporation v Lenthall (2019) 265 FCR 21. 205 Doucet-Boudreau v Nova Scotia (Minister of Education) [2003] 3 SCR 3 at 24 [24], quoting Mills v The Queen [1986] 1 SCR 863 at 965. 206 FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 at 284. See also Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 185, 202-203, 205; Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 421. Edelman implications or imposing limitations not found in the words used"207. The limitations are only that the orders must be capable of being thought to be "appropriate or necessary", in the sense of being "suitable or fitting"208, for the purpose of ensuring that justice is done in the proceeding. In representative proceedings where some group members, but not others, have entered an agreement with a litigation funder there is potential for injustice in two ways. Injustice could arise if the litigation funder were only able to recover a small portion of its costs because it was limited to recovery of remuneration from those persons with whom it entered an agreement. Alternatively, injustice could arise if the group members who entered an agreement with the litigation funder of the proceedings were forced to bear all of the costs of the litigation while other members of the group who had not entered into such agreements could take the benefit of the proceeds of the litigation free from its costs. One solution to these potential matters of injustice is sometimes described as "fund equalisation orders". These orders were devised in the Court of Chancery in response to the situation where lawyers had entered cost agreements with some group members but not with others. The Court of Chancery adjusted the rights of all the parties to ensure that the costs incurred by the lawyers would be borne pro rata by all the group members who benefitted from the litigation. The orders required payment into a fund, held for the benefit of the group, of the costs received by the representative party to the suit. The representative party was then entitled to deduct his legal expenses from that fund, thus ensuring that the costs were borne pro rata by the group members209. The same fund equalisation approach can be taken to ensure that, upon success of a proceeding at judgment or settlement, the litigation funder is remunerated by all group members with the remuneration borne pro rata by all group members. This is achieved by deducting from the entitlements of those "unfunded" group members who had not entered contracts with the litigation funder the "amounts equivalent to the funding commission that would otherwise 207 Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 260-261 [11]. 208 Vella v Commissioner of Police (NSW) [2019] HCA 38 at [50]. 209 National Bolivian Navigation Co v Wilson (1880) 5 App Cas 176 at 211-212. Edelman have been payable by them had they entered into a funding agreement"210. As Finkelstein J said in the Multiplex class action211: "fairness to the funded class members, without whom the proceedings could not have continued, requires that the non-funded group members are in no better position for having been unfunded for a matter of weeks prior to the in-principle settlement having been reached." The fund equalisation solution has the benefit of spreading the remuneration of the litigation funder from those who would bear the cost of it under an agreement to all members of the group. But the fund equalisation solution suffers from the difficulty that it involves no necessary assessment by the court of the reasonableness of the remuneration costs incurred by the group members who enter into contracts with a litigation funder. Without such assessment, the group members who did not enter contracts might have unreasonable and excessive remuneration costs imposed upon them in the process of equalisation with those members who might have entered contracts in a "compliant" manner212. A different solution, designed to ensure justice to the litigation funder and also to all the members of the group, was for a court to make a common fund order providing for the reasonable remuneration of the legal service provider from the common fund. The remuneration of the litigation funder could be limited to that which is reasonable, even if the agreement with some group members exceeded a reasonable amount. Indeed, the imposed remuneration in the common fund order in the BMW appeal involved a smaller commission rate than the remuneration that had been agreed between the litigation funder and the group members213. The question in these appeals is whether it could be thought "appropriate or necessary to ensure that justice is done in the proceeding" for a court to make a common fund order which recognises a right for a third party service provider, 210 Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191 at 211 P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd [No 4] [2010] FCA 1029 212 Waye and Morabito, "Financial arrangements with litigation funders and law firms in Australian class actions", in van Boom (ed), Litigation, Costs, Funding and Behaviour: Implications for the Law (2017) 155 at 193. 213 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 176 [22]. Edelman namely a litigation funder, to recover a reasonable remuneration proportionately from group members, including by reference to the success of the action. The appellants' submission is that such an order could never be thought appropriate or necessary to ensure that justice is done in the proceeding. The appellants focused upon components of the order that they effectively treated as contrary to justice, in particular remuneration for work done without request and calculated by reference to the extent of success. The basic reason why the appellants' submission cannot be accepted is that the rationale in justice for a common fund order can be illuminated by reference to long-standing orders, analogous to those "that any civilized system of law is bound to provide"214. Those orders are made despite the presence of all of the matters asserted by the appellants to be contrary to justice in a proceeding. Bearing in mind that the concept of justice in a proceeding is plainly one that can, and was expected to, evolve, it is a complete answer to the appellants' submissions to point to the existence of orders for remuneration of work, based upon well-accepted principles of justice in the proceeding, in circumstances where the work was not requested and where remuneration is dependent upon success. These orders are made in numerous circumstances where justice requires remuneration for unrequested intervention that rescues or preserves the property of another including actions by maritime salvors, bailees, tenants, trustees, liquidators, and solicitors. The common fund order as a just order in the proceedings The common fund order, in its original form in the United States, was an order that was said to be based upon the prevention of unjust enrichment that would result from court orders, including orders resulting in the unjust enrichment of group members entitled to the fund at the expense of those who provided the legal services. It was held that "a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole" because "persons who obtain the benefit of a lawsuit without contributing to its cost are unjustly enriched at the successful litigant's expense"215. The reasonable fee could be recovered in the absence of a contract or a request for the provision of funding from the persons who have obtained the benefit of the successful claim216. 214 Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 215 Boeing Co v Van Gemert (1980) 444 US 472 at 478. 216 Central Railroad & Banking Co of Georgia v Pettus (1885) 113 US 116 at 126. Edelman An analogy can be drawn using the example given by Lord Scott of Foscote in Cobbe v Yeoman's Row Management Ltd217, of a locksmith who is requested to open a locked cabinet "which is believed to contain valuable treasures but to which there is no key". Although no agreement is reached, the locksmith designs a key which opens the cabinet and reveals the treasure. The locksmith is in the same position as a litigation funder in the litigation of a chose in action on behalf of persons with whom no agreement has been reached. The potential value of the litigation cannot realistically be "unlocked" without the litigation funder. Although no agreement is concluded between the locksmith and the owner of the locked cabinet, when the cabinet is opened and treasure is found, "[t]he owner has been enriched by his work and, many would think, unjustly enriched. For why should a craftsman work for nothing?" With no accrued contractual rights held by persons who have not entered agreements with the litigation funder218, it might be thought that Australian law could recognise a claim for restitution of unjust enrichment against the group members in such circumstances. This would extend, in a principled manner, a right to remuneration from the lawyer who performs the work to the litigation funder who engages the lawyer and incurs the risk. If so, it would not be difficult to conclude that a court could think it appropriate or necessary to make such an order to ensure that justice is done in the proceeding. There are, however, at least three potential obstacles to characterising a common fund order that involves remuneration as a proportionate share of the award to be an award of restitution in the category of unjust enrichment. First, in Australian law, restitution within the category of unjust enrichment requires proof of an unjust factor such as mistake, duress, undue influence or failure of consideration that qualifies or vitiates the basis for another's right to retain the benefit or enrichment219. But in common fund order cases such factors are not usually relied upon as the basis for the litigation funder's entitlement and such factors were not relied on in these appeals. Secondly, in unjust enrichment an obligation to make restitution of the value of work done is not usually ordered if 217 [2008] 1 WLR 1752 at 1773 [41]; [2008] 4 All ER 713 at 736. 218 Mann v Paterson Constructions Pty Ltd [2019] HCA 32 at [64], [172], [179]. 219 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 516 [30]; Mann v Paterson Constructions Pty Ltd [2019] HCA 32 at [168]. Edelman the work has not been requested by the party who obtains the benefit220. In common fund order cases, some members of an open group might not even be aware of the proceedings. Thirdly, as a response to unjust enrichment, the amount of a personal restitutionary award is usually the reasonable value of the work done at the time it was performed221 as a sum certain222; it is not a partial share of future profit or future recovery. In common fund order cases, a common order for remuneration is expressed as a percentage of the recovery. These potential obstacles were all relied upon by the appellants. But although they are obstacles to justifying a common fund order by reference to the Australian conception of restitution in the category of unjust enrichment, they are not obstacles to whether a common fund order could ever be thought to be "appropriate or necessary to ensure that justice is done in the proceeding". Justice in a proceeding is not confined by issues of taxonomy or classification. Indeed, even awards of restitution are not limited to actions that form part of the category of unjust enrichment223. Shorn of any such rigidity, the broad concept of justice being "done in the proceeding" can extend beyond the category of unjust enrichment and beyond awards that fit the recognised category of restitution. It can extend to some circumstances (i) where the calculation of reasonable remuneration includes a share of profits in the market value of work done and the risk incurred, particularly where that is the basis for such remuneration in the relevant industry224 and (ii) where work has not been requested. This is particularly so where services are not conferred gratuitously and remuneration will only be recovered from a fund obtained upon success. As the appellants pointed out, Australian law225, like English law226, does not recognise a general right to remuneration for work that increases the value of 220 Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 at 248; Lumbers v W Cook Builders Pty Ltd (In liq) (2008) 232 CLR 635 at 663 [79]-[80]; Stewart v Atco Controls Pty Ltd (In liq) (2014) 252 CLR 307 at 326-327 [47]-[48]. 221 Benedetti v Sawiris [2014] AC 938 at 955-956 [14]. 222 Mann v Paterson Constructions Pty Ltd [2019] HCA 32 at [150]. 223 Mann v Paterson Constructions Pty Ltd [2019] HCA 32 at [213]. 224 Way v Latilla [1937] 3 All ER 759. See also Becerra v Close Brothers Corporate Finance Ltd [1999] EWHC 289 (Comm). 225 Stewart v Atco Controls Pty Ltd (In liq) (2014) 252 CLR 307 at 326 [47]-[48]. 226 Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 at 248; ENE Kos 1 Ltd v Petroleo Brasileiro SA [No 2] [2012] 2 AC 164 at 176-177 [19]-[20]. Edelman another's property. Instead, the general rule denies remuneration to a person who acts to increase the value of another's property because "[l]iabilities are not to be forced upon people behind their backs"227. Underlying the general rule are principles that (i) a person should not be made worse off by being required to pay for unrequested actions of others that the person might not have wanted, and (ii) the law should not encourage the officious creation of liabilities. However, powerful justifications for exceptions to the general rule arise where the underlying principles have little force because (i) the liability can only be recovered from a fund obtained from the success of the action, and (ii) remuneration for the action is of a type that the law, through legislation or general principle, supports. In the United States, the exceptions have been consolidated in a rule permitting recovery from an owner of property, not exceeding the value of the benefit obtained, where non-gratuitous services are successful and it would be reasonable to assume that they would have been desired by the owner228. Although English and Australian law have not yet recognised any consolidated rule permitting recovery, numerous exceptions to the general rule against remuneration for unrequested work have developed where the underlying principles that support it have little force or are outweighed by other principles. One well-recognised example of such an exception is an award for unrequested intervention in the law of maritime salvage. A maritime salvage award is remuneration based upon the value of the property recovered where, without a duty to do so, a maritime salvor saves a ship or its cargo from peril or recovers them from derelict229. Salvage services operate as an exception to the general rule that a person should not have to pay for a service they did not request, and in fact may not have desired, because of the "strong maritime policy interest in rewarding salvors"230. Maritime salvage is not a unique instance of remuneration for unrequested intervention. Although the precise rules of salvage are obviously limited to 227 Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 at 248. 228 American Law Institute, Restatement of the Law Third, Restitution and Unjust Enrichment (2011) §21 at 295-296. See also Mitchell, Mitchell and Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 9th ed (2016) at 229 Robinson v Western Australian Museum (1977) 138 CLR 283 at 330. 230 Ministry of Trade of the Republic of Iraq v Tsavliris Salvage (International) Ltd (The "Altair") [2008] 2 Lloyd's Rep 90 at 101 [57]. Edelman maritime law, justice does not stop at the shoreline; the same underlying reasoning is reflected in numerous categories of case on dry land which might have taken their "rise from marine adventure"231. An old view, that maritime salvage was an anomalous branch of the law of "quasi-contract", perhaps provoked by a "fear of the archaic embarrassments of the old learning"232, ignored the recognition of numerous other categories of recovery of a reasonable remuneration for unrequested work including reasonably necessary and effective acts of preservation by bailees233, tenants234, trustees, and liquidators235. Reimbursement will also be awarded, in broad terms, to a person who intervenes and pays a bill of exchange that has been protested for non-payment for the honour of any party who is liable thereon or the person for whose account the bill is drawn. This right of recovery, embodied in s 73 of the Bills of Exchange Act 1909 (Cth), is based on common law principles which were recognised nearly two centuries ago as analogous to the power of the master of a ship to raise 231 Prager v Blatspiel, Stamp and Heacock Ltd [1924] 1 KB 566 at 568. See also Jackman, The Varieties of Restitution, 2nd ed (2017) at 141; American Law Institute, Restatement of the Law Third, Restitution and Unjust Enrichment (2011) §21 at 300; Dietrich, Restitution: A New Perspective (1998) at 183-184; Burrows, The Law of Restitution, 3rd ed (2011), ch 18; Virgo, The Principles of the Law of Restitution, 3rd ed (2015), ch 12; Mitchell, Mitchell and Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 9th ed (2016), ch 18. 232 Birks, "Negotiorum Gestio and the Common Law" (1971) 24 Current Legal Problems 110 at 116 (footnote omitted), responding to Jackson, The History of Quasi-Contract in English Law (1936) at 46. 233 Great Northern Railway Co v Swaffield (1874) LR 9 Ex 132 at 136; Sims & Co v Midland Railway [1913] 1 KB 103 at 112; Australasian United SN Co Ltd v Hiskens [1914] VLR 684 at 705; China Pacific SA v Food Corporation of India [1982] AC 939 at 960-961; J Gadsden Pty Ltd v Strider 1 Ltd (The "AES Express") (1990) 20 NSWLR 57 at 65-67. 234 Lee-Parker v Izzet [1971] 1 WLR 1688 at 1693; [1971] 3 All ER 1099 at 1107, citing Waters v Weigall (1795) 2 Anst 575 at 576 [145 ER 971 at 971]; British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137 at 146-148; Batiste v Lenin (2002) 11 BPR 20,403 at 20,416 [47]. 235 In re Universal Distributing Co Ltd (In liq) (1933) 48 CLR 171 at 174; Stewart v Atco Controls Pty Ltd (In liq) (2014) 252 CLR 307 at 317 [11]-[12]. Edelman money for repairs by pledging the credit of the ship's owners in cases of emergency236. Remuneration for unrequested intervention has also been recognised for legal work that benefits third parties. In Ex parte Patience; Makinson v The Minister237, a solicitor claimed a charge against property based upon legal work that resulted in a decision increasing the amount of compensation for land that had been acquired by the Crown. One submission by the solicitor was that the increased amount of compensation could be charged against the land and was exigible against mortgagees of the land. Jordan CJ described the claim as one that had always been held to be "in the nature of a claim to salvage" and "made upon all the property recovered or preserved as the result of the solicitor's exertions and not merely on his client's interest therein". The recognition of an award of a reasonable remuneration in these numerous instances of unrequested intervention has an obvious resonance with the calculation of the remuneration of a litigation funder. The well-recognised example of salvage can be used for a direct comparison although similar reasoning applies to the instances described above where remuneration is permitted for bailees, tenants, trustees, liquidators, and solicitors. Like the recognition by admiralty law of the legitimacy in public policy of salvage actions238, litigation funding is no longer regarded as contrary to public policy239 and is part of a scheme that seeks to enhance access to justice in a situation where each litigant's loss is not significant so that individual action is not economically feasible240. Like instances of salvage where the maritime salvor engages professional salvors in order to preserve the value of a ship or its cargo241, the 236 Hawtayne v Bourne (1841) 7 M & W 595 at 599-600 [151 ER 905 at 907]; Prager v Blatspiel, Stamp and Heacock Ltd [1924] 1 KB 566 at 569. See also Mitchell, Mitchell and Watterson (eds), Goff & Jones: The Law of Unjust Enrichment, 9th ed (2016) at 575 [18-62]. 237 (1940) 40 SR (NSW) 96 at 107, citing Bulley v Bulley (1878) 8 Ch D 479 at 484- 485 (see also at 490-491) and Greer v Young (1883) 24 Ch D 545 at 548. 238 The "Waterloo" (1820) 2 Dods 433 at 435-436 [165 ER 1537 at 1538]. 239 Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at 433- 240 See Australia, House of Representatives, Parliamentary Debates (Hansard), 14 November 1991 at 3174. 241 The "Rosa Luxemburg" (1934) 49 Ll L Rep 292 at 300. Edelman litigation funder engages lawyers to act in order to preserve the value of rights held by the members of the group. Like instances of salvage242, members of the group might have no contract with the litigation funder. Like instances of salvage, the assessment of the value of the service is not "an exact science"243 and the value can increase by reference to the potential for financial losses including other lost opportunities244. Like instances of salvage, the criteria for the calculation of the award include the value of the rights preserved (the cause of action, the ship, or the cargo), the measure of success, the degree of risk involved, the time taken, and the expenses incurred245. Indeed, in one respect, the justice of ordering remuneration from a common fund to a litigation funder can be stronger than the cases of maritime salvors, bailees, tenants, trustees, liquidators, and solicitors. The order spreads the cost and risk of the litigation proportionately between all group members; otherwise those with contracts with the litigation funder would pay for the benefit and the other group members would receive a windfall. In that respect, the order shares the foundations of the doctrine of contribution, requiring pro rata burden sharing by those under co-ordinate liabilities, a doctrine that is "bottomed and fixed on general principles of justice"246. The analogy between these well-recognised instances where justice recognises remuneration for unrequested intervention and the instance of remuneration of a litigation funder is not defeated by the possibility that a common fund order might depart from the rate of remuneration that was agreed with some group members. For instance, where a maritime salvor had entered an agreement with the owner of the vessel or cargo being salvaged, the remuneration ordered by the court was not confined to the amount in the agreement. The admiralty court would not award a contractually agreed 242 The Liffey (1887) 6 Asp MLC 255 at 256; The Troilus [1950] P 92 at 110. 243 Semco Salvage and Marine Pte Ltd v Lancer Navigation Co Ltd [1997] AC 455 at 244 Rose, Kennedy & Rose: Law of Salvage, 9th ed (2017) at 619 [16-068]-[16-069]. 245 Rose, Kennedy & Rose: Law of Salvage, 9th ed (2017) at 596-597 [16-009]. See, eg, Fisher v The "Oceanic Grandeur" (1972) 127 CLR 312 at 342-344. 246 Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 351, citing Dering v Earl of Winchelsea (1787) 1 Cox 318 at 321 [29 ER Edelman remuneration if it was sufficiently "exorbitant"247 or "manifestly unfair or unjust"248. The same reasoning should apply to common fund orders; although the remuneration agreed with some group members might be strong evidence of a market rate, it is not conclusive of the reasonableness of the agreed rate. The power to review terms in costs agreements for unreasonableness provides another analogy with common fund orders that depart from the remuneration that was agreed in a contract between the litigation funder and some group members. A court with inherent jurisdiction can examine the fairness and reasonableness of costs agreements between solicitor and client249, including reducing the amount if it is "exorbitant"250. Although costs agreements between a solicitor and a client were treated by courts with "great jealousy"251 due to the potential for undue influence, it is hard to see why a power to ensure "that justice is done in the proceeding" should not also permit an assessment of the fairness and reasonableness of remuneration in an agreement that provides access to justice. For the reasons discussed above, where costs are exorbitant or unreasonable the fund equalisation solution could not provide that justice in the proceeding. Despite the long-standing existence of awards that support the justice of a common fund order and the breadth of s 33ZF(1) of the Federal Court Act, the appellants had three submissions why a court could never consider it appropriate or necessary to make a common fund order. First, they pointed to the existence of the torts of maintenance and champerty when s 33ZF(1) was enacted in 1991 to highlight that "litigation funding was not lawful when Pt IVA was enacted"252. Secondly, they relied upon the existence of express powers in Pt IVA of the 247 The "Helen and George" (1858) Swab 368 at 369 [166 ER 1170 at 1171]. Compare Cargo ex Woosung (1876) 1 PD 260 at 269-270; see also at 263-264. See also The Mark Lane (1890) 15 PD 135 at 137. 248 The Strathgarry [1895] P 264 at 270. See also Akerblom v Price (1881) 7 QBD 129 at 132-133; The Altair [1897] P 105 at 108; The Port Caledonia and The Anna [1903] P 184 at 189. 249 Clare v Joseph [1907] 2 KB 369 at 376, referring to the general law position before the Attorneys' and Solicitors' Act 1870 (UK), s 4. See also Kowalski v Bourne [2017] SASCFC 24 at [26]. 250 Saunderson v Glass (1742) 2 Atk 296 at 298 [26 ER 581 at 582]. 251 Clare v Joseph [1907] 2 KB 369 at 376. 252 BMW Australia Ltd v Brewster (2019) 366 ALR 171 at 189 [81]. Edelman Federal Court Act and the general scheme of Pt IVA in support of an implication limiting the application of s 33ZF(1). Thirdly, they argued that s 33ZF(1) should be limited in its application to common fund orders because of the principle of legality. Each of these submissions can be addressed in turn. Maintenance and champerty As to the submissions about maintenance and champerty, it can be accepted that one body of understanding in 1991 when s 33ZF(1) was enacted was that acts of maintenance or champerty were generally contrary to public policy. In States other than Victoria, where criminal and tortious liabilities for champerty were abolished in 1969253, Parliament might not have been understood, by those who considered maintenance and champerty to be contrary to public policy, to contemplate that s 33ZF(1) could support a common fund order at the time of its enactment254 although any such public policy in 1991, which was neither wholly secure nor unconfined255, was clearly evolving beyond Victoria256. As explained in the introduction to these reasons, the short answer to this submission is that whatever the particular application that Parliament might be thought to have intended s 33ZF(1) to have in 1991 does not govern the application of the essential meaning of the provisions decades later when litigation funding is no longer seen as contrary to public policy257. It would be contrary to the purposes of a 2010 provision for the essential meaning to be characterised at a low level of generality based upon conceptions of justice in 1991. The concern of the provisions was to enhance access to justice including "to facilitate access to legal remedies and to promote efficiency in the 253 Abolition of Obsolete Offences Act 1969 (Vic), ss 2, 4. 254 See Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46 (1988) at 114 [274]. 255 Findon v Parker (1843) 11 M & W 675 at 682-683 [152 ER 976 at 979]; Alabaster v Harness [1895] 1 QB 339 at 342-343. 256 See, for instance, Statutes Amendment and Repeal (Public Offences) Act 1992 (SA), Schedule, inserting Sch 11, cll 1(3), 3 into the Criminal Law Consolidation Act 1935 (SA), abolishing maintenance, including champerty. 257 Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at 433- 436 [88]-[95]; see also at 425-432 [66]-[82]. Edelman determination of legal rights and in court management"258. As the Full Court said in the Westpac appeal, quoting from Wilcox J in McMullin v ICI Australia Operations Pty Ltd259: "It was impossible to foresee all the issues that might arise in the operation of the Part. In order to avoid the necessity for frequent resort to Parliament for amendments to the legislation, it was obviously desirable to empower the Court to make the orders necessary to resolve unforeseen difficulties; the only limitation being that the Court must think the order appropriate or necessary to ensure 'that justice is done in the proceeding'." The existence of specific express powers and the scheme of Pt IVA The next submission of the appellants relied upon what was described as the Anthony Hordern principle, derived from the decision of Gavan Duffy CJ and Dixon J in the case of that name260. The principle concerns in substance the same general language convention261, or "ordinary usage"262 of language, that is sometimes expressed as generalia specialibus non derogant and seeks to resolve inconsistency by preferring the specific provision to the general provision263. A general provision will usually be interpreted so that it does not contradict a specific power that imposes "conditions and restrictions which must be observed" in the exercise of the same power264. 258 Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46 (1988) at 133 [324]. 259 (1998) 84 FCR 1 at 4, cited in Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 44 [85]. 260 Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1. 261 See Brisbane City Council v Amos (2019) 93 ALJR 977 at 989 [36]; 372 ALR 366 262 Effort Shipping Co Ltd v Linden Management SA [1998] AC 605 at 627. 263 Smith v The Queen (1994) 181 CLR 338 at 348. 264 Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7. See also Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144 at 187-188 [84]. Edelman Two of the specific provisions which the appellants submitted to be inconsistent with a common fund order made under s 33ZF(1) of the Federal Court Act and s 183 of the Civil Procedure Act were, respectively, s 33V(2) and s 173(2). Focusing upon the provision in the Federal Court Act, s 33V(2) empowers the Federal Court, after approving a settlement, to "make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court". The basic flaw in the appellants' submission is that the scheme of Pt IVA is replete with broadly expressed powers. The broad power in s 33V(2) is no more exclusive of s 33ZF(1) than it is of s 33ZJ(3), which empowers the court to make any order that it thinks just in relation to reimbursement of the costs of a representative party. Indeed, like s 33ZJ(3), there are no apparent restraints or conditions within s 33V(2) that would prevent a common fund order from being made under that provision. Indeed, neither s 33V(2) nor s 33ZJ(3) is conditioned by a requirement that the justice be "in the proceeding". This might even suggest that these words in s 33ZF(1) should be understood as intended to be descriptive rather than prescriptive. A related submission by the appellants was that a common fund order is inconsistent with the general scheme of Pt IVA of the Federal Court Act and Pt 10 of the Civil Procedure Act respectively. The appellants focused upon the provisions for recovery of damages265 and for the reimbursement of costs of the representative party266 and submitted that those provisions left no room for the operation of the general power in s 33ZF(1) of the Federal Court Act and s 183 of the Civil Procedure Act. The immediate textual difficulty with this submission is that the provisions in Pt IVA of the Federal Court Act and Pt 10 of the Civil Procedure Act establishing this regime are plainly not intended to be a comprehensive scheme. The powers concerning costs themselves provide for the court to make "any other order it thinks just"267. Even more fundamentally, there is an obvious area where s 33ZF(1) must have a large area of operation in order to make the scheme operate effectively. This is in relation to awards other than damages. Section 33Z empowers the court to award damages268, including in an aggregate amount for group members269 provided that a reasonably accurate assessment can 265 Federal Court Act, s 33Z; Civil Procedure Act, s 177. 266 Federal Court Act, s 33ZJ; Civil Procedure Act, s 184. 267 Federal Court Act, s 33ZJ(3); Civil Procedure Act, s 184(3). 268 Federal Court Act, s 33Z(1)(e). 269 Federal Court Act, s 33Z(1)(f). Edelman be made of the total aggregate amount to which group members will be entitled under the judgment270, with "provision for the payment or distribution of the money to the group members entitled"271. But s 33Z makes no provision for awards in representative proceedings of an account and disgorgement of a defendant's profits, orders to pay a debt, or orders for restitution of money, including restitution consequent upon court-ordered rescission. In an attempt to treat the scheme as comprehensive, the appellant in the BMW matter submitted that the reference in the legislation to "damages" meant "any pecuniary claim". This submission attributes to the Parliament a bovine ignorance of fundamental concepts in private law in the expression of s 33Z despite, for example, the clear separation by Parliament in s 33C(2) of "damages" from "equitable relief" and the separation in s 51A(1) of "debt" from "damages". There is an elementary distinction between debt and damages, between a primary right and a secondary right, between a claim of entitlement and a claim based upon a breach, and between claims to compensate losses and claims to recover benefits. There would only be a need to treat Parliament as having ignored such basic distinctions if Parliament were taken to have intended s 33ZF(1) to have very limited operation. Even then, if "damages" were interpreted to include debts, accounts of profits and restitution, the expression still would not extend to orders for rescission of a contract and restitution of payments equivalent to those orders that could be made, outside class actions, under a provision such as the Australian Consumer Law272. For these reasons, the words of s 33ZF(1) must extend to a power to make orders concerning distribution of payments arising from disgorgement of profits, restitution, debts due, or rescission of a contract and restitution of payments made under it. In the latter instance, an analogy can be drawn with an order under s 12 of the Contracts Review Act 1980 (NSW), which empowers a court that declares part of a contract to be void to make orders, "as may be just in the circumstances", against persons who are not parties to the contract but who are entitled to share in the benefits of the contract. The orders can be made even if the rights of those persons would be prejudiced and they have not had an opportunity to be heard, provided that the order is not "unjust in all the circumstances". 270 Federal Court Act, s 33Z(3). 271 Federal Court Act, s 33Z(2). 272 Competition and Consumer Act 2010 (Cth), Sch 2, s 237. Edelman The principle of legality The appellants' submission about the principle of legality can be shortly dismissed. The basis of the appellants' argument is that a common fund order impermissibly intrudes on a group member's proprietary rights by rendering the property less valuable by giving the litigation funder a right to the group member's interest in any judgment or settlement. The principle of legality is one of variable force in the attribution of meaning to words based upon past experience. The force of the principle of legality increases the more legislation impairs rights and the more "fundamental" or "important" the rights which are impaired273. Even if the principle of legality could be applied to constrict the application of a provision, rather than its essential meaning, the interference with the rights of group members in the reallocation of the fruits of litigation is based upon a court's perception of justice in the proceeding. It is not inconsistent with expectations based upon rationality and reason. Instead, it is consistent with the approach taken in salvage and analogous areas. And, as the Full Court observed in the Westpac appeal, a power to make a common fund order "supports and fructifies ... rights of persons that would otherwise be uneconomic to vindicate"274. It enhances the value of the rights of the group members just as the locksmith's services enhance the value of the rights of the owner of the locked treasure chest. A common fund order on an interlocutory basis? The common fund orders made in each appeal were interlocutory. To express the nature of the orders in clear terms, they operate only until settlement, final judgment or other order. The appellants relied upon this interlocutory nature and submitted that even if common fund orders could be made at the conclusion of the proceeding, they could not be made on an interlocutory basis. To do so, the appellants submitted, would not do justice "in the proceeding" because it would not aid in the determination of the parties' legal interests or in the resolution of matters in controversy between the parties. 273 Mann v Paterson Constructions Pty Ltd Federal Commissioner of Taxation v Tomaras (2018) 93 ALJR 118 at 137 [101]- [102]; 362 ALR 253 at 276-277. [2019] HCA 32 at 274 Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 46 [94]. Edelman The appellants' submission was effectively that a common fund order could not ever be thought to be appropriate or necessary to do justice in the proceeding if it were made on a pre-emptive basis. The appellants were not suggesting, and could not have suggested, that the orders were not made "in the proceeding" because they were orders against a non-party. As Mason CJ and Deane J, with whom Gaudron J agreed, said in Knight v FP Special Assets Ltd275, in reasoning concerning orders for payment of a party's costs by a non-party which is equally applicable to payment by a party of a non-party's costs and remuneration, there are: "a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party. Thus, for example, there are several long-established categories of case in which equity recognized that it may be appropriate for such an order to be made." The appellants' submission takes too narrow a view of the expression "in the proceeding". Interlocutory orders in a proceeding can be appropriate or necessary to do justice in the proceeding for principled reasons of convenience even if they are not a step in the process of determining the legal interests of the parties and even if they do not finally resolve matters in controversy between the parties. In other words, interlocutory orders can be made on a pre-emptive basis, anticipating a final order, where there are good reasons of convenience to do so. An obvious instance where a pre-emptive order on an interlocutory basis is made for reasons of convenience is an interlocutory injunction, which anticipates final orders and which can either prohibit conduct or require conduct. The stronger the prima facie case of the applicant, and therefore the greater the likelihood of success, the less that will be needed for the balance of convenience to favour the grant of the interlocutory injunction276. Factors of convenience can also favour a pre-emptive award of costs. In Chancery, where costs were a general law creation, a pre-emptive costs order could be made where a payment of costs was needed by the plaintiff to fund the proceeding277. This power to order payment of some or all of the costs of an action that has not been finally determined is so exceptional that the power has rarely been exercised. However, this does not deny the existence of the power. 275 (1992) 174 CLR 178 at 192 (footnote omitted). 276 Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 154; Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238 at 261 [67]. 277 Jones v Coxeter (1742) 2 Atk 400 at 400 [26 ER 642 at 642]. Edelman In Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (In liq) [No 4]278, Finkelstein J made a pre-emptive costs order for reasons which included that the applicant would ultimately have been entitled to those costs irrespective of the result of the action. The making of a common fund order on an interlocutory basis has a far less intrusive effect upon persons such as the appellants than a pre-emptive order for costs. The persons subject to the order are not required to make any immediate payment. Indeed, putting to one side the aspects of the common fund orders in these appeals that concern matters other than remuneration, such as confidentiality and dispute resolution obligations, the order imposes no final liability upon the group members and does not require them to do anything. The order must also be revisited at the conclusion of the proceedings. Hence, as an interlocutory order, the common fund order is far less exceptional than a pre- emptive costs order and more akin to a routine Beddoe order279 in its effect of reducing the risks of proceeding without imposing any further burden on the opposing parties. An interlocutory order must nevertheless advance the purpose of justice in the proceeding and, with the requirement in s 33ZF(1) that it be thought to be "appropriate or necessary to ensure that justice is done in the proceeding", must be suitable or fitting for that purpose. In Jackson v Sterling Industries Ltd280, this Court considered an interlocutory order that required the respondent to provide security for the satisfaction of a judgment in order to preserve the assets available for execution after a judgment in favour of the appellant. A majority of this Court held that the order was not "appropriate" because it went further than preserving the assets for potential execution and purported to confer security over them281. 278 (2008) 169 FCR 497 at 500 [7]. See also Berkett v Cave [2001] 1 NZLR 667 at 670 [12]-[13]; British Columbia (Minister of Forests) v Okanagan Indian Band [2003] 3 SCR 371 at 408 [65], 411-412 [77]-[78]. Compare R (Corner House Research) v Secretary of State for Trade and Industry [2005] 1 WLR 2600 at 2626 [77]; [2005] 4 All ER 1 at 24. 279 In re Beddoe; Downes v Cottam [1893] 1 Ch 547. See also Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66. 280 (1987) 162 CLR 612. 281 (1987) 162 CLR 612 at 626-627. Edelman The order was not "framed so as to come within the limits set by the purpose which it can properly be intended to serve"282. The primary judge and the Full Court in the Westpac matter identified two purposes for making a common fund order on an interlocutory basis283: (i) greater information for group members to make an informed decision before the date required for opt out; and (ii) avoidance of the risk for litigation funders that upon settlement or judgment in favour of the funded party a court might reduce, even unconsciously, the likelihood (and, I would add, potential magnitude) of adverse costs orders due to the benefit of hindsight. Each of these matters is explained further below. As to the first purpose, the importance of information for a group member arises because, with limited exceptions, a person can be a group member without consent284. Prior to the commencement of the hearing285, the court must give group members notice of the commencement of the proceeding and the right to opt out286. But a group member can only opt out of the proceeding by providing written notice before a date that is set by the court287. Part IVA places no obligation upon any person to inform group members of any of the proposed terms, or likely terms, of remuneration of the lawyers or litigation funders. If a common fund order could only be made at the conclusion of the proceeding then a group member could be required to make a decision about whether to opt out without knowing anything about the likely remuneration of the litigation funder from any common fund recovered. As to the second purpose, the possibility of "hindsight bias"288 by a court is real. Plainly, the risk at the time of agreement should be assessed by reference to the circumstances prevailing at the time of agreement – not at the conclusion 282 (1987) 162 CLR 612 at 625. 283 Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 707-708 [29]; Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 27-28 [10], relevantly quoting Perera v GetSwift Ltd (2018) 263 FCR 1 at 65-66 [244]-[245]. 284 Federal Court Act, s 33E. 285 Federal Court Act, s 33J(4). 286 Federal Court Act, s 33X(1)(a). 287 Federal Court Act, s 33J(1), (2). 288 Lenthall v Westpac Banking Corporation (2018) 363 ALR 698 at 707-708 [29]; Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at 27-28 [10], quoting Perera v GetSwift Ltd (2018) 263 FCR 1 at 65-66 [245]. Edelman of the proceedings, when the parties have the benefit of full knowledge. By the time that the proceedings have concluded there is no longer any risk of success or failure of the proceedings. The pre-emptive, although provisional, exercise of the power to make a common fund order, once the court is apprised of all the relevant facts other than the success of the proceeding, reduces the possibility of hindsight bias that arises by assessing risk when success is known rather than at the time when the risk is incurred. In light of the minimal prejudice to the appellants in the making of a common fund order as a prima facie rate of remuneration and the provisional nature of the interlocutory common fund order, which must be revisited at the conclusion of the proceeding, a common fund order made on an interlocutory basis can be seen to fall within the limits of the two purposes which it is properly intended to serve. Judicial power The appellants submitted that if s 33ZF(1) of the Federal Court Act and s 183 of the Civil Procedure Act empowered the court to make a common fund order then those provisions would purport to permit the exercise of non-judicial power. Although a State court might exercise non-judicial power in some circumstances where a federal court cannot, it suffices to explain why the appellants' submissions cannot succeed even in relation to s 33ZF(1) of the Federal Court Act. The appellants broadly relied on three reasons. First, they said that a common fund order empowered the creation of new rights rather than the enforcement of existing rights. Secondly, they submitted that a common fund order involved the exercise of a discretion by reference to policy considerations rather than by reference to legal principle. Thirdly, they submitted that an interlocutory common fund order would not affect any right or interest because it would only operate until it was reassessed at final judgment. The first submission misunderstands the "adjudication of existing rights and obligations" and "the creation of rights and obligations"289. The latter is concerned with an attempted judicial creation of new rights whilst simultaneously concluding that those rights should never have previously existed. By contrast, it is entirely within judicial power for courts to create new rights, in the sense of recognising and giving effect to rights that the distinction between 289 Ha v New South Wales (1997) 189 CLR 465 at 504; see also at 515. See also Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 189. Edelman differ from a previously settled understanding290. That is often how the common law develops. As to the second submission, although the calculation of the rate of remuneration for a common fund order will be a difficult exercise and one upon which minds may differ, it must be exercised in accordance with the judicial process, by a process of balancing interests that is quintessentially judicial291. Although s 33ZF(1) is open-textured, such enquiries are a common exercise of judicial power. Examples of courts making assessments by reference to broad, open-textured criteria "unconscionable", interlocutory injunctions, and the power of courts to make preventive orders. In any event, the requirements of propriety or necessity, and doing justice in the proceeding, ensure that the exercise of power is judicial. the adjudication of whether conduct involved the "just and convenient" considerations include The third submission must also be dismissed. At the very least, a common fund order made on an interlocutory basis for the two purposes described above supports or aids the exercise of judicial power and is therefore a permissible incident in the exercise of a strictly judicial power292. Just terms The final submission of each of the BMW and Westpac appellants, respectively, was that s 183 of the Civil Procedure Act, which they submitted could only operate if picked up by s 79 of the Judiciary Act 1903 (Cth) with a precondition of compliance with s 51(xxxi) of the Constitution293, and s 33ZF(1) of the Federal Court Act were acquisitions of property on other than just terms. It might be doubted whether s 183 of the Civil Procedure Act should be characterised in a manner that would require it either never or always to be picked up by s 79 of the Judiciary Act. It may be that s 183 is neither exclusively a law that is "determinative of the rights and duties of persons" nor exclusively a 290 Bell Lawyers Pty Ltd v Pentelow (2019) 93 ALJR 1007 at 1028-1029 [95]-[96]; 372 ALR 555 at 579. 291 Vella v Commissioner of Police (NSW) [2019] HCA 38 at [68]. 292 Queen Victoria Memorial Hospital v Thornton (1953) 87 CLR 144 at 151. See also Cominos v Cominos (1972) 127 CLR 588 at 591, 593, 600, 606, 608-609. 293 Solomons v District Court (NSW) (2002) 211 CLR 119 at 136 [28]. Edelman law that is concerned with "the manner of exercise of jurisdiction"294, which involves regulating or governing the exercise of power rather than the conferral of power itself. The better view may be that whether s 183 is a section that regulates or governs the exercise of power, such that it would be required to be "picked up" by s 79 of the Judiciary Act, will depend upon the nature of the court orders that it empowers. It is unnecessary to decide this matter because, like a common fund order made under s 33ZF(1) of the Federal Court Act, a common fund order under s 183 of the Civil Procedure Act does not involve an acquisition of property. A court order is unlikely to be characterised as an acquisition of property where a court makes an order for "compensation for a wrong done or damages for an injury inflicted, or as a genuine adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity"295. The expression "adjustment of the competing rights, claims or obligations" is a loose description that encapsulates a wide range of orders that are made for principled reasons independently of any purpose of acquiring property. One example is an order that requires a defendant to make restitution of a payment made to them by mistake. That order is plainly not an acquisition of property. Another example is a common fund order that provides for the reasonable remuneration of a service provider from a common fund, ensuring that remuneration is made for a non-gratuitous service and that the cost of the remuneration is spread across all group members whose common fund was obtained as a result of the service. Conclusion At times during these appeals, there was a heavy focus in submissions upon arguments of policy. For instance, on the one hand it was submitted that in open class actions a common fund order avoided inefficient and costly "book building" which would ultimately enrich only the lawyers engaged in that process and unnecessarily reduce the fund available to compensate deserving plaintiffs. On the other hand, it was submitted that it would be more "sensible and logical" for potential group members to be identified individually at an early stage and to be personally informed at that stage. These arguments, at heart, concern the extent to which, and manner in which, non-parties should intervene in another's 294 Masson v Parsons (2019) 93 ALJR 848 at 858 [30], see also at 860 [39]; 368 ALR 295 Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 510. See also Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 161. Edelman litigation. The answers depend for their practical application on "large questions which vary with changing attitudes to litigation"296. There may be doubt whether courts are the best forum for resolution of these questions of policy. For the reasons given above, the answer to the central issue in these appeals can be resolved by legal principle. It is open for a court acting under s 33ZF(1) of the Federal Court Act or s 183 of the Civil Procedure Act to make a common fund order that will ensure proportionate distribution among all group members of a reasonable remuneration to a litigation funder. The court has power to make the order if it thinks that such an order is "appropriate or necessary to ensure that justice is done in the proceeding", including on an interlocutory basis. That power is supported by reference to long-standing, established approaches to legal principle. The appeals should be dismissed with costs. 296 XYZ v Travelers Insurance Co Ltd [2019] 1 WLR 6075 at 6106 [113].

HIGH COURT OF AUSTRALIA LEONILDA MARCOLONGO APPELLANT AND YU PO CHEN & ANOR RESPONDENTS Marcolongo v Chen [2011] HCA 3 9 March 2011 ORDER Appeal allowed. Dismiss the summons filed by the second respondent seeking to file a notice of contention out of time. Set aside paragraphs 1, 2, 3, 4 and 5 of the order of the New South Wales Court of Appeal made on 12 November 2009, and in their place order that: the appeal to the New South Wales Court of Appeal be dismissed; (b) Yu Po Chen pay Leonilda Marcolongo's costs in the New South Wales Court of Appeal; and the sum of $60,000 paid into the New South Wales Supreme Court by Yu Po Chen as security for Leonilda Marcolongo's costs in the New South Wales Court of Appeal, together with interest thereon, be paid out forthwith to Leonilda Marcolongo's solicitor. The first and second respondents pay the appellant's costs of the appeal to this Court. The second respondent pay the appellant's costs of the summons filed by the second respondent seeking to file a notice of contention out of time. On appeal from the Supreme Court of New South Wales Representation T A Alexis SC with D H Mitchell for the appellant (instructed by Dunstan Legal) No appearance for the first respondent T S Hale SC with D J A Mackay for the second respondent (instructed by Unsworth Legal Pty Ltd) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Real property – Conveyancing – Conveyancing Act 1919 (NSW), s 37A – Voluntary alienation to defraud creditors – Appellant sought to set aside registered transfer of land from second respondent to first respondent – Whether intent to defraud creditors satisfied by proof of "actual" or "predominantly" fraudulent intent – Whether satisfied by proof that transfer would "delay, hinder or defraud" creditors – Whether intent may be inferred where transfer is voluntary. Words and phrases – "delay, hinder or defraud". Conveyancing Act 1919 (NSW), s 37A. An Act against (13 Eliz I c 5). fraudulent Deeds, Gifts, Alienations, etc 1571 (Imp) FRENCH CJ, GUMMOW, CRENNAN AND BELL JJ. This appeal from the Court of Appeal of the Supreme Court of New South Wales (Allsop P, Giles and Young JJA)1 turns upon the application of the New South Wales legislation (s 37A of the Conveyancing Act 1919 (NSW) ("the Conveyancing Act")) which replaced in that State the statute 13 Eliz I c 5. This had been passed in 1571 and was generally identified by reference to the words in the long title "An Act against fraudulent Deeds, Gifts, Alienations, etc" ("the Elizabethan Statute"). As elsewhere in the British Empire2, the Elizabethan Statute had been received as part of the law of England applicable in New South Wales3. The course of the litigation The appellant, Mrs Marcolongo, challenges the decision of the Court of Appeal which set aside the decision in her favour of the primary judge (Hamilton J)4 in the Equity Division of the Supreme Court. Mrs Marcolongo had on foot in the District Court an action for damages against the second respondent, Lym International Pty Limited ("Lym"), and in the Supreme Court she had relied upon s 37A to achieve a result of Lym retaining a substantial asset to meet its obligations under any decision in her favour in the District Court litigation. At the suit of Mrs Marcolongo, Hamilton J applied s 37A to a contract for sale of land under the provisions of the Real Property Act 1900 (NSW) ("the RP Act") and to the registered transfer in completion of that contract. Lym was the vendor and the purchaser was the first respondent, Mr Chen. Ms Limin Yang was a director of Lym and Mr Chen was their fiduciary adviser in the transaction as well as purchaser. 1 Chen v Marcolongo (2009) 260 ALR 353. Instances were given in Kerr on Fraud and Mistake, 6th ed (1929) at 217; they included at least parts of British India: Abdool Hye v Mir Mohamed Mozuffer Hossein (1883) LR 11 Ind App 10 at 17-19; Eugene Pogose v The Delhi and London Banking Co Ltd (1884) ILR 10 Calc 951. 3 See Godfrey v Poole (1888) 13 App Cas 497; Coghlan v Alexander (1905) 5 SR (NSW) 441; Re William Deane; Ex parte The Official Assignee (1906) 6 SR (NSW) 580. The Elizabethan Statute also was received in many jurisdictions in the United States: Kent, Commentaries on American Law, (1827), vol 2, Lecture XXXIX at 405; Story, Commentaries on Equity Jurisprudence, as administered in England and America, 13th ed (1886), vol 1, §353. 4 Lym International Pty Ltd v Chen [2009] NSWSC 98. Crennan Bell Two proceedings were heard together by Hamilton J. In the first, Lym and Ms Yang and her daughter, Ms Yang Liu, successfully made good their claim that Mr Chen had acted in breach of his fiduciary duty. His Honour set aside the transfer to Mr Chen and made consequential orders. In her Supreme Court action against Lym and Mr Chen, Mrs Marcolongo had pleaded an intention by Lym to defraud her, and Lym joined issue on that pleading. Notwithstanding this defence, at trial Lym did not actively dispute Mrs Marcolongo's claim, directing its energies to its claim against Mr Chen for breach of his fiduciary duty. Mr Chen appealed to the Court of Appeal against the decisions in both proceedings and Lym filed a submitting appearance in the Marcolongo appeal. In the Court of Appeal Mr Chen failed on all grounds relating to his liability to Lym. However, the Court of Appeal reversed the decision in favour of Mrs Marcolongo and set aside the orders declaring the contract and the transfer to be voidable at her instance and requiring Mr Chen to transfer the property back to Lym. The result is that although, by reason of the failure of Mr Chen's appeal in the Lym litigation, the subject land is to be restored to Lym and thus will be available to answer claims by Mrs Marcolongo in enforcement of her District Court action, unless she succeeds in this Court, she will be left to bear the burden of costs in her Supreme Court litigation. In this Court, Mr Chen did not appear by counsel but the Court received his written submissions resisting the appeal. The burden of the oral advocacy supporting the outcome in the Court of Appeal thus fell upon counsel for Lym. The Court of Appeal allowed the appeal in the Marcolongo litigation essentially on the basis that s 37A was enlivened only by an "actual"5 or "predominantly" fraudulent6 intent or purpose to deprive creditors of their rights or of the fruits of their rights and that this required an "element of dishonesty" by Lym which the Court of Appeal held to be absent7. (2009) 260 ALR 353 at 357, 389. (2009) 260 ALR 353 at 382. (2009) 260 ALR 353 at 358, 390. Crennan Bell For the reasons which follow the appeal should be allowed and the decision of Hamilton J in favour of Mrs Marcolongo restored. The issues on the appeal best appear after consideration of the provenance of s 37A, which in turn involves consideration of the place of fraud in the framework of general legal principle. The varieties of fraud In the joint reasons of the whole Court in SZFDE v Minister for Immigration and Citizenship8 their Honours observed: "In his celebrated speech in Reddaway v Banham9, Lord Macnaghten spoke of the various guises in which fraud appears in the conduct of human affairs, saying 'fraud is infinite in variety'. A corollary, expressed by Kerr in his Treatise on the Law of Fraud and Mistake10, is that: 'The fertility of man's invention in devising new schemes of fraud is so great, that the courts have always declined to define it ... reserving to themselves the liberty to deal with it under whatever form it may present itself.' Nevertheless, much judicial effort has been expended in exploring different shades of meaning, and sometimes deeper distinctions, in the constituents of 'fraud' in various areas of the law. Recent decisions in this Court respecting 'fraud' concern criminal law11, the tort of deceit12, (2007) 232 CLR 189 at 194 [8]-[10]; [2007] HCA 35. [1896] AC 199 at 221. 10 6th ed (1929) at 1 (footnote omitted). 11 Macleod v The Queen (2003) 214 CLR 230 at 241-242 [32]-[38]; [2003] HCA 24. 12 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 579-580; [1995] HCA 68. Crennan Bell registered designs law13, the law of agency14, statutes of limitation15 and dealings in Torrens title land16. Professor Hanbury17 described the common law and equity as having 'quarrelled over the possession of the word "fraud" like two dogs over a bone, off which neither side was sufficiently strong to tear all the meat', and said that the word fraud applied 'indifferently to all failures in relations wherein equity set a certain standard of conduct'. Hence the attachment of the term 'fraud' to the exercise of powers of appointment, and of other powers, such as those of company directors, in a fashion of Hanbury went on19 to refer to English decisions in the latter part of the 19th century manifesting "appalling confusion" between the quite different senses in which the common law used the term "fraud", exemplified by the tort of deceit, and in which equity used the term "fraud" in its exclusive jurisdiction. The phrase "actual fraud" captures the sense of the common law and "constructive fraud" that in equity. The Elizabethan Statute had been said by Lord Mansfield to represent the common law20, and thus to require proof of a "real" rather than "constructive" fraud. But, as will appear below, the distinction has not always been well appreciated. 13 Polyaire Pty Ltd v K-Aire Pty Ltd (2005) 221 CLR 287 at 295-296 [17]-[18]; [2005] HCA 32. 14 Sons of Gwalia Ltd v Margaretic (2007) 231 CLR 160 at 197 [73]-[74]; [2007] HCA 1. 15 The Commonwealth v Cornwell (2007) 229 CLR 519 at 532-533 [40]-[45], 543-544 [74]-[75]; [2007] HCA 16. 16 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 167-171; [2007] HCA 22. 17 Modern Equity, 8th ed (1962) at 643-644. 18 See the discussion by Dixon J in Mills v Mills (1938) 60 CLR 150 at 185; [1938] HCA 4. 19 Modern Equity, 8th ed (1962) at 643-644. 20 Cadogan v Kennett (1776) 2 Cowp 432 at 434 [98 ER 1171 at 1172]. Crennan Bell The provenance of s 37A The Elizabethan Statute with respect to the transferor used the terms "purpose and intent" and contained a proviso in favour of what might be called innocent third parties, who purchased without "any manner of notice or knowledge of such ... fraud or collusion". A succinct description of the operation of the Elizabethan Statute as understood in 1912 was given by Parker J in Glegg v Bromley21. His Lordship said: "Now the scheme of that statute is this: By it all conveyances and assignments made with intent to hinder and delay creditors are rendered void against all creditors hindered or delayed by their operation. There is, however, a proviso for the protection of a purchaser for good consideration without notice of the illegal intention. In the authorities which deal with the statute it is not always clear whether the judges are dealing with the operative part of the Act or with the proviso. The illegal intent under the operative part is a question of fact for the jury or the judge sitting as a jury. On the one hand the want of consideration for the conveyance or assignment is a material fact in considering whether there was any illegal intent, but it is not conclusive that there existed any such intent. In the same way consideration was by no means conclusive that there was no illegal intent. When, however, one comes to deal with the proviso, it is quite clear that any person relying on the proviso must prove both good consideration and the fact that he had no notice of the illegal intent." In England, the Elizabethan Statute was replaced by the Law of Property (Amendment) Act 1924 (UK)22 ("the 1924 Act") and a substituted provision was made by Item 31 in Pt II of the Third Schedule. As indicated by the heading to Pt II, Item 31 was one of a series of provisions for "facilitating consolidation of the law of property and conveyancing". The use throughout Pt II of the expression "substituted for" the old statute law is significant. Differing language was used in Pt I of the Third Schedule to the 1924 Act. The heading to the Schedule as a whole was "CONVEYANCING AND LAW OF PROPERTY" and Pt I was simply headed "AMENDMENTS". Commentary 21 [1912] 3 KB 474 at 492. 22 15 Geo V c 5. Crennan Bell upon the property law legislation of this period has not always sufficiently distinguished between provisions made to alter the pre-existing statute law and those designed to re-express it23. This distinction between Pt I and Pt II had been devised in the Report of the Committee on the Law of Property Consolidation Bills24 chaired by Romer J. Part I was to contain "definite amendments of the law", while Pt II was "not intended to amend the law". The committee had reported to Viscount Haldane LC. Thereafter, when speaking on the Bill for the 1924 Act, he said25: "If your Lordships have read the Bill through, you will find that it deals with all sorts of interesting subjects, such as the Statute of Uses, and other Statutes going back to Tudor times. It puts them into a much improved form, so far as it does not get rid of them, and leaves the whole matter in such a shape that the Committee of my noble friend Lord Muir Mackenzie can consolidate them without difficulty." (emphasis added) Section 3 and the Third Schedule to the 1924 Act were repealed by the Law of Property Act 1925 (UK) ("the 1925 Act")26. The long title to the 1925 Act described it as a statute "to consolidate the enactments relating to Conveyancing and the Law of Property in England and Wales". The 1925 Act introduced s 172 as a provision in Pt IX (ss 172-174), headed "VOIDABLE DISPOSITIONS". Section 172 has since been replaced by the elaborate provisions of ss 423 to 425 of the Insolvency Act 1986 (UK)27. Section 172 differed in minor respects from the provision in the 1924 Act which it replaced, but both provisions operated upon conveyances of property "with intent to defraud creditors". The Elizabethan Statute had spoken of dispositions made "to the end, purpose and intent, to delay, hinder or defraud creditors and others of their just and lawful actions, suits, debts, accounts, 23 See Sparkes, "The 1925 Property Legislation: Curtaining off the Antecedents", (1988) Statute Law Review 146. 24 (1924) Cmd 2271 at 3. 25 United Kingdom, House of Lords, Parliamentary Debates (Hansard), 10 December 1924, vol 60, cc 82-83. 26 15 Geo V c 20, s 207 and Seventh Schedule. 27 Giles v Rhind (No 2) [2009] Ch 191 at 198-199. Crennan Bell damages ...". It followed that a disposition made pendente lite by a defendant with the necessary intent would fall within the very terms of the statute28. In New South Wales, the Conveyancing (Amendment) Act 1930 (NSW) ("the 1930 Act") repealed the Elizabethan Statute in its application to New South Wales29 and followed the text of s 172 of the 1925 Act with the introduction30 of s 37A into the Conveyancing Act. It is upon the construction and application of s 37A that this appeal turns. Section 37A now states: "(1) Save as provided in this section, every alienation of property, made whether before or after the commencement of [the 1930 Act], with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced. This section does not affect the law of bankruptcy for the time being in force. This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors." In Re Cummins; Richardson v Cummins31 Clyne J observed of s 37A that it "says nothing about an intent to hinder or delay creditors", and concluded that, while Mr Cummins "did hinder or delay his creditors" by leasing his property to his wife for a three-year term, the lease was not made "with intent to defraud his creditors". However, the better view of the abbreviated terms employed in s 172 and s 37A is that of Pennycuick V-C in Lloyds Bank Ltd v Marcan32. This is that, 28 Reese River Silver Mining Co v Atwell (1869) LR 7 Eq 347 at 351. 29 Section 2. 30 Section 10. 31 (1951) 15 ABC 185 at 191. See also World Expo Park Pty Ltd v EFG Australia Ltd (1995) 129 ALR 685 at 708. 32 [1973] 1 WLR 339 at 344; [1973] 2 All ER 359 at 367; affd [1973] 1 WLR 1387; [1973] 3 All ER 754. See also Trautwein v Richardson [1946] ALR 129 at 133; P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 522. Crennan Bell beginning with its appearance in the consolidation provision in the 1924 Act, the term "defraud" was designed to reproduce the meaning of the expression "delay, hinder or defraud" in the Elizabethan Statute. That statute was understood as if it read "delay, hinder or [otherwise] defraud". The contrary has not been suggested in the present case. From this legislative history two things of immediate relevance appear. The first is that an understanding of the issues in this appeal is assisted by consideration of the case law upon the Elizabethan Statute which had been built up before that statute's repeal and restatement in s 37A. The second is that, in accordance with that case law, exemplified by remarks of Lord Mansfield33, and more recently of Arden LJ34, the provision and its modern representatives should receive a liberal construction in effecting their purpose of suppressing fraud. There is one relevant qualification where, as here, the subject matter is a contract for the sale of land under the provisions of the RP Act which has been completed and the transfer registered. In Regal Castings Ltd v Lightbody35, a majority of the Supreme Court of New Zealand held that the indefeasibility provisions of the Torrens system allowed for the enforcement against the registered proprietor of in personam remedies given by the Elizabethan Statute and its local representative. The contrary was not contended for on the present appeal. The view taken in New Zealand had earlier been accepted by Hogg36 and Kerr37 in their works on the Torrens system. In his treatise on equity jurisprudence, Story had seen the object of the Elizabethan Statute as the protection of creditors "from those frauds which are frequently practised by debtors under the pretence of discharging a moral 33 Cadogan v Kennett (1776) 2 Cowp 432 at 434 [98 ER 1171 at 1172]. 34 Giles v Rhind (No 2) [2009] Ch 191 at 199. 35 [2009] 2 NZLR 433 at 449-450 per Elias CJ, 465 per Blanchard and Wilson JJ, 481-482 per Tipping J. McGrath J (at 491-494) saw the Elizabethan Statute as an exception to the indefeasibility of title. 36 Hogg, The Australian Torrens System, (1905) at 835. 37 Kerr, The Principles of the Australian Lands Titles (Torrens) System, (1927) Crennan Bell obligation [to] wives, children, and other relations"38. But the term "voluntary" did not appear in the statute39 and the case law established that its application was not so limited. On appeal from the Supreme Court of New South Wales, the Privy Council in Godfrey v Poole40 had approved the statement of principle respecting the operation of the Elizabethan Statute which had been made by Kindersley V-C in Thompson v Webster41. The Vice-Chancellor said: "The language of [the Elizabethan Statute] being that any conveyance of property is void against creditors, if it is made with intent to defeat, hinder or delay creditors, the Court is to decide in each particular case whether, on all the circumstances, it can come to the conclusion that the intention of the settlor, in making the settlement, was to defeat, hinder or delay his creditors." (emphasis in original) The Vice-Chancellor (like Parker J in the passage from Glegg v Bromley set out above) had also been at pains to point out that to attract the Elizabethan Statute it was not sufficient, of itself, merely to show that the deed was voluntary; nor, on the other hand, was it necessary in order to set aside a voluntary deed that the settlor should actually be insolvent. The sufficiency of proof of intent Nevertheless, the 19th century cases did support a related distinction bearing upon the sufficiency of proof in these cases. The effect of the decisions was summed up as follows in the treatment under the title "Fraudulent and Voidable Conveyances" in the first edition of Halsbury's Laws of England42: "In an action to set aside an alienation under the statute the onus of proof of actual fraud on the part of the grantor, and that the grantee was privy to the intent, rests upon the plaintiff where the alienation is for 38 Story, Commentaries on Equity Jurisprudence, as administered in England and America, 13th ed (1886), vol 1, §353. 39 Holloway v Millard (1816) 1 Madd 414 at 418-419 [56 ER 152 at 154]. 40 (1888) 13 App Cas 497 at 503. 41 (1859) 4 Drewry 628 at 632 [62 ER 241 at 242]. 42 (1911), vol 15 at 84, par 173. Crennan Bell valuable consideration (a)43. Where, however, the alienation is voluntary, then on proof that the grantor was at the time of its execution contemplating his entry upon a hazardous business (b)44, or that the natural consequence of the alienation was to delay, hinder, or defraud creditors (c)45, or that the circumstances under which the alienation was effected bore one of the indications or badges of fraud hereafter mentioned (d)46, the onus of upholding the alienation is imposed on the defendants." (emphasis added) The two leading authorities given in footnote (c) to this passage are Freeman v Pope47 and Ex parte Mercer; In re Wise48. However, neither case concerned a transaction cast in the form of a contract for sale of property. Rather, each transaction was a voluntary settlement of property, which was set aside in the first case but not in the second. The point sought to be made in the text of Halsbury attached to footnote (c) may be expressed by saying that it would be the duty of the judge to direct a jury that they might infer an intention by the settlor to defeat or delay creditors, even in the absence of direct evidence of that intention, where this outcome was the necessary consequence of a voluntary settlement49. In this way, it was easier to infer a dishonest intention if the conveyance were voluntary than 43 Re Johnson; Golden v Gillam (1881) 20 Ch D 389 at 394; Re Cranston; Ex parte Cranston (1892) 9 Morr 160; Re Tetley; Ex parte Jeffrey (1896) 3 Mans 226 at 233; Re Hirth (Carl); Ex parte Trustee [1899] 1 QB 612 at 620; Re Holland; Gregg v Holland [1902] 2 Ch 360; Re Reis; Ex parte Clough [1904] 2 KB 769. 44 Mackay v Douglas (1872) LR 14 Eq 106. 45 Freeman v Pope (1870) LR 5 Ch App 538; Ex parte Mercer; In re Wise (1886) 17 QBD 290; Re Holland; Gregg v Holland [1902] 2 Ch 360; see Re Tetley; Ex parte Jeffrey (1896) 3 Mans 226. 46 See Halsbury's Laws of England, 1st ed (1911), vol 15 at 84-87, pars 174-177. 47 (1870) LR 5 Ch App 538. 48 (1886) 17 QBD 290. 49 Cf Williams v Lloyd (1934) 50 CLR 341 at 360-361; [1934] HCA 1. Crennan Bell if it were made for consideration50. Evidence that the conveyance was voluntary does not replace the requirement of proof of intent by a distinct category where constructive fraud, with notions of constructive knowledge or notice as understood in equity, would suffice for the application of s 37A51. Rather, the evidence is that species which has sufficient weight to entitle the fact finder to decide an issue (here the necessary intent) in favour of the moving party, although the fact finder is not obliged to do so and other evidence given may be decisive to the contrary52. The statement by Parker J in Glegg v Bromley53 that the existence of the necessary intent is a question of fact for the jury, or the judge sitting alone to try the facts, is important here. In such a case remarks of Lord Esher MR in English and Scottish Mercantile Investment Co v Brunton54 are in point. His Lordship spoke of inferences of fact, "drawn because you cannot look into a man's mind", whereby it is actual knowledge which is inferred, which is distinguished from the purely equitable doctrine of constructive notice or constructive knowledge. However, in the United States the Conference of Commissioners on Uniform State Laws, when promulgating the Uniform Fraudulent Conveyance Act ("the UFCA") in 1918, sought to remove what it saw as a confusion; this stemmed "from judicial attempts to stretch the original English fraudulent conveyance statute ... and its offspring ... which permitted relief only on a showing of actual intent to defraud, to apply to situations where no such actual intent could be proven"55. This was done by providing, as distinct grounds in the UFCA, "constructive fraud" manifested by the absence of "a fair consideration", and conveyances with "actual intent" to hinder, delay or defraud present or future 50 Cf Lloyds Bank Ltd v Marcan [1973] 1 WLR 1387 at 1392; [1973] 3 All ER 754 51 Kerr on Fraud and Mistake, 6th ed (1929) at 282. 52 See Cross on Evidence, 8th Aust ed (2010) at 121 [1600]. 53 [1912] 3 KB 474 at 492. 54 [1892] 2 QB 700 at 708. 55 Marine Midland Bank v Murkoff 508 NYS 2d 17 at 21 (1986). For a discussion of the Elizabethan Statute in the United States prior to the UFCA, see Bump, A Treatise upon Conveyances Made by Debtors to Defraud Creditors, 4th ed Crennan Bell creditors which, however, might be proved as a matter of inference56. The Uniform Fraudulent Transfer Act ("the UFTA") was approved by the Commissioners in 1984 and has been adopted in some 43 States57. Like s 548 of the Bankruptcy Code, enacted in 1978, it preserves the distinction in the UFCA between transfers made with an actual fraudulent intent and constructively fraudulent transfers58. The proper mental state for s 37A The particular and specific course taken in the United States with the UFCA and the UFTA as to the ground of constructive fraud did not represent the English case law upon the Elizabethan Statute as it stood in 1924. That case law is summed up in the passage from Glegg v Bromley set out earlier in these reasons. Consequently, the operation of s 37A of the Conveyancing Act was not qualified by a notion of constructive fraud. However, the reasoning of the Court of Appeal in the present case appears to proceed otherwise. It appears to have been assumed that in order to repel an interpretation of s 37A that would extend its scope to cases of equitable or constructive fraud, it was appropriate to fortify the requirement of an intention to defraud by some notion of dishonesty involving a desire to "cheat" or "swindle" those prejudiced59. Hamilton J then was held to have erred in law in not considering that requirement for the operation of s 37A. In the Court of Appeal, Allsop P (with whom Giles JA agreed) began his analysis with the observation that there was a debate as to "the proper mental state for s 37A"60 and continued: "The cases in the 19th and 20th centuries revealed a tension between those which stated that the fraud required to be proved was 'real' or 'actual' and 56 United States v McCombs 30 F 3d 310 at 323-328 (1994). 57 Erens, Friedman and Mayerfeld, "Bankrupt Subsidiaries: The Challenges to the Parent of Legal Separation", (2008) 25 Emory Bankruptcy Developments Journal 65 at 80, fn 19. 58 Collier on Bankruptcy, 15th ed (rev) (1998), vol 5, §548.01 [1]-[3]. 59 Cf Hardie v Hanson (1960) 105 CLR 451 at 456, 463; [1960] HCA 8. 60 (2009) 260 ALR 353 at 356. Crennan Bell those which provided for constructive fraud based upon the consequences of the acts undertaken and impugned." He went on to regard Ex parte Mercer; In re Wise61 as rejecting the proposition that a finding of intent for the Elizabethan Statute was a conclusion from the necessary effect of what was done, so that on this view "fraud may not involve deceit, but does involve dishonesty", and to treat Freeman v Pope62 as a decision which looked to the "necessary effect" of a disposition. However, at trial Mrs Marcolongo had shouldered the burden of establishing in all the circumstances that the contract and transfer were made with intent to defraud creditors with the consequence that they were voidable at her instance as a person thereby prejudiced. She did not rely upon any adverse inference based upon the absence of consideration and the alleged natural consequence of the conveyance or transfer as being to defraud creditors. Allsop P went on to identify the "central question", which Hamilton J had not addressed, as being whether Lym "had an actual and real intention" to defraud Mrs Marcolongo63, and Young JA spoke of a requirement of "some element of dishonesty"64. In this Court, Lym, in the first of its submissions supporting the decision of the Court of Appeal, treated this as requiring "an actual intent" in the sense of an animus shown by an "awareness" that the transaction would have an effect on the ability of creditors to recover from Lym. However, in response Mrs Marcolongo correctly relies upon a statement by Blanchard and Wilson JJ when considering the comparable New Zealand legislation65 in Regal Castings Ltd v Lightbody66. Their Honours said that it was unnecessary to show that the debtor wanted creditors to suffer a loss or that the debtor had a purpose of causing loss: it was necessary to show the existence of 61 (1886) 17 QBD 290. 62 (1870) LR 5 Ch App 538. 63 (2009) 260 ALR 353 at 358. 64 (2009) 260 ALR 353 at 390. 65 Property Law Act 1952 (NZ), s 60, now replaced by sub-pt 6 of Pt 6 (ss 344-350) of the Property Law Act 2007 (NZ). 66 [2009] 2 NZLR 433 at 456-457. Crennan Bell an intention to hinder, delay or defeat creditors and in that sense to show that accordingly the debtor had acted dishonestly. Mrs Marcolongo correctly relies also upon the observation by Russell LJ when considering s 172 of the 1925 Act in Lloyds Bank Ltd v Marcan67. His Lordship said: "I am not sure what is meant by a perfectly innocent defeat, hindrance or delay. It must be remembered that in every case under this section the debtor has done something which in law he has power and is entitled to do: otherwise it would never reach the section. If he disposes of an asset which would be available to his creditors with the intention of prejudicing them by putting it, or its worth, beyond their reach, he is in the ordinary case acting in a fashion not honest in the context of the relationship of debtor and creditor. And in cases of voluntary disposition that intention may be inferred. ... The intention of Mr Marcan is perfectly plain: the lease to his wife was designed expressly to deprive the bank of the ability to obtain the vacant possession to which the bank plainly attributed value, and to diminish to that extent the strength of the bank's position as creditor. To take that action at that juncture, in my judgment, was, in the context of relationship of debtor and creditor, less than honest: it was sharp practice, and not the less so because he was advised that he had power to grant the lease. It was, in my judgment, a transaction made with intent to defraud the bank within section 172, and would have been within the [Elizabethan Statute]." To that may be added the statement in the joint reasons of the Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd68: "As a matter of ordinary understanding, and as reflected in the criminal law in Australia69, a person may have acted dishonestly, judged by the standards of ordinary, decent people, without appreciating that the act in question was dishonest by those standards. Further, as early as 1801, Sir William Grant MR stigmatised those who 'shut their eyes' against the receipt of unwelcome information70." 67 [1973] 1 WLR 1387 at 1390-1391; [1973] 3 All ER 754 at 759-760. 68 (2007) 230 CLR 89 at 162 [173]. 69 Macleod v The Queen (2003) 214 CLR 230 at 242 [36]-[37]. 70 Hill v Simpson (1802) 7 Ves Jun 152 at 170 [32 ER 63 at 69]. See further May v Chapman and Gurney (1847) 16 M & W 355 at 361 [153 ER 1225 at 1228]; Jones (Footnote continues on next page) Crennan Bell Lym relied upon the references by Brennan CJ and McHugh J in Cannane v J Cannane Pty Ltd (In liq)71 to "the onus of proving an actual intent". But their Honours were adding the word "actual" as a periphrasis to emphasise that, while the existence of the intent might be inferred from the evidence, it was to be found as a fact. With Gaudron J and Gummow J, Brennan CJ and McHugh J concluded that the facts of Cannane did not support the drawing of such an inference72. The first submission by Lym should be rejected. Before turning to its second submission something more should be said of the facts. The facts Lym was involved in two property developments at Mona Vale, on the northern beaches of Sydney; the first was at 1 to 5 Darley Street ("Project 1") and the second was at 34 to 36 Golf Avenue ("Project 2" and "the subject property"). By mid-2006, Project 1 was completed and the units in the development had been sold. Mrs Marcolongo owned and lived on the property adjacent to Project 1. In 2004 she instituted an action in the District Court of New South Wales for damages for the removal of support during the building operations for Project 1. trial, on 26 November 2009 Mrs Marcolongo recovered a judgment against Lym for $388,643.62 with costs. Eventually, after a lengthy After the units in Project 1 were sold, the subject property remained the only asset of substance held by Lym in Australia. During 2004 and 2005 there had been correspondence between the solicitors for Mrs Marcolongo and Lym concerning her District Court litigation and the prospect of an interlocutory motion for an assets preservation order73 in respect of Project 2 to protect her position. On 27 August 2004 the District Court had refused a motion by Mrs Marcolongo that Lym retain in the trust account of its solicitors $500,000 from the proceeds of sale of the units in Project 1. However, the correspondence continued into 2006. v Gordon (1877) 2 App Cas 616 at 625, 628-629, 635; English and Scottish Mercantile Investment Co Ltd v Brunton [1892] 2 QB 700 at 707-708. 71 (1998) 192 CLR 557 at 565-566 [10]-[12]; [1998] HCA 26. 72 (1998) 192 CLR 557 at 568 [17], 572 [31]-[32], 579-580 [58]. 73 See Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 399-401 [41]-[44]; [1999] HCA 18. Crennan Bell On 5 September 2005 Mrs Marcolongo filed an amended Statement of Claim in the District Court proceedings, which increased the amount claimed to $600,000. In December 2005 the estimated value of the subject property once completed was $18.5 million. This was exceeded by Lym's liabilities. On 15 August 2006, Lym transferred the subject property to Mr Chen. Ms Limin Yang had been a director of Lym since 1998. At the hearing before Hamilton J she was cross-examined by counsel for Mrs Marcolongo and counsel for Mr Chen. Ms Yang resided in New Zealand and was an equal shareholder in Lym with a Mr Mao. Mr Mao had been managing Project 2 until his return to China in February 2006. Ms Sandy Lai was appointed to manage the project in Mr Mao's absence. In early March 2006, the builder terminated its retainer with Lym for Project 2 and on 7 April 2006 a quantity surveyor estimated that it would cost around $3.4 million to complete Project 2. In May 2006, Ms Yang's husband, a Mr Liu, was detained by authorities in China; Ms Yang and her daughter, Ms Yang Liu, were concerned and fearful about steps that the Chinese authorities might take against them and assets of the family in Australia and New Zealand. Ms Yang became more dependent on Mr Chen and his wife, Amanda (who also lived in New Zealand), for friendship, business advice and assistance in attempts to conceal herself and her assets from the Chinese authorities. Ms Yang withdrew funds from bank accounts and deposited them in a bank account of one of Mr Chen's companies. She also transferred her shares in family companies to Mr Chen. In mid-July 2006, Mr Chen offered to go to Sydney for Ms Yang and investigate the state of Project 2 and the affairs of Lym, if Lym granted him a power of attorney. The power of attorney was granted on 24 July 2006. Hamilton J made it clear that he did not find that Ms Yang had made any firm decision by that date to "sell" the subject property. However, Mr Chen had considered as a possible course that he should buy the subject property from Lym as a means of obtaining the discharge of substantial debts due from the Liu interests to him and his associates. He travelled to Sydney on 25 July 2006, inspected the subject property and learned that many contractors needed to be paid for work done on Project 2; he collected from Ms Sandy Lai a large quantity of books and records of Lym. It was then that he learned of the $600,000 claim by Mrs Marcolongo against Lym. Ms Yang executed the contract and the transfer on 31 July 2006 in New Zealand. This had been preceded by numerous telephone conversations Mr Chen had with her from Sydney in which he had conveyed to her information concerning Project 2. It was during these conversations that Mr Chen told Crennan Bell "[Lym] has got some problems with its first real property project. The company has completed that project and all properties have been sold. Now, all the purchasers of those real properties have decided to sue your company, because of the quality problems of those properties. As the builder of those properties has gone into liquidation. Your company will be solely liable for a damage of more than $0.6 million to those purchasers. If you are not [sic] going to transfer the development property, you must do it quickly, the plaintiffs will freeze any dealing in relation to the development property. If that is the case, the company will suffer a big loss." (emphasis added) The evidence established that by late July 2006 the builder of Project 1 had gone bankrupt and Mrs Marcolongo desired to "freeze" dealings in relation to Project 2 with an application for an assets preservation order. There were further conversations between Ms Yang and Mr Chen, during which he said to Ms Yang: "You can transfer the project to me, and then neither the company nor you can then be liable for any money to the purchasers" and that "Lym has to pay $600,000 to purchasers (of the other project) otherwise they may sue Lym and its assets will be frozen". Hamilton J found that Mr Chen was determined to induce Ms Yang to enter into the contract for sale to solve his problem with the debts owed by the Liu interests and that, when he said "purchasers" may sue, he was referring, in reality, to the $600,000 claim by Mrs Marcolongo in the District Court. Further, his Honour found that Mr Chen did "indicate to her that there was a potential debt of $600,000 arising from Project 1 that both [Lym] and she would escape if [Lym] divested itself of the subject property as a matter of urgency". It was during these conversations that it was agreed that Mr Chen would "buy" the subject property from Lym. He arranged for the preparation of the contract for sale and the transfer in Sydney and his solicitors sent the documents to lawyers in New Zealand on 27 July 2006 for execution by Ms Yang "as soon as possible". Mr Chen specified the $15 million purchase price in the contract and transfer. This was not the subject of any prior discussion or negotiation with Ms Yang. Project 2 was not marketed for sale. Accordingly, it was on 31 July 2006 that for the first time before executing the documents in New Zealand Ms Yang saw the $15 million purchase price specified on the contract for sale and the transfer. She also signed a document confirming that the New Zealand solicitor named on the contract as the solicitor for Lym had not provided any legal advice with respect of the transaction. The transaction proceeded with haste. Crennan Bell Hamilton J held that Ms Yang had made "significant admissions as to the intent with which the transaction was entered into" during her cross-examination. Ms Yang accepted that one of the reasons for transferring the subject property was to "get the property ... out of [Lym's] name and away from those who might be making a claim against the company". She also accepted that she signed the contract "so as to avoid [Lym] suffering a big loss". His Honour found that her preparedness to admit the "avoidance" of the $600,000 claim as a reason for her entering into the contract for sale, also conduced to acceptance that she knew of the claim before the contract was entered into. The contract did not come into effect until 15 August 2006 when it was executed by Mr Chen in Sydney and he simultaneously exchanged and settled the transaction on the same day both for himself and as attorney for Lym. The contract contained a special condition 33: "Price The Purchaser must pay the Purchase Price as follows: $7,625,000 to the mortgagee of the Land; and the balance to be applied to the debts owed to the Purchaser by the Vendor or a related entity (as that term is defined in the Corporations Act 2001 (Cth)) of the Vendor." On completion, Mr Chen arranged for the outgoing mortgagee to be paid about $7.6 million to discharge its mortgage over the subject property, by monies largely borrowed from Westpac Banking Corporation ("Westpac"). He executed a mortgage in favour of Westpac. The mortgage was registered and the relief granted by Hamilton J preserved that security and any existing tenancies. No settlement statement was prepared, nor any accounting or statement with respect to the application of the balance of the sale proceeds (about $7.4 million) to debts due to Mr Chen by Lym or related entities. No statement was provided as to what debts owed by the Liu interests to the Chen interests were satisfied by credit out of the proceeds of sale. No arrangements were made for Mr Chen to otherwise pay Lym the balance. On completion, Mr Chen used monies in Lym's bank account to pay $360,000 towards payment of the outgoing mortgagee and about $810,000 for stamp duty. Crennan Bell The critical findings of fact by Hamilton J were74: "I am not unmindful that [Ms Yang's] account of what [Mr Chen] said was somewhat garbled and inaccurate in that the claimants of the $600,000 were said to be purchasers of town houses rather than the next door neighbour. However, there was in fact only one potential source of debt and what Mr Chen was referring to in reality was the $600,000 claim by the District Court proceedings, whether he erroneously referred to purchasers or the mistake was made in Ms Yang's recounting of the conversation. I find that he did make representations to her that there was an outstanding claim or claims against [Lym] of $600,000 and that [Lym] should divest itself of the subject property as a matter of urgency in order to deflect that liability from the company and herself." Hamilton J referred to admissions made by Ms Yang in cross-examination which supported the case that the transaction was entered into with intent to defraud creditors and continued75: "The objection that those admissions were self serving, because they support Mrs Marcolongo's case, the success of which would achieve the setting aside of the transaction, which Ms Yang also sought, is not without force. However, particularly in the context of cross examination in which the admissions were made, including the promptness of the responses, I did not have any impression that the answers were calculated to advantage Ms Yang, rather than being frank and straightforward responses to the propositions put to her. I accept her evidence to this effect. Incidentally, Ms Yang's preparedness to admit that avoidance of the $600,000 claim was a reason for her entering into the contract for sale also conduces to acceptance that she knew of the claim before the contract was entered into." His Honour then said (and we agree) that his acceptance of these admissions rendered comparatively simple the decision on the s 37A case. His 74 [2009] NSWSC 98 at [141]. 75 [2009] NSWSC 98 at [145]. 76 [2009] NSWSC 98 at [182]. Crennan Bell "I find that the alienation of property was made 'with intent to defraud creditors'. Mrs Marcolongo is a person prejudiced by the transaction and therefore entitled to bring proceedings. She had at the time and has a claim for some $600,000 against [Lym]. Although she was not within the terms of the category of creditors as expressed in the admissions it was indeed her potential debt of $600,000 intended to be referred to. Mr Chen cannot characterise himself as a purchaser in good faith not having notice of the intent to defraud. This equally flows from the fact that I have found ... above that he pressed upon Ms Yang the existence of the claim and urged her to carry out the transaction expeditiously in order to avoid its effect. Mrs Marcolongo is therefore entitled to have the transaction declared voidable." The remaining issues In this Court Mr Chen submits that he was a purchaser for value. But the findings by the trial judge set out above deny any application in his favour of the proviso in s 37A(3). For its part, Lym seeks to uphold the decision of the Court of Appeal on the basis that Mrs Marcolongo had not established that its intention was "fraudulent predominantly", and that she must fail if the "primary purpose" of the transaction had not been its effect on creditors including Mrs Marcolongo. Both phrases had been used by Young JA77. His Honour also had regarded it as significant that "the real fraudster was Mr Chen" and that Lym's intentions, whatever they were, had been "formed principally from the influence of Mr Chen"78. Allsop P adopted the discussion of evidence by Young JA (and Giles JA agreed with Allsop P)79 and identified the issue as insufficiency of material upon which to conclude "that an operative intention of Ms Yang was to Three things should be said here. First, the reference to "defraud", in the light of what has been said earlier in these reasons, includes the hindering or delaying of creditors, in particular of Mrs Marcolongo in the exercise of her legal 77 (2009) 260 ALR 353 at 381, 382. 78 (2009) 260 ALR 353 at 382. 79 (2009) 260 ALR 353 at 355, 359. 80 (2009) 260 ALR 353 at 357. Crennan Bell remedies, whether by an assets preservation order in respect of Project 2 pending determination of her District Court action against Lym, or by execution upon Project 2 to recover her verdict and costs were she to be successful. No doubt, the transaction was not expressed as voluntary and Lym was to receive some value in exchange. But the provision in special condition 33(b) for application of the balance of the proceeds to debts owed by Lym and related entities of Lym, and the evidence as to the lack of arrangements for Mr Chen to pay that balance, shows the deterioration to the position of Mrs Marcolongo that inevitably ensued. It is no answer, as it was no answer in In re Fasey; Ex parte Trustees81, that there had been no delay and hindrance occasioned by the transaction because eventually she might have had some recovery for any judgment she recovered and costs. The second point is that s 37A requires a finding, which Hamilton J made, of intent to achieve the proscribed prejudice. The section does not postulate a mixture of motives from which there must be extracted what is identified as a predominant intent to defraud. Further, as Stephen J indicated in his discussion in Barton v Deputy Federal Commissioner of Taxation82, a provision such as the Elizabethan Statute does not require for its operation that the proscribed intent to defraud be the sole intent. Nor is it an answer to an application under the section that the transferor formed the intent of which it speaks by reason of the misconduct of another or, as here, of the transferee; the transferor, as in this case, will have remedies against that party but that does not deny success on the application made under the section by the person prejudiced. Counsel for Lym was unable to point to any line of authority in the extensive case law upon the Elizabethan Statute which would confine s 37A in this fashion. The final point is that the limiting effect which Lym sought to place upon s 37A would be to deny it the liberal construction which the Elizabethan Statute has long been held to require. Conclusions and orders For these reasons Costs of Mrs Marcolongo's appeal to this Court should be paid by Mr Chen and Lym. The Summons by Lym seeking to file a Notice of Contention out of time was not pressed. It should be dismissed with Mrs Marcolongo's costs against Lym. the appeal should be allowed. 81 [1923] 2 Ch 1 at 13, 15, 17. 82 (1974) 131 CLR 370 at 375; [1974] HCA 43. Crennan Bell Orders 1, 2, 3, 4 and 5 of the orders of the Court of Appeal made on 12 November 2009 allowing the appeal to that Court should be set aside and in place thereof the appeal to that Court should be dismissed, the costs of Mrs Marcolongo of the appeal to be paid by Mr Chen. The sum of $60,000 paid into the Supreme Court by Mr Chen as security for the costs of Mrs Marcolongo, together with interest thereon, should be paid out forthwith to her solicitor. The effect of the above orders of this Court will be to reinstate the orders made by Hamilton J and entered on 23 March 2009, save for order 12, which already is spent. Order 11 of those orders is a grant of liberty to apply to the Equity Division of the Supreme Court. Order 9(c) makes distinct provision for satisfaction of the judgment sum and costs of the District Court action, in which HEYDON J. On 31 July 2006, Lym International Pty Ltd executed a contract to transfer 34-36 Golf Avenue, Mona Vale, to Mr Yu Po Chen. Was that contract (and the consequential transfer on 15 August 2006) liable to be set aside as having been made with the intention of defrauding creditors in breach of s 37A of the Conveyancing Act 1919 (NSW)? The critical period was the period leading up to the execution of the contract by Lym International Pty Ltd on 31 July 2006. The critical mind was that of Lym International Pty Ltd. In the critical period the critical human mental states corresponding with the critical mind were those of one of its directors, Ms Limin Yang, who was also a 50 percent shareholder. That is because it was her decision to enter the contract of sale and complete the transaction, and hers alone. The company's other director, Mr Weilin Mao, who owned the other 50 percent of the shares, was in China and was not shown to have participated in the relevant decisions. In evaluating Ms Yang's state of mind, the following events are relevant. Excavation for Mona Vale is a suburb in the "Northern Beaches" area of Sydney. Mrs Leonilda Marcolongo owned a property adjoining a site at 1-5 Darley Street, Mona Vale. On that site Lym International Pty Ltd constructed a townhouse the development removed support from development. in August 2002. Mrs Marcolongo's property and caused Mrs Marcolongo commenced proceedings in the District Court of New South Wales on 9 August 2004 for damages in the amount of $400,000. The claim was increased to $600,000 on 5 September 2005. Meanwhile, on 3 May 2005, Lym International Pty Ltd had endeavoured to protect itself by cross-claiming against R C J Young, who carried out the excavation and development of 1-5 Darley Street, and also a company which was responsible for certain works connected with the excavation and development. Mr Young was bankrupt and in September 2005 Lym International Pty Ltd also cross-claimed against Mr Young's insurer. it damage Immediately after the proceedings began, Mrs Marcolongo applied for an injunction seeking to protect $500,000 of the proceeds of sale of the townhouses at 1-5 Darley Street as a possible source out of which the claimed damages could be paid. She was unsuccessful. But she maintained pressure on Lym International Pty Ltd for that protection. In a letter dated 13 September 2005, the solicitors for Mrs Marcolongo asked the solicitors for Lym International Pty Ltd for their client's consent to retaining a sum of money from the net proceeds of sale of the development at 34-36 Golf Avenue as a source for meeting any damages recovered in the District Court proceedings. The letter noted that the principals of Lym International Pty Ltd were nationals of the People's Republic of China, and raised questions about the extent to which the company had assets in Australia. It referred to the need for a Mareva injunction if agreement could not be reached. After Mrs Marcolongo's solicitors sent a reminder on 7 October, Lym International Pty Ltd's solicitors replied on 11 October. The letter said: "[O]ur client has a continuing development at 34-36 Golf Avenue, Mona Vale. We are instructed that the development comprises 15 units with the units having significant value. At the date of this letter we are instructed that the construction phase is due to be completed in the latter part of this year and all 14 units are for sale. We are instructed that our client has no other projects at this stage." By 11 October, the townhouses at 1-5 Darley Street had been sold, and the only asset of substance which Lym International Pty Ltd had in Australia was the project at 34-36 Golf Avenue. Before December 2005 the estimated value of 34-36 Golf Avenue on completion was $22.5 million, but in December 2005 that value fell to $18.5 million, which was less than the amount of Lym International Pty Ltd's debts. That event rendered false the assurances to be inferred from the 11 October 2005 letter that Lym International Pty Ltd was good for any judgment that Mrs Marcolongo might obtain. Thereafter matters worsened for the development at 34-36 Golf Avenue. On 25 January 2006 the solicitors for Mrs Marcolongo wrote to the solicitors for Lym International Pty Ltd demanding that the net proceeds of sale of the 34-36 Golf Avenue development be retained as "security for any judgment". the The manager of the development, Mr Mao, withdrew from management of Lym International Pty Ltd in January 2006 and subsequently returned to China. Little work was done on the development after that time. There were disputes with the builder. It was owed approximately $400,000. It had been told that Lym International Pty Ltd lacked the funds to pay it. In March 2006 it terminated its retainer. On 7 April 2006 Lym International Pty Ltd's quantity surveyor estimated that the cost of completing the development would be $3.4 million – double what it had been in January, because defective work had come to light. In April 2006 the mortgagee whose loans were financing construction revalued the property downwards, and successfully demanded repayment of $4.2 million, leaving $7.6 million owing to that mortgagee. That sum was provided by Heard Park Ltd, a company of which Mr Chen was the principal. Mr Chen and his wife had for some years been business and personal associates of Ms Yang and her husband, Mr Liu. In May 2006 Mr Liu was imprisoned in China by the authorities there. The personal affairs of Ms Yang and the business affairs of her company, Lym International Pty Ltd, had thus reached a stage of crisis. She could not speak or write English. She lived in New Zealand. Mr Chen then took on the role of fiduciary adviser to Lym International Pty Ltd. He offered to assist her by travelling from New Zealand to Sydney in order to investigate the state of the 34-36 Golf Avenue development provided he was granted a power of attorney. On 24 July 2006 that power of attorney was granted. By that date he considered that a possible course was for him to buy 34-36 Golf Avenue as a means of obtaining the discharge of debts owed by Mr Liu's interests to him or his associates. On 25 July Mr Chen went to Sydney. On 26 July he inspected 34-36 Golf Avenue. On succeeding days he observed that many contractors were unpaid, and he collected a large quantity of books and records. He learned that there was a claim of $600,000 against Lym International Pty Ltd arising out of the development of 1-5 Darley Street. The trial judge made certain crucial credit-based findings. They were not challenged in the Court of Appeal or in this Court, nor could they reasonably have been challenged. He found that Ms Yang had several conversations with Mr Chen before Lym International Pty Ltd executed the contract of sale on 31 July 2006. He found that Mr Chen was determined to induce her to enter the contract in order to solve the problem of the debts owed to his interests by the Liu interests. He found that Mr Chen represented that there was an outstanding claim or claims against Lym International Pty Ltd of $600,000 arising from the development of 1-5 Darley Street. He found that Mr Chen represented that Lym International Pty Ltd should divest itself of 34-36 Golf Avenue as a matter of urgency in order to deflect that liability from Lym International Pty Ltd and Ms Yang – or, as Ms Yang's evidence put it, avoid the company's assets being "frozen". He found that Mr Chen said that if Ms Yang did not do this, she could go to gaol – an improbable prediction, but she believed it. He accepted admissions in cross-examination by Ms Yang that a reason for her signing the contract of sale on behalf of Lym International Pty Ltd was to get the property away from those who might claim against that company and to avoid the company suffering a "big loss" in the form of the $600,000 claim. For those reasons he found that the contract of sale was entered, and the transfer was made, with an intent to defraud creditors. The trial judge's finding that Ms Yang was being urged to act with extreme haste is supported by the haste with which she did act, and by various other circumstances. Some of those circumstances were known to, or could have been inferred by, Ms Yang. On 25 July 2006, before inspecting 34-36 Golf Avenue or making inquiries, Mr Chen instructed his Sydney solicitors to prepare a contract of sale and transfer of the land. They sent the documents to Mr Chen's New Zealand solicitors on 27 July 2006 for execution "as soon as possible". Mr Chen specified the purchase price of $15 million. This was not the subject of any prior discussion or negotiation with Ms Yang. Ms Yang first became aware of the price when she saw it on the documents just before executing them. She signed a document confirming that a New Zealand solicitor introduced to her by Mr Chen had not given her any legal advice. that to say is sufficient There were other circumstances known to Mr Chen, though not necessarily known to Ms Yang. It was submitted for Mrs Marcolongo that Mr Chen's role as attorney of Lym International Pty Ltd in relation to the execution and completion of the contract of sale meant that his intention to defeat Mrs Marcolongo's interests was relevant. It is not necessary to accept that those other perhaps ambitious submission; circumstances are relevant at least because they suggest a sense of urgency on his part which he is likely to have communicated to Ms Yang before 31 July. The contract of sale was completed on the same day as Mr Chen signed it – 15 August. That completion took place without any reference to Ms Yang, without instructions from Lym International Pty Ltd, and without any representation by solicitors on behalf of Lym International Pty Ltd. Special Condition 33(b) to the contract of sale, the meaning of which was never conveyed to Ms Yang, provided that, after $7,625,000 of the purchase price was paid to the mortgagee, the balance was "to be applied to the debts owed to the Purchaser by the Vendor or a related entity (as that term is defined in the Corporations Act 2001 (Cth)) of the Vendor." There was no settlement statement stating the amount paid to the mortgagee, or showing what the balance was, or showing how it was applied to the "debts owed" within the meaning of Special Condition 33(b). Mr Chen provided no accounting to Lym International Pty Ltd or Ms Yang for any of the proceeds of sale. He provided no statement of what debts were satisfied out of the proceeds of sale – of what quantum, owed by whom and to what extent. He gave no identification of whether there was any surplus of those debts over the amount satisfied by settlement of the transaction, or vice versa. He supplied no acknowledgment of satisfaction of the debts which the debtors could produce as evidence of their discharge from the debts. There are two other indications of extreme haste. One concerns the second director of Lym International Pty Ltd, Mr Mao. Before the contract was made, the New Zealand solicitor acting for Mr Chen was given a copy of a letter in which Mr Mao purported to resign as director. But the signature on the letter was not that of Mr Mao. It was forged. Although the trial judge said there was no evidence that either Ms Yang or Mr Chen was responsible, the production of the letter does reveal a desire to proceed with great urgency. The other indication of extreme haste was that Mr Chen used money in Lym International Pty Ltd's bank account to pay $360,000 towards the discharge of the mortgagee's mortgage and about $810,000 for stamp duty, for which Mr Chen was liable. No explanation was apparently offered to Ms Yang in relation to that conduct. All these indications of haste reveal determination on Mr Chen's part, communicated to Ms Yang before 31 July, to ensure that 34-36 Golf Avenue passed into safe hands rather than remaining in peril of being frozen to support the interests of Lym International Pty Ltd's creditors. The fears afflicting Mr Chen and Ms Yang were realised. On 26 November 2009 Elkaim DCJ entered a verdict and judgment in favour of Mrs Marcolongo in the District Court proceedings for $388,643.62 plus costs. Although that was less than $600,000, it was said in this Court, without contradiction, that the trial lasted three weeks and that the costs incurred by Mrs Marcolongo during it were $600,000-$800,000. The legal issue for this Court was put as being whether s 37A required "an actual dishonest intent" or whether something less sufficed. In the Court of Appeal judgments there are references to the need for "a real intent to defraud"83, a "real and actual state of mind … of detrimentally affecting the property and rights of others"84, an "actual intent to deprive creditors of their rights"85, and "a serious finding of an actual and real intent to defraud"86. In the Court of Appeal it was said that "constructive fraud or equitable fraud" was not enough87; nothing "constructive[,] imputed or implied will do."88 The reasoning of the Court of Appeal posed other possible issues: whether a "predominantly" fraudulent intent89, or an actual and real intent which was "operative as one of the reasons for the transaction"90, was required, or whether an intent to have a "merely incidental" effect on creditors sufficed91. 83 Chen v Marcolongo (2009) 260 ALR 353 at 357 [14]. 84 Chen v Marcolongo (2009) 260 ALR 353 at 357 [15]. 85 Chen v Marcolongo (2009) 260 ALR 353 at 357 [17]. 86 Chen v Marcolongo (2009) 260 ALR 353 at 357 [17]. 87 Chen v Marcolongo (2009) 260 ALR 353 at 389 [295]. 88 Chen v Marcolongo (2009) 260 ALR 353 at 382 [243]. 89 Chen v Marcolongo (2009) 260 ALR 353 at 382 [241]. 90 Chen v Marcolongo (2009) 260 ALR 353 at 358 [24]. 91 Chen v Marcolongo (2009) 260 ALR 353 at 381 [236]. Whatever the precise test called for by s 37A, the intent underlying the conduct of Lym International Pty Ltd through Ms Yang was enough to satisfy it. It was as "actual" and "dishonest" an intent as it is possible to have. The intent was to delay or hinder a creditor, Mrs Marcolongo, by forestalling any attempt by her to obtain an injunction ensuring that assets in the hands of Lym International Pty Ltd would remain available to satisfy any judgment which she obtained in the District Court proceedings. It was an intention that was primary and not "merely incidental" to other intentions92. The intent was not merely a minor element amidst a range of mental states. Lym International Pty Ltd submitted that Ms Yang's reasons for entering the transaction were many and varied. On examination each of them boils down either to an element of or factor in the intent found by the trial judge, or to a worry Ms Yang was experiencing but which the transfer could not overcome. In the Court of Appeal it was said that she was very worried about "a great number of factors, including the incarceration of her husband in China, the stalled building project, the claims from the first project and her inability to fund the project."93 The first cannot have been a reason for the transfer, and the remainder are all related to the intent found by the trial judge. Lym International Pty Ltd submitted that Ms Yang was unwell, but that did not go to her intent. In evidence she identified as other reasons for the transaction the following: the indebtedness of Lym International Pty Ltd; the need for another $3.4 million to complete the project; the need for that money to be invested within two months, when the construction licence would expire; and the need to repay a debt to avoid going to gaol. Of these reasons, only two were not related to the intent found by the trial judge. One was the need to invest the $3.4 million. The other was the need to repay a debt to avoid going to gaol. The transaction with Mr Chen did not meet either need. The evidence accepted by the trial judge, and his findings, reveal that the proscribed intention was probably the sole one, but at all events it was a predominant and primary one. The second respondent appeared to submit that Mr Chen was the primary wrongdoer. In passing the Court of Appeal referred to the undoubted fact that Mr Chen was the primary wrongdoer, and that the intentions of Lym International Pty Ltd derived from him94. But as the Court of Appeal also said, the crucial intention was not his, but Lym International Pty Ltd's, and the greater role of Mr Chen was immaterial. 92 Chen v Marcolongo (2009) 260 ALR 353 at 381 [236]. 93 Chen v Marcolongo (2009) 260 ALR 353 at 358 [22]. 94 Chen v Marcolongo (2009) 260 ALR 353 at 382 [241]. Finally, Mr Chen submitted that he was a purchaser in good faith without notice of the intent to defraud creditors within the meaning of s 37A(3). This submission must be rejected. In him was the immediate origin of the relevant intent. He was acting in total bad faith. He had complete notice of the relevant intent. For those reasons the appeal must be allowed with costs.

HIGH COURT OF AUSTRALIA DIRECTOR OF PUBLIC PROSECUTIONS FOR THE NORTHERN TERRITORY OF AUSTRALIA APPELLANT AND WJI RESPONDENT Director of Public Prosecutions (NT) v WJI [2004] HCA 47 6 October 2004 ORDER Appeal dismissed. On appeal from the Supreme Court of the Northern Territory of Australia Representation: D F Jackson QC with W J Karczewski QC and M J Carey for the appellant (instructed by Office of the Director of Public Prosecutions for the Northern Territory) S J Odgers SC with S J Cox for the respondent (instructed by Northern Territory Legal Aid Commission) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Director of Public Prosecutions (NT) v WJI Criminal law – Criminal Code (NT), ss 192(3) and 31 – Sexual intercourse without consent – Mental element required – Whether relevant "act" is sexual intercourse or sexual intercourse without consent – Whether prosecution must prove beyond reasonable doubt that accused intended to have sexual intercourse with the complainant without consent – Application of Criminal Code (NT), Statutes – Interpretation – Criminal Codes – Criminal Code (NT). Practice and procedure – Trials – Jury directions. Words and phrases – "act", "event", "act, omission or event", "sexual intercourse with another person without the consent of the other person". Criminal Code (NT), ss 1, 31, 32, 192(3). GLEESON CJ. This is an appeal from a decision of the Court of Criminal Appeal of the Northern Territory which, by a majority of four to one1, upheld a trial judge's directions to a jury in a case of alleged rape where the principal issues related to the complainant's consent, or lack of it, and the accused's state of mind about that matter. The relevant directions were as follows: The indictment contains one charge of having sexual intercourse without consent. The charge consists of three elements. The Crown must prove each of the elements beyond reasonable doubt. B1. The charge consists of the following three elements: That on or about 27 January 1998 at Palmerston the accused had sexual intercourse with TRR. That TRR did not give her consent to the accused having sexual intercourse with her. That the accused intended to have sexual intercourse with TRR without her consent. Element 1.3 The accused knew TRR was not consenting or may not be consenting and proceeded regardless. If the accused mistakenly believed that TRR consented to his having sexual intercourse with her, he will NOT have intended to have sexual intercourse with her without her therefore prove beyond consent. reasonable doubt that the accused held no mistaken belief that TRR consented to having sexual intercourse with him. The Crown must Such a 'mistaken belief' does NOT have to be based on reasonable grounds. However, if there is no reasonable basis for such a mistaken belief, you are entitled to take that 1 Director of Public Prosecutions Reference No 1 of 2002 (2002) 12 NTLR 176 (Martin CJ, Thomas and Bailey JJ and Gallop AJ; Angel J dissenting). into account in deciding whether or not the Crown has proved that no mistaken belief existed." Those directions, we were told, followed a pattern that had been used in the Northern Territory for several years2, but there was a dispute about whether they were in conformity with the currently applicable provisions of the Criminal Code (NT) ("the Code" or "the Northern Territory Code"). They would not come as a surprise to a lawyer from one of the "common law States"3, but they are different from the law as applied in other "code States"4. Our concern, however, is to interpret and apply the Northern Territory Code which, in some respects, is unique. The principal points in contention relate to sub-par B1.3 of the directions and, as a corollary, sub-pars B4.2 and B4.3. Those points can only be understood by reference to the detail of the relevant provisions of the Code. In brief, however, the appellant contends that the prosecution was only required to establish elements B1.1 and B1.2, and, further, that the accused intended to have sexual intercourse. It was not required to establish that he intended non- consensual intercourse. On that approach, there may have been available to the accused an excuse (which the prosecution had to negative) that he had an honest and reasonable, but mistaken, belief that the complainant was consenting. The practical importance of the difference will often turn upon the question of reasonableness. The offence with which the accused was charged is created by s 192(3) of the Code, which prohibits "sexual intercourse ... without ... consent". The Code, in s 1, contains an extended definition of sexual intercourse, but that is presently immaterial. What was involved (and undisputed) in this case was sexual intercourse within the ordinary meaning of that expression. Section 192(3) provides that any person who has sexual intercourse with another person without the consent of the other person is guilty of a crime, and is liable to imprisonment for life. Two general provisions of the Code are of potential relevance to the mental element necessary for a contravention of s 192(3). 2 McMaster v The Queen (1994) 4 NTLR 92. cf Director of Public Prosecutions v Morgan [1976] AC 182; R v McEwan [1979] 2 NSWLR 926. eg Snow v The Queen [1962] Tas SR 271; Arnol v The Queen [1981] Tas R 157; Re Attorney-General's Reference No 1 of 1977 [1979] WAR 45. that a person Section 31(1) provides is excused from criminal responsibility for an act, omission or event unless it was intended or foreseen by him as a possible consequence of his conduct. It is that provision that the trial judge intended to reflect in sub-par B1.3 of the above directions. The directions assume that the relevant "act" prescribed by s 192(3), for the purpose of s 31(1), is not merely the act of sexual intercourse (which is legally neutral) but the act which is made criminal, that is to say, sexual intercourse without consent (or, to use a more old-fashioned word, rape). Whether that approach is correct, as it was held to be by a majority in the Court of Criminal Appeal, turns upon the identification of the act to which s 31(1) refers when it is applied to s 192(3). In the Northern Territory Code, "act" is defined, in s 1, in relation to an accused person, to mean "the deed alleged to have been done by him", and "it is not limited to bodily movement". There is also a definition of "event", but it is presently irrelevant. It means the result of an act or omission. If, as held by Angel J in dissent, the relevant act of the accused was the act of sexual intercourse, the absence of consent was not the result of that act. judgments There are in which expressions such as "extrinsic circumstances" or "external circumstances" have been used, in other contexts, to distinguish between the physical act involved in an offence and some other circumstance which must be present in order to make the act criminal. In a case concerning the Queensland Criminal Code, Kaporonovski v The Queen5, Gibbs J referred to absence of consent on a charge of rape as an extrinsic circumstance accompanying the act of the accused, that is, sexual intercourse. For present purposes, however, the question to be asked is whether, in relating ss 192(3) and 31(1) of the Northern Territory Code, having regard to the definition of "act" ("deed ... not limited to bodily movement"), the act for which a person is excused from criminal responsibility unless it was intended is intercourse, or intercourse without consent. Is the "deed" sexual intercourse, or rape? If the wider concept of the relevant act is adopted, then there will be criminal responsibility only if there was an intent to have sexual intercourse without consent. It will not suffice to establish criminal responsibility that there was an intent to have sexual intercourse. If the narrower concept of the relevant act is adopted, that would not leave an accused bereft of any possible exculpation arising from a misunderstanding about consent. Section 32 provides that a person who does an act under an honest and reasonable, but mistaken, belief in the existence of any state of things is not criminally responsible for it to any greater extent than if the real state of things had been such as he believed to exist. This, according to the appellant, is (1973) 133 CLR 209 at 231. the statutory rubric which covers the mental element of an accused concerning the consent of a person with whom he has sexual intercourse. On that approach, reasonableness is a factor that always comes into play as an ingredient of the "defence", and not merely as a matter of potential evidentiary significance on the question of intention. Sections 31 and 32 are general provisions with possible application to a variety of offences. The presence of s 31 does not mean that it will provide the exclusive answer to any problem of intention or foresight involved in criminal responsibility, regardless of the elements of the substantive offence involved: Charlie v The Queen6. A provision such as s 32 might have little, if any, room for practical operation in a case where the nature of the elements which the prosecution must prove in order to establish criminal responsibility is such that the possibility of mistake is caught up within those elements7. In a given case, there may be no occasion for an accused to rely upon the excuse provided by s 31 or s 32, because of what the prosecution needs to prove in order to establish the elements of the offence. Section 32 is not to be treated in every case as an answer which demands a question. If, because of the interaction of s 31(1) and s 192(3), the prosecution has to show that the accused intended, not just to have sexual intercourse, but to have sexual intercourse without consent, then it may very well be that, in a given case, of which the present is an example, s 32 would not arise for consideration. It does not appear to me to be helpful to ask whether the complainant's absence of consent was an extrinsic circumstance. Extrinsic to what? It was extrinsic to the accused in the sense that it was a quality, not of the accused, but of the alleged victim. To describe it as extrinsic to the conduct which attracted criminal responsibility is to beg the question. Having sexual intercourse with someone who is not consenting is a "deed" which is not limited to the bodily movement of the perpetrator. It involves violence, and a serious affront to the dignity and personal integrity of the victim. It is consistent with the ordinary use of language to describe the absence of consent as a part of the deed which attracts criminal responsibility. It is a defining aspect of the deed. In my view, in the Northern Territory Code, for the purpose of applying s 31(1) to s 192(3), the relevant act is having sexual intercourse with another person without the consent of the other person. It follows that the directions of (1999) 199 CLR 387. See also Vallance v The Queen (1961) 108 CLR 56 at 58 per cf King v The Queen (2003) 77 ALJR 1477; 199 ALR 568. the trial judge were correct. I agree with the majority in the Court of Criminal Appeal. The appeal should be dismissed. GUMMOW AND HEYDON JJ. The Criminal Code of the Northern Territory of Australia ("the Code") is Sched 1 to the Criminal Code Act (NT). That statute was enacted in 1983 and s 3 repealed a deal of earlier legislation including various South Australian Acts in their application to the Territory. The Code has apparent affinities with the Griffith Code and the Codes of Tasmania and Western Australia, but it has some distinctive features of its own. That is not surprising, given that the Northern Territory legislation is the most recent of the four Codes and was enacted in the light of many decisions construing the State Codes. The Code and the common law As is well known, Sir Samuel Griffith regarded it as a mark of the success of the Queensland Code that no longer would it be necessary to consider "the old doctrine of mens rea"; he said that "the exact meaning" of that common law doctrine had been the subject of much discussion8. That discussion has continued. Is the voluntary nature of the conduct of the accused an element of the actus reus, as an essential constituent of the "act" in question, or an element of the mens rea9? Where the existence of a particular intent or state of mind is a necessary ingredient of an offence, may the accused exculpate himself by an honest and reasonable mistaken belief10? Does such a mistake necessarily negate the existence of mens rea11? There may be no requisite "act" at all where the offence fixes upon an omission or treats as sufficient the proof of the existence of a specified event, state of affairs, status or situation12. Offences of "strict liability" may be created by statute. With these considerations in mind, is it correct to say that the actus 8 Widgee Shire Council v Bonney (1907) 4 CLR (Pt 2) 977 at 981. 9 Ryan v The Queen (1967) 121 CLR 205 at 216-217, 231-232, 235, 244-246; Smith & Hogan, Criminal Law, 10th ed (2002) at 37-38. 10 See the judgment of Windeyer J in Iannella v French (1968) 119 CLR 84 at 11 See the judgment of Bray CJ in R v Brown (1975) 10 SASR 139 at 144, 147. 12 Smith & Hogan, Criminal Law, 10th ed (2002) at 42-44; Cohen, "The 'Actus Reus' and Offences of 'Situation'", (1972) 7 Israel Law Review 186 at 190-192. An example was s 7 of the Immigration Restriction Act 1901 (Cth), which made every prohibited immigrant found in Australia in contravention of that statute guilty of an offence. reus includes all the elements of the crime in question except for that which is required (if any) as the mental element of the offence? In He Kaw Teh v The Queen13, Brennan J affirmed that "a presumption is made that mens rea is an element in a statutory offence though the offence is defined only by reference to its external elements". The phrase "external elements" and cognate expressions have a significance for the issues that arise on this appeal respecting the construction of the Code. With the above questions of common law classification, this appeal is not concerned. However, they lie behind, or at least can assist in, an understanding of the scheme of the Code. The meaning of "act" In construing the Codes of the States, particular difficulty has arisen as to the meaning of the term "act" appearing in provisions dealing with general principles of liability14. Was all that was indicated the activity performed by the accused, for example firing a shot, or also the consequences of that action or the circumstances in which the action occurred? In Vallance v The Queen15, the Court was concerned with the unlawful wounding provision of the Tasmanian Code. Kitto J and Menzies J held16 that the word "act" in the provision in s 13(1) that no person was to be criminally responsible for an act unless it be voluntary and intentional, referred to the physical action of a person charged; it did not extend, in its application to the unlawful wounding provision of s 172, to all that was comprised in the notion of wounding. Dixon CJ and Windeyer J17 were of the contrary view; Taylor J tended18 to favour the opinion of Kitto J and Menzies J. The Code was enacted 13 (1985) 157 CLR 523 at 565-566. 14 Specifically, Criminal Code (Q), s 23; Criminal Code (WA), s 23; Criminal Code (Tas), s 13. 15 (1961) 108 CLR 56. 16 (1961) 108 CLR 56 at 64, 71 respectively. 17 (1961) 108 CLR 56 at 60-61, 79 respectively. 18 (1961) 108 CLR 56 at 68-69. See Kaporonovski v The Queen (1973) 133 CLR 209 at 228-230 where Gibbs J discusses Vallance and the subsequent support given the views of Dixon CJ and Windeyer J in Timbu Kolian v The Queen (1968) 119 CLR in terms which involved a response to Vallance19. Before coming to the particular legal issues involved in the appeal, it is necessary to say something of the facts. The facts The respondent was acquitted at his trial in the Supreme Court of the Northern Territory before Riley J and a jury on a count of sexual intercourse without the consent of the complainant, contrary to s 192(3) of the Code. Section 192(3) states: "Any person who has sexual intercourse with another person without the consent of the other person, is guilty of a crime and is liable to imprisonment for life." An aide memoire distributed to the jury as part of Riley J's directions in part read: "If the accused mistakenly believed that [the complainant] consented to his having sexual intercourse with her, he will NOT have intended to have sexual intercourse with her without her consent. The Crown must therefore prove beyond reasonable doubt that the accused held no mistaken belief that [the complainant] consented to having sexual intercourse with him. Such a 'mistaken belief' does NOT have to be based on reasonable grounds. However, if there is no reasonable basis for such a mistaken belief, you are entitled to take that into account in deciding whether or not the Crown has proved that no mistaken belief existed." Section 414(2) of the Code states: "A Crown Law Officer may, in a case where a person has been acquitted after his trial on indictment, refer any point of law that has arisen at the trial to the [Court of Criminal Appeal] for its consideration and opinion thereon." The term "Crown Law Officer" is defined in s 1 of the Code so as to include the present appellant. 19 Gray, "A Class Act, an Omission or a Non-event? Criminal Responsibility Under Section 31 of the Criminal Code (NT)", (2002) 26 Criminal Law Journal 175 at Under s 414(2) of the Code, the following points of law were referred for consideration: "1. Was the learned trial judge correct in directing the jury, in respect of the elements of the offence prescribed by section 192(3) of the [Code], that the Crown must prove beyond reasonable doubt, not only that the accused had sexual intercourse with the complainant, and that the complainant did not give her consent to the accused having sexual intercourse with her but also that the accused intended to have sexual intercourse with the complainant without her consent? 2. Was the learned trial judge correct in directing the jury, in respect of the issue of the accused's mistaken belief as to consent, that such a mistaken belief need not be based on reasonable grounds?" The Court of Criminal Appeal (Martin CJ, Thomas and Bailey JJ and Gallop AJ; Angel J dissenting) answered each question "Yes"20. Section 407(1) of the Code stipulates that the Supreme Court shall be the Court of Criminal Appeal. Pursuant to s 35AA of the Judiciary Act 1903 (Cth), an appeal lay to this Court by special leave from a judgment, decree, order or sentence of the Supreme Court sitting as the Court of Criminal Appeal. The order that the questions referred be answered in the affirmative answered the description of a judgment, decree, order or sentence21. The appellant contends that the Court of Criminal Appeal erred in not answering each question in the negative. We have concluded that the Court of Criminal Appeal did not err and that the appeal should be dismissed. 20 Director of Public Prosecutions Reference No 1 of 2002 (2002) 12 NTLR 176; 171 FLR 403. 21 Mellifont v Attorney-General (Q) (1991) 173 CLR 289. The structure of the Code It is necessary to make some further reference to the structure and scope of the Code. The Code follows the outline described by Dixon CJ in Vallance, with reference to the Tasmanian Code. His Honour referred to22 "the use in the introductory part of the [Tasmanian Code] of wide abstract statements of principle about criminal responsibility" which "come ab extra and speak upon the footing that they will restrain the operation of what follows"; what follows are "many chapters defining particular crimes more often than not in terms adopted long before as occasion demanded by a legislature introducing a new crime or crimes into a common law system". The abstractions of doctrine, "framed rather to satisfy the analytical conscience of an Austinian jurist than to tell a judge at a criminal trial what he ought to do", do not represent "generalized deductions from ... particular instances"23. What then is to be seen in the framing of the Australian Codes is an application to statutory schemes of what has been described as "top-down reasoning"24, whereby general principle is imposed by a particular theory rather than derived from decisions upon particular instances. A particular theory of the framers of the State Codes may have been displaced by later common law decisions. An example, after Woolmington v The Director of Public Prosecutions25, was the placement of the burden respecting issues of accident or provocation in the trial of a murder indictment26. Further, as the present appeal demonstrates, in relating the general to the specific portions of the Code, there is a risk that the requisite intent which is to be proved may be distorted. There is thus wisdom in the statement by Dixon CJ in Vallance27, 22 (1961) 108 CLR 56 at 58. 23 Vallance v The Queen (1961) 108 CLR 56 at 58 per Dixon CJ. 24 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 26 R v Mullen (1938) 59 CLR 124 at 136; Murray v The Queen (2002) 211 CLR 193 at 206-207 [40]. However, with respect to the Code, s 440 provides a standard of proof beyond reasonable doubt, save for matters to be proved by the defence, where the standard is the balance of probabilities. 27 (1961) 108 CLR 56 at 61. adopted by Gaudron J in Murray v The Queen28, that the operation of those provisions of the Codes dealing with general principles can be worked out only by specific solutions of particular difficulties raised by the precise facts of given cases. Section 192(3) of the Code is found in Pt VI, Div 5 (ss 187-193), which is headed "Assaults". Part VI is headed "OFFENCES AGAINST THE PERSON AND RELATED MATTERS". The central elements of s 192(3) "sexual intercourse with another person without the consent of the other person" have some affinity with the definition of the common law crime of rape as "carnal knowledge of a woman without her consent", carnal knowledge being "the physical fact of penetration"29. However, there is in s 1 an expanded definition of the term "sexual intercourse" and sub-ss (1) and (2) of s 192 both indicate that "consent" means "free agreement" and indicate various circumstances in which there will not be that free agreement. Nothing turns immediately upon these provisions for this case. Part II (ss 22-43) is headed "CRIMINAL RESPONSIBILITY" and contains the wide abstract statements of principle about criminal responsibility to which Dixon CJ referred in Vallance. The critical provision is s 23 which is found in Div 1 (ss 22-25), headed "General Matters". Section 23 states: "A person is not guilty of an offence if any act, omission or event constituting that offence done, made or caused by him was authorized, justified or excused." The section is so drawn as to encompass the diverse range of offences specified in Pts III-VIII of the Code. These include not only crimes proscribing certain activities, with or without the achievement of a particular result, but also crimes of omission, and what earlier in these reasons have been described as situation crimes. This is indicated by the postulate in s 23 that an offence is constituted by one or more of an "act, omission or event". An "event" means "the result of an act or omission" (s 1). There is no definition of "omission". However, s 1 contains a detailed definition of "act" which sets the Code apart from the State Codes. The provision reads: 28 (2002) 211 CLR 193 at 198 [12]. 29 Papadimitropoulos v The Queen (1957) 98 CLR 249 at 261. See also R v Flannery [1969] VR 31 at 33. "'act', in relation to an accused person, means the deed alleged to have been done by him; it is not limited to bodily movement and it includes the deed of another caused, induced or adopted by him or done pursuant to a common intention". The reference to "deed" reflects a passage in the judgment of Windeyer J in Vallance. There, in the course of construing s 13(1) of the Tasmanian Code, which read: "No person shall be criminally responsible for an act, unless it is voluntary and intentional; nor, except as hereinafter expressly provided, for an event which occurs by chance", "The statement that no person shall be criminally responsible for an act, unless it is voluntary and intentional refers, I think, as a mere matter of construction, to an act for which, if done voluntarily and intentionally, a person would be criminally responsible. The definition of 'criminally responsible' in s 1[31] seems to confirm this construction. The 'act' referred to is thus a deed that, if done wilfully and intentionally (and in cases where a specific intent is an ingredient of the crime, done with that intent), would make the doer criminally responsible." Section 23 uses the phrase "authorized, justified or excused". The Code does not contain any further definition of those expressions. Their content is to be gathered from the balance of Pt II. Division 2 (s 26) is headed "Authorization", Div 3 (ss 27-29) "Justification", and Div 4 (ss 30-43) "Excuse". Section 31 of the Code The most important provision found in Div 4 is s 31. This states: "(1) A person is excused from criminal responsibility for an act, omission or event unless it was intended or foreseen by him as a possible consequence of his conduct. (2) A person who does not intend a particular act, omission or event, but foresees it as a possible consequence of his conduct, and that 30 (1961) 108 CLR 56 at 79. 31 The term meant "liable to punishment as for an offence". particular act, omission or event occurs, is excused from criminal responsibility for it if, in all the circumstances, including the chance of it occurring and its nature, an ordinary person similarly circumstanced and having such foresight would have proceeded with that conduct. This section does not apply to the offences defined by Division 2 of Part VI." The offences covered by sub-s (3) are concerned with certain dangerous acts or omissions and failures to rescue. Further, by reason of express provision (s 162(4)) or as a matter of true construction32, s 31 is not applicable to two of the four categories of murder specified in s 162(1) of the Code. However, s 31 does apply across a range of offences specified in Parts succeeding Pt II of the Code. These offences include s 192(3), the crime of which the respondent was acquitted. In these cases, s 31 says negatively that there shall be no guilt unless the act, omission or event, being the crime specified in another Part of the Code, was intended by the accused or foreseen by the accused as a possible consequence of the conduct of the accused. In this way there is a congruence between the general principles stated in Pt II and the specific provisions made in other Parts of the Code. The general scheme of the Code is that these latter provisions do "no more by way of defining the crime than stating the external elements necessary to form the crime" and s 31 is relied upon to define and import the elements going to state of mind; the reference to "external elements" is to the judgment of Dixon CJ in Vallance33. Dixon CJ used the phrase "external elements" in a similar fashion to Professor Glanville Williams. In his Criminal Law – The General Part34, he espoused "[t]he view that actus reus means all the external ingredients of the crime". Later35, he wrote that "actus reus" denoted "the external situation forbidden by law – the external elements of the offence". He continued by explaining that he meant by "external elements" those parts of the offence that were "not in the defendant's mind", adding36: 32 Charlie v The Queen (1999) 199 CLR 387. 33 (1961) 108 CLR 56 at 59. 34 2nd ed (1961) at 19 (original emphasis). 35 Textbook of Criminal Law, (1978) at 30. 36 Textbook of Criminal Law, (1978) at 30. "Rape, for example, is (1) sexual intercourse by a man with a woman without her consent, (2) the man knowing that she does not consent or realising that she may not be consenting and being reckless whether she consents or not. The elements that I have put under (1) are the external elements, and they include the lack of consent by the woman, which is to some extent a reference to her state of mind. The external elements are all the elements of the offence other than the defendant's mental element." The adaptation of these remarks to the Code with the assistance of Dixon CJ's observations in Vallance, together with the significance of the adoption in the definition of "act" in s 1 of the Code of the term "deed", are critical for the outcome of the present case. The correct process of construction of the Code is that indicated by Burbury CJ and Cox J in Snow v The Queen37. Their Honours said38: "The first step in determining the mental elements in the crime of rape under the Tasmanian Criminal Code is to consider the statutory definition of the crime itself and then to consider the application to the elements of the crime so defined the general provisions of Chapter IV of the [Tasmanian Code] relating to criminal responsibility." "Rape" was defined by s 185 of the Tasmanian Code and "carnal knowledge" by s 1. Burbury CJ and Cox J continued39: "Section 185 as in the case of s 172 (unlawful wounding) must, we think (in the words of Dixon CJ in Vallance v The Queen40): '... be read in the Code as doing no more by way of defining the crime than stating the external elements necessary to form the crime' (ie (1) physical penetration of a woman not married to the accused, (2) absence of her consent) the introductory part' (ie Chapter IV) 'or so much of it as deals with criminal responsibility to define and import the elements which go 'relying upon 37 [1962] Tas SR 271. 38 [1962] Tas SR 271 at 275. 39 [1962] Tas SR 271 at 275. 40 (1961) 108 CLR 56 at 59. to intention or other state of mind necessary or sufficient completely to constitute the crime.' Absence of the woman's consent (as defined in s 1) involves of course the woman's state of mind but it is an external element of the crime vis à vis the accused." Thereafter, in Kaporonovski v The Queen41, which involved a conviction under the Queensland Code for unlawfully doing grievous bodily harm, Gibbs J said of the word "act" appearing in the first paragraph of s 23 of that Code42 that it would be a departure from the ordinary meaning of that word to regard it as including all the ingredients of the crime other than the mental element43. Gibbs J said that perhaps the strongest indication of the intent with which "act" was used in the first paragraph of s 23 was44: "to be found in the very words of that paragraph, which, by distinguishing between an act and its consequences, show that 'act' is not intended to embrace the consequences as well as the action that produced them". "Putting aside cases where a specific intention is required, there are many offences which are constituted only if the act of the accused was accompanied by some extrinsic circumstance (eg absence of consent on a charge of rape or the age of the girl on a charge of unlawful carnal knowledge) or had some particular consequence (eg the causing of grievous bodily harm, as in the present case). It would be straining language to regard the word 'act' as extending to all such external circumstances." 41 (1973) 133 CLR 209. 42 This read: "Subject to the express provisions of this Code relating to negligent acts and omissions, a person is not criminally responsible for an act or omission which occurs independently of the exercise of his will, or for an event which occurs by accident." 43 (1973) 133 CLR 209 at 230. 44 (1973) 133 CLR 209 at 231. 45 (1973) 133 CLR 209 at 231. It will be apparent the expressions "external circumstances" and "extrinsic circumstance" in a sense quite different to that in which Dixon CJ used "external circumstances" in Vallance. distinguished the "act" of the accused from a circumstance such as absence of consent on a charge of rape or the causing of grievous bodily harm. Dixon CJ spoke of "the external elements necessary to form the crime, that is to say the wounding or the causing of grievous bodily harm"46, other than the mental element provided for in the general provisions as to liability found in the Tasmanian Code. The outcome on the appeal In Kaporonovski, Gibbs J was influenced by the absence of any definition of "act" in the Queensland Code and what he took to be its "ordinary meaning"47. That concern does not arise with s 31 of the Code. Even without the distinct treatment of "event" as meaning the result of an act or omission, and the separate treatment of acts and omissions, the definition of "act" indicates that that word means "the deed alleged to have been done" by the accused person and is not limited to bodily movement. The significance of the choice of the term "deed" in the light of remarks by Windeyer J in Vallance48 has been emphasised earlier in these reasons. In construing s 31, the central question is the identification of that which, if done intentionally, gives rise to criminal responsibility. This for the present case was the charge of the sexual intercourse of the respondent with the complainant without her consent, as specified in s 192(3) of the Code. The outcome is consistent with the common law as understood at the time of the enactment of the Code in 1983. In 1975, the House of Lords decided Director of Public Prosecutions v Morgan49. The critical holding by the majority appears in the following passage in the speech of Lord Hailsham of St Marylebone50: 46 Vallance v The Queen (1961) 108 CLR 56 at 59. 47 (1973) 133 CLR 209 at 230. 48 (1961) 108 CLR 56 at 79. 50 [1976] AC 182 at 214. "Once one has accepted, what seems to me abundantly clear, that the prohibited act in rape is non-consensual sexual intercourse, and that the guilty state of mind is an intention to commit it, it seems to me to follow as a matter of inexorable logic that there is no room either for a 'defence' of honest belief or mistake, or of a defence of honest and reasonable belief or mistake. Either the prosecution proves that the accused had the requisite intent, or it does not." Section 32 of the Code Something should be said respecting s 32 of the Code. This states: "A person who does, makes or causes an act, omission or event under an honest and reasonable, but mistaken, belief in the existence of any state of things is not criminally responsible for it to any greater extent than if the real state of things had been such as he believed to exist." The framing of the second question for the Court of Criminal Appeal, in speaking of "the issue of the accused's mistaken belief as to consent", appears to have assumed some role in the present case for s 32, perhaps to the displacement of s 31. Martin CJ, with respect, correctly, pointed out that s 32 was not exhaustive and that it would be wrong to assume that it was only the provisions of s 32 that applied in all cases where the belief of the accused was relevant and mistake raised in the evidence51. His Honour continued52: "In the case of the offence under s 192(3), I have already indicated that the Crown must prove that the accused intended to have sexual intercourse with another person without that person's consent. That necessarily involves negating any material capable of indicating that the accused honestly believed the other person was consenting. That does not require the application of s 32. It is simply part of the burden resting on the Crown to discharge the onus resting upon it to prove the mental element of the offence." Bailey J, with reference to what had been said by Bray CJ in R v Brown53, emphasised that in some instances there was no necessary identity between a 51 (2002) 12 NTLR 176 at 183; 171 FLR 403 at 406. 52 (2002) 12 NTLR 176 at 183; 171 FLR 403 at 406. 53 (1975) 10 SASR 139 at 144, 147. mistaken belief in circumstances that would make an act innocent and the absence of the necessary mens rea54. It is unnecessary to pursue the distinction between s 31 and s 32 as a matter of abstract principle and in the absence of a difficulty raised by precise facts in other given cases. Juries and reasonable basis There is one further point to be made. After the decision in Morgan, provision was made in s 1 of the Sexual Offences (Amendment) Act 1976 (UK) to the effect that the presence or absence of reasonable grounds for a belief that the other party was consenting to sexual intercourse is a matter to which the jury is to have regard in considering whether the defendant is to be believed55. Of the necessity for such a statutory provision, Sir John Smith wrote56: "Whenever a jury has to decide whether a person knew a fact or foresaw a consequence, the fact that a reasonable man would have known the fact or foreseen the consequence is evidence tending to show that the accused knew or foresaw; but the decision must be made in the light of the whole of the evidence, including the accused's own testimony, if he gives it, that he did not know or foresee as the case may be. It is unfortunate that a matter of common sense should be enacted at all, particularly that it should be enacted in relation to one offence." In the present case, Bailey J described the essential issue raised by the reference to the Court of Criminal Appeal as somewhat theoretical57. He added58: "Juries are invariably directed that if there is no reasonable basis for an accused's mistaken belief, they are entitled to take that into account in deciding whether or not the Crown has proved that no mistaken belief existed. I think that, in the light of such a direction, the prospects of a jury acquitting an accused who had no reasonable basis for believing that the complainant was consenting to intercourse because they were not satisfied beyond reasonable doubt that the accused's belief in consent was not honest are so remote as to be near fanciful." 54 (2002) 12 NTLR 176 at 207-208; 171 FLR 403 at 422. 55 See Fisse, Howard's Criminal Law, 5th ed (1990) at 172. 56 Smith & Hogan, Criminal Law, 10th ed (2002) at 467. 57 (2002) 12 NTLR 176 at 194; 171 FLR 403 at 414. 58 (2002) 12 NTLR 176 at 194-195; 171 FLR 403 at 414. Orders The appeal should be dismissed. Kirby KIRBY J. The issues raised by this appeal are similar to those which have separated this Court in the past59. They divided the Court of Criminal Appeal of the Northern Territory60, although four of the appellate judges agreed with the view taken by the trial judge (Riley J) as to the requirements of the Criminal Code of the Northern Territory ("NT Code"), applicable to the circumstances. Those requirements, and especially s 31, have been considered by this Court recently in Charlie v The Queen61. There too the Court was divided62. Commentators who have addressed the operation of s 31 of the NT Code have likewise expressed sharply different views as to its meaning and effect63. Such differences suggest that something deeper lurks in the points that have divided so many judges and commentators. If this is so, it is unlikely that the resolution of the differences will be found in a purely verbal analysis. The divergence of so much thought (although in differing statutory circumstances) raises the possibility that there is an undisclosed premise of reasoning that we should expose and evaluate. In my view, this premise concerns the basic purposes of the criminal law (as revealed in the NT Code) and concepts of moral culpability that justify the assignment of a criminal quality to particular acts, omissions and events, especially where conviction potentially carries very serious consequences for human liberty. In the present case, where the crime involved was "sexual intercourse with another person without the consent of the other person", contrary to s 192(3) of the NT Code64, establishment of the offence 59 See Vallance v The Queen (1961) 108 CLR 56; Timbu Kolian v The Queen (1968) 119 CLR 47; Kaporonovski v The Queen (1973) 133 CLR 209; R v Falconer (1990) 171 CLR 30. 60 Director of Public Prosecutions Reference No 1 of 2002 (2002) 12 NTLR 176 (Martin CJ, Thomas and Bailey JJ and Gallop AJ; Angel J dissenting). 61 (1999) 199 CLR 387. 62 Gleeson CJ, McHugh and Callinan JJ. Hayne J and I dissented. 63 Gray, "A Class Act, an Omission or a Non-event? Criminal Responsibility Under Section 31 of the Criminal Code (NT)", (2002) 26 Criminal Law Journal 175; Hemming, "A Tour de Force, a Faux Pas or a Coup de Grace? A Rejoinder to Criminal Responsibility Under Section 31 of the Criminal Code (NT)", (2002) 26 Criminal Law Journal 344; Pincus, "Criminal Cases in the High Court of Australia: Ugle v The Queen; Murray v The Queen", (2002) 26 Criminal Law Journal 365; Gray, "A third look at criminal responsibility under section 31 of the Criminal Code (NT)", (2003) 27 Criminal Law Journal 211. 64 The language of the offence in the NT Code forecloses debates that might otherwise arise concerning whether, in its essential character, the offence so provided is truly (or merely) of a sexual kind, as distinct from a profound assault (Footnote continues on next page) Kirby exposed the prisoner, if convicted of it, to a maximum penalty of imprisonment In the Court of Criminal Appeal, Bailey J (who delivered the leading opinion66) described the problem for decision thus67: "The key question raised by the reference is whether or not the Crown is required to prove a mental element in relation to a completed crime contrary to s 192(3) [of the NT Code] (ie 'rape')." Later, in the same vein, his Honour went on68: "In the case of rape, the virtually non-existent mental element which the Crown seeks to assign to the offence militates very strongly against exclusion of s 31 [in its application in this case to s 192(3) of the NT Code]." These remarks help to explain the response which the majority judges in the Court of Criminal Appeal in this case adopted to the problem presented by the NT Code. Being informed by an important general principle of the criminal law normally upheld in Australia69, intuitively, the reaction of the judges seems correct. The crime of sexual intercourse without consent could not be viewed as non-criminal "in the real sense" or as merely a statutory offence of an administrative character. On the face of things (absent express language) it is therefore one of those crimes ordinarily informed by the general principle that subjective intent or foresight (in this case, to have sexual intercourse without upon the person, privacy, autonomy and human dignity of a victim. For the victim (and for the perpetrator), such assaults may not have a predominantly "sexual" character. Nor may the "sex" necessarily be experienced as "intercourse". See eg Lewis, "Recent Proposals in the Criminal Law of Rape: Significant Reform or Semantic Change?", (1979) 17 Osgoode Hall Law Journal 445; Smart, Law, Crime and Sexuality: Essays in Feminism, (1995) at 110-112; Cahill, "Foucault, Rape, and the Construction of the Feminine Body", (2000) 15 Hypatia 43. 65 NT Code, s 192(3). The section is set out in the reasons of Hayne J at [115]. 66 Reference No 1 (2002) 12 NTLR 176 at 192 [39]. 67 With which, in substance, Martin CJ agreed: Reference No 1 (2002) 12 NTLR 176 at 183 [19]; see also at 185 [29] per Thomas J, 208 [85]-[86] per Gallop AJ. 68 Reference No 1 (2002) 12 NTLR 176 at 204 [72]. 69 See He Kaw Teh v The Queen (1985) 157 CLR 523 at 528-529, 564-565, 598-599. Kirby consent) must be proved by the prosecution in order to secure a conviction70. Typically, the more serious the potential consequences for an accused on conviction, the less likely it is that subjective intent or foresight will be treated as absent from a statutory definition of an offence71. By this test, conviction of sexual intercourse without consent, with such grave punitive consequences, attracts the presumption that intent or foresight to have sexual intercourse without consent is required. However, the question remains whether, in the present case, the language of the NT Code supports that conclusion or requires the opposite outcome. By the time contested questions of statutory construction reach this Court they are "notorious for generating opposing answers, none of which can be said to be either clearly right or clearly wrong"72. In the present appeal, we have to resolve an ambiguity. Neither solution might be unarguably correct or incorrect. However, a deep principle of our criminal law, against the background of which the NT Code was drafted, suggests that the trial judge and the majority of the Court of Criminal Appeal did not err in the construction of the NT Code which they successively adopted. The facts and the provisions of the NT Code The facts and practicalities: The present proceedings arose following contested directions given at the trial of the accused for sexual intercourse without consent, the acquittal of the accused, and a subsequent reference to the Court of Criminal Appeal by the Director of Public Prosecutions of a question of law73. In the course of the trial judge's summing up to the jury he told them74: 70 He Kaw Teh (1985) 157 CLR 523 at 594; Von Lieven v Stewart (1990) 21 NSWLR 52 at 66-67. See also Sherras v De Rutzen [1895] 1 QB 918 at 922-923; Proudman v Dayman (1941) 67 CLR 536; Lim Chin Aik v The Queen [1963] AC 160 at 176. Compare R v Woodrow (1846) 15 M and W 404 [153 ER 907]; Parker v Alder [1899] 1 QB 20. 71 He Kaw Teh (1985) 157 CLR 523 at 529-530. 72 News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 77 ALJR 1515 at 1524 [42] per McHugh J; 200 ALR 157 at 168. 73 As provided for by the NT Code, s 414(2). See Reference No 1 (2002) 12 NTLR 74 Summing up of Riley J, 25 May 2001 at 5. Kirby "[Y]ou are required to be satisfied beyond reasonable doubt that the accused man intended to have sexual intercourse with [the complainant] without her consent or that he knew she may not be consenting and proceeded regardless." As the judge observed75, there was no dispute that "sexual intercourse" had taken place between the accused and the complainant: "The issue is whether she consented or not, and if she did not consent, whether the accused man knew that she did not, or alternatively, knew that she may not be consenting but proceeded with his actions regardless." To assist the jury, the judge described the record of interview videotaped by the police, and sworn evidence given by the accused, asserting that although the complainant did not give him verbal permission to have sexual intercourse with her, she did so by "her actions"76. The evidence disclosed that the complainant had contacted police from a public telephone close to the accused's residence alleging sexual intercourse without consent soon after it was claimed to have occurred. She said that she had protested loudly during and after the "sexual intercourse". The accused denied this. He called a witness who was nearby who said that he had heard no such thing. The case was therefore typical of its kind in that the evidence presented a direct contradiction. As the evidence was described to the jury by the trial judge, there was little room for argument over mistake, misunderstanding, confusion or accident. The ultimate question for the jury was whether the prosecution had proved the charge of sexual intercourse without consent against the accused beyond reasonable doubt. To assist the jury further, the trial judge sensibly gave them a written memorandum elaborating the direction on the law which they were to apply to the facts as they found them. The essence of the memorandum is set out in other reasons77. There is no contest over the first and second of the elements which the judge told the jury that the prosecution had to prove beyond reasonable doubt78. Nor is there a contest that the first element was satisfied. The prosecution asserted that the facts established the second element (the complainant's want of 75 Summing up of Riley J, 25 May 2001 at 7. 76 Summing up of Riley J, 25 May 2001 at 21, referring to the videotaped interview of the accused by police. 77 Reasons of Gleeson CJ at [1]-[3]; reasons of Gummow and Heydon JJ at [23]; reasons of Hayne J at [112]-[113]. 78 That is, that the accused had "sexual intercourse" with the complainant and that she did not give her consent to his having "sexual intercourse" with her. Kirby consent) and, more importantly, that the law (the NT Code) excluded the third element − that the accused intended to have sexual intercourse with the complainant without her consent. The contest at trial, as described in the summing up, suggests that the jury may well have reached their verdict on the disputed second element without having to proceed to the third. In that sense, this case was not particularly well suited to present a factual contest to be resolved by the application of the law stated in the third element. However, the issue remains whether the third element is part of the law of the Northern Territory. It was not submitted that this Court's determination of that issue would involve an impermissible resolution of a theoretical question79. Because this Court is unaware of the basis of the jury's verdict, it is proper to accept the possibility that the third element was a relevant consideration, for some jurors at least, justifying determination by this Court of its legal correctness80. I have referred to the facts to strengthen a point made by Bailey J in the court below. In practical terms, the main issue that falls for decision in this appeal is not likely to affect the outcome of most cases81: "[T]he essential issue raised by the reference is not so much absurd, but rather academic or theoretical. Juries are invariably directed that if there is no reasonable basis for an accused's mistaken belief, they are entitled to take that into account in deciding whether or not the Crown has proved that no mistaken belief existed. I think that, in the light of such a direction, the prospects of a jury acquitting an accused who had no reasonable basis for believing that the complainant was consenting to intercourse because they were not satisfied beyond reasonable doubt that the accused's belief in consent was not honest are so remote as to be near fanciful." The provisions of the NT Code: The applicable provisions of the NT Code are contained or described in other reasons82. I agree that the starting point for 79 In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265-267. See also Mellifont v Attorney-General (Q) (1991) 173 CLR 289 at 303-304. 80 See Domican v The Queen (1992) 173 CLR 555 at 566. 81 Reference No 1 (2002) 12 NTLR 176 at 194-195 [50]. 82 Reasons of Gummow and Heydon JJ at [24], [27], [32]-[37], [47]; reasons of Kirby textual analysis is s 19283. This creates the offence with which the accused was charged. I also agree that that offence is not one containing a specific, or express, mental element84. In this, I concur in what Hayne J has written and with the exposition of the dissenting judge in the Court of Criminal Appeal85. The last point is, for me, a significant step in reasoning that supports the argument of the respondent. To render the conduct of the accused criminally liable, so that it exposes the accused to the risk of the punishment provided in s 192(3) of the NT Code, the normal features of our criminal law would suggest that the subjective element of intention or foresight (to have sexual intercourse without consent) would be introduced in a significant way. It is possible that the NT Code, properly analysed, will negate that expectation. However, it would not be in the slightest surprising that a general provision in the NT Code would introduce a requirement that, to secure such a conviction, the prosecution had to prove a relevant intention or foresight. As Bailey J remarked86, a direction such as the trial judge gave to the jury in this case would have been correct in law in, for example, the United Kingdom87, New South Wales88 and South Australia89, where the common law of "rape" applies to the elements of the offence. For the NT Code to adhere to such a deeply entrenched rule of the common law would not, therefore, be strange. For this Court to so hold would have the advantage of promoting the kind of uniformity in basic principles of the criminal law throughout Australia that this Court has upheld in the past, absent some contrary demand of language in the applicable law90. It is in this way that the issue presented by the legislation is brought ultimately to the text of the NT Code; the rules that govern the construction of 83 Reasons of Gummow and Heydon JJ at [32]-[33]; reasons of Hayne J at [124]- 84 Reasons of Hayne J at [123], [125]. 85 Reference No 1 (2002) 12 NTLR 176 at 184 [23] per Angel J. See reasons of 86 Reference No 1 (2002) 12 NTLR 176 at 192 [40]. 87 R v Morgan [1976] AC 182. 88 R v McEwan [1979] 2 NSWLR 926. 89 R v Brown (1975) 10 SASR 139. 90 Zecevik v Director of Public Prosecutions (Vict) (1987) 162 CLR 645 at 665. Kirby such legislative codifications91; and the past authority of this Court as to the provisions of criminal codes other than that of the Northern Territory, so far as they are analogous. Approach to the meaning of the NT Code Codes: rules of construction: The NT Code is Sched 1 to the Criminal Code Act (NT) ("NT Criminal Code Act"). That Act is an ordinary statute of the Northern Territory legislature. However, the choice of the words "Criminal Code", and the establishment of the NT Code as "the law of the Territory in respect of the various matters therein dealt with"92 suggest that what was intended was a statement of the entire law on the subjects covered, to the exclusion of the previous common law where this was inconsistent93. The first loyalty in interpreting a statutory codification is to the code94. The starting point for construction is the language of the code. It must be given its natural meaning so as to effect its disclosed purposes95. Codification puts a brake on the modern technique of looking beyond the statutory language. It focuses the attention of the decision-maker on the text of the code. That, after all, is the object of replacing the vast mass of decisional law with codified provisions. The purpose of codification would be undermined if lawyers, in the guise of construction, reintroduced all of the common law authority which the NT Code was intended to replace. Before the NT Code was enacted, the adoption of criminal codes in other Australian jurisdictions was greatly influenced by the draft code prepared by Sir Samuel Griffith in Queensland. His criminal code was based on earlier Italian, English and Indian attempts to codify the criminal law96. Because of the similarities of the criminal codes adopted in Queensland, Western Australia and 91 R v Barlow (1997) 188 CLR 1 at 31-33. See also R v Jervis [1993] 1 Qd R 643 at 92 NT Criminal Code Act, s 5 (emphasis added). The NT Criminal Code Act was originally introduced into the Northern Territory in 1983. See Charlie (1999) 199 CLR 387 at 407 [62] per Callinan J. 93 Brennan v The King (1936) 55 CLR 253 at 263. 94 Jervis [1993] 1 Qd R 643 at 647. 95 Barlow (1997) 188 CLR 1 at 31. 96 See eg Cullinane, "The Zanardelli Code and Codification in Countries of the Common Law", (2000) 7 James Cook University Law Review 116 at 116-117. Kirby (to a lesser extent) Tasmania, this Court has observed a rule that, so far as the language permits, consistency in the interpretation of the Australian criminal codes should be upheld97. I support that approach. It is sustained by considerations of linguistic similarity, history and practicality in achieving the other general objective, namely, broad consistency in the basic principles of the criminal law throughout Australia: codified, statutory and common law98. These matters of approach, derived from many earlier decisions of this Court and other courts, were noted by all of the judges below99. They are not controversial. Peculiarity of the NT Code: The point of difference concerns precisely what rule has been established by the course of authority, in relation to the provisions of the State criminal codes said to be analogous with s 31 of the NT Code. The provenance of the NT Code was different from State codes. It was enacted nearly a century after the Griffith Code was adopted in Queensland100 and long after the adoption of the criminal codes in Western Australia101 and Tasmania102. As was mentioned in Charlie103, the NT Code grew out of 97 Barlow (1997) 188 CLR 1 at 32; Charlie (1999) 199 CLR 387 at 410 [69]. 98 Jervis [1993] 1 Qd R 643 at 647; Barlow (1997) 188 CLR 1 at 31-33. 99 Reference No 1 (2002) 12 NTLR 176 at 181 [7] per Martin CJ, 185 [25] per Angel J, 195-196 [52] per Bailey J (Thomas J and Gallop AJ agreeing). 100 Criminal Code (Q) ("Queensland Code"), scheduled to the Criminal Code Act 1899 (Q). The Queensland Code followed a draft prepared for the government of Queensland in 1897 by Griffith CJ, then Chief Justice of the Supreme Court of Queensland. 101 The Criminal Code (WA) was first enacted by the Criminal Code Act 1902 (WA). It was then re-enacted, incorporating amendments, as a schedule to the Criminal Code Act 1913 (WA). 102 Criminal Code (Tas) ("Tasmanian Code"). The Tasmanian Code was enacted by the Criminal Code Act 1924 (Tas). It did not follow exactly the Griffith draft. In the Territory of Papua (called British New Guinea before 1905: see Papua Act 1905 (Cth), s 5) the Queensland Code was adopted by The Criminal Code Ordinance 1902. In the Territory of New Guinea, it was adopted by the Laws Repeal and Adopting Ordinance 1921, and subsequently in the Laws Repeal and Adopting Ordinance 1924. See Cooper v The Queen (1961) 105 CLR 177 at 179; O'Regan, New Essays on the Australian Criminal Codes, (1988) at 104-106. 103 (1999) 199 CLR 387 at 395 [18]. Kirby extensive consultations in Darwin104. These were followed by a period of gestation that probably helps to explain the many points of difference from the other Australian criminal codes. The majority in the Court of Criminal Appeal were in no doubt that the NT Code was different in relevant respects from the criminal codes of the States. "[The NT Code] should be taken as having been drafted with a view to avoiding the problems which have arisen in relation to the provisions such as s 23 of the Queensland Code, which has been most recently considered by the High Court in Murray v The Queen106 and the similar, but not identical, s 23 of the Western Australian Code decided by that Court at the same time in Ugle v The Queen107. The differences between those code provisions and s 31 of the [NT Code] are obvious." Bailey J expressed a similar view108. Moreover, he referred to a line of authority in the Court of Criminal Appeal of the Northern Territory109 (and he might have referred to more110) that draws attention to critical verbal distinctions between the State criminal codes and the NT Code. These, then, are the opinions111 of the judges who have the day to day responsibility for applying the NT Code. The dissenting judge in the Court of 104 Criminal Code Seminar, Darwin, October 1983. See Charlie (1999) 199 CLR 387 105 Reference No 1 (2002) 12 NTLR 176 at 181 [8]-[10]. 106 (2002) 211 CLR 193. 107 (2002) 211 CLR 171. 108 Reference No 1 (2002) 12 NTLR 176 at 204 [73]. 109 Reference No 1 (2002) 12 NTLR 176 at 204-205 [74], citing R v Mardday (1998) 7 NTLR 192. 110 eg Attorney-General v Wurrabadlumba (1990) 74 NTR 5; McMaster v The Queen (1994) 4 NTLR 92. 111 Reference No 1 (2002) 12 NTLR 176 at 204-205 [74]. Kirby Criminal Appeal disagreed112. However, the majority adhered to their conclusion that the fact that the State criminal codes had been construed more narrowly than that favoured in the case of the NT Code was "not to the point"113. The differences in outcome could be justified by reference to the usual principles governing such matters: legal authority (textual differences); legal principle (the observance of the basic purposes of the criminal law); and legal policy (avoidance of diminishing the element of intention to virtual non-existence in the case of serious crimes)114. It is necessary to turn to each of these considerations. In my view, they sustain the decision of the majority in the Court of Criminal Appeal. Considerations of legal authority Textual analysis: Starting in the right place, with the language and structure of the NT Code, a few general points can be noticed. Section 31 appears in Pt II, a general part of the NT Code dealing with "Criminal Responsibility". That part is introduced by s 23, which appears in Div 1 providing for "General Matters". Section 23 enacts, in broad language, that: "A person is not guilty of an offence if any act, omission or event constituting that offence done, made or caused by him was authorized, justified or excused." Because this part of the NT Code (and in particular s 23) is intended to apply, unless otherwise provided, throughout the NT Code, the words should be given a broad application. To narrow the ambit would be to risk rendering the general provisions on criminal responsibility inapplicable to a particular crime provided in the NT Code. That would be contrary to the obvious purpose evident in the NT Code's language and structure. Section 31 appears in Div 4 of Pt II, titled "Excuse". It picks up the language of s 23. Textually, it does so in three ways. It excuses the subject from "criminal responsibility", the general phrase governing Pt II. It repeats the phrase of wide ambit "an act, omission or event". On its face, this was designed to be broad enough to refer to the factual features of the many particular crimes that appear in the NT Code. It provides a general "excuse" from "criminal responsibility" as foreshadowed by the language of s 23. 112 Reference No 1 (2002) 12 NTLR 176 at 184 [23]. 113 Reference No 1 (2002) 12 NTLR 176 at 205 [75]. 114 Reference No 1 (2002) 12 NTLR 176 at 204 [72]. Kirby Correctly, the appellant did not contest that ss 23 and 31 of the NT Code had to be read together and that s 31 applied to s 192(3) governing the specified crime of "sexual intercourse with another person without the consent of the other person". This concession follows from the decision of this Court in Charlie115. That decision held that, but for the fact that s 162(1)(a) of the NT Code (there under consideration) contained its own reference to a mental element, the general provisions of s 31 would have been imported. Because, by way of contrast, s 192(3) does not contain its own reference to a mental element, s 31 clearly applies to s 192(3). The critical point in the case: The critical point is now reached. Section 31(1) excuses a person from "criminal responsibility". It does so by reference to the collective phrase ("for an act, omission or event"). The appellant endeavours to dissect that phrase so as to address attention, in relation to the excuse that s 31 provides, solely to the physical "act", relevantly of "sexual intercourse". In the present case, this act involved the insertion of the accused's penis into the vagina of the complainant (and continued until the withdrawal of his penis from her vagina)116. However, as the majority below point out, there are numerous textual indications that this is an incorrect reading of s 31. First, there is, as such, no "criminal responsibility" for an "act" of "sexual intercourse". Such an "act", which happens on countless occasions every day, is, of itself, neutral so far as the NT Code is concerned. In the overwhelming majority of cases, the act is consensual. No criminal responsibility whatever normally attaches to it. There is nothing to be "excused". This is the fundamental reason why the reading hypothesised by the appellant does not work. Secondly, that reading gives insufficient attention to the collocation "act, omission or event". The phrase is compendious. This Court has said over and over again that it is a mistake to dissect words and to endeavour to construe them in isolation. The natural unit of comprehensible communication in the English language is the sentence117. The approach of the appellant attempts to lead this Court back to the dark days of statutory interpretation by reference to isolated 115 (1999) 199 CLR 387. 116 See definition of "sexual intercourse" in the NT Code, s 1. 117 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 396-397, applying R v Brown (Gregory) [1996] AC 543 at 561. Kirby words118. The fact that this legislation is a code affords no warrant for us to accept this inducement. On the contrary, the fact that the combined phrase appears in the general provisions of the NT Code suggests the contrary construction; as does the history of the provision when contrasted with those appearing in the State criminal codes. Thirdly, unlike the State criminal codes, the NT Code defines "act" and "event"119. The definition of "act", by using the word "deed", indicates that something more than an isolated physical "act" was contemplated. In case there was any doubt (and in an attempt to escape the quasi-theological debates that had emerged in this Court over the State criminal codes), the drafters of the NT Code made the purpose plain. The definition says that "act" "is not limited to bodily movement". Clearly enough, this specific elaboration was designed to indicate that, in respect of the NT Code, there should be no further niceties about whether the relevant "act" was the act of firing of an air gun pellet in the direction of a victim as distinct from the act of wounding of the victim120. The narrow and wide views: The NT Code was written against the background of a number of decisions in this Court over just such fine factual points, arising out of the State criminal codes (and the Criminal Code of Papua New Guinea based on the Queensland Code)121. A clear purpose of the definition of "act", and of the use of the collocation "act, omission or event", in the NT Code was to avoid just such artificial reasoning as the narrow view in respect to the State codes adopted. In effect, it was to embrace the wide view of the meaning of "act" explained by Dixon CJ in Vallance v The Queen122 by reference to the Tasmanian Code. That Code refers only to "an act [which] is voluntary 118 See Kirby, "Towards a Grand Theory of Interpretation: The Case of Statutes and Contracts", (2003) 24 Statute Law Review 95 at 102-103. 119 NT Code, s 1. The definition is set out in the reasons of Hayne J at [119]. 120 Vallance (1961) 108 CLR 56 at 61. 121 Timbu Kolian (1968) 119 CLR 47. In Papua New Guinea (at the time of the case, the Territory of Papua and New Guinea), s 23 of the Criminal Code followed s 23 of the Queensland Code and referred to "an act or omission which occurs independently of the exercise of his will, or for an event which occurs by accident" (emphasis added). The criminal law of Papua New Guinea is now contained in the Criminal Code Act 1974 (PNG). 122 (1961) 108 CLR 56 at 60-61. Kirby and intentional" or "an event which occurs by chance"123. Of this provision, "[Section 13(1)] appears to me to be saying negatively that there shall be no guilt unless all acts of the accused forming the ingredients of the crime are voluntary and intentional. It is the punishable act or acts to which the words appear to me to refer. In the case of unlawful wounding the punishable act is the wounding … The wounding is the crime, the punishable act, and it is the wounding which must be voluntary and intentional." As Dixon CJ went on to remark, with respect to the State criminal codes there was a weight of judicial authority to the contrary of the construction that he favoured. With hindsight, we can now see that such authority probably derived from the discredited approach to statutory interpretation that takes words in isolation and construes them in that way. We do not here need to revisit that debate. Clearly, the drafters of the NT Code were aware of it. The definition of "act" that was adopted was designed to make it clear that the "wide view" of the meaning of "act" was to be observed; not the narrow. The context should have indicated this in any event (as Dixon CJ implied). But the controversy was settled by the drafting of the NT Code. It is a serious mistake of interpretation to ignore these considerations of language and history. It is an even more serious error to take this step by picking up remarks about other criminal codes, with their different language and history. When this point is appreciated, and the use of the collective phrase is contrasted with the different ways that "act" and "event" are referred to in the general provisions of the State criminal codes, the object of s 31 becomes more clear. In Charlie125, I remarked on the peculiarity of the NT Code and its differences from other criminal codes and from legislative provisions as well as from the common law. Those differences are critical in the present case, as the majority judges below correctly observed126. It was the absence of a broader definition of "act" in s 23 of The Criminal Code (WA) and s 13(1) of the Tasmanian Code that sustained the opinion of 123 Tasmanian Code, s 13(1). See Gray, "A Class Act, an Omission or a Non-event? Criminal Responsibility Under Section 31 of the Criminal Code (NT)", (2002) 26 Criminal Law Journal 175 at 182. 124 Vallance (1961) 108 CLR 56 at 60-61 (emphasis added). 125 (1999) 199 CLR 387 at 393 [12]. 126 Reference No 1 (2002) 12 NTLR 176 at 182 [13], 201 [66]-[67]. Kirby Mason CJ, Brennan and McHugh JJ in R v Falconer that the "act" referred to was "a bodily action which, either alone or in conjunction with some quality of the action, or consequence caused by it, or an accompanying state of mind, entails criminal responsibility"127. Armed with the definitions in the NT Code, we have no excuse for confining the "act" to the bodily action of "sexual intercourse". Here, the word "act" as defined, and especially as appearing in the composite phrase "act, omission or event", carries a wider meaning. Relevant to the "excuse" from "criminal responsibility", in the case of the offence of sexual intercourse without consent in s 192(3) of the NT Code, it is addressed to the conduct that would otherwise render the person performing the "act" criminally responsible. That is, it refers to the act of sexual intercourse without consent. No other construction accommodates the particular language of the NT Code, its definitions and unique adoption of the undecorated combination of words ("act, omission or event"). Decisions on other codes: The foregoing reasoning renders it largely irrelevant to revisit the observations in this Court in earlier cases on the State criminal codes (including as applied in Papua New Guinea). Their only present significance is that they demonstrate the reason why the drafters in the Northern Territory deliberately chose a different, and broader, approach in the language of In any case, it is plain from a reflection on the earlier decisions that the judges of this Court were divided in the views that they expressed as to whether the "wide view" or "narrow view" should be adopted128. In Timbu Kolian v The Queen129, the approach of Dixon CJ, which inevitably enjoyed considerable respect, appears to have attracted a majority of this Court. In Kaporonovski v The Queen130, Gibbs J stated his preference for the narrow view of "act" adopted by Kitto and Menzies JJ in Vallance. In this appeal it is immaterial to identify the precise position of authority on the State criminal codes. Our duty is solely to give meaning to the different language of the NT Code. Nevertheless, the divisions of opinion in this Court concerning the meaning to be given to "act" and "event", as differently appearing in the other criminal codes, make it 127 (1990) 171 CLR 30 at 38. 128 The classic exposition of the "wide view" is that of Dixon CJ in Vallance (1961) 108 CLR 56 at 60-61. The "narrow view" is expressed in Vallance at 64 per Kitto J, 68 per Taylor J. Menzies J also appeared to adopt the narrow view (at 71). 129 (1968) 119 CLR 47 at 52-53 per Barwick CJ, 64 per Windeyer J. See also Mamote-Kulang v The Queen (1964) 111 CLR 62 at 81. 130 (1973) 133 CLR 209 at 231. Kirby extremely dangerous to pick up past dicta and to apply them as if they produce a solution for the present case. Conflicting submissions were presented to the Court in respect of the recent decisions in Ugle131 and Murray132. The respondent argued that, implicitly at least, the Court in Ugle, in respect of the offence of unlawful wounding, had preferred the "wide view" of the meaning of "act" adopted by Dixon CJ in Vallance. On this basis, it was argued, the approach adopted by Gibbs J in Kaporonovski133 should now be treated as doubtful so far as the State criminal codes are concerned. On the other hand, the appellant submitted that the decisions, and especially Murray, lead to the opposite conclusion. Because of the textual differences, we do not need to decide that point here. It would be undesirable to do so in a proceeding where such a conclusion is unnecessary to the outcome. their language, structure and history support Endorsing a common approach to the construction of criminal codes is that justified where only approach134. In the present case, the points of linguistic difference demand respect for the different provisions of the NT Code, especially when read against the background of the divisions of opinion in this Court on the State criminal codes and the existence of a competing approach to criminal responsibility for the crime of sexual intercourse without consent appearing in the non-code jurisdictions of Australia135. Even in Australian jurisdictions governed by a criminal code, where it has been held that the only mental element which the prosecution must prove on a charge of sexual intercourse without consent is that the accused's physical act of "sexual intercourse" was "voluntary and intentional", judges have felt disquieted by such an apparent departure from the basic principle of criminal responsibility. On this approach, "the mental element required to be proved against a person 131 (2002) 211 CLR 171. 132 (2002) 211 CLR 193. 133 (1973) 133 CLR 209 at 230-231. 134 Barlow (1997) 188 CLR 1 at 32. 135 Reference No 1 (2002) 12 NTLR 176 at 192 [40]. Kirby accused of rape is, in practical terms, virtually non-existent"136. In Ingram v The Queen, Chambers J made this point137: the hypothesis "[O]n impossible for a man unintentionally to effect penetration, it seems to me clear that … the mental element in the crime of rape in Tasmania is reduced to microscopic proportions." is virtually that In response to that outcome, arguably occasioning "blatant unfairness", inimical to the basic notions of criminal responsibility138, the Tasmanian Court of Criminal Appeal suggested that trial judges should have frequent recourse to directing juries about the Tasmanian Code provisions dealing with mistake of fact. Thus Neasey J in Ingram139 said: "[T]he defence of honest and reasonable belief as to consent becomes of particular importance in the law of rape as it is in this State. It is the only component of the relevant law which relates to the innocence or otherwise of the mind of the accused when the act was committed. It is therefore of more particular importance for the sake of elementary justice that the jury should be directed in this State to consider the question of mistake whenever the evidence leaves room for it than it is in places where the common law of rape applies." Legislature leaves code unchanged: The Court of Criminal Appeal in the present case pointed out that, until now, such artificialities had been avoided in the Northern Territory140. A series of cases in that Territory, giving effect to the different language and structure of the NT Code, had insisted that s 31 obliges proof by the prosecution of the mental element, in terms consistent with the directions given by the trial judge with respect to the crime of sexual intercourse without consent in the present case141. This approach has stood in the Northern Territory as one of general principle for at least 17 years. In that time, the NT 136 Reference No 1 (2002) 12 NTLR 176 at 193 [44]. 137 [1972] Tas SR 250 at 263, noted by Bailey J in Reference No 1 (2002) 12 NTLR 138 Reference No 1 (2002) 12 NTLR 176 at 193 [45]. 139 [1972] Tas SR 250 at 259 (emphasis added). Burbury CJ and Chambers J were to like effect. 140 Reference No 1 (2002) 12 NTLR 176 at 194-195 [50]. 141 See Pregelj v Manison (1987) 51 NTR 1; McMaster (1994) 4 NTLR 92 at 99. Kirby Code has been revised by the Northern Territory legislature. Thus, s 31 was amended in 1996142. Specifically, s 192 was substituted in 1994143. In 1994, ss 192A and 192B were added144. Section 192A is relevant. It requires a judge to direct the jury that a person is not to be taken to have consented to an act of sexual intercourse only because the person did not protest or physically resist, did not sustain physical injury, or had, on that or an earlier occasion, consented to sexual intercourse with the accused. Despite the established approach to ss 31 and 192 in the Northern Territory courts, no attempt was made to amend the NT Code to alter that approach. Whilst such considerations are not now given the weight they previously enjoyed in statutory construction145, in the sensitive area of sexual offences (which has had much legislative attention in Australia in recent years) it is more reasonable than otherwise to infer that the approach of the Northern Territory courts to the operation of the NT Code was deemed acceptable to the legislature. This would be unsurprising, given that it is the same approach as is adopted in the States with the major population centres of Australia and it is the approach that conforms to foundational principles of the criminal law. Considerations of legal principle and policy Considerations of legal principle: The foregoing analysis sustains the correctness of the approach of the majority in the Court of Criminal Appeal in this case. However, if there is any residual ambiguity, it is my view that considerations of legal principle and policy strengthen the stated conclusion. Although the legislature may make "acts, omissions and events" criminal in character, without the requirement of intention or foresight on the part of an accused person, doing so is exceptional. Ensuring real content to the requirement of proved intention or foresight would not be unusual, at least to establish criminal responsibility for a traditional offence (such as sexual intercourse without consent) attracting the imposition of substantial punishment. Sexual intercourse without consent is an offence known in various forms and by various names in every legal system and to international law. It lies at the heart of any law on criminal offences. 142 Criminal Code Amendment Act 1996 (NT), s 6. 143 Criminal Code Amendment Act 1994 (NT), s 12. 144 Criminal Code Amendment Act 1994 (NT), s 12. 145 See R v Reynhoudt (1962) 107 CLR 381 at 388; Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310 at 329, 351. Kirby In such circumstances, it is not self-evident that a person who engages in "sexual intercourse" with another, believing that other to be consenting to the "sexual intercourse", should be liable to conviction of such a crime and exposed to condign imprisonment. This conclusion is not inapplicable simply because the other person was not in fact consenting and although the belief of the accused in the existence of consent might be viewed as unreasonable. In a society where much consensual sexual intercourse takes place, it is unrealistic to expect that verbalisation of consent should invariably observe set formalities. In many cases, and perhaps desirably, it does. But in other cases, consent is sufficiently indicated by conduct and implication. The law would defy reality if it endeavoured to stamp the necessity of a particular verbal formula upon conduct usually so intimate, individual and private. Criminal responsibility for such a serious crime as sexual intercourse without consent, with such serious consequences upon conviction, is therefore only imposed by the NT Code where the accused's conduct is culpable and, as in most crimes of this kind, where it involves a deliberate element (intention or foresight). It is thus the intention of the accused to have sexual intercourse without the consent of another, or although the accused has foreseen that such lack of consent is a possible consequence of the conduct and continues uncaring and regardless, that attracts criminal responsibility. This is the apparent meaning of s 31 of the NT Code146. It is reasoning compatible with the specific exceptions contemplated by s 31(3)147. It is consonant with the usual basic principles of criminal liability. It avoids the necessity to press other sections of the NT Code, such as s 32148, into artificial service to avoid inflicting the "elementary [in]justice" of which Neasey J spoke in Ingram149. Particularly in the light of the deliberate variation of the NT Code from the language and approach of State criminal codes, and the absence of a particular express mental element in the crime of sexual intercourse without consent150, it is more consistent with the general legal principles governing criminal liability for this Court to adhere to the construction of the NT Code adopted by the Northern Territory courts. 146 See reasons of Gleeson CJ at [13]. 147 That sub-section provides that s 31 does not apply to the offences defined by Div 2 of Pt VI of the NT Code (failure to rescue offences). That express exception is inapplicable to this case. 148 See reasons of Gleeson CJ at [10]-[12]; reasons of Gummow and Heydon JJ at 149 [1972] Tas SR 250 at 259. 150 NT Code, s 192(3). See Charlie (1999) 199 CLR 387. Kirby Considerations of legal policy: Considerations of legal policy also support this construction. Generally speaking, absent established error, the interpretation of a common provision of particular State or Territory law is the responsibility of the appellate court of that State or Territory151. Any decision made by this Court in the present case could not be confined to the crime of sexual intercourse without consent. It would impose an artificially narrow view, severally, of "act" and "omission" and "event" for every offence where a mental element is not expressed in the NT Code152. It would do so, despite the pains of the drafters to use a composite phrase of wide ambit in which the words were obviously intended as cumulative and alternative (indicated by the word "or")153. Sexual intercourse without consent is a very serious offence and an affront to the human rights and human dignity of the victim. However, conviction of that crime carries very serious consequences for the liberty, life and reputation of the prisoner. The suggestion of the dissenting judge below that his construction should be adopted lest an accused person "in drink and lust … does not advert to the question of consent at all"154 is unpersuasive. As to the reference to "drink", by s 7(1)(b) of the NT Code, unless intoxication is involuntary, "it shall be presumed evidentially that the accused person foresaw the natural and probable consequences of his conduct". Further, complete inadvertence on the part of an accused would sometimes be criminalised under s 154 of the NT Code ("Dangerous acts or omissions")155. That offence carries a maximum penalty of 9 years imprisonment if the offender was intoxicated at the time156. The existence of this unique provision in the NT Code adds still further strength to the conclusion that, in this criminal code, the Northern Territory intended to adopt an approach to criminal responsibility different from that taken in the other Australian code jurisdictions and similar to that observed in the non-code jurisdictions. 151 Or, in the case of federal laws, it is the responsibility of the Full Court of the Federal Court of Australia or of the Family Court of Australia. 152 Charlie (1999) 199 CLR 387. 153 NT Code, s 31(1). 154 Reference No 1 (2002) 12 NTLR 176 at 185 [27] per Angel J. 155 See also R v Kitchener (1993) 29 NSWLR 696 at 697; R v Tolmie (1995) 37 NSWLR 660 at 669-671. 156 The maximum penalty is 11 years, if grievous harm is caused and 14 years, if death is caused: NT Code, s 154. Kirby In practical terms, as pointed out by Bailey J157, the prospects of a jury acquitting an accused of sexual intercourse without consent who had no reasonable basis for believing that the complainant had consented to the act, are extremely remote. That remote possibility affords no reason for this Court to distort the unique language of the NT Code and to exclude from application a basic feature of the criminal law expressed in s 31. Finally, as the facts of the present case show, in most instances of this offence the battle is fought at an earlier stage of reasoning. Typically, it concerns whether the complainant consented to "sexual intercourse" or not. In the present case, the evidence, as described by the trial judge in his summing up, did not appear to flesh out the subtleties of the questions debated in this appeal. So it will be in most trials for sexual intercourse without consent. But where the issue of intention and foresight is relevant, s 31 provides answers that are clear, sensible, just to the accused and to the complainant, and conformable with the general principle and policy of criminal responsibility observed in Australian law158. In all other respects, I agree in the reasons of Bailey J in the Court of Criminal Appeal. Orders The appeal should be dismissed. 157 Reference No 1 (2002) 12 NTLR 176 at 194-195 [50] per Bailey J. See reasons of Gummow and Heydon JJ at [52]. 158 See generally Weinberg, "The Jurisprudence of the Court: Criminal Law and Criminal Process: Moral Blameworthiness − The 'Objective Test' Dilemma", in Cane (ed), Centenary Essays for the High Court of Australia, (2004) 150 at Hayne 110 HAYNE J. In May 2001, after a trial in the Supreme Court of the Northern Territory, the respondent was found not guilty of one count of having sexual intercourse with a female, without her consent, contrary to s 192(3) of the Criminal Code (NT) ("the NT Code"). Pursuant to s 414(2) of the NT Code the appellant ("the Director") referred two questions to the Court of Criminal Appeal of the Northern Territory. Those questions were: "1. Was the learned trial judge correct in directing the jury, in respect of the elements of the offence prescribed by section 192(3) of the Criminal Code, that the Crown must prove beyond reasonable doubt, not only the accused had sexual that complainant, and intercourse with the that the complainant did not give her consent to the accused having sexual intercourse with her but also that the accused intended to have sexual intercourse with the complainant without her consent? 2. Was the learned trial judge correct in directing the jury, in respect of the issue of the accused's mistaken belief as to consent, that such a mistaken belief need not be based on reasonable grounds?" The Court of Criminal Appeal (Martin CJ, Thomas and Bailey JJ and Gallop AJ; Angel J dissenting) answered159 both questions in the affirmative. By special leave the Director now appeals to this Court. I would set aside the orders of the Court of Criminal Appeal and, in their place, order that each question be answered, "No". The issue At the respondent's trial, the trial judge directed the jury that the charge brought against the respondent required the prosecution to prove three elements beyond reasonable doubt: that the accused had sexual intercourse with the complainant; that the complainant did not give her consent to the accused having sexual intercourse with her; and 159 Director of Public Prosecutions Reference No 1 of 2002 (2002) 12 NTLR 176. Hayne that the accused intended to have sexual intercourse with the complainant without her consent. It is the last part of the third of these elements that is now in controversy. Must the prosecution prove beyond reasonable doubt that the accused not only intended to have sexual intercourse with the complainant but also intended to have intercourse without her consent? That is, was the trial judge right to instruct the jury, as he did, that the prosecution must prove that the accused knew that the complainant was not consenting, or may not be consenting but proceeded regardless? The questions referred for consideration by the Court of Criminal Appeal require close attention to the relevant provisions of the NT Code. It is as well to set out the text of the principal provisions in issue. The relevant provisions Section 192(3) of the NT Code provides that: "Any person who has sexual intercourse with another person without the consent of the other person, is guilty of a crime and is liable to imprisonment for life." Sub-sections (1) and (2) of that section provide that "consent" means "free agreement" and identify some particular circumstances as "[c]ircumstances in which a person does not freely agree to sexual intercourse". "[S]exual intercourse" is defined in s 1 of the NT Code (unless the contrary intention appears) in terms extending well beyond the act of vaginal intercourse alleged against the respondent in this case. It is not necessary to explore the operation of the provisions which deal with the subject of consent or the provisions defining sexual intercourse. Part II of the NT Code (ss 22-43) deals with "Criminal Responsibility". Division 1 of Pt II (ss 22-25) provides for some general matters. In particular, s 23 provides that: "A person is not guilty of an offence if any act, omission or event constituting that offence done, made or caused by him was authorized, justified or excused." What is meant by "authorized, justified or excused" is amplified in subsequent divisions of Pt II. Division 2 (s 26) of that Part deals with "Authorization", Div 3 (ss 27-29) with "Justification", and Div 4 (ss 30-43) with "Excuse". Chief attention will have to be given to two of the provisions of Div 4 dealing with "Excuse" (ss 31 and 32), but it is as well to notice some other Hayne provisions of Div 4 of Pt II. Section 30(1) provides that, subject to some qualifications, "ignorance of the law does not afford an excuse unless knowledge of the law by the offender is expressly declared to be an element of the offence". Section 33 deals with acts done in a sudden and extraordinary emergency. Section 34 deals with provocation, s 37 with diminished responsibility, ss 40 and 41 with duress and coercion. Section 38 deals with the criminal responsibility of those of immature age. It is in this setting that ss 31 and 32 deal with "Unwilled act, &c, and accident", and "Mistake of fact". Section 31 provides: "(1) A person is excused from criminal responsibility for an act, omission or event unless it was intended or foreseen by him as a possible consequence of his conduct. (2) A person who does not intend a particular act, omission or event, but foresees it as a possible consequence of his conduct, and that particular act, omission or event occurs, is excused from criminal responsibility for it if, in all the circumstances, including the chance of it occurring and its nature, an ordinary person similarly circumstanced and having such foresight would have proceeded with that conduct. This section does not apply to the offences defined by Division 2 of Part VI." Section 32 provides: "A person who does, makes or causes an act, omission or event under an honest and reasonable, but mistaken, belief in the existence of any state of things is not criminally responsible for it to any greater extent than if the real state of things had been such as he believed to exist." "[A]ct" is defined by s 1 of the NT Code (unless the contrary intention appears) in the following terms: "'act', in relation to an accused person, means the deed alleged to have been done by him; it is not limited to bodily movement and it includes the deed of another caused, induced or adopted by him or done pursuant to a common intention". "[E]vent" is defined (again by s 1, and again unless the contrary intention appears) as "the result of an act or omission". "Omission" is not defined. The Court of Criminal Appeal All members of the Court of Criminal Appeal saw the questions as turning upon how effect is to be given, in this context, to those provisions of the Hayne NT Code (ss 31 and 32) which deal with what the headings to the sections respectively refer to as "Unwilled act, &c, and accident" and "Mistake of fact". The majority of the Court of Criminal Appeal concluded that the prosecution must prove that the accused intended to have sexual intercourse with the complainant without her consent. This was said160 to follow from the provisions of s 31 dealing with unwilled acts and accidents. A majority of the Court concluded that seldom161, if ever162, could there then be occasion to consider the operation of s 32 of the NT Code. That is, seldom, if ever, in a case where sexual intercourse without consent was alleged would there be occasion to consider whether the accused should be excused criminal responsibility as a person "who does, makes or causes an act, omission or event under an honest and reasonable, but mistaken, belief in the existence of any state of things" for which there would be no criminal responsibility to any greater extent than if the real state of things had been such as the accused believed to exist. In the majority's opinion, that an accused intended to have intercourse without the complainant's consent (or regardless of whether the complainant consented) would necessarily "negat[e] any material capable of indicating that the accused honestly believed the other person was consenting"163. Angel J, who dissented in the Court of Criminal Appeal, began from the premise164 that s 192(3) of the NT Code prescribes no specific mental element. His Honour characterised the offence as an act (namely, the act of penetration) accompanied by an extrinsic circumstance (the lack of consent) and, in this connection, referred to decisions concerning the Criminal Codes of Tasmania165 and Queensland166. In his Honour's view167, s 31(1) of the NT Code (excusing a 160 (2002) 12 NTLR 176 at 182-183 [15] per Martin CJ, 205-206 [75]-[76] per Bailey J. Thomas J and Gallop AJ agreed in the reasons of Bailey J. 161 (2002) 12 NTLR 176 at 206-208 [77]-[83] per Bailey J, 185 [29] per Thomas J, 208 [86] per Gallop AJ. 162 (2002) 12 NTLR 176 at 183 [18] per Martin CJ. 163 (2002) 12 NTLR 176 at 183 [18] per Martin CJ. See also at 206 [77] per Bailey J, 185 [29] per Thomas J, 208 [86] per Gallop AJ. 164 (2002) 12 NTLR 176 at 184 [23]. 165 Arnol v The Queen [1981] Tas R 157. 166 Kaporonovski v The Queen (1973) 133 CLR 209. Reference was also made to R v Falconer (1990) 171 CLR 30 and R v Van Den Bemd (1994) 179 CLR 137. 167 (2002) 12 NTLR 176 at 185 [24]. Hayne person from criminal responsibility for an act, omission or event unless it was intended or foreseen by him as a possible consequence of his conduct) applies to s 192(3) only "in so far as there is an act and in the absence of any event". Lack of consent not being part of the "act" of sexual intercourse, and there being no result of the physical act involved as an element of the crime, there is, in his Honour's view168, no "event" to which s 31(1) could apply. It followed169 that to prove the elements of an offence under s 192(3) the prosecution must prove that the accused intentionally had intercourse with the complainant and that the complainant did not in fact consent to that act at that time. If an issue of mistake about consent was raised, s 32 excused the accused only if the accused had an honest and reasonable, but mistaken, belief that the complainant consented to the act of sexual intercourse. These reasons will seek to demonstrate that Angel J was right to conclude that s 192(3) of the NT Code prescribes no specific mental element for the offence of having sexual intercourse with a person without that person's consent and that neither s 31 nor s 32 requires the conclusion that the prosecution must prove that the accused intended to have intercourse without the complainant's consent, or regardless of consent. Section 32 will excuse an accused from criminal responsibility if the prosecution fails to prove, beyond reasonable doubt, that the accused had no honest and reasonable belief that the complainant consented to the act of sexual intercourse. Section 31 will be engaged in relation to a charge brought under s 192(3) if there is a question whether the act of sexual intercourse was accidental or unwilled. It is the act of sexual intercourse which is the relevant "act" for the purposes of ss 31 and 32 of the NT Code, not intercourse without consent. Section 192(3) Although the majority of the Court of Criminal Appeal began by considering the operation of the excusing provisions of ss 31 and 32, it is necessary to begin at an earlier point. Section 192(3) creates an offence. Unlike a number of other offences created by the NT Code, s 192(3) says nothing about the intention of the accused. In that respect, s 192(3) may be contrasted with provisions like s 233, dealing with false accounting, which speaks of a person "who, with a view to gain for himself or another or with intent to deceive or cause loss to another". It may be contrasted with provisions like s 212, dealing with assault with intent to steal, which speaks of a person "who assaults another with intent to steal anything". It 168 (2002) 12 NTLR 176 at 184 [23]. 169 (2002) 12 NTLR 176 at 185 [24]. Hayne may be contrasted with provisions like s 227, dealing with criminal deception, which speaks of a person "who by any deception" obtains the property of another or a benefit. The examples could be multiplied. As Angel J rightly pointed out170, s 192(3) says nothing about the intention of the person who is alleged to have had sexual intercourse with another without that other's consent. It says only that it is an offence to do so. In this respect, the NT Code follows a pattern set by the Criminal Code of Queensland. Of that Code, its author, Sir Samuel Griffith, said171: "[U]nder the criminal law of Queensland, as defined in the Criminal Code, it is never necessary to have recourse to the old doctrine of mens rea, the exact meaning of which has been the subject of much discussion. The test now to be applied is whether this prohibited act was, or was not, done accidentally or independently of the exercise of the will of the accused person". (emphasis added) Whether, as Sir Samuel Griffith suggested in his note to ss 22-24 of the draft Criminal Code of Queensland172, the provisions of that Code dealing with criminal responsibility produced results identical with the then understanding of common law doctrines, is not to the point. Common law doctrines of criminal responsibility have since developed in a number of very important ways, not least with the recognition in Woolmington v The Director of Public Prosecutions173 that the prosecution bears the burden of proving that the accused's acts were not accidental or unwilled. What is presently important is that there is nothing in s 192(3) that requires demonstration of any particular intent on the part of the accused. No doubt that is why principal attention was directed in argument, both in the Court of Criminal Appeal and in this Court, to ss 31 and 32. The respondent's contentions The respondent placed particular emphasis on s 31. The respondent submitted that s 31 applies to the "act, omission or event" of having "sexual intercourse with another person without the consent of the other person" and that an accused person is excused from criminal responsibility for that act, omission or event "unless it [intercourse without consent] was intended or foreseen by [the accused] as a possible consequence of [the accused's] conduct". 170 (2002) 12 NTLR 176 at 184 [23]. 171 Widgee Shire Council v Bonney (1907) 4 CLR 977 at 981-982. 172 Carter's Criminal Law of Queensland, 14th ed (2004) at 233. Hayne The respondent provided a draft of the directions that it was submitted would give effect to this operation of s 31. The directions contained three elements. First, it was said that the jury should be directed that the prosecution must prove beyond reasonable doubt that the accused knew that the complainant was not consenting, or realised that the complainant may not be consenting. It was said that it would then be necessary to give two further directions that would deal with the application of s 31(2) if the jury was not persuaded that the accused realised that the complainant may not be consenting. It was said that the jury should be told (as the second element of the directions) that, if persuaded only that the accused believed that the complainant may not be consenting, it was necessary to consider whether an ordinary person similarly circumstanced, and having such awareness, would not have proceeded with the intercourse. The respondent submitted that, if persuaded only that the accused believed that the complainant may not be consenting, the third element of the directions would require the jury to consider whether one of two additional elements had been established. Those additional elements were that the accused did not believe that the complainant was consenting, or that no ordinary person in the position of the accused could have believed that the complainant was consenting. Section 31 The respondent's contentions about the application of s 31 to an offence under s 192(3) of the NT Code depended upon two critical steps. They were, first, that "act, omission or event" should be read as a portmanteau expression sufficient to encompass having sexual intercourse with a person without that person's consent. Secondly, the respondent's contentions depended upon identifying the absence of consent as a "possible consequence" of the accused's conduct that could be "foreseen". It is necessary to examine each of those steps in the respondent's argument. It may be accepted that "act, omission or event" is an expression which, as a matter of ordinary language, might be apt to describe having sexual intercourse with a person without that person's consent. Difficulties in applying that phrase emerge, however, if account is taken of the definitions of "act" and "event" contained in s 1 of the NT Code. And much of the discussion in the reasons of the Court of Criminal Appeal was directed to the application of those terms: "act" and "event". As noted above, the NT Code defines "event" as "the result of an act or omission". That definition assumes that an "event" and an "act" are always capable of separate identification. "Act" in relation to an accused is defined as the "deed" alleged to have been done by the accused. That definition is then amplified in two respects. It is said that "it [that is, the 'act'] is not limited to bodily movement" and that it "includes the deed of another caused, induced or adopted by [the accused] or done pursuant to a common intention". But there is no definition or amplification of what is meant by "deed". Hayne By defining "act" and "event" the NT Code differs from the State Criminal Codes. None of the Criminal Codes of Queensland, Tasmania or Western Australia gives a definition of those terms. Rather, in the provisions of those Codes dealing with accident, each draws a contrast between, on the one hand, an "act" that is "voluntary and intentional"174 and on the other hand an "act or omission that occurs independently of the exercise of [the accused person's] will"175, or "an event" which occurs by chance176 or by accident177. This contrast has led to no little controversy about how to identify the relevant "act"178. "Act" in the State Criminal Codes In Kaporonovski v The Queen, Gibbs J made two points179 about the construction of the word "act" when used in s 23 of the Criminal Code (Q). First, he said180 that it would depart from the ordinary meaning of the word to regard "act" as including all the ingredients of the crime other than the mental element. As his Honour pointed out, there are many cases in which the accused's bodily acts do not entail any criminal responsibility. It was in this context, and for this purpose, to consent as an "extrinsic circumstance" in rape181: introduced reference "Putting aside cases where a specific intention is required, there are many offences which are constituted only if the act of the accused was accompanied by some extrinsic circumstance (e.g. absence of consent on a charge of rape or the age of the girl on a charge of unlawful carnal 174 Criminal Code (Tas), s 13. 175 Criminal Code (Q), s 23(1). See also The Criminal Code (WA), s 23. 176 Criminal Code (Tas), s 13. 177 Criminal Code (Q), s 23(1); The Criminal Code (WA), s 23. 178 Vallance v The Queen (1961) 108 CLR 56; Mamote-Kulang v The Queen (1964) 111 CLR 62; Timbu Kolian v The Queen (1968) 119 CLR 47; Kaporonovski v The Queen (1973) 133 CLR 209; R v Falconer (1990) 171 CLR 30; R v Van Den Bemd (1994) 179 CLR 137; Ugle v The Queen (2002) 211 CLR 171; Murray v The Queen (2002) 211 CLR 193. 179 (1973) 133 CLR 209 at 230-231. 180 (1973) 133 CLR 209 at 230. 181 (1973) 133 CLR 209 at 231. Hayne knowledge) or had some particular consequence (e.g. the causing of grievous bodily harm, as in the present case)." Secondly, by distinguishing between an "act" and its consequences, Gibbs J said182 that s 23 of the Criminal Code (Q) shows that "act" is not intended to embrace them. Accordingly, so Gibbs J concluded183: the consequences as well as that produced the action "Section 23 is elliptical and when it speaks of criminal responsibility for an act or for an event it does not mean that the act or event per se would necessarily give rise to criminal responsibility, but rather refers to an act or event which is one of the circumstances alleged to render the accused person criminally responsible. It seems to me that this must be beyond argument in so far as the section refers to an event, for an event – the consequences of an act – alone could hardly give rise to criminal responsibility." (emphasis added) It was on this basis that Gibbs J concluded184 that the "act" to which the first part of s 23 of the Criminal Code (Q) refers "is some physical action, apart from its consequences – the firing of the rifle rather than the wounding in Vallance v The Queen185 and the wielding of the stick, rather than the striking or the killing of the baby in Timbu Kolian v The Queen186". It would be wrong to attempt to apply these statements to the NT Code without first identifying what effect that Code's definitions of "act" and "event" have on the operation of the relevant provisions. Nonetheless, it is important to notice that what does emerge from what was said in Kaporonovski is that, in the Criminal Code (Q), neither "act" nor "event" is to be understood as necessarily encompassing all the defining elements of an offence. In at least some cases, some elements of the offence may be neither an act nor an event. Nothing in subsequent decisions of this Court requires a contrary conclusion. 182 (1973) 133 CLR 209 at 231. 183 (1973) 133 CLR 209 at 231. 184 (1973) 133 CLR 209 at 231. 185 (1961) 108 CLR 56. 186 (1968) 119 CLR 47. Hayne "Act" and "event" in the NT Code Examination of the applicable provisions of the NT Code leads to a conclusion similar to that reached in Kaporonovski. Neither the composite expression "act, omission or event", nor the separate integers of that expression, when used in ss 31 and 32, will, in every case, encompass all elements of the offence or (where there is a specific intention required) all elements of the offence other than that intention. Neither the composite expression, nor the separate integers, encompasses the absence of consent which s 192(3) requires to be established to demonstrate commission of that offence. The words "act" and "event" are not used in ss 31 and 32, in the phrase "act, omission or event", with a meaning other than that provided for by their respective definitions in s 1. A contrary intention is not evident from the use of these words in the collocation "act, omission or event", and no other basis for deducing a contrary intention is to be discerned. That does not deny that the use of the collocation "act, omission or event" is intended to require that the tests prescribed by s 31 are applied regardless of whether the subject of their application is properly classified as "act", "omission" or "event". It follows that, so long as it is clear that what is under consideration either is an "act" (or an omission) or is an "event", it will seldom be necessary to draw refined distinctions between the two. That is, it will seldom be necessary to distinguish between what is an "act" (or an omission) and what is an "event". The decision in Pregelj v Manison187 upon which the respondent placed reliance is to be understood in the light of that proposition. One question which arose in Pregelj was how ss 31 and 32 of the NT Code applied in a case where a man and woman were accused of engaging in offensive behaviour "in or within the ... view of any person in any ... public place"188. They had been observed having sexual intercourse in a bedroom of a house; they said in evidence that they did not know that they could be seen, as they were, from outside the bedroom and that they believed that they were out of sight. As Nader J rightly pointed out189 in Pregelj, the "act" of each accused was "the act of sexual intercourse and the offence that might be suffered by an observer was something that eventuated from the act: an event". Section 31 excused the accused from criminal responsibility for that event unless they intended it or relevantly foresaw it. It by no means follows, however, whether from the words of s 31 or from 187 (1987) 51 NTR 1. 188 Contrary to Summary Offences Act 1978 (NT), s 47. 189 (1987) 51 NTR 1 at 17. Hayne what was decided in Pregelj, that the absence of consent which s 192(3) requires to be established is, or is part of, the relevant "act, omission or event". Once it is accepted, as it must be, that s 192(3) makes no provision concerning the intention of the accused, the provisions of ss 31 and 32 are not to be given a strained or artificial meaning in order to introduce a requirement for proof of an intention similar to that developed through the use of concepts of mens rea. Rather, ss 31 and 32 are to be given their ordinary meaning as amplified by the definition of "act" and "event". In particular (contrary to the respondent's submission) s 31 is not to be read as engaged in respect of every element of an offence. In the case of a prosecution for an offence under s 192(3), the absence of consent of the complainant is not itself an "act", an "omission", or an "event". (Attaching the label "extrinsic circumstance" to the absence of consent may be convenient, but the use of that label should not be permitted to distract attention from the operation of the relevant statutory terms.) The absence of consent is not "the deed alleged to have been done" by the accused. For like reasons the physical act constituting the intercourse, taken together with the absence of consent (as "intercourse-without-consent"), is not the "deed" done by the accused. It is, therefore, not an "act" for the purposes of Section 31 directs attention to what the accused did or did not do. What the accused did or did not do (the accused's "act" or "omission") may not have been intended. It may have been unwilled, as, for example, if done when unconscious. It may have been accidental, as, for example, when a loaded weapon is knocked over and discharges on impact with the ground. No doubt other examples could be given. The consequences of the act or omission (an "event") may not have been intended and, if not intended, may not have been foreseen. Again, many examples may be given. In all the cases mentioned, s 31 may have work to do. In the case of an offence under s 192(3), s 31 will have work to do if there is a question whether the sexual intercourse was unwilled or accidental. But it could have work to do with respect to the presence or absence of the consent of the complainant only if the act of the accused were to be understood as extending beyond what he or she did. For the reasons given earlier, such a construction of s 31 finds no footing in decisions about the operation of similar, but not identical, provisions of the State Criminal Codes. Moreover, it finds no footing in the text. It finds no footing in the authorities because they reject the view that, in the State Criminal Codes, "act" must encompass all elements of the relevant offence. It finds no footing in the text because of the evident focus in s 31 on what the accused did or did not do (not what the complainant did) and because consent of the complainant could never be a consequence of the relevant conduct of the Hayne accused (the act of intercourse). The first of those points (that s 31 evidently focuses on what the accused did or did not do) requires no elaboration. The second point (that consent is not a consequence) does. the the "act" of accused were to be understood "intercourse-without-consent" rather than as simply the sexual intercourse, it may be possible to say that the accused's "act" was intended by him. But if, in a particular case, it is not demonstrated that the accused's "act" (of having intercourse-without-consent) was intended it would not be possible to apply s 31(2). The complexity of the respondent's draft direction on this aspect of the matter points towards the fundamental difficulty. That difficulty is that it cannot be said that intercourse-without-consent (whether that is properly described as an "act" or an "event") could be foreseen "as a possible consequence of [the accused's] conduct". Accordingly, contrary to the assumptions reflected in the respondent's draft directions, s 31(2) could have no relevant operation if the act of the accused were to be identified as intercourse-without-consent. And the consequence of that would be that the sole question would be whether the accused intended intercourse-without-consent. So to hold may bring the law of rape under the NT Code closer to the law in non-Code States, but it would represent a radical departure from what, for so long, has been the understanding of the provisions of the State Criminal Codes dealing with criminal responsibility and the identification, for the purposes of those Codes, of the relevant "act" of an accused. That step should not be taken. The "act" of a person accused of having sexual intercourse with a person without that person's consent should be identified as the act of intercourse, not intercourse-without-consent. This construction of s 31, and of "act, omission or event", finds further support in s 32. That section treats "act, omission or event" as distinct from "any state of things". It excuses a person who does, makes or causes an act, omission or event under an honest and reasonable, but mistaken, belief in the existence of any state of things from any greater criminal responsibility than the person would have had if the real state of things had been such as that person believed to exist. Section 32 will have work to do in any prosecution under s 192(3) where there is an issue about the accused being mistaken as to the complainant's consent. If such an issue arises, the prosecution must prove beyond reasonable doubt that the accused was not under an honest and reasonable belief that the complainant was consenting (as that consent is defined by s 192(1) and (2)). As is at least implicit in that last proposition, a mistaken belief not based on reasonable grounds will not excuse an accused from criminal responsibility even if the belief is honestly held. For that reason, the trial judge was wrong to direct the jury, as he did, that a mistaken belief does not have to be based on Hayne reasonable grounds. The second question reserved for the consideration of the Court of Criminal Appeal asked whether the trial judge was right to give that direction. That question should have been answered, "No". Conclusion and orders Both of the questions reserved for the consideration of the Court of Criminal Appeal should have been answered, "No". I would order that the appeal to this Court be allowed, the orders of the Court of Criminal Appeal be set aside and in their place there be orders that each of the questions reserved for the consideration of that Court be answered, "No".

HIGH COURT OF AUSTRALIA GRAEME STEPHEN REEVES APPLICANT AND THE QUEEN RESPONDENT Reeves v The Queen [2013] HCA 57 18 December 2013 ORDER Special leave to appeal on Grounds 2.1, 2.2 and 2.3 of the Application for Special Leave to Appeal filed on 21 March 2013 granted. Application for special leave to appeal otherwise dismissed. Appeal treated as instituted and heard instanter. Appeal allowed in part. Set aside paragraphs 6, 7, 8 and 9 of the orders of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 21 February 2013. Remit the matter to the Court of Criminal Appeal of the Supreme Court of New South Wales for further consideration in accordance with the reasons of the Court. Appeal otherwise dismissed. On appeal from the Supreme Court of New South Wales Representation P J D Hamill SC with S F Beckett for the applicant (instructed by Legal Aid (NSW)) L A Babb SC for the respondent (instructed by Solicitor for Public Prosecutions (NSW)) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Reeves v The Queen Criminal law – Malicious infliction of grievous bodily harm with intent – Consent to battery resulting from surgery – Whether "informed consent" was correct test – Whether patient informed in broad terms of nature of procedure – Application of Rogers v Whitaker (1992) 175 CLR 479. Criminal law – Appeal – Appeal against conviction – Application of proviso – Whether misdirection to jury actually resulted in substantial miscarriage of justice. Criminal law – Appeal – Prosecution appeal against sentence – Where appellate court failed to consider residual discretion. Words and phrases – "consent to medical procedure", "proviso", "substantial miscarriage of justice", "residual discretion". Crimes Act 1900 (NSW), s 33. Criminal Appeal Act 1912 (NSW), ss 5D, 6(1). FRENCH CJ, CRENNAN, BELL AND KEANE JJ. The applicant was convicted following a trial in the District Court of New South Wales (Woods DCJ) of the malicious infliction of grievous bodily harm on CDW, the complainant, with intent to inflict such harm1. He was sentenced to a term of two and a half years' imprisonment with a non-parole period of one year for this offence. The applicant is a gynaecologist. The injury inflicted upon CDW was the removal of her external genitals ("vulva") in a surgical procedure described as a "simple vulvectomy" which was carried out at the Pambula Hospital on 8 August 2002. CDW had been referred to the applicant by her general practitioner for treatment for a lesion identified as vulval intraepithelial neoplasia grade 3 ("VIN 3") on her left labia minora. This is a pre-cancerous condition which if left untreated can progress to cancer. Expert evidence established that the appropriate treatment for CDW's condition was the surgical excision of the lesion together with a margin of surrounding tissue. It was the prosecution case that the applicant carried out the simple vulvectomy knowing that it was not surgery for CDW's benefit. There was no evidence that the applicant entertained hostile feelings towards CDW. She was unknown to him before his one consultation with her. The conclusion that he removed her vulva knowing that the surgery was not for her benefit was an inference from the expert evidence that the surgery was excessive. By 2002 the simple vulvectomy was a largely outmoded procedure, although there was some evidence that it might still be appropriate in a case of multifocal disease. The central issue at the trial was proof that the applicant did not have lawful cause or excuse for the surgery2. Proof that the applicant performed the surgery, knowing that it was not proper surgery for CDW's benefit, would negative that he acted with lawful cause or excuse ("the unwarranted surgery case"). Proof that the applicant did not honestly believe that he had CDW's consent to the surgery would also negative that he acted with lawful cause or excuse ("the consent case"). The prosecution case was put in both of these ways. 1 Crimes Act 1900 (NSW), s 33. 2 Section 33 of the Crimes Act 1900 (NSW), at the time, relevantly provided: "Whosoever ... maliciously ... inflicts grievous bodily harm upon any person ... with intent in any such case to do grievous bodily harm to any person" is guilty of an offence. At the time, section 5 defined "maliciously" in terms which excluded acts done with "lawful cause or excuse". Crennan Bell CDW was an adult of sound mind capable of giving consent to surgery. It was the prosecution case that CDW had agreed to the surgical excision of the VIN 3 lesion which, she had been informed, involved the removal of a small flap of skin and not the removal of her vulva, including her labia and clitoris. It was the applicant's case that at a consultation with CDW he observed widespread sinister changes to her vulva and that he considered a simple vulvectomy was appropriate in light of the extent of those changes. The applicant said that he had explained his observations to CDW, making clear that the surgery involved the removal of the vulva, including the labia and clitoris. He maintained that he had an honest belief that the surgery was for CDW's benefit and that she had consented to it. For the purposes of sentencing, the trial judge was not satisfied that the applicant's guilt had been proved on the unwarranted surgery case. His Honour sentenced upon a finding that the applicant may have wrongly but honestly believed that the surgery was for CDW's benefit. His Honour considered that the applicant's criminality lay in performing the surgery knowing that he did not have CDW's consent to it and "arrogantly disregard[ing]" any possible opinion CDW may have had. The applicant appealed against his conviction to the New South Wales Court of Criminal Appeal (Bathurst CJ, Hall and R A Hulme JJ). The Director of Public Prosecutions ("the Director") appealed against the inadequacy of the sentence for the offence against CDW and an unrelated offence of dishonesty to which the applicant had pleaded guilty. The Court of Criminal Appeal found that the trial judge had wrongly introduced the concept of "informed consent" in directing the jury how the prosecution might negative that the applicant had a lawful cause or excuse for the infliction of the harm3. The Court accepted that the applicant's guilt had not been proved on the unwarranted surgery case but was satisfied that the applicant's guilt had been proved beyond reasonable doubt on the consent case4. Notwithstanding the misdirection respecting proof of liability on that case, the Court determined 3 Reeves v The Queen [2013] NSWCCA 34 at [86]-[88] per Bathurst CJ, [109] per Hall J, [284] per R A Hulme J. 4 Reeves v The Queen [2013] NSWCCA 34 at [92] per Bathurst CJ, [169]-[170] per Hall J, [285] per R A Hulme J. Crennan Bell that it was appropriate to dismiss the applicant's appeal under the proviso in s 6(1) of the Criminal Appeal Act 1912 (NSW)5. The Court of Criminal Appeal upheld the Director's appeal and resentenced the applicant for this offence and the dishonesty offence. The Court did not refer to its residual discretion to dismiss a prosecution appeal against sentence despite the fact that evidence had been adduced, and submissions made, in support of its exercise6. The applicant applies for special leave to appeal against the orders of the Court of Criminal Appeal dismissing his appeal and allowing the Director's appeal. His first ground contends that the Court of Criminal Appeal formulated and applied an incorrect test of liability under the criminal law for acts done by a surgeon in the course of surgery (Ground 2.1). His second ground contends that the Court of Criminal Appeal erred in its application of the proviso (Ground 2.2). His remaining grounds relate to the sentence appeal. He contends the Court erred: by allowing the appeal without considering the residual discretion (Ground 2.3); in its treatment of the evidence of the applicant's psychiatric condition (Ground 2.4); and by failing to acknowledge the discretionary nature of sentencing and to give reasons for the conclusion that Woods DCJ's discretion miscarried (Ground 2.5). On 7 June 2013 French CJ and Kiefel J referred the application to an enlarged Full Bench. For the reasons to be given, special leave to appeal against the conviction, Grounds 2.1 and 2.2, should be granted but the appeal should be dismissed. Special leave to appeal against the determination of the Director's appeal should be granted on Ground 2.3 and the appeal should be remitted to the Court of Criminal Appeal for consideration of the residual discretion. Special leave should be refused on Grounds 2.4 and 2.5. The appeal against conviction (Grounds 2.1 and 2.2) This was the applicant's second trial on a charge arising out of the surgery on CDW. The jury were discharged without verdict at the first trial. A recording "[T]he court may, notwithstanding that it is of opinion that the point or points raised by the appeal might be decided in favour of the appellant, dismiss the appeal if it considers that no substantial miscarriage of justice has actually occurred." Reeves v The Queen [2013] NSWCCA 34 at [106] per Bathurst CJ, [109] per Hall J, [284] per R A Hulme J. 6 Criminal Appeal Act 1912 (NSW), s 5D. Crennan Bell of the applicant's evidence given at that trial was admitted without objection in the prosecution case. The applicant did not give evidence in the defence case. What follows is a summary of the evidence on the consent case, including the applicant's evidence at the first trial. The evidence In June 2002 CDW consulted her general practitioner, Dr Salisbury, in relation to an area of thickening on her vulva. A biopsy was conducted. The results of the biopsy revealed the existence of VIN 3 on her left labia minora. On 5 July 2002 Dr Salisbury made an appointment for CDW to see the applicant that day. The entry in the applicant's appointment register recorded "Vuvlal [sic] Cancer URGENT". The consent case largely turned on what occurred at the consultation on 5 July 2002 ("the consultation"). The applicant's account follows. He took a history and examined CDW's vulva. The examination was assisted by the use of a binocular magnifying instrument called a colposcope. Prior to the colposcopic examination the applicant placed a swab soaked in a solution of acetic acid on the vulva. The solution soaks into the skin and highlights any abnormalities. The examination revealed dystrophic changes "all over the vulva". Dystrophy is a clinical term used to describe abnormal growth or appearance. The dystrophic changes involved both labia minora and part of the labia majora on the left side. The changes were running to the area where the labia minora fused to become the clitoris hood and were within millimetres of it. One explanation for these changes was a condition known as lichen sclerosus. The applicant made this association in light of CDW's history of rashes. Lichen sclerosus on the vulva is sinister. The applicant told CDW that he thought she had a "dystrophic vulva" and that treatment would require "staged biopsies". He suggested that she could travel to a clinic in Sydney or Melbourne for the treatment. CDW was unwilling to travel because she was caring for her mother, who was unwell. She told the applicant that she wanted it "done in one go". Given the combination of dystrophy and VIN 3 and CDW's medical history and life circumstances the applicant concluded that the only option was a simple vulvectomy. He explained the procedure to her by reference to a diagram which he drew on a sheet of A4 paper. On the top half of the page he drew the vulva with a dotted line indicating the area of the excision. He told CDW that everything within the dotted line would be removed. The labia and clitoris were within the dotted line. On the bottom half of the page the applicant drew a second diagram to depict the appearance of the genital area after the surgery. Crennan Bell The applicant did not use the word "clitoris" in describing the surgery. He believed that the removal of the clitoris was implicit given that his explanation involved reference to the diagram. The diagram triggered a discussion about sexual intercourse. CDW asked whether she would be able to have intercourse after the surgery. The applicant responded by asking if she had a partner and she said that she did not. He asked if she anticipated having sexual intercourse in the short term and she said that she did not. He told her that once the wounds had healed she would be able to have sexual intercourse but that her vulva would look and feel different. CDW said that she was pleased because she did not want to rule out sexual activity in the future. The applicant gave the diagram to CDW to take home with her. He did not keep a copy of it. At the end of the consultation CDW signed a consent form. The form recorded CDW's pre-admission diagnosis as "VIN III" and the surgery proposed as "simple vulvectomy". Underneath the words "simple vulvectomy" there was a diagram of the vulva. The only feature recorded on the diagram was a hatched oval area on the anatomical left. Next to this was the notation "VIN III". CDW's account of the consultation now follows. CDW agreed that the applicant had used the words "simple vulvectomy". She had not understood the nature of the procedure and would not have consented to the removal of her clitoris. The only diagram that she had been shown was the diagram on the consent form. CDW had no knowledge that any tissue was to be removed apart from a small flap of skin as depicted in the diagram on the consent form that she signed. CDW was familiar with the appearance of a colposcope. She had been previously examined with the use of one. She denied that the applicant had used a colposcope or applied a swab soaked in acetic acid to her vulva in the course of the examination. She agreed that the applicant had offered her the opportunity of obtaining a second opinion and that she had told him that she wanted the "quickest most complete treatment". She also agreed that the applicant "would have asked" her if she was involved in a sexual relationship and that she would have told him that she did not rule out a sexual relationship in the long term. She accepted that the applicant had probably told her that intercourse would "look and feel different" but it would be possible once the scars of the operation had healed. Other evidence was adduced at trial. The applicant wrote a report to Dr Salisbury following his consultation with CDW. In the report he described CDW as suffering from "troublesome VIN 3". He commented on CDW's Crennan Bell "interesting" history, which included cervical dysplasia and an abdominal hysterectomy and observed that "now she has developed extensive in situ cancer in the vulva". He noted that CDW had been through a very stressful time over the past 18 months with the death of her husband, complicated business matters, litigation and her mother's illness. He remarked that he had not elicited a history of exposure to any noxious agent associated with "multi-genital cancers". His examination "show[ed] quite localised VIN on the left labia minora extending to the majora." The report continued: "Clearly, it will be simple to adequately excise this lesion without the need for grafting and I have recommended to [CDW] that she should, within the next few weeks, be admitted to Pambula Hospital for a relatively simple vulvectomy. I have very carefully been through the procedure with [CDW] and I feel that this will be a simple procedure which will not debilitate her greatly and which she will be able to continue working as she is." CDW was admitted to the Pambula Hospital for the surgery on 8 August 2002. A nurse confirmed CDW's consent to a simple vulvectomy, although the nurse did not know what was involved in the procedure. CDW said that when she was in the operating theatre just before losing consciousness the applicant had moved close to her face and said "I'm going to take your clitoris too". The applicant denied saying this. No other person present in the operating theatre heard the remark. The scrub nurse was insistent that "I definitely did not hear him say that". There was conflicting evidence about whether the sedative drugs administered to CDW might produce false recollection. A nurse recalled commenting that the surgery was "fairly radical" and the applicant's response was "if I didn't take that much the cancer would spread". The nurse had volunteered "[y]ou wouldn't be taking my clitoris, no matter what", to which the applicant replied that the patient's husband was dead "so it didn't matter anyway." The applicant accepted that he may have mentioned that CDW's husband was dead but he denied saying anything to the effect that "it didn't matter". The applicant's operation report made no reference to the dystrophy that he claimed to have observed on examination. The applicant signed a pathology form, which requested that the excised vulval tissue taken from CDW be tested for "VIN III". The form contained a Crennan Bell diagram of the vulva, which indicated the site of the lesion on the anatomical left. There was no reference on the form to any other condition. Dr Edwards, a pathologist who specialises in the study of surgically removed skin tissue, conducted a macroscopic examination of CDW's vulval tissue. She identified a lesion which was 20 mm across. She detected no other abnormality in the tissue. She took 13 sections from the specimen. These were examined microscopically by Dr Jain, a pathologist. The majority of sections were from the left side of the vulva. Five exhibited VIN 2 to 3. The remainder showed no abnormality. Dr Jain considered that the vulva was normal except for the area of VIN 2 to 3. The contemporaneous records to which reference has been made and the results of the pathology tests did not provide support for the applicant's account that he had observed dystrophic changes to CDW's vulva (apart from the VIN 3 lesion). However, the applicant's clinical notes contained a diagram of CDW's vulva depicting the VIN 3 lesion and an area at the top of the vulva and another area on the right labia each bearing the notation "DYS", an abbreviation of dystrophic. The notes also recorded that CDW had noticed the lesion on her vulva in the past two years. A copy of the notes was in evidence. The prosecution contended that the entries recording areas of "DYS" and the history that the lesion had been present for two years were fabrications made by the applicant after he became aware that CDW was complaining about the surgery. The applicant denied that this was so. He pointed to evidence that CDW had given a history to another doctor of having suffered from vulval irritation for a long time and having done nothing about it because her husband was ill. CDW's husband died in August 2001. CDW remained in hospital for six days following the procedure. She was visited daily in the hospital by the applicant. She was referred by a nurse to a social worker for her "complex business [and] personal affairs" and "serious health worries". During this time CDW did not complain about the extent of the surgery. On 19 August 2002 CDW returned to the applicant to have the sutures removed. She expressed a preference for removal under anaesthetic. The applicant removed the sutures at the Pambula Hospital on 22 August 2002. Again there was no complaint about the surgery. CDW did not complain to Dr Salisbury, her female general practitioner, about the surgery. Dr Salisbury examined CDW gynaecologically on a number of occasions and noted a "well- healed scar". CDW explained her absence of complaint saying that she had been living "on autopilot" and that in August 2004 she "snapped out of that" and started to Crennan Bell look into what had happened to her. CDW commenced civil proceedings claiming damages against the applicant in July 2005. CDW's first complaint to the police was made in 2008. The directions on informed consent The jury were supplied with written directions of law, which included directions on "informed consent". The oral directions on this topic were in the same terms as the written directions. Relevantly, the written directions stated. "There will not be 'lawful cause or excuse' for the surgery performed by the [applicant] if the Crown proves beyond reasonable doubt that the [applicant] did not honestly believe at the time of the operation that the patient had given her informed consent to the full extent of the operation, including removal of the labia and clitoris". (emphasis in original) Under the heading "What Does 'Informed Consent' mean?" the written directions included the following: "To be valid, consent must be 'informed'. This means that the medical practitioner must at least explain to the patient the purpose of the operation, the part or parts of the body to be cut or removed, the possible major consequences of the operation, and any options or alternative treatments which may be reasonably available." (emphasis in the original) Consent to medical procedures The Court of Criminal Appeal found, correctly, that it was an error to direct the jury in terms of "informed consent". Specifically, it was an error to direct that a medical practitioner must explain the "possible major consequences of the operation" together with "options" and "alternative treatments" before the patient's consent to the procedure will afford the medical practitioner lawful cause or excuse for performing it. The nature of the consent to a medical procedure that is required in order to negative the offence of battery is described in the joint reasons in Rogers v Whitaker7. It is sufficient that the patient consents to the procedure having been advised in broad terms of its nature8. (1992) 175 CLR 479; [1992] HCA 58. 8 Rogers v Whitaker (1992) 175 CLR 479 at 490 per Mason CJ, Brennan, Dawson, Crennan Bell Provided CDW was informed that the surgery involved the removal of her labia and clitoris, the applicant had a lawful cause or excuse for performing it. This was so regardless of any failure to inform CDW of its possible major consequences and any alternative treatments. A failure in either of these respects might be a breach of the applicant's common law duty of care exposing him to liability in negligence but it would not vitiate the consent to the surgery. The first ground – the Court of Criminal Appeal's formulation of the test The applicant contends that the Court of Criminal Appeal formulated an incorrect, overly stringent test of consent to surgery and applied that test in its determination that his guilt had been proved. The complaint misconstrues the Court of Criminal Appeal's reasons, which, on this subject, were given by Bathurst CJ stated the test for consent to a surgical procedure in terms drawn directly from the joint reasons in Rogers v Whitaker9. This is supported by his Honour's review of the authorities in England and Canada, which adopt a like test10. Despite Bathurst CJ's clear recognition of the authority of the statement in Rogers v Whitaker, the applicant submits that when his Honour formulated the direction that should have been given, he added a gloss to it11: "In these circumstances, any direction to the jury on this issue should be to the effect that the accused will not be guilty of assault unless the Crown proves beyond reasonable doubt that the complainant has not consented to the nature and extent of the procedure and that the doctor does not honestly believe that she has so consented. The only exception is where consent is vitiated by fraud or misrepresentation. Expressions such as 'informed consent' or 'real consent' should be avoided as, in my opinion, they tend to obscure the difference between criminal and civil liability in this area." (emphasis added) 9 Reeves v The Queen [2013] NSWCCA 34 at [74], [82], citing Rogers v Whitaker (1992) 175 CLR 479 at 490 per Mason CJ, Brennan, Dawson, Toohey and 10 Reeves v The Queen [2013] NSWCCA 34 at [75]-[83], citing Chatterton v Gerson [1981] QB 432 at 443 per Bristow J, and Reibl v Hughes [1980] 2 SCR 880. 11 Reeves v The Queen [2013] NSWCCA 34 at [86]. Crennan Bell Consent to the "nature and extent of the procedure" is suggested by the applicant to be a different and more demanding test than one which asks whether the patient was informed "in broad terms of the nature of the procedure". In the context of this trial it is a complaint without substance. No meaningful distinction could be drawn between asking if the prosecution had proved that CDW was informed in broad terms of the nature of the procedure being the removal of her vulva, including the labia and clitoris, and asking if CDW was informed of the nature and extent of the procedure. If, as CDW maintained, she was not told that the procedure would involve the removal of her vulva, including the labia and clitoris, her signed consent to the simple vulvectomy was not consent to the surgery. If, as the applicant maintained, CDW had been shown a diagram depicting her labia and clitoris within the area of tissue to be removed, it was not disputed that her signed consent gave the applicant lawful cause or excuse for the surgery. The error in the trial judge's directions on informed consent lay, as Bathurst CJ recognised, in the risk that the jury might reason to guilt even if the jury considered that it was reasonably possible that CDW understood in broad terms the nature of the operation: the jury might find that CDW had not given informed consent because the applicant had not explained the possible major consequences of the surgery or any alternative treatments to her ("the informed consent case"). The second ground – the proviso Bathurst CJ's conclusion, that the misdirection had not actually occasioned a substantial miscarriage of justice, took into account that the expert evidence was not directed to alternative treatments and that cross-examination on the possible consequences of the surgery had been limited. His Honour noted that the prosecutor had referred in her closing address to the fact that CDW was not told of the difficulty that she may have with urination in consequence of the "but it does not seem to me that that cross-examination or that reference would lead to a real likelihood that the jury convicted on the grounds that although [CDW] was informed of the nature and extent of the operation, she was not informed that subsequent to it she would have difficulties in urination." 12 Reeves v The Queen [2013] NSWCCA 34 at [102]. Crennan Bell The applicant submits that determining that there was no "real likelihood" that the verdict was based on the informed consent case was an answer to the wrong question. The correct question, he contends, was to ask whether it is possible that the jury reasoned to guilt on the informed consent case13. He argues that this possibility cannot be dismissed in circumstances in which the one question asked by the jury in the course of their retirement concerned the misdirection. The jury asked: "On page 6 of the Directions of Law a definition of informed consent is given. Are we to assume that this is the literal definition of informed consent by which the accused is to be judged for his actions relating to the operation he carried out in August 2002?" The applicant's principal submission is that a misdirection on a critical element of liability necessarily occasions a substantial miscarriage of justice. This misdirection resulted in the imposition of a lower threshold for negativing that the surgery was done with lawful cause or excuse. To hold that this did not occasion a substantial miscarriage of justice, he contends, is to have the appellate court usurp the function of the jury. Finally the applicant challenges the Court of Criminal Appeal's conclusion that his guilt was proved beyond reasonable doubt, submitting that Bathurst CJ's analysis of the record of the trial was incomplete and inconsistent. The Court of Criminal Appeal's analysis of the evidence Some of the applicant's criticisms of Bathurst CJ's conclusion, that his guilt had been proved, proceed upon a view that it was inconsistent, having rejected the unwarranted surgery case, to take into account evidence adduced in support of that case in considering the consent case. Critical to Bathurst CJ's analysis of the evidence was his Honour's conclusion that the applicant had not observed the dystrophic changes to CDW's vulva that he claimed to have seen. There was no inconsistency in his Honour's reasoning in this respect14. Acceptance that the applicant may have honestly believed that the surgery was for CDW's benefit did not dictate, as a logical corollary, acceptance of his evidence that he had observed dystrophic changes "all over the vulva". It was open to consider, as the trial judge found, that the applicant honestly may have 13 Gassy v The Queen (2008) 236 CLR 293 at 307 [34] per Gummow and Hayne JJ; [2008] HCA 18. 14 Reeves v The Queen [2013] NSWCCA 34 at [95]-[96]. Crennan Bell believed that the simple vulvectomy would eradicate any possibility of the development of cancer. Bathurst CJ considered that had the applicant observed dystrophic changes, which may have been lichen sclerosus, it was inconceivable that the observation would not have been recorded – in the consent form that he caused CDW to sign; in his report to Dr Salisbury; in his operation notes; or in his request for pathology testing of the excised vulval tissue15. This was a conclusion that was open. Satisfaction that the applicant did not make the claimed clinical observations inevitably led to rejection of aspects of his account of the things conveyed to CDW in the consultation. The objective evidence that told against acceptance of the applicant's account was critical to the Court of Criminal Appeal's conclusion on its review of the evidence. The evidence to which the applicant complains Bathurst CJ failed to refer in that review does not detract from the force of the conclusion. There should, however, be some reference to that evidence. The applicant notes CDW's acceptance that he had used the word "atrophy" in the consultation. In his evidence the applicant said that he told CDW that she had "mixed vulval dystrophy". He denied using the word "atrophy". He accepted that vulval atrophy describes the thinning of tissue and can be part of the normal process of ageing. Next the applicant submits that Bathurst CJ failed to consider that the inference to be drawn from the report that he wrote to Dr Salisbury was not all one way. He points to the statement that CDW "has developed extensive in situ cancer in the vulva". However, this was not a report of dystrophy or lichen sclerosus. At trial, Dr Dalrymple, a gynaecological oncologist, said that "in situ cancer" is an old term for preinvasive disease albeit he would not have described a 2 cm lesion as excessive. It remains that the applicant described CDW presenting with "troublesome VIN 3" and advised that "it will be simple to adequately excise this lesion without the need for grafting". Next the applicant points to Bathurst CJ's failure to consider CDW's acknowledgement that there had been some discussion at the consultation about her ability to have sexual intercourse after the wound had healed. He submits that the excision of a small flap of skin on the labia would hardly give rise to a concern about sexual functioning. The inference, he submits, is that CDW 15 Reeves v The Queen [2013] NSWCCA 34 at [95]. Crennan Bell understood the nature of the surgery at the time. CDW and the applicant were agreed about the content and extent of the discussion of sexual matters. That evidence has been detailed earlier in these reasons. An alternative inference is that had CDW understood that her vulva, including her labia and clitoris, were to be removed it might be expected to have prompted rather more discussion on that subject. The existence of these competing inferences does not diminish the force of Bathurst CJ's conclusion based upon the evidence of the contemporaneous documents16. The conclusion that the applicant's guilt was proved by evidence properly admitted at the trial was a necessary, but not a sufficient, condition for the dismissal of the applicant's appeal17. The record of the trial, upon which the appellate court bases its conclusion of guilt, includes the fact of the verdict. Where, as here, the legal error at the trial was a wrong direction relating to an element of liability, the significance of the verdict was to be assessed in light of the capacity of the misdirection to have led the jury to wrongly reason to guilt. Bathurst CJ addressed this consideration by asking whether the misdirection deprived the applicant of a "real chance" of acquittal18. The question echoes the formulation in Mraz v The Queen: did the error deprive the accused of "a chance fairly open" of acquittal19? His Honour's conclusion, that in the way in which the trial was conducted there was not a "real likelihood" that the jury reasoned to guilt on the basis of the misdirection, was an answer to the question that had been framed in terms of the existence of a "real chance". In decisions since Mraz this Court has cautioned against reference to judicial expressions that differ from the statutory expression when applying the proviso20. The Court of Criminal Appeal was required to dismiss the applicant's appeal if it considered that no substantial miscarriage of justice has actually occurred. The applicant's contention that a misdirection concerning an element 16 Reeves v The Queen [2013] NSWCCA 34 at [98]. 17 Weiss v The Queen (2005) 224 CLR 300 at 317 [45]; [2005] HCA 81; Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 104 [29] per French CJ, Gummow, Hayne and Crennan JJ; [2012] HCA 14. 18 Reeves v The Queen [2013] NSWCCA 34 at [100]. 19 (1955) 93 CLR 493 at 514 per Fullagar J; [1955] HCA 59. 20 Baiada Poultry Pty Ltd v The Queen (2012) 246 CLR 92 at 105 [31] per French CJ, Gummow, Hayne and Crennan JJ. Crennan Bell of liability is necessarily productive of a substantial miscarriage of justice should be rejected. The modifier "actually" makes clear that the appellate court is to determine whether the error in this trial in fact occasioned a substantial miscarriage of justice. This requires consideration of the issues at the trial. Bathurst CJ's conclusion, that there was no real likelihood that the jury reasoned to guilt upon a finding that the applicant had not explained possible major consequences of the surgery or alternative treatments to CDW, was based on the assessment that the issue of consent at the trial was a stark one: had CDW been informed that the surgery involved the removal of her vulva, including her labia and clitoris21? The applicant submits that this conclusion overlooks that evidence was adduced from CDW about the consequences of the surgery, including with respect to sexual response and difficulties in urinating. The opinion evidence included the explanation that ought to be given to the patient before removing the clitoris. The applicant had been cross-examined about his failure to inform CDW that her sexual response would be reduced to almost nil by the surgery. Moreover, the prosecutor had opened referring to "informed consent" and saying that CDW was not told of "any of the consequences sexually, or in every day life", of the surgery. The evidence of CDW and the applicant was lengthy. In each case the evidence touching on the discussion of the consequences of the surgery was brief. The opinion evidence was focussed on the unwarranted surgery case. The applicant's submission, that the concept of informed consent permeated the trial, needs to be understood in the context of the way in which the prosecution case was opened and left to the jury. The prosecutor's use of the phrase "informed consent" in her opening was with respect to the case that the applicant did not have CDW's consent to perform such a "radical operation"; that CDW at no time was told of the amount of tissue that was to be taken; that CDW was given to believe that a small lesion would be cut out; and that she was not told to expect the complete excision of her vulva. Towards the conclusion of her opening the prosecutor explained the two ways in which the case was put in these terms: to perform "the Crown of course contends that it was never necessary for the [applicant] circumstances where there was only a small lesion and it was never conveyed to [CDW] that so much was going to – that this entire area of her body would be removed." radical and disfiguring surgery this 21 Reeves v The Queen [2013] NSWCCA 34 at [102]. Crennan Bell In her closing address the prosecutor invited the jury to consider that "it's inconceivable that he really told this lady that he was going to take everything". The prosecutor reminded the jury of passages of CDW's evidence in support of the submission on the consent case: "Did you ever consent to an operation to remove your entire vulva including your clitoris? She said 'Never never never never'. She only had to say it for you to believe it ladies and gentlemen. Of course she didn't. Not for what she had. Not without further biopsies. Not without other – more consultations than that and time to think about it." Notably, the prosecution did not dispute that, had the applicant explained the surgery to CDW in the way that he said he had done, CDW's signed consent gave him lawful cause or excuse for its performance. Nor did the prosecutor submit that, in the event the jury were not satisfied that CDW did not understand that her vulva, including her labia and clitoris, were to be removed, it was still open to convict if satisfied that the applicant had not explained the possible consequences of the surgery or alternative treatments to CDW. The applicant was represented at the trial by senior counsel. There was no objection to the directions on informed consent. It is evident that it did not occur to the parties or the trial judge that the jury might reason to guilt upon a view that CDW understood that her vulva, including labia and clitoris, was to be removed but her consent to the removal did not afford the applicant lawful cause or excuse because he had not explained the possible major consequences of the surgery or any alternative treatments to her. That conclusion is reinforced when it is appreciated that the jury's question did not prompt consideration that the jury might reason in that way. Trial counsel did not apply for any further direction in response to it. Any assessment of the significance of the question must take into account the answer that was given to it: "Now the answer to that question is yes. But when you read the material on page 6 relating to informed consent you should also bear in mind what is on page 5 under Lawful Cause or Excuse. That is to say the Crown must prove both the absence of informed consent from the perspective of the patient and as well it must rule out beyond reasonable doubt an honest belief by the [applicant] that there was informed consent at the time of the operation. … It is for the Crown to prove that the [applicant] had no lawful cause or excuse and towards the bottom of the page the second last paragraph is what we are dealing with here. There will not be lawful cause or excuse for the surgery performed by the [applicant] if the Crown proves beyond Crennan Bell reasonable doubt that the [applicant] did not honestly believe at the time of the operation that the patient had given her informed consent to the full extent of the operation including removal of the labia and clitoris." The reference to "informed consent" was to informed consent to the full extent of the operation including the removal of the labia and clitoris. The further directions given in response to the jury's question conveyed that lawful cause or excuse could only be negatived by proof beyond reasonable doubt that the applicant did not honestly believe that CDW had consented to an operation involving the removal of her labia and clitoris. There was no error in concluding, in the context of this trial, that the phrase "informed consent" and the reference to possible major consequences and alternative treatments did not distract the jury from determining the one issue presented with respect to CDW's consent. This was whether the prosecution had excluded beyond reasonable doubt that CDW had been informed that the surgery involved the removal of her vulva, including her labia and clitoris. The Court of Criminal Appeal did not err in holding that the misdirection did not actually occasion a substantial miscarriage of justice. The application for special leave to appeal should be allowed but the appeal against conviction must be dismissed. The appeal against sentence (Grounds 2.3, 2.4 and 2.5) Reference has been made to the grounds upon which the applicant seeks to challenge the determination of the prosecution appeal against sentence. Neither ground which challenges the Court of Criminal Appeal's conclusions that the sentencing judge's discretion miscarried and that the sentence imposed for the offence against CDW (or that imposed for the dishonesty offence to which the applicant pleaded guilty) was manifestly inadequate justifies the grant of special leave. The applicant adduced evidence in the Court of Criminal Appeal of the deterioration in his health during his time in custody. He submitted that his health and the imminence of the expiration of his non-parole period were considerations which justified the dismissal of the Director's appeal in the exercise of the residual discretion22. In allowing the Director's appeal and resentencing the applicant the Court did not refer to this material or to the residual discretion. 22 Green v The Queen (2011) 244 CLR 462 at 471-472 [26] per French CJ, Crennan and Kiefel JJ, 506 [131] per Bell J; [2011] HCA 49. Crennan Bell The Director accepts that the Court of Criminal Appeal erred by its failure to consider the exercise of the discretion and submits that the proceeding should be remitted to enable it to do so. In light of that concession, it is appropriate in relation to the sentence appeal to grant the applicant special leave to appeal on Ground 2.3, and to allow the appeal and remit the proceeding to the Court of Criminal Appeal for it to consider the exercise of the discretion to dismiss the appeal under s 5D of the Criminal Appeal Act 1912 (NSW). Orders There should be orders as follows. Special leave to appeal on Grounds 2.1, 2.2 and 2.3 of the Application for Special Leave to Appeal filed on 21 March 2013 granted. Application for special leave to appeal otherwise dismissed. Appeal treated as instituted and heard instanter. Appeal allowed in part. Set aside pars 6, 7, 8 and 9 of the orders of the Court of Criminal Appeal of the Supreme Court of New South Wales made on 21 February 2013. Remit the matter to the Court of Criminal Appeal of the Supreme Court of New South Wales for further consideration in accordance with the reasons of the Court. Appeal otherwise dismissed. GAGELER J. I agree with the orders proposed in the joint reasons for judgment. With one reservation, I agree with the reasoning. To apply the proviso in s 6(1) of the Criminal Appeal Act 1912 (NSW), Bathurst CJ in the Court of Criminal Appeal of the Supreme Court of New South Wales considered that he needed to determine both (in terms derived from Weiss v The Queen23) that the evidence properly admitted at trial proved the applicant's guilt beyond reasonable doubt24 and (in terms derived from Mraz v The Queen25) that the misdirection did not deprive the applicant of a real likelihood of acquittal by the jury26. The joint reasons for judgment accept that the Court of Criminal Appeal, having concluded that the evidence properly admitted at trial proved the applicant's guilt beyond reasonable doubt, needed to engage in a further stage of analysis. The joint reasons for judgment do not couch that further stage of analysis in the terminology of Mraz. They couch it instead in terms of the Court of Criminal Appeal needing ultimately to be satisfied that no substantial miscarriage of justice had "in fact" occurred. The substance of the analysis is nevertheless that which Bathurst CJ undertook: excluding any real likelihood that the jury was misled by the misdirection in reasoning to guilt. The joint reasons for judgment respond to the arguments in this Court. Whether one or the other stage of the analysis undertaken ought to have been sufficient in order for the Court of Criminal Appeal to apply the proviso in a case of a misdirection of law was not argued. I would reserve that question for consideration in a future case. 23 (2005) 224 CLR 300 at 316 [41]; [2005] HCA 81. 24 Reeves v The Queen [2013] NSWCCA 34 at [90]-[99]. 25 (1955) 93 CLR 493 at 514; [1955] HCA 59. 26 Reeves v The Queen [2013] NSWCCA 34 at [100]-[104].

HIGH COURT OF AUSTRALIA CRI026 AND APPELLANT THE REPUBLIC OF NAURU RESPONDENT CRI026 v The Republic of Nauru [2018] HCA 19 16 May 2018 ORDER Leave to amend the notice of appeal refused with costs. Leave to be heard on Ground 3 refused with costs. Appeal dismissed with costs. On appeal from the Supreme Court of Nauru Representation A T Broadfoot QC with M L L Albert and S Gory for the appellant (instructed by Fitzroy Legal Service) G R Kennett SC with A Aleksov for the respondent (instructed by Republic of Nauru) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS CRI026 v The Republic of Nauru Migration – Refugees – Appeal as of right from Supreme Court of Nauru – Where Secretary of Department of Justice and Border Control of Nauru ("Secretary") determined appellant not refugee under Refugees Convention Act 2012 (Nr) – Where Secretary determined Nauru did not owe appellant complementary protection under Refugees Convention Act – Where Refugee Status Review Tribunal ("Tribunal") affirmed Secretary's determinations on basis appellant could reasonably relocate within country of origin to place where persecutors had little or no influence or power – Where Tribunal's reasons contained typographical error – Where Tribunal issued corrigendum correcting error – Where Supreme Court of Nauru affirmed Tribunal's decision – Whether appellant's ability reasonably to relocate within country of origin relevant to claim for complementary protection – Whether typographical error in Tribunal's reasons disclosed error – Whether ability of appellant's family reasonably to relocate relevant to assessing appellant's ability reasonably to relocate – Whether Tribunal erred in failing to consider whether appellant's family able reasonably to relocate in assessing appellant's ability reasonably to relocate – Whether Tribunal's finding that persecutors had little or no influence or power in place of relocation supported by evidence. "internal Words and phrases – "complementary protection", "corrigendum", "freedom of movement", relocation", "non-refoulement", "reasonable internal relocation", "reasonable relocation", "refugee", "subsidiary protection", "typographical error", "well-founded fear of persecution". alternative", "internal flight Convention Relating to the Status of Refugees (1951) as modified by the Protocol Relating to the Status of Refugees (1967), Art 1A(2). Convention for the Protection of Human Rights and Fundamental Freedoms (1950), Art 3. International Covenant on Civil and Political Rights (1966), Arts 2, 6, 7, 12. Nauru (High Court Appeals) Act 1976 (Cth), s 5. Refugees Convention Act 2012 (Nr), ss 3, 4, 43. KIEFEL CJ, GAGELER AND NETTLE JJ. This is an appeal as of right, pursuant to s 5 of the Nauru (High Court Appeals) Act 1976 (Cth), from a judgment of the Supreme Court of Nauru (Crulci J). The Supreme Court dismissed the appellant's appeal brought under s 43 of the Refugees Convention Act 2012 (Nr) ("the Refugees Act") against a decision of the Refugee Status Review Tribunal ("the Tribunal"). The Tribunal had affirmed a decision of the Secretary of the Department of Justice and Border Control, made pursuant to s 6 of the Refugees Act, to reject the appellant's application to be recognised as a refugee in accordance with the Act or as a person to whom the Republic of Nauru ("Nauru") owes complementary protection under the Act. The facts As appears from the Tribunal's reasons, the appellant was born on 13 July 1975 in Sialkot in Punjab Province, Pakistan, but had lived most of his life in Karachi. Between 2003 and 2005, however, he lived in Sialkot, and, between 2010 and 2011, he lived in Lahore. He had completed nine years of schooling and held an electrical certificate. Between 2003 and 2011, he was self-employed in Pakistan as an electrician and air conditioning mechanic. The appellant married in Pakistan on 5 November 2006 and had two children, one born after he left Pakistan in 2011. His wife and children were living in Sialkot with her family. His parents, who emigrated from India many years ago, were resident in Karachi. His father worked in Dubai for some 15 to 20 years and retired four or five years before the Tribunal hearing. Two of the appellant's brothers, Faisal and Nasier, were in Dubai and Libya, respectively, and his other brother, Asif, had been in Libya but at the time of the hearing was living with the appellant's wife and children in Sialkot. The appellant had relatives living in Roras and Sambrial in the Sialkot district. The appellant departed Pakistan in 2011 and went to Malaysia. He arrived in Nauru in December 2013. The appellant's case before the Tribunal The appellant's case before the Tribunal was that he was a refugee under the Refugees Act or, alternatively, that he was a person to whom Nauru owed complementary protection under the Act because his circumstances engaged Nauru's international obligations under, inter alia, the International Covenant on Civil and Political Rights (1966) ("the ICCPR"). He claimed that he could not or did not want to return to Pakistan because he feared that upon his return he would be harmed by members of the Muttahida Qaumi Movement ("the MQM"). He said that he feared that the MQM would seek to hurt him to get revenge for an injury which he had inflicted on one of their senior members, Munir Tunda, in a Nettle fight at a cricket game some years before, and also because they viewed him as a political dissident. He claimed that he feared that the MQM would be able to find him anywhere in Pakistan and that the State would not be willing to protect him because the MQM are supported by and allied with the Pakistani authorities. He said that he also feared harm from generalised violence and insecurity in Pakistan. The Tribunal's decision The Tribunal accepted that the appellant might be regarded adversely by Munir Tunda as a result of the injury inflicted on Munir Tunda at the cricket game. The Tribunal did not accept that Munir Tunda held a senior position in the MQM but allowed that he might be a powerful person in Karachi associated with the MQM. The Tribunal accepted that the appellant was threatened in Karachi in 2003 and 2009 and that his shop was burnt down in 2003 by persons associated with Munir Tunda, and that those persons may have done so in retaliation for the assault. The Tribunal found that the MQM remained powerful in Karachi, albeit their power had diminished in recent times due to a high level of ethno-political violence between the MQM and the Awami National Party in 2012 and targeting by militant groups. It appeared to the Tribunal that the MQM were still dominant at the local and provincial level, having won 15 of the 20 National Assembly seats in 2013, and were allied to the Pakistani military. As against that, however, the Tribunal noted that the appellant's father had not reported any further threats or contact with Munir Tunda's associates since the appellant left Pakistan, and that the last threat was in 2009. The Tribunal further observed that it had been 12 years since the fight at the cricket game and six years since the last contact or threat. Consequently, it did not appear to the Tribunal that Munir Tunda or his associates had been searching for the appellant or waging a systematic vendetta against him. But it was possible that they might opportunistically harm him if they were to encounter him in Karachi. In the result, the Tribunal accepted that there was a real possibility that if the appellant were returned to Karachi he would be harmed by Munir Tunda or his associates, but only for reasons of personal revenge and not because of the appellant's political inclinations. The Tribunal further accepted that state protection from the police or other authorities in Karachi may be inadequate or withheld from the appellant because of Munir Tunda's political connections and involvement with the MQM. But the Tribunal also found that, due to the MQM's absence of power and influence in Punjab, the size of the population of Punjab, the existence of large urban centres such as Lahore and Sialkot and the fact that the appellant had previously lived in Lahore and Sialkot without coming to any harm, the appellant could live safely in Sialkot or Lahore or elsewhere in Punjab without a real possibility of harm from Munir Tunda or his associates. For reasons which the Tribunal specified, the Tribunal found, too, that relocation to Nettle Punjab would be reasonably available to the appellant. Further, due to the low level of attacks and casualties in Punjab, including Lahore and Sialkot, relative to the size of the population, and the fact that the appellant was not politically active and was a member of the religious majority, the Tribunal was satisfied that the risk of the appellant being harmed in generalised insecurity was remote and not a real possibility. The Tribunal decided, therefore, that the appellant was not a refugee and that, because there was not a real risk that he would be subjected to torture, cruel, inhuman or degrading treatment or punishment, arbitrary deprivation of life or the imposition of the death penalty if he were returned to Pakistan, he was not owed complementary protection. The Supreme Court's decision In dismissing the appellant's appeal to the Supreme Court, Crulci J held that the Tribunal had not erred in applying a reasonable internal relocation test to the appellant's claim for complementary protection1; that the Tribunal had taken into account all matters relevant to whether the appellant could reasonably relocate to Punjab; and that the Tribunal's reasons did not otherwise disclose an error of law2. Grounds of appeal The appellant's grounds of appeal to this Court are as follows: The Supreme Court erred by failing to conclude: that the Refugee Status Review Tribunal (Tribunal) had misapplied the Nauruan law of complementary protection (as embodied in s 4(2) of the Refugees Convention Act 2012 (Nr) (Refugees Act)), namely by identifying ... and applying ... a 'reasonable relocation' test in relation to complementary protection, where there is no such test as a matter of law; and that it followed, on the basis of the Tribunal's finding ... that there was a real possibility of harm if the [appellant] were to 1 See CRI026 v The Republic [2017] NRSC 67 at [40]-[41]. 2 See CRI026 v The Republic [2017] NRSC 67 at [43]. Nettle return to Karachi, that the [a]ppellant was entitled to complementary protection. The Supreme Court erred in law by failing to find that the Tribunal's decision was vitiated by errors of law in that it took irrelevant considerations into account or asked itself the wrong question, in that it determined the [a]ppellant's claim to refugee status ... and his claim to complementary protection ... by reference to his circumstances in the event that he were to return to Sri Lanka. Further or alternatively, the Tribunal erred by failing to take into account an integer of the [a]ppellant's objection to internal relocation, namely that it would not have been reasonable for him to relocate to Punjab because of his children, then aged 6 and 4, who lived in Karachi." (emphasis added) The appellant sought leave to add the emphasised words to Ground 1 and Ground 2 and also to include a further ground of appeal: "4. Further or alternatively, the Tribunal erred by making a finding ... without any probative evidence, namely that the militant body that had been used to harm the [a]ppellant previously had 'no power or influence' in the place to which the Tribunal concluded he could reasonably relocate." Relevant statutory and treaty provisions In brief substance, s 4 of the Refugees Act provides that Nauru must not expel or return a refugee to the frontiers of territories where he or she would be persecuted, and that it must not expel or return any person to the frontiers of territories in breach of its international obligations. Section 3 of the Refugees Act defines "refugee" as a person who is a refugee under the Convention Relating to the Status of Refugees (1951) as modified by the Protocol Relating to the Status of Refugees (1967) ("the Refugee Convention"). To the extent that is relevant, Art 1A(2) of the Refugee Convention defines "refugee" as any person outside his or her country of nationality who is unable or unwilling for Convention reasons (for example, race, religion, membership of a particular social group or political opinion) to avail him or herself of that country's protection. Nettle Section 3 of the Refugees Act defines "complementary protection" as protection for people who are not refugees as defined in the Act but who also cannot be returned or expelled to the frontiers of territories where this would breach Nauru's international obligations. Ground 1: Relevance of ability reasonably to relocate to entitlement to complementary protection As was earlier noticed, having found that the appellant could live safely in another part of Pakistan, namely, Punjab (including Lahore and Sialkot), and that it was reasonable for him to relocate there, the Tribunal concluded that the appellant was not a refugee within the meaning of the Refugees Act because in effect he was not unable or unwilling for Convention reasons to avail himself of the protection of Pakistan. The Tribunal added that, for the same reasons, they found that returning the appellant to Pakistan would not breach Nauru's international obligations arising under the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (1984), the ICCPR or cl 19(c) of the Memorandum of Understanding between the Republic of Nauru and the Commonwealth of Australia, Relating to the Transfer to and Assessment of Persons in Nauru, and Related Issues (2013), and hence that the appellant was not entitled to complementary protection. Under Ground 1, the appellant contended that the Tribunal erred in their determination of his claim for complementary protection by taking into account his capacity to avoid harm by relocating within Pakistan. Counsel for the appellant submitted that whether or not the appellant would be able reasonably to relocate to a place of safety in Pakistan is irrelevant to the question of whether Nauru is obligated to provide him with complementary protection. In counsel's submission, so much was made plain by the Full Court of the Federal Court of Australia in Minister for Immigration and Citizenship v MZYYL3. The submission that MZYYL is determinative should be rejected. The passage of the judgment in MZYYL was part of the Full Court's explanation of why authority as to the interpretation of international treaties was unhelpful in interpreting the codified regime of complementary protection provided for in the Migration Act 1958 (Cth). Their Honours were making the point that, in contrast to s 36(2)(aa) and (2B) of that Act, which in substance stipulate that an applicant for complementary protection must demonstrate that he or she cannot avail him or herself of the protection of the receiving country by relocating within that country, the international treaties say nothing expressly about the matter. So to (2012) 207 FCR 211 at 215 [18]-[20]. Nettle interpretation – portends nothing as observe – and thus emphasise that, consequently, each regime calls for a different technique of international jurisprudence which informs the scope of the complementary protection obligations arising from international treaties. To the contrary, as was emphasised in MZYYL, the implications of international treaties did not need to be considered in that case because they did not materially bear on the task of statutory interpretation with which the Full Court was concerned. the Counsel for the appellant argued in the alternative that the only question relevant to the assessment of a claim for complementary protection is whether there is a "real risk of exposure to inhuman or degrading treatment or punishment", among other harms, in any place in the country of nationality, and, if there is, an applicant for protection should not be returned to the frontiers of that country. That was said to be apparent from the statement of the United Nations Human Rights Committee in General Comment No 20: Article 7 (Prohibition of Torture, or Other Cruel, Inhuman or Degrading Treatment or Punishment)4 that: "[t]he text of article 7 [of the ICCPR] allows of no limitation ... States parties must not expose individuals to the danger of torture or cruel, inhuman or degrading treatment or punishment upon return to another country by way of their extradition, expulsion or refoulement." Counsel also invoked the observations of the European Court of Human Rights in Soering v United Kingdom5 regarding Art 3 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1950) ("the European Convention on Human Rights"), which, like Art 7 of the ICCPR, provides that "[n]o one shall be subjected to torture or to inhuman or degrading treatment or punishment". For reasons which will be explained, counsel's submissions cannot be accepted in the broad terms in which they were stated. In particular, it is not the case that, just because there may be a real risk of exposure to inhuman or degrading treatment or punishment in one place, or even some places, in a country of nationality, an applicant cannot be returned to some other place in that country in which there is not such a risk and to which it would be reasonable for him or her to relocate. 4 44th sess, UN Doc A/44/40, (1992) at [3], [9]. (1989) 11 EHRR 439 at 467-468 [88]. Nettle the international community would accord The content of a treaty obligation depends upon the construction which the international community would attribute to the treaty and on the operation which in particular circumstances6. The interpretative principles to be applied include the rules of customary international law codified in Arts 31 and 32 of the Vienna Convention on the Law of Treaties (1969). Considerable weight should be given to the interpretations adopted by an independent body established to supervise the application of the treaty7. Taken as a whole, international law and practice leave no doubt that, unless the feared persecution emanates from or is condoned or tolerated by state actors (which is not an issue in this case)8, an applicant's ability reasonably to relocate within a receiving country, including the ability safely and legally to travel to the place of relocation, is relevant to whether the applicant is in need of complementary protection. To the extent that it is germane, Arts 2, 6, 7 and 12 of the ICCPR provide as follows: "Article 2. Each State Party to the present Covenant undertakes to respect and to ensure to all individuals within its territory and subject to its jurisdiction the rights recognized in the present Covenant, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Article 6. Every human being has the inherent right to life. This right shall be protected by law. No one shall be arbitrarily deprived of his life. 6 Queensland v The Commonwealth (1989) 167 CLR 232 at 240 per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ; [1989] HCA 36. 7 See Ahmadou Sadio Diallo (Republic of Guinea v Democratic Republic of the Congo) [2010] ICJ Rep 639 at 664 [66]. 8 See United Nations High Commissioner for Refugees, Guidelines on International Protection: "Internal Flight or Relocation Alternative" within the Context of Article 1A(2) of the 1951 Convention and/or 1967 Protocol relating to the Status of Refugees, UN Doc HCR/GIP/03/04, (2003) at [13]; Sufi and Elmi v United Kingdom (2012) 54 EHRR 9 at 220 [36]. Nettle Article 7. No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment. In particular, no one shall be subjected without his free consent to medical or scientific experimentation. Article 12. Everyone lawfully within the territory of a State shall, within that territory, have the right to liberty of movement and freedom to choose his residence. his own. Everyone shall be free to leave any country, including The above-mentioned rights shall not be subject to any restrictions except those which are provided by law, are necessary to protect national security, public order (ordre public), public health or morals or the rights and freedoms of others, and are consistent with the other rights recognized in the present Covenant. own country." No one shall be arbitrarily deprived of the right to enter his As can be seen, those provisions of the ICCPR do not expressly impose a non-refoulement obligation on States Parties. Rather, it is accepted as a matter of international law that Art 2 impliedly obligates States Parties not to remove a person from their territory where there are "substantial grounds" for believing that there is a real risk of irreparable harm of the kind contemplated by Arts 6 and 7 in the country to which such removal is to be effected9. "Substantial grounds" means, however, that it must be a necessary and foreseeable consequence of refoulement that the person would suffer the kind of harm identified in Arts 6 and 710. As Perram J observed in Minister for Immigration 9 See, for example, United Nations Human Rights Committee, General Comment No 31 [80]: The Nature of the General Legal Obligation Imposed on States Parties to the Covenant, 80th sess, UN Doc CCPR/C/21/Rev.1/Add.13, (2004) at 10 See United Nations Human Rights Committee, Communication No 470/1991 (Kindler v Canada), 48th sess, UN Doc CCPR/C/48/D/470/1991, (1993) at [6.2]; United Nations Human Rights Committee, Communication No 692/1996 (ARJ v Australia), 60th sess, UN Doc CCPR/C/60/D/692/1996, (1997) at [6.8]-[6.9], Nettle and Citizenship v Anochie11, that is a high hurdle for the applicant to meet. The risk of harm must be both necessary and foreseeable and, according to the weight of relevant international jurisprudence, it is neither if it can be avoided by reasonable relocation within the applicant's country of nationality. The cornerstone of the international regime for the protection of refugees, and in turn for complementary protection, is the Refugee Convention. Until superseded in 2011, Art 8 of the Council of the European Union's Council Directive 2004/83/EC of 29 April 2004 on minimum standards for the qualification and status of third country nationals or stateless persons as refugees or as persons who otherwise need international protection and the content of the protection granted ("the 2004 Directive")12 relevantly provided: "As part of the assessment of the application for international protection [which was defined in Art 2 as including an application seeking refugee status or subsidiary protection status], Member States may determine that an applicant is not in need of international protection if in a part of the country of origin there is no well-founded fear of being persecuted or no real risk of suffering serious harm and the applicant can reasonably be expected to stay in that part of the country." More recently, the European Parliament and the Council of the European Union recast the 2004 Directive as Directive 2011/95/EU of the European Parliament and of the Council of 13 December 2011 on standards for the qualification of third-country nationals or stateless persons as beneficiaries of international protection, for a uniform status for refugees or for persons eligible for subsidiary protection, and for the content of the protection granted ("the 2011 Directive")13. Relevantly, Art 8 of the 2011 Directive reiterates the position of Member States in relation to their non-refoulement obligations as follows: "As part of the assessment of the application for international protection, Member States may determine that an applicant is not in need of international protection if in a part of the country of origin, he or she: has no well-founded fear of being persecuted or is not at real risk of suffering serious harm; or 11 (2012) 209 FCR 497 at 512 [62]. 12 [2004] OJ L 304/12. 13 [2011] OJ L 337/9. Nettle has access to protection against persecution or serious harm as defined in Article 7; and he or she can safely and legally travel to and gain admittance to that part of the country and can reasonably be expected to settle there." There are also several individual communications concerning Art 3 of the European Convention on Human Rights to similar effect. In the decision of Omeredo v Austria14, the European Court of Human Rights held that, notwithstanding the applicant would face the prospect of female genital mutilation if returned to the village in Nigeria from which she came seeking asylum in Austria, her claim for subsidiary protection pursuant to Art 3 of the Convention was "manifestly ill-founded ... and must therefore be rejected" because the applicant "could for instance live in another province or in one of the big cities" and not be exposed to that risk. The Court concluded that, owing to the applicant's education and work experience as a seamstress, "there is reason to believe that the applicant will be able to build up her life in Nigeria without having to rely on support of family members"15. In Salah Sheekh v The Netherlands16, the applicant belonged to a minority group living in Mogadishu, Somalia. He sought asylum in Amsterdam on the basis that his repatriation to Somalia would constitute a breach of Art 3 of the European Convention on Human Rights. The Netherlands refused asylum on the basis, inter alia, that protection would be available to the applicant in relatively safe parts of Somalia to which it would be reasonable for him to relocate17. On appeal, the European Court of Human Rights expressly recognised the relevance of reasonable internal relocation to such claims, albeit rejecting its application to the facts of the applicant's claim18: "Moreover, Art 3 does not, as such, preclude contracting states from placing reliance on the existence of an internal flight alternative in their 14 European Court of Human Rights, Chamber, Application No 8969/10, (2011) at 15 European Court of Human Rights, Chamber, Application No 8969/10, (2011) at 5. 16 (2007) 45 EHRR 50. 17 Salah Sheekh v The Netherlands (2007) 45 EHRR 50 at 1164 [31]. 18 Salah Sheekh v The Netherlands (2007) 45 EHRR 50 at 1199 [141]. Nettle assessment of an individual's claim that a return to his or her country of origin would expose him or her to a real risk of being subjected to treatment proscribed by that provision ... [But the] Court considers that as a precondition for relying on an internal flight alternative, certain guarantees have to be in place: the person to be expelled must be able to travel to the area concerned, to gain admittance and be able to settle there, failing which an issue under Art 3 may arise, the more so if in the absence of such guarantees there is a possibility of the expellee ending up in a part of the country of origin where he or she may be subject to ill-treatment." In Hilal v United Kingdom19, the applicant originated from Zanzibar, being part of the United Republic of Tanzania, and sought asylum in the United Kingdom. He applied for protection on the basis, relevantly, that his deportation to Tanzania would expose him to a real risk of ill-treatment contrary to Art 3 of the European Convention on Human Rights. Once again, the European Court of Human Rights expressly recognised the possibility of reasonable internal relocation providing a reliable guarantee against the risk of ill-treatment, albeit finding on the facts that the applicant would be at risk in both Zanzibar and mainland Tanzania and, therefore, that his expulsion from the United Kingdom would violate Art 3 of the Convention20: "The Government relies on the 'internal flight' option, arguing that even assuming that the applicant was at risk in Zanzibar, the situation in mainland Tanzania was more secure ... Conditions in the prisons on the mainland are described as inhuman and degrading, with inadequate food and medical treatment leading to life-threatening conditions. The police in mainland Tanzania may be regarded as linked institutionally to the police in Zanzibar as part of the Union and cannot be relied on as a safeguard against arbitrary action. There is also the possibility of extradition between Tanzania and Zanzibar. The Court is not persuaded therefore that the internal flight option offers a reliable guarantee against the risk of ill-treatment." (footnotes omitted) To the same effect, in Sufi and Elmi v United Kingdom21, the European Court of Human Rights, although finding on the facts of the case that the 19 (2001) 33 EHRR 2. 20 Hilal v United Kingdom (2001) 33 EHRR 2 at 49 [67]-[68]. 21 (2012) 54 EHRR 9 at 220 [35]. Nettle applicants' refoulement to Somalia would breach Art 3 of the European Convention on Human Rights, expressly stated: "It is a well-established principle that persons will generally not be in need of asylum or subsidiary protection [under the European Convention on Human Rights] if they could obtain protection by moving elsewhere in their own country." A similar approach has been adopted in relation to the non-refoulement obligation arising out of the ICCPR. In General Comment No 31 [80]: The Nature of the General Legal Obligation Imposed on States Parties to the Covenant22, the United Nations Human Rights Committee stated: "[T]he article 2 [of the ICCPR] obligation requiring that States Parties respect and ensure the Covenant rights for all persons in their territory and all persons under their control entails an obligation not to extradite, deport, expel or otherwise remove a person from their territory, where there are substantial grounds for believing that there is a real risk of irreparable harm, such as that contemplated by articles 6 and 7 of the Covenant". Although there was no mention in General Comment No 31 of whether the opportunity for reasonable internal relocation should be regarded as relevant, the United Nations Human Rights Committee later clarified the position in Communication No 1897/2009 (SYL v Australia)23. In that instance, the applicant's claim for complementary protection was put on the basis that he would face cruel, inhuman and degrading treatment if returned to Timor-Leste due to a lack of access to adequate medical treatment in the Aileu province of Timor-Leste. After noting the applicant's claim that his return to Timor-Leste would exacerbate his health condition to an extent amounting to inhuman treatment, and his reference to a medical report according to which his health status would be likely rapidly to decline in Timor-Leste, the Committee stated24: "The Committee further notes that the [applicant] has not presented any reasons as to why it would be unreasonable for him to live in a location in Timor-Leste where adequate health care would be more available than in 22 80th sess, UN Doc CCPR/C/21/Rev.1/Add.13, (2004) at [12]. 23 108th sess, UN Doc CCPR/C/108/D/1897/2009, (2013). 24 United Nations Human Rights Committee, Communication No 1897/2009 (SYL v Australia), 108th sess, UN Doc CCPR/C/108/D/1897/2009, (2013) at [8.4]. Nettle the Aileu province, nor has the Committee received information indicating an acute condition that would make the [applicant's] return to Timor-Leste an immediate threat to his health. In light of the information before it, the Committee considers that the [applicant] has not sufficiently substantiated that the possible aggravation of his state of health as a result of his deportation would reach the threshold of inhuman treatment within the meaning of article 7 of the Covenant." The same point was made again, but with added emphasis, in Communication No 2053/2011 (BL v Australia)25, in which the Human Rights Committee concluded that Australia was not obligated to provide the applicant, originating from Touba, Senegal, with complementary protection against harm of the kind identified in Arts 6, 7 and 18 of the ICCPR because of the availability of reasonable internal relocation. The Committee concluded that26: "it was not shown that the authorities in Senegal would not generally be willing and able to provide impartial, adequate and effective protection to the [applicant] against threats to his physical safety, and that it would not be unreasonable to expect him to settle in a location, especially one more distant from Touba, where such protection would be available to him. Provided that the [applicant] would only be returned to such a location where [Australia] determines that adequate and effective protection is available, the Committee cannot conclude that removing him to Senegal would violate [Australia's] obligations under article 6 or 7 of the Covenant." In a concurring opinion, two further members of the Committee added27: "We concur fully with the Committee's Views. We write separately merely to point out that the Committee's discussion in paragraph 7.4 reflects the well-established principle of the 'internal flight 25 112th sess, UN Doc CCPR/C/112/D/2053/2011, (2014). 26 United Nations Human Rights Committee, Communication No 2053/2011 (BL v Australia), 112th sess, UN Doc CCPR/C/112/D/2053/2011, (2014) at [7.4] per Yadh Ben Achour, Christine Chanet, Ahmad Amin Fathalla, Cornelis Flinterman, Victor Manuel Rodríguez-Rescia, Anja Seibert-Fohr, Yuval Shany, Konstantine Vardzelashivili, Margo Waterval and Andrei Paul Zlătescu. 27 United Nations Human Rights Committee, Communication No 2053/2011 (BL v Australia), 112th sess, UN Doc CCPR/C/112/D/2053/2011, (2014) at Appendix I per Gerald L Neuman and Yuji Iwasawa. Nettle alternative', a basic rule of international refugee law as well as international human rights law. Individuals are not in need of international protection if they can avail themselves of the protection of their own State; if resettling within the State would enable them to avoid a localized risk, and resettling would not be unreasonable under the circumstances, then returning them to a place where they can live in safety does not violate the principle of non-refoulement. See, for example, communication No 1897/2009, SYL v Australia, inadmissibility decision of 24 July 2013, para 8.4; Sufi and Elmi v the United Kingdom, Applications Nos 8319/07 and 11449/07 (European Court of Human Rights, 2011), para 266; and Omeredo v Austria, Application No 8969/10 (European Court of Human Rights 2011) (inadmissibility decision)." Similarly, in a second concurring opinion, another member of the Committee stated28: "In the light of the Committee's own finding that the [applicant] has not put forward any reason why he could not relocate within Senegal, the burden falls upon him to avail himself of the protection of his own State as established by the doctrine of internal flight. The duty of ascertaining the location where adequate and effective protection is available in Senegal does not rest upon the authorities of [Australia]. Their duty is limited to obtaining reliable information that Senegal is a secular State where there is religious tolerance." Only the one remaining member of the Committee stated that he did not agree as to the significance of internal relocation29: "The Committee should not have stated that 'the [applicant] has not put forward any other reason why he could not relocate within Senegal' (para 7.4). It is also regrettable that the Committee concluded that 'it would not be unreasonable to expect him to settle in a location, especially one more distant from Touba, where such protection would be available to him' (para 7.4)." 28 United Nations Human Rights Committee, Communication No 2053/2011 (BL v Australia), 112th sess, UN Doc CCPR/C/112/D/2053/2011, (2014) at Appendix II per Dheerujlall B Seetulsingh. 29 United Nations Human Rights Committee, Communication No 2053/2011 (BL v Australia), 112th sess, UN Doc CCPR/C/112/D/2053/2011, (2014) at Appendix III [4] per Fabián Omar Salvioli. Nettle Counsel for the appellant further contended, in substance, that it logically could not be that the availability of reasonable internal relocation is relevant to the assessment of complementary protection, for, if it were, it would be incumbent upon an applicant for complementary protection to undertake the practically impossible task of establishing that there is no place in his or her country of nationality to which he or she could reasonably relocate. That contention should also be rejected. Implicitly, it proceeds from the false premise that a claim for complementary protection is in the nature of an adversarial proceeding in which the burden of proof is on the applicant and, therefore, that, in the event of the applicant failing to discharge the burden of proof, the claim for complementary protection must fail. To the contrary, however, as appears from BL v Australia, before a decision maker may properly reject a claim for complementary protection on the basis of the availability of reasonable internal relocation, the decision maker needs reliable information as to the safety and suitability of the place of relocation30. Moreover, as Gummow, Hayne and Crennan JJ observed in SZATV v Minister for Immigration and Citizenship31 in relation to a claim for refugee protection: "What is 'reasonable', in the sense of 'practicable', must depend upon the particular circumstances of the applicant for refugee status and the impact upon that person of relocation of the place of residence within the country of nationality." Accordingly, depending on the issues and circumstances identified by the applicant, the decision maker not only will need reliable information as to the safety and suitability of the place of relocation but also will need to pay careful regard to the applicant's personal and family circumstances. It is only when and if the decision maker concludes on that basis that internal relocation would be reasonable that the claim for complementary protection may be rejected on that basis. Of course, that does not mean that it will be necessary in every case for a decision maker to identify with precision the proposed place of relocation and undertake the analysis of reasonableness in relation to that precise place. In some 30 See, in particular, United Nations Human Rights Committee, Communication No 2053/2011 (BL v Australia), 112th sess, UN Doc CCPR/C/112/D/2053/2011, (2014) at [7.4], Appendices I-II. 31 (2007) 233 CLR 18 at 27 [24]; [2007] HCA 40. See also MZZQV v Minister for Immigration and Border Protection [2015] FCA 533 at [68]; Hathaway and Foster, The Law of Refugee Status, 2nd ed (2014) at 330-331. Nettle cases it may be that the reliable information available to the decision maker demonstrates that the risk of harm of the kind described in Arts 6 and 7 of the ICCPR exists only in one place or area, or a couple or few places or areas, within the applicant's country of nationality, and that elsewhere the country is relevantly risk free. In such cases, it is accurate to say that the burden would be upon the applicant for complementary protection, once sufficiently alerted to the significance of the information available to the decision maker, to present reasons why it would nonetheless be unreasonable to expect the applicant to relocate to any place beyond the affected places or areas32. Each case is fact specific and must be dealt with accordingly. The point for present purposes, however, is that treating reasonable internal relocation as a relevant consideration in the determination of a claim for complementary protection is not in any sense impracticable or unfair. Counsel for the appellant contended that, be all that as it may, it was apparent that judicial recognition of the relevance of reasonable internal relocation to a claim for protection under the Refugee Convention is based on the definition of "refugee" in the Convention and, since there is no such applicable definition of "refugee" in or in relation to the ICCPR, and since the ICCPR is of such a different nature from the Convention, the logic of regarding reasonable internal relocation as relevant to complementary protection does not apply. Logically, that does not follow. Admittedly, judicial recognition of the relevance of reasonable internal relocation to a claim for protection under the Refugee Convention has been said to be based on the Convention definition of "refugee". As will be recalled, the Convention defines a "refugee" in substance as any person outside his or her country of nationality who is unable or unwilling for Convention reasons to avail him or herself of that country's protection33. And as Lord Bingham of Cornhill observed in Januzi v Secretary of State for the Home Department34, a person is not unable to obtain the protection of his or her 32 See, in particular, United Nations Human Rights Committee, Communication No 1897/2009 (SYL v Australia), 108th sess, UN Doc CCPR/C/108/D/1897/2009, 33 See Convention Relating to the Status of Refugees (1951) as modified by the Protocol Relating to the Status of Refugees (1967), Art 1A(2). 34 [2006] 2 AC 426 at 440 [7]-[8]. See SZATV v Minister for Immigration and Citizenship (2007) 233 CLR 18 at 25-26 [19]-[22] per Gummow, Hayne and Crennan JJ; Minister for Immigration and Border Protection v SZSCA (2014) 254 CLR 317 at 326-327 [22]-[23] per French CJ, Hayne, Kiefel and Keane JJ, 330-332 [35], [39]-[40] per Gageler J; [2014] HCA 45. Nettle country of nationality if he or she is able to obtain it in a part of that country to which he or she could reasonably relocate: "The Refugee Convention does not expressly address the situation at issue in these appeals where, within the country of his nationality, a person has a well-founded fear of persecution at place A, where he lived, but not at place B, where (it is said) he could reasonably be expected to relocate. But the situation may fairly be said to be covered by the causative condition to which reference has been made: for if a person is outside the country of his nationality because he has chosen to leave that country and seek asylum in a foreign country, rather than move to a place of relocation within his own country where he would have no well- founded fear of persecution, where the protection of his country would be available to him and where he could reasonably be expected to relocate, it can properly be said that he is not outside the country of his nationality owing to a well-founded fear of being persecuted for a Convention reason The ground of refusal would be that the person is not, within the Convention definition, a refugee." But so to conclude in no way gainsays the relevance of reasonable internal relocation to the extent of non-refoulement obligations which, as a matter of international jurisprudence, are accepted as being implicit in Art 2 of the ICCPR and comparable treaty provisions. Rather to the contrary, given that a person who is outside his or her country of nationality is considered to be not unable to obtain the protection of that country if able to obtain protection at a place within that country to which he or she can reasonably relocate, parity of logic dictates that, if by reasonable relocation to that place the person can avoid risk of harm of the kind identified in Arts 6 and 7 of the ICCPR, it should not be seen as a necessary and foreseeable consequence of the person's refoulement to that place that he or she will be at risk of that kind of harm. Counsel for the appellant further contended that Nauru's non-refoulement obligation arising by implication from the ICCPR, properly construed in its context, is not so limited in scope because to deny a person complementary protection on the basis that he or she could avoid risk of harm by relocating to a place in that country to which he or she could reasonably be expected to relocate would be to deny him or her freedom of movement in that country and thus constitute a breach of Nauru's international obligations under Art 12. That contention also faces difficulties at several levels. In the first place, and most fundamentally, the fact that a person may be at risk of harm at a place in his or her country of nationality and thus chooses to relocate within that Nettle country does not, without more, mean that the person is not free to go to or remain at that place or to choose to reside there. In such a case, a rational choice to relocate from that place to another place to avoid the risk of harm in the former is not a denial of freedom of movement but a manifestation of its exercise. In the second place, while it may be that Nauru is under an international obligation arising out of Arts 2 and 12 of the ICCPR to respect the right of a person who is lawfully within Nauruan territory to freedom of movement within Nauruan territory, and to choose his or her place of residence in Nauruan territory, nothing in the text of Arts 2 and 12, or any other article of the ICCPR to which this Court was referred, suggests that Nauru is under an international obligation to procure for a person who, ex hypothesi, is unlawfully within Nauruan territory a right to freedom of movement within that person's country of nationality35. In the third place, counsel was unable to identify any international jurisprudence in which it has been held or suggested that a State's international non-refoulement obligations arising out of the ICCPR or comparable international treaties are to any extent informed by an applicant's right to freedom of movement within his or her country of nationality. To the contrary, the decision of Omeredo v Austria suggests36 that they are not. Further, as Nauru submitted, it is not otherwise apparent why Art 12 of the ICCPR would assist in defining the scope of the non-refoulement obligation arising by implication from the ICCPR, given the obligation is not enlivened by potential breaches of Art 12. In the fourth place, even if Nauru owed some kind of international obligation to procure for a person who, ex hypothesi, is unlawfully within Nauruan territory a right to freedom of movement within that person's country of nationality (and there is no reason to suppose that it does), for Nauru to permit a person who is unlawfully within Nauruan territory to remain in Nauru, rather than returning to that person's country of nationality, would do nothing to procure that person's freedom of movement in his or her country of nationality. Consequently, such if any right as that person may have to move freely in his or her country of nationality cannot logically be the basis of the kind of non- refoulement obligation for which the appellant contended. 35 See generally Joseph and Castan, The International Covenant on Civil and Political Rights: Cases, Materials, and Commentary, 3rd ed (2013) at 392-394. 36 See European Court of Human Rights, Chamber, Application No 8969/10, (2011) Nettle Given the weight of international jurisprudence in favour of the relevance of reasonable internal relocation to the assessment of complementary protection, the apparent absence of any international jurisprudence to the contrary, and the evident logic and common sense of regarding reasonable internal relocation as relevant to complementary protection just as it is relevant to refugee protection, leave to add the words "to Karachi" to Ground 1 should be refused and Ground 1 should be rejected. Ground 2: Error in taking irrelevant considerations into account or asking wrong question As was earlier noticed, counsel for the appellant sought leave to add the words "or asked itself the wrong question" to Ground 2. Leave should be refused. Under the heading of "General insecurity", the Tribunal recorded that the appellant had stated that there were ongoing targeted killings, violence and attacks in Pakistan, and the Tribunal accepted that there had been a level of insecurity in Pakistan, particularly in the tribal areas of Khyber Pakhtunkhwa and the Federally Administered Tribal Lands. But the Tribunal found that, in general, urban centres tended to be more secure, the situation in Lahore was relatively secure and better than many other areas of Pakistan and the evidence before the Tribunal did not indicate that Sialkot was insecure. It followed, as the Tribunal found, that, although there was a level of insecurity in Pakistan, by contrast Punjab (including Lahore and Sialkot) was relatively secure. Accordingly, given that the appellant was not politically active or associated with a government or military institution which might be targeted, and was of the majority Sunni faith, he was not a person at risk of being targeted and the risk of him being harmed in generalised insecurity was remote and not a real possibility. Having so concluded, the Tribunal then added to its reasons the following, evidently incongruous, further observation: "Refugee assessment 68. Having regard to all of the evidence and findings above, the Tribunal finds that the [appellant] does not face a real possibility of persecution now or in the reasonably foreseeable future in Sri Lanka [sic] because of an imputed political opinion, his race or his membership of particular social groups comprising his family, young Tamils from the north, failed Tamil asylum seekers, Tamil returnees, persons who left Sri Lanka illegally or young Tamils separately and cumulatively [sic]. The Tribunal finds that the [appellant] is not a refugee." Nettle The appellant contended that it is apparent from that further observation that the Tribunal took into account irrelevant considerations concerning Sri Lanka and Tamils which had nothing to do with the case in point, or alternatively asked themselves the wrong question, and therefore the Tribunal's reasoning process was affected by error. At first sight, that might appear to be so. By any standard, it is remarkable that, in a matter concerning a Pakistani applicant claiming refugee protection on the basis of an alleged fear of being harmed by the MQM waging a vendetta against him for the injury he inflicted on Munir Tunda, the Tribunal should express its "Refugee assessment" in terms of the applicant not facing a real possibility of persecution in Sri Lanka because of an imputed political opinion, his race or his membership of particular Tamil social groups. Axiomatically, the latter has nothing at all to do with the former and thus, other things being equal, the Tribunal's reference to the latter would tend to imply that the Tribunal's reasoning process had gone seriously awry37. Closer examination of the Tribunal's reasons shows, however, that the Tribunal in fact reached their conclusion – that the appellant was not a refugee – on the basis of the evidence and findings essayed at paragraphs 11 to 67 of the reasons: the evidence and the Tribunal's findings regarding the appellant's dealings and experiences with the MQM in Pakistan, his expressed fears of being harmed by the MQM in the event of returning to Karachi, the level of general insecurity in Pakistan, and the unlikelihood of him being harmed by the MQM or others in places in Pakistan elsewhere than in Karachi. That included the Tribunal's conclusion in the paragraph which immediately precedes the incongruous observation in paragraph 68 that: ... [The Tribunal] is satisfied that [the appellant] is not a person at risk of being targeted in an attack ... and is satisfied that the risk of the [appellant] being harmed in generalised insecurity is remote and not a real possibility." Viewed in that context, it will be seen that the incongruous observation in paragraph 68 was truly intended to be a formal restatement of the conclusion immediately before expressed, in paragraph 67, on the basis of all of the relevant considerations essayed in paragraphs 11 to 66, and that somehow a typographical error – possibly an error in editing a form of words cut and pasted from a 37 See and compare SZIFI v Minister for Immigration and Multicultural and Indigenous Affairs [2007] FCA 63 at [36]; SZNZK v Minister for Immigration and Citizenship (2010) 115 ALD 332 at 341 [38]. Nettle previous decision in another matter – resulted in references to Sri Lanka and Tamils rather than Karachi and the MQM. It is unfortunate that such an error should have been permitted to occur. It suggests a lack of care in final proof reading of reasons for which all three members of the Tribunal were responsible – but the principal burden of which falls on the presiding member – that should not have occurred and should not be repeated. Such errors are likely to create doubts about the validity of decisions which should not arise. Nevertheless, reading the Tribunal's reasons as a whole, it is plain beyond peradventure that in this case it was not an error in the reasoning process of the kind for which the appellant contended and should be disregarded: falsa demonstratio non nocet38. It remains to mention two other matters pertaining to Ground 2. The first is that, some 84 days after the appellant filed his notice of appeal in the Supreme Court (in which he complained of error in the Tribunal's reasoning process by reference to the mistaken statement in paragraph 68 of their reasons), the Tribunal published a corrigendum stating that the original paragraph 68 of their reasons should be deleted and that a new paragraph 68 should be inserted in its place as follows: "68. Having regard to all of the evidence and findings above, the Tribunal finds that the [appellant] does not face a real possibility of persecution now or in the reasonably foreseeable future in Pakistan because of an actual or imputed political opinion, his race or his religion or his membership of a particular social group comprising persons subject to a vendetta or any other Convention reason separately and cumulatively. the [appellant] is not a refugee." The Tribunal finds that When the matter was before the Supreme Court, Nauru relied on the corrigendum as evidence of what the Tribunal had truly intended, and the appellant, who was then unrepresented, did not object. When the matter came before this Court, it was contended on behalf of the appellant that the Tribunal did not have power to issue the corrigendum and that it should be ignored. Whether the Tribunal had power to issue the corrigendum, as Nauru contended, or whether they published the corrigendum when they were functus 38 See and compare Diocesan Trustees of the Church of England in Western Australia v Solicitor-General (1909) 9 CLR 757 at 761-762, 765-766 per Griffith CJ (Barton J agreeing at 767-768), 771 per O'Connor J; [1909] HCA 66. Nettle officio, as the appellant contended, is debatable. As Gummow J observed in Minister for Immigration and Ethnic Affairs v Kurtovic39, where a discretionary power reposed by statute in a decision maker is, upon proper construction, of such a character that it is not exercisable from time to time but rather is spent upon publishing a decision, the decision maker is prevented from later resiling from the decision because the power to do so is spent and the proposed second decision would be ultra vires. In Minister for Immigration and Multicultural Affairs v Bhardwaj40, Gaudron and Gummow JJ embraced the conclusion of the Supreme Court of Canada in Chandler v Alberta Association of Architects41 that, as a general rule, once an administrative tribunal have reached a final decision in respect of a matter before them in accordance with their enabling statute, the decision cannot be revisited because the tribunal have made an error within jurisdiction. Their Honours also endorsed42 the Supreme Court's conclusion that, in such a case, the principle of functus officio applies on policy grounds favouring the finality of proceedings as opposed to the rules of procedure which apply to formal judgments of courts whose decisions are subject to a full appeal43. But it is apparent that those observations were directed to the possibility of a statutory tribunal making substantive changes to a decision as the result of a change of mind, substantive error within jurisdiction or subsequent change of circumstances. They did not relate directly, if at all, to whether, in circumstances in which a tribunal have made a mere textual error in recording their reasons for decision, it is open to the tribunal later to correct the text to make it accord to what the tribunal always intended. The latter case is more akin to the kind of error to which procedural slip rules may apply44. 39 (1990) 21 FCR 193 at 211. See and compare Comptroller-General of Customs v Kawasaki Motors Pty Ltd (No 1) (1991) 32 FCR 219 at 225 per Beaumont J. 40 (2002) 209 CLR 597 at 615-616 [52]-[53]; [2002] HCA 11. 41 [1989] 2 SCR 848 at 861-862 per Dickson CJ, Wilson and Sopinka JJ. 42 See Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 615 [52]-[53]. 43 See also, for example, Bailey v Marinoff (1971) 125 CLR 529 at 530 per Barwick CJ; [1971] HCA 49; Achurch v The Queen (2014) 253 CLR 141 at 153- 154 [17]-[18] per French CJ, Crennan, Kiefel and Bell JJ; [2014] HCA 10. 44 See Burrell v The Queen (2008) 238 CLR 218 at 224-225 [21] per Gummow ACJ, Hayne, Heydon, Crennan and Kiefel JJ; [2008] HCA 34. See, in particular, Interpretation Act 2011 (Nr), s 89. Nettle That said, as Hill J observed in Minister for Immigration and Ethnic Affairs v Taveli45, in relation to the admissibility of a statement of reasons provided by an administrative decision maker under s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth), where a statement of reasons is made after the event it will as a matter of general principle not be received as evidence in favour of the person making the statement, because it is both self- serving and a narrative of the past event which purports to be the equivalent of or a substitute for direct testimony of the event it narrates. In terms of general principle, parity of reasoning suggests that the same is true of an ex post facto amendment to reasons for decision. If so, except where it is admitted into evidence by consent, it should not be received. In this matter, the position is further complicated by the fact that, on one view of the proceedings before the Supreme Court, the corrigendum was received into evidence without objection. Other things being equal, that would pose a question as to whether the appellant waived objection to the admissibility of the corrigendum and whether he is now estopped from resiling from the waiver46. But in turn, the resolution of that question might well turn on the fact that the appellant was unrepresented before the Supreme Court and that the judge did not alert him to the chance to object. Ultimately, however, it is unnecessary to reach a concluded view about the issue. As has been stated, the fact that the errors in paragraph 68 were unintended textual errors is apparent from the face of the Tribunal's reasons without reference to the corrigendum. For the reasons earlier stated, it is clear from the remainder of the reasons, particularly paragraphs 11 to 67, that the references in paragraph 68 to Sri Lanka and Tamils were something which the Tribunal could not possibly have intended. The matter therefore falls to be decided on the basis previously stated, by reference to the contents of the original reasons alone, and, as all parties ultimately accepted would be appropriate in those circumstances, the corrigendum can be disregarded. 45 (1990) 23 FCR 162 at 168 per Davies J, 187 per Hill J. See also Nezovic v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 133 FCR 190 at 46 See, for example, Harrison, "Hearsay Admitted Without Objection", (1955-1957) 7 Res Judicatae 58 at 67-68; Weinberg, "The Consequences of Failure to Object to Inadmissible Evidence in Criminal Cases", (1978) 11 Melbourne University Law Review 408 at 424-426; "Note: The Status of Hearsay and Other Evidence Admitted Without Objection", (1985) 1 Australian Bar Review 155 at 158. See also Radford (1993) 66 A Crim R 210 at 232-233 per Phillips CJ and Eames J. Nettle The other remaining point in relation to Ground 2 is that, in his written submissions, the appellant identified three other alleged errors in the Tribunal's reasons which, either alone or standing together with the alleged error evident in paragraph 68, were said to be productive of error in the Tribunal's reasoning process which vitiated their decision. The first was a reference to the appellant having appeared before the Tribunal with the assistance of an Arabic interpreter when in fact the appellant had appeared with the assistance of an Urdu interpreter. The second and third were references to the appellant having previously lived in "Mianabad" and "Marianbad" which, as was accepted, should have appeared as "Moeenabad". Unsurprisingly, counsel for the appellant did not pursue any of those complaints in oral argument. He was right not to do so. None of them could seriously be conceived of as productive of error or as evidence of error in the Tribunal's reasoning process. In the circumstances, there would be no point in granting the leave that was sought. Ground 2 should be rejected. Ground 3: Failure to take into account integer said to be relevant to assessment of capacity reasonably to relocate Under cover of Ground 3, which was not advanced before the Supreme Court, counsel for the appellant sought leave to contend that the Tribunal erred in failing to respond to the appellant's "substantial, clearly articulated argument" that he would and could not relocate to a place where his young family would not be safe, educated and provided for. That contention is untenable. There was no substantial, clearly articulated argument of the kind suggested and the Tribunal were not required to consider claims that were not clearly articulated or which did not clearly arise on the materials before them47. Leave should thus be refused. Relevantly, the furthest the appellant's evidence before the Tribunal went was as follows: 47 See and compare Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088 at 1092 [24] per Gummow and Callinan JJ (Hayne J agreeing at 1102 [95]); 197 ALR 389 at 394, 408; [2003] HCA 26. See generally NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) (2004) 144 FCR 1 at 18-20 [58], [60]-[61]; NAVK v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 124 at [31]; SZTQP v Minister for Immigration and Border Protection (2015) 232 FCR 452 at 463-464 [50]. Nettle "I had to travel back and forth between Lahore and Sialkut [sic] because the MQM had established a base in Sialkut [sic], so I did not feel safe there, and the MQM knew my address in Lahore, so I did not feel safe there either. I did not have any family anywhere else in Pakistan, so there was nowhere else I could go because it is too dangerous in Pakistan to attempt to relocate without a familial support network", and as follows: "In future, you know, I can see that I can't survive over there [in Punjab]. I have to educate my children. I have to [give] them a good education, look after them and establish myself and, given the situation and this – all the things I've told you, I cannot see [us] surviving and settling down in future at all. Like [the] MQM are still growing up in – like, before maybe not that much, but [they are] getting stronger in Punjab as well. They are opening up their offices in Punjab as well ... And unfortunately, any of those men, if they are there or come there, and I don't want to risk my life and my children's life because of that in future. And I tried my best that I don't get out of Pakistan, that I settle down with my family and my children and run my business in Pakistan. But I couldn't. That's why I had to leave." The furthest the appellant's submission on the point went before the Tribunal was as follows: "We submit that it would be very difficult for our client to obtain employment should he relocate within Pakistan. This would make it extremely difficult for him to subsist, especially with his wife and children as dependents, and thus we submit our client would be subjected to undue hardship should he attempt to relocate within Pakistan." The Tribunal then responded comprehensively to that evidence and submission as follows: "The Tribunal therefore accepts that there is a real possibility that the [appellant] will be harmed by Monir Tunda [sic] or his associates in Karachi. The Tribunal finds that the harm will arise for reasons of personal revenge, not for a Convention reason. However, the Tribunal accepts that state protection from the police or other authorities in Karachi may be inadequate or withheld from the [appellant] because of Monir Tunda's [sic] political connection and involvement with the MQM. Nettle ... The MQM's support base is largely confined to Urdu speakers in the main cities of Sindh, particularly Karachi and Hyderabad. The Tribunal accepts that the MQM has campaigned in Punjab and may have an office or a presence in Lahore and in Sialkot. However, the MQM was not successful in securing seats at the national or provincial level in Punjab in 2013 and has little or no influence or power outside Sindh. The Tribunal notes that Punjab has an estimated population of 91 million people and a number of large urban centres including Lahore which has an estimated population of over 6 million. Sialkot city, also in Punjab, has a population of about 500,000. The Tribunal notes that the [appellant] lived in Sialkot between 2003 and 2005 and during 2011 without experiencing any harm and that he lived in Lahore between 2010 and 2011 without experiencing any harm. In view of the absence of MQM power and influence in Punjab, the size of the population of Punjab, the existence of large urban centres such as Lahore and Sialkot and the fact that the [appellant] has previously lived in Lahore and Sialkot district without coming to any harm, the Tribunal is satisfied that he could live safely in Lahore or Sialkot or elsewhere in Punjab without a real possibility of harm from Munir Tunda or his associates of Munir Tunda [sic]. In relation to whether relocation is reasonable, the Tribunal notes Punjab is Pakistan's most prosperous province. It is ethnically diverse and has a large industrial and manufacturing base. The Tribunal notes that the [appellant] speaks and reads Urdu which is spoken widely throughout Punjab; that he was born in Punjab and that he speaks some Punjabi. The [appellant] claims that he was unable to find work in Sialkot. The Tribunal notes that the [appellant] confined his job search to the small village in Sialkot district he was residing in at the time and notes that large urban centres such as Lahore offer greater employment opportunities and access to services. The [appellant] has a portable skill and training [he held an electrical certificate and was a self-employed electrician and air conditioning mechanic between 2003 and 2011] and the Tribunal is satisfied that he could obtain employment in Lahore or Sialkot city. The Tribunal notes that the [appellant] has relatives living in Sialkot, a relatively short distance from Sialkot city; and that his wife's family also lives in Sialkot. The Tribunal also notes that Lahore is relatively close to Nettle Sialkot. The Tribunal is satisfied that the [appellant] has access to family support networks in Punjab. The Tribunal also notes that Punjab, including Lahore and Sialkot, is relatively secure ... and safer than Karachi which has been subject to ethno-political violence and targeted insurgency. Having regard to the information above, the Tribunal is satisfied that the [appellant] has family support in Punjab and will be able to find employment and accommodation in Punjab and live securely and establish a normal life there with his family and that, accordingly, relocation to Punjab is reasonably available to the [appellant]." (footnotes omitted) Counsel for the appellant contended that the Tribunal's findings on relocation were "vague and ambiguous" because the Tribunal did not identify where it was in Punjab – an area the size of Victoria, Australia, with a population of approximately 91 million people – that the appellant could reasonably relocate. That contention should also be rejected, for two reasons. First, the Tribunal were not required to identify the place of reasonable internal relocation with the degree of precision for which the appellant contended48. Secondly, the Tribunal did specifically identify both Sialkot and nearby Lahore as cities to which the appellant could reasonably relocate on the basis, inter alia, that he had lived in those cities in the past without harm befalling him, they were relatively secure, and the appellant could obtain employment and have access to family support networks in them. Counsel for the appellant argued that the Tribunal's reasoning was deficient because, in concluding that the appellant would have access to family support networks in Sialkot and nearby Lahore, the Tribunal evidently failed to take into account the appellant's evidence that when he had last lived in Sialkot he was only safe because he was in hiding. That argument must also be rejected. The appellant did not say that he was in hiding in Sialkot because he feared being harmed in Sialkot. He said that he was in hiding in Sialkot because he had been beaten in Karachi. And, as the Tribunal found, not only was Punjab, including Lahore and Sialkot, relatively 48 See Randhawa v Minister for Immigration, Local Government and Ethnic Affairs (1994) 52 FCR 437 at 440, 443 per Black CJ (Whitlam J agreeing at 453); Plaintiff M196 of 2015 v Minister for Immigration and Border Protection [2015] HCATrans 240 at 10-11 per Gordon J. Nettle more secure and safer than Karachi, which had been subject to ethno-political violence and targeted insurgency, but Sialkot was where the appellant's wife and children were living with her family. Finally on this aspect of the matter, counsel for the appellant submitted that the Tribunal's "passing, generalised reference to the [a]ppellant's 'family' or the ability to live a 'normal life'" was insufficient to demonstrate that the Tribunal had considered the appellant's objection that he would not be able reasonably to relocate his young children with their needs as a family. That submission is equally unpersuasive. As will be recalled, the only bases which the appellant advanced before the Tribunal for concluding that it was not reasonable to expect that he relocate were that he feared that the MQM would come after him and, perhaps implicitly, his family; he had no family elsewhere in Pakistan; and it was too dangerous to relocate without family support. The Tribunal effectively disposed of each of those arguments by their findings that the MQM would not pose a significant threat to the appellant's security, and thus implicitly his family's security, in Punjab; the appellant had family support networks in Punjab; and, because of the appellant's skills and the economic and social diversity of the area, he would be able to obtain employment there. In the circumstances, there is no point in granting the leave that was sought. Proposed Ground 4: No evidence to support critical finding As was also earlier noticed, counsel for the appellant sought leave to advance a further ground of appeal, proposed Ground 4, to the effect that there was no evidence to support what counsel described as the Tribunal's critical finding that "the MQM ... has little or no influence or power outside Sindh". Leave should be refused. As has been seen, the Tribunal's statement that the MQM had little or no influence or power outside Sindh formed part of their larger finding that: "[t]he MQM's support base is largely confined to Urdu speakers in the main cities of Sindh, particularly Karachi and Hyderabad. The Tribunal accepts that the MQM has campaigned in Punjab and may have an office or a presence in Lahore and in Sialkot. However, the MQM was not successful in securing seats at the national or provincial level in Punjab in influence or power outside Sindh." 2013 and has (footnote omitted) little or no In turn, as appears from the Tribunal's reasons, that finding was based on footnoted references to country of nationality information from the Immigration Nettle and Refugee Board of Canada and The Nation newspaper. Those sources were not adduced in evidence before the Supreme Court, and, just as they were not in evidence before the Supreme Court, they were not in evidence before this Court. Nor did counsel for the appellant suggest that the appellant should be permitted to tender those sources into evidence for the first time on appeal to this Court. He was right not to do so. In the circumstances, there is nothing to say that there was insufficient evidence to sustain the Tribunal's finding, and, accordingly, the argument in support of proposed Ground 4 must fail. Leave to advance Ground 4 should be refused. Conclusion The appeal should be dismissed with costs.

HIGH COURT OF AUSTRALIA APPELLANT AND NAURU LANDS COMMITTEE & ORS RESPONDENTS Clodumar v Nauru Lands Committee [2012] HCA 22 Date of Order: 20 April 2012 Date of Publication of Reasons: 20 June 2012 ORDER Extension of time allowed to enable this Court to hear and determine this appeal. Appeal allowed. Civil Action No 16/2000 is remitted to the Supreme Court of Nauru for retrial. The costs of the proceedings so far in the Supreme Court in Civil Action No 16/2000 to be in the discretion of that Court. The first respondent is to pay the appellant's costs of this appeal. On appeal from the Supreme Court of Nauru Representation D J Williams SC with L D D Keke for the appellant (instructed by Leo D. Keke, Solicitor and Notary Public) R M Niall SC with K L Walker for the first respondent (instructed by Department of Justice and Border Control) No appearance for second respondents Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Clodumar v Nauru Lands Committee High Court of Australia − Original jurisdiction − Matter arising under laws made by Parliament − Appeal from Supreme Court of Nauru pursuant to s 5 of Nauru (High Court Appeals) Act 1976 (Cth) − Supreme Court of Nauru held that transfer of land to appellant was invalid because President of Nauru had not approved transfer − After conclusion of proceeding in Supreme Court of Nauru appellant discovered document bearing President's signature and approving transfer to appellant − Whether fresh evidence can be received on appeal to High Court from Supreme Court of Nauru − Whether appellant could have discovered document by exercise of reasonable diligence at time of proceeding in Supreme Court of Nauru. Words and phrases – "appeal", "fresh evidence", "original jurisdiction". Constitution, s 76(ii). Nauru (High Court Appeals) Act 1976 (Cth), s 5. FRENCH CJ, GUMMOW, HAYNE AND BELL JJ. Introduction This appeal, which required the grant of an extension of time, was brought in the original jurisdiction of this Court against a decision of the Supreme Court of Nauru, delivered on 19 February 20021. The jurisdiction is conferred on this Court by s 5 of the Nauru (High Court Appeals) Act 1976 (Cth) ("the Nauru Appeals Act"). The decision of the Supreme Court effectively dismissed a challenge brought by the appellant to a decision of the Nauru Lands Committee ("the Committee") relating to land in which the appellant claimed an interest as an inter vivos transferee from their deceased owner. The Committee was established by the Nauru Lands Committee Act 1956 (Nauru) ("the Lands Committee Act"). It has power to determine "questions as to the ownership of, or rights in respect of, land"2. The short question raised by these proceedings was whether, on appeal from the Supreme Court of Nauru to this Court, it is open to this Court to receive evidence which was not before the Supreme Court. In this case the evidence was said to be fresh evidence not known to the appellant and not discoverable by the exercise of reasonable diligence on his part at the time of the proceedings the subject of the appeal. It was also said to be evidence directly negativing the critical finding of fact upon which the decision of the Supreme Court, adverse to the appellant, was based. On 20 April 2012, this Court granted the appellant the necessary extension of time, allowed the appeal and remitted the proceedings to the Supreme Court of Nauru for retrial. The reasons for that decision follow. Factual and procedural background The appellant is a citizen and former President and Minister of the Republic of Nauru. He commenced proceedings in the Supreme Court of Nauru in 2000. He claimed injunctive relief against the Committee to prevent it from giving effect to its decision published in the Government Gazette of 12 July 2000 1 Clodumar v Nauru Lands Committee, unreported, Civil Action No 16/2000, Supreme Court of Nauru, 19 February 2002. 2 Nauru Lands Committee Act 1956 (Nauru), s 6(1). The questions which the Committee can determine are questions arising between Nauruans or Pacific Islanders or between Nauruans and Pacific Islanders. Bell concerning the ownership of land described as one half of the lands known as "Dabodine" Portion 5 and "Iro" Portion 30, both at Yaren ("the disputed lands"). The appellant asserted that the disputed lands had been transferred to him in or about April 1999 by the late Mr Rick Burenbeiya, who died on 11 June 1999. Under s 3 of the Lands Act 1976 (Nauru) ("the Lands Act") the consent in writing of the President of Nauru ("Presidential Approval") is necessary to the transfer of any interest or estate in land in Nauru. Absent such consent the transfer is "absolutely void and of no effect"3. The appellant gave evidence on affidavit in the proceedings in the Supreme Court that "as a matter of course and of tradition and practice" the Committee acts on behalf of Naurans who want to transfer ownership of lands and applies to the President, on their behalf, for consent. That was not a statutory function of the Committee. On 13 April 1999, Mr Burenbeiya had written to the Committee asking it to "process for approval" the transfer of his half share in the disputed lands to the appellant. By a notice published in the Government Gazette of 20 October 1999, the Committee stated that it had ascertained that Mr Burenbeiya had been determined by previous decisions of the Committee to be the owner of lands which included the disputed lands. By the same notice, the Committee determined that Mr Burenbeiya's widow was a beneficiary of his estate in respect of those lands. On Mrs Burenbeiya's death, the Committee, apparently in the exercise of its statutory function, determined a distribution of her estate in relation to a number of pieces of land, including the disputed lands. That determination first appeared in Government Gazette Notice 209/2000 dated 12 July 2000 and listed a number of people as beneficiaries of the estate. The appellant commenced two related proceedings in the Supreme Court on 9 August 2000. The first, Action No 16/2000, named the Committee as the defendant. The second, Action No 17/2000, named the Curator of Intestate Estates as the defendant. On 10 August 2000, the Chief Justice issued an interlocutory injunction in Action No 16/2000 restraining the Committee from taking any action to implement its decision of 12 July 2000. It was not in dispute that the proceedings against the Committee in Action No 16/2000 were not by way of an appeal to the Supreme Court against a 3 Lands Act, s 3(4). Bell decision of the Committee. Under the law of Nauru no appeal would lie to this Court from a decision of the Supreme Court on such an appeal4. On 12 March 2001, Connell CJ directed that Actions 16 and 17 be heard together. Memoranda of appearance were filed for the defendants but no defences. On 19 February 2002, the actions were heard by Connell CJ. On that day the Chief Justice issued final orders in the proceedings against the Committee in Action No 16. There is no record of any orders made in respect of Action No 17. His Honour found that the asserted transfer from Mr Burenbeiya to the appellant had not been perfected because of the want of Presidential Approval, required by s 3 of the Lands Act. He also held that Mrs Burenbeiya only had a life interest in her husband's estate. The estate that should have been distributed consisted of Mr Burenbeiya's reversionary interests in the disputed lands. His Honour made orders directing that the Committee withdraw its Gazette Notice of 12 July 2000 and that it call a family meeting to determine the reversionary interests in the estate of Mr Burenbeiya. The appellant was to be invited to attend the meeting. There were before this Court two affidavits sworn by Mr David Lambourne, the Secretary for Justice and Border Control for the Republic of Nauru. He had reviewed the court files in Actions No 16 and 17 of 2000. He exhibited the Chief Justice's trial notes and prepared a typed transcript of them. He noted that at the hearing of the actions on 19 February 2002 the Committee was represented by its Chairman, Mr Leslie Adam. Mr Adam died in Nauru on 5 October 2011. Other than the entry of an appearance, there was no record of the Curator of Intestate Estates participating in Action No 17. According to Mr Lambourne, the current practice and the practice in 1999 was that any files relating to an application for transfer of land would have been held by the Department of Island Development and Industry5. Mr Lambourne noted in his affidavit that any records of the Department of Island Development and Industry that remain from 1999 are now held by the Department of Commerce, Industry and Environment. A search of the departmental records found no documents relating to this matter. 4 Appeals Act 1972 (Nauru), s 45(d). 5 According to Mr Lambourne, the Department of Island Development and Industry changed its name to the Department of Industry and Economic Development in April 2000. Bell On 28 February 2002, the Committee held a meeting of interested parties at which the appellant again raised his claim to the disputed lands. The Committee met again on 13 February 2009 and 18 February 2010. The reasons for this protracted process do not appear from the materials before this Court. On 2 June 2010, the Government Gazette a determination listing the second respondents as the beneficiaries of the estate of the late Rick Burenbeiya in respect of various pieces of land, including the disputed lands. The determination was replaced by another determination on 11 August 2010. Its purpose was to make a minor amendment by adding an additional beneficiary. the Committee published The appellant appealed to the Supreme Court of Nauru against the Committee's determination of 2 June 2010, as amended by that of 11 August 2010. The appeal was evidently made pursuant to s 7 of the Lands Committee Act. It was based upon the appellant's claim as transferee from Mr Burenbeiya, to be entitled to the disputed lands. That was the claim he had advanced before Connell CJ. The appeal came on for hearing in March 2011. The appellant was represented by Mr Keke. The Committee was represented by Mr Lambourne. According to the appellant's affidavit, in the course of the hearing while he was seated in Court, he was handed some documents by Mr Pres-Nimes Ekwona, who was a pleader of the Supreme Court of Nauru. The documents appeared to be copies of documents relating to submissions made to Cabinet in 1999 in relation to land transfers. One of the documents was a copy of a signed approval of various land transfers, including one executed by the former President of the Republic of Nauru on 21 May 1999. The appellant handed the documents to Mr Keke who sought to tender them to the Court. In the event, Eames CJ adjourned the further hearing of the appeal for mention at a callover and gave the appellant 28 days to initiate an application for leave to appeal to this Court against the decision of Connell CJ in Action No 16/2000. The appellant's account of events at the hearing before Eames CJ was supported by an affidavit sworn by Mr Ekwona and filed in these proceedings. Mr Ekwona said he had noticed the Presidential Approval among papers given to him by a client in connection with proceedings concerning other lands owned by the late Mr Burenbeiya. The issues in the appeal The issues on this appeal were: 1. Whether this Court could receive fresh evidence on an appeal from the Supreme Court of Nauru. Bell 2. Whether the Court should grant the extension of time necessary to allow the appellant to proceed with his appeal. 3. Whether the Court should receive the evidence of the Presidential Approval now relied upon by the appellant. The fresh evidence Before considering the issues, it is convenient to have regard to the evidence which this Court is now asked to receive. In an affidavit sworn on 18 May 2011 the appellant said that at the time of the hearing before Connell CJ the Committee informed the Court that there had been no Presidential Approval granted for the transfer of the disputed lands to the appellant. According to Mr Lambourne's affidavit, there was no record on the Court file or in the primary judge's notes that any representative of the Committee had so informed the Court. Mr Adam had died before Mr Lambourne could speak to him. The appellant said that he and his lawyer had tried, prior to the proceeding in the Supreme Court, to inspect government files relating to the transfer but were told by a legal representative of the Committee that if there was any such file it had been lost. The appellant exhibited to his affidavit the documents which, he said, had been given by Mr Ekwona on 22 March 2011. Among those documents were copies of signed approvals of transfers including an approval executed by the President on 21 May 1999. The document contained a recommendation for approval of certain transfers, including a transfer by Mr Rick Burenbeiya of "his share of coconut bearing lands to Mr Kinza Clodumar at folio 74". The appellant stated his belief that the document was a true copy of a genuine Presidential Approval. The Committee did not dispute its authenticity. The history of the document and an explanation for its unavailability appeared from an affidavit sworn on 7 December 2011 by Mr Namaduk, who was a Minister in the Cabinet of President Harris in May 1999. He recalled that there was considerable public discussion at the time of the need to regulate land transfers in Nauru. He also recalled the day upon which the approval for the transfer of the disputed lands was signed by the President. The appellant himself was a member of the Cabinet at the time, but did not attend the Cabinet meeting during discussions relating to the transfer. After approving the transfer among others, the President gave Mr Namaduk a file containing the approvals which he had signed. He asked Mr Namaduk to look after the file until Cabinet had completed its discussions on further regulation of such transfers. Mr Namaduk placed the file in his office and did not disclose its existence to other members of the Cabinet including the appellant. The file remained in Bell Mr Namaduk's office until President Harris' government lost office following its defeat on the floor of the Parliament in April 2000. Mr Namaduk then vacated his ministerial office and took with him boxes containing files, including the file relating to the transfer approvals which had been given to him by the President. In or about November 2011, following an approach from the appellant's solicitor, Mr Namaduk located the file. A copy of the contents of the file was exhibited to Mr Namaduk's affidavit. The exhibits included a copy of the Presidential Approval document given to the appellant by Mr Ekwona at the Supreme Court. That document did not itself specify the portions of the land whose transfer is approved, but refers to a folio number 74 on the file. The folio numbered 74, also exhibited to Mr Namaduk's affidavit, was a minute from the Committee setting out the proposed transfers and indicating that the Committee had no objection to their approval. The disputed lands were identified on that minute. On the face of it, the evidence that President Harris was asked to approve and did approve the transfer of the disputed lands to the appellant during the lifetime of Mr Burenbeiya was cogent. That conclusion did not mean that that evidence must be accepted. It was not tested in this Court. What, if any, weight is to be attributed to it will be a matter for the Supreme Court of Nauru to determine on retrial. But it is clear that if accepted the evidence could alter the outcome of the proceedings. There was also evidence tendered before this Court that there was little that the appellant could reasonably have been expected to do to ascertain the existence of the Presidential Approval at the time of the proceedings before Connell CJ. The appellant was represented in the Supreme Court by Mr Peter MacSporran, a legal practitioner in Australia and Nauru. The appellant had instructed him in July 2000 to advise in connection with the transfers of the disputed lands. His instructions were that the transferor had died before the Committee had done anything to give effect to the intention of the transferor to transfer the disputed lands. Mr MacSporran ascertained that no transfer had been gazetted. Although not a legal requirement, it was standard practice for all transfers to be gazetted once approved. In Mr MacSporran's experience, the Committee was always promptly informed when an application for approval of a land transfer had been approved or rejected. The fact that the Committee was unaware of the fate of the application for approval of the disputed lands indicated to him that the application had not been considered by the President. The proceedings in the Supreme Court were issued and conducted by both parties on the assumption that approval had not been given. Bell Mr MacSporran said that the Chairman of the Committee submitted to the Supreme Court that the transfers were invalid for want of the requisite approval. As noted above, there was no record on the Court file or in the trial notes of Connell CJ of any such statement by the Chairman. But then the notes did not record the Chairman. Mr MacSporran made other submissions, relying upon customary law and the proposition that the gift was in the class of donatio mortis causa. Those submissions were not accepted. the appearances of either Mr MacSporran or The extension of time The Committee opposed any extension of time on the basis that key witnesses are now deceased and its conduct of the case in this Court would be prejudiced. The President had died on 5 July 2008. The chairman of the Committee, Mr Adam, who appeared on behalf of the Committee in the proceedings before Connell CJ died on 5 October 2011. The Committee said it had no means of confirming or denying the evidence given by the appellant and is prejudiced in responding to it. The most critical evidence was that of Mr Namaduk who, according to his affidavit, resides in the Republic of Nauru. There was no suggestion that he would not be available, at a retrial in the Supreme Court of Nauru, to give evidence and to be cross-examined. On the material before this Court, the delay that occurred in this case was not the fault of the appellant. The prejudice to the appellant if an extension of time were refused was apparent. The prejudice to the Committee was not. In the circumstances, an extension of time was granted to enable the appeal to be heard and determined. The jurisdiction and powers of the High Court As a matter of Australian domestic law, the jurisdiction conferred upon this Court by s 5 of the Nauru Appeals Act, was original jurisdiction conferred pursuant to s 76(ii) of the Constitution6. The Nauru Appeals Act gives effect to an agreement, approved by the Act7, made between the Government of Australia and the Government of Nauru on 6 September 1976 ("the Agreement"). The Agreement is set out in the Schedule to the Nauru Appeals Act. Its Articles define the content of this Court's jurisdiction and are imported by reference into 6 Ruhani v Director of Police (2005) 222 CLR 489; [2005] HCA 42. 7 Nauru Appeals Act, s 4. Bell the Nauru Appeals Act8. The background leading to the making of the Agreement and to the enactment of the Nauru Appeals Act is set out in the judgments in Ruhani v Director of Police9. It was submitted for the Committee that the use of the term "appeal" in s 5, and the absence of any express power to receive evidence, indicates a legislative intention that an appeal under that section is an appeal in the strict sense and is to be decided on the basis of the primary record. There is no reason, either historical or constitutional, to burden the original jurisdiction conferred upon the High Court by s 5 of the Nauru Appeals Act with the restriction which limits the nature of the jurisdiction conferred by s 73 of the Commonwealth Constitution to that of an appeal in the strict sense. That characterisation of appeals under s 73 is of long standing10. The reasons for it were considered in Mickelberg v The Queen11 in relation to appeals from State Supreme Courts and again in Eastman v The Queen12 in relation to appeals against decisions of federal courts and other courts exercising jurisdiction. The reasons for the restriction included: 8 Nauru Appeals Act, s 5 read with Articles 1 and 2 of the Agreement. (2005) 222 CLR 489 at 502-506 [22]-[33] per McHugh J, 524-525 [95]-[99] per 10 Ronald v Harper (1910) 11 CLR 63; [1910] HCA 43; Scott Fell v Lloyd (1911) 13 CLR 230; [1911] HCA 34; Werribee Council v Kerr (1928) 42 CLR 1 at 20 per Isaacs J; [1928] HCA 41; Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73; [1931] HCA 34; Grosglik v Grant (No 2) (1947) 74 CLR 355 at 357 per Latham CJ, Rich, Dixon, McTiernan and Williams JJ; [1947] HCA 1; Mickelberg v The Queen (1989) 167 CLR 259; [1989] HCA 35; Eastman v The Queen (2000) 203 CLR 1; [2000] HCA 29; Keramianakis v Regional Publishers Pty Ltd (2009) 237 CLR 268 at 282 [39]; [2009] HCA 18. 11 (1989) 167 CLR 259. 12 (2000) 203 CLR 1. Bell The historical fact that at Federation a mere grant of appellate jurisdiction without more would not have been understood as carrying with it a power to receive further evidence13. The differentiation between original and appellate jurisdiction and the different provisions for their exercise in Ch III of the Constitution, reinforcing the notion that when it refers to the appellate jurisdiction, it is speaking of appeals in the true or proper sense14. Those considerations do not affect the construction of s 5 of the Nauru Appeals Act. As Gummow J observed in Eastman15: "the considerations which favour a power to permit further evidence on appeal are stronger at the level of a first rather than an ultimate appeal. Contrary to what once was the case, it is extremely unusual now for an appeal to be brought directly to this Court from a decision at first instance in a State Supreme Court." (footnote omitted) The present appeal brought in the original jurisdiction of this Court is, as the Nauru Appeals Act contemplates, an appeal against a first instance decision of a judge of the Supreme Court of Nauru exercising original jurisdiction. The dispositive powers which this Court can exercise in deciding an appeal under s 5 of the Nauru Appeals Act are set out in s 8 of that Act, in the same terms as the powers conferred upon the Court by s 37 of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). Both sections use the same heading "Form of judgment on appeal", although the Judiciary Act provision expressly relates to the exercise by the Court of "appellate jurisdiction". Section 8, like s 37 of the Judiciary Act, may be contrasted with s 31 of the Judiciary Act which empowers this Court in the exercise of its original jurisdiction to "make and pronounce all such judgments as are necessary for doing complete justice in any cause or matter pending before it". In Ruhani the 13 Mickelberg v The Queen (1989) 167 CLR 259 at 270 per Mason CJ; Eastman v The Queen (2000) 203 CLR 1 at 32-33 [104] per McHugh J, 61 [186] per Gummow J. 14 Mickelberg v The Queen (1989) 167 CLR 259 at 269 per Mason CJ, 297-298 per Toohey and Gaudron JJ, Brennan J agreeing at 274; Eastman v The Queen (2000) 203 CLR 1 at 26 [76] per Gaudron J, 97 [290] per Hayne J. 15 (2000) 203 CLR 1 at 64 [193]. Bell difference between ss 31 and 37 was said, by McHugh J, not to be "a conclusive indicator that the Court exercises appellate jurisdiction when it uses the power of disposition conferred by the Nauru Appeals Act."16 Nor is it a conclusive indicator of the content of the original jurisdiction conferred by that Act. As was observed in Ruhani the powers conferred by s 8 are analogous to those of a court exercising original jurisdiction in first instance review of an administrative decision17. Section 8 is neutral in relation to the nature of the jurisdiction conferred by s 5 of the Nauru Appeals Act. "Appeal" being a statutory term, the nature of the proceedings it describes varies according to its statutory context. As Hayne J said in Eastman18: "The word 'appeal' is now used to describe many different forms of proceeding: appeals on questions of law, appeals by way of rehearing, appeals by rehearing de novo, appeals which, on examination, can be seen to be an exercise of original jurisdiction." (footnotes omitted) Of particular significance in this context is the range of matters which may come before this Court in the exercise of the jurisdiction conferred by s 5 of the Nauru Appeals Act. As was submitted by the appellant, the Agreement and the Nauru Appeals Act provide for an appeal from a single judge of the Supreme Court of Nauru to this Court in civil matters which lies as of right, save for interlocutory appeals. There is, and at the time of the enactment of the Nauru Appeals Act was, no intermediate appeal court in Nauru. The absence of a leave requirement and the absence of any interposition of an intermediate appellate decision, where the appeal lies from the Supreme Court in its original jurisdiction, militates against a restrictive interpretation of the jurisdiction conferred upon this Court by s 5 of the Nauru Appeals Act. At the time that the Nauru Appeals Act was enacted, provision for the manner and form in which evidence in the exercise of its original jurisdiction was to be received was made by the High Court Procedure 16 (2005) 222 CLR 489 at 508 [43]. 17 (2005) 222 CLR 489 at 508 [43] per McHugh J, see also 528 [110] per Gummow 18 (2000) 203 CLR 1 at 97 [290]. See also Lacey v Attorney-General (Qld) (2011) 242 CLR 573 at 596-597 [57] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ; [2011] HCA 10; Turnbull v New South Wales Medical Board (1976) 2 NSWLR 281 at 297 per Glass JA. Bell Act 1903 (Cth)19. Similar provisions are now to be found in the Judiciary Act20. In the exercise of its original jurisdiction s 32 of the Judiciary Act confers on this Court power to grant such remedies as the parties are entitled to, so that all matters in controversy may be completely and finally determined. The immediate controversy here is whether the appellant should have the extension of time he seeks and whether this Court should receive the evidence of the Presidential Approval. To completely and finally determine that controversy requires the exercise of a power to receive new evidence. It is not necessary for present purposes to explore the limits of that power in an appeal against a decision of the Supreme Court of Nauru in its original jurisdiction. It suffices to say that the procedures of the common law courts21 provide an appropriate analogy and that this Court can receive evidence, properly the purposes of such an appeal. characterised as fresh evidence, for Acknowledging the variations of phraseology which have been used, Dixon J in "The fact which the new evidence tends to prove, if it does not itself form part of the issue, must be well nigh decisive of the state of facts upon which the issue depends. The evidence must be so persuasive of the existence of the fact it tends to prove that a finding to the contrary, if it had been given, would, upon the materials before the court, appear to have been improbable if not unreasonable." Further, the applicant for a new trial must show that no reasonable diligence upon his part would have enabled him or her to adduce the evidence upon the 19 High Court Procedure Act 1903 (Cth), ss 19-22. 20 Judiciary Act, ss 77G-77H. 21 CDJ v VAJ (1998) 197 CLR 172 at 184-185 [51], 196-199 [95]-[100]; [1998] HCA 22 (1948) 76 CLR 632 at 642; [1948] HCA 16. 23 (1948) 76 CLR 632 at 644 per Dixon J. Bell Conclusion The affidavit evidence relied upon by the appellant to support a finding that the requisite presidential approval had been given to the transfer of the disputed lands to the appellant was able to be received and was received in this Court. The evidence was not inherently improbable. On the face of it, it was evidence of some cogency. If accepted on a retrial in the Supreme Court, it would be very likely to determine the outcome of the civil proceedings commenced in that Court in 2000. Having regard to the circumstances in which the Presidential Approval was, in effect, concealed by a Minister of the Government at the time on the instructions of the President, the existence of the Presidential Approval could not have been discovered with the exercise of reasonable diligence on the part of the appellant prior to the hearing in the Supreme Court in 2000. For the preceding reasons, the appeal was allowed and the matter remitted to the Supreme Court of Nauru for further hearing and determination. There was no practical benefit in setting aside the orders made by Connell CJ. By implication, although not in terms, his Honour had dismissed the application for final injunctive relief. Although the interlocutory injunction against the Committee was discharged, no formal order dismissing the substantive application was made. The order of the Court was: Extension of time allowed to enable this Court to hear and determine this appeal. Appeal allowed. Civil Action No 16/2000 is remitted to the Supreme Court of Nauru for retrial. The costs of the proceedings so far in the Supreme Court in Civil Action No 16/2000 to be in the discretion of that Court. The first respondent is to pay the appellant's costs of this appeal. HEYDON J. This is an appeal against a decision of the Supreme Court of Nauru (Connell CJ) given on 19 February 2002. The decision related to an attempted transfer of certain lands. Connell CJ held that the attempted transfer was ineffective because the President of the Republic of Nauru had not approved the transfer. The appellant seeks to tender on the appeal a recently located document expressing a Presidential approval. The appeal is brought as of right under s 5 of the Nauru (High Court Appeals) Act 1976 (Cth) ("the Act"). The appeal is more than 9 years out of time24. That is a procedural irregularity25. But this Court has power to grant the appellant an extension of time26. The issues before this Court correspond with the first respondent's three basic submissions. First, the first respondent submitted that this Court has no power to receive fresh evidence on an appeal under s 5 of the Act. It argued that the reference to "appeals" in s 5 is a reference to appeals "in the strict sense" – appeals that are "to be determined on the material before the primary court [where] the introduction of fresh evidence is not permitted". The first respondent submitted that time should not be extended because without the fresh evidence the appeal is doomed to failure. Secondly, the first respondent submitted that even if this Court does have power to receive fresh evidence, the evidence in question does not meet the requirements that must be satisfied before the Court could receive it, and hence time should not be extended. Thirdly, the first respondent submitted that even if this Court does have power to receive fresh evidence and even if the requirements for doing so are satisfied, time should not be extended because of the prejudice this would cause the first respondent. I disagree with the orders made at the conclusion of oral argument. At least in these proceedings, the first submission of the first respondent should not be rejected. In the interests of brevity, this judgment will address only the appellant's arguments on this "fresh evidence" point. Those arguments can be grouped as follows. 24 High Court Rules 2004, rr 42.03(c) and 43.02. 25 High Court Rules 2004, r 2.03.1. 26 High Court Rules 2004, r 4.02. Section 8 of the Act The appellant contended that s 8 of the Act27 was a source of power for this Court to receive fresh evidence. That contention must be rejected. Section 8 deals with what orders this Court can make. But it is silent about what materials this Court can consider in deciding what orders it should make. The appellant submitted that s 8 of the Act requires this Court to apply the law of Nauru in hearing and determining the appeal28. The appellant submitted that the starting point in ascertaining the law of Nauru is the common law of England on 31 January 1968. He relied on s 4 of the Custom and Adopted Laws Act 1971 (Nauru) in support of this proposition. The key words in it are "the common law and the statutes of general application ... which were in force in England" on 31 January 1968. The appellant submitted that the appellate courts of England had power to receive fresh evidence. He argued that this Court "should ... adopt the same approach in relation to Nauru appeals." The first respondent attacked these submissions on the following convincing grounds. The jurisdiction and powers of this Court depend on the Act, not on the law of Nauru. The relevant question is whether the Act permits fresh evidence. The law of Nauru cannot affect whether the Act permits fresh evidence. In any event, the powers of English courts to receive fresh evidence in appeals arise not from the common law but from enactments. It is questionable whether those enactments are "statutes of general application" within the meaning of s 4. The appellant responded to these attacks by pointing to s 46 of the Courts Act 1972 (Nauru). It provided that in certain circumstances the Supreme Court of Nauru's jurisdiction is to be exercised in accordance "with the law and practice for the time being observed in England in the High Court of Justice". This has no bearing on how the High Court of Australia's jurisdiction is to be exercised in relation to the reception of fresh evidence on appeal from the Supreme Court of Nauru. The Constitution and circumstances of Nauru The appellant also relied on the Constitution of Nauru. Article 57(2) allowed for the possibility of appeals from the Supreme Court of Nauru to a court in a foreign country. The appellant submitted that the circumstances of Nauru were so totally different from those of Australia as to suggest that an appeal under s 5 of the Act was quite different from an appeal under s 73 of the 27 See above at [30]-[31]. 28 Ruhani v Director of Police (2005) 222 CLR 489 at 516 [66]; [2005] HCA 42. Constitution29. Fresh evidence cannot be tendered in an appeal under s 7330. The appellant submitted that in contrast it could be tendered in a s 5 appeal. He said that it was unlikely that there ever would be sufficient Supreme Court Judges in Nauru to permit appeals from one of them to an appellate court composed of the others. He submitted that s 73 of the Constitution was the product of inter-colonial jealousies about the jurisdiction of the State Supreme Courts which would succeed the colonial Supreme Courts. Even if it is legitimate to take these matters into account in construing the Act, which is questionable, they do not point to the construction that the appellant advocates. Apart from the fact that Art 57(1) of the Constitution of Nauru does contemplate appeals within the Supreme Court of Nauru, there are considerations of at least equal strength which point the other way. Nauru is a long way from Australia. To bring appeals from the Supreme Court of Nauru to this Court generates considerable expense. The reception of fresh evidence in this Court (including evidence from witnesses resident in Nauru which may have to be given and tested in cross-examination in Australia) would generate even greater expense and considerable inconvenience. No power to receive evidence The first respondent put the following argument: "there is no express power to receive evidence. Authority for an [appellate] court to receive further evidence must come from a grant of legislative power in addition to a mere grant of appellate jurisdiction.31 Historically, a simple grant of appellate jurisdiction required the court to determine whether the decision was correct on the facts and law existing at the time the primary decision was given.32 Appeals are creatures of statute and the source of the powers to receive fresh evidence must arise expressly or by implication from the statute that defines the conditions and limits the exercise of the power.33 In s 5 ... Parliament chose to style the 29 Section 73 of the Constitution provides that: "The High Court shall have jurisdiction, with such exceptions and subject to such regulations as the Parliament prescribes, to hear and determine appeals from all judgments, decrees, orders, and sentences" from various bodies which do not include the Supreme Court of Nauru. 30 See below at [53]-[59]. 31 Eastman v The Queen (2000) 203 CLR 1 at 33 [105]; [2000] HCA 29. 32 Eastman v The Queen (2000) 203 CLR 1 at 35 [111]. 33 Eastman v The Queen (2000) 203 CLR 1 at 11-12 [14] and 61-62 [186]. proceeding as an appeal without conferring any express power in the ... Act to admit fresh evidence." The first respondent also submitted that the "choice of the word 'appeal' combined with an absence of any power to receive evidence in relation to an appeal from Nauru should be seen as deliberate and a power to receive evidence should not be implied." Perhaps it would accord with "contemporary notions of justice"34 if this Court as the first and only tier of appellate review for some Supreme Court of Nauru decisions had the power to receive fresh evidence. Enactments commonly confer this power on intermediate appellate courts in Australia35. But justice makes different demands in different circumstances. In some circumstances, a legislative choice not to confer power to receive fresh evidence on an appellate court can be intelligible, whether critics agree with it or not. The measure of justice that the Act affords depends on its construction. The Act, construed in isolation, contains no express grant of power to receive fresh evidence. And it is difficult to discern in the Act, considered in isolation, any necessary implication that there is a grant of that power. It is true that the Act must be construed, not in isolation, but in its constitutional context. The right to appeal from the Supreme Court of Nauru to this Court is conferred by s 5 of the Act. The Act was enacted pursuant to the power granted by s 76(ii) of the Constitution36. Section 5 was not enacted pursuant to Parliament's power under s 73 of the Constitution to create exceptions and prescribe regulations in relation to the appellate jurisdiction of this Court. Section 5 thus conferred original jurisdiction on this Court. In Mickelberg v The Queen, Mason CJ said37: 34 Mickelberg v The Queen (1989) 167 CLR 259 at 270 per Mason CJ; [1989] HCA 35 See below at [70]. 36 Ruhani v Director of Police (2005) 222 CLR 489. Section 76 relevantly provides: "The Parliament may make laws conferring original jurisdiction on the High Court in any matter: arising under any laws made by the Parliament". 37 (1989) 167 CLR 259 at 269. "by differentiating between original and appellate jurisdiction and by making different provisions for their exercise, Ch III of the Constitution reinforces the notion that, when it refers to the appellate jurisdiction, it is speaking of appeals in their true or proper sense." It follows that appeals in the original jurisdiction are not necessarily appeals in what the first respondent called "the strict sense". In Mickelberg v The Queen38, Mason CJ also observed: "in 1900 or thereabouts a mere grant of appellate jurisdiction without more would not be understood as carrying with it a power to receive further evidence." But that proposition has no necessary application to a statute enacted in 1976 under s 76(ii) conferring a right of "appeal" in the original jurisdiction. A court hearing an appeal in the original jurisdiction can have a power to receive fresh evidence. Thus Gleeson CJ said in Eastman v The Queen39: "It is not uncommon for intermediate appellate courts in Australia, including Courts of Criminal Appeal, to have conferred upon them, by statute, power to receive and act upon evidence which was not before the court of first instance. When such a power is exercised, what is involved is an exercise of original rather than strictly appellate jurisdiction." However, Gleeson CJ went on to say40: "The relevant statute ordinarily defines the conditions and limits of the exercise of the power." The first respondent relied on the following statement of Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied Operations Pty Ltd v Australian "It was pointed out in [Re Coldham; ex parte] Brideson [No 2] that 'the nature of [an] appeal must ultimately depend on the terms of the statute conferring the right [of appeal]'." (footnote omitted) The statement in Re Coldham; ex parte Brideson [No 2]42 to which their Honours referred was made in the context of appeals against administrative decisions. But 38 (1989) 167 CLR 259 at 270. 39 (2000) 203 CLR 1 at 11 [14]. 40 (2000) 203 CLR 1 at 11 [14]. 41 (2000) 203 CLR 194 at 202-203 [11]; [2000] HCA 47. 42 (1990) 170 CLR 267 at 273-274 per Deane, Gaudron and McHugh JJ; [1990] HCA that statement, as widened by their Honours in the Coal and Allied case, supports the first respondent's contention that some statutory warrant must be found to justify the reception of fresh evidence on appeals from the Supreme Court of Nauru to the High Court, even though those appeals are in the original jurisdiction. Similarly, in CDJ v VAJ, McHugh, Gummow and Callinan JJ said that43: "apart from [a] special jurisdiction of the House of Lords, in the absence of statute there was and still is no basis for an appeal from a verdict of the common law courts. If a right of appeal is conferred by statute, the terms of the statutory grant determine the nature of the appeal and consequently the right, if any, to adduce further evidence on the appeal." (footnotes omitted) Hence even though, for the reasons Mason CJ gave in Mickelberg v The Queen, the appeal from the Supreme Court of Nauru to this Court is not necessarily an appeal in a "true or proper sense", there must be some statutory basis for concluding that on that "appeal" it is open to the parties to tender fresh evidence. The question is not whether the jurisdiction granted by s 5 should be construed amply, without any imposition on it of the restriction on fresh evidence which exists in s 73 appeals. The question is rather whether there is any provision attaching a power to receive fresh evidence to the jurisdiction granted by s 5. There is nothing in s 5, or in any other provision of the Act, or in any other statutory provision, indicating in terms that this Court has a power to receive fresh evidence. However, Gleeson CJ said the relevant statute "ordinarily" defines the "conditions and limits of the exercise of the power" to call fresh evidence. The word "ordinarily" implies that there are instances where there is a power to receive fresh evidence even though the relevant statute does not in terms grant the power or define the conditions and limits of its exercise. One instance may be the doctrine stated in Electric Light and Power Supply Corporation Ltd v Electricity Commission of New South Wales44: "[The legislation under consideration] takes the course of referring a particular matter for hearing and determination to an existing court established as part of the judicial system of the State, the proceedings of 43 (1998) 197 CLR 172 at 197 [95]; [1998] HCA 67. 44 (1956) 94 CLR 554 at 559 per Dixon CJ, McTiernan, Williams, Webb, Fullagar, Kitto and Taylor JJ; [1956] HCA 22. which are regulated by a statutory enactment and a body of rules, and the authority of which is amplified by some, and qualified by other, provisions of the enactment, one qualification being the duty to state a case upon a question of law if required by a party. When such a course is adopted it is taken to mean, unless and except in so far as the contrary intention appears, that it is to the court as such that the matter is referred exercising its known authority according to the rules of procedure by which it is governed and subject to the incidents by which it is affected." The first respondent relied on that doctrine for another purpose. But the appellant did not rely on it for the present purpose. When the Act came into force in 1976, procedure in this Court was regulated by the High Court Procedure Act 1903 (Cth) ("the Procedure Act"). Can the Electric Light and Power doctrine be applied to the Procedure Act? Section 20 of the Procedure Act, for example, provided: "(1) On the hearing of any matter, not being the trial of a cause, evidence may be given by affidavit or orally as the Court or Justice directs. (2) At the trial of a cause, proof may be given by affidavit of the service of any document incidental to the proceedings in the cause, or of the signature of a party to the cause or his solicitor to any such document. The High Court or a Justice may at any time for sufficient reason order that any particular facts in issue in a cause may be proved by affidavit at the trial, or that the affidavit of any person may be read at the trial of a cause, on such conditions in either case as are just. But such an order shall not be made if any party to the cause desires in good faith that the proposed witness shall attend at the trial for cross-examination." Section 21 provided: "Except as provided by the preceding provisions of this Act, or unless in any suit the parties agree to the contrary, testimony at the trial of causes shall be given orally in open court." Sections 20 and 21 have been repealed, but their substance now appears in s 77H of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). Is it open to this Court to find a power to receive fresh evidence by the following reasoning? When the Parliament gave the High Court jurisdiction to hear appeals from the Supreme Court of Nauru, the appeals were to be heard by the Court "exercising its known authority according to the rules of procedure by which it is governed and subject to the incidents by which it is affected."45 Among these procedures and incidents in 1976 was the introduction of affidavit or oral evidence pursuant to s 20 or oral testimony pursuant to s 21. The same procedures and incidents exist now under s 77H of the Judiciary Act. In relation to s 21, a critic of the postulated reasoning might object that even though an "appeal" from the Supreme Court of Nauru was in the original jurisdiction, it was not a "trial" of a cause. That objection could not apply to s 20(1), which applied to the hearing of any matter which was not a trial of a cause, as does s 77H(1). In Federal Commissioner of Taxation v Lewis Berger & Sons (Australia) Ltd, Starke J began his judgment with these words46: "This is an appeal by the Commissioner of Taxation from the decision of a Board of Review constituted under the Income Tax Assessment Act 1922-1925. Under sec 51(6) of that Act the appeal may be brought from any decision of the Board which, in the opinion of this Court, involves a question of law. The Board, in its proceedings, did not exercise the judicial power of the Commonwealth, but an administrative function, namely, that of reviewing the Commissioner's assessments for the purpose of ascertaining the taxable income upon which tax should be levied. The appeal to this Court submits the ascertainment of the taxpayer's liability to judicial review and ascertainment, but the so-called appeal is a proceeding in the original, and not within the appellate, jurisdiction of the Court. It follows, I think, that the parties on this appeal are not limited to the material that was before the Board of Review, but are entitled to adduce before this Court such evidence in support of, or in answer to, the appeal as is relevant to the matter. The material before the Board and its decision and reasons should be brought before this Court, and the parties may use this material if they so desire, but further or additional evidence may be adduced, or the appeal may be conducted as an original cause brought in this Court. A taxpayer, however, is limited by the Act, sec 51(2), in such proceedings, to the grounds stated in his objection to the assessment, and an appellant should be limited to the grounds of appeal stated in his 45 Electric Light and Power Supply Corporation Ltd v Electricity Commission of New South Wales (1956) 94 CLR 554 at 559. 46 (1927) 39 CLR 468 at 469-470; [1927] HCA 11, followed in Federal Commissioner of Taxation v Sagar (1946) 71 CLR 421 at 423-424; [1946] HCA 6; Commissioner of Taxation v Finn (1960) 103 CLR 165 at 167-168; [1960] HCA initiating process in this Court, that is, his notice of appeal, unless he obtain leave to amend it." It is not clear whether the view that fresh evidence could be received was argued or was agreed between the parties. The unusually tentative words "I think" suggest that it was not argued. Counsel for the Commissioner, in his reply, applied for leave to call evidence on a particular point. Starke J refused leave on the ground that the point was outside the grounds of appeal. Does Starke J's reasoning support the appellant in this appeal? One obstacle may be that an appeal to the High Court from a decision in the exercise of the judicial power conferred on the Supreme Court of Nauru is different from an "appeal" by way of judicial review of an administrative act. The appellant did not rely on the argument under consideration in any of his three sets of written submissions. He did not do so in his oral submissions either (though these were limited to questions of relief). Counsel for the first respondent was asked a single question about s 77H of the Judiciary Act. But counsel had no opportunity to conduct a calm and unhurried examination of the argument under consideration from the point of view of either principle or authority. Neither Starke J's decision nor any other authority was cited to this Court. Since the appellant did not rely on the argument, the first respondent was not concerned to refute it. It was for the parties to draw up the lines along which their battle was to be fought. They were entitled to limit themselves to those battle lines. Of course no court is bound by propositions of law on which the parties agree47. Similarly, no court is bound by the parameters of legal debate on which the parties settle. But if the outcome of litigation is going to depend on departure from the propositions or parameters the parties agree on, it is necessary that they be given notice sufficient to enable them to make a proper examination of principle and authority48. In particular, notice must be given to the party who will lose because of the departure – here the first respondent. It is undesirable to proceed much further with any examination of principle and authority without the assistance which events precluded counsel, particularly counsel for the first respondent, from giving in this case. For those reasons, the appellant ought not to succeed on the argument under consideration in the particular circumstances of this appeal. Before moving from that argument, however, there are three factors which might have to be evaluated in a case in which the argument was put. They are 47 Chilton v Corporation of London (1878) 7 Ch D 735 at 740; Damberg v Damberg (2001) 52 NSWLR 492 at 519 [149]. 48 Pantorno v The Queen (1989) 166 CLR 466 at 473; [1989] HCA 18. See also Rahimtoola v Nizam of Hyderabad [1958] AC 379 at 404 and 410. analysed on the assumption that the crucial provision is s 20(1) of the Procedure Act, though they apply with equal force if the crucial provisions are ss 20 and 21 of that Act read together. One factor is that s 20(1) appeared in Div 5 of Pt II of the Procedure Act. Part II was headed "Procedure of the High Court". Division 5 was headed "Evidence". None of the 10 Divisions of Pt II dealt in terms with appeals to the High Court. Part III, on the other hand, was devoted to "Appeals" to the High Court. Division 1 of Pt III dealt with "Security" and Div 2 dealt with "Procedure". But no provision of Pt III dealt with evidence. In 1903, it is likely that most, if not all, "appeals" to the High Court would have been s 73 appeals. This raises a doubt whether Pt II Div 5 was to be construed as applying to "appeals" under statutes enacted pursuant to s 76(ii). The second factor is that s 20(1) was enacted at a time which renders it highly unlikely that it was to be construed as applying to appeals to this Court from the Supreme Court of Nauru. In 1903, Nauru was a German colony. Australia was part of the British Empire. Appeals lay from Australian courts to the Privy Council. But no appeal lay from any non-Australian court to an Australian court. The tumultuous circumstances of the next 70 years – the outbreak of the First World War, Germany's loss of its colony, Nauru's successive passage through the League of Nations mandate system to Japanese occupation and then to the United Nations trustee system, the evolution of Nauruan and Australian independence, and the agreement of Nauru and Australia to establish a regime for appeals from the Supreme Court of Nauru to the High Court – are quite different from those which existed when the provisions were enacted. The third factor is that a construction of s 20(1), and now s 77H(1) of the Judiciary Act, as conferring a power to receive fresh evidence in "appeals" to this Court brought pursuant to statutes enacted under s 76(ii) is highly improbable in the absence of words defining the "conditions and limits of the exercise of the power", to use Gleeson CJ's expression. Legislation providing for the reception of fresh evidence in intermediate appellate courts very commonly contains words of that kind. Sometimes they consist simply in the grant of a simple discretion. One example is the simple discretion given by s 93A(2) of the Family Law Act 1975 (Cth), considered in CDJ v VAJ49. Another technique is found in the more 49 (1998) 197 CLR 172. See also the discretion given by the Federal Court of Australia Act 1976 (Cth), s 27, regulated by Federal Court Rules 2011, r 36.57, by the Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 64.22(3) and by the Supreme Court Civil Rules 2006 (SA), r 286(3)(a). The former O 63, r 10(1) of the Western Australian Supreme Court Rules gave "full discretionary power to receive further evidence". constrained discretion granted by the Supreme Court Act 1970 (NSW), s 75A(7)-(9)50. Those sub-sections provide that, although the Court of Appeal "may receive further evidence", save for evidence concerning matters occurring after a trial or hearing, the Court "shall not receive further evidence except on special grounds". What constitutes special grounds has been treated as resting on the same principles as those the common law courts applied to motions for a new trial on the ground of fresh evidence51. Dixon CJ summarised those principles in "It must be reasonably clear that if the evidence had been available at the first trial and had been adduced, an opposite result would have been produced or, if it is not reasonably clear that it would have been produced, it must have been so highly likely as to make it unreasonable to suppose the contrary. Again, reasonable diligence must have been exercised to procure the evidence which the defeated party failed to adduce at the first trial." An unusually elaborate discretionary regime is found in the Supreme Court Civil Procedure Act 1932 (Tas), s 48. It provides: "(1) On the hearing of any appeal a Full Court shall have power to receive further evidence upon questions of fact, and may take such evidence by oral examination in court or by affidavit, or may direct the same to be taken by a judge or an examiner, or a commissioner, or a judge of an inferior court of civil jurisdiction. (2) Upon appeals in interlocutory applications, or in any case as to matters which have occurred after the date of the judgment, order, or other determination from which the appeal is brought, such further evidence may be given without special leave. 50 See also Uniform Civil Procedure Rules 1999 (Qld), r 766(1)(c); Court Procedures Rules 2006 (ACT), r 5052(1)(c). 51 See, for example, Akins v National Australia Bank (1994) 34 NSWLR 155 at 160. The same approach has been taken to the expression "special grounds" in an enactment in England: Skone v Skone [1971] 1 WLR 812 at 815; [1971] 2 All ER 582 at 586. In CDJ v VAG (1998) 197 CLR 172 at 200 [105] McHugh, Gummow and Callinan JJ noted that the common law power was wider than that conventionally applied to statutes; see also Commonwealth Bank of Australia v Quade (1991) 178 CLR 134 at 140; [1991] HCA 61. 52 (1955) 93 CLR 435 at 444; [1955] HCA 16. (3) Upon any appeal from a judgment, order, or other determination given or made after the trial of any cause or matter on the merits, such further evidence (except as to matters which have occurred after the date of judgment, order, or determination) shall be admitted only by special leave of the Full Court, which shall only be granted in cases in which – the evidence was not in the possession of the party seeking to have it admitted, and could not by proper diligence have been obtained by him, before the termination of the trial; or there is some other special circumstance which, in the opinion of the Full Court, justifies the admission of it." If s 20(1) of the Procedure Act is to be construed as dealing with the tender of fresh evidence on "appeals" brought in this Court's original jurisdiction pursuant to legislation enacted under s 76(ii), what are the statutory words which define what Gleeson CJ called the "conditions and limits of the exercise of the power"53? There are none. Even if s 20(1) were read as dealing with fresh evidence in those appeals, it did not confer a discretionary power to receive fresh evidence. In this it differs from the enactments just discussed. Section 20(1) gave this Court power to control whether evidence was given by affidavit or orally. But it did not give power to prevent parties tendering evidence which was relevant and complied with the rules of admissibility so long as it was given either on affidavit or orally. It obliged the Court to receive the evidence. To find words creating restrictions on the reception of fresh evidence under s 20(1) and s 77H(1), it is necessary to add to the words which Parliament used, which are wholly inadequate for that purpose, numerous other words which Parliament did not use. Without words defining some conditions and limits, the right of appeal would create an opportunity, for example, to run the case advanced in the Supreme Court of Nauru entirely afresh in this Court. The parties could tender all evidence seen to be relevant, whether or not it was relied on in the Supreme Court of Nauru. It would mean that the right of appeal from the Supreme Court of Nauru to this Court is a right to a "hearing de novo". Mason J (Barwick CJ and Stephen J concurring) described a hearing de novo as one in which "even if it be the defendant who appeals, the [moving party below] starts again and has to make out his case and call his witnesses."54 In a hearing de novo the parties to the appeal are unrestrained by the limits of the evidence they called at the trial. If s 77H(1) were construed favourably to the appellant, the width of the power to receive fresh evidence in appeals from the Supreme 53 See above at [55]. 54 Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 at 620; [1976] HCA 62. Court of Nauru to this Court would be so extensive that the trials from which those appeals were brought could be employed as a mere rehearsal or warm-up or dummy run. It is extremely improbable that s 5 of the Act read with s 20(1) of the Procedure Act or with s 77H(1) of the Judiciary Act permits that outcome. If it did, to use Lord Chelmsford's words in Shedden v Patrick and the Attorney-General55: "it is obvious that parties might endeavour to obtain the determination of their case upon the least amount of evidence, reserving the right, if they have failed, to have the case re-tried upon additional evidence, which was all the time within their power." The words of Scrutton LJ in Nash v Rochford Rural Council are also relevant56: "in the interests of the State litigation should come to an end at some time or other; and if you are to allow parties who have been beaten in a case to come to the Court and say 'Now let us have another try; we have found some more evidence,' you will never finish litigation, and you will give great scope to the concoction of evidence." These three factors support the conclusion that ss 20 and 21 had nothing to do with s 76(ii) "appeals" from courts exercising judicial power, and that s 77H has nothing to do with them either. Sections 20 and 21 related to other types of proceedings in this Court's original jurisdiction. These proceedings include suits (defined in s 2 as including "any action or original proceeding between parties"), civil matters ("matter" being defined as including "any proceeding in a Court, whether between parties or not, and also any incidental proceeding in a cause or matter"), matters which are not the trial of causes, and trials of causes ("cause" being defined as including "any suit" and also "criminal proceedings"). In s 2 of the Judiciary Act, "suit", "matter" and "cause" are defined in the same way. These three factors may also support the conclusion that ss 20 and 21 were, and s 77H is, dealing with the form in which evidence, if receivable, may be received in the High Court. Sections 20 and 21 were, and s 77H is, not dealing with the question whether evidence may be given at all in particular High Court proceedings. Can the Electric Light and Power doctrine be applied to find a source for the reception of fresh evidence in s 32 of the Judiciary Act? It provides: "The High Court in the exercise of its original jurisdiction in any cause or matter pending before it, whether originated in the High Court or removed 55 (1869) LR 1 HL Sc 470 at 545. 56 [1917] 1 KB 384 at 393. into it from another Court, shall have power to grant, and shall grant, either absolutely or on such terms and conditions as are just, all such remedies whatsoever as any of the parties thereto are entitled to in respect of any legal or equitable claim properly brought forward by them respectively in the cause of matter; so that as far as possible all matters in controversy between the parties regarding the cause of action, or arising out of or connected with the cause of action, may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters may be avoided." The appellant did not rely on s 32. It was not otherwise drawn to the first respondent's attention before or during oral argument. It cannot, therefore, be taken into account adversely to the first respondent. Even if it were taken into account, it would not assist the appellant. Section 32 enables this Court in its original jurisdiction to grant those remedies to which the parties are entitled as necessary to achieve the goals set out in the provision. It does not stipulate what materials this Court is to have regard to in executing that mandate. There is a further point which was not argued. At common law it was possible, subject to the satisfaction of quite strict but not necessarily exhaustive conditions, to move for a new trial on the ground that fresh evidence had been discovered. That procedure was not by way of appeal57. The appellant did not invoke that procedure. Accordingly, the appellant presented no argument that this Court had power to receive fresh evidence and grant a new trial in accordance with the common law practice. Nor did the appellant seek to gain whatever support for such an argument could be gained from Deane J's dissenting judgment on s 73 appeals in Mickelberg v The Queen58. Conclusion Although the nature of the controversy in some other case may make it right to conclude that fresh evidence is receivable in a s 5 appeal, it is not right to do so in this case. On the assumption that fresh evidence is receivable, the appellant presented a very strong case for the view that the fresh evidence he relied on should be received and for the view that time should be extended. The respondent presented quite detailed arguments to the contrary. In view of the conclusion just reached, it is not necessary to deal with these competing arguments. 57 See CDJ v VAJ (1998) 197 CLR 172 at 196-199 [95]-[99]. 58 (1989) 167 CLR 259 at 276-281.

HIGH COURT OF AUSTRALIA REX BASHFORD AND APPELLANT INFORMATION AUSTRALIA (NEWSLETTERS) PTY LIMITED RESPONDENT Bashford v Information Australia (Newsletters) Pty Limited [2004] HCA 5 11 February 2004 Appeal dismissed with costs. ORDER On appeal from the Supreme Court of New South Wales Representation: R S McColl SC with M A Kumar for the appellant (instructed by Eakin McCaffery Cox) G O'L Reynolds SC with R G McHugh and A T S Dawson for the respondent (instructed by Corrs Chambers Westgarth) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. CATCHWORDS Bashford v Information Australia (Newsletters) Pty Limited Defamation – Defences – Common law defence of qualified privilege – Matter published conveying imputation defamatory of appellant in subscription publication – Where matter involved report of judicial proceedings – Where no claim for qualified privilege made under Defamation Act 1974 (NSW) – Whether qualified privilege available as a defence – Whether matter published on occasion of qualified privilege – Publication for reward – Publication of matter concerning occupational health and safety – Publication to subscribers – Subscribers professionally concerned with matters of occupational health and safety – Whether reciprocity of duty or interest – Whether defamatory matter sufficiently connected to the privileged occasion – Whether absence of availability of defence of fair and accurate report of judicial proceedings precludes availability of defence of qualified privilege. Defamation Act 1912 (NSW), s 29(1)(d), (e). Defamation Act 1958 (NSW). Defamation Act 1974 (NSW), ss 11, 22, 24. GLEESON CJ, HAYNE AND HEYDON JJ. Central to the resolution of the issues in this appeal is the proper application of principles regulating the availability of the common law defence of qualified privilege to a claim for defamation. The appellant sued the respondent in the Supreme Court of New South Wales for defamation. He alleged that the respondent had defamed him in a periodical it published called "Occupational Health and Safety Bulletin". The relevant text of the matter which the respondent published, and which the appellant alleged defamed him, is set out in the reasons of other members of the Court. Those reasons also describe the course of proceedings in the courts below. We need only repeat those matters which are necessary to explain our reasons. A jury found, and it is now not disputed, that the matter which the respondent published conveyed the following imputation, which was defamatory of the appellant: that the appellant had been found by the Federal Court of Australia liable to ACOHS Pty Ltd ("ACOHS") in damages and costs for causing that company harm and loss by publishing a false report concerning it. In fact, a company controlled by the appellant and his wife (R A Bashford Consulting Pty Ltd – "Consulting") had been found by the Federal Court to be liable to ACOHS. The appellant had not been a party to those proceedings and it follows that it was wrong to say that he, as distinct from his company, had been found liable. It is necessary to say something about the claim which ACOHS made against Consulting in the Federal Court. It concerned, among other things, the publication of a newsletter called "Infax". On 2 December 1993, Consulting and another company called Risk Management Concepts Pty Ltd published an item entitled "Chemwatch wins copyright case". The Federal Court found (and in its final orders declared) that in publishing this item, or causing it to be published, those companies engaged in conduct which contravened s 52 of the Trade Practices Act 1974 (Cth)1. The Court ordered Consulting, Risk Management Concepts Pty Ltd, and a third respondent (Mr Bialkower), to pay ACOHS $20,000 damages and to pay part of ACOHS' costs of the proceeding. Thus, the Federal Court found Consulting (but not the appellant personally) liable to ACOHS in damages and costs for causing it harm and loss. 1 Acohs Pty Ltd v R A Bashford Consulting Pty Ltd (1997) 144 ALR 528 at 558. Hayne It is important to identify the basis for that finding against Consulting. The "item" published in the "Infax" newsletter falsely asserted that "Chemwatch" (a competitor of ACOHS) had "successfully challenged in court ... for breach of copyright" two companies which used, on a database, material safety data sheets prepared by Chemwatch. The item said that entering the data sheets into the database was an "unlawful act ... in total disregard of copyright legislation". The item implied that ACOHS was one of the two companies concerned. In fact, however, Chemwatch had not succeeded in proceedings of that kind. Publishing, or causing to be published, the assertion, that entering material safety data sheets into a database had been judicially determined to breach copyright, was held by the Federal Court to be misleading or deceptive conduct contravening s 52 of the Trade Practices Act. (The Federal Court also reached a number of other conclusions about copyright in material safety data sheets and about licences to use that copyright material. The validity of those conclusions could not be and was not examined in this litigation.) The issues in this Court In this Court the appellant made three, related, contentions. First, it was submitted that the primary judge and the Court of Appeal erred in finding2 that the matter of which the appellant complained was published on an occasion of qualified privilege. Secondly, it was submitted that if the matter was published on an occasion of qualified privilege, that part of the matter which defamed the appellant was not sufficiently connected to the occasion to attract the defence. (The primary judge held3 that it was; the Court of Appeal divided on the point, holding by majority (Sheller and Hodgson JJA, Rolfe AJA dissenting) that the primary judge was not shown to have erred in this respect4.) Thirdly, it was submitted that the matter which defamed the appellant was an inaccurate report of court proceedings and that, because the report was inaccurate, the defence of qualified privilege could not be engaged. Before dealing with these arguments in the order stated it is necessary to refer to Pt 3 of the Defamation Act 1974 (NSW) which deals with defences in 2 Bashford v Information Australia (Newsletters) Pty Ltd [2000] NSWSC 665 at [24] per Davies AJ and, on appeal, [2001] NSWCA 470 at [1] per Sheller JA, [32] per Hodgson JA, [54] per Rolfe AJA. [2000] NSWSC 665 at [24]. [2001] NSWCA 470 at [2]-[4] per Sheller JA, [32]-[44] per Hodgson JA; cf [55]-[57] per Rolfe AJA. Hayne civil proceedings for defamation5. Division 2 provides6, among other things, that it is a defence to any imputation complained of that it is published under qualified privilege. Division 2 identifies7 both when an imputation is published under qualified privilege and what is an occasion of qualified privilege. The application of the provisions of Div 2 of Pt 3 of the Act was not in issue in the appeals to the Court of Appeal or this Court. On appeal, the respondent did not rely on the statutory defence of qualified privilege. Rather, consonant with s 11 of the Act (that the provision of a defence by Pt 3 "does not of itself vitiate, diminish or abrogate any defence" available apart from the Act), the respondent contended that the primary judge had correctly concluded that the common law defence of qualified privilege was available to it. An occasion of qualified privilege? The principles to be applied in determining whether the occasion of publication of matter about which complaint is made was an occasion of qualified privilege are well known. The authorities that state those principles are equally well known8. Frequent reference is made to the statement of Parke B in Toogood v Spyring9: "In general, an action lies for the malicious publication of statements which are false in fact, and injurious to the character of another (within the well-known limits as to verbal slander), and the law considers such publication as malicious, unless it is fairly made by a person in the discharge of some public or private duty, whether legal or moral, or in the conduct of his own affairs, in matters where his interest is concerned. In such cases, the occasion prevents the inference of malice, which the law draws from unauthorized communications, and affords a qualified defence depending upon the absence of actual malice. If fairly warranted by any such reasonable occasion or communications are protected for the common convenience and welfare and honestly made, exigency, 6 By s 15(2)(b). In s 14. 8 Toogood v Spyring (1834) 1 Cr M & R 181 [149 ER 1044]; Adam v Ward [1917] (1834) 1 Cr M & R 181 at 193 [149 ER 1044 at 1049-1050]. Hayne of society; and the law has not restricted the right to make them within any narrow limits." Reciprocity of duty or interest is essential10. These principles are stated at a very high level of abstraction and generality. "The difficulty lies in applying the law to the circumstances of the particular case under consideration"11. Concepts which are expressed as "public or private duty, whether legal or moral"12 and "the common convenience and welfare of society"13 are evidently difficult of application. When it is recognised, as it must be, that "the circumstances that constitute a privileged occasion can themselves never be catalogued and rendered exact"14, it is clear that in order to apply the principles, a court must "make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication"15. The primary judge's reasons did not identify the particular circumstances of the case which made the occasion of publication one of qualified privilege. His Honour did cite the well-known statements of Lord Atkinson in Adam v Ward16 and noted17 that the subjects and issues dealt with in the matter which the respondent had published were of interest to persons operating in the field of occupational health and safety. It may be that argument at trial was understood as focused more upon other issues, such as malice, than it was upon whether the occasion was one of qualified privilege. 10 Adam v Ward [1917] AC 309 at 334. 11 Macintosh v Dun (1908) 6 CLR 303 at 305 per Lord Macnaghten; [1908] AC 390 12 Toogood v Spyring (1834) 1 Cr M & R 181 at 193 per Parke B [149 ER 1044 at 13 Toogood v Spyring (1834) 1 Cr M & R 181 at 193 per Parke B [149 ER 1044 at 14 London Association for Protection of Trade v Greenlands Ltd [1916] 2 AC 15 at 22 per Lord Buckmaster LC. 15 Guise v Kouvelis (1947) 74 CLR 102 at 116 per Dixon J. 16 [1917] AC 309 at 334. 17 [2000] NSWSC 665 at [22]. Hayne In the Court of Appeal, however, a deal of attention was directed to identifying the circumstances which made the occasion of publication a privileged occasion. Five features of the circumstances of publication were noted by Hodgson JA who, in this respect, stated the reasons of the Court. First, occupational health and safety was identified as a matter of importance for the common convenience and welfare of society18. Secondly, the communication of matters relevant to that issue to persons responsible for occupational health and safety was said to promote that common convenience and welfare19. Thirdly, it was noted that the respondent's publication was a subscription periodical distributed to persons responsible for occupational health and safety, and not to a wider audience20. Fourthly, it was said that having accepted subscriptions, the respondent was morally and legally obliged to publish for its subscribers matters of significance on the topic21. Finally, it was said that the Federal Court's decision on the claim made by ACOHS for damages for contravention of s 52 was a matter of significance on the topic of occupational health and safety22. The appellant submitted both in this Court and in the Court of Appeal that there was not the necessary reciprocity of duty or interest to make the occasion of publication privileged. It was emphasised that the respondent was a publisher for profit. The appellant submitted that any duty or interest which the respondent had was created by itself; the respondent and its subscribers had no interest in common, so it was said, save that provided by the subscription contracts they had made. The significance of a profit motive Reference must be made, and was made in argument in this Court, to the advice of the Privy Council in Macintosh v Dun23 and the decision of this Court in Howe & McColough v Lees24. But attention cannot be, and was not, confined 18 [2001] NSWCA 470 at [32]. 19 [2001] NSWCA 470 at [32]. 20 [2001] NSWCA 470 at [33]. 21 [2001] NSWCA 470 at [32]. 22 [2001] NSWCA 470 at [32]. 23 (1908) 6 CLR 303; [1908] AC 390. 24 (1910) 11 CLR 361. Hayne to those two decisions. Both must be set in the general fabric of the law relating to qualified privilege. Each concerned mercantile references. Macintosh concerned a reference given by a trade protection society, or mercantile agency, to one of its subscribers about the commercial "standing, responsibility, [et cetera]" of a trader for the purpose "of aiding [the subscriber] to determine the propriety of giving credit" to the trader25. It was ultimately held that the reference was not made on an occasion of qualified privilege. In giving the advice of the Privy Council, Lord Macnaghten emphasised that the information upon which a mercantile agency would base its reference about a trader's standing would include confidential information. His Lordship referred26 to the possibility that such information would be extorted from the trader, or would come from gossip, discharged servants or disloyal employees. Accordingly, although it would be convenient for a subscriber, who was also a trader, to know what Lord Macnaghten described27 as "all the secrets of his neighbour's position, his 'standing', his 'responsibility', and whatever else may be comprehended under the expression 'et cetera'", the good of society did not require that disclosure of such information for profit be privileged. The fact that the mercantile agency was in the business of providing the information was evidently an important consideration leading to denial of the claim to privilege. It would be wrong, however, to isolate that element of profit and conclude that it will, in every case and without more, deny the availability of a defence of qualified privilege. In Macintosh, further elements were identified: the disclosure of confidential information would be sought, and it would likely be sought by means condemned as at least inappropriate, if not unlawful. While these further considerations were seen as following from the existence of the profit motive, they were considerations critical to the conclusion that the occasion was not privileged. In Howe & McColough the members of an association of stock salesmen had contracted with each other to supply information about the default of any purchaser of stock. Failure to fulfil that obligation to supply information rendered a member of the association liable to forfeit a sum of money. There was, therefore, at least that commercial spur to the performance of the obligation 25 (1908) 6 CLR 303 at 304; [1908] AC 390 at 398. 26 (1908) 6 CLR 303 at 307; [1908] AC 390 at 400. 27 (1908) 6 CLR 303 at 307; [1908] AC 390 at 401. Hayne interest the association had an as well as the self-interest in avoiding future defaults. This Court held that each member of in making and receiving communications of information about default. It was held, therefore, that the publication occurred on a privileged occasion, there being the necessary reciprocity of duty or interest. The Court distinguished Macintosh. O'Connor J said28 that the Privy Council's decision in Macintosh was to be understood as authority for no more than the proposition that "an individual, or an association or corporation, that makes a business of collecting information about traders' credit and selling it for reward to other traders has no privilege to communicate defamatory matter in the information". Macintosh does stand for that proposition, but does it, as the appellant contended here, stand for some wider proposition? In both Macintosh and Howe & McColough, the maker and the recipient of the communication which was held to have defamed the plaintiff made or received the communication pursuant to contractual obligations which each had voluntarily assumed. In both cases, the maker and the recipient of the communication were in business and the communication related to a business transaction. In both cases, the maker and the recipient had a business reason (that is, a profit motive) for making or receiving the communication. Yet in Howe & McColough it was held that there was mutual duty or interest, whereas in Macintosh it was held that there was not. The Full Court of New South Wales had held in Macintosh29 that reciprocity of duty or interest was established. Pring J, who gave the reasons of the Full Court, said that because there was a contract to supply the information, the mercantile agency was under a legal duty to supply to the subscriber making the inquiry whatever information the agency had. He rejected the proposition that, because the mercantile agency was paid for its information, there could be no privilege. He described this argument as amounting to saying "that the higher the duty the less the protection"30. On appeal to this Court this analysis was substantially affirmed31. It is important to recognise that, in rejecting the analysis made in the Full Court of New South Wales and this Court, the Privy Council did not endorse the 28 (1910) 11 CLR 361 at 373. 29 Macintosh v Dun (1905) 5 SR (NSW) 708. 30 (1905) 5 SR (NSW) 708 at 718. 31 Dun v Macintosh; Macintosh v Dun (1906) 3 CLR 1134. Hayne proposition urged in the Full Court that payment for information necessarily denies that the occasion of its communication is privileged. Nor did the Privy Council hold that the voluntary assumption of obligations (whether by contract or otherwise) is necessarily inconsistent with the existence of mutual duty or interest. What distinguished Macintosh from Howe & McColough was the nature of the information conveyed and the manner of its collection. In Macintosh, information which included private or confidential material gathered from and about third parties was being conveyed; in Howe & McColough, information about a transaction to which the maker of the statement was a party was passed on. In Macintosh, the fear was that inappropriate methods would be used to assemble the information; in Howe & McColough, the person who made the communication already possessed the relevant knowledge. In his reasons in the present case Hodgson JA said32 he accepted "that one cannot create a licence to oneself to defame other persons by undertaking a contractual obligation to supply information". Divorced from its context, that proposition might be misunderstood. Macintosh does not establish that proposition and, expressed as it was, it might be understood as misstating the place of qualified privilege in the law of defamation. Qualified privilege gives no licence to defame. It denies the inference of malice that ordinarily follows from showing that false and injurious words have been published. If the occasion is privileged the further question which arises is whether the defendant "has fairly and properly conducted himself in the exercise of it"33. In a trial of all issues in a defamation action by judge and jury, the question whether the occasion is privileged is a question of law for the judge; the question whether the occasion was used for the purpose of the privilege is a question of fact for the jury34. That is, it is for the jury in such a trial to decide the issue of malice. If the judge rules that the occasion is privileged, "the burden of shewing that the defendant did not act in respect of the reason of the privilege, but for some other and indirect reason, is thrown upon the plaintiff"35. But if the occasion is held to have been privileged, the question of malice will ordinarily remain to be answered. If that is so, it cannot be said that the defendant had some licence to defame. 32 [2001] NSWCA 470 at [32]. 33 Guise v Kouvelis (1947) 74 CLR 102 at 117 per Dixon J quoting Dickson v Earl of Wilton (1859) 1 F & F 419 at 426 per Lord Campbell CJ [175 ER 790 at 793]. 34 Guise v Kouvelis (1947) 74 CLR 102 at 117 per Dixon J. 35 Clark v Molyneux (1877) 3 QBD 237 at 247 per Brett LJ. Hayne Was there, in this case, that reciprocity of duty or interest between maker and recipient of the matter of which complaint was made which would make the occasion of its communication privileged? What legal, social, or moral duties or interests were engaged between the respondent as publisher and those subscribers to whom it published its Bulletin? The respondent described its Bulletin, on the masthead of the publication and in the advertising material it distributed, as a "plain English guide to workplace health and safety". The subscribers to the Bulletin were persons responsible for health and safety in the workplace, not any wider audience. By accepting subscriptions, the respondent undertook to publish a periodical of the kind it described – a guide to workplace health and safety. The subject of the guide was rightly identified in the Court of Appeal as important to society as a whole. The dissemination of information about that subject to those responsible for it was rightly held by the primary judge and the three judges in the Court of Appeal as advancing the common convenience and welfare of society. The matter of which complaint was made concerned the use which persons other than the copyright owner might make of material safety data sheets containing safety information about hazardous materials. The facts that the respondent voluntarily embarked on its publishing venture and charged subscribers for its Bulletin required no different answer. There will be cases where an occasion is privileged but where both maker and recipient of the matter complained of have voluntarily undertaken the reciprocal duties which make the occasion privileged. Howe & McColough was such a case. Sometimes, as again was the case in Howe & McColough, there may be a contract between the maker and the recipient. Unlike Macintosh, however, no adverse consequence followed in this case from the publisher having a motive to profit from the publication. The material which the respondent sought to publish was not, as Lord Macnaghten described the subject of the respondents' business in Macintosh, "the characters of other people"36. Rather, the material concerned how to keep people safe from workplace injury. What set the respondent's Bulletin apart from some other paid publications was the narrow focus of both its subject matter and its readership. Because its subscribers were only those responsible for occupational health and safety matters, and because it dealt only with those matters, there was that reciprocity of duty or interest between maker and recipient which attracted qualified privilege. The circumstances of publication were, therefore, very different from those in 36 (1908) 6 CLR 303 at 306; [1908] AC 390 at 400. Hayne which the general news media deal with matters of political or other interest. The premise for the development of the common law that was made in Lange v Australian Broadcasting Corporation37 was that only in exceptional cases had the common law recognised a duty to publish or interest in publishing defamatory matter to the general public38. To hold that the occasion of publication of the matter complained of in this matter was privileged does not challenge that premise. In the present matter there was no publication to the general public. The occasion of the publication of the matter of which the appellant complained was rightly held in the courts below to be a privileged occasion. Connection with a privileged occasion As noted earlier, the Court of Appeal divided in opinion about the second of the issues argued in this Court: whether the matter which defamed the appellant was sufficiently connected to the privileged occasion to attract the defence. The majority of the Court of Appeal was right to conclude that it was. Whether other statements, in other subscription journals, would attract such a defence is a matter to be decided as and when the occasion arises, according to the facts of the particular case. The article published in the respondent's Bulletin was entitled "MSDS copyright case dismissed". (Material safety data sheets are often called "MSDS".) The first paragraph of the article read: "Material safety data sheets should not be too restricted by copyright – they should as much as possible be available to enforce OH&S, according to a Federal Court ruling in the past fortnight." The article then contained extensive quotations from the Federal Court's reasons for decision in the ACOHS case as well as commentary on what had been decided. The article said that ACOHS had sued the publishers of the Infax newsletter "which had printed a report claiming ACOHS was one of two companies Bialkower copyright successfully prosecuted infringement". It went on to say that the publishers "had engaged in false and misleading conduct by publishing an incorrect report". for MSDS 37 (1997) 189 CLR 520 at 570. 38 Duncombe v Daniell (1837) 8 Car & P 222 [173 ER 470]; Adam v Ward [1917] AC 309; Chapman v Ellesmere (Lord) [1932] 2 KB 431; Telegraph Newspaper Co Ltd v Bedford (1934) 50 CLR 632; Lang v Willis (1934) 52 CLR 637; Radio 2UE Sydney Pty Ltd v Parker (1992) 29 NSWLR 448; Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211 at 261. Hayne The matter of which the appellant complained had as its subject the use that persons other than the copyright owner might make of material safety data sheets. That subject was evidently connected to occupational health and safety. The particular parts of the matter published by the respondent which defamed the appellant related to that subject. The defamatory matter related to the subject because it, like the rest of the matter published, concerned the use that others might make of material safety data sheets. It said that to assert that there had been "successful[] prosecut[ion] for MSDS copyright infringement" had been held to be "false and misleading conduct". That the article wrongly identified the appellant as having published this assertion did not alter or reduce the connection between the privileged occasion and the defamatory matter. Communication of the statement, that to assert successful prosecution for MSDS copyright infringement had been held to be false and misleading conduct, fulfilled the reciprocal duties or interests of the parties in the communication of information about occupational health and safety. An inaccurate report of court proceedings The appellant submitted that a defence of qualified privilege was not available because the defamation was contained in what purported to be, but was not, a fair and accurate report of court proceedings. It was said that the "doctrinal basis for the defence of fair and accurate report of court proceedings is such that it axiomatically eclipses any particular relationship" which might found a defence of qualified privilege. This, the third of the issues argued in this Court, can be dealt with shortly. The defences of qualified privilege and fair and accurate report have developed separately and differently39. That separate development may have occurred only in the nineteenth century40, but it was inevitable. Each form of defence assumes the making of a defamatory statement. The focus of the defence of fair and accurate report, however, is necessarily directed to the quality of a report of what has taken place elsewhere. By contrast, because qualified privilege extends to all manner of communications between persons, its focus is upon what duty or interest joined the parties, and how the defamatory material related to the privileged occasion. 39 Curry v Walter (1796) 1 B & P 525 [126 ER 1046]; R v Wright (1799) 8 TR 293 40 Bellino v Australian Broadcasting Corporation (1996) 185 CLR 183 at 215 per Dawson, McHugh and Gummow JJ. Hayne Because the two defences are so different, and are directed to radically different problems, one is not to be understood as superior to the other. Each has its proper work to do. When, as here, it is thought that the two may intersect in some way, it is important not to begin from some assumption that only one can be engaged. Yet that was the premise for this aspect of the appellant's argument: that unless the respondent's report of the court proceedings brought by ACOHS was fair and accurate, the respondent could have no defence of qualified privilege. The premise should be rejected. It is right to say that because the report was inaccurate (in describing the individual rather than his company as publisher) the respondent could not rely on a defence of fair and accurate report of court proceedings. But it by no means follows that no other defence was available. Contrary to the appellant's submissions, what was called "the internal coherence of the law of defamation" does not require that conclusion. The separate development of the defence of qualified privilege and the defence of fair and accurate report reveals that to be so, and nothing in the Defamation Act denies it. As noted earlier, s 11 of that Act says that the provision of a defence by Pt 3 of the Act "does not of itself vitiate, diminish or abrogate any defence or exclusion of liability available apart from this Act". The defence of qualified privilege was available. The absence of a defence of fair and accurate report of judicial proceedings required no different conclusion. The appeal should be dismissed with costs. McHugh 36 McHUGH J. "When New York Times Co v Sullivan was decided, Alexander Meiklejohn, the philosopher of free speech, said it was 'an occasion for dancing in the streets.'" So wrote Anthony Lewis, the legal columnist for the New York Times, in his book Make No Law: The Sullivan Case and the First Amendment41. Australia has no First Amendment to celebrate. But, as it appears to me, the majority decision in this case goes beyond any decision that could be rendered under the First Amendment. It may not cause any dancing in the streets, but it is likely to be celebrated in the offices of the publishers of subscription magazines dealing exclusively with subjects of public interest and it will almost certainly be celebrated beyond that newly privileged group of publishers. The majority decision holds that an occasion of qualified privilege arises when matter is voluntarily published to subscribers concerning a subject of public interest, if the subscribers have a business or professional responsibility for that subject. If they have that responsibility, the occasion is privileged even where, as here, the subject matter is described at a high level of abstraction – "occupational health and safety" or a "guide to workplace health and safety". It is possible to imagine more abstract statements of a subject of public interest, but there is certainly nothing concrete in the description of the subject matter in this case. Thus, the majority decision appears to protect the extensive publication of defamatory statements, true or false, that can be related to a widely defined subject of public interest when they are published to persons who have some responsibility for matters falling within the subject of interest. At least inferentially, the majority decision also holds that the occasion is privileged even though the defamatory matter is not itself part of the subject of public interest and no part of that subject contains defamatory matter. Necessarily involved in the majority decision, given the facts of the case, is the holding that qualified privilege protects defamatory matter even though it is merely explanatory of, or related or incidental to, the subject of public interest and would not be published on an occasion of qualified privilege if published by itself. Indeed, the judgment of the Court of Appeal, which the majority decision affirms, expressly held that it was sufficient that the defamatory matter was explanatory of the subject of public interest. Nor did it matter, in the Court of Appeal's view, that the defamatory matter would not be published on an occasion of qualified privilege if published by itself. The majority decision also appears to treat the publication of the subscription magazine itself, and not the publication of the article that gave rise to the defamation, as the occasion of qualified privilege. So the present case will inevitably stand as authority for the proposition that a paid-for communication such as a safety bulletin containing defamatory McHugh matter relating to occupational health and safety matters sent to subscribers responsible for occupational health and safety matters is published on an occasion of qualified privilege. The result is that principles applied by common law judges for 200 years, principles that were carefully crafted to balance the competing demands of protection of reputation and freedom of speech, have been outflanked, if indeed their substance has not been repudiated. Certainly, the decision blunts the application of those principles. The consequences of the majority decision may be far reaching. At the least, it must mean that trade and professional journals sent to paid subscribers are published on an occasion of qualified privilege and that defamatory imputations concerning any person that can be related to that trade or profession are protected communications. A medical journal that falsely stated that a person had died because of a particular doctor's negligent diagnosis would therefore be a protected communication. So would a legal journal that falsely reported the professional misconduct of a practitioner or judge or the incompetence of a journalist writing on legal matters. Except in those cases where the plaintiff can prove malice, the defendant will escape liability without the necessity to prove truth or fair comment. The majority decision asserts that finding qualified privilege in this case is no licence to defame. But it is certainly a licence for the stupid and careless, as well as the ignorant, to defame. Ignorance, carelessness and stupidity are not evidence of malice, and their presence does not destroy an occasion of qualified privilege. Once the occasion is privileged, the protection will not be defeated because the publisher was ignorant, careless or stupid. in respect of health and consumer matters. Moreover, it is difficult to see how the effect of the decision can be confined to trade and professional journals. Any subscription magazine concerning general health and consumer matters would seem to fall within the ambit of the decision, at all events if the subscribers are mainly persons who have Specialist responsibilities publications concerning companies sent to investors, credit officers and other persons responsible for financial matters are also arguably within the ambit of the decision. And it may well be that the publication of a trade union or trade association journal to members of organisations responsible for advancing and protecting the interests of those members is published on an occasion of qualified privilege. Indeed, there are numerous instances of subscription journals dealing with matters of public importance or interest. The potential scope of this decision's application in those cases is very great, particularly where persons responsible for matters pertaining to that subject matter are the chief recipients of the journals. McHugh The issues The appeal, which is brought from an order of the Court of Appeal of New South Wales, gives rise to two questions of public importance and one subsidiary question in the law of defamation. First, if the law of qualified privilege would otherwise protect defamatory matter, is the privilege lost if that matter is contained in a report of court proceedings that is unfair? Second, if the privilege is not lost, does the common law recognise the relationship between the publisher of an occupational health and safety bulletin and subscribers who are responsible for occupational health and safety matters as one that makes the publication of the bulletin to the subscribers an occasion of qualified privilege? If the bulletin was published on an occasion of qualified privilege, a subsidiary question arises as to whether the defamatory matter was so irrelevant to the occasion of privilege that the privilege does not protect it. Statement of the case Mr Rex Bashford sued Information Australia (Newsletters) Pty Ltd ("Information Australia") for damages for defamation in the Supreme Court of New South Wales. His claim arose out of an article published by Information Australia in its Occupational Health and Safety Bulletin, dated 28 May 1997. Subscribers to the bulletin – who total about 900 – pay an annual subscription of $395. Its readers comprise persons with responsibility for occupational health and safety within their companies, agencies and government departments. The article on which Mr Bashford sued arose out of a judgment given by Merkel J42 in an action in the Federal Court of Australia in respect of misleading statements in a newsletter called Infax. The main thrust of the article, however, concerned a cross-claim in that action brought by Mr Bernie Bialkower, one of the defendants, against ACOHS Pty Ltd ("ACOHS"). Mr Bialkower alleged that ACOHS had breached his copyright in certain safety data sheets. He had sought an injunction against further infringement of that copyright, but Merkel J dismissed the cross-claim. His Honour found that no breach of copyright had occurred and he declared that in any event he would have refused relief on discretionary grounds that included the public interest in not impeding the disclosure of data sheets concerned with industrial safety. In its action, ACOHS had sought relief against R A Bashford Consulting Pty Ltd ("Bashford Consulting"), Mr Bialkower and Risk Management Concepts Pty Ltd ("Risk Management") in respect of misleading statements published in the Infax newsletter. The newsletter was published by Risk Management under a business venture between it and Bashford Consulting. Merkel J found both 42 ACOHS Pty Ltd v R A Bashford Consulting Pty Ltd (1997) 144 ALR 528. McHugh companies and Mr Bialkower liable for the harm caused by the misleading statements. His Honour awarded damages of $20,000 to ACOHS, but declared that Bashford Consulting and Risk Management were entitled to an indemnity of 75% of the damages and costs from Mr Bialkower. Bashford Consulting was found liable, not expressly as a publisher but as a principal of a business in the course of which Risk Management published the newsletter. It was the report of these findings of Merkel J that gave rise to Mr Bashford's claim for defamation. He was not a party to the action or cross-claim and was not mentioned by Merkel J in his judgment. However, the article in the bulletin concluded: "In respect of the initial claim, Justice Merkel found the publishers of Infax newsletter, RA Bashford and Risk Management Concepts, had engaged in false and misleading conduct by publishing an incorrect report – there had been no such copyright case – and that Bialkower was the source of the information and authorised its publication. He ruled publication of the 'seriously misleading statements caused harm to ACOHS's repute and goodwill and that harm is likely to have led to some loss of business or custom'. He awarded ACOHS $20,000 damages and ordered Bialkower, RA Bashford and Risk Management Concepts to pay their legal costs." In accordance with the law of New South Wales, a jury had to determine what, if any, imputations concerning Mr Bashford were contained in the bulletin article and whether they were defamatory. But the validity of the defences to the publication and the assessment of damages had to be determined by a judge without a jury. In an earlier hearing, a jury determined that the bulletin contained the defamatory imputation that "[Mr Bashford] by publishing a false report concerning ACOHS Pty Limited had been found by the Federal Court of Australia liable to ACOHS Pty Limited in damages and costs for causing it harm and loss". Subsequently, the case came before Davies AJ to determine the defences and to assess the damages. Information Australia relied on four defences – the "no harm" defence under s 13 of the Defamation Act 1974 (NSW), the defence of truth under s 15 of the Defamation Act, the defence of contextual truth under s 16 of the Defamation Act and the common law defence of qualified privilege. It did not rely on the defence of statutory qualified privilege given by s 22 of the Defamation Act – apparently because it believed that it could not establish that its conduct was reasonable, as required by that section. Davies AJ found that the bulletin article contained two erroneous statements concerning Mr Bashford. First, it used the name "R A Bashford", not "R A Bashford Consulting Pty Ltd", and thereby referred to him personally. Second, it suggested that Mr Bashford was a publisher of the Infax newsletter McHugh when neither he nor his company was the publisher. As a result, his Honour rejected the defences of truth and contextual truth. His Honour also rejected the "no harm" defence sought to be relied upon by Information Australia. However, he upheld the defence of common law qualified privilege. His Honour held that the principal part of the article, dealing with the cross-claim, was published on a privileged occasion because Mr Bialkower's cross-claim raised a matter of general interest to persons operating in the field of occupational health and safety. His Honour said that the part of the article concerning misleading and deceptive conduct – which gave rise to the defamation – was not of interest to persons operating in the occupational health and safety field. He found that, if published on its own, it would not have been the subject of qualified privilege. But his Honour said that that part of the article was not irrelevant to the matters involved in the cross-claim. Consequently, the defamatory matter was also published on a privileged occasion. He also rejected Mr Bashford's argument that qualified privilege could not attach to a report of legal proceedings if the report was not fair and accurate. His Honour found that there was no evidence of malice or improper purpose on the part of Information Australia that defeated the privilege. He entered judgment for Information Australia but, in case his findings on liability should be reversed on appeal, he assessed the damages at $25,000. The Court of Appeal of New South Wales by majority (Hodgson JA with Sheller JA agreeing, Rolfe AJA dissenting) dismissed an appeal brought by Mr Bashford. All three judges agreed the article was published on an occasion of qualified privilege in so far as it dealt with the determination of the cross-claim. But Rolfe AJA held that the publication of the defamatory matter was not relevant to the occasion. Qualified privilege It is convenient to determine whether any part of the article was published on an occasion of qualified privilege before discussing whether the defence of qualified privilege can ever protect the publication of an unfair report of court proceedings. Mr Bashford contends that, for the purposes of the doctrine of qualified privilege, Information Australia had no relevant duty to publish the article and no relevant interest in publishing it. He accepts that the bulletin subscribers had an interest in the judgment of Merkel J so far as it related to Mr Bialkower's cross-claim, but he submits that this is insufficient to establish a privileged occasion. He contends that the duty must be a duty to publish the matter complained of, not the journal in which it appears. He claims that in the Court of Appeal Hodgson JA erred in saying that it was sufficient that there was a duty, moral and legal, to include matters of this type in the newsletter. Mr Bashford claims that the statement is contrary to principle and to the decided cases – which speak in terms of the duty to make the communication in question. McHugh At common law, a defamatory statement receives qualified protection when it is made in discharge of a duty or the furtherance or protection of an interest of the maker of the statement or some person with whom the publisher has a direct business, professional or social connection, and the recipient of the statement has a corresponding duty to receive or interest in receiving it43. Lord Campbell CJ stated the principle in Harrison v Bush44 as follows: "A communication made bona fide upon any subject matter in which the party communicating has an interest, or in reference to which he has a duty, is privileged, if made to a person having a corresponding interest or duty, although it contain criminatory matter which, without this privilege, would be slanderous and actionable." The common law describes the occasion on which such a communication is made as an occasion of qualified privilege45. The protection is lost – hence the name qualified privilege – if the occasion was used for a purpose or a motive foreign to the duty or interest that gave rise to the occasion46. In determining whether the occasion was privileged, the court examines all the circumstances of the case. They include the nature of the defamatory communication, the status or position of the publisher, the number of recipients and the nature of any interest they had in receiving it, and the time, place and manner of, and reason for, the publication. After considering these matters, the court makes a judgment as to whether the publisher had a duty or interest that justified making the publication and whether the recipients, or some of them, had a duty to receive or interest in receiving it. Evaluating these questions of duty and interest usually involves questions of public policy. In Toogood v Spyring47, Parke B said that "[i]f fairly warranted by any reasonable occasion or exigency, and honestly made, such communications are protected for the common convenience and welfare of 43 Toogood v Spyring (1834) 1 Cr M & R 181 [149 ER 1044]; Adam v Ward [1917] AC 309; Watt v Longsdon [1930] 1 KB 130; Mowlds v Fergusson (1940) 64 CLR 206; Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211. 44 (1855) 5 E & B 344 at 348 [119 ER 509 at 512]. 45 In Adam v Ward [1917] AC 309 at 334, Lord Atkinson said that a privileged occasion arises "where the person who makes a communication has an interest or a duty, legal, social, or moral, to make it to the person to whom it is made, and the person to whom it is so made has a corresponding interest or duty to receive it." Lord Atkinson said that "[t]his reciprocity is essential." 46 Adam v Ward [1917] AC 309 at 334; Mowlds v Fergusson (1940) 64 CLR 206 at 210-211, 214-215; Roberts v Bass (2002) 212 CLR 1 at 26 [62]. 47 (1834) 1 Cr M & R 181 at 193 [149 ER 1044 at 1050]. McHugh society". Griffith CJ cited this passage with approval in Howe & McColough v Lees48. There, Griffith CJ explained49 that the reference to the welfare of society did not mean that the person who made the communication was under an obligation to publish and was justified in publishing it to the public at large. Rather, according to his Honour, the phrase means that the interests of society in general require that a communication made under the particular circumstances to the particular person should be protected. It is of the first importance to understand that references to concepts such as "the common convenience and welfare of society" and similar phrases record a result and explain why the communication and the relevant duty or interest gave rise to an occasion of qualified privilege. Such concepts are not the determinants of whether the occasion is privileged. They must be distinguished from the question whether society would recognise a duty or interest in the publisher making, and the recipient receiving, the communication in question. As Jordan CJ pointed out in Andreyevich v Kosovich50, it is necessary to "show by evidence that both the givers and the receivers of the defamatory information had a special and reciprocal interest in its subject matter, of such a kind that it was desirable as a matter of public policy, in the general interests of the whole community of New South Wales, that it should be made with impunity, notwithstanding that it was defamatory of a third party." (emphasis added) It is only when the defendant has a duty to publish or an interest in publishing the particular communication and the recipient has a corresponding duty or interest that the occasion is privileged. It is only when this reciprocity of duty and interest is present that the common law regards publication of the communication as being for the common convenience and welfare of society. With great respect, it was the Court of Appeal's failure to appreciate that the concept of the common convenience and welfare of society describes a result reached on the ground of reciprocity of duty and interest that erroneously led it to find that the bulletin was published on a privileged occasion. The Court of Appeal began with the premise that it was for the common convenience and welfare of society to publish material concerning occupational health and safety matters. Commencing with that premise, the Court of Appeal naturally concluded that the publication was made on a privileged occasion because of the responsibilities of the recipients and the contractual obligation of Information Australia to furnish them with information on safety matters. 48 (1910) 11 CLR 361 at 368. 49 (1910) 11 CLR 361 at 368-369. 50 (1947) 47 SR (NSW) 357 at 363. McHugh After concluding that it is for the common convenience and welfare of society to publish matter concerning occupational health and safety matters, the Court of Appeal held that Information Australia had a duty to publish this class of matter and that the recipients had an interest in receiving this class of matter. Thus, the Court of Appeal held that Information Australia had a duty to publish matter, described at a high level of abstraction, without regard to the subject matter of the particular defamation or, for that matter, whether the matter was defamatory or non-defamatory. The Court of Appeal then held that, because the defamatory matter sued upon was incidental to, or explanatory of, matter falling within this abstract description, the occasion of publication was privileged. With respect, this analysis of the issues turns the law of qualified privilege on its head. A plea that defamatory matter was published on an occasion of qualified privilege is a plea of confession and avoidance. It accepts that the communication is defamatory, that the defamatory matter may be false and that its publication has caused or may cause harm to the plaintiff. It confesses the publication of defamatory matter, but contends that the publication is immune from liability because the public interest requires that the duty and interest of the publisher and recipient should be preferred to the protection of the plaintiff's reputation. The court cannot determine these issues of duty and interest without characterising the subject matter of the defamation. It cannot judge whether the particular duty and interest are so necessary for the proper functioning of society that the occasion should be privileged – despite the harm that the communication may cause – unless it knows what is the nature of the defamatory communication that allegedly gives rise to the duty and interest. A defendant who claims that the occasion was privileged must show that "both the givers and the receivers of the defamatory information had a special and reciprocal interest in its subject matter"51 such that public policy requires that the defendant be immune from liability for the publication. Commencing with the premise that it is for the common convenience and welfare of society to publish matter concerning occupational health and safety also led the Court of Appeal into two further errors that are related to each other. First, it caused the Court to fail to define precisely and concretely what the interest of each recipient was. Second, it caused the Court to equate the issue of relevance with the connection between the defamatory matter and the report of Mr Bialkower's cross-claim, instead of the connection between the defamatory matter and the occasion of qualified privilege. Although it is convenient for text book writers and sometimes judges to classify occasions of qualified privilege into broad categories such as replies to attacks and interests arising out of employment, the practical working of the 51 Andreyevich v Kosovich (1947) 47 SR (NSW) 357 at 363. McHugh doctrine of qualified privilege requires that the occasion be defined concretely and precisely. That ordinarily requires the interest of the recipient to be defined first, and to be defined concretely and precisely, although sometimes it is necessary first to define the duty in that way. Unless the interest is so defined, the issues of duty, occasion, relevance and malice cannot be determined – at all events correctly. Thus, it is insufficient to describe the interest of an employer as an interest in obtaining information about the character of a potential employee. It is necessary not only to know the name of the employee but also what position that person will occupy and often what he or she will be doing. Until these things are known, it is not possible to know whether the publisher had a reciprocal duty to answer a request for information concerning the employee and whether the defamatory answer given is relevant to the request that together with the answer constitutes the occasion. Similarly, where the defendant asserts that he or she had an interest in answering an attack, it is necessary to know what the attack was and how and to whom it was made. Only when that is known can the court determine whether the defendant's defamatory response was relevant to the occasion, went beyond what was necessary to protect the defendant's interests or was used for a purpose foreign to the occasion. By regarding the interest of the bulletin's recipients as simply an interest in receiving information concerning occupational health and safety matters, the Court of Appeal appears to have concluded that Information Australia's contractual promise to publish the bulletin to each subscriber constituted the required reciprocal duty. If the Court of Appeal had attempted to define the interest of each recipient more concretely and precisely, it would have seen that each recipient had no interest that created a reciprocal duty in Information Australia to publish the defamatory matter concerning Mr Bashford. The correct approach in determining the issue of qualified privilege is radically different from the approach of the Court of Appeal. In determining the question of privilege, the court must consider all the circumstances and ask whether this publisher had a duty to publish or an interest in publishing this defamatory communication to this recipient. It does not ask whether the communication is for the common convenience and welfare of society. It does not, for example, ask whether it is for the common convenience and welfare of society to report that an employee has a criminal conviction. Instead, it asks whether this publisher had a duty to inform this recipient that the latter's employee had been convicted of a particular offence and whether this recipient had an interest in receiving this information. That will depend on all the circumstances of the case. Depending on those circumstances, for example, there may be no corresponding duty and interest where the conviction occurred many McHugh years ago or where it could not possibly affect the employment. As an Irish court has pointed out52: "It is not enough to have an interest or a duty in making a communication, the interest or duty must be shown to exist in making the communication complained of." (original emphasis) The correct approach to determining whether the occasion is privileged is contained in a passage in Baird v Wallace-James53 that members of this Court have cited54 with approval. In Baird, Earl Loreburn said55: "In considering the question whether the occasion was an occasion of privilege the Court will regard the alleged libel, and will examine by whom it was published, to whom it was published, when, why, and in what circumstances it was published, and will see whether these things establish a relation between the parties which gives a social or moral right or duty; and the consideration of these things may involve the consideration of questions of public policy". (emphasis added) Statements made in answer to attacks or requests for information In determining whether the communication was made to discharge a duty or to protect or further an interest, the common law has drawn a distinction between statements replying to a request for information or responding to an attack and statements that are volunteered by the publisher. Where the defamatory communication responds to an attack on its publisher or some person connected with him or her, the common law has adopted a liberal approach to the question of duty or interest. Not only has it usually held56 that the publisher had a duty to respond or an interest in responding but, as a consequence, it has taken a very liberal view of what constitutes an "interest" in those who receive the response. In Mowlds v Fergusson57, Dixon J said: 52 Lynam v Gowing (1880) 6 LR Ir 259 at 268-269. 53 (1916) 85 LJ PC 193. 54 Telegraph Newspaper Co Ltd v Bedford (1934) 50 CLR 632 at 646-647; Mowlds v Fergusson (1940) 64 CLR 206 at 214. 55 (1916) 85 LJ PC 193 at 198. 56 Laughton v The Bishop of Sodor and Man (1872) LR 4 PC 495; Adam v Ward [1917] AC 309; Loveday v Sun Newspapers Ltd (1938) 59 CLR 503. 57 (1940) 64 CLR 206 at 214-215. McHugh "Where the defamatory matter is published in self-defence or in defence or protection of an interest or by way of vindication against an imputation or attack, the conception of a corresponding duty or interest in the recipient must be very widely interpreted." So, in Adam v Ward58, the House of Lords held that the publication of a letter in the British and Colonial Press was made on an occasion of qualified privilege when it was sent by the Army Council to protect an army officer who had been falsely attacked in Parliament. Lord Atkinson said59 that the publication was not too wide because "every subject of the Crown ... has, and must have, an interest in the British Army". Similarly, in Loveday v Sun Newspapers Ltd60, this Court held that, where the plaintiff had chosen the public press for the purpose of publicising a complaint, he could not complain if the defendant used the public press to reply to the plaintiff's criticism. Starke J said61: "A man who attacks another in or through a newspaper cannot complain if that other repels or refutes the attack for the purpose of vindicating himself. He has appealed to the public and provoked or invited a reply. A person attacked has both a right and an interest in repelling or refuting the attack, and the appeal to the public gives it a corresponding interest in the reply. Occasions of this kind are privileged and communications made in pursuance of a right or duty incident to them are privileged by the occasion." "If the criticism had been addressed to the public at large and the communication had not been confined to specific individuals, the privilege would cover a publication of the answer in the newspapers or in any other manner that would reach the public generally. A privilege would be of no value if the means of exercising it were not also protected. If the party attacked is given a privilege to reply through the public press, the 59 [1917] AC 309 at 343. 60 (1938) 59 CLR 503. 61 (1938) 59 CLR 503 at 515. 62 (1938) 59 CLR 503 at 519. McHugh publisher of a newspaper who allows the use of his columns for the purpose must also enjoy an attendant privilege." Similarly, the common law has taken a liberal view in respect of the existence of a duty to answer requests for information about the plaintiff. Rarely will the duty be one enforceable by mandamus or other legal action. It is sufficient that the duty is social or moral63. Admittedly, common law judges of great experience "have all felt great difficulty in defining what kind of social or moral duty ... will afford a justification"64. In Stuart v Bell, however, Lindley LJ said65: "I take moral or social duty to mean a duty recognised by English people of ordinary intelligence and moral principle, but at the same time not a duty enforceable by legal proceedings". A common case of a moral or social duty in this context is the duty to answer a request by a potential employer for information concerning the character, capacity or honesty of an employee66. When such a request is made, the common law recognises a duty in the recipient of the request to answer the enquiry and to state fully and honestly all that he or she believes that he or she knows about the employee that is relevant to the enquiry. The answer cannot be used as a licence to defame the employee. It must be fairly and reasonably relevant to the enquiry. If the employer is asked whether the employee is fit to be employed as a gardener, it is unlikely that the occasion of privilege would extend to details about the employee's convictions for negligent driving. Similar to the case of information concerning an employee is an answer to a request for information by a person who intends to deal with a businessperson. If the request is made to someone who has information about the business dealings of a businessperson, the common law recognises a duty to give a full, 63 Watt v Longsdon [1930] 1 KB 130 at 152. 64 Whiteley v Adams (1863) 15 CB (NS) 392 at 418 [143 ER 838 at 848]. 65 [1891] 2 QB 341 at 350. 66 Hodgson v Scarlett (1818) 1 B & Ald 232 at 239-240 [106 ER 86 at 88]; Mead v Hughes (1891) 7 TLR 291. McHugh honest and relevant answer concerning that person67. In Waller v Loch, Brett LJ said68: "If a person who is thinking of dealing with another in any matter of business asks a question about his character from some one who has means of knowledge, it is for the interests of society that the question should be answered, and if answered bona fide and without malice, the answer is a privileged communication." But not every relevant answer to a request for information concerning the character, reputation or credit-worthiness of another is published on an occasion of qualified privilege69. The occasion will not be privileged unless the person making the enquiry has a legitimate interest in obtaining the information70. Interest for this purpose – and the law of qualified privilege generally – means more than an interest in the information "as a matter of gossip or curiosity"71. The interest must be a social, moral or economic interest that is sufficiently tangible for the public interest to require its protection72. The interest of the recipient, said Evatt J in Telegraph Newspaper Co Ltd v Bedford73, must be "a real and direct personal, trade, business or social concern." The occasion will not be privileged simply because the defendant believes that the recipient had a relevant interest in receiving or duty to receive the communication74. Although answers to enquiries about the character, reputation and credit- worthiness of former employees and businesspersons represent the most common instances of the common law recognising a duty to give information, the 67 Bromage v Prosser (1825) 4 B & C 247 [107 ER 1051]; Storey v Challands (1837) 8 C & P 234 [173 ER 475]; Robshaw v Smith (1878) 38 LT 423; Waller v Loch (1881) 7 QBD 619 at 621; London Association for Protection of Trade v Greenlands Ltd [1916] 2 AC 15 at 42. 68 (1881) 7 QBD 619 at 622. 69 Force v Warren (1864) 15 CB (NS) 806 at 808 [143 ER 1002 at 1003]. 70 Greenlands Ltd v Wilmshurst and the London Association for Protection of Trade [1913] 3 KB 507 at 541. 71 Howe & McColough v Lees (1910) 11 CLR 361 at 398. 72 cf Howe & McColough v Lees (1910) 11 CLR 361 at 377. 73 (1934) 50 CLR 632 at 662. 74 Hebditch v MacIlwaine [1894] 2 QB 54 at 59. McHugh their duty, under categories of duty are not closed. The law will recognise a duty whenever "the great mass of right-minded men in the position of the defendant would have the considered communications]"75. Thus, where a person suspects someone of committing a crime, being dishonest or engaging in misconduct, the common law recognises a duty in that person to give information concerning what he or she knows about the matter to a person who has requested the information and has a legitimate interest in acquiring it76. the circumstances, [to make Different considerations apply when the defendant volunteers defamatory information. Ordinarily the occasion for making a volunteered statement will be privileged only where there is a pressing need to protect the interests of the defendant or a third party or where the defendant has a duty to make the statement to the recipient. The common law has generally perceived no advantage to society in giving qualified privilege to volunteered statements in the absence of a pre-existing reciprocity of interest between the defendant and the recipient77. It has taken the view that the reputation of the defamed should be preferred over the freedom to publish volunteered but defamatory statements that may or may not be true. In most cases, a defendant who publishes a defamatory statement that neither protects his or her interests nor answers a request for information will have to rely on some other defence, such as truth or fair comment. Thus, in Guise v Kouvelis78, a majority of this Court held that the occasion was not privileged when a club committeeman, who was watching a game of cards, immediately informed about 50 or 60 members and non-members in the room that one of the players had cheated when he claimed that there had been a misdeal. The majority rejected the defendant's claim that he had a moral or social duty to say what he did or that he was protecting his own interests or the common interests of himself and other members of club. Latham CJ said79 that it 75 Stuart v Bell [1891] 2 QB 341 at 350. 76 Cockayne v Hodgkisson (1833) 5 C & P 543 [172 ER 1091]; Kine v Sewell (1838) 3 M & W 297 [150 ER 1157]; Beatson v Skene (1860) 5 H & N 838 [157 ER 77 Wyatt v Gore (1816) Holt NP 299 [171 ER 250]; Brooks v Blanshard (1833) 1 C & M 779 [149 ER 613]; Wenman v Ash (1853) 13 CB 836 [138 ER 1432]; Dickeson v Hilliard (1874) LR 9 Exch 79; Thomas v Moore [1918] 1 KB 555; Guise v Kouvelis (1947) 74 CLR 102; Andreyevich v Kosovich (1947) 47 SR (NSW) 357. 78 (1947) 74 CLR 102 (Latham CJ, Starke, McTiernan and Williams JJ, Dixon J dissenting). 79 (1947) 74 CLR 102 at 111. McHugh could "hardly be contended that the defendant was under a duty to shout out to the room that the plaintiff was a crook even if he believed that he was." Starke J said80 that the committeeman clearly "had no legal duty to make any such statement and no reasonable right-minded man in the circumstances and in the position of the [defendant] ought, in my judgment, to have made it." Dixon J, who dissented, thought that the defendant did have a social duty to expose immediately the cheating that he believed had occurred. His Honour said81: "The test of privilege that is in point is the defendant's interest or social duty in impugning then and there the plaintiff's play on the footing of what he had witnessed and on the other side the plaintiff's interest therein, which can hardly be doubted. The question and the interest of the bystanders is by no means immaterial, because it affects the extent of the protection, the extent of publication protected. But that is not the essential basis of the privilege, it is rather incidental." Nevertheless, an occasion may be privileged when the defendant has volunteered a statement instead of answering a request or has made the statement to protect the defendant's or a third party's interests. As Jessel MR pointed out in Waller v Loch82, "[i]t is not necessary in all cases that the information should be given in answer to an inquiry." In all cases, however, the fact that the defendant has volunteered the statement is an important – often decisive – factor in determining whether the occasion was privileged. In Macintosh v Dun, Lord Macnaghten said83: "Communications injurious to the character of another may be made in answer to inquiry or may be volunteered. If the communication be made in the legitimate defence of a person's own interest, or plainly under a sense of duty such as would be 'recognized by English people of ordinary intelligence and moral principle'84, (to borrow again the language of Lindley LJ), it cannot matter whether it is volunteered or brought out in answer to an inquiry. But in cases which are near the line, and in cases which may give rise to a difference of opinion, the circumstance that the information is volunteered is an element for consideration certainly not without some importance." 80 (1947) 74 CLR 102 at 114. 81 (1947) 74 CLR 102 at 122. 82 (1881) 7 QBD 619 at 621. 83 (1908) 6 CLR 303 at 305-306; [1908] AC 390 at 399. 84 Stuart v Bell [1891] 2 QB 341 at 350. McHugh In cases where imminent injury to the person or loss or damage to property is concerned, the common law has given a wide protection to defamatory communications initiated by a defendant where they are necessary to protect the immediate interests of a person – usually the recipient85. In Davies v "[W]here a person is so situated that it becomes right in the interests of society that he should tell to a third person certain facts, then if he bona fide and without malice does tell them it is a privileged communication." So in Stuart v Bell87, the Court of Appeal held that the occasion was privileged where the defendant, after receiving information from a chief constable, informed the plaintiff's master that the plaintiff was suspected of stealing a watch. Similarly, a former employer may ordinarily inform a potential employer of the misconduct of a former employee even though the potential employer has made no request for a reference88. And an employer who has dismissed the plaintiff for dishonesty acts on an occasion of qualified privilege when the employer informs the person who gave the reference that led to the plaintiff's employment of the dishonesty89. So does a relative who warns a woman about the bad character of the man that she proposes to marry90. So too does a solicitor who warns a client about the potential harm to the client's interests even though the solicitor has not been consulted on the particular matter91. In a case like that the previous relationship between the solicitor and the client may be sufficient to constitute an interest in the client and a social or moral duty in the solicitor that enables the solicitor to volunteer the defamatory communication. Similarly, in Mowlds v Fergusson92, this Court held that a former relationship between the defendant, a police officer, and a former Commissioner of Police constituted a sufficient interest in all the circumstances 85 Coxhead v Richards (1846) 2 CB 569 at 596 [135 ER 1069 at 1080]. 86 (1870) LR 5 QB 608 at 611. 88 Rogers v Clifton (1803) 3 Bos & P 587 at 592, 595 [127 ER 317 at 320, 321]; Pattison v Jones (1828) 8 B & C 578 [108 ER 1157]. 89 Dixon v Parsons (1858) 1 F & F 24 [175 ER 609]; Fryer v Kinnersley (1863) 15 CB (NS) 422 [143 ER 849]. 90 Todd v Hawkins (1837) 8 C & P 88 [173 ER 411]. 91 Baker v Carrick [1894] 1 QB 838 at 841. 92 (1940) 64 CLR 206. McHugh of the case to create a duty in the defendant to show a copy of a report to the former Commissioner. But where neither life is in immediate danger nor harm to the person or injury to property imminent, the fact that the defendant has volunteered defamatory matter is likely to be decisive against a finding of qualified privilege. Thus, the customer of a shopkeeper in answer to a request by a potential customer is entitled to give his or her opinion as to the quality of the shopkeeper's goods, and when he or she does so, the reply will be published on an occasion of qualified privilege. But the case is different where the customer voluntarily defames the character or reputation of the shopkeeper to potential customers93. The point is well illustrated by the famous case of Toogood v Spyring94. In Toogood, the defendant required his landlord to effect repairs on the tenanted property; the landlord's agent sent out two workmen to do the work, one of whom was the plaintiff. Later the defendant complained to the plaintiff in the presence of one Taylor that the plaintiff had misconducted himself in doing the work. Still later the defendant repeated the charge to Taylor in the absence of the plaintiff and later again to the landlord's agent. The Court of Exchequer held that the statements were made on occasions of qualified privilege, except for the statement made to Taylor in the absence of the plaintiff. The Court held that both the plaintiff and the agent had such an interest in being informed of the charge against the plaintiff that the defendant was entitled to protect his interests by telling them of his concerns. Taylor, however, had no interest in the matter that could justify the defendant telling him of the plaintiff's misconduct. One class of case where the defendant is entitled to volunteer defamatory information to a third party is where a confidential relationship exists between the defendant and the third party and the defendant has a duty to protect the interests of that person95. In the absence of a confidential relationship between the parties, however, the common law has narrowly construed the situations that entitle a person to volunteer defamatory information concerning another. In 93 Picton v Jackman (1830) 4 C & P 257 [172 ER 695]; Storey v Challands (1837) 8 C & P 234 [173 ER 475]. 94 (1834) 1 Cr M & R 181 [149 ER 1044]. 95 Wright v Woodgate (1835) 2 Cr M & R 573 [150 ER 244]; Todd v Hawkins (1837) 8 C & P 88 [173 ER 411]; Wilson v Robinson (1845) 7 QB 68 [115 ER 413]; Scarll v Dixon (1864) 4 F & F 250 [176 ER 552]; Stace v Griffith (1869) LR 2 PC 420; Henwood v Harrison (1872) LR 7 CP 606; Adams v Coleridge (1884) 1 TLR 84; Baker v Carrick [1894] 1 QB 838 at 841. McHugh Macintosh v Dun96, the Judicial Committee of the Privy Council held that qualified privilege did not attach to communications by a trade protection business to subscribers concerning the commercial standing of persons in New South Wales and elsewhere. Lord Macnaghten, giving the reasons of the Committee, said97: "No doubt there was a specific request. In response to that request the communication was made. That much is clear. But it is equally clear that the defendants set themselves in motion and formulated and invited the request in answer to which the information complained of was produced. The defendants, in fact, hold themselves out as collectors of information about other people which they are ready to sell to their customers." The Judicial Committee went on to hold that the defendants did not supply the information to subscribers from a sense of duty but as a matter of business and self-interest. Having made that finding, the Judicial Committee said98: "Then comes the real question: Is it in the interest of the community, is it for the welfare of society, that the protection which the law throws around communications made in legitimate self-defence, or from a bona fide sense of duty, should be extended to communications made from motives of self-interest by persons who trade for profit in the characters of other people?" The Judicial Committee answered the question in the negative. It said99: "There is no reason to suppose that the defendants generally have acted otherwise than cautiously and discreetly. But information such as that which they offer for sale may be obtained in many ways, not all of them deserving of commendation. It may be extorted from the person whose character fear of misrepresentation or misconstruction if he remains silent. It may be gathered from gossip. It may be picked up from discharged servants. It may be betrayed by disloyal employees. It is only right that those who engage in such a business, touching so closely very dangerous ground, should take the consequences if they overstep the law." in question through 96 (1908) 6 CLR 303; [1908] AC 390. 97 (1908) 6 CLR 303 at 306; [1908] AC 390 at 399-400. 98 (1908) 6 CLR 303 at 306; [1908] AC 390 at 400. 99 (1908) 6 CLR 303 at 306-307; [1908] AC 390 at 400. McHugh Macintosh does not hold that qualified privilege cannot attach to a communication made for profit. It is true that the Judicial Committee used the business nature of the communication to negate the conclusion that the defendants acted from a sense of duty. But it went on to determine whether, despite the lack of duty, the business interest of the defendants was sufficient to make the occasion of publication one of qualified privilege. The real basis of the decision was that the welfare of society was not furthered by giving qualified privilege to defamatory communications, whether true or untrue, made by a publisher who was a volunteer, who was not discharging any moral duty and whose sources might be unreliable or malicious, simply because of the business interest of the publisher. That the communication was made for profit is relevant in determining whether the occasion was actuated by a social or moral duty and at common law100 was once likely to be decisive in determining whether the occasion was privileged. Nowadays, however, it is probably better in most cases to regard the issue of profit motive as neither advancing nor impairing a claim for qualified privilege. That is to say, its presence does not ordinarily indicate that the defendant was not discharging a duty or protecting an interest that the common law will recognise. Nor does Macintosh hold that qualified privilege cannot extend to statements concerning the credit of traders when the statements are made by or on behalf of a trade protection association. This Court held to the contrary in Howe & McColough v Lees101. In Howe, the defendants were members of a stock salesmen association in Bendigo. In accordance with the rules of the association, they reported to the secretary of the association that the plaintiff had failed to pay for stock bought at the Bendigo sales yards. In turn, the secretary informed other members of the association that the plaintiff had defaulted. The Court held that the defendants' report was made on an occasion of qualified "Having regard to the nature of the business conducted by the members of the Bendigo association, I think that they were all mutually interested in knowing whether probable bidders at the auction sales were persons to whom the short credit allowed might be safely given. The fact that a man had purchased at one sale was, in my opinion, sufficient foundation for regarding him as a probable bidder at another. A communication with regard to his failure to meet his engagements was consequently relevant to 100 The position is different in New South Wales when the case falls within s 22 of the Defamation Act 1974 (NSW). 101 (1910) 11 CLR 361. 102 (1910) 11 CLR 361 at 370. McHugh the question of his solvency. There was, therefore, in my opinion, a community of interest." His Honour went on to say103: "The communication now in question was in substance made in answer to a standing inquiry understood to be made on every Saturday by every member of the association to every other member in pursuance of the rules, the effect of which was: Has any purchaser from you at the last sale made default?" As the judgment of Griffith CJ shows, the occasion was privileged because each member had a direct financial interest in knowing whether he or she could safely extend credit to a purchaser at the sales yards. Furthermore, by the rules of the association, each was taken to have made a standing request to other selling agents for information concerning the credit of probable purchasers at the sales. There was, therefore, a request for credit information by a person who had a direct interest in acquiring that information and the information given was based on the defendants' own dealings with the plaintiff. The decision of the Court is analogous to a long line of cases holding that qualified privilege attaches to answers to requests for information concerning the credit or character of another, when the request is made by those who are likely to deal with that person104. The only material difference between Howe and those cases was that in Howe the requests were made by, and the answers given to, more than one person. However, a real possibility existed that any of the recipients might have dealings with the defaulter. Because that was so, each of them had a direct interest in knowing of the credit standing of the defaulter. A clear example of the distinction that the common law draws between a statement made in response to an attack on the publisher of the statement and a volunteered statement made to protect others is seen in Penton v Calwell105. In Penton, the defendant claimed qualified privilege in respect of an editorial responding to an attack upon the defendant and fellow employees and upon Australian newspapers generally. Dixon J rejected the claim in so far as the defendant sought qualified privilege in respect of the defence of Australian newspapers generally. His Honour said106: 103 (1910) 11 CLR 361 at 370-371. 104 See, for example, Smith v Thomas (1835) 2 Bing (NC) 372 [132 ER 146]; Storey v Challands (1837) 8 C & P 234 [173 ER 475]; Robshaw v Smith (1878) 38 LT 423; Waller v Loch (1881) 7 QBD 619. 105 (1945) 70 CLR 219. 106 (1945) 70 CLR 219 at 231-232. McHugh "No case has yet gone as far as deciding that attacks upon an institution, such as the press, the theatre, or the Bar, or a section of the community create a privileged occasion in each person belonging to or concerned in the institution or the section of the community so that he is enabled in the exercise of a qualified privilege attaching to him personally to publish defamatory matter by way of defence or counter-attack." The Full Court upheld this part of his Honour's judgment107. Penton is another authority, therefore, for the proposition that the occasion is privileged when the defendant responds to the plaintiff's attack on the defendant's interests by attacking the plaintiff. But it is also an authority for the proposition that the occasion does not extend to attacking the plaintiff because of what that person has said about an unrelated third party. A fortiori, the occasion is not privileged if, in the course of responding to the plaintiff's attack, the defendant volunteers an attack on a third party. The Court of Appeal's reasons In my opinion, the learned judges of the Court of Appeal failed to invoke or apply these principles in the present case in determining the issue of qualified privilege. Hodgson JA gave the leading judgment. Both Sheller JA and Rolfe AJA agreed with his Honour's judgment on this issue. Hodgson JA said that occupational health and safety is a matter important for the common convenience and welfare of society and that communications on matters relevant to that issue to persons responsible for occupational health and safety promote that common convenience and welfare. The article was in a newsletter distributed to persons responsible for occupational health and safety who paid a substantial subscription for the newsletter and not to any wider audience, as is the case with a newspaper of general distribution. Relying on Howe108, Hodgson JA said that the existence of a lawful agreement with regard to a matter that the parties have a common interest in gives rise to a duty to provide the information. In this case, Information Australia had entered into an agreement with its subscribers to provide an occupational health and safety newsletter. The subscribers would have expected that, in return for their $395, Information Australia would include stories about matters of importance in the area of occupational health and safety. 107 (1945) 70 CLR 219 at 245-246, 248, 251, 255. 108 (1910) 11 CLR 361 at 370 per Griffith CJ, Barton J agreeing. McHugh Hodgson JA said that the cross-claim was a matter of significant importance to those in the industry and it was part of Information Australia's duty to communicate information about it to its readers. His Honour said that "having accepted subscriptions for a newsletter on such matters, [Information Australia] was morally and legally obliged to publish for subscribers matters of significance on that topic, and the decision on the cross-claim in this case fell within that description." His Honour said that he was satisfied that the publication was made on an occasion of qualified privilege. The circumstances did not give rise to an occasion of qualified privilege The material circumstances in the present case were as follows: The defamatory communication imputed that Mr Bashford had published a report concerning ACOHS that contained seriously misleading statements and that the Federal Court of Australia had held him liable to pay damages and costs to ACOHS for the harm and loss that it had suffered. The defamatory imputation was published as an addendum to a story that the Federal Court had rejected a claim for an injunction by a Mr Bialkower to restrain breach of the copyright he claimed in certain safety data sheets. The Federal Court had held that Mr Bialkower had no copyright in the sheets. In rejecting the claim, the Federal Court said that in any event it would have refused to give Mr Bialkower relief because of the public interest in not impeding the disclosure of data sheets concerned with industrial safety. The Federal Court had made no finding against Mr Bashford. The article was published as an item of information to about 900 paying subscribers to a bulletin that specialised in reporting occupational health and safety matters. (7) Most – perhaps all – of the subscribers to the bulletin had responsibilities in respect of occupational health and safety matters. The subscribers were not shown to have any imminent dealings with Mr Bashford. Upon these facts, it is impossible to hold that the defamatory matter was published on a privileged occasion. Earlier in these reasons, I pointed out that McHugh the major premise of the Court of Appeal's reasoning and its consequential analysis were erroneous. And when the above circumstances are evaluated, they lead inevitably to the conclusion that the defamatory communication was not published on an occasion of qualified privilege. The fact that the publication was made to paid subscribers neither advances nor impairs the claim of qualified privilege. However, Information Australia had no legal duty to publish the article or any part of it to its subscribers. It was a matter for its discretion whether it did so. It could select what items it published. Unlike the defendants in Howe, Information Australia had no contractual obligation to publish this communication, even if the communication was defined to mean the entire article. And, unlike the recipients of the communication in Howe, the recipients of the bulletin had no direct interest in being informed that Mr Bashford had engaged in false and misleading conduct by publishing seriously misleading statements that had caused harm to the repute and goodwill of ACOHS. No evidence was led that the recipients, or any of them, had any imminent or even potential dealings with Mr Bashford that made it imperative that they be told of his misconduct. Because that is so, it is impossible to hold that Information Australia had any legal, moral or social duty to publish this communication containing defamatory material to the recipients. And as I have indicated, the recipients did not have "a real and direct personal, trade, business or social concern"109 in information concerning Mr Bashford or, for that matter, Mr Bialkower. Nor did Information Australia make the communication in answer to a request for information concerning Mr Bashford or such people as the subscribers were likely to deal with in the future. Nor did it make the communication to protect its own interests. If Information Australia had responded to a public attack by Mr Bialkower by relevantly attacking him in its bulletin, the occasion of the reply would have been privileged. But that occasion of privilege would not have extended to defaming Mr Bashford. However, there is not, and cannot be, any suggestion that in publishing the article Information Australia was seeking to protect its own interests by responding to attacks on those interests. Thus, for the purpose of the law of qualified privilege, Information Australia was a volunteer. It was in no different position to an ordinary citizen who informed the safety officers of a number of companies that Mr Bashford had published a false and misleading report that caused damage to ACOHS. A claim for qualified privilege by such a citizen would be hopeless. Information Australia's position is in fact worse than the claim of the hypothetical citizen: it has published the defamation to at least 900 persons. The extent of a publication 109 Telegraph Newspaper Co Ltd v Bedford (1934) 50 CLR 632 at 662. McHugh is always a relevant matter in determining whether the occasion was privileged110. it, but in receiving interest, properly defined, Finally, if it otherwise mattered in this case, not only did Information Australia have no duty to publish this defamatory communication and its recipients have no the communication is a false report of court proceedings. Contrary to the argument of Mr Bashford, there is no general rule that an occasion cannot be privileged if the communication contains an unfair report of court proceedings. If the occasion is otherwise privileged because of reciprocity of duty and interest, the fact that the communication contains an unfair report of court proceedings will not destroy the occasion of privilege. Thus, the occasion is still privileged even though an employer, when asked about the character of a former employee by a potential employer, honestly but mistakenly reports the result of a court case concerning the employee. But when a question arises as to whether a defendant had a duty to volunteer information about a court case – as in this case – the fact that the information constitutes an unfair report of the court proceedings is a decisive reason for rejecting the claim. At common law, the publishing of a report of court proceedings was an occasion of qualified privilege. However, it was a condition of the privilege that the publication was a fair report111. The application of the settled principles of the law concerning qualified privilege requires the rejection of Information Australia's claim that the defamation was published on an occasion of qualified privilege. I have not read all the reported cases on common law qualified privilege decided by the English and Australian courts, but I have read many – probably most – of them. I can think of only two English cases that remotely support the bold claim of qualified privilege for this defamation. In Chapman v Ellesmere (Lord)112, the English Court of Appeal held that the occasion was privileged when the defendants published the disqualification of a horse trainer in the Racing Calendar, the recognised organ of the Jockey Club, which was circulated to persons interested in horse racing. It is hard to see what "interest" in the proper sense the readers of the Racing Calendar had in the trainer's disqualification. Central to upholding the claim of privilege, however, was the fact that the plaintiff was bound by a rule of the Rules of Racing of the Jockey Club that authorised disqualifications to be published in the Racing Calendar. The decision may therefore be supported on the ground that the trainer had consented to the publication. Significantly, the Court of Appeal rejected a claim of qualified privilege for the publication of the disqualification in the Times newspaper. 110 Telegraph Newspaper Co Ltd v Bedford (1934) 50 CLR 632. 111 Wason v Walter (1868) LR 4 QB 73. McHugh In Allbutt v General Council of Medical Education and Registration113, the English Court of Appeal held that a privileged occasion arose when the General Council of Medical Education and Registration found a medical practitioner guilty of professional misconduct and published the decision in the minutes of the council, a book that was open for public inspection. Again it is not easy to see what direct interest each member of the public had in the publication. However, the General Council was a statutory body that had held an inquiry under its statute and, as Lopes LJ pointed out114, the public had an interest in knowing which medical practitioners were qualified. Moreover, Lopes LJ said115 that it was "most material to bear in mind that it is admitted that the report is truthful, accurate, and honest, published bona fide, without malice, not an ex parte report, but a report of facts which have been finally ascertained and adjudicated upon." The case may therefore be regarded as one concerning a fair report of quasi-judicial proceedings. But whether or not these two cases were correctly decided, neither case supports the claim of privilege in the present case. The material facts of each of them are far removed from this case. In the Court of Appeal and in this Court, Information Australia principally relied on the decision of this Court in Howe116 to support its claim of privilege. But for the reasons that I have already given, that case does not assist Information Australia's claim for privilege. Two other cases arguably might give support for Information Australia's claim that the occasion was privileged. In Camporese v Parton117, the Supreme Court of British Columbia held that the occasion was privileged when a newspaper asserted that the plaintiff was selling imported canning lids that he knew were defective. The article asserted that using the lids could cause death because they would lead to the formation of a deadly toxin in the cans. The claim of privilege was upheld although the trial judge held that the report was careless and reckless, the plaintiff had invited the defendant to test the lids and the information in the reporter's hands required further in-depth investigation. The trial judge held that the public's interest in learning that the lids were defective was sufficient to create a reciprocity of interest between each reader of the article and the defendant. With great respect to the learned judge, the 113 (1889) 23 QBD 400. 114 (1889) 23 QBD 400 at 409. 115 (1889) 23 QBD 400 at 408. 116 (1910) 11 CLR 361. 117 (1983) 150 DLR (3d) 208. McHugh decision is plainly erroneous. It offended the long-established rule that, where the subject matter of the article is not itself a matter of public interest or published in answer to a public attack on a person, a general newspaper cannot create an occasion of qualified privilege by publishing matter to inform or protect the defendant or some other person118. The second case is Bowin Designs Pty Ltd v Australian Consumers Association119. In Bowin, Lindgren J held that an occasion of qualified privilege existed for the publication of an issue of Choice magazine that imputed that the applicants had irresponsibly and recklessly distributed dangerous gas heaters. The issue of Choice was sent to more than 140,000 subscribers. Lindgren J said120: "In my view, because the use of gas heaters is so widespread and undiscriminating, members of the public generally had an interest in being warned of the defect and of the fire danger present in the use of the heaters. That interest was personal and private to each member of the public, although shared by all. The warning could be given effectively only by notification to the general public. In such a case the rationale underlying the qualified privilege defence is satisfied." I think that his Honour erred in upholding this claim of privilege. No incident concerning the heaters had been reported during the previous 22 months121. Moreover, only 3,400 of the heaters that contained the problem had been manufactured and the evidence suggested that only a small number of them were defective. It seems highly unlikely that more than a few thousand of the 140,000 subscribers to Choice had purchased the heaters – indeed it would not be surprising if no more than a few hundred subscribers were directly interested in the matter. It is impossible to see how the great bulk of Choice readers had the requisite "real and direct personal, trade, business or social concern" with the applicants and their heaters. In these circumstances, his Honour's decision is surprising and almost certainly incorrect. But even if his Honour was correct in holding that the readers of Choice had a sufficiently direct 118 Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211 at 261. 119 Unreported, Federal Court of Australia, 6 December 1996. A truncated report of the case appears at (1996) A Def R [52,078], however none of the passages I refer to appear in that report. 120 Bowin Designs Pty Ltd v Australian Consumers Association unreported, Federal Court of Australia, 6 December 1996 at 126-127. 121 Bowin Designs Pty Ltd v Australian Consumers Association unreported, Federal Court of Australia, 6 December 1996 at 9. McHugh interest in the subject matter of the article to create a social duty in the defendant to inform them of the defects that it believed existed in the heaters, the decision is far removed from the facts of this case. It would be astonishing if the common law principles of qualified privilege required the present claim to be upheld. It would mean that any defamatory statement by this defendant concerning any person, no matter how serious or how false, would be the subject of qualified privilege if it was relevant to or explained any topic falling under the rubric of occupational health and safety. An article that falsely imputed that an employer was criminally liable for the work-related death of an employee would therefore be published on an occasion of qualified privilege. Unless the employer could prove malice on the part of the defendant, the employer would be without remedy. (Indeed, this very issue of the bulletin contains a story not far removed from this hypothetical.) Nor is this a case where the Court should intervene to change the settled principles of the common law. In R v Governor of Brockhill Prison, Ex parte Evans (No 2)122, in a passage with which I entirely agree, Lord Hobhouse of "The common law develops as circumstances change and the balance of legal, social and economic needs changes. New concepts come into play; new statutes influence the non-statutory law. The strength of the common law is its ability to develop and evolve. All this carries with it the inevitable need to recognise that decisions may change. What was previously thought to be the law is open to challenge and review; if the challenge is successful, a new statement of the law will take the place of the old statement." In New South Wales, the Defamation Act has a statutory form of qualified privilege. So have the Code States of Queensland123, Tasmania124 and Western Australia125. Under these legislative regimes, reciprocity of duty and interest is not a condition of the statutory defences. Some forms of these statutory defences make it necessary, however, to prove that the recipients had an interest in receiving the communication. Moreover, most of these statutory defences stipulate various conditions – for example, reasonableness – that must be fulfilled before they apply. In the present case, despite lack of reciprocity of duty and 122 [2001] 2 AC 19 at 48. 123 Defamation Act 1889 (Q), s 16. 124 Defamation Act 1957 (Tas), s 16. 125 Criminal Code (WA), s 357. McHugh interest, s 22(1)(c) of the Defamation Act arguably gave Information Australia a defence if it could show that its conduct was reasonable. Significantly, it did not rely on this defence. It is, however, one thing to overrule previous decisions and another thing to repudiate fundamental principles of the common law. Reciprocity of duty and interest is fundamental to the common law doctrine of qualified privilege. It would be a far-reaching step, bordering on legislation, to eradicate it from the common law. Moreover, if reciprocity of duty and interest were banished from common law doctrine, some substitute would have to be found to maintain that balance between freedom of speech and protection of reputation that the common law has long sought to maintain. That balance could only be achieved by imposing conditions such as those found in the legislative regimes to which I have referred. Such conditions could only be successfully formulated after widespread consultation with a variety of interested parties. Courts do not have the facilities or the right to engage in such consultations. Imposing such conditions is, therefore, a legislative rather than a judicial function. In C (A Minor) v Director of Public Prosecutions126, Lord Lowry referred to five matters that he said judges should take into account before interfering with fundamental doctrine: "(1) If the solution is doubtful, the judges should beware of imposing their own remedy. (2) Caution should prevail if Parliament has rejected opportunities of clearing up a known difficulty or has legislated, while leaving the difficulty untouched. (3) Disputed matters of social policy are less suitable areas for judicial intervention than purely legal problems. (4) Fundamental legal doctrines should not be lightly set aside. (5) Judges should not make a change unless they can achieve finality and certainty." In my opinion, the claim that this defamatory communication was published on an occasion of qualified privilege must be rejected. It is therefore unnecessary to determine the issue whether the defamatory matter was relevant to the occasion of privilege. Order The appeal should be allowed. The order of the Court of Appeal should be set aside. In its place should be substituted an order that the appeal to that Court be allowed and judgment entered for the plaintiff in the sum of $25,000. Information Australia should pay the costs of this appeal and the proceedings in the Supreme Court, including the Court of Appeal. 126 [1996] AC 1 at 28. McHugh 108 GUMMOW J. The respondent, Information Australia (Newsletters) Pty Limited ("Information Australia"), is a publisher of books, directories and newsletters. Among its publications is a subscription newsletter entitled Occupational Health and Safety Bulletin ("OHS Bulletin"). In an issue of the OHS Bulletin dated 28 May 1997, the respondent published an article entitled "MSDS [material safety data sheets] copyright case dismissed". The points of defamation law in New South Wales with which this appeal is concerned arise in the following circumstances. The Federal Court proceeding The article concerned the decision of the Federal Court (Merkel J) in ACOHS Pty Ltd v RA Bashford Consulting Pty Ltd, which was delivered on 9 May 1997127. On 9 December 1993, ACOHS Pty Ltd ("ACOHS") had instituted a proceeding in the Federal Court against RA Bashford Consulting Pty Ltd ("RABC") and Risk Management Concepts Pty Ltd ("RMC"), two companies involved in the publication of a newsletter entitled Infax. ACOHS claimed that both companies had contravened s 52 of the Trade Practices Act 1974 (Cth) ("the TPA") by publishing an article in which it was claimed that ACOHS had been found guilty of copyright infringement in relation to the use of material safety data sheets produced by Chemwatch, a business owned and operated by Mr Bernie Bialkower. In fact, no such court proceeding had been instituted and at no stage had ACOHS been found guilty of copyright infringement in relation to Chemwatch's material safety data sheets. ACOHS also sought relief against Mr Bialkower, who was alleged to have been the source of the misleading statements and to have authorised their publication. In response, Mr Bialkower cross-claimed against ACOHS alleging that the company had infringed Mr Bialkower's copyright in works, being several safety data sheets, by transcribing the data sheets into its database. He also sought an injunction against further infringement of that copyright. Merkel J found each of the defendants, RABC, RMC and Mr Bialkower, liable for harm caused by the misleading statements contained in the Infax newsletter and awarded ACOHS $20,000 in damages. However, his Honour dismissed Mr Bialkower's cross-claim, holding that no infringement of copyright had been established and that, in any event, relief would have been refused on discretionary grounds. Those discretionary grounds were said to include the public interest in ensuring that the disclosure of safety data sheets for safety- related purposes was not unduly impeded. 127 (1997) 144 ALR 528. In discussing Merkel J's decision, the OHS Bulletin article dealt principally with Mr Bialkower's cross-claim. In this vein, the article commenced as follows: "Material safety data sheets should not be too restricted by copyright – they should as much as possible be available to enforce OH&S, according to a Federal Court ruling in the past fortnight." However, the article concluded by referring in the last seven paragraphs to the claim by ACOHS of contravention of s 52 of the TPA, in respect of which the cross-claim by Mr Bialkower had been instituted: "[32] The breach of copyright allegations were made by Mr Bialkower in response to an action initiated by ACOHS in 1993. [33] ACOHS sued the publishers of a newsletter called Infax which had printed a report claiming ACOHS was one of two companies Bialkower successfully prosecuted for MSDS copyright infringement. [34] ACOHS also sued Bernie Bialkower as he had provided the information for the report. [35] Mr Bialkower then made the counter-claim, accusing ACOHS of copyright infringement. [36] In respect of the initial claim, Justice Merkel found the publishers of Infax newsletter, RA Bashford and Risk Management Concepts, had engaged in false and misleading conduct by publishing an incorrect report – there had been no such copyright case – and that Bialkower was the source of the information and authorised its publication. [37] He ruled publication of the 'seriously misleading statements caused harm to ACOHS's repute and goodwill and that harm is likely to have led to some loss of business or custom'. [38] He awarded ACOHS $20,000 damages and ordered Bialkower, RA Bashford and Risk Management Concepts to pay their legal costs." (paragraph numbers inserted) It will be noted from pars [36] and [38] of the article that Merkel J had found "RA Bashford" guilty of engaging in false and misleading conduct and had ordered "RA Bashford" to pay ACOHS' legal costs. In fact, as noted earlier in these reasons, his Honour had made his findings in respect of RABC, which was a party to the Federal Court proceeding. The Supreme Court action The appellant, Mr Rex Anthony Bashford, was, at all material times, a director of RABC. On 30 September 1997, Mr Bashford instituted an action in the Supreme Court of New South Wales against Information Australia for damages allegedly suffered as a result of defamatory imputations contained in an article in the 28 May 1997 issue of the OHS Bulletin. In order to understand the course of the Supreme Court proceedings, and the issues that arise in this appeal, it is at this point convenient to outline the legal foundation of the procedural and substantive law governing defamation law in New South Wales. Prior to 1958, and notwithstanding the Defamation Act 1912 (NSW), the law relating to defamation "remained basically a body of law established by judicial decision"128. In that year, the Defamation Act 1958 (NSW) ("the 1958 Act") was enacted. That Act endeavoured "largely to codify the substantive law and to supersede the common law"129. However, in the present case, the Defamation Act 1974 (NSW) ("the 1974 Act") governs proceedings. Section 4(1) of the 1974 Act repealed the 1958 Act and s 4(2) revived the common law as it related to defamation. In addition, s 11 expressly provided that130: "The provision of a defence by this Part [entitled 'Defence in civil proceedings'] does not of itself vitiate, diminish or abrogate any defence or exclusion of liability available apart from this Act."131 (emphasis added) Section 11 of the 1974 Act may be contrasted with what had been provided by s 3(2) of the 1958 Act, namely: "Except where this Act deals with, and makes a different provision for, any protection or privilege existing by law immediately before the commencement of this Act, nothing in this Act is to be construed to affect any such protection or privilege." (emphasis added) 128 New South Wales, Report of the Law Reform Commission on Defamation, LRC 11, 129 New South Wales, Report of the Law Reform Commission on Defamation, LRC 11, (1971) at 88. See Australian Consolidated Press Ltd v Uren (1966) 117 CLR 185 130 cf Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 569. 131 The exceptions to s 11, contained in ss 15(1) and 29(2) of the 1974 Act, have no relevance in the present case. Special provision is made in s 7A of the 1974 Act as to the method of trial in actions such as the present. The effect is that the "staunch safeguard of democratic liberty"132 secured in England by Fox's Libel Act 1792 (UK)133 has been withdrawn by the New South Wales legislature. Section 7A(1) provides that, where proceedings for defamation are tried before a jury, the court, rather than the jury, is to determine whether the matter complained of is reasonably capable of carrying the imputation pleaded by the plaintiff and, if so, whether the imputation is reasonably capable of bearing a defamatory meaning134. If the court determines that the matter complained of is reasonably capable of carrying the imputation pleaded by the plaintiff and the imputation is reasonably capable of bearing a defamatory meaning, the jury is to determine whether the matter complained of carries the imputation, and, if so, whether the imputation is defamatory (s 7A(3)). However, if the jury reaches the conclusion that the matter complained of was published by the defendant and carries an imputation that is defamatory of the plaintiff, then it is for the court to determine whether any defence raised by the defendant has been established and to determine the amount of damages (if any) that should be awarded to the plaintiff (s 7A(4)). Three imputations were pleaded in Mr Bashford's statement of claim: that [the appellant] was guilty of false and misleading conduct as a publisher of a report concerning [ACOHS] in the newsletter 'Infax', thereby causing [ACOHS] serious harm and loss; that [the appellant], by publishing a false report concerning [ACOHS], had been found by the Federal Court of Australia liable to [ACOHS] in damages and costs for causing it harm and loss; that [the appellant] was equally culpable with Mr Bialkower and [RMC] for causing serious harm and loss to [ACOHS] by the publication of a false report". At trial, the jury found that imputation (b) was conveyed and was defamatory of the appellant. Imputations (a) and (c) were found not to have been 132 Fleming, The Law of Torts, 9th ed (1998) at 589. 133 32 Geo III c 60. 134 Section 86(1) of the Supreme Court Act 1970 (NSW) ("the Supreme Court Act") requires that proceedings on a common law claim in which there are issues of fact on a claim in respect of defamation are to be tried with a jury, unless the court makes an order to the contrary pursuant to s 86(2) of that Act. Pursuant to s 7A(5) of the 1974 Act, s 86 of the Supreme Court Act applies subject to the provisions of s 7A. conveyed. Thereafter, in proceedings before Davies AJ pursuant to s 7A(4) of the 1974 Act, the respondent pleaded common law qualified privilege arising out of a reciprocal duty or interest and the defences available pursuant to ss 13 (Unlikelihood of harm), 15 (Truth generally) and 16 (Truth: contextual imputations) of the 1974 Act. Davies AJ rejected the statutory defences relied upon by the respondent. However, his Honour upheld the respondent's defence of common law qualified privilege135. The appellant's proceedings were therefore dismissed. An appeal by the appellant to the New South Wales Court of Appeal was dismissed by majority (Sheller and Hodgson JJA; Rolfe AJA dissenting)136. The appeal to this Court During argument before this Court, two primary questions arose for consideration: first, whether the Court of Appeal erred in rejecting the appellant's submission that the common law defence of qualified privilege arising out of a reciprocal duty or interest is unavailable in circumstances where the impugned publication is properly characterised as an inaccurate report of judicial proceedings; and, second, whether the Court of Appeal erred in concluding that the necessary criteria for the existence of common law qualified privilege arising out of a reciprocal duty or interest had been met in the present case. It is convenient to deal with these questions in the order in which they were argued before the Court. Multiple defences to a single defamatory imputation? At the heart of the appellant's submissions on this issue was the assertion that the common law defence of fair and accurate report of court proceedings "axiomatically eclipses" any particular relationship which might otherwise found a duty or interest sufficient to give rise to common law qualified privilege. The appellant contends that an imputation which would, but for its inaccuracy, attract the common law defence of fair and accurate report of court proceedings cannot attract the defence of common law qualified privilege arising out of a reciprocal duty or interest. In response to this submission, Hodgson JA, in a passage with which I agree, noted137: 135 Bashford v Information Australia [2000] NSWSC 665 at [31]. 136 Bashford v Information Australia (Newsletters) Pty Ltd [2001] NSWCA 470. 137 [2001] NSWCA 470 at [45]. "[T]he requirement that a report of court proceedings be accurate in order that it have the protection of qualified privilege is a requirement that applies to one particular category of qualified privilege, namely that applicable to reports of court proceedings made to the public in general. It is not an additional requirement imposed over and above the other requirements for the reciprocal duty and interest category of qualified privilege." What we now call the common law of defamation (with its division between libel and slander138) has not developed in a structured and ordered way; it is, as Gatley has noted, "firmly rooted in its historical origins, and [has not been] open to the development and rationalisation that is acceptable elsewhere in the common law"139. Pleas of publication on privileged occasions were a comparatively late development140. The appellant's submissions appear to be founded on an assumption that the law of defamation has evolved through reference to a coherent legal policy which implicitly rejects the availability of two or more defences of privilege to a single defamatory imputation. Such an assumption in turn requires acceptance of the proposition that the plurality of common law defences of privilege available in respect of a defamatory imputation exist within a framework which requires each defence to be developed with constant reference to each other defence. Neither that somewhat paradoxical proposition, nor the assumption upon which it is founded, should be accepted. In the present context, it is important to remember that, at common law, the term "qualified privilege" enjoys no legal force of itself but is merely descriptive of those factual circumstances (many in number) which the law deems privileged to a qualified extent. Moreover, it is significant that the unifying criterion by reference to which the categories of qualified privilege have been formulated is not any element of commonality between the circumstances in the effect, which defamatory imputations are communicated but rather 138 Section 8 of the 1974 Act states: "Slander is actionable without special damage in the same way and to the same extent as libel is actionable without special damage." 139 Gatley on Libel and Slander, 9th ed (1998) at [1.11]. See Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 at 149-150. 140 Holdsworth, "Defamation in the Sixteenth and Seventeenth Centuries", (1925) 41 Law Quarterly Review 13 at 28-30. historically, which the presence of malice has had on the availability of the respective defences. Therefore, it is unsurprising that categories of qualified privilege may differ in the considerations which found them. To take a relevant example, while the substantial accuracy of a report of judicial proceedings is deemed necessary in order efficiently to place the general public in the same position as those in attendance upon the relevant proceedings141, it is well established that the inaccuracy of an imputation is no bar to the availability of qualified privilege arising out of a reciprocal duty or interest142. This is because the particular relationship between the communication, and the advantages which the law deems are to be had from free communication within such a relationship, enjoy a significance over and above the accuracy of the defamatory imputation in question. the defendant and in receipt of the person It follows that the circumstance that the publication of a fair and accurate report of judicial proceedings and the publication of a defamatory imputation pursuant to a relevant reciprocal duty or interest both fall under the umbrella of "qualified privilege" does not mean that the defences may not be available in respect of the one imputation. Once that proposition is accepted, it follows that it is open for a defendant to rely on the existence of a relevant reciprocal duty or interest in order to ground a defence of qualified privilege in circumstances where the defamatory imputation could not properly be characterised as a fair and accurate report of judicial proceedings143. In reaching the above conclusions, it has not been necessary to consider the accuracy or otherwise of the decision of the Full Court of the Supreme Court of New South Wales in Thom v Associated Newspapers Ltd144, upon which the appellant relies. In that case, the Court upheld a jury direction to the effect that, if a publication relied upon as a fair report pursuant to s 14 of the 1958 Act was unfair, it could not, on the evidence before the court, be privileged under the statutory equivalent of qualified privilege contained within s 17 of that Act145. 141 Macdougall v Knight (1889) 14 App Cas 194 at 200; Ex parte Terrill; Re Consolidated Press Ltd (1937) 37 SR (NSW) 255 at 257-258; Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519 at 525-526 [2], 540 [42], 587-588 142 Toogood v Spyring (1834) 1 CM & R 181 at 193 [149 ER 1044 at 1049-1050]. 143 Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519 at 557 [94]. 144 (1964) 64 SR (NSW) 376; cf Allen v John Fairfax & Sons Ltd [1971] 1 NSWLR 145 (1964) 64 SR (NSW) 376 at 384, 386. Several points may be made in distinguishing Thom from the present case. First, the jury direction was given in the terms outlined above where there was no evidence to support a defence of qualified privilege under s 17 of the 1958 Act146. Indeed, "when asked, counsel for the appellant was unable to inform the court of any such evidence that conceivably could be available"147. Secondly, it is important to recognise that Thom related to the availability of multiple defences under the 1958 Act. As noted earlier in these reasons, that Act sought in large part to codify the common law148. In this case, however, the 1974 Act governs proceedings and, as noted above, that Act revives the common law and expressly provides that the provision of a statutory defence does not, of itself, vitiate the availability of the equivalent defence at common law (s 11). It follows that the introduction of the statutory defence of fair protected report pursuant to s 24 of the 1974 Act can have no bearing on the availability, under the common law, of individual categories of qualified privilege in the manner discussed above. The appellant's submissions on this issue should be rejected. Common law qualified privilege – a reciprocal duty or interest? The appellant contends that if, contrary to the submissions considered above, a defence of common law qualified privilege arising out of a reciprocal duty or interest is available in respect of an inaccurate report of judicial proceedings, the Court of Appeal erred in holding that it was available in the present case. The appellant further submits that, even if the principal part of the article was published on a privileged occasion, the privilege did not extend to that part of the article containing the defamatory imputation. In considering whether or not the respondent was able to assert a defence of qualified privilege arising out of a reciprocal duty or interest, the primary judge divided the OHS Bulletin article into two parts. In respect of the principal part of the article, which dealt with Mr Bialkower's cross-claim, his Honour was "was published on a privileged occasion, because Mr Bialkower's cross- claim raised issues which were of general interest to persons operating in 146 (1964) 64 SR (NSW) 376 at 384. 147 (1964) 64 SR (NSW) 376 at 384. 148 New South Wales, Report of the Law Reform Commission on Defamation, LRC 11, (1971) at 88. See Australian Consolidated Press Ltd v Uren (1966) 117 CLR 185 149 [2000] NSWSC 665 at [22]. the field of occupational health and safety. It concerned the copyright in information in a Chemwatch [material safety data sheet] which related to occupational health and safety matters … Merkel J, without deciding the question of copyright, discussed the circumstances in which an implied licence for the use of material would arise. His Honour also discussed discretionary issues and held that, even if he had found that there was an infringement of Mr Bialkower's copyright, he would have refused relief on discretionary grounds … These matters were obviously of interest to persons in the occupational health and safety field and the publication of a report of the case, at least insofar as it dealt with those issues, occurred on an occasion of qualified privilege." In respect of the remaining section of the article (pars [32]-[38]), which dealt with ACOHS' original claim of contravention of s 52 of the TPA, Davies AJ noted that it "was not a matter of interest to persons in the occupational health and safety field, apart from the fact that the persons involved were persons who worked in that field"150. Nevertheless, his Honour concluded that this part of the article was also made on a privileged occasion. This was said to be because151: "the judgment of Merkel J was of an interest to persons operating in the occupational health and safety field. Although the report concerning the s 52 claim would not alone have been the subject of qualified privilege, for there was no duty to report on it and there was no particular interest in the subscribers to the [OHS Bulletin] to receive information about it, nevertheless, the report was not irrelevant to the occasion." In reaching this conclusion, his Honour did not appear to view himself as departing from the statement of three members of this Court in Bellino v Australian Broadcasting Corporation that152: "at common law, privilege only attaches to those defamatory imputations that are relevant to the privileged occasion. Where a potentially privileged communication consists partly of matters relevant to the privilege and partly of matters that are not relevant, qualified privilege only attaches to that part which is relevant to the occasion." The Court of Appeal unanimously upheld the primary judge's finding that the principal part of the article was published on a privileged occasion. The 150 [2000] NSWSC 665 at [23]. 151 [2000] NSWSC 665 at [24]. 152 (1996) 185 CLR 183 at 228 per Dawson, McHugh and Gummow JJ. critical passage is contained in the reasons of Hodgson JA, with whom Sheller JA and Rolfe AJA agreed on this point153: "I am satisfied myself that this was an occasion of qualified privilege. Occupational health and safety is a matter important for the common convenience and welfare of society, and communications on matters relevant to that issue to persons responsible for occupational health and safety do promote that common convenience and welfare. The respondent, having accepted subscriptions for a newsletter on such matters, was morally and legally obliged to publish for subscribers matters of significance on that topic, and the decision on the cross-claim in this case fell within that description. It is in my opinion irrelevant that failure to publish this particular report would not of itself have been an actionable breach of contract: it is in my opinion sufficient that there was a duty, moral and legal, to include matters of this type in the newsletter. I accept of course that one cannot create a licence to oneself to defame other persons by undertaking a contractual obligation to supply information154, but the existence of a contract of the type that existed here does in my opinion support the existence of a duty of communication where there is truly a public interest in the communication being made155." However, the Court of Appeal differed as to whether that part of the article which contained the defamatory imputation was also the subject of qualified privilege. Hodgson JA, with whom Sheller JA agreed, upheld Davies AJ's decision that pars [32]-[38] of the article were relevant to the subject-matter of the privileged occasion156. Rolfe AJA dissented on this point157. It is clear that both the primary judge and the Court of Appeal proceeded on the assumption that it was first necessary to establish that the principal part of the article was published on an occasion of qualified privilege and only then to consider whether the defamatory imputation, although not contained within the principal part of the article, nevertheless, was relevant to it. In my view, such an approach requires caution. The defence of qualified privilege is a plea in confession and, as such, is predicated upon the existence of a defamatory imputation to which the privilege attaches. To speak of qualified privilege 153 [2001] NSWCA 470 at [32]. 154 Macintosh v Dun (1908) 6 CLR 303; [1908] AC 390. 155 Howe & McColough v Lees (1910) 11 CLR 361. 156 [2001] NSWCA 470 at [4], [44]. 157 [2001] NSWCA 470 at [55]. attaching to a non-defamatory statement is to ignore this fundamental characteristic. It follows that questions of relevance, in the sense in which that term was used by the judges below, will ordinarily only arise where two or more defamatory imputations are published on a single privileged occasion158. In such circumstances, it will be necessary to determine whether each imputation falls within the umbrella of the applicable privilege or whether one of the imputations is not relevant and, therefore, not covered by the defence. In the present case, only one defamatory imputation has been found to have been conveyed. It is therefore necessary to consider whether that imputation was made on an occasion giving rise to a defence of qualified privilege arising out of a reciprocal duty or interest. In Roberts v Bass, Gaudron, McHugh and Gummow JJ described the defence of qualified privilege arising out of a reciprocal duty or interest in the following terms159: "The common law protects a defamatory statement made on an occasion where one person has a duty or interest to make the statement and the recipient of the statement has a corresponding duty or interest to receive it160. Communications made on such occasions are privileged because their making promotes the welfare of society161. But the privilege is qualified – hence the name qualified privilege – by the condition that the occasion must not be used for some purpose or motive foreign to the duty or interest that protects the making of the statement." That statement of principle is consistent with the proposition put in 1869 in the third edition of Starkie on Slander and Libel162 that the "duty" spoken of cannot be confined to legal duties which may be enforced by curial remedy, "but must include moral and social duties of imperfect obligation". Starkie had used the expression "communications ... made in the discharge of any legal, or even moral duty" in the second edition, published in 1830163, four years before Parke B 158 Adam v Ward [1917] AC 309 at 318, 321, 329, 340. 159 (2002) 212 CLR 1 at 26 [62]. 160 Adam v Ward [1917] AC 309 at 334 per Lord Atkinson. 161 Toogood v Spyring (1834) 1 CM & R 181 at 193 [149 ER 1044 at 1050] per Parke B. 162 Folkard (ed) at 526. 163 Starkie on Slander and Libel, 2nd ed (1830) at cxlii. in Toogood v Spyring164 spoke of the "publication of statements ... made ... in the discharge of some public or private duty, whether legal or moral". Parke B continued: "If fairly warranted by any reasonable occasion or exigency, and honestly made, such communications are protected for the common convenience and welfare of society". Of that passage, Griffith CJ explained in Howe & McColough v Lees165: "The reference to society does not mean that the person who makes the communication is under any obligation to publish, and is justified in publishing, it to the public at large, but that the interests of society in general require that a communication made under such circumstances to the particular person should be protected. The term 'moral duty' is not used in a sense implying that a man who failed to make the communication under the circumstances would necessarily be regarded by his fellows as open to censure, but in the sense implying that it was made on an occasion on which a man who desired to do his duty to his neighbour would reasonably believe that he ought to make it. It is obviously impossible to lay down a priori an exhaustive list of such occasions. The rule being founded upon the general welfare of society, new occasions for its application will necessarily arise with continually changing conditions." The English Court of Appeal in a recent decision166 may have extended the scope of the defence. Simon Brown LJ, who delivered the leading judgment in Kearns v General Council of the Bar, said167: "To my mind an altogether more helpful categorisation is to be found by distinguishing between, on the one hand, cases where the communicator and the communicatee are in an existing and established relationship (irrespective of whether within that relationship the communications between them relate to reciprocal interests or reciprocal duties or a mixture of both) and, on the other hand, cases where no such relationship has been established and the communication is between strangers (or at any rate is volunteered otherwise than by reference to their relationship)." 164 (1834) 1 CM & R 181 at 193 [149 ER 1044 at 1049-1050]. 165 (1910) 11 CLR 361 at 368-369. 166 Kearns v General Council of the Bar [2003] 1 WLR 1357; [2003] 2 All ER 534. 167 [2003] 1 WLR 1357 at 1369; [2003] 2 All ER 534 at 547. For the purposes of this appeal, it is unnecessary to decide whether that reasoning should be accepted. In determining the existence of privilege in the present case, the words of Dixon J in Guise v Kouvelis deserve mention168: "[T]he very width of the principles governing qualified privilege for defamation makes it more necessary, in deciding how they apply, to make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication." Hence the caution by Jordan CJ in Andreyevich v Kosovich169 that in order for the defendants in that case to succeed in the defence of qualified privilege: "it was necessary that they should show by evidence that both the givers and the receivers of the defamatory information had a special and reciprocal interest in its subject matter, of such a kind that it was desirable as a matter of public policy, in the general interests of the whole community of New South Wales, that it should be made with impunity, notwithstanding that it was defamatory of a third party". One consequence of the matters which Dixon J and Jordan CJ emphasised is that, as has long been recognised170, different minds, whilst informed of the legal principles, nevertheless may differ as to the outcomes in particular cases. Guise v Kouvelis171 is an example, the majority of the Court differing from Dixon J as to the result. Another is that the outcome in this case cannot be guided by apprehension of what conceivably could be the outcome of other litigation where other considerations and evidence might be put forward in respect of other claims of occasions protected by qualified privilege172. 168 (1947) 74 CLR 102 at 116. See Baird v Wallace-James (1916) 85 LJ PC 193 at 198; London Association for Protection of Trade v Greenlands Ltd [1916] 2 AC 15 169 (1947) 47 SR (NSW) 357 at 363. 170 See, eg, Mellor v Parker (1902) 2 SR (NSW) 156 at 162. 171 (1947) 74 CLR 102. 172 cf Phelps v Western Mining Corp Ltd (1978) 20 ALR 183 at 189; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 620 [71]. The defamatory imputation complained of by the appellant was conveyed on an occasion of qualified privilege, and protected, in the sense explained by Griffith CJ in Howe & McColough173, for the common convenience and welfare of society. Information Australia presented the OHS Bulletin as the "Plain English Guide to Workplace Health and Safety" written by an "expert editorial team". On its face, the OHS Bulletin was designed to assist those responsible for occupational health and safety in complying with relevant laws and regulations. The Commonwealth and each State and Territory has enacted such legislation174. One example is the Occupational Health and Safety Act 2000 (NSW) ("the NSW Act"). Section 3 of that Act identifies the objects of the Act as follows175: to secure and promote the health, safety and welfare of people at work, to protect people at a place of work against risks to health or safety arising out of the activities of persons at work, to promote a safe and healthy work environment for people at work that protects them from injury and illness and that is adapted to their physiological and psychological needs, to provide for consultation and co-operation between employers and employees in achieving the objects of this Act, to ensure that risks to health and safety at a place of work are identified, assessed and eliminated or controlled, to develop and promote community awareness of occupational health and safety issues, 173 (1910) 11 CLR 361 at 368. 174 Occupational Health and Safety (Commonwealth Employment) Act 1991 (Cth); Occupational Safety and Health Act 1984 (WA); Occupational Health and Safety Act 1985 (Vic); Occupational Health, Safety and Welfare Act 1986 (SA); Workplace Health and Safety Act 1995 (Tas); Workplace Health and Safety Act 1995 (Q); Occupational Health and Safety Act 2000 (NSW); Work Health Act 1986 (NT); Occupational Health and Safety Act 1989 (ACT). 175 See also Occupational Health and Safety (Commonwealth Employment) Act 1991 (Cth), s 3; Occupational Safety and Health Act 1984 (WA), s 5; Occupational Health and Safety Act 1985 (Vic), s 6; Occupational Health, Safety and Welfare Act 1986 (SA), s 3; Workplace Health and Safety Act 1995 (Q), s 7; Occupational Health and Safety Act 1989 (ACT), s 3. to provide a legislative framework that allows for progressively higher standards of occupational health and safety to take account of changes in technology and work practices, to protect people (whether or not at a place of work) against risks to health and safety arising from the use of plant that affects public safety." together with The NSW Act, its Commonwealth, State and Territory counterparts, demonstrate a legislative recognition of the importance of improving health and safety in the workplace. The provision of information by corporations such as the respondent with respect to statutory and judicial developments in the field of occupational health and safety assists in the achievement of the legislative objectives set out above. Moreover, it is significant that the OHS Bulletin was marketed directly by Information Australia to specific occupational health and safety professionals. Those professionals could, and did, subscribe to the OHS Bulletin for an annual fee of $395. Indeed, at the time of the publication of the relevant issue, the OHS Bulletin was available only by subscription. As a result, Information Australia was contractually obliged to provide those subscribers with information in printed form relevant to matters of occupational health and safety. Although the existence of such an obligation is not generally determinative, it is relevant when considering whether or not Information Australia possessed the requisite duty to publish, or interest in publishing, the impugned article176. itself Lastly, imputation the defamatory the subject-matter of significant. As noted earlier in these reasons, the impugned article discussed Federal Court litigation that had a direct bearing upon the enforceability of copyright in material safety data sheets and which could be expected to be of significant interest to those responsible for health and safety in the workplace. As Merkel J noted at the commencement of the decision discussed in the article, "[t]he present matter involves a copyright dispute in relation to material safety data sheets (MSDSs) which contain safety information about hazardous substances and other chemicals used in workplaces throughout Australia"177. Importantly, ACOHS' s 52 claim against RABC, RMC and Mr Bialkower was an essential element of that dispute. As Merkel J again noted, Mr Bialkower's contention that ACOHS' use of the relevant material safety data sheets constituted an infringement of copyright was "part of his defence [to the s 52 claim] and also by way of cross-claim"178. To seek, as the appellant does, to 176 Howe & McColough v Lees (1910) 11 CLR 361 at 394. 177 (1997) 144 ALR 528 at 530. 178 (1997) 144 ALR 528 at 532. portray Merkel J's analysis of the enforcement of Mr Bialkower's copyright in the data sheets as wholly isolated from the s 52 claim made by ACOHS is to ignore the course of the litigation before the Federal Court. In such circumstances, and given the general interest of the community reflected in the consistent legislative recognition of the importance of furthering occupational health and safety in Australia179, Information Australia possessed a duty, in the sense of the authorities, to provide subscribers with the information contained in the impugned article. That the duty owed by Information Australia may be characterised as one of imperfect obligation does not nullify its existence in the present case180. The appellant submits that the decision of the Judicial Committee in Macintosh v Dun181 stands in the way of the conclusion reached above. In that case, the Board held that the provision of information for profit by a trade protection society to one of its subscribers did not give rise to qualified privilege arising out of a reciprocal duty or interest182. In so doing, their Lordships reversed the decision of this Court in Dun v Macintosh183. However, the "real question" before the Judicial Committee was expressed by Lord Macnaghten as follows184: "Is it in the interest of the community, is it for the welfare of society, that the protection which the law throws around communications made in legitimate self-defence, or from a bona fide sense of duty, should be extended to communications made from motives of self-interest by persons who trade for profit in the characters of other people?" (emphasis added) The phrase emphasised in the passage just quoted is sufficient to demonstrate the significant factual differences between Macintosh and the case 179 cf Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at 61-63 [22]-[28], 83 [91]. 180 Harrison v Bush (1855) 5 El & Bl 344 at 349 [119 ER 509 at 512]; cf 36 Corpus Juris (1924) at 1244 [210]. 181 (1908) 6 CLR 303; [1908] AC 390. 182 (1908) 6 CLR 303 at 306; [1908] AC 390 at 400; cf Foley v Hall (1891) 12 NSWR 183 (1906) 3 CLR 1134. 184 (1908) 6 CLR 303 at 306; [1908] AC 390 at 400. presently before this Court. As noted earlier in these reasons, Information Australia provided information to subscribers that was designed to facilitate the furtherance of occupational health and safety consistently with legislative objectives to that effect. Although the "good of society in general" may, as the Privy Council decided in Macintosh185, detrimentally be affected by the publication of hitherto confidential information regarding the commercial standing and financial position of a corporation, it is quite another thing to reach the same conclusion in respect of the information contained in the impugned article of the OHS Bulletin. The remaining element of the defence of qualified privilege arising out of a reciprocal duty or interest may be dealt with shortly. On the evidence before the primary judge, it is clear that the recipients of the defamatory imputation contained in the relevant article possessed a corresponding interest in the subject- matter to which the imputation related. In Howe & McColough, Higgins J noted186: "[T]he word 'interest', as used in the cases, is not used in any technical sense. It is used in the broadest popular sense, as when we say that a man is 'interested' in knowing a fact – not interested in it as a matter of gossip or curiosity, but as a matter of substance apart from its mere quality as news." In the same case, Higgins J justified the existence of a requisite interest on the part of the recipients of the defamatory communication in the following way187: "When information is given to these men as to the solvency of a buyer, it is not given to them as idle gossip; it is for solid business uses." The subscribers to the OHS Bulletin were, in large part, individuals and corporations responsible for occupational health and safety in their respective workplaces. The information contained in the OHS Bulletin with respect to occupational health and safety was sought by those subscribers in order to assist them in complying with their statutory obligations. Such an interest cannot be regarded as "unsubstantial" or "remote"188. Moreover, the impugned article clearly dealt with a matter to which the interest of the subscribers related, being the refusal of injunctive relief with respect to copyright in material safety data 185 (1908) 6 CLR 303 at 307; [1908] AC 390 at 401. 186 (1910) 11 CLR 361 at 398. 187 (1910) 11 CLR 361 at 393. 188 Howe & McColough v Lees (1910) 11 CLR 361 at 398. sheets, one result of which could be the increased publication of those data sheets within the workplace. As noted earlier in these reasons, that issue encompassed the claim of contravention of s 52 of the TPA concerning which the defamatory imputation was made. It follows that the defamatory imputation was made upon an occasion of qualified privilege. Result The appeal should be dismissed with costs. Kirby 151 KIRBY J. At first glance this appeal189 might appear to involve something of a storm in a teacup. A trade journal, reporting a published decision of a judge of the Federal Court of Australia, inaccurately referred to a finding in that decision. Incorrectly, it ascribed the judge's decision that a party had engaged in conduct which contravened s 52 of the Trade Practices Act 1974 (Cth) to the appellant personally, Mr R A Bashford, rather than to the consulting company that bore his name, R A Bashford Consulting Pty Ltd. In cross-examination, the appellant agreed that, in the eyes of the marketplace, he and the company were "effectively one [and] the same"190. The primary judge in the trial of defamation proceedings in the Supreme Court of New South Wales (Davies AJ) found that the company was "a private company established by Mr Bashford and his wife and all Mr Bashford's consulting activities were carried out in the name of his company"191. On the face of things, so much fuss about the failure of the publisher to add "three little words" ("Consulting Pty Ltd") to its report about the judgment might seem a trifle precious. Nevertheless, it is clear that a factual inaccuracy occurred; that the publisher rebuffed a demand from the appellant to publish a correction and apology192; and that a jury, performing their limited function in the trial193, determined that the matter complained of carried an imputation that was defamatory of the appellant. As found by the jury, this was "that the Plaintiff … had been found by the Federal Court of Australia liable to ACOHS Pty Ltd in damages and costs for causing it harm and loss". In this appeal, these facts represent the starting point from which this Court was asked to proceed. Although the primary judge dismissed the appellant's claim on a footing later contested in the Court of Appeal, he prudently proceeded to calculate the damages to which the appellant was entitled, if the filed defences were rejected on appeal. He fixed such damages at $25,000. That 189 From a judgment of the New South Wales Court of Appeal: Bashford v Information Australia (Newsletters) Pty Ltd [2001] NSWCA 470. 190 Bashford v Information Australia [2000] NSWSC 665 at [8] per Davies AJ. 191 Bashford [2000] NSWSC 665 at [8]. 192 Reasons of Callinan J at [215], [217]. 193 Pursuant to the Defamation Act 1974 (NSW), ss 7A(3) and (4). Kirby sum is not contested194. This is not a large sum as defamation verdicts go195; but it is not derisory. In a perfect world, defamation proceedings would be available for the redress of wrongs to reputation, large and small, including those which, considering all things, might not seem terribly important except to the person defamed and perhaps that person's family and close friends. But this appeal, like others196, illustrates the pitfalls that face litigants who enter the lists in this country to repair their hurt feelings and to seek redress for wrongs to their reputation by invoking the law of defamation. Within the Court of Appeal197 (and now in this Court198) differing opinions are expressed concerning the availability of the defences invoked by the publisher. At least in this case, no party invoked the Constitution to complicate the ambit of those defences199. The facts and applicable legislation The background materials: The matter complained of is set out, or described, in other reasons200. Also detailed there are the background facts concerning the original proceedings before Merkel J in the Federal Court of Australia201; the actual orders made by that judge against R A Bashford 194 Bashford [2000] NSWSC 665 at [44]. 195 Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519 at 598 [173]. 196 eg Bellino v Australian Broadcasting Corporation (1996) 185 CLR 183; Roberts v Bass (2002) 212 CLR 1. 197 Where, upon some issues, members of the Court divided, with Sheller JA and Hodgson JA in the majority; Rolfe AJA dissenting. 198 Contrast the opinion and conclusions in this Court of Gleeson CJ, Hayne and Heydon JJ ("joint reasons") and Gummow J with those of McHugh J and 199 cf Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 567-568; Roberts v Bass (2002) 212 CLR 1 at 9 [3], 26-28 [64]-[68], 60-64 [163]-[176], 101- 200 Joint reasons at [2]-[6]; reasons of McHugh J at [44]-[47]; reasons of Gummow J at [112]-[113]; reasons of Callinan J at [209]-[216]. 201 Reasons of McHugh J at [45]-[46]; reasons of Gummow J at [109]-[113]; reasons of Callinan J at [209]-[211]. Kirby Consulting Pty Ltd202 and the course that the appellant's claim in defamation took at trial203. Those reasons also describe the differences of opinion that emerged in the New South Wales Court of Appeal between the majority204 (Hodgson JA, with whom Sheller JA agreed) and the dissenting judge (Rolfe AJA). Other reasons also contain reference to most of the provisions of the Defamation Act 1974 (NSW) ("the Act") applicable to the proceedings, to which it will be necessary to refer. These include the unique provision governing the trial of defamation actions in New South Wales, delineating the respective roles of the jury and of the judge, and the structure and key provisions of that Act concerning the applicable law205. The saving provisions of s 11 of that Act are also set out, or described, there206. Although there are provisions elsewhere that bear some similarities to s 11207, a full appreciation of the purpose of s 11 can probably only be had by a recollection of the controversies that attended the attempt in 1958 to codify the law of defamation in New South Wales208. That venture was ultimately abandoned, with the complete repeal of that Act, the enactment of the present Act209 and a revival, with respect to matters published after the commencement of the latter Act, of the "common law and the enacted 202 Reasons of Callinan J at [209]. 203 Reasons of McHugh J at [47]-[50]; reasons of Gummow J at [114]-[118]; reasons of Callinan J at [217]-[218]. 204 Reasons of McHugh J at [51]; reasons of Callinan J at [219]-[225]. 205 The Act, ss 7A, 13, 15, 16: see joint reasons at [8]; reasons of Gummow J at [115]- [116], [118], [128]; reasons of Callinan J at [229]. See also John Fairfax Publications Pty Ltd v Rivkin (2003) 77 ALJR 1657 at 1671 [86]; 201 ALR 77 at 206 Set out in joint reasons at [8]; reasons of Gummow J at [115], [128]; reasons of 207 See eg Wrongs Act 1936 (SA), s 7(1), proviso (c) set out in Chakravarti (1998) 193 CLR 519 at 584 [147] and Defamation Act 1992 (NZ), s 16(3) considered in Pauanui Publishing Ltd v Montgomerie unreported, Court of Appeal of New Zealand, 21 October 1997. 208 Defamation Act 1958 (NSW). See reasons of Gummow J at [115], [128]. 209 The Act, s 4(1). Kirby law" that had preceded it, subject of course to modification by the Act's provisions210. Statutory protected reports: I need repeat none of the foregoing material (nor conclusions of the Court of Appeal not now disputed211). However, it is relevant to add to the statutory references, mention of those provisions of the present Act that afford protections to court proceedings and reports about them. Such provisions are contained in Pt 3 of the Act ("Defence in civil proceedings"). That Part has various divisions. These include "Truth" (Div 2); "Absolute privilege" (Div 3); "Qualified privilege" (Div 4); "Protected reports etc" (Div 5); "Court notices, official notices etc" (Div 6); "Comment" (Div 7); and "Offer of amends" (Div 8). Within Div 3, dealing with absolute privilege, are contained 36 sections (omitting one repealed) that extend absolute privilege to the publication of proceedings before a very wide range of specified bodies, extending far beyond the traditional categories of that privilege at common law. The defence of qualified privilege (Div 4) includes a statutory defence212 that arises in respect of matter published to any person where "the recipient has an interest or apparent interest in having information on some subject, [and] the matter is published to the recipient in the course of giving to the recipient information on that subject". However, it is a condition of the application of statutory qualified privilege that "the conduct of the publisher in publishing that matter is reasonable in the circumstances"213. In this Court, the publisher did not seek to bring itself within that defence. Presumably, this was because of perceived difficulties in establishing compliance with the condition of reasonable conduct in the circumstances. The particular provisions of the Act governing "protected reports" are contained in s 24. By that section, "[t]here is a defence for the publication of a fair protected report"214. "Protected report" is defined to mean "a report of proceedings specified in clause 2 of Schedule 2 as proceedings for the purposes 210 The Act, s 4(2). See also Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 at 424-425 [112]. 211 eg that the matter complained of was not true in substance and that the defence of contextual truth was unavailable. See reasons of Callinan J at [225]. 212 The Act, s 22(1). 213 The Act, s 22(1)(c). 214 The Act, s 24(2). Kirby of this definition"215. Within that clause it is provided that "[t]he following proceedings are specified for the purposes of the definition of 'protected report' in section 24(1)". The fifth paragraph in the ensuing list states "proceedings in public of a court". By cl 1 of Sched 2 "'court' means a court of any country". Although appearing in a State Act that definition, in the context, would be wide enough to include proceedings in the Federal Court of Australia. Other provisions in cl 2 of Sched 2 replicate a large number of proceedings before the wide variety of specified tribunals and other bodies, established by State legislation, as earlier mentioned in Div 3 ("Absolute privilege"). Requirement that reports be fair: To attract the statutory protection, the only adjective used in s 24(2) of the Act is "fair". In this respect, the Act has adopted a terminology slightly different from that traditionally applicable to such a defence at common law216. In the Defamation Act 1912 (NSW), for example, it was provided, relevantly, that no civil action was maintainable in respect of a publication in good faith for the information of the public "in any newspaper" of "a fair and accurate report of the public proceedings of any court of justice, whether such proceedings are preliminary or interlocutory or final, unless, in the case of proceedings which are not final, the publication has been prohibited by the court"217. Provision was also made in the 1912 Act for a defence for publication of "a copy or an abstract of any judgment, or of the entries relative to any judgment, which are recorded in any books kept in the office of any court of justice"218. The exceptions in the 1912 Act, in respect of fair and accurate reports of specified proceedings, were collected under the divisional heading "Qualified privilege". That arrangement gives some indication of the way in which the categories of fair and accurate reports were generally regarded in Australia in the 215 The Act, s 24(1). 216 The language used by statutes varies between jurisdictions, making attention to the language of each statute imperative. Thus, under the Wrongs Act 1958 (Vic), s 4 it is provided that "[n]o action … shall be maintainable against any person for publishing a faithful and accurate report of proceedings in any court of justice, or other legally constituted court". The Defamation Act 1992 (NZ) refers to "fair and accurate" reports. In some States of the United States the statute requires that the report be "fair, accurate and impartial": Lubin v Kunin 17 P 3d 422 (2001) (Nevada). 217 Defamation Act 1912 (NSW), s 29(1)(d) (emphasis added); there was a proviso that matter of a defamatory nature ruled to be inadmissible by the court shall not be deemed to be part of the public proceedings of such court. 218 Defamation Act 1912 (NSW), s 29(1)(e). Kirby first half of the last century. Provided such reports were fair and accurate and otherwise complied with the conditions of the 1912 Act, they attracted a defence of privilege. But it was not an absolute privilege. It was "qualified". Amongst the qualifications attaching was the requirement that the report must be "fair and accurate". Under the present Act, this formula has been replaced by the simple requirement that the report must be "fair". However, there is no relevant distinction. An inaccurate report, at least in respect of the identification of a party to a judgment of a court that has found a person in breach of the law, could not be "fair". The issues Arranging the issues logically: Despite the order of the grounds of appeal filed in this Court219, I agree with Callinan J that it is logical to deal first with the threshold point raised by the appellant's third ground. According to that ground, where a case falls to be considered under the statutory defence of protection for a fair report of court proceedings (or a common law defence of a fair and accurate report of such proceedings) that category applies to state the relevant defence to the exclusion of any separate and different category of qualified privilege attaching to the making and receiving of statements published between persons with a corresponding duty or interest to make and receive them. The reason why this ground comes first is obvious. The matter complained of here was inaccurate. It was not fair to the appellant. It would not therefore attract either the statutory "protected report" defence or any residual common law defence for such a report. If, therefore, the only applicable defence of qualified privilege in the circumstances was the one requiring the accuracy of reportage of court proceedings and their outcomes (to the exclusion of any other general defence of qualified privilege), the publisher would fail in the defence. The subordinate issues would not then arise. The consequential issues: For these reasons, the issues for decision in this Court, in logical order, are: (1) Whether, when the matter complained of involved reportage (relevantly) of judicial proceedings, the only applicable defence to protect such report is one concerned with the "fairness" (or "fairness and accuracy") of the report. Or whether, even if these requirements are unfulfilled, it remains open to the publisher to invoke a more general defence of qualified privilege in respect of an inaccurate report of such proceedings. (The scope of the protected report issue); 219 Set out in reasons of Callinan J at [226]. Kirby If the answer to (1) is that qualified privilege may protect an inaccurate report of such proceedings, whether the occasion of the publication in question in these proceedings was one attracting qualified privilege at common law, it being conceded that no claim was available for qualified privilege under the Act. (The scope of the qualified privilege issue); and If the matter complained of was published on an occasion of qualified privilege, whether the part of that publication found to have been defamatory of the appellant was within such privilege, in the sense that it was sufficiently connected to the privileged occasion to attract qualified privilege so as to give rise to the defence. (The relevance to the privileged occasion issue). The scope of the protected report A "strange" outcome: In the Court of Appeal, Rolfe AJA expressed the opinion that, where a person has communicated material on a subject on which the recipient had an interest in receiving that material, but has done so in the form of a report of court proceedings, there is no reason why "any such report should not be, conformably with established principles, accurate"220. He suggested that the contrary conclusion seemed "somewhat strange, particularly against the background of reciprocal rights and duties to receive and furnish information"221. Without finally deciding the point, Callinan J has expressed a similar inclination on the footing that the application of differing defences (with differing requirements as to accuracy) in respect of communications comprising reports of court proceedings appears "anomalous and productive of an incoherence in the law"222. At first I shared this opinion. It is not without certain judicial support223. The appellant suggests that this Court should uphold the point substantially upon 220 Bashford [2001] NSWCA 470 at [59]. 221 Bashford [2001] NSWCA 470 at [59]. 222 Reasons of Callinan J at [230]. 223 See eg John Fairfax Ltd & Sons v Hook (1983) 47 ALR 477 at 488, 494-495; Bainton v John Fairfax & Sons Ltd (1991) Aust Torts Reports ¶81-143; Hodgson v Canadian Newspapers Co (1998) 39 OR (3d) 235; Grassi v WIC Radio Ltd [2000] 5 WWR 119; Pauanui Publishing Ltd v Montgomerie unreported, Court of Appeal of New Zealand, 21 October 1997 upholding a decision of Anderson J at first instance concerned with the defences available under the Defamation Act 1992 (NZ), s 16(1) (fair and accurate report) and s 16(3) (qualified privilege). In the Court of Appeal a concession was made and accepted by the Court. Kirby the basis of the policy of the law that the public, and individual recipients of information about judicial proceedings, are entitled to have reports of that kind which are fair and accurate, such that this basal requirement may not be overridden by to other, different, communications having different characteristics and requirements. invoking other defences, applicable Court reports "stand apart": In support of this approach, the appellant strongly relied on Lord Uthwatt's reasons for the Privy Council in Perera (M G) v Peiris224: "Reports of judicial and parliamentary proceedings and, it may be, of some bodies which are neither judicial nor parliamentary in character, stand in a class apart by reason that the nature of their activities is treated as conclusively establishing that the public interest is forwarded by publication of reports of their proceedings. As regards reports of proceedings of other bodies, the status of those bodies taken alone is not conclusive and it is necessary to consider the subject-matter dealt with in the particular report with which the court is concerned. If it appears that it is to the public interest that the particular report should be published privilege will attach." that there The notion is something special about judicial (and parliamentary and some other) proceedings, so that they "stand apart", is a recurring one in the case law225. This notion lends support to the submission that, the subject communication is in the form of a report (relevantly) of judicial proceedings, it is a universal prerequisite of any defence based on such a report that it must be fair (including accurate)226. to any valid statutory provisions the contrary, where The point presented by the appellant on this first issue is not the subject of an authoritative decision of this Court. It must therefore be resolved by reference to the usual considerations that inform decisions on such issues. Where a statute speaks and is constitutionally valid, a court must give it effect. A court has no authority to adhere to pre-existing law in the face of contrary provisions in 224 [1949] AC 1 at 21 (emphasis added). 225 cf Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211 at 246-247; Chakravarti (1998) 193 CLR 519 at 556 [89]; Reynolds v Times Newspapers Ltd 226 cf Taylor-Wright v CHBC-TV (1999) BCSC 214; MD Mineralsearch Inc v East Kootenay Newspapers Ltd (2000) BCSC 9036. Kirby legislation227. But if a statute does not resolve the matter, the court must do so in a principled way, drawing upon any analogous authority and any applicable legal principle and legal policy228. A universal statutory requirement? Turning to the statute, it must be said that it is not entirely clear. It is true that s 11 of the present Act states (with emphasis added) that "[t]he provision of a defence by this Part [such as the defence of protected report of court proceedings] does not of itself vitiate, diminish or abrogate any defence or exclusion of liability available apart from this Act". However, it remains necessary, where some other, general common law defence is postulated on the basis of s 11 of the Act, to reconcile the highly particular provision for "protected reports" in s 24 of the Act with the revived and continuing common law defence of "fair and accurate report" and the qualified privilege relied on by the publisher as applicable alongside s 24. It is open to ask, as the appellant did, what room is left for the defence of publication of a fair protected report when, by s 24 and Sched 2 of the present Act, Parliament had gone to so much trouble to enact detailed and particular provisions on that very subject. If the defence for reports (relevantly) of proceedings in a court were to be at large, with no universal requirement for "fairness" (or accuracy), the operation of the postulate for the publication of reports of judicial proceedings enacted in s 24(2) of the Act would, to that extent, be undermined, or certainly qualified. In effect, this argument amounts to a kind of expressio unius contention229. Because, in the present Act, Parliament has specifically addressed the subject of reports of certain proceedings (including proceedings in public of a court230) the proposition is that pre-existing and general provisions of the common law (including the common law defence of qualified privilege invoked by the publisher) are overridden by the high particularity of the enacted provision for "protected reports". As the argument proceeds, although the provision of s 24 of the Act does not "of itself" have the effect to "vitiate, diminish or abrogate" other common law defences relevant to protected reports, when such defences are placed alongside the particularity of s 24, they cannot survive. They evaporate 227 Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 at 542-543 [143]-[144]; Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 at 641 [158]. 228 Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 252; Northern Territory v Mengel (1995) 185 CLR 307 at 347. 229 Expressio unius est exclusio alterius, ie that the express mention of one outcome implicitly excludes all others. 230 The Act, s 24(2) and Sched 2, cl 2(5) and cl 1, definition of "court". Kirby because of the strong and clear indication of the legislative purpose that to have a defence in such a case all such reports must be fair and, if they are not, they are unprotected. Supporting this notion, the appellant relied not only upon the textual particularity of the Act but also the "strangeness" of the contrary proposition that "fairness" (and accuracy) could be treated as inessential by the simple device of side-stepping the defence of "protected report" and resorting to the common law defence of "qualified privilege" in respect of the self-same report. For the appellant, this was not a result consistent with the language and scheme of the Act dealing with "protected reports". Need for accuracy of court reports: Support for the appellant's submission exists in the policy of the law, reflected in s 24 of the Act, insisting on a special status (relevantly) for court reports, on the footing that judicial proceedings can often give rise to highly defamatory and damaging statements which, if reported, should only be protected so long as such reports are accurate231. If such a universal rule were established, it would have the merit of promoting particular care in the reporting of judicial proceedings. It would establish a discrete category where accuracy was essential in a class of communication which, of its very nature, is of great public importance. In so far as the common law has not previously expressed such a discrete rule, the appellant invited this Court to do so in fulfilment of its function of stating the common law of Australia in ways that are not merely historical but also conceptual, principled and rational232. The Act allows multiple defences: Whilst these arguments have force, they should not be accepted. The starting point is the Act; because if it establishes an exclusive regime for protected reports of judicial proceedings, this Court will be unconcerned with common law rules. The history, language and structure of the Act tell against treating s 24 as an entire regulation of the law of defamation in respect of reports of the proceedings specified there. The present Act had, as a major objective, the abolition of the codification that had been adopted in the 1958 Act233. Its object was to revive the common law of defamation, modified, in part only, by particular statutory provisions. That 231 cf Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749 at 780-781; John Fairfax & Sons Ltd v Hook (1983) 47 ALR 477 at 488. 232 cf Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 534; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 570 [129], 600-603 233 The Act, ss 4(1), 4(2). Kirby object was not left to inference. It was spelt out in s 11. The fact that that section refers to "any defence or exclusion of liability" makes it clear that the purpose of the Act was to revive all of the many defences and protections that had previously existed by the common law. In this sense, the present Act is confined to the regulation of essential, or "core", matters upon which Parliament made its will unmistakable. Beyond such matters, the common law had been left to apply and develop. There is a further reason why s 11 should not be given a narrow interpretation. Not only is it somewhat peculiar in its terms (a reflection of its history). It is also a provision that tends to uphold freedom of expression, an important civil right234. It is true that the enjoyment of one's honour and reputation, the defence of which is mentioned as an exception to freedom of expression, also constitutes an important civil right, recognised as such by the common law and by international human rights law235. The object of the Act is to assist in procuring a proper balance between these rights which are in competition. But, as its heading indicates, the particular purpose of s 11 is to provide for common law defences. It is therefore aimed at securing a balance that ensures the enlargement of common law defences so as to enhance the zone of free expression. Where a statute is ambiguous, it is permissible to resolve its ambiguity by preferring the construction that advances the apparent object of Parliament in a way that promotes the attainment of fundamental civil rights236. This conclusion is further reinforced by the structure of the Act. Part 3 of the Act contains several defences. There is no hint in the Act that such defences represent closed categories, obliging a party sued to elect amongst them. On the contrary, the language of the defences suggests that, in particular cases, two or more of them may apply concurrently. Taking only the first two defences mentioned as examples, it may frequently be the case that a publisher will wish to defend an action for defamation on the basis that "the person defamed was not likely to suffer harm" (s 13) but also on the basis that "the imputation is a matter of substantial truth, and … either relates to a matter of public interest or is published under qualified privilege" (s 15). Just as plaintiffs are entitled to (and commonly do) express their claims in terms of alternative causes of action 234 International Covenant on Civil and Political Rights ("ICCPR"), Art 19.1, 19.2. 235 ICCPR, Art 17.1, 17.2. See also Art 19.3(a); cf Gutnick (2002) 210 CLR 575 at 236 Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42; cf Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 77 ALJR 40 at 59-61 [101]-[110]; 192 ALR 561 at 587-590; Attorney-General (WA) v Marquet (2003) 78 ALJR 105 at 138 [184]-[186]; 202 ALR 233 at 278-279. Kirby arising at common law or under a statute, so defendants are ordinarily entitled to invoke each and every applicable defence provided by law (whether by statute or the common law). It follows that, whilst the high particularity of the Act's treatment of "protected reports" in s 24 at first glance suggests to a legal mind an exclusive treatment of the subject matter of that section, with the consequence that such reports must always be shown to have been "fair", a closer analysis of the Act denies that proposition. The several defences supplement any common law defences that are revived. They overlap one another. A publisher is entitled to invoke so many of them as are applicable. This also conforms to ordinary pleading practice. Accordingly, notwithstanding an inability to attract the statutory defence of "protected report", if a publisher can establish that some other defence (such as qualified privilege) applies to the occasion of the publication, it may have the protection of that defence. Neither in its express terms, nor by necessary implication, does the Act forbid this construction. The common law allows multiple defences: When one leaves the language of the Act, and considers the first issue solely in terms of the common law defences of qualified privilege and "fair and accurate report"237, the position is even clearer. From their respective origins at common law (and in the manner of the development of that body of law), the defences grew out of different needs, occasioning different judicial holdings. They supplemented, and did not contradict, one another238. Obviously, where the more particular defence (absolute privilege or fair and accurate report) applied, it was commonly unnecessary to decide fine points arising from the possible application of a more general defence of qualified privilege. But if, because the requirements of the specific defence were not met, it became essential to invoke the general common 237 According to Spencer Bower, The Law of Actionable Defamation, 2nd ed (1923) at 122, the first modern case involving this defence with respect to a report of judicial proceedings was Curry v Walter (1796) 1 Bos & Pul 525 [126 ER 1046]. For a case of criminal defamation see R v Wright (1799) 8 TR 293 [101 ER 1396]; cf Hoare v Silverlock (1850) 9 CB 20 at 24-25 [137 ER 798 at 799-800]; Davison v Duncan (1857) 7 El & Bl 229 [119 ER 1233]. 238 cf Smith v Harris (1995) A Def R [52,055]. This position appears to be accepted in some jurisdictions in the United States; cf Lubin v Kunin 17 P 3d 422 (2001); Riley v Zuber Tex App LEXIS 507 (2001) at 20-24. However, United States decisions are often affected by constitutional doctrines: Chapadeau v Utica Observer-Dispatch Inc 341 NE 2d 569 (1975). Kirby law of qualified privilege, there was no reason of legal principle why it should be unavailable239. Nothing in the repeated judicial statements concerning the importance to the public of accurate reporting of judicial (and parliamentary and other) proceedings is undermined by the invocation of common law qualified privilege, where it applies. The social objects of each defence are different; but are equally important. The specific one treats the public interest as conclusively established by proof that a report of certain proceedings is fair (and accurate). The other upholds the public interest "where one person has a duty or interest to make the statement and the recipient of the statement has a corresponding duty or interest to receive it"240. Each defence, in its different way, "promotes the welfare of society"241. Legal history rejects any suggestion that a publisher must make an irrevocable election between such defences. The welfare of society does not oblige that such an election should now be imposed by this Court. Conclusion: privilege available: The first issue must therefore be determined against the appellant. Neither as a matter of statutory construction, nor as one of legal authority, principle or policy, can it be said that the defence of fair and accurate report "eclipses" any relationship otherwise giving rise to a defence of qualified privilege. The scope of the qualified privilege On the second issue (accepting that qualified privilege attaches) there was unanimity of opinion in the Supreme Court. A majority of this Court takes the same view, as do I. The test for determining whether a particular publication was made on an occasion of, and germane to a subject matter attracting, qualified privilege at common law is whether there was the requisite reciprocal duty or interest between the publisher of the matter complained of and its recipients242. In this case, such reciprocity was present. In the reasons of Gleeson CJ, Hayne and 239 cf Boutrous, "Why an Expanded Common-Law Privilege Should Also Protect the Media", (1997) 15 Communications Lawyer 8 at 10. 240 Roberts v Bass (2002) 212 CLR 1 at 26 [62]; see also at 58-59 [160]; cf Toogood v Spyring (1834) 1 CM & R 181 at 193 [149 ER 1044 at 1049-1050]; Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211 at 237-243, 260-264; and Tobin and Sexton, Australian Defamation Law and Practice at [14,001]. 241 Roberts v Bass (2002) 212 CLR 1 at 26 [62]. 242 Roberts v Bass (2002) 212 CLR 1 at 26 [62]. Kirby Heydon JJ ("the joint reasons"), by reference to the analysis of Hodgson JA in the Court of Appeal243, it is concluded that the necessary indications are present to attract qualified privilege244. I agree. However, I wish to add an observation about one feature of the case that has attracted the attention of other members of this Court. Early in the last century, in Macintosh v Dun245, reversing a decision of this Court, the Privy Council deployed language that suggested that the provision of information for fee or profit would deprive a publisher of any qualified privilege to which the occasion of the publication was otherwise entitled246. The passages are set out in the joint reasons247. Since that time there have been many developments that make such a suggestion highly doubtful as a proposition of law. True, in particular circumstances, the receipt of a fee might indicate that a publisher was trading in salacious or malicious gossip, sold for entertainment. But more commonly it would indicate the serious purpose of the publication and the assumption of contractually enforceable obligations and expectations of accuracy and fairness. The growth of credit and other reporting bodies that provide business information about individuals (sometimes based on court reports) is a case in point. Whatever might have been the position a hundred years ago, I do not consider that the Privy Council's dictum in Macintosh248, stated so broadly, represents the common law of Australia today. This Court is no longer bound by decisions of the Privy Council. Macintosh should now be treated as overruled in this respect. The payment of a fee, as such, does not deprive an occasion of a publication of any privilege otherwise attaching to it249. I feel no obligation to persist with dubious efforts to 243 Bashford [2001] NSWCA 470 at [32]-[33]. 244 Joint reasons at [12]. See also reasons of Gummow J at [130]-[135]; cf reasons of McHugh J at [52]-[64]; reasons of Callinan J at [230]-[241]. 245 (1908) 6 CLR 303; [1908] AC 390. 246 (1908) 6 CLR 303 at 306-307; [1908] AC 390 at 400. 247 Joint reasons at [14]-[16]. See also reasons of Gummow J at [146]-[147]. 248 (1908) 6 CLR 303 at 306; [1908] AC 390 at 400. 249 Reasons of Callinan J at [232]. Kirby distinguish Macintosh250, or to await its correction by statute251. In particular circumstances, of which the present is an instance, the payment of a fee to the publisher for the information provided may actually reinforce the necessary element of reciprocity. If there is salaciousness or malice in a publication purchased for fee, any qualified privilege otherwise attaching may be lost for such reasons. The salaciousness or malice may snap the connection with the propounded subject matter. They may contradict the propounded interest and duty. But qualified privilege will not be lost for the payment of the fee as such. The relevance to the privileged occasion The test of relevance: The foregoing conclusions bring me to the last point, which was the one upon which, in the Court of Appeal, Rolfe AJA252 reached his dissenting conclusion. Accepting that the occasion was privileged, was the defamatory imputation (being the mistaken reference to the appellant personally) germane to the occasion? Or did it amount to "[t]he introduction of … extraneous matter"253 so as to "afford evidence of malice which will take away protection on the subject to which privilege attaches"254 or otherwise take that part of the publication outside the protection of the privilege? Simply because, in a general sense, the publication of matter defamatory of an individual is included in a context of discussion of a subject of public interest on which there is the requisite reciprocity of interest and duty, does not assure the imputation of protection. Were it so, a great many grievous wrongs to the reputation of individuals would be privileged against redress simply because of a tenuous, remote or contrived connection between the defamatory imputation and the context. The introduction into a privileged communication of extraneous defamatory imputations will not necessarily cloak them with the privilege. The problem remains one of drawing a line between the protected and the unprotected. 250 As in joint reasons at [25]. 251 Australian Law Reform Commission, Unfair Publication: Defamation and privacy, Report No 11, (1979) ("ALRC 11"), Draft Bill, cl 15(4) ("The defence under this section does not fail by reason of the fact that the matter was published for fee or reward"). 252 Bashford [2001] NSWCA 470 at [58]-[59]. 253 Adam v Ward [1917] AC 309 at 318. 254 Adam v Ward [1917] AC 309 at 318. Kirby Various judicial formulae have been propounded to mark out the boundaries of the protection given by the relevant privilege. In Bellino v Australian Broadcasting Corporation255, the joint reasons suggested that the test was whether "those defamatory imputations … are relevant to the privileged occasion". In that case Brennan CJ was, if anything, more stringent. He did not consider that it was sufficient to decide whether the impugned imputations were "unconnected with and irrelevant to the main statement", as Lord Dunedin had proposed in Adam v Ward256. In Brennan CJ's view, it was necessary, in order to attract the protection, that "the publication of the defamatory matter makes a contribution to the discussion of the subject of public interest"257. A still further criterion of connection, apparently derived from Canadian formulations258, was that applied by Sheller JA259 and Hodgson JA260 in the Court of Appeal. This asked whether the defamatory imputations were sufficiently "germane and reasonably appropriate" to the publication on the matter of public interest that otherwise attracted the privilege. All of these formulae are attempts to define the boundaries of a discussion that is truly within the scope of the matter of public interest, so as to exclude the introduction of extraneous, irrelevant or marginal and gratuitous imputations that unacceptably do harm to the reputation and honour of an individual. Scientific precision is impossible by the use of such formulae. In every case, a judgment is evoked261. In some instances the titillating character of an irrelevant defamatory imputation in an otherwise justifiable context will be plain. But in other cases, the issue will be more debatable, as Callinan J has correctly recognised262. 255 (1996) 185 CLR 183 at 228. 256 [1917] AC 309 at 327. 257 Bellino (1996) 185 CLR 183 at 204 (footnote omitted). 258 Brown, The Law of Defamation in Canada, 2nd ed (1994), vol 1 at 879-880, 259 Bashford [2001] NSWCA 470 at [2]. 260 Bashford [2001] NSWCA 470 at [44]. 261 cf Truth (NZ) Ltd v Holloway [1960] NZLR 69 at 80-81. 262 Reasons of Callinan J at [237]. Kirby Care must be observed in taking too literally the test propounded by Brennan CJ in Bellino263. Because, as Callinan J notes264, a defamatory imputation, as such, will commonly make little contribution to a discussion of public interest if included in a mistaken report of court proceedings, too rigid an application of that criterion would be self-fulfilling. Every error that involved a defamatory imputation would be cast beyond the pale. This would effectively introduce into the defence of qualified privilege a strict or even absolute requirement of accuracy in reports of proceedings that has been a feature of the common law defence of protected reports but not, as such, of qualified privilege. This, in turn, could endanger free discussion on subject matters of public interest that qualified privilege protects for the welfare of society. Does this mean, as the appellant argued, that to allow the defence of qualified privilege would fundamentally frustrate the policy inherent in the defence of fair protected reports265? I think not. In order to secure the alternative defence of qualified privilege, it remains in each case for the publisher to demonstrate that the defamatory imputations are "relevant to the privileged occasion"266. It must be left to the common sense of judges (and, where they still decide such matters, juries) to evaluate in the particular case whether the defamatory imputation is "relevant" or "germane" to the occasion or not. It can be left to such decision-makers to navigate the course between the Scylla of extraneous affront and that all communications on matters of public interest be fastidiously checked so as to remove the slightest inaccuracies before publication. Whilst the principal disqualifying element for the defence of protected report has conventionally been a want of fairness (and accuracy), the disqualifying element in the case of the defence of qualified privilege has conventionally been different: the existence of malice and the lack of bona fides on the part of the publisher. These considerations are not present here. the Charybdis of unrealistic demands Application of the test: When the test of relevance to the privileged occasion is applied to the circumstances of this case, I agree, for the reasons given by Gummow J267, that it is impossible to treat the report of Merkel J's 263 (1996) 185 CLR 183 at 204. 264 Reasons of Callinan J at [231], [237]. 265 cf Sattin v Nationwide News Pty Ltd (1996) 39 NSWLR 32 at 38 per Levine J; Wade v State of Victoria [1999] 1 VR 121 at 137-143; Bell-Booth Group Ltd v Attorney-General [1989] 3 NZLR 148 at 156. 266 Bellino (1996) 185 CLR 183 at 228. 267 Reasons of Gummow J at [132]-[135]. Kirby analysis of the enforcement of the copyright claim over the data sheets as irrelevant to the subject matter enlivened by the claim made under s 52 of the Trade Practices Act. By common consent, the latter viewed as a whole was sufficiently relevant to a discussion of the subject matter, occupational health and safety, as to constitute communication on a clear matter of public interest. The publication of the false and defamatory imputation concerning the appellant was hurtful. But, as such, the subject was not irrelevant to the occasion of the publication. Still less was it gratuitous and lacking in relevant connection with the subject matter. That subject matter had arisen out of the same litigation in the Federal Court. It was historically and legally connected. It was agreed for the appellant that malice or want of good faith could not be proved. Thus, whilst neither the statutory defence of protected report nor the common law defence of fair and accurate report was available to, or indeed pleaded by, the publisher, the defence of qualified privilege was available. It was not lost because of the mistaken reference to the appellant in the place of his company. Response to the minority: With respect, there are several flaws in the reasoning of the minority on the issues of qualified privilege. First, they effectively demand that the publication always be perfectly accurate, without factual errors. This is most evident in the reasons of Callinan J, which state that "the making of any wrong statement cannot possibly be for the common, indeed any good, or in the public, or indeed any narrower interest"268. Such an approach would introduce a strict truth requirement that has not hitherto been part of the common law of qualified privilege. In my view, this Court should not now introduce that requirement, given the purpose and function of that defence. An important attribute of qualified privilege is that the defence is available where the defence of truth (however expressed) may be unavailable. Secondly, the minority appear to overlook the large expansion and variety of publications in Australian society today, including on specialised subject matters of importance and benefit to society. Occupational health and safety is only one such subject matter. The common law of qualified privilege must adapt to such changes and also to the technologies that make them possible. This is a reason for reading some of the old cases with critical scrutiny. The exchange and expression of views upon such subject matters may attract the defence of qualified privilege given the reciprocity of interest and duty that such publications commonly involve for their particular audiences. To withdraw the defence, or to hold that it is lost because of a factual error, would seriously burden such publications and thus community discussion upon specialised subject matters that conduce greatly to the convenience and welfare of society. 268 Reasons of Callinan J at [231]. Kirby The position of such publications is separate and different from the case of the general or mass media. Thirdly, the minority overstate the significance of this decision and the limited circumstances to which it responds. In particular, McHugh J's reference to "dancing in the streets"269, quickly qualified (as if recognising the hyperbole), seems, with all respect, to overestimate not only the implications of the majority reasoning in this case, but also the subject matters over which Australians display their emotions publicly. Although the basic principles of qualified privilege are well settled, I do not suggest that they are always easy to apply. Opinions will differ concerning their application in a particular case, as they have differed here. However, the decision of this Court rejects an absolute requirement of factual accuracy that would alter existing law, cripple the defence of qualified privilege, impose a chilling effect on legitimate communications and undermine the distinct advantages that modern technology brings to specialised publications. The majority are therefore correct, in my view, to resist the errors into which the minority would lead the law. If there will be "dancing in the streets" (which I doubt), it is because a serious legal error inimical to free expression has been avoided. The legal defects illustrated by the appeal In a more logical system of defamation law (such as that followed in most countries of the civil law tradition) the solution to the present case, in the absence of a voluntary acknowledgment of mistake as the appellant sought, would have been a court-ordered publication, with adequate prominence, identifying the publisher's error and correcting it with a statement of the true facts as found270. That remedy, which acknowledges that the recipients of any publication normally have an interest, beyond those of the parties, in receiving correct information, was proposed more than twenty years ago by the Australian Law Reform Commission271. The Commission referred to the "inadequacies of present remedies, the limitations of awards of damages and the unfortunate consequences of the 'damages or nothing' approach"272 that mark present defamation law. It commented that "[t]he correction order should at once provide a genuine plaintiff 269 Reasons of McHugh J at [36]. 270 ALRC 11 at 142-143 [258]-[259], 151-152 [277]. 271 ALRC 11 at 151-152 [277]. 272 ALRC 11 at 151 [277]. Kirby with a more effective remedy and reduce the burden of damages, with their consequences for the diminution of freedom of speech"273. The proposal was not enacted. The present appeal illustrates once again the defects of the current law274. The appellant had a genuine grievance which the publisher declined to correct. As it was found, the appellant suffered damage to his reputation. The case was not a big one; but it was important to the appellant. Once again, the law of Australia has failed to afford appropriate redress to an understandable grievance. Instead, it has ensnared the parties in complex proceedings of uncertain statutory and common law and peculiar procedures involving great delays and much cost and anxiety to them both. Eventually, the parties were yoked together in a Herculean struggle where the burden of accumulated costs quite possibly overtook the importance of the dispute that initially lay between them. The outcome is not a proud moment for the law. It affords another reminder of the need for law reform. As many judges and law reform bodies have recognised, the path to such reform lies in the direction of changed procedures, including enforceable rights of correction and reply. Orders I agree that the appeal should be dismissed with costs. 273 ALRC 11 at 151-152 [277]. 274 cf Chakravarti (1998) 193 CLR 519 at 561-562 [106]; Roberts v Bass (2002) 212 CLR 1 at 49-50 [126]. Callinan CALLINAN J. This appeal, in defamation proceedings, raises important questions of principle in relation to qualified privilege: in particular, whether the occasion with which the Court was concerned was one of qualified privilege; and, if it could be so designated, whether the matter published was either not relevant, or of such limited relevance to the publication of the matter actually attracting the privilege (if any) that the matter published should be regarded as falling outside the privilege. I should say at the outset that McHugh J has dealt very fully with the first of the questions, and has reached a conclusion on it with which I agree. The facts ACOHS Pty Ltd ("A") brought an action in the Federal Court against R A Bashford Consulting Pty Ltd ("Consulting"), Risk Management Concepts Pty Ltd ("Risk") and Mr Bialkower. The last made a cross-claim against A. The action was heard by Merkel J who found in favour of A. Relevantly his Honour made orders as follows: The Court declares that:- in publishing or causing to be published an item entitled 'Chemwatch Wins Copyright Case' on 2 December, 1993 [Consulting] and [Risk] engaged in conduct in trade and commerce which contravened s 52 of the Trade Practices Act 1974 (Cth); [Mr Bialkower] was a person contravention within the meaning of s 75B of the said Act. involved the said [Consulting, Risk and Mr Bialkower] pay damages in the sum of $20,000.00 to [A]. The Application of [A] be [otherwise] dismissed. The Cross-Claim of [Mr Bialkower] be dismissed. The Court declares that [Consulting] and [Risk] are entitled to contribution from [Mr Bialkower] in an amount equal to 75 per centum of the damages and costs ordered to be paid by them. [Mr Bialkower] indemnify [Consulting] and [Risk] in an amount equal to 75 per centum of the damages and costs ordered to be paid by them. The Cross-Claim [Consulting] [Mr Bialkower] be otherwise dismissed. and [Risk] against Callinan [Consulting, Risk and Mr Bialkower] pay one-third of [A's] taxed costs of and incidental to the proceeding. [Mr Bialkower] pay two-thirds of [A's] taxed costs of and incidental to the proceeding. [Mr Bialkower] pay to [Consulting] and [Risk] one-third of their taxed costs of and incidental to the proceeding." The appellant gave evidence during the trial. His name assumed no prominence in the reasons for judgment. The proceedings before Merkel J arose out of the publication of a newsletter, relating among other things to the handling of chemicals. The appellant was not alleged to have been personally involved in the publication and therefore not himself to have been, to use the language of s 75B(1)(c) of the Trade Practices Act 1974 (Cth), "in any way, directly or indirectly, knowingly concerned in, or party to" the misleading or deceptive conduct constituted by it275. The precise role of Consulting, of which the appellant was a shareholder and director, in the publication by no means emerges with any clarity from the reasons of Merkel J. Nonetheless, the orders made by his Honour were made in unmistakable terms and clearly identified the legal personalities against whom the orders were made and were to operate. The respondent is also a publisher. It publishes a periodical occupational health and safety bulletin ("the bulletin") fortnightly to subscribers who pay an annual fee of $395. On 28 May 1997, almost three weeks after Merkel J delivered his judgment, the respondent published a bulletin in which the matter complained of appeared under a headline "MSDS copyright case dismissed". The article commenced with the following: "Material safety data sheets should not be too restricted by copyright – they should as much as possible be available to enforce OH&S, according to a Federal Court ruling in the past fortnight. The Court has dismissed a claim by a chemical information database company which alleges its main competitor, Victorian-based ACOHS Pty Ltd, breached copyright by transcribing 43 material safety data sheets (MSDS) into its database. 275 Neither the parties nor his Honour referred to s 65A of the Trade Practices Act which was inserted in 1984 to afford protection to prescribed information providers against suits under s 52 and other sections. Callinan Bernie Bialkower, proprietor of Chemwatch, claimed the MSDS – the primary vehicle for providing chemical safety information to the workplace – were original literary works authored by himself and his employees. He sought an injunction preventing ACOHS from further infringing his copyright and an order requiring ACOHS to surrender copies of the 43 MSDS. ACOHS, which received the MSDS from manufacturers before entering them into its Infosafe database, denied infringing Bialkower's copyright. Justice Merkel of the Federal Court in Melbourne, dismissed Bialkower's claim, saying he had not adequately shown he owned copyright of the 43 MSDS." There then followed some direct quotations from the judgment of Merkel J and commentary upon them. Included in the commentary was this: "The breach of copyright allegations were made by Mr Bialkower in response to an action initiated by ACOHS in 1993. ACOHS sued the publishers of a newsletter called Infax which had printed a report claiming ACOHS was one of two companies Bialkower successfully prosecuted for MSDS copyright infringement. ACOHS also sued Bernie Bialkower as he had provided the information for the report. Mr Bialkower then made the counter-claim, accusing ACOHS of copyright infringement. In respect of the initial claim, Justice Merkel found the publishers of Infax newsletter, RA Bashford and Risk Management Concepts, had engaged in false and misleading conduct by publishing an incorrect report – there had been no such copyright case – and that Bialkower was the source of the information and authorised its publication. He ruled publication of the 'seriously misleading statements caused harm to ACOHS's repute and goodwill and that harm is likely to have led to some loss of business or custom'. He awarded ACOHS $20,000 damages and ordered Bialkower, RA Bashford and Risk Management Concepts to pay their legal costs." Before she wrote the article its author, a journalist, telephoned the appellant to ask him to comment on the decision. The appellant declined, but Callinan warned the journalist that she should be very careful about what she wrote because of the complexities of the case. Following the publication of the bulletin the appellant's solicitors protested on his behalf, and sought an apology from the respondent. The letter was admitted into evidence. It stated several matters of fact: "In the newsletter you stated, inter alia: 'RA Bashford and Risk Management Concepts had engaged in false and misleading conduct by publishing and [sic] incorrect report ...' and ... 'ordered Bialkower, RA Bashford and Risk Management Concepts to pay their legal costs.' The Court made no such finding. RA Bashford was not a party to the proceedings at all. The Respondent involved was RA Bashford Consulting Pty Ltd ('Consulting'). Consulting is not mentioned in the judgment at all except in the introduction and in the formal orders. There is no mention of our client being involved in the commission of any false or misleading conduct. Consulting's only involvement was after the event and aimed at mitigating the effects of an erroneous article in the 'In Fax' Newsletter. Notwithstanding that our client is a director and shareholder of Consulting (one of the actual Respondents) you also failed to identify that Consulting was provided with a 75% indemnity by the other Respondent with respect to damages and the costs of the case. Our client is a non practising barrister who specialises in the workers' compensation and occupational health and safety areas. The publication of your newsletter is directed to our client's specialty of work and his client's. The recognition of our client's name as a person with expertise and a reputation in the field of occupational health and safety is critical to his profitability. Additionally, our client is authoring a CD Rom which deals specifically with workers' compensation and occupational health and safety issues Australia-wide. Your newsletter has been forwarded to many of the corporations which would be potential customers for the services of our client. The newsletter is also defamatory of our client and he has been seriously hurt and embarrassed by its publication. Our client has instructed that he has already pointed out to you the errors in your newsletter and has provided to you his telephone number so that Callinan you could attempt reparation, but we are instructed, you have not had the courtesy to return our client's telephone calls. We invite you to publish at the earliest possible date an apology to our client in the following terms: 'On 28 May 1997 the Information Australian Newsletters published an article in its Occupational Health and Safety Bulletin which referred The Information Australia Newsletters unequivocally recognises that the statements it made referring to Mr RA Bashford were false and without foundation. to Mr RA Bashford. The Information Australia (Newsletters) unreservedly apologises to Mr Bashford for any hurt and embarrassment that the publication of the statements may have caused to him.' Notwithstanding that you may publish an apology in the form requested, our client reserves his rights to claim damages and costs by reason of the publication. We put you on notice that your failure or refusal to publish the requested form of apology to our client, will be relied upon as conduct aggravating the damages suffered by our client because of the offending publication." To the facts stated in the letter should be added these which were found by Davies AJ at first instance: "It seems that [the appellant's] relief at the result of the Federal Court proceedings was shattered when he read the article in the Occupational Health and Safety Bulletin, which not only named him personally, but described him as one of the publishers. [The appellant] apparently felt that all his efforts to distance himself from the Infax newsletter, efforts which he considered to have achieved success in the Federal Court proceedings, were destroyed by the article in the Occupational Health and Safety Bulletin." The trial No apology was published. The appellant sued the respondent in defamation in the Supreme Court of New South Wales. By way of defence the respondent denied that it had defamed the appellant. One of the imputations pleaded was found by a jury to have been conveyed and to be defamatory of the appellant: "that the Plaintiff, by publishing a false report concerning ACOHS Pty Ltd, had been found by the Federal Court of Australia liable to ACOHS Pty Ltd in damages and costs for causing it harm and loss". Callinan It then fell for a judge of the Supreme Court (Davies AJ) to decide, in accordance with s 7A of the Defamation Act 1974 (NSW) ("the Act"), whether any of the other defences of the respondent were made out, and the damages for which the respondent was liable. Those defences in summary were: that the appellant was not likely to suffer harm pursuant to s 13 of the Act; of truth pursuant to s 15 of the Act; of contextual truth pursuant to s 16 of the Act; and of qualified privilege at common law. His Honour rejected three of the defences. The first was clearly unarguable. The second failed because in his opinion the imputation was not true in substance, and the third, because the contextual imputations pleaded by the respondent were not made by the article in the bulletin, and furthermore, did not differ in substance from the appellant's imputation. His Honour did however uphold the defence of qualified privilege for the reasons that the article raised issues of general interest to persons operating in the field of occupational health and safety, that the imputation was within the privilege to which that interest gave rise, and that malice was not established. His Honour, conscious of the possibility of an appeal, said that he would have assessed damages if the defences had failed, in the sum of $25,000. The appeal to the Court of Appeal of New South Wales The appellant appealed to the Court of Appeal of New South Wales (Sheller and Hodgson JJA and Rolfe AJA). By majority (Rolfe AJA dissenting) that Court found that the inaccurate report of the decision on the original claim was protected because it was relevant to the occasion of qualified privilege. Their Honours also rejected the appellant's argument that a defence of qualified privilege can never attach to an inaccurate report of court proceedings of which this was said to be an example. Hodgson JA (with whom Sheller JA and Rolfe AJA agreed on this point) held that the report of the decision on the cross-claim in the Federal Court proceedings was published on an occasion of qualified privilege. This was so because occupational health and safety were matters important for the common convenience and welfare of society, and communications relevant to them to persons responsible for occupational health and safety promoted those ends. As the respondent had accepted subscriptions for a newsletter dealing with occupational health and safety it was morally and legally obliged to publish to subscribers matters of significance on that topic within which the decision on the cross-claim fell. Hodgson JA also held that unless malice were established, matter communicated on the privileged occasion enjoyed the privilege unless it was "truly unconnected with the subject matter of the occasion." His Honour further held that it was "germane and reasonably appropriate to the occasion to give readers the context of the proceedings in which the decision relevant to occupational health and safety was made" and that "the part of the publication complained about really [did] no more than ... indicate the nature of the Callinan proceedings and the result of the proceedings, so that the part of the judgment relevant to occupational health and safety [was] put in a context." In addition to agreeing with the decision and reasons of Hodgson JA, Sheller JA said that the matter complained of was "connected and sufficiently connected with the subject matter of the privileged occasion" and "relevant to the occasion" because the paragraphs complained of explained the context in which the copyright claim had been made as a response to an action brought against the claimant in the Federal Court proceedings. In dissenting, Rolfe AJA would have applied Bellino v Australian Broadcasting Corporation276 to hold that the imputation found by the jury was not relevant to the privileged occasion: therefore the inaccurate attribution of the publisher was "truly unconnected with the subject matter of the occasion". It "intruded material into the article, which was not only wrong, but irrelevant to its essential thrust." As to the appellant's argument that there could be no defence of qualified privilege for an inaccurate report of court proceedings, Hodgson JA said that the necessity for accuracy to sustain a defence of fair report of court proceedings was not an additional requirement superimposed over and above the defence of qualified privilege based upon a reciprocity of duty and interest. Rolfe AJA would have upheld the appellant's submission in this respect. In his Honour's opinion, the requirement is that for qualified privilege to apply to reports of court proceedings, the reports must be accurate. His Honour thought a contrary conclusion to be "somewhat strange, particularly against the background of reciprocal rights and duties to receive and furnish information." Having regard to the decision he had reached on the appellant's appeal, Hodgson JA did not need to deal with the Notice of Contention. He did, however, express two further opinions: first, that Davies AJ had not been in error in not finding that the appellant's imputation was true in substance. In his Honour's opinion: "the indirectness of the involvement of the appellant's company in the publication, coupled with the reference to the appellant rather than his company, are sufficient in my opinion to prevent the imputation being true in substance." Secondly, the respondent's defence of contextual truth could not succeed because, whether or not the contextual imputations were conveyed, they were considerably weaker than the appellant's imputation, and could not satisfy the condition for which s 16(2)(c) of the Act provides, that the appellant's imputation not further injure the appellant's reputation. 276 (1996) 185 CLR 183. Callinan The appeal to this Court The appellant's appeal to this Court is brought on three grounds: "(a) The Court of Appeal erred in finding that the Respondent was 'morally and legally obliged' and thereby had a duty to publish the matter complained of to the recipients and, thereby, finding that it was published on an occasion of qualified privilege at common law. (b) Hodgson JA (with whom Sheller JA agreed) erred in determining that that part of the matter complained of which defamed the [appellant] was relevant to the occasion of qualified privilege which he had found and in doing so misapplied the decision of this Court in Bellino v Australian Broadcasting Corporation277. (c) Hodgson JA (and Sheller JA) erred in determining that the defence of qualified privilege can ever extend to protect an inaccurate report of court proceedings." In dealing with the appeal I proceed upon the basis that the article was factually wrong as found by the primary judge, and in my opinion correctly so, in referring to the appellant personally, and not to Consulting by its correct corporate name, and in describing the appellant personally as the, or a publisher of the newsletter the subject of the proceedings in the Federal Court. The first question is whether a defence of qualified privilege is available in respect of the publication of an inaccurate or unfair report of judicial proceedings. That a publication in New South Wales is of a report of court proceedings may not mean that its publisher is confined to the defence of a fair and accurate report of judicial proceedings if other defences are available at common law. Regard has to be had to s 11 of the Act which is in this form: "Common law defence etc The provision of a defence by this Part does not of itself vitiate, diminish or abrogate any defence or exclusion of liability available apart from this Act." 277 (1996) 185 CLR 183. Callinan For present purposes I will proceed upon the basis that a report of judicial proceedings may attract qualified privilege. It is another question however whether the fact that the publication does purport to be a report of judicial proceedings, would be irrelevant to a claim of qualified privilege in respect of it. It is unfortunate enough for the persons defamed that absolute privilege attaches to judicial, as well as parliamentary proceedings to deny them an effective remedy in defamation in respect of harsh and false things that may be uttered about them in court and Parliament. Any extension of such a licence, to defame, obviously needs to be carefully scrutinized. I must say that it does seem anomalous and productive of an incoherence in the law278, that a report of judicial proceedings, however damaging to a person, may be protected as a fair and accurate report of judicial proceedings if, and only if it is fair and accurate279, yet if it is inaccurate, or unfair, it might still attract qualified privilege. As will appear I do not have to resolve in this case the tension to which that anomaly gives rise or indeed, even to decide this first question, whether a separate defence of qualified privilege at common law can coexist with the statutory or common law defences of "fair report". But it is a matter which may need attention at some stage. There are two reasons why I do not have to do so. One is that, on the assumption that the relevant occasion was one of qualified privilege, all of the necessary elements of the defence of it are not present. The second reason is that, as McHugh J demonstrates in his judgment, the publication the true subject of these proceedings was not made on an occasion of qualified privilege. It is to the first of these matters that I will now turn. Expressions which have the ring of slogans and metaphors have been repeatedly used in discussions of qualified privilege. It is important to examine those expressions to reduce them, as far as may be, to concrete terms. The starting point is that a defence of qualified privilege operates to excuse the publication of inaccurate or untrue and defamatory matter. But from the earliest times and subsequently according to various formulations, the protection which the law affords has always depended upon a number of matters: that the statement has been made in the discharge of some public or private duty, whether legal or moral, or in the conduct of the maker's own affairs and in which he or she has a real interest280. The formulation that qualified privilege will extend to a 278 See Sullivan v Moody (2001) 207 CLR 562 at 580-581 [54] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ. See also Montgomerie v Pauanui Publishing Ltd unreported, New Zealand High Court, 3 March 1997, and on appeal, Pauanui Publishing Ltd v Montgomerie unreported, New Zealand Court of Appeal, 21 October 1997. 279 See John Fairfax & Sons Ltd v Hook (1983) 47 ALR 477 at 488, 495. 280 cf Toogood v Spyring (1834) 1 CM & R 181 at 193 [149 ER 1044 at 1049-1050]. See also Howe & McColough v Lees (1910) 11 CLR 361 at 368 per Griffith CJ. Callinan communication "fairly warranted by any reasonable occasion or exigency, and honestly made", such communication being "protected for the common convenience and welfare of society" was propounded in Toogood v Spyring281 and later affirmed in Stuart v Bell282. Griffith CJ cited the formulation with approval in Howe & McColough v Lees283. The phrase "common convenience and welfare of society" rolls readily off the tongue as if it had a fixed meaning that no one could possibly dispute. The desirability of the advancement of the common convenience and welfare of society may readily be accepted. There are bound to be cases however in which what will advance the common convenience and the welfare of society are contestable concepts. Other expressions, such as "the general interest of society"284 and "community of interest"285 similarly involve the making of value judgments. It is because the making of any wrong statement cannot possibly be for the common, indeed any good, or in the public, or indeed any narrower interest, that the defence, once the occasion has been shown to be one of qualified privilege, focuses upon the subject matter of the communication, rather than upon the actual communication itself, the inaccuracy of which is the reason why there must be some other basis for its justification if its maker is to be protected against suit. The authorities speak of public and private duties, legal or moral. In truth there are few matters of any kind which in ordinary affairs divorced from business or official functions, one person is under a legal duty to communicate to another or others. Almost all of the cases on qualified privilege are ones in which the publisher of the statement seeks to rely upon the existence of a moral duty, and necessarily so, because a legal duty is non-existent. And it is because of the premium which the law places on freedom of speech that the concept of a moral duty has been generously regarded, and allowed to be extended to large commercial publishers, that is to say publishers avid for profit. That is not to say of course that the intrusion of commerce should in any way be a disqualifying factor. The reality is that much which is informative and is in the interest of society to learn, would not be communicated at all if it could not be communicated for profit. A further requirement for a defence of qualified privilege is an absence of malice. That is not a matter which need detain me here because it is not 281 (1834) 1 CM & R 181 at 193 [149 ER 1044 at 1049-1050]. 282 [1891] 2 QB 341 at 346 per Lindley LJ. 283 (1910) 11 CLR 361 at 368. 284 Macintosh v Dun (1908) 6 CLR 303 at 305; [1908] AC 390 at 399. 285 Howe & McColough v Lees (1910) 11 CLR 361 at 369 per Griffith CJ. Callinan suggested that the relevant publication was published maliciously: the inaccuracies were not so gross that they could be said to have been made with such a degree of recklessness as could constitute malice. Another requirement for the defence is "community of interest", an expression used by Griffith CJ in Howe & McColough v Lees286, or, as I would prefer, and much other authority holds, "reciprocity of interest and duty". Just as the duty must be a duty to make a communication on, and in respect of a particular subject matter, the interest in receiving the communication must be reciprocal and relate to the particular subject matter. Everything to which I have referred highlights the importance of identifying, and doing so with some degree of precision, the relevant subject matter. It is equally important to make sure that the inaccurate and defamatory matter in respect of which the defence is advanced is not extraneous to that subject matter and is, to adopt the words of each of Sheller and Hodgson JJA respectively in the Court of Appeal in this case which I am content to do, "sufficiently connected" and "germane and reasonably appropriate" to it. A slight, or general, ill-defined connexion will not suffice. As North J said in Truth (NZ) Ltd v Holloway287 in a passage cited with approval by Windeyer J in Australian Consolidated Press Ltd v Uren288: "[T]here is no principle of law, and certainly no case that we know of, which may be invoked in support of the contention that a newspaper can claim privilege if it publishes a defamatory statement of fact about an individual merely because the general topic developed in the article is a matter of public interest." To a similar effect is the passage in the joint judgment of Dawson, McHugh and Gummow JJ in Bellino v Australian Broadcasting Corporation289: "It is true that, at common law, privilege only attaches to those defamatory imputations that are relevant to the privileged occasion. Where a potentially privileged communication consists partly of matters relevant to the privilege and partly of matters that are not relevant, qualified privilege only attaches to that part which is relevant to the Moreover, the inclusion of the irrelevant part in the occasion. 286 (1910) 11 CLR 361 at 369. 287 [1960] NZLR 69 at 83. 288 (1966) 117 CLR 185 at 209. 289 (1996) 185 CLR 183 at 228. Callinan communication affords evidence of malice and can destroy the privilege attaching to the relevant part." Again, what is or is not relevant or germane is not a matter upon which all minds will always agree. But because the communication of inaccurate matter can hardly be in the true interest of anyone, matters of the most attenuated relevance only to the subject matter, need to be carefully scrutinized and should be rejected as being outside the occasion of qualified privilege. I turn now to the article containing the defamatory matter in which the imputation was made. It appears in a bulletin which on its masthead makes the claim "The Plain English Guide to Workplace Health & Safety". The headings to its various articles give the flavour of the publication. The first article is "Managers to be 'more accountable'". The next is "Dealing with mental abuse at work". The third has the heading "Call for City Link OH&S probe". The fourth article is headed "$350,000 for uninformed worker". The next heading is "Hire cars go smoke free". The sixth is "$6.8 million RSI payout overruled". The next is headed "'Enforced' rest breaks reduce RSI". The eighth has the heading "NT increases OH&S fines". The ninth is "New OH&S regulations for Tas". The tenth has the heading "Emergency management manual". The next is "Tractor safety campaign". The twelfth, with which this appeal is concerned, has the heading "MSDS copyright case dismissed". And the final article is headed "OH&S dates". Were it not for the twelfth article, the readers would be in no doubt that the exclusive concerns of the bulletin were occupational health and safety. He or she would also immediately assume that its readership consisted of people interested in, or directly involved in those disciplines. This view would be confirmed by a statement at the end of the bulletin that it is published fortnightly and that "Special Reports are available at $395 for a [sic] 12 months with a 100% money back guarantee". In my opinion the view of Rolfe AJA in dissent in the Court of Appeal should be preferred to the majority's. Everything which the readers had an interest in knowing and that the respondent had a moral duty to communicate to them consisted of the information about the publication and use of safety data sheets, matters truly of occupational health and safety. The import of the relevant orders of the Federal Court was that these should be, and were readily accessible, and that their republication was not a breach of copyright. The other issue in the proceedings in the Federal Court and the way in which it was resolved, were if at all, of only the most peripheral relevance to the accessibility, use and publication of the safety data sheets. As to those matters, the finding of false and misleading conduct, and its attribution to the appellant, were not germane or sufficiently related. Reference to the latter was not necessary for an understanding of the relevant matter, or in any way to put it in context. Callinan I have so far approached this matter on the basis that the occasion was truly one of qualified privilege. It was not in fact, as McHugh J holds, such an occasion. Apart from emphasising that in my view carelessness to the point of recklessness may constitute evidence of malice, I agree with his Honour's reasoning and conclusion. As neither party contended that the trial judge's provisional assessment of damages was inappropriate, I would allow the appeal with costs. The respondent should also pay the appellant's costs of the trial and the appeal to the Court of Appeal. Judgment should be entered for the appellant in the sum of $25,000.